Symantec 2008 Annual Report Download - page 160

Prior to the adoption of SFAS No. 123R, we presented all tax benefits for deductions related to stock options as
operating cash flows in our Consolidated Statements of Cash Flows. SFAS No. 123R requires cash flows resulting
from the tax benefits for tax deductions, in excess of the compensation expense recorded for exercised options, to be
classified as financing cash flows. Accordingly, we classified $26 million in both years for such excess tax benefits
as financing cash flows rather than operating cash flows in our Consolidated Statement of Cash Flows for the fiscal
years ended March 28, 2008 and March 30, 2007, respectively.
Pursuant to the income tax guidance included in SFAS No. 123R, we have elected the regular method of
computing the pool of excess tax benefits, or APIC pool.
Concentrations of Credit Risk
A significant portion of our revenues and net income is derived from international sales and independent
agents and distributors. Fluctuations of the U.S. dollar against foreign currencies, changes in local regulatory or
economic conditions, piracy, or nonperformance by independent agents or distributors could adversely affect
operating results.
Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and
cash equivalents, short-term investments, trade accounts receivable, and forward foreign exchange contracts. Our
investment portfolio is diversified and consists of investment grade securities. Our investment policy limits the
amount of credit risk exposure to any one issuer and in any one country. We are exposed to credit risks in the event of
default by the issuers to the extent of the amount recorded in the Consolidated Balance Sheets. The credit risk in our
trade accounts receivable is substantially mitigated by our credit evaluation process, reasonably short collection
terms, and the geographical dispersion of sales transactions. We maintain reserves for potential credit losses and
such losses have been within management’s expectations.
Legal Expenses
Prior to October 1, 2006, we recognized a liability for cases where we are the defendant for estimated external
legal costs to be incurred during the next fiscal quarter. Effective October 1, 2006, we changed our policy related to
legal costs from one generally accepted method of accounting to another generally accepted method of accounting.
Under our new policy, we will no longer recognize a liability for external legal costs related to future periods.
Instead, we will expense such amounts in the period incurred. We believe that this new policy is preferable because
the costs and administrative burden involved in estimating future legal expenses outweigh the benefits. Further, we
believe that this new method more accurately aligns the expense with the accounting period in which it is incurred.
We will continue to accrue amounts related to external legal costs that are incurred during the period and to accrue
losses in the period in which a loss is probable and estimable. The impact of this change in accounting method is not
material for all prior periods presented, and, therefore, prior periods have not been revised to reflect this change.
Accumulated Other Comprehensive Income
We report comprehensive income or loss in accordance with the provisions of SFAS No. 130, Reporting
Comprehensive Income, which establishes standards for reporting comprehensive income and its components in the
financial statements. The components of other comprehensive income consist of unrealized gains and losses on
available-for-sale securities, net of tax, and foreign currency translation adjustments, net of tax. Unrealized losses
on our available-for-sale securities were $3 million and $2 million as of March 28, 2008 and March 30, 2007,
respectively. Comprehensive income is presented in the accompanying Consolidated Statements of Stockholders’
Equity and Comprehensive Income.
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SYMANTEC CORPORATION
Notes to Consolidated Financial Statements — (Continued)