Symantec 2016 Annual Report Download - page 163

lease. As with our other indemnification obligations discussed above and in general, it is not possible to
determine the aggregate maximum potential loss under these indemnification agreements due to the limited
history of prior indemnification claims and the unique facts and circumstances involved in each particular
agreement. As with our other indemnification obligations, such indemnification agreements might not be subject
to maximum loss clauses and to date, generally under our real estate obligations, we have not incurred material
costs as a result of such obligations under our leases and have not accrued any liabilities related to such
indemnification obligations under our Consolidated Financial Statements.
We provide limited product warranties and the majority of our software license agreements contain
provisions that indemnify licensees of our software from damages and costs resulting from claims alleging that
our software infringes on the intellectual property rights of a third party. Historically, payments made under these
provisions have been immaterial. We monitor the conditions that are subject to indemnification to identify if a
loss has occurred.
Litigation contingencies
GSA
During the first quarter of fiscal 2013, we were advised by the Commercial Litigation Branch of the
Department of Justice’s Civil Division and the Civil Division of the U.S. Attorney’s Office for the District of
Columbia that the government is investigating our compliance with certain provisions of our U.S. General
Services Administration (“GSA”) Multiple Award Schedule Contract No. GS-35F-0240T effective January 24,
2007, including provisions relating to pricing, country of origin, accessibility, and the disclosure of commercial
sales practices.
As reported on the GSA’s publicly-available database, our total sales under the GSA Schedule contract were
approximately $222 million from the period beginning January 2007 and ending September 2012. We have fully
cooperated with the government throughout its investigation and in January 2014, representatives of the
government indicated that their initial analysis of our actual damages exposure from direct government sales
under the GSA schedule was approximately $145 million; since the initial meeting, the government’s analysis of
our potential damages exposure relating to direct sales has increased. The government has also indicated they are
going to pursue claims for certain sales to New York, California, and Florida as well as sales to the federal
government through reseller GSA Schedule contracts, which could significantly increase our potential damages
exposure.
In 2012, a sealed civil lawsuit was filed against Symantec related to compliance with the GSA Schedule
contract and contracts with California, Florida, and New York. On July 18, 2014, the Court-imposed seal
expired, and the government intervened in the lawsuit. On September 16, 2014, the states of California and
Florida intervened in the lawsuit, and the state of New York notified the Court that it would not intervene. On
October 3, 2014, the Department of Justice filed an amended complaint, which did not state a specific damages
amount. On October 17, 2014, California and Florida combined their claims with those of the Department of
Justice and the relator on behalf of New York in an Omnibus Complaint; and a First Amended Omnibus
Complaint was filed on October 8, 2015; the state claims also do not state specific damages amounts.
It is possible that the litigation could lead to claims or findings of violations of the False Claims Act, and
could be material to our results of operations and cash flows for any period. Resolution of False Claims Act
investigations can ultimately result in the payment of somewhere between one and three times the actual
damages proven by the government, plus civil penalties in some cases, depending upon a number of factors. Our
current estimate of the low end of the range of the probable estimated loss from this matter is $25 million, which
we have accrued. This amount contemplates estimated losses from both the investigation of compliance with the
terms of the GSA Schedule contract as well as possible violations of the False Claims Act. There is at least a
reasonable possibility that a loss may have been incurred in excess of our accrual for this matter, however, we are
currently unable to determine the high end of the range of estimated losses resulting from this matter.
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