EXHIBIT 10.35
MILBERG WEISS BERSHAD
HYNES & LERACH LLP
WILLIAM S. LERACH (68581)
ALAN SCHULMAN (128661)
BLAKE M. HARPER (115756)
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619\231-1058
KAPLAN, KILSHEIMER & FOX, LLP
ROBERT N. KAPLAN
685 Third Avenue, 26th Floor
New York, NY 10017
Telephone: 212/687-1980
Attorneys for Plaintiffs
SUPERIOR COURT OF STATE OF CALIFORNIA
COUNTY OF SANTA CLARA
STEVEN COOPERMAN and ERIC D. FREED ) No. CV756665
IRA, On Behalf of Themselves and )
All Others Similarly Situated, ) CLASS ACTION
)
Plaintiffs, ) COMPLAINT FOR DAMAGES BASED
) UPON:
vs. )
) (1) VIOLATION OF CAL.
GORDON EUBANKS, CHARLES BOESENBERG, ) CORP. CODE Sections 25400 AND
EUGENE WANG, HOWARD BAIN, ELLEN ) 25500; AND
TAYLOR, ROBERT DYKES, JOHN LAING, ) (2) VIOLATION OF CAL. CIV.
DEREK WITTE and SYMANTEC ) CODE Sections 1709-1710
CORPORATION, )
)
Defendants. ) Plaintiffs Demand A
) Trial By Jury
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SUMMARY OF ACTION
1. This is a class action on behalf of purchasers of the stock of
Symantec Corporation ("Symantec" or the "Company") between July 24, 1995 and
January 8, 1996 (the "Class Period"), complaining of a fraudulent scheme,
conspiracy and course of business that operated as a fraud or deceit on
purchasers of Symantec stock due to defendants' false and misleading statements,
primarily about Symantec's new Windows 95-related utility software products
known as Norton Navigator, Norton AntiVirus and Norton Utilities, and Symantec's
sales in Europe, accompanied by falsification of Symantec's first and second
quarters fiscal 1996 (ended June 30 and September 29, 1995) financial
statements. These false and misleading statements drove Symantec's stock to a
Class Period high of $33-1/4 and enabled (i) Symantec to complete a large
acquisition of another software company, Delrina Inc. ("Delrina"), in November
1995 by agreeing to issue, I.E., sell, 15 million shares of its stock; and (ii)
Symantec's insiders to sell 394,901 shares of their shares at artificially
inflated prices as high as $32, pocketing over $12 million for themselves,
before it was exposed that sales of Symantec's Windows 95 utility software
products were very poor and that, due to huge product returns, Symantec would
suffer flat revenue growth in its third quarter of fiscal 1996 (ended December
31, 1995), resulting in a loss, causing its stock to collapse from $22-1/2 to
$10-1/8 per share, in just four trading days, on huge volume of 27 million
shares -- over 67% of Symantec's public float.
2. During 1993 and 1994, Symantec's business performed erratically,
primarily because Symantec had been unable to achieve substantial or consistent
revenue growth by introducing new
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products or growing its business. As a result, Symantec stock performed poorly
and, despite an increase during 1994, at year end 1994 Symantec's stock was
trading below its price at the beginning of 1993, 24 months earlier, thus
trailing well behind the strong performances of many other successful software
companies during that same time period. This poor stock performance put
pressure on Symantec's management to make it appear that Symantec's earnings and
business were growing, so that the stock would perform better.
3. During early 1995, it was widely known that Microsoft intended to
introduce a new, upgraded version of its Windows computer operating system known
as Windows 95. The upcoming release of Windows 95 was widely anticipated in the
financial community and viewed as providing an opportunity for software
companies like Symantec, which sold products related to Microsoft's Windows,
to profit as a result of this new "upgrade cycle." As a result, investor
interest in companies like Symantec increased. During the past several
years, Symantec had also attempted to grow its business by acquiring other
companies, using its own stock to make such acquisitions. Thus, in early
1995, Symantec's President and CEO, Gordon Eubanks ("Eubanks") and Symantec's
other insiders realized that they had a significant opportunity to push
Symantec's stock price much higher by capitalizing on investor interest in
Windows 95 and then take advantage of that high stock price by making a major
acquisition for Symantec by issuing Symantec stock and by selling substantial
amounts of their own Symantec shares into the market at high, and for them,
very profitable prices.
4. In the spring of 1995, Symantec announced it would launch several new
products concurrently with the introduction of Windows
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95, and previewed those products -- the Norton Navigator, AntiVirus and
Utilities in April 1995. As a result of anticipation over the possible success
of these new products, as well as the apparent success of the sale of Symantec's
enterprise products and strong sales in Europe, Symantec's stock price increased
from around $17 per share at the beginning of 1995 to as high as $30 per share
by late June 1995.
5. Capitalizing on this increase in Symantec's stock price, in early July
1995, Symantec announced that it would acquire Delrina, another software
company, in a transaction that would enable Delrina's shareholders to exchange
their Delrina shares for 15 million shares of Symantec stock, IN ONE OF THE
LARGEST, IF NOT THE LARGEST, ACQUISITIONS SYMANTEC HAD EVER MADE. However,
because Delrina was located in Canada and because of other pre-merger work that
had to be completed before the merger could be consummated, the Delrina
acquisition would not be voted upon by Delrina's shareholders until November
1995. Since the value of the transaction to Delrina's shareholders depended
upon the price of Symantec's stock, Symantec's insiders were under pressure
to keep Symantec's stock price high until after Delrina's shareholders
voted on the acquisition to increase the likelihood of approval by Delrina's
shareholders.
6. In late July, Symantec officially introduced its three new Windows 95
utility software products, the Norton Navigator, AntiVirus and Utilities.
However, by late July, Symantec's insiders had learned that Windows 95 when
released would contain a much larger amount of built-in utilities than earlier
versions of Windows had contained and, as a result, the prospects for commer-
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cial success of its own line of Windows 95 utility products was greatly
diminished. And, in order to get distributors and resellers to accept shipments
of large amounts of its Norton Utilities for Windows 95, Symantec was forced to
agree to give those distributors and resellers unlimited rights of return on any
of the product that did not "sell through" at retail. Nevertheless, on July
24, 1995 -- the commencement of the Class Period -- when Symantec reported its
results for the first quarter of fiscal 1996 (ended June 30, 1995), it assured
the market that the results were at the "HIGH-END" of Symantec's expectations,
that the good results were largely due to "STRONG OVERSEAS [MOSTLY EUROPEAN]
SALES," that Symantec expected to be a "MAJOR BENEFICIARY" of the Windows 95
upgrade cycle and thus its next few quarters would be particularly strong,
enabling it to achieve fiscal 1996 earnings per share of $1.20-1.23 per share.
7. In September 1995, after Windows 95 was introduced in August 1995,
Symantec told the market that the sales of its Windows 95 utility products were
"MEETING THE COMPANY'S EXPECTATIONS" and that the Company was "REAL HAPPY WITH
HOW THEY'RE SELLING." Later in September and during October 1995, Symantec
assured the market that sales of its Windows 95 lead products were "STRONG" and
were "MEETING or "BEATING EXPECTATIONS." When Symantec reported strong revenue
and earnings per share growth for its second quarter of fiscal 1996 (ended
September 29, 1995), it again told analysts that the results "EXCEEDED
SYMANTEC'S EXPECTATIONS" due to "STRONG SALES" of its Windows 95 utility
products. Symantec also assured analysts that it was utilizing a "CONSERVATIVE"
approach to revenue recognition for Windows 95 products and that as a result of
this
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would report stronger earnings growth later that year. Later in 1995,
Symantec's top executives told analysts that its business was continuing to do
"VERY WELL" with sales of its Windows 95 utility products continuing to be
"STRONG" and "MEETING OR EXCEEDING ITS EXPECTATIONS," resulting in Symantec
"guiding" analysts to increase their forecasted fiscal 1996 earnings per share
for Symantec to approximately $1.35 per share.
8. These positive reports pushed Symantec stock to a Class Period high of
$33-1/4 per share and maintained the stock price at inflated levels throughout
the Class Period, enabling several key insiders at Symantec to unload an
aggregate of 394,901 shares of their Symantec stock at between $29-32 per share
during August and September 1995, allowing them to pocket over $12 million,
while helping to assure that Delrina's shareholders voted to approve the
acquisition of their company by Symantec in November 1995. OF THE EIGHT
SYMANTEC INSIDERS WHO UNLOADED SHARES AT THESE INFLATED PRICES, SEVEN SOLD OVER
50% OF THE STOCK THEY OWNED, FIVE SOLD VIRTUALLY ALL THEIR HOLDINGS, I.E., OVER
90%, WHILE EUBANKS, SYMANTEC'S CEO, SOLD OVER 50% OF HIS HOLDINGS! Virtually
all of the shares sold by Symantec's insiders were obtained by them by the
exercise of stock options at much lower prices -- SOME AS LOW AS $.50 PER SHARE
- -- and then immediately sold by them to pocket millions in risk-free profits
based on Symantec stock's inflated trading price.
9. On January 4, 5 and 8, 1996, Symantec stock plunged from $22-1/2 to
$15-3/8 per share, a 32% decline on 11 million shares volume, as information
leaked into the marketplace that the sales of Symantec's Windows 95 utility
products might not be as strong as
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earlier represented. Then, after the close of trading on January 8, 1996,
Symantec shocked the market by revealing that its results for the quarter ended
December 31, 1995 would be much worse than earlier forecast due to very poor
sales of -- and large returns of -- its Windows 95 utility products -- meaning
Symantec would achieve NO REVENUE GROWTH OVER THE PRIOR QUARTER AND LIKELY
SUFFER A LOSS FOR THAT QUARTER. The next trading day, Symantec's stock
collapsed to $10-1/8 per share, a 34% one-day decline on huge volume of 15.9
million shares -- THE LARGEST ONE-DAY PERCENTAGE STOCK PRICE DECLINE ON THE
LARGEST ONE-DAY STOCK VOLUME IN SYMANTEC'S HISTORY. Eubanks admitted "WE HAD
A TERRIBLE QUARTER. WE SCREWED UP." Analysts immediately slashed their
earnings forecasts for Symantec for the fourth quarter of fiscal 1996, fiscal
1996 as a whole and for fiscal 1997. Later, Symantec announced that its
revenues for the December 1995 quarter were $111 million (a decline from the
third quarter) and that it actually suffered an operating loss of $1.1
million! Later, Eubanks admitted this catastrophe was not due to slower than
anticipated sales of Windows 95 --"I'm not blaming Microsoft. I'm blaming
Symantec. . . . Windows 95 is selling great. It's just that we had a higher
forecast for sales of our products than we managed to meet."
10. Each of the positive statements about Symantec's business during the
Class Period was materially false and misleading. The true facts were:
(a) Symantec's Windows 95 utility software products (Navigator,
AntiVirus and Utilities) were selling poorly at retail and below the levels
forecast by the Company, which would result in
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large distributor/reseller returns of those products well in excess of amounts
Symantec had reserved for OR in sharply diminished distributor/reseller reorders
of those products, causing Symantec to not achieve the revenue and income growth
forecast by and for it for the last half of fiscal 1996;
(b) Sales of Symantec's Windows 95 Utilities, Navigator and AntiVirus
products were not meeting or exceeding Symantec's expectations and in fact were
below expectations, due to (i) lower than anticipated sales or Windows 95; AND
(ii) lower than anticipated "attach rates" of Symantec utility products to
Windows 95, as Windows 95 came equipped with a large number of built-in
utilities, thus diminishing the need for and attractiveness of Symantec's
products;
(c) Symantec was not encountering a good "attach rate" with respect
to the sale of its products along with Windows 95 and in fact the "attach rate"
was below expectations because Windows 95 came equipped with a large amount of
built-in utilities, thus making Symantec's products less necessary or attractive
to purchasers of Windows 95;
(d) Sales of Symantec's Windows 95 utility software products were not
strong and were not beating or exceeding its expectations, and in fact, sales of
such products at the retail level were weak and well below Symantec's
expectations, meaning that Symantec's reserves for product returns by
distributors and resellers were grossly inadequate;
(e) Sales of Symantec's enterprise products were weak and below
internal goals and budgets;
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(f) Symantec's European sales were well below Symantec's expectations
and doing very poorly due to competitive pressures and localized negative
economic factors;
(g) That the problems identified in Paragraph 10(a)-(f) above, were
causing Symantec to fall short of its planned revenue and earnings growth and
made it impossible for Symantec to meet the revenue and earnings forecasts made
by and for it for the third and fourth quarters of fiscal 1996 and fiscal 1996
as a whole;
(h) Symantec was not following a conservative approach with respect
to revenue recognition on its Windows 95 utility and products and in fact was
improperly recognizing revenue on these products in violation of Generally
Accepted Accounting Principles ("GAAP"), thus inflating its financial results
and concealing the poor sales or "attach rates" of these products and the
deterioration of Symantec's business overall;
(i) Symantec's reported revenues and earnings per share for the first
and second quarters of fiscal 1996 (ended June 30 and September 29, 1995) were
artificially inflated due to the improper recognition of revenue via the
accounting artifices and tricks detailed in this Complaint;
(j) Symantec's method of accounting for its Windows 95 utility
products was not "conservative" or such that it would result in strengthening
Symantec's reported profits in the last half of fiscal 1996, but, in fact, the
contrary was true, since Symantec was violating GAAP in the manner in which it
was recognizing revenue in Europe and on the sale of its Windows 95 utility
products, which would result in massive returns and/or
- 8 -
reduced shipments of those products later on in fiscal 1996, hurting Symantec's
reported profits;
(k) That in order to cover up the weak sales of its Windows 95-
related products, its enterprise products and its poor European results,
Symantec was falsifying its reported financial results by improperly recognizing
millions in revenue, thus inflating its reported revenues, income and earnings
per share;
(l) It was not true that except for Microsoft no software company
stood to gain as much from the sale of Microsoft Windows 95 operating systems as
Symantec did as defendants knew that Windows 95 came equipped with large amounts
of built-in utilities and this diminished the desirability of or necessity for
Symantec's products among purchasers of Windows 95 and this, in fact, was very
adversely affecting retail sales of Symantec's Windows 95 utility products;
(m) Because defendants knew that Windows 95 would come equipped with
a large amount of built-in utilities which would greatly diminish the need for
and appeal of Symantec's stand-alone Windows 95 utility software products,
Symantec's statement that it would be a major beneficiary from the Windows 95
upgrade cycle was known by defendants to be false;
(n) That defendants' positive forecasts and projections regarding
Symantec's Windows 95 utility product line, and its revenues or earnings growth
during the balance of fiscal 1996 were known by defendants to be false as they
were inconsistent with the above negative factors; and
(o) That defendants' forecasts of increased earnings for Symantec in
fiscal 1996 of $1.25-$1.35 and of earnings per share of
- 9 -
$.31 - $.33 for the third quarter of fiscal 1996, were known by defendants to be
false as they were contradicted by the adverse facts set forth above.
11. The charts below show the increase in Symantec's stock price while
defendants were issuing false and misleading statements, defendants' stock sales
at inflated prices and Symantec stock's collapse as the true facts became known,
and illustrate that, when compared to an index of similar stocks, the movement
of Symantec stock was largely due to Company specific information as opposed to
industry or market factors.
SYMANTEC CORPORATION
DECEMBER 30, 1994 - JANUARY 30, 1996
DAILY STOCK PRICES
[GRAPH]
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SYMANTEC CORPORATION
VS. H&Q COMPUTER SOFTWARE PRODUCTS GROUP
JUNE 1, 1995 - JANUARY 24, 1996
[GRAPH]
JURISDICTION AND VENUE
12. This Court has jurisdiction over all causes of action asserted in this
Complaint pursuant to the California Constitution, Article VI, Section 10,
because this case is a cause not given by statute to other trial courts. The
claims asserted herein arise under Sections 25400 and 25500 of the Cal. Corp.
Code and Sections 1709-1710 of the Cal. Civ. Code.
13. Each of the individual defendants resides in and is a citizen of the
State of California. One of the plaintiffs lives in
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and is a citizen of California. Symantec has its principal place of business in
California. The amount in controversy of each of the named plaintiffs' claims is
less than $50,000 exclusive of interest and costs. This action is not removable
to federal court.
CLASS ACTION ALLEGATIONS
14. Plaintiffs bring this action as a class action pursuant to California
Code of Civil Procedure Section 382 on behalf of all persons who purchased or
otherwise acquired Symantec stock (the "Class") during the Class Period.
Excluded from the Class are the defendants, members of their families and any
entity in which a defendant has an interest.
15. The Class is composed of numerous residents of California, as well as
persons dispersed throughout the U.S., the joinder of whom is impracticable. The
disposition of their claims in a class action will provide substantial benefits
to the parties and the Court. During the Class Period, Symantec had more than 38
million shares of stock outstanding, owned by thousands of shareholders.
16. There is a well-defined community of interest in the questions of law
and fact involved in this case. The questions of law and fact common to the
members of the Class which predominated over questions which may affect
individual Class members, include the following:
(a) Whether Cal. Corp. Code Sections 25400 and 25500 were violated by
defendants;
(b) Whether Cal. Civ. Code Sections 1709-1710 were violated by
defendants;
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(c) Whether defendants omitted and/or misrepresented material facts;
(d) Whether defendants failed to disclose or conspired or aided and
abetted one another in not disclosing material facts necessary to make the
statements made not misleading;
(e) Whether defendants knew or recklessly disregarded that their
statements were false and misleading;
(f) Whether the price of Symantec stock was artificially inflated
during the Class Period; and
(g) The extent of damage sustained by Class members and the
appropriate measure of damages.
17. Plaintiffs' claims are typical of those of the Class because
plaintiffs and the Class sustained damages from defendants' wrongful conduct.
18. The prosecution of separate actions by individual Class members would
create a risk of inconsistent and varying adjudications.
19. Plaintiffs will adequately protect the interests of the Class. They
have retained counsel who are experienced in class action securities litigation.
Plaintiffs have no interests which conflict with those of the Class.
20. A class action is superior to other available methods for the fair and
efficient adjudication of this controversy.
THE PARTIES
21. (a) Plaintiff Steven Cooperman, a retired physician, purchased 2,000
shares of Symantec stock on December 1, 1995 at $26-3/4 per share and was
damaged thereby.
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(b) Plaintiff Eric D. Freed IRA purchased 100 shares of Symantec
stock on October 30, 1995 at $25-5/8 per share and was damaged thereby.
22. (a) Defendant Symantec is headquartered at Cupertino, California. It
sells computer software products. Approximately 88% of Symantec's revenues are
derived from products that operate on Microsoft's MS-DOS or Windows operating
systems. Symantec stock trades in an efficient market on the NASDAQ System.
(b) Symantec has had a historic pattern of acquiring other companies
by issuing Symantec stock. During 1992-1994, Symantec acquired the following
companies by issuing shares of Symantec stock:
SHARES OF
SYMANTEC
COMPANIES DATE COMMON STOCK
ACQUIRED ACQUIRED ISSUED
- --------------------------------------------------------------------------
INTEC SYSTEMS CORPORATION AUGUST 31, 1994 133,332
CENTRAL POINT SOFTWARE, INC. JUNE 1, 1994 4,029,429
SLR SYSTEMS, INC. MAY 31, 1994 178,093
FIFTH GENERATION SYSTEMS, INC. OCTOBER 4, 1993 2,769,010
CONTACT SOFTWARE INTERNATIONAL INC. JUNE 2,1993 2,484,019
CERTUS INTERNATIONAL CORPORATION NOVEMBER 30,1992 368,141
MULTISCOPE, INC. SEPTEMBER 2, 1992 253,878
THE WHITE WATER GROUP, INC. SEPTEMBER 2, 1992 69,740
One of the reasons why Symantec's insiders wanted to push Symantec's stock price
higher in 1995 and were willing to falsify its first and second quarter fiscal
1996 results (ended June 30 and September 29, 1995), was so that Symantec could
make a major acquisition using Symantec stock.
(c) Symantec, Eubanks and Symantec's other insiders have a history of
fraudulent conduct in connection with the trading in Symantec stock. In 1991-
1992, when they pushed Symantec's stock
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from the high $20s to over $50 per share while reporting strong (but phony)
financial results while falsely forecasting strong, continued profit growth, due
to the success of Symantec's products, Eubanks, Robert Dykes, John Laing and
other Symantec insiders unloaded 2.5 million of their Symantec shares for $90
million, before it was exposed that Symantec was stealing trade secrets from
Borland and Symantec reported losses rather than the strong profits it had
forecast. Eubanks and Eugene Wang were indicted for theft of those trade
secrets. Symantec stock collapsed to less than $10 per share. After being sued
by investors for that fraud, Symantec, Eubanks and the other defendants paid $19
million to compensate the investors they had allegedly defrauded. The chart
below highlights this prior incident of securities fraud involving Symantec and
its insiders:
[GRAPH]
- 15 -
(d) (i) Another reason why Eubanks and the other officers of
Symantec named as defendants falsified Symantec's reported profits for the
quarters ended June 30 and September 29, 1995 was to collect larger payments
under Symantec's Executive Officer Compensation Plan, which pays quarterly
bonuses to Symantec's top executives EACH quarter based on Symantec's operating
profits and performance compared to the Company's internal budget or forecast.
During the past, Symantec's executive officers had their base salaries reduced
by 10% to reflect the Company's failure at that time to meet desired targets and
objectives. Thus, they had experienced the consequences of poor financial
performance and were determined to have Symantec report inflated profits even if
they had to falsify its result to do so;
(ii) Bonuses for executive officers are paid pursuant to
Symantec's quarterly bonus program. Under the quarterly bonus program, a bonus
pool is established by Symantec's Board each quarter. The pool for the quarterly
bonus program is increased by a percentage of operating income in excess of the
Company's plan for the quarter and is reduced if operating income falls below
the Company's plan. The Board determines the amount payable to the CEO, and the
CEO proposes to the Board for their approval the allocation of the remainder of
the pool to the remaining executive officers;
(iii) Under the quarterly bonus program, bonuses for executive
officers are determined based in part on overall corporate performance. These
factors receive approximately equal weight. Overall corporate performance is
judged based primarily on operating profit/loss, including ability to achieve
budgeted
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revenue and expense levels. Because the pool of funds available for bonuses is
determined by corporate financial performance, bonuses are significantly
affected if corporate financial performance falls short of budget or goals; and
(iv) An important factor taken into account by the Board in
awarding bonuses includes executives' ability to achieve budgeted revenue
levels. The Company establishes its financial objectives in connection with its
normal financial budgeting process. Approximately every six months, a budget is
established for the following four fiscal quarters.
23. (a) Defendant Gordon Eubanks is President and CEO of Symantec and a
member of its Board. Because of defendant Eubanks' position with Symantec, he
knew the adverse non-public information about its business, finances, products,
markets and present and future business prospects via access to internal
corporate documents (including Symantec's operating plans, budgets and forecasts
and reports of actual operations compared thereto), conversations and
connections with other corporate officers and employees, attendance at
management and Board of Directors' meetings and committees thereof and via
reports and other information provided to them in connection therewith. As part
of the scheme, Eubanks sold 135,000 shares of Symantec stock at artificially
inflated prices of $29-$30-7/8 per share based on inside information, pocketing
$4.1 million. Eubanks exercised options to acquire 105,000 of those shares at
$.50-1.00 per share and sold the shares immediately upon exercise. These sales
constituted 52% of Eubank's holdings in Symantec. Eubanks is currently under
criminal indictment for stealing trade secrets from one of Symantec's
competitors.
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(b) Defendant Robert Dykes ("Dykes") is Executive Vice President-
Worldwide Operations and Chief Financial Officer of Symantec. Because of
defendant Dykes' position with Symantec, he knew the adverse non-public
information about its business, finances, products, markets and present and
future business prospects via access to internal corporate documents
(including Symantec's operating plans, budgets and forecasts and reports
of actual operations compared thereto), conversations and connections
with other corporate officers and employees, attendance at management meetings
and via reports and other information provided to them in connection therewith.
Dykes signed the Form 10-Qs for the quarters ended June 30 and September 29,
1995. As part of the fraudulent scheme, Dykes sold 100,000 shares of Symantec
stock at artificially inflated prices of $30-5/8 per share based on inside
information, pocketing $3 million. Dykes exercised options to purchase 50,000 of
those shares at $12.75 per share and 50,000 shares at $16.94 per share and sold
the shares immediately upon exercise. These sales constituted 65% of Dykes'
holdings in Symantec.
(c) Defendant John Laing ("Laing") is Executive Vice President-
Worldwide Sales of Symantec. Because of Laing's position with Symantec, he knew
the adverse non-public information about its business, finances, products,
markets and present and future business prospects via access to internal
corporate documents (including Symantec's operation plans, budgets and forecasts
and reports of actual operations compared thereto), conversations and
connections with other corporate officers and employees, attendance at
management meetings and via reports and other information
- 18 -
provided to them in connection therewith. As part of the fraudulent scheme,
Laing sold 11,500 shares of Symantec stock at artificially inflated prices of
$22.88 to $31 per share based on inside information, pocketing $355,600. Laing
exercised options to purchase 10,000 of those 11,500 shares at $11 per share and
sold the shares virtually immediately upon exercise. These sales constituted 43%
of Laing's holdings in Symantec.
(d) Defendant Charles Boesenberg ("Boesenberg") is an Executive Vice
President and a Director of the Company. Because of defendant Boesenberg's
position with Symantec, he knew the adverse non-public information about its
business, finances, products, markets and present and future business prospects
via access to internal corporate documents (including Symantec's operating
plans, budgets and forecasts and reports of actual operations compared thereto),
conversations and connection with other corporate officers and employees,
attendance at management and Board of Directors' meetings and committees thereof
and via reports and other information provided to them in connection therewith.
During the Class Period and as part of the fraudulent scheme, defendant
Boesenberg sold 75,332 shares of Symantec stock at artificially inflated prices
of $30-$31-1/8 per share based on inside information, pocketing over $2.2
million. Boesenberg exercised options to purchase those 75,332 shares at $10.75
and $16.16 per share and sold the shares immediately upon exercise. These sales
constituted 96% of Boesenberg's holdings in Symantec.
(e) Defendant Eugene Wang ("Wang") is an Executive Vice President of
Symantec. Because of Wang's position with Symantec, he knew the adverse non-
public information about its business,
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finances, products, markets and present and future business prospects via access
to internal corporate documents (including Symantec's operating plans, budgets
and forecasts and reports of actual operations compared thereto), conversations
and connections with other corporate officers and employees, attendance at
management meetings thereof and via reports and other information provided in
connection therewith. As part of the fraudulent scheme, Wang sold 5,000 shares
of Symantec stock at artificially inflated prices of $31-5/8 per shares based
on inside information, pocketing $158,150. Wang exercised options to purchase
all 5,000 of those shares at $10.50 per share and sold the shares immediately
upon exercise. These sales constituted 100% of Wang's holdings in Symantec.
Wang is currently under criminal indictment for stealing trade secrets from
one of Symantec's competitors.
(f) Defendant Ellen Taylor ("Taylor") is a Vice President and General
Manager of the Norton Group of Symantec. Because of defendant Taylor's position
with Symantec, she knew the adverse non-public information about its business,
finances, products, markets and present and future business prospects via access
to internal corporate documents (including Symantec's operating plans, budgets
and forecasts and reports of actual operations compared thereto), conversations
and connections with other corporate officers and employees, attendance at
management meetings and via reports and other information provided to her in
connection therewith. As part of the fraudulent scheme, Taylor sold 21,174
shares of Symantec stock at artificially inflated prices of $28-$29-1/2 per
share based on inside information, pocketing $607,478. Taylor exercised options
to purchase those
- 20 -
21,174 shares at $11 and $16 per share and sold the shares immediately upon
exercise. These sales constituted 98% of Taylor's holdings in Symantec.
(g) Defendant Derek Witte ("Witte") is a Vice President and General
Counsel of Symantec. Because of Witte's position with Symantec, he knew the
adverse non-public information about its business, finances, products, markets
and present and future business prospects via access to internal corporate
documents (including Symantec's operating plans, budgets and forecasts and
reports of actual operations compared thereto), conversations and connections
with other corporate officers and employees, attendance at management meetings
and via reports and other information provided in connection therewith. As part
of the fraudulent scheme, defendant Witte sold 25,793 shares of Symantec stock
at artificially inflated prices of $31-$32 per share based on inside
information, pocketing $802,456. Witte exercised options to purchase 24,647 of
those shares at $10-1/4-$14-1/2 per share and sold the shares immediately upon
exercise. These sales constituted 100% of Witte's holdings in Symantec.
(h) Defendant Howard Bain ("Bain") is Chief Accounting Officer of
Symantec. Because of Bain's position with Symantec, he knew the adverse non-
public information about its business, finances, products, markets and present
and future business prospects via access to internal corporate documents
(including Symantec's operating plans, budgets and forecasts and reports of
actual operations compared thereto), conversations and connections with other
corporate officers and employees, attendance at management meetings and via
reports and other information provided in
- 21 -
connection therewith. Bain signed the Company's Form 10-Qs for the quarters
ended June 30 and September 29, 1995. As part of the fraudulent scheme, Bain
sold 21,102 shares of Symantec stocks at artificially inflated prices of
$22-5/6-$31-3/4 per share based on inside information, pocketing $658,939. Bain
acquired 20,000 of those 21,102 shares by the exercise of options at $11 per
share and immediately sold the shares upon exercise. These sales constituted
98% of Bain's holdings in Symantec.
(i) The individuals named as defendants in Paragraph 23 (a) - (h) are
referred to as the "Individual Defendants." The Individual Defendants aided
or abetted or conspired to commit the violations of law complained of.
24. Defendant Eubanks, by reason of his position as CEO and President of
Symantec, and a director of the Company was a controlling person of Symantec and
had the power and influence, and exercised the same, to cause Symantec to engage
in the conduct complained of.
25. During the Class Period, each Individual Defendant occupied a
position that made him or her privy to non-public information concerning
Symantec. Because of this access, each of these defendants knew that the
adverse facts specified herein were being concealed. Notwithstanding their duty
to refrain from selling Symantec stock while in possession of material, non-
public information concerning Symantec, the defendants sold 394,901 shares of
the Company's stock, in many instances over 90% of their holdings, pocketing
over $12 million and thus profiting from their fraudulent scheme.
- 22 -
SYMANTEC'S INTERNAL FORECASTS
PLANS AND PROJECTIONS
26. A key management tool for Symantec's top executives was Symantec's
annual budget or forecast, by which the Company's Board, after input from top
executives, set performance goals and then closely monitored the Company's
actual performance, compared to those budgeted and/or forecasted. Symantec
prepared its fiscal 1996 forecast and budget by mid-1995 and then updated it
thereafter. Symantec's fiscal 1996 budget or forecast for the year ended March
31, 1996, which called for substantial revenue growth, was very dependent upon
Symantec obtaining large increases of revenue due to sales of its Windows 95
utility product line, plus greatly increased European revenues. Each of the
Individual Defendants was aware of Symantec's fiscal 1996 forecast and budget
and of internal reports comparing Symantec's actual results to those budgeted
and/or forecasted. Based on the negative internal reports of the Company's
actual performance compared to that budgeted and forecasted, the Individual
Defendants each knew Symantec's business was not performing as well as publicly
represented, that Symantec was encountering very poor retail sales of its
Windows 95 utility products due to low "attach rates," weak sales of its
enterprise software products, weak sales of its products in Europe, and that
Symantec was artificially inflating its reported revenues and profits by
improper practices, I.E., accounting tricks, detailed elsewhere in this
Complaint, meaning that Symantec could not possibly achieve the revenue and
earnings per share growth in the second, third and fourth quarters of fiscal
1996 or fiscal 1996 as a whole forecast by and for it. Thus,
- 23 -
defendants each knew or recklessly disregarded that the statements issued during
the Class Period were false and misleading when made.
DEFENDANTS' FRAUDULENT SCHEME,
CONSPIRACY AND COURSE OF BUSINESS
27. During 1993 and 1994 Symantec's business performed erratically,
primarily because Symantec had been unable to achieve either substantial or
consistent revenue growth by successfully introducing new products or otherwise
growing its business. As a result, Symantec stock performed poorly and, despite
an increase during 1994, at year end 1994 Symantec's stock was trading BELOW its
price at the beginning of 1993, 24 months earlier, thus trailing well behind the
strong performances of many other successful software companies during that same
time period. This poor stock performance put pressure on Symantec's management
to boost Symantec's earnings and to grow the business, so that the stock would
perform better.
28. During early 1995 it widely known that Microsoft intended to
introduce a new, upgraded version of its Windows computer operating systems
known as Windows 95. The upcoming release of Windows 95 was widely followed in
the financial community and was viewed as providing an opportunity for software
companies like Symantec, which sold products related to Microsoft's Windows, to
profit as a result of this new "upgrade cycle." As a result of this, investor
interest increased in companies like Symantec. During the past several years,
Symantec had also attempted to grow its business by acquiring other companies,
using its own stock to make such acquistions. Thus, in early 1995, Symantec's
insiders realized that they had a significant oppor-
- 24 -
tunity to push Symantec's stock price much higher by capitalizing on investor
interest in Windows 95 and then take advantage of that high stock price by
making a major acquisition for Symantec and by selling substantial amounts of
their own Symantec shares into the market at high, and for them, very profitable
prices.
29. In the spring of 1995, Symantec announced it would launch several new
products concurrently with the introduction of Windows 95, and previewed those
products -- the Norton Navigator, Norton AntiVirus and Norton Utilities -- in
April 1995. As a result of anticipation over the possible success of these new
products, as well as the apparent success of the sale of Symantec's enterprise
products and strong sales in Europe, Symantec's stock price increased from
around $17 per share at the beginning of 1995 to as high as $30 per share by
late June 1995.
30. On July 6, 1995, Symantec announced it would acquire Delrina by
issuing some 15 million shares of Symantec stock. This was a huge acquisition
for Symantec, THE LARGEST IT HAD EVER MADE. Based on Symantec's July 6, 1995
stock price of $26 per share, the acquition had a value of about $390 million to
Delrina's shareholders. However, shortly after the Delrina merger was
announced, Symantec stock declined from a high of $27-1/8 the day after the
merger was announced to as low as $23 several days later. The ability of
Symantec to complete the Delrina acquisition depended in part on keeping its
stock price high, at least through the date Delrina's shareholders voted on the
merger. Symantec's insiders were concerned that any further signigicant decline
in Symantec's stock would jeopardize their ability to complete the Delrina
- 25 -
acquisition and inhibit their ability to profit by selling their Symantec stock
into the market.
31. In late July, Symantec also officially introduced its three new
Windows 95 utility software products, the Norton Navigator, Utilities and
AntiVirus. However, by late July, Symantec's insiders had learned that Windows
95, when released, would contain a much larger number of built-in utilities than
earlier versions of Windows had contained and, as a result, the prospects for
commercial success of Symantec's own line of Windows 95 utility products was
greatly diminished. However, because Symantec had already invested millions in
the development of these products and had already "pre-announced" that it would
introduce and market these products, Symantec had no realistic option other than
to go forward with product "roll-out" and hope for the best -- even though it
and its insiders knew the prospects for real success were remote at best --
intending to inflate Symantec's stock price long enough for them to unload lots
of their stock at inflated prices and for Symantec to achieve the approval of
the Delrina acquisition by Delrina's shareholders. Thus, defendants pursued a
fraudulent scheme, conspiracy and course of business while aiding and abetting
one another, that operated as a fraud and deceit on purchasers of Symantec stock
by making the false and misleading statements set forth below.
FALSE AND MISLEADING STATEMENTS
DURING THE CLASS PERIOD
32. On July 24, 1995, Symantec issued a press release reporting revenues,
net income and earnings per share of $90.1 million, $11.6 million and $.29,
respectively, for its first
- 26 -
quarter of fiscal 1996, ended June 30, 1995. The release also stated:
"SYMANTEC CONTINUES TO SEE GROWTH IN OUR ENTERPRISE
PRODUCTS. . ." said Gordon E. Eubanks, Jr., Symantec's
president and CEO. "In addition, with the expected shipment
of Windows 95, we see a TREMENDOUS OPPORTUNITY for Symantec. . . ."
PREPARATION FOR WINDOWS 95
Symantec spent much of the June quarter preparing
for Windows 95. Symantec expects to ship three Windows
95 utility products in August, just prior to the release
of Microsoft's Windows 95. These products are Norton
Utilities for Windows 95, Norton Navigator for Windows 95
and Norton AntiVirus for Windows 95.
33. On July 24, 1995, Eubanks and Bain spoke with securities analysts and
told them:
- Symantec's first quarter results were at the "HIGH
END OF SYMANTEC'S EXPECTATIONS."
- Symantec's strong results were largely due to
"STRONG OVERSEAS (MOSTLY EUROPEAN) SALES."
- Symantec's was poised to benefit from the August 1995
introduction of Windows 95 due to its Norton AntiVirus,
Norton Utilities and Norton Navigator products.
- Symantec's next two quarters were expected to be
"PARTICULARLY STRONG."
- Symantec expected to be a "MAJOR BENEFICIARY" of the
Windows 95 upgrade cycle.
- Symantec forecast or endorsed forecasts of fiscal
1996 earnings per share of $1.20-$1.23.
Securities analysts reported this information to the market where it became part
of the total mix of information affecting Symantec stock while increasing their
earnings forecasts for Symantec based on its stronger than expected first
quarter fiscal 1996 results and the positive statements made by its executives.
Symantec's stock surged to $27-7/8 after Symantec's July 24, 1995 report and its
executives' discussions with analysts.
- 27 -
34. On July 31, 1995, Symantec issued a press release which stated:
Symantec Corporation today announced a comprehensive
set of three utility products of Microsoft Windows 95.
. . . The products are Norton Utilities, the only 32-bit
continuous system protection and data recovery solution
for Windows 95; Norton Navigator for enhanced file
management and desktop navigation; and Norton AntiVirus,
comprehensive 32-bit anti-virus protection specifically
for Windows 95.
* * *
Gordon E. Eubanks, Jr., president and CEO said,
". . . The products we are introducing for Windows 95
enhance our position as the industry's leader providing
reliable and technically-proven utility software."
35. On September 1, 1995, Eubanks gave an inverview to
REUTERS which REUTERS reported. Eubanks said:
- Sales of Symantec's utility products for Windows 95
"ARE MEETING THE COMPANY'S EXPECTATIONS."
- "WE'RE REAL HAPPY WITH HOW THEY'RE SELLING . . . .
IT'S CERTAINLY MEETING OUR EXPECTATIONS."
- Retailers were telling Symantec that there was a
"GOOD ATTACH RATE" of customers who buy Windows 95 and
"AT LEAST ONE OF SYMANTEC'S THREE NORTON UTILITY
PRODUCTS."
- Norton Navigator was "DOING A LITTLE BETTER THAN WE
THOUGHT," while Norton Utilities and Norton AntiVirus
were "MEETING EXPECTATIONS."
Immediately after this interview was reported, Symantec stock jumped almost $4
per share on its largest one-day stock volume in months. Within a few days the
stock reached its Class Period high of $33-1/4.
36. On September 20, 1995, Eubanks was interviewed by REUTERS. In that
interview Eubanks said:
- "Looking at Symantec's current sales performance
. . . EUROPEAN . . . markets WERE OUTPERFORMING OTHER
AREAS AT PRESENT."
- 28 -
- Symantec was most excited about what it was seeing
in Europe for its business, where it was encountering
STRONG DEMAND for its products.
37. During August and September, while Symantec's stock was selling at
between $29 and $33-1/4 per share (its Class Period high), the eight Symantec
executives named as defendants sold 382,899 shares of Symantec stock, pocketing
over $12 million, and in at least five instances selling over 90% of the
Symantec stock they owned, with Eubanks the CEO selling 52% of his shares --
135,000 shares at $29-$30-7/8 per share -- 105,000 shares of which he acquired
by exercising options at $.50-$1.00 per share -- then immediately selling the
stock for over $30 per share.
38. On or about October 16, 1995, Symantec executives communicated with a
Morgan Stanley analyst and told her:
- Customer acceptance of Symantec's Windows 95-related
products was "STRONG" and sales of these products were
"BEATING EXPECTATIONS."
Morgan Stanley reported this information to the market, where it became part of
the total mix of information affecting Symantec's stock price.
39. On October 25, 1995, Symantec issued a press release reporting
revenues, net income and earnings per share of $102.8 million, $12.9 million and
$.31, respectively for its second quarter of fiscal 1996, ended September 29,
1995. These were very good results, showing strong revenue, net income and
earnings per share growth from the same period in the prior year and from the
prior quarter. The October 25, 1995 release also stated:
"THROUGH THE FIRST TWO MONTHS SINCE THE GENERAL RELEASE
OF WINDOWS 95, WE ARE AMONG THE INDUSTRY LEADERS IN TERMS
OF ATTACH-RATE TO WINDOWS 95 SALES," said Gordon E.
Eubanks, Jr., president and CEO of Symantec Corporation.
"OUR ESSENTIAL SYSTEM UTILITY SOFTWARE HAS PROMPTED MANY
- 29 -
CUSTOMERS TO BUY SYMANTEC PRODUCTS AT THE SAME TIME THEY BUY WINDOWS 95."
The October 25, 1995 release also stated that Symantec had signed a definitive
agreement to acquire Delrina, subject to a shareholder vote.
40. On October 25, 1995, Eubanks and Bain also communicated with
securities analysts and told them:
- Symantec's excellent second quarter results "EXCEEDED EXPECTATIONS."
- Symantec's excellent second quarter results were fueled by "STRONG
SALES" of its Windows 95 utility products.
- Symantec's reported earnings per share would have been even higher had
it not been for the company's "CONSERVATIVE APPROACH TO REVENUE RECOGNITION
FOR WINDOWS 95 PRODUCTS."
- Symantec had also established "CONSERVATIVE" reserve levels, reserving
not only against distributor inventory levels, but also against retail
inventory levels, effectively only recognizing revenue or product
sell-through at the retail level.
- These "CONSERVATIVE" practices would enable Symantec to report even
higher than expected earnings per share in the last two quarters of fiscal
1996.
- The Windows 95 launch had been VERY SUCCESSFUL for Symantec and
Symantec's outlook was for solid earnings per share momentum for the next
12-18 months.
- Symantec expected to achieve fiscal 1996 earnings per share of $1.25+
with further gains in fiscal 1997 to $1.40+.
- Symantec expected to achieve earnings per share of $.33 in its third
quarter of fiscal 1996 to end December 31, 1995, even though the Delrina
acquisition was expected to cause some earnings dilution in that quarter.
Analysts reported this information to the market where it became part of the
total mix of information affecting Symantec's stock price.
- 30 -
41. In late October, Symantec stock fell sharply from $30-3/8 on October
24, 1995 to $24-1/8 on October 31, 1995, due in part to concerns in the
investment community that there might be excessive inventories of Symantec's
Windows 95 utility products in the "channel." Symantec's executives were very
concerned about this decline in Symantec stock as, if it continued, it could
endanger stockholder approval of the Delrina acquisition, which was to be voted
on in November 1995.
42. On October 31, 1995, Symantec executives met with securities analysts
in connection with the American Electronics Association meeting in Monterey,
California. During this meeting, Eubanks and Bain told analysts:
- Symantec's business was doing VERY WELL and sales of its Windows 95
utility products were MEETING OR EXCEEDING EXPECTATIONS.
- Symantec now expected its fiscal 1996 earnings per share would be
approximately $1.35.
Securities analysts reported this information to the market and it became part
of the total mix of information affecting Symantec stock.
43. On or about November 9, 1995, Symantec executives communicated with
Alex. Brown & Sons and assured it that:
- Symantec's Norton applications are doing "VERY WELL" in the
marketplace, and that "ATTACH RATES" HAD INCREASED SINCE SEPTEMBER.
- Concerns over high inventory levels in the channel were UNWARRANTED as
Symantec recognized revenue on its utilities product line only on sell-
through plus 6 weeks and this reduced its exposure to product returns.
This information was reported to the market by Alex. Brown and became part of
the total mix of information affecting Symantec stock price.
- 31 -
44. The positive reports referenced in Paragraphs 32-36, 38-40 and 42-43
helped to halt the decline in Symantec's stock price and stabilize it. On
November 20, 1995, Delrina's shareholders voted to approve the acquisition of
Delrina by Symantec.
45. On December 6, 1995, Symantec, through Eubanks, made a presentation at
the Montgomery Securities Technology Conference and was interviewed by REUTERS,
during which he stated:
- "[E]XCEPT FOR MICROSOFT CORP., NO SOFTWARE COMPANY STOOD TO GAIN AS
MUCH FROM THE SALE OF MICROSOFT'S WINDOWS 95 OPERATING SYSTEM" AS SYMANTEC
DID.
- "WE'RE GAINING MARKET SHARE BECAUSE OF WINDOWS 95. . . . Windows 95
is going to be a much bigger force than most people realize."
- Symantec expected calendar 1995 sales growth of "AT LEAST 30 PERCENT"
over calendar 1995 and pre-tax profit growth of 18 percent over 1995.
- Eubanks also expected to see 18 percent pre-tax profit year-over-year
growth beginning with the fourth quarter ending March 1996.
REUTERS and BLOOMBERG reported this information to the market where it became
part of the total mix of information affecting Symantec stock price.
46. On or about December 7, 1995, Symantec's executives communicated with
Donaldson, Lufkin & Jenrette and told them that:
- Symantec's business was doing "VERY WELL."
- The Windows 95 upgrade cycle was "GOING VERY WELL" for Symantec,
resulting in "STRONG SALES" of its Windows 95 utility products.
- Symantec expected to benefit from the Windows 95 upgrade cycle for
another 12-18 months.
Symantec stock rallied to a high of $27-3/8 after Donaldson Lufkin reported this
information to the market where it became part of the total mix of information
affecting Symantec's stock price.
- 32 -
DISCLOSURE OF THE TROUBLED
NATURE OF SYMANTEC'S BUSINESS
47. In the last two weeks of December 1995, Symantec stock declined and
then, on January 4, 5 and 8, 1996, Symantec stock plunged from $22-1/2 to
$15-3/8 per share--a 32% decline--on 11 million shares volume, as information
leaked into the marketplace that sales of Symantec's Windows 95 utility products
might not be as strong as earlier indicated. On January 8, 1996, after the close
of trading, Symantec shocked the market by revealing that its results for the
quarter ending December 31, 1995 would be much worse than earlier forecast with
little or no revenue growth from the second quarter and results from continuing
operations likely to show a loss. The next day, Symantec's stock collapsed to
$10-1/8--a 34% one-day decline on huge volume of 15.9 million shares--the
largest one-day percentage decline in its stock price on the largest one-day
stock volume in Symantec's history. Eubanks admitted Symantec's earlier
shortfall was due to poor sales and large returns of Symantec's Windows 95
utility products and poor sales of its products in Europe, admitting "WE HAD A
TERRIBLE QUARTER. WE SCREWED UP." Analysts immediately cut their earnings
forecasts for Symantec for the fourth quarter of fiscal 1996, fiscal 1996 as a
whole and for fiscal 1997. Later, Symantec announced that its revenues for the
December 1995 quarter were $111 million (a decline from the third quarter) and
that it actually suffered an operating loss of $1.1 million!
48. Each of the positive statements about Symantec's business made by
defendants during the Class Period was materially false and misleading when
issued, and failed to disclose, INTER ALIA, the
- 33 -
following adverse information, disclosure of which was necessary to make the
statements made not false and misleading, and which facts were then known only
to defendants due to their access to internal Symantec corporate data:
(a) Symantec's Windows 95 utility software products (Navigator,
AntiVirus and Utilities) were selling poorly at retail and below the levels
forecast by the Company, which would result in large distributor/reseller
returns of those products well in excess of amounts Symantec had reserved for OR
in sharply diminished distributor/reseller reorders of those products, causing
Symantec to not achieve the revenue and income growth forecast by and for it for
the last half of fiscal 1996;
(b) Sales of Symantec's Windows 95 Utilities, Navigator and AntiVirus
products were not meeting or exceeding Symantec's expectations and in fact were
below expectations, due to (i) lower than anticipated sales of Windows 95; AND
(ii) lower than anticipated "attach rates" of Symantec utility products to
Windows 95, as Windows 95 came equipped with a large number of built-in
utilities, thus diminishing the need for and attractiveness of Symantec's
products;
(c) Symantec was not encountering a good "attach rate" with respect
to the sale of its products along with Windows 95 and in fact the "attach rate"
was below expectations because Windows 95 came equipped with a large number of
built-in utilities, thus making Symantec's products less necessary or attractive
to purchasers of Windows 95;
(d) Sales of Symantec's Windows 95 utility software products were not
strong and were not beating or exceeding
- 34 -
expectations, and in fact, sales of such products at the retail level were weak
and well below Symantec's expectations, meaning that Symantec's reserves for
product returns by distributors and resellers were grossly inadequate;
(e) Sales of Symantec's enterprise products were weak and below
internal goals and budgets;
(f) Symantec's European sales were well below Symantec's expectations
and doing very poorly due to competitive pressures and localized negative
economic factors;
(g) The problems identified in Paragraph 48(a)-(f) above, were
causing Symantec to fall short of its planned revenue and earnings growth and
made it impossible for Symantec to meet the revenue and earnings forecasts made
by and for it for the third and fourth quarters of fiscal 1996 and fiscal 1996
as a whole;
(h) Symantec was not following a conservative approach with respect
to revenue recognition on its Windows 95 utility products and in fact was
improperly recognizing revenue on these products in violation of GAAP, thus
inflating its financial results and concealing the poor sales or "attach rates"
of these products and the deterioration of Symantec's business overall;
(i) Symantec's reported revenues and earnings per share for the first
and second quarters of fiscal 1996 (ended June 30 and September 29, 1995) were
artificially inflated due to the improper recognition of revenue via the
accounting artifices and tricks detailed in this Complaint;
(j) Symantec's method of accounting for its Windows 95 utility
products was not "conservative" or such that it would result in strengthening
Symantec's reported profits in the last
- 35 -
half of fiscal 1996, but, in fact, the contrary was true, since Symantec was
violating GAAP in the manner in which it was recognizing revenue in Europe and
on the sale of its Windows 95 utility products, which would result in massive
returns and/or reduced shipments of those products later on in fiscal 1996,
hurting Symantec's reported profits;
(k) In order to cover up the weak sales of its Windows 95-related
products, its enterprise products and its poor European results, Symantec was
falsifying its reported financial results by improperly recognizing millions in
revenue, thus inflating its reported revenues, income and earnings per share;
(l) It was not true that except for Microsoft no software company
stood to gain as much from the sale of Microsoft Windows 95 operating systems as
Symantec did as defendants knew that Windows 95 came equipped with a large
number of built-in utilities and this diminished the desirability of or
necessity for Symantec's products among purchasers of Windows 95 and this, in
fact, was very adversely affecting retail sales of Symantec's Windows 95 utility
products;
(m) Because defendants knew that Windows 95 would come equipped with
a large amount of built-in utilities which would greatly diminish the need for
and appeal of Symantec's stand-alone Windows 95 utility software product,
Symantec's statement that it would be a major beneficiary from the Windows 95
upgrade cycle was known by defendants to be false;
(n) Defendants' positive forecasts and projections regarding
Symantec's Windows 95 utility product line and its revenues or earnings growth
during the balance of fiscal 1996 were
- 36 -
known by defendants to be false as they were inconsistent with the above
negative factors; and
(o) Defendants' forecasts of increased earnings for Symantec in
fiscal 1996 of $1.25-$1.35 and of earnings per share of $.31-$.33 for the third
quarter of fiscal 1996, were known by defendants to be false as they were
contradicted by the adverse facts set forth above.
SYMANTEC'S FINANCIAL MANIPULATIONS
AND FALSE FINANCIAL STATEMENTS
49. Much of Symantec's revenue came from sales to customers which have the
right of return. Symantec's two largest distributors (Ingram Micro and Merisel)
demanded that Symantec accept returns of unsold merchandise. Symantec also
offered other customers return privileges in an effort to have those customers
accept large amounts of inventory, especially of its Windows 95 utility
products. During the quarter ended September 29, 1995, Symantec was selling a
new product for Windows 95 for which Symantec had no experience and was selling
it to many new customers. Thus, it was impossible for Symantec to reasonably
estimate future returns. Based on the return privileges Symantec granted its
customers and its inability to estimate future returns, Symantec should have
deferred all such sales until the right of return expired. Rather than deferring
revenue recognition for such sales, as required by GAAP under these
circumstances, Symantec reserved only a portion of such sales, thus improperly
inflating its reported results in the first and second quarters. During the
quarter ended June 30, 1995, Symantec recognized revenue from
- 37 -
sales, including sales in Europe by Central Pointe, which were contingent on
resale and the right of return had not expired.
50. During 1995, Symantec focused an enormous amount of attention on
launching its utility software products to run on Windows 95 which was released
in the summer of 1995. The success of these products (Norton Navigator,
Utilities and AntiVirus) was extraordinarily important to Symantec as Symantec
has experienced almost no revenue growth for nearly two years. The Windows 95
introduction was expected to provide this badly needed revenue growth for
Symantec. In fact, the quarter in which Windows 95 and Symantec's associated
utility products first shipped, the quarter ended September 29, 1995,
represented the first real revenue growth Symantec had been able to report in a
long time. Note the trend in Symantec's quarterly sales:
Symantec Corporation
Quarterly Sales
[graph]
- 38 -
However, much, if not all, of Symantec's revenue growth in the June and
September 1995 quarters came as the result of improper revenue recognition
wherein Symantec recorded as revenue, sales to distributors, retailers and other
resellers where their obligation to pay Symantec was contingent on their resale
of the product and sales for which Symantec could not reasonably estimate future
returns.
51. In the Form 10-Q for the quarter ended September 29, 1995, the notes
to the financial statements contained the following representations:
The consolidated financial statements of Symantec Corporation ("Symantec"
or the "Company") as of September 30, 1995 and for the three and six months
ended September 30, 1995 and 1994 are unaudited and, in the opinion of
management, CONTAIN ALL ADJUSTMENTS, CONSISTING OF ONLY NORMAL RECURRING
ITEMS NECESSARY FOR THE FAIR PRESENTATION OF THE FINANCIAL POSITION AND
RESULTS OF OPERATIONS FOR THE INTERIM PERIODS.
A similar paragraph was included in the Form 10-Q for the quarter ended June 30,
1995. These Form 10-Qs were signed by Dykes and Bain.
52. This statement was false and misleading as Symantec's results in the
first and second quarters were artificially and improperly inflated by reporting
revenue from purported sales which were contingent on resale, causing Symantec's
financial statements to be presented in violation of GAAP.
53. GAAP are those principles recognized by the accounting profession as
the conventions, rules and procedures necessary to define accepted accounting
practice at a particular time. Regulation S-X (17 C.F.R. 210.4-01(a)(1)) states
that financial
- 39 -
statements filed with the SEC which are not prepared in compliance with GAAP are
presumed to be misleading and inaccurate.
54. Because Symantec granted its customers significant rights to return
product, its revenue recognition was controlled by Statement of Financial
Accounting Standards ("SFAS") No. 48. SFAS No. 48, entitled "Revenue
Recognition When Right of Return Exists," requires that six conditions of ALL be
met for revenue recognition where the right of return exists. SEE SFAS No. 48,
PARA 6. Otherwise, revenue recognition MUST be deferred until all these
conditions are satisfied.
55. In the quarter ended June 30, 1995, Symantec recognized material
amounts of revenue on shipments to customers who had the right to return unsold
product, including shipments Central Pointe made in Europe in the prior year,
even though Symantec knew that the right of return had not expired on many of
the shipments and much of the product was still in the channel. Symantec knew
that such revenue recognition violated GAAP and SFAS No. 48.
56. In the quarter ended September 29, 1995, Symantec shipped large
quantities of its utility products for Windows 95 to distributors, retailers and
other resellers in anticipation of the introduction of Windows 95 in August
1995. In order to convince its customers to accept such large inventories of
its products, Symantec offered the customers expansive rights to return unsold
product and offered to help the customer sell the product to end-users. The
Company knew such "sales" were not properly recognizable as revenue as the
conditions of SFAS No. 48 had not been complied with. However, in order to
report financial results in line with market expectations, the Company
recognized the
- 40 -
revenue and merely reserved and deferred a small portion of the sales based on
"inventories estimated to be in excess of levels deemed appropriate in the
distribution channel." Thus, contrary to SFAS No. 48's clear and concise
requirement that revenue be deferred until the contingency is removed, Symantec
used an ambiguous and subjective standard of reserving for "estimated" returns
or for excess channel inventory not "deemed appropriate." The amount of the
Company's reserves was much lower than the amount of revenue which would have
been deferred had the Company complied with GAAP and SFAS No. 48. Symantec was
required to defer revenue by SFAS No. 48; Symantec's sales of these products
failed to satisfy at least the following three requirements of SFAS No. 48,
PARA 6.
(a) SFAS No. 48, PARA 6 (b): "The buyer has paid the seller, or the
buyer is obligated to pay the seller and the obligation is not contingent on
resale of the product." SEE ALSO AICPA Statement of Position ("SOP") 91-1
(Software Revenue Recognition), PARA 58, which discusses factors which a
software seller should consider when selling to resellers, including:
Business practices, the reseller's operating history, competitive
pressures, formal or informal communications, or factors that indicate
that payment is contingent on the reseller's success in distributing
individual units.
Many of Symantec's sales in the September 1995 Quarter were, in effect,
contingent on resale. In addition to Ingram Micro and Merisel, Symantec has
admitted that it also offered return privileges for unsold product to other
retailers and distributors. Nevertheless, in violation of SFAS No. 48, Symantec
did not defer revenue recognition, but rather, Symantec only deferred net
- 41 -
revenues associated with distribution inventories estimated to be in excess of
levels "deemed appropriate" in the distribution channel. This ambiguous
standard was abused by Symantec to inflate its required results;
(b) SFAS No. 48 PARA 6 (e): "The seller does not have significant
obligations for future performance to directly bring about resale of the product
by the buyer." Symantec employed significant resources in assisting its
resellers to "sell-through" Symantec's products. It has admitted that it
employs a distribution sales group to work closely with its major distributor
and reseller accounts on the management of orders, inventory level and
sell-through to retailers, as well as promotions and selling activities.
Symantec was either contractually obligated to assist in bringing about resale
of products or it was doing so because it knew its sales were contingent on
resale of its products by resellers/distributors and, in some instances,
retailers; and
(c) SFAS No. 48, PARA 6 (f): "The amount of future returns can be
reasonably estimated." SEE ALSO SOP 91-1.58:
Uncertainties about the potential number of copies to be sold by the
reseller because of such factors as the newness of the product or marketing
channel, competitive products, or dependence on the market potential of
another product offered by the reseller, may indicate that profit cannot be
reasonably estimated on delivery. If so, revenue should not be recognized
until the vendor can reasonably determine that the transaction is viable
for both parties or that the reseller is willing to honor and is capable of
honoring the commitment to make the fixed payments.
At September 29, 1995, there were major changes in business conditions,
customers and products which prevented Symantec from being able to reasonably
estimate future returns. Thus, revenue from those transactions should have been
deferred. The September
- 42 -
1995 quarter was the quarter in which Symantec first shipped its Windows 95
products in volume. While Symantec deferred some revenue associated with these
sales and increased its allowance for returns, none of the revenue was properly
recognized or recorded. Under GAAP, Symantec should have deferred all revenue
associated with sales of its Windows 95-related utility products, which were
contingent on resale, as Symantec could not actually estimate future returns for
the following reasons:
(i) Symantec's Windows 95-related products were new to the
market and to Symantec. There was a serious question whether Symantec's utility
program would even be necessary with Windows 95 since Windows 95 came with so
many more built-in utilities that earlier versions of Windows;
(ii) Symantec was dealing with many new customers, new to both
Symantec and to PC software sales. These smaller customers were less
predictable both in terms of ordering practices and selling trends;
(iii) Symantec was selling enterprise systems which were subject
to acceptance for many customers and, in fact, these sales were not going well;
and
(iv) Price competition was becoming more severe, which would
indicate a greater risk of returns, as customers became aware that they could
get lower prices elsewhere.
57. Ultimately, Symantec's improper revenue recognition in the
September 1995 quarter resulted in poor sales in the December 1995 quarter. THE
SHORTFALL IN DECEMBER WAS QUITE REMARKABLE. WHILE WINDOWS 95 UTILITY PRODUCT
SALES WERE $43 MILLION IN THE
- 43 -
QUARTER ENDED SEPTEMBER 29, 1995, THEY WERE ONLY ABOUT $22 MILLION IN THE
QUARTER ENDED DECEMBER 30, 1995.
58. On January 8, 1996, when Symantec shocked the market with the
announcement that its third quarter fiscal 1996 revenues -- the first quarter
AFTER the shipment of its Windows 95-related utility products -- would be below
prior forecasts and that operating income would only be, at best, slightly above
breakeven, the explanations it provided to analysts were:
"THE PRIMARY REASON FOR THE REVENUE SHORTFALL WAS GREATER-THAN-ANTICIPATED
RETURNS OF WINDOWS 95 ADVANCED UTILITIES (NORTON UTILITIES) PRODUCTS by
small retail distributors following the company's large initial sell-in the
September quarter -- $20 MILLION OF SUCH PRODUCT CAME BACK."
Returns from secondary retailers (over-purchasing in August, returns in
Q4).
Had Symantec properly deferred revenue recognition for sales which were
contingent on resale, as required by SFAS No. 48, such huge returns would not
have negatively impacted its reported third quarter fiscal 1996 earnings and its
first and second quarters fiscal 1996 revenue and earnings would have been much
lower and shown little growth.
59. Due to these improprieties, the Company presented its results in a
manner which violated the following generally accepted accounting principles,
among others:
(a) The principle that financial reporting should provide information
that is useful to present and potential investors and creditors and other users
in making rational investment, credit and similar decisions was violated (FASB
Statement of Concepts No. 1, PARA 34);
- 44 -
(b) The principle that financial reporting should provide information
about the economic resources of an enterprise, the claims to those resources,
and the effects of transactions, events and circumstances that change resources
and claims to those resources was violated (FASB Statement of Concepts No. 1,
PARA 40);
(c) The principle that financial reporting should provide information
about how management of an enterprise has discharged its stewardship
responsibility to owners (stockholders) for the use of enterprise resources
entrusted to it was violated. To the extent that management offers securities
of the enterprise to the public, it voluntarily accepts wider responsibilities
for accountability to prospective investors and to the public in general (FASB
Statement of Concepts No. 1, PARA 50);
(d) The principle that financial reporting should provide information
about an enterprise's financial performance during a period was violated.
Investors and creditors often use information about the past to help in
accessing the prospects of an enterprise. Thus, although investment and credit
decisions reflect investors' expectations about future enterprise performance,
those expectations are commonly based at least partly on evaluations of past
enterprise performance (FASB Statement of Concepts No. 1, PARA 42);
(e) The principle that financial reporting should be reliable in that
it represents what it purports to represent was violated. That information
should be reliable as well as relevant is a notion that is central to accounting
(FASB Statement of Concepts No. 2, PARA 58-59);
- 45 -
(f) The principle of completeness, which means that nothing is left
out of the information that may be necessary to ensure that it validly
represents underlying events and conditions, was violated (FASB Statement of
Concepts No. 2, PARA 79); and
(g) The principle that conservatism be used as a prudent reaction to
uncertainty to try to ensure that uncertainties and risks inherent in business
situations are adequately considered was violated. The best way to avoid injury
to investors is to try to ensure that what is reported represents what it
purports to represent (FASB Statement of Concepts No. 2, PARA 95, 97).
60. The undisclosed adverse information concealed by defendants during the
Class Period is the type of information which, because of SEC regulations,
regulations of the nation stock exchanges and customary business practice, is
expected by investors and securities analysts to be disclosed and is known by
corporate officials and their legal and financial advisors to be the type of
information which is expected to be and must be disclosed.
DEFENDANTS' INSIDER SELLING
61. During April-July 1995, Symantec's insiders sold very little of their
Symantec stock, selling less than 21,000 shares during this four month period,
or about 5,000 shares per month. From January 1995 through July 1995,
Symantec's insiders sold only about 57,200 shares -- about 8,200 shares per
month. Symantec's insiders wanted to sell off large amounts of their Symantec
shares at profitable prices before the market learned what they already knew,
sales of Symantec's Windows 95-related utility products were
- 46 -
poor, its European sales were weak and it was falsifying its financial
statements to conceal these adverse facts.
62. Thus, in August and September 1995, at the height of the Windows 95
hype and while Symantec's insiders were issuing false and misleading statements
about Symantec's business, including its Windows 95-related products, defendants
sold 382,899 shares of the Symantec stock they owned for proceeds of over $12
million, to profit from the artificial inflation of Symantec's stock price their
fraud had created before the truth became known and Symantec's stock price
crashed. Notwithstanding their access to material non-public information as a
result of their positions with the Company, the Individual Defendants sold the
following amounts of Symantec shares at artificially inflated prices throughout
the Class Period while in possession of material non-public information:
DATE SHARES PRICE PROCEEDS OPTION
NAME SOLD SOLD PER SHARE FROM SALE PURCHASE PRICE
- ---- ---- ------ --------- --------- --------------
Eubanks, G. 08/09/95 9,700 $29.38 $ 284,986
08/09/95 15,300 $29.75 455,175
08/09/95 5,000 $29.78 148,900
08/23/95 30,000 $30.80 924,000 30,000 $ .50
08/23/95 75,000 $30.80 $2,310,000 75,000 $1.00
------- ----------
Total: 135,000 $4,123,061
------- ----------
------- ----------
Boesenberg, C. 08/14/95 8,333 $30.00 $ 249,990 8,333 $10.75
08/15/95 24,031 $30.00 720,930 24,031 $10.75
08/15/95 2,968 $30.00 89,040 2,988 $10.75
08/18/95 10,000 $31.15 311,500 10,000 $16.16
08/22/95 10,000 $30.00 300,000 10,000 $16.16
08/23/95 10,000 $31.00 310,000 10,000 $16.16
08/23/95 10,000 $30.50 305,000 10,000 $16.16
------- ----------
Total: 75,332 $2,286,460
------- ----------
------- ----------
Wang, E. 08/17/95 5,000 $31.63 $ 158,150 5,000 $10.50
------- ----------
------- ----------
Bain, H. 08/18/95 10,000 $31.63 $ 316,300 10,000 $11.00
09/08/95 1,904 $31.75 60,452 1,904 $11.00
09/08/95 1,430 $31.75 45,403 1,430 $11.00
09/08/95 2,952 $31.75 93,926 2,952 $11.00
09/08/95 3,714 $31.75 117,920 3,714 $11.00
01/02.96 1,102 $22.63 $ 24,938
Total: ------ ----------
21,102 $ 658,939
------ ----------
------ ----------
- 47 -
Taylor, E. 08/28/95 2,000 $29.00 $ 58,000 2,000 $11.00
08/28/95 675 $29.00 19,575 675 $11.00
08/28/95 325 $29.00 9,425 325 $16.00
08/30/95 7,000 $28.00 196,000 7,000 $16.00
08/31/95 5,092 $29.00 147,668 5,092 $16.00
08/31/95 5,218 $29.00 151,322 5,218 $16.00
09/01/95 864 $29.50 $ 25,488 864 $16.00
------- ----------
Total: 21,174 $ 607,478
------- ----------
------- ----------
Dykes, R. 09/01/95 24,652 $30.64 $ 755,337 24,652 $16.94
09/01/95 6,596 $30.64 202,101 6,596 $16.94
09/01/95 11,808 $30.64 361,797 11,808 $16.94
09/01/95 6,944 $30.64 212,764 6,944 $16.94
09/01/95 50,000 $30.64 $1,512,000 50,000 $12.75
------- ----------
Total: 100,000 $3,043,999
------- ----------
------- ----------
Laing, J. 09/01/95 6,148 $31.00 $ 190,588 6,148 $11.00
09/01/95 3,852 $31.00 119,412 3,852 $11.00
09/01/95 1,400 $31.00 43,400
01/02/96 100 $22.88 2,288
------- ----------
Total: 11,500 $ 355,688
------- ----------
------- ----------
Witte,D. 09/05/95 8,000 $31.07 $ 248,560 8,000 $10.25
09/05/95 1,822 $31.07 56,610 1,822 $11.00
09/05/95 1,303 $31.07 40,484 1,303 $11.00
09/05/95 2,153 $31.07 66,894 2,153 $11.00
09/05/95 347 $31.07 10,781 347 $11.00
09/05/95 3,093 $31.07 96,100 3,093 $13.25
09/05/95 5,868 $31.07 182,319 5,868 $14.50
09/05/95 93 $31.07 2,890 93 $14.50
09/05/95 1,218 $31.07 37,843 1,218 $13.50
09/05/95 750 $31.07 23,303 750 $13.50
09/06/95 1,146 $32.00 $ 36,672
------- ----------
Total: 25,793 $ 802,456
------- ----------
------- ----------
GRAND TOTAL: 394,901 $12,036,231
------- -----------
------- -----------
63. This insider selling by the Individual Defendants was highly unusual,
both in its timing and in its amount. These sales came just after the purported
successful introduction of a major new product line by Symantec that was
supposed to push its earnings higher for several quarters, presumably resulting
in substantial appreciation in Symantec's stock price over that time period --
yet the defendants bailed-out at the very beginning. During the two months
preceding August and September 1995, Symantec's insiders sold only about 3,000
shares of Symantec stock. In the prior four months, they sold only about 21,000
shares. In all of 1995, prior to their August-September selling spree, they
sold only about 57,200 shares, or about 8,200 shares per month, contrasted with
- 48 -
382,899 shares sold in August-September insider bailout. Also, these stock sales
took place just 90+ days BEFORE Symantec revealed "terrible" results from the
sales of a new product line that defendants said was "meeting or beating
expectations," while they were unloading their shares.
FIRST CAUSE OF ACTION
Violation of sections 25400 and 25500 of
the California Corporations Code
64. Plaintiffs incorporate PARA 1-63.
65. Acting individually and pursuant to a scheme and conspiracy and while
aiding and abetting each other, defendants concealed and/or misrepresented
material adverse information regarding Symantec. Defendant's wrongdoing
included the making of and/or participation in the making of, untrue statements
of material facts and the omission to state material facts necessary in order to
make the statements made, in light of the circumstances under which they were
made, not misleading, and engaging in acts, practices and a course of conduct
which operated as a fraud and deceit upon plaintiffs and members of the Class in
order to induce the purchase of Symantec stock by plaintiffs and the members of
the Class, while Symantec and the Individual Defendants were selling Symantec
stock.
66. Plaintiffs and the members of the Class have suffered substantial
damages because, in reliance on the integrity of the market, they paid
artificially inflated prices for Symantec stock. Plaintiffs and the members of
the Class would not have purchased Symantec stock at the prices they paid, or at
all, if they had been aware that the market price had been artificially and
falsely
- 49 -
inflated by defendants' misleading statements and concealments. At the time of
the purchases by plaintiffs and the members of the Class of Symantec stock, the
fair market value of said stock was substantially less than the prices paid by
them.
67. By reason of the foregoing, defendants violated Section 25400 of the
Cal. Corp. Code, thereby entitling the members of the Class to recover damages
pursuant to Section 25500.
SECOND CAUSE OF ACTION
Violation of Sections 1709-1710 of
the California Civil Code
68. Plaintiffs incorporate Paragraphs 1-63, 65-66.
69. For the purpose of inducing public investors, including plaintiffs and
other members of the Class, to purchase or otherwise acquire Symantec stock, and
with intent to deceive such investors, the defendants employed a scheme and
conspiracy to defraud and aided and abetted each other as a part of which said
defendants made, participated in the making of, or aided and abetted the making
of, misrepresentations of fact and concealed the true facts and omitted to state
material facts as set forth above. Said representations and statements were not
true and defendants did not believe them to be true. Said acts by defendants
were fraudulent, oppressive and malicious.
70. Plaintiffs and the Class members each relied on one or more of the
false statements alleged herein and were damaged thereby.
BASIS OF ALLEGATIONS
71. Plaintiffs have alleged the foregoing based upon the investigation of
their counsel, which included a review of
- 50 -
Symantec's SEC filings, securities analysts' reports and advisories about the
Company, press releases issued by the Company, media reports about the Company
and discussions with consultants, and believe that substantial evidentiary
support will exist for the allegations set forth in Paragraphs 1, 3, 6, 8, 10,
22-26, 28, 31, 33 and 48-50, 52, 53, 59-62 after a reasonable opportunity for
discovery.
PRAYER FOR RELIEF
WHEREFORE, plaintiffs pray for judgment as follows:
1. Declaring this action to be a proper class action on behalf of the
Class defined herein;
2. Awarding plaintiffs and the members of the Class compensatory and/or
punitive damages;
3. Awarding plaintiffs and the members of the Class pre-judgment and
post-judgment interest, as well as reasonable attorneys' fees, expert witness
fees and other costs;
4. Awarding extraordinary, equitable and/or injunctive relief as permitted
by law, equity and the appropriate state law remedies; and
5. Awarding such other relief as this Court may deem just and proper.
JURY DEMAND
Plaintiffs demand a trial by jury.
DATED: March 11, 1996
MILBERG WEISS BERSHAD
HYNES & LERACH LLP
WILLIAM S. LERACH
ALAN SCHULMAN
BLAKE M. HARPER
/s/ WILLIAM S. LERACH
-------------------------
WILLIAM S. LERACH
- 51 -
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058
KAPLAN, KILSHEIMER & FOX, LLP
ROBERT N. KAPLAN
685 Third Avenue, 26th Floor
New York, NY 10017
Telephone: 212/687-1980
Attorneys for Plaintiffs
- 52 -
SUMMONS
(CITACION JUDICIAL)
----------------------
FOR COURT USE ONLY
NOTICE TO DEFENDANT:
GORDON EUBANKS, CHARLES BOESENBERG, EUGENE WANG,
HOWARD BAIN, ELLEN TAYLOR, ROBERT DYKES, JOHN
LAING, DEREK WITTE and SYMANTEC CORPORATION
YOU ARE BEING SUED BY PLAINTIFF:
STEVEN COOPERMAN and ERIC D. FREED, IRA, On Behalf of
Themselves and All Others Similarly Situated
----------------------
- -------------------------------------------------------------------------------
YOU HAVE 30 CALENDAR DAYS AFTER THIS SUMMONS IS SERVED ON YOU TO FILE A
TYPEWRITTEN RESPONSE AT THIS COURT.
A LETTER OR PHONE CALL WILL NOT PROTECT YOU; YOUR TYPEWRITTEN RESPONSE MUST
BE IN PROPER LEGAL FORM IF YOU WANT THE COURT TO HEAR YOUR CASE.
IF YOU DO NOT FILE YOUR RESPONSE ON TIME, YOU MAY LOSE THE CASE, AND YOUR
WAGES, MONEY AND PROPERTY MAY BE TAKEN WITHOUT FURTHER WARNING FROM THE
COURT.
THERE ARE OTHER LEGAL REQUIREMENTS. YOU MAY WANT TO CALL AN ATTORNEY RIGHT
AWAY. IF YOU DO NOT KNOW AN ATTORNEY, YOU MAY CALL AN ATTORNEY REFERRAL
SERVICE OR A LEGAL AID OFFICE (LISTED IN THE PHONE BOOK).
- -------------------------------------------------------------------------------
The name and address of the court is: CASE NUMBER
CV756665
Santa Clara County Superior Court ---------------------------
191 North First Street
San Jose, CA 95113
The name, address, and telephone number of plaintiff's attorney, or plaintiff
without an attorney, is:
William S. Lerach
Milberg Weiss Bershad Hynes & Lerach
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058
- ------------------------------------------------------------------------------
DATE: MAR 18 1996 Clerk, by /s/ B. RHODES STEPHEN V. LOVE Deputy
----------------------------------
B. RHODES
[SEAL] NOTICE TO THE PERSON SERVED: You are served
1. / / as an individual defendant.
2. / / as the person sued under the fictitious name of (SPECIFY):
3. /x/ on behalf of (SPECIFY): Symantec Corporation
under: /x/ CCP 416.10 (corporation) / / CCP 416.60 (minor)
/ / CCP 416.20 (defunct corporation) / / CCP 416.70 (conservatee)
/ / CCP 416.40 (association / / CCP 416.90 (individual)
or partnership)
/ / other:
4. / / by personal delivery on (DATE):
- -------------------------------------------------------------------------------
Form adopted by (See reverse for Proof Form 219 Co. Clk.
Rule 982 of Service) (Rev 1-84)
Judicial Council of California SUMMONS
[SANTA CLARA COUNTY SUPERIOR COURT LETTERHEAD] [SEAL]
- -------------------------------------------------------------------------------
CASE NUMBER: CV756665
NOTICE TO LITIGANTS
1. Timely filing and service of pleadings is required per Local Rule 1.1.5.
2. All parties are responsible to be acquainted with the Local Rules of Court
and to acquire the proper forms. The rules and forms to be used by the
litigants are available for purchase through:
FORMS AND RULES RULES
Rose Printing Co. San Jose Post Record
20 N. First St., Ste. A 90 N. First St., Ste. 100
San Jose, CA 95113 San Jose, CA 95113
(408) 293-8177 (408) 287-4866
3. Notice is given that the Case Management Conference has been scheduled as
follows:
- ------------------------------------------------------------------------------
DATE: 07-16-96 TIME: 10:00 DEPT. 04
- ------------------------------------------------------------------------------
4. You must file and serve a completed Case Management Conference
Questionnaire and At-Issue Memorandum at least ten calendar days before the
Case Management Conference per Local Rule 1.1.7.
5. Counsel for each party and each self-represented party shall attend and be
fully prepared to participate effectively in the Case Management Conference
per Local Rule 1.1.6(D).
6. At the Case Management Conference the court will evaluate each case as
provided in the CRC 2106 and make appropriate pre-trial orders per Local
Rule 1.1.6(D).
- --------------------------------------------------------------------------------
SANCTIONS
If you do not file the Case Management Conference Questionnaire and At-Issue
Memorandum, attend the Case Management Conference and/or participate effectively
in the conference, the court may impose sanctions (including the dismissal of
the case and payment of money)
- --------------------------------------------------------------------------------