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8-K - FORM 8-K - NortonLifeLock Inc. | f57172e8vk.htm |
Exhibit 99.01
News Release
MEDIA CONTACT:
|
INVESTOR CONTACT: | |
Nicole Kenyon
|
Helyn Corcos | |
Symantec Corp.
|
Symantec Corp. | |
650-527-5547
|
650-527-5523 | |
nicole_kenyon@Symantec.com
|
Hcorcos@symantec.com |
Symantec Reports Second Quarter Fiscal 2011 Results
| GAAP Revenue of $1.480 billion | |
| Non-GAAP Operating Margin of 25.1 percent | |
| Non-GAAP Earnings Per Share of $0.34 | |
| GAAP Deferred Revenue of $3.104 billion | |
| Cash Flow from Operations of $310 million |
MOUNTAIN VIEW, Calif. Oct. 27, 2010 Symantec Corp. (Nasdaq:SYMC) today reported the results
of its second quarter of fiscal year 2011, ended Oct. 1, 2010. GAAP revenue for the fiscal second
quarter was $1.480 billion, up 2 percent year-over-year after adjusting for currency.
I am pleased with the execution in the quarter, in particular the strong performance in backup and
archiving and continued momentum in hosted services and data loss prevention. In addition, we saw
growth in the public sector, driven by strength across all product lines in both the civilian and
defense agencies, said Enrique Salem, president and chief executive officer, Symantec. Were
making good progress integrating the VeriSign security business, PGP and GuardianEdge into the
Symantec portfolio and all three acquisitions performed better than expected in the quarter.
In the September quarter, we delivered better than expected results on all of our key financial
metrics. Our enterprise business closed the quarter on a strong note, generating greater than
expected revenue and deferred revenue, said James Beer, executive vice president and chief
financial officer, Symantec. We also generated another quarter of excellent cash flow from
operations, up 37 percent year-over-year, for a total of $1.74 billion over the last twelve
months.
GAAP Results: GAAP operating margin for the second quarter of fiscal year 2011 was 14.7 percent.
GAAP net income for the fiscal second quarter was $136 million compared with net income of $155
million for the same quarter last year. GAAP diluted earnings per share were $0.17 compared with
$0.19 for the same quarter last year.
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Symantec Reports Second Quarter Fiscal 2011 Results
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GAAP deferred revenue as of Oct. 1, 2010, was $3.104 billion compared with $2.905 billion as of
Oct. 2, 2009, up 7 percent on an actual and currency-adjusted basis. Cash flow from operating
activities for the second quarter of fiscal year 2011 was $310 million. Symantec ended the quarter
with cash, cash equivalents and short-term investments of $2.264 billion.
Non-GAAP Results: Non-GAAP operating margin for the second quarter of fiscal year 2011 was 25.1
percent. Non-GAAP net income for the second quarter was $266 million compared with $295 million
for the year-ago period. Non-GAAP diluted earnings per share were $0.34 compared with earnings per
share of $0.36 for the year-ago quarter.
As previously announced, Symantec is no longer reporting revenue and deferred revenue on a non-GAAP
basis. For a detailed reconciliation of our GAAP to non-GAAP results, please refer to the attached
consolidated financial statements.
During the second quarter of fiscal year 2011, Symantec repurchased approximately 17 million shares
for $225 million at an average price of $13.16. Symantec has $322 million remaining in the current
board authorized stock repurchase plan.
Business Segment and Geographic Highlights
For the September quarter, Symantecs Consumer segment represented 32 percent of total revenue.
During the quarter, Symantec made a one-time reduction to Consumer segment revenue of approximately
$10 million resulting from certain consumers not receiving their subscription entitlements on a
timely basis. Excluding this adjustment, Symantecs Consumer segment revenue increased 3 percent
year-over-year (increased 5 percent after adjusting for currency).
For the quarter, Symantecs Security and Compliance segment represented 24 percent of total revenue
and increased 5 percent year-over-year (increased 7 percent after adjusting for currency). The
Storage and Server Management segment represented 38 percent of total revenue and declined 1
percent year-over-year (increased 1 percent after adjusting for currency). Services represented 6
percent of total revenue and declined 11 percent year-over-year (declined 9 percent after adjusting
for currency).
International revenue represented 50 percent of total revenue in the second quarter of fiscal
year 2011 and declined 1 percent year-over-year (increased 3 percent after adjusting for currency).
The Europe, Middle East and Africa region represented 28 percent of total revenue for the quarter
and declined 9 percent year-over-year (flat after adjusting for currency). The Asia Pacific/Japan
revenue for the quarter represented 17 percent of total revenue and increased 11 percent
year-over-year (increased 5 percent after adjusting for currency). The Americas, including the
United States, Latin America and Canada, represented 55 percent of total revenue and increased 3
percent year-over-year on an actual and currency-adjusted basis.
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Symantec Reports Second Quarter Fiscal 2011 Results
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Acquisition Highlights
Symantec completed the acquisition of VeriSigns security business in early August. The VeriSign
security acquisition performed better than expected, generating revenue of $18 million. The June
quarter PGP and Guardian Edge acquisitions continue to perform well, generating revenue of $15
million. The combined earnings per share dilution of these acquisitions was 3 cents, which was one
penny less dilutive than our expectations of $0.04. Sales and technology integration is progressing
well, with the sales teams working on cross-selling opportunities, and acquired technologies being
leveraged across the Symantec product portfolio.
Third Quarter Fiscal Year 2011 Guidance
Guidance assumes an exchange rate of $1.35 per Euro for the December 2010 quarter versus the actual
weighted average rate of $1.48 per Euro for the December 2009 quarter, approximately a 10 percent
currency headwind. The end of period rate for the December 2009 quarter was $1.43, approximately a
6 percent headwind versus the $1.35 per Euro assumption for the December 2010 quarter.
For the third quarter of fiscal year 2011, ending Dec. 31, 2010, revenue is estimated between $1.57
billion and $1.59 billion, up 2 to 3 percent year-over-year and up 3 to 4 percent after adjusting
for currency.
GAAP diluted earnings per share are estimated between $0.23 and $0.24. Non-GAAP diluted earnings
per share are estimated between $0.32 and $0.33.
Deferred revenue is expected to be in the range of $3.19 billion and $3.22 billion, up 5 to 6
percent year-over-year on an actual and currency-adjusted basis.
Conference Call
Symantec has scheduled a conference call for 5 p.m. ET/2 p.m. PT today to discuss the results from
the fiscal second quarter 2011, ended Oct. 1, 2010, and to review guidance. Interested parties may
access the conference call on the Internet at http://www.symantec.com/invest. To listen to
the live call, please go to the Web site at least 15 minutes early to register, download and
install any necessary audio software. A replay and script of our officers remarks will be
available on the investor relations home page shortly after the call is completed.
About Symantec
Symantec is a global leader in providing security, storage and systems management solutions to help
consumers and organizations secure and manage their information-driven world. Our software and
services protect against more risks at more points, more completely and efficiently, enabling
confidence wherever information is used or stored. More information is available at
www.symantec.com.
###
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Symantec Reports Second Quarter Fiscal 2011 Results
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NOTE TO EDITORS: If you would like additional information on Symantec Corporation and its
products, please visit the Symantec News Room at http://www.symantec.com/news. All prices
noted are in U.S. dollars and are valid only in the United States.
Symantec and the Symantec Logo are trademarks or registered trademarks of Symantec Corporation or
its affiliates in the U.S. and other countries. Other names may be trademarks of their respective
owners.
FORWARD-LOOKING STATEMENTS: This press release contains statements regarding our financial and
business results, which may be considered forward-looking within the meaning of the U.S. federal
securities laws, including projections of future revenue, earnings per share and deferred revenue,
as well as projections of amortization of acquisition-related intangibles and stock-based
compensation and restructuring charges. These statements are subject to known and unknown risks,
uncertainties and other factors that may cause our actual results, levels of activity, performance
or achievements to differ materially from results expressed or implied in this press release. Such
risk factors include those related to: general economic conditions; maintaining customer and
partner relationships; the anticipated growth of certain market segments, particularly with regard
to security and storage; the competitive environment in the software industry; changes to operating
systems and product strategy by vendors of operating systems; fluctuations in currency exchange
rates; the timing and market acceptance of new product releases and upgrades; the successful
development of new products and integration of acquired businesses, and the degree to which these
products and businesses gain market acceptance. Actual results may differ materially from those
contained in the forward-looking statements in this press release. We assume no obligation, and do
not intend, to update these forward-looking statements as a result of future events or
developments. Additional information concerning these and other risks factors is contained in the
Risk Factors sections of our Form 10-K for the year ended April 2, 2010.
USE OF NON-GAAP FINANCIAL INFORMATION: Our results of operations have undergone significant change
due to a series of acquisitions, the impact of SFAS 123(R), impairment charges and other corporate
events. To help our readers understand our past financial performance and our future results, we
supplement the financial results that we provide in accordance with generally accepted accounting
principles, or GAAP, with non-GAAP financial measures. The method we use to produce non-GAAP
results is not computed according to GAAP and may differ from the methods used by other companies.
Our non-GAAP results are not meant to be considered in isolation or as a substitute for comparable
GAAP measures and should be read only in conjunction with our consolidated financial statements
prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial
measures internally to understand, manage and evaluate our business and make operating decisions.
These non-GAAP measures are among the primary factors management uses in planning for and
forecasting future periods. Investors are encouraged to review the reconciliation of our non-GAAP
financial measures to the comparable GAAP results, which is attached to our quarterly earnings
release and which can be found, along with other financial information, on the investor relations
page of our Web site at www.symantec.com/invest.
(More)
SYMANTEC CORPORATION
Condensed Consolidated Balance Sheets
(In millions)
Condensed Consolidated Balance Sheets
(In millions)
October 1, | April 2, | |||||||
2010 | 2010(1) | |||||||
(Unaudited) | ||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 2,256 | $ | 3,029 | ||||
Short-term investments |
8 | 15 | ||||||
Trade accounts receivable, net |
682 | 856 | ||||||
Inventories |
23 | 25 | ||||||
Deferred income taxes |
196 | 176 | ||||||
Other current assets |
278 | 250 | ||||||
Total current assets |
3,443 | 4,351 | ||||||
Property and equipment, net |
1,009 | 949 | ||||||
Intangible assets, net |
1,724 | 1,179 | ||||||
Goodwill |
5,485 | 4,605 | ||||||
Investment in joint venture |
47 | 58 | ||||||
Other long-term assets |
111 | 90 | ||||||
Total assets |
$ | 11,819 | $ | 11,232 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 257 | $ | 214 | ||||
Accrued compensation and benefits |
304 | 349 | ||||||
Deferred revenue |
2,725 | 2,835 | ||||||
Current portion of long-term debt |
578 | | ||||||
Income taxes payable |
62 | 35 | ||||||
Other current liabilities |
308 | 338 | ||||||
Total current liabilities |
4,234 | 3,771 | ||||||
Long-term debt |
1,962 | 1,871 | ||||||
Long-term deferred revenue |
379 | 371 | ||||||
Long-term deferred tax liabilities |
236 | 195 | ||||||
Long-term income taxes payable |
359 | 426 | ||||||
Other long-term obligations |
60 | 50 | ||||||
Total liabilities |
7,230 | 6,684 | ||||||
Total Symantec Corporation
stockholders equity |
4,505 | 4,548 | ||||||
Noncontrolling interest in subsidiary |
84 | | ||||||
Total stockholders equity |
4,589 | 4,548 | ||||||
Total liabilities and
stockholders equity |
$ | 11,819 | $ | 11,232 | ||||
(1) | Derived from audited financial statements. |
SYMANTEC CORPORATION
Condensed Consolidated Statements of Income
(In millions, except per share data)
Condensed Consolidated Statements of Income
(In millions, except per share data)
Year-Over-Year | ||||||||||||||||
Three Months Ended | Growth Rate | |||||||||||||||
October 1, | October 2, | Constant | ||||||||||||||
2010 | 2009(1) | Actual | Currency(2) | |||||||||||||
Net revenue: |
||||||||||||||||
Content, subscription, and maintenance |
$ | 1,270 | $ | 1,254 | ||||||||||||
License |
210 | 220 | ||||||||||||||
Total net revenue |
1,480 | 1,474 | 0 | % | 2 | % | ||||||||||
Cost of revenue: |
||||||||||||||||
Content, subscription, and maintenance |
217 | 207 | ||||||||||||||
License |
6 | 5 | ||||||||||||||
Amortization of acquired product rights |
23 | 47 | ||||||||||||||
Total cost of revenue |
246 | 259 | -5 | % | -4 | % | ||||||||||
Gross profit |
1,234 | 1,215 | 2 | % | 4 | % | ||||||||||
Operating expenses: |
||||||||||||||||
Sales and marketing |
612 | 576 | ||||||||||||||
Research and development |
208 | 210 | ||||||||||||||
General and administrative |
100 | 84 | ||||||||||||||
Amortization of other purchased intangible assets |
67 | 63 | ||||||||||||||
Restructuring and transformation |
28 | 25 | ||||||||||||||
Loss and impairment of assets held for sale |
1 | | ||||||||||||||
Total operating expenses |
1,016 | 958 | 6 | % | 7 | % | ||||||||||
Operating income |
218 | 257 | -15 | % | -8 | % | ||||||||||
Interest income |
2 | 1 | ||||||||||||||
Interest expense |
(36 | ) | (31 | ) | ||||||||||||
Other income, net |
14 | 2 | ||||||||||||||
Loss on early extinguishment of debt |
(16 | ) | | |||||||||||||
Income before income taxes and loss from joint venture |
182 | 229 | -21 | % | N/A | |||||||||||
Provision for income taxes |
44 | 68 | ||||||||||||||
Loss from joint venture |
4 | 6 | ||||||||||||||
Net income |
134 | 155 | -14 | % | N/A | |||||||||||
Loss attributable to noncontrolling interest |
(2 | ) | | |||||||||||||
Net income attributable to Symantec Corporation stockholders |
$ | 136 | $ | 155 | -12 | % | N/A | |||||||||
Net income per share attributable to Symantec Corporation
stockholders basic |
$ | 0.17 | $ | 0.19 | ||||||||||||
Net income per share attributable to Symantec Corporation
stockholders diluted |
$ | 0.17 | $ | 0.19 | ||||||||||||
Weighted-average shares outstanding attributable to
Symantec Corporation stockholders basic |
782 | 812 | ||||||||||||||
Weighted-average shares outstanding attributable to
Symantec Corporation stockholders diluted |
786 | 819 |
(1) | As adjusted for the adoption of new authoritative guidance on revenue recognition during the fourth quarter of fiscal 2010. | |
(2) | Management refers to growth rates adjusting for currency so that the business results can be viewed without the impact of fluctuations in foreign currency exchange rates. We compare the percentage change in the results from one period to another period in order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the actual exchange rates in effect during the respective prior periods. |
SYMANTEC CORPORATION
Condensed Consolidated Statements of Income
(In millions, except per share data)
Condensed Consolidated Statements of Income
(In millions, except per share data)
Year-Over-Year | ||||||||||||||||
Six Months Ended | Growth Rate | |||||||||||||||
October 1, | October 2, | Constant | ||||||||||||||
2010 | 2009(1) | Actual | Currency(2) | |||||||||||||
Net revenue: |
||||||||||||||||
Content, subscription, and maintenance |
$ | 2,518 | $ | 2,463 | ||||||||||||
License |
395 | 443 | ||||||||||||||
Total net revenue |
2,913 | 2,906 | 0 | % | 2 | % | ||||||||||
Cost of revenue: |
||||||||||||||||
Content, subscription, and maintenance |
434 | 416 | ||||||||||||||
License |
9 | 10 | ||||||||||||||
Amortization of acquired product rights |
68 | 145 | ||||||||||||||
Total cost of revenue |
511 | 571 | -11 | % | -10 | % | ||||||||||
Gross profit |
2,402 | 2,335 | 3 | % | 5 | % | ||||||||||
Operating expenses: |
||||||||||||||||
Sales and marketing |
1,185 | 1,135 | ||||||||||||||
Research and development |
416 | 431 | ||||||||||||||
General and administrative |
192 | 173 | ||||||||||||||
Amortization of other purchased intangible assets |
128 | 125 | ||||||||||||||
Restructuring and transformation |
68 | 59 | ||||||||||||||
Loss and impairment of assets held for sale |
1 | 3 | ||||||||||||||
Total operating expenses |
1,990 | 1,926 | 3 | % | 4 | % | ||||||||||
Operating income |
412 | 409 | 1 | % | 10 | % | ||||||||||
Interest income |
4 | 3 | ||||||||||||||
Interest expense |
(69 | ) | (63 | ) | ||||||||||||
Other income, net |
15 | 8 | ||||||||||||||
Loss on early extinguishment of debt |
(16 | ) | | |||||||||||||
Income before income taxes and loss from joint venture |
346 | 357 | -3 | % | N/A | |||||||||||
Provision for income taxes |
40 | 110 | ||||||||||||||
Loss from joint venture |
11 | 18 | ||||||||||||||
Net income |
295 | 229 | 29 | % | N/A | |||||||||||
Loss attributable to noncontrolling interest |
(2 | ) | | |||||||||||||
Net income attributable to Symantec Corporation stockholders |
$ | 297 | $ | 229 | 30 | % | N/A | |||||||||
Net income per share attributable to Symantec Corporation stockholders basic |
$ | 0.38 | $ | 0.28 | ||||||||||||
Net income per share attributable to Symantec Corporation stockholders diluted |
$ | 0.37 | $ | 0.28 | ||||||||||||
Weighted-average shares outstanding attributable to Symantec Corporation stockholders basic |
789 | 814 | ||||||||||||||
Weighted-average shares outstanding attributable to Symantec Corporation stockholders diluted |
795 | 823 |
(1) | As adjusted for the adoption of new authoritative guidance on revenue recognition during the fourth quarter of fiscal 2010. | |
(2) | Management refers to growth rates adjusting for currency so that the business results can be viewed without the impact of fluctuations in foreign currency exchange rates. We compare the percentage change in the results from one period to another period in order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the actual exchange rates in effect during the respective prior periods. |
SYMANTEC CORPORATION
Condensed Consolidated Statements of Cash Flows
(In millions)
Condensed Consolidated Statements of Cash Flows
(In millions)
Six Months Ended | ||||||||
October 1, | October 2, | |||||||
2010 | 2009(1) | |||||||
OPERATING ACTIVITIES: |
||||||||
Net income |
$ | 295 | $ | 229 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
323 | 395 | ||||||
Amortization of discount on debt |
54 | 51 | ||||||
Stock-based compensation expense |
71 | 85 | ||||||
Loss on early extinguishment of debt |
16 | | ||||||
Impairment of assets held for sale |
1 | 3 | ||||||
Deferred income taxes |
29 | 4 | ||||||
Income tax benefit from the exercise of stock options |
(5 | ) | 2 | |||||
Excess income tax benefit from the exercise of stock options |
(1 | ) | (6 | ) | ||||
Loss from joint venture |
11 | 18 | ||||||
Other |
(10 | ) | | |||||
Net change in assets and liabilities, excluding effects of acquisitions: |
||||||||
Trade accounts receivable, net |
233 | 171 | ||||||
Inventories |
3 | 5 | ||||||
Accounts payable |
27 | (7 | ) | |||||
Accrued compensation and benefits |
(65 | ) | (79 | ) | ||||
Deferred revenue |
(238 | ) | (259 | ) | ||||
Income taxes payable |
(79 | ) | (15 | ) | ||||
Other assets |
12 | (8 | ) | |||||
Other liabilities |
(32 | ) | 8 | |||||
Net cash provided by operating activities |
645 | 597 | ||||||
INVESTING ACTIVITIES: |
||||||||
Purchase of property and equipment |
(116 | ) | (108 | ) | ||||
Proceeds from sale of property and equipment |
| 3 | ||||||
Cash (payments for) returned from acquisitions, net of cash acquired |
(1,528 | ) | 3 | |||||
Purchase of equity investments |
(6 | ) | (16 | ) | ||||
Purchases of available-for-sale securities |
| (2 | ) | |||||
Proceeds from sales of available-for-sale securities |
3 | 189 | ||||||
Net cash (used in) provided by investing activities |
(1,647 | ) | 69 | |||||
FINANCING ACTIVITIES: |
||||||||
Net proceeds from sales of common stock under employee stock benefit plans |
46 | 54 | ||||||
Excess income tax benefit from the exercise of stock options |
1 | 6 | ||||||
Tax payments related to restricted stock issuance |
(18 | ) | (18 | ) | ||||
Proceeds from debt issuance, net of discount |
1,097 | | ||||||
Repurchase of long-term debt |
(510 | ) | | |||||
Proceeds from sale of bond hedge |
13 | | ||||||
Debt issuance costs |
(10 | ) | | |||||
Repurchase of common stock |
(425 | ) | (243 | ) | ||||
Repayment of other long-term liabilities |
(2 | ) | (4 | ) | ||||
Net cash provided by (used in) financing activities |
192 | (205 | ) | |||||
Effect of exchange rate fluctuations on cash and cash equivalents |
37 | 60 | ||||||
Change in cash and cash equivalents |
(773 | ) | 521 | |||||
Beginning cash and cash equivalents |
3,029 | 1,793 | ||||||
Ending cash and cash equivalents |
$ | 2,256 | $ | 2,314 | ||||
(1) | As adjusted for the adoption of new authoritative guidance on revenue recognition during the fourth quarter of fiscal 2010. |
SYMANTEC CORPORATION
Reconciliation of Selected GAAP Measures to Non-GAAP Measures (1)
(In millions, except per share data)
Reconciliation of Selected GAAP Measures to Non-GAAP Measures (1)
(In millions, except per share data)
Year-Over-Year | ||||||||||||||||||||||||||||||||
Three Months Ended | Non-GAAP(2) Growth Rate | |||||||||||||||||||||||||||||||
October 1, 2010 | October 2, 2009 | Constant | ||||||||||||||||||||||||||||||
GAAP | Adj | Non-GAAP(2) | GAAP | Adj | Non-GAAP(2) | Actual | Currency(3) | |||||||||||||||||||||||||
Net revenue: |
$ | 1,480 | NA | $ | 1,480 | $ | 1,474 | NA | $ | 1,474 | 0 | % | 2 | % | ||||||||||||||||||
Gross profit: |
$ | 1,234 | $ | 27 | $ | 1,261 | $ | 1,215 | $ | 51 | $ | 1,266 | 0 | % | 2 | % | ||||||||||||||||
Stock-based compensation |
4 | 4 | ||||||||||||||||||||||||||||||
Amortization of acquired product rights |
23 | 47 | ||||||||||||||||||||||||||||||
Gross margin % |
83.4 | % | 85.2 | % | 82.4 | % | 85.9 | % | -70 | bps | -50 | bps | ||||||||||||||||||||
Operating expenses: |
$ | 1,016 | $ | (127 | ) | $ | 889 | $ | 958 | $ | (119 | ) | $ | 839 | 6 | % | 7 | % | ||||||||||||||
Stock-based compensation |
(32 | ) | (32 | ) | ||||||||||||||||||||||||||||
Amortization of other intangible assets |
(67 | ) | (62 | ) | ||||||||||||||||||||||||||||
Restructuring and transformation |
(28 | ) | (25 | ) | ||||||||||||||||||||||||||||
Loss and impairment of assets held for sale |
(1 | ) | | |||||||||||||||||||||||||||||
Acquisition related expenses |
(9 | ) | | |||||||||||||||||||||||||||||
Internally developed software costs |
10 | | ||||||||||||||||||||||||||||||
Operating expenses as a % of revenue |
68.6 | % | 60.1 | % | 65.0 | % | 56.9 | % | 320 | bps | 250 | bps | ||||||||||||||||||||
Operating income |
$ | 218 | $ | 154 | $ | 372 | $ | 257 | $ | 170 | $ | 427 | -13 | % | -8 | % | ||||||||||||||||
Operating margin % |
14.7 | % | 25.1 | % | 17.4 | % | 29.0 | % | -390 | bps | -300 | bps | ||||||||||||||||||||
Net income: |
$ | 136 | $ | 130 | $ | 266 | $ | 155 | $ | 140 | $ | 295 | -10 | % | N/A | |||||||||||||||||
Gross profit adjustment |
27 | 51 | ||||||||||||||||||||||||||||||
Operating expense adjustment |
127 | 119 | ||||||||||||||||||||||||||||||
Non-cash interest expense |
27 | 26 | ||||||||||||||||||||||||||||||
Loss on early extinguishment of debt |
16 | | ||||||||||||||||||||||||||||||
Gain on sale of marketable securities |
(13 | ) | | |||||||||||||||||||||||||||||
Joint venture: Amortization of other intangible assets |
2 | 2 | ||||||||||||||||||||||||||||||
Income tax effect on above items |
(56 | ) | (58 | ) | ||||||||||||||||||||||||||||
Diluted net income per share attributable to Symantec Corporation stockholders |
$ | 0.17 | $ | 0.17 | $ | 0.34 | $ | 0.19 | $ | 0.17 | $ | 0.36 | -6 | % | N/A | |||||||||||||||||
Diluted weighted-average shares outstanding attributable to Symantec Corporation stockholders |
786 | 786 | 819 | 819 | -4 | % | N/A |
(1) | This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial measures prepared in accordance with GAAP. For a detailed explanation of these non-GAAP measures, please see Symantecs Explanation of Non-GAAP Measures in Appendix A. | |
(2) | Beginning in fiscal 2011, we discontinued reporting revenue on a non-GAAP basis. We continue to report non-GAAP gross margin, operating margin, net income and earnings per share, however, we now utilize GAAP revenue in calculating these non-GAAP financial metrics. | |
(3) | Management refers to growth rates adjusting for currency so that the business results can be viewed without the impact of fluctuations in foreign currency exchange rates. We compare the percentage change in the results from one period to another period in order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the actual exchange rates in effect during the respective prior periods. |
SYMANTEC CORPORATION
Revenue and Deferred Revenue Detail (1, 2)
(In millions, unaudited)
Revenue and Deferred Revenue Detail (1, 2)
(In millions, unaudited)
Three Months Ended | ||||||||
October 1, 2010 | October 2, 2009 | |||||||
GAAP Revenue |
||||||||
Content, subscription, and maintenance |
$ | 1,270 | $ | 1,254 | ||||
License |
210 | 220 | ||||||
Total revenue |
$ | 1,480 | $ | 1,474 | ||||
GAAP Revenue Y/Y Growth Rate |
||||||||
Content, subscription, and maintenance |
1 | % | 6 | % | ||||
License |
-5 | % | -35 | % | ||||
Total Y/Y Growth Rate |
0 | % | -3 | % | ||||
GAAP Revenue Y/Y Growth Rate in Constant Currency |
||||||||
Content, subscription, and maintenance |
3 | % | 7 | % | ||||
License |
-2 | % | -34 | % | ||||
Total Y/Y Growth Rate in Constant Currency |
2 | % | -2 | % | ||||
GAAP Revenue by Segment |
||||||||
Consumer |
$ | 468 | $ | 463 | ||||
Security and Compliance |
363 | 345 | ||||||
Storage and Server Management |
557 | 563 | ||||||
Services |
92 | 103 | ||||||
GAAP Revenue by Segment: Y/Y Growth Rate |
||||||||
Consumer |
3 | % (3) | 6 | % | ||||
Security and Compliance |
5 | % | -3 | % | ||||
Storage and Server Management |
-1 | % | -9 | % | ||||
Services |
-11 | % | -1 | % | ||||
GAAP Revenue by Segment: Y/Y Growth Rate in Constant Currency |
||||||||
Consumer |
5 | % (3) | 7 | % | ||||
Security and Compliance |
7 | % | -2 | % | ||||
Storage and Server Management |
1 | % | -8 | % | ||||
Services |
-9 | % | 0 | % | ||||
GAAP Revenue by Geography |
||||||||
International |
$ | 741 | $ | 747 | ||||
US |
739 | 727 | ||||||
Americas (US, Latin America, Canada) |
815 | 791 | ||||||
EMEA |
414 | 457 | ||||||
Asia Pacific & Japan |
251 | 226 | ||||||
GAAP Revenue by Geography: Y/Y Growth Rate |
||||||||
International |
-1 | % | -2 | % | ||||
US |
2 | % | -4 | % | ||||
Americas (US, Latin America, Canada) |
3 | % | -4 | % | ||||
EMEA |
-9 | % | -5 | % | ||||
Asia Pacific & Japan |
11 | % | 5 | % | ||||
GAAP Revenue by Geography: Y/Y Growth Rate in Constant Currency |
||||||||
International |
3 | % | 0 | % | ||||
US |
2 | % | -3 | % | ||||
Americas (US, Latin America, Canada) |
3 | % | -4 | % | ||||
EMEA |
0 | % | -1 | % | ||||
Asia Pacific & Japan |
5 | % | 2 | % | ||||
GAAP Deferred Revenue |
$ | 3,104 | $ | 2,905 | ||||
GAAP Deferred Revenue Y/Y Growth Rate |
7 | % | 7 | % | ||||
GAAP Deferred Revenue Y/Y Growth Rate in Constant Currency |
7 | % | 4 | % | ||||
(1) | We compare the percentage change in the results from one period to another period in order to provide a framework for assessing how our underlying businesses performed. To exclude the effects of foreign currency rate fluctuations, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the actual exchange rates in effect during the respective prior periods (or, in the case of deferred revenue, converted into United States dollars at the actual exchange rate in effect at the end of the prior period). | |
(2) | Beginning in fiscal 2011, we discontinued reporting revenue and deferred revenue on a non-GAAP basis. We continue to report non-GAAP gross margin, operating margin, net income and earnings per share, however, we now utilize GAAP revenue in calculating these non-GAAP financial metrics. | |
(3) | For Q2 fiscal 2011, the Consumer segment actual and constant currency year-over-year growth rates have been modified to exclude a one-time adjustment. This adjustment reduced the Companys Consumer segment revenue by $10 million for the three months ended October 1, 2010 as a result of certain consumers not receiving their subscription entitlements on a timely basis. The Company determined that this adjustment was not material to previously reported results. |
SYMANTEC CORPORATION
Operating Margin by Segment Detail (1, 2)
(In millions, unaudited)
Operating Margin by Segment Detail (1, 2)
(In millions, unaudited)
Three Months Ended | ||||||||
October 1, 2010 | October 2, 2009 | |||||||
GAAP Operating Margin by Segment |
||||||||
Consumer |
45 | % | 47 | % | ||||
Security and Compliance |
16 | % | 26 | % | ||||
Storage and Server Management |
49 | % | 49 | % | ||||
Services |
9 | % | 13 | % |
(1) | Beginning in fiscal 2011, we discontinued reporting revenue and deferred revenue on a non-GAAP basis. We continue to report non-GAAP gross margin, operating margin, net income and earnings per share, however, we now utilize GAAP revenue in calculating these non-GAAP financial metrics. | |
(2) | Excluded from this table is our Other segment which is comprised of sunset products nearing the end of their life cycle. The Other segment also includes general and administrative expenses; amortization of acquired product rights, intangible assets, and other assets; goodwill impairment charges; charges such as stock-based compensation and restructuring; and certain indirect costs that are not charged to the other operating segments. |
SYMANTEC CORPORATION
Guidance and Reconciliation of GAAP to Non-GAAP Earnings Per Share
(In billions, except per share data, unaudited)
Guidance and Reconciliation of GAAP to Non-GAAP Earnings Per Share
(In billions, except per share data, unaudited)
We include certain non-GAAP measures in the tracking and forecasting of our earnings and management
of our business. For a detailed explanation of these non-GAAP measures, please see Symantecs
Explanation of Non-GAAP Measures in Appendix A.
Three Months Ending December 31, 2010 | ||||||||||||
Year-Over-Year Growth Rate | ||||||||||||
Revenue guidance | Range | Actual | Constant Currency(1) | |||||||||
GAAP revenue range |
$ | 1.57 - $1.59 | 2% - 3 | % | 3% - 4 | % |
Three Months Ending December 31, 2010 | ||||||||||||
Year-Over-Year Growth Rate | ||||||||||||
Earnings per share guidance and reconciliation | Range | Actual | Constant Currency(1) | |||||||||
GAAP diluted earnings per share range |
$ | 0.23 - $0.24 | (38)% - (35 | )% | N/A | |||||||
Add back: |
||||||||||||
Stock-based compensation, net of tax |
0.02 | |||||||||||
Amortization of acquired product rights and other intangible assets and
non-cash interest expense, net of tax |
0.07 | |||||||||||
Non-GAAP diluted earnings per share range |
$ | 0.32 - $0.33 | (20)% - (18 | )% | N/A | |||||||
Three Months Ending December 31, 2010 | ||||||||||||
Year-Over-Year Growth Rate | ||||||||||||
Deferred revenue guidance | Range | Actual | Constant Currency(1) | |||||||||
GAAP deferred revenue range |
$ | 3.19 - $3.22 | 5% - 6 | % | 5% - 6 | % |
(1) | Management refers to growth rates adjusting for currency so that the business results can be viewed without the impact of fluctuations in foreign currency exchange rates. We compare the percentage change in the results from one period to another period in order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the actual exchange rates in effect during the respective prior periods (or, in the case of deferred revenue, converted into United States dollars at the actual exchange rate in effect at the end of the prior period). |
SYMANTEC CORPORATION
Explanation of Non-GAAP Measures
Appendix A
Explanation of Non-GAAP Measures
Appendix A
The non-GAAP financial measures included in the tables adjust for the following items: business
combination accounting entries, stock-based compensation expense, restructuring charges, charges
related to the amortization of intangible assets and acquired product rights, impairments of assets
and certain other items. We believe the presentation of these non-GAAP financial measures, when
taken together with the corresponding GAAP financial measures, provides meaningful supplemental
information regarding the Companys operating performance for the reasons discussed below. Our
management uses these non-GAAP financial measures in assessing the Companys operating results, as
well as when planning, forecasting and analyzing future periods. We believe that these non-GAAP
financial measures also facilitate comparisons of the Companys performance to prior periods and to
our peers and that investors benefit from an understanding of these non-GAAP financial measures.
Stock-based compensation: Consists of expenses for employee stock options, restricted stock
units, restricted stock awards and our employee stock purchase plan determined in accordance with
the authoritative guidance on stock-based compensation. When evaluating the performance of our
individual business units and developing short and long term plans, we do not consider stock-based
compensation charges. Our management team is held accountable for cash-based compensation, but we
believe that management is limited in its ability to project the impact of stock-based compensation
and accordingly is not held accountable for its impact on our operating results. Although
stock-based compensation is necessary to attract and retain quality employees, our consideration of
stock-based compensation places its primary emphasis on overall shareholder dilution rather than
the accounting charges associated with such grants. In addition, for comparability purposes, we
believe it is useful to provide a non-GAAP financial measure that excludes stock-based compensation
in order to better understand the long-term performance of our core business and to facilitate the
comparison of our results to the results of our peer companies. Furthermore, unlike cash-based
compensation, the value of stock-based compensation is determined using a complex formula that
incorporates factors, such as market volatility, that are beyond our control.
Three months ended | ||||||||
October 1, | October 2, | |||||||
2010 | 2009 | |||||||
Cost of revenue |
$ | 4 | $ | 4 | ||||
Sales and marketing |
14 | 14 | ||||||
Research and development |
12 | 12 | ||||||
General and administrative |
6 | 6 | ||||||
Total stock-based compensation |
$ | 36 | $ | 36 | ||||
Amortization of acquired product rights and other intangible assets: When conducting
internal development of intangible assets, accounting rules require that we expense the costs as
incurred. In the case of acquired businesses, however, we are required to allocate a portion of
the purchase price to the accounting value assigned to intangible assets acquired and amortize
this amount over the estimated useful lives of the acquired intangibles. The acquired company, in
most cases, has itself previously expensed the costs incurred to develop the acquired intangible
assets, and the purchase price allocated to these assets is not necessarily reflective of the cost
we would incur in developing the intangible asset. We eliminate these amortization charges from
our non-GAAP operating results to provide better comparability of pre and post-acquisition
operating results and comparability to results of businesses utilizing internally developed
intangible assets.
Restructuring and transformation: We have engaged in various restructuring activities over
the past several years that have resulted in costs associated with severance, benefits,
outplacement services and excess facilities. Each restructuring has been a discrete event based on
a unique set of business objectives or circumstances, and each has differed from the others in
terms of its operational implementation, business impact and scope. We do not engage in
restructuring activities in the ordinary course of business. While our operations previously
benefited from the employees and facilities covered by our various restructuring charges, these
employees and facilities have benefited different parts of our business in different ways, and the
amount of these charges has varied significantly from period to period. We believe that it is
important to understand these charges; however, we do not believe that these charges are
indicative of future operating results and that investors benefit from an understanding of our
operating results without giving effect to them.
Loss and impairment of assets held for sale: We have committed to sell certain buildings
and land. We have classified these assets as held for sale and adjusted the assets carrying value
when above the fair market value less cost to sell. We do not believe that these charges are
indicative of future operating results and believe that investors benefit from an understanding of
our operating results without giving effect to them.
Acquisition related expenses: New authoritative guidance on business combinations requires
us to record in the statement of operations, certain items that at the time of an acquisition
would have been recorded to goodwill under the old authoritative guidance. We have excluded the
effect of acquisition related expenses from our non-GAAP operating expenses and net income
measures. We incurred expenses in connection with our acquisitions, which we generally would not
have otherwise incurred in the periods presented as a part of our continuing operations.
Acquisition related expenses consist of professional service expenses. We believe it is useful for
investors to understand the effects of these items on our operations. Although acquisition related
expenses generally diminish over time with respect to past acquisitions, we generally will incur
these expenses in connection with any future acquisitions.
Internally developed software costs: During the three months ended October 1, 2010, the
Company reduced research and development expense by approximately $10 million related to increased
capitalization of certain costs for internally developed software. This approach aligns the
capitalization policies of the business we acquired from VeriSign with the equivalent policies
previously utilized by our Hosted Services operation. The Company determined that this change was
not material to previously reported results. The Companys management excluded this immaterial
item when evaluating its ongoing operating performance, and therefore excluded this benefit when
presenting non-GAAP financial measures.
SYMANTEC CORPORATION
Explanation of Non-GAAP Measures
Appendix A (continued)
Explanation of Non-GAAP Measures
Appendix A (continued)
Non-cash interest expense: Effective April 4, 2009, we adopted new authoritative guidance
on convertible debt instruments, which changes the method of accounting for our convertible notes.
Under this new authoritative guidance, our EPS and net income calculated in accordance with GAAP
will be reduced as a result of recognizing incremental non-cash interest expense. We believe it is
useful to provide a non-GAAP financial measure that excludes this incremental non-cash interest
expense in order to better understand the long-term performance of our core business and to
facilitate the comparison of our results to the results of our peer companies.
Loss on early extinguishment of debt: In September 2010, we purchased $500 million of
aggregate principal amount of our 0.75% Convertible Senior Notes due June 15, 2011, from several
holders in privately negotiated transactions for approximately $497 million net, in cash. The
transaction resulted in a loss from extinguishment of debt of approximately $16 million, which
represented the difference between the book value of the notes, net of the remaining unamortized
discount prior to repurchase and the fair value of the liability component of the notes upon
repurchase. We do not believe that this charge is indicative of future operating results and
believe that investors benefit from an understanding of our operating results without giving
effect to this transaction.
Gain on sale of marketable securities: This constitutes the gain from the sale of the
Companys available-for-sale securities. The Companys management excludes this gain when
evaluating its ongoing performance and therefore excludes this gain when presenting non-GAAP
financial measures.
Joint venture: As noted above, we exclude amortization of other intangible assets related
to the joint venture from our non-GAAP net income.