Altiris 8-K Altiris Reports Strong Second Quarter 2004 Financial Results

EXHIBIT 99.1

Altiris Reports Strong Second Quarter 2004 Financial Results

SALT LAKE CITY - July 26, 2004 – Altiris, Inc. (Nasdaq: ATRS), a pioneer of IT lifecycle management solutions that reduce the total cost of owning information technology, today announced financial results for the second quarter ended June 30, 2004.

For the second quarter of 2004, the Company reported total revenue of $40.0 million, an increase of 75% over the second quarter of 2003 and an increase of 7% over the first quarter of 2004. Net income for the second quarter was $3.7 million, or $0.13 per diluted share, including charges of $1.0 million related to amortization of acquired intellectual property, $681,000 of amortization of intangible assets, and $145,000 in stock-based compensation. This compares to net income of $3.3 million, or $0.15 per diluted share, reported in the second quarter of 2003, and net income of $3.1 million, or $0.11 per diluted share, reported in the first quarter of 2004.

On a pro forma basis, the Company reported net income of $5.4 million, or $0.20 per diluted share, for the second quarter of 2004, excluding the above-mentioned charges and applying a tax rate of 35%. This compares to pro forma net income of $2.6 million, or $0.11 per diluted share, reported in the second quarter of 2003, and pro forma net income of $4.6 million, or $0.17 per diluted share, reported in the first quarter of 2004.

The Company reported license revenue of $25.6 million, representing a 70% increase over $15.1 million in the second quarter of 2003 and a 3% increase over $24.7 million in the first quarter of 2004. Services revenue for the second quarter of 2004 increased to $14.5 million, an 86% increase over $7.8 million in the second quarter of 2003 and a 14% increase over $12.7 million in the first quarter of 2004. The Company generated $10.5 million in cash from operations and closed the quarter with $158.2 million in cash and marketable securities.

“We had a good quarter across our business and are pleased to report strong financial results,” commented Greg Butterfield, chairman, president and chief executive officer of Altiris. “We had strong sales activity through our channels and our direct sales force, where our newly formed named accounts team performed exceptionally well. Several of our larger transactions in the quarter were driven by our customers need for complete IT Lifecycle Management solutions, including our Asset and Server Management Suites.

“Market reception for Altiris 6.0 has been highly encouraging and we believe that this platform update has raised the bar for other systems management vendors. We are increasingly recognized by customers, partners, and industry experts for our outstanding products and value proposition.

“We continue to be optimistic about our overall business and the market opportunity ahead. We enter the third quarter with confidence in our outlook and a clear focus on our objectives and opportunities,” concluded Butterfield.

Earnings Call Information

Altiris, Inc. will broadcast a conference call discussing the company’s second quarter results on Monday, July 26, 2004 beginning at 5:00 p.m. Eastern Time. A live Webcast of the call will be available on the Investor Relations section of the company’s Website at www.altiris.com. For those unable to listen to the live Webcast, a replay of the call will also be available on the Altiris Website, or by dialing 800-405-2236 and entering passcode 11002332.

Pro Forma Financial Measures

In this earnings release and during our earnings conference call and Webcast to be broadcast on July 26, 2004 as described above, we use or plan to discuss certain pro forma financial measures, which may be considered non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States of America, or GAAP. A reconciliation between pro forma and GAAP measures can be found in the accompanying tables and on the Investor Relations Section of our website atwww.altiris.com. We believe that, while these pro forma measures are not a substitute for GAAP results, they provide a basis for evaluating the Company’s cash requirements for ongoing operating activities. These pro forma measures have been reconciled to the nearest GAAP measure as is now required under SEC rules regarding the use of non-GAAP financial measures. We compute pro forma net income by adjusting GAAP net income before taxes for amortization of acquisition-related intellectual property, amortization of other acquired intangible assets such as customer lists and work force and stock-based compensation. In addition, we used a pro-forma tax rate of 35% and 38% for the second quarter of 2004 and 2003, respectively. This compares to a GAAP effective tax rate for the same quarters of 40% and 5%, respectively.

About Altiris

Altiris, Inc. offers a full line of Web-enabled solutions that empower organizations to easily manage desktops, notebooks, handhelds, and Windows, Linux and UNIX servers throughout the IT lifecycle. Altiris provides fully integrated, complete systems management solutions for client and mobile, server, and asset management. Altiris’ vision is to automate, simplify, and reduce the cost and complexity of IT lifecycle management with a rapid return on investment. For more information, visit www.altiris.com.

Note on Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including but not limited to statements regarding market acceptance of our Altiris 6.0 platform, customer recognition of our products and partner relationships, our business performance and market position and opportunities for growth in the third quarter and beyond. These forward-looking statements involve certain risks and uncertainties that could cause actual results to differ, including, but not limited to, our limited operating history and history of losses, fluctuations in our future quarterly operating results, any deterioration of our relationships with HP, Dell, Fujitsu Siemens, Microsoft and other OEMs, VARs, systems integrators, and direct sales channels, our inability to compete effectively in the market, a general downturn in economic conditions, adverse changes in IT spending trends, our failure to expand our distribution channels and customer base, the length and complexity of our product sales cycle, increased competition, difficulties and delays in product development, reduced market acceptance of our products and services, our failure to continue to meet the sophisticated and changing needs of our customers, risks inherent in doing business internationally, and such other risks as identified in our Quarterly Report on From 10-Q for the period ended March 31, 2004 as filed with the Securities and Exchange Commission and all subsequent filings, which contain and identify important factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements.

Altiris, Inc.

Consolidated Statements of Operations

(Unaudited)

(in 000’s, except per share data)

	Three Months Ended June 30						Six Months Ended June 30
	2004			2003			2004			2003
Revenue:
Software	$	25,561		$	15,051		$	50,278		$	27,862
Services		14,462			7,765			27,157			15,798
Total revenue		40,023			22,816			77,435			43,660
Cost of revenue:
Software		226			152			547			351
Amortization of acquired intellectual property		1,020			148			2,068			296
Services		4,988			2,203			9,192			4,843
Total cost of revenue		6,234			2,503			11,807			5,490
Gross profit		33,789			20,313			65,628			38,170
Operating expenses:
Sales and marketing		15,344			9,252			30,440			17,315
Research and development		7,766			5,909			15,657			11,283
General and administrative		3,517			2,032			6,584			3,834
Amortization of intangible assets		681			18			1,345			41
Stock-based compensation		145			332			303			664
Total operating expenses		27,453			17,543			54,329			33,137
Income from operations		6,336			2,770			11,299			5,033
Other income, net		191			855			412			1,213
Income before income taxes		6,527			3,625			11,711			6,246
Provision for income taxes		(2,833	)		(327	)		(4,924	)		(464	)
Net income	$	3,694		$	3,298		$	6,787		$	5,782
Basic net income per share	$	0.14		$	0.16		$	0.26		$	0.28
Diluted net income per share	$	0.13		$	0.15		$	0.25		$	0.26
Basic shares		26,349			21,129			26,228			20,823
Diluted shares		27,553			22,546			27,465			22,159
PRO FORMA ADJUSTMENTS
GAAP income before income taxes	$	6,527		$	3,625		$	11,711		$	6,246
Add back:
Amortization of acquired intellectual property		1,020			148			2,068			296
Amortization of intangible assets		681			18			1,345			41
Stock-based compensation		145			332			303			664
Pro forma income before income taxes		8,373			4,123			15,427			7,247
Pro forma provision for income taxes (35% and 38% in 2004 and 2003, respectively)		(2,931	)		(1,567	)		(5,399	)		(2,754	)
Pro forma net income	$	5,442		$	2,556		$	10,028		$	4,493
Pro forma net income per share:
Basic	$	0.21		$	0.12		$	0.38		$	0.22
Diluted	$	0.20		$	0.11		$	0.37		$	0.20
Shares used to compute pro forma net income per share:
Basic		26,349			21,129			26,228			20,823
Diluted		27,553			22,546			27,465			22,159

Altiris, Inc.

Consolidated Balance Sheets

(in 000’s)

	June 30, 2004			December 31, 2003
	(Unaudited)
ASSETS
Current assets:
Cash and marketable securities	$	158,151		$	139,031
Accounts receivable, net		29,255			23,479
Prepaid expenses and other current assets		4,906			4,131
Deferred tax asset		1,110			853
Total current assets		193,422			167,494
Property and equipment, net		5,121			4,517
Intangible assets, net		22,364			22,951
Goodwill		16,897			15,698
Other assets		130			128
Total Assets	$	237,934		$	210,788
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of capital lease obligations	$	1,059		$	1,008
Accounts payable		2,486			2,769
Accrued salaries and benefits		8,962			7,220
Other accrued expenses		6,331			4,172
Deferred revenue		27,713			21,620
Total current liabilities		46,551			36,789
Capital lease obligations, net of current portion		1,009			818
Deferred tax liability, non-current		1,922			1,922
Deferred revenue, non-current		5,408			4,409
Total liabilities		54,890			43,938
Stockholders’ equity:
Common stock		3			3
Additional paid in capital		186,479			177,185
Deferred compensation		(570	)		(899	)
Accumulated other comprehensive income		(156	)		58
Accumulated deficit		(2,712	)		(9,497	)
Total stockholders’ equity		183,044			166,850
Total liabilities and stockholders’ equity	$	237,934		$	210,788

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Altiris contact:	Investor contacts:
Susan Richards	Erica Abrams, Vanessa Lehr
Altiris Inc.	The Blueshirt Group for Altiris
801-805-2783	415-217-7722
srichards@altiris.com	erica@blueshirtgroup.com
	vanessa@blueshirtgroup.com