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 Third Quarter Fiscal Year 2018 Results,” January 31, 2018.
|
Symantec Corporation
|
||
Date: January 31, 2018
|
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: | |
Mara Mort
|
Cynthia Hiponia
|
|
Symantec Corp.
|
Symantec Corp.
|
|
650-527-7455
|
650-527-8020
|
|
Mara_Mort@symantec.com
|
Cynthia_Hiponia@symantec.com
|
·
|
Q3 GAAP revenue $1.209 billion, up 16% year-over-year; non-GAAP revenue $1.234 billion, up 13% year-over-year
|
·
|
Double digit year-over-year deferred revenue growth
|
·
|
Enterprise segment delivered strong implied billings growth; revenue below guidance range due to accelerating mix shift to ratable business
|
·
|
Consumer Digital Safety segment achieved high end of revenue guidance range
|
·
|
Operating margins beat Q3 GAAP and non-GAAP guidance; continued cost and operating efficiencies
|
·
|
Cash flow from operations in fiscal year 2018 expected to be near the high-end of prior guidance range
|
·
|
Enterprise customers accelerating adoption of Symantec’s cloud solutions
|
|
Q3 FY18
|
|
Q3 FY17
|
|
Y/Y Change
|
|||||||
GAAP
|
||||||||||||
Revenue
|
|
$1,209M
|
|
|
$1,041M
|
|
16%
|
|
||||
Operating Margin
|
7.9%
|
|
(1.5%)
|
|
|
940bps
|
||||||
EPS (Diluted)
|
|
$2.01
|
|
$0.07
|
|
$1.94
|
||||||
Non-GAAP
|
||||||||||||
Revenue
|
|
$1,234M
|
|
|
$1,088M
|
|
13%
|
|
||||
Operating Margin
|
37.5%
|
|
30.4%
|
|
|
710bps
|
||||||
EPS (Diluted)
|
|
$0.49
|
|
$0.32
|
|
$0.17
|
|
|
GAAP
|
|
Non-GAAP
|
||||
Fourth Quarter Fiscal 2018
|
||||||||
Revenue
|
|
$1,164M – $1,194M
|
|
|
$1,175M – $1,205M
|
|
||
Operating Margin
|
(1%) – 0%
|
|
33% – 34%
|
|
||||
EPS (Diluted)
|
|
($0.07) – ($0.03)
|
|
|
$0.37 – $0.41
|
|||
Fiscal 2018
|
||||||||
Revenue
|
|
$4,790M – $4,820M
|
|
|
$4,915M – $4,945M
|
|
||
Operating Margin
|
0%
|
|
34%
|
|
||||
EPS (Diluted)
|
|
$0.29 – $0.33
|
|
$1.60 – $1.64
|
SYMANTEC CORPORATION
|
||||||||
Condensed Consolidated Balance Sheets
|
||||||||
(In millions, unaudited)
|
||||||||
December 29,
2017
|
March 31,
2017 (1)
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
2,142
|
$
|
4,247
|
||||
Short-term investments
|
390
|
9
|
||||||
Accounts receivable, net
|
666
|
649
|
||||||
Other current assets
|
369
|
419
|
||||||
Total current assets
|
3,567
|
5,324
|
||||||
Property and equipment, net
|
838
|
937
|
||||||
Intangible assets, net
|
2,754
|
3,004
|
||||||
Goodwill
|
8,318
|
8,627
|
||||||
Equity investments
|
332
|
158
|
||||||
Other long-term assets
|
171
|
124
|
||||||
Total assets
|
$
|
15,980
|
$
|
18,174
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
181
|
$
|
180
|
||||
Accrued compensation and benefits
|
215
|
272
|
||||||
Current portion of long-term debt
|
-
|
1,310
|
||||||
Deferred revenue
|
2,151
|
2,353
|
||||||
Income taxes payable
|
186
|
30
|
||||||
Other current liabilities
|
368
|
477
|
||||||
Total current liabilities
|
3,101
|
4,622
|
||||||
Long-term debt
|
5,587
|
6,876
|
||||||
Long-term deferred revenue
|
579
|
434
|
||||||
Deferred income tax liabilities
|
618
|
2,401
|
||||||
Long-term income taxes payable
|
1,051
|
251
|
||||||
Other long-term obligations
|
86
|
103
|
||||||
Total liabilities
|
11,022
|
14,687
|
||||||
Total stockholders' equity
|
4,958
|
3,487
|
||||||
Total liabilities and stockholders' equity
|
$
|
15,980
|
$
|
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
|
Nine Months Ended
|
|||||||||||||||
December 29,
|
December 30,
|
December 29,
|
December 30,
|
|||||||||||||
2017
|
2016
|
2017
|
2016
|
|||||||||||||
Net revenues
|
$
|
1,209
|
$
|
1,041
|
$
|
3,624
|
$
|
2,904
|
||||||||
Cost of revenues
|
249
|
235
|
768
|
594
|
||||||||||||
Gross profit
|
960
|
806
|
2,856
|
2,310
|
||||||||||||
Operating expenses:
|
||||||||||||||||
Sales and marketing
|
372
|
377
|
1,239
|
1,006
|
||||||||||||
Research and development
|
225
|
204
|
699
|
574
|
||||||||||||
General and administrative
|
122
|
131
|
431
|
360
|
||||||||||||
Amortization of intangible assets
|
52
|
43
|
166
|
91
|
||||||||||||
Restructuring, transition and other costs
|
93
|
67
|
278
|
201
|
||||||||||||
Total operating expenses
|
864
|
822
|
2,813
|
2,232
|
||||||||||||
Operating income (loss)
|
96
|
(16
|
)
|
43
|
78
|
|||||||||||
Interest income
|
5
|
5
|
16
|
14
|
||||||||||||
Interest expense
|
(58
|
)
|
(55
|
)
|
(199
|
)
|
(134
|
)
|
||||||||
Gain on divestiture
|
658
|
-
|
658
|
-
|
||||||||||||
Other income (expense), net
|
4
|
5
|
(16
|
)
|
28
|
|||||||||||
Income (loss) from continuing operations before income taxes
|
705
|
(61
|
)
|
502
|
(14
|
)
|
||||||||||
Income tax expense (benefit)
|
(606
|
)
|
(5
|
)
|
(683
|
)
|
45
|
|||||||||
Income (loss) from continuing operations
|
1,311
|
(56
|
)
|
1,185
|
(59
|
)
|
||||||||||
Income from discontinued operations, net of income taxes
|
31
|
102
|
12
|
96
|
||||||||||||
Net income
|
$
|
1,342
|
$
|
46
|
$
|
1,197
|
$
|
37
|
||||||||
Income (loss) per share – basic:
|
||||||||||||||||
Continuing operations
|
$
|
2.12
|
$
|
(0.09
|
)
|
$
|
1.93
|
$
|
(0.10
|
)
|
||||||
Discontinued operations
|
$
|
0.05
|
$
|
0.16
|
$
|
0.02
|
$
|
0.16
|
||||||||
Net income per share – basic
|
$
|
2.17
|
$
|
0.07
|
$
|
1.95
|
$
|
0.06
|
||||||||
Income (loss) per share – diluted:
|
||||||||||||||||
Continuing operations
|
$
|
1.97
|
$
|
(0.09
|
)
|
$
|
1.78
|
$
|
(0.10
|
)
|
||||||
Discontinued operations
|
$
|
0.05
|
$
|
0.16
|
$
|
0.02
|
$
|
0.16
|
||||||||
Net income per share – diluted (1)
|
$
|
2.01
|
$
|
0.07
|
$
|
1.80
|
$
|
0.06
|
||||||||
Weighted-average shares outstanding – basic
|
619
|
620
|
614
|
618
|
||||||||||||
Weighted-average shares outstanding – diluted
|
667
|
620
|
665
|
618
|
||||||||||||
Cash dividends declared per common share
|
$
|
0.075
|
$
|
0.075
|
$
|
0.225
|
$
|
0.225
|
(1) Net income per share amounts may not add due to rounding.
|
SYMANTEC CORPORATION
|
||||||||||||||||
Condensed Consolidated Statements of Cash Flows
|
||||||||||||||||
(In millions, unaudited)
|
||||||||||||||||
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
December 29,
2017 (1)
|
December 30,
2016
|
December 29,
2017
|
December 30,
2016
|
|||||||||||||
OPERATING ACTIVITIES:
|
||||||||||||||||
Net income
|
$
|
1,342
|
$
|
46
|
$
|
1,197
|
$
|
37
|
||||||||
Income from discontinued operations, net of income taxes
|
(31
|
)
|
(102
|
)
|
(12
|
)
|
(96
|
)
|
||||||||
Adjustments to continuing operating activities:
|
||||||||||||||||
Depreciation and amortization, including debt issuance costs and discounts
|
165
|
151
|
526
|
356
|
||||||||||||
Stock-based compensation expense
|
125
|
97
|
448
|
231
|
||||||||||||
Deferred income taxes
|
(1,632
|
)
|
(16
|
)
|
(1,821
|
)
|
33
|
|||||||||
Gain on divestiture
|
(658
|
)
|
-
|
(658
|
)
|
-
|
||||||||||
Other
|
24
|
12
|
43
|
43
|
||||||||||||
Changes in operating assets and liabilities, net of acquisitions and divestitures:
|
||||||||||||||||
Accounts receivable, net
|
(153
|
)
|
(111
|
)
|
(38
|
)
|
114
|
|||||||||
Accounts payable
|
(15
|
)
|
(6
|
)
|
5
|
(72
|
)
|
|||||||||
Accrued compensation and benefits
|
22
|
25
|
(53
|
)
|
(10
|
)
|
||||||||||
Deferred revenue
|
214
|
142
|
187
|
(71
|
)
|
|||||||||||
Income taxes
|
950
|
(140
|
)
|
945
|
(981
|
)
|
||||||||||
Other assets
|
(29
|
)
|
10
|
(3
|
)
|
16
|
||||||||||
Other liabilities
|
(64
|
)
|
(9
|
)
|
(85
|
)
|
(60
|
)
|
||||||||
Net cash provided by (used in) continuing operating activities
|
260
|
99
|
681
|
(460
|
)
|
|||||||||||
Net cash provided by (used in) discontinued operating activities
|
34
|
49
|
3
|
(104
|
)
|
|||||||||||
Net cash provided by (used in) operating activities
|
294
|
148
|
684
|
(564
|
)
|
|||||||||||
INVESTING ACTIVITIES:
|
||||||||||||||||
Additions to property and equipment
|
(33
|
)
|
(18
|
)
|
(105
|
)
|
(57
|
)
|
||||||||
Payments for acquisitions, net of cash acquired
|
(41
|
)
|
-
|
(402
|
)
|
(4,533
|
)
|
|||||||||
Purchases of short-term investments
|
(207
|
)
|
-
|
(408
|
)
|
-
|
||||||||||
Proceeds from maturities and sale of short-term investments
|
25
|
-
|
25
|
31
|
||||||||||||
Proceeds from divestiture, net of cash contributed
|
946
|
-
|
946
|
7
|
||||||||||||
Other
|
(20
|
)
|
2
|
(20
|
)
|
2
|
||||||||||
Net cash provided by (used in) investing activities
|
670
|
(16
|
)
|
36
|
(4,550
|
)
|
||||||||||
FINANCING ACTIVITIES:
|
||||||||||||||||
Repayments of debt and other obligations
|
(630
|
)
|
(45
|
)
|
(2,640
|
)
|
(62
|
)
|
||||||||
Proceeds from issuance of debt, net of issuance costs
|
-
|
(6
|
)
|
-
|
4,993
|
|||||||||||
Net proceeds from sales of common stock under employee stock benefit plans
|
9
|
4
|
83
|
53
|
||||||||||||
Tax payments related to restricted stock units
|
(14
|
)
|
(16
|
)
|
(97
|
)
|
(50
|
)
|
||||||||
Dividends and dividend equivalents paid
|
(49
|
)
|
(53
|
)
|
(163
|
)
|
(173
|
)
|
||||||||
Payment for dissenting shareholder settlement
|
-
|
-
|
(68
|
)
|
-
|
|||||||||||
Other
|
-
|
-
|
-
|
10
|
||||||||||||
Net cash provided by (used in) financing activities
|
(684
|
)
|
(116
|
)
|
(2,885
|
)
|
4,771
|
|||||||||
Effect of exchange rate fluctuations on cash and cash equivalents
|
26
|
(51
|
)
|
60
|
(65
|
)
|
||||||||||
Change in cash and cash equivalents
|
306
|
(35
|
)
|
(2,105
|
)
|
(408
|
)
|
|||||||||
Beginning cash and cash equivalents (including cash and cash equivalents held for sale)
|
1,836
|
5,610
|
4,247
|
5,983
|
||||||||||||
Ending cash and cash equivalents
|
$
|
2,142
|
$
|
5,575
|
$
|
2,142
|
$
|
5,575
|
||||||||
Non-cash information:
|
||||||||||||||||
Equity investment received as consideration from divestiture
|
$
|
160
|
$
|
-
|
$
|
160
|
$
|
-
|
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
|
|||||||||||
December 29,
|
December 30,
|
|||||||||||
2017
|
2016
|
Actual
|
||||||||||
Net revenues (GAAP)
|
$
|
1,209
|
$
|
1,041
|
16%
|
|
||||||
Deferred revenue fair value adjustment
|
25
|
47
|
||||||||||
Net revenues (Non-GAAP)
|
$
|
1,234
|
$
|
1,088
|
13%
|
|
||||||
Operating income (loss) (GAAP)
|
$
|
96
|
$
|
(16
|
)
|
(700%)
|
|
|||||
Deferred revenue fair value adjustment
|
25
|
47
|
||||||||||
Inventory fair value adjustment
|
-
|
13
|
||||||||||
Stock-based compensation
|
125
|
97
|
||||||||||
Amortization of intangible assets
|
111
|
94
|
||||||||||
Restructuring, transition and other costs
|
93
|
67
|
||||||||||
Acquisition related costs
|
13
|
29
|
||||||||||
Operating income (non-GAAP)
|
$
|
463
|
$
|
331
|
40%
|
|
||||||
Operating margin (GAAP)
|
7.9
|
%
|
(1.5
|
%)
|
940 bps
|
|||||||
Operating margin (Non-GAAP)
|
37.5
|
%
|
30.4
|
%
|
710 bps
|
|||||||
Net income (GAAP)
|
$
|
1,342
|
$
|
46
|
2817%
|
|
||||||
Adjustments to income (loss) from continuing operations:
|
||||||||||||
Deferred revenue fair value adjustment
|
25
|
47
|
||||||||||
Inventory fair value adjustment
|
-
|
13
|
||||||||||
Stock-based compensation
|
125
|
97
|
||||||||||
Amortization of intangible assets
|
111
|
94
|
||||||||||
Restructuring, transition and other costs
|
93
|
67
|
||||||||||
Acquisition related costs
|
13
|
29
|
||||||||||
Non-cash interest expense
|
9
|
8
|
||||||||||
Gain on divestiture
|
(658
|
)
|
-
|
|||||||||
Income tax reform
|
(810
|
)
|
-
|
|||||||||
Other income tax effects and adjustments
|
109
|
(90
|
)
|
|||||||||
Total adjustment from continuing operations
|
(983
|
)
|
265
|
|||||||||
Net income adjustment from discontinued operations
|
(31
|
)
|
(102
|
)
|
||||||||
Net income (Non-GAAP)
|
$
|
328
|
$
|
209
|
57%
|
|
||||||
Diluted income (loss) per share:
|
||||||||||||
Income (loss) per share from continuing operations (GAAP)
|
$
|
1.97
|
$
|
(0.09
|
)
|
|||||||
Adjustments to income (loss) from continuing operations
|
$
|
(1.47
|
)
|
$
|
0.41
|
|||||||
Income per share from continuing operations (Non-GAAP) (2)
|
$
|
0.49
|
$
|
0.32
|
||||||||
Income (loss) per share from discontinued operations (GAAP)
|
$
|
0.05
|
$
|
0.16
|
||||||||
Adjustments to income (loss) from discontinued operations
|
$
|
(0.05
|
)
|
$
|
(0.16
|
)
|
||||||
Income per share from discontinued operations (Non-GAAP)
|
$
|
-
|
$
|
-
|
||||||||
Diluted net income per share (GAAP)
|
$
|
2.01
|
$
|
0.07
|
||||||||
Diluted net income per share (Non-GAAP)
|
$
|
0.49
|
$
|
0.32
|
||||||||
Diluted weighted-average shares outstanding (GAAP)
|
667
|
620
|
||||||||||
Incremental dilution
|
-
|
34
|
||||||||||
Diluted weighted-average shares outstanding (Non-GAAP) (3)
|
667
|
654
|
SYMANTEC CORPORATION
|
||||||||
Reconciliation of GAAP Revenue to Non-GAAP Implied Billings (1)
|
||||||||
(In millions, unaudited)
|
||||||||
Three Months Ended
|
||||||||
December 29,
|
December 30,
|
|||||||
2017
|
2016
|
|||||||
Total Company Implied Billings (Non-GAAP)(2)
|
||||||||
Total revenue
|
$
|
1,209
|
$
|
1,041
|
||||
Add: Deferred revenue (end of period)
|
2,730
|
2,473
|
||||||
Less: Deferred revenue (beginning of period)
|
(2,514
|
)
|
(2,487
|
)
|
||||
Deferred revenue adjustments (3) (4)
|
3
|
54
|
||||||
Implied billings (Non-GAAP)
|
$
|
1,428
|
$
|
1,081
|
||||
Enterprise Security Implied Billings (Non-GAAP)
|
||||||||
Total revenue
|
$
|
625
|
$
|
644
|
||||
Add: Deferred revenue (end of period)
|
1,685
|
1,654
|
||||||
Less: Deferred revenue (beginning of period)
|
(1,484
|
)
|
(1,629
|
)
|
||||
Deferred revenue adjustments (3) (4)
|
3
|
54
|
||||||
Implied billings (Non-GAAP)
|
$
|
829
|
$
|
723
|
||||
Consumer Digital Safety Implied Billings (Non-GAAP)(2)
|
||||||||
Total revenue
|
$
|
584
|
$
|
397
|
||||
Add: Deferred revenue (end of period)
|
1,045
|
819
|
||||||
Less: Deferred revenue (beginning of period)
|
(1,030
|
)
|
(858
|
)
|
||||
Implied billings (Non-GAAP)
|
$
|
599
|
$
|
358
|
SYMANTEC CORPORATION
|
||||||||||||
Guidance and Reconciliation of GAAP to Non-GAAP Revenue and Operating Income (1)
|
||||||||||||
(Dollars in millions, except per share data, unaudited)
|
||||||||||||
Fourth Quarter Fiscal Year 2018
|
||||||||||||
Revenue Guidance
|
||||||||||||
GAAP revenue range
|
|
$1,164
|
-
|
|
$1,194
|
|||||||
Adjustment:
|
||||||||||||
Deferred revenue fair value adjustment
|
|
|
$11
|
|||||||||
Non-GAAP revenue range
|
|
$1,175
|
-
|
|
$1,205
|
|||||||
Operating Margin Guidance and Reconciliation
|
||||||||||||
GAAP operating margin
|
(1%)
|
|
-
|
0%
|
|
|||||||
Adjustments:
|
||||||||||||
Deferred revenue fair value adjustment
|
|
|
1%
|
|||||||||
Stock-based compensation
|
|
|
13%
|
|||||||||
Amortization of intangible assets
|
|
|
9%
|
|||||||||
Other non-GAAP adjustments
|
|
|
11%
|
|||||||||
Non-GAAP operating margin
|
33%
|
|
-
|
34%
|
|
|||||||
Earnings Per Share Guidance and Reconciliation
|
||||||||||||
GAAP diluted loss per share range (2)
|
|
$(0.07)
|
|
-
|
|
$(0.03)
|
|
|||||
Adjustments:
|
||||||||||||
Deferred revenue fair value adjustment
|
|
$0.02
|
||||||||||
Stock-based compensation
|
|
$0.25
|
||||||||||
Amortization of intangible assets
|
|
$0.18
|
||||||||||
Other non-GAAP adjustments
|
|
$0.23
|
||||||||||
Income tax effects and adjustments
|
|
|
$(0.20)
|
|||||||||
Incremental dilution effect
|
|
|
$(0.04)
|
|||||||||
Non-GAAP diluted earnings per share range (2)
|
|
$0.37
|
-
|
|
$0.41
|
|||||||
Fiscal Year 2018
|
||||||||||||
Revenue Guidance
|
||||||||||||
GAAP revenue range
|
|
$4,790
|
-
|
|
$4,820
|
|||||||
Adjustment:
|
||||||||||||
Deferred revenue fair value adjustment
|
|
$125
|
||||||||||
Non-GAAP revenue range
|
|
$4,915
|
-
|
|
$4,945
|
|||||||
Operating Margin Guidance and Reconciliation
|
||||||||||||
GAAP operating margin
|
0%
|
|
-
|
0%
|
|
|||||||
Adjustments:
|
||||||||||||
Deferred revenue fair value adjustment
|
|
3%
|
||||||||||
Stock-based compensation
|
|
12%
|
||||||||||
Amortization of intangible assets
|
|
9%
|
||||||||||
Other non-GAAP adjustments
|
|
10%
|
||||||||||
Non-GAAP operating margin
|
34%
|
|
-
|
34%
|
|
|||||||
Earnings Per Share Guidance and Reconciliation
|
||||||||||||
GAAP diluted earnings per share range
|
|
$0.29
|
-
|
|
$0.33
|
|||||||
Adjustments:
|
||||||||||||
Deferred revenue fair value adjustment
|
|
$0.19
|
||||||||||
Stock-based compensation
|
|
$0.90
|
||||||||||
Amortization of intangible assets
|
|
$0.67
|
||||||||||
Other non-GAAP adjustments
|
|
|
$(0.24)
|
|||||||||
Income tax effects and adjustments
|
|
|
$(0.21)
|
|||||||||
Non-GAAP diluted earnings per share range
|
|
$1.60
|
-
|
|
$1.64
|