What changed in this filing

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Item 1. Financial Statements

2022-11-09 compared with 2022-08-05 · 415 added, 207 removed, 542 unchanged (53% of the section changed)

Financial Statements (Unaudited)

NORTONLIFELOCK INC.

GEN DIGITAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in millions, except par value per share amounts)

July 1, 2022 April 1, 2022

September 30, 2022 April 1, 2022

Current assets:

31 unchanged sentences

3,000 shares authorized;

571 and 580 shares issued and outstanding as of July 1, 2022 and April 1, 2022, respectively

661 and 582 shares issued and outstanding as of September 30, 2022 and April 1, 2022, respectively

Accumulated other comprehensive income (loss) ( 15 ) ( 4 )

3 unchanged sentences

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

NORTONLIFELOCK INC.

GEN DIGITAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in millions, except per share amounts)

Three Months Ended

July 1, 2022 July 2, 2021

Three Months Ended Six Months Ended

September 30, 2022 October 1, 2021 September 30, 2022 October 1, 2021

Net revenues $ 748 $ 692 $ 1,455 $ 1,378

17 unchanged sentences

Weighted-average shares outstanding:

590 582 583 581

595 591 599 591

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

NORTONLIFELOCK INC.

GEN DIGITAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHEN SIVE INCOME (LOSS)

(Unaudited, in millions)

Three Months Ended

July 1, 2022 July 2, 2021

Three Months Ended Six Months Ended

September 30, 2022 October 1, 2021 September 30, 2022 October 1, 2021

Net income (loss) $ 69 $ 333 $ 269 $ 514

Other comprehensive income (loss), net of taxes:

Foreign currency translation adjustments ( 40 ) 2

Foreign currency translation gain (loss) 29 ( 15 ) ( 11 ) ( 13 )

Other comprehensive income (loss), net of taxes 29 ( 15 ) ( 11 ) ( 13 )

1 unchanged sentence

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

NORTONLIFELOCK INC.

GEN DIGITAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited, in millions, except share amounts)

Three months ended July 1, 2022

Three months ended September 30, 2022

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 July 1, 2022 571 $ 1,479 $ ( 44 ) $ ( 1,734 ) $ ( 299 )

Net income (loss) — — — 69 69

Other comprehensive income (loss), net of taxes — — 29 — 29

Common stock issued under employee stock incentive plans 1 6 — — 6

Repurchases of common stock ( 5 ) ( 104 ) — — ( 104 )

Cash dividends declared ($ 0.125 per share of common stock) and dividend equivalents accrued

— ( 73 ) — — ( 73 )

Stock-based compensation — 29 — — 29

Extinguishment of convertible debt — ( 100 ) — — ( 100 )

Merger consideration 94 2,141 — — 2,141

Balance as of September 30, 2022 661 $ 3,378 $ ( 15 ) $ ( 1,665 ) $ 1,698

Six months ended September 30, 2022

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 April 1, 2022 582 $ 1,851 $ ( 4 ) $ ( 1,940 ) $ ( 93 )

7 unchanged sentences

Stock-based compensation — 53 — — 53

Extinguishment of convertible debt — ( 100 ) — — ( 100 )

Cumulative effect adjustment from adoption of ASU 2020-06 (1)

— ( 7 ) — 6 ( 1 )

Merger consideration 94 2,141 — — 2,141

Balance as of September 30, 2022 661 $ 3,378 $ ( 15 ) $ ( 1,665 ) $ 1,698

(1) Effective on April 2, 2022, the Company adopted ASU 2020-06 ( Debt with Conversion and Other Options, ASC 470-20 ) using a modified retrospective method.

See Note 2 for further information about this recently adopted guidance.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

GEN DIGITAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited, in millions, except share amounts)

Three months ended October 1, 2021

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 July 2, 2021 581 $ 2,049 $ 49 $ ( 2,595 ) $ ( 497 )

Three months ended July 2, 2021

Net income (loss) — — — 333 333

Other comprehensive income (loss), net of taxes — — ( 15 ) — ( 15 )

Common stock issued under employee stock incentive plans 1 7 — — 7

Cash dividends declared ($ 0.125 per share of common stock) and dividend equivalents accrued

— ( 73 ) — — ( 73 )

Stock-based compensation — 13 — — 13

Balance as of October 1, 2021 582 $ 1,996 $ 34 $ ( 2,262 ) $ ( 232 )

Six months ended October 1, 2021

Common Stock and Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings (Accumulated Deficit) Total Stockholders’ Equity (Deficit)

9 unchanged sentences

Extinguishment of convertible debt — ( 112 ) — — ( 112 )

Balance as of July 2, 2021 581 $ 2,049 $ 49 $ ( 2,595 ) $ ( 497 )

(1) Effective on April 2, 2022, the Company adopted ASU 2020-06 ( Debt with Conversion and Other Options, ASC 470-20 ) using a modified retrospective method.

See Note 2 for further information about this recently adopted guidance.

Balance as of October 1, 2021 582 $ 1,996 $ 34 $ ( 2,262 ) $ ( 232 )

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

NORTONLIFELOCK INC.

GEN DIGITAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in millions)

Three Months Ended

July 1, 2022 July 2, 2021

Six Months Ended

September 30, 2022 October 1, 2021

OPERATING ACTIVITIES:

Net income (loss) $ 200 $ 181

Net income $ 269 $ 514

Amortization and depreciation 78 71

Impairments and write-offs of current and long-lived assets ( 5 ) 3

Stock-based compensation expense 53 33

1 unchanged sentence

Loss (gain) on extinguishment of debt 9 5

Gain on sale of property — ( 175 )

Non-cash operating lease expense 11 11

11 unchanged sentences

Purchases of property and equipment ( 4 ) ( 2 )

Payments for acquisitions, net of cash acquired ( 6,550 ) ( 40 )

Proceeds from the maturities and sales of short-term investments 4 4

Proceeds from the sale of property — 355

Other 4 ( 4 )

13 unchanged sentences

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

NORTONLIFELOCK INC.

GEN DIGITAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Description of Business and Significant Accounting Policies

NortonLifeLock, Inc.

is a global, leading provider of consumer Cyber Safety solutions.

On August 10, 2021, we announced a transaction under which we intended to acquire the entire issued and to be issued ordinary share capital of Avast plc, a public company incorporated in England and Wales and a global leader of digital security and privacy headquartered in Prague, Czech Republic (Avast and such transaction, the Merger).

On September 12, 2022, we completed the Merger with Avast, and its results of operations have been included in our Condensed Consolidated Statements of Operations beginning September 12, 2022.

See Note 4 for further information about this business combination.

In connection with the Merger, effective November 7, 2022, we changed our corporate name from NortonLifeLock Inc.

to Gen Digital Inc.

Gen is a global, leading provider of consumer Cyber Safety solutions.

Our portfolio provides protection across three Cyber Security categories:

5 unchanged sentences

These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended April 1, 2022.

The results of operations for the three months ended July 1, 2022 are not necessarily indicative of the results expected for the entire fiscal year.

The results of operations for the three and six months ended September 30, 2022 are not necessarily indicative of the results expected for the entire fiscal year.

Fiscal calendar

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

Unless otherwise stated, references to three month periods in this report relate to fiscal periods ended July 1, 2022 and July 2, 2021.

The three months ended July 1, 2022 and July 2, 2021 each consisted of 13 weeks.

Unless otherwise stated, references to three and six month periods in this report relate to fiscal periods ended September 30, 2022 and October 1, 2021.

The three and six months ended September 30, 2022 and October 1, 2021 each consisted of 13 and 26 weeks, respectively.

Our 2023 fiscal year consists of 52 weeks and ends on March 31, 2023.

7 unchanged sentences

Significant accounting policies

With the exception of those discussed in Note 2, there have been no material changes to our significant accounting policies as of and for the three months ended July 1, 2022, as compared to the significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended April 1, 2022.

With the exception of those discussed in Note 2, there have been no material changes to our significant accounting policies as of and for the three and six months ended September 30, 2022, as compared to the significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended April 1, 2022.

Recent Accounting Standards

12 unchanged sentences

The net effect of these adjustments was recorded as an increase to retained earnings as of April 2, 2022.

Recently issued authoritative guidance not yet adopted

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.

As of September 30, 2022, we have fully transitioned to SOFR and no longer use LIBOR on any debt or contractual arrangements that are outstanding.

Any future contracts, hedging relationships and other transactions will be SOFR denominated.

Although there are several other new accounting pronouncements issued or proposed by the 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 Condensed Consolidated Financial Statements and disclosures .

2 unchanged sentences

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.

We continue to actively market the remaining properties for sale;

however, during fiscal 2023, the commercial real estate market continues to be 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 July 1, 2022, these assets are classified as assets held for sale.

During the three months ended July 1, 2022 , there were no impairments because the fair value of the properties less costs to sell either equals or exceeds their carrying value.

However, the commercial real estate market continues to be adversely affected by the COVID-19 pandemic, which delayed the expected timing of such sales.

During the three months ended September 30, 2022, we determined certain land and buildings in Mountain View, California, which were previously reported as assets held for sale as of April 1, 2022, no longer qualify as held for sale classification.

As a result, we reclassified the aggregate $ 26 million carrying value from assets held for sale to property and equipment, net, in our Condensed Consolidated Balance Sheets and recorded an immaterial catch-up depreciation adjustment, which is included in our Condensed Consolidated Statements of Operations.

We continue to actively market the remaining property for sale.

We have taken into consideration the current real estate values and demand and continue to execute plans to sell this property.

As of September 30, 2022, this property remains classified as assets held for sale.

During the three and six months ended September 30, 2022 , there were no impairments because the fair value of the properties less costs to sell either equals or exceeds their carrying value.

Business Combinations

Proposed Merger with Avast

On August 10, 2021, we announced a transaction under which we intend to acquire the entire issued and to be issued ordinary share capital of Avast plc, a public company incorporated in England and Wales and a global leader of digital security and privacy headquartered in Prague, Czech Republic (Avast and such transaction, the Proposed Merger).

The Proposed Merger will be implemented by means of a court-sanctioned scheme of arrangement under the UK Companies Act 2006, as amended (the Scheme), and remains subject to a certain number of conditions.

Under the terms of the Proposed Merger, Avast shareholders will be entitled to elect to receive, for each ordinary share of Avast held, in respect of their entire holding of Avast shares, either:

Merger with Avast

On August 10, 2021, we announced a transaction under which we intended to acquire the entire issued and to be issued share capital of Avast plc, a public company incorporated in England and Wales (Avast and such transaction, the Merger).

The Merger was implemented by means of a court-sanctioned scheme of arrangement under Part 26 of the UK Companies Act 2006 (the Scheme).

Under the terms of the Merger, Avast shareholders were entitled to elect to receive, for each ordinary share of Avast held, in respect of their entire holding of Avast shares, either:

(i) $ 7.61 in cash and 0.0302 of a new share of our common stock (such option, the Majority Cash Option);

or (ii) $ 2.37 in cash and 0.1937 of a new share of our common stock (such option, the Majority Stock Option).

Based on our undisturbed closing share price of $ 27.20 on July 13, 2021, and depending on the Avast shareholder elections, the estimated purchase price range for the Avast shares under the Proposed Merger is $ 8.1 billion to $ 8.6 billion.

Each of the directors of Avast who holds shares has undertaken to elect for the Majority Stock Option in respect of their entire benefi cial holdings of Avast shares.

We plan to finance the Proposed Merger with existing cash, cash to be generated by operations and new debt financing.

In conjunction with the Proposed Merger, on August 10, 2021, we entered into an agreement (as amended, the Interim Facilities Agreement) with certain financial institutions, in which they agreed to provide us with (i) a $ 3,600 million term loan interim facility B (the Interim Facility B), (ii) $ 750 million term loan interim facility A1 (the Interim Facility A1) and $ 3,500 million term loan interim facility A2 (the Interim Facility A2), and (iii) a $ 1,500 million interim revolving facility (the Interim Revolving

Facility) (collectively, the Interim Facilities) and a commitment letter (as amended, the Commitment Letter) with certain financial institutions, in which they agreed to provide us with financing no less than the financing available under the Interim Facilities (the Definitive Facilities and, together with the Interim Facilities, the Facilities) to finance the cash consideration payable in connection with the Proposed Merger.

The Definitive Facilities will be financed by a syndicate of lenders led by Bank of America, N.A.

and Wells Fargo Bank N.A.

On January 28, 2022, Bank of America N.A.

and Wells Fargo Bank N.A.

agreed to arrange, on a best efforts basis, additional term loans under the Definitive Facilities in an amount up to $ 500 million.

The Interim Facilities Agreement contains, and any definitive financing documentation for the Definitive Facilities entered into in connection with the Commitment Letter (the Facilities Agreement) will contain, customary representations and warranties, events of default and covenants for transactions of this type.

The Facilities Agreement will replace the existing credit facility agreement upon the close of the transaction.

In conjunction with the Proposed Merger, on August 10, 2021, we entered into a Co-operation Agreement (the Co-operation Agreement) with Nitro Bidco Limited, our wholly-owned subsidiary (Bidco), and Avast, pursuant to which we and Bidco agreed to, among other things, use all reasonable endeavors for the purposes of obtaining any regulatory authorizations which are required to implement the Proposed Merger, and we, Bidco and Avast agreed to cooperate with each other in preparing required transaction documents and certain other matters in connection with the Proposed Merger.

The Co-operation Agreement also contains certain termination rights.

The Co-operation Agreement also provides that, subject to certain exceptions, if we fail to receive approval from the U.K.

Competition and Markets Authority and cannot consummate the Proposed Merger, we may be required to pay Avast a break fee of up to $ 200 million.

The Proposed Merger was approved by our Board of Directors and by our shareholders, the Board of Directors and shareholders of Avast, and regulators including the Federal Trade Commission under the U.S.

Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the HSR Act) and in Europe, the German Federal Cartel Office and the Spanish National Markets and Competition Commission.

On August 3, 2022, the U.K.

Competition and Markets Authority (CMA) provisionally cleared the Proposed Merger.

Subject to final approval by the CMA and changes based on operational considerations mutually agreed upon by the parties and other requirements, the closing is anticipated to be between mid-September to early October 2022, given the CMA’s published schedule and the currently scheduled U.K.

Court Hearing to approve the scheme.

Each Avast Director who held Avast shares elected for the Majority Stock Option in respect to their entire beneficial holdings of Avast shares.

The Merger was approved by our Board of Directors and by our shareholders, the Board of Directors and shareholders of Avast, and regulators including the Federal Trade Commission under the U.S.

Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the HSR Act) and in Europe, the German Federal Cartel Office, the Spanish National Markets and Competition Commission and the U.K.

Competition and Markets Authority.

Closing of Merger with Avast

On September 12, 2022, we completed the Merger with Avast, and as a result, we have changed our corporate name to Gen Digital Inc.

and have become dual headquartered in Tempe, Arizona and Prague, Czech Republic.

Avast is a global leader in consumer cybersecurity, offering a comprehensive range of digital security and privacy products and services that protect and enhance users’ online experiences.

Combining Avast’s strength in privacy and our strength in identity will create a broad and complementary consumer product portfolio beyond core security and towards adjacent trust-based solutions.

The Merger will provide greater geographic diversification and access to a larger user base and will accelerate the transformation of global consumer cyber safety.

Upon completion of the Merger, we acquired all of the outstanding common stock of Avast.

Based on the election of the Avast shareholders, we paid cash consideration of approximately $ 6,913 million and issued 94,201,233 shares o f our common stock to Avast shareholders.

As a result, immediately following the closing of the Merger, Avast shareholders owned approximately 14 % of our outstanding common stock.

The fair value of our common stock provided in exchange for all outstanding ordinary shares of Avast was approximately $ 2,141 million.

Consideration transferred

The total consideration for the Merger with Avast was approximately $ 8,691 million, net of cash acquired, and consisted of the following:

(In millions) September 12, 2022

Cash and equity consideration for outstanding Avast common shares (1)

Repayment of outstanding Avast debt (2)

Total consideration 9,054

Cash acquired 363

Net consideration transferred $ 8,691

(1) Represents the total value of cash paid and our common stock issued to Avast shareholders pursuant to the Majority Cash/Stock Option in the Scheme.

(2) Represents the cash consideration paid concurrent with the close of the Merger to retire certain Avast debt, including repayment of the associated principal, accrued interest, premiums and other costs.

Fair value of assets acquired and liabilities assumed

We accounted for the Merger as a business combination.

The identifiable assets acquired and liabilities assumed of Avast were recorded at their estimated fair values as of the acquisition date and consolidated with those of our company.

The allocation of purchase price requires management to make significant estimates and assumptions in determining the fair values of the assets acquired and liabilities assumed, especially with respect to intangible assets.

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

Our preliminary allocation of the aggregate purchase price, based on the estimated fair values of the assets acquired and liabilities assumed, as of the acquisition date, is as follows:

(In millions) September 12, 2022

Accounts receivable $ 61

Other current assets 18

Property and equipment 31

Operating lease assets 18

Intangible assets 2,383

Goodwill 7,267

Other long-term assets 10

Total assets acquired 9,788

Current liabilities 180

Contract liabilities 508

During the three months ended July 1, 2022, we recognized $ 508 million from the contract liabilities balance as of April 1, 2022.

During the three months ended July 2, 2021, we recognized $ 498 million from the contract liabilities balance as of April 2, 2021.

Operating lease liabilities 18

Long-term deferred tax liabilities 345

Other long-term obligations 46

Total liabilities assumed 1,097

Total purchase price $ 8,691

The allocation of the purchase price is based upon a preliminary valuation, and as additional information becomes available, our estimates and assumptions may be subject to refinement within the measurement period, which may be up to one year from the acquisition date.

Adjustments to the purchase price may require adjustments to goodwill prospectively.

The primary areas of preliminary purchase price allocation that are not yet finalized include intangible assets and certain tax and litigation matters.

The preliminary goodwill of $ 7,267 million represents the excess of the consideration transferred over the fair values of the assets acquired and liabilities assumed.

It is attributable to the expected synergies of the Merger, including future cost savings from planned integration of infrastructure, facilities, personnel and systems, and other benefits that are anticipated to be generated by combining both companies.

Goodwill is allocated to our single reportable segment.

Substantially all of the goodwill recognized is expected to be deductible for U.S.

tax purposes.

See Note 6 for further information on goodwill.

Preliminary identified intangible assets and their respective useful lives, as of September 12, 2022, are as follows:

(In millions, except for useful lives) Fair Value Weighted-Average Estimated Useful Life

Customer relationships (1)

$ 1,055 7 years

Developed technology (2)

1,244 6 years

Finite-lived trade names (2)

Total identified intangible assets $ 2,383

(1) Customer relationships were valued using the multi-period excess earnings method, which is a form of the income approach that considers customer retention rate.

(2) Developed technology and finite-lived trade names were valued using the relief-from-royalty method, which is a form of the income approach that considers technology migration and probability of use, respectively.

In connection with the Merger, on September 12, 2022, we entered into the Amended and Restated Credit Agreement (Credit Agreement) with certain financial institutions, in which they agreed to provide us with (i) a $ 1,500 million revolving credit facility (Revolving Facility), a $ 3,910 million term loan A facility (Term A Facility), (iii) a $ 3,690 million term loan B facility (Term B Facility) and (iv) a $ 750 million tranche A bridge loan (Bridge Loan) (collectively, the senior credit facilities).

The Bridge Loan was undrawn and immediately terminated upon the Merger’s close.

The proceeds were or will be used (i) to finance the cash consideration payable for the Merger, (ii) to repay in full and terminate all commitments under Avast’s credit facility, (iii) to pay expenses relating to the Merger, (iv) to add cash to the balance sheet and (v) for general corporate purposes and on-going business activities.

See Note 10 for further information about these debt instruments and the related debt covenants.

In connection with the financing provided for Term B Facility, we incurred customary ticking fees with respect to the undrawn commitments that began accruing on the 61st day post-syndication.

The ticking fees were payable at the per annum rate of (i) 50 % of the interest rate margin for adjusted SOFR (or applicable replacement rate) loans for 61-90 days from January 28, 2022, the syndication date, and (ii) 100 % of the interest rate margin for adjusted SOFR (or applicable replacement rate) loans on and after 91 days from the syndication date.

Ticking fees were payable on the closing date of the transaction.

During the three and six months ended September 30, 2022, we paid $ 31 million in ticking fees.

Impact on operating results

Our results of operations for the three and six months ended September 30, 2022 include $ 48 million of net revenues and $ 1 million of loss before income taxes attributable to Avast beginning September 12, 2022.

Additionally, we recognized transaction and integration costs of $ 58 million and $ 21 million for the three months ended September 30, 2022 and October 1, 2021, respectively, and $ 66 million and $ 21 million for the six months ended September 30, 2022 and October 1, 2021, respectively.

These costs were primarily associated with legal and professional services and other regulatory closing fees, which were expensed as incurred and included in general and administrative expenses in our Condensed Consolidated Statements of Operations.

On the closing date of the Merger, we also incurred $ 145 million of debt issuance costs associated with the senior credit facilities, of which $ 132 million was capitalized and recorded as a reduction of outstanding debt balances and $ 10 million was capitalized and included in Other long-term assets in our Condensed Consolidated Balance Sheets.

The remaining $ 3 million was capitalized but immediately extinguished in conjunction with the termination of the Bridge Loan.

Unaudited pro forma information

The following unaudited pro forma financial information represents the combined historical results for the three and six months ended September 30, 2022 and October 1, 2021, as if the Merger had been completed on April 3, 2021, the first day of fiscal 2022.

The results presented below include adjustments to conform Avast financial information, prepared in accordance with International Financial Reporting Standards (IFRS), to U.S.

GAAP as well as the impacts of material, nonrecurring pro forma adjustments, including amortization of acquired intangible assets, interest on debt issued to finance the Merger, and acquisition-related transaction costs, and the income tax effect of the other pro forma adjustments.

The unaudited pro forma results do not include any anticipated synergies or other expected benefits of the Merger.

The following table summarizes the unaudited pro forma financial information:

Three Months Ended Six Months Ended

(In millions) September 30, 2022 October 1, 2021 September 30, 2022 October 1, 2021

Net revenues $ 930 $ 925 $ 1,873 $ 1,845

Net income (loss) $ ( 62 ) $ 262 $ 47 $ 376

The unaudited pro forma financial information is provided for informational purposes only and are not indicative of future operations or results that would have been achieved had the Merger been completed as of the beginning of fiscal 2022.

Fiscal 2022 acquisition

On September 15, 2021, we completed an acquisition of an online reputation management and digital privacy solutions company for total aggregate consideration of $ 39 million, net of $ 1 million cash acquired.

The purchase price was primarily allocated to intangible assets and goodwill.

Our estimates and assumptions were subject to refinement within the measurement period, which is up to one year from the acquisition date.

Adjustments to the purchase price during the measurement period required adjustments to be made to goodwill.

The measurement period ended on September 14, 2022.

Contract liabilities

During the three and six months ended September 30, 2022, we recognized $ 502 million and $ 875 million from the contract liabilities balances as of July 1, 2022 and April 1, 2022, respectively.

During the three and six months ended October 1, 2021, we recognized $ 506 million and $ 858 million from the contract liabilities balances as of July 2, 2021 and April 2, 2021, respectively.

Remaining performance obligations

Remaining performance obligations represent contract revenue that has not been recognized, which include contract liabilities and amounts that will be billed and recognized as revenue in future periods.

As of July 1, 2022, we had $ 783 million of remaining performance obligations, excluding customer deposit liabilities of $ 437 million, of which we expect to recognize approximately 94 % as revenue over the next 12 months.

As of September 30, 2022, we had $ 1,204 million of remaining performance obligations, excluding customer deposit liabilities of $ 480 million, of which we expect to recognize approximately 93 % as revenue over the next 12 months.

See Note 17 for tabular disclosures of disaggregated revenue by solution and geographic region.

3 unchanged sentences

Balance as of April 1, 2022 $ 2,873

Merger with Avast 7,267

Translation adjustments

Balance as of July 1, 2022 $ 2,861

Balance as of September 30, 2022 $ 10,126

Intangible assets, net

July 1, 2022 April 1, 2022

September 30, 2022 April 1, 2022

(In millions) Gross

9 unchanged sentences

Total intangible assets $ 3,930 $ ( 598 ) $ 3,332 $ 1,551 $ ( 528 ) $ 1,023

As a result of our Merger with Avast, we recorded $ 2,383 million of acquired intangible assets during the three months ended September 30, 2022.

See Note 4 for further information about this business combination.

Amortization expense for purchased intangible assets is summarized below:

Three Months Ended Condensed Consolidated Statements of Operations Classification

(In millions) July 1, 2022 July 2, 2021

Three Months Ended Six Months Ended Condensed Consolidated Statements of Operations Classification

(In millions) September 30, 2022 October 1, 2021 September 30, 2022 October 1, 2021

Customer relationships and other $ 29 $ 21 $ 50 $ 42 Operating expenses

1 unchanged sentence

Total $ 45 $ 32 $ 71 $ 63

As of July 1, 2022, future amortization expense related to intangible assets that have finite lives is as follows by fiscal year:

As of September 30, 2022, future amortization expense related to intangible assets that have finite lives is as follows by fiscal year:

(In millions)

1 unchanged sentence

Thereafter 720

Total $ 2,593

Supplementary Information

Cash and cash equivalents:

(In millions) July 1, 2022 April 1, 2022

(In millions) September 30, 2022 April 1, 2022

Cash $ 427 $ 609

2 unchanged sentences

Accounts receivable, net:

(In millions) July 1, 2022 April 1, 2022

(In millions) September 30, 2022 April 1, 2022

Accounts receivable $ 153 $ 121

2 unchanged sentences

Other current assets:

(In millions) July 1, 2022 April 1, 2022

(In millions) September 30, 2022 April 1, 2022

Prepaid expenses $ 127 $ 107

3 unchanged sentences

Property and equipment, net:

(In millions) July 1, 2022 April 1, 2022

(In millions) September 30, 2022 April 1, 2022

Land $ 14 $ 2

Computer hardware and software 489 462

6 unchanged sentences

Total property and equipment, net $ 108 $ 60

During the three months ended September 30, 2022, we reclassified $ 26 million of buildings and leasehold improvements, which were previously reported as held for sale as of April 1, 2022, to property and equipment, net.

Adjustments associated with catch-up depreciation were immaterial.

Refer to Note 3 for further information about our assets held for sale.

Other long-term assets:

(In millions) July 1, 2022 April 1, 2022

(In millions) September 30, 2022 April 1, 2022

Non-marketable equity investments $ 182 $ 178

4 unchanged sentences

Short-term contract liabilities:

(In millions) July 1, 2022 April 1, 2022

(In millions) September 30, 2022 April 1, 2022

Deferred revenue $ 1,117 $ 743

2 unchanged sentences

Other current liabilities:

(In millions) July 1, 2022 April 1, 2022

(In millions) September 30, 2022 April 1, 2022

Income taxes payable $ 232 $ 109

2 unchanged sentences

Accrued royalties 50 49

Accrued interest 44 32

Total other current liabilities $ 852 $ 639

Long-term income taxes payable:

(In millions) July 1, 2022 April 1, 2022

(In millions) September 30, 2022 April 1, 2022

Deemed repatriation tax payable $ 309 $ 437

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Other income (expense), net:

Three Months Ended

(In millions) July 1, 2022 July 2, 2021

Three Months Ended Six Months Ended

(In millions) September 30, 2022 October 1, 2021 September 30, 2022 October 1, 2021

Interest income $ 3 $ — $ 5 $ —

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Gain (loss) on early extinguishment of debt ( 9 ) — ( 9 ) ( 5 )

Gain on sale of properties — 175 — 175

Other 6 1 4 2

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Supplemental cash flow information:

Three Months Ended

(In millions) July 1, 2022 July 2, 2021

Six Months Ended

(In millions) September 30, 2022 October 1, 2021

Income taxes paid, net of refunds $ 295 $ 273

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Cash paid for amounts included in the measurement of operating lease liabilities $ 11 $ 14

Non-cash operating activities:

Operating lease assets obtained in exchange for operating lease liabilities $ 18 $ 35

Reduction of operating lease assets as a result of lease terminations and modifications $ 30 $ 8

Non-cash investing and financing activities:

Extinguishment of debt with borrowings from same creditors $ — $ 494

Non-cash consideration for the Merger with Avast $ 2,141 $ —

Financial Instruments and Fair Value Measurements

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The following table summarizes our financial instruments measured at fair value on a recurring basis:

July 1, 2022 April 1, 2022

September 30, 2022 April 1, 2022

(In millions) Fair Value Level 1 Level 2 Fair Value Level 1 Level 2

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Non-marketable equity investments

As of July 1, 2022 and April 1, 2022, the carrying value of our non-marketable equity investments was $ 178 million.

As of September 30, 2022 and April 1, 2022, the carrying value of our non-marketable equity investments was $ 182 million and $ 178 million, respectively.

Current and long-term debt

As of July 1, 2022 and April 1, 2022, the total fair value of our fixed rate debt was $ 1,597 million and $ 2,021 million, respectively.

As of September 30, 2022 and April 1, 2022, the total fair value of our fixed rate debt was $ 2,496 million and $ 2,021 million, respectively.

The fair value of our variable rate debt approximated its carrying value.

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The following summarizes our lease costs:

Three Months Ended

(In millions) July 1, 2022 July 2, 2021

Three Months Ended Six Months Ended

(In millions) September 30, 2022 October 1, 2021 September 30, 2022 October 1, 2021

Operating lease costs $ 3 $ 4 $ 7 $ 8

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Three Months Ended

July 1, 2022 July 2, 2021

September 30, 2022 October 1, 2021

Weighted-average remaining lease term 3.2 years 4.9 years

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See Note 7 for cash flow information related to our operating leases.

As of July 1, 2022, the maturities of our lease liabilities by fiscal year are as follows:

As of September 30, 2022, the maturities of our lease liabilities by fiscal year are as follows:

(In millions)

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(In millions, except percentages)

July 1, 2022 April 1, 2022 Effective

September 30, 2022 April 1, 2022 Effective

Interest Rate

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New 2.00 % Convertible Unsecured Notes due August 15, 2022

525 525 2.62 %

5.00 % Senior Notes due April 15, 2025

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Delayed Term loan due May 7, 2026 — 703 LIBOR plus (3)

Term A Facility due September 12, 2027 3,910 — SOFR + % (1)

6.75 % Senior Notes due September 30, 2027

Term B Facility due September 12, 2029 3,690 — SOFR + % (2)

1.29 % Avira Mortgage due December 30, 2029

7.125 % Senior Notes due September 30, 2030

0.95 % Avira Mortgage due December 30, 2030

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unamortized discount and issuance costs

( 149 ) ( 11 )

Total debt 10,058 3,736

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Total long-term debt $ 9,883 $ 2,736

(1) Term A Facility due 2027 bears interest at a rate equal to Term SOFR plus a credit spread adjustment (CSA) plus a margin based either on the current debt rating of our non-credit-enhanced, senior unsecured long-term debt or consolidated adjusted leverage as defined in the underlying loan agreement.

(2) Term B Facility due 2029 bears interest at a rate equal to Term SOFR plus CSA plus 2.00 %.

(3) The term loans bear interest at a rate equal to LIBOR plus a margin based either on the current debt rating of our non-credit-enhanced, senior unsecured long-term debt or consolidated adjusted leverage as defined in the underlying loan agreement.

The interest rates for the outstanding term loans are as follows:

July 1, 2022 April 1, 2022

September 30, 2022 April 1, 2022

Term A Facility due September 12, 2027 4.77 % — %

Term B Facility due September 12, 2029 4.85 % — %

Initial Term Loan due May 7, 2026 — % 1.75 %

Delayed Term Loan due May 7, 2026 — % 1.75 %

As of July 1, 2022, the future contractual maturities of debt by fiscal year are as follows:

As of September 30, 2022, the future contractual maturities of debt by fiscal year are as follows:

(In millions)

Remainder of 2023 $ 59

Thereafter 8,115

Total future maturities of debt $ 10,207

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We may voluntarily repay outstanding principal balances without penalty.

As of July 1, 2022, 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 the LIBOR at our election.

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The unused revolving line of credit is subject to a commitment fee ranging from 0.125 % to 0.30 % per annum.

On September 12, 2022, we fully repaid the outstanding principal and accrued interest under the Initial Term Loan and Delay Draw Term Loan, which had an aggregate principal amount outstanding of $ 1,703 million.

In addition, we paid $ 3 million of accrued and unpaid interest through the redemption date.

The repayments resulted in a loss on extinguishment of $ 2 million.

We also terminated our undrawn revolving line of credit of $ 1,000 million, resulting in a loss on extinguishment of $ 4 million.

Senior credit facilities

Upon the close of the Merger, on September 12, 2022, we entered into the Amended and Restated Credit Agreement (Credit Agreement) with certain financial institutions, in which they agreed to provide us with (i) a $ 1,500 million revolving credit facility (Revolving Facility), a $ 3,910 million term loan A facility (Term A Facility), (iii) a $ 3,690 million term loan B facility (Term B Facility) and (iv) a $ 750 million tranche A bridge loan (Bridge Loan) (collectively, the senior credit facilities).

The Bridge Loan was undrawn and immediately terminated upon the Merger’s close, resulting in a loss on extinguishment of $ 3 million.

The Credit Agreement provides that we have the right at any time, subject to customary conditions, to request incremental revolving commitments and incremental term loans up to an unlimited amount, subject to certain customary conditions precedent and other provisions.

The lenders under these facilities will not be under any obligation to provide any such incremental loans or commitments.

We drew down the aggregate principal amounts of the Term A Facility and Term B Facility to finance the cash consideration payable for the transaction and to fully repay the outstanding principal and accrued interest of the existing credit facilities.

The Credit Agreement replaced the existing credit facilities upon the close of the transaction.

The Revolving Facility and Term A Facility will mature in September 2027, and the Term Facility B will mature in September 2029;

the senior credit facilities remain senior secured.

The principal amounts of Term Facility A must be repaid in quarterly installments on the last business day of each calendar quarter equal to 1.25 % of the aggregate principal amount as of the date of the Credit Agreement.

The principal amounts of Term Facility B must be repaid in quarterly installments on the last business day of each calendar quarter equal to 0.25 % of the aggregate principal amount as of the date of the Credit Agreement.

Quarterly installment payments commence on March 31, 2023.

We may voluntarily repay outstanding principal balances under the Revolving Facility and Term A Facility without penalty.

Prior to the six month anniversary of the Closing Date, any voluntary prepayment of outstanding principal balances under the Term B Facility is subject to a 1.00 % premium;

after such time, voluntary prepayment is permitted without penalty.

As of September 30, 2022, there were no borrowings outstanding under our Revolving Facility.

Interest on borrowings under the Credit Agreement can be based on a base rate or the SOFR at our election.

Based on our debt ratings and our consolidated leverage ratios as determined in accordance with the Credit Agreement, loans borrowed bear interest, in the case of base rate loans, at a per annum rate equal to the applicable base rate plus CSA plus a margin ranging from 0.125 % to 0.75 %, and in the case of the SOFR loans, SOFR, as adjusted for statutory reserves, plus a margin ranging from 1.125 % to 1.75 %.

Debt covenant compliance

The credit agreement contains customary representations and warranties, 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 July 1, 2022 , we were in compliance with all debt covenants.

Interim facilities

O n August 10, 2021, in conjunction with the Proposed Merger, we entered into the Interim Facilities Agreement with certain financial institutions, in which they agreed to provide us with (i) a 7-year term loan interim facility B of $ 3,600 million (the Interim Facility B), (ii) a 60-day term loan interim facility A1 of $ 750 million (the Interim Facility A1) and 5-year term loan interim facility A2 of $ 3,500 million (the Interim Facility A2), and (iii) a 5-year interim revolving facility of $ 1,500 million (the Interim Revolving Facility) (collectively, the Interim Facilities) and the Commitment Letter (as amended, the Commitment Letter) with certain financial institutions, in which the agreed to provide us with financing no less than the financing available under the Interim Facilities (the Definitive Facilities and, together with the Interim Facilities, the Facilities) to finance the cash consideration payable in connection with the Proposed Merger.

The Definitive Facilities will be financed by a syndicate of lenders led by Bank of America, N.A.

and Wells Fargo Bank N.A.

On January 28, 2022, Bank of America, N.A.

and Wells Fargo Bank N.A.

agreed to arrange, on a best efforts basis, additional term loans under the Definitive Facilities in an amount up to $ 500 million.

The Facilities Agreement will replace the existing credit facility agreement upon the close of the transactions contemplated thereby.

The Credit Agreement contains customary representations and warranties, affirmative and negative covenants.

Each of the Revolving Facility and Term A Facility will be subject to a covenant that we maintain a consolidated leverage ratio less than or equal to (i) 6.0 to 1.0 from the Closing Date through the last day of the fourth full fiscal quarter following the Closing Date, (ii) 5.75 to 1.0 following the last day of the fourth fiscal quarter after the Closing Date through the last day of the eighth full fiscal quarter following the Closing Date and (iii) 5.25 to 1.0 for each fiscal quarter thereafter;

provided that such maximum consolidated leverage ratio will increase to 5.75 to 1.0 for the four fiscal quarters ending immediately should we acquire property, business or assets in an aggregate amount greater than $ 250 million.

In addition, the Credit Agreement contains customary events of default under which our payment obligations may be accelerated, including, among others, non-payment of principal, interest or other amounts when due, inaccuracy of representations and warranties, violation of certain covenants, payment and acceleration cross defaults with certain other indebtedness, certain undischarged judgments, bankruptcy, insolvency or inability to pay debts, change of control, the occurrence of certain events related to the Employee Retirement Income Security Act of 1974 (ERISA), and the Company experiencing a change of control.

As of September 30, 2022 , we were in compliance with all debt covenants.

On June 1, 2022, we fully repaid the principal and accrued interest under the 3.95 % Senior Notes due June 2022, which had an aggregate principal amount outstanding of $ 400 million.

In addition, we paid $ 7 million of accrued and unpaid interest through the redemption date.

Accounting for the New 2.00 % Convertible Notes

O n September 19, 2022, we issued two series of senior notes, consisting of 6.75 % Senior Notes due 2027 and 7.125 % Senior Notes due 2030, for an aggregate principal of $ 1,500 million.

They are senior unsecured obligations that rank equally in right of payment with all of our existing and future senior, unsecured, unsubordinated obligations and may be redeemed at any time, subject to the make-whole provisions contained in the applicable indenture relating to such series of notes.

Interest on these series of notes is payable semi-annually in arrears on March 31 and September 30 for both the 6.75 % Senior Notes and 7.125 % Senior Notes, commencing on March 31, 2023.

We may redeem some or all of the 6.75 % Senior Notes due 2027 and 7.125 % Senior Notes due 2030 at any time.

The First Call Dates of the 6.75 % Senior Notes due 2027 and 7.125 % Senior Notes due 2030 are September 30, 2024 and September 30, 2025, respectively.

New 2.0 % Convertible Notes

As described in Note 2, on April 2, 2022, we adopted ASU 2020-06 using the modified retrospective method.

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Under this new guidance, the New 2.0 % Convertible Notes included in our Condensed Consolidated Balance Sheet reflect the par value of the liability

In accordance with the New 2.00 % Convertible Notes agreement, we communicated our intent to the convertible note holders to settle the principal and conversion rights in cash upon maturity in August 2022.

This election did not have a material impact on our financial results.

As of July 1, 2022 and April 1, 2022, our Convertible Senior Notes consisted of the following:

July 1, 2022 April 1, 2022

(In millions) New 2.00 % Convertible Notes

New 2.00 % Convertible Notes

Liability components:

Principal $ 525 $ 525

Unamortized debt discount — ( 1 )

Net carrying amount $ 525 $ 524

Based on the closing price of our common stock of $ 22.28 on July 1, 2022, the if-converted value of the New 2.00 % Convertible Notes exceeded the principal amount by approximately $ 48 million.

The following table sets forth total interest expense recognized related to our Convertible Senior Notes:

Three Months Ended

(In millions) July 1, 2022 July 2, 2021

Contractual interest expense $ 3 $ 3

Amortization of debt discount $ — $ 1

Payments in lieu of conversion price adjustments (1)

(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.

On August 15, 2022, we settled the $ 525 million principal and conversion rights of our New 2.0 % Convertible Notes in cash.

The aggregate settlement amount of $ 630 million was based on $ 20.41 per underlying share into which the New 2.0 % Convertible Notes were convertible.

In addition, we paid $ 5 million of accrued and unpaid interest through the date of settlement.

The repayments resulted in an adjustment to stockholders’ equity of $ 100 million.

Our primary objective in holding derivatives is to reduce the volatility of earnings and cash flow associated with changes in foreign currency exchange rates and interest rates.

These hedging contracts reduce, but do not entirely eliminate, the impact of adverse foreign exchange rate and interest rate movements.

We do not use our derivative instruments for speculative trading purposes.

By using derivative financial instruments to hedge exposures to changes in foreign exchange and interest rates, we are exposed to credit risk;

however, we mitigate this risk by entering into hedging instruments with highly rated institutions that can be expected to fully perform under the terms of the applicable contracts.

Foreign currency exchange forward contracts

We conduct business in numerous currencies throughout our worldwide operations and our entities hold monetary assets or liabilities, earn revenues or incur costs in currencies other than the entity’s functional currency.

As a result, we are exposed to foreign exchange gains or losses, which impact our operating results.

As part of our foreign currency risk mitigation strategy, we have entered into monthly foreign exchange forward contracts.

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.

As part of our foreign currency risk mitigation strategy, we have entered into monthly foreign exchange forward contracts to hedge foreign currency balance sheet exposure.

These forward contracts are not designated as hedging instruments.

As of July 1, 2022 and April 1, 2022, the fair value of these contracts was immaterial.

We do not hedge our foreign currency exposure in a manner that entirely offsets the effects of the changes in foreign exchange rates.

As of September 30, 2022 and April 1, 2022, the fair value of these contracts was immaterial.

The related gain (loss) recognized in Other income (expense), net in our Condensed Consolidated Statements of Operations was as follows:

Three Months Ended

(In millions) July 1, 2022 July 2, 2021

Three Months Ended Six Months Ended

(In millions) September 30, 2022 October 1, 2021 September 30, 2022 October 1, 2021

Foreign exchange forward contracts gain (loss) $ ( 3 ) $ ( 3 ) $ ( 10 ) $ —

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dollar equivalent was as follows:

(In millions) July 1, 2022 April 1, 2022

(In millions) September 30, 2022 April 1, 2022

Foreign exchange forward contracts purchased $ 171 $ 155

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Restructuring and Other Costs

Our restructuring costs consist primarily of severance and termination benefits, contract cancellation charges, asset write-offs and impairments and other exit and disposal costs.

Our restructuring costs generally consist of severance and termination benefits, contract cancellation charges, asset write-offs and impairments and other exit and disposal costs.

Severance costs generally include severance payments, outplacement services, health insurance coverage and legal costs.

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Other exit and disposal costs include costs to exit and consolidate facilities in connection with restructuring events.

September 2022 Plan

In connection with the Merger, our Board of Directors approved a restructuring plan (the September 2022 Plan) to realize cost savings and operational synergies, which became effective upon the close of the Merger on September 12, 2022.

Actions under this plan include the reduction of our workforce, contract terminations, facilities closures, and the sale of underutilized facilities.

We expect that we will incur total costs up to $ 280 million, with $ 180 million and $ 100 million estimated to be incurred within the first and second full years, respectively, following the completion of the Merger.

These actions are expected to be completed by fiscal 2024.

As of September 30, 2022, we have incurred costs of $ 6 million related to the September 2022 Plan.

December 2020 Plan

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Restructuring and other costs summary

During the three months ended July 1, 2022 and July 2, 2021, we incurred total restructuring costs of $ 2 million and $ 7 million , respectively.

During the three and six months ended September 30, 2022, we incurred total restructuring costs of $ 9 million and $ 11 million, respectively.

During the three and six months ended October 1, 2021, we incurred total restructuring costs of $ 5 million and $ 12 million, respectively.

The following table summarizes our effective tax rate for the periods presented:

Three Months Ended

Three Months Ended Six Months Ended

(In millions, except percentages)

July 1, 2022 July 2, 2021

September 30, 2022 October 1, 2021 September 30, 2022 October 1, 2021

Income (loss) before income taxes $ 195 $ 433 $ 424 $ 685

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Effective tax rate 65 % 23 % 37 % 25 %

Our effective tax rate for the three months ended July 1, 2022 differs from the federal statutory income tax rate primarily due to tax benefits related to the foreign currency remeasurement of an Irish deferred tax asset and discrete legal expenses booked during the quarter, partially offset by state taxes.

Our effective tax rate for the three months ended July 2, 2021 differs from the federal statutory income tax rate primarily due to state taxes, partially offset by the benefits of lower-tax international earnings and various permanent differences.

We are a U.S.-based multinational company subject to tax in multiple U.S.

Our effective tax rate for the three and six months ended September 30, 2022 differs from the federal statutory income tax rate primarily due to state taxes and the U.S.

taxation on foreign earnings, and certain items this quarter including the tax impacts of internal restructuring, deductibility of transaction costs from the Merger, and the limitations of foreign taxes due to the increase of interest expense.

Our effective tax rate for the three and six months ended October 1, 2021 differs from the federal statutory income tax rate primarily due to state taxes and U.S.

taxation on foreign earnings.

We are a multinational company dual headquartered in the U.S.

and Czech Republic, subject to tax in multiple U.S.

and international tax jurisdictions.

Our results of operations would be adversely affected to the extent that our geographical mix of income becomes more weighted toward jurisdictions with higher tax rates and would be favorably affected to the extent the relative geographic mix shifts to lower tax jurisdictions.

Our results can also be impacted by the costs incurred and the potential deductibility of the expenses.

Any change in our mix of earnings is dependent upon many factors and is therefore difficult to predict.

In connection with the Merger, we established $ 345 million of net deferred tax liabilities primarily related to the excess of book basis over the tax basis of acquired identified intangible assets.

The net deferred tax liabilities are based upon certain assumptions underlying our preliminary purchase price allocation.

Upon finalization of the purchase price allocation, additional adjustments to the amount of our net deferred taxes may be required.

The timing of the resolution of income tax examinations is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year.

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Stockholders' Equity

On August 4, 2022, we announced that our Board of Directors declared a cash dividend of $ 0.125 per share of common stock to be paid in September 2022.

On November 8, 2022, we announced that our Board of Directors declared a cash dividend of $ 0.125 per share of common stock to be paid in December 2022.

All shares of common stock issued and outstanding and all restricted stock units (RSUs) and performance-based restricted stock units (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.

However, the 4 million unvested RSUs assumed in connection with the Merger will not be entitled to DERs.

See Note 15 for further information about these equity awards.

Any future dividends and DERs will be subject to the approval of our Board of Directors.

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Under our stock repurchase program, we may purchase shares of our outstanding common stock on the open market and through accelerated stock repurchase transactions.

As of July 1, 2022, we had $ 1,474 million remaining under the authorization to be completed in future periods with no expiration date.

No shares were repurchased during the three months ended July 2, 2021.

The following table summarizes activity related to this program during the three months ended July 1, 2022:

Three Months Ended

As of September 30, 2022, we had $ 1,370 million remaining under the authorization to be completed in future periods with no expiration date.

No shares were repurchased in the prior fiscal year during the six months ended October 1, 2021.

The following table summarizes activity related to this program during the six months ended September 30, 2022:

Six Months Ended

(In millions, except per share amounts)

September 30, 2022

Number of shares repurchased 17

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Aggregate purchase price $ 404

Subsequent to September 30, 2022, we executed repurchases of 14 million shares of our common stock for an aggregate amount of $ 308 million.

As a result, we have $ 1,062 million remaining under our existing share repurchase program.

Accumulated other comprehensive income (loss)

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(In millions) Foreign Currency

Translation Adjustments

Translation Gain (Loss)

Balance as of April 1, 2022 $ ( 4 )

Other comprehensive income (loss), net of taxes ( 11 )

Balance as of July 1, 2022 $ ( 44 )

Balance as of September 30, 2022 $ ( 15 )

Stock-Based Compensation

Avast equity awards

In connection with the Merger, we assumed the outstanding equity awards under two of Avast’s equity incentive plans (the Avast Holding B.V.

2014 Share Option Plan and the Rules of the Avast plc Long Term Incentive Plan (collectively, the Avast Plans)), which consisted of 4 million unvested RSUs.

The assumed RSUs generally retain the terms and conditions under which they were originally granted.

We intend to grant all additional shares that remain available for issuance under the Avast Plans.

Upon vesting, these assumed RSUs and any additional shares granted will settle into shares of our common stock.

See Note 4 for further information about this business combination.

The following table sets forth the stock-based compensation expense recognized for our equity incentive plans:

Three Months Ended

Three Months Ended Six Months Ended

(In millions)

July 1, 2022 July 2, 2021

September 30, 2022 October 1, 2021 September 30, 2022 October 1, 2021

Cost of revenues $ 1 $ 1 $ 2 $ 1

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Income tax benefit for stock-based compensation expense $ ( 4 ) $ ( 3 ) $ ( 8 ) $ ( 7 )

As of July 1, 2022, the total unrecognized stock-based compensation costs related to our unvested stock-based awards was $ 213 million, which will be recognized over an estimated weighted-average amortization period of 2.4 years.

As of September 30, 2022, the total unrecognized stock-based compensation costs related to our unvested stock-based awards was $ 297 million, which will be recognized over an estimated weighted-average amortization period of 2.2 years.

The following table summarizes additional information related to our stock-based awards:

Three Months Ended

(In millions, except per grant data) July 1, 2022 July 2, 2021

Six Months Ended

(In millions, except per grant data) September 30, 2022 October 1, 2021

Restricted stock units (RSUs):

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Dividend equivalent rights (DERs)

Our RSUs and PRUs contain DERs that entitles the recipient of an award to receive cash dividend payments if and when the underlying shares are released.

Our RSUs and PRUs, except the 4 million unvested RSUs assumed under the Avast Plans, contain DERs that entitles the recipient of an award to receive cash dividend payments if and when the underlying shares are released.

The amount of DERs equals the amount of cumulated dividends on the issued number of common stock that would have been payable since the date the associated award was granted.

As of July 1, 2022 and April 1, 2022, current dividends payable related to DER was $ 3 million and $ 11 million, respectively, recorded as part of Other current liabilities in the Condensed Consolidated Balance Sheets, and long-term dividends payable related to DER was $ 2 million and $ 2 million, respectively, recorded as part of Other long-term liabilities.

As of September 30, 2022 and April 1, 2022, current dividends payable related to DER was $ 4 million and $ 11 million, respectively, recorded as part of Other current liabilities in the Condensed Consolidated Balance Sheets, and long-term dividends payable related to DER was $ 2 million and $ 2 million, respectively, recorded as part of Other long-term liabilities.

Net Income Per Share

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Diluted net income per share also includes the incremental effect of dilutive potentially issuable common shares outstanding.

Dilutive potentially issuable common shares include the dilutive effect of the shares underlying convertible debt and employee equity awards.

Dilutive potentially issuable common shares include the dilutive effect of the shares underlying our employee equity awards and convertible debt until its extinguishment on August 15, 2022.

The components of basic and diluted net income (loss) per share are as follows:

Three Months Ended

Three Months Ended Six Months Ended

(In millions, except per share amounts)

July 1, 2022 July 2, 2021

September 30, 2022 October 1, 2021 September 30, 2022 October 1, 2021

Net income (loss) $ 69 $ 333 $ 269 $ 514

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Weighted-average shares outstanding - diluted 595 591 599

Anti-dilutive shares excluded from diluted net income per share calculation:

Employee equity awards — 1 — 1

Upon adoption of ASU 2020-06 under the modified retrospective method, we are required to apply the if-converted method to our calculation of diluted earnings per share.

For the three months ended July 1, 2022, we adjust for the dilutive effect of the maximum number of potential shares to be issued upon settlement of our outstanding convertible debt instruments.

For the three and six months ended September 30, 2022, we adjust for the dilutive effect of the maximum number of potential shares to be issued upon settlement of our outstanding convertible debt instruments.

Prior period earnings per share amounts are not restated under the modified retrospective method.

For the three months ended July 2, 2021, the dilutive effect of our debt instruments is calculated using the treasury stock method, under which our convertible debt instruments generally had a dilutive impact on net income per share when our average stock price for the period exceeds the conversion prices for the convertible debt instruments.

The adoption of ASU 2020-06 had a $ 0.01 impact on dilutive earnings per share for the three months ended July 1, 2022, with the dilutive shares underlying the convertible debt increasing by 18 million shares.

The conversion price of each convertible debt instrument applicable in the periods presented is as follows:

Three Months Ended

July 1, 2022 July 2, 2021

New 2.00 % Convertible Senior Notes due August 15, 2022

$ 20.41 $ 20.41

For the three and six months ended October 1, 2021, the dilutive effect of our debt instruments is calculated using the treasury stock method, under which our convertible debt instruments generally had a dilutive impact on net income per share when our average stock price for the period exceeds the conversion prices for the convertible debt instruments.

The initial adoption of ASU 2020-06 had a $ 0.01 impact on dilutive earnings per share, with the dilutive shares underlying the convertible debt increasing by 18 million shares.

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.

Our Chief Operating Decision Maker reviews financial information presented on a consolidated basis to evaluate company performance and to allocate and prioritize resources.

The following table summarizes net revenues for our major solutions:

Three Months Ended

(In millions) July 1, 2022 July 2, 2021

Consumer security $ 413 $ 412

Identity and information protection 294 274

Three Months Ended Six Months Ended

(In millions) September 30, 2022 October 1, 2021 September 30, 2022 October 1, 2021

Consumer security revenues $ 436 $ 404 $ 838 $ 805

Identity and information protection revenues 298 277 592 551

Total Cyber Safety revenues 734 681 1,430 1,356

Legacy revenues 14 11 25 22

Total net revenues (1)

(1) During the three months ended July 1, 2022, total net revenues include an unfavorable foreign exchange impact of $ 27 million, consisting of $ 26 million from our consumer security solutions and $ 1 million from our identity and information protection solutions.

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.

$ 748 $ 692 $ 1,455 $ 1,378

(1) During the three months ended September 30, 2022, total net revenues include an unfavorable foreign exchange impact of $ 31 million, consisting of $ 30 million from our consumer security solutions and $ 1 million from our identity and information protection solutions.

During the six months ended September 30, 2022, total net revenues include an unfavorable foreign exchange impact of $ 58 million, consisting of $ 56 million from our consumer security solutions, $ 1 million from our identity and information protection solutions and $ 1 million from our legacy solutions.

From time to time, changes in our product hierarchy cause changes to the product categories above.

When changes occur, we recast historical amounts to match the current product hierarchy.

The changes have been reflected for all periods presented above.

Consumer security includes revenues from our Norton 360 Security offerings, Norton Security, Avast Security offerings, Norton Secure VPN, Avira Security and other consumer security and device performance solutions through our direct, partners and small business channels.

Identity and information protection includes revenues from our Norton 360 with LifeLock offerings, LifeLock identity theft protection and other information protection and privacy solutions.

Legacy includes revenues from products or solutions that are no longer in operations in exited markets, have been discontinued or identified to be discontinued, or remain in maintenance mode as a result of integration and product portfolio decisions.

Geographic information

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The following table represents net revenues by geographic area for the periods presented:

Three Months Ended

(In millions) July 1, 2022 July 2, 2021

Three Months Ended Six Months Ended

(In millions) September 30, 2022 October 1, 2021 September 30, 2022 October 1, 2021

Americas $ 529 $ 485 $ 1,037 $ 962

EMEA 139 125 259 252

APJ 80 82 159 164

Total net revenues (1)

$ 748 $ 692 $ 1,455 $ 1,378

The Americas include U.S., Canada and Latin America;

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APJ includes Asia Pacific and Japan.

(1) During the three months ended July 1, 2022, total net revenues include an unfavorable foreign exchange impact of $ 27 million, consisting of $ 16 million from EMEA and $ 11 million from APJ.

(1) During the three months ended September 30, 2022, total net revenues include an unfavorable foreign exchange impact of $ 31 million, consisting of $ 18 million from EMEA and $ 13 million from APJ.

During the six months ended September 30, 2022, total net revenues include an unfavorable foreign exchange impact of $ 58 million, consisting of $ 34 million from EMEA and $ 24 million from APJ.

Revenues from customers inside the U.S.

were $ 479 million and $ 456 million during the three months ended July 1, 2022 and July 2, 2021, respectively.

were $ 493 million and $ 972 million during the three and six months ended September 30, 2022, respectively, and $ 460 million and $ 916 million during the three and six months ended October 1, 2021, respectively.

No other individual country accounted for more than 10% of revenues.

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and internationally in various foreign subsidiaries.

(In millions) July 1, 2022 April 1, 2022

(In millions) September 30, 2022 April 1, 2022

$ 644 $ 1,220

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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) July 1, 2022 April 1, 2022

(In millions) September 30, 2022 April 1, 2022

Ireland 25 27

Czech Republic 24 —

Germany 12 13

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Our operating lease assets by geographic area, based on the physical location of the asset, at the end of each period presented, are as follows:

(In millions) July 1, 2022 April 1, 2022

(In millions) September 30, 2022 April 1, 2022

Czech Republic 11 —

Other countries (1)

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Significant customers

No customer accounted for 10% or more of our net revenues during the three months ended July 1, 2022 and July 2, 2021.

Customers which are distributors that accounted for over 10% of our net accounts receivable were as follows:

July 1, 2022 April 1, 2022

No customer accounted for 10% or more of our net revenues during the six months ended September 30, 2022 and October 1, 2021.

Customers which are distributors that accounted for over 10% of our total accounts receivable were as follows:

September 30, 2022 April 1, 2022

Customer A 14 % 23 %

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Such indemnification provisions may not be subject to maximum loss clauses.

Historically, payments made under these provisions have been immaterial.

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.

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NortonLifeLock

As previously disclosed in our public filings, on May 2, 2022, a jury returned its verdict in a patent infringement case filed in 2013 by the Trustees of Columbia University in the City of New York in the U.S.

District Court for the Eastern District of Virginia.

Columbia originally brought suit alleging infringement of six patents owned by the university.

The Company won a favorable claim construction order on all six patents, and the claim construction was upheld by the Federal Circuit in 2016 on all but U.S.

We won a favorable claim construction order on all six patents, and the claim construction was upheld by the Federal Circuit in 2016 on all but U.S.

8,601,322 and 8,074,115.

The Company also sought inter partes review by the Patent Trial and Appeal Board of the claims of the ‘322 and ‘115 Patents and all but two claims of the ‘322 Patent and three claims of the ‘115 Patent were invalidated.

We also sought inter partes review by the Patent Trial and Appeal Board of the claims of the ‘322 and ‘115 Patents and all but two claims of the ‘322 Patent and three claims of the ‘115 Patent were invalidated.

The remaining claims of the ‘322 and ‘115 Patents were the only claims that remained in suit at trial.

The jury found that the Company’s Norton Security products and Symantec Endpoint Protection products (the latter of which were sold to Broadcom as part of an Asset Purchase Agreement with NortonLifeLock dated November 4, 2019) willfully infringe the ‘322 and ‘115 Patents through the use of SONAR/BASH behavioral protection technology.

The jury found that our Norton Security products and Symantec Endpoint Protection products (the latter of which were sold by us to Broadcom as part of an Asset Purchase Agreement dated November 4, 2019) willfully infringe the ‘322 and ‘115 Patents through the use of SONAR/BASH behavioral protection technology.

The jury awarded damages in the amount of $ 185 million.

Columbia did not seek injunctive relief against the Company.

The Company intends to cease use of the technology found by the jury to infringe.

The jury also found that the Company did not fraudulently conceal its prosecution of U.S.

Columbia did not seek injunctive relief against us.

We intend to cease use of the technology found by the jury to infringe.

The jury also found that we did not fraudulently conceal its prosecution of U.S.

8,549,643 but did find that two Columbia professors were coinventors of this patent.

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A formal judgment has not yet been entered in the case.

Post-verdict motions have been filed, and the Company intends to file an appeal challenging the verdict.

Post-verdict motions have been filed, and we intend to file an appeal challenging the verdict.

At this time, our current estimate of the low end of the range of probable estimated losses from this matter is approximately $ 233 million, reflecting the jury award and prejudgment interest, which we have accrued.

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however, such loss cannot be reasonably estimated.

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 with which we cooperated.

In April 2022, the SEC Staff informed the Company that it concluded its investigation and does not intend to recommend an enforcement action by the Commission against us.

Securities Class Action and Derivative Litigation

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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.

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On May 24, 2021, the parties reached a proposed settlement and release of all claims in the class action, for $ 70 million, and on June 8, 2021, the parties executed a Stipulation and Agreement of Settlement, subject to Court approval and exclusive of any claims that may be brought by shareholders who opted out of the class action.

Of the $ 70 million, $ 67.1 million was covered under the applicable insurance policy with the remainder to be paid by the Company.

Of the $ 70 million, $ 67.1 million was covered under the applicable insurance policy with the remainder to be paid by us.

The Court approved the settlement on February 12, 2022.

On November 22, 2021, investment funds managed by Orbis Investment Management Ltd.

which previously opted out of the securities class action, filed suit under the Securities and Exchange Act of 1934, Arizona Securities Act, Arizona Consumer Fraud Act and certain common law causes of action to recover alleged damages for losses incurred by the funds for their purchases or acquisitions of our common stock during the class period.

which previously opted out of the securities class action, filed suit under the Exchange Act of 1934, the Arizona Securities Act, the Arizona Consumer Fraud Act and certain common law causes of action to recover alleged damages for losses incurred by the funds for their purchases or acquisitions of our common stock during the class period.

In the fourth quarter of fiscal 2022, we made an immaterial settlement offer in this matter, for which we have accrued.

The Company’s Motion to Dismiss is now pending.

Our Motion to Dismiss is now pending.

Purported shareholder derivative lawsuits have been filed against us and certain of our former officers and current and former directors in the U.S.

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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.

On October 21, 2019, the DOJ moved for a Prejudgment Writ of Sequestration for us to set aside $ 1,090 million to pay a judgment, should the United States prevail in this litigation, under the Federal Debt Collection Procedures Act.

The Writ was sought in response to our announcement of our plans to distribute the after-tax proceeds of the sale of the Symantec enterprise business to Broadcom to our shareholders via a special dividend.

The Court denied the Writ on December 12, 2019, on the basis of the government’s failure to establish the “probable validity” of the debt, the amount sought to be sequestered, and our available cash, cash equivalents and short-term investments.

The Court permitted the DOJ limited discovery of facts relevant to our financial state and financial projections and the option to renew its motion if appropriate and supported by the analysis of its own financial expert.

That discovery period has now closed.

On March 30, 2020, the Court issued an Order granting in part and denying in part our motion for summary judgment and granting in part and denying in part the United States’ motion for partial summary judgment.

On September 30, 2020, the Company filed a Motion for Reconsideration of certain rulings in the Court’s March 30 Summary Judgment Order.

On September 30, 2020, we filed a Motion for Reconsideration of certain rulings in the Court’s March 30 Summary Judgment Order.

A second Motion for Reconsideration of certain rulings in the Summary Judgement Order based on significant change in the law was filed on July 23, 2021.

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Court ordered mediations in July 2020 and February 2021 were not successful.

On March 23, 2021, Plaintiffs withdrew their demand for a jury trial and the Company consented to proceed with a bench trial, which concluded on March 24, 2022.

On March 23, 2021, Plaintiffs withdrew their demand for a jury trial and we consented to proceed with a bench trial, which concluded on March 24, 2022.

The Court has not yet issued its judgment and post-trial motions are pending.

On May 13, 2021, we reached a settlement in principle with the State of Florida to resolve all claims it asserted in the litigation for $ 0.5 million, plus Relator’s statutory attorney’s fees with respect to the State of Florida’s claims.

On February 28, 2022, we reached a settlement in principle with the State of New York and Relator to resolve all of the New York claims asserted in the litigation for $ 5 million.

On May 13, 2021, we reached a settlement in principle with the State of Florida to resolve all claims it asserted in the litigation for $ 0.5 million, plus the relator’s statutory attorney’s fees with respect to the State of Florida’s claims.

On February 28, 2022, we reached a settlement in principle with the State of New York and the relator to resolve all of the New York claims asserted in the litigation for $ 5 million.

At this time, our current estimate of the low end of the range of probable estimated losses from this matter is $ 50 million, inclusive of the settlement with the states of Florida and New York, which we have accrued.

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however, such loss cannot be reasonably estimated.

Jumpshot Matters

At the end of 2019, Avast came under media scrutiny for provision of Avast customer data to its data analytics subsidiary Jumpshot Inc.

Jumpshot was a subsidiary of Avast with its own management team and technical experts.

Avast announced the decision to terminate its provision of data to, and wind down, Jumpshot on January 30, 2020.

As Avast has previously disclosed, it has been in communication with certain regulators and authorities prior to completion of the Merger, and we will continue cooperating fully in respect of all regulatory enquiries.

On December 23, 2019, the United States Federal Trade Commission (FTC) issued a Civil Investigative Demand (CID) to Avast seeking documents and information related to its privacy practices, including Jumpshot's past use of consumer information that was provided to it by Avast.

Avast responded cooperatively to the CID and related follow-up requests from the FTC.

On October 29, 2021, staff at the FTC sent Avast a draft complaint and proposed settlement order.

We have been engaged in ongoing negotiations with the FTC staff regarding the scope and terms of the proposed settlement.

Any negotiated settlement with the FTC, or absent settlement, any litigation or other legal proceeding between us and the FTC could result in material monetary remedies and/or compliance requirements that impose significant and material cost and resource burdens on us, and may impact our ability to use data in the future.

There can be no assurance that we will be successful in negotiating a favorable

settlement or in litigation.

Any remedies or compliance requirements could adversely affect our ability to operate our business or have a materially adverse impact on our financial results.

At this stage, we are unable to assess whether any material loss or adverse effect is reasonably possible as a result of this investigation or estimate the range of any potential loss.

On February 27, 2020, the Czech Office for Personal Data Protection (the Czech DPA) initiated offense proceedings concerning Avast`s practices with respect to Jumpshot, which remain ongoing and we continue to evaluate our options including an appeal of any findings and assessments.

In addition, we received a letter and notification before action from Stichting CUIC – Privacy Foundation for Collective Redress, a Dutch foundation (the Foundation).

The Foundation has asserted it represents the interests of Avast customers in the Netherlands whose data was provided to Jumpshot and that by doing so Avast violated the requirements of the GDPR and other provisions in Dutch and European Union privacy and consumer law entitling those customers to damages and other compensation, all of which we dispute.

No specific amount of damages has been alleged and to date, no action has been filed.

At this stage, we are unable to assess whether any material loss or adverse effect is reasonably possible as a result of this notification before action or estimate the range of any potential loss.

The outcome of the regulatory proceedings, government enforcement actions and litigation is difficult to predict, and the cost to defend, settle or otherwise resolve these matters may be significant.

Plaintiffs or regulatory agencies or authorities in these matters may seek recovery of large or indeterminate amounts or seek to impose sanctions, including significant monetary penalties, as well as equitable relief.

The monetary and other impact of these litigations, proceedings or actions may remain unknown for substantial periods of time.

Further, an unfavorable resolution of litigations, proceedings or actions could have a material adverse effect on our business, financial condition, and results of operations and cash flows.

The amount of time that will be required to resolve these matters is unpredictable, and these matters may divert management’s attention from the day-to-day operations of our business.

Any future investigations or additional lawsuits may also adversely affect our business, financial condition, results of operations and cash flows.

We are involved in a number of other judicial and administrative proceedings that are incidental to our business.

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

What changed 10-Q

Item 1. Financial Statements