Symantec reports record quarter with 31% revenue growth

Symantec, the world leader in Internet security, today reported results for the fiscal third quarter ended 2 January 2004. Symantec posted revenue for the quarter of $494 million, a 31% increase compared to $376 million for the same quarter last year, driven by solid enterprise security revenues and stronger than expected consumer results.

GAAP results: Net income for the fiscal third quarter was $111 million, compared to $72 million for the same quarter last year. Earnings per share was $0.32, compared to earnings per share of $0.22 for the year-ago quarter.

Non-GAAP results: Non-GAAP net income for the fiscal third quarter was $120 million, compared to $77 million for the same quarter last year. Non-GAAP earnings per share was $0.34, compared to earnings per share of $0.24 for the year-ago quarter. Non-GAAP results and related reconciliation, as outlined in the attached consolidated statements, exclude expenses from the amortisation of other intangibles from acquisitions, acquired in-process research and development, and restructuring charges as well as related income tax benefits. See "Use of non-GAAP financial information" below.

"We closed a record number of large enterprise deals during the quarter and the consumer segment turned in a phenomenal performance," said John W Thompson, Symantec chairman and CEO. "Our focus on helping customers secure and manage their IT infrastructure continues to gain traction as more and more customers turn to Symantec to solve the challenge of managing their complex environments."

For the quarter, Symantec's worldwide enterprise business, including enterprise security, enterprise administration, and services, represented 51% of total revenue. Symantec's enterprise security business represented 38% of total revenue and grew 17% year-over-year; the enterprise administration business represented 11% of revenues and grew 2% compared to the same quarter last year; and the services business grew 42% and represented 2% of total revenue. Symantec's consumer business grew 55% and represented 49% of total revenue.

International revenues represented 54% of total revenue in the third quarter and grew 40% over the same quarter last year. Canada led the increase for the quarter with 47% growth, followed by the Europe, Middle East and Africa region with 45% growth. Japan recorded 36% year-over-year growth, Asia Pacific recorded 24% growth and Latin America grew by 11%. The US grew 22%.

Forward-looking guidance for the fiscal fourth quarter ending 2 April 2004, is as follows:

* Revenue is expected to be in the range of $500 million to $520 million.

* GAAP earnings per share is expected to be $0.30 at the midpoint of revenue guidance.

* Non-GAAP earnings per share is expected to be $0.32 at the midpoint of revenue guidance.

Forward-looking guidance for the fiscal year, ending 2 April 2004, updated to reflect the fiscal year-to-date actual performance and estimated results for the fiscal fourth quarter is as follows:

* Revenue is expected to be approximately $1.82 billion.

* GAAP earnings per share is expected to be $1.03 at the stated revenue forecast, up 8c from our previous guidance of $0.95 per share.

* Non-GAAP earning per share is expected to be $1.14 at the stated revenue forecast, up 9c from previous guidance of $1.05 per share.

Non-GAAP earnings per share excludes the pre-tax amortisation of other intangibles from acquisitions, acquired in-process research and development, and other items such as patent settlement and restructuring charges of approximately $11 million and $59 million for the quarter ending 2 April 2004, and the fiscal year ending 2 April 2004.

Symantec is initiating forward-looking guidance for fiscal year 2005 ending 1 April 2005. It should be noted that the outlook does include forecasted results from our announced acquisition of ON Technology, which is expected to close in mid-February. In addition, our outlook assumes no significant changes in the current economic or competitive climates over the course of the next 15 months as compared to what we are experiencing today. Guidance is as follows:

* Revenue is estimated to be in the range of $2.15 billion to $2.20 billion. Symantec expects about 47% of the revenue to occur in the first half of the fiscal year.

* GAAP earnings per share is expected to be $1.21 at the midpoint of the stated revenue forecast.

* Non-GAAP earnings per share is expected to be $1.31 at the midpoint of the stated revenue forecast.

* Gross margin is forecasted to average 84.7% for the full year.

* Operating income as a percent of revenue is estimated at 32% for the full year.

* Common Stock Equivalents (CSEs) are expected to grow by less than 2% over the next year.

Non-GAAP earnings per share excludes the pre-tax amortisation of other intangibles from acquisitions, acquired in-process research and development, and other items such as restructuring charges of approximately $45 million for the fiscal year ending 1 April 2005.

* Symantec signed 278 contracts worldwide worth more than $100 000 each, including 87 worth more than $300 000 and 13 worth more than $1 million each, during the quarter.

* Symantec signed new or extended agreements with customers including the US Air Force; H&R Block Inc; CIGNA Corporation, one of the largest investor-owned employee benefits organisations in the US; Nicor Gas Company, one of the nation's largest gas distribution companies; Graybar Electric Company Inc, the nation's leading distributor of communications and electrical products and related supply chain management and logistics services; PNC Financial Services Group Inc; UnumProvident Corporation, the largest provider of group and individual disability income protection insurance in the US and UK; Spherion Corporation, a provider of recruitment, technology and outsourcing services; Hercules Incorporated, a global manufacturer of chemical specialties used in making a variety of products for home, office and industrial markets; Zurich Financial Services; and Development Bank of Singapore, the largest bank in Singapore.

* During the quarter, Symantec released Symantec Enterprise Security Manager (ESM) 6.0, an industry-leading policy compliance solution. With outstanding performance and scalability, Symantec ESM provides centralised, automated and comprehensive security analysis of organisations' critical business applications and operating systems.

* Symantec announced an enhanced iForce Intrusion Detection (IDS) Appliance, powered by Sun and Symantec. A complete high-speed network intrusion detection appliance, the solution combines Symantec ManHunt 3.0 with Sun's Fire V60x server and provides flexible deployment options by monitoring up to 2Gbps.

* In addition, Symantec announced its client compliancy initiative designed to promote the enforcement of remote and mobile client security policies. As part of the initiative Symantec introduced its new client compliancy application program interface (API), which provides IT administrators the ability to block access to an organisation's network when a computer's security level does not meet the requirements defined by the organisation's security policies.