Symantec: Fiscal 2Q010 Financial Results

For the Storage and Server Management Group only

Symantec Corp. reported the results of its second quarter of fiscal year 2010, ended Oct. 2, 2009. GAAP revenue for the fiscal second quarter was $1.47 billion. Non-GAAP revenue was $1.48 billion, down 3 percent over the comparable period a year ago (down 2 percent after adjusting for currency).

"Execution against our key priorities in a tight spending environment enabled us to achieve solid results," said Enrique Salem, president and chief executive officer, Symantec. "In particular, we were pleased with the strength in the consumer segment and with the initial progress in SMB security. We are encouraged by the signs of stabilization in the markets we serve and are confident that we will continue to see gradual improvement over the next few quarters."

"We delivered solid results on each of our key financial metrics and our cash flow generation highlights the strength of our business model," said James Beer, executive vice president and chief financial officer, Symantec. "Our continued focus on expense management resulted in better than expected earnings."

GAAP Results: GAAP operating margin for the second quarter of fiscal year 2010 was 17.4 percent compared with 14.3 percent for the same quarter last year. GAAP net income for the fiscal second quarter was $150 million compared with $126 million for the same quarter last year. GAAP diluted earnings per share were $0.18 compared with earnings per share of $0.15 for the same quarter last year, up 20 percent year-over-year. GAAP deferred revenue as of Oct. 2, 2009 was $2.91 billion compared with $2.71 billion as of Oct. 3, 2008, up 7 percent year-over-year.

Cash flow from operating activities for the second quarter of fiscal year 2010 was $226 million. Symantec ended the quarter with cash, cash equivalents and short-term investments of $2.33 billion.


Non-GAAP Results: Non-GAAP operating margin for the second quarter of fiscal year 2010 was 29.2 percent, flat year-over-year. Non-GAAP net income for the fiscal second quarter was $294 million. Non-GAAP diluted earnings per share were $0.36 compared with earnings per share of $0.37 for the year-ago quarter.

Non-GAAP deferred revenue as of Oct. 2, 2009 was $2.91 billion compared with $2.72 billion as of Oct. 3, 2008, an increase of 7 percent year-over-year. After adjusting for currency, non-GAAP deferred revenue increased 4 percent year-over-year.

During the second quarter of fiscal year 2010, Symantec repurchased 7.9 million shares for $120 million at an average price of $15.22.

Business Segment and Geographic Highlights
For the quarter, Symantec’s Storage and Server Management segment represented 38 percent of total non-GAAP revenue and declined 9 percent year-over-year (declined 8 percent after adjusting for currency). The Consumer segment represented 31 percent of total non-GAAP revenue and increased 6 percent year-over-year on an actual and currency adjusted basis. The Security and Compliance segment represented 24 percent of total non-GAAP revenue and declined 3 percent year-over-year (declined 1 percent adjusting for currency). Services represented 7 percent of total non-GAAP revenue and declined 1 percent year-over-year (flat after adjusting for currency).

International revenue represented 51 percent of total non-GAAP revenue in the second quarter of fiscal year 2010 and declined 2 percent year-over-year (flat after adjusting for currency). The Europe, Middle East and Africa region represented 31 percent of total non-GAAP revenue for the quarter and declined 5 percent year-over-year (declined 1 percent after adjusting for currency). The Asia Pacific/Japan revenue for the quarter represented 15 percent of total non-GAAP revenue and increased 5 percent year-over-year (increased 3 percent after adjusting for currency). The Americas, including the United States, Latin America and Canada, represented 54 percent of total non-GAAP revenue and declined 4 percent year-over-year on an actual and currency adjusted basis.

Third Quarter Fiscal Year 2010 Guidance
Guidance assumes an exchange rate of $1.47 per Euro for the December 2009 quarter versus the actual weighted average rate of $1.32 per Euro for the December 2008 quarter, approximately an 11 percent currency benefit. The end of period rate for the December 2008 quarter was $1.39, approximately a 6 percent currency benefit versus the $1.47 per Euro assumption for the December 2009 quarter.

For the third quarter of fiscal year 2010, ending Jan. 1, 2010, GAAP revenue is estimated between $1.484 billion and $1.514 billion. GAAP diluted earnings per share are estimated between $0.23 and $0.24. GAAP deferred revenue is expected to be in the range of $2.998 billion and $3.048 billion.

Non-GAAP revenue for the third quarter of fiscal year 2010 is estimated between $1.485 billion and $1.515 billion. Non-GAAP diluted earnings per share are estimated between $0.36 and $0.37. Non-GAAP deferred revenue is expected to be in the range of $3.000 billion and $3.050 billion.