Symantec 2003 Annual Report Download - page 56

54 Symantec 2003
A portion of the purchase price for each acquisition was placed into
escrow and may be returned to us in the event of a breach by the sellers
of certain general representations, warranties, covenants or agree-
ments. The escrows are scheduled to be settled within one year of the
acquisition dates, subject to extension in the event of disputes, and any
funds returned to Symantec under the terms of the escrow will result in
a reduction to goodwill at that time.
The following table summarizes the allocation of the purchase price,
adjusted for revised estimates related to certain liabilities, for each of
the acquisitions during the September 2002 quarter (in thousands):
In connection with these four acquisitions, we wrote off a total of $4.7
million of acquired in-process research and development, because the
acquired technologies had not reached technological feasibility and had
no alternative uses. The efforts required to develop the acquired in-
process technology principally relate to the completion of all planning,
design, development and test activities that are necessary to establish
that the product or service can be produced to meet its design specifica-
tions, including features, functions and performance.
We determined the fair value of the acquired in-process technology for
each of the purchases by estimating the projected cash flows related to
these projects and future revenues to be earned upon commercialization
of the products. We discounted the resulting cash flows back to their
net present values. We based the net cash flows from such projects on
our analysis of the respective markets and estimates of revenues and
operating profits related to these projects.
Acquisition of Lindner & Pelc On August 30, 2001, we purchased
100% of the outstanding shares of Lindner & Pelc Consult GmbH, a
security services and implementation company in Berlin, Germany, for
approximately $2.2 million. The transaction was accounted for as a
purchase and we recorded approximately $2.1 million in goodwill. Under
the terms of the agreement, we may also be liable for contingency pay-
ments based on targeted future sales through September 2004. The
maximum aggregate amount of such contingency payments is approxi-
mately $2.0 million. During the June 2002 quarter, $0.7 million was
recorded as compensation expense, as it was determined that this
amount of the contingency payments will be paid under the agreement.
The amount was paid during the December 2002 quarter.
Acquisition of Foster-Melliar’s Enterprise Security Management
Division On July 11, 2001, we acquired the enterprise security manage-
ment division of Foster-Melliar Limited, an IT services company located
in Johannesburg, South Africa. We paid approximately $1.5 million for
these assets and the IT services business. The transaction was
accounted for as a purchase and we recorded approximately $1.5 mil-
lion of goodwill. Under the terms of the agreement, we may also be
liable for contingency payments based on targeted future sales through
fiscal year 2004. The maximum aggregate amount of such contingency
payments is $1.5 million. During the March 2003 and March 2002
quarters, an amount of $0.5 million each was recorded as goodwill and
compensation expense, respectively, as it was determined that these
amounts of the contingency payments will be paid under the agreement.
An amount of $0.5 million remains as an accrual as of March 31, 2003.
Acquisition of AXENT On December 18, 2000, we acquired 100% of
the outstanding common stock of AXENT Technologies, Inc. by issuing
approximately 29,056,000 shares of our common stock to AXENT share-
holders. We also assumed all of the outstanding AXENT employee stock
options valued at approximately $87.0 million. A valuation specialist
used our estimates to establish the amount of acquired in-process
research and development. The transaction was accounted for as a
purchase. The acquisition was initially recorded during fiscal 2001 for
approximately $924.7 million and was allocated as follows (in thou-
sands):
Net tangible assets of AXENT $130,517
In-process research and development 22,300
Tradename 4,100
Workforce-in-place 10,670
Developed technology 75,500
Deferred income taxes (19,080)
Unearned compensation 992
Goodwill 699,660
Total purchase price $924,659
Allocated Purchase Price Components
Acquired Deferred Other assets
Purchase Acquired Product Other Tax (Liabilities),
Price IPR&D Rights Goodwill Intangibles Assets, net net
Riptech $148,032 $2,100 $12,700 $116,836 $ – $ 7,974 $ 8,422
Recourse 138,633 1,000 19,000 109,085 2,164 9,090 (1,706)
SecurityFocus 76,558 1,600 6,840 64,281 2,100 503 1,234
Mountain Wave 20,698 – 2,000 17,320 – 1,740 (362)
Total $383,921 $4,700 $40,540 $307,522 $4,264 $19,307 $ 7,588