Symantec 2008 Annual Report Download - page 157

Each quarter, we assess our compliance with accounting guidance, including the provisions of Financial
Accounting Standards Board Interpretation No. 46R, or FIN 46R, Consolidation of Variable Interest Entities — An
Interpretation of ARB No. 51. Under FIN 46R, we must consolidate a variable interest entity if we have a variable
interest (or combination of variable interests) in the entity that will absorb a majority of the entity’s expected losses,
receive a majority of the entity’s expected residual returns, or both. Currently, our equity investments are not subject
to consolidation under FIN 46R.
Derivative Financial Instruments
We utilize hedging to mitigate our foreign currency exposures, and we manage certain residual exposures
through the use of one-month forward foreign exchange contracts. We enter into forward foreign exchange
contracts with high-quality financial institutions primarily to minimize currency exchange risks associated with
certain balance sheet positions denominated in foreign currencies. We do not utilize derivative instruments for
trading or speculative purposes. Gains and losses on the contracts are included in Other income (expense), net in the
Consolidated Statements of Income in the period that gains and losses on the underlying maturing forward
transactions are recognized. The gains and losses on the contracts generally offset the gains and losses on the
underlying transactions. Changes in the fair value of forward foreign exchange contracts are included in earnings.
We do not hedge our foreign currency translation risk.
Inventories
Inventories are valued at the lower of cost or market. Cost is principally determined using the first-in, first-out
method. Inventory predominantly consists of finished goods as well as deferred costs of revenue. Deferred costs of
revenue were $32 million at March 28, 2008 and $40 million at March 30, 2007, of which $22 million and
$27 million, respectively, are related to consumer products that include content updates and will be recognized
ratably over the term of the subscription.
Property and Equipment
Property, equipment, and leasehold improvements are stated at cost, net of accumulated depreciation and
amortization. Depreciation and amortization is provided on a straight-line basis over the estimated useful lives of
the respective assets as follows:
• Computer hardware and software — two to five years
• Office furniture and equipment — three to five years
• Leasehold improvements — the shorter of the lease term or seven years
• Buildings — twenty-five to thirty years
Acquired Product Rights
Acquired product rights are comprised of purchased product rights, technologies, databases, patents, and
contracts from acquired companies. Acquired product rights are stated at cost less accumulated amortization.
Amortization of acquired product rights is provided on a straight-line basis over the estimated useful lives of the
respective assets, generally one to eight years, and is included in Cost of revenues in the Consolidated Statements of
Income.
On an annual basis, we evaluate acquired product rights for impairment by comparing the carrying value of the
assets to the net realizable value of the assets, in accordance with SFAS No. 86. To determine the net realizable value
of the assets, we use the estimated future gross revenues from each product. Our estimated future gross revenues of
each product are based on company forecasts and are subject to change. As of March 28, 2008 and March 30, 2007,
we recorded no impairment associated with this analysis.
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SYMANTEC CORPORATION
Notes to Consolidated Financial Statements — (Continued)