Symantec 2008 Annual Report Download - page 159

valuation allowance or change the valuation allowance in a period, we reflect the change with a corresponding
increase or decrease to our tax provision in our Consolidated Statements of Income, or to goodwill to the extent that
the valuation allowance related to tax attributes of the acquired entities.
We adopted the provisions of FASB Interpretation No. 48, or FIN 48, Accounting for Uncertainty in Income
Taxes, effective March 31, 2007. FIN 48 clarifies the accounting for income taxes, by prescribing a minimum
recognition threshold a tax position is required to meet before being recognized in the financial statements. FIN 48
also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim
periods, disclosure and transition.
FIN 48 prescribes a two-step process to determine the amount of tax benefit to be recognized. The first step is
to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is
more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation
processes, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that is
more than 50% likely of being realized upon ultimate settlement. It is inherently difficult and subjective to estimate
such amounts, as this requires us to determine the probability of various possible outcomes. We reevaluate these
uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes
in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Such a
change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the
tax provision in the period.
Earnings Per Share
Earnings per share — basic and diluted are presented in conformity with SFAS No. 128, Earnings per Share,
for all periods presented. Earnings per share — basic is computed using the weighted-average number of common
shares outstanding during the periods. Earnings per share — diluted is computed using the weighted-average
number of common shares outstanding and potentially dilutive common shares outstanding during the periods.
Potentially dilutive common shares include the assumed exercise of stock options using the treasury stock method,
the dilutive impact of restricted stock, restricted stock units, and warrants using the treasury stock method, and
conversion of debt, if dilutive, in the period.
Stock-Based Compensation
Prior to April 1, 2006, we accounted for stock-based compensation awards to employees using the intrinsic
value method in accordance with Accounting Principles Board Opinion, or APB, No. 25, Accounting for Stock
Issued to Employees, and to non-employees using the fair value method in accordance with SFAS No. 123,
Accounting for Stock-Based Compensation. In addition, we applied applicable provisions of FIN 44, Accounting for
Certain Transactions Involving Stock Compensation, an interpretation of APB No. 25.
Effective April 1, 2006, we adopted the provisions of SFAS No. 123R, Share-Based Payment, which replaced
SFAS No. 123 and superseded APB No. 25 and related interpretations. Under SFAS No. 123R, we must measure the
fair value of all stock-based awards, including stock options, restricted stock units, and employee stock purchase
plan purchase rights, on the date of grant and amortize the fair value of the award as compensation expense over the
requisite service period. We elected the modified prospective application method, under which prior periods are not
revised for comparative purposes. The valuation provisions of SFAS No. 123R apply to new awards and to awards
outstanding as of the effective date that are subsequently modified. For stock-based awards granted on or after
April 1, 2006, we recognize stock-based compensation expense on a straight-line basis over the requisite service
period, which is generally the vesting period. We recognize estimated compensation expense for stock-based
awards that were outstanding and unvested as of the effective date on a straight-line basis over the remaining service
period under the pro forma provisions of SFAS No. 123.
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Notes to Consolidated Financial Statements — (Continued)