Gen Digital Inc. 10-K

Item 9A. Controls and Procedures a) Evaluation of Disclosure Controls and Procedures The 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 and Chief Financial 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 Chief Executive Officer and our Chief 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) Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) for NortonLifeLock. Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has conducted an evaluation of the effectiveness of our internal control over financial reporting as of April 2, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). We acquired Avira during January 2021. Management excluded Avira from its assessment of the effectiveness of NortonLifeLock Inc.’s internal control over financial reporting as of April 2, 2021. Total assets and total revenues of Avira represent approximately 1%, or $67 million and 1%, or $21 million, respectively, of the related consolidated financial statement amounts as of, and for the year ended, April 2, 2021. Management did not assess the effectiveness of internal control over financial reporting at Avira due to the complexity associated with assessing internal control during integration efforts as well as the limited amount of time between the transaction date and the assessment date of April 2, 2021. Our management has concluded that, as of April 2, 2021, our internal control over financial reporting was effective at the reasonable assurance level based on these criteria. The effectiveness of our internal control over financial reporting as of April 2, 2021 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report, which is included in Part IV, Item 15 of this Annual Report on Form 10-K. c) Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting during the quarter ended April 2, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We have not experienced any significant impact to our internal controls over financial reporting despite the fact that a significant number of employees continue to work remotely due to the COVID-19 pandemic. The design of our processes and controls allow for remote execution with accessibility to secure data. We are continually monitoring and assessing the COVID-19 situation to minimize the impact, if any, on the design and operating effectiveness on our internal controls. d) Limitations on Effectiveness of Controls Our management, including our Chief Executive Officer and 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. Item 9B. Other Information None. 35 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance The information required by this item will be included under the caption “Directors, Executive Officers, and Corporate Governance” in our proxy statement for the 2021 Annual Meeting to be filed with the SEC within 120 days of the fiscal year ended April 2, 2021 (the 2021 Proxy Statement) and is incorporated herein by reference . With regard to the information required by this item regarding compliance with Section 16(a) of the Exchange Act, we will provide disclosure of delinquent Section 16(a) reports, if any, in the 2021 Proxy Statement, and such disclosure, if any, is incorporated herein by reference. Item 11. Executive Compensation The information required by this item will be included under the caption “Executive Compensation” in our 2021 Proxy Statement and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this item will be included under the caption “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” in our 2021 Proxy Statement and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by this item will be included under the caption “Certain Relationships and Related Transactions, and Director Independence” in our 2021 Proxy Statement and is incorporated herein by reference. Item 14. Principal Accountant Fees and Services The information required by this item will be included under the caption “Principal Accountant Fees and Services” in our 2021 Proxy Statement and is incorporated herein by reference. 36 Table of Contents PART IV Item 15. Exhibits, Financial Statement Schedules (a) (1). Financial Statements Upon written request, we will provide, without charge, a copy of this annual report, including the Consolidated Financial Statements and financial statement schedule. All requests should be sent to: NortonLifeLock Inc. Attn: Investor Relations 60 E. Rio Salado, Suite 1000 Tempe, Arizona 85281 (650) 527-8000 The following documents are filed as part of this report: Page 1. Consolidated Financial Statements: Report of Independent Registered Public Accounting Firm 38 Consolidated Balance Sheets 40 Consolidated Statements of Operations 41 Consolidated Statements of Comprehensive Income (Loss) 42 Consolidated Statements of Stockholders’ Equity (Deficit) 43 Consolidated Statements of Cash Flows 44 Notes to the Consolidated Financial Statements 45 Note 1. Description of Business and Significant Accounting Policies 45 Note 2. Recent Accounting Standards 49 Note 3. Divestitures, Discontinued Operations and Assets Held for Sale 50 Note 4. Acquisitions 52 Note 5. Revenues 52 Note 6. Goodwill and Intangible Assets 52 Note 7. Supplementary Information 53 Note 8. Financial Instruments and Fair Value Measurements 55 Note 9. Leases 56 Note 10. Debt 57 Note 11. Derivatives 59 Note 12. Restructuring, Transition and Other Costs 60 Note 13. Income Taxes 62 Note 14. Stockholders’ Equity 64 Note 15. Stock-Based Compensation and Other Benefit Plans 65 Note 16. Net Income Per Share 68 Note 17. Segment and Geographic Information 69 Note 18. Commitments and Contingencies 70 Note 19. Subsequent Events 73 Financial statement schedules have been omitted since they are either not required, not applicable, or the information is otherwise included. 2. Exhibits: The information required by this Item is set forth in the Exhibit Index that precedes the signature page of this Annual Report. 73 37 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors NortonLifeLock Inc.: Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting We have audited the accompanying consolidated balance sheets of NortonLifeLock Inc. and subsidiaries (the Company) as of April 2, 2021 and April 3, 2020, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity (deficit), and cash flows for each of the years in the three-year period ended April 2, 2021, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of April 2, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of April 2, 2021 and April 3, 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended April 2, 2021, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of April 2, 2021 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company acquired Avira during 2021, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of April 2, 2021, Avira’s internal control over financial reporting associated with total assets and total revenues of approximately 1%, or $67 million and 1%, or $21 million, respectively, included in the consolidated financial statements of the Company as of and for the year ended April 2, 2021. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Avira. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 38 Table of Contents Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Assessment of uncertain tax positions As discussed in Notes 1 and 13 to the consolidated financial statements, as of April 2, 2021 the Company recognized uncertain tax positions. The Company recognizes tax benefits from uncertain tax positions when there is more than a 50% likelihood that the tax position will be sustained upon examination by the taxing authorities based on the technical merits of the position. As of April 2, 2021, the Company has recorded a liability for gross unrecognized tax benefits, of $558 million. We identified the assessment of uncertain tax positions as a critical audit matter. Complex auditor judgment, including the involvement of tax professionals with specialized skills and knowledge, was required to evaluate the Company’s interpretation and application of tax law globally across its multiple subsidiaries. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s uncertain tax positions process, including controls related to the interpretation of tax law, its application in the liability estimation process, and determination of the final uncertain tax position. We involved tax professionals with specialized skills and knowledge, who assisted in: ● Obtaining an understanding of the Company’s overall tax structure across multiple subsidiaries and assessing the Company’s compliance with tax laws globally, ● Evaluating changes in tax law, and assessing the interpretation under the relevant jurisdictions’ tax law, ● Inspecting settlements with taxing authorities to assess the Company’s determination of its tax positions and having more than a 50% likelihood to be sustained upon examination, and ● Performing an assessment of the Company’s tax positions and comparing the results of the Company’s assessment. In addition, we evaluated the Company’s ability to accurately estimate its gross unrecognized tax benefits by comparing historical gross unrecognized tax benefits to actual outcome upon conclusion of tax examinations. /s/ KPMG LLP We have served as the Company’s auditor since 2002. Santa Clara, California May 21, 2021 39 Table of Contents NORTONLIFELOCK INC. CONSOLIDATED BALANCE SHEETS (In millions, except par value per share amounts) April 2, 2021 April 3, 2020 ASSETS Current assets: Cash and cash equivalents $ 933 $ 2,177 Short-term investments 18 86 Accounts receivable, net 117 111 Other current assets 237 435 Assets held for sale 233 270 Total current assets 1,538 3,079 Property and equipment, net 78 238 Operating lease assets 76 88 Intangible assets, net 1,116 1,067 Goodwill 2,867 2,585 Other long-term assets 686 678 Total assets $ 6,361 $ 7,735 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) Current liabilities: Accounts payable $ 52 $ 87 Accrued compensation and benefits 107 115 Current portion of long-term debt 313 756 Contract liabilities 1,210 1,049 Current operating lease liabilities 26 28 Other current liabilities 428 587 Total current liabilities 2,136 2,622 Long-term debt 3,288 3,465 Long-term contract liabilities 55 27 Deferred income tax liabilities 137 149 Long-term income taxes payable 1,119 1,310 Long-term operating lease liabilities 66 73 Other long-term liabilities 60 79 Total liabilities 6,861 7,725 Commitments and contingencies (Note 18) Stockholders’ equity (deficit): Common stock and additional paid-in capital, $ 0.01 par value: 3,000 shares authorized; 580 and 589 shares issued and outstanding as of April 2, 2021 and April 3, 2020, respectively 2,229 3,356 Accumulated other comprehensive income (loss) 47 ( 16 ) Retained earnings (accumulated deficit) ( 2,776 ) ( 3,330 ) Total stockholders’ equity (deficit) ( 500 ) 10 Total liabilities and stockholders’ equity (deficit) $ 6,361 $ 7,735 The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements. 40 Table of Contents NORTONLIFELOCK INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share amounts) Year Ended April 2, 2021 April 3, 2020 March 29, 2019 Net revenues $ 2,551 $ 2,490 $ 2,456 Cost of revenues 362 393 455 Gross profit 2,189 2,097 2,001 Operating expenses: Sales and marketing 576 701 712 Research and development 267 328 420 General and administrative 215 368 410 Amortization of intangible assets 74 79 80 Restructuring, transition and other costs 161 266 221 Total operating expenses 1,293 1,742 1,843 Operating income 896 355 158 Interest expense ( 144 ) ( 196 ) ( 208 ) Other income (expense), net 120 660 ( 57 ) Income (loss) from continuing operations before income taxes 872 819 ( 107 ) Income tax expense 176 241 3 Income (loss) from continuing operations 696 578 ( 110 ) Income (loss) from discontinued operations ( 142 ) 3,309 141 Net income $ 554 $ 3,887 $ 31 Income (loss) per share - basic: Continuing operations $ 1.18 $ 0.94 $ ( 0.17 ) Discontinued operations $ ( 0.24 ) $ 5.38 $ 0.22 Net income per share - basic (1) $ 0.94 $ 6.32 $ 0.05 Income (loss) per share - diluted: Continuing operations $ 1.16 $ 0.90 $ ( 0.17 ) Discontinued operations $ ( 0.24 ) $ 5.15 $ 0.22 Net income per share - diluted (1) $ 0.92 $ 6.05 $ 0.05 Weighted-average shares outstanding: Basic 589 615 632 Diluted 600 643 632 (1) Net income per share amounts may not add due to rounding. The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements. 41 Table of Contents NORTONLIFELOCK INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In millions) Year Ended April 2, 2021 April 3, 2020 March 29, 2019 Net income $ 554 $ 3,887 $ 31 Other comprehensive income (loss), net of taxes: Foreign currency translation adjustments 63 ( 11 ) ( 13 ) Unrealized gain on available-for-sale securities — 1 3 Other comprehensive income (loss) from equity method investee — 1 ( 1 ) Other comprehensive income (loss), net of taxes 63 ( 9 ) ( 11 ) Comprehensive income $ 617 $ 3,878 $ 20 The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements. 42 Table of Contents NORTONLIFELOCK INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) (In millions, except per share amounts) Common Stock and Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings (Accumulated Deficit) Total Stockholders’ Equity (Deficit) Shares Amount Balance as of March 30, 2018 624 $ 4,691 $ 4 $ 328 $ 5,023 Cumulative effect from adoption of accounting standards — — — 939 939 Net income 31 31 Other comprehensive income (loss) — — ( 11 ) — ( 11 ) Common stock issued under employee stock incentive plans 24 19 — — 19 Shares withheld for taxes related to vesting of restricted stock units ( 8 ) ( 173 ) — — ( 173 ) Repurchases of common stock ( 10 ) ( 84 ) — ( 168 ) ( 252 ) Cash dividends declared ($ 0.30 per share of common stock) and dividend equivalents accrued — — — ( 197 ) ( 197 ) Stock-based compensation — 359 — — 359 Balance as of March 29, 2019 630 4,812 ( 7 ) 933 5,738 Net income — — — 3,887 3,887 Other comprehensive income (loss) — — ( 9 ) — ( 9 ) Common stock issued under employee stock incentive plans 32 123 — — 123 Shares withheld for taxes related to vesting of restricted stock units ( 4 ) ( 86 ) — — ( 86 ) Repurchases of common stock ( 69 ) ( 902 ) — ( 661 ) ( 1,563 ) Cash dividends declared ($ 12.40 per share of common stock) and dividend equivalents accrued — ( 76 ) — ( 7,489 ) ( 7,565 ) Stock-based compensation — 338 — — 338 Short-swing profit disgorgement — 9 — — 9 Exchange and extinguishment of convertible debt — ( 862 ) — — ( 862 ) Balance as of April 3, 2020 589 3,356 ( 16 ) ( 3,330 ) 10 Net income — — — 554 554 Other comprehensive income (loss) — — 63 — 63 Common stock issued under employee stock incentive plans 8 24 — — 24 Shares withheld for taxes related to vesting of restricted stock units ( 2 ) ( 49 ) — — ( 49 ) Repurchases of common stock ( 15 ) ( 304 ) — — ( 304 ) Cash dividends declared ($ 0.50 per share of common stock) and dividend equivalents accrued — ( 301 ) — — ( 301 ) Stock-based compensation — 81 — — 81 Extinguishment of convertible debt — ( 578 ) — — ( 578 ) Balance as of April 2, 2021 580 $ 2,229 $ 47 $ ( 2,776 ) $ ( 500 ) The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements. 43 Table of Contents NORTONLIFELOCK INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Year Ended April 2, 2021 April 3, 2020 March 29, 2019 OPERATING ACTIVITIES: Net income $ 554 $ 3,887 $ 31 Adjustments: Amortization and depreciation 150 361 615 Impairments and write-offs of current and long-lived assets 90 74 10 Stock-based compensation expense 81 312 352 Deferred income taxes 42 16 ( 70 ) Gain on extinguishment of debt ( 20 ) — — Loss from equity interest — 31 101 Gain on divestitures — ( 5,684 ) — Gain on sale of equity method investment — ( 379 ) — Gain on sale of properties ( 98 ) — — Non-cash operating lease expense 22 40 — Other 52 ( 4 ) ( 14 ) Changes in operating assets and liabilities, net of acquisitions: Accounts receivable, net 3 583 113 Accounts payable ( 44 ) ( 61 ) 6 Accrued compensation and benefits ( 10 ) ( 117 ) 2 Contract liabilities 118 ( 121 ) 196 Income taxes payable ( 299 ) 383 67 Other assets 144 ( 81 ) ( 26 ) Other liabilities ( 79 ) ( 101 ) 112 Net cash provided by (used in) operating activities 706 ( 861 ) 1,495 INVESTING ACTIVITIES: Purchases of property and equipment ( 6 ) ( 89 ) ( 207 ) Payments for acquisitions, net of cash acquired ( 344 ) — ( 180 ) Proceeds from divestitures, net of cash contributed and transaction costs — 10,918 — Proceeds from the maturities and sales of short-term investments 68 167 139 Proceeds from sales of properties 218 — 26 Proceeds from sale of equity method investment — 380 — Other ( 5 ) 3 ( 19 ) Net cash provided by (used in) investing activities ( 69 ) 11,379 ( 241 ) FINANCING ACTIVITIES: Repayments of debt and related equity component ( 1,941 ) ( 868 ) ( 600 ) Proceeds from issuance of debt, net of issuance costs 750 300 — Net proceeds from sales of common stock under employee stock incentive plans 24 123 19 Tax payments related to restricted stock units ( 58 ) ( 78 ) ( 173 ) Dividends and dividend equivalents paid ( 373 ) ( 7,481 ) ( 217 ) Repurchase of common stock ( 304 ) ( 1,581 ) ( 234 ) Cash consideration paid in exchange of convertible debt — ( 546 ) — Short-swing profit disgorgement — 9 — Other ( 1 ) ( 1 ) ( 4 ) Net cash used in financing activities ( 1,903 ) ( 10,123 ) ( 1,209 ) Effect of exchange rate fluctuations on cash and cash equivalents 22 ( 9 ) ( 28 ) Change in cash and cash equivalents ( 1,244 ) 386 17 Beginning cash and cash equivalents 2,177 1,791 1,774 Ending cash and cash equivalents $ 933 $ 2,177 $ 1,791 The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements. 44 Table of Contents NORTONLIFELOCK INC. Notes to the Consolidated Financial Statements Note 1. Description of Business and Significant Accounting Policies Business NortonLifeLock, Inc. is a leading provider of consumer Cyber Safety solutions globally. We help customers protect their devices, online privacy, identity and home networks. Basis of presentation The accompanying Consolidated Financial Statements of NortonLifeLock and our wholly-owned subsidiaries are prepared in conformity with generally accepted accounting principles in the United States (GAAP). All significant intercompany accounts and transactions have been eliminated in consolidation. Fiscal calendar We have a 52/53-week fiscal year ending on the Friday closest to March 31. Our fiscal year 2020 consisted of 53 weeks, whereas fiscal years 2021 and 2019 were each 52-week years. Use of estimates The preparation of Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying Notes. Such estimates include, but are not limited to, valuation of business 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 and results of operations of our discontinued operations. On an ongoing basis, management determines these estimates and assumptions based on historical experience and on various other assumptions that are believed to be reasonable. Third-party valuation specialists are also utilized for certain estimates. Actual results could differ from such estimates and assumptions due to risks and uncertainties, including uncertainty in the current economic environment due to the COVID-19 pandemic, and such differences may be material to the Consolidated Financial Statements. Significant Accounting Policies With the exception of those discussed in Note 2, there were no material changes in accounting pronouncements issued by the Financial Accounting Standards Board (FASB) that were applicable or adopted by us during the fiscal 2021. Revenue recognition We sell products and services directly to end-users and packaged software products through a multi-tiered distribution channel. We recognize revenue when control of the promised products or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for such products or services. Performance periods are generally one year or less, and payments are generally collected up front. Revenue is recognized net of allowances for partner incentives and rebates, and any taxes collected from customers and subsequently remitted to governmental authorities. We offer various channel rebates for our products. Our estimated reserves for channel volume incentive rebates are based on distributors’ and resellers’ performance compared to the terms and conditions of volume incentive rebate programs, which are typically entered into quarterly. Our reserves for rebates are estimated based on the terms and conditions of the promotional program, actual sales during the promotion, the amount of redemptions received, historical redemption trends by product and by type of promotional program, and the value of the rebate. We record estimated reserves for rebates as an offset to revenue or contract liabilities. Reserves for rebates, recorded in Other current liabilities, were $ 6 million and $ 10 million as of April 2, 2021 and April 3, 2020, respectively. For products that include content updates, rebates are recognized as a ratable offset to revenue or contract liabilities over the term of the subscription. Performance obligations At contract inception, we assess the products and services promised in the contract to identify each performance obligation and evaluate whether the performance obligations are capable of being distinct and are distinct within the context of the contract. Performance obligations that are not both capable of being distinct and are distinct within the context of the contract are combined and treated as a single performance obligation in determining the allocation and recognition of revenue. Our software solutions typically consist of a term-based subscription as well as when-and-if available software updates and upgrades. We have determined that our promises to transfer the software license subscription and the related support and maintenance are not separately identifiable because: • the licensed software and the software updates and upgrades are highly interdependent and highly interrelated, working together to deliver continuously updated protection to customers; • by identifying and addressing new threats, the software updates and upgrades significantly modify the licensed software and are integral to maintaining its utility; and • given the rapid pace with which new threats are identified, the value of the licensed software diminishes rapidly without the software updates and upgrades. 45 Table of Contents We therefore consider the software license and related support obligations a single, combined performance obligation with revenue recognized over time as our solutions are delivered. Fair value measurements For assets and liabilities 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. • 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: Cash equivalents . We consider all highly liquid investments with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents are carried at amounts that approximate fair value due to the short period of time to maturity. Short-term investments . Short-term investments consist primarily of corporate bonds. They are classified as available-for-sale and recognized at fair value using Level 1 and Level 2 inputs, which are quoted using market prices, independent pricing vendors, or other sources, to determine the fair value. Unrealized gains and losses, net of tax, are included in Accumulated other comprehensive income (loss) (AOCI). We regularly review our investment portfolio to identify and evaluate investments that have indications of impairment. Available-for-sale debt securities with an amortized cost basis in excess of estimated fair value are assessed to determine what amount of that difference, if any, is caused by expected credit losses. Factors considered in determining if a credit loss exists include: the extent to which the fair value has been lower than the cost basis, any changes to the rating of the security by a rating agency, and any adverse financial conditions specifically related to the security. Expected credit losses on available-for-sale debt securities are recognized in Other income (expense), net in our Consolidated Statements of Operations, and any remaining unrealized losses, net of taxes, are included in AOCI in our Consolidated Statements of Stockholders’ Equity (Deficit). Non-marketable investments Our non-marketable investments consist of equity investments in privately-held companies without a readily determinable fair value. We measure these investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. Gains and losses on these investments, whether realized or unrealized, are recognized in Other income (expense), net in our Consolidated Statements of Operations. We assess the recoverability of our non-marketable investments by reviewing various indicators of impairment. If indicators are present, a fair value measurement is made by performing a discounted cash flow analysis of the investment. We immediately recognize the impairment to our non-marketable equity investments if the carrying value exceeds the fair value. For our equity method investment, if a decline in value is determined to be other than temporary, impairment is recognized and included in Other income (expense), net in our Consolidated Statements of Operations. Accounts receivable Accounts receivable are recorded at the invoiced amount and are not interest bearing. We maintain an allowance for doubtful accounts or expected credit losses to reserve for potentially uncollectible receivables. We review our accounts receivables by aging category to identify specific customers with known disputes or collectability issues. In addition, we maintain an allowance for all other receivables not included in the specific reserve by applying specific percentages of projected uncollectible receivables to the various aging categories. In determining these percentages, we use judgment based on our historical collection experience and current economic trends as well as reasonable and supportable forecasts of future economic conditions. Assets held for sale Long-lived assets held for sale are recorded as the lower of its carrying value or fair value less costs to sell. Fair value is determined based on discounted cash flows, appraised values or management’s estimates, depending upon the nature of the assets and external data available. 46 Table of Contents Property and equipment Property, equipment, and leasehold improvements are stated at cost, net of accumulated depreciation. Depreciation is provided on a straight-line basis over the estimated useful lives. Estimated useful lives for financial reporting purposes are as follows: buildings, 20 to 30 years; building improvements, 7 to 20 years; leasehold improvements, the lesser of the life of the improvement or the initial lease term, and computer hardware and software, and office furniture and equipment, 3 to 5 years. Software development costs The costs for the development of new software products and substantial enhancements to existing software products are expensed as incurred until technological feasibility has been established, at which time any additional costs would be capitalized in accordance with the accounting guidance for software. Because our current process for developing software is essentially completed concurrently with the establishment of technological feasibility, which occurs upon the completion of a working model, no costs have been capitalized for any of the periods presented. Internal-use software development costs We capitalize qualifying costs incurred during the application development stage related to software developed for internal-use and amortize them over the estimated useful life of 3 years. We expense costs incurred related to the planning and post-implementation phases of development as incurred. As of April 2, 2021 and April 3, 2020, capitalized costs, net of amortization, were $ 9 million and $ 24 million, respectively. Leases We determine if an arrangement is a lease at inception. We have elected to not recognize a lease liability or right-of-use (ROU) asset for short-term leases (leases with a term of twelve months or less that do not include an option to purchase the underlying asset). Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The interest rate we use to determine the present value of future payments is our incremental borrowing rate because the rate implicit in our leases is not readily determinable. Our incremental borrowing rate is a hypothetical rate for collateralized borrowings in economic environments where the leased asset is located based on credit rating factors. Our operating lease assets also include adjustments for prepaid lease payments , lease incentives and initial direct costs . Certain lease contracts include obligations to pay for other services, such as operations and maintenance. We elected the practical expedient whereby we record all lease components and the related minimum non-lease components as a single lease component. Cash payments made for variable lease costs are not included in the measurement of our operating lease assets and liabilities. Many of our lease terms include one or more options to renew. We do not assume renewals in our determination of the lease term unless it is reasonably certain that we will exercise that option. Lease costs for minimum lease payments for operating leases are recognized on a straight-line basis over the lease term. Our lease agreements do not contain any residual value guarantees. Business combinations We use the acquisition method of accounting under the authoritative guidance on business combinations. We allocate the purchase price of our acquisitions to the assets acquired and liabilities assumed based on their estimated fair values. The excess of the purchase price over the fair values of these identifiable assets and liabilities is recorded as goodwill. Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred. Each acquired company’s operating results are included in our Consolidated Financial Statements starting on the date of acquisition. Goodwill Goodwill is recorded when consideration paid for an acquisition exceeds the fair value of net tangible and intangible assets acquired. We perform an impairment assessment of goodwill at the reporting unit level at least annually in the fourth quarter of each fiscal year, or more frequently if events or changes in circumstances indicate that the asset may be impaired. The accounting guidance gives us the option to perform a qualitative assessment to determine whether further impairment testing is necessary. The qualitative assessment considers events and circumstances that might indicate that a reporting unit’s fair value is less than its carrying amount. If it is determined, as a result of the qualitative assessment, that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative test is performed. In fiscal 2021, based on our qualitative assessments, we concluded that it is more likely than not that the fair values are more than their carrying values. Accordingly, there was no indication of impairment of goodwill, and further quantitative testing was not required. Long-lived assets In connection with our acquisitions, we generally recognize assets for customer relationships, developed technology, finite-lived trade names, patents, and indefinite-lived trade names. Finite-lived intangible assets are carried at cost less accumulated amortization. Such amortization is provided on a straight-line basis over the estimated useful lives of the respective assets, generally from 1 to 9 years. Amortization for developed technology is recognized in cost of revenue. Amortization for customer relationships and certain trade names is recognized in operating expenses. Indefinite-lived intangible assets are not subject to amortization but instead tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. 47 Table of Contents Long-lived assets, including finite-lived intangible assets and property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or group may not be recoverable. The evaluation is performed at the lowest level of identifiable cash flows independent of other assets. An impairment loss is recognized when estimated undiscounted future cash flows generated from the assets are less than their carrying amount. Measurement of an impairment loss is based on the excess of the carrying amount of the asset group over its fair value. In fiscal 2021, based on our qualitative assessments, we concluded that it is more likely than not that the fair values are more than their carrying values. Accordingly, there was no indication of impairment of long-lived assets, and further quantitative testing was not required. Contract liabilities Contract liabilities consist of deferred revenue and customer deposit liabilities and represent cash payments received or due in advance of fulfilling our performance obligations. Deferred revenue represents billings under non-cancelable contracts before the related product or service is transferred to the customer. Certain arrangements include terms that allow the customer to terminate the contract and receive a pro-rata refund for a period of time. In these arrangements, we have concluded there are no enforceable rights and obligations during the period in which the option to cancel is exercisable by the customer, and therefore the consideration received or due from the customer is recorded as a customer deposit liability. Debt Our debt includes senior unsecured notes, senior term loans, convertible senior notes, and a senior unsecured revolving credit facility. Our senior unsecured notes are recorded at par value at issuance less a discount representing the amount by which the face value exceeds the fair value at the date of issuance and an amount which represents issuance costs. Our senior term loans are recorded at par value less debt issuance costs, which are recorded as a reduction in the carrying value of the debt. Our convertible senior notes are recorded at par value less the fair value of the equity component of the notes, at their issuance date, determined using Level 2 inputs and less any issuance costs. The discount and issuance costs associated with the various notes are amortized using the effective interest rate method over the term of the debt as a non-cash charge to interest expense. Borrowings under our revolving credit facility, if any, are recognized at principal balance plus accrued interest based upon stated interest rates. Debt maturities are classified as current liabilities on our Consolidated Balance Sheets if we are contractually obligated to repay them in the next twelve months or, prior to the balance sheet date, we have the authorization and intent to repay them prior to their contractual maturities and within the next twelve months. Treasury stock We account for treasury stock under the cost method. Shares repurchased under our share repurchase program are retired. Upon retirement, we allocate the value of treasury stock between Additional paid-in capital and Retained earnings. Restructuring Restructuring actions generally include significant actions involving employee-related severance charges, contract termination costs, and assets write-offs. Employee-related severance charges are largely based upon substantive severance plans, while some charges result from mandated requirements in certain foreign jurisdictions. These charges are reflected in the period when both the actions are probable, and the amounts are estimable. Contract termination costs reflect costs that will continue to be incurred under a contract for its remaining term without future economic benefit. These charges are reflected in the period when a contract is terminated. Asset impairments, including those related to ROU lease assets, are recognized in the period that an asset is decommissioned or a facility ceases to be used. Income taxes We compute the provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities and for operating losses and tax credit carryforwards in each jurisdiction in which we operate. We measure deferred tax assets and liabilities using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled. We also assess the likelihood that deferred tax assets will be realized from future taxable income and based on weighting positive and negative evidence, we will assess and determine the need for a valuation allowance, if required. The determination of our valuation allowance involves assumptions, judgments, and estimates, including forecasted earnings, future taxable income, and the relative proportions of revenue and income before taxes in the various domestic and international jurisdictions in which we operate. To the extent we establish a valuation allowance or change the valuation allowance in a period, we reflect the change with a corresponding increase or decrease to our tax expense. We record accruals for uncertain tax positions when we believe that it is not more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. We adjust these accruals when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. The provision for income taxes includes the effects of adjustments for uncertain tax positions as well as any related interest and penalties. Stock-based compensation We measure and recognize stock-based compensation for all stock-based awards, including restricted stock units (RSU), performance-based restricted stock units (PRU), stock options, and rights to purchase shares under our employee stock purchase plan (ESPP), based on their estimated fair value on the grant date. We recognize the costs in our Consolidated 48 Table of Contents Financial Statements on a straight-line basis over the award’s requisite service period except for PRUs with graded vesting, for which we recognize the costs on a graded basis. For awards with performance conditions, the amount of compensation cost we recognize over the requisite service period is based on the actual or estimated achievement of the performance condition. We estimate the number of stock-based awards that will be forfeited due to employee turnover. The fair value of each RSU and PRU that does not contain a market condition is equal to the market value of our common stock on the date of grant. The fair value of each PRU that contains a market condition is estimated using the Monte Carlo simulation model. The fair values of RSUs and PRUs are not discounted by the dividend yield because our RSUs and PRUs include dividend-equivalent rights. We use the Black-Scholes model to determine the fair value of stock options and the fair value of rights to acquire shares of common stock under our ESPP . The Black-Scholes valuation model incorporates a number of variables, including our expected stock price volatility over the expected life of the awards, actual and projected employee exercise and forfeiture behaviors, risk-free interest rates, and expected dividends. Foreign currency For foreign subsidiaries whose functional currency is the local currency, assets and liabilities are translated to U.S. dollars at exchange rates in effect at the balance sheet date. Gains and losses resulting from translation of these foreign currency financial statements into U.S. dollars are recorded in AOCI. Remeasurement adjustments are recorded in Other income (expense), net in our Consolidated Statements of Operations. Concentrations of risk A significant portion of our revenue is derived from international sales. Fluctuations of the U.S. dollar against foreign currencies, changes in local regulatory or economic conditions, or piracy could adversely affect our operating results. Financial instruments that potentially subject us to concentrations of risk consist principally of cash and cash equivalents, short-term investments, and trade accounts receivable. Our investment policy limits the amount of credit risk exposure to any one issuer and to any one country. A majority of our trade receivables are derived from sales to distributors and retailers. The credit risk in our trade accounts receivable is substantially mitigated by our credit evaluation process, reasonably short collection terms, and the geographical dispersion of sales transactions. Customers which are distributors that accounted for over 10% of our net accounts receivable, are as follows: April 2, 2021 April 3, 2020 Customer A 46 % 39 % Advertising and other promotional costs Advertising and other promotional costs are charged to operations as incurred and included in sales and marketing expenses. These costs totaled $ 353 million, $ 343 million, and $ 279 million for fiscal 2021, 2020, and 2019, respectively. Contingencies We evaluate contingent liabilities including threatened or pending litigation in accordance with the authoritative guidance on contingencies. We assess the likelihood of any adverse judgments or outcomes from potential claims or proceedings, as well as potential ranges of probable losses, when the outcomes of the claims or proceedings are probable and reasonably estimable. A determination of the amount of an accrual required, if any, for these contingencies is made after the analysis of each separate matter. Because of uncertainties related to these matters, we base our estimates on the information available at the time of our assessment. As additional information becomes available, we reassess the potential liability related to our pending claims and litigation and may revise our estimates. Note 2. Recent Accounting Standards Recently adopted authoritative guidance Credit Losses. In June 2016, the Financial Accounting Standards Board (FASB) issued new authoritative guidance on credit losses which changes the impairment model for most financial assets and certain other instruments. On April 4, 2020, the first day of our fiscal 2021, we adopted the new guidance using the modified retrospective transition method. Upon adoption, we utilized a new forward-looking “expected loss” model to replace the incurred loss impairment model for our accounts receivable and other financial assets. Additionally, for available-for-sale debt securities with unrealized losses, we discontinued using the concept of “other than temporary” impairment and recognized the estimated credit loss as allowances. The adoption of this guidance did not have a material impact on our Consolidated Financial Statements. Internal-Use Software. In August 2018, the FASB issued new guidance that clarifies the accounting for implementation costs in a cloud computing arrangement. The new guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. On April 4, 2020, we adopted the new guidance prospectively. The adoption of this guidance did not have a material impact on our Consolidated Financial Statements. Recently issued authoritative guidance not yet adopted Income taxes . In December 2019, the FASB issued new guidance that simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The guidance also clarifies and amends existing guidance to 49 Table of Contents improve consistent application. The standard will be effective for us in our first quarter of fiscal 2022. We do not believe the adoption of this guidance will have a material impact on our Consolidated Financial Statements. Debt with Conversion and Other options. In August 2020, the FASB issued new guidance that 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, after adopting the guidance, entities will no longer separately present embedded conversion features in equity. Instead, they will account for the convertible debt wholly as debt. The new guidance also requires use of the if-converted method when calculating the dilutive impact of convertible debt on earnings per share. The standard will be effective for us in our first quarter of fiscal 2023, with early adoption permitted beginning in the first quarter of fiscal 2022. It may be applied retrospectively to each prior period presented or retrospectively with cumulative effect recognized in retained earnings as of the date of adoption. We are currently evaluating the adoption date and the impact of the adoption of this guidance on our Consolidated Financial Statements and disclosures. 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. 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. We continue to evaluate our contractual arrangements and hedging relationships that reference LIBOR. 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 Statements or disclosures. Note 3. Divestitures, Discontinued Operations and Assets Held for Sale Divestitures Enterprise Security assets On November 4, 2019, we completed the sale of certain of our Enterprise Security assets and certain liabilities to Broadcom Inc. (the Broadcom sale) for a purchase price of $ 10.7 billion. As a result of the sale, the majority of the results of our Enterprise Security business were classified as discontinued operations in our Consolidated Statements of Operations and thus excluded from both continuing operations and segment results for all periods presented. We recognized a gain on sale of $ 5,434 million, which was included in Income (loss) from discontinued operations in our Consolidated Statements of Operations. Total net assets sold was $ 5,211 million, consisting of goodwill, net intangible assets and other assets of $ 7,121 million, net of contract and other liabilities of $ 1,910 million. In connection with the Broadcom sale, we entered into a transition services agreement under which we provided assistance to Broadcom including, but not limited to, business support services and information technology services. During fiscal 2021, the transition services were completed. Dedicated direct costs, net of charges to Broadcom, for these transition services were $ 9 million and $ 19 million during fiscal 2021 and 2020, respectively. These direct costs were presented as part of Other income (expense), net in the Consolidated Statements of Operations. On October 1, 2020, we entered into multiple agreements with Broadcom for an aggregate amount of $ 200 million. We licensed Broadcom’s enterprise software, multiple security engines and related telemetry for 5.6 years, which will be amortized to continuing operations over the term of the license. In addition, we resolved all outstanding payments and certain claims related to the asset purchase and transition services agreements, which is included in discontinued operations. ID Analytics solutions On January 31, 2020, we completed the sale of our ID Analytics solutions for $ 375 million in net cash proceeds. We recognized a gain on sale of $ 250 million, which was included in Other income (expense), net in our Consolidated Statements of Operations. Total net assets sold was $ 125 million, consisting of goodwill and net intangible assets of $ 114 million and net other assets, net of other liabilities, of $ 11 million. We incurred tax expense of $ 86 million related to the gain. Discontinued Operations The following table presents information regarding certain components of income (loss) from discontinued operations, net of income taxes: 50 Table of Contents Year Ended (In millions) April 2, 2021 April 3, 2020 March 29, 2019 Net revenues $ 1 $ 1,368 $ 2,288 Gross profit $ 1 $ 1,035 $ 1,693 Operating income (loss) $ ( 177 ) $ 4 $ 234 Gain on sale $ — $ 5,434 $ — Income (loss) before income taxes $ ( 176 ) $ 5,431 $ 228 Income tax expense (benefit) $ ( 34 ) $ 2,122 $ 87 Income (loss) from discontinued operations, net of taxes $ ( 142 ) $ 3,309 $ 141 Our discontinued operations consist of our divested Enterprise Security assets and results of our previously divested Veritas information management business (Veritas). There was no income from Veritas during fiscal 2021 and 2020. During fiscal 2019, revenue from Veritas was $ 13 million and income from Veritas, net of taxes was $ 15 million. The following table presents significant non-cash items and capital expenditures of discontinued operations: Year Ended (In millions) April 2, 2021 April 3, 2020 March 29, 2019 Amortization and depreciation $ — $ 130 $ 368 Stock-based compensation expense $ 1 $ 172 $ 193 Purchases of property and equipment $ — $ 43 $ 65 Assets 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 properties were approved for immediate sale in their present condition and the sale was expected to be completed within one year. As a result, we recognized an impairment of $ 24 million in fiscal 2020, which was included in restructuring costs, representing the difference between the estimated net sales price and the carrying value of one of our properties. On July 27, 2020, we completed the sale of our Culver City property, which was previously classified as held for sale during the first quarter of fiscal 2021, for cash consideration of $ 118 million, net of selling costs, and recognized a gain on sale of $ 35 million. On April 1, 2021, we completed the sale of certain land and buildings in Mountain View, which was previously classified as held for sale as of April 3, 2020, for cash consideration of $ 100 million, net of selling costs, and recognized a gain on sale of $ 63 million. We continue to actively market the remaining properties for sale; however, in fiscal 2021, the real estate market was adversely affected by the COVID-19 pandemic, which delayed the expected timing of sale. We have taken into consideration the current real estate values and demand, and continue to execute plans to sell these properties. As of April 2, 2021, these assets are classified as assets held for sale. During fiscal 2021, there were no impairments because the fair value of the properties less costs to sell either equals or exceeds their carrying value. 51 Table of Contents Note 4. Acquisitions Fiscal 2021 acquisition On January 8, 2021, we completed our acquisition of Avira. Avira provides a consumer-focused portfolio of cybersecurity and privacy solutions primarily in Europe and key emerging markets. The total aggregate consideration for the acquisition was $ 344 million, net of $ 32 million cash acquired. Our preliminary allocation of the aggregate purchase price for the acquisition as of January 8, 2021, was as follows: (In millions, except useful lives) January 8, 2021 Assets: Current assets $ 12 Intangible assets 151 Goodwill 269 Other long-term asset 21 Total assets acquired 453 Liabilities: Current liabilities 29 Contract liabilities 54 Other long-term obligations 26 Total liabilities assumed 109 Total purchase price $ 344 The allocation of the purchase price was based upon a preliminary valuation, and our estimates and assumptions are subject to refinement within the measurement period, which may be up to one year from the acquisition date. Adjustments to the purchase price allocation may require adjustments to goodwill prospectively. The primary areas of preliminary purchase price allocation that are not yet finalized are certain tax matters and intangible assets. The preliminary goodwill of $ 269 million arising from the acquisition is attributed to the expected synergies, including future cost efficiencies, and other benefits that are expected to be generated by combining Avira and NortonLifeLock. Substantially all of the goodwill recognized is expected to be deductible for tax purposes. See Note 6 for further information on goodwill. Note 5. Revenues Contract liabilities During fiscal 2021 and 2020, we recognized $ 1,050 million and $ 1,017 million of revenue, respectively, from the contract liabilities balance at the beginning of the respective fiscal years. Remaining performance obligations Remaining performance obligations represent contracted 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 April 2, 2021, we had $ 850 million of remaining performance obligations, which does not include customer deposit liabilities of $ 415 million, of which we expect to recognize approximately 94 % as revenue over the next 12 months. See Note 1 for a description of our revenue recognition policy and Note 17 for tabular disclosures of disaggregated revenue by solution and geographic region. Note 6. Goodwill and Intangible Assets Goodwill The changes in the carrying amount of goodwill are as follows: (In millions) Balance as of March 29, 2019 $ 2,677 Divestitures ( 88 ) Other adjustments ( 4 ) Balance as of April 3, 2020 2,585 Acquisitions 269 Translation adjustments 13 Balance as of April 2, 2021 $ 2,867 52 Table of Contents Intangible assets, net April 2, 2021 April 3, 2020 (In millions) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 556 $ ( 299 ) $ 257 $ 505 $ ( 230 ) $ 275 Developed technology 210 ( 104 ) 106 133 ( 85 ) 48 Other 7 ( 1 ) 6 — — — Total finite-lived intangible assets 773 ( 404 ) 369 638 ( 315 ) 323 Indefinite-lived trade names 747 — 747 744 — 744 Total intangible assets $ 1,520 $ ( 404 ) $ 1,116 $ 1,382 $ ( 315 ) $ 1,067 Amortization expense for purchased intangible assets is summarized below: Year Ended Consolidated Statements of Operations Classification (In millions) April 2, 2021 April 3, 2020 March 29, 2019 Customer relationships and other $ 74 $ 79 $ 80 Operating expenses Developed technology 31 30 30 Cost of revenues Total $ 105 $ 109 $ 110 As of April 2, 2021, future amortization expense related to intangible assets that have finite lives is as follows by fiscal year: (In millions) April 2, 2021 2022 $ 119 2023 99 2024 86 2025 27 2026 22 Thereafter 16 Total $ 369 Note 7. Supplementary Information Cash and cash equivalents: (In millions) April 2, 2021 April 3, 2020 Cash $ 650 $ 483 Cash equivalents 283 1,694 Total cash and cash equivalents $ 933 $ 2,177 Accounts receivable, net: (In millions) April 2, 2021 April 3, 2020 Accounts receivable $ 118 $ 123 Allowance for doubtful accounts ( 1 ) ( 12 ) Accounts receivable, net $ 117 $ 111 Other current assets: (In millions) April 2, 2021 April 3, 2020 Prepaid expenses $ 95 $ 110 Income tax receivable and prepaid income taxes 96 150 Other tax receivable 31 88 Other 15 87 Total other current assets $ 237 $ 435 53 Table of Contents Property and equipment, net: (In millions) April 2, 2021 April 3, 2020 Land $ 3 $ 7 Computer hardware and software 479 746 Office furniture and equipment 63 88 Buildings 29 108 Leasehold improvements 58 128 Construction in progress 1 1 Total property and equipment, gross 633 1,078 Accumulated depreciation and amortization ( 555 ) ( 840 ) Total property and equipment, net $ 78 $ 238 During 2021, we completed the sale of certain properties with total carrying value of $ 120 million, including land, buildings, furniture and fixtures, and leasehold improvements, of which $ 37 million was classified as held for sale and $ 83 million was included in property and equipment as of April 3, 2020. See Note 3 for further information on the sale. Depreciation and amortization expense of property and equipment was $ 45 million, $ 122 million, and $ 139 million in fiscal 2021, 2020, and 2019, respectively. Other long-term assets: (In millions) April 2, 2021 April 3, 2020 Non-marketable equity investments $ 185 $ 187 Long-term income tax receivable and prepaid income taxes 30 38 Deferred income tax assets 355 387 Long-term prepaid royalty 70 15 Other 46 51 Total other long-term assets $ 686 $ 678 Short-term contract liabilities: (In millions) April 2, 2021 April 3, 2020 Deferred revenue $ 795 $ 709 Customer deposit liabilities 415 340 Total short-term contract liabilities $ 1,210 $ 1,049 Other current liabilities: (In millions) April 2, 2021 April 3, 2020 Income taxes payable $ 111 $ 195 Other taxes payable 82 141 Other accrued liabilities 235 251 Total other current liabilities $ 428 $ 587 Long-term income taxes payable: (In millions) April 2, 2021 April 3, 2020 Deemed repatriation tax payable $ 525 $ 615 Other long-term income taxes 29 — Uncertain tax positions (including interest and penalties) 565 695 Total long-term income taxes payable $ 1,119 $ 1,310 54 Table of Contents Other income (expense), net: Year Ended (In millions) April 2, 2021 April 3, 2020 March 29, 2019 Interest income $ 4 $ 80 $ 42 Loss from equity interest — ( 31 ) ( 101 ) Foreign exchange gain (loss) 1 ( 6 ) ( 11 ) Gain on divestitures — 250 — Gain on sale of equity method investment — 379 — Gain on early extinguishment of debt 20 — — Gain on sale of properties 98 — — Transition service expense, net ( 9 ) ( 19 ) — Other 6 7 13 Total other income (expense), net $ 120 $ 660 $ ( 57 ) Supplemental cash flow information: Year Ended (In millions) April 2, 2021 April 3, 2020 March 29, 2019 Income taxes paid, net of refunds $ 341 $ 1,985 $ 112 Interest expense paid $ 139 $ 179 $ 183 Cash paid for amounts included in the measurement of operating lease liabilities $ 34 $ 51 $ — Non-cash operating activities: Operating lease assets obtained in exchange for operating lease liabilities $ 34 $ 15 $ — Reduction of operating lease assets as a result of lease terminations and modifications $ 26 $ 34 $ — Non-cash investing and financing activities: Purchases of property and equipment in current liabilities $ — $ — $ 23 Extinguishment of debt with borrowings from same creditors $ — $ 1,073 $ — Note 8. Financial Instruments and Fair Value Measurements The following table summarizes our financial instruments measured at fair value on a recurring basis: April 2, 2021 April 3, 2020 (In millions) Fair Value Level 1 Level 2 Fair Value Level 1 Level 2 Assets: Money market funds $ 284 $ 284 $ — $ 1,346 $ 1,346 $ — Certificates of deposit 1 — 1 348 — 348 Corporate bonds 17 — 17 86 — 86 Total $ 302 $ 284 $ 18 $ 1,780 $ 1,346 $ 434 The following table presents the contractual maturities of our investments in debt securities as of April 2, 2021: (In millions) Fair Value Due in one year or less $ 14 Due after one year through five years 4 Total $ 18 Actual maturities may differ from the contractual maturities because borrowers may have the right to call or prepay certain obligations. Financial instruments not recorded at fair value on a recurring basis include our non-marketable equity investments, equity method investment, and our long-term debt. 55 Table of Contents Non-marketable equity investments As of April 2, 2021 and April 3, 2020, the carrying value of our non-marketable equity investments was $ 185 million and $ 187 million, respectively. Equity method investment Our investment in equity securities that was accounted for using the equity method was divested during fiscal 2020 and consisted of our equity investment in DigiCert. On October 16, 2019, Clearlake Capital Group, L.P, a private investment firm, and TA Associates, an investor of DigiCert and private equity firm, completed a joint investment in DigiCert. As a result, we sold our equity investment in DigiCert for $ 380 million in cash and recognized a gain on sale of $ 379 million in fiscal 2020. We recorded a loss from our equity interest of $ 31 million and $ 101 million during 2020 and 2019, respectively, in Other income (expense), net in our Consolidated Statements of Operations. This loss was reflected as a reduction in the carrying amount of our investment in equity interests in our Consolidated Balance Sheets. DigiCert’s results were reported on a three month lag prior to our divestiture of our investment. The following table summarizes DigiCert’s results of operations through October 16, 2019, the date of our investment sale. (In millions) Period from January 1, 2019 to October 16, 2019 (unaudited) Year Ended December 31, 2018 Revenue $ 350 $ 313 Gross profit $ 293 $ 250 Net loss $ ( 102 ) $ ( 342 ) Current and long-term debt As of April 2, 2021 and April 3, 2020, the total fair value of our current and long-term fixed rate debt was $ 2,400 million and $ 3,634 million, respectively. The fair value of our variable rate debt approximated their 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 10 years for our facilities, 1 year to 6 years for equipment, and 1 year to 6 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 for fiscal 2021 and 2020: Year Ended (In millions) April 2, 2021 April 3, 2020 Operating lease costs $ 17 $ 34 Short-term lease costs 4 8 Variable lease costs 6 21 Total lease costs $ 27 $ 63 Rent expense under operating leases prior to our adoption of Topic 842 was $ 58 million for fiscal 2019. Other information related to our operating leases as of April 2, 2021 was as follows: Year Ended April 2, 2021 April 3, 2020 Weighted-average remaining lease term 4.4 years 4.5 years Weighted-average discount rate 4.07 % 4.05 % See Note 7 for cash flow information related to our operating leases. 56 Table of Contents As of April 2, 2021, the maturities of our lease liabilities by fiscal year are as follows: (In millions) 2022 $ 29 2023 22 2024 19 2025 14 2026 7 Thereafter 9 Total lease payments 100 Less: Imputed interest ( 8 ) Present value of lease liabilities $ 92 Note 10. Debt The following table summarizes components of our debt: April 2, 2021 April 3, 2020 (In millions, except percentages) Amount Effective Interest Rate Amount Effective Interest Rate 2.00 % Convertible Unsecured Notes due August 15, 2022 $ — N/A $ 625 2.66 % 4.20 % Senior Notes due September 15, 2020 — N/A 750 4.25 % New 2.50 % Convertible Senior Notes due April 1, 2022 250 2.63 % 250 2.63 % 3.95 % Senior Notes due June 15, 2022 400 4.05 % 400 4.05 % New 2.00 % Convertible Unsecured Notes due August 15, 2022 625 2.62 % 625 2.62 % Term Loan due November 4, 2024 494 LIBOR plus (1) 500 LIBOR plus (1) Delayed Term Loan due November 4, 2024 741 LIBOR plus (1) — N/A 5.0 % Senior Notes due April 15, 2025 1,100 5.00 % 1,100 5.23 % 0.95 % Avira Mortgage due December 30, 2030 5 0.95 % — N/A 1.29 % Avira Mortgage due December 30, 2029 5 1.29 % — N/A Total principal amount 3,620 4,250 Less: unamortized discount and issuance costs ( 19 ) ( 29 ) Total debt 3,601 4,221 Less: current portion ( 313 ) ( 756 ) Total long-term portion $ 3,288 $ 3,465 (1) The term loans bear interest at a rate equal to the LIBOR plus a margin based on the current debt rating of our non-credit-enhanced, senior unsecured long-term debt, and our underlying loan agreements. The interest rates for the outstanding term loans are as follows: April 2, 2021 April 3, 2020 Term Loan due November 4, 2024 1.50 % 2.88 % Delayed Term Loan due November 4, 2024 1.50 % N/A As of April 2, 2021, the future contractual maturities of debt by fiscal year are as follows: (In millions) 2022 $ 313 2023 1,089 2024 64 2025 1,048 2026 1,101 Thereafter 5 Total future maturities of debt $ 3,620 57 Table of Contents Credit Facility On November 4, 2019, we entered into 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). On September 14, 2020, we drew $ 750 million on the Delayed Draw Term Loan. On May 7, 2021, we entered into the first amendment to the credit agreement with financial institutions (the First Amendment), which extends the maturity of all term loan and revolver credit facilities from November 2024 to May 2026. The First Amendment also provides an additional five-year term loan facility (the First Amendment Additional Term Loan) of $ 525 million. At the closing of the First Amendment, we did not borrow any funds under the revolving line of credit and fully borrowed the First Amendment Additional Term Loan such that loans in an aggregate principal amount of $ 1.75 billion were outstanding. The credit facilities remain senior secured. The principal amount of the Initial Term Loan and the First Amendment Additional Term Loan must be repaid in quarterly installments on the last business day of each calendar quarter commencing with the quarter ended September 30, 2022 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 commencing with the later of (i) the quarter ended March 31, 2021 and (ii) the first full fiscal quarter ended following the Borrowing of the Delayed Draw Term Loans in an amount equal to 1.25 % of aggregate principal amount that are outstanding immediately after the borrowing of the Delayed Draw Term Loan. We may voluntarily repay outstanding principal balances without penalty. As of April 2, 2021 and April 3, 2020, there were no borrowings outstanding under our revolving credit facilities. Interest on borrowings under the credit agreement can be based on a base rate or a 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. The credit agreement 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. Senior Notes On February 9, 2017, we issued $ 1.1 billion aggregate principal amount of our 5.0 % Senior Notes due April 15, 2025 (the 5.0 % Senior Notes). The 5.0 % Senior Notes bear interest at a rate of 5.00 % per year, payable semiannually in arrears on April 15 and October 15 of each year, beginning on October 15, 2017. On or after April 15, 2020, we may redeem some or all of the 5.0 % Senior Notes at the applicable redemption prices set forth in the supplemental indenture, plus accrued and unpaid interest. In addition, we had two series of senior notes, the 4.2 % Senior Notes and 3.95 % Senior Notes that 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 each series of these notes is payable semi-annually in arrears, on September 15 and March 15 for the 4.2 % Senior Notes, and June 15 and December 15 for the 3.95 % Senior Notes. On September 15, 2020, we fully repaid the principal and accrued interest under the 4.2 % Senior Notes due September 2020, which had an aggregate principal amount outstanding of $ 750 million. Convertible Senior Notes On March 4, 2016, we issued $ 500 million of convertible notes which would mature on April 1, 2021 and bear interest at an annual rate of 2.5 % ( 2.5 % Convertible Notes). On August 1, 2016, we issued an additional $ 1.25 billion of convertible notes which would mature on August 15, 2021 and bear interest at an annual rate of 2.0 % ( 2.0 % Convertible Notes and collectively, Convertible Senior Notes). As of March 29, 2019, the principal amount and associated unamortized discount and issuance costs of the 2.5 % Convertible Notes were classified as current because upon the four year anniversary of the issuance of the notes, holders of thereof had the option to require us to repurchase the notes, in cash, equal to the principal amount and accrued and unpaid interest of the 2.5 % Convertible Notes (the Repurchase Right). On November 11, 2019, we amended the Convertible Senior Notes agreements to provide that, if and when we pay a special dividend of $ 12 to our stockholders, we would exchange $ 250 million of the principal amount underlying the 2.5 % Convertible Notes for new notes to be issued pursuant to a new indenture (the New 2.5 % Convertible Notes) and would also pay cash consideration of $ 12 for each share underlying the New 2.5 % Convertible Notes, and exchange $ 625 million of the principal amount underlying the 2.0 % Convertible Notes for new notes to be issued pursuant to a new indenture (the New 2.0 % Convertible Notes) and would also pay cash consideration of $ 12 for each share underlying the New 2.0 % Convertible Notes, in each case in lieu of conversion price adjustments (the Cash Note Payments). The remaining principal of the Convertible Senior Notes would receive a conversion price adjustment with respect to such special dividend. The special dividend was payable to stockholders on January 31, 2020. On February 4, 2020, we issued the New 2.5 % Convertible Notes, maturing on April 1, 2022, and the New 2.0 % Convertible Notes, which mature on August 15, 2022, pursuant 58 Table of Contents to two new indentures, and made the Cash Note Payments. The new Notes are convertible into cash, shares of common stock or a combination of cash and common stock, at the Company’s option, at an initial conversion rate for the New 2.50 % Convertible Notes of 59.6341 per $1,000 principal amount of the New 2.50 % Convertible Notes (which represents an initial conversion price of approximately $ 16.77 per share) and an initial conversion rate for the New 2.00 % Convertible Notes of 48.9860 per $1,000 principal amount of the New 2.00 % Convertible Notes (which represents an initial conversion price of approximately $ 20.41 per share), in each case subject to certain limitations and certain adjustments. The Cash Note Payments consisted of $ 179 million with respect to holders of the New 2.5 % Convertible Notes and $ 367 million with respect to holders of the New 2.0 % Convertible Notes. The exchange of the convertible notes was accounted for as extinguishment of debt and the consideration comprising the Cash Note Payments were recorded as charges to paid in capital. We recognized a gain of $ 2 million related to the exchange. After giving effect to the conversion rate adjustment that was made in connection with the payment of the special dividend on January 31, 2020, the conversion rate for the remaining $ 250 million of the 2.5 % Convertible Notes was 118.9814 shares of common stock per $1,000 principal amount of the notes, which represents an adjusted conversion price of approximately $ 8.40 per share and the conversion rate for the remaining $ 625 million of the 2.0 % Convertible Notes was 97.7364 shares of common stock per $1,000 principal amount of the notes, which represented an adjusted conversion price of approximately $ 10.23 per share. In addition, in connection with the amendments, the maturity dates of the 2.5 % Convertible Notes and the 2.0 % Convertible Notes were extended to April 1, 2022 and August 15, 2022, respectively. Holders of the Convertible Senior Notes would only be able to convert the notes in a period of six months prior to the extended maturity dates; and the Redemption Right and Repurchase Right were removed. On March 5, 2020, we entered into an agreement to repay the full $ 250 million of principal and conversion rights of the 2.5 % Convertible Notes for an aggregate amount of $ 566 million in cash. The payment was based on $ 19 per underlying share into which the 2.5 % Convertible Notes were convertible. In addition, we paid $ 2 million of accrued and unpaid interest through the date of settlement, and $ 1 million in lieu of a proration of the cash dividend declared on February 6, 2020. The extinguishment was settled on March 10, 2020 and resulted in an adjustment to stockholders’ equity of $ 316 million and a loss on extinguishment of $ 1 million. On May 26, 2020, we settled the $ 625 million principal and conversion rights of the 2.0 % Convertible Senior Notes in cash. The aggregate settlement amount of $ 1,176 million was based on $ 19.25 per underlying share into which the 2.0 % Convertible Notes were convertible. In addition, we paid $ 3 million of accrued and unpaid interest through the date of settlement. The extinguishment resulted in an adjustment to stockholders’ equity of $ 578 million and a gain on extinguishment of $ 20 million. As of April 2, 2021 and April 3, 2020, the Convertible Senior Notes consisted of the following: April 2, 2021 April 3, 2020 (In millions) New 2.5 % Convertible Notes New 2.0 % Convertible Notes New 2.5 % Convertible Notes New 2.0 % Convertible Notes 2.0 % Convertible Notes Liability component: Principal $ 250 $ 625 $ 250 $ 625 $ 625 Unamortized discount and issuance costs — ( 5 ) ( 1 ) ( 9 ) ( 6 ) Net carrying amount $ 250 $ 620 $ 249 $ 616 $ 619 Equity component, net of tax $ 43 $ 56 $ 43 $ 56 $ 12 Based on the closing price of our common stock of $ 21.42 on the last trading date closest to April 2, 2021, the if-converted values of the New 2.5 % Convertible Notes and the 2.0 % Convertible Notes exceeded the principal amount by approximately $ 69 million and $ 31 million, respectively. See Note 19 for discussion of convertible note purchase agreement entered into on May 13, 2021. The following table sets forth total interest expense recognized related to our convertible notes: Year Ended (In millions) April 2, 2021 April 3, 2020 March 29, 2019 Contractual interest expense $ 20 $ 37 $ 38 Amortization of debt discount and issuance costs $ 4 $ 13 $ 16 Payments in lieu of conversion price adjustments (1) $ 12 $ 11 $ — (1) Payments in lieu of conversion price adjustments consist of amounts paid to holders of the Convertible Senior Notes when our quarterly dividend to our common stockholders exceeds the amounts defined in the Convertible Senior Notes agreements. 59 Table of Contents Note 11. Derivatives 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 impacts our operating results. As part of our foreign currency risk mitigation strategy, we have entered into foreign exchange forward contracts with up to twelve months in duration. We do not use derivative financial instruments for speculative trading purposes, nor do we hedge our foreign currency exposure in a manner that entirely offsets the effects of the changes in foreign exchange rates. We enter into foreign currency forward contracts to hedge foreign currency balance sheet exposure. These forward contracts are not designated as hedging instruments. As of April 2, 2021 and April 3, 2020, the fair value of these contracts was immaterial. The related gain (loss) recognized in Other income (expense), net in our Consolidated Statements of Operations was as follows: Year Ended (In millions) April 2, 2021 April 3, 2020 March 29, 2019 Foreign exchange forward contracts gain (loss) $ 15 $ ( 22 ) $ ( 37 ) The fair value of our foreign exchange forward contracts is presented on a gross basis in our Consolidated Balance Sheets. To mitigate losses in the event of nonperformance by counterparties, we have entered into master netting arrangements with our counterparties that allow us to settle payments on a net basis. The effect of netting on our derivative assets and liabilities was not material as of April 2, 2021 and April 3, 2020. The notional amount of our outstanding foreign exchange forward contracts in U.S. dollar equivalent was as follows: (In millions) April 2, 2021 April 3, 2020 Foreign exchange forward contracts purchased $ 270 $ 362 Foreign exchange forward contracts sold $ 68 $ 57 Note 12. Restructuring, Transition and Other Costs Our restructuring, transition and other costs consist primarily of severance, contract cancellations, separation, 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. Separation costs primarily consist of consulting costs incurred in connection with our divestitures. 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. Such transition projects were completed by the end of fiscal 2019. 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 our acquisition of Avira. We estimate that we will incur total costs of up to $ 20 million. These actions are expected to be completed in fiscal 2022. As of April 2, 2021, we have incurred total costs of $ 12 million under the December 2020 Plan. See Note 4 for further information on our Avira acquisition. November 2019 Plan In November 2019, our Board of Directors approved a restructuring plan (the November 2019 Plan) in connection with the strategic decision to divest our Enterprise Security business. Actions under this plan included the reduction of our workforce as well as asset write-offs and impairments, contract terminations, facilities closures, and the sale of underutilized facilities. These actions were completed in fiscal 2021, and we incurred total costs of $ 509 million, excluding stock-based compensation expense, under the November 2019 Plan. In connection with the Broadcom sale, our Board of Directors approved an equity-based severance program under which certain equity awards to certain terminated employees were accelerated. As of April 2, 2021, we have incurred $ 127 million of stock-based compensation related to our equity-based severance program. See Note 15 for further information on the impact of this program. August 2019 Plan On August 6, 2019, our Board of Directors approved a restructuring plan (the August 2019 Plan) to improve productivity and reduce complexity in the way we manage the business. Under the August 2019 Plan, we reduced our global headcount and closed certain facilities. These actions were completed in fiscal 2020, and we incurred total costs of $ 53 million, primarily consisting of severance and termination benefits. 60 Table of Contents Restructuring, transition and other costs summary Our restructuring, transition and other costs attributable to continuing operations are presented in the table below: Year Ended (In millions) April 2, 2021 April 3, 2020 March 29, 2019 Severance and termination benefit costs $ 31 $ 90 $ 19 Contract cancellation charges 51 101 — Stock-based compensation charges 10 20 — Asset write-offs and impairments 58 47 2 Other exit and disposal costs 11 7 12 Separation costs — 1 3 Transition costs — — 185 Total restructuring, transition and other $ 161 $ 266 $ 221 In connection with the agreement to sell certain assets of our Enterprise Security business, a portion of our restructuring, transition and other costs were classified to discontinued operations for all periods presented. Our restructuring, transition and other costs attributable to discontinued operations are presented in the table below: Year Ended (In millions) April 2, 2021 April 3, 2020 March 29, 2019 Severance and termination benefit costs $ 64 $ 121 $ 9 Contract cancellation charges — 5 — Stock-based compensation charges — 97 — Asset write-offs and impairments — 13 — Other exit and disposal costs — — 3 Separation costs 2 25 — Transition costs — — 8 Total restructuring, transition and other $ 66 $ 261 $ 20 Restructuring summary Our activities and liability balances related to our restructuring plans are presented in the tables below: December 2020 Plan (In millions) Liability Balance as of April 3, 2020 Net Charges Cash Payments Non-Cash Items Liability Balance as of April 2, 2021 Severance and termination benefit costs $ — $ 12 $ ( 9 ) $ — $ 3 Total $ — $ 12 $ ( 9 ) $ — $ 3 November 2019 Plan (In millions) Liability Balance as of April 3, 2020 Net Charges Cash Payments Non-Cash Items Liability Balance as of April 2, 2021 Severance and termination benefit costs $ 35 $ 83 $ ( 118 ) $ — $ — Contract cancellation charges 7 51 ( 11 ) ( 35 ) 12 Stock-based compensation charges — 10 — ( 10 ) — Asset write-offs and impairments — 58 — ( 58 ) — Other exit and disposal costs — 11 ( 10 ) — 1 Total $ 42 $ 213 $ ( 139 ) $ ( 103 ) $ 13 The restructuring liabilities are included in Other current liabilities in our Consolidated Balance Sheets. 61 Table of Contents Note 13. Income Taxes The components of our income (loss) from continuing operations before income taxes are as follows: Year Ended (In millions) April 2, 2021 April 3, 2020 March 29, 2019 Domestic $ 607 $ 667 $ ( 179 ) International 265 152 72 Income (loss) before income taxes $ 872 $ 819 $ ( 107 ) The components of income tax expense (benefit) from continuing operations are as follows: Year Ended (In millions) April 2, 2021 April 3, 2020 March 29, 2019 Current: Federal $ 133 $ 208 $ 58 State 36 33 4 International ( 13 ) 3 ( 14 ) Total 156 244 48 Deferred: Federal ( 6 ) ( 23 ) ( 35 ) State ( 5 ) 3 ( 3 ) International 31 17 ( 7 ) Total 20 ( 3 ) ( 45 ) Income tax expense $ 176 $ 241 $ 3 The U.S. federal statutory income tax rates we have applied for fiscal 2021, 2020, and 2019 are as follows: Year Ended April 2, 2021 April 3, 2020 March 29, 2019 U.S. federal statutory income tax rate 21.0 % 21.0 % 21.0 % The difference between our effective income tax and the federal statutory income tax is as follows: Year Ended (In millions) April 2, 2021 April 3, 2020 March 29, 2019 Federal statutory tax expense (benefit) $ 183 $ 172 $ ( 23 ) State taxes, net of federal benefit 25 22 ( 11 ) Foreign earnings taxed at other than the federal rate 7 ( 2 ) ( 24 ) Transition tax — — ( 2 ) Federal research and development credit ( 1 ) ( 2 ) ( 4 ) Valuation allowance increase (decrease) 1 ( 57 ) 26 Change in uncertain tax positions 3 60 44 Stock-based compensation 5 5 8 Nondeductible goodwill — 18 — Favorable ruling on foreign withholding tax ( 35 ) — — US tax on foreign earnings ( 15 ) ( 4 ) ( 1 ) Return to provision adjustment 1 12 ( 16 ) Other, net 2 17 6 Income tax expense $ 176 $ 241 $ 3 62 Table of Contents The principal components of deferred tax assets and liabilities are as follows: (In millions) April 2, 2021 April 3, 2020 Deferred tax assets: Tax credit carryforwards $ 2 $ 6 Net operating loss carryforwards of acquired companies 23 21 Other accruals and reserves not currently tax deductible 54 46 Operating lease liabilities 29 12 Deferred revenue — 2 Property and equipment 17 10 Intangible assets 103 117 Loss on investments not currently tax deductible — 1 Stock-based compensation 7 21 Other 36 44 Gross deferred tax assets 271 280 Valuation allowance ( 7 ) ( 9 ) Deferred tax assets, net of valuation allowance 264 271 Deferred tax liabilities: Operating lease assets ( 25 ) ( 10 ) Goodwill ( 1 ) — Deferred revenue ( 1 ) — Unremitted earnings of foreign subsidiaries ( 15 ) ( 17 ) Prepaids and deferred expenses ( 2 ) ( 2 ) Discount on convertible debt ( 2 ) ( 4 ) Deferred tax liabilities ( 46 ) ( 33 ) Net deferred tax assets (liabilities) $ 218 $ 238 The valuation allowance provided against our deferred tax assets as of April 2, 2021, decreased primarily due to a change in tax credit carryforwards. The ending valuation allowance of $ 7 million is provided primarily against certain foreign tax credits. As of April 2, 2021, we have U.S. federal net operating losses attributable to various acquired companies of approximately $ 77 million, which, if not used, will expire between fiscal 2022 and 2039. The remaining net operating loss carryforwards are subject to an annual limitation under U.S. federal tax regulations but are expected to be fully realized. Furthermore, we have U.S. state net operating loss carryforwards attributable to various acquired companies of approximately $ 13 million. If not used, our U.S. state net operating losses will expire between fiscal 2022 and 2038. In addition, we have foreign net operating loss carryforwards attributable to various foreign companies of approximately $ 26 million. In assessing the ability to realize our deferred tax assets, we considered whether it is more likely than not that some portion or all the deferred tax assets will not be realized. We considered the following: we have historical cumulative book income, as measured by the current and prior two years; we have strong, consistent taxpaying history; we have substantial U.S. federal income tax carryback potential; and we have substantial amounts of scheduled future reversals of taxable temporary differences from our deferred tax liabilities. We have concluded that this positive evidence outweighs the negative evidence and, thus, that the deferred tax assets as of April 2, 2021, are realizable on a “more likely than not” basis. 63 Table of Contents The aggregate changes in the balance of gross unrecognized tax benefits were as follows: Year Ended (In millions) April 2, 2021 April 3, 2020 March 29, 2019 Balance at beginning of year $ 724 $ 446 $ 378 Settlements with tax authorities ( 37 ) ( 5 ) ( 3 ) Lapse of statute of limitations ( 34 ) ( 15 ) ( 17 ) Increase related to prior period tax positions 13 77 16 Decrease related to prior period tax positions ( 129 ) ( 11 ) ( 11 ) Increase related to current year tax positions 11 232 75 Increase due to acquisition — — 8 Balance at end of year $ 548 $ 724 $ 446 There was a change of $ 176 million in gross unrecognized tax benefits during the year ended April 2, 2021, as disclosed above. This gross liability does not include offsetting tax benefits associated with the correlative effects of potential transfer pricing adjustments, interest deductions, and state income taxes. Of the total unrecognized tax benefits at April 2, 2021, $ 494 million, if recognized, would affect our effective tax rate. We recognize interest and/or penalties related to uncertain tax positions in income tax expense. At April 2, 2021, before any tax benefits, we had $ 74 million of accrued interest and penalties on unrecognized tax benefits. Interest included in our provision for income taxes was an expense of approximately $ 26 million for fiscal 2021. If the accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced in the period that such determination is made and reflected as a reduction of the overall income tax provision. On July 27, 2015, the United States Tax Court (Tax Court) issued its opinion in Altera v. Commissioner and concluded that related parties in a cost sharing arrangement are not required to share expenses related to stock-based compensation. The Commissioner of the Internal Revenue Service appealed the Tax Court decision to the Ninth Circuit. In June 2019, the U.S. Court of Appeals for the Ninth Circuit reversed the July 2015 decision of the U.S. Tax Court. As a result of this decision, we recorded a cumulative income tax expense of $ 62 million in the first quarter of fiscal 2020. On July 22, 2019, the taxpayer requested a rehearing before the full Ninth Circuit, but such request was denied on November 12, 2019. In February 2020, Altera requested a hearing before the Supreme Court of the United States. In June 2020, the Supreme Court declined to review the case. We file income tax returns in the U.S. on a federal basis and in many U.S. state and foreign jurisdictions. Our most significant tax jurisdictions are the U.S. and Ireland. Our tax filings remain subject to examination by applicable tax authorities for a certain length of time following the tax year to which those filings relate. Our fiscal years 2014 through 2021 remain subject to examination by the IRS for U.S. federal tax purposes. Our fiscal years prior to 2014 have been settled and closed with the IRS. Our fiscal years 2014 to 2019 are currently under audit by the IRS. Our 2016 through 2021 fiscal years remain subject to examination by the appropriate governmental agencies for Irish tax purposes. 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. Although potential resolution of uncertain tax positions involves multiple tax periods and jurisdictions, it is reasonably possible that the gross unrecognized tax benefits related to these audits could decrease (whether by payment, release, or a combination of both) in the next 12 months. Depending on the nature of the settlement or expiration of statutes of limitations, it could affect our income tax provision and therefore benefit the resulting effective tax rate. We continue to monitor the progress of ongoing income tax controversies and the impact, if any, of the expected tolling of the statute of limitations in various taxing jurisdictions. Note 14. Stockholders’ Equity Preferred stock On May 22, 2020, we filed a Certificate of Elimination of Series A Junior Preferred Stock (the “Junior Preferred Stock”) with the Secretary of State of the State of Delaware, to remove the Certificate of Designations of the Junior Preferred Stock from our Amended and Restated Certificate of Incorporation. The Certificate of Elimination became effective upon filing. No shares of the Junior Preferred Stock were issued or outstanding upon filing of the Certificate of Elimination. Dividends On May 10, 2021, we announced that our Board of Directors declared a cash dividend of $ 0.125 per share of common stock to be paid in June 2021. All shares of common stock issued and outstanding and all RSUs and PRUs as of the record date will be entitled to the dividend and dividend equivalent rights (DERs), respectively, which will be paid out if and when the underlying shares are released. Any future dividends and DERs will be subject to the approval of our Board of Directors. 64 Table of Contents Stock repurchase program Under our stock repurchase program, we may purchase shares of our outstanding common stock through open market and through accelerated stock repurchase transactions. As of April 2, 2021, we have $ 274 million remaining under the authorization to be completed in future periods with no expiration date. The following table summarizes activity related to our stock repurchase program: Year Ended (In millions, except per share amounts) April 2, 2021 April 3, 2020 Number of shares repurchased 15 68 Average price per share $ 20.50 $ 22.97 Aggregate purchase price $ 304 $ 1,562 Repurchases of 1 million shares executed during 2019 were settled in fiscal 2020. On May 4, 2021, our Board of Directors approved an incremental share repurchase authorization of $ 1,500 million, bringing the total authorized under the stock repurchase program to $ 1,774 million. The authorization does not have an expiration date. Accumulated other comprehensive income (loss) Components and activities of AOCI, net of tax, were as follows: (In millions) Foreign Currency Translation Adjustments Unrealized Gain (Loss) On Available-For-Sale Securities Equity Method Investee Total AOCI Balance as of March 29, 2019 $ ( 5 ) $ ( 1 ) $ ( 1 ) $ ( 7 ) Other comprehensive income (loss) before reclassifications ( 11 ) 1 2 ( 8 ) Reclassification to net income — — ( 1 ) ( 1 ) Balance as of April 3, 2020 ( 16 ) — — ( 16 ) Other comprehensive income before reclassifications 63 — — 63 Balance as of April 2, 2021 $ 47 $ — $ — $ 47 Note 15. Stock-Based Compensation and Other Benefit Plans Stock incentive plans The purpose of our stock incentive plans is to attract, retain, and motivate eligible persons whose present and potential contributions are important to our success by offering them an opportunity to participate in our future performance through equity awards. We have one primary stock incentive plan: the 2013 Equity Incentive Plan (the 2013 Plan), under which incentive stock options may be granted only to employees (including officers and directors who are also employees), and other awards may be granted to employees, officers, directors, consultants, independent contractors, and advisors. As amended, our stockholders have approved and reserved 82 million shares of common stock for issuance under the 2013 Plan. As of April 2, 2021, 18 million shares remained available for future grant, calculated using the maximum potential shares that could be earned and issued at vesting. In connection with the acquisitions of various companies, we have assumed the equity awards granted under stock incentive plans of the acquired companies or issued equity awards in replacement thereof. No new awards will be granted under our acquired stock plans. RSUs (In millions, except per share and year data) Number of Shares Weighted- Average Grant Date Fair Value Outstanding as of April 3, 2020 7 $ 21.33 Granted 4 $ 20.70 Vested ( 4 ) $ 21.86 Forfeited ( 2 ) $ 20.55 Outstanding as of April 2, 2021 5 $ 20.62 RSUs generally vest over a three-year period. The weighted-average grant date fair value per share of RSUs granted during fiscal 2021, 2020, and 2019 was $ 20.70 , $ 19.65 , and $ 21.77 , respectively. The total fair value of RSUs released in fiscal 2021, 2020, and 2019 was $ 86 million, $ 300 million, and $ 214 million, respectively, which represents the market value of our common stock on the date the RSUs were released. 65 Table of Contents PRUs (In millions, except per share and year data) Number of Shares Weighted- Average Grant Date Fair Value Outstanding and unvested at April 3, 2020 2 $ 22.68 Granted 2 $ 26.39 Vested ( 2 ) $ 23.97 Forfeited ( 1 ) $ 20.61 Unvested at April 2, 2021 1 $ 27.50 Vested and unreleased at April 2, 2021 — Outstanding at April 2, 2021 1 The total fair value of PRUs released in fiscal 2021, 2020, and 2019 was $ 43 million, $ 39 million, and $ 261 million, respectively, which represents the market value of our common stock on the date the PRUs were released. We have granted PRUs to certain of our executives. Typically, these PRUs have a three-year vest period. PRUs granted in fiscal 2021 and 2019 contain a combination of our company’s performance and market conditions whereas our fiscal 2020 PRUs only contain market conditions. The performance conditions are based on the achievement of specified one-year non-GAAP financial metrics. The market conditions are based on the achievement of our relative total shareholder return over a two - and three-year period. Typically, 0 % to 200 % of target shares are eligible to be earned based on the achievement of the performance and market conditions. Valuation of PRUs The fair value of each PRU that does not contain a market condition is equal to the market value of our common stock on the date of grant. The fair value of each PRU that contains a market condition is estimated using the Monte Carlo simulation model. The valuation and the underlying weighted-average assumptions for PRUs are summarized below: Year Ended April 2, 2021 April 3, 2020 March 29, 2019 Expected term 2.7 years 1.9 years 2.7 years Expected volatility 42.5 % 38.1 % 34.2 % Risk-free interest rate 0.2 % 1.7 % 2.7 % Expected dividend yield — % 1.1 % — % Weighted-average grant date fair value of PRUs $ 26.39 $ 21.69 $ 21.30 Stock options (In millions, except per share and year data) Number of Shares Weighted-Average Exercise Price Weighted- Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding at April 3, 2020 2 $ 6.85 Exercised ( 1 ) $ 7.25 Forfeited and expired ( 1 ) $ 6.93 Outstanding at April 2, 2021 (1) — $ 5.22 Exercisable at April 2, 2021 (1) — $ 5.22 4.75 $ 5 (1) The number of shares is less than 1 million. The total intrinsic value of options exercised during fiscal 2021, 2020, and 2019 was $ 18 million, $ 171 million, and $ 23 million, respectively. No options were granted in fiscal 2021. The fair value of options granted in fiscal 2020 was $ 4.76 per share. ESPP Under our 2008 Employee Stock Purchase Plan, employees may annually contribute up to 10 % of their gross compensation, subject to certain limitations, to purchase shares of our common stock at a discounted price. Eligible employees are offered shares through a 12 -month offering period, which consists of two consecutive 6 -month purchase periods, at 85 % of the lower of either the fair market value on the purchase date or the fair market value at the beginning of the offering period. As of April 2, 2021, 38 million shares have been issued under this plan, and 32 million shares remained available for future issuance. 66 Table of Contents The following table summarizes activity related to the purchase rights issued under the ESPP: Year Ended (In millions) April 2, 2021 April 3, 2020 March 29, 2019 Shares issued under the ESPP 1 2 — Proceeds from issuance of shares $ 14 $ 39 $ — The fair value of each stock purchase right under our ESPP is estimated using the Black-Scholes option pricing model. The weighted-average grant date fair value related to rights to acquire shares of common stock under our ESPP in fiscal 2021, 2020, and 2019 was $ 5.65 per share, $ 5.17 per share, and $ 6.22 per share, respectively. Dividend equivalent rights (DERs) Our RSUs and PRUs contain dividend equivalent rights (DER) that entitles the recipient of an award to receive cash dividend payments when the associated award is released. The amount of DER equals to the cumulated dividends on the issued number of common stock that would have been payable since the date the associated award was granted. As of April 2, 2021 and April 3, 2020, current dividends payable related to DER was $ 12 million and $ 62 million, respectively, recorded as part of Other current liabilities in the Consolidated Balance Sheets, and long-term dividends payable related to DER was $ 10 million and $ 31 million, respectively, recorded as part of Other long-term liabilities. Stock-based award modifications In connection with the Broadcom sale in fiscal 2020, we approved severance and retention arrangements for certain executives. As a result, these executives are entitled to receive vesting of 50 % of their unvested equity, subject to a service condition, and the remaining unvested equity will be earned at levels of 0 % to 150 %, subject to market and service conditions. In connection with restructuring activities related to the Broadcom sale, we entered into severance and retention arrangements with certain other employees. These arrangements provided for acceleration of either a portion or all of the vesting of their stock-based awards. The following table summarizes the stock-based compensation expense recognized as a result of these modifications: Year Ended (In millions) April 2, 2021 April 3, 2020 Sales and marketing $ 2 $ 6 Research and development 9 — General and administrative 8 20 Restructuring and other costs 10 20 Discontinued operations 1 99 Total stock-based compensation $ 30 $ 145 Stock-based compensation expense Total stock-based compensation expense and the related income tax benefit recognized for all of our equity incentive plans in our Consolidated Statements of Operations were as follows: Year Ended (In millions) April 2, 2021 April 3, 2020 March 29, 2019 Cost of revenues $ 1 $ 2 $ 6 Sales and marketing 18 29 42 Research and development 26 30 34 General and administrative 26 58 76 Restructuring, transition and other costs 10 20 — Other income (expense), net ( 1 ) 1 — Total stock-based compensation from continuing operations 80 140 158 Discontinued operations 1 172 194 Total stock-based compensation expense $ 81 $ 312 $ 352 Income tax benefit for stock-based compensation expense $ ( 18 ) $ ( 55 ) $ ( 73 ) As of April 2, 2021, the total unrecognized stock-based compensation expense related to our unvested stock-based awards was $ 94 million, which will be recognized over an estimated weighted-average amortization period of 1.8 years. 67 Table of Contents Other employee benefit plans 401(k) plan We maintain a salary deferral 401(k) plan for all of our U.S. employees. This plan allows employees to contribute their pretax salary up to the maximum dollar limitation prescribed by the Internal Revenue Code. We match the first 3.5 % of a participant’s eligible compensation up to $ 6,000 in a calendar year. Our employer matching contributions to the 401(k) plan were as follows, including contributions to employees of our discontinued operations: Year Ended (In millions) April 2, 2021 April 3, 2020 March 29, 2019 401(k) matching contributions $ 3 $ 16 $ 23 Note 16. Net Income Per Share Basic income per share is computed by dividing net income by the weighted-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 during the period using the treasury stock method. Dilutive potentially issuable common shares include the dilutive effect of the shares underlying convertible debt and employee equity awards. Diluted income (loss) per share was the same as basic income (loss) per share for the year ended March 29, 2019, as there was a loss from continuing operations in the period and inclusion of potentially issuable shares was anti-dilutive. The components of basic and diluted net income (loss) per share are as follows: Year Ended (In millions, except per share amounts) April 2, 2021 April 3, 2020 March 29, 2019 Income (loss) from continuing operations $ 696 $ 578 $ ( 110 ) Income (loss) from discontinued operations, net of income taxes ( 142 ) 3,309 141 Net income $ 554 $ 3,887 $ 31 Income (loss) per share - basic: Continuing operations $ 1.18 $ 0.94 $ ( 0.17 ) Discontinued operations $ ( 0.24 ) $ 5.38 $ 0.22 Net income per share - basic (1) $ 0.94 $ 6.32 $ 0.05 Income (loss) per share - diluted: Continuing operations $ 1.16 $ 0.90 $ ( 0.17 ) Discontinued operations $ ( 0.24 ) $ 5.15 $ 0.22 Net income per share - diluted (1) $ 0.92 $ 6.05 $ 0.05 Weighted-average outstanding shares - basic 589 615 632 Dilutive potentially issuable shares: Convertible debt 8 20 — Employee equity awards 3 8 — Weighted-average shares outstanding - diluted 600 643 632 Anti-dilutive shares excluded from diluted net income (loss) per share calculation: Convertible debt 8 5 91 Employee equity awards — 2 47 Total 8 7 138 (1) Net income per share amounts may not add due to rounding. Under the treasury stock method, our convertible debt instruments will generally have 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. On February 4, 2020, a portion of the 2.5 % Convertible Notes were exchanged for the New 2.5 % Convertible Notes, and a portion of the 2.0 % Convertible Notes were exchanged for the New 2.0 % Convertible Notes. The remaining Convertible Senior Notes received conversion price adjustments. The 2.5 % Convertible Notes and 2.0 % Convertible Notes were fully repaid on March 10, 2020 and May 26, 2020, respectively. See Note 10 for further information on our convertible debt instruments and Note 19 for information on a convertible note purchase agreement entered into on May 13, 2021. The conversion price of each convertible debt applicable in the periods presented is as follows: 68 Table of Contents Year Ended April 2, 2021 April 3, 2020 March 29, 2019 2.5 % Convertible Senior Notes due April 1, 2022 N/A $ 8.40 (1) $ 16.77 2.0 % Convertible Senior Notes due August 15, 2022 N/A $ 10.23 (1) $ 20.41 New 2.5 % Convertible Senior Notes due April 1, 2022 $ 16.77 $ 16.77 N/A New 2.0 % Convertible Senior Notes due August 15, 2022 $ 20.41 $ 20.41 N/A (1) Conversion prices of the Convertible Senior Notes prior to their full repayments. The conversion features of the convertible debt instruments were anti-dilutive during fiscal 2019 due to a loss from continuing operations. 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 resources. The following table summarizes net revenues for our major solutions: Year Ended (In millions) April 2, 2021 April 3, 2020 March 29, 2019 Consumer security $ 1,513 $ 1,450 $ 1,471 Identity and information protection 1,038 994 937 ID Analytics — 46 48 Total net revenues $ 2,551 $ 2,490 $ 2,456 From time to time, changes in our 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 products include our Norton 360 Security offerings, Norton Security, Norton Secure VPN, Avira Security, and other consumer security solutions. Identity and information protection products include our Norton 360 with LifeLock offerings, LifeLock identity theft protection and other information protection solutions. Our ID Analytics solutions were divested on January 31, 2020. 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: Year Ended (In millions) April 2, 2021 April 3, 2020 March 29, 2019 Americas $ 1,827 $ 1,831 $ 1,786 EMEA 419 376 392 APJ 305 283 278 Total net revenues $ 2,551 $ 2,490 $ 2,456 Note: The Americas include U.S., Canada, and Latin America; EMEA includes Europe, Middle East, and Africa; APJ includes Asia Pacific and Japan Revenues from customers inside the U.S. were $ 1,742 million, $ 1,747 million, and $ 1,700 million during fiscal 2021, 2020, and 2019, 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) April 2, 2021 April 3, 2020 U.S. $ 536 $ 1,345 International 415 918 Total cash, cash equivalents and short-term investments $ 951 $ 2,263 69 Table of Contents 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) April 2, 2021 April 3, 2020 U.S. $ 28 $ 174 Ireland 32 34 Germany 14 4 Other countries (1) 4 26 Total property and equipment, net $ 78 $ 238 (1) No 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 were as follows: (In millions) April 2, 2021 April 3, 2020 U.S. $ 55 $ 40 India 9 11 Japan 3 10 Other countries (1) 9 27 Total operating lease assets $ 76 $ 88 (1) No individual country represented more than 10% of the respective totals. Significant customers In fiscal 2021, 2020, and 2019, no customer accounted for 10% or more of our net revenues. See Note 1 for customers that accounted for over 10% of our net accounts receivable. Note 18. Commitments and Contingencies Purchase obligations We have purchase obligations that are associated with agreements for purchases of goods or services. Management believes that cancellation of these contracts is unlikely, and we expect to make future cash payments according to the contract terms. The following reflects estimated future payments for purchase obligations by fiscal year. The amount of purchase obligations reflects estimated future payments as of April 2, 2021. (In millions) April 2, 2021 2022 $ 296 2023 35 2024 35 2025 5 2026 4 Thereafter 5 Total purchase obligations $ 380 Deemed repatriation taxes Under the Tax Cuts and Jobs Act (H.R.1), we are required to pay a one-time transition tax on untaxed foreign earnings of our foreign subsidiaries through July 2025. The following reflects estimated future payments for deemed repatriation taxes by fiscal year: (In millions) April 2, 2021 2022 $ 69 2023 68 2024 128 2025 171 2026 158 Total obligations $ 594 70 Table of Contents 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 Consolidated Financial Statements. 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. 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 their 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 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. Historically, 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 For a description of our accounting policy regarding litigation and loss contingencies, see “Critical Accounting Policies and Estimates” included in Part II, Item 7 of this annual report. SEC Investigation As previously disclosed in our public filings, the Audit Committee of our Board of Directors (the Audit Committee) completed its internal investigation (the Audit Committee Investigation) in September 2018. In connection with the Audit Committee Investigation, we voluntarily contacted the U.S. Securities and Exchange Commission (SEC) in April 2018. The SEC commenced a formal investigation, and we continue to cooperate with that investigation. The outcome of such an investigation is difficult to predict. We have incurred, and may continue to incur, significant expenses related to legal and other professional services in connection with the SEC investigation. At this stage, we are unable to assess whether any material loss or adverse effect is reasonably possible as a result of the SEC’s investigation or estimate the range of any potential loss. 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. 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 will conclude on July 2, 2021. The initial class opt out period closed on August 25, 2020. In an April 29, 2021 Order, the Court vacated the June 14, 2021 trial date and the trial is now continued indefinitely. A settlement conference has been set for May 24, 2021. 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. The derivative actions are currently voluntarily stayed in light of the securities class action. 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. 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 71 Table of Contents 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. At this stage, we are unable to assess whether any material loss or adverse effect is reasonably possible as a result of these lawsuits or estimate the range of any potential loss. GSA During the first quarter of fiscal 2013, we were advised by the Commercial Litigation Branch of the Department of Justice’s (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) 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 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 Schedule 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 also indicated they would 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 us 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 the Company 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 the Company’s announcement of its plans to distribute the after-tax proceeds of the sale of the Symantec enterprise business to Broadcom to its 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 the Company’s available cash, cash equivalents and short-term investments. The Court permitted the DOJ limited discovery of facts relevant to the Company’s 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, the Company filed a Motion for Reconsideration of certain rulings in the Court’s March 30 Summary Judgment Order. Court ordered mediations in July 2020 February 2021 were not successful. Trial is set for August 2, 2021. On March 23, 2021, Plaintiffs withdrew their demand for a jury trial and the Company consented to proceed with a bench trail. 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. The issue of Relator’s statutory attorney’s fees with respect to the State of Florida’s claims remains unresolved. 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 State of Florida, 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. There is at least a reasonable possibility that a loss may have been incurred in excess of our accrual for this matter. Holden v. NortonLifeLock On February 8, 2021, Lauren Holden filed a putative class action in the Circuit Court for Duval County, Florida alleging that the Company violated the Florida wiretapping statute, Florida Security of Communications Act, Fla. Stat. Ann. § 934.01, et. seq., through the use of session replay technology on www.us.norton.com. The complaint defines the class as consisting of Florida residents who visited the website and whose electronic communications were alleged to have been intercepted by the Company without prior consent and, on behalf of the class, seeks statutory damages, attorney’s fees and costs, and injunctive relief. On March 12, 2021, the Company removed the case to the District Court for the Middle District of Florida and filed its Answer and Affirmative Defenses to the complaint. The Company then filed a Motion for Judgment on the Pleadings on April 20, 2021. At this stage, we are unable to assess whether any material loss or adverse effect is reasonably possible as a result of this lawsuit or estimate the range of any potential loss. We dispute these claims and intend to defend them vigorously. 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 72 Table of Contents 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 19. Subsequent Events On May 13, 2021, we entered into a Convertible Notes Purchase Agreement (the “Agreement”) with affiliates of Silver Lake Partners (“Silver Lake”), pursuant to which we agreed to repurchase $ 250 million in aggregate principal amount of our new 2.50 % convertible unsecured senior notes due 2022 (the “Note Repurchase”). These notes are convertible into our common stock at a rate of 59.6341 shares for each $1,000 principal amount of notes, representing a conversion price of approximately $ 16.77 per share. Under the terms of the Agreement, we will pay Silver Lake an aggregate of $ 365 million, 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. The Note Repurchase was completed on May 20, 2021. (2) Financial Statement Schedule Schedule II NORTONLIFELOCK INC. VALUATION AND QUALIFYING ACCOUNTS All financial statement schedules have been omitted, since the required information is not applicable or is not present in material amounts, and/or changes to such amounts are immaterial to require submission of the schedule, or because the information required is included in our Consolidated Financial Statements and notes thereto included in this Form 10-K. (3) Exhibits Exhibit Number Incorporated by Reference Filed Herewith Exhibit Description Form File No. Exhibit Filing Date 2.01(§) Asset Purchase Agreement, dated August 8, 2019, by and between Broadcom Inc. and Registrant. 8-K 000-17781 2.01 8/8/2019 3.01 Amended and Restated Certificate of Incorporation of Registrant, and all amendments thereto. X 3.02 Amended and Restated Bylaws of Registrant. 8-K 000-17781 3.02 11/4/2019 3.03 Certificate of Elimination of Series A Junior Preferred Stock. 10-K 000-17781 3.06 5/28/2020 4.01 Form of Common Stock Certificate. 10-K 000-17781 4.01 5/28/2020 4.02 Description of Securities. 10-K 000-17781 4.02 5/28/2020 4.03 Indenture, dated September 16, 2010, between Registrant and Wells Fargo Bank, National Association, as trustee. 8-K 000-17781 4.01 9/16/2010 4.04 Form of Global Note for Symantec’s 3.950% Senior Notes due 2022 (contained in Exhibit No. 4.02 of Form 8-K). 8-K 000-17781 4.04 6/14/2012 4.05 Investment Agreement, dated as of February 3, 2016, by and among Registrant and Silver Lake Partners IV Cayman (AIV II), L.P. 8-K 000-17781 10.01 2/9/2016 4.06 First Amendment to Investment Agreement, dated as of March 2, 2016, by and among Registrant and Silver Lake Partners IV Cayman (AIV II), L.P. 8-K 000-17781 10.01 3/7/2016 4.07 Investment Agreement, dated as of June 12, 2016, by and among Registrant, Bain Capital Fund XI, L.P., Bain Capital Europe Fund IV, L.P. and Silver Lake Partners IV Cayman (AIV II), L.P. (including the form of Indenture attached as Exhibit A thereto). 8-K 000-17781 2.02 6/14/2016 4.08 Amendment to Investment Agreement, dated as of July 31, 2016, by and among Registrant, Bain Capital Fund XI, L.P., Bain Capital Europe Fund IV, L.P. and Silver Lake Partners IV Cayman (AIV II), L.P. 10-Q 000-17781 2.03 8/5/2016 4.09 Base Indenture, dated as of February 9, 2017, between Registrant and Wells Fargo Bank, National Association, as trustee. 8-K 000-17781 4.01 2/9/2017 73 Table of Contents Exhibit Number Incorporated by Reference Filed Herewith Exhibit Description Form File No. Exhibit Filing Date 4.10 First Supplemental Indenture related to the 5% Senior Notes due 2025, dated as of February 9, 2017, between Registrant and Wells Fargo Bank, National Association, as trustee (including form of 5.00% Senior Note due 2025). 8-K 000-17781 4.02 2/9/2017 4.11 Third Amendment to Investment Agreement, dated November 11, 2019, by and between NortonLifeLock Inc. and Silver Lake Partners IV Cayman (AIV II), L.P., SLP IV Seal Holdings, L.P. and SLP IV Seal II Holdings, L.P. 8-K 000-17781 10.01 11/12/2019 4.12 Second Amendment to Investment Agreement, dated November 11, 2019, by and between NortonLifeLock Inc. and BC Bearcat SPV, LP, BCIP Venture Associates, BCIP Venture Associates-B, BCIP Associates IV (US), L.P., BCIP Associates IV-B (US), L.P., BCIP T Associates IV (US), 8-K 000-17781 10.02 11/12/2019 4.13 Indenture, dated as of February 4, 2020, by and between Registrant and Wells Fargo Bank, National Association, as trustee (including the form of 2.00% Convertible Senior Notes Due 2022). 10-K 000-17781 4.14 5/28/2020 4.14 Indenture, dated as of February 4, 2020, by and between Registrant and Wells Fargo Bank, National Association, as trustee (including the form of 2.500% Convertible Senior Notes Due 2022). 10-K 000-17781 4.15 5/28/2020 10.01(*) Form of Indemnification Agreement for Officers, Directors and Key Employees (form for agreements entered into between January 17, 2006 and March 6, 2016). 8-K 000-17781 10.01 1/23/2006 10.02(*) Form of Indemnification Agreement for Officers, Directors and Key Employees, as amended (form for agreements entered into after March 6, 2016). 8-K 000-17781 10.03 3/7/2016 10.03(*) Registrant’s Deferred Compensation Plan, restated and amended January 1, 2010, as adopted December 15, 2009. 10-K 000-17781 10.05 5/24/2010 10.04(*) Registrant’s 2000 Director Equity Incentive Plan, as amended. 10-Q 000-17781 10.01 11/1/2011 10.05(*) Registrant’s 2008 Employee Stock Purchase Plan, as amended. 10-Q 000-17781 10.06 2/7/2020 10.06(*) Registrant’s 2013 Equity Incentive Plan, as amended. 8-K 000-17781 10.01 12/3/2018 10.07(*) Forms of award agreements under 2013 Equity Incentive Plan. 10-K 000-17781 10.10 10/26/2018 10.08(*) Form of FY2 1 Performance Based Restricted Stock Unit Award Agreements under 2013 Equity Incentive Plan 10-Q 000-17781 10.03 8/6/2020 10.09(*) Form of FY22 Performance Based Restricted Stock Unit Award Agreements under 2013 Equity Incentive Plan X 10.10(*) Form of Amended and Restated Restricted Stock Unit Award Agreements under 2013 Equity Incentive Plan X 74 Table of Contents Exhibit Number Incorporated by Reference Filed Herewith Exhibit Description Form File No. Exhibit Filing Date 10.11 Amended and Restated Credit Agreement, effective as of August 1, 2016, among Registrant, the lenders party thereto (the Lenders), Wells Fargo Bank, National Association, as Term Loan A-1/Revolver Administrative Agent and Swingline Lender, JPMorgan Chase Bank, N.A., as Term Loan A-2 Administrative Agent, JPMorgan Chase Bank, N.A., Merrill Lynch, Pierce, Fenner & Smith, Incorporated, Barclays Bank PLC, Citigroup Global Markets Inc., Wells Fargo Securities, LLC, Royal Bank of Canada and Mizuho Bank, Ltd., as Lead Arrangers and Joint Bookrunners in respect of the Term A-2 Facility, Barclays Bank PLC, Citibank, N.A., Wells Fargo Bank, National Association, Royal Bank of Canada, Mizuho Bank, Ltd. And TD Securities (USA) LLC, as Co-Documentation Agents in respect of the Term A-2 Facility, and Bank of America, N.A., as Syndication Agent in respect of Term A-2 Facility. 10-Q 000-17781 4.03 8/5/2016 10.12 Term Loan Agreement, dated as of August 1, 2016, among Registrant, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America, N.A., as Syndication Agent, and Barclays Bank PLC, Citibank, N.A., Wells Fargo Bank, National Association, Royal Bank of Canada, Mizuho Bank, Ltd., and TD Securities (USA) LLC, as Co-Documentation Agents, JPMorgan Chase Bank, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Bank, PLC, Citigroup Global Markets Inc., Wells Fargo Securities, LLC, Royal Bank of Canada and Mizuho Bank, Ltd., as Joint Lead Arrangers and Joint Bookrunners. 10-Q 000-17781 4.05 8/5/2016 10.13 Amendment Agreement, dated as of July 18, 2016, by and among Registrant, Symantec Operating Corporation, the Lenders and the New Term Lenders, Wells Fargo Bank, National Association, and JPMorgan Chase Bank, N.A. 10-Q 000-17781 4.02 8/5/2016 10.14 Assignment and Assumption, dated October 3, 2016, to the Term Loan Agreement dated as of August 1, 2016, among Registrant, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America, N.A., as Syndication Agent, and Barclays Bank PLC, Citibank, N.A., Wells Fargo Bank, National Association, Royal Bank of Canada, Mizuho Bank, Ltd., and TD Securities (USA) LLC, as Co-Documentation Agents, JPMorgan Chase Bank, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Bank, PLC, Citigroup Global Markets Inc., Wells Fargo Securities, LLC, Royal Bank of Canada and Mizuho Bank, Ltd., as Joint Lead Arrangers and Joint Bookrunners. 10-Q 000-17781 4.01 2/3/2017 75 Table of Contents Exhibit Number Incorporated by Reference Filed Herewith Exhibit Description Form File No. Exhibit Filing Date 10.15 First Amendment, dated December 12, 2016, to the Term Loan Agreement, dated as of August 1, 2016, among Registrant, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America, N.A., as Syndication Agent, and Barclays Bank PLC, Citibank, N.A., Wells Fargo Bank, National Association, Royal Bank of Canada, Mizuho Bank, Ltd., and TD Securities (USA) LLC, as Co-Documentation Agents, JPMorgan Chase Bank, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Bank, PLC, Citigroup Global Markets Inc., Wells Fargo Securities, LLC, Royal Bank of Canada and Mizuho Bank, Ltd., as Joint Lead Arrangers and Joint Bookrunners. 10-Q 000-17781 4.02 2/3/2017 10.16 First Amendment, dated December 12, 2016, to the Credit Agreement, effective as of August 1, 2016, among the Registrant, the lenders party thereto (the Lenders), Wells Fargo Bank, National Association, as Term Loan A-1/Revolver Administrative Agent and Swingline Lender, JPMorgan Chase Bank, N.A., as Term Loan A-2 Administrative Agent, JPMorgan Chase Bank, N.A., Merrill Lynch, Pierce, Fenner & Smith, Incorporated, Barclays Bank PLC, Citigroup Global Markets Inc., Wells Fargo Securities, LLC, Royal Bank of Canada and Mizuho Bank, Ltd., as Lead Arrangers and Joint Bookrunners in respect of the Term A-2 Facility, Barclays Bank PLC, Citibank, N.A., Wells Fargo Bank, National Association, Royal Bank of Canada, Mizuho Bank, Ltd. And TD Securities (USA) LLC, as Co-Documentation Agents in respect of the Term A-2 Facility, and Bank of America, N.A., as Syndication Agent in respect of Term A-2 Facility. 10-Q 000-17781 4.03 2/3/2017 10.17(*) Registrant’s Senior Executive Incentive Plan, as amended and restated. 8-K 000-17781 10.03 10/25/2013 10.18(*) Registrant’s Executive Retention Plan, as amended and restated. X 10.19(*) Registrant’s Executive Severance Plan. X 10.20(*) FY2 1 Executive Annual Incentive Plan - Chief Executive Officer. 10-Q 000-17781 10.01 8/6/2020 10.21(*) FY2 1 Executive Annual Incentive Plan - Senior Vice President and Executive Vice President. 10-Q 000-17781 10.02 8/6/2020 10.22(§§) Assignment of Copyright and Other Intellectual Property Rights, by and between Peter Norton and Peter Norton Computing, Inc., dated August 31, 1990. S-4 33-35385 10.37 6/13/1990 10.23(†) Environmental Indemnity Agreement, dated April 23, 1999, between Veritas and Fairchild Semiconductor Corporation, included as Exhibit C to that certain Agreement of Purchase and Sale, dated March 29, 1999, between Veritas and Fairchild Semiconductor of California. S-1/A 333-83777 10.27 8/6/1999 10.24 Amendment, dated June 20, 2007, to the Amended and Restated Agreement Respecting Certain Rights of Publicity dated as of August 31, 1990, by and between Peter Norton and Registrant. 10-Q 000-17781 10.01 8/7/2007 76 Table of Contents Exhibit Number Incorporated by Reference Filed Herewith Exhibit Description Form File No. Exhibit Filing Date 10.25 Second Amendment and Limited Waiver to Amended and Restated Credit Agreement dated as of June 22, 2018. 10-Q 000-17781 10.01 11/16/2018 10.26 Second Amendment and Limited Waiver to Term Loan dated as of June 22, 2018. 10-Q 000-17781 10.02 11/16/2018 10.27(*) Registrant’s Offer Letter with Natalie M. Derse dated June 19, 2020 10-Q 000-17781 10.01 7/8/2020 10.28 Credit Agreement, effective as of November 4, 2019, among NortonLifeLock Inc., the issuing banks and lenders party thereto (the Lenders), Wells Fargo Bank, National Association, as Revolver Administrative Agent and Swingline Lender, JPMorgan Chase Bank, N.A., as Term Loan Administrative Agent and Collateral Agent, JPMorgan Chase Bank, N.A., Wells Fargo Securities, LLC, BofA Securities, Inc., Mizuho Bank, Ltd., Barclays Bank PLC, and The Bank of Nova Scotia, as Lead Arrangers and Joint Bookrunners, Bank of America, N.A., Mizuho Bank, Ltd., Barclays Bank PLC and The Bank of Nova Scotia, as Syndication Agents and and Goldman Sachs Bank USA, HSBC Securities (USA) Inc., MUFG Bank, Ltd., SunTrust Robinson Humphrey, Inc., Citizens Bank, N.A., BMO Capital Markets Corp., BNP Paribas Securities Corp. and Santander Bank, N.A., as Co-Documentation Agents. 8-K 000-17781 10.01 11/4/2019 10.29 APA Letter Agreement dated October 1, 2020 by and between the Company and Broadcom Inc. 8-K 000-17781 10.01 7/8/2020 10.30(+) Stock Purchase Agreement dated December 7, 2020 between the Company and Alpaca HoldCo GmbH, Alpaca TopCo GmbH. 10-Q 000-17781 10.01 2/5/2021 10.31 First Amendment, effective as of May [7], 2021, among NortonLifeLock Inc., JPMorgan Chase Bank, N.A., as Term Loan Administrative Agent, Wells Fargo Bank, National Association, as Revolver Administrative Agent, and the lenders and other parties party thereto. X 21.01 Subsidiaries of Registrant. X 23.01 Consent of Independent Registered Public Accounting Firm. X 24.01 Power of Attorney (see Signature page to this annual report). X 31.01 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X 31.02 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X 32.01(††) Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X 32.02(††) Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X 77 Table of Contents Exhibit Number Incorporated by Reference Filed Herewith Exhibit Description Form File No. Exhibit Filing Date 101.00 The following financial information from NortonLifeLock Inc.'s Annual Report on Form 10-K for the fiscal year ended April 2, 2021 are formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Stockholders’ Equity (Deficit), (vi) Consolidated Statements of Cash Flows, and (vi) Notes to the Consolidated Financial Statements, tagged as blocks of text and including detailed tags. X 104.00 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) X * Indicates a management contract, compensatory plan or arrangement. ** Filed by LifeLock, Inc. § The exhibits and schedules to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant agrees to furnish supplementally copies of any such exhibits and schedules to the SEC upon request. §§ Paper filing. † Filed by Veritas Software Corporation. †† 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. + Certain portions of this document that constitute confidential information have been redacted in accordance with Regulations S-K, Item 601(b)(10). Item 16. Form 10-K Summary None. 78 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Mountain View, State of California, on the 21st day of May 2021. NORTONLIFELOCK INC. By: /s/ Vincent Pilette Vincent Pilette Chief Executive Officer and Director KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Vincent Pilette, Natalie Derse, and Bryan Ko, and each or any of them, his or her attorneys-in-fact, each with the power of substitution, for him or her in any and all capacities to sign any and all amendments to this report on Form 10-K and any other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that such attorneys-in-fact, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. This Power of Attorney may be signed in several counterparts. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated below. Signature Title Date /s/ Vincent Pilette Chief Executive Officer and Director (Principal Executive Officer) May 21, 2021 Vincent Pilette /s/ Natalie Derse Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) May 21, 2021 Natalie Derse /s/ Frank E. Dangeard Chairman of the Board May 21, 2021 Frank E. Dangeard /s/ Sue Barsamian Director May 21, 2021 Sue Barsamian /s/ Eric K. Brandt Director May 21, 2021 Eric K. Brandt /s/ Nora Denzel Director May 21, 2021 Nora Denzel /s/ Peter A. Feld Director May 21, 2021 Peter A. Feld /s/ Kenneth Y. Hao Director May 21, 2021 Kenneth Y. Hao /s/ Emily Heath Director May 21, 2021 Emily Heath /s/ Sherrese M. Smith Director May 21, 2021 Sherrese M. Smith 79