January 3, 2020
| Ireland | 98-0648577 | |||||||
| (State or other jurisdiction of | (I.R.S. Employer | |||||||
| incorporation or organization) | ||||||||
| 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 | ||||||||||||
Yes
☒ No ☐Yes
☒ No ☐Large accelerated | ☒ |
| Accelerated filer: | ☐ | |||||||||||||
Non-accelerated filer: | ☐ |
| Smaller reporting company: | ☐ | |||||||||||||
Emerging growth company: | ☐ | ||||||||||||||||
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ | ||||||||||||||||
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. ☐
Yes
☐No ☒| PAGE NO. | ||||||||||||||
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Item 1. | ||||||||||||||
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Current assets: Cash and cash equivalents Accounts receivable, net Inventories Other current assets Total current assets Property, equipment and leasehold improvements, net Investment in debt security 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, less current portion 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) onavailable-for-sale debt 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 Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Share-based compensation Deferred income taxes Gain on sale of property and equipment 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 Other assets and liabilities Net cash provided by operating activities Acquisition of property, equipment and leasehold improvements Proceeds from settlement of foreign currency forward exchange contracts Proceeds from sale of strategic investments Proceeds from sale of properties previously classified as held for sale Proceeds from sale of property and equipment Purchases of strategic investments Other investing activities, net Net cash used in investing activities Redemption and repurchase of debt Dividends to shareholders Repurchases of ordinary shares Taxes paid related to net share settlement of equity awards Net proceeds from issuance of long-term debt 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 (Decrease) 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 December 28, 2018 Net income Other comprehensive loss 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 March 29, 2019 Balances at December 29, 2017 Net income Other comprehensive income Issuance of ordinary shares under employee stock plans Tax withholding related to vesting of restricted stock units Dividends to shareholders Share-based compensation Balance at March 30, 2018 Balance at June 29, 2018 Cumulative effect of adoption of new revenue standard (Note 1) Net income Other comprehensive loss 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 March 29, 2019 Balances 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 March 30, 2018 In addition to HDDs and SSDs, SSHDs combine the features of SSDs and HDDs in the same unit, containing a high capacity HDD and a smaller SSD acting as a cache to improve performance of frequently accessed data. systems. . July 3, 2020.(Unaudited) March 29,
2019 June 29,
2018 ASSETS $ 1,388 $ 1,853 897 1,184 1,001 1,053 201 220 3,487 4,310 1,822 1,792 1,318 1,275 1,237 1,237 129 188 416 417 187 191 $ 8,596 $ 9,410 LIABILITIES AND EQUITY $ 1,310 $ 1,728 145 253 100 112 — 499 591 598 2,146 3,190 112 125 5 10 122 100 4,522 4,320 6,907 7,745 6,518 6,377 (21 ) (16 ) (4,808 ) (4,696 ) 1,689 1,665 $ 8,596 $ 9,410 The information as of June 29, 2018 was derived from the Company’s audited Consolidated Balance Sheet as of June 29, 2018. January 3,
2020June 28,
2019(unaudited) ASSETS Current assets: Cash and cash equivalents $ 1,744 $ 2,220 Accounts receivable, net 1,112 989 Inventories 1,148 970 Other current assets 148 184 Total current assets 4,152 4,363 Property, equipment and leasehold improvements, net 2,049 1,869 Goodwill 1,237 1,237 Other intangible assets, net 83 111 Deferred income taxes 1,119 1,114 Other assets, net 292 191 Total Assets $ 8,932 $ 8,885 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 1,870 $ 1,420 Accrued employee compensation 191 169 Accrued warranty 80 91 Current portion of long-term debt 6 — Accrued expenses 553 552 Total current liabilities 2,700 2,232 Long-term accrued warranty 89 104 Long-term accrued income taxes 3 4 Other non-current liabilities 175 130 Long-term debt 4,135 4,253 Total Liabilities 7,102 6,723 Commitments and contingencies (See Notes 11 and 13) Shareholders’ Equity: Ordinary shares and additional paid-in capital 6,667 6,545 Accumulated other comprehensive loss (33) (34) Accumulated deficit (4,804) (4,349) Total Equity 1,830 2,162 Total Liabilities and Equity $ 8,932 $ 8,885 For the Three Months Ended For the Nine Months Ended March 29,
2019 March 30,
2018 March 29,
2019 March 30,
2018 $ 2,313 $ 2,803 $ 8,019 $ 8,349 1,712 1,956 5,711 5,889 238 254 750 767 110 135 345 422 6 6 17 47 11 11 41 95 2,077 2,362 6,864 7,220 236 441 1,155 1,129 21 10 67 23 (55 ) (60 ) (169 ) (182 ) 13 2 28 (18 ) (21 ) (48 ) (74 ) (177 ) 215 393 1,081 952 20 12 52 231 $ 195 $ 381 $ 1,029 $ 721 $ 0.69 $ 1.33 $ 3.62 $ 2.50 0.69 1.31 3.57 2.48 281 286 284 288 284 291 288 291 $ 0.63 $ 0.63 $ 1.89 $ 1.89 For the Three Months Ended For the Six Months Ended January 3,
2020December 28,
2018January 3,
2020December 28,
2018Revenue $ 2,696 $ 2,715 $ 5,274 $ 5,706 Cost of revenue 1,938 1,921 3,845 3,999 Product development 250 246 505 512 Marketing and administrative 120 120 242 235 Amortization of intangibles 4 5 8 11 Restructuring and other, net — 7 17 30 Total operating expenses 2,312 2,299 4,617 4,787 Income from operations 384 416 657 919 Interest income 4 22 15 46 Interest expense (48) (56) (103) (114) Other, net (4) 16 (35) 15 Other expense, net (48) (18) (123) (53) Income before income taxes 336 398 534 866 Provision for income taxes 18 14 16 32 Net income $ 318 $ 384 $ 518 $ 834 Net income per share: Basic $ 1.21 $ 1.35 $ 1.96 $ 2.92 Diluted 1.20 1.34 1.93 2.88 Number of shares used in per share calculations: Basic 262 285 264 286 Diluted 265 287 268 290 Cash dividends declared per ordinary share $ 0.65 $ 0.63 $ 1.28 $ 1.26 For the Three Months Ended For the Nine Months Ended March 29,
2019 March 30,
2018 March 29,
2019 March 30,
2018 $ 195 $ 381 $ 1,029 $ 721 1 — — — 1 — (1 ) — 2 — (1 ) — — — — — — — — — — — — — — — — — — — — — — — — — (2 ) 3 (4 ) 9 — 3 (5 ) 9 $ 195 $ 384 $ 1,024 $ 730 For the Three Months Ended For the Six Months Ended January 3,
2020December 28,
2018January 3,
2020December 28,
2018Net income $ 318 $ 384 $ 518 $ 834 Other comprehensive income (loss), net of tax: Cash flow hedges Change in net unrealized gain (loss) on cash flow hedges 3 (4) 2 (1) Less: reclassification for amounts included in net income 1 (1) 1 (2) Net change 4 (5) 3 (3) Foreign currency translation adjustments 3 (4) (2) (2) Total other comprehensive income (loss), net of tax 7 (9) 1 (5) Comprehensive income $ 325 $ 375 $ 519 $ 829 For the Nine Months Ended March 29,
2019 March 30,
2018 OPERATING ACTIVITIES $ 1,029 $ 721 407 461 73 85 15 209 (1 ) — (68 ) 9 296 124 49 (20 ) (366 ) 74 (108 ) (49 ) (32 ) (24 ) 19 55 1,313 1,645 INVESTING ACTIVITIES (451 ) (270 ) 66 — 10 — 27 43 3 2 (14 ) (8 ) — (6 ) (359 ) (239 ) FINANCING ACTIVITIES (499 ) (209 ) (539 ) (545 ) (613 ) (361 ) (30 ) (22 ) 196 — 68 110 (1,417 ) (1,027 ) (3 ) 8 (466 ) 387 1,857 2,543 $ 1,391 $ 2,930 For the Six Months Ended January 3,
2020December 28,
2018OPERATING ACTIVITIES Net income $ 518 $ 834 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 185 272 Share-based compensation 53 45 Deferred income taxes (4) 1 Other non-cash operating activities, net 47 (44) Changes in operating assets and liabilities: Accounts receivable, net (124) 135 Inventories (172) (47) Accounts payable 458 (240) Accrued employee compensation 22 (89) Accrued expenses, income taxes and warranty (38) (16) Other assets and liabilities (9) 24 Net cash provided by operating activities 936 875 INVESTING ACTIVITIES Acquisition of property, equipment and leasehold improvements (341) (304) Proceeds from settlement of foreign currency forward exchange contracts — 66 Proceeds from sale of strategic investments — 10 Proceeds from the sale of assets 1 6 Purchases of investments (45) (8) Net cash used in investing activities (385) (230) FINANCING ACTIVITIES Redemption and repurchase of debt (645) (499) Dividends to shareholders (335) (361) Repurchases of ordinary shares (600) (286) Taxes paid related to net share settlement of equity awards (39) (30) Net proceeds from issuance of long-term debt 498 — Proceeds from issuance of ordinary shares under employee stock plans 69 35 Other financing activities, net (2) — Net cash used in financing activities (1,054) (1,141) Effect of foreign currency exchange rate changes on cash, cash equivalents and restricted cash (2) (1) Decrease in cash, cash equivalents and restricted cash (505) (497) Cash, cash equivalents and restricted cash at the beginning of the period 2,251 1,857 Cash, cash equivalents and restricted cash at the end of the period $ 1,746 $ 1,360 March 29, 2019January 3, 2020 and March 30,December 28, 2018 Number
of
Ordinary
Shares Par Value
of Shares Additional
Paid-in
Capital Accumulated
Other
Comprehensive
Loss Accumulated
Deficit Total 283 $ — $ 6,457 $ (21 ) $ (4,502 ) $ 1,934 195 195 — — 1 33 33 (7 ) (327 ) (327 ) — — — (174 ) (174 ) 28 28 277 $ — $ 6,518 $ (21 ) $ (4,808 ) $ 1,689 Number
of
Ordinary
Shares Par Value
of Shares Additional
Paid-in
Capital Accumulated
Other
Comprehensive
Loss Accumulated
Deficit Total 285 $ — $ 6,246 $ (11 ) $ (5,174 ) $ 1,061 381 381 3 3 2 75 75 (1 ) (1 ) (181 ) (181 ) 26 26 287 $ — $ 6,347 $ (8 ) $ (4,975 ) $ 1,364 Number
of
Ordinary
SharesPar Value
of SharesAdditional
Paid-in
CapitalAccumulated
Other
Comprehensive
LossAccumulated
DeficitTotal Balance at October 4, 2019 263 $ — $ 6,610 $ (40) $ (4,800) $ 1,770 Net income 318 318 Other comprehensive income 7 7 Issuance of ordinary shares under employee stock plans 1 30 30 Repurchases of ordinary shares (3) (150) (150) Tax withholding related to vesting of restricted stock units (2) (2) Dividends to shareholders (170) (170) Share-based compensation 27 27 Balance at January 3, 2020 261 $ — $ 6,667 $ (33) $ (4,804) $ 1,830 Number
of
Ordinary
SharesPar Value
of SharesAdditional
Paid-in
CapitalAccumulated
Other
Comprehensive
LossAccumulated
DeficitTotal Balance at September 28, 2018 286 $ — $ 6,427 $ (12) $ (4,569) $ 1,846 Net income 384 384 Other comprehensive loss (9) (9) Issuance of ordinary shares under employee stock plans 3 3 Repurchases of ordinary shares (3) (136) (136) Tax withholding related to vesting of restricted stock units (3) (3) Dividends to shareholders (178) (178) Share-based compensation 27 27 Balance at December 28, 2018 283 $ — $ 6,457 $ (21) $ (4,502) $ 1,934 NineSix Months Ended March 29, 2019January 3, 2020 and March 30,December 28, 2018 Number
of
Ordinary
Shares Par Value
of Shares Additional
Paid-in
Capital Accumulated
Other
Comprehensive
Loss Accumulated
Deficit Total 287 $ — $ 6,377 $ (16 ) $ (4,696 ) $ 1,665 34 34 1,029 1,029 (5 ) (5 ) 4 68 68 (13 ) (613 ) (613 ) (1 ) (30 ) (30 ) (532 ) (532 ) 73 73 277 $ — $ 6,518 $ (21 ) $ (4,808 ) $ 1,689 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 ) $ 1,364 721 721 9 9 6 110 110 (10 ) (361 ) (361 ) (1 ) (22 ) (22 ) (542 ) (542 ) 85 85 287 $ — $ 6,347 $ (8 ) $ (4,975 ) $ 1,364 Number
of
Ordinary
SharesPar Value
of SharesAdditional
Paid-in
CapitalAccumulated
Other
Comprehensive
LossAccumulated
DeficitTotal Balance at June 28, 2019 269 $ — $ 6,545 $ (34) $ (4,349) $ 2,162 Impact of adopting new lease standard (Note 1) (2) (2) Net income 518 518 Other comprehensive income 1 1 Issuance of ordinary shares under employee stock plans 5 69 69 Repurchases of ordinary shares (12) (597) (597) Tax withholding related to vesting of restricted stock units (1) (39) (39) Dividends to shareholders (335) (335) Share-based compensation 53 53 Balance at January 3, 2020 261 $ — $ 6,667 $ (33) $ (4,804) $ 1,830 Number
of
Ordinary
SharesPar Value
of SharesAdditional
Paid-in
CapitalAccumulated
Other
Comprehensive
LossAccumulated
DeficitTotal Balance at June 29, 2018 287 $ — $ 6,377 $ (16) $ (4,696) $ 1,665 Cumulative effect of adoption of new revenue standard 34 34 Net income 834 834 Other comprehensive loss (5) (5) Issuance of ordinary shares under employee stock plans 3 35 35 Repurchases of ordinary shares (6) (286) (286) Tax withholding related to vesting of restricted stock units (1) (30) (30) Dividends to shareholders (358) (358) Share-based compensation 45 45 Balance at December 28, 2018 283 $ — $ 6,457 $ (21) $ (4,502) $ 1,934 (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 (“SSDs”), solid state hybrid drives (“SSHDs”) and storage subsystems.Hard disk drivesDisk drivesHDDs continue to be the primary medium of mass data storage due to their performance attributes, reliability, high quality and cost effectiveness. Complementing existing data center storage architecture, solid-state storage devicesSSDs use integrated circuit assemblies as memory to store data, and most SSDs use NAND flash memory.nearlineconsumer applications. These markets were previously categorized as enterprise servers and storage systems, edge non-compute applications, and edge compute applications. The Company’s SSD product portfolio is mainly comprised of Serial Attached SCSI (“SAS”) and Non-Volatile Memory Express (“NVMe”) and is designed primarily for applications in enterprise servers and storage systems; edge compute applications, where its products are designed primarily for desktop and mobile computing; and edgenon-compute applications, where its products are designed for a wide variety of end user devices such as portable external storage systems, surveillance systems, digital video recorders (“DVRs”), network-attached storage (“NAS”), and gaming consoles. The Company’s SSD products mainly include serial attached SCSI (“SAS”) andNon-Volatile Memory Express (“NVMe”) SSDs.(formerly referred to as the “cloud systems and solutions”(“EDS”) portfolio includes modularstorage subsystems for enterprises, cloud service providers, scale-out storage servers and original equipment manufacturers (“OEM”OEMs”) storage systemsand scale-out storage servers. The condensed 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.29, 2018,28, 2019 are included in its Annual Report onForm 10-K, as filed with the United StatesU.S. Securities and Exchange Commission (“SEC”) on August 3, 2018.2, 2019. The Company believes that the disclosures included in thethese unaudited condensed consolidated financial statements, when read in conjunction with its consolidated financial statements as of June 29, 2018,28, 2019, and the notes thereto, are adequate to make the information presented not misleading.ninesix months ended March 29, 2019January 3, 2020 are not necessarily indicative of the results of operations to be expected for any subsequent interim period or for the Company’s fiscal year ending June 28, 2019. The Company operates and reports financial results on a fiscal year of 52 or 53 weeks ending on the Friday closest to June 30. Both the three and nine months ended March 29, 2019 and March 30, 2018 consisted of 13 weeks and 39 weeks, respectively. Fiscal year 2019, which ends on June 28, 2019, and fiscal year 2018, which ended on June 29, 2018, are both comprised of 52 weeks. The fiscal quarters ended March 29, 2019, December 28, 2018, September 28, 2018, and March 30, 2018, are also referred to herein as the “March 2019 quarter”, the “December 2018 quarter,” the “September 2018 quarter” and the “March 2018 quarter”, respectively.
Summary of Significant Accounting Policies
Revenue Recognition
2020, respectively, and increased the diluted earnings per share by $0.16 and $0.24 for the three and six months ended January 3, 2020,
respectively.Revenue from sales of products is generally recognized upon transfer of control to customersoperating expenses in an amount that reflects the consideration the Company expects to receive in exchange for those products, net of sales taxes. This typically occurs upon shipment from the Company. When applicable, the Company includes shipping charges billed to customers in Revenue and includes the related shipping costs in Cost of revenue on the Company’s Condensed Consolidated Statements of Operations.
The Company records estimated variable consideration at the time of revenue recognition as a reduction to net revenue. Variable consideration generally consists of sales incentive programs, such as price protection and volume incentives aimed at increasing customer demand. For OEM sales, rebates are typically established by estimating the most likely amount of consideration expected to be received based on an OEM customer’s volume of purchases from Seagate or other agreed upon rebate programs. For the distribution and retailing channel, these sales incentive programs typically involve estimating the most likely amount of rebates related to a customer’s level of sales, order size, advertising or point of sale activity as well as the expected value of price protection adjustments based on historical analysis and forecasted pricing environment. Marketing development program costs are accrued and recorded as a reduction to revenue at the same time that the related revenue is recognized.
The Company elected a practical expedient to expense sales commissions when the commissions are incurred because the amortization period would have been one year or less. These costs are recorded as Marketing and administrative on the Company’s Condensed Consolidated Statements of Operations.
In June 2016, the FASB issuedASU 2016-13 (ASC Topic 326), Financial InstrumentsASC 842 adoption, see
Note 5. Leases.
InIn February 2018, the FASB issued ASU2018-02 (ASC Topic 220),Income Statement—Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This ASU was issued following the enactment of the U.S. Tax Cuts and Jobs Act of 2017 (the “Tax Act”) and permits entities to elect a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act. TheThis ASU became effective and the Company is required to adopt thisadopted the guidance in the first quarter of fiscal year 2020. Early adoption is permitted.September 2019 quarter. The Company is inhas elected not to reclassify the process of assessing the impactstranded amounts. The adoption of this ASUguidance did not have a material impact on its condensed consolidated financial statements.
statements and disclosures.
Recently Adopted Accounting Pronouncements
The Company applied the ASC 606 using a modified retrospective transition approach to all contracts that were not completed as of June 29, 2018. Results for reporting periods beginning June 30, 2018 are presented under ASC 606, while prior period amounts were not adjusted and continue to be reported under the historical accounting standard. As a result of the adoption, the Company identified a change in revenue recognition timing on its product sales made to certain retail customers and started to recognize revenue when the Company transfers control to the applicable customers rather than deferring recognition until those customers sell the products. In addition, the Company established accruals for the variable consideration related to customer incentives on these arrangements. On the date of initial adoption, the Company removed the related deferred income on the product sales made to these customers and recorded estimates of the accrual for variable consideration through a cumulative adjustment to accumulated deficit. The cumulative effect of the change to the Company’s Condensed Consolidated Balance Sheet from the adoption of ASC 606 was as follows:
(Dollars in millions) | As of June 29, 2018 | Effect of adoption of ASC 606 | As of June 30, 2018 | |||||||||
Accounts receivable, net | $ | 1,184 | $ | 9 | $ | 1,193 | ||||||
Inventory | $ | 1,053 | $ | (9 | ) | $ | 1,044 | |||||
Accrued expenses | $ | 598 | $ | (34 | ) | $ | 564 | |||||
Accumulated deficit | $ | (4,696 | ) | $ | 34 | $ | (4,662 | ) | ||||
The impact of applying the new accounting standard on the Company’s condensed consolidated financial statements for the three and nine months ended March 29, 2019 was not material.
In January 2016, the FASB issuedASU 2016-01 (ASCSubtopic 825-10), Financial Instruments—Overall Recognition and Measurement of Financial Assets and Financial Liabilities,as amended by ASU2018-03,Financial Instruments—Overall: Technical Correction and Improvements,issued in February 2018. The amendments in these ASUs require entities to measure all equity investments at fair value with changes recognized through net income. Additionally, the amendments eliminate certain disclosure requirements related to financial instruments measured at amortized cost and add disclosures related to the measurement categories of financial assets and financial liabilities. These ASUs became effective and were adopted by the Company in the September 2018 quarter. For equity investments without readily determinable fair value, the Company elected 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 until the equity investments’ fair value becomes readily determinable. The adoption ofadopt this guidance had no impact on the Company’s condensed consolidated financial statements and disclosures.
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 adopted the guidance in the September 2018 quarter.first quarter of fiscal year 2021. The adoptionCompany is in the process of assessing the impact of this guidance had no impactASU on the Company’s condensedits consolidated financial statements and disclosures.
statements.
|
statements.
(Dollars in millions) | Amortized Cost | Unrealized Gain/(Loss) | Fair Value | |||||||||
Available-for-sale debt securities: | ||||||||||||
Money market funds | $ | 239 | $ | — | $ | 239 | ||||||
Time deposits and certificates of deposit | 300 | — | 300 | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 539 | $ | — | $ | 539 | ||||||
|
|
|
|
|
| |||||||
Included in Cash and cash equivalents | $ | 536 | ||||||||||
Included in Other current assets | 3 | |||||||||||
|
| |||||||||||
Total | $ | 539 | ||||||||||
|
| |||||||||||
January 3, 2020:
| (Dollars in millions) | Amortized Cost | Unrealized Gain/(Loss) | Fair Value | |||||||||||||||||
| Available-for-sale debt securities: | ||||||||||||||||||||
| Money market funds | $ | 571 | $ | — | $ | 571 | ||||||||||||||
| Time deposits and certificates of deposit | 101 | — | 101 | |||||||||||||||||
| Other debt securities | 14 | — | 14 | |||||||||||||||||
| Total | $ | 686 | $ | — | $ | 686 | ||||||||||||||
| Included in Cash and cash equivalents | $ | 670 | ||||||||||||||||||
| Included in Other current assets | 2 | |||||||||||||||||||
| Included in Other assets, net | 14 | |||||||||||||||||||
| Total | $ | 686 | ||||||||||||||||||
January 3, 2020.
(Dollars in millions) | Amortized Cost | Fair Value | ||||||
Due in less than 1 year | $ | 539 | $ | 539 | ||||
Due in 1 to 5 years | — | — | ||||||
Due in 6 to 10 years | — | — | ||||||
Thereafter | — | — | ||||||
|
|
|
| |||||
Total | $ | 539 | $ | 539 | ||||
|
|
|
| |||||
| (Dollars in millions) | Amortized Cost | Fair Value | ||||||||||||
| Due in less than 1 year | $ | 672 | $ | 672 | ||||||||||
| Due in 1 to 5 years | 6 | 6 | ||||||||||||
| Due in 6 to 10 years | — | — | ||||||||||||
| Thereafter | 8 | 8 | ||||||||||||
| Total | $ | 686 | $ | 686 | ||||||||||
(Dollars in millions) | Amortized Cost | Unrealized Gain/(Loss) | Fair Value | |||||||||
Available-for-sale securities: | ||||||||||||
Money market funds | $ | 621 | $ | — | $ | 621 | ||||||
Time deposits and certificates of deposit | 395 | — | 395 | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 1,016 | $ | — | $ | 1,016 | ||||||
|
|
|
|
|
| |||||||
Included in Cash and cash equivalents | $ | 1,012 | ||||||||||
Included in Other current assets | 4 | |||||||||||
|
| |||||||||||
Total | $ | 1,016 | ||||||||||
|
| |||||||||||
28, 2019:
| (Dollars in millions) | Amortized Cost | Unrealized Gain/(Loss) | Fair Value | |||||||||||||||||
| Available-for-sale debt securities: | ||||||||||||||||||||
| Money market funds | $ | 417 | $ | — | $ | 417 | ||||||||||||||
| Time deposits and certificates of deposit | 133 | — | 133 | |||||||||||||||||
| Other debt securities | 7 | — | 7 | |||||||||||||||||
| Total | $ | 557 | $ | — | $ | 557 | ||||||||||||||
| Included in Cash and cash equivalents | $ | 548 | ||||||||||||||||||
| Included in Other current assets | 2 | |||||||||||||||||||
| Included in Other assets, net | 7 | |||||||||||||||||||
| Total | $ | 557 | ||||||||||||||||||
28, 2019.
(Dollars in millions) | March 29, 2019 | June 29, 2018 | March 30, 2018 | June 30, 2017 | ||||||||||||
Cash and cash equivalents | $ | 1,388 | $ | 1,853 | $ | 2,926 | $ | 2,539 | ||||||||
Restricted cash included in Other current assets | 3 | 4 | 4 | 4 | ||||||||||||
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| |||||||||
Total cash, cash equivalents and restricted cash shown in the Statements of Cash Flows | $ | 1,391 | $ | 1,857 | $ | 2,930 | $ | 2,543 | ||||||||
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| (Dollars in millions) | January 3, 2020 | June 28, 2019 | December 28, 2018 | June 29, 2018 | ||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 1,744 | $ | 2,220 | $ | 1,357 | $ | 1,853 | ||||||||||||||||||||||||||||||
| Restricted cash included in Other current assets | 2 | 31 | 3 | 4 | ||||||||||||||||||||||||||||||||||
| Total cash, cash equivalents and restricted cash presented on the Statements of Cash Flows | $ | 1,746 | $ | 2,251 | $ | 1,360 | $ | 1,857 | ||||||||||||||||||||||||||||||
(Dollars in millions) | March 29, 2019 | June 29, 2018 | ||||||
Raw materials and components | $ | 330 | $ | 329 | ||||
Work-in-process | 260 | 347 | ||||||
Finished goods | 411 | 377 | ||||||
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Total inventories | $ | 1,001 | $ | 1,053 | ||||
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| (Dollars in millions) | January 3, 2020 | June 28, 2019 | ||||||||||||
| Raw materials and components | $ | 346 | $ | 336 | ||||||||||
| Work-in-process | 365 | 217 | ||||||||||||
| Finished goods | 437 | 417 | ||||||||||||
| Total inventories | $ | 1,148 | $ | 970 | ||||||||||
(Dollars in millions) | March 29, 2019 | June 29, 2018 | ||||||
Property, equipment and leasehold improvements | $ | 9,736 | $ | 9,525 | ||||
Accumulated depreciation and amortization | (7,914 | ) | (7,733 | ) | ||||
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Property, equipment and leasehold improvements, net | $ | 1,822 | $ | 1,792 | ||||
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| (Dollars in millions) | January 3, 2020 | June 28, 2019 | ||||||||||||
| Property, equipment and leasehold improvements | $ | 10,095 | $ | 9,835 | ||||||||||
| Accumulated depreciation and amortization | (8,046) | (7,966) | ||||||||||||
| Property, equipment and leasehold improvements, net | $ | 2,049 | $ | 1,869 | ||||||||||
Investment in Debt Security
As of March 29, 2019 and June 29, 2018, the Company had approximately $1.3 billion investmentin non-convertible preferred stock of Toshiba Memory Corporation (“TMC”, formerly known as “K.K. Pangea”). The Company has the positive intent and ability to hold the investment until maturity. As such, the investment, with a contractual maturity of six years starting from May 31, 2018, is accounted for asa held-to-maturity debt security, carried at cost and adjusted for amortization of transaction costs into interest income. Additionally, the debt security has a contractualpayment-in-kind (“PIK”) income which will be paid in cash upon redemption of the investment. PIK income computed at the contractual rate is accrued into Interest income in the Company’s Condensed Consolidated Statements of Operations and added to the carrying value of the Investment in debt security on its Condensed Consolidated Balance Sheets. For the three and nine months ended March 29, 2019, the PIK income earned was $16 million and $47 million, respectively. There was no other-than-temporary impairment identified for the three and nine months ended March 29, 2019. Please refer to Note 8 - Fair Value for more details.
(Dollars in millions) Dividends payable Other accrued expenses Total accrued expenses (Dollars in millions) Balance at June 29, 2018 Other comprehensive income (loss) before reclassifications Amounts reclassified from AOCI Other comprehensive income (loss) Balance at March 29, 2019 Balance at June 30, 2017 Other comprehensive income (loss) before reclassifications Amounts reclassified from AOCI Other comprehensive income (loss) Balance at March 30, 2018 March 29,
2019 June 29,
2018 $ 174 $ 181 417 417 $ 591 $ 598 (Dollars in millions) January 3,
2020June 28,
2019Dividends payable $ 170 $ 170 Other accrued expenses 383 382 Total accrued expenses $ 553 $ 552 Unrealized
Gains/(Losses)
on Cash Flow
Hedges Unrealized
Gains/(Losses)
on
Available-for-Sale
Debt Securities Unrealized
Gains/(Losses)
on Post-
Retirement Plans Foreign
Currency
Translation
Adjustments Total $ — $ — $ (4 ) $ (12 ) $ (16 ) — — — (4 ) (4 ) (1 ) — — — (1 ) (1 ) — — (4 ) (5 ) $ (1 ) $ — $ (4 ) $ (16 ) $ (21 ) $ — $ — $ (5 ) $ (12 ) $ (17 ) — — — 9 9 — — — — — — — — 9 9 $ — $ — $ (5 ) $ (3 ) $ (8 ) (Dollars in millions) Unrealized Gains/(Losses) on Cash Flow Hedges Unrealized Gains/(Losses) on Available-for-Sale Debt Securities Unrealized Gains/(Losses) on Post-Retirement Plans Foreign Currency Translation Adjustments Total Balance at June 28, 2019 $ — $ — $ (20) $ (14) $ (34) Other comprehensive income (loss) before reclassifications 2 — — (2) — Amounts reclassified from AOCI 1 — — — 1 Other comprehensive income (loss) 3 — — (2) 1 Balance at January 3, 2020 $ 3 $ — $ (20) $ (16) $ (33) Balance at June 29, 2018 $ — $ — $ (4) $ (12) $ (16) Other comprehensive loss before reclassifications (1) — — (2) (3) Amounts reclassified from AOCI (2) — — — (2) Other comprehensive loss (3) — — (2) (5) Balance at December 28, 2018 $ (3) $ — $ (4) $ (14) $ (21) 3.Debt
principal amount of approximately $250 million was repurchased pursuant to cash tender offers for certain senior notes (the principal amount of $200 million was repurchased pursuant to the Tender Offers. The Company recorded a loss of $10 million during the six months ended January 3, 2020, which was included in Other, net in the Company’s Condensed Consolidated Statements of Operations. STX. principal amount of approximately $170 million was repurchased pursuant to the Tender Offers. The Company recorded a loss of $8 million during the six months ended January 3, 2020, which was included in Other, net in the Company’s Condensed Consolidated Statements of Operations. STX. STX. Fiscal Year Remainder of 2019 2020 2021 2022 2023 Thereafter Total share-based compensation expense. (Dollars in millions) Balance at June 29, 2018 Goodwill acquired Goodwill disposed Foreign currency translation effect Balance at March 29, 2019 (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 follows (in millions):Revolving FacilityOn February 20, 2019, the Company terminated its senior unsecured revolving credit facility scheduled to expire on January 15, 2020, under which the Company was able to draw up to $700 million. Upon termination, the Company and itsAgreementnew credit agreement (the “2019 Revolving“Credit Agreement”) on February 20, 2019, which was most recently amended on September 16, 2019. The Credit Facility”) whichAgreement provides the Company with a $1.3an up to $1.5 billion senior unsecured revolving credit facility.facility (“Revolving Credit Facility”) and a term loan facility in an aggregate principal amount of $500 million (“Term Loan”). The term of the 2019 Revolving Credit Facility is throughhas a final maturity of February 20, 2024.2024 and the Term Loan has a final maturity date of September 16, 2025. The loans made under the 2019 Revolving Credit Facility and the Term Loan will bear interest at a rate of LIBORthe London Interbank Offered Rate (“LIBOR”) plus a variable margin for each facility that will be determined based on the corporate credit rating of the Company. The CompanySTX and certain otherof its material subsidiaries of the Company fully and unconditionally guarantee both the revolving credit facility.Revolving Credit Facility and the Term Loan. The 2019 Revolving Credit Facility also allows the Companysuch facility to increase the facility by up to an aggregate of $300additional $100 million, provided that (i) there has been, and will be after giving effect to such increase, no default, (ii) the increase is at least $25 million, and (iii) the existing commitments under thesuch facility receive 0.50% most favored nation protection. An aggregate amount of up to $75 million of the facilityRevolving Credit Facility is available for the issuance of letters of credit, and an aggregate amount of up to $50 million of thesuch facility is also available for swing line loans.2019 RevolvingTerm Loan is repayable in quarterly installments of 1.25% of the original principal amount beginning on December 31, 2020, with the remaining balance payable upon maturity.FacilityAgreement includes three financial covenants: (1) interest coverage ratio, (2) total leverage ratio, and (3) a minimum liquidity amount. The Company was in compliance with the covenants as of March 29, 2019January 3, 2020 and expects to be in compliance for the next 12 months.March 29, 2019, $200 million had beenJanuary 3, 2020, 0 borrowings were drawn and no letters of credit or swing line loans had been utilized under the 2019 Revolving Credit Facility.$800 million Aggregate Principal Amount of 3.75% Senior Notes due November 2018 (the “2018 Notes”). The Company recorded a loss of approximately $1 million and $3 million on repurchases during the three and nine months ended March 30, 2018, respectively, which is included in Other, net on the Company’s Condensed Consolidated Statements of Operations. On November 15, 2018, the 2018 Notes matured and the Company repaid the entire outstanding principal amount of $499 million, plus accrued and unpaid interest.Company.Company.the Company.Company.the Company.the Company.March 29, 2019,January 3, 2020, future principal payments on long-term debt were as follows (in millions): Amount $ — — — 750 951 2,862 $ 4,563 4.Income TaxesFiscal Year Amount Remainder of 2020 $ — 2021 19 2022 525 2023 766 2024 525 Thereafter 2,336 Total $ 4,171 $20$18 million and $52$16 million in the three and ninesix months ended March 29, 2019,January 3, 2020, respectively. The discrete items in the income tax provision were not material for the three months ended January 3, 2020. The income tax provision for the three and ninesix months ended March 29, 2019January 3, 2020 included approximately $9 million and $5$10 million of net discrete tax expense, respectively,benefits, primarily associated with a deferred withholding tax liability resulting from a change in indefinite reinvestment assertion for a foreign subsidiary. This was partially offset by the recognition of previously unrecognizednet excess tax benefits related to the expiration of certain statutes of limitation.ninesix months ended March 29, 2019January 3, 2020 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 tax benefits related to (i) non-Irish earnings generated in jurisdictions that are subject to tax incentive programs and are considered indefinitely reinvested outside of Ireland and (ii) current year generation of research credits.non-U.S. non-Irish 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.Duringnine months ended March 29, 2019, the Company’s unrecognized tax benefits excluding interest and penalties decreased by approximately $19 million to $41 million. The unrecognized tax benefits that, if recognized, would impact the effective tax rate were $41 million at March 29, 2019, subject to certain future valuation allowance reversals. During the twelve months beginning March 30, 2019, the Company expects that its unrecognized tax benefits could be reduced by approximately $6 million, primarily as a resultnon-cancelable period of the expirationlease, adjusted for options to extend or terminate the lease when it is reasonably certain that an option will be exercised.considered indefinitely reinvested outsideshown net of Irelandimmaterial sublease income. The components of lease costs and (ii) a reduction in the net U.S. deferred tax assets associated with revaluationother information related to a lower U.S. tax rate.On December 22, 2017, the Tax Act was enacted into law in the United States. The Tax 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 aone-time transition tax on deemed repatriated earnings ofnon-U.S. subsidiaries.The U.S. tax law changes, including limitations on various business deductions such as executive compensation under Internal Revenue Code §162(m), will not impact the Company’s tax expense in the short-term due to its large net operating loss and tax credit carryovers and associated valuation allowance. The Tax Act’s new international rules, including Global IntangibleLow-Taxed Income (“GILTI”), Foreign Derived Intangible Income (“FDII”), and Base Erosion Anti-Avoidance Tax (“BEAT”) are effective beginning in fiscal year 2019. For fiscal year 2019, the Company has included these effects of the Tax Act in its fiscal year 2019 financial statements and has concluded the impact will not be material.As of the fiscal quarter ended September 28, 2018, pursuant to SEC Staff Accounting Bulletin (“SAB”) 118 (regarding the application of ASC 740, Income Taxes (“ASC 740”) associated with the enactment of the Tax Act), the Company had considered SAB 118 and believed its accounting under ASC 740 for the provisions of the Tax Act was complete.5.Goodwill and Other Intangible AssetsGoodwillThe changes in the carrying amount of goodwill for the nine months ended March 29, 2019,leases were as follows: Amount $ 1,237 — — — $ 1,237 Other Intangible AssetsOther intangible(Dollars in millions) For the Three Months Ended January 3, 2020 For the Six Months Ended January 3, 2020 Operating lease cost $ 5 $ 11 Variable lease cost 1 2 Total lease cost $ 6 $ 13 Operating cash outflows from operating leases $ 5 $ 9 January 3,
2020Weighted-average remaining lease term 12.9 years Weighted-average discount rate 6.29 % consist primarily of existing technology, customer relationships and trade names acquired in business combinations. Intangibleslease liabilities are amortizedincluded on a straight-line basis over the respective estimated useful lives of the assets. Amortization is charged to Operating expenses in the Company’s Condensed Consolidated Statements of Operations.The carrying value of other intangible assets subject to amortization, excluding fully amortized intangible assets,Balance Sheet as of March 29, 2019, is set forthfollows:(Dollars in millions) Balance Sheet Location January 3,
2020ROU assets Other assets, net $ 109 Current lease liabilities Accrued expenses $ 14 Non-current lease liabilities Other non-current liabilities $ 55 following table: Gross Carrying
Amount Accumulated
Amortization Net Carrying
Amount Weighted-Average
Remaining Useful Life $ 237 $ (167 ) $ 70 2.0 years 90 (53 ) 37 3.4 years 17 (16 ) 1 0.8 years 41 (20 ) 21 2.9 years $ 385 $ (256 ) $ 129 2.5 years The carrying valuemeasurement of other intangible assets subject to amortization, excluding fully amortized intangible assets,lease liabilities were as of June 29, 2018, is set forth in the following table: Gross Carrying
Amount Accumulated
Amortization Net Carrying
Amount Weighted-Average
Remaining Useful Life $ 256 $ (145 ) $ 111 2.5 years 89 (42 ) 47 4.0 years 17 (13 ) 4 1.3 years 45 (19 ) 26 3.0 years $ 407 $ (219 ) $ 188 2.9 years Fiscal Year Amount Remainder of 2020 $ 6 2021 16 2022 14 2023 10 2024 5 Thereafter 105 Total lease payments 156 Less: imputed interest (87) Present value of lease liabilities $ 69
For the three
(Dollars in millions) | Amount | |||
Remainder of 2019 | $ | 18 | ||
2020 | 57 | |||
2021 | 29 | |||
2022 | 20 | |||
2023 | 5 | |||
Thereafter | — | |||
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Total | $ | 129 | ||
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For the three and nine months ended March 29, 2019, theExit Costs
December 2017 Plan — On December 8, 2017, the Company committed to a restructuring plan (the “December 2017 Plan”) to reduce its cost structure. The December 2017 Plan included reducing the Company’s global headcount by approximately 500 employees. The December 2017 Plan was 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 reducing the Company’s global headcount by approximately 600 employees. The July 2017 Plan was substantially completed during fiscal year 2018.
March 2017 Plan —On March 9, 2017, the Company committed to a 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 substantially 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 substantially completed during fiscal year 2018.
The following table summarizes the Company’s restructuring activities under all of the Company’s active restructuring plans for the ninesix months ended March 29, 2019:
| December 2017 Plan | July 2017 Plan | March 2017 Plan | July 2016 Plan | Other Plans | ||||||||||||||||||||||||||||||||||||||||
(Dollars in millions) | 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 29, 2018 | $ | 5 | $ | 4 | $ | — | $ | 1 | $ | 1 | $ | — | $ | 2 | $ | — | $ | 11 | $ | 18 | $ | 42 | ||||||||||||||||||||||
Restructuring charges | — | 3 | — | — | — | — | — | 4 | 29 | 4 | 40 | |||||||||||||||||||||||||||||||||
Cash payments | (5 | ) | (4 | ) | — | — | — | — | (1 | ) | (4 | ) | (36 | ) | (6 | ) | (56 | ) | ||||||||||||||||||||||||||
Adjustments | — | (1 | ) | — | (1 | ) | — | — | — | — | 1 | — | (1 | ) | ||||||||||||||||||||||||||||||
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| Accrual balances at March 29, 2019 | $ | — | $ | 2 | $ | — | $ | — | $ | 1 | $ | — | $ | 1 | $ | — | $ | 5 | $ | 16 | $ | 25 | ||||||||||||||||||||||
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| Total costs incurred to date as of March 29, 2019 | $ | 26 | $ | 8 | $ | 37 | $ | 3 | $ | 31 | $ | 3 | $ | 82 | $ | 38 | $ | 270 | $ | 63 | $ | 561 | ||||||||||||||||||||||
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| Total expected charges to be incurred as of March 29, 2019 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1 | $ | — | $ | 1 | ||||||||||||||||||||||
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Additionally, the Company recorded an impairment chargeJanuary 3, 2020:
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Contents
| Restructuring Plans | ||||||||||||||||||||||||||
| (Dollars in millions) | Workforce Reduction Costs | Facilities and Other Exit Costs | Total | |||||||||||||||||||||||
| Accrual balances at June 28, 2019 | $ | 13 | $ | 17 | $ | 30 | ||||||||||||||||||||
| Lease adoption adjustment | — | (11) | (11) | |||||||||||||||||||||||
| Restructuring charges | 20 | 1 | 21 | |||||||||||||||||||||||
| Cash payments | (15) | (3) | (18) | |||||||||||||||||||||||
| Adjustments | (4) | — | (4) | |||||||||||||||||||||||
| Accrual balances at January 3, 2020 | $ | 14 | $ | 4 | $ | 18 | ||||||||||||||||||||
| Total costs incurred to date as of January 3, 2020 | $ | 474 | $ | 118 | $ | 592 | ||||||||||||||||||||
| Total expected charges to be incurred as of January 3, 2020 | $ | — | $ | 1 | $ | 1 | ||||||||||||||||||||
that is expected to be reclassified to earnings within twelve months.
Operations.
The following tables show the total notional value of the Company’s outstanding foreign currency forward exchange contracts as of March 29, 2019January 3, 2020 and June 29, 2018.28, 2019. All theseof the foreign currency forward exchange contracts mature within 12 months:
| As of March 29, 2019 | ||||||||
(Dollars in millions) | Contracts Designated as Hedges | Contracts Not Designated as Hedges | ||||||
Thai Baht | $ | — | $ | 19 | ||||
Singapore Dollar | — | 25 | ||||||
Chinese Renminbi | 10 | — | ||||||
British Pound Sterling | 20 | 18 | ||||||
Japanese Yen | 39 | 1,314 | ||||||
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| $ | 69 | $ | 1,376 | |||||
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| As of June 29, 2018 | ||||||||
(Dollars in millions) | Contracts Designated as Hedges | Contracts Not Designated as Hedges | ||||||
Japanese Yen | $ | 66 | $ | 1,310 | ||||
months.
| As of January 3, 2020 | ||||||||||||||||||||
| (Dollars in millions) | Contracts Designated as Hedges | Contracts Not Designated as Hedges | ||||||||||||||||||
| Singapore Dollar | $ | 26 | $ | 32 | ||||||||||||||||
| Chinese Renminbi | 10 | 20 | ||||||||||||||||||
| $ | 36 | $ | 52 | |||||||||||||||||
| As of June 28, 2019 | ||||||||||||||||||||
| (Dollars in millions) | Contracts Designated as Hedges | Contracts Not Designated as Hedges | ||||||||||||||||||
| Singapore Dollar | $ | 60 | $ | 40 | ||||||||||||||||
| Chinese Renminbi | 79 | 20 | ||||||||||||||||||
| British Pound Sterling | 6 | 12 | ||||||||||||||||||
| $ | 145 | $ | 72 | |||||||||||||||||
| As of March 29, 2019 | ||||||||||||||||
| 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 | $ | (1 | ) | |||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||
Foreign currency forward exchange contracts | Other current assets | 1 | Accrued expenses | (21 | ) | |||||||||||
Total return swap | Other current assets | — | Accrued expenses | — | ||||||||||||
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Total derivatives | $ | 2 | $ | (22 | ) | |||||||||||
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28, 2019:
| As of January 3, 2020 | ||||||||||||||||||||||||||||||||||||||||||||
| 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 | $ | — | ||||||||||||||||||||||||||||||||||||||
| Interest rate swap | Other current assets | 2 | Accrued expenses | — | ||||||||||||||||||||||||||||||||||||||||
| Derivatives not designated as hedging instruments: | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency forward exchange contracts | Other current assets | — | Accrued expenses | — | ||||||||||||||||||||||||||||||||||||||||
| Total derivatives | $ | 3 | $ | — | ||||||||||||||||||||||||||||||||||||||||
| As of June 29, 2018 | ||||||||||||||||
| 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 | $ | — | Accrued expenses | $ | — | ||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||
Foreign currency forward exchange contracts | Other current assets | 10 | Accrued expenses | — | ||||||||||||
Total return swap | Other current assets | — | Accrued expenses | — | ||||||||||||
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Total derivatives | $ | 10 | $ | — | ||||||||||||
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| As of June 28, 2019 | ||||||||||||||||||||||||||||||||||||||||||||
| 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 | $ | — | Accrued expenses | $ | — | ||||||||||||||||||||||||||||||||||||||
| Derivatives not designated as hedging instruments: | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency forward exchange contracts | Other current assets | 1 | Accrued expenses | (1) | ||||||||||||||||||||||||||||||||||||||||
| Total derivatives | $ | 1 | $ | (1) | ||||||||||||||||||||||||||||||||||||||||
(Dollars in millions) Derivatives Not Designated as Hedging Instruments | Location 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 | $ | 10 | $ | 38 | |||||
Total return swap | Operating expenses | $ | 11 | $ | — | |||||
(Dollars in millions) Derivatives Designated as Hedging Instruments | 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 | $ | — | Other expense, net | $ | (1 | ) | $ | 1 | Other expense, net | $ | — | $ | 1 | |||||||||||||||||
AsJanuary 3, 2020:
| Location of Gain/ (Loss) Recognized in Income on Derivatives | Amount of Gain/ (Loss) Recognized in Income on Derivatives | |||||||||||||||||||||||||
(Dollars in millions) Derivatives Not Designated as Hedging Instruments | For the Three Months | For the Six Months | ||||||||||||||||||||||||
| Foreign currency forward exchange contracts | Other, net | $ | 1 | $ | (2) | |||||||||||||||||||||
| Total return swap | Operating expenses | $ | 7 | $ | 7 | |||||||||||||||||||||
(Dollars in millions) Derivatives Designated as Hedging Instruments | 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 Six Months | For the Three Months | For the Six Months | For the Three Months | For the Six Months | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency forward exchange contracts | $ | 1 | $ | — | Other expense, net | $ | (1) | $ | (1) | Other expense, net | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swap | $ | 2 | $ | 2 | Other expense, net | $ | — | $ | — | Other expense, net | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in millions) Derivatives Not Designated as Hedging Instruments | Location 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 | $ | — | $ | — | |||||
Total return swap | Operating expenses | $ | (2 | ) | $ | 5 | ||||
|
| Location of Gain/ (Loss) Recognized in Income on Derivatives | Amount of Gain/ (Loss) Recognized in Income on Derivatives | |||||||||||||||||||||||||
(Dollars in millions) Derivatives Not Designated as Hedging Instruments | For the Three Months | For the Six Months | ||||||||||||||||||||||||
| Foreign currency forward exchange contracts | Other, net | $ | (13) | $ | 28 | |||||||||||||||||||||
| Total return swap | Operating expenses | $ | (15) | $ | (11) | |||||||||||||||||||||
| 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) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in millions) Derivatives Designated as Hedging Instruments | For the Three Months | For the Six Months | For the Three Months | For the Six Months | For the Three Months | For the Six Months | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency forward exchange contracts | $ | (4) | $ | (1) | Other expense, net | $ | 1 | $ | 2 | Other expense, net | $ | 1 | $ | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Hierarchy
| 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 | ||||||||||||
Assets: | ||||||||||||||||
Money market funds | $ | 238 | $ | — | $ | — | $ | 238 | ||||||||
Time deposits and certificates of deposit | — | 298 | — | 298 | ||||||||||||
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| |||||||||
Total cash equivalents | 238 | 298 | — | 536 | ||||||||||||
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| |||||||||
Restricted cash and investments: | ||||||||||||||||
Money market funds | 1 | — | — | 1 | ||||||||||||
Time deposits and certificates of deposit | — | 2 | — | 2 | ||||||||||||
Derivative Assets | — | 2 | — | 2 | ||||||||||||
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| |||||||||
Total assets | $ | 239 | $ | 302 | $ | — | $ | 541 | ||||||||
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| |||||||||
Liabilities: | ||||||||||||||||
Derivative liabilities | $ | — | $ | 22 | $ | — | $ | 22 | ||||||||
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| |||||||||
Total liabilities | $ | — | $ | 22 | $ | — | $ | 22 | ||||||||
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| |||||||||
January 3, 2020:
| 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 | ||||||||||||||||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||||||||||||||
| Money market funds | $ | 570 | $ | — | $ | — | $ | 570 | ||||||||||||||||||||||||||||||||||||
| Time deposits and certificates of deposit | — | 100 | — | 100 | ||||||||||||||||||||||||||||||||||||||||
| Total cash equivalents | 570 | 100 | — | 670 | ||||||||||||||||||||||||||||||||||||||||
| Restricted cash and investments: | ||||||||||||||||||||||||||||||||||||||||||||
| Money market funds | 1 | — | — | 1 | ||||||||||||||||||||||||||||||||||||||||
| Time deposits and certificates of deposit | — | 1 | — | 1 | ||||||||||||||||||||||||||||||||||||||||
| Other debt securities | — | — | 14 | 14 | ||||||||||||||||||||||||||||||||||||||||
| Derivative assets | — | 3 | — | 3 | ||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 571 | $ | 104 | $ | 14 | $ | 689 | ||||||||||||||||||||||||||||||||||||
| 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 | ||||||||||||
Assets: | ||||||||||||||||
Cash and cash equivalents | $ | 238 | $ | 298 | $ | — | $ | 536 | ||||||||
Other current assets | 1 | 4 | — | 5 | ||||||||||||
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|
|
|
|
|
| |||||||||
Total assets | $ | 239 | $ | 302 | $ | — | $ | 541 | ||||||||
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| |||||||||
Liabilities: | ||||||||||||||||
Accrued expenses | $ | — | $ | 22 | $ | — | $ | 22 | ||||||||
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| |||||||||
Total liabilities | $ | — | $ | 22 | $ | — | $ | 22 | ||||||||
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| |||||||||
| 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 | ||||||||||||||||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 570 | $ | 100 | $ | — | $ | 670 | ||||||||||||||||||||||||||||||||||||
| Other current assets | 1 | 4 | — | 5 | ||||||||||||||||||||||||||||||||||||||||
| Other assets, net | — | — | 14 | 14 | ||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 571 | $ | 104 | $ | 14 | $ | 689 | ||||||||||||||||||||||||||||||||||||
| 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 | ||||||||||||
Assets: | ||||||||||||||||
Money market funds | $ | 620 | $ | — | $ | — | $ | 620 | ||||||||
Time deposits and certificates of deposit | — | 392 | — | 392 | ||||||||||||
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| |||||||||
Total cash equivalents | 620 | 392 | — | 1,012 | ||||||||||||
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| |||||||||
Restricted cash and investments: | ||||||||||||||||
Money market funds | 1 | — | — | 1 | ||||||||||||
Time deposits and certificates of deposit | — | 3 | — | 3 | ||||||||||||
Derivative assets | — | 10 | — | 10 | ||||||||||||
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|
|
|
|
|
| |||||||||
Total assets | $ | 621 | $ | 405 | $ | — | $ | 1,026 | ||||||||
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|
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| |||||||||
| 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 | ||||||||||||
Assets: | ||||||||||||||||
Cash and cash equivalents | $ | 620 | $ | 392 | $ | — | $ | 1,012 | ||||||||
Other current assets | 1 | 13 | — | 14 | ||||||||||||
|
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|
|
|
|
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| |||||||||
Total assets | $ | 621 | $ | 405 | $ | — | $ | 1,026 | ||||||||
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| |||||||||
28, 2019:
| 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 | ||||||||||||||||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||||||||||||||
| Money market funds | $ | 416 | $ | — | $ | — | $ | 416 | ||||||||||||||||||||||||||||||||||||
| Time deposits and certificates of deposit | — | 132 | — | 132 | ||||||||||||||||||||||||||||||||||||||||
| Total cash equivalents | 416 | 132 | — | 548 | ||||||||||||||||||||||||||||||||||||||||
| Restricted cash and investments: | ||||||||||||||||||||||||||||||||||||||||||||
| Money market funds | 1 | — | — | 1 | ||||||||||||||||||||||||||||||||||||||||
| Time deposits and certificates of deposit | — | 1 | — | 1 | ||||||||||||||||||||||||||||||||||||||||
| Other debt securities | — | — | 7 | 7 | ||||||||||||||||||||||||||||||||||||||||
| Derivative assets | — | 1 | — | 1 | ||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 417 | $ | 134 | $ | 7 | $ | 558 | ||||||||||||||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||||||||||||||
| Derivative liabilities | $ | — | $ | 1 | $ | — | $ | 1 | ||||||||||||||||||||||||||||||||||||
| Total liabilities | $ | — | $ | 1 | $ | — | $ | 1 | ||||||||||||||||||||||||||||||||||||
| 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 | ||||||||||||||||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 416 | $ | 132 | $ | — | $ | 548 | ||||||||||||||||||||||||||||||||||||
| Other current assets | 1 | 2 | — | 3 | ||||||||||||||||||||||||||||||||||||||||
| Other assets, net | — | — | 7 | 7 | ||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 417 | $ | 134 | $ | 7 | $ | 558 | ||||||||||||||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||||||||||||||
| Accrued expenses | $ | — | $ | 1 | $ | — | $ | 1 | ||||||||||||||||||||||||||||||||||||
| Total liabilities | $ | — | $ | 1 | $ | — | $ | 1 | ||||||||||||||||||||||||||||||||||||
The Company classifies items in Level 2 if the financial asset or liability is valued using observable inputs. The Company uses observable inputs including quoted prices in active markets for similar assets or liabilities. Level 2 assets include: agency bonds, corporate bonds, commercial paper, municipal bonds, U.S. Treasuries, time deposits and certificates of deposit. These debt investments are priced using observable inputs and valuation models which vary by asset class. The Company uses a pricing service to assist in determining the fair value of all of its cash equivalents and short-term investments. 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 March 29, 2019,January 3, 2020, 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 March 29, 2019 and June 29, 2018, the Company had no Level 3 assets or liabilities measured at fair value on a recurring basis.
investments. properties. As of January 3, 2020, the Company had 0 held for sale land or buildings.influence but does not have control.influence. These investments are included in Other assets, net inon the Company’s Condensed Consolidated Balance Sheets, and are periodically analyzed to determine whether or not there are indicators of impairment.Prior to fiscal year 2019, the Company’s strategic investments in privately-held companies without readily determinable fair values were accounted for under the cost method and were recorded at historical cost at the time of investment, with adjustments to the balance only in the event of impairment. Effective June 30, 2018, the Company adopted ASU2016-01, Financial Instruments, which changed the way the Company accounts for equity investments, excluding investments that qualify for the equity method of accounting. The Company’s equity investments in privately-held companies without readily determinable fair values are now measured using the measurement alternative, defined by ASC 321,Investments — Equity Securities, as cost, less impairments, and adjusted up or down based on observable price changes in orderly transactions for identical or similar investments of the same issuer. Any adjustments resulting from impairments and/or observable price changes are recorded as Other, net in the Company’s Condensed Consolidated Statements of Operations.March 29, 2019January 3, 2020 and June 29, 2018,28, 2019, the carrying value of the Company’s strategic investments were $118 million.was $151 million and $114 million, respectively. For the three and ninesix months ended March 30, 2018,January 3, 2020, the Company determined that a certain equity investment accounted for under the cost method was other-than-temporarily impaired and recorded a chargedownward adjustment of $3$1 million in order to write down the carrying valueamount of thean investment to its fair value. This amount was recorded in Other, net in the Condensed Consolidated Statements of Operations. For the three and ninesix months ended March 29, 2019,December 28, 2018, there were no0 upward or downward adjustments on equity investments as a result of adoption of the measurement alternative during the September 2018 quarter.March 29,June 28, 2019, and June 29, 2018, the Company had $52$23 million and $26 million, respectively, of held for sale land and building (collectively, the “properties”) included in Other current assets on its Condensed Consolidated Balance Sheets. Of the balance as of March 29,In July 2019, $24 million and $28 million are located in Asia and in the Americas, respectively. Depreciation related to the properties ceased as of the date these were determined to be held for sale. During the September 2018 quarter, the Company accepted an offer to sell the property in Asia to a third party and thereafter, recorded an impairment charge of approximately $2 million for the nine months ended March 29, 2019. The impairment charge was recorded in Restructuring and other, net in the Company’s Condensed Consolidated Statement of Operations. No impairment was identified for the three months ended March 29, 2019 and for the three and nine months ended March 30, 2018. The sale of the properties are expected to be completed by the end of fiscal year 2019, subject to customary closing conditions for both properties and government approval for the sale of the property in Asia.The Company’s investment in a debt security, classifiedas held-to-maturity, represents sharesof non-convertible preferred stock of TMC. This debt security has a maturity date of six years starting from May 31, 2018 and is classified as Investment in debt security on the Company’s Condensed Consolidated Balance Sheets. The debt security is recorded at amortized cost and its fair value approximated the carrying value at June 29, 2018. As of March 29, 2019, the fair value of this investment was $1,322 million with an unrealized gain of $4 million on the carrying value of $1,318 million. There was no other-than-temporary impairment identified for the three and nine months ended March 29, 2019. The fair value was determined utilizing Level 2 inputs such as discount rates and yield terms of similar types of securities issued by comparable companies.
The Company’s debt is carried at amortized cost. The estimated fair value of the Company’s debt is derived using the closing price of the same debt instruments as of the date of valuation, which takes into account the yield curve, interest rates and other observable inputs. Accordingly, these fair value measurements are categorized as Level 2. The following table presents the fair value and amortized cost of the Company’s debt:
| March 29, 2019 | June 29, 2018 | |||||||||||||||
(Dollars in millions) | Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | ||||||||||||
3.75% Senior Notes due November 2018 | $ | — | $ | — | $ | 499 | $ | 501 | ||||||||
4.25% Senior Notes due March 2022 | 749 | 755 | 749 | 743 | ||||||||||||
4.75% Senior Notes due June 2023 | 951 | 962 | 951 | 942 | ||||||||||||
4.875% Senior Notes due March 2024 | 498 | 501 | 497 | 489 | ||||||||||||
4.75% Senior Notes due January 2025 | 975 | 949 | 975 | 936 | ||||||||||||
4.875% Senior Notes due June 2027 | 695 | 668 | 695 | 650 | ||||||||||||
5.75% Senior Notes due December 2034 | 489 | 450 | 489 | 441 | ||||||||||||
LIBOR based 2019 Revolving Credit Facility due February 2024 | 200 | 200 | — | — | ||||||||||||
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|
|
|
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| |||||||||
| $ | 4,557 | $ | 4,485 | $ | 4,855 | $ | 4,702 | |||||||||
Less: debt issuance costs | (35 | ) | — | (36 | ) | — | ||||||||||
|
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|
|
|
|
|
| |||||||||
Long-term debt, net of debt issuance costs | $ | 4,522 | $ | 4,485 | $ | 4,819 | $ | 4,702 | ||||||||
Less: current portion of long-term debt, net of debt issuance costs | — | — | (499 | ) | (501 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Long-term debt, less current portion | $ | 4,522 | $ | 4,485 | $ | 4,320 | $ | 4,201 | ||||||||
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| |||||||||
| January 3, 2020 | June 28, 2019 | |||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | ||||||||||||||||||||||||||||||||||
| 4.25% Senior Notes due March 2022 | $ | 499 | $ | 517 | $ | 749 | $ | 763 | ||||||||||||||||||||||||||||||
| 4.75% Senior Notes due June 2023 | 741 | 785 | 941 | 973 | ||||||||||||||||||||||||||||||||||
| 4.875% Senior Notes due March 2024 | 498 | 533 | 498 | 514 | ||||||||||||||||||||||||||||||||||
| 4.75% Senior Notes due January 2025 | 750 | 798 | 920 | 929 | ||||||||||||||||||||||||||||||||||
| 4.875% Senior Notes due June 2027 | 689 | 734 | 689 | 688 | ||||||||||||||||||||||||||||||||||
| 5.75% Senior Notes due December 2034 | 489 | 520 | 489 | 482 | ||||||||||||||||||||||||||||||||||
| LIBOR based Term Loan due September 2025 | 500 | 502 | — | — | ||||||||||||||||||||||||||||||||||
| 4,166 | 4,389 | 4,286 | 4,349 | |||||||||||||||||||||||||||||||||||
| Less: debt issuance costs | (25) | — | (33) | — | ||||||||||||||||||||||||||||||||||
| Debt, net of debt issuance costs | 4,141 | 4,389 | 4,253 | 4,349 | ||||||||||||||||||||||||||||||||||
| Less: current portion of long-term debt | (6) | (6) | — | — | ||||||||||||||||||||||||||||||||||
| Long-term debt, less current portion, net of debt issuance costs | $ | 4,135 | $ | 4,383 | $ | 4,253 | $ | 4,349 | ||||||||||||||||||||||||||||||
|
January 3, 2020. (In millions) Repurchases of ordinary shares Tax withholding related to vesting of equity awards Total January 3, 2020:276,834,237260,923,948 shares were outstanding as of March 29, 2019,January 3, 2020, and 100,000,000 preferred shares, par value $0.00001, of which noneNaN were issued or outstanding as of March 29, 2019. – —Holders of ordinary shares are entitled to receive dividends 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. – —The Company may issue preferred shares in 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.Articles of Association.On October 29, 2018, the Company’s Board of Directors authorized the repurchase of an additional $2.3 billion of its outstanding ordinary shares. Constitution.March 29, 2019, $2.5January 3, 2020, $1.6 billion remained available for repurchase under the existing repurchase authorization limit.the Company’sordinary shares during the ninesix months ended March 29, 2019: Number of
Shares
Repurchased Dollar Value of Shares
Repurchased 13 $ 613 1 30 14 $ 643 (In millions) Number of Shares Repurchased Dollar Value of Shares Repurchased Repurchases of ordinary shares 12 $ 597 Tax withholding related to vesting of equity awards 1 39 Total 13 $ 636 10.Revenue
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
(Dollars in millions) | March 29, 2019 | March 30, 2018 | March 29, 2019 | March 30, 2018 | ||||||||||||
Revenues by Channel | ||||||||||||||||
OEMs | $ | 1,568 | $ | 1,971 | $ | 5,571 | $ | 5,801 | ||||||||
Distributors | 411 | 477 | 1,388 | 1,406 | ||||||||||||
Retailers | 334 | 355 | 1,060 | 1,142 | ||||||||||||
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|
|
|
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| |||||||||
Total | $ | 2,313 | $ | 2,803 | $ | 8,019 | $ | 8,349 | ||||||||
|
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| |||||||||
Revenues by Geography(1) | ||||||||||||||||
Americas | $ | 796 | $ | 912 | $ | 2,533 | $ | 2,700 | ||||||||
EMEA | 448 | 522 | 1,563 | 1,561 | ||||||||||||
Asia Pacific | 1,069 | 1,369 | 3,923 | 4,088 | ||||||||||||
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| |||||||||
Total | $ | 2,313 | $ | 2,803 | $ | 8,019 | $ | 8,349 | ||||||||
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| |||||||||
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The Company recorded approximately $28 million and $73 million
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | January 3, 2020 | December 28, 2018 | January 3, 2020 | December 28, 2018 | ||||||||||||||||||||||||||||||||||
| Revenues by Channel | ||||||||||||||||||||||||||||||||||||||
| OEMs | $ | 1,843 | $ | 1,865 | $ | 3,663 | $ | 4,003 | ||||||||||||||||||||||||||||||
| Distributors | 463 | 443 | 924 | 977 | ||||||||||||||||||||||||||||||||||
| Retailers | 390 | 407 | 687 | 726 | ||||||||||||||||||||||||||||||||||
| Total | $ | 2,696 | $ | 2,715 | $ | 5,274 | $ | 5,706 | ||||||||||||||||||||||||||||||
Revenues by Geography (1) | ||||||||||||||||||||||||||||||||||||||
| Asia Pacific | $ | 1,377 | $ | 1,386 | $ | 2,655 | $ | 2,854 | ||||||||||||||||||||||||||||||
| Americas | 761 | 731 | 1,596 | 1,737 | ||||||||||||||||||||||||||||||||||
| EMEA | 558 | 598 | 1,023 | 1,115 | ||||||||||||||||||||||||||||||||||
| Total | $ | 2,696 | $ | 2,715 | $ | 5,274 | $ | 5,706 | ||||||||||||||||||||||||||||||
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On May 4, 2009, , then and wholly-owned subsidiary of STX, from time to time enters into indemnification agreements with the parent company, entered into a new formdirectors, officers, employees and agents of indemnification agreement (the “Revised Indemnification Agreement”) with its officers and directorsSTX or any of Seagate-Cayman and its subsidiaries (each, an “Indemnitee”). The Revised Indemnification Agreement providesindemnification agreements provide indemnification in addition to any of Indemnitee’s indemnification rights under Seagate-Cayman’sany relevant Articles of Association (or similar constitutional document), applicable law or otherwise, and indemnifies an Indemnitee for certain expenses (including attorneys’ fees), judgments, fines and settlement amounts actually and reasonably incurred by him or her in any action or proceeding, including any action by or in the right of Seagate-CaymanSTX or any of its subsidiaries, arising out of his or her service as a director, officer, employee or agent of Seagate-CaymanSTX or any of its subsidiaries or of any other entity to which he or she provides services at Seagate-Cayman’sthe Company’s request. However, an Indemnitee shallIndemnitees are not be indemnified under the Revised Indemnification Agreementindemnification agreements for (i) any fraud or dishonesty in the performance of Indemnitee’s duty to Seagate-CaymanSTX or the applicable subsidiary of Seagate-Cayman or (ii) Indemnitee’s conscious, intentional or willful failure to act honestly, lawfully and in good faith with a view to the best interests of Seagate-Cayman or the applicable subsidiary of Seagate-Cayman.Company. In addition, the Revised Indemnification Agreement providesindemnification agreements provide that Seagate-Cayman will advance expenses incurred by an Indemnitee in connection with enforcement of the Revised Indemnification Agreementindemnification agreement or with the investigation, settlement or appeal of any action or proceeding against him or her as to which he or she could be indemnified.
On July 3, 2010, pursuant to a corporate reorganization, the common shareholders of Seagate-Cayman became ordinary shareholders of the Company and Seagate-Cayman became a wholly owned subsidiary of the Company, as described more fully in the Current Report onForm 8-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 provides for the indemnification by Seagate-Cayman of any director, officer, employee or agent of the Company, Seagate-Cayman or any subsidiary of the Company (each, a “Deed Indemnitee”), in addition to any indemnification rights of a Deed Indemnitee under the Company’s Articles of Association, applicable law or otherwise, with a similar scope to the Revised Indemnification Agreement. Seagate-Cayman entered into Deeds of Indemnity with certain Deed Indemnitees effective as of July 3, 2010 and continues to enter into Deeds of Indemnity with additional Deed Indemnitees from time to time.
The nature of these 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. Historically, the Company has not made any significant indemnification payments under such agreements and no0 amount has been accrued in the Company’s condensed consolidated financial statements with respect to these indemnification obligations.
(Dollars in millions) Balance, beginning of period Warranties issued Repairs and replacements Changes in liability forpre-existing warranties, including expirations Balance, end of period Intellectual Property has enteredfrom time to time enters into agreements with customers, suppliers, partners and suppliersothers in the ordinary course of business that includeprovide indemnification for certain matters including, but not limited to, intellectual property indemnification obligations that are customary in the industry. These guarantees generally require the Company to compensate the other party for certain damagesinfringement claims, environmental claims and costs incurred as a resultbreach of third party intellectual property claims arising from these transactions.agreement claims. The nature of the intellectual propertyCompany’s indemnification obligations prevents the Company from making a reasonable estimate of the maximum potential amount it could be required to pay to its customers and suppliers.pay. Historically, the Company has not made any significant indemnification payments under such agreements and no0 amount has been accrued in the Company’s condensed consolidated financial statements with respect to these indemnification obligations.three and ninesix months ended March 29, 2019January 3, 2020 and March 30,December 28, 2018 were as follows: For the Three Months Ended For the Nine Months Ended March 29,
2019 March 30,
2018 March 29,
2019 March 30,
2018 $ 222 $ 236 $ 237 $ 233 24 36 89 111 (23 ) (26 ) (75 ) (80 ) (11 ) (11 ) (39 ) (29 ) $ 212 $ 235 $ 212 $ 235 For the Six Months Ended (Dollars in millions) January 3,
2020December 28,
2018Balance, beginning of period $ 195 $ 237 Warranties issued 46 65 Repairs and replacements (44) (52) Changes in liability for pre-existing warranties, including expirations (28) (28) Balance, end of period $ 169 $ 222 13.Earnings Per Share
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(In millions, except per share data) | March 29, 2019 | March 30, 2018 | March 29, 2019 | March 30, 2018 | ||||||||||||
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Net income | $ | 195 | $ | 381 | $ | 1,029 | $ | 721 | ||||||||
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Total shares for purposes of calculating basic net income per share | 281 | 286 | 284 | 288 | ||||||||||||
Weighted-average effect of dilutive securities: | ||||||||||||||||
Employee equity award plans | 3 | 5 | 4 | 3 | ||||||||||||
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Total shares for purpose of calculating diluted net income per share | 284 | 291 | 288 | 291 | ||||||||||||
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| Net income per share: | ||||||||||||||||
Basic | $ | 0.69 | $ | 1.33 | $ | 3.62 | $ | 2.50 | ||||||||
Diluted | $ | 0.69 | $ | 1.31 | $ | 3.57 | $ | 2.48 | ||||||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||||||||||||||||||||
| (In millions, except per share data) | January 3, 2020 | December 28, 2018 | January 3, 2020 | December 28, 2018 | ||||||||||||||||||||||||||||||||||
| Numerator: | ||||||||||||||||||||||||||||||||||||||
| Net income | $ | 318 | $ | 384 | $ | 518 | $ | 834 | ||||||||||||||||||||||||||||||
| Number of shares used in per share calculations: | ||||||||||||||||||||||||||||||||||||||
| Total shares for purposes of calculating basic net income per share | 262 | 285 | 264 | 286 | ||||||||||||||||||||||||||||||||||
| Weighted-average effect of dilutive securities: | ||||||||||||||||||||||||||||||||||||||
| Employee equity award plans | 3 | 2 | 4 | 4 | ||||||||||||||||||||||||||||||||||
| Total shares for purpose of calculating diluted net income per share | 265 | 287 | 268 | 290 | ||||||||||||||||||||||||||||||||||
| Net income per share: | ||||||||||||||||||||||||||||||||||||||
| Basic | $ | 1.21 | $ | 1.35 | $ | 1.96 | $ | 2.92 | ||||||||||||||||||||||||||||||
| Diluted | 1.20 | 1.34 | 1.93 | 2.88 | ||||||||||||||||||||||||||||||||||
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On August 16, 2011, the district court granted in part and denied in part the Company’sSeagate’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 judgmentof 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.
NoA jury trial date has been set.in this matter is scheduled for June 1, 2020. While the possible range of loss for this matter remains uncertain, the Company estimates the amount of loss to be immaterial to the financial statements.United States,U.S., Canada, Mexico, Taiwan, China, Japan and others. The European UnionEU REACH Directive (Registration, Evaluation, Authorization, and Restriction of Chemicals, EC 1907/2006) also restricts substances of very high concern (“SVHCs”) in products. If the Company or its suppliers fails to comply with the substance restrictions, recycle requirements or other environmental requirements as they are enacted worldwide, it could have a materially adverse effect on the Company’s business.
Other Matters
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Unconditional Long-term Purchase Obligations
As of March 29, 2019,
Unconditional Long-term Capital Expenditures
As of March 29, 2019, the Company had $16 million of unconditional long-term commitment primarily related to purchases of equipment.
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Dividend Declared
On April 30, 2019, the Company’sCom
March 25, 2020.
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Some of the statements and assumptions included in this
the uncertainty in global economic and political conditions;
•the development and introduction of products based on new technologies and expansion into new data storage markets;
•the impact of competitive product announcements and unexpected advances in competing technologies or changes in market trends;
•the impact of variable demand, changes in market demand, and an adverse pricing environment for storage products;
the Company’s ability to achieve projected cost savings in connection with its restructuring plans and consolidation of its manufacturing activities;
•the Company’s ability to effectively manage its debt obligations and comply with certain covenants in its credit facilities with respect to financial ratios and financial condition tests and its ability to maintain a favorable cash liquidity position;
•the Company’s ability to successfully qualify, manufacture and sell its storage products particularly the new disk drive products with lower cost structures, in increasing volumes on a cost-effective basis and with acceptable quality;
possible excess industry supply both with respect to particular disk drive products•any price erosion or volatility of sales volumes through the Company’s distributor and competing alternative storage technology solutions;
•disruptions to the Company’s supply chain or production capabilities;
consolidation trends in the data storage industry;
fluctuations in interest rates;
•currency fluctuations that may impact the Company’s margins, international sales and results of operations;
fluctuations in the value of the Company’s investments and the associated investment income;
•the impact of trade barriers, such as import/export duties and restrictions, tariffs and quotas, imposed by the U.S. or other countries in which the Company conducts business;
the evolving legal, regulatory and administrative climate in the international markets where the Company operates including changes in regulations relating to privacy and protection of data and environmental matters; and
•cyber-attacks or other data breaches that disrupt the Company’s operations or result in the dissemination of proprietary or confidential information and cause reputational harm,harm.
Information concerningother risks, uncertainties and other factors, among others, that could cause results to differ materially from those projectedour expectations are described in such forward-looking statements is also set forththis Quarterly Report on Form 10-Q and in “Item 1A. Risk Factors” of our Annual Reporton Form 10-K for the fiscal year ended June 29, 2018,28, 2019, which we encourage you to carefully read. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date on which they were made and we undertake no obligation to update forward-looking statements to reflect new information or future events or circumstances after the date they were made.
except as required by law.
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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 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, and most SSDs use NAND flash memory.
Our HDD products are designed for mission critical and nearline applications in enterprise servers and storage systems; edge compute applications, where our products are designed primarily for desktop and mobile computing; and edgenon-compute applications, where our products are designed for a wide variety of end user devices such as portable external storage systems, surveillance systems, digital video recorders (“DVRs”), network-attached storage (“NAS”) and gaming consoles. Our SSD products mainly include serial attached SCSI (“SAS”) andNon-Volatile Memory Express (“NVMe”) SSDs.
Our enterprise data solutions (formerly referred to as the “cloud systems and solutions”) portfolio includes modular original equipment manufacturer (“OEM”) storage systemsand scale-out storage servers.
that impacted our financial position.
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||
(Dollars in millions) | March 29, 2019 | December 28, 2018 | March 30, 2018 | March 29, 2019 | March 30, 2018 | |||||||||||||||
Revenue | $ | 2,313 | $ | 2,715 | $ | 2,803 | $ | 8,019 | $ | 8,349 | ||||||||||
Cost of revenue | 1,712 | 1,921 | 1,956 | 5,711 | 5,889 | |||||||||||||||
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Gross margin | 601 | 794 | 847 | 2,308 | 2,460 | |||||||||||||||
Product development | 238 | 246 | 254 | 750 | 767 | |||||||||||||||
Marketing and administrative | 110 | 120 | 135 | 345 | 422 | |||||||||||||||
Amortization of intangibles | 6 | 5 | 6 | 17 | 47 | |||||||||||||||
Restructuring and other, net | 11 | 7 | 11 | 41 | 95 | |||||||||||||||
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Income from operations | 236 | 416 | 441 | 1,155 | 1,129 | |||||||||||||||
Other expense, net | (21 | ) | (18 | ) | (48 | ) | (74 | ) | (177 | ) | ||||||||||
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Income before income taxes | 215 | 398 | 393 | 1,081 | 952 | |||||||||||||||
Provision for income taxes | 20 | 14 | 12 | 52 | 231 | |||||||||||||||
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Net income | $ | 195 | $ | 384 | $ | 381 | $ | 1,029 | $ | 721 | ||||||||||
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| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||
| March 29, 2019 | December 28, 2018 | March 30, 2018 | March 29, 2019 | March 30, 2018 | ||||||||||||||||
Revenue | 100% | 100% | 100% | 100% | 100% | |||||||||||||||
Cost of revenue | 74 | 71 | 70 | 71 | 71 | |||||||||||||||
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Gross margin | 26 | 29 | 30 | 29 | 29 | |||||||||||||||
Product development | 10 | 9 | 9 | 9 | 9 | |||||||||||||||
Marketing and administrative | 5 | 5 | 5 | 4 | 5 | |||||||||||||||
Amortization of intangibles | — | — | — | — | 1 | |||||||||||||||
Restructuring and other, net | 1 | — | — | 1 | 1 | |||||||||||||||
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Income from operations | 10 | 15 | 16 | 15 | 13 | |||||||||||||||
Other expense, net | (1) | (1) | (2) | (1) | (2) | |||||||||||||||
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Income before income taxes | 9 | 14 | 14 | 14 | 11 | |||||||||||||||
Provision for income taxes | 1 | — | — | 1 | 2 | |||||||||||||||
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Net income | 8% | 14% | 14% | 13% | 9% | |||||||||||||||
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| For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | January 3, 2020 | October 4, 2019 | December 28, 2018 | January 3, 2020 | December 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 2,696 | $ | 2,578 | $ | 2,715 | $ | 5,274 | $ | 5,706 | ||||||||||||||||||||||||||||||||||||||||
| Cost of revenue | 1,938 | 1,907 | 1,921 | 3,845 | 3,999 | |||||||||||||||||||||||||||||||||||||||||||||
| Gross margin | 758 | 671 | 794 | 1,429 | 1,707 | |||||||||||||||||||||||||||||||||||||||||||||
| Product development | 250 | 255 | 246 | 505 | 512 | |||||||||||||||||||||||||||||||||||||||||||||
| Marketing and administrative | 120 | 122 | 120 | 242 | 235 | |||||||||||||||||||||||||||||||||||||||||||||
| Amortization of intangibles | 4 | 4 | 5 | 8 | 11 | |||||||||||||||||||||||||||||||||||||||||||||
| Restructuring and other, net | — | 17 | 7 | 17 | 30 | |||||||||||||||||||||||||||||||||||||||||||||
| Income from operations | 384 | 273 | 416 | 657 | 919 | |||||||||||||||||||||||||||||||||||||||||||||
| Other expense, net | (48) | (75) | (18) | (123) | (53) | |||||||||||||||||||||||||||||||||||||||||||||
| Income before income taxes | 336 | 198 | 398 | 534 | 866 | |||||||||||||||||||||||||||||||||||||||||||||
| Provision (benefit) for income taxes | 18 | (2) | 14 | 16 | 32 | |||||||||||||||||||||||||||||||||||||||||||||
| Net income | $ | 318 | $ | 200 | $ | 384 | $ | 518 | $ | 834 | ||||||||||||||||||||||||||||||||||||||||
March 29, December 28, March 30, March 29, March 30, Revenues by Channel (%) OEMs Distributors Retailers Revenues by Geography (%) Americas EMEA Asia Pacific HDD ASPs (per unit) HDD Exabytes Shipped shipped by market and price per terabyte: (Dollars in millions) Cost of revenue Gross margin Gross margin percentage and lower depreciation expense For the Three Months Ended For the Six Months Ended January 3,
2020October 4,
2019December 28,
2018January 3,
2020December 28,
2018Revenue 100 % 100 % 100 % 100 % 100 % Cost of revenue 72 74 71 73 70 Gross margin 28 26 29 27 30 Product development 9 10 9 10 9 Marketing and administrative 4 5 5 5 4 Amortization of intangibles — — — — — Restructuring and other, net — — — — 1 Income from operations 15 11 15 12 16 Other expense, net (2) (3) (1) (2) (1) Income before income taxes 13 8 14 10 15 Provision (benefit) for income taxes 1 — — — — Net income 12 % 8 % 14 % 10 % 15 % geography, HDD average drive selling prices (“ASPs”)market and HDD exabytes shipped: For the Three Months Ended For the Nine Months Ended
2019
2018
2018
2019
2018 68 % 69 % 70 % 70 % 69 % 18 % 16 % 17 % 17 % 17 % 14 % 15 % 13 % 13 % 14 % 35 % 27 % 32 % 32 % 32 % 19 % 22 % 19 % 19 % 19 % 46 % 51 % 49 % 49 % 49 % $ 68 $ 68 $ 70 $ 69 $ 67 77 87 87 263 245 For the Three Months Ended For the Six Months Ended January 3,
2020October 4,
2019December 28,
2018January 3,
2020December 28,
2018Revenues by Channel (%) OEMs 68 % 71 % 69 % 69 % 70 % Distributors 17 % 18 % 16 % 18 % 17 % Retailers 15 % 11 % 15 % 13 % 13 % Revenues by Geography (%) Asia Pacific 51 % 50 % 51 % 50 % 50 % Americas 28 % 32 % 27 % 30 % 30 % EMEA 21 % 18 % 22 % 20 % 20 % Revenues by Market (%) Mass capacity 49 % 47 % 39 % 48 % 43 % Legacy 43 % 46 % 53 % 44 % 50 % Other 8 % 7 % 8 % 8 % 7 % HDD Exabytes Shipped by Market Mass capacity 71 64 47 135 107 Legacy 36 34 40 70 79 Total 107 98 87 205 186 HDD Price per Terabyte $ 23 $ 24 $ 28 $ 24 $ 28 MarchDecember 2019 quarter increased by $118 million from the September 2019 quarter primarily due to an increase in exabytes shipped, partially offset by price erosion.$402$19 million from the December 2018 quarter primarily due to the decrease in exabytes shipped as a result of lower demand for our products, seasonality declines and price erosion.Revenue in the March 2019 quarter decreased by $490 million from the March 2018 quarter primarily due to the decrease in exabytes shipped as a result of less favorable market conditions and price erosion.Revenue for the nine months ended March 29, 2019 decreased by $330 million from the nine months ended March 30, 2018 primarily due to price erosion, partially offset by an increase in exabytes shipped.rebates and price masking.OEM rebates. Sales incentive programs were approximately 13%, 13% and 12% of gross driveHDD revenue for each of the MarchDecember 2019, September 2019 and December 2018 and March 2018 quarters respectively.. Adjustments to revenues due to under or over accruals for sales incentive programs related to revenues reported in prior quarterly periods were less than 1% of quarterly gross revenue in all periods presented. For the Three Months Ended For the Nine Months Ended March 29,
2019 December 28,
2018 March 30,
2018 March 29,
2019 March 30,
2018 $ 1,712 $ 1,921 $ 1,956 $ 5,711 $ 5,889 601 794 847 2,308 2,460 26 % 29 % 30 % 29 % 29 % For the Three Months Ended For the Six Months Ended (Dollars in millions) January 3,
2020October 4,
2019December 28,
2018January 3,
2020December 28,
2018Cost of revenue $ 1,938 $ 1,907 $ 1,921 $ 3,845 $ 3,999 Gross margin 758 671 794 1,429 1,707 Gross margin percentage 28 % 26 % 29 % 27 % 30 % MarchDecember 2019 quarter decreased fromincreased compared to the December 2018September 2019 quarter primarily driven by factory underutilizationimproved product mix and price erosion.Comparedlower depreciation expense March 2018change in useful lives of our manufacturing equipment in the September 2019 quarter gross, partially offset by price erosion.MarchDecember 2019 quarter decreased compared to the December 2018 quarter primarily driven by price erosion, partially offset by improved product mix and factory underutilization.Comparedlower depreciation expense nine months ended March 29,change in useful lives of our manufacturing equipment in the September 2019 grossquarter.ninesix months ended March 30,January 3, 2020 decreased compared to the six months ended December 28, 2018 remained flat primarily driven by favorableprice erosion and factory underutilization, partially offset by improved product mix offset by price erosion.MarchDecember 2019 quarter, total warranty cost was 0.6%0.2% of revenue and included a favorable change in estimates of prior warranty accruals of 0.5%0.6% of revenue primarily due to lower repair costs and improvements in return rates on newer generation products. Warranty cost related to new shipments was 1.1%0.8%, 0.9% and 1.1% and 1.3% of revenuerevenue for the MarchDecember 2019 quarter, September 2019 quarter and December 2018 and March 2018 quarters,quarter, respectively.
Operating Expenses
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(Dollars in millions) | March 29, 2019 | December 28, 2018 | March 30, 2018 | March 29, 2019 | March 30, 2018 | |||||||||||||||
Product development | $ | 238 | $ | 246 | $ | 254 | $ | 750 | $ | 767 | ||||||||||
Marketing and administrative | 110 | 120 | 135 | 345 | 422 | |||||||||||||||
Amortization of intangibles | 6 | 5 | 6 | 17 | 47 | |||||||||||||||
Restructuring and other, net | 11 | 7 | 11 | 41 | 95 | |||||||||||||||
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Operating expenses | $ | 365 | $ | 378 | $ | 406 | $ | 1,153 | $ | 1,331 | ||||||||||
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(Dollars in millions) Other expense, net . For the Three Months Ended For the Six Months Ended (Dollars in millions) January 3,
2020October 4,
2019December 28,
2018January 3,
2020December 28,
2018Product development $ 250 $ 255 $ 246 $ 505 $ 512 Marketing and administrative 120 122 120 242 235 Amortization of intangibles 4 4 5 8 11 Restructuring and other, net — 17 7 17 30 Operating expenses $ 374 $ 398 $ 378 $ 772 $ 788 MarchDecember 2019 quarter decreased by $8$5 million compared to the September 2019 quarter primarily due to a $6 million decrease in compensation and other employee benefits resulting primarily from the additional fourteenth week in the September 2019 quarter, partially offset by a $3 million increase in variable compensation expense.$7$13 million decrease in other general expenses mainly as a result of timing of materials purchases and the additional fourteenth week in the September 2019 quarter, and a $4$13 million decrease in variabledepreciation expense, which was partially offset by an $11 million increase in compensation and other employee benefits and a $6 million increase in outside services expense.offset byand a $2 million increase in share-based compensation expense.Comparedand other employee benefits due to the March 2018 quarter, Product development expenseadditional fourteenth week in the September 2019 quarter.MarchDecember 2019 quarter remained flat compared to the September 2019 quarter. For the Three Months Ended For the Six Months Ended (Dollars in millions) January 3,
2020October 4,
2019December 28,
2018January 3,
2020December 28,
2018Other expense, net $ (48) $ (75) $ (18) $ (123) $ (53) $16$27 million from the September 2019 quarter primarily due to a $10$30 million decreasenon-recurring loss resulting from the repurchase of certain long-term debt in variable compensation expense and an $8 million decrease in other general expenses due to operational efficiencies.Compared to the corresponding nine months ended March 30, 2018, Product development expense for the nine months ended March 29,September 2019 decreased by $17 million primarily due to an $18 million decrease in variable compensation expensequarter and a $5 million decrease in salaries and employee benefits primarilyinterest expense in the December 2019 quarter due to the voluntary early exit program and restructuring of our workforcedecrease in prior periods,long-term debt, partially offset by a $9$7 million increasedecrease in share-based compensation expense.Marketing and administrative expense. Marketing and administrativeinterest income in the December 2019 quarter mainly resulting from lower average invested balances.MarchDecember 2019 quarter decreased increased by $10$30 million fromcompared to the December 2018 quarter primarily due to a decrease$29 million of non-recurring income, net in other general expenses.Compared to the March 2018 quarter, Marketing and administrative expense for the March 2019 quarter decreased by $25 million, primarily due to a $4 million decrease in salaries and employee benefits as a result of the restructuring of our workforce in prior periods, a $13 million decrease in other general expenses and a $7 million decrease in variable compensation expense.Compared to the corresponding nine months ended March 30, 2018, Marketing and administrative expense for the nine months ended March 29, 2019 decreased by $77 million, primarily due to a $31 million decrease in salaries and employee benefits as a result of the restructuring of our workforce in prior periods, a $30 million decrease in other general expenses due to related operational efficiencies and a $15 million decrease in variable compensation expense.Amortization of intangibles. Amortization of intangibles for the March 2019 quarter remained flat compared to the December 2018 quarter and March 2018 quarter. Amortization of intangibles for the nine months ended March 29, 2019 decreased by $30 million from the nine months ended March 30, 2018 due to certain intangible assets reaching the end of their useful lives.Restructuring and other, net.Restructuring and other, net for nine months ended March 29, 2019 was comprised of charges primarily related to a voluntary early exit program. Thereour previous investment in Toshiba Memory Holdings Corporation (“TMHC”), which was no new restructuring planredeemed in the Marchquarter ended June 28, 2019 quarter.Restructuring and other, net for nine months ended March 30, 2018 was comprised of restructuring charges to reduce our global workforce by 1,100 employees.Other Expense, Net For the Three Months Ended For the Nine Months Ended March 29,
2019 December 28,
2018 March 30,
2018 March 29,
2019 March 30,
2018 $ (21 ) $ (18 ) $ (48 ) $ (74 ) $ (177 )
Other expense, net.Other expense, net for the March 2019 quarter remained flat six months ended January 3, 2020 increased by $70 million compared to the six months ended December 28, 2018 quarter.
Compared to the March 2018 quarter, Other expense, net for the March 2019 quarter decreased by $27 million primarily due to $53 million of non-recurring income, net in the six months ended December 28, 2018 related to our previous investment in TMHC, which was redeemed in the quarter ended June 28, 2019 and a $16$30 million increaseloss resulting from the repurchase of certain long-term debt, partially offset by a related $3 million decrease in interest income on our investment inexpense and a debt security, a $9$6 million net increase in gains due to favorable changes in foreign currency exchange rates, a $6 million decrease in interest expense due to the repayment of certain senior notes, a $3 million decrease due to impairment charge of a strategic investment that did not recur in fiscal year 2019, offset by a $5 million decrease in interest income primarily due to lower average invested balances.
Other expense, net for the nine months ended March 29, 2019 decreased by $103 million from the corresponding period in the prior year, primarily due to a $47 million increase in interest income on our investment in a debt security, a $43 million net increase in gains due to favorable changes in foreign currency exchange rates and a $14 million decrease in interest expense due to the repayment of certain senior notes.
rates. (Dollars in millions) Provision for income taxes For the Three Months Ended For the Nine Months Ended March 29,
2019 December 28,
2018 March 30,
2018 March 29,
2019 March 30,
2018 $ 20 $ 14 $ 12 $ 52 $ 231 For the Three Months Ended For the Six Months Ended (Dollars in millions) January 3,
2020October 4,
2019December 28,
2018January 3,
2020December 28,
2018Provision (benefit) for income taxes $ 18 $ (2) $ 14 $ 16 $ 32
share-based compensation expense.
current year generation of research credits.
Our
On December 22, 2017, the Tax Act was enacted into law in the United States. The Tax 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 aone-time transition tax on deemed repatriated earnings ofnon-U.S. subsidiaries.
The U.S. tax law changes, including limitations on various business deductions such as executive compensation under Internal Revenue Code §162(m), will not impact our tax expense in the short-term due to our large net operating loss and tax credit carryovers and associated valuation allowance. The Tax Act’s new international rules, including Global IntangibleLow-Taxed Income (“GILTI”), Foreign Derived Intangible Income (“FDII”), and Base Erosion Anti-Avoidance Tax (“BEAT”) are effective beginning in fiscal year 2019. For fiscal year 2019, we have included these effects of the Tax Act in our financial statements and concluded the impact will not be material.
As of the quarter ended September 28, 2018, pursuant to SEC Staff Accounting Bulletin (“SAB”) 118 (regarding the application of ASC 740 associated with the enactment of the Tax Act), we had considered SAB 118 and believed our accounting under ASC 740 for the provisions of the Tax Act was complete.
January 3, 2020.
Cash and Cash Equivalents
(Dollars in millions) | March 29, 2019 | June 29, 2018 | Change | |||||||||
Cash and cash equivalents | $ | 1,388 | $ | 1,853 | $ | (465 | ) | |||||
| (Dollars in millions) | January 3, 2020 | June 28, 2019 | Change | |||||||||||||||||
| Cash and cash equivalents | $ | 1,744 | $ | 2,220 | $ | (476) | ||||||||||||||
activities and net proceeds of $498 million from borrowings under our Term Loan.
•a decreasen increase of $296$458 million in accounts receivable, primarily due to a decrease in revenue and improved collections;
partially offset by a decrease of $366 million in accounts payable, primarily due to lower material purchases and timing of payments;payments and
a decrease•an increase of $108$22 million in accrued employee compensation primarily due to timing of cash paid to our employees as part of our variable compensation plans.
•$ninesix months ended March 29, 2019January 3, 2020 was $359$385 million, primarily attributableattributable to the following activities:$451 million, offset by the proceeds from the settlementinvestments of foreign currency forward exchange contracts of $66 million and the proceeds from the sale of properties previously classified as held for sale of $27$45 million.activitiesactivities of $1,417$1,054 million for the ninesix months ended March 29, 2019January 3, 2020 was primarily attributable to the following activities:613645 million in paymentspayments for repurchase of certain long-term debt;
•$539335 million in dividend payments;
•$49939 million in repayment of our 2018 Senior Notes; and
$30 million in paymentspayments for taxes related to net share settlement of equity awards;
•partially offset by $196$498 million in net proceeds from borrowings under the borrowing on the 2019 revolving credit facility;Term Loan; and
•$6869 million in proceedsproceeds from the issuance of ordinary shares under employee stock plans.
March 29, 2019January 3, 2020 consisted of: (1) approximately $1.4approximately $1.7 billion in cash and cash equivalents, (2) cash we expect to generate from operations, and (3) $1.1up to $1.5 billion available for borrowing fromunder our 2019 Revolving Credit Facility.
On February 20, 2019, we terminated our senior unsecured revolving credit facility scheduled to expire on January 15, 2020, under which we were able to draw up to $700 million. Upon termination, we and our subsidiary Seagate HDD Cayman entered into a new credit agreement which provides us with a $1.3 billion senior unsecured revolving credit facility and an option to increase the facility by up to an aggregate of $300 million provided that (i) there has been, and will be after giving effect to such increase, no default, (ii) the increase is at least $25 million, and (iii) the existing commitments under the facility receive 0.50% most favored nation protection.
As of March 29, 2019, approximately $200 million inJanuary 3, 2020, no borrowings had been drawn and no borrowings had been utilized for letters of credit or swing line loans issued under the 2019 Revolving Credit Facility. The 2019 Revolving Credit Facility is available for borrowings, subject to compliance with financial covenants and other customary conditions to borrowing.
Dividends declared in
March 25, 2020.
Constitution.
Contractual Obligations and Commitments
Our contractual cash obligations and commitments as of March 29, 2019, have been summarized in the table below:
| Fiscal Year(s) | ||||||||||||||||||||
(Dollars in millions) | Total | Remainder of 2019 | 2020-2021 | 2022-2023 | Thereafter | |||||||||||||||
Contractual Cash Obligations: | ||||||||||||||||||||
Long-term debt, including current portion | $ | 4,563 | $ | — | $ | — | $ | 1,701 | $ | 2,862 | ||||||||||
Interest payments on debt | 1,440 | 55 | 420 | 388 | 577 | |||||||||||||||
Purchase obligations (1) | 1,207 | 924 | 102 | 8 | 173 | |||||||||||||||
Operating leases (2) | 111 | 4 | 20 | 16 | 71 | |||||||||||||||
Capital expenditures | 385 | 113 | 272 | — | — | |||||||||||||||
Other funding requirements(3) | 13 | 2 | 11 | — | — | |||||||||||||||
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Subtotal | 7,719 | 1,098 | 825 | 2,113 | 3,683 | |||||||||||||||
Commitments: | ||||||||||||||||||||
Letters of credit or bank guarantees | 105 | 13 | 92 | — | — | |||||||||||||||
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Total | $ | 7,824 | $ | 1,111 | $ | 917 | $ | 2,113 | $ | 3,683 | ||||||||||
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As of March 29, 2019, we had a liability of $41 million for unrecognized tax benefits excluding interest and penalties, of which $3 million and an additional $1 million of interest and penalties could result in potential cash payments, 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.
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January 3, 2020.
margin set on December 19, 2019.
| Fiscal Years Ended | ||||||||||||||||||||||||||||||||
(Dollars in millions, except percentages) | 2019 | 2020 | 2021 | 2022 | 2023 | Thereafter | Total | Fair Value at March 29, 2019 | ||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
Cash equivalents: | ||||||||||||||||||||||||||||||||
Floating rate | $ | 539 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 539 | $ | 539 | ||||||||||||||||
Average interest rate | 2.74 | % | 2.74 | % | ||||||||||||||||||||||||||||
Investment in debt security including accrued PIK income: | ||||||||||||||||||||||||||||||||
Fixed rate | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,300 | $ | 1,300 | $ | 1,322 | ||||||||||||||||
Fixed interest rate | 5.00 | % | 5.00 | % | ||||||||||||||||||||||||||||
| Debt | ||||||||||||||||||||||||||||||||
Fixed rate | $ | — | $ | — | $ | — | $ | 750 | $ | 951 | $ | 2,662 | $ | 4,363 | $ | 4,285 | ||||||||||||||||
Average interest rate | 4.25 | % | 4.75 | % | 4.99 | % | 4.81 | % | ||||||||||||||||||||||||
Variable rate | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 200 | $ | 200 | $ | 200 | ||||||||||||||||
Average interest rate | 4.03 | % | 4.03 | % | ||||||||||||||||||||||||||||
January 3, 2020.
| Fiscal Years Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions, except percentages) | 2020 | 2021 | 2022 | 2023 | 2024 | Thereafter | Total | Fair Value at January 3, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash equivalents: | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Floating rate | $ | 672 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 672 | $ | 672 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Average interest rate | 1.96 | % | 1.96 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other debt securities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fixed rate | $ | — | $ | 6 | $ | — | $ | — | $ | — | $ | 8 | $ | 14 | $ | 14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fixed interest rate | 5.00 | % | 5.00 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fixed rate | $ | — | $ | — | $ | 500 | $ | 741 | $ | 500 | $ | 1,930 | $ | 3,671 | $ | 3,887 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Average interest rate | 4.25 | % | 4.75 | % | 4.88 | % | 5.05 | % | 4.86 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Variable rate | $ | — | $ | 19 | $ | 25 | $ | 25 | $ | 25 | $ | 406 | $ | 500 | $ | 502 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Average interest rate | 3.39 | % | 3.39 | % | 3.39 | % | 3.39 | % | 3.39 | % | 3.39 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
We evaluate hedging effectiveness prospectively and retrospectively. As of March 29, 2019, our foreign currency forward exchange contracts include a notional amount of approximately 10.1 billion Japanese Yen ($91 million), to hedge the PIK income related to our TMC investment, out of which $39 million is designated as a cash flow hedge and the remainder of $52 million wasde-designated and included in contracts not designated as hedges.
WeWe did not havehave any material net gains or losses recognized in Cost of revenue, or Other, expense, net for cash flow hedges due to hedge ineffectiveness or discontinued cash flow hedges during the three and ninesix months ended March 29, 2019.
January 3, 2020.
| (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 | $ | 58 | $ | 1.37 | $ | 1 | ||||||||||||||
| Chinese Renminbi | 30 | $ | 6.85 | — | ||||||||||||||||
| Total | $ | 88 | $ | 1 | ||||||||||||||||
(Dollars in millions, except weighted-average contract rate) | Notional Amount | Weighted- Average Contract Rate | Estimated Fair Value(1) | |||||||||
Foreign currency forward exchange contracts: | ||||||||||||
Thai Baht | $ | 19 | $ | 33.07 | $ | 1 | ||||||
Singapore Dollar | 25 | 1.36 | — | |||||||||
Chinese Renminbi | 10 | 6.79 | — | |||||||||
British Pound Sterling | 38 | 0.77 | 1 | |||||||||
Japanese Yen | 1,353 | 110.51 | (22 | ) | ||||||||
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Total | $ | 1,445 | $ | (20 | ) | |||||||
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capital.increase the cost of such capital and our ability to execute transactions with various counterparties.We have an investment in debt security of $1.3 billion carried at amortized cost. We review our debt security for impairment when eventscounterparties and circumstances indicate a decline in fair valueincrease the cost of such asset below carrying value is other-than-temporary.Seagate Deferred Compensation Plan (the “SDCP”).SDCP. 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 liability due to changes in the value of the investment options made by employees. See “Part I, Item 1. Financial Statements—Note 7. Derivative Financial Instruments” of this Quarterly Report onForm 10-Q.ITEM 4.CONTROLS AND PROCEDURES
January 3, 2020.
Changes in Internal Control over Financial Reporting
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On October 29, 2018, the Company’s Board of Directors authorized the repurchase of an additional $2.3 billion of its outstanding ordinary shares. STX’s Constitution.
| Period | Total Number of Shares Repurchased(1)(2) | Average Price Paid Per Share(1)(2) | Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs(2) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1)(2) | ||||||||||||||||||||||
| October 5, 2019 through November 1, 2019 | — | $ | 57.61 | — | $ | 1,707 | ||||||||||||||||||||
| November 2, 2019 through November 29, 2019 | 1 | 58.56 | 1 | 1,660 | ||||||||||||||||||||||
| November 30, 2019 through January 3, 2020 | 2 | 59.22 | 2 | 1,555 | ||||||||||||||||||||||
| Total | 3 | 3 | ||||||||||||||||||||||||
(In millions, except average price paid per share) | 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) | ||||||||||||
December 29, 2018 through January 25, 2019 | 1 | $ | 39.90 | 1 | $ | 2,815 | ||||||||||
January 26, 2019 through February 22, 2019 | 2 | 45.46 | 2 | 2,740 | ||||||||||||
February 23, 2019 through March 29, 2019 | 4 | 46.74 | 4 | 2,544 | ||||||||||||
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Total | 7 | 7 | ||||||||||||||
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| Incorporated by Reference | |||||||||||||||||||||||||||||||||||
| Exhibit No. | Description of Exhibit | Form | File No. | Exhibit | Filing Date | Filed Herewith | |||||||||||||||||||||||||||||
| 3.1 | 8-K | 001-31560 | 3.1 | 10/24/2016 | |||||||||||||||||||||||||||||||
| 3.2 | 10-K | 001-31560 | 3.2 | 8/20/2010 | |||||||||||||||||||||||||||||||
| 10.1+ | X | ||||||||||||||||||||||||||||||||||
| 10.2+ | 8-K | 001-31560 | 10.1 | 11/4/2019 | |||||||||||||||||||||||||||||||
| 10.3+ | X | ||||||||||||||||||||||||||||||||||
| 10.4+ | X | ||||||||||||||||||||||||||||||||||
| 10.5+ | X | ||||||||||||||||||||||||||||||||||
| 10.6+ | X | ||||||||||||||||||||||||||||||||||
| 31.1 | X | ||||||||||||||||||||||||||||||||||
| 31.2 | X | ||||||||||||||||||||||||||||||||||
| 32.1† | X | ||||||||||||||||||||||||||||||||||
| 101.INS | Inline XBRL Instance Document. | X | |||||||||||||||||||||||||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | X | |||||||||||||||||||||||||||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | X | |||||||||||||||||||||||||||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | X | |||||||||||||||||||||||||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | X | |||||||||||||||||||||||||||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase. | X | |||||||||||||||||||||||||||||||||
| 104 | Inline XBRL Cover page and contained in Exhibit 101. | ||||||||||||||||||||||||||||||||||
Gianluca Romano Executive Vice President and Chief Financial OfficerSEAGATE TECHNOLOGY PUBLIC LIMITED COMPANY DATE: April 30, 2019BY:DATE: February 4, 2020 BY: /s/ Gianluca Romano
(Principal Financial and Accounting Officer)48