Gen Digital (GEN) 10-K risk factor changes: FY2018 vs FY2017

[removed: We are also focused on addressing] [added: Additionally, we must continually address the challenges of] dynamic and accelerating market [removed: trends,] [added: trends and competitive developments,] such as the [added: emergence of advanced persistent threats in the security space, the] continued decline in the PC [removed: market,] [added: market and] the market [removed: shifts] [added: shift] towards [removed: mobility,] [added: mobility and] the [removed: continued] [added: increasing] transition towards cloud-based [removed: solutions and architectural shifts in the provision of security,] [added: solutions,] all of which [removed: has made] [added: continue to make] it more difficult for us to compete [removed: effectively and requires us to improve our product and service offerings.][added: effectively.]

[removed: Fluctuations in demand for our products and services are driven by many factors, and a] [added: _A] decrease in demand for our [removed: products] [added: solutions] could adversely affect our financial [removed: results.][added: results._]

We are subject to fluctuations in demand for our [removed: products and services] [added: solutions] due to a variety of factors, including market transitions, general economic conditions, competition, product obsolescence, technological change, shifts in buying patterns, [added: the timing and duration of hardware refresh cycles,] financial difficulties and budget constraints of our current and potential customers, [added: public] awareness of security threats to IT systems and other factors.

While such factors may, in some periods, increase product sales, fluctuations in demand can also negatively impact our [removed: product] sales.

If demand for our [removed: products and] solutions declines, whether due to general economic [removed: conditions or] [added: conditions,] a shift in buying [removed: patterns,] [added: patterns or otherwise,] our revenues and margins would likely be adversely affected.

[removed: Our] [added: _Our] business depends on customers renewing their arrangements for maintenance, subscriptions, managed security services and [removed: SaaS offerings.][added: cloud-based (“cloud”) offerings._]

A large portion of our revenue is derived from arrangements for maintenance, subscriptions, managed security services and [removed: SaaS] [added: cloud] offerings, yet [removed: existing] customers have no contractual obligation to purchase additional solutions after the initial subscription or contract period.

Our customers’ renewal [removed: rates] [added: rates, and our customer retention,] may decline or fluctuate as a result of a number of factors, including their level of satisfaction with our solutions or our customer support, customer budgets and the pricing of our solutions compared with the solutions offered by our competitors, any of which may cause our revenue to grow more slowly than expected, [removed: if at all.][added: or to decline.]

[removed: If] [added: _If] we are unable to develop new and enhanced [removed: products and services] [added: solutions] that achieve widespread market acceptance, or if we are unable to continually improve the performance, features, and reliability of our existing [removed: products and services] [added: solutions] or adapt our business model to keep pace with industry trends, our [added: competitive position may weaken and our] business and operating results could be adversely [removed: affected.][added: affected._]

Our future success depends on our ability to [added: effectively] respond to the rapidly changing needs of our [removed: customers] [added: customers, as well as competitive technological developments and industry changes] by developing or introducing new [removed: products, product upgrades] and [removed: services] [added: enhanced solutions] on a timely basis.

For example, [added: although] we have been [removed: increasingly] investing [added: heavily] in solutions that address the cloud security market, [removed: particularly our acquisition of Blue Coat, but] we cannot be certain that [removed: the cloud security market] [added: it] will develop at a rate or in the manner we expect or that we will be able to compete successfully with [added: new entrants or] more established [removed: competitors in the cloud security market.][added: competitors.]

Our failure to develop [added: new] solutions [added: and improve our existing solutions] that satisfy customer preferences [added: and effectively compete with other market offerings] in a timely and cost-effective manner may harm our ability to renew our subscriptions with existing customers and to create or increase demand for our [removed: solutions and] [added: solutions, which] may adversely impact our operating results.

[removed: New product] [added: The] development and introduction [added: of new solutions] involves a significant commitment of time and resources and [removed: is] [added: are] subject to a number of risks and challenges including:

| [added: |] • | [removed: Adapting to emerging and evolving] [added: | Evolving] industry standards and [removed: to] technological developments by our competitors and customers; |

| [added: |] • | [removed: Extending the operation of our products and services to new and evolving] [added: | Evolving] platforms, operating systems and hardware products, such as mobile [removed: devices;] [added: devices, and related product and service interoperability challenges;] |

| [added: |] • | [added: |] Entering into new or unproven [removed: markets with which we have limited experience;] [added: markets;] |

| [added: |] • | [removed: Managing] [added: | Executing] new product and service [removed: strategies for the markets in which we operate;] [added: strategies;] |

| [added: |] • | [added: |] Developing or expanding efficient sales channels; and |

If we are not successful in managing these risks and challenges, or if our new [removed: products, product upgrades and services] [added: or improved solutions] are not technologically competitive or do not achieve market acceptance, our business and operating results could be adversely affected.

[removed: We] [added: _We] operate in a highly competitive environment, and our competitors may gain market share in the markets for our [removed: products] [added: solutions] that could adversely affect our business and cause our revenues to [removed: decline.][added: decline._]

We operate in intensely competitive markets that experience rapid technological developments, changes in industry [added: standards, changes in customer requirements and frequent new product introductions and improvements.]

If we are unable to anticipate or react to [removed: these] competitive challenges or if existing or new competitors gain market share in any of our markets, our competitive position could [removed: weaken] [added: weaken,] and we could experience a decline in our sales that could adversely affect our business and operating results.

To compete successfully, we must maintain an innovative research and development effort to develop new [removed: products and services] [added: solutions] and enhance [added: our] existing [removed: products and services,] [added: solutions,] effectively adapt to changes in the technology or product rights held by our competitors, appropriately respond to competitive strategies and effectively adapt to technological changes and changes in the ways that our information is accessed, used and stored within our enterprise and consumer markets.

Our competitors include software [added: and cloud-based] vendors that offer [removed: software products] [added: solutions] that directly compete with our [removed: product] offerings.

In addition to competing with these vendors directly for sales to end-users of our [removed: products,] [added: solutions,] we compete with them for the opportunity to have our [removed: products] [added: solutions] bundled with the [removed: product] offerings of our strategic partners such as computer hardware OEMs and ISPs.

Our competitors could gain market share from us if any of these strategic partners replace our [removed: products] [added: solutions] with [removed: the products] [added: those] of our competitors or if these partners more actively promote our competitors’ [removed: products] [added: solutions] than our [removed: products.][added: own.]

In addition, software [added: and cloud-based] vendors who have bundled our [removed: products] [added: solutions] with theirs may choose to bundle their [removed: software] [added: solutions] with their own or other vendors’ [removed: software] [added: solutions] or may limit our access to standard [removed: product] interfaces and inhibit our ability to develop [removed: products] [added: solutions] for their platform.

In the future, further product development by these vendors could cause our [removed: software applications and services] [added: solutions] to become redundant, which could significantly impact our sales and financial results.

Many of these competitors are increasingly developing and incorporating into their products data protection software that competes at some levels with our [removed: product] offerings.

Our competitive position could be adversely affected to the extent that our customers perceive the functionality incorporated into these products as replacing the need for our [removed: products.][added: solutions.]

Some companies offer [removed: the] lower-priced or free security products within their computer hardware or software [removed: products that we believe are inferior to our products and SaaS offerings.][added: products.]

Our competitive position could be adversely affected to the extent that our customers perceive these [added: lower cost or free] security products as replacing the need for more effective, full featured [removed: products and services,] [added: solutions,] such as those that we provide.

The expansion of these competitive trends could have a significant negative impact on our sales and [removed: financial] [added: operating] results by causing, among other things, price reductions of our [removed: products,] [added: solutions,] reduced profitability and loss of market share.

[removed: Fluctuations] [added: _Fluctuations] in our quarterly financial results have affected the trading price of our outstanding securities in the past and could affect the trading price of outstanding securities in the [removed: future.][added: future._]

Our quarterly financial results have fluctuated in the past and are likely to vary [removed: significantly] in the future due to a number of factors, many of which are outside of our control.

[removed: Any volatility] [added: Volatility] in our quarterly financial results may make it more difficult for us to raise capital in the future or pursue [removed: acquisitions that involve issuances of our stock.][added: acquisitions.]

Factors associated with our industry, the operation of our business, and the markets for our [removed: products] [added: solutions] may cause our quarterly financial results to fluctuate, including:

| [added: |] • | [added: |] Fluctuations in demand for [removed: any of] our [removed: products and services;] [added: solutions;] |

| [added: |] • | [added: |] Entry of new competition into our markets; |

| [added: |] • | [added: |] Competitive pricing pressure for one or more of our classes of [removed: products;] [added: our solutions;] |

| | • | | Fluctuations in our revenue due to the transition of our sales contracts to a higher mix of products subject to ratable versus point-in-time revenue recognition; |

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| | • | | The timing of satisfying revenue recognition criteria, particularly with regard to our enterprise sales transactions, as a result of our adoption of new revenue recognition accounting standards under ASC 606 on March 31, 2018; |

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| | • | | The timing and extent of significant restructuring charges; |

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| | • | | The impact of acquisitions and our ability to achieve expected synergies; |

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| | • | | Our ability to achieve targeted operating income and margins; |

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| | • | | Changes in tax laws, rules, and regulations; |

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| | • | | Disruptions in our business operations or target markets caused by, among other things, terrorism or other intentional acts, outbreaks of disease, or earthquakes, floods, or other natural disasters. |

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_Matters relating to or arising from our Audit Committee investigation, including regulatory investigations and proceedings, litigation matters and potential additional expenses, may adversely affect our business and results of operations._

As previously disclosed in our public filings, the Audit Committee of our Board of Directors (the “Audit Committee”) has recently completed an internal investigation (the “Audit Committee Investigation”).

In connection with the Audit Committee Investigation, we voluntarily contacted the SEC in May 2018.

The SEC commenced a formal investigation and we continue to cooperate with that investigation.

##### [Table of Contents](#toc)

Furthermore, if the SEC commences legal action, we could be required to pay significant penalties and become subject to injunctions, a cease and desist order and other equitable remedies.

The completion of the Audit Committee investigation and filing of delinquent periodic reports will not automatically resolve the SEC investigation.

We can provide no assurances as to the outcome of any governmental investigation.

We have incurred, and may continue to incur, significant expenses related to legal, accounting, and other professional services in connection with the internal investigation and related legal matters.

These expenses, the delay in timely filing our periodic reports, and the diversion of the attention of the management team that has occurred, and is expected to continue, has adversely affected, and could continue to adversely affect, our business and financial condition.

If we are unsuccessful at addressing our business challenges, our business and results of operations may be adversely affected and our ability to invest in and grow our business could be limited.

For the last few years, we have experienced a number of transitions as we have attempted to revitalize our business model, improve execution and innovate new products and services.

These transitions have involved changes to management and other key personnel, shifts in our strategic direction and, more recently, changes to our corporate structure as a result of the divestiture of Veritas and the acquisition of Blue Coat.

In particular, in connection with our acquisition of Blue Coat, we experienced changes to our executive team during the second and third quarters of fiscal 2017, appointing three former Blue Coat executive officers to the positions of Chief Executive Officer, President and Chief Operating Officer, and Executive Vice President and Chief Financial Officer.

Transitions of these kind can be disruptive, can result in the loss of institutional focus and employee morale and make the execution of business strategies more difficult.

We may experience delays in the anticipated timing of activities related to our efforts to address these challenges and higher than expected or unanticipated execution costs.

In addition, we are vulnerable to increased risks associated with these efforts and the broad range of geographic regions in which we and our customers and partners operate.

If we do not succeed in these efforts, or if these efforts are more costly or time-consuming than expected, our business and results of operations may be adversely affected, which could limit our ability to invest in and grow our business.

Additionally, since Blue Coat’s business historically experienced a major product refresh cycle approximately once every five

years, as hardware appliances reach the end of their useful life, we anticipate that we will experience fluctuations in demand as we enter and exit cycles in which many of our customers refresh their install base of hardware appliance products with our latest equipment, replacing older versions of the hardware that have reached the end of their useful life and are no longer supported under maintenance contracts.

Our appliances generally have a five year end-of-life date from the date of purchase, which we expect will extend refresh cycles for our hardware appliances over a multi-year period and reduce the impact of a product refresh cycle in any one period.

However, we cannot assure you that we will not experience uneven demand for these products in any one period, causing our business and results of operations to be adversely affected.

A refresh cycle also creates an opportunity for our competitors to try to displace our existing product deployments for our customers, who may be more inclined to consider other product solutions at a time when they otherwise need to replace our existing products that have reached the end of their useful life.

The extent to which customers decide to refresh by purchasing products from our current or future competitors as opposed to purchasing our new products may significantly impact our current period product revenues as well as future service revenue.

Additionally, we must continually address the challenges of dynamic and accelerating market trends, such as the emergence of advanced persistent threats in the security space, the continued decline in the PC market and the market shift towards mobility and the increasing transition towards cloud-based solutions, all of which have made it more difficult for us to compete effectively.

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| • | Managing the length of the development cycle for new products and product enhancements, which has frequently been longer than we originally expected; |

| • | Addressing trade compliance issues affecting our ability to ship our products; |

| • | Obtaining sufficient licenses to technology and technical access from operating system software vendors on reasonable terms to enable the development and deployment of interoperable products, including source code licenses for certain products with deep technical integration into operating systems. |

standards, changes in customer requirements and frequent new product introductions and improvements.

Reduced trust in our SSL/TLS certificates could adversely affect our website security business.

Our website security business depends on the widespread acceptance of the digital certificates we provide to enable communications security infrastructure.

We have in the past issued, and may in the future issue, SSL/TLS certificates out of compliance with the requirements of the Certificate Authority and Browser Forum Baseline Requirements.

Failures of this kind could cause popular browsers to reduce or eliminate trust in our SSL/TSL certificates or the related roots or otherwise disrupt our position as a leading certificate authority.

For example, Google recently issued a proposal to reduce trust in our SSL/TSL certificates based on our past issuance of non-compliant certificates.

If any popular browser reduced trust in our SSL/TSL certificates or roots, it would damage our brand and cause our SSL/TSL certificates to fail to interoperate, resulting in customer attrition for our website security business, which could adversely affect our results of operations and our stock price.

| • | How well we execute our strategy and operating plans and the impact of changes in our business operations or business model that could result in significant restructuring charges; |

| • | The impact of future acquisitions; |

| • | Our sales cycle, which may lengthen as the complexity of products and competition in our markets increases; |

| • | Changes in accounting rules; |

| • | Budgetary constraints of customers, which are influenced by corporate earnings and government budget cycles and spending objectives; |

| • | Disruptions in our business operations or target markets caused by, among other things, earthquakes, floods, or other natural disasters affecting our headquarters located in Silicon Valley, California, an area known for seismic activity, or our other locations worldwide; |

| • | Acts of war or terrorism; |

| • | Intentional disruptions by third parties; and |

| • | Health or similar issues, such as a pandemic. |

In recent years, our SaaS offerings have become increasingly critical in our business.

Additionally, the increasing prevalence of cloud and SaaS delivery models offered by us and our competitors may unfavorably impact pricing in both our on-premise enterprise software business and our cloud business, as well as overall demand for our on-premise software product and service offerings, which could reduce our revenues and profitability.

Our competitors may offer lower pricing on their support offerings, which could put pressure on us to further discount our product or support pricing.

If we do not adapt our pricing models to reflect changes in customer use of our products or changes in customer

[removed: OVERVIEW][added: OVERVIEW]

[removed: Fiscal] [added: Fiscal] calendar and basis of [removed: presentation][added: presentation]

Unless otherwise stated, references to years in this report relate to fiscal year [removed: and periods] ended March [added: 30, 2018, March] 31, [removed: 2017, April 1, 2016] [added: 2017] and April [removed: 3, 2015.][added: 1, 2016, each of which was a 52-week year.]

[removed: | • |] See Note [removed: 6 of] [added: 7 to] the Consolidated Financial Statements for [removed: additional] [added: further] information [removed: about] [added: on] our [removed: acquisitions. |][added: debt.]

[removed: Here are] [added: The following table provides] our key financial [removed: results] [added: metrics] for continuing operations [removed: in] [added: for] fiscal [removed: 2017 as] [added: 2018] compared [removed: to] [added: with] fiscal [removed: 2016:][added: 2017:]

[removed: | • | Consolidated revenue] [added: Net revenues] increased [removed: by 12%,] [added: $419 million,] primarily [removed: driven by a 22%] [added: due to an] increase [added: of $425 million] in revenue from our Enterprise Security segment [removed: due to] [added: as a result of] the acquisition of Blue [removed: Coat. |][added: Coat during the second quarter of fiscal 2017.]

| [added: |] • | [added: |] Cash [removed: paid for income taxes] [added: flow from continuing operating activities] increased [removed: $779 million,] primarily due to [removed: the] [added: a] one-time [added: tax] payment [added: of $887 million] related to the gain on sale from the divestiture of [removed: Veritas during] [added: our information management business (“Veritas”) in] fiscal [removed: 2016.] [added: 2017 and an increase in deferred revenue.] |

[removed: RESULTS] [added: RESULTS] OF [removed: OPERATIONS][added: OPERATIONS]

[removed: Segment] [added: Segment] operating [removed: results][added: results]

[removed: Enterprise] [added: _Enterprise] Security [removed: Segment by fiscal year][added: Segment_]

[added: _Fiscal] 2017 compared to [removed: 2016][added: fiscal 2016_]

Revenue increased $425 million, [removed: or 22%,] primarily due to [removed: $427] [added: a $422] million [removed: in revenue] [added: increase] from sales of [removed: Blue Coat] [added: our] network [removed: protection products.][added: and web security solutions, primarily as a result of our acquisition of Blue Coat.]

Operating income increased $85 million, [removed: or 83%,] primarily due to [removed: increased revenue,] [added: higher revenue and] a reduction of expenses from [removed: new and ongoing] cost savings [removed: initiatives, and favorable currency fluctuations of $16 million, and a decrease in unallocated corporate charges of $22 million.][added: initiatives.]

These increases were partially offset by [removed: increased] expenses associated with the Blue Coat acquisition in the post-acquisition period, and [added: the cost of revenues from] acquired inventory [removed: write-up] [added: write-ups] related to the Blue Coat acquisition of $24 million.

[removed: 2016] [added: _Fiscal 2017] compared to [removed: 2015][added: fiscal 2016_]

[removed: Consumer] [added: _Consumer] Digital Safety [removed: Segment by fiscal year][added: Segment_]

Revenue decreased $6 million [removed: primarily] due to a decline in revenue from sales of [removed: Norton-branded] [added: consumer security] products of [removed: $73] [added: $83] million as the revenue generated from customer additions was not sufficient to replace revenue lost through customer attrition.

[removed: The] [added: This] decline was [removed: largely] [added: mostly] offset by a [removed: $67] [added: $77] million increase in revenue due to [added: sales of our identity and information protection products acquired in] the acquisition of LifeLock.

Operating income decreased $85 million, [removed: or 9%,] primarily due to the [removed: Norton] [added: consumer security] revenue decline coupled with [added: increased operating expenses as] a [removed: loss from LifeLock’s operations.][added: result of the LifeLock acquisition.]

[removed: Net] [added: Net] revenues by geographical [removed: region by fiscal year][added: region]

[removed: Revenue] [added: Percentage of revenue] by [removed: country] [added: geographic region] as presented below is based on the billing location of the customer.

Note: [added: The] Americas include U.S., Canada and Latin America; EMEA includes Europe, Middle East and Africa; APJ includes Asia Pacific and Japan.

[added: |] Cost of revenues [removed: by fiscal year][added: | | | 21 | | | | 21 | | | | 17 | |]

Our cost of revenues increased $238 million primarily due to $122 million of increased amortization [removed: related to the] [added: of] acquired [removed: Blue Coat and LifeLock] intangible assets and [added: increased] other costs related to sales of [removed: the acquired Blue Coat] [added: our network] and [removed: LifeLock] [added: web security solutions and consumer identity and information protection] products [added: that were acquired in fiscal 2017,] including an acquired product inventory fair value write-up of $24 million.

These increases in cost of revenues were partially offset by [removed: a decrease in unallocated corporate charges] [added: decreased costs related to Veritas] of $22 million.

[added: |] Operating [removed: expenses by fiscal year][added: expenses: | | | | | | | | | | | | |]

Sales and marketing expense increased $167 million primarily as a result of [removed: the] [added: our fiscal 2017] acquisitions [removed: of Blue Coat] and [removed: LifeLock, increased stock-based compensation expense] [added: included increases] of $54 million [removed: and increased integration] [added: in stock-based compensation] expense [removed: of $24 million.][added: and]

These increases were partially offset by a reduction of expenses from new and ongoing cost savings initiatives and decreased [removed: unallocated corporate charges] [added: costs related to Veritas] of $88 million.

Research and development expense increased $75 million primarily as a result of the acquisition of Blue Coat and [added: included] an increase of $54 million [removed: of] [added: in] stock-based compensation expense.

These increases were [removed: partially] [added: partly] offset by a reduction of expenses from new and ongoing cost savings initiatives and decreased [removed: unallocated corporate charges] [added: costs related to Veritas] of [removed: $44] [added: $32] million.

General and administrative expense increased $269 million primarily as a result of the acquisition of Blue Coat and [added: included] an increase of $160 million [removed: of] [added: in] stock-based compensation expense.

In addition, we incurred [removed: increased] [added: higher] acquisition-related and integration expenses of $79 million.

[removed: These increases were partly] [added: This increase was partially] offset by a reduction of expenses from new and ongoing cost savings initiatives and decreased [removed: unallocated corporate charges] [added: costs related to Veritas] of [removed: $32] [added: $44] million.

Our stock-based compensation in operating expenses increased $268 million [added: to $419 million in fiscal 2018 from $151 million in fiscal 2017,] primarily due to the equity awards [removed: assumed] [added: granted] in [added: connection with] the Blue Coat and LifeLock acquisitions, and the expected level of achievement for [removed: performance-based restricted stock units][added: PRUs granted in fiscal 2017.]

Amortization of intangible assets increased $90 million primarily due to the [removed: intangible assets of] $2.9 billion [added: of intangible assets] acquired in the Blue Coat and LifeLock acquisitions.

[added: |] Restructuring, [removed: separation, transition,] [added: transition] and other [added: costs | | | 8 | | | | 7 | | | | 4 | |]

These actions are expected to be completed in fiscal [removed: 2018.][added: 2019.]

[added: | (1) |] See Note [removed: 4] [added: 7] to the Consolidated Financial Statements for further information on our [removed: restructuring, separation, transition, and other related costs.][added: debt. |]

[removed: Non-operating expense, net by fiscal year][added: Non-operating income (expense), net]

Non-operating expense, net, [removed: increased $97 million to $162 million from $65 million as of March 31, 2017 and April 1, 2016, respectively,] [added: increased,] primarily [removed: driven by] [added: due to] an increase [removed: in interest expense] of $133 [removed: million,] [added: million in interest expense,] mainly related to our increased borrowings in fiscal 2017.

Key financial metrics

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| (In millions, except for percentages and per share amounts) | | Fiscal 2018 | | | | Fiscal 2017 | | |

| Net revenues | | $ | 4,834 | | | $ | 4,019 | |

| Operating income (loss) | | $ | 49 | | | $ | (100 | ) |

| Income (loss) from continuing operations | | $ | 1,127 | | | $ | (236 | ) |

| Income (loss) per share from continuing operations — diluted | | $ | 1.69 | | | $ | (0.38 | ) |

| Cash, cash equivalent and short-term investments | | $ | 2,162 | | | $ | 4,256 | |

| Net cash provided by (used in) continuing operating activities | | $ | 957 | | | $ | (145 | ) |

| Deferred revenue | | $ | 3,103 | | | $ | 2,787 | |

| | • | | Net revenues grew 20% in fiscal 2018 compared to fiscal 2017 primarily as a result of the inclusion of revenue from our consumer identity and information protection products acquired at the end of fiscal 2017 for a full year and increased revenues from sales of our enterprise network and web security solutions which included products acquired in our fiscal 2017 acquisition, partially offset by a decrease in revenue as a result of the divestiture of our WSS and PKI solutions. See Note 14 to the Consolidated Financial Statements for further information on our products and services revenues. |

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| | • | | Operating income increased primarily as a result of increased net revenues and our cost reduction initiatives and integration synergy program we announced in fiscal 2017. This increase was partially offset by increased operating expenses as a result of acquisitions of Blue Coat and LifeLock, including stock-based compensation, amortization of intangible assets, and advertising and promotional expenses. The increase in operating income was also partially offset by increased transition costs primarily due to costs related to our enterprise resource planning and supporting systems and separation costs related to the divestiture of our WSS and PKI solutions. |

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| | • | | Income from continuing operations and diluted income per share from continuing operations increased primarily as a result of the $653 million gain on the divestiture of our WSS and PKI solutions and a net tax benefit of $690 million primarily as a result of the Tax Cuts and Jobs Act (H.R.1) (the “Act”). Partially offsetting the increase in the diluted income per share from continuing operations was a higher diluted share count due to including the dilutive effect of potentially issuable common shares under our equity award programs and convertible debt. Such potentially issuable common shares were excluded from our net loss per share computation in fiscal 2017 as they would have been anti-dilutive. |

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| | • | | Cash, cash equivalents and short-term investments decreased primarily as a result of our $3.2 billion of debt repayments as part of our plan to deleverage our balance sheet and $401 million paid for acquisitions, partially offset by $933 million in net cash proceeds from the divestiture of our WSS and PKI solutions and cash flow from continuing operating activities of $957 million. |

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| | • | | Deferred revenue increased $316 million, primarily due to our shift in sales contracts to a higher mix of solutions subject to ratable versus point in time revenue recognition and longer contract duration in our Enterprise Security segment, which resulted in less in-period revenue recognized, and due to higher billings towards the end of the fiscal year, reflecting seasonal sales cycles in that segment. These factors were partially offset by a decrease of $319 million in deferred revenue as a result of the divestiture of our WSS and PKI solutions. |

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The preparation of our Consolidated Financial Statements and related notes in accordance with generally accepted accounting principles in the U.S. (“GAAP”) 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.

Management believes that the accounting estimates employed and the resulting amounts are reasonable; however, actual results may differ from these estimates.

Making estimates and judgments about future events is inherently unpredictable and is subject to significant uncertainties, some of which are beyond our control.

Should any of these estimates and assumptions change or prove to have been incorrect, it could have a material impact on our results of operations, financial position and cash flows.

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably possible could materially impact the financial statements.

Management believes the following critical accounting policies reflect the significant estimates and assumptions used in the preparation of our Consolidated Financial Statements.

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 and assumptions.

##### [Table of Contents](#toc)

We enter into arrangements that can include various combinations of software and non-software elements.

Where elements are delivered over different periods of time, and when allowed under GAAP, revenue is allocated to the respective elements based on their relative selling prices at the inception of the arrangement, and revenue is recognized as each element is delivered.

We use a hierarchy to determine the fair value to be used for allocating revenue to non-software elements: (i) vendor-specific objective evidence of fair value (“VSOE”), (ii) third-party evidence, and (iii) estimated selling price (“ESP”).

For software elements, we follow the industry-specific software guidance which only allows for the use of VSOE in establishing fair value.

VSOE of each element is based on the price for which the undelivered element is sold separately by us.

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.

Our fiscal 2017 and 2016 were 52-week years whereas our fiscal 2015 was a 53-week year.

The results of Veritas are presented as discontinued operations in our Consolidated Statements of Operations and thus have been excluded from continuing operations and segment results for all reported periods.

Accordingly, the following discussion reflects our current segment reporting structure, which was reduced from three to two segments, and segment results for all reported periods have been adjusted to conform to the current segment structure.

In addition, the following discussion relates to our continuing operations unless stated otherwise.

Financial highlights and business trends

The following charts provide an overview of key financial metrics for each of the last three fiscal years in millions, except for percentage of revenues.

 


In fiscal 2017, we made two key acquisitions to expand our offerings in both our operating segments:

| | |

| --- | --- |

| • | In August 2016, we acquired Blue Coat, a provider of advanced web security solutions for global enterprises and governments. The addition of Blue Coat’s suite of network and cloud security products to our Enterprise Security segment has enhanced our existing portfolio of threat protection and information protection products while positioning us to provide new cybersecurity solutions that address the ever-evolving threat landscape. |

| • | In February 2017, we acquired LifeLock, a provider of proactive identity theft protection services for consumers and consumer risk management services for enterprises. The addition of LifeLock’s identity and fraud protection offerings to our Consumer Digital Safety segment allows us to provide a comprehensive digital safety solution designed to protect information across devices and users in the connected home and family. |

| • | Consumer Digital Safety segment revenue remained relatively flat as the Norton-branded product revenue decline of 4% was largely offset by increased revenue of $67 million due to the acquisition of LifeLock. During fiscal 2017, the Norton-branded product revenue decline improved year-over-year as we benefited from the shift to subscription-based contracts. |

| • | Our gross margin decreased four percentage points primarily due to lower relative gross margins on Blue Coat and LifeLock revenue as a result of the impact of acquisition-related write-downs of pre-acquisition deferred revenues. Additionally, our gross margin was negatively impacted by amortization of $122 million of acquired Blue Coat and LifeLock intangible assets and the write-up of acquired inventory of $24 million related to the Blue Coat acquisition. |

| • | Our operating margin decreased fifteen percentage points primarily due to increased operating expenses as a result of Blue Coat and LifeLock post-acquisition operating expenses including stock-based compensation from assumed equity awards and amortization of acquired intangible assets. We also incurred acquisition-related and integration expenses of $120 million related to the Blue Coat and LifeLock acquisitions. In addition, restructuring, transition, and other related costs increased year-over-year as a result of the implementation of new cost saving initiatives. |

| • | Deferred revenue increased 6% to $2.8 billion from $2.6 billion as of March 31, 2017 and April 1, 2016, respectively, mainly as a result of our Blue Coat and LifeLock acquisitions. The increase was partly offset by the amortization of deferred revenue from Veritas retained contracts. |

We expect our operating margin 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.

Our Enterprise Security segment protects organizations so they can securely conduct business while leveraging new platforms and data.

The following tables are in millions except for percentage of revenues.

 

Due to the fair value adjustment of deferred revenue as a result of the accounting for the Blue Coat acquisition, we excluded revenue of $116 million in the post-acquisition period.

In addition, services revenue increased $16 million while revenue from sales of endpoint management solutions decreased $23 million.

Revenue decreased $139 million, or 7%, primarily due to unfavorable foreign currency fluctuations of $90 million, as well as decrease in sales of endpoint management solutions and our mail cloud security products.

Operating income decreased $191 million, or 65%, primarily due to decreased revenue and increased allocation of stranded costs.

These stranded costs consist of overhead expenses resulting from the sale of Veritas and primarily include information technology infrastructure and services, and real estate costs.

In addition, revenue decreased partially due to the impact of the additional week from the 53-week fiscal 2015 year.

Our Consumer Digital Safety segment focuses making it simple for customers to be productive and protected at home and at work.

 

Due to the fair value adjustment of deferred revenue as a result of the accounting for the LifeLock acquisition, we excluded revenue of $28 million in the post-acquisition period.

While the trend of declining revenues from sales of Norton-branded products continued in fiscal 2017, we began to benefit from the shift to subscription-based contracts, resulting in a lower decline in fiscal 2017 as compared to the prior two fiscal years.

LifeLock’s operating loss was a result of the deferred revenue fair value write-down.

Revenue decreased $217 million, or 11%, primarily due to new Norton customer acquisition not being sufficient to replace Norton customers lost through natural attrition and a reduction in revenue from OEM arrangements.

Unfavorable currency fluctuations of $81 million also contributed to the decline in revenue.

Operating income decreased $58 million, or 6%, primarily due to the decreases in revenue in this segment, which were partially offset by reductions in cost of revenue, sales and marketing and research and development expenses.


| | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Total: | $ | 3,956 | | million | | Total: | $ | 3,600 | | million | | Total: | $ | 4,019 | | million |

Fluctuations in the U.S. dollar compared to foreign currencies favorably impacted our international revenue by approximately $20 million for fiscal 2017 as compared to fiscal 2016.

[removed: Interest] [added: Interest] rate [removed: risk][added: risk]

As of March [removed: 31, 2017,] [added: 30, 2018,] we had [removed: $4.6] [added: $4.0] billion in [added: aggregate] principal amount of fixed-rate Senior Notes and Convertible Senior Notes outstanding, with a carrying amount [removed: of $4.6 billion] and a fair value of [removed: $4.6] [added: $3.9] billion, based on [removed: level] [added: Level] 2 inputs.

[removed: Foreign] [added: Foreign] currency exchange rate [removed: risk][added: risk]

Our entities conduct their businesses in the primary local currency in which they [removed: operate,] [added: operate;] however, they may also conduct business in other currencies.

To the extent our entities hold monetary assets or liabilities, earn revenues or incur costs in currencies other than the entity’s functional currency, they are exposed to foreign exchange gains or losses and impacts to [removed: margins] [added: operating results] as a result.

As part of our foreign currency risk mitigation strategy, we have entered into foreign exchange forward contracts with up to six months in duration to help mitigate foreign exchange [removed: risk, however] [added: risk; however,] we are not able to [removed: mitigate all of] [added: hedge] our foreign [added: currency exposure in a manner that entirely offsets the effects of the changes in foreign] exchange [removed: risk.][added: rates.]

Our short-term investments primarily consist of corporate bonds.

An increase in interest could have an adverse impact on its market value.

As of March 30, 2018, the fair value of our short-term investments was $388 million.

A hypothetical increase in the corporate bonds’ yield curve of 50 basis points would not result in a significant reduction in fair value.

Since these notes bear interest at fixed rates, they do not result in any financial statement risk associated with changes in interest rates.

However, the fair value of these notes fluctuates when interest rates change.

As of March 30, 2018, we also had $1.1 billion outstanding debt with variable interest rates based on the London InterBank Offered Rate (“LIBOR”).

A reasonably possible hypothetical adverse change of 50 basis points in LIBOR would not result in a significant increase in interest expense on an annualized basis.

##### [Table of Contents](#toc)

In addition, we have a $1.0 billion revolving credit facility that if drawn bears interest at a variable rate based on LIBOR and would be subject to the same risks associated with adverse changes in LIBOR.

As of March 30, 2018 and March 31, 2017, we had open foreign currency forward contracts with notional amounts of $848 million and $696 million, respectively.

A hypothetical ten percent depreciation of foreign currency would result in a reduction in fair value of $55 million and $29 million for fiscal 2018 and fiscal 2017, respectively.

This analysis disregards the possibilities that the rates can move in opposite directions and that losses from one geographic area may be offset by gains from another geographic area.

##### [Table of Contents](#toc)

As of April 1, 2016, we had $2.3 billion in principal amount of fixed-rate Senior Notes outstanding, with a carrying amount of $2.2 billion and a fair value of $2.3 billion, based on level 2 inputs.

We have considered the historical volatility of interest rates and determined that it is possible that adverse changes in interest rates related to our fixed and variable rate debt could occur.

A reasonably possible hypothetical adverse change of 50-basis points could result in a $92 million fair value reduction of our fixed-rate borrowings as of March 31, 2017, compared to a $41 million fair value reduction as of April 1, 2016.

A reasonably possible hypothetical adverse change of 50-basis points in the effective interest rate of our $3.7 billion of variable-rate borrowings could result in an incremental $19 million of pre-tax interest expense on an annualized basis.

The estimated impacts of a ten percent appreciation or depreciation of foreign currency are as follows in millions:

| | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | March 31, 2017 | | | | | | | | | | | | April 1, 2016 | | | | | | | | | | |

| | | | | | | Change in Fair Value Due to 10% | | | | | | | | | | | | Change in Fair Value Due to 10% | | | | | | |

| Foreign Exchange Forward Contract | | Notional Amount | | | | Appreciation | | | | Depreciation | | | | Notional Amount | | | | Appreciation | | | | Depreciation | | |

| Purchased | | $ | 492 | | | $ | 49 | | | $ | (49 | ) | | $ | 693 | | | $ | 69 | | | $ | (69 | ) |

| Sold | | (204 | | ) | | (20 | | ) | | 20 | | | | (198 | | ) | | (19 | | ) | | 19 | | |

| Total net outstanding contracts | | $ | 288 | | | $ | 29 | | | $ | (29 | ) | | $ | 495 | | | $ | 50 | | | $ | (50 | ) |

We do not use derivative financial instruments for speculative trading purposes, nor do we hedge our foreign currency exposure in a manner that entirely offsets the effects of the changes in foreign exchange rates.

[removed: Overview][added: Overview]

Symantec Corporation is a global leader in [removed: cybersecurity.][added: cyber security.]

Founded in 1982, Symantec has operations in more than [removed: 40] [added: 45] countries.

Our [removed: principal executive offices] [added: headquarters] are located at 350 Ellis Street, Mountain View, [removed: California, 94043.][added: California.]

[removed: Strategy][added: Business Strategy]

Our strategy is to [added: combine best-of-breed technology with unmatched scale to] deliver comprehensive cyber security platforms for [removed: both enterprises] [added: enterprise, business] and [added: government customers, as well as] consumers.

[added: Fiscal 2018] Business [removed: highlights][added: Highlights]

[removed: | ▪ | We released new products] [added: Products] and [removed: services: |][added: Services]

[removed: Consumer] [added: _Consumer] Digital Safety [added: Portfolio_]

[removed: Enterprise Security][added: _Enterprise_]

For [added: financial] information regarding our [removed: revenue by segment, revenue by geographical area,] [added: Enterprise Security] and [added: Consumer Digital Safety segments, revenues and] property and equipment by geographical [removed: area,] [added: area and significant customers,] see Note [removed: 2] [added: 14] to the Consolidated Financial Statements in this annual report.

For information regarding risks associated with our international operations, see Item 1A, [removed: Risk Factors.][added: _Risk Factors_.]

[removed: Sales] [added: Sales] and [removed: go-to-market strategy][added: Go-to-Market Strategy]

We also maintain strategic relationships with a number of original equipment manufacturers (“OEMs”), Internet service providers (“ISPs”), [added: global service integrators (“GSI”s),] wireless carriers, and retail and online stores through which we market and sell our products.

[removed: Consumer][added: _Consumer_]

We bring these products to market through direct marketing and co-marketing programs supported by our e-commerce and [removed: telesales] [added: tele-sales] platforms.

We [added: also] sell and market our products and [removed: related] services to small, medium and large [removed: customers] [added: businesses] through field sales and inside sales forces that leverage indirect sales partners around the [removed: world that] [added: world, who] are specifically trained and certified to sell our solutions.

These partners include national solution providers, regional solution providers, national account resellers, global/federal system [removed: integrators] [added: integrators,] and managed service providers.

Our [added: enterprise] products and services are also available on our e-commerce platform, as well as through authorized [removed: distributors] [added: distributors, GSIs] and OEMs, [removed: which] [added: who] incorporate our technologies into their products, bundle our products with their offerings, or serve as authorized resellers of our products.

We sell and market our products and [removed: related] services to large enterprises, including [added: business,] government and [removed: public sector] [added: public-sector] customers, through our field sales [removed: force.][added: force and reseller channels.]

[removed: This] [added: Our] field sales team [removed: is responsible for leveraging] [added: leverages] our global partner [removed: ecosystem] [added: ecosystem,] primarily targeting senior executives and IT department personnel responsible for managing a company’s highest-order IT [added: and cyber security] initiatives.

[removed: Research] [added: Research] and [removed: development][added: Development]

Symantec embraces a global research and development strategy to drive organic [removed: innovation.][added: innovation and product integration across our portfolio.]

Our [removed: engineers] [added: engineering] and [removed: researchers] [added: product management teams] are focused on delivering new versions of existing product lines as well as developing entirely new [removed: offerings to drive the company’s leadership in cybersecurity.][added: products and]

Symantec’s Security Technology and Response organization [removed: consists of] [added: is] a global team of security engineers, threat analysts, and researchers [removed: that] [added: who] provide the underlying functionality, content, and support for many of our [removed: consumer, commercial and enterprise security products.][added: solutions.]

[removed: Our] [added: These front-line] security experts analyze threat telemetry collected through our vast cyber intelligence networks to protect our customers against current and emerging threats.

Our research and development teams also leverage [removed: this] [added: these] vast [removed: amount of] data [added: sets] and [removed: related] insights to develop new technologies and [removed: approaches, including our Unified Security analytics platform,] [added: approaches] in order to improve security outcomes for our customers.

Research and development expenses were [removed: $823 million, $748] [added: $956] million, [removed: and $812] [added: $823] million [removed: in fiscal 2017, 2016,] and [removed: 2015, respectively, representing approximately 20%, 21% and 21% of revenue] [added: $748 million] in fiscal [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] respectively.

Our [removed: technical] support experts assist customers with [added: both] issue resolution and threat detection.

Our [removed: consumer] [added: Consumer Digital Safety] support [removed: program provides] [added: includes] self-help online services and phone, chat, and email support [removed: to consumers] worldwide.

Our [removed: LifeLock] [added: Consumer Digital Safety service and support] offerings come with [removed: support] 24x7x365 [removed: and] [added: support, along with] remediation services during normal business hours.

We provide [added: Enterprise Security] customers [added: with] various levels of [removed: enterprise support offerings.][added: support.]

Our [removed: enterprise security] support program offers annual maintenance support contracts, including content, [removed: upgrades,] [added: updates,] and technical support.

Our [removed: standard] [added: essential] technical support includes: self-service [removed: options] [added: options, assisted support] delivered by telephone or electronically during [removed: the] contracted-for hours, immediate patches for severe problems, periodic software updates, and access to our technical knowledge base and frequently asked questions.

[removed: Competition][added: Competition]

[removed: Much] [added: Some] of the market growth has come from startups [removed: whose] [added: that] focus [removed: is] on solving a [removed: specific customer] [added: particular] issue or delivering a niche-oriented [removed: product] [added: product,] and from larger integration providers that increasingly [removed: are looking] [added: seek] to [removed: put various types of protection into] [added: add to or extend] their [removed: platforms.][added: offerings.]

[added: We focus on delivering] comprehensive customer solutions, integrating across our broad product portfolio and partnering with other technology providers to differentiate [removed: ourselves] [added: our offerings and platforms] from the competition.

In addition to the competition we face from direct competitors, we face indirect or potential competition from retailers, application providers, operating system providers, network equipment [removed: manufacturers,] [added: manufacturers] and other OEMs who may provide various solutions and functions in their current and future [removed: products.][added: offerings.]

We [removed: also] compete for access to [removed: retail] distribution channels and for spending at the retail level [added: for our consumer offerings] and in corporate [removed: accounts.][added: accounts for our enterprise offerings.]

[removed: | • | In Identity Protection, our] [added: Consumer backup product] competitors [removed: are the] [added: include Carbonite, Inc. LifeLock identity theft protection competitors include] credit bureaus [removed: that include] Experian, Equifax, and TransUnion, as well as [removed: others, such as] [added: others including] Affinion, EWS, Intersections, [removed: CSID,] and LexisNexis. [removed: |]

We provide cyber security products, services and solutions to more than 350,000 organizations and 50 million individuals worldwide.

Our Integrated Cyber Defense Platform helps enterprise, business and government customers unify cloud and on-premises security to protect against threats and safeguard information across every control point and attack vector.

Our Cyber Safety solutions (delivered through the Norton and LifeLock offerings) help consumers protect their information, identities, devices and networks at home and online.

Our business and consumer offerings are powered by the largest civilian threat intelligence network, which uses machine learning and human intelligence to analyze trillions of rows of data every day across hundreds of millions of devices to discover and help prevent advanced threats that might otherwise go undetected.

We believe this threat intelligence data is a competitive advantage, and a primary way we are able to provide faster and better protection for customers.

During fiscal 2018, we continued to make progress enhancing and expanding our product and services portfolio and improving product integration, partner integration and sales delivery to help business customers deploy our Integrated Cyber Defense Platform.

We also made progress driving revenue growth and market adoption for our Consumer Digital Safety solutions, building on our Norton and LifeLock product portfolio.

In addition, we implemented operational improvements to reduce costs and complexity, building on the business transformation programs we initiated in fiscal 2017, and leveraged synergies from the successful integration of our acquired businesses.

| | • | | Our enterprise product teams built extensive point-to-point integrations across endpoint, network, cloud and email security products, responding to customer demand to consolidate vendors and enhance their security posture across control points. |

| --- | --- | --- | --- |

| | • | | We further extended our Integrated Cyber Defense platform through application programming interfaces (APIs) and engineering-level integration with more than 100 certified technology partners. Their complementary products and services expand our ecosystem, helping businesses implement a coordinated and robust approach to threat protection, detection and response. |

| --- | --- | --- | --- |

| | • | | We began offering consumers bundled services of our Norton-branded security services with LifeLock-branded identity theft protection services, allowing individuals and families to help defend against increasingly complex online threats. Bundling these solutions enabled us to combine our Norton and LifeLock demand generation and customer relationship management programs to drive new customer acquisition, improve retention and cross-sell within our large installed base. |

| --- | --- | --- | --- |

##### [Table of Contents](#toc)

| | • | | We completed several acquisitions, including Fireglass Ltd. and Skycure Ltd. |

| --- | --- | --- | --- |

| | • | | Fireglass provides agentless isolation solutions that prevent ransomware, malware, and phishing threats in real-time from reaching user endpoints or the corporate network. With this acquisition, we further strengthened our enterprise security strategy to deliver an Integrated Cyber Defense Platform and extended our participation in the Secure Web Gateway and Email protection markets delivered both on premises and in the cloud. |

| --- | --- | --- | --- |

| | • | | Skycure provides mobile threat defense for devices running modern operating systems, including iOS and Android. This acquisition extends our endpoint security capabilities. With the addition of Skycure our Integrated Cyber Defense Platform now enables visibility into and control over all endpoint devices, including mobile devices, whether corporate owned or bring your own device. |

| --- | --- | --- | --- |

| | • | | We completed the divestiture of our Website Security (“WSS”) and Public Key Infrastructure (“PKI”) solutions to DigiCert, Inc., allowing us to sharpen our enterprise security focus on Integrated Cyber Defense. At the closing of the transaction, we received a minority ownership stake in DigiCert. |

| --- | --- | --- | --- |

| | • | | We launched significant new products to advance our portfolio and competitive position: |

| --- | --- | --- | --- |

| | • | | Symantec Endpoint Protection 14.1 delivers superior, multi-layer protection to help stop threats regardless of how they attack endpoints, while integrating with other security products to provide an orchestrated response. Its single, lightweight agent offers high performance while maintaining end-user productivity. In addition, Symantec Endpoint Protection 14.1 is designed to be effective even in sites with low connectivity, using advanced machine learning and other signature-less technologies to minimize the need for content updates. |

| --- | --- | --- | --- |

| | • | | Symantec Advanced Threat Protection 3.0 extends and differentiates our endpoint security offering with new technology that includes file-less attack detection and enhanced adversary intelligence. It also enables “flight recorder” functionality, which records all activity on the endpoint, providing valuable forensic data to incident responders with no new agent to install. |

| --- | --- | --- | --- |

Our Enterprise Security strategy is to leverage our product portfolio, partner ecosystem and global threat intelligence network to deliver Integrated Cyber Defense to enterprise, business and government customers.

Our Integrated Cyber Defense platform enables us to acquire new customers and cross-sell our full portfolio of products and services to existing customers with improved visibility, enhanced controls, accelerated response and reduced cost of ownership.

Our Consumer Digital Safety strategy is to combine and leverage our portfolio of Norton and LifeLock brands, products, and services to deliver a comprehensive set of Cyber Safety solutions that addresses today’s continually evolving and increasingly complex threat landscape.

This threat landscape puts consumers at increased risk of having their security, privacy, and identities compromised.

As risks shift from PC-based attacks to more sophisticated threats (ransomware, identity theft, Internet of Things (“IoT”) risks), our software and services provide a multi-layered approach to protect consumers everywhere, regardless of device, network or location.

##### [Table of Contents](#toc)

_Enterprise Security Portfolio: Integrated Cyber Defense_

Our Enterprise Security portfolio includes a deep and broad mix of products, services and solutions, delivered as part of an Integrated Cyber Defense platform.

Our platform unifies cloud and on-premises security to provide advanced threat protection and information protection across all endpoints, networks, email, and cloud applications.

Key components of the platform include:

| | • | | Core Services |

We operate our business on a global civilian cyber intelligence threat network that tracks 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.

This database 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 to deliver integrated platforms for customers.

We are also pioneering solutions in markets such as cloud security, digital safety, advanced threat protection, identity protection, information protection and cyber security services.

Our enterprise security strategy is to deliver an Integrated Cyber Defense Platform that allows Symantec products to share threat intelligence and improve security outcomes for customers across all control points.

Symantec is the leading vendor in protecting users, information, web and messaging across an integrated platform.

Our consumer digital safety strategy is to deliver the most comprehensive consumer digital safety solutions to help people protect their information, identities, devices and families.

Following the completion of the sale of our former information management business (“Veritas”) in the fourth quarter of fiscal 2016, we completed the acquisitions of Blue Coat, Inc. (“Blue Coat”) and LifeLock, Inc. (“LifeLock”) in fiscal 2017 in order to expand our offerings in both our operating segments, as described below.

During fiscal 2017, we took the following actions in support of our business:

| | |

| --- | --- |

| • | With the divestiture of Veritas completed, we refocused Symantec as a pure cybersecurity company. In the second fiscal quarter, we completed the acquisition of Blue Coat, a provider of advanced web and cloud security solutions for global enterprises and governments, to complement our Enterprise Security offerings. The aggregate purchase price of the Blue Coat acquisition was $4.7 billion in net consideration, of which $4.5 billion consisted of cash consideration including the repayment of approximately $1.9 billion in Blue Coat’s debt. Following the closing of the Blue Coat acquisition, we appointed Blue Coat’s Chief Executive Officer as our Chief Executive Officer and Blue Coat’s President and Chief Operating Officer as our President and Chief Operating Officer, respectively, in the second quarter of fiscal 2017. In addition, we appointed Blue Coat’s Chief Financial Officer to the position of our Executive Vice President and Chief Financial Officer in the third quarter of fiscal 2017. |

| • | In the fourth fiscal quarter, we completed the acquisition of LifeLock, a provider of proactive identity theft protection services for consumers and consumer risk management services for enterprises, for approximately $2.3 billion in net consideration. |

| • | We increased the size of our Board of Directors and appointed representatives of Silver Lake Partners and Bain Capital to our Board of Directors. |

| ◦ | We launched Symantec Endpoint Protection 14, a solution that fuses endpoint technologies with advanced machine learning and memory exploit mitigation in a single agent, delivering a multi-layered solution designed to stop a wide variety of advanced threats and respond at the endpoint. |

| ◦ | We introduced Symantec Endpoint Protection Cloud, a new solution for small and mid-sized businesses (SMBs) designed to protect them from targeted attacks and ransomware. Symantec Endpoint Protection Cloud is for organizations with fewer than 1,000 employees that are looking for an effective way to protect corporate and personal devices on the corporate network. |

| ◦ | We announced Cloud Workload Protection, a solution designed to deliver automated security policy enforcement and protect applications from unknown exploits inside of both Amazon Web Service and Microsoft Azure. Cloud Workload Protection automates security for public cloud workloads delivering metered usage billing, rapid workload discovery, increased visibility and elastic protection to help ensure safe cloud workload adoption. |

| ▪ | We integrated Blue Coat and Symantec products: |

| ◦ | We announced the integration of Symantec Data Loss Prevention (“DLP”) with Symantec CloudSOC (formerly Blue Coat’s Elastica CloudSOC Cloud Access Security Broker) and Cloud Data Protection products to address the needs of the cloud generation. This integrated solution provides visibility and control over all sensitive |

content that users upload, store and share via the cloud, protecting confidential information through the stages of its lifecycle.

| ◦ | We integrated our Symantec DLP with our cloud-delivered Web Security Service, providing a seamless platform to help ensure a safe web experience and protect organizational data. |

| ◦ | We combined Symantec and Blue Coat’s security telemetry which has led to a series of significant protection improvements as well as discoveries of new attack campaigns. |

| • | Symantec’s Board of Directors increased the company’s share repurchase authorization by $510 million. In the fourth fiscal quarter, Symantec entered into accelerated stock repurchase agreements to repurchase an aggregate of $500 million of the company’s common stock. |

Operating segments, products and services

Our operating segments are significant strategic business units that offer different products and services distinguished by customer needs.

Our operating segments are: Consumer Digital Safety and Enterprise Security.

Our Consumer Digital Safety segment focuses on providing a comprehensive Digital Safety solution to protect information, devices, networks and the identities of consumers.

This solution includes our Norton-branded services, which provide multi-layer security across major desktop and mobile operating systems, public Wi-Fi connections, and home networks, to defend against increasingly complex online threats to individuals, families and small businesses, and our LifeLock-branded identity protection services.

Our LifeLock-branded identity protection services primarily consist of identifying and notifying users of identity-related and other events and assisting users in remediating their impact.

With the addition of LifeLock-branded identity protection services, we are providing a comprehensive digital safety platform designed to protect information across devices, customer identities and the connected home and family and accelerating our leadership in Consumer Digital Safety to protect all aspects of consumers’ digital lives.

Our Enterprise Security segment protects organizations so they can securely conduct business while leveraging new platforms and data.

Our Enterprise Security segment includes our endpoint protection products, endpoint management, messaging protection products, information protection products, cyber security services, website security and advanced web and cloud security offerings.

Our enterprise endpoint and network security and management offerings support evolving endpoints and networks, providing advanced threat protection while helping reduce cost and complexity.

These solutions are delivered through various methods, such as software, appliance, Software-as-a-Service (“SaaS”) and managed services.

The addition of Blue Coat’s suite of network and cloud security products to our innovative Enterprise Security product portfolio has enhanced our threat protection and information protection products while providing us with complementary products, such as advanced web and cloud security solutions, that address the network and cloud security needs of enterprises.

This augmentation of our product portfolio, together with the integration of Blue Coat’s large threat database with our global civilian cyber intelligence threat network, allows us to provide an integrated cyber defense platform, addressing both endpoint and network security, and offer differentiated security solutions.

It also positions us well to introduce new cybersecurity solutions that address the ever-evolving threat landscape, the changes introduced by the shift to mobile and cloud along with the adoption of Internet of Things (IoT) devices.

Our enhanced portfolio also positions us well to address the challenges created by regulatory and privacy concerns.

Financial information by segment and geographic region

Information with respect to this Item may be found under the heading “Litigation contingencies” in Note [removed: 12] [added: 15] to the Consolidated Financial Statements in this Annual Report on Form 10-K which information is incorporated into this Item 3 by reference.

[removed: UNITED] [added: UNITED] STATES SECURITIES AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]

[removed: Form 10-K][added: Form 10-K]

[removed: (Mark One)][added: (Mark One)]

| [removed: þ] [added: ☑] | [removed: ANNUAL] [added: ANNUAL] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

[removed: For] [added: | | For] the Fiscal Year Ended March [removed: 31, 2017][added: 30, 2018 |]

| [removed: o] [added: ☐] | [removed: TRANSITION] [added: TRANSITION] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

[removed: For] [added: | | For] the Transition Period from [removed: to][added: to |]

[removed: Commission] [added: Commission] File Number [removed: 000-17781][added: 000-17781]

[removed: Symantec Corporation][added: Symantec Corporation]

[removed: (Exact] [added: _(Exact] name of the registrant as specified in its [removed: charter)][added: charter)_]

| [removed: Delaware] [added: Delaware] | | [removed: 77-0181864] [added: 77-0181864] |

| [removed: (State] [added: _(State] or other jurisdiction [removed: of incorporation] [added: of_ _incorporation] or [removed: organization)] [added: organization)_] | | [removed: (I.R.S. employer Identification no.)] [added: _(I.R.S. employer_ _Identification no.)_] |

| [removed: Mountain] [added: 350 Ellis Street, Mountain] View, [removed: California] [added: California] | | [removed: 94043] [added: 94043 _(Zip code)_] |

| [removed: (Address] [added: _(Address] of principal executive [removed: offices)] [added: offices)_] | | [removed: (zip code)] |

[removed: Registrant’s] [added: Registrant’s] telephone number, including area [removed: code:][added: code:]

[removed: (650) 527-8000][added: (650) 527-8000]

[removed: Securities] [added: Securities] registered pursuant to Section 12(b) of the [removed: Act:][added: Act:]

| [removed: Common] [added: Common] Stock, par value $0.01 per [removed: share (Title of each class)] [added: share] | | [removed: The] [added: The] NASDAQ Stock Market [removed: LLC (Name of each exchange on which registered)] [added: LLC] |

[removed: Securities] [added: Securities] registered pursuant to Section 12(g) of the [removed: Act:][added: Act:]

[removed: None][added: None]

[removed: (Title] [added: _(Title] of [removed: class)][added: class)_]

Yes [removed: þ] [added: ☐] No [removed: o][added: ☑]

Yes [removed: o] [added: ☐] No [removed: þ][added: ☑]

Indicate by check mark whether the registrant has submitted electronically [removed: and posted on its corporate Web site, if any,] every Interactive Data File required to be submitted [removed: and posted] 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 [removed: and post] such files).

See the definitions of “large accelerated filer,” “accelerated [removed: filer”,] [added: filer,”] “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

| Large accelerated filer [removed: þ] [added: ☑] | | Accelerated filer [removed: o] [added: ☐] | | Non-accelerated filer [removed: o] [added: ☐] | | Smaller reporting company [removed: o] [added: ☐] |

| | | [removed: (Do not check if a smaller reporting company)] | | | | Emerging growth company [removed: o] [added: ☐] |

[removed: |] 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. [removed: o | | | | | | |]

Aggregate market value of the voting stock held by non-affiliates of the registrant, based upon the closing sale price of Symantec common stock on September [removed: 30, 2016] [added: 28, 2018] as reported on the [removed: NASDAQ] [added: Nasdaq] Global Select Market: [removed: $15,559,432,822.][added: $7,810,381,908.]

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

[removed: TABLE] [added: TABLE] OF [removed: CONTENTS][added: CONTENTS]

| [removed: Page] | | | [added: | Page | | |]

| [removed: PART I] [added: PART I] | | | [added: | | | |]

| Item 1. | [removed: [Business](#sD5B37AE19CF7502D05BE1A5C60339302)] | [removed: [4](#sD5B37AE19CF7502D05BE1A5C60339302)] [added: [Business](#osl573170_1)] | [added: | | 4 | |]

| Item 1A. | [added: |] [Risk [removed: Factors](#sDCB8588951F4FBFA6D3A1A5C7CAFE358)] [added: Factors](#osl573170_2)] | [removed: [8](#sDCB8588951F4FBFA6D3A1A5C7CAFE358)] | [added: | 12 | |]

| Item 1B. | [added: |] [Unresolved Staff [removed: Comments](#s7FE0FA44896B0C60B72A1A5C7CE1213D)] [added: Comments](#osl573170_3)] | [removed: [21](#s7FE0FA44896B0C60B72A1A5C7CE1213D)] | [added: | 30 | |]

| Item 2. | [removed: [Properties](#sF42ADED0F58CC7E821AC1A5C5FB2D38D)] | [removed: [22](#sF42ADED0F58CC7E821AC1A5C5FB2D38D)] [added: [Properties](#osl573170_4)] | [added: | | 30 | |]

| Item 3. | [added: |] [Legal [removed: Proceedings](#sE08AE8282BE49BECF20E1A5C7D2D65F2)] [added: Proceedings](#osl573170_5)] | [removed: [22](#sE08AE8282BE49BECF20E1A5C7D2D65F2)] | [added: | 31 | |]

| Item 4. | [added: |] [Mine Safety [removed: Disclosures](#s65E00CF36E7EC9F332191A5C7D588784)] [added: Disclosures](#osl573170_6)] | [removed: [22](#s65E00CF36E7EC9F332191A5C7D588784)] | [added: | 31 | |]

10-K 1 d573170d10k.htm 10-K

##### [Table of Contents](#toc)

or

| --- | --- |

| --- | --- |

| _(Title of each class)_ | | _(Name of each exchange on which registered)_ |

Yes ☐ No ☑

Yes ☑ No ☐

Yes ☐ No ☑

Solely for purposes of this disclosure, shares of common stock held by each executive officer, director, and holder of 5% or more of the outstanding common stock have been excluded as of such date because such persons may be deemed to be affiliates.

This determination of possible affiliate status is not a conclusive determination for any other purposes.

The number of shares of Symantec common stock, $0.01 par value per share, outstanding as of October 15, 2018 was 638,800,147 shares.

None.

##### [Table of Contents](#toc)

SYMANTEC CORPORATION

FORM 10-K

For the Fiscal Year Ended March 30, 2018

| --- | --- | --- | --- | --- | --- | --- |

| Item 16. | | [Form 10-K Summary](#osl573170_21) | | | 187 | |

| [Signatures](#osl573170_22) | | | | | 188 | |

EXPLANATORY NOTE

As previously reported, we were unable to timely file our Annual Report on Form 10-K for the fiscal year ended March 30, 2018 and our Quarterly Report on Form 10-Q for the first quarter of fiscal 2019 ended June 29, 2018 and we anticipate being unable to timely file our Quarterly Report on Form 10-Q for the second quarter of fiscal 2019 ended September 28, 2018 as a result of an Audit Committee investigation as described herein.

We expect to file the delinquent Quarterly Reports as promptly as practicable following this Annual Report filing.

##### [Table of Contents](#toc)

##### [Table of Contents](#toc)

10-K 1 symc33117-10k.htm 10-K

| | |

or

| | | |

| --- | --- | --- |

| 350 Ellis Street | | |

| | | | | | | |

Number of shares outstanding of the registrant’s common stock as of April 28, 2017: 608,240,301

Portions of the registrant’s definitive Proxy Statement for the 2017 Annual Meeting of Stockholders are incorporated herein by reference into Part III of this Annual Report on Form 10-K where indicated.

Such proxy statement will be filed with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year ended March 31, 2017.

| [Signatures](#s4F82E88E3209A3E5032C1A5C85C3A956) | | [73](#s4F82E88E3209A3E5032C1A5C85C3A956) |

There are no unresolved issues with respect to any Commission staff’s written comments that were received at least 180 days before the end of our fiscal year to which this report relates and that relate to our periodic or current reports under the Exchange Act.

None.

Our properties consist primarily of owned and leased office facilities for sales, research and development, administrative, customer [removed: service,] [added: service] and technical support personnel.

Our corporate headquarters is located in Mountain View, California where we occupy facilities totaling approximately [removed: 794,000] [added: 734,000] square feet, of which 723,000 square feet is owned and [removed: 71,000] [added: 11,000] square feet is leased.

Our leased facilities are occupied under agreements that expire on various dates through fiscal [removed: 2026.][added: 2029.]

The following table presents the approximate square footage of our facilities as of March [removed: 31, 2017:][added: 30, 2018:]

| | [removed: Approximate Square Footage (1)] | [added: Approximate Square Footage (1)] | | | | [added: | | |]

| [added: (In thousands)] | [removed: Owned] | [added: Owned] | | [removed: Leased] | | [added: Leased | | |]

| Americas (U.S., Canada and Latin America) | [removed: 1,512] | | [added: 1,402] | [removed: 952] | | [added: | 746 | |]

| EMEA (Europe, Middle East and Africa) | [removed: 177] | | [added: 163] | [removed: 295] | | [added: | 227 | |]

| APJ (Asia Pacific and Japan) | [removed: —] | | [added: \-] | [removed: 1,088] | | [added: | 945 | |]

| Total approximate square footage | [removed: 1,689] | | [added: 1,565] | [removed: 2,335] | | [added: | 1,918 | |]

| (1) | Included in the total [added: approximate] square footage above are vacant and available-for-lease properties totaling approximately [removed: 196,000] [added: 151,000] square feet. Total square footage excludes approximately [removed: 588,000] [added: 664,000] square feet relating to facilities subleased to third parties. [added: As of March 30, 2018, we also own facilities that are held as available-for-sale on our Consolidated Balance Sheets. These facilities comprise approximately 403,000 square feet of space. In October 2018, we completed the sale of these facilities.] |

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | |

| | | | | | | | | |

##### [Table of Contents](#toc)

We also lease an additional 116,000 square feet in the San Francisco Bay Area.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | (In thousands) | | | | |

| | |

[removed: PART II][added: PART II]

##### [Table of Contents](#toc)

[removed: Price] [added: Price] range of common stock and number of [removed: stockholders][added: stockholders]

Our common stock is traded on the [removed: NASDAQ] [added: Nasdaq] Global Select Market under the symbol “SYMC.” As of March [removed: 31, 2017,] [added: 30, 2018,] there were [removed: 1,763] [added: 1,665] stockholders of record.

| | [removed: Fourth Quarter] | [added: First Quarter] | | | [removed: Third Quarter] | [added: Second Quarter] | | | [removed: Second Quarter] | [added: Third Quarter] | | | [removed: First Quarter] | [added: Fourth Quarter] | | | [removed: Fourth Quarter] | [added: First Quarter] | | | [removed: Third Quarter] | [added: Second Quarter] | | | [removed: Second Quarter] | [added: Third Quarter] | | | [removed: First Quarter] | [added: Fourth Quarter] | | [added: |]

[removed: Stock] [added: Stock] performance [removed: graph][added: graph]

The graph below compares the cumulative total stockholder return on our common stock with the cumulative total return on the S&P 500 Composite Index and the S&P Information Technology Index for the five fiscal years ended March [removed: 31, 2017] [added: 30, 2018] (assuming the initial investment of $100 in our common stock and in each of the other indices on the last day of trading for fiscal [removed: 2011,] [added: 2013,] and the reinvestment of all dividends).

[removed: COMPARISON] [added: COMPARISON] OF FIVE-YEAR CUMULATIVE TOTAL [removed: RETURN][added: RETURN]

[removed: Among] [added: Among] Symantec Corporation, the S&P 500 [removed: Index][added: Index]

[removed: and] [added: and] the S&P Information Technology [removed: Index][added: Index]

[removed: ][added: ]

[removed: Dividends][added: Dividends]

During fiscal [removed: 2017, 2016] [added: 2018] and [removed: 2015,] [added: 2017,] we declared and paid aggregate cash dividends and dividend equivalents of [removed: $222] [added: $211] million or $0.30 per common share, [removed: $3.0 billion or $4.60 per common share,] and [removed: $413] [added: $222] million or [removed: $0.60] [added: $0.30] per common share, respectively.

Dividends declared and paid each quarter during fiscal [removed: 2017, 2016] [added: 2018] and [removed: 2015] [added: 2017] were [removed: $0.075, $0.15 and $0.15] [added: $0.075] per [removed: share, respectively.][added: share.]

[removed: Repurchases] [added: Repurchases] of our equity [removed: securities][added: securities]

Under these programs, shares may be repurchased on the open market and through accelerated stock repurchase [removed: (“ASR”)] transactions.

Stock repurchases during the three months ended March [removed: 31, 2017,] [added: 30, 2018,] were as follows:

| [removed: (In] [added: (In] millions, except per share [removed: data)] [added: data)] | | [removed: Total Number] [added: Total Number] of Shares [removed: Purchased (1)] [added: Purchased] | | | [removed: Average Price Paid per Share (1)] | [added: Average Price Paid per Share] | | | [removed: Total] [added: | Total] Number of Shares Purchased as Part of Publicly Announced [removed: Program] [added: Program] | | | [removed: Maximum] [added: | Maximum] Dollar Value of Shares That May Yet Be [removed: Purchased Under] [added: Purchased Under] the Plans or [removed: Programs (2)] [added: Programs] | | |

| December [removed: 31, 2016] [added: 30, 2017] to January [removed: 27, 2017] [added: 26, 2018] | | [removed: —] | [added: \-] | | [added: |] $ | [removed: —] [added: \-] | | | [removed: —] | [added: \-] | | [added: |] $ | [removed: 1,300] [added: 800] | |

| February [removed: 25, 2017] [added: 24, 2018] to March [removed: 31, 2017] [added: 30, 2018] | | [removed: 14.2] | [added: \-] | | [added: |] $ | [removed: —] [added: \-] | | | [removed: 14.2] | [added: \-] | | [added: |] $ | 800 | |

| Total number of shares repurchased | | [removed: 14.2] | [added: \-] | | | | | | [removed: 14.2] | | [added: \-] | | | | [added: | |]

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | 2017 | | | | | | | | | | | | | | | | 2018 | | | | | | | | | | | | | | |

| High | | $ | 21.24 | | | $ | 25.27 | | | $ | 25.45 | | | $ | 30.83 | | | $ | 33.14 | | | $ | 34.16 | | | $ | 33.92 | | | $ | 29.57 | |

| Low | | $ | 16.60 | | | $ | 20.28 | | | $ | 23.49 | | | $ | 24.01 | | | $ | 28.06 | | | $ | 27.47 | | | $ | 27.36 | | | $ | 25.51 | |

##### [Table of Contents](#toc)

275 Symantec Corporation 250 S&P 500 225 S&P Information Technology 200 Dollars 175 150 125 100 75 3/29/2013 3/28/2014 4/3/2015 4/1/2016 3/31/2017 3/30/2018

##### [Table of Contents](#toc)

As of March 30, 2018, we have $800 million remaining authorized to be completed in future periods with no expiration date.

| | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| January 27, 2018 to February 23, 2018 | | | \- | | | $ | \- | | | | \- | | | $ | 800 | |

| | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | |

##### [Table of Contents](#toc)

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | 2017 | | | | | | | | | | | | | | | | 2016 | | | | | | | | | | | | | | |

| High | $ | 30.83 | | | $ | 25.45 | | | $ | 25.27 | | | $ | 21.24 | | | $ | 20.88 | | | $ | 21.37 | | | $ | 23.47 | | | $ | 25.90 | |

| Low | $ | 24.01 | | | $ | 23.49 | | | $ | 20.28 | | | $ | 16.60 | | | $ | 16.62 | | | $ | 19.50 | | | $ | 19.33 | | | $ | 23.03 | |

Additionally, a special dividend of $4.00 per share was declared and paid in the fourth quarter of fiscal 2016.

See Note 10 to the Consolidated Financial Statements for additional information regarding our dividends.

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| January 28, 2017 to February 24, 2017 | | — | | | $ | — | | | — | | | $ | 1,300 | |

| | |

| --- | --- |

| (1) | Pursuant to the March 2017 ASR, we made an upfront payment of $500 million and received and retired an initial delivery of 14.2 million shares of our common stock in March 2017. On May 19, 2017, which was in our first quarter of fiscal 2018, the ASR was completed, which, per the terms of the agreements, resulted in us receiving an additional 2.2 million shares of our common stock (these shares were excluded from the table above, as they were received after March 31, 2017). The total shares received under the terms of the ASR were 16.4 million, with an average price paid per share of $30.51. See Note 10 to the Consolidated Financial Statements for additional information regarding our stock repurchase programs. |

| (2) | The approximate dollar value of the shares that may yet be purchased under the plans or programs for the period from February 25, 2017 to March 31, 2017 is reduced by the $500 million that reflects the aggregate value of the stock held back by the financial institutions pending final settlement of our ASR agreement. The remaining $800 million authorization, to be completed in future periods, does not have an expiration date. |

[removed: Management’s] [added: _Management’s] Discussion and Analysis of Financial Condition and Results of [removed: Operations.][added: Operations_.]

[removed: Five-Year Summary][added: Five-Year Summary]

[removed: | Summary] [added: Summary] of [removed: operations: | Year Ended (1) | | | | | | | | | | | | | | | | | | |][added: Operations:]

| [removed: (In] [added: (In] millions, except per share [removed: data)] [added: data)] | [removed: March] [added: | March 30, 2018 (2) | | | | March] 31, 2017 [removed: (2)] [added: (3)] | | | | [removed: April] [added: April] 1, 2016 [removed: (3)] [added: (4)] | | | | [removed: April] [added: April] 3, [removed: 2015] [added: 2015] | | | | [removed: March] [added: March] 28, [removed: 2014 | | | | March 29, 2013] [added: 2014] | | |

| Net revenues | [added: |] $ | [removed: 4,019] [added: 4,834] | | | $ | [removed: 3,600] [added: 4,019] | | | $ | [removed: 3,956] [added: 3,600] | | | $ | [removed: 4,183] [added: 3,956] | | | $ | [removed: 4,268] [added: 4,183] | |

| Operating income (loss) | [added: |] $ | [removed: (100] [added: 49] | [removed: )] | | $ | [removed: 457] [added: (100] | [added: )] | | $ | [removed: 154] [added: 457] | | | $ | [removed: 144] [added: 154] | | | $ | [removed: (60] [added: 144] | [removed: )] |

| Income (loss) from continuing operations [added: (2)] | [added: |] $ | [removed: (236] [added: 1,127] | [removed: )] | | $ | [removed: (821] [added: (236] | ) | | $ | [removed: 109] [added: (821] | [added: )] | | $ | [removed: 91] [added: 109] | | | $ | [removed: (138] [added: 91] | [removed: )] |

| Income from discontinued operations, net of income taxes (4) | [added: |] $ | [removed: 130] [added: 11] | | | $ | [removed: 3,309] [added: 130] | | | $ | [removed: 769] [added: 3,309] | | | $ | [removed: 807] [added: 769] | | | $ | [removed: 893] [added: 807] | |

| Net income (loss) | [added: |] $ | [removed: (106] [added: 1,138] | [removed: )] | | $ | [removed: 2,488] [added: (106] | [added: )] | | $ | [removed: 878] [added: 2,488] | | | $ | [removed: 898] [added: 878] | | | $ | [removed: 755] [added: 898] | |

| Income (loss) per share [removed: -] [added: —] basic: (5) | | | | | | | | | | | | | | | | | | | | [added: |]

| Continuing operations | [added: |] $ | [removed: (0.38] [added: 1.83] | [removed: )] | | $ | [removed: (1.23] [added: (0.38] | ) | | $ | [removed: 0.16] [added: (1.23] | [added: )] | | $ | [removed: 0.13] [added: 0.16] | | | $ | [removed: (0.20] [added: 0.13] | [removed: )] |

| Discontinued operations | [added: |] $ | [removed: 0.21] [added: 0.02] | | | $ | [removed: 4.94] [added: 0.21] | | | $ | [removed: 1.12] [added: 4.94] | | | $ | [removed: 1.16] [added: 1.12] | | | $ | [removed: 1.27] [added: 1.16] | |

| Net income (loss) per share [removed: -] [added: —] basic | [added: |] $ | [removed: (0.17] [added: 1.85] | [removed: )] | | $ | [removed: 3.71] [added: (0.17] | [added: )] | | $ | [removed: 1.27] [added: 3.71] | | | $ | [removed: 1.29] [added: 1.27] | | | $ | [removed: 1.08] [added: 1.29] | |

| Income (loss) per share [removed: -] [added: —] diluted: (5) | | | | | | | | | | | | | | | | | | | | [added: |]

| Discontinued operations | [added: |] $ | [removed: 0.21] [added: 0.02] | | | $ | [removed: 4.94] [added: 0.21] | | | $ | [removed: 1.10] [added: 4.94] | | | $ | [removed: 1.15] [added: 1.10] | | | $ | [removed: 1.27] [added: 1.15] | |

| Net income (loss) per share [removed: -] [added: —] diluted | [added: |] $ | [removed: (0.17] [added: 1.70] | [removed: )] | | $ | [removed: 3.71] [added: (0.17] | [added: )] | | $ | [removed: 1.26] [added: 3.71] | | | $ | [removed: 1.28] [added: 1.26] | | | $ | [removed: 1.08] [added: 1.28] | |

| Cash dividends declared per common share | [added: |] $ | 0.30 | | | $ | [removed: 4.60] [added: 0.30] | | | $ | [removed: 0.60] [added: 4.60] | | | $ | 0.60 | | | $ | [removed: —] [added: 0.60] | |

[removed: | Consolidated] [added: Consolidated] Balance Sheets [removed: Data: | | | | | | | | | | | | | | | | | | | |][added: Data:]

| [removed: (In millions)] [added: (In millions)] | [removed: March 31, 2017 (6) (9)] | [added: March 30, 2018] | | | [removed: April 1, 2016 (8)] | [added: March 31, 2017] | | | [removed: April 3, 2015] | [added: April 1, 2016] | | | [removed: March 28, 2014 (7)] | [added: April 3, 2015] | | | [removed: March 29, 2013] | [added: March 28, 2014] | | [added: |]

| Total assets | [added: |] $ | [removed: 18,174] [added: 15,759] | | | $ | [removed: 11,767] [added: 18,174] | | | $ | [removed: 13,233] [added: 11,767] | | | $ | [removed: 13,539] [added: 13,233] | | | $ | [removed: 14,508] [added: 13,539] | |

| Long-term debt | [added: |] $ | [removed: 6,876] [added: 5,026] | | | $ | [removed: 2,207] [added: 6,876] | | | $ | [removed: 1,746] [added: 2,207] | | | $ | [removed: 2,095] [added: 1,746] | | | $ | [removed: 2,094] [added: 2,095] | |

| Total stockholders’ equity | [added: |] $ | [removed: 3,487] [added: 5,023] | | | $ | [removed: 3,676] [added: 3,487] | | | $ | [removed: 5,935] [added: 3,676] | | | $ | [removed: 5,797] [added: 5,935] | | | $ | [removed: 5,476] [added: 5,797] | |

| (1) | We have a 52/53-week fiscal year. Our fiscal 2015 was a 53-week [removed: year] [added: year,] whereas fiscal [added: 2018,] 2017, [removed: 2016, 2014,] [added: 2016] and [removed: 2013,] [added: 2014] each consisted of 52 weeks. |

| [removed: (2)] [added: (3)] | [removed: We] [added: In fiscal 2017, we] acquired Blue [removed: Coat on August 1, 2016] [added: Coat, Inc. (“Blue Coat”)] and [removed: LifeLock on February 9, 2017] [added: LifeLock, Inc. (“LifeLock”)] and the results of operations of those entities [removed: are] [added: were] included from their respective dates of [removed: acquisition. See] [added: acquisition (see] Note [removed: 6] [added: 3] to the Consolidated Financial [removed: Statements for more information.] [added: Statements).] |

| [removed: (3)] [added: (4)] | In fiscal 2016, we recorded $1.1 billion in income tax expense related to unremitted earnings of foreign subsidiaries from the proceeds of the sale of [removed: Veritas.] [added: our divested information management business (“Veritas”).] This charge [removed: is] [added: was] presented in loss from [removed: continuing operations in the Consolidated Statements of Operations for fiscal 2016. See Note 5 to the Consolidated Financial Statements for more information.] |

| [removed: (4)] | [removed: In fiscal 2016, we sold] [added: continuing operations in] the [removed: assets] [added: Consolidated Statements] of [removed: Veritas] [added: Operations (see Note 10] to [removed: Carlyle for] [added: the Consolidated Financial Statements). As] a [added: result of the sale, a] net gain of $3.0 [removed: billion, which is] [added: billion was] presented as part of income from discontinued operations, net of income taxes [removed: in the Consolidated Statements of Operations for fiscal 2016. See] [added: (see] Note [removed: 13] [added: 3] to the Consolidated Financial [removed: Statements for more information.] [added: Statements).] |

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| Continuing operations | | $ | 1.69 | | | $ | (0.38 | ) | | $ | (1.23 | ) | | $ | 0.16 | | | $ | 0.13 | |

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| Cash, cash equivalents and short-term investments | | $ | 2,162 | | | $ | 4,256 | | | $ | 6,025 | | | $ | 3,860 | | | $ | 4,084 | |

| (2) | In fiscal 2018, we sold our WSS and PKI solutions and recognized a gain of $653 million before income taxes associated with the sale (see Note 3 to the Consolidated Financial Statements) and we recognized an income tax benefit of $659 million as a result of the enactment of the Tax Cuts and Jobs Act (H.R.1) (see Note 10 to the Consolidated Financial Statements). |

##### [Table of Contents](#toc)

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| Weighted-average shares outstanding: | | | | | | | | | | | | | | | | | | | |

| Basic | 618 | | | | 670 | | | | 689 | | | | 696 | | | | 701 | | |

| Diluted | 618 | | | | 670 | | | | 696 | | | | 704 | | | | 701 | | |

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| (6) | In fiscal 2017, we acquired total assets of $5.9 billion and $2.9 billion from Blue Coat and LifeLock, respectively. See Note 6 to the Consolidated Financial Statements for more information on our acquisitions. |

| (7) | In fiscal 2014, the principal balance on our 1.00% Convertible Senior Notes matured and was settled by a cash payment of $1.0 billion. At the time of issuance of the 1.00% notes, we granted warrants to affiliates of certain initial purchasers of the notes whereby they had the option to purchase up to 52.7 million shares of our common stock. All the warrants expired unexercised during the second quarter of fiscal 2014. In the fourth quarter of fiscal 2016, we issued $500 million in principal amount of 2.50% Convertible Senior Notes, due in April of 2021. |

| (8) | In fiscal 2016, the principal balance on our 2.75% Senior Notes due September 15, 2015, matured and was settled by a cash payment of $350 million. |

| (9) | In fiscal 2017, we issued $3.8 billion in Senior Term Facilities due at various dates from May 2019 to August 2021, $1.25 billion in 2.0% Convertible Senior Notes due in August of 2021 and $1.1 billion in 5% Senior Notes due in April of 2025. The proceeds from these issuances were used primarily to fund our Blue Coat and LifeLock acquisitions. In addition, we reclassified $710 million to short-term obligations due to our Board’s approval to prepay some of our Senior Term Facility and $600 million of our 2.75% Senior Notes due June 15, 2017. See Note 8 to the Consolidated Financial Statements for more information on the Company’s long-term debt. |

[removed: Selected] [added: Selected] Quarterly Financial Data [removed: (Unaudited)][added: (Unaudited)]

| | [removed: Fiscal 2017] | [added: Fiscal 2018] | | | | | | | | | | | | | | | [removed: Fiscal 2016] | [added: Fiscal 2017] | | | | | | | | | | | | | | [added: |]

| [removed: (In] [added: (In] millions, except per share [removed: data)] [added: data)] | [removed: Fourth Quarter] | [added: Fourth Quarter] | | | [removed: Third] [added: | Third] Quarter [added: (1)] | | | | [removed: Second Quarter] [added: Second Quarter] | | | | [removed: First Quarter] [added: First Quarter] | | | | [removed: Fourth Quarter] [added: Fourth Quarter] | | | | [removed: Third Quarter] [added: Third Quarter] | | | | [removed: Second Quarter] [added: Second Quarter] | | | | [removed: First Quarter] [added: First Quarter] | | |

| Net revenues | [added: |] $ | [removed: 1,115] [added: 1,210] | | | $ | [removed: 1,041] [added: 1,209] | | | $ | [removed: 979] [added: 1,240] | | | $ | [removed: 884] [added: 1,175] | | | $ | [removed: 873] [added: 1,115] | | | $ | [removed: 909] [added: 1,041] | | | $ | [removed: 906] [added: 979] | | | $ | [removed: 912] [added: 884] | |

| Gross profit | [removed: 856] | | [added: 946] | | [removed: 806] | | [added: 960] | | [removed: 769] | | [added: 978] | | [removed: 735] | | [added: 918] | | [removed: 726] | | [added: 856] | | [removed: 759] | | [added: 806] | | [removed: 746] | | [added: 769] | | [removed: 754] | | [added: 735] | [added: |]

| Operating income (loss) | [removed: (178] | | [removed: )] [added: 6] | | [removed: (16] | | [removed: )] [added: 96] | | [removed: (12] | | [added: (9 |] ) | | [removed: 106] | [added: (44] | [added: )] | | [removed: 128] | [added: (178] | [added: )] | | [removed: 146] | [added: (16] | [added: )] | | [removed: 100] | [added: (12] | [added: )] | | [removed: 83] | [added: 106] | |