Symantec 2007 Annual Report Download - page 41

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be different than what was estimated. These factors and unanticipated changes in the economic and industry
environment could make actual results differ from our return estimates.
Reserves for rebates
We estimate and record reserves for channel and end-user rebates as an offset to revenue. For consumer
products that include content updates, rebates are recorded as a ratable offset to revenue over the term of the
subscription. Our estimated reserves for channel volume incentive rebates are based on distributors’ and resellers’
actual performance against the terms and conditions of volume incentive rebate programs, which are typically
entered into quarterly. Our reserves for end-user rebates are estimated based on the terms and conditions of the
promotional programs, actual sales during the promotion, amount of actual redemptions received, historical
redemption trends by product and by type of promotional program, and the value of the rebate. We also consider
current market conditions and economic trends when estimating our reserves for rebates. If we made different
estimates, material differences may result in the amount and timing of our net revenues for any period presented.
Business Combinations
When we acquire businesses, we allocate the purchase price to tangible assets and liabilities and identifiable
intangible assets acquired. Any residual purchase price is recorded as goodwill. The allocation of the purchase price
requires management to make significant estimates in determining the fair values of assets acquired and liabilities
assumed, especially with respect to intangible assets. These estimates are based on historical experience and
information obtained from the management of the acquired companies. These estimates can include, but are not
limited to, the cash flows that an asset is expected to generate in the future, the appropriate weighted-average cost of
capital, and the cost savings expected to be derived from acquiring an asset. These estimates are inherently
uncertain and unpredictable. In addition, unanticipated events and circumstances may occur which may affect the
accuracy or validity of such estimates.
At March 31, 2007, Goodwill was $10.3 billion, Other intangible assets, net were $1.2 billion, and Acquired
product rights, net were $910 million. We assess goodwill for impairment within our reporting units annually or
more often if events or changes in circumstances indicate that the carrying value may not be recoverable. We
evaluate goodwill for impairment by comparing the fair value of each of our reporting units, which are the same as
our operating segments, to its carrying value, including the goodwill allocated to that reporting unit. To determine
the reporting units’ fair value in the current year evaluation, we used the income approach under which we calculate
the fair value of each reporting unit based on the estimated discounted future cash flows of that unit. Our cash flow
assumptions are based on historical and forecasted revenue, operating costs, and other relevant factors. If
management’s estimates of future operating results change, or if there are changes to other assumptions, the
estimate of the fair value of our goodwill could change significantly. Such change could result in goodwill
impairment charges in future periods, which could have a significant impact on our consolidated financial
statements.
We assess the impairment of acquired product rights and other identifiable intangible assets whenever events
or changes in circumstances indicate that an asset’s carrying amount may not be recoverable. An impairment loss
would be recognized when the sum of the estimated future cash flows expected to result from the use of the asset and
its eventual disposition is less than its carrying amount. Such impairment loss would be measured as the difference
between the carrying amount of the asset and its fair value. Our cash flow assumptions are based on historical and
forecasted revenue, operating costs, and other relevant factors. If management’s estimates of future operating results
change, or if there are changes to other assumptions, the estimate of the fair value of our acquired product rights and
other identifiable intangible assets could change significantly. Such change could result in impairment charges in
future periods, which could have a significant impact on our consolidated financial statements.
Accounting for Excess Facilities
We have estimated expenses for excess facilities related to consolidating, moving, and relocating personnel or
sites as a result of restructuring activities and business acquisitions. In determining our estimates, we obtain
information from third party leasing agents to calculate anticipated third party sublease income and the vacancy
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