Subsequent Events

6 Months Ended

Oct. 04, 2019

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Sale of equity method investment

On October 16, 2019, Clearlake Capital Group, L.P. (Clearlake), a private investment firm, and TA Associates, an existing investor of DigiCert and a private equity firm, completed an investment in DigiCert. As a part of the transaction, Clearlake and TA became equal partners in DigiCert. As a result, we received $378 million in cash for our equity investment in DigiCert. We expect to make income tax payments of approximately $55 million as a result of the transaction. As a result of the transaction, we expect to recognize a gain of approximately $310 million to $320 million, net of taxes.

Divestiture of Enterprise Security business

On November 4, 2019, we completed the sale of certain assets and the assumption of certain liabilities of our Enterprise Security business to Broadcom for a purchase price of $10.7 billion. In connection with the transaction, we expect to incur direct costs of $35 million to $40 million. We expect to pay $2.2 billion to $2.6 billion in U.S. and foreign income taxes as a result of the transaction. As a result of the transaction, we expect to recognize a gain of approximately $2 billion to $3 billion, net of taxes. We expect to distribute the net proceeds from the Broadcom sale to our stockholders through a special dividend in the fourth quarter of our 2020 fiscal year.

In connection with the Broadcom sale, we entered into a transition services agreement under which we will provide assistance to Broadcom including, but not limited to, business support services and information technology services for a period of six months.

New debt financing

On November 4, 2019, we entered into a credit agreement with financial institutions, which provides a revolving line of credit of $1,000 million through October 2024, a 5-year term loan of $500 million, and a delayed 5-year term loan commitment of $750 million through September 15, 2020. Interest on borrowings under the credit agreement can be based on a base rate or a London interbank offered rate (LIBOR) at our election. Based on our debt ratings and our consolidated leverage ratios as determined in accordance with the credit agreement, loans borrowed bear interest, in the case of base rate loans, at a per annum rate equal to the applicable base rate plus a margin ranging from 0.125% to 0.75%, and in the case of LIBOR loans, LIBOR plus a margin ranging from 1.125% to 1.75%. The unused revolving line of credit is subject to a commitment fee ranging from 0.125% to 0.30% per annum. The principal amount of the term loan is repayable in quarterly installments on the last business day of each calendar quarter commencing with the quarter ended March 31, 2021 in an amount equal to 1.25% of the aggregate principal amount of the term loan and in the outstanding principal amount upon the October 2024 maturity date.

The credit agreement contains customary representations and warranties, non-financial covenants for financial reporting, affirmative and negative covenants, including a covenant that we maintain a consolidated leverage ratio of not more than 5.25 to 1.0, or 5.75 to 1.0 if we acquire assets or business in an aggregate amount greater than $250 million, and restrictions on subsidiary indebtedness, liens, stock repurchases, and dividends (with exceptions permitting our regular quarterly dividend).

Dividends

On November 7, 2019, we announced a cash dividend of $0.125 per share of common stock to be paid in December 2019. All shares of common stock issued and outstanding and all RSUs and PRUs as of the record date will be entitled to the dividend and dividend equivalents, respectively. Any future dividends and dividend equivalents will be subject to the approval of our Board of Directors.

November 2019 Restructuring Plan

On November 5, 2019, in connection with the strategic decision to divest our enterprise business, our Board of Directors approved a restructuring plan (the November 2019 Plan). Actions under this plan will include the reduction of our workforce by approximately 3,100 employees, as well as asset impairments, contract terminations, facilities closures, and the sale of underutilized facilities. We estimate that we will incur total costs of $800 million in connection with the November 2019 Plan of

which approximately $350 million are expected to consist of cash expenditures for severance and termination benefits. These actions are expected to be completed within the next twelve months.