Symantec 2006 Annual Report Download - page 51

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expenses. The remaining increase in general and administrative expenses was due primarily to an increase in
employee headcount, resulting in additional employee compensation cost.
The increase in general and administrative expenses in fiscal 2005 as compared to fiscal 2004 resulted
primarily from an increase in employee compensation due to increased headcount. The increased headcount
and related compensation was the direct result of company growth, including business acquisitions completed
in the second half of fiscal 2004 and the first quarter of fiscal 2005.
Amortization of other intangible assets
Year Ended
March 31,
2006 2005 2004
($ in thousands)
Amortization of other intangible assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $148,822 $5,416 $2,954
Percentage of total net revenues ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4% * *
Period over period increase ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $143,406 $2,462
* 83%
* Percentage not meaningful
Other intangible assets are comprised of customer base, trade names, partnership agreements, and
marketing-related assets. The increased amortization in fiscal 2006 is primarily associated with the Veritas
acquisition, for which amortization began in July 2005. In connection with the Veritas acquisition, we
recorded $1.5 billion in other intangible assets which will be amortized over their useful lives of eight to
ten years. For further discussion of other intangible assets from acquisitions and related amortization, see
Notes 3 and 4 of the Notes to Consolidated Financial Statements.
The increase in amortization of other intangibles in fiscal 2005 as compared to fiscal 2004 was primarily
associated with the Brightmail acquisition in June 2004, the ON Technology acquisition in February 2004, the
PowerQuest acquisition in December 2003, and the @stake, Inc. acquisition in October 2004.
Stock-based compensation expense
Year Ended March 31,
2006 2005 2004
($ in thousands)
Stock-based compensation expense:
Included in Cost of revenues ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 439 $ Ì $Ì
Sales and marketing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $13,314 $1,298 $Ì
Research and development ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 17,497 1,780 Ì
General and administrativeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7,151 1,446 Ì
$37,962 $4,524 $Ì
In connection with the acquisition of Veritas in July 2005, we assumed Veritas stock options and RSUs
and converted them into options to purchase 66 million shares of Symantec common stock and 425,000
Symantec RSUs. The fair value of the assumed stock options was $688 million using the Black-Scholes
valuation model with the following weighted average assumptions: volatility of 36%, risk-free interest rate of
3.4%, expected life of 3.5 years, and dividend yield of zero. The fair value of the RSUs was $11 million based
on fair value of the underlying shares on the announcement date. The intrinsic value of the unvested options
and RSUs was valued at $63 million and was recorded in Deferred stock-based compensation within
Stockholders' equity in the Consolidated Balance Sheets in the September 2005 quarter. We recorded
amortization of Deferred stock-based compensation related to the assumed Veritas stock options and RSUs of
$27 million in fiscal 2006.
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