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Symantec Reports Record Revenue and Earnings, Raises Fiscal Year Guidance

Consumer Performance Exceeds Expectations Following Numerous Threat Outbreaks During the Quarter

CUPERTINO --Calif. - October 23, 2003 -- Symantec, the world leader in Internet security, today reported results for the fiscal second quarter 2004 ended October 3, 2003. Symantec posted revenue for the quarter of US$429 million, a 32 per cent increase compared to US$325 million for the same quarter last year, driven by strong enterprise security growth and higher than expected results in the consumer segment.

GAAP Results: Net income for the fiscal second quarter was US$83 million, compared to US$52 million for the same quarter last year. Earnings per share was US$0.49, compared to earnings per share of US$0.33 for the year-ago quarter.

Non-GAAP Results: Non-GAAP net income for the fiscal second quarter was US$91 million, compared to US$60 million for the same quarter last year. Non-GAAP earnings per share was US$0.53, compared to earnings per share of US$0.38 for the year-ago quarter. Non-GAAP results and related reconciliation, as outlined in the attached consolidated statements, exclude expenses from the amortisation of other intangibles from acquisitions and acquired in-process research and development as well as related income tax benefits. See "Use of Non-GAAP Financial Information" below.

"It was a stellar quarter across the board with strong performances in all regions," said John W. Thompson, Symantec chairman and CEO. "Our integrated approach for enterprises and consumers continues to gain momentum and set the bar for the rest of the industry."

Revenue Components
For the quarter, Symantec's worldwide enterprise business, including enterprise security, enterprise administration, and services, represented 55 per cent of total revenue. Symantec's enterprise security business represented 41 per cent of total revenue and grew 25 per cent year-over-year; the enterprise administration business represented 12 per cent of revenues and declined 8 per cent in line with expectations; and the services business grew 53 per cent and represented 2 per cent of total revenue. Symantec's consumer business grew 56 per cent and represented 45 per cent of total revenue.

International revenues represented 50 per cent of total revenue in the second quarter and grew 39 per cent over the same quarter last year. Canada led the increase for the quarter with 49 per cent growth, followed by the Europe, Middle East and Africa region with 46 per cent growth. Japan recorded 27 per cent year-over-year growth, Asia Pacific recorded 24 per cent growth and Latin America had 9 per cent growth. The United States grew at 26 per cent.

Business Outlook
Forward-looking guidance for the fiscal third quarter ending Jan. 2, 2004, is as follows:

  • Revenue is expected to be in the range of US$440 to US$460 million.
  • GAAP earnings per share is expected to be US$0.52 at the midpoint of the revenue guidance.
  • Non-GAAP earnings per share is expected to be US$0.56 at the midpoint of the 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 third and fourth quarters is as follows:

  • Revenue is expected to be approximately US$1.73 billion.
  • GAAP earnings per share is expected to be US$1.90 at the stated revenue forecast, up 15 cents from previous guidance.
  • Non-GAAP earnings per share is expected to be US$2.10 at the stated revenue forecast, up 14 cents from previous guidance. Non-GAAP earnings per share excludes the pre-tax amortisation of other intangibles from acquisitions, acquired in-process research and development, and other items such as patent settlement and restructuring charges of approximately US$11 million and US$58 million for the quarter ending Jan. 2, 2004, and the fiscal year ending April 2, 2004, respectively. Quarterly Highlights
  • Symantec signed 129 contracts worldwide worth more than US$100,000 each, including 36 worth more than US$300,000 each and 6 worth more than US$1 million each, during the quarter.
  • Symantec signed new or extended agreements with customers including Nextel; Cinergy, one of the nation's largest utility companies; Digex, Incorporated, a leading provider of enterprise hosting services; Rinker Materials, one of the nation's leaders in building and construction materials; Qualex, Inc., the largest wholesale and on-site photofinishing company in the world; Storage Technologies Corp., a worldwide data storage company; Sykes Enterprises, a global leader in providing outsourced customer management solutions and services; and CenturyTel, Inc., the nation's eighth largest local telephone exchange company.
  • Symantec also signed new or extended agreements with public sector and education customers including Temple University; the State of Tennessee; the U.S. Department of the Interior; the U.S. Environmental Protection Agency; the U.S. Department of State; the U.S. Army; and the Internal Revenue Service.
  • Around the world, Symantec signed contracts with customers including South Korea-based Samsung Electronics; Jainam Technologies, a leading IT solutions company in India; and ANZ Bank, one of Australia's largest financial institutions.
  • Symantec introduced its new line of firewall appliances, the Symantec Gateway Security 5400 Series. The 5400 series offers a unique combination of superior price performance, integrated protection, and flexible licensing. The appliance provides comprehensive gateway level protection by integrating full inspection firewall, intrusion prevention, intrusion detection, antivirus, content filtering, virtual private networking (VPN), and anti-spam technology into a single device.
  • During the quarter, Symantec updated the world's premier global early warning system with the launch of Symantec Deep Sight Threat Management System 5.0. The early warning security system gathers firewall, intrusion detection and now antivirus data from more than 20,000 partners worldwide to provide proactive alerts on active attacks to customers. The system now includes an optional custom reports add-on, enabling organisations to mine the global event database by time, country, and industry to better analyse security events.
  • Symantec also announced the Symantec AntiVirus for Handhelds product line to protect consumers and enterprise users. Symantec AntiVirus for Handhelds - Corporate Edition integrates with existing enterprise infrastructures and improves management by providing a centralised view of virus protection information.
  • In addition, Symantec launched its 2004 line of consumer security products including Norton Internet Security, Norton AntiVirus, Norton Personal Firewall, Norton AntiSpam and Norton SystemWorks, which includes Norton Password Manager. The new products provide protection from viruses, intrusion attempts, and privacy threats and now offer expanded protection from emerging threats including spyware, adware, keystroke logging programs, and spam.

About Symantec
Symantec, the world leader in Internet security technology, provides a broad range of content and network security software and appliance solutions to individuals, enterprises and service providers. The company is a leading provider of client, gateway and server security solutions for virus protection, firewall and virtual private network, vulnerability management, intrusion detection, Internet content and e-mail filtering, remote management technologies and security services to enterprises and service providers around the world. Symantec's Norton brand of consumer security products is a leader in worldwide retail sales and industry awards. Headquartered in Cupertino, Calif., Symantec has worldwide operations in 36 countries. For more information, please visit www.symantec.com.au

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

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/center.html.