Symantec 2013 Annual Report Download - page 173

SYMANTEC CORPORATION
Notes to Consolidated Financial Statements — (Continued)
•Restricted stock units and restricted stock awards. The fair value of each Restricted Stock Unit
(“RSU”) and Restricted Stock Award (“RSA”) is equal to the market value of Symantec’s common
stock on the date of grant.
•Performance-based restricted stock units and performance-contingent stock units. We use the Monte
Carlo simulation option pricing model (“Monte Carlo model”) to determine the fair value of each
performance-based restricted stock unit (“PRU”) and the fair value and derived service period of each
performance-contingent stock unit (“PCSU”). The determination of the grant date fair value and
derived service periods using a simulation 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 awards, risk-free interest rates and expected dividends.
Expected volatility is based on the average of historical volatility for the period commensurate with the
expected life of the PRUs and PCSUs. The risk-free interest rate is equal to the U.S. Treasury constant
maturity rates for the period equal to the expected life. For all historical periods presented, we have not
paid cash dividends on our common stock, and therefore our expected dividend rate was zero for all
such periods presented. The compensation expense for PRUs is initially based on the probability of
achieving the target level of the company-specific performance condition, and will be adjusted for
subsequent changes in the estimated or actual outcome of this performance condition. The
compensation expense for PCSUs is amortized ratably using the graded vesting attribution method over
the derived service periods.
Changes in the valuation assumptions and our related estimates may change the fair value for stock-based
compensation and the related expense recognized. There have not been any material changes to our stock-based
compensation expense due to changes in our valuation assumptions. For information regarding a subsequent
event announcing the declaration of a quarterly dividend, see Note 15 of the Notes to Consolidated Financial
Statements.
Concentrations of credit risk
A significant portion of our revenue and net income is derived from international sales and independent
agents and distributors. Fluctuations of the U.S. dollar against foreign currencies, changes in local regulatory or
economic conditions, piracy, or nonperformance by independent agents or distributors could adversely affect
operating results.
Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash
and cash equivalents, short-term investments, and trade accounts receivable. Our investment policy limits the
amount of credit risk exposure to any one issuer and to any one country. We are exposed to credit risks in the
event of default by the issuers to the extent of the amount recorded in our Consolidated Balance Sheets. The
credit risk in our trade accounts receivable is substantially mitigated by our credit evaluation process, reasonably
short collection terms, and the geographical dispersion of sales transactions. We maintain reserves for potential
credit losses and such losses have been within management’s expectations. See Note 10 for details of significant
customers.
Advertising and other promotional costs
Advertising and other promotional costs are charged to operations as incurred and included in Operating
expenses. These costs totaled $594 million, $667 million, and $668 million for fiscal 2013, 2012, and 2011,
respectively.
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