Symantec 2012 Annual Report Download - page 182

SYMANTEC CORPORATION
Notes to Consolidated Financial Statements — (Continued)
appropriate governmental agencies for Irish tax purposes. Other significant jurisdictions include California,
Japan, the UK and India. As of March 30, 2012, we are in appeals with the IRS regarding Veritas U.S. federal
income taxes for the 2002 through 2005 tax years, and under examination regarding Symantec U.S. federal
income taxes for the fiscal years 2005 through 2008. In addition, we are under examination by the California
Franchise Tax Board for the Symantec California income taxes for the 2005 through 2006 tax years. We are also
under audit by the Indian income tax authorities for fiscal years 2004 through 2011.
On December 10, 2009, the U.S. Tax Court issued its opinion in Veritas v. Commissioner, finding that our
transfer pricing methodology, with appropriate adjustments, was the best method for assessing the value of the
transaction at issue between Veritas and its international subsidiary in the 2000 to 2001 tax years. In June 2010,
we reached an agreement with the IRS concerning the amount of the adjustment based on the U.S. Tax Court
decision. As a result of the agreement, we reduced our liability for unrecognized tax benefits, resulting in a $39
million tax benefit in the first quarter of fiscal 2011. In March 2011, we reached agreement with Irish Revenue
concerning compensating adjustments arising from this matter, resulting in an additional $10 million tax benefit
in the fourth quarter of fiscal 2011. This matter has now been closed and no further adjustments to the accrued
liability are expected.
On December 2, 2009, we received a Revenue Agent’s Report from the IRS for the Veritas 2002 through
2005 tax years assessing additional taxes due. We have contested $80 million of the tax assessed and all
penalties. As a result of negotiations with IRS Appeals in the three months ended December 30, 2011, we have
remeasured our liability for unrecognized tax benefits, resulting in a tax benefit of $52 million.
The timing of the resolution of income tax examinations is highly uncertain, and the amounts ultimately
paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts
accrued for each year. Although potential resolution of uncertain tax positions involve multiple tax periods and
jurisdictions, it is reasonably possible that a reduction of up to $21 million of the reserves for unrecognized tax
benefits may occur within the next 12 months, some of which, depending on the nature of the settlement or
expiration of statutes of limitations, may affect our income tax provision and therefore benefit the resulting
effective tax rate. The actual amount could vary significantly depending on the ultimate timing and nature of any
settlements.
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.
Note 13. Earnings Per Share
Basic and diluted earnings per share are computed on the basis of the weighted average number of shares of
common stock outstanding during the period. Diluted earnings per share also include the incremental effect of
dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive
potential common shares include the dilutive effect of shares underlying outstanding stock options, restricted
stock, warrants and Convertible Senior Notes.
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