Symantec 2012 Annual Report Download - page 115

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We issue performance-based restricted stock units (“PRU”) representing hypothetical shares of our common
stock. Each PRU grant reflects a target number of shares that may be issued to the award recipient. We determine
the actual number of shares the recipient receives at the end of a three-year performance period as follows:
(1) our achievement of an annual target earnings per share for the first fiscal year of grant and (2) our two and
three year cumulative relative total shareholder return ranked against that of other companies that are included in
the Standard & Poor’s 500 Index. We estimate the fair value of PRUs using the Monte Carlo simulation model,
as the total shareholder return (“TSR”) modifier contains a market condition.
In accordance with the authoritative guidance on stock compensation, we record stock-based compensation
expense for awards that are expected to vest. As a result, judgment is 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 an adjustment for the
difference in the period that the awards vest or are forfeited.
Contingencies and litigation
We evaluate contingent liabilities including threatened or pending litigation in accordance with the
authoritative guidance on contingencies. We assess the likelihood of any adverse judgments or outcomes from
potential claims or legal proceedings, 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 our
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 are required to compute our income taxes in each federal, state, and international jurisdiction in which
we operate. This process requires that we estimate the current tax exposure as well as assess temporary
differences between the accounting and tax treatment of assets and liabilities, including items such as accruals
and allowances not currently deductible for tax purposes. The income tax effects of the differences we identify
are classified as current or long-term deferred tax assets and liabilities in our Consolidated Balance Sheets. Our
judgments, assumptions, and estimates relative to the current provision for income tax take into account current
tax laws, our interpretation of current tax laws, and possible outcomes of current and future audits conducted by
foreign and domestic tax authorities. Changes in tax laws or our interpretation of tax laws and the resolution of
current and future tax audits could significantly impact the amounts provided for income taxes in our
Consolidated Balance Sheets and Consolidated Statements of Income.
We account for uncertain tax positions pursuant to authoritative guidance based on a two-step approach to
recognize and measure those positions taken or expected to be taken in a tax return. The first step is to determine
if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained
on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax
benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. We adjust
reserves for our uncertain tax positions due to changing facts and circumstances, such as the closing of a tax
audit, the refinement of estimates, or the realization of earnings or deductions that differ from our estimates. To
the extent that the final outcome of these matters is different than the amounts recorded, such differences will
impact our tax provision in our Consolidated Statements of Income in the period in which such determination is
made.
We must also assess the likelihood that deferred tax assets will be realized from future taxable income and,
based on this assessment establish a valuation allowance, if required. The determination of our valuation
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