Symantec 2012 Annual Report Download - page 114

generate. If the asset is considered to be impaired, the amount of such impairment would be measured as the
difference between the carrying amount of the asset and its fair value. Recoverability and impairment of other
finite-lived intangible assets, particularly developed technology and patents, would be measured by the
comparison of the carrying amount of the asset to the sum of undiscounted estimated future product revenues
offset by estimated future costs to dispose of the product to which the asset relates. For indefinite-lived intangible
assets, we review impairment on an annual basis consistent with the timing of the annual evaluation for goodwill.
These assets generally include tradenames, trademarks and in-process research and development. Recoverability
of indefinite-lived intangible assets would be measured by the comparison of the carrying amount of the asset to
the sum of the discounted estimated future cash flows the asset is expected to generate plus expected royalties. If
the asset is considered to be impaired, the amount of such impairment would be measured as the difference
between the carrying amount of the asset and its fair value. Our cash flow assumptions are based on historical
and forecasted future revenue, operating costs, and other relevant factors. Assumptions and estimates about the
remaining useful lives of our intangible assets are subjective and are affected by changes to our business
strategies. If management’s estimates of future operating results change, or if there are changes to other
assumptions, the estimate of the fair value of our identifiable intangible assets could change significantly. Such
change could result in impairment charges in future periods, which could have a significant impact on our
operating results and financial condition.
Long-lived assets (including assets held for sale). We assess long-lived assets for impairment whenever
events or changes in circumstances indicate that the carrying value of the long-lived assets may not be
recoverable. Based on the existence of one or more indicators of impairment, we assess recoverability of long-
lived assets based on a projected undiscounted cash flow method using assumptions determined by management
to be commensurate with the risk inherent in our current business model. If an asset is not recoverable,
impairment is measured as the difference between the carrying amount and its fair value. Our estimates of cash
flows require significant judgment based on our historical and anticipated results and are subject to many factors
which could change and cause a material impact to our operating results or financial condition. We record
impairment charges on long-lived assets held for sale when we determine that the carrying value of the long-
lived assets may not be recoverable. In determining fair value, we obtain and consider market value appraisal
information from third parties.
Stock-based compensation
We account for stock-based compensation in accordance with the authoritative guidance on stock
compensation. Under the fair value recognition provisions of this guidance, stock-based compensation is
measured at the grant date based on the fair value of the award and is recognized as expense ratably on a straight-
line basis over the requisite service period, which is generally the vesting period of the respective award.
Determining the fair value of stock-based awards, primarily stock options, 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 grant date fair value of options 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 expected life of the options, 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.
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