(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Title of each class | Trading Symbol | Name of each exchange on which registered | |
par value $0.01 per share |
Exhibit Number | Exhibit Title or Description | |
99.01 | ||
99.02 | ||
104 | The cover page of this Current Report on Form 8-K, formatted in Inline XBRL. |
NortonLifeLock Inc. | ||
Date: November 8, 2019 | By: /s/ VINCENT PILETTE Vincent Pilette Executive Vice President and Chief Financial Officer | |
Historical | Enterprise Security Disposal Group | (1) | Other Pro Forma Adjustments | Pro Forma | |||||||||||||
ASSETS | |||||||||||||||||
Current assets: | |||||||||||||||||
Cash and cash equivalents | $ | 1,697 | $ | — | $ | 10,570 | (2) | $ | 12,267 | ||||||||
Short-term investments | 134 | — | — | 134 | |||||||||||||
Accounts receivable, net | 593 | — | — | 593 | |||||||||||||
Other current assets | 289 | — | 20 | (3) | 309 | ||||||||||||
Current assets of discontinued operations | 7,047 | (7,047 | ) | — | — | ||||||||||||
Total current assets | 9,760 | (7,047 | ) | 10,590 | 13,303 | ||||||||||||
Property and equipment, net | 676 | (60 | ) | — | 616 | ||||||||||||
Operating lease assets | 154 | (20 | ) | — | 134 | ||||||||||||
Intangible assets, net | 1,146 | — | — | 1,146 | |||||||||||||
Goodwill | 2,675 | — | — | 2,675 | |||||||||||||
Other long-term assets | 1,818 | (3 | ) | (1,048 | ) | (4) | 767 | ||||||||||
Total assets | $ | 16,229 | $ | (7,130 | ) | $ | 9,542 | $ | 18,641 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||||
Current liabilities: | |||||||||||||||||
Accounts payable | $ | 120 | $ | — | $ | 35 | (5) | $ | 155 | ||||||||
Accrued compensation and benefits | 219 | (5 | ) | — | 214 | ||||||||||||
Current portion of long-term debt | 1,245 | — | — | 1,245 | |||||||||||||
Contract liabilities | 990 | — | — | 990 | |||||||||||||
Current operating lease liabilities | 36 | (3 | ) | — | 33 | ||||||||||||
Other current liabilities | 514 | — | 2,198 | (6) | 2,712 | ||||||||||||
Current liabilities of discontinued operations | 1,932 | (1,932 | ) | — | — | ||||||||||||
Total current liabilities | 5,056 | (1,940 | ) | 2,233 | 5,349 | ||||||||||||
Long-term debt | 3,219 | — | — | 3,219 | |||||||||||||
Long-term contract liabilities | 26 | — | — | 26 | |||||||||||||
Deferred income tax liabilities | 538 | — | (328 | ) | (4) | 210 | |||||||||||
Long-term income taxes payable | 1,069 | — | — | 1,069 | |||||||||||||
Long-term operating lease liabilities | 137 | (21 | ) | — | 116 | ||||||||||||
Other long-term liabilities | 72 | (8 | ) | — | 64 | ||||||||||||
Total liabilities | 10,117 | (1,969 | ) | 1,905 | 10,053 | ||||||||||||
Stockholders' equity: | |||||||||||||||||
Preferred stock, $0.01 par value: 1 shares authorized; 0 shares issued and outstanding | — | — | — | — | |||||||||||||
Common stock and additional paid-in capital, $0.01 par value: 3,000 shares authorized; 623 shares issued and outstanding as of October 4, 2019 | 4,816 | — | — | 4,816 | |||||||||||||
Accumulated other comprehensive loss | (2 | ) | — | — | (2 | ) | |||||||||||
Retained earnings | 1,298 | — | 2,476 | (7) | 3,774 | ||||||||||||
Total stockholders’ equity | 6,112 | — | 2,476 | 8,588 | |||||||||||||
Total liabilities and stockholders’ equity | $ | 16,229 | $ | (1,969 | ) | $ | 4,381 | $ | 18,641 |
Historical | Enterprise Security Disposal Group | (1) | Pro Forma | |||||||||
Net revenues | $ | 1,258 | $ | — | $ | 1,258 | ||||||
Cost of revenues | 200 | 7 | 193 | |||||||||
Gross profit | 1,058 | (7 | ) | 1,065 | ||||||||
Operating expenses: | ||||||||||||
Sales and marketing | 374 | 2 | 372 | |||||||||
Research and development | 188 | 2 | 186 | |||||||||
General and administrative | 188 | 1 | 187 | |||||||||
Amortization of intangible assets | 41 | — | 41 | |||||||||
Restructuring, transition and other costs | 30 | — | 30 | |||||||||
Total operating expenses | 821 | 5 | 816 | |||||||||
Operating income (loss) | 237 | (12 | ) | 249 | ||||||||
Interest expense | (95 | ) | — | (95 | ) | |||||||
Other expense, net | (2 | ) | — | (2 | ) | |||||||
Income (loss) from continuing operations before income taxes | 140 | (12 | ) | 152 | ||||||||
Income tax expense (benefit) | 70 | (6 | ) | 76 | ||||||||
Income (loss) from continuing operations, net of income taxes | $ | 70 | $ | (6 | ) | $ | 76 | |||||
Income per share from continuing operations: | ||||||||||||
Basic | $ | 0.11 | $ | 0.12 | ||||||||
Diluted | $ | 0.11 | $ | 0.12 | ||||||||
Weighted-average shares outstanding: | ||||||||||||
Basic | 619 | 619 | ||||||||||
Diluted | 643 | 643 |
Historical | Enterprise Security Disposal Group | Pro Forma | |||||||||
Net revenues | $ | 4,731 | $ | 2,275 | $ | 2,456 | |||||
Cost of revenues | 1,050 | 595 | 455 | ||||||||
Gross profit | 3,681 | 1,680 | 2,001 | ||||||||
Operating expenses: | |||||||||||
Sales and marketing | 1,493 | 781 | 712 | ||||||||
Research and development | 913 | 493 | 420 | ||||||||
General and administrative | 447 | 36 | 411 | ||||||||
Amortization of intangible assets | 207 | 127 | 80 | ||||||||
Restructuring, transition and other costs | 241 | 21 | 220 | ||||||||
Total operating expenses | 3,301 | 1,458 | 1,843 | ||||||||
Operating income | 380 | 222 | 158 | ||||||||
Interest expense | (208 | ) | — | (208 | ) | ||||||
Other expense, net | (64 | ) | (6 | ) | (58 | ) | |||||
Income (loss) from continuing operations before income taxes | 108 | 216 | (108 | ) | |||||||
Income tax expense | 92 | 89 | 3 | ||||||||
Income (loss) from continuing operations, net of income taxes | $ | 16 | $ | 127 | $ | (111 | ) | ||||
Income (loss) per share from continuing operations: | |||||||||||
Basic | $ | 0.03 | $ | (0.18 | ) | ||||||
Diluted | $ | 0.02 | $ | (0.18 | ) | ||||||
Weighted-average shares outstanding: | |||||||||||
Basic | 632 | 632 | |||||||||
Diluted | 661 | 632 |
Historical | Enterprise Security Disposal Group | Pro Forma | |||||||||
Net revenues | $ | 4,834 | $ | 2,275 | $ | 2,559 | |||||
Cost of revenues | 1,032 | 569 | 463 | ||||||||
Gross profit | 3,802 | 1,706 | 2,096 | ||||||||
Operating expenses: | |||||||||||
Sales and marketing | 1,593 | 752 | 841 | ||||||||
Research and development | 956 | 502 | 454 | ||||||||
General and administrative | 574 | 87 | 487 | ||||||||
Amortization of intangible assets | 220 | 132 | 88 | ||||||||
Restructuring, transition and other costs | 410 | 30 | 380 | ||||||||
Total operating expenses | 3,753 | 1,503 | 2,250 | ||||||||
Operating income (loss) | 49 | 203 | (154 | ) | |||||||
Interest expense | (256 | ) | — | (256 | ) | ||||||
Gain on divestiture | 653 | — | 653 | ||||||||
Other income (expense), net | (9 | ) | (10 | ) | 1 | ||||||
Income from continuing operations before income taxes | 437 | 193 | 244 | ||||||||
Income tax expense (benefit) | (690 | ) | 30 | (720 | ) | ||||||
Income from continuing operations, net of income taxes | $ | 1,127 | $ | 163 | $ | 964 | |||||
Income per share from continuing operations: | |||||||||||
Basic | $ | 1.83 | $ | 1.56 | |||||||
Diluted | $ | 1.69 | $ | 1.44 | |||||||
Weighted-average shares outstanding: | |||||||||||
Basic | 616 | 616 | |||||||||
Diluted | 668 | 668 |
Historical | Enterprise Security Disposal Group | Pro Forma | |||||||||
Net revenues | $ | 4,019 | $ | 1,928 | $ | 2,091 | |||||
Cost of revenues | 853 | 504 | 349 | ||||||||
Gross profit | 3,166 | 1,424 | 1,742 | ||||||||
Operating expenses: | |||||||||||
Sales and marketing | 1,459 | 691 | 768 | ||||||||
Research and development | 823 | 412 | 411 | ||||||||
General and administrative | 564 | 83 | 481 | ||||||||
Amortization of intangible assets | 147 | 105 | 42 | ||||||||
Restructuring, transition and other costs | 273 | 108 | 165 | ||||||||
Total operating expenses | 3,266 | 1,399 | 1,867 | ||||||||
Operating income (loss) | (100 | ) | 25 | (125 | ) | ||||||
Interest expense | (208 | ) | — | (208 | ) | ||||||
Other income, net | 46 | 2 | 44 | ||||||||
Income (loss) from continuing operations before income taxes | (262 | ) | 27 | (289 | ) | ||||||
Income tax expense (benefit) | (26 | ) | 137 | (163 | ) | ||||||
Loss from continuing operations, net of income taxes | $ | (236 | ) | $ | (110 | ) | $ | (126 | ) | ||
Loss per share from continuing operations: | |||||||||||
Basic | $ | (0.38 | ) | $ | (0.20 | ) | |||||
Diluted | $ | (0.38 | ) | $ | (0.20 | ) | |||||
Weighted-average shares outstanding: | |||||||||||
Basic | 618 | 618 | |||||||||
Diluted | 618 | 618 |
(1) | The assets and liabilities and direct results of the Enterprise Security Group are presented as discontinued operations for the period as of, and for the six months ended, October 4, 2019 in our quarterly report on Form 10-Q for the quarterly period ended October 4, 2019. Adjustments were identified subsequent to October 4, 2019. |
(2) | Reflects the net cash proceeds of approximately $10,570 million received in connection with the Broadcom sale. Net cash proceeds are calculated as the purchase price of $10,700 million, less tax withholdings of $110 million Buyer paid to Irish tax authorities on the Company’s behalf, less $20 million receivable from the delayed closings in certain non-U.S. jurisdictions in accordance with the terms of the Purchase Agreement. |
(3) | Represents the $20 million receivable from the delayed closings in certain non-U.S. jurisdictions in accordance with the terms of the Purchase Agreement. |
(4) | Reflects estimates of the deferred tax assets and liabilities derecognized in connection with the Broadcom sale. The deferred tax asset balance derecognized is primarily related to the tax basis in Irish intellectual property. The amount of deferred tax liability balance that was derecognized is primarily related to U.S. book basis intangible assets and deferred intercompany royalties. Temporary differences associated with fixed assets, deferred revenue, and other accruals are also derecognized. |
(5) | Represents estimated transaction costs incurred in connection with the Broadcom sale. |
(6) | Reflects an estimated $2,308 million payable for U.S. and foreign income taxes resulting from the Broadcom sale, less a tax liability of $110 million Buyer paid to tax authorities in Ireland on the Company’s behalf. |
(7) | Reflects the estimated after-tax gain related to the Broadcom sale as of October 4, 2019. The actual net gain will differ from the pro forma estimated gain due to the difference in timing between the assumed closing date for the unaudited Pro Forma Condensed Consolidated Financial Statements and the actual closing date of November 4, 2019. In addition, the actual gain on sale may differ from the pro forma estimated gain as additional information about the assets sold and liabilities assumed becomes available. Such changes could be significant. The following table reflects the components of the after-tax gain (amounts in millions). |
Net cash proceeds | $ | 10,570 | |
Tax liability assumed by Buyer | 110 | ||
Receivable due on delayed closing in certain non-U.S. jurisdictions | 20 | ||
Net assets sold | (5,161 | ) | |
Transaction costs | (35 | ) | |
Estimated pre-tax gain on the Broadcom sale | 5,504 | ||
Estimated tax expense on gain on the Broadcom sale | 3,028 | ||
Estimated after-tax gain on the Broadcom sale | $ | 2,476 |
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