Symantec 2010 Annual Report Download - page 142

include: the length of time and extent to which the fair market value has been lower than the cost basis, the financial
condition and near-term prospects of the investee, credit quality, likelihood of recovery, and our ability to hold the
investment for a period of time sufficient to allow for any anticipated recovery in fair market value.
Unrealized gains and losses, net of tax, and other-than-temporary impairments for all reasons other than credit
worthiness are included in Accumulated other comprehensive income. The amortization of premiums and discounts
on the investments, realized gains and losses, and declines in value due to credit worthiness judged to be other-than-
temporary on available-for-sale debt securities are included in Other income, net. We use the specific-identification
method to determine cost in calculating realized gains and losses upon sale of short-term investments.
Equity Investments. During fiscal 2010, we made equity investments in privately held companies whose
businesses are complementary to our business. These investments are accounted for under the cost method of accounting,
as we hold less than 20% of the voting stock outstanding and do not exert significant influence over these companies. The
investments are included in Other long-term assets. We assess the recoverability of these investments by reviewing
various indicators of impairment and determine the fair value of these investments by performing a discounted cash flow
analysis of estimated future cash flows if there are indicators of impairment. If a decline in value is determined to be
other-than-temporary, impairment would be recognized and included in Other income, net. As of April 2, 2010 and
April 3, 2009, we held equity investments in privately-held companies of $22 million and $3 million, respectively. Other-
than-temporary impairments related to these investments were not material for the periods presented.
Derivative Instruments. We transact business in various foreign currencies and have foreign currency risks
associated with monetary assets and liabilities denominated in foreign currencies. We utilize foreign currency forward
contracts to reduce the risks associated with changes in foreign currency exchange rates. Our forward contracts
generally have terms of one to six months. We do not use forward contracts for trading purposes. The gains and losses
on the contracts are intended to offset the gains and losses on the underlying transactions. Both the changes in fair
value of outstanding forward contracts and realized foreign exchange gains and losses are included in Other income,
net. Contract fair values are determined based on quoted prices for similar assets or liabilities in active markets using
inputs such as LIBOR, currency rates, forward points, and commonly quoted credit risk data. For each fiscal period
presented in this report, outstanding derivative contracts and the related gains or losses were not material.
Convertible Senior Notes, Note Hedges and Revolving Credit Facility. Our convertible senior notes are
recorded at cost based upon par value at issuance less a discount for the estimated value of the equity component of
the notes, which is amortized through maturity as additional non-cash interest expense. See Note 7 for further
details. Debt issuance costs were recorded in Other long-term assets and are being amortized to Interest expense
using the effective interest method over five years for the 0.75% Notes and seven years for the 1.00% Notes. In
conjunction with the issuance of the notes, we entered into note hedge transactions which provide us with the option
to purchase additional common shares at a fixed price after conversion. The cost incurred in connection with the
note hedge transactions, net of the related tax benefit, and the proceeds from the sale of warrants, was included as a
net reduction in Additional paid-in capital. Borrowings under our $1 billion senior unsecured revolving credit
facility are recognized at cost plus accrued interest based upon stated interest rates.
Trade Accounts Receivable
Trade accounts receivable are recorded at the invoiced amount and are not interest bearing. We maintain an
allowance for doubtful accounts to reserve for potentially uncollectible trade receivables. Additions to the
allowance for doubtful accounts are recorded as General and administrative expenses. We review our trade
receivables by aging category to identify specific customers with known disputes or collectability issues. In
addition, we maintain an allowance for all other receivables not included in the specific reserve by applying specific
percentages of projected uncollectible receivables to the various aging categories. In determining these percentages,
we analyze our historical collection experience and current economic trends. We exercise judgment when
determining the adequacy of these reserves as we evaluate historical bad debt trends, general economic conditions
in the U.S. and internationally, and changes in customer financial conditions. We also offset deferred revenue
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SYMANTEC CORPORATION
Notes to Consolidated Financial Statements — (Continued)