SYMC Symantec Corporation

Cyber Security Visionary Greg Clark Becomes CEO, Leading Industry’s Largest Pure Play Cyber Security Company

Symantec (NASDAQ:SYMC) today announced that it has successfully completed its acquisition of Blue Coat, Inc., a leading provider of web security for enterprises and governments worldwide. The acquisition of Blue Coat complements Symantec’s innovative product portfolio and creates the industry’s largest pure play cyber security company.

“At a time when the world faces more threats than it’s ever encountered before, I couldn’t be more confident in our ability to deliver what our customers need or more honored to lead Symantec’s next chapter of innovation and growth,” said Greg Clark, Symantec CEO. “With Blue Coat now part of Symantec, we are well positioned to solve the industry’s most difficult challenges of securing a mobile workforce, protecting the cloud and stopping advanced threats.”

Clark added, “Since announcing the transaction, our integration planning teams have been working diligently to capture the strengths of both companies. With our increased scale, portfolio and resources, large enterprises can now look to Symantec as a single strategic source for integrated solutions across endpoints, cloud and infrastructure to defend against sophisticated attacks and create a stronger, more cost-efficient security posture.”

With the acquisition of Blue Coat complete, Symantec has begun executing its integration strategy and accelerating its commitment to define the future of cyber security.

Dan Schulman, Symantec Chairman, said, “Nearly two years ago we announced our intention to become the leading pure play cyber security company. Today that intention becomes a reality, as we combine Symantec’s leadership in endpoint, email, data loss prevention and datacenter security with Blue Coat’s strength in cloud security with the #1 market share position at the secure web gateway. In the near term, we’ll be focused on ensuring a smooth integration for our customers. As we look ahead, I am confident we have the talent, capabilities and resources to help us drive profitable growth.”

“The global security landscape is becoming more complex, and threats more pervasive, while at the same time, our clients are looking for business outcomes,” said Matthew Gyde, Dimension Data’s group executive of security. “We’re seeing an increase in the adoption of cloud services for security, and clients also see potential cost-savings of moving to the cloud. The Symantec and Blue Coat combination is an exciting opportunity for the security industry, and particularly for our clients. We look forward to working together to help our clients accelerate their ambitions.”

An independent poll of enterprise buyers by industry research firm ESG Research shows that more than 75 percent of buyers are more likely or much more likely to buy from Symantec as a result of the combined portfolios1. “Based upon our quantitative research of cyber security and IT professionals, organizations are clearly excited about the prospects of getting access to the larger and more comprehensive cyber security portfolio from a combined Symantec-Blue Coat entity,” said Jon Oltsik, Sr. principal analyst at ESG. “Most point to the potential benefit of a more streamlined buying center and reduced costs resulting from a more integrated set of cyber security products and services.”

The combined company would have had approximately $4.2 billion in GAAP pro forma revenues in fiscal year 2016, of which 60% would come from enterprise security. On a pro forma, non-GAAP basis, the combined company would have had $4.4 billion in revenues in fiscal year 2016, of which 62% would come from enterprise security.

As previously announced, Michael Fey will serve as President and Chief Operating Officer and Thomas Seifert will continue to serve as Executive Vice President, Chief Financial Officer of Symantec. The combined company will be headquartered in Mountain View, Calif.

The company will webcast its Q1 earnings conference call on Thursday, August 4, at 5 p.m. ET/ 2 p.m. PT. For more details, please visit http://investor.symantec.com/investor-relations/events-calendar/.

About Symantec

Symantec Corporation (NASDAQ:SYMC) is the global leader in cyber security. 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.

Forward-Looking Statements

This press release contains statements which may be considered forward-looking within the meaning of the U.S. federal securities laws, including statements regarding the expected benefits to Symantec Corporation (“Symantec”), its customers, stockholders and investors from completing the acquisition of Blue Coat, Inc. (“Blue Coat”), including without limitation expected growth, cross-sell and upsell opportunities, earnings accretion and cost savings. These statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from results expressed or implied in this press release. Such risk factors include those related to: the potential impact on the businesses of Blue Coat and Symantec due to uncertainties in connection with the acquisition; the retention of employees of Blue Coat and the ability of Symantec to successfully integrate Blue Coat and to achieve expected benefits; general economic conditions; fluctuations and volatility in Symantec’s stock price; the ability of Symantec to successfully execute strategic plans; the ability to maintain customer and partner relationships; fluctuations in tax rates and currency exchange rates; the timing and market acceptance of new product releases and upgrades; and 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 press release. Symantec assumes 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 Symantec’s Form 10-K for the year ended April 1, 2016.

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. The results of operations of Blue Coat have undergone significant change due to the impact of purchase accounting on revenue from prior acquisitions, stock-based compensation, restructuring, transition and integration 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 press 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.

1 ESG Brief, Symantec-Blue Coat Merger Sentiment, July 2016

 

GAAP RESULTS RECONCILED TO NON-GAAP RESULTS (1)

Fiscal Year Ended April 1, 2016 (2) (Dollars in millions, unaudited)  

Non-GAAP pro forma net revenues

    GAAP Adj (3) Non-GAAP  

Symantec enterprise security net revenues

$ 1,930 $ - $ 1,930 Blue Coat net revenues   598   157   755

Total pro forma combined enterprise security net revenues

2,528 157 2,685

Consumer security net revenues

  1,670   -   1,670 Total pro forma combined net revenues $ 4,198 $ 157 $ 4,355  

Enterprise security as % of total pro forma combined net revenues

60% 2% 62%   (1) For more information about our non-GAAP financial measures, please see Appendix A.

(2) Blue Coat's fiscal year end is within 93 days of Symantec's fiscal year end, therefore Blue Coat's net revenuesfrom its fiscal year ended April 30, 2016 are combined with Symantec net revenues from its fiscal year ended April 1,2016.

(3) Adjustment for impact of purchase accounting on net revenues.  

Explanation of Non-GAAP MeasuresAppendix A

Objective of non-GAAP measures of Symantec: Symantec Corporation (“Symantec”) supplements the financial results and projections that it provides in accordance with generally accepted accounting principles, or GAAP, with non-GAAP financial measures. Symantec believes its presentation of pro forma and non-GAAP financial measures, when taken together with corresponding GAAP financial measures, provides meaningful supplemental information regarding our future results. Symantec’s management team uses these pro forma and non-GAAP financial measures in assessing its operating results, as well as when planning, forecasting and analyzing future periods. Symantec believes that these non-GAAP financial measures also facilitate comparisons of its performance to prior periods and to its peers and that investors benefit from an understanding of the pro forma and non-GAAP financial measures. Pro forma and non-GAAP financial measures are supplemental and should not be considered a substitute for financial information presented in accordance with GAAP.

Objective of non-GAAP measures of Blue Coat: Blue Coat, Inc. (“Blue Coat”) believes its presentation of non-GAAP financial measures, when taken together with corresponding GAAP financial measures, provides meaningful supplemental information regarding Blue Coat’s operating performance for the reasons discussed below. Blue Coat’s management team uses these non-GAAP financial measures in assessing Blue Coat’s operating results, as well as when planning, forecasting and analyzing future periods. Blue Coat believes that these non-GAAP financial measures also facilitate comparisons of Blue Coat’s performance to prior periods and to Blue Coat’s 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.

Impact of purchase accounting on net revenue: Blue Coat defines adjusted net revenue as net revenue excluding the impact of purchase accounting. Blue Coat regularly monitors these measures to assess its operating performance. On February 15, 2012, in connection with the Thoma Bravo Acquisition, and on May 22, 2015, as part of the Bain Acquisition, Blue Coat was required to write down its deferred revenue balances due to purchase accounting in accordance with GAAP. In addition, in connection with Blue Coat’s other acquisitions, Blue Coat was also required to make similar adjustments to write down its deferred revenue balances due to purchase accounting in accordance with GAAP. The impact on revenue related to purchase accounting as a result of these transactions, particularly as a result of the Bain Acquisition, limits the comparability of revenue between periods. While the deferred revenue written down in connection with Blue Coat’s acquisitions will never be recognized as revenue under GAAP, Blue Coat does not expect the Bain Acquisition to have an impact on future renewal rates of the contracts included within the deferred revenue write-down, nor does Blue Coat expect revenue generated from new service and subscription contracts to be similarly impacted by purchase accounting adjustments. Accordingly, Blue Coat believes presenting adjusted net revenue to exclude the impact of purchase accounting adjustments, including the deferred revenue write-down, aids in the comparability between periods and in assessing Blue Coat’s overall operating performance. If these adjustments were not made, Blue Coat’s future revenue growth rates could appear overstated. Adjusted net revenue has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for net revenue. Other companies in our industry may calculate this measure differently, which may limit its usefulness as a comparative measure.

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Symantec Corp.MEDIA:Kristen Batch, 503-516-6297kristen_batch@symantec.comorINVESTORS:Jonathan Doros, 650-527-5523jonathan_doros@symantec.com