Singapore – July 30, 2009 – Symantec Corp. (Nasdaq:SYMC) today reported the results of its first quarter of fiscal year 2010, ended July 3, 2009. GAAP revenue for the fiscal first quarter was $1.43 billion. Non-GAAP revenue was $1.44 billion, down 13 percent (down 4 percent after adjusting for currency and the extra 14th week in the first quarter of fiscal year 2009) over the comparable period a year ago. Non-GAAP revenue for the year-ago period included approximately $75 million of one-time benefit from the extra week of activity. Year-over-year, foreign currency fluctuations negatively impacted non-GAAP revenue by approximately $75 million.
“We are pleased with the performance of the consumer business and our award-winning Norton 2009 products. On the enterprise side, some customers focused their spending on shorter-term contracts or maintenance renewals, resulting in fewer new license deals, but stronger deferred revenue,” said Enrique Salem, president and chief executive officer, Symantec. “We’ve laid the groundwork to drive improved execution in the second half of the fiscal year.”
“Our ongoing focus on expense management resulted in earnings per share within the guided range,” said James Beer, executive vice president and chief financial officer, Symantec.
GAAP Results: GAAP operating income for the first quarter of fiscal year 2010 was $152 million compared with $278 million for the same quarter last year. GAAP net income for the first quarter of fiscal year 2010 was $73 million compared with $172 million for the same quarter last year. GAAP diluted earnings per share were $0.09 compared with earnings per share of $0.20 for the same quarter last year.
GAAP deferred revenue as of July 3, 2009 was $2.97 billion compared with $3.01 billion as of July 4, 2008. Cash flow from operating activities for the first quarter of fiscal year 2010 was $371 million compared with $414 million for the same quarter last year. Cash flow from operating activities for the year-ago period included approximately $47 million of benefit from currency and the extra week.
Non-GAAP Results: Non-GAAP operating margin for the first quarter of fiscal year 2010 was 28.5 percent compared with 29.3 percent for the same quarter last year (flat year-over-year after adjusting for currency and the extra week).
Non-GAAP net income for the first quarter of fiscal year 2010 was $285 million compared with $342 million for the same quarter last year. Non-GAAP diluted earnings per share were $0.34 compared with earnings per share of $0.40 for the year-ago quarter. Non-GAAP earnings per share for the year ago period included approximately $0.03 of one-time benefit generated from the extra week.
Non-GAAP deferred revenue as of July 3, 2009 was $2.98 billion compared with $3.03 billion as of July 4, 2008. After adjusting for currency and the extra week, non-GAAP deferred revenue increased 2 percent year-over-year.
For a detailed reconciliation of our GAAP to non-GAAP results, please refer to the attached consolidated financial statements.
During the first quarter of fiscal year 2010, we purchased 7.9 million shares at an average price of $15.59, equivalent to $123 million.
Business Segment and Geographic Highlights
During the first quarter of fiscal year 2010, the company modified its segment reporting structure to more readily match its operating structure. The following modifications were made to the segment reporting structure: Enterprise Vault products were moved to the Storage and Server Management segment from the Security and Compliance segment, and the Software-as-a-Service (SaaS) offerings were moved to either the Security and Compliance or the Storage and Server Management segment from the Services segment based on the nature of the service delivered. Fiscal year 2009 Enterprise Vault revenue of $197 million and fiscal year 2009 SaaS revenue of $51 million was moved. The predominant amount for SaaS went to the Security and Compliance segment. There were no changes to the Consumer segment. The historical periods have been updated in the attached consolidated financial statements to reflect the modified reporting segments.
For the quarter, Symantec’s Storage and Server Management segment represented 38 percent of total non-GAAP revenue and declined 17 percent year-over-year (declined 8 percent after adjusting for currency and the extra week). The Consumer business represented 31 percent of total non-GAAP revenue and declined 4 percent year-over-year (increased 6 percent after adjusting for currency and the extra week). The Security and Compliance segment represented 24 percent of total non-GAAP revenue and declined 14 percent year-over-year (declined 4 percent after adjusting for currency and the extra week). Services represented 7 percent of total non-GAAP revenue and declined 20 percent year-over-year (declined 15 percent after adjusting for currency and the extra week).
International revenue represented 50 percent of total non-GAAP revenue in the first quarter of fiscal year 2010 and declined 17 percent year-over-year (declined 5 percent after adjusting for currency and the extra week). The Europe, Middle East and Africa region represented 30 percent of total non-GAAP revenue for the quarter and declined 22 percent year-over-year (declined 7 percent after adjusting for currency and the extra week). The Asia Pacific/Japan revenue for the quarter represented 15 percent of total non-GAAP revenue and declined 6 percent year-over-year (increased 1 percent after adjusting for currency and the extra week). The Americas, including the United States, Latin America and Canada, represented 55 percent of total non-GAAP revenue and declined 9 percent year-over-year (declined 3 percent after adjusting for currency and the extra week).
Second Quarter Fiscal Year 2010 Guidance
Guidance assumes an exchange rate of $1.40 per Euro for the September 2009 quarter versus the actual weighted average rate of $1.49 per Euro for the September 2008 quarter, approximately a 6 percent negative currency impact. The end of the period rate for the September 2008 quarter was $1.38, approximately a 1 percent currency benefit versus the $1.40 per Euro assumption for the September 2009 quarter.
For the second quarter of fiscal year 2010, ending Oct. 2, 2009, GAAP revenue is estimated between $1.395 billion and $1.445 billion. GAAP diluted earnings per share are estimated between $0.14 and $0.16. GAAP deferred revenue is expected to be in the range of $2.747 billion and $2.847 billion.
Non-GAAP revenue for the second quarter of fiscal year 2010 is estimated between $1.40 billion and $1.45 billion. Non-GAAP diluted earnings per share are estimated between $0.32 and $0.34. Non-GAAP deferred revenue is expected to be in the range of $2.75 billion and $2.85 billion.
Symantec has scheduled a conference call for 5 p.m. ET/2 p.m. PT today to discuss the results from the fiscal first quarter 2010, ended July 3, 2009, 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 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 a global leader in providing security, storage and systems management solutions to help consumers and organizations secure and manage their information-driven world. Our software and services protect against more risks at more points, more completely and efficiently, enabling confidence wherever information is used or stored. 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 projections of future revenue, earnings per share and deferred revenue, as well as projections of amortization of acquisition-related intangibles and stock-based compensation and restructuring 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: general economic conditions; maintaining customer and partner relationships; the anticipated growth of certain market segments, particularly with regard to security and storage; 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. 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 sections of our Form 10-K for the year ended April 3, 2009.
USE OF NON-GAAP FINANCIAL INFORMATION: Our results of operations have undergone significant change due to a series of acquisitions, the impact of SFAS 123(R), impairment charges and other corporate events. 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. Our non-GAAP results are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting 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 Web site at www.symantec.com/invest