Symantec: Fiscal 4Q11 Financial Results

For the Storage and Server Management Group only

Symantec Corp. reported the results of its fourth quarter and the fiscal year 2011, ended April 1, 2011.

GAAP revenue for the fiscal fourth quarter was $1.67 billion, up 9 percent year-over-year and up 8 percent after adjusting for currency. For the fiscal year, GAAP revenue was $6.19 billion, up 3 percent year-over-year and up 4 percent after adjusting for currency.

"We closed our fiscal year surpassing expectations across each of our key financial metrics, driven by market share gains and growth in backup, software-as-a-service, data loss prevention and consumer. In addition, our recent acquisitions performed above expectations for the third consecutive quarter," said Enrique Salem, president and chief executive officer, Symantec. "Our rigorous approach to running the business positions us well for fiscal year 2012, during which we will execute on our vision by energizing our core businesses and capitalizing on opportunities in mobile, cloud and virtualization."

"We achieved record quarterly revenue and deferred revenue, as a result of strong bookings performance across all three regions," said James Beer, executive vice president and chief financial officer, Symantec. "We continued to generate substantial cash flow from operations driven by the success of our sales efforts and our continuing focus on cost control."

GAAP Results
GAAP operating margin for the fourth quarter of fiscal year 2011 was 14.3 percent compared with 16.1 percent for the same quarter last year. GAAP net income for the fiscal fourth quarter was $168 million compared with $184 million for the year-ago period. GAAP diluted earnings per share were $0.22 compared with $0.23 for the year-ago quarter.

For the fiscal year 2011, GAAP operating margin was 14.2 percent. GAAP net income for the fiscal year 2011 was $597 million. GAAP diluted earnings per share for the year were $0.76.

GAAP deferred revenue as of April 1, 2011, was $3.82 billion compared with $3.21 billion as of April 2, 2010, up 19 percent year-over-year and up 16 percent after adjusting for currency.

Cash flow from operating activities for the fourth quarter of fiscal year 2011 was $689 million compared with $703 million for the same quarter last year. Symantec ended the quarter and fiscal year with cash, cash equivalents and short-term investments of $2.958 billion. Cash flow from operating activities for fiscal year 2011 was $1.79 billion compared with $1.69 billion for fiscal year 2010, an increase of 6 percent.

Non-GAAP Results
Non-GAAP operating margin for the fourth quarter of fiscal year 2011 was 24.1 percent compared with 28.1 percent for the year-ago period. Non-GAAP net income for the fourth quarter was $297 million compared with $323 million for the year-ago quarter. Non-GAAP diluted earnings per share were $0.38 compared with earnings per share of $0.40 for the year ago quarter.

For the fiscal year 2011, Non-GAAP operating margin was 24.8 percent. Non-GAAP net income for the year was $1.12 billion. Non-GAAP diluted earnings per share were $1.42.

During the fourth quarter of fiscal year 2011, Symantec repurchased approximately 11 million shares for $180 million at an average price of $17.86. During the fiscal year 2011, the company repurchased 57 million shares at an average price of $15.39, equivalent to $870 million. Symantec has $877 million remaining in the current board authorized stock repurchase program.

Business Segment and Geographic Highlights
For the quarter, Symantec’s Consumer segment represented 31 percent of total revenue and increased 6 percent year-over-year (5 percent after adjusting for currency). The Security and Compliance segment represented 27 percent of total revenue and increased 24 percent year-over-year (21 percent after adjusting for currency). The Storage and Server Management segment represented 37 percent of total revenue and increased 8 percent year-over-year (7 percent after adjusting for currency). Services represented 5 percent of total revenue and declined 21 percent year-over-year (22 percent after adjusting for currency) as expected due to the company’s move to a partner-led consulting model.

International revenue represented 51 percent of total revenue in the fourth quarter of fiscal year 2011 and increased 10 percent year-over-year (8 percent after adjusting for currency). The Europe, Middle East and Africa region represented 29 percent of total revenue for the quarter and increased 4 percent year-over-year on an actual and currency-adjusted basis. The Asia Pacific/Japan revenue for the quarter represented 16 percent of total revenue and increased 22 percent year-over-year (12 percent after adjusting for currency). The Americas, including the United States, Latin America and Canada, represented 55 percent of total revenue and increased 9 percent year-over-year on an actual and currency-adjusted basis.

Acquisition Highlights
Recent acquisitions continue to perform better than expected. For the quarter, the VeriSign security business generated revenue of $61 million and the PGP and GuardianEdge acquisitions generated revenue of $20 million. The combined earnings per share dilution of these acquisitions was a penny and a half, which was half a penny better than expected.

For the fiscal year 2011, revenue from acquisitions was $186 million, exceeding expectations. The combined earnings per share dilution of these acquisitions was 8.5 cents, which was 2.5 cents better than expected.

First Quarter Fiscal Year 2012 Guidance
Guidance assumes an exchange rate of $1.42 per Euro for the June 2011 quarter versus the actual weighted average and end of period rate of $1.26 per Euro for the June 2010 quarter.

For the first quarter of fiscal year 2012, ending July 1, 2011, revenue is estimated between $1.570 billion and $1.590 billion, up 10 to 11 percent year-over-year as reported.

GAAP diluted earnings per share are estimated between $0.19 and $0.20. Non-GAAP diluted earnings per share are estimated between $0.36 and $0.37.

Deferred revenue is expected to be in the range of $3.60 billion and $3.63 billion, up 20 to 21 percent year-over-year as reported.