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Symantec Reports Solid Second Quarter Earnings

Results driven by large deals, demand for market-leading security and availability solutions

CUPERTINO, Calif. - Nov. 1, 2005 - Symantec Corp. (Nasdaq: SYMC) today reported results for the second quarter of fiscal year 2006, ended Sept. 30, 2005. GAAP revenue for the September 2005 quarter was $1.056 billion and non-GAAP revenue was $1.192 billion. Non-GAAP revenue includes $136 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. On a non-GAAP basis, revenue grew eight percent over the September 2004 quarter's combined non-GAAP revenue of $1.103 billion.

GAAP Results: The September quarter's GAAP net loss was $251 million, resulting in fully diluted GAAP loss per share of $0.21. The loss was driven primarily by the write-off of $284 million in IPR&D expense associated with the acquisition of VERITAS, in addition to other merger-related acquisition and restructuring charges.

Non-GAAP Results: Non-GAAP net income was $273 million for the second quarter, 16 percent higher than the September 2004 quarter's combined non-GAAP net income of $235 million. Non-GAAP fully diluted earnings per share for the quarter was $0.23, up 21 percent as compared to our combined non-GAAP earnings per share of $0.19 in the September 2004 quarter.

Non-GAAP results, as presented in the attached consolidated statements, exclude certain non-GAAP expenses, net of tax, and include VERITAS results of operations 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.

"We are very pleased with our first quarter of combined operations," said John W. Thompson, Symantec chairman and chief executive officer. "Our team remained dedicated and focused on serving the needs of customers, resulting in solid September quarter results. We remain excited by the interest we're seeing from both customers and partners around the world."

Revenue Components
For the quarter, Symantec's worldwide enterprise security business, which includes Symantec's enterprise security solutions, as well as response and managed security services, represented 22 percent of total revenue and grew 11 percent on a combined non-GAAP basis year-over-year. Symantec's storage management segment, which includes Symantec's cloning and imaging products and VERITAS' Foundation Suite and Utility Computing solutions, represented 21 percent of total revenue and grew on a combined non-GAAP basis by six percent year-over-year. Symantec's Data Protection segment, which is comprised of Backup Exec, Net Backup and Enterprise Vault solutions, delivered 24 percent of total revenue and grew two percent on a combined non-GAAP basis year-over-year. Symantec's consumer business represented 29 percent of total revenue and grew ten percent on a combined non-GAAP basis year-over-year. Services revenue, which is comprised of consulting and education, represented four percent of total revenue and grew on a combined non-GAAP basis 41 percent year-over-year.

International revenues represented 49 percent of non-GAAP revenue in the second quarter and grew 15 percent on a combined non-GAAP basis over the same quarter last year. The Americas, including the United States, Latin America, and Canada, represented 56 percent of total revenue and grew three percent on a combined non-GAAP basis year-over-year. The Europe, Middle East, and Africa region represented 30 percent of total revenue and grew 11 percent on a combined non-GAAP basis year-over-year. Asia Pacific/Japan represented 13 percent of total revenue and grew 25 percent on a combined non-GAAP basis year-over-year.

December Quarter Forecast
For the December 2005 quarter, GAAP revenue is estimated at $1.165 billion. This excludes $98 million of deferred revenue that was lost through the purchase accounting for the VERITAS transaction. Including this deferred revenue, Symantec's non-GAAP revenue for the December 2005 quarter is estimated at $1.263 billion, six percent higher than the combined non-GAAP revenue from last December.

GAAP fully diluted earnings per share for the December quarter is estimated at $0.10. Non-GAAP fully diluted earnings per share, including $98 million of VERITAS deferred revenue that was eliminated as part of the purchase accounting, and excluding all merger-related costs, restructuring charges, and deferred compensation expenses, is forecasted at $0.25.

Fiscal Year 2006 Forecast
For the fiscal year ending March 2006, GAAP revenue is estimated at $4.2 billion. This excludes $288 million of deferred revenue that was lost through the purchase accounting for the VERITAS transaction and $559 million of revenue related to VERITAS for the quarter ended March 31, 2005. Including the $288 million of deferred revenue lost through the purchase accounting and including the $559 million of VERITAS March quarter revenue, Symantec's combined Non-GAAP revenue for fiscal 2006 is estimated at $5 billion, 8 percent higher than the combined non-GAAP revenue for fiscal 2005 of $4.625 billion.

GAAP fully diluted earnings per share for the fiscal year ending in March 2006 is estimated at $0.19. Non-GAAP fully diluted earnings per share, including the net income effect of VERITAS deferred revenue that was eliminated during the purchase accounting and including the VERITAS results for the March 31, 2005 quarter, and excluding all merger-related costs, restructuring charges, and deferred compensation expenses is estimated at $0.99.

Quarterly Highlights

  • Symantec signed 843 contracts worldwide worth more than $100,000 each, including 67 deals worth more than $1 million each, during the quarter. Forty percent of these deals included multiple Symantec enterprise products and services.
  • Symantec signed new or extended agreements with customers including the United States Air Force; Advanced Micro Devices, a leading provider of microprocessors, Flash memory devices, and silicon-based solutions for communications and computer companies worldwide; First American Corporation, one of the nation's leading financial services organizations for business information; Constellation Energy, a FORTUNE 200 company and the nation's largest competitive supplier of electricity to large commercial and industrial customers; Unisys, a global provider of information technology services; City of Chicago Business Information Services, a business improvement organization that assists city departments in redesigning business operations and leveraging technology to solve business issues; and Gwinnett County Public Schools, Georgia's largest school system with over 140,000 students on 99 campuses in the metro Atlanta area.
  • International customers from the quarter included: Toronto Catholic District School Board, a religious educational community of 95,000 students in 201 elementary and secondary schools located throughout Canada's largest city; Coop Danmark A/S, the leading consumer goods retailer in Denmark, with approximately 64,000 employees and DKK100 billion (US $16 billion) in annual revenue; and Financiera Compartamos, an enterprise dedicated to providing financial services for small and micro business in Mexico.


Symantec has scheduled a conference call for 5 p.m. ET/2 p.m. PT today to discuss the results of the second quarter of fiscal year 2006, ended Sept. 30, 2005, and to review guidance for the fiscal year 2006. 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 view the Symantec Press Center at http://www.symantec.com/about/news/release/index.jsp 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 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. 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 success of the VERITAS merger, including successful integration of VERITAS' businesses, maintenance of customer and partner relationships and leveraging of synergies; the sustainability of recent growth rates, particularly in consumer products; the anticipation of the growth of certain market segments, particularly enterprise security and international; the competitive environment in the software industry; changes to operating systems and product strategy by vendors of operating systems; general market conditions; fluctuations in currency exchange rates; the timing and market acceptance of new product releases and upgrades; whether Symantec can successfully develop new products and integrate 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 July 1, 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. Non-GAAP net income and earnings per share exclude certain non-GAAP expenses, net of tax, and include VERITAS results of operations 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. 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, 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 and can also 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