Symantec: Fiscal 4Q09 Financial Results

Storage and Server Management Group

Symantec Corp. reported the results of its fiscal fourth quarter and the fiscal year 2009, ended April 3, 2009. GAAP revenue for the fiscal fourth quarter was $1.47 billion. Non-GAAP revenue was $1.49 billion, down 4 percent (up 2 percent, adjusting for currency) over the comparable period a year ago. For the fiscal year, GAAP revenue was $6.15 billion and non-GAAP revenue was $6.2 billion. On a non-GAAP basis, fiscal year 2009 revenue grew 5 percent (up 4 percent, adjusting for currency) compared with fiscal year 2008 revenue of $5.94 billion.

"We continue to build on our leading position in key market segments and customers see the value of our broad portfolio of products and services," said Enrique Salem, president and chief executive officer, Symantec. "Moving forward our focus is on investments that will extend our leadership, improve product quality and integrate our solutions to help customers secure and manage their information."

"Our continued focus on cost management enabled us to deliver better than expected earnings per share," said James Beer, chief financial officer, Symantec. "In the midst of a challenging economic environment we delivered strong cash flow from operations, generating more than $1 billion during the last two quarters."

GAAP Results: GAAP operating loss for the fiscal fourth quarter was $192 million compared with operating income of $213 million for the same quarter last year. GAAP net loss for the fiscal fourth quarter was $249 million compared with net income of $186 million for the same quarter last year. GAAP diluted loss per share was $0.30 compared with diluted earnings per share of $0.22 for the same quarter last year. During the quarter the company finalized the goodwill impairment analysis that it began in the fiscal third quarter. The GAAP net loss for the fourth quarter of fiscal year 2009 includes an additional non-cash goodwill impairment charge of $413 million.

For fiscal year 2009, Symantec reported a GAAP operating loss of $6.5 billion compared with operating income of $602 million for fiscal year 2008. GAAP net loss for fiscal year 2009 was $6.7 billion compared with net income of $464 million for fiscal year 2008. GAAP diluted loss per share for the year was $8.10 compared with diluted earnings per share of $0.52 for fiscal year 2008. The GAAP net loss for fiscal year 2009 includes a non-cash goodwill impairment charge of $7.4 billion.

GAAP deferred revenue as of April 3, 2009, was $3.06 billion compared with $3.08 billion as of March 28, 2008. Cash flow from operating activities for the fiscal fourth quarter was $607 million compared with $674 million for the same quarter last year. Cash flow from operating activities for fiscal year 2009 was $1.67 billion compared with $1.82 billion for fiscal year 2008.

Non-GAAP Results: Non-GAAP operating margins for the fiscal fourth quarter were 30.5 percent, up 270 basis points year-over-year. Non-GAAP net income for the fourth quarter of fiscal year 2009 was $318 million, up 3 percent compared with $309 million for the same quarter last year. Non-GAAP diluted earnings per share were $0.38, up 6 percent compared with earnings per share of $0.36 for the year ago quarter.

Fiscal year 2009 non-GAAP operating margins were 30.2 percent, up 360 basis points versus fiscal year 2008. For fiscal year 2009, Symantec reported non-GAAP net income of $1.32 billion, up 17 percent compared with $1.13 billion in fiscal year 2008. Non-GAAP diluted earnings per share for the year were $1.57, up 24 percent compared with earnings per share of $1.27 for fiscal year 2008.

Non-GAAP deferred revenue as of April 3, 2009, was $3.08 billion, flat year-over-year (up 6 percent adjusting for currency) compared with $3.09 billion as of March 28, 2008. Sequentially, non-GAAP deferred revenue was up $119 million, or 4 percent (up 6 percent sequentially, adjusting for currency).

During the fourth quarter of fiscal year 2009, we repurchased 7.2 million shares at an average price of $13.84, equivalent to $100 million. During fiscal year 2009 we repurchased 42.3 million shares at an average price of $16.53, equivalent to $700 million. There is $300 million remaining in the current board authorized stock repurchase plan.

Business Segment and Geographic Highlights
For the quarter, Symantec’s Storage and Server Management segment represented 36 percent of total non-GAAP revenue and declined 4 percent year-over-year (increased 1 percent, adjusting for currency). The Consumer business represented 30 percent of total non-GAAP revenue and declined 1 percent year-over-year (increased 4 percent, adjusting for currency). The Security and Compliance segment represented 25 percent of total non-GAAP revenue and declined 14 percent year-over-year (declined 9 percent, adjusting for currency). Services represented 9 percent of total non-GAAP revenue and grew 27 percent year-over-year (increased 41 percent, adjusting for currency).

International revenue represented 50 percent of total non-GAAP revenue in the fourth quarter of fiscal year 2009 and declined 8 percent year-over-year (increased 3 percent, adjusting for currency). The Europe, Middle East and Africa region represented 30 percent of total non-GAAP revenue for the quarter and declined 13 percent year-over-year (increased 2 percent, adjusting for currency). The Asia Pacific/Japan revenue for the quarter represented 15 percent of total non-GAAP revenue and declined 1 percent year-over-year (increased 4 percent, adjusting for currency). The Americas, including the United States, Latin America and Canada, represented 55 percent of total non-GAAP revenue and increased 1 percent year-over-year (increased 1 percent, adjusting for currency).

First Quarter Fiscal Year 2010 Guidance
Guidance assumes an exchange rate of $1.30 per Euro for the June 2009 quarter versus the actual weighted average rate of $1.56 per Euro, a 17 percent currency headwind, and versus the end of the period rate of $1.58 per Euro for the June 2008 quarter.

For the first quarter of fiscal year 2010, ending July 3, 2009, GAAP revenue is estimated between $1.44 billion and $1.5 billion. GAAP diluted earnings per share are estimated between $0.09 and $0.11. GAAP deferred revenue is expected to be in the range of $2.84 billion and $2.94 billion.

Non-GAAP revenue for the quarter is estimated between $1.45 billion and $1.51 billion. Non-GAAP diluted earnings per share are estimated between $0.34 and $0.36. Non-GAAP deferred revenue is expected to be in the range of $2.85 billion and $2.95 billion.