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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
þ☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 29, 2017September 30, 2022
or
o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
      
For the Transition Period from to
Commission File Number 000-17781
image0a06.jpg
Symantec CorporationGen Digital Inc.
(Exact name of the registrant as specified in its charter)
Delaware77-0181864
(State or other jurisdiction of
incorporation or organization)		(I.R.S. employer
Identification no.)
350 Ellis Street60 E. Rio Salado Parkway,Suite 1000,
Mountain View, CaliforniaTempe,Arizona9404385281
(Address of principal executive offices)(Zip code)
Registrant’s telephone number, including area code:
(650) 527-8000
Former name or former address, if changed since last report:
NortonLifeLock Inc.
 ________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock,par value $0.01 per shareGENThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ   No o☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ   No o☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerþAccelerated filer☐Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
Large accelerated filer þ
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o
(Do not check if a smaller reporting company)
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o☐   No þ
The number of shares of SymantecGen common stock, $0.01 par value per share, outstanding as of January 26, 2018November 4, 2022 was 621,538,648651,359,881 shares.

Table of Contents

SYMANTEC CORPORATION
FORM 10-Q
Quarterly Period Ended December 29, 2017
TABLE OF CONTENTS

Table of Contents
GEN DIGITAL INC.
FORM 10-Q
Quarterly Period Ended September 30, 2022
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION
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PART II. OTHER INFORMATION
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“Gen,” “we,” “us,” “our,” and “the Company” refer to Gen Digital Inc. and all of its subsidiaries. Gen, the Gen Logo, the Checkmark Logo, Norton, LifeLock, the LockMan Logo, Avast, Piriform and AVG are trademarks or registered trademarks of Gen Digital Inc. or its affiliates in the United States (U.S.) and other countries. Other names may be trademarks of their respective owners.

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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
SYMANTEC CORPORATIONGEN DIGITAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in millions, except share amounts which are reflected in thousands, and par value per share amounts)
September 30, 2022April 1, 2022
ASSETS
Current assets:
Cash and cash equivalents$1,095 $1,887 
Short-term investments— 4 
Accounts receivable, net152 120 
Other current assets345 193 
Assets held for sale30 56 
Total current assets1,622 2,260 
Property and equipment, net108 60 
Operating lease assets50 74 
Intangible assets, net3,332 1,023 
Goodwill10,126 2,873 
Other long-term assets644 653 
Total assets$15,882 $6,943 
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable$66 $63 
Accrued compensation and benefits111 81 
Current portion of long-term debt175 1,000 
Contract liabilities1,597 1,264 
Current operating lease liabilities24 18 
Other current liabilities852 639 
Total current liabilities2,825 3,065 
Long-term debt9,883 2,736 
Long-term contract liabilities87 42 
Deferred income tax liabilities392 75 
Long-term income taxes payable913 996 
Long-term operating lease liabilities41 75 
Other long-term liabilities43 47 
Total liabilities14,184 7,036 
Commitments and contingencies (Note 18)

Stockholders’ equity (deficit):
Common stock and additional paid-in capital, $0.01 par value: 3,000 shares authorized; 661 and 582 shares issued and outstanding as of September 30, 2022 and April 1, 2022, respectively3,378 1,851 
Accumulated other comprehensive income (loss)(15)(4)
Retained earnings (accumulated deficit)(1,665)(1,940)
Total stockholders’ equity (deficit)1,698 (93)
Total liabilities and stockholders’ equity (deficit)$15,882 $6,943 
 December 29,
2017		 
March 31,
2017 (1)
ASSETS
Current assets:   
Cash and cash equivalents$2,142
 $4,247
Short-term investments390
 9
Accounts receivable, net666
 649
Other current assets369
 419
Total current assets3,567
 5,324
Property and equipment, net838
 937
Intangible assets, net2,754
 3,004
Goodwill8,318
 8,627
Equity investments332
 158
Other long-term assets171
 124
Total assets$15,980
 $18,174
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:   
Accounts payable$181
 $180
Accrued compensation and benefits215
 272
Current portion of long-term debt—
 1,310
Deferred revenue2,151
 2,353
Income taxes payable186
 30
Other current liabilities368
 477
Total current liabilities3,101
 4,622
Long-term debt5,587
 6,876
Long-term deferred revenue579
 434
Deferred income tax liabilities618
 2,401
Long-term income taxes payable1,051
 251
Other long-term obligations86
 103
Total liabilities11,022

14,687
Contingencies

 

Stockholders’ equity:   
Preferred stock, $0.01 par value: 1,000 shares authorized; 21 shares issued; 0 outstanding
—
 —
Common stock and additional paid-in capital, $0.01 par value: 3,000,000 shares authorized; 621,351 and 608,019 shares issued and outstanding as of December 29, 2017 and March 31, 2017, respectively
4,507
 4,236
Accumulated other comprehensive income15
 12
Retained earnings (accumulated deficit)436
 (761)
Total stockholders’ equity4,958
 3,487
Total liabilities and stockholders’ equity$15,980
 $18,174
(1)Derived from audited financial statements.
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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SYMANTEC CORPORATION
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GEN DIGITAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in millions, except per share amounts)
 Three Months Ended Nine Months Ended
 December 29,
2017		 December 30,
2016		 December 29,
2017		 December 30,
2016
Net revenues$1,209
 $1,041
 $3,624
 $2,904
Cost of revenues249
 235
 768
 594
Gross profit960
 806
 2,856
 2,310
Operating expenses:       
Sales and marketing372
 377
 1,239
 1,006
Research and development225
 204
 699
 574
General and administrative122
 131
 431
 360
Amortization of intangible assets52
 43
 166
 91
Restructuring, transition and other costs93
 67
 278
 201
Total operating expenses864
 822
 2,813
 2,232
Operating income (loss)96
 (16) 43
 78
Interest income5
 5
 16
 14
Interest expense(58) (55) (199) (134)
Gain on divestiture658
 —
 658
 —
Other income (expense), net4
 5
 (16) 28
Income (loss) from continuing operations before income taxes705
 (61) 502
 (14)
Income tax expense (benefit)(606) (5) (683) 45
Income (loss) from continuing operations1,311
 (56) 1,185
 (59)
Income from discontinued operations, net of income taxes31
 102
 12
 96
Net income$1,342
 $46

$1,197
 $37
        
Income (loss) per share - basic:       
Continuing operations$2.12
 $(0.09) $1.93
 $(0.10)
Discontinued operations$0.05
 $0.16
 $0.02
 $0.16
Net income per share - basic$2.17
 $0.07
 $1.95
 $0.06
        
Income (loss) per share - diluted:       
Continuing operations$1.97
 $(0.09) $1.78
 $(0.10)
Discontinued operations$0.05
 $0.16
 $0.02
 $0.16
Net income per share - diluted (1)
$2.01
 $0.07
 $1.80
 $0.06
        
Weighted-average shares outstanding:       
Basic619
 620
 614
 618
Diluted667
 620
 665
 618
Cash dividends declared per common share$0.075
 $0.075
 $0.225
 $0.225
(1)Net income per share amounts may not add due to rounding.
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

SYMANTEC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited, in millions)
 Three Months Ended Nine Months Ended
 December 29,
2017		 December 30,
2016		 December 29,
2017		 December 30,
2016
Net income$1,342
 $46
 $1,197
 $37
Other comprehensive income (loss), net of taxes:       
Foreign currency translation adjustments:       
Translation adjustments6
 6
 4
 (16)
Reclassification adjustments for net loss included in net income8
 —
 5
 —
Net foreign currency translation adjustments14
 6
 9
 (16)
Unrealized loss on available-for-sale securities:

 

 

 

Unrealized loss(2) (2) (2) (3)
Reclassification adjustment for gain included in net income(4) —
 (4) —
Net unrealized loss on available-for-sale securities(6) (2) (6) (3)
Other comprehensive income (loss), net of taxes8
 4
 3
 (19)
Comprehensive income$1,350
 $50
 $1,200
 $18
Three Months EndedSix Months Ended
 September 30, 2022October 1, 2021September 30, 2022October 1, 2021
Net revenues$748 $692 $1,455 $1,378 
Cost of revenues119 100 221 202 
Gross profit629 592 1,234 1,176 
Operating expenses:
Sales and marketing167 150 323 306 
Research and development73 66 134 134 
General and administrative110 63 214 108 
Amortization of intangible assets29 21 50 42 
Restructuring and other costs9 5 11 12 
Total operating expenses388 305 732 602 
Operating income (loss)241 287 502 574 
Interest expense(48)(31)(79)(63)
Other income (expense), net2 177 1 174 
Income (loss) before income taxes195 433 424 685 
Income tax expense (benefit)126 100 155 171 
Net income (loss)$69 $333 $269 $514 
Net income (loss) per share - basic$0.12 $0.57 $0.46 $0.88 
Net income (loss) per share - diluted$0.12 $0.56 $0.45 $0.87 
Weighted-average shares outstanding:
Basic590 582 583 581 
Diluted595 591 599 591 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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SYMANTEC CORPORATION
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GEN DIGITAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSCOMPREHENSIVE INCOME (LOSS)
(Unaudited, in millions)
 Nine Months Ended
 December 29,
2017		 December 30,
2016
OPERATING ACTIVITIES:   
Net income$1,197
 $37
Income from discontinued operations, net of income taxes(12) (96)
Adjustments to continuing operating activities:   
Depreciation and amortization, including debt issuance costs and discounts526
 356
Stock-based compensation expense448
 231
Deferred income taxes(1,821) 33
Gain on divestiture(658) —
Other43
 43
Changes in operating assets and liabilities, net of acquisitions and divestitures:   
Accounts receivable, net(38) 114
Accounts payable5
 (72)
Accrued compensation and benefits(53) (10)
Deferred revenue187
 (71)
Income taxes945
 (981)
Other assets(3) 16
Other liabilities(85) (60)
Net cash provided by (used in) continuing operating activities681
 (460)
Net cash provided by (used in) discontinued operating activities3
 (104)
Net cash provided by (used in) operating activities684
 (564)
INVESTING ACTIVITIES:   
Additions to property and equipment(105) (57)
Payments for acquisitions, net of cash acquired(402) (4,533)
Purchases of short-term investments(408) —
Proceeds from maturities and sales of short-term investments25
 31
Proceeds from divestitures, net of cash contributed946
 7
Other(20) 2
Net cash provided by (used in) investing activities36
 (4,550)
FINANCING ACTIVITIES:   
Repayments of debt and other obligations(2,640) (62)
Proceeds from issuance of debt, net of issuance costs—
 4,993
Net proceeds from sales of common stock under employee stock benefit plans83
 53
Tax payments related to restricted stock units(97) (50)
Dividends and dividend equivalents paid(163) (173)
Payment for dissenting LifeLock shareholder settlement(68) —
Other—
 10
Net cash provided by (used in) financing activities(2,885) 4,771
Effect of exchange rate fluctuations on cash and cash equivalents60
 (65)
Change in cash and cash equivalents(2,105) (408)
Beginning cash and cash equivalents4,247
 5,983
Ending cash and cash equivalents$2,142
 $5,575
Supplemental disclosure of cash flow information   
Income taxes paid, net of refunds$200
 $1,044
 Three Months EndedSix Months Ended
 September 30, 2022October 1, 2021September 30, 2022October 1, 2021
Net income (loss)$69 $333 $269 $514 
Other comprehensive income (loss), net of taxes:
Foreign currency translation gain (loss)29 (15)(11)(13)
Other comprehensive income (loss), net of taxes29 (15)(11)(13)
Comprehensive income (loss)$98 $318 $258 $501 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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SYMANTEC CORPORATION
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GEN DIGITAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited, in millions, except share amounts)
Three months ended September 30, 2022Common Stock and Additional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Retained Earnings (Accumulated Deficit)Total Stockholders’ Equity (Deficit)
SharesAmount
Balance as of July 1, 2022571 $1,479 $(44)$(1,734)$(299)
Net income (loss)— — — 69 69 
Other comprehensive income (loss), net of taxes— — 29 — 29 
Common stock issued under employee stock incentive plans1 6 — — 6 
Repurchases of common stock(5)(104)— — (104)
Cash dividends declared ($0.125 per share of common stock) and dividend equivalents accrued— (73)— — (73)
Stock-based compensation— 29 — — 29 
Extinguishment of convertible debt— (100)— — (100)
Merger consideration94 2,141 — — 2,141 
Balance as of September 30, 2022661 $3,378 $(15)$(1,665)$1,698 
Six months ended September 30, 2022Common Stock and Additional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Retained Earnings (Accumulated Deficit)Total Stockholders’ Equity (Deficit)
SharesAmount
Balance as of April 1, 2022582 $1,851 $(4)$(1,940)$(93)
Net income (loss)— — — 269 269 
Other comprehensive income (loss), net of taxes— — (11)— (11)
Common stock issued under employee stock incentive plans3 6 — — 6 
Shares withheld for taxes related to vesting of restricted stock units(1)(16)— — (16)
Repurchases of common stock(17)(404)— — (404)
Cash dividends declared ($0.250 per share of common stock) and dividend equivalents accrued— (146)— — (146)
Stock-based compensation— 53 — — 53 
Extinguishment of convertible debt— (100)— — (100)
Cumulative effect adjustment from adoption of ASU 2020-06 (1)
— (7)— 6 (1)
Merger consideration94 2,141 — — 2,141 
Balance as of September 30, 2022661 $3,378 $(15)$(1,665)$1,698 
(1) Effective on April 2, 2022, the Company adopted ASU 2020-06 (Debt with Conversion and Other Options, ASC 470-20) using a modified retrospective method. See Note 2 for further information about this recently adopted guidance.
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.








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GEN DIGITAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited, in millions, except share amounts)

Three months ended October 1, 2021Common Stock and Additional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Retained Earnings (Accumulated Deficit)Total Stockholders’ Equity (Deficit)
SharesAmount
Balance as of July 2, 2021581 $2,049 $49 $(2,595)$(497)
Net income (loss)— — — 333 333 
Other comprehensive income (loss), net of taxes— — (15)— (15)
Common stock issued under employee stock incentive plans1 7 — — 7 
Cash dividends declared ($0.125 per share of common stock) and dividend equivalents accrued— (73)— — (73)
Stock-based compensation— 13 — — 13 
Balance as of October 1, 2021582 $1,996 $34 $(2,262)$(232)

Six months ended October 1, 2021Common Stock and Additional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Retained Earnings (Accumulated Deficit)Total Stockholders’ Equity (Deficit)
SharesAmount
Balance as of April 2, 2021580 $2,229 $47 $(2,776)$(500)
Net income (loss)— — — 514 514 
Other comprehensive income (loss), net of taxes— — (13)— (13)
Common stock issued under employee stock incentive plans3 8 — — 8 
Shares withheld for taxes related to vesting of restricted stock units(1)(15)— — (15)
Cash dividends declared ($0.250 per share of common stock) and dividend equivalents accrued— (147)— — (147)
Stock-based compensation— 33 — — 33 
Extinguishment of convertible debt— (112)— — (112)
Balance as of October 1, 2021582 $1,996 $34 $(2,262)$(232)
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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GEN DIGITAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in millions)
Six Months Ended
September 30, 2022October 1, 2021
OPERATING ACTIVITIES:
Net income$269 $514 
Adjustments:
Amortization and depreciation78 71 
Impairments and write-offs of current and long-lived assets(5)3 
Stock-based compensation expense53 33 
Deferred income taxes(51)13 
Loss (gain) on extinguishment of debt9 5 
Gain on sale of property— (175)
Non-cash operating lease expense11 11 
Other(45)5 
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net17 9 
Accounts payable(18)27 
Accrued compensation and benefits3 (36)
Contract liabilities(85)(47)
Income taxes payable(91)(97)
Other assets9 (5)
Other liabilities(27)(13)
Net cash provided by (used in) operating activities127 318 
INVESTING ACTIVITIES:
Purchases of property and equipment(4)(2)
Payments for acquisitions, net of cash acquired(6,550)(40)
Proceeds from the maturities and sales of short-term investments4 4 
Proceeds from the sale of property— 355 
Other4 (4)
Net cash provided by (used in) investing activities(6,546)313 
FINANCING ACTIVITIES:
Repayments of debt(2,738)(382)
Proceeds from issuance of debt, net of issuance costs8,954 512 
Net proceeds from sales of common stock under employee stock incentive plans6 8 
Tax payments related to vesting of restricted stock units(16)(14)
Dividends and dividend equivalents paid(153)(157)
Repurchases of common stock(404)— 
Net cash provided by (used in) financing activities5,649 (33)
Effect of exchange rate fluctuations on cash and cash equivalents(22)(5)
Change in cash and cash equivalents(792)593 
Beginning cash and cash equivalents1,887 933 
Ending cash and cash equivalents$1,095 $1,526 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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GEN DIGITAL INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Description of Business and Significant Accounting Policies
Business
Symantec Corporation (“Symantec,” “we,” “us,” “our,”On August 10, 2021, we announced a transaction under which we intended to acquire the entire issued and to be issued ordinary share capital of Avast plc, a public company incorporated in England and Wales and a global leader of digital security and privacy headquartered in Prague, Czech Republic (Avast and such transaction, the “Company” referMerger). On September 12, 2022, we completed the Merger with Avast, and its results of operations have been included in our Condensed Consolidated Statements of Operations beginning September 12, 2022. See Note 4 for further information about this business combination.
In connection with the Merger, effective November 7, 2022, we changed our corporate name from NortonLifeLock Inc. to Symantec Corporation and all of its subsidiaries)Gen Digital Inc. (Gen).
Gen is a global, leader in cybersecurity.
On October 31, 2017, we completed the saleleading provider of our websiteconsumer Cyber Safety solutions. Our portfolio provides protection across three Cyber Security categories: security, (“WSS”)identity protection and public key infrastructure (“PKI”) solutions to Thoma Bravo, LLC’s portfolio company DigiCert Parent Inc. (“DigiCert”). The results of operations of our WSSonline privacy. We help customers protect their computer and PKI solutions prior to the divestiture are reported in our consolidated results of operations through October 31, 2017. See Note 6 for moremobile devices from online threats, safeguard their identity and personal information on the divestiture.and strengthen online privacy capabilities and functionalities.
Basis of presentation
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles (“GAAP”)(GAAP) in the United States of America (“U.S.”) for interim financial information. In the opinion of management, the unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting only of normal recurring items, except as otherwise noted, necessary for the fair presentation of our financial position, results of operations and cash flows for the interim periods. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and accompanying Notes thereto included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2017.April 1, 2022. The results of operations for the three and ninesix months ended December 29, 2017,September 30, 2022 are not necessarily indicative of the results expected for the entire fiscal year.
Fiscal calendar
We have a 52/53-week fiscal year ending on the Friday closest to March 31. Unless otherwise stated, references to three and ninesix month periods in this report relate to fiscal periods ended December 29, 2017September 30, 2022 and December 30, 2016.October 1, 2021. The ninethree and six months ended December 29, 2017September 30, 2022 and December 30, 2016October 1, 2021 each consisted of 39 weeks.13 and 26 weeks, respectively. Our 20182023 fiscal year consists of 52 weeks and ends on March 30, 2018.31, 2023.
Recently adopted authoritative guidanceUse of estimates
Employee Stock-Based Compensation. InThe preparation of Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the first quarteramounts reported and disclosed in the financial statements and accompanying Notes. Such estimates include, but are not limited to, valuation of fiscal 2018, we adopted new guidancebusiness combinations including acquired intangible assets and goodwill, loss contingencies, the recognition and measurement of current and deferred income taxes, including the measurement of uncertain tax positions, and valuation of assets and liabilities. On an ongoing basis, management determines these estimates and assumptions based on historical experience and on various other assumptions that are believed to simplify accountingbe reasonable. Third-party valuation specialists are also utilized for share-based payment transactions. Priorcertain estimates. Actual results could differ from such estimates and assumptions due to adoption, excess tax benefits resulting fromrisks and uncertainties, including uncertainty in the difference between the deduction for tax purposes and the compensation costs recognized for financial reporting were not recognized until the deduction reduced taxes payable. Ascurrent economic environment as a result of the new guidance, we now recognize excess tax benefits or deficiencies inCOVID-19 pandemic and continuing Russia-Ukraine conflict, and such differences may be material to the period in which the award vests. We elected to continue to estimate forfeitures rather than record the forfeitures as they occur. We adopted the change in recognizing excess tax benefits using the modified retrospective method. We also elected to retrospectively apply the change in presentation of excess tax benefits recognized related to stock-based compensation expense in our Condensed Consolidated StatementsFinancial Statements.
Significant accounting policies
With the exception of Cash Flows from financing activities to operating activities. The cumulative effect of adopting the new accounting guidance was not material.
Therethose discussed in Note 2, there have been no other material changes into our significant accounting policies as of and for the ninethree and six months ended December 29, 2017,September 30, 2022, as compared to the significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended March 31, 2017.April 1, 2022.
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Note 2. Segment InformationRecent Accounting Standards
Recently adopted authoritative guidance
Debt with Conversion and Other Options. In August 2020, the FASB issued Accounting Standards Update 2020-06 (ASU 2020-06) which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments. The new guidance removes from GAAP the separation models for convertible debt with embedded conversion features. As a result, entities will no longer separately present embedded conversion features in equity. A convertible debt instrument will be accounted for wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. In addition, the debt discount, which is equal to the carry value of the embedded conversion feature upon issuance, will no longer be amortized as interest expense over the life of the instrument. The new guidance also requires the use of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share and include the effect of share settlement for instruments that may be settled in cash or shares. See Note 16 for further information related to the diluted earnings per share calculation.
We adopted this standard as of April 2, 2022, the first day of fiscal 2023, using a modified retrospective method of transition, under which, financial results and earnings per share amounts reported in prior periods were not adjusted or restated in the Condensed Consolidated Financial Statements. As such, the new guidance was applied to the convertible debt instruments outstanding as of the beginning of this fiscal year, with the cumulative effect of adoption recognized through an adjustment to the opening balance of retained earnings. We increased the carrying amount of the New 2.0% Convertible Notes (as defined in Note 10) by approximately $1 million and reduced additional paid-in capital by approximately $7 million, net of tax. The net effect of these adjustments was recorded as an increase to retained earnings as of April 2, 2022.
Reference Rate Reform. In March 2020, the FASB issued new guidance providing temporary optional expedients and exceptions to ease the financial reporting burden of the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (SOFR). The standard was effective upon issuance and may generally be applied through December 31, 2022, to any new or amended contracts, hedging relationships and other transactions that reference LIBOR. As of September 30, 2022, we have fully transitioned to SOFR and no longer use LIBOR on any debt or contractual arrangements that are outstanding. Any future contracts, hedging relationships and other transactions will be SOFR denominated.
Although there are several other new accounting pronouncements issued or proposed by the following two reporting segments, which are the sameFASB that we have adopted or will adopt, as our operating segments:
Enterprise Security. Our Enterprise Security segment solutions protect organizations so they can securely conduct business while leveraging new platforms and data. Our Enterprise Security segment includes our endpoint protection products, endpoint management products, messaging protection products, information protection products, cyber security services, website security (through October 31, 2017) and advanced web and cloud security offerings. See Note 6 for more informationapplicable, we do not believe any of these accounting pronouncements has had, or will have, a material impact on our divestiture of our WSSCondensed Consolidated Financial Statements and PKI solutions on October 31, 2017. Our enterprise endpoint, network security and management offerings support evolving endpoints and networks, providing advanced threat protection while helping reduce cost and complexity. These products and solutions are delivered through various methods, such as software, appliance, virtual appliance, Software-as-a-Service (“SaaS”) and managed services.
disclosures.

Consumer Digital Safety. Our Consumer Digital Safety segment focuses on providing a comprehensive Digital Safety solution to protect information, devices, networks and the identities of consumers. This solution includes our Norton-branded services, which provide multi-layer security across major desktop and mobile operating systems, public Wi-Fi connections, and home networks, to defend against increasingly complex online threats to individuals, families and small businesses, and our LifeLock-branded identity protection services. Our LifeLock-branded identity protection services primarily consist of identifying and notifying users of identity-related and other events and assisting users in remediating their impact. With the addition of LifeLock-branded identity protection services, we are providing a comprehensive digital safety solution designed to protect information across devices, customer identities and the connected home and family and accelerating our leadership in Consumer Digital Safety to protect all aspects of consumers’ digital lives.
Operating segments are based upon the nature of our business and how our business is managed. Our Chief Operating Decision Makers (“CODM”), comprised of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), use our operating segment financial information to evaluate segment performance and to allocate resources.
There were no inter-segment sales for the periods presented. The following table summarizes the operating results of our reporting segments:
 Three Months Ended Nine Months Ended
(In millions)December 29,
2017		 December 30,
2016		 December 29,
2017		 December 30,
2016
Total Segments:       
Net revenues$1,209
 $1,041
 $3,624
 $2,904
Operating income$438
 $271
 $1,161
 $773
Enterprise Security:       
Net revenues$625
 $644
 $1,957
 $1,699
Operating income$136
 $58
 $377
 $111
Consumer Digital Safety:       
Net revenues$584
 $397
 $1,667
 $1,205
Operating income$302
 $213
 $784
 $662
We do not allocate to our operating segments certain operating expenses that we manage separately at the corporate level and are not used in evaluating the results of, or in allocating resources to, our segments. These unallocated expenses consist of stock-based compensation expense; amortization of intangible assets; restructuring, transition and other costs; and acquisition-related costs.
The following table provides a reconciliation of our total reportable segments’ operating income to our total operating income (loss):
 Three Months Ended Nine Months Ended
(In millions)December 29,
2017		 December 30,
2016		 December 29,
2017		 December 30,
2016
Total segment operating income$438
 $271
 $1,161
 $773
Reconciling items:       
Stock-based compensation expense125
 97
 448
 231
Amortization of intangible assets111
 94
 341
 183
Restructuring, transition and other costs93
 67
 278
 201
Acquisition-related costs13
 29
 51
 80
Total consolidated operating income (loss) from continuing operations$96
 $(16) $43
 $78
Note 3. Net Income Per ShareAssets Held for Sale
Basic income per share is computed by dividing net income byAssets held for sale
During fiscal 2020, we reclassified certain land and buildings previously reported as property and equipment to assets held for sale when the weighted-average number of common shares outstanding duringproperties were approved for immediate sale in their present condition and the period. Diluted net income per share also includes the incremental effect of dilutive potentially issuable common shares outstanding during the period using the treasury stock method. Dilutive potentially issuable common shares includes the dilutive effect of the shares underlying convertible debt and employee equity awards. Diluted loss per sharesale was the same as basic loss per share for the three and nine months ended December 30, 2016, as there was a loss from continuing operations in the periods and inclusion of potentially issuable shares was anti-dilutive.

The components of basic and diluted net income (loss) per share are as follows:
 Three Months Ended Nine Months Ended
(In millions, except per share amounts)December 29,
2017		 December 30,
2016		 December 29,
2017		 December 30,
2016
Income (loss) from continuing operations$1,311
 $(56) $1,185
 $(59)
Income from discontinued operations, net of income taxes31
 102
 12
 96
Net income$1,342
 $46
 $1,197
 $37
Income (loss) per share - basic:       
Continuing operations$2.12
 $(0.09) $1.93
 $(0.10)
Discontinued operations$0.05
 $0.16
 $0.02
 $0.16
Net income per share - basic$2.17
 $0.07
 $1.95
 $0.06
Income (loss) per share - diluted:       
Continuing operations$1.97
 $(0.09) $1.78
 $(0.10)
Discontinued operations$0.05
 $0.16
 $0.02
 $0.16
Net income per share - diluted (1)
$2.01
 $0.07
 $1.80
 $0.06
        
Weighted-average shares outstanding - basic619
 620
 614
 618
Dilutive potentially issuable shares:       
Convertible debt33
 —
 33
 —
Employee equity awards15
 —
 18
 —
Weighted-average shares outstanding - diluted667
 620
 665
 618
        
Anti-dilutive shares excluded from diluted net income per share calculation:       
Convertible debt—
 91
 —
 91
Employee equity awards1
 46
 1
 46
Total1
 137
 1
 137
(1)Net income per share amounts may not add due to rounding.
Under the treasury stock method, our Convertible Senior Notes will generally have a dilutive impact on net income per share when our average stock price for the period exceeds approximately $16.77 per share for the 2.5% Convertible Senior Notes and $20.41 per share for the 2.0% Convertible Senior Notes. During the three and nine months ended December 30, 2016, the conversion feature of both notes was anti-dilutive due to a loss from continuing operations.
Note 4. Restructuring, Transition and Other Costs
Our restructuring, transition and other costs and liabilities consist primarily of severance, facilities, transition and other related costs. Severance costs generally include severance payments, outplacement services, health insurance coverage and legal costs. Included in other exit and disposal costs are advisory fees incurred in connection with restructuring events and facilities exit costs, which generally include rent expense and lease termination costs, less estimated sublease income. Transition costs are incurred in connection with Board of Directors approved discrete strategic information technology transformation initiatives and primarily consist of consulting charges associated with our enterprise resource planning and supporting systems and costs to automate business processes. In addition, transition costs include expenses associated with divestitures of our product lines. Restructuring, transition and other costs are managed at the corporate level and are not allocated to our reportable segments. See Note 2 for information regarding the reconciliation of total segment operating income to total consolidated operating income (loss).
Fiscal 2017 Plan
We initiated a restructuring plan in the first quarter of fiscal 2017 to reduce complexity by means of long-term structural improvements (the “Fiscal 2017 Plan”). We have reduced headcount and closed certain facilities in connection with the Fiscal 2017 Plan and expect additional headcount reductions and facilities closures. We expect to incur additional costs of between $70 million and $90 million in connection with the Fiscal 2017 Plan primarily consisting of severance and termination benefits and facilities exit costs. These actions are expected to be completed inwithin one year. However, the first half of fiscal 2019. As of December 29, 2017, liabilities for excess facility obligations at several locations around the world are expectedcommercial real estate market continues to be paid throughoutadversely affected by the respective lease terms,COVID-19 pandemic, which delayed the longestexpected timing of such sales.
During the three months ended September 30, 2022, we determined certain land and buildings in Mountain View, California, which extends through fiscal 2022.

Restructuring, transitionwere previously reported as assets held for sale as of April 1, 2022, no longer qualify as held for sale classification. As a result, we reclassified the aggregate $26 million carrying value from assets held for sale to property and other costs summary
Our restructuring, transition and other costs are presented in the table below:
(In millions)Three Months Ended December 29, 2017 Nine Months Ended December 29, 2017
Severance and termination benefit costs$11
 $50
Other exit and disposal costs (benefit)(2) 15
Asset write-offs9
 18
Transition costs75
 195
Total$93
 $278
Restructuring summary
Our restructuring activities related to the Fiscal 2017 Plan are presented in the table below:
(In millions)Balance as of March 31, 2017 Costs, Net of
Adjustments		 Cash
Payments		 Non-Cash Charges Balance as of December 29, 2017 Cumulative Incurred to Date
Severance and termination benefit costs$20
 $50
 $(58) $—
 $12
 $126
Other exit and disposal costs26
 15
 (22) (7) 12
 94
Total$46
 $65
 $(80) $(7) $24
 $220
The restructuring liabilities are included in accounts payable, other current liabilities and other long-term obligationsequipment, net, in our Condensed Consolidated Balance Sheets.Sheets and recorded an immaterial catch-up depreciation adjustment, which is included in our Condensed Consolidated Statements of Operations.
We continue to actively market the remaining property for sale. We have taken into consideration the current real estate values and demand and continue to execute plans to sell this property. As of September 30, 2022, this property remains classified as assets held for sale. During the three and six months ended September 30, 2022, there were no impairments because the fair value of the properties less costs to sell either equals or exceeds their carrying value.
Note 5. Income Taxes4.Business Combinations
Merger with Avast
On August 10, 2021, we announced a transaction under which we intended to acquire the entire issued and to be issued share capital of Avast plc, a public company incorporated in England and Wales (Avast and such transaction, the Merger). The Merger was implemented by means of a court-sanctioned scheme of arrangement under Part 26 of the UK Companies Act 2006 (the Scheme). Under the terms of the Merger, Avast shareholders were entitled to elect to receive, for each ordinary share of Avast held, in respect of their entire holding of Avast shares, either: (i) $7.61 in cash and 0.0302 of a new share of our common stock (such option, the Majority Cash Option); or (ii) $2.37 in cash and 0.1937 of a new share of our common stock (such option, the Majority Stock Option). Each Avast Director who held Avast shares elected for the Majority Stock Option in respect to their entire beneficial holdings of Avast shares.
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The following table summarizesMerger was approved by our effective tax rate for income (loss) from continuing operations forBoard of Directors and by our shareholders, the periods presented:Board of Directors and shareholders of Avast, and regulators including the Federal Trade Commission under the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the HSR Act) and in Europe, the German Federal Cartel Office, the Spanish National Markets and Competition Commission and the U.K. Competition and Markets Authority.
Closing of Merger with Avast
 Three Months Ended Nine Months Ended
(In millions, except percentages)December 29,
2017		 December 30,
2016		 December 29,
2017		 December 30,
2016
Income (loss) from continuing operations before income taxes$705
 $(61) $502
 $(14)
Income tax expense (benefit)$(606) $(5) $(683) $45
Effective tax rate(86)% 8% (136)% (321)%
Our effective tax rate for income from continuing operations forOn September 12, 2022, we completed the threeMerger with Avast, and nine months ended December 29, 2017 differs from the federal statutory income tax rate primarily due to accounting for the effects of enactment of the Tax Cuts and Jobs Act (H.R.1) or the “Act” on December 22, 2017, the benefits of lower-taxed international earnings, the research and development tax credit, and excess tax benefits related to stock-based compensation, partially offset by various permanent differences.
In the third quarter of fiscal 2018, we revised our estimated annual effective rate to reflect a change in the federal statutory rate from 35% to 21%, as a result, we have changed our corporate name to Gen Digital Inc. and have become dual headquartered in Tempe, Arizona and Prague, Czech Republic. Avast is a global leader in consumer cybersecurity, offering a comprehensive range of digital security and privacy products and services that protect and enhance users’ online experiences. Combining Avast’s strength in privacy and our strength in identity will create a broad and complementary consumer product portfolio beyond core security and towards adjacent trust-based solutions. The Merger will provide greater geographic diversification and access to a larger user base and will accelerate the transformation of global consumer cyber safety.
Upon completion of the enactmentMerger, we acquired all of the Act, which included broad tax reforms that are applicableoutstanding common stock of Avast. Based on the election of the Avast shareholders, we paid cash consideration of approximately $6,913 million and issued 94,201,233 shares of our common stock to us. The rate change is effective January 1, 2018 and therefore will require us to use a blended U.S. statutory rate of 31.58% for our fiscal year 2018.Avast shareholders. As a result, we recognized a tax benefitimmediately following the closing of the Merger, Avast shareholders owned approximately 14% of our outstanding common stock. The fair value of our common stock provided in our tax provisionexchange for all outstanding ordinary shares of Avast was approximately $2,141 million.
Consideration transferred
The total consideration for the three and nine months ended December 29, 2017 related to applying the new blended tax rate to our taxable income, as well as adjusting our deferred tax balance to reflect the application of the Act.
Our effective tax rate for loss from continuing operations for the three and nine months ended December 30, 2016Merger with Avast was based on the historic statutory tax rate of 35%. Our effective tax rate for loss from continuing operations for the three months ended December 30, 2016 differs from the federal statutory income tax rate primarily due to the benefits of lower-taxed international earnings and the research and development credit, partially offset by various permanent differences. Our effective tax rate for loss from continuing operations for the nine months ended December 30, 2016 differs from the federal statutory income tax rate primarily due to the benefits of lower-taxed international earnings and the research and development credit, partially offset by various permanent differences and tax expense related to the loss of tax attributes due to restructuring activities. Additionally, as pre-tax income (loss) approaches break even, small changes can produce significant variability in the effective tax rate.
For the three and nine months ended December 29, 2017, we recorded an income tax benefit of $30 million and an income tax expense of $7 million on discontinued operations, respectively. For the three and nine months ended December 30, 2016,

we recorded an income tax benefit of $85 million and an income tax expense of $49 million on discontinued operations, respectively. See Note 13 for further details regarding discontinued operations.
Income tax expense from continuing operations for the three and nine months ended December 29, 2017 was adjusted to reflect the discrete effects of the Act and resulted in an increase in income tax benefit of $810 million. This includes an income tax benefit of $1.6 billion resulting from the application of the Act to existing deferred tax balances, including a reduction of the previously accrued deferred tax liability for foreign earnings by $1.4 billion. This was partially offset by $821 million of tax expense that was recorded for the one-time transition tax liability under the Act.
As of December 29, 2017, we have not completed our accounting for the tax effects of enactment of the Act; however, in certain cases, as described below, we have made a reasonable estimate of the effects on our existing deferred tax balances and the one-time transition tax. These amounts may require further adjustments as a result of additional future guidance from the U.S. Department of the Treasury, changes in our assumptions, and the availability of further information and interpretations. In other cases, we have not been able to make a reasonable estimate and we continue to account for those items based on our existing accounting policies and the provisions of the tax laws that were in effect immediately prior to enactment. For the items for which we were able to determine a reasonable estimate, we recognized a provisional tax benefit of $810 million, which is included as a component of income tax expense from continuing operations.
We remeasured certain deferred tax assets and liabilities based on an estimate of the rates at which they are expected to reverse in the future. However, we are still analyzing certain aspects of the Act and refining our calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. Additionally, our estimates for when timing differences will reverse could differ from actual results at year end, impacting our provisional tax benefit.
The Act contained a one-time transition tax that is based on our total post-1986 earnings and profits (“E&P”) that we previously deferred from U.S. income taxes. We recorded a provisional amount for our one-time transition tax liability of our foreign subsidiaries. We have not yet completed our calculation of the total post-1986 E&P for these foreign subsidiaries. The liability ultimately determined will be dependent on our final fiscal year results. Further, the transition tax is based in part on the amount of those earnings held in cash and other specified assets. This amount may change when we finalize the calculation of post-1986 foreign E&P previously deferred from U.S. federal taxation and finalize the amounts held in cash or other specified assets. Future accounting guidance may also change our provisional estimates for the transition tax.
We have not completed our analysis of the deferred tax accounting for the new taxes on global intangible low taxed income and, therefore, have not recorded provisional amounts. We have not determined whether our accounting policy will be to record these amounts as deferred taxes or as period costs. We do not have sufficient information to complete the analysis and are awaiting potential further guidance required to evaluate the impact of deferred tax accounting for these provisions. Following the Securities and Exchange Commission guidance on changes in the tax law for which we are unable to make a provisional estimate, we have continued to compute this aspect of the tax provision based on the tax laws that were in effect immediately prior to the Act being enacted.
Note 6. Acquisitions and Divestiture
Fiscal 2018 acquisitions
Fireglass and Skycure acquisitions
In July 2017, we completed our acquisitions of Israel-based Fireglass, Ltd. (“Fireglass”) and Skycure, Ltd. (“Skycure”). Fireglass provides agentless isolation solutions that prevent ransomware, malware and phishing threats in real-time from reaching user endpoints or the corporate network. With this acquisition, we further strengthened our enterprise security strategy to deliver an Integrated Cyber Defense Platform and extended our participation in the Secure Web Gateway and Email protection markets delivered both on premises and in the cloud. Skycure provides mobile threat defense for devices running modern operating systems, including iOS and Android. This acquisition extends our endpoint security capabilities. With the addition of Skycure our Integrated Cyber Defense Platform now has visibility into and control over all endpoint devices, including mobile devices, whether corporate owned or bring your own device. The total aggregate consideration for these acquisitions, primarily consisting of cash, was $345approximately $8,691 million, net of $15 million cash acquired.acquired, and consisted of the following:

(In millions)September 12, 2022
Cash and equity consideration for outstanding Avast common shares (1)
$8,112 
Repayment of outstanding Avast debt (2)
942 
Total consideration9,054 
Cash acquired363 
Net consideration transferred$8,691 
(1) Represents the total value of cash paid and our common stock issued to Avast shareholders pursuant to the Majority Cash/Stock Option in the Scheme.
(2) Represents the cash consideration paid concurrent with the close of the Merger to retire certain Avast debt, including repayment of the associated principal, accrued interest, premiums and other costs.
Fair value of assets acquired and liabilities assumed
We accounted for the Merger as a business combination. The identifiable assets acquired and liabilities assumed of Avast were recorded at their estimated fair values as of the acquisition date and consolidated with those of our company. The allocation of purchase price requires management to make significant estimates and assumptions in determining the fair values of the assets acquired and liabilities assumed, especially with respect to intangible assets. Third-party valuation specialists were also utilized for certain estimates.
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Our preliminary allocation of the aggregate purchase price, for these two acquisitions, based on the estimated fair values of the assets acquired and liabilities assumed, in July 2017, andas of the related weighted-average estimated useful lives,acquisition date, is as follows:
(In millions, except useful lives)July 24,
2017		 Weighted-Average Estimated Useful Life
Developed technology$123

5.5 years
Customer relationships11

7 years
Goodwill247
  
Deferred income tax liabilities(35)  
Other liabilities(1)  
Total purchase price$345
  
(In millions)September 12, 2022
Assets:
Accounts receivable$61 
Other current assets18 
Property and equipment31 
Operating lease assets18 
Intangible assets2,383 
Goodwill7,267 
Other long-term assets10 
Total assets acquired9,788 
Liabilities:
Current liabilities180 
Contract liabilities508 
Operating lease liabilities18 
Long-term deferred tax liabilities345 
Other long-term obligations46 
Total liabilities assumed1,097 
Total purchase price$8,691 
The preliminary allocation of the aggregate purchase price for the two acquisitions described above wasis based upon a preliminary valuations,valuation, and as additional information becomes available, our estimates and assumptions aremay be subject to refinement within the measurement period, (upwhich may be up to one year from the close date).acquisition date. Adjustments to the purchase price allocations may require adjustments to goodwill prospectively. The primary areas of the preliminary purchase price allocationsallocation that are not yet finalized are certain tax matters,include intangible assets and identification of contingencies.certain tax and litigation matters.
The preliminary goodwill arising fromof $7,267 million represents the acquisitionsexcess of the consideration transferred over the fair values of the assets acquired and liabilities assumed. It is attributedattributable to the expected synergies of the Merger, including revenuefuture cost savings from planned integration of infrastructure, facilities, personnel and systems, and other benefits that are expectedanticipated to be generated by combining Fireglass and Skycure with Symantec. A portionboth companies. Goodwill is allocated to our single reportable segment. Substantially all of the goodwill recognized is expected to be deductible for U.S. tax purposes. See Note 76 for morefurther information on goodwill.
Pro formaPreliminary identified intangible assets and their respective useful lives, as of September 12, 2022, are as follows:
(In millions, except for useful lives)Fair ValueWeighted-Average Estimated Useful Life
(Years)
Customer relationships (1)
$1,055 7 years
Developed technology (2)
1,244 6 years
Finite-lived trade names (2)
84 10 years
Total identified intangible assets$2,383 
(1) Customer relationships were valued using the multi-period excess earnings method, which is a form of the income approach that considers customer retention rate.
(2) Developed technology and finite-lived trade names were valued using the relief-from-royalty method, which is a form of the income approach that considers technology migration and probability of use, respectively.
Financing
In connection with the Merger, on September 12, 2022, we entered into the Amended and Restated Credit Agreement (Credit Agreement) with certain financial institutions, in which they agreed to provide us with (i) a $1,500 million revolving credit facility (Revolving Facility), a $3,910 million term loan A facility (Term A Facility), (iii) a $3,690 million term loan B facility (Term B Facility) and (iv) a $750 million tranche A bridge loan (Bridge Loan) (collectively, the senior credit facilities). The Bridge Loan was undrawn and immediately terminated upon the Merger’s close. The proceeds were or will be used (i) to finance the cash consideration payable for the Merger, (ii) to repay in full and terminate all commitments under Avast’s credit facility, (iii) to pay expenses relating to the Merger, (iv) to add cash to the balance sheet and (v) for general corporate purposes and on-going business activities. See Note 10 for further information about these debt instruments and the related debt covenants.
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In connection with the financing provided for Term B Facility, we incurred customary ticking fees with respect to the undrawn commitments that began accruing on the 61st day post-syndication. The ticking fees were payable at the per annum rate of (i) 50% of the interest rate margin for adjusted SOFR (or applicable replacement rate) loans for 61-90 days from January 28, 2022, the syndication date, and (ii) 100% of the interest rate margin for adjusted SOFR (or applicable replacement rate) loans on and after 91 days from the syndication date. Ticking fees were payable on the closing date of the transaction. During the three and six months ended September 30, 2022, we paid $31 million in ticking fees.
Impact on operating results
Our results of operations for these acquisitions have not been presented because they were not material to our consolidated results of operations, either individually or in the aggregate.
Other fiscal 2018 acquisitions
During the ninethree and six months ended December 29, 2017, in additionSeptember 30, 2022 include $48 million of net revenues and $1 million of loss before income taxes attributable to Avast beginning September 12, 2022. Additionally, we recognized transaction and integration costs of $58 million and $21 million for the acquisitions mentioned above, we completed acquisitions of other companies for an aggregate purchase price ofthree months ended September 30, 2022 and October 1, 2021, respectively, and $66 million netand $21 million for the six months ended September 30, 2022 and October 1, 2021, respectively. These costs were primarily associated with legal and professional services and other regulatory closing fees, which were expensed as incurred and included in general and administrative expenses in our Condensed Consolidated Statements of $1Operations.
On the closing date of the Merger, we also incurred $145 million cash acquired. Ofof debt issuance costs associated with the aggregate purchase price, $48senior credit facilities, of which $132 million was preliminarilycapitalized and recorded to goodwill.as a reduction of outstanding debt balances and $10 million was capitalized and included in Other long-term assets in our Condensed Consolidated Balance Sheets. The primary areasremaining $3 million was capitalized but immediately extinguished in conjunction with the termination of the preliminary purchase price allocations that are not yet finalized are certain tax matters, intangible assets, and identification of contingencies. These acquisitions were not material to our consolidated results of operations, either individually or in the aggregate.
Fiscal 2017 Blue Coat acquisition
During our second quarter of fiscal 2017, we acquired all of the outstanding common stock of Blue Coat, Inc. (“Blue Coat”). The total consideration for the acquisition was approximately $4.67 billion, net of cash acquired. The Blue Coat results are included in our Enterprise Security segment. See Note 2 for more information related to our segments.Bridge Loan.
Unaudited pro forma information
The following unaudited pro forma financial results combineinformation represents the combined historical results of Symantec and Blue Coat for the three and nine months ended December 30, 2016 and include the effects of pro forma adjustments as if Blue Coat were acquired in the beginning of our 2016 fiscal year. The pro forma results for the three and ninesix months ended DecemberSeptember 30, 20162022 and October 1, 2021, as if the Merger had been completed on April 3, 2021, the first day of fiscal 2022. The results presented below include nonrecurring adjustments to conform Avast financial information, prepared in accordance with International Financial Reporting Standards (IFRS), to U.S. GAAP as well as the impacts of material, nonrecurring pro forma adjustments, including amortization of acquired intangible assets, stock-based compensation, commissions, interest on debt usedissued to finance the acquisition,Merger, and acquisition-related transaction costs, as well asand the income tax effect of the other pro forma adjustments.
The unaudited pro forma financial results presented below do not include any anticipated synergies or other expected benefits of the acquisition. TheseMerger. The following table summarizes the unaudited pro forma results are presentedfinancial information:
Three Months EndedSix Months Ended
(In millions)September 30, 2022October 1, 2021September 30, 2022October 1, 2021
Net revenues$930 $925 $1,873 $1,845 
Net income (loss)$(62)$262 $47 $376 
The unaudited pro forma financial information is provided for informational purposes only and are not indicative of future operations or results that would have been achieved had the acquisitionMerger been completed as of the beginning of fiscal 2022.
Fiscal 2022 acquisition
On September 15, 2021, we completed an acquisition of an online reputation management and digital privacy solutions company for total aggregate consideration of $39 million, net of $1 million cash acquired. The purchase price was primarily allocated to intangible assets and goodwill. Our estimates and assumptions were subject to refinement within the measurement period, which is up to one year from the acquisition date. Adjustments to the purchase price during the measurement period required adjustments to be made to goodwill. The measurement period ended on September 14, 2022.
Note 5. Revenues
Contract liabilities
During the three and six months ended September 30, 2022, we recognized $502 million and $875 million from the contract liabilities balances as of July 1, 2022 and April 1, 2022, respectively. During the three and six months ended October 1, 2021, we recognized $506 million and $858 million from the contract liabilities balances as of July 2, 2021 and April 2, 2021, respectively.
Remaining performance obligations
Remaining performance obligations represent contract revenue that has not been recognized, which include contract liabilities and amounts that will be billed and recognized as revenue in future periods. As of September 30, 2022, we had $1,204 million of remaining performance obligations, excluding customer deposit liabilities of $480 million, of which we expect to recognize approximately 93% as revenue over the next 12 months.
See Note 17 for tabular disclosures of disaggregated revenue by solution and geographic region.
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Note 6. Goodwill and Intangible Assets
Goodwill
The changes in the carrying amount of goodwill were as follows:
(In millions)
Balance as of April 1, 2022$2,873 
Merger with Avast7,267 
Translation adjustments(14)
Balance as of September 30, 2022$10,126 
Intangible assets, net
 September 30, 2022April 1, 2022
(In millions)Gross
Carrying
Amount		Accumulated
Amortization		Net
Carrying
Amount		Gross
Carrying
Amount		Accumulated
Amortization		Net
Carrying
Amount
Customer relationships$1,639 $(431)$1,208 $583 $(382)$201 
Developed technology1,461 (164)1,297 217 (143)74 
Other91 (3)88 8 (3)5 
Total finite-lived intangible assets3,191 (598)2,593 808 (528)280 
Indefinite-lived trade names739 — 739 743 — 743 
Total intangible assets$3,930 $(598)$3,332 $1,551 $(528)$1,023 
As a result of our 2016Merger with Avast, we recorded $2,383 million of acquired intangible assets during the three months ended September 30, 2022. See Note 4 for further information about this business combination.
Amortization expense for purchased intangible assets is summarized below:
Three Months EndedSix Months EndedCondensed Consolidated Statements of Operations Classification
(In millions)September 30, 2022October 1, 2021September 30, 2022October 1, 2021
Customer relationships and other$29 $21 $50 $42 Operating expenses
Developed technology16 11 21 21 Cost of revenues
Total$45 $32 $71 $63 
As of September 30, 2022, future amortization expense related to intangible assets that have finite lives is as follows by fiscal year. year:
(In millions)
Remainder of 2023$237 
2024461 
2025400 
2026394 
2027381 
Thereafter720 
Total$2,593 
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Note 7. Supplementary Information
Cash and cash equivalents:
(In millions)September 30, 2022April 1, 2022
Cash$427 $609 
Cash equivalents668 1,278 
Total cash and cash equivalents$1,095 $1,887 
Accounts receivable, net:
(In millions)September 30, 2022April 1, 2022
Accounts receivable$153 $121 
Allowance for doubtful accounts(1)(1)
Total accounts receivable, net$152 $120 
Other current assets:
(In millions)September 30, 2022April 1, 2022
Prepaid expenses$127 $107 
Income tax receivable and prepaid income taxes166 35 
Other tax receivable25 27 
Other27 24 
Total other current assets$345 $193 
Property and equipment, net:
(In millions)September 30, 2022April 1, 2022
Land$14 $2 
Computer hardware and software489 462 
Office furniture and equipment27 27 
Buildings40 27 
Leasehold improvements64 56 
Construction in progress1 1 
Total property and equipment, gross635 575 
Accumulated depreciation and amortization(527)(515)
Total property and equipment, net$108 $60 
During the three months ended September 30, 2022, we reclassified $26 million of buildings and leasehold improvements, which were previously reported as held for sale as of April 1, 2022, to property and equipment, net. Adjustments associated with catch-up depreciation were immaterial. Refer to Note 3 for further information about our assets held for sale.
Other long-term assets:
(In millions)September 30, 2022April 1, 2022
Non-marketable equity investments$182 $178 
Long-term income tax receivable and prepaid income taxes21 25 
Deferred income tax assets346 351 
Long-term prepaid royalty45 53 
Other50 46 
Total other long-term assets$644 $653 
Short-term contract liabilities:
(In millions)September 30, 2022April 1, 2022
Deferred revenue$1,117 $743 
Customer deposit liabilities480 521 
Total short-term contract liabilities$1,597 $1,264 
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Other current liabilities:
(In millions)September 30, 2022April 1, 2022
Income taxes payable$232 $109 
Other taxes payable75 87 
Accrued legal fees300 273 
Accrued royalties50 49 
Accrued interest44 32 
Other151 89 
Total other current liabilities$852 $639 
Long-term income taxes payable:
(In millions)September 30, 2022April 1, 2022
Deemed repatriation tax payable$309 $437 
Other long-term income taxes9 3 
Uncertain tax positions (including interest and penalties)595 556 
Total long-term income taxes payable$913 $996 
Other income (expense), net:
Three Months EndedSix Months Ended
(In millions)September 30, 2022October 1, 2021September 30, 2022October 1, 2021
Interest income$3 $— $5 $— 
Foreign exchange gain (loss)2 1 1 2 
Gain (loss) on early extinguishment of debt(9)— (9)(5)
Gain on sale of properties— 175 — 175 
Other6 1 4 2 
Other income (expense), net$2 $177 $1 $174 
Supplemental cash flow information:
Six Months Ended
(In millions)September 30, 2022October 1, 2021
Income taxes paid, net of refunds$295 $273 
Interest expense paid$63 $60 
Cash paid for amounts included in the measurement of operating lease liabilities$11 $14 
Non-cash operating activities:
Operating lease assets obtained in exchange for operating lease liabilities$18 $35 
Reduction of operating lease assets as a result of lease terminations and modifications$30 $8 
Non-cash investing and financing activities:
Extinguishment of debt with borrowings from same creditors$— $494 
Non-cash consideration for the Merger with Avast$2,141 $— 
Note 8. Financial Instruments and Fair Value Measurements
For financial instruments measured at fair value, fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, we consider the principal or most advantageous market in which we would transact, and we consider assumptions that market participants would use when pricing the asset or liability.
The three levels of inputs that may be used to measure fair value are:
•Level 1: Quoted prices in active markets for identical assets or liabilities.
•Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in less active markets or model-derived valuations. All significant inputs used in our valuations, such as discounted cash flows, are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities.
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•Level 3: Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of assets or liabilities. We monitor and review the inputs and results of these valuation models to help ensure the fair value measurements are reasonable and consistent with market experience in similar asset classes.
Assets measured and recorded at fair value on a recurring basis
The following table summarizes our financial instruments measured at fair value on a recurring basis:
September 30, 2022April 1, 2022
(In millions)Fair ValueLevel 1Level 2Fair ValueLevel 1Level 2
Assets:
Money market funds$668 $668 $— $1,278 $1,278 $— 
Corporate bonds— — — 4 — 4 
Total$668 $668 $— $1,282 $1,278 $4 
Financial instruments not recorded at fair value on a recurring basis include our non-marketable equity investments and long-term debt.
Non-marketable equity investments
As of September 30, 2022 and April 1, 2022, the pro forma financial information:carrying value of our non-marketable equity investments was $182 million and $178 million, respectively.
Current and long-term debt
As of September 30, 2022 and April 1, 2022, the total fair value of our fixed rate debt was $2,496 million and $2,021 million, respectively. The fair value of our variable rate debt approximated its carrying value. The fair values of all our debt obligations were based on Level 2 inputs.
Note 9. Leases
We lease certain of our facilities, equipment and data center co-locations under operating leases that expire on various dates through fiscal 2028. Our leases generally have terms that range from 1 year to 8 years for our facilities, 1 year to 3 years for equipment and 1 year to 5 years for data center co-locations. Some of our leases contain renewal options, escalation clauses, rent concessions and leasehold improvement incentives.
The following summarizes our lease costs:
Three Months EndedSix Months Ended
(In millions)September 30, 2022October 1, 2021September 30, 2022October 1, 2021
Operating lease costs$3 $4 $7 $8 
Short-term lease costs— 1 1 2 
Variable lease costs2 2 3 3 
Total lease costs$5 $7 $11 $13 
Other information related to our operating leases was as follows:
Three Months Ended
September 30, 2022October 1, 2021
Weighted-average remaining lease term3.2 years4.9 years
Weighted-average discount rate4.37 %4.05 %
See Note 7 for cash flow information related to our operating leases.
As of September 30, 2022, the maturities of our lease liabilities by fiscal year are as follows:
(In millions)
Remainder of 2023$13 
202425 
202516 
20268 
20276 
Thereafter1 
Total lease payments69 
Less: Imputed interest(4)
Present value of lease liabilities$65 
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 December 30, 2016
(In millions)Three Months Ended Nine Months Ended
Net revenues$1,041
 $3,127
Net income (loss)$55
 $(64)
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LifeLock acquisition-related shareholder settlementNote 10. Debt
The following table summarizes components of our debt:
(In millions, except percentages)September 30, 2022April 1, 2022Effective
Interest Rate
3.95% Senior Notes due June 15, 2022$— $400 4.05 %
New 2.00% Convertible Unsecured Notes due August 15, 2022— 525 2.62 %
5.00% Senior Notes due April 15, 20251,100 1,100 5.00 %
Initial Term Loan due May 7, 2026— 1,010 
LIBOR plus (3)
Delayed Term loan due May 7, 2026— 703 
LIBOR plus (3)
Term A Facility due September 12, 20273,910 — 
SOFR + % (1)
6.75% Senior Notes due September 30, 2027900 — 6.75 %
Term B Facility due September 12, 20293,690 — 
SOFR + % (2)
1.29% Avira Mortgage due December 30, 20294 5 1.29 %
7.125% Senior Notes due September 30, 2030600 — 7.13 %
0.95% Avira Mortgage due December 30, 20303 4 0.95 %
Total principal amount10,207 3,747 
Less: unamortized discount and issuance costs(149)(11)
Total debt10,058 3,736 
Less: current portion(175)(1,000)
Total long-term debt$9,883 $2,736 
(1) Term A Facility due 2027 bears interest at a rate equal to Term SOFR plus a credit spread adjustment (CSA) plus a margin based either on the current debt rating of our non-credit-enhanced, senior unsecured long-term debt or consolidated adjusted leverage as defined in the underlying loan agreement.
(2) Term B Facility due 2029 bears interest at a rate equal to Term SOFR plus CSA plus 2.00%.
(3) The term loans bear interest at a rate equal to LIBOR plus a margin based either on the current debt rating of our non-credit-enhanced, senior unsecured long-term debt or consolidated adjusted leverage as defined in the underlying loan agreement.
The interest rates for the outstanding term loans are as follows:
September 30, 2022April 1, 2022
Term A Facility due September 12, 20274.77 %— %
Term B Facility due September 12, 20294.85 %— %
Initial Term Loan due May 7, 2026— %1.75 %
Delayed Term Loan due May 7, 2026— %1.75 %
As of September 30, 2022, the future contractual maturities of debt by fiscal year are as follows:
(In millions)
Remainder of 2023$59 
2024233 
2025234 
20261,333 
2027233 
Thereafter8,115 
Total future maturities of debt$10,207 
Credit facility
We have a credit agreement with financial institutions, which provides a revolving line of credit of $1 billion, a 5-year term loan of $500 million (the Initial Term Loan) and a delayed draw 5-year term loan commitment of $750 million (the Delayed Draw Term Loan). An amendment to the agreement (the First Amendment) also provides for an incremental increase under the Initial Term Loan of $525 million. All term loans and revolver credit facilities mature in May 2026, and the credit facilities remain senior secured.
The principal amount of the Initial Term Loan and the additional borrowings under the First Amendment must be repaid in quarterly installments on the last business day of each calendar quarter in an amount equal to 1.25% of the aggregate principal amount as of the date of the First Amendment. The principal amount of the Delayed Draw Term Loan must be repaid in quarterly installments on the last business day of each calendar quarter in an amount equal to 1.25% of aggregate principal amount as of the borrowing date of the Delayed Draw Term Loan. We may voluntarily repay outstanding principal balances without penalty.
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Interest on borrowings under the credit agreement can be based on a base rate or the LIBOR at our election. Based on our debt ratings and our consolidated leverage ratios as determined in accordance with the credit agreement, loans borrowed bear interest, in the case of base rate loans, at a per annum rate equal to the applicable base rate plus a margin ranging from 0.125% to 0.75%, and in the case of LIBOR loans, LIBOR, as adjusted for statutory reserves, plus a margin ranging from 1.125% to 1.75%. The unused revolving line of credit is subject to a commitment fee ranging from 0.125% to 0.30% per annum.
On February 9, 2017,September 12, 2022, we completedfully repaid the acquisitionoutstanding principal and accrued interest under the Initial Term Loan and Delay Draw Term Loan, which had an aggregate principal amount outstanding of LifeLock, Inc. (“LifeLock”)$1,703 million. In addition, we paid $3 million of accrued and unpaid interest through the redemption date. The repayments resulted in a loss on extinguishment of $2 million. We also terminated our undrawn revolving line of credit of $1,000 million, resulting in a loss on extinguishment of $4 million.
Senior credit facilities
Upon the close of the Merger, on September 12, 2022, we entered into the Amended and Restated Credit Agreement (Credit Agreement) with certain financial institutions, in which they agreed to provide us with (i) a $1,500 million revolving credit facility (Revolving Facility), a $3,910 million term loan A facility (Term A Facility), (iii) a $3,690 million term loan B facility (Term B Facility) and (iv) a $750 million tranche A bridge loan (Bridge Loan) (collectively, the senior credit facilities). The Bridge Loan was undrawn and immediately terminated upon the Merger’s close, resulting in a loss on extinguishment of $3 million. The Credit Agreement provides that we have the right at any time, subject to customary conditions, to request incremental revolving commitments and incremental term loans up to an unlimited amount, subject to certain customary conditions precedent and other provisions. The lenders under these facilities will not be under any obligation to provide any such incremental loans or commitments. We drew down the aggregate principal amounts of the Term A Facility and Term B Facility to finance the cash consideration payable for the transaction and to fully repay the outstanding principal and accrued interest of the existing credit facilities. The Credit Agreement replaced the existing credit facilities upon the close of the transaction. The Revolving Facility and Term A Facility will mature in September 2027, and the Term Facility B will mature in September 2029; the senior credit facilities remain senior secured.
The principal amounts of Term Facility A must be repaid in quarterly installments on the last business day of each calendar quarter equal to 1.25% of the aggregate principal amount as of the date of the Credit Agreement. The principal amounts of Term Facility B must be repaid in quarterly installments on the last business day of each calendar quarter equal to 0.25% of the aggregate principal amount as of the date of the Credit Agreement. Quarterly installment payments commence on March 31, 2023. We may voluntarily repay outstanding principal balances under the Revolving Facility and Term A Facility without penalty. Prior to the six month anniversary of the Closing Date, any voluntary prepayment of outstanding principal balances under the Term B Facility is subject to a 1.00% premium; after such time, voluntary prepayment is permitted without penalty. As of September 30, 2022, there were no borrowings outstanding under our Revolving Facility.
Interest on borrowings under the Credit Agreement can be based on a base rate or the SOFR at our election. Based on our debt ratings and our consolidated leverage ratios as determined in accordance with the Credit Agreement, loans borrowed bear interest, in the case of base rate loans, at a per annum rate equal to the applicable base rate plus CSA plus a margin ranging from 0.125% to 0.75%, and in the case of the SOFR loans, SOFR, as adjusted for statutory reserves, plus a margin ranging from 1.125% to 1.75%.
Debt covenant compliance
The Credit Agreement contains customary representations and warranties, affirmative and negative covenants. Each of the Revolving Facility and Term A Facility will be subject to a covenant that we maintain a consolidated leverage ratio less than or equal to (i) 6.0 to 1.0 from the Closing Date through the last day of the fourth full fiscal quarter following the Closing Date, (ii) 5.75 to 1.0 following the last day of the fourth fiscal quarter after the Closing Date through the last day of the eighth full fiscal quarter following the Closing Date and (iii) 5.25 to 1.0 for each fiscal quarter thereafter; provided that such maximum consolidated leverage ratio will increase to 5.75 to 1.0 for the four fiscal quarters ending immediately should we acquire property, business or assets in an aggregate amount greater than $250 million.
In connectionaddition, the Credit Agreement contains customary events of default under which our payment obligations may be accelerated, including, among others, non-payment of principal, interest or other amounts when due, inaccuracy of representations and warranties, violation of certain covenants, payment and acceleration cross defaults with this acquisition, we recognized a liabilitycertain other indebtedness, certain undischarged judgments, bankruptcy, insolvency or inability to pay debts, change of $68 million for a claimcontrol, the occurrence of certain events related to appraisal rights bythe Employee Retirement Income Security Act of 1974 (ERISA), and the Company experiencing a LifeLock stockholder,change of control. As of September 30, 2022, we were in compliance with all debt covenants.
Senior notes
On June 1, 2022, we fully repaid the principal and accrued interest under the 3.95% Senior Notes due June 2022, which had an aggregate principal amount outstanding of $400 million. In addition, we paid $7 million of accrued and unpaid interest through the redemption date.
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On September 19, 2022, we issued two series of senior notes, consisting of 6.75% Senior Notes due 2027 and 7.125% Senior Notes due 2030, for an aggregate principal of $1,500 million. They are senior unsecured obligations that rank equally in right of payment with all of our existing and future senior, unsecured, unsubordinated obligations and may be redeemed at any time, subject to the make-whole provisions contained in the applicable indenture relating to such series of notes. Interest on these series of notes is payable semi-annually in arrears on March 31 and September 30 for both the 6.75% Senior Notes and 7.125% Senior Notes, commencing on March 31, 2023. We may redeem some or all of the 6.75% Senior Notes due 2027 and 7.125% Senior Notes due 2030 at any time. The First Call Dates of the 6.75% Senior Notes due 2027 and 7.125% Senior Notes due 2030 are September 30, 2024 and September 30, 2025, respectively.
New 2.0% Convertible Notes
As described in Note 2, on April 2, 2022, we adopted ASU 2020-06 using the modified retrospective method. Prior to the adoption of this guidance, we accounted for our convertible debt instruments under the cash conversion model, requiring the convertible notes to be separated into an equity and liability component. We recognized $56 million in equity, net of tax, which consisted of $9 million in debt discount, representing the difference between the fair value of the liability component and par value, and $47 million in substantial premium due to the fiscal year 2020 amendment, which was accounted for as a debt extinguishment and resulted in the recognition of the New 2.0% Convertible Notes.
Upon adoption of ASU 2020-06, the cash conversion model is now eliminated. We de-recognized the remaining unamortized debt discount of $1 million on the New 2.0% Convertible Notes and therefore will no longer recognize the related amortization as interest expense. Additionally, we recorded a cumulative adjustment to retained earnings of $6 million, net of tax, for the debt discount amortization incurred from issuance through April 2, 2022. The remaining $47 million of substantial premium will remain in equity, as the new guidance did not eliminate the substantial premium model for convertible instruments. Under this new guidance, the New 2.0% Convertible Notes included in our Condensed Consolidated Balance Sheet reflect the par value of the liability
On August 15, 2022, we settled in the second quarter$525 million principal and conversion rights of fiscal 2018 for $74 millionour New 2.0% Convertible Notes in cash. The $6aggregate settlement amount of $630 million was based on $20.41 per underlying share into which the New 2.0% Convertible Notes were convertible. In addition, we paid $5 million of accrued and unpaid interest through the date of settlement. The repayments resulted in additionan adjustment to stockholders’ equity of $100 million.
Note 11. Derivatives
Our primary objective in holding derivatives is to reduce the volatility of earnings and cash flow associated with changes in foreign currency exchange rates and interest rates. These hedging contracts reduce, but do not entirely eliminate, the impact of adverse foreign exchange rate and interest rate movements. We do not use our derivative instruments for speculative trading purposes. By using derivative financial instruments to hedge exposures to changes in foreign exchange and interest rates, we are exposed to credit risk; however, we mitigate this risk by entering into hedging instruments with highly rated institutions that can be expected to fully perform under the terms of the applicable contracts.
Foreign currency exchange forward contracts
We conduct business in numerous currencies throughout our worldwide operations and our entities hold monetary assets or liabilities, earn revenues or incur costs in currencies other than the entity’s functional currency. As a result, we are exposed to foreign exchange gains or losses, which impact our operating results. As part of our foreign currency risk mitigation strategy, we have entered into monthly foreign exchange forward contracts to hedge foreign currency balance sheet exposure. These forward contracts are not designated as hedging instruments. We do not hedge our foreign currency exposure in a manner that entirely offsets the effects of the changes in foreign exchange rates.
As of September 30, 2022 and April 1, 2022, the fair value of these contracts was immaterial. The related gain (loss) recognized liability was recorded to general and administrative expensein Other income (expense), net in our Condensed Consolidated Statements of Operations.Operations was as follows:
Three Months EndedSix Months Ended
(In millions)September 30, 2022October 1, 2021September 30, 2022October 1, 2021
Foreign exchange forward contracts gain (loss)$(3)$(3)$(10)$— 

Divestiture
Website Security and Public Key Infrastructure solutions
On October 31, 2017, we completed the saleThe notional amount of our WSSoutstanding foreign exchange forward contracts in U.S. dollar equivalent was as follows:
(In millions)September 30, 2022April 1, 2022
Foreign exchange forward contracts purchased$171 $155 
Foreign exchange forward contracts sold$48 $191 
Note 12. Restructuring and PKI solutionsOther Costs
Our restructuring costs generally consist of severance and termination benefits, contract cancellation charges, asset write-offs and impairments and other exit and disposal costs. Severance costs generally include severance payments, outplacement services, health insurance coverage and legal costs. Contract cancellation charges primarily include penalties for early termination of contracts and write-offs of related prepaid assets. Other exit and disposal costs include costs to exit and consolidate facilities in our Enterprise Security segment to DigiCert. In accordanceconnection with the termsrestructuring events.
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Table of the agreement, we received aggregate consideration of $1.1 billion, consisting of approximately $960 million in cash and shares of common stock representing an approximate 28% interest in the outstanding common stock of DigiCert valued at $160 million as of October 31, 2017. The cash consideration is subject to adjustment for WSS and PKI closing date cash and working capital as specified in the purchase agreement.
We determined the estimated fair value of our equity investment with the assistance of valuations performed by third party specialists and estimates made by management. We utilized a combination of the income approach based on a discounted cash flow method and market approach based on the guideline public company method that focuses on comparing DigiCert to reasonably similar publicly traded companies. The equity interest received is being accounted for under the equity method. We record our interest in the net earnings (loss) of DigiCert based on the most recently available financial statements of DigiCert, which are provided to us on a three month lag, along with adjustments for unrealized profits or losses on intra-entity transactions and amortization of basis differences, in Income (loss) from equity interests in our Condensed Consolidated Statement of Operations. Profits or losses related to intra-entity sales with DigiCert are eliminated until realized by us or DigiCert. Basis differences represent differences between the original fair value of the investment and the underlying equity in net assets of the investment and are generally amortized over the lives of the related assets that gave rise to them. The carrying amount of the investment in equity interest will be adjusted to reflect our interest in net earnings, dividends received and other-than-temporary impairments.
As of the transaction close date, the carrying amounts of the major classes of assets and liabilities associated with the divestiture of our WSS and PKI solutions were as follows:
Contents
(In millions) October 31,
2017
Assets:  
Cash and cash equivalents $2
Accounts receivable, net 34
Goodwill and intangible assets, net 670
Other assets 40
Total assets 746
Liabilities:  
Deferred revenue 285
Other liabilities 11
Total liabilities $296
As of the transaction close date, we also had $8 million in cumulative currency translation losses related to subsidiaries that were sold, which was reclassified from Accumulated other comprehensive income (“AOCI”) to the gain on divestiture. In addition, we incurred direct costs of $8 million, which was netted against the gain on divestiture, and tax expense of $137 million.
The following table presents the gain before income taxes associated with the divestiture:
(In millions) 
Gain on divestiture: 
Gain on sale of short-term investment$7
Gain on sale of other assets and liabilities651
Total gain on divestiture$658
The gain on sale of short-term investment represents the gain on the sale of a short-term investment that was included in the transaction and resulted in the reclassification on the transaction close date of $7 million of unrealized gains from AOCI to the gain on divestiture.
The following table presents the income before income taxes for our WSS and PKI solutions for the periods indicated:
 Three Months Ended Nine Months Ended
(In millions)December 29,
2017		 December 30,
2016		 December 29,
2017		 December 30,
2016
Income before income taxes$8
 $49
 $66
 $157
September 2022 Plan
In connection with the divestiture, we entered intoMerger, our Board of Directors approved a Transition Services Agreement ("TSA") with DigiCert pursuantrestructuring plan (the September 2022 Plan) to realize cost savings and operational synergies, which we provide certain services including human resource services, financial support services and information technology services to

DigiCert. The services under the TSA commenced withbecame effective upon the close of the transactionMerger on September 12, 2022. Actions under this plan include the reduction of our workforce, contract terminations, facilities closures, and expire at various dates throughthe sale of underutilized facilities. We expect that we will incur total costs up to $280 million, with $180 million and $100 million estimated to be incurred within the first and second full years, respectively, following the completion of the Merger. These actions are expected to be completed by fiscal 2019,2024. As of September 30, 2022, we have incurred costs of $6 million related to the September 2022 Plan.
December 2020 Plan
In December 2020, our Board of Directors approved a restructuring plan (the December 2020 Plan) to consolidate facilities and reduce operating costs in connection with extension options. our acquisition of Avira. These actions were completed in fiscal 2022. Any remaining costs or adjustments are immaterial. We incurred total costs of $24 million under the December 2020 Plan.
Restructuring and other costs summary
During the three and ninesix months ended December 29, 2017,September 30, 2022, we recorded incomeincurred total restructuring costs of $10$9 million and associated direct$11 million, respectively. During the three and six months ended October 1, 2021, we incurred total restructuring costs of $2$5 million and $12 million, respectively.
Note 13. Income Taxes
The following table summarizes our effective tax rate for all services providedthe periods presented:
Three Months EndedSix Months Ended
(In millions, except percentages)September 30, 2022October 1, 2021September 30, 2022October 1, 2021
Income (loss) before income taxes$195 $433 $424 $685 
Income tax expense (benefit)$126 $100 $155 $171 
Effective tax rate65 %23 %37 %25 %
Our effective tax rate for the three and six months ended September 30, 2022 differs from the federal statutory income tax rate primarily due to DigiCertstate taxes and the U.S. taxation on foreign earnings, and certain items this quarter including the tax impacts of internal restructuring, deductibility of transaction costs from the Merger, and the limitations of foreign taxes due to the increase of interest expense.
Our effective tax rate for the three and six months ended October 1, 2021 differs from the federal statutory income tax rate primarily due to state taxes and U.S. taxation on foreign earnings.
We are a multinational company dual headquartered in Otherthe U.S. and Czech Republic, subject to tax in multiple U.S. and international tax jurisdictions. Our results of operations would be adversely affected to the extent that our geographical mix of income (expense)becomes more weighted toward jurisdictions with higher tax rates and would be favorably affected to the extent the relative geographic mix shifts to lower tax jurisdictions. Our results can also be impacted by the costs incurred and the potential deductibility of the expenses. Any change in our Condensed Consolidated Statementmix of Operations.earnings is dependent upon many factors and is therefore difficult to predict.
In connection with the Merger, we established $345 million of net deferred tax liabilities primarily related to the excess of book basis over the tax basis of acquired identified intangible assets. The net deferred tax liabilities are based upon certain assumptions underlying our preliminary purchase price allocation. Upon finalization of the purchase price allocation, additional adjustments to the amount of our net deferred taxes may be required.
The timing of the resolution of income tax examinations is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year. Given the potential resolution of uncertain tax positions involves multiple tax periods and jurisdictions, we are unable to accurately estimate when these unrecognized tax benefits will be realized or released. However, it is reasonably possible that there could be significant changes to our unrecognized tax benefits in the next 12 months.
We continue to monitor the progress of ongoing income tax controversies and the impact, if any, of the expected expiration of the statute of limitations in various taxing jurisdictions.
Note 7. Goodwill and Intangible Assets
Goodwill
The changes in the carrying amount of goodwill by segment are as follows:
(In millions)Enterprise Security Consumer Digital Safety Total
Net balance as of March 31, 2017$6,078
 $2,549
 $8,627
Acquisitions256
 39
 295
Divestiture(606) —
 (606)
Translation and other adjustments5
 (3) 2
Net balance as of December 29, 2017$5,733
 $2,585
 $8,318
Intangible assets, net
 December 29, 2017 March 31, 2017
(In millions)Gross
Carrying
Amount		 Accumulated
Amortization		 Net
Carrying
Amount		 Gross
Carrying
Amount		 Accumulated
Amortization		 Net
Carrying
Amount
Customer relationships$1,462
 $(305) $1,157
 $1,646
 $(322) $1,324
Developed technology1,043
 (323) 720
 1,006
 (229) 777
Finite-lived trade names and other13
 (7) 6
 46
 (26) 20
Total finite-lived intangible assets2,518
 (635) 1,883
 2,698
 (577) 2,121
Indefinite-lived trade names852
 —
 852
 864
 —
 864
In-process research and development19
 —
 19
 19
 —
 19
Total intangible assets$3,389
 $(635) $2,754
 $3,581
 $(577) $3,004
Amortization expense for purchased intangible assets is summarized below:
 Three Months Ended Nine Months Ended Statements of Operations Classification
(In millions)December 29, 2017 December 30, 2016 December 29, 2017 December 30, 2016 
Customer relationships and other$52
 $43
 $166
 $91
 Operating expenses
Developed technology59
 51
 175
 92
 Cost of revenues
Total$111
 $94
 $341
 $183
  
As of December 29, 2017, future amortization expense related to intangible assets that have finite lives is as follows by fiscal year:
(In millions)December 29,
2017
Remainder of 2018$110
2019436
2020431
2021321
2022259
Thereafter326
Total$1,883
See Note 6 for more information on our acquisitions and divestiture.

Note 8. Debt
The following table summarizes components of our debt:
(In millions, except percentages)December 29,
2017		 March 31,
2017		 Effective
Interest Rate
2.75% Senior Notes due June 15, 2017$—
 $600
 2.79%
Senior Term Loan A-1 due May 10, 2019300
 1,000
 
LIBOR plus (1)

Senior Term Loan A-2 due August 1, 2019800
 800
 
LIBOR plus (1)

Senior Term Loan A-3 due August 1, 201970
 200
 
LIBOR plus (1)

4.2% Senior Notes due September 15, 2020750
 750
 4.25%
2.5% Convertible Senior Notes due April 1, 2021500
 500
 3.76%
Senior Term Loan A-5 due August 1, 2021500
 1,710
 
LIBOR plus (1)

2.0% Convertible Senior Notes due August 15, 20211,250
 1,250
 2.66%
3.95% Senior Notes due June 15, 2022400
 400
 4.05%
5.0% Senior Notes due April 15, 20251,100
 1,100
 5.23%
Total principal amount5,670
 8,310
  
Less: Unamortized discount and issuance costs(83) (124)  
Total debt5,587
 8,186
  
Less: Current portion—
 (1,310)  
Total long-term portion$5,587
 $6,876
  
(1)The senior term facilities bear interest at a rate equal to the London Interbank Offered Rate (“LIBOR”) plus a margin of 1.50% to 2.00% based on the current debt rating of our non-credit-enhanced, senior unsecured long-term debt and our underlying loan agreements.
Based on the closing price of our common stock of $28.06 on December 29, 2017, the if-converted values of our 2.5% and 2.0% Convertible Senior Notes exceed the principal amount by approximately $337 million and $469 million, respectively.
The following table sets forth total interest expense recognized related to our 2.5% and 2.0% Convertible Senior Notes:
 Three Months Ended Nine Months Ended
(In millions)December 29,
2017		 December 30,
2016		 December 29,
2017		 December 30,
2016
Contractual interest expense$9
 $10
 $28
 $20
Amortization of debt discount and issuance costs$4
 $3
 $12
 $9
As of December 29, 2017, the future maturities of debt by fiscal year are as follows:
(In millions)December 29,
2017
Remainder of 2018$—
2019—
20201,170
20211,250
20221,750
Thereafter1,500
Total future maturities of debt$5,670
Debt repayments
During the third quarter of fiscal 2018, we prepaid principal amounts of $130 million of our Senior Term Loan A-3 and $500 million of our Senior Term Loan A-1.
During the first quarter of fiscal 2018, we prepaid principal amounts of $1.2 billion of our Senior Term Loan A-5 and $200 million of our Senior Term Loan A-1. We also repaid in cash at maturity the $600 million remaining principal balance of our 2.75% Senior Notes due June 15, 2017.

Note 9. Fair Value Measurements
Assets measured and recorded at fair value on a recurring basis
Our cash equivalents consist primarily of money market funds whose carrying amount is a reasonable estimate of fair value. Our short-term investments consist of investment securities with original maturities greater than three months whose fair value approximates their amortized cost and marketable equity securities.
The following table summarizes our assets measured at fair value on a recurring basis, by level, within the fair value hierarchy:
 December 29, 2017 March 31, 2017
(In millions)Fair Value Cash and Cash Equivalents Short-Term Investments Fair Value Cash and Cash Equivalents Short-Term Investments
Cash$712
 $712
 $—
 $1,183
 $1,183
 $—
Non-negotiable certificates of deposit381
 381
 —
 15
 15
 —
Level 1 (Quoted prices in active markets for identical assets):           
Money market funds814
 814
 —
 2,532
 2,532
 —
U.S. government securities64
 64
 —
 94
 94
 —
Marketable equity securities—
 —
 —
 9
 —
 9
Total level 1878
 878
 —
 2,635
 2,626
 9
Level 2 (Significant other observable inputs):           
Corporate bonds367
 —
 367
 —
 —
 —
U.S. agency securities63
 63
 —
 75
 75
 —
Commercial paper119
 108
 11
 348
 348
 —
Negotiable certificates of deposit12
 —
 12
 —
 —
 —
Total level 2561
 171
 390
 423
 423
 —
Total$2,532
 $2,142
 $390
 $4,256
 $4,247
 $9
There were no transfers between fair value measurement levels during the nine months ended December 29, 2017.
The following table presents the contractual maturities of our debt investments as of December 29, 2017:
(In millions)Fair Value
Due in one year or less$66
Due after one year through five years324
Total$390
Actual maturities may differ from the contractual maturities because borrowers may have the right to call or prepay certain obligations.
Fair value of debt
As of December 29, 2017 and March 31, 2017, the total fair value of our debt was $5.7 billion and $8.3 billion, respectively, based on Level 2 inputs.

Note 10.14. Stockholders' Equity
Dividends
The following table summarizes dividends declared and paid and dividend equivalents paid for the periods presented:
 Three Months Ended Nine Months Ended
(In millions, except per share data)December 29,
2017		 December 30,
2016		 December 29,
2017		 December 30,
2016
Dividends declared and paid$47
 $46
 $139
 $139
Dividend equivalents paid2
 7
 24
 34
Total dividends and dividend equivalents paid$49
 $53
 $163
 $173
Cash dividends declared per common share$0.075
 $0.075
 $0.225
 $0.225
Our restricted stock units and performance based restricted stock units are entitled to dividend equivalents to be paid in the formOn November 8, 2022, we announced that our Board of cash upon vesting for each share of the underlying unit.
On January 31, 2018, weDirectors declared a cash dividend of $0.075$0.125 per share of common stock to be paid on March 14, 2018 to all stockholders of record as of the close of business on February 20, 2018.in December 2022. All shares of common stock issued and outstanding and all shares of unvested restricted stock units (RSUs) and performance-based restricted stock units (PRUs) as of the record date will be entitled to the dividend and dividend equivalents, respectively.equivalent rights (DERs), respectively, which will be paid out if and when the underlying shares are released. However, the 4 million unvested RSUs assumed in connection with the Merger will not be entitled to DERs. See Note 15 for further information about these equity awards. Any future dividends and dividend equivalentsDERs will be subject to the approval of our Board of Directors.
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Stock repurchase program
As of December 29, 2017, the remaining balanceUnder our stock repurchase program, we may purchase shares of our share repurchase authorization is $800 millionoutstanding common stock on the open market and does not have an expiration date.
Accelerated stock repurchase agreement
During the fourth quarter of fiscal 2017, we entered into anthrough accelerated stock repurchase (“ASR”) agreementtransactions. As of September 30, 2022, we had $1,370 million remaining under the authorization to be completed in future periods with financial institutionsno expiration date. No shares were repurchased in the prior fiscal year during the six months ended October 1, 2021.
The following table summarizes activity related to repurchase an aggregatethis program during the six months ended September 30, 2022:
Six Months Ended
(In millions, except per share amounts)September 30, 2022
Number of shares repurchased17 
Average price per share$23.60 
Aggregate purchase price$404 
Subsequent to September 30, 2022, we executed repurchases of $500 million of our common stock. Pursuant to the ASR agreement, we made an upfront payment of $500 million to the financial institutions and received and retired an initial delivery of 14.214 million shares of our common stock. stock for an aggregate amount of $308 million. As a result, we have $1,062 million remaining under our existing share repurchase program.
Accumulated other comprehensive income (loss)
Accumulated other comprehensive income (loss), net of taxes, consisted of foreign currency translation adjustments:
(In millions)Foreign Currency
Translation Gain (Loss)
Balance as of April 1, 2022$(4)
Other comprehensive income (loss), net of taxes(11)
Balance as of September 30, 2022$(15)
Note 15. Stock-Based Compensation
Avast equity awards
In connection with the first quarterMerger, we assumed the outstanding equity awards under two of fiscal 2018, we completedAvast’s equity incentive plans (the Avast Holding B.V. 2014 Share Option Plan and the ASRRules of the Avast plc Long Term Incentive Plan (collectively, the Avast Plans)), which consisted of 4 million unvested RSUs. The assumed RSUs generally retain the terms and receivedconditions under which they were originally granted. We intend to grant all additional shares that remain available for issuance under the Avast Plans. Upon vesting, these assumed RSUs and retired anany additional delivery of 2.2 millionshares granted will settle into shares of our common stock. See Note 4 for further information about this business combination.
The following table sets forth the stock-based compensation expense recognized for our equity incentive plans:
 Three Months EndedSix Months Ended
(In millions)September 30, 2022October 1, 2021September 30, 2022October 1, 2021
Cost of revenues$1 $1 $2 $1 
Sales and marketing8 3 15 8 
Research and development6 3 12 9 
General and administrative14 6 24 15 
Total stock-based compensation expense$29 $13 $53 $33 
Income tax benefit for stock-based compensation expense$(4)$(3)$(8)$(7)
As of September 30, 2022, the total shares receivedunrecognized stock-based compensation costs related to our unvested stock-based awards was $297 million, which will be recognized over an estimated weighted-average amortization period of 2.2 years.
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The following table summarizes additional information related to our stock-based awards:
 Six Months Ended
(In millions, except per grant data)September 30, 2022October 1, 2021
Restricted stock units (RSUs):
Weighted-average fair value per award granted$23.34 $21.55 
Awards granted6 3 
Total fair value of awards released$50 $51 
Outstanding and unvested10 5 
Performance-based restricted stock units (PRUs):
Weighted-average fair value per award granted$30.47 $28.84 
Awards granted1 1 
Total fair value of awards released$4 $— 
Outstanding and unvested at target payout4 2 
Dividend equivalent rights (DERs)
Our RSUs and retired PRUs, except the 4 million unvested RSUs assumed under the termsAvast Plans, contain DERs that entitles the recipient of an award to receive cash dividend payments if and when the ASR agreement were 16.4underlying shares are released. The amount of DERs equals the amount of cumulated dividends on the issued number of common stock that would have been payable since the date the associated award was granted. As of September 30, 2022 and April 1, 2022, current dividends payable related to DER was $4 million with an average price paid per shareand $11 million, respectively, recorded as part of $30.51.
ChangesOther current liabilities in AOCI by component
Components of AOCI net of taxes were as follows:
(In millions)
Foreign Currency
Translation Adjustments
 
Unrealized Gain (Loss) on
Available-For-Sale
Securities
 Total
Balance as of March 31, 2017$7
 $5
 $12
Reclassification to net income5
 (4) 1
Other comprehensive income (loss)4

(2)
2
Balance as of December 29, 2017$16
 $(1) $15

Net gain (loss) reclassified from AOCI to the Condensed Consolidated StatementBalance Sheets, and long-term dividends payable related to DER was $2 million and $2 million, respectively, recorded as part of Operations was as follows:Other long-term liabilities.
  Amount Reclassified from AOCI Line Items in Condensed Consolidated Statements of Operations
  Three Months Ended Nine Months Ended 
(In millions) December 29,
2017		 December 30,
2016		 December 29,
2017		 December 30,
2016		 
AOCI Components:          
Foreign currency translation adjustments:          
Gain on liquidations $—
 $—
 $3
 $—
 Other income (expense), net
Sale of foreign entities (8) —
 (8) —
 Gain on divestiture
Total adjustments (8) —
 (5) —
 Income (loss) from continuing operations
Available-for-sale securities:          
Gain realized 7
 —
 7
 —
 Gain on divestiture
Income tax expense 3
 —
 3
 —
 Income tax expense (benefit)
Gain, net of tax 4
 —
 4
 —
 Income (loss) from continuing operations
Total $(4) $—
 $(1) $—
  
Note 11. Stock-Based Compensation16. Net Income Per Share
Stock-based compensation expense
The following table presentsBasic income per share is computed by dividing net income by the stock-based compensation expense recognized inweighted-average number of common shares outstanding during the period. Diluted net income per share also includes the incremental effect of dilutive potentially issuable common shares outstanding. Dilutive potentially issuable common shares include the dilutive effect of the shares underlying our Condensed Consolidated Statements of Operations:
 Three Months Ended Nine Months Ended
(In millions)December 29,
2017		 December 30,
2016		 December 29,
2017		 December 30,
2016
Cost of revenues$7
 $6
 $22
 $14
Sales and marketing30
 25
 123
 63
Research and development49
 25
 143
 64
General and administrative39
 41
 160
 90
Total stock-based compensation expense125
 97
 448
 231
Tax expense (benefit) associated with stock-based compensation expense2
 (34) (107) (74)
Net stock-based compensation expense$127
 $63
 $341
 $157
employee equity awards and convertible debt until its extinguishment on August 15, 2022.
The tax expense (benefit) associated with stock-based compensation expense forcomponents of basic and diluted net income (loss) per share are as follows:
 Three Months EndedSix Months Ended
(In millions, except per share amounts)September 30, 2022October 1, 2021September 30, 2022October 1, 2021
Net income (loss)$69 $333 $269 $514 
Net income (loss) per share - basic$0.12 $0.57 $0.46 $0.88 
Net income (loss) per share - diluted$0.12 $0.56 $0.45 

$0.87 
Weighted-average shares outstanding - basic590 582 583 581 
Dilutive potentially issuable shares:
Convertible debt2 7 12 

7 
Employee equity awards3 2 4 

3 
Weighted-average shares outstanding - diluted595 591 599 

591 
Anti-dilutive shares excluded from diluted net income per share calculation:
Employee equity awards— 1 — 1 
Total— 1 — 1 
Upon adoption of ASU 2020-06 under the modified retrospective method, we are required to apply the if-converted method to our calculation of diluted earnings per share. For the three and ninesix months ended December 29, 2017 reflectsSeptember 30, 2022, we adjust for the impactdilutive effect of the enactmentmaximum number of potential shares to be issued upon settlement of our outstanding convertible debt instruments. Prior period earnings per share amounts are not restated under the Act. The tax benefit associated with stock-based compensation expense formodified retrospective method. For the three and ninesix months ended December 30, 2016 reflectsOctober 1, 2021, the historic tax rates.dilutive effect of our debt instruments is calculated using the treasury stock method, under which our convertible debt instruments generally had a dilutive impact on net income per share when our average stock price for the period exceeds the conversion prices for the convertible debt instruments. The initial adoption of ASU 2020-06 had a $0.01 impact on dilutive earnings per share, with the dilutive shares underlying the convertible debt increasing by 18 million shares.

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Note 17. Segment and Geographic Information
We operate as one reportable segment. Our Chief Operating Decision Maker reviews financial information presented on a consolidated basis to evaluate company performance and to allocate and prioritize resources.
The following table summarizes additionalnet revenues for our major solutions:
Three Months EndedSix Months Ended
(In millions)September 30, 2022October 1, 2021September 30, 2022October 1, 2021
Consumer security revenues$436 $404 $838 $805 
Identity and information protection revenues298 277 592 551 
Total Cyber Safety revenues734 681 1,430 1,356 
Legacy revenues14 11 25 22 
Total net revenues (1)
$748 $692 $1,455 $1,378 
(1) During the three months ended September 30, 2022, total net revenues include an unfavorable foreign exchange impact of $31 million, consisting of $30 million from our consumer security solutions and $1 million from our identity and information relatedprotection solutions. During the six months ended September 30, 2022, total net revenues include an unfavorable foreign exchange impact of $58 million, consisting of $56 million from our consumer security solutions, $1 million from our identity and information protection solutions and $1 million from our legacy solutions.
From time to time, changes in our stock-based compensation:product hierarchy cause changes to the product categories above. When changes occur, we recast historical amounts to match the current product hierarchy. The changes have been reflected for all periods presented above. Consumer security includes revenues from our Norton 360 Security offerings, Norton Security, Avast Security offerings, Norton Secure VPN, Avira Security and other consumer security and device performance solutions through our direct, partners and small business channels. Identity and information protection includes revenues from our Norton 360 with LifeLock offerings, LifeLock identity theft protection and other information protection and privacy solutions. Legacy includes revenues from products or solutions that are no longer in operations in exited markets, have been discontinued or identified to be discontinued, or remain in maintenance mode as a result of integration and product portfolio decisions.
Geographic information
Net revenues by geography are based on the billing addresses of our customers. The following table represents net revenues by geographic area for the periods presented:
Three Months EndedSix Months Ended
(In millions)September 30, 2022October 1, 2021September 30, 2022October 1, 2021
Americas$529 $485 $1,037 $962 
EMEA139 125 259 252 
APJ80 82 159 164 
Total net revenues (1)
$748 $692 $1,455 $1,378 
Note: The Americas include U.S., Canada and Latin America; EMEA includes Europe, Middle East and Africa; APJ includes Asia Pacific and Japan.
(1) During the three months ended September 30, 2022, total net revenues include an unfavorable foreign exchange impact of $31 million, consisting of $18 million from EMEA and $13 million from APJ. During the six months ended September 30, 2022, total net revenues include an unfavorable foreign exchange impact of $58 million, consisting of $34 million from EMEA and $24 million from APJ.
Revenues from customers inside the U.S. were $493 million and $972 million during the three and six months ended September 30, 2022, respectively, and $460 million and $916 million during the three and six months ended October 1, 2021, respectively. No other individual country accounted for more than 10% of revenues.
The table below represents cash, cash equivalents and short-term investments held in the U.S. and internationally in various foreign subsidiaries.
(In millions)September 30, 2022April 1, 2022
U.S.$644 $1,220 
International451 671 
Total cash, cash equivalents and short-term investments$1,095 $1,891 
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 Nine Months Ended
(In millions, except per grant data)December 29,
2017		 December 30,
2016
Restricted stock units:   
Weighted-average fair value per award granted and assumed$30.20
 $18.80
Awards granted and assumed11.9
 14.2
Total fair value of awards released$265
 $138
Total unrecognized compensation expense, net of estimated forfeitures$369
 $257
Weighted-average remaining recognition period1.7 years
 2.0 years
Performance-based restricted stock units:   
Weighted-average fair value per award granted and assumed$32.94
 $19.99
Awards granted and assumed3.7
 5.0
Total fair value of awards released$24
 $13
Total unrecognized compensation expense, net of estimated forfeitures$92
 $63
Weighted-average remaining recognition period0.9 years
 1.2 years
Stock options:   
Total intrinsic value of stock options exercised$123
 $57
Total unrecognized compensation expense, net of estimated forfeitures$79
 $116
Weighted-average remaining recognition period1.0 year
 1.6 years
The table below represents our property and equipment, net of accumulated depreciation and amortization, by geographic area, based on the physical location of the asset, at the end of each period presented.
(In millions)September 30, 2022April 1, 2022
U.S.$43 $16 
Ireland25 27 
Czech Republic24 — 
Germany12 13 
Other countries (1)
4 4 
Total property and equipment, net$108 $60 
(1) No other individual country represented more than 10% of the respective totals.
Our operating lease assets by geographic area, based on the physical location of the asset, at the end of each period presented, are as follows:
(In millions)September 30, 2022April 1, 2022
U.S.$30 $66 
Czech Republic11 — 
Other countries (1)
9 8 
Total operating lease assets$50 $74 
(1) No other individual country represented more than 10% of the respective totals.
Significant customers
No customer accounted for 10% or more of our net revenues during the six months ended September 30, 2022 and October 1, 2021. Customers which are distributors that accounted for over 10% of our total accounts receivable were as follows:
September 30, 2022April 1, 2022
Customer A14 %23 %
Customer B18 %— %
Note 12.18. Commitments and Contingencies
Indemnifications
In the ordinary course of business, we may provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners, subsidiaries and other parties with respect to certain matters, including, but not limited to, losses arising out of our breach of agreements or representations and warranties made by us. In addition, our bylaws contain indemnification obligations to our directors, officers, employees, and agents, and we have entered into indemnification agreements with our directors and certain of our officers to give such directors and officers additional contractual assurances regarding the scope of the indemnification set forth in our bylaws and to provide additional procedural protections. We maintain director and officer insurance, which may cover certain liabilities arising from our obligation to indemnify our directors and officers. It is not possible to determine the aggregate maximum potential loss under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Such indemnification agreements might not be subject to maximum loss clauses. Historically, we have not incurred material costs as a result of obligations under these agreements, and we have not accrued any material liabilities related to such indemnification obligations in our Condensed Consolidated Financial Statements.
In connection with the sale of Veritas and the sale of our former information managementEnterprise Security business (“Veritas”),to Broadcom, we assigned several leases to Veritas Technologies LLC or itsBroadcom and/or their related subsidiaries. As a condition to consenting to the assignments, certain lessors required us to agree to indemnify the lessor under the applicable lease with respect to certain matters, including, but not limited to, losses arising out of Veritas Technologies LLC, Broadcom, or itstheir related subsidiaries’ breach of payment obligations under the terms of the lease. As with our other indemnification obligations discussed above and in general, it is not possible to determine the aggregate maximum potential loss under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. As with our other indemnification obligations, such indemnification agreements might not be subject to maximum loss clauses, and to date, generally under our real estate obligations, we have not incurred material costs as a result of such obligations under our leases and have not accrued any liabilities related to such indemnification obligations in our Condensed Consolidated Financial Statements.
We provide limited product warranties, and the majority of our software license agreements contain provisions that indemnify licensees of our software from damages and costs resulting from claims alleging that our software infringes on the intellectual property rights of a third party. Such indemnification provisions may not be subject to maximum loss clauses. Historically,
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payments made under these provisions have been immaterial. We monitor the conditions that are subject to indemnification to identify if a loss has occurred.
Litigation contingencies
Trustees of the University of Columbia in the City of New York v. NortonLifeLock
As previously disclosed in our public filings, on May 2, 2022, a jury returned its verdict in a patent infringement case filed in 2013 by the Trustees of Columbia University in the City of New York (Columbia) in the U.S. District Court for the Eastern District of Virginia. Columbia originally brought suit alleging infringement of six patents owned by the university. We won a favorable claim construction order on all six patents, and the claim construction was upheld by the Federal Circuit in 2016 on all but U.S. Patent Nos. 8,601,322 and 8,074,115. We also sought inter partes review by the Patent Trial and Appeal Board of the claims of the ‘322 and ‘115 Patents and all but two claims of the ‘322 Patent and three claims of the ‘115 Patent were invalidated. The remaining claims of the ‘322 and ‘115 Patents were the only claims that remained in suit at trial.
The jury found that our Norton Security products and Symantec Endpoint Protection products (the latter of which were sold by us to Broadcom as part of an Asset Purchase Agreement dated November 4, 2019) willfully infringe the ‘322 and ‘115 Patents through the use of SONAR/BASH behavioral protection technology. The jury awarded damages in the amount of $185 million. Columbia did not seek injunctive relief against us. We intend to cease use of the technology found by the jury to infringe. The jury also found that we did not fraudulently conceal its prosecution of U.S. Patent No. 8,549,643 but did find that two Columbia professors were coinventors of this patent. No damages were awarded related to this patent.
A formal judgment has not yet been entered in the case. Post-verdict motions have been filed, and we intend to file an appeal challenging the verdict.
At this time, our current estimate of the low end of the range of probable estimated losses from this matter is approximately $233 million, reflecting the jury award and prejudgment interest, which we have accrued. The jury’s verdict may be enhanced and, should it be upheld on appeal, could ultimately result in the payment of somewhere between one and three times the jury’s verdict, plus interest and attorneys’ fees. There is a reasonable possibility that a loss may be incurred in excess of our accrual for this matter; however, such loss cannot be reasonably estimated.
Securities Class Action and Derivative Litigation
Securities class action lawsuits, which have since been consolidated, were filed in May 2018 against us and certain of our former officers, in the U.S. District Court for the Northern District of California. The lead plaintiff’s consolidated amended complaint alleged that, during a purported class period of May 11, 2017 to August 2, 2018, defendants made false and misleading statements in violation of Sections 10(b) and 20(a), and that certain individuals violated Section 20A, of the Securities Exchange Act of 1934, as amended (the Exchange Act). Defendants filed motions to dismiss, which the Court granted in an order dated June 14, 2019. Pursuant to that order, plaintiff filed a motion seeking leave to amend and a proposed first amended complaint on July 11, 2019. The Court granted the motion in part on October 2, 2019, and the first amended complaint was filed on October 11, 2019. The Court’s order dismissed certain claims against certain of our former officers. Defendants filed answers on November 7, 2019. On April 20, 2021, to resolve an alleged conflict of interest raised with respect to the lead plaintiff and its counsel, the Court ordered a second Class Notice disclosing the circumstances of the alleged conflict and providing a further period for class members to opt out, which closed on July 2, 2021. The initial class opt out period closed on August 25, 2020.
On May 24, 2021, the parties reached a proposed settlement and release of all claims in the class action, for $70 million, and on June 8, 2021, the parties executed a Stipulation and Agreement of Settlement, subject to Court approval and exclusive of any claims that may be brought by shareholders who opted out of the class action. Of the $70 million, $67.1 million was covered under the applicable insurance policy with the remainder to be paid by us. The Court approved the settlement on February 12, 2022.
On November 22, 2021, investment funds managed by Orbis Investment Management Ltd. which previously opted out of the securities class action, filed suit under the Exchange Act of 1934, the Arizona Securities Act, the Arizona Consumer Fraud Act and certain common law causes of action to recover alleged damages for losses incurred by the funds for their purchases or acquisitions of our common stock during the class period. In the fourth quarter of fiscal 2022, we made an immaterial settlement offer in this matter, for which we have accrued. Our Motion to Dismiss is now pending.
Purported shareholder derivative lawsuits have been filed against us and certain of our former officers and current and former directors in the U.S. District Courts for the District of Delaware and the Northern District of California, Delaware Chancery Court, and Delaware Superior Court, arising generally out of the same facts and circumstances as alleged in the securities class action and alleging claims for breach of fiduciary duty and related claims; these lawsuits include an action brought derivatively on behalf of our 2008 Employee Stock Purchase Plan. No specific amount of damages has been alleged in these lawsuits. We have also received demands from purported stockholders to inspect corporate books and records under Delaware law. At this stage, we are unable to assess whether any material loss or adverse effect is reasonably possible as a result of the derivative lawsuits or estimate the range of any potential loss.
We will continue to incur legal fees in connection with these pending cases and demands, including expenses for the reimbursement of legal fees of present and former officers and directors under indemnification obligations. The expense of continuing to defend such litigation may be significant. We intend to defend these lawsuits vigorously, but there can be no assurance that we will be successful in any defense. If any of the lawsuits are decided adversely, we may be liable for significant damages directly or under our indemnification obligations, which could adversely affect our business, results of operations, and cash flows.
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GSA
During the first quarter of fiscal 2013, we were advised by the Commercial Litigation Branch of the Department of Justice’s (“DOJ”)(DOJ) Civil Division and the Civil Division of the U.S. Attorney’s Office for the District of Columbia that the government is investigating our compliance with certain provisions of our U.S. General Services Administration (“GSA”)(GSA) Multiple Award

Schedule Contract No. GS-35F-0240T effective January 24, 2007, including provisions relating to pricing, country of origin, accessibility, and the disclosure of commercial sales practices.
As reported on the GSA’s publicly-available database, our total sales under the GSA Schedule contract were approximately $222 million from the period beginning January 2007 and ending September 2012. We have fully cooperated with the government throughout its investigation, and in January 2014, representatives of the government indicated that their initial analysis of our actual damages exposure from direct government sales under the GSA scheduleSchedule contract was approximately $145 million; since the initial meeting, the government’s analysis of our potential damages exposure relating to direct sales has increased. The government has also indicated they are going towould pursue claims for certain sales to California, Florida, and New York as well as sales to the federal government through reseller GSA Schedule contracts, which could significantly increase our potential damages exposure.
In 2012, a sealed civil lawsuit was filed against Symantecus related to compliance with the GSA Schedule contract and contracts with California, Florida, and New York. On July 18, 2014, the Court-imposed seal expired, and the government intervened in the lawsuit. On September 16, 2014, the states of California and Florida intervened in the lawsuit, and the state of New York notified the Court that it would not intervene. On October 3, 2014, the DOJ filed an amended complaint, which did not state a specific damages amount. On October 17, 2014, California and Florida combined their claims with those of the DOJ and the relator on behalf of New York in an Omnibus Complaint, and a First Amended Omnibus Complaint was filed on October 8, 2015; the state claims also do not state specific damages amounts. On June 6, 2019, we filed a motion seeking summary judgment on all claims asserted by all plaintiffs, and the plaintiffs filed a motion for partial summary judgment on elements of liability on their claims. On October 21, 2019, the DOJ moved for a Prejudgment Writ of Sequestration for us to set aside $1,090 million to pay a judgment, should the United States prevail in this litigation, under the Federal Debt Collection Procedures Act. The Writ was sought in response to our announcement of our plans to distribute the after-tax proceeds of the sale of the Symantec enterprise business to Broadcom to our shareholders via a special dividend. The Court denied the Writ on December 12, 2019, on the basis of the government’s failure to establish the “probable validity” of the debt, the amount sought to be sequestered, and our available cash, cash equivalents and short-term investments. The Court permitted the DOJ limited discovery of facts relevant to our financial state and financial projections and the option to renew its motion if appropriate and supported by the analysis of its own financial expert. That discovery period has now closed. On March 30, 2020, the Court issued an Order granting in part and denying in part our motion for summary judgment and granting in part and denying in part the United States’ motion for partial summary judgment. On September 30, 2020, we filed a Motion for Reconsideration of certain rulings in the Court’s March 30 Summary Judgment Order. A second Motion for Reconsideration of certain rulings in the Summary Judgement Order based on significant change in the law was filed on July 23, 2021. Both Motions for Reconsideration were denied. Court ordered mediations in July 2020 and February 2021 were not successful.
On March 23, 2021, Plaintiffs withdrew their demand for a jury trial and we consented to proceed with a bench trial, which concluded on March 24, 2022. The Court has not yet issued its judgment and post-trial motions are pending.
On May 13, 2021, we reached a settlement in principle with the State of Florida to resolve all claims it asserted in the litigation for $0.5 million, plus the relator’s statutory attorney’s fees with respect to the State of Florida’s claims. On February 28, 2022, we reached a settlement in principle with the State of New York and the relator to resolve all of the New York claims asserted in the litigation for $5 million.
At this time, our current estimate of the low end of the range of probable estimated losses from this matter is $50 million, inclusive of the settlement with the states of Florida and New York, which we have accrued. It is possible that the litigation could lead to claims or findings of violations of the False Claims Act and could be material to our results of operations and cash flows for any period. Resolution of False Claims Act investigations can ultimately result in the payment of somewhere between one and three times the actual damages proven by the government, plus civil penalties in some cases, depending upon a number of factors. Our current estimate of the low end of the range of the probable estimated loss from this matter is $25 million, which we have accrued. This amount contemplates estimated losses from both the investigation of compliance with the terms of the GSA Schedule contract as well as possible violations of the False Claims Act.penalties. There is at least a reasonable possibility that a loss may have been incurred in excess of our accrual for this matter,matter; however, such loss cannot be reasonably estimated.
Jumpshot Matters
At the end of 2019, Avast came under media scrutiny for provision of Avast customer data to its data analytics subsidiary Jumpshot Inc. Jumpshot was a subsidiary of Avast with its own management team and technical experts. Avast announced the decision to terminate its provision of data to, and wind down, Jumpshot on January 30, 2020. As Avast has previously disclosed, it has been in communication with certain regulators and authorities prior to completion of the Merger, and we will continue cooperating fully in respect of all regulatory enquiries.
On December 23, 2019, the United States Federal Trade Commission (FTC) issued a Civil Investigative Demand (CID) to Avast seeking documents and information related to its privacy practices, including Jumpshot's past use of consumer information that was provided to it by Avast. Avast responded cooperatively to the CID and related follow-up requests from the FTC. On October 29, 2021, staff at the FTC sent Avast a draft complaint and proposed settlement order. We have been engaged in ongoing negotiations with the FTC staff regarding the scope and terms of the proposed settlement. Any negotiated settlement with the FTC, or absent settlement, any litigation or other legal proceeding between us and the FTC could result in material monetary remedies and/or compliance requirements that impose significant and material cost and resource burdens on us, and may impact our ability to use data in the future. There can be no assurance that we will be successful in negotiating a favorable
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settlement or in litigation. Any remedies or compliance requirements could adversely affect our ability to operate our business or have a materially adverse impact on our financial results. At this stage, we are currently unable to determine the high endassess whether any material loss or adverse effect is reasonably possible as a result of this investigation or estimate the range of estimated losses resultingany potential loss. On February 27, 2020, the Czech Office for Personal Data Protection (the Czech DPA) initiated offense proceedings concerning Avast`s practices with respect to Jumpshot, which remain ongoing and we continue to evaluate our options including an appeal of any findings and assessments.
In addition, we received a letter and notification before action from this matter.
Finjan
On August 28, 2013, Finjan, Inc. (“Finjan”) filedStichting CUIC – Privacy Foundation for Collective Redress, a complaint against Blue Coat Systems, Inc.Dutch foundation (the Foundation). The Foundation has asserted it represents the interests of Avast customers in the U.S. District Court forNetherlands whose data was provided to Jumpshot and that by doing so Avast violated the Northern District of California alleging that certain Blue Coat products infringe six of Finjan’s U.S. patents. On August 4, 2015, a jury returned a verdict that certain Blue Coat products infringe fiverequirements of the Finjan patents-in-suitGDPR and awarded Finjan lump-sumother provisions in Dutch and European Union privacy and consumer law entitling those customers to damages and other compensation, all of $40 million. On November 20, 2015, the trial court entered a judgment in favorwhich we dispute. No specific amount of Finjan on the jury verdictdamages has been alleged and certain non-jury legal issues. On July 28, 2016, in its ruling on post-trial motions the trial court denied Blue Coat’s motions seeking a new trialto date, no action has been filed. At this stage, we are unable to assess whether any material loss or judgmentadverse effect is reasonably possible as a matterresult of law and denied Finjan’s request for enhanced damages and attorneys’ fees. In August 2016, we completed our acquisitionthis notification before action or estimate the range of Blue Coat. We subsequently filed an appeal with the Federal Circuit Court of Appeals. On January 10, 2018, the Federal Circuit Court of Appeals issued an opinion favorable to us. any potential loss.
The decision reversed or vacated all but $8 millionoutcome of the judgment against Blue Coatregulatory proceedings, government enforcement actions and remandedlitigation is difficult to predict, and the District Courtcost to determine whether Finjandefend, settle or otherwise resolve these matters may be significant. Plaintiffs or regulatory agencies or authorities in these matters may seek recovery of large or indeterminate amounts or seek to impose sanctions, including significant monetary penalties, as well as equitable relief. The monetary and other impact of these litigations, proceedings or actions may remain unknown for substantial periods of time. Further, an unfavorable resolution of litigations, proceedings or actions could have a material adverse effect on our business, financial condition, and results of operations and cash flows. The amount of time that will be required to resolve these matters is entitled to a new trial on damages related to oneunpredictable, and these matters may divert management’s attention from the day-to-day operations of the patents. Blue Coat previously accrued $40 million in connection with Finjan, which was assumed by us as a partour business. Any future investigations or additional lawsuits may also adversely affect our business, financial condition, results of the acquisition of Blue Coat.operations and cash flows.
Other
We are involved in a number of other judicial and administrative proceedings that are incidental to our business. Although adverse decisions (or settlements) may occur in one or more of the cases, it is not possible to estimate the possible loss or losses from each of these cases. The final resolution of these lawsuits, individually or in the aggregate, is not expected to have a material adverse effect on our business, results of operations, financial condition or cash flows.
Note 13. Discontinued Operations
On January 29, 2016, we completed the sale of Veritas. The results of Veritas are presented as discontinued operations in our Condensed Consolidated Statements of Operations and have been excluded from continuing operations and segment results for all reported periods.

The following table presents information regarding certain components of income from discontinued operations, net of income taxes:
 Three Months Ended Nine Months Ended
(In millions)December 29,
2017		 December 30,
2016		 December 29,
2017		 December 30,
2016
Net revenues$14
 $22
 $51
 $145
Cost of revenues(5) (3) (21) (12)
Operating expenses(8) (2) (11) (26)
Gain on sale of Veritas—
 —
 —
 38
Income from discontinued operations before income taxes1
 17
 19
 145
Income tax expense (benefit)(30) (85) 7
 49
Income from discontinued operations, net of income taxes$31
 $102
 $12
 $96
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-looking statements and factors that may affect future results
The discussion below contains forward-looking statements, which are subject to safe harbors under the Securities Act of 1933, as amended (the “Securities Act”)Securities Act) and the Exchange Act of 1934, as amended (the “Exchange Act”).Act. Forward-looking statements include references to our ability to utilize our deferred tax assets, as well as statements including words such as “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “goal,” “intent,” “momentum,” “projects,” and similar expressions. In addition, projections of our future financial performance,performance; anticipated growth and trends in our businesses and in our industries,industries; the consummation of or anticipated impacts of acquisitions (including the recent Merger with Avast and related financing), divestitures, restructurings, stock repurchases, and investment activities; the outcome or impact of our restructurings,pending litigation, claims or disputes; our intent to pay quarterly cash dividends in the future,future; plans for and anticipated benefits of our solutions; anticipated tax rates, benefits and expenses; the impact of the COVID-19 pandemic on our operations and financial performance; and other characterizations of future events or circumstances are forward-looking statements. These statements are only predictions, based on our current expectations about future events and may not prove to be accurate. We do not undertake any obligation to update these forward-looking statements to reflect events occurring or circumstances arising after the date of this report. These forward-looking statements involve risks and uncertainties, and our actual results, performance or achievements could differ materially from those expressed or implied by the forward-looking statements on the basis of several factors, including economic recessions, inflationary pressures and those other factors that we discuss in Risk Factors, set forth in Part I, Item 1A, of our annual report on Form 10-K for the fiscal year ended March 31, 2017 and in Part II Item 1A, of this quarterly reportQuarterly Report on Form 10-Q. We encourage you to read those sectionsthat section carefully.
OVERVIEW
Gen is a global, leading provider of consumer Cyber Safety solutions, empowering over 500 million users in more than 150 countries. Our businessportfolio provides protection across three Cyber Security categories: security, identity protection and online privacy. We help customers protect their computer and mobile devices from online threats, safeguard their identity and personal information and strengthen online privacy capabilities and functionalities.
Symantec CorporationMerger with Avast
On September 12, 2022, we completed the Merger with Avast with the issuance of 94,201,233 shares of our common stock to Avast shareholders and cash consideration of $6,913 million, which includes repayment of Avast’s outstanding debt. As a result, we have changed our corporate name to Gen Digital Inc. and have become dual headquartered in Tempe, Arizona and Prague, Czech Republic. Avast is a global leader in cybersecurity. We operateconsumer cybersecurity, offering a comprehensive range of digital security and privacy products and services that protect and enhance users’ online experiences. Combining Avast’s strength in privacy and our business onstrength in identity will create a broad and complementary consumer product portfolio beyond core security and towards adjacent trust-based solutions. This Merger will provide greater geographic diversification and access to a larger user base and will accelerate the transformation of global civilianconsumer cyber intelligence threat networksafety. All financial information related to Avast that is discussed below in key financial metrics, results of operations and track a vast numberliquidity and capital resources is inclusive as of threats across the Internet from hundredsClosing Date.
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Table of millions of mobile devices, endpoints, and servers across the globe. We believe one of our competitive advantages is our database of threat indicators. This database allows us to reduce the number of false positives and provide faster and better protection for customers through our products. We are leveraging our capabilities to deliver integrated solutions for customers. We are also pioneering solutions in markets such as cloud security, digital safety, advanced threat protection, identity protection, information protection and cyber security services.Contents
Fiscal calendar
We have a 52/53-week fiscal year ending on the Friday closest to March 31. The three and six months ended December 29, 2017 (“Q3 FY18”)September 30, 2022 and December 30, 2016 (“Q3 FY17”) bothOctober 1, 2021 each consisted of 13 weeks. The nine months ended December 29, 2017 (“YTD FY18”) and December 30, 2016 (“YTD FY17”) both consisted of 39 weeks.26 weeks, respectively. Our 20182023 fiscal year consists of 52 weeks and ends on March 30, 2018.31, 2023.
StrategyKey financial metrics
Our strategy is to deliver comprehensive cyber security solutionsThe following tables provide our key financial metrics for both enterprises and consumers.the periods presented:
Three Months EndedSix Months Ended
(In millions, except for per share amounts)September 30, 2022October 1, 2021September 30, 2022October 1, 2021
Net revenues$748 $692 $1,455 $1,378 
Operating income (loss)$241 $287 $502 $574 
Net income (loss)$69 $333 $269 $514 
Net income (loss) per share - diluted$0.12 $0.56 $0.45 $0.87 
Net cash provided by (used in) operating activities$(88)$60 $127 $318 
Our enterprise security strategy is to deliver an Integrated Cyber Defense platform that allows Symantec products to share threat intelligence and improve security outcomes for customers across all control points. Symantec is the leading vendor in protecting users, information, web and messaging across an integrated platform.
As Of
(In millions)September 30, 2022April 1, 2022
Cash, cash equivalents and short-term investments$1,095 $1,891 
Contract liabilities$1,684 $1,306 
Our consumer digital safety strategy is to deliver the most comprehensive consumer digital safety solutions to help people protect their information, identities, devices and families.

OurBelow are our financial highlights for the second quarter of fiscal 2023, compared to the corresponding period in the prior year:
•Net revenues increased $56 million, due to revenue attributable to Avast and higher sales in our identity and information protection products.
•Operating income decreased $46 million, primarily due to the increase in transaction and integration costs related to the Merger. We anticipate an initial increase in our operating costs, which we expect to decrease as we realize synergies as a combined company.
•Net income decreased $264 million and Net income per share - diluted decreased 0.44, primarily due to the increases in operating costs, non-operating other expense and income tax expense.
Below are our financial highlights for the first six months of fiscal 2023, compared to the corresponding period in the prior year:
•Net revenues increased $77 million, due to revenue attributable to Avast and higher sales in our identity and information protection products.
•Operating income decreased $72 million, primarily due to the increase in transaction and integration costs related to the Merger. We anticipate an initial increase in our operating costs, which we expect to decrease as we realize synergies as a combined company.
•Net income decreased $245 million and Net income per share - diluted decreased $0.42, primarily due to the increases in operating costs, non-operating other expense and income tax expense.
•Cash, cash equivalents and short-term investments decreased by $796 million compared to April 1, 2022, primarily due to the completion of the Merger and repurchases of our common stock, offset by proceeds from the issuance of the senior credit facilities and the two senior unsecured notes.
•Contract liabilities increased $378 million compared to April 1, 2022, primarily due to contract liabilities assumed as part of the Merger, partially offset by seasonally lower billings than recognized revenue during the period.
The Merger has altered the size and scope of our operations, impacting our assets, liabilities, obligations, capital requirements and performance measures. We expect the key financial metrics and results of operations of the combined company to be materially different than the trends experienced during the three and six months ended September 30, 2022. As a combined company, we expect to achieve synergies, rapidly launch a broad and innovative product portfolio, expand into new and diversified sales channels and enhance customer experience and retention. Refer to Note 4 of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further information about this business combination.
Our
COVID-19 UPDATE
The COVID-19 pandemic has had widespread, rapidly evolving and unpredictable impacts on global society, economies, financial highlightsmarkets and business practices.
The duration and extent of the impact from the COVID-19 pandemic depends on future developments that cannot be accurately forecasted at this time, such as the severity and transmission rate of new variants of the disease, the extent, effectiveness and acceptance of containment actions, such as vaccination programs, and the impact of these and other factors
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on our employees, customers, partners and third-party service providers. For more information on the risks associated with the COVID-19 pandemic, please see “Risk Factors” in Part II, Item 1A below.
RUSSIA-UKRAINE CONFLICT
Due to the ongoing conflict between Russia and Ukraine and the related sanctions and other penalties imposed on Russia and Belarus by the United States, the European Union, the United Kingdom and other countries, we suspended our business operations in Russia commencing in the fourth quarter of fiscal 2022. We do not have operations or employees in Ukraine. The suspension of our business operations in Russia has not had a material impact on our business, financial condition, or results of operations discussas our operations in Russia and our sales to customers in Russia and Belarus do not constitute a material portion of our business. Further, unless and until the U.S. government lifts its sanctions on Russia and Belarus, which are restricting the export of a broad range of U.S. technologies to those countries, we will continue to be unable to ship such technologies or provide support to anyone in Russia or Belarus. We are actively monitoring the Russia-Ukraine conflict and the potential impact it could have on our business, employees and overall analysisour ability to sell our products and services to our customers. See Part II, Item 1A, Risk Factors for further discussion of the possible impact of the Russia-Ukraine Conflict on our business, operations and financial condition.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of our Condensed Consolidated Financial Statements and other highlights affectingrelated notes in accordance with generally accepted accounting principles in the companyU.S. requires us to make estimates, including judgments and analyzeassumptions that affect the reported amounts of assets, liabilities, revenue, and expenses, and related disclosure of contingent assets and liabilities. We have based our estimates on historical experience and on various assumptions that we believe to be reasonable under the circumstances. We evaluate our estimates on a regular basis and make changes accordingly. Management believes that the accounting estimates employed and the resulting amounts are reasonable; however, actual results may differ from these estimates. Making estimates and judgments about future events is inherently unpredictable and is subject to significant uncertainties, some of which are beyond our control. Should any of these estimates and assumptions change or prove to have been incorrect, it could have a material impact on our results of operations, financial results comparing the threeposition and nine months ended December 29, 2017 to the prior year periods. This interimcash flows.
Our critical accounting policies and estimates were disclosed in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the MD&Aincluded in our Annual Report on Form 10-K for the fiscal year ended March 31, 2017.
On October 31, 2017, we completed the sale of our website security (“WSS”) and public key infrastructure (“PKI”) solutions to DigiCert Parent Inc. (“DigiCert”) for an aggregate consideration of $1.1 billion, consisting of approximately $960 million in cash and shares of common stock representing an approximate 28% interestApril 1, 2022. There have been no material changes in the outstanding common stock of DigiCert valued at $160 million as of the transaction date. The results of operations of our WSS and PKI solutions prior to the divestiture are reported in our consolidated results of operations through October 31, 2017. The cash consideration is subject to adjustmentmatters for WSS and PKI closing date cash and working capital as specifiedwhich we make critical accounting estimates in the purchase agreement. See Note 6 to thepreparation of our Condensed Consolidated Financial Statements for more information on our divestiture.during the three and six months ended September 30, 2022.
RESULTS OF OPERATIONS
The following discussion relates to the results oftable sets forth our continuing operations and our total Company cash flows unless stated otherwise.
Our operating segments
Our operating segments are significant strategic business units that offer different products and services distinguished by customer needs. Our operating segments are: Enterprise Security and Consumer Digital Safety.
Enterprise Security. Our Enterprise Security segment solutions protect organizations so they can securely conduct business while leveraging new platforms and data. Our Enterprise Security segment includes our endpoint protection products, endpoint management products, messaging protection products, information protection products, cyber security services, website security (through October 31, 2017) and advanced web and cloud security offerings. See Note 6 to the Condensed Consolidated Financial Statements for more information on our divestiture of our WSS and PKI solutions on October 31, 2017. Our enterprise endpoint, network security and management offerings support evolving endpoints and networks, providing advanced threat protection while helping reduce cost and complexity. These products and solutions are delivered through various methods, such as software, appliance, virtual appliance, Software-as-a-Service (“SaaS”) and managed services.
Consumer Digital Safety. Our Consumer Digital Safety segment focuses on providing a comprehensive Digital Safety solution to protect information, devices, networks and the identities of consumers. This solution includes our Norton-branded services, which provide multi-layer security across major desktop and mobile operating systems, public Wi-Fi connections, and home networks, to defend against increasingly complex online threats to individuals, families and small businesses, and our LifeLock-branded identity protection services. Our LifeLock-branded identity protection services primarily consist of identifying and notifying users of identity-related and other events and assisting users in remediating their impact. With the addition of LifeLock-branded identity protection services, we are providing a comprehensive digital safety solution designed to protect information across devices, customer identities and the connected home and family and accelerating our leadership in Consumer Digital Safety to protect all aspects of consumers’ digital lives.
For more information on our operating segments see Note 2 to the Condensed Consolidated Financial Statements.
Financial highlights and business trends
The following is an overview of key financial metrics in millions and the respective metricsOperations data as a percentage of revenues.net revenues for the periods indicated:
Three Months EndedSix Months Ended
September 30, 2022October 1, 2021September 30, 2022October 1, 2021
Net revenues100 %100 %100 %100 %
Cost of revenues16 14 15 15 
Gross profit84 86 85 85 
Operating expenses:
Sales and marketing22 22 22 22 
Research and development10 10 9 10 
General and administrative15 9 15 8 
Amortization of intangible assets4 3 3 3 
Restructuring and other costs1 1 1 1 
Total operating expenses52 44 50 44 
Operating income (loss)32 41 35 42 
Interest expense(6)(4)(5)(5)
Other income (expense), net— 26 — 13 
Income (loss) before income taxes26 63 29 50 
Income tax expense (benefit)17 14 11 12 
Net income (loss)9 %48 %18 %37 %
symc063017_chart-20687a02.jpgsymc063017_chart-21433a02.jpgNote: Percentages may not add due to rounding.

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BelowNet revenues
Three Months EndedSix Months Ended
(In millions, except for percentages)September 30, 2022October 1, 2021Change in %September 30, 2022October 1, 2021Change in %
Net revenues$748 $692 8 %$1,455 $1,378 6 %
Three Months Ended September 30, 2022 Compared with Three Months Ended October 1, 2021
Net revenues increased $56 million, primarily due to $48 million of revenue attributable to Avast and an increase in sales of our identity and information protection products. Net revenues were impacted by $31 million of foreign exchange headwinds, primarily in our consumer security solutions.
Six Months Ended September 30, 2022 Compared with Six Months Ended October 1, 2021
Net revenues increased $77 million, primarily due to $48 million of revenue attributable to Avast and an increase in sales of our identity and information protection products. Net revenues were impacted by $58 million of foreign exchange headwinds, primarily in our consumer security solutions.
Performance Metrics
We regularly monitor a number of metrics in order to measure our current performance and estimate our future performance. Our metrics may be calculated in a manner different than similar metrics used by other companies.
The following table summarizes supplemental key performance metrics:
Three Months Ended (2)
(In millions, except for per user amounts)
September 30, 2022 (3)
October 1, 2021
Direct customer revenues (1)
$660 $619 
Partner revenues$74 $64 
Total Cyber Safety revenues$734 $683 
Legacy revenues$14 $12 
Direct customer count (at quarter end)38.6 24.0 
Direct average revenue per user (ARPU)$6.98 $8.63 
(1) Direct customer revenues during the three months ended October 1, 2021 excludes a $3 million reduction of revenue, from contract liability purchase accounting adjustments. We believe that eliminating the impact of these adjustments improves the comparability of revenues between periods. In addition, although the adjustment amounts will never be recognized in our GAAP financial statements, we do not expect the acquisitions to affect the future renewal rates of revenues excluded by the adjustments.
(2) From time to time, changes in our product hierarchy cause changes to the revenue channels above. When changes occur, we recast historical amounts to match the current revenue channels. Direct revenues currently includes Mobile App Store customers, and legacy revenues includes revenues from products or solutions that are our financial highlightsno longer in operations in exited markets, have been discontinued or identified to be discontinued, or remain in maintenance mode as a result of integration and product portfolio decisions. As such, the changes to historical revenue amounts and the other performance metrics, including direct customer count and ARPU, are reflected for all periods presented above.
(3) The performance metrics for the three months ended December 29, 2017, compared toSeptember 30, 2022 include the corresponding period in the prior year:revenues earned and customers acquired through our Merger with Avast. ARPU is based on average customer count and assumes full quarter of revenue for both companies.
Revenue increased by 16% compared to the corresponding period in the prior year, driven by a 47% increase in our Consumer Digital Safety segment, primarily due to the contributionWe define direct customer revenues as revenues from the February 2017 acquisition of LifeLock, Inc. (“LifeLock”). Revenue in our Enterprise Security segment decreased 3%, primarily due to the divestituresales of our WSSconsumer solutions to direct customers, which we define as active paid users who have a direct billing relationship with the Company at the end of the reported period. We exclude users on free trials and PKI solutions, partially offset by increased revenue from Blue Coat products.users who have indirectly purchased our product or services through partners unless such users convert or renew their subscription directly with us, or sign up for a paid membership through our web store or third party app stores.
Gross margin increased 2 percentage points compared toAverage direct customer count presents the corresponding period in the prior year due to the mix of customer and products, as our higher margin Consumer Digital Safety segment contributed to a larger proportionaverage of the total gross profit.number of direct customers at the beginning and end of the fiscal quarter.
Operating margin increased 10 percentage points compared to the corresponding period in the prior year primarily driven by increased revenue and decreased sales and marketing and general administrative expense relative to our revenue partially due to savings from our ongoing cost reduction initiatives.
Income tax expense from continuing operationsARPU is calculated as estimated direct customer revenues for the three and nine months ended December 29, 2017 reflectsperiod divided by the discrete effects of the Tax Cuts and Jobs Act (H.R.1), or the “Act”, enacted on December 22, 2017, and includes an income tax benefit of $1.6 billion resulting from the application of the Act to existing deferred tax balances, partially offset by $821 million of tax expense that was recordedaverage direct customer count for the one-time transition tax liability under the Act. In addition, we recorded the benefit of a reduction in our estimated annual effective rate to reflect a change in the federal statutory rate from 35% to 21%, effective January 1, 2018,same period, expressed as a result of the enactment of the Act.
On October 31, 2107, we completed the sale of our WSSmonthly figure. Non-GAAP estimated direct customer revenues and PKI solutions to DigiCert for an aggregate consideration of $1.1 billion, resultingARPU have limitations as analytical tools and should not be considered in a gain of $658 million.
Below are our additional financial highlights for the nine months ended December 29, 2017, compared to the corresponding period in the prior year:
Revenue increased by 25% compared to the corresponding period in the prior year, driven by a 15% and 38% increase in revenue from our Enterprise Security and Consumer Digital Safety segments, respectively, primarily due to the contributions from the acquisitions of Blue Coat and LifeLock.
Gross margin decreased 1 percentage point compared to the corresponding period in the prior year, primarily due to increased amortization of intangible assets of $83 millionisolation or as a resultsubstitute for GAAP estimated direct customer revenues or other GAAP measures. We monitor ARPU because it helps us understand the rate at which we are monetizing our consumer customer base.
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Table of our acquisitions of Blue Coat and LifeLock, partially offset by our higher margin Consumer Digital Safety segment contributing to a larger proportion of the total gross profit.Contents
Operating margin decreased 2 percentage points compared to the corresponding period in the prior year, primarily due to the decreased gross margin, increased stock-based compensation expense and advertising and promotion expense, partly offset by savings from our ongoing cost reduction initiatives.
We repaid debt totaling $2.6 billion as part of our plan to deleverage our balance sheet.
We paid aggregate cash consideration of $402 million for our acquisitions.

RESULTS OF OPERATIONS
Net revenues by geographicgeographical region
Percentage of revenue by geographic region presented below is based on the billing location of the customer.
Three Months EndedSix Months Ended
September 30, 2022October 1, 2021September 30, 2022October 1, 2021
Americas71 %70 %71 %70 %
EMEA18 %18 %18 %18 %
APJ11 %12 %11 %12 %
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Note:The Americas include the U.S., Canada and Latin America; EMEA includes Europe, the Middle East and Africa; APJ includes Asia Pacific and JapanJapan.
Our percentagePercentage of revenues from the Americas forrevenue by geographic region in the three and ninesix months ended December 29, 2017 increased compared to prior year periods primarily as a result of LifeLock sales which are entirely U.S.-based.
Our international sales are expected to continue to be a significant portion of our revenue. As a result, we expect revenue to continue to be affected by foreign currency exchange rates as compared toSeptember 30, 2022 remained consistent with the U.S. dollar. We are unable to predict the extent to which revenue in future periods will be impacted by changes in foreign currency exchange rates. If international sales become a greater portion of our total salescorresponding period in the future, changes in foreign currency exchange rates may have a potentially greater impact on our revenue and operating results.prior year.

Cost of revenues
Cost of revenues consists primarily of technical support costs, costs of billable services, fees to original equipment manufacturers under revenue-sharing agreements, hardware costs, and fulfillment costs, as well as intangible asset amortization expense. The amounts below are presented in millions and the percentages are a percentage of revenues.
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Three Months EndedSix Months Ended
(In millions, except for percentages)September 30, 2022October 1, 2021Change in %September 30, 2022October 1, 2021Change in %
Cost of revenues$119 $100 19 %$221 $202 9 %
Three Months Ended December 29, 2017September 30, 2022 Compared with Three Months Ended December 30, 2016October 1, 2021
Our cost of revenues increased $14$19 million, or 6%, primarily due to costhigher revenue share costs and payment processing fees associated with year-over-year business growth and costs incurred by Avast subsequent to the completion of revenues related to our acquired LifeLock products, partially offset by lower cost of revenues from our divested WSS and PKI solutions.the Merger.
NineSix Months Ended December 29, 2017September 30, 2022 Compared with NineSix Months Ended December 30, 2016October 1, 2021
Our cost of revenues increased $174$19 million, or 29%, primarily due to costhigher revenue share costs and payment processing fees associated with year-over-year business growth and costs incurred by Avast subsequent to the completion of revenues related to our acquired Blue Coat and LifeLock products, including $83 million of increased amortization of acquired intangible assets and $52 million of increased technical support costs primarily driven by the LifeLock acquisition.Merger.
Operating expenses
The following amounts are in millions and the percentages are a percentage of revenues.
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Three Months EndedSix Months Ended
(In millions, except for percentages)September 30, 2022October 1, 2021Change in %September 30, 2022October 1, 2021Change in %
Sales and marketing$167 $150 11 %$323 $306 6 %
Research and development73 66 11 %134 134 0 %
General and administrative110 63 75 %214 108 98 %
Amortization of intangible assets29 21 38 %50 42 19 %
Restructuring and other costs9 5 80 %11 12 (8)%
Total operating expenses$388 $305 27 %$732 $602 22 %
Three Months Ended December 29, 2017September 30, 2022 Compared with Three Months Ended December 30, 2016October 1, 2021
Sales and marketing expense were relatively flat compared to the corresponding period in fiscal 2017.
Research and development expense increased $21 million, or 10%, primarily due to an increase of $24 million in stock-based compensation expense primarily related to the equity awards assumed or granted in connection with our acquisitions.
General and administrative expense was relatively flat compared to the corresponding period in fiscal 2017.
Amortization of intangible assets increased $9 million primarily due to the intangible assets acquired in the LifeLock acquisition.
Nine Months Ended December 29, 2017 Compared with Nine Months Ended December 30, 2016
Sales and marketing expense increased $233$17 million, or 23%, primarily as a result of increased expenses from the Blue Coat and LifeLock acquisitions, including increases of $143 million in advertising and promotional expense, largely related to LifeLock, $60 milliondue an increase in stock-based compensation expense, primarily from awards assumed in acquisitions,charges and $36 million in other compensation and benefits expense. These increases were partially offsetthe additional expenses incurred by Avast subsequent to the decreased expenses from our divested WSS and PKI solutions.
Research and development expense increased $125 million, or 22%, primarily as a resultcompletion of increased expenses from the Blue Coat and LifeLock acquisitions, including increases of $79 million in stock-based compensation expense and $23 million in other compensation and benefits expense.Merger.
General and administrative expense increased $71 million primarily as a result of increases of $70 million in stock-based compensation expense and $28 million in other compensation and benefits expense, primarily due to the Blue Coat and LifeLock acquisitions, partially offset by a decrease of $34 million in acquisition-related costs due to a lower level of acquisition activities in fiscal 2018.
Our stock-based compensation expense included in operating expenses increased $209 million, or 96%, primarily due to the equity awards assumed in our acquisitions, and the expected level of achievement for performance-based equity awards.
Amortization of intangible assets increased $75$47 million, primarily due to transaction and integration costs incurred in connection with the Merger, which consisted of legal and professional services and other regulatory closing fees.
Research and development, amortization of intangible assets acquired in the Blue Coat and LifeLock acquisitions.
Restructuring, transition and other costs
We initiated a restructuring plan in the first quarter of fiscal 2017 to reduce complexity by means of long-term structural improvements. We have reduced headcount and closed certain facilities under the restructuring plan. During the three and nine months ended December 29, 2017, we also incurred divestiture costs as a result of the sale of our WSS and PKI solutions, as well as costs associated with our other transition and transformation programs including the implementation of a new enterprise resource planning system and costs to automate business processes. Restructuring, transition and other costs remained relatively flat.
Six Months Ended September 30, 2022 Compared with Six Months Ended October 1, 2021
Sales and marketing expense increased $17 million, primarily consisteddue an increase in stock-based compensation charges and the additional expenses incurred by Avast subsequent to the completion of $11the Merger.
General and administrative expense increased $106 million, primarily due to transaction and $75integration costs incurred in connection with the Merger and a $54 million legal accrual, of severance costswhich $47 million was prejudgment interest, relating to an ongoing patent infringement lawsuit and transition costs, respectively, during the third quarter in fiscal 2018, compared to $19 million and$26 million, respectively, during the same period in fiscal 2017. Restructuring, transitioncorresponding legal fees.
Research and development, amortization of intangible assets and restructuring and other costs primarily consistedremained relatively flat.
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Table of $50 million and $195 million of severance costs and transition costs, respectively, during the first nine months of fiscal 2018, compared to $57 million and $71 million, respectively, during the same period in fiscal 2017. See Note 4 to the Condensed Consolidated Financial Statements for further information on our restructuring, transition and other costs.Contents

Non-operating income (expense), net
The following charts are in millions.
Three Months EndedSix Months Ended
(In millions)September 30, 2022October 1, 2021September 30, 2022October 1, 2021
Interest expense$(48)$(31)$(79)$(63)
Interest income3 — 5 — 
Foreign exchange gain (loss)2 1 1 2 
Gain (loss) on early extinguishment of debt(9)— (9)(5)
Gain on sale of properties— 175 — 175 
Other6 1 4 2 
Total non-operating income (expense), net$(46)$146 $(78)$111 
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chart-5fb98fd9e61d8b0f6eda01.jpgsymc063017_chart-22844a02.jpgThree Months Ended September 30, 2022 Compared with Three Months Ended October 1, 2021
Non-operating income (expense), net, increased during the third quarter and the first nine months of fiscal 2018, compared to the same periodsby $192 million in fiscal 2017,expense, primarily due to a $658the $175 million gain as a resulton sale of our divestiturecertain land and buildings in Mountain View, California during the second quarter of our WSSfiscal 2022 and PKI solutions. See Note 6 to the Condensed Consolidated Financial Statements for more information on our divestiture.
Thean increase in non-operatinginterest expense during the second quarter of fiscal 2023 associated with our new senior credit facilities and two unsecured senior notes.
Six Months Ended September 30, 2022 Compared with Six Months Ended October 1, 2021
Non-operating income (expense), net, forincreased by $189 million in expense, primarily due to the first nine monthsabsence of the $175 million gain on sale of certain land and buildings in Mountain View, California during the second quarter of fiscal 2018 from our divestiture was partially offset by increased2022 and an increase in interest expense of $65 million mainly related toduring the timing of the issuance of the borrowings in fiscal 2017 as well as a foreign currency net loss of $26 million in the first nine monthssecond quarter of fiscal 2018, compared to a net gain of $3 million in the same period in fiscal 2017.2023 associated with our new senior credit facilities and two unsecured senior notes.

Provision for income taxes
The following charts are in millions except for percentages.
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Three Months EndedSix Months Ended
(In millions, except for percentages)September 30, 2022October 1, 2021September 30, 2022October 1, 2021
Income (loss) before income taxes$195 $433 $424 $685 
Income tax expense (benefit)$126 $100 $155 $171 
Effective tax rate65 %23 %37 %25 %
Our effective tax rate for income from continuing operations for the three and ninesix months ended December 29, 2017September 30, 2022 differs from the federal statutory income tax rate primarily due to accounting forstate taxes and the effectsU.S. taxation on foreign earnings, and certain discrete items this quarter including the tax impacts of enactmentinternal restructuring, deductibility of transaction costs from the Tax CutsMerger, and Jobs Act (H.R.1) or the “Act” on December 22, 2017,limitations of foreign taxes due to the benefitsincrease of lower-taxed international earnings, the research and development tax credit, and excess tax benefits related to stock-based compensation, partially offset by various permanent differences.
In the third quarter of fiscal 2018, we revised our estimated annual effective rate to reflect a change in the federal statutory rate from 35% to 21%, as a result of the enactment of the Act, which included broad tax reforms that are applicable to us. The rate change is effective January 1, 2018 and therefore will require us to use a blended U.S. statutory rate of 31.58% for our fiscal year 2018. As a result, we recognized a tax benefit in our tax provision for the three and nine months ended December 29, 2017 related to applying the new blended tax rate to our taxable income, as well as adjusting our deferred tax balance to reflect the application of the Act.interest expense.
Our effective tax rate for loss from continuing operations for the three and ninesix months ended December 30, 2016 was based on the historic statutory tax rate of 35%. Our effective tax rate for loss from continuing operations for the three months ended December 30, 2016October 1, 2021 differs from the federal statutory income tax rate primarily due to the benefits of lower-taxed international earningsstate taxes and the research and development credit, partially offset by various permanent differences. Our effective tax rate for loss from continuing operations for the nine months ended December 30, 2016 differs from the federal statutory income tax rate primarily due to the benefits of lower-taxed international earnings and the research and development credit, partially offset by various permanent differences and tax expense related to the loss of tax attributes due to restructuring activities. Additionally, as pre-tax income (loss) approaches break even, small changes can produce significant variability in the effective tax rate.
For the three and nine months ended December 29, 2017, we recorded an income tax benefit of $30 million and an income tax expense of $7 millionU.S. taxation on discontinued operations, respectively. For the three and nine months ended December 30, 2016, we recorded an income tax benefit of $85 million and an income tax expense of $49 million on discontinued operations, respectively. See Note 13 for further details regarding discontinued operations.
Income tax expense from continuing operations for the three and nine months ended December 29, 2017 was adjusted to reflect the discrete effects of the Act and resulted in an increase in income tax benefit of $810 million. This includes an income tax benefit of $1.6 billion resulting from the application of the Act to existing deferred tax balances, including a reduction of the previously accrued deferred tax liability for foreign earnings by $1.4 billion. This was partially offset by $821 million of tax expense that was recorded for the one-time transition tax liability under the Act.
As of December 29, 2017, we have not completed our accounting for the tax effects of enactment of the Act; however, in certain cases, we have made a reasonable estimate of the effects on our existing deferred tax balances and the one-time transition tax. These amounts may require further adjustments as a result of additional future guidance from the U.S. Department of the Treasury, changes in our assumptions, and the availability of further information and interpretations. In other cases, we have not been able to make a reasonable estimate and we continue to account for those items based on our existing accounting policies and the provisions of the tax laws that were in effect immediately prior to enactment. For the items for which we were able to determine a reasonable estimate, we recognized a provisional tax benefit of $810 million, which is included as a component of income tax expense from continuing operations. See Note 5 to the Condensed Consolidated Financial Statements for more information for additional information regarding our estimates.earnings.
We are a U.S.-based multinational company dual headquartered in the U.S. and Czech Republic, subject to tax in multiple U.S. and international tax jurisdictions. A substantial portion of our international earnings were generated from subsidiaries organized in Ireland and Singapore. Our results of operations would be adversely affected to the extent that our geographical mix of income becomes more weighted toward jurisdictions with higher tax rates and would be favorably affected to the extent the relative geographic mix shifts to lower tax jurisdictions. Our results can also be impacted by the costs incurred and the potential deductibility of the expenses. Any change in our mix of earnings is dependent upon many factors and therefore, is therefore difficult to predict.

In connection with the Merger, we established $345 million of net deferred tax liabilities primarily related to the excess of book basis over the tax basis of acquired identified intangible assets. The net deferred tax liabilities are based upon certain assumptions underlying our preliminary purchase price allocation. Upon finalization of the purchase price allocation, additional adjustments to the amount of our net deferred taxes may be required.
The timing of the resolution of income tax examinations is highly uncertain and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year. AlthoughGiven the potential resolution of uncertain tax positions involveinvolves multiple tax periods and jurisdictions, we are unable to accurately estimate when these unrecognized tax benefits will be realized or released. However, it is reasonably possible that the grossthere could be significant changes to our unrecognized tax benefits related to these audits could decrease, whether by payment, release, or a combination of both, in the next 12 months by $13 million, which could reduce our income tax provision and therefore benefit the resulting effective tax rate.months.
We continue to monitor the progress of ongoing income tax controversies and the impact, if any, of the expected expiration of the statute of limitations in various taxing jurisdictions.
Segment operating results
Enterprise Security Segment
The following amounts are in millions and the percentages are a percentage of Enterprise Security segment revenues.
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Note: We do not allocate to our operating segments certain operating expenses that we manage separately at the corporate level and are not used in evaluating the results
Table of or in allocating resources to, our segments. These unallocated expenses consist of stock-based compensation expense; amortization of intangible assets; restructuring, transition and other costs; and acquisition-related costs.Contents
Three Months Ended December 29, 2017 Compared with Three Months Ended December 30, 2016
Revenue decreased $19 million, or 3%, primarily due to a $69 million decrease in revenue from our WSS and PKI solutions as a result of the divestiture on October 31, 2017, partially offset by an increase in revenue from our network protection solutions. Revenue during the third quarter of fiscal 2018 was also unfavorably affected by a shift in sales to products with ratable revenue recognition, and away from product and license sales, as customers are increasingly adopting our cloud, subscription and virtual appliance products in line with our business strategy. This resulted in less in-quarter recognized revenue and more revenue deferred to the balance sheet. We expect this trend to continue at least through the fourth quarter of fiscal 2018 as our business model continues to evolve to more arrangements subject to ratable revenue recognition. Operating income increased $78 million, or 134%, primarily due to improved gross margin and decreased sales and marketing expense.
Nine Months Ended December 29, 2017 Compared with Nine Months Ended December 30, 2016
Revenue increased $258 million, or 15%, primarily due to the full period impact of the Blue Coat acquisition, partially offset by a decrease of $80 million in revenue as a result of the divestiture of our WSS and PKI solutions on October 31, 2017. Revenue during the first nine months of fiscal 2018 was also unfavorably affected by our shift to products with ratable revenue recognition as described above. Operating income increased $266 million, or 240%, primarily due to the contribution from the Blue Coat acquisition.

Consumer Digital Safety Segment
The following amounts are in millions and the percentages are a percentage of Consumer Digital Safety Segment revenues.
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Note: We do not allocate to our operating segments certain operating expenses that we manage separately at the corporate level and are not used in evaluating the results of, or in allocating resources to, our segments. These unallocated expenses consist of stock-based compensation expense; amortization of intangible assets; restructuring, transition and other costs; and acquisition-related costs.
Three Months Ended December 29, 2017 Compared with Three Months Ended December 30, 2016
Revenue increased $187 million, or 47%, primarily due to revenue from sales of LifeLock products in the third quarter of fiscal 2018, which were absent in the third quarter of fiscal 2017. Our revenue growth reflects the benefit of the shift to subscription-based contracts and combined packaging of our consumer products, which is helping to mitigate the trend of declining revenues from sales of stand-alone Norton-branded products. Operating income increased $89 million, or 42%, primarily due to the contribution from the LifeLock acquisition.
Nine Months Ended December 29, 2017 Compared with Nine Months Ended December 30, 2016
Revenue increased $462 million, or 38%, primarily due to revenue from sales of LifeLock products in the first nine months of fiscal 2018, which were absent in the same period in fiscal 2017. We were also impacted by the trends related to our Norton products discussed above. Operating income increased $122 million, or 18%, primarily due to the contribution from the LifeLock acquisition.
LIQUIDITY, AND CAPITAL RESOURCES AND CASH REQUIREMENTS
Liquidity and Capital Resources
We have historically relied on cash flowgenerated from operations, borrowings under credit facilities, issuances of debt and the sale of a business,proceeds from divestitures for our liquidity needs.
Our capital allocation strategy is to balance driving stockholder returns, managing financial risk and preserving our flexibility to pursue strategic options, including acquisitions and mergers. Historically, this has included a quarterly cash dividend, the repayment of debt and the repurchase of shares of our common stock.
Based on past performance and current expectations, we believe that our existing cash and cash equivalents, together with cash generated from operations and amounts available under our Revolving Facility, will be sufficient to meet our working capital needs, support on-going business activities and finance the expected synergy costs related to the Merger through at least the next 12 months and to meet our known long-term contractual obligations. We are currently not aware of any trends or demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in our liquidity increasing or decreasing in any material way that will impact our capital needs during or beyond the next 12 months. However, our future liquidity and capital requirements may vary materially from those as of September 30, 2022 depending on several factors, including, but not limited to, economic conditions; political climate; the expansion of sales and marketing activities; the costs to acquire or invest in businesses; and the risks and uncertainties discussed in “Risk Factors” in Part II, Item 1A below.
Cash flows
The following summarizes our cash flow activities:
Six Months Ended
(In millions)September 30, 2022October 1, 2021
Net cash provided by (used in):
Operating activities$127 $318 
Investing activities$(6,546)$313 
Financing activities$5,649 $(33)
See Note 7 of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for our supplemental cash flow information.
Cash from operating activities
Our cash flows provided by operating activities decreased by $191 million, primarily due to an increase of cash payments during the first six months of fiscal 2023, including payments of federal income taxes, debt interest, and transaction costs and other regulatory closing fees in connection with the Merger, all of which was partially offset by collections of receivables.
Cash from investing activities
Our cash flows used in investing activities increased by $6,859 million, primarily due to the $6,550 million total cash consideration paid for the Avast Merger, net of $363 million cash acquired and $2,141 million non-cash consideration transferred, as well as the absence of $355 million in proceeds from the sale of certain Mountain View, California properties during the first six months of fiscal 2022.
Cash from financing activities
Our cash flows provided by financing activities increased $5,682 million, primarily due to proceeds from the issuance of debt, partially offset by repayment of debt and the continuation of our stock repurchase program. The first six months of fiscal 2023 reflects $8,954 million of aggregate proceeds: $3,910 million from Term Facility A, $3,690 million from Term Facility B, $900 million from the 6.75% Senior Notes and $600 million from the 7.125% Senior Notes, net of $146 million of debt issuance costs. This was partially offset by the $400 million repayment of our 3.95% Senior Notes, $1,010 million repayment of our Initial Draw Term Loan, $703 million repayment of our Delayed Draw Term Loan and the settlement of the $525 million principal and $100 million equity rights associated with our New 2.0% Convertible Notes. In contrast, the first three months of fiscal 2022 reflects $512 million of proceeds from the issuance of our Initial Term Loan, partially offset by the $364 million settlement of our New 2.5% Convertible Notes.
Cash and cash equivalents
As of December 29, 2017,September 30, 2022, we had cash, cash equivalents and short-term investments of $2.5 billion.
We manage$1,095 million, of which $451 million was held by our investment portfolio with the objective to achieve greater investment diversification and higher yields while preserving capital and liquidity.
Another potential source of liquidity is our unused credit facility of $1.0 billion, which expires in May 2021.
foreign subsidiaries. Our principal cash requirements primarily consist of acquisitions, operating expenses, payment of taxes, capital expenditures, and contractual payments of principal and interest on debt. As a part of our plan to deleverage our balance sheet, we may from time to time in the future make additional optional repayments of our debt obligations, which may include repurchases of our outstanding debt, depending on various factors such as market conditions.
As of December 29, 2017, $1.6 billion in cash, cash equivalents and short-term investments were held by ourare managed with the objective to preserve principal, maintain liquidity and generate investment returns. The participation exemption system under current U.S. federal tax regulations generally allows us to make distributions of non-U.S. earnings to the U.S. without incurring additional U.S. federal tax, however, these distributions may be subject to applicable state or foreign subsidiaries. We have provided U.S. deferred taxes on a portiontaxes.
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Table of Contents
Debt
On June 1, 2022, we fully repaid the principal and accrued interest under the 3.95% Senior Notes due June 2022, which had an aggregate principal amount outstanding of $400 million. In addition, we paid $7 million of accrued and unpaid interest through the redemption date.
On August 15, 2022, we settled the $525 million principal and conversion rights of our undistributed foreign earnings sufficientNew 2.0% Convertible Notes in cash. The aggregate settlement amount of $630 million was based on $20.41 per underlying share into which the New 2.0% Convertible Notes were convertible. In addition, we paid $5 million of accrued and unpaid interest through the date of settlement.
On September 12, 2022, upon close of the Merger with Avast, we entered into the Amended and Restated Credit Agreement (Credit Agreement) with certain financial institutions, in which they agreed to addressprovide us with (i) a $1,500 million revolving credit facility (Revolving Facility), a $3,910 million term loan A facility (Term A Facility), (iii) a $3,690 million term loan B facility (Term B Facility) and (iv) a $750 million tranche A bridge loan (Bridge Loan) (collectively, the incremental U.S. taxsenior credit facilities). The Bridge Loan was undrawn and immediately terminated upon the Merger’s close. We drew down the aggregate principal amounts of the Term A Facility and Term B Facility to finance the cash consideration payable for the transaction and to fully repay the outstanding principal of $1,703 million and accrued and unpaid interest of $3 million under the Initial Term Loan and Delay Draw Term Loan from the existing credit facilities. The Credit Agreement replaced the existing credit facilities upon the close of the transaction. During three and six months ended September 30, 2022, we paid an aggregate $145 million in debt issuance costs associated with the senior credit facilities.
On September 19, 2022, we issued two series of senior notes, consisting of 6.75% Senior Notes due 2027 and 7.125% Senior Notes due 2030, for an aggregate principal of $1,500 million. They are senior unsecured obligations that wouldrank equally in right of payment with all of our existing and future senior, unsecured, unsubordinated obligations and may be due if we needed those fundsredeemed at any time, subject to support our operationsthe make-whole provisions contained in the U.S. As a resultapplicable indenture relating to such series of notes. Interest on these series of notes is payable semi-annually in arrears on March 31 and September 30 for both the 6.75% Senior Notes and 7.125% Senior Notes, commencing on March 31, 2023. During three and six months ended September 30, 2022, we paid an aggregate $14 million in debt issuance costs associated with the two senior notes.
In connection with the financing provided for Term B Facility, we incurred customary ticking fees with respect to the undrawn commitments that began accruing on the 61st day post-syndication. The ticking fees were accrued at the per annum rate of (i) 50% of the Act enactedinterest rate margin for adjusted SOFR (or applicable replacement rate) loans for 61-90 days from January 28, 2022, the syndication date, and (ii) 100% of the interest rate margin for adjusted SOFR (or applicable replacement rate) loans on December 22, 2017,and after 91 days from the syndication date. Ticking fees were payable on the closing date of the transaction. During three and six months ended September 30, 2022, we have recorded a provisional liability forpaid $31 million in ticking fees.
Share repurchases
During the one-time transition tax, payable over eight years,three months ended September 30, 2022, we executed repurchases of $821 million. Approximately $9217 million is reflected as a current tax payable and the remainder as a long-term liability.
Furthermore, our capital allocation strategy contemplates a quarterly cash dividend and an on-going evaluation of our ability to repurchase shares of our common stock.stock under our existing share repurchase program for an aggregate amount of $404 million.
We initiatedMerger with Avast
On September 12, 2022, we completed the Merger with Avast for a restructuring plan in the first quarter of fiscal 2017 to reduce complexity by means of long-term structural improvements. We have reduced headcount and closed certain facilities under the restructuring plan. We expect the plan to be substantially completed in the first half of fiscal 2019 and expect additionaltotal cash chargesconsideration of approximately $70$6,550 million, to $90net $363 million primarily related to severance benefitsof cash acquired and facilities exit costs.$2,141 million non-cash consideration transferred. The cash consideration included repayment of outstanding Avast debt totaling $942 million. See Note 4 to the Condensed Consolidated Financial Statements for more information on our restructuring plan.

Sources and uses of cash
The following summarizes selected items in our Condensed Consolidated Statements of Cash Flows for the nine months ended December 29, 2017 and December 30, 2016, in millions.
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Operating activities
Our primary source of cash has been cash collections from our customers. Due to seasonality, our orders are generally higher in our third and fourth fiscal quarters and lower in our first and second fiscal quarters. Cash inflows are affected by these fluctuations in our billings and timing of the related collections.
Our primary uses of cash include payments for compensation and related costs, payments to our resellers and distribution partners, payments for income taxes, and other general corporate expenditures.
Our cash flows from operations for the first nine months of fiscal 2018 were $684 million, compared to net cash used of $564 million for the same period in fiscal 2017. Our cash flows in the first nine months of fiscal 2018 reflected $1.6 billion of discrete deferred income tax benefit related to adjustments of deferred taxes as a result of the enactment of the Act in December 2017 and $821 millionin taxespayable as a result of transition taxes. Our cash flows in the first nine months of fiscal 2017 reflected a one-time tax payment of $887 million related to the gain on sale from the divestiture of Veritas. In addition, our cash flows from operations in the first nine months of fiscal 2018, compared to the corresponding period in the prior year, were favorably impacted by an increase in deferred revenue of $258 million, reflecting increased billings and collections for ratable contracts, as well as longer contract duration.
Investing activities
Our investing cash flows consist primarily of proceeds from divestitures, payments for acquisitions and net purchases of short-term investments. Our investing activities during the first nine months of fiscal 2018 included $946 million in net cash proceeds from the divestiture of our WSS and PKI solutions in the third quarter of fiscal 2018, partially offset by $402 million paid for acquisitions during the first nine months of fiscal 2018, compared to $4.5 billion paid during the same period for fiscal 2017 for the Blue Coat acquisition. See Note 6 to the Condensed Consolidated Financial Statements for more information on our divestiture and acquisitions. In addition, during the first nine months of fiscal 2018, we had net purchases of $383 million of short-term investments.
Financing activities
Our financing cash flows consist primarily of issuances and repayments of debt, payment of dividends and dividend equivalents to stockholders, and tax payments related to shares withheld in the settlement of restricted stock units (“RSUs”). Our primary financing activities during the first nine months of fiscal 2018 consisted of debt repayments of $2.6 billion, while our primary financing activities in the first nine months of fiscal 2017 consisted of borrowings of $5.0 billion, net of issuance costs.
Debt. As of December 29, 2017, our total outstanding principal amount of our debt was $5.7 billion. See Note 8Notes to the Condensed Consolidated Financial Statements for further information about this business combination.
Material Cash Requirements
Our principal cash requirements are primarily to meet our working capital needs, support on-going business activities, including payment of taxes and cash dividends, payment of contractual obligations, funding capital expenditures, servicing existing debt, repurchasing shares of our common stock and investing in business acquisitions and mergers.
Debt instruments
As of September 30, 2022, our total outstanding principal amount of indebtedness is summarized as follows. See Note 10 of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further information on our debt.
Dividends.
(In millions)September 30, 2022
Term Loans$7,600 
Senior Notes2,600 
Mortgage Loans7 
Total debt$10,207 
Our Credit Agreement contains customary representations and warranties and affirmative and negative covenants, including compliance with specified financial ratios.As of September 30, 2022, we were in compliance with all debt covenants. See Note 10of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further information regarding financial ratios and debt covenant compliance.
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Dividends
On January 31, 2018,November 8, 2022, we declaredannounced a cash dividend of $0.075$0.125 per share of common stock to be paid on March 14, 2018, to all stockholders of record as of the close of business on February 20, 2018. All shares of common stock issued and outstanding and all shares of unvested restricted stock and performance-based stock as of the record date will be entitled to the dividend and dividend equivalents, respectively.in December 2022. Any future dividends and dividend equivalents will be subject to the approval of our Board of Directors. See Note 10 to the Condensed Consolidated Financial Statements for more information on our dividends and dividend equivalents.
Share repurchases. repurchase program
Under our stock repurchase programs,program, we may purchase shares of our outstanding common stock throughon the open market (including through trading plans intended to qualify under Rule 10b5-1 under the Exchange Act) and through accelerated stock repurchase (“ASR”) transactions. As of December 29, 2017,September 30, 2022, the remaining balance of our sharestock repurchase authorization is $800was $1,370 million and does not have an expiration date. The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions and other investment opportunities.

Contractual obligations
Our contractual obligations primarily consistSubsequent to September 30, 2022, we executed repurchases of future payments due$14 million shares of our common stock for an aggregate amount of $308 million. As a result, we have $1,062 million remaining under our debt, purchase orders, lease arrangements and certain tax regulations. The table below summarizes contractual obligations as of December 29, 2017 that have materially changed from our disclosure in Management’s Discussion and Analysis of Financial Condition and Results of Operations, set forth in Part II, Item 7, of our Annual Report on Form 10-K for the fiscal year ended March 31, 2017.existing share repurchase program.
 Payments Due by Fiscal Period
(In millions)Total Remainder of 2018 2019 - 2020 2021 - 2022 Thereafter
Debt (1)
$5,670
 $—
 $1,170
 $3,000
 $1,500
Interest payments on debt (2)
845
 43
 369
 233
 200
Purchase obligations (3)
340
 242
 45
 51
 2
Deemed repatriation taxes (4)
856
 92
 133
 133
 498
(1)See Note 8 to the Condensed Consolidated Financial Statements for further information on our debt.
(2)Interest payments were calculated based on the contractual terms of the related Senior Notes, Convertible Senior Notes and Senior Term Facilities. Interest on variable rate debt was calculated using the interest rate in effect as of December 29, 2017. See Note 8 to the Condensed Consolidated Financial Statements for further information on the Senior Notes, Convertible Senior Notes and Senior Term Facilities.
(3)These amounts are associated with agreements for purchases of goods or services generally including agreements that are enforceable and legally binding and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. The table above also includes agreements to purchase goods or services that have cancellation provisions requiring little or no payment. The amounts under such contracts are included in the table above because management believes that cancellation of these contracts is unlikely and we expect to make future cash payments according to the contract terms or in similar amounts for similar materials.
(4)These amounts represent the transition tax on untaxed foreign earnings of foreign subsidiaries under the Act which may be paid in installments over an eight-year period. See Note 5 to the Condensed Consolidated Financial Statements for further information on our income taxes and the impact from the recently enacted legislation.
Indemnifications
In the ordinary course of business, we may provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners, subsidiaries and other parties with respect to certain matters, including, but not limited to, losses arising out of our breach of agreements or representations and warranties made by us. In addition, our bylaws contain indemnification obligations to our directors, officers, employees and agents, and we have entered into indemnification agreements with our directors and certain of our officers to give such directors and officers additional contractual assurances regarding the scope of the indemnification set forth in our bylaws and to provide additional procedural protections. We maintain director and officer insurance, which may cover certain liabilities arising from our obligation to indemnify our directors and officers. It is not possible to determine the aggregate maximum potential loss under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Such indemnification agreements might not be subject to maximum loss clauses. Historically, we have not incurred material costs as a result of obligations under these agreements and we have not accrued any liabilities related to such indemnification obligations in our Condensed Consolidated Financial Statements.Restructuring
In connection with the Merger, our Board of Directors approved a restructuring plan (the September 2022 Plan) to realize cost savings and operational synergies, which became effective upon the close of the Merger on September 12, 2022. We have incurred or expect to incur cash expenditures for severance and termination benefits, contract terminations, facilities closures, and the sale of Veritas,underutilized facilities. As of September 30, 2022, we assigned several leasesexpect that we will incur total costs up to Veritas Technologies LLC or its related subsidiaries. As a condition$280 million, with $180 million and $100 million estimated to consenting tobe incurred within the assignments, certain lessors required us to agree to indemnifyfirst and second full years, respectively, following the lessor under the applicable lease with respect to certain matters, including, but not limited to, losses arising out of Veritas Technologies LLC or its related subsidiaries’ breach of payment obligations under the termscompletion of the lease. AsMerger. These actions are expected to be completed by fiscal 2024.
Contractual obligations
The following is a schedule of our significant contractual obligations and commitments as of September 30, 2022, including those associated with our other indemnification obligations discussed aboveMerger with Avast. The expected timing and in general, it is not possible to determineamount of short-term and long-term payments of the aggregate maximum potential loss under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. As with our other indemnification obligations, such indemnification agreements might not be subject to maximum loss clauses and to date, generally under our real estate obligations, we have not incurred material costs as a result of such obligations under our leases and have not accrued any liabilities related to such indemnification obligations in our Condensed Consolidated Financial Statements.
We provide limited product warrantiesthe following table is estimated based on current information. Timing of payments and the majority of our software license agreements contain provisions that indemnify licensees of our software from damages and costs resulting from claims alleging that our software infringesactual amounts paid may be different, depending on the intellectual property rightstime of a third party. Historically, payments made under these provisions have been immaterial. We monitorreceipt of goods or services, or changes to agreed-upon amounts for certain obligations.
Short-Term PaymentsLong-Term PaymentsTotal
(In millions)
Contractual obligations:
Debt (principal payments) (1)
$175 $10,032 $10,207 
Interest payments on debt (2)
588 2,573 3,161 
Purchase obligations (3)
316 122 438 
Deemed repatriation taxes (4)
128 309 437 
Operating leases (5)
26 43 69 
Total$1,233 $13,079 $14,312 
(1)As of September 30, 2022, our total outstanding principal amount of indebtedness is comprised of $7,600 million in Term Loans, $2,600 million in Senior Notes and $7 million in Mortgage Loans. See Note 10 of the conditions that are subjectNotes to indemnification to identify if a loss has occurred.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES
There have been no material changes in the matters for which we make critical accounting estimates in the preparation of our Condensed Consolidated Financial Statements during the nine months ended December 29, 2017, as compared to those disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annualthis Quarterly Report on Form 10-K10-Q for further information about our debt and debt covenants.
The Credit Agreement contains customary representations and warranties and affirmative and negative covenants, including a covenant that we maintain a consolidated leverage ratio of not more than 5.25 to 1.0, or 5.75 to 1.0 if we acquire assets or business in an aggregate amount greater than $250 million, and restrictions on indebtedness, liens, investments, stock repurchases, and dividends (with exceptions permitting our regular quarterly dividend and other specific capital returns). As of September 30, 2022, we were in compliance with all debt covenants.
(2)Interest payments calculated based on the fiscal year ended March 31, 2017.contractual terms of the related debt instruments. Interest on variable rate debt was calculated using the interest rate in effect as of September 30, 2022. See Note 10 of the Notes to the Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further information on the Term Loans and Senior Notes.
Recently issued authoritative guidance not yet adopted
Revenue Recognition - Contracts with Customers. In May 2014, the Financial Accounting Standards Board (“FASB”) issued new authoritative guidance(3)Agreements for revenue from contracts with customers. The standard’s core principle is that a company will recognize revenue when it transfers promisedpurchases of goods or services, with terms that are enforceable and legally binding and specify all significant terms, including fixed or minimum quantities to customers in an amount that reflectsbe purchased; fixed, minimum, or variable price provisions; and the consideration that the company expects to receive in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under current guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. In March 2016, the FASB clarified implementation guidance on principal versus agent considerations. In April 2016, the FASB issued guidance related to identifying performance obligations and licensing which reduces the cost and complexity of applying certain aspects of the guidance both at implementation and on an ongoing basis.
The new guidance may be applied retrospectively to each prior period presented (“retrospective”) or retrospectively with cumulative effect recognized in retained earnings as of the date of adoption (“modified retrospective”). We expect to adopt the new standard on a modified retrospective basis in our first quarter of fiscal 2019.
We are continuing to assess the impact of this standard on our financial position, results of operations and related disclosures and have not yet determined whether the effect will be material. We do not expect that the adoption of this standard will have a material impact on our operating cash flows. We believe that the new guidance will impact our following policies and disclosures:
the pattern andapproximate timing of the recognitiontransaction. These amounts include agreements to purchase goods or services that have cancellation provisions requiring little or no payment. The amounts under such contracts are included because management believes that cancellation of revenuethese contracts is unlikely, and we expect to make future cash payments according to the contract terms or in similar amounts for certain license fees;similar materials.
(4)Transition tax payments on previously untaxed foreign earnings of foreign subsidiaries under the allocationTax Cuts and Jobs Act, which may be paid through July 2025.
(5)Payments for various non-cancelable operating lease agreements that expire on various dates through fiscal 2028. The amounts in the table above exclude expected sublease income. See Note 9 of revenue across performance obligationsthe Notes to the Condensed Consolidated Financial Statements included in multiple element arrangements; andthis Quarterly Report on Form 10-Q for further information on leases.
required disclosures, including information aboutDue to the transaction price allocateduncertainty with respect to remaining performance obligations and expectedthe timing of revenue recognition.
We will continuefuture cash flows associated with our unrecognized tax benefits and other long-term taxes as of September 30, 2022, we are unable to assess the impact of new guidance including any changes to systems, processes and the control environment as we work through the adoption, and there remain areas still to be fully concluded upon.
Financial Instruments - Recognition and Measurement. In January 2016, the FASB issued new authoritative guidance on financial instruments. The new guidance enhances the reporting model for financial instruments, which includes amendments to address aspects of recognition, measurement, presentation and disclosure. The new guidance will be effective for us in our first quarter of fiscal 2019. Early adoption is permitted under limited circumstances but we do not intend to adopt the provisionsmake reasonably reliable estimates of the new guidance early. We are currently evaluating the impact of the adoption of this guidance on our Consolidated Financial Statements.
Leases. In February 2016, the FASB issued new guidance on lease accounting which will require lessees to recognize assets and liabilities on their balance sheet for the rights and obligations created by operating leases and will also require disclosures designed to give users of financial statements information on the amount, timing, and uncertaintyperiod of cash flows arisingsettlement
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with the respective taxing authorities. Therefore, $595 million in long-term income taxes payable has been excluded from leases. The new guidance will be effective for us in our first quarterquarterly review of fiscal 2020. Early adoption is permitted but we do not plan to adopt the provisionstiming of the new guidance early. We are currently evaluating the impact of the adoption of this guidance on our Consolidated Financial Statements. We are currently in the assessment phase to determine the adoption methodology and are evaluating the impact of this new standard on our consolidated financial statements and disclosures. We expect that most of our operating lease commitments will be subject to the new standard and recognized as lease liabilities and right-of-use assets upon adoption, which will increase the total assets and total liabilities we report. We are evaluating the impact to our consolidated financial statements as it relates to other aspects of the business.contractual obligations.
Credit Losses. In June 2016, the FASB issued new authoritative guidance on credit losses which changes the impairment model for most financial assets and certain other instruments. For trade receivables and other instruments, we will be required to use a new forward-looking “expected loss” model. Additionally, for available-for-sale debt securities with unrealized losses, we will measure credit losses in a manner similar to today, except that the losses will be recognized as allowances rather than reductions in the amortized cost of the securities. The standard will be effective for us in our first quarter of fiscal 2021. We are currently evaluating the impact of the adoption of this guidance on our Consolidated Financial Statements.
Income Taxes - Intra-Entity Asset Transfers Other Than Inventory. In October 2016, the FASB issued new authoritative guidance that requires entities to immediately recognize the tax consequences of intercompany asset transfers, excluding inventory, at the transaction date, rather than deferring the tax consequences under current U.S. GAAP. The standard will be effective for us in our first quarter of fiscal 2019, and requires a modified retrospective transition method. We are currently evaluating the impact of the adoption of this guidance and anticipate it will have a material impact on our Consolidated Financial Statements.
Although there are several other new accounting pronouncements issued or proposed by the FASB that we have adopted or will adopt, as applicable, we do not believe any of these accounting pronouncements has had or will have a material impact on our consolidated financial position, operating results or disclosures.

Item 3. Quantitative and Qualitative Disclosures aboutAbout Market Risk
We are exposed to various market risks related to fluctuations in foreign currency exchange and interest rates. We may use derivative financial instruments to reduce the volatility of earnings and cash flow that may result from adverse economic conditions and events or changes in foreign currency exchange and interest rates.
Interest rate risk
There have been no significantAs of September 30, 2022, we had $2,600 million in aggregate principal amount of fixed-rate Senior Notes outstanding, with a carrying amount and a fair value of $2,496 million, based on Level 2 inputs. The fair value of these notes fluctuates when interest rates change. Since these notes bear interest at fixed rates, financial statement risk associated with changes in interest rates is limited to future refinancing of current debt obligations. If these notes were refinanced at higher interest rates prior to maturity, our total interest payments could increase by a material amount; however, this risk is mitigated by our strong cash position and expected future cash generated from operations, which will be sufficient to satisfy this increase in obligation.
As of September 30, 2022, we also had $7,600 million outstanding debt with variable interest rates based on the Secured Overnight Financing Rate (SOFR). A hypothetical 1% change in SOFR would have resulted in a $76 million increase in interest expense on an annualized basis.
In addition, we have a $1,500 million revolving credit facility that if drawn bears interest at a variable rate risk during the nine months ended December 29, 2017, as comparedbased on SOFR and would be subject to the interest rate risk exposures discussedsame risks associated with adverse changes in Management’s Discussion and Analysis of Financial Condition and Results of Operations, set forth in Part II, Item 7A, of our Annual Report on Form 10-K for the fiscal year ended March 31, 2017.SOFR.
Foreign currency exchange rate risk
There have been noWe conduct business in numerous currencies through our worldwide operations, and our entities hold monetary assets or liabilities, earn revenues or incur costs in currencies other than the entity’s functional currency, primarily in Euro, Japanese Yen, British Pound, Australian Dollar and Canadian Dollar. In addition, we charge our international subsidiaries for their use of intellectual property and technology and for certain corporate services provided. Our cash flow, results of operations and certain of our intercompany balances that are exposed to foreign exchange rate fluctuations may differ materially from expectations, and we may record significant changesgains or losses due to foreign currency fluctuations and related hedging activities. As a result, we are exposed to foreign exchange gains or losses which impacts our operating results.
Growth in our international operations will incrementally increase our exposure to foreign currency fluctuations as well as volatile market conditions, including the estimated fair value changeweakening of foreign currencies relative to USD, which has and may in the future negatively affect our revenue expressed in USD.
We manage these exposures and reduce the potential effects of currency fluctuations on our results of operations through monthly foreign exchange forward contracts on our assets and liabilities denominated in currencies other than the functional currency of our subsidiaries. The gains and losses on these foreign exchange contracts are recorded in Other income (expense), net in the Consolidated Statements of Operations.
We do not use derivative financial instruments for speculative trading purposes, nor do we hedge our foreign currency hedging derivatives forexposure in a given changemanner that entirely offsets the effects of the changes in foreign currency exchange rates duringrates. As our international operations grow, we will continue to reassess our approach to managing risks related to fluctuations in foreign currency.
Additional information related to our debt and derivative instruments is included in Note 10 and Note 11, respectively, of the nine months ended December 29, 2017, as comparedNotes to that discussedthe Condensed Consolidated Financial Statements included in Part II, Item 7A of our Annualthis Quarterly Report on Form 10-K for the fiscal year ended March 31, 2017.10-Q.
Item 4. Controls and Procedures 
(a) Evaluation of Disclosure Controls and Procedures
The Securities and Exchange Commission (“SEC”)SEC defines the term “disclosure controls and procedures” to mean a company’s controls and other procedures that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms. “Disclosure controls and procedures” include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our disclosure controls and procedures are designed to provide reasonable assurance that such information is accumulated and communicated to our management. Our management (with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”))Officer) has conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act). Based on such evaluation, our CEOChief Executive Officer and our CFOChief Financial Officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period covered by this report.
(b) Changes in Internal Control over Financial Reporting
ThereDuring the second quarter of fiscal 2023, except for the Merger with Avast discussed below, there were no changes in our internal controlcontrols over financial reporting during the three months ended December 29, 2017,or in other factors, that have materially affected, or are reasonably likely to materially affect, our internal controlcontrols over financial reporting.
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On September 12, 2022, we completed the Merger with Avast and are currently integrating Avast into our operations and internal control processes. Pursuant to the Securities and Exchange Commission's guidance that an assessment of a recently acquired business may be omitted from the scope of the evaluation for a period up to one year following the Merger, the scope of our assessment of our internal controls over financial reporting is ongoing. We are currently assessing the control environment related to our Merger with Avast and have designed and implemented new controls as needed.
(c) Limitations on Effectiveness of Controls
Our management, including our CEOChief Executive Officer and CFO,Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. Accordingly, our disclosure controls and procedures provide reasonable assurance
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Information with respect to this Item may be found under the heading “Litigation contingencies” in Note 1218 of the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q, which information is incorporated herein by reference.
Item 1A. Risk Factors
A description of the risksrisk factors associated with our business is set forth below. The list is not exhaustive, and you should carefully consider these risks and uncertainties before investing in our common stock.
RISKS RELATED TO OUR BUSINESS STRATEGY AND INDUSTRY
If we are unable to develop new and enhanced solutions, or if we are unable to continually improve the performance, features, and reliability of our existing solutions, our business and operating results could be adversely affected.
Our future success depends on our ability to effectively respond to evolving threats to consumers, as well as competitive technological developments and industry changes, by developing or introducing new and enhanced solutions on a timely basis.
We have in the past incurred, and will continue to incur, significant research and development expenses as we focus on organic growth through internal innovation. We believe that we also must continue to dedicate a significant amount of resources to our research and development efforts to decrease our reliance on third parties. If we do not achieve the benefits anticipated from these investments, or if the achievement of these benefits is delayed, our operating results may be adversely affected. Additionally, we must continually address the challenges of dynamic and accelerating market trends and competitive developments. Customers may require features and capabilities that our current solutions do not have. Our failure to develop new solutions and improve our existing solutions to satisfy customer preferences and effectively compete with other market offerings in a timely and cost-effective manner may harm our ability to retain our customers and attract new customers. A loss of customers would adversely impact our business and operating results.
The development and introduction of new solutions involve a significant commitment of time and resources and are subject to a number of risks and challenges including but not limited to:
•Lengthy development cycles;
•Evolving industry and regulatory standards and technological developments by our competitors and customers;
•Rapidly changing customer preferences;
•Evolving platforms, operating systems, and hardware products, such as mobile devices;
•Product and service interoperability challenges with customer’s technology and third-party vendors;
•The integration of products and solutions from acquired companies;
•Entering into new or unproven market segments; and
•Executing new product and service strategies.
In addition, third parties, including operating systems and internet browser companies, may take steps to further limit the interoperability of our solutions with their own products and services, in some cases to promote their own offerings. This could delay the development of our solutions or our solutions may be unable to operate effectively. This could also result in decreased demand for our solutions, decreased revenue, and harm to our reputation, and adversely affect our business, financial condition, results of operations, and cash flows.
If we are not successful in managing these risks and challenges, or if our new or improved solutions are not technologically competitive or do not achieve market acceptance, our business and operating results could be adversely affected.
We operate in a highly competitive and dynamic environment, and if we are unable to compete effectively, we could experience a loss in market share and a reduction in revenue.
We operate in intensely competitive and dynamic markets that experience frequent and rapid technological developments, changes in industry and regulatory standards, changes in customer requirements and preferences, and frequent new product introductions and improvements. If we are unable to anticipate or react to these continually evolving conditions, we could experience a loss of market share and a reduction in our revenues, which could materially and adversely affect our business and financial results. To compete successfully, we must maintain an innovative research and development effort to develop new solutions and enhance our existing solutions, effectively adapt to changes in the technology or product rights held by our competitors as well as the ways our information is accessed, used and stored by our customers, and appropriately respond to competitive strategies.
We face competition from a broad range of companies, including software vendors focusing on Cyber Safety solutions, operating system providers such as Apple, Google and Microsoft, and ‘pure play’ companies that currently specialize in one or a few particular segments of the market and many of which are expanding their product portfolios into different segments. Many of these competitors offer solutions or are currently developing solutions that directly compete with our offerings. We also face growing competition from other technology companies, as well as from companies in the identity threat protection space such as credit bureaus. Further, many of our competitors are increasingly developing and incorporating into their products data protection software and other competing Cyber Safety products such as antivirus protection or VPN, often free of charge, that compete with
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our offerings. Our competitive position could be adversely affected by the functionality incorporated into these products rendering our existing solutions obsolete. In addition, the introduction of new products or services by competitors, and/or market acceptance of products or services based on emerging or alternative technologies, could make it easier for other products or services to compete with our solutions.
We anticipate facing additional competition as new participants continue to enter the Cyber Safety market and as our current competitors seek to increase their market share and expand their existing offerings. Some of our competitors have greater financial, technical, marketing, or other resources than we do, including in new Cyber Safety and digital life segments, and consequently, may have the ability to influence customers to purchase their products instead of ours, including through investing more in internal innovation than we can and through benefiting from unique access to customer engagement points. Further consolidation among our competitors and within our industry or, in addition to other changes in the competitive environment, such as greater vertical integration from key computing and operating system suppliers could result in larger competitors that compete more frequently with us.
In addition to competing with these vendors directly for sales to end-users of our solutions, we compete with them for the opportunity to have our solutions bundled with the offerings of our strategic partners, such as computer hardware original equipment manufacturers (OEMs) and internet service providers (ISPs) and operating systems. Our competitors could gain market share from us if any of these strategic partners replace our solutions with those of our competitors or with their own solutions; similarly, they could gain market share from us if these partners more actively promote our competitors’ solutions or their own solutions than our solutions. In addition, software vendors who have bundled our solutions with theirs may choose to bundle their solutions with their own or other vendors’ solutions or may limit our access to standard interfaces and inhibit our ability to develop solutions for their platform. In the future, further product development by these vendors could cause our solutions to become redundant, which could significantly impact our sales and operating results.
Our acquisitions and divestitures create special risks and challenges that could adversely affect our financial results.
As part of our business strategy, we may acquire or divest businesses or assets. For example, in 2019, we completed the sale of certain of our enterprise security assets to Broadcom Inc. (the Broadcom sale), in January 2021, we completed the acquisition of Avira, and in September 2022, we completed the Merger with Avast. These activities can involve a number of risks and challenges, including:
•Complexity, time and costs associated with managing these transactions, including the integration of acquired and the winding down of divested business operations, workforce, products, IT systems and technologies;
•Challenges in retaining customers of acquired businesses, or providing the same level of service to existing customers with reduced resources;
•Diversion of management time and attention;
•Loss or termination of employees, including costs associated with the termination or replacement of those employees;
•Assumption of liabilities of the acquired and divested business or assets, including pending or future litigation, investigations or claims related to the acquired business or assets;
•Addition of acquisition-related debt;
•Difficulty in entering into or expanding in new markets or geographies;
•Increased or unexpected costs and working capital requirements;
•Dilution of stock ownership of existing stockholders;
•Unanticipated delays or failure to meet contractual obligations;
•Substantial accounting charges for acquisition-related costs, asset impairments, amortization of intangible assets and higher levels of stock-based compensation expense; and
•Difficulty in realizing potential benefits, including cost savings and operational efficiencies, synergies and growth prospects from integrating acquired businesses.
Moreover, to be successful, large complex acquisitions depend on large-scale product, technology, and sales force integrations that are difficult to complete on a timely basis or at all and may be more susceptible to the special risks and challenges described above. Any of the foregoing, and other factors, could harm our ability to achieve anticipated levels of profitability or other financial benefits from our acquired or divested businesses, product lines or assets or to realize other anticipated benefits of divestitures or acquisitions.
Our revenue and operating results depend significantly on our ability to retain our existing customers, convert existing non-paying customers to paying customers and add new customers.
We generally sell our solutions to our customers on a monthly or annual subscription basis. Customers may choose not to renew their membership with us at any time. Renewing customers may require additional incentives to renew, may not renew for the same contract period, or may change their subscriptions. We therefore may be unable to retain our existing customers on the same or on more profitable terms, if at all. In addition, we may not be able to accurately predict or anticipate future trends in customer retention or effectively respond to such trends.
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Our customer retention rates may decline or fluctuate due to a variety of factors, including the following:
•Our customers’ levels of satisfaction or dissatisfaction with our solutions and the value they place on our solutions;
•The quality, breadth, and prices of our solutions;
•Our general reputation and events impacting that reputation;
•The services and related pricing offered by our competitors; including increasing availability and efficacy of free solutions;
•Disruption by new services or changes in law or regulations that impact the need for efficacy of our products and services;
•Changes in auto-renewal regulations;
•Our customers’ dissatisfaction with our efforts to market additional products and services;
•Our customer service and responsiveness to the needs of our customers;
•Changes in our target customers’ spending levels as a result of general economic conditions, inflationary pressures or other factors; and
•The quality and efficacy of our third party partners who assist us in renewing customers’ subscriptions.
Declining customer retention rates could cause our revenue to grow more slowly than expected or decline, and our operating results, gross margins and business will be harmed.
We may need to change our pricing models to compete successfully.
The intense competition we face, in addition to general and economic business conditions, can put pressure on us to change our pricing practices. If our competitors offer deep discounts on certain solutions or provide offerings, or offer free introductory products that compete with ours, we may need to lower prices or offer similar free introductory products in order to compete successfully. Similarly, if external factors, such as economic conditions or market trends, require us to raise our prices, our ability to acquire new customers and retain existing customers may be diminished. Any such changes may reduce revenue and margins and could adversely affect our financial results.
Additionally, our business may be affected by changes in the macroeconomic environment. Our solutions are discretionary purchases, and customers may reduce or eliminate their discretionary spending on our solutions during a difficult macroeconomic environment. Although we did not experience a material increase in cancellations by customers or a material reduction in our retention rate in fiscal 2022 or in the first two quarters of fiscal 2023, we may experience such an increase or reduction in the future, especially in the event of a prolonged recession or a worsening of current conditions as a result of the COVID-19 pandemic. In addition, during a recession, consumers may experience a decline in their credit or disposable income, which may result in less demand for our solutions. As a result, we may have to lower our prices or make other changes to our pricing model to address these dynamics, any of which could adversely affect our business and financial results.
In addition, in January 2021, we acquired Germany-based Avira and in September 2022, we completed our Merger with Avast. Many of Avira’s and Avast’s users are freemium subscribers, meaning they do not pay for its basic services. Much of our anticipated growth in connection with the Avira acquisition and the Avast Merger is attributable to attracting and converting Avira’s and Avast’s freemium users to a paid subscription option. Numerous factors, however, may impede our ability to attract free users, convert these users into paying customers and retain them.
If we fail to manage our sales and distribution channels effectively, or if our partners choose not to market and sell our solutions to their customers, our operating results could be adversely affected.
A portion of our revenues is derived from sales through indirect channels, including, but not limited to, distributors that sell our products to end-users and other resellers, and OEM partners that incorporate our products into, or bundle our products with, their products. These channels involve a number of risks, including:
•Our resellers, distributors and OEMs are generally not subject to minimum sales requirements or any obligation to market our solutions to their customers;
•Our reseller and distributor agreements are generally nonexclusive and may be terminated at any time without cause and our OEM partners may terminate or renegotiate their arrangements with us and new terms may be less favorable due to competitive conditions in our markets and other factors;
•Our resellers, distributors and OEMs may encounter issues or have violations of applicable law or regulatory requirements or otherwise cause damage to our reputation through their actions;
•Our resellers and distributors frequently market and distribute competing solutions and may, from time to time, place greater emphasis on the sale of these competing solutions due to pricing, promotions, and other terms offered by our competitors;
•Any consolidation of electronics retailers can increase their negotiating power with respect to software providers such as us and any decline in the number of physical retailers could decrease the channels of distribution for us;
•The continued consolidation of online sales through a small number of larger channels has been increasing, which could reduce the channels available for online distribution of our solutions; and
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•Sales through our partners are subject to changes in general economic conditions, strategic direction, competitive risks, and other issues that could result in a reduction of sales, or cause our partners to suffer financial difficulty which could delay payments to us, affecting our operating results.
If we fail to manage our sales and distribution channels successfully, these channels may conflict with one another or otherwise fail to perform as we anticipate, which could reduce our sales and increase our expenses as well as weaken our competitive position.
Changes in industry structure and market conditions could lead to charges related to discontinuance of certain of our products or businesses and asset impairments.
In response to changes in industry structure and market conditions, we may be required to strategically reallocate our resources and consider restructuring, disposing of, or otherwise exiting certain businesses. Any decision to limit investment in or dispose of or otherwise exit businesses may result in the recording of special charges, such as technology-related write-offs, workforce reduction costs, charges relating to consolidation of excess facilities, or claims from third parties who were resellers or users of discontinued products. Our estimates with respect to the useful life or ultimate recoverability of our carrying basis of assets, including purchased intangible assets, could change as a result of such assessments and decisions. Although in certain instances our vendor agreements allow us the option to cancel, reschedule, and adjust our requirements based on our business needs, our loss contingencies may include liabilities for contracts that we cannot cancel, reschedule or adjust with suppliers.
Further, our estimates relating to the liabilities for excess facilities are affected by changes in real estate market conditions. Additionally, we are required to evaluate goodwill impairment on an annual basis and between annual evaluations in certain circumstances, and future goodwill impairment evaluations may result in a charge to earnings.
RISKS RELATED TO OUR OPERATIONS
Our international operations involve risks that could increase our expenses, adversely affect our operating results and require increased time and attention of our management.
Following the Merger with Avast, we derive a significant portion of our revenues from customers located outside of the U.S., and we have substantial operations outside of the U.S., including engineering, finance, sales and customer support. Our international operations are subject to risks in addition to those faced by our domestic operations, including:
•Difficulties in staffing, managing, and coordinating the activities of our geographically dispersed and culturally diverse operations;
•Potential loss of proprietary information due to misappropriation or laws that may be less protective of our intellectual property rights than U.S. laws or that may not be adequately enforced;
•Requirements of foreign laws and other governmental controls, including tariffs, trade barriers and labor restrictions, and related laws that reduce the flexibility of our business operations;
•Fluctuations in currency exchange rates, economic instability, and inflationary conditions could make our solutions more expensive or could increase our costs of doing business in certain countries;
•Potential changes in trade relations arising from policy initiatives or other political factors;
•Regulations or restrictions on the use, import, or export of encryption technologies that could delay or prevent the acceptance and use of encryption products and public networks for secure communications;
•Local business and cultural factors that differ from our normal standards and practices, including business practices that we are prohibited from engaging in by the Foreign Corrupt Practices Act and other anti-corruption laws and regulations;
•Central bank and other restrictions on our ability to repatriate cash from our international subsidiaries or to exchange cash in international subsidiaries into cash available for use in the U.S.;
•Limitations on future growth or inability to maintain current levels of revenues from international sales if we do not invest sufficiently in our international operations;
•Difficulties in staffing, managing, and operating our international operations;
•Costs and delays associated with developing software and providing support in multiple languages;
•Political, social or economic unrest, war, or terrorism, or regional natural disasters, particularly in areas in which we have facilities; and
•Multiple and possibly overlapping tax regimes.
The expansion of our existing international operations and entry into additional international markets has required and will continue to require significant management attention and financial resources. These increased costs may increase our cost of acquiring international customers, which may delay our ability to achieve profitability or reduce our profitability in the future. We may also face pressure to lower our prices in order to compete in emerging markets, which could adversely affect revenue derived from our international operations.
Our business has not been materially impacted to date by the ongoing military conflict between Russia and Ukraine; however, it is not possible to predict the broader consequences of this conflict or other conflicts that may arise in the future, which could include geopolitical instability and uncertainty; adverse impacts on global and regional economic conditions and financial
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markets, including significant volatility in credit, capital, and currency markets; reduced economic activity; changes in laws and regulations affecting our business, including further sanctions or counter-sanctions which may be enacted; and increased cybersecurity threats and concerns. The ultimate extent to which the Russia-Ukraine conflict or other future conflicts may negatively impact our business, financial condition and results of operations is set forthwill depend on future developments, which are highly uncertain, difficult to predict and subject to change.
Our future success depends on our ability to attract and retain personnel in Part I, Item 1A,a competitive marketplace.
Our future success depends upon our ability to recruit and retain key management, technical (including cyber security experts), sales, marketing, e-commerce, finance, and other personnel. As a result of our AnnualMerger with Avast, we have expanded our leadership team to lead the combined company. Our officers and other key personnel are “at will” employees and we generally do not have employment or non-compete agreements with our employees. Competition for people with the specific skills that we require is significant. While we continue to monitor the competitive environment, it is possible that the COVID-19 pandemic may affect the productivity of our employees and our ability to attract and retain key talent. As a result of the pandemic, in March 2020, we transitioned to a remote working environment for the substantial majority of our employees. While our employees have transitioned effectively to working from home, over time such remote operations may decrease the cohesiveness of our employees and our ability to maintain our culture, both of which are integral to our success. Additionally, a remote working environment may impede our ability to undertake new business projects, to foster a creative environment, to hire new employees and to retain existing employees.
In order to attract and retain personnel in a competitive marketplace, we must provide competitive pay packages, including cash and equity-based compensation. Additionally, changes in immigration laws could impair our ability to attract and retain highly qualified employees. If we fail to attract, retain and motivate new or existing personnel, our business, results of operations and future growth prospects could suffer. The volatility in our stock price may from time to time adversely affect our ability to recruit or retain employees. In addition, we may not have an adequate number of shares reserved under our equity compensation plans, forcing us to reduce awards of equity-based compensation, which could impair our efforts to attract, retain and motivate necessary personnel. If we are unable to hire and retain qualified employees, or conversely, if we fail to manage employee performance or reduce staffing levels when required by market conditions, our business and operating results could be adversely affected.
Effective succession planning is also important to our long-term success. Failure to ensure effective transfer of knowledge and smooth transitions involving key employees could hinder our strategic planning and execution. From time to time, key personnel leave our company and the frequency and number of such departures have widely varied and have, in the past, resulted in significant changes to our executive leadership team. The loss of any key employee could result in significant disruptions to our operations, including adversely affecting the timeliness of product releases, the successful implementation and completion of company initiatives, our internal control over financial reporting, and our results of operations. In addition, hiring, training, and successfully integrating replacement personnel can be time consuming and expensive, may cause additional disruptions to our operations, and may be unsuccessful, which could negatively impact future financial results.
Our solutions, systems, websites and the data on these sources may be subject to intentional disruption that could materially harm to our reputation and future sales.
Despite our precautions and significant ongoing investments to protect against security risks, data protection breaches, cyber-attacks, and other intentional disruptions of our solutions, we expect to be an ongoing target of attacks specifically designed to impede the performance and availability of our offerings and harm our reputation as a leading cyber security company. Similarly, experienced computer programmers or other sophisticated individuals or entities, including malicious hackers, state-sponsored organizations, and insider threats including actions by employees and third-party service providers, may attempt to penetrate our network security or the security of our systems and websites and misappropriate proprietary information or cause interruptions of our products and services. Such attempts are increasing in number and in technical sophistication, and if successful could expose us and the affected parties, to risk of loss or misuse of proprietary or confidential information or disruptions of our business operations.
While we engage in a number of measures aimed to protect against security breaches and to minimize the impact if a data breach were to occur, our information technology systems and infrastructure may be vulnerable to damage, compromise, disruption, and shutdown due to attacks or breaches by hackers or other circumstances, such as error or malfeasance by employees or third-party service providers or technology malfunction. The occurrence of any of these events, as well as a failure to promptly remedy these events should they occur, could compromise our systems, and the information stored in our systems could be accessed, publicly disclosed, lost, stolen, or damaged. Any such circumstance could adversely affect our ability to attract and maintain customers as well as strategic partners, cause us to suffer negative publicity or damage to our brand, and subject us to legal claims and liabilities or regulatory penalties. In addition, unauthorized parties might alter information in our databases, which would adversely affect both the reliability of that information and our ability to market and perform our services as well as undermine our ability to remain compliant with relevant laws and regulations. Techniques used to obtain unauthorized access or to sabotage systems change frequently, are constantly evolving and generally are difficult to recognize and react to effectively. We may be unable to anticipate these techniques or to implement adequate preventive or reactive measures. Several recent, highly publicized data security breaches, including a large-scale attack on SolarWinds customers by a foreign nation state actor and a significant uptick in ransomware/extortion attacks at other companies have heightened consumer awareness of this issue and may embolden individuals or groups to target our systems or those of our strategic partners or enterprise customers. In December 2021, a critical remote code execution (RCE) vulnerability was identified in the Apache Software Foundation’s Log4j software library (Log4j), which if exploited could result in unauthorized access to our systems and data, and
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acquisition of the same. We are taking, and have taken, steps to remediate all known Log4j vulnerabilities within our environment, deployed compensating controls, and implemented additional changes to protect against an exploit of those vulnerabilities. A threat actor could exploit a Log4j vulnerability or newly discovered vulnerabilities before we complete our remediation work or identify a vulnerability that we did not effectively remediate. If that happens, there could be unauthorized access to, or acquisition of, data we maintain, and damage to our systems. We could also face legal action from individuals, business partners, and regulators in connection with exploitation of those vulnerabilities, which would result in increased costs and fees incurred in our defense against those proceedings.
We collect, use, disclose, store or otherwise process personal information, which subjects us to privacy and data security laws and contractual commitments.
We collect, use, process, store, transmit or disclose (collectively, process) an increasingly large amount of confidential information, including personally identifiable information, credit card information and other critical data from employees and customers, in connection with the operation of our business, particularly in relation to our identity and information protection offerings.
The personal information we process is subject to an increasing number of federal, state, local, and foreign laws regarding privacy and data security, as well as contractual commitments. Any failure or perceived failure by us to comply with such obligations may result in governmental enforcement actions, fines, litigation, or public statements against us by consumer advocacy groups or others and could cause our customers to lose trust in us, which could have an adverse effect on our reputation and business.
Additionally, changes to applicable privacy or data security laws could impact how we process personal information and therefore limit the effectiveness of our solutions or our ability to develop new solutions. For example, the European Union General Data Protection Regulation imposes more stringent data protection requirements and provides for greater penalties for noncompliance of up to the greater of €20 million or four percent of our worldwide annual revenues.
Data protection legislation is also becoming increasingly common in the U.S. at both the federal and state level. For example, the California Consumer Privacy Act of 2018 (the CCPA) requires, among other things, covered companies to provide new disclosures to California consumers regarding the use of personal information, gives California residents expanded rights to access their personal information that has been collected and allows such consumers new abilities to opt-out of certain sales of personal information. Further, the new California Privacy Rights Act (the CPRA) significantly modifies the CCPA. These modifications may result in additional uncertainty and require us to incur additional costs and expenses in our effort to comply. Additionally, the Federal Trade Commission (the FTC) and many state attorneys general are interpreting federal and state consumer protection laws to impose standards for the online collection, use, dissemination, and security of data. The burdens imposed by the CCPA, CPRA and other similar laws that may be enacted at the federal and state level may require us to modify our data processing practices and policies, adapt our goods and services and incur substantial expenditures in order to comply.
Global privacy and data protection legislation, enforcement, and policy activity are rapidly expanding and evolving, and may be inconsistent from jurisdiction to jurisdiction. We may be or become subject to data localization laws mandating that data collected in a foreign country be processed and stored only within that country. If any country in which we have customers were to adopt a data localization law, we could be required to expand our data storage facilities there or build new ones in order to comply. The expenditure this would require, as well as costs of compliance generally, could harm our financial condition.
Additionally, third parties with whom we work, such as vendors or developers, may violate applicable laws or our policies and such violations can place personal information of our customers at risk. In addition, our customers may also accidentally disclose their passwords or store them on a device that is lost or stolen, creating the perception that our systems are not secure against third-party access. This could have an adverse effect on our reputation and business. In addition, such third parties could expose us to compromised data or technology, or be the target of cyberattack and other data breaches which could impact our systems or our customers’ records. Further, we could be the target of a cyberattack or other action that impacts our systems and results in a data breach of our customers’ records. This could have an adverse effect on our reputation and business.
Our inability to successfully recover from a disaster or other business continuity event could impair our ability to deliver our products and services and harm our business.
We are heavily reliant on our technology and infrastructure to provide our products and services to our customers. For example, we host many of our products using third-party data center facilities, and while we require them to maintain formal service level agreements around availability, we do not control the operation of these facilities. These facilities are vulnerable to damage, interruption, or performance problems from earthquakes, hurricanes, floods, fires, power loss, telecommunications failures, pandemics and similar events. They are also subject to break-ins, computer viruses, sabotage, intentional acts of vandalism, and other misconduct. The occurrence of a natural disaster, an act of terrorism, a pandemic, and similar events could result in a decision to close the facilities without adequate notice or other unanticipated problems, which in turn, could result in lengthy interruptions in the delivery of our products and services, which could negatively impact our sales and operating results.
Furthermore, our business administration, human resources, compliance efforts, and finance services depend on the proper functioning of our computer, telecommunication, and other related systems and operations. A disruption or failure of these systems or operations because of a disaster, cyber-attack or other business continuity event, such as the COVID-19 pandemic, could cause data to be lost or otherwise delay our ability to complete sales and provide the highest level of service to our customers. In addition, we could have difficulty producing accurate financial statements on a timely basis, and deficiencies may arise in our internal control over financial reporting, which may impact our ability to certify our financial results, all of which could adversely affect the trading value of our stock. Although we endeavor to ensure there is redundancy in these systems and that
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they are regularly backed-up, there are no assurances that data recovery in the event of a disaster would be effective or occur in an efficient manner. If these systems or their functionality do not operate as we expect them to, we may be required to expend significant resources to make corrections or find alternative sources for performing these functions.
We are dependent upon Broadcom for certain engineering and threat response services, which are critical to our products and business.
Our endpoint security solution has historically relied upon certain threat analytics software engines and other software (the Engine-Related Services) that have been developed and provided by engineering teams that have transferred to Broadcom as part of the Broadcom sale. The technology, including source code, at issue is shared, and pursuant to the terms of the Broadcom sale, we retain rights to use, modify, enhance and create derivative works from such technology. Broadcom has committed to provide these Engine-Related Services substantially to the same extent and in substantially the same manner, as has been historically provided under a license agreement with a limited term.
As a result, we are dependent on Broadcom for services and technology that are critical to our Norton business, and if Broadcom fails to deliver these Engine-Related Services it would result in significant business disruption, and our business and operating results and financial condition could be materially and adversely affected. Furthermore, if our current sources become unavailable, and if we are unable to develop or obtain alternatives to integrate or deploy them in time, our ability to compete effectively could be impacted and have a material adverse effect on our business. Additionally, in connection with the Broadcom sale, we lost other capabilities, including certain threat intelligence data which were historically provided by our former Enterprise Security business, the lack of which could have a negative impact on our business and products.
If we fail to offer high-quality customer support, our customer satisfaction may suffer and have a negative impact on our business and reputation.
Many of our customers rely on our customer support services to resolve issues, including technical support, billing and subscription issues, that may arise. If demand increases, or our resources decrease, we may be unable to offer the level of support our customers expect. Any failure by us to maintain the expected level of support could reduce customer satisfaction and negatively impact our customer retention and our business.
Our solutions are complex and operate in a wide variety of environments, systems and configurations, which could result in failures of our solutions to function as designed.
Because we offer very complex solutions, errors, defects, disruptions, or other performance problems with our solutions may and have occurred. For example, we may experience disruptions, outages, and other performance problems due to a variety of factors, including infrastructure changes, human or software errors, capacity constraints due to an overwhelming number of users accessing our websites simultaneously, fraud, or security attacks. In some instances, we may not be able to identify the cause or causes of these performance problems within an acceptable period of time. Interruptions in our solutions, could impact our revenues or cause customers to cease doing business with us. Our operations are dependent upon our ability to protect our technology infrastructure against damage from business continuity events that could have a significant disruptive effect on our operations. We could potentially lose customer data or experience material adverse interruptions to our operations or delivery of solutions to our clients in a disaster recovery scenario.
Negative publicity regarding our brand, solutions and business could harm our competitive position.
Our brand recognition and reputation as a trusted service provider are critical aspects of our business and key to retaining existing customers and attracting new customers. Our business could be harmed due to errors, defects, disruptions or other performance problems with our solutions causing our customers and potential customers to believe our solutions are unreliable. Furthermore, negative publicity, whether or not justified, including intentional brand misappropriation, relating to events or activities attributed to us, our employees, our strategic partners, our affiliates, or others associated with any of these parties, may tarnish our reputation and reduce the value of our brands. In addition, the rapid rise and use of social media has the potential to harm our brand and reputation. We may be unable to timely respond to and resolve negative and inaccurate social media posts regarding our company, solutions and business in an appropriate manner. Damage to our reputation and loss of brand equity may reduce demand for our solutions and have an adverse effect on our business, operating results, and financial condition. Moreover, any attempts to rebuild our reputation and restore the value of our brands may be costly and time consuming, and such efforts may not ultimately be successful.
LEGAL AND COMPLIANCE RISKS
Our solutions are highly regulated, which could impede our ability to market and provide our solutions or adversely affect our business, financial position, and results of operations.
Our solutions are subject to a high degree of regulation, including a wide variety of federal, state, and local laws and regulations, such as the Fair Credit Reporting Act, the Gramm-Leach-Bliley Act, the Federal Trade Commission Act (the FTC Act), and comparable state laws that are patterned after the FTC Act. We have previously entered into consent decrees and similar arrangements with the FTC and the attorney generals of 35 states as well as a settlement with the FTC relating to allegations that certain of LifeLock’s advertising, marketing and security practices constituted deceptive acts or practices in violation of the FTC Act, which impose additional restrictions on our business, including prohibitions against making any misrepresentation of “the means, methods, procedures, effects, effectiveness, coverage, or scope of” our solutions. We signed an Undertaking, effective June 14, 2021, with the United Kingdom’s Competition and Markets Authority (CMA) requiring our NortonLifeLock Ireland Limited and NortonLifeLock UK entities to make certain changes to our policies and practices related to automatically renewing subscriptions in the United Kingdom as part of the CMA’s investigation into auto-renewal practices in the
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antivirus sector it launched in December 2018. Any of the laws and regulations that apply to our business are subject to revision or new or changed interpretations, and we cannot predict the impact of such changes on our business.
Additionally, the nature of our identity and information protection products subjects us to the broad regulatory, supervisory, and enforcement powers of the Consumer Financial Protection Bureau which may exercise authority with respect to our services, or the marketing and servicing of those services, through the oversight of our financial institution or credit reporting agency customers and suppliers, or by otherwise exercising its supervisory, regulatory, or enforcement authority over consumer financial products and services.
If we do not protect our proprietary information and prevent third parties from making unauthorized use of our products and technology, our financial results could be harmed.
Much of our software and underlying technology is proprietary. We seek to protect our proprietary rights through a combination of confidentiality agreements and procedures and through copyright, patent, trademark, and trade secret laws. However, these measures afford only limited protection and may be challenged, invalidated, or circumvented by third parties. Third parties may copy all or portions of our products or otherwise obtain, use, distribute, and sell our proprietary information without authorization.
Third parties may also develop similar or superior technology independently by designing around our patents. Our consumer agreements do not require a signature and therefore may be unenforceable under the laws of some jurisdictions. Furthermore, the laws of some foreign countries do not offer the same level of protection of our proprietary rights as the laws of the U.S., and we may be subject to the unauthorized use of our products in those countries. The unauthorized copying or use of our products or proprietary information could result in reduced sales of our products. Any legal action to protect proprietary information that we may bring or be engaged in with a strategic partner or vendor could adversely affect our ability to access software, operating system, and hardware platforms of such partner or vendor, or cause such partner or vendor to choose not to offer our products to their customers. In addition, any legal action to protect proprietary information that we may bring or be engaged in, could be costly, may distract management from day-to-day operations, and may lead to additional claims against us, which could adversely affect our operating results.
From time to time we are a party to lawsuits and investigations, which typically require significant management time and attention and result in significant legal expenses.
We are frequently involved in litigation and other proceedings, including, but not limited to, patent litigation, class actions, and governmental claims or investigations, some of which may be material initially or become material over time. The expense of initiating and defending, and in some cases settling, such matters may be costly and divert management’s attention from the day-to-day operations of our business, which could have a materially adverse effect on our business, results of operations, and cash flows. In addition, such matters may thru the course of litigation or other proceedings incur an unfavorable change which could alter the profile of the matter and create potential material risk to the company. Any unfavorable outcome in a matter could result in significant fines, settlements, monetary damages, or injunctive relief that could negatively and materially impact our ability to conduct our business, results of operations, and cash flows. Additionally, in the event we did not previously accrue for such litigation or proceeding in our financial statements, we may be required to record retrospective accruals that adversely affect our results of operations and financial condition.
Third parties claiming that we infringe their proprietary rights could cause us to incur significant legal expenses and prevent us from selling our products.
From time to time, third parties may claim that we have infringed their intellectual property rights, including claims regarding patents, copyrights, and trademarks. Because of constant technological change in the segments in which we compete, the extensive patent coverage of existing technologies, and the rapid rate of issuance of new patents, it is possible that the number of these claims may grow. In addition, former employers of our former, current, or future employees may assert claims that such employees have improperly disclosed to us confidential or proprietary information of these former employers. Any such claim, with or without merit, could result in costly litigation and distract management from day-to-day operations. If we are not successful in defending such claims, we could be required to stop selling, delay shipments of, or redesign our solutions, pay monetary amounts as damages, enter into royalty or licensing arrangements, or satisfy indemnification obligations that we have with some of our partners. We cannot assure you that any royalty or licensing arrangements that we may seek in such circumstances will be available to us on commercially reasonable terms or at all. We have made and expect to continue making significant expenditures to investigate, defend, and settle claims related to the use of technology and intellectual property rights as part of our strategy to manage this risk.
In addition, we license and use software from third parties in our business. These third-party software licenses may not continue to be available to us on acceptable terms or at all and may expose us to additional liability. This liability, or our inability to use any of this third-party software, could result in delivery delays or other disruptions in our business that could materially and adversely affect our operating results.
Some of our products contain “open source” software, and any failure to comply with the terms of one or more of these open source licenses could negatively affect our business.
Certain of our products are distributed with software licensed by its authors or other third parties under so-called “open source” licenses. Some of these licenses contain requirements that we make available source code for modifications or derivative works we create based upon the open source software and that we license such modifications or derivative works under the terms of a particular open source license or other license granting third parties certain rights of further use. By the
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terms of certain open source licenses, we could be required to release the source code of our proprietary software if we combine our proprietary software with open source software in a certain manner. In addition to risks related to license requirements, usage of open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or controls on origin of the software. We have established processes to help alleviate these risks, including a review process for screening requests from our development organizations for the use of open source, but we cannot be sure that all open source is submitted for approval prior to use in our products. In addition, many of the risks associated with usage of open source may not or cannot be eliminated and could, if not properly addressed, negatively affect our business.
RISKS RELATED TO OUR LIQUIDITY AND INDEBTEDNESS
There are risks associated with our outstanding and future indebtedness that could adversely affect our financial condition.
As of September 30, 2022, we had an aggregate of $10,207 million of outstanding indebtedness that will mature in calendar years 2022 through 2030, and $1,000 million available for borrowing under our revolving credit facility. See Note 10 of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-K10-Q for further information on our outstanding debt. Our ability to meet expenses, remain in compliance with the fiscal year ended March 31, 2017. covenants under our debt instruments, pay interest and repay principal for our substantial level of indebtedness depends on, among other things, our operating performance, competitive developments, and financial market conditions, all of which are significantly affected by financial, business, economic and other factors. We are not able to control many of these factors. Accordingly, our cash flow may not be sufficient to allow us to pay principal and interest on our debt, including the notes, and meet our other obligations. Our level of indebtedness could have other important consequences, including the following:
•We must use a substantial portion of our cash flow from operations to pay interest and principal on the term loans and revolving credit facility, our existing senior notes, and other indebtedness, which reduces funds available to us for other purposes such as working capital, capital expenditures, other general corporate purposes, and potential acquisitions;
•We may be unable to refinance our indebtedness or to obtain additional financing for working capital, capital expenditures, acquisitions, or general corporate purposes;
•We have significant exposure to fluctuations in interest rates because borrowings under our senior secured credit facilities bear interest at variable rates;
•Our leverage may be greater than that of some of our competitors, which may put us at a competitive disadvantage and reduce our flexibility in responding to current and changing industry and financial market conditions;
•We may be more vulnerable to an economic downturn or recession and adverse developments in our business;
•We may be unable to comply with financial and other covenants in our debt agreements, which could result in an event of default that, if not cured or waived, may result in acceleration of certain of our debt and would have an adverse effect on our business and prospects and could force us into bankruptcy or liquidation; and
•Changes by any rating agency to our outlook or credit rating could negatively affect the value of our debt and/or our common stock, adversely affect our access to debt markets, and increase the interest we pay on outstanding or future debt.
There can be no assurance that we will be able to manage any of these risks successfully. In addition, we conduct a significant portion of our operations through our subsidiaries. Accordingly, repayment of our indebtedness will be dependent in part on the generation of cash flow by our subsidiaries and their ability to make such cash available to us by dividend, debt repayment, or otherwise, which may not always be possible. In the event that we do not receive distributions from our subsidiaries, we may be unable to make the required principal and interest payments on our indebtedness.
Our term loan and revolving credit facility agreement impose operating and financial restrictions on us.
Our term loan and revolving credit facility agreement contain covenants that limit our ability and the ability of our restricted subsidiaries to:
•Incur additional debt;
•Create liens on certain assets to secure debt;
•Enter into certain sale and leaseback transactions;
•Pay dividends on or make other distributions in respect of our capital stock or make other restricted payments; and
•Consolidate, merge, sell or otherwise dispose of all or substantially all of our assets.
All of these covenants may adversely affect our ability to finance our operations, meet or otherwise address our capital needs, pursue business opportunities, react to market conditions, or otherwise restrict activities or business plans. A breach of any of these covenants could result in a default in respect of the related indebtedness. If a default occurs, the relevant lenders could elect to declare the indebtedness, together with accrued interest and other fees, to be immediately due and payable and, to the extent such indebtedness is secured in the future, proceed against any collateral securing that indebtedness.
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GENERAL RISKS
The COVID-19 pandemic has affected how we are operating our business, and the duration and extent to which this will impact our future results of operations and overall financial performance remains uncertain.
The COVID-19 pandemic has had widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets, and business practices. At the onset of the pandemic, to protect the health and well-being of our employees, partners and third-party service providers, we facilitated a work-from-home requirement for most employees and established site-specific COVID-19 prevention protocols. We continue to monitor the situation and over the past several months have been noadjusted our policies and protocols to reflect changes to public health regulations and guidance. Our offices are now open to employees on a voluntary basis. To date, we have not seen any meaningful negative impact on our customer success efforts, sales and marketing efforts, or employee productivity. Nevertheless, as more employees, partners or third-party services providers return to work during the COVID-19 pandemic, the risk of inadvertent transmission of COVID-19 through human contact could still occur and result in litigation.
While the COVID-19 pandemic has negatively impacted many sectors of the U.S. and global economies, the consumer Cyber Safety market experienced increased demand as the pandemic greatly accelerated the digital lives of people around the world. However, with the extended duration of the pandemic and the easing of prevention protocols and restrictions, we are seeing decreasing demand and increased competition. In addition, should the negative macroeconomic impacts of the COVID-19 pandemic persist or worsen, we may experience continued slowdowns in our business activity and an increase in cancellations by customers or a material changesreduction in our retention rate in the future, especially in the event of a prolonged recession. A prolonged recession could adversely affect demand for our offerings, retention rates and harm our business and results of operations, particularly in light of the fact that our solutions are discretionary purchases and thus may be more susceptible to macroeconomic pressures, as well impact the value of our common stock, ability to refinance our debt and our access to capital.
The duration and extent of the impact from the riskCOVID-19 pandemic depends on future developments that cannot be accurately forecasted at this time, such as the severity and transmission rate of new variants of the disease, the extent, effectiveness and acceptance of containment actions, such as vaccination programs, and the impact of these and other factors previously disclosedon our employees, customers and the overall demand for our products, partners and third-party service providers. If we are not able to respond to and manage the impact of such events effectively and if the macroeconomic conditions of the general economy or the industries in which we operate do not improve, or deteriorate further, our business, operating results, financial condition and cash flows could be adversely affected.
Government efforts to combat inflation, along with other interest rate pressures arising from an inflationary economic environment, could lead to higher financing costs.
Inflation has risen on a global basis, the United States has been experiencing historically high levels of inflation, and government entities have taken various actions to combat inflation, such as raising interest rate benchmarks. Government entities may continue their efforts, or implement additional efforts, to combat inflation, which could include among other things continuing to raise interest rate benchmarks or maintaining interest rate benchmarks at elevated levels. Such government efforts, along with other interest rate pressures arising from an inflationary economic environment, could lead to higher financing costs and have material adverse effect on our business, financial condition and results of operations.
Fluctuations in our Annual Report, except forquarterly financial results have affected the following risk factor. The risk factor below shouldtrading price of our outstanding securities in the past and could affect the trading price of our outstanding securities in the future.
Our quarterly financial results have fluctuated in the past and are likely to vary in the future due to a number of factors, many of which are outside of our control. If our quarterly financial results or our predictions of future financial results fail to meet our expectations or the expectations of securities analysts and investors, the trading price of our outstanding securities could be read in conjunction with the risk factors and other information disclosednegatively affected. Volatility in our Form 10-K.quarterly financial results may make it more difficult for us to raise capital in the future or pursue acquisitions. Factors associated with our industry, the operation of our business, and the markets for our solutions may cause our quarterly financial results to fluctuate, including but not limited to:
•Fluctuations in demand for our solutions;
•Disruptions in our business operations or target markets caused by, among other things, terrorism or other intentional acts, outbreaks of disease, such as the COVID-19 pandemic, or earthquakes, floods, or other natural disasters;
•Entry of new competition into our markets;
•Our ability to achieve targeted operating income and margins and revenues;
•Competitive pricing pressure or free offerings that compete with one or more of our solutions;
•Our ability to timely complete the release of new or enhanced versions of our solutions;
•The amount and timing of commencement and termination of major marketing campaigns;
•The number, severity, and timing of threat outbreaks and cyber security incidents;
•Loss of customers or strategic partners;
•Changes in the mix or type of solutions and subscriptions sold and changes in consumer retention rates;
•The rate of adoption of new technologies and new releases of operating systems, and new business processes;
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•Consumer confidence and spending changes;
•The impact of litigation, regulatory inquiries, or investigations;
•The impact of acquisitions and divestitures and our ability to achieve expected synergies or attendant cost savings;
•Fluctuations in foreign currency exchange rates and interest rates;
•The publication of unfavorable or inaccurate research reports about our business by cybersecurity industry analysts;
•The success of our corporate responsibility initiatives;
•Changes in tax laws, rules, and regulations; and
•Changes in consumer protection laws and regulations.
Any of the foregoing factors could cause the trading price of our outstanding securities to fluctuate significantly.
Changes to our effective tax rate could increase our income tax expense and reduce (increase) our net income (loss)., cash flows and working capital.
Our effective tax rate could be adversely affected by several factors, many of which are outside of our control, including:
•Changes to the U.S. federal income tax laws, including impacts of the recently enactedpotential for federal tax law changes put forward by Congress and the Biden administration including potentially increased corporate tax rates, new minimum taxes and other changes to the way that our US tax liability has been calculated following the 2017 Tax Cuts and Jobs Act, the consequencesAct. Certain of whichthese proposals could have not yet been fully determined;significant retroactive adjustments adding cash tax payments/liabilities if adopted;
•Changes to other tax laws, regulations, and interpretations in multiple jurisdictions in which we operate, including actions resulting from the Organisation for Economic Co-operation and Development’sDevelopment's (OECD) base erosion and profit shifting project including recent proposals for a global minimum tax rate, proposed actions by international bodies such as digital services taxation, as well as the requirements of certain tax rulings;rulings. In October 2021, the OECD/G20 inclusive framework on Base Erosion and Profit Shifting (the Inclusive Framework) published a statement updating and finalizing the key components of a two-pillar plan on global tax reform which has now been agreed upon by the majority of OECD members. Pillar One allows countries to reallocate a portion of residual profits earned by multinational enterprises (MNE), with an annual global turnover exceeding €20 billion and a profit margin over 10%, to other market jurisdictions. Pillar Two requires MNEs with an annual global turnover exceeding €750 million to pay a global minimum tax of 15%. Additional guidance is expected to be published in 2022. We will continue to monitor the implementation of the Inclusive Framework agreement by the countries in which we operate. We are unable to predict if and how these legislative changes will be enacted into law, and it is possible that they could have a material effect on our corporate tax liability and our global effective tax rate;
•Changes in the relative proportions of revenues and income before taxes in the various jurisdictions in which we operate that have differing statutory tax rates;
•The tax effects of purchase accounting for acquisitions and restructuring chargessignificant infrequently occurring events that may cause fluctuations between reporting periods; and
•Tax assessments, or any related tax interest or penalties, that could significantly affect our income tax expense for the period in which the settlements take place.place; and
We report•Taxes arising in connection to changes in our results ofworkforce, corporate entity structure or operations based on our determination of the aggregate amount of taxes owed in theas they relate to tax jurisdictions in which we operate. incentives and tax rates.
From time to time, we receive notices that a tax authority in a particular jurisdiction believes that we owe a greater amount of tax than we have reported to such authority. We are regularly engaged in discussions and sometimes disputes with these tax authorities. We are engaged in disputes of this nature at this time. If the ultimate determination of our taxes owed in any of these jurisdictions is for an amount in excess of the tax provision we have recorded or reserved for, our operating results, cash flows, and financial condition could be adversely affected.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a) None.Repurchase of equity securities
(b) None.Under our stock repurchase program, shares may be repurchased on the open market and through accelerated stock repurchase transactions. As of September 30, 2022, we have $1,370 million remaining authorized to be completed in future periods with no expiration date. Stock repurchases during the three months ended September 30, 2022 were as follows:
(c) None.
(In millions, except per share data)
Total Number of Shares Purchased (1)
Average Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced ProgramMaximum Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
July 2, 2022 to July 29, 2022— $— — $— 
July 30, 2022 to August 26, 2022— $— — $— 
August 27, 2022 to September 30, 20225 $21.68 5 $1,370 
Total number of shares repurchased5 5 

(1) The number of shares purchased is reported on trade date.
Item 6. Exhibits
Exhibit
Number
 Incorporated by ReferenceFiled/Furnished with this 10-Q
Exhibit DescriptionFormFile NumberExhibitFile Date
2.018-K000-177812.017/18/2022
3.01X
3.028-K000-177813.0211/7/2022
4.018-K000-177814.019/19/2022
4.028-K000-177814.029/19/2022
10.018-K000-1778110.019/12/2022
10.02*S-8000-1778199.019/12/2022
10.03*X
10.04*X
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Exhibit
Number
Incorporated by ReferenceFiledFiled/Furnished with this 10-Q
Exhibit DescriptionFormFile NumberExhibitFile Date
10.01*10.05*10-Q000-1778110.0111/3/2017X
31.0110.06*X
31.01X
31.02X
32.01†X
32.02†X
101.INS101XBRL Instance DocumentThe following financial information from Gen Digital Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 are formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Stockholders’ Equity (Deficit), (vi) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags.X
101.SCH104Cover Page Interactive Data File (formatted as Inline XBRL Taxonomy Schema Linkbase Documentand contained in Exhibit 101)X
101.CALXBRL Taxonomy Calculation Linkbase DocumentX
101.DEFXBRL Taxonomy Definition Linkbase DocumentX
101.LABXBRL Taxonomy Labels Linkbase DocumentX
101.PREXBRL Taxonomy Presentation Linkbase DocumentX
*Indicates a management contract or compensatory plan or arrangement.
†This exhibit is being furnished rather than filed, and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
GEN DIGITAL INC.
(Registrant)
SYMANTEC CORPORATIONBy: /s/     Vincent Pilette
(Registrant)
By: /s/    Gregory S. Clark
Gregory S. Clark Vincent Pilette
Chief Executive Officer and Director
By: /s/    Nicholas R. NovielloNatalie Derse
Nicholas R. Noviello Natalie Derse
Executive Vice President and Chief Financial Officer


February 2, 2018

November 9, 2022
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