| Symantec Closes Fiscal Year 2006 With Solid March Quarter |
| Driven by Demand for Email Archiving, Compliance, Storage, and Norton Internet Security CUPERTINO, CA, May 09, 2006 (MARKET WIRE via COMTEX News Network) -- Symantec Corp. (NASDAQ: SYMC) today reported results for the fiscal fourth quarter and the fiscal year ended March 31, 2006. GAAP revenue for the March 2006 quarter was $1.24 billion and non-GAAP revenue was $1.30 billion. Non-GAAP revenue includes $61 million of deferred revenue that has been eliminated from GAAP results as part of the purchase accounting associated with the acquisition of VERITAS Software Corporation. Non-GAAP revenue grew one percent over the combined Symantec and Veritas revenue for the March 2005 quarter of $1.29 billion. For the 2006 fiscal year, GAAP revenue was $4.14 billion and non-GAAP revenue was $5.00 billion. Non-GAAP revenue for the fiscal year includes $302 million of deferred revenue that has been eliminated from GAAP results as part of the purchase accounting associated with the acquisition of VERITAS as well as $559 million in historic VERITAS revenue for the quarter ended March 31, 2005. On a non-GAAP basis, 2006 fiscal year revenue grew eight percent compared to the 2005 fiscal year's combined non-GAAP revenue of $4.63 billion. GAAP Results: GAAP net income for the fiscal fourth quarter was $119 million, compared to $120 million for the same quarter last year. Earnings per share were $0.11, compared to earnings per share of $0.16 for the same quarter last year. For fiscal year 2006, Symantec reported net income of $157 million, compared to net income of $536 million for fiscal year 2005. Earnings per share were $0.16, compared to earnings per share of $0.74 for fiscal year 2005. Non-GAAP Results: Non-GAAP net income for fiscal fourth quarter was $279 million, compared to $314 million for the same quarter last year. Non-GAAP earnings per share were $0.26, compared to earnings per share of $0.26 for the year-ago quarter. For fiscal year 2006, Symantec reported non-GAAP net income of $1.14 billion, compared to $1.05 billion in fiscal year 2005. Non-GAAP earnings per share for the year were $1.00, compared to earnings per share of $0.86 for fiscal year 2005. Non-GAAP results, as presented in the attached consolidated financial statements, exclude certain GAAP expenses, net of tax, and include the results of operations of VERITAS for the applicable periods, including adjustments based on the fair values of assets acquired and liabilities assumed as of the acquisition date of July 2, 2005, and deferred revenue that was eliminated as a result of purchase accounting for the VERITAS acquisition. "By staying focused on execution, the worldwide Symantec team delivered a solid fiscal fourth quarter," said John W. Thompson, Symantec chairman and chief executive officer. "Performance in all segments and regions was quite strong during the quarter, driven by solid demand for our email archiving, storage, and compliance solutions as well as Norton Internet Security. In addition, our enterprise and consumer antivirus segments performed well in a stable pricing environment." Revenue Components For the quarter, Symantec's enterprise security business represented 22 percent of total revenue and grew nine percent year-over-year on a combined non-GAAP basis year-over-year. Services revenue represented four percent of total revenue and grew 16 percent year-over-year. The storage management segment represented 23 percent of total revenue and grew two percent year-over-year. The data protection segment comprised 23 percent of total revenue and declined eight percent. Symantec's consumer business represented 28 percent of total revenue and held steady on a combined non-GAAP basis year-over-year. International revenues for the March quarter represented 50 percent of non-GAAP revenue and grew five percent on a combined non-GAAP basis over the same quarter last year. Asia Pacific/Japan revenue for the quarter represented 13 percent of total revenue and grew nine percent on a combined non-GAAP basis year-over-year. The Europe, Middle East, and Africa region represented 32 percent of total revenue for the quarter and grew three percent year-over-year. The Americas, including the United States, Latin America, and Canada, represented 55 percent of total revenue and declined two percent year-over-year. June Quarter Forecast For the June 2006 quarter, GAAP revenue is estimated between $1.20 billion and $1.23 billion. This excludes approximately $25 million of deferred revenue that was lost through the purchase accounting for the VERITAS transaction. GAAP fully diluted earnings per share for the June quarter are estimated between $0.05 and $0.07. Non-GAAP revenue for the June quarter is estimated between $1.22 billion and $1.25 billion, including about $25 million of deferred revenue. Non-GAAP fully diluted earnings per share are forecasted between $0.20 and $0.21 excluding approximately $145 million of expenses related to the amortization of acquisition-related intangibles and deferred compensation charges, net of estimated income taxes. Fiscal Year 2007 Forecast For the fiscal year ending March 2007, GAAP revenue is estimated in the range of $5.2 billion to $5.4 billion, excluding about $55 million in lost deferred revenue from the VERITAS merger. GAAP fully diluted earnings per share for the fiscal year ending in March 2007 are estimated between $0.46 and $0.57. Non-GAAP revenue is estimated in the range of $5.3 billion to $5.5 billion, including about $55 million in deferred revenue from the VERITAS merger. Non-GAAP fully diluted earnings per share are estimated between $1.05 and $1.15, excluding approximately $555 million in expenses related to the amortization of acquisition-related intangibles and stock-based compensation charges, net of estimated income taxes. Quarterly Highlights
Conference Call Symantec has scheduled a conference call for 5 p.m. ET/2 p.m. PT today to discuss fiscal fourth quarter and fiscal year 2006 results, and to review guidance for the fiscal first quarter 2007. Interested parties may access the conference call on the Internet at http://www.symantec.com/invest/index.html. 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 the world leader in providing solutions to help individuals and enterprises assure the security, availability, and integrity of their information. Headquartered in Cupertino, Calif., Symantec has operations in more than 40 countries. More information is available at www.symantec.com. 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 US 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 statements relating to projections of future revenue and earnings per share for the first quarter and year of fiscal 2007, and projections of deferred revenue, amortization of acquisition related intangibles and deferred compensation 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: the acquisition of VERITAS, including the successful integration of VERITAS' businesses, maintenance of customer and partner relationships and leveraging of synergies; the anticipated growth of certain market segments, particularly the enterprise security and international markets; 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. Additional information concerning these and other risk factors is contained in the Risk Factors section of Symantec's Form 10-Q for the quarter ended December 31, 2005. Symantec assumes no obligation to update any forward-looking information contained in this press release. USE OF NON-GAAP FINANCIAL INFORMATION: In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Symantec reports non-GAAP financial results. All references to "combined non-GAAP" financial information for pre-acquisition periods include the results of Symantec and VERITAS for like fiscal quarter (i.e., combining the results of Symantec for the March 2005 fiscal quarter with the results of VERITAS for the December 2004 fiscal quarter), and have been adjusted to exclude certain expenses, net of tax, and include adjustments based on the fair values of assets acquired and liabilities assumed as of the acquisition date of July 2, 2005 and deferred revenue that was eliminated as a result of purchase accounting for the VERITAS acquisition. Symantec's management believes the non-GAAP measures used in this release are useful to investors because they provide supplemental information that facilitates comparisons to prior periods. Management uses these non-GAAP measures to evaluate its financial results, develop budgets and manage expenditures. The method Symantec uses to produce non-GAAP results is not computed according to GAAP, may differ from the methods used by other companies and should not be regarded as a replacement for corresponding GAAP measures. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to the comparable GAAP results, which is attached to this release. Additional information regarding the reconciliation, along with additional pro forma financial information, can be found on the investor relations page of Symantec's Web site, along with additional pro forma financial information for the combined company, at www.symantec.com/invest/center.html.
SYMANTEC CORPORATION
GAAP Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended Year Ended
March 31, March 31,
---------------------- ------------------------
2006 2005 2006 2005
----------- ---------- ----------- -----------
(unaudited) (unaudited)
Net revenues $ 1,238,560 $ 712,678 $ 4,143,392 $ 2,582,849
Cost of revenues:
Cost of revenues 194,385 110,026 667,579 403,215
Amortization of
acquired product
rights 88,769 11,105 314,290 48,894
----------- ---------- ----------- -----------
Cost of revenues 283,154 121,131 981,869 452,109
Gross profit 955,406 591,547 3,161,523 2,130,740
Operating expenses:
Sales and marketing 440,713 227,329 1,486,590 843,724
Research and
development 198,549 90,277 664,628 332,266
General and
administrative 69,892 33,646 221,412 115,419
Amortization of other
intangible assets from
acquisitions 50,347 1,760 148,822 5,416
Amortization of
deferred stock-based
compensation 9,459 2,844 37,962 4,524
Acquired in-process
research and
development 1,100 - 285,100 3,480
Restructuring 4,426 - 24,918 2,776
Integration planning 587 3,494 15,926 3,494
Patent settlement - 375 2,200 375
----------- ---------- ----------- -----------
Total operating
expenses 775,073 359,725 2,887,558 1,311,474
Operating income 180,333 231,822 273,965 819,266
Interest and other
income, net 21,508 16,670 106,754 51,185
Interest expense (3,650) - (17,996) (12,323)
----------- ---------- ----------- -----------
Income before income
taxes 198,191 248,492 362,723 858,128
Provision for income
taxes 79,378 128,810 205,871 321,969
----------- ---------- ----------- -----------
Net income $ 118,813 $ 119,682 $ 156,852 $ 536,159
=========== ========== =========== ===========
Net income per share --
diluted* $ 0.11 $ 0.16 $ 0.15 $ 0.74
=========== ========== =========== ===========
Shares used to compute
net income per share --
diluted* 1,064,293 738,413 1,025,856 738,245
=========== ========== =========== ===========
*For the twelve months ended March 31, 2005, diluted net income per share
is calculated using the if-converted method. Under this method, the
numerator excludes the interest expense from the 3% convertible
subordinated notes, net of income tax, of $8.4 million for the twelve
months ended March 31, 2005, and the denominator includes shares issuable
from the assumed conversion of the 3% convertible subordinated notes.
SYMANTEC CORPORATION
Reconciliation of Consolidated Statements of Operations to Non-GAAP
Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended March 31, 2006
-----------------------------------------
GAAP Non-GAAP
Symantec Adjustments Non-GAAP
----------- ----------- --- -----------
Financial Statement Information
Net revenues (1) $ 1,238,560 $ 61,307 A $ 1,299,867
Cost of revenues:
Cost of revenues (1) 194,385 D 194,385
Amortization of acquired
product rights (1) 88,769 (88,769) B -
----------- ----------- --- -----------
Total cost of revenues (2) 283,154 (88,769) 194,385
Gross profit (2) 955,406 150,076 1,105,482
Operating expenses:
Sales and marketing (1) 440,713 (298) C 440,415
Research and development (1) 198,549 (1,466) C 197,083
General and administrative (1) 69,892 (3,477) C 66,415
Amortization of other
intangible assets from
acquisitions (1) 50,347 (50,347) B -
Amortization of deferred
stock-based compensation (1) 9,459 (9,459) D -
Acquired in-process research
and development (1) 1,100 (1,100) B -
Restructuring (1) 4,426 (4,426) E -
Integration planning (1) 587 (587) F -
Patent settlement - -
----------- ----------- --- -----------
Total operating expenses
(2) 775,073 (71,160) 703,913
----------- ----------- --- -----------
Operating income (2) 180,333 221,236 401,569
Interest and other income, net
(1) 21,508 21,508
Interest expense (1) (3,650) (3,650)
Gain on strategic investments - -
----------- ----------- --- -----------
Income before income taxes (2) 198,191 221,236 419,427
Provision for income taxes (1) 79,378 61,269 G 140,647
----------- ----------- --- -----------
Net income (2) $ 118,813 $ 159,967 $ 278,780
----------- ----------- --- -----------
Net income per share:
Diluted (2) $ 0.11 $ 0.26
Shares used to compute net
income per share:
Diluted (1) *** 1,064,293 1,064,293
Three Months Ended March 31, 2005
----------------------------------------------------
GAAP Non-GAAP
Adjustme-
Symantec* VERITAS** nts Non-GAAP
--------- --------- --- --------- --- -----------
Financial
Statement
Information
Net revenues (1) $ 712,678 $ 574,435 H $ - $ 1,287,113
Cost of revenues:
Cost of revenues
(1) 110,026 82,473 H (901) D 192,402
(246) J
901 K
(52) L
201 M
Amortization of
acquired product
rights (1) 11,105 7,328 H (83,256) B -
(7,328) I
72,151 N
--------- --------- --- --------- --- -----------
Total cost of
revenues (2) 121,131 155,428 (84,157) 192,402
Gross profit (2) 591,547 419,007 84,157 1,094,711
Operating
expenses:
Sales and
marketing (1) 227,329 163,307 H - 389,475
(1,502) J
(28) L
369 M
Research and
development (1) 90,652 95,569 H 184,895
(1,516) J
(58) L
248 M
General and
administrative
(1) 33,646 50,775 H - 83,955
(59) J
(540) L
133 M
Amortization of
other intangible
assets from
acquisitions
(1) 1,760 3,009 H (48,524) B -
(3,009) I
46,764 N
Amortization of
deferred
stock-based
compensation (1) 2,844 4,733 K (7,577) D -
Acquired
in-process
research and
development (1) - -
Restructuring (1) - -
Integration
planning (1) 3,494 - (3,494) F -
Patent settlement - 375 (375) Q -
--------- --------- --- --------- --- -----------
Total
operating
expenses (2) 359,725 358,570 (59,970) 658,325
--------- --------- --- --------- --- -----------
Operating income
(2) 231,822 60,437 144,127 436,386
Interest and
other income,
net (1) 16,670 17,421 H - 34,091
Interest expense
(1) - (6,242) H - (8,753)
(2,511) O
Gain on strategic
investments - 2,009 H (2,009) R -
--------- --------- --- --------- --- -----------
Income before
income taxes (2) 248,492 71,114 142,118 461,724
Provision for
income taxes (1) 128,810 56,093 H (11,074) G 147,752
(26,077) G
--------- --------- --- --------- --- -----------
Net income (2) $ 119,682 $ 41,098 $ 153,192 $ 313,972
--------- --------- --- --------- --- -----------
Net income per
share:
Diluted (2) $ 0.16 $ 0.26
Shares used to
compute net
income per share:
Diluted (1) *** 738,413 430,989 1,222,931 P
NOTES:
The above information reflects the combined results of Symantec Corporation
("Symantec") and VERITAS Software Corporation ("VERITAS"), including
amounts related to the amortization of fair value adjustments of assets
acquired and liabilities assumed by Symantec as of the actual acquisition
date of July 2, 2005. For comparative purposes, the information presented
assumes that the acquisition took place on April 1, 2004. If the
acquisition had taken place on April 1, 2004, the fair values of the assets
and liabilities would have been different and actual results of operations
would have been different from those presented above.
Additional non-GAAP adjustments consist of: non-cash charges related to
acquisitions, such as the amortization of intangibles and stock-based
compensation expense, and the write-off of in-process research and
development; restructuring charges; integration planning costs; and the
impact of other special items, such as other stock-based compensation
expense, litigation matters, gain/loss on investments and related
adjustments to provision for income taxes on our operating results. These
non-GAAP financial measures are not prepared in accordance with generally
accepted accounting principles and may be different from non-GAAP financial
measures used by other companies. Non-GAAP financial measures should not be
considered a substitute for, or superior to, measures of financial
performance prepared in accordance with GAAP.
(*) The results of operations include our results for the three months
ended March 31, 2005.
(**) The results of operations include VERITAS' historical results for the
three months ended December 31, 2004, including amortization related to
fair value adjustments based on the fair values of assets acquired and
liabilities assumed as of the acquisition date of July 2, 2005.
Footnotes:
(1) Symantec includes these non-GAAP financial measures because we believe
these measures are useful to investors in that they allow for greater
transparency to certain line items in our financial statements. We have
historically reported similar non-GAAP financial measures to our investors
and believe that the inclusion of comparative numbers provides consistency
in our financial reporting. Investors are encouraged to review the
reconciliation of the non-GAAP financial measures to the most directly
comparable GAAP financial measures as provided herein.
(2) Symantec's management refers to these non-GAAP financial measures, such
as non-GAAP operating margins and net income, in making operating decisions
because the measures provide meaningful supplemental information regarding
our operational performance and our ability to invest in research and
development and fund acquisitions and capital expenditures. In addition,
these non-GAAP financial measures facilitate management's internal
comparisons to our historical operating results and comparisons to
competitors' operating results. Investors are encouraged to review the
reconciliation of the non-GAAP financial measures to the most directly
comparable GAAP financial measures as provided herein.
A To include VERITAS' deferred revenue that was excluded
as a result of adjustments to fair value.
B To exclude non-cash charges of amortization of
acquired product rights, amortization of other
intangible assets and the write-off of acquired
in-process research and development.
C To exclude executive incentive bonuses related to
the VERITAS acquisition, executive sign-on bonuses
and executive recruitment fees.
D To exclude amortization of deferred stock-based
compensation.
E To exclude charges relating to restructuring.
F To exclude the Symantec and VERITAS integration
planning costs.
G To adjust the provision for income taxes to reflect the
effect of the non-GAAP adjustments on net income
(loss).
H To include VERITAS' historical results of operations
for the three months ended December 31, 2004.
I To eliminate VERITAS' historical amortization of
developed technology, other intangible assets and
the write-off of in-process research and
development.
J To eliminate VERITAS' historical amortization of
deferred stock-based compensation.
K To amortize deferred stock-based compensation
related to the VERITAS acquisition.
L To amortize VERITAS' lease obligation in excess of
fair value.
M To record additional depreciation expense on VERITAS'
property and equipment as a result of the adjustment
to fair value.
N To amortize acquired product rights and other
intangible assets related to the VERITAS
acquisition.
O To amortize the discount on VERITAS' convertible
subordinated debt as a result of adjustment to
fair value.
P Diluted shares are equal to Symantec historical shares
plus VERITAS historical shares multiplied by the
exchange ratio of 1.1242.
Q To exclude charges related to patent settlement
R To exclude gain on strategic investments
SYMANTEC CORPORATION
Reconciliation of Consolidated Statements of Operations to Non-GAAP
Statements of Operations
(In thousands, except per share data)
(Unaudited)
Year Ended March 31, 2006
------------------------------------------------
GAAP Non-GAAP
Symantec VERITAS* Adjustments Non-GAAP
---------- -------- - ---------- - ----------
Financial Statement
Information
Net revenues (1) $4,143,392 $559,258 A $ 301,788 J $5,004,438
Cost of revenues:
Cost of revenues (1) 667,579 87,657 A (901) K 753,984
(401) B
901 C (1,057) L
(52) D
258 E
- -
Amortization of
acquired product
rights (1) 314,290 7,424 A (386,441) M -
(7,424) F
72,151 G
---------- -------- - ---------- - ----------
Total cost of
revenues (2) 981,869 160,514 (388,399) 753,984
Gross profit (2) 3,161,523 398,744 690,187 4,250,454
Operating expenses:
Sales and marketing
(1) 1,486,590 165,652 A (3,094) L 1,646,318
(1,396) B (1,866) N
(28) D
460 E
Research and
development (1) 664,628 97,510 A (2,700) L 755,519
(1,331) B (2,832) N
(58) D
302 E
General and
administrative (1) 221,412 87,907 A (5,774) N 268,377
(60) B (30,000) O
(540) D (4,826) L
258 E
Amortization of other
intangible assets
from acquisitions (1) 148,822 2,430 A (195,586) M -
(2,430) F
46,764 G
Amortization of
deferred stock-based
compensation (1) 37,962 4,733 C (42,695) P -
Acquired in-process
research and
development (1) 285,100 (285,100) M -
Restructuring (1) 24,918 (24,918) Q -
Integration planning
(1) 15,926 (15,926) L -
Patent settlement (1) 2,200 (2,200) R -
---------- -------- - ---------- - ----------
Total operating
expenses 2,887,558 400,173 (617,517) 2,670,214
---------- -------- - ---------- - ----------
Operating income (2) 273,965 (1,429) 1,307,704 1,580,240
Interest and other
income, net (1) 106,754 15,532 A 122,286
Interest expense (1) (17,996) (5,198) A (25,705)
(2,511) H
Gain on strategic
investments (1) - 732 A (732) S -
---------- -------- - ---------- - ----------
Income before income
taxes (2) 362,723 7,126 1,306,972 1,676,821
Provision for income
taxes (1) 205,871 47,042 A 305,789 I 532,278
(26,424) I
---------- -------- - ---------- - ----------
Net income (2) $ 156,852 $(13,492) $1,001,183 $1,144,543
---------- -------- - ---------- - ----------
Net income per share:
Diluted (2) **** $ 0.15 $ 1.00
Shares used to compute
net income per share:
Diluted (1) **** 1,025,856 1,147,519
Year Ended March 31, 2005
------------------------------------------------
GAAP Non-GAAP
Symantec** VERITAS*** Adjustments Non-GAAP
---------- ---------- - --------- - ----------
Financial Statement
Information
Net revenues (1) $2,582,849 $2,041,874 A $4,624,723
Cost of revenues:
Cost of revenues (1) 403,215 307,421 A (3,604) K 710,623
(610) B
3,604 C
(208) D
805 E
Amortization of
acquired product
rights (1) 48,894 19,583 A (383,398) M -
(19,583) F
334,504 G
---------- ---------- - --------- - ----------
Total cost of
revenues (2) 452,109 645,516 (387,002) 710,623
Gross profit (2) 2,130,740 1,396,358 387,002 3,914,100
Operating expenses:
Sales and marketing
(1) 843,724 610,962 A 1,450,117
(5,942) B
(112) D
1,485 E
Research and
development (1) 332,266 346,644 A 675,685
(3,960) B
(232) D
967 E
General and
administrative (1) 115,419 194,454 A 307,407
(851) B
(2,160) D
545 E
Amortization of other
intangible assets
from acquisitions (1) 5,416 9,201 A (192,472) M -
(9,201) F
187,056 G
Amortization of
deferred stock-based
compensation (1) 4,524 18,932 C (23,456) P -
Acquired in-process
research and
development (1) 3,480 11,900 A (3,480) M -
(11,900) F
Restructuring (1) 2,776 (9,648) A 6,872 Q -
Integration planning
(1) 3,494 (3,494) L -
Patent settlement (1) 375 (375) R -
---------- ---------- - --------- - ----------
Total operating
expenses 1,311,474 1,338,140 (216,405) 2,433,209
---------- ---------- - --------- - ----------
Operating income (2) 819,266 58,218 603,407 1,480,891
Interest and other
income, net (1) 51,185 52,846 A 104,031
Interest expense (1) (12,323) (24,399) A (46,766)
(10,044) H
Gain on strategic
investments (1) - 9,505 A (9,505) S -
---------- ---------- - --------- - ----------
Income before income
taxes (2) 858,128 86,126 593,902 1,538,156
Provision for income
taxes (1) 321,969 177,898 A 111,107 I 492,210
(118,764) I
---------- ---------- - --------- - ----------
Net income (2) $ 536,159 $ 26,992 $ 482,795 $1,045,946
---------- ---------- - --------- - ----------
Net income per share:
Diluted (2) **** $ 0.74 $ 0.86
Shares used to compute
net income per share:
Diluted (1) **** 738,245 1,231,731 T
NOTES:
The above information reflects the combined results of Symantec Corporation
("Symantec") and VERITAS Software Corporation ("VERITAS"), including
amounts related to the amortization of fair value adjustments of assets
acquired and liabilities assumed by Symantec as of the actual acquisition
date of July 2, 2005. For comparative purposes, the information presented
assumes that the acquisition took place on April 1, 2004. If the
acquisition had taken place on April 1, 2004, the fair values of the assets
and liabilities would have been different and actual results of operations
would have been different from those presented above.
Additional non-GAAP adjustments consist of: non-cash charges related to
acquisitions, such as the amortization of intangibles and stock-based
compensation expense, and the write-off of in-process research and
development; restructuring charges; integration planning costs; and the
impact of other special items, such as other stock-based compensation
expense, litigation matters, gain/loss on investments and related
adjustments to provision for income taxes on our operating results. These
non-GAAP financial measures are not prepared in accordance with generally
accepted accounting principles and may be different from non-GAAP financial
measures used by other companies. Non-GAAP financial measures should not be
considered a substitute for, or superior to, measures of financial
performance prepared in accordance with GAAP.
(*) The results of operations include VERITAS' historical results for the
three months ended March 31, 2005, including amortization related to fair
value adjustments based on the fair values of assets acquired and
liabilities assumed as of the acquisition date of July 2, 2005.
(**) The results of operations include our results for the year ended March
31, 2005.
(***) The results of operations include VERITAS' historical results for the
year ended December 31, 2004, including amortization related to fair value
adjustments based on the fair values of assets acquired and liabilities
assumed as of the acquisition date of July 2, 2005.
(****) For the year ended March 31, 2005, diluted net income per share is
calculated using the if-converted method. Under this method, the numerator
excludes the interest expense from the 3% convertible subordinated notes,
net of income tax, of $8.4M million for the year ended March 31, 2005 and
the denominator includes shares issuable from the assumed conversion of the
3% convertible subordinated notes.
Footnotes:
(1) Symantec includes these non-GAAP financial measures because we believe
these measures are useful to investors in that they allow for greater
transparency to certain line items in our financial statements. We have
historically reported similar non-GAAP financial measures to our investors
and believe that the inclusion of comparative numbers provides consistency
in our financial reporting. Investors are encouraged to review the
reconciliation of the non-GAAP financial measures to the most directly
comparable GAAP financial measures as provided herein.
(2) Symantec's management refers to these non-GAAP financial measures, such
as non-GAAP operating margins and net income, in making operating decisions
because the measures provide meaningful supplemental information regarding
our operational performance and our ability to invest in research and
development and fund acquisitions and capital expenditures. In addition,
these non-GAAP financial measures facilitate management's internal
comparisons to our historical operating results and comparisons to
competitors' operating results. Investors are encouraged to review the
reconciliation of the non-GAAP financial measures to the most directly
comparable GAAP financial measures as provided herein.
A To include VERITAS' historical results of operations for applicable
periods
B To eliminate VERITAS' historical amortization of deferred
stock-based compensation.
C To amortize deferred stock-based compensation related to the VERITAS
acquisition.
D To amortize VERITAS' lease obligation in excess of fair value
E To record additional depreciation expense on VERITAS' property and
equipment as a result of the adjustment to fair value.
F To eliminate VERITAS' historical amortization of developed
technology, other intangible assets and the write-off of in-process
research and development.
G To amortize acquired product rights and other intangible assets
related to the VERITAS acquisition.
H To amortize the discount on VERITAS' convertible subordinated debt
as a result of adjustment to fair value.
I To adjust the provision for income taxes to reflect the effect of
the non-GAAP adjustments on net income (loss).
J To include VERITAS' deferred revenue that was excluded as a result
of adjustments to fair value
K To exclude amortization of deferred stock-based compensation.
L To exclude the Symantec and VERITAS integration planning costs.
M To exclude non-cash charges of amortization of acquired product
rights, amortization of other intangible assets and the write-off of
acquired in-process research and development.
N To exclude executive incentive bonuses related to the VERITAS
acquisition.
O To exclude $30 million related to the proposed VERITAS settlement
with the SEC.
P To exclude amortization of deferred stock-based compensation.
Q To exclude charges relating to restructuring.
R To exclude patent settlement costs
S To exclude gains/losses on strategic investments.
T Diluted shares are equal to Symantec historical shares plus VERITAS
historical shares multiplied by the exchange ratio of 1.1242.
SYMANTEC CORPORATION
Reconciliation of GAAP Revenue Components to Non-GAAP Revenue Components
(In thousands, except per share data)
(Unaudited)
Three Months Ended March, 2006
------------------------------------
GAAP Non-GAAP
Symantec Adjustments Non-GAAP
----------- -------- - -----------
Net Revenues (1) $ 1,238,560 $ 61,307 A $ 1,299,867
Revenue By Segment:
Enterprise Security $ 287,494 $ - A $ 287,494
Storage and Server Management $ 275,079 $ 25,021 A $ 300,100
Data Protection $ 269,306 $ 32,541 A $ 301,847
Services $ 44,193 $ 3,751 A $ 47,944
Consumer $ 362,605 $ - A $ 362,605
Other $ (117) $ (6) A $ (123)
Revenue by Geography:
Americas $ 673,832 $ 40,648 A $ 714,480
EMEA $ 399,524 $ 15,315 A $ 414,839
Asia Pacific/Japan $ 165,204 $ 5,344 A $ 170,548
Total International Revenue $ 627,198 $ 22,842 A $ 650,040
Three Months Ended March 31, 2005
--------------------------------------------
GAAP GAAP Non-GAAP Combined
Symantec* VERITAS** Adjustments Non-GAAP
--------- --------- - ---------- -----------
Net Revenues (1) $ 712,678 $ 574,435 B $ - $ 1,287,113
Revenue By Segment:
Enterprise Security $ 263,981 $ - B $ - $ 263,981
Storage and Server Management $ 76,764 $ 217,832 B $ - $ 294,596
Data Protection $ - $ 326,333 B $ - $ 326,333
Services $ 11,093 $ 30,189 B $ - $ 41,282
Consumer $ 360,914 $ - B $ - $ 360,914
Other $ (74) $ 81 B $ - $ 7
Revenue by Geography:
Americas $ 382,995 $ 345,680 B $ - $ 728,675
EMEA $ 229,040 $ 172,242 B $ - $ 401,282
Asia Pacific/Japan $ 100,643 $ 56,513 B $ - $ 157,156
Total International Revenue $ 370,771 $ 250,223 B $ - $ 620,994
NOTES:
The above information reflects the combined results of Symantec Corporation
("Symantec") and VERITAS Software Corporation ("VERITAS"), which was
acquired by Symantec as of July 2, 2005. For comparative purposes, the
information presented assumes that the acquisition took place on April 1,
2004. If the acquisition had taken place on April 1, 2004, the fair value
of deferred revenue would have been different and actual net revenues would
have been different from the amounts presented above. These non-GAAP
financial measures are not prepared in accordance with generally accepted
accounting principles and may be different from non-GAAP financial measures
used by other companies. Non-GAAP financial measures should not be
considered a substitute for, or superior to, measures of financial
performance prepared in accordance with GAAP.
(*) Net revenues include Symantec's net revenues for the three months
ended March 31, 2005.
(**) Net revenues include VERITAS' net revenues for the three months ended
December 31, 2004.
Footnotes:
1 Symantec includes these non-GAAP financial measures because we believe
these measures are useful to investors in that they allow for greater
transparency to certain line items in our financial statements. We have
historically reported similar non-GAAP financial measures to our
investors and believe that the inclusion of comparative numbers provides
consistency in our financial reporting. Investors are encouraged to
review the reconciliation of the non-GAAP financial measures to the most
directly comparable GAAP financial measures as provided herein.
A To include VERITAS' deferred revenue that was excluded as a result of
adjustments to fair value.
B To include VERITAS' historical results of operations for the three
months ended December 31, 2004.
SYMANTEC CORPORATION
Consolidated Balance Sheets
(In thousands, except per share data)
March 31,
--------------------------
2006 2005
------------ ------------
(unaudited)
ASSETS
Current assets:
Cash and short-term investments $ 2,865,802 $ 3,206,587
Trade accounts receivable, net 670,937 285,325
Inventories 48,687 19,118
Current deferred income taxes 148,968 97,279
Other current assets 190,673 79,973
------------ ------------
Total current assets 3,925,067 3,688,282
Property and equipment, net 946,217 382,689
Acquired product rights, net 1,238,511 127,619
Other intangible assets, net 1,440,873 30,739
Goodwill 10,331,045 1,365,213
Other long-term assets 37,053 19,679
------------ ------------
$ 17,918,766 $ 5,614,221
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Convertible subordinated notes $ 512,800 $ -
Accounts payable 167,135 74,685
Accrued compensation and benefits 277,170 140,543
Current deferred revenue 1,915,179 1,215,537
Other accrued expenses 185,882 91,033
Income taxes payable 454,753 179,225
------------ ------------
Total current liabilities 3,512,919 1,701,023
Long-term deferred revenue 248,273 114,724
Long-term deferred tax liabilities 464,187 88,613
Other long-term obligations 24,916 4,408
Stockholders' equity:
Common stock 10,409 7,105
Capital in excess of par value 12,426,690 2,412,947
Accumulated other comprehensive income 146,810 191,938
Deferred stock-based compensation (43,595) (21,070)
Retained earnings 1,128,157 1,114,533
------------ ------------
Total stockholders' equity 13,668,471 3,705,453
------------ ------------
$ 17,918,766 $ 5,614,221
============ ============
MEDIA CONTACT: SOURCE: Symantec mailto:glhaldeman@symantec.com |