News Release Exhibit 99.1
FOR IMMEDIATE RELEASE
MEDIA CONTACT: INVESTOR CONTACT:
Genevieve Haldeman David Gennarelli
Symantec Corporation Symantec Corporation
408-517-7642 408-517-8324
glhaldeman@symantec.com David_gennarelli@symantec.com
SYMANTEC DISCOVERS AND CORRECTS ERROR IN NON-U.S. CONSUMER REVENUE
WILL FILE FIRST QUARTER FORM 10-Q ON AUGUST 10
CUPERTINO, CALIF. - AUG. 9, 2004 - Symantec (Nasdaq: SYMC) today announced that
it discovered an error in its calculation of deferred revenue, which represents
an accumulated adjustment of $20 million. The company is revising the financial
results for the quarter ended July 2, 2004 that were announced on its earnings
call on July 21, 2004 to reflect this correction. The revised results will be
reflected in the company's Form 10-Q scheduled to be filed on August 10.
A deferred revenue understatement was discovered during a review of the
company's revenue maintenance application that calculates deferred revenue for
Symantec's consumer products. A manual error was made in entering the unit
renewal prices applicable to consumer product licenses sold in foreign
currencies. As a result, the deferred revenue from these consumer product
licenses was understated and the portion of revenue from these licenses that was
recognized at the time of sale was overstated. The error does not affect cash
collections; it simply changes the timing for the recognition of the revenue for
consumer product licenses sold in foreign currencies. Symantec has implemented
new control procedures to avoid the recurrence of this type of error in the
future.
Although the revisions to revenue and earnings are an accumulation of the effect
of the error over multiple quarters, the effect of the error was not material to
any relevant prior periods. To correct this error, the income statement will
reflect a $20 million reduction in revenue during the three-month period ended
July 2, 2004 with a corresponding $20 million increase in deferred revenue in
the balance sheet as of July 2, 2004.
Revenue for the quarter ended July 2, 2004 is revised to $557 million, 42
percent growth compared to the same period last year. GAAP earnings per share
are revised to $0.33, $0.04 lower than previously announced, non-GAAP earnings
per share are revised to $0.36, $0.03 lower than previously announced. Non-GAAP
results and related reconciliation, as outlined in the attached consolidated
statements, excludes the expenses from the amortization of other intangibles
from acquisitions, acquired in-process research and development, restructuring
charges, and patent settlement charges as well as related income tax benefits.
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SYMANTEC REVISES FIRST QUARTER FINANCIAL RESULTS
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This error will not impact the company's previously stated full-year guidance.
Because the revision increases deferred revenue in the quarter ended July 2,
2004, guidance for the company's fiscal second quarter, ending October 1, 2004,
will be updated as follows:
o Revenue is estimated at $588 million, an increase of $8 million from prior
guidance.
o At this revenue guidance, GAAP earnings per share is estimated to be $0.35,
an increase of $0.01 from previous guidance.
o At this revenue guidance, non-GAAP earnings per share is estimated to be
$0.38, an increase of $0.01 from previous guidance.
Non-GAAP earnings per share excludes the pre-tax amortization of other
intangibles from acquisitions, acquired in-process research and development and
restructuring charges of approximately $14 million for the quarter ending
October 1, 2004.
CONFERENCE CALL
Symantec has scheduled a conference call for 5 p.m. EDT/2 p.m. PDT today to
discuss the revised fiscal first quarter 2005 results, and to review guidance
for the fiscal second quarter and fiscal year. Interested parties may access a
live webcast of the call on the Internet at www.symantec.com/invest/index.html.
To listen to the webcast, please go to the Web site at least 15 minutes early to
register, download and install any necessary audio software. A replay and the
script of our officers' remarks will be available on the investor relations home
page shortly after the call is completed.
Institutional investors and research analysts can access the live conference by
calling 800-500-0311 (U.S. and Canada) or 719-457-2698 (International). The
call's ID number is: 710156. Please dial in at least 15 minutes prior to the
scheduled start time.
ABOUT SYMANTEC
Symantec is the global leader in information security providing a broad range of
software, appliances and services designed to help individuals, small and
mid-sized businesses, and large enterprises secure and manage their IT
infrastructure. Symantec's Norton brand of products is the worldwide leader in
consumer security and problem-solving solutions. Headquartered in Cupertino,
Calif., Symantec has operations in more than 35 countries. More information is
available at http://www.symantec.com.
###
NOTE TO EDITORS: If you would like additional information on Symantec
Corporation and its products, please view the Symantec Press Center at
http://www.symantec.com/PressCenter/ on Symantec's Web site. All prices noted
are in US dollars and are valid only in the United States.
Symantec and the Symantec logo are trademarks or registered trademarks, in the
United States and certain other countries, of Symantec Corporation. Additional
company and product names may be trademarks or registered trademarks of the
individual companies and are respectfully acknowledged.
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SYMANTEC REVISES FIRST QUARTER FINANCIAL RESULTS
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FORWARD LOOKING STATEMENT: This press release contains forward-looking
statements, including forecasts of future revenue and earnings per share,
expected industry patterns, and other financial and business results that
involve known and unknown risks, uncertainties and other factors that may cause
our actual results, levels of activity, performance or achievements to differ
materially from results expressed or implied by this press release. Such risk
factors include, among others: the sustainability of recent growth rates,
particularly in consumer products; the anticipation of the growth of certain
market segments, particularly enterprise security; the positioning of Symantec's
products in those segments; the competitive environment in the software
industry; general market conditions; fluctuations in currency exchange rates;
changes to operating systems and product strategy by vendors of operating
systems; and whether Symantec can successfully develop new products and
integrate acquired businesses, and the degree to which these products and
businesses gain market acceptance. Actual results may differ materially from
those contained in the forward-looking statements in this press release.
Additional information concerning these and other risk factors is contained in
the Risk Factors sections of Symantec's recently filed Form 10-K. Symantec
assumes no obligation to update any forward-looking information contained in
this press release.
USE OF NON-GAAP FINANCIAL INFORMATION: In addition to reporting financial
results in accordance with generally accepted accounting principles, or GAAP,
Symantec reports non-GAAP financial results. Non-GAAP net income and earnings
per share exclude acquisition related charges, such as amortization of other
intangibles and in-process research and development, and certain other
identified charges, such as restructuring and patent settlement, as well as the
tax effect of these items. Symantec's management believes these non-GAAP
measures are useful to investors because they provide supplemental information
that facilitates comparisons to prior periods. Management uses these non-GAAP
measures to evaluate its financial results, develop budgets and manage
expenditures. The method Symantec uses to produce non-GAAP results is not
computed according to GAAP, is likely to differ from the methods used by other
companies and should not be regarded as a replacement for corresponding GAAP
measures. Investors are encouraged to review the reconciliation of these
non-GAAP financial measures to the comparable GAAP results, which is attached to
this release and can also be found on the investor relations Web site at
www.symantec.com/invest/center.html.
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SYMANTEC DISCOVERS AND CORRECTS ERROR IN NON-U.S. CONSUMER REVENUE
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SYMANTEC CORPORATION
GAAP CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
June 30,
-------------------------
(In thousands, except per share data; unaudited) 2004 2003
- ------------------------------------------------------ --------- ---------
Net revenues ......................................... $ 556,634 $ 391,124
Cost of revenues ..................................... 100,261 67,578
--------- ---------
Gross profit ...................................... 456,373 323,546
Operating expenses:
Research and development .......................... 72,884 60,605
Sales and marketing ............................... 187,932 141,837
General and administrative ........................ 24,285 26,372
Amortization of other intangibles from acquisitions 892 791
Acquired in-process research and development ...... 2,262 --
Restructuring, site closures and other ............ 860 568
Patent settlement ................................. -- 13,917
--------- ---------
Total operating expenses ....................... 289,115 244,090
Operating income ..................................... 167,258 79,456
Interest income ................................... 9,318 10,097
Interest expense .................................. (5,291) (5,291)
Income, net of expense, from sale of technologies
and product lines .............................. -- 2,168
Other income (expense), net ....................... 1,120 (711)
--------- ---------
Income before income taxes ........................... 172,405 85,719
Provision for income taxes ........................ 55,128 26,938
--------- ---------
Net income ........................................... $ 117,277 $ 58,781
========= =========
Net income per share - diluted* ...................... $ 0.33 $ 0.18
========= =========
Shares used to compute net income
per share - diluted* ................................ 367,926 349,976
========= =========
* For the three months ended June 30, 2004 and 2003, diluted net income per
share is calculated using the if-converted method. Under this method, the
numerator excludes the interest expense from the 3% convertible subordinated
notes, net of income tax, of $3.6M for each of the three months ended June 30,
2004 and 2003, and the denominator includes shares issuable from the assumed
conversion of the 3% convertible subordinated notes.
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SYMANTEC DISCOVERS AND CORRECTS ERROR IN NON-U.S. CONSUMER REVENUE
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SYMANTEC CORPORATION
NON-GAAP CONSOLIDATED STATEMENTS OF INCOME
NON-GAAP AMOUNTS EXCLUDE ALL ACQUISITION RELATED AMORTIZATION OF INTANGIBLES,
ACQUIRED IPR&D, PATENT SETTLEMENT AND RESTRUCTURING CHARGES.
Three Months Ended
June 30,
-------------------------
(In thousands, except per share data; unaudited) 2004 2003
- ------------------------------------------------------ --------- ---------
Net revenues ......................................... $ 556,634 $ 391,124
Cost of revenues ..................................... 89,011 58,813
--------- ---------
Gross profit ...................................... 467,623 332,311
Operating expenses:
Research and development .......................... 72,884 60,605
Sales and marketing ............................... 187,932 141,837
General and administrative ........................ 24,285 26,372
--------- ---------
Total operating expenses ....................... 285,101 228,814
Operating income ..................................... 182,522 103,497
Interest income ................................... 9,318 10,097
Interest expense .................................. (5,291) (5,291)
Income, net of expense, from sale of technologies
and product lines .............................. -- 2,168
Other income (expense), net ....................... 1,120 (711)
--------- ---------
Income before income taxes ........................... 187,669 109,760
Provision for income taxes ........................ 60,054 35,123
--------- ---------
Net income ........................................... $ 127,615 $ 74,637
========= =========
Net income per share - diluted* ...................... $ 0.36 $ 0.22
========= =========
Shares used to compute net income per share - diluted* 367,926 349,976
========= =========
* For the three months ended June 30, 2004 and 2003, diluted net income per
share is calculated using the if-converted method. Under this method, the
numerator excludes the interest expense from the 3% convertible subordinated
notes, net of income tax, of $3.6M for each of the three months ended June 30,
2004 and 2003, and the denominator includes shares issuable from the assumed
conversion of the 3% convertible subordinated notes.
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SYMANTEC DISCOVERS AND CORRECTS ERROR IN NON-U.S. CONSUMER REVENUE
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SYMANTEC CORPORATION
RECONCILIATION OF NON-GAAP GROSS PROFIT, OPERATING EXPENSES AND CONSOLIDATED
STATEMENTS OF INCOME TO THE GAAP GROSS PROFIT, OPERATING EXPENSES AND
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
June 30,
-------------------------
(In thousands, except per share data; unaudited) 2004 2003
- ------------------------------------------------------ --------- ---------
Non-GAAP gross profit ................................ $ 467,623 $ 332,311
Cost of revenues:
Amortization of acquired product rights ........... (11,250) (8,765)
--------- ---------
GAAP gross profit .................................... $ 456,373 $ 323,546
========= =========
Non-GAAP operating expenses .......................... $ 285,101 $ 228,814
Operating expenses:
Amortization of other intangibles from acquisitions 892 791
Acquired in-process research and development ...... 2,262 --
Restructuring, site closures and other ............ 860 568
Patent settlement ................................. -- 13,917
--------- ---------
Total operating expenses ....................... 4,014 15,276
GAAP operating expenses .............................. $ 289,115 $ 244,090
========= =========
Non-GAAP net income .................................. $ 127,615 $ 74,637
Cost of revenues ..................................... (11,250) (8,765)
Operating expenses ................................... (4,014) (15,276)
Income tax benefit ................................ 4,926 8,185
--------- ---------
GAAP net income ...................................... $ 117,277 $ 58,781
========= =========
NON-GAAP AND GAAP NET INCOME PER SHARE - DILUTED
Non-GAAP net income per share - diluted .............. $ 0.36 $ 0.22
========= =========
GAAP net income per share - diluted .................. $ 0.33 $ 0.18
========= =========
Shares used to compute net income
per share - diluted ............................... 367,926 349,976
========= =========
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SYMANTEC DISCOVERS AND CORRECTS ERROR IN NON-U.S. CONSUMER REVENUE
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SYMANTEC CORPORATION
CONSOLIDATED BALANCE SHEETS
June 30, March 31,
(In thousands) 2004 2004
- ------------------------------------------------------ ----------- -----------
ASSETS
Current assets:
Cash, cash equivalents and short-term investments $ 2,338,728 $ 2,410,331
Trade accounts receivable, net .................. 250,202 259,152
Inventories ..................................... 14,747 15,134
Deferred income taxes ........................... 109,962 98,438
Other current assets ............................ 68,915 59,079
----------- -----------
Total current assets .......................... 2,782,554 2,842,134
Property, equipment and leasehold improvements, net .. 379,279 378,367
Acquired product rights, net ......................... 138,747 120,938
Goodwill ............................................. 1,352,271 1,080,759
Other long-term assets ............................... 30,588 34,300
----------- -----------
$ 4,683,439 $ 4,456,498
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................ $ 73,746 $ 71,654
Accrued compensation and benefits ............... 86,280 116,770
Current deferred revenue ........................ 967,157 878,716
Other accrued expenses .......................... 84,205 92,595
Income taxes payable ............................ 143,406 127,305
----------- -----------
Total current liabilities ..................... 1,354,794 1,287,040
Convertible subordinated notes ....................... 599,976 599,987
Long-term deferred revenue ........................... 97,741 92,481
Deferred tax liability ............................... 55,053 44,750
Other long-term obligations .......................... 5,698 6,032
Stockholders' equity:
Common stock .................................... 3,136 3,119
Capital in excess of par value .................. 1,645,131 1,573,466
Accumulated other comprehensive income .......... 134,625 125,484
Deferred stock-based compensation ............... (8,303) --
Retained earnings ............................... 795,588 724,139
----------- -----------
Total stockholders' equity .................... 2,570,177 2,426,208
----------- -----------
$ 4,683,439 $ 4,456,498
=========== ===========
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