Symantec 2007 Annual Report Download - page 38

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
OVERVIEW
Our Business
Symantec is a global leader in infrastructure software, enabling businesses and consumers to have confidence
in a connected world. We help our customers protect their infrastructure, information, and interactions by delivering
software and services that address risks to information security, availability, compliance, and information tech-
nology, or IT, systems performance. We strive to help our customers manage compliance, complexity, and cost by
protecting their IT infrastructure as they seek to maximize value from their IT investments. We deliver a
comprehensive and diverse set of security and availability products and services to a wide range of customers,
including large enterprises, governments, small and medium-sized businesses, and consumers. Our delivery
network includes direct, inside, and channel sales resources which support our ecosystem of more than 50,000
partners across the world, as well as various relationships with original equipment manufacturers, or OEMs,
Internet service providers, or ISPs, and retail and online stores. Founded in 1982, we have operations in 40 countries.
We have a 52/53-week fiscal accounting year. Accordingly, all references as of and for the fiscal years ended
March 31, 2007, 2006, and 2005 reflect amounts as of and for the periods ended March 30, 2007, March 31, 2006,
and April 1, 2005, respectively, each of which consisted of 52 weeks.
Our operating segments are significant strategic business units that offer different products and services,
distinguished by customer needs. In the June 2006 quarter, we consolidated our Enterprise Security, Data
Protection, and Storage and Server Management segments into two segments — the Security and Data Manage-
ment segment and the Data Center Management segment. Amounts for the years ended March 31, 2006 and 2005
have been reclassified to conform to our current presentation. As of March 31, 2007, we had five operating
segments, descriptions of which are provided in Note 15 of the Notes to Consolidated Financial Statements.
On July 2, 2005, we completed the acquisition of Veritas, whereby Veritas became a wholly owned subsidiary
of Symantec in a transaction accounted for using the purchase method. The results of Veritas’ operations have been
included in our results of operations beginning on July 2, 2005, and have had a significant impact on our revenues,
cost of revenues, and operating expenses since the date of acquisition.
On April 6, 2007, we completed our acquisition of Altiris, Inc., a leading provider of IT management software
that enables businesses to easily manage and service network-based endpoints. The aggregate purchase price,
excluding acquisition related costs, was approximately $815 million in cash, which amount was net of Altiris’ cash
balance. We believe this acquisition will enable us to help customers better manage and enforce security policies at
the endpoint, identify and protect against threats, and repair and service assets. The Altiris business will constitute a
new business segment in fiscal 2008. We will also move our Ghost, pcAnywhere, and LiveState Delivery products
from the Security and Data Management segment to the Altiris segment. In addition, we will move our Managed
Security Services, DeepSight, and Software-As-A-Service products and services from the Security and Data
Management segment to the Services segment.
Financial Results and Trends
Our net income was $404 million for fiscal 2007 as compared to $157 million and $536 million for fiscal 2006
and 2005, respectively. The higher net income for fiscal 2007 as compared to fiscal 2006 was primarily due to the
write-off in fiscal 2006 of $284 million of acquired in-process research and development, or IPR&D, as a result of
the Veritas acquisition for which there is no comparable charge in fiscal 2007. This increase was partially offset by
$154 million of stock-based compensation expense related to our adoption of Statement of Financial Accounting
Standards, or SFAS, No. 123R, Share-Based Payment, effective April 1, 2006, higher employee compensation costs
resulting from increased employee headcount, and $70 million of restructuring charges. As of March 31, 2007,
employee headcount had increased by approximately 8% from March 31, 2006.
During fiscal 2007, we delivered revenue growth across all of our geographic regions as compared to fiscal
2006 and 2005. The overall growth is due primarily to the Veritas acquisition, which was included in our results for
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