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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): December 18, 2000
SYMANTEC CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 0-17781 77-181864
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(State of Incorporation or Organization) (Commission File Number) (I.R.S. Employer Identification No.)
20330 Stevens Creek Boulevard, Cupertino, California 95014
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(Address of principal executive offices) (Zip Code)
Registrant's telephone no., including area code: (408) 253-9600
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION ASSETS.
ITEM 5. OTHER EVENTS.
As previously reported in Registrant's Registration Statement on Form S-8
filed on December 19, 2000, File No. 333-52200, (and by press release on
December 18, 2000), on December 18, 2000, Apache Acquisition Corp., a Delaware
corporation and a wholly- owned subsidiary of the Registrant (the "Merger Sub")
merged with and into AXENT Technologies, Inc., a Delaware corporation ("AXENT"),
AXENT became a wholly-owned subsidiary of the Registrant and all outstanding
shares of AXENT's common stock were converted into 0.5 shares of the
Registrant's common stock. The transaction was pursuant to an Agreement and Plan
of Merger (the "Merger Agreement") dated July 26, 2000, and will be accounted
for as a purchase. This amendment to the Form 8-K filed on January 9, 2001 is
being filed to include the unaudited pro forma financial information. Actual
financial information for the combined entity is included in the Form 10-Q for
the quarter ended December 31, 2000 filed on February 12, 2001.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(b) Pro Forma Financial Information.
OVERVIEW
On July 26, 2000, Symantec Corporation ("Symantec" or the "Company") reached a
definitive agreement to acquire AXENT Technologies, Inc. ("AXENT") in a
transaction to be accounted for using the purchase method of accounting. On
December 18, 2000, Symantec issued approximately 14,528,000 shares of Symantec
Common Stock, based on the predetermined exchange ratio of 0.50 shares of
Symantec common stock for each share of AXENT common stock, to the AXENT
shareholders. Symantec also assumed all of the outstanding AXENT employee stock
options valued at approximately $87 million. Symantec estimates it will incur
approximately $18 million in acquisition expenses, which includes financial
advisory, legal and accounting fees, duplicative site and fixed assets and
severance costs. The combined total of the common stock issued, options assumed
and acquisition costs is approximately $925 million based on the average of the
closing price of Symantec's Common Stock on the agreement date of July 26, 2000
and for the three days before and after July 26, 2000.
With respect to stock options to be assumed as part of the merger, all AXENT
employee stock options were exchanged for Symantec stock options and are
included as part of the purchase price based on their fair value as of July 26,
2000. Any unvested AXENT options exchanged for unvested Symantec options are
also included in the purchase price based on their fair value; however, the
portion of the intrinsic value of the unvested options that will be deemed to be
earned over the remaining vesting period of those options has been allocated to
deferred compensation and will be amortized over the remaining vesting period.
The fair value of the options to be assumed has been based on the Black-Scholes
option pricing model using the following assumptions: fair market value of the
underlying shares which is based on the average closing price of Symantec's
common stock on July 26, 2000 and for the three days before and after July 26,
2000; the remaining contractual life of each option was used for the expected
life; expected volatility of 0.65; no expected dividend rate; and risk-free
interest rate of 6.5%.
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The aggregate purchase price has been allocated as follows, based on an
independent appraisal of the AXENT intangibles and in-process research and
development (in thousands):
Net tangible assets of AXENT $ 146,809
In-process research and development 22,300
Tradename 4,100
Workforce-in-place 10,670
Developed technology 75,500
Deferred income taxes (34,580)
Deferred compensation 992
Goodwill 698,868
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$ 924,659
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In-process research and development has not reached technological feasibility
based on identifiable technological risk factors which indicate that even though
successful completion is expected, it is not assured at the acquisition date and
will be immediately charged to operations. The amount allocated to tradename,
workforce-in-place and developed technology is being amortized over the
estimated useful lives of four years. The purchase price in excess of tangible
assets and identifiable intangible assets has been allocated to goodwill and
will be amortized over its expected useful life of four years.
The tangible assets of AXENT acquired in the merger principally include cash,
marketable securities, accounts receivable and fixed assets. Liabilities of
AXENT assumed in the merger principally included accounts payable and deferred
revenue for maintenance and technical support contracts.
The accompanying unaudited pro forma combined consolidated balance sheet gives
effect to the merger of Symantec and AXENT as if such transaction occurred on
September 30, 2000. The unaudited pro forma combined balance sheet combines the
unaudited consolidated balance sheet of Symantec and AXENT as of September 30,
2000.
To determine the value of the developed technology, the expected future cash
flow attributable to all existing technology was discounted, taking into account
the risks related to the characteristics and applications of the technology,
existing and future markets and assessments of the life cycle stage of the
technology. The analysis resulted in a valuation of approximately $76 million
for developed technology which has reached technological feasibility and
therefore was capitalizable. The developed technology is being amortized on a
straight-line basis over a four-year period.
The value of the workforce-in-place was derived by estimating the costs to
replace the existing employees, including recruiting and hiring costs and
training costs for each category of employee. The analysis determined a
valuation of approximately $11 million for the workforce-in-place, and is being
amortized on a straight-line basis over a four-year period.
The value of the tradename of approximately $4 million was derived by estimating
the expected future cash flows attributable to royalties on revenues from
existing products that have established name recognition and customer
acceptance. The value of the customer base is being amortized on a straight-line
basis over a four-year period.
The value of the deferred compensation of approximately $1 million was derived
using the guidance of Financial Accounting Standards Board Interpretation number
44.
The accompanying unaudited pro forma combined consolidated statements of
operations present the results of operations of Symantec for the year ended
March 31, 2000 and the six month period ended September 30, 2000, combined with
the statement of operations of AXENT for the year ended December 31, 1999 and
the six month period ended September 30, 2000. The unaudited pro forma combined
consolidated statements of operations give effect to this acquisition as if it
had occurred as of April 3, 1999. Financial information for AXENT for the three
months ended March 31, 2000, is not represented due to the different fiscal year
ends for AXENT and Symantec.
The unaudited pro forma combined consolidated balance sheet and statement of
operations are not necessarily indicative of the financial position and the
operating results that would have been achieved had the transaction been
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in effect as of the dates indicated and should not be construed as being a
representation of financial position or future operating results of the combined
companies.
The unaudited pro forma combined consolidated financial information should be
read in conjunction with the audited consolidated financial statements and
related notes of Symantec and the audited consolidated financial statements and
related notes of AXENT.
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PRO FORMA COMBINED CONSOLIDATED BALANCE SHEET - UNAUDITED
AS OF SEPTEMBER 30, 2000 (IN THOUSANDS)
Pro Forma
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Symantec AXENT Adjustments Combined
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ASSETS
Current assets:
Cash, cash equivalents and
short-term investments $ 507,829 $ 125,108 $ $ 632,937
Trade accounts receivable 92,599 31,616 124,215
Inventories 2,895 -- 2,895
Deferred income taxes 45,363 -- 45,363
Other 23,159 4,417 27,576
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Total current assets 671,845 161,141 832,986
Restricted investments 72,168 -- 72,168
Equipment and leasehold improvements 61,198 13,816 75,014
Deferred income taxes 38,827 2,144 (34,580) C 6,391
Acquired product rights and other intangibles 28,993 1,000 89,270 B 119,263
Goodwill 73,118 23,836 675,032 A 771,986
Other 27,803 6,315 34,118
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$ 973,952 $ 208,252 $ 729,722 $ 1,911,926
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 52,745 $ 2,641 $ $ 55,386
Accrued compensation and benefits 25,517 7,846 33,363
Deferred revenue 121,912 19,385 141,297
Other accrued expenses 43,446 6,719 18,300 D 68,465
Income taxes payable 34,977 1,447 36,424
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Total current liabilities 278,597 38,038 18,300 334,935
Long-term obligations 2,712 -- 2,712
Stockholders' equity:
Preferred stock -- -- --
Common stock 611 580 (435) E 756
Capital in excess of par value 452,729 203,384 702,830 E 1,358,943
Deferred compensation (352) -- (992) I (1,344)
Accumulated other comprehensive loss (47,955) (1,431) (49,386)
Retained earnings 287,610 (32,319) 10,019 F 265,310
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Total stockholders' equity 692,643 170,214 711,422 1,574,279
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$ 973,952 $ 208,252 $ 729,722 $ 1,911,926
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See accompanying Notes to Pro Forma Combined Consolidated Financial Information.
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PRO FORMA COMBINED CONSOLIDATED STATEMENT OF OPERATIONS - UNAUDITED
(IN THOUSANDS EXCEPT PER SHARE DATA)
Year Ended
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Symantec AXENT
March 31, December 31,
2000 1999 Adjustments Combined
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Net revenues $ 745,725 $ 112,813 $ $ 858,538
Cost of revenues 121,073 16,049 21,543 G 158,665
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Gross margin 624,652 96,764 (21,543) 699,873
Operating expenses
Research and development 108,425 26,859 135,284
Sales and marketing 306,755 61,252 368,007
General and administrative 42,150 11,572 496 I 54,218
Acquired in-process research and development 4,300 2,000 6,300
Amortization of goodwill and other
acquisition related intangibles 18,801 4,184 175,742 G 198,727
Restructuring and other expenses 9,018 1,753 10,771
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Total operating expenses 489,449 107,620 176,238 773,307
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Operating income (loss) 135,203 (10,856) (197,781) (73,434)
Interest income and other 14,730 4,775 19,505
Income, net of expense,
from sales of technologies 107,358 -- 107,358
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Income (loss) before income taxes 257,291 (6,081) (197,781) 53,429
Provision for income taxes 87,143 859 88,002
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Net income (loss) $ 170,148 $ (6,940) $ (197,781) $ (34,573)
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Net income (loss) per share - basic $ 2.94 $ (0.48)
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Net income (loss) per share - diluted $ 2.73 $ (0.48)
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Shares to compute basic earnings per share 57,870 H 72,398
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Shares to compute diluted earnings per share 62,214 H 72,398
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See accompanying Notes to Pro Forma Combined Consolidated Financial Information.
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PRO FORMA COMBINED CONSOLIDATED STATEMENT OF OPERATIONS - UNAUDITED
(IN THOUSANDS EXCEPT PER SHARE DATA)
Six Months ended September 30, 2000
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Symantec AXENT Adjustments Combined
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Net revenues $ 383,654 $ 68,138 $ $ 451,792
Cost of revenues 54,445 11,211 10,771 F 76,427
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Gross margin 329,209 56,927 (10,771) 375,365
Operating expenses
Research and development 54,480 13,900 68,380
Sales and marketing 152,396 33,886 186,282
General and administrative 19,652 7,077 248 I 26,977
Amortization of goodwill and other
acquisition related intangibles 10,937 2,941 87,871 G 101,749
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Total operating expenses 237,465 57,804 88,119 383,388
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Operating income (loss) 91,744 (877) (98,890) (8,023)
Interest income and other 14,736 3,410 18,146
Income, net of expense,
from sales of technologies 11,198 -- 11,198
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Income before income taxes 117,678 2,533 (98,890) 21,321
Provision for income taxes 40,168 733 40,901
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Net income (loss) $ 77,510 $ 1,800 $ (98,890) $ (19,580)
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Net income (loss) per share - basic $ 1.28 $ (0.26)
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Net income (loss) per share - diluted $ 1.21 $ (0.26)
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Shares to compute basic earnings per share 60,754 H 75,282
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Shares to compute diluted earnings per share 64,094 H 75,282
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See accompanying Notes to Pro Forma Combined Consolidated Financial Information.
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NOTES TO PRO FORMA COMBINED CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
Note 1 - Basis of Presentation
The unaudited pro forma combined consolidated statements of operation have been
prepared to reflect the acquisition of AXENT Technologies, Inc. ("AXENT") by
Symantec Corporation ("Symantec") as if the acquisition had occurred as of April
3, 1999. The pro forma combined consolidated statement of operations for the
year ended March 31, 2000 reflects the combination of the separate historical
statement of operations of Symantec for the year ended March 31, 2000 and of
AXENT for the year ended December 31, 1999. The pro forma combined consolidated
statement of operations for the six months ended September 30, 2000 reflects the
combination of the separate historical statement of operations of Symantec and
AXENT for the six months ended September 30, 2000. Revenues of AXENT of
approximately $30 million and net income of approximately $33,000 for the period
from January 1, 2000 through March 31, 2000 are not included in either of the
unaudited pro forma combined consolidated statements of operations.
Note 2 - Pro Forma Adjustments
(A) To record the value of goodwill as described in the overview of
approximately $699 million and elimination of AXENT's goodwill related
to historical acquisitions of approximately $24 million.
(B) To record the value of developed technology, workforce-in-place, trade
name and elimination of AXENT's other intangible assets related to
historical acquisitions of approximately $90 million.
(C) To record the value of deferred income tax liabilities associated with
the intangible assets and deferred income tax assets associated with
assumption of stock options.
(D) To reflect acquisition expenses, primarily transaction fees and
professional services, of approximately $18 million.
(E) To reflect the elimination of AXENT's common stock ($204 million) and
the issuance of 14.5 million shares of Symantec Common Stock valued at
approximately $819 million and the assumption of outstanding AXENT
stock options valued at approximately $87 million.
(F) Reflects in-process technology charge of $22 million and elimination
of AXENT's accumulated deficit ($33 million). The in-process research
and development cost is treated as an expense and therefore decreases
the retained earnings.
(G) To record the amortization of goodwill and identifiable intangible
assets related to the acquisition of AXENT as if the transaction
occurred on April 3, 1999. Goodwill in relation to the acquisition was
$699 million and is being amortized on a straight-line basis over four
years to operating expenses. Identifiable intangible assets recorded
in relation to the acquisition was approximately $90 million and is
being amortized on a straight-line basis over four years to cost of
revenues.
(H) Weighted average shares used to calculate pro forma basic and diluted
net loss per share for the period presented is computed using the
weighted average number of common stock outstanding for the period
presented and the shares to be issued in conjunction with the
acquisition of AXENT as if such issued shares were outstanding as of
April 3, 1999.
(I) To record the portion of intrinsic value of unvested stock options
that will be deemed to be earned over the remaining vesting period and
the related deferred compensation amortization expense.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYMANTEC CORPORATION
/s/ ART COURVILLE
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Art Courville
Vice President and General Counsel
EXHIBIT INDEX
2.1 Agreement and Plan of Merger, dated as of July 26, 2000, among
Symantec, Merger Sub and AXENT. (Incorporated herein by reference to
Registrant's Registration Statement on Form S-4 filed on September 20,
2000, File No. 333-46264.)
99.1 Financial Statements of AXENT Technologies, Inc. for the three and
nine month periods ended September 30, 2000 and 1999 as set forth on
AXENT's Quarterly Report on Form 10-Q for the quarter ended September
30, 2000 (File No. 000-28100.)
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