Press Release Details

Symantec Reports Fourth Quarter and Fiscal Year 2016 Results

05/12/2016
  • As pre-announced, revenue of $873 million, non-GAAP operating margin of 25% and EPS of $0.22
  • $400 million efficiency program underway to accelerate next phase of margin expansion

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)-- Symantec Corp. (NASDAQ: SYMC) today reported the results of its fourth quarter and fiscal year 2016, ended April 1, 2016.

“Symantec’s unified security strategy leverages the unmatched understanding we have about global, real-time threats and puts this knowledge to work to better protect our customers,” said Michael A. Brown, Symantec CEO. “To complement this strategy, we’re bringing more than a dozen new products to market in 2016 enabling us to grow our enterprise security business. Our most recent product release, Symantec Advanced Threat Protection, just surpassed 1.2 million endpoint subscriptions in its first full quarter of availability making it one of the most successful new products in our history.”

“We’re making significant progress on our $400 million efficiency program by executing against eight work streams that include eliminating stranded costs from the Veritas divestiture, rationalizing corporate infrastructure and simplifying our Enterprise Security portfolio,” said Thomas Seifert, Symantec CFO. “These actions will create a stronger and more nimble Symantec, supporting both higher operating margins in the future as well as a business model that is more subscription-based.”

Results for the Fourth Quarter of Fiscal Year 2016 (Dollars in millions, except EPS)

      4Q16   4Q15      

Reported Y/Y
Change

 

FX Adjusted
Y/Y Change

GAAP                      
Revenue     $873   $899       (3%)   (2%)
Operating Margin     14.7%   (5.5%)       2,020 bps   1,930 bps
Net Income    

$2,045

  $176      

1,062%

  N/A
Deferred Revenue     $2,638   $2,871       (8%)   (9%)
EPS (Diluted)    

$3.15

  $0.25      

1,160%

  N/A
CFFO     $292   $488       (40%)   N/A
Non-GAAP                      
Revenue     $873   $929       (6%)   (6%)
Operating Margin     24.5%   31.1%       (660) bps   (740) bps
Net Income     $147   $203       (28%)   N/A
EPS (Diluted)     $0.22   $0.29       (24%)   N/A
             

Results for Fiscal Year 2016 (Dollars in millions, except EPS)

      FY16   FY15      

Reported Y/Y
Change

 

FX Adjusted
Y/Y Change

GAAP                      
Revenue     $3,600   $3,956       (9%)   (4%)
Operating Margin     12.7%   3.9%       880 bps   1,020 bps
Net Income    

$2,488

  $878      

183%

  N/A
Deferred Revenue     $2,638   $2,871       (8%)   (9%)
EPS (Diluted)    

$3.71

  $1.26      

194%

  N/A
CFFO     $838   $1,312       (36%)   N/A
Non-GAAP                      
Revenue     $3,600   $3,986       (10%)   (5%)
Operating Margin     28.5%   32.7%       (420) bps   (340) bps
Net Income     $698   $908       (23%)   N/A
EPS (Diluted)     $1.03   $1.30       (21%)   N/A
             

First Quarter and Fiscal Year 2017 Guidance (Dollars in millions, except EPS and FX rate)

      1Q17  

FX Adj. Y/Y
Growth

      FY17  

FX Adj. Y/Y
Growth

GAAP                      
Revenue     $865 - $895   (6%) – (3%)       $3,490 - $3,580   (4%) – (1%)
Enterprise Security     $465 - $480   (4%) – (1%)       $1,910 - $1,950   (2%) – 0%
Consumer Security     $400 - $415   (8%) – (5%)       $1,580 - $1,630   (6%) – (3%)
Operating Margin     10.0% - 12.5%           12.0% - 13.5%    
EPS (Diluted)     $0.17 - $0.19           $0.69 - $0.73    
Non-GAAP                      
Operating Margin     24.5% - 26.5%           26.5% - 27.5%    
EPS (Diluted)     $0.24 - $0.26           $1.06 - $1.10    
Tax Rate     27.5%           27.5%    
Share Count     621 million           594 million    
FX Rate (€/$)     $1.13           $1.13    
             

In line with Symantec’s previous capital structure plans, the company has returned $4.2 billion of the previously announced $5.5 billion capital return program related to the sale of Veritas. The company will return the remaining $1.3 billion by the end of the current fiscal year. Symantec announced today that to support its capital structure plans, it has entered into a $2 billion credit facility, including a $1 billion refinancing of our revolver and a new $1 billion prepayable term loan.

Symantec's Board of Directors has declared a quarterly cash dividend of 7.5 cents per common share to be paid on June 22, 2016 to all shareholders of record as of the close of business on June 8, 2016. The ex-dividend date will be June 6, 2016.

Conference Call

Symantec has scheduled a conference call for 5 p.m. ET/2 p.m. PT today to discuss its fourth quarter and fiscal year 2016 results, ended April 1, 2016 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 website at least 15 minutes early to register, download and install any necessary audio software. A replay and our prepared remarks will be available on the investor relations home page shortly after the call is completed.

About Symantec

Symantec Corporation (NASDAQ: SYMC) is the global leader in cybersecurity. Operating one of the world’s largest cyber intelligence networks, we see more threats, and protect more customers from the next generation of attacks. We help companies, governments and individuals secure their most important data wherever it lives.

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.

Symantec, the Symantec Logo and the Checkmark 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 forward-looking statements regarding our projected financial and business results, projections of future revenue, operating margin and earnings per share, cost reduction efforts as well as statements regarding the Company’s roadmap and pipeline. 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 Company’s future financial performance; general economic conditions; maintaining customer and partner relationships; the competitive environment in the software industry, fluctuations in tax rates and 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 section of our Form 10-K for the year ended April 3, 2015.

USE OF NON-GAAP FINANCIAL INFORMATION: Our results of operations have undergone significant change due to the impact of litigation accruals, discontinued operations including the gain on the sale of Veritas, stock-based compensation, restructuring, transition and separation matters, charges related to the amortization of intangible assets, and certain other income and expense items that management considers unrelated to the Company’s core operations. 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. Non-GAAP financial measures are supplemental, should not be considered a substitute for financial information presented in accordance with GAAP and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management team uses these non-GAAP financial measures in assessing Symantec’s operating results, as well as when planning, forecasting and analyzing 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 website at: http://www.symantec.com/invest.

 
 

SYMANTEC CORPORATION

Consolidated Balance Sheets (1)

(Dollars in millions, unaudited)
 
 

April 1, 2016

 

April 3, 2015

 
ASSETS
 
Current assets:
Cash and cash equivalents $ 5,983 $ 2,843
Short-term investments 42 1,017
Accounts receivable, net 556 700
Deferred income taxes - 152
Other current assets 378 295
Current assets of discontinued operations   -     415
Total current assets   6,959     5,422
 
Property and equipment, net 957 950
Intangible assets, net 443 525
Goodwill 3,148 3,146
Equity investments 157 10
Other long-term assets 103 70
Long-term assets of discontinued operations   -     3,110
Total assets $ 11,767   $ 13,233
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
Accounts payable $ 175 $ 169
Accrued compensation and benefits 219 232
Deferred revenue 2,279 2,427
Current portion of long-term debt - 350
Income taxes payable 941 47
Other current liabilities 419 292
Current liabilities of discontinued operations   -     936
Total current liabilities   4,033     4,453
 
Long-term debt 2,207 1,746
Long-term deferred revenue 359 444
Long-term deferred tax liabilities 1,235 308
Long-term income taxes payable 160 134
Other long-term obligations 97 79
Long-term liabilities of discontinued operations   -     134
Total liabilities   8,091     7,298
     
Total stockholders' equity   3,676     5,935
Total liabilities and stockholders' equity $ 11,767   $ 13,233
 
(1) This presentation reflects the assets and liabilities of discontinued operations associated with the divestiture of our information management business. Please see Appendix A for further information.
 
 
 
SYMANTEC CORPORATION
Consolidated Statements of Operations (1)
(In millions, except per share data, unaudited)
 
 

 

Year-Over-Year

Three Months Ended

 

Growth Rate

April 1,

 

April 3,

 

Constant

2016

 

2015

 

Actual

 

Currency (2)

 
Net revenues $ 873 $ 899 -3 % -2 %
Costs of revenues   147       176     -16 %   -15 %
Gross profit   726       723     0 %   1 %
 
Operating expenses:
Sales and marketing 308 385
Research and development 177 208
General and administrative 77 86
Amortization of intangible assets 16 21
Restructuring, separation, and transition   20       72          
Total operating expenses   598       772     -23 %   -22 %
Operating income (loss)   128       (49 )
 
Interest income 4 2
Interest expense (19 ) (19 )
Other income, net   3       8  
Income (loss) from continuing operations before income taxes   116       (58 )
Income tax expense (benefit)   1,129       (113 )
Income (loss) from continuing operations (1,013 ) 55
Income from discontinued operations, net of income taxes  

3,058

      121          
Net income $

2,045

    $ 176    

1062

%   N/A  
 
Income (loss) per share – basic:
Continuing operations $ (1.56 ) $ 0.08
Discontinued operations

4.70

0.18
Net income (loss) per share -- basic

3.15

0.26
 
Income (loss) per share – diluted:
Continuing operations $ (1.56 ) $ 0.08
Discontinued operations

4.70

0.17
Net income (loss) per share -- diluted

3.15

0.25
 
Weighted-average shares outstanding -- basic 650 684
 
Weighted-average shares outstanding -- diluted 650 693
 
Cash dividends declared per common share   $ 4.15     $ 0.15          
(1) This presentation reflects the discontinued operations associated with the divestiture of our information management business. Please see Appendix A for further information.
(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
Consolidated Statements of Operations (1)
(In millions, except per share data, unaudited)
 
      Year-Over-Year
Year Ended       Growth Rate (2)
April 1, April 3,   Constant
 

2016

     

2015

    Actual   Currency (3)
 
Net revenues $ 3,600 $ 3,956 -9 % -4 %
Costs of revenues   615       727     -15 %   -12 %
Gross profit   2,985       3,229     -8 %   -3 %
 
Operating expenses:
Sales and marketing 1,292 1,650
Research and development 748 812
General and administrative 295 362
Amortization of intangible assets 57 87
Restructuring, separation, and transition   136       164          
Total operating expenses   2,528       3,075     -18 %   -15 %
Operating income   457       154     197 %   244 %
 
Interest income 10 11
Interest expense (75 ) (78 )
Other income, net   -       14          
Income from continuing operations before income taxes   392       101     288 %   N/A  
Income tax expense (benefit)   1,213       (8 )  
Income (loss) from continuing operations (821 ) 109
Income from discontinued operations, net of income taxes  

3,309

      769          
Net income $

2,488

    $ 878    

183

%   N/A  
 
Income (loss) per share -- basic:
Continuing operations $ (1.23 ) $ 0.16
Discontinued operations

4.94

1.12
Net income per share – basic (4)

3.71

1.27
 
Income (loss) per share -- diluted:
Continuing operations $ (1.23 ) $ 0.16
Discontinued operations

4.94

1.10
Net income per share – diluted

3.71

1.26
 

Weighted-average shares outstanding -- basic

670 689
 
Weighted-average shares outstanding -- diluted 670 696
 
Cash dividends declared per common share   $ 4.60     $ 0.60          
(1) This presentation reflects the discontinued operations associated with the divestiture of our information management business. Please see Appendix A for further information.
(2) We have a 52/53 week fiscal accounting year. The twelve months ended April 1, 2016 consisted of 52 weeks, whereas the twelve months ended April 3, 2015 consisted of 53 weeks.
(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.
(4) Net income per share amounts may not add due to rounding.
 
 
 
SYMANTEC CORPORATION
Consolidated Statements of Cash Flows (1)
(Dollars in millions, unaudited)
 
 

Year Ended

April 1, 2016

 

April 3, 2015

 
OPERATING ACTIVITIES:
Net income $

2,488

$ 878
Income from discontinued operations, net of income taxes

(3,309

) (769 )
Adjustments to reconcile income from continuing operations to net cash provided by (used in) continuing operating activities:
Depreciation 213 229
Amortization of intangible assets 86 122
Amortization of debt issuance costs and discounts 5 4
Stock-based compensation expense 161 131
Deferred income taxes 1,082 (29 )
Excess income tax benefit from the exercise of stock options (6 ) (10 )
Other 13 8
Net change in assets and liabilities, excluding effects of acquisitions:
Accounts receivable, net 38 (35 )
Accounts payable (69 ) (73 )
Accrued compensation and benefits (7 ) 7
Deferred revenue 20 (83 )
Income taxes payable 693 (405 )
Other assets - 16
Other liabilities   92       26  
Net cash provided by continuing operating activities 1,500 17
Net cash provided by (used in) discontinued operating activities   (662 )     1,295  
Net cash provided by operating activities   838       1,312  
 
INVESTING ACTIVITIES:
Purchases of property and equipment (272 ) (303 )
Payments for acquisitions, net of cash acquired, and purchases of intangibles (4 ) (39 )
Purchases of short-term investments (378 ) (1,758 )
Proceeds from maturities of short-term investments 1,056 681

Proceeds from sales of short-term investments

299 343

Proceeds received from divestiture of information management business, net of cash contributed and transaction costs

  6,499       -  
Net cash provided by (used in) continuing investing activities 7,200 (1,076 )
Net cash used in discontinued investing activities   (63 )     (78 )
Net cash provided by (used in) investing activities   7,137       (1,154 )
 
FINANCING ACTIVITIES:
Repayments of debt and other obligations (368 ) (21 )
Proceeds from issuance of Convertible Senior Notes, net of issuance costs 494 -
Net proceeds from sales of common stock under employee stock benefit plans 65 116
Excess income tax benefit from the exercise of stock options 6 10
Tax payments related to restricted stock units (39 ) (36 )
Dividends and dividend equivalents paid (3,030 ) (413 )
Repurchases of common stock (1,868 ) (500 )
Proceeds from other financing, net   -       44  
Net cash used in continuing financing activities (4,740 ) (800 )
Net cash used in discontinued financing activities   (30 )     (11 )
Net cash used in financing activities   (4,770 )     (811 )
 
Effect of exchange rate fluctuations on cash and cash equivalents   (96 )     (180 )
Change in cash and cash equivalents 3,109 (833 )
Beginning cash and cash equivalents   2,874       3,707  
Ending cash and cash equivalents 5,983 2,874
Less: Cash and cash equivalents of discontinued operations   -       31  
Cash and cash equivalents of continuing operations $ 5,983     $ 2,843  
Equity investment received from divestiture of the information management business $ 149 $ -
Income taxes paid, net of refunds $ 265 $ 353
Interest expense paid   $ 70     $ 75  
(1) This presentation reflects the discontinued operations associated with the divestiture of our information management business. Please see Appendix A for further information.
 
 
 
SYMANTEC CORPORATION

Reconciliation of Selected GAAP Measures to Non-GAAP Measures (1)

(In millions, except per share data, unaudited)
 
    Year-Over-Year
Three Months Ended  

Non-GAAP Growth Rate

April 1, 2016   April 3, 2015   Constant
GAAP   Adj   Non-GAAP   GAAP   Adj   Non-GAAP   Actual   Currency (2)
         
Net revenues $ 873     $ -     $ 873     $ 899     $ 30     $ 929     -6 %   -6 %
 
Gross profit: $ 726 $ 9 $ 735 $ 723 $ 52 $ 775 -5 % -5 %
EDS & NDI contingency - 30
Unallocated corporate charges (3) - 10
Stock-based compensation 3 3
Amortization of intangible assets       6               9              
 
Gross margin %   83.2 %     1.0 %     84.2 %     80.4 %     3.0 %     83.4 %   80 bps   50 bps
 
Operating expenses: $ 598 $ 77 $ 521 $ 772 $ 286 $ 486 7 % 9 %
Unallocated corporate charges (3) - 159
Stock-based compensation 40 34
Amortization of intangible assets 16 21
Restructuring, separation, and transition       20               72              
 
Operating expenses as a % of revenue   68.5 %     -8.8 %     59.7 %     85.9 %     -33.6 %     52.3 %   740 bps   800 bps
 
Operating income (loss) $ 128     $ 86     $ 214     $ (49 )   $ 338     $ 289     -26 %   -28 %
 
Operating margin %   14.7 %     9.8 %     24.5 %     -5.5 %     36.6 %     31.1 %   -660 bps   -740 bps
 
Net income: $

2,045

$

(1,898

) $

147

$ 176 $ 27 $ 203 -28 % N/A
Gross profit adjustment 9 52
Operating expense adjustment 77 286
Income tax effects and adjustments 1,074 (190 )
Income from discontinued operations, net of taxes      

(3,058

)             (121 )            
 
Diluted income (loss) per share:
Income (loss) per share from continuing operations $ (1.56 ) $ 1.78 $ 0.22 $ 0.08 $ 0.21 $ 0.29
Income (loss) per share from discontinued operations

4.70

(4.70

) - 0.17 (0.17 ) -
Diluted net income per share  

3.15

     

(2.93

)     0.22       0.25       0.04       0.29     -24 %   N/A  
 
Diluted weighted-average shares outstanding     650       6       656       693       -       693     -5 %   N/A  
(1) This presentation reflects the discontinued operations associated with the divestiture of our information management business. Please see Appendix A for further information.
(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.
(3) This item consists of charges previously allocated to our discontinued information management business. Please see Appendix A for further information.
 
 
 
SYMANTEC CORPORATION
Reconciliation of Selected GAAP Measures to Non-GAAP Measures (1)
(In millions, except per share data, unaudited)
 
    Year-Over-Year
Year Ended  

Non-GAAP Growth Rate

April 1, 2016   April 3, 2015   Constant
GAAP   Adj   Non-GAAP   GAAP   Adj   Non-GAAP   Actual   Currency (2)
         
Net revenues $ 3,600     $ -     $ 3,600     $ 3,956     $ 30     $ 3,986     -10 %   -5 %
 
Gross profit: $ 2,985 $ 60 $ 3,045 $ 3,229 $ 121 $ 3,350 -9 % -5 %
EDS & NDI contingency - 30
Unallocated corporate charges (3) 22 41
Stock-based compensation 10 15
Amortization of intangible assets       28               35              
 
Gross margin %   82.9 %     1.7 %     84.6 %     81.6 %     2.4 %     84.0 %   60 bps   40 bps
 
Operating expenses: $ 2,528 $ 509 $ 2,019 $ 3,075 $ 1,030 $ 2,045 -1 % 2 %
Unallocated corporate charges (3) 164 663
Stock-based compensation 151 116
Amortization of intangible assets 57 87
Restructuring, separation, and transition       136               164              
 
Operating expenses as a % of revenue   70.2 %     -14.1 %     56.1 %     77.7 %     -26.4 %     51.3 %   480 bps   380 bps
 
Operating income $ 457     $ 569     $ 1,026     $ 154     $ 1,151     $ 1,305     -21 %   -15 %
 
Operating margin %   12.7 %     15.8 %     28.5 %     3.9 %     28.8 %     32.7 %   -420 bps   -340 bps
 
Net income: $

2,488

$

(1,790

) $ 698 $ 878 $ 30 $ 908 -23 % N/A
Gross profit adjustment 60 121
Operating expense adjustment 509 1,030
Income tax effects and adjustments 950 (352 )
Income from discontinued operations, net of taxes      

(3,309

)             (769 )            
 
Diluted income (loss) per share:
Diluted income (loss) per share from continuing operations $ (1.23 ) $ 2.26 $ 1.03 $ 0.16 $ 1.15 $ 1.30
Diluted income (loss) per share from discontinued operations

4.94

(4.94

) - 1.10 (1.10 ) -
Diluted net income per share (4)  

3.71

     

(2.68

)     1.03       1.26       0.04       1.30     -21 %   N/A  
 
Diluted weighted-average shares outstanding     670       6       676       696       -       696     -3 %   N/A  
(1) This presentation reflects the discontinued operations associated with the divestiture of our information management business. Please see Appendix A for further information.
(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.
(3) This item consists of charges previously allocated to our discontinued information management business. Please see Appendix A for further information.
(4) Net income (loss) per share amounts may not add due to rounding.
 
 
 
SYMANTEC CORPORATION
Revenue and Deferred Revenue Detail (1)
(Dollars in millions, unaudited)
 
  Three Months Ended
April 1, 2016   April 3, 2015
    GAAP   Adj   Non-GAAP   GAAP  

Adj (2)

  Non-GAAP
Revenues    
Content, subscription, and maintenance, and other $ 849   $ -   $ 849   $ 861   $ 30   $ 891
License     24       -       24       38       -       38  
Total Revenues   $ 873     $ -     $ 873     $ 899     $ 30     $ 929  
Revenues - Y/Y Growth Rate                              
Content, subscription, and maintenance, and other (3) -1 % -4 % -5 % * * *
License (3)     -37 %     0 %     -37 %   *     *     *  
Total Y/Y Growth Rate     -3 %     -3 %     -6 %     -12 %     1 %     -11 %
Revenues - Y/Y Growth Rate in Constant Currency (4)                              
Content, subscription, and maintenance, and other (3) -1 % -3 % -4 % * * *
License (3)     -37 %     0 %     -37 %   *     *     *  
Total Y/Y Growth Rate in Constant Currency (4)     -2 %     -4 %     -6 %     -6 %     1 %     -5 %
                               
Revenues by Segment                              
Consumer Security $ 406 $ - $ 406 $ 408 $ 30 $ 438
Enterprise Security     467       -       467       491       -       491  
Revenues by Segment - Y/Y Growth Rate                              
Consumer Security 0 % -7 % -7 % -19 % 6 % -13 %
Enterprise Security     -5 %     0 %     -5 %     -8 %     -2 %     -10 %
Revenues by Segment - Y/Y Growth Rate in Constant Currency (4)                              
Consumer Security 0 % -7 % -7 % -13 % 6 % -7 %
Enterprise Security     -4 %     0 %     -4 %     1 %     -5 %     -4 %
                               
Revenues by Geography                              
International $ 417 $ - $ 417 $ 445 $ - $ 445
U.S. 456 - 456 454 30 484
Americas (U.S., Latin America, Canada) 506 - 506 513 30 543
EMEA 217 - 217 230 - 230
Asia Pacific & Japan     150       -       150       156       -       156  
Revenues by Geography - Y/Y Growth Rate                              
International -6 % 0 % -6 % -17 % 0 % -17 %
U.S. 0 % -6 % -6 % -7 % 2 % -5 %
Americas (U.S., Latin America, Canada) -1 % -6 % -7 % -7 % 1 % -6 %
EMEA -6 % 0 % -6 % -20 % 0 % -20 %
Asia Pacific & Japan     -4 %     0 %     -4 %     -13 %     0 %     -13 %
Revenues by Geography - Y/Y Growth Rate in Constant Currency (4)                              
International -5 % 0 % -5 % -5 % 0 % -5 %
U.S. 0 % -6 % -6 % -7 % 3 % -4 %
Americas (U.S., Latin America, Canada) -1 % -6 % -7 % -8 % 3 % -5 %
EMEA -4 % 0 % -4 % -4 % 0 % -4 %
Asia Pacific & Japan     -4 %     0 %     -4 %     -4 %     0 %     -4 %
                               
Deferred Revenue   $ 2,638             $ 2,871              
(1) This presentation reflects the discontinued operations associated with the divestiture of our information management business. Please see Appendix A for further information.
(2) The revenue adjustment relates to the EDS & NDI contingency. Please see Appendix A for more details.
(3) Growth rates for the three months ended April 3, 2015 are not meaningful.
(4) 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. 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.
 
 
 
SYMANTEC CORPORATION
Operating Margin by Segment Detail (1)
(Dollars in millions, unaudited)
 
  Three Months Ended
April 1, 2016   April 3, 2015
    GAAP   GAAP  

Adj (2)

  Non-GAAP
Operating Income by Segment                
Consumer Security $ 217   $ 212   $ 30   $ 242
Enterprise Security     (3 )     47       -       47  
Total Operating Income by Segment     214       259       30       289  
Reconciling Items:
Unallocated corporate charges (3) - 169 (169 ) -
Stock-based compensation 43 37 (37 ) -
Amortization of intangible assets 23 30 (30 ) -
Restructuring, separation, and transition     20       72       (72 )     -  
Total Consolidated Operating Income (Loss)   $ 128     $ (49 )   $ 338     $ 289  
                 
Operating Margin by Segment                
Consumer Security 53 % 52 % 3 % 55 %
Enterprise Security     -1 %     10 %     0 %     10 %
(1) This presentation reflects the discontinued operations associated with the divestiture of our information management business. Please see Appendix A for further information.
(2) The revenue adjustment relates to the EDS & NDI contingency. Please see Appendix A for further information.
(3) This item consists of costs previously allocated to our discontinued information management business. Please see Appendix A for further information.
 
 
 
SYMANTEC CORPORATION

Revenue and Deferred Revenue Detail (1) (2)

(Dollars in millions, unaudited)
 
  Year Ended
April 1, 2016   April 3, 2015
    GAAP   Adj   Non-GAAP   GAAP    

Adj (3)

    Non-GAAP
Revenues                              
Content, subscription, and maintenance, and other $ 3,470   $ -   $ 3,470   $ 3,827   $ 30   $ 3,857
License     130       -       130       129       -       129  
Total Revenues   $ 3,600     $ -     $ 3,600     $ 3,956     $ 30     $ 3,986  
Revenues - Y/Y Growth Rate                              
Content, subscription, and maintenance, and other (4) -9 % -1 % -10 % * * *
License (4)     1 %     0 %     1 %   *     *     *  
Total Y/Y Growth Rate     -9 %     -1 %     -10 %     -5 %     0 %     -5 %
Revenues - Y/Y Growth Rate in Constant Currency (5)                              
Content, subscription, and maintenance, and other (4) -5 % 0 % -5 % * * *
License (4)     4 %     0 %     4 %   *     *     *  
Total Y/Y Growth Rate in Constant Currency (5)     -4 %     -1 %     -5 %     -3 %     0 %     -3 %
                               
Revenues by Segment                              
Consumer Security $ 1,670 $ - $ 1,670 $ 1,887 $ 30 $ 1,917
Enterprise Security     1,930       -       1,930       2,069       -       2,069  
Revenues by Segment - Y/Y Growth Rate                              
Consumer Security -11 % -2 % -13 % -9 % 2 % -7 %
Enterprise Security     -7 %     0 %     -7 %     -3 %     -1 %     -4 %
Revenues by Segment - Y/Y Growth Rate in Constant Currency (5)                              
Consumer Security -7 % -2 % -9 % -6 % 1 % -5 %
Enterprise Security     -2 %     0 %     -2 %     0 %     -1 %     -1 %
                               
Revenues by Geography                              
International $ 1,703 $ - $ 1,703 $ 1,996 $ - $ 1,996
U.S. 1,897 - 1,897 1,960 30 1,990
Americas (U.S., Latin America, Canada) 2,113 - 2,113 2,214 30 2,244
EMEA 894 - 894 1,065 - 1,065
Asia Pacific & Japan     593       -       593       677       -       677  
Revenues by Geography - Y/Y Growth Rate                              
International -15 % 0 % -15 % -6 % 0 % -6 %
U.S. -3 % -2 % -5 % -4 % 0 % -4 %
Americas (U.S., Latin America, Canada) -5 % -1 % -6 % -4 % 0 % -4 %
EMEA -16 % 0 % -16 % -6 % 0 % -6 %
Asia Pacific & Japan     -12 %     0 %     -12 %     -8 %     0 %     -8 %
Revenues by Geography - Y/Y Growth Rate in Constant Currency (5)                              
International -6 % 0 % -6 % -2 % 0 % -2 %
U.S. -3 % -2 % -5 % -4 % 0 % -4 %
Americas (U.S., Latin America, Canada) -5 % -1 % -6 % -4 % 0 % -4 %
EMEA -5 % 0 % -5 % -1 % 0 % -1 %
Asia Pacific & Japan     -5 %     0 %     -5 %     -3 %     0 %     -3 %
                               
Deferred Revenue   $ 2,638             $ 2,871              
(1) This presentation reflects the discontinued operations associated with the divestiture of our information management business. Please see Appendix A for further information.
(2) We have a 52/53 week fiscal accounting year. The twelve months ended April 1, 2016 consisted of 52 weeks, whereas the twelve months ended April 3, 2015 consisted of 53 weeks.
(3) The revenue adjustment relates to the EDS & NDI contingency. Please see Appendix A for more details.
(4) Growth rates for the year ended April 3, 2015 are not meaningful.
(5) 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. 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.
 
 
 
SYMANTEC CORPORATION

Operating Margin by Segment Detail (1)

(Dollars in millions, unaudited)
 
  Year Ended
April 1, 2016   April 3, 2015
    GAAP   GAAP  

Adj (2)

  Non-GAAP
Operating Income by Segment                
Consumer Security $ 924   $ 982   $ 30   $ 1,012
Enterprise Security     102       293       -       293  
Total Operating Income by Segment     1,026       1,275       30       1,305  
Reconciling Items:
Unallocated corporate charges (3) 186 704 (704 ) -
Stock-based compensation 161 131 (131 ) -
Amortization of intangible assets 86 122 (122 ) -
Restructuring, separation, and transition     136       164       (164 )     -  
Total Consolidated Operating Income   $ 457     $ 154     $ 1,151     $ 1,305  
                 
Operating Margin by Segment                
Consumer Security 55 % 52 % 1 % 53 %
Enterprise Security     5 %     14 %     0 %     14 %
(1) This presentation reflects the discontinued operations associated with the divestiture of our information management business. Please see Appendix A for further information.

(2) The revenue adjustment relates to the EDS & NDI contingency. Please see Appendix A for further information.

(3) This item consists of costs previously allocated to our discontinued information management business. Please see Appendix A for further information.
 
 
SYMANTEC CORPORATION
Guidance and Reconciliation of GAAP to Non-GAAP Operating Margin and Earnings Per Share (1)
(Dollars in millions, except per share data, unaudited)
     
First Quarter Fiscal Year 2017

 

Three Months Ended July 1, 2016
Year-Over-Year Growth Rate

Revenue Guidance (2)

Range Actual

Constant Currency (3)

Revenue range $865 - $895 (5%) - (2%) (6%) - (3%)
Three Months Ended July 1, 2016
Year-Over-Year Increase
Operating Margin Guidance and Reconciliation (2) Range Actual

Constant Currency (3)

GAAP operating margin 10.0% - 12.5% -- --
Add back:
Stock-based compensation 5.5%
Other non-GAAP adjustments 8.5% - 9.0%
Non-GAAP operating margin 24.5% - 26.5% -- --
Three Months Ended July 1, 2016
Year-Over-Year Growth Rate
Earnings Per Share Guidance and Reconciliation Range Actual
GAAP diluted earnings per share range $0.17 - $0.19 --
Add back:
Stock-based compensation, net of taxes $0.05
Other non-GAAP adjustments, net of taxes $0.02
Non-GAAP diluted earnings per share range $0.24 - $0.26 --
 
 

Fiscal Year 2017

 

Year Ended March 31, 2017
Year-Over-Year Growth Rate

Revenue Guidance (2)

Range Actual

Constant Currency (3)

Revenue range $3,490 - $3,580 (3%) - (1%) (4%) - (1%)
Year Ended March 31, 2017
Year-Over-Year Increase
Operating Margin Guidance and Reconciliation (2) Range Actual

Constant Currency (3)

GAAP operating margin 12.0% - 13.5% -- --
Add back:
Stock-based compensation 5.5%
Other non-GAAP adjustments 8.5% - 9.0%
Non-GAAP operating margin 26.5% - 27.5% -- --
Year Ended March 31, 2017
Year-Over-Year Growth Rate
Earnings Per Share Guidance and Reconciliation Range Actual
GAAP diluted earnings per share range $0.69 - $0.73 --
Add back:
Stock-based compensation, net of taxes $0.24
Other non-GAAP adjustments, net of taxes $0.13
Non-GAAP diluted earnings per share range $1.06 - $1.10 --
 

(1) This presentation includes non-GAAP measures. Non-GAAP financial measures are supplemental and should not be considered a substitute for financial information presented in accordance with GAAP. For a detailed explanation of these non-GAAP measures, please see Appendix A.

(2) These figures represent guidance for our continuing operations and include our security business, which consists of Enterprise Security and Consumer Security segments.

(3) Management refers to growth rates adjusting for currency fluctuations in foreign currency exchange rates so that the business results can be viewed without the impact of these fluctuations. We compare the percent change of the results from one period to another period in order to provide a consistent 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.

 

SYMANTEC CORPORATION

Explanation of Non-GAAP Measures

Appendix A

Objective of non-GAAP measures: We believe our presentation of non-GAAP financial measures, when taken together with corresponding GAAP financial measures, provides meaningful supplemental information regarding the Company’s operating performance for the reasons discussed below. Our management team uses these non-GAAP financial measures in assessing the Company’s 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 Company’s performance to prior periods and to our peers and that investors benefit from an understanding of the non-GAAP financial measures. Non-GAAP financial measures are supplemental and should not be considered a substitute for financial information presented in accordance with GAAP.

Discontinued operations: In August 2015, we entered into a definitive agreement to sell the assets of our information management business (“Veritas”) to Carlyle. In January 2016, the Company and Carlyle amended the terms of the purchase agreement for Carlyle's acquisition of the information management business, Veritas. The transaction closed on January 29, 2016. The results of Veritas are presented as discontinued operations in our Consolidated Statements of Operations and thus have been excluded from continuing operations and segment results for all reported periods. Furthermore, Veritas' assets and liabilities were removed from our Consolidated Balance Sheet as of April 1, 2016, and have been classified as discontinued operations on our Consolidated Balance Sheet as of April 3, 2015.

Gain on sale of Veritas: The Company's management excludes this gain when evaluating its ongoing performance and therefore has excluded this gain when presenting non-GAAP financial measures. Based on the amended terms of the definitive agreement, we received net consideration of $6.6 billion in cash and 40 million B common shares of Veritas and Veritas assumed certain liabilities in connection with the acquisition. The transaction closed on January 29, 2016. The disposition resulted in a net gain of $3.0 billion, which is presented as part of income from discontinued operations, net of income taxes in the Consolidated Statements of Operations for fiscal 2016.

Unallocated corporate charges: A significant portion of the segments' expenses arise from shared services and infrastructure that we have historically provided to the segments in order to realize economies of scale and to efficiently use resources. These expenses, collectively called corporate charges, include legal, accounting, real estate, information technology services, treasury, human resources and other corporate infrastructure expenses. Charges were allocated to the segments, and the allocations were determined on a basis that we consider to be a reasonable reflection of the utilization of services provided to or benefits received by the segments. Corporate charges previously allocated to our information management business, but not classified within discontinued operations, were not reallocated to our other segments. We eliminate these unallocated corporate charges from our non-GAAP operating results to facilitate a more meaningful comparison of past operating performance to current operating results.

Stock-based compensation: Consists of expenses for employee stock options, restricted stock units, performance based 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. 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 complex formulas that incorporate factors, such as market volatility, that are beyond our control.

       
Twelve Months Ended
April 1,   April 3,
2016 2015
Cost of revenue $ 10 $ 15
Sales and marketing 53 46
Research and development 56 39
General and administrative   42   31

Total continuing operations stock-based compensation

$ 161 $ 131
 

Amortization of 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 intangible assets. 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.

Income Tax Effects and Adjustments: During the third quarter of fiscal 2016, the Company adopted a projected long-term non-GAAP tax rate of 27.5% in order to provide better consistency across the interim financial reporting periods by eliminating the effects of stock based compensation, amortization of acquisition related intangibles and restructuring, separation and transition charges. Additionally, the use of a long-term projected non-GAAP tax rate will eliminate the effects of certain discontinued operations accounting policy elections and unique GAAP reporting requirements under discontinued operations as a result of the sale of the information management business. This long-term rate could be subject to change for a variety of reasons, such as significant changes in the geographic earnings mix including acquisition activity, or fundamental tax law changes in major jurisdictions where the company operates. The Company will evaluate and assess the appropriateness of this rate annually, giving due consideration to the impacts of significant events and structural changes in the Company.

Deferred taxes on foreign earnings: In the fourth quarter of fiscal 2016, the Company recorded $1.1 billion in income tax expense related to unremitted earnings of foreign subsidiaries that were formerly considered to be permanently invested in the Company's operations outside the U.S. This charge is presented in loss from continuing operations in the Consolidated Statements of Operations for the fourth quarter of fiscal 2016.

Current deferred income tax liabilities and assets: In November 2015, the FASB issued ASU No. 2015-17, Income Taxes, which simplifies the presentation of deferred income taxes by requiring that all deferred income tax liabilities and assets be classified as long-term. The standard was adopted by the Company in the fourth quarter of fiscal 2016 on a prospective basis, and it resulted in balance sheet reclassifications of current deferred income tax liabilities and assets to long-term on April 1, 2016.

SYMANTEC CORPORATION
Explanation of Non-GAAP Measures
Appendix A

Restructuring, separation, and transition: We have engaged in various restructuring, separation, and transition activities over the past several years that have resulted in costs associated with severance, facilities, transition, and other related costs. Separation and other related costs consist of consulting and disentanglement costs incurred to separate our security and information management businesses into standalone companies, as well as costs to prune selected product lines that do not fit either the Company’s growth or margin objectives. Transition and other related costs consist of consulting charges associated with the implementation of new Enterprise Resource Planning systems. Each restructuring, separation, and transition activity 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, separation, or transition activities in the ordinary course of business. While our operations previously benefited from the employees and facilities covered by our various restructuring and separation 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 and we believe that investors benefit from excluding these charges from our operating results to facilitate a more meaningful evaluation of current operating performance and comparisons to past operating performance.

Diluted GAAP and non-GAAP weighted-average shares outstanding: Diluted GAAP and non-GAAP weighted-average shares outstanding are the same except in periods that there is a GAAP loss from continuing operations. In accordance with authoritative accounting guidance, we do not present dilution for GAAP in periods in which there is a loss from continuing operations. However if there is non-GAAP net income, we present dilution for non-GAAP weighted-average shares outstanding in an amount equal to the dilution that would have been presented had there been GAAP income from continuing operations for the period.

Source: Symantec Corporation

MEDIA CONTACT:

Symantec Corp.

Mara Mort, 650-527-7455

Mara_Mort@symantec.com

or

INVESTOR CONTACT:

Symantec Corp.

Jonathan Doros, 650-527-5523

Jonathan_Doros@symantec.com