2. THREE YEAR SUMMARY
Fiscal Year Ended
2005 2004 2003
(in millions, except per share amounts)
Reconciliation of Non-GAAP to GAAP Results*:
Revenues $ 2,583 $ 1,870 $ 1,407
Non-GAAP Gross Margin $ 2,180 $ 1,584 $ 1,186
Cost of revenues: amortization of acquired product rights $ (49) $ (41) $ (29)
GAAP Gross Margin $ 2,131 $ 1,543 $ 1,157
Non-GAAP Operating Expenses $ 1,292 $ 1,007 $ 796
Amortization of other intangibles from acquisitions $ 5 $ 3 $ 3
Amortization of deferred stock-based compensation $ 5 – –
Acquired in-process research and development $ 3 $ 4 $ 5
Restructuring $ 3 $ 1 $ 11
Patent settlement – $ 14 –
Integration costs $ 3 – –
GAAP Operating Expenses $ 1,311 $ 1,029 $ 815
Non-GAAP Net Income $ 634 $ 411 $ 280
Cost of revenues $ (49) $ (41) $ (29)
Operating expenses $ (20) $ (21) $ (19)
Income tax benefit $ 25 $ 22 $ 16
Tax charge on cash repatriation $ (54) – –
GAAP Net Income $ 536 $ 371 $ 248
GAAP Net Income per Share – Diluted $ 0.74 $ 0.54 $ 0.38
Non-GAAP Net Income per Share – Diluted $ 0.87 $ 0.59 $ 0.43
Other Information:
Cash Flow from Operating Activities $ 1,207 $ 903 $ 599
Total Assets $ 5,614 $ 4,456 $ 3,266
Stockholders’ Equity $ 3,705 $ 2,426 $ 1,764
Total Employees 6,395 5,300 4,344
*In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Symantec reports non-GAAP financial results. Non-GAAP net
income per share exclude amortization of acquisition-related intangibles, amortization of deferred stock-based compensation, in-process research and development,
and certain other identified charges, such as restructuring, patent settlement, and integration planning expenses associated with the VERITAS merger, as well as the tax ef-
fect of these items, and the one-time tax effect associated with the company’s cash repatriation under the American Jobs Creation Act. Symantec’s management believes these
non-GAAP measures are useful to investors because they provide supplemental information that facilitates comparisons to prior periods. Management uses these non-GAAP
measures to evaluate the Company’s financial results, develop budgets, and manage expenditures. The calculations Symantec uses to produce non-GAAP results are not in
accordance with GAAP, are likely to differ from the methods used by other companies, and should not be regarded as a replacement for corresponding GAAP measures. Investors
are encouraged to review the reconciliation of these non-GAAP financial measures to the comparable GAAP results, which can be found in our earnings press releases, investor
presentations, and on the investor relations Web site at www.symantec.com/invest.
3. FINANCIAL HIGHLIGHTS
ABOUT SYMANTEC
SYMANTEC IS THE WORLD
38% GROWTH $2.58 BILLION
LEADER IN PR OVIDING
IN REVENUE IN REVENUE
SOLUTIONS TO HELP INDIVIDUALS
R E V E N U E * (millions) N E T I N C O M E * (millions)
$634
AND ENTERPRISES ASSURE
$2,583 $536
THE SECURITY, AVAILABILITY,
$411
$371
$1,870
AND INTEGRIT Y OF THEIR $280
$1,407
$248
INFORMATION. HEADQUARTERED
IN CUPERTINO, CALIFORNIA ,
2005
2003 2004
2005
2003 2004
NON-GAAP
GAAP NON-GAAP
GAAP
SYMANTEC HAS OPERATIONS
IN MORE THAN 40 COUNTRIES.
D E F E R R E D R E V E N U E (millions)
EARNINGS PER DILUTED SHARE
$0.87
MORE INFORMATION IS AVAILABLE
$1,330
$0.74
AT W W W.SYMANTEC.COM. $0.59
$0.54
$971
$0.43
$0.38
$590
2005 2005
2003 2004 2003 2004
NON-GAAP
GAAP
*Non-GAAP results are reconciled to GAAP results on the inside front cover.
SYMANTEC 2005 ANNUAL REPORT 1
5. LETTER TO OUR SHAREHOLDERS
Dear Shareholders,
Fiscal 2005 was another tremendous year for almost $2.6 billion in fiscal 2005, and produced
record earnings. Non-GAAP1 earnings per share grew
Symantec. We continued to execute our core
strategy: ensuring information integrity across 47% to $0.87 per share. Our deferred revenue for
a broad range of environments. We integrated five the fiscal year grew nearly $360 million, an increase
acquisitions and grew our business organically of 37%, and we ended the year with $3.2 billion in
by launching powerful new products and services. cash and short-term investments. As we move into
And, we announced our intent to merge with fiscal 2006, our overall financial health has never
VERITAS. We believe combining the leaders of been stronger.
security and storage management will position
Our tenacious commitment to customer-driven
Symantec to help our customers build a resilient
solutions fueled results that surpassed our expecta-
infrastructure, manage complex network environ-
tions. During fiscal 2005, we booked almost 1,350
ments, and reduce risk.
enterprise deals greater than $100,000—that’s 64%
Evolving Security Threat Environment more than we booked in fiscal 2004. The number
Today’s evolving security threat environment is as of million-dollar deals increased 85%. Our strategy
dangerous as it has ever been. Symantec’s Internet of providing customers with a breadth and depth
Security Threat Report—the most comprehensive of integrated security and availability products has
gauge of the cyberthreat landscape—found that been instrumental to these successes.
malicious code that exposed confidential informa-
Boosting Consumer Confidence in a World
tion made up 54% of the samples in the past six
of Increasing Risk
months, up 10% from the previous six months.
The Consumer segment was the star performer
We documented about 1,400 new vulnerabilities,
again this year, growing 51% to $1.3 billion in
Our global sales team produced another year of
remarkable results generating double-digit revenue
growth in all major geographies.
or gaps in programming code, that attackers can revenue. We shipped almost 26 million packaged
exploit. That’s an astounding 58 new vulnerabilities products in addition to the tens of millions of
every week. The majority of them were of moderate electronic transactions we conducted with customers
or high severity and almost half of them occurred around the world.
in Web applications. With our breadth of offerings
Over the past 20 years, Symantec has built an extensive
and track record of success, we believe no company
network of channel partners providing us with
is better positioned than Symantec to protect
the broadest customer reach of any company in the
enterprises and individuals against these threats.
industry. Sales of our integrated product suite, Norton
Another Year of Record Financial Performance Internet Security, grew nearly 100%—evidence that
™
Our global sales team produced another year of consumers are gravitating towards integrated, multi-
remarkable results generating double-digit revenue function security solutions. There is no doubt that
growth in all major geographies. Following a very the Norton brand provides our customers—hundreds
strong fiscal 2004, Symantec grew revenue 38% to of millions of PC users worldwide—confidence so
Non-GAAP results are reconciled to GAAP results on the inside front cover.
1
SYMANTEC 2005 ANNUAL REPORT 3
6. they can live, learn, create, and play in a connected acquisitions of LIRIC and @Stake. We expanded our
world. We are more committed than ever to Managed Security Service to support even more
strengthening our Norton brand with consumers security devices. Recently we launched the Symantec
around the world. Systems Continuity Service, which identifies secu-
rity, network, and storage risks. Our consultants
Helping Enterprises Build a Resilient provide detailed action plans and policy recommen-
Infrastructure dations helping customers to rapidly recover from
Our presence in the corporate world is equally strong—
unforeseen systems attacks while maintaining
our enterprise revenue grew 27% to $1.3 billion in
continuous availability.
fiscal 2005. Enterprise customers chose Symantec
The Next Step: Solving Business Problems
products and services to secure and manage their
IT infrastructures and ensure compliance with In today’s digitally connected world, there are few
evolving regulatory requirements. challenges more significant than protecting and
We must deliver security and availability solutions that
address complexity, cost, and compliance issues across
our customers’ entire network environment.
Our enterprise security segment remains the efficiently managing information. Information
largest enterprise group, growing 26% during the is nothing less than the lifeblood of customers’
year. Enterprise antivirus solutions continued operations—even the global economy. Information
to be the most significant contributor to the mix. is under increasing attack and its integrity is being
Through last year’s acquisition of Brightmail, we compromised—not just from worms, viruses, and
added market-leading antispam solutions to our hackers, but also from an array of new cyberthreats
integrated security offerings and we recently added including spam, spyware, and phishing. We must
antispyware technology to our offerings. In addition, protect information differently. It is not enough to
our unique products, such as Symantec Enterprise make information secure, we also need to ensure
Security Manager, are gaining momentum as companies that information is always available. Information is
™
in highly regulated industries, like financial services the currency of our age, and as such, it is invaluable.
and health care, turn to Symantec for help in meeting Unlike a disk, server, or laptop, information is
evolving regulatory compliance requirements. not replaceable.
In the past 18 months, our Enterprise Administration Today’s dynamic businesses are challenged to find
team integrated the advanced technology capabilities ways to secure the gathering, dissemination, and
we acquired from PowerQuest and ON Technology to storage of information, optimize its performance
create the LiveState™ Recovery platform, which helps and make it available—with less money, fewer
companies get their systems back up and running people, and fewer resources. Companies must do
after a disaster. This successful integration further this while finding ways to standardize and balance
strengthens our proven track record of taking new the complexity associated with managing the flow
technologies and teams and weaving them into the of information and regulatory compliance.
fabric of Symantec to create even more compelling
From our beginnings in the content security business
customer offerings. The Enterprise Administration
to our introduction of the industry’s first integrated
segment grew 29% in fiscal 2005.
security appliance, we have provided customers
Our Services segment posted growth of 35% during with innovative and effective solutions to real-world
the year, propelled by contributions from our security challenges.
SYMANTEC 2005 ANNUAL REPORT
4
8. Looking forward, data security and availability must The combination of Symantec and VERITAS creates
be intertwined. Together, security and availability a software company of significant scale and global
solutions need to address the complexity, cost, and reach. Independently, each company is a category
compliance issues that customers’ face. Solutions leader. Together the combined company will
must deliver integrated infrastructure management, be uniquely positioned to not only extend those
not just integrated security. Importantly, these leadership positions, but also to define new
solutions must be available across a wide range of markets and bring together security and storage
network environments. in new and compelling ways.
Today, we offer systems and disaster recovery and Immediately following the completion of the merger,
patch management solutions predominately in our customers can expect to see product solutions
the Windows environment. However, in order to and general product interoperability in three areas:
better serve large enterprise customers, we are resilient infrastructure, email management, and
working to provide a truly integrated infrastructure regulatory compliance. Within six to 12 months, we’ll
management solution across all platforms. have a common user interface and common licensing.
Then, we’ll get into deeper integration, with new
A Merger of Leaders functionality based on combined features and a
It was out of this desire to fulfill customer needs
common architecture. To be sure, the combined
that the merger with VERITAS was born. This
company will draw from the best practices of
merger marries the market leaders in security and
both Symantec and VERITAS.
storage. Symantec provides the broadest security
Building a Global Leader
solutions and the addition of VERITAS brings
a wide range of availability offerings. The combined While significant challenges lie ahead, we believe
company will help customers bounce back from that by building on the combined strengths of
disruptions when they occur and continuously Symantec and VERITAS, no other company is more
optimize performance. strongly positioned. And, no team is more excited
about the prospects and possibilities.
We believe we have the depth and breath in our
solution portfolio and the talent on our team to
engage with customers and win. The successes of the
past 12 months, and the excitement we see as our
team plans for the coming year and beyond, gives us
confidence we can execute on our plans and succeed.
On behalf of the board, we want to acknowledge the
tremendous efforts of our employees and partners
around the world and thank our customers for
another stellar year of growth. And, we would like
to thank our investors for their continued faith and
confidence in our ability to lead Symantec into a new
era. We look forward to 2006 with immense optimism.
Sincerely,
John W. Thompson
Chairman of the Board and
Chief Executive Officer
SYMANTEC 2005 ANNUAL REPORT
3
9. FINANCIAL INFORMATION
10-K FORM
FORWARD-LOOKING STATEMENT
This annual report may be deemed to contain forward-looking statements, including statements regarding our market opportunity, forecasts of market growth, future revenue, benefits
of the merger with VERITAS, expectations that the merger will be accretive to Symantec’s results, market trends such as convergence into integrated infrastructure management,
and other matters that involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to differ
materially from results expressed or implied by this annual report. Such risk factors include, among others: the sustainability of recent growth rates, particularly in consumer products;
difficulties encountered in integrating merged businesses; whether certain market segments grow as anticipated; the positioning of Symantec’s products in those segments; general
market conditions; the competitive environment in the software industry, including consolidation and new market entrants, and competitive responses to the merger with VERITAS;
and whether the companies can successfully develop new products and the degree to which these products gain market acceptance. Additional information concerning these and
other risk factors is contained in the Business Risk Factors section of Symantec’s previously filed Form 10-K, for the year ended April 1, 2005. Symantec assumes no obligation to
update any forward-looking information contained in this annual report.
SYMANTEC 2005 ANNUAL REPORT SYMANTEC 2005 ANNUAL REPORT
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