Symantec Discovers and Corrects Error in Non-U.S. Consumer Revenue
Will File First Quarter Form 10-Q on August 10
CUPERTINO, Calif. - Aug. 9, 2004 -
Symantec (Nasdaq: SYMC) today announced that it discovered an error
in its calculation of deferred revenue, which represents an accumulated
adjustment of $20 million. The company is revising the financial results
for the quarter ended July 2, 2004 that were announced on its earnings
call on July 21, 2004 to reflect this correction. The revised results
will be reflected in the company’s Form
10-Q scheduled to be filed on August 10.
A deferred revenue understatement was discovered during a review of the company's revenue maintenance application that calculates deferred revenue for Symantec's consumer products. A manual error was made in entering the unit renewal prices applicable to consumer product licenses sold in foreign currencies. As a result, the deferred revenue from these consumer product licenses was understated and the portion of revenue from these licenses that was recognized at the time of sale was overstated. The error does not affect cash collections; it simply changes the timing for the recognition of the revenue for consumer product licenses sold in foreign currencies. Symantec has implemented new control procedures to avoid the recurrence of this type of error in the future.
Although the revisions to revenue and earnings are an accumulation of the effect of the error over multiple quarters, the effect of the error was not material to any relevant prior periods. To correct this error, the income statement will reflect a $20 million reduction in revenue during the three-month period ended July 2, 2004 with a corresponding $20 million increase in deferred revenue in the balance sheet as of July 2, 2004.
Revenue for the quarter ended July 2, 2004 is revised to $557 million, 42 percent growth compared to the same period last year. GAAP earnings per share are revised to $0.33, $0.04 lower than previously announced, non-GAAP earnings per share are revised to $0.36, $0.03 lower than previously announced. Non-GAAP results and related reconciliation, as outlined in the attached consolidated statements, excludes the expenses from the amortization of other intangibles from acquisitions, acquired in-process research and development, restructuring charges, and patent settlement charges as well as related income tax benefits.
This error will not impact the company's previously stated full-year guidance.
Because the revision increases deferred revenue in the quarter ended July 2, 2004, guidance for the company's fiscal second quarter, ending October 1, 2004, will be updated as follows:
- Revenue is estimated at $588 million, an increase of $8 million from prior guidance.
- At this revenue guidance, GAAP earnings per share is estimated to be $0.35, an increase of $0.01 from previous guidance.
- At this revenue guidance, non-GAAP earnings per share is estimated to be $0.38, an increase of $0.01 from previous guidance.
Non-GAAP earnings per share excludes the pre-tax amortization of other intangibles from acquisitions, acquired in-process research and development and restructuring charges of approximately $14 million for the quarter ending October 1, 2004.
Symantec has scheduled a conference call for 5 p.m. EDT/2 p.m. PDT today to discuss the revised fiscal first quarter 2005 results, and to review guidance for the fiscal second quarter and fiscal year. Interested parties may access a live webcast of the call on the Internet at www.symantec.com/invest/index.html. To listen to the webcast, please go to the Web site at least 15 minutes early to register, download and install any necessary audio software. A replay and the script of our officers' remarks will be available on the investor relations home page shortly after the call is completed.
Institutional investors and research analysts can access the live conference by calling 800-500-0311 (U.S. and Canada) or 719-457-2698 (International). The call's ID number is: 710156. Please dial in at least 15 minutes prior to the scheduled start time.
Consolidated Financial Statements
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:
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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 Symantecís previously filed Form 10-K and Form 10-Q.
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