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Item 7. Management’s Discussion and Analysis

2021-05-21 compared with 2020-05-28 · 192 added, 186 removed, 199 unchanged (66% of the section changed)

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Please read the following discussion and analysis of our financial condition and results of operations together with our Consolidated Financial Statements and related Notes thereto included under Item 15 of this Annual Report on Form 10-K.

We are a leading provider of Cyber Safety solutions for consumers.

During fiscal year 2020, we completed the sale of our Enterprise Security assets to Broadcom Inc.

(Broadcom) and the sale of our ID Analytics solutions to LexisNexis Risk Solutions, part of RELX Inc.

With the sale of our enterprise assets, we have transformed ourselves into a pure consumer company.

Our NortonLifeLock branded solutions help customers protect their devices, online privacy, identity and home networks.

NortonLifeLock Inc.

has the largest Consumer Cyber Safety platform in the world, empowering nearly 80 million users in more than 150 countries.

We are the trusted and number one top of mind brand in consumer Cyber Safety, according to the 2020 NortonLifelock brand tracking study.

We help prevent, detect, and restore potential damages caused by many cyber criminals.

We have utilized and expect to continue to utilize acquisitions to contribute to our long-term growth objectives.

During fiscal year 2021, we completed the acquisition of Avira, which provides a consumer-focused portfolio of cybersecurity and privacy solutions primarily in Europe and key emerging markets.

We believe this acquisition will help accelerate our international growth.

Fiscal Year Highlights

In October 2019, we sold our equity interest in DigiCert Parent Inc.

for $380 million and realized a gain of $379 million , on which we paid income taxes of $53 million.

On November 4, 2019, we completed the Broadcom sale under which Broadcom purchased certain of our Enterprise Security assets and assumed certain liabilities for a purchase price of $10.7 billion.

As a result, we realized a gain of $5,434 million on which we paid income taxes of $1.9 billion as of April 3, 2020 .

The divestiture of our Enterprise Security business allowed us to shift our operational focus to our consumer business and represented a strategic shift in our operations.

As a result, the results of our Enterprise Security business are classified as discontinued operations in our Consolidated Statements of Operations and thus are excluded from both continuing operations for all periods presented.

Accordingly, we now have one reportable segment.

Revenues and associated costs of our ID Analytics solutions, which were formerly included in the Enterprise Security segment, were included in our remaining reportable segment.

In November 2019, we entered into a credit facility and drew down $500 million of a 5-year term loan to repay an existing term loan of $500 million.

The credit facility also provides a revolving a line of credit of $1.0 billion and a delayed 5-year term loan commitment of $750 million through September 15, 2020.

In November 2019, our Board of Directors approved a restructuring plan in connection with the strategic decision to divest our Enterprise Security business.

We incurred costs of $423 million under this plan in fiscal 2020, primarily related to workforce reduction, contract termination, and asset write-offs and impairment charges.

In connection with the Broadcom sale, in January 2020, we made a distribution to our stockholders through a special dividend of $12 per share of common stock.

The aggregate amount of such dividend payments was $7.2 billion.

In January 2020, we completed the sale of our ID Analytics solutions for $375 million in net cash proceeds, resulting in a gain of $250 million .

In February 2020, we exchanged $250 million of our 2.5% Convertible Notes and $625 million of our 2.0% Convertible Notes for new convertible notes of the same principal amounts and paid the holders of the new convertible notes a total cash consideration of $546 million in lieu of conversion price adjustments related to our $12 special dividend to the exchanged notes.

We adjusted the conversion price of the remaining $250 million of our 2.5% Convertible Notes and the remaining $625 million of our 2.0% Convertible Notes and extended the maturity date by one year.

In March 2020, we settled $250 million of our 2.5% Convertible Notes for $566 million , which included a cash settlement of the equity conversion feature.

Subsequent event

In May 2020, we settled the principal and conversion rights of $625 million of our 2.0% Convertible Notes for $1.18 billion in cash.

• In May 2020, we settled the $625 million principal and conversion rights of our 2.0% Convertible Notes for $1,176 million in cash.

The repayments resulted in an adjustment to stockholders’ equity of $578 million and a gain on extinguishment of $20 million.

• In July 2020, we completed the sale of our Culver City property for cash consideration of $118 million, net of selling costs, and recognized a gain on sale of $35 million.

• In September 2020, we borrowed $750 million under the Delayed Draw Term Loan, maturing in 2024, and used the entire amount of the proceeds to repay in full the principal and accrued interest under our 4.2% Senior Notes due September 2020.

The first amendment to our credit agreement, executed in May 2021, extends the maturity date from November 2024 to May 2026 for this tranche.

See Note 10 of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K.

• In October 2020, we entered into multiple agreements with Broadcom for an aggregate amount of $200 million to license Broadcom’s enterprise software and security engines and to resolve all outstanding payments and claims related to the asset purchase and transition services agreement.

• In December 2020, we substantially completed our restructuring plan (the November 2019 Plan) in connection with the strategic decision to divest our Enterprise Security business.

We incurred total costs of $509 million since the inception of the November 2019 Plan, excluding stock-compensation expense, primarily related to workforce reduction, contract termination, and asset write-offs and impairment charges.

• In January 2021, we completed the acquisition of Avira for total aggregate consideration of $344 million, net of $32 million cash acquired.

• On April 1, 2021, we completed the sale of certain land and buildings in Mountain View for cash consideration of $100 million, net of selling costs, and recognized a gain on sale of $63 million.

Fiscal calendar and basis of presentation

We have a 52/53-week fiscal year ending on the Friday closest to March 31.

Fiscal 2020, 2019 and 2018 in this report refers to fiscal year ended April 3, 2020 , March 29, 2019 , and March 30, 2018 , respectively.

Fiscal 2021, 2020, and 2019 in this report refers to fiscal year ended April 2, 2021, April 3, 2020, and March 29, 2019, respectively.

Fiscal 2020 was a 53-week year, whereas fiscal 2021 and 2019 each consisted of 52 weeks.

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(In millions, except for per share amounts) 2021 2020

Net revenues $ 2,551 $ 2,490

Operating income $ 896 $ 355

Income (loss) from continuing operations

Income from discontinued operations

Income from continuing operations $ 696 $ 578

Income (loss) from discontinued operations $ (142) $ 3,309

Net income $ 554 $ 3,887

Net income per share from continuing operations - diluted $ 1.16 $ 0.90

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Net cash provided by (used in) operating activities $ 706 $ (861)

(in millions)

April 3, 2020

March 29, 2019

(in millions) April 2, 2021 April 3, 2020

Cash, cash equivalents and short-term investments $ 951 $ 2,263

Contract liabilities $ 1,265 $ 1,076

Net revenues increased $34 million primarily due to the favorable impact from the additional week in the fiscal 2020.

Operating income increased $197 million primarily due to lower compensation expense, lower outside service expense, and lower technical support expense that we achieved as a result of our cost reduction programs, partially offset by higher advertising and promotional expense and higher costs recognized in connection with our restructuring plans.

Income (loss) from continuing operations increased $688 million primarily due to higher operating income and the gains on the sale of the DigiCert equity method investment and our ID Analytics solutions, partially offset by higher income tax expense.

Income from discontinued operations increased $3,168 million , net of taxes, primarily due to the gain on the Broadcom sale.

Net income and net income per share increased primarily due to higher income from both continuing operations and discontinued operations for the reasons discussed above.

Net cash used in operating activities was $861 million , compared to cash provided by operating activities of $1,495 million in fiscal 2019, primarily due to income tax payments related to our gains on the divestitures described above.

Cash, cash equivalents and short-term investments increased $220 million compared to March 29, 2019 , primarily due to cash proceeds from the divestitures described above, largely offset by payments of quarterly and special dividends, stock repurchases, and net cash used in operating activities.

Contract liabilities increased $17 million compared to March 29, 2019 , reflecting higher billings than recognized net revenues.

• Net revenues increased $61 million, primarily due to increased sales of our consumer security products and our identity and protection products, partially offset by the divestiture of our ID Analytics solutions and the additional week of revenue recognized during fiscal 2020.

• Operating income increased $541 million, primarily due to lower compensation expense, outside services expense, and facility and IT costs that were driven by our cost reduction programs, partially offset by a legal accrual relating to an ongoing civil lawsuit involving a government contract with the U.S.

General Services Administration (GSA).

• Income from continuing operations increased $118 million, primarily due to higher operating income, gain on sale of our Culver City and certain Mountain View properties, gain on extinguishment of debt, and lower income tax expense, partially offset by the absence of the $379 million gain on sale of our equity method investment in DigiCert and the $250 million gain on the sale of our ID Analytics solutions, which were divested in fiscal 2020.

• We incurred a loss from discontinued operations, net of tax, compared to a gain during the corresponding period in fiscal 2020, primarily due to the absence of gain on the sale of certain of our Enterprise Security assets and certain liabilities to Broadcom Inc.

(the “Broadcom sale”), the absence of operating income as a result of the Broadcom sale, and a settlement with Broadcom in the second quarter of fiscal 2021 of all outstanding payments and certain claims related to the Broadcom sale.

• Net income and net income per share decreased, primarily due to the loss from discontinued operations for the reasons discussed above, partially offset by higher income from continuing operations.

• Cash, cash equivalents and short-term investments decreased by $1,312 million compared to April 3, 2020, primarily due to repayment of debt, net of borrowings, and to a lesser extent, payments for dividends and dividend equivalents, and payment for acquisitions.

The payments were partially offset by net cash provided by operating activities and proceeds from the sale of our Culver City and certain Mountain View properties.

In May 2020, we settled the principal and conversion rights of $625 million of our 2.0% Convertible Notes for $1,176 million in cash.

• Contract liabilities increased $189 million compared to April 3, 2020, primarily due to higher billings than recognized revenue and the acquisition of Avira.

COVID-19 UPDATE

The COVID-19 pandemic is having widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets, and business practices.

Federal and state governments have implemented measures to contain the virus, including social distancing, travel restrictions, border closures, limitations on public gatherings, work from home, and closure of non-essential businesses.

Further, beginning in March 2020, the U.S.

and global economies have reacted negatively in response to worldwide concerns due to the economic impacts of the COVID-19 pandemic.

To protect the health and well-being of our employees, partners and third-party service providers, we have implemented a near company-wide work-from-home requirement for most employees until further notice, made substantial modifications to employee travel policies, and cancelled or shifted our conferences and other marketing events to virtual-only for the foreseeable future.

While we continue to monitor the situation and may adjust our current policies as more information and public health guidance become available, such precautionary measures could negatively affect our customer success efforts, sales and marketing efforts, or create operational or other challenges, such as a reduction in employee productivity because of the work from home requirement, any of which could harm our business and results of operations.

Further, if the COVID-19 pandemic has a substantial impact on our employees, partners or third-party service providers’ health, attendance or productivity, our results of operations and overall financial performance may be adversely impacted.

Additionally, if 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 .

Although we have not yet experienced a material increase in customers cancellations or a material reduction in our retention rate in 2020, a prolonged economic downturn could result 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, our ability to refinance our debt, and our access to capital.

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 the disease, the extent and effectiveness of containment actions and the impact of these and other factors on our employees, customers, partners and third-party service providers.

To protect the health and well-being of our employees, partners and third-party service providers, we implemented a near company-wide work-from-home requirement for most employees, made substantial modifications to employee travel policies, and cancelled or shifted our conferences and other marketing events to virtual-only.

We continue to monitor the situation and plan to adjust our current policies as recommendations and public health guidance is changing.

To date, we have not seen any meaningful negative impact on our customer success efforts, sales and marketing efforts, or employee productivity.

Nevertheless, as 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.

and global economies have experienced a recession due to the economic impacts of the COVID-19 pandemic.

Although we did not experience a material increase in cancellations by customers or a material reduction in our retention rate in

2021, we may experience such an increase or reduction in the future, especially in the event of a prolonged recession as a result of the COVID-19 pandemic.

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 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 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 Item 1A.

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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.

Critical estimates in valuing intangible assets include, but are not limited to, future expected cash flows from customer relationships, developed technology, trade names, and acquired patents;

and discount rates.

Critical estimates in valuing intangible assets include, but are not limited to, future expected cash flows from customer relationships, developed technology, trade names, and acquired patents, and discount rates.

Management estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable.

Third-party valuation specialists are also utilized for certain estimates.

Unanticipated events and circumstances may occur which may affect the accuracy or validity of such assumptions, estimates, or actual results.

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Should any of our estimates and assumptions change or prove to have been incorrect, it could have a material impact on our Consolidated Financial Statements for that reporting period.

Discontinued Operations

We review the presentation of planned business dispositions in the Consolidated Financial Statements based on the available information and events that have occurred.

The review consists of evaluating whether the business meets the definition of a

component for which the operations and cash flows are clearly distinguishable from the other components of the business, and if so, whether it is anticipated that after the disposal the cash flows of the component would be eliminated from continuing operations and whether the disposition represents a strategic shift that has a major effect on operations and financial results.

In addition, we evaluate whether the business has met the criteria as a business held for sale.

In order for a planned disposition to be classified as a business held for sale, the established criteria must be met as of the reporting date, including an active program to market the business and the expected disposition of the business within one year.

Planned business dispositions are presented as discontinued operations when all the criteria described above are met.

For those divestitures that qualify as discontinued operations, all comparative periods presented are reclassified in the Consolidated Balance Sheets.

Additionally, the results of operations of a discontinued operation are reclassified to income from discontinued operations, net of tax, for all periods presented.

Results of discontinued operations include all revenues and expenses directly derived from such businesses;

general corporate overhead is not allocated to discontinued operations.

See Note 3 - Divestiture and Discontinued Operations in our Notes to Consolidated Financial statements for additional information.

RESULTS OF OPERATIONS

The following table sets forth our Consolidated Statements of Operations data as a percentage of net revenues for the periods indicated:

2021 2020 2019

Net revenues 100 % 100 % 100 %

Cost of revenues 14 16 19

Gross profit 86 84 81

Operating expenses:

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Total operating expenses 51 70 75

Operating income (loss)

Operating income 35 14 6

Interest expense (6) (8) (8)

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Income (loss) from continuing operations before income taxes 34 33 (4)

Income tax expense (benefit)

Income tax expense 7 10 —

Income (loss) from continuing operations 27 23 (4)

Income from discontinued operations

Income (loss) from discontinued operations (6) 133 6

Net income 22 % 156 % 1 %

The percentages may not add due to rounding.

Variance in %

(In millions, except for percentages)

Fiscal Year Variance in %

(In millions, except for percentages) 2021 2020 2019 2021 vs.

2020 2020 vs.

Net revenues $ 2,551 $ 2,490 $ 2,456 2 % 1 %

Fiscal 2021 compared to fiscal 2020

Net revenues increased $34 million primarily due to approximately $44 million of revenues from the additional week in fiscal 2020.

Net revenues increased $61 million primarily due to a $91 million increase in sales of our consumer security products and a $60 million increase in sales of our identity and protection products.

This was driven by the increase in our direct customer count year-over-year, and stable annual retention rate and average revenue per user (ARPU) in fiscal 2021.

The increase was partially offset by a $46 million decrease as a result of the divestiture of our ID Analytics solutions in January 2020 and $44 million of revenue recognized during an additional week in fiscal 2020.

Fiscal 2020 compared to fiscal 2019

Net revenues decreased $103 million primarily due to a $238 million decrease as a result of the divestiture of our website security (WSS) and public key infrastructure (PKI) solutions and $33 million decrease in revenue from our consumer security solutions, partially offset by a $161 million increase in revenues of our identity and information protection solutions.

Net revenues increased $34 million primarily due to approximately $44 million of revenues from the additional week in fiscal 2020.

Performance Metrics

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$ 2,286 $ 2,204 $ 2,168

Partner revenues $ 270 $ 240 $ 240

Average direct customer count (2)

21.2 20.2 20.7

Direct customer count (at quarter-end) 23.0 20.2 20.3

Direct average revenue per user (ARPU) (3)

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Annual retention rate 85 % 85 % 85 %

(1) Direct customer revenues in fiscal 2021 excludes a $5 million reduction of revenue from a contract liability purchase accounting adjustment recognized during the last quarter due to the acquisition of Avira.

Direct customer revenues in fiscal 2020 and 2019 excludes $46 million and $48 million, respectively, of revenue from ID Analytics solutions, which were divested in the fourth quarter of fiscal 2020.

(2) Average direct customer count for fiscal 2021 is calculated as an average of the fiscal quarters.

The average direct customer count for the fourth fiscal quarter was pro-rated to include 1.6 million customers from the Avira acquisition.

(3) ARPU in fiscal 2020 was normalized to exclude the impact of the extra week on direct revenue, which we estimate to be approximately $41 million of direct customer revenue.

Excluding this adjustment, APRU would have been $9.07 in fiscal 2020

(2) Represents a non-GAAP financial measure.

Estimated net revenue generated from direct customers during fiscal year 2018 used in the calculation of ARPU excluded a reduction in revenue related to contract liability purchase accounting adjustments required by GAAP, as further discussed below.

We define direct customer revenues as revenues from sales of our consumer solutions to direct customers, which we define as those customers who have a direct billing relationship with us.

Such customer sources include online acquisition and retention, affiliates, co-marketing, and original equipment manufacturer channels.

Direct customers excludes customers of our partners, and our ID Analytics solutions and WSS and PKI solutions, all of which have now been divested.

The excluded revenues are summarized in the following table:

(In millions)

Partner revenues

ID Analytics revenues

WSS and PKI revenues

Average direct customer count presents the average of the total number of direct customers at the beginning and end of the fiscal year.

Excluding this adjustment, ARPU would have been $9.07 in fiscal 2020.

We define direct customer revenues as revenues from sales of our consumer solutions to direct customers, which we define as active paid users who have a direct billing relationship with us at the end of the reported period.

Users with multiple products or entitlements are counted for based on which solutions they are subscribed.

We exclude users on free trials and promotions and users who have indirectly purchased our product or services through partners unless such users convert or renew their subscriptions directly with us.

From time to time, we update our methodology due to changes in the business.

In fiscal 2021, the average direct customer count calculation has been refined primarily to pro-rate for acquisitions that happen during a quarter, such as Avira, which was acquired in January 2021.

The full year average direct customer count is calculated as an average across the quarters.

This change in methodology had an immaterial impact to historical amounts presented.

ARPU is calculated as estimated direct customer revenues for the period divided by the average direct customer count for the same period, expressed as a monthly figure.

Non-GAAP fiscal 2018 estimated direct customer revenues used in the calculation of ARPU is adjusted only to exclude a reduction in revenue of $60 million related to purchase accounting adjustments related to the February 2017 acquisition of LifeLock, Inc.

ARPU for fiscal 2018 would have been $7.99 without this adjustment.

We believe the adjustment is useful to investors to reflect ARPU trends in our business by improving the comparability of ARPU between periods.

Fiscal 2020 and 2019 did not include any adjustments to estimated direct customer revenue as the purchase accounting adjustments were fully amortized prior to fiscal 2019.

Non-GAAP estimated direct customer revenues and ARPU have limitations as analytical tools and should not be considered in isolation or as a substitute for GAAP estimated direct customer revenues or other GAAP measures.

We monitor APRU because it helps us understand the rate at which we are monetizing our consumer customer base.

We monitor ARPU because it helps us understand the rate at which we are monetizing our consumer customer base.

Annual retention rate is defined as the number of direct customers who have more than a one-year tenure as of the end of the most recently completed fiscal period divided by the total number of direct customers as of the end of the period from one year ago.

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Percentage of revenue by geographic region as presented below is based on the billing location of the customer.

2021 2020 2019

Americas 72 % 74 % 73 %

EMEA 16 % 15 % 16 %

APJ 12 % 11 % 11 %

Percentages may not add to 100% due to rounding.

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APJ includes Asia Pacific and Japan.

Percentage of revenue by geographic region in fiscal 2020 was similar to fiscal 2019.

Americas revenues as a percentage of total revenues increased in fiscal 2019 compared to fiscal 2018 as a result of the sale of our WSS and PKI solutions which proportionally had more revenues in EMEA and APJ than the remaining solutions and higher revenues from our identity and information protection solutions in U.S.

during fiscal 2019.

Percentage of revenue by geographic region remained consistent in fiscal 2021, 2020, and 2019.

Cost of revenues

Variance in %

(In millions, except for percentages)

Fiscal Year Variance in %

(In millions, except for percentages) 2021 2020 2019 2021 vs.

2020 2020 vs.

Cost of revenues $ 362 $ 393 $ 455 (8) % (14) %

Fiscal 2021 compared to fiscal 2020

Our cost of revenues decreased $31 million primarily due to decreases in royalty charges and technical support costs, partially offset by an increase in commissions, reflecting higher investments in affiliate marketing programs.

Fiscal 2020 compared to fiscal 2019

Our cost of revenues decreased $62 million primarily due to decreases in technical support costs and service costs, partially offset by an increase in royalty charges.

In addition, during fiscal 2019, we recorded higher inventory write-offs of $10 million due to our discontinuation of our consumer hardware product line.

Fiscal 2019 compared to fiscal 2018

Our cost of revenues decreased $8 million primarily due to a $37 million decrease from the divestiture of our WSS and PKI solutions, partially offset by higher inventory and royalty write-offs due to our discontinuation of our consumer hardware product line in fiscal 2019 and higher fulfillment costs.

Operating expenses

Variance in %

(In millions, except for percentages)

Fiscal Year Variance in %

(In millions, except for percentages) 2021 2020 2019 2021 vs.

2020 2020 vs.

Sales and marketing $ 576 $ 701 $ 712 (18) % (2) %

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Restructuring, transition and other costs 161 266 221 (39) % 20 %

Total $ 1,293 $ 1,742 $ 1,843 (26) % (5) %

Fiscal 2021 compared to fiscal 2020

Sales and marketing expense decreased $125 million primarily due to a $147 million decrease in shared facility and IT costs, partially offset by a $12 million increase in advertising and promotional expense.

Research and development expense decreased $61 million due to a $44 million decrease in shared facility and IT costs and a $17 million decrease in compensation, driven by lower headcount.

General and administrative expense decreased $153 million primarily due to a $70 million decrease in compensation expense, a $55 million decrease in shared facility and IT costs, and a $43 million decrease in outside services expense, partially offset by an additional legal accrual of $25 million in fiscal 2021 relating to an ongoing civil lawsuit involving a government contract with the GSA.

The overall decreases in our sales and marketing, research and development and general and administrative expenses were driven by our cost reduction initiatives.

Amortization of intangible assets was relatively flat compared to fiscal 2020.

Restructuring, transition and other costs decreased $105 million primarily due to a $50 million decrease of contract cancellation charges and a $59 million decrease in severance costs in connection with our November 2019 restructuring plan (the November 2019 Plan).

The decrease was partially offset by a $11 million increase in asset write-offs and impairments.

See Note 12 of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for further information on our restructuring plans.

Fiscal 2020 compared to fiscal 2019

Sales and marketing expense decreased $11 million primarily due to a $75 million decrease in compensation expense and allocated corporate costs, reflecting our cost reduction initiatives.

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These increases were partially offset by $185 million costs related to transition projects incurred in fiscal 2019 that were completed by the end of that period.

See Note 12 to the Consolidated Financial Statements for further information on our restructuring plans.

Fiscal 2019 compared to fiscal 2018

Sales and marketing expense decreased $129 million primarily due to a $41 million decrease as a result of the divestiture of our WSS and PKI solutions, a $40 million decrease in advertising and promotional expense, a $23 million decrease in compensation expense other than stock-based compensation, and a $20 million decrease in stock-based compensation expense.

Research and development expense decreased $35 million primarily due to a $30 million decrease in stock-based compensation expense and a $20 million decrease as a result of the divestiture of our WSS and KPI solutions, partially offset by a $15 million increase in outside services.

General and administrative expense decreased $77 million primarily due to an $85 million decrease in stock-based compensation expense, partially offset by a $10 million increase in compensation expense other than stock-based compensation.

Amortization of intangible assets decreased $7 million primarily due to the intangible assets sold with the divestiture of WSS and PKI solutions.

Restructuring, transition and other costs decreased $159 million primarily due to a $75 million decrease in severance and other restructuring costs.

In addition, fiscal 2018 costs included $88 million of transition related costs related to our fiscal 2018 divestiture of our WSS and PKI solutions compared to $3 million in fiscal 2019.

Non-operating income (expense), net

Variance in $

(In millions)

Fiscal Year Variance in $

(In millions) 2021 2020 2019 2021 vs.

2020 2020 vs.

Interest expense $ (144) $ (196) $ (208) $ 52 $ 12

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Loss from equity interest — (31) (101) 31 70

Foreign exchange loss

Foreign exchange gain (loss) 1 (6) (11) 7 5

Gain on divestitures — 250 — (250) 250

Gain on sale of equity method investment — 379 — (379) 379

Gain on early extinguishment of debt 20 — — 20 —

Gain on sale of properties 98 — — 98 —

Transition service expense, net (9) (19) — 10 (19)

Other 6 7 13 (1) (6)

Non-operating income (expense), net $ (24) $ 464 $ (265) $ (488) $ 729

Fiscal 2021 compared to fiscal 2020

Non-operating income, net of expense, decreased $488 million primarily due the absence of the $379 million gain on sale of our equity method investment in DigiCert and the $250 million gain on the sale of our ID Analytics solutions, which were divested in fiscal 2020.

The decrease was partially offset by the absence of loss from our equity interest in DigiCert, gain on sale of our Culver City property and certain Mountain View properties, and the gain on extinguishment of debt due to the repayment of our 2.0% Convertible Notes in fiscal 2021.

Fiscal 2020 compared to fiscal 2019

Non-operating income, net of expense, increased $729 million primarily due to a $379 million gain on the sale of the DigiCert equity method investment and a $250 million gain on the sale of our ID Analytics solutions in fiscal 2020.

In addition, our loss from equity interest that was divested in fiscal 2020 decreased $70 million and our interest income increased $38 million as a result of higher investments in money market funds purchased with proceeds from the Broadcom sale.

Fiscal 2019 compared to fiscal 2018

Non-operating income, net of expense, decreased $663 million primarily due to the absence of the $653 million gain on the divestiture of our WSS and PKI solutions in fiscal 2018.

In addition, our loss from our equity interest that was acquired in the third quarter of fiscal 2018 increased $75 million .

Interest expense decreased $48 million as a result of lower outstanding borrowings during fiscal 2019 due to repayments.

Provision for income taxes

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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.

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Income (loss) from continuing operations before income taxes $ 872 $ 819 $ (107)

Provision for (benefit from) income taxes

Effective tax rate on income from continuing operations

Provision for income taxes $ 176 $ 241 $ 3

Effective tax rate on income (loss) from continuing operations 20 % 29 % (3) %

Fiscal 2021 compared to fiscal 2020

Our effective tax rate increased primarily due to an increase in income taxes from non-deductible goodwill, and an increase in income taxes as a result of the Altera Ninth Circuit Opinion.

See Note 13 to the Consolidated Financial Statements for information about the Altera Ninth Circuit Opinion.

Our effective tax rate decreased primarily due to releases in uncertain tax positions and favorable withholding tax rulings.

Fiscal 2020 compared to fiscal 2019

Our effective tax rate increased primarily due to one-time benefits from Tax Cuts and Jobs Act (H.R.1) (the 2017 Tax Act) in fiscal 2018.

In addition, increases in tax expense in fiscal 2019 are attributable to the valuation allowance on capital losses for which we cannot yet recognize a tax benefit.

Our effective tax rate increased primarily due to an increase in income taxes from non-deductible goodwill, and an increase in income taxes as a result of the Altera Ninth Circuit Opinion.

See Note 13 of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for information about the Altera Ninth Circuit Opinion.

Discontinued operations

Variance in %

(In millions, except for percentages)

Operating income

Income before income taxes

Income tax expense

Income from discontinued operations

Fiscal Year Variance in %

(In millions, except for percentages) 2021 2020 2019 2021 vs.

2020 2020 vs.

Net revenues $ 1 $ 1,368 $ 2,288 (100) % (40) %

Gross profit $ 1 $ 1,035 $ 1,693 (100) % (39) %

Operating income (loss) $ (177) $ 4 $ 234 (4,525) % (98) %

Gain on sale $ — $ 5,434 $ — N/A N/A

Income (loss) before income taxes $ (176) $ 5,431 $ 228 (103) % 2,282 %

Income tax expense (benefit) $ (34) $ 2,122 $ 87 (102) % 2,339 %

Income (loss) from discontinued operations, net of taxes $ (142) $ 3,309 $ 141 (104) % 2,247 %

Fiscal 2021 compared to fiscal 2020

We incurred a loss from discontinued operations in fiscal 2021, compared to a gain during the corresponding period in fiscal 2020, primarily due to the absence of gain on the Broadcom sale, the absence of operating income as a result of the Broadcom sale, and a $200 million settlement with Broadcom in the second quarter of fiscal 2021 of all outstanding payments and certain claims related to the Broadcom sale.

Fiscal 2020 compared to fiscal 2019

Income from discontinued operations in fiscal 2020 reflects a $5,434 million gain on the Broadcom sale and $2,122 million income tax expense primarily related to the gain.

In addition, we recognized $261 million restructuring, transition and other costs in fiscal 2020, compared to $20 million in fiscal 2019.

Fiscal 2019 compared to fiscal 2018

Income from discontinued operations decreased in fiscal 2019 compared to fiscal 2018, primarily due to higher income tax expense as we had higher foreign tax benefit and stock-based compensation windfalls in fiscal 2018.

LIQUIDITY, CAPITAL RESOURCES AND CASH REQUIREMENTS

We have historically relied on cash generated from operations, borrowings under credit facilities, issuances of debt, and proceeds from divestitures for our liquidity needs.

As of April 3, 2020 , we had cash, cash equivalents and short-term investments of $2.3 billion , of which $0.9 billion was held by our foreign subsidiaries.

As of April 2, 2021, we had cash, cash equivalents and short-term investments of approximately $1.0 billion, of which $0.4 billion was held by our foreign subsidiaries.

Our cash, cash equivalents and short-term investments are managed with the objective to preserve principal, maintain liquidity, and generate investment returns.

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earnings or for outside basis differences in our subsidiaries.

We also have an undrawn revolving credit facility of $1.0 billion which expires in November 2024.

We also have an undrawn revolving credit facility of $1 billion.

The first amendment to our credit agreement, executed in May 2021, extends the maturity date from November 2024 to May 2026.

For additional discussion on the amendment, see Note 10 of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.

Our principal cash requirements are primarily to meet our working capital needs and support on-going business activities, including payment of taxes and cash dividends, funding capital expenditures, servicing existing debt, repurchasing our common stock, and investing in business acquisitions.

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Historically, this has included a quarterly cash dividend, the repayment of debt, and the repurchase of our common stock.

Sale of equity method investment

On October 16, 2019, Clearlake Capital Group, L.P., a private investment firm, and TA Associates, an existing investor of DigiCert and a private equity firm, completed an investment in DigiCert.

As a result, we received $380 million in cash for our equity investment in DigiCert and made income tax payments of approximately $53 million as a result of the transaction.

Divestiture of Enterprise Security business

On November 4, 2019, we completed the Broadcom sale under which we received cash proceeds of $10.6 billion.

In connection with the transaction, we incurred direct costs of approximately $39 million .

In fiscal 2020, we paid approximately $1.9 billion of U.S.

and foreign income taxes and we expect to pay additional income taxes of $85 million in fiscal 2021 as a result of the transaction.

As a result of the divestiture, on January 31, 2020, we made a distribution to our stockholders through a special dividend of $12 per share of common stock in an aggregate amount of $7.2 billion.

Sale of ID Analytics solutions

On January 31, 2020, we completed the sale of our ID Analytics solutions for approximately $375 million in net cash proceeds.

In November 2019, we entered into a credit facility and drew down $500 million of a 5-year term loan to repay an existing term loan of $500 million.

In March 2020, we settled the $250 million principal and conversion rights of our 2.5% Convertible Notes for $566 million in cash.

In May 2020, we settled the $625 million principal and conversion rights of our 2.0% Convertible Notes for $1.18 billion in cash.

In fiscal 2020, we completed the sale of certain assets and the assumption of certain liabilities of our Enterprise Security business to Broadcom.

During fiscal 2021, we paid approximately $70 million of U.S.

and foreign income taxes as a result of the transaction.

On October 1, 2020, we entered into multiple agreements with Broadcom and paid an aggregate amount of $200 million.

We licensed Broadcom’s enterprise software, multiple security engines and related telemetry for 5.6 years.

In addition, we resolved all outstanding payments and certain claims related to the asset purchase and transition services agreements.

In May 2020, we settled the $625 million principal and conversion rights of our 2.0% Convertible Notes for $1,176 million in cash.

In September 2020, we borrowed $750 million under the Delayed Draw Term Loan, maturing in November 2024, and used the entire amount of the proceeds to repay in full the principal and accrued interest under our 4.2% Senior Notes due September 2020.

In March 2021, we made a $6 million quarterly principal payment on our initial term loan (the Initial Term Loan) and a $9 million quarterly principal payment on the Delayed Draw Term Loan.

On May 7, 2021, we entered into the first amendment to our credit agreement, which provides an additional five year term loan (the First Amendment Additional Term Loan), and extends the maturity date of the Initial Term Loan, the Delayed Draw Term Loan, and revolving credit facility from November 2024 to May 2026.

For additional discussion on the amendment, see Note 10 of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.

In May 2021, we entered into a Convertible Notes Purchase Agreement (the “Agreement”) under which we agreed to repurchase $250 million in aggregate principal amount of our new 2.50% convertible senior notes due 2022.

Under the terms of the Agreement, we paid an aggregate of $365 million on May 20, 2021, representing $24.40 per underlying share into which the notes are convertible, accrued and unpaid interest through the date of settlement, and a portion of the cash dividend that we declared on May 10, 2021 .

For additional discussion on the Agreement, see Note 19 of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K

Sale of certain assets

On July 27, 2020, we completed the sale of our Culver City property for cash consideration of $118 million, net of selling costs.

On April 1, 2021, we completed the sale of certain land and buildings in Mountain View for cash consideration of $100 million, net of selling costs.

Acquisition of Avira

On January 8, 2021, we completed our acquisition of Avira for total aggregate cash consideration of $344 million, net of $32 million cash acquired.

Share repurchase program

During fiscal 2020, we executed repurchases of 68 million shares of our common stock, under our existing share repurchase program for an aggregate amount of $1.6 billion .

We have $578 million remaining under our existing share repurchase authorization.

During fiscal 2021, we executed repurchases of 15 million shares of our common stock under our existing share repurchase program for an aggregate amount of $304 million.

The following table summarizes our cash flow activities in fiscal 2021, 2020 and 2019:

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Cash from operating activities

Our cash used in fiscal 2020 reflected net income of $3,887 million adjusted by items, consisting primarily of gains on divestitures of $ 5,684 million and a gain on the sale of our equity method investment of $ 379 million , amortization and depreciation of $361 million , and stock-based compensation of $312 million .

Our cash from operating activities in fiscal 2021 reflected net income of $554 million, adjusted by non-cash items, primarily consisting of amortization and depreciation of $150 million, impairments of current and long-lived assets of $90 million, stock-based compensation expense of $81 million, deferred income taxes of $42 million, and gain on sale of properties of $98 million.

Changes in operating assets and liabilities during fiscal 2021 consisted primarily of the following:

Contract liabilities increased $118 million, primarily due to higher billings than recognized revenue.

Accounts payable decreased $44 million, primarily due to a reduction in operating costs in connection with our November 2019 Plan, which was completed during fiscal 2021.

Income taxes payable decreased $299 million primarily due to tax payments made during fiscal 2021, including payments related to the Broadcom sale, payments of federal and foreign income taxes, and a decrease as a result of favorable tax rulings.

During fiscal 2021, we made aggregate tax payments of $341 million related to these transactions.

Our cash flows for fiscal 2020 reflected net income of $3,887 million, adjusted by non-cash items, primarily consisting of gains on divestitures of $5,684 million and a gain on the sale of our equity method investment of $379 million, amortization and depreciation of $361 million, and stock-based compensation of $312 million.

Changes in operating assets and liabilities during fiscal 2020 consisted primarily of the following:

Accounts receivable decreased $583 million, primarily due to the collections of receivables related to our Enterprise Security solutions.

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During fiscal 2020, we made aggregate tax payments of $2 billion related to these transactions.

Our cash flows for fiscal 2019 reflected net income of $ 31 million , adjusted by non-cash items, primarily consisting of amortization and depreciation of $ 615 million , stock-based compensation of $ 352 million , and loss from equity interest of $ 101 million .

Changes in operating assets and liabilities during fiscal 2019 consisted primarily of the following:

Accounts receivable decreased $113 million , reflecting lower billings and higher collections in the last months of fiscal 2019 compared to the corresponding period in fiscal 2018.

Contract liabilities increased $196 million , reflecting higher billings versus recognized revenue.

Our cash flows for fiscal 2018 reflected net income of $ 1.1 billion , adjusted by non-cash amortization and depreciation of $ 640 million , stock-based compensation expense of $ 610 million , and offset by a deferred tax benefit of $ 1.8 billion , primarily as a result of the enactment of the 2017 Tax Act in December 2017, and a gain on divestiture of $ 653 million .

Changes in operating assets and liabilities during fiscal 2018 consisted primarily of the following:

Accounts receivable increased $170 million , reflecting higher billings in the last months of fiscal 2018 and our shift in sales to solutions with ratable revenue recognition related to our Enterprise Security solutions.

Contract liabilities increased $491 million , reflecting our shift in sales to contracts related to our Enterprise Security solutions with longer durations subject to ratable versus point in time revenue recognition.

This resulted in less in-period revenue recognized and higher billings towards the end of the fiscal year due to the seasonal sales cycles for those solutions.

These factors were primarily offset by a decrease of $319 million related to our fiscal 2018 divestiture of our WSS and PKI solutions.

Income taxes payable increased $880 million , reflecting the one-time transition tax of $896 million under the 2017 Tax Act.

Cash from investing activities

Our cash flows from investing activities in fiscal 2020 consisted primarily of $10.9 billion in net proceeds from the Broadcom sale and the divestiture of ID Analytics solutions and $380 million from the sale of our equity method investment in DigiCert.

Our investing activities in fiscal 2019 consisted primarily of capital expenditures of $207 million , payments for acquisitions of $180 million , partially offset by proceeds from maturities and sales of short-term investments of $139 million .

Our investing activities in fiscal 2018 consisted primarily of $933 million in net proceeds from divestiture of our WSS and PKI solutions, partially offset by payment for acquisitions of $401 million and net purchases of $387 million of short-term investments.

Our cash flows used in investing activities in fiscal 2021 primarily consisted of payment for the Avira acquisition of $344 million, net of $32 million cash acquired, partially offset by proceeds from the sale of our Culver City and certain Mountain View properties of $218 million and proceeds from maturities and sales of short-term investments of $68 million.

Our investing activities in fiscal 2020 primarily consisted of $10,918 million in net proceeds from the Broadcom sale and the divestiture of our ID Analytics solutions and $380 million from the sale of our equity method investment in DigiCert.

Cash from financing activities

Our financing activities in fiscal 2020 consisted primarily of payments of dividends and dividend equivalents of $7.5 billion , repurchases of common stock of $1.6 billion , debt repayments of $868 million , consisting of $552 million in principal and a $316 million cash settlement of the equity rights associated with our Senior Convertible notes, and cash consideration of $546 million paid in connection with the exchange of convertible debt.

Our financing activities in fiscal 2019 primarily included debt repayments of $600 million , repurchases of common stock of $234 million , payments of dividends and dividend equivalents of $217 million , and tax payments related to vesting equity awards of $173 million .

Our financing activities in fiscal 2018 primarily included debt repayments of $3.2 billion .

Our financing activities in fiscal 2021 primarily consisted of repayments of debt of $1,941 million in connection with the settlement of our 2.0% Convertible Notes, repayments of our 4.2% Senior Notes, and quarterly principal payments of our Initial Term Loan and Delayed Draw Term Loan, payment of dividends and dividend equivalents of $373 million, and repurchases of common stock of $304 million, partially offset by proceeds from issuance of debt of $750 million under our Delayed Draw Term Loan.

Our financing activities in fiscal 2020 primarily consisted of payments of dividends and dividend equivalents of $7,481 million, repurchases of common stock of $1,581 million, debt repayments of $868 million, consisting of $552 million in principal and a $316 million cash settlement of the equity rights associated with our Senior Convertible notes, and cash consideration of $546 million paid in connection with the exchange of convertible debt.

Cash requirements

Debt - As of April 2, 2021, our total outstanding principal amount of indebtedness is summarized as follows.

See Note 10 to the Consolidated Financial Statements for further information about our debt.

(In millions)

April 3, 2020

Senior Term Loan

See Note 10 of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for further information about our debt.

(In millions) April 2, 2021

Term Loans $ 1,235

Convertible Senior Notes 875

In May 2020, we repaid $625 million of our 2.0% Convertible Notes.

In our second quarter of fiscal 2021, we plan to borrow $750 million under the delayed draw term loan, which will mature in November 2024, and use the proceeds to repay in full our 4.2% Senior Notes, which are due in September 2020.

Debt covenant compliance - The credit agreement we entered into in November 2019 contains customary representations and warranties, non-financial covenants for financial reporting, 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).

Mortgage Loans 10

Total debt $ 3,620

Debt covenant compliance - The credit agreement we entered into in November 2019, which was amended and extended through May 2026 on May 7, 2021, contains customary representations and warranties, non-financial covenants for financial reporting, 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 April 2, 2021 , we were in compliance with all debt covenants.

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As of April 2, 2021, the remaining balance of our stock repurchase authorization is $274 million and does not have an expiration date.

On May 4, 2021, our Board of Directors approved an incremental share repurchase authorization of $1,500 million, bringing the total authorized amount under the stock repurchase program to $1,774 million.

The authorization 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.

Restructuring.

Under our restructuring plans approved by our Board of Directors in August and November 2019, we have incurred and expect to incur cash expenditures for severance and termination benefits and contract terminations.

The August 2019 Plan was completed in fiscal 2020 with total cash payments of $50 million .

As of April 3, 2020, we estimate that we will incur total costs of $ 550 million in connection with the November 2019 Plan, excluding stock-based compensation expense, of which up to $ 200 million is expected to consist of cash expenditures for severance and termination benefits and $ 110 million of cash expenditures for contract terminations, and up to $240 million is expected to consist of asset write-offs and other restructuring costs.

During fiscal 2020, we made $196 million in cash payments related to the November 2019 Plan.

actions are expected to be completed by September 2020.

See Note 12 to the Consolidated Financial Statements for additional cash flow information associated with our restructuring activities.

Restructuring - Under our restructuring plans approved by our Board of Directors in November 2019 and December 2020, we have incurred cash expenditures primarily for severance and termination benefits, contract terminations, and other exit and disposal costs.

The November 2019 Plan was completed in fiscal 2021 with total cash payments of $139 million during the fiscal year.

As of April 2, 2021, we estimate that we will incur total costs up to $20 million in connection with the December 2020 Plan.

During fiscal 2021, we made $9 million in cash payments related to the December 2020 Plan.

These actions are expected to be

completed in fiscal 2022.

See Note 12 of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for further cash flow information associated with our restructuring activities.

Contractual obligations

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Payments Due by Period

(In millions)

Less than 1 Year

(In millions) Total Less than 1 Year 1 - 3 Years 3 - 5 Years Over 5 Years

Debt $ 3,620 $ 313 $ 1,153 $ 2,149 $ 5

Interest payments on debt (1)

367 110 162 94 1

Purchase obligations (2)

Long-term income taxes payable (4)

380 296 70 9 5

Deemed repatriation taxes (3)

594 69 196 329 —

Operating leases (4)

In May 2020, we repaid $625 million of our 2.0% Convertible Notes.

See Note 10 and Note 19 to the Consolidated Financial Statements for further information on our debt.

100 29 41 21 9

Total $ 5,061 $ 817 $ 1,622 $ 2,602 $ 20

(1) Interest payments were calculated based on the contractual terms of the related Senior Notes, Convertible Senior Notes, and credit facility.

Interest on variable rate debt was calculated using the interest rate in effect as of April 2, 2021.

See Note 10 to the Consolidated Financial Statements for further information on the Senior Notes, Convertible Senior Notes, and credit facility.

See Note 10 of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for further information on the Senior Notes, Convertible Senior Notes, and Term loans.

(2) 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;

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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.

These amounts represent the transition tax on previously untaxed foreign earnings of foreign subsidiaries under the 2017 Tax Act which may be paid through July 2025.

(3) These amounts represent the transition tax on previously untaxed foreign earnings of foreign subsidiaries under the Tax Cuts and Jobs Act which may be paid through July 2025.

(4) We have entered into 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 to the Consolidated Financial Statements for further information on leases.

See Note 9 of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for further information on leases.

Due to the uncertainty with respect to the timing of future cash flows associated with our unrecognized tax benefits and other long-term taxes as of April 2, 2021, we are unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities.

Therefore, $525 million in long-term income taxes payable has been excluded from the contractual obligations table.

See Note 13 to the Consolidated Financial Statements for further information.

See Note 13 of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for further information.

Indemnifications

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In connection with the sale of Veritas and the sale of our Enterprise Security business to Broadcom, we assigned several leases to Veritas Technologies LLC or Broadcom and/or their related subsidiaries.

R efer to Note 18 to the Consolidated Financial Statements for further information on our indemnifications.

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.

Refer to Note 18 of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for further information on our indemnifications.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis