Gen Digital Inc. 10-K

Item 9A. Controls and Procedures (a) Evaluation of Disclosure Controls and Procedures The SEC defines the term “disclosure controls and procedures” to mean a company’s controls and other procedures that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms. “Disclosure controls and procedures” include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our disclosure controls and procedures are designed to provide reasonable assurance that such information is accumulated and communicated to our management. Our management (with the participation of our Chief Executive Officer and Chief Financial Officer) has conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Based on such evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period covered by this Annual Report on Form 10-K. (b) Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) for Gen Digital. Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has conducted an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). We acquired Avast during September 2022. Management excluded Avast from its assessment of the effectiveness of Gen’s internal control over financial reporting as of March 31, 2023. Total assets (excluding goodwill and intangibles) and total revenues of Avast represent approximately 3%, or $462 million and 16%, or $518 million, respectively, of the Consolidated Financial Statements amounts as of, and for the year ended, March 31, 2023. Management did not assess the effectiveness of internal controls over financial reporting of Avast due to the complexity associated with assessing internal control during integration efforts as well as the limited amount of time between the transaction date and the assessment date of March 31, 2023. Our management has concluded that, as of March 31, 2023, our internal control over financial reporting was effective at the reasonable assurance level based on these criteria. The effectiveness of our internal control over financial reporting, as of March 31, 2023, has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report, which is included in Part IV, Item 15 of this Annual Report on Form 10-K. (c) Changes in Internal Control over Financial Reporting During the quarter ended March 31, 2023, except for changes in connection with our Merger with Avast discussed above, there were no changes in our internal controls over financial reporting or in other factors, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. (d) Limitations on Effectiveness of Controls Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. Item 9B. Other Information None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 37 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance The information required by this item will be included under the caption “Directors, Executive Officers, and Corporate Governance” in our proxy statement for the 2023 Annual Meeting to be filed with the SEC within 120 days of the fiscal year ended March 31, 2023 (the 2023 Proxy Statement) and is incorporated herein by reference . With regard to the information required by this item regarding compliance with Section 16(a) of the Exchange Act, we will provide disclosure of delinquent Section 16(a) reports, if any, in the 2023 Proxy Statement, and such disclosure, if any, is incorporated herein by reference. Item 11. Executive Compensation The information required by this item will be included under the caption “Executive Compensation” in our 2023 Proxy Statement and is incorporated herein by reference (excluding the information under the subheading “Pay Versus Performance”). Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this item will be included under the caption “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” in our 2023 Proxy Statement and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by this item will be included under the caption “Certain Relationships and Related Transactions, and Director Independence” in our 2023 Proxy Statement and is incorporated herein by reference. Item 14. Principal Accountant Fees and Services Our independent registered public accounting firm is KPMG, LLP , Santa Clara, CA , Auditor Firm ID: 185 . The information required by this item will be included under the caption “Principal Accountant Fees and Services” in our 2023 Proxy Statement and is incorporated herein by reference. 38 Table of Contents PART IV Item 15. Exhibits, Financial Statement Schedules (a) (1). Financial Statements Upon written request, we will provide, without charge, a copy of this annual report, including the Consolidated Financial Statements and financial statement schedule. All requests should be sent to: Gen Digital Inc. Attn: Investor Relations 60 E. Rio Salado, Suite 1000 Tempe, Arizona 85281 (650) 527-8000 The following documents are filed as part of this report: Page 1. Consolidated Financial Statements: Report of Independent Registered Public Accounting Firm 40 Consolidated Balance Sheets 42 Consolidated Statements of Operations 43 Consolidated Statements of Comprehensive Income (Loss) 44 Consolidated Statements of Stockholders’ Equity (Deficit) 45 Consolidated Statements of Cash Flows 46 Notes to the Consolidated Financial Statements 47 Note 1. Description of Business and Significant Accounting Policies 47 Note 2. Recent Accounting Standards 52 Note 3. Divestitures, Discontinued Operations and Assets Held for Sale 52 Note 4. Business Combinations 53 Note 5. Revenues 57 Note 6. Goodwill and Intangible Assets 57 Note 7. Supplementary Information 58 Note 8. Financial Instruments and Fair Value Measurements 60 Note 9. Leases 60 Note 10. Debt 62 Note 11. Derivatives 66 Note 12. Restructuring and Other Costs 67 Note 13. Income Taxes 68 Note 14. Stockholders’ Equity 71 Note 15. Stock-Based Compensation and Other Benefit Plans 71 Note 16. Net Income Per Share 75 Note 17. Segment and Geographic Information 76 Note 18. Commitments and Contingencies 77 Financial statement schedules have been omitted since they are either not required, not applicable, or the information is otherwise included. 2. Exhibits: The information required by this Item is set forth in the Exhibit Index that precedes the signature page of this Annual Report. 80 39 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Gen Digital Inc.: Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting We have audited the accompanying consolidated balance sheets of Gen Digital Inc. and subsidiaries (the Company) as of March 31, 2023 and April 1, 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity (deficit), and cash flows for each of the years in the three-year period ended March 31, 2023, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of March 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2023 and April 1, 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended March 31, 2023, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2023 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company acquired Avast plc during September 2022 and management excluded it from its assessment of the effectiveness of the Company’s internal control over financial reporting as of March 31, 2023, Avast plc’s internal control over financial reporting associated with total assets (excluding goodwill and intangibles) and total revenues representing approximately 3%, or $462 million, and 16%, or $518 million, respectively, included in the consolidated financial statements of the Company as of and for the year ended March 31, 2023. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Avast plc. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters 40 Table of Contents The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Sufficiency of audit evidence over net revenues As discussed in Note 1 to the consolidated financial statements, the Company’s net revenues are principally derived from the sale of packaged software products directly to end-user customers through a multi-tiered distribution channel. The processing of customer orders through to the determination of net revenues to be recognized is reliant upon multiple information technology (IT) systems. The Company recorded $3,338 million of net revenues for the year ended March 31, 2023. We identified the evaluation of sufficiency of audit evidence over net revenues as a critical audit matter. The evaluation of sufficiency of audit evidence over net revenues required a high degree of subjective auditor judgment due to the number of revenue-related IT systems involved. Specifically, judgment was required to evaluate that revenue data was captured and aggregated throughout various IT systems. Additionally, IT professionals with specialized skills and knowledge were required to evaluate the nature and extent of evidence obtained over net revenues. The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the nature and extent of procedures to be performed over net revenues. We evaluated the design and tested the operating effectiveness of certain internal controls related to the revenue process, including IT related controls. We involved IT professionals with specialized skills and knowledge, who assisted in identifying and testing key IT configuration and IT interface controls for the various systems processing and recording revenue transactions. For a sample of transactions, we assessed the recorded revenue by comparing cash receipts to the revenue recognized. We evaluated the sufficiency of audit evidence obtained over net revenues by assessing the results of procedures performed. Assessment of uncertain tax positions As discussed in Notes 1 and 13 to the consolidated financial statements, as of March 31, 2023, the Company recognized uncertain tax positions. The Company evaluates uncertain tax positions to determine whether it is more likely than not that the tax position will be sustained upon examination by the taxing authorities based on the technical merits of the position. As of March 31, 2023, the Company recorded a liability for gross unrecognized tax benefits of $710 million. We identified the assessment of uncertain tax positions as a critical audit matter. Complex auditor judgment, including the involvement of tax professionals with specialized skills and knowledge, was required to evaluate the Company’s determination of uncertain tax positions, which included assessing the Company’s interpretation and application of tax laws globally across its multiple jurisdictions. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s uncertain tax positions process, including controls related to the determination of uncertain tax positions, which included assessing the Company’s interpretation and application of tax laws. We evaluated the Company’s ability to identify and determine its uncertain tax positions by comparing historical uncertain tax positions to actual outcomes upon conclusion of tax examinations. We involved tax professionals with specialized skills and knowledge, who assisted in: ● Obtaining an understanding of the Company’s overall tax structure across multiple jurisdictions and assessing the Company’s compliance with tax laws globally, ● Evaluating changes in tax law, and assessing the interpretation under the relevant jurisdictions’ tax law, ● Inspecting settlements with taxing authorities to assess the Company’s determination of its tax positions, ● Inspecting correspondence and agreements with taxing authorities, reading internal meeting minutes, and evaluating the status of income tax audits with relevant tax authorities, and ● Performing an assessment of the Company’s tax positions and comparing to the results of the Company’s assessment. /s/ KPMG LLP We have served as the Company’s auditor since 2002. Santa Clara, California May 24, 2023 41 Table of Contents GEN DIGITAL INC. CONSOLIDATED BALANCE SHEETS (In millions, except par value per share amounts) March 31, 2023 April 1, 2022 ASSETS Current assets: Cash and cash equivalents $ 750 $ 1,887 Short-term investments — 4 Accounts receivable, net 168 120 Other current assets 284 193 Assets held for sale 31 56 Total current assets 1,233 2,260 Property and equipment, net 76 60 Operating lease assets 43 74 Intangible assets, net 3,097 1,023 Goodwill 10,217 2,873 Other long-term assets 1,281 653 Total assets $ 15,947 $ 6,943 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) Current liabilities: Accounts payable $ 77 $ 63 Accrued compensation and benefits 102 81 Current portion of long-term debt 233 1,000 Contract liabilities 1,708 1,264 Current operating lease liabilities 26 18 Other current liabilities 703 639 Total current liabilities 2,849 3,065 Long-term debt 9,529 2,736 Long-term contract liabilities 80 42 Deferred income tax liabilities 395 75 Long-term income taxes payable 820 996 Long-term operating lease liabilities 31 75 Other long-term liabilities 43 47 Total liabilities 13,747 7,036 Commitments and contingencies (Note 18) Stockholders’ equity (deficit): Common stock and additional paid-in capital, $ 0.01 par value: 3,000 shares authorized; 640 and 582 shares issued and outstanding as of March 31, 2023 and April 1, 2022, respectively 2,800 1,851 Accumulated other comprehensive income (loss) ( 15 ) ( 4 ) Retained earnings (accumulated deficit) ( 585 ) ( 1,940 ) Total stockholders’ equity (deficit) 2,200 ( 93 ) Total liabilities and stockholders’ equity (deficit) $ 15,947 $ 6,943 The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements. 42 Table of Contents GEN DIGITAL INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share amounts) Year Ended March 31, 2023 April 1, 2022 April 2, 2021 Net revenues $ 3,338 $ 2,796 $ 2,551 Cost of revenues 589 408 362 Gross profit 2,749 2,388 2,189 Operating expenses: Sales and marketing 682 622 576 Research and development 313 253 267 General and administrative 286 392 215 Amortization of intangible assets 172 85 74 Restructuring and other costs 69 31 161 Total operating expenses 1,522 1,383 1,293 Operating income (loss) 1,227 1,005 896 Interest expense ( 401 ) ( 126 ) ( 144 ) Other income (expense), net ( 22 ) 163 120 Income (loss) from continuing operations before income taxes 804 1,042 872 Income tax expense (benefit) ( 545 ) 206 176 Income (loss) from continuing operations 1,349 836 696 Income (loss) from discontinued operations — — ( 142 ) Net income (loss) $ 1,349 $ 836 $ 554 Income (loss) per share - basic: Continuing operations $ 2.20 $ 1.44 $ 1.18 Discontinued operations $ — $ — $ ( 0.24 ) Net income per share - basic $ 2.20 $ 1.44 $ 0.94 Income (loss) per share - diluted: Continuing operations $ 2.16 $ 1.41 $ 1.16 Discontinued operations $ — $ — $ ( 0.24 ) Net income per share - diluted $ 2.16 $ 1.41 $ 0.92 Weighted-average shares outstanding: Basic 614 581 589 Diluted 624 591 600 The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements. 43 Table of Contents GEN DIGITAL INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In millions) Year Ended March 31, 2023 April 1, 2022 April 2, 2021 Net income (loss) $ 1,349 $ 836 $ 554 Other comprehensive income (loss), net of taxes: Foreign currency translation adjustments ( 11 ) ( 51 ) 63 Other comprehensive income (loss), net of taxes ( 11 ) ( 51 ) 63 Comprehensive income (loss) $ 1,338 $ 785 $ 617 The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements. 44 Table of Contents GEN DIGITAL INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) (In millions, except share amounts) Common Stock and Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings (Accumulated Deficit) Total Stockholders’ Equity (Deficit) Shares Amount Balance as of April 3, 2020 589 $ 3,356 $ ( 16 ) $ ( 3,330 ) $ 10 Net income (loss) — — — 554 554 Other comprehensive income (loss), net of taxes — — 63 — 63 Common stock issued under employee stock incentive plans 8 24 — — 24 Shares withheld for taxes related to vesting of stock units ( 2 ) ( 49 ) — — ( 49 ) Repurchases of common stock ( 15 ) ( 304 ) — — ( 304 ) Cash dividends declared ($ 0.50 per share of common stock) and dividend equivalents accrued — ( 301 ) — — ( 301 ) Stock-based compensation — 81 — — 81 Exchange and extinguishment of convertible debt — ( 578 ) — — ( 578 ) Balance as of April 2, 2021 580 2,229 47 ( 2,776 ) ( 500 ) Net income (loss) — — — 836 836 Other comprehensive income (loss), net of taxes — — ( 51 ) — ( 51 ) Common stock issued under employee stock incentive plans 3 14 — — 14 Shares withheld for taxes related to vesting of stock units ( 1 ) ( 16 ) — — ( 16 ) Cash dividends declared ($ 0.50 per share of common stock) and dividend equivalents accrued — ( 294 ) — — ( 294 ) Stock-based compensation — 70 — — 70 Extinguishment of convertible debt — ( 152 ) — — ( 152 ) Balance as of April 1, 2022 582 1,851 ( 4 ) ( 1,940 ) ( 93 ) Net income (loss) — — — 1,349 1,349 Other comprehensive income (loss), net of taxes — — ( 11 ) — ( 11 ) Common stock issued under employee stock incentive plans 5 12 — — 12 Shares withheld for taxes related to vesting of stock units ( 1 ) ( 19 ) — — ( 19 ) Repurchases of common stock ( 40 ) ( 904 ) — — ( 904 ) Cash dividends declared ($ 0.50 per share of common stock) and dividend equivalents accrued — ( 308 ) — — ( 308 ) Stock-based compensation — 134 — — 134 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 March 31, 2023 640 $ 2,800 $ ( 15 ) $ ( 585 ) $ 2,200 (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 to the Consolidated Financial Statements are an integral part of these statements. 45 Table of Contents GEN DIGITAL INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Year Ended March 31, 2023 April 1, 2022 April 2, 2021 OPERATING ACTIVITIES: Net income $ 1,349 $ 836 $ 554 Adjustments: Amortization and depreciation 329 140 150 Impairments and write-offs of current and long-lived assets 25 13 90 Stock-based compensation expense 134 70 81 Deferred income taxes ( 145 ) ( 81 ) 42 Loss (gain) on extinguishment of debt 9 3 ( 20 ) Gain on sale of properties — ( 175 ) ( 98 ) Non-cash operating lease expense 23 20 22 Other 2 1 52 Changes in operating assets and liabilities, net of acquisitions: Accounts receivable, net 11 ( 9 ) 3 Accounts payable ( 8 ) 10 ( 44 ) Accrued compensation and benefits ( 6 ) ( 26 ) ( 10 ) Contract liabilities ( 5 ) 67 118 Income taxes payable ( 128 ) ( 78 ) ( 299 ) Other assets ( 696 ) ( 7 ) 144 Other liabilities ( 137 ) 190 ( 79 ) Net cash provided by (used in) operating activities 757 974 706 INVESTING ACTIVITIES: Purchases of property and equipment ( 6 ) ( 6 ) ( 6 ) Payments for acquisitions, net of cash acquired ( 6,547 ) ( 39 ) ( 344 ) Proceeds from the maturities and sales of short-term investments 4 15 68 Proceeds from the sale of properties — 355 218 Other 2 1 ( 5 ) Net cash provided by (used in) investing activities ( 6,547 ) 326 ( 69 ) FINANCING ACTIVITIES: Repayments of debt and related equity component ( 3,047 ) ( 541 ) ( 1,941 ) Proceeds from issuance of debt, net of issuance costs 8,954 512 750 Net proceeds from sales of common stock under employee stock incentive plans 12 14 24 Tax payments related to vesting of stock units ( 20 ) ( 15 ) ( 58 ) Dividends and dividend equivalents paid ( 314 ) ( 303 ) ( 373 ) Repurchases of common stock ( 904 ) — ( 304 ) Other — — ( 1 ) Net cash provided by (used in) financing activities 4,681 ( 333 ) ( 1,903 ) Effect of exchange rate fluctuations on cash and cash equivalents ( 28 ) ( 13 ) 22 Change in cash and cash equivalents ( 1,137 ) 954 ( 1,244 ) Beginning cash and cash equivalents 1,887 933 2,177 Ending cash and cash equivalents $ 750 $ 1,887 $ 933 The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements. 46 Table of Contents GEN DIGITAL INC. Notes to the Consolidated Financial Statements Note 1. Description of Business and Significant Accounting Policies Business 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 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). Gen is a global company powering Digital Freedom with a family of trusted consumer brands including Norton, Avast, LifeLock, Avira, AVG, ReputationDefender and CCleaner. Our Cyber Safety portfolio provides protection across multiple channels and geographies, including security and performance, identity protection, and online privacy. Our technology platforms bring together software and service capabilities into comprehensive and easy-to-use products and solutions across our brands. We have also evolved beyond traditional Cyber Safety to offer adjacent trust-based solutions, including digital identity and access management, digital reputation, and restoration support services. Basis of presentation The accompanying Consolidated Financial Statements of Gen Digital Inc. and our wholly-owned subsidiaries are prepared in conformity with generally accepted accounting principles in the United States (GAAP). All significant intercompany accounts and transactions have been eliminated in consolidation. Fiscal calendar We have a 52/53-week fiscal year ending on the Friday closest to March 31. Fiscal 2023, 2022 and 2021 in this report refers to fiscal years ended March 31, 2023, April 1, 2022, and April 2, 2021, respectively, each of which was a 52-week year. Use of estimates The preparation of Consolidated Financial Statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying Notes. Such estimates include, but are not limited to, valuation of business combinations including acquired intangible assets and goodwill, loss contingencies, the recognition and measurement of current and deferred income taxes, including the measurement of uncertain tax positions, and valuation of assets and liabilities. On an ongoing basis, management determines these estimates and assumptions based on historical experience and on various other assumptions that are believed to be reasonable. Third-party valuation specialists are also utilized for certain estimates. Actual results could differ from such estimates and assumptions due to risks and uncertainties, including uncertainty in the current economic environment 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 Consolidated Financial Statements. Significant Accounting Policies With the exception of those discussed in Note 2, there were no material changes in accounting pronouncements issued by the Financial Accounting Standards Board (FASB) that were applicable or adopted by us during fiscal 2023. Revenue recognition We sell products and services directly to end-users and packaged software products through a multi-tiered distribution channel. We recognize revenue when control of the promised products or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for such products or services. Performance periods are generally one year or less, and payments are generally collected up front. Revenue is recognized net of allowances for partner incentives and rebates, and any taxes collected from customers and subsequently remitted to governmental authorities. Revenue from e-commerce partners is recognized on a gross basis before the deduction of partner incentive and fees. Taxes will be collected by our e-commerce partners and subsequently remitted to governmental authorities. We offer various channel rebates for our products. Our estimated reserves for channel volume incentive rebates are based on distributors’ and resellers’ performance compared to the terms and conditions of volume incentive rebate programs, which are typically entered into quarterly. Our reserves for rebates are estimated based on the terms and conditions of the promotional program, actual sales during the promotion, the amount of redemptions received, historical redemption trends by product and by type of promotional program and the value of the rebate. We record estimated reserves for rebates as an offset to revenue or contract liabilities. Reserves for rebates, recorded in Other current liabilities, were $ 4 million and $ 5 million as of March 31, 2023 and April 1, 2022, respectively. For products that include content updates and services, rebates are recognized as a ratable offset to revenue or contract liabilities over the term of the subscription. 47 Table of Contents Performance obligations At contract inception, we assess the products and services promised in the contract to identify each performance obligation and evaluate whether the performance obligations are capable of being distinct and are distinct within the context of the contract. Performance obligations that are not both capable of being distinct and are distinct within the context of the contract are combined and treated as a single performance obligation in determining the allocation and recognition of revenue. Our software solutions typically consist of a term-based subscription as well as when-and-if available software updates and upgrades. We have determined that our promises to transfer the software license subscription and the related support and maintenance are not separately identifiable because: • the licensed software and the software updates and upgrades are highly interdependent and highly interrelated, working together to deliver continuously updated protection to customers; • by identifying and addressing new threats, the software updates and upgrades significantly modify the licensed software and are integral to maintaining its utility; and • given the rapid pace with which new threats are identified, the value of the licensed software diminishes rapidly without the software updates and upgrades. We therefore consider the software license and related support obligations a single, combined performance obligation with revenue recognized over time as our solutions are delivered. Fair value measurements For assets and liabilities measured at fair value, fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, we consider the principal or most advantageous market in which we would transact, and we consider assumptions that market participants would use when pricing the asset or liability. The three levels of inputs that may be used to measure fair value are: • Level 1: Quoted prices in active markets for identical assets or liabilities. • Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in less active markets or model-derived valuations. All significant inputs used in our valuations, such as discounted cash flows, are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities. • Level 3: Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of assets or liabilities. We monitor and review the inputs and results of these valuation models to help ensure the fair value measurements are reasonable and consistent with market experience in similar asset classes. Assets measured and recorded at fair value: Cash equivalents . We consider all highly liquid investments with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents are carried at amounts that approximate fair value due to the short period of time to maturity. Short-term investments . Short-term investments consist primarily of corporate bonds. They are classified as available-for-sale and recognized at fair value using Level 1 and Level 2 inputs, which are quoted using market prices, independent pricing vendors or other sources, to determine the fair value. Unrealized gains and losses, net of tax, are included in Accumulated other comprehensive income (loss) (AOCI). We regularly review our investment portfolio to identify and evaluate investments that have indications of impairment. Available-for-sale debt securities with an amortized cost basis in excess of estimated fair value are assessed to determine what amount of that difference, if any, is caused by expected credit losses. Factors considered in determining if a credit loss exists include: the extent to which the fair value has been lower than the cost basis, any changes to the rating of the security by a rating agency and any adverse financial conditions specifically related to the security. Expected credit losses on available-for-sale debt securities are recognized in Other income (expense), net in our Consolidated Statements of Operations, and any remaining unrealized losses, net of taxes, are included in AOCI in our Consolidated Statements of Stockholders’ Equity (Deficit). Non-marketable investments Our non-marketable investments consist of equity investments in privately-held companies without a readily determinable fair value. We primarily measure these investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. We may elect to measure certain investments at fair value, for which we utilize third-party valuation specialists at least annually in the fourth quarter of each fiscal year, or more frequently if events or changes in circumstances indicate a change in the fair value of the investment. Gains and losses on these investments, whether realized or unrealized, are recognized in Other income (expense), net in our Consolidated Statements of Operations. We assess the recoverability of our non-marketable investments by reviewing various indicators of impairment. If indicators are present, a fair value measurement is made by performing a discounted cash flow analysis of the investment. We immediately recognize the impairment to our non-marketable equity investments if the carrying value exceeds the fair value. 48 Table of Contents Accounts receivable Accounts receivable are recorded at the invoiced amount and are not interest bearing. We maintain an allowance for doubtful accounts or expected credit losses to reserve for expected uncollectible receivables. We review our accounts receivables by aging category to identify specific customers with known disputes or collectability issues. In addition, we maintain an allowance for all other receivables not included in the specific reserve by applying specific percentages of projected uncollectible receivables to the various aging categories. In determining these percentages, we use judgment based on our historical collection experience and current economic trends as well as reasonable and supportable forecasts of future economic conditions. Assets held for sale Long-lived assets held for sale are recorded at the lower of carrying value or fair value less costs to sell. Fair value is determined based on discounted cash flows, appraised values or management’s estimates, depending upon the nature of the assets and external data available. Property and equipment Property, equipment, and leasehold improvements are stated at cost, net of accumulated depreciation. Depreciation is provided on a straight-line basis over the estimated useful lives. Estimated useful lives for financial reporting purposes are as follows: buildings, 20 to 30 years; building improvements, 7 to 20 years; leasehold improvements, the lesser of the life of the improvement or the initial lease term, and computer hardware and software and office furniture and equipment, 3 to 5 years. Software development costs The costs for the development of new software products and substantial enhancements to existing software products are expensed as incurred until technological feasibility has been established, at which time any additional costs would be capitalized in accordance with the accounting guidance for software. Because our current process for developing software is essentially completed concurrently with the establishment of technological feasibility, which occurs upon the completion of a working model, no costs have been capitalized for any of the periods presented. Internal-use software development costs We capitalize qualifying costs incurred during the application development stage related to software developed for internal-use and amortize them over the estimated useful life of 3 years. We expense costs incurred related to the planning and post-implementation phases of development as incurred. As of March 31, 2023 and April 1, 2022, capitalized costs, net of amortization, were $ 6 million and $ 6 million, respectively. Leases We determine if an arrangement is a lease at inception. We have elected to not recognize a lease liability or right-of-use (ROU) asset for short-term leases (leases with a term of twelve months or less that do not include an option to purchase the underlying asset). Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The interest rate we use to determine the present value of future payments is our incremental borrowing rate because the rate implicit in our leases is not readily determinable. Our incremental borrowing rate is a hypothetical rate for collateralized borrowings in economic environments where the leased asset is located based on credit rating factors. Our operating lease assets also include adjustments for prepaid lease payments , lease incentives and initial direct costs . Certain lease contracts include obligations to pay for other services, such as operations and maintenance. We elected the practical expedient whereby we record all lease components and the related minimum non-lease components as a single lease component. Cash payments made for variable lease costs are not included in the measurement of our operating lease assets and liabilities. Many of our lease terms include one or more options to renew. We do not assume renewals in our determination of the lease term unless it is reasonably certain that we will exercise that option. Lease costs for minimum lease payments for operating leases are recognized on a straight-line basis over the lease term. Our lease agreements do not contain any residual value guarantees. Business combinations We use the acquisition method of accounting under the authoritative guidance on business combinations. We allocate the purchase price of our acquisitions to the assets acquired and liabilities assumed based on their estimated fair values. The excess of the purchase price over the fair values of these identifiable assets and liabilities is recorded as goodwill. Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred. Each acquired company’s operating results are included in our Consolidated Financial Statements starting on the date of acquisition. Goodwill Goodwill is recorded when consideration paid for an acquisition exceeds the fair value of net tangible and intangible assets acquired. We perform an impairment assessment of goodwill at the reporting unit level at least annually in the fourth quarter of each fiscal year, or more frequently if events or changes in circumstances indicate that the asset may be impaired. The accounting guidance gives us the option to perform a qualitative assessment to determine whether further impairment testing is necessary. The qualitative assessment considers events and circumstances that might indicate that a reporting unit’s fair value is less than 49 Table of Contents its carrying amount. If it is determined, as a result of the qualitative assessment, that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative test is performed. In fiscal 2023, based on our qualitative assessments, we concluded that it is more likely than not that the fair values are more than their carrying values. Accordingly, there was no indication of impairment of goodwill, and further quantitative testing was not required. Long-lived assets In connection with our acquisitions, we generally recognize assets for customer relationships, developed technology, finite-lived trade names, patents and indefinite-lived trade names. Finite-lived intangible assets are carried at cost less accumulated amortization. Such amortization is provided on a straight-line basis over the estimated useful lives of the respective assets, generally from 1 to 9 years. Amortization for developed technology is recognized in cost of revenue. Amortization for customer relationships and certain trade names is recognized in operating expenses. Indefinite-lived intangible assets are not subject to amortization but instead tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets, including finite-lived intangible assets and property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or group may not be recoverable. The evaluation is performed at the lowest level of identifiable cash flows independent of other assets. An impairment loss is recognized when estimated undiscounted future cash flows generated from the assets are less than their carrying amount. Measurement of an impairment loss is based on the excess of the carrying amount of the asset group over its fair value. In fiscal 2023, based on our qualitative and quantitative assessments, we concluded that it is more likely than not that the fair values are more than their carrying values. Accordingly, there was no indication of impairment of long-lived assets, and further quantitative testing was not required. Contract liabilities Contract liabilities consist of deferred revenue and customer deposit liabilities and represent cash payments received or due in advance of fulfilling our performance obligations. Deferred revenue represents billings under non-cancelable contracts before the related product or service is transferred to the customer. Certain arrangements include terms that allow the customer to terminate the contract and receive a pro-rata refund for a period of time. In these arrangements, we have concluded there are no enforceable rights and obligations during the period in which the option to cancel is exercisable by the customer, and therefore the consideration received or due from the customer is recorded as a customer deposit liability. Debt Our debt includes senior unsecured notes, senior term loans and a senior secured revolving credit facility. Our senior unsecured notes are recorded at par value at issuance less a discount representing the amount by which the face value exceeds the fair value at the date of issuance and an amount which represents issuance costs. Our senior term loans are recorded at par value less debt issuance costs, which are recorded as a reduction in the carrying value of the debt. The discount and issuance costs associated with the various notes are amortized using the effective interest rate method over the term of the debt as a non-cash charge to interest expense. Borrowings under our revolving credit facility, if any, are recognized at principal balance plus accrued interest based upon stated interest rates. Debt maturities are classified as current liabilities on our Consolidated Balance Sheets if we are contractually obligated to repay them in the next twelve months or, prior to the balance sheet date, we have the authorization and intent to repay them prior to their contractual maturities and within the next twelve months. Treasury stock We account for treasury stock under the cost method. Shares repurchased under our share repurchase program are retired. Upon retirement, we allocate the value of treasury stock between Additional paid-in capital and Retained earnings. Restructuring Restructuring actions generally include significant actions involving employee-related severance charges, contract termination costs and asset write-offs and impairments. Employee-related severance charges are largely based upon substantive severance plans, while some charges result from mandated requirements in certain foreign jurisdictions. These charges are reflected in the period when both the actions are probable and the amounts are estimable. Contract termination costs reflect costs that will continue to be incurred under a contract for its remaining term without future economic benefit. These charges are reflected in the period when a contract is terminated. Asset write-offs and impairments, including those related to ROU lease assets, are recognized in the period that an asset is decommissioned or a facility ceases to be used. Income taxes We compute the provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities and for operating losses and tax credit carryforwards in each jurisdiction in which we operate. We measure deferred tax assets and liabilities using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled. We also assess the likelihood that deferred tax assets will be realized from future taxable income and based on weighting positive and negative evidence, we will assess and determine the need for a valuation allowance, if required. The determination of our valuation allowance involves assumptions, judgments and estimates, including forecasted earnings, future taxable income 50 Table of Contents and the relative proportions of revenue and income before taxes in the various domestic and international jurisdictions in which we operate. To the extent we establish a valuation allowance or change the valuation allowance in a period, we reflect the change with a corresponding increase or decrease to our tax expense. We record accruals for uncertain tax positions when we believe that it is not more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. We adjust these accruals when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. The provision for income taxes includes the effects of adjustments for uncertain tax positions as well as any related interest and penalties. Stock-based compensation We measure and recognize stock-based compensation for all stock-based awards, including restricted stock units (RSU), performance-based restricted stock units (PRU), stock options and rights to purchase shares under our employee stock purchase plan (ESPP), based on their estimated fair value on the grant date. We recognize the costs in our Consolidated Financial Statements on a straight-line basis over the award’s requisite service period except for PRUs with graded vesting, for which we recognize the costs on a graded basis. For awards with performance conditions, the amount of compensation cost we recognize over the requisite service period is based on the actual or estimated achievement of the performance condition. We estimate the number of stock-based awards that will be forfeited due to employee turnover. The fair value of each RSU and PRU that does not contain a market condition is equal to the market value of our common stock on the date of grant. The fair value of each PRU that contains a market condition is estimated using the Monte Carlo simulation model. The fair values of RSUs and PRUs are not discounted by the dividend yield because our RSUs and PRUs include dividend-equivalent rights, except for the $ 4 million unvested RSUs assumed as part of the Merger with Avast. We use the Black-Scholes model to determine the fair value of stock options and the fair value of rights to acquire shares of common stock under our ESPP . The Black-Scholes valuation model incorporates a number of variables, including our expected stock price volatility over the expected life of the awards, actual and projected employee exercise and forfeiture behaviors, risk-free interest rates and expected dividends. If the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected life, we estimate the expected life of the stock option awards granted based on its expected term using the simplified method available under U.S. GAAP. Foreign currency For foreign subsidiaries whose functional currency is the local currency, assets and liabilities are translated to U.S. dollars at exchange rates in effect at the balance sheet date. Gains and losses resulting from translation of these foreign currency financial statements into U.S. dollars are recorded in AOCI. Remeasurement adjustments are recorded in Other income (expense), net in our Consolidated Statements of Operations. Concentrations of risk A significant portion of our revenue is derived from international sales. Fluctuations of the U.S. dollar against foreign currencies, changes in local regulatory or economic conditions, or piracy could adversely affect our operating results. Financial instruments that potentially subject us to concentrations of risk consist principally of cash and cash equivalents, short-term investments and trade accounts receivable. Our investment policy limits the amount of credit risk exposure to any one issuer and to any one country. A majority of our trade receivables are derived from sales to distributors and retailers. The credit risk in our trade accounts receivable is substantially mitigated by our credit evaluation process, reasonably short collection terms and the geographical dispersion of sales transactions. Distributors that accounted for over 10% of our total billed and unbilled accounts receivable, are as follows: March 31, 2023 April 1, 2022 Distributor A 13 % 23 % Distributor B 14 % N/A Advertising and other promotional costs Advertising and other promotional costs are charged to operations as incurred and included in sales and marketing expenses. These costs totaled $ 405 million, $ 423 million, and $ 353 million for fiscal 2023, 2022 and 2021, respectively. Contingencies We evaluate contingent liabilities including threatened or pending litigation in accordance with the authoritative guidance on contingencies. We assess the likelihood of any adverse judgments or outcomes from potential claims or proceedings, as well as potential ranges of probable losses, when the outcomes of the claims or proceedings are probable and reasonably estimable. A determination of the amount of an accrual required, if any, for these contingencies is made after the analysis of each separate matter. Because of uncertainties related to these matters, we base our estimates on the information available at the time of our assessment. As additional information becomes available, we reassess the potential liability related to our pending claims and litigation and may revise our estimates. 51 Table of Contents Note 2. Recent Accounting Standards Recently adopted authoritative guidance Debt with Conversion and Other Options . In August 2020, the FASB issued Accounting Standards Update 2020-06 (ASU 2020-06) which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments. The new guidance removes from GAAP the separation models for convertible debt with embedded conversion features. As a result, entities will no longer separately present embedded conversion features in equity. A convertible debt instrument will be accounted for wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging , or (2) a convertible debt instrument was issued at a substantial premium. In addition, the debt discount, which is equal to the carry value of the embedded conversion feature upon issuance, will no longer be amortized as interest expense over the life of the instrument. The new guidance also requires the use of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share and include the effect of share settlement for instruments that may be settled in cash or shares. See Note 16 for further information related to the diluted earnings per share calculation. We adopted this standard as of April 2, 2022, the first day of fiscal 2023, using a modified retrospective method of transition, under which, financial results and earnings per share amounts reported in prior periods were not adjusted or restated in our Consolidated Financial Statements. As such, the new guidance was applied to the convertible debt instruments outstanding as of the beginning of this fiscal year, with the cumulative effect of adoption recognized through an adjustment to the opening balance of retained earnings. We increased the carrying amount of the New 2.0 % Convertible Notes (as defined in Note 10) by approximately $ 1 million and reduced additional paid-in capital by approximately $ 7 million, net of tax. The net effect of these adjustments was recorded as an increase to retained earnings as of April 2, 2022. Reference Rate Reform. In March 2020, the FASB issued new guidance providing temporary optional expedients and exceptions to ease the financial reporting burden of the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (SOFR). The standard was effective upon issuance and may generally be applied through December 31, 2024, to any new or amended contracts, hedging relationships and other transactions that reference LIBOR. During fiscal 2023, w e 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. Although there are several other new accounting pronouncements issued or proposed by the FASB that we have adopted or will adopt, as applicable, we do not believe any of these accounting pronouncements has had, or will have, a material impact on our Consolidated Financial Statements or disclosures. Note 3. Divestitures, Discontinued Operations and Assets Held for Sale Divestitures Enterprise Security assets On November 4, 2019, we completed the sale of certain of our Enterprise Security assets and certain liabilities to Broadcom Inc. (Broadcom sale) for a purchase price of $ 10.7 billion. As a result of the sale, the majority of the results of our Enterprise Security business and certain related costs were classified as discontinued operations in our Consolidated Statements of Operations and thus excluded from both continuing operations and segment results for all periods presented. During fiscal 2021, in connection with the Broadcom sale, we recognized costs for severance and termination benefits as part of our November 2019 restructuring plan, which was included in Income (loss) from discontinued operations in our Consolidated Statements of Operations. These activities were completed during fiscal 2021. See Note 12 for information associated with our restructuring activities. On October 1, 2020, we entered into multiple agreements with Broadcom for an aggregate amount of $ 200 million. We licensed Broadcom’s enterprise software, multiple security engines and related telemetry for 5.6 years, which will be amortized to continuing operations over the term of the license. In addition, we resolved all outstanding payments and certain claims related to the asset purchase and transition services agreements, which were included in discontinued operations. In connection with the Broadcom sale, we entered into a transition services agreement under which we provided assistance to Broadcom including, but not limited to, business support services and information technology services. During fiscal 2021, the transition services were completed. Dedicated direct costs, net of charges to Broadcom, for these transition services were $ 9 million during fiscal 2021. These direct costs were presented as part of Other income (expense), net in the Consolidated Statements of Operations. Discontinued Operations The following table presents information regarding certain components of income (loss) from discontinued operations, net of income taxes during the year ended April 2, 2021. There was no discontinued operations activity during the years ended March 31, 2023 and April 1, 2022. 52 Table of Contents Year Ended (In millions) April 2, 2021 Net revenues $ 1 Gross profit $ 1 Operating income (loss) $ ( 177 ) Income (loss) before income taxes $ ( 176 ) Income tax expense (benefit) $ ( 34 ) Income (loss) from discontinued operations, net of taxes $ ( 142 ) Assets Held for Sale During fiscal 2020, we reclassified certain land and buildings previously reported as property and equipment to assets held for sale when the properties were approved for immediate sale in their present condition and the sale was expected to be completed within one year. However, the commercial real estate market was adversely affected by the COVID-19 pandemic, which delayed the expected timing of such sales. On July 27, 2020, we completed the sale of our Culver City, California property, which was previously classified as held for sale during the first quarter of fiscal 2021, for cash consideration of $ 118 million, net of selling costs, and recognized a gain on sale of $ 35 million. On April 1, 2021, we completed the sale of certain land and buildings in Mountain View, California, which was previously classified as held for sale as of April 3, 2020, for cash consideration of $ 100 million, net of selling costs, and recognized a gain on sale of $ 63 million. On July 14, 2021, we completed the sale of certain land and buildings in Mountain View, California for cash consideration of $ 355 million, net of selling costs, and recognized a gain of $ 175 million on the sale. 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 qualified 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 Consolidated Balance Sheets and recorded an immaterial catch-up depreciation adjustment, which is included in our Consolidated Statements of Operations. During the fourth quarter of fiscal 2023, we determined certain land and buildings in Dublin, Ireland, which were previously reported as property and equipment, net as of April 1, 2022, now qualifies as held for sale classification. As a result, we reclassified the aggregate $ 23 million carrying value from property and equipment, net to assets held for sale in our Consolidated Balance Sheets. We continue to actively market the remaining properties held for sale. We have taken into consideration the current real estate values and demand and continue to execute plans to sell these properties. As a result, we recognized an impairment of $ 23 million representing the difference between the estimated net sales price and the carrying value of one of our properties. As of March 31, 2023, this property remains classified as assets held for sale. During fiscal 2023, there were no other impairments because the fair value of the other properties less costs to sell either equals or exceeds their carrying value. Note 4. Business Combinations Merger with Avast On August 10, 2021, we announced a transaction under which we intended to acquire the entire issued and to be issued share capital of Avast plc, a public company incorporated in England and Wales (Avast and such transaction, the Merger). The Merger was implemented by means of a court-sanctioned scheme of arrangement under Part 26 of the UK Companies Act 2006 (the Scheme). Under the terms of the Merger, Avast shareholders were entitled to elect to receive, for each ordinary share of Avast held, in respect of their entire holding of Avast shares, either: (i) $ 7.61 in cash and 0.0302 of a new share of our common stock (such option, the Majority Cash Option); or (ii) $ 2.37 in cash and 0.1937 of a new share of our common stock (such option, the Majority Stock Option). Each Avast Director who held Avast shares elected for the Majority Stock Option in respect to their entire beneficial holdings of Avast shares. 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 (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, although our principal executive offices remain in Tempe, Arizona. 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. 53 Table of Contents 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 $ 6,910 million and issued 94,201,223 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 on September 12, 2022 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 $ 8,688 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) $ 8,109 Repayment of outstanding Avast debt (2) 942 Total consideration 9,051 Cash acquired 363 Net consideration transferred $ 8,688 (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. 54 Table of Contents 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, inclusive of measurement period adjustments, is as follows: (In millions) September 12, 2022 Assets: Accounts receivable $ 63 Other current assets 17 Property and equipment 33 Operating lease assets 18 Intangible assets 2,383 Goodwill 7,349 Other long-term assets 11 Total assets acquired 9,874 Liabilities: Current liabilities 180 Contract liabilities 509 Operating lease liabilities 18 Long-term deferred tax liabilities 433 Other long-term obligations 46 Total liabilities assumed 1,186 Total purchase price $ 8,688 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 certain tax and litigation matters. During the fourth quarter of fiscal 2023, we recorded measurement period adjustments resulting in a net increase to goodwill of $ 84 million, primarily related to updated information regarding long-term deferred tax liabilities, which resulted in an increase of $ 88 million of long-term deferred tax liabilities, offset by other immaterial adjustments. The preliminary goodwill of $ 7,349 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 (Years) Customer relationships (1) $ 1,055 7 years Developed technology (2) 1,244 6 years Finite-lived trade names (2) 84 10 years Total identified intangible assets $ 2,383 (1) Customer relationships were valued using the multi-period excess earnings method, which is a form of the income approach that 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. Financing In connection with the Merger, on September 12, 2022, we entered into the Amended and Restated Credit Agreement (Credit Agreement) with certain financial institutions, in which they agreed to provide us with (i) a $ 1,500 million revolving credit facility (Revolving Facility), a $ 3,910 million term loan A facility (Term A Facility), (iii) a $ 3,690 million term loan B facility (Term B Facility) and (iv) a $ 750 million tranche A bridge loan (Bridge Loan) (collectively, the senior credit facilities). The Bridge Loan was undrawn and immediately terminated upon the Merger’s close. The proceeds were or will be used (i) to finance the cash consideration payable for the Merger, (ii) to repay in full and terminate all commitments under Avast’s credit facility, (iii) to pay expenses relating to the Merger, (iv) to add cash to the balance sheet and (v) for general corporate purposes and on-going business activities. See Note 10 for further information about these debt instruments and the related debt covenants. 55 Table of Contents 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 Merger and capitalized as a portion of debt issuance cost for the Term B Facility. During the year ended March 31, 2023, we paid $ 31 million in ticking fees. Impact on operating results The operating results of Avast have been included in our Consolidated Statements of Operations beginning September 12, 2022. Our results of operations for fiscal 2023 include $ 518 million of net revenues of Avast. This total post-acquisition revenue 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 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 separate reporting segment, but rather 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 $ 77 million and $ 35 million for the years ended March 31, 2023 and April 1, 2022, 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 Consolidated Statements of Operations. 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 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 year ended March 31, 2023 and April 1, 2022, 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: Year Ended (In millions) March 31, 2023 April 1, 2022 Net revenues $ 3,804 $ 3,737 Net income (loss) $ 1,133 $ 242 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. 56 Table of Contents Fiscal 2021 acquisition On January 8, 2021, we completed our acquisition of Avira. Avira provided a consumer-focused portfolio of cybersecurity and privacy solutions primarily in Europe and key emerging markets. The total aggregate consideration for the acquisition was $ 344 million, net of $ 32 million cash acquired. Our final allocation of the aggregate purchase price for the acquisition as of January 8, 2021, was as follows: (In millions) January 8, 2021 Assets: Current assets $ 12 Intangible assets 162 Goodwill 261 Other long-term asset 21 Total assets acquired 456 Liabilities: Current liabilities 29 Contract liabilities 54 Other long-term obligations 29 Total liabilities assumed 112 Total purchase price $ 344 Our estimates and assumptions were subject to refinement within the measurement period, which was 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 January 7, 2022. Note 5. Revenues Contract liabilities During fiscal 2023 and 2022, we recognized $ 1,213 million and $ 1,187 million of revenue, respectively, from the contract liabilities balance at the beginning of the respective fiscal years. Remaining performance obligations Remaining performance obligations represent contracted revenue that has not been recognized, which include contract liabilities and amounts that will be billed and recognized as revenue in future periods. As of March 31, 2023, we had $ 1,233 million of remaining performance obligations, excluding customer deposit liabilities of $ 555 million, of which we expect to recognize approximately 94 % as revenue over the next 12 months. See Note 1 for a description of our revenue recognition policy and Note 17 for tabular disclosures of disaggregated revenue by solution and geographic region. Note 6. Goodwill and Intangible Assets Goodwill The changes in the carrying amount of goodwill are as follows: (In millions) Balance as of April 2, 2021 $ 2,867 Acquisitions 25 Purchase accounting adjustments ( 7 ) Translation adjustments ( 12 ) Balance as of April 1, 2022 2,873 Merger with Avast 7,265 Purchase accounting adjustments 84 Translation adjustments ( 5 ) Balance as of March 31, 2023 $ 10,217 57 Table of Contents Intangible assets, net March 31, 2023 April 1, 2022 (In millions) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 1,641 $ ( 549 ) $ 1,092 $ 583 $ ( 382 ) $ 201 Developed technology 1,462 ( 279 ) 1,183 217 ( 143 ) 74 Other 91 ( 8 ) 83 8 ( 3 ) 5 Total finite-lived intangible assets 3,194 ( 836 ) 2,358 808 ( 528 ) 280 Indefinite-lived trade names 739 — 739 743 — 743 Total intangible assets $ 3,933 $ ( 836 ) $ 3,097 $ 1,551 $ ( 528 ) $ 1,023 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: Year Ended Consolidated Statements of Operations Classification (In millions) March 31, 2023 April 1, 2022 April 2, 2021 Customer relationships and other $ 172 $ 85 $ 74 Operating expenses Developed technology 136 39 31 Cost of revenues Total $ 308 $ 124 $ 105 As of March 31, 2023, future amortization expense related to intangible assets that have finite lives is as follows by fiscal year: (In millions) March 31, 2023 2024 $ 462 2025 401 2026 395 2027 381 2028 378 Thereafter 341 Total $ 2,358 Note 7. Supplementary Information Cash and cash equivalents: (In millions) March 31, 2023 April 1, 2022 Cash $ 576 $ 609 Cash equivalents 174 1,278 Total cash and cash equivalents $ 750 $ 1,887 Accounts receivable, net: (In millions) March 31, 2023 April 1, 2022 Accounts receivable $ 169 $ 121 Allowance for doubtful accounts ( 1 ) ( 1 ) Accounts receivable, net $ 168 $ 120 Other current assets: (In millions) March 31, 2023 April 1, 2022 Prepaid expenses $ 122 $ 107 Income tax receivable and prepaid income taxes 123 35 Other tax receivable 16 27 Other 23 24 Total other current assets $ 284 $ 193 58 Table of Contents Property and equipment, net: (In millions) March 31, 2023 April 1, 2022 Land $ 13 $ 2 Computer hardware and software 498 462 Office furniture and equipment 17 27 Buildings 28 27 Leasehold improvements 28 56 Construction in progress 1 1 Total property and equipment, gross 585 575 Accumulated depreciation and amortization ( 509 ) ( 515 ) Total property and equipment, net $ 76 $ 60 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. During the fourth quarter of fiscal 2023, we determined certain land and buildings in Dublin, Ireland, which were previously reported as property and equipment, net as of April 1, 2022, now qualifies as held for sale classification. As a result, we reclassified the aggregate $ 23 million carrying value from property and equipment, net to assets held for sale in our Consolidated Balance Sheets. Refer to Note 3 for further information about our assets held for sale. Depreciation and amortization expense of property and equipment was $ 21 million, $ 16 million, and $ 45 million in fiscal 2023, 2022 and 2021, respectively. Other long-term assets: (In millions) March 31, 2023 April 1, 2022 Non-marketable equity investments $ 176 $ 178 Long-term income tax receivable and prepaid income taxes 669 25 Deferred income tax assets 353 351 Long-term prepaid royalty 36 53 Other 47 46 Total other long-term assets $ 1,281 $ 653 Short-term contract liabilities: (In millions) March 31, 2023 April 1, 2022 Deferred revenue $ 1,153 $ 743 Customer deposit liabilities 555 521 Total short-term contract liabilities $ 1,708 $ 1,264 Other current liabilities: (In millions) March 31, 2023 April 1, 2022 Income taxes payable $ 172 $ 109 Other taxes payable 76 87 Accrued legal fees 284 273 Accrued royalties 48 49 Accrued interest 27 32 Other accrued liabilities 96 89 Total other current liabilities $ 703 $ 639 Long-term income taxes payable: (In millions) March 31, 2023 April 1, 2022 Deemed repatriation tax payable $ 310 $ 437 Other long-term income taxes 1 3 Uncertain tax positions (including interest and penalties) 509 556 Total long-term income taxes payable $ 820 $ 996 59 Table of Contents Other income (expense), net: Year Ended (In millions) March 31, 2023 April 1, 2022 April 2, 2021 Interest income $ 15 $ — $ 4 Foreign exchange gain (loss) ( 8 ) ( 2 ) 1 (Loss) gain on early extinguishment of debt ( 9 ) ( 3 ) 20 Gain on sale of properties — 175 98 Transition service expense, net — — ( 9 ) Other ( 20 ) ( 7 ) 6 Total other income (expense), net $ ( 22 ) $ 163 $ 120 Supplemental cash flow information: Year Ended (In millions) March 31, 2023 April 1, 2022 April 2, 2021 Income taxes paid, net of refunds $ 456 $ 356 $ 341 Interest expense paid $ 390 $ 120 $ 139 Cash paid for amounts included in the measurement of operating lease liabilities $ 26 $ 27 $ 34 Non-cash operating activities: Operating lease assets obtained in exchange for operating lease liabilities $ 23 $ 35 $ 34 Reduction of operating lease assets as a result of lease terminations and modifications $ 31 $ 17 $ 26 Non-cash investing and financing activities: Purchases of property and equipment in current liabilities $ 1 $ 1 $ — Extinguishment of debt with borrowings from same creditors $ — $ 494 $ — Non-cash consideration for the Merger with Avast $ 2,141 $ — $ — Note 8. Financial Instruments and Fair Value Measurements The following table summarizes our financial instruments measured at fair value on a recurring basis: March 31, 2023 April 1, 2022 (In millions) Fair Value Level 1 Level 2 Fair Value Level 1 Level 2 Assets: Money market funds $ 174 $ 174 $ — $ 1,278 $ 1,278 $ — Corporate bonds — — — 4 — 4 Interest rate swaps (1) — — — — — — Total $ 174 $ 174 $ — $ 1,282 $ 1,278 $ 4 (1) The fair value of our interest rate swaps is less than $ 1 million as of March 31, 2023. We did not have any interest rate swaps as of April 1, 2022. Financial instruments not recorded at fair value on a recurring basis include our non-marketable equity investments and our long-term debt. Non-marketable equity investments As of March 31, 2023 and April 1, 2022, the carrying value of our non-marketable equity investments was $ 176 million and $ 178 million, respectively. Current and long-term debt As of March 31, 2023 and April 1, 2022, the total fair value of our current and long-term fixed rate debt was $ 2,593 million and $ 2,021 million, respectively. The fair value of our variable rate debt approximated their carrying value. The fair values of all our debt obligations were based on Level 2 inputs. Note 9. Leases We lease certain of our facilities, equipment, and data center co-locations under operating leases that expire on various dates through fiscal 2028. Our leases generally have terms that range from 1 year to 8 years for our facilities, 1 year to 3 years for equipment and 1 year to 5 years for data center co-locations. Some of our leases contain renewal options, escalation clauses, rent concessions and leasehold improvement incentives. 60 Table of Contents The following summarizes our lease costs for fiscal 2023, 2022 and 2021: Year Ended (In millions) March 31, 2023 April 1, 2022 April 2, 2021 Operating lease costs $ 16 $ 16 $ 17 Short-term lease costs 2 2 4 Variable lease costs 8 6 6 Total lease costs $ 26 $ 24 $ 27 Other information related to our operating leases for fiscal 2023, 2022 and 2021 was as follows: Year Ended March 31, 2023 April 1, 2022 April 2, 2021 Weighted-average remaining lease term 2.8 years 4.7 years 4.4 years Weighted-average discount rate 4.38 % 4.04 % 4.07 % See Note 7 for cash flow information related to our operating leases. As of March 31, 2023, the maturities of our lease liabilities by fiscal year are as follows: (In millions) 2024 $ 28 2025 17 2026 9 2027 6 2028 1 Total lease payments 61 Less: Imputed interest ( 4 ) Present value of lease liabilities $ 57 61 Table of Contents Note 10. Debt The following table summarizes components of our debt: March 31, 2023 April 1, 2022 (In millions, except percentages) Amount Effective Interest Rate Amount Effective Interest Rate 3.95 % Senior Notes due June 15, 2022 — N/A 400 4.05 % New 2.00 % Convertible Unsecured Notes due August 15, 2022 — N/A 525 2.62 % 5.0 % Senior Notes due April 15, 2025 1,100 5.00 % 1,100 5.00 % Initial Term Loan due May 7, 2026 — N/A 1,010 LIBOR plus (2) Delayed Term Loan due May 7, 2026 — N/A 703 LIBOR plus (2) Term A Facility due September 12, 2027 3,861 SOFR + % (3) — N/A 6.75 % Senior Notes due September 30, 2027 900 6.75 % — N/A Term B Facility due September 12, 2029 3,431 SOFR + % (4) — N/A 1.29 % Avira Mortgage due December 30, 2029 (1) 4 1.29 % 5 1.29 % 7.125 % Senior Notes due September 30, 2030 600 7.13 % — N/A 0.95 % Avira Mortgage due December 30, 2030 (1) 3 0.95 % 4 0.95 % Total principal amount 9,899 3,747 Less: unamortized discount and issuance costs ( 137 ) ( 11 ) Total debt 9,762 3,736 Less: current portion ( 233 ) ( 1,000 ) Total long-term portion $ 9,529 $ 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 %. The interest rates for the outstanding term loans are as follows: March 31, 2023 April 1, 2022 Term A Facility due September 12, 2027 6.66 % N/A Term B Facility due September 12, 2029 6.91 % 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 March 31, 2023, the future contractual maturities of debt by fiscal year are as follows: (In millions) 2024 $ 233 2025 234 2026 1,333 2027 233 2028 4,017 Thereafter 3,849 Total future maturities of debt $ 9,899 62 Table of Contents Credit Facility We had a credit agreement with financial institutions, which provided 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 credit agreement (the First Amendment) also provided for an incremental increase under the Initial Term Loan of $ 525 million. All term loans and revolver credit facilities were to mature in May 2026, and the credit facilities remained senior secured. The principal amount of the Initial Term Loan and the additional borrowings under the First Amendment were to be repaid in quarterly installments on the last business day of each calendar quarter in an amount equal to 1.25 % of the aggregate principal amount as of the date of the First Amendment. The principal amount of the Delayed Draw Term Loan were to be repaid in quarterly installments on the last business day of each calendar quarter in an amount equal to 1.25 % of aggregate principal amount as of the borrowing date of the Delayed Draw Term Loan. Interest on borrowings under the credit agreement were based on a base rate or the LIBOR at our election. Based on our debt ratings and our consolidated leverage ratios as determined in accordance with the credit agreement, loans borrowed bore interest, in the case of base rate loans, at a per annum rate equal to the applicable base rate plus a margin ranging from 0.125 % to 0.75 %, and in the case of LIBOR loans, LIBOR, as adjusted for statutory reserves, plus a margin ranging from 1.125 % to 1.75 %. The unused revolving line of credit was 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), (ii) 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 A Facility 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 both Term Loan facilities without penalty. As of March 31, 2023, there were no borrowings outstanding under our Revolving Facility; however, from time to time we utilize letters of credits as part of our ordinary course of business. Letters of credit reduce our Revolving Facility commitment amounts. 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 %. On January 19, 2023 and April 28, 2023, we made a voluntary prepayment of $ 250 million and $ 150 million, respectively, 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. Debt covenant compliance The Credit Agreement contains customary representations and warranties, affirmative and negative covenants. Each of the Revolving Facility and Term A Facility will be subject to a covenant that we maintain a consolidated leverage ratio less than or equal to (i) 6.0 to 1.0 from the Closing Date through the last day of the fourth full fiscal quarter following the Closing Date, (ii) 5.75 to 1.0 following the last day of the fourth fiscal quarter after the Closing Date through the last day of the eighth full fiscal quarter following the Closing Date and (iii) 5.25 to 1.0 for each fiscal quarter thereafter; provided that such maximum consolidated leverage ratio will increase to 5.75 to 1.0 for the four fiscal quarters ending immediately should we acquire property, business or assets in an aggregate amount greater than $ 250 million. 63 Table of Contents 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 March 31, 2023 we were in compliance with all debt covenants. Senior Notes On February 9, 2017, we issued $ 1.1 billion aggregate principal amount of our 5.0 % Senior Notes due April 15, 2025 (the 5.0 % Senior Notes). The 5.0 % Senior Notes bear interest at a rate of 5.00 % per year, payable semiannually in arrears on April 15 and October 15 of each year, beginning on October 15, 2017. On or after April 15, 2020, we may redeem some or all of the 5.0 % Senior Notes at the applicable redemption prices set forth in the supplemental indenture, plus accrued and unpaid interest. In addition, we had two series of senior notes, the 4.2 % Senior Notes and 3.95 % Senior Notes, that are senior unsecured obligations that rank equally in right of payment with all of our existing and future senior, unsecured, unsubordinated obligations and may be redeemed at any time, subject to the make-whole provisions contained in the applicable indenture relating to such series of notes. Interest on each series of these notes is payable semi-annually in arrears, on September 15 and March 15 for the 4.2 % Senior Notes, and June 15 and December 15 for the 3.95 % Senior Notes. On September 15, 2020, we fully repaid the principal and accrued interest under the 4.2 % Senior Notes due September 2020, which had an aggregate principal amount outstanding of $ 750 million. 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. 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, 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. Convertible Senior Notes On March 4, 2016, we issued $ 500 million of convertible notes which would mature on April 1, 2021 and bear interest at an annual rate of 2.5 % ( 2.5 % Convertible Notes). On August 1, 2016, we issued an additional $ 1.25 billion of convertible notes which would mature on August 15, 2021 and bear interest at an annual rate of 2.0 % ( 2.0 % Convertible Notes and collectively, Convertible Senior Notes). As of March 29, 2019, the principal amount and associated unamortized discount and issuance costs of the 2.5 % Convertible Notes were classified as current because upon the four year anniversary of the issuance of the notes, holders of thereof had the option to require us to repurchase the notes, in cash, equal to the principal amount and accrued and unpaid interest of the 2.5 % Convertible Notes (the Repurchase Right). On November 11, 2019, we amended the Convertible Senior Notes agreements to provide that, if and when we pay a special dividend of $ 12 to our stockholders, we would exchange $ 250 million of the principal amount underlying the 2.5 % Convertible Notes for new notes to be issued pursuant to a new indenture (the New 2.5 % Convertible Notes) and would also pay cash consideration of $ 12 for each share underlying the New 2.5 % Convertible Notes, and exchange $ 625 million of the principal amount underlying the 2.0 % Convertible Notes for new notes to be issued pursuant to a new indenture (the New 2.0 % Convertible Notes) and would also pay cash consideration of $ 12 for each share underlying the New 2.0 % Convertible Notes, in each case in lieu of conversion price adjustments (the Cash Note Payments). The remaining principal of the Convertible Senior Notes would receive a conversion price adjustment with respect to such special dividend. The special dividend was payable to stockholders on January 31, 2020. On February 4, 2020, we issued the New 2.5 % Convertible Notes, maturing on April 1, 2022, and the New 2.0 % Convertible Notes, which mature on August 15, 2022, pursuant to two new indentures, and made the Cash Note Payments. The new Notes are convertible into cash, shares of common stock or a combination of cash and common stock, at the Company’s option, at an initial conversion rate for the New 2.50 % Convertible Notes of 59.6341 per $1,000 principal amount of the New 2.50 % Convertible Notes (which represents an initial conversion price of approximately $ 16.77 per share) and an initial conversion rate for the New 2.00 % Convertible Notes of 48.9860 per $1,000 principal amount of the New 2.00 % Convertible Notes (which represents an initial conversion price of approximately $ 20.41 per share), in each case subject to certain limitations and certain adjustments. The Cash Note Payments consisted of $ 179 million with respect to holders of the New 2.5 % Convertible Notes and $ 367 million with respect to holders of the New 2.0 % Convertible Notes. The exchange of the convertible notes was accounted for as extinguishment of debt and the consideration comprising the Cash Note Payments were recorded as charges to paid in capital. We recognized a gain of $ 2 million related to the exchange. 64 Table of Contents After giving effect to the conversion rate adjustment that was made in connection with the payment of the special dividend on January 31, 2020, the conversion rate for the remaining $ 250 million of the 2.5 % Convertible Notes was 118.9814 shares of common stock per $1,000 principal amount of the notes, which represents an adjusted conversion price of approximately $ 8.40 per share and the conversion rate for the remaining $ 625 million of the 2.0 % Convertible Notes was 97.7364 shares of common stock per $1,000 principal amount of the notes, which represented an adjusted conversion price of approximately $ 10.23 per share. In addition, in connection with the amendments, the maturity dates of the 2.5 % Convertible Notes and the 2.0 % Convertible Notes were extended to April 1, 2022 and August 15, 2022, respectively. Holders of the Convertible Senior Notes would only be able to convert the notes in a period of six months prior to the extended maturity dates; and the Redemption Right and Repurchase Right were removed. On March 5, 2020, we entered into an agreement to repay the full $ 250 million of principal and conversion rights of the 2.5 % Convertible Notes for an aggregate amount of $ 566 million in cash. The payment was based on $ 19 per underlying share into which the 2.5 % Convertible Notes were convertible. In addition, we paid $ 2 million of accrued and unpaid interest through the date of settlement, and $ 1 million in lieu of a proration of the cash dividend declared on February 6, 2020. The extinguishment was settled on March 10, 2020 and resulted in an adjustment to stockholders’ equity of $ 316 million and a loss on extinguishment of $ 1 million. On May 26, 2020, we settled the $ 625 million principal and conversion rights of the 2.0 % Convertible Senior Notes in cash. The aggregate settlement amount of $ 1,176 million was based on $ 19.25 per underlying share into which the 2.0 % Convertible Notes were convertible. In addition, we paid $ 3 million of accrued and unpaid interest through the date of settlement. The extinguishment resulted in an adjustment to stockholders’ equity of $ 578 million and a gain on extinguishment of $ 20 million. On May 20, 2021, we settled the $ 250 million principal and conversion rights of the New 2.5 % Convertible Senior Notes in cash. The aggregate settlement amount of $ 364 million was based on $ 24.40 per underlying share into which the 2.5 % Convertible Notes were convertible. In addition, we paid $ 1 million of accrued and unpaid interest through the date of settlement and $ 1 million of cash dividends that we declared on May 10, 2021. The extinguishment resulted in an adjustment to stockholders’ equity of $ 112 million and a loss on extinguishment of $ 2 million. On March 18, 2022, we settled $ 100 million of principal and conversion rights of the New 2.0 % Convertible Senior Notes in cash. The aggregate settlement amount of $ 139 million was based on $ 28.32 per underlying share into which the New 2.0 % Convertible Notes were convertible. The extinguishment resulted in an adjustment to stockholders’ equity of $ 40 million and a gain on extinguishment of $ 1 million. As described in Note 2, on April 2, 2022, we adopted ASU 2020-06 using the modified retrospective method. Prior to the adoption of this guidance, we accounted for our convertible debt instruments under the cash conversion model, requiring the convertible notes to be separated into an equity and liability component. W e recognized $ 56 million in equity, net of tax, which consisted of $ 9 million in debt discount, representing the difference between the fair value of the liability component and par value, and $ 47 million in substantial premium due to the fiscal year 2020 amendment, which was accounted for as a debt extinguishment and resulted in the recognition of the New 2.0 % Convertible Notes. Upon adoption of ASU 2020-06, the cash conversion model was eliminated. We de-recognized the remaining unamortized debt discount of $ 1 million on the New 2.0 % Convertible Notes and therefore no longer recognized the related amortization as interest expense. Additionally, we recorded a cumulative adjustment to retained earnings of $ 6 million, net of tax, for the debt discount amortization incurred from issuance through April 2, 2022. The remaining $ 47 million of substantial premium remained in equity, as the new guidance did not eliminate the substantial premium model for convertible instruments. 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. As of March 31, 2023, we have extinguished all remaining convertible debt instruments. As of April 1, 2022, the Convertible Senior Notes consisted of the following: April 1, 2022 (In millions) New 2.0 % Convertible Notes Liability component: Principal $ 525 Unamortized discount and issuance costs ( 1 ) Net carrying amount $ 524 Equity component, net of tax $ 56 65 Table of Contents The following table sets forth total interest expense recognized related to our convertible notes: Year Ended (In millions) March 31, 2023 April 1, 2022 April 2, 2021 Contractual interest expense $ 4 $ 12 $ 20 Amortization of debt discount and issuance costs $ — $ 4 $ 4 Payments in lieu of conversion price adjustments (1) $ 1 $ 8 $ 12 (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. Note 11. Derivatives Our primary objective in holding derivatives is to reduce the volatility of earnings and cash flow associated with changes in foreign currency exchange rates and interest rates. These hedging contracts reduce, but do not entirely eliminate, the impact of adverse foreign exchange rate and interest rate movements. We do not use our derivative instruments for speculative trading purposes. By using derivative financial instruments to hedge exposures to changes in foreign exchange and interest rates, we are exposed to credit risk; however, we mitigate this risk by entering into hedging instruments with highly rated institutions that can be expected to fully perform under the terms of the applicable contracts. Foreign currency exchange forward contracts We conduct business in numerous currencies throughout our worldwide operations, and our entities hold monetary assets or liabilities, earn revenues, or incur costs in currencies other than the entity’s functional currency. As a result, we are exposed to foreign exchange gains or losses which impacts our operating results. As part of our foreign currency risk mitigation strategy, we have entered into monthly foreign exchange forward contracts to hedge foreign currency balance sheet exposure. These forward contracts are not designated as hedging instruments. We do not hedge our foreign currency exposure in a manner that entirely offsets the effects of the changes in foreign exchange rates. Interest rate swap In March 2023, we entered into interest rate swap agreements to mitigate risks associated with the variable interest rate of our Term A Facility. These pay-fixed, receive-floating rate interest rate swaps have the economic effect of hedging the variability of forecasted interest payments until their maturity on March 31, 2026. Pursuant to the agreements, we will effectively convert $ 1 billion of our variable rate borrowings under Term A Facility to fixed rates, with $ 500 million at a fixed rate of 3.762 % and $ 500 million at a fixed rate of 3.55 %. These arrangements are designated as cash flow hedges for accounting purposes and as such, we will recognize the changes in the fair value of these interest rate swaps in Accumulated other comprehensive income (loss) (AOCI), and the periodic settlements or accrued settlements of the swap will be recognized within or against interest expense in our Consolidated Statements of Operations. Cash flows related to these hedges are classified under operating activities in our Consolidated Statement of Cash Flows. The effect of our interest rate swaps on AOCI was immaterial during fiscal 2023. The related gain (loss) recognized within or against interest expense in our Consolidated Statement of Operations was immaterial during fiscal 2023. We did not have any interest rate swaps during fiscal 2022 and 2021. As of March 31, 2023, we estimate that $ 9 million of net deferred gains related to our interest rate hedges will be recognized in earnings over the next 12 months. Summary of derivative instruments The following table summarizes our outstanding derivative instruments as of March 31, 2023 and April 1, 2022: Notional Amount Fair Value of Derivative Assets Fair Value of Derivative Liabilities (In millions) March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022 Foreign exchange contracts not designated as hedging instrument (1) $ 291 $ 346 $ — $ — $ — $ — Interest rate swap contract designed as cash flow hedge 1,000 — 1 — 2 — Total $ 1,291 $ 346 $ 1 $ — $ 2 $ — (1) The fair values of the foreign exchange contracts are less than $ 1 million as of March 31, 2023 and April 1, 2022. 66 Table of Contents The following table summarizes the related gain (loss) recognized in Other income (expense), net in our Consolidated Statements of Operations during the periods indicated: Year Ended (In millions) March 31, 2023 April 1, 2022 April 2, 2021 Foreign exchange contracts not designated as hedging instrument $ ( 7 ) $ ( 7 ) $ 15 Note 12. Restructuring and Other Costs Our restructuring and other costs consist primarily of severance and termination benefits, contract cancellation charges, asset write-offs and impairments and other exit and disposal costs. Severance costs generally include severance payments, outplacement services, health insurance coverage and legal costs. Contract cancellation charges primarily include penalties for early termination of contracts and write-offs of related prepaid assets. Other exit and disposal costs include costs to exit and consolidate facilities in connection with restructuring events. Separation costs primarily consist of consulting costs incurred in connection with our divestitures. 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 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 $ 150 million, with $ 120 million and $ 30 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 March 31, 2023, we have incurred costs of $ 69 million related to the September 2022 Plan. December 2020 Plan In December 2020, our Board of Directors approved a restructuring plan (the December 2020 Plan) to consolidate facilities and reduce operating costs in connection with our acquisition of Avira. These actions were completed in fiscal 2022. Any remaining costs or adjustments are immaterial. We incurred total costs of $ 24 million under the December 2020 Plan. November 2019 Plan In November 2019, our Board of Directors approved a restructuring plan (the November 2019 Plan) in connection with the strategic decision to divest our Enterprise Security business. Actions under this plan included the reduction of our workforce as well as asset write-offs and impairments, contract terminations, facilities closures and the sale of underutilized facilities. These actions were completed in fiscal 2021. Any remaining costs or adjustments are immaterial. We incurred total costs of $ 528 million, excluding stock-based compensation expense, under the November 2019 Plan. In connection with the Broadcom sale, our Board of Directors approved an equity-based severance program under which certain equity awards to certain terminated employees were accelerated. We incurred $ 127 million of stock-based compensation related to our equity-based severance program. See Note 15 for further information on the impact of this program. Restructuring and other costs summary Our restructuring and other costs attributable to continuing operations are presented in the table below: Year Ended (In millions) March 31, 2023 April 1, 2022 April 2, 2021 Severance and termination benefit costs $ 40 $ 5 $ 31 Contract cancellation charges 2 3 51 Stock-based compensation charges 11 — 10 Asset write-offs and impairments 4 5 58 Other exit and disposal costs 12 18 11 Total restructuring and other $ 69 $ 31 $ 161 In connection with the agreement to sell certain assets of our Enterprise Security business, a portion of our restructuring and other costs were classified to discontinued operations for fiscal 2021. Our restructuring and other costs attributable to discontinued operations are presented in the table below. There was no discontinued operations activity during the years ended March 31, 2023 and April 1, 2022. Year Ended (In millions) April 2, 2021 Severance and termination benefit costs $ 64 Separation costs 2 Total restructuring and other $ 66 67 Table of Contents Restructuring summary Our activities and liability balances related to our September 2022 Plan are presented in the tables below: (In millions) Liability Balance as of April 1, 2022 Net Charges Cash Payments Non-Cash Items Liability Balance as of March 31, 2023 Severance and termination benefit costs $ — $ 40 $ ( 33 ) $ — $ 7 Stock-based compensation charges — 11 — ( 11 ) — Asset write-offs — 4 — ( 4 ) — Other exit and disposal costs — 12 ( 10 ) ( 2 ) — Total $ — $ 69 $ ( 43 ) $ ( 19 ) $ 7 The restructuring liabilities are included in Other current liabilities in our Consolidated Balance Sheets. Note 13. Income Taxes The components of our income (loss) from continuing operations before income taxes are as follows: Year Ended (In millions) March 31, 2023 April 1, 2022 April 2, 2021 Domestic $ 350 $ 791 $ 607 International 454 251 265 Income (loss) before income taxes $ 804 $ 1,042 $ 872 The components of income tax expense (benefit) from continuing operations are as follows: Year Ended (In millions) March 31, 2023 April 1, 2022 April 2, 2021 Current: Federal $ ( 479 ) $ 217 $ 133 State ( 28 ) 50 36 International 99 20 ( 13 ) Total ( 408 ) 287 156 Deferred: Federal ( 111 ) ( 42 ) ( 6 ) State ( 10 ) ( 6 ) ( 5 ) International ( 16 ) ( 33 ) 31 Total ( 137 ) ( 81 ) 20 Income tax expense (benefit) $ ( 545 ) $ 206 $ 176 68 Table of Contents The U.S. federal statutory income tax rates we have applied for fiscal 2023, 2022 and 2021 are as follows: Year Ended March 31, 2023 April 1, 2022 April 2, 2021 U.S. federal statutory income tax rate 21.0 % 21.0 % 21.0 % The difference between our effective income tax and the federal statutory income tax is as follows: Year Ended (In millions) March 31, 2023 April 1, 2022 April 2, 2021 Federal statutory tax expense (benefit) $ 169 $ 219 $ 183 State taxes, net of federal benefit 1 33 25 Foreign earnings taxed at other than the federal rate 44 ( 47 ) ( 10 ) Federal research and development credit ( 5 ) ( 4 ) ( 1 ) Valuation allowance increase (decrease) ( 33 ) 2 1 Change in uncertain tax positions 176 11 3 Stock-based compensation 9 7 5 Favorable ruling on foreign withholding tax 19 — ( 35 ) US tax on foreign earnings ( 1 ) 12 ( 15 ) Return to provision adjustment 1 ( 8 ) 1 Irish FX remeasurement ( 17 ) ( 19 ) 17 Capital loss ( 910 ) — — Other, net 2 — 2 Income tax expense (benefit) $ ( 545 ) $ 206 $ 176 The principal components of deferred tax assets and liabilities are as follows: (In millions) March 31, 2023 April 1, 2022 Deferred tax assets: Tax credit carryforwards $ 24 $ 7 Net operating loss carryforwards of acquired companies 60 16 Interest 37 — Other accruals and reserves not currently tax deductible 95 84 Operating lease liabilities 11 28 Deferred revenue 16 — Property and equipment 16 13 Intangible assets — 123 Capitalized research and experimental expenditures 46 — Loss on investments not currently tax deductible 68 — Stock-based compensation 15 8 Other 39 54 Gross deferred tax assets 427 333 Valuation allowance ( 97 ) ( 11 ) Deferred tax assets, net of valuation allowance 330 322 Deferred tax liabilities: Operating lease assets ( 8 ) ( 21 ) Goodwill ( 10 ) ( 6 ) Intangible assets ( 328 ) — Deferred revenue — ( 2 ) Unremitted earnings of foreign subsidiaries ( 15 ) ( 16 ) Prepaids and deferred expenses ( 2 ) ( 1 ) Deferred tax liabilities ( 363 ) ( 46 ) Net deferred tax assets (liabilities) $ ( 33 ) $ 276 Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their basis for income tax purposes and the tax effects of net operating losses and tax credit carryforwards. The valuation allowance provided against our deferred tax assets as of March 31, 2023, increased primarily due to a valuation allowance on capital loss carryforwards and change in tax credit carryforwards. The ending valuation allowance of $ 97 69 Table of Contents million is provided primarily against state and foreign capital loss carryforwards and certain tax credits. During fiscal 2023, we acquired deferred tax assets through the Merger with Avast that had a valuation allowance provided against the deferred tax assets. Due to a change in facts, we released the valuation allowance provided against some of the deferred tax assets. As of March 31, 2023, we have U.S. federal net operating losses attributable to various acquired companies of approximately $ 193 million, which, if not used, will expire between fiscal 2024 and 2039. The net operating loss carryforwards are subject to an annual limitation under U.S. federal tax regulations but are expected to be fully realized. Furthermore, we have U.S. state net operating loss carryforwards attributable to various acquired companies of approximately $ 147 million. If not used, our U.S. state net operating losses will expire between fiscal 2024 and 2038. In addition, we have foreign net operating loss carryforwards attributable to various foreign companies of approximately $ 28 million. In assessing the ability to realize our deferred tax assets, we considered whether it is more likely than not that some portion or all the deferred tax assets will not be realized. We considered the following: we have historical cumulative book income, as measured by the current and prior two years; we have strong, consistent taxpaying history; and we have substantial amounts of scheduled future reversals of taxable temporary differences from our deferred tax liabilities. We have concluded that this positive evidence outweighs the negative evidence and, thus, that the deferred tax assets as of March 31, 2023, are realizable on a “more likely than not” basis. In fiscal 2023 as part of Avast integration plan we undertook a legal entity and operational restructuring that resulted in tax capital losses. We plan to carry the entirety of the capital losses back to the fiscal 2020 tax return to offset a capital gain, which is expected to result in a tax refund on our federal and state tax returns for the 2020 tax year. The Company estimates that the tax refund will be $ 910 million. In order to obtain the refunds, we intend to file claims for refund shortly after filing our fiscal 2023 tax return. As part of this process, we have recorded a net tax receivable in an amount less than the $ 910 million, due to the complexity of applying evolving tax laws and uncertainties with respect to sustaining the Company’s refunds claims, the success of which we believe is more likely than not. This net amount takes into account the Company’ best estimate of the likely outcome of the refund claim given the information available to us at this time. The Company’s ability to recognize the financial statement benefit of the refund claim is subject to change based on a number of factors, including but not limited to, changes in facts and circumstances, changes in tax laws, correspondence with both IRS and State tax authorities, and the results of tax audits and related proceedings, which may take several years or more to resolve. We intend to vigorously defend our position if challenged by the tax authorities and will contest any proposed adjustments. If we are not able to resolve any proposed adjustments at the examination level, we plan to pursue all available administrative and, if necessary, judicial remedies. If we do not ultimately prevail on some or all of the components of our position, we would be required to pay the IRS and the states some or all of any cash tax refund, along with interest on such amount, and penalties, if assessed. As with all actual and potential tax audits and related proceedings, there can be no assurances on the final outcome. To the extent the final outcome is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on our Consolidated Balance Sheets and Statements of Operations. The aggregate changes in the balance of gross unrecognized tax benefits were as follows: Year Ended (In millions) March 31, 2023 April 1, 2022 April 2, 2021 Balance at beginning of year $ 527 $ 548 $ 724 Settlements with tax authorities ( 2 ) — ( 37 ) Lapse of statute of limitations ( 96 ) ( 34 ) ( 34 ) Increase related to prior period tax positions 9 16 13 Decrease related to prior period tax positions ( 15 ) ( 11 ) ( 129 ) Increase related to current year tax positions 259 8 11 Increase due to acquisition 28 — — Balance at end of year $ 710 $ 527 $ 548 There was a change of $ 183 million in gross unrecognized tax benefits during the year ended March 31, 2023, as disclosed above, mainly on account of a reserve against the tax receivable. This gross liability does not include offsetting tax benefits associated with the correlative effects of potential transfer pricing adjustments, interest deductions and state income taxes. Of the total unrecognized tax benefits at March 31, 2023, $ 674 million, if recognized, would affect our effective tax rate. We recognize interest and/or penalties related to uncertain tax positions in income tax expense. At March 31, 2023, before any tax benefits, we had $ 100 million of accrued interest and penalties on unrecognized tax benefits. Interest included in our provision for income taxes was an expense of approximately $ 22 million for fiscal 2023. If the accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced in the period that such determination is made and reflected as a reduction of the overall income tax provision. We file income tax returns in the U.S. on a federal basis and in many U.S. state and foreign jurisdictions. Our most significant tax jurisdictions are the U.S., Ireland, and Czech Republic. Our tax filings remain subject to examination by applicable tax authorities for a certain length of time following the tax year to which those filings relate. During the fourth quarter of fiscal 2023, we closed our fiscal years 2014 through 2017 IRS audit. Our fiscal years prior to 2018 have been settled and closed with the IRS. Our fiscal years 2018 through 2022 remain subject to examination by the IRS for U.S. federal tax purposes. Our fiscal years 70 Table of Contents 2018 through 2020 are under audit. Our 2017 through 2021 fiscal years remain subject to examination by the appropriate governmental agencies for Irish tax purposes. The timing of the resolution of income tax examinations is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year. Although potential resolution of uncertain tax positions involves multiple tax periods and jurisdictions, it is reasonably possible that the gross unrecognized tax benefits related to these audits could decrease (whether by payment, release, or a combination of both) in the next 12 months. Depending on the nature of the settlement or expiration of statutes of limitations, it could affect our income tax provision and therefore benefit the resulting effective tax rate. We continue to monitor the progress of ongoing income tax controversies and the impact, if any, of the expected tolling of the statute of limitations in various taxing jurisdictions. We provide U.S. income taxes on the earnings of foreign subsidiaries unless the subsidiaries’ earnings are considered permanently reinvested outside the U.S. or are exempted from further taxation. As of March 31, 2023, the unrecognized deferred tax liability on the undistributed earnings is approximately $ 15 million. Note 14. Stockholders' Equity Dividends On May 11, 2023, we announced that our Board of Directors declared a cash dividend of $ 0.125 per share of common stock to be paid in June 2023. All shares of common stock issued and outstanding and all RSUs and PRUs as of the record date will be entitled to the dividend and dividend equivalent rights (DERs), respectively, which will be paid out if and when the underlying shares are released. 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. Stock repurchase program 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 March 31, 2023, we have $ 870 million remaining under the authorization to be completed in future periods with no expiration date. No shares were repurchased during the year ended April 1, 2022. The following table summarizes activity related to our stock repurchase program during the years ended March 31, 2023 and April 2, 2021: Year Ended (In millions, except per share amounts) March 31, 2023 April 2, 2021 Number of shares repurchased 40 15 Average price per share $ 22.63 $ 20.50 Aggregate purchase price $ 904 $ 304 Accumulated other comprehensive income (loss) Accumulated other comprehensive income (loss), net of taxes, consisted of foreign currency translation adjustments: (In millions) Foreign Currency Translation Adjustments Balance as of April 2, 2021 $ 47 Other comprehensive income (loss), net of taxes ( 51 ) Balance as of April 1, 2022 ( 4 ) Other comprehensive income (loss), net of taxes ( 11 ) Balance as of March 31, 2023 $ ( 15 ) Note 15. Stock-Based Compensation and Benefit Plans Stock incentive plans The purpose of our stock incentive plans is to attract, retain and motivate eligible persons whose present and potential contributions are important to our success by offering them an opportunity to participate in our future performance through equity awards. We have one primary stock incentive plan: the 2013 Equity Incentive Plan (the 2013 Plan), under which incentive stock options may be granted only to employees (including officers and directors who are also employees), and other awards may be granted to employees, officers, directors, consultants, independent contractors, and advisors. As amended, our stockholders have approved and reserved 82 million shares of common stock for issuance under the 2013 Plan. Stock options granted under the 2013 Plan expire no more than 10 years from the date of grant. 71 Table of Contents 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. As of March 31, 2023, 9 million shares remained available for future grant, calculated using the maximum potential shares that could be earned and issued at vesting. RSUs (In millions, except per share and year data) Number of Shares Weighted- Average Grant Date Fair Value Outstanding as of April 1, 2022 6 $ 21.80 Granted 7 $ 22.38 Vested ( 3 ) $ 21.12 Forfeited ( 1 ) $ 22.38 Outstanding as of March 31, 2023 9 $ 22.45 RSUs generally vest over a three-year period. The weighted-average grant date fair value per share of RSUs granted during fiscal 2023, 2022 and 2021 was $ 22.38 , $ 22.53 , and $ 20.70 , respectively. The total fair value of RSUs released in fiscal 2023, 2022 and 2021 was $ 74 million, $ 57 million, and $ 86 million, respectively, which represents the market value of our common stock on the date the RSUs were released. PRUs (In millions, except per share and year data) Number of Shares Weighted- Average Grant Date Fair Value Outstanding and unvested as of April 1, 2022 3 $ 28.50 Granted 2 $ 27.07 Vested (1) — $ 31.75 Forfeited ( 1 ) $ 26.70 Unvested at March 31, 2023 4 $ 28.01 Vested and unreleased as of March 31, 2023 1 Outstanding as of March 31, 2023 5 (1) The number of shares is less than 1 million. The total fair value of PRUs released in fiscal 2023, 2022 and 2021 was $ 5 million, $ 0 million , and $ 43 million, respectively, which represents the market value of our common stock on the date the PRUs were released. We have granted PRUs to certain of our executives. Typically, these PRUs have a three-year vest period. PRUs granted in fiscal 2023, 2022 and 2021 contain a combination of our company’s performance and market conditions. The performance conditions are based on the achievement of specified two-year non-GAAP financial metrics. The market conditions are based on the achievement of our relative total shareholder return over a three - and five-year period. Typically, 0 % to 200 % of target shares are eligible to be earned based on the achievement of the performance and market conditions. Valuation of PRUs The fair value of each PRU that does not contain a market condition is equal to the market value of our common stock on the date of grant. The fair value of each PRU that contains a market condition is estimated using the Monte Carlo simulation model. The valuation and the underlying weighted-average assumptions for PRUs are summarized below: Year Ended March 31, 2023 April 1, 2022 April 2, 2021 Expected term 3.3 years 3.9 years 2.7 years Expected volatility 34.8 % 37.6 % 42.5 % Risk-free interest rate 3.4 % 1.0 % 0.2 % Expected dividend yield 1.3 % — % — % Weighted-average grant date fair value of PRUs $ 27.07 $ 28.68 $ 26.39 72 Table of Contents Stock options (In millions, except per share and year data) Number of Shares Weighted-Average Exercise Price Weighted- Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding as of April 1, 2022 (1) — $ 5.51 Exercised (1) — $ 4.43 Forfeited and expired (1) — $ 2.58 Outstanding as of March 31, 2023 (1) — $ 5.97 Exercisable as of March 31, 2023 (1) — $ 5.97 3.84 $ 2 (1) The number of shares is less than 1 million. The total intrinsic value of options exercised during fiscal 2023, 2022 and 2021 was $ 1 million, $ 3 million, and $ 18 million, respectively. No options were granted in fiscal 2023, 2022 and 2021. ESPP Under our 2008 Employee Stock Purchase Plan, employees may annually contribute up to 10 % of their gross compensation, subject to certain limitations, to purchase shares of our common stock at a discounted price. Eligible employees are offered shares through a 12 -month offering period, which consists of two consecutive 6 -month purchase periods, at 85 % of the lower of either the fair market value on the purchase date or the fair market value at the beginning of the offering period. As of March 31, 2023, 39 million shares have been issued under this plan, and 31 million shares remained available for future issuance. The following table summarizes activity related to the purchase rights issued under the ESPP: Year Ended (In millions) March 31, 2023 April 1, 2022 April 2, 2021 Shares issued under the ESPP 1 1 1 Proceeds from issuance of shares $ 12 $ 13 $ 14 The fair value of each stock purchase right under our ESPP is estimated using the Black-Scholes option pricing model. The weighted-average grant date fair value related to rights to acquire shares of common stock under our ESPP in fiscal 2023, 2022 and 2021 was $ 6.04 per share, $ 6.77 per share, and $ 5.65 per share, respectively. Dividend equivalent rights (DERs) Our RSUs and PRUs, except for the $ 4 million unvested RSUs assumed under the Avast Plans, contain DERs that entitles the recipient of an award to receive cash dividend payments when the associated award is released. The amount of DER equals to the cumulated dividends on the issued number of common stock that would have been payable since the date the associated award was granted. As of March 31, 2023 and April 1, 2022, current dividends payable related to DER was $ 5 million and $ 11 million, respectively, recorded as part of Other current liabilities in the 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. Stock-based award modifications In connection with the Broadcom sale, during fiscal 2021 and 2020, we entered into severance and retention arrangements with certain executives. Pursuant to these agreements, these executives were entitled to receive vesting of 50 % of their unvested equity, subject to a service condition, and the remaining unvested equity will be earned at levels of 0 % to 150 %, subject to market and service conditions. In addition, we entered into severance and retention arrangements with certain other employees in connection with restructuring activities and the Broadcom sale, which accelerated either a portion or all of the vesting of their stock-based awards. All award modifications related to the Broadcom sale were fully expensed by fiscal 2021. The following table summarizes the stock-based compensation expense recognized as a result of these modifications: Year Ended (In millions) April 2, 2021 Sales and marketing $ 2 Research and development 9 General and administrative 8 Restructuring and other costs 10 Discontinued operations 1 Total stock-based compensation $ 30 Stock-based compensation expense 73 Table of Contents Total stock-based compensation expense and the related income tax benefit recognized for all of our equity incentive plans in our Consolidated Statements of Operations were as follows: Year Ended (In millions) March 31, 2023 April 1, 2022 April 2, 2021 Cost of revenues $ 3 $ 2 $ 1 Sales and marketing 34 19 18 Research and development 31 19 26 General and administrative 55 30 26 Restructuring and other costs 11 — 10 Other income (expense), net — — ( 1 ) Total stock-based compensation from continuing operations 134 70 80 Discontinued operations — — 1 Total stock-based compensation expense $ 134 $ 70 $ 81 Income tax benefit for stock-based compensation expense $ ( 20 ) $ ( 11 ) $ ( 18 ) As of March 31, 2023, the total unrecognized stock-based compensation expense related to our unvested stock-based awards was $ 226 million, which will be recognized over an estimated weighted-average amortization period of 2.0 years. Other employee benefit plans 401(k) plan We maintain a salary deferral 401(k) plan for all of our U.S. employees. This plan allows employees to contribute their pretax salary up to the maximum dollar limitation prescribed by the Internal Revenue Code. We match the first 3.5 % of a participant’s eligible compensation up to $ 6,000 in a calendar year. Our employer matching contributions to the 401(k) plan were as follows, including contributions to employees of our discontinued operations: Year Ended (In millions) March 31, 2023 April 1, 2022 April 2, 2021 401(k) matching contributions $ 4 $ 3 $ 3 74 Table of Contents Note 16. Net Income (Loss) Per Share Basic income per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted net income per share also includes the incremental effect of dilutive potentially issuable common shares outstanding. Dilutive potentially issuable common shares include the dilutive effect of the shares underlying convertible debt and employee equity awards. Our remaining convertible debt was extinguished on August 15, 2022. The components of basic and diluted net income (loss) per share are as follows: Year Ended (In millions, except per share amounts) March 31, 2023 April 1, 2022 April 2, 2021 Income (loss) from continuing operations $ 1,349 $ 836 $ 696 Income (loss) from discontinued operations — — ( 142 ) Net income (loss) $ 1,349 $ 836 $ 554 Net income (loss) per share - basic Continuing operations $ 2.20 $ 1.44 $ 1.18 Discontinued operations $ — $ — $ ( 0.24 ) Net income per share - basic $ 2.20 $ 1.44 $ 0.94 Income (loss) per share - diluted: Continuing operations $ 2.16 $ 1.41 $ 1.16 Discontinued operations $ — $ — $ ( 0.24 ) Net income per share - diluted $ 2.16 $ 1.41 $ 0.92 Weighted-average shares outstanding - basic 614 581 589 Dilutive potentially issuable shares: Convertible debt 6 7 8 Employee equity awards 4 3 3 Weighted-average shares outstanding - diluted 624 591 600 Anti-dilutive shares excluded from diluted net income (loss) per share calculation: Convertible debt — — 8 Employee equity awards — 1 — Total — 1 8 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 fiscal 2023, 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 fiscal 2022, 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. The New 2.0 % Convertible Notes were fully repaid on August 15, 2022. The New 2.5 % Convertible Notes were fully repaid on May 20, 2021. See Note 10 for further information on our convertible debt instruments. The conversion price of each convertible debt applicable in the periods presented is as follows: Year Ended April 1, 2022 April 2, 2021 New 2.5 % Convertible Senior Notes due April 1, 2022 N/A $ 16.77 New 2.0 % Convertible Senior Notes due August 15, 2022 $ 20.41 $ 20.41 75 Table of Contents Note 17. Segment and Geographic Information We operate as one reportable segment. Our Chief Operating Decision Maker reviews financial information presented on a consolidated basis to evaluate company performance and to allocate resources. The following table summarizes net revenues for our major solutions: Year Ended (In millions) March 31, 2023 April 1, 2022 April 2, 2021 Consumer security revenues $ 2,029 $ 1,623 $ 1,504 Identity and information protection revenues 1,244 1,127 1,038 Total Cyber Safety revenues 3,273 2,750 2,542 Legacy revenues 65 46 9 Total net revenues (1) $ 3,338 $ 2,796 $ 2,551 (1) During the year ended March 31, 2023, total net revenues include an unfavorable foreign exchange impact of $ 113 million, consisting of $ 108 million from our consumer security solutions, $ 3 million from our identity and information protection solutions and $ 2 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, partner 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 from markets that we have exited and in which we no longer operate, have been discontinued or identified to be discontinued, or remain in maintenance mode as a result of integration and product portfolio decisions. Geographic information Net revenues by geography are based on the billing addresses of our customers. The following table represents net revenues by geographic area for the periods presented: Year Ended (In millions) March 31, 2023 April 1, 2022 April 2, 2021 Americas $ 2,282 $ 1,963 $ 1,827 EMEA 704 506 419 APJ 352 327 305 Total net revenues (1) $ 3,338 $ 2,796 $ 2,551 Note: The Americas include U.S., Canada, and Latin America; EMEA includes Europe, Middle East, and Africa; APJ includes Asia Pacific and Japan. (1) During the year ended March 31, 2023, total net revenues include an unfavorable foreign exchange impact of $ 113 million, consisting of $ 2 million from Americas, $ 68 million from EMEA and $ 43 million from APJ. Revenues from customers inside the U.S. were $ 2,106 million, $ 1,860 million, and $ 1,742 million during fiscal 2023, 2022 and 2021, respectively. No other individual country accounted for more than 10% of revenues. The table below represents cash, cash equivalents and short-term investments held in the U.S. and internationally in various foreign subsidiaries: (In millions) March 31, 2023 April 1, 2022 U.S. $ 178 $ 1,220 International 572 671 Total cash, cash equivalents and short-term investments $ 750 $ 1,891 76 Table of Contents The table below represents our property and equipment, net of accumulated depreciation and amortization, by geographic area, based on the physical location of the asset, at the end of each period presented: (In millions) March 31, 2023 April 1, 2022 U.S. $ 38 $ 16 Ireland — 27 Czech Republic 16 — Germany 13 13 Other countries (1) 9 4 Total property and equipment, net $ 76 $ 60 (1) No individual country represented more than 10% of the respective totals. Our operating lease assets by geographic area, based on the physical location of the asset were as follows: (In millions) March 31, 2023 April 1, 2022 U.S. $ 25 $ 66 Czech Republic 12 — Other countries (1) 6 8 Total operating lease assets $ 43 $ 74 (1) No individual country represented more than 10% of the respective totals. Significant customers and channel partners In fiscal 2023, 2022 and 2021, no individual end-user customer accounted for 10% or more of our net revenues. See Note 1 for distributors that accounted for over 10% of our total accounts receivable. Note 18. Commitments and Contingencies Purchase obligations We have purchase obligations that are associated with agreements for purchases of goods or services. Management believes that cancellation of these contracts is unlikely, and we expect to make future cash payments according to the contract terms. The following reflects estimated future payments for purchase obligations by fiscal year. The amount of purchase obligations reflects estimated future payments as of March 31, 2023. (In millions) March 31, 2023 2024 $ 320 2025 79 2026 31 2027 11 2028 1 Total purchase obligations $ 442 Deemed repatriation taxes Under the Tax Cuts and Jobs Act (H.R.1), we are required to pay a one-time transition tax on untaxed earnings of our foreign subsidiaries through July 2025. The following reflects estimated future payments for deemed repatriation taxes by fiscal year: (In millions) March 31, 2023 2024 $ 128 2025 171 2026 139 Total obligations $ 438 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, 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 77 Table of Contents regarding the scope of the indemnification set forth in our bylaws and to provide additional procedural protections. We maintain director and officer insurance, which may cover certain liabilities arising from our obligation to indemnify our directors and officers. It is not possible to determine the aggregate maximum potential loss under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Such indemnification agreements might not be subject to maximum loss clauses. 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 Consolidated Financial Statements. 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 Consolidated Financial Statements. Litigation contingencies For a description of our accounting policy regarding litigation and loss contingencies, see “Critical Accounting Policies and Estimates” included in Part II, Item 7 of this Annual Report. Trustees of the University of Columbia in the City of New York v. NortonLifeLock As previously disclosed, on May 2, 2022, a jury returned its verdict in a patent infringement case filed in 2013 by the Trustees of Columbia University in the City of New York (Columbia) in the U.S. District Court for the Eastern District of Virginia. Columbia originally brought suit alleging infringement of six patents owned by the university. We won a favorable claim construction order on all six patents, and the claim construction was upheld by the Federal Circuit in 2016 on all but U.S. Patent Nos. 8,601,322 and 8,074,115. We also sought inter partes review by the Patent Trial and Appeal Board of the claims of the ‘322 and ‘115 Patents and all but two claims of the ‘322 Patent and three claims of the ‘115 Patent were invalidated. The remaining claims of the ‘322 and ‘115 Patents were the only claims that remained in suit at trial. The jury found that our Norton Security products and Symantec Endpoint Protection products (the latter of which were sold by us to Broadcom as part of an Asset Purchase Agreement dated November 4, 2019) willfully infringe the ‘322 and ‘115 Patents through the use of SONAR/BASH behavioral protection technology. The jury awarded damages in the amount of $ 185 million. Columbia did not seek injunctive relief against us. We intend to cease use of the technology found by the jury to infringe. The jury also found that we did not fraudulently conceal its prosecution of U.S. Patent No. 8,549,643 but did find that two Columbia professors were coinventors of this patent. No damages were awarded related to this patent. A formal judgment has not yet been entered in the case. Post-verdict motions have been filed, and we intend to file an appeal challenging the verdict. At this time, our current estimate of the low end of the range of probable estimated losses from this matter is approximately $ 237 million, reflecting the jury award and prejudgment interest, which we have accrued. The jury’s verdict may be enhanced and, should it be upheld on appeal, could ultimately result in the payment of somewhere between one and three times the jury’s verdict, plus interest and attorneys’ fees. There is a reasonable possibility that a loss may be incurred in excess of our accrual for this matter; however, such loss cannot be reasonably estimated. Securities Class Action and Derivative Litigation Securities class action lawsuits, which have since been consolidated, were filed in May 2018 against us and certain of our former officers, in the U.S. District Court for the Northern District of California. The lead plaintiff’s consolidated amended complaint alleged that, during a purported class period of May 11, 2017 to August 2, 2018, defendants made false and misleading statements in violation of Sections 10(b) and 20(a), and that certain individuals violated Section 20A, of the Securities Exchange Act of 1934, as amended (the Exchange Act). 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, exclusive of any claims that may be brought by shareholders who opted out of the class action. Of the $ 70 million, $ 67.1 million was covered under the applicable insurance policy with the remainder to be paid by us. The Court approved the settlement on February 12, 2022. On November 22, 2021, investment funds managed by Orbis Investment Management Ltd. which previously opted out of the securities class action, filed suit under the Exchange Act of 1934, the Arizona Securities Act, the Arizona Consumer Fraud Act and certain common law causes of action to recover alleged damages for losses incurred by the funds for their purchases or acquisitions of our common stock during the class period. On February 7, 2023, our Motion to Dismiss was granted in part and denied in part. The parties have now settled the matter and the action was dismissed with prejudice on April 26, 2023. The impact of settlement was not material. 78 Table of Contents 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. S’holder. Deriv. Litig. ), Northern District of California ( Lee v. Clark et al., ), and the District of Delaware ( Milliken vs. Clark et al. ). These assert generally the same facts and circumstances as alleged in the securities class action and allege claims for breach of fiduciary duty and related claims. On January 4, 2023, after reaching an agreement on the terms of the proposed settlement, which provides for, among other things, a payment of $ 12 million to the Company by the insurers of the Company’s directors and officers, the parties to the Chancery action filed a Stipulation and Agreement of Settlement, Compromise and Release in that Court, which was approved by the Court on May 4, 2023, over the objection of the Lee and Milliken plaintiffs, and releases all claims in the Chancery, Lee , and Milliken actions, as well as any other claims based on the same operative facts. The parties in the Milliken action stipulated to a dismissal with prejudice, which was entered by the Court on May 12, 2023. The Lee action has been stayed pending the settlement hearing in the Chancery Court and we intend to seek dismissal of the Lee action based on the preclusive effect of the approved release in the Chancery action. A fourth lawsuit filed in the Delaware Superior Court, Kukard v. Symantec , brings claims derivatively on behalf of our 2008 Employee Stock Purchase Plan. At this stage, we are unable to assess whether any material loss or adverse effect is reasonably possible as a result of the Kukard action or estimate the range of any potential loss. We will continue to incur legal fees in connection with these pending cases, including expenses for the reimbursement of legal fees of present and former officers and directors under indemnification obligations. The expense of continuing to defend such litigation may be significant. We intend to defend these lawsuits vigorously, but there can be no assurance that we will be successful in any defense. If any of the lawsuits are decided adversely, we may be liable for significant damages directly or under our indemnification obligations, which could adversely affect our business, results of operations, and cash flows. GSA During the first quarter of fiscal 2013, we were advised by the Commercial Litigation Branch of the Department of Justice’s (DOJ) Civil Division and the Civil Division of the U.S. Attorney’s Office for the District of Columbia that the government is investigating our compliance with certain provisions of our U.S. General Services Administration (GSA) Multiple Award Schedule Contract No. GS-35F-0240T effective January 24, 2007, including provisions relating to pricing, country of origin, accessibility, and the disclosure of commercial sales practices. As reported on the GSA’s publicly-available database, our total sales under the GSA Schedule contract were approximately $ 222 million from the period beginning January 2007 and ending September 2012. We fully cooperated with the government throughout its investigation, and in January 2014, representatives of the government indicated that their initial analysis of our actual damages exposure from direct government sales under the GSA Schedule contract was approximately $ 145 million; since the initial meeting, the government’s analysis of our potential damages exposure relating to direct sales has increased. The government also indicated they would pursue claims for certain sales to California, Florida, and New York as well as sales to the federal government through reseller GSA Schedule contracts, which could significantly increase our potential damages exposure. In 2012, a sealed civil lawsuit was filed against us related to compliance with the GSA Schedule contract and contracts with California, Florida, and New York. On July 18, 2014, the Court-imposed seal expired, and the government intervened in the lawsuit. On September 16, 2014, the states of California and Florida intervened in the lawsuit, and the state of New York notified the Court that it would not intervene. On October 3, 2014, the DOJ filed an amended complaint, which did not state a specific damages amount. On October 17, 2014, California and Florida combined their claims with those of the DOJ and the relator on behalf of New York in an Omnibus Complaint, and a First Amended Omnibus Complaint was filed on October 8, 2015; the state claims also do not state specific damages amounts. On 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. 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. On February 16, 2023, Plaintiffs filed Motions to Amend Judgment to revive the damages claimed at trial. We have opposed and the motion is now fully briefed before the Court. 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. The January 2023 Judgment has been paid, and at this time, our current estimate of the low end of the range of probable estimated losses from this matter was reduced to $ 1.4 million, which we have accrued. It is possible that the Court could grant Plaintiffs’ Motions to Amend Judgment, in whole or in part, or 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. There is a reasonable possibility that a loss may have been incurred in excess of our accrual for this matter; however, such loss cannot be reasonably estimated. 79 Table of Contents 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. 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. 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. On February 24, 2023, we filed a Motion to Dismiss, which is still pending. 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. 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. Other We are involved in a number of other judicial and administrative proceedings that are incidental to our business. Although adverse decisions (or settlements) may occur in one or more of the cases, it is not possible to estimate the possible loss or losses from each of these cases. The final resolution of these lawsuits, individually or in the aggregate, is not expected to have a material adverse effect on our business, results of operations, financial condition or cash flows. (2) Financial Statement Schedule Schedule II GEN DIGITAL INC. VALUATION AND QUALIFYING ACCOUNTS All financial statement schedules have been omitted, since the required information is not applicable or is not present in material amounts, and/or changes to such amounts are immaterial to require submission of the schedule, or because the information required is included in our Consolidated Financial Statements and notes thereto included in this Form 10-K. (3) Exhibits 80 Table of Contents Exhibit Number Incorporated by Reference Filed Herewith Exhibit Description Form File No. Exhibit Filing Date 2.01(§) Asset Purchase Agreement, dated August 8, 2019, by and between Broadcom Inc. and Registrant. 8-K 000-17781 2.01 8/8/2019 2.02 Co-operation Agreement, dated August 10, 2021, by and between NortonLifeLock Inc., Nitro Bidco Limited and Avast plc 8-K 000-17781 2.02 8/10/2021 2.03 Form of Deed of Irrevocable Undertaking, dated August 10, 2021, by and between NortonLifeLock Inc. and Nitro Bidco Limited 8-K 000-17781 2.03 8/10/2021 2.04 Amended and Restated Agreement, dated as of July 15, 2022, by and between NortonLifeLock Inc., Nitro Bidco Limited, and Avast plc 8-K 000-17781 2.01 7/18/2022 3.01 Amended and Restated Certificate of Incorporation of Registrant, and all amendments thereto. 10-Q 000-17781 3.01 11/9/2022 3.02 Amended and Restated Bylaws of Registrant. 8-K 000-17781 3.02 11/7/2022 3.03 Certificate of Elimination of Series A Junior Preferred Stock. 10-K 000-17781 3.06 5/28/2020 4.01 Description of Securities. 10-K 000-17781 4.02 5/28/2020 4.02 Indenture, dated September 16, 2010, between Registrant and Wells Fargo Bank, National Association, as trustee. 8-K 000-17781 4.01 9/16/2010 4.03 Investment Agreement, dated as of February 3, 2016, by and among Registrant and Silver Lake Partners IV Cayman (AIV II), L.P. 8-K 000-17781 10.01 2/9/2016 4.04 First Amendment to Investment Agreement, dated as of March 2, 2016, by and among Registrant and Silver Lake Partners IV Cayman (AIV II), L.P. 8-K 000-17781 10.01 3/7/2016 4.05 Investment Agreement, dated as of June 12, 2016, by and among Registrant, Bain Capital Fund XI, L.P., Bain Capital Europe Fund IV, L.P. and Silver Lake Partners IV Cayman (AIV II), L.P. (including the form of Indenture attached as Exhibit A thereto). 8-K 000-17781 2.02 6/14/2016 4.06 Amendment to Investment Agreement, dated as of July 31, 2016, by and among Registrant, Bain Capital Fund XI, L.P., Bain Capital Europe Fund IV, L.P. and Silver Lake Partners IV Cayman (AIV II), L.P. 10-Q 000-17781 2.03 8/5/2016 4.07 Base Indenture, dated as of February 9, 2017, between Registrant and Wells Fargo Bank, National Association, as trustee. 8-K 000-17781 4.01 2/9/2017 4.08 First Supplemental Indenture related to the 5% Senior Notes due 2025, dated as of February 9, 2017, between Registrant and Wells Fargo Bank, National Association, as trustee (including form of 5.00% Senior Note due 2025). 8-K 000-17781 4.02 2/9/2017 4.09 Third Amendment to Investment Agreement, dated November 11, 2019, by and between NortonLifeLock Inc. and Silver Lake Partners IV Cayman (AIV II), L.P., SLP IV Seal Holdings, L.P. and SLP IV Seal II Holdings, L.P. 8-K 000-17781 10.01 11/12/2019 4.10 Second Amendment to Investment Agreement, dated November 11, 2019, by and between NortonLifeLock Inc. and BC Bear cat SPV, LP, BCIP Venture Associates, BCIP Venture Associates-B, BCIP Associates IV (US), L.P., BCIP Associates IV-B (US), L.P., BCIP T Associates IV (US), 8-K 000-17781 10.02 11/12/2019 81 Table of Contents Exhibit Number Incorporated by Reference Filed Herewith Exhibit Description Form File No. Exhibit Filing Date 4.11 Second Supplemental Indenture, dated as of September 19, 2022, by and among the Company, each of the Guarantors (as defined therein) listed on the signature pages thereto and Computershare Trust Company, National Association, as successor to Wells Fargo Bank, National Association, as trustee (including the form of 6.750% Senior Notes due 2027 and form of 7.125% Senior Notes due 2030). 8-K 000-17781 4.01 9/19/2022 4.12 Third Supplemental Indenture, dated as of September 19, 2022, by and among the Company, the Guarantors and Computershare Trust Company, National Association, as successor to Wells Fargo Bank, National Association, as trustee. 8-K 000-17781 4.02 9/19/2022 10.01(*) Form of Indemnification Agreement for Officers, Directors and Key Employees (form for agreements entered into between January 17, 2006 and March 6, 2016). 8-K 000-17781 10.01 1/23/2006 10.02(*) Form of Indemnification Agreement for Officers, Directors and Key Employees, as amended (form for agreements entered into after March 6, 2016). 8-K 000-17781 10.03 3/7/2016 10.03(*) Registrant’s Deferred Compensation Plan, restated and amended January 1, 2010, as adopted December 15, 2009. 10-K 000-17781 10.05 5/24/2010 10.04(*) Registrant’s 2000 Director Equity Incentive Plan, as amended. 10-Q 000-17781 10.01 11/1/2011 10.05(*) Registrant’s 2008 Employee Stock Purchase Plan, as amended. 10-Q 000-17781 10.06 2/7/2020 10.06(*) Registrant’s 2013 Equity Incentive Plan, as amended. 8-K 000-17781 10.01 12/3/2018 10.07(*) Form of Director Restricted Stock Unit Award Agreement under Gen Digital Inc. 2013 Equity Incentive Plan X 10.08(*) Form of Employee Restricted Stock Unit Award Agreement under Gen Digital Inc. 2013 Equity Incentive Plan X 10.09(*) Form of Performance Based Restricted Stock Unit Award Agreement under Gen Digital Inc. 2013 Equity Incentive Plan X 10.10(*) Form of Restricted Stock Unit Award Agreement under Avast Limited Long Term Incentive Plan X 10.11(*) Form of Performance Stock Unit Award Agreement under Avast Limited Long Term Incentive Plan X 10.12 Amended and Restated Credit Agreement, effective as of August 1, 2016, among Registrant, the lenders party thereto (the Lenders), Wells Fargo Bank, National Association, as Term Loan A-1/Revolver Administrative Agent and Swingline Lender, JPMorgan Chase Bank, N.A., as Term Loan A-2 Administrative Agent, JPMorgan Chase Bank, N.A., Merrill Lynch, Pierce, Fenner & Smith, Incorporated, Barclays Bank PLC, Citigroup Global Markets Inc., Wells Fargo Securities, LLC, Royal Bank of Canada and Mizuho Bank, Ltd., as Lead Arrangers and Joint Bookrunners in respect of the Term A-2 Facility, Barclays Bank PLC, Citibank, N.A., Wells Fargo Bank, National Association, Royal Bank of Canada, Mizuho Bank, Ltd. And TD Securities (USA) LLC, as Co-Documentation Agents in respect of the Term A-2 Facility, and Bank of America, N.A., as Syndication Agent in respect of Term A-2 Facility. 10-Q 000-17781 4.03 8/5/2016 82 Table of Contents Exhibit Number Incorporated by Reference Filed Herewith Exhibit Description Form File No. Exhibit Filing Date 10.13 Term Loan Agreement, dated as of August 1, 2016, among Registrant, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America, N.A., as Syndication Agent, and Barclays Bank PLC, Citibank, N.A., Wells Fargo Bank, National Association, Royal Bank of Canada, Mizuho Bank, Ltd., and TD Securities (USA) LLC, as Co-Documentation Agents, JPMorgan Chase Bank, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Bank, PLC, Citigroup Global Markets Inc., Wells Fargo Securities, LLC, Royal Bank of Canada and Mizuho Bank, Ltd., as Joint Lead Arrangers and Joint Bookrunners. 10-Q 000-17781 4.05 8/5/2016 10.14 Amendment Agreement, dated as of July 18, 2016, by and among Registrant, Symantec Operating Corporation, the Lenders and the New Term Lenders, Wells Fargo Bank, National Association, and JPMorgan Chase Bank, N.A. 10-Q 000-17781 4.02 8/5/2016 10.15 Assignment and Assumption, dated October 3, 2016, to the Term Loan Agreement dated as of August 1, 2016, among Registrant, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America, N.A., as Syndication Agent, and Barclays Bank PLC, Citibank, N.A., Wells Fargo Bank, National Association, Royal Bank of Canada, Mizuho Bank, Ltd., and TD Securities (USA) LLC, as Co-Documentation Agents, JPMorgan Chase Bank, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Bank, PLC, Citigroup Global Markets Inc., Wells Fargo Securities, LLC, Royal Bank of Canada and Mizuho Bank, Ltd., as Joint Lead Arrangers and Joint Bookrunners. 10-Q 000-17781 4.01 2/3/2017 10.16 First Amendment, dated December 12, 2016, to the Term Loan Agreement, dated as of August 1, 2016, among Registrant, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America, N.A., as Syndication Agent, and Barclays Bank PLC, Citibank, N.A., Wells Fargo Bank, National Association, Royal Bank of Canada, Mizuho Bank, Ltd., and TD Securities (USA) LLC, as Co-Documentation Agents, JPMorgan Chase Bank, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Bank, PLC, Citigroup Global Markets Inc., Wells Fargo Securities, LLC, Royal Bank of Canada and Mizuho Bank, Ltd., as Joint Lead Arrangers and Joint Bookrunners. 10-Q 000-17781 4.02 2/3/2017 83 Table of Contents Exhibit Number Incorporated by Reference Filed Herewith Exhibit Description Form File No. Exhibit Filing Date 10.17 First Amendment, dated December 12, 2016, to the Credit Agreement, effective as of August 1, 2016, among the Registrant, the lenders party thereto (the Lenders), Wells Fargo Bank, National Association, as Term Loan A-1/Revolver Administrative Agent and Swingline Lender, JPMorgan Chase Bank, N.A., as Term Loan A-2 Administrative Agent, JPMorgan Chase Bank, N.A., Merrill Lynch, Pierce, Fenner & Smith, Incorporated, Barclays Bank PLC, Citigroup Global Markets Inc., Wells Fargo Securities, LLC, Royal Bank of Canada and Mizuho Bank, Ltd., as Lead Arrangers and Joint Bookrunners in respect of the Term A-2 Facility, Barclays Bank PLC, Citibank, N.A., Wells Fargo Bank, National Association, Royal Bank of Canada, Mizuho Bank, Ltd. And TD Securities (USA) LLC, as Co-Documentation Agents in respect of the Term A-2 Facility, and Bank of America, N.A., as Syndication Agent in respect of Term A-2 Facility. 10-Q 000-17781 4.03 2/3/2017 10.18(*) Registrant’s Senior Executive Incentive Plan, as amended and restated. 8-K 000-17781 10.03 10/25/2013 10.19(*) Registrant’s Executive Retention Plan, as amended and restated. 10-K 000-17781 10.18 5/21/2021 10.20(*) Registrant’s Executive Severance Plan. 10-K 000-17781 10.19 5/21/2021 10.21(§§) Assignment of Copyright and Other Intellectual Property Rights, by and between Peter Norton and Peter Norton Computing, Inc., dated August 31, 1990. S-4 33-35385 10.37 6/13/1990 10.22(†) Environmental Indemnity Agreement, dated April 23, 1999, between Veritas and Fairchild Semiconductor Corporation, included as Exhibit C to that certain Agreement of Purchase and Sale, dated March 29, 1999, between Veritas and Fairchild Semiconductor of California. S-1/A 333-83777 10.27 8/6/1999 10.23 Amendment, dated June 20, 2007, to the Amended and Restated Agreement Respecting Certain Rights of Publicity dated as of August 31, 1990, by and between Peter Norton and Registrant. 10-Q 000-17781 10.01 8/7/2007 10.24 Second Amendment and Limited Waiver to Amended and Restated Credit Agreement dated as of June 22, 2018. 10-Q 000-17781 10.01 11/16/2018 10.25 Second Amendment and Limited Waiver to Term Loan dated as of June 22, 2018. 10-Q 000-17781 10.02 11/16/2018 10.26(*) Registrant’s Offer Letter with Natalie M. Derse dated June 19, 2020 10-Q 000-17781 10.01 7/8/2020 84 Table of Contents Exhibit Number Incorporated by Reference Filed Herewith Exhibit Description Form File No. Exhibit Filing Date 10.27 Credit Agreement, effective as of November 4, 2019, among NortonLifeLock Inc., the issuing banks and lenders party thereto (the Lenders), Wells Fargo Bank, National Association, as Revolver Administrative Agent and Swingline Lender, JPMorgan Chase Bank, N.A., as Term Loan Administrative Agent and Collateral Agent, JPMorgan Chase Bank, N.A., Wells Fargo Securities, LLC, BofA Securities, Inc., Mizuho Bank, Ltd., Barclays Bank PLC, and The Bank of Nova Scotia, as Lead Arrangers and Joint Bookrunners, Bank of America, N.A., Mizuho Bank, Ltd., Barclays Bank PLC and The Bank of Nova Scotia, as Syndication Agents and Goldman Sachs Bank USA, HSBC Securities (USA) Inc., MUFG Bank, Ltd., SunTrust Robinson Humphrey, Inc., Citizens Bank, N.A., BMO Capital Markets Corp., BNP Paribas Securities Corp. and Santander Bank, N.A., as Co-Documentation Agents. 8-K 000-17781 10.01 11/4/2019 10.28 APA Letter Agreement dated October 1, 2020 by and between the Company and Broadcom Inc. 8-K 000-17781 10.01 7/8/2020 10.29(+) Stock Purchase Agreement dated December 7, 2020 between the Company and Alpaca HoldCo GmbH, Alpaca TopCo GmbH. 10-Q 000-17781 10.01 2/5/2021 10.30 First Amendment, effective as of May [7], 2021, among NortonLifeLock Inc., JPMorgan Chase Bank, N.A., as Term Loan Administrative Agent, Wells Fargo Bank, National Association, as Revolver Administrative Agent, and the lenders and other parties thereto. 10-K 000-17781 10.31 5/21/2021 10.31 Amended and Restated Commitment Letter, dated September 1, 2021, by and between NortonLifeLock Inc. and the parties thereto 8-K 000-17781 10.02 9/3/2021 10.32 Amended and Restated Interim Facilities Agreement, dated September 1, 2021, by and between NortonLifeLock Inc., the parties specified thereto, as acceding finance partners, BofA Securities, Inc. and Wells Fargo Securities, LLC, as arrangers, and Bank of America, N.A., as issuing bank, interim facility agent and interim security agent 8-K 000-17781 10.01 9/3/2021 10.33 Agreement of Sale and Purchase and Joint Escrow Instructions, dated as of June 4, 2021, by and between NortonLifeLock Inc. and TMG Partners R.E., LLC 8-K 000-17781 10.01 6/7/2021 10.34++ Restatement Agreement, dated as of September 12, 2022, by and among the Company, the other Loan Parties thereto, the Lenders party thereto, JPMorgan Chase Bank, N.A., as term loan administrative agent and collateral agent under the Existing Credit Agreement, Wells Fargo Bank, National Association, as revolver administrative agent under the Existing Credit Agreement, and Bank of America, N.A., in its capacity as Successor Administrative Agent. 8-K 000-17781 10.01 9/12/2022 10.35(*) Avast Limited (formerly Avast plc) 2018 Long Term Incentive Plan S-8 000-17781 99.01 9/12/2022 10.36(*) Form of Restricted Stock Unit Award Agreements under Avast Long-Term Incentive Plan 10-Q 000-17781 10.03 11/9/2022 85 Table of Contents Exhibit Number Incorporated by Reference Filed Herewith Exhibit Description Form File No. Exhibit Filing Date 10.37(*) Form of FY23 Restricted Stock Unit Award Agreements for Non-Employee Directors under 2013 Equity Incentive Plan. 10-Q 000-17781 10.04 11/9/2022 10.38(*) Employment Agreement dated September 12, 2022, between AVAST Software s.r.o. and Ondrej V l cek 10-Q 000-17781 10.05 11/9/2022 10.39(*) Form of Non-Competition and Non-Solicitation Agreement 10-Q 000-17781 10.06 11/9/2022 10.40 Registrant’s Non-Employee Director Compensation Policy 10-Q 000-17781 10.01 8/5/2022 21.01 Subsidiaries of Registrant. X 23.01 Consent of Independent Registered Public Accounting Firm. X 24.01 Power of Attorney (see Signature page to this annual report). X 31.01 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X 31.02 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X 32.01(††) Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X 32.02(††) Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X 101.00 The following financial information from Gen Digital Inc.'s Annual Report on Form 10-K for the fiscal year ended March 31, 2023 are formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Stockholders’ Equity (Deficit), (vi) Consolidated Statements of Cash Flows, and (vi) Notes to the Consolidated Financial Statements, tagged as blocks of text and including detailed tags. X 104.00 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). X * Indicates a management contract, compensatory plan or arrangement. ** Filed by LifeLock, Inc. § The exhibits and schedules to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant agrees to furnish supplementally copies of any such exhibits and schedules to the SEC upon request. §§ Paper filing. † Filed by Veritas Software Corporation. †† This exhibit is being furnished, rather than filed, and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K. + Certain portions of this document that constitute confidential information have been redacted in accordance with Regulations S-K, Item 601(b)(10). ++ Certain schedules and similar attachments to the exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5) Item 16. Form 10-K Summary None. 86 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Mountain View, State of California, on the 24th day of May 2023. GEN DIGITAL INC. By: /s/ Vincent Pilette Vincent Pilette Chief Executive Officer and Director Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated below. Signature Title Date /s/ Vincent Pilette Chief Executive Officer and Director (Principal Executive Officer) May 24, 2023 Vincent Pilette /s/ Natalie Derse Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) May 24, 2023 Natalie Derse /s/ Ondrej Vlcek President and Director May 24, 2023 Ondrej Vlcek /s/ Frank E. Dangeard Chairman of the Board May 24, 2023 Frank E. Dangeard /s/ Sue Barsamian Director May 24, 2023 Sue Barsamian /s/ Pavel Baudis Director May 24, 2023 Pavel Baudis /s/ Eric K. Brandt Director May 24, 2023 Eric K. Brandt /s/ Nora Denzel Director May 24, 2023 Nora Denzel /s/ Peter A. Feld Director May 24, 2023 Peter A. Feld /s/ Emily Heath Director May 24, 2023 Emily Heath /s/ Sherrese M. Smith Director May 24, 2023 Sherrese M. Smith 87