Symantec: Fiscal 4Q14 Financial Results

Symantec Corp. reported the results of its fourth quarter and fiscal year 2014, ended March 28, 2014.

GAAP revenue for the fourth quarter was $1.63 billion, down 7% year-over-year (as reported and after adjusting for currency). For the fiscal year, GAAP revenue was $6.68 billion, down 3% (as reported and after adjusting for currency).

“Our fourth quarter results, led by better performance from our sales teams and cost reductions, demonstrate the underlying health of our business,” said Michael Brown, interim president and CEO. “In the new leadership team’s first 40 days, we’ve taken important steps to accelerate the pace of our transformation. There are substantial opportunities for us to improve our growth profile, maximize profitability and create value, and I’m confident we have the right team and plans in place to achieve our objectives.”

Thomas Seifert, EVP and CFO, added: “We see further opportunities to streamline our operations and drive ongoing operating margin expansion, with the near-term goal of achieving 30% non-GAAP operating margin by 4Q15. We will also continue to return significant capital to shareholders while maintaining a strong balance sheet.“

GAAP Results for the Fourth Quarter of Fiscal Year 2014

• GAAP operating margin was 18.8%, up 425 basis points and up 360 basis points after adjusting for currency, resulting in GAAP earnings per share of $0.31, up 15% year-over-year.
• GAAP net income was $217 million, up 14% year-over-year.
• GAAP deferred revenue as of March 28, 2014 was $3.90 billion, down 4% year-over-year and down 6% after adjusting for currency.
• Cash flow from operating activities was $449 million, down 27% year-over-year.

GAAP Results for Fiscal Year 2014

• GAAP operating margin was 17.7%, up 170 basis points and up 125 basis points after adjusting for currency, resulting in GAAP earnings per share of $1.28, up 21% year-over-year.
• GAAP net income was $898 million, up 19% year-over-year.
• Cash flow from operating activities was $1.28 billion, down 20% year-over-year.

Non-GAAP Results for the Fourth Quarter of Fiscal Year 2014

• Non-GAAP revenue was $1.65 billion, down 6% year-over-year (as reported and after adjusting for currency).
• Non-GAAP operating margin was 27.3%, up 320 basis points and up 250 basis points after adjusting for currency, resulting in non-GAAP earnings per share of $0.47, up 7% year-over-year.
• Non-GAAP net income was $329 million, up 4% year-over-year.

Non-GAAP Results for Fiscal Year 2014

• Non-GAAP revenue was $6.70 billion, down 3% year-over-year (as reported and after adjusting for currency).
• Non-GAAP operating margin was 27.5%, up 200 basis points and up 160 basis points after adjusting for currency, resulting in non-GAAP earnings per share of $1.92, up 9% year-over-year.
• Non-GAAP net income was $1.35 billion, up 8% year-over-year.

Capital Allocation
Symantec ended the quarter and fiscal year with cash, cash equivalents and short-term investments of $4.08 billion compared to $4.75 billion, a decrease of 14% year-over-year driven by a principal payment for our matured and settled convertible notes. On March 19, 2014, the company paid a dividend of $0.15 per share for a total of $104 million. Also, during the quarter, Symantec repurchased 5.5 million shares for $125 million at an average price of $22.85. During the fiscal year 2014, it repurchased 21 million shares at an average price of $23.87, equivalent to $500 million. At the end of the fourth quarter, Symantec had $658 million remaining for future repurchases in the current board authorized stock repurchase plan.

Board of directors has declared a quarterly cash dividend of $0.15 per common share to be paid on June 25, 2014 to all shareholders of record as of the close of business on June 10, 2014. The ex-dividend date will be June 6, 2014.

For the fiscal year 2015, Symantec expects:

• Revenue of $6.63 to $6.77 billion, compared to $6.70 billion in the year-ago period.
• GAAP operating margin of 21.8 to 22.3%, compared to 17.7% in the year-ago period.
• Non-GAAP operating margin of 27.7 to 28.2%, compared to 27.5% in the year-ago period.
• GAAP diluted earnings per share between $1.43 and $1.51, compared to $1.28 in the year-ago period.
• Non-GAAP diluted earnings per share between $1.84 and $1.92, compared to $1.92 in the year-ago period.

For the first quarter of fiscal 2015, Symantec expects:
Revenue of $1.65 to $1.69 billion, compared to $1.71 billion in the year-ago period.

• GAAP operating margin of 18.4 to 18.8%, compared to 13.1% in the year-ago period.
• Non-GAAP operating margin of 24.1 to 24.5%, compared to 25.3% in the year-ago period.
• GAAP diluted earnings per share between $0.31 and $0.33, compared to $0.22 in the year-ago period.
• Non-GAAP diluted earnings per share between $0.41 and $0.43, compared to $0.44 in the year-ago period.

Guidance assumes an exchange rate of $1.38 per Euro for the June 2014 quarter versus the actual weighted average rate of $1.31 and an end of period rate of $1.30 per Euro for the June 2013 quarter and $1.38 per Euro for fiscal year 2015. It assumes an effective tax rate of 24.8% for the June 2014 quarter and 27.8% for the remaining quarters in fiscal year 2015 and a common stock equivalents total for the quarter and fiscal year of 695 million shares.

To read the earnings call transcript