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Symantec Corporation 2007 Annual Report TWO YEAR SUMMARY OF FINANCIAL RESULTS RECONCILIATION OF GAAP TO NON-GAAP FINANCIALS Fiscal Year The non-GAAP information reflects the com- ($ in millions, except per share amounts) 2007 2006 bined results of Symantec and Veritas Soft- ware, including adjustments based on the fair Revenue values of assets acquired and liabilities GAAP Revenue $5,199 $4,143 assumed by Symantec as of the actual acqui- Veritas revenue — 559 sition date of July 2, 2005. For comparative Fair value adjustment to Veritas deferred revenue 53 302 purposes, the information presented assumes Non-GAAP Revenue $5,253 $5,004 that the acquisition took place on April 1, 2004. Symantec’s fiscal years ended March 31st Gross Profit whereas Veritas’ fiscal years ended Decem- GAAP Gross Profit $3,984 $3,162 ber 31st. The 2006 fiscal amounts combine Veritas gross profit — 398 Symantec’s 2006 fiscal results with Veritas’ Fair value adjustment to Veritas deferred revenue 53 302 Integration planning — 1 historical results for the three months ended Amortization of acquired product rights 342 386 March 31, 2005. Additional non-GAAP adjust- Amortization of deferred stock-based compensation 16 1 ments consist of: non-cash charges related to Non-GAAP Gross Profit $4,396 $4,250 acquisitions, such as the amortization of intan- gibles and stock-based compensation Operating Expenses expense, and the write-off of in-process GAAP Operating Expenses $3,464 $2,888 research and development; restructuring Veritas operating expenses — 400 charges; integration planning costs; and the Amortization of other intangible assets (202) (196) impact of other special items, such as other Amortization of deferred stock-based compensation (137) (43) stock-based compensation expense, litigation Acquired in-process research and development — (285) matters, gain/loss on investments and related Restructuring (70) (25) Integration planning (1) (27) adjustments to the provision for income taxes, Patent settlement — (2) on our operating results. Proposed SEC legal settlement — (30) Executive incentive bonuses (4) (10) These non-GAAP financial measures are not Non-GAAP Operating Expenses $3,050 $2,670 prepared in accordance with generally accepted accounting principles and may be Net Income different from non-GAAP financial measures GAAP Net Income $ 404 $ 157 used by other companies. Non-GAAP financial Gross margin adjustment 412 1,089 measures should not be considered a substi- Operating expenses adjustment 414 218 tute for, or superior to, measures of financial Veritas other income and tax — (12) performance prepared in accordance with Gain on strategic investments — (1) Gain on sale of building (20) GAAP. Income tax provision (218) (306) Symantec adopted Staff Accounting Bulle- Non-GAAP Net Income $ 992 $1,145 tin 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstate- Earnings Per Share ments in Current Year Financial Statements,” GAAP Earnings Per Share — diluted $ 0.41 $ 0.15 during the March quarter. As such, our GAAP Non-GAAP adjustments per share — diluted 0.60 0.85 and non-GAAP results for the fiscal year 2007 Non-GAAP Earnings Per Share — diluted $ 1.01 $ 1.00 include the adoption of SAB 108. We believe the resulting changes to the previously reported amounts to the fiscal year are imma- Deferred Revenue GAAP Deferred Revenue $2,754 $2,163 terial. The GAAP SAB 108 adjustment was Fair value adjustment to Veritas deferred revenue 18 58 applied on April 1, 2006. We believe that providing a non-GAAP deferred revenue bal- Non-GAAP Deferred Revenue 2,772 2,221 SAB 108 Adjustment — 100 ance as of March 31, 2006 that is adjusted for SAB 108 allows comparison of our deferred Non-GAAP Deferred Revenue adjusted for SAB 108 $2,772 $2,321 revenue balance on a consistent basis. DEAR STOCKHOLDERS, Symantec ended Fiscal 2007 on a strong note to close out what proved to be one of the most challenging fiscal years in our 25-year history. It was a year of transition marked by the implementation of several major, but necessary, changes in our operations as we continue to evolve our business. We believe we are now positioned for a more successful 2008. 2007 — A TRANSITION YEAR One of the most significant changes was implemented on the first day of the new fiscal year when we integrated our enterprise sales teams. We aligned our model with a more typical industry approach that provides better account and opportunity coverage, while leveraging our broad product portfolio. We also undertook a large scale business process and systems consolidation project, which integrated our two enterprise resource planning systems into a single enhanced system allowing us to implement new buying programs, drive operational efficiencies, and create a platform to improve the ease of transacting business with our customers and partners. This project was important as it provides the foundation for scaling our business and lowering our costs over time. We also took action to better align our operating expenses with our revenue expectations and implemented several cost-saving initiatives. We have reduced new hiring throughout most of the company,reduced our employee base by 5 percent, lowered our spending on contractors, consultants, and travel-related expenses, and we continue our facilities consolidation activities around the world. We believe these actions will result in annu- alized cost savings of at least $200 million. And finally, we fortified our strength at the endpoint with the acquisition of Altiris. We believe the combination of Symantec and Altiris will enable our customers to better manage and enforce security policies at the endpoint, identify and protect against threats, as well as remediate and manage IT assets. We are pleased with how swiftly we were able to close the transaction and with the progress we have made toward inte- grating Altiris into Symantec. FINANCIAL PERFORMANCE Fiscal 2007 was a tough year financially for Symantec. We achieved record revenue and earnings per share; however, these results were well below our initial forecast. Our deferred revenue grew faster than expected and cash flow from operations was strong. Given the recurring nature of our business model, deferred revenue and cash flow from operations are important metrics in measuring the overall strength of our business. 1 Non-GAAP revenue1 grew 5 percent to more than $5.25 billion, generating non-GAAP earnings per share1 of $1.01. Non-GAAP deferred revenue1 grew 19 percent to nearly $2.8 billion and we generated cash flow from operating activities of approximately $1.7 billion. During the year,we took action to optimize our capital structure and increase our financial flexibility, with the issuance of $2.1 billion in convertible notes. Furthermore, we demonstrated our commitment to create shareholder value by repurchasing a total of $2.8 billion of our common stock. CONFIDENCE IN A CONNECTED WORLD Symantec celebrates its 25th anniversary this year. Looking ahead to the next 25 years, none of us can accurately predict what the IT industry will look like or how much more it will revolutionize our businesses or our lives. To seize the opportunities that lie ahead, people need confidence in the connected world. That’s why Symantec will continue to innovate to help large enterprises and governments manage cost, complexity, and compliance within their IT infrastructures, as well as continue to focus on securing the digital lifestyles of consumers around the world. At Symantec, we are dedicated to delivering technologies and services that help our customers minimize IT risk, maximize IT performance, and create the opportunities for them to innovate and grow in ways they never even imagined. We believe that people should be able to work and play freely in the connected world. And to make that happen, one thing is essential: confidence. Businesses need to be confident that they have the software and systems in place to keep data secure, to make information available when and where it’s needed, and to be able to get the most out of their investments in IT. Consumers also need to be confident that the information they are providing online, the interactions they are having, and the various devices they are using to do both are secure and reliable. Earlier this year we launched Norton 360TM, an all-in-one security service. The Norton 360 product combines Symantec’s proven, industry-leading technologies for antivirus, anti-spyware, firewall, intrusion protection, anti-phishing, backup, and tuneup, elimi- nating the need to purchase and manage multiple products. This innovative product is getting very positive feedback from industry thought leaders, having received the prestigious Editor’s Choice awards from both CNET and PC Magazine. WELL POSITIONED FOR FISCAL 2008 We believe we have entered fiscal year 2008 with the most difficult part of our trans- formation behind us and more importantly, we are much better positioned to deliver our market-leading security and availability products to our customers and partners around 1 Non-GAAP results are reconciled to GAAP results on the inside front cover. 2 the world. We’re also focusing on managing our diverse portfolio of products and striving for a better balance among revenue growth, operating costs, and margin expansion. In 2008, we are focused on building stronger links between sales and marketing, tighter alignment between our product integration activities and better product launch quality. This year, we have a sales force that has had one full year operating as “one-team” under its belt. It understands the breadth and depth of our product portfolio. As a result, we have entered fiscal 2008 with a sales team that has built deeper relationships with many of our largest customers and so our focus now is on leveraging those relationships to deliver better returns. There are a number of important growth drivers that will establish the foundation for not just this fiscal year, but the next few years.

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