Symantec's Fiscal Second Quarter Supplemental Information

Transcription

1 Symantec's Fiscal Second Supplemental Information SUMMARY (in thousands) Revenue and Earnings Results Sep-05Q Jun-05Q Sep-04Q Y/Y Growth Q/Q Growth Non-GAAP Revenue (including writedown)* $1,192,144 $1,259,200 $1,103,347 8% -5% GAAP Revenue (excluding writedown)* $1,055,864 $699,942 $618,313 71% 51% Non-GAAP EPS* $0.23 $0.25 $ % -8% GAAP EPS* ($0.21) $0.27 $ % -178% *Place holder for description of Pro Forma & Pro Forma Non GAAP differences Performance by Business Unit - Non-GAAP Sep-05Q Jun-05Q Sep-04Q Y/Y Growth Q/Q Growth Sep-05% of Total Revenue Enterprise Security $259,257 $266,092 $232,932 11% -3% 22% Data Protection $288,943 $321,512 $284,260 2% -10% 24% Storage Management $254,414 $270,642 $239,123 6% -6% 21% Services $43,708 $43,805 $31,089 41% 0% 4% Total Enterprise $846,322 $902,051 $787,404 7% -6% 71% Consumer $346,199 $356,954 $315,392 10% -3% 29% Other ($377) $195 $ % -293% 0% Geographic Mix - Non-GAAP Sep-05Q Jun-05Q Sep-04Q Y/Y Growth Q/Q Growth Sep-05% of Total Revenue International $578,335 $618,400 $504,970 15% -6% 49% US $613,809 $640,800 $598,377 3% -4% 51% Americas (US,Latin America, Canada) $671,643 $705,888 $650,585 3% -5% 56% EMEA $360,466 $400,359 $324,450 11% -10% 30% Asia Pacific & Japan $160,035 $152,953 $128,312 25% 5% 13% Expenses and Profitability - Non-GAAP Sep-05Q Jun-05Q Sep-04Q Gross Margin: 84.6% 84.7% 84.4% Operating Expenses before all acquisition related and OTC: $645,314 $640,786 $593,332 Operating Expenses as a % of total revenue: 54% 51% 54% Operating Income: $362,860 $426,227 $338,226 Operating Margin: 30% 34% 31% Net Income before all acquisition related and OTC: $272,772 $310,629 $234,998 Net Income using "if-converted" method: - - $238,596 Fully Diluted Shares Outstanding: 1,205,052 1,224,123 1,233,840

2 SUMMARY continued Symantec's Fiscal Second Supplemental Information Balance Sheet & Cash Flow Metrics Sep-05Q Jun-05Q Sep-04Q Cash position (including short-term investments): (Jun-05 and Sep-04 are Symantec only) $4,433M $3,351M $2,545M DSO (Sep-04 is Symantec only): 34 days 35 days 48 days Non-GAAP Deferred Revenue: $1,738,345 $1,787,899 $1,576,054 Deferred Revenue: $1,512,009 $1,428,582 $1,576,054 Capital Expenses: $66,749 $27,576 $20,127 Cash Flow from Operating Activities: (Jun-05 and Sep-04 are Symantec only) $472,194 $211,724 $239,711 The information presented above includes selected historical GAAP and non-gaap financial information. To see the most directly comparable GAAP financial measures together with the reconciliation, click on:

3 Historical Revenue by Segment - Non-GAAP ly Revenue by Segment for Fiscal Year 2006: Enterprise Data Storage Total (in thousands) Security Protection Management Consumer Services Other* Company Jun-05 $266,092 $321,512 $270,642 $356,954 $43,805 $195 $1,259,200 Sep-05 $259,257 $288,943 $254,414 $346,199 $43,708 ($377) $1,192,144 Dec-05 Mar-06 FY-06 year-to-date $525,349 $610,455 $525,256 $703,153 $87,513 ($182) $2,551,344 ly Revenue by Segment for Fiscal Year 2005: Enterprise Data Storage Total (in thousands) Security Protection Management Consumer Services Other* Company Jun-04 $211,942 $269,379 $248,180 $278,311 $30,041 $4,528 $1,042,381 Sep-04 $232,932 $284,260 $239,123 $315,392 $31,089 $551 $1,103,347 Dec-04 $249,952 $284,960 $263,498 $360,591 $32,698 $183 $1,191,882 Mar-05 $263,981 $326,333 $294,596 $360,914 $41,282 $7 $1,287,113 FY-05 $958,807 $1,164,932 $1,045,397 $1,315,208 $135,110 $5,269 $4,624,723 *The other category contains divested product lines and/or product lines nearing the end of their life cycle. See note 11 of our June Q. Historical Revenue by Geography - Non-GAAP ly Revenue by Geography for Fiscal Year 2006: (in thousands) Americas* EMEA Asia Pacific & Japan Total Company Jun-05 $705,888 $400,359 $152,953 $1,259,200 Sep-05 $671,643 $360,466 $160,035 $1,192,144 Dec-05 Mar-06 FY-06 year-to-date $1,377,531 $760,825 $312,988 $2,451,344 ly Revenue by Geography for Fiscal Year 2005: (in thousands) Americas* EMEA Asia Pacific & Japan Total Company Jun-04 $624,243 $297,352 $120,787 $1,042,382 Sep-04 $650,585 $324,450 $128,312 $1,103,347 Dec-04 $677,615 $369,726 $144,541 $1,191,882 Mar-05 $728,675 $401,282 $157,155 $1,287,112 FY-05 $2,681,118 $1,392,810 $550,795 $4,624,723 *The Americas include: the United States, Latin America and Canada. Big Deal Summary Sep-05 greater than $100K 843 greater than $1M 67

4 Historical Product Release Consumer Enterprise Security Data Protection Storage Management Services Sep-05 Norton Ghost 10.0 Symantec Scan Engine 5.0 Enterprise Vault 6.0 Symantec Livestate Recovery Desktop 6.0 Consulting for Windows Authorized Program Norton AntiVirus 2006 Symantec Mail Security Multi-Platform Edition 2.0 Backup Exec 10d Symantec Livestate Recovery Desktop Suite 6.0 Enterprise Vault Deployment, 1 Day Onsite+ Norton Internet Security 2006 Symantec Gateway Security 3.0 Symantec Livestate Recovery Advanced Server 6.0 Symantec AntiVirus 10.0 for Macintosh Symantec Livestate Recovery Advanced Server Suite 6.0 Symantec Livestate Recovery Manager 6.0 Symantec Livestate Recovery Standard Server 6.0 Symantec Livestate Recovery LightsOut Restore Option Symantec Livestate Recovery Restore Anyware Option VERITAS Insight Inquire V2.1 VERITAS Cluster ServerÔ Agent 4.0 for WebSphere Application Server VERITAS Storage Foundation and High Availability Solutions v4.3 for Windows VERITAS Storage Foundation and High Availability solutions 4.1 for HP-UX VERITAS Storage Foundation and High Availability Solutions v4.3 for Windows VERITAS Storage Foundation High Availability Solutions, Version 4.1 for Linux Jun-05 Norton Internet Security 2005 AntiSpyware Edition Symantec Client Security 3.0 Symantec LiveState Patch Manager 6.0 Norton AntiVirus Mac 10.0 Symantec Client Security for Small and Medium Business 3.0 Symantec Discovery 6.0 Symantec Mobile Security 4.0 for Symbian Symantec LiveState Delivery 6.0 Symantec AntiVirus Enterprise Edition 10.0 Symantec LiveState Delivery Enterprise Manager 6.0 Symantec AntiVirus Corporate Edition 10.0 Symantec LiveState Client Management Suite Symantec AntiVirus for Small and Medium Business 10.0 Symantec AntiVirus 4.3 for Messaging Symantec Enterprise Security Manager Version 6.5 Managed Security Services Vulnerability Data Integration Mar-05 Symantec AntiVirus 4.3 for Microsoft SharePoint Backup Exec 10.0 Symantec LiveState Recovery Manager Symantec Network Security 4.0 Symantec Mail Security Appliance Symantec Smart Agent for Dragon Symantec Smart Agent for Cisco Intrusion Detection System Symantec Smart Agent for Snort 2.0 Dec-04 Norton Antivirus MAC 9.0 R1 Symantec Enterprise Security Architecture 2.1 Symantec Livestate Recovery Desktop 3.0 Symantec Gateway Security 400 Series Appliance Symantec Livestate Recovery Desktop 3.0 Small & Medium Business Symantec Network Security Fiber Fail-Open Solution 1.0 Appliance Symantec Livestate Recovery Standard Server 3.0 Small & Medium Business Symantec Mail Security 4.1 for Domino Symantec Ghost Solution Suite 1.0 Symantec Mail Security for Domino Multi Platform Bundle Edition pcanywhere 11.5 Symantec Mail Security for Microsft Exchange 4.6 Recovery Advanced Server 3.0 Symantec Mail Security for SMTP 4.1 Recovery Standard Server 3.0 Symantec Client Security 3.0 for Nokia Communicator Symantec AntiVirus for Caching 4.3 Symantec AntiVirus for Network Attached Storage 4.3 Sep-04 Norton Internet Security 2005 Symantec Universal Event Collector 1.0 Symantec ON ipatch 1.1 Norton Internet Security U Symantec Event Manager for Anti-Virus 2.0 Norton Antivirus 2005 Symantec Network Security 7100 Series Norton Antivirus 3U Symantec Enterprise Manager 6.1 Norton AntiSpam 2005 Symantec Security Awareness Program 2.0 Norton Personal Firewall Symantec AntiVirus for Handhelds 3.3 Norton System Works 2005 Symantec Mail Security Multi-Platform Edition Bundle 1.0 Norton System Works 2005 Premier Norton Go Back 4.0 Norton Ghost 9.0

5 Symantec Corporation Trended GAAP Financial Statements (In thousands, except per share data) (Unaudited) Ended Ended Fiscal Ended 30-Sep Jun Mar Dec Sep Jun-04 Net revenues $ 1,055,864 $ 699,942 $ 2,582,849 $ 712,678 $ 695,224 $ 618,313 $ 556,634 Cost of revenues: Cost of sales 183, , , , ,163 96,015 89,011 Amortization of acquired product rights 129,472 11,013 48,894 11,105 13,335 13,204 11,250 Total cost of revenues 313, , , , , , ,261 Gross profit 742, ,147 2,130, , , , ,373 Operating expenses: Sales and marketing 401, , , , , , ,932 Research and development 187,313 91, ,266 90,277 85,289 83,816 72,884 General and administrative 59,379 30, ,419 33,646 29,910 27,578 24,285 Amortization of other intangibles 48,309 1,739 5,416 1,760 1,622 1, Amortization of deferred stock-based compensation 13,389 2,785 4,524 2,844 1, Acquired in-process research and development 284,000-3,480-1,218-2,262 Restructuring 1,452 3,474 2, , Integration planning 5,253 7,901 3,494 3, Patent settlement - 2, Total operating expenses 1,000, ,829 1,311, , , , ,115 Operating income (loss) (258,347) 232, , , , , ,258 Interest and other income, net 39,963 22,758 51,185 16,670 13,354 10,723 10,438 Interest expense (7,503) - (12,323) - (1,741) (5,291) (5,291) Income before income taxes (225,887) 255, , , , , ,405 Provision for income taxes 25,441 56, , ,810 76,105 61,926 55,128 Net income (loss) $ (251,328) $ 198,633 $ 536,159 $ 119,682 $ 163,577 $ 135,623 $ 117,277 Net income (loss) per share - diluted $ (0.21) $ 0.27 $ 0.74 $ 0.16 $ 0.22 $ 0.19 $ 0.16 Shares used to compute net income per share - diluted 1,172, , , , , , ,852 Amortization of stock-based compensation is allocated as follows: Sales and marketing $ 4,457 $ 806 $ 1,298 $ 829 $ 223 $ 246 $ - Research and development 6,763 1,105 1,779 1, General and administrative 2, , $ 13,389 $ 2,785 $ 4,524 $ 2,844 $ 1,041 $ 639 $ - NOTE: The above information reflects the financial results of Symantec Corporation ("Symantec"). Symantec acquired VERITAS Software Corporation ("VERITAS") on July 2, The results of operations of VERITAS have been included in the Symantec results of operations beginning on July 2, 2005.

6 Symantec Corporation Trended Non-GAAP Combined Statements of Operations (In thousands, except per share data) (Unaudited) Ended Ended Fiscal 30-Sep Jun Ended 31-Mar-05 Net revenues (1) $ 1,192,144 $ 1,259,200 $ 4,624,723 $ 1,287,113 $ 1,191,882 $ 1,103,347 $ 1,042,381 Cost of revenues (1) 183, , , , , , ,291 Gross profit (2) 1,008,174 1,067,013 3,914,100 1,094,711 1,009, , ,090 Operating expenses: Sales and marketing (1) 400, ,703 1,450, , , , ,428 Research and development (1) 186, , , , , , ,764 General and administrative (1) 57,854 83, ,407 83,955 79,026 73,536 70,890 Total operating expenses (2) 645, ,786 2,433, , , , ,082 Operating income (2) 362, ,227 1,480, , , , ,008 Interest and other income, net (1) 39,963 38, ,031 34,091 27,015 21,161 21,764 Interest expense (1) (7,503) (7,709) (46,766) (8,753) (10,707) (13,802) (13,504) Income before income taxes (1) 395, ,808 1,538, , , , ,268 Provision for income taxes (1) 122, , , , , , ,286 Net income (2) $ 272,772 $ 310,629 $ 1,045,946 $ 313,972 $ 268,994 $ 234,998 $ 227,982 Net income per share - diluted (2) $ 0.23 $ 0.25 $ 0.86 $ 0.26 $ 0.22 $ 0.19 $ 0.18 Shares used to compute net income per share - diluted (1) 1,205,052 1,224,123 1,231,731 1,222,931 1,234,505 1,233,840 1,236,032 NOTES: The above information reflects the combined results of Symantec Corporation ("Symantec") and VERITAS Software Corporation ("VERITAS"), including amounts related to the amortization of fair value adjustments of assets acquired and liabilities assumed by Symantec as of the actual acquisition date of July 2, For comparative purposes, the information presented assumes that the acquisition took place on April 1, If the acquisition had taken place on April 1, 2004, the fair values of the assets and liabilities would have been different and actual results of operations would have been different from those presented above. Symantec's fiscal years end March 31st whereas VERITAS' fiscal years ended December 31st. The above fiscal year amounts combine Symantec's 2004 and 2005 fiscal years with VERITAS' 2003 and 2004 fiscal years, respectively. The above quarterly amounts combine the first, second, third and fourth quarters in each of VERITAS' fiscal years with the corresponding quarters in Symantec's fiscal years, except the quarter ended September 30, 2005 which consists of the consolidated Symantec amounts. Additional non-gaap adjustments consist of: non-cash charges related to acquisitions, such as the amortization of intangibles and stock-based compensation expense, and the write-off of in-process research and development; restructuring charges; integration planning costs; and the impact of other special items, such as other stock-based compensation expense, litigation matters, gain/loss on investments and related adjustments to provision for income taxes on our operating results. These non-gaap financial measures are not prepared in accordance with generally accepted accounting principles and may be different from non-gaap financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. FOOTNOTES: 1. Symantec includes these non-gaap financial measures because we believe these measures are useful to investors in that they allow for greater transparency to certain line items in our financial statements. We have historically reported similar non-gaap financial measures to our investors and believe that the inclusion of comparative numbers provides consistency in our financial reporting. Investors are encouraged to review the reconciliation of the non-gaap financial measures to their most directly comparable GAAP financial measures as provided herein. 2. Symantec's management refers to these non-gaap financial measures, such as non-gaap operating margins and net income, in making operating decisions because the measures provide meaningful supplemental information regarding our operational performance and our ability to invest in research and development and fund acquisitions and capital expenditures. In addition, these non-gaap financial measures facilitate management s internal comparisons to our historical operating results and comparisons to competitors operating results. Investors are encouraged to review the reconciliation of the non-gaap financial measures to their most directly comparable GAAP financial measures as provided herein.

7 Symantec Corporation Reconciliation of Non-GAAP Adjustments Statements of Operations (In thousands) (Unaudited) Ended Ended Fiscal Ended 30-Sep Jun Mar Dec Sep Jun-04 Net revenues (1): Non-GAAP net revenue (1) $ 1,192,144 $ 1,259,200 $ 4,624,723 $ 1,287,113 $ 1,191,882 $ 1,103,347 $ 1,042,381 Fair value adjustment to VERTAS deferred revenue (136,280) VERITAS net revenue* (1) - (559,258) (2,041,874) (574,435) GAAP net revenues $ 1,055,864 $ 699,942 $ 2,582,849 $ 712,678 $ 695,224 $ 618,313 $ 556,634 Gross profit: Non-GAAP gross profit (2) $ 1,008,174 $ 1,067,013 $ 3,914,100 $ 1,094,711 $ 1,009,741 $ 931,558 $ 878,090 VERITAS gross profit* (2) - (398,744) (1,396,358) (419,007) (349,628) (336,208) (291,515) Fair value adjustment to VERTAS deferred revenue (136,280) Integration planning (1,057) Amortization of acquired product rights (129,472) (83,164) (383,398) (83,256) (85,486) (85,355) (129,301) Amortization of deferred stock-based compensation - (901) (3,604) (901) (901) (901) (901) Gross profit adjustment (2) (265,752) (483,866) (1,783,360) (503,164) (436,015) (422,464) (421,717) GAAP gross profit $ 742,422 $ 583,147 $ 2,130,740 $ 591,547 $ 573,726 $ 509,094 $ 456,373 Operating expenses: Non-GAAP operating expenses (2) $ 645,314 $ 640,786 $ 2,433,209 $ 658,325 $ 630,470 $ 593,332 $ 551,082 VERITAS operating expenses* (1) - (400,173) (1,338,140) (358,570) (330,543) (331,549) (317,478) Amortization of other intangible assets 48,309 48, ,472 48,524 48,386 47,906 47,656 Amortization of deferred stock-based compensation 13,389 7,518 23,456 7,577 5,774 5,372 4,733 Acquired in-process research and development 284,000-3,480-1,218-2,262 Restructuring 1,452 3,474 (6,872) - (9,648) 1, Integration planning 5,253 18,521 3,494 3, Patent settlement - 2, Proposed SEC legal settlement - 30, Executive incentive bonuses 3, Operating expense adjustment (2) 355,455 (289,957) (1,121,735) (298,600) (284,813) (276,355) (261,967) GAAP operating expenses $ 1,000,769 $ 350,829 $ 1,311,474 $ 359,725 $ 345,657 $ 316,977 $ 289,115 Net income (loss): Non-GAAP net income (2) $ 272,772 $ 310,629 $ 1,045,946 $ 313,972 $ 268,994 $ 234,998 $ 227,982 Gross profit adjustment (2) (265,752) (483,866) (1,783,360) (503,164) (436,015) (422,464) (421,717) Operating expense adjustment (2) (355,455) 289,957 1,121, , , , ,967 VERITAS other income and tax* (1) - 12,063 31,226 19,339 3,212 9,300 (625) Gain on strategic investments ,505 2, ,496 Income tax benefit (provision) 97,107 69, ,107 (11,074) 42,573 37,434 42,174 GAAP net income (loss) $ (251,328) $ 198,633 $ 536,159 $ 119,682 $ 163,577 $ 135,623 $ 117,277 Net income (loss) per share - diluted: Non-GAAP net income per share $ 0.23 $ 0.25 $ 0.86 $ 0.26 $ 0.22 $ 0.19 $ 0.18 Non-GAAP adjustments per share (0.44) 0.02 (0.12) (0.10) 0.00 (0.00) (0.02) GAAP net income (loss) per share $ (0.21) $ 0.27 $ 0.74 $ 0.16 $ 0.22 $ 0.19 $ 0.16 Shares used to compute net income (loss) per share - diluted: Non-GAAP Shares used to compute net income per share 1,205,052 1,224,123 1,231,731 1,222,931 1,234,505 1,233,840 1,236,032 Converted incremental VERITAS shares** - (486,912) (493,486) (484,518) (492,059) (497,302) (500,180) Additional Non-GAAP diluted shares*** (32,922) GAAP Shares used to compute net income (loss) per share 1,172, , , , , , ,852 NOTES: The above information reflects the combined results of Symantec Corporation ("Symantec") and VERITAS Software Corporation ("VERITAS"), including amounts related to the amortization of fair value adjustments of assets acquired and liabilities assumed by Symantec as of the actual acquisition date of July 2, For comparative purposes, the information presented assumes that the acquisition took place on April 1, If the acquisition had taken place on April 1, 2004, the fair values of the assets and liabilities would have been different and actual results of operations would have been different from those presented above. Symantec's fiscal years end March 31st whereas VERITAS' fiscal years ended December 31st. The above fiscal year amounts combine Symantec's 2004 and 2005 fiscal years with VERITAS' 2003 and 2004 fiscal years, respectively. The above quarterly amounts combine the first, second, third and fourth quarters in each of VERITAS' fiscal years with the corresponding quarters in Symantec's fiscal years, except the quarter ended September 30, 2005 which consists of the consolidated Symantec amounts. Additional non-gaap adjustments consist of: non-cash charges related to acquisitions, such as the amortization of intangibles and stock-based compensation expense, and the write-off of in-process research and development; restructuring charges; integration planning costs; and the impact of other special items, such as other stock-based compensation expense, litigation matters, gain/loss on investments and related adjustments to provision for income taxes on our operating results. These non-gaap financial measures are not prepared in accordance with generally accepted accounting principles and may be different from non-gaap financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. * These amounts include VERITAS historical amounts plus amortization related to fair value adjustments based on the fair values of assets acquired and liabilities assumed by Symantec as of the actual acquisition date of July 2, **Converted incremental VERITAS shares equals VERITAS historical shares multiplied by the exchange ratio of ***Excluded from the shares used to compute the dilutive GAAP net loss per share because the effect was antidilutive. FOOTNOTES: 1. Symantec includes these non-gaap financial measures because we believe these measures are useful to investors in that they allow for greater transparency to certain line items in our financial statements. We have historically reported similar non-gaap financial measures to our investors and believe that the inclusion of comparative numbers provides consistency in our financial reporting. Investors are encouraged to review the reconciliation of the non-gaap financial measures to their most directly comparable GAAP financial measures as provided herein. 2. Symantec's management refers to these non-gaap financial measures, such as non-gaap operating margins and net income, in making operating decisions because the measures provide meaningful supplemental information regarding our operational performance and our ability to invest in research and development and fund acquisitions and capital expenditures. In addition, these non-gaap financial measures facilitate management s internal comparisons to our historical operating results and comparisons to competitors operating results. Investors are encouraged to review the reconciliation of the non-gaap financial measures to their most directly comparable GAAP financial measures as provided herein.