Symantec 2003 Annual Report Download - page 57

Symantec 2003 55
During fiscal 2001, we also accrued approximately $18.3 million in
acquisition related expenses, which included financial advisory, legal
and accounting, duplicative site and fixed assets, and severance costs.
These acquisition related expenses were paid by the end of the
December 2001 quarter.
After filing the pre-acquisition tax returns of AXENT during the
December 2001 quarter, we identified additional tax losses and other
beneficial tax attributes available from the pre-acquisition periods of
AXENT. As a result, we recorded additional deferred tax assets of $5 mil-
lion attributable to these carryforward tax benefits, with a correspon-
ding offset to goodwill.
During the September 2001 quarter, we divested the Web access man-
agement product line that we acquired with our acquisition of AXENT.
As a result, we wrote off approximately $0.8 million of net workforce-
in-place related to this product line (see Divestiture of Web Access
Management Product Line).
During the June 2001 quarter, we resolved certain pre-acquisition
contingencies related to the acquisition of AXENT, and as a result, we
increased the purchase price and goodwill by $4.5 million. The amount
allocated to tradename, workforce-in-place, developed technology
and goodwill is being amortized over their useful lives of four years. In
accordance with SFAS No. 142, we recharacterized acquired workforce-
in-place (and the related deferred tax liability) as goodwill and ceased
the amortization of goodwill on April 1, 2002. The unearned compensa-
tion related to the options assumed as part of the acquisition is being
amortized over the remaining vesting period.
Pro Forma The following unaudited pro forma information for fiscal
2003, 2002 and 2001 was as if the Riptech acquisition had occurred at
the beginning of each fiscal period presented. The pro forma informa-
tion excludes approximately $1.7 million (pre-tax) of amortization
related to developed technology and other intangible assets associated
with the Riptech acquisition for fiscal 2003. In addition, the pro forma
information excludes approximately $2.1 million (pre-tax) of acquired
in-process research and development associated with the Riptech acqui-
sition for fiscal 2003. The pro forma information excludes approximately
$196.8 million (pre-tax) and $2.8 million (pre-tax) of amortization
related to goodwill and workforce-in-place, respectively, associated
with non-related acquisitions for fiscal 2002.
The pro forma information has been prepared for comparative purposes
only and is not indicative of what operating results would have been if
the acquisition had taken place at the beginning of fiscal 2002 or of
future operating results. Financial information prepared in accordance
with U.S. GAAP for Recourse was not available due to insufficient
record-keeping during the interim and annual periods in fiscal 2002
and interim periods in 2003 and, as such, has not been included in this
pro forma information. Pro forma information for SecurityFocus and
Mountain Wave was not presented, as the SecurityFocus and Mountain
Wave acquisitions were deemed not significant.
Year Ended March 31,
(IN THOUSANDS, EXCEPT NET INCOME PER SHARE DATA; UNAUDITED) 2003 2002
Net revenues $1,413,762 $1,080,093
Net income $244,117 $151,509
Basic net income per share $1.68 $1.06
Diluted net income per share $1.51 $0.99
Divestiture of the Web Access Management Product Line On August
24, 2001, we sold assets and transferred liabilities and employees
related to our Web access management product line to PassGo
Technologies, Ltd for approximately $1.1 million in cash, resulting in
a pre-tax gain of approximately $0.4 million on the divestiture, which
was recorded in income, net of expense, from sale of technologies and
product lines on the Consolidated Statements of Operations.
We also entered into an exclusive license and option agreement with
PassGo whereby they licensed our Web access management technology
products. In consideration for the license, PassGo is required to pay us
quarterly royalties based on their net revenue starting at 30% and
declining to 10% over a four-year period. Because the royalties are not
guaranteed and the quarterly amounts to be received are not deter-
minable until earned, we are recognizing these royalties as payments
are due. PassGo has an option to purchase the technology at a price
starting at $18.8 million and declining to $3.3 million over a four-year
period. These payments, if any, will be recorded in income, net of
expense, from sale of technologies and product lines.
During fiscal 2003 and 2002, we recorded approximately $1.8 million
and $1.1 million for the amortization of the developed technology
related to the Web access management products in income, net of
expense, from sale of technologies and product lines. During the
December 2002 quarter, we also wrote off approximately $2.7 million
of developed technology related to the Web access management prod-
ucts due to impairment.
Divestiture of ACT! Product Line On December 31, 1999, we licensed
substantially all of the ACT! product line technology to Interact
Commerce Corporation for a period of four years. In addition, we sold
the inventory and fixed assets related to the ACT! product line to
Interact. In consideration for the license and assets, Interact transferred
to us 623,247 shares of its unregistered common stock, valued at
approximately $20.0 million. During the March 2001 quarter, Interact
entered into a plan to merge with The Sage Group plc and we recorded a
loss of approximately $12.5 million as other expense on the Condensed
Consolidated Statements of Operations related to the other than tempo-
rary decline in value of our investment in Interact. As a result of the
merger, we received approximately $7.5 million upon the surrender of
the Interact shares in July 2001.
In addition to the shares received from Interact, Interact is required to
pay us quarterly royalty payments for four years. Interact will pay these
royalties based on future revenues set forth in the license, up to an