Gen Digital Inc 10-Q for FY2020 Q3

Gen Digital Inc. (GEN)

10-Q 2020-02-07 For: 2020-01-03

Added on April 06, 2026

About this 10-Q

Gen Digital Inc filed this 10-Q on February 7, 2020, covering the quarter ended January 3, 2020 (FY2020 Q3).

Headline figures

Quarter ended January 3, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $618M; up 0.5% from $615M a year earlier
Net income: $2.85B; up 4276.9% from net income of $65M a year earlier
Diluted EPS: $4.40; up 4300.0% from $0.10 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →



Delaware				77-0181864
(State or other jurisdiction of incorporation or organization)				(I.R.S. employer Identification no.)

60 E. Rio Salado Parkway,	Suite 1000,	Tempe,	Arizona	85281
(Address of principal executive offices)				(Zip code)



Title of each class		Trading symbol(s)	Name of each exchange on which registered
Common Stock,	par value $0.01 per share	NLOK	The Nasdaq Stock Market LLC



Large accelerated filer	þ	Accelerated filer	☐	Non-accelerated filer	☐	Smaller reporting company	☐
						Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Income (Loss)	5
	Condensed Consolidated Statements of Equity	6
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	39
Item 4.	Controls and Procedures	39
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 6.	Exhibits	52
Signatures		55



	January 3, 2020		March 29, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	12,649	$	1,791
Short-term investments	119		252
Accounts receivable, net	171		708
Assets held for sale	213		—
Other current assets	411		286
Current assets of discontinued operations	8		149
Total current assets	13,571		3,186
Property and equipment, net	365		663
Operating lease assets	107		—
Intangible assets, net	1,119		1,202
Goodwill	2,676		2,677
Other long-term assets	709		1,160
Long-term assets of discontinued operations	—		7,050
Total assets	$	18,547	$	15,938
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	157	$	165
Accrued compensation and benefits	131		250
Current portion of long-term debt	749		491
Contract liabilities	1,019		1,032
Current operating lease liabilities	32		—
Other current liabilities	2,604		524
Current liabilities of discontinued operations	21		1,304
Total current liabilities	4,713		3,766
Long-term debt	3,719		3,961
Long-term contract liabilities	28		27
Deferred income tax liabilities	165		577
Long-term income taxes payable	1,086		1,076
Long-term operating lease liabilities	92		—
Other long-term liabilities	67		78
Long-term liabilities of discontinued operations	—		715
Total liabilities	9,870		10,200
Commitments and contingencies (Note 17)
Stockholders’ equity:
Preferred stock, $0.01 par value: 1 shares authorized; 0 shares issued and outstanding	—		—
Common stock and additional paid-in capital, $0.01 par value: 3,000 shares authorized; 614 and 630 shares issued and outstanding as of January 3, 2020 and March 29, 2019, respectively	4,853		4,812
Accumulated other comprehensive loss	12		(7		)
Retained earnings	3,812		933
Total stockholders’ equity	8,677		5,738
Total liabilities and stockholders’ equity	$	18,547	$	15,938



☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	Three Months Ended						Nine Months Ended
	January 3, 2020			December 28, 2018			January 3, 2020			December 28, 2018
Net revenues	$	618		$	615		$	1,876		$	1,839
Cost of revenues	103			110			296			331
Gross profit	515			505			1,580			1,508
Operating expenses:
Sales and marketing	178			166			551			537
Research and development	72			110			258			322
General and administrative	85			98			271			317
Amortization of intangible assets	20			19			61			59
Restructuring, transition and other costs	98			50			128			187
Total operating expenses	453			443			1,269			1,422
Operating income	62			62			311			86
Interest expense	(51		)	(53		)	(146		)	(157		)
Other income (expense), net	399			(18		)	397			(56		)
Income (loss) from continuing operations before income taxes	410			(9		)	562			(127		)
Income tax expense	57			10			133			20
Income (loss) from continuing operations	353			(19		)	429			(147		)
Income from discontinued operations	2,492			84			3,227			144
Net income (loss)	$	2,845		$	65		$	3,656		$	(3	)

Income (loss) per share - basic:
Continuing operations	$	0.57		$	(0.03	)	$	0.69		$	(0.23	)
Discontinued operations	$	4.01		$	0.13		$	5.20		$	0.23
Net income (loss) per share - basic ⁽¹⁾	$	4.58		$	0.10		$	5.90		$	—

Income (loss) per share - diluted:
Continuing operations	$	0.55		$	(0.03	)	$	0.67		$	(0.23	)
Discontinued operations	$	3.85		$	0.13		$	5.01		$	0.23
Net income (loss) per share - diluted ⁽¹⁾	$	4.40		$	0.10		$	5.68		$	—

Weighted-average shares outstanding:
Basic	621			637			620			631
Diluted	647			637			644			631



Three months ended January 3, 2020	Common Stock and Additional Paid-In Capital					Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total Stockholders’ Equity
	Shares		Amount			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total Stockholders’ Equity
Balance as of October 4, 2019	623		$	4,816		$	(2	)	$	1,298		$	6,112
Net income	—		—			—			2,845			2,845
Other comprehensive income	—		—			14			—			14
Common stock issued under employee stock incentive plans	5		21			—			—			21
Shares withheld for taxes related to vesting of restricted stock units	(1	)	(7		)	—			—			(7		)
Repurchases of common stock	(13	)	(110		)	—			(253		)	(363		)
Cash dividends declared ($0.125 per share of common stock) and dividend equivalents accrued	—		—			—			(78		)	(78		)
Stock-based compensation	—		124			—			—			124
Short-swing profit disgorgement	—		9			—			—			9
Balance as of January 3, 2020	614		$	4,853		$	12		$	3,812		$	8,677



Nine months ended January 3, 2020	Common Stock and Additional Paid-In Capital					Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total Stockholders’ Equity
	Shares		Amount			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total Stockholders’ Equity
Balance as of March 29, 2019	630		$	4,812		$	(7	)	$	933		$	5,738
Net income	—		—			—			3,656			3,656
Other comprehensive income	—		—			19			—			19
Common stock issued under employee stock incentive plans	27		109			—			—			109
Shares withheld for taxes related to vesting of restricted stock units	(4	)	(71		)	—			—			(71		)
Repurchases of common stock	(39	)	(300		)	—			(604		)	(904		)
Cash dividends declared ($0.275 per share of common stock) and dividend equivalents accrued	—		—			—			(173		)	(173		)
Stock-based compensation	—		294			—			—			294
Short-swing profit disgorgement	—		9			—			—			9
Balance as of January 3, 2020	614		$	4,853		$	12		$	3,812		$	8,677



Three months ended December 28, 2018	Common Stock and Additional Paid-In Capital					Accumulated Other Comprehensive Loss			Retained Earnings			Total Stockholders’ Equity
	Shares		Amount			Accumulated Other Comprehensive Loss			Retained Earnings			Total Stockholders’ Equity
Balance as of September 28, 2018	632		$	4,867		$	(17	)	$	1,100		$	5,950
Net income	—		—			—			65			65
Other comprehensive income	—		—			3			—			3
Common stock issued under employee stock incentive plans	13		2			—			—			2
Shares withheld for taxes related to vesting of restricted stock units	(6	)	(115		)	—			—			(115		)
Cash dividends declared ($0.075 per share of common stock) and dividend equivalents accrued	—		—			—			(49		)	(49		)
Stock-based compensation	—		50			—			—			50
Balance as of December 28, 2018	639		$	4,804		$	(14	)	$	1,116		$	5,906



Nine months ended December 28, 2018	Common Stock and Additional Paid-In Capital					Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total Stockholders’ Equity
	Shares		Amount			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total Stockholders’ Equity
Balance as of March 30, 2018	624		$	4,691		$	4		$	328		$	5,023
Cumulative effect from adoption of accounting standard	—		—			—			939			939
Net loss	—		—			—			(3		)	(3		)
Other comprehensive loss	—		—			(18		)	—			(18		)
Common stock issued under employee stock incentive plans	23		8			—			—			8
Shares withheld for taxes related to vesting of restricted stock units	(8	)	(168		)	—			—			(168		)
Cash dividends declared ($0.225 per share of common stock) and dividend equivalents accrued	—		—			—			(148		)	(148		)
Stock-based compensation	—		273			—			—			273
Balance as of December 28, 2018	639		$	4,804		$	(14	)	$	1,116		$	5,906



(In millions)
Cash proceeds	$	10,582
Income taxes withheld by Broadcom	109
Net assets sold	(5,225		)
Transaction costs	(38		)
Foreign exchange impact	(6		)
Total gain on sale	$	5,422



(In millions)
Current assets	$	157
Intangible assets, net	934
Goodwill	5,773
Other long-term assets	252
Current contract liabilities	(1,200		)
Other current liabilities	(28		)
Long-term contract liabilities	(629		)
Other long-term liabilities	(34		)
Total net assets sold	$	5,225



	Nine Months Ended
	January 3, 2020
Weighted-average remaining lease term	4.6 years
Weighted-average discount rate	4.08	%



(In millions)
Remainder of 2020	$	10
2021	35
2022	30
2023	22
2024	19
Thereafter	20
Total lease payments	136
Less: Imputed interest	(12		)
Present value of lease liabilities	$	124



(In millions)
2020	$	55
2021	49
2022	40
2023	32
2024	26
Thereafter	42
Total minimum future lease payments	$	244



	January 3, 2020							March 29, 2019
(In millions)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	541	$	(227	)	$	314	$	541	$	(168	)	$	373
Developed technology	142		(83		)	59		143		(61		)	82
Other	4		(2		)	2		6		(3		)	3
Total finite-lived intangible assets	687		(312		)	375		690		(232		)	458
Indefinite-lived trade names	744		—			744		744		—			744
Total intangible assets	$	1,431	$	(312	)	$	1,119	$	1,434	$	(232	)	$	1,202



(In millions)
Remainder of 2020	$	28
2021	108
2022	100
2023	79
2024	59
Thereafter	1
Total	$	375



	Three Months Ended				Nine Months Ended				Statements of Operations Classification
(In millions)	January 3, 2020		December 28, 2018		October 4, 2019		September 28, 2018		Statements of Operations Classification
Customer relationships and other	$	20	$	19	$	61	$	59	Operating expenses
Developed technology	8		9		23		22		Cost of revenues
Total	$	28	$	28	$	84	$	81



	January 3, 2020		March 29, 2019
Cash	$	648	$	376
Cash equivalents	12,001		1,415
Total cash and cash equivalents	$	12,649	$	1,791



	January 3, 2020		March 29, 2019
Prepaid expenses	$	118	$	136
Income tax receivable and prepaid income taxes	49		61
Other tax receivable	161		69
Other	83		20
Total other current assets	$	411	$	286



	January 3, 2020			March 29, 2019
Land	$	21		$	65
Computer hardware and software	786			814
Office furniture and equipment	95			105
Buildings	213			364
Leasehold improvements	178			327
Construction in progress	3			9
Total property and equipment, gross	1,296			1,684
Accumulated depreciation and amortization	(931		)	(1,021		)
Total property and equipment, net	$	365		$	663



	January 3, 2020		March 29, 2019
Cost method investments	$	185	$	184
Equity method investment	—		32
Long-term income tax receivable and prepaid income taxes	43		34
Deferred income tax assets	404		830
Other	77		80
Total other long-term assets	$	709	$	1,160



	January 3, 2020		March 29, 2019
Deferred revenue	$	674	$	527
Customer deposit liabilities	345		505
Total short-term contract liabilities	$	1,019	$	1,032



	January 3, 2020		March 29, 2019
Income taxes payable	$	2,086	$	103
Other taxes payable	232		143
Other	286		278
Total other current liabilities	$	2,604	$	524



	January 3, 2020		March 29, 2019
Deemed repatriation tax payable	$	626	$	703
Uncertain tax positions (including interest and penalties)	460		373
Total long-term income taxes payable	$	1,086	$	1,076


•	Level 1: Quoted prices in active markets for identical assets or liabilities.


•	Level 3: Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of assets or liabilities. We monitor and review the inputs and results of these valuation models to help ensure the fair value measurements are reasonable and consistent with market experience in similar asset classes.



(In millions)	Fair Value
Due in one year or less	$	1,784
Due after one year through five years	36
Total	$	1,820



(In millions, except percentages)	January 3, 2020			March 29, 2019			Effective Interest Rate
4.2% Senior Notes due September 15, 2020	$	750		$	750		4.25	%
2.5% Convertible Senior Notes due April 1, 2022	500			500			3.76	%
Senior Term Loan A-5 due August 1, 2021	—			500			LIBOR plus ⁽¹⁾
2.0% Convertible Senior Notes due August 15, 2022	1,250			1,250			2.66	%
3.95% Senior Notes due June 15, 2022	400			400			4.05	%
Term Loan due November 4, 2024	500			—			LIBOR plus ⁽¹⁾
5.0% Senior Notes due April 15, 2025	1,100			1,100			5.23	%
Total principal amount	4,500			4,500
Less: unamortized discount and issuance costs	(32		)	(48		)
Total debt	4,468			4,452
Less: current portion	(749		)	(491		)
Total long-term debt	$	3,719		$	3,961


(1)	The term loans bear interest at a rate equal to the London Interbank Offered Rate (LIBOR) plus a margin based on the current debt rating of our non-credit-enhanced, senior unsecured long-term debt and the underlying loan agreement. The interest rates for the outstanding term loans are as follows:



(In millions)	Liability Balance as of March 29, 2019		Net Charges		Cash Payments			Non-Cash Items			Liability Balance as of January 3, 2020
Severance and termination benefit costs	$	—	$	88	$	(47	)	$	—		$	41
Contract cancellation charges	—		71		—			(9		)	63
Stock-based compensation charges	—		101		—			(101		)	—
Asset write-offs	—		23		—			(23		)	—
Other exit and disposal costs	—		2		—			(1		)	1
Total	$	—	$	285	$	(47	)	$	(134	)	$	105



(In millions)
Balance as of March 29, 2019	$	446
Settlements with tax authorities	(1		)
Lapse of statute of limitations	(14		)
Increase related to prior period tax positions	84
Increase related to current year tax positions	54
Balance as of January 3, 2020	$	569



	Three Months Ended January 3, 2020		Nine Months Ended January 3, 2020
(In millions, except per share amounts)	Three Months Ended January 3, 2020		Nine Months Ended January 3, 2020
Number of shares repurchased	14		39
Average price per share	$	25.79	$	23.28
Aggregate purchase price	$	364	$	904



(In millions)	Foreign Currency Translation Adjustments			Unrealized Gain (Loss) on Available-For-Sale Securities			Equity Method Investee			Total
Balance as of March 29, 2019	$	(5	)	$	(1	)	$	(1	)	$	(7	)
Other comprehensive income before reclassifications	17			1			2			20
Reclassifications to net income (loss)	—			—			(1		)	(1		)
Balance as of January 3, 2020	$	12		$	—		$	—		$	12



	Nine Months Ended
(In millions, except per grant data)	January 3, 2020		December 28, 2018
Restricted stock units (RSUs):
Weighted-average fair value per award granted	$	19.56	$	21.71
Awards granted	13		14
Total fair value of awards released	$	251	$	203
Outstanding and unvested	8		21
Performance-based restricted stock units (PRUs):
Weighted-average fair value per award granted	$	13.42	$	21.21
Awards granted	2		2
Total fair value of awards released	$	33	$	261
Outstanding and unvested at target payout	1		4
Stock options:
Weight-average fair value per award granted	$	4.76	$	—
Awards granted	2		—
Total intrinsic value of stock options exercised	$	159	$	13
Outstanding	3		12
Exercisable	2		12
Restricted stock:
Outstanding and unvested	—		1


(1)	No individual country represented more than 10% of the respective totals.



(In millions)	January 3, 2020
U.S.	$	50
India	14
Japan	11
Other Countries⁽¹⁾	32
Total operating lease assets	$	107