April 1, 2022
| Ireland | ||||||||
(State or other jurisdiction of | (I.R.S. Employer | |||||||
| incorporation or organization) |
Identification Number) | |||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
| Ordinary Shares, par value $0.00001 per share | STX | The NASDAQ Global Select Market | ||||||||||||
| Large accelerated | ☒ | ☐ | ||||||||||||||
| 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. ☐
Item 1. Table of Contents Current assets: Cash and cash equivalents Accounts receivable, net Inventories Other current assets Total current assets Property, equipment and leasehold improvements, net Goodwill Other intangible assets, net Deferred income taxes Other assets, net Total Assets Current liabilities: Accounts payable Accrued employee compensation Accrued warranty Current portion of long-term debt Accrued expenses Total current liabilities Long-term accrued warranty Long-term accrued income taxes Othernon-current liabilities Long-term debt Total Liabilities Commitments and contingencies (See Notes 12, 14 and 15) Shareholders’ Equity: Ordinary shares and additionalpaid-in capital Accumulated other comprehensive loss Accumulated deficit Total Equity Total Liabilities and Equity Revenue Cost of revenue Product development Marketing and administrative Amortization of intangibles Restructuring and other, net Total operating expenses Income from operations Interest income Interest expense Other, net Other expense, net Income before income taxes Provision for income taxes Net income Net income per share: Basic Diluted Number of shares used in per share calculations: Basic Diluted Cash dividends declared per ordinary share Net income Other comprehensive income (loss), net of tax: Cash flow hedges Change in net unrealized gain (loss) on cash flow hedges Less: reclassification for amounts included in net income Net change Marketable securities Change in net unrealized gain (loss) on marketable securities Less: reclassification for amounts included in net income Net change Post-retirement plans Change in unrealized gain (loss) on post-retirement plans Less: reclassification for amounts included in net income Net change Foreign currency translation adjustments Total other comprehensive income (loss), net of tax Comprehensive income OPERATING ACTIVITIES Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Share-based compensation Impairment of long-lived assets Deferred income taxes Othernon-cash operating activities, net Changes in operating assets and liabilities: Accounts receivable, net Inventories Accounts payable Accrued employee compensation Accrued expenses, income taxes and warranty Vendor receivables Other assets and liabilities Net cash provided by operating activities INVESTING ACTIVITIES Acquisition of property, equipment and leasehold improvements Proceeds from the sale of property and equipment Maturities of short-term investments Other investing activities, net Net cash used in investing activities FINANCING ACTIVITIES Redemption and repurchase of debt Taxes paid related to net share settlement of equity awards Repurchases of ordinary shares Dividends to shareholders Proceeds from issuance of ordinary shares under employee stock plans Net cash used in financing activities Effect of foreign currency exchange rate changes on cash, cash equivalents, and restricted cash Increase in cash, cash equivalents, and restricted cash Cash, cash equivalents, and restricted cash at the beginning of the period Cash, cash equivalents, and restricted cash at the end of the period Balance at June 30, 2017 Net income Other comprehensive income Issuance of ordinary shares under employee stock plans Repurchases of ordinary shares Tax withholding related to vesting of restricted stock units Dividends to shareholders Share-based compensation Balance at December 29, 2017 legacy applications. at the metro edge, a converged object storage solution enabling efficient capture and consolidation of massive data sets and Cortx, an open-source object storage software optimized for mass capacity and data intensive workloads. The results of operations and the cash flows for the three and 6, 2021. (Dollars in millions) Available-for-sale securities: Money market funds Time deposits and certificates of deposit Total Included in Cash and cash equivalents Included in Other current assets Total April 1, 2022 and July 2, 2021: April 1, 2022. The Company determined no impairment related to credit losses for available-for-sale debt securities as of July 2, 2021. (Dollars in millions) Due in less than 1 year Due in 1 to 5 years Due in 6 to 10 years Thereafter Total (Dollars in millions) Available-for-sale securities: Money market funds Time deposits and certificates of deposit Total Included in Cash and cash equivalents Included in Other current assets Total (Dollars in millions) Cash and cash equivalents Restricted cash included in Other current assets Total cash, cash equivalents, and restricted cash shown in the Statements of Cash Flows (Dollars in millions) Raw materials and components Work-in-process Finished goods (Dollars in millions) Property, equipment and leasehold improvements Accumulated depreciation and amortization (Dollars in millions) Dividends payable Other accrued expenses Total (Dollars in millions) Balance at June 30, 2017 Other comprehensive income (loss) before reclassifications Amounts reclassified from AOCI Other comprehensive income (loss) Balance at December 29, 2017 Balance at July 1, 2016 Other comprehensive income (loss) before reclassifications Amounts reclassified from AOCI Other comprehensive income (loss) Balance at December 30, 2016 Fiscal Year Remainder of 2018 2019 2020 2021 2022 Thereafter Total quarter ended October 2, 2020. (Dollars in millions) Cash and cash equivalents Accounts receivable, net Inventories Other current andnon-current assets Property, plant and equipment Intangible assets Goodwill Total assets Accounts payable, accrued expenses and other Total liabilities Total (Dollars in millions) Existing technology Customer relationships Trade names Total amortizable intangible assets acquired In-process research and development Total acquired identifiable intangible assets (Dollars in millions) Balance at June 30, 2017 Goodwill acquired Goodwill disposed Foreign currency translation effect Balance at December 29, 2017 (Dollars in millions) Existing technology Customer relationships Trade name Other intangible assets Total amortizable other intangible assets (Dollars in millions) Existing technology Customer relationships Trade name Other intangible assets Total amortizable other intangible assets (Dollars in millions) Remainder of 2018 2019 2020 2021 2022 Thereafter Total (Dollars in millions) Restructuring charges Cash payments Adjustments plans: as of July 2, 2021, respectively. As of April 1, 2022, the amount of existing net gains related to cash flow hedges recorded in Accumulated other comprehensive loss included a net gain of $4 million that is expected to be reclassified to earnings within twelve months. contracts as of April 1, 2022 and July 2, 2021. All of the foreign currency forward exchange contracts mature within 12 months. as of April 1, 2022 and July 2, 2021: (Dollars in millions) Derivatives Not Designated as Hedging Instruments Foreign currency forward exchange contracts Total return swap April 1, 2022: (Dollars in millions) Derivatives Designated as Hedging Instruments Foreign currency forward exchange contracts Derivatives Not Designated as Hedging Instruments Foreign currency forward exchange contracts Total return swap April 2, 2021 (Dollars in millions) 3.75% Senior Notes due November 2018 4.25% Senior Notes due March 2022 4.75% Senior Notes due June 2023 4.875% Senior Notes due March 2024 4.75% Senior Notes due January 2025 4.875% Senior Notes due June 2027 5.75% Senior Notes due December 2034 Less: debt issuance costs Long-term debt, net of debt issuance costs Less: current portion of long-term debt Long-term debt, less current portion April 1, 2022. Directors resolved to adopt and continue the STUC Share Repurchase Program as its own and that the STX Board of Directors be authorized to effect the repurchase of STX ordinary shares in an amount equal to the remaining STUC Share Repurchase Program amount as of the effective time of the scheme of arrangement The following table sets forth information with respect to repurchases of PAGE NO. 92836PART II38383838Item 4.38Item 5.38Item 6.3940FINANCIAL INFORMATIONITEM 1.FINANCIAL STATEMENTSPage 991314151617182324252727(Unaudited) December 29,
2017 June 30,
2017 ASSETS $ 2,556 $ 2,539 1,055 1,199 1,014 982 285 321 4,910 5,041 1,762 1,875 1,238 1,238 222 281 402 609 216 224 $ 8,750 $ 9,268 LIABILITIES AND EQUITY $ 1,620 $ 1,626 183 237 111 113 560 — 639 650 3,113 2,626 125 120 12 15 123 122 4,316 5,021 7,689 7,904 6,246 6,152 (11 ) (17 ) (5,174 ) (4,771 ) 1,061 1,364 $ 8,750 $ 9,268 The information as of June 30, 2017 was derived from the Company’s audited Consolidated Balance Sheet as of June 30, 2017. April 1,
2022July 2,
2021(unaudited) ASSETS Current assets: Cash and cash equivalents $ 1,138 $ 1,209 Accounts receivable, net 1,344 1,158 Inventories 1,479 1,204 Other current assets 298 208 Total current assets 4,259 3,779 Property, equipment and leasehold improvements, net 2,197 2,181 Goodwill 1,237 1,237 Other intangible assets, net 14 29 Deferred income taxes 1,121 1,117 Other assets, net 317 332 Total Assets $ 9,145 $ 8,675 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 1,948 $ 1,725 Accrued employee compensation 194 282 Accrued warranty 64 61 Current portion of long-term debt 30 245 Accrued expenses 645 608 Total current liabilities 2,881 2,921 Long-term accrued warranty 84 75 Other non-current liabilities 145 154 Long-term debt, less current portion 5,614 4,894 Total Liabilities 8,724 8,044 Commitments and contingencies (See Notes 10, 12 and 13) Shareholders’ Equity: Ordinary shares and additional paid-in capital 7,151 6,977 Accumulated other comprehensive income (loss) 37 (41) Accumulated deficit (6,767) (6,305) Total Equity 421 631 Total Liabilities and Equity $ 9,145 $ 8,675 For the Three Months Ended For the Six Months Ended December 29,
2017 December 30,
2016 December 29,
2017 December 30,
2016 $ 2,914 $ 2,894 $ 5,546 $ 5,691 2,037 2,003 3,933 3,999 250 305 513 620 142 155 287 308 19 28 41 57 33 33 84 115 2,481 2,524 4,858 5,099 433 370 688 592 6 1 13 2 (61 ) (50 ) (122 ) (100 ) (7 ) (11 ) (20 ) (11 ) (62 ) (60 ) (129 ) (109 ) 371 310 559 483 212 13 219 19 $ 159 $ 297 $ 340 $ 464 $ 0.55 $ 1.00 $ 1.18 $ 1.56 0.55 1.00 1.17 1.55 288 296 289 297 291 298 291 299 $ 0.63 $ 0.63 $ 1.26 $ 1.26 For the Three Months Ended For the Nine Months Ended April 1,
2022April 2,
2021April 1,
2022April 2,
2021Revenue $ 2,802 $ 2,731 $ 9,033 $ 7,668 Cost of revenue 1,996 1,991 6,323 5,636 Product development 233 227 694 671 Marketing and administrative 141 126 410 366 Amortization of intangibles 3 3 9 9 Restructuring and other, net — (2) 2 1 Total operating expenses 2,373 2,345 7,438 6,683 Income from operations 429 386 1,595 985 Interest income — 1 1 2 Interest expense (63) (59) (184) (161) Other, net (15) 11 (14) 25 Other expense, net (78) (47) (197) (134) Income before income taxes 351 339 1,398 851 Provision for income taxes 5 10 25 19 Net income $ 346 $ 329 $ 1,373 $ 832 Net income per share: Basic $ 1.59 $ 1.41 $ 6.18 $ 3.38 Diluted 1.56 1.39 6.08 3.34 Number of shares used in per share calculations: Basic 218 233 222 246 Diluted 222 237 226 249 For the Three Months Ended For the Six Months Ended December 29,
2017 December 30,
2016 December 29,
2017 December 30,
2016 $ 159 $ 297 $ 340 $ 464 — (2 ) — (3 ) — — — 1 — (2 ) — (2 ) — — — — — — — — — — — — — — — — — — — — — — — — 2 (7 ) 6 (6 ) 2 (9 ) 6 (8 ) $ 161 $ 288 $ 346 $ 456 For the Three Months Ended For the Nine Months Ended April 1,
2022April 2,
2021April 1,
2022April 2,
2021Net income $ 346 $ 329 $ 1,373 $ 832 Other comprehensive income (loss), net of tax: Change in net unrealized gains (losses) on cash flow hedges: Net unrealized gains arising during the period 56 4 58 20 Losses (gains) reclassified into earnings 6 (7) 18 (9) Net change 62 (3) 76 11 Change in unrealized components of post-retirement plans: Net unrealized gains arising during the period — 1 1 — Losses reclassified into earnings — — 1 2 Net change — 1 2 2 Foreign currency translation adjustments — — — 15 Total other comprehensive income (loss), net of tax 62 (2) 78 28 Comprehensive income $ 408 $ 327 $ 1,451 $ 860 For the Six Months Ended December 29,
2017 December 30,
2016 $ 340 $ 464 318 391 59 73 — 9 204 3 3 18 145 110 (32 ) (140 ) 59 170 (54 ) 70 3 69 42 19 — (9 ) 1,087 1,247 (201 ) (235 ) 2 (1 ) — 6 (11 ) (4 ) (210 ) (234 ) (152 ) — (21 ) (24 ) (361 ) (248 ) (366 ) (188 ) 35 47 (865 ) (413 ) 5 (12 ) 17 588 2,543 1,132 $ 2,560 $ 1,720 For the Nine Months Ended April 1,
2022April 2,
2021OPERATING ACTIVITIES Net income $ 1,373 $ 832 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 324 294 Share-based compensation 106 87 Deferred income taxes 2 (7) Other non-cash operating activities, net 46 (8) Changes in operating assets and liabilities: Accounts receivable, net (186) 138 Inventories (275) (141) Accounts payable 209 60 Accrued employee compensation (88) (46) Accrued expenses, income taxes and warranty 19 — Other assets and liabilities (53) (61) Net cash provided by operating activities 1,477 1,148 INVESTING ACTIVITIES Acquisition of property, equipment and leasehold improvements (309) (374) Proceeds from sale of investments 34 11 Proceeds from the sale of assets — 4 Purchases of investments (18) (4) Maturities of short-term investments — 3 Net cash used in investing activities (293) (360) FINANCING ACTIVITIES Redemption and repurchase of debt (701) (27) Dividends to shareholders (458) (495) Repurchases of ordinary shares (1,313) (1,819) Taxes paid related to net share settlement of equity awards (45) (33) Proceeds from issuance of long-term debt 1,200 1,000 Proceeds from issuance of ordinary shares under employee stock plans 68 95 Other financing activities, net (6) (19) Net cash used in financing activities (1,255) (1,298) Decrease in cash, cash equivalents and restricted cash (71) (510) Cash, cash equivalents and restricted cash at the beginning of the period 1,211 1,724 Cash, cash equivalents and restricted cash at the end of the period $ 1,140 $ 1,214 STATEMENTSTATEMENTS OF SHAREHOLDERS’ EQUITYSixThree Months Ended December 29, 2017April 1, 2022 and April 2, 2021 Number
of
Ordinary
Shares Par Value
of Shares Additional
Paid-in
Capital Accumulated
Other
Comprehensive
Loss Accumulated
Deficit Total 292 $ — $ 6,152 $ (17 ) $ (4,771 ) $ 1,364 340 340 6 6 4 35 35 (10 ) (361 ) (361 ) (1 ) (21 ) (21 ) (361 ) (361 ) 59 59 285 $ — $ 6,246 $ (11 ) $ (5,174 ) $ 1,061 Number of Ordinary Shares Par Value of Shares Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Balance at December 31, 2021 219 $ — $ 7,084 $ (25) $ (6,533) $ 526 Net income 346 346 Other comprehensive income 62 62 Issuance of ordinary shares under employee share plans 1 31 31 Repurchases of ordinary shares (4) (428) (428) Dividends to shareholders ($0.70 per ordinary share) (152) (152) Share-based compensation 36 36 Balance at April 1, 2022 216 $ — $ 7,151 $ 37 $ (6,767) $ 421 Number of Ordinary Shares Par Value of Shares Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Balance at January 1, 2021 240 $ — $ 6,855 $ (36) $ (5,829) $ 990 Net income 329 329 Other comprehensive loss (2) (2) Issuance of ordinary shares under employee share plans 1 55 55 Repurchases of ordinary shares (11) (762) (762) Tax withholding related to vesting of restricted share units — (1) (1) Dividends to shareholders ($0.67 per ordinary share) (154) (154) Share-based compensation 29 29 Balance at April 2, 2021 230 $ — $ 6,939 $ (38) $ (6,417) $ 484 Number of Ordinary Shares Par Value of Shares Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Balance at July 2, 2021 227 $ — $ 6,977 $ (41) $ (6,305) $ 631 Net income 1,373 1,373 Other comprehensive income 78 78 Issuance of ordinary shares under employee share plans 4 68 68 Repurchases of ordinary shares (14) (1,333) (1,333) Tax withholding related to vesting of restricted share units (1) (45) (45) Dividends to shareholders ($2.07 per ordinary share) (457) (457) Share-based compensation 106 106 Balance at April 1, 2022 216 $ — $ 7,151 $ 37 $ (6,767) $ 421 Number of Ordinary Shares Par Value of Shares Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Balance at July 3, 2020 257 $ — $ 6,757 $ (66) $ (4,904) $ 1,787 Net income 832 832 Other comprehensive income 28 28 Issuance of ordinary shares under employee share plans 4 95 95 Repurchases of ordinary shares (30) (1,830) (1,830) Tax withholding related to vesting of restricted share units (1) (33) (33) Dividends to shareholders ($1.99 per ordinary share) (482) (482) Share-based compensation 87 87 Balance at April 2, 2021 230 $ — $ 6,939 $ (38) $ (6,417) $ 484 (the(“STX”) and its subsidiaries (collectively, unless the context otherwise indicates, the “Company”) is a leading provider of data storage technology and solutions. Its principal products are hard disk drives, commonly referred to as disk drives, hard drives or HDDs. In addition to HDDs, the Company produces a broad range of data storage products including solid state drives (“SSD”SSDs”) and their related controllers,, solid state hybrid drives (“SSHD”SSHDs”), storage subsystems, as well as a scalable edge-to-cloud mass data platform that includes data transfer shuttles and storage subsystems.Hard disk drivesa storage-as-a-service cloud.Disk drivesHDDs continue to be the primary medium of mass data storage due to their performance attributes, reliability, high capacities, superior quality and cost effectiveness. Complementing existing data center storage architecture, solid-state storage devicesarchitectures, SSDs use integrated circuit assemblies as memory to store data, withand most SSDs using NAND-baseduse NAND flash memory. In additioncontrast to HDDs and SSDs, SSHDs combine the features of SSDs and HDDs in the same unit, containing a large hard disk drivehigh-capacity HDD and ana smaller SSD acting as a cache to improve performance of frequently accessed data.mission criticalmass capacity storage and nearline applicationslegacy markets. Mass capacity storage involves well-established use cases—such as hyperscale data centers and public clouds as well as emerging use cases. Legacy markets include markets the Company continues to service but that it does not plan to invest in enterprise serverssignificantly. The Company’s HDD and storage systems; edge compute / client compute applications, where its products are designed primarily for desktopSSD product portfolio includes Serial Advanced Technology Attachment, Serial Attached SCSI and mobile computing; and edgenon-compute /client non-compute applications, where its products are designed forNon-Volatile Memory Express based designs to support a wide variety of end user devices such as portable external storage systems, surveillance systems, network-attached storage (“NAS”), digital video recorders (“DVRs”)mass capacity and gaming consoles.cloud systems and solutions extend innovation from the device into the information infrastructure, onsite and in the cloud. Itssystem portfolio includes modularstorage subsystems for enterprises, cloud service providers, scale-out storage servers and original equipment manufacturers (“OEM”OEMs”). Engineered for modularity, mobility, capacity and performance, these solutions include the Company’s enterprise HDDs and SSDs, enabling customers to integrate powerful, scalable storage systemswithin legacy environments or build new ecosystems from the ground up in a secure, cost-effective manner.scale-outsecure way to manage massive volumes of data across the distributed enterprise. The Lyve platform includes a shuttle solution that enables enterprises to transfer massive amounts of data from endpoints to the core cloud, a storage-as-a-service cloud that provides frictionless mass capacity storage servers.generally accepted accounting principlesGAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s condensed consolidated financial statements and accompanying notes. These estimates and assumptions include the impact of the COVID-19 pandemic. Actual results could differ materially from those estimates. The methods, estimates and judgments the Company uses in applying its most critical accounting policies have a significant impact on the results the Company reports in its condensed consolidated financial statements.condensedCompany’s consolidated financial statements reflect, in the opinion of management, all material adjustments necessary to present fairly the condensed consolidated financial position, results of operations, comprehensive income, cash flows and shareholders’ equity for the periods presented. Such adjustments are of a normal and recurring nature. Certain prior period amounts in the condensed consolidated financial statements and notes to the condensed consolidated financial statements have been reclassified to conform to the current period’s presentation.The Company’s Consolidated Financial Statements for the fiscal year ended June 30, 2017,July 2, 2021 are included in its Annual Report onForm 10-K, as filed with the United StatesU.S. Securities and Exchange Commission (“SEC”) on August 4, 2017.6, 2021. The Company believes that the disclosures included in thethese unaudited condensed consolidated financial statements, when read in conjunction with its Consolidated Financial Statementsconsolidated financial statements as of June 30, 2017,July 2, 2021, and the notes thereto, are adequate to make the information presented not misleading.sixnine months ended December 29, 2017,April 1, 2022 are not necessarily indicative of the results of operations to be expected for any subsequent interim period inor for the Company’s fiscal year ending June 29, 2018. July 1, 2022.sixnine months ended December 29, 2017April 1, 2022 and the three and sixnine months ended December 30, 2016April 2, 2021 consisted of 13 weeks and 2639 weeks, respectively. Fiscal year 2018 will be2022, which ends on July 1, 2022 and fiscal year 2021, which ended on July 2, 2021, are both comprised of 52 weeks and will end on June 29, 2018.weeks. The fiscal quarters ended April 1, 2022, December 29, 2017, September 29, 2017,31, 2021 and December 30, 2016,April 2, 2021, are also referred to herein as the “December 2017“March 2022 quarter”, the “September 2017“December 2021 quarter” and the “March 2021 quarter”, and the “December 2016 quarter”, respectively.significantmaterial changes into the Company’s significant accounting policies. Please refer topolicies disclosed in Note 11. Basis of Presentation and Summary of Significant Accounting Policies of “Financial Statements and Supplementary Data” contained in Part II, Item 88. of the Company’s Annual Report onForm 10-K for the fiscal year ended June 30, 2017,July 2, 2021, as filed with the SEC on August 4, 2017 for a discussion of the Company’s other significant accounting policies.IssuedAdopted Accounting PronouncementsMay 2014, August 2015, April 2016, May 2016 and December 2016,2019, the Financial Accounting Standards Board (“FASB”) issuedASU 2014-092019-12 (ASC Topic 606)740), Revenue from Contracts with Customers,Simplifying the Accounting for Income Taxes. This ASU 2015-14 (ASC Topic 606) Revenue from Contracts with Customers, Deferral of the Effective Date, ASU 2016-10 (ASC Topic 606) Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing,ASU 2016-12 (ASC Topic 606) Revenue from Contracts with Customers, Narrow-Scope Improvements and Practical Expedients, andASU 2016-20 (ASC Topic 606) Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, respectively. ASC Topic 606 outlines a single comprehensive model for entities to use insimplifies accounting for revenue arising from contracts with customersincome taxes by removing certain exceptions to the general principles and supersedes most current revenue recognitionamending existing guidance including industry-specific guidance. It also requires entities to disclose both quantitativeimprove consistent application. This ASU became effective and qualitative information that enable financial statements users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company is required to adoptadopted the guidance in the first quarter of fiscal 2019. This standard may be applied retrospectively to all prior periods presented, or retrospectively with a cumulative adjustment to retained earnings in the year of adoption (“modified retrospective transition approach”). Based on its assessment, the Company plans to adopt the new revenue standard in the first quarter of fiscal 2019, utilizing the modified retrospective method of transition. While management has not yet completed its assessment of the impact of adopting this new standard on the Company’s consolidated financial statements, the Company expects theended October 1, 2021. The adoption of the new standard will result in the recognition of revenues generally uponshipment (sell-in basis) for sales of products to certain direct retail customers and customers in certain indirect retail channels which are currently being recognized on a sell-through basis. Accordingly, the Company will need to estimate variable consideration (e.g. rebates) related to customer incentives on these arrangements. These changes arethis ASU did not expected to have a materialan impact on the Company’s condensed consolidated financial statements.January 2016,July 2021, the FASB issuedASU 2016-01 (ASCSubtopic 825-10)2021-05 (ASC Topic 842), Financial Instruments—Overall RecognitionLessors—Certain Leases with Variable Lease Payments. This ASU requires lessors to classify and Measurementaccount for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if the lease would have been classified as a sales-type lease or a direct financing lease and the lessor would have otherwise recognized a day-one loss. The Company adopted the guidance in the quarter ended October 1, 2021 on a prospective basis. The adoption of Financial Assets and Financial Liabilities. The amendments in this ASU require entitiesdid not have an impact on the Company’s condensed consolidated financial statements.measure all investments in equity securities at fair value with changes recognizedcontracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. Adoption of the expedients and exceptions is permitted upon issuance of this update through net income. This requirementDecember 31, 2022. The Company does not applyexpect the adoption of this ASU to investmentshave a material impact on its condensed consolidated financial statements.qualifyincrease the transparency of transactions involving government grants, including (1) the type of transactions, (2) the accounting for those transactions and (3) the equity methodeffect of accounting, to those that result in consolidation of the investee, or for which the entity meets a practicability exception to fair value measurement. Additionally, the amendments eliminate certain disclosure requirements related totransactions on an entity’s financial instruments measured at amortized cost and add disclosures related to the measurement categories of financial assets and financial liabilities.statements. The Company is required to adopt the guidancethis new accounting pronouncement in the first quarter of fiscal 2019.year 2023. Early adoption is permitted for only certain portions of the ASU. The Company expects to elect the measurement alternative for measurement of equity investments, defined as cost, less impairments, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment in the same issuer (the “Price Changes”) until the equity investments’ fair value becomes readily determinable. The amount of the impact to equity investments will depend on any Price Changes observed after adoption in the first quarter of fiscal 2019.In February 2016, the FASB issuedASU 2016-02 (ASC Topic 842), Leases. The ASU amends a number of aspects of lease accounting, including requiring lessees to recognize operating leases with a term greater than one year on their balance sheet asa right-of-use asset and corresponding lease liability, measured at the present value of the lease payments. The Company is required to adopt the guidance in the first quarter of fiscal 2020. Early adoption is permitted.In January 2017, the FASB issuedASU 2017-01 (ASC Topic 805), Business Combination: Clarifying the Definition of a Business. The amendments in this ASU change the definition of a business to assist with evaluating when a set of transferred assets and activities is a business. The Company plans to adopt the guidance in the first quarter of fiscal 2019. Early adoption is permitted. The Company is in the process of assessing the impact of this ASU on its condensed consolidated financial statements.In May 2017, the FASB issuedASU 2017-09 (ASC Topic 718), Stock Compensation: Scope of Modification Accounting. The amendments in this ASU provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The Company plans to adopt the guidance in the first quarter of fiscal 2019. Early adoption is permitted. The Company is in the process of assessing the impact of this ASU on its condensed consolidated financial statements.Recently Adopted Accounting PronouncementsIn July 2015, the FASB issuedASU 2015-11 (ASC Topic 330), Inventory: Simplifying the Measurement of Inventory. The amendments in this ASU require inventory measurement at the lower of cost and net realizable value. This ASU became effective and was adopted by the Company in the September 2017 quarter on a prospective basis. The adoption of this guidance had no material impact on the Company’s condensed consolidated financial statements and disclosures.In March 2016, the FASB issuedASU 2016-09 (ASC Topic 718), Stock Compensation—Improvements to Employee Share-Based Payment Accounting. The amendments in this ASU are intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax consequences, classification on the consolidated statement of cash flows and treatment of forfeitures. This ASU became effective and was adopted by the Company in the September 2017 quarter. Upon adoption, excess tax benefits or deficiencies from share-based award activity are reflected in the condensed consolidated statements of operations as a component of the provision for income taxes, whereas they previously were recognized in the Shareholder’s equity in the condensed consolidated balance sheets. The Company also elected to continue to account for share-based compensation expense net of estimated forfeitures. The adoption of this ASU resulted in an increase in deferred tax assets relating to net operating losses of approximately $0.6 billion, offset by an equivalent increase in the valuation allowance with no impact to retained earnings. The adoption of this guidance had no material impact on the Company’s condensed consolidated financial statements and disclosures.In October 2016, the FASB issuedASU 2016-16 (ASC Topic 740), Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory. The amendments in this ASU require the recognition of the income tax consequences for intra-entity transfers of assets other than inventory when the transfer occurs. The Company elected to adopt this ASU in the September 2017 quarter on a modified retrospective basis with no material impact on the Company’s condensed consolidated financial statements and disclosures.2.Balance Sheet InformationInvestmentsDecember 29, 2017: Amortized
Cost Unrealized
Gain/(Loss) Fair
Value $ 674 $ — $ 674 390 — 390 $ 1,064 $ — $ 1,064 $ 1,060 4 $ 1,064 April 1,
2022July 2,
2021(Dollars in millions) Amortized Cost Unrealized Gain/(Loss) Fair Value Amortized Cost Unrealized Gain/(Loss) Fair Value Available-for-sale debt securities: Money market funds $ 176 $ — $ 176 $ 552 $ — $ 552 Time deposits and certificates of deposit 1 — 1 1 — 1 Other debt securities 36 (13) 23 18 — 18 Total $ 213 $ (13) $ 200 $ 571 $ — $ 571 Included in Cash and cash equivalents $ 176 $ 551 Included in Other current assets 1 2 Included in Other assets, net 23 18 Total $ 200 $ 571 December 29, 2017,both April 1, 2022 and July 2, 2021, the Company’s Other current assets included $4$2 million in restricted cash and investments held as collateral at banks for various performance obligations.December 29, 2017,April 1, 2022 and July 2, 2021, the Company had no materialavailable-for-sale debt securities that had been in a continuous unrealized loss position for a period greater than 12 months. The Company determined that norecorded $13 million of allowance for credit losses related to an impairment ofavailable-for-sale debt securities were other-than-temporarily impaired as of December 29, 2017.December 29, 2017,April 1, 2022, by remaining contractual maturity were as follows: Amortized
Cost Fair
Value $ 1,064 $ 1,064 — — — — — — $ 1,064 $ 1,064 The following table summarizes, by major type, the fair value and amortized cost of the Company’s investments as of June 30, 2017: Amortized
Cost Unrealized
Gain/(Loss) Fair
Value $ 594 $ — $ 594 584 — 584 $ 1,178 $ — $ 1,178 $ 1,174 4 $ 1,178 As of June 30, 2017, the Company’s Other current assets included $4 million in restricted cash and investments held as collateral at banks for various performance obligations.As of June 30, 2017, the Company had no materialavailable-for-sale securities that had been in a continuous unrealized loss position for a period greater than 12 months. The Company determined noavailable-for-sale securities were other-than-temporarily impaired as of June 30, 2017.(Dollars in millions) Amortized Cost Fair Value Due in less than 1 year $ 190 $ 177 Due in 1 to 5 years 15 15 Due in 6 to 10 years — — Thereafter 8 8 Total $ 213 $ 200 December 29,
2017 June 30,
2017 December 30,
2016 July 1,
2016 $ 2,556 $ 2,539 $ 1,716 $ 1,125 4 4 4 7 $ 2,560 $ 2,543 $ 1,720 $ 1,132 (Dollars in millions) April 1,
2022July 2,
2021April 2,
2021July 3,
2020Cash and cash equivalents $ 1,138 $ 1,209 $ 1,212 $ 1,722 Restricted cash included in Other current assets 2 2 2 2 Total cash, cash equivalents and restricted cash shown in the Statements of Cash Flows $ 1,140 $ 1,211 $ 1,214 $ 1,724 December 29,
2017 June 30,
2017 $ 303 $ 350 296 257 415 375 $ 1,014 $ 982 (Dollars in millions) April 1,
2022July 2,
2021Raw materials and components $ 536 $ 375 Work-in-process 456 443 Finished goods 487 386 Total inventories $ 1,479 $ 1,204 December 29,
2017 June 30,
2017 $ 9,422 $ 9,633 (7,660 ) (7,758 ) $ 1,762 $ 1,875 (Dollars in millions) April 1,
2022July 2,
2021Property, equipment and leasehold improvements $ 10,571 $ 10,378 Accumulated depreciation and amortization (8,374) (8,197) Property, equipment and leasehold improvements, net $ 2,197 $ 2,181 December 29,
2017 June 30,
2017 $ 179 $ 184 460 466 $ 639 $ 650 (Dollars in millions) April 1,
2022July 2,
2021Dividends payable $ 152 $ 153 Other accrued expenses 493 455 Total $ 645 $ 608 Unrealized
Gains (Losses)
on Cash Flow
Hedges Unrealized
Gains (Losses)
on Marketable
Securities Unrealized
Gains (Losses)
on Post-
Retirement
Plans Foreign
Currency
Translation
Adjustments Total $ — $ — $ (5 ) $ (12 ) $ (17 ) — — — 6 6 — — — — — — — — 6 6 $ — $ — $ (5 ) $ (6 ) $ (11 ) $ (1 ) $ — $ (7 ) $ (17 ) $ (25 ) (3 ) — — (6 ) (9 ) 1 — — — 1 (2 ) — — (6 ) (8 ) $ (3 ) $ — $ (7 ) $ (23 ) $ (33 ) 3.DebtShort-Term Borrowings(Dollars in millions) Unrealized Gains/(Losses) on Cash Flow Hedges Unrealized Gains/(Losses) on Post-Retirement Plans Foreign Currency Translation Adjustments Total Balance at July 2, 2021 $ (18) $ (22) $ (1) $ (41) Other comprehensive income before reclassifications 58 1 — 59 Amounts reclassified from AOCI 18 1 — 19 Other comprehensive income 76 2 — 78 Balance at April 1, 2022 $ 58 $ (20) $ (1) $ 37 Balance at July 3, 2020 $ (24) $ (26) $ (16) $ (66) Other comprehensive income before reclassifications 20 — — 20 Amounts reclassified from AOCI (9) 2 15 8 Other comprehensive income 11 2 15 28 Balance at April 2, 2021 $ (13) $ (24) $ (1) $ (38) credit agreement entered into by the Company and its subsidiary Seagate HDD Cayman on January 18, 2011 and subsequently amended (the “Revolving Credit Facility”)following table provides the Company with a $700 million senior secured revolving credit facility. The termdetails of the Revolving Credit Facility is through January 15, 2020, provided that if the Company does not have Investment Grade Ratings (as defined in the Revolving Credit Facility) on August 15, 2018, then the maturity date will be August 16, 2018 unless certain extension conditions have been satisfied. The loans made under the Revolving Credit Facility will bear interest at a rate of LIBOR plus a variable margin that will be determined based on the corporate credit rating of the Company. The Company and certain of its material subsidiaries fully and unconditionally guarantee the Revolving Credit Facility. The Revolving Credit Facility is available for cash borrowings, subject to compliance with certain covenants and other customary conditions to borrowing, and for the issuance of letters of credit up to asub-limit of $75 million.The Revolving Credit Facility, as amended, includes three financial covenants: (1) minimum cash, cash equivalents and marketable securities; (2) a fixed charge coverage ratio; and (3) a net leverage ratio. On April 27, 2016, the Revolving Credit Agreement was amended in order to increase the allowable net leverage ratio to allow for higher net leverage levels. The Company was in compliance with the modified covenantsCompany’s debt as of December 29, 2017April 1, 2022 and expects to be in compliance for the next 12 months.As of December 29, 2017, no borrowings had been drawn or letters of credit utilized under the Revolving Credit Facility.Long-Term Debt$800 million Aggregate Principal Amount of 3.75% Senior Notes due November 2018 (the “2018 Notes”). The interest on the 2018 Notes is payable semi-annually on May 15 and November 15 of each year. The issuer under the 2018 Notes isJuly 2, 2021:
______________________________(Dollars in millions) April 1,
2022July 2,
2021$ — $ 220 541 541 499 499 479 479 504 504 464 461 500 500 500 499 500 500 489 489 Term Loan 600 — 600 — — 481 5,676 5,173 Less: unamortized debt issuance costs (32) (34) Debt, net of debt issuance costs 5,644 5,139 Less: current portion of long-term debt (30) (245) Long-term debt, less current portion $ 5,614 $ 4,894 the 2018 Notesthese notes are fully and unconditionally guaranteed, on a senior unsecured basis, by Seagate Technology Unlimited Company (“STUC”) and, pursuant to a supplemental indenture dated as of May 18, 2021, STX.Company.entire outstanding principal amount of $220 million was repaid at par, plus accrued and unpaid interest. During the three and sixnine months ended December 29, 2017, the Company repurchased $128 million and $150April 2, 2021, $9 million aggregate principal amount of the 20182022 Notes respectively,were repurchased for cash at a premium to their principal amount, plus accrued and unpaid interest.approximately $2$1 million on repurchases during the three and sixnine months ended December 29, 2017April 2, 2021, which is included in Other, net onin the Company’s Condensed Consolidated Statements of Operations.remainder of the 2018 Notes are classified as Current portion of long-term debt on the Company’s Condensed Consolidated Balance Sheet at December 29, 2017.$750 million Aggregate Principal Amount of 4.25% Senior Notes due March 2022 (the “2022 Notes”). The interest on the 2022 Notes is payable semi-annually on March 1 and September 1 of each year. The issuer under the 2022 Notes issubsidiary, Seagate HDD Cayman, entered into a credit agreement on February 20, 2019, which was amended on September 16, 2019, January 13, 2021, May 18, 2021 and October 14, 2021 (the “Credit Agreement”).obligationsRevolving Credit Facility had a final maturity of February 20, 2024. On September 17, 2019, Seagate HDD Cayman borrowed the $500 million principal amount under the September 2019 Term Loan.Notes areand has a final maturity date of September 16, 2025. Term Loan A2 bears interest at a rate of LIBOR plus a variable margin ranging from 1.25% to 2.5% that will be determined based on the corporate credit rating of the Company. Term Loan A2 is repayable in quarterly installments beginning on December 31, 2022 and has a final maturity date of July 30, 2027. The proceeds of the Terms Loans may be used for, among other things, general corporate purposes.guaranteed, onguarantee both the Revolving Credit Facility and the Term Loans.senior unsecured basis, byminimum liquidity amount. The Company was in compliance with the Company.$1 billion Aggregate Principal Amountcovenants as of 4.75% Senior Notes due June 2023 (the “2023 Notes”). The interest onApril 1, 2022 and expects to be in compliance for the 2023 Notes is payable semi-annually on Junenext 12 months. As of April 1, 2022, 0 borrowings (including swingline loans) were outstanding and December 1no commitments were utilized for letters of each year. The issuercredit issued under the 2023 Notes is Seagate HDD Cayman, and the obligations under the 2023 Notes are fully and unconditionally guaranteed,Revolving Credit Facility.a senior unsecured basis, by the Company.$500 million Aggregate Principal Amount of 4.875% Senior Notes due March 2024 (the “2024 Notes”). The interest on the 2024 Notes is payable semi-annually on MarchLong-term Debtand September 1 of each year. The issuer under the 2024 Notes is Seagate HDD Cayman, and the obligations under the 2024 Notes are fully and unconditionally guaranteed, on a senior unsecured basis, by the Company.$1 billion Aggregate Principal Amount of 4.75% Senior Notes due January 2025 (the “2025 Notes”). The interest on the 2025 Notes is payable semi-annually on January 1 and July 1 of each year. The issuer under the 2025 Notes is Seagate HDD Cayman, and the obligations under the 2025 Notes are fully and unconditionally guaranteed, on a senior unsecured basis, by the Company.$700 million Aggregate Principal Amount of 4.875% Senior Notes due June 2027 (the “2027 Notes”). The interest on the Notes is payable semi-annually on June 1 and December 1 of each year. The issuer under the 2027 Notes is Seagate HDD Cayman, and the obligations under the 2027 Notes are fully and unconditionally guaranteed, on a senior unsecured basis, by the Company.$500 million Aggregate Principal Amount of 5.75% Senior Notes due December 2034 (the “2034 Notes”). The interest on the 2034 Notes is payable semi-annually on June 1 and December 1 of each year. The issuer under the 2034 Notes is Seagate HDD Cayman, and the obligations under the 2034 Notes are fully and unconditionally guaranteed, on a senior unsecured basis, by the Company.At December 29, 2017,2022, future principal payments on long-term debt were as follows (in millions): Amount $ — 560 — — 750 3,613 $ 4,923 4.Income TaxesFiscal Year Amount Remainder of 2022 $ — 2023 585 2024 560 2025 562 2026 563 Thereafter 3,445 Total $ 5,715 $212$10 million and $219$19 million infor the three and sixnine months ended December 29, 2017,April 2, 2021, respectively.The income tax provision for the three and six months ended December 29, 2017April 2, 2021 included approximately $197$4 million of net discrete tax expense,benefit, primarily associated with filing of tax returns in various jurisdictions. The income tax provision for the revaluationnine months ended April 2, 2021 included approximately $15 million of U.S. deferrednet discrete tax assets as a resultbenefits, primarily associated with net excess tax benefits related to share-based compensation expense, filing of tax returns in various jurisdictions and postponement of the enactment ofpreviously enacted United Kingdom tax rate change in the Tax Cuts and Jobs Act on December 22, 2017, partially offset by the recognition of previously unrecognized tax benefits associated with the expiration of certain statutes of limitation.sixnine months ended December 29, 2017 April 1, 2022 and April 2, 2021 differed from the provision for income taxes that would be derived by applying the Irish statutory rate of 25% to income before income taxes, primarily due to the net effect of (i) tax benefits related tonon-U.S. (i) non-Irish earnings generated in jurisdictions that are subject to tax incentive programs and are considered indefinitely reinvested outside of Ireland and (ii) a reduction incurrent year generation of research credits.net U.S. deferred tax assets associated with revaluation to a lower U.S. tax rate.During the sixnine months ended December 29, 2017, the Company’s unrecognized tax benefits excluding interest and penalties increased by approximately $1 million to $75 million. The unrecognized tax benefits that, if recognized, would impact the effective tax rate were $75 million at December 29, 2017, subject to certain future changes in valuation allowance. During the 12 months beginning December 30, 2017, the Company expects that its unrecognized tax benefits could be reduced by approximately $2 million, primarily as a result of the expiration of certain statutes of limitation.The Company recorded an income tax provision of $13 million and $19 million in the three and six months ended December 30, 2016, respectively. The income tax provision for the six months ended December 30, 2016 included approximately $4 million of net discrete tax benefits, primarily associated with the release of tax reserves associated with the expiration of certain statutes of limitation and prior year tax adjustments.The Company’s income tax provision recorded for the three and six months ended December 30, 2016 differed from the provision from income taxes that would be derived by applying the Irish statutory rate of 25% to income before income taxes, primarily due to the net effect of (i) tax benefits related tonon-U.S. earnings generated in jurisdictions that are subject to tax incentive programs and are considered indefinitely reinvested outside of Ireland and (ii) a decrease in valuation allowance for certain deferred tax assets.On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted into law in the United States. The Act significantly revises U.S. corporate income tax law by, among other things, lowering U.S. corporate income tax rates from 35% to 21%, implementing a territorial tax system and imposing a tax on deemed repatriated earnings ofnon-U.S. subsidiaries. The Act’s new international rules, including the Global IntangibleLow-Taxed Income, the Foreign Derived Intangible Income and the Base Erosion Anti-Avoidance Tax, are not expected to have a material impact on the Company’s financial statements. However, these assessments are based on preliminary review and analysis of the Act and are subject to change as the Company continues to evaluate these highly complex rules as additional interpretive guidance is issued.Pursuant to SEC Staff Accounting Bulletin (SAB) 118 (regarding the application of ASC 740 associated with the enactment of the Act), the Company recorded a provisional tax expense of approximately $208 million for the three months ended December 29, 2017 tore-measure its U.S. deferred tax assets at the newly enacted 21% tax rate. The tax expense is provisional because the Company continues to evaluate the impact of various domestic and international provisions of the Act as well as the impact of additional guidance that may be provided. This provisional tax expense increased the Company’s effective tax rate for the three months ended December 29, 2017 to approximately 56%. Many of the other U.S. tax changes are not expected to impact the Company’s tax expense in the short-term due the Company’s large net operating loss and tax credit carryovers.5.AcquisitionsDot Hill Systems Corp.On October 6, 2015, the Company acquired all of the outstanding shares of Dot Hill Systems Corp. (“Dot Hill”), a supplier of software and hardware storage systems. The Company paid $9.75 per share, or $674 million, in cash for the acquisition. The acquisition of Dot Hill further expands the Company’sOEM-focused cloud storage systems business and advances the Company’s strategic efforts.The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date: Amount $ 40 48 21 7 10 252 364 742 (68 ) (68 ) $ 674 The following table shows the fair value of the separately identifiable intangible assets at the time of acquisition and the period over which each intangible asset will be amortized: Fair Value Weighted-
Average
Amortization
Period $ 164 5.0 years 71 7.0 years 3 5.0 years 238 5.5 years 14 $ 252 The recognized goodwill, which is not deductible for income tax purposes, is primarily attributable to cost synergies expected to arise after the acquisition and the benefits the Company expects to derive from enhanced market opportunities.6.Goodwill and Other Intangible AssetsGoodwillThe changes in the carrying amount of goodwill for the six months ended December 29, 2017, are as follows: Amount $ 1,238 — (1 ) 1 $ 1,238 Other Intangible AssetsOther intangible assets consist primarily of existing technology, customer relationships and trade names acquired in business combinations. Intangibles are amortized on a straight-line basis over the respective estimated useful lives of the assets. Amortization is charged to Operating expenses in the Condensed Consolidated Statements of Operations.The carrying value of other intangible assets subject to amortization, excluding fully amortized intangible assets, as of December 29, 2017, is set forth in the following table: Gross Carrying
Amount Accumulated
Amortization Net Carrying
Amount Weighted-Average
Remaining Useful Life $ 279 $ (138 ) $ 141 3.2 years 105 (50 ) 55 4.3 years 17 (11 ) 6 1.7 years 36 (16 ) 20 2.2 years $ 437 $ (215 ) $ 222 3.2 years The carrying value of other intangible assets subject to amortization, excluding fully amortized intangible assets, as of June 30, 2017 is set forth in the following table: Gross Carrying
Amount Accumulated
Amortization Net Carrying
Amount Weighted-Average
Remaining Useful Life $ 280 $ (112 ) $ 168 3.6 years 487 (395 ) 92 3.4 years 27 (19 ) 8 2.1 years 29 (16 ) 13 2.6 years $ 823 $ (542 ) $ 281 3.4 years For the three and six months ended December 29, 2017, the amortization expense of other intangible assets were $33 million and $69 million, respectively. For the three and six months ended December 30, 2016, the amortization expense of other intangible assets was $42 million and $84 million, respectively. As of December 29, 2017, expected amortization expense for other intangible assets for each of the next five fiscal years and thereafter is as follows: Amount $ 40 71 53 25 17 16 $ 222 7.Restructuring and Exit CostsFor the three and six months ended December 29, 2017,April 1, 2022, the Company recorded restructuring charges of approximately $33$2 million. For the three and nine months ended April 2, 2021, the Company recorded a net gain of $2 million, comprised primarily of a gain of $3 million from sale of a property and $84 million, respectively,restructuring charges of $1 million. The Company’s restructuring plans are comprised primarily of charges related to workforce reduction costs and facilityfacilities and other exit costs associated with the restructuring of its workforce during the fiscal year. The Company’s significant restructuring plans are described below.costs. All restructuring charges are reported in Restructuring and other, net on the Company’s Condensed Consolidated Statements of Operations.December 2017 Plan - On December 8, 2017, the Company committed to a restructuring plan (the “December 2017 Plan”) to reduce its cost structure. December 2017 Plan included reducingfollowing tables summarize the Company’s global headcount by approximately 500 employees. The December 2017 Plan is expected to be substantially completed by the end of fiscal year 2018.July 2017 Plan -On July 25, 2017, the Company committed to a restructuring plan (the “July 2017 Plan”) to reduce its cost structure. The July 2017 Plan included reducingactivities under the Company’s global headcount by approximately 600 employees. The July 2017 Plan was largely completed by the end of the September 2017 quarter.March 2017 Plan -On March 9, 2017, the Company committed to aactive restructuring plan (the “March 2017 Plan”) in connection with the continued consolidation of its global footprint. The Company closed its design center in Korea, resulting in the reduction of the Company’s headcount by approximately 300 employees. The March 2017 Plan was largely completed by the end of fiscal year 2017.July 2016 Plan - On July 11, 2016, the Company committed to a restructuring plan (the “July 2016 Plan”) for continued consolidation of its global footprint across Asia, EMEA and the Americas. The July 2016 Plan included reducing worldwide headcount by approximately 6,500 employees. The July 2016 Plan was largely completed by the end of the December 2017 quarter.In addition, during fiscal year 2017, the Company committed to sell certain land and buildings primarily in Asia as part of the March 2017 and July 2016 plans, which accordingly met the criteria to be classified as assets held for sale and were reclassified to Other current assets at that time. These assets remained included in Other current assets on the Condensed Consolidated Balance Sheet as of December 29, 2017. December 2017 Plan July 2017 Plan March 2017 Plan July 2016 Plan Other Plans Workforce
Reduction
Costs Facilities
and
Other
Exit
Costs Workforce
Reduction
Costs Facilities
and
Other
Exit
Costs Workforce
Reduction
Costs Facilities
and
Other
Exit
Costs Workforce
Reduction
Costs Facilities
and
Other
Exit
Costs Workforce
Reduction
Costs Facilities
and
Other
Exit
Costs Total Accrual balances at June 30, 2017 $ — $ — $ — $ — $ — $ — $ 22 $ 2 $ 6 $ 13 $ 43 27 — 38 4 — — 1 9 2 — 81 (3 ) — (35 ) (3 ) — — (21 ) (11 ) (7 ) — (80 ) — — (1 ) — 2 — 2 — — — 3 Accrual balances at December 29, 2017 $ 24 $ — $ 2 $ 1 $ 2 $ — $ 4 $ — $ 1 $ 13 $ 47 Total costs incurred to date as of December 29, 2017 $ 27 $ — $ 37 $ 4 $ 31 $ 3 $ 82 $ 29 $ 228 $ 51 $ 492 Total expected charges to be incurred as of December 29, 2017 $ 3 $ 7 $ — $ — $ — $ 1 $ 1 $ 4 $ — $ 3 $ 19 Restructuring charges for the three months ended December 29, 2017 $ 27 $ — $ (1 ) $ — $ 1 $ — $ 2 $ 3 $ 1 $ — $ 33 8.Derivative Financial Instruments(Dollars in millions) Workforce Reduction Costs Facilities and Other Exit Costs Total Accrual balances at July 2, 2021 $ 2 $ 6 $ 8 Restructuring charges 2 — 2 Cash payments (3) (2) (5) Accrual balances at April 1, 2022 $ 1 $ 4 $ 5 Total costs incurred inception to date as of April 1, 2022 $ 65 $ 23 $ 88 Total expected charges to be incurred as of April 1, 2022 $ — $ 1 $ 1 TheFrom time to time, the Company enters into cash flow hedges in the form of foreign currency forward exchange contracts in order to manage the foreign currency exchange rate risk on forecasted expenses and investments denominated in foreign currencies.in theon its Condensed Consolidated Balance Sheets at fair value. The changes in the fair value of thehighly effective portions of designated cash flow hedges are recorded in Accumulated other comprehensive loss until the hedged item is recognized in earnings. Derivatives that are not designated as hedging instruments and the ineffective portions of cash flow hedgesor are not assessed to be highly effective are adjusted to fair value through earnings. The Company had no outstandingamount of net unrealized gain on cash flow hedges was $58 million and net unrealized loss was $18 million as of December 29, 2017April 1, 2022 and June 30, 2017.dedesignatesde-designates its cash flow hedges when the forecasted hedged transactions are realizedaffect earnings or it is probable the forecasted hedged transactions will not occur in the initially identified time period. At such time, the associated gains and losses deferred in Accumulated other comprehensive loss on the Company’s Condensed Consolidated Balance Sheets are reclassified immediately into earnings and any subsequent changes in the fair value of such derivative instruments are immediately reflected in earnings. The Company did not recognize anyrecognized a net gains or lossesloss of $2 million and $4 million in Cost of revenue and Interest expense, respectively, related to the loss of hedge designation on discontinued cash flow hedges during the three months ended April 1, 2022. The Company recognized a net loss of $10 million and $8 million in Cost of revenue and Interest expense, respectively, related to the loss of hedge designation on discontinued cash flow hedges during the nine months ended April 1, 2022.The Company recognized a net gain of $8 million and $12 million in Cost of revenue related to the loss of hedge designation on discontinued cash flow hedges during the three and sixnine months ended December 29, 2017.AsApril 2, 2021, respectively. The Company recognized a net loss of December 29, 2017$1 million and June 30, 2017,$5 million in Interest expense related to the loss of hedge designation on discontinued cash flow hedges during the three and nine months ended April 2, 2021, respectively.does not haveuses to hedge the foreign currency exposure on forecasted expenditures denominated in currencies other than the U.S. dollar. The Company recognizes gains and losses on these contracts, as well as the related costs in Other, net on its Condensed Consolidated Statements of Operations.contracts. As of April 1, 2022 (Dollars in millions) Contracts Designated as Hedges Contracts Not Designated as Hedges Singapore Dollar $ 178 $ 62 Thai Baht 143 41 Chinese Renminbi 92 23 British Pound Sterling 61 19 $ 474 $ 145 As of July 2, 2021 (Dollars in millions) Contracts Designated as Hedges Contracts Not Designated as Hedges Singapore Dollar $ 172 $ 43 Thai Baht 131 46 Chinese Renminbi 73 21 British Pound Sterling 54 16 $ 430 $ 126 Non-qualified Deferred Compensation Plan—non-qualified deferred compensation plan: the Seagate Deferred Compensation Plan (the “SDCP”). In fiscal year 2014, the Company entered into a Total Return Swap (“TRS”) in order to manage the equity market risks associated with the SDCPSDCP’s liabilities. The Company pays a floating rate, based on LIBOR plus an interest rate spread, on the notional amount of the TRS. The TRS is designed to substantially offset changes in the SDCP liabilitySDCP’s liabilities due to changes in the value of the investment options made by employees. As of December 29, 2017,April 1, 2022, the notional investments underlying the TRS amounted to $117 million. The$123 million and the contract term of the TRS is through January 2019 and is2023, settled on a monthly basis, therefore limiting counterparty performance risk. The Company did not designate the TRS as a hedge. Rather, the Company records all changes in the fair value of the TRS to earnings to offset the market value changes of the SDCPSDCP’s liabilities.AsCompany had no outstanding foreign currency forward exchange contracts and theCompany’s derivative instruments measured at gross fair value of the TRSas reflected in the Condensed Consolidated Balance Sheets respectively, is immaterial.As of April 1, 2022 Derivative Assets Derivative Liabilities (Dollars in millions) Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Foreign currency forward exchange contracts Other current assets $ 2 Accrued expenses $ (1) Interest rate swap Other current assets 57 Accrued expenses — Derivatives not designated as hedging instruments: Foreign currency forward exchange contracts Other current assets 1 Accrued expenses (1) Total return swap Other current assets — Accrued expenses (2) Total derivatives $ 60 $ (4) As of July 2, 2021 Derivative Assets Derivative Liabilities (Dollars in millions) Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Foreign currency forward exchange contracts Other current assets $ 1 Accrued expenses $ (5) Interest rate swap Other current assets — Accrued expenses (14) Derivatives not designated as hedging instruments: Foreign currency forward exchange contracts Other current assets 1 Accrued expenses (2) Total return swap Other current assets 2 Accrued expenses — Total derivatives $ 4 $ (21) StatementStatements of Comprehensive Income and the Condensed Consolidated StatementStatements of Operations for the three and sixnine months ended December 29, 2017. Location of Gain or
(Loss) Recognized in
Income on Derivatives Amount of Gain or
(Loss) Recognized in
Income on Derivatives For the Three Months For the Six Months Other, net $ — $ — Operating expenses 4 7 Amount of Gain/(Loss) Recognized in Income on Derivatives Location of Gain/(Loss) Recognized in Income on Derivatives For the Three Months For the Nine Months Foreign currency forward exchange contracts Other, net $ 1 $ (1) Total return swap Operating expenses (7) (1) Amount of Gain/(Loss) Recognized in OCI on Derivatives (Effective Portion) Location of Gain/(Loss) Reclassified from Accumulated OCI into Income (Effective Portion) Amount of Gain/(Loss) Reclassified from Accumulated OCI into Income (Effective Portion) Location of Gain/(Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) Amount of Gain/(Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing) For the Three Months For the Nine Months For the Three Months For the Nine Months For the Three Months For the Nine Months Foreign currency forward exchange contracts $ (1) $ (6) Cost of revenue $ (2) $ (10) Other, net $ — $ 1 Interest rate swap 57 64 Interest expense (4) (8) Interest expense — — StatementStatements of Comprehensive Income and the Condensed Consolidated StatementStatements of Operations for the three and sixnine months ended December 30, 2016: Amount of
Gain or
(Loss)
Recognized
in OCI on
Derivatives
(Effective
Portion) Location of
Gain or (Loss)
Reclassified
from
Accumulated
OCI into
Income
(Effective
Portion) Amount of
Gain or
(Loss)
Reclassified
from
Accumulated
OCI into
Income
(Effective
Portion) Location of
Gain or (Loss)
Recognized in
Income on
Derivatives
(Ineffective
Portion and
Amount Excluded
from
Effectiveness
Testing) Amount of
Gain
or (Loss)
Recognized in
Income
(Ineffective
Portion and
Amount
Excluded from
Effectiveness
Testing) (a) For the
Three
Months For the
Six
Months For the
Three
Months For the
Six
Months For the
Three
Months For the
Six
Months $ (2 ) $ (3 ) Cost of revenue $ — $ (1 ) Cost of revenue $ — $ — Location of Gain or
(Loss) Recognized in
Income on Derivatives Amount of Gain or
(Loss) Recognized in
Income on Derivatives For the Three Months For the Six Months Other, net $ (2 ) $ (3 ) Operating expenses 1 $ 4 (a)The amount of gain or (loss) recognized in income related to the ineffective portion of the hedging relationships and the amount excluded from the assessment of hedge effectiveness were less than $1 million for the three and six months ended December 30, 2016.9.Fair ValueLocation of Gain/(Loss) Recognized in Income on Derivatives Amount of Gain/(Loss) Recognized in Income on Derivatives For the Three Months For the Nine Months Foreign currency forward exchange contracts Other, net $ (3) $ 11 Total return swap Operating expenses $ 6 $ 22 Amount of Gain/(Loss) Recognized in OCI on Derivatives (Effective Portion) Location of Gain/(Loss) Reclassified from Accumulated OCI into Income (Effective Portion) Amount of Gain/(Loss) Reclassified from Accumulated OCI into Income (Effective Portion) Location of Gain/(Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) Amount of Gain/(Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing) For the Three Months For the Nine Months For the Three Months For the Nine Months For the Three Months For the Nine Months Foreign currency forward exchange contracts $ (5) $ 10 Cost of revenue $ 8 $ 12 Other, net $ (1) $ — Interest rate swap 9 10 Interest expense (1) (5) Interest expense — — reflectsreflect the Company’s own assumptions of market participant valuation (unobservable inputs). A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs that may be used to measure fair value are:April 1, 2022 July 2, 2021 Fair Value Measurements at Reporting Date Using Fair Value Measurements at Reporting Date Using (Dollars in millions) Quoted Prices in Active Markets for Identical Instruments (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Balance Quoted Prices in Active Markets for Identical Instruments (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Balance Assets: Money market funds $ 175 $ — $ — $ 175 $ 551 $ — $ — $ 551 Total cash equivalents 175 — — 175 551 — — 551 Restricted cash and investments: Money market funds 1 — — 1 1 — — 1 Time deposits and certificates of deposit — 1 — 1 — 1 — 1 Other debt securities — — 23 23 — — 18 18 Derivative assets — 60 — 60 — 4 — 4 Total assets $ 176 $ 61 $ 23 $ 260 $ 552 $ 5 $ 18 $ 575 Liabilities: Derivative liabilities $ — $ 4 $ — $ 4 $ — $ 21 $ — $ 21 Total liabilities $ — $ 4 $ — $ 4 $ — $ 21 $ — $ 21 April 1, 2022 July 2, 2021 Fair Value Measurements at Reporting Date Using Fair Value Measurements at Reporting Date Using (Dollars in millions) Quoted Prices in Active Markets for Identical Instruments (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Balance Quoted Prices in Active Markets for Identical Instruments (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Balance Assets: Cash and cash equivalents $ 175 $ — $ — $ 175 $ 551 $ — $ — $ 551 Other current assets 1 61 — 62 1 5 — 6 Other assets, net — — 23 23 — — 18 18 Total assets $ 176 $ 61 $ 23 $ 260 $ 552 $ 5 $ 18 $ 575 Liabilities: Accrued expenses $ — $ 4 $ — $ 4 $ — $ 21 $ — $ 21 Total liabilities $ — $ 4 $ — $ 4 $ — $ 21 $ — $ 21 valuesvalue of all of its cash equivalents. For the cash equivalents and short-term investments in the Company’s portfolio, multiple pricing sources are generally available. The pricing service uses inputs from multiple industry standardindustry-standard data providers or other third partythird-party sources and various methodologies, such as weighting and models, to determine the appropriate price at the measurement date. The Company corroborates the prices obtained from the pricing service against other independent sources and, as of December 29, 2017,April 1, 2022, has not found it necessary to make any adjustments to the prices obtained. The Company’s derivative financial instruments are also classified within Level 2. The Company’s derivative financial instruments consist of foreign currency forward exchange contracts, interest rate swaps and the TRS. The Company recognizes derivative financial instruments in its condensed consolidated financial statements at fair value. The Company determines the fair value of these instruments by considering the estimated amount it would pay or receive to terminate these agreements at the reporting date.As of December 29, 2017 and June 30, 2017, the Company had no Level 3 assets or liabilities measured at fair value on a recurring basis.objectives. These strategic investments primarily include cost basis investments representing those whereobjectives, which are accounted for either under the Company does not have the ability to exercise significant influence as well as equity method investments representing those whereor the Company does have the ability to exercise significant influence but does not have control. These investments are included in Other assets, netmeasurement alternative. If measured at fair value in the Condensed Consolidated Balance Sheets, these investments would generally be classified in Level 3 of the fair value hierarchy.periodically analyzedaccounted for under the measurement alternative, the Company recorded a net gain of $4 million for the nine months ended April 1, 2022. The Company recorded a net gain of $10 million and $26 million for the three and nine months ended April 2, 2021, respectively, related to determine whether or not there are indicatorsdownward and upward adjustments due to observable price changes. As of impairment. TheApril 1, 2022 and July 2, 2021, the carrying value of the Company’s strategic investments at December 29, 2017 and June 30, 2017 totaled $129under the measurement alternative was $88 million and $125$117 million, respectively, and consisted primarilyrespectively. December 29, 2017 June 30, 2017 Carrying
Amount Estimated
Fair Value Carrying
Amount Estimated
Fair Value $ 560 $ 567 $ 710 $ 726 748 758 748 765 951 972 951 987 497 504 497 511 975 961 975 984 695 668 695 698 489 473 489 488 $ 4,915 $ 4,903 $ 5,065 $ 5,159 (39 ) — (44 ) — $ 4,876 $ 4,903 $ 5,021 $ 5,159 (560 ) (567 ) — — $ 4,316 $ 4,336 $ 5,021 $ 5,159 10.Equity April 1, 2022 July 2, 2021 (Dollars in millions) Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value 4.25% Senior Notes due March 2022 $ — $ — $ 220 $ 224 4.75% Senior Notes due June 2023 541 551 541 578 4.875% Senior Notes due March 2024 499 513 499 544 4.75% Senior Notes due January 2025 479 491 479 529 4.875% Senior Notes due June 2027 504 517 504 561 4.091% Senior Notes due June 2029 464 484 461 519 3.125% Senior Notes due July 2029 500 446 500 488 4.125% Senior Notes due January 2031 500 473 499 513 3.375% Senior Notes due July 2031 500 444 500 487 5.75% Senior Notes due December 2034 489 501 489 566 LIBOR Based Term Loan A1 due September 2025 600 589 — — LIBOR Based Term Loan A2 due July 2027 600 591 — — LIBOR Based Term Loan due September 2025 — — 481 478 5,676 5,600 5,173 5,487 Less: unamortized debt issuance costs (32) — (34) — Debt, net of debt issuance costs 5,644 5,600 5,139 5,487 Less: current portion of debt (30) (30) (245) (249) Long-term debt, less current portion, net of debt issuance costs $ 5,614 $ 5,570 $ 4,894 $ 5,238 isis $13,500 and consists of 1,250,000,000 ordinary shares, par value $0.00001, of which 284,573,784215,565,360 shares were outstanding as of December 29, 2017, April 1, 2022, and 100,000,000 preferred shares, par value $0.00001, of which none were issued or outstanding as of December 29, 2017.as and when declared by the Company’s boardBoard of directors (the “Board of Directors”).Directors. Upon any liquidation, dissolution, or winding up, of the Company, after required payments are made to holders of preferred shares, any remaining assets of the Company will be distributed ratably to holders of the preferred and ordinary shares. Holders of shares are entitled to one vote per share on all matters upon which the ordinary shares are entitled to vote, including the election of directors.one1 or more series, up to the authorized amount, without shareholder approval. The Board of Directors is authorized to establish from time to time the number of shares to be included in each series, and to fix the rights, preferences and privileges of the shares of each wholly unissued series and any of its qualifications, limitations or restrictions. The Board of Directors can also increase or decrease the number of shares of a series, but not below the number of shares of that series then outstanding, without any further vote or action by the shareholders.On April 22, 2015, the Board of Directors authorized the Company to repurchase $2.5 billion of its outstanding ordinary shares.ArticlesConstitution.Association.December 29, 2017, $0.9April 1, 2022, $2.8 billion remained available for repurchase under the existing repurchase authorization limit.the Company’sordinary shares during the sixnine months ended December 29, 2017:April 1, 2022:(In millions) Number of Shares Repurchased Dollar Value of Shares Repurchased 14 $ 1,333 Tax withholding related to vesting of equity awards 1 45 Total 15 $ 1,378
(In millions) | Number of Shares Repurchased | Dollar Value of Shares Repurchased | ||||||
Repurchases of ordinary shares | 10 | $ | 361 | |||||
Tax withholding related to vesting of equity awards | 1 | 21 | ||||||
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Total | 11 | $ | 382 | |||||
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The Company recorded approximately $27 million and $59 million
Indemnifications to Officers and Directors
On May 4, 2009, Seagate Technology, an exempted company incorporated with limited liability under the laws of the Cayman Islands (“Seagate-Cayman”), then the parent company, entered into a new form of indemnification agreement (the “Revised Indemnification Agreement”) with its officers and directors of Seagate-Cayman and its subsidiaries (each, an “Indemnitee”). The Revised Indemnification Agreement provides indemnification in addition to any of Indemnitee’s indemnification rights under Seagate-Cayman’s Articles of Association, applicable law or otherwise, and indemnifies an Indemnitee for certain expenses (including attorneys’ fees), judgments, fines and settlementordinary shares amounts actually and reasonably incurred by him or her in any action or proceeding, including any action by or in the rightcondensed consolidated statements of Seagate-Cayman or any of its subsidiaries, arising out of his or her service as a director, officer, employee or agent of Seagate-Cayman or any of its subsidiaries or of any other entitycash flows due to which he or shetiming differences between repurchases and cash settlement thereof.
On July 3, 2010, pursuant to a corporate reorganization, the common shareholders of Seagate-Cayman became ordinary shareholders of Seagate Technology plc (the “Company”) and Seagate-Cayman became a wholly owned subsidiary of the Company, as described more fully in the Current Report on Form8-K filed by the Company on July 6, 2010 (the “Redomestication”). On July 27, 2010, in connection with the Redomestication, the Company, as sole shareholder of Seagate-Cayman, approved a form of deed of indemnity (the “Deed of Indemnity”), which providesgeographical region for the indemnification by Seagate-Cayman of any director, officer, employee or agent of theCompany’s single reportable segment:
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||
| (Dollars in millions) | April 1, 2022 | April 2, 2021 | April 1, 2022 | April 2, 2021 | ||||||||||||||||||||||
| Revenues by Channel | ||||||||||||||||||||||||||
| Original equipment manufacturers | $ | 2,149 | $ | 1,950 | $ | 6,615 | $ | 5,299 | ||||||||||||||||||
| Distributors | 349 | 455 | 1,418 | 1,297 | ||||||||||||||||||||||
| Retailers | 304 | 326 | 1,000 | 1,072 | ||||||||||||||||||||||
| Total | $ | 2,802 | $ | 2,731 | $ | 9,033 | $ | 7,668 | ||||||||||||||||||
Revenues by Geography (1) | ||||||||||||||||||||||||||
| Asia Pacific | $ | 1,292 | $ | 1,268 | $ | 4,308 | $ | 3,680 | ||||||||||||||||||
| Americas | 1,171 | 939 | 3,436 | 2,582 | ||||||||||||||||||||||
| EMEA | 339 | 524 | 1,289 | 1,406 | ||||||||||||||||||||||
| Total | $ | 2,802 | $ | 2,731 | $ | 9,033 | $ | 7,668 | ||||||||||||||||||
time enters into agreements with customers, suppliers, partners and others in the ordinary course of business that provide indemnification for certain matters including, but not limited to, intellectual property infringement claims, environmental claims and breach of agreement claims. The nature of thesethe Company’s indemnification obligations prevents the Company from making a reasonable estimate of the maximum potential amount it could be required to pay on behalf of its officers and directors.pay. Historically, the Company has not made any significant indemnification payments under such agreements and no amount has been accrued in the accompanyingCompany’s condensed consolidated financial statements with respect to these indemnification obligations.
Intellectual Property Indemnification Obligations
The Company has entered into agreements with customers and suppliers that include limited intellectual property indemnification obligations that are customary in the industry. These guarantees generally require the Company to compensate the other party for certain damages and costs incurred as a result
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
(Dollars in millions) | December 29, 2017 | December 30, 2016 | December 29, 2017 | December 30, 2016 | ||||||||||||
Balance, beginning of period | $ | 230 | $ | 216 | $ | 233 | $ | 206 | ||||||||
Warranties issued | 40 | 34 | 75 | 65 | ||||||||||||
Repairs and replacements | (27 | ) | (29 | ) | (54 | ) | (59 | ) | ||||||||
Changes in liability forpre-existing warranties, including expirations | (7 | ) | 1 | (18 | ) | 10 | ||||||||||
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Balance, end of period | $ | 236 | $ | 222 | $ | 236 | $ | 222 | ||||||||
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| For the Nine Months Ended | |||||||||||||||||
| (Dollars in millions) | April 1, 2022 | April 2, 2021 | |||||||||||||||
| Balance, beginning of period | $ | 136 | $ | 151 | |||||||||||||
| Warranties issued | 62 | 56 | |||||||||||||||
| Repairs and replacements | (65) | (62) | |||||||||||||||
| Changes in liability for pre-existing warranties, including expirations | 15 | (11) | |||||||||||||||
| Balance, end of period | $ | 148 | $ | 134 | |||||||||||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
(In millions, except per share data) | December 29, 2017 | December 30, 2016 | December 29, 2017 | December 30, 2016 | ||||||||||||
Numerator: | ||||||||||||||||
Net income | $ | 159 | $ | 297 | $ | 340 | $ | 464 | ||||||||
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Number of shares used in per share calculations: | ||||||||||||||||
Total shares for purposes of calculating basic net income per share | 288 | 296 | 289 | 297 | ||||||||||||
Weighted-average effect of dilutive securities: | ||||||||||||||||
Employee equity award plans | 3 | 2 | 2 | 2 | ||||||||||||
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Total shares for purpose of calculating diluted net income per share | 291 | 298 | 291 | 299 | ||||||||||||
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Net income per share: | ||||||||||||||||
Basic | $ | 0.55 | $ | 1.00 | $ | 1.18 | $ | 1.56 | ||||||||
Diluted | $ | 0.55 | $ | 1.00 | $ | 1.17 | $ | 1.55 | ||||||||
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||
| (In millions, except per share data) | April 1, 2022 | April 2, 2021 | April 1, 2022 | April 2, 2021 | ||||||||||||||||||||||
| Numerator: | ||||||||||||||||||||||||||
| Net income | $ | 346 | $ | 329 | $ | 1,373 | $ | 832 | ||||||||||||||||||
| Number of shares used in per share calculations: | ||||||||||||||||||||||||||
| Total shares for purposes of calculating basic net income per share | 218 | 233 | 222 | 246 | ||||||||||||||||||||||
| Weighted-average effect of dilutive securities: | ||||||||||||||||||||||||||
| Employee equity award plans | 4 | 4 | 4 | 3 | ||||||||||||||||||||||
| Total shares for purpose of calculating diluted net income per share | 222 | 237 | 226 | 249 | ||||||||||||||||||||||
| Net income per share: | ||||||||||||||||||||||||||
| Basic | $ | 1.59 | $ | 1.41 | $ | 6.18 | $ | 3.38 | ||||||||||||||||||
| Diluted | 1.56 | 1.39 | 6.08 | 3.34 | ||||||||||||||||||||||
Other Contingencies
Intellectual Property
Convolve, Inc. (“Convolve”) and Massachusetts Institute of Technology (“MIT”) v. Seagate Technology LLC, et al. On July 13, 2000, Convolve and MIT filed suit against Compaq Computer Corporation and Seagate Technology LLC in the U.S. District Court for the Southern District of New York, alleging infringement of U.S. Patent No. 4,916,635 (the “‘635 patent”) and U.S. Patent No. 5,638,267 (the “‘267 patent”), misappropriation of trade secrets, breach of contract, and other claims. On January 16, 2002, Convolve filed an amended complaint, alleging defendants infringe U.S. Patent No. 6,314,473 (the “‘473 patent”). The district court ruled in 2010 that the ‘267 patent was out of the case.
On August 16, 2011, the district court granted in part and denied in part the Company’s motion for summary judgment. On July 1, 2013, the U.S. Court of Appeals for the Federal Circuit: 1) affirmed the district court’s summary judgment rulings that Seagate did not misappropriate any of the alleged trade secrets and that the asserted claims of the ‘635 patent are invalid; 2) reversed and vacated the district court’s summary judgmentof non-infringement with respect to the ‘473 patent; and 3) remanded the case for further proceedings on the ‘473 patent. On July 11, 2014, the district court granted the Company’s further summary judgment motion regarding the ‘473 patent. On February 10, 2016, the U.S. Court of Appeals for the Federal Circuit: 1) affirmed the district court’s summary judgment of no direct infringement by Seagate because Seagate’s ATA/SCSI disk drives do not meet the “user interface” limitation of the asserted claims of the ‘473 patent; 2) affirmed the district court’s summary judgment of non-
infringement by Compaq’s products as to claims 1, 3, and 5 of the ‘473 patent because Compaq’s F10 BIOS interface does not meet the “commands” limitation of those claims; 3) vacated the district court’s summary judgmentof non-infringement by Compaq’s accused products as toclaims 7-15 of the ‘473 patent; 4) reversed the district court’s summary judgmentof non-infringement based on intervening rights; and 5) remanded the case to the district court for further proceedings on the ‘473 patent. In view of the rulings made by the district court and the Court of Appeals and the uncertainty regarding the amount of damages, if any, that could be awarded Convolve in this matter, the Company does not believe that it is currently possible to determine a reasonable estimate of the possible range of loss related to this matter.
Enova Technology Corporation v. Seagate Technology (US) Holdings, Inc., et al.On June 5, 2013, Enova Technology Corporation (“Enova”) filed a complaint against Seagate Technology (US) Holdings, Inc. and Seagate Technology LLC in the U.S. District Court for the District of Delaware alleging infringement of U.S. Patent No. 7,136,995 (the “‘995 patent”), “Cryptographic Device,” and U.S. Patent No. 7,900,057 (the “‘057 patent”), “Cryptographic Serial ATA Apparatus and Method.” The Company believes the claims are without merit and intends to vigorously defend this case. On April 27, 2015, the district court ordered a stay of the case, in view of proceedings regarding the ‘995 and ‘057 patents before the Patent Trial and Appeal Board (“PTAB”) of the U.S. Patent and Trademark Office. On September 2, 2015, PTAB issued its final written decision thatclaims 1-15 of the ‘995 patent are held unpatentable. On December 18, 2015, PTAB issued its final written decisions thatclaims 1-32 and 40-53 of the ‘057 patent are held unpatentable. On February 4, 2016, PTAB issued its final written decision thatclaims 33-39 of the ‘057 patent are held unpatentable. Enova appealed PTAB’s decisions on the ‘995 patent and the ‘057 patent to the U.S. Court of Appeals for the Federal Circuit. On March 20, 2017, the court of appeals issued its judgment affirming PTAB’s decision on the ‘995 patent. On September 6, 2017, the court of appeals issued its judgment affirming PTAB’s decision on the ‘057 patent. On November 27, 2017, Enova filed a petition for writ of certiorari with the U.S. Supreme Court challenging the court of appeals’ decision on the ‘057 Patent. The Supreme Court has not yet ruled on this petition. The district court case remains stayed. In view of the uncertainty regarding the amount of damages, if any, that could be awarded in this matter, the Company does not believe that it is currently possible to determine a reasonable estimate of the possible range of loss related to this matter.
dismiss with prejudice all claims against TDK.
Investment
Dividend Declared
On January 29, 2018, the Company’sCom
June 24, 2022
.Some of the statements and assumptions included in this
except as required by law.
Our Company
We are a leading provider of data storage technology and solutions. Our principal products are hard disk drives, commonly referred to as disk drives, hard drives or HDDs. In addition to HDDs, we produce a broad range of data storage products including solid state drives (“SSD”) and their related controllers, solid state hybrid drives (“SSHD”) and storage subsystems.
Hard disk drives are devices that store digitally encoded data on rapidly rotating disks with magnetic surfaces. Disk drives continue to be the primary medium of mass data storage due to their performance attributes, high quality and cost effectiveness. Complementing existing data center storage architecture, solid-state storage devices use integrated circuit assemblies as memory to store data with most SSDs using NAND-based flash memory. In addition to HDDs and SSDs, SSHDs combine the features of SSDs and HDDs in the same unit, containing a large hard disk drive and an SSD cache to improve performance of frequently accessed data.
Our products are designed for mission critical and nearline applications in enterprise servers and storage systems; edge compute / client compute applications, where our products are designed primarily for desktop and mobile computing; and edgenon-compute /client non-compute applications, where our products are designed for a wide variety of end user devices such as portable external storage systems, surveillance systems, network-attached storage (“NAS”), digital video recorders (“DVRs”) and gaming consoles.
Our cloud systems and solutions extend innovation from the device into the information infrastructure, onsite and in the cloud. Our portfolio includes modular original equipment manufacturer (“OEM”) storage systemsand scale-out storage servers.
2021 quarter and the March 2021 quarter.
end markets, including impacts from periodic governmental lockdown measures.
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||
(Dollars in millions) | December 29, 2017 | September 29, 2017 | December 30, 2016 | December 29, 2017 | December 30, 2016 | |||||||||||||||
Revenue | $ | 2,914 | $ | 2,632 | $ | 2,894 | $ | 5,546 | $ | 5,691 | ||||||||||
Cost of revenue | 2,037 | 1,896 | 2,003 | 3,933 | 3,999 | |||||||||||||||
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Gross margin | 877 | 736 | 891 | 1,613 | 1,692 | |||||||||||||||
Product development | 250 | 263 | 305 | 513 | 620 | |||||||||||||||
Marketing and administrative | 142 | 145 | 155 | 287 | 308 | |||||||||||||||
Amortization of intangibles | 19 | 22 | 28 | 41 | 57 | |||||||||||||||
Restructuring and other, net | 33 | 51 | 33 | 84 | 115 | |||||||||||||||
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Income from operations | 433 | 255 | 370 | 688 | 592 | |||||||||||||||
Other expense, net | (62 | ) | (67 | ) | (60 | ) | (129 | ) | (109 | ) | ||||||||||
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Income before income taxes | 371 | 188 | 310 | 559 | 483 | |||||||||||||||
Provision for income taxes | 212 | 7 | 13 | 219 | 19 | |||||||||||||||
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Net income | $ | 159 | $ | 181 | $ | 297 | $ | 340 | $ | 464 | ||||||||||
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| For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||
| December 29, 2017 | September 29, 2017 | December 30, 2016 | December 29, 2017 | December 30, 2016 | |||||||||||||||
Revenue | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||
Cost of revenue | 70 | 72 | 69 | 71 | 70 | |||||||||||||||
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Gross margin | 30 | 28 | 31 | 29 | 30 | |||||||||||||||
Product development | 9 | 10 | 11 | 9 | 11 | |||||||||||||||
Marketing and administrative | 5 | 5 | 5 | 5 | 6 | |||||||||||||||
Amortization of intangibles | — | 1 | 1 | 1 | 1 | |||||||||||||||
Restructuring and other, net | 1 | 2 | 1 | 2 | 2 | |||||||||||||||
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Income from operations | 15 | 10 | 13 | 12 | 10 | |||||||||||||||
Other expense, net | (3 | ) | (3 | ) | (2 | ) | (2 | ) | (2 | ) | ||||||||||
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Income before income taxes | 12 | 7 | 11 | 10 | 8 | |||||||||||||||
Provision for income taxes | 7 | — | 1 | 4 | — | |||||||||||||||
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Net income | 5 | % | 7 | % | 10 | % | 6 | % | 8 | % | ||||||||||
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| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||||||
| (Dollars in millions) | April 1, 2022 | December 31, 2021 | April 2, 2021 | April 1, 2022 | April 2, 2021 | |||||||||||||||||||||||||||
| Revenue | $ | 2,802 | $ | 3,116 | $ | 2,731 | $ | 9,033 | $ | 7,668 | ||||||||||||||||||||||
| Cost of revenue | 1,996 | 2,168 | 1,991 | 6,323 | 5,636 | |||||||||||||||||||||||||||
| Gross profit | 806 | 948 | 740 | 2,710 | 2,032 | |||||||||||||||||||||||||||
| Product development | 233 | 228 | 227 | 694 | 671 | |||||||||||||||||||||||||||
| Marketing and administrative | 141 | 136 | 126 | 410 | 366 | |||||||||||||||||||||||||||
| Amortization of intangibles | 3 | 3 | 3 | 9 | 9 | |||||||||||||||||||||||||||
| Restructuring and other, net | — | 1 | (2) | 2 | 1 | |||||||||||||||||||||||||||
| Income from operations | 429 | 580 | 386 | 1,595 | 985 | |||||||||||||||||||||||||||
| Other expense, net | (78) | (66) | (47) | (197) | (134) | |||||||||||||||||||||||||||
| Income before income taxes | 351 | 514 | 339 | 1,398 | 851 | |||||||||||||||||||||||||||
| Provision for income taxes | 5 | 13 | 10 | 25 | 19 | |||||||||||||||||||||||||||
| Net income | $ | 346 | $ | 501 | $ | 329 | $ | 1,373 | $ | 832 | ||||||||||||||||||||||
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||||||
| April 1, 2022 | December 31, 2021 | April 2, 2021 | April 1, 2022 | April 2, 2021 | ||||||||||||||||||||||||||||
| Revenue | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||||||||||||
| Cost of revenue | 71 | 70 | 73 | 70 | 73 | |||||||||||||||||||||||||||
| Gross margin | 29 | 30 | 27 | 30 | 27 | |||||||||||||||||||||||||||
| Product development | 8 | 7 | 9 | 9 | 9 | |||||||||||||||||||||||||||
| Marketing and administrative | 5 | 4 | 5 | 5 | 5 | |||||||||||||||||||||||||||
| Amortization of intangibles | — | — | — | — | — | |||||||||||||||||||||||||||
| Restructuring and other, net | — | — | — | — | — | |||||||||||||||||||||||||||
| Operating margin | 16 | 19 | 14 | 16 | 13 | |||||||||||||||||||||||||||
| Other expense, net | (4) | (3) | (2) | (2) | (2) | |||||||||||||||||||||||||||
| Income before income taxes | 12 | 16 | 12 | 14 | 11 | |||||||||||||||||||||||||||
| Provision for income taxes | — | — | — | — | — | |||||||||||||||||||||||||||
| Net income | 12 | % | 16 | % | 12 | % | 16 | % | 11 | % | ||||||||||||||||||||||
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||||||
| April 1, 2022 | December 31, 2021 | April 2, 2021 | April 1, 2022 | April 2, 2021 | ||||||||||||||||||||||||||||
| Revenues by Channel (%) | ||||||||||||||||||||||||||||||||
| OEMs | 77 | % | 70 | % | 71 | % | 73 | % | 69 | % | ||||||||||||||||||||||
| Distributors | 12 | % | 18 | % | 17 | % | 16 | % | 17 | % | ||||||||||||||||||||||
| Retailers | 11 | % | 12 | % | 12 | % | 11 | % | 14 | % | ||||||||||||||||||||||
Revenues by Geography (%) (1) | ||||||||||||||||||||||||||||||||
| Asia Pacific | 46 | % | 46 | % | 47 | % | 48 | % | 48 | % | ||||||||||||||||||||||
| Americas | 42 | % | 38 | % | 34 | % | 38 | % | 34 | % | ||||||||||||||||||||||
| EMEA | 12 | % | 16 | % | 19 | % | 14 | % | 18 | % | ||||||||||||||||||||||
| Revenues by Market (%) | ||||||||||||||||||||||||||||||||
| Mass capacity | 69 | % | 66 | % | 60 | % | 66 | % | 59 | % | ||||||||||||||||||||||
| Legacy | 23 | % | 25 | % | 32 | % | 25 | % | 33 | % | ||||||||||||||||||||||
| Other | 8 | % | 9 | % | 8 | % | 9 | % | 8 | % | ||||||||||||||||||||||
| HDD Exabytes Shipped by Market | ||||||||||||||||||||||||||||||||
| Mass capacity | 133 | 137 | 111 | 402 | 294 | |||||||||||||||||||||||||||
| Legacy | 21 | 26 | 29 | 74 | 89 | |||||||||||||||||||||||||||
| Total | 154 | 163 | 140 | 476 | 383 | |||||||||||||||||||||||||||
| HDD Price per Terabyte | $ | 17 | $ | 17 | $ | 18 | $ | 17 | $ | 18 | ||||||||||||||||||||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||
| December 29, 2017 | September 29, 2017 | December 30, 2016 | December 29, 2017 | December 30, 2016 | |||||||||||||||
ASPs (per unit) | $ | 68 | $ | 64 | $ | 67 | $ | 66 | $ | 67 | ||||||||||
Exabytes Shipped | 88 | 70 | 68 | 158 | 135 | |||||||||||||||
Revenues by Channel (%) | ||||||||||||||||||||
OEMs | 67 | % | 67 | % | 66 | % | 67 | % | 68 | % | ||||||||||
Distributors | 17 | % | 17 | % | 18 | % | 17 | % | 18 | % | ||||||||||
Retailers | 16 | % | 16 | % | 16 | % | 16 | % | 14 | % | ||||||||||
Revenues by Geography (%) | ||||||||||||||||||||
Americas | 26 | % | 26 | % | 30 | % | 26 | % | 32 | % | ||||||||||
EMEA | 19 | % | 18 | % | 19 | % | 18 | % | 17 | % | ||||||||||
Asia Pacific | 55 | % | 56 | % | 51 | % | 56 | % | 51 | % | ||||||||||
Compared toa decrease in legacy market exabytes shipped.
Revenue for the six months ended December 2017 quarter decreased by $145 million from the six months ended December 2016 quarter as a result of price erosion, partially offset by an improved product mix.
a decrease in legacy market exabytes shipped.
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||
(Dollars in millions) | December 29, 2017 | September 29, 2017 | December 30, 2016 | December 29, 2017 | December 30, 2016 | |||||||||||||||
Cost of revenue | $ | 2,037 | $ | 1,896 | $ | 2,003 | $ | 3,933 | $ | 3,999 | ||||||||||
Gross margin | 877 | 736 | 891 | 1,613 | 1,692 | |||||||||||||||
Gross margin percentage | 30 | % | 28 | % | 31 | % | 29 | % | 30 | % | ||||||||||
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||||||
| (Dollars in millions) | April 1, 2022 | December 31, 2021 | April 2, 2021 | April 1, 2022 | April 2, 2021 | |||||||||||||||||||||||||||
| Cost of revenue | $ | 1,996 | $ | 2,168 | $ | 1,991 | $ | 6,323 | $ | 5,636 | ||||||||||||||||||||||
| Gross profit | 806 | 948 | 740 | 2,710 | 2,032 | |||||||||||||||||||||||||||
| Gross margin | 29 | % | 30 | % | 27 | % | 30 | % | 27 | % | ||||||||||||||||||||||
Compared to the corresponding threehigher component and six months ended December 2016 quarter, gross margin as a percentage of revenue for the three and six months ended December 2017 quarter decreased by 100 basis points in both periods, primarily driven by price erosion, partially offset by favorable product mix and improved factory utilizationlogistics costs resulting from cost savings due to our workforce reductionsthe pandemic and manufacturing consolidation activities.
global inflationary pressures.
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||
(Dollars in millions) | December 29, 2017 | September 29, 2017 | December 30, 2016 | December 29, 2017 | December 30, 2016 | |||||||||||||||
Product development | $ | 250 | $ | 263 | $ | 305 | $ | 513 | $ | 620 | ||||||||||
Marketing and administrative | 142 | 145 | 155 | 287 | 308 | |||||||||||||||
Amortization of intangibles | 19 | 22 | 28 | 41 | 57 | |||||||||||||||
Restructuring and other, net | 33 | 51 | 33 | 84 | 115 | |||||||||||||||
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Operating expenses | $ | 444 | $ | 481 | $ | 521 | $ | 925 | $ | 1,100 | ||||||||||
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| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||||||
| (Dollars in millions) | April 1, 2022 | December 31, 2021 | April 2, 2021 | April 1, 2022 | April 2, 2021 | |||||||||||||||||||||||||||
| Product development | $ | 233 | $ | 228 | $ | 227 | $ | 694 | $ | 671 | ||||||||||||||||||||||
| Marketing and administrative | 141 | 136 | 126 | 410 | 366 | |||||||||||||||||||||||||||
| Amortization of intangibles | 3 | 3 | 3 | 9 | 9 | |||||||||||||||||||||||||||
| Restructuring and other, net | — | 1 | (2) | 2 | 1 | |||||||||||||||||||||||||||
| Operating expenses | $ | 377 | $ | 368 | $ | 354 | $ | 1,115 | $ | 1,047 | ||||||||||||||||||||||
Compared to the December 2016 quarter, product development expense, decreased by $55a $4 million primarily due to a $17 million decreaseincrease in salaries and employee benefits travel expenses
Compared to corresponding six months ended December 2016 quarter, product development expense decreased by $107 million primarily due to a $47 million decrease in salaries and employee benefits as a result of the restructuring of our workforce in prior periods, a $36 million decrease due to related operational efficiencies and a $24 million decrease in variable compensation and share-based compensation expenses.
Marketing and administrative expense. Marketing and administrative expense for the December 2017 quarter decreased by $3 million from the September 2017 quarter primarily due to a decrease in salaries and related benefits as a result of the restructuring of our workforce in prior periods, partially offset by an increase in variable compensation expense.
Compared to the December 2016 quarter, Marketing and administrative expense decreased by $13 million, primarily due to a $9 million decrease in salaries and related benefits as a result of the restructuring of our workforce in prior periods, andpandemic-related travel restrictions
Compared to corresponding six months ended December 2016 quarter, marketing and administrative expense decreased by $21 million primarily due to a $13 million decrease in salaries and related benefits as a result of the restructuring of our workforce in prior periodsinformation technology costs and a $8$2 million decreaseincrease in variable compensation expense.
advertising costs.
April 2, 2021, respectively.
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||||||
| (Dollars in millions) | April 1, 2022 | December 31, 2021 | April 2, 2021 | April 1, 2022 | April 2, 2021 | |||||||||||||||||||||||||||
| Other expense, net | $ | (78) | $ | (66) | $ | (47) | $ | (197) | $ | (134) | ||||||||||||||||||||||
Other Expense, Net
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||
(Dollars in millions) | December 29, 2017 | September 29, 2017 | December 30, 2016 | December 29, 2017 | December 30, 2016 | |||||||||||||||
Other expense, net | $ | (62 | ) | $ | (67 | ) | $ | (60 | ) | $ | (129 | ) | $ | (109 | ) | |||||
Other expense, net decreased by $5$12 million from the September 2017December 2021 quarter primarily due to a favorable $9net $13 million change in foreign currency exchange rates, partially offset byimpairment charge related to a $2 million loss on repurchase of debtstrategic investment in the December 2017March 2022 quarter.
Compared to December 2016 quarter,
long-term debt.
long-term debt.
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||
(Dollars in millions) | December 29, 2017 | September 29, 2017 | December 30, 2016 | December 29, 2017 | December 30, 2016 | |||||||||||||||
Provision for income taxes | $ | 212 | $ | 7 | $ | 13 | $ | 219 | $ | 19 | ||||||||||
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||||||
| (Dollars in millions) | April 1, 2022 | December 31, 2021 | April 2, 2021 | April 1, 2022 | April 2, 2021 | |||||||||||||||||||||||||||
| Provision for income taxes | $ | 5 | $ | 13 | $ | 10 | $ | 25 | $ | 19 | ||||||||||||||||||||||
quarter ended October 2, 2020
.During the six months ended December 2017 quarter, our unrecognized tax benefits excluding interest and penalties increased by approximately $1 million to $75 million. The unrecognized tax benefits that, if recognized, would impact the effective tax rate were $75 million at December 29, 2017, subject to certain future changes in valuation allowance. During the twelve months beginning December 30, 2017, we expect that our unrecognized tax benefits could be reduced by approximately $2 million, primarily as a resultcurrent year generation of the expirationresearch credits.
from the values reported as of April 1, 2022.
(Dollars in millions) | December 29, 2017 | June 30, 2017 | Change | |||||||||
Cash and cash equivalents | $ | 2,556 | $ | 2,539 | $ | 17 | ||||||
| (Dollars in millions) | April 1, 2022 | July 2, 2021 | Change | |||||||||||||||||
| Cash and cash equivalents | $ | 1,138 | $ | 1,209 | $ | (71) | ||||||||||||||
debt and net cash of
$1.5 billion provided by operating activities.forin investing activities for the sixnine months ended December 29, 2017April 1, 2022 was $210$293 million, which was primarily attributableattributable to the following activities:$201strategic investments of $18 million;activitiesactivities of $865 million$1.3 billion for the sixnine months ended December 29, 2017April 1, 2022 was primarily attributable to the following activities:$366 million in dividend payments;
amount. We require substantial amounts of cash to fund any increased working capital requirements, future capital expenditures, scheduled payments of principal and interest on our indebtedness and payments of dividends. We may raise additional capital from time to time and will continue to evaluate and manage the retirement and replacement of existing debt and associated obligations, including evaluating the issuance of new debt securities, exchanging existing debt securities for other debt securities and retiring debt pursuant to privately negotiated transactions, open market purchases, tender offers or other means. In addition, we may selectively pursue strategic alliances, acquisitions, joint ventures and investments, which may require additional capital. June 24, 2022.December 29, 2017 consistedApril 1, 2022 consist of: (1) approximately $2.6approximately $1.1 billion in cash and cash equivalents, (2) cash we expect to generate from operations and (3) a $700 million$1.75 billion available for borrowing under our senior revolving credit facility.As of December 29, 2017, no borrowings had been drawn under theunsecured revolving credit facility or had been(“Revolving Credit Facility”), which is part of our credit agreement (the “Credit Agreement”).this credit facility.the Revolving Credit Facility. The line of creditRevolving Credit Facility is available for borrowings, subject to compliance with financial covenants and other customary conditions to borrowing.credit agreement that governs our revolving credit facility, as amended,Credit Agreement includes three financial covenants: (1) minimum cash, cash equivalents and marketable securities;interest coverage ratio, (2) a fixed charge coverage ratio;total leverage ratio and (3) a net leverage ratio. On April 28, 2016, the Revolving Credit Agreement was amended in order to increase the allowable net leverage ratio to adjust for our current financialminimum liquidity position. The term of the revolving credit facility is through January 15, 2020 provided that if we do not have Investment Grade Ratings (as defined in the revolving credit facility) on August 15, 2018, then the maturity date will be August 16, 2018 unless certain extension conditions have been satisfied. We were in compliance with the modified covenants as of December 29, 2017 and expect to be in compliance for the next 12 months.dividend.dividend and any future strategic investments. Our ability to fund these requirements will depend on our future cash flows, which are determined by future operating performance, and therefore, subject to prevailing global macroeconomic conditions and financial, business and other factors, some of which are beyond our control.2018,2022, we expect capital expenditures to be less than 5%at or below the low end of our long-term targeted range of 4% to 6% of revenue.otherwise,otherwise, or we may repurchase outstanding senior notes pursuant to the terms of the applicable indenture.Dividends declared inDecember 2017March 2022 quarter, of $179 million were subsequently paid on January 3, 2018. The Company’sour Board of Directors announceddeclared dividends of $0.70 per share, totaling $152 million, which were paid on April 6, 2022. On April 27, 2022, our Board of Directors declared a quarterly cash dividend of $0.63$0.70 per share, on January 29, 2018, which is payable on April 4, 2018July 7, 2022 to shareholders of record at the close of business on March 21, 2018.purchases. purchases, tender offers, or other means, including through the use of derivative transactions.As of December 29, 2017, $0.9April 1, 2022, $2.8 billion remained remained available for repurchaserepurchases under our existing repurchase authorization limit.authorization. We may limit or terminate the repurchase program at any time. All repurchases are effected as redemptions in accordance with the Company’s Articlesour Constitution.December 29, 2017, have beenApril 1, 2022, are summarized in the table below: Fiscal Year(s) (Dollars in millions) Total 2022 2023-2024 2025-2026 Thereafter Contractual Cash Obligations: Long-term debt $ 5,715 $ — $ 1,145 $ 1,125 $ 3,445 Interest payments on debt 1,414 70 430 325 589 1,831 1,062 525 148 96 63 4 25 13 21 Capital expenditures 257 80 176 1 — Subtotal 9,280 1,216 2,301 1,612 4,151 Commitments: Letters of credit or bank guarantees 38 9 20 — 9 Total $ 9,318 $ 1,225 $ 2,321 $ 1,612 $ 4,160
| Fiscal Year(s) | ||||||||||||||||||||
(Dollars in millions) | Total | Remainder of 2018 | 2019-2020 | 2021-2022 | Thereafter | |||||||||||||||
Contractual Cash Obligations: | ||||||||||||||||||||
Long-term debt | $ | 4,923 | $ | — | $ | 560 | $ | 750 | $ | 3,613 | ||||||||||
Interest payments on debt | 1,720 | 115 | 430 | 420 | 755 | |||||||||||||||
Purchase obligations(2) | 764 | 764 | — | — | — | |||||||||||||||
Operating leases(1) | 122 | 9 | 25 | 13 | 75 | |||||||||||||||
Capital expenditures | 127 | 116 | 10 | 1 | — | |||||||||||||||
Other funding requirements(3) | 24 | 12 | 12 | — | — | |||||||||||||||
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Subtotal | 7,680 | 1,016 | 1,037 | 1,184 | 4,443 | |||||||||||||||
Commitments: | ||||||||||||||||||||
Letters of credit or bank guarantees | 107 | 15 | 91 | 1 | — | |||||||||||||||
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Total | $ | 7,787 | $ | 1,031 | $ | 1,128 | $ | 1,185 | $ | 4,443 | ||||||||||
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(1)Purchase obligations are defined as contractual obligations |
On September 28, 2017, we entered into an Equity Commitment Letter (“ECL”) with a consortium of investors led by Bain Capital Private Equity for the acquisitionpurchase of Toshiba Memory Corporation (“TMC”). The ECL contemplatesgoods or services, which are enforceable and legally binding on us, and that upon the closingspecify all significant terms.
As of December 29, 2017, we had a liability for unrecognized tax benefits and an accrual for the payment of related interest totaling $11 million, none of which is expected to be settled within one year. Outside of one year, we are unable to make a reasonably reliable estimate of when cash settlement with a taxing authority will occur.
sublease income).
Since our fiscal year ended June 30, 2017,
April 1, 2022.
Our Term Loans bear interest at a variable rate equal to LIBOR plus a variable margin. At this time, we have not identified any material exposure associated with the phase out of LIBOR by the end of 2022.
| Fiscal Years Ended | ||||||||||||||||||||||||||||||||
(Dollars in millions, except percentages) | 2018 | 2019 | 2020 | 2021 | 2022 | Thereafter | Total | Fair Value at December 29, 2017 | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Cash equivalents: | ||||||||||||||||||||||||||||||||
Fixed rate | $ | 1,064 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,064 | $ | 1,064 | ||||||||||||||||
Average interest rate | 1.49 | % | 1.49 | % | ||||||||||||||||||||||||||||
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Total fixed income | $ | 1,064 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,064 | $ | 1,064 | ||||||||||||||||
Average interest rate | 1.49 | % | 1.49 | % | ||||||||||||||||||||||||||||
Debt | ||||||||||||||||||||||||||||||||
Fixed rate | $ | — | $ | 560 | $ | — | $ | — | $ | 750 | $ | 3,613 | $ | 4,923 | $ | 4,903 | ||||||||||||||||
Average interest rate | 3.75 | % | 4.25 | % | 4.93 | % | 4.69 | % | ||||||||||||||||||||||||
April 1, 2022.
| Fiscal Years Ended | Total | Fair Value at April 1, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions, except percentages) | 2022 | 2023 | 2024 | 2025 | 2026 | Thereafter | ||||||||||||||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Money market funds, time deposits and certificates of deposit | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Floating rate | $ | 177 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 177 | $ | 177 | ||||||||||||||||||||||||||||||||||
| Average interest rate | 0.14 | % | 0.14 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Other debt securities | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Fixed rate | $ | — | $ | — | $ | — | $ | — | $ | 15 | $ | 8 | $ | 23 | $ | 23 | ||||||||||||||||||||||||||||||||||
| Debt | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Fixed rate | $ | — | $ | 541 | $ | 500 | $ | 479 | $ | — | $ | 2,995 | $ | 4,515 | $ | 4,420 | ||||||||||||||||||||||||||||||||||
| Average interest rate | — | % | 4.75 | % | 4.88 | % | 4.75 | % | — | % | 4.22 | % | 4.41 | % | ||||||||||||||||||||||||||||||||||||
| Variable rate | $ | — | $ | 44 | $ | 60 | $ | 83 | $ | 563 | $ | 450 | $ | 1,200 | $ | 1,180 | ||||||||||||||||||||||||||||||||||
| Average interest rate | — | % | 2.92 | % | 2.92 | % | 2.92 | % | 2.94 | % | 2.90 | % | 2.92 | % | ||||||||||||||||||||||||||||||||||||
We evaluate hedging effectiveness prospectively and retrospectively and record any ineffective portion of the hedging instruments$4 million in Cost of revenue onand Interest expense, respectively, related to the Condensed Consolidated Statementsloss of Operations. We did not have any material net gains (losses) recognized in Cost of revenue for cash flow hedges due to hedge ineffectiveness ordesignation on discontinued cash flow hedges during the three and six months ended December 29, 2017.April 1, 2022. We recognized a net loss of $10 million and $8 million in Cost of revenue and Interest expense, respectively, related to the loss of hedge designation on discontinued cash flow hedges during the nine months ended April 1, 2022.
| (Dollars in millions, except weighted-average contract rate) | Notional Amount | Weighted-Average Contract Rate | Estimated Fair Value(1) | |||||||||||||||||
| Foreign currency forward exchange contracts: | ||||||||||||||||||||
| Singapore Dollar | $ | 240 | $ | 1.36 | $ | 1 | ||||||||||||||
| Thai Baht | 184 | $ | 33.07 | — | ||||||||||||||||
| Chinese Renminbi | 115 | $ | 6.49 | 2 | ||||||||||||||||
| British Pound Sterling | 80 | $ | 0.74 | (2) | ||||||||||||||||
| Total | $ | 619 | $ | 1 | ||||||||||||||||
counterparties, and may increase the cost of such capital.transaction costs and our ability to raise capital and execute transactions with various counterparties.Plan (the “SDCP”).Plans, as amended from time to time, under which no additional deferrals may be made after December 31, 2014. In fiscal year 2014, we entered into a Total Return Swap (“TRS”)TRS in order to manage the equity market risks associated with the SDCP liabilities. We pay a floating rate, based on LIBOR plus an interest rate spread, on the notional amount of the TRS. The TRS is designed to substantially offset changes in the SDCP liabilityliabilities due to changes in the value of the investment options made by employees. See “Part I, Item 1. Financial Statements—Note 8.6. Derivative Financial Instruments” of this Quarterly Report onForm 10-Q.ITEM 4.CONTROLS AND PROCEDURES
An
The timing of purchases will depend upon prevailing market conditions, alternative uses of capital and other factors. We may limit or terminate the repurchase program at any time.
| Period | Total Number of Shares Repurchased(1) | Average Price Paid Per Share(1) | Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1) | ||||||||||||||||||||||
| January 1, 2022 through January 28, 2022 | 1 | $ | 104.07 | 1 | $ | 3,169 | ||||||||||||||||||||
| January 29, 2022 through February 25, 2022 | 1 | 108.78 | 1 | 3,082 | ||||||||||||||||||||||
| February 26, 2022 through April 1, 2022 | 2 | 92.83 | 2 | 2,844 | ||||||||||||||||||||||
| Total | 4 | 4 | ||||||||||||||||||||||||
(In millions, except average price paid per share) | Total Number of Shares Repurchased | Average Price Paid per Share | Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||||
September 30, 2017 through October 27, 2017 | — | $ | 34.02 | — | $ | 1,084 | ||||||||||
October 28, 2017 through November 24, 2017 | — | 39.59 | — | 1,084 | ||||||||||||
November 25, 2017 through December 29, 2017 | 5.0 | 39.21 | 5.0 | 888 | ||||||||||||
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Total | 5.0 | $ | 39.17 | 5.0 | $ | 888 | ||||||||||
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Not applicable
See
| Incorporated by Reference | |||||||||||||||||||||||
| Exhibit No. | Description of Exhibit | Form | File No. | Exhibit | Filing Date | Filed Herewith | |||||||||||||||||
| 3.1 | 10-K | 001-31560 | 3.1 | 8/6/2021 | |||||||||||||||||||
| 3.2 | S-8 | 001-31560 | 4.1 | 10/20/2021 | |||||||||||||||||||
10.1+ | X | ||||||||||||||||||||||
10.2+ | X | ||||||||||||||||||||||
10.3+ | X | ||||||||||||||||||||||
| 31.1 | X | ||||||||||||||||||||||
| 31.2 | X | ||||||||||||||||||||||
| 32.1† | X | ||||||||||||||||||||||
| 101.INS | Inline XBRL Instance Document. | ||||||||||||||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema | ||||||||||||||||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | ||||||||||||||||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | ||||||||||||||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | ||||||||||||||||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase. | ||||||||||||||||||||||
| 104 | Inline XBRL Cover page and contained in Exhibit 101. | ||||||||||||||||||||||
EXHIBIT INDEX
Form 10-Q, irrespective of any general incorporation language contained in such filing.
SEAGATE TECHNOLOGY HOLDINGS PUBLIC LIMITED COMPANY | |||||||||||||||||
| DATE: | April 28, 2022 | BY: | /s/ | ||||||||||||||
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Executive Vice President
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