Symantec 2009 Annual Report Download - page 93

we determine that the carrying value of the long-lived assets may not be recoverable. In determining our fair value,
we obtain market value appraisal information from third-parties.
Fair Value of Financial Instruments
Beginning in the first fiscal quarter of 2009, the assessment of fair value for our financial instruments is based
on the provisions of SFAS No. 157, Fair Value Measurements. SFAS No. 157 establishes a fair value hierarchy that
is based on three levels of inputs and requires an entity to maximize the use of observable inputs and minimize the
use of unobservable inputs when measuring fair value.
We use inputs such as actual trade data, benchmark yields, broker/dealer quotes and other similar data which
are obtained from independent pricing vendors, quoted market prices or other sources to determine the ultimate fair
value of our assets and liabilities. We use such pricing data as the primary input, to which we have not made any
material adjustments, to make our assessments and determinations as to the ultimate valuation of our investment
portfolio, and we are ultimately responsible for the financial statements and underlying estimates. The fair value
and inputs are reviewed for reasonableness, may be further validated by comparison to publicly available
information and could be adjusted based on market indices or other information that management deems material
to their estimate of fair value.
As of April 3, 2009, our financial instruments measured at fair value on a recurring basis included $1.5 billion
of assets. Our cash equivalents primarily consist of money market funds, bank securities, and government notes and
represent 98% of our total financial instruments measured at fair value on a recurring basis.
As of April 3, 2009, $392 million of investments were classified as Level 1, most of which represents
investments in money market funds. These were classified as Level 1 because their valuations were based on quoted
prices for identical securities in active markets. Determining fair value for Level 1 instruments generally does not
require significant management judgment.
As of April 3, 2009, $1.1 billion of investments were classified as Level 2, of which $474 million and
$654 million (98% together of total financial instruments fair valued on a recurring basis) represent investments in
corporate securities and government securities, respectively. These were classified as Level 2 because either (1) the
estimated fair value is based on the fair value of similar securities or (2) their valuations were based on pricing
models with all significant inputs derived from or corroborated by observable market prices for identical securities
in markets with insufficient volume or infrequent transactions (less active markets). Level 2 inputs generally are
based on non-binding market consensus prices that are corroborated by observable market data; quoted prices for
similar instruments; and/or model-derived valuations in which all significant inputs are observable or can be derived
principally from or corroborated with observable market data for substantially the full term of the assets or liabilities
or quoted prices for similar assets or liabilities. While determining the fair value for Level 2 instruments does not
necessarily require significant management judgment, it generally involves the following level of judgment and
subjectivity:
• Determining whether a market is considered active. An assessment of an active market for marketable
securities generally takes into consideration trading volume for each instrument type or whether a trading
market exists for a given instrument. Our Level 2 financial instruments were so classified due to either low
trading activity in active markets or no active market existing. For those securities where no active market
existed, amortized cost was used and approximates fair value because of their short maturities. For these
financial instruments classified as Level 2 as of April 3, 2009, we used identical securities for determining
fair value.
• Determining which model-derived valuations to use in determining fair value. When observable market
prices for identical securities or similar securities are not available, we may price marketable securities
using: non-binding market consensus prices that are corroborated with observable market data; or pricing
models, such as discounted cash flow approaches, with all significant inputs derived from or corroborated
with observable market data. In addition, the credit ratings for issuers of debt instruments in which we are
invested could change, which could lead to lower fair values. As of April 3, 2009, the fair value of
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