Symantec 2009 Annual Report Download - page 94

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$12 million of fixed-income securities was determined using benchmark pricing models for identical or
similar securities.
As of April 3, 2009, we have no financial instruments with unobservable inputs as classified in Level 3 under
the SFAS No. 157 hierarchy. Level 3 instruments generally would include unobservable inputs to be used in the
valuation methodology that are significant to the measurement of fair value of assets or liabilities. The determi-
nation of fair value for Level 3 instruments requires the most management judgment and subjectivity.
Stock-Based Compensation
We account for stock-based compensation in accordance with SFAS No. 123R, Share-Based Payment. Under
the fair value recognition provisions of this statement, stock-based compensation is measured at the grant date based
on the fair value of the award and is recognized as expense over the requisite service period, which is generally the
vesting period of the respective award.
Determining the fair value of stock-based awards at the grant date requires judgment. We use the Black-
Scholes option-pricing model to determine the fair value of stock options. The determination of the fair value of
stock-based awards on the date of grant using an option-pricing model is affected by our stock price as well as
assumptions regarding a number of complex and subjective variables. These variables include our expected stock
price volatility over the term of the awards, actual and projected employee stock option exercise and cancellation
behaviors, risk-free interest rates, and expected dividends.
We estimate the expected life of options granted based on an analysis of our historical experience of employee
exercise and post-vesting termination behavior considered in relation to the contractual life of the option. Expected
volatility is based on the average of historical volatility for the period commensurate with the expected life of the
option and the implied volatility of traded options. The risk free interest rate is equal to the U.S. Treasury constant
maturity rates for the period equal to the expected life. We do not currently pay cash dividends on our common stock
and do not anticipate doing so in the foreseeable future. Accordingly, our expected dividend yield is zero.
In accordance with SFAS No. 123R, we only record stock-based compensation expense for awards that are
expected to vest. As a result, judgment is also required in estimating the amount of stock-based awards that are
expected to be forfeited. Although we estimate forfeitures based on historical experience, actual forfeitures may
differ. If actual results differ significantly from these estimates, stock-based compensation expense and our results
of operations could be materially impacted when we record a true-up for the difference in the period that the awards
vest.
Contingencies and Litigation
We evaluate contingent liabilities including threatened or pending litigation in accordance with SFAS No. 5,
Accounting for Contingencies. We assess the likelihood of any adverse judgments or outcomes from a potential
claim or legal proceeding, as well as potential ranges of probable losses, when the outcomes of the claims or
proceedings are probable and reasonably estimable. A determination of the amount of accrued liabilities required, if
any, for these contingencies is made after the analysis of each separate matter. Because of uncertainties related to
these matters, we base our estimates on the information available at the time of our assessment. As additional
information becomes available, we reassess the potential liability related to its pending claims and litigation and
may revise our estimates. Any revisions in the estimates of potential liabilities could have a material impact on our
operating results and financial position.
Income Taxes
We account for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes. The provision
for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are
recognized for the expected future tax consequences of temporary differences between the financial reporting and
tax bases of assets and liabilities, and for operating loss and tax credit carryforwards in each jurisdiction in which we
operate. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable
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