UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): November 5, 2015
Symantec Corporation
|
(Exact Name of Registrant as Specified in Charter)
|
Delaware
|
000-17781
|
77-0181864
|
(State or Other Jurisdiction of
Incorporation)
|
(Commission
File Number)
|
(IRS Employer
Identification No.)
|
350 Ellis Street, Mountain View, CA
|
94043
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
Registrant’s Telephone Number, Including Area Code (650) 527-8000 |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition
On November 5, 2015, Symantec Corporation (the “Company”) issued a press release announcing financial results for the second quarter ended October 2, 2015. The Company also posted to its website supplemental financial information and commentary by Thomas J. Seifert, the Company’s Executive Vice President and Chief Financial Officer. Copies of the press release and supplemental information and commentary are furnished as Exhibits 99.01 and 99.02, respectively, to this Current Report and are incorporated herein by reference.
The information in Item 2.02 of this Current Report, including Exhibits 99.01 and 99.02 hereto, shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information contained in this Item 2.02 and in the accompanying Exhibits 99.01 and 99.02 shall not be incorporated by reference into any registration statement or other document filed with the Securities and Exchange Commission by the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
Exhibit Number
|
Exhibit Title or Description
|
|
|
99.01
|
Press release issued by Symantec Corporation entitled “Symantec Reports Second Quarter Fiscal Year 2016 Results,” dated November 5, 2015
|
|
|
99.02
|
CFO Commentary on Second Quarter Fiscal Year 2016 Results
|
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
|
|
|
|
Symantec Corporation |
|
|
|
|
|
Date: November 5, 2015
|
By:
|
/s/ Thomas J. Seifert
|
|
|
|
Thomas J. Seifert
Executive Vice President and Chief Financial Officer
|
Exhibit Index
Exhibit Number
|
Exhibit Title or Description
|
|
|
99.01
|
Press release issued by Symantec Corporation entitled “Symantec Reports Second Quarter Fiscal Year 2016 Results,” dated November 5, 2015
|
|
|
99.02
|
CFO Commentary on Second Quarter Fiscal Year 2016 Results
|
Exhibit 99.01
FOR IMMEDIATE RELEASE
MEDIA CONTACT: |
INVESTOR CONTACT: |
Noah Edwardsen
|
Jonathan Doros
|
Symantec Corp.
|
Symantec Corp.
|
424-750-7574
|
650-527-5523
|
noah_edwardsen@symantec.com
|
jonathan_doros@symantec.com
|
Symantec Reports Second Quarter Fiscal Year 2016 Results
●
|
Revenue within guided range; Operating margin and EPS at the high end of guided range
|
●
|
Enterprise Security continues its growth trajectory, adjusting for currency; Consumer Security margins expand year-over-year to 55%
|
●
|
Board of Directors authorizes $500 million accelerated share repurchase
|
MOUNTAIN VIEW, Calif. – November 5, 2015 – Symantec Corp. (NASDAQ: SYMC) today reported the results of its second quarter of fiscal year 2016, ended October 2, 2015.
Michael A. Brown, president and CEO, said, “With a security-focused Symantec, we continue to increase our momentum as the global leader in cybersecurity. We drove growth in Enterprise Security for the second consecutive quarter, partly due to a 10 percent revenue increase in Information Protection solutions including another record quarter for DLP. To set the stage for continued progress, we will deliver more than a dozen new products and services over the next three quarters.”
Thomas Seifert, executive vice president and CFO, said, “This was an important quarter for Symantec. On October 3, we completed the operational separation as planned, and Symantec and Veritas are now running as standalone businesses. The close of the Veritas sale is on track to occur by the end of Q3 and we have received board authorization to accelerate the return of $2 billion to shareholders, beginning with a $500 million accelerated share repurchase.”
Results for the Second Quarter of Fiscal Year 2016 (Dollars in millions, except EPS)
|
|
|
2Q16 |
|
|
|
2Q15 |
|
|
Reported Y/Y
Change
|
|
|
FX Adjusted
Y/Y Change
|
|
GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
1,498 |
|
|
$ |
1,617 |
|
|
|
(7 |
%) |
|
|
(1 |
%) |
Operating Margin
|
|
|
13.6 |
% |
|
|
21.5 |
% |
|
(790) bps
|
|
(600) bps
|
Net Income
|
|
$ |
156 |
|
|
$ |
244 |
|
|
|
(36 |
%) |
|
|
N/A |
|
Deferred Revenue
|
|
$ |
3,271 |
|
|
$ |
3,417 |
|
|
|
(4 |
%) |
|
|
0 |
% |
EPS (Diluted)
|
|
$ |
0.23 |
|
|
$ |
0.35 |
|
|
|
(34 |
%) |
|
|
N/A |
|
CFFO
|
|
$ |
134 |
|
|
$ |
173 |
|
|
|
(23 |
%) |
|
|
N/A |
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Margin
|
|
|
28.1 |
% |
|
|
28.7 |
% |
|
(60) bps
|
|
50 bps
|
Net Income
|
|
$ |
301 |
|
|
$ |
332 |
|
|
|
(9 |
%) |
|
|
N/A |
|
EPS (Diluted)
|
|
$ |
0.44 |
|
|
$ |
0.48 |
|
|
|
(8 |
%) |
|
|
N/A |
|
(More)
Third Quarter and Fourth Quarter of Fiscal Year 2016 Guidance (Dollars in millions, except EPS and FX rate)
|
|
New Security Company Guidance
|
|
|
|
|
3Q16 |
|
|
FX Adj. Y/Y
Growth
|
|
|
|
4Q16 |
|
|
FX Adj. Y/Y
Growth
|
|
GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
$890 - $920 |
|
|
|
(5%) - (2%) |
|
|
$885 - $915 |
|
|
|
(4%) - (1%) |
Enterprise Security
|
|
|
$480 - $500 |
|
|
|
(2%) - 2% |
|
|
$480 - $500 |
|
|
|
(1%) - 3% |
Consumer Security
|
|
|
$410 - $420 |
|
|
|
(8%) - (6%) |
|
|
$405 - $415 |
|
|
|
(8%) - (5%) |
Information Management
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
Operating Margin
|
|
|
8.5% - 10.5 |
% |
|
|
|
|
|
|
17.5% - 19.5 |
% |
|
|
|
|
EPS (Diluted)*
|
|
|
$0.22 - $0.25 |
|
|
|
|
|
|
|
$0.16 - $0.19 |
|
|
|
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Margin
|
|
|
25.5% - 27.5 |
% |
|
|
|
|
|
|
26.5% - 28.5 |
% |
|
|
|
|
EPS (Diluted)
|
|
|
$0.22 - $0.25 |
|
|
|
|
|
|
|
$0.24 - $0.27 |
|
|
|
|
|
Tax Rate
|
|
|
29.5 |
% |
|
|
|
|
|
|
29.5 |
% |
|
|
|
|
Share Count
|
|
665 million
|
|
|
|
|
|
|
653 million
|
|
|
|
|
|
FX Rate (€/$)
|
|
|
$1.13 |
|
|
|
|
|
|
|
$1.13 |
|
|
|
|
|
*Note: The impact from our information management business is included in 3Q16 GAAP EPS, but excluded from 3Q16 non-GAAP EPS. In addition, we are currently unable to estimate any potential gain on the proposed sale of our information management business and it has therefore been excluded from our guidance.
Symantec's Board of Directors has declared a quarterly cash dividend of $0.15 per common share to be paid on December 16, 2015 to all shareholders of record as of the close of business on November 23, 2015. The ex-dividend date will be November 19, 2015.
Conference Call
Symantec has scheduled a conference call for 8:30 a.m. ET/5:30 a.m. PT today to discuss its second quarter of fiscal year 2016 results, ended October 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 the global leader in cybersecurity. Operating one of the world’s largest cyber intelligence networks, we see more threats, and protect more customers from the next generation of attacks. We help companies, governments and individuals secure their most important data wherever it lives.
###
Symantec, the Symantec Logo and the Checkmark 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 projected financial and business results, capital allocation plans and our proposed divestiture of our Veritas business, which may be considered forward-looking within the meaning of the U.S. federal securities laws. These include statements regarding the anticipated closing of the Veritas sale and product development plans, 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: the satisfaction of the conditions to closing of the Veritas divestiture; general economic conditions; risks related to the proposed divestiture of Veritas; maintaining customer and partner relationships; the anticipated growth of certain market segments, particularly with regard to security and storage; the competitive environment in the software industry; changes to operating systems and product strategy by vendors of operating systems; fluctuations in currency exchange rates; the timing and market acceptance of new product releases and upgrades; the successful development of new products and integration of acquired businesses, and the degree to which these products and businesses gain market acceptance. Actual results may differ materially from those contained in the forward-looking statements in this press release. We assume no obligation, and do not intend, to update these forward-looking statements as a result of future events or developments. Additional information concerning these and other risks factors is contained in the Risk Factors sections of our Form 10-K for the year ended April 3, 2015.
USE OF NON-GAAP FINANCIAL INFORMATION: Our results of operations have undergone significant change due to the impact of litigation accruals, stock-based compensation, restructuring, transition, and separation matters, charges related to the amortization of intangible assets, and certain other income and expense items that management considers unrelated to Symantec’s core operations. 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 Symantec’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)
|
|
October 2, 2015 |
|
April 3, 2015 (1)
|
ASSETS
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$ |
3,097
|
|
|
$ |
2,874
|
|
Short-term investments
|
|
260
|
|
|
|
1,017
|
|
Accounts receivable, net
|
|
738
|
|
|
|
993
|
|
Deferred income taxes
|
|
207
|
|
|
|
152
|
|
Deferred commissions
|
|
112
|
|
|
|
131
|
|
Other current assets
|
|
250
|
|
|
|
255
|
|
Total current assets
|
|
4,664
|
|
|
|
5,422
|
|
Property and equipment, net
|
|
1,262
|
|
|
|
1,205
|
|
Intangible assets, net
|
|
572
|
|
|
|
628
|
|
Goodwill
|
|
5,847
|
|
|
|
5,847
|
|
Long-term deferred commissions
|
|
14
|
|
|
|
26
|
|
Other long-term assets
|
|
101
|
|
|
|
105
|
|
Total assets
|
$ |
12,460
|
|
|
$ |
13,233
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable
|
$ |
326
|
|
|
$ |
213
|
|
Accrued compensation and benefits
|
|
289
|
|
|
|
398
|
|
Deferred revenue
|
|
2,766
|
|
|
|
3,109
|
|
Current portion of long-term debt
|
|
-
|
|
|
|
350
|
|
Other current liabilities
|
|
348
|
|
|
|
383
|
|
Total current liabilities
|
|
3,729
|
|
|
|
4,453
|
|
Long-term debt
|
|
1,740
|
|
|
|
1,746
|
|
Long-term deferred revenue
|
|
505
|
|
|
|
555
|
|
Long-term deferred tax liabilities
|
|
381
|
|
|
|
308
|
|
Long-term income taxes payable
|
|
132
|
|
|
|
134
|
|
Other long-term obligations
|
|
81
|
|
|
|
102
|
|
Total liabilities
|
|
6,568
|
|
|
|
7,298
|
|
Total stockholders' equity
|
|
5,892
|
|
|
|
5,935
|
|
Total liabilities and stockholders' equity
|
$ |
12,460
|
|
|
$ |
13,233
|
|
|
|
|
|
|
|
|
|
(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 |
|
October 2, 2015 |
|
October 3, 2014 |
|
Actual
|
|
Constant Currency (1)
|
Net revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Content, subscription, and maintenance
|
$ |
1,333
|
|
|
$ |
1,445
|
|
|
-8
|
% |
|
-2
|
% |
License
|
|
165
|
|
|
|
172
|
|
|
-4
|
% |
|
2
|
% |
Total net revenue
|
|
1,498
|
|
|
|
1,617
|
|
|
-7
|
% |
|
-1
|
% |
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Content, subscription, and maintenance
|
|
225
|
|
|
|
240
|
|
|
|
|
|
|
|
License
|
|
29
|
|
|
|
25
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
10
|
|
|
|
13
|
|
|
|
|
|
|
|
Total cost of revenue
|
|
264
|
|
|
|
278
|
|
|
-5
|
% |
|
0
|
% |
Gross profit
|
|
1,234
|
|
|
|
1,339
|
|
|
-8
|
% |
|
-2
|
% |
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
516
|
|
|
|
565
|
|
|
|
|
|
|
|
Research and development
|
|
293
|
|
|
|
276
|
|
|
|
|
|
|
|
General and administrative
|
|
94
|
|
|
|
93
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
17
|
|
|
|
27
|
|
|
|
|
|
|
|
Restructuring, separation, and transition
|
|
111
|
|
|
|
30
|
|
|
|
|
|
|
|
Total operating expenses
|
|
1,031
|
|
|
|
991
|
|
|
4
|
% |
|
8
|
% |
Operating income
|
|
203
|
|
|
|
348
|
|
|
-42
|
% |
|
-29
|
% |
Interest income
|
|
3
|
|
|
|
3
|
|
|
|
|
|
|
|
Interest expense
|
|
(19
|
) |
|
|
(19
|
) |
|
|
|
|
|
|
Other income (expense), net
|
|
2
|
|
|
|
1
|
|
|
|
|
|
|
|
Income before income taxes
|
|
189
|
|
|
|
333
|
|
|
-43
|
% |
|
N/A
|
Provision for income taxes
|
|
33
|
|
|
|
89
|
|
|
|
|
|
|
|
Net income
|
$ |
156
|
|
|
$ |
244
|
|
|
-36
|
% |
|
N/A
|
Net income per share -- basic
|
$ |
0.23
|
|
|
$ |
0.35
|
|
|
|
|
|
|
|
Net income per share -- diluted
|
$ |
0.23
|
|
|
$ |
0.35
|
|
|
|
|
|
|
|
Weighted-average shares outstanding -- basic
|
|
682
|
|
|
|
690
|
|
|
|
|
|
|
|
Weighted-average shares outstanding -- diluted
|
|
687
|
|
|
|
696
|
|
|
|
|
|
|
|
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
|
|
Six Months Ended |
|
Growth Rate (1)
|
|
October 2, 2015 |
|
October 3, 2014 |
|
Actual
|
|
Constant Currency (2)
|
Net revenue:
|
|
|
|
|
|
|
|
Content, subscription, and maintenance
|
$
|
2,685
|
|
|
$
|
3,019
|
|
|
-11
|
%
|
|
-5
|
%
|
License
|
|
312
|
|
|
|
333
|
|
|
-6
|
%
|
|
1
|
%
|
Total net revenue
|
|
2,997
|
|
|
|
3,352
|
|
|
-11
|
%
|
|
-4
|
%
|
Cost of revenue:
|
|
|
|
|
|
|
|
Content, subscription, and maintenance
|
|
444
|
|
|
|
509
|
|
|
|
|
|
License
|
|
51
|
|
|
|
52
|
|
|
|
|
|
Amortization of intangible assets
|
|
23
|
|
|
|
26
|
|
|
|
|
|
Total cost of revenue
|
|
518
|
|
|
|
587
|
|
|
-12
|
%
|
|
-7
|
%
|
Gross profit
|
|
2,479
|
|
|
|
2,765
|
|
|
-10
|
%
|
|
-4
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
Sales and marketing
|
|
1,037
|
|
|
|
1,209
|
|
|
|
|
|
Research and development
|
|
577
|
|
|
|
584
|
|
|
|
|
|
General and administrative
|
|
190
|
|
|
|
196
|
|
|
|
|
|
Amortization of intangible assets
|
|
36
|
|
|
|
56
|
|
|
|
|
|
Restructuring, separation, and transition
|
|
235
|
|
|
|
50
|
|
|
|
|
|
Total operating expenses
|
|
2,075
|
|
|
|
2,095
|
|
|
-1
|
%
|
|
3
|
%
|
Operating income
|
|
404
|
|
|
|
670
|
|
|
-40
|
%
|
|
-24
|
%
|
Interest income
|
|
6
|
|
|
|
6
|
|
|
|
|
|
Interest expense
|
|
(39
|
)
|
|
|
(40
|
)
|
|
|
|
|
Other income (expense), net
|
|
(9
|
)
|
|
|
2
|
|
|
|
|
|
Income before income taxes
|
|
362
|
|
|
|
638
|
|
|
-43
|
%
|
|
N/A
|
Provision for income taxes
|
|
89
|
|
|
|
158
|
|
|
|
|
|
|
|
Net income
|
$
|
273
|
|
|
$
|
480
|
|
|
-43
|
%
|
|
N/A
|
Net income per share -- basic
|
$
|
0.40
|
|
|
$
|
0.69
|
|
|
|
|
|
Net income per share -- diluted
|
$
|
0.40
|
|
|
$
|
0.69
|
|
|
|
|
|
Weighted-average shares outstanding -- basic
|
|
682
|
|
|
|
691
|
|
|
|
|
|
Weighted-average shares outstanding -- diluted
|
|
689
|
|
|
|
697
|
|
|
|
|
|
Cash dividends declared per common share
|
$
|
0.30
|
|
|
$
|
0.30
|
|
|
|
|
|
|
(1) We have a 52/53 week fiscal accounting year. The six months ended October 2, 2015 consisted of 26 weeks, whereas the six months ended October 3, 2014 consisted of 27 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)
|
|
Six Months Ended |
|
October 2, 2015
|
|
October 3, 2014 |
OPERATING ACTIVITIES:
|
|
|
Net income
|
|
$ |
273 |
|
|
$ |
480 |
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
143 |
|
|
|
145 |
|
Amortization of intangible assets
|
|
|
59 |
|
|
|
82 |
|
Amortization of debt issuance costs and discounts
|
|
|
2 |
|
|
|
2 |
|
Stock-based compensation expense
|
|
|
133 |
|
|
|
89 |
|
Deferred income taxes
|
|
|
17 |
|
|
|
30 |
|
Excess income tax benefit from the exercise of stock options
|
|
|
(6 |
) |
|
|
(5 |
) |
Other
|
|
|
9 |
|
|
|
3 |
|
Net change in assets and liabilities, excluding effects of acquisitions:
|
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
255 |
|
|
|
268 |
|
Deferred commissions
|
|
|
30 |
|
|
|
(3 |
) |
Accounts payable
|
|
|
50 |
|
|
|
(77 |
) |
Accrued compensation and benefits
|
|
|
(107 |
) |
|
|
(50 |
) |
Deferred revenue
|
|
|
(397 |
) |
|
|
(374 |
) |
Income taxes payable
|
|
|
(22 |
) |
|
|
(101 |
) |
Other assets
|
|
|
12 |
|
|
|
33 |
|
Other liabilities
|
|
|
(17 |
) |
|
|
(56 |
) |
Net cash provided by operating activities
|
|
|
434 |
|
|
|
466 |
|
INVESTING ACTIVITIES:
|
|
|
Purchases of property and equipment
|
|
|
(149 |
) |
|
|
(199 |
) |
Payments for acquisitions, net of cash acquired
|
|
|
(4 |
) |
|
|
(19 |
) |
Purchases of short-term investments
|
|
|
(327 |
) |
|
|
(1,071 |
) |
Proceeds from maturities of short-term investments
|
|
|
1,019 |
|
|
|
411 |
|
Proceeds from sales of short-term investments
|
|
|
76 |
|
|
|
156 |
|
Net cash provided by (used in) investing activities
|
|
|
615 |
|
|
|
(722 |
) |
FINANCING ACTIVITIES:
|
|
|
Repayments of debt and other obligations
|
|
|
(367 |
) |
|
|
(18 |
) |
Net proceeds from sales of common stock under employee stock benefit plans
|
|
|
44 |
|
|
|
66 |
|
Excess income tax benefit from the exercise of stock options
|
|
|
6 |
|
|
|
5 |
|
Tax payments related to restricted stock units
|
|
|
(37 |
) |
|
|
(34 |
) |
Dividends and dividend equivalents paid
|
|
|
(210 |
) |
|
|
(207 |
) |
Repurchases of common stock
|
|
|
(250 |
) |
|
|
(250 |
) |
Proceeds from other financing, net
|
|
|
- |
|
|
|
34 |
|
Net cash used in financing activities
|
|
|
(814 |
) |
|
|
(404 |
) |
Effect of exchange rate fluctuations on cash and cash equivalents
|
|
|
(12 |
) |
|
|
(75 |
) |
Change in cash and cash equivalents
|
|
|
223 |
|
|
|
(735 |
) |
Beginning cash and cash equivalents
|
|
|
2,874 |
|
|
|
3,707 |
|
Ending cash and cash equivalents
|
|
$ |
3,097 |
|
|
$ |
2,972 |
|
SYMANTEC CORPORATION
|
Reconciliation of Selected GAAP Measures to Non-GAAP Measures (1)
|
(In millions, except per share data, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-Over-Year
|
|
|
Three Months Ended |
|
Non-GAAP Growth Rate
|
|
|
October 2, 2015
|
|
October 3, 2014
|
|
|
|
|
Constant
|
|
|
GAAP
|
|
Adj
|
|
Non-GAAP
|
|
GAAP
|
|
Adj
|
|
Non-GAAP
|
|
Actual
|
|
Currency (2)
|
Net revenue
|
|
$ |
1,498 |
|
|
$ |
- |
|
|
$ |
1,498 |
|
|
$ |
1,617 |
|
|
$ |
- |
|
|
$ |
1,617 |
|
|
|
-7 |
% |
|
|
-1 |
% |
Gross profit:
|
|
$ |
1,234 |
|
|
$ |
18 |
|
|
$ |
1,252 |
|
|
$ |
1,339 |
|
|
$ |
19 |
|
|
$ |
1,358 |
|
|
|
-8 |
% |
|
|
-2 |
% |
Stock-based compensation
|
|
|
|
|
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin %
|
|
|
82.4 |
% |
|
|
1.2 |
% |
|
|
83.6 |
% |
|
|
82.8 |
% |
|
|
1.2 |
% |
|
|
84.0 |
% |
|
-40 bps
|
|
-20 bps
|
Operating expenses:
|
|
$ |
1,031 |
|
|
$ |
200 |
|
|
$ |
831 |
|
|
$ |
991 |
|
|
$ |
97 |
|
|
$ |
894 |
|
|
|
-7 |
% |
|
|
-3 |
% |
Stock-based compensation
|
|
|
|
|
|
|
72 |
|
|
|
|
|
|
|
|
|
|
|
40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
|
|
|
17 |
|
|
|
|
|
|
|
|
|
|
|
27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring, separation, and transition
|
|
|
|
|
|
|
111 |
|
|
|
|
|
|
|
|
|
|
|
30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses as a % of revenue
|
|
|
68.8 |
% |
|
|
-13.3 |
% |
|
|
55.5 |
% |
|
|
61.3 |
% |
|
|
-6.0 |
% |
|
|
55.3 |
% |
|
20 bps
|
|
-80 bps
|
Operating income
|
|
$ |
203 |
|
|
$ |
218 |
|
|
$ |
421 |
|
|
$ |
348 |
|
|
$ |
116 |
|
|
$ |
464 |
|
|
|
-9 |
% |
|
|
0 |
% |
Operating margin %
|
|
|
13.6 |
% |
|
|
14.5 |
% |
|
|
28.1 |
% |
|
|
21.5 |
% |
|
|
7.2 |
% |
|
|
28.7 |
% |
|
-60 bps
|
|
50 bps
|
Net income:
|
|
$ |
156 |
|
|
$ |
145 |
|
|
$ |
301 |
|
|
$ |
244 |
|
|
$ |
88 |
|
|
$ |
332 |
|
|
|
-9 |
% |
|
|
N/A |
Gross profit adjustment
|
|
|
|
|
|
|
18 |
|
|
|
|
|
|
|
|
|
|
|
19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expense adjustment
|
|
|
|
|
|
|
200 |
|
|
|
|
|
|
|
|
|
|
|
97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax effect on above items
|
|
|
|
|
|
|
(73 |
) |
|
|
|
|
|
|
|
|
|
|
(28 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share
|
|
$ |
0.23 |
|
|
$ |
0.21 |
|
|
$ |
0.44 |
|
|
$ |
0.35 |
|
|
$ |
0.13 |
|
|
$ |
0.48 |
|
|
|
-8 |
% |
|
|
N/A |
Diluted weighted-average shares outstanding
|
|
|
687 |
|
|
|
- |
|
|
|
687 |
|
|
|
696 |
|
|
|
- |
|
|
|
696 |
|
|
|
-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) 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 |
|
|
October 2, 2015
|
|
October 3, 2014
|
GAAP Revenue
|
|
|
|
|
Content, subscription, and maintenance
|
|
$ |
1,333 |
|
|
$ |
1,445 |
|
License
|
|
|
165 |
|
|
|
172 |
|
Total Revenue
|
|
$ |
1,498 |
|
|
$ |
1,617 |
|
GAAP Revenue - Y/Y Growth Rate
|
|
|
|
|
|
|
|
|
Content, subscription, and maintenance
|
|
|
-8 |
% |
|
|
-4 |
% |
License
|
|
|
-4 |
% |
|
|
25 |
% |
Total Y/Y Growth Rate
|
|
|
-7 |
% |
|
|
-1 |
% |
GAAP Revenue - Y/Y Growth Rate in Constant Currency (1)
|
|
|
|
|
|
|
|
|
Content, subscription, and maintenance
|
|
|
-2 |
% |
|
|
-3 |
% |
License
|
|
|
2 |
% |
|
|
25 |
% |
Total Y/Y Growth Rate in Constant Currency (1)
|
|
|
-1 |
% |
|
|
-1 |
% |
GAAP Revenue by Segment
|
|
|
|
|
|
|
|
|
Consumer Security
|
|
$ |
420 |
|
|
$ |
485 |
|
Enterprise Security
|
|
|
485 |
|
|
|
511 |
|
Information Management
|
|
|
593 |
|
|
|
621 |
|
GAAP Revenue by Segment - Y/Y Growth Rate
|
|
|
|
|
|
|
|
|
Consumer Security
|
|
|
-13 |
% |
|
|
-6 |
% |
Enterprise Security
|
|
|
-5 |
% |
|
|
-1 |
% |
Information Management
|
|
|
-5 |
% |
|
|
3 |
% |
GAAP Revenue by Segment - Y/Y Growth Rate in Constant Currency (1)
|
|
|
|
|
|
Consumer Security
|
|
|
-8 |
% |
|
|
-6 |
% |
Enterprise Security
|
|
|
1 |
% |
|
|
-1 |
% |
Information Management
|
|
|
2 |
% |
|
|
3 |
% |
GAAP Revenue by Geography
|
|
|
|
|
|
|
|
|
International
|
|
$ |
717 |
|
|
$ |
847 |
|
U.S.
|
|
|
781 |
|
|
|
770 |
|
Americas (U.S., Latin America, Canada)
|
|
|
866 |
|
|
|
884 |
|
EMEA
|
|
|
387 |
|
|
|
455 |
|
Asia Pacific & Japan
|
|
|
245 |
|
|
|
278 |
|
GAAP Revenue by Geography - Y/Y Growth Rate
|
|
|
|
|
|
|
|
|
International
|
|
|
-15 |
% |
|
|
0 |
% |
U.S.
|
|
|
1 |
% |
|
|
-2 |
% |
Americas (U.S., Latin America, Canada)
|
|
|
-2 |
% |
|
|
-1 |
% |
EMEA
|
|
|
-15 |
% |
|
|
0 |
% |
Asia Pacific & Japan
|
|
|
-12 |
% |
|
|
-4 |
% |
GAAP Revenue by Geography - Y/Y Growth Rate in Constant Currency (1)
|
|
|
|
|
|
International
|
|
|
-4 |
% |
|
|
1 |
% |
U.S.
|
|
|
1 |
% |
|
|
-2 |
% |
Americas (U.S., Latin America, Canada)
|
|
|
-2 |
% |
|
|
-1 |
% |
EMEA
|
|
|
0 |
% |
|
|
0 |
% |
Asia Pacific & Japan
|
|
|
-1 |
% |
|
|
-3 |
% |
GAAP Deferred Revenue
|
|
$ |
3,271 |
|
|
$ |
3,417 |
|
GAAP Deferred Revenue - Y/Y Growth Rate
|
|
|
-4 |
% |
|
|
-4 |
% |
GAAP Deferred Revenue - Y/Y Growth Rate in Constant Currency (1)
|
|
|
0 |
% |
|
|
-1 |
% |
|
|
|
|
|
|
|
|
|
(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).
|
SYMANTEC CORPORATION
|
Operating Margin by Segment Detail
|
(Dollars in millions, unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
October 2, 2015
|
|
October 3, 2014
|
Operating Income by Segment
|
|
|
|
|
|
|
Consumer Security
|
|
$ |
232 |
|
|
$ |
257 |
|
Enterprise Security
|
|
|
50 |
|
|
|
85 |
|
Information Management
|
|
|
139 |
|
|
|
122 |
|
Total Operating Income by Segment
|
|
|
421 |
|
|
|
464 |
|
Reconciling Items:
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
80 |
|
|
|
46 |
|
Amortization of intangible assets
|
|
|
27 |
|
|
|
40 |
|
Restructuring, separation, and transition
|
|
|
111 |
|
|
|
30 |
|
Total Consolidated Operating Income
|
|
$ |
203 |
|
|
$ |
348 |
|
Operating Margin by Segment
|
|
|
|
|
|
|
|
|
Consumer Security
|
|
|
55 |
% |
|
|
53 |
% |
Enterprise Security
|
|
|
10 |
% |
|
|
17 |
% |
Information Management
|
|
|
23 |
% |
|
|
20 |
% |
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter Fiscal Year 2016
|
|
|
|
|
|
|
|
Three Months Ended January 1, 2016
|
|
|
|
Year-Over-Year Growth Rate
|
|
Range
|
|
Actual
|
|
Constant Currency (3)
|
Revenue range
|
$890 - $920
|
|
(8.2%) - (5.2%)
|
|
(5.0%) - (1.8%)
|
|
|
|
|
|
|
|
|
Three Months Ended January 1, 2016
|
|
|
|
Year-Over-Year Increase
|
Operating Margin Guidance and Reconciliation (2)
|
Range
|
|
Actual
|
|
Constant Currency (3)
|
GAAP operating margin
|
8.5% - 10.5%
|
|
-- |
|
-- |
|
Add back:
|
|
|
|
|
|
|
Stock-based compensation
|
5.0%
|
|
|
|
|
|
Other non-GAAP adjustments
|
12.0%
|
|
|
|
|
|
Non-GAAP operating margin
|
25.5% - 27.5%
|
|
-- |
|
-- |
|
|
|
|
Three Months Ended January 1, 2016
|
|
|
|
Year-Over-Year Growth Rate
|
Earnings Per Share Guidance and Reconciliation (4)
|
Range
|
|
Actual
|
GAAP diluted earnings per share range
|
$0.22 - $0.25
|
|
-- |
Add back:
|
|
|
|
|
|
|
Stock-based compensation, net of taxes
|
$0.05
|
|
|
|
|
|
Other non-GAAP adjustments, net of taxes
|
$0.11
|
|
|
|
|
|
Discontinued Operations, net of taxes
|
($0.16)
|
|
|
|
|
|
Non-GAAP diluted earnings per share range
|
$0.22 - $0.25
|
|
-- |
|
|
|
|
|
|
|
Fourth Quarter Fiscal Year 2016
|
|
|
|
|
|
|
|
Three Months Ended April 1, 2016
|
|
|
|
Year-Over-Year Growth Rate (5)
|
|
Range
|
|
Actual
|
|
Constant Currency (3)
|
Revenue range
|
$885 - $915
|
|
(4.7%) - (1.5%)
|
|
(4.3%) - (1.1%)
|
|
|
|
|
|
|
|
|
Three Months Ended April 1, 2016
|
|
|
|
Year-Over-Year Increase
|
Operating Margin Guidance and Reconciliation (2)
|
Range
|
|
Actual
|
|
Constant Currency (3)
|
GAAP operating margin
|
17.5% - 19.5%
|
|
-- |
|
-- |
|
Add back:
|
|
|
|
|
|
|
Stock-based compensation
|
5.0%
|
|
|
|
|
|
Other non-GAAP adjustments
|
4.0%
|
|
|
|
|
|
Non-GAAP operating margin
|
26.5% - 28.5%
|
|
-- |
|
-- |
|
|
|
|
|
|
|
|
|
Three Months Ended April 1, 2016
|
|
|
|
Year-Over-Year Growth Rate
|
Earnings Per Share Guidance and Reconciliation (2)
|
Range
|
|
Actual
|
GAAP diluted earnings per share range
|
$0.16 - $0.19
|
|
-- |
Add back:
|
|
|
|
|
|
|
Stock-based compensation, net of taxes
|
$0.05
|
|
|
|
|
|
Other non-GAAP adjustments, net of taxes
|
$0.03
|
|
|
|
|
|
Non-GAAP diluted earnings per share range
|
$0.24 - $0.27
|
|
-- |
|
|
|
|
|
|
|
(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) These figures represent guidance for our expected continuing operations and include our security business, which consists of Enterprise Security and Consumer Security segments.
|
|
(3) 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.
|
|
(4) The impact from our information management business is included in GAAP EPS, but excluded from non-GAAP EPS. In addition, we are currently unable to estimate any potential gain on the proposed sale of our information management business and it has therefore been excluded from our guidance.
|
|
(5) Growth rates are calculated using fourth quarter fiscal year 2015 non-GAAP revenue.
|
SYMANTEC CORPORATION
Explanation of Non-GAAP Measures
Appendix A
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.
Stock-based compensation: Consists of expenses for employee stock options, restricted stock units, 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. 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
|
|
|
|
|
|
Cost of revenue
|
|
$ |
8 |
|
|
$ |
6 |
|
Sales and marketing
|
|
|
29 |
|
|
|
18 |
|
Research and development
|
|
|
30 |
|
|
|
15 |
|
General and administrative
|
|
|
13 |
|
|
|
7 |
|
Total stock-based compensation
|
|
$ |
80 |
|
|
$ |
46 |
|
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 separate our security and information management businesses into standalone 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.
Exhibit 99.02
SYMC Reports Second Quarter 2016 Results – CFO Commentary
A reconciliation for all non-GAAP financial measures discussed in this commentary to the most directly comparable GAAP financial measures is included in our financial tables that accompany our earnings press release available on http://investor.symantec.com/investor-relations/events-calendar/.
Second Quarter Fiscal 2016 Results
●
|
SYMC revenue was $1.5 billion, flat sequentially and down 1% year-over-year in constant currency, within our guidance range.
|
●
|
Non-GAAP operating margin was 28.1%, at the high end of our guidance range.
|
●
|
Non-GAAP net income was $301 million and EPS was $0.44, at the high end of our guidance range.
|
Q2 Fiscal 2016 Commentary
Revenue was $1.5 billion, down 1% year-over-year in constant currency. Year-over-year constant currency revenue growth of 1% in Enterprise Security and 2% in Information Management was offset by an 8% constant currency revenue decline in Consumer Security.
Non-GAAP operating income was $421 million and non-GAAP operating margin was 28.1%, up 50 basis points year-over-year in constant currency and at the high end of our guidance range, driven by lower spend as we aligned costs with lower revenue.
Our non-GAAP tax rate was 26.0% compared to our guided rate of 24.0%.
Non-GAAP net income was $301 million and non-GAAP EPS was $0.44, calculated using 687 million fully diluted shares.
Q2 Fiscal 2016 Segment Results – Enterprise Security
Enterprise Security segment revenue was $485 million, up 1% year-over-year in constant currency, driven by growth in data loss prevention and endpoint security.
●
|
Data loss prevention experienced strong year-over-year constant currency growth of 37%.
|
●
|
Endpoint security posted solid year-over-year constant currency growth of 2%.
|
●
|
This was offset by weakness in endpoint management, mail, and data center security.
|
Enterprise Security non-GAAP operating income was $50 million, up $20 million sequentially, driven by increased revenue and lower sales and marketing spend.
Q2 Fiscal 2016 Segment Results – Consumer Security
Consumer Security segment revenue was $420 million, down 8% year-over-year in constant currency, within our annual range of down 5% to 8% as we continued to shift away from unprofitable retail channels.
Consumer Security non-GAAP operating income was $232 million, down $25 million from the prior year primarily due to lower revenue.
Q2 Fiscal 2016 Segment Results – Information Management
Information Management segment revenue was $593 million, up 2% year-over-year in constant currency compared to the prior year mainly due to double-digit growth in NetBackup Appliances.
●
|
NetBackup Appliances year-over-year growth accelerated to 38% in constant currency.
|
●
|
NetBackup Software posted solid year-over-year constant currency growth of 4%.
|
Information Management non-GAAP operating income was $139 million, up $4 million from the prior quarter driven by lower sales and marketing spend and an increase in revenue.
Cash Flow Statement and Balance Sheet
Deferred Revenue at the end of the quarter was $3.27 billion, flat year-over-year in constant currency.
Cash flow from operations was $134 million. We made separation payments of $64 million and restructuring payments of $26 million during the September quarter.
Capital expenditures were $71 million.
Debt as of the end of the quarter was $1.74 billion. The principal balance of our 2.75% Senior Notes due September 15, 2015 matured and was settled by a cash payment of $350 million in the three months ended October 2, 2015.
During the September quarter we returned $262 million to shareholders. $102 million was in the form of cash dividends and $160 million was related to share repurchases.
Our cash, cash equivalents and short-term investments at the end of the quarter was $3.4 billion, down $527 million compared to the end of the first quarter of 2016.
Outlook
The following statements concerning SYMC are forward-looking and actual results could differ materially from current expectations. These statements are subject to risks and uncertainties, including those set forth in Risk Factors in the company’s Annual Report on Form 10-K for the year ended April 3, 2015 and as otherwise discussed in the company’s filings with the Securities and Exchange Commission.
Overview
Our full year fiscal 2016 results will be impacted by several factors:
●
|
Our revenue, non-GAAP operating margin, and non-GAAP EPS guidance for the third and fourth quarters of fiscal 2016 represent standalone Symantec security and do not include Veritas, formerly our Information Management segment.
|
●
|
The impact from Veritas will be included in GAAP EPS as discontinued operations for the third quarter. This does not include any potential gain on the proposed sale of our information management business as we are currently unable to estimate the potential gain.
|
●
|
We are lowering second half fiscal 2016 revenue outlook as our enterprise security sales pipeline is growing, but not by enough to compensate for our Q1 shortfall.
|
●
|
Similarly, we are adjusting our non-GAAP operating margin guidance.
|
●
|
Selling the Veritas business will result in transaction service agreements (TSA) and stranded costs, which are overhead expenses once shared with Veritas.
|
●
|
These expenses include IT-related infrastructure and services, real estate, litigation, and to a lesser extent headcount.
|
●
|
On an annualized basis, we expect to have approximately $130 million in TSAs and stranded costs.
|
●
|
Our TSA costs, which represent about a third of the total, will need to be in place over the next year as we support the Veritas business’s transition.
|
●
|
While these TSAs are a headwind to our operating margin, Veritas will reimburse us for these costs in discontinued operations.
|
●
|
Starting now and through fiscal year 2017, we expect to take aggressive action to right-size our cost structure by this amount of $130 million.
|
●
|
This will help us move toward our 30% operating margin target.
|
●
|
Soon after we close the Veritas sale, we will provide historical financial statements that consolidate Information Management into discontinued operations.
|
●
|
We expect our historical first and second quarter fiscal 2016 Symantec security operating income to be lower than what we are reporting today for Enterprise Security and Consumer Security operating income. The decrease in operating income is due to standalone Symantec security recognizing unallocated corporate overhead expenses, or stranded costs, that were once shared with Veritas.
|
Q3 FY2016
●
|
Our December 2015 quarter guidance assumes an exchange rate of $1.13.
|
●
|
We expect Symantec security revenue for our third fiscal quarter to be between $890 and $920 million.
|
●
|
For our Consumer Security segment, we expect revenue to decline year-over-year within the range of 6% and 8% in constant currency.
|
●
|
We expect revenue for our Enterprise Security segment to grow approximately 0.5% year-over-year in constant currency.
|
●
|
We expect non-GAAP operating margin to be between 25.5% and 27.5%.
|
●
|
Excluding the impact from stranded costs and TSAs, our operating margin guidance would have been 30.0% at the midpoint.
|
●
|
We expect third fiscal quarter non-GAAP EPS in the range of 22¢ to 25¢.
|
●
|
Our share count of 665 million accounts for the impact of the $500 million Accelerated Share Repurchase and a separate share buyback of approximately $125 million.
|
●
|
Without the Veritas sale, we estimate that the Information Management business would have contributed an additional 23¢ per share to non-GAAP EPS.
|
Q4 FY2016
●
|
Our March 2016 guidance assumes an exchange rate of $1.13.
|
●
|
We expect fourth fiscal quarter revenue to be between $885 and $915 million.
|
●
|
For our Consumer Security segment, we expect our revenue guidance to remain unchanged from a year-over-year decline in a range of between 5% and 8% in constant currency.
|
●
|
We expect revenue from our Enterprise Security segment to grow 1% year-over-year in constant currency.
|
●
|
We expect non-GAAP operating margin to be between 26.5% and 28.5%, resulting in non-GAAP EPS in the range of 24¢ to 27¢.
|
●
|
Excluding the impact from stranded costs and TSAs, our non-GAAP operating margin guidance would have been 30.3% at the midpoint.
|
●
|
Our guidance assumes a share count of 653 million after accounting for a $125 million buyback in the fourth quarter.
|
Use of GAAP and Non-GAAP Financial Information:
|
|
Our results of operations have undergone significant change due to the impact of litigation accruals, stock-based compensation, restructuring, transition and separation matters, 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. 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.
|
|
Reconciliation of Selected GAAP Measures to Non-GAAP Measures:
|
SYMANTEC CORPORATION
|
Reconciliation of Selected GAAP Measures to Non-GAAP Measures (1)
|
(In millions, except per share data, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-Over-Year
|
|
|
Three Months Ended |
|
Non-GAAP Growth Rate
|
|
|
October 2, 2015
|
|
October 3, 2014
|
|
|
|
|
Constant
|
|
|
GAAP
|
|
Adj
|
|
Non-GAAP
|
|
GAAP
|
|
Adj
|
|
Non-GAAP
|
|
Actual
|
|
Currency (2)
|
Net revenue
|
|
$ |
1,498 |
|
|
$ |
- |
|
|
$ |
1,498 |
|
|
$ |
1,617 |
|
|
$ |
- |
|
|
$ |
1,617 |
|
|
|
-7 |
% |
|
|
-1 |
% |
Gross profit:
|
|
$ |
1,234 |
|
|
$ |
18 |
|
|
$ |
1,252 |
|
|
$ |
1,339 |
|
|
$ |
19 |
|
|
$ |
1,358 |
|
|
|
-8 |
% |
|
|
-2 |
% |
Stock-based compensation
|
|
|
|
|
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin %
|
|
|
82.4 |
% |
|
|
1.2 |
% |
|
|
83.6 |
% |
|
|
82.8 |
% |
|
|
1.2 |
% |
|
|
84.0 |
% |
|
-40 bps
|
|
-20 bps
|
Operating expenses:
|
|
$ |
1,031 |
|
|
$ |
200 |
|
|
$ |
831 |
|
|
$ |
991 |
|
|
$ |
97 |
|
|
$ |
894 |
|
|
|
-7 |
% |
|
|
-3 |
% |
Stock-based compensation
|
|
|
|
|
|
|
72 |
|
|
|
|
|
|
|
|
|
|
|
40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
|
|
|
17 |
|
|
|
|
|
|
|
|
|
|
|
27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring, separation, and transition
|
|
|
|
|
|
|
111 |
|
|
|
|
|
|
|
|
|
|
|
30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses as a % of revenue
|
|
|
68.8 |
% |
|
|
-13.3 |
% |
|
|
55.5 |
% |
|
|
61.3 |
% |
|
|
-6.0 |
% |
|
|
55.3 |
% |
|
20 bps
|
|
-80 bps
|
Operating income
|
|
$ |
203 |
|
|
$ |
218 |
|
|
$ |
421 |
|
|
$ |
348 |
|
|
$ |
116 |
|
|
$ |
464 |
|
|
|
-9 |
% |
|
|
0 |
% |
Operating margin %
|
|
|
13.6 |
% |
|
|
14.5 |
% |
|
|
28.1 |
% |
|
|
21.5 |
% |
|
|
7.2 |
% |
|
|
28.7 |
% |
|
-60 bps
|
|
50 bps
|
Net income:
|
|
$ |
156 |
|
|
$ |
145 |
|
|
$ |
301 |
|
|
$ |
244 |
|
|
$ |
88 |
|
|
$ |
332 |
|
|
|
-9 |
% |
|
|
N/A |
Gross profit adjustment
|
|
|
|
|
|
|
18 |
|
|
|
|
|
|
|
|
|
|
|
19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expense adjustment
|
|
|
|
|
|
|
200 |
|
|
|
|
|
|
|
|
|
|
|
97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax effect on above items
|
|
|
|
|
|
|
(73 |
) |
|
|
|
|
|
|
|
|
|
|
(28 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share
|
|
$ |
0.23 |
|
|
$ |
0.21 |
|
|
$ |
0.44 |
|
|
$ |
0.35 |
|
|
$ |
0.13 |
|
|
$ |
0.48 |
|
|
|
-8 |
% |
|
|
N/A |
Diluted weighted-average shares outstanding
|
|
|
687 |
|
|
|
- |
|
|
|
687 |
|
|
|
696 |
|
|
|
- |
|
|
|
696 |
|
|
|
-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) 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.
|
Forward Looking Statements: |
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This commentary contains statements regarding our projected financial and business results and planned cost structure improvements, which may be considered forward-looking within the meaning of the U.S. federal securities laws, including statements regarding the pending sale of our information management business to The Carlyle Group and statements with respect to the proposed timing of the closing of the sale of the information management business to Carlyle; and statements regarding our capital allocation strategy and plans. 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: risks related to the separation of the company into the security business and the information management business, general economic conditions; maintaining customer and partner relationships; the anticipated growth of certain market segments, particularly with regard to security and information management; 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 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 presentation. We assume no obligation, and do not intend, to update these forward-looking statements as a result of future events or developments. Additional information concerning these and other risks factors is contained in the Risk Factors sections of our Form 10-K for the year ended April 3, 2015.
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Any information regarding pre-release of Symantec offerings, future updates or other planned modifications is subject to ongoing evaluation by Symantec and therefore subject to change. This information is provided without warranty of any kind, express or implied. Customers who purchase Symantec offerings should make their purchase decision based upon features that are currently available.
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We assume no obligation to update any forward‐looking information contained in this presentation. |
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