Symantec Joint Venture Sell Announcement November 14, 2011 1 Introduction - Helyn Corcos, Vice President Investor Relations, Symantec Thank you for joining us to discuss Symantec’s planned sale of our 49% stake in the Huawei Symantec joint venture. With me on today’s call 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 who will discuss the goals we’ve achieved with the joint venture and the rationale for selling our stake. James will then provide a summary of the financial details for this transaction. This 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. The press release is currently available on our website. A copy of today’s prepared remarks will be posted shortly after the call is completed. Before we begin, I would like to remind everyone that the information discussed on this call contains forward-looking statements that involve risks and uncertainty, including expectations regarding the closing of this transaction. These statements are based on current expectations and actual results may differ materially from those set forth during today’s call. Additional information concerning factors that may cause actual results to differ can be found in Symantec’s filings with the U.S. Securities and Exchange Commission. It’s now my pleasure to introduce our President and CEO Enrique Salem. Enrique Salem, President and CEO Thank you, Helyn, and welcome everyone. Four years ago, we established the Huawei Symantec joint venture for three specific reasons. First, to gain expertise in building and selling appliances. Second, to increase penetration in the China market. And third, to move closer to the networking side of the telecommunications segment. I’m pleased to say that we have achieved all of our objectives and believe this is the right time to sell our stake in the joint venture. We will be exiting the joint venture with a growing appliance business, increased penetration in China, a better understanding of the networking side of the telco segment, and a good return on our investment. Now, let’s take a closer look at our achievements. Our dedicated sales and development teams combined with the experience gained from the joint venture have made significant progress in growing our own appliance business. As you know, appliances are just another way for customers to deploy our market leading security and storage technologies. I’d like to take a minute to review what we’ve accomplished over the past 18 months. Our NetBackup appliances have seen increased adoption by customers who are looking for an integrated backup and deduplication offering that is easy to deploy, scalable and reduces total cost of ownership. In the past six months alone, we’ve sold more than double the number of units sold in all of last year.Symantec Joint Venture Sell Announcement November 14, 2011 2 We also recently launched our Backup Exec appliance targeted to medium-sized companies. This offering, like our NetBackup appliances, is enabled with our unique V-Ray technology that provides customers with greater visibility into their physical and virtual environments within a single backup solution. The Backup Exec appliance also includes Symantec Critical System Protection for total virus and malware security protection. Our sales team has been selling these appliances into their accounts for a number of months now and we look forward to continued growth in this new area of our business. The joint venture also extended our strategic commitment to the China market. Today, China is one of our fastest growing markets with strong growth in the enterprise security and storage businesses. Over the past three years, China grew 46%, and accounted for 16% of our Asia Pacific and Japan business in fiscal year 2011. With more than 900 Symantec employees in China, we continue to develop a very strong business in this key market, with a growing sales force, two R&D sites in Beijing and Chengdu, and a China Security Response Center that supports a broad range of users in the Greater China region. We remain completely committed to the China market and will continue to devote resources and focus to this high growth market. As we began the joint venture, we were also interested in gaining additional relationships on the networking side of the telecommunications segment as well as strengthening our relationships with infrastructure providers. As telcos and carriers have evolved with the adoption of cloud computing, we have gained a deeper understanding of their roles as a service provider to both governments and enterprise customers. While we currently supply security and storage to some of these telecommunications vendors, we are now partnering more closely with many of these telcos and carriers in order to expand their product and service offerings as well as our own. Now, I’d like to discuss the rationale for selling our share of the joint venture. After careful evaluation of all the available options, we concluded that selling our stake in the joint venture was the best outcome for our shareholders and customers. Both Symantec and Huawei mutually agreed that the next stage of growth for the joint venture would benefit from the direction of a single owner. In addition, it was very clear to us that other strategic alternatives had higher risks associated with them. In conclusion, our investment in the joint venture has proven to be a good strategic and financial investment for Symantec. I’m pleased with the progress we’ve made in our appliances business, the inroads we’ve made in the China market, and the ROI achieved on our original investment. Now, I will turn the call over to James to discuss the financials. James Beer, EVP and CEO Thank you, Enrique. We have elected to sell our share of the joint venture for $530 million. I’m pleased with both the business goals that we’ve achieved and the return of approximately 3.5 times on our original investment of $150 million – equivalent to an annualized internal rate of return of approximately 31%. The terms of this transaction, which imply an enterprise value of approximately $1.1 billion and involve the payment of ongoing royalties to Symantec under an OEM arrangement Symantec Joint Venture Sell Announcement November 14, 2011 3 for at least seven years, were negotiated extensively over a number of months with the assistance of an investment banking advisor. Upon closing, we expect to receive a one-time gain on the sale of the joint venture and will make an accounting accrual related to possible future taxes to be paid on this gain. As a result, our GAAP earnings per share would be expected to include a large one-time benefit in the March 2012 quarter We expect the majority of the cash proceeds received from this transaction to be included in our offshore cash balance. In conclusion, we are pleased with both the strategic and financial outcome of this joint venture investment. We will continue to expand our own appliance business worldwide and grow our security and storage businesses in China. And now, I’ll turn it back over to Helyn so that we can start taking some of your questions. Hand over to Helyn for Q&A Thanks. Operator will you please begin polling for questions. While the operator is polling for questions, I’d like to remind everyone that James will be presenting at the UBS conference tomorrow at 9:30 am ET. A webcast of his fireside chat will be available live on our investor relations website. Operator, we are ready for the first question. Enrique Salem, President and CEO I’m pleased with our achievements from the joint venture. In addition, I expect to continue to grow both our appliance and China businesses as we stay focused on our objectives for the fiscal year. Thank you for joining us. I look forward to speaking with you again soon. Thank you
Please direct all questions to investor relations at 650-527-5523.
