Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

OVERVIEW

Our business

Symantec Corporation is a global leader in security, backup and availability solutions. Our market leading products and services protect people and information in any environment – from the mobile device in your pocket, to the enterprise data center, to cloud-based systems. Founded in April 1982, Symantec operates one of the largest global threat-intelligence networks. The company has more than 19,000 employees in more than 50 countries.

Fiscal calendar

We have a 52/53-week fiscal year ending on the Friday closest to March 31. Unless otherwise stated, references to years in this report relate to fiscal year and periods ended April 3, 2015, March 28, 2014 and March 29, 2013. Our fiscal 2015 was a 53-week year whereas our fiscal 2014 and 2013 were 52-week years.

Strategy

In our security business, we operate a global civilian cyber intelligence threat network and track a vast number of threats across the Internet from hundreds of millions of mobile devices, endpoints, and servers across the globe. We believe one of our competitive advantages is our database of threat indicators which allows us to reduce the number of false positives and provide faster and better protection for customers through our products. We are leveraging our capabilities in threat protection and data loss prevention and extending them into our core security offerings. We are also pioneering new solutions in growing markets like cloud, advanced threat protection, information protection and cyber security services.

Our security strategy is to leverage our unique assets to provide best-in-class consumer and enterprise security products; deliver a unified security analytics platform that provides big data analytics, utilizes our vast telemetry, provides visibility into real-time global threats, and powers Symantec and third-party security analytics applications; and offer cyber security services that provide a full-suite of services from monitoring to incident response to threat intelligence supported by over 500 cyber security experts and nine global threat centers.

In our information management business, with a global installed customer base, we have a comprehensive portfolio that spans backup and recovery, storage management and archiving. Our information availability offerings help customers keep their data and systems available where they need them, when they need them, and irrespective of their location. Our information insight solutions help customers know what data they have and leverage that knowledge to help manage such data better and inform strategic decisions.

Our information management product strategy is to expand our best-in-class foundational portfolio across backup, storage management, business continuity, archiving and eDiscovery through software, integrated appliances and the cloud; deliver next-generation availability solutions through a coordinated orchestration architecture focused on managing and moving mission-critical data in a hybrid cloud world; and enable next-generation insight solutions that provide visibility, action, and automated control across an organization’s information landscape through an intelligent information fabric that integrates our portfolio and third-party ecosystems.

In fiscal 2015, we focused on five priorities: running our businesses with a portfolio approach by managing certain businesses for operating margin; prioritizing investments for growth; further reducing costs and improving efficiencies; attracting top talent to our executive team; and continuing to return significant cash to shareholders. We are optimizing some of our businesses by methodically evaluating every product line to balance our profitability targets against our objectives. In order to prioritize investments for growth, we are realigning our research and development budgets to apply the best resources to the most promising market opportunities. To further reduce costs and improve efficiencies, we are consolidating our global footprint, data centers and product support capabilities as well as streamlining the way we run our businesses with initiatives to increase research and development efficiencies and sales productivity. We are focused on continuing to attract talented business and technology leaders to the company. We remain committed to returning significant cash to shareholders in the form of dividends and share buybacks.

The Planned Separation of Information Management from the Security Business

On October 9, 2014, we announced plans to separate our business into two independent publicly-traded companies: one focused on security and one focused on information management. The transaction is intended to take the form of a tax-free distribution to Symantec shareholders of all of the capital stock of our information management business. We expect to complete the legal separation on January 2, 2016, subject to market, regulatory and certain other conditions. John Gannon has been appointed as General Manager of the information management business, and Don Rath has been appointed as acting Chief Financial Officer. After the transaction, Michael Brown and Thomas Seifert will continue to lead Symantec as Chief Executive Officer and Chief Financial Officer, respectively. For additional separation cost information, see Note 6 of the Notes to Consolidated Financial Statements in this annual report.

Our operating segments

Our operating segments are significant strategic business units that offer different products and services distinguished by customer needs. In the second quarter of fiscal 2015, we modified our segment reporting structure to match our new operating structure. The three reporting segments, which are the same as our operating segments, are:

•	Consumer Security: Our Consumer Security segment focuses on making it simple for customers to be productive and protected at home and at work. Our Norton-branded services provide multi-layer security and identity protection on major desktop and mobile operating systems, to defend against increasingly complex online threats to individuals, families, and small businesses.

•

Enterprise Security: Our Enterprise Security segment protects organizations so they can securely conduct business while leveraging new platforms and data. These products include Secure Socket Layer (“SSL”) Certificates, authentication, mail and web security, data center security, data loss prevention, information security services, endpoint security and management, encryption, and mobile security offerings.

•	Information Management: Our Information Management segment focuses on backup and recovery, archiving and eDiscovery, storage and high availability solutions, helping to ensure that our customers’ IT infrastructure and mission-critical applications are protected, managed and available.

For further description of our operating segments see Note 9 of the Notes to Consolidated Financial Statements in this annual report.

Financial results and trends

The following table provides an overview of key financial metrics for each of the last three fiscal years:

	2015				2014				2013
	(In millions, except percentages)
Consolidated Income Statement Data:
Total net revenue	$	6,508			$	6,676			$	6,906
Gross profit	5,355				5,527				5,731
Operating income	1,149				1,183				1,106
Operating margin percentage	18		%		18		%		16		%
Consolidated Cash Flow and Balance Sheet Data:
Cash flow from operations	1,312				1,281				1,593
Deferred revenue	3,664				3,903				4,080

Total net revenue decreased $168 million for fiscal 2015 as compared to fiscal 2014, reflecting declines in our content, subscription, and maintenance revenue, partially offset by an additional week from the 53-week fiscal 2015 year and by increased license revenue. Content, subscription, and maintenance revenue decreased $211 million primarily due to the general strengthening of the U.S. dollar against foreign currencies and declines in our consumer security products driven by our channel strategy to exit certain high-cost OEM arrangements and change our renewal practices. This was partially offset by increased revenue from Backup and Recovery products. License revenue increased $43 million primarily due to an increase in sales of our NetBackup appliances, partially offset by unfavorable foreign currency fluctuations.

Gross margin was 82% for fiscal 2015 compared to 83% for fiscal 2014 driven by growth in our lower margin appliance business.

Operating income declined $34 million year over year as lower operating expenses largely offset lower net revenue. Our operating expenses decreased $138 million year over year due to our cost savings initiatives and favorable foreign currency effects of $66 million. Fiscal 2015 operating expenses included $252 million of restructuring, separation, and transition costs compared to $264 million in fiscal 2014. We expect our operating margins to fluctuate in future periods as a result of a number of factors, including our operating results and the timing and amount of expenses incurred.

Net cash provided by operating activities was $1.3 billion for fiscal 2015, which resulted from net income of $878 million adjusted for non-cash items, including depreciation and amortization charges of $443 million and stock-based compensation expense of $195 million. These amounts were partially offset by decreases in deferred income taxes of $23 million and income taxes payable of $191 million.

Deferred revenue decreased $239 million year over year primarily due to unfavorable foreign currency fluctuations.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our Consolidated Financial Statements and related notes included in this annual report in accordance with generally accepted accounting principles in the U.S., requires us to make estimates, including judgments and assumptions, that affect the reported amounts of assets, liabilities, revenue, and expenses, and related disclosure of contingent assets and liabilities. We have based our estimates on historical experience and on various assumptions that we believe to be reasonable under the circumstances. We evaluate our estimates on a regular basis and make changes accordingly. Historically, our critical accounting policies and estimates have not differed materially from actual results; however, actual results may differ from these estimates under different conditions. If actual results differ from these estimates and other considerations used in estimating amounts reflected in our Consolidated Financial Statements included in this annual report, the resulting changes could have a material adverse effect on our Consolidated Statements of Income, and in certain situations, could have a material adverse effect on our liquidity and financial condition.

A critical accounting estimate is based on judgments and assumptions about matters that are uncertain at the time the estimate is made. Different estimates that reasonably could have been used or changes in accounting estimates could materially impact our operating results or financial condition. We believe that the estimates described below represent our critical accounting policies and estimates, as they have the greatest potential impact on our Consolidated Financial Statements. See also Note 1 of the Notes to Consolidated Financial Statements included in this annual report.

Revenue recognition

We recognize revenue primarily pursuant to the requirements under the authoritative guidance on software revenue recognition, and any applicable amendments or modifications. Revenue recognition requirements in the software industry are very complex and require us to make estimates.

For software arrangements that include multiple elements, including perpetual software licenses and maintenance or services, packaged products with content updates, and subscriptions, we allocate and defer revenue for the undelivered items based on the fair value using vendor specific objective evidence (“VSOE”), and recognize the difference between the total arrangement fee and the amount deferred for the undelivered items as revenue. VSOE of each element is based on the price for which the undelivered element is sold separately. We determine fair value of the undelivered elements based on historical evidence of our stand-alone sales of these elements to third parties or from the stated renewal rate for the undelivered elements. When VSOE does not exist for undelivered items, the entire arrangement fee is recognized ratably over the performance period. Our deferred revenue consists primarily of the unamortized balance of enterprise product maintenance, consumer product content updates, managed security services, subscriptions, and arrangements where VSOE does not exist. Deferred revenue totaled approximately $3.7 billion as of April 3, 2015, of which $555 million was classified as long-term deferred revenue in our Consolidated Balance Sheets. Changes to the elements in a software arrangement, the ability to identify VSOE for those elements, the fair value of the respective elements, and increasing flexibility in contractual arrangements could materially impact the amount recognized in the current period and deferred over time.

For arrangements that include both software and non-software elements, we allocate revenue to the software deliverables as a group and non-software deliverables based on their relative selling prices. In such circumstances, the accounting principles establish a hierarchy to determine the selling price to be used for allocating revenue to deliverables as follows: (i) VSOE, (ii) third-party evidence of selling price (“TPE”) and (iii) best estimate of the selling price (“ESP”). When we are unable to establish a selling price using VSOE or TPE, we use ESP to allocate the arrangement fees to the deliverables.

For our consumer products that include content updates, we recognize revenue and the associated cost of revenue ratably over the term of the subscription upon sell-through to end-users, as the subscription period generally commences on the date of sale to the end-user. We defer revenue and cost of revenue amounts for unsold product held by our distributors and resellers.

We expect our distributors and resellers to maintain adequate inventory of consumer packaged products to meet future customer demand, which is generally four or six weeks of customer demand based on recent buying trends. We ship product to our distributors and resellers at their request and based on valid purchase orders. Our distributors and resellers base the quantity of orders on their estimates to meet future customer demand, which may exceed the expected level of a four or six week supply. We offer limited rights of return if the inventory held by our distributors and resellers is below the expected level of a four or six week supply. We estimate reserves for product returns as described below. We typically offer liberal rights of return if inventory held by our distributors and resellers exceeds the expected level. Because we cannot reasonably estimate the amount of excess inventory that will be returned, we primarily offset deferred revenue against trade accounts receivable for the amount of revenue in excess of the expected inventory levels.

Arrangements for maintenance, subscriptions, managed security services and SaaS offerings are generally offered to our customers over a specified period of time, and we recognize the related revenue ratably over the maintenance, subscription, or service period.

Reserves for product returns. We reserve for estimated product returns as an offset to revenue or deferred revenue based primarily on historical trends. We fully reserve for obsolete products in the distribution channels as an offset to deferred revenue. Actual product returns may be different than what was estimated. These factors and unanticipated changes in the economic and industry environment could make actual results differ from our return estimates.

Reserves for rebates. We estimate and record reserves for channel and end-user rebates as an offset to revenue or deferred revenue. For consumer products that include content updates, rebates are recorded as a ratable offset to revenue or deferred revenue over the term of the subscription. Our estimated reserves for channel volume incentive rebates are based on distributors’ and resellers’ actual performance against the terms and conditions of volume incentive rebate programs, which are typically entered into quarterly. Our reserves for end-user rebates are estimated based on the terms and conditions of the promotional programs, actual sales during the promotion, the amount of actual redemptions received, historical redemption trends by product and by type of promotional program, and the value of the rebate. We also consider current market conditions and economic trends when estimating our reserves for rebates. If actual redemptions differ from our estimates, material differences may result in the amount and timing of our net revenues for any period presented.

Valuation of goodwill, intangible assets and long-lived assets

Business combination valuations. When we acquire businesses, we allocate the purchase price to tangible assets and liabilities and identifiable intangible assets acquired. Any residual purchase price is recorded as goodwill. The allocation of the purchase price requires management to make significant estimates in determining the fair values of assets acquired and liabilities assumed, especially with respect to intangible assets. These estimates are based on information obtained from management of the acquired companies and historical experience. These estimates can include, but are not limited to:

•	cash flows that an asset is expected to generate in the future;

•	expected costs to develop the in-process research and development into commercially viable products and estimated cash flows from the projects when completed;

•	the acquired company’s brand and competitive position, as well as assumptions about the period of time the acquired brand will continue to be used in the combined company’s product portfolio;

•	cost savings expected to be derived from acquiring an asset; and

•	discount rates.

These estimates are inherently uncertain and unpredictable, and if different estimates were used, the purchase price for the acquisition could be allocated to the acquired assets and liabilities differently from the allocation that we have made. In addition, unanticipated events and circumstances may occur which may affect the accuracy or validity of such estimates, and if such events occur we may be required to record a charge against the value ascribed to an acquired asset or an increase in the amounts recorded for assumed liabilities.

Goodwill impairment. We review goodwill for impairment on an annual basis on the first day of the fourth quarter of each fiscal year, and on an interim basis whenever events or changes in circumstances indicate that the carrying value may not be recoverable, at the reporting unit level. Our reporting units are the same as our operating segments. A qualitative assessment is first made to determine whether it is necessary to perform quantitative testing. This initial assessment includes, among others, consideration of: (i) past, current and projected future earnings and equity; (ii) recent trends and market conditions; and (iii) valuation metrics involving similar companies that are publicly-traded and acquisitions of similar companies, if available. If this initial qualitative assessment indicates that it is more likely than not that impairment exists, a second step is taken, involving a comparison between the estimated fair values of our reporting units with their respective carrying amounts including goodwill. The methods for estimating reporting unit values include asset and liability fair values and other valuation techniques, such as discounted cash flows and multiples of earnings or revenues. If the carrying value exceeds estimated fair value, there is an indication of potential impairment, and a third step is performed to measure the amount of impairment. The third step involves calculating an implied fair value of goodwill by measuring the excess of the estimated fair value of the reporting units over the aggregate estimated fair values of the individual assets less liabilities. If the carrying value of goodwill exceeds the implied fair value of goodwill, an impairment charge is recorded for the excess.

The process of estimating the fair value and carrying value of our reporting units’ equity requires significant judgment at many points during the analysis. Many assets and liabilities, such as trade accounts receivable and property and equipment, are not specifically allocated to an individual reporting unit, and therefore, we apply judgment to allocate the assets and liabilities, and this allocation affects the carrying value of the respective reporting units. Similarly, we use judgment to allocate goodwill to the reporting units based on relative fair values. The use of relative fair values has been necessary for certain reporting units due to changes in our operating structure in prior years. To determine a reporting unit’s fair value, we use the income approach under which we calculate the fair value of each reporting unit based on the estimated discounted future cash flows of that unit. We evaluate the reasonableness of this approach by comparing it with the market approach, which involves a review of the

carrying value of our assets relative to our market capitalization and to the valuation of publicly traded companies operating in the same or similar lines of business.

Applying the income approach requires that we make a number of important estimates and assumptions. We estimate the future cash flows of each reporting unit based on historical and forecasted revenue and operating costs. This, in turn, involves further estimates, such as estimates of future revenue and expense growth rates. In addition, we apply a discount rate to the estimated future cash flows for the purpose of the valuation. This discount rate is based on the estimated weighted-average cost of capital for each reporting unit and may change from year to year. Changes in these key estimates and assumptions, or in other assumptions used in this process, could materially affect our impairment analysis for a given year.

As of April 3, 2015, our goodwill balance was $5.8 billion amongst our reporting units. Based on a qualitative impairment analysis performed as of January 3, 2015, we determined that it was more likely than not that there was no impairment in any of our reporting units.

A number of factors, many of which we have no ability to control, could affect our financial condition, operating results and business prospects and could cause actual results to differ from the estimates and assumptions we employed. These factors include:

•	a prolonged global economic crisis;

•	a significant decrease in the demand for our products;

•	the inability to develop new and enhanced products and services in a timely manner;

•	a significant adverse change in legal factors or in the business climate;

•	an adverse action or assessment by a regulator;

•	successful efforts by our competitors to gain market share in our markets;

•	a loss of key personnel;

•	our determination to dispose of one or more of our reporting units;

•	the testing for recoverability of a significant asset group within a reporting unit; and

•	recognition of a goodwill impairment loss.

Intangible asset impairment. We assess the impairment of identifiable finite-lived intangible assets whenever events or changes in circumstances indicate that an asset group’s carrying amount may not be recoverable. Recoverability of certain finite-lived intangible assets, particularly customer relationships and finite-lived trade names, would be measured by the comparison of the carrying amount of the asset group to which the assets are assigned to the sum of the undiscounted estimated future cash flows the asset group is expected to generate. If an asset is considered to be impaired, the amount of such impairment would be measured as the difference between the carrying amount of the asset and its fair value. Recoverability and impairment of other finite-lived intangible assets, particularly developed technology and patents, would be measured by the comparison of the carrying amount of the asset to the sum of undiscounted estimated future product revenues offset by estimated future costs to dispose of the product to which the asset relates. For indefinite-lived intangible assets, we review impairment on an annual basis consistent with the timing of the annual evaluation for goodwill. These assets generally include trade names and trademarks. Similar to goodwill impairment testing, a qualitative assessment is first made to determine whether it is necessary to perform quantitative testing. This initial assessment includes consideration of, among other things: (i) past, current and projected future revenues; (ii) recent trends and market conditions, including discount rates; and (iii) valuation metrics, such as royalty rates, involving similar companies that are publicly-traded, if available. If this initial qualitative assessment indicates that it is more likely than not that impairment exists, a second step is taken. This step involves a comparison between the fair values of the assets and their respective carrying amounts. Any excess of the carrying amount over the fair value would be recognized as an impairment charge. Our cash flow assumptions are based on historical and forecasted future revenue, operating costs, and other relevant factors. Assumptions and estimates about the remaining useful lives of our intangible assets are subjective and are affected by changes to our business strategies. If management’s estimates of future operating results change, or if there are changes to other assumptions, the estimate of the fair value of our identifiable intangible assets could change significantly. Such change could result in impairment charges in future periods, which could have a significant impact on our operating results and financial condition.

Long-lived assets. We assess long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of the long-lived assets may not be recoverable. Based on the existence of one or more indicators of impairment, we assess recoverability of long-lived assets based on a projected undiscounted cash flow method using assumptions determined by management to be commensurate with the risk inherent in our current business model. If an asset is not recoverable, impairment is measured as the difference between the carrying amount and its fair value. Our estimates of cash flows require significant judgment based on our historical and anticipated results and are subject to many factors which could

change and cause a material impact to our operating results or financial condition. We record impairment charges on long-lived assets held for sale when we determine that the carrying value of the long-lived assets may not be recoverable. In determining fair value, we obtain and consider market value appraisal information from third parties.

Stock-based compensation

We account for stock-based compensation expense, which principally consists of restricted stock units, in accordance with the authoritative guidance on stock compensation. Under the fair value recognition provisions of this guidance, stock-based compensation expense is measured at the grant date based on the fair value of the award and is generally recognized ratably over the requisite service period, which is generally the vesting period of the respective award.

We record stock-based compensation expense for awards that are expected to vest. As a result, judgment is required in estimating the amount of stock-based awards that are expected to be forfeited. Although we estimate forfeitures based on historical experience, actual forfeitures may differ. If actual results differ significantly from these estimates, stock-based compensation expense and our results of operations could be materially impacted when we record an adjustment for the difference in the period that the awards vest or are forfeited.

Contingencies and litigation

We evaluate contingent liabilities including threatened or pending litigation in accordance with the authoritative guidance on contingencies. We assess the likelihood of any adverse judgments or outcomes from potential claims or proceedings, as well as potential ranges of probable losses, when the outcomes of the claims or proceedings are probable and reasonably estimable. A determination of the amount of accrued liabilities required, if any, for these contingencies is made after the analysis of each separate matter. Because of uncertainties related to these matters, we base our estimates on the information available at the time of our assessment. As additional information becomes available, we reassess the potential liability related to our pending claims and litigation and may revise our estimates. Any revisions in the estimates of potential liabilities could have a material impact on our operating results and financial position.

Income taxes

We are required to compute our income taxes in each federal, state, and international jurisdiction in which we operate. This process requires that we estimate the current tax exposure as well as assess temporary differences between the accounting and tax treatment of assets and liabilities, including items such as accruals and allowances not currently deductible for tax purposes. The income tax effects of the differences we identify are classified as current or long-term deferred tax assets and liabilities in our Consolidated Balance Sheets. Our judgments, assumptions, and estimates relative to the current provision for income tax take into account current tax laws, our interpretation of current tax laws, and possible outcomes of current and future audits conducted by foreign and domestic tax authorities. Changes in tax laws or our interpretation of tax laws and the resolution of current and future tax audits could significantly impact the amounts provided for income taxes in our Consolidated Balance Sheets and Consolidated Statements of Income.

Our effective tax rate includes the impact of certain undistributed foreign earnings for which no U.S. taxes have been provided because such earnings are planned to be indefinitely reinvested outside the U.S. While we do not anticipate changing our intention regarding indefinitely reinvested earnings outside the U.S., material changes in our estimates of such earnings or tax legislation that limits or restricts the amount of such earnings could materially impact our income tax provision and effective tax rate. If certain foreign earnings previously treated as indefinitely reinvested outside the U.S. are repatriated, the related U.S. tax liability may be reduced by any foreign income taxes paid on these earnings.

We account for uncertain tax positions pursuant to authoritative guidance based on a two-step approach to recognize and measure those positions taken or expected to be taken in a tax return. The first step is to determine if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. We adjust reserves for our uncertain tax positions due to changing facts and circumstances, such as the closing of a tax audit, the refinement of estimates, or the realization of earnings or deductions that differ from our estimates. To the extent that the final outcome of these matters is different than the amounts recorded, such differences will impact our tax provision in our Consolidated Statements of Income in the period in which such determination is made.

We must also assess the likelihood that deferred tax assets will be realized from future taxable income and, based on this assessment establish a valuation allowance, if required. The determination of our valuation allowance involves assumptions, judgments and estimates, including forecasted earnings, future taxable income, and the relative proportions of revenue and income before taxes in the various domestic and international jurisdictions in which we operate. To the extent we establish a valuation allowance or change the valuation allowance in a period, we reflect the change with a corresponding increase or decrease to our tax provision in our Consolidated Statements of Income.

Recently issued authoritative guidance

See Note 1 of the Notes to Consolidated Financial Statements in this annual report for recently issued authoritative guidance, including the respective expected dates of adoption and effects on our results of operations and financial condition.

RESULTS OF OPERATIONS

The following table sets forth certain Consolidated Statements of Income data as a percentage of net revenue for the fiscal years indicated below:

	2015			2014			2013
Net revenue:
Content, subscription, and maintenance	88	%		89	%		87	%
License	12	%		11	%		13	%
Total net revenue	100	%		100	%		100	%
Cost of revenue:
Content, subscription, and maintenance	15	%		15	%		15	%
License	2	%		1	%		1	%
Amortization of intangible assets	1	%		1	%		1	%
Total cost of revenue	18	%		17	%		17	%
Gross profit	82	%		83	%		83	%
Operating expenses:
Sales and marketing	36	%		37	%		40	%
Research and development	18	%		16	%		15	%
General and administrative	6	%		7	%		6	%
Amortization of intangible assets	2	%		2	%		4	%
Restructuring, separation, and transition	4	%		4	%		1	%
Total operating expenses	65	%		65	%		67	%
Operating income	18	%		18	%		16	%
Non-operating expense, net	(1)	%		—	%		(1)	%

The total percentages may not add due to rounding.

Total net revenue by fiscal year

													Change in %
	2015				2014				2013				2015 v 2014			2014 v 2013
	(Dollars in millions)
Content, subscription, and maintenance revenue	$	5,749			$	5,960			$	6,021			(4)	%		(1)	%
License revenue	759				716				885				6	%		(19)	%
Total	$	6,508			$	6,676			$	6,906			(3)	%		(3)	%

2015 compared to 2014:

Content, subscription, and maintenance revenue represented 88%, 89% and 87% of total net revenue for the fiscal years ended 2015, 2014 and 2013, respectively. Content, subscription, and maintenance revenue decreased $211 million primarily due to the general strengthening of the U.S. dollar against foreign currencies and declines in our consumer security revenue driven by our channel strategy to exit unprofitable retail arrangements and certain high-cost OEM arrangements, coupled with the impact of our decision to change our renewal practices. This was partially offset by an additional week from the 53-week fiscal 2015 year and by increased revenue from Backup and Recovery products. License revenue increased $43 million primarily due to an increase in sales of our NetBackup appliances, partially offset by unfavorable foreign currency fluctuations.

2014 compared to 2013:

Content, subscription, and maintenance revenue decreased $61 million primarily due to decreases from our Consumer Security segment of $30 million and Information Management segment of $26 million. License revenue decreased $169 million due to declines from our Information Management segment of $89 million, Enterprise Security segment of $63 million and Consumer Security segment of $17 million.

Net revenue and operating income by segment by fiscal year

													Change in %
	2015				2014				2013				2015 v 2014			2014 v 2013
	(Dollars in millions)
Total net revenue:
Consumer Security	$	1,887			$	2,063			$	2,109			(9)	%		(2)	%
Enterprise Security	2,063				2,100				2,168				(2)	%		(3)	%
Information Management	2,558				2,513				2,629				2	%		(4)	%
Percentage of total net revenue:
Consumer Security	29		%		31		%		31		%
Enterprise Security	32		%		31		%		31		%
Information Management	39		%		38		%		38		%
Operating income:
Consumer Security	$	982			$	928			$	805			6	%		15	%
Enterprise Security	287				314				213				(9)	%		47	%
Information Management	486				571				684				(15)	%		(17)	%
Operating margin:
Consumer Security	52		%		45		%		38		%
Enterprise Security	14		%		15		%		10		%
Information Management	19		%		23		%		26		%

2015 compared to 2014:

Consumer Security revenue decreased $176 million primarily due to our channel strategy to exit unprofitable retail arrangements and certain high-cost OEM arrangements, coupled with the impact of our decision to change our renewal practices. Consumer Security operating income increased $54 million primarily due to reductions in advertising and promotional expenses of $141 million and decreases in cost of revenue of $52 million and salaries and wages of $26 million, partially offset by the revenue decline.

Enterprise Security revenue decreased $37 million primarily due to unfavorable foreign currency fluctuations of $45 million. The decrease of $27 million in operating income was mainly due to the reduction in revenue.

Information Management revenue increased $45 million primarily due to growth in our NetBackup software which was partially offset by unfavorable foreign currency fluctuations. Information Management operating income decreased $85 million driven by increased headcount related expenses including higher sales commission expense, occupancy expenses and marketing spend, partially offset by the increase in revenue.

2014 compared to 2013:

Consumer Security revenue declined $46 million primarily due to declines in PC tools revenue of $21 million and decreases in certain services activities revenues of $19 million. Consumer Security operating income increased $123 million primarily due to lower advertising and promotional expenses of $128 million.

Enterprise Security revenue declined $68 million primarily due to a $54 million decline in endpoint management sales. Enterprise Security operating income increased $101 million mainly due to lower salaries and wages of $119 million, lower outside services expenses of $28 million, and a decrease in cost of revenue of $24 million, partially offset by lower revenue.

Information Management revenue decreased $116 million primarily due to an $80 million decline in our storage management offerings, a decrease of $50 million from our Backup Exec products and a decrease of $12 million from our Enterprise Vault products. These decreases were partially offset by growth in our NetBackup offerings of $31 million. Information Management operating income decreased $113 million primarily from decreases in revenue and higher materials costs related to our appliances business, coupled with higher costs associated with our services business.

Net revenue by geographic region by fiscal year

													Change in %
	2015				2014				2013				2015 v 2014			2014 v 2013
	(Dollars in millions)
Revenue by geographic region:
Americas (U.S., Canada and Latin America)	$	3,586			$	3,617			$	3,744			(1)	%		(3)	%
EMEA (Europe, Middle East, Africa)	1,813				1,891				1,858				(4)	%		2	%
Asia Pacific/Japan	1,109				1,168				1,304				(5)	%		(10)	%
Total net revenue	$	6,508			$	6,676			$	6,906
U.S.	3,170				3,198				3,337				(1)	%		(4)	%
International	3,338				3,478				3,569				(4)	%		(3)	%
Total net revenue	$	6,508			$	6,676			$	6,906
Percentage of total net revenue:
Americas (U.S., Canada and Latin America)	55		%		54		%		54		%
EMEA (Europe, Middle East, Africa)	28		%		28		%		27		%
Asia Pacific/Japan	17		%		18		%		19		%
U.S.	49		%		48		%		48		%
International	51		%		52		%		52		%

Fluctuations in the U.S. dollar compared to foreign currencies unfavorably impacted our international revenue by approximately $156 million for fiscal 2015 as compared to fiscal 2014. Fiscal 2015 revenue for the EMEA and Asia Pacific and Japan regions decreased primarily due to unfavorable foreign currency fluctuations of $100 million and $54 million, respectively, compared to fiscal 2014.

Fluctuations in the U.S. dollar compared to foreign currencies unfavorably impacted our international revenue by approximately $20 million for fiscal 2014 as compared to fiscal 2013. This was due to a $90 million unfavorable foreign currency fluctuation in the Asia Pacific and Japan region partially offset by a favorable foreign currency fluctuation of $70 million in the EMEA region.

Our international sales are expected to continue to be a significant portion of our revenue. As a result, revenue is expected to continue to be affected by foreign currency exchange rates as compared to the U.S. dollar. We are unable to predict the extent to which revenue in future periods will be impacted by changes in foreign currency exchange rates. If international sales become a greater portion of our total sales in the future, changes in foreign currency exchange rates may have a potentially greater impact on our revenue and operating results.

Cost of revenue by fiscal year

													Change in %
	2015				2014				2013				2015 v 2014			2014 v 2013
	(Dollars in millions)
Cost of content, subscription, and maintenance	$	988			$	1,008			$	1,017			(2)	%		(1)	%
Cost of license	114				87				89				31	%		(2)	%
Amortization of intangible assets	51				54				69				(6)	%		(22)	%
Total	$	1,153			$	1,149			$	1,175			—	%		(2)	%

2015 compared to 2014:

Cost of content, subscription, and maintenance consists primarily of technical support costs, costs of billable services, and fees to OEMs under revenue-sharing agreements. Cost of license consists primarily of royalties paid to third parties under technology licensing agreements, appliance manufacturing costs, and other direct material costs. Intangible assets are primarily comprised of developed technologies and patents from acquired companies. Our total cost of revenue remained relatively consistent for fiscal 2015 compared to fiscal 2014. Cost of license increased in fiscal 2015 compared to fiscal 2014, primarily due to direct costs associated with our appliance offerings.

2014 compared to 2013:

Our total cost of revenue remained relatively consistent for fiscal 2014 compared to fiscal 2013. Amortization of intangible assets decreased in fiscal 2014 compared to fiscal 2013 as certain developed technologies from acquired companies became fully amortized early in fiscal 2014.

Operating expenses by fiscal year

													Change in %
	2015				2014				2013				2015 v 2014			2014 v 2013
	(Dollars in millions)
Sales and marketing expense	$	2,323			$	2,439			$	2,789			(5)	%		(13)	%
Research and development expense	1,144				1,039				1,026				10	%		1	%
General and administrative expense	379				446				447				(15)	%		—	%
Amortization of intangible assets	108				156				286				(31)	%		(45)	%
Restructuring, separation, and transition	252				264				77				(5)	%		243	%
Total	$	4,206			$	4,344			$	4,625			(3)	%		(6)	%

2015 compared to 2014:

Sales and marketing expense decreased $116 million primarily due to lower OEM royalty fees of $130 million.

Research and development expense increased $105 million primarily due to higher salaries and wages of $34 million, higher equipment costs of $12 million, an increase in information technology and telecom costs of $11 million, and an increase in stock-based compensation of $17 million.

General and administrative expenses decreased $67 million primarily due to a reduction of outside services of $63 million.

Amortization of intangible assets decreased $48 million primarily as a result of various customer relationship intangibles becoming fully amortized at the end of the first quarter of fiscal 2014.

Restructuring, separation, and transition costs include severance, facilities, separation, transition and other related costs. For fiscal 2015, we incurred $125 million of restructuring costs, $81 million in separation costs, and $46 million in transition costs. For further information on restructuring, separation, and transition costs, see Note 6 of the Notes to Consolidated Financial Statements in this annual report.

We experienced favorable foreign currency effects on our operating expenses of $66 million in fiscal 2015 as compared to fiscal 2014.

2014 compared to 2013:

Sales and marketing expense decreased $350 million in fiscal 2014, primarily due to lower salaries and wages of $188 million resulting from lower headcount, and lower advertising and promotion expenses of $146 million. Our sales and marketing expense in fiscal 2014 was also impacted by the changes in our go-to-market strategy as described under Part I, Item 1. Business, "Sales and Go-To-Market-Strategy."

The $13 million increase in research and development expense for fiscal 2014 was primarily due to higher equipment costs.

Amortization of intangible assets decreased by $130 million primarily as a result of various customer relationship intangibles becoming fully amortized at the end of the first quarter of fiscal 2014.

Restructuring and transition costs consist of severance, facilities, transition and other related costs associated with our organization simplification. For fiscal 2014, we recognized $212 million of restructuring, $49 million in transition costs related to our ERP system and $3 million in other transition costs. For further information on restructuring and transition costs, see Note 6 of the Notes to Consolidated Financial Statements in this annual report.

We experienced favorable foreign currency effects on our operating expenses of $42 million in fiscal 2014 as compared to fiscal 2013.

Non-operating expense, net by fiscal year

													Change in %
2015				2014				2013				2015 v 2014			2014 v 2013
	(Dollars in millions)
Interest income	$	12			$	12			$	12			—	%		—	%
Interest expense	(79		)		(84		)		(139		)		(6)	%		(40)	%
Other income, net	11				45				27				(76)	%		67	%
Non-operating expense, net	$	(56	)		$	(27	)		$	(100	)		107	%		(73)	%

2015 compared to 2014:

Non-operating expense, net, increased $29 million primarily due to a $32 million realized gain from sale of short-term investments during fiscal 2014 that did not recur in fiscal 2015.

2014 compared to 2013:

Non-operating expense, net, decreased $73 million primarily due to a $32 million realized gain from sale of short-term investments during fiscal 2014, coupled with a decrease in interest expense of $55 million as we experienced lower amortization of debt issuance costs and discounts following the maturity of our $1.0 billion 1.00% notes in June 2013.

Provision for income taxes

													Change in %
2015				2014				2013				2015 v 2014			2014 v 2013
	(Dollars in millions)
Provision for income taxes	$	215			$	258			$	251			(17)	%		3	%
Effective tax rate on earnings	20		%		22		%		25		%		(2)	%		(3)	%

Our effective tax rate was approximately 20%, 22%, and 25% in fiscal 2015, 2014, and 2013, respectively.

The tax expense in fiscal 2015 was reduced by the following benefits: (1) $59 million for tax benefits related to the settlement of the Symantec 2009 through 2013 Internal Revenue Service (“IRS”) audit, (2) $21 million in tax benefits resulting from tax settlements and lapses of statutes of limitations, (3) $14 million in tax benefits related to certain foreign operations, and (4) $14 million in tax benefits resulting from deductible separation costs.

The tax expense in fiscal 2014 was reduced by the following benefits: (1) $33 million for the resolution of a tax matter related to the sale of our 49% ownership interest in the joint venture with Huawei during the fourth quarter of fiscal 2012, (2) $24 million for tax benefits related to the settlement of the Symantec 2005 through 2008 IRS audit, (3) $15 million tax benefit related to certain foreign operations, and (4) $13 million from lapses of statutes of limitation. These tax benefits were partially offset by $12 million in tax expense, resulting from the sale of short-term investments.

The tax expense in fiscal 2013 was reduced by the following benefits: (1) $17 million tax benefits arising from the Veritas 2002 through 2005 IRS Appeals matters, including adjustments to state liabilities and a reduction of interest accrued, (2) $13 million in tax benefits resulting from tax settlements and adjustments to prior year items, (3) $10 million from lapses of statutes of limitation, and (4) $2 million for the benefit of the research credit for the fourth quarter of fiscal 2012 resulting from the extension of the federal research credit as part of the 2012 Taxpayer Relief Act. These tax benefits were offset by a $9 million tax expense from an increase in valuation allowance on state research tax credits.

The effective tax rates for all periods presented otherwise reflect the benefits of lower-taxed international earnings, domestic manufacturing incentives, and research and development credits (of which the U.S. federal research and development credit expired on December 31, 2014), partially offset by state income taxes.

We are a U.S.-based multinational company subject to tax in multiple U.S. and international tax jurisdictions. A substantial portion of our international earnings were generated from subsidiaries organized in Ireland and Singapore. 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. Any change in our mix of earnings is dependent upon many factors and is therefore difficult to predict.

For further information on the impact of foreign earnings on our effective tax rate, see Note 11 of the Notes to Consolidated Financial Statements in this annual report.

See Critical Accounting Policies and Estimates above for additional information about our provision for income taxes.

In assessing the ability to realize our deferred tax assets, we considered whether it is more likely than not that some portion or all the deferred tax assets will not be realized. We considered the following: we have historical cumulative book income, as measured by the current and prior two years; we have strong, consistent taxpaying history; we have substantial U.S. federal income tax carryback potential; and we have substantial amounts of scheduled future reversals of taxable temporary differences from our deferred tax liabilities. Levels of future taxable income are subject to the various risks and uncertainties discussed in Part I, Item 1A, Risk Factors, set forth in this annual report. We have concluded that this positive evidence outweighs the negative evidence and, thus, that the deferred tax assets as of April 3, 2015 of $350 million, which are net of a valuation allowance of $60 million, are realizable on a “more likely than not” basis.

In fiscal 2013, we resolved an IRS audit for the Veritas 2002 through 2005 tax years and executed the final closing agreement. Accordingly, we recorded a further tax benefit of $3 million in fiscal 2013 based on the closing agreement. We also amended our state tax returns for the Veritas 2002 through 2005 tax years in fiscal 2013 to reflect the adjustments in the closing agreement and remeasured our state liability resulting in a benefit of $7 million.

On September 3, 2013, we settled and effectively settled matters with the IRS for the Symantec 2005 through 2008 fiscal years. The result of the settlements, effective settlements, and re-measurements resulted in a reduction in the balance of our gross unrecognized tax benefits in fiscal year 2014 of $122 million.

On March 18, 2015, we settled and effectively settled matters with the IRS for the Symantec 2009 through 2013 fiscal years. The settlement and effective settlement resulted in a benefit to tax expense in fiscal year 2015 of $59 million. Additionally, the Company settled transfer price related matters of $158 million, a portion of which was accounted for against deferred tax liabilities on unremitted foreign earnings. The Company has paid in $155 million to cover the final tax and interest liability on the settlement.

The timing of the resolution of income tax examinations is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year. Although potential resolution of uncertain tax positions involve 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 by $44 million.

We continue to monitor the progress of ongoing income tax controversies and the impact, if any, of the expected tolling of the statute of limitations in various taxing jurisdictions.

LIQUIDITY AND CAPITAL RESOURCES

Sources of Cash

We have historically relied on cash flow from operations, borrowings under a credit facility, and issuances of debt and equity securities for our liquidity needs. As of April 3, 2015, we had cash, cash equivalents and short-term investments of $3.9 billion and an unused credit facility of $1.0 billion resulting in a liquidity position of approximately $4.9 billion. As of April 3, 2015, $2.2 billion in cash, cash equivalents, and short-term investments were held by our foreign subsidiaries. We have provided U.S. deferred taxes on a portion of our undistributed foreign earnings sufficient to address the incremental U.S. tax that would be due if we needed such portion of these funds to support our operations in the U.S.

Senior Notes. In fiscal 2013, we issued $1.0 billion of Senior Notes consisting of the 3.95% Senior Notes due in 2022 and the 2.75% Senior Notes due in 2017. We received proceeds of $996 million, net of an issuance discount. In fiscal 2011, we issued $1.1 billion of Senior Notes consisting of the 4.20% Senior Notes due in 2020 and 2.75% Senior Notes due in 2015.

Revolving Credit Facility. In fiscal 2011, we entered into a $1.0 billion senior unsecured revolving credit facility (“credit facility”), which was amended in fiscal 2013. The amendment extended the term of the credit facility to June 7, 2017. Under the terms of this credit facility, we must comply with certain financial and non-financial covenants, including a covenant to maintain a specified ratio of debt to EBITDA (earnings before interest, taxes, depreciation and amortization). As of April 3, 2015, we were in compliance with the required covenants, and no amounts were outstanding.

We believe that our existing cash and investment balances, our available revolving credit facility, our ability to issue new debt instruments, and cash generated from operations will be sufficient to meet our working capital and capital expenditure requirements, as well as to fund any cash dividends, principal and interest payments on debt, and repurchases of our stock, for at least the next 12 months and foreseeable future. Since the beginning of fiscal 2014, we have implemented a capital allocation strategy pursuant to which we expect to return over time approximately 50% of free cash flow to stockholders through a combination of dividends and share repurchases, while still enabling our company to invest in its future. Our strategy emphasizes organic growth through internal innovation and will be complemented by acquisitions that fit strategically and meet specific internal profitability hurdles.

Uses of Cash

Our principal cash requirements include working capital, capital expenditures, payments of principal and interest on debt, and payments of taxes. Also, we may, from time to time, engage in the open market purchase of our notes prior to their maturity. Furthermore, our capital allocation strategy contemplates a quarterly cash dividend. In addition, we regularly evaluate our ability to repurchase stock, pay debts, and acquire other businesses.

Stock Repurchases. Our Board of Directors authorized a new $1.0 billion stock repurchase program during the fourth quarter of fiscal 2015. In fiscal 2015, we repurchased 21 million shares, or $500 million of our common stock. In fiscal 2014, we repurchased 21 million shares, or $500 million, of our common stock. In fiscal 2013, we repurchased 49 million shares, or $826 million, of our common stock. Our active stock repurchase programs have $1.2 billion remaining authorized for future repurchase as of April 3, 2015, with no expiration date.

Dividend Program. During fiscal 2015, we declared and paid aggregate cash dividends of $413 million or $0.60 per common share. During fiscal 2014, we declared and paid cash dividends of $418 million or $0.60 per common share. Our restricted stock and performance-based stock units have dividend equivalent rights entitling holders to dividend equivalents to be paid in the form of cash upon vesting, for each share of the underlying units. No dividends or dividend equivalents were paid in any periods prior to fiscal 2014.

On May 14, 2015, we declared a cash dividend of $0.15 per share of common stock to be paid on June 24, 2015 to all stockholders of record as of the close of business on June 10, 2015. All shares of common stock issued and outstanding, and unvested restricted stock and performance-based stock, as of the record date will be entitled to the dividend and dividend equivalents, respectively. Any future dividends and dividend equivalents will be subject to the approval of our Board of Directors.

Restructuring Plans. In fiscal 2015, we announced plans to separate our business into two independent publicly-traded companies: one focused on security and one focused on information management. We expect to complete the legal separation on January 2, 2016, subject to market, regulatory and certain other conditions. In order to separate the business, we initiated a restructuring plan to properly align personnel and expect to incur associated severance and facilities costs. We also expect to incur separation costs in the form of advisory, consulting and disentanglement expenses. These actions are expected to be completed in fiscal 2016. We expect to incur total severance and facilities costs between $165 million and $195 million. We expect to incur separation costs between $170 million and $190 million, excluding any potential tax implications outside the U.S. and potential advisor fees payable upon separation. Total restructuring and separation costs are expected to be between $335 million and $385 million. As of April 3, 2015, liabilities for excess facility obligations at several locations around the world are expected to be paid throughout the respective lease terms as we continue to occupy these facilities, the longest of which extends through fiscal 2019.

In fiscal 2013, we initiated a restructuring plan to reduce management and redundant personnel resulting in headcount reductions across the Company. As of April 3, 2015, the related costs for severance and benefits are substantially complete; however, we expect to incur immaterial adjustments to existing reserves in subsequent periods.

Note Repayments. In fiscal 2014, the principal balance of our 1.00% Convertible Senior Notes issued in fiscal 2007 matured and was settled by a cash payment of $1.0 billion, along with the $5 million semiannual interest payment. In addition, we elected to pay the conversion value above par value in cash in the amount of $189 million. Concurrently with the payment of the conversion value, we received $189 million from the note hedge we entered into at the time of issuance of the 1.00% notes. In fiscal 2016, $350 million of principal amount of 2.75% Senior Notes due September 2015 will mature and become due and payable.

Cash Flows

The following table summarizes, for the fiscal periods indicated, selected items in our Consolidated Statements of Cash Flows:

	2015				2014				2013
	(Dollars in millions)
Net cash provided by (used in):
Operating activities	$	1,312			$	1,281			$	1,593
Investing activities	(1,154		)		(583		)		(319		)
Financing activities	(811		)		(1,712		)		308

Operating activities

We expect cash from our operating activities to fluctuate in future periods as a result of a number of factors, including the timing of our billings and collections, our operating results, the timing and amount of tax and other liability payments.

Net cash provided by operating activities was $1.3 billion for fiscal 2015, which resulted from net income of $878 million adjusted for non-cash items, including depreciation and amortization charges of $443 million and stock-based compensation expense of $195 million. These amounts were partially offset by decreases in income taxes payable of $191 million and accounts payable of $65 million.

Net cash provided by operating activities was $1.3 billion for fiscal 2014, which resulted from net income of $898 million adjusted for non-cash items, including depreciation and amortization charges of $498 million and stock-based compensation expense of $156 million. These amounts were partially offset by decreases in deferred revenue of $223 million.

Net cash provided by operating activities was $1.6 billion for fiscal 2013, which resulted from net income of $755 million adjusted for non-cash items, including depreciation and amortization charges of $698 million and stock-based compensation expense of $164 million, and an increase in deferred revenue of $119 million. These amounts were partially offset by an increase in trade accounts receivable, net of $107 million.

Investing activities

Net cash used in investing activities was $1.2 billion for fiscal 2015 and was primarily due to the purchase of $1.8 billion of short-term investments and payments of $381 million for capital expenditures, partially offset by proceeds of $681 million from maturities of short-term investments and $343 million from sales of our short-term investments.

Net cash used in investing activities was $583 million for fiscal 2014 and was primarily due to payments of $260 million for capital expenditures, and $492 million in purchases of short-term investments, partially offset by $186 million in proceeds from the sales and maturities of our short-term investments.

Net cash used in investing activities was $319 million for fiscal 2013 and was primarily due to payments of $336 million for capital expenditures, partially offset by $46 million in proceeds from the sales and maturities of our short-term investments.

Financing activities

Net cash used in financing activities was $811 million for fiscal 2015, which was primarily due to repurchases of our common stock of $500 million and cash dividend payments of $413 million, partially offset by proceeds from sales of common stock under employee stock benefit plans of $116 million.

Net cash used in financing activities was $1.7 billion for fiscal 2014, which was primarily due to the repayment of our convertible senior notes of $1.0 billion, repurchases of our common stock of $500 million and cash dividends paid of $418 million, partially offset by net proceeds from sales of common stock through employee stock benefit plans of $234 million.

Net cash provided by financing activities of $308 million for fiscal 2013 was primarily due to the $996 million net proceeds generated from our issuance of $600 million in principal amount of 2.75% interest-bearing senior notes due June 15, 2017 and $400 million in principal amount of 3.95% interest-bearing senior notes due June 15, 2022, and net proceeds from sales of common stock through employee stock benefit plans of $281 million, partially offset by repurchases of our common stock of $826 million and the purchase of additional equity interest in subsidiary of $111 million.

Contractual obligations

The following is a schedule by years of our significant contractual obligations as of April 3, 2015:

	Payments Due by Fiscal Period
	Total				2016				2017 - 2018				2019 - 2020				Thereafter
	(Dollars in millions)
Senior Notes (1)	$	2,100			$	350			$	600			$	—			$	1,150
Interest payments on Senior Notes (1)	327				68				115				95				49
Purchase obligations (2)	542				539				3				—				—
Operating leases (3)	442				103				150				104				85
Uncertain tax positions(4)	29				29				—				—				—
Total	$	3,440			$	1,089			$	868			$	199			$	1,284

(1)

In fiscal 2011, we issued $350 million in principal amount of 2.75% senior notes due September 2015 and $750 million in principal amount of 4.20% senior notes due September 2020. In fiscal 2013, we issued $600 million in principal amount of 2.75% senior notes due June 2017 and $400 million in principal amount of 3.95% senior notes due June 2022. Interest payments were calculated based on terms of the related senior notes. For further information on the senior notes, see Note 5 of the Notes to Consolidated Financial Statements in this annual report.

(2)

These amounts are associated with agreements for purchases of goods or services generally including agreements that are enforceable and legally binding and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction. The table above also includes agreements to purchase goods or services that have cancellation provisions requiring little or no payment. The amounts under such contracts are included in the table above because management believes that cancellation of these contracts is unlikely and we expect to make future cash payments according to the contract terms or in similar amounts for similar materials.

(3)	We have entered into various noncancelable operating lease agreements that expire on various dates through fiscal 2029. The amounts in the table above exclude expected sublease income and include $6 million in exited or excess facility costs related to restructuring activities.

(4)

Due to the uncertainty with respect to the timing of future cash flows associated with our unrecognized tax benefits as of April 3, 2015 we are unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities. Therefore, $134 million in long-term income taxes payable has been excluded from the contractual obligations table. For further information, see Note 11 of the Notes to Consolidated Financial Statements in this annual report.

Indemnifications

In the ordinary course of business, we may provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners, subsidiaries and other parties with respect to certain matters, including, but not limited to, losses arising out of our breach of agreements or representations and warranties made by us. In addition, our bylaws contain indemnification obligations to our directors, officers, employees and agents, and we have entered into indemnification agreements with our directors and certain of our officers to give such directors and officers additional contractual assurances regarding the scope of the indemnification set forth in our bylaws and to provide additional procedural protections. We maintain director and officer insurance, which may cover certain liabilities arising from our obligation to indemnify our directors and officers. It is not possible to determine the aggregate maximum potential loss under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Such indemnification agreements might not be subject to maximum loss clauses. Historically, we have not incurred material costs as a result of obligations under these agreements and we have not accrued any liabilities related to such indemnification obligations in our Consolidated Financial Statements.

We provide limited product warranties and the majority of our software license agreements contain provisions that indemnify licensees of our software from damages and costs resulting from claims alleging that our software infringes on the intellectual property rights of a third party. Historically, payments made under these provisions have been immaterial. We monitor the conditions that are subject to indemnification to identify if a loss has occurred.