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Symantec Delivers Record Revenue in Fiscal Third Quarter 2013

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MOUNTAIN VIEW, CA -- (Marketwire) -- 01/23/13 -- Symantec Corp. (NASDAQ: SYMC) today reported the results of its third quarter of fiscal year 2013, ended Dec. 28, 2012. GAAP revenue for the fiscal third quarter was $1.79 billion, up 4 percent year-over-year and up 5 percent after adjusting for currency.

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"We continue to deliver better than expected results," said Steve Bennett, president and chief executive officer, Symantec. "I'm so proud of our employees. These types of results don't happen by accident. The fact that we can deliver these results in a period of significant transition and uncertainty is a testament to our employees, the strength of our brand, the quality of our products and the scope of our customer base."

"Strength in EMEA, information management and license revenue drove our FX adjusted organic revenue growth of 4%," said James Beer, executive vice president and chief financial officer, Symantec. "Our better than expected top line growth coupled with disciplined expense management drove non-GAAP operating margins of 25.6% even as we are investing in certain areas to better serve our customer needs."

GAAP Results for third quarter of fiscal year 2013

•GAAP operating margin was 16.6 percent compared with 17.5 percent for the same quarter last year, down 90 basis points year-over-year. •GAAP net income was $212 million compared with net income of $240 million for the year-ago period, down 12 percent year-over-year. •GAAP diluted earnings per share were $0.30 compared with $0.32 for the year ago quarter, down 6 percent year-over-year. •GAAP deferred revenue was $3.806 billion compared with $3.665 billion for the year ago quarter, up 4 percent year-over-year on an actual and currency-adjusted basis. •Cash flow from operating activities was $463 million compared with $403 million for the year ago period, up 15 percent year-over-year. •Symantec ended the quarter with cash, cash equivalents and short-term investments of $4.25 billion. During the quarter, Symantec repurchased 11 million shares for $200 million at an average price of $17.94. Symantec has $283 million remaining in the current board authorized stock repurchase plan.

Non-GAAP Results for third quarter of fiscal year 2013

•Non-GAAP operating margin was 25.6 percent compared with 26.2 percent for the same quarter last year, down 60 basis points year-over-year and down 80 basis points after adjusting for currency, due to increased investment in certain areas to better serve our customer needs. •Non-GAAP net income was $313 million compared to $314 million for the same quarter last year. •Non-GAAP diluted earnings per share were $0.45 compared with earnings per share of $0.42 for the year-ago quarter, up 7 percent year-over-year.

Business Segment Highlights for the Quarter

•The Consumer segment represented 30 percent of total revenue and increased 1 percent year-over-year (increased 2 percent after adjusting for currency). •The Security and Compliance segment represented 29 percent of total revenue and increased 3 percent year-over-year (increased 4 percent after adjusting for currency). •The Storage and Server Management segment represented 37 percent of total revenue and increased 8 percent year-over-year (increased 9 percent after adjusting for currency). •Services represented 4 percent of total revenue and increased 10 percent year-over-year (increased 9 percent after adjusting for currency).

Geographic Highlights for the Quarter

•International revenue represented 52 percent of total revenue and increased 6 percent year-over-year (increased 8 percent after adjusting for currency). •The Europe, Middle East and Africa region represented 28 percent of total revenue and increased 6 percent year-over-year (increased 10 percent after adjusting for currency). •Asia Pacific/Japan revenue represented 19 percent of total revenue and increased 7 percent year-over-year (increased 6 percent after adjusting for currency). •The Americas, including the United States, Latin America and Canada, represented 53 percent of total revenue and increased 3 percent year-over-year on an actual and currency-adjusted basis.

Webcast
Symantec has scheduled a Webcast from 4:30 p.m. ET/1:30 p.m. PT to 6:30 p.m. ET/3:30 p.m. PT today to discuss the Company's strategic direction, operational plan, capital allocation strategy and financial results, including guidance. To listen to the live event and view the corresponding presentation, please go to http://www.symantec.com/invest at least 15 minutes early to register, download and install any necessary audio software. A replay of the webcast including presentation will be available within 24 hours after the event.

About Symantec
Symantec protects the world's information, and is a global leader in security, backup and availability solutions. Our innovative products and services protect people and information in any environment -- from the smallest mobile device, to the enterprise data center, to cloud-based systems. Our world-renowned expertise in protecting data, identities and interactions gives our customers confidence in a connected world. More information is available at www.symantec.com or by connecting with Symantec at: go.symantec.com/socialmedia.

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. All prices noted are in U.S. dollars and are valid only in the United States.

Symantec and the Symantec 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.

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.




SYMANTEC CORPORATION Revenue and Deferred Revenue Detail (1) (In millions, unaudited) Three Months Ended ---------------------------- December 28, December 30, 2012 2011 ------------- -------------GAAP Revenue ------------- ------------- Content, subscription, and maintenance $ 1,521 $ 1,462 License 270 253 ------------- -------------Total Revenue $ 1,791 $ 1,715 ------------- -------------GAAP Revenue Y/Y Growth Rate ------------- ------------- Content, subscription, and maintenance 4% 8% License 7% -1% ------------- -------------Total Y/Y Growth Rate 4% 7% ------------- -------------GAAP Revenue Y/Y Growth Rate in Constant Currency ------------- ------------- Content, subscription, and maintenance 5% 8% License 8% -1% ------------- -------------Total Y/Y Growth Rate in Constant Currency 5% 6%GAAP Revenue by Segment (2) ------------- ------------- Consumer $ 530 $ 525 Security and Compliance 527 510 Storage and Server Management 666 618 Services 68 62 ------------- -------------GAAP Revenue by Segment: Y/Y Growth Rate ------------- ------------- Consumer 1% 5% Security and Compliance 3% 17% Storage and Server Management 8% 3% Services 10% -13% ------------- -------------GAAP Revenue by Segment: Y/Y Growth Rate in Constant Currency ------------- ------------- Consumer 2% 5% Security and Compliance 4% 17% Storage and Server Management 9% 3% Services 9% -12% ------------- -------------GAAP Revenue by Geography ------------- ------------- International $ 940 $ 888 US 851 827 Americas (U.S., Latin America, Canada) 956 932 EMEA 498 468 Asia Pacific & Japan 337 315 ------------- -------------GAAP Revenue by Geography: Y/Y Growth Rate ------------- ------------- International 6% 6% US 3% 8% Americas (U.S., Latin America, Canada) 3% 8% EMEA 6% -1% Asia Pacific & Japan 7% 16% ------------- -------------GAAP Revenue by Geography: Y/Y Growth Rate in Constant Currency ------------- ------------- International 8% 5% US 3% 8% Americas (U.S., Latin America, Canada) 3% 8% EMEA 10% 0% Asia Pacific & Japan 6% 12% ------------- ------------- ------------- -------------GAAP Deferred Revenue $ 3,806 $ 3,665 ------------- -------------GAAP Deferred Revenue Y/Y Growth Rate 4% 8% ------------- -------------GAAP Deferred Revenue Y/Y Growth Rate in Constant Currency 4% 8% ------------- -------------(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. To exclude the effects of foreign currency rate fluctuations, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the actual exchange rates in effect during the respective prior periods (or, in the case of deferred revenue, converted into United States dollars at the actual exchange rate in effect at the end of the prior period).(2) Excluded from this table is our Other segment which is comprised of sunset products nearing the end of their life cycle. The Other segment also includes certain general and administrative expenses; amortization of intangible assets; stock-based compensation expense; restructuring and transition expenses; and certain indirect costs that are not charged to the other operating segments. SYMANTEC CORPORATION Operating Margin by Segment Detail (1) (Unaudited) Three Months Ended ------------------------------------ December 28, 2012 December 30, 2011 ----------------- -----------------GAAP Operating Margin by Segment Consumer 43% 48% Security and Compliance 33% 27% Storage and Server Management 39% 39% Services 18% 18%(1) Excluded from this table is our Other segment which is comprised of sunset products nearing the end of their life cycle. The Other segment also includes certain general and administrative expenses; amortization of intangible assets; stock-based compensation expense; restructuring and transition expenses; and certain indirect costs that are not charged to the other operating segments. SYMANTEC CORPORATION Explanation of Non-GAAP Measures Appendix A




The non-GAAP financial measures included in the tables adjust for the following items: business combination accounting entries, stock-based compensation expense, restructuring and transition charges, charges related to the amortization of intangible assets, impairments of assets and certain other items. We believe the presentation of these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provides meaningful supplemental information regarding the Company's operating performance for the reasons discussed below. Our management 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 these non-GAAP financial measures.

Stock-based compensation: Consists of expenses for employee stock options, restricted stock units, restricted stock awards, 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. Although stock-based compensation is necessary to attract and retain quality employees, our consideration of stock-based compensation places its primary emphasis on overall shareholder dilution rather than the accounting charges associated with such grants. In addition, for comparability purposes, we believe it is useful to provide a non-GAAP financial measure that excludes stock-based compensation in order to better understand the long-term performance of our core business and to facilitate the comparison of our results to the results of our peer companies. Furthermore, unlike cash-based compensation, the value of stock-based compensation is determined using complex formulas that incorporate factors, such as market volatility, that are beyond our control.


Three months ended December 28, December 30, 2012 2011 ------------ ------------ Cost of revenue $ 4 $ 4 Sales and marketing 18 20 Research and development 13 13 General and administrative 7 9 ------------ ------------ Total stock-based compensation $ 42 $ 46 ============ ============




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.

Restructuring and transition: We have engaged in various restructuring and transition activities over the past several years that have resulted in costs associated with severance, facilities costs, and transition and other related costs. Transition and other related costs consist of severance costs associated with acquisition integrations in efforts to streamline our business operations, consulting charges associated with the implementation of a new Enterprise Resource Planning system, and costs related to the outsourcing of certain back office functions. Each restructuring 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 or transition activities in the ordinary course of business. While our operations previously benefited from the employees and facilities covered by our various restructuring 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.

Acquisition/divestiture-related expenses: The authoritative guidance on business combinations requires us to record in the statement of income, certain items that at the time of an acquisition would have been recorded to goodwill under the old authoritative guidance. We have excluded the effect of acquisition-related expenses from our non-GAAP operating expenses and net income measures. We incurred expenses in connection with our acquisitions, which we generally would not have otherwise incurred in the periods presented as a part of our continuing operations. Acquisition/divestiture-related expenses consist of professional service expenses. We believe it is useful for investors to understand the effects of these items on our operations. Although acquisition/divestiture-related expenses generally diminish over time with respect to past transactions, we generally will incur these expenses in connection with any future transactions.

Non-cash interest expense: Effective April 4, 2009, we adopted authoritative guidance on convertible debt instruments, which changed the method of accounting for our convertible notes. Under this authoritative guidance, our EPS and net income calculated in accordance with GAAP have been reduced as a result of recognizing incremental non-cash interest expense. We believe it is useful to provide a non-GAAP financial measure that excludes this incremental non-cash interest expense 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.

China VAT refund: During the December 2012 quarter, we received a tax incentive from the China tax bureau in the form of value-added tax ("VAT") refunds. The tax incentive is provided to software companies that perform research and development activities with respect to software in China. The refunds relate to VAT collected on qualifying software product sales during the periods from January 2011 through December 2012. This tax incentive plan was updated late in 2011 and it enabled companies to retrospectively apply the incentive back to January 2011. To maintain comparability of results across periods, we have excluded from our non-GAAP financial measures the portion of the refund representing periods ended prior to the December 2012 quarter.

Release of pre-acquisition tax contingencies: On December 2, 2009, we received a Revenue Agent's Report from the IRS for the VERITAS 2002 through 2005 tax years assessing additional taxes due. We contested $80 million of tax assessed and all penalties. As a result of negotiations with the IRS Appeals in the December 2011 quarter, we remeasured certain tax accruals related to this matter. Accordingly, we realized a benefit to GAAP net income of $52 million and a non-GAAP benefit of $10 million. The non-GAAP benefit was due to the reversal of accrued interest attributed to the VERITAS tax assessment that was recorded to our income statement during post-acquisition periods. Accordingly, the amount of these accruals has not been excluded from Symantec's non-GAAP results. In the quarter ended December 2012, we executed the final closing agreement for the VERITAS 2002 through 2005 tax years and recorded a further benefit to GAAP net income of $3 million and a non-GAAP expense $2 million, based on the closing agreement, as well as a GAAP benefit of $2 million for the adjustment of other pre-acquisition tax accruals. The non-GAAP expense was due to the additional accrual of post acquisition related interest.



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Symantec Corp.
650-527-5526
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INVESTOR CONTACT:
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Symantec Corp.
650-527-5523
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