Symantec 2010 Annual Report Download - page 141

When we are unable to establish selling price using VSOE or TPE, we use ESP in the allocation of arrangement
consideration. The objective of ESP is to determine the price at which we would transact a sale if the product or
service were sold on a stand-alone basis. The determination of ESP is made through consultation with and formal
approval by our management, taking into consideration the go-to-market strategy and pricing factors. ESP applies
to a small portion of our arrangements with multiple deliverables.
Indirect channel sales
For our Consumer segment, we sell packaged software products through a multi-tiered distribution channel.
We also sell electronic download and packaged products via the Internet. We separately sell annual content update
subscriptions directly to end-users primarily via the Internet. For our consumer products that include content
updates, we recognize revenue ratably over the term of the subscription upon sell-through to end-users, as the
subscription period commences on the date of sale to the end-user. For most other consumer products, we recognize
packaged product revenue on distributor and reseller channel inventory that is not in excess of specified inventory
levels in these channels. We offer the right of return of our products under various policies and programs with our
distributors, resellers, and end-user customers. We estimate and record reserves for product returns as an offset to
revenue. We fully reserve for obsolete products in the distribution channel as an offset to deferred revenue for
products with content updates and to revenue for all other products.
For our Security and Compliance and Storage and Server Management segments, we generally recognize
revenue from the licensing of software products through our indirect sales channel upon sell-through or with evidence
of an end-user. For licensing of our software to OEMs, royalty revenue is recognized when the OEM reports the sale of
the software products to an end-user, generally on a quarterly basis. In addition to license royalties, some OEMs pay an
annual flat fee and/or support royalties for the right to sell maintenance and technical support to the end-user. We
recognize revenue from OEM support royalties and fees ratably over the term of the support agreement.
We offer channel and end-user rebates for our products. Our estimated reserves for channel volume incentive
rebates are based on distributors’ and resellers’ actual performance against the terms and conditions of volume incentive
rebate programs, which are typically entered into quarterly. Our reserves for end-user rebates are estimated based on the
terms and conditions of the promotional program, actual sales during the promotion, amount of actual redemptions
received, historical redemption trends by product and by type of promotional program, and the value of the rebate. We
estimate and record reserves for channel and end-user rebates as an offset to revenue. For consumer products that
include content updates, rebates are recorded as a ratable offset to revenue over the term of the subscription.
Financial Instruments
The following methods were used to estimate the fair value of each class of financial instruments for which it is
practicable to estimate that value:
Cash and Cash Equivalents. We consider all highly liquid investments with an original maturity of three
months or less to be cash equivalents. Cash equivalents are recognized at fair value. As of April 2, 2010, our cash
equivalents consisted of $2 billion in money market funds, $216 million in bank securities and deposits, and
$116 million in government securities. As of April 3, 2009, our cash equivalents consisted of $389 million in money
market funds, $474 million in bank securities and deposits, and $479 million in government securities.
Short-Term Investments. Short-term investments consist of marketable debt or equity securities that are
classified as available-for-sale and recognized at fair value. The determination of fair value is further detailed in
Note 2. Our portfolios generally consist of (1) debt securities which include asset-backed securities, corporate
securities and government securities, and (2) marketable equity securities. As of April 2, 2010, our asset-backed
securities have contractual maturity dates in excess of 10 years and corporate securities have contractual maturity
dates of less than two years. We regularly review our investment portfolio to identify and evaluate investments that
have indications of possible impairment. Factors considered in determining whether a loss is other-than-temporary
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SYMANTEC CORPORATION
Notes to Consolidated Financial Statements — (Continued)