Symantec 2011 Annual Report Download - page 154

Total future amortization expense for intangible assets that have definite lives, based upon our existing
intangible assets and their current estimated useful lives as of April 1, 2011, is estimated as follows (in millions):
2012 ................................................................. $ 362
2013 ................................................................. 326
2014 ................................................................. 181
2015 ................................................................. 127
2016 ................................................................. 76
Thereafter ............................................................. 134
Total ................................................................. $1,206
Note 5. Investment in Joint Venture
On February 5, 2008, Symantec formed Huawei-Symantec Technologies Co., Ltd. (“joint venture”) with a
subsidiary of Huawei Technologies Co., Limited (“Huawei”). The joint venture is domiciled in Hong Kong with
principal operations in Chengdu, China. We contributed cash of $150 million, licenses related to certain intellectual
property and intangible assets in exchange for 49% of the outstanding common shares of the joint venture. The joint
venture develops, manufactures, supports and markets security and storage appliances and solutions to global
telecommunications carriers and enterprise customers. Huawei contributed its telecommunications storage and
security business assets, engineering, sales and marketing resources, personnel, and licenses related to intellectual
property in exchange for a 51% ownership interest in the joint venture.
The contribution of assets to the joint venture was accounted for at its carrying value. The historical carrying
value of the assets contributed by Symantec comprised a significant portion of the net assets of the joint venture. As
a result, our carrying value of the investment in the joint venture exceeded our proportionate share in the book value
of the joint venture by approximately $75 million upon formation of the joint venture. As the contributions for both
Symantec and Huawei were recorded at historical carrying value by the joint venture, this basis difference is
attributable to the contributed identified intangible assets. The basis difference is being amortized over a weighted-
average period of 9 years, the estimated useful lives of the underlying identified intangible assets to which the basis
difference is attributed.
We have a one-time option to purchase an additional two percent ownership interest from Huawei for
$28 million. The period to exercise this option began on February 5, 2011. We determined the value of the option
using the Black-Scholes option-pricing model. The value of the option is not considered material to the financial
statements. We have concluded that the option does not meet the definition of a derivative under the authoritative
guidance. As of the date of this filing, we continue to evaluate the exercise of this option.
If Symantec declines its option to purchase the additional two percent ownership interest, Symantec and
Huawei would each then have the right to purchase all of the other partner’s ownership interest through a bid
process. As of the date of this filing, this bid process has not been triggered.
We account for our investment in the joint venture under the equity method of accounting. Under this method,
we record our proportionate share of the joint venture’s net income or loss based on the quarterly financial
statements of the joint venture. We record our proportionate share of net income or loss one quarter in arrears. In
determining our share of the joint venture’s net income or loss, we adjust the joint venture’s reported results to
recognize the amortization expense associated with the basis difference described above. Summarized audited
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SYMANTEC CORPORATION
Notes to Consolidated Financial Statements — (Continued)