Symantec Corporation (SYMC)

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Symantec Corp. (SYMC)

F1Q10 (Qtr End 07/03/09) Earnings Call

July 29, 2009 5:00 pm ET


Helyn Corcos - VP IR

Enrique Salem - President and CEO

James Beer - CFO


Todd Raker - Deutsche Bank

Sarah Friar - Goldman Sachs

Kash Rangan - Merrill Lynch

John Difucci - JPMorgan

Philip Winslow - Credit Suisse

Rob Owens - Pacific Crest Securities

Brent Thill - Citigroup

Adam Holt - Morgan Stanley

Walter Pritchard - Cowen & Company

Aaron Schwartz - Ladenburg Thalmann

Brian Freed - Morgan Keegan

Michael Turits - Raymond James

Daniel Ives - Freedman Billings Ramsey

Steve Ashley - Robert W. Baird

Tim Klasell - Thomas Weisel Partners



Good day and welcome to Symantec's first quarter 2010 Earnings Call. Today's call is being recorded. At this time I would like to turn the conference over to Ms. Helyn Corcos, Vice President of Investor Relations. Please go ahead madam.

Helyn Corcos

Thank you Tom. Good afternoon and thank you for joining our call to discuss fiscal first quarter 2010 financial results. With me today are Enrique Salem, Symantec's President and CEO, and James Beer, Symantec's Executive Vice President and CFO.

In a moment, I will turn the call over to Enrique. He will start with a few comments about our quarterly activities and results, then James will provide financial and operational details, as well as discuss our guidance as outlined in the press release. Then will be followed by a question and answer session.

Today's call is being recorded, and will be available for replay on Symantec's Investor Relations website. A copy of today's press release and supplemental financial information are available on our website and a copy of today's prepared remarks will be available on the Investor Relations website shortly after the call is completed.

Before we begin, I’d like to remind you that our June 2008 period results included 14 weeks of activity versus the normal 13 weeks of the June 2009 quarter has. We outline the specific financial details of the extra week for you in our press release and supplemental information. Let me briefly review this with you.

Non-GAAP revenue for the June 2008 quarter included approximately $75.0 million of a one-time benefit and non-GAAP earnings per share included approximately $0.03 of a one-time benefit generated from the extra week. Non-GAAP deferred revenue included a one-time negative impact of approximately $5.0 million from the extra week. We will exclude the impact of the extra week when comparing our June, 2009 guidance and results to the June 2008 results.

Next, we will review our non-GAAP financial results focusing on constant currency growth rates, unless otherwise stated. For the March 2009 quarter, the actual weighted average exchange rate was $1.37 per euro and the end of period rate was $1.40 per euro, compared to our guided rates of $1.30 per euro. For the 2008 quarter, the actual weighted average rate was $1.56 per euro and the end of period rate was $1.58 per euro.

For revenue and operating expense purposes, current and comparative prior period results for entities reporting in currencies other than the U.S. dollar are converted into U.S. dollars at actual exchange rates in effect during the respective prior periods.

For deferred revenue, results are converted into U.S. dollars at the actual exchange rate in effect at the end of the prior period. We have included a summary and reconciliation of the year-over-year growth rates in our press release tables and in our supplemental information available on the website.

Given the rapidly fluctuating exchange rate environment, I’d like to remind everyone to apply the rules of thumb provided as a guide to estimating the impact of currency fluctuations on our financial metrics. It's important to note however, that these rules of thumb will move around based on the actual currency fluctuations and the mix of our revenue and expenses.

Although the divergent currency moves in the yen and the British pound versus the euro impacted revenue and expenses during the June, 2009 period, we are not making adjustments to our rule of thumb at this point. We will evaluate the fluctuations during the September period and provide an update next quarter.

Moving on, some of the information discussed on this call, including our projections regarding revenue, operating results, deferred revenue, cash flow from operations, amortization of acquisition-related intangibles, and stock-based compensation for the coming quarter contains forward-looking statements.

These statements involve risks and uncertainties that may cause actual results to differ materials from those set forth in the statement. Additional information concerning these risks and uncertainties can be found in the company's most recent periodic reports filed with the U.S. Securities & Exchange Commission.

Symantec assumes no obligation to update any forward-looking statements. In addition to reporting financial results in accordance with generally accepted accounting principles or GAAP, Symantec reports non-GAAP financial results. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to the most directly comparable GAAP results, which can be found on the press release and on our website. And now, I'd like to introduce our CEO, Mr. Enrique Salem.

Enrique Salem

Thank you, Helyn and good afternoon, everyone. Our ongoing focus on expense management resulted in earnings per share within our guided range. However, as of some our enterprise customers focused their spending on shorter term contracts, this resulted in reduced new license revenue in the period.

Therefore, we ended our first quarter with lighter than expected revenue, but with a stronger deferred revenue balance. Deferred revenue remains strong as customers continued to renew their maintenance contracts. During the quarter, we focused on a small number of priorities and we laid the ground work to drive improved execution during the second half of the fiscal year.

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