Symantec 2008 Annual Report Download - page 131

We are as yet unable to confirm our eligibility to claim a lower tax rate on a distribution made from a Veritas
foreign subsidiary prior to the acquisition. The distribution was intended to be made pursuant to the Jobs Act, and
therefore eligible for a 5.25% effective U.S. federal rate of tax, in lieu of the 35% statutory rate. We are seeking a
ruling from the IRS on the matter. Because we were unable to obtain this ruling prior to filing the Veritas tax return
in May 2006, we have paid $130 million of additional U.S. taxes. Since this payment relates to the taxability of
foreign earnings that are otherwise the subject of the IRS assessment, this additional payment reduced the amount of
taxes payable accrued as part of the purchase accounting for pre-acquisition contingent tax risks. For further
information, see Note 17 of the Notes to Consolidated Financial Statements in this annual report and Critical
Accounting Estimates — Income Taxes above.
In connection with the note hedge transactions discussed in Note 9 of the Notes to the Consolidated Financial
Statements in this annual report, we established a deferred tax asset of approximately $232 million to account for
the book-tax basis difference in the convertible notes resulting from note hedge transactions. The deferred tax asset
has been accounted for as an increase to Capital in excess of par value.
The Company adopted the provisions of FASB Interpretation No. 48, FIN 48, Accounting for Uncertainty in
Income Taxes, effective March 31, 2007. FIN 48 addresses the accounting for and disclosure of uncertainty in
income tax positions, by prescribing a minimum recognition threshold that a tax position is required to satisfy
before being recognized in the financial statements. FIN 48 also provides guidance on derecognition, measurement,
classification, interest and penalties, accounting in interim periods, disclosure and transition.
The cumulative effect of adopting FIN 48 was a decrease in tax reserves of $16 million, resulting in a decrease
in Veritas goodwill of $10 million, an increase of $5 million to Retained Earnings balance, and a $1 million increase
in Capital in excess of par value. Upon adoption, the gross liability for unrecognized tax benefits at March 31, 2007
was $456 million, exclusive of interest and penalties.
LIQUIDITY AND CAPITAL RESOURCES
Sources of Cash
We have historically relied primarily on cash flow from operations, borrowings under a credit facility,
issuances of convertible notes and equity securities for our liquidity needs. Key sources of cash include earnings
from operations and existing cash, cash equivalents, short-term investments, and our revolving credit facility.
In July 2006, we entered into a five-year $1 billion senior unsecured revolving credit facility that expires in
July 2011. During fiscal 2008, we borrowed $200 million under the credit facility. In order to maintain availability
to draw on the credit facility, we must maintain certain covenants, including a specified ratio of debt to earnings
before interest, taxes, depreciation, and amortization as defined as well as various other non-financial covenants. As
of March 28, 2008, we were in compliance with these covenants.
As of March 28, 2008, we had cash and cash equivalents of $1.9 billion and short-term investments of
$537 million resulting in a net liquidity position (unused availability of the credit facility, cash and cash equivalents
and short-term investments) of $3.2 billion.
We believe that our cash balances, cash that we generate over time from operations, and our borrowing
capacity will be sufficient to satisfy our anticipated cash needs for working capital and capital expenditures for at
least the next 12 months.
Uses of Cash
Our principal cash requirements include working capital, capital expenditures, payments of principal and
interest on our debt and payments of taxes. In addition, we regularly evaluate our ability to repurchase stock, pay
debts and acquire other businesses.
Acquisition-Related. We generally use cash to fund the acquisition of other businesses and from time to time
use our revolving credit facility when necessary. In April 2007, we acquired the outstanding common stock of
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