Symantec 2013 Annual Report Download - page 198

SYMANTEC CORPORATION
Notes to Consolidated Financial Statements — (Continued)
appropriate governmental agencies for Irish tax purposes, and our 2007 through 2013 fiscal years remain subject
to examination by the appropriate governmental agencies for Singapore tax purposes. Other significant
jurisdictions include California, Japan, the UK and India. As of March 29, 2013, we are 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 2009
through 2010 tax years. We are also under audit by the Singapore income tax authorities for fiscal years 2007
through 2011 and 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 contested $80 million of the tax assessed and all penalties. As
a result of negotiations with IRS Appeals in the third quarter of fiscal 2012, we remeasured our liability for
unrecognized tax benefits, resulting in a tax benefit of $52 million. We executed the final closing agreement for
the VERITAS 2002 through 2005 tax years on December 26, 2012. Accordingly, we recorded a further tax
benefit of $3 million during the third quarter of fiscal 2013 based on the closing agreement. Further, we amended
our state tax returns for the VERITAS 2002 through 2005 tax years in the fourth quarter of fiscal 2013 to reflect
the adjustments in the closing agreement and remeasured our state liability resulting in a benefit of $7 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 the gross unrecognized tax benefits related to these audits could
decrease (whether by payment, release, or a combination of both) in the next 12 months by between $15 million
and $130 million. Depending on the nature of the settlement or expiration of statutes of limitations, we estimate
at least $15 million could affect our income tax provision and therefore benefit the resulting effective tax rate. As
of March 29, 2013, we have $76 million on deposit with the IRS pertaining to U.S. tax matters in the Symantec
2005 through 2008 audit cycle.
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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