What changed in this filing

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Item 1. Financial Statements

2023-08-04 compared with 2023-02-06 · 223 added, 408 removed, 576 unchanged (52% of the section changed)

3 unchanged sentences

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

December 30, 2022 April 1, 2022

June 30, 2023 March 31, 2023

Current assets:

Cash and cash equivalents $ 623 $ 750

Short-term investments — 4

Accounts receivable, net 145 168

28 unchanged sentences

3,000 shares authorized;

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

639 and 640 shares issued and outstanding as of June 30, 2023 and March 31, 2023, respectively

Accumulated other comprehensive income (loss) 36 ( 15 )

6 unchanged sentences

(Unaudited, in millions, except per share amounts)

Three Months Ended Nine Months Ended

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

Three Months Ended

June 30, 2023 July 1, 2022

Net revenues $ 946 $ 707

17 unchanged sentences

Weighted-average shares outstanding:

647 582 605 581

651 591 617 591

Basic 640 578

Diluted 643 604

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

2 unchanged sentences

(Unaudited, in millions)

Three Months Ended Nine Months Ended

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

Three Months Ended

June 30, 2023 July 1, 2022

Net income (loss) $ 189 $ 200

1 unchanged sentence

Foreign currency translation gain (loss) 32 ( 40 )

Net unrealized gain (loss) on derivative instruments 19 —

Other comprehensive income (loss), net of taxes 51 ( 40 )

4 unchanged sentences

(Unaudited, in millions, except share amounts)

Three months ended December 30, 2022

Three months ended June 30, 2023

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

Balance as of March 31, 2023 640 $ 2,800 $ ( 15 ) $ ( 585 ) $ 2,200

Net income (loss) — — — 189 189

6 unchanged sentences

Stock-based compensation — 37 — — 37

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

Nine months ended December 30, 2022

Balance as of June 30, 2023 639 $ 2,697 $ 36 $ ( 396 ) $ 2,337

Three months ended July 1, 2022

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

9 unchanged sentences

Stock-based compensation — 24 — — 24

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

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

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

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

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

GEN DIGITAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited, in millions, except share amounts)

Three months ended December 31, 2021

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

Shares Amount

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

Net income (loss) — — — 202 202

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

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

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

— ( 73 ) — — ( 73 )

Stock-based compensation — 18 — — 18

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

Nine months ended December 31, 2021

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

Shares Amount

Balance as of April 2, 2021 580 $ 2,229 $ 47 $ ( 2,776 ) $ ( 500 )

Net income (loss) — — — 716 716

Other comprehensive income (loss), net of taxes — — ( 25 ) — ( 25 )

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

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

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

— ( 220 ) — — ( 220 )

Stock-based compensation — 51 — — 51

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

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

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

GEN DIGITAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in millions)

Nine Months Ended

December 30, 2022 December 31, 2021

Three Months Ended

June 30, 2023 July 1, 2022

OPERATING ACTIVITIES:

1 unchanged sentence

Amortization and depreciation 125 29

Impairments and write-offs of current and long-lived assets ( 5 ) 8

Stock-based compensation expense 37 24

Deferred income taxes ( 59 ) ( 32 )

Loss (gain) on extinguishment of debt 9 5

Gain on sale of property ( 4 ) —

12 unchanged sentences

Purchases of property and equipment ( 4 ) ( 2 )

Payments for acquisitions, net of cash acquired ( 6,547 ) ( 39 )

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

Proceeds from the sale of property — 355

Other ( 2 ) 2

2 unchanged sentences

Repayments of debt ( 208 ) ( 410 )

Proceeds from issuance of debt, net of issuance costs 8,954 512

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

Tax payments related to vesting of stock units ( 18 ) ( 16 )

10 unchanged sentences

Description of Business and Significant Accounting Policies

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

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

Gen Digital Inc.

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.

On September 12, 2022, we completed our acquisition of Avast, plc (Avast).

Avast has been included in our consolidated results of operations since the acquisition date.

See Note 4 for further information about this business combination.

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

to Gen Digital Inc.

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

Our portfolio provides protection across three Cyber Security categories:

security, identity protection and online privacy.

We help customers protect their computer and mobile devices from online threats, safeguard their identity and personal information and strengthen online privacy capabilities and functionalities.

Basis of presentation

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In the opinion of management, the unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting only of normal recurring items, except as otherwise noted, necessary for the fair presentation of our financial position, results of operations and cash flows for the interim periods.

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

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

The results of operations for the three months ended June 30, 2023 are not necessarily indicative of the results expected for the entire fiscal year.

Fiscal calendar

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

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

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

Unless otherwise stated, references to three month periods in this report relate to fiscal periods ended June 30, 2023 and July 1, 2022.

The three months ended June 30, 2023 and July 1, 2022 each consisted of 13 weeks, respectively.

Our 2024 fiscal year consists of 52 weeks and ends on March 29, 2024.

6 unchanged sentences

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

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

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

Significant accounting policies

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

With the exception of those discussed in Note 2, there have been no material changes to our significant accounting policies as of and for the three months ended June 30, 2023, as compared to the significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023.

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 the Condensed 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.

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

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

There have been no material changes in recently issued or adopted accounting standards from those disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023.

Although there are several other new accounting pronouncements issued or proposed by the FASB that we have adopted or will adopt, as applicable, we do not believe any of these accounting pronouncements has had, or will have, a material impact on our Condensed Consolidated Financial Statements and disclosures .

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

During the second quarter of fiscal 2023 , we determined certain land and buildings in Mountain View, California, which were previously reported as assets held for sale as of April 1, 2022, no longer qualify as held for sale classification.

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

We continue to actively market the remaining property for sale.

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

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

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

On June 28, 2023, we completed the sale of certain land and buildings in Dublin, Ireland, which was previously classified as held for sale as of March 31, 2023, for cash consideration of $ 13 million, net of selling costs, and recognized a gain on sale of $ 4 million.

We continue to actively market the remaining properties for sale.

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

As of June 30, 2023, these assets are classified as held for sale.

During the three months ended June 30, 2023 , there were no impairments because the fair value of the properties less costs to sell either equals or exceeds their carrying value.

On July 28, 2023, we entered into an agreement to sell certain land and buildings in Tucson, Arizona, which were previously classified as held for sale as of June 30, 2023 and March 31, 2023, for cash consideration of $ 13 million, net of selling costs.

The transaction is expected to close during the third quarter of fiscal 2024.

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 (the Closing Date), we completed the Merger with Avast, and as a result, we have changed our corporate name to Gen Digital Inc.

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

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

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

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

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)

Repayment of outstanding Avast debt (2)

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.

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

Fiscal 2023 Avast acquisition

During the second quarter of fiscal 2023, we acquired all of the outstanding common stock of Avast.

Prior to the acquisition, 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 acquisition, we are positioned to provide a broad and complementary consumer product portfolio with greater geographic diversification and access to a larger user base.

The total consideration for the acquisition of Avast was approximately $ 8,688 million, net of cash acquired.

Our current 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

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

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

The preliminary goodwill of $ 7,265 million represents the excess of the consideration transferred over the fair values of the assets acquired and liabilities assumed.

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

Goodwill is allocated to our single reportable segment.

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

tax purposes.

See Note 6 for further information on goodwill.

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

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

Customer relationships (1)

$ 1,055 7 years

Developed technology (2)

1,244 6 years

Finite-lived trade names (2)

Total identified intangible assets $ 2,383

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

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

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

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

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

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

In connection with the financing provided 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.

During the nine months ended December 30, 2022, we paid $ 31 million in ticking fees.

Impact on operating results

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

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

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

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

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

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

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

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

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

Unaudited pro forma information

The following unaudited pro forma financial information represents the combined historical results for the three and nine months ended December 30, 2022 and December 31, 2021, as if the Merger had been completed on April 3, 2021, the first day of fiscal 2022.

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

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

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

The following table summarizes the unaudited pro forma financial information:

Three Months Ended Nine Months Ended

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

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

Net income (loss) $ 204 $ 113 $ 323 $ 341

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.

The primary area of preliminary purchase price allocation that is not yet finalized are certain tax matters.

There were immaterial measurement period adjustments during the three months ended June 30, 2023.

Contract liabilities

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

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

During the three months ended June 30, 2023, we recognized $ 700 million from the contract liabilities balances as of March 31, 2023.

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

Remaining performance obligations

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

As of December 30, 2022, we had $ 1,179 million of remaining performance obligations, excluding customer deposit liabilities of $ 550 million, of which we expect to recognize approximately 93 % as revenue over the next 12 months.

As of June 30, 2023, we had $ 1,219 million of remaining performance obligations, excluding customer deposit liabilities of $ 490 million, of which we expect to recognize approximately 94 % as revenue over the next 12 months.

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

2 unchanged sentences

(In millions)

Balance as of April 1, 2022 $ 2,873

Merger with Avast 7,265

Balance as of March 31, 2023 $ 10,217

Translation adjustments

Balance as of December 30, 2022 $ 10,124

Balance as of June 30, 2023 $ 10,241

Intangible assets, net

December 30, 2022 April 1, 2022

June 30, 2023 March 31, 2023

(In millions) Gross

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Total intangible assets $ 3,937 $ ( 955 ) $ 2,982 $ 3,933 $ ( 836 ) $ 3,097

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

See Note 4 for further information about this business combination.

Amortization expense for purchased intangible assets is summarized below:

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

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

Three Months Ended Condensed Consolidated Statements of Operations Classification

(In millions) June 30, 2023 July 1, 2022

Customer relationships and other $ 61 $ 21 Operating expenses

1 unchanged sentence

Total $ 118 $ 26

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

As of June 30, 2023, future amortization expense related to intangible assets that have finite lives is as follows by fiscal year:

(In millions)

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Cash and cash equivalents:

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

(In millions) June 30, 2023 March 31, 2023

Cash $ 542 $ 576

2 unchanged sentences

Accounts receivable, net:

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

(In millions) June 30, 2023 March 31, 2023

Accounts receivable $ 146 $ 169

2 unchanged sentences

Other current assets:

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

(In millions) June 30, 2023 March 31, 2023

Prepaid expenses $ 118 $ 122

3 unchanged sentences

Property and equipment, net:

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

(In millions) June 30, 2023 March 31, 2023

Land $ 13 $ 13

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Total property and equipment, net $ 73 $ 76

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.

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

Other long-term assets:

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

(In millions) June 30, 2023 March 31, 2023

Non-marketable equity investments $ 176 $ 176

4 unchanged sentences

Short-term contract liabilities:

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

(In millions) June 30, 2023 March 31, 2023

Deferred revenue $ 1,141 $ 1,153

2 unchanged sentences

Other current liabilities:

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

(In millions) June 30, 2023 March 31, 2023

Income taxes payable $ 188 $ 172

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Long-term income taxes payable:

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

(In millions) June 30, 2023 March 31, 2023

Deemed repatriation tax payable $ 310 $ 310

3 unchanged sentences

Other income (expense), net:

Three Months Ended Nine Months Ended

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

Three Months Ended

(In millions) June 30, 2023 July 1, 2022

Interest income $ 6 $ 2

Foreign exchange gain (loss) 1 ( 1 )

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

Gain on sale of properties 4 —

2 unchanged sentences

Supplemental cash flow information:

Nine Months Ended

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

Three Months Ended

(In millions) June 30, 2023 July 1, 2022

Income taxes paid, net of refunds $ 21 $ 1

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Non-cash operating activities:

Operating lease assets obtained in exchange for operating lease liabilities $ 23 $ 35

Reduction of operating lease assets as a result of lease terminations and modifications $ ( 1 ) $ —

Non-cash investing and financing activities:

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

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

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

Financial Instruments and Fair Value Measurements

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

December 30, 2022 April 1, 2022

June 30, 2023 March 31, 2023

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

Money market funds $ 81 $ 81 $ — $ 174 $ 174 $ —

Corporate bonds — — — 4 — 4

Interest rate swaps (1)

19 — 19 — — —

Total $ 100 $ 81 $ 19 $ 174 $ 174 $ —

(1) The fair value of our interest rate swaps is less than $ 1 million as of March 31, 2023.

Financial instruments not recorded at fair value on a recurring basis include our non-marketable equity investments and long-term debt.

Non-marketable equity investments

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

As of June 30, 2023 and March 31, 2023, the carrying value of our non-marketable equity investments was $ 176 million and $ 176 million, respectively.

Current and long-term debt

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

As of June 30, 2023 and March 31, 2023, the total fair value of our current and long-term fixed rate debt was $ 2,578 million and $ 2,593 million, respectively.

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

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The following summarizes our lease costs:

Three Months Ended Nine Months Ended

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

Three Months Ended

(In millions) June 30, 2023 July 1, 2022

Operating lease costs $ 4 $ 4

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Three Months Ended

December 30, 2022 December 31, 2021

June 30, 2023 July 1, 2022

Weighted-average remaining lease term 3.0 years 4.6 years

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

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

As of June 30, 2023, the maturities of our lease liabilities by fiscal year are as follows:

(In millions)

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(In millions, except percentages)

December 30, 2022 April 1, 2022 Effective

June 30, 2023 March 31, 2023 Effective

Interest Rate

3.95 % Senior Notes due June 15, 2022

$ — $ 400 4.05 %

New 2.00 % Convertible Unsecured Notes due August 15, 2022

5.00 % Senior Notes due April 15, 2025

$ 1,100 $ 1,100 5.00 %

Initial Term Loan due May 7, 2026 — 1,010 LIBOR plus (2)

Delayed Term loan due May 7, 2026 — 703 LIBOR plus (2)

Term A Facility due September 12, 2027 3,812 3,861 SOFR + % (2)

6.75 % Senior Notes due September 30, 2027

900 900 6.75 %

Term B Facility due September 12, 2029 3,272 3,431 SOFR + % (3)

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7.125 % Senior Notes due September 30, 2030

600 600 7.13 %

0.95 % Avira Mortgage due December 30, 2030 (1)

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(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.

(2) 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.

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

December 30, 2022 April 1, 2022

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

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

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

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

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

June 30, 2023 March 31, 2023

Term A Facility due September 12, 2027 6.95 % 6.66 %

Term B Facility due September 12, 2029 7.20 % 6.91 %

As of June 30, 2023, the future contractual maturities of debt by fiscal year are as follows:

(In millions)

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Total future maturities of debt $ 9,691

Credit facility

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

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

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

The principal amount of the Initial Term Loan and the additional borrowings under the First Amendment must 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 must 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.

We may voluntarily repay outstanding principal balances without penalty.

Interest on borrowings under the credit agreement can be 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 bear interest, in the case of base rate loans, at a per annum rate equal to the applicable base rate plus a margin ranging from 0.125 % to 0.75 %, and in the case of LIBOR loans, LIBOR, as adjusted for statutory reserves, plus a margin ranging from 1.125 % to 1.75 %.

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

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

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

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

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

Senior credit facilities

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

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

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 close of the acquisition of Avast.

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.

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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.

Quarterly installment payments commenced on March 31, 2023.

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

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

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

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

As of June 30, 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.

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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;

Each of the Revolving Facility and Term A Facility are subject to a covenant that we maintain a consolidated leverage ratio less than or equal to (i) 6.0 to 1.0 from the second quarter of fiscal 2023 through the last day of the second quarter of fiscal 2024, (ii) 5.75 to 1.0 following the last day of the second quarter of fiscal 2024 through the last day of the second quarter of fiscal 2025 and (iii) 5.25 to 1.0 for each fiscal quarter thereafter;

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

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

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

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

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

As of June 30, 2023 , we were in compliance with all debt covenants.

On February 9, 2017, we issued $ 1,100 million 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.

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.

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

New 2.0 % Convertible Notes

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

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 is now eliminated.

We de-recognized the remaining unamortized debt discount of $ 1 million on the New 2.0 % Convertible Notes and therefore will no longer recognize 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 will remain in equity, as the new guidance did not eliminate the substantial premium model for convertible instruments.

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

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.

Convertible Senior Notes

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

Three Months Ended

(In millions) July 1, 2022

Contractual interest expense $ 3

Amortization of debt discount —

Payments in lieu of conversion price adjustments (1)

(1) Payments in lieu of conversion price adjustments consist of amounts paid to holders of the Convertible Senior Notes when our quarterly dividend to our common stockholders exceeds the amounts defined in the Convertible Senior Notes agreements.

During the three months ended June 30, 2023, we did no t recognize any interest expense related to our Convertible Senior Notes as they were settled during the second quarter of fiscal year 2023.

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.

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

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

As 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.

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

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

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

Three Months Ended Nine Months Ended

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

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

The notional amount of our outstanding foreign exchange forward contracts in U.S.

dollar equivalent was as follows:

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

Foreign exchange forward contracts purchased $ 234 $ 155

Foreign exchange forward contracts sold $ 68 $ 191

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 have effectively converted $ 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 Condensed Consolidated Statements of Operations.

Cash flows related to these hedges are classified under operating activities in our Condensed Consolidated Statement of Cash Flows.

Summary of derivative instruments

The following table summarizes our outstanding derivative instruments as of June 30, 2023 and March 31, 2023:

Notional Amount Fair Value of Derivative Assets Fair Value of Derivative Liabilities

(In millions) June 30, 2023 March 31, 2023 June 30, 2023 March 31, 2023 June 30, 2023 March 31, 2023

Foreign exchange contracts not designated as hedging instrument (1)

$ 249 $ 291 $ — $ — $ — $ —

Interest rate swap contracts designed as cash flow hedge 1,000 1,000 19 1 — 2

Total $ 1,249 $ 1,291 $ 19 $ 1 $ — $ 2

(1) The fair values of the foreign exchange contracts are less than $ 1 million as of June 30, 2023 and March 31, 2023.

The following table summarizes the effect of our cash flow hedges on AOCI during the periods indicated:

Three Months Ended

(In millions) June 30, 2023 July 1, 2022

Interest rate swap contracts designed as cash flow hedge $ ( 22 ) $ —

The related gain (loss) recognized in our Condensed Consolidated Statements of Operations, with presentation location was as follows:

Three Months Ended Condensed Consolidated Statements of Operations Classification

(In millions) June 30, 2023 July 1, 2022

Foreign exchange contracts not designated as hedging instrument $ ( 3 ) $ ( 7 ) Other income (expense), net

Interest rate swap contracts designed as cash flow hedge 3 — Interest expense

Total $ — $ ( 7 )

As of June 30, 2023, we estimate that $ 15 million of net deferred gains related to our interest rate hedges will be recognized in earnings over the next 12 months.

Restructuring and Other Costs

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

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.

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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.

In connection with our acquisition of Avast, 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 acquisition 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 $ 280 million, with $ 180 million and $ 100 million estimated to be incurred within the first and second full years, respectively, following the completion of the Merger.

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 acquisition.

These actions are expected to be completed by fiscal 2024.

As of December 30, 2022, we have incurred costs of $ 48 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.

As of June 30, 2023, we have incurred total costs of $ 86 million related to the September 2022 Plan.

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

(in millions) Liability Balance as of March 31, 2023 Costs, Net of Adjustments Cash Payments Liability Balance as of June 30, 2023

Severance and termination benefit costs $ 7 $ 11 $ ( 7 ) $ 11

Contract cancellation charges — 1 ( 1 ) —

Other exit and disposal costs — 5 ( 5 ) —

Total $ 7 $ 17 $ ( 13 ) $ 11

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

Restructuring and other costs summary

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

Three Months Ended Nine Months Ended

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

Three Months Ended

(In millions) June 30, 2023 July 1, 2022

Severance and termination benefit costs $ 11 $ —

Contract cancellation charges 1 —

Stock-based compensation charges 8 — 8 —

Asset write-offs and impairments 2 — 2 —

Other exit and disposal costs 5 2

Total restructuring and other costs $ 17 $ 2

Restructuring summary

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

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

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

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

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

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

Total $ — $ 48 $ ( 21 ) $ ( 12 ) $ 15

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

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

Three Months Ended Nine Months Ended

Three Months Ended

(In millions, except percentages)

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

June 30, 2023 July 1, 2022

Income (loss) before income taxes $ 204 $ 229

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Effective tax rate 7 % 13 %

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

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

Our effective tax rate for the three and nine months ended December 31, 2021 differs from the federal statutory income tax rate primarily due to state taxes and U.S.

Our effective tax rate for the three months ended June 30, 2023, differs from the federal statutory income tax rate primarily due to tax benefits related to the set up and write-off of deferred tax items from an internal restructuring, partially offset by state taxes and the U.S.

taxation on foreign earnings.

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

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

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

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

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

and Czech Republic, although our principal executive offices remain in Tempe, Arizona, and we are subject to tax in multiple U.S.

and international tax jurisdictions.

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

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

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

In connection with our Avast integration plan, in July 2023, we executed a legal entity restructuring as part of an ongoing effort to simplify our business operational and tax structure.

We are evaluating the impact of this transaction on our Condensed Consolidated Financial Statements, however, an estimate of the impact cannot be made at this time.

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.

Given the potential resolution of uncertain tax positions involves multiple tax periods and jurisdictions, we are unable to accurately estimate when these unrecognized tax benefits will be realized or released.

However, it is reasonably possible that there could be significant changes to our unrecognized tax benefits in the next 12 months.

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 expiration of the statute of limitations in various taxing jurisdictions.

Stockholders' Equity

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

All shares of common stock issued and outstanding and all restricted stock units (RSUs) and performance-based restricted stock units (PRUs) as of the record date will be entitled to the dividend and dividend equivalent rights (DERs), respectively, which will be paid out if and when the underlying shares are released.

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

On August 3, 2023, we announced that our Board of Directors declared a cash dividend of $ 0.125 per share of common stock to be paid in September 2023.

All shares of common stock issued and outstanding and all restricted stock units (RSUs) and performance-based restricted stock units (PRUs) as of the record date will be entitled to the dividend and dividend equivalent rights, 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 acquisition of Avast will not be entitled to DERs.

See Note 15 for further information about these equity awards.

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

As of December 30, 2022, we had $ 870 million remaining under the authorization to be completed in future periods with no expiration date.

No shares were repurchased in the prior fiscal year during the three and nine months ended December 31, 2021.

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

Three Months Ended Nine Months Ended

As of June 30, 2023, we had $ 829 million remaining under the authorization to be completed in future periods with no expiration date.

The following table summarizes activity related to this program during the three months ended June 30, 2023 and July 1, 2022:

Three Months Ended

(In millions, except per share amounts)

December 30, 2022 December 30, 2022

June 30, 2023 July 1, 2022

Number of shares repurchased 3 12

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Accumulated other comprehensive income (loss)

Accumulated other comprehensive income (loss), net of taxes, consisted of foreign currency translation adjustments:

Accumulated other comprehensive income (loss), net of taxes, consisted of foreign currency translation adjustments and unrealized gain (loss) on derivative instruments:

(In millions) Foreign Currency

Translation Gain (Loss)

Balance as of April 1, 2022 $ ( 4 )

Translation Adjustments Unrealized Gain (Loss) On

Derivative Instruments Total

Balance as of March 31, 2023 $ ( 15 ) $ — $ ( 15 )

Other comprehensive income (loss), net of taxes 32 19 51

Balance as of December 30, 2022 $ ( 28 )

Balance as of June 30, 2023 $ 17 $ 19 $ 36

Stock-Based Compensation

Avast equity awards

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

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

In connection with our acquisition of Avast, 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 shares of unvested RSUs.

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

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

Three Months Ended Nine Months Ended

Three Months Ended

(In millions)

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

June 30, 2023 July 1, 2022

Cost of revenues $ 1 $ 1

2 unchanged sentences

General and administrative 16 10

Restructuring and other costs 8 — 8 —

Total stock-based compensation expense $ 37 $ 24

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

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

As of June 30, 2023, the total unrecognized stock-based compensation expense related to our unvested stock-based awards was $ 307 million, which will be recognized over an estimated weighted-average amortization period of 2.2 years.

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

Nine Months Ended

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

Three Months Ended

(In millions, except per grant data) June 30, 2023 July 1, 2022

Restricted stock units (RSUs):

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

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

As of June 30, 2023 and March 31, 2023, current dividends payable related to DER was $ 3 million and $ 5 million, respectively, recorded as part of Other current liabilities in the Condensed Consolidated Balance Sheets, and long-term dividends payable related to DER was $ 2 million and $ 2 million, respectively, recorded as part of Other long-term liabilities.

Net Income Per Share

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

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

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:

Three Months Ended Nine Months Ended

Three Months Ended

(In millions, except per share amounts)

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

June 30, 2023 July 1, 2022

Net income (loss) $ 189 $ 200

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Employee equity awards 6 —

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

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

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

For the three and nine months ended December 31, 2021, the dilutive effect of our debt instruments is calculated using the treasury stock method, under which our convertible debt instruments generally had a dilutive impact on net income per share when our average stock price for the period exceeds the conversion prices for the convertible debt instruments.

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

Segment and Geographic Information

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The following table summarizes net revenues for our major solutions:

Three Months Ended Nine Months Ended

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

Three Months Ended

(In millions) June 30, 2023 July 1, 2022

Consumer security revenues $ 599 $ 402

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Total net revenues (1)

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

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

During the nine months ended December 30, 2022, total net revenues include an unfavorable foreign exchange impact of $ 92 million, consisting of $ 89 million from our consumer security solutions, $ 2 million from our identity and information protection solutions and $ 1 million from our legacy solutions.

(1) During the three months ended June 30, 2023, total net revenues include an unfavorable foreign exchange impact of $ 9 million from our consumer security solutions.

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

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

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

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:

Three Months Ended Nine Months Ended

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

The following table represents net revenues by geographic area at the end of each period presented:

Three Months Ended

(In millions) June 30, 2023 July 1, 2022

Americas $ 622 $ 508

EMEA 220 128 479 380

APJ 94 81 253 245

Total net revenues (1)

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

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

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APJ includes Asia Pacific and Japan.

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

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

(1) During the three months ended June 30, 2023, total net revenues include an unfavorable foreign exchange impact of $ 9 million, consisting of $ 7 million from EMEA and $ 2 million from APJ.

Revenues from customers inside the U.S.

were $ 537 million and $ 1,509 million during the three and nine months ended December 30, 2022, respectively, and $ 467 million and $ 1,383 million during the three and nine months ended December 31, 2021, respectively.

were $ 565 million and $ 479 million during the three months ended June 30, 2023 and July 1, 2022, respectively.

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

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and internationally in various foreign subsidiaries.

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

$ 372 $ 1,220

(In millions) June 30, 2023 March 31, 2023

International 520 572

Total cash, cash equivalents and short-term investments $ 623 $ 750

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) December 30, 2022 April 1, 2022

Ireland 24 27

The table below represents our property and equipment, net of accumulated depreciation and amortization, by geographic areas, based on the physical location of the asset, at the end of each period presented.

(In millions) June 30, 2023 March 31, 2023

Czech Republic 13 16

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

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

(In millions) June 30, 2023 March 31, 2023

Czech Republic 9 12

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Significant customers and channel partners

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

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

December 30, 2022 April 1, 2022

No individual, end-user customer accounted for 10% or more of our net revenues during the three months ended June 30, 2023 and July 1, 2022.

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

June 30, 2023 March 31, 2023

Distributor A 15 % 13 %

Distributor B 14 % N/A

Distributor B 17 % 14 %

Commitments and Contingencies

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NortonLifeLock

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

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.

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Columbia did not seek injunctive relief against us.

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

We believe that we have ceased the 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.

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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).

Defendants filed motions to dismiss, which the Court granted in an order dated June 14, 2019.

Pursuant to that order, plaintiff filed a motion seeking leave to amend and a proposed first amended complaint on July 11, 2019.

The Court granted the motion in part on October 2, 2019, and the first amended complaint was filed on October 11, 2019.

The Court’s order dismissed certain claims against certain of our former officers.

Defendants filed answers on November 7, 2019.

On April 20, 2021, to resolve an alleged conflict of interest raised with respect to the lead plaintiff and its counsel, the Court ordered a second Class Notice disclosing the circumstances of the alleged conflict and providing a further period for class members to opt out, which closed on July 2, 2021.

The initial class opt out period closed on August 25, 2020.

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

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 million was covered under the applicable insurance policy with the remainder to be paid by us.

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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.

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

Our Motion to Dismiss is now pending.

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.

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.

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

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

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

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

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

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

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 parties in the Lee action stipulated to a dismissal with prejudice, which was entered by the Court on June 12, 2023.

All three shareholder derivative lawsuits are now resolved.

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

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

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

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

We have also received demands from purported stockholders to inspect corporate books and records under Delaware law.

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

We will continue to incur legal fees in connection with these pending cases and demands, including expenses for the reimbursement of legal fees of present and former officers and directors under indemnification obligations.

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 the Kukard matter, including expenses for the reimbursement of legal fees of present and former 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.

We intend to defend this claim vigorously, but there can be no assurance that we will be successful in any defense.

If this lawsuit is 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.

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.

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On September 16, 2014, the states of California and Florida intervened in the lawsuit, and the state of New York notified the Court that it would not intervene.

On October 3, 2014, the DOJ filed an amended complaint, which did not state a specific

damages amount.

On October 3, 2014, the DOJ filed an amended complaint, which did not state a specific damages amount.

On October 17, 2014, California and Florida combined their claims with those of the DOJ and the relator on behalf of New York in an Omnibus Complaint, and a First Amended Omnibus Complaint was filed on October 8, 2015;

the state claims also do not state specific damages amounts.

On June 6, 2019, we filed a motion seeking summary judgment on all claims asserted by all plaintiffs, and the plaintiffs filed a motion for partial summary judgment on elements of liability on their claims.

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

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

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

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

That discovery period has now closed.

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

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

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

Both Motions for Reconsideration were denied.

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

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

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

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

Plaintiffs have not yet indicated if they intend to appeal.

On 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.

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

It is possible that an appeal of the Court’s judgment by the Plaintiffs, if brought, could lead to further claims or findings of violations of the False Claims Act and could be material to our results of operations and cash flows for any period.

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.

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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.

As Avast has previously disclosed, it has been in communication with certain regulators and authorities prior to completion of the acquisition of Avast, 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.

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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.

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

What changed 10-Q

Item 1. Financial Statements