Symantec Corporation
|
(Exact Name of Registrant as Specified in Charter)
|
Delaware
|
000-17781
|
77-0181864
|
(State or Other Jurisdiction
of Incorporation) |
(Commission
File Number) |
(IRS Employer
Identification No.) |
350 Ellis Street, Mountain View, CA
|
94043
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
Registrant’s Telephone Number, Including Area Code
|
(650) 527-8000
|
Exhibit Number
|
Exhibit Title or Description
|
99.01
|
Press release issued by Symantec Corporation entitled “Symantec Reports Second Quarter Fiscal Year 2018 Results,” November 1, 2017.
|
Symantec Corporation
|
|||
Date: November 1, 2017
|
By: |
/s/ Nicholas R. Noviello
|
|
Nicholas R. Noviello | |||
Executive Vice President and Chief Financial Officer |
Exhibit Number
|
Exhibit Title or Description
|
MEDIA CONTACT: | INVESTOR CONTACT: |
Kristen Batch
|
Nate Pollack
|
Symantec Corp.
|
Symantec Corp.
|
650-527-5152
|
650-527-7906
|
Kristen_Batch@symantec.com
|
Nate_Pollack@symantec.com
|
·
|
Q2 GAAP revenue $1.240 billion, up 27% year over year; non-GAAP revenue $1.276 billion, up 26% year over year
|
·
|
Strong Enterprise business activity from market-leading Integrated Cyber Defense platform; double digit year-over-year deferred revenue growth excluding impact from divestiture
|
·
|
Consumer Digital Safety revenue exceeds expectations, driven by strong retention and growth in average revenue per user
|
·
|
Completed previously announced cost reduction and synergy programs ahead of schedule
|
·
|
Continued focus on innovation with the introduction of Symantec Endpoint Security for the Cloud Generation, offering advanced capabilities in deception technology, mobile threat defense and Endpoint Detection and Response (EDR)
|
·
|
Continue to lead industry in cyber threat research
|
·
|
Robust demand for secure web gateway, with refresh underway
|
·
|
Rapid growth in Enterprise cloud security offerings
|
·
|
Record LifeLock enrollments; strong start to cross-sell of LifeLock into Norton customer base
|
·
|
Completed sale of Website Security and related PKI solutions to DigiCert
|
Q2 FY18
|
Q2 FY17
|
Y/Y Change
|
|
GAAP
|
|||
Revenue
|
$1,240M
|
$979M
|
27%
|
Operating Margin
|
(0.7%)
|
(1.2%)
|
50 bps
|
EPS (Diluted)
|
$(0.02)
|
$(0.23)
|
$0.21
|
Non-GAAP
|
|||
Revenue
|
$1,276M
|
$1,015M
|
26%
|
Operating Margin
|
34.1%
|
29.2%
|
490 bps
|
EPS (Diluted)
|
$0.40
|
$0.30
|
$0.10
|
GAAP
|
Non-GAAP
|
|
Third Quarter 2018
|
||
Revenue
|
$1,227M – $1,257M
|
$1,250M – $1,280M
|
Operating Margin
|
(3%) – (2%)
|
36% – 37%
|
EPS
|
N/A
|
$0.42 - $0.46
|
Fiscal 2018
|
||
Revenue
|
$4,877M – $4,977M
|
$5,000M – $5,100M
|
Operating Margin
|
1% – 2%
|
35% – 36%
|
EPS
|
N/A
|
$1.66 – $1.76
|
SYMANTEC CORPORATION
|
||||||||
Condensed Consolidated Balance Sheets
|
||||||||
(In millions, unaudited)
|
||||||||
September 29,
2017 |
March 31,
2017 (1)
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
1,826
|
$
|
4,247
|
||||
Short-term investments
|
200
|
9
|
||||||
Accounts receivable, net
|
514
|
649
|
||||||
Assets held for sale
|
746
|
-
|
||||||
Other current assets
|
401
|
419
|
||||||
Total current assets
|
3,687
|
5,324
|
||||||
Property and equipment, net
|
868
|
937
|
||||||
Intangible assets, net
|
2,847
|
3,004
|
||||||
Goodwill
|
8,301
|
8,627
|
||||||
Equity investments
|
159
|
158
|
||||||
Other long-term assets
|
134
|
124
|
||||||
Total assets
|
$
|
15,996
|
$
|
18,174
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
187
|
$
|
180
|
||||
Accrued compensation and benefits
|
193
|
272
|
||||||
Current portion of long-term debt
|
130
|
1,310
|
||||||
Deferred revenue
|
2,041
|
2,353
|
||||||
Income taxes payable
|
36
|
30
|
||||||
Liabilities held for sale
|
303
|
-
|
||||||
Other current liabilities
|
397
|
477
|
||||||
Total current liabilities
|
3,287
|
4,622
|
||||||
Long-term debt
|
6,079
|
6,876
|
||||||
Long-term deferred revenue
|
473
|
434
|
||||||
Deferred income tax liabilities
|
2,239
|
2,401
|
||||||
Long-term income taxes payable
|
280
|
251
|
||||||
Other long-term obligations
|
103
|
103
|
||||||
Total liabilities
|
12,461
|
14,687
|
||||||
Total stockholders' equity
|
3,535
|
3,487
|
||||||
Total liabilities and stockholders' equity
|
$
|
15,996
|
$
|
18,174
|
||||
(1) Derived from audited consolidated financial statements.
|
SYMANTEC CORPORATION
|
||||||||||||||||
Condensed Consolidated Statements of Operations
|
||||||||||||||||
(In millions, except per share data, unaudited)
|
||||||||||||||||
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
September 29,
|
September 30,
|
September 29,
|
September 30,
|
|||||||||||||
2017
|
2016
|
2017
|
2016
|
|||||||||||||
Net revenues
|
$
|
1,240
|
$
|
979
|
$
|
2,415
|
$
|
1,863
|
||||||||
Cost of revenues
|
262
|
210
|
519
|
359
|
||||||||||||
Gross profit
|
978
|
769
|
1,896
|
1,504
|
||||||||||||
Operating expenses:
|
||||||||||||||||
Sales and marketing
|
434
|
338
|
867
|
629
|
||||||||||||
Research and development
|
241
|
200
|
474
|
370
|
||||||||||||
General and administrative
|
160
|
145
|
309
|
229
|
||||||||||||
Amortization of intangible assets
|
55
|
34
|
114
|
48
|
||||||||||||
Restructuring, transition and other
|
97
|
64
|
185
|
134
|
||||||||||||
Total operating expenses
|
987
|
781
|
1,949
|
1,410
|
||||||||||||
Operating income (loss)
|
(9
|
)
|
(12
|
)
|
(53
|
)
|
94
|
|||||||||
Interest income
|
5
|
4
|
11
|
9
|
||||||||||||
Interest expense
|
(57
|
)
|
(52
|
)
|
(141
|
)
|
(79
|
)
|
||||||||
Other income (expense), net
|
(8
|
)
|
10
|
(20
|
)
|
23
|
||||||||||
Income (loss) from continuing operations before income taxes
|
(69
|
)
|
(50
|
)
|
(203
|
)
|
47
|
|||||||||
Income tax expense (benefit)
|
(53
|
)
|
19
|
(77
|
)
|
50
|
||||||||||
Loss from continuing operations
|
(16
|
)
|
(69
|
)
|
(126
|
)
|
(3
|
)
|
||||||||
Income (loss) from discontinued operations, net of income taxes
|
4
|
(75
|
)
|
(19
|
)
|
(6
|
)
|
|||||||||
Net loss
|
$
|
(12
|
)
|
$
|
(144
|
)
|
$
|
(145
|
)
|
$
|
(9
|
)
|
||||
Income (loss) per share – basic and diluted:
|
||||||||||||||||
Continuing operations
|
$
|
(0.03
|
)
|
$
|
(0.11
|
)
|
$
|
(0.21
|
)
|
$
|
0.00
|
|||||
Discontinued operations
|
$
|
0.01
|
$
|
(0.12
|
)
|
$
|
(0.03
|
)
|
$
|
(0.01
|
)
|
|||||
Net loss per share – basic and diluted
|
$
|
(0.02
|
)
|
$
|
(0.23
|
)
|
$
|
(0.24
|
)
|
$
|
(0.01
|
)
|
||||
Weighted-average shares outstanding – basic and diluted
|
615
|
620
|
612
|
617
|
||||||||||||
Cash dividends declared per common share
|
$
|
0.075
|
$
|
0.075
|
$
|
0.15
|
$
|
0.15
|
SYMANTEC CORPORATION
|
||||||||
Condensed Consolidated Statements of Cash Flows
|
||||||||
(In millions, unaudited)
|
||||||||
Six Months Ended
|
||||||||
September 29,
2017 |
September 30,
2016 |
|||||||
OPERATING ACTIVITIES:
|
||||||||
Net loss
|
$
|
(145
|
)
|
$
|
(9
|
)
|
||
Loss from discontinued operations, net of income taxes
|
19
|
6
|
||||||
Adjustments to continuing operating activities:
|
||||||||
Depreciation and amortization, including debt issuance costs and discounts
|
361
|
205
|
||||||
Stock-based compensation expense
|
323
|
134
|
||||||
Deferred income taxes
|
(189
|
)
|
49
|
|||||
Other
|
19
|
31
|
||||||
Changes in operating assets and liabilities, net of acquisitions:
|
||||||||
Accounts receivable, net
|
115
|
225
|
||||||
Accounts payable
|
20
|
(66
|
)
|
|||||
Accrued compensation and benefits
|
(75
|
)
|
(35
|
)
|
||||
Deferred revenue
|
(27
|
)
|
(213
|
)
|
||||
Income taxes
|
(5
|
)
|
(841
|
)
|
||||
Other assets
|
26
|
6
|
||||||
Other liabilities
|
(21
|
)
|
(51
|
)
|
||||
Net cash provided by (used in) continuing operating activities
|
421
|
(559
|
)
|
|||||
Net cash used in discontinued operating activities
|
(31
|
)
|
(153
|
)
|
||||
Net cash provided by (used in) operating activities
|
390
|
(712
|
)
|
|||||
INVESTING ACTIVITIES:
|
||||||||
Additions to property and equipment
|
(72
|
)
|
(39
|
)
|
||||
Payments for acquisitions, net of cash acquired
|
(361
|
)
|
(4,533
|
)
|
||||
Purchases of short-term investments
|
(201
|
)
|
-
|
|||||
Proceeds from maturities and sale of short-term investments
|
-
|
31
|
||||||
Other
|
-
|
7
|
||||||
Net cash used in investing activities
|
(634
|
)
|
(4,534
|
)
|
||||
FINANCING ACTIVITIES:
|
||||||||
Repayments of debt and other obligations
|
(2,010
|
)
|
(17
|
)
|
||||
Proceeds from issuance of debt, net of issuance costs
|
-
|
4,999
|
||||||
Net proceeds from sales of common stock under employee stock benefit plans
|
74
|
49
|
||||||
Tax payments related to restricted stock units
|
(83
|
)
|
(34
|
)
|
||||
Dividends and dividend equivalents paid
|
(114
|
)
|
(120
|
)
|
||||
Payment for dissenting shareholder settlement
|
(68
|
)
|
-
|
|||||
Other
|
-
|
10
|
||||||
Net cash provided by (used in) financing activities
|
(2,201
|
)
|
4,887
|
|||||
Effect of exchange rate fluctuations on cash and cash equivalents
|
34
|
(14
|
)
|
|||||
Change in cash and cash equivalents
|
(2,411
|
)
|
(373
|
)
|
||||
Cash held for sale (1)
|
(10
|
)
|
-
|
|||||
Beginning cash and cash equivalents
|
4,247
|
5,983
|
||||||
Ending cash and cash equivalents
|
$
|
1,826
|
$
|
5,610
|
||||
(1) The impact of assets and liabilities reclassified as held for sale during the period was not considered in the changes in operating assets and liabilities within cash flows from operating activities.
|
SYMANTEC CORPORATION
|
||||||||||||||||
Reconciliation of Selected GAAP Measures to Non-GAAP Measures (1)
|
||||||||||||||||
(Dollars in millions, except per share data, unaudited)
|
||||||||||||||||
Year-Over-Year
|
||||||||||||||||
Three Months Ended
|
Growth Rate
|
|||||||||||||||
September 29,
|
September 30,
|
Constant
|
||||||||||||||
2017
|
2016
|
Actual
|
Currency (3)
|
|||||||||||||
Net revenues (GAAP)
|
$
|
1,240
|
$
|
979
|
27
|
%
|
||||||||||
Deferred revenue fair value adjustment (2)
|
36
|
36
|
||||||||||||||
Net revenues (Non-GAAP)
|
$
|
1,276
|
$
|
1,015
|
26
|
%
|
||||||||||
Foreign exchange impact (3)
|
(4
|
)
|
-
|
|||||||||||||
Net revenues in constant currency (Non-GAAP)
|
$
|
1,272
|
$
|
1,015
|
25
|
%
|
||||||||||
Operating loss (GAAP)
|
$
|
(9
|
)
|
$
|
(12
|
)
|
(25
|
%)
|
||||||||
Deferred revenue fair value adjustment (2)
|
36
|
36
|
||||||||||||||
Inventory fair value adjustment
|
-
|
11
|
||||||||||||||
Stock-based compensation
|
176
|
85
|
||||||||||||||
Amortization of intangible assets
|
116
|
69
|
||||||||||||||
Restructuring, transition and other
|
97
|
64
|
||||||||||||||
Acquisition and integration costs
|
19
|
43
|
||||||||||||||
Operating income (non-GAAP)
|
$
|
435
|
$
|
296
|
47
|
%
|
||||||||||
Foreign exchange impact (3)
|
2
|
-
|
||||||||||||||
Operating income in constant currency (Non-GAAP)
|
$
|
437
|
$
|
296
|
48
|
%
|
||||||||||
Operating margin (GAAP)
|
(0.7
|
%)
|
(1.2
|
%)
|
50
|
bps | ||||||||||
Operating margin (Non-GAAP)
|
34.1
|
%
|
29.2
|
%
|
490
|
bps | ||||||||||
Operating margin in constant currency (Non-GAAP)
|
34.4
|
%
|
29.2
|
%
|
520
|
bps | ||||||||||
Net loss (GAAP)
|
$
|
(12
|
)
|
$
|
(144
|
)
|
(92
|
%)
|
||||||||
Adjustments to loss from continuing operations:
|
||||||||||||||||
Deferred revenue fair value adjustment (2)
|
36
|
36
|
||||||||||||||
Inventory fair value adjustment
|
-
|
11
|
||||||||||||||
Stock-based compensation
|
176
|
85
|
||||||||||||||
Amortization of intangible assets
|
116
|
69
|
||||||||||||||
Restructuring, transition and other
|
97
|
64
|
||||||||||||||
Acquisition and integration costs
|
19
|
43
|
||||||||||||||
Non-cash interest expense and amortization of debt issuance costs
|
5
|
12
|
||||||||||||||
Income tax effects and adjustments
|
(165
|
)
|
(59
|
)
|
||||||||||||
Total adjustments to loss from continuing operations
|
$
|
284
|
$
|
261
|
||||||||||||
Net income (loss) adjustment from discontinued operations
|
(4
|
)
|
75
|
|||||||||||||
Net income (Non-GAAP)
|
$
|
268
|
$
|
192
|
40
|
%
|
||||||||||
Diluted income (loss) per share:
|
||||||||||||||||
Loss per share from continuing operations (GAAP)
|
$
|
(0.03
|
)
|
$
|
(0.11
|
)
|
||||||||||
Adjustments to loss from continuing operations
|
0.43
|
0.41
|
||||||||||||||
Income per share from continuing operations (Non-GAAP)
|
0.40
|
0.30
|
||||||||||||||
Income (loss) per share from discontinued operations (GAAP)
|
$
|
0.01
|
$
|
(0.12
|
)
|
|||||||||||
Adjustments to income (loss) from discontinued operations
|
(0.01
|
)
|
0.12
|
|||||||||||||
Income (loss) per share from discontinued operations (Non-GAAP)
|
-
|
-
|
||||||||||||||
Diluted net loss per share (GAAP)
|
$
|
(0.02
|
)
|
$
|
(0.23
|
)
|
||||||||||
Diluted net income per share (Non-GAAP)
|
0.40
|
0.30
|
||||||||||||||
Diluted weighted-average shares outstanding (GAAP)
|
615
|
620
|
||||||||||||||
Diluted weighted-average shares outstanding (Non-GAAP) (4)
|
666
|
644
|
||||||||||||||
(1) This presentation includes non-GAAP measures. Non-GAAP financial measures are supplemental and should not be considered a substitute for financial information presented in accordance with GAAP. For a detailed explanation of these non-GAAP measures, please see Appendix A.
|
||||||||||||||||
(2) The adjustment for the three months ended September 29, 2017 and September 30, 2016 relates to the Blue Coat and LifeLock deferred revenue fair value adjustments as a result of purchase accounting. For further information please see Appendix A.
|
||||||||||||||||
(3) Management refers to growth rates in constant 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. Non-GAAP constant currency revenues and operating income (loss) are calculated by translating current quarter revenues and operating income (loss), respectively, using prior period exchange rates. Constant currency growth (expressed as a percentage) is calculated by determining the increase in the current quarter non-GAAP constant currency revenues and operating income (loss) over prior period revenues and operating margins.
|
||||||||||||||||
(4) Diluted GAAP and non-GAAP weighted-average shares outstanding are the same except in periods that there is a GAAP loss from continuing operations. In accordance with authoritative accounting guidance, we do not present dilution for GAAP in periods in which there is a loss from continuing operations. However, if there is non-GAAP net income, we present dilution for non-GAAP weighted-average shares outstanding in an amount equal to the dilution that would have been presented had there been GAAP income from continuing operations for the period.
|
SYMANTEC CORPORATION
|
|||
Guidance and Reconciliation of GAAP to Non-GAAP Revenue and Operating Income (1)
|
|||
(Dollars in millions, except per share data, unaudited)
|
|||
Third Quarter Fiscal Year 2018
|
|||
Three Months Ending December 29, 2017
|
|||
Revenue Guidance
|
Range
|
||
GAAP revenue range
|
$1,227
|
-
|
$1,257
|
Add back:
|
|||
Deferred revenue fair value adjustment
|
|
$23
|
|
Non-GAAP revenue range
|
$1,250
|
-
|
$1,280
|
Three Months Ending December 29, 2017
|
|||
Operating Margin Guidance and Reconciliation
|
Range
|
||
GAAP operating margin
|
(3%)
|
-
|
(2%)
|
Add back:
|
|||
Deferred revenue fair value adjustment
|
|
1%
|
|
Stock-based compensation
|
|
13%
|
|
Amortization of intangible assets
|
|
9%
|
|
Other non-GAAP adjustments
|
|
16%
|
|
Non-GAAP operating margin
|
36%
|
-
|
37%
|
Fiscal Year 2018
|
|||
Year Ending March 30, 2018
|
|||
Revenue Guidance
|
Range
|
||
GAAP revenue range
|
$4,877
|
-
|
$4,977
|
Add back:
|
|||
Deferred revenue fair value adjustment
|
|
$123
|
|
Non-GAAP revenue range
|
$5,000
|
-
|
$5,100
|
Year Ending March 30, 2018
|
|||
Operating Margin Guidance and Reconciliation
|
Range
|
||
GAAP operating margin
|
1%
|
-
|
2%
|
Add back:
|
|||
Deferred revenue fair value adjustment
|
|
2%
|
|
Stock-based compensation
|
|
13%
|
|
Amortization of intangible assets
|
|
9%
|
|
Other non-GAAP adjustments
|
|
10%
|
|
Non-GAAP operating margin
|
35%
|
-
|
36%
|
(1) This presentation includes non-GAAP measures. Non-GAAP financial measures are supplemental and should not be considered a substitute for financial information presented in accordance with GAAP. For a detailed explanation of these non-GAAP measures, please see Appendix A.
|
Three Months Ended
|
||||||||
September 29,
|
September 30,
|
|||||||
2017
|
2016
|
|||||||
Cost of revenue
|
$
|
9
|
$
|
5
|
||||
Sales and marketing
|
50
|
24
|
||||||
Research and development
|
53
|
24
|
||||||
General and administrative
|
64
|
32
|
||||||
Total stock-based compensation
|
$
|
176
|
$
|
85
|