CUPERTINO, Calif. - Jan 31, 2006 - Symantec Corp. (Nasdaq: SYMC) today reported results for the third quarter of fiscal year 2006, ended Dec. 30, 2005. GAAP revenue for the December 2005 quarter was $1.149 billion and non-GAAP revenue was $1.253 billion. Non-GAAP revenue includes $104 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 five percent over the December 2004 quarter's combined non-GAAP revenue of $1.192 billion.
GAAP Results: The December quarter's GAAP net income was $91 million, resulting in fully diluted GAAP earnings per share of $0.08. GAAP net income includes $166 million of expenses related to the amortization of acquired software and intangibles, the amortization of deferred compensation, and integration and restructuring.
Non-GAAP Results: Non-GAAP net income was $282 million for the third quarter, five percent higher than the December 2004 quarter's combined non-GAAP net income of $269 million. Non-GAAP fully diluted earnings per share for the quarter was $0.26, up 18 percent as compared to our combined non-GAAP earnings per share of $0.22 in the December 2004 quarter. Non-GAAP earnings per share excludes the write-off of in-process research and development, the amortization of acquired software and intangibles, the amortization of deferred compensation, and integration and restructuring expenses.
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.
"Our December quarter was driven by a record number of large transactions and robust performance in backup, email archiving, and high availability solutions," said John W. Thompson, Symantec chairman and chief executive officer. "We continue to believe the combination of our growing deferred revenue balance, broad product portfolio, and diverse customer base will be critical factors in driving consistently predictable results."
For the quarter, Symantec's Data Protection segment comprised 26 percent of total revenue and grew 16 percent on a combined non-GAAP basis year-over-year. The storage management segment represented 23 percent of total revenue and grew nine percent year-over-year. The enterprise security business represented 21 percent of total revenue and grew seven percent year-over-year. Services revenue represented four percent of total revenue and grew 38 percent year-over-year. Symantec's consumer business represented 26 percent of total revenue and declined ten percent on a combined non-GAAP basis year-over-year as was expected with the shift to a ratable revenue recognition model.
International revenues represented 49 percent of non-GAAP revenue and grew eight percent on a combined non-GAAP basis over the same quarter last year. The Americas, including the United States, Latin America, and Canada, represented 55 percent of total revenue and grew two percent year-over-year. The Europe, Middle East, and Africa region represented 32 percent of total revenue and grew eight percent year-over-year. Asia Pacific/Japan represented 13 percent of total revenue and grew 11 percent on a combined non-GAAP basis year-over-year.
March Quarter Forecast
For the March 2006 quarter, GAAP revenue is estimated between $1.19 billion and $1.22 billion. This excludes $60 million of deferred revenue that was lost through the purchase accounting for the VERITAS transaction. GAAP fully diluted earnings per share for the March quarter is estimated at $0.10 at the mid-point of the revenue guidance.
Non-GAAP revenue for the March quarter is estimated between $1.25 billion and $1.28 billion, including about $60 million of deferred revenue. Non-GAAP fully diluted earnings per share is forecasted at $0.25 at the mid-point of the revenue guidance. Non-GAAP earnings per share excludes approximately $155 million of expenses related to the amortization of acquisition-related intangibles and deferred compensation charges.
Fiscal Year 2006 Forecast
For the fiscal year ending March 2006, GAAP revenue is estimated between $4.09 billion and $4.12 billion. This excludes $300 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. GAAP fully diluted earnings per share for the fiscal year ending in March 2006 is estimated at $0.24 at the mid-point of GAAP revenue guidance.
Including $300 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,, Symantec's non-GAAP revenue for fiscal 2006 is estimated in the range of $4.95 billion and $4.98 billion. Non-GAAP fully diluted earnings per share is estimated at $0.99 at the mid-point of non-GAAP revenue guidance, excluding approximately $980 million related to the write-off of in-process research and development, and expenses related to the amortization of acquisition-related intangibles, deferred compensation charges, integration and restructuring.
Fiscal Year 2007 Forecast
For the fiscal year ending March 2007, GAAP revenue is estimated in the range of $5.35 billion to $5.55 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 is estimated at $0.59 at the mid-point of the revenue guidance.
Non-GAAP revenue is estimated in the range of $5.4 billion to $5.6 billion, including about $55 million in deferred revenue from the VERITAS merger. Non-GAAP fully diluted earnings per share is estimated at $1.14 at the midpoint of guidance, excluding approximately $750 million in expenses related to the amortization of acquisition-related intangibles and stock-based compensation charges.
-- Symantec signed 1,134 contracts worldwide worth more than $100,000 each, including 92 deals worth more than $1 million each, during the quarter. Almost 50 percent of these deals included multiple Symantec enterprise products and services.
-- Symantec signed new or extended agreements with customers including Accredited Home Lenders, a premier non-prime mortgage company operating throughout the U.S. and in Canada; Enterprise Rent-A-Car; HealthSouth Corporation, one of the nation's largest providers of outpatient surgery, diagnostic imaging and rehabilitative healthcare services, operating facilities nationwide; Sprint Nextel Corporation; Pepco Holdings, Inc., one of the largest energy delivery companies in the Mid-Atlantic region; Progressive Casualty Insurance Company, a leading U.S. auto insurer; UnumProvident Corporation, the industry leader in disability income protection; Ameren, an energy services company; Rohm and Haas Company, an $8 billion specialty materials company; Mervyns LLC, a leading U.S. promotional neighborhood department store; Florida Power and Light Company, among the largest and fastest-growing electric utilities in the U.S.; Hewlett Packard; Encore Credit Corp., a wholesale non-conforming lender; Westchester County, a prominent suburban New York government.
-- International customers from the quarter included: Alcatel, which provides communications solutions; Transurban, a leading international toll road developer and investor; MBF Australia, providing health insurance and financial solutions; Samsung Electronics Co., Ltd.; BiG Vent S.A., a leading value added distributor in the nascent and fast growing Enterprise Data Storage Management [DSM] market in Poland; EDAG Engineering, which provides advanced turn-key solutions for tomorrow's vehicles and manufacturing facilities worldwide; British Telecommunications plc (BT); Yonhap News Agency, Korea's sole newswire service; and Fujitsu Services.
Symantec has scheduled a conference call for 5 p.m. ET/2 p.m. PT today to discuss the results of the third quarter of fiscal year 2006, ended Dec. 30, 2005, and to review guidance for the fourth quarter of fiscal year 2006 and fiscal year 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.
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.
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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 acquisition of VERITAS, including the successful integration of VERITAS' businesses, maintenance of customer and partner relationships and leveraging of synergies; the sustainability of recent growth rates, particularly for our consumer products; 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 September 30, 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 include the results of Symantec for the December 2004 fiscal quarter and the results of VERITAS for the September 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 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.