##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
      Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended
    December 31, 2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Transition Period
    from          to   Commission File Number:
    001-31216
  McAfee, Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware

77-0316593(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification Number)3965 Freedom Circle
    Santa Clara, California(Address of principal
    executive offices)

95054(Zip
    Code)   Registrants telephone number, including area code:
 (408) 988-3832
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon stock, par value $0.01 per share

New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
 Large accelerated
    filer þ

Accelerated
    filer o

Non-accelerated
    filer o(Do not check if a smaller
    reporting company)

Smaller reporting
    company o   Rule 12b-2 o þ
    DOCUMENTS
    INCORPORATED BY REFERENCE




---



##### 





MCAFEE,
    INC. AND SUBSIDIARIESFORM 10-K
    For the fiscal year ended December 31, 2008
  TABLE OF
    CONTENTS
   
  PageSpecial Note Regarding Forward-Looking
    Statements


3PART IItem 1.

Business


4Item 1A.

Risk Factors


13Item 1B.

Unresolved Staff Comments


26Item 2.

Properties


26Item 3.

Legal Proceedings


26Item 4.

Submission of Matters to a Vote of Security
    Holders


26PART IIItem 5.

Market for the Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


27Item 6.

Selected Financial Data


30Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


30Item 7A.

Quantitative and Qualitative Disclosures about
    Market Risk


53Item 8.

Financial Statements and Supplementary Data


54Item 9.

Changes In and Disagreements With Accountants on
    Accounting and Financial Disclosure


54Item 9A.

Controls and Procedures


55Item 9B.

Other Information


58PART IIIItem 10.

Directors and Executive Officers of the
    Registrant and Corporate Governance


58Item 11.

Executive Compensation


58Item 12.

Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


58Item 13.

Certain Relationships and Related Transactions,
    and Director Independence


58Item 14.

Principal Accountant Fees and Services


58PART IVItem 15.

Exhibits and Financial Statement Schedules


59Signatures


106EX-10.18EX-10.23EX-10.24EX-10.25EX-10.32EX-21.1EX-23.1EX-31.1EX-32.1   2




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##### Table of Contents



SPECIAL
    NOTE REGARDING FORWARD-LOOKING STATEMENTS  Form 10-K Form 10-K Risk Factors Business Managements Discussion and Analysis
    of Financial Condition and Results of Operations Form 10-K.
  TRADEMARKS
    AND TRADE NAMES
  and/or
 3




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##### Table of Contents



PART I  Item 1.
    Business  OVERVIEW
    e-commerce
  BUSINESS
    DEVELOPMENTS AND HIGHLIGHTS
    
    We completed three acquisitions: ScanAlert, Inc., Reconnex, Inc.
    and Secure Computing Corporation (Secure Computing).  
    ScanAlert offers web site vulnerability detection and security
    certification services to protect users from identity theft and
    credit card fraud. This acquisition enhances our triple play
    protection securing consumers on the PC, web and mobile
    platforms by integrating ScanAlerts
    e-commerce
    security certification service into our SiteAdvisor web rating
    system.
    Reconnex, a leading data loss prevention (DLP)
    company, brings a unique technology that learns and adapts to
    automate the ongoing protection of sensitive data.
    Reconnexs technology helps an organization define and
    identify what information to protect on its network, determine
    data proliferation risks, and create appropriate security
    policies and remediate violations, regardless of how information
    is stored, secured or communicated. The Reconnex suite of
    comprehensive network and discovery/DLP compliance technology
    solutions complements and enhances our existing data protection
    offerings.
    Secure Computing delivers a comprehensive set of software,
    appliance and firewall solutions that help customers protect
    their critical web, email and network assets. Secure
    Computings TrustedSource technology will extend our
    in-the-cloud security as a service offering and with
    Secure Computing, we plan to deliver complete content and data
    lifecycle management at the network, spanning detection,
    filtering, encryption, blocking, archiving, reporting and
    compliance levels.  
    We developed and launched several new products and integrated
    enhanced feature functionality into new versions of our products
    across our offerings. Some of these new offerings include:  
    Artemis Technology, a new internet-based
    in-the-cloud service hosted by McAfee Avert Labs
    provides active protection on the fly when a computer gets hit
    by malicious computer code. Artemis Technology provides an
    always-on delivery model for relevant, up-to-date
    research and response to close the protection gap. Using a
    combination of signature/behavior analysis and the application
    of community threat intelligence, it delivers protection to the
    system whenever it is required in real time. Artemis Technology
    is enabled through ePolicy Orchestrator with McAfee VirusScan
    for enterprise customers and through McAfee Security Center for
    consumer, small business, and midmarket customers. 4




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##### Table of Contents




    McAfee Unified Secure Access, our network access control
    (NAC) offering links endpoint and network security
    with access control and compliance and is centrally managed by
    ePolicy Orchestrator software to help organizations ease the
    deployment and management of NAC.
    Total Protection for Secure Business is a comprehensive suite
    that offers small and medium-size businesses complete security
    for endpoints, email, web, and data in one easy-to-manage
    package, including our secure search service based on McAfee
    SiteAdvisor technology.  
    We formed strategic relationships with numerous new partners
    including CommVault, HP ProCurve and Intel. We have agreed with
    CommVault to deliver an integrated data and security management
    solution built on our two companies respective data
    management, backup and security expertise. We created a
    strategic alliance with HP ProCurve to jointly develop and
    deliver network security solutions. Under this agreement, we
    will build security solutions with HP ProCurve that combine
    information security products with HP ProCurves networking
    product portfolio. We also agreed to work with Intel to provide
    security below the operating system layer on PCs using Intel
    vPro technology.
    We expanded our relationship with existing partners, including
    VMware. VMware is shipping McAfee VirusScan Plus software with
    VMware Fusion  VMwares desktop virtualization
    product for running Microsoft Windows applications side by side
    with Apple Macintosh applications on any Intel-based Macintosh.
    In May, Albert A. Rocky Pimentel joined McAfee as
    its new Chief Operating Officer and Chief Financial Officer.  OUR
    BUSINESS MODEL AND OFFERINGS
    
  3 × 5 × 3 Business Model
  Customers
    
    consumer/small business;
    mid-market; or
    enterprise.   5




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##### Table of Contents



Managements Discussion and Analysis
    of Financial Condition and Results of Operations.
  Geographic
    Theaters
    
    North America;
    Europe, Middle East and Africa (EMEA);
    Asia-Pacific;
    Japan; and
    Latin America.  Risk Factors.
  Product
    Lines
        
    To extend our leadership position in corporate and consumer
    endpoint security;
    To establish and extend leadership in network security;
    To interlock our endpoint solutions with our network
    solutions; and
    To pursue new solution opportunities that build upon our
    multi-platform strategy of PCs, internet and mobile security.   6




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System
    Security Offerings
      Network
    Security Offerings
        Vulnerability
    and Risk Management Offerings
   7




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##### Table of Contents



Support
    and Services
  on-site
  
    Our core support capabilities are standard with all corporate
    support offerings and include a suite of tools that provide
    preventive, responsive, and analytical resources to our
    customers. Our customers benefit from daily malware protection
    updates, proactive alerting and product upgrades, an online
    product evaluation lab, automated diagnostic tools, and a
    state-of-the-art knowledgebase backed up by rapid access to our
    support experts around the clock.
    Our premium support offerings (Gold Select, Platinum and
    Platinum Select) deliver expert resources that offer flexible
    levels of enhanced support coverage  specialist
    support for escalated technical assistance, personalized
    management through support account managers, dedicated coverage
    from assigned technical experts, and onsite support through a
    security specialist co-located at the customers site.  on-site
      Research
    and Development, Investments and Acquisitions
     8




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##### Table of Contents



SALES AND
    MARKETING
    Sales
    in North America
    Sales
    Outside of North America
  and/or
  Resellers
    and Distributors
   9




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##### Table of Contents



Strategic
    Channel Partners
    Strategic
    Alliances
  and/or
  Marketing
    Activities
  www.mcafee.com
 10




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##### Table of Contents



COMPETITION
  and/or Risk Factors  We face intense
    competition and we expect competitive pressures to increase in
    the future. This competition could have a negative impact on our
    business and financial results.
      System Security Market.
  Network Security Market.
  Vulnerability and Risk Management Security
    Market.
  Other Competitors.
   11




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##### Table of Contents



OUR
    PROPRIETARY TECHNOLOGY
  Risk
    Factors  We face numerous risks relating to the
    enforceability of our intellectual property rights and our use
    of third-party intellectual property, many of which could result
    in the loss of our intellectual property rights as well as other
    material adverse impacts on our business and financial results
    and condition
  SEASONALITY
    OUR
    EMPLOYEES
    COMPANY
    INFORMATION
  (408) 988-3832.
 12




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ADDITIONAL
    INFORMATION
  1-800-SEC-0330. Form 10-K, Form 10-Q Form 8-K, Form 10-K
  Item 1A.
    Risk
    Factors    Adverse
    conditions in the national and global economies and financial
    markets may adversely affect our business and financial
    results.
    We
    face intense competition and we expect competitive pressures to
    increase in the future. This competition could have a negative
    impact on our business and financial results.
    Advantages of larger competitors. Business  Competition
 13




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##### Table of Contents



and/or
  Consumer business competition.
  Low-priced or free competitive
    products. 
  and/or
  We
    face product development risks due to rapid changes in our
    industry. Failure to keep pace with these changes could harm our
    business and financial results.
    Keeping pace with industry changes.
  Impact of product development delays or competitive
    announcements.
 14




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##### Table of Contents



If
    our products do not work properly, we could experience negative
    publicity, damage to our reputation, legal liability, declining
    sales and increased expenses.
  Failure to protect against security
    breaches.
  False alarms.
  and/or
  Customer misuse of products.
  We
    face risks associated with past and future
    acquisitions.
    Integration.
 15




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##### Table of Contents



Internal controls, policies and
    procedures. and/or
  Use of cash and securities. and/or
  Key employees from acquired companies may be difficult to
    retain and assimilate. and/or
  Accounting charges.
  Potential goodwill impairment.
  Establishment of VSOE.
  Our
    international operations involve risks that could divert the
    time and attention of management, increase our expenses and
    otherwise adversely impact our business and financial
    results.
   16




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##### Table of Contents



Revenue risks.
  Legal and compliance risks.
      Currency exchange and interest rate
    risks.
  General operating risks.
  We
    face a number of risks related to our product sales through
    distributors and other third parties.
    Limited control over timing of product
    delivery.
 17




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##### Table of Contents



Competitive aspects of distributor
    relationships.
    Reliance on a small number of
    distributors.
  Risk of loss of distributors.
    Credit risk.
  Our international
    operations involve risks that could divert the time and
    attention of management, increase our expenses and otherwise
    adversely impact our business and financial results,
  We
    face numerous risks relating to the enforceability of our
    intellectual property rights and our use of third-party
    intellectual property, many of which could result in the loss of
    our intellectual property rights as well as other material
    adverse impacts on our business and financial results and
    condition.
  Limited protection of our intellectual property rights
    against potential infringers.
 18




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##### Table of Contents



Frequency, expense and risks of intellectual property
    litigation in the network and system security
    market. Legal Proceedings
        Potential risks of using open source
    software.
     19




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Pending
    or future litigation could have a material adverse impact on our
    results of operation, financial condition and
    liquidity.
    Our
    financial results can fluctuate significantly, making it
    difficult for us to accurately estimate operating
    results.
  Impact of fluctuations.
      Establishment of VSOE.
  Timing of product orders.
  Reliability and timeliness of expense
    data.
 20




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##### Table of Contents



Issues relating to third-party distribution, manufacturing
    and fulfillment relationships.
  Product mix.
  Timing of new products and
    customers.
  Additional cash and non-cash sources of
    fluctuations.
  Material
    weaknesses in our internal control and financial reporting
    environment may impact the accuracy, completeness and timeliness
    of our external financial reporting.
  Form 10-K Form 10-K.
  Our
    strategic alliances and our relationships with manufacturing
    partners expose us to a range of business risks and
    uncertainties that could have a material adverse impact on our
    business and financial results.
  Uncertainty of realizing anticipated benefit of strategic
    alliances.
 21




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##### Table of Contents



Challenges relating to integrated products from strategic
    alliances.
    Less control of the manufacturing process and outcome with
    third party manufacturing relationships.
  Risk of inadequate capacity with third party manufacturing
    relationships.
  Risk of hardware obsolescence with third party
    manufacturing relationships.
  Our
    global operations may expose us to tax risk.
   22




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##### Table of Contents



Accounting for Income Taxes
  Critical
    personnel may be difficult to attract, assimilate and
    retain.
  and/or
    Competition for personnel; need for competitive pay
    packages.
  Risks relating to senior management changes and new
    hires.
    Increased
    customer demands on our technical support services may adversely
    affect our relationships with our customers and negatively
    impact our financial results.
      We
    face risks related to customer outsourcing to system
    integrators.
   23




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##### Table of Contents



If
    we fail to effectively upgrade or modify our information
    technology system, we may not be able to accurately report our
    financial results or prevent fraud.
    Computer
    hackers may damage our products, services and
    systems.
    Business
    interruptions may impede our operations and the operations of
    our customers.
      Our
    investment portfolio is subject to volatility, losses and
    liquidity limitations. Continued negative conditions in the
    global credit markets could impair the value of or limit our
    access to our investments.
   24




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##### Table of Contents



non-U.S. investment
  Our
    historical stock option granting practices have resulted in, and
    could continue to result in, continued or new litigation,
    regulatory proceedings, government enforcement actions and
    remedial actions, all of which have had, and could in the future
    have, a negative impact on our business and financial
    results.
        Our
    stock price has been volatile and is likely to remain
    volatile.
   25




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##### Table of Contents



Our
    charter documents and Delaware law may impede or discourage a
    takeover, which could lower our stock price.
      Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties      Item 3.
    Legal
    Proceedings  Form 10-K,
  Item 4.
    Submission
    of Matters to a Vote of Security Holders   26




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##### Table of Contents



PART II  Item 5.
    Market
    for the Registrants Common Equity, Related Stockholder
    Matters and Issuer Purchases of Equity Securities  Price
    Range of Common Stock
    mark-up,
  High


LowYear Ended December 31, 2008First Quarter

$
37.40


$
27.80Second Quarter


37.82



30.71Third Quarter


40.97



30.63Fourth Quarter


34.98



24.72Year Ended December 31, 2007First Quarter

$
31.80


$
27.74Second Quarter


37.86



28.89Third Quarter


38.24



31.47Fourth Quarter


41.66



34.69     Dividend
    Policy
   27




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##### Table of Contents



Stock
    Performance
  The following Performance Graph and related information shall
    not be deemed soliciting material or to be
    filed with the Securities and Exchange Commission,
    nor shall such information be incorporated by reference into any
    future filing under the Securities Act of 1933 or Securities
    Exchange Act of 1934, each as amended, except to the extent that
    we specifically incorporate it by reference into such filing.
    Comparison
    of Five-Year Cumulative Total Returns
  COMPARISON
    5-YEAR
    CUMULATIVE TOTAL RETURN
    AMONG MCAFEE, INC., NYSE MARKET INDEX,
    S&P 500 INDEX AND S&P INFORMATION TECHNOLOGY
  
  ASSUMES
    $100 INVESTED ON JAN. 01, 2004
    ASSUMES DIVIDEND REINVESTED
    FISCAL YEAR ENDING DEC. 31, 2008
  Dec-03


Dec-04


Dec-05


Dec-06


Dec-07


Dec-08McAfee, Inc.



100.0




192.4




180.4




188.7




249.3




229.9NYSE Market Index



100.0




112.9




122.3




143.2




150.9




94.8S&P Information Technology



100.0




102.6




103.6




112.3




130.6




74.3S&P 500 Index



100.0




110.9




116.3




134.7




142.1




89.5  28




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##### Table of Contents



Holders
    of Common Stock
    Common
    Stock Repurchases
      Total Number of


Approximate DollarTotal





Shares Purchased as


Value of Shares ThatNumber of


Average


Part of Publicly


May Yet Be PurchasedShares


Price Paid


Announced Plan or


Under Our StockPeriod

Purchased


Per Share


Repurchase Program


Repurchase Program(In thousands, except price per share)October 1, 2008 through October 31, 2008


17


$
31.12






$
250,290November 1, 2008 through November 30, 2008


13



26.66







250,290December 1, 2008 through December 31, 2008


5



29.01







250,290Total


35


$
29.13



  29




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##### Table of Contents



Item 6.
    Selected
    Financial Data  Managements Discussion and Analysis of Financial
    Conditions and Results of Operations.
  Years Ended December 31,2008(1)


2007


2006


2005(2)


2004(3)(In thousands, except for per share amounts)Statement of Operations DataTotal net revenue

$
1,600,065


$
1,308,220


$
1,145,158


$
981,628


$
907,573Income from operations


189,571



159,813



139,028



141,407



310,252Income before provision for income taxes


222,206



229,204



183,781



166,678



302,814Net income


172,209



166,980



137,471



118,217



220,017Net income per share, basic

$
1.10


$
1.04


$
0.85


$
0.72


$
1.37Net income per share, diluted

$
1.08


$
1.02


$
0.84


$
0.70


$
1.28Shares used in per share calculation  basic


156,205



159,819



160,945



165,042



160,510Shares used in per share calculation  diluted


159,406



164,126



163,052



169,249



177,385   As of December 31,2008


2007


2006


2005(2)


2004(3)(In thousands)Balance Sheet DataCash and cash equivalents

$
483,302


$
394,158


$
389,627


$
728,592


$
291,155Working capital


76,160



230,145



146,253



688,015



260,183Total assets(4)


3,457,881



3,386,524



2,760,834



2,608,357



2,216,883Deferred revenue


1,293,110



1,044,513



897,525



751,806



601,485Accrued taxes and other long-term liabilities


72,751



88,241



149,924



147,128



205,107Total equity


1,752,488



1,905,325



1,427,249



1,434,641



1,206,242     (1)
    
    In 2008, we expensed $19.5 million for in-process research
    and development related to the acquisition of Secure Computing.(2)
    
    In 2005, we reserved $50.0 million in connection with a
    settlement with the SEC and we deposited $50.0 million in
    an escrow account with the SEC as the designated beneficiary.(3)
    
    In 2004, we sold our Sniffer and Magic product lines for
    aggregate net cash proceeds of $260.9 million and
    recognized pre-tax gains on the sale of assets and technology
    aggregating $243.5 million. We also received
    $25.0 million from our insurance carriers for insurance
    reimbursements related to the class action lawsuit settled in
    2003.(4)
    
    In 2007, 2006, 2005 and 2004, we decreased both prepaid taxes
    and accrued income taxes by $27.6 million,
    $39.4 million, $27.9 million and $39.3 million,
    respectively, related to certain income tax prepayments that
    were more properly classified with the related current
    liabilities.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Forward-Looking
    Statements and Factors That May Affect Future Results
  Special Note Regarding
    Forward-Looking Statements
 30




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Overview
    and Executive Summary
      Operating
    Results and Trends
    Net Revenue.
  Operating Income.
  Net Income.
  Acquisitions.
  Net Revenue by Product Groups and Customer
    Category.
 31




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##### Table of Contents



Deferred Revenue.
  Macro Economic Conditions.
  Foreign Exchange Fluctuations. non-U.S. currencies
   32




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Critical
    Accounting Policies and Estimates
      Revenue
    Recognition
      97-2, Software Revenue Recognition (SOP 97-2), SOP 97-2 and/or
  Revenue
    Recognition
   33




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Stock-based
    Compensation Expense
       34




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Estimation
    of Restructuring Accrual and Litigation
  Restructuring accrual.
    Litigation.
  Accounting
    for Income Taxes
     35




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Valuation
    of Goodwill, Intangibles, and Long-lived Assets
    Goodwill.
  Intangibles and Long-lived Assets.
  Impairment
    of Marketable Securities
   36




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##### Table of Contents



Results
    of Operations
  Years
    Ended December 31, 2008, 2007 and 2006
  Net
    Revenue
    2008 vs. 2007





2007 vs. 20062008


2007


$


%


2006


$


%(Dollars in thousands)Net revenue:Service and support

$
805,506


$
674,296


$
131,210



19
%

$
633,658


$
40,638



6
%Subscription


661,586



552,131



109,455



20



428,296



123,835



29Product


132,973



81,793



51,180



63



83,204



(1,411
)


(2
)Total net revenue

$
1,600,065


$
1,308,220


$
291,845



22
%

$
1,145,158


$
163,062



14
%Net revenue by Geography:North America

$
844,937


$
678,227


$
166,710



25
%

$
633,222


$
45,005



7
%EMEA


502,876



426,966



75,910



18



354,592



72,374



20Japan


116,567



102,272



14,295



14



87,121



15,151



17Asia-Pacific, excluding Japan


81,109



60,913



20,196



33



43,018



17,895



42Latin America


54,576



39,842



14,734



37



27,205



12,637



46Total net revenue

$
1,600,065


$
1,308,220


$
291,845



22
%

$
1,145,158


$
163,062



14
%Net service and support revenue:Support and maintenance

$
742,876


$
644,464


$
98,412



15
%

$
610,061


$
34,403



6
%Consulting, training and other services


62,630



29,832



32,798



110



23,597



6,235



26Total service and support revenue

$
805,506


$
674,296


$
131,210



19
%

$
633,658


$
40,638



6
%Net product revenue:Licenses

$
57,485


$
37,389


$
20,096



54
%

$
52,077


$
(14,688
)


(28
)%Hardware


64,195



33,431



30,764



92



31,367



2,064



7Retail and other


11,293



10,973



320



3



(240
)


11,213




*Total product revenue

$
132,973


$
81,793


$
51,180



63
%

$
83,204


$
(1,411
)


(2
)%     *
    
    Calculation not meaningful 37




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##### Table of Contents



Net
    Revenue by Geography
       38




---



##### Table of Contents



Service
    and Support Revenue
        Subscription
    Revenue
     39




---



##### Table of Contents



Product
    Revenue
      Cost
    of Net Revenue
    2008 vs. 2007





2007 vs. 20062008


2007


$


%


2006


$


%(Dollars in thousands)Cost of net revenue:Service and support

$
66,108


$
49,285


$
16,823



34
%

$
51,904


$
(2,619
)


(5
)%Subscription


187,975



165,297



22,678



14



110,267



55,030



50Product


72,634



55,872



16,762



30



60,957



(5,085
)


(8
)Amortization of purchased technology


56,811



35,290



21,521



61



23,712



11,578



49Total cost of net revenue

$
383,528


$
305,744


$
77,784



25


$
246,840


$
58,904



24Components of gross margin:Service and support

$
739,398


$
625,011










$
581,754Subscription


473,611



386,834











318,029Product


60,339



25,921











22,247Amortization of purchased technology


(56,811
)


(35,290
)










(23,712
)Total gross margin

$
1,216,537


$
1,002,476










$
898,318Total gross margin percentage


76
%


77
%










78
%   Cost of
    Service and Support Revenue
     40




---



##### Table of Contents



Cost of
    Subscription Revenue
        Cost of
    Product Revenue
        Amortization
    of Purchased Technology
     41




---



##### Table of Contents



Gross
    Margin
    Stock-based
    Compensation Expense
      2008 vs. 2007





2007 vs. 20062008


2007


$


%


2006


$


%(Dollars in thousands)Stock-based compensation expense

$
76,881


$
59,017


$
17,864



30
%

$
57,761


$
1,256



2
%       Operating
    Costs
  Research
    and development
    2008 vs. 2007





2007 vs. 20062008


2007


$


%


2006


$


%(Dollars in thousands)Research and development(1)

$
252,020


$
217,934


$
34,086



16
%

$
193,447


$
24,487



13
%Percentage of net revenue


16
%


17
%










17
%     (1)
    
    Includes stock-based compensation expense of $18.5 million,
    $14.0 million and $15.0 million in 2008, 2007 and
    2006, respectively.   42




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##### Table of Contents



Sales and
    marketing
    2008 vs. 2007





2007 vs. 20062008


2007


$


%


2006


$


%(Dollars in thousands)Sales and marketing(1)

$
525,942


$
388,213


$
137,729



35
%

$
366,454


$
21,759



6
%Percentage of net revenue


33
%


30
%










32
%     (1)
    
    Includes stock-based compensation expense of $32.6 million,
    $21.8 million and $24.3 million in 2008, 2007 and
    2006, respectively.       43




---



##### Table of Contents



General
    and administrative
    2008 vs. 2007





2007 vs. 20062008


2007


$


%


2006


$


%(Dollars in thousands)General and administrative(1)

$
204,786


$
214,164


$
(9,378
)


(4
)%

$
187,777


$
26,387



14
%Percentage of net revenue


13
%


16
%










16
%     (1)
    
    Includes stock-based compensation expense of $22.1 million,
    $20.1 million and $15.0 million in 2008, 2007 and
    2006, respectively.        Amortization
    of intangibles
    2008 vs. 2007





2007 vs. 20062008


2007


$


%


2006


$


%(Dollars in thousands)Amortization of intangibles

$
26,470


$
13,583


$
12,887



95
%

$
10,682


$
2,901



27
%      44




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##### Table of Contents



Restructuring
    (benefit) charges
    2008 vs. 2007





2007 vs. 20062008


2007


$


%


2006


$


%(Dollars in thousands)Restructuring (benefit) charges

$
(1,752
)

$
8,769


$
(10,521
)



*

$
470


$
8,299




*     *
    
    Calculation not meaningful      In-process
    research and development
    Interest
    and Other Income
    2008 vs. 2007





2007 vs. 20062008


2007


$


%


2006


$


%(Dollars in thousands)Interest and other income

$
45,687


$
68,287


$
(22,600
)


(33
)%

$
44,397


$
23,890



54
%    45




---



##### Table of Contents



Impairment
    of Marketable Securities
    Gain on
    investments, net
  available-for-sale
  Provision
    for income taxes
  year-over-year
  2008 vs. 2007



2007 vs. 20062008

2007

$

%

2006

$

%(Dollars in thousands)Provision for income taxes

$
49,997


$
62,224


$
(12,227
)


(20
)%

$
46,310


$
15,914



34
%Effective tax rate


23
%


27
%










25
%      46




---



##### Table of Contents



Acquisitions
  Secure
    Computing
    SafeBoot
    Holding B.V.
    Liquidity
    and Capital Resources
  Years Ended December 31,2008


2007


2006Net cash provided by operating activities

$
308,322


$
393,415


$
290,489Net cash provided by (used in) investing activities

$
200,226


$
(436,770
)

$
(452,339
)Net cash (used in) provided by financing activities

$
(371,962
)

$
10,689


$
(197,711
)   Overview
    available-for-sale,
 47




---



##### Table of Contents



and/or
      Operating
    Activities
       48




---



##### Table of Contents



and/or and/or
    Investing
    Activities
        back-up
     49




---



##### Table of Contents



Financing
    Activities
            Contractual
    Obligations
    Payments Due by PeriodLess Than


1-3


3-5


More ThanContractual Obligations

Total


1 Year


Years


Years


5 YearsOperating leases(1)

$
107,588


$
26,622


$
38,695


$
24,537


$
17,734Other commitments(2)


168,460



147,144



21,076



240



Purchase obligations(3)


7,482



7,482











FIN 48 obligations, including interest and penalties


5,585



5,585











Total

$
289,115


$
186,833


$
59,771


$
24,777


$
17,734     (1)
    
    Operating leases are for office space and office equipment. The
    operating lease commitments above reflect contractual and
    reasonably assured rent escalations under the lease
    arrangements. The most significant of our lease contractual
    obligations relate to the following four leases:
    $28.6 million for the Santa Clara, California facility
    lease, $22.0 million for two St. Paul, Minnesota facility
    leases, $10.7 million for the Slough, United Kingdom
    facility lease. 50




---



##### Table of Contents



(2)
    
    Other commitments are minimum contractual commitments including
    telecom contracts, software licensing, royalty and
    distribution-related agreements.(3)
    
    Purchase obligations consist of purchase orders to our contract
    manufacturers, which typically have delivery dates from four to
    six weeks from the purchase order date.      Off-Balance
    Sheet Arrangements
    Credit
    Facilities
  and/or
       51




---



##### Table of Contents



Financial
    Risk Management
    Foreign
    Currency Risk
          December 31, 2008Notional U.S. DollarEquivalent


Fair ValueEuro

$
31,944


$
(701
)British Pound


8,503



(1,633
)Canadian Dollar


2,954



(55
)$
43,401


$
(2,389
)     Interest
    Rate Risk
  available-for-sale
 52




---



##### Table of Contents



other-than-temporary
      Valuation of Securities Given





Valuation of Securities Givenan Interest Rate Decrease of


No


an Interest Rate Increase ofX Basis Points


Change in


X Basis PointsIssuer

150 BPS


100 BPS


50 BPS


Interest Rate


50 BPS


100 BPS


150 BPSU.S. Government notes and bonds

$
128.0


$
127.2


$
126.5


$
125.7


$
124.9


$
124.1


$
123.3Corporate notes and bonds


33.3



33.2



33.0



32.9



32.7



32.5



32.4Asset-backed securities


19.0



18.8



18.6



18.4



18.2



18.0



17.8Mortgage-backed securities


16.1



16.1



16.0



16.0



16.0



16.0



16.0Cash and cash equivalents


30.7



30.3



30.0



29.6



29.2



28.9



28.5Total

$
227.1


$
225.6


$
224.1


$
222.6


$
221.0


$
219.5


$
218.0   Newly
    Adopted and Recently Issued Accounting Pronouncements
    Item 7A.
    Quantitative
    and Qualitative Disclosure About Market Risk  Managements Discussion and Analysis of
    Financial Condition and Results of Operations 
    Financial Risk Management
 53




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  Quarterly
    Operating Results (Unaudited)
  Three Months EndedDecember 31,


September 30,


June 30,


March 31,


December 31,


September 30,


June 30,


March 31,2008


2008


2008


2008


2007


2007


2007


2007(In thousands, except per share data)Statement of Operations and Other Data:Net revenue

$
423,987


$
409,679


$
396,758


$
369,641


$
356,526


$
321,986


$
314,830


$
314,878Gross margin


318,637



311,170



307,025



279,705



270,084



244,121



243,446



244,825Income from operations


32,564



49,363



54,397



53,247



33,002



46,640



38,751



41,420Income before provision for income taxes


34,683



53,912



64,867



68,744



49,282



66,461



57,617



55,844Net income

$
45,406


$
48,808


$
47,826


$
30,169


$
12,185


$
63,401


$
48,044


$
43,350Net income per share  basic(1)

$
0.30


$
0.32


$
0.30


$
0.19


$
0.08


$
0.40


$
0.30


$
0.27Net income per share  diluted(1)

$
0.29


$
0.31


$
0.30


$
0.18


$
0.07


$
0.39


$
0.29


$
0.27     (1)
    
    Net income per share is computed independently for each of the
    quarters presented. Therefore, the sum of the quarterly net
    income per share may not equal the annual net income per share
    due to rounding differences.  period-to-period
      Item 9.
    Changes
    In and Disagreements With Accountants on Accounting and
    Financial Disclosure   54




---



##### Table of Contents



Item 9A.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
  Rules 13a-15(e) 15d-15(e)
    Managements
    Annual Report on Internal Control over Financial
    Reporting
  Rules 13a-15(f) Internal Control 
    Integrated Framework
  Overview and Executive Summary,
    Managements Discussion and Analysis of Financial
    Condition and Results of Operations
    Changes
    in Internal Control over Financial Reporting
    Remediation
    of Material Weakness in Accounting for Income
    Taxes
  Form 10-K Form 10-K.
 55




---



##### Table of Contents




    We completed additional improvements to our redesigned income
    tax reconciliation process to further enhance data analysis and
    timely resolution of open items.
    We enhanced the precision of our interim and annual review
    processes for various calculations, including the tax provision
    computation process.    
    We hired more tax accounting personnel, with an emphasis on
    hiring personnel with tax provision and international tax
    expertise.
    We implemented our redesigned income tax reconciliation process
    to facilitate improved data collection, analysis and timely
    resolution of open items.
    We automated key elements of the calculation of the provision
    for income taxes.
    We provided training to our tax accounting personnel and will
    continue to enhance our training programs in the future. 56




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM    Internal Control  Integrated Framework
        Internal Control  Integrated Framework
    
    57




---



##### Table of Contents



Item 9B.
    Other
    Information   PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance    Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   58




---



##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  Consolidated Financial Statements
  PageNumberReport of Independent Registered Public
    Accounting Firm


60Consolidated Balance Sheets: December 31,
    2008 and 2007


61Consolidated Statements of Income and
    Comprehensive Income: Years ended December 31, 2008, 2007
    and 2006


62Consolidated Statements of Stockholders
    Equity: Years ended December 31, 2008, 2007 and 2006


63Consolidated Statements of Cash Flows: Years
    ended December 31, 2008, 2007 and 2006


65Notes to Consolidated Financial Statements


66   Consolidated Financial Statement
    Schedule
  Form 10-K
      Exhibits
 59




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and Stockholders of McAfee, Inc.

Santa Clara, California



We have audited the accompanying consolidated balance sheets of
    McAfee, Inc. and subsidiaries (the Company) as of
    December 31, 2008 and 2007, and the related consolidated
    statements of income and comprehensive income,
    stockholders equity, and cash flows for each of the three
    years in the period ended December 31, 2008. Our audits
    also included the financial statement schedule listed in the
    Index at Item 15. These financial statements and financial
    statement schedule are the responsibility of the Companys
    management. Our responsibility is to express an opinion on the
    financial statements and financial statement schedule based on
    our audits.



We conducted our audits in accordance with the standards of the
    Public Company Accounting Oversight Board (United States). Those
    standards require that we plan and perform the audit to obtain
    reasonable assurance about whether the financial statements are
    free of material misstatement. An audit includes examining, on a
    test basis, evidence supporting the amounts and disclosures in
    the financial statements. An audit also includes assessing the
    accounting principles used and significant estimates made by
    management, as well as evaluating the overall financial
    statement presentation. We believe that our audits provide a
    reasonable basis for our opinion.



In our opinion, such consolidated financial statements present
    fairly, in all material respects, the financial position of the
    Company as of December 31, 2008 and 2007, and the results
    of its operations and its cash flows for each of the three years
    in the period ended December 31, 2008, in conformity with
    accounting principles generally accepted in the United States of
    America. Also, in our opinion, such financial statement
    schedule, when considered in relation to the basic consolidated
    financial statements taken as a whole, presents fairly, in all
    material respects, the information set forth therein.



Effective January 1, 2007, the Company adopted the
    provisions of Financial Accounting Standards Board (FASB)
    Interpretation No. 48, Accounting for Uncertainty in
    Income Taxes  an interpretation of FASB Statement
    No. 109.



As discussed in Note 2, effective January 1, 2006, the
    Company adopted the provisions of FASB Statement
    No. 123(R), Share Based Payment.



We have also audited, in accordance with the standards of the
    Public Company Accounting Oversight Board (United States), the
    Companys internal control over financial reporting as of
    December 31, 2008, based on the criteria established in
    Internal Control  Integrated Frameworkissued
    by the Committee of Sponsoring Organizations of the Treadway
    Commission and our report dated March 2, 2009 expressed an
    unqualified opinion on the Companys internal control over
    financial reporting.



/s/  Deloitte &
    Touche LLP



San Jose, California

March 2, 2009

60




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
  December 31,2008


2007(In thousands,except share data)ASSETSCurrent assets:Cash and cash equivalents

$
483,302


$
394,158Short-term marketable securities


27,449



338,770Accounts receivable


322,986



232,056Prepaid expenses and prepaid taxes


221,900



134,995Deferred income taxes


310,870



256,188Other current assets


38,281



24,000Total current assets


1,404,788



1,380,167Long-term marketable securities


82,974



585,874Property and equipment, net


114,435



94,670Deferred income taxes


303,937



321,342Intangible assets, net


315,803



220,126Goodwill


1,169,616



750,089Other assets


66,328



34,256Total assets

$
3,457,881


$
3,386,524LIABILITIESCurrent liabilities:Accounts payable

$
41,529


$
45,858Accrued income taxes


20,675



51,974Accrued compensation


82,648



99,652Other accrued liabilities


194,680



150,961Deferred revenue


989,096



801,577Total current liabilities


1,328,628



1,150,022Deferred revenue, less current portion


304,014



242,936Accrued taxes and other long-term liabilities


72,751



88,241Total liabilities


1,705,393



1,481,199Commitments and contingencies (Notes 9, 10 and 11)STOCKHOLDERS EQUITYPreferred stock, $0.01 par value:Authorized: 5,000,000 shares; Issued and outstanding: none
    in 2008 and 2007






Common stock, $0.01 par value:Authorized: 300,000,000 shares; Issued:
    181,133,439 shares at December 31, 2008 and
    173,148,853 shares at December 31, 2007Outstanding: 153,534,594 shares at December 31, 2008
    and 160,545,422 shares at December 31, 2007


1,812



1,732Treasury stock, at cost: 27,598,845 shares at
    December 31, 2008 and 12,603,431 shares at
    December 31, 2007


(819,861
)


(303,270
)Additional paid-in capital


2,053,245



1,810,290Accumulated other comprehensive (loss) income


(18,992
)


32,498Retained earnings


536,284



364,075Total stockholders equity


1,752,488



1,905,325Total liabilities and stockholders equity

$
3,457,881


$
3,386,524    61




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
  Years Ended December 31,2008


2007


2006(In thousands, except per share data)Net revenue:Service and support

$
805,506


$
674,296


$
633,658Subscription


661,586



552,131



428,296Product


132,973



81,793



83,204Total net revenue


1,600,065



1,308,220



1,145,158Cost of net revenue:Service and support


66,108



49,285



51,904Subscription


187,975



165,297



110,267Product


72,634



55,872



60,957Amortization of purchased technology


56,811



35,290



23,712Total cost of net revenue


383,528



305,744



246,840Operating costs:Research and development


252,020



217,934



193,447Sales and marketing


525,942



388,213



366,454General and administrative


204,786



214,164



187,777Amortization of intangibles


26,470



13,583



10,682Restructuring (benefit) charges


(1,752
)


8,769



470In-process research and development


19,500







460Total operating costs


1,026,966



842,663



759,290Income from operations


189,571



159,813



139,028Interest and other income, net


45,687



68,287



44,397Impairment of marketable securities


(18,533
)






Gain on sale of investments, net


5,481



1,104



356Income before provision for income taxes


222,206



229,204



183,781Provision for income taxes


49,997



62,224



46,310Net income

$
172,209


$
166,980


$
137,471Other comprehensive income:Unrealized (loss) gain on marketable securities, net

$
(215
)

$
1,257


$
1,344Foreign currency translation loss


(51,275
)


(231
)


(3,795
)Comprehensive income

$
120,719


$
168,006


$
135,020Net income per share  basic

$
1.10


$
1.04


$
0.85Net income per share  diluted

$
1.08


$
1.02


$
0.84Shares used in per share calculation  basic


156,205



159,819



160,945Shares used in per share calculation  diluted


159,406



164,126



163,052    62




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY
  AccumulatedAdditional


Deferred


Other





TotalCommon Stock


Treasury Stock


Paid-In


Stock-Based


Comprehensive


Retained


StockholdersShares


Amount


Shares


Amount


Capital


Compensation


(Loss) Income


Earnings


Equity(In thousands)Balances, January 1, 2006


167,688


$
1,705



2,765


$
(68,395
)

$
1,443,743


$
(8,146
)

$
33,923


$
31,811


$
1,434,641Issuance of common stock under our employee stock option plans
    and employee stock purchase plan


2,059



21











32,149















32,170Interest on Employee Stock Purchase Plans due to restrictions on
    share issuance


















(164
)














(164
)Repurchase of common stock


(9,812
)






9,812



(234,679
)


















(234,679
)Forfeiture of restricted stock awards


(20
)






20























Reclassification of deferred compensation into additional
    paid-in capital due to adoption of FAS 123(R)


















(8,146
)


8,146











Stock-based compensation


















50,369















50,369Stock-based compensation related to option extension


















4,326















4,326Cash payable in excess of exercise price related to exchange of
    McAfee.com options


















(392
)














(392
)Tax benefits from exercise of non-qualified stock options


















5,958















5,958Foreign currency translation


























(3,795
)






(3,795
)Net increase in unrealized gains on investment


























1,344







1,344Net income






























137,471



137,471Balances, December 31, 2006


159,915



1,726



12,597



(303,074
)


1,527,843







31,472



169,282



1,427,249Cumulative adjustment for the implementation of FIN 48


















101,225











27,813



129,038Adjusted balances, January 1, 2007


159,915



1,726



12,597



(303,074
)


1,629,068







31,472



197,095



1,556,287Issuance of common stock upon exercise of stock options


636



6











12,811















12,817Repurchase of common stock


(6
)






6



(196
)


















(196
)Stock-based compensation


















42,118















42,118Stock-based compensation related to option extension


















14,014















14,014Cash payable in excess of exercise price related to exchange of
    McAfee.com options


















(154
)














(154
)Reduction of prior tax benefit from stock option activity


















(820
)














(820
)Recognition of tax benefit related to acquisition accounted for
    as a pooling of interests


















123,379















123,379Fair value of options assumed in acquisition


















3,611















3,611Modification of stock options  reclassification from
    equity to liability awards


















(18,272
)














(18,272
)Exercise of stock options  reclassification from
    liability to equity awards


















4,535















4,535Foreign currency translation


























(231
)






(231
)Net increase in unrealized gains on investment


























1,257







1,257Net income






























166,980



166,980Balances, December 31, 2007


160,545



1,732



12,603



(303,270
)


1,810,290







32,498



364,075



1,905,325 63




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS
    EQUITY  (Continued)
  AccumulatedAdditional


Deferred


Other





TotalCommon Stock


Treasury Stock


Paid-In


Stock-Based


Comprehensive


Retained


StockholdersShares


Amount


Shares


Amount


Capital


Compensation


(Loss) Income


Earnings


Equity(In thousands)Issuance of common stock under our employee stock option plans
    and employee stock purchase plan


7,986



80











127,238















127,318Repurchase of common stock


(14,974
)






14,974



(516,591
)


















(516,591
)Forfeiture of restricted stock awards


(22
)






22























Stock-based compensation


















76,662















76,662Reclassification of fair value charge as liability for tender
    offer


















(1,223
)














(1,223
)Fair value of options assumed in prior year acquisition


















(1,672
)














(1,672
)Cash payable in excess of exercise price related to exchange of
    McAfee.com options


















(984
)














(984
)Fair value of RSAs and RSUs assumed in acquisition


















2,211















2,211Tax benefits from stock-based awards


















23,729















23,729Exercise of stock options reclassification from
    liability to equity awards


















16,994















16,994Foreign currency translation


























(51,275
)






(51,275
)Net increase in unrealized losses on investment


























(215
)






(215
)Net income






























172,209



172,209Balances, December 31, 2008


153,535


$
1,812



27,599


$
(819,861
)

$
2,053,245


$



$
(18,992
)

$
536,284


$
1,752,488    64




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Years Ended December 31,2008


2007


2006(In thousands)Cash flows from operating activities:Net income

$
172,209


$
166,980


$
137,471Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization


123,894



84,427



70,271Impairment of marketable securities


18,533







Acquired in-process research and development


19,500







460Deferred income taxes


(10,724
)


151



(34,975
)Non-cash restructuring (benefit) charge


(7,471
)


6,035



559(Decrease) increase in fair value of options accounted for as
    liabilities


(5,483
)


8,745



Stock-based compensation expense


76,662



56,132



54,695Excess tax benefit from stock-based awards


(17,693
)


(1,092
)


(4,960
)Other non-cash items


(3,688
)


(5,076
)


(6,789
)Changes in assets and liabilities, net of acquisitions:Accounts receivable


(68,208
)


(33,295
)


(2,097
)Prepaid expenses, prepaid taxes and other assets


(77,300
)


(34,655
)


(66,973
)Accounts payable


(7,775
)


6,769



(531
)Accrued taxes and other liabilities


(33,493
)


47,413



33,214Deferred revenue


129,359



90,881



110,144Net cash provided by operating activities


308,322



393,415



290,489Cash flows from investing activities:Purchase of marketable securities


(252,031
)


(927,257
)


(1,315,407
)Proceeds from sales of marketable securities


587,587



404,106



338,329Proceeds from maturities of marketable securities


466,101



458,142



664,590(Increase) decrease in restricted cash


(2,036
)


379



49,989Purchase of patents






(9,300
)


Purchase of property and equipment


(48,747
)


(33,568
)


(43,751
)Acquisitions, net of cash acquired


(550,648
)


(333,377
)


(146,089
)Proceeds from sale of assets and technology






4,105



Net cash provided by (used in) investing activities


200,226



(436,770
)


(452,339
)Cash flows from financing activities:Proceeds from issuance of common stock under stock option and
    stock purchase plans


129,990



9,793



32,008Excess tax benefit from stock-based awards


17,693



1,092



4,960Repurchase of common stock


(516,591
)


(196
)


(234,679
)Other financing activities


(3,054
)






Net cash (used in) provided by financing activities


(371,962
)


10,689



(197,711
)Effect of exchange rate fluctuations on cash


(47,442
)


37,197



20,596Net increase (decrease) in cash and cash equivalents


89,144



4,531



(338,965
)Cash and cash equivalents at beginning of period


394,158



389,627



728,592Cash and cash equivalents at end of period

$
483,302


$
394,158


$
389,627Non cash investing and financing activities:Unrealized (loss) gain on marketable securities, net

$
(215
)

$
1,257


$
1,344Fair value of assets acquired in business combinations,
    excluding cash acquired

$
756,836


$
384,287


$
166,099Fair value of acquired intangibles

$
2,000


$



$
Liabilities assumed in business combinations

$
226,328


$
46,794


$
20,012Accrued purchase price

$
1,268


$



$
Accrual for purchase of property, equipment and leasehold
    improvements

$
2,953


$
4,133


$
2,694Modification of stock options  reclassification from
    equity to liability awards

$



$
18,271


$
Exercise of stock options  reclassification from
    liability to equity awards

$
16,994


$
4,535


$
Issuance of common stock under stock option plans

$



$
3,024


$
Supplemental disclosure of cash flow information:Cash paid for income taxes

$
60,494


$
27,320


$
54,919Cash received from income tax refunds

$
5,072


$
11,964


$
7,032    65




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.
    Organization
    and Business    2.
    Summary
    of Significant Accounting Policies  Basis
    of Presentation
    Use of
    Estimates
    Certain
    Risks and Concentrations
           66




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Foreign
    Currency Translation
      Derivatives
    Cash
    and Cash Equivalents
    Restricted
    Cash
        Marketable
    Securities
  available-for-sale Available-for-sale
 67




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    available-for-sale other-than-temporary other-than-temporary other-than-temporary
  Inventory
    Deferred
    Costs of Revenue
    Property
    and Equipment
    
    building  interior  seven years;
    exterior  twenty years;
    office furniture and equipment  three to five years;
    computer hardware, networking hardware and software 
    three to five years; and
    leasehold improvements  the shorter of the lease
    term, including assumed lease renewal periods that are
    reasonably assured, or the estimated useful life of the asset.   68




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Internal
    Use Software
      Goodwill
    and Other Intangible Assets
    Finite-Lived
    Intangibles, Long-Lived Assets and Assets Held for
    Sale
      Fair
    Value of Financial Instruments
    Revenue
    Recognition
   69




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Revenue Recognition
      and/or
      Research
    and Development
   70




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Advertising
    Costs
    Stock-based
    Compensation Expense
    Share-Based
    Payment
    Accounting
    for Income Taxes
    Computation
    of Net Income Per Share
   71




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Warranty
    Reclassifications
      Other
    Comprehensive Income (Loss)
      Before





Net ofIncome Tax


Income Tax


Income Tax2008Unrealized loss on marketable securities, net

$
(13,410
)

$
5,364


$
(8,046
)Reclassification adjustment for net loss on marketable
    securities recognized during the period


13,052



(5,221
)


7,831Foreign currency translation loss


(51,275
)






(51,275
)Total other comprehensive loss

$
(51,633
)

$
143


$
(51,490
)2007Unrealized gain on marketable securities, net

$
3,198


$
(1,279
)

$
1,919Reclassification adjustment for net gain on marketable
    securities recognized during the period


(1,104
)


442



(662
)Foreign currency translation loss


(231
)






(231
)Total other comprehensive loss

$
1,863


$
(837
)

$
1,0262006Unrealized gain on marketable securities, net

$
2,596


$
(1,038
)

$
1,558Reclassification adjustment for net gain on marketable
    securities recognized during the period


(356
)


142



(214
)Foreign currency translation loss


(3,795
)






(3,795
)Total other comprehensive loss

$
(1,555
)

$
(896
)

$
(2,451
)  72




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,2008


2007Unrealized gain on available-for-sale securities

$
364


$
579Cumulative translation adjustment


(19,356
)


31,919Total

$
(18,992
)

$
32,498   Fair
    Value Measurements
  Fair Value Measurements
  Fair Value Measurements at December 31, 2008 UsingQuoted Prices inActive Markets


Significant Other


SignificantDecember 31,


Using Identical


Observable Inputs


Unobservable InputsDescription

2008


Assets (Level 1) (1)


(Level 2) (2)


(Level 3) (3)Available-for-sale securities:United States Government notes and bonds(4)

$
49,798


$
46,558


$
3,240


$
Corporate notes and bonds(4)


21,632







21,632



Asset-backed securities(4)


26,361







26,361



Mortgage-backed securities(4)


12,632







12,632



Cash and cash equivalents(5)


81,823







81,823



Total available-for-sale securities


192,246



46,558



145,688



Foreign exchange derivatives(6)


(2,389
)


(2,389
)






Total

$
189,857


$
44,169


$
145,688


$
     (1)
    
    Level 1 classification is applied to any asset that has a
    readily available quoted price from an active market where there
    is significant transparency in the executed/quoted price.(2)
    
    Level 2 classification is applied to assets that have
    evaluated prices received from fixed income vendors where the
    data inputs to these valuations, which are observable either
    directly or indirectly, but do not represent quoted prices from
    an active market for each individual security.(3)
    
    Level 3 classification is applied to assets when prices are
    not derived from existing market data.(4)
    
    Included in both short-term and long-term marketable securities
    on our consolidated balance sheets.(5)
    
    Included in cash and cash equivalents on our consolidated
    balance sheets.(6)
    
    Included in other current assets and other accrued liabilities
    on our consolidated balance sheets.  No. 157-2, Effective Date of FASB Statement No. 157
    ( FSP 157-2 ). FSP 157-2 FSP 157-2 FSP 157-2
 73




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  No. 157-3, Determining the Fair Value of a Financial Asset When
    the Market for That Asset Is Not Active (FSP 157-3). FSP 157-3 FSP 157-3 FSP 157-3
  Recent
    Accounting Pronouncements
  Useful
    Life of Intangible Assets
  No. 142-3, Determination of the Useful Life of Intangible
    Assets (FSP 142-3). FSP 142-3 Goodwill and Other Intangible
    Assets Business Combinations FSP 142-3 FSP 142-3
  Derivative
    Instruments and Hedging Activities
  Disclosures about Derivative Instruments and Hedging
    Activities  an amendment of FASB Statement
    No. 133 Accounting
    for Derivative Instruments and Hedging Activities
  Noncontrolling
    Interests
  Noncontrolling Interests in Consolidated Financial
    Statements an amendment of Accounting
    Research Bulletin No. 51
  Business
    Combinations
  Business Combinations
 74




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    3.
    Business
    Combinations  2008
    Acquisitions
    Total2008ScanAlert


Reconnex


Secure Computing


AcquisitionsAcquisition date


January 2008



August 2008



November 2008Cash paid to shareholders and employees, including escrow
    deposits

$
48,480


$
40,318


$
484,497


$
573,295Payment in 2007 to third party for use of patent


4,500











4,500Payment to third party for outstanding debt






4,460







4,460Direct acquisition costs


660



1,782



4,003



6,445Purchase price recorded as a liability


1,268











1,268Fair value of assumed RSAs and RSUs










2,211



2,211Reduction in our historical net liabilities to Secure Computing
    due to acquisition










(611
)


(611
)Total purchase price

$
54,908


$
46,560


$
490,100


$
591,568     and/or
 75




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Total2008ScanAlert


Reconnex


Secure Computing


AcquisitionsTechnology

$
4,759


$
9,800


$
99,200


$
113,759Other intangibles


14,505



2,500



51,200



68,205Goodwill


42,133



20,143



365,474



427,750Cash


107



363



41,090



41,560Accounts receivable


982



661



25,386



27,029Fixed assets


443







16,261



16,704Restricted cash










9,458



9,458Prepaid license fees


3,627











3,627Other assets


194



487



12,702



13,383Deferred tax assets


1,970



21,247



89,477



112,694Total assets acquired


68,720



55,201



710,248



834,169Accrued liabilities


8,733



3,136



60,177



72,046Deferred revenue


5,079



596



119,151



124,826Deferred tax liabilities






4,909



60,320



65,229Total liabilities assumed


13,812



8,641



239,648



262,101Net assets acquired


54,908



46,560



470,600



572,068In-process research and development expensed










19,500



19,500Total acquisition cost

$
54,908


$
46,560


$
490,100


$
591,568      76




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
                Year EndedDecember 31,2008


2007Pro forma net revenue

$
1,792,657


$
1,512,323Pro forma net income

$
98,851


$
53,318Pro forma net income per share  basic

$
0.63


$
0.33Pro forma net income per share  diluted

$
0.62


$
0.32Shares used in per share calculation  basic


156,205



159,819Shares used in per share calculation  diluted


159,406



164,126    77




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  2007
    Acquisition
    Cash paid as of December 31, 2007

$
294,887Escrow deposit


43,750Direct acquisition and other costs paid in 2008


6,007Fair value of options assumed


1,939Total purchase price before imputed interest


346,583Imputed interest


(1,002
)Total purchase price

$
345,581           Technology

$
102,340Other intangibles


41,800Goodwill


215,871Cash


9,760Other assets


23,853Total assets acquired


393,624Accrued liabilities


26,847Deferred revenue


9,394Deferred tax liabilities


11,802Total liabilities assumed


48,043Net assets acquired

$
345,581  78




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2007


2006Pro forma net revenue

$
1,346,470


$
1,175,535Pro forma net income

$
137,339


$
111,023Pro forma net income per share  basic

$
0.86


$
0.69Pro forma net income per share  diluted

$
0.84


$
0.68Shares used in per share calculation  basic


159,819



160,945Shares used in per share calculation  diluted


164,126



163,052     2006
    Acquisitions
    Total2006SiteAdvisor


Preventsys


Onigma


Citadel


AcquisitionsAcquisition date


April 2006



June 2006



October 2006



December 2006Technology

$
15,450


$
3,540


$
23,139


$
15,900


$
58,029Other intangibles


420



677



1,889



6,500



9,486Goodwill


50,397











42,055



92,452Cash


29



23



125







177Other assets


485



661



281



1,103



2,530Deferred tax assets


587



2,820



530







3,937Total assets acquired


67,368



7,721



25,964



65,558



166,611Accrued liabilities


37



1,384



372



426



2,219Deferred revenue






203







3,937



4,140Deferred tax liabilities


6,269



1,750



6,429







14,448Total liabilities assumed


6,306



3,337



6,801



4,363



20,807Net assets acquired


61,062



4,384



19,163



61,195



145,804In-process research and development expensed






460











460Total acquisition cost

$
61,062


$
4,844


$
19,163


$
61,195


$
146,264  79




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Year EndedDecember 31, 2006Pro forma net revenue

$
1,157,986Pro forma net income

$
119,371Pro forma net income per share  basic

$
0.74Pro forma net income per share  diluted

$
0.73Shares used in per share calculation  basic


160,945Shares used in per share calculation  diluted


163,052      80




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  4.
    Marketable
    Securities and Cash and Cash Equivalents    December 31, 2008Purchase/


Gross


GrossAmortized


Unrealized


Unrealized


AggregateCost


Gains


Losses


Fair ValueU.S. Treasury Notes

$
10,032


$
148


$



$
10,180Corporate and government-sponsored agency debt securities


99,785



1,972



(1,514
)


100,243$
109,817


$
2,120


$
(1,514
)

$
110,423   December 31, 2007Purchase/


Gross


GrossAmortized


Unrealized


Unrealized


AggregateCost


Gains


Losses


Fair ValueU.S. Treasury Notes

$
53,759


$
498


$
(3
)

$
54,254Corporate and government-sponsored agency debt securities


829,900



3,501



(3,031
)


830,370Time deposits


40,020











40,020$
923,679


$
3,999


$
(3,034
)

$
924,644       December 31,2008


2007Cash and money market funds, at cost which approximates fair
    value

$
483,302


$
358,579Corporate debt securities, primarily commercial paper






35,579Total cash and cash equivalents

$
483,302


$
394,158     Years Ended December 31,2008


2007


2006Realized gains

$
6,738


$
1,486


$
596Realized losses


(1,257
)


(382
)


(240
)Net realized gain

$
5,481


$
1,104


$
356  81




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Less Than 12 Months


12 Months or Greater


TotalGross





Gross





GrossUnrealized





Unrealized





UnrealizedFair Value


Losses


Fair Value


Losses


Fair Value


LossesCorporate debt securities

$
12,691


$
(44
)

$
4,726


$
(22
)

$
17,417


$
(66
)Mortgage-backed securities


3,237



(2
)


6,139



(252
)


9,376



(254
)Asset-backed securities


10,870



(1,194
)










10,870



(1,194
)$
26,798


$
(1,240
)

$
10,865


$
(274
)

$
37,663


$
(1,514
)     5.
    Derivatives  Forward
    Exchange Contracts
        December 31, 2008Notional U.S. DollarEquivalent


Fair ValueEuro

$
31,944


$
(701
)British Pound


8,503



(1,633
)Canadian Dollar


2,954



(55
)$
43,401


$
(2,389
)    82




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  6.
    Consolidated
    Balance Sheet Detail (in thousands):  December 31,2008


2007(In thousands)Property and equipment:Building

$
22,190


$
21,390Furniture and fixtures


25,499



23,782Computers, equipment and software


250,643



222,506Leasehold improvements


38,451



33,690Construction in progress


4,229



3,033341,012



304,401Accumulated depreciation


(233,494
)


(216,648
)107,518



87,753Land


6,917



6,917Total property and equipment, net

$
114,435


$
94,670     December 31,2008


2007(In thousands)Other accrued liabilities:Accrued legal and professional fees

$
39,725


$
30,968Accrued marketing


38,069



36,264Other accrued expenses


116,886



83,729$
194,680


$
150,961   December 31,2008


2007(In thousands)Accrued taxes and other long-term liabilities:Accrued income taxes, long-term

$
47,106


$
69,246Other


25,645



18,995$
72,751


$
88,241     7.
    Restructuring     83




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        2008
    Restructuring
    LeaseTermination


Severance andCosts


Other Benefits


TotalBalance, January 1, 2008

$



$



$
Restructuring accrual


6,142



6,621



12,763Cash payments






(5,419
)


(5,419
)Adjustment to liability






(25
)


(25
)Effects of foreign currency exchange






(2
)


(2
)Accretion


29







29Balance, December 31, 2008

$
6,171


$
1,175


$
7,346    84




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##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  2006
    Restructuring
    LeaseTermination


Severance andCosts


Other Benefits


TotalBalance, January 1, 2006

$



$



$
Restructuring accrual






2,404



2,404Cash payments






(14
)


(14
)Balance, December 31, 2006






2,390



2,390Restructuring accrual


330



2,634



2,964Cash payments


(233
)


(4,542
)


(4,775
)Adjustment to liability


(24
)


(196
)


(220
)Effects of foreign currency exchange


4



7



11Balance, December 31, 2007


77



293



370Cash payments


(51
)


(65
)


(116
)Adjustment to liability


(7
)


(37
)


(44
)Balance, December 31, 2008

$
19


$
191


$
210      85




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##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  2004
    and 2003 Restructurings
    LeaseTerminationCostsBalance, December 31, 2005

$
18,083Cash payments


(4,071
)Adjustment to liability


(2,506
)Effects of foreign currency exchange


97Accretion


645Balance, December 31, 2006


12,248Cash payments


(2,235
)Adjustment to liability


5,552Effects of foreign currency exchange


99Accretion


431Balance, December 31, 2007


16,095Cash payments


(2,495
)Adjustment to liability


(8,632
)Reclassification to deferred rent liability


(2,573
)Effects of foreign currency exchange


(12
)Accretion


378Balance, December 31, 2008

$
2,761       8.
    Goodwill
    and Other Intangible Assets    Effects of











Effects ofForeign











ForeignJanuary 1,


Goodwill





Currency


December 31,


Goodwill





Currency


December 31,2007


Acquired


Adjustments


Exchange


2007


Acquired


Adjustments


Exchange


2008North America

$
412,453


$
95,877


$
1,840


$
1,321


$
511,491


$
297,270


$
(54
)

$
(1,667
)

$
807,040EMEA


75,445



86,537



584



(392
)


162,174



97,188



20



(5,634
)


253,748Japan


18,771



6,921



95







25,787



9,813



7







35,607Asia-Pacific (excluding Japan)


11,960



22,201



56







34,217



18,197











52,414Latin America


11,848



4,251



57



264



16,420



5,282







(895
)


20,807Total

$
530,477


$
215,787


$
2,632


$
1,193


$
750,089


$
427,750


$
(27
)

$
(8,196
)

$
1,169,616  86




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      December 31, 2008


December 31, 2007Accumulated








AccumulatedAmortization








AmortizationWeighted




(Including Effects








(Including EffectsAverage

Gross


of Foreign


Net


Gross


of Foreign


NetUseful

Carrying


Currency


Carrying


Carrying


Currency


CarryingLife

Amount


Exchange)


Amount


Amount


Exchange)


AmountOther Intangible assets:Purchased technologies

4.1 years

$
385,915


$
(176,072
)

$
209,843


$
282,293


$
(129,082
)

$
153,211Trademarks and patents

5.0 years


42,282



(35,639
)


6,643



42,922



(33,956
)


8,966Customer base and other intangibles

5.5 years


182,282



(82,965
)


99,317



117,731



(59,782
)


57,949$
610,479


$
(294,676
)

$
315,803


$
442,946


$
(222,820
)

$
220,126     December 31,2008


2007(In thousands)Gross intangible assets, beginning of year

$
442,946


$
305,395Add: Purchased technologies (amortized over one to seven years)


113,759



102,825Add: Trademarks and patents (amortized over one to seven years)


397



9,905Add: Customer base and other intangibles (amortized over one to
    seven years)


67,808



41,195Add: Change in value due to foreign exchange


(12,358
)


2,457612,552



461,777Dispositions


(2,073
)


(18,831
)Gross intangible assets, end of year

$
610,479


$
442,946    87




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##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Fiscal Years:2009

$
111,7852010


93,5312011


69,0672012


31,2392013


6,168Thereafter


4,013$
315,803   9.
    Commitments  Leases
    Lease Expiration

Renewal OptionCorporate Headquarters, Santa Clara, California

March 2013

10-year renewalSt. Paul, Minnesota

May 2018

two 5-year renewalsSlough, England

September 2017

None       SubleasePayments


Income2009

$
26,622


$
(854
)2010


20,817



(762
)2011


17,878



(286
)2012


15,638



(294
)2013


8,899



(174
)Thereafter


17,734



Total

$
107,588


$
(2,370
)    88




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    PurchaseObligationsand OtherCommitments2009

$
154,6262010


20,3522011


7242012


1802013


60Total

$
175,942     10.
    Warranty
    Accrual and Guarantees    December 31,2008


2007


2006Warranty balance, beginning of year

$
489


$
662


$
1,083Additional accruals


4,236



1,546



1,937Costs incurred during the period


(3,615
)


(1,719
)


(2,358
)Warranty balance, end of year

$
1,110


$
489


$
662     
    Under the terms of our software license agreements with our
    customers, we agree that in the event the software sold
    infringes upon any patent, copyright, trademark, or any other
    proprietary right of a third party, we will indemnify our
    customer licensees against any loss, expense or liability from
    any damages that may be awarded against our customer. We include
    this infringement indemnification in our software license
    agreements and selected managed service arrangements. In the
    event the customer cannot use the software or service due to
    infringement and we can not obtain the right to use, replace or
    modify the license or service in a commercially feasible manner
    so that it no longer infringes then we may terminate the license
    and provide the customer a pro-rata refund of the fees paid by
    the customer for the infringing license or service. We have
    recorded no liability associated with this indemnification, as
    we are not aware of any pending or threatened infringement
    actions that are probable losses. We believe the estimated fair
    value of these intellectual property indemnification clauses is
    minimal.
    Under the terms of certain vendor agreements, in particular,
    vendors used as part of our managed services, we have agreed
    that in the event the service provided to the customer by the
    vendor on behalf of us infringes upon any patent, copyright,
    trademark or any other proprietary right of a third party, we
    will indemnify our vendor against any loss, expense, or
    liability from any damages that may be awarded against our
    vendor. No 89




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##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  maximum liability is stipulated in these vendor agreements. We
    have recorded no liability associated with this indemnification,
    as we are not aware of any pending or threatened infringement
    actions or claims that are probable losses. We believe the
    estimated fair value of these indemnification clauses is minimal.  
    As permitted under Delaware law, we have agreements whereby we
    indemnify our officers and directors for certain events or
    occurrences while the officer or director is, or was, serving at
    our request in such capacity. The maximum potential amount of
    future payments we could be required to make under these
    indemnification agreements is not limited; however, we have
    director and officer insurance coverage that reduces our
    exposure and may enable us to recover a portion or all of any
    future amounts paid. We cannot estimate the fair value of these
    indemnification agreements in excess of applicable insurance
    coverage due to the fact that the insurers are denying coverage
    in many instances where we believe coverage should apply. We
    believe we will prevail in these insurance coverage disputes.
    Under the terms of our agreements to sell Magic in January 2004,
    Sniffer in July 2004 and McAfee Labs assets in December 2004, we
    agreed to indemnify the purchasers for any breach of
    representations or warranties in the agreement as well as for
    any liabilities related to the assets prior to sale that were
    not included in the purchaser assumed liabilities (undiscovered
    liabilities). Subject to limited exceptions, the maximum
    potential loss related to the indemnifications is
    $10.0 million, $200.0 million and $1.5 million,
    respectively. To date, we have paid no amounts under the
    representations and warranties indemnifications. We have not
    recorded any accruals related to these agreements.
    Under the terms of the agreement entered into by Secure
    Computing in July 2008 to sell its SafeWord assets, we are
    obligated to indemnify the purchaser for any breach of
    representations or warranties in the agreement as well as for
    any liabilities related to the assets prior to sale that were
    not included in the purchaser assumed liabilities (undiscovered
    liabilities). Subject to limited exceptions, the maximum
    potential loss related to the indemnification is
    $64.3 million. To date, we have paid no amounts under the
    representations and warranties indemnifications. We have not
    recorded any accruals related to this agreement.    11.
    Credit
    Facilities  and/or
     90




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      12.
    Employee
    Benefit Plan    13.
    Stockholders
    Equity  Common
    Stock
      Preferred
    Stock
   91




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##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  14.
    Employee
    Stock Benefit Plans  Employee
    Stock Purchase Plan
        Company
    Stock Incentive Plans
       92




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Plan
    Activity
    Year Ended December 31, 2008WeightedWeighted


AverageAverage


Remaining


AggregateNumber of


Exercise


Contractual


IntrinsicOptions


Price


Life


Value(1)Outstanding at beginning of period


14,168


$
23.68Options granted


3,351



34.59Options exercised


(5,862
)


19.91Options canceled


(1,344
)


31.60Outstanding at end of period


10,313


$
28.51



7.4


$
69,770Options vested and expected to vest(2)


9,043


$
27.78



7.1


$
67,137Options exercisable


4,707


$
23.53



5.9


$
53,543     (1)
    
    Intrinsic value is calculated as the difference between the
    market value of our common stock on December 31, 2008 and
    the exercise price of the option. The aggregate intrinsic value
    of options vested and expected to vest and exercisable excludes
    options with an exercise price above $34.57, the closing price
    of our common stock on December 31, 2008, as reported by
    the New York Stock Exchange.(2)
    
    Options vested and expected to vest reflect our estimated
    forfeiture rates.        Year Ended December 31, 2008Weighted





Weighted





WeightedPerformance


Average


Restricted


Average


Restricted


AverageStock


Grant Date


Stock


Grant Date


Stock


Grant DateUnits


Fair Value


Units


Fair Value


Awards


Fair ValueUnvested at beginning of period


42


$
34.73



2,496


$
24.02



82


$
27.48Granted


2,251



34.98



1,014



34.61







Awards assumed in conjunction with acquisition










233



28.57



359



28.57Vested


(100
)


35.88



(1,349
)


24.97



(54
)


29.22Canceled


(266
)


34.23



(277
)


26.17



(22
)


29.50Unvested at end of period


1,927


$
35.03



2,117


$
28.71



365


$
28.17      93




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Years Ended December 31,2008


2007


2006Amortization of fair value of options

$
24,657


$
19,313


$
30,660Restricted stock awards and units


26,237



21,346



16,426Restricted stock units with performance-based vesting


22,415



1,459



Employee Stock Purchase Plan


3,353







1,864Extension of post-termination exercise period






14,014



4,326(Benefit) expense related to cash settlement of options


(382
)


2,885



3,066Tender offer


601







Former executive acceleration










1,419Total stock-based compensation expense

$
76,881


$
59,017


$
57,761   Amortization of fair value of options.
  Restricted stock awards and units.
  Restricted stock units with performance-based
    vesting.
   94




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Employee Stock Purchase Plan.
  Extension of post-termination exercise
    period.
    Cash settlement of options. 90-day
  Tender offer.
  Former executive acceleration.
 95




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended December 31,2008


2007


2006Cost of net revenue  service and support

$
1,763


$
1,448


$
1,968Cost of net revenue  subscription


809



915



699Cost of net revenue  product


1,129



767



750Stock-based compensation expense included in cost of net revenue


3,701



3,130



3,417Research and development


18,476



14,023



15,042Sales and marketing


32,625



21,756



24,289General and administrative


22,079



20,108



15,013Stock-based compensation expense included in operating costs


73,180



55,887



54,344Total stock-based compensation expense


76,881



59,017



57,761Deferred tax benefit


(21,780
)


(16,913
)


(15,672
)Total stock-based compensation expense, net of tax

$
55,101


$
42,104


$
42,089       Assumptions
    Years Ended December 31,2008


2007


2006RSA grants

$



$



$
23.76RSU grants

$
34.61


$
29.43


$
23.79PSU grants

$
34.98


$
34.73


$
  96




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended December 31,2008


2007


2006Options:Risk free interest rate


3.1
%


4.5
%


4.8
%Weighted average expected lives (years)


5.8



6.0



5.6Volatility


39.9
%


33.7
%


37.4
%Dividend yield










ESPP:Risk free interest rate


1.1
%






4.6
%Weighted average expected lives (years)


0.5







0.5Volatility


32.0
%






38.0
%Dividend yield










     Years Ended December 31,2008

2007

2006Option grants

$
14.63


$
14.55


$
10.47ESPP grants

$
7.64


$



$
6.11     15.
    Provision
    for Income Taxes    December 31,2008


2007


2006Domestic

$
185,853


$
19,490


$
47,493Foreign


36,353



209,714



136,288$
222,206


$
229,204


$
183,781  97




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended December 31,2008


2007


2006Federal:Current

$
10,159


$
17,770


$
28,948Deferred


13,021



4,777



(17,489
)Total Federal


23,180



22,547



11,459State:Current


9,214



4,151



4,877Deferred


1,079



(2,311
)


(169
)Total State


10,293



1,840



4,708Foreign:Current


16,288



33,741



42,255Deferred


236



4,096



(12,112
)Total Foreign


16,524



37,837



30,143Provision for income taxes

$
49,997


$
62,224


$
46,310     Years Ended December 31,2008


2007


2006Federal income tax provision at statutory rate

$
77,772


$
80,250


$
64,201State tax expense (net of Federal benefit)


6,690



1,150



3,808Acquisition related non deductible costs


6,825







161Foreign earnings taxed at rates different than the Federal rate


(8,951
)


(49,146
)


(30,402
)Other permanent differences and other taxes


(5,831
)


2,976



1,593Tax credits, net of withholding taxes


(6,370
)


(5,605
)


(2,907
)Deemed repatriations of earnings from foreign subsidiaries


4,857



15,523



3,399Changes in valuation allowances


(34,298
)


(1,979
)


4,248Non deductible stock compensation


6,192



4,499



4,339Provision (benefit) for accruals for tax exposures


3,111



14,556



(2,130
)$
49,997


$
62,224


$
46,310      98




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Years Ended December 31,2008


2007Deferred Tax Assets:Deferred revenue

$
325,923


$
236,455Accrued liabilities and allowances


69,920



65,017Depreciation and amortization


158,216



196,712Tax credits


43,302



110,087Deferred stock-based compensation


34,754



38,259Net operating loss carryover


134,494



34,195766,609



680,725Valuation allowance


(64,832
)


(65,044
)Total deferred tax assets


701,777



615,681Deferred Tax Liabilities:Intangibles not amortizable for tax purposes


73,570



27,254Prepaids


13,400



10,897Total deferred tax liability


86,970



38,151Net deferred tax asset

$
614,807


$
577,530Current portion

$
310,870


$
256,188Noncurrent portion


303,937



321,342$
614,807


$
577,530      99




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  and/or non-U.S. subsidiaries. non-U.S. subsidiaries
      Years Ended December 31,2008


2007Beginning Gross unrecognized tax benefits(1)

$
71,690


$
47,468Gross increases related to tax positions in prior period(1)


17,195



21,077Gross decreases related to tax positions in prior period(1)


(1,896
)


(1,141
)Gross increases related to tax positions in current period(1)


3,648



5,189Settlements


(244
)


0Lapse of statute of limitations


(781
)


(903
)Ending Gross unrecognized tax benefits(1)

$
89,612


$
71,690     (1)
    
    State and local positions are presented before federal tax
    benefit.       100




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  16.
    Net
    Income Per Share    Years Ended December 31,2008


2007


2006Numerator  basic net income

$
172,209


$
166,980


$
137,471Numerator  diluted net income

$
172,209


$
166,980


$
137,471Denominator  basicBasic weighted-average common stock outstanding


156,205



159,819



160,945Denominator  dilutedBasic weighted-average common stock outstanding


156,205



159,819



160,945Effect of dilutive securities:Options, RSUs, RSAs, PSUs and ESPP grants(1)


3,201



4,307



2,107Diluted weighted-average shares


159,406



164,126



163,052Net income per share  basic

$
1.10


$
1.04


$
0.85Net income per share  diluted

$
1.08


$
1.02


$
0.84     (1)
    
    At December 31, 2008, 2007 and 2006, 5.7 million,
    3.2 million and 7.2 million RSUs and options,
    respectively, were excluded from the calculation since the
    effect was anti-dilutive. In addition, we excluded
    0.8 million PSUs for the year ended December 31, 2008,
    because they are contingently issuable shares.  17.
    Business
    Segment and Major Customer Information       101




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended December 31,2008


2007


2006Net revenue by region:North America

$
844,937


$
678,227


$
633,222EMEA


502,876



426,966



354,592Japan


116,567



102,272



87,121Asia-Pacific, excluding Japan


81,109



60,913



43,018Latin America


54,576



39,842



27,205Net revenue

$
1,600,065


$
1,308,220


$
1,145,158Income from operations by region:North America

$
630,000


$
527,016


$
481,575EMEA


378,212



319,134



253,343Japan


86,070



78,255



62,337Asia-Pacific, excluding Japan


52,427



38,603



22,148Latin America


37,042



24,672



14,890Corporate and other


(994,180
)


(827,867
)


(695,265
)Income from operations

$
189,571


$
159,813


$
139,028Depreciation expense by region:North America

$
9,340


$
7,884


$
12,269EMEA


2,159



2,127



1,842Japan


154



60



381Asia-Pacific, excluding Japan


1,842



1,995



2,352Latin America


27



13



175Corporate


27,091



23,475



18,858Depreciation expense

$
40,613


$
35,554


$
35,877      102




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,2008


2007North America

$
2,194,800


$
2,333,535EMEA


870,735



741,726Japan


221,804



170,545Asia-Pacific, excluding Japan


76,530



57,227Latin America


30,218



22,360Corporate


63,794



61,131Total assets

$
3,457,881


$
3,386,524     December 31,2008


2007India

$
6,157


$
10,130Japan


3,161



2,884United Kingdom


3,513



4,718Ireland


1,341



1,508Other foreign countries


8,586



6,269Total foreign countries


22,758



25,509United States


91,677



69,161Total

$
114,435


$
94,670     Years Ended December 31,2008


2007


2006United Kingdom

$
159,501


$
139,157


$
101,824Germany


64,409



54,157



53,145Japan


116,567



102,273



87,121Canada


59,493



40,552



26,401Other foreign countries


414,651



334,408



269,846Total foreign countries


814,621



670,547



538,337United States


785,444



637,673



606,821Total

$
1,600,065


$
1,308,220


$
1,145,158    103




---



##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  18.
    Litigation  Settled
    Cases
          Open
    Cases
     104




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##### Table of Contents



MCAFEE,
    INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    In re McAfee.com Corp. Initial Public
    Offering Securities Litigation In re Initial Public Offering
    Securities Litigation
      19.
    Related
    Party Transactions    20.
    Subsequent
    Events   105




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##### Table of Contents



SIGNATURES      By:
    /s/  David
    G. DeWalt   Chief Executive Officer and President
    Signature

Title

Date/s/  David
    G. DeWalt(David
    G. DeWalt)

Chief Executive Officer and President (Principal Executive
    Officer)

March 2, 2009/s/  Albert
    A. Rocky Pimentel(Albert
    A. Rocky Pimentel)

Chief Financial Officer and
    Chief Operating Officer
    (Principal Financial Officer)

March 2, 2009/s/  Keith
    S. Krzeminski(Keith
    S. Krzeminski)

Chief Accounting Officer and Senior Vice President, Finance
    (Principal Accounting Officer)

March 2, 2009/s/  Charles
    J. Robel(Charles
    J. Robel)

Non-Executive Chairman of the Board

March 2, 2009(Carl
    Bass)

Director

March 2, 2009/s/  Thomas
    Darcy(Thomas
    Darcy)

Director

March 2, 2009/s/  Leslie
    G. Denend(Leslie
    G. Denend)

Director

March 2, 2009/s/  Jeffrey
    A. Miller(Jeffrey
    A. Miller)

Director

March 2, 2009/s/  Denis
    J. OLeary(Denis
    J. OLeary)

Director

March 2, 2009/s/  Robert
    W. Pangia(Robert
    W. Pangia)

Director

March 2, 2009/s/  Anthony
    Zingale(Anthony
    Zingale)

Director

March 2, 2009  106




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##### Table of Contents



SCHEDULE II
  MCAFEE,
    INC.
  VALUATION
    AND QUALIFYING ACCOUNTS
  Provision forDoubtfulAccounts,Additions Charged


Write-Offs ofBalance at


to Operating Expense,


Previously


Balance atBeginning of


Deferred Revenue or


Provided


End ofAllowance for Doubtful Accounts, Net(1)

Period


Net Revenue


Accounts


Period(In thousands)Year Ended December 31, 2008

$
4,076


$
1,126


$
(1,255
)

$
3,947Year Ended December 31, 2007

$
2,015


$
2,248


$
(187
)

$
4,076Year Ended December 31, 2006

$
2,389


$
884


$
(1,258
)

$
2,015     (1)
    
    Allowance for Doubtful Accounts, Net.The
    allowance for doubtful accounts, consists of our estimates with
    respect to the uncollectibility of our receivables. Our
    management must make estimates of the uncollectibility of our
    accounts receivables. Management specifically analyzes accounts
    receivable and analyzes historical bad debts, customer
    concentrations, customer credit-worthiness, current economic
    trends and changes in our customer payment terms when
    determining the allowance for doubtful accounts.  Provision forSales ReturnsCharged to NetBalance at


Revenue or





Balance atBeginning of


Deferred


Actual


End ofSales Returns

Period


Revenue(2)


Returns


Period(In thousands)Year Ended December 31, 2008

$
7,994


$
95,853


$
(89,058
)

$
14,789Year Ended December 31, 2007

$
8,508


$
55,931


$
(56,445
)

$
7,994Year Ended December 31, 2006

$
3,837


$
19,198


$
(14,527
)

$
8,508   Provision forOtherIncentivesCharged to NetBalance at


Revenue or





Balance atBeginning of


Deferred


Actual


End ofOther Incentives

Period


Revenue(2)


Incentives


Period(In thousands)Year Ended December 31, 2008

$
40,494


$
110,469


$
(104,546
)

$
46,417Year Ended December 31, 2007

$
31,266


$
133,748


$
(124,520
)

$
40,494Year Ended December 31, 2006

$
28,102


$
119,856


$
(116,692
)

$
31,266     (2)
    
    Allowance for Sales Returns and Allowance for Other
    Incentives.The allowance for sales returns and
    the allowance for incentives consists of our estimates of
    potential future product returns related to product revenue, and
    specific provisions for distributor, reseller, and retailer
    sales incentives that are reductions in the revenue to be
    realized, respectively. We analyze and monitor current and
    historical return rates, current economic trends and changes in
    customer demand and acceptance of our products when evaluating
    the adequacy of the sales returns and other allowances. These
    estimates affect our net revenue line item on our statements of
    income and affect our net accounts receivable and other accrued
    liabilities line items on our consolidated balance sheets. These
    estimates affect all of our operating geographies. At
    December 31, 2008, $28.7 million is netted with
    accounts receivable and $32.5 million is in other accrued
    liabilities on our consolidated balance sheet. 107




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##### Table of Contents



EXHIBIT INDEX
  Incorporated by ReferenceExhibit





File

Exhibit



Filed withNumber

Description

Form

Number

Number

Filing Date

this 10-K3.1


Second Restated Certificate of Incorporation of the Registrant,
    as amended on December 1, 1997

S-4

333-48593

3.1

March 25, 19983.2


Certificate of Ownership and Merger between Registrant and
    Network Associates, Inc.

10-Q

001-31216

3.2

November 8, 20043.3


Third Amended and Restated Bylaws of the Registrant

8-K

001-31216

3.1

February 6, 20093.4


Certificate of Designation of Series A Preferred Stock of
    the Registrant

10-Q

000-20558

3.3

November 14, 19963.5


Certificate of Designation of Rights, Preferences and Privileges
    of Series B Participating Preferred Stock of the Registrant

8-A

000-20558

5.0

October 22, 199810.1


Lease Assignment dated November 17, 1997 for facility at
    3965 Freedom Circle, Santa Clara, California by and between
    Informix Corporation and the Registrant

S-3

333-46049

10.13

February 11, 199810.2


Consent to Assignment Agreement dated December 19, 1997 by
    and among Birk S. McCandless, LLC, Guaranty Federal Bank,
    F.S.B., Informix Corporation and the Registrant

S-3

333-46049

10.14

February 11, 199810.3


Subordination, Nondisturbance and Attornment Agreement dated
    December 18, 1997, between Guaranty Federal Bank, F.S.B.,
    the Registrant and Birk S. McCandless, LLC

S-3

333-46049

10.15

February 11, 199810.4


Form of lease executed November 22, 1996 by and between
    Birk S. McCandless, LLC and Informix Corporation for facility at
    3965 Freedom Circle, Santa Clara, California

S-3

333-46049

10.16

February 11, 199810.5


First Amendment to Lease dated March 20, 1998 between Birk
    S. McCandless, LLC and the Registrant

10-Q

000-20558

10.28

November 13, 200110.6


Confirmation, Amendment and Notice of Security Agreement dated
    March 20, 1998 among Informix Corporation, Birk S.
    McCandless, LLC and the Registrant

10-Q

000-20558

10.29

November 13, 200110.7


Second Amendment to Lease dated September 1, 1998 among
    Informix Corporation, Birk S. McCandless, LLC and the Registrant

10-Q

000-20558

10.30

November 13, 2001 108




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##### Table of Contents



Incorporated by ReferenceExhibit





File

Exhibit



Filed withNumber

Description

Form

Number

Number

Filing Date

this 10-K10.8


Subordination, Non-disturbance and Attornment Agreement dated
    June 21, 2000, among Column Financial, Inc., Informix
    Corporation, Birk S. McCandless, LLC, and the Registrant

10-Q

000-20558

10.31

November 13, 200110.9*


Form of Indemnification Agreement between the Registrant and its
    Executive Officers

10-K

001-31216

10.34

March 9, 200410.10*


Network Associates, Inc. Tax Deferred Savings Plan

S-8

333-110257

4.1

November 5, 200310.11


Umbrella Credit Facility of Registrant dated April 15, 2004

10-Q

001-31216

10.36

May 10, 200410.12*


Fifth Amendment to Network Associates, Inc. Tax Deferred Savings
    Plan

10-Q

001-31216

10.37

May 10, 200410.13*


Sixth Amendment to Network Associates, Inc. Tax Deferred Savings
    Plan

10-Q

001-31216

10.43

August 9, 200410.14*


Employment Agreement between Registrant and Eric F. Brown dated
    December 10, 2004

8-K

001-31216

10.1

December 14, 200410.15*


First Amendment to Employment Agreement between Registrant and
    Eric F. Brown dated May 26, 2005

8-K

001-31216

10.3

May 26, 200510.16*


Letter Agreement Amendment to Employment Agreement between the
    Registrant and Eric F. Brown dated January 31, 2006

10-K

001-31216

10.36

March 1, 200610.17*


Letter agreement, dated February 23, 2007 between David
    DeWalt and the Registrant

8-K

001-31216

10.37

March 8, 200710.18*


Letter Agreement, dated February 5, 2008 between David
    DeWalt and the Registrant, amending the Letter Agreement, dated
    February 23, 2007 between David DeWalt and the Registrant










X10.19


Share Purchase Agreement, dated October 8, 2007 among the
    Registrant, McAfee European Holdings Limited and SafeBoot
    Holding B.V., among other parties

10-K

001-31216

10.32

February 27, 200810.20*


Letter agreement, dated April 30, 2008 between Albert
    Rocky Pimentel and the Registrant

8-K

001-31216

10.1

April 30, 200810.21*


Letter agreement, dated August 17, 2007 between Mark
    Cochran and the Registrant

10-Q

001-31216

10.1

May 12, 200810.22*


Letter agreement, dated September 14, 2007 between Michael
    DeCesare and the Registrant

10-Q

001-31216

10.2

May 12, 2008 109




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##### Table of Contents



Incorporated by ReferenceExhibit





File

Exhibit



Filed withNumber

Description

Form

Number

Number

Filing Date

this 10-K10.23*


Letter agreement, dated February 15, 2007 between Keith
    Krzeminski and the Registrant










X10.24*


Employment Agreement, dated October 1, 2004 between
    Christopher Bolin and the Registrant










X10.25*


First Amendment to Employment Agreement between Christopher
    Bolin and the Registrant, dated May 21, 2005










X10.26*


Amendment of Stock Options, dated February 11, 2008 between
    Christopher Bolin and the Registrant

10-Q

001-31216

10.3

May 12, 200810.27*


Foundstone, Inc. 2000 Stock Plan, as amended

10-Q

001-31216

10.6

May 12, 200810.28*


2002 Employee Stock Purchase Plan, as amended

10-Q

001-31216

10.7

May 12, 200810.29*


SafeBoot Stock Option Plan 2006, as amended

S-8

333-150918

4.1

May 14, 200810.30*


1997 Stock Incentive Plan, as amended

10-Q

001-31216

10.2

August 7, 200810.31*


Form of Performance Stock Unit Issuance Agreement

10-Q

001-31216

10.8

May 12, 200810.32*


Form of Stock Option Award Agreement










X10.33*


Executive Bonus Plan

10-Q

001-31216

10.3

August 7, 200810.34


Agreement and Plan of Merger, dated September 21, 2008
    among the Registrant, Seabiscuit Acquisition Corporation and
    Secure Computing Corporation

8-K

001-31216

10.1

September 22, 200810.35*


Amended and Restated 1993 Stock Option Plan for Outside
    Directors, as amended

10-Q

001-31216

10.2

November 7, 200810.36*


Secure Computing Corporation 2002 Stock Incentive Plan

S-8

333-155583

4.1

November 21, 200810.37*


Secure Computing Corporation (formerly CipherTrust, Inc.) 2000
    Stock Option Plan

S-8

333-155583

4.2

November 21, 200810.38*


CyberGuard Corporation Third Amended and Restated Employee Stock
    Option Plan

S-8

333-155583

4.3

November 21, 200810.39*


Form of Change of Control and Retention Agreement (Tier 2
    Executives)

8-K

001-31216

10.1

December 18, 200810.40*


Change of Control and Retention Plan (Tier 3 Executives)

8-K

001-31216

10.2

December 18, 200810.41*


Change of Control and Retention Agreement, dated
    January 26, 2009, between David DeWalt and the Registrant

8-K

001-31216

10.1

January 30, 2009 110




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##### Table of Contents



Incorporated by ReferenceExhibit





File

Exhibit



Filed withNumber

Description

Form

Number

Number

Filing Date

this 10-K10.42


Credit Agreement dated December 22, 2008 among the
    Registrant, McAfee Ireland Holdings Limited, the subsidiaries of
    the Registrant party thereto as guarantors, the lenders from
    time to time party thereto and Bank of America, N.A., as
    Administrative Agent and L/C Issuer

8-K

001-31216

10.1

December 29, 200821.1


Subsidiaries of the Registrant










X23.1


Consent of Independent Registered Public Accounting Firm










X31.1


Certification of Chief Executive Officer and Chief Financial
    Officer pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002










X32.1


Certification of Chief Executive Officer and Chief Financial
    Officer pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002










X     *
    
    Management contracts or compensatory plans or arrangements
    covering executive officers or directors of McAfee, Inc. 111