Symantec 2008 Annual Report Download - page 126

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Amortization of acquired product rights
2008 2007 2006
Fiscal
($ in thousands)
Amortization of acquired product rights .................. $349,327 $342,333 $314,290
Percentage of total net revenues ........................ 6% 7% 8%
Period over period change ............................ $ 6,994 $ 28,043
2% 9%
Acquired product rights are comprised of developed technologies and patents from acquired companies. The
amortization in fiscal 2008 was higher than fiscal 2007 primarily due to amortization associated with the Altiris
acquisition, offset in part by certain acquired product rights becoming fully amortized. For further discussion of
acquired product rights and related amortization, see Notes 4 and 7 of the Notes to Consolidated Financial
Statements in this annual report.
Operating Expenses
Sales and marketing expense
2008 2007 2006
Fiscal
($ in thousands)
Sales and marketing ............................. $2,415,264 $2,007,651 $1,499,904
Percentage of total net revenues .................... 41% 39% 36%
Period over period change ........................ $ 407,613 $ 507,747
20% 34%
Sales and marketing expense as a percentage of total revenues increased to 41% in fiscal 2008 as compared to
39% in fiscal 2007. The percentage increase and increase in absolute dollars in sales and marketing expenses in fiscal
2008 as compared to fiscal 2007 is primarily due to higher employee compensation expense as a result of the Altiris
and Vontu acquisitions and the OEM placement fees as discussed above under “Financial Results and Trends.” We
negotiated new contract terms with some of our OEM partners in fiscal 2007, for which the expense commenced being
recognized in the fourth quarter of fiscal 2007. In addition, these new contract terms had the effect of moving our OEM
payments from Cost of revenues to Operating expenses.
Sales and marketing expense as a percentage of total revenues increased to 39% in fiscal 2007 as compared to
36% in fiscal 2006. The percentage increase and increase in absolute dollars in sales and marketing expenses in
fiscal 2007 as compared to fiscal 2006 is primarily due to higher employee compensation expense of approximately
$335 million resulting from an increase in employee headcount. Higher employee compensation expense includes
the effect of adopting of SFAS No. 123R, which added $56 million of stock-based compensation expense in fiscal
2007 for which there is no comparable expense in fiscal 2006. In addition, approximately $171 million of the
increase is due to an additional three months of sales and marketing expenses related to the Veritas acquisition,
which is included for the full year of fiscal 2007 as compared to nine months in fiscal 2006. Advertising expense
increased in fiscal 2007 as compared to fiscal 2006 primarily as a result of changes in our OEM arrangements.
Research and development expense
2008 2007 2006
Fiscal
($ in thousands)
Research and development ............................ $895,242 $866,882 $682,125
Percentage of total net revenues ........................ 15% 17% 16%
Period over period change ............................ $ 28,360 $184,757
3% 27%
44