Symantec 2009 Annual Report Download - page 105

Non-operating Income and Expense
Fiscal
2009 $ %
Fiscal
2008 $ %
Fiscal
2007
2009 vs. 2008 2008 vs. 2007
($ in thousands)
Interest income ................. $37,054 $ 76,896 $122,043
Interest expense................. (29,705) (29,480) (27,233)
Impairment of marketable securities . . (3,658) — —
Settlements of litigation, net ....... — 58,500 —
Other income, net ............... 12,041 4,327 17,070
Total ....................... $15,732 $(94,511) (86)% $110,243 $(1,637) (1)% $111,880
Interest income decreased during fiscal years 2009 and 2008 primarily due to lower average cash balances
outstanding and lower average yields on our invested cash and short-term investment balances. We expect that our
interest expense will increase with the adoption of Financial Accounting Standards Board (“FASB”) FSP APB
No. 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including
Partial Cash Settlement). Please see “Newly Adopted and Recently Issued Accounting Pronouncements” below.
Interest expense is primarily related to the interest and amortization of issuance costs related to our 0.75% and
1.00% Convertible Senior Notes issued in June 2006. Fiscal 2007 also includes interest and accretion related to the
0.25% Convertible Subordinated Notes that we assumed in connection with our acquisition of Veritas, which were
paid in full during August 2006.
In fiscal 2008, we recorded a net gain from Settlements of litigation.
Other income, net includes a net gain of foreign currency for fiscal 2009, while fiscal 2008 and fiscal 2007
include net foreign currency losses. In fiscal 2007, Other income, net includes a gain of $20 million on the sale of
our buildings in Milpitas, California, and Maidenhead, United Kingdom.
Provision for Income Taxes
2009 2008 2007
Fiscal
($ in thousands)
Provision for income taxes ............................ $221,630 $248,673 $227,242
Effective tax rate on earnings .......................... (3)% 35% 36%
Our effective tax rate was approximately (3)%, 35%, and 36% in fiscal 2009, 2008, and 2007, respectively. The
tax provision for fiscal 2009 includes a $56 million net tax benefit associated with the impairment of goodwill
charge of $7.4 billion, materially impacting the overall effective tax rate. The effective tax rate for fiscal 2009
otherwise reflects the benefits of lower-taxed foreign earnings and losses from the joint venture, domestic
manufacturing tax incentives, and research and development credits. The effective tax rate for fiscal 2008 reflects
the impact of non-deductible stock-based compensation offset by U.S. tax benefits from domestic manufacturing
deductions. The effective tax rate for fiscal 2007 reflects the impact of non-deductible stock-based compensation
offset by foreign earnings taxed at a lower rate than the U.S. tax rate.
The $56 million net tax benefit arising from the impairment of goodwill during the year consists of a
$112 million tax benefit from elements of tax deductible goodwill, net of a $56 million tax provision to increase our
valuation allowances for certain deferred tax assets in a foreign jurisdiction that will require an extended period of
time to realize. The valuation allowance increased by $63 million in total in fiscal 2009 and totals $101 million as of
April 3, 2009.
As a result of the impairment of goodwill, we have cumulative pre-tax book losses, as measured by the current
and prior two years. We considered the negative evidence of this cumulative pre-tax book loss position on our ability
to continue to recognize deferred tax assets that are dependent upon future taxable income for realization. Levels of
future taxable income are subject to the various risks and uncertainties discussed in Part I, Item 1A, Risk Factors, set
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