What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-07 compared with 2023-08-04 · 98 added, 76 removed, 188 unchanged (48% of the section changed)

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and other characterizations of future events or circumstances are forward-looking statements.

These statements are only predictions, based on our current expectations about

future events and may not prove to be accurate.

These statements are only predictions, based on our current expectations about future events and may not prove to be accurate.

We do not undertake any obligation to update these forward-looking statements to reflect events occurring or circumstances arising after the date of this report.

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

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

The three and six months ended September 29, 2023 and September 30, 2022 each consisted of 13 weeks and 26 weeks, respectively.

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

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The following tables provide our key financial metrics for the periods presented:

Three Months Ended

(In millions, except for per share amounts) June 30, 2023 July 1, 2022

Three Months Ended Six Months Ended

(In millions, except for per share amounts) September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022

Net revenues $ 948 $ 748 $ 1,894 $ 1,455

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Net cash provided by (used in) operating activities $ 125 $ (88) $ 351 $ 127

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

(In millions) September 29, 2023 March 31, 2023

Cash and cash equivalents $ 629 $ 750

Contract liabilities $ 1,672 $ 1,788

Below are our financial highlights for the first quarter of fiscal 2024, compared to the corresponding period in the prior year:

• Net revenues increased $239 million and Operating income increased $101 million, primarily due to revenue contribution from Avast, which was acquired during the second quarter of fiscal 2023, and higher sales in both our consumer security and identity and information protection products, partially offset by unfavorable foreign currency fluctuations.

• Net income decreased $11 million and Net income per share - diluted decreased 0.04, primarily due to increased interest expense associated with our new senior credit facilities and two senior notes.

This was partially offset by increased Operating income as a result of our merger with Avast.

• Cash and cash equivalents decreased by $127 million compared to March 31, 2023, primarily due to cash interest paid, dividends paid to shareholders, voluntary prepayments of our Term B facility, a mandatory principal amortization payment of our Term A facility, and repurchases of our common stock.

Below are our financial highlights for the second quarter of fiscal 2024, compared to the corresponding period in the prior year:

• Net revenues increased $200 million, primarily due to revenue contribution from Avast, which was acquired during the second quarter of fiscal 2023, and higher sales in both our consumer security and identity and information protection products, partially offset by unfavorable foreign currency fluctuations.

• Operating income decreased $216 million, primarily due to an increase of a legal accrual related to an ongoing patent infringement lawsuit and corresponding legal fees.

See Note 18 of the Notes to the Condensed Consolidated Financial

Statements for further information.

This was partially offset by increased Net revenues and cost synergies post-acquisition.

• Net income increased $80 million and Net income per share - diluted increased 0.11, primarily due to an income tax benefit in the second quarter of fiscal 2024, partially offset by decreased operating income discussed above and increased interest expense associated with our new senior credit facilities and two senior notes.

Below are our financial highlights for the first six months of fiscal 2024, compared to the corresponding period in the prior year:

• Net revenues increased $439 million, primarily due to revenue contribution from Avast, which was acquired during the second quarter of fiscal 2023, and higher sales in both our consumer security and identity and information protection products, partially offset by unfavorable foreign currency fluctuations.

• Operating income (loss) decreased $115 million primarily due to an increase in legal accrual related to ongoing litigation and an increase in amortization of intangible assets recognized as a result of our merger with Avast.

This is partially offset by the increase in net revenues discussed above and cost synergies post-acquisition.

• Net income increased $69 million and net income per share increased $0.07, primarily due to an income tax benefit in the second quarter of fiscal 2024, partially offset by decreased operating income discussed above and increased interest expense associated with our new senior credit facilities and two senior notes.

• Cash and cash equivalents decreased by $121 million compared to March 31, 2023, primarily due to cash interest paid, cash tax paid, dividends paid to shareholders, voluntary prepayments of our Term B facility, a mandatory principal amortization payment of our Term A facility, and repurchases of our common stock.

• Contract liabilities decreased $116 million compared to March 31, 2023, primarily due to a seasonal decline in billings and fluctuations in foreign currency rates.

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

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

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

In addition, in early 2022, worldwide inflation began to increase.

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Interest rates continued to increase in 2023, and while inflation rates have slowed, global inflation remains high and has impacted our results due to higher costs.

Volatile market conditions related to Russia’s invasion of Ukraine and retaliatory sanctions against the Russian Federation and Belarus, and other macroeconomic events have, at times, and may in the future negatively impact our results of operations and cash flows.

Volatile market conditions related to military conflicts such as Russia’s invasion of Ukraine and retaliatory sanctions against the Russian Federation and Belarus, and other macroeconomic events have, at times, and may in the future negatively impact our results of operations and cash flows.

Conversely, we have seen and may continue to see cost savings from the shift to remote and distributed work for certain of our employees in areas including real estate, events, travel, utilities and other benefits.

Due to our subscription-based business model, the effect of recent macroeconomic events may not be fully reflected in our results of operations until future periods, if at all.

banking market has also recently experienced increased volatility as a result of several distressed or closed banks.

While we have not realized any losses as a result of this increased market volatility, we continue to monitor the situation and will take appropriate measures, as necessary, to minimize potential risk exposure to our customers’ and our cash and investment balances.

While inflation, interest rates and foreign currency exchange rates may be less volatile in the second half of 2023, fluctuations in these indicators are uncertain and could result in further adverse impacts to our reported results.

Fluctuations in inflation, interest rates and foreign currency exchange rates are uncertain and could result in further adverse impacts to our reported results.

For a further discussion of the potential impacts of the global macroeconomic conditions on our business, please see Part I, Item III and “Risk Factors” in Part II, Item 1A below.

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Our critical accounting policies and estimates were disclosed in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023.

There have been no material changes in the matters for which we make critical accounting estimates in the preparation of our Condensed Consolidated Financial Statements during the three months ended June 30, 2023.

RESULTS OF OPERATIONS

The following table sets forth our Condensed Consolidated Statements of Operations data as a percentage of net revenues for the periods indicated:

Three Months Ended

June 30, 2023 July 1, 2022

Three Months Ended Six Months Ended

September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022

Net revenues 100 % 100 % 100 % 100 %

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Percentages may not add due to rounding.

Three Months Ended

(In millions, except for percentages) June 30, 2023 July 1, 2022 Change in %

Three Months Ended Six Months Ended

(In millions, except for percentages) September 29, 2023 September 30, 2022 Change in % September 29, 2023 September 30, 2022 Change in %

Net revenues $ 948 $ 748 27 % $ 1,894 $ 1,455 30 %

Three Months Ended September 29, 2023 Compared with Three Months Ended September 30, 2022

Net revenues increased $200 million, primarily due to a $168 million increase in sales of our consumer security products and a $30 million increase in sales of our identity and information protection products.

This is inclusive of $7 million of foreign exchange headwinds, primarily in our consumer security solutions.

Six Months Ended September 29, 2023 Compared with Six Months Ended September 30, 2022

Net revenues increased $439 million, primarily due to a $364 million increase in sales of our consumer security products and a $67 million increase in sales of our identity and information protection products.

This is inclusive of $16 million of foreign exchange headwinds, primarily in our consumer security solutions.

Performance Metrics

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Three Months Ended (1)

(In millions, except for per user amounts) June 30, 2023 (3)

(In millions, except for per user amounts) September 29, 2023 (2)

September 30, 2022 (2)

Direct customer revenues $ 837 $ 660

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Direct average revenue per user (ARPU) $ 7.28 $ 6.98

(1) Non-GAAP Direct customer revenues differ from GAAP direct customer revenue during the three months ended July 1, 2022, as it excludes a $1 million reduction of revenue from contract liability purchase accounting adjustments.

We believe that eliminating the impact of these adjustments improves the comparability of revenues between periods.

In addition, although the adjustment amounts will never be recognized in our GAAP financial statements, we do not expect the acquisitions to affect the future renewal rates of revenues excluded by the adjustments.

(1) From time to time, changes in our product hierarchy cause changes to the revenue channels above.

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As such, prior period performance metrics have been recast to conform to the current period presentation for all periods presented above.

(3) The performance metrics for three months ended June 30, 2023 include the revenues earned and customers acquired through our acquisition with Avast.

(2) The performance metrics for the three months ended September 29, 2023 and September 30, 2022 include the revenues earned and customers acquired through our acquisition with Avast.

ARPU is based on average customer count and assumes full quarter of revenue for both companies.

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Net revenues by geographical region

Three Months Ended

June 30, 2023 July 1, 2022

Three Months Ended Six Months Ended

September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022

Americas 65 % 71 % 65 % 71 %

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APJ includes Asia Pacific and Japan.

Percentage of revenue by geographic region in the three months ended June 30, 2023 remains primarily in the Americas but is beginning to shift more into the EMEA markets, as the acquisition with Avast has contributed to a stronger presence in those regional countries.

Percentage of revenue by geographic region in the three and six months ended September 29, 2023 remains primarily in the Americas but is beginning to shift more into the EMEA markets, as the acquisition with Avast has contributed to a stronger presence in those regional countries.

Cost of revenues

Three Months Ended

(In millions, except for percentages) June 30, 2023 July 1, 2022 Change in %

Three Months Ended Six Months Ended

(In millions, except for percentages) September 29, 2023 September 30, 2022 Change in % September 29, 2023 September 30, 2022 Change in %

Cost of revenues $ 180 $ 119 51 % $ 359 $ 221 62 %

Our cost of revenues increased $77 million, primarily due to a $52 million increase in the amortization of acquired intangible assets, $15 million increase in payment processing fees, and $8 million increase in revenue share costs.

Three Months Ended September 29, 2023 Compared with Three Months Ended September 30, 2022

Our cost of revenues increased $61 million, primarily due to a $42 million increase in the amortization of acquired intangible assets, a $13 million increase in payment processing fees, and a $6 million increase in revenue share costs.

Six Months Ended September 29, 2023 Compared with Six Months Ended September 30, 2022

Our cost of revenues increased $138 million, primarily due to a $94 million increase in the amortization of acquired intangible assets, a $28 million increase in payment processing fees, and a $14 million increase in revenue share costs.

Operating expenses

Three Months Ended

(In millions, except for percentages) June 30, 2023 July 1, 2022 Change in %

Three Months Ended Six Months Ended

(In millions, except for percentages) September 29, 2023 September 30, 2022 Change in % September 29, 2023 September 30, 2022 Change in %

Sales and marketing $ 187 $ 167 12 % $ 368 $ 323 14 %

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Total operating expenses $ 743 $ 388 91 % $ 1,148 $ 732 57 %

Sales and marketing expense increased $25 million, primarily due to an $11 million increase in headcount and IT costs, an $8 million increase in outside services and software expenses, a $3 million increase in our investment in advertising, and a $2 million increase of stock-based compensation expense.

Research and development expense increased $29 million, primarily due to a $15 million increase in headcount costs, a $9 million increase in outside services and software expense, and a $5 million increase of stock-based compensation expense.

General and administrative expense decreased $48 million, primarily due to a $53 million decrease in litigation cost and an $8 million decrease in IT and occupancy costs.

This was partially offset by an $8 million increase in headcount costs and a $6 million increase of stock-based compensation expense.

Amortization of intangible assets increased $40 million as a result of the acquisition with Avast.

Three Months Ended September 29, 2023 Compared with Three Months Ended September 30, 2022

Sales and marketing expense increased $20 million, primarily due to a $7 million increase in our investment in advertising, a $5 million increase in occupancy and IT costs, a $4 million increase in outside services and software expenses, and a $2 million increase of stock-based compensation expense.

Research and development expense increased $12 million, primarily due to a $6 million increase in outside services and software expense, a $4 million increase of stock-based compensation expense, and a $3 million increase in headcount costs.

General and administrative expense increased $283 million, primarily due to a $340 million increase in legal accruals, of which $335 million is related to an ongoing patent infringement lawsuit and the corresponding legal fees.

This was partially offset by a $52 million decrease in acquisition and integration costs related to our acquisition with Avast, an $11 million insurance settlement related to previous litigation matters received in the second quarter of fiscal 2024, and a $5 million decrease in headcount costs.

Amortization of intangible assets increased $32 million, primarily as a result of the Avast acquisition.

Restructuring and other costs increased $8 million, primarily due to severance, termination benefits and other exit and disposal costs in connection with the September 2022 Plan.

See Note 12 of the Notes to the Condensed Consolidated Financial Statements for details of the fiscal 2024 restructuring activities.

Six Months Ended September 29, 2023 Compared with Six Months Ended September 30, 2022

Sales and marketing expense increased $45 million, primary due to a $12 million increase in outside services and software expenses, a $10 million increase in our investment in advertising, a $9 million increase in occupancy and IT costs, a $9 million increase in headcount costs, and a $4 million increase of stock-based compensation expense.

Research and development expense increased $41 million, primarily due to an $18 million increase in headcount costs, a $14 million increase in outside services and software expenses, and a $9 million increase of stock-based compensation expense.

General and administrative expense increased $235 million, primarily due to a $287 million increase in legal accrual, of which $284 million is related to an ongoing patent infringement lawsuit and the corresponding legal fees.

This was partially offset by a $54 million decrease in acquisition and integration costs related to our acquisition with Avast, and an $11 million insurance settlement related to previous litigation matters received in the second quarter of fiscal 2024.

Amortization of intangible assets increased $72 million primarily as a result of the Avast acquisition.

Restructuring and other costs increased $23 million, primarily due to severance, termination benefits and other exit and disposal costs in connection with the September 2022 Plan.

See Note 12 of the Notes to the Condensed Consolidated Financial Statements for details of the fiscal 2024 restructuring activities.

Non-operating income (expense), net

Three Months Ended

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

Three Months Ended Six Months Ended

(In millions) September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022

Interest expense $ (173) $ (48) $ (343) $ (79)

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Foreign exchange gain (loss) 1 2 2 1

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

Gain on sale of properties — — 4 —

Other — 6 1 4

Total non-operating income (expense), net $ (166) $ (46) $ (324) $ (78)

Three Months Ended September 29, 2023 Compared with Three Months Ended September 30, 2022

Non-operating income (expense), net, increased by $120 million in expense, primarily due to an increase in interest expense associated with our new senior credit facilities and two senior notes, all of which were issued during the second quarter of fiscal 2023.

This is partially offset by a $4 million increase in interest income from higher interest rates on our money market funds, a

$4 million increase in rental income related to a rent review settlement with our tenant, and a $4 million gain on the sale of certain land and buildings in Dublin, Ireland.

Six Months Ended September 29, 2023 Compared with Six Months Ended September 30, 2022

Non-operating income (expense), net, increased by $246 million, primarily due to an increase in interest expense associated with our new senior credit facilities and two senior notes, all of which were issued during the second quarter of fiscal 2023.

This is partially offset by the absence of the loss on early extinguishment of debt related to our Initial Term Loan, Delayed Draw Term Loan, and Bridge Loan, all of which were early extinguished during the second quarter of fiscal 2023.

Provision for income taxes

Three Months Ended

(In millions, except for percentages) June 30, 2023 July 1, 2022

Three Months Ended Six Months Ended

(In millions, except for percentages) September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022

Income (loss) before income taxes $ (141) $ 195 $ 63 $ 424

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Effective tax rate 206 % 65 % (437) % 37 %

Our effective tax rate for income 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.

Our effective tax rate for the three and six months ended September 29, 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 resulting from an internal restructuring, partially offset by state taxes, changes in unrecognized tax benefits and related interest and penalties, and the U.S.

taxation on foreign earnings.

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.

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.

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.

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

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

In the second quarter of fiscal 2024, as part of the Avast integration plan, which geographically realigned and simplified our business, we undertook a legal entity and operational restructuring.

As part of that process, we distributed certain assets within the legal entity operating structure and as a result, we recorded a net tax benefit of $268 million.

Differences between the final outcome and recorded amounts will impact the provision for income taxes in the period in which such a determination is made and could have a material impact on our Condensed Consolidated Balance Sheet and Statement of Operations in future years.

LIQUIDITY, CAPITAL RESOURCES AND CASH REQUIREMENTS

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We are currently not aware of any trends or demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in our liquidity increasing or decreasing in any material way that will impact our capital needs during or beyond the next 12 months.

However, our future liquidity and capital requirements may vary materially from those as of June 30, 2023, depending on several factors, including, but not limited to, economic conditions;

However, our future liquidity and capital requirements may vary materially from those as of September 29, 2023, depending on several factors, including, but not limited to, economic conditions;

political climate;

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The following summarizes our cash flow activities:

Three Months Ended

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

Six Months Ended

(In millions) September 29, 2023 September 30, 2022

Net cash provided by (used in):

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Cash from operating activities

Our cash flows provided by operating activities remained relatively flat.

Our cash flows provided by operating activities increased $224 million, primarily due to cash collections from revenue attributable to our acquisition with Avast during the first six months of fiscal 2023 .

Cash from investing activities

Our cash flows provided by and used in investing activities remained relatively flat.

Our cash flows provided by and used in investing activities increased $6,549 million, primarily related to the absence of the total cash consideration paid for our acquisition with Avast during the first six months of fiscal 2023.

Cash from financing activities

Our cash flows used in financing activities decreased $457 million, primarily due to the absence of the repayment of our 3.95% Senior Notes.

The first three months of fiscal 2024 reflects $150 million voluntary prepayment of Term B Facility, $83 million of dividends and dividend equivalent paid, $58 million principal amortization payments of our Term Loans and mortgages, and $41 million of repurchases of common stock, compared to the $400 million repayment of our 3.95% Senior Notes and $300 million of repurchases of common stock during the first three months of fiscal 2023.

Our cash flows provided by and used in financing activities decreased $6,134 million, primarily due to lower repayments of debt and repurchases of common stock under our repurchase program and by the absence of proceeds from the issuance of debt during the first six months of fiscal 2023.

The first six months of fiscal 2024, reflect $266 million in voluntary prepayments and principal amortization payments of our Term Loans and mortgages and $41 million in repurchases of common stock.

In contrast, the first six months of fiscal 2023 reflect $8,954 million of aggregate proceeds:

$3,910 million from Term Facility A, $3,690 million from Term Facility B, $900 million from the 6.75% Senior Notes and $600 million from the 7.125% Senior Notes, net of $146 million of debt issuance costs, offset by the $400 million repayment of our 3.95% Senior Notes, $1,010 million repayment of our Initial Draw Term Loan, $703 million repayment of our Delayed Draw Term Loan and the settlement of the $525 million principal and $100 million equity rights associated with our New 2.0% Convertible Notes.

Repurchases of common stock in the first six months of fiscal 2023 were $404 million.

Cash and cash equivalents

As of June 30, 2023, we had cash, cash equivalents and short-term investments of $623 million, of which $520 million was held by our foreign subsidiaries.

As of September 29, 2023, we had cash, cash equivalents and short-term investments of $629 million, of which $422 million was held by our foreign subsidiaries.

Our cash, cash equivalents and short-term investments are managed with the objective to preserve principal, maintain liquidity and generate investment returns.

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We have an undrawn revolving credit facility of $1,500 million, which expires in September 2027.

Subsequent to September 29, 2023, on October 13, 2023 and October 27, 2023, we made voluntary prepayments of $100 million each, for our senior credit facilities, which were applied exclusively to the Term B Facility.

Stock repurchases

During the three months ended June 30, 2023, we executed repurchases of 3 million of our common stock under our existing stock repurchase program for an aggregate amount of $41 million.

During the six months ended September 29, 2023 and September 30, 2022, we executed repurchases of 3 million and 17 million of our common stock under our existing stock repurchase program for an aggregate amount of $41 million and $404 million, respectively.

Material Cash Requirements

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Debt instruments

As of June 30, 2023, our total outstanding principal amount of indebtedness is summarized as follows.

As of September 29, 2023, our total outstanding principal amount of indebtedness is summarized as follows.

See Note 10 of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further information on our debt.

(In millions) June 30, 2023

(In millions) September 29, 2023

Term Loans $ 7,026

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The Credit Agreement contains customary representations and warranties and affirmative and negative covenants, including compliance with specified financial ratios .

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

As of September 29, 2023, we were in compliance with all debt covenants.

See Note 10 of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further information regarding financial ratios and debt covenant compliance.

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

On November 7, 2023, we announced a cash dividend of $0.125 per share of common stock to be paid in December 2023.

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

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Under our stock repurchase program, we may purchase shares of our outstanding common stock on the open market (including through trading plans intended to qualify under Rule 10b5-1 under the Exchange Act) and through accelerated stock repurchase transactions.

As of June 30, 2023, the remaining balance of our stock repurchase authorization was $829 million and does not have an expiration date.

As of September 29, 2023, the remaining balance of our stock repurchase authorization was $829 million and does not have an expiration date.

The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions and other investment opportunities.

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We have incurred and expect to incur cash expenditures for severance and termination benefits, contract terminations, facilities closures, and the sale of underutilized facilities as well as stock-based compensation charges for accelerated equity awards for certain terminated employees.

We expect that we will incur total costs up to $150 million, with $120 million and $30 million estimated to be incurred within the first and second full years, respectively, following the completion of the acquisition.

These actions are expected to be completed by fiscal 2024.

During the three months ended June 30, 2023, we made $13 million in cash payments related to the September 2022 Plan.

We expect that we will incur total costs up to $150 million following the completion of the acquisition.

These actions are expected to be completed by the end of fiscal 2024.

During the six months ended September 29, 2023, we made $26 million in cash payments related to the September 2022 Plan.

See Note 12 of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further cash flow information associated with our restructuring activities.

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Our principal commitments consist of principal and interest payments related to our debt instruments, obligations under our purchase agreements, repatriation tax payments under the Tax Cuts and Jobs Acts and obligations under various non-cancellable leases.

Due to the uncertainty with respect to the timing of future cash flows associated with our unrecognized tax benefits and other long-term taxes as of June 30, 2023, we are unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities.

Due to the uncertainty with respect to the timing of future cash flows associated with our unrecognized tax benefits and other long-term taxes as of September 29, 2023, we are unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities.

Therefore, $1,073 million in long-term income taxes payable has been excluded from our quarterly review of timing of contractual obligations.

There have been no material changes, outside the ordinary course of business, to the contractual obligations reported in our Annual Report.

Commitments related to repatriation tax payments under the Tax Cuts and Jobs Acts decreased $128 million due to adjustments and payments made during the six months ended September 29, 2023.

There have been no other material changes, outside the ordinary course of business, to the contractual obligations reported in our Annual Report.

For additional information about our debt obligations and certain other contingencies, see Note 10 and Note 18, respectively, of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

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 2. Management’s Discussion and Analysis