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Symantec Reports Record Quarter with 31 Percent Revenue Growth

Raises Fiscal Year Guidance

CUPERTINO, Calif. - Jan. 21, 2004 - Symantec Corp. (Nasdaq:SYMC), the world leader in Internet security, today reported results for the fiscal third quarter ended Jan. 2, 2004. Symantec posted revenue for the quarter of $494 million, a 31 percent increase compared to $376 million for the same quarter last year, driven by solid enterprise security revenues and stronger than expected consumer results.

GAAP Results: Net income for the fiscal third quarter was $111 million, compared to $72 million for the same quarter last year. Earnings per share was $0.32, compared to earnings per share of $0.22 for the year-ago quarter.

Non-GAAP Results: Non-GAAP net income for the fiscal third quarter was $120 million, compared to $77 million for the same quarter last year. Non-GAAP earnings per share was $0.34, compared to earnings per share of $0.24 for the year-ago quarter. Non-GAAP results and related reconciliation, as outlined in the attached consolidated statements, exclude expenses from the amortization of other intangibles from acquisitions, acquired in-process research and development, and restructuring charges as well as related income tax benefits. See "Use of Non-GAAP Financial Information" below.

"We closed a record number of large enterprise deals during the quarter and the consumer segment turned in a phenomenal performance," said John W. Thompson, Symantec chairman and CEO. "Our focus on helping customers secure and manage their IT infrastructure continues to gain traction as more and more customers turn to Symantec to solve the challenge of managing their complex environments."

Revenue Components
For the quarter, Symantec's worldwide enterprise business, including enterprise security, enterprise administration, and services, represented 51 percent of total revenue. Symantec's enterprise security business represented 38 percent of total revenue and grew 17 percent year-over-year; the enterprise administration business represented 11 percent of revenues and grew 2 percent compared to the same quarter last year; and the services business grew 42 percent and represented 2 percent of total revenue. Symantec's consumer business grew 55 percent and represented 49 percent of total revenue.

International revenues represented 54 percent of total revenue in the third quarter and grew 40 percent over the same quarter last year. Canada led the increase for the quarter with 47 percent growth, followed by the Europe, Middle East and Africa region with 45 percent growth. Japan recorded 36 percent year-over-year growth, Asia Pacific recorded 24 percent growth and Latin America grew by 11 percent. The United States grew 22 percent.

Business Outlook
Forward-looking guidance for the fiscal fourth quarter ending April 2, 2004, is as follows:

  • Revenue is expected to be in the range of $500 to $520 million.
  • GAAP earnings per share is expected to be $0.30 at the midpoint of revenue guidance.
  • Non-GAAP earnings per share is expected to be $0.32 at the midpoint of revenue guidance.

Forward-looking guidance for the fiscal year, ending April 2, 2004, updated to reflect the fiscal year-to-date actual performance and estimated results for the fiscal fourth quarter is as follows:

  • Revenue is expected to be approximately $1.82 billion.
  • GAAP earnings per share is expected to be $1.03 at the stated revenue forecast, up 8 cents from our previous guidance of $0.95 per share.
  • Non-GAAP earning per share is expected to be $1.14 at the stated revenue forecast, up 9 cents from previous guidance of $1.05 per share.

Non-GAAP earnings per share excludes the pre-tax amortization of other intangibles from acquisitions, acquired in-process research and development, and other items such as patent settlement and restructuring charges of approximately $11 million and $59 million for the quarter ending April 2, 2004, and the fiscal year ending April 2, 2004.

Symantec is initiating forward-looking guidance for fiscal year 2005 ending April 1, 2005. It should be noted that the outlook does include forecasted results from our announced acquisition of ON Technology, which is expected to close in mid-February. In addition, our outlook assumes no significant changes in the current economic or competitive climates over the course of the next 15 months as compared to what we are experiencing today.

Guidance is as follows:

  • Revenue is estimated to be in the range of $2.15 to $2.20 billion. Symantec expects about 47 percent of the revenue to occur in the first half of the fiscal year.
  • GAAP earnings per share is expected to be $1.21 at the midpoint of the stated revenue forecast.
  • Non-GAAP earnings per share is expected to be $1.31 at the midpoint of the stated revenue forecast.
  • Gross margin is forecasted to average 84.7 percent for the full year.
  • Operating income as a percent of revenue is estimated at 32 percent for the full year.
  • Common Stock Equivalents (CSE's) are expected to grow by less than 2 percent over the next year.

Non-GAAP earnings per share excludes the pre-tax amortization of other intangibles from acquisitions, acquired in-process research and development, and other items such as restructuring charges of approximately $45 million for the fiscal year ending April 1, 2005.

Quarterly Highlights

  • Symantec signed 278 contracts worldwide worth more than $100,000 each, including 87 worth more than $300,000 and 13 worth more than $1 million each, during the quarter.
  • Symantec signed new or extended agreements with customers including the U.S. Air Force; H&R Block Inc.; CIGNA Corporation, one of the largest investor-owned employee benefits organizations in the United States; Nicor Gas Company, one of the nation's largest gas distribution companies; Graybar Electric Company Inc., the nation's leading distributor of communications and electrical products and related supply chain management and logistics services; PNC Financial Services Group Inc.; UnumProvident Corporation, the largest provider of group and individual disability income protection insurance in the United States and United Kingdom; Spherion Corporation, a provider of recruitment, technology, and outsourcing services; Hercules Incorporated, a global manufacturer of chemical specialties used in making a variety of products for home, office, and industrial markets; Zurich Financial Services; and Development Bank of Singapore, the largest bank in Singapore.
  • During the quarter, Symantec released Symantec Enterprise Security Manager (ESM) 6.0, an industry-leading policy compliance solution. With outstanding performance and scalability, Symantec ESM provides centralized, automated and comprehensive security analysis of organizations' critical business applications and operating systems.
  • Symantec announced an enhanced iForceTM Intrusion Detection (IDS) Appliance, powered by Sun and Symantec. A complete high-speed network intrusion detection appliance, the solution combines Symantec ManHunt 3.0 with Sun's Fire V60x server and provides flexible deployment options by monitoring up to 2 gigabits per second.
  • In addition, Symantec announced its client compliancy initiative designed to promote the enforcement of remote and mobile client security policies. As part of the initiative Symantec introduced its new client compliancy application program interface (API), which provides IT Administrators the ability to block access to an organization's network when a computer's security level does not meet the requirements defined by the organization's security policies.

Consolidated Financial Statements

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. Non-GAAP net income and earnings per share exclude acquisition related charges, such as amortization of other intangibles and in-process research and development, and certain other identified charges, such as restructuring and patent settlement, as well as the tax effect of these items. Symantec's management believes these non-GAAP measures 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, is likely to 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 and can be found on the investor relations Web site at www.symantec.com/invest/.

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 view the Symantec Press Center at http://www.symantec.com/PressCenter/ on Symantec's Web site. All prices noted are in US dollars and are valid only in the United States.

Symantec, the Symantec logo, VERITAS, and the VERITAS logo are trademarks or registered trademarks of Symantec Corporation or its affiliates in the United States and certain other countries. Additional company and product names may be trademarks or registered trademarks of the individual companies and are respectfully acknowledged.

FORWARD LOOKING STATEMENT: This press release contains forward-looking statements, including forecasts of future revenue and earnings per share, expected industry patterns, and other financial and business results that involve 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 by this press release. Such risk factors include, among others: the sustainability of recent growth rates, particularly in consumer products; whether certain market segments, particularly enterprise security, grow as anticipated; the positioning of Symantec's products in those segments; the competitive environment in the software industry; ability to integrate acquired companies and technology; ability to retain key employees; ability to successfully combine product offerings and customer acceptance of combined products; general market conditions, fluctuations in currency exchange rates, changes to operating systems and product strategy by vendors of operating systems; and whether Symantec can successfully develop new products and the degree to which these 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 sections of Symantec’s previously filed Form 10-K and Form 10-Q.

@Symantec