Symantec 2007 Annual Report Download - page 2

TWO YEAR SUMMARY OF FINANCIAL RESULTS
RECONCILIATION OF GAAP TO NON-GAAP FINANCIALS
($ in millions, except per share amounts) 2007 2006
Fiscal Year
Revenue
GAAP Revenue $5,199 $4,143
Veritas revenue — 559
Fair value adjustment to Veritas deferred revenue 53 302
Non-GAAP Revenue $5,253 $5,004
Gross Profit
GAAP Gross Profit $3,984 $3,162
Veritas gross profit — 398
Fair value adjustment to Veritas deferred revenue 53 302
Integration planning — 1
Amortization of acquired product rights 342 386
Amortization of deferred stock-based compensation 16 1
Non-GAAP Gross Profit $4,396 $4,250
Operating Expenses
GAAP Operating Expenses $3,464 $2,888
Veritas operating expenses — 400
Amortization of other intangible assets (202) (196)
Amortization of deferred stock-based compensation (137) (43)
Acquired in-process research and development — (285)
Restructuring (70) (25)
Integration planning (1) (27)
Patent settlement — (2)
Proposed SEC legal settlement — (30)
Executive incentive bonuses (4) (10)
Non-GAAP Operating Expenses $3,050 $2,670
Net Income
GAAP Net Income $ 404 $ 157
Gross margin adjustment 412 1,089
Operating expenses adjustment 414 218
Veritas other income and tax — (12)
Gain on strategic investments — (1)
Gain on sale of building (20)
Income tax provision (218) (306)
Non-GAAP Net Income $ 992 $1,145
Earnings Per Share
GAAP Earnings Per Share — diluted $ 0.41 $ 0.15
Non-GAAP adjustments per share — diluted 0.60 0.85
Non-GAAP Earnings Per Share — diluted $ 1.01 $ 1.00
Deferred Revenue
GAAP Deferred Revenue $2,754 $2,163
Fair value adjustment to Veritas deferred revenue 18 58
Non-GAAP Deferred Revenue 2,772 2,221
SAB 108 Adjustment — 100
Non-GAAP Deferred Revenue adjusted for SAB 108 $2,772 $2,321
The non-GAAP information reflects the com-
bined results of Symantec and Veritas Soft-
ware, including adjustments based on the fair
values of assets acquired and liabilities
assumed by Symantec as of the actual acqui-
sition date of July 2, 2005. For comparative
purposes, the information presented assumes
that the acquisition took place on April 1, 2004.
Symantec’s fiscal years ended March 31st
whereas Veritas’ fiscal years ended Decem-
ber 31st. The 2006 fiscal amounts combine
Symantec’s 2006 fiscal results with Veritas’
historical results for the three months ended
March 31, 2005. Additional non-GAAP adjust-
ments consist of: non-cash charges related to
acquisitions, such as the amortization of intan-
gibles and stock-based compensation
expense, and the write-off of in-process
research and development; restructuring
charges; integration planning costs; and the
impact of other special items, such as other
stock-based compensation expense, litigation
matters, gain/loss on investments and related
adjustments to the provision for income taxes,
on our operating results.
These non-GAAP financial measures are not
prepared in accordance with generally
accepted accounting principles and may be
different from non-GAAP financial measures
used by other companies. Non-GAAP financial
measures should not be considered a substi-
tute for, or superior to, measures of financial
performance prepared in accordance with
GAAP.
Symantec adopted Staff Accounting Bulle-
tin 108, “Considering the Effects of Prior Year
Misstatements when Quantifying Misstate-
ments in Current Year Financial Statements,”
during the March quarter. As such, our GAAP
and non-GAAP results for the fiscal year 2007
include the adoption of SAB 108. We believe
the resulting changes to the previously
reported amounts to the fiscal year are imma-
terial. The GAAP SAB 108 adjustment was
applied on April 1, 2006. We believe that
providing a non-GAAP deferred revenue bal-
ance as of March 31, 2006 that is adjusted for
SAB 108 allows comparison of our deferred
revenue balance on a consistent basis.