Symantec 2008 Annual Report Download - page 188

attributable to the earnings repatriation. As a result of this clarifying language, we reduced the tax expense
attributable to the repatriation by approximately $21 million in fiscal 2006, which reduced the cumulative tax
charge on the repatriation to $33 million.
The Company adopted the provisions of FASB Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty
in Income Taxes, effective March 31, 2007. The cumulative effect of adopting FIN 48 was a decrease in tax reserves
of $16 million, resulting in a decrease to Veritas goodwill of $10 million, an increase of $5 million to the March 31,
2007 Retained Earnings balance, and a $1 million increase in Paid in Capital. Upon adoption, the gross liability for
unrecognized tax benefits at March 31, 2007 was $456 million, exclusive of interest and penalties.
The aggregate changes in the balance of gross unrecognized tax benefits were as follows:
(In thousands)
Beginning balance as of March 31, 2007 (date of adoption) .................... $456,183
Settlements with tax authorities . ........................................ (6,680)
Lapse of statute of limitations . . ........................................ (6,030)
Increases in balances related to tax positions taken during prior years ............. 40,390
Decreases in balances related to tax positions taken during prior years ............ (6,570)
Increases in balances related to tax positions taken during current year ............ 111,197
Balance as of March 28, 2008 . . ........................................ $588,490
Of the $132 million of changes in gross unrecognized tax benefits during the year disclosed above,
approximately $76 million was provided through purchase accounting in connection with acquisitions made in
fiscal 2008. This gross liability is reduced by offsetting tax benefits associated with the correlative effects of
potential transfer pricing adjustments, interest deductions, and state income taxes, as well as payments made to date.
Of the total unrecognized tax benefits at March 28, 2008, $122 million, if recognized, would favorably affect
the company’s effective tax rate while the remaining amounts would affect goodwill, cumulative translation
adjustments and Additional paid in capital. However, one or more of these unrecognized tax benefits could be
subject to a valuation allowance if and when recognized in a future period, which could impact the timing of any
related effective tax rate benefit.
Our policy to include interest and penalties related to gross unrecognized tax benefits within our provision for
income taxes did not change upon the adoption of FIN 48. At March 28, 2008, before any tax benefits, we had
$122 million of accrued interest and $13 million of accrued penalties on unrecognized tax benefits. Interest
included in our provision for income taxes was approximately $32 million for the year ended March 28, 2008. If the
accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced in the period that
such determination is made, and reflected as a reduction of the overall income tax provision, to the extent that the
interest expense had been provided through the tax provision, or as a reduction to Goodwill if it had been recorded
through purchase accounting.
We file income tax returns in the U.S. on a federal basis and in many U.S. state and foreign jurisdictions. Our
two most significant tax jurisdictions are the U.S. and Ireland. Our tax filings remain subject to examination by
applicable tax authorities for a certain length of time following the tax year to which those filings relate. Our 2000
through 2007 tax years remain subject to examination by the IRS for U.S. federal tax purposes, and our 1995
through 2007 tax years remain subject to examination by the appropriate governmental agencies for Irish tax
purposes. Other significant jurisdictions include California and Japan. As of March 28, 2008, we are under
examination by the IRS, for the Veritas U.S. federal income taxes for the 2002 through 2005 tax years.
We continue to monitor the progress of ongoing income tax controversies and the impact, if any, of the
expected tolling of the statute of limitations in various taxing jurisdictions. Considering these facts, we do not
currently believe there is a reasonable possibility of any significant change to our total unrecognized tax benefits
within the next twelve months.
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SYMANTEC CORPORATION
Notes to Consolidated Financial Statements — (Continued)