Income Taxes

12 Months Ended

Mar. 28, 2025

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The components of our income (loss) before income taxes are as follows:

	Year Ended
(In millions)	March 28, 2025		March 29, 2024		March 31, 2023
Domestic	$	514	$	70	$	337
International	515		377		446
Income (loss) before income taxes	$	1,029	$	447	$	783

The components of income tax expense (benefit) are as follows:

	Year Ended
(In millions)	March 28, 2025		March 29, 2024		March 31, 2023
Current:
Federal	$	246	$	201	$	(479)
State	21		43		(28)
International	149		579		99
Total	416		823		(408)
Deferred:
Federal	(33)		(729)		(114)
State	13		(134)		(11)
International	(10)		(120)		(18)
Total	(30)		(983)		(143)
Income tax expense (benefit)	$	386	$	(160)	$	(551)

The U.S. federal statutory income tax rates we have applied for fiscal 2025, 2024 and 2023 are as follows:

	Year Ended
	March 28, 2025		March 29, 2024		March 31, 2023
U.S. federal statutory income tax rate	21.0	%	21.0	%	21.0	%

The difference between our effective income tax and the federal statutory income tax is as follows:

	Year Ended
(In millions)	March 28, 2025		March 29, 2024		March 31, 2023
Federal statutory tax expense (benefit)	$	216	$	93	$	165
State taxes, net of federal benefit	41		—		—
Foreign earnings taxed at other than the federal rate	(30)		(22)		(12)
Nondeductible expenses	31		48		20
Federal research and development credit	(4)		(6)		(5)
Valuation allowance increase (decrease)	10		(4)		(33)
Change in unrecognized tax benefits	(37)		338		163
Tax interest and penalties	84		129		13
Stock-based compensation	12		17		9
US tax on foreign earnings	55		20		12
Return to provision adjustment	4		—		1
Foreign exchange loss (gain)	10		(28)		(17)
Capital loss	—		(44)		(910)
Legal entity restructuring	—		(719)		42
Other, net	(6)		18		1
Income tax expense (benefit)	$	386	$	(160)	$	(551)

The principal components of deferred tax assets and liabilities are as follows:

(In millions)	March 28, 2025		March 29, 2024
Deferred tax assets:
Tax credit carryforwards	$	17	$	27
Net operating loss carryforwards of acquired companies	51		60
Interest	71		63
Other accruals and reserves not currently tax deductible	358		332
Goodwill	463		517
Capitalized research and experimental expenditures	112		82
Loss on investments not currently tax deductible	74		60
Other	61		77
Gross deferred tax assets	1,207		1,218
Valuation allowance	(107)		(93)
Deferred tax assets, net of valuation allowance	1,100		1,125
Deferred tax liabilities:
Intangible assets	(91)		(127)
Unremitted earnings of foreign subsidiaries	(4)		(14)
Other	(9)		(9)
Deferred tax liabilities	(104)		(150)
Net deferred tax assets (liabilities)	$	996	$	975

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their basis for income tax purposes and the tax effects of net operating losses and tax credit carryforwards.

The valuation allowance provided against our deferred tax assets as of March 28, 2025 of $107 million is provided primarily against state and foreign capital loss carryforwards and certain tax credits.

As of March 28, 2025, we have U.S. federal net operating losses attributable to various acquired companies of approximately $176 million, of which $30 million begins to expire in fiscal 2026 and $146 million has an indefinite life. The net operating loss carryforwards are subject to an annual limitation under U.S. federal tax regulations but are expected to be fully realized. Furthermore, we have U.S. state net operating loss carryforwards attributable to various acquired companies of approximately $108 million. If not used, our U.S. state net operating losses will expire between fiscal 2033 and 2038. In addition, we have foreign net operating loss carryforwards of approximately $37 million.

In assessing the realizability of our gross deferred tax assets, we consider both the positive and negative evidence of future taxable income to support utilization. We considered the following: historical cumulative book income, as measured by the current and prior two years; historical taxable income; and future reversals of taxable temporary differences. The valuation allowance for deferred tax assets as of March 28, 2025 was $107 million. The valuation allowance was primarily related to tax attribute carryforwards that, in the judgement of management, are not more likely than not to be realized.

In the second quarter of fiscal 2024, as part of the Avast integration plan, which geographically realigned and simplified our business, we undertook a legal entity and operational restructuring. As part of that process, we distributed certain assets within the legal entity operating structure and as a result, we recorded a net tax benefit of $285 million in fiscal 2024. Differences between the final outcome and recorded amounts will impact the provision for income taxes in the period in which such a determination is made and could have a material impact on our Consolidated Balance Sheets and Statements of Operations in future years.

The aggregate changes in the balance of gross unrecognized tax benefits were as follows:

	Year Ended
(In millions)	March 28, 2025		March 29, 2024		March 31, 2023
Balance at beginning of year	$	1,163	$	710	$	527
Settlements with tax authorities	—		(8)		(2)
Lapse of statute of limitations	(27)		(14)		(96)
Increase related to prior period tax positions	14		47		9
Decrease related to prior period tax positions	(13)		(9)		(15)
Increase related to current year tax positions	9		467		259
Increase due to acquisition	—		—		28
Increase (decrease) related to foreign currency exchange rates	7		(30)		—
Balance at end of year	$	1,153	$	1,163	$	710

There was a change of $10 million in gross unrecognized tax benefits during the year ended March 28, 2025, as disclosed above. This gross liability does not include offsetting tax benefits associated with the correlative effects of potential transfer pricing adjustments, interest deductions and state income taxes.

Of the total unrecognized tax benefits at March 28, 2025, $974 million, if recognized, would affect our effective tax rate.

We recognize interest and/or penalties related to unrecognized tax benefits in income tax expense. At March 28, 2025, before any tax benefits, we had $309 million of accrued interest and penalties on unrecognized tax benefits. Interest included in our provision for income taxes was an expense of approximately $83 million for fiscal 2025. If the accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced in the period that such determination is made and reflected as a reduction of the overall income tax provision.

We file income tax returns in the U.S. and in many U.S. state and foreign jurisdictions. Our most significant tax jurisdictions are U.S. federal, Ireland, and the Czech Republic. Our tax filings remain subject to examination by applicable tax authorities for a certain length of time following the tax year to which those filings relate. Our fiscal years 2018 through 2024 remain subject to examination by the IRS for U.S. federal tax purposes. Our 2021 through 2024 fiscal years remain subject to examination by the appropriate governmental agencies for Irish tax purposes. Our 2017 through 2024 fiscal years remain subject to examination by the Czech tax authorities.

The timing of the resolution of income tax examinations is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year. Although potential resolution of these matters involves multiple tax periods and jurisdictions, it is reasonably possible that the gross unrecognized tax benefits related to these audits could significantly change (whether by payment, release, or a combination of both) in the next 12 months; however, an estimate of this range cannot be made. Depending on the nature of the settlement or expiration of statutes of limitations, it could affect our income tax provision and therefore benefit the resulting effective tax rate.

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

We provide U.S. income taxes on the earnings of foreign subsidiaries unless the subsidiaries’ earnings are considered permanently reinvested outside the U.S. or are exempted from further taxation. As of March 28, 2025, the tax liability recorded on the undistributed earnings is approximately $4 million.