- Achieved 30 percent non-GAAP operating
margin target
- Accelerating growth of Veritas business
driven by strength in enterprise backup and appliances
- Approved a new $1 billion share
repurchase program
Symantec Corp. (NASDAQ: SYMC) today reported the results of its
third quarter of fiscal year 2015, ended January 2, 2015.
Michael A. Brown, president and CEO, said, “Cyberattacks
continue to dominate the headlines with more than 70 percent of
these still occurring at the endpoint. By harnessing Symantec’s
vast threat telemetry to deliver actionable insight, we continue to
prevent attacks at hundreds of millions of enterprise and consumer
endpoints.”
“As the market leader in endpoint security, our enterprise
endpoint protection revenue grew 5 percent year-over-year in
constant currency. Over the next few quarters, we will deliver more
powerful advanced threat protection capabilities that will better
detect and remediate attacks.”
“Our information management business, recently rebranded as
Veritas, is experiencing accelerating growth, driven by
double-digit revenue growth for both our NetBackup appliances and
NetBackup software.”
Thomas Seifert, executive vice president and CFO, said,
“Driving operational efficiencies across the company has allowed us
to achieve our 30 percent operating margin target. We saw implied
billings growth for three consecutive quarters on a constant
currency basis, in addition to a 21 percent increase in large
deals, underlining that the momentum in our businesses is
strong.”
Results for the Third Quarter of Fiscal
Year 2015 (Dollars in millions, except EPS)
3Q15 3Q14
ReportedY/YChange
FXAdjustedY/Y
Change
GAAP
Revenue $1,638 $1,705 (4%) 0%
Operating Margin 20.0% 23.8% (380) bps
(270) bps
Net Income $222 $283
(22%) N/A
Deferred Revenue $3,494
$3,654 (4%) 1%
EPS (Diluted) $0.32
$0.40 (20%) N/A
CFFO $358
$329 9% N/A
Non-GAAP
Operating Margin
30.4% 29.9% 50 bps 140 bps
Net Income
$367 $367 0% N/A
EPS (Diluted)
$0.53 $0.52 2% N/A
Fourth Quarter and Fiscal Year 2015
Guidance (Dollars in millions, except EPS and FX rate)
4Q15 FY15
At Expected
FX Rate
At Previous
FX Rate
At Expected
FX Rate
At Previous
FX Rate
GAAP
Revenue $1,525 - $1,585 $1,620 - $1,680
$6,515 - $6,575 $6,700 - $6,760
Operating Margin
14.9% - 15.9%
17.9% - 18.9%
18.8% - 19.0%
20.1% - 20.3%
EPS (Diluted) $0.22 - $0.25 $0.29 - $0.32
$1.23 - $1.26 $1.36 - $1.39
Non-GAAP
Operating
Margin
26.5% - 27.5%
28.9% - 29.9%
27.5% - 27.7%
28.6% - 28.8%
EPS (Diluted) $0.42 - $0.45 $0.48 - $0.51
$1.87 - $1.90 $2.00 - $2.03
Tax Rate
25.5%
25.5%
24.8%
24.8%
Share Count 693 million 693 million 696
million 696 million
FX Rate (€/$) $1.16
$1.38 $1.28 $1.38
Symantec's Board of Directors has declared a quarterly cash
dividend of $0.15 per common share to be paid on March 18, 2015 to
all shareholders of record as of the close of business on February
26, 2015. The ex-dividend date will be February 24, 2015.
In a separate press release today, the company also announced
that its Board of Directors has approved a new $1 billion share
repurchase program.
Conference Call
Symantec has scheduled a conference call for 5 p.m. ET/2 p.m. PT
today to discuss results from the third quarter of fiscal year
2015, ended January 2, 2015 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 website at least 15 minutes early to register, download
and install any necessary audio software. A replay and our prepared
remarks will be available on the investor relations home page
shortly after the call is completed.
About Symantec
Symantec Corporation (NASDAQ: SYMC) is an information protection
expert that helps people, businesses and governments seeking the
freedom to unlock the opportunities technology brings -- anytime,
anywhere. Founded in April 1982, Symantec, a Fortune 500 company,
operating one of the largest global data-intelligence networks, has
provided leading security, backup and availability solutions for
where vital information is stored, accessed and shared. The
company's more than 20,000 employees reside in more than 50
countries. Ninety-nine percent of Fortune 500 companies are
Symantec customers. In fiscal 2014, it recorded revenues of $6.7
billion. To learn more go to www.symantec.com or connect with
Symantec at: http://www.symantec.com/social/
NOTE TO EDITORS: If you would like additional information
on Symantec Corporation and its products, please visit the Symantec
News Room at http://www.symantec.com/news. All prices noted are in
U.S. dollars and are valid only in the United States.
Symantec and the Symantec Logo are trademarks or registered
trademarks of Symantec Corporation or its affiliates in the U.S.
and other countries. Other names may be trademarks of their
respective owners.
FORWARD-LOOKING STATEMENTS: This press release contains
statements regarding our financial and business results and plans,
which may be considered forward-looking within the meaning of the
U.S. federal securities laws. These include statements regarding
our plan to separate into two publicly traded companies, as well as
projections of future revenue, operating margin and earnings per
share, amortization of acquisition-related intangibles, stock-based
compensation, and restructuring, separation and transition 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; risks related to the planned separation of the company
into the security business and the information management business;
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 March 28, 2014 and our
Form 10-Q for the quarter ended October 3, 2014.
USE OF NON-GAAP FINANCIAL INFORMATION: Our results of operations
have undergone significant change due to the impact of stock-based
compensation, charges related to the amortization of intangible
assets, and certain other income and expense items that management
considers unrelated to the Company’s core operations, including
restructuring, separation and transition costs. 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. Non-GAAP financial measures are
supplemental, should not be considered a substitute for financial
information presented in accordance with GAAP and should be read
only in conjunction with our consolidated financial statements
prepared in accordance with GAAP. Our management team uses these
non-GAAP financial measures in assessing the Company’s operating
results, as well as when planning, forecasting and analyzing 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 website at
http://www.symantec.com/invest.
SYMANTEC
CORPORATION Condensed Consolidated Balance Sheets
(Dollars in millions, unaudited)
January 2, March 28,
2015
2014(1)
ASSETS Current assets: Cash and cash
equivalents $ 2,764 $ 3,707 Short-term investments 976 377 Trade
accounts receivable, net 982 1,007 Inventories, net 12 14 Deferred
income taxes 143 142 Deferred commissions 120 115 Other current
assets 258 290
Total current
assets 5,255 5,652 Property
and equipment, net 1,186 1,116 Intangible assets, net 669 768
Goodwill 5,854 5,858 Long-term deferred commissions 25 21 Other
long-term assets 113 124
Total
assets $ 13,102 $ 13,539
LIABILITIES
AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable $ 212 $ 282 Accrued compensation and benefits 382
365 Deferred revenue 2,961 3,322 Current portion of long-term debt
350 - Other current liabilities 328 337
Total current liabilities 4,233 4,306
Long-term debt 1,745 2,095 Long-term deferred revenue
533 581 Long-term deferred tax liabilities 465 425 Long-term income
taxes payable 133 252 Other long-term obligations 83
83
Total liabilities 7,192
7,742
Total stockholders'
equity 5,910 5,797
Total
liabilities and stockholders' equity $ 13,102 $ 13,539
(1) Derived from
audited consolidated financial statements.
SYMANTEC CORPORATION Condensed Consolidated
Statements of Income (In millions, except per share data,
unaudited)
Year-Over-Year Three Months Ended
Growth Rate January 2, December 27,
Constant
2015
2013 Actual
Currency (1)
Net revenue: Content, subscription, and maintenance $
1,412 $ 1,508 -6 % -3 % License 226 197
15 % 20 %
Total net revenue
1,638 1,705 -4 % 0 %
Cost of revenue: Content, subscription, and
maintenance 239 244 License 28 26
Amortization of intangible assets
12 13
Total cost of revenue 279
283 -1 % 1 %
Gross profit 1,359
1,422 -4 % -1 %
Operating expenses: Sales and marketing 563 610 Research and
development 267 252 General and administrative 94 98 Amortization
of intangible assets 27 28
Restructuring, separation, and
transition
81
29
Total operating expenses 1,032
1,017 1 % 4 %
Operating
income 327 405 -19 %
-12 % Interest income 3 3 Interest expense (20 ) (20
)
Other income (loss), net
2 (1 )
Income before income taxes 312
387 -19 % N/A Provision for
income taxes 90 104
Net income $ 222 $ 283
-22 % N/A Net income per share
-- basic $ 0.32 $ 0.41 Net income per share -- diluted $
0.32 $ 0.40 Weighted-average shares outstanding -- basic 689
696 Weighted-average shares outstanding -- diluted 697 702
Cash dividends declared per common share $ 0.15
$ 0.15 (1)
Management refers to growth rates adjusting for currency so that
the business results can be viewed without the impact of
fluctuations in foreign currency exchange rates. We compare the
percentage change in the results from one period to another period
in order to provide a framework for assessing how our underlying
businesses performed excluding the effect of foreign currency rate
fluctuations. To present this information, current and comparative
prior period results for entities reporting in currencies other
than United States dollars are converted into United States dollars
at the actual exchange rates in effect during the respective prior
periods.
SYMANTEC
CORPORATION Condensed Consolidated Statements of Income
(In millions, except per share data, unaudited)
Year-Over-Year Nine Months Ended
Growth Rate (1)
January 2, December 27, Constant
2015
2013 Actual Currency
(2) Net revenue: Content, subscription, and
maintenance $ 4,431 $ 4,527 -2 % -1 % License 559
524 7 % 8 %
Total net
revenue 4,990 5,051
-1 % 0 %
Cost of revenue: Content,
subscription, and maintenance 748 759 License 80 67 Amortization of
intangible assets 38 41
Total cost of revenue
866 867 0 % 1 %
Gross profit 4,124 4,184
-1 % 0 %
Operating expenses: Sales and
marketing 1,772 1,854 Research and development 851 762 General and
administrative 290 331 Amortization of intangible assets 83 128
Restructuring, separation, and transition 131
232
Total operating
expenses 3,127 3,307
-5 % -5 %
Operating income 997
877 14 % 16 % Interest income 9
9 Interest expense (60 ) (65 ) Other income, net 4
37
Income
before income taxes 950 858
11 % N/A Provision for income taxes
248 177
Net income $ 702 $ 681 3
% N/A Net income per share -- basic $ 1.02 $
0.98 Net income per share -- diluted $ 1.01 $ 0.96
Weighted-average shares outstanding -- basic 690 697
Weighted-average shares outstanding -- diluted 697 706 Cash
dividends declared per common share $ 0.45 $
0.45 (1) We have a
52/53-week fiscal accounting year. The nine months ended January 2,
2015 consisted of 40 weeks, whereas the nine months ended December
27, 2013 consisted of 39 weeks. (2) Management refers to
growth rates adjusting for currency so that the business results
can be viewed without the impact of fluctuations in foreign
currency exchange rates. We compare the percentage change in the
results from one period to another period in order to provide a
framework for assessing how our underlying businesses performed
excluding the effect of foreign currency rate fluctuations. To
present this information, current and comparative prior period
results for entities reporting in currencies other than United
States dollars are converted into United States dollars at the
actual exchange rates in effect during the respective prior
periods.
SYMANTEC CORPORATION
Condensed Consolidated Statements of Cash Flows (Dollars
in millions, unaudited) Nine
Months Ended January 2, December 27,
2015 2013 OPERATING ACTIVITIES:
Net income $ 702 $ 681 Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation
213
207
Amortization of intangible assets 121 170 Amortization of debt
issuance costs and discounts 3 6 Stock-based compensation expense
140 111 Deferred income taxes 28 9 Excess income tax benefit from
the exercise of stock options (6 ) (13 ) Net gain from sale of
short-term investments - (32 ) Other 8 8 Net change in assets and
liabilities, excluding effects of acquisitions: Trade accounts
receivable, net (7 ) 145 Inventories, net 1 11 Deferred commissions
(16 ) 27 Accounts payable (65 ) (54 ) Accrued compensation and
benefits 28 (83 ) Deferred revenue (232 ) (470 ) Income taxes
payable (94 ) 30 Other assets 22 30 Other liabilities (22 )
49
Net cash provided by operating
activities 824 832
INVESTING ACTIVITIES: Purchases of property and equipment
(300 ) (183 ) Payments for acquisitions, net of cash acquired, and
purchases of intangibles (39 ) (17 ) Purchases of short-term
investments (1,429 ) (174 ) Proceeds from maturities of short-term
investments 495
99
Proceeds from sales of short-term investments 270
67
Net cash used in investing activities (1,003 )
(208 )
FINANCING ACTIVITIES: Repayments
of debt and other obligations (19 ) (1,189 ) Proceeds from
convertible note hedge - 189 Net proceeds from sales of common
stock under employee stock benefit plans 78 183 Excess income tax
benefit from the exercise of stock options 6 13 Tax payments
related to restricted stock units (37 ) (32 ) Dividends paid, net
(311 ) (314 ) Repurchases of common stock (375 ) (375 ) Proceeds
from other financing, net 36 -
Net cash used in financing activities (622 )
(1,525 ) Effect of exchange rate fluctuations on cash
and cash equivalents (142 ) 29 Change
in cash and cash equivalents (943 ) (872 ) Beginning cash and cash
equivalents 3,707 4,685 Ending
cash and cash equivalents $ 2,764 $ 3,813
SYMANTEC CORPORATION
Reconciliation of Selected GAAP
Measures to Non-GAAP Measures (1) (2)
(In millions, except per share data, unaudited)
Year-Over-Year Three Months Ended Non-GAAP
Growth Rate January 2, 2015 December 27, 2013
Constant GAAP Adj
Non-GAAP GAAP Adj
Non-GAAP Actual Currency (3)
Net revenue $ 1,638 $ - $ 1,638 $ 1,705
$ - $ 1,705 -4% 0%
Gross profit $ 1,359 $ 18 $
1,377 $ 1,422 $ 18 $ 1,440 -4% -1% Stock-based compensation 6 5
Amortization of intangible assets 12
13
Gross margin % 83.0% 1.1%
84.1% 83.4% 1.1% 84.5% -40 bps
-30 bps
Operating expenses: $ 1,032 $ 153 $ 879 $
1,017 $ 86 $ 931 -6% -3% Stock-based compensation 45 29
Amortization of intangible assets 27 28 Restructuring, separation,
and transition 81
29
Operating expenses
as a % of revenue 63.0% -9.3%
53.7% 59.6% -5.0% 54.6%
-90 bps -170 bps
Operating income $ 327 $ 171
$ 498 $ 405 $ 104 $ 509 -2% 4%
Operating margin % 20.0% 10.4%
30.4% 23.8% 6.1% 29.9% 50
bps 140 bps
Net income: $ 222 $ 145 $ 367 $ 283 $ 84
$ 367 0% N/A Gross profit adjustment 18 18 Operating expense
adjustment 153 86 Income tax effect on above items
(26) (20)
Diluted net income per share $ 0.32
$ 0.21 $ 0.53 $ 0.40 $ 0.12 $ 0.52 2%
N/A
Diluted weighted-average shares outstanding
697 - 697
702 - 702 -1% N/A
(1) This presentation includes non-GAAP measures. Non-GAAP
financial measures are supplemental and should not be considered a
substitute for financial information presented in accordance with
GAAP. For a detailed explanation of these non-GAAP measures, please
see Appendix A. (2) Non-GAAP measures for fiscal 2015 have
been revised to reflect a change in methodology that reduces the
number of adjustments to GAAP measures. For a detailed explanation
of this change in methodology, please see “Change in non-GAAP
methodology” in Appendix A. (3) Management refers to growth
rates adjusting for currency so that the business results can be
viewed without the impact of fluctuations in foreign currency
exchange rates. We compare the percentage change in the results
from one period to another period in order to provide a framework
for assessing how our underlying businesses performed excluding the
effect of foreign currency rate fluctuations. To present this
information, current and comparative prior period results for
entities reporting in currencies other than United States dollars
are converted into United States dollars at the actual exchange
rates in effect during the respective prior periods.
SYMANTEC CORPORATION
Revenue and Deferred Revenue Detail (Dollars in millions,
unaudited) Three Months
Ended January 2, 2015 December 27, 2013 GAAP
Revenue Content, subscription, and
maintenance $ 1,412 $ 1,508 License 226
197
Total Revenue $ 1,638
$ 1,705
GAAP Revenue - Y/Y Growth Rate
Content, subscription, and maintenance -6 % -1 %
License 15 % -27 %
Total Y/Y Growth
Rate -4 % -5 %
GAAP Revenue -
Y/Y Growth Rate in Constant Currency (1)
Content, subscription, and maintenance -3 % 0 %
License 20 % -27 %
Total Y/Y Growth
Rate in Constant Currency (1) 0 %
-4 %
GAAP Revenue by Segment (2)
Consumer Security $ 461 $ 517 Enterprise Security 509
528 Information Management 668
660
GAAP Revenue by Segment - Y/Y Growth Rate
(2) Consumer Security -11 % -2 %
Enterprise Security -4 % -5 % Information Management
1 % -6 %
GAAP Revenue by Segment - Y/Y Growth Rate
in Constant Currency (1) (2)
Consumer Security -7 % -2 % Enterprise Security 0 % -4 %
Information Management 5 % -7 %
GAAP
Revenue by Geography International
$ 830 $ 904 U.S. 808 801 Americas (U.S., Latin America, Canada) 907
914 EMEA 464 494 Asia Pacific & Japan 267
297
GAAP Revenue by Geography - Y/Y Growth
Rate International -8 % -4 % U.S. 1
% -6 % Americas (U.S., Latin America, Canada) -1 % -4 % EMEA -6 %
-1 % Asia Pacific & Japan -10 % -12
%
GAAP Revenue by Geography - Y/Y Growth Rate in Constant
Currency (1) International
-1 % -3 % U.S. 1 % -6 % Americas (U.S., Latin America, Canada) -1 %
-4 % EMEA 2 % -5 % Asia Pacific & Japan -3 %
-4 %
GAAP
Deferred Revenue $ 3,494 $ 3,654
GAAP Deferred Revenue - Y/Y Growth Rate -4 %
-6 %
GAAP Deferred Revenue - Y/Y Growth Rate in
Constant Currency (1) 1 % -5
% (1) Management refers to growth rates adjusting for
currency so that the business results can be viewed without the
impact of fluctuations in foreign currency exchange rates. We
compare the percentage change in the results from one period to
another period in order to provide a framework for assessing how
our underlying businesses performed. To exclude the effects of
foreign currency rate fluctuations, current and comparative prior
period results for entities reporting in currencies other than
United States dollars are converted into United States dollars at
the actual exchange rates in effect during the respective prior
periods (or, in the case of deferred revenue, converted into United
States dollars at the actual exchange rate in effect at the end of
the prior period). (2) This presentation includes revised
amounts from a change in segment reporting. Please see Appendix A
for more details.
SYMANTEC CORPORATION Operating Margin by Segment
Detail (1) (2) (3) (Dollars in millions,
unaudited) Three Months Ended
January 2, December 27, 2015
2013 Operating Income by Segment
Consumer Security $ 245 $ 224 Enterprise Security 85
107 Information Management 168
178 Total Operating Income by Segment 498
509 Reconciling Items: Stock-based
compensation 51 34 Amortization of intangible assets 39 41
Restructuring, separation, and transition 81
29
Total Consolidated Operating Income
$ 327 $ 405
Operating Margin by Segment
Consumer Security 53 % 43 % Enterprise Security 17 % 20 %
Information Management 25 % 27 %
(1) This presentation includes non-GAAP measures. Non-GAAP
financial measures are supplemental and should not be considered a
substitute for financial information presented in accordance with
GAAP. For a detailed explanation of these non-GAAP measures, please
see Appendix A. (2) Non-GAAP measures for fiscal 2015 have
been revised to reflect a change in methodology that reduces the
number of adjustments to GAAP measures. For a detailed explanation
of this change in methodology, please see “Change in non-GAAP
methodology” in Appendix A. (3) This presentation includes
revised amounts from a change in segment reporting. Please see
Appendix A for more details.
SYMANTEC CORPORATION Guidance
and Reconciliation of GAAP to Non-GAAP Operating Margin and
Earnings Per Share (1) (2) (Dollars in millions,
except per share data, unaudited)
Fiscal Year 2015 Revenue
Guidance Year Ended April 3, 2015
Year-Over-Year Growth Rate (3) (4) Range
Actual Constant Currency (5)
Revenue range $6,515 - $6,575 (2.8)% - (1.9)% (0.8)% - 0.2%
Year Ended April 3,
2015 Year-Over-Year Increase (3) Operating
Margin Guidance and Reconciliation Range Actual
Constant Currency (5) GAAP operating margin
18.8% - 19.0%
110 bps - 130 bps
198 bps - 221 bps
Add back: Stock-based compensation 3.0% Other non-GAAP adjustments
5.7% Non-GAAP operating margin
27.5% - 27.7%
10 bps - 30 bps
85 bps - 109 bps
Year Ended
April 3, 2015 Year-Over-Year Growth Rate (3)
Earnings Per Share Guidance and Reconciliation Range
Actual GAAP diluted earnings per share range $1.23 -
$1.26 (3.9)% - (1.6)% Add back: Stock-based compensation, net of
taxes $0.21 Other non-GAAP adjustments, net of taxes $0.43
Non-GAAP diluted earnings per share range $1.87 - $1.90 (4.1)% -
(2.6)%
Fourth
Quarter Fiscal Year 2015 Revenue Guidance Three
Months Ended April 3, 2015 Year-Over-Year Growth Rate
(4) Range Actual Constant Currency
(5) Revenue range $1,525 - $1,585 (7.6)% - (3.9)%
(2.2)% - 1.7%
Three Months Ended April 3, 2015 Year-Over-Year Increase
(Decrease) Operating Margin Guidance and Reconciliation
Range Actual Constant Currency (5)
GAAP operating margin
14.9% - 15.9%
(390) bps - (290) bps
(110) bps - (8) bps
Add back: Stock-based compensation 3.6% Other non-GAAP adjustments
8.0% Non-GAAP operating margin
26.5% - 27.5%
(70) bps - 30 bps
153 bps - 249 bps
Three Months
Ended April 3, 2015 Year-Over-Year Growth Rate
Earnings Per Share Guidance and Reconciliation Range
Actual GAAP diluted earnings per share range $0.22 -
$0.25 (29.0)% - (19.4)% Add back: Stock-based compensation, net of
taxes $0.06 Other non-GAAP adjustments, net of taxes $0.14
Non-GAAP diluted earnings per share range $0.42 - $0.45
(12.5)% - (6.2)% (1) This presentation includes
non-GAAP measures. Non-GAAP financial measures are supplemental and
should not be considered a substitute for financial information
presented in accordance with GAAP. For a detailed explanation of
these non-GAAP measures, please see Appendix A. (2) Non-GAAP
measures for fiscal 2015 have been revised to reflect a change in
methodology that reduces the number of adjustments to GAAP
measures. For a detailed explanation of this change in methodology,
please see “Change in non-GAAP methodology” in Appendix A.
(3) We have a 52/53-week fiscal accounting year. The fiscal year
ended April 3, 2015 consists of 53 weeks, whereas the fiscal year
ended March 28, 2014 consisted of 52 weeks. (4) Growth rates
are calculated using fiscal year 2014 non-GAAP revenue. (5)
Management refers to growth rates adjusting for currency
fluctuations in foreign currency exchange rates so that the
business results can be viewed without the impact of these
fluctuations. We compare the percent change of the results from one
period to another period in order to provide a consistent framework
for assessing how our underlying businesses performed. To exclude
the effects of foreign currency rate fluctuations, current and
comparative prior period results for entities reporting in
currencies other than United States dollars are converted into
United States dollars at the actual exchange rates in effect during
the respective prior periods.
SYMANTEC CORPORATIONExplanation of
Non-GAAP Measures and Other ItemsAppendix A
Segment Reporting: In fiscal 2015,
we are focused on managing our businesses as a portfolio and
optimizing certain businesses for margin or growth. As a result, we
formed a new consumer group and we consolidated our enterprise
security businesses into a segment. We modified our segment
reporting structure to match our operating structure in the second
quarter of fiscal 2015. The historical periods presented have been
adjusted to reflect the new reporting structure, which is now:
• Consumer Security• Enterprise Security• Information
Management
Consumer Security consists of our consumer security businesses
that were previously reported in User Productivity &
Protection. Enterprise Security consists of our enterprise security
businesses that were previously reported in User Productivity &
Protection and Information Security. There were no changes to the
Information Management segment.
Objective of non-GAAP measures: We
believe our presentation of non-GAAP financial measures, when taken
together with corresponding GAAP financial measures, provides
meaningful supplemental information regarding the Company’s
operating performance for the reasons discussed below. Our
management team uses these non-GAAP financial measures in assessing
the Company’s operating results, as well as when planning,
forecasting and analyzing future periods. We believe that these
non-GAAP financial measures also facilitate comparisons of the
Company’s performance to prior periods and to our peers and that
investors benefit from an understanding of the non-GAAP financial
measures. Non-GAAP financial measures are supplemental and should
not be considered a substitute for financial information presented
in accordance with GAAP.
Change in non-GAAP methodology:
From time to time, the Company performs a comprehensive review of
its non-GAAP financial measures. Effective in the first quarter of
fiscal 2015, non-GAAP financial measures are adjusted for the
following items: stock-based compensation expense; charges related
to the amortization of intangible assets; certain other income and
expense items that management considers unrelated to the Company’s
core operations; and the associated income tax effects of the
adjustments. By limiting the number and nature of adjustments, our
management team believes this supplemental information will provide
more meaningful insight into the performance of the Company’s core
business and enhance investors’ ability to compare the Company’s
performance to its peers. The adoption of the change in methodology
has been applied retrospectively to prior periods to facilitate
comparability across periods.
Stock-based compensation: Consists
of expenses for employee stock options, restricted stock units,
restricted stock awards, performance based awards and our employee
stock purchase plan determined in accordance with the authoritative
guidance on stock-based compensation. When evaluating the
performance of our individual business units and developing short-
and long-term plans, we do not consider stock-based compensation
charges. Our management team is held accountable for cash-based
compensation, but we believe that management is limited in its
ability to project the impact of stock-based compensation and
accordingly is not held accountable for its impact on our operating
results. Although stock-based compensation is necessary to attract
and retain quality employees, our consideration of stock-based
compensation places its primary emphasis on overall shareholder
dilution rather than the accounting charges associated with such
grants. In addition, for comparability purposes, we believe it is
useful to provide a non-GAAP financial measure that excludes
stock-based compensation in order to better understand the
long-term performance of our core business and to facilitate the
comparison of our results to the results of our peer companies.
Furthermore, unlike cash-based compensation, the value of
stock-based compensation is determined using complex formulas that
incorporate factors, such as market volatility, that are beyond our
control.
Three
Months Ended January 2, December 27, 2015 2013 Cost of
revenue $ 6 $ 5 Sales and marketing 20 15 Research and development
17 9 General and administrative 8 5 Total stock-based compensation
$ 51 $ 34
Amortization of intangible assets:
When conducting internal development of intangible assets,
accounting rules require that we expense the costs as incurred. In
the case of acquired businesses, however, we are required to
allocate a portion of the purchase price to the accounting value
assigned to intangible assets acquired and amortize this amount
over the estimated useful lives of the acquired intangible assets.
The acquired company, in most cases, has itself previously expensed
the costs incurred to develop the acquired intangible assets, and
the purchase price allocated to these assets is not necessarily
reflective of the cost we would incur in developing the intangible
asset. We eliminate these amortization charges from our non-GAAP
operating results to provide better comparability of pre- and
post-acquisition operating results and comparability to results of
businesses utilizing internally developed intangible assets.
Restructuring, separation, and
transition: We have engaged in various restructuring,
separation, and transition activities over the past several years
that have resulted in costs associated with severance, facilities,
transition, and other related costs. Separation and other related
costs consist of consulting and disentanglement costs incurred to
split the Company into two, independent publicly traded companies,
as well as costs to prune selected product lines that do not fit
either the Company’s growth or margin objectives. Transition and
other related costs consist of consulting charges associated with
the implementation of new Enterprise Resource Planning systems.
Each restructuring, separation, and transition activity has been a
discrete event based on a unique set of business objectives or
circumstances, and each has differed from the others in terms of
its operational implementation, business impact and scope. We do
not engage in restructuring, separation, or transition activities
in the ordinary course of business. While our operations previously
benefited from the employees and facilities covered by our various
restructuring and separation charges, these employees and
facilities have benefited different parts of our business in
different ways, and the amount of these charges has varied
significantly from period to period. We believe that it is
important to understand these charges and we believe that investors
benefit from excluding these charges from our operating results to
facilitate a more meaningful evaluation of current operating
performance and comparisons to past operating performance.
Symantec Corp.Media Contact:Kristen Batch,
650-527-5152Kristen_Batch@symantec.comInvestor Contact:Helyn
Corcos, 650-527-5523hcorcos@symantec.com
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