Still smarting from tax season? Groaning over how big of a bite the IRS took from your personal net worth in 2004? As bad as you might think you had it on April 15, Internet security specialist Symantec (NASDAQ:SYMC) had it worse. The company ultimately paid a 51.8% tax rate on its fiscal 2005 income (which closed on April 1).
Of course, making money and paying taxes on it is better than the alternative. If Symantec ultimately had to ante up a lot of moola to the taxman, shareholders can take some consolation in the fact that the company made a whole bunch of money first.
On Wednesday, Symantec released its annual results for both fiscal 2005 and the fourth quarter thereof. Wall Street analysts are all focusing on that fourth quarter, so we'll give a quick nod in that direction before moving smartly to the annual results. Symantec earned $248.5 million for the quarter before the IRS came a-knocking, but the G-men left shareholders with just $119.7 million in the kitty. The reason: Symantec took advantage of a government enticement to repatriate already-earned foreign profits at a "favorable" tax rate in Q4. It brought $625 million back stateside, paying $54 million in taxes on that amount.
So that was the bad news: Last year's $116.9 million in Q4 profits grew less than 3% this year.
Regardless, fiscal 2005 as a whole remained a good year. Sales grew 38%. Profits grew 45% -- yes, even after the hefty Q4 tax hit. That's just outstanding work.
Admittedly, it's hard to say precisely how outstanding it was, because the company once again declined to produce a cash flow statement for investors' perusal. Thus, we don't know precisely how much those GAAP profits were supported by real cash in the form of free cash flow. Nor can we say for certain whether the company made good on its pledge to dial back stock dilution. Sure, average shares outstanding grew just 2.4% over the past year, and sure, that's apparently better than some of the numbers Symantec has produced in past years. But without seeing the cash flow statement, it's hard to say how much actual dilution was masked by stock buybacks in order to arrive at that 2.4% figure. For that answer, we'll need to await the filing of Symantec's Form 10-K with the SEC.
In other news, the merger with Veritas (NASDAQ:VRTS) looks to be still on, pending shareholder approval. Read about that deal in these other Foolish takes:
- Verily, Veritas Did Well
- Those Incredible Vanishing Tickers
- Symantec Slammed
- VERITAS: Discounted and Attractive
Fool contributor Rich Smith has no position in either of the companies mentioned in this article.
