Symantec 2010 Annual Report Download - page 147

Advertising costs
Advertising costs are charged to operations as incurred and include electronic and print advertising, trade
shows, collateral production, and all forms of direct marketing. Starting in January 2007, certain advertising
contracts contain placement fee arrangements with escalation clauses which are expensed on an estimated average
cost basis over the term of the arrangement. The difference between the actual placement fee paid and the estimated
average placement fee cost was $47 million and $82 million for fiscal 2010 and fiscal 2009, respectively.
Advertising costs included in Sales and marketing expense for fiscal 2010, 2009, and 2008 were $615 million,
$572 million, and $555 million, respectively.
Recently Adopted Authoritative Guidance
In the first quarter of fiscal 2010, we adopted new authoritative guidance on convertible debt instruments that
requires the issuer of convertible debt instruments with cash settlement features to separately account for the
liability and equity components of the instrument. The debt is recognized at the present value of its cash flows
discounted using the issuer’s nonconvertible debt borrowing rate at the time of issuance. The equity component is
recognized as the difference between the proceeds from the issuance of the note and the fair value of the liability.
This guidance also requires interest to be accreted as interest expense of the resultant debt discount over the
expected life of the debt. This guidance applies to the 0.75% Convertible Senior Notes (“0.75% Notes”) due
June 15, 2011 and the 1.00% Convertible Senior Notes (“1.00% Notes”) due June 15, 2013, collectively referred to
as the Senior Notes. Prior to the adoption of this guidance, the liability of the Senior Notes was carried at its
principal value and only the contractual interest expense was recognized in our Consolidated Statements of
Operations. Because this guidance requires retrospective adoption, we were required to adjust all periods for which
the Senior Notes were outstanding before the date of adoption.
Upon adoption of this guidance and effective as of the issuance date of the Senior Notes in June 2006, we
recorded $586 million of the principal amount to equity, representing the debt discount for the difference between
our estimated nonconvertible debt borrowing rate of 6.78% at the time of issuance and the coupon rate of the Senior
Notes. This debt discount, recorded in additional paid-in capital, is amortized as additional non-cash interest
expense over the contractual terms of the Senior Notes using the effective interest method. In addition, we allocated
$9 million of the issuance costs to the equity component of the Senior Notes and the remaining $24 million of the
issuance costs to the debt component of the Senior Notes. The issuance costs were allocated pro rata based on the
relative carrying amounts of the debt and equity components. The debt issuance costs associated with the debt
component are amortized as interest expense over the respective contractual terms of the Senior Notes using the
effective interest method.
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SYMANTEC CORPORATION
Notes to Consolidated Financial Statements — (Continued)