Advertisement
USE OF NON-GAAP FINANCIAL INFORMATION: Our results of operations have undergone significant change due to a series of acquisitions, the impact of stock-based compensation, impairment charges and other corporate events. 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. Our non-GAAP results are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting 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 Web site at www.symantec.com/invest.
SYMANTEC CORPORATION Condensed Consolidated Balance Sheets (In millions) December 28, March 30, 2012 2012 (1) ------------- ------------- (Unaudited)ASSETSCurrent assets: Cash and cash equivalents $ 4,200 $ 3,162 Short-term investments 52 49 Trade accounts receivable, net 1,081 940 Inventories 20 28 Deferred income taxes 193 205 Other current assets 270 249 ------------- ------------- Total current assets 5,816 4,633 ------------- -------------Property and equipment, net 1,130 1,100Intangible assets, net 1,065 1,337Goodwill 5,843 5,826Other long-term assets 108 124 ------------- ------------- Total assets $ 13,962 $ 13,020 ============= =============LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities: Accounts payable $ 317 $ 324 Accrued compensation and benefits 454 416 Deferred revenue 3,298 3,444 Current portion of long-term debt 982 - Other current liabilities 431 321 ------------- ------------- Total current liabilities 5,482 4,505 ------------- -------------Long-term debt 2,094 2,039Long-term deferred revenue 508 529Long-term deferred tax liabilities 321 288Long-term income taxes payable 341 393Other long-term obligations 60 94 ------------- ------------- Total liabilities 8,806 7,848 ------------- ------------- ------------- ------------- Total Symantec Corporation stockholders' equity 5,156 5,094 ------------- -------------Noncontrolling interest in subsidiary - 78 ------------- ------------- Total stockholders' equity 5,156 5,172 ------------- ------------- Total liabilities and stockholders' equity $ 13,962 $ 13,020 ============= =============(1) Derived from audited consolidated financial statements. SYMANTEC CORPORATION Condensed Consolidated Statements of Income (In millions, except per share data, unaudited) Year-Over-Year Three Months Ended Growth Rate -------------------------- ------------------------ December 28, December 30, Constant 2012 2011 Actual Currency(1) ------------ ------------ ----------- -----------Net revenue: Content, subscription, and maintenance $ 1,521 $ 1,462 4% 5% License 270 253 7% 8% ------------ ------------ ----------- ----------- Total net revenue 1,791 1,715 4% 5% ------------ ------------ ----------- -----------Cost of revenue: Content, subscription, and maintenance 256 233 License 27 16 Amortization of intangible assets 16 22 ------------ ------------ ----------- ----------- Total cost of revenue 299 271 10% 11% ------------ ------------ ----------- -----------Gross profit 1,492 1,444 3% 4% ------------ ------------ ----------- -----------Operating expenses: Sales and marketing 730 711 Research and development 249 242 General and administrative 117 113 Amortization of intangible assets 71 73 Restructuring and transition 27 5 ------------ ------------ ----------- ----------- Total operating expenses 1,194 1,144 4% 5% ------------ ------------ ----------- -----------Operating income 298 300 -1% 0% ------------ ------------ ----------- ----------- Interest income 4 2 Interest expense (38) (27) Other income (expense), net 20 (2) ------------ ------------ ----------- -----------Income before income taxes 284 273 4% N/A ------------ ------------ ----------- ----------- Provision for income taxes 72 32 ------------ ------------ ----------- -----------Net income 212 241 -12% N/A Less: Loss attributable to noncontrolling interest - 1 ------------ ------------ ----------- -----------Net income attributable to Symantec Corporation stockholders $ 212 $ 240 -12% N/A ============ ============ =========== ===========Net income per share attributable to Symantec Corporation stockholders -- basic $ 0.31 $ 0.33Net income per share attributable to Symantec Corporation stockholders -- diluted $ 0.30 $ 0.32Weighted-average shares outstanding attributable to Symantec Corporation stockholders -- basic 693 734Weighted-average shares outstanding attributable to Symantec Corporation stockholders -- diluted 702 740(1) Management refers to growth rates adjusting for currency so that the business results can be viewed without the impact of fluctuations in foreign currency exchange rates. We compare the percentage change in the results from one period to another period in order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the actual exchange rates in effect during the respective prior periods. SYMANTEC CORPORATION Condensed Consolidated Statements of Income (In millions, except per share data, unaudited) Year-Over-Year Nine Months Ended Growth Rate -------------------------- ------------------------ December 28, December 30, Constant 2012 2011 Actual Currency(1) ------------ ------------ ----------- -----------Net revenue: Content, subscription, and maintenance $ 4,494 $ 4,353 3% 6% License 664 696 -5% -2% ------------ ------------ ----------- ----------- Total net revenue 5,158 5,049 2% 5% ------------ ------------ ----------- -----------Cost of revenue: Content, subscription, and maintenance 752 695 License 62 33 Amortization of intangible assets 53 67 ------------ ------------ ----------- ----------- Total cost of revenue 867 795 9% 10% ------------ ------------ ----------- -----------Gross profit 4,291 4,254 1% 4% ------------ ------------ ----------- -----------Operating expenses: Sales and marketing 2,038 2,073 Research and development 745 728 General and administrative 336 324 Amortization of intangible assets 215 217 Restructuring and transition 85 25 ------------ ------------ ----------- ----------- Total operating expenses 3,419 3,367 2% 4% ------------ ------------ ----------- -----------Operating income 872 887 -2% 3% ------------ ------------ ----------- ----------- Interest income 9 10 Interest expense (102) (87) Other income (expense), net 15 (4) Loss from joint venture - (27) ------------ ------------ ----------- -----------Income before income taxes 794 779 2% N/A ------------ ------------ ----------- ----------- Provision for income taxes 217 166 ------------ ------------ ----------- -----------Net income 577 613 -6% N/A Less: Loss attributable to noncontrolling interest - - ------------ ------------ ----------- -----------Net income attributable to Symantec Corporation stockholders $ 577 $ 613 -6% N/A ============ ============ =========== ===========Net income per share attributable to Symantec Corporation stockholders -- basic $ 0.82 $ 0.82Net income per share attributable to Symantec Corporation stockholders -- diluted $ 0.81 $ 0.82Weighted-average shares outstanding attributable to Symantec Corporation stockholders -- basic 704 745Weighted-average shares outstanding attributable to Symantec Corporation stockholders -- diluted 710 752(1) Management refers to growth rates adjusting for currency so that the business results can be viewed without the impact of fluctuations in foreign currency exchange rates. We compare the percentage change in the results from one period to another period in order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the actual exchange rates in effect during the respective prior periods. SYMANTEC CORPORATION Condensed Consolidated Statements of Cash Flows (In millions, unaudited) Nine Months Ended ------------------------------ December 28, December 30, 2012 2011 -------------- --------------OPERATING ACTIVITIES:Net income $ 577 $ 613Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 213 200 Amortization of intangible assets 268 284 Amortization of debt issuance costs and discounts 44 46 Stock-based compensation expense 125 123 Deferred income taxes 26 38 Excess income tax benefit from the exercise of stock options (2) (6) Loss from joint venture - 27 Other (3) 4 Net change in assets and liabilities, excluding effects of acquisitions: Trade accounts receivable, net (144) 12 Inventories 9 (3) Accounts payable (8) 9 Accrued compensation and benefits 40 (49) Deferred revenue (150) (108) Income taxes payable 39 3 Other assets (45) (9) Other liabilities (8) 30 -------------- -------------- Net cash provided by operating activities 981 1,214 -------------- --------------INVESTING ACTIVITIES: Purchases of property and equipment (245) (199) Cash payments for acquisitions, net of cash acquired (28) (364) Purchases of held-to-maturity securities - (47) Proceeds from sale of held-to-maturity securities 46 - Other 3 (1) -------------- -------------- Net cash used in investing activities (224) (611) -------------- --------------FINANCING ACTIVITIES: Net proceeds from sales of common stock under employee stock benefit plans 100 95 Excess income tax benefit from the exercise of stock options 2 6 Tax payments related to restricted stock issuance (14) (22) Repurchases of common stock (701) (693) Purchase of additional interest in subsidiary (92) - Repayments of debt and other obligations - (602) Proceeds from debt issuance, net of discount 996 - Debt issuance costs (7) - -------------- -------------- Net cash provided by (used in) financing activities 284 (1,216) -------------- --------------Effect of exchange rate fluctuations on cash and cash equivalents (3) (10) -------------- --------------Change in cash and cash equivalents 1,038 (623)Beginning cash and cash equivalents 3,162 2,950 -------------- --------------Ending cash and cash equivalents $ 4,200 $ 2,327 ============== ============== SYMANTEC CORPORATIONReconciliation of Selected GAAP Measures to Non-GAAP Measures (1) (In millions, except per share data, unaudited) Three Months Ended ---------------------------------------------- December 28, 2012 December 30, 2011 ---------------------- ---------------------- Non- Non- GAAP Adj GAAP GAAP Adj GAAP ------ ------ ------ ------ ------ ------Net revenue: $1,791 N/A $1,791 $1,715 N/A $1,715 ------ ------ ------ ------ ------ ------Gross profit: $1,492 $ 20 $1,512 $1,444 $ 26 $1,470 Stock-based compensation 4 4 Amortization of intangible assets 16 22 ------ ------ ------ ------ ------ ------Gross margin % 83.3% 84.4% 84.2% 85.7% ------ ------ ------ ------ ------ ------Operating expenses: $1,194 $ 140 $1,054 $1,144 $ 123 $1,021 Stock-based compensation 38 42 Amortization of intangible assets 71 73 Restructuring and transition 27 5 Acquisition/divestiture- related expenses 4 3 ------ ------ ------ ------ ------ ------Operating expenses as a % of revenue 66.7% 58.8% 66.7% 59.5% ------ ------ ------ ------ ------ ------Operating income $ 298 $ 160 $ 458 $ 300 $ 149 $ 449 ------ ------ ------ ------ ------ ------Operating margin % 16.6% 25.6% 17.5% 26.2% ------ ------ ------ ------ ------ ------Net income: $ 212 $ 101 $ 313 $ 240 $ 74 $ 314 Gross profit adjustment 20 26 Operating expense adjustment 140 123 Non-cash interest expense 15 12 China VAT refund (24) - Income tax effect on above items (44) (45) Tax related adjustments: Release of pre- acquisition tax contingencies (6) (42) ------ ------ ------ ------ ------ ------Diluted net income per share attributable to Symantec Corporation stockholders $ 0.30 $ 0.15 $ 0.45 $ 0.32 $ 0.10 $ 0.42 ------ ------ ------ ------ ------ ------Diluted weighted-average shares outstanding attributable to Symantec Corporation stockholders 702 702 740 740 Year-Over-Year Non-GAAP Growth Rate -------------------- Constant Actual Currency(2) ------- -----------Net revenue: 4% 5% ------- -----------Gross profit: 3% 4% Stock-based compensation Amortization of intangible assets ------- -----------Gross margin % -130 bps -110 bps ------- -----------Operating expenses: 3% 4% Stock-based compensation Amortization of intangible assets Restructuring and transition Acquisition/divestiture- related expenses ------- -----------Operating expenses as a % of revenue -70 bps -40 bps ------- -----------Operating income 2% 2% ------- -----------Operating margin % -60 bps -80 bps ------- -----------Net income: 0% N/A Gross profit adjustment Operating expense adjustment Non-cash interest expense China VAT refund Income tax effect on above items Tax related adjustments: Release of pre- acquisition tax contingencies ------- -----------Diluted net income per share attributable to Symantec Corporation stockholders 7% N/A ------- -----------Diluted weighted-average shares outstanding attributable to Symantec Corporation stockholders -5% N/A(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial measures prepared in accordance with GAAP. For a detailed explanation of these non-GAAP measures, please see Symantec's Explanation of Non-GAAP Measures in Appendix A.(2) Management refers to growth rates adjusting for currency so that the business results can be viewed without the impact of fluctuations in foreign currency exchange rates. We compare the percentage change in the results from one period to another period in order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the actual exchange rates in effect during the respective prior periods.
