Symantec 2009 Annual Report Download - page 144

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engineering, sales and marketing resources, personnel, and licenses related to intellectual property in exchange for a
51% ownership interest in the joint venture.
The contribution of assets to the joint venture was accounted for at its carrying value. The historical carrying
value of the assets contributed by Symantec comprised a significant portion of the net assets of the joint venture. As
a result, our carrying value of the investment in the joint venture exceeded our proportionate share in the book value
of the joint venture by approximately $75 million upon formation of the joint venture. As the contributions for both
Symantec and Huawei were recorded at historical carrying value by the joint venture, this basis difference is
attributable to the contributed identified intangible assets. The basis difference is being amortized over a weighted-
average period of 9 years, the estimated useful lives of the underlying identified intangible assets to which the basis
difference is attributed.
On February 5, 2011, we have a one-time option to purchase an additional two percent ownership interest from
Huawei for $28 million. We determined the value of the option using the Black-Scholes option-pricing model. The
value of the option is not considered material to the financial statements and is recorded in Investment in joint
venture on the Balance Sheet. We have concluded that the option does not meet the definition of a derivative under
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. Symantec and Huawei each have the
right to purchase all of the other partner’s ownership interest through a bid process upon certain triggering events set
to occur as early as February 5, 2011.
In fiscal 2009, we recorded a loss of approximately $53 million related to our share of the joint venture’s net
loss, including the amortization of the basis difference described above, for the joint venture’s period ended
December 31, 2008. The carrying value of our investment in the joint venture as of April 3, 2009 was approximately
$97 million.
Summarized unaudited statement of operations information for the joint venture and the calculation of our
share of the joint venture’s loss are as follows:
For the Period from
February 5, 2008 to
December 31, 2008
(In thousands)
Net revenues . . . ................................................ $28,081
Gross margin . . . ................................................ 6,997
Net loss, as reported by the joint venture............................... $(92,550)
Symantec’s ownership interest....................................... 49%
Symantec’s proportionate share of net loss ............................. $(45,349)
Adjustment for amortization of basis difference .......................... (7,713)
Loss from joint venture .......................................... $(53,062)
Note 8. Debt
Convertible senior notes
In June 2006, we issued $1.1 billion principal amount of 0.75% Convertible Senior Notes due June 15, 2011
(the “0.75% Notes”) and $1.0 billion principal amount of 1.00% Convertible Senior Notes due June 15, 2013 (the
“1.00% Notes”) to initial purchasers in a private offering for resale to qualified institutional buyers pursuant to SEC
Rule 144A. We refer to the 0.75% Notes and the 1.00% Notes collectively as the Senior Notes. We received
proceeds of $2.1 billion from the Senior Notes and incurred net transaction costs of approximately $33 million,
which were allocated proportionately to the 0.75% Notes and the 1.00% Notes. The 0.75% Notes and 1.00% Notes
were each issued at par and bear interest at 0.75% and 1.00% per annum, respectively. Interest is payable
semiannually in arrears on June 15 and December 15, beginning December 15, 2006.
84
SYMANTEC CORPORATION
Notes to Consolidated Financial Statements — (Continued)