What changed in this filing

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Item 1. Financial Statements

2023-02-06 compared with 2022-11-09 · 196 added, 169 removed, 788 unchanged (32% of the section changed)

3 unchanged sentences

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

September 30, 2022 April 1, 2022

December 30, 2022 April 1, 2022

Current assets:

31 unchanged sentences

3,000 shares authorized;

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

639 and 582 shares issued and outstanding as of December 30, 2022 and April 1, 2022, respectively

Accumulated other comprehensive income (loss) ( 28 ) ( 4 )

6 unchanged sentences

(Unaudited, in millions, except per share amounts)

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

December 30, 2022 December 31, 2021 December 30, 2022 December 31, 2021

Net revenues $ 936 $ 702 $ 2,391 $ 2,080

23 unchanged sentences

(Unaudited, in millions)

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

December 30, 2022 December 31, 2021 December 30, 2022 December 31, 2021

Net income (loss) $ 165 $ 202 $ 434 $ 716

7 unchanged sentences

(Unaudited, in millions, except share amounts)

Three months ended September 30, 2022

Three months ended December 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 )

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

Net income (loss) — — — 165 165

1 unchanged sentence

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

Shares withheld for taxes related to vesting of stock units — ( 1 ) — — ( 1 )

Repurchases of common stock ( 23 ) ( 500 ) — — ( 500 )

2 unchanged sentences

Stock-based compensation — 42 — — 42

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

Balance as of December 30, 2022 639 $ 2,838 $ ( 28 ) $ ( 1,500 ) $ 1,310

Nine months ended December 30, 2022

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

4 unchanged sentences

Common stock issued under employee stock incentive plans 4 6 — — 6

Shares withheld for taxes related to vesting of restricted stock units ( 1 ) ( 16 ) — — ( 16 )

Shares withheld for taxes related to vesting of stock units ( 1 ) ( 17 ) — — ( 17 )

Repurchases of common stock ( 40 ) ( 904 ) — — ( 904 )

6 unchanged sentences

Merger consideration 94 2,141 — — 2,141

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

Balance as of December 30, 2022 639 $ 2,838 $ ( 28 ) $ ( 1,500 ) $ 1,310

(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.

4 unchanged sentences

(Unaudited, in millions, except share amounts)

Three months ended October 1, 2021

Three months ended December 31, 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 )

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

Net income (loss) — — — 202 202

Other comprehensive income (loss), net of taxes — — ( 12 ) — ( 12 )

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

Shares withheld for taxes related to vesting of stock units — ( 1 ) — — ( 1 )

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

1 unchanged sentence

Stock-based compensation — 18 — — 18

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

Six months ended October 1, 2021

Balance as of December 31, 2021 582 $ 1,940 $ 22 $ ( 2,060 ) $ ( 98 )

Nine months ended December 31, 2021

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

4 unchanged sentences

Common stock issued under employee stock incentive plans 3 8 — — 8

Shares withheld for taxes related to vesting of restricted stock units ( 1 ) ( 15 ) — — ( 15 )

Shares withheld for taxes related to vesting of stock units ( 1 ) ( 16 ) — — ( 16 )

Cash dividends declared ($ 0.375 per share of common stock) and dividend equivalents accrued

2 unchanged sentences

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

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

Balance as of December 31, 2021 582 $ 1,940 $ 22 $ ( 2,060 ) $ ( 98 )

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

2 unchanged sentences

(Unaudited, in millions)

Six Months Ended

September 30, 2022 October 1, 2021

Nine Months Ended

December 30, 2022 December 31, 2021

OPERATING ACTIVITIES:

28 unchanged sentences

Net proceeds from sales of common stock under employee stock incentive plans 6 8

Tax payments related to vesting of restricted stock units ( 16 ) ( 14 )

Tax payments related to vesting of stock units ( 20 ) ( 15 )

Dividends and dividend equivalents paid ( 234 ) ( 230 )

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

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

Fiscal calendar

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

Unless otherwise stated, references to three and 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.

Unless otherwise stated, references to three and nine month periods in this report relate to fiscal periods ended December 30, 2022 and December 31, 2021.

The three and nine months ended December 30, 2022 and December 31, 2021 each consisted of 13 and 39 weeks, respectively.

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

5 unchanged sentences

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 as a result of the COVID-19 pandemic and continuing Russia-Ukraine conflict, and such differences may be material to the Condensed Consolidated Financial Statements.

Actual results could differ from such estimates and assumptions due to risks and uncertainties, including uncertainty in the current economic environment as a result of macroeconomic factors such as inflation, fluctuations in foreign currency exchange rates relative to the U.S.

dollars, our reporting currency, changes in interest rates, the COVID-19 pandemic and Russia’s invasion of Ukraine, and such differences may be material to the Condensed Consolidated Financial Statements.

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 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.

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 nine months ended December 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

15 unchanged sentences

The standard was effective upon issuance and may generally be applied through December 31, 2024, to any new or amended contracts, hedging relationships and other transactions that reference LIBOR.

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

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

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

3 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.

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.

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

During the second quarter of fiscal 2023 , 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.

1 unchanged sentence

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.

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

During the three and nine months ended December 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

10 unchanged sentences

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.

On September 12, 2022 (the Closing Date), 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.

Prior to the Merger, Avast was a global leader in consumer cybersecurity, offering a comprehensive range of digital security and privacy products and services that protected and enhanced users’ online experiences.

With this Merger, we are positioned to provide a broad and complementary consumer product portfolio with greater geographic diversification and access to a larger user base.

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

1 unchanged sentence

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.

The fair value of our common stock provided on September 12, 2022 in exchange for all outstanding ordinary shares of Avast was approximately $ 2,141 million.

Consideration transferred

47 unchanged sentences

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.

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

2 unchanged sentences

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.

In connection with the financing provided by the 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.

Ticking fees were payable on the Closing Date of the Merger.

During the nine months ended December 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.

The operating results of Avast have been included in our Condensed Consolidated Statements of Operations beginning September 12, 2022.

Our results of operations for the three and nine months ended December 30, 2022 include $ 234 million and $ 282 million, respectively, of net revenues booked through the Avast enterprise resource planning system.

This total post-acquisition revenue extracted from the legacy Avast system is not comparable to pre-acquisition results due to our product integration strategy, cross-selling activities and the reallocation of performance marketing spend deployed to maximize total GEN revenue and not revenue by brand.

It is also impracticable to provide income before income taxes attributable to Avast subsequent to the Merger due to the integration of our operations.

The Company does not consider it to be a separate operating unit or a separate reporting segment, pursuing an integrated brand, selling and marketing strategy, and is in the advanced stages of completing the full integration of Avast with our ongoing operations.

We recognized transaction and integration costs of $ 5 million and $ 7 million for the three months ended December 30, 2022 and December 31, 2021, respectively, and $ 71 million and $ 28 million for the nine months ended December 30, 2022 and December 31, 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.

On the Closing Date of the Merger, we 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 following unaudited pro forma financial information represents the combined historical results for the three and nine months ended December 30, 2022 and December 31, 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.

2 unchanged sentences

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

Three Months Ended Nine Months Ended

(In millions) December 30, 2022 December 31, 2021 December 30, 2022 December 31, 2021

Net revenues $ 936 $ 939 $ 2,857 $ 2,784

8 unchanged sentences

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.

During the three and nine months ended December 30, 2022, we recognized $ 686 million and $ 1,116 million from the contract liabilities balances as of September 30, 2022 and April 1, 2022, respectively.

During the three and nine months ended December 31, 2021, we recognized $ 505 million and $ 1,093 million from the contract liabilities balances as of October 1, 2021 and April 2, 2021, respectively.

Remaining performance obligations

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

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

As of December 30, 2022, we had $ 1,179 million of remaining performance obligations, excluding customer deposit liabilities of $ 550 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.

5 unchanged sentences

Translation adjustments

Balance as of September 30, 2022 $ 10,126

Balance as of December 30, 2022 $ 10,124

Intangible assets, net

September 30, 2022 April 1, 2022

December 30, 2022 April 1, 2022

(In millions) Gross

9 unchanged sentences

Total intangible assets $ 3,929 $ ( 717 ) $ 3,212 $ 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.

As a result of the Merger with Avast, we recorded $ 2,383 million of acquired intangible assets during the second quarter of fiscal 2023.

See Note 4 for further information about this business combination.

Amortization expense for purchased intangible assets is summarized below:

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

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

(In millions) December 30, 2022 December 31, 2021 December 30, 2022 December 31, 2021

Customer relationships and other $ 61 $ 21 $ 111 $ 63 Operating expenses

1 unchanged sentence

Total $ 118 $ 32 $ 189 $ 95

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

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

(In millions)

4 unchanged sentences

Cash and cash equivalents:

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

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

Cash $ 468 $ 609

2 unchanged sentences

Accounts receivable, net:

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

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

Accounts receivable $ 169 $ 121

2 unchanged sentences

Other current assets:

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

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

Prepaid expenses $ 118 $ 107

3 unchanged sentences

Property and equipment, net:

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

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

Land $ 14 $ 2

7 unchanged sentences

Total property and equipment, net $ 104 $ 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.

During the second quarter of fiscal 2023, 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.

1 unchanged sentence

Other long-term assets:

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

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

Non-marketable equity investments $ 182 $ 178

4 unchanged sentences

Short-term contract liabilities:

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

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

Deferred revenue $ 1,093 $ 743

2 unchanged sentences

Other current liabilities:

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

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

Income taxes payable $ 243 $ 109

5 unchanged sentences

Long-term income taxes payable:

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

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

Deemed repatriation tax payable $ 310 $ 437

3 unchanged sentences

Other income (expense), net:

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

(In millions) December 30, 2022 December 31, 2021 December 30, 2022 December 31, 2021

Interest income $ 5 $ — $ 10 $ —

5 unchanged sentences

Supplemental cash flow information:

Six Months Ended

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

Nine Months Ended

(In millions) December 30, 2022 December 31, 2021

Income taxes paid, net of refunds $ 378 $ 297

5 unchanged sentences

Non-cash investing and financing activities:

Purchases of property and equipment in current liabilities $ — $ 1

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

11 unchanged sentences

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

September 30, 2022 April 1, 2022

December 30, 2022 April 1, 2022

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

4 unchanged sentences

Non-marketable equity investments

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.

As of December 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 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.

As of December 30, 2022 and April 1, 2022, the total fair value of our fixed rate debt was $ 2,552 million and $ 2,021 million, respectively.

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

4 unchanged sentences

The following summarizes our lease costs:

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

(In millions) December 30, 2022 December 31, 2021 December 30, 2022 December 31, 2021

Operating lease costs $ 5 $ 4 $ 12 $ 12

4 unchanged sentences

Three Months Ended

September 30, 2022 October 1, 2021

December 30, 2022 December 31, 2021

Weighted-average remaining lease term 2.9 years 4.8 years

1 unchanged sentence

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

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

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

(In millions)

5 unchanged sentences

(In millions, except percentages)

September 30, 2022 April 1, 2022 Effective

December 30, 2022 April 1, 2022 Effective

Interest Rate

18 unchanged sentences

Total long-term debt $ 9,831 $ 2,736

(1) The Avira Mortgages are denominated in a foreign currency so the balances of these mortgages may fluctuate based on changes in foreign currency exchange rates.

(2) 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.

(3) 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.

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

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

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

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

December 30, 2022 April 1, 2022

Term A Facility due September 12, 2027 5.80 % N/A

Term B Facility due September 12, 2029 6.15 % N/A

Initial Term Loan due May 7, 2026 N/A 1.75 %

Delayed Term Loan due May 7, 2026 N/A 1.75 %

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

(In millions)

4 unchanged sentences

We have a credit agreement with financial institutions, which provides a revolving line of credit of $ 1 billion, a 5-year term loan of $ 500 million (the Initial Term Loan) and a delayed draw 5-year term loan commitment of $ 750 million (the Delayed Draw Term Loan).

An amendment to the agreement (the First Amendment) also provides for an incremental increase under the Initial Term Loan of $ 525 million.

An amendment to the credit agreement (the First Amendment) also provides for an incremental increase under the Initial Term Loan of $ 525 million.

All term loans and revolver credit facilities mature in May 2026, and the credit facilities remain senior secured.

21 unchanged sentences

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.

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

On January 19, 2023, we made a voluntary prepayment of $ 250 million pursuant to Section 2.05(a) of the Credit Agreement dated September 12, 2022.

The prepayment amount was applied exclusively to the Term B Facility.

As of December 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.

5 unchanged sentences

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.

As of December 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.

3 unchanged sentences

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.

We may redeem some or all of the 6.75 % Senior Notes due 2027 and 7.125 % Senior Notes due 2030 at any time, subject to a prepayment penalty that expires one year prior to the maturity of each respective note.

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.

23 unchanged sentences

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.

As of December 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 Six Months Ended

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

Three Months Ended Nine Months Ended

(In millions) December 30, 2022 December 31, 2021 December 30, 2022 December 31, 2021

Foreign exchange forward contracts gain (loss) $ 2 $ ( 1 ) $ ( 8 ) $ ( 4 )

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dollar equivalent was as follows:

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

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

Foreign exchange forward contracts purchased $ 234 $ 155

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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.

Actions under this plan include the reduction of our workforce, contract terminations, facilities closures, and the sale of underutilized facilities as well as stock-based compensation charges for accelerated equity awards to certain terminated employees.

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.

As of December 30, 2022, we have incurred costs of $ 48 million related to the September 2022 Plan.

December 2020 Plan

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Restructuring and other costs summary

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.

Our restructuring and other costs are presented in the table below:

Three Months Ended Nine Months Ended

(In millions) December 30, 2022 December 31, 2021 December 30, 2022 December 31, 2021

Severance and termination benefit costs $ 31 $ 1 $ 32 $ 5

Contract cancellation charges 1 1 1 2

Stock-based compensation charges 8 — 8 —

Asset write-offs and impairments 2 — 2 —

Other exit and disposal costs 2 10 12 17

Total restructuring and other costs $ 44 $ 12 $ 55 $ 24

Restructuring summary

Our activities and liabilities related to our September 2022 Plan are presented in the table below:

(in millions) Liability Balance as of April 1, 2022 Costs, Net of Adjustments Cash Payments Non-Cash Items Liability Balance as of December 30, 2022

Severance and termination benefit costs $ — $ 32 $ ( 17 ) $ — $ 15

Stock-based compensation charges — 8 — ( 8 ) —

Asset write-offs and impairments — 2 — ( 2 ) —

Other exit and disposal costs — 6 ( 4 ) ( 2 ) —

Total $ — $ 48 $ ( 21 ) $ ( 12 ) $ 15

The restructuring liabilities are included in Other current liabilities in our Condensed Consolidated Balance Sheets.

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

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

(In millions, except percentages)

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

December 30, 2022 December 31, 2021 December 30, 2022 December 31, 2021

Income (loss) before income taxes $ 216 $ 261 $ 640 $ 946

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Effective tax rate 24 % 23 % 32 % 24 %

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.

Our effective tax rate for the three and nine months ended December 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 discrete items 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 nine months ended December 31, 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.

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Stockholders' Equity

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.

On February 2, 2023, we announced that our Board of Directors declared a cash dividend of $ 0.125 per share of common stock to be paid in March 2023.

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.

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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 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

As of December 30, 2022, we had $ 870 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 three and nine months ended December 31, 2021.

The following table summarizes activity related to this program during the three and nine months ended December 30, 2022:

Three Months Ended Nine Months Ended

(In millions, except per share amounts)

September 30, 2022

December 30, 2022 December 30, 2022

Number of shares repurchased 23 40

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Aggregate purchase price $ 500 $ 904

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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Other comprehensive income (loss), net of taxes ( 24 )

Balance as of September 30, 2022 $ ( 15 )

Balance as of December 30, 2022 $ ( 28 )

Stock-Based Compensation

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

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

(In millions)

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

December 30, 2022 December 31, 2021 December 30, 2022 December 31, 2021

Cost of revenues $ 1 $ — $ 3 $ 1

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General and administrative 15 8 39 23

Restructuring and other costs 8 — 8 —

Total stock-based compensation expense $ 42 $ 18 $ 95 $ 51

Income tax benefit for stock-based compensation expense $ ( 5 ) $ ( 4 ) $ ( 13 ) $ ( 11 )

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.

As of December 30, 2022, the total unrecognized stock-based compensation expense related to our unvested stock-based awards was $ 259 million, which will be recognized over an estimated weighted-average amortization period of 2.1 years.

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

Six Months Ended

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

Nine Months Ended

(In millions, except per grant data) December 30, 2022 December 31, 2021

Restricted stock units (RSUs):

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

As of September 30, 2022 and April 1, 2022, current dividends payable related to DER was $ 4 million 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 December 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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The components of basic and diluted net income (loss) per share are as follows:

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

(In millions, except per share amounts)

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

December 30, 2022 December 31, 2021 December 30, 2022 December 31, 2021

Net income (loss) $ 165 $ 202 $ 434 $ 716

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

For the three and 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.

For the three and nine months ended December 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 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.

For the three and nine months ended December 31, 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.

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The following table summarizes net revenues for our major solutions:

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

(In millions) December 30, 2022 December 31, 2021 December 30, 2022 December 31, 2021

Consumer security revenues $ 590 $ 406 $ 1,428 $ 1,211

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$ 936 $ 702 $ 2,391 $ 2,080

(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.

(1) During the three months ended December 30, 2022, total net revenues include an unfavorable foreign exchange impact of $ 34 million, consisting of $ 33 million from our consumer security solutions and $ 1 million from our identity and information protection solutions.

During the nine months ended December 30, 2022, total net revenues include an unfavorable foreign exchange impact of $ 92 million, consisting of $ 89 million from our consumer security solutions, $ 2 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.

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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.

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

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

(In millions) December 30, 2022 December 31, 2021 December 30, 2022 December 31, 2021

Americas $ 622 $ 493 $ 1,659 $ 1,455

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APJ includes Asia Pacific and Japan.

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

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

(1) During the three months ended December 30, 2022, total net revenues include an unfavorable foreign exchange impact of $ 34 million, consisting of $ 1 million from Americas, $ 21 million from EMEA and $ 12 million from APJ.

During the nine months ended December 30, 2022, total net revenues include an unfavorable foreign exchange impact of $ 92 million, consisting of $ 1 million from Americas, $ 55 million from EMEA and $ 36 million from APJ.

Revenues from customers inside the U.S.

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

were $ 537 million and $ 1,509 million during the three and nine months ended December 30, 2022, respectively, and $ 467 million and $ 1,383 million during the three and nine months ended December 31, 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) September 30, 2022 April 1, 2022

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

$ 372 $ 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) September 30, 2022 April 1, 2022

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

Ireland 24 27

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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) September 30, 2022 April 1, 2022

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

Czech Republic 12 —

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(1) No other individual country represented more than 10% of the respective totals.

Significant customers

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

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

September 30, 2022 April 1, 2022

Customer A 14 % 23 %

Customer B 18 % — %

Significant customers and channel partners

No individual, end-user customer accounted for 10% or more of our net revenues during the nine months ended December 30, 2022 and December 31, 2021.

Distributors that accounted for over 10% of our total accounts receivable were as follows:

December 30, 2022 April 1, 2022

Distributor A 16 % 23 %

Distributor B 14 % N/A

Commitments and Contingencies

Indemnifications

In the ordinary course of business, we may provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners, subsidiaries and other parties with respect to certain matters, including, but not limited to, losses arising out of our breach of agreements or representations and warranties made by us.

In 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, product warranties and losses arising out of our breach of agreements or representations and warranties made by us, including claims alleging that our software infringes on the intellectual property rights of a third party.

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.

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Such indemnification agreements might not be subject to maximum loss clauses.

We monitor the conditions that are subject to indemnification to identify if a loss has occurred.

Historically, we have not incurred material costs as a result of obligations under these agreements, and we have not accrued any material liabilities related to such indemnification obligations in our Condensed Consolidated Financial Statements.

In connection with the sale of Veritas and the sale of our 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.

In connection with the sale of our Enterprise Security business to Broadcom, we assigned several leases to Broadcom or certain of its 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 Broadcom’s or such subsidiaries’ breach of payment obligations under the terms of such lease.

As with our other indemnification obligations discussed above and in general, it is not possible to determine the aggregate maximum potential loss under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement.

As with our other indemnification obligations, such indemnification agreements might not be subject to maximum loss clauses, and to date, generally under our real estate obligations, we have not incurred material costs as a result of such obligations under our leases and have not accrued any liabilities related to such indemnification obligations in our Condensed Consolidated Financial Statements.

We provide limited product warranties, and the majority of our software license agreements contain provisions that indemnify licensees of our software from damages and costs resulting from claims alleging that our software infringes on the intellectual property rights of a third party.

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

Historically,

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

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Our Motion to Dismiss is now pending.

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

District Courts for the District of Delaware and the Northern District of California, Delaware Chancery Court, and Delaware Superior Court, arising generally out of the same facts and circumstances as alleged in the securities class action and alleging claims for breach of fiduciary duty and related claims;

these lawsuits include an action brought derivatively on behalf of our 2008 Employee Stock Purchase Plan.

Purported shareholder derivative lawsuits have been filed against us and certain of our former officers and current and former directors in the Delaware Court of Chancery ( In re Symantec Corp.

), Northern District of California ( Lee v.

Clark et al., ), and the District of Delaware ( Milliken vs.

These assert generally the same facts and circumstances as alleged in the securities class action and alleging claims for breach of fiduciary duty and related claims.

On January 4, 2023, after reaching an agreement on the terms of the proposed settlement including a payment of $ 12 million by the Company’s D&O insurers to the Chancery plaintiffs, the parties to the Chancery action filed a Stipulation and Agreement of Settlement, Compromise and Release in that Court, which if approved by the Court will extinguish all claims in the Chancery, Lee , and Milliken actions.

On January 10, 2023, the Court entered a scheduling order regarding the settlement notice, objection and approval process.

Under the scheduling order, the Company will provide notice of the settlement to current stockholders, and stockholders will have until March 24, 2023, to lodge objections to the settlement.

The Lee action has been stayed pending the settlement hearing in the Chancery Court.

A fourth lawsuit filed in the Delaware Superior Court, Kukard v.

Symantec , brings claims derivatively on behalf of our 2008 Employee Stock Purchase Plan.

Motions to Dismiss are on file and fully briefed in the Lee , Milliken and Kukard actions.

No specific amount of damages has been alleged in these lawsuits.

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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 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;

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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 January 19, 2023, the Court issued its Findings of Facts and Conclusions of Law in which it found in favor of the United States in part and awarded damages and penalties in the amount of $ 1.3 million.

The Court also found in favor of the State of California in part and awarded penalties in the amount of $ 0.4 million.

The resulting Judgment was filed by the Court on January 20, 2023.

At this time, we are considering whether to appeal the Court’s decision.

Plaintiffs have not yet indicated if they intend to appeal.

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

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

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

It is possible that the litigation could lead to claims or findings of violations of the False Claims Act and could be material to our results of operations and cash flows for any period.

At this time, our current estimate of the low end of the range of probable estimated losses from this matter was reduced to $ 3 million, inclusive of the judgment and potential related awards, which we have accrued.

It is possible that an appeal of the Court’s judgment by the Plaintiffs, if brought, could lead to further 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.

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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.

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).

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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.

On December 12, 2022, a putative class action, Lau v.

Gen Digital Inc.

and Jumpshot Inc ., was filed in the Northern District of California alleging violations of the Electronic Communications Privacy Act, California Invasion of Privacy Act, statutory larceny, unfair competition and various common law claims related to the provision of customer data to Jumpshot.

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

We dispute these claims and intend to defend them vigorously.

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.

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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