Company Quick10K Filing
Symantec
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 642 $13,392
10-Q 2019-11-08 Quarter: 2019-10-04
10-Q 2019-08-09 Quarter: 2019-07-05
10-K 2019-05-24 Annual: 2019-03-29
10-Q 2019-02-04 Quarter: 2018-12-28
10-Q 2018-11-16 Quarter: 2018-09-28
10-Q 2018-11-16 Quarter: 2018-06-29
10-K 2018-10-26 Annual: 2018-03-30
10-Q 2018-02-02 Quarter: 2017-12-29
10-Q 2017-11-03 Quarter: 2017-09-29
10-Q 2017-08-04 Quarter: 2017-06-30
10-K 2017-05-19 Annual: 2017-03-31
10-Q 2017-02-03 Quarter: 2016-12-30
10-Q 2016-11-04 Quarter: 2016-09-30
10-Q 2016-08-05 Quarter: 2016-07-01
10-K 2016-05-20 Annual: 2016-04-01
10-Q 2016-02-04 Quarter: 2016-01-01
10-Q 2015-11-06 Quarter: 2015-10-02
10-Q 2015-08-12 Quarter: 2015-07-03
10-K 2015-05-22 Annual: 2015-04-03
10-Q 2015-02-09 Quarter: 2015-01-02
10-Q 2014-11-07 Quarter: 2014-11-07
10-Q 2014-08-08 Quarter: 2014-07-04
10-K 2014-05-16 Annual: 2014-03-28
10-Q 2014-02-03 Quarter: 2013-12-27
10-Q 2013-10-29 Quarter: 2013-09-27
10-Q 2013-07-31 Quarter: 2013-06-28
10-K 2013-05-17 Annual: 2013-03-29
10-Q 2013-01-29 Quarter: 2012-12-28
10-Q 2012-10-30 Quarter: 2012-09-28
10-Q 2012-07-31 Quarter: 2012-06-29
10-K 2012-05-21 Annual: 2012-03-30
10-Q 2012-01-31 Quarter: 2011-12-30
10-Q 2011-11-01 Quarter: 2011-09-30
10-Q 2011-08-03 Quarter: 2011-07-01
10-K 2011-05-20 Annual: 2011-04-01
10-Q 2010-11-03 Quarter: 2010-10-01
10-Q 2010-08-04 Quarter: 2010-07-02
10-K 2010-05-24 Annual: 2010-04-02
10-Q 2010-02-05 Quarter: 2010-01-01
8-K 2019-12-19 Shareholder Vote
8-K 2019-12-05 Officers, Exhibits
8-K 2019-12-03 Officers
8-K 2019-11-11 Enter Agreement, Off-BS Arrangement, Sale of Shares, Regulation FD, Exhibits
8-K 2019-11-07 Earnings, Officers, Exhibits
8-K 2019-11-04 M&A, Exhibits
8-K 2019-11-04 Enter Agreement, Leave Agreement, Off-BS Arrangement, Amend Bylaw, Regulation FD, Exhibits
8-K 2019-08-30 Officers
8-K 2019-08-21 Officers
8-K 2019-08-08 Earnings, Exit Costs, Exhibits
8-K 2019-08-08 Enter Agreement, Other Events, Exhibits
8-K 2019-06-10 Officers
8-K 2019-05-07 Earnings, Officers, Exhibits
8-K 2019-01-31 Officers, Exhibits
8-K 2019-01-31 Earnings, Officers, Exhibits
8-K 2019-01-07 Officers, Exhibits
8-K 2018-12-03 Officers, Shareholder Vote, Exhibits
8-K 2018-11-26 Officers, Exhibits
8-K 2018-11-01 Earnings, Exhibits
8-K 2018-09-24
8-K 2018-09-16 Enter Agreement, Officers, Other Events, Exhibits
8-K 2018-08-13 Exhibits
8-K 2018-08-02 Earnings, Other Events, Exhibits
8-K 2018-06-29 Officers
8-K 2018-06-22 Enter Agreement
8-K 2018-06-06 Officers
8-K 2018-05-31 Exhibits
8-K 2018-05-14
8-K 2018-05-10 Earnings, Exhibits
8-K 2018-01-31 Earnings, Exhibits
SYMC 2019-10-04
Part I. Financial Information
Item 1. Financial Statements
Note 1. Basis of Presentation and Significant Accounting Policies
Note 2. Recent Accounting Standards
Note 4. Revenues
Note 5. Leases
Note 6. Goodwill and Intangible Assets
Note 7. Supplementary Information (In Millions)
Note 8. Financial Instruments and Fair Value Measurements
Note 9. Debt
Note 10. Derivatives
Note 11. Restructuring, Transition and Other Costs
Note 12. Income Taxes
Note 13. Stockholders' Equity
Note 14. Employee Equity Incentive Plans
Note 15. Net Income per Share
Note 16. Segment and Geographic Information
Note 17. Commitments and Contingencies
Note 18. Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 5. Other Information
Item 6. Exhibits
EX-10.05 a10419exhibit1005.htm
EX-10.06 a10419exhibit1006.htm
EX-31.01 a10419exhibit3101.htm
EX-31.02 a10419exhibit3102.htm
EX-32.01 a10419exhibit3201.htm
EX-32.02 a10419exhibit3202.htm

Symantec Earnings 2019-10-04

SYMC 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
CHKP 16,409 5,828 2,056 0 0 0 0 16,105 0%
SSNC 15,642 16,141 11,295 4,389 1,860 318 1,193 22,411 42% 18.8 2%
DATA 14,111 1,912 837 1,231 1,077 -143 -129 13,558 87% -104.9 -7%
SYMC 13,392 15,369 10,119 4,822 3,749 117 811 16,198 78% 20.0 1%
TTWO 12,686 4,366 2,280 2,821 1,187 308 260 11,074 42% 42.6 7%
PAYC 12,664 1,826 1,391 653 552 156 219 11,516 85% 52.7 9%
OKTA 12,154 1,027 776 487 352 -155 -148 11,936 72% -80.6 -15%
DOCU 10,891 1,762 1,195 828 617 -233 -158 10,667 75% -67.5 -13%
ULTI 10,595 2,716 1,890 1,199 742 57 128 10,495 62% 81.9 2%
MOMO 10,572 18,966 7,943 0 0 0 0 8,104 0%

Document
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended October 4, 2019
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
      
For the Transition Period from                to                
Commission File Number 000-17781
nloklogo.jpg
 NortonLifeLock Inc.
(Exact name of the registrant as specified in its charter)
Delaware
  
77-0181864
(State or other jurisdiction of incorporation or organization)
  
(I.R.S. employer Identification no.)
 
 
 
 
 
 
60 E. Rio Salado Parkway,
Suite 1000,
Tempe,
Arizona
  
85281
(Address of principal executive offices)
 
(Zip code)
Registrant’s telephone number, including area code:
(650527-8000
Former name or former address, if changed since last report:
Symantec Corporation
350 Ellis Street, Mountain View, California, 94043
  ________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Name of each exchange on which registered
Common Stock,
par value $0.01 per share
NLOK
The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ   No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes þ   No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
þ
  
Accelerated filer
  
Non-accelerated filer
  
Smaller reporting company
 
 
  
 
 
 
Emerging growth company
 
 
 
 
 
 
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes    No þ
The number of shares of NortonLifeLock common stock, $0.01 par value per share, outstanding as of October 30, 2019 was 623,004,728 shares.
 


Table of Contents

NORTONLIFELOCK INC.
FORM 10-Q
Quarterly Period Ended October 4, 2019
TABLE OF CONTENTS
Page
 
 
 
 
 
 
 


2

Table of Contents

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NORTONLIFELOCK INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in millions, except par value per share amounts)
 
October 4, 2019
 
March 29, 2019
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
1,697

 
$
1,791

Short-term investments
134

 
252

Accounts receivable, net
593

 
708

Other current assets
289

 
286

Current assets of discontinued operations
7,047

 
149

Total current assets
9,760

 
3,186

Property and equipment, net
676

 
718

Operating lease assets
154

 

Intangible assets, net
1,146

 
1,202

Goodwill
2,675

 
2,677

Other long-term assets
1,818

 
1,163

Long-term assets of discontinued operations

 
6,992

Total assets
$
16,229

 
$
15,938

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
 
 
 
Accounts payable
$
120

 
$
165

Accrued compensation and benefits
219

 
257

Current portion of long-term debt
1,245

 
491

Contract liabilities
990

 
1,032

Current operating lease liabilities
36

 

Other current liabilities
514

 
524

Current liabilities of discontinued operations
1,932

 
1,297

Total current liabilities
5,056

 
3,766

Long-term debt
3,219

 
3,961

Long-term contract liabilities
26

 
27

Deferred income tax liabilities
538

 
577

Long-term income taxes payable
1,069

 
1,076

Long-term operating lease liabilities
137

 

Other long-term liabilities
72

 
80

Long-term liabilities of discontinued operations

 
713

Total liabilities
10,117


10,200

Commitments and contingencies (Note 17)


 


Stockholders’ equity:
 
 
 
Preferred stock, $0.01 par value: 1 shares authorized; 0 shares issued and outstanding

 

Common stock and additional paid-in capital, $0.01 par value: 3,000 shares authorized; 623 and 630 shares issued and outstanding as of October 4, 2019 and March 29, 2019, respectively
4,816

 
4,812

Accumulated other comprehensive loss
(2
)
 
(7
)
Retained earnings
1,298

 
933

Total stockholders’ equity
6,112

 
5,738

Total liabilities and stockholders’ equity
$
16,229

 
$
15,938


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

3

Table of Contents

NORTONLIFELOCK INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in millions, except per share amounts)
 
Three Months Ended
 
Six Months Ended
 
October 4, 2019
 
September 28, 2018
 
October 4, 2019
 
September 28, 2018
Net revenues
$
608

 
$
612

 
$
1,258

 
$
1,224

Cost of revenues
100

 
116

 
200

 
226

Gross profit
508

 
496

 
1,058

 
998

Operating expenses:
 
 
 
 
 
 
 
Sales and marketing
189

 
175

 
374

 
373

Research and development
86

 
105

 
188

 
214

General and administrative
92

 
101

 
188

 
220

Amortization of intangible assets
21

 
20

 
41

 
40

Restructuring, transition and other costs
17

 
52

 
30

 
137

Total operating expenses
405

 
453

 
821

 
984

Operating income
103

 
43

 
237

 
14

Interest expense
(46
)
 
(52
)
 
(95
)
 
(104
)
Other expense, net
(2
)
 
(23
)
 
(2
)
 
(38
)
Income (loss) from continuing operations before income taxes
55

 
(32
)
 
140

 
(128
)
Income tax expense
20

 
30

 
70

 
6

Income (loss) from continuing operations
35

 
(62
)
 
70

 
(134
)
Income from discontinued operations, net of taxes
750

 
54

 
741

 
66

Net income (loss)
$
785

 
$
(8
)
 
$
811

 
$
(68
)
 
 
 
 
 
 
 
 
Income (loss) per share - basic:
 
 
 
 
 
 
 
Continuing operations
$
0.06

 
$
(0.10
)
 
$
0.11

 
$
(0.21
)
Discontinued operations
$
1.21

 
$
0.09

 
$
1.20

 
$
0.11

Net income (loss) per share - basic (1)
$
1.27

 
$
(0.01
)
 
$
1.31

 
$
(0.11
)
 
 
 
 
 
 
 
 
Income (loss) per share - diluted:
 
 
 
 
 
 
 
Continuing operations
$
0.05

 
$
(0.10
)
 
$
0.11

 
$
(0.21
)
Discontinued operations
$
1.16

 
$
0.09

 
$
1.15

 
$
0.11

Net income (loss) per share - diluted (1)
$
1.22

 
$
(0.01
)
 
$
1.26

 
$
(0.11
)
 
 
 
 
 
 
 
 
Weighted-average shares outstanding:
 
 
 
 
 
 
 
Basic
620

 
630

 
619

 
627

Diluted
644

 
630

 
643

 
627


 

(1) Net income per share amounts may not add due to rounding.
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

4

Table of Contents

NORTONLIFELOCK INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited, in millions)
 
Three Months Ended
 
Six Months Ended
 
October 4, 2019
 
September 28, 2018
 
October 4, 2019
 
September 28, 2018
Net income (loss)
$
785

 
$
(8
)
 
$
811

 
$
(68
)
Other comprehensive income (loss), net of taxes:

 

 
 
 
 
Foreign currency translation adjustments
9

 
1

 
2

 
(23
)
Net unrealized gain on available-for-sale securities
1

 

 
2

 

Other comprehensive income from equity method investee

 
2

 
1

 
2

Other comprehensive loss, net of taxes
10

 
3

 
5

 
(21
)
Comprehensive income (loss)
$
795

 
$
(5
)
 
$
816

 
$
(89
)
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

5

Table of Contents

NORTONLIFELOCK INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited, in millions, except per share amounts)
Three months ended October 4, 2019
Common Stock and Additional Paid-In Capital
 
Accumulated Other Comprehensive Loss
 
Retained Earnings
 
Total Stockholders’ Equity
 
Shares
 
Amount
 
 
 
Balance as of July 5, 2019
617

 
$
4,701

 
$
(12
)
 
$
561

 
$
5,250

Net income

 

 

 
785

 
785

Other comprehensive loss

 

 
10

 

 
10

Common stock issued under employee stock incentive plans
6

 
51

 

 

 
51

Shares withheld for taxes related to vesting of restricted stock units

 
(7
)
 

 

 
(7
)
Cash dividends declared ($0.075 per share of common stock) and dividend equivalents accrued

 

 

 
(48
)
 
(48
)
Stock-based compensation

 
71

 

 

 
71

Balance as of October 4, 2019
623

 
$
4,816

 
$
(2
)
 
$
1,298

 
$
6,112

Six months ended October 4, 2019
Common Stock and Additional Paid-In Capital
 
Accumulated Other Comprehensive Loss
 
Retained Earnings
 
Total Stockholders’ Equity
 
Shares
 
Amount
 
 
 
Balance as of March 29, 2019
630

 
$
4,812

 
$
(7
)
 
$
933

 
$
5,738

Net income

 

 
 
 
811

 
811

Other comprehensive loss

 

 
5

 

 
5

Common stock issued under employee stock incentive plans
22

 
88

 

 

 
88

Shares withheld for taxes related to vesting of restricted stock units
(3
)
 
(64
)
 

 

 
(64
)
Repurchases of common stock
(26
)
 
(190
)
 

 
(351
)
 
(541
)
Cash dividends declared ($0.15 per share of common stock) and dividend equivalents accrued

 

 

 
(95
)
 
(95
)
Stock-based compensation

 
170

 

 

 
170

Balance as of October 4, 2019
623

 
$
4,816

 
$
(2
)
 
$
1,298

 
$
6,112


6

Table of Contents

NORTONLIFELOCK INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited, in millions, except per share amounts)
Three months ended September 28, 2018
Common Stock and Additional Paid-In Capital
 
Accumulated Other Comprehensive Loss
 
Retained Earnings
 
Total Stockholders’ Equity
 
Shares
 
Amount
 
 
 
Balance as of June 29, 2018
631

 
$
4,780

 
$
(20
)
 
$
1,158

 
$
5,918

Net loss

 

 

 
(8
)
 
(8
)
Other comprehensive income

 

 
3

 

 
3

Common stock issued under employee stock incentive plans
1

 
2

 

 

 
2

Shares withheld for taxes related to vesting of restricted stock units

 
(8
)
 

 

 
(8
)
Cash dividends declared ($0.075 per share of common stock) and dividend equivalents accrued

 

 

 
(50
)
 
(50
)
Stock-based compensation

 
93

 

 

 
93

Balance as of September 28, 2018
632

 
$
4,867

 
$
(17
)
 
$
1,100

 
$
5,950

Six months ended September 28, 2018
Common Stock and Additional Paid-In Capital
 
Accumulated Other Comprehensive Income (Loss)
 
Retained Earnings
 
Total Stockholders’ Equity
 
Shares
 
Amount
 
 
 
Balance as of March 30, 2018
624

 
$
4,691

 
$
4

 
$
328

 
$
5,023

Cumulative effect from adoption of accounting standards

 

 

 
939

 
939

Net loss

 

 

 
(68
)
 
(68
)
Other comprehensive loss

 

 
(21
)
 

 
(21
)
Common stock issued under employee stock incentive plans
10

 
6

 

 

 
6

Shares withheld for taxes related to vesting of restricted stock units
(2
)
 
(53
)
 

 

 
(53
)
Cash dividends declared ($0.15 per share of common stock) and dividend equivalents accrued

 

 

 
(99
)
 
(99
)
Stock-based compensation

 
223

 

 

 
223

Balance as of September 28, 2018
632

 
$
4,867

 
$
(17
)
 
$
1,100

 
$
5,950

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

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NORTONLIFELOCK INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in millions)
 
Six Months Ended
 
October 4, 2019
 
September 28, 2018
OPERATING ACTIVITIES:
 
 
 
Net income (loss)
$
811

 
$
(68
)
Adjustments:
 
 
 
Amortization and depreciation
251

 
305

Impairments of long-lived assets
4

 
7

Stock-based compensation expense
150

 
210

Deferred income taxes
(707
)
 
3

Loss from equity interest
22

 
60

Other
30

 
(42
)
Changes in operating assets and liabilities, net of acquisitions:
 
 
 
Accounts receivable, net
111

 
286

Accounts payable
(32
)
 
(12
)
Accrued compensation and benefits
(20
)
 
(81
)
Contract liabilities
(129
)
 
(116
)
Income taxes payable
5

 
(67
)
Other assets
(5
)
 
55

Other liabilities
15

 
31

Net cash provided by operating activities
506

 
571

INVESTING ACTIVITIES:
 
 
 
Purchases of property and equipment
(76
)
 
(95
)
Payments for acquisitions, net of cash acquired

 
(17
)
Proceeds from maturities and sales of short-term investments
120

 
99

Other
(5
)
 
(7
)
Net cash provided by (used in) investing activities
39

 
(20
)
FINANCING ACTIVITIES:
 
 
 
Net proceeds from sales of common stock under employee stock incentive plans
88

 
6

Tax payments related to restricted stock units
(65
)
 
(53
)
Dividends and dividend equivalents paid
(98
)
 
(110
)
Repurchases of common stock
(559
)
 

Net cash used in financing activities
(634
)
 
(157
)
Effect of exchange rate fluctuations on cash and cash equivalents
(5
)
 
(21
)
Change in cash and cash equivalents
(94
)
 
373

Beginning cash and cash equivalents
1,791

 
1,774

Ending cash and cash equivalents
$
1,697

 
$
2,147


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

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Table of Contents

NORTONLIFELOCK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1Basis of Presentation and Significant Accounting Policies
Recent Corporate Name Change
In connection with the sale of certain assets of our Enterprise Security business as disclosed in Basis of presentation below, effective November 4, 2019, we changed our corporate name from Symantec Corporation to NortonLifeLock Inc.
Basis of presentation
On August 8, 2019, we entered into a definitive agreement with Broadcom Inc. (Broadcom) under which Broadcom agreed to purchase certain of our Enterprise Security assets and assume certain liabilities for a purchase price of $10.7 billion (the Broadcom sale). On November 4, 2019, we completed the transaction. The divestiture of our Enterprise Security business allows us to shift our operational focus to our consumer business and represents a strategic shift in our operations. As a result, the majority of results of our Enterprise Security business were classified as discontinued operations in our Condensed Consolidated Statements of Operations and thus excluded from both continuing operations and segment results for all periods presented. Starting in the second quarter of fiscal 2020, we operate in one reportable segment. The Enterprise Security business was part of our Enterprise Security segment. Results of discontinued operations include all revenues and expenses directly derived from the Enterprise Security business, with the exception of revenues and associated costs of our ID Analytics solutions, which were formerly included in the Enterprise Security segment, and general corporate overhead which were previously allocated to the Enterprise Security segment but are not allocated to discontinued operations. These revenues and expenses are now included in continuing operations. The assets acquired and liabilities to be sold to Broadcom, as specified in the August 8, 2019 definitive agreement, were classified as discontinued operations in our Condensed Consolidated Balance Sheets, subject to changes set forth in the agreement. See Notes 3 and 18 for additional information about the divestiture of our Enterprise Security business.
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles (GAAP) in the United States of America (U.S.) for interim financial information. 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 and accompanying Notes thereto included in our Annual Report on Form 10-K for the fiscal year ended March 29, 2019. The results of operations for the six months ended October 4, 2019 are not necessarily indicative of the results expected for the entire fiscal year.
We have a 52/53-week fiscal year ending on the Friday closest to March 31. Unless otherwise stated, references to three and six-month periods in this report relate to fiscal periods ended October 4, 2019 and September 28, 2018. The three and six months ended October 4, 2019 consisted of 13 and 27 weeks, respectively, whereas the three and six months ended September 28, 2018 consisted of 13 and 26 weeks, respectively. Our 2020 fiscal year consists of 53 weeks and ends on April 3, 2020.
Use of estimates
The preparation of Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported and disclosed in the financial statements and accompanying notes. Such estimates include, but are not limited to, the determination of stand-alone selling price for performance obligations, valuation of business combinations including acquired intangible assets and goodwill, loss contingencies, valuation of stock-based compensation, and the recognition and measurement of current and deferred income taxes, including the measurement of uncertain tax positions. Management determines these estimates and assumptions based on historical experience and on various other assumptions that are believed to be reasonable. Actual results could differ significantly from these estimates, and such differences may be material to the Condensed Consolidated Financial Statements.
Significant accounting policies
There have been no material changes to our significant accounting policies as of and for the six months ended October 4, 2019, except for those noted in Note 2 and Note 5, as compared to the significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended March 29, 2019.

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Table of Contents

Note 2. Recent Accounting Standards
Recently adopted authoritative guidance
Leases. In February 2016, the Financial Accounting Standards Board (FASB) issued new guidance on lease accounting which requires lessees to recognize assets and liabilities on their balance sheet for the rights and obligations created by operating leases and also requires disclosures designed to give users of financial statements information on the amount, timing, and uncertainty of cash flows arising from leases. Most prominent among the changes in the standard is the recognition of right-of-use (ROU) assets and lease liabilities by lessees for those leases classified as operating leases. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases.
On March 30, 2019, the first day of our fiscal 2020, we adopted the new guidance using the alternative modified retrospective transition method under which we continue to apply the legacy lease accounting guidance, including its disclosure requirements, in comparative periods prior to fiscal 2020. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard that allowed us not to reassess (1) whether any expired or existing contracts are or contain leases, (2) lease classification for any expired or existing leases, and (3) initial direct costs for any existing leases. We currently do not have any finance leases. We combine the lease and non-lease components in determining the operating lease assets and liabilities.
The adoption of the new lease accounting standard resulted in the recognition of ROU assets and lease liabilities of $182 million and $209 million, respectively, as of March 30, 2019 related to our operating leases. The adoption of the standard also resulted in elimination of deferred rent liabilities of $17 million, as of March 30, 2019, which are now recorded as a reduction of the ROU assets. The standard did not have an impact on our consolidated statements of operations or statements of cash flows.
Recently issued authoritative guidance not yet adopted
Credit Losses. In June 2016, the FASB issued new authoritative guidance on credit losses which changes the impairment model for most financial assets and certain other instruments. For trade receivables and other instruments, we will be required to use a new forward-looking “expected loss” model. Additionally, for available-for-sale debt securities with unrealized losses, we will measure credit losses in a manner similar to today, except that the losses will be recognized as allowances rather than reductions in the amortized cost of the securities. The standard will be effective for us in our first quarter of fiscal 2021. We are currently evaluating the impact of the adoption of this guidance on our Consolidated Financial Statements.
Internal-Use Software. In August 2018, the FASB issued new guidance that clarifies the accounting for implementation costs in a cloud computing arrangement. The new guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The standard will be effective for us in our first quarter of fiscal 2021, with early adoption permitted. We are currently evaluating the adoption date and the impact of the adoption of this guidance on our Consolidated Financial Statements and disclosures.
Although there are several other new accounting pronouncements issued or proposed by the FASB that we have adopted or will adopt, as applicable, we do not believe any of these accounting pronouncements has had, or will have, a material impact on our consolidated financial position, operating results or disclosures.
Note 3. Discontinued Operations
On August 8, 2019, we entered into a definitive agreement with Broadcom under which Broadcom agreed to purchase certain of our Enterprise Security assets and assume certain liabilities for a purchase price of $10.7 billion.
The following table presents the aggregate carrying amounts of the classes of assets and liabilities sold under the definitive agreement with Broadcom:
(In millions)
October 4, 2019
 
March 29, 2019
Assets:
 
 
 
Current assets
$
147

 
$
149

Intangible assets, net
934

 
1,048

Goodwill
5,772

 
5,773

Other long-term assets
194

 
171

Total assets of discontinued operations
$
7,047

 
$
7,141

Liabilities:
 
 
 
Current contract liabilities
$
1,224

 
$
1,288

Other current liabilities
22

 
9

Long-term contract liabilities
671

 
709

Other long-term liabilities
15

 
4

Total liabilities of discontinued operations
$
1,932

 
$
2,010



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Table of Contents

The following table presents information regarding certain components of income from discontinued operations, net of income taxes:
 
Three Months Ended
 
Six Months Ended
(In millions)
October 4, 2019
 
September 28, 2018
 
October 4, 2019
 
September 28, 2018
Net revenues
$
576

 
$
567

 
$
1,173

 
$
1,116

Operating income
$
113

 
$
63

 
$
136

 
$
99

Income before income taxes
$
113

 
$
63

 
$
137

 
$
95

Income tax expense (benefit)
$
(637
)
 
$
9

 
$
(604
)
 
$
29

Income from discontinued operations, net of taxes
$
750

 
$
54

 
$
741

 
$
66


Our discontinued operations consist of our divested Enterprise Security assets and also includes results of our previously divested Veritas information management business (Veritas). There was no income from Veritas during the three and six months ended October 4, 2019. Revenue from Veritas was $4 million and $9 million during the three and six months ended September 28, 2018. Income from Veritas, net of taxes was $0 million and $5 million during the three and six months ended September 28, 2018.
We recorded a $665 million tax benefit in discontinued operations during the three and six months ended October 4, 2019 to remeasure the deferred tax assets associated with the tax basis of intellectual property held by our subsidiaries organized in Ireland. We previously expected to recover the tax basis through normal operation of our Enterprise business, which is taxed at the Irish trading rate of 12.5%. We now expect to recover the tax basis through the sale of certain assets of the Enterprise business, which will be taxed at the Irish capital gains tax rate of 33%.
The following table presents significant non-cash items and capital expenditures of discontinued operations:
 
Six Months Ended
(In millions)
October 4, 2019
 
September 28, 2018
Amortization and depreciation
$
123

 
$
182

Stock-based compensation expense
$
95

 
$
122

Purchases of property and equipment
$
29

 
$
16


See Note 18 for more information regarding the completion of the sale that occurred on November 4, 2019.
Note 4. Revenues
Timing of revenue recognition
The following table provides our revenue disaggregated by the timing of recognition:
 
Three Months Ended
 
Six Months Ended
(In millions)
October 4, 2019
 
September 28, 2018
 
October 4, 2019
 
September 28, 2018
Products and services transferred at a point in time
$
12

 
$
12

 
$
25

 
$
24

Products and services transferred over time
$
596

 
$
600

 
$
1,233

 
$
1,200

Contract liabilities
The amount of revenue recognized during the three and six months ended October 4, 2019 that was included within the contract liabilities balance at July 5, 2019 and March 29, 2019 was $427 million and $767 million, respectively. The amount of revenue recognized during the three and six months ended September 28, 2018 that was included within the contract liabilities balance at June 29, 2018 and March 31, 2018 was $443 million and $766 million, respectively.
Contract acquisition costs
We recognized amortization expense of capitalized contract acquisition costs of $1 million and $3 million during the three and six months ended October 4, 2019, respectively, and $1 million and $2 million during the three and six months ended September 28, 2018, respectively. There were no impairment losses recognized during the periods.
Remaining performance obligations
Remaining performance obligations represent contracted revenue that has not been recognized, which include contract liabilities and amounts that will be billed and recognized as revenue in future periods. As of October 4, 2019, we had $626 million of remaining performance obligations, which does not include customer deposit liabilities of $390 million, of which we expect to recognize approximately 96% as revenue over the next twelve months.

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Table of Contents

Note 5. Leases
We lease certain of our facilities, equipment, and data center co-locations under operating leases that expire on various dates through fiscal 2029. Our leases generally have terms that range from 1 year to 17 years for our facilities, 1 year to 6 years for equipment, and 1 year to 6 years for data center co-locations. Some of our leases contain renewal options, escalation clauses, rent concessions, and leasehold improvement incentives.
We determine if an arrangement is a lease at inception. We have elected to not recognize a lease liability or ROU asset for short-term leases (leases with a term of twelve months or less that do not include an option to purchase the underlying asset). Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The interest rate we use to determine the present value of future payments is our incremental borrowing rate because the rate implicit in our leases is not readily determinable. Our incremental borrowing rate is a hypothetical rate for collateralized borrowings in economic environments where the leased asset is located based on credit rating factors. Our operating lease assets also include adjustments for prepaid lease payments, lease incentives and initial direct costs.
Certain lease contracts include obligations to pay for other services, such as operations and maintenance. We elected the practical expedient whereby we record all lease components and the related minimum non-lease components as a single lease component. Cash payments made for variable lease costs are not included in the measurement of our operating lease assets and liabilities. Many of our lease terms include one or more options to renew. We do not assume renewals in our determination of the lease term unless it is reasonably certain that we will exercise that option. Lease costs for minimum lease payments for operating leases is recognized on a straight-line basis over the lease term. Our lease agreements do not contain any residual value guarantees.
The following summarizes our lease costs:
 
Three Months Ended
 
Six Months Ended
(In millions)
October 4, 2019
 
October 4, 2019
Operating lease costs
$
10

 
$
22

Short-term lease costs
2

 
4

Variable lease costs
5

 
11

Total lease costs
$
17

 
$
37


Rent expense under operating leases was $18 million and $37 million for the three and six months ended September 28, 2018, respectively.
Other information related to our operating leases was as follows:
 
Six Months Ended
 
October 4, 2019
Weighted-average remaining lease term
5.5 years

Weighted-average discount rate
4.14
%

See Note 7 for additional cash flow information related to our operating leases.
As of October 4, 2019, the maturities of our lease liabilities, excluding lease liabilities associated with our discontinued operations, by fiscal year are as follows:
(In millions)
 
Remainder of 2020
$
21

2021
42

2022
36

2023
27

2024
26

Thereafter
42

Total lease payments
194

Less: Imputed interest
(21
)
Present value of lease liabilities
$
173



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Table of Contents

As of March 29, 2019, the minimum future rentals on non-cancelable operating leases, including leases associated with our discontinued operations and based on the previous lease accounting standard, by fiscal year were as follows:
(In millions)
 
2020
$
55

2021
49

2022
40

2023
32

2024
26

Thereafter
42

Total minimum future lease payments
$
244


Note 6Goodwill and Intangible Assets
Goodwill
The changes in the carrying amount of goodwill were as follows:
(In millions)
 
Balance as of March 29, 2019
$
2,677

Translation adjustments
(2
)
Balance as of October 4, 2019
$
2,675


Intangible assets, net
 
October 4, 2019
 
March 29, 2019
(In millions)
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
Customer relationships
$
541

 
$
(208
)
 
$
333

 
$
541

 
$
(168
)
 
$
373

Developed technology
143

 
(76
)
 
67

 
143

 
(61
)
 
82

Other
4

 
(2
)
 
2

 
6

 
(3
)
 
3

Total finite-lived intangible assets
688

 
(286
)
 
402

 
690

 
(232
)
 
458

Indefinite-lived trade names
744