Symantec 2008 Annual Report Download - page 114

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.
Valuation of goodwill, intangible assets and long-lived assets
When we acquire businesses, we allocate the purchase price to tangible assets and liabilities and identifiable
intangible assets acquired. Any residual purchase price is recorded as goodwill. The allocation of the purchase price
requires management to make significant estimates in determining the fair values of assets acquired and liabilities
assumed, especially with respect to intangible assets. These estimates are based on historical experience and
information obtained from the management of the acquired companies. These estimates can include, but are not
limited to, the cash flows that an asset is expected to generate in the future, the appropriate weighted-average cost of
capital, and the cost savings expected to be derived from acquiring an asset. These estimates are inherently
uncertain and unpredictable. In addition, unanticipated events and circumstances may occur which may affect the
accuracy or validity of such estimates.
Goodwill. At March 28, 2008, goodwill was $11.2 billion, other intangible assets, net were $1.2 billion, and
acquired product rights, net were $649 million. We assess goodwill and intangible assets with indefinite life 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 in accordance with SFAS No. 142 “Goodwill and Other Intangible Assets”
(“SFAS 142”). The provisions of SFAS 142 require that a two-step impairment test be performed on goodwill. In the
first step, we compare the fair value of each reporting unit to its carrying value. Our reporting units are consistent
with our reportable segments. If the fair value of the reporting unit exceeds the carrying value of the equity assigned
to that unit, goodwill is not considered to be impaired and we are not required to perform further testing. If the
carrying value of the equity assigned to the reporting unit exceeds the fair value of the reporting unit, then we must
perform the second step of the impairment test in order to determine the implied fair value of that reporting unit’s
goodwill. If the carrying value of the reporting unit’s goodwill exceeds its implied fair value, then we would record
an impairment loss equal to the excess.
To determine the reporting units’ fair value in the current year evaluation, we use 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, growth rates 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 operating results and
financial condition.
In the fourth quarter of fiscal 2008, we performed our annual impairment analysis of goodwill. 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.
Intangible Assets. We assess the impairment of other identifiable intangible assets according to SFAS 142
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 operating results
and financial condition. During fiscal 2008 we recorded an impairment charge of $95 million primarily for the write
down of intangible assets related to the sale of our Application Performance Management business.
Long-Lived Assets. We account for long-lived assets in accordance with SFAS No. 144, “Accounting for the
Impairment or Disposal of Long-Lived Assets.” We record impairment charges on long-lived assets to be held and
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