e10vq
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form 10-Q
|
|
|
(Mark One)
|
|
|
þ
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
|
|
For the Quarterly Period Ended
January 2, 2009
|
or
|
o
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
|
|
For the Transition Period
from to
|
Commission File Number
000-17781
Symantec Corporation
(Exact name of the registrant as
specified in its charter)
|
|
|
Delaware
(State or other jurisdiction
of
incorporation or organization)
|
|
77-0181864
(I.R.S. employer
identification no.)
|
|
|
|
20330 Stevens Creek Blvd.,
Cupertino, California
(Address of principal
executive offices)
|
|
95014-2132
(Zip
Code)
|
Registrants telephone number, including area code:
(408) 517-8000
Indicate by check mark whether the registrant: (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past
90 days. Yes þ No o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in Rule
12b-2 of the
Exchange Act. (Check one):
þ Large
accelerated
filer o Accelerated
filer o Non-accelerated
filer o Smaller
reporting company
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the Exchange
Act). Yes o No þ
Shares of Symantec common stock, $0.01 par value per share,
outstanding as of January 30, 2009: 820,984,915 shares.
SYMANTEC
CORPORATION
FORM 10-Q
Quarterly
Period Ended January 2, 2009
TABLE OF
CONTENTS
2
PART I.
FINANCIAL INFORMATION
|
|
Item 1.
|
Financial
Statements
|
SYMANTEC
CORPORATION
|
|
|
|
|
|
|
|
|
|
|
January 2,
|
|
|
March 28,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
*
|
|
|
|
(In thousands)
|
|
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,449,033
|
|
|
$
|
1,890,225
|
|
Short-term investments
|
|
|
79,888
|
|
|
|
536,728
|
|
Trade accounts receivable, net
|
|
|
927,048
|
|
|
|
758,200
|
|
Inventories
|
|
|
27,419
|
|
|
|
34,138
|
|
Deferred income taxes
|
|
|
181,003
|
|
|
|
193,775
|
|
Other current assets
|
|
|
278,737
|
|
|
|
316,852
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
2,943,128
|
|
|
|
3,729,918
|
|
Property and equipment, net
|
|
|
972,240
|
|
|
|
1,001,750
|
|
Acquired product rights, net
|
|
|
510,474
|
|
|
|
648,950
|
|
Other intangible assets, net
|
|
|
1,278,665
|
|
|
|
1,243,524
|
|
Goodwill
|
|
|
4,955,678
|
|
|
|
11,207,357
|
|
Investment in joint venture
|
|
|
116,602
|
|
|
|
150,000
|
|
Long-term deferred income taxes
|
|
|
4,399
|
|
|
|
55,304
|
|
Other long-term assets
|
|
|
60,884
|
|
|
|
55,291
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
10,842,070
|
|
|
$
|
18,092,094
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
213,474
|
|
|
$
|
169,631
|
|
Accrued compensation and benefits
|
|
|
387,535
|
|
|
|
431,345
|
|
Current deferred revenue
|
|
|
2,512,319
|
|
|
|
2,661,515
|
|
Income taxes payable
|
|
|
92,616
|
|
|
|
72,263
|
|
Short-term borrowing
|
|
|
|
|
|
|
200,000
|
|
Other current liabilities
|
|
|
264,897
|
|
|
|
264,832
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
3,470,841
|
|
|
|
3,799,586
|
|
Convertible senior notes
|
|
|
2,100,000
|
|
|
|
2,100,000
|
|
Long-term deferred revenue
|
|
|
406,293
|
|
|
|
415,054
|
|
Long-term deferred tax liabilities
|
|
|
73,801
|
|
|
|
219,341
|
|
Long-term income taxes payable
|
|
|
510,969
|
|
|
|
478,743
|
|
Other long-term liabilities
|
|
|
89,473
|
|
|
|
106,187
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
6,651,377
|
|
|
|
7,118,911
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
8,202
|
|
|
|
8,393
|
|
Additional paid-in capital
|
|
|
8,955,257
|
|
|
|
9,139,084
|
|
Accumulated other comprehensive income
|
|
|
154,023
|
|
|
|
159,792
|
|
Accumulated (deficit) earnings
|
|
|
(4,926,789
|
)
|
|
|
1,665,914
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
4,190,693
|
|
|
|
10,973,183
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
10,842,070
|
|
|
$
|
18,092,094
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Derived from audited financials |
The accompanying Notes to Condensed Consolidated Financial
Statements are an integral part of these financial statements.
3
SYMANTEC
CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
January 2,
|
|
|
December 28,
|
|
|
|
2009
|
|
|
2007
|
|
|
2009
|
|
|
2007
|
|
|
|
(Unaudited)
|
|
|
|
(In thousands, except per share data)
|
|
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Content, subscriptions, and maintenance
|
|
$
|
1,196,938
|
|
|
$
|
1,167,443
|
|
|
$
|
3,668,645
|
|
|
$
|
3,371,126
|
|
Licenses
|
|
|
317,016
|
|
|
|
347,808
|
|
|
|
1,013,641
|
|
|
|
963,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net revenues
|
|
|
1,513,954
|
|
|
|
1,515,251
|
|
|
|
4,682,286
|
|
|
|
4,334,678
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Content, subscriptions, and maintenance
|
|
|
200,338
|
|
|
|
204,355
|
|
|
|
630,982
|
|
|
|
619,593
|
|
Licenses
|
|
|
8,289
|
|
|
|
10,304
|
|
|
|
27,134
|
|
|
|
31,434
|
|
Amortization of acquired product rights
|
|
|
90,209
|
|
|
|
84,502
|
|
|
|
261,772
|
|
|
|
262,924
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenues
|
|
|
298,836
|
|
|
|
299,161
|
|
|
|
919,888
|
|
|
|
913,951
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
1,215,118
|
|
|
|
1,216,090
|
|
|
|
3,762,398
|
|
|
|
3,420,727
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
580,708
|
|
|
|
627,980
|
|
|
|
1,840,510
|
|
|
|
1,791,672
|
|
Research and development
|
|
|
204,701
|
|
|
|
225,293
|
|
|
|
655,185
|
|
|
|
671,928
|
|
General and administrative
|
|
|
83,508
|
|
|
|
82,600
|
|
|
|
261,112
|
|
|
|
254,850
|
|
Amortization of other purchased intangible assets
|
|
|
60,647
|
|
|
|
54,996
|
|
|
|
171,677
|
|
|
|
168,847
|
|
Restructuring
|
|
|
45,805
|
|
|
|
23,305
|
|
|
|
72,600
|
|
|
|
51,883
|
|
Impairment of goodwill
|
|
|
7,005,702
|
|
|
|
|
|
|
|
7,005,702
|
|
|
|
|
|
Impairment of assets held for sale
|
|
|
16,849
|
|
|
|
6,142
|
|
|
|
43,053
|
|
|
|
92,688
|
|
Patent settlement
|
|
|
(9,900
|
)
|
|
|
|
|
|
|
(9,900
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
7,988,020
|
|
|
|
1,020,316
|
|
|
|
10,039,939
|
|
|
|
3,031,868
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
|
|
(6,772,902
|
)
|
|
|
195,774
|
|
|
|
(6,277,541
|
)
|
|
|
388,859
|
|
Interest income
|
|
|
4,676
|
|
|
|
19,997
|
|
|
|
34,966
|
|
|
|
59,997
|
|
Interest expense
|
|
|
(6,511
|
)
|
|
|
(7,477
|
)
|
|
|
(22,792
|
)
|
|
|
(20,385
|
)
|
Other income (expense), net
|
|
|
16,571
|
|
|
|
(2,348
|
)
|
|
|
7,728
|
|
|
|
883
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income taxes and loss from joint venture
|
|
|
(6,758,166
|
)
|
|
|
205,946
|
|
|
|
(6,257,639
|
)
|
|
|
429,354
|
|
Provision for income taxes
|
|
|
31,620
|
|
|
|
74,056
|
|
|
|
188,455
|
|
|
|
151,890
|
|
Loss from joint venture
|
|
|
16,471
|
|
|
|
|
|
|
|
33,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(6,806,257
|
)
|
|
$
|
131,890
|
|
|
$
|
(6,479,492
|
)
|
|
$
|
277,464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share basic
|
|
$
|
(8.23
|
)
|
|
$
|
0.15
|
|
|
$
|
(7.76
|
)
|
|
$
|
0.32
|
|
Net (loss) income per share diluted
|
|
$
|
(8.23
|
)
|
|
$
|
0.15
|
|
|
$
|
(7.76
|
)
|
|
$
|
0.31
|
|
Weighted-average shares outstanding basic
|
|
|
826,959
|
|
|
|
859,997
|
|
|
|
834,774
|
|
|
|
875,971
|
|
Weighted-average shares outstanding diluted
|
|
|
826,959
|
|
|
|
876,221
|
|
|
|
834,774
|
|
|
|
893,794
|
|
The accompanying Notes to Condensed Consolidated Financial
Statements are an integral part of these financial statements.
4
SYMANTEC
CORPORATION
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
|
2009
|
|
|
2007
|
|
|
|
(Unaudited)
|
|
|
|
(In thousands)
|
|
|
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(6,479,492
|
)
|
|
$
|
277,464
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
626,402
|
|
|
|
618,404
|
|
Stock-based compensation expense
|
|
|
123,130
|
|
|
|
121,151
|
|
Impairment of assets held for sale
|
|
|
42,719
|
|
|
|
93,888
|
|
Deferred income taxes
|
|
|
(53,267
|
)
|
|
|
(178,647
|
)
|
Income tax benefit from the exercise of stock options
|
|
|
17,088
|
|
|
|
27,730
|
|
Excess income tax benefit from the exercise of stock options
|
|
|
(16,197
|
)
|
|
|
(18,307
|
)
|
Loss from joint venture
|
|
|
33,398
|
|
|
|
|
|
Realized and other than temporary impairment loss on investments
|
|
|
2,410
|
|
|
|
|
|
Impairment of goodwill
|
|
|
7,005,702
|
|
|
|
|
|
Other
|
|
|
14,263
|
|
|
|
3,253
|
|
Net change in assets and liabilities, excluding effects of
acquisitions:
|
|
|
|
|
|
|
|
|
Trade accounts receivable, net
|
|
|
(157,069
|
)
|
|
|
(165,392
|
)
|
Inventories
|
|
|
5,835
|
|
|
|
9,224
|
|
Accounts payable
|
|
|
(20,279
|
)
|
|
|
(13,249
|
)
|
Accrued compensation and benefits
|
|
|
(44,638
|
)
|
|
|
83,794
|
|
Deferred revenue
|
|
|
(49,006
|
)
|
|
|
9,466
|
|
Income taxes payable
|
|
|
(17,569
|
)
|
|
|
215,462
|
|
Other assets
|
|
|
67,752
|
|
|
|
58,856
|
|
Other liabilities
|
|
|
(37,641
|
)
|
|
|
1,186
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
1,063,541
|
|
|
|
1,144,283
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(215,232
|
)
|
|
|
(209,129
|
)
|
Proceeds from sales of property and equipment
|
|
|
39,547
|
|
|
|
|
|
Cash payments for business acquisitions, net of cash and cash
equivalents acquired
|
|
|
(1,045,240
|
)
|
|
|
(1,150,683
|
)
|
Purchases of available-for-sale securities
|
|
|
(222,850
|
)
|
|
|
(825,104
|
)
|
Proceeds from sales of available-for-sale securities
|
|
|
679,345
|
|
|
|
830,903
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(764,430
|
)
|
|
|
(1,354,013
|
)
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Repurchase of common stock
|
|
|
(599,894
|
)
|
|
|
(1,299,976
|
)
|
Net proceeds from sales of common stock under employee stock
benefit plans
|
|
|
189,020
|
|
|
|
164,162
|
|
Proceeds from short-term borrowing
|
|
|
|
|
|
|
200,000
|
|
Repayment of short-term borrowing
|
|
|
(200,000
|
)
|
|
|
|
|
Excess income tax benefit from the exercise of stock options
|
|
|
16,197
|
|
|
|
18,307
|
|
Repayment of other long-term liability
|
|
|
(5,622
|
)
|
|
|
(9,913
|
)
|
Tax payments related to restricted stock issuance
|
|
|
(14,986
|
)
|
|
|
(3,742
|
)
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(615,285
|
)
|
|
|
(931,162
|
)
|
Effect of exchange rate fluctuations on cash and cash equivalents
|
|
|
(125,018
|
)
|
|
|
66,347
|
|
|
|
|
|
|
|
|
|
|
Decrease in cash and cash equivalents
|
|
|
(441,192
|
)
|
|
|
(1,074,545
|
)
|
Beginning cash and cash equivalents
|
|
|
1,890,225
|
|
|
|
2,559,034
|
|
|
|
|
|
|
|
|
|
|
Ending cash and cash equivalents
|
|
$
|
1,449,033
|
|
|
$
|
1,484,489
|
|
|
|
|
|
|
|
|
|
|
The accompanying Notes to Condensed Consolidated Financial
Statements are an integral part of these financial statements.
5
SYMANTEC
CORPORATION
(Unaudited)
|
|
Note 1.
|
Basis of
Presentation
|
The condensed consolidated financial statements of Symantec
Corporation (we, us, and our
refer to Symantec Corporation and all of its subsidiaries) as of
January 2, 2009 and March 28, 2008 and for the three
and nine months ended January 2, 2009 and December 28,
2007 have been prepared in accordance with the instructions for
Form 10-Q
pursuant to the rules and regulations of the Securities and
Exchange Commission (SEC) and, therefore, do not
include all information and notes normally provided in audited
financial statements. In the opinion of management, the
condensed consolidated financial statements contain all
adjustments, consisting only of normal recurring items, except
as otherwise noted, necessary for the fair presentation of our
financial position and results of operations for the interim
periods. The condensed consolidated balance sheet as of
March 28, 2008 has been derived from the audited
consolidated financial statements, however it does not include
all disclosures required by generally accepted accounting
principles. These condensed consolidated financial statements
should be read in conjunction with the Consolidated Financial
Statements and Notes thereto included in our Annual Report on
Form 10-K
for the fiscal year ended March 28, 2008. The results of
operations for the three and nine months ended January 2,
2009 are not necessarily indicative of the results to be
expected for the entire fiscal year. All significant
intercompany accounts and transactions have been eliminated.
We have a 52/53-week fiscal accounting year. Unless otherwise
stated, references to three and nine months ended in this report
relate to fiscal periods ended January 2, 2009 and
December 28, 2007. The three months ended January 2,
2009 and December 28, 2007 both consisted of 13 weeks.
The nine months ended January 2, 2009 consisted of
40 weeks while the nine months ended December 28, 2007
consisted of 39 weeks.
Significant
accounting policies
The following represents an update for the nine months ended
January 2, 2009 to the significant accounting policies
described in our Annual Report on
Form 10-K
for the fiscal year ended March 28, 2008.
Fair
Value of Financial Instruments
Effective July 4, 2008, we adopted Financial Accounting
Standards Board (FASB) Statement of Financial
Accounting Standards No. 157, Fair Value
Measurements, for all of our financial assets and
liabilities are recognized or disclosed at fair value on a
recurring and nonrecurring basis (FASB Staff Position
(FSP)
FAS No. 157-1
eliminates leasing transactions from scope and FSP
FAS No. 157-2
defers the effective date for one year for nonfinancial assets
and liabilities measured at fair value on a nonrecurring basis).
See Note 2 of the Notes to Condensed Consolidated Financial
Statements for further discussion.
Goodwill
and Other Intangible Assets
Our methodology for allocating the purchase price relating to
purchase acquisitions is determined through established
valuation techniques. Goodwill is measured as the excess of the
cost of the acquisition over the sum of the amounts assigned to
tangible and identifiable intangible assets acquired less
liabilities assumed. We review goodwill for impairment on an
annual basis and whenever events or changes in circumstances
indicate the carrying value of goodwill may not be recoverable.
In testing for a potential impairment of goodwill, we estimate
the fair value of our businesses to which goodwill relates and
determine the carrying value (book value) of the assets and
liabilities related to those businesses. The first step in the
goodwill impairment analysis is to determine if the estimated
fair value is less than the carrying value of each reporting
unit or business. If the estimated fair value is in fact, less
than the carrying value for a particular business, then we are
required to perform a second step in the goodwill impairment
analysis to estimate the fair value of all identifiable assets
and liabilities of the business, in a manner similar to a
purchase price allocation for an acquired business to determine
the estimated fair value of goodwill. Only after this process is
completed is the amount of any goodwill impairment determined.
6
SYMANTEC
CORPORATION
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Prior to performing our second step in the goodwill impairment
analysis, we assessed long-lived assets for impairment. Such
long-lived assets included tangible and intangible assets
recorded in accordance with SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived
Assets and SFAS No. 86, Accounting for the
Costs of Computer Software to Be Sold, Leased or Otherwise
Marketed. Our preliminary conclusion is that such long-lived
assets were not impaired as of January 2, 2009.
The process of evaluating the potential impairment of goodwill
requires significant judgment at many points during the
analysis. In determining the carrying value of the reporting
units, we had to apply judgment to allocate the assets and
liabilities, such as accounts receivable and property and
equipment, based on specific identification or relevant driver.
In estimating the fair value of the businesses with recognized
goodwill for the purposes of our annual or periodic analyses, we
make estimates and judgments about the future cash flows of
these businesses. Although our cash flow forecasts are based on
assumptions that are consistent with the plans and estimates we
are using to manage the underlying businesses, there is
significant judgment in determining the cash flows attributable
to these businesses over their estimated remaining useful lives.
Recent
accounting pronouncements
In June 2008, the FASB issued Emerging Issues Task Force
(EITF) Issue
No. 07-5,
Determining Whether an Instrument (or an Embedded Feature) Is
Indexed to an Entitys Own Stock. EITF Issue
No. 07-5
provides guidance on evaluating whether an equity-linked
financial instrument (or embedded feature) is indexed to the
companys own stock, including evaluating the
instruments contingent exercise and settlement provisions.
EITF Issue
No. 07-5
is effective for fiscal years beginning after December 15,
2008. We are currently assessing the impact of EITF Issue
No. 07-5
on our consolidated financial statements.
In May 2008, the FASB issued FSP Accounting Principles Board
(APB)
No. 14-1,
Accounting for Convertible Debt Instruments That May Be
Settled in Cash upon Conversion (Including Partial Cash
Settlement). The FSP will require the issuer of convertible
debt instruments with cash settlement features to separately
account for the liability and equity components of the
instrument. The debt will be recognized at the present value of
its cash flows discounted using the issuers nonconvertible
debt borrowing rate at the time of issuance. The equity
component will be recognized as the difference between the
proceeds from the issuance of the note and the fair value of the
liability. The FSP will also require an accretion as interest
expense of the resultant debt discount over the expected life of
the debt. The transition guidance requires retrospective
application to all periods presented, and does not grandfather
existing instruments. The guidance will be effective for fiscal
years beginning after December 15, 2008, and interim
periods within those years. As such, we will adopt the FSP in
the first quarter of fiscal year 2010. Upon adoption, we expect
the increase in non-cash interest expense recognized on our
consolidated financial statements, and the decrease in deferred
tax assets recognized on our consolidated financial statements,
to be significant.
In December 2007, the FASB issued SFAS No. 141R,
Business Combinations. This standard changes the
accounting for business combinations by requiring that an
acquiring entity measures and recognizes identifiable assets
acquired and liabilities assumed at the acquisition date fair
value with limited exceptions. The changes include the treatment
of acquisition related transaction costs, the valuation of any
noncontrolling interest at the acquisition date fair value, the
recording of acquired contingent liabilities at acquisition date
fair value and the subsequent re-measurement of such liabilities
after acquisition date, the recognition of capitalized
in-process research and development, the accounting for
acquisition-related restructuring cost accruals subsequent to
the acquisition date, and the recognition of changes in the
acquirers income tax valuation allowance.
SFAS No. 141R is effective for fiscal years beginning
after December 15, 2008, with early adoption prohibited. If
the current level of acquisitions activity continues, we expect
the implementation of SFAS No. 141R to have a material
impact on our consolidated financial statements when it becomes
effective. The accounting treatment related to pre-acquisition
uncertain tax positions will change when SFAS No. 141R
becomes effective, which will be in first quarter of our
7
SYMANTEC
CORPORATION
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
fiscal year 2010. At such time, any changes to the recognition
or measurement of uncertain tax positions related to
pre-acquisition periods will be recorded through income tax
expense, where currently the accounting treatment would require
any adjustment to be recognized through the purchase price.
In September 2006, the FASB issued SFAS No. 157,
Fair Value Measurements, which defines fair value,
establishes guidelines for measuring fair value and expands
disclosures regarding fair value measurements.
SFAS No. 157 does not require any new fair value
measurements but rather eliminates inconsistencies in guidance
found in various prior accounting pronouncements and is
effective for fiscal years beginning after November 15,
2007. In February 2008, the FASB issued FSP
No. 157-2,
The Effective Date of FASB Statement No. 157, which
delays the effective date of SFAS No. 157 for all
nonfinancial assets and nonfinancial liabilities, except those
that are recognized or disclosed at fair value in the financial
statements on a recurring basis (at least annually), until
fiscal years beginning after November 15, 2008, and interim
periods within those fiscal years. These nonfinancial items
include assets and liabilities such as reporting units measured
at fair value in a goodwill impairment test and nonfinancial
assets acquired and liabilities assumed in a business
combination. Effective March 29, 2008, we adopted
SFAS No. 157 for financial assets and liabilities
recognized at fair value on a recurring basis. The partial
adoption of SFAS No. 157 for financial assets and
liabilities did not have a material impact on our consolidated
financial position, results of operations or cash flows. In
October 2008, the FASB issued FSP
No. FAS 157-3,
Determining the Fair Value of a Financial Asset When the
Market for That Asset Is Not Active. FSP
No. FAS 157-3
provides examples to illustrate key considerations in
determining the fair value of a financial asset when the market
for that financial asset is not active. FSP
No. FAS 157-3
is effective upon issuance. The adoption of the FSP did not have
a material impact on our consolidated financial statements. See
Note 2 for information and related disclosures regarding
our fair value measurements.
|
|
Note 2.
|
Financial
Instruments
|
We measure financial assets and liabilities at fair value based
upon exit price, representing the amount that would be received
on the sale of an asset or paid to transfer a liability, as the
case may be, in an orderly transaction between market
participants. As such, fair value may be based on assumptions
that market participants would use in pricing an asset or
liability. SFAS No. 157 (as impacted by FSP Nos.
157-1,
157-2 and
157-3)
establishes a consistent framework for measuring fair value on
either a recurring or nonrecurring basis whereby inputs, used in
valuation techniques, are assigned a hierarchical level. The
following are the hierarchical levels of inputs to measure fair
value:
|
|
|
|
|
Level 1: Observable inputs that reflect
quoted prices (unadjusted) for identical assets or liabilities
in active markets.
|
|
|
|
Level 2: Inputs reflect quoted prices for
identical assets or liabilities in markets that are not active;
quoted prices for similar assets or liabilities in active
markets; inputs other than quoted prices that are observable for
the assets or liabilities; or inputs that are derived
principally from or corroborated by observable market data by
correlation or other means.
|
|
|
|
Level 3: Unobservable inputs reflecting
our own assumptions incorporated in valuation techniques used to
determine fair value. These assumptions are required to be
consistent with market participant assumptions that are
reasonably available.
|
8
SYMANTEC
CORPORATION
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table summarizes our financial assets and
liabilities measured at fair value on a recurring basis, by
level within the fair value hierarchy:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of January 2, 2009
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds
|
|
$
|
263,904
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
263,904
|
|
Bank securities and deposits
|
|
|
|
|
|
|
35,980
|
|
|
|
|
|
|
|
35,980
|
|
Short-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government notes
|
|
|
|
|
|
|
49,968
|
|
|
|
|
|
|
|
49,968
|
|
Asset-backed securities
|
|
|
|
|
|
|
17,176
|
|
|
|
|
|
|
|
17,176
|
|
Corporate notes
|
|
|
|
|
|
|
9,007
|
|
|
|
|
|
|
|
9,007
|
|
Equity investments(1)
|
|
|
3,737
|
|
|
|
|
|
|
|
|
|
|
|
3,737
|
|
Deferred compensation plan assets(2)
|
|
|
|
|
|
|
10,534
|
|
|
|
|
|
|
|
10,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
267,641
|
|
|
$
|
122,665
|
|
|
$
|
|
|
|
$
|
390,306
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Equity investments relate to our investments in the securities
of other public companies. Such investments are included in
Short-term investments. |
|
(2) |
|
Deferred compensation plan assets are fund-of-funds and consist
primarily of corporate equity securities. Such assets are
included in Other current assets. |
Certain financial assets and liabilities are not included in the
table above because they are measured at fair value on a
nonrecurring basis. These assets and liabilities include our
non-public equity investments, convertible senior notes and bond
hedge (including the derivative call option).
The effective date of FSP
FAS No. 157-2
for measuring fair value of nonfinancial assets and liabilities
which are recognized or disclosed at fair value on a
nonrecurring basis is the fiscal year starting April 4,
2009 and interim periods within that fiscal year. This deferral
applies to us for such items as nonfinancial assets and
liabilities initially measured at fair value in a business
combination but not measured at fair value in subsequent
periods, nonfinancial long-lived and intangible asset groups
measured at fair value for an impairment assessment, reporting
units measured at fair value as part of a goodwill impairment
test, and nonfinancial restructuring liabilities.
9
SYMANTEC
CORPORATION
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
Note 3.
|
Balance
Sheet Information
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
January 2,
|
|
|
March 28,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Property and equipment, net:
|
|
|
|
|
|
|
|
|
Computer hardware and software
|
|
$
|
1,020,874
|
|
|
$
|
925,156
|
|
Office furniture and equipment
|
|
|
207,651
|
|
|
|
292,306
|
|
Buildings
|
|
|
492,199
|
|
|
|
492,857
|
|
Leasehold improvements
|
|
|
248,403
|
|
|
|
276,116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,969,127
|
|
|
|
1,986,435
|
|
Less: accumulated depreciation and amortization
|
|
|
(1,073,661
|
)
|
|
|
(1,079,468
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
895,466
|
|
|
|
906,967
|
|
Land
|
|
|
76,774
|
|
|
|
94,783
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
$
|
972,240
|
|
|
$
|
1,001,750
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 4.
|
Comprehensive
Income (Loss)
|
The components of comprehensive (loss) income are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
January 2,
|
|
|
December 28,
|
|
|
|
2009
|
|
|
2007
|
|
|
2009
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Net (loss) income
|
|
$
|
(6,806,257
|
)
|
|
$
|
131,890
|
|
|
$
|
(6,479,492
|
)
|
|
$
|
277,464
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification adjustment
|
|
|
|
|
|
|
|
|
|
|
(4,824
|
)
|
|
|
|
|
Change in cumulative translation adjustment, net of tax
|
|
|
(27,732
|
)
|
|
|
100
|
|
|
|
607
|
|
|
|
12,401
|
|
Change in unrealized gain (loss) on available-for-sale
securities, net of tax
|
|
|
(825
|
)
|
|
|
3,574
|
|
|
|
(1,552
|
)
|
|
|
4,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other comprehensive (loss) income
|
|
|
(28,557
|
)
|
|
|
3,674
|
|
|
|
(5,769
|
)
|
|
|
16,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss) income
|
|
$
|
(6,834,814
|
)
|
|
$
|
135,564
|
|
|
$
|
(6,485,261
|
)
|
|
$
|
294,019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The reclassification adjustment relates to the realization of a
foreign exchange translation resulting from the legal
liquidation of foreign entities.
Accumulated other comprehensive income as of January 2,
2009 and March 28, 2008 primarily consisted of foreign
currency translation adjustments.
MessageLabs
Purchase
On November 14, 2008, we completed the acquisition of
MessageLabs Group Limited (MessageLabs), a nonpublic
United Kingdom-based provider of managed services to protect,
control, encrypt, and archive electronic communications. The
acquisition complements our software-as-a-service
(SaaS) business. In exchange for all
10
SYMANTEC
CORPORATION
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
voting equity interests, we paid $630 million in cash
excluding cash acquired, which included acquisition-related
costs of $8 million. No equity interests were issued. Of
the aggregate purchase price, $20 million was allocated to
tangible assets; $30 million to tax liabilities;
$170 million to intangibles consisting of
$131 million in other intangible assets for customer
relationships and tradenames and $39 million in acquired
product rights for developed technology; and the remaining
$470 million resulted in goodwill. The amount allocated to
acquired product rights is being amortized over a
weighted-average period of 4 years. The amount allocated to
other intangible assets is being amortized over a
weighted-average period of 8 years. Goodwill, none of which
is deductible for tax purposes, resulted primarily from our
expectation of synergies from the integration of MessageLabs
product offerings with our product offerings. The results of
operations for MessageLabs, since the date of acquisition, were
included as part of the Services segment. Supplemental proforma
information for MessageLabs is not material to our financial
results and therefore not included. In addition, the purchase
price is subject to an adjustment of up to an additional
$13 million in cash due to estimates in the initial
purchase price that have yet to be finalized.
PC
Tools Purchase
On October 6, 2008, we completed the acquisition of PC
Tools Pty Ltd. (PC Tools), a nonpublic
Australia-based provider of security and systems software. The
acquisition complements our consumer security software business.
In exchange for all voting equity interests, we paid
$262 million in cash excluding cash acquired, which
included acquisition-related costs. No equity interests were
issued. Of the aggregate purchase price, $11 million was
allocated to tangible assets, $23 million to tax
liabilities, $101 million to intangibles
consisting of $66 million in other intangible assets for
customer relationships and tradenames and $35 million in
acquired product rights for developed technology; and the
remaining $173 million resulted in goodwill. The amount
allocated to acquired product rights is being amortized over a
weighted-average period of 5 years. The amount of
$35 million allocated to other intangible assets is being
amortized over a weighted-average period of 6 years while
the remaining amount of $31 million has an indefinite life.
Goodwill, most of which is deductible for tax purposes, resulted
primarily from our expectation of synergies from the integration
of PC Tools product offerings with our product offerings.
The results of operations for PC Tools, since the date of
acquisition, were included as part of the Consumer Products
segment. Supplemental proforma information for PC Tools is not
material to our financial results and therefore not included. In
addition, the purchase price is subject to a contingent
consideration adjustment of up to an additional $30 million
in cash if PC Tools achieves certain billings and expense
targets for the six month period ending on April 3, 2009.
nSuite
Purchase
On August 8, 2008, we completed the acquisition of nSuite
Technologies, Inc. (nSuite), a nonpublic
Massachusetts-based provider of connection broker technology.
The acquisition complements our endpoint virtualization
portfolio and strategy. The connection broker technology of
nSuite is utilized in an endpoint virtualization platform to
validate users, perform basic security functions, connect users
with the correct applications and manage the transfer of virtual
resources within the data center. In exchange for all voting
equity interests, we paid $20 million in cash, which
included acquisition-related costs. No equity interests were
issued. Of the aggregate purchase price, $5 million was
allocated to acquired product rights for developed technology,
and the remaining $15 million resulted in goodwill. The
amount allocated to acquired product rights is being amortized
over a weighted-average period of 6 years. Goodwill, all of
which is deductible for tax purposes, resulted primarily from
our expectation of synergies from the integration of
nSuites product offerings with our product offerings. The
results of operations for nSuite, since the date of acquisition,
were included as part of the Security and Compliance segment.
Supplemental proforma information for nSuite is not material to
our financial results and therefore not included.
11
SYMANTEC
CORPORATION
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
SwapDrive
Purchase
On June 6, 2008, we completed the acquisition of SwapDrive,
Inc. (SwapDrive), a nonpublic Washington D.C.-based
provider of online storage products. SwapDrive was acquired to
strengthen and expand the Norton consumer portfolio by
leveraging online backup and storage platform technologies. In
exchange for all voting equity interests, we paid
$124 million in cash, which included acquisition-related
costs. No equity interests were issued. Of the aggregate
purchase price, $6 million was allocated to tangible
assets; $40 million was allocated to
intangibles consisting of $8 million in other
intangible assets for customer relationships and
$32 million in acquired product rights for developed
technology; and the remaining $78 million resulted in
goodwill. The amount allocated to acquired product rights is
being amortized over a weighted-average period of 5 years.
The amount allocated to other intangible assets is being
amortized over a weighted-average period of 8 years.
Goodwill, none of which is deductible for tax purposes, resulted
primarily from our expectation of synergies from the integration
of SwapDrives product offerings with our product
offerings. The results of operations for SwapDrive, since the
date of acquisition, were included as part of the Consumer
Products segment. Supplemental proforma information for
SwapDrive is not material to our financial results and therefore
not included.
AppStream
Purchase
On April 18, 2008, we completed the acquisition of
AppStream, Inc. (AppStream), a nonpublic Palo Alto,
California-based provider of endpoint virtualization software.
AppStream was acquired to complement our endpoint management and
virtualization portfolio and strategy. AppStreams
application streaming technology provides an on-demand delivery
mechanism that leverages application virtualization to enable
greater flexibility and control. In exchange for all voting
equity interests, we paid $53 million in cash, which
included acquisition-related costs. No equity interests were
issued. Of the aggregate purchase price, $15 million was
allocated to tangible assets, $11 million to acquired
product rights for developed technology, and the remaining
$27 million resulted in goodwill. The amount allocated to
acquired product rights is being amortized over a
weighted-average period of 5 years. Goodwill, none of which
is deductible for tax purposes, resulted primarily from our
expectation of synergies from the integration of
AppStreams product offerings with our product offerings.
The results of operations for AppStream, since the date of
acquisition, were included as part of the Security and
Compliance segment. Supplemental proforma information for
AppStream is not material to our financial results and therefore
not included.
|
|
Note 6.
|
Investment
in Joint Venture
|
On February 5, 2008, Symantec formed Huawei-Symantec, Inc.
(joint venture) with a subsidiary of Huawei
Technologies Co., Ltd. (Huawei). The joint venture
is domiciled in Hong Kong with principal operations in Chengdu,
China. We contributed cash of $150 million, licenses
related to certain intellectual property and other intangible
assets in exchange for 49% of the outstanding common shares of
the joint venture. The joint venture will develop, manufacture,
market and support security and storage appliances to global
telecommunications carriers and enterprise customers. Huawei
contributed its telecommunications storage and security business
assets, engineering, sales and marketing resources, personnel,
and licenses related to intellectual property in exchange for a
51% ownership interest in the joint venture.
The contribution of assets to the joint venture was accounted
for at its carrying value. The historical carrying value of the
assets contributed by Symantec comprised a significant portion
of the net assets of the joint venture. As a result, our
carrying value of the investment in the joint venture exceeded
our proportionate share in the underlying net assets of the
joint venture by approximately $75 million upon formation
of the joint venture. As the contributions for both Symantec and
Huawei were recorded at historical carrying value by the joint
venture, this basis difference is attributable to the
contributed identified intangible assets. The basis difference
is being amortized over a weighted-average period of
9 years, the estimated useful lives of the underlying
identified intangible assets to which the basis difference is
attributed.
12
SYMANTEC
CORPORATION
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
We account for our investment in the joint venture under the
equity method of accounting. Under this method, we record our
proportionate share of the joint ventures net income or
loss based on the quarterly financial statements of the joint
venture. We record our proportionate share of net income or loss
one quarter in arrears. In determining our share of the joint
ventures net income or loss, we adjust the joint
ventures reported results to recognize the amortization
expense associated with the basis difference. For the nine
months ended January 2, 2009, we recorded a loss of
approximately $33 million related to our share of the joint
ventures net loss, including the amortization of the basis
difference described above, for the joint ventures period
ended September 30, 2008. This loss is included in the
accompanying Condensed Consolidated Statements of Operations
under the caption Loss from joint venture. The
carrying value of our investment in the joint venture as of
January 2, 2009 was approximately $117 million.
Summarized unaudited statement of operations information for the
joint venture and the calculation of our share of the joint
ventures loss are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Period from
|
|
|
|
Three Months Ended
|
|
|
February 5, 2008 to
|
|
|
|
September 30, 2008
|
|
|
September 30, 2008
|
|
|
|
(In thousands)
|
|
|
Net revenues
|
|
$
|
5,927
|
|
|
$
|
6,396
|
|
Gross margin
|
|
|
1,512
|
|
|
|
1,126
|
|
Net loss, as reported by the joint venture
|
|
$
|
(29,114
|
)
|
|
$
|
(56,712
|
)
|
Symantecs ownership interest
|
|
|
49
|
%
|
|
|
49
|
%
|
|
|
|
|
|
|
|
|
|
Symantecs proportionate share of net loss
|
|
|
(14,266
|
)
|
|
|
(27,789
|
)
|
Adjustment for amortization of basis difference
|
|
|
(2,205
|
)
|
|
|
(5,609
|
)
|
|
|
|
|
|
|
|
|
|
Loss from joint venture
|
|
$
|
(16,471
|
)
|
|
$
|
(33,398
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Note 7.
|
Goodwill,
Acquired Product Rights, and Other Intangible Assets
|
Goodwill
We account for goodwill and other intangible assets in
accordance with SFAS No. 142. In accordance with
SFAS No. 142, we allocate goodwill to our reporting
units, which are the same as our operating segments, except for
the Services operating segment, which includes the reporting
units SaaS and Other Services. Goodwill is allocated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
|
|
|
Security and
|
|
|
Storage and Server
|
|
|
|
|
|
Total
|
|
|
|
Products
|
|
|
Compliance
|
|
|
Management
|
|
|
Services
|
|
|
Company
|
|
|
|
(In thousands)
|
|
|
Balance as of March 28, 2008
|
|
$
|
102,810
|
|
|
$
|
4,080,717
|
|
|
$
|
6,665,734
|
|
|
$
|
358,096
|
|
|
$
|
11,207,357
|
|
Operating segment
reclassification(1)
|
|
|
|
|
|
|
(84,376
|
)
|
|
|
|
|
|
|
84,376
|
|
|
|
|
|
Goodwill acquired through business
combinations(2)
|
|
|
251,281
|
|
|
|
43,078
|
|
|
|
|
|
|
|
470,280
|
|
|
|
764,639
|
|
Goodwill
adjustments(3)
|
|
|
4,420
|
|
|
|
(3,336
|
)
|
|
|
(6,347
|
)
|
|
|
(5,353
|
)
|
|
|
(10,616
|
)
|
Goodwill impairment
|
|
|
|
|
|
|
(2,533,448
|
)
|
|
|
(3,942,900
|
)
|
|
|
(529,354
|
)(4)
|
|
|
(7,005,702
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of January 2, 2009
|
|
$
|
358,511
|
|
|
$
|
1,502,635
|
|
|
$
|
2,716,487
|
|
|
$
|
378,045
|
|
|
$
|
4,955,678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
In the first quarter of fiscal year 2009, we moved Altiris
services from the Security and Compliance segment to the
Services segment. As a result of this reclassification, the
above adjustment was made in accordance with
SFAS No. 142. |
13
SYMANTEC
CORPORATION
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
(2) |
|
See Note 5 for acquisitions. |
|
(3) |
|
Reflects adjustments made to goodwill of prior acquisitions as a
result of tax adjustments, primarily related to stock-based
compensation. |
|
(4) |
|
Includes impairment of $442 million in Other Services
reporting unit and $87 million in SaaS reporting unit. |
In accordance with SFAS No. 142, we apply a fair value
based impairment test to the net book value of goodwill and
indefinite-lived intangible assets on an annual basis and, if
certain events or circumstances indicate that an impairment loss
may have been incurred, on an interim basis. The analysis of
potential impairment of goodwill requires a two-step process.
The first step is the estimation of fair value. If step one
indicates that impairment potentially exists, the second step is
performed to measure the amount of impairment, if any. Goodwill
impairment exists when the estimated fair value of goodwill is
less than its carrying value.
During our quarter ended January 2, 2009, based on a
combination of factors, including the current economic
environment and a decline in our market capitalization, we
concluded that there were sufficient indicators to require us to
perform an interim goodwill impairment analysis. For the
purposes of this analysis, our estimates of fair value are based
on a combination of the income approach, which estimates the
fair value of our reporting units based on the future discounted
cash flows, and the market approach, which estimates the fair
value of our reporting units based on comparable market prices.
As of the date of this filing, we have not completed this
analysis due to the complexities involved in determining the
implied fair value of the goodwill of each reporting unit.
However, based on the work performed to date, we have concluded
that an impairment loss is probable and can be reasonably
estimated. Accordingly, we have recorded a non-cash goodwill
impairment charge of approximately $7 billion, representing
our best estimate of the impairment loss, during the third
quarter of fiscal 2009.
We expect to finalize our goodwill impairment analysis during
the fourth quarter of fiscal 2009. There could be material
adjustments to the goodwill impairment charge when the goodwill
impairment test is completed. Any adjustments to our preliminary
estimates as a result of completing this evaluation will be
recorded in our financial statements for the fiscal year ended
April 3, 2009.
Acquired
product rights, net
Acquired product rights subject to amortization are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of January 2, 2009
|
|
|
|
Gross
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
Net Carrying
|
|
|
Weighted-Average
|
|
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
|
Remaining Life
|
|
|
|
(In thousands)
|
|
|
Developed technology
|
|
$
|
1,780,207
|
|
|
$
|
(1,301,750
|
)
|
|
$
|
478,457
|
|
|
|
1 year
|
|
Patents
|
|
|
75,595
|
|
|
|
(43,578
|
)
|
|
|
32,017
|
|
|
|
3 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,855,802
|
|
|
$
|
(1,345,328
|
)
|
|
$
|
510,474
|
|
|
|
1 year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 28, 2008
|
|
|
|
Gross
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
Net Carrying
|
|
|
Weighted-Average
|
|
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
|
Remaining Life
|
|
|
|
(In thousands)
|
|
|
Developed technology
|
|
$
|
1,655,895
|
|
|
$
|
(1,045,383
|
)
|
|
$
|
610,512
|
|
|
|
2 years
|
|
Patents
|
|
|
71,313
|
|
|
|
(32,875
|
)
|
|
|
38,438
|
|
|
|
3 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,727,208
|
|
|
$
|
(1,078,258
|
)
|
|
$
|
648,950
|
|
|
|
2 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the three months ended January 2, 2009 and
December 28, 2007, amortization expense for acquired
product rights was $90 million and $85 million,
respectively. During the nine months ended January 2, 2009
and
14
SYMANTEC
CORPORATION
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
December 28, 2007, amortization expense for acquired
product rights was $262 million and $263 million,
respectively. Amortization of acquired product rights is
included in Cost of revenues in the Condensed Consolidated
Statements of Operations.
Amortization expense for acquired product rights, based upon our
existing acquired product rights and their current useful lives
as of January 2, 2009, is estimated to be as follows (in
thousands):
|
|
|
|
|
Remainder of fiscal 2009
|
|
$
|
91,039
|
|
2010
|
|
|
229,795
|
|
2011
|
|
|
98,514
|
|
2012
|
|
|
56,164
|
|
2013
|
|
|
23,437
|
|
Thereafter
|
|
|
11,525
|
|
|
|
|
|
|
Total
|
|
$
|
510,474
|
|
|
|
|
|
|
Other
intangible assets, net
Other intangible assets are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of January 2, 2009
|
|
|
Gross Carrying
|
|
|
Accumulated
|
|
|
Net Carrying
|
|
|
Weighted-Average
|
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
|
Remaining Life
|
|
|
(In thousands)
|
|
Customer base
|
|
$
|
1,834,652
|
|
|
$
|
(686,020
|
)
|
|
$
|
1,148,632
|
|
|
5 years
|
Definite-lived tradenames
|
|
|
125,263
|
|
|
|
(48,513
|
)
|
|
|
76,750
|
|
|
6 years
|
Indefinite-lived tradenames
|
|
|
53,283
|
|
|
|
|
|
|
|
53,283
|
|
|
Indefinite
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,013,198
|
|
|
$
|
(734,533
|
)
|
|
$
|
1,278,665
|
|
|
5 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 28, 2008
|
|
|
Gross Carrying
|
|
|
Accumulated
|
|
|
Net Carrying
|
|
|
Weighted-Average
|
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
|
Remaining Life
|
|
|
(In thousands)
|
|
Customer base
|
|
$
|
1,661,683
|
|
|
$
|
(526,512
|
)
|
|
$
|
1,135,171
|
|
|
5 years
|
Definite-lived tradenames
|
|
|
125,203
|
|
|
|
(38,933
|
)
|
|
|
86,270
|
|
|
7 years
|
Indefinite-lived tradenames
|
|
|
22,083
|
|
|
|
|
|
|
|
22,083
|
|
|
Indefinite
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,808,969
|
|
|
$
|
(565,445
|
)
|
|
$
|
1,243,524
|
|
|
6 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the three months ended January 2, 2009 and
December 28, 2007, amortization expense for other
intangible assets was $61 million and $55 million,
respectively. During the nine months ended January 2, 2009
and December 28, 2007, amortization expense for other
intangible assets was $172 million and $169 million,
respectively. Amortization of other intangible assets is
included in Operating expenses in the Condensed Consolidated
Statements of Operations.
15
SYMANTEC
CORPORATION
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Amortization expense for other intangible assets, based upon our
existing other intangible assets and their current useful lives
as of January 2, 2009, is estimated to be as follows (in
thousands):
|
|
|
|
|
Remainder of fiscal 2009
|
|
$
|
61,428
|
|
2010
|
|
|
244,464
|
|
2011
|
|
|
243,701
|
|
2012
|
|
|
241,609
|
|
2013
|
|
|
239,640
|
|
Thereafter
|
|
|
194,540
|
|
|
|
|
|
|
Total(1)
|
|
$
|
1,225,382
|
|
|
|
|
|
|
|
|
|
(1) |
|
Does not include Indefinite-lived tradenames as they are not
subject to amortization. |
In July 2006, we entered into a five-year $1 billion senior
unsecured revolving credit facility that expires in July 2011.
Borrowings under the facility bear interest, at our option, at
either a rate equal to the banks base rate or a rate equal
to LIBOR plus a margin based on our leverage ratio, as defined
in the credit facility agreement. In connection with the credit
facility, we must maintain certain covenants, including a
specified ratio of debt to earnings (before interest, taxes,
depreciation, amortization and impairments) as well as various
other non-financial covenants.
On November 29, 2007, we borrowed $200 million under
this credit agreement to partially finance our acquisition of
Vontu with an interest rate of 4.7075% per annum due and payable
quarterly. During the first quarter of fiscal 2009, we repaid
the entire Line of Credit principal amount of $200 million
plus accrued interest of $3 million. Total interest expense
associated with this borrowing was approximately
$6 million. As of January 2, 2009, we were in
compliance with all required covenants, and there was no
outstanding balance on the credit facility.
|
|
Note 9.
|
Assets
Held for Sale
|
In accordance with the provisions of SFAS No. 144,
land and buildings held for sale are classified on our Condensed
Consolidated Balance Sheets as Other current assets. We believe
that these sales will be completed no later than the third
quarter of fiscal 2010. The following table summarizes the
changes in assets held for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassed
|
|
|
|
|
As of March 28,
|
|
Added
|
|
Sold
|
|
Properties and
|
|
As of January 2,
|
|
|
2008
|
|
Properties
|
|
Properties
|
|
Adjustments
|
|
2009
|
|
|
(In thousands)
|
|
Assets held for sale
|
|
$
|
39,568
|
|
|
$
|
107,082
|
|
|
$
|
(38,203
|
)
|
|
$
|
(44,165
|
)
|
|
$
|
64,282
|
|
In December 2008, following a review of our real estate
holdings, we decided to retain two buildings we had previously
committed to sell. As a result, on the January 2, 2009
Condensed Consolidated Balance Sheet, these buildings were
reclassified at their fair value to the Property and
equipment, net caption rather than the Other current
assets caption, where they had been classified previously.
SFAS No. 144 provides that a long-lived asset
classified as held for sale should be measured at the lower of
its carrying amount or fair value less cost to sell and thus we
have recorded impairment losses of $17 million and
$43 million during the three and nine months ended
January 2, 2009, respectively.
During the second quarter of fiscal 2009, we sold two of our
properties previously classified as assets held for sale for
cash proceeds of $40 million. The gain and the loss on the
sales were not significant.
16
SYMANTEC
CORPORATION
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
Note 10.
|
Stock
Repurchases
|
For the three months ended January 2, 2009, we repurchased
16.1 million shares of our common stock at prices ranging
from $10.34 to $13.60 per share for an aggregate amount of
$200 million. For the nine months ended January 2,
2009, we repurchased 35.1 million shares of our common
stock at prices ranging from $10.34 to $22.64 per share for an
aggregate amount of $600 million. As of January 2,
2009, an aggregate of $400 million remained authorized for
future repurchases from the June 14, 2007 stock repurchase
plan.
|
|
Note 11.
|
Earnings
Per Share
|
The components of earnings per share are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
January 2,
|
|
|
December 28,
|
|
|
|
2009
|
|
|
2007
|
|
|
2009
|
|
|
2007
|
|
|
|
(In thousands, except per share data)
|
|
|
Net (loss) income per share basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(6,806,257
|
)
|
|
$
|
131,890
|
|
|
$
|
(6,479,492
|
)
|
|
$
|
277,464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share basic
|
|
$
|
(8.23
|
)
|
|
$
|
0.15
|
|
|
$
|
(7.76
|
)
|
|
$
|
0.32
|
|
Weighted average outstanding common shares
|
|
|
826,959
|
|
|
|
859,997
|
|
|
|
834,774
|
|
|
|
875,971
|
|
Net (loss) income per share diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(6,806,257
|
)
|
|
$
|
131,890
|
|
|
$
|
(6,479,492
|
)
|
|
$
|
277,464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share diluted
|
|
$
|
(8.23
|
)
|
|
$
|
0.15
|
|
|
$
|
(7.76
|
)
|
|
$
|
0.31
|
|
Weighted-average outstanding common shares
|
|
|
826,959
|
|
|
|
859,997
|
|
|
|
834,774
|
|
|
|
875,971
|
|
Shares issuable from assumed exercise of options
|
|
|
|
|
|
|
14,687
|
|
|
|
|
|
|
|
16,396
|
|
Dilutive impact of restricted stock and restricted stock units
|
|
|
|
|
|
|
1,537
|
|
|
|
|
|
|
|
1,427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total weighted-average shares outstanding diluted
|
|
|
826,959
|
|
|
|
876,221
|
|
|
|
834,774
|
|
|
|
893,794
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following potential common shares were excluded from the
computation of diluted earnings per share, as their effect would
have been anti-dilutive:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
January 2,
|
|
|
December 28,
|
|
|
|
2009
|
|
|
2007
|
|
|
2009
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Stock options
|
|
|
70,086
|
|
|
|
62,768
|
|
|
|
61,333
|
|
|
|
61,570
|
|
Restricted stock units
|
|
|
9,015
|
|
|
|
17
|
|
|
|
1,796
|
|
|
|
15
|
|
Dilutive impact of assumed conversion of Senior Notes using the
treasury stock method
|
|
|
|
|
|
|
|
|
|
|
201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
79,101
|
|
|
|
62,785
|
|
|
|
63,330
|
|
|
|
61,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three and nine months ended January 2, 2009 and
December 28, 2007, the effect of the warrants issued and
options purchased in connection with the convertible senior
notes were excluded for the reasons discussed in
17
SYMANTEC
CORPORATION
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Note 9 of Notes to Consolidated Financial Statements in our
Annual Report on
Form 10-K
for the fiscal year ended March 28, 2008.
|
|
Note 12.
|
Stock-based
Compensation
|
We currently have in effect certain stock purchase plans, stock
award plans, and equity incentive plans, as described in detail
in Note 15 of Notes to Consolidated Financial Statements in
our Annual Report on
Form 10-K
for the fiscal year ended March 28, 2008. These plans were
amended in several respects during the second quarter of fiscal
2009. At our 2008 Annual Meeting held in September 2008, our
stockholders approved (a) the amendment of our 2004 Equity
Incentive Plan to reserve an additional 50,000,000 shares
of our common stock for issuance thereunder, and (b) the
adoption of our 2008 Employee Stock Purchase Plan including the
reservation of 20,000,000 shares of common stock for
issuance thereunder, with the first purchase period thereunder
to commence on February 16, 2009. The 2008 Employee Stock
Purchase Plan replaces the 1998 Employee Stock Purchase Plan, as
amended, which terminates pursuant to its terms on
January 1, 2009 subject to completion of the final purchase
period under the 1998 Employee Stock Purchase Plan on
February 15, 2009.
Valuation
of stock-based awards
Changes in the Black-Scholes valuation assumptions and our
estimated forfeiture rate may change the estimate of fair value
for stock-based compensation and the related expense recognized.
There have not been any material changes to our stock-based
compensation expense due to changes in our valuation assumptions
of stock-based awards as described in detail in Note 15 of
Notes to Consolidated Financial Statements in our Annual Report
on
Form 10-K
for the fiscal year ended March 28, 2008. The net effect of
the forfeiture rate adjustment based upon actual results was a
decrease to our stock-based compensation expense for the three
and nine months ended January 2, 2009 by approximately
$10 million.
18
SYMANTEC
CORPORATION
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table sets forth the total stock-based
compensation expense recognized in our Condensed Consolidated
Statements of Operations for the three and nine months ended
January 2, 2009 and December 28, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
January 2,
|
|
|
December 28,
|
|
|
|
2009
|
|
|
2007
|
|
|
2009
|
|
|
2007
|
|
|
|
(In thousands, except per share data)
|
|
|
Cost of revenues Content, subscriptions, and
maintenance
|
|
$
|
2,403
|
|
|
$
|
2,987
|
|
|
$
|
8,545
|
|
|
$
|
9,940
|
|
Cost of revenues Licenses
|
|
|
636
|
|
|
|
890
|
|
|
|
2,370
|
|
|
|
2,832
|
|
Sales and marketing
|
|
|
14,731
|
|
|
|
14,013
|
|
|
|
52,263
|
|
|
|
42,433
|
|
Research and development
|
|
|
10,951
|
|
|
|
14,431
|
|
|
|
38,104
|
|
|
|
43,439
|
|
General and administrative
|
|
|
4,914
|
|
|
|
7,097
|
|
|
|
21,848
|
|
|
|
22,507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stock-based compensation expense
|
|
|
33,635
|
|
|
|
39,418
|
|
|
|
123,130
|
|
|
|
121,151
|
|
Tax benefit associated with stock-based compensation expense
|
|
|
8,788
|
|
|
|
10,076
|
|
|
|
34,173
|
|
|
|
29,788
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect of stock-based compensation expense on operations
|
|
$
|
24,847
|
|
|
$
|
29,342
|
|
|
$
|
88,957
|
|
|
$
|
91,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect of stock-based compensation expense on earnings per
share basic
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
$
|
0.11
|
|
|
$
|
0.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect of stock-based compensation expense on earnings per
share diluted
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
$
|
0.11
|
|
|
$
|
0.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of January 2, 2009, total unrecognized compensation
expense adjusted for estimated forfeitures related to unvested
stock options, Restricted Stock Units (RSUs), and
Restricted Stock Agreements (RSAs), was
$94 million, $91 million, and $0.1 million,
respectively, which is expected to be recognized over the
remaining weighted-average vesting periods of 2.3 years for
stock options, 2.2 years for RSUs, and 0.1 years for
RSAs.
The weighted-average fair value per stock option granted during
the nine months ended January 2, 2009 and December 28,
2007, including assumed options, was $5.29 and $6.12,
respectively. The total intrinsic value of options exercised
during the nine months ended January 2, 2009 and
December 28, 2007, including assumed options, was
$101 million and $116 million, respectively.
The weighted-average fair value per RSU granted during the nine
months ended January 2, 2009 and December 28, 2007,
including assumed RSUs, was $19.67 and $19.45 respectively. The
fair value of RSUs granted for the nine months ended
January 2, 2009 and December 28, 2007 was
$186 million and $68 million, respectively. The total
fair value of RSUs that vested during the nine months ended
January 2, 2009 and December 28, 2007, including
assumed RSUs, was $50 million and $14 million,
respectively.
Our restructuring costs consist of severance, benefits,
facilities and other costs. Severance and benefits generally
include severance, stay-put or one-time bonuses, outplacement
services, health insurance coverage, effects of foreign currency
exchange and legal costs. Facilities costs generally
include rent expense less expected sublease income, lease
termination costs, asset abandonment costs and the effects of
foreign currency exchange. Other costs generally include
relocation, consulting services and asset impairments.
Restructuring expenses generally do not impact a particular
reporting segment and are included in the Other
reporting segment.
19
SYMANTEC
CORPORATION
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Restructuring charges were $46 million and $23 million
for the three months ended January 2, 2009 and
December 28, 2007, respectively. Charges for the fiscal
2009 period were primarily for severance and benefits related to
the headcount reduction action in the 2009 Restructuring Plan.
Charges for the fiscal 2008 period were primarily for severance
and benefits related to headcount reduction action in the 2008
Restructuring Plan. Restructuring charges were $73 million
and $52 million for the nine months ended January 2,
2009 and December 28, 2007, respectively. Restructuring
charges for the fiscal 2009 period were primarily for severance
and benefits related to the first action in the 2009
Restructuring Plan and second action in the 2008 Restructuring
Plan. Restructuring charges for the fiscal 2008 period were
primarily for severance and benefits related to the first action
in the 2008 Restructuring Plan and the first action in the 2007
Restructuring Plan.
2009
Restructuring Plan (2009 Plan)
In third quarter of fiscal 2009, management approved and
initiated the following restructuring events to:
|
|
|
|
|
Reduce operating costs through a worldwide headcount
reduction. Charges related to this action are for
severance and benefits. These actions were initiated in the
third quarter of fiscal 2009 and are expected to be
substantially completed in fiscal 2010. Total remaining costs
are not expected to be material.
|
|
|
|
Consolidate facilities. Charges related to
this action will primarily be other charges associated with
moving costs. These actions have not been initiated and costs
are expected to be substantially recognized in fiscal 2010.
|
2008
Restructuring Plan (2008 Plan)
In third quarter of fiscal 2008, management approved and
initiated the following restructuring events to:
|
|
|
|
|
Reduce operating costs through a worldwide headcount
reduction. This action was initiated in the third
quarter of fiscal 2008 and was substantially completed in the
fourth quarter of fiscal 2008. Charges related to this action
are for severance and benefits. Total remaining costs are not
expected to be material.
|
|
|
|
Reduce operating costs, implement management structure
changes, optimize the business structure and discontinue certain
products. Charges related to these actions are
for severance and benefits and asset impairments. These actions
were initiated in the third quarter of fiscal 2008 and are
expected to be completed in fiscal 2010. Total remaining costs
for the 2008 Plan are estimated to range from $10 million
to $20 million.
|
|
|
|
Outsource certain back office functions
worldwide. Charges related to these actions are
for severance and benefits and other consulting costs. These
actions were initiated in the second quarter of fiscal 2009 and
are expected to be completed in fiscal 2011. Total remaining
costs, primarily for severance, benefits and outsourcing
transition and transformation costs, are estimated to range from
$30 million to $50 million.
|
Prior
and Acquisition-Related Restructuring Plans
Prior
Year Restructuring Plans
2007 Restructuring Plan. In fiscal 2007,
management approved and initiated the following restructuring
events to:
|
|
|
|
|
Reduce operating costs through a worldwide headcount
reduction. This action was initiated and
substantially completed in the first quarter of fiscal 2008.
Charges related to this action are for severance and benefits.
Total remaining costs are not expected to be material.
|
|
|
|
Consolidate and exit certain facilities related to earlier
acquisitions. Restructuring liabilities related
to excess facilities are expected to be paid through the second
quarter of fiscal 2010 and are not material as of
January 2, 2009. Total remaining costs are not expected to
be material.
|
20
SYMANTEC
CORPORATION
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
2006 Restructuring Plan. In fiscal 2006,
management approved and initiated a plan to consolidate and exit
certain facilities. Restructuring liabilities related to excess
facilities are expected to be paid through the fourth quarter of
fiscal 2018. Total remaining costs are not expected to be
material.
Acquisition-Related
Restructuring Plans
Restructuring liabilities related to acquisitions as of
January 2, 2009 were $10 million, consisting primarily
of excess facilities obligations related to the Veritas
acquisition and Vontu acquisitions. Acquisition-related
restructuring liabilities are expected to be paid between fiscal
2011 and fiscal 2014. Total remaining costs are not expected to
be material.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring Liability
|
|
|
|
|
|
|
Costs,
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative
|
|
|
|
March 28,
|
|
|
Net of
|
|
|
Cash
|
|
|
Non-Cash
|
|
|
January 2,
|
|
|
Incurred
|
|
|
|
2008
|
|
|
Adjustments(1)
|
|
|
Payments
|
|
|
Settlements
|
|
|
2009
|
|
|
to Date
|
|
|
|
(In thousands)
|
|
|
2009 Restructuring Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
$
|
|
|
|
$
|
37,020
|
|
|
$
|
(19,010
|
)
|
|
$
|
|
|
|
$
|
18,010
|
|
|
$
|
37,020
|
|
2008 Restructuring Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
|
16,337
|
|
|
|
15,260
|
|
|
|
(27,366
|
)
|
|
|
|
|
|
|
4,231
|
|
|
|
56,885
|
|
Asset impairments
|
|
|
|
|
|
|
2,687
|
|
|
|
|
|
|
|
(2,687
|
)
|
|
|
|
|
|
|
2,687
|
|
Other
|
|
|
|
|
|
|
8,833
|
|
|
|
(8,833
|
)
|
|
|
|
|
|
|
|
|
|
|
8,833
|
|
Prior Years & Acquisition Restructuring Plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
|
20
|
|
|
|
1,873
|
|
|
|
(950
|
)
|
|
|
|
|
|
|
943
|
|
|
|
119,581
|
|
Facilities
|
|
|
14,263
|
|
|
|
6,927
|
|
|
|
(8,483
|
)
|
|
|
|
|
|
|
12,707
|
|
|
|
43,080
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
30,620
|
|
|
$
|
72,600
|
|
|
$
|
(64,642
|
)
|
|
$
|
(2,687
|
)
|
|
$
|
35,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current liabilities
|
|
$
|
24,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
30,137
|
|
|
|
|
|
Other long-term liabilities
|
|
|
6,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
30,620
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
35,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Total net adjustments or reversals for the three and nine months
ended January 2, 2009 were not significant. |
The effective tax rate was approximately (0.5)% and 36% for the
three month periods and (3)% and 35% for the nine months ended
January 2, 2009 and December 28, 2007, respectively.
The tax expense for the three and nine months ended
January 2, 2009 includes a $44 million tax benefit
associated with the $7 billion impairment of goodwill,
materially impacting the overall effective tax rate. The
effective tax rates for all periods otherwise reflect the
benefits of lower-taxed foreign earnings, domestic manufacturing
tax incentives, and research and development credits, offset by
state income taxes and non-deductible stock-based compensation.
The provision for the three months ended January 2, 2009
reflects a revised forecast tax rate for the year of 34% prior
to taking into consideration the goodwill impairment, and a
resulting 3% benefit to
true-up
estimated taxes provided in the first two quarters of the year.
The provision for the nine months ended January 2, 2009 is
31% prior to taking into consideration the goodwill impairment,
reflecting non-recurring tax benefits recorded in the June and
September quarters (including a $5 million tax benefit in
the June 2008 quarter related to a favorable Irish settlement; a
$7 million tax benefit in the September 2008 quarter from
interest savings as a result of the IRS agreement on the
treatment of the 2005 dividend from a Veritas international
subsidiary; and a $5 million tax benefit in the September
2008 quarter from favorable prior year items including the
retroactive reinstatement of the U.S. federal research
credit).
21
SYMANTEC
CORPORATION
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The $44 million net tax benefit arising from the impairment
of goodwill consists of a $100 million tax benefit from
elements of tax deductible goodwill, net of a $56 million
tax provision resulting from an increase in our valuation
allowances on certain deferred tax assets that will require an
extended period of time to realize. As a result of the
impairment of goodwill, we have cumulative pre-tax book losses,
as measured by the current and prior two years. We considered
the negative evidence of this cumulative pre-tax book loss
position on our ability to continue to recognize deferred tax
assets that are dependent upon future taxable income for
realization. We considered the following as positive evidence:
the vast majority of the goodwill impairment is not deductible
for tax purposes and thus will not result in tax losses; we have
a strong, consistent taxpaying history; we have substantial
U.S. federal income tax carryback potential; we have
substantial amounts of scheduled future reversals of taxable
temporary differences from our deferred tax liabilities. We have
concluded that this positive evidence outweighs the negative
evidence and, thus, that those deferred tax assets not otherwise
subject to a valuation allowance are realizable on a more
likely than not basis.
We file income tax returns in the U.S. on a federal basis
and in many U.S. state and foreign jurisdictions. Our two
most significant tax jurisdictions are the U.S. and
Ireland. Our tax filings remain subject to examination by
applicable tax authorities for a certain length of time
following the tax year to which those filings relate. Our 2000
through 2007 tax years remain subject to examination by the IRS
for U.S. federal tax purposes, and our 2004 through 2008
tax years remain subject to examination by the appropriate
governmental agencies for Irish tax purposes. Other significant
jurisdictions include California, Japan, and India. As of
January 2, 2009, we continue to be under examination by the
IRS, for the Veritas U.S. federal income taxes for the 2002
through 2005 tax years.
On March 29, 2006, we received a Notice of Deficiency from
the IRS claiming that we owe additional taxes, plus interest and
penalties, for the 2000 and 2001 tax years based on an audit of
Veritas. The incremental tax liability asserted by the IRS was
$867 million, excluding penalties and interest. On
June 26, 2006, we filed a petition with the U.S. Tax
Court protesting the IRS claim for such additional taxes. The
IRS answered our petition on August 30, 2006, at which
point the dispute was docketed for trial. In the March 2007
quarter, we agreed to pay $7 million out of
$35 million originally assessed by the IRS in connection
with several of the lesser issues covered in the assessment. The
IRS also agreed to waive the assessment of penalties. During
July 2008, we completed the trial phase of the Tax Court case,
which dealt with the remaining issue covered in the assessment.
At trial, the IRS changed its position with respect to this
remaining issue, which decreased the remaining amount at issue
from $832 million to $545 million, excluding interest.
We filed our post-trial briefs in October 2008 and rebuttal
briefs in November 2008 with the U.S. Tax Court.
We strongly believe the IRS position with regard to this
matter is inconsistent with applicable tax laws and Treasury
regulations in existence for the years at issue, and that our
previously reported income tax provision for the years in
question is appropriate. If, upon resolution, we are required to
pay an amount in excess of our provision for this matter, based
upon current accounting authority, the incremental amounts due
would be accounted for principally as additions to the cost of
the Veritas purchase price. Any incremental interest accrued
subsequent to the date of the Veritas acquisition would be
recorded as an expense in the period the matter is resolved.
The accounting treatment related to pre-acquisition unrecognized
tax benefits will change when SFAS No. 141R becomes
effective, which will be in the first quarter of our fiscal year
2010. At such time, any changes to the recognition or
measurement of unrecognized tax benefits related to
pre-acquisition periods will be recorded through income tax
expense, where currently the accounting treatment would require
any adjustment to be recognized through the purchase price as an
increase or decrease to goodwill.
In July 2008, we reached an agreement with the IRS concerning
our eligibility to claim a lower tax rate on a distribution made
from a Veritas foreign subsidiary prior to the July 2005
acquisition. The distribution was intended to be made pursuant
to the American Jobs Creation Act of 2004, and therefore
eligible for a 5.25% effective U.S. federal rate of tax, in
lieu of the 35% statutory rate. The final impact of this
agreement is not yet known since this relates to the taxability
of earnings that are otherwise the subject of the tax years
2000-2001
transfer pricing dispute which in turn is being addressed in the
U.S. Tax Court. To the extent that we owe taxes as a result
of the
22
SYMANTEC
CORPORATION
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
transfer pricing dispute, we anticipate that the incremental tax
due from this negotiated agreement will decrease. We currently
estimate that the most probable outcome from this negotiated
agreement will be $13 million or less, for which an accrual
has already been made. As previously disclosed in
Form 10-K
for the fiscal year ended March 28, 2008, we made a payment
of $130 million to the IRS for this matter in May 2006. We
have applied $110 million of this payment as a deposit on
the outstanding transfer pricing matter for the tax years
2000-2001.
We continue to monitor the progress of ongoing income tax
controversies and the impact, if any, of the expected tolling of
the statute of limitations in various taxing jurisdictions.
Considering these facts, we do not currently believe there is a
reasonable possibility of any significant change to our total
unrecognized tax benefits within the next twelve months.
See Note 14 for a discussion of our tax litigation with the
IRS relating to the 2000 and 2001 tax year of Veritas.
On July 7, 2004, a purported class action complaint
entitled Paul Kuck, et al. v. Veritas Software Corporation,
et al. was filed in the United States District Court for the
District of Delaware. The lawsuit alleges violations of federal
securities laws in connection with Veritas announcement on
July 6, 2004 that it expected results of operations for the
fiscal quarter ended June 30, 2004 to fall below earlier
estimates. The complaint generally seeks an unspecified amount
of damages. Subsequently, additional purported class action
complaints have been filed in Delaware federal court, and, on
March 3, 2005, the Court entered an order consolidating
these actions and appointing lead plaintiffs and counsel. A
consolidated amended complaint (CAC), was filed on
May 27, 2005, expanding the class period from
April 23, 2004 through July 6, 2004. The CAC also
named another officer as a defendant and added allegations that
Veritas and the named officers made false or misleading
statements in press releases and SEC filings regarding the
companys financial results, which allegedly contained
revenue recognized from contracts that were unsigned or lacked
essential terms. The defendants to this matter filed a motion to
dismiss the CAC in July 2005; the motion was denied in May 2006.
In April 2008, the parties filed a stipulation of settlement,
which if approved by the Court will resolve the matter. On
July 31, 2008, the Court held a final approval hearing and,
on August 5, 2008, the Court entered an order approving the
settlement. An objector to the fees portion of the settlement
has lodged an appeal. As of March 28, 2008, we have
recorded an accrual in the amount of $21.5 million for this
matter and, pursuant to the terms of the settlement, we
established a settlement fund of $21.5 million on
May 1, 2008.
After Veritas announced in January 2003 that it would restate
its financial results as a result of transactions entered into
with AOL Time Warner in September 2000, numerous separate
complaints purporting to be class actions were filed in the
United States District Court for the Northern District of
California alleging that Veritas and some of its officers and
directors violated provisions of the Securities Exchange Act of
1934, as amended (the Exchange Act). The complaints
contain varying allegations, including that Veritas made
materially false and misleading statements with respect to its
2000, 2001 and 2002 financial results included in its filings
with the SEC, press releases and other public disclosures. A
consolidated complaint entitled In Re VERITAS Software
Corporation Securities Litigation was filed by the lead
plaintiff on July 18, 2003. On February 18, 2005, the
parties filed a Stipulation of Settlement in the class action.
On March 18, 2005, the Court entered an order preliminarily
approving the class action settlement. Pursuant to the terms of
the settlement, a $35 million settlement fund was
established on March 25, 2005. Veritas insurance
carriers provided for the entire amount of the settlement fund.
In July 2007, the Court of Appeals vacated the settlement,
finding that the notice of settlement was inadequate. The matter
was returned to the District Court for further proceedings,
including reissuance of the notice, and the District Court again
approved the settlement and dismissed the matter.
We are also involved in a number of other judicial and
administrative proceedings that are incidental to our business.
Although adverse decisions (or settlements) may occur in one or
more of the cases, it is not possible to estimate the possible
loss or losses from each of these cases. The final resolution of
these lawsuits, individually or in the aggregate, is not
expected to have a material adverse effect on our financial
condition or results of operations.
23
SYMANTEC
CORPORATION
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
During the third quarter of fiscal 2009, we settled a patent
lawsuit in which the result was a gain of approximately
$10 million reflected in the Condensed Consolidated
Statement of Operations under the caption Patent
settlement.
|
|
Note 16.
|
Segment
Information
|
During the first quarter of fiscal 2009, we changed our
reporting segments to better align our operating structure.
Altiris services that were formerly included in the Security and
Compliance segment were moved to the Services segment. This move
is a result of operational changes in our Services segment and
the continued integration of our Altiris business. We revised
the segment information for the prior year to conform to the new
presentation. As of January 2, 2009, our five operating
segments are:
|
|
|
|
|
Consumer Products. Our Consumer Products
segment focuses on delivering our Internet security,
PC tuneup, and backup products to individual users and home
offices.
|
|
|
|
Security and Compliance. Our Security and
Compliance segment focuses on providing large, medium, and
small-sized businesses with solutions for endpoint security and
management, compliance, archiving, messaging management, and
data loss prevention solutions that allow our customers to
secure, provision, and remotely access their laptops, PCs,
mobile devices, and servers.
|
|
|
|
Storage and Server Management. Our Storage and
Server Management segment focuses on providing enterprise and
large enterprise customers with storage and server management,
backup, and data protection solutions across heterogeneous
storage and server platforms.
|
|
|
|
Services. Our Services segment provides
customers with leading IT risk management services and solutions
to manage security, availability, performance and compliance
risks across multi-vendor environments. Our services include
consulting, business critical, education, SaaS and managed
security services.
|
|
|
|
Other. Our Other segment is comprised of
sunset products and products nearing the end of their life
cycle. It also includes general and administrative expenses;
amortization of acquired product rights, other intangible
assets, and other assets; goodwill impairment charges; charges
such as stock-based compensation and restructuring; and certain
indirect costs that are not charged to the other operating
segments.
|
Our reportable segments are the same as our operating segments.
The accounting policies of the segments are described in our
Annual Report on
Form 10-K
for the fiscal year ended March 28, 2008. There are no
intersegment sales. Our chief operating decision maker evaluates
performance based on direct profit or loss from operations
before income taxes not including nonrecurring gains and losses,
foreign exchange gains and losses, and miscellaneous other
income and expenses. Except for goodwill, as disclosed in
Note 7, the majority of our assets are not discretely
identified by segment. The depreciation and amortization of our
property, equipment, and leasehold improvements are allocated
based on headcount, unless specifically identified by segment.
24
SYMANTEC
CORPORATION
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Segment
information
The following table presents a summary of our operating segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Storage and
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
|
|
|
Security and
|
|
|
Server
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
Products
|
|
|
Compliance
|
|
|
Management
|
|
|
Services
|
|
|
Other
|
|
|
Company
|
|
|
|
(In thousands)
|
|
|
Three months ended January 2, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
432,290
|
|
|
$
|
394,612
|
|
|
$
|
568,484
|
|
|
$
|
118,199
|
|
|
$
|
369
|
|
|
$
|
1,513,954
|
|
Percentage of total net revenues
|
|
|
29
|
%
|
|
|
26
|
%
|
|
|
37
|
%
|
|
|
8
|
%
|
|
|
0
|
%
|
|
|
100
|
%
|
Operating income (loss)
|
|
|
224,350
|
|
|
|
106,738
|
|
|
|
300,395
|
|
|
|
4,126
|
|
|
|
(7,408,511
|
)
|
|
|
(6,772,902
|
)
|
Operating margin of segment
|
|
|
52
|
%
|
|
|
27
|
%
|
|
|
53
|
%
|
|
|
3
|
%
|
|
|
*
|
|
|
|
|
|
Depreciation and amortization expense
|
|
|
4,120
|
|
|
|
5,751
|
|
|
|
11,764
|
|
|
|
3,914
|
|
|
|
189,286
|
|
|
|
214,835
|
|
Three months ended December 28, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
440,206
|
|
|
$
|
410,250
|
|
|
$
|
561,694
|
|
|
$
|
102,606
|
|
|
$
|
495
|
|
|
$
|
1,515,251
|
|
Percentage of total net revenues
|
|
|
29
|
%
|
|
|
27
|
%
|
|
|
37
|
%
|
|
|
7
|
%
|
|
|
0
|
%
|
|
|
100
|
%
|
Operating income (loss)
|
|
|
224,974
|
|
|
|
82,576
|
|
|
|
253,834
|
|
|
|
(3,219
|
)
|
|
|
(362,391
|
)
|
|
|
195,774
|
|
Operating margin of segment
|
|
|
51
|
%
|
|
|
20
|
%
|
|
|
45
|
%
|
|
|
(3
|
)%
|
|
|
*
|
|
|
|
|
|
Depreciation and amortization expense
|
|
|
1,763
|
|
|
|
6,389
|
|
|
|
14,891
|
|
|
|
2,363
|
|
|
|
175,505
|
|
|
|
200,911
|
|
Three months ended period over period comparison:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
$
|
(624
|
)
|
|
$
|
24,162
|
|
|
$
|
46,561
|
|
|
$
|
7,345
|
|
|
$
|
(7,046,120
|
)
|
|
$
|
(6,968,676
|
)
|
Operating income percentage year over year change
|
|
|
0
|
%
|
|
|
29
|
%
|
|
|
18
|
%
|
|
|
*
|
|
|
|
*
|
|
|
|
|
|
Nine months ended January 2, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
1,342,275
|
|
|
$
|
1,241,251
|
|
|
$
|
1,755,949
|
|
|
$
|
341,536
|
|
|
$
|
1,275
|
|
|
$
|
4,682,286
|
|
Percentage of total net revenues
|
|
|
29
|
%
|
|
|
27
|
%
|
|
|
37
|
%
|
|
|
7
|
%
|
|
|
0
|
%
|
|
|
100
|
%
|
Operating income (loss)
|
|
|
735,158
|
|
|
|
250,325
|
|
|
|
914,451
|
|
|
|
1,347
|
|
|
|
(8,178,822
|
)
|
|
|
(6,277,541
|
)
|
Operating margin of segment
|
|
|
55
|
%
|
|
|
20
|
%
|
|
|
52
|
%
|
|
|
0
|
%
|
|
|
*
|
|
|
|
|
|
Depreciation and amortization expense
|
|
|
10,128
|
|
|
|
18,753
|
|
|
|
37,972
|
|
|
|
9,648
|
|
|
|
549,901
|
|
|
|
626,402
|
|
Nine months ended December 28, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
1,297,464
|
|
|
$
|
1,186,441
|
|
|
$
|
1,575,231
|
|
|
$
|
274,478
|
|
|
$
|
1,064
|
|
|
$
|
4,334,678
|
|
Percentage of total net revenues
|
|
|
30
|
%
|
|
|
28
|
%
|
|
|
36
|
%
|
|
|
6
|
%
|
|
|
0
|
%
|
|
|
100
|
%
|
Operating income (loss)
|
|
|
685,133
|
|
|
|
191,826
|
|
|
|
627,825
|
|
|
|
(35,961
|
)
|
|
|
(1,079,964
|
)
|
|
|
388,859
|
|
Operating margin of segment
|
|
|
53
|
%
|
|
|
16
|
%
|
|
|
40
|
%
|
|
|
(13
|
)%
|
|
|
*
|
|
|
|
|
|
Depreciation and amortization expense
|
|
|
5,154
|
|
|
|
19,569
|
|
|
|
45,248
|
|
|
|
7,787
|
|
|
|
540,646
|
|
|
|
618,404
|
|
Nine months ended period over period comparison:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
$
|
50,025
|
|
|
$
|
58,499
|
|
|
$
|
286,626
|
|
|
$
|
37,308
|
|
|
$
|
(7,098,858
|
)
|
|
$
|
(6,666,400
|
)
|
Operating income percentage year over year change
|
|
|
7
|
%
|
|
|
30
|
%
|
|
|
46
|
%
|
|
|
104
|
%
|
|
|
*
|
|
|
|
|
|
|
|
|
* |
|
Percentage not meaningful |
25
|
|
Item 2.
|
Managements
Discussion and Analysis of Financial Condition and Results of
Operations
|
Forward-Looking
Statements and Factors That May Affect Future Results
The discussion below contains forward-looking statements, which
are subject to safe harbors under the Securities Act of 1933, as
amended, or the Securities Act, and the Exchange Act.
Forward-looking statements include references to our ability to
utilize our deferred tax assets, as well as statements including
words such as expects, plans,
anticipates, believes,
estimates, predicts,
projects, and similar expressions. In addition,
statements that refer to projections of our future financial
performance, anticipated growth and trends in our businesses and
in our industries, the anticipated impacts of acquisitions, and
other characterizations of future events or circumstances are
forward-looking statements. These statements are only
predictions, based on our current expectations about future
events and may not prove to be accurate. We do not undertake any
obligation to update these forward-looking statements to reflect
events occurring or circumstances arising after the date of this
report. These forward-looking statements involve risks and
uncertainties, and our actual results, performance, or
achievements could differ materially from those expressed or
implied by the forward-looking statements on the basis of
several factors, including those that we discuss in Risk
Factors, set forth in Part I, Item 1A, of our annual
report on
Form 10-K
for the fiscal year ended March 28, 2008. We encourage you
to read that section carefully.
Fiscal
Calendar
We have a 52/53-week fiscal accounting year. Unless otherwise
stated, references to three and nine month ended periods in this
report relate to fiscal periods ended January 2, 2009 and
December 28, 2007. The January 2, 2009 and
December 28, 2007 quarters both consisted of 13 weeks.
The nine months ended January 2, 2009 consisted of
40 weeks while the nine months ended December 28, 2007
consisted of 39 weeks.
OVERVIEW
Our
Business
Symantec is a global leader in providing security, storage and
systems management solutions to help businesses and consumers
secure and manage their information. We provide customers
worldwide with software and services that protect, manage and
control information risks related to security, data protection,
storage, compliance, and systems management. We help our
customers manage cost, complexity and compliance by protecting
their IT infrastructure as they seek to maximize value from
their IT investments.
Despite a challenging economic environment, Symantec delivered
solid revenue performance for the three and nine months ended
January 2, 2009 due to the recurring nature of our business
and the mission-critical nature of our storage, backup, data
loss prevention and archiving products. In addition, we
continued to tightly manage expenses. Foreign currency
negatively impacted our fiscal 2009 third quarter results
compared to the year ago period.
Our
Operating Segments
Our operating segments are significant strategic business units
that offer different products and services, distinguished by
customer needs. Since the March 2008 quarter, we have operated
in five operating segments: Consumer Products, Security and
Compliance, Storage and Server Management, Services, and Other.
During the June 2008 quarter , we changed our reporting segments
to better align our operating structure, resulting in the
Altiris services that were formerly included in the Security and
Compliance segment being moved to the Services segment. We
revised the segment information for the prior year to conform to
the new presentation. For further descriptions of our operating
segments, see Note 16 of the Notes to Condensed
Consolidated Financial Statements in this quarterly report. Our
reportable segments are the same as our operating segments.
Financial
Results and Trends
Revenue for the three months ended January 2, 2009 declined
slightly compared to the three months ended December 28,
2007. Revenue declined in the Europe, Middle East, Africa
(EMEA) region and in our Security and Compliance and
Consumer Products segments for the three months ended
January 2, 2009. The global economic
26
slowdown increased competitive pricing pressures and led to
longer lead times in the sales of some of our products. If the
challenging economic conditions affecting global markets
continue or deteriorate further, we may experience slower or
negative revenue growth and our business and operating results
might suffer. In light of these economic conditions, we will
continue to align our cost structure with our revenue
expectations.
During the nine months ended January 2, 2009, we delivered
revenue growth across all of our geographic regions as compared
to the same periods last year and experienced revenue growth in
all of our segments.
Our net loss was $6.8 billion and $6.5 billion, for
the three and nine months ended January 2, 2009,
respectively, as compared to our net income of $132 million
and $277 million for the three and nine months ended
December 28, 2007, respectively. The lower net income for
fiscal 2009 periods as compared to the same periods last year
was primarily due to a non-cash impairment charge related to
goodwill of approximately $7 billion.
Fluctuations in the U.S. dollar compared to foreign
currencies negatively impacted our international revenue by
approximately $56 million during the three months ended
January 2, 2009 and positively impacted our international
revenue by $98 million during the nine months ended
January 2, 2009, in each case as compared to the same
period last year. We are unable to predict the extent to which
revenues in future periods will be impacted by changes in
foreign currency exchange rates. If our level of international
sales and expenses increase in the future, changes in foreign
exchange rates may have a potentially greater impact on our
revenues and operating results.
During our quarter ended January 2, 2009, based on a
combination of factors, including the current economic
environment and a sustained decline in our market
capitalization, we concluded that there were sufficient
indicators to require us to perform an interim goodwill
impairment analysis. Although we have not yet completed this
analysis, we have concluded that an impairment loss is probable
and can be reasonably estimated. Accordingly, we have recorded a
$7 billion non-cash goodwill impairment charge during the
third quarter of fiscal 2009.
We expect to finalize the goodwill impairment analysis during
the fourth quarter of fiscal 2009. There could be material
adjustments to the goodwill impairment charge when the goodwill
impairment test is completed.
Critical
Accounting Estimates
Other than the changes set forth below, there have been no
changes in our critical accounting estimates during the nine
months ended January 2, 2009, as compared to the critical
accounting estimates disclosed in Managements Discussion
and Analysis of Financial Condition and Results of Operations
included in our Annual Report on
Form 10-K
for the fiscal year ended March 28, 2008.
Income
Taxes
In July 2008, we reached an agreement with the Internal Revenue
Service (IRS) concerning our eligibility to claim a
lower tax rate on a distribution made from a Veritas foreign
subsidiary prior to the July 2005 acquisition. The distribution
was intended to be made pursuant to the American Jobs Creation
Act of 2004, and therefore eligible for a 5.25% effective
U.S. federal rate of tax, in lieu of the 35% statutory
rate. The final impact of this agreement is not yet known since
this relates to the taxability of earnings that are otherwise
the subject of the tax years
2000-2001
transfer pricing dispute which in turn is being addressed in the
U.S. Tax Court. To the extent that we owe taxes as a result
of the transfer pricing dispute, we anticipate that the
incremental tax due from this negotiated agreement will
decrease. We currently estimate that the most probable outcome
from this negotiated agreement will be $13 million or less,
for which an accrual has already been made. As previously
disclosed in
Form 10-K
for the fiscal year ended March 28, 2008, we made a payment
of $130 million to the IRS for this matter in May 2006. We
applied $110 million of this payment as a deposit on the
outstanding transfer pricing matter for the tax years
2000-2001.
Fair
Value of Financial Instruments
Beginning in the first fiscal quarter of 2009, the assessment of
fair value for our financial instruments is based on the
provisions of SFAS No. 157. SFAS No. 157
establishes a fair value hierarchy that is based on three levels
of inputs and requires an entity to maximize the use of
observable inputs and minimize the use of unobservable inputs
when measuring fair value.
27
As of January 2, 2009, our financial instruments measured
at fair value on a recurring basis included $390 million of
assets. Our cash equivalents, which primarily consist of money
market funds and bank securities total $300 million which
is 77% of our total financial instruments measured at fair value
on a recurring basis.
As of January 2, 2009, $268 million were classified as
Level 1, most of which represents investments in money
market funds. These were classified as Level 1 because
their valuations were based on quoted prices for identical
securities in active markets. Determining fair value for
Level 1 instruments generally does not require significant
management judgment.
As of January 2, 2009, $123 million were classified as
Level 2, $36 million and $50 million (22%
together of total financial instruments fair valued on a
recurring basis) of which represent investments in bank
securities and government notes, respectively. These were
classified as Level 2 because their valuations were based
on pricing models with all significant inputs derived from or
corroborated by observable market prices for identical
securities in markets with insufficient volume or infrequent
transactions (less active markets). Level 2 inputs also
generally include non-binding market consensus prices that are
corroborated by observable market data; quoted prices for
similar instruments; model-derived valuations in which all
significant inputs are observable or can be derived principally
from or corroborated with observable market data for
substantially the full term of the assets or liabilities or
quoted prices for similar assets or liabilities. The level of
judgment and subjectivity involved with Level 2 instruments
generally includes:
|
|
|
|
|
Determining which instruments are most similar to the instrument
being priced and identifying a sample of similar securities
based on the coupon rates, maturity, issuer, credit rating, and
instrument type, and subjectively selecting an individual
security or multiple securities that are deemed most similar to
the security being priced. For our financial instruments
classified as Level 2 at January 2, 2009, identical
securities were used for determining fair value.
|
|
|
|
Determining whether a market is considered active. An assessment
of an active market for marketable securities generally takes
into consideration trading volume for each instrument type or
whether a trading market exists for a given instrument. Our
Level 2 financial instruments were so classified due to
either low trading activity in active markets or no active
market existed. Where no active market existed, amortized cost
was used and was assumed to equate to fair value because of the
short maturities.
|
|
|
|
Determining which model-derived valuations to use in determining
fair value. When observable market prices for identical
securities or similar securities are not available, we may price
marketable securities using: non-binding market consensus prices
that are corroborated with observable market data; or pricing
models, such as discounted cash flow approaches, with all
significant inputs derived from or corroborated with observable
market data. In addition, the credit ratings for issuers of debt
instruments in which we are invested could change, which could
lead to lower fair values. During the third quarter of 2009, the
fair value of $17 million of fixed-income securities was
determined using benchmark pricing models for identical or
similar securities.
|
As of January 2, 2009, we have no financial instruments
with unobservable inputs as classified in Level 3 under the
SFAS No. 157 hierarchy. Level 3 instruments
generally would include unobservable inputs to the valuation
methodology that are significant to the measurement of fair
value of assets or liabilities. The determination of fair value
for Level 3 instruments requires the most management
judgment and subjectivity.
Valuation
of goodwill, intangible assets and long-lived
assets
When we acquire businesses, we allocate the purchase price to
tangible assets and liabilities and identifiable intangible
assets acquired. Any residual purchase price is recorded as
goodwill. The allocation of the purchase price requires
management to make significant estimates in determining the fair
values of assets acquired and liabilities assumed, especially
with respect to intangible assets. These estimates are based on
historical experience and information obtained from the
management of the acquired companies. These estimates can
include, but are not limited to, the cash flows that an asset is
expected to generate in the future, the appropriate
weighted-average cost of capital, and the cost savings expected
to be derived from acquiring an asset. These estimates are
inherently
28
uncertain and unpredictable. In addition, unanticipated events
and circumstances may occur which may affect the accuracy or
validity of such estimates.
We review goodwill for impairment on an annual basis and
whenever events or changes in circumstances indicate the
carrying value of goodwill may not be recoverable. In testing
for a potential impairment of goodwill, we allocate goodwill to
our various businesses to which the acquired goodwill relates;
estimate the fair value of our businesses to which goodwill
relates; and determine the carrying value (book value) of the
assets and liabilities related to those businesses. The first
step in the goodwill impairment analysis is to determine if the
estimated fair value is less than the carrying value of each
reporting unit. If the estimated fair value is in fact, less
than the carrying value for a particular business, then we are
required to perform a second step in the goodwill impairment
analysis to estimate the fair value of all identifiable assets
and liabilities of the business, in a manner similar to a
purchase price allocation for an acquired business. Only after
this process is completed is the amount of any goodwill
impairment determined.
Prior to performing our second step in the goodwill impairment
analysis, we are required to assess long-lived assets for
impairment. Such long-lived assets included tangible and
intangible assets recorded in accordance with
SFAS No. 144, Accounting for the Impairment of
Long-Lived Assets and SFAS No. 86, Accounting
for the Costs of Computer Software to Be Sold, Leased or
Otherwise Marketed. Our preliminary conclusion is that such
long-lived assets were not impaired as of January 2, 2009.
The process of evaluating the potential impairment of goodwill
requires significant judgment at many points during the
analysis. In determining the carrying value of the reporting
units, we had to apply judgment to allocate the assets and
liabilities, such as accounts receivable and property and
equipment, based on specific identification or relevant driver.
In estimating the fair value of the businesses with recognized
goodwill for the purposes of our annual or periodic analyses, we
make estimates and judgments about the future cash flows of
these businesses. Although our cash flow forecasts are based on
assumptions that are consistent with the plans and estimates we
are using to manage the underlying businesses, there is
significant judgment in determining the cash flows attributable
to these businesses over their estimated remaining useful lives.
RESULTS
OF OPERATIONS
Total Net
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
|
($ in thousands)
|
|
|
Net revenues
|
|
$
|
1,513,954
|
|
|
$
|
1,515,251
|
|
|
$
|
(1,297
|
)
|
|
|
0
|
%
|
|
$
|
4,682,286
|
|
|
$
|
4,334,678
|
|
|
$
|
347,608
|
|
|
|
8
|
%
|
Net revenues decreased slightly for the three months ended
January 2, 2009, as compared to the same period last year,
primarily due to a $31 million decrease in Licenses
revenues. This decrease was partially offset by a
$29 million increase in Content, subscriptions, and
maintenance revenues. This net decrease was primarily driven by
decreased revenues in our Security and Compliance segment
partially offset by increased revenues in our Services segment.
Foreign currencies had a negative impact on net revenues for the
three months ended January 2, 2009 as compared to the same
period last year due to the strengthening U.S. dollar
compared to the prior year period. Furthermore, the global
economic slowdown has increased competitive pricing pressure and
lead time to close on sales for some of our products. While we
cannot predict the intensity or duration of this slowdown, we
believe the recurring nature of our business and the
mission-critical nature of our products position us well in this
challenging environment.
Net revenues increased for the nine months ended January 2,
2009, as compared to the same period last year, primarily due to
a $298 million increase in Content, subscriptions, and
maintenance revenues coupled with a $50 million increase in
Licenses revenues. These increases were primarily related to
increased revenues in our Storage and Server Management and
Services segments. In addition, revenues for the nine months
ended January 2,
29
2009 benefited from additional amortization of deferred revenue
of approximately $75 million as a result of the fiscal 2009
period comprising one more week than the fiscal 2008 period.
The revenue changes for the three and nine months ended
January 2, 2009 discussed above are further described in
the discussions that follow.
Content,
subscriptions, and maintenance revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
|
($ in thousands)
|
|
|
Content, subscriptions, and maintenance revenues
|
|
$
|
1,196,938
|
|
|
$
|
1,167,443
|
|
|
$
|
29,495
|
|
|
|
3
|
%
|
|
$
|
3,668,645
|
|
|
$
|
3,371,126
|
|
|
$
|
297,519
|
|
|
|
9
|
%
|
Percentage of total net revenues
|
|
|
79
|
%
|
|
|
77
|
%
|
|
|
|
|
|
|
|
|
|
|
78
|
%
|
|
|
78
|
%
|
|
|
|
|
|
|
|
|
Content, subscriptions, and maintenance revenues increased for
the three and nine months ended January 2, 2009 as compared
to the same periods last year primarily due to an increase in
revenue from the Storage and Server Management and Services
segments. For the three and nine months ended January 2,
2009, Storage and Server Management increased by
$29 million and $135 million, respectively, and
Services increased by $22 million and $87 million,
respectively. The increase in these two segments revenue
is largely attributable to demand for our Storage and Server
Management products and consulting services as a result of
increased demand for security and storage solutions. This
increased demand was driven by the proliferation of structured
and unstructured data, and increasing sales of services in
conjunction with our license sales as a result of our focus on
offering our customers a more comprehensive IT solution.
Furthermore, growth in our customer base through acquisitions
and new license sales results in an increase to Content,
subscriptions, and maintenance revenues because a large amount
of our customers renew their annual maintenance contracts.
Content, subscriptions, and maintenance revenues from our
Consumer Products and Security and Compliance segments decreased
by approximately $12 million and $9 million,
respectively, for the three months ended January 2, 2009
and increased by approximately $33 million and
$43 million, respectively, during the nine months ended
January 2, 2009.
Licenses
revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
|
($ in thousands)
|
|
|
Licenses revenues
|
|
$
|
317,016
|
|
|
$
|
347,808
|
|
|
$
|
(30,792
|
)
|
|
|
(9
|
)%
|
|
$
|
1,013,641
|
|
|
$
|
963,552
|
|
|
$
|
50,089
|
|
|
|
5
|
%
|
Percentage of total net revenues
|
|
|
21
|
%
|
|
|
23
|
%
|
|
|
|
|
|
|
|
|
|
|
22
|
%
|
|
|
22
|
%
|
|
|
|
|
|
|
|
|
Licenses revenues decreased for the three months ended
January 2, 2009 as compared to the same period last year
primarily due to a decrease of $22 million in revenue
related to our Security and Compliance products. This decrease
is primarily a result of the challenging economic environment
and a decline in demand from small and medium businesses.
Licenses revenues increased for the nine months ended
January 2, 2009 as compared to the same period last year
primarily due to an increase of $46 million in revenue
related to our Storage and Server Management products. These
increases are a result of increased demand for storage solutions
driven by the proliferation of structured and unstructured data.
30
Net
revenue and operating income by segment
Consumer
Products segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
|
($ in thousands)
|
|
|
Consumer Products revenues
|
|
$
|
432,290
|
|
|
$
|
440,206
|
|
|
$
|
(7,916
|
)
|
|
|
(2
|
)%
|
|
$
|
1,342,275
|
|
|
$
|
1,297,464
|
|
|
$
|
44,811
|
|
|
|
3
|
%
|
Percentage of total net revenues
|
|
|
29
|
%
|
|
|
29
|
%
|
|
|
|
|
|
|
|
|
|
|
29
|
%
|
|
|
30
|
%
|
|
|
|
|
|
|
|
|
Consumer Products operating income
|
|
$
|
224,350
|
|
|
$
|
224,974
|
|
|
$
|
(624
|
)
|
|
|
0
|
%
|
|
$
|
735,158
|
|
|
$
|
685,133
|
|
|
$
|
50,025
|
|
|
|
7
|
%
|
Percentage of Consumer Products revenues
|
|
|
52
|
%
|
|
|
51
|
%
|
|
|
|
|
|
|
|
|
|
|
55
|
%
|
|
|
53
|
%
|
|
|
|
|
|
|
|
|
Consumer Products revenues decreased for the three months ended
January 2, 2009 as compared to the same period last year
primarily due to a decrease from our core consumer security
products in the retail channel and to a lesser extent due to the
unfavorable impact of foreign currencies on the
U.S. dollar. This decrease was partially offset by an
increase in revenue for our consumer services and our PC Tools
security products. The revenue from our consumer products is
generally recognized ratably over the 12 months after the
product is sold.
Consumer Products revenues increased for the nine months ended
January 2, 2009 as compared to the same period last year
primarily due to an increase from our core consumer security
products in our electronic channels and to a lesser extent due
to a favorable impact of foreign currencies on the
U.S. dollar. In addition, Consumer Products revenues
increased from the sale of our consumer services and our the
integration of acquired security products.
Our electronic channel sales are derived from OEMs,
subscriptions, upgrades, online sales, and renewals. For the
three and nine months ended January 2, 2009, electronic
channel revenue grew $26 million and $121 million,
respectively, as compared to the same periods last year.
Electronic sales constituted 81% and 79% of Consumer Products
revenues for the three and nine months ended January 2,
2009 as compared to 74% and 73%, respectively, for the same
periods last year.
Operating income for this segment decreased slightly for the
three months ended January 2, 2009 as compared to the same
period last year, as the decrease in total expenses did not
fully offset the decrease in revenue. Operating income for this
segment increased for the nine months ended January 2, 2009
as compared to the same period last year, as revenues increased
while expenses decreased. Our operating expenses for the three
and nine months ended January 2, 2009 benefited from our
continued cost containment measures.
Security
and Compliance segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
|
($ in thousands)
|
|
|
Security and Compliance revenues
|
|
$
|
394,612
|
|
|
$
|
410,250
|
|
|
$
|
(15,638
|
)
|
|
|
(4
|
)%
|
|
$
|
1,241,251
|
|
|
$
|
1,186,441
|
|
|
$
|
54,810
|
|
|
|
5
|
%
|
Percentage of total net revenues
|
|
|
26
|
%
|
|
|
27
|
%
|
|
|
|
|
|
|
|
|
|
|
27
|
%
|
|
|
28
|
%
|
|
|
|
|
|
|
|
|
Security and Compliance operating income
|
|
$
|
106,738
|
|
|
$
|
82,576
|
|
|
$
|
24,162
|
|
|
|
29
|
%
|
|
$
|
250,325
|
|
|
$
|
191,826
|
|
|
$
|
58,499
|
|
|
|
30
|
%
|
Percentage of Security and Compliance revenues
|
|
|
27
|
%
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
20
|
%
|
|
|
16
|
%
|
|
|
|
|
|
|
|
|
31
Security and Compliance revenues decreased for the three months
ended January 2, 2009 as compared to the same period last
year primarily due to decrease in revenue from sales of endpoint
security products to small and medium businesses. This decrease
was partially offset by increased revenues from our successful
integration of acquired products into our product portfolio
during fiscal 2009.
Security and Compliance revenues increased for the nine months
ended January 2, 2009 as compared to the same period last
year as a result of strong demand for endpoint management
products and archiving solutions, as well as the successful
integration of acquired products into our product portfolio
during fiscal 2009.
Operating income for the Security and Compliance segment
increased for both the three and nine months ended
January 2, 2009 as compared to the same period last year,
as expenses grew at a slower rate than revenues. Our operating
expenses for the three and nine months ended January 2,
2009 also benefited from our continued cost containment measures.
Storage
and Server Management segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
|
($ in thousands)
|
|
|
Storage and Server Management revenues
|
|
$
|
568,484
|
|
|
$
|
561,694
|
|
|
$
|
6,790
|
|
|
|
1
|
%
|
|
$
|
1,755,949
|
|
|
$
|
1,575,231
|
|
|
$
|
180,718
|
|
|
|
11
|
%
|
Percentage of total net revenues
|
|
|
37
|
%
|
|
|
37
|
%
|
|
|
|
|
|
|
|
|
|
|
37
|
%
|
|
|
36
|
%
|
|
|
|
|
|
|
|
|
Storage and Server Management operating income
|
|
$
|
300,395
|
|
|
$
|
253,834
|
|
|
$
|
46,561
|
|
|
|
18
|
%
|
|
$
|
914,451
|
|
|
$
|
627,825
|
|
|
$
|
286,626
|
|
|
|
46
|
%
|
Percentage of Storage and Server Management revenues
|
|
|
53
|
%
|
|
|
45
|
%
|
|
|
|
|
|
|
|
|
|
|
52
|
%
|
|
|
40
|
%
|
|
|
|
|
|
|
|
|
Storage and Server Management revenues increased for the three
months ended January 2, 2009 as compared to the same period
last year primarily due to an increase in sales of core
enterprise products related to standardization and
simplification of data center infrastructures and disaster
recovery. Offsetting this increase were decreases in sales of
our backup products to small and medium businesses and in sales
of our availability products to large enterprises.
Storage and Server Management revenues increased for the nine
months ended January 2, 2009 as compared to the same period
last year due to a $190 million increase in sales of
products related to the standardization and simplification of
data center infrastructures, increased demand for products
supporting high availability and disaster recovery and due to
the proliferation of structured and unstructured data.
Operating income for the Storage and Server Management segment
increased for the three and nine months ended January 2,
2009 as compared to the same period, last year, as revenue
growth was coupled with a decrease in expenses for the segment.
Also, our operating expenses for the three and nine months ended
January 2, 2009 also benefited from our continued cost
containment measures.
32
Services
segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
|
($ in thousands)
|
|
|
Services revenues
|
|
$
|
118,199
|
|
|
$
|
102,606
|
|
|
$
|
15,593
|
|
|
|
15
|
%
|
|
$
|
341,536
|
|
|
$
|
274,478
|
|
|
$
|
67,058
|
|
|
|
24
|
%
|
Percentage of total net revenues
|
|
|
8
|
%
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
7
|
%
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
Services operating income (loss)
|
|
$
|
4,126
|
|
|
$
|
(3,219
|
)
|
|
$
|
7,345
|
|
|
|
*
|
|
|
$
|
1,347
|
|
|
$
|
(35,961
|
)
|
|
$
|
37,308
|
|
|
|
104
|
%
|
Percentage of Services revenues
|
|
|
3
|
%
|
|
|
(3
|
)%
|
|
|
|
|
|
|
|
|
|
|
0
|
%
|
|
|
(13
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Percentage not meaningful |
Services revenues increased for the three months ended
January 2, 2009 as compared to the same period last year
primarily due to an increase in software as a service revenues
as a result of our November 14, 2008 acquisition of
MessageLabs. The remaining increase in revenues was in our
consulting services and Business Critical Services, as a result
of increased demand for more comprehensive software
implementation assistance and increased demand for our Business
Critical Services. Customers are increasingly purchasing our
service offerings in conjunction with the purchase of our
products and augmenting the capabilities of their own IT staff
with our onsite consultants.
Services revenues increased for the nine months ended
January 2, 2009 as compared to the same period last year
primarily due to an increase in consulting services and Business
Critical Services, as a result of increased demand as described
above.
Operating income for the Services segment increased for both the
three and nine months ended January 2, 2009, as revenue
growth exceeded expense growth for the segment.
Other
segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
|
($ in thousands)
|
|
|
Other revenues
|
|
$
|
369
|
|
|
$
|
495
|
|
|
$
|
(126
|
)
|
|
|
(25
|
)%
|
|
$
|
1,275
|
|
|
$
|
1,064
|
|
|
$
|
211
|
|
|
|
20
|
%
|
Percentage of total net revenues
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
Other operating loss
|
|
$
|
(7,408,511
|
)
|
|
$
|
(362,391
|
)
|
|
$
|
(7,046,120
|
)
|
|
|
*
|
|
|
$
|
(8,178,822
|
)
|
|
$
|
(1,079,964
|
)
|
|
$
|
(7,098,858
|
)
|
|
|
*
|
|
|
|
|
* |
|
Percentage not meaningful |
Revenue from our Other segment is comprised primarily of sunset
products and products nearing the end of their life cycle. Our
Other segment also includes general and administrative expenses;
amortization of acquired product rights, other intangible
assets, and other assets; goodwill impairment charges; charges
such as stock-based compensation and restructuring; and certain
indirect costs that are not charged to the other operating
segments. The operating loss of our Other segment for the three
and nine months ended January 2, 2009 primarily consists of
the $7 billion charge related to impairment of goodwill
that was incurred in the three months ended January 2, 2009.
33
Net
revenues by geographic region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
|
($ in thousands)
|
|
|
Americas (U.S., Canada and Latin America)
|
|
$
|
827,872
|
|
|
$
|
779,817
|
|
|
$
|
48,055
|
|
|
|
6
|
%
|
|
$
|
2,511,149
|
|
|
$
|
2,295,736
|
|
|
$
|
215,413
|
|
|
|
9
|
%
|
Percentage of total net revenues
|
|
|
55
|
%
|
|
|
51
|
%
|
|
|
|
|
|
|
|
|
|
|
54
|
%
|
|
|
53
|
%
|
|
|
|
|
|
|
|
|
EMEA (Europe, Middle East, Africa)
|
|
$
|
474,532
|
|
|
$
|
524,981
|
|
|
$
|
(50,449
|
)
|
|
|
(10
|
)%
|
|
$
|
1,512,553
|
|
|
$
|
1,443,270
|
|
|
$
|
69,283
|
|
|
|
5
|
%
|
Percentage of total net revenues
|
|
|
31
|
%
|
|
|
35
|
%
|
|
|
|
|
|
|
|
|
|
|
32
|
%
|
|
|
33
|
%
|
|
|
|
|
|
|
|
|
Asia Pacific/Japan
|
|
$
|
211,550
|
|
|
$
|
210,453
|
|
|
$
|
1,097
|
|
|
|
1
|
%
|
|
$
|
658,584
|
|
|
$
|
595,672
|
|
|
$
|
62,912
|
|
|
|
11
|
%
|
Percentage of total net revenues
|
|
|
14
|
%
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
14
|
%
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
Total net revenues
|
|
$
|
1,513,954
|
|
|
|
1,515,251
|
|
|
|
|
|
|
|
|
|
|
$
|
4,682,286
|
|
|
|
4,334,678
|
|
|
|
|
|
|
|
|
|
Americas revenues increased in the three and nine months ended
January 2, 2009 as compared to the same periods last year
primarily due to increased revenues related to our Storage and
Server Management, Security and Compliance, and Services
segments, as a result of increased demand as discussed above
coupled with the convergence of endpoint security and
management. In addition, for the three and nine months ended
January 2, 2009 as compared to the same period last year,
Americas revenues related to our Consumer Products segment
increased driven by demand for our Consumer Products suites.
EMEA revenues decreased for the three months ended
January 2, 2009 as compared to the same period last year,
primarily due to decreased revenues related to our Consumer
Products and Security and Compliance segments of
$45 million, as a result of a strengthening
U.S. dollar and a decrease in endpoint security product
sales to small and medium sized businesses. EMEA revenues
increased for the nine months ended January 2, 2009 as
compared to the same period last year primarily due to increased
revenues related to our Storage and Server Management and
Services segments. This increase is due to continuing demand for
products related to the standardization and simplification of
data center infrastructures, the proliferation of structured and
unstructured data, and increasing sales of services in
conjunction with our license sales as a result of our focus on
offering our customers a more comprehensive IT solution.
Asia Pacific/Japan revenues remained constant for the three
months ended January 2, 2009 as compared to the same period
last year. Revenues related to our Consumer Products and
Services segments decreased as a result of a strengthening
U.S. dollar and decreased prior period demand for Consumer
Products. This decrease was offset by an increase in revenues
related to our Storage and Server Management segment as a result
of increased demand discussed above. Asia Pacific/Japan revenues
increased for the nine months ended January 2, 2009 as
compared to the same period last year primarily due to increased
revenues related to our Storage and Server Management and
Services segments. This increase is due to continuing demand for
products related to the standardization and simplification of
data center infrastructures, the proliferation of structured and
unstructured data, and increasing sales of services in
conjunction with our license sales as a result of our focus on
offering our customers a more comprehensive IT solution.
Our international sales are and will continue to be a
significant portion of our net revenues. As a result, net
revenues will continue to be affected by foreign currency
exchange rates as compared to the U.S. dollar. The recent
trend of the strengthening U.S. dollar as compared to
foreign currencies over the prior year period has had a negative
impact on net revenues for the three months ended
January 2, 2009 as compared to the same period last year.
However, for the nine months ended January 2, 2009 foreign
currencies had a favorable impact on net revenues as compared to
the same period last year as the recent trend in the
strengthening U.S. dollar has not yet exceeded the revenue
benefit realized in the first half of fiscal 2009 from a weaker
U.S. dollar. While the current global economic slowdown has
continued to result in a strengthening U.S. dollar, we are
unable to predict the extent to which revenues in future periods
will be impacted by changes in foreign currency exchange rates.
If international sales
34
become a greater portion of our total sales in the future,
changes in foreign currency exchange rates may have a
potentially greater impact on our revenues and operating results.
Cost of
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
|
($ in thousands)
|
|
|
Cost of revenues
|
|
$
|
298,836
|
|
|
$
|
299,161
|
|
|
$
|
(325
|
)
|
|
|
0
|
%
|
|
$
|
919,888
|
|
|
$
|
913,951
|
|
|
$
|
5,937
|
|
|
|
1
|
%
|
Gross margin
|
|
|
80
|
%
|
|
|
80
|
%
|
|
|
|
|
|
|
|
|
|
|
80
|
%
|
|
|
79
|
%
|
|
|
|
|
|
|
|
|
Cost of revenues consists primarily of the amortization of
acquired product rights, fee-based technical support costs, the
costs of billable services, payments to OEMs under
revenue-sharing arrangements, manufacturing and direct material
costs, and royalties paid to third parties under technology
licensing agreements.
Gross margin remained stable for the three months ended
January 2, 2009 as compared to the same period last year.
For the nine months ended January 2, 2009 as compared to
the same period last year gross margin increased slightly
primarily due to higher revenues and, to a lesser extent, lower
OEM royalty payments, partially offset by a year over year
increase in technical support costs.
Cost
of content, subscriptions, and maintenance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
|
($ in thousands)
|
|
|
Cost of content, subscriptions, and maintenance
|
|
$
|
200,338
|
|
|
$
|
204,355
|
|
|
$
|
(4,017
|
)
|
|
|
(2
|
)%
|
|
$
|
630,982
|
|
|
$
|
619,593
|
|
|
$
|
11,389
|
|
|
|
2
|
%
|
As a percentage of related revenue
|
|
|
17
|
%
|
|
|
18
|
%
|
|
|
|
|
|
|
|
|
|
|
17
|
%
|
|
|
18
|
%
|
|
|
|
|
|
|
|
|
Cost of content, subscriptions, and maintenance consists
primarily of fee-based technical support costs, costs of
billable services, and payments to OEMs under revenue-sharing
agreements. Cost of content, subscriptions, and maintenance as a
percentage of related revenue for the three months and nine
months ended January 2, 2009 as compared to the same period
last year decreased one percentage point. The decrease is
primarily driven by lower OEM royalties and lower distribution
costs partially offset by a year-over-year increase in technical
support costs.
Cost
of licenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
|
($ in thousands)
|
|
|
Cost of licenses
|
|
$
|
8,289
|
|
|
$
|
10,304
|
|
|
$
|
(2,015
|
)
|
|
|
(20
|
)%
|
|
$
|
27,134
|
|
|
$
|
31,434
|
|
|
$
|
(4,300
|
)
|
|
|
(14
|
)%
|
As a percentage of related revenue
|
|
|
3
|
%
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
3
|
%
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
Cost of licenses consists primarily of royalties paid to third
parties under technology licensing agreements and manufacturing
and direct material costs. Cost of licenses remained stable as a
percentage of the related revenue for the three and nine months
ended January 2, 2009 as compared to the same periods last
year. Increases in royalties were offset by lower manufacturing
and distribution costs.
35
Amortization
of acquired product rights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
|
($ in thousands)
|
|
|
Amortization of acquired product rights
|
|
$
|
90,209
|
|
|
$
|
84,502
|
|
|
$
|
5,707
|
|
|
|
7
|
%
|
|
$
|
261,772
|
|
|
$
|
262,924
|
|
|
$
|
(1,152
|
)
|
|
|
0
|
%
|
Percentage of total net revenues
|
|
|
6
|
%
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
6
|
%
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
Acquired product rights are comprised of developed technologies
and patents from acquired companies. The increase in
amortization for the three months ended January 2, 2009 as
compared to the same period last year is primarily due to the
amortization associated with the SwapDrive, PC Tools and
MessageLabs acquisitions during the fiscal 2009 period. The
decrease in amortization for the nine months ended
January 2, 2009 as compared to the same periods last year
is primarily due to the APM business divestiture in the fiscal
2008 period and decreasing amortization associated with the
Veritas and BindView acquisitions offset in part by amortization
associated with SwapDrive, PC Tools and MessageLabs acquisitions
during the fiscal 2009 periods.
Operating
Expenses
Operating
expenses overview
As discussed above under Fiscal Calendar, our
operating expenses for the nine months ended January 2,
2009 compared to the same period last year were adversely
impacted by an additional week during fiscal 2009. Our
international expenses during the three and nine months ended
January 2, 2009 were favorably impacted by the
strengthening of the U.S. dollar compared to foreign
currencies during the same period last year and by the 2009
restructuring plan. In addition, our ongoing cost and expense
discipline positively contributed to our increased operating
margins for the fiscal 2009 periods.
Sales
and marketing expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
|
($ in thousands)
|
|
|
Sales and marketing
|
|
$
|
580,708
|
|
|
$
|
627,980
|
|
|
$
|
(47,272
|
)
|
|
|
(8
|
)%
|
|
$
|
1,840,510
|
|
|
$
|
1,791,672
|
|
|
$
|
48,838
|
|
|
|
3
|
%
|
Percentage of total net revenues
|
|
|
38
|
%
|
|
|
41
|
%
|
|
|
|
|
|
|
|
|
|
|
39
|
%
|
|
|
41
|
%
|
|
|
|
|
|
|
|
|
As a percent of net revenues, sales and marketing expenses
decreased to 38% and 39% for the three and nine months ended
January 2, 2009 as compared to 41% for both the three and
nine months ended December 28, 2007 after taking into
account the items discussed above under Operating expenses
overview.
Research
and development expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
|
($ in thousands)
|
|
|
Research and development
|
|
$
|
204,701
|
|
|
$
|
225,293
|
|
|
$
|
(20,592
|
)
|
|
|
(9
|
)%
|
|
$
|
655,185
|
|
|
$
|
671,928
|
|
|
$
|
(16,743
|
)
|
|
|
(2
|
)%
|
Percentage of total net revenues
|
|
|
14
|
%
|
|
|
15
|
%
|
|
|
|
|
|
|
|
|
|
|
14
|
%
|
|
|
16
|
%
|
|
|
|
|
|
|
|
|
As a percent of net revenues, research and development expenses
decreased to 14% for both the three and nine months ended
January 2, 2009 as compared to 15% and 16% for the three
and nine months ended December 28, 2007, respectively,
after taking into account the items discussed above under
Operating expenses overview.
36
General
and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
|
($ in thousands)
|
|
|
General and administrative
|
|
$
|
83,508
|
|
|
$
|
82,600
|
|
|
$
|
908
|
|
|
|
1
|
%
|
|
$
|
261,112
|
|
|
$
|
254,850
|
|
|
$
|
6,262
|
|
|
|
2
|
%
|
Percentage of total net revenues
|
|
|
6
|
%
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
6
|
%
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
As a percent of net revenues, general and administrative
expenses were 6% for both the three and nine months ended
January 2, 2009 as compared to 5% and 6% for the three and
nine months ended December 28, 2007, respectively, after
taking into account the items discussed above under
Operating expenses overview.
Amortization
of other purchased intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
|
($ in thousands)
|
|
|
Amortization of other purchased intangible assets
|
|
$
|
60,647
|
|
|
$
|
54,996
|
|
|
$
|
5,651
|
|
|
|
10
|
%
|
|
$
|
171,677
|
|
|
$
|
168,847
|
|
|
$
|
2,830
|
|
|
|
2
|
%
|
Percentage of total net revenues
|
|
|
4
|
%
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
4
|
%
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
Other purchased intangible assets are comprised of customer
bases and tradenames. Amortization for the three and nine months
ended January 2, 2009 compared to the same periods last
year remained relatively stable.
Restructuring
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
|
($ in thousands)
|
|
|
Severance
|
|
$
|
37,525
|
|
|
$
|
23,235
|
|
|
|
|
|
|
|
|
|
|
$
|
54,152
|
|
|
$
|
41,862
|
|
|
|
|
|
|
|
|
|
Facilities & Other
|
|
|
8,280
|
|
|
|
70
|
|
|
|
|
|
|
|
|
|
|
|
18,448
|
|
|
|
10,021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring
|
|
$
|
45,805
|
|
|
$
|
23,305
|
|
|
$
|
22,500
|
|
|
|
97
|
%
|
|
$
|
72,600
|
|
|
$
|
51,883
|
|
|
$
|
20,717
|
|
|
|
40
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of total net revenues
|
|
|
3
|
%
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
2
|
%
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
In the third quarter of fiscal 2009, management approved and
initiated a restructuring plan (the 2009 Plan) to
reduce operating costs through a headcount reduction and
facility consolidation. Costs for both the three and nine months
ended January 2, 2009 were $37 million related to
severance and benefit costs. Severance payments related to the
2009 Plan are expected to be substantially completed in fiscal
2010. Total remaining severance costs related to the reduction
in force are expected to be insignificant. Costs related to the
facility consolidation have not been recognized as of
January 2, 2009, and the costs are expected to be
substantially recognized in fiscal 2010.
In fiscal 2008, management approved and initiated a
restructuring plan (the 2008 Plan) to reduce
operating costs, outsource certain back office functions
worldwide, implement management structure changes, optimize the
business structure and discontinue certain products. Projects
within the 2008 Plan began in the third quarter of fiscal 2008
and severance payments are expected to be completed in fiscal
2010. Severance and benefits costs were $15 million, and
other costs, primarily for asset impairments and consulting
services, were $12 million for the nine months ended
January 2, 2009. Total remaining costs for the 2008 Plan
are estimated to range from $40 to $70 million.
37
We do not expect costs relating to plans prior to the 2008 Plan
to have a significant impact on future net income.
Impairment
of goodwill and Impairment of assets held for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
|
($ in thousands)
|
|
|
Impairment of goodwill
|
|
$
|
7,005,702
|
|
|
$
|
|
|
|
$
|
7,005,702
|
|
|
|
NA
|
|
|
$
|
7,005,702
|
|
|
$
|
|
|
|
$
|
7,005,702
|
|
|
|
NA
|
|
Percentage of total net revenues
|
|
|
463
|
%
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
150
|
%
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
Impairment of assets held for sale
|
|
$
|
16,849
|
|
|
$
|
6,142
|
|
|
$
|
10,707
|
|
|
|
174
|
%
|
|
$
|
43,053
|
|
|
$
|
92,688
|
|
|
$
|
(49,635
|
)
|
|
|
(54
|
)%
|
Percentage of total net revenues
|
|
|
1
|
%
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
1
|
%
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
In accordance with SFAS No. 142, we evaluate goodwill
for impairment at least annually and any time business
conditions indicate a potential change in recoverability. Based
on a combination of factors, including the current economic
environment and a decline in our market capitalization, during
the third quarter of fiscal 2009 we concluded that there were
sufficient indicators to require us to perform an interim
goodwill impairment analysis. As of the filing of this report,
we have not completed this analysis. We have concluded, however,
that an impairment loss can be reasonably estimated.
Accordingly, we have recorded a $7 billion non-cash
goodwill impairment charge in the financial statements for the
three and nine months ended January 2, 2009.
We expect to finalize the goodwill impairment analysis in
connection with the completion of our financial statements for
the fiscal year ended April 3, 2009. There could be
material adjustments to the goodwill impairment charge when the
goodwill impairment test is completed.
During the three and nine months ended January 2, 2009, we
recognized an impairment of $17 million and
$43 million on certain land and buildings classified as
held for sale. SFAS No. 144 provides that a long-lived
asset classified as held for sale should be measured at the
lower of its carrying amount or fair value less cost to sell.
During the three and nine months ended December 28, 2007,
we determined that the APM business in the Storage and Server
Management segment (formerly the Data Center Management segment)
did not meet the long-term strategic objectives of the segment.
As a result, we recognized additional losses related to the
impairment of assets of $6 million and $93 million,
respectively, related to our disposition of this business.
Patent
settlement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
|
($ in thousands)
|
|
|
Patent settlement
|
|
$
|
(9,900
|
)
|
|
$
|
|
|
|
$
|
(9,900
|
)
|
|
|
NA
|
|
|
$
|
(9,900
|
)
|
|
$
|
|
|
|
$
|
(9,900
|
)
|
|
|
NA
|
|
Percentage of total net revenues
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
During the third quarter of fiscal 2009, we settled a patent
lawsuit in which the result was a gain of approximately
$10 million reflected in the Condensed Consolidated
Statement of Operations under the caption Patent
settlement.
38
Non-operating
Income and Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
|
($ in thousands)
|
|
|
Interest income
|
|
$
|
4,676
|
|
|
$
|
19,997
|
|
|
|
|
|
|
|
|
|
|
$
|
34,966
|
|
|
$
|
59,997
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(6,511
|
)
|
|
|
(7,477
|
)
|
|
|
|
|
|
|
|
|
|
|
(22,792
|
)
|
|
|
(20,385
|
)
|
|
|
|
|
|
|
|
|
Other income (expense), net
|
|
|
16,571
|
|
|
|
(2,348
|
)
|
|
|
|
|
|
|
|
|
|
|
7,728
|
|
|
|
883
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
14,736
|
|
|
$
|
10,172
|
|
|
$
|
4,564
|
|
|
|
45
|
%
|
|
$
|
19,902
|
|
|
$
|
40,495
|
|
|
$
|
(20,593
|
)
|
|
|
(51
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of total net revenues
|
|
|
1
|
%
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
0
|
%
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
The decrease in interest income during the three and nine months
ended January 2, 2009 as compared to the same periods last
year is primarily due to lower average cash balances outstanding
and a lower average yield on our invested cash and short-term
investment balances.
Interest expense for the three months and nine months ended
January 2, 2009 as compared to the same period last year
remained flat. The increase in other income (expense), net
related to a gain on foreign currency.
Provision
for income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
|
($ in thousands)
|
|
|
Provision for income taxes
|
|
$
|
31,620
|
|
|
$
|
74,056
|
|
|
$
|
(42,436
|
)
|
|
|
(57
|
)%
|
|
$
|
188,455
|
|
|
$
|
151,890
|
|
|
$
|
36,565
|
|
|
|
24
|
%
|
Effective income tax rate
|
|
|
(0.5
|
)%
|
|
|
36
|
%
|
|
|
|
|
|
|
|
|
|
|
(3
|
)%
|
|
|
35
|
%
|
|
|
|
|
|
|
|
|
The effective tax rate was approximately (0.5)% and 36% for the
three month periods and (3)% and 35% for the nine months ended
January 2, 2009 and December 28, 2007, respectively.
The tax expense for the three and nine months ended
January 2, 2009 includes a $44 million tax benefit
associated with the impairment of goodwill of $7 billion,
materially impacting the overall effective tax rate. The
effective tax rates for all periods otherwise reflect the
benefits of lower-taxed foreign earnings, domestic manufacturing
tax incentives, and research and development credits, offset by
state income taxes and non-deductible stock-based compensation.
The provision for the three months ended January 2, 2009
reflects a revised forecast tax rate for the year of 34% prior
to taking into consideration the goodwill impairment, and a
resulting 3% benefit to
true-up
estimated taxes provided in the first two quarters of the year.
The provision for the nine months ended January 2, 2009 is
31% prior to taking into consideration the goodwill impairment,
reflecting non-recurring tax benefits recorded in the June and
September quarters (including a $5 million tax benefit in
the June 2008 quarter related to a favorable Irish settlement; a
$7 million tax benefit in the September 2008 quarter from
interest savings as a result of the IRS agreement on the
treatment of the 2005 dividend from a Veritas international
subsidiary; and a $5 million tax benefit in the September
2008 quarter from favorable prior year items including the
retroactive reinstatement of the U.S. federal research
credit).
The $44 million net tax benefit arising from the impairment
of goodwill consists of a $100 million tax benefit from
elements of tax deductible goodwill, net of a $56 million
tax provision resulting from an increase in our valuation
allowances on certain deferred tax assets that will require an
extended period of time to realize. As a result of the
impairment of goodwill, we have cumulative pre-tax book losses,
as measured by the current and prior two years. We considered
the negative evidence of this cumulative pre-tax book loss
position on our ability to continue to recognize deferred tax
assets that are dependent upon future taxable income for
realization. We considered the following as positive evidence:
the vast majority of the goodwill impairment is not deductible
for tax purposes and thus will not result in tax losses; we have
a strong, consistent taxpaying history; we have substantial
U.S. federal
39
income tax carryback potential; we have substantial amounts of
scheduled future reversals of taxable temporary differences from
our deferred tax liabilities. We have concluded that this
positive evidence outweighs the negative evidence and, thus,
that those deferred tax assets not otherwise subject to a
valuation allowance are realizable on a more likely than
not basis.
Loss
from joint venture
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
January 2,
|
|
|
December 28,
|
|
|
Change in
|
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
2009
|
|
|
2007
|
|
|
$
|
|
|
%
|
|
|
|
($ in thousands)
|
|
|
Loss from joint venture
|
|
$
|
(16,471
|
)
|
|
$
|
|
|
|
$
|
(16,471
|
)
|
|
|
NA
|
|
|
$
|
(33,398
|
)
|
|
$
|
|
|
|
$
|
(33,398
|
)
|
|
|
NA
|
|
On February 5, 2008, Symantec formed Huawei-Symantec, Inc.
(joint venture) with a subsidiary of Huawei
Technologies Co., Ltd. (Huawei). The joint venture
is domiciled in Hong Kong with principal operations in Chengdu,
China. The joint venture develops, manufactures, markets and
supports security and storage appliances to global
telecommunications carriers and enterprise customers.
As described further in Note 6 of the Notes to Condensed
Consolidated Financial Statements in this quarterly report, we
account for our investment in the joint venture under the equity
method of accounting. Under this method, we record our
proportionate share of the joint ventures net income or
loss based on the quarterly financial statements of the joint
venture. We record our proportionate share of net income or loss
one quarter in arrears. For the nine months ended
January 2, 2009, we recorded a loss of approximately
$33 million related to our share of the joint
ventures net loss incurred for the period from
February 5, 2008 (its date of inception) to
September 30, 2008.
LIQUIDITY
AND CAPITAL RESOURCES
Sources
of Cash
We have historically relied on cash flow from operations,
borrowings under a credit facility and issuances of convertible
notes and equity securities for our liquidity needs. Key sources
of cash are provided by operations, existing cash, cash
equivalents, short-term investments, and our revolving credit
facility.
In the second quarter of fiscal 2007, we entered into a
five-year $1 billion senior unsecured revolving credit
facility that expires in July 2011. In order to be able to draw
on the credit facility, we must maintain certain covenants,
including a specified ratio of debt to earnings (before
interest, taxes, depreciation, amortization and impairments) as
well as various other non-financial covenants. As of
January 2, 2009, we were in compliance with all required
covenants, and there was no outstanding balance on the credit
facility.
As of January 2, 2009, we had cash and cash equivalents of
$1.4 billion and short-term investments of $80 million
resulting in a net liquidity position defined as unused
availability of the credit facility, cash and cash equivalents
and short-term investments of approximately $2.5 billion.
We believe that our existing cash balances, the cash that we
generate from operations and our borrowing capacity will be
sufficient to satisfy our anticipated cash needs for working
capital and capital expenditures for at least the next
12 months.
Uses of
Cash
Our principal cash requirements include working capital, capital
expenditures and payments of taxes. In addition, we regularly
evaluate our ability to repurchase stock, pay long-term debts
and acquire other businesses.
Line of Credit. During the first quarter of
fiscal 2009, we repaid the entire $200 million principal
amount plus $3 million of accrued interest related to our
senior unsecured revolving credit facility.
Acquisition-Related. We generally use cash to
fund the acquisition of other businesses and, from time to time,
use our revolving credit facility when necessary. In the third
quarter of fiscal 2009, we acquired PC Tools for
40
$239 million and MessageLabs for $619 million, net of
cash acquired. In the second quarter of fiscal 2009, we acquired
nSuite for $20 million, net of cash acquired. In the first
quarter of fiscal 2009, we acquired AppStream for
$49 million and SwapDrive for $117 million, net of
cash acquired.
During the third quarter of fiscal 2008, we used approximately
$298 million to complete our acquisition of Vontu, which
was partially financed by our $200 million borrowing under
our unsecured revolving credit facility. Furthermore, in the
first quarter of fiscal 2008, we acquired the outstanding common
stock of Altiris, Inc. and paid $841 million, net of cash
acquired, which reflects $165 million of cash acquired and
$17 million of cash paid for transaction costs.
Stock Repurchases. In the third quarter of
fiscal 2009, we repurchased 16 million shares, or
$200 million, of our common stock. For the first three
quarters of fiscal 2009, we repurchased 35 million shares,
or $600 million, of our common stock. As of January 2,
2009, $400 million remained authorized for future
repurchases from the 2007 Stock Repurchase Plan.
Cash
Flows
The following table summarizes, for the periods indicated,
selected items in our Condensed Consolidated Statements of Cash
Flows:
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
January 2,
|
|
|
December 28,
|
|
|
|
2009
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Net cash provided by (used in):
|
|
|
|
|
|
|
|
|
Operating activities
|
|
$
|
1,063,541
|
|
|
$
|
1,144,283
|
|
Investing activities
|
|
|
(764,430
|
)
|
|
|
(1,354,013
|
)
|
Financing activities
|
|
|
(615,285
|
)
|
|
|
(931,162
|
)
|
Operating
Activities
Net cash provided by operating activities of $1.1 billion
during the nine months ended January 2, 2009 primarily
resulted from a net loss of $6.5 billion adjusted for
non-cash items goodwill impairment of
$7.0 billion, depreciation and amortization charges of
$626 million and stock-based compensation expense of
$123 million. These amounts were partially offset by an
increase in our Trade accounts receivable which is in line with
our normal seasonal trends.
Net cash provided by operating activities during the nine months
ended December 28, 2007 resulted largely from net income of
$277 million, adjusted for non-cash depreciation and
amortization charges of $618 million, an impairment of
assets of $94 million, and non-cash stock-based
compensation expense of $121 million. These amounts were
partially offset by an increase in our Trade accounts receivable
which is in line with our normal seasonal trends. Income taxes
payable also increased by $215 million, primarily due to
the FIN 48 implementation and Altiris acquisition during
the first quarter of fiscal 2008.
Investing
Activities
Net cash used in investing activities of $764 million for
the nine months ended January 2, 2009 was primarily due to
$1.0 billion paid for acquisitions and $215 million
paid for capital expenditures, partially offset by net proceeds
of $456 million from the sale of short-term investments
which were used to partially fund acquisitions.
The $1.4 billion cash used in investing activities for the
nine months ended December 28, 2007 was primarily due to
$1.1 billion used to fund the purchase of Altiris and
Vontu, net of cash acquired. Additionally, we had purchases of
short-term investments of $825 million and capital
expenditures of $209 million, which were partially offset
by sales of short-term investments of $831 million.
41
Financing
Activities
Net cash used in financing activities of $615 million for
the nine months ended January 2, 2009 was primarily due to
stock repurchases of 35.1 million shares of our common
stock under the plan announced in June 2007 for
$600 million and the repayment of $200 million on our
senior unsecured revolving credit facility, partially offset by
net proceeds of $189 million received from the issuance of
our common stock through employee stock plans.
Net cash used in financing activities was $931 million for
the nine months ended December 28, 2007, primarily due to
the repurchase of 70 million shares of our common stock,
under the plans announced in January 2007 and June 2007, for
$1.3 billion. This amount was partially offset by the net
proceeds of $164 million received from the issuance of our
common stock through employee stock plans and $200 million
borrowed from our five-year, $1.0 billion senior unsecured
revolving credit facility.
Contractual
Obligations
There have been no significant changes in our contractual
obligations during the nine months ended January 2, 2009,
as compared to the contractual obligations disclosed in
Managements Discussion and Analysis of Financial Condition
and Results of Operations, set forth in Part II,
Item 7, of our Annual Report on Form 10-K for the
fiscal year ended March 28, 2008.
|
|
Item 3.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
There have been no significant changes in our market risk
exposures during the nine months ended January 2, 2009 as
compared to the market risk exposures disclosed in
Managements Discussion and Analysis of Financial
Condition and Results of Operations, set forth in
Part II, Item 7A, of our Annual Report on
Form 10-K
for the fiscal year ended March 28, 2008.
|
|
Item 4.
|
Controls
and Procedures
|
(a) Evaluation
of Disclosure Controls and Procedures
The SEC defines the term disclosure controls and
procedures to mean a companys controls and other
procedures that are designed to ensure that information required
to be disclosed in the reports that it files or submits under
the Exchange Act is recorded, processed, summarized, and
reported, within the time periods specified in the SECs
rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by an issuer in
the reports that it files or submits under the Exchange Act is
accumulated and communicated to the issuers management,
including its principal executive and principal financial
officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required
disclosure. Our Chief Executive Officer and our Chief Financial
Officer have concluded, based on an evaluation of the
effectiveness of our disclosure controls and procedures (as
defined in
Rules 13a-15(e)
and
15d-15(e) of
the Securities Exchange Act of 1934, as amended) by our
management, with the participation of our Chief Executive
Officer and our Chief Financial Officer, that our disclosure
controls and procedures were effective as of the end of the
period covered by this report.
(b) Changes
in Internal Control over Financial Reporting
There were no changes in our internal control over financial
reporting during the three months ended January 2, 2009
that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
(c) Limitations
on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief
Financial Officer, does not expect that our disclosure controls
and procedures or our internal controls will prevent all errors
and all fraud. A control system, no matter how well conceived
and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met.
Further, the design of a control system must reflect the fact
that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Because of
the inherent
42
limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues and
instances of fraud, if any, within our Company have been
detected.
PART II.
OTHER INFORMATION
|
|
Item 1.
|
Legal
Proceedings
|
Information with respect to this Item may be found in
Note 15 of Notes to Condensed Consolidated Financial
Statements in this
Form 10-Q,
which information is incorporated into this Part II,
Item 1 by reference.
A description of the risks associated with our business,
financial condition, and results of operations is set forth in
Part I, Item 1A, of our Annual Report on
Form 10-K
for the fiscal year ended March 28, 2008. There have been
no material changes in our risks from such description, other
than the addition of the following risk factor:
The
recent global economic crisis may harm our business, operating
results and financial condition.
The recent global economic crisis has caused a tightening in the
credit markets, increases in the rates of default and
bankruptcy, and extreme volatility in credit, equity and fixed
income markets. These macroeconomic developments could
negatively affect our business, operating results or financial
condition under a number of different scenarios. For example,
current or potential customers may delay or forgo decisions to
license new products or additional instances of existing
products, upgrade their existing hardware or operating
environments (which upgrades are often a catalyst for new
purchases of our software), or purchase services. Customers may
also have difficulties in obtaining the requisite third-party
financing to complete the purchase of our products and services.
The current economic environment could also subject us to
increased credit risk should customers be unable to pay us, or
delay paying us, for previously purchased products and services.
In addition, weakness in the market for end users of our
products could harm the cash flow of our distributors and
resellers who could then delay paying their obligations to us.
This would further increase our credit risk exposure and,
potentially, cause delays in our recognition of revenue on sales
to these customers.
In addition, financial institution difficulties
and/or
failures may make it more difficult either to utilize our
existing debt capacity or otherwise obtain financing for our
operations, investing activities (including potential
acquisitions) or financing activities. Specific economic trends,
such as declines in the demand for PCs, servers, and other
computing devices, or softness in corporate information
technology spending, could have an even more direct, and
harmful, impact on our business. Finally, our cash and our
investment portfolio, which includes short-term debt securities,
is generally subject to general credit, liquidity, counterparty,
market and interest rate risks that may be exacerbated by the
recent global financial crisis. Our investment in our joint
venture could also become impaired. If the banking system or the
fixed income, credit or equity markets continue to deteriorate
or remain volatile, our cash and our investment portfolio may be
impacted and the values and liquidity of our investments could
be harmed.
43
|
|
Item 2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
Stock repurchases during the three months ended January 2,
2009 were as follows:
ISSUER
PURCHASES OF EQUITY SECURITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Number of
|
|
|
Maximum Dollar
|
|
|
|
|
|
|
|
|
|
Shares Purchased
|
|
|
Value of Shares That
|
|
|
|
|
|
|
|
|
|
Under Publicly
|
|
|
May Yet Be
|
|
|
|
Total Number of
|
|
|
Average Price
|
|
|
Announced Plans
|
|
|
Purchased Under the
|
|
|
|
Shares Purchased
|
|
|
Paid per Share
|
|
|
or Programs
|
|
|
Plans or Programs
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
|
October 4, 2008 to October 31, 2008
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
600
|
|
November 1, 2008 to November 28, 2008
|
|
|
16,070,300
|
|
|
$
|
12.45
|
|
|
|
16,070,300
|
|
|
$
|
400
|
|
November 29, 2008 to January 2, 2009
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
16,070,300
|
|
|
$
|
12.45
|
|
|
|
16,070,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For information regarding our stock repurchase programs, see
Note 10 of Notes to Condensed Consolidated Financial
Statements, which information is incorporated herein by
reference.
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
Exhibit
|
|
|
|
|
|
File
|
|
|
|
File
|
|
Filed with
|
Number
|
|
Exhibit Description
|
|
Form
|
|
Number
|
|
Exhibit
|
|
Date
|
|
this 10-Q
|
|
|
2
|
.01*
|
|
|
Agreement and Plan of Merger among Symantec Corporation, Atlas
Merger Corp. and Altiris, Inc. dated January 26, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
31
|
.01
|
|
|
Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
31
|
.02
|
|
|
Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
32
|
.01
|
|
|
Certification of Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
32
|
.02
|
|
|
Certification of Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
* |
|
The exhibits and schedules to this agreement have been omitted
pursuant to Item 601(b)(2) of
Regulation S-K.
We will furnish copies of any of the exhibits and schedules to
the SEC upon request. |
|
|
|
This exhibit is being furnished rather than filed, and shall not
be deemed incorporated by reference into any filing, in
accordance with Item 601 of
Regulation S-K. |
45
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly
authorized.
SYMANTEC CORPORATION
(Registrant)
John W. Thompson
Chairman of the Board and
Chief Executive Officer
James A. Beer
Executive Vice President and
Chief Financial Officer
Date: February 9, 2009
46
EXHIBIT INDEX
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit
|
|
|
|
|
|
File
|
|
|
|
File
|
|
Filed with
|
Number
|
|
Exhibit Description
|
|
Form
|
|
Number
|
|
Exhibit
|
|
Date
|
|
this 10-Q
|
|
|
2
|
.01*
|
|
|
Agreement and Plan of Merger among Symantec Corporation, Atlas
Merger Corp. and Altiris, Inc. dated January 26, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
31
|
.01
|
|
|
Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
31
|
.02
|
|
|
Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
32
|
.01
|
|
|
Certification of Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
32
|
.02
|
|
|
Certification of Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
* |
|
The exhibits and schedules to this agreement have been omitted
pursuant to Item 601(b)(2) of
Regulation S-K.
We will furnish copies of any of the exhibits and schedules to
the SEC upon request. |
|
|
|
This exhibit is being furnished rather than filed, and shall not
be deemed incorporated by reference into any filing, in
accordance with Item 601 of
Regulation S-K. |