Symantec 2008 Annual Report Download - page 112

international revenue growth in fiscal 2008 compared to fiscal 2007. In fiscal 2007, foreign currency fluctuations
also positively impacted our revenue growth internationally compared to fiscal 2006. We are unable to predict the
extent to which revenues in future periods will be impacted by changes in foreign currency exchange rates. If
international sales become a greater portion of our total sales in the future, changes in foreign exchange rates may
have a potentially greater impact on our revenues and operating results. In addition, our April 2007 acquisition of
Altiris contributed $194 million to our revenue increase from fiscal 2007 to fiscal 2008.
Our deferred revenue at March 28, 2008 was 12% higher than at the corresponding amount as of March 30,
2007. Increased sales related to some of our enterprise products and the depreciation of the U.S. dollar against
foreign currencies drove the increase in deferred revenue realized for the year ended March 28, 2008. In recent
periods, the percentage of our in-period revenue that has resulted from the amortization of our deferred revenue
balance has been increasing, and we believe this trend has normalized as we are over twelve months into the
transition of combining our buying programs for all of our enterprise offerings. The factors contributing to the
growth in revenue and deferred revenue are discussed more fully in “Results of Operations” below.
In the fourth quarter of fiscal 2007, we implemented a cost savings initiative, which included a workforce
reduction of approximately 6% worldwide. We have fully implemented this cost savings initiative in fiscal 2008. In
the December 2007 quarter, we implemented another restructuring plan to continue our focus on controlling costs.
These cost savings initiatives resulted in restructuring charges totaling $74 million for the year ended March 28,
2008 and we expect to incur additional charges during fiscal year 2009 as a result of this plan.
Our gross margins and operating expenses were affected during fiscal 2008 as a result of recent changes in the
terms of some of our relationships with key Original Equipment Manufacturers (“OEMs”). We have negotiated new
contract terms with some of our OEM partners, which have resulted in some payments to OEM partners being
included in our Consolidated Statements of Income as Operating expenses rather than Cost of revenues. In general,
payments to OEMs made on a placement fee per unit basis will be treated as Operating expenses, while payments
based on a revenue-sharing model will be amortized as Cost of revenues. The increase in Operating expenses will
more than offset the decrease in Cost of revenues because placement fee arrangements are expensed on an estimated
average cost basis, while revenue-sharing arrangements are generally amortized ratably over a one-year period, and
because payments to OEMs increased. These recent changes have largely been in effect for fiscal 2008 and we do
not expect the trend relating to placement fees increasing Operating expense and decreasing Cost of revenues to
continue.
Cash flows were strong in fiscal 2008 as we achieved $1.8 billion in operating cash flow. We ended fiscal 2008
with $2.4 billion in cash, cash equivalents, and short-term investments. In addition, during fiscal 2008 we
repurchased 81 million shares of our common stock at an average price of $18.53, for total consideration of
$1.5 billion.
CRITICAL ACCOUNTING ESTIMATES
The preparation of the Consolidated Financial Statements and related notes included in this annual report in
accordance with generally accepted accounting principles in the United States, requires us to make estimates, which
include judgments and assumptions, that affect the reported amounts of assets, liabilities, revenue, and expenses,
and related disclosure of contingent assets and liabilities. We have based our estimates on historical experience and
on various assumptions that we believe to be reasonable under the circumstances. We evaluate our estimates on a
regular basis and make changes accordingly. Historically, our critical accounting estimates have not differed
materially from actual results; however, actual results may differ from these estimates under different conditions. If
actual results differ from these estimates and other considerations used in estimating amounts reflected in the
Consolidated Financial Statements included in this annual report, the resulting changes could have a material
adverse effect on our Consolidated Statements of Income, and in certain situations, could have a material adverse
effect on liquidity and our financial condition.
A critical accounting estimate is based on judgments and assumptions about matters that are uncertain at the
time the estimate is made. Different estimates that reasonably could have been used or changes in accounting
estimates could materially impact the operating results or financial condition. We believe that the estimates
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