Symantec 2001 Annual Report Download - page 39

Legal Expenses We accrue estimated legal expenses for lawsuits only
when both of the conditions of SFAS No. 5, Accounting for Contingencies,
are met. Costs for external attorney fees are accrued when the likeli-
hood of the incurrence of the related costs is probable and management
has the ability to estimate such costs. If both of these conditions are
not met, management records the related legal expenses when incurred.
Amounts accrued by us are not discounted. The material assumptions
used to estimate the amount of legal expenses include:
•the monthly legal expense incurred by our external attorneys
on the particular case being evaluated;
•communication between us and our external attorneys on the
expected duration of the lawsuit and the estimated expenses
during that time;
•our intentions regarding these lawsuits, e.g. to defend vigorously,
to take to trial and the minimum amounts within
the estimated range for which we would be willing to settle if
settlement discussions were to occur;
•deductible amounts under our insurance policies; and
•past experiences with similar lawsuits.
Recent Accounting Pronouncements On February 14, 2001, the FASB
issued a limited revision of its September 7, 1999 exposure Draft,
Business Combinations and Intangible Assets, that proposes to signifi-
cantly change the accounting for goodwill acquired in a purchase
business combination. Under the revised proposal, goodwill would not
be amortized but would be reviewed for impairment annually and if
certain events occur or circumstances exist. Goodwill impairment
charges would be presented as a separate line item within the operating
section of the income statement. The nonamortization approach
would apply to previously recorded goodwill as well as goodwill arising
from acquisitions completed after the application of the new standard.
Amortization of the remaining book value of goodwill would cease
and the new impairment-only approach would apply. The FASB
expects to release the final statement in July 2001.We will not adopt
the provisions of the proposed statement, which defers reporting the
effects of the proposed statement, until our first quarter of fiscal 2003.
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, which establishes accounting and
reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively
referred to as derivatives) and for hedging activities. In June 1999, the
FASB issued SFAS No. 137, Accounting for Derivative Instruments and
Hedging Activities – Deferral of the Effective Date of FASB Statement
No. 133, which defers the adoption of SFAS No. 133 for one year.
SFAS 133 will be effective for us at the beginning of the June 2001
quarter for both annual and interim reporting periods. We do not
expect the adoption of this accounting pronouncement to have a
material effect on our consolidated financial position or results of
operations.
Reclassifications Certain previously reported amounts have been
reclassified to conform to the current presentation format with no
impact on net income. All financial information has been restated to
conform to this presentation.
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