- Delivered four consecutive quarters of
implied billings growth and two consecutive quarters of deferred
revenue growth, in constant currency
- Released 41 enterprise security
products and 17 Veritas products in FY15
- Q4 non-GAAP revenue of $1,548M and EPS
of $0.43 within the guidance range
Symantec Corp. (NASDAQ: SYMC) today reported the results of its
fourth quarter and fiscal year 2015, ended April 3, 2015.
Michael A. Brown, president and CEO, said, “Fiscal 2015 was a
transformative year for Symantec, as we announced our unified
security and information management strategies, delivered more than
fifty products, and made the decision to separate Symantec and
Veritas into two standalone companies.”
“With the progress we made in FY15, our businesses have the
necessary focus to thrive and we are already seeing the benefits.
Setting aside currency headwinds, continued growth in both implied
billings and deferred revenue underscores the momentum in our
businesses. Our endpoint protection, data loss prevention,
NetBackup appliances and NetBackup software all outperformed the
market this quarter.”
Thomas Seifert, executive vice president and CFO, said,
“Symantec returned to growth and expanded operating margin
year-over-year in constant currency during the fourth quarter. We
continued to improve our cost structure, and over the year
delivered more than $150 million of incremental profit from our
revenue and efficiency initiatives. Additionally, the Veritas
separation is progressing on schedule.”
Results for the Fourth Quarter of Fiscal Year 2015 (Dollars
in millions, except EPS)
4Q15
4Q14
ReportedY/YChange
FXAdjustedY/Y
Change
GAAP
Revenue $1,518
$1,625 (7%) 0%
Operating Margin 10.0%
18.8% (880) bps
(640) bps
Net Income $176
$217 (19%) N/A
Deferred Revenue $3,664
$3,903 (6%) 1%
EPS (Diluted) $0.25
$0.31 (19%) N/A
CFFO $488 $449
9% N/A
Non-GAAP
Revenue
$1,548 $1,650
(6%) 1%
Operating Margin
25.6% 27.2%
(160) bps 30 bps
Net Income
$299 $333
(10%) N/A
EPS (Diluted)
$0.43 $0.48
(10%) N/A
Results for Fiscal Year 2015 (Dollars in millions, except
EPS)
FY15
FY14
ReportedY/YChange
FXAdjustedY/Y
Change
GAAP
Revenue $6,508
$6,676 (3%) 0%
Operating Margin 17.7%
17.7% 0 bps 60 bps
Net Income $878
$898 (2%) N/A
Deferred
Revenue $3,664 $3,903
(6%) 1%
EPS
(Diluted) $1.26 $1.28
(2%) N/A
CFFO
$1,312 $1,281
2% N/A
Non-GAAP
Revenue
$6,538 $6,701
(2%) 0%
Operating Margin
27.3% 27.4%
(10) bps 50 bps
Net Income
$1,311 $1,370
(4%) N/A
EPS (Diluted)
$1.88 $1.95
(4%) N/A
First Quarter and Fiscal Year 2016 Guidance (Dollars in
millions, except EPS and FX rate)
1Q16 FY16 GAAP
Revenue $1,500 - $1,540
$6,210 - $6,350
Operating Margin
14.0% - 15.0% 14.5% - 15.5%
EPS
(Diluted) $0.20 - $0.23
$0.86 - $0.96
Non-GAAP
Operating Margin
27.0% - 28.0% 29.0% - 30.0%
EPS
(Diluted) $0.41 - $0.44
$1.80 - $1.90
Tax Rate 27.0%
27.5%
Share Count
690 million 694 million
FX Rate (€/$)
$1.10 $1.13
Symantec's Board of Directors has declared a quarterly cash
dividend of $0.15 per common share to be paid on June 24, 2015 to
all shareholders of record as of the close of business on June 10,
2015. The ex-dividend date will be June 8, 2015.
Conference Call
Symantec has scheduled a conference call for 5 p.m. ET/2 p.m. PT
today to discuss its fourth quarter and fiscal year 2015 results,
ended April 3, 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 19,000 employees reside in more than 50
countries. Ninety-nine percent of Fortune 500 companies are
Symantec customers. In fiscal 2015, it recorded revenues of $6.5
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 January 2, 2015.
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)
April 3, March 28,
2015
2014 (1)
ASSETS Current assets: Cash and cash
equivalents $ 2,874 $ 3,707 Short-term investments 1,017 377 Trade
accounts receivable, net 993 1,007 Deferred income taxes 152 142
Deferred commissions 131 115 Other current assets 255
304
Total current assets 5,422
5,652 Property and equipment, net 1,205 1,116
Intangible assets, net 628 768 Goodwill 5,847 5,858 Long-term
deferred commissions 26 21 Other long-term assets 105
124
Total assets $ 13,233 $ 13,539
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable $ 213 $ 282 Accrued
compensation and benefits 398 365 Deferred revenue 3,109 3,322
Current portion of long-term debt 350 - Other current liabilities
383 337
Total current
liabilities 4,453 4,306
Long-term debt 1,746 2,095 Long-term deferred revenue 555 581
Long-term deferred tax liabilities 308 425 Long-term income taxes
payable 134 252 Other long-term obligations 102
83
Total liabilities 7,298
7,742
Total stockholders'
equity 5,935 5,797
Total
liabilities and stockholders' equity $ 13,233 $ 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 April 3, March
28, Constant
2015
2014
Actual Currency (1)
Net revenue: Content, subscription, and maintenance $ 1,318
$ 1,433 -8 % -1 % License 200 192
4 % 13 %
Total net revenue 1,518
1,625 -7 % 0 %
Cost of revenue: Content, subscription, and maintenance 240
249 License 34 20 Amortization of intangible assets 13
13
Total cost of revenue
287 282 2 % 6 %
Gross profit 1,231 1,343
-8 % -1 %
Operating expenses: Sales and
marketing 551 585 Research and development 293 277 General and
administrative 89 115 Amortization of intangible assets 25 28
Restructuring, separation, and transition 121
32
Total operating expenses
1,079 1,037 4 % 9
%
Operating income 152 306
-50 % -34 % Interest income 3 3
Interest expense (19 ) (19 ) Other income, net 7
8
Income before
income taxes 143 298
-52 % N/A Income tax (benefit) expense
(33 ) 81
Net
income $ 176 $ 217 -19 % N/A
Net income per share -- basic $ 0.26 $ 0.31
Net income per share -- diluted $ 0.25 $ 0.31
Weighted-average shares outstanding -- basic 684 693
Weighted-average shares outstanding -- diluted 693 700 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
Year Ended
Growth Rate (1)
April 3, March 28,
Constant
2015
2014
Actual
Currency (2) Net revenue:
Content, subscription, and maintenance $ 5,749 $ 5,960 -4 % -1 %
License 759 716 6 %
10 %
Total net revenue 6,508
6,676 -3 % 0 %
Cost of
revenue: Content, subscription, and maintenance 988 1,008
License 114 87 Amortization of intangible assets 51
54
Total cost
of revenue 1,153 1,149
0 % 2 %
Gross profit 5,355
5,527 -3 % -1 %
Operating expenses: Sales and marketing 2,323 2,439 Research
and development 1,144 1,039 General and administrative 379 446
Amortization of intangible assets 108 156 Restructuring,
separation, and transition 252 264
Total operating expenses
4,206 4,344 -3 %
-2 %
Operating income 1,149
1,183 -3 % 3 % Interest income 12 12
Interest expense (79 ) (84 ) Other income, net 11
45
Income
before income taxes 1,093 1,156
-5 % N/A Provision for income
taxes 215 258
Net income $ 878 $ 898
-2 % N/A Net income per share -- basic
$ 1.27 $ 1.29 Net income per share -- diluted $ 1.26 $ 1.28
Weighted-average shares outstanding -- basic 689 696
Weighted-average shares outstanding -- diluted 696 704 Cash
dividends declared per common share $ 0.60 $
0.60 (1) We have a
52/53-week fiscal accounting year. The year ended April 3, 2015
consisted of 53 weeks, whereas the year ended March 28, 2014
consisted of 52 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) Year Ended April 3,
March 28, 2015 2014 OPERATING
ACTIVITIES: Net income $ 878 $ 898 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation 280 281 Amortization of intangible assets 159 210
Amortization of debt issuance costs and discounts 4 7 Stock-based
compensation expense 195 156 Deferred income taxes
(23
) 47 Excess income tax benefit from the exercise of stock options
(10 ) (17 ) Net gain from sale of short-term investments - (32 )
Other 10 8 Net change in assets and liabilities, excluding effects
of acquisitions: Trade accounts receivable, net (38 ) 30 Deferred
commissions (30 ) 26 Accounts payable (65 ) (75 ) Accrued
compensation and benefits 49 (58 ) Deferred revenue 19 (223 )
Income taxes payable
(191
) 7 Other assets 22 (11 ) Other liabilities 53
27
Net cash provided by operating activities
1,312 1,281
INVESTING
ACTIVITIES: Purchases of property and equipment (381 ) (260 )
Payments for acquisitions, net of cash acquired, and purchases of
intangibles (39 ) (17 ) Purchases of short-term investments (1,758
) (492 ) Proceeds from maturities of short-term investments 681 117
Proceeds from sales of short-term investments 343
69
Net cash used in investing
activities (1,154 ) (583 )
FINANCING ACTIVITIES: Repayments of debt and other
obligations (21 ) (1,189 ) Proceeds from convertible note hedge -
189 Net proceeds from sales of common stock under employee stock
benefit plans 116 234 Excess income tax benefit from the exercise
of stock options 10 17 Tax payments related to restricted stock
units (47 ) (45 ) Dividends paid, net (413 ) (418 ) Repurchases of
common stock (500 ) (500 ) Proceeds from other financing, net
44 -
Net cash used in
financing activities (811 ) (1,712 )
Effect of exchange rate fluctuations on cash and cash
equivalents (180 ) 36 Change in cash
and cash equivalents (833 ) (978 ) Beginning cash and cash
equivalents 3,707 4,685 Ending
cash and cash equivalents $ 2,874 $ 3,707
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 April 3, 2015
March 28, 2014 Constant GAAP
Adj Non-GAAP GAAP
Adj Non-GAAP
Actual Currency (3) Net
revenue $ 1,518 $ 30 $ 1,548
$ 1,625 $ 25 $ 1,650
-6 % 1 %
Gross profit: $
1,231 $ 49 $ 1,280 $ 1,343 $ 44 $ 1,387 -8 % -1 % EDS & NDI
contingency 30 - GSA investigation - 25 Stock-based compensation 6
6 Amortization of intangible assets 13
13
Gross margin
% 81.1 % 1.6 % 82.7 %
82.6 % 1.5 % 84.1 %
-140 bps -100 bps
Operating
expenses: $ 1,079 $ 195 $ 884 $ 1,037 $ 99 $ 938 -6 % -2 %
Stock-based compensation 49 39
Amortization of intangible assets
25
28
Restructuring, separation, and transition 121
32
Operating expenses as a % of revenue 71.1 %
-14.0 % 57.1 % 63.8 %
-7.0 % 56.8 % 30 bps
-130 bps
Operating income $ 152
$ 244 $ 396 $ 306
$ 143 $ 449 -12 % 1 %
Operating margin % 10.0 % 15.6 %
25.6 % 18.8 % 8.4
% 27.2 % -160 bps 30 bps
Net income: $ 176 $ 123 $ 299 $ 217 $ 116 $ 333 -10 % N/A
Gross profit adjustment 49 44 Operating expense adjustment 195 99
Income tax effect on above items (121 )
(27 )
Diluted net income per
share $ 0.25 $ 0.18 $ 0.43
$ 0.31 $ 0.17 $ 0.48
-10 % N/A
Diluted
weighted-average shares outstanding 693
- 693
700 - 700
-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 Reconciliation of Selected
GAAP Measures to Non-GAAP Measures (1) (2) (In
millions, except per share data, unaudited)
Year-Over-Year Year Ended
Non-GAAP Growth Rate April 3, 2015
March 28, 2014 Constant GAAP
Adj Non-GAAP GAAP
Adj Non-GAAP
Actual Currency (3) Net
revenue $ 6,508 $ 30 $ 6,538
$ 6,676 $ 25 $ 6,701
-2 % 0 %
Gross profit: $
5,355 $ 105 $ 5,460 $ 5,527 $ 98 $ 5,625 -3 % 0 % EDS & NDI
contingency 30 - GSA investigation - 25 Stock-based compensation 24
19 Amortization of intangible assets 51
54
Gross margin
% 82.3 % 1.2 % 83.5 %
82.8 % 1.1 % 83.9 %
-40 bps -30 bps
Operating
expenses: $ 4,206 $ 531 $ 3,675 $ 4,344 $ 557 $ 3,787 -3 % -2 %
Stock-based compensation 171 137 Amortization of intangible assets
108 156 Restructuring, separation, and transition
252
264
Operating expenses as a % of revenue 64.6 %
-8.4 % 56.2 % 65.1 %
-8.6 % 56.5 % -30 bps
-80 bps
Operating income $ 1,149
$ 636 $ 1,785 $ 1,183
$ 655 $ 1,838 -3 %
2 %
Operating margin % 17.7 %
9.6 % 27.3 % 17.7 %
9.7 % 27.4 % -10 bps 50
bps
Net income: $ 878 $ 433 $ 1,311 $ 898 $ 472 $
1,370 -4 % N/A Gross profit adjustment 105 98 Operating expense
adjustment 531 557 Income tax effect on above items
(203 ) (183
)
Diluted net income per share $ 1.26 $ 0.62
$ 1.88 $ 1.28 $
0.67 $ 1.95 -4 % N/A
Diluted weighted-average shares outstanding
696 - 696
704 -
704 -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 (1) (2) (Dollars in millions, unaudited)
Three Months
Ended April 3, 2015 March 28, 2014 GAAP
Adj (3) Non-GAAP GAAP
Adj (4) Non-GAAP Revenue
Content, subscription, and maintenance
$ 1,318 $ 30 $ 1,348 $ 1,433 $ 21 $ 1,454 License 200
- 200
192 4 196
Total Revenue $ 1,518 $ 30
$ 1,548 $ 1,625 $
25 $ 1,650
Revenue - Y/Y Growth Rate
Content, subscription, and maintenance
-8 % 1 % -7 % -6 % 1 % -5 % License 4 %
-2 % 2 % -13 % 2 %
-11 %
Total Y/Y Growth Rate -7 %
1 % -6 % -7 %
1 % -6 %
Revenue - Y/Y Growth Rate
in Constant Currency (5)
Content, subscription, and maintenance -1 % 0 % -1 % -6 % 1 % -5 %
License 13 % -3 % 10 %
-14 % 2 % -12 %
Total
Y/Y Growth Rate in Constant Currency (5) 0
% 1 % 1 % -7 %
1 % -6 %
Revenue by Segment (6)
Consumer Security $ 408 $ 30 $ 438 $ 504 $ - $ 504 Enterprise
Security 491 - 491 511 10 521 Information Management
619 - 619
610 15 625
Revenue by Segment - Y/Y Growth Rate (6)
Consumer Security -19 % 6 % -13 % -5 %
0 % -5 % Enterprise Security -4 % -2 % -6 % -6 % 2 % -4 %
Information Management 1 % -2 %
-1 % -10 % 3 %
-7 %
Revenue by Segment - Y/Y Growth Rate in Constant
Currency (5) (6)
Consumer
Security -13 % 6 % -7 % -5 % 0 % -5 % Enterprise Security 2 % -2 %
0 % -6 % 2 % -4 % Information Management 9 %
-3 % 6 % -10 %
2 % -8 %
Revenue by Geography
International $ 758 $ - $ 758 $ 847 $ - $ 847 U.S. 760 30 790 778
25 803 Americas (U.S., Latin America, Canada) 855 30 885 880 25 905
EMEA 399 - 399 470 - 470 Asia Pacific & Japan 264
- 264
275 - 275
Revenue by Geography - Y/Y Growth Rate
International -11 % 0 % -11 % -6 % 0 % -6 % U.S. -2 %
0 % -2 % -9 % 3 % -6 % Americas (U.S., Latin America, Canada) -3 %
1 % -2 % -8 % 3 % -5 % EMEA -15 % 0 % -15 % -3 % 0 % -3 % Asia
Pacific & Japan -4 % 0 %
-4 % -11 % 0 %
-11 %
Revenue by Geography - Y/Y Growth Rate in Constant
Currency (5)
International 2 %
0 % 2 % -6 % 0 % -6 % U.S. -2 % 1 % -1 % -9 % 3 % -6 % Americas
(U.S., Latin America, Canada) -3 % 1 % -2 % -8 % 3 % -5 % EMEA 3 %
0 % 3 % -6 % 0 % -6 % Asia Pacific & Japan 6 %
0 % 6 % -6 %
0 % -6 %
Deferred Revenue $ 3,664 $ -
$ 3,664 $ 3,903 $
- $ 3,903
Deferred Revenue - Y/Y Growth
Rate -6 % 0 % -6 %
-4 % 0 % -4 %
Deferred Revenue - Y/Y Growth Rate in Constant Currency
(5) 1 % 0 % 1 %
-6 % 0 % -6 %
(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 Symantec’s Explanation of Non-GAAP Measures in 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 Symantec’s Explanation of Non-GAAP Measures in Appendix A.
(3) The revenue adjustment relates to the EDS & NDI
contingency. Please see Appendix A for more details. (4) The
revenue adjustment relates to the GSA investigation. Please see
Appendix A for more details. (5) 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). (6) 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 April 3, 2015 March 28,
2014 GAAP Adj (4)
Non-GAAP GAAP Adj (5)
Non-GAAP Operating Income by Segment
Consumer Security $ 212 $ 30 $ 242 $ 255 $ - $ 255
Enterprise Security 47 - 47 69 10 79 Information Management
107 - 107
100 15
115 Total Operating Income by Segment
366 30 396
424 25 449
Reconciling Items: Stock-based compensation 55 (55 ) - 45
(45 ) - Amortization of intangible assets 38 (38 ) - 41 (41 ) -
Restructuring, separation, and transition 121
(121 ) - 32
(32 ) -
Total
Consolidated Operating Income $ 152 $ 244
$ 396 $ 306 $ 143
$ 449
Operating Margin by Segment
Consumer Security 52 % 3 % 55 % 51 % 0 % 51 % Enterprise Security
10 % 0 % 10 % 14 % 1 % 15 % Information Management 17
% 0 % 17 % 16 %
2 % 18 % (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. (4) The revenue adjustment relates to the
EDS & NDI contingency. Please see Appendix A for more details.
(5) The revenue adjustment relates to the GSA investigation.
Please see Appendix A for more details.
SYMANTEC CORPORATION Revenue and Deferred Revenue
Detail (1) (2) (Dollars in millions, unaudited)
Year Ended April 3, 2015 March 28, 2014
GAAP Adj (3) Non-GAAP
GAAP Adj (4) Non-GAAP
Revenue
Content, subscription,
and maintenance $ 5,749 $ 30 $ 5,779 $ 5,960 $ 21 $ 5,981 License
759 - 759
716 4
720
Total Revenue $ 6,508
$ 30 $ 6,538 $ 6,676
$ 25 $ 6,701
Revenue - Y/Y
Growth Rate
Content, subscription,
and maintenance -4 % 1 % -3 % -1 % 0 % -1 % License 6
% -1 % 5 % -19 %
0 % -19 %
Total Y/Y Growth Rate
-3 % 1 % -2 %
-3 % 0 % -3 %
Revenue
- Y/Y Growth Rate in Constant Currency (5)
Content, subscription, and maintenance -1 % 0 % -1 %
-1 % 1 % 0 % License 10 % -1 %
9 % -19 % 0 %
-19 %
Total Y/Y Growth Rate in Constant Currency
(5) 0 % 0 % 0 %
-3 % 0 % -3 %
Revenue by Segment
(6)
Consumer Security $ 1,887 $ 30 $
1,917 $ 2,063 $ - $ 2,063 Enterprise Security 2,063 - 2,063 2,100
10 2,110 Information Management 2,558
- 2,558
2,513 15 2,528
Revenue by Segment - Y/Y Growth Rate (6)
Consumer Security -9 % 2 % -7 % -2 % 0 % -2 %
Enterprise Security -2 % 0 % -2 % -3 % 0 % -3 % Information
Management 2 % -1 % 1 %
-4 % 0 % -4 %
Revenue by Segment - Y/Y Growth Rate in Constant Currency
(5) (6)
Consumer Security -6 % 1
% -5 % -1 % 0 % -1 % Enterprise Security 0 % 0 % 0 % -2 % 0 % -2 %
Information Management 4 % 0 %
4 % -5 % 1 %
-4 %
Revenue by
Geography
International $ 3,338 $ -
$ 3,338 $ 3,478 $ - $ 3,478 U.S. 3,170 30 3,200 3,198 25 3,223
Americas (U.S., Latin America, Canada) 3,586 30 3,616 3,617 25
3,642 EMEA 1,813 - 1,813 1,891 - 1,891 Asia Pacific & Japan
1,109 -
1,109 1,168 -
1,168
Revenue by Geography - Y/Y
Growth Rate
International -4 % 0 % -4
% -3 % 0 % -3 % U.S. -1 % 0 % -1 % -4 % 1 % -3 % Americas (U.S.,
Latin America, Canada) -1 % 0 % -1 % -3 % 0 % -3 % EMEA -4 % 0 % -4
% 2 % 0 % 2 % Asia Pacific & Japan -5 %
0 % -5 % -10 %
0 % -10 %
Revenue by Geography - Y/Y Growth
Rate in Constant Currency (5)
International 0 % 0 % 0 % -2 % 0 % -2 % U.S. -1 % 0 % -1 %
-4 % 1 % -3 % Americas (U.S., Latin America, Canada) -1 % 0 % -1 %
-3 % 0 % -3 % EMEA 1 % 0 % 1 % -2 % 0 % -2 % Asia Pacific &
Japan 0 % 0 % 0 %
-4 % 0 % -4 %
Deferred Revenue $ 3,664
$ - $ 3,664 $
3,903 $ - $ 3,903
Deferred
Revenue - Y/Y Growth Rate -6 % 0 %
-6 % -4 % 0 %
-4 %
Deferred Revenue - Y/Y Growth Rate in
Constant Currency (5) 1 % 0
% 1 % -6 % 0 %
-6 % (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 Symantec’s Explanation of Non-GAAP
Measures in 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 Symantec’s Explanation of Non-GAAP
Measures in Appendix A. (3) The revenue adjustment relates
to the EDS & NDI contingency. Please see Appendix A for more
details. (4) The revenue adjustment relates to the GSA
investigation. Please see Appendix A for more details. (5)
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).
(6) 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)
Year Ended April 3, 2015 March 28,
2014 GAAP Adj (4)
Non-GAAP GAAP Adj (5)
Non-GAAP Operating Income by Segment
Consumer Security $ 982 $ 30 $ 1,012 $ 928 $ -
$ 928 Enterprise Security 287 - 287 314 10 324 Information
Management 486 -
486 571 15
586 Total Operating Income by Segment
1,755 30
1,785 1,813 25
1,838 Reconciling Items: Stock-based
compensation 195 (195 ) - 156 (156 ) - Amortization of intangible
assets 159 (159 ) - 210 (210 ) - Restructuring, separation, and
transition 252 (252 )
- 264 (264
) -
Total Consolidated Operating Income
$ 1,149 $ 636 $ 1,785
$ 1,183 $ 655 $ 1,838
Operating Margin by
Segment
Consumer Security 52 % 1 % 53 %
45 % 0 % 45 % Enterprise Security 14 % 0 % 14 % 15 % 0 % 15 %
Information Management 19 % 0 %
19 % 23 % 0 %
23 % (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.
(4) The revenue adjustment relates to the EDS & NDI
contingency. Please see Appendix A for more details. (5) The
revenue adjustment relates to the GSA investigation. Please see
Appendix A for more details.
SYMANTEC
CORPORATION Guidance and Reconciliation of GAAP to Non-GAAP
Operating Margin and Earnings Per Share (1) (Dollars
in millions, except per share data, unaudited) Fiscal
Year 2016 Revenue Guidance Year Ended April 1,
2016 Year-Over-Year Growth Rate (2) (3)
Range Actual Constant
Currency (4) (5) Revenue range $6,210 -
$6,350
(5.0)% - (2.9)%
0.0% - 2.3%
Year Ended
April 1, 2016 Year-Over-Year Increase (Decrease)
(2) Operating Margin Guidance and Reconciliation
Range Actual Constant
Currency (4) (5) GAAP operating margin 14.5% -
15.5% (320) bps - (220) bps (108) bps - (8) bps Add back:
Stock-based compensation 4.6% Other non-GAAP adjustments 9.9%
Non-GAAP operating margin 29.0%
- 30.0% 170 bps - 270 bps 330 bps - 430 bps
Year Ended April 1,
2016 Year-Over-Year Growth Rate (2) Earnings
Per Share Guidance and Reconciliation Range
Actual GAAP diluted earnings per share range
$0.86 - $0.96 (31.7)% - (23.8)% Add back: Stock-based compensation,
net of taxes $0.30 Other non-GAAP adjustments, net of taxes $0.64
Non-GAAP diluted earnings per share range
$1.80 - $1.90 (4.3)% - 1.1%
First Quarter Fiscal
Year 2016 Revenue Guidance Three Months Ended July 3,
2015 Year-Over-Year Growth Rate (2)
Range Actual Constant Currency
(4) (5) Revenue range $1,500 - $1,540
(13.5)% - (11.2)%
(0.5)% - 2.1%
Three Months
Ended July 3, 2015 Year-Over-Year Increase (Decrease)
(2) Operating Margin Guidance and Reconciliation
Range Actual Constant
Currency (4) (5) GAAP operating margin 14.0% -
15.0% (460) bps - (360) bps 33 bps - 134 bps Add back: Stock-based
compensation 3.7% Other non-GAAP adjustments 9.3%
Non-GAAP operating margin 27.0% - 28.0%
240 bps - 340 bps 635 bps - 735 bps
Three Months Ended July 3, 2015
Year-Over-Year Growth Rate (2) Earnings Per Share
Guidance and Reconciliation Range
Actual GAAP diluted earnings per share range $0.20 -
$0.23 (41.2)% - (32.4)% Add back: Stock-based compensation, net of
taxes $0.06 Other non-GAAP adjustments, net of taxes $0.15
Non-GAAP diluted earnings per share range $0.41 -
$0.44 (8.9)% - (2.2)% (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) We have
a 52/53-week fiscal accounting year. The fiscal year ended April 1,
2016 consists of 52 weeks, whereas the fiscal year ended April 3,
2015 consisted of 53 weeks. The quarter ended July 3, 2015 consists
of 13 weeks, whereas the quarter ended July 4, 2014 consisted of 14
weeks. (3) Growth rates are calculated using fiscal year
2015 non-GAAP revenue. (4) 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. (5) These calculations are
adjusted for the extra week in the June 2014 quarter.
SYMANTEC CORPORATION
Explanation of Non-GAAP Measures and Other
Items
Appendix 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 April 3, March 28,
2015
2014
Cost of revenue $ 6 $ 6 Sales and marketing 20 15 Research and
development 20 14 General and administrative 9 10 Total
stock-based compensation $ 55 $ 45
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.
EDS & NDI contingency: On
January 24, 2011, a class action lawsuit was filed against the
Company and its previous e-commerce vendor Digital River, Inc. The
lawsuit alleged violations of California’s Unfair Competition Law,
the California Legal Remedies Act and unjust enrichment related to
prior sales of Extended Download Service (EDS) and Norton Download
Insurance (NDI). On March 31, 2014, the U.S. District Court for the
District of Minnesota certified a class of all people who purchased
these products between January 24, 2005, and March 10, 2011. In
April 2015, we reached agreement in principle with the plaintiffs
under which the Company will pay the plaintiffs $30 million. As we
consider this settlement amount now estimable and probable, we have
recorded it as an offset to revenue during the year ended April 3,
2015. The Company's management excluded this item when evaluating
its ongoing operating performance, and therefore excluded this loss
when presenting non-GAAP financial measures.
GSA investigation: During the first
quarter of fiscal 2013, we were advised by the Commercial
Litigation Branch of the Department of Justice’s Civil Division and
the Civil Division of the U.S. Attorney’s Office for the District
of Columbia that the government is investigating our compliance
with certain provisions of our U.S. General Services Administration
(“GSA”) Multiple Award Schedule Contract No. GS-35F-0240T effective
January 24, 2007, including provisions relating to pricing, country
of origin, accessibility, and the disclosure of commercial sales
practices. As a result of these developments, we considered the
need for an accrual for a potential loss and we recorded an amount
as a reduction of revenue that represents our best estimate of the
low end of such range. This amount contemplates estimated losses
from both the investigation of compliance with the terms of the GSA
Schedule contract as well as possible violations of the False
Claims Act. There is at least a reasonable possibility that a loss
may have been incurred in excess of our accrual for this matter,
however we are currently unable to determine a range of estimated
losses resulting from this matter. The Company's management
excluded this item when evaluating its ongoing operating
performance, and therefore excluded this loss when presenting
non-GAAP financial measures.
Release of tax contingencies:
During the fourth quarter of fiscal 2015 and second quarter of
fiscal 2014, we realized GAAP tax benefits of $39 million and $33
million, respectively, for the resolution of tax matters related to
the sale of our 49% ownership interest in the joint venture with
Huawei during the fourth quarter of fiscal 2012. The related gain
on the sale in the fourth quarter of fiscal 2012 was excluded from
non-GAAP results and, accordingly, we have excluded the tax benefit
from our non-GAAP results. This GAAP tax benefit is presented in
the “Income tax effect on above items” line.
Defined benefit plans: The Company
has defined benefit plans in the form of company mandatory or
statutory retirement and termination indemnities in foreign
locations including a company supplemental plan in Germany which is
now frozen. In the fourth quarter of fiscal 2015, the Company
recorded an $11 million charge to operating expenses to adjust for
gains and losses on such defined benefit plans. This charge was
included in our non-GAAP results.
Symantec Corp.Kristen Batch, 650-527-5152
(Media)Kristen_Batch@symantec.comHelyn Corcos, 650-527-5523
(Investors)hcorcos@symantec.com
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