- Revenue at high end of guided range;
operating margin and EPS exceed guidance
- Enterprise Security revenues grew YOY
for third consecutive quarter, in constant currency
- Announces $500 million strategic
investment by Silver Lake, and increases total capital return
program to $5.5 billion
Symantec Corp. (NASDAQ: SYMC) today reported the results of its
third quarter of fiscal year 2016, ended January 1, 2016.
Michael A. Brown, president and CEO, said, “We are entering the
second half of our transformation with a stronger foundation,
evidenced by new products that are gaining mindshare among
customers, better top-line performance, and a clear path to
long-term profitability. I’m pleased with the progress we’ve made
against our priorities, including strengthening our security
portfolio, enhancing our go-to-market capabilities, improving our
cost structure and efficiently allocating capital.”
Thomas Seifert, executive vice president and CFO, said,
“Our enterprise security revenue grew for the third consecutive
quarter and we expect continued growth through FY17. We will return
$5.5 billion in capital to shareholders by the end of March 2017.
This total includes the $500 million accelerated share repurchase
we have already completed, as well as a special dividend, equaling
$2.7 billion, and $2.3 billion in share repurchases. Additionally,
we will be implementing plans to achieve greater profitability
through cost savings of approximately $400 million by the end of
fiscal year 2018.”
Results for the Third Quarter of Fiscal Year 2016 (Dollars in
millions, except EPS)
3Q16
3Q15 Reported Y/Y
Change
FX Adjusted Y/Y Change GAAP
Revenue
$909 $970 (6%) (2%)
Operating Margin
16.1% 3.5% 1,260 bps 1,347 bps
Net
Income $170 $222 (23%) N/A
Deferred Revenue $2,546 N/A N/A
N/A
EPS (Diluted) $0.25 $0.32 (22%)
N/A
CFFO $112 N/A N/A N/A
Non-GAAP
Operating Margin 27.9% 34.0%
(610) bps (540) bps
Net Income $172
$228 (25%) N/A
EPS (Diluted) $0.26
$0.33 (21%) N/A
Fourth Quarter 2016 Guidance (Dollars in millions, except EPS
and FX rate)
4Q16 GAAP
Revenue $885 - $915 Enterprise Security $480 -
$500 Consumer Security $405 - $415
Operating Margin
15.5% - 17.5%
EPS (Diluted) $0.15 - $0.18
Non-GAAP Operating Margin 26.0%
- 28.0%
EPS (Diluted) $0.24 - $0.27
Tax Rate
27.5%
Share Count 654 million
FX Rate
(€/$) $1.09
*Note: The impact from our Information Management business is
included in 4Q16 GAAP EPS, but excluded from 4Q16 non-GAAP EPS as
well as from our GAAP and Non-GAAP Op Margins. Any net gain from
the sale of Veritas is also excluded from our GAAP guidance.
In a separate press release, Symantec announced that Silver Lake
will make a $500 million strategic investment in Symantec. In
connection with Silver Lake’s investment, the Symantec Board has
increased the Company’s total capital return program to $5.5
billion. The Symantec Board expects to complete the full capital
return by the end of March 2017 in the form of the $500 million
accelerated share repurchase completed in January 2016; a special
dividend of $4.00 per share, equaling $2.7 billion; and $2.3
billion in share repurchases.
The $4.00 per share special dividend will be payable on March
22, 2016, to stockholders of record as of the close of business on
March 8, 2016. The special dividend will be in addition to
Symantec’s quarterly dividend.
Conference Call
Symantec has scheduled a conference call for 5 p.m. ET / 2 p.m.
PT today to discuss its third quarter of fiscal year 2016 results,
ended January 1, 2016 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,
planned capital return, including statements regarding the
anticipated size and timing of accelerated share repurchase
transactions and dividends, anticipated dividend increases and
planned debt, 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 Company’s future
financial performance; general economic conditions; maintaining
customer and partner relationships; the competitive environment in
the software industry, fluctuations in tax rates and 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, discontinued operations, 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 (1) (Dollars
in millions, unaudited)
January 1, 2016
April 3, 2015
ASSETS Current assets: Cash and cash
equivalents $ 2,213 $ 2,843 Short-term investments 56 1,017
Accounts receivable, net 490 700 Deferred income taxes 223 152
Deferred commissions 52 64 Other current assets 189 231 Current
assets held for sale 3,950 415
Total
current assets 7,173 5,422 Property and equipment, net
986 950 Intangible assets, net 464 525 Goodwill 3,146 3,146
Long-term deferred commissions 11 9 Other long-term assets 156 71
Long-term assets held for sale - 3,110
Total assets $ 11,936 $ 13,233
LIABILITIES
AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable $ 241 $ 169 Accrued compensation and benefits 203
232 Deferred revenue 2,180 2,427 Current portion of long-term debt
- 350 Other current liabilities 271 339 Current liabilities held
for sale 932 936
Total current
liabilities 3,827 4,453 Long-term debt 1,740 1,746
Long-term deferred revenue 366 444 Long-term deferred tax
liabilities 399 308 Long-term income taxes payable 140 134 Other
long-term obligations 70 79 Long-term liabilities held for sale
- 134
Total liabilities 6,542
7,298
Total stockholders' equity 5,394
5,935
Total liabilities and stockholders'
equity $ 11,936 $ 13,233
(1) This presentation reflects the held
for sale assets and liabilities associated with the divestiture of
our information management business. Please see Appendix A for
further information.
SYMANTEC CORPORATION
Condensed Consolidated Statements of Operations (1)
(In millions, except per share data, unaudited)
Year-Over-Year
Three Months Ended
Growth Rate
January 1, January 2, Constant
2016
2015
Actual
Currency (2) Net revenues $ 909
$ 970 -6 % -2 % Costs of revenues 150
177 -15 % -13 %
Gross profit 759 793 -4 % 0 %
Operating expenses: Sales and marketing 308 403 Research and
development 174 193 General and administrative 68 91 Amortization
of intangible assets 13 21 Restructuring, separation, and
transition 50 51
Total operating expenses
613 759 -19 % -16 %
Operating
income 146 34 329 % 364 % Interest income 1 3 Interest
expense (17 ) (19 ) Other income (expense), net (1 )
1
Income from continuing operations before income
taxes 129 19 579 % N/A
Provision for income taxes 15 44
Income (loss) from
continuing operations 114 (25 ) Income from discontinued
operations, net of income taxes 56 247
Net income $ 170 $ 222 -23 % N/A
Net income (loss) per share – basic:
Continuing operations $ 0.17 $ (0.04 ) Discontinued operations 0.08
0.36
Net income per share – basic (3)
0.26 0.32 Net income (loss) per share – diluted: Continuing
operations $ 0.17 $ (0.04 ) Discontinued operations 0.08 0.36
Net income per share – diluted (3)
0.25 0.32
Weighted-average shares outstanding –
basic
665 689
Weighted-average shares outstanding –
diluted
671 689 Cash dividends declared per common share $
0.15 $ 0.15
(1) This presentation reflects the discontinued operations
associated with the divestiture of our information management
business. Please see Appendix A for further information. (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. (3) Net income (loss) per share amounts may not add
due to rounding.
SYMANTEC CORPORATION
Condensed Consolidated Statements of Operations (1)
(In millions, except per share data, unaudited)
Year-Over-Year Nine Months Ended
Growth Rate (2) January 1, January
2,
2016
2015 Actual
Net revenues $ 2,727 $ 3,057 -11 % Costs of revenues
468 551 -15 %
Gross profit 2,259
2,506 -10 %
Operating expenses: Sales and marketing
984 1,265 Research and development 571 604 General and
administrative 218 276 Amortization of intangible assets 41 66
Restructuring, separation, and transition 116
92
Total operating expenses 1,930
2,303 -16 %
Operating income 329
203 62 % Interest income 6 9 Interest expense (56 ) (59 )
Other income (expense), net (3 ) 6
Income from continuing operations before income taxes 276
159 74 % Provision for income taxes 84
105
Income from continuing operations 192 54
Income from discontinued operations, net of income taxes 251
648
Net income $ 443
$ 702 -37 %
Net income per share – basic:
Continuing operations $ 0.28 $ 0.08 Discontinued operations 0.37
0.94
Net income per share – basic
0.65 1.02
Net income per share – diluted:
Continuing operations $ 0.28 $ 0.08 Discontinued operations 0.37
0.93 Net income per share – diluted 0.65 1.01
Weighted-average shares outstanding –
basic
677 690
Weighted-average shares outstanding –
diluted
683 697 Cash dividends declared per common share $
0.45 $ 0.45 (1) This
presentation reflects the discontinued operations associated with
the divestiture of our information management business. Please see
Appendix A for further information. (2) We have a 52/53 week
fiscal accounting year. The nine months ended January 1, 2016
consisted of 39 weeks, whereas the nine months ended January 2,
2015 consisted of 40 weeks.
SYMANTEC
CORPORATION Condensed Consolidated Statements of Cash
Flows (1) (Dollars in millions, unaudited)
Nine Months Ended
January 1, 2016
January 2, 2015 OPERATING ACTIVITIES:
Net income $ 443 $ 702 Income from discontinued operations (251 )
(648 )
Adjustments to reconcile income from
continuing operations to net cash provided by (used in) continuing
operating activities:
Depreciation 161 173 Amortization of intangible assets 63 92
Amortization of debt issuance costs and discounts 3 3 Stock-based
compensation expense 118 94 Deferred income taxes 63 29 Excess
income tax benefit from the exercise of stock options (6 ) (6 )
Other 14 8 Net change in assets and liabilities, excluding effects
of acquisitions: Accounts receivable, net 26 24 Deferred
commissions 10 (4 ) Accounts payable 61 (69 ) Accrued compensation
and benefits (23 ) (2 ) Deferred revenue (175 ) (199 ) Income taxes
payable (94 ) (237 ) Other assets (49 ) 18 Other liabilities
(48 ) (28 ) Net cash provided by (used in) continuing
operating activities 316 (50 ) Net cash provided by discontinued
operating activities 230 874
Net cash provided by operating activities 546 824
INVESTING ACTIVITIES: Purchases of property and equipment
(225 ) (249 ) Payments for acquisitions, net of cash acquired, and
purchases of intangibles (4 ) (39 ) Purchases of short-term
investments (377 ) (1,429 ) Proceeds from maturities of short-term
investments 1,038 495 Proceeds from sales of short-term investments
299 270 Net cash provided by
(used in) continuing investing activities 731 (952 ) Net cash used
in discontinued investing activities (57 ) (51
)
Net cash provided by (used in) investing activities 674
(1,003 )
FINANCING ACTIVITIES: Repayments of debt and
other obligations (368 ) (19 ) Net proceeds from sales of common
stock under employee stock benefit plans 63 78 Excess income tax
benefit from the exercise of stock options 6 6 Tax payments related
to restricted stock units (35 ) (30 ) Dividends and dividend
equivalents paid (312 ) (311 ) Repurchases of common stock (868 )
(375 ) Proceeds from other financing, net -
36 Net cash used in continuing financing activities
(1,514 ) (615 ) Net cash used in discontinued financing activities
(17 ) (7 )
Net cash used in financing
activities (1,531 ) (622 ) Effect of exchange rate
fluctuations on cash and cash equivalents (51 )
(142 ) Change in cash and cash equivalents (362 ) (943 )
Beginning cash and cash equivalents 2,874
3,707 Ending cash and cash equivalents 2,512 2,764
Less: Cash and cash equivalents of discontinued operations
299 30 Cash and cash equivalents of
continuing operations $ 2,213 $ 2,734
(1)
This presentation reflects the discontinued operations associated
with the divestiture of our information management business. Please
see Appendix A for further information.
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
January 1, 2016 January 2, 2015
GAAP Adj Non-GAAP
GAAP Adj Non-GAAP
Actual
ConstantCurrency
(2)
Net revenues $ 909
$ - $ 909 $ 970 $
- $ 970 -6 % -2 %
Gross profit: $ 759 $ 10 $ 769 $ 793 $ 21 $ 814 -6 % -1 %
Unallocated corporate charges (3) - 9 Stock-based compensation 3 4
Amortization of intangible assets 7
8
Gross margin %
83.5 % 1.1 % 84.6 % 81.8
% 2.1 % 83.9 % 70 bps 80
bps
Operating expenses: $ 613 $ 98 $ 515 $ 759 $ 275
$ 484 6 % 10 % Unallocated corporate charges (3) - 173 Stock-based
compensation 35 30 Amortization of intangible assets 13 21
Restructuring, separation, and transition 50
51
Operating expenses as
a % of revenue 67.4 % -10.7 %
56.7 % 78.2 % -28.3 %
49.9 % 680 bps 620 bps
Operating
income $ 146 $ 108 $ 254
$ 34 $ 296 $ 330
-23 % -18 %
Operating margin % 16.1 %
11.8 % 27.9 % 3.5 %
30.5 % 34.0 % -610 bps
-540 bps
Net income: $ 170 $ 2 $ 172 $ 222 $ 6 $ 228
-25 % N/A Gross profit adjustment 10 21 Operating expense
adjustment 98 275 Income tax effects and adjustments (50 ) (43 )
Income from discontinued operations, net of taxes
(56 ) (247
)
Diluted net income (loss) per
share:
Diluted net income (loss) per share from continuing operations $
0.17 $ 0.09 $ 0.26 $ (0.04 ) $ 0.37 $ 0.33 Diluted net income
(loss) per share from discontinued operations 0.08 (0.08 )
-
0.36 (0.36 )
- Diluted net income per share
0.25 0.01 0.26
0.32 0.01
0.33 -21 % N/A
Diluted
weighted-average shares outstanding 671
- 671 689
- 689 -3 %
N/A
(1) This presentation reflects the
discontinued operations associated with the divestiture of our
information management business. Please see Appendix A for further
information.
(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.
(3) This item consists of costs previously allocated to our
discontinued information management business. Please see Appendix A
for further information.
SYMANTEC CORPORATION
Revenue and Deferred Revenue Detail (1) (Dollars
in millions, unaudited) Three Months Ended
January 1, 2016 January 2, 2015
GAAP Revenues Content,
subscription, and maintenance $ 868 $ 930 License
41 40
Total Revenues
$ 909 $ 970
GAAP Revenues - Y/Y
Growth Rate Content, subscription,
and maintenance -7 % -8 % License 3 % 8
%
Total Y/Y Growth Rate -6 % -8
%
GAAP Revenues - Y/Y Growth Rate in Constant Currency
(2) Content, subscription, and
maintenance -2 % -5 % License 5 % 15 %
Total Y/Y Growth Rate in Constant Currency (2)
-2 % -4 %
GAAP Revenues by Segment
Consumer Security $ 414 $ 461 Enterprise Security 495
509
GAAP Revenues by Segment - Y/Y
Growth Rate Consumer Security -10 %
-11 % Enterprise Security -3 % -5 %
GAAP Revenues by Segment - Y/Y Growth Rate in Constant
Currency (2) Consumer
Security -6 % -7 % Enterprise Security 1 %
-2 %
GAAP Revenues by
Geography International $ 425 $ 474
U.S. 484 496 Americas (U.S., Latin America, Canada) 539 551 EMEA
224 259 Asia Pacific & Japan 146
160
GAAP Revenues by Geography - Y/Y Growth
Rate International -10 % -12 % U.S.
-2 % -4 % Americas (U.S., Latin America, Canada) -2 % -5 % EMEA -14
% -9 % Asia Pacific & Japan -9 %
-14 %
GAAP Revenues by Geography - Y/Y Growth Rate in Constant
Currency (2) International
-2 % -5 % U.S. -2 % -4 % Americas (U.S., Latin America, Canada) -2
% -6 % EMEA -2 % -1 % Asia Pacific & Japan -2 %
-6 %
GAAP
Deferred Revenue $ 2,546
–
(1) This presentation reflects the discontinued
operations associated with the divestiture of our information
management business. Please see Appendix A for further information.
(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. 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 (1) (Dollars in millions,
unaudited) Three Months Ended
January 1, 2016 January 2, 2015
Operating Income by Segment
Consumer Security $ 230 $ 245 Enterprise Security
24 85 Total Operating Income by
Segment 254 330
Reconciling Items: Unallocated corporate charges (2) - 182
Stock-based compensation 38 34 Amortization of intangible assets 20
29 Restructuring, separation, and transition 50
51
Total Consolidated Operating
Income $ 146 $ 34
Operating Margin by Segment
Consumer Security 56 % 53 % Enterprise
Security 5 % 17 % (1) This
presentation reflects the discontinued operations associated with
the divestiture of our information management business. Please see
Appendix A for further information. (2) This item consists
of costs previously allocated to our discontinued information
management business. Please see Appendix A for further information.
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)
Fourth Quarter Fiscal Year 2016
Year Ended April 1, 2016 Year-Over-Year
Growth Rate (3)
Revenue Guidance (2)
Range Actual Constant
Currency (4) Revenue range $885 - $915
(4.7%) - (1.5%) (3.6%) - (0.3%)
Year Ended April 1, 2016
Year-Over-Year Increase
Operating Margin Guidance and
Reconciliation (2)
Range Actual Constant
Currency (4) GAAP operating margin 15.5% - 17.5%
--
--
Add back: Stock-based compensation 5.0% Other non-GAAP adjustments
5.5% Non-GAAP operating margin
26.0% - 28.0%
--
--
Year Ended April 1, 2016 Year-Over-Year Growth Rate
Earnings Per Share Guidance and
Reconciliation (5)
Range Actual GAAP diluted
earnings per share range $0.15 - $0.18
--
Add back: Stock-based compensation, net of taxes $0.05 Other
non-GAAP adjustments, net of taxes
$0.04
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) Growth rates are calculated using fourth quarter
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) The impact from Veritas is included in
GAAP EPS, but excluded from non-GAAP EPS. In addition, we are
currently unable to estimate any gain on the sale of
SYMANTEC CORPORATIONExplanation of
Non-GAAP MeasuresAppendix 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.
Discontinued operations: In January
2016, the Company and Carlyle amended the terms of the purchase
agreement for Carlyle's acquisition of the information management
business, Veritas. Based on the amended terms, the Company will
receive net consideration of $6.6 billion in cash and 40 million B
common shares of Veritas. The transaction closed on January 29,
2016. The results of Veritas are presented as discontinued
operations in our Condensed Consolidated Statements of Operations
for all reported periods. Furthermore, the related assets and
liabilities have been classified as held for sale on our Condensed
Consolidated Balance Sheets. The gain on sale will be recorded in
the fourth quarter of 2016, to the extent that the net proceeds
from the final sale amount exceed the book carrying value of the
assets sold.
Unallocated corporate charges: A
significant portion of the segments' expenses arise from shared
services and infrastructure that we have historically provided to
the segments in order to realize economies of scale and to
efficiently use resources. These expenses, collectively called
corporate charges, include legal, accounting, real estate,
information technology services, treasury, human resources and
other corporate infrastructure expenses. Charges were allocated to
the segments, and the allocations were determined on a basis that
we consider to be a reasonable reflection of the utilization of
services provided to or benefits received by the segments.
Corporate charges previously allocated to our information
management business, but not classified within discontinued
operations, were not reallocated to our other segments. We
eliminate these unallocated corporate charges from our non-GAAP
operating results to facilitate a more meaningful comparison of
past operating performance to current operating results.
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
January 1, January 2, 2016 2015 Cost of revenue $ 3 $ 4
Sales and marketing 12 11 Research and development 14 11 General
and administrative 9 8
Total continuing operations stock-based
compensation
$ 38 $ 34
Amortization of intangible assets:
When conducting internal development of intangible assets,
accounting rules require that we expense the costs as incurred. In
the case of acquired businesses, however, we are required to
allocate a portion of the purchase price to the accounting value
assigned to intangible assets acquired and amortize this amount
over the estimated useful lives of the acquired intangible assets.
The acquired company, in most cases, has itself previously expensed
the costs incurred to develop the acquired intangible assets, and
the purchase price allocated to these assets is not necessarily
reflective of the cost we would incur in developing the intangible
asset. We eliminate these amortization charges from our non-GAAP
operating results to provide better comparability of pre- and
post-acquisition operating results and comparability to results of
businesses utilizing internally developed intangible assets.
Income tax effects and adjustments:
During the third quarter of fiscal 2016, the Company adopted a
projected long-term non-GAAP tax rate of 27.5% in order to provide
better consistency across the interim financial reporting periods
by eliminating the effects of stock based compensation,
amortization of acquisition related intangibles and restructuring,
separation and transition charges. Additionally, the use of a
long-term projected non-GAAP tax rate will eliminate the effects of
certain discontinued operations accounting policy elections and
unique GAAP reporting requirements under discontinued operations as
a result of the sale of the information management business. This
long-term rate could be subject to change for a variety of reasons,
such as significant changes in the geographic earnings mix
including acquisition activity, or fundamental tax law changes in
major jurisdictions where the company operates. The Company will
evaluate and assess the appropriateness of this rate annually,
giving due consideration to the impacts of significant events and
structural changes in the Company.
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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160204006539/en/
Symantec Corp.Media Contact:Noah Edwardsen,
424-750-7574noah_edwardsen@symantec.comInvestor Contact:Jonathan
Doros, 650-527-5523jonathan_doros@symantec.com
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