Symantec Corp. (SYMC, Financial) filed Quarterly Report for the period ended 2009-01-02.
Symantec a world leader in Internet security technology provides a broad range of content security solutions to individuals and companies. The company is a leading provider of anti-virus protection Internet content and e-mail filtering and mobile code detection technologies to enterprise customers. Symantec Corp. has a market cap of $12.82 billion; its shares were traded at around $15.64 with a P/E ratio of 10.7 and P/S ratio of 2.18. Symantec Corp. had an annual average earning growth of 20.6% over the past 10 years. GuruFocus rated Symantec Corp. the business predictability rank of 3-star.
Fluctuations in the U.S. dollar compared to foreign currencies negatively impacted our international revenue by approximately $56 million during the three months ended January 2, 2009 and positively impacted our international revenue by $98 million during the nine months ended January 2, 2009, in each case as compared to the same period last year. We are unable to predict the extent to which revenues in future periods will be impacted by changes in foreign currency exchange rates. If our level of international sales and expenses increase in the future, changes in foreign exchange rates may have a potentially greater impact on our revenues and operating results.
In July 2008, we reached an agreement with the Internal Revenue Service (IRS) concerning our eligibility to claim a lower tax rate on a distribution made from a Veritas foreign subsidiary prior to the July 2005 acquisition. The distribution was intended to be made pursuant to the American Jobs Creation Act of 2004, and therefore eligible for a 5.25% effective U.S. federal rate of tax, in lieu of the 35% statutory rate. The final impact of this agreement is not yet known since this relates to the taxability of earnings that are otherwise the subject of the tax years 2000-2001 transfer pricing dispute which in turn is being addressed in the U.S. Tax Court. To the extent that we owe taxes as a result of the transfer pricing dispute, we anticipate that the incremental tax due from this negotiated agreement will decrease. We currently estimate that the most probable outcome from this negotiated agreement will be $13 million or less, for which an accrual has already been made. As previously disclosed in Form 10-K for the fiscal year ended March 28, 2008, we made a payment of $130 million to the IRS for this matter in May 2006. We applied $110 million of this payment as a deposit on the outstanding transfer pricing matter for the tax years 2000-2001.
As of January 2, 2009, our financial instruments measured at fair value on a recurring basis included $390 million of assets. Our cash equivalents, which primarily consist of money market funds and bank securities total $300 million which is 77% of our total financial instruments measured at fair value on a recurring basis.
As of January 2, 2009, $123 million were classified as Level 2, $36 million and $50 million (22% together of total financial instruments fair valued on a recurring basis) of which represent investments in bank securities and government notes, respectively. These were classified as Level 2 because their valuations were based on pricing models with all significant inputs derived from or corroborated by observable market prices for identical securities in markets with insufficient volume or infrequent transactions (less active markets). Level 2 inputs also generally include non-binding market consensus prices that are corroborated by observable market data; quoted prices for similar instruments; model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities or quoted prices for similar assets or liabilities. The level of judgment and subjectivity involved with Level 2 instruments generally includes:
Content, subscriptions, and maintenance revenues increased for the three and nine months ended January 2, 2009 as compared to the same periods last year primarily due to an increase in revenue from the Storage and Server Management and Services segments. For the three and nine months ended January 2, 2009, Storage and Server Management increased by $29 million and $135 million, respectively, and Services increased by $22 million and $87 million, respectively. The increase in these two segments revenue is largely attributable to demand for our Storage and Server Management products and consulting services as a result of increased demand for security and storage solutions. This increased demand was driven by the proliferation of structured and unstructured data, and increasing sales of services in conjunction with our license sales as a result of our focus on offering our customers a more comprehensive IT solution. Furthermore, growth in our customer base through acquisitions and new license sales results in an increase to Content, subscriptions, and maintenance revenues because a large amount of our customers renew their annual maintenance contracts. Content, subscriptions, and maintenance revenues from our Consumer Products and Security and Compliance segments decreased by approximately $12 million and $9 million, respectively, for the three months ended January 2, 2009 and increased by approximately $33 million and $43 million, respectively, during the nine months ended January 2, 2009.
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Symantec a world leader in Internet security technology provides a broad range of content security solutions to individuals and companies. The company is a leading provider of anti-virus protection Internet content and e-mail filtering and mobile code detection technologies to enterprise customers. Symantec Corp. has a market cap of $12.82 billion; its shares were traded at around $15.64 with a P/E ratio of 10.7 and P/S ratio of 2.18. Symantec Corp. had an annual average earning growth of 20.6% over the past 10 years. GuruFocus rated Symantec Corp. the business predictability rank of 3-star.
Highlight of Business Operations:
Our net loss was $6.8 billion and $6.5 billion, for the three and nine months ended January 2, 2009, respectively, as compared to our net income of $132 million and $277 million for the three and nine months ended December 28, 2007, respectively. The lower net income for fiscal 2009 periods as compared to the same periods last year was primarily due to a non-cash impairment charge related to goodwill of approximately $7 billion.Fluctuations in the U.S. dollar compared to foreign currencies negatively impacted our international revenue by approximately $56 million during the three months ended January 2, 2009 and positively impacted our international revenue by $98 million during the nine months ended January 2, 2009, in each case as compared to the same period last year. We are unable to predict the extent to which revenues in future periods will be impacted by changes in foreign currency exchange rates. If our level of international sales and expenses increase in the future, changes in foreign exchange rates may have a potentially greater impact on our revenues and operating results.
In July 2008, we reached an agreement with the Internal Revenue Service (IRS) concerning our eligibility to claim a lower tax rate on a distribution made from a Veritas foreign subsidiary prior to the July 2005 acquisition. The distribution was intended to be made pursuant to the American Jobs Creation Act of 2004, and therefore eligible for a 5.25% effective U.S. federal rate of tax, in lieu of the 35% statutory rate. The final impact of this agreement is not yet known since this relates to the taxability of earnings that are otherwise the subject of the tax years 2000-2001 transfer pricing dispute which in turn is being addressed in the U.S. Tax Court. To the extent that we owe taxes as a result of the transfer pricing dispute, we anticipate that the incremental tax due from this negotiated agreement will decrease. We currently estimate that the most probable outcome from this negotiated agreement will be $13 million or less, for which an accrual has already been made. As previously disclosed in Form 10-K for the fiscal year ended March 28, 2008, we made a payment of $130 million to the IRS for this matter in May 2006. We applied $110 million of this payment as a deposit on the outstanding transfer pricing matter for the tax years 2000-2001.
As of January 2, 2009, our financial instruments measured at fair value on a recurring basis included $390 million of assets. Our cash equivalents, which primarily consist of money market funds and bank securities total $300 million which is 77% of our total financial instruments measured at fair value on a recurring basis.
As of January 2, 2009, $123 million were classified as Level 2, $36 million and $50 million (22% together of total financial instruments fair valued on a recurring basis) of which represent investments in bank securities and government notes, respectively. These were classified as Level 2 because their valuations were based on pricing models with all significant inputs derived from or corroborated by observable market prices for identical securities in markets with insufficient volume or infrequent transactions (less active markets). Level 2 inputs also generally include non-binding market consensus prices that are corroborated by observable market data; quoted prices for similar instruments; model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities or quoted prices for similar assets or liabilities. The level of judgment and subjectivity involved with Level 2 instruments generally includes:
Content, subscriptions, and maintenance revenues increased for the three and nine months ended January 2, 2009 as compared to the same periods last year primarily due to an increase in revenue from the Storage and Server Management and Services segments. For the three and nine months ended January 2, 2009, Storage and Server Management increased by $29 million and $135 million, respectively, and Services increased by $22 million and $87 million, respectively. The increase in these two segments revenue is largely attributable to demand for our Storage and Server Management products and consulting services as a result of increased demand for security and storage solutions. This increased demand was driven by the proliferation of structured and unstructured data, and increasing sales of services in conjunction with our license sales as a result of our focus on offering our customers a more comprehensive IT solution. Furthermore, growth in our customer base through acquisitions and new license sales results in an increase to Content, subscriptions, and maintenance revenues because a large amount of our customers renew their annual maintenance contracts. Content, subscriptions, and maintenance revenues from our Consumer Products and Security and Compliance segments decreased by approximately $12 million and $9 million, respectively, for the three months ended January 2, 2009 and increased by approximately $33 million and $43 million, respectively, during the nine months ended January 2, 2009.
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