Symantec 2009 Annual Report Download - page 92

historical and forecasted amounts specific to each reporting unit, and consider estimates of cash flows, including
revenues, operating costs, growth rates and other relevant factors, as well as discount rates to be applied. Although
our cash flow forecasts are based on assumptions that are consistent with the plans and estimates we are using to
manage the underlying reporting units, there is significant judgment in determining the cash flows attributable to
these reporting units over their remaining useful lives.
Based on a combination of factors, including the current economic environment and a decline in our market
capitalization, we concluded that there were sufficient indicators to require us to perform an interim goodwill
impairment analysis during the third quarter of fiscal 2009. The analysis was not completed during the third quarter
of fiscal 2009 and an estimated impairment charge of $7.0 billion was recorded. The analysis was subsequently
finalized and an additional impairment charge of $413 million was included in our results for the fourth quarter of
fiscal 2009. As a result, we incurred a total impairment charge of $7.4 billion for fiscal 2009. We also performed our
annual impairment analysis during the fourth quarter of fiscal 2009 and determined that no additional impairment
charge was necessary.
The methodology applied in the current year analyses was consistent with the methodology applied in the prior
year analysis, but was based on updated assumptions, as appropriate. As a result of the downturn in the economic
environment during the second half of calendar 2008, determining the fair value of the individual reporting units
was even more judgmental than in the past. In particular, the global economic recession has reduced our visibility
into long-term trends and consequently, estimates of future cash flows used in the current year analyses are lower
than those used in the prior year analysis. The discount rates utilized in the analysis also reflect market-based
estimates of the risks associated with the projected cash flows of individual reporting units and were increased from
the prior year analysis to reflect increased risk due to current volatility in the economic environment.
If there are changes to the methods used to allocate carrying values, if management’s estimates of future
operating results change, if there are changes in the identified reporting units or if there are changes to other
significant assumptions, the estimated carrying values for each reporting unit and the estimated fair value of our
goodwill could change significantly, and could result in an impairment charge. Such changes could also result in
goodwill impairment charges in future periods, which could have a significant impact on our operating results and
financial condition therein.
Intangible Assets. We assess the impairment of identifiable intangible assets according to SFAS Nos. 142 or
144, as appropriate, 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 undiscounted 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.
We account for developed technology or acquired product rights in accordance with SFAS No. 86.We record
impairment charges on acquired product rights when we determine that the net realizable value of the assets may not
be recoverable. 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.
Long-Lived Assets (including Assets Held for Sale). We account for long-lived assets in accordance with
SFAS No. 144. We record impairment charges on long-lived assets to be held and used when we determine that the
carrying value of the long-lived assets may not be recoverable. Based upon the existence of one or more indicators
of impairment, we measure any impairment of long-lived assets based on a projected undiscounted cash flow
method using assumptions determined by our management to be commensurate with the risk inherent in our current
business model. Our estimates of cash flows require significant judgment based on our historical results and
anticipated results and are subject to many triggering factors which could change and cause a material impact to our
operating results or financial condition. We record impairment charges on long-lived assets to be held for sale when
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