- As pre-announced, revenue of $873
million, non-GAAP operating margin of 25% and EPS of $0.22
- $400 million efficiency program
underway to accelerate next phase of margin expansion
Symantec Corp. (NASDAQ: SYMC) today reported the results of its
fourth quarter and fiscal year 2016, ended April 1, 2016.
“Symantec’s unified security strategy leverages the unmatched
understanding we have about global, real-time threats and puts this
knowledge to work to better protect our customers,” said Michael A.
Brown, Symantec CEO. “To complement this strategy, we’re bringing
more than a dozen new products to market in 2016 enabling us to
grow our enterprise security business. Our most recent product
release, Symantec Advanced Threat Protection, just surpassed 1.2
million endpoint subscriptions in its first full quarter of
availability making it one of the most successful new products in
our history.”
“We’re making significant progress on our $400 million
efficiency program by executing against eight work streams that
include eliminating stranded costs from the Veritas divestiture,
rationalizing corporate infrastructure and simplifying our
Enterprise Security portfolio,” said Thomas Seifert, Symantec CFO.
“These actions will create a stronger and more nimble Symantec,
supporting both higher operating margins in the future as well as a
business model that is more subscription-based.”
Results for the Fourth Quarter of Fiscal Year 2016 (Dollars
in millions, except EPS)
4Q16 4Q15
Reported Y/YChange
FX AdjustedY/Y Change
GAAP
Revenue $873 $899
(3%) (2%)
Operating Margin
14.7% (5.5%) 2,020 bps
1,930 bps
Net Income
$2,045
$176
1,062%
N/A
Deferred Revenue $2,638
$2,871 (8%) (9%)
EPS (Diluted)
$3.15
$0.25
1,160%
N/A
CFFO $292 $488
(40%) N/A
Non-GAAP
Revenue
$873 $929 (6%)
(6%)
Operating Margin 24.5% 31.1%
(660) bps (740) bps
Net Income
$147 $203 (28%)
N/A
EPS (Diluted) $0.22 $0.29
(24%) N/A
Results for Fiscal Year 2016 (Dollars in millions, except
EPS)
FY16 FY15
Reported Y/YChange
FX AdjustedY/Y Change
GAAP
Revenue $3,600
$3,956 (9%) (4%)
Operating
Margin 12.7% 3.9% 880
bps 1,020 bps
Net Income
$2,488
$878
183%
N/A
Deferred Revenue $2,638
$2,871 (8%) (9%)
EPS (Diluted)
$3.71
$1.26
194%
N/A
CFFO $838 $1,312
(36%) N/A
Non-GAAP
Revenue $3,600 $3,986
(10%) (5%)
Operating Margin
28.5% 32.7% (420) bps (340) bps
Net Income $698 $908
(23%) N/A
EPS (Diluted) $1.03
$1.30 (21%) N/A
First Quarter and Fiscal Year 2017 Guidance (Dollars in
millions, except EPS and FX rate)
1Q17
FX Adj. Y/YGrowth
FY17
FX Adj. Y/YGrowth
GAAP
Revenue $865 - $895
(6%) – (3%) $3,490 - $3,580 (4%)
– (1%) Enterprise Security $465 - $480 (4%) –
(1%) $1,910 - $1,950 (2%) – 0% Consumer
Security $400 - $415 (8%) – (5%)
$1,580 - $1,630 (6%) – (3%)
Operating Margin
10.0% - 12.5%
12.0% - 13.5%
EPS (Diluted)
$0.17 - $0.19 $0.69 - $0.73
Non-GAAP
Operating Margin
24.5% - 26.5%
26.5% - 27.5%
EPS (Diluted)
$0.24 - $0.26 $1.06 - $1.10
Tax Rate 27.5%
27.5%
Share Count
621 million 594 million
FX Rate (€/$) $1.13
$1.13
In line with Symantec’s previous capital structure plans, the
company has returned $4.2 billion of the previously announced $5.5
billion capital return program related to the sale of Veritas. The
company will return the remaining $1.3 billion by the end of the
current fiscal year. Symantec announced today that to support its
capital structure plans, it has entered into a $2 billion credit
facility, including a $1 billion refinancing of our revolver and a
new $1 billion prepayable term loan.
Symantec's Board of Directors has declared a quarterly cash
dividend of 7.5 cents per common share to be paid on June 22, 2016
to all shareholders of record as of the close of business on June
8, 2016. The ex-dividend date will be June 6, 2016.
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 2016 results,
ended April 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.
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.
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
forward-looking statements regarding our projected financial and
business results, projections of future revenue, operating margin
and earnings per share, cost reduction efforts as well as
statements regarding the Company’s roadmap and pipeline. 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
section 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 including the gain on the sale of
Veritas, 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. 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
Consolidated Balance Sheets
(1)
(Dollars in millions, unaudited)
April 1, 2016
April 3, 2015
ASSETS Current assets: Cash and cash
equivalents $ 5,983 $ 2,843 Short-term investments 42 1,017
Accounts receivable, net 556 700 Deferred income taxes - 152 Other
current assets 378 295 Current assets of discontinued operations
- 415
Total current assets 6,959
5,422 Property and equipment, net 957 950
Intangible assets, net 443 525 Goodwill 3,148 3,146 Equity
investments 157 10 Other long-term assets 103 70 Long-term assets
of discontinued operations - 3,110
Total
assets $ 11,767 $ 13,233
LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable $ 175 $ 169 Accrued compensation and benefits 219
232 Deferred revenue 2,279 2,427 Current portion of long-term debt
- 350 Income taxes payable 941 47 Other current liabilities 419 292
Current liabilities of discontinued operations -
936
Total current liabilities 4,033
4,453 Long-term debt 2,207 1,746 Long-term deferred
revenue 359 444 Long-term deferred tax liabilities 1,235 308
Long-term income taxes payable 160 134 Other long-term obligations
97 79 Long-term liabilities of discontinued operations -
134
Total liabilities 8,091
7,298
Total stockholders' equity
3,676 5,935
Total liabilities and
stockholders' equity $ 11,767 $ 13,233 (1) This
presentation reflects the assets and liabilities of discontinued
operations associated with the divestiture of our information
management business. Please see Appendix A for further information.
SYMANTEC CORPORATION Consolidated
Statements of Operations (1) (In millions, except per
share data, unaudited)
Year-Over-Year
Three Months Ended
Growth Rate
April 1,
April 3,
Constant
2016
2015
Actual
Currency (2)
Net revenues $ 873 $ 899 -3 % -2 % Costs of revenues
147 176 -16 % -15
%
Gross profit 726 723
0 % 1 %
Operating expenses: Sales and
marketing 308 385 Research and development 177 208 General and
administrative 77 86 Amortization of intangible assets 16 21
Restructuring, separation, and transition 20
72
Total operating
expenses 598 772 -23
% -22 %
Operating income (loss) 128
(49 ) Interest income 4 2 Interest expense (19
) (19 ) Other income, net 3 8
Income (loss) from continuing operations before income taxes
116 (58 ) Income tax expense (benefit)
1,129 (113 )
Income (loss) from
continuing operations (1,013 ) 55 Income from discontinued
operations, net of income taxes
3,058
121
Net
income $
2,045
$ 176
1062
% N/A Income (loss) per share – basic:
Continuing operations $ (1.56 ) $ 0.08 Discontinued operations
4.70
0.18 Net income (loss) per share -- basic
3.15
0.26 Income (loss) per share – diluted: Continuing
operations $ (1.56 ) $ 0.08 Discontinued operations
4.70
0.17 Net income (loss) per share -- diluted
3.15
0.25 Weighted-average shares outstanding -- basic 650 684
Weighted-average shares outstanding -- diluted 650 693
Cash dividends declared per common share $ 4.15
$ 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.
SYMANTEC CORPORATION Consolidated Statements of
Operations (1) (In millions, except per share data,
unaudited) Year-Over-Year
Year Ended Growth Rate
(2) April 1, April 3, Constant
2016
2015
Actual Currency (3)
Net revenues $ 3,600 $ 3,956 -9 % -4 % Costs of
revenues 615 727 -15 %
-12 %
Gross profit 2,985
3,229 -8 % -3 %
Operating
expenses: Sales and marketing 1,292 1,650 Research and
development 748 812 General and administrative 295 362 Amortization
of intangible assets 57 87 Restructuring, separation, and
transition 136 164
Total operating expenses 2,528
3,075 -18 % -15 %
Operating
income 457 154 197 %
244 % Interest income 10 11 Interest expense (75 )
(78 ) Other income, net - 14
Income from continuing operations
before income taxes 392 101
288 % N/A Income tax expense (benefit)
1,213 (8 )
Income (loss) from
continuing operations (821 ) 109 Income from discontinued
operations, net of income taxes
3,309
769
Net
income $
2,488
$ 878
183
% N/A Income (loss) per share -- basic:
Continuing operations $ (1.23 ) $ 0.16 Discontinued operations
4.94
1.12 Net income per share – basic (4)
3.71
1.27 Income (loss) per share -- diluted: Continuing
operations $ (1.23 ) $ 0.16 Discontinued operations
4.94
1.10 Net income per share – diluted
3.71
1.26
Weighted-average shares outstanding --
basic
670 689 Weighted-average shares outstanding -- diluted 670
696 Cash dividends declared per common share $ 4.60
$ 0.60 (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 twelve months ended April 1, 2016 consisted of
52 weeks, whereas the twelve months ended April 3, 2015 consisted
of 53 weeks. (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. (4) Net income per share amounts may
not add due to rounding.
SYMANTEC
CORPORATION Consolidated Statements of Cash Flows
(1) (Dollars in millions, unaudited)
Year Ended
April 1, 2016
April 3, 2015
OPERATING ACTIVITIES: Net income $
2,488
$ 878 Income from discontinued operations, net of income taxes
(3,309
) (769 ) Adjustments to reconcile income from continuing operations
to net cash provided by (used in) continuing operating activities:
Depreciation 213 229 Amortization of intangible assets 86 122
Amortization of debt issuance costs and discounts 5 4 Stock-based
compensation expense 161 131 Deferred income taxes 1,082 (29 )
Excess income tax benefit from the exercise of stock options (6 )
(10 ) Other 13 8 Net change in assets and liabilities, excluding
effects of acquisitions: Accounts receivable, net 38 (35 ) Accounts
payable (69 ) (73 ) Accrued compensation and benefits (7 ) 7
Deferred revenue 20 (83 ) Income taxes payable 693 (405 ) Other
assets - 16 Other liabilities 92 26
Net cash provided by continuing operating activities 1,500
17 Net cash provided by (used in) discontinued operating activities
(662 ) 1,295
Net cash provided by
operating activities 838 1,312
INVESTING ACTIVITIES: Purchases of property
and equipment (272 ) (303 ) Payments for acquisitions, net of cash
acquired, and purchases of intangibles (4 ) (39 ) Purchases of
short-term investments (378 ) (1,758 ) Proceeds from maturities of
short-term investments 1,056 681
Proceeds from sales of short-term
investments
299 343
Proceeds received from divestiture of
information management business, net of cash contributed and
transaction costs
6,499 - Net cash provided by
(used in) continuing investing activities 7,200 (1,076 ) Net cash
used in discontinued investing activities (63 )
(78 )
Net cash provided by (used in) investing
activities 7,137 (1,154 )
FINANCING ACTIVITIES: Repayments of debt and other
obligations (368 ) (21 ) Proceeds from issuance of Convertible
Senior Notes, net of issuance costs 494 - Net proceeds from sales
of common stock under employee stock benefit plans 65 116 Excess
income tax benefit from the exercise of stock options 6 10 Tax
payments related to restricted stock units (39 ) (36 ) Dividends
and dividend equivalents paid (3,030 ) (413 ) Repurchases of common
stock (1,868 ) (500 ) Proceeds from other financing, net -
44 Net cash used in continuing
financing activities (4,740 ) (800 ) Net cash used in discontinued
financing activities (30 ) (11 )
Net cash
used in financing activities (4,770 ) (811
) Effect of exchange rate fluctuations on cash and cash
equivalents (96 ) (180 ) Change in cash and
cash equivalents 3,109 (833 ) Beginning cash and cash equivalents
2,874 3,707 Ending cash and cash
equivalents 5,983 2,874 Less: Cash and cash equivalents of
discontinued operations - 31
Cash and cash equivalents of continuing operations $ 5,983
$ 2,843 Equity investment received from divestiture
of the information management business $ 149 $ - Income taxes paid,
net of refunds $ 265 $ 353 Interest expense paid $ 70
$ 75 (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
April 1, 2016 April 3, 2015
Constant GAAP Adj
Non-GAAP GAAP Adj
Non-GAAP Actual Currency
(2) Net revenues $
873 $ - $ 873 $ 899
$ 30 $ 929 -6 % -6
%
Gross profit: $ 726 $ 9 $ 735 $ 723 $ 52 $ 775 -5 %
-5 % EDS & NDI contingency - 30 Unallocated corporate charges
(3) - 10 Stock-based compensation 3 3 Amortization of intangible
assets 6
9
Gross margin % 83.2 % 1.0 %
84.2 % 80.4 % 3.0 %
83.4 % 80 bps 50 bps
Operating expenses: $ 598 $ 77 $ 521 $ 772 $ 286 $ 486 7 % 9
% Unallocated corporate charges (3) - 159 Stock-based compensation
40 34 Amortization of intangible assets 16 21 Restructuring,
separation, and transition 20
72
Operating expenses as a % of
revenue 68.5 % -8.8 % 59.7 %
85.9 % -33.6 % 52.3 %
740 bps 800 bps
Operating income (loss)
$ 128 $ 86 $ 214 $ (49 )
$ 338 $ 289 -26 % -28 %
Operating margin % 14.7 % 9.8 %
24.5 % -5.5 % 36.6 %
31.1 % -660 bps -740 bps
Net
income: $
2,045
$
(1,898
) $
147
$ 176 $ 27 $ 203 -28 % N/A Gross profit adjustment 9 52 Operating
expense adjustment 77 286 Income tax effects and adjustments 1,074
(190 ) Income from discontinued operations, net of taxes
(3,058
) (121 )
Diluted income (loss) per
share: Income (loss) per share from continuing operations $
(1.56 ) $ 1.78 $ 0.22 $ 0.08 $ 0.21 $ 0.29 Income (loss) per share
from discontinued operations
4.70
(4.70
)
- 0.17 (0.17 )
- Diluted net income per
share
3.15
(2.93
) 0.22 0.25
0.04 0.29 -24 % N/A
Diluted weighted-average shares outstanding
650 6 656
693 -
693 -5 % 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 charges previously allocated to our discontinued
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 Year
Ended
Non-GAAP Growth Rate
April 1, 2016 April 3, 2015
Constant GAAP Adj
Non-GAAP GAAP Adj
Non-GAAP Actual Currency
(2) Net revenues $
3,600 $ - $ 3,600 $ 3,956
$ 30 $ 3,986 -10 %
-5 %
Gross profit: $ 2,985 $ 60 $ 3,045 $ 3,229 $ 121
$ 3,350 -9 % -5 % EDS & NDI contingency - 30 Unallocated
corporate charges (3) 22 41 Stock-based compensation 10 15
Amortization of intangible assets 28
35
Gross margin %
82.9 % 1.7 % 84.6 % 81.6
% 2.4 % 84.0 % 60 bps 40
bps
Operating expenses: $ 2,528 $ 509 $ 2,019 $ 3,075
$ 1,030 $ 2,045 -1 % 2 % Unallocated corporate charges (3) 164 663
Stock-based compensation 151 116 Amortization of intangible assets
57 87 Restructuring, separation, and transition
136 164
Operating expenses as a % of revenue 70.2 %
-14.1 % 56.1 % 77.7 %
-26.4 % 51.3 % 480 bps 380 bps
Operating income $ 457 $ 569
$ 1,026 $ 154 $ 1,151
$ 1,305 -21 % -15 %
Operating
margin % 12.7 % 15.8 % 28.5
% 3.9 % 28.8 % 32.7 %
-420 bps -340 bps
Net income: $
2,488
$
(1,790
) $ 698 $ 878 $ 30 $ 908 -23 % N/A Gross profit adjustment 60 121
Operating expense adjustment 509 1,030 Income tax effects and
adjustments 950 (352 ) Income from discontinued operations, net of
taxes
(3,309
) (769 )
Diluted income (loss) per
share: Diluted income (loss) per share from continuing
operations $ (1.23 ) $ 2.26 $ 1.03 $ 0.16 $ 1.15 $ 1.30 Diluted
income (loss) per share from discontinued operations
4.94
(4.94
)
- 1.10 (1.10 )
- Diluted net income per
share (4)
3.71
(2.68
) 1.03 1.26
0.04 1.30 -21 % N/A
Diluted weighted-average shares outstanding
670 6 676
696 -
696 -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 charges previously allocated to our discontinued
information management business. Please see Appendix A for further
information. (4) Net income (loss) per share amounts may not add
due to rounding.
SYMANTEC CORPORATION
Revenue and Deferred Revenue Detail (1) (Dollars
in millions, unaudited) Three Months Ended
April 1, 2016 April 3, 2015
GAAP Adj Non-GAAP
GAAP
Adj (2)
Non-GAAP Revenues Content,
subscription, and maintenance, and other $ 849 $ - $
849 $ 861 $ 30 $ 891 License 24
- 24
38 - 38
Total
Revenues $ 873 $ - $ 873
$ 899 $ 30 $ 929
Revenues - Y/Y Growth Rate
Content, subscription, and maintenance, and other (3)
-1 % -4 % -5 % * * * License (3) -37 %
0 % -37 % * * *
Total Y/Y Growth Rate -3 %
-3 % -6 % -12 % 1
% -11 %
Revenues - Y/Y Growth Rate in Constant
Currency (4)
Content, subscription, and maintenance, and other (3) -1 % -3 % -4
% * * * License (3) -37 % 0 %
-37 % * * *
Total Y/Y Growth Rate in Constant Currency (4)
-2 % -4 % -6 % -6
% 1 % -5 %
Revenues by Segment
Consumer Security $ 406 $ - $ 406 $ 408
$ 30 $ 438 Enterprise Security 467
- 467 491
- 491
Revenues by
Segment - Y/Y Growth Rate
Consumer Security 0 % -7 % -7 % -19 % 6 % -13 % Enterprise
Security -5 % 0 % -5 %
-8 % -2 % -10 %
Revenues by Segment - Y/Y Growth Rate in Constant Currency
(4)
Consumer Security
0 % -7 % -7 % -13 % 6 % -7 % Enterprise Security -4 %
0 % -4 % 1 %
-5 % -4 %
Revenues by Geography
International $ 417 $ - $ 417 $ 445 $ - $ 445
U.S. 456 - 456 454 30 484 Americas (U.S., Latin America, Canada)
506 - 506 513 30 543 EMEA 217 - 217 230 - 230 Asia Pacific &
Japan 150 -
150 156 -
156
Revenues by Geography - Y/Y Growth Rate
International -6 % 0 % -6
% -17 % 0 % -17 % U.S. 0 % -6 % -6 % -7 % 2 % -5 % Americas (U.S.,
Latin America, Canada) -1 % -6 % -7 % -7 % 1 % -6 % EMEA -6 % 0 %
-6 % -20 % 0 % -20 % Asia Pacific & Japan -4 %
0 % -4 % -13 %
0 % -13 %
Revenues by Geography - Y/Y
Growth Rate in Constant Currency (4)
International -5 % 0 % -5 % -5 % 0 % -5
% U.S. 0 % -6 % -6 % -7 % 3 % -4 % Americas (U.S., Latin America,
Canada) -1 % -6 % -7 % -8 % 3 % -5 % EMEA -4 % 0 % -4 % -4 % 0 % -4
% Asia Pacific & Japan -4 % 0 %
-4 % -4 % 0 %
-4 %
Deferred
Revenue $ 2,638
$ 2,871 (1)
This presentation reflects the discontinued operations associated
with the divestiture of our information management business. Please
see Appendix A for further information. (2) The revenue adjustment
relates to the EDS & NDI contingency. Please see Appendix A for
more details. (3) Growth rates for the three months ended April 3,
2015 are not meaningful. (4) 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.
SYMANTEC
CORPORATION Operating Margin by Segment Detail
(1) (Dollars in millions, unaudited)
Three Months Ended April 1, 2016 April 3,
2015 GAAP GAAP
Adj (2)
Non-GAAP Operating Income by Segment
Consumer Security
$ 217 $ 212 $ 30 $ 242 Enterprise Security
(3 ) 47 -
47 Total Operating Income by Segment
214 259 30
289 Reconciling Items: Unallocated corporate
charges (3) - 169 (169 ) - Stock-based compensation 43 37 (37 ) -
Amortization of intangible assets 23 30 (30 ) - Restructuring,
separation, and transition 20 72
(72 ) -
Total
Consolidated Operating Income (Loss) $ 128
$ (49 ) $ 338 $ 289
Operating
Margin by Segment
Consumer Security 53 % 52 % 3 % 55 % Enterprise
Security -1 % 10 % 0 %
10 % (1) This presentation reflects the discontinued
operations associated with the divestiture of our information
management business. Please see Appendix A for further information.
(2) The revenue adjustment relates to the EDS & NDI
contingency. Please see Appendix A for further information. (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) (2)
(Dollars in millions, unaudited) Year
Ended April 1, 2016 April 3, 2015
GAAP Adj Non-GAAP
GAAP
Adj (3)
Non-GAAP Revenues
Content, subscription, and maintenance, and
other $ 3,470 $ - $ 3,470 $ 3,827 $ 30
$ 3,857 License 130 -
130 129
- 129
Total Revenues
$ 3,600 $ - $ 3,600
$ 3,956 $ 30 $ 3,986
Revenues - Y/Y Growth Rate
Content, subscription, and maintenance, and other (4)
-9 % -1 % -10 % * * * License (4) 1 % 0
% 1 % * * *
Total Y/Y Growth Rate -9 % -1 %
-10 % -5 % 0 %
-5 %
Revenues - Y/Y Growth Rate in Constant Currency
(5)
Content,
subscription, and maintenance, and other (4) -5 % 0 % -5 % * * *
License (4) 4 % 0 % 4 %
* * *
Total Y/Y Growth
Rate in Constant Currency (5) -4 %
-1 % -5 % -3 % 0 %
-3 %
Revenues by Segment
Consumer Security $ 1,670 $ - $ 1,670 $ 1,887 $ 30 $ 1,917
Enterprise Security 1,930 -
1,930 2,069
- 2,069
Revenues by Segment -
Y/Y Growth Rate
Consumer Security -11 % -2 % -13 % -9 % 2 % -7 % Enterprise
Security -7 % 0 % -7 %
-3 % -1 % -4 %
Revenues by Segment - Y/Y Growth Rate in Constant Currency
(5)
Consumer Security
-7 % -2 % -9 % -6 % 1 % -5 % Enterprise Security -2 %
0 % -2 % 0 %
-1 % -1 %
Revenues by Geography
International $ 1,703 $ - $ 1,703 $ 1,996 $ -
$ 1,996 U.S. 1,897 - 1,897 1,960 30 1,990 Americas (U.S., Latin
America, Canada) 2,113 - 2,113 2,214 30 2,244 EMEA 894 - 894 1,065
- 1,065 Asia Pacific & Japan 593
- 593 677
- 677
Revenues by
Geography - Y/Y Growth Rate
International -15 % 0 % -15 % -6 % 0 % -6 % U.S. -3 % -2 %
-5 % -4 % 0 % -4 % Americas (U.S., Latin America, Canada) -5 % -1 %
-6 % -4 % 0 % -4 % EMEA -16 % 0 % -16 % -6 % 0 % -6 % Asia Pacific
& Japan -12 % 0 % -12
% -8 % 0 % -8 %
Revenues by Geography - Y/Y Growth Rate in Constant Currency
(5)
International -6 %
0 % -6 % -2 % 0 % -2 % U.S. -3 % -2 % -5 % -4 % 0 % -4 % Americas
(U.S., Latin America, Canada) -5 % -1 % -6 % -4 % 0 % -4 % EMEA -5
% 0 % -5 % -1 % 0 % -1 % Asia Pacific & Japan -5
% 0 % -5 % -3 %
0 % -3 %
Deferred Revenue $ 2,638
$ 2,871
(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
twelve months ended April 1, 2016 consisted of 52 weeks, whereas
the twelve months ended April 3, 2015 consisted of 53 weeks. (3)
The revenue adjustment relates to the EDS & NDI contingency.
Please see Appendix A for more details. (4) Growth rates for the
year ended April 3, 2015 are not meaningful. (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.
SYMANTEC
CORPORATION
Operating Margin by Segment Detail
(1)
(Dollars in millions, unaudited) Year
Ended April 1, 2016 April 3, 2015
GAAP GAAP
Adj (2)
Non-GAAP Operating Income by Segment
Consumer Security
$ 924 $ 982 $ 30 $ 1,012 Enterprise Security
102 293 -
293 Total Operating Income by Segment
1,026 1,275
30 1,305 Reconciling Items: Unallocated
corporate charges (3) 186 704 (704 ) - Stock-based compensation 161
131 (131 ) - Amortization of intangible assets 86 122 (122 ) -
Restructuring, separation, and transition 136
164 (164 ) -
Total Consolidated Operating Income $ 457
$ 154 $ 1,151 $ 1,305
Operating Margin by Segment
Consumer Security 55 % 52 % 1 %
53 % Enterprise Security 5 % 14 %
0 % 14 % (1) This presentation reflects
the discontinued operations associated with the divestiture of our
information management business. Please see Appendix A for further
information.
(2) The revenue adjustment relates to the
EDS & NDI contingency. Please see Appendix A for further
information.
(3) 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) First
Quarter Fiscal Year 2017
Three Months Ended July 1, 2016 Year-Over-Year Growth
Rate
Revenue Guidance (2)
Range Actual
Constant Currency (3)
Revenue range $865 - $895 (5%) - (2%) (6%) - (3%)
Three Months
Ended July 1, 2016 Year-Over-Year Increase Operating
Margin Guidance and Reconciliation (2) Range
Actual
Constant Currency (3)
GAAP operating margin 10.0% - 12.5% -- -- Add back: Stock-based
compensation 5.5% Other non-GAAP adjustments 8.5% - 9.0% Non-GAAP
operating margin 24.5% - 26.5% -- --
Three Months Ended July 1,
2016 Year-Over-Year Growth Rate Earnings Per Share
Guidance and Reconciliation Range Actual GAAP
diluted earnings per share range $0.17 - $0.19 -- Add back:
Stock-based compensation, net of taxes $0.05 Other non-GAAP
adjustments, net of taxes $0.02 Non-GAAP diluted earnings per share
range $0.24 - $0.26 --
Fiscal Year 2017
Year Ended March 31, 2017 Year-Over-Year Growth Rate
Revenue Guidance (2)
Range Actual
Constant Currency (3)
Revenue range $3,490 - $3,580 (3%) - (1%) (4%) - (1%)
Year Ended
March 31, 2017 Year-Over-Year Increase Operating
Margin Guidance and Reconciliation (2) Range
Actual
Constant Currency (3)
GAAP operating margin 12.0% - 13.5% -- -- Add back: Stock-based
compensation 5.5% Other non-GAAP adjustments 8.5% - 9.0% Non-GAAP
operating margin 26.5% - 27.5% -- --
Year Ended March 31,
2017 Year-Over-Year Growth Rate Earnings Per Share
Guidance and Reconciliation Range Actual GAAP
diluted earnings per share range $0.69 - $0.73 -- Add back:
Stock-based compensation, net of taxes $0.24 Other non-GAAP
adjustments, net of taxes $0.13 Non-GAAP diluted earnings per share
range $1.06 - $1.10 --
(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 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.
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.
Discontinued operations: In August
2015, we entered into a definitive agreement to sell the assets of
our information management business (“Veritas”) to Carlyle. In
January 2016, the Company and Carlyle amended the terms of the
purchase agreement for Carlyle's acquisition of the information
management business, Veritas. The transaction closed on January 29,
2016. The results of Veritas are presented as discontinued
operations in our Consolidated Statements of Operations and thus
have been excluded from continuing operations and segment results
for all reported periods. Furthermore, Veritas' assets and
liabilities were removed from our Consolidated Balance Sheet as of
April 1, 2016, and have been classified as discontinued operations
on our Consolidated Balance Sheet as of April 3, 2015.
Gain on sale of Veritas: The
Company's management excludes this gain when evaluating its ongoing
performance and therefore has excluded this gain when presenting
non-GAAP financial measures. Based on the amended terms of the
definitive agreement, we received net consideration of $6.6 billion
in cash and 40 million B common shares of Veritas and Veritas
assumed certain liabilities in connection with the acquisition. The
transaction closed on January 29, 2016. The disposition resulted in
a net gain of $3.0 billion, which is presented as part of income
from discontinued operations, net of income taxes in the
Consolidated Statements of Operations for fiscal 2016.
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.
Twelve Months Ended April 1,
April 3, 2016 2015 Cost of revenue $ 10 $ 15 Sales and marketing 53
46 Research and development 56 39 General and administrative
42 31
Total continuing operations stock-based
compensation
$ 161 $ 131
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.
Deferred taxes on foreign earnings:
In the fourth quarter of fiscal 2016, the Company recorded $1.1
billion in income tax expense related to unremitted earnings of
foreign subsidiaries that were formerly considered to be
permanently invested in the Company's operations outside the U.S.
This charge is presented in loss from continuing operations in the
Consolidated Statements of Operations for the fourth quarter of
fiscal 2016.
Current deferred income tax liabilities
and assets: In November 2015, the FASB issued ASU No.
2015-17, Income Taxes, which simplifies the presentation of
deferred income taxes by requiring that all deferred income tax
liabilities and assets be classified as long-term. The standard was
adopted by the Company in the fourth quarter of fiscal 2016 on a
prospective basis, and it resulted in balance sheet
reclassifications of current deferred income tax liabilities and
assets to long-term on April 1, 2016.
SYMANTEC CORPORATIONExplanation of
Non-GAAP MeasuresAppendix A
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.
Diluted GAAP and non-GAAP weighted-average
shares outstanding: Diluted GAAP and non-GAAP
weighted-average shares outstanding are the same except in periods
that there is a GAAP loss from continuing operations. In accordance
with authoritative accounting guidance, we do not present dilution
for GAAP in periods in which there is a loss from continuing
operations. However if there is non-GAAP net income, we present
dilution for non-GAAP weighted-average shares outstanding in an
amount equal to the dilution that would have been presented had
there been GAAP income from continuing operations for the
period.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160512006560/en/
MEDIA CONTACT:Symantec Corp.Mara Mort,
650-527-7455Mara_Mort@symantec.comorINVESTOR
CONTACT:Symantec Corp.Jonathan Doros,
650-527-5523Jonathan_Doros@symantec.com
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