2005 Annual Report

SYMANTEC 2005 ANNUAL REPORT

BE FEARLESS LEAD THREE YEAR SUMMARY

Fiscal Year Ended

(in millions, except per share amounts) 2005 2004 2003 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 effect 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. ABOUT SYMANTEC FINANCIAL HIGHLIGHTS

SYMANTEC IS THE WORLD

LEADER IN PROVIDING 38% GROWTH $2.58 BILLION IN REVENUE IN REVENUE SOLUTIONS TO HELP INDIVIDUALS

R E V E N U E * (millions) NET INCOME* (millions) AND ENTERPRISES ASSURE $634

$2,583 $536 THE SECURITY, AVAILABILITY, $411 $1,870 $371 AND INTEGRITY OF THEIR $1,407 $280 $248

INFORMATION. HEADQUARTERED

IN CUPERTINO, CALIFORNIA, 2003 2004 2005 2003 2004 2005

GAAP NON-GAAP GAAP NON-GAAP SYMANTEC HAS OPERATIONS

IN MORE THAN 40 COUNTRIES. EARNINGS PER DILUTED SHARE DEFERRED REVENUE (millions)

$0.87 MORE INFORMATION IS AVAILABLE $1,330 $0.74

AT WWW.SYMANTEC.COM. $0.59 $0.54 $0.43 $971 $0.38

$590

2003 2004 2005 2003 2004 2005

GAAP NON-GAAP

*Non-GAAP results are reconciled to GAAP results on the inside front cover.

SYMANTEC 2005 ANNUAL REPORT 1 BE FOCUSED EXECUTE LETTER TO OUR SHAREHOLDERS

Dear Shareholders,

Fiscal 2005 was another tremendous year for almost $2.6 billion in fiscal 2005, and produced Symantec. We continued to execute our core record earnings. Non-GAAP1 earnings per share grew 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 Symantec to help our customers build a resilient Our tenacious commitment to customer-driven infrastructure, manage complex network environ- solutions fueled results that surpassed our expecta- ments, and reduce risk. tions. During fiscal 2005, we booked almost 1,350 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 information made up 54% of the samples in the past six Boosting Consumer Confidence in a World months, up 10% from the previous six months. of Increasing Risk We documented about 1,400 new vulnerabilities, The Consumer segment was the star performer 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

1 Non-GAAP results are reconciled to GAAP results on the inside front cover.

SYMANTEC 2005 ANNUAL REPORT 3 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 security, 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 products and services to secure and manage their The Next Step: Solving Business Problems 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.

4 SYMANTEC 2005 ANNUAL REPORT BE FORWARD INNOVATE 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 solutions and the addition of VERITAS brings Building a Global Leader 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

3 SYMANTEC 2005 ANNUAL REPORT FINANCIAL INFORMA TION

10-K FORM

FORW A RD-L O O K I N G S TAT EMEN T 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.

7 SYMANTEC 2005 ANNUAL REPORT SYMANTEC 2005 ANNUAL REPORT 7 Thomas W. Kendra Senior Vice President, Worldwide Sales

Stephen C. Markowski Vice President, Finance and Chief Accounting Officer

Enrique T. Salem CORPORATE INFORMATION Senior Vice President, Security Products and Solutions

James R. Socas Senior Vice President, Corporate Business Development BOARD OF DIRECTORS John G. Schwarz President Arthur W. Wong Michael Brown Vice President, Former Chairman and Gregory E. Myers Response and Managed Security Services Chief Executive Officer Senior Vice President, Quantum Corporation Finance and Chief Financial Officer INVESTOR INFORMATION William T. Coleman III Mark F. Bregman Founder, Chairman and Senior Vice President, Annual Meeting Chief Executive Officer Chief Technology Officer The annual meeting of shareholders will Cassatt Corporation be held on Friday, September 16, 2005 at John F. Brigden 8 a.m. at Symantec’s worldwide headquarters: David L. Mahoney Senior Vice President, 20330 Stevens Creek Blvd. Former Co-Chief Executive Officer General Counsel Cupertino, CA 95014 McKesson HBOC, Inc. and (408) 517 8000 Chief Executive Officer Janice D. Chaffin iMckesson LLC Senior Vice President, Stock Exchange Listing Chief Marketing Officer Symantec’s common stock trades on the Robert S. Miller Nasdaq under the symbol SYMC. Chairman and Chief Executive Officer Arthur F. Courville Delphi Corporation Senior Vice President, Transfer Agent Corporate Legal Affairs and Secretary EquiServe Trust Company George Reyes P.O. Box 43023 Chief Financial Officer Donald E. Frischmann Providence, RI 02940-3023 Google Senior Vice President, www.equiserve.com Communications and Brand Management (781) 575 2879 David J. Roux Co-Founder and Managing Director Edwin Gillis Investor Relations Silver Lake Partners Senior Vice President, Investor inquires may be directed to: Administration and Integration Helyn Corcos Daniel H. Schulman Rebecca A. Ranninger Investor Relations Chief Executive Officer 20330 Stevens Creek Blvd. Virgin Mobile USA Senior Vice President, Human Resources Cupertino, CA 95014 Paul Unruh (408) 517 8324 Former Chief Financial Officer and [email protected] OTHER SENIOR EXECUTIVES www.symantec.com/invest

/Consolidated Graphics /Consolidated Vice Chairman Bechtel Group, Inc. Jeremy Burton Annual Report on Form 10-K Senior Vice President, A copy of Symantec’s Form 10-K, including Gary L. Bloom Data Management Vice Chairman and President exhibits, for the period ended April 1, 2005, as filed with the Securities and Exchange Symantec Corporation Dieter Giesbrecht atermark Graphics Senior Vice President, Commission, is available without charge John W. Thompson Application and Infrastructure Management upon request or can be accessed at: Chairman and Chief Executive Officer www.symantec.com/invest Symantec Corporation Ajei Gopal Senior Vice President, Outside Counsel Solutions, Alliances, and Operations Fenwick & West LLP EXECUTIVE OFFICERS 801 California Street Mountain View, CA 94041 John W. Thompson Kristof Hagerman (650) 988 8500 Chairman and Chief Executive Officer Senior Vice President, Storage and Server Management Independent Auditors Gary L. Bloom KPMG LLP Vice Chairman and President Gregory W. Hughes Senior Vice President, 500 East Middlefield Road Worldwide Services and Support Mountain View, CA 94043

Symantec, the Symantec logo, and VERITAS are registered trademarks of Symantec Corporation or its affiliates in the U.S. and other countries. LiveState, Norton Internet Security, and Symantec Enterprise Security Manager are trademarks of Symantec Corporation. Other brands and products are trademarks of their respective holder/s.