Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Table of Contents												Page
Consolidated Balance Sheets												49
Consolidated Statements of Operations												50
Consolidated Statements of Comprehensive (Loss) Income												51
Consolidated Statements of Cash Flows												52
Consolidated Statements of Shareholders’ (Deficit) Equity												53
Notes to Consolidated Financial Statements
			Note 1. Basis of Presentation and Summary of Significant Accounting Policies									54
			Note 2. Balance Sheet Information									59
			Note 3. Goodwill and Other Intangible Assets									62
			Note 4. Debt									63
			Note 5. Income Taxes									66
			Note 6. Leases									68
			Note 7. Restructuring and Exit Costs									70
			Note 8. Derivative Financial Instruments									71
			Note 9. Fair Value									74
			Note 10. Shareholders’ (Deficit) Equity									77
			Note 11. Share-Based Compensation									78
			Note 12. Guarantees									83
			Note 13. (Loss) Earnings Per Share									84
			Note 14. Legal, Environmental and Other Contingencies									84
			Note 15. Commitments									86
			Note 16. Business Segment and Geographic Information									86
			Note 17. Revenue									87
			Note 18. Subsequent Events									87
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)												88

SEAGATE TECHNOLOGY HOLDINGS PLC

CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share data)

			Fiscal Years Ended
			June 30, 2023						July 1, 2022
ASSETS
Current assets:
Cash and cash equivalents			$	786					$	615
Accounts receivable, net			621						1,532
Inventories			1,140						1,565
Other current assets			358						321
Total current assets			2,905						4,033
Property, equipment and leasehold improvements, net			1,706						2,239
Goodwill			1,237						1,237
Other intangible assets, net			—						9
Deferred income taxes			1,117						1,132
Other assets, net			591						294
Total Assets			$	7,556					$	8,944
LIABILITIES AND (DEFICIT) EQUITY
Current liabilities:
Accounts payable			$	1,603					$	2,058
Accrued employee compensation			100						252
Accrued warranty			78						65
Current portion of long-term debt			63						584
Accrued expenses			748						596
Total current liabilities			2,592						3,555
Long-term accrued warranty			90						83
Other non-current liabilities			685						135
Long-term debt, less current portion			5,388						5,062
Total Liabilities			8,755						8,835
Commitments and contingencies (See Notes 12, 14 and 15)
Shareholders’ (Deficit) Equity:
Preferred shares, $0.00001 par value per share—100,000,000 authorized; no shares issued or outstanding			—						—
Ordinary shares, $0.00001 par value per share—1,250,000,000 authorized; 207,389,381 issued and outstanding at June 30, 2023 and 209,850,169 issued and outstanding at July 1, 2022			—						—
Additional paid-in capital			7,373						7,190
Accumulated other comprehensive income			98						36
Accumulated deficit			(8,670)						(7,117)
Total Shareholders’ (Deficit) Equity			(1,199)						109
Total Liabilities and Shareholders’ (Deficit) Equity			$	7,556					$	8,944

See Notes to Consolidated Financial Statements.

SEAGATE TECHNOLOGY HOLDINGS PLC

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

			Fiscal Years Ended
			June 30, 2023						July 1, 2022						July 2, 2021
Revenue			$	7,384					$	11,661					$	10,681
Cost of revenue			6,033						8,192						7,764
Product development			797						941						903
Marketing and administrative			491						559						502
Amortization of intangibles			3						11						12
BIS settlement penalty			300						—						—
Restructuring and other, net			102						3						8
Total operating expenses			7,726						9,706						9,189
(Loss) income from operations			(342)						1,955						1,492
Interest income			10						2						2
Interest expense			(313)						(249)						(220)
Net gain recognized from early redemption of debt			190						—						—
Other, net			(41)						(29)						74
Other expense, net			(154)						(276)						(144)
(Loss) income before income taxes			(496)						1,679						1,348
Provision for income taxes			33						30						34
Net (loss) income			$	(529)					$	1,649					$	1,314
Net (loss) income per share:
Basic			$	(2.56)					$	7.50					$	5.43
Diluted			$	(2.56)					$	7.36					$	5.36
Number of shares used in per share calculations:
Basic			207						220						242
Diluted			207						224						245

See Notes to Consolidated Financial Statements.

SEAGATE TECHNOLOGY HOLDINGS PLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In millions)

			Fiscal Years Ended
			June 30, 2023						July 1, 2022						July 2, 2021
Net (loss) income			$	(529)					$	1,649					$	1,314
Other comprehensive income (loss), net of tax:
Change in net unrealized gains (losses) on cash flow hedges:
Net unrealized gains arising during the period			65						48						15
(Gains) losses reclassified into earnings			(13)						21						(9)
Net change			52						69						6
Change in unrealized components of post-retirement plans:
Net unrealized gains arising during the period			11						6						1
(Gains) losses reclassified into earnings			(1)						2						3
Net change			10						8						4
Foreign currency translation adjustments			—						—						15
Total other comprehensive income, net of tax			62						77						25
Comprehensive (loss) income			$	(467)					$	1,726					$	1,339

See Notes to Consolidated Financial Statements.

SEAGATE TECHNOLOGY HOLDINGS PLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

			Fiscal Years Ended
			June 30, 2023						July 1, 2022						July 2, 2021
OPERATING ACTIVITIES
Net income			$	(529)					$	1,649					$	1,314
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			513						451						397
Share-based compensation			115						145						112
Net (gain) loss on redemption and repurchase of debt			(204)						—						1
Deferred income taxes			10						(9)						(4)
Other non-cash operating activities, net			(125)						64						(50)
Changes in operating assets and liabilities:
Accounts receivable, net			911						(374)						(42)
Inventories			425						(361)						(64)
Accounts payable			(421)						228						(14)
Accrued employee compensation			(152)						(30)						58
Accrued expenses, income taxes and warranty			101						(26)						(38)
Other assets and liabilities			298						(80)						(44)
Net cash provided by operating activities			942						1,657						1,626
INVESTING ACTIVITIES
Acquisition of property, equipment and leasehold improvements			(316)						(381)						(498)
Proceeds from the sale of assets			534						—						4
Purchases of investments			(1)						(18)						(4)
Proceeds from sale of investments			—						47						29
Maturities of short-term investments			—						—						3
Net cash provided by (used in) investing activities			217						(352)						(466)
FINANCING ACTIVITIES
Redemption and repurchase of debt			(1,578)						(701)						(33)
Proceeds from issuance of long-term debt			1,600						1,200						1,000
Dividends to shareholders			(582)						(610)						(649)
Repurchases of ordinary shares			(408)						(1,799)						(2,047)
Taxes paid related to net share settlement of equity awards			(44)						(51)						(33)
Proceeds from issuance of ordinary shares under employee stock plans			68						68						108
Other financing activities, net			(44)						(6)						(19)
Net cash used in financing activities			(988)						(1,899)						(1,673)
Increase (decrease) in cash, cash equivalents and restricted cash			171						(594)						(513)
Cash, cash equivalents and restricted cash at the beginning of the year			617						1,211						1,724
Cash, cash equivalents and restricted cash at the end of the year			$	788					$	617					$	1,211
Supplemental Disclosure of Cash Flow Information
Cash paid for interest			$	327					$	244					$	184
Cash paid for income taxes, net of refunds			$	32					$	33					$	44

See Notes to Consolidated Financial Statements.

SEAGATE TECHNOLOGY HOLDINGS PLC

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ (DEFICIT) EQUITY

For Fiscal Years Ended June 30, 2023, July 1, 2022 and July 2, 2021

(In millions**)**

						Number of Ordinary Shares						Par Value of Shares						Additional Paid-in Capital						Accumulated Other Comprehensive Income (Loss)						Accumulated Deficit						Total
Balance at, July 3, 2020						257						$	—					$	6,757					$	(66)					$	(4,904)					$	1,787
Net income																														1,314						1,314
Other comprehensive income																								25												25
Issuance of ordinary shares under employee stock plans						4												108																		108
Repurchases of ordinary shares						(33)																								(2,047)						(2,047)
Tax withholding related to vesting of restricted share units						(1)																								(33)						(33)
Dividends to shareholders ($2.66 per ordinary share)																														(635)						(635)
Share-based compensation																		112																		112
Balance at, July 2, 2021						227						—						6,977						(41)						(6,305)						631
Net income																														1,649						1,649
Other comprehensive income																								77												77
Issuance of ordinary shares under employee stock plans						4												68																		68
Repurchases of ordinary shares						(20)																								(1,806)						(1,806)
Tax withholding related to vesting of restricted share units						(1)																								(51)						(51)
Dividends to shareholders ($2.77 per ordinary share)																														(604)						(604)
Share-based compensation																		145																		145
Balance at, July 1, 2022						210						—						7,190						36						(7,117)						109
Net loss																														(529)						(529)
Other comprehensive income																								62												62
Issuance of ordinary shares under employee stock plans						3												68																		68
Repurchases of ordinary shares						(5)																								(400)						(400)
Tax withholding related to vesting of restricted share units						(1)																								(44)						(44)
Dividends to shareholders ($2.80 per ordinary share)																														(580)						(580)
Share-based compensation																		115																		115
Balance at, June 30, 2023						207						$	—					$	7,373					$	98					$	(8,670)					$	(1,199)

See Notes to Consolidated Financial Statements.

SEAGATE TECHNOLOGY HOLDINGS PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

**1.**Basis of Presentation and Summary of Significant Accounting Policies

Organization

Seagate Technology Holdings plc (“STX”) and its subsidiaries (collectively, unless the context otherwise indicates, the “Company”) is a leading provider of data storage technology and infrastructure 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”), storage subsystem, as well as a scalable edge-to-cloud mass data platform that includes data transfer shuttles and a storage-as-a-service cloud.

On May 18, 2021, Seagate Technology plc, now known as Seagate Technology Unlimited Company (“STUC”), and STX completed a scheme of arrangement pursuant to which STUC’s ordinary shares were acquired by STX and the ordinary shareholders of STUC received, on a one-for-one basis, new ordinary shares of STX (the “Scheme”). As a result of the Scheme, STUC is now a direct, wholly-owned subsidiary of STX, which is the successor issuer to STUC. In connection with the Scheme, STX assumed STUC’s existing obligations in connection with awards granted under STUC’s incentive plans and other similar employee awards and amended such plans and awards as necessary to provide for the issuance of STX’s registered shares rather than the ordinary shares of STUC upon the exercise or vesting of awards.

Basis of Presentation and Consolidation

The Company’s consolidated financial statements include the accounts of the Company and all its wholly-owned and majority-owned subsidiaries, after elimination of intercompany transactions and balances.

The preparation of financial statements in accordance with the United States (“U.S.”) generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the Company’s consolidated financial statements and accompanying notes. These estimates and assumptions include the impact of the COVID-19 pandemic. Actual results could differ materially from those estimates. The methods, estimates and judgments the Company uses in applying its most critical accounting policies have a significant impact on the results the Company reports in its consolidated financial statements.

Fiscal Year

The Company operates and reports financial results on a fiscal year of 52 or 53 weeks ending on the Friday closest to June 30. Fiscal years 2023, 2022 and 2021 are comprised of 52 weeks and ended on June 30, 2023, July 1, 2022 and July 2, 2021, respectively. All references to years in these Notes to Consolidated Financial Statements represent fiscal years unless otherwise noted. Fiscal year 2026 will also be comprised of 53 weeks and will end on July 3, 2026.

Summary of Significant Accounting Policies

Cash and Cash Equivalents. The Company considers all highly liquid investments with a remaining maturity of 90 days or less at the time of purchase to be cash equivalents. The Company’s highly liquid investments are primarily comprised of money market funds, time deposits and certificates of deposits. The Company has classified its marketable debt securities as available-for-sale and they are stated at fair value with unrealized gains and losses included in Accumulated other comprehensive income, which is a component of Shareholders’ (Deficit) Equity. The Company evaluates the available-for-sale debt securities in an unrealized loss position for other-than-temporary impairment. Realized gains and losses are included in Other, net on the Company’s Consolidated Statements of Operations. The cost of securities sold is based on the specific identification method. Other cash equivalents are carried at cost, which approximates fair value.

Restricted Cash and Cash Equivalents. Restricted cash and cash equivalents represent cash and cash equivalents that are restricted as to withdrawal or use for other than current operations.

Allowance for expected credit loss. The Company maintains an allowance for expected credit loss relating to its accounts receivable based upon expected collectability. This reserve is established based upon historical trends, global macroeconomic conditions, reasonable and supportable forecasts of future conditions and an analysis of specific exposures. The provision for expected credit loss is recorded as a charge to Marketing and administrative expense on the Company’s Consolidated Statements of Operations.

Inventories. Inventories are valued at the lower of cost (using the first-in, first-out method) and net realizable value. Net realizable value is based upon the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Adjustments to reduce cost of inventories to its net realizable value are made, if required, for estimated excess or obsolescence determined primarily by future demand forecasts.

Property, Equipment and Leasehold Improvements. Property, equipment and leasehold improvements are stated at cost less accumulated depreciation and amortization. Equipment and buildings are depreciated using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated life of the asset or the remaining term of the lease. The costs of additions and substantial improvements to property, equipment and leasehold improvements, which extend the economic life of the underlying assets, are capitalized. The cost of maintenance and repairs to property, equipment and leasehold improvements is expensed as incurred.

Goodwill. The Company performs a qualitative assessment in the fourth quarter of each year, or more frequently if indicators of potential impairment exist, to determine if any events or circumstances exist, such as an adverse change in business climate or a decline in the overall industry that would indicate that it would more likely than not reduce the fair value of a reporting unit below its carrying amount, including goodwill. If it is determined in the qualitative assessment that the fair value of a reporting unit is more likely than not below its carrying amount, including goodwill, then the Company will perform a quantitative impairment test. The quantitative goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. Any excess in the carrying value of a reporting unit over its fair value is recognized as an impairment loss, limited to the total amount of goodwill allocated to that reporting unit.

Other Long-lived Assets. The Company tests other long-lived assets, including property, equipment and leasehold improvements and other intangible assets subject to amortization, for recoverability whenever events or changes in circumstances indicate that the carrying value of those assets may not be recoverable. The Company performs a recoverability test to assess the recoverability of an asset group. If the recoverability test indicates that the carrying value of the asset group is not recoverable, the Company will estimate the fair value of the asset group and the excess of the carrying value over the fair value is allocated pro rata to derive the adjusted carrying value of assets in the asset group. The adjusted carrying value of each asset in the asset group is not reduced below its fair value.

The Company tests other intangible assets not subject to amortization whenever events occur or circumstances change, such as declining financial performance, deterioration in the environment in which the entity operates or deteriorating macroeconomic conditions that have a negative effect on future expected earnings and cash flows that could affect significant inputs used to determine the fair value of the indefinite-lived intangible asset.

Assets Held for Sale. The Company classifies its long-lived assets to be sold as held for sale in the period (i) it has approved and committed to a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition, (iii) an active program to locate a buyer and other actions required to sell the asset have been initiated, (iv) the sale of the asset is probable, (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value and (vi) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The Company initially measures a long-lived asset that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset until the date of sale. Upon designation as an asset held for sale, the Company stops recording depreciation expense on the asset. The Company assesses the fair value of a long-lived asset less any costs to sell at each reporting period and until the asset is no longer classified as held for sale.

Leases. The Company determines if an arrangement is a lease or contains a lease at inception. Right-of-use (“ROU”) assets are included in Other assets, net and lease liabilities are included in Accrued expenses and Other non-current liabilities on the Company’s Consolidated Balance Sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and the corresponding lease liabilities represent its obligation to make lease payments arising from the lease. The Company combines lease and non-lease components for facility leases and does not recognize ROU assets and lease liabilities for leases with an initial term of 12 months or less on the consolidated balance sheets.

Lease liabilities are measured at the present value of the remaining lease payments and ROU assets are based on the lease liability, adjusted for lease prepayments, lease incentives received and the lessee’s initial direct costs. For the Company’s leases that do not provide an implicit rate, the net present value of future minimum lease payments is determined using the Company’s estimated incremental borrowing rate based on the information available at the lease commencement date. Additionally, the Company’s lease term may include options to extend or terminate the lease. These options are reflected in the ROU asset and lease liability when it is reasonably certain that the Company will exercise the option. The Company’s lease agreements do not contain any material residual value guarantees.

The Company recognizes lease expense on a straight-line basis over the lease term. Variable lease payments not dependent on an index or a rate primarily consist of common area maintenance charges, are expensed as incurred, and are not included in the ROU asset and lease liability calculation. The total operating and variable lease costs were included in operating expenses in the Company’s Consolidated Statements of Operations.

Derivative Financial Instruments. The Company records all derivatives on the balance sheet at fair value and establishes criteria for designation and effectiveness of hedging relationships. The Company excludes the change in forward points from the assessment of hedge effectiveness and recognizes the excluded component in Other, net in the Consolidated Statements of Operations. Foreign currency forward exchange contracts not designated as hedge instruments are used to economically hedge the foreign currency exposure on forecasted expenditures in currencies other than U.S. dollar. The Company recognizes the unrealized gains and losses due to the changes in the fair value of these contracts, as well as the related costs in Other, net in the Consolidated Statements of Operations.

Warranty. The Company estimates probable product warranty costs at the time revenue is recognized. The Company generally provides warranty on its products for a period of 1 to 5 years. The Company's warranty provision considers estimated product failure rates, trends (including the timing of product returns during the warranty periods), and estimated repair or replacement costs related to product quality issues, if any. The Company also exercises judgement in estimating its ability to sell refurbished products.

Revenue Recognition and Sales Incentive Programs. The Company determines revenue recognition through the following steps: (1) identification of the contract with a customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when, or as, the Company satisfies a performance obligation.

Revenue from sales of products is generally recognized upon transfer of control to customers 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 Consolidated Statements of Operations.

The Company records estimated variable consideration at the time of revenue recognition as a reduction to revenue. Variable consideration generally consists of sales incentive programs, such as price protection and volume incentives aimed at increasing customer demand. For original equipment manufacturers (“OEMs”) 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 the Company or other agreed upon rebate programs. For the distribution and retail channel, these 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 expenses sales commissions as incurred because the amortization period would have been one year or less. These costs are recorded as Marketing and administrative on the Company’s Consolidated Statements of Operations.

Restructuring Costs. The timing of recognition for severance costs depends on whether employees are required to render service until they are terminated in order to receive the termination benefits. If employees are required to render service until they are terminated in order to receive the termination benefits, a liability is recognized ratably over the future service period. Otherwise, a liability is recognized when management has committed to a restructuring plan and has communicated those actions to employees. Employee termination benefit costs covered by existing benefit arrangements are recognized when management has committed to a restructuring plan and the severance costs are probable and estimable.

Advertising Expense. The cost of advertising is expensed as incurred. Advertising costs were approximately $30 million, $34 million and $29 million in fiscal years 2023, 2022 and 2021, respectively.

Share-Based Compensation. The Company accounts for share-based compensation net of estimated forfeitures. Refer to Note 11. Share-Based Compensation for details.

Accounting for Income Taxes. The Company records a provision or benefit for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method. Deferred income tax expense or benefit is recognized by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases as well as net operating loss and tax credit carryforwards. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefits for which future realization is uncertain.

Equity Investments. From time to time, the Company enters into certain strategic investments for the promotion of business and strategic objectives, which are accounted for either under equity method or the measurement alternative. These investments

are included in Other assets, net in the Company's Consolidated Balance Sheets and are adjusted through Other, net in the Consolidated Statement of Operations.

Investments are accounted for under the equity method if the Company has the ability to exercise significant influence, but does not have a controlling financial interest. These investments are measured at cost, less any impairment plus the Company's portion of investee’s income or loss. The Company uses the financial statements of investees to determine any adjustments, which are received on a one-quarter lag.

For equity investments where the Company does not have the ability to exercise significant influence and there are no readily determinable fair values, the Company has elected to apply the measurement alternative, under which investments are measured at cost, less impairment, and adjusted for qualifying observable price changes on a prospective basis.

The Company’s strategic investments are periodically analyzed to determine whether or not there are indicators of impairment by assessing factors such as deterioration of earnings, adverse change in market/industry conditions, the ability to operate as a going concern, and other factors which indicate that the carrying amount of the investment might not be recoverable. In such a case, the decrease in value is recognized in the period the impairment occurs in the Consolidated Statements of Operations.

Comprehensive Income. The Company presents comprehensive income in a separate statement. Comprehensive income is comprised of net income and other gains and losses affecting equity that are excluded from net income.

Foreign Currency Remeasurement and Translation. The U.S. dollar is the functional currency for the majority of the Company's foreign operations. Monetary assets and liabilities denominated in foreign currencies are remeasured into the functional currency of the subsidiary at the balance sheet date. The gains and losses from the remeasurement of foreign currency denominated balances into the functional currency of the subsidiary are included in Other, net on the Company's Consolidated Statements of Operations. The Company’s subsidiaries that use the U.S. dollar as their functional currency remeasure monetary assets and liabilities at exchange rates in effect at the end of each period, and nonmonetary assets and liabilities at historical rates.

The Company translates the assets and liabilities of its non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange rates in effect at the end of each period. Revenue and expenses for these subsidiaries are translated using rates that approximate those in effect during the period. Gains and losses from these translations are recognized in foreign currency translation included in Accumulated other comprehensive income, which is a component of Shareholders’ (Deficit) Equity.

Government Incentives. The Company enters into government incentive arrangements with domestic and foreign, local, regional and national governments, which vary in size, duration and conditions. The Company receives primarily operating grants, which are recognized as a reduction of expenditures when there is reasonable assurance that the grant will be received and the Company will comply with the conditions specified in the grant agreement. In fiscal year 2023, approximately $13 million of operating grants were recognized as reductions to Cost of revenue and Product development in the Consolidated Statements of Operations. The Company also received advanced cash grants of $13 million, which were reflected within Accrued expenses in the Company's Consolidated Balance Sheets as of June 30, 2023.

Concentrations

Concentration of Credit Risk. The Company’s customer base is concentrated with a small number of customers. The Company does not generally require collateral or other security to support accounts receivable. To reduce credit risk, the Company performs ongoing credit evaluations on its customers’ financial condition. The Company establishes allowances for expected credit losses based upon factors surrounding the credit risk of customers, global macroeconomic conditions and an analysis of specific exposures. Two customers and one customer accounted for more than 10% of the Company’s accounts receivable as of June 30, 2023 and July 1, 2022, respectively.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash equivalents, investments and foreign currency forward exchange contracts. The Company mitigates concentrations of credit risk in its financial instruments through diversification, by investing in highly-rated securities and/or major multinational companies.

In entering into foreign currency forward exchange contracts, the Company assumes the risk that might arise from the possible inability of counterparties to meet the terms of their contracts. The counterparties to these contracts are major multinational commercial and investment banks, and the Company has not incurred and does not expect any losses as a result of counterparty defaults.

Supplier Concentration. Certain of the raw materials, components and equipment used by the Company in the manufacture of its products are available from single-sourced direct and indirect vendors. Shortages could occur in these essential materials and components due to an interruption of supply or increased demand in the industry. If the Company were unable to procure certain materials, components or equipment at all or acceptable prices, it would be required to reduce its manufacturing operations, which could have a material adverse effect on its results of operations. In addition, the Company may make prepayments to certain suppliers or enter into minimum volume commitment agreements. Should these suppliers be unable to deliver on their obligations or experience financial difficulty, the Company may not be able to recover these prepayments.

Recently Adopted Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04 (ASC Topic 848), Reference Rate Reform. This ASU provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. In December 2022, FASB issued ASU 2022-06 (ASC Topic 848) and deferred the sunset date from December 31, 2022 to December 31, 2024. The Company adopted the guidance in the quarter ended September 30, 2022 on a prospective basis and is transitioning from an interest rate based on London Interbank Offered Rate (“LIBOR”) to Secured Overnight Financing Rate (“SOFR”). The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

In November 2021, the FASB issued ASU 2021-10 (ASC Topic 832), Disclosures by Business Entities about Government Assistance. This ASU requires annual disclosures that increase the transparency of transactions involving government grants, including (1) the type of transactions, (2) the accounting for those transactions and (3) the effect of those transactions on an entity’s financial statements. The Company adopted this guidance for the fiscal year ended June 30, 2023 on a prospective basis. See “Government Incentives” for further details.

Recently Issued Accounting Pronouncements

In September 2022, the FASB issued ASU 2022-04 (ASC Subtopic 405-50), Disclosure of Supplier Finance Program Obligations. This ASU requires disclosure of key terms of the outstanding supplier finance programs and a roll forward of the related obligations. The Company will adopt this in the first quarter of fiscal year 2024 and provide additional disclosure. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.

In June 2022, the FASB issued ASU 2022-03 (ASC Topic 820), Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. This ASU clarifies that a contractual restriction on the sale of equity security is not considered when measuring its fair value and requires new disclosures for equity securities subject to contractual sale restriction. The Company is required to adopt this guidance in the first quarter of fiscal year 2025. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.

**2.**Balance Sheet Information

Available-for-sale Debt Securities

The following table summarizes, by major type, the fair value and amortized cost of the Company’s available-for-sale debt investments as of June 30, 2023 and July 1, 2022:

						June 30, 2023																		July 1, 2022
(Dollars in millions)						Amortized Cost						Unrealized Gain/(Loss)						Fair Value						Amortized Cost						Unrealized Gain/(Loss)						Fair Value
Available-for-sale debt securities:
Money market funds						$	73					$	—					$	73					$	60					$	—					$	60
Time deposits and certificates of deposit						1						—						1						1						—						1
Other debt securities						16						—						16						23						—						23
Total						$	90					$	—					$	90					$	84					$	—					$	84
Included in Cash and cash equivalents																		$	72																	$	59
Included in Other current assets																		2																		2
Included in Other assets, net																		16																		23
Total																		$	90																	$	84

As of June 30, 2023 and July 1, 2022, the Company’s Other current assets included $2 million in restricted cash equivalents held as collateral at banks for various performance obligations.

As of June 30, 2023 and July 1, 2022, the Company had no material available-for-sale debt securities that had been in a continuous unrealized loss position for a period greater than 12 months. The Company determined no impairment related to credit losses for available-for-sale debt securities as of June 30, 2023. During fiscal year 2022, the Company recorded a $13 million impairment loss relating to available-for-sale debt securities.

The fair value and amortized cost of the Company’s investments classified as available-for-sale debt securities as of June 30, 2023, by remaining contractual maturity were as follows:

(Dollars in millions)						Amortized Cost						Fair Value
Due in less than 1 year						$	74					$	74
Due in 1 to 5 years						15						15
Due in 6 to 10 years						—						—
Thereafter						1						1
Total						$	90					$	90

Cash, Cash Equivalents and Restricted Cash

The following table provides a summary of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets that reconciles to the corresponding amount in the Consolidated Statements of Cash Flows:

(Dollars in millions)									June 30, 2023						July 1, 2022						July 2, 2021
Cash and cash equivalents									$	786					$	615					$	1,209
Restricted cash included in Other current assets									2						2						2
Total cash, cash equivalents and restricted cash shown in the Statements of Cash Flows									$	788					$	617					$	1,211

Accounts Receivable, net

The following table provides details of the accounts receivable, net balance sheet item:

(Dollars in millions)						June 30, 2023						July 1, 2022
Accounts receivable						$	625					$	1,536
Allowances for expected credit losses						(4)						(4)
Account receivable, net						$	621					$	1,532

Activity in the expected credit losses accounts is as follows:

(Dollars in millions)						Balance at Beginning of Period						Charges (Credit) to Operations						Deductions (1)						Balance at End of Period
Fiscal year ended July 2, 2021						$	5					—						(1)						$	4
Fiscal year ended July 1, 2022						$	4					—						—						$	4
Fiscal year ended June 30, 2023						$	4					—						—						$	4

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(1) Uncollectible accounts written off, net of recoveries.

In connection with the Company’s factoring agreements, from time to time the Company sells trade receivables to third parties for cash proceeds less a discount. During fiscal year 2023, the Company sold trade receivables without recourse for cash proceeds of $876 million, of which $275 million remained subject to servicing by the Company as of June 30, 2023. During fiscal year 2022, the Company sold trade receivables without recourse for cash proceeds of $275 million, of which $200 million remained subject to servicing by the Company as of July 1, 2022. The discounts on trade receivables sold were $11 million for fiscal year 2023 and immaterial for fiscal years 2022 and 2021, respectively.

Inventories

The following table provides details of the inventory balance sheet item:

(Dollars in millions)						June 30, 2023						July 1, 2022
Raw materials and components						$	241					$	283
Work-in-process						682						716
Finished goods						217						566
Total inventories						$	1,140					$	1,565

The Company reclassified certain Raw materials and components to Work-in-process as of July 1, 2022 in the table above to conform to the current year’s presentation. The reclassification did not result in any change to the total inventories balance as reported in the Consolidated Balance Sheets and Statements of Cash Flows for all periods presented.

Other Current Assets

The following table provides details of the other current assets balance sheet item:

(Dollars in millions)						June 30, 2023						July 1, 2022
Vendor receivables						$	167					$	83
Other current assets						191						238
Total						$	358					$	321

Property, Equipment and Leasehold Improvements, net

The components of property, equipment and leasehold improvements, net were as follows:

(Dollars in millions)						Useful Life in Years						June 30, 2023						July 1, 2022
Land and land improvements												$	21					$	47
Equipment						3 – 7						8,504						8,473
Buildings and leasehold improvements						Up to 30						1,435						1,893
Construction in progress												307						246
												10,267						10,659
Less: accumulated depreciation and amortization												(8,561)						(8,420)
Property, equipment and leasehold improvements, net												$	1,706					$	2,239

Depreciation expense, which includes amortization of leasehold improvements, was $504 million, $431 million and $368 million for fiscal years 2023, 2022 and 2021, respectively. In fiscal year 2023, the Company recognized a charge of $85 million for the accelerated depreciation of certain fixed assets, of which $60 million and $25 million was recorded to Cost of revenue and Operating expense, respectively, in the Consolidated Statement of Operations. In fiscal years 2022 and 2021, the accelerated depreciation charge recognized was immaterial. Interest on borrowings related to eligible capital expenditures is capitalized as part of the cost of the qualified assets and amortized over the estimated useful lives of the assets. During fiscal years 2023, 2022 and 2021, the Company capitalized interest of $8 million, $3 million and $5 million, respectively.

Accrued Expenses

The following table provides details of the accrued expenses balance sheet item:

(Dollars in millions)						June 30, 2023						July 1, 2022
Dividends payable						$	145					$	147
Other accrued expenses						603						449
Total						$	748					$	596

Accumulated Other Comprehensive Income (Loss) (“AOCI”)

The components of AOCI, net of tax, were as follows:

(Dollars in millions)						Unrealized Gains/(Losses) on Cash Flow Hedges									Unrealized Gains/(Losses) on Post-Retirement Plans						Foreign Currency Translation Adjustments						Total
Balance at July 2, 2021						$	(18)								$	(22)					$	(1)					$	(41)
Other comprehensive income before reclassifications						48									6						—						54
Amounts reclassified from AOCI						21									2						—						23
Other comprehensive income						69									8						—						77
Balance at July 1, 2022						51									(14)						(1)						36
Other comprehensive income before reclassifications						65									11						—						76
Amounts reclassified from AOCI						(13)									(1)						—						(14)
Other comprehensive income						52									10						—						62
Balance at June 30, 2023						$	103								$	(4)					$	(1)					$	98

**3.**Goodwill and Other Intangible Assets

Goodwill

The carrying amount of goodwill was $1,237 million as of June 30, 2023 and July 1, 2022. There were no additions to, disposals of, impairments of or translation adjustments to goodwill in fiscal years 2023, 2022 and 2021.

Other Intangible Assets

Other intangible assets consist primarily of existing technology, customer relationships and trade names acquired in business combinations. Intangibles are amortized on a straight-line basis over the respective estimated useful lives of the assets. Amortization is charged to Operating expenses in the Consolidated Statements of Operations.

In fiscal years 2023, 2022 and 2021, amortization expense for other intangible assets was $9 million, $20 million and $29 million, respectively.

The carrying value of other intangible assets subject to amortization, excluding fully amortized intangible assets, as of June 30, 2023, is set forth in the following table:

(Dollars in millions)						Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount						Weighted Average Remaining Useful Life
Existing technology						$	10					$	(10)					$	—					0.1 Year
Total amortizable other intangible assets						$	10					$	(10)					$	—					0.1 Year

The carrying value of other intangible assets subject to amortization, excluding fully amortized intangible assets, as of July 1, 2022 is set forth in the following table:

(Dollars in millions)						Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount						Weighted Average Remaining Useful Life
Existing technology						$	29					$	(24)					$	5					1.0 Year
Customer relationships						71						(68)						3						0.2 Year
Other intangible assets						8						(7)						1						0.8 Year
Total amortizable other intangible assets						$	108					$	(99)					$	9					0.8 Year

As of June 30, 2023, expected amortization expense for other intangible assets for fiscal year 2024 is immaterial.

**4.**Debt

The following table provides details of the Company’s debt as of June 30, 2023 and July 1, 2022:

(Dollars in millions)						June 30, 2023						July 1, 2022
Unsecured Senior Notes**(1)**
$1,000 issued on May 22, 2013 at 4.75% due June 1, 2023 (the “2023 Notes”), interest payable semi-annually on June 1 and December 1 of each year.						$	—					$	540
$500 issued on February 3, 2017 at 4.875% due March 1, 2024 (the “2024 Notes”), interest payable semi-annually on March 1 and September 1 of each year.						—						499
$1,000 issued on May 28, 2014 at 4.75% due January 1, 2025 (the “2025 Notes”), interest payable semi-annually on January 1 and July 1 of each year.						479						479
$700 issued on May 14, 2015 at 4.875% due June 1, 2027 (the “2027 Notes”), interest payable semi-annually on June 1 and December 1 of each year.						504						504
$500 issued on June 18, 2020 at 4.091% due June 1, 2029 (the “June 2029 Notes”), interest payable semi-annually on June 1 and December 1 of each year.						465						466
$500 issued on December 8, 2020 at 3.125% due July 15, 2029 (the “July 2029 Notes”), interest payable semi-annually on January 15 and July 15 of each year.						163						500
$500 issued on May 30, 2023 at 8.25% due December 15, 2029 (the “December 2029 Notes”), interest payable semi-annually on June 15 and December 15 of each year.						500						—
$500 issued on June 10, 2020 at 4.125% due January 15, 2031 (the “January 2031 Notes”), interest payable semi-annually on January 15 and July 15 of each year.						275						500
$500 issued on December 8, 2020 at 3.375% due July 15, 2031 (the “July 2031 Notes”), interest payable semi-annually on January 15 and July 15 of each year.						72						500
$500 issued on May 30, 2023 at 8.50% due July 15, 2031 (the “8.50% July 2031 Notes”), interest payable semi-annually on January 15 and July 15 of each year.						500						—
$750 issued on November 30, 2022 at 9.625% due December 1, 2032 (the “2032 Notes”), interest payable semi-annually on June 1 and December 1 of each year.						750						—
$500 issued on December 2, 2014 at 5.75% due December 1, 2034 (the “2034 Notes”), interest payable semi-annually on June 1 and December 1 of each year.						489						489
Term Loan
$600 borrowed on October 14, 2021 at SOFR plus a variable margin ranging from 1.125% to 2.375%, (the “Term Loan A1”), repayable in quarterly installments beginning on December 31, 2022, with a final maturity date of September 16, 2025.						430						600
$600 borrowed on October 14, 2021 at SOFR plus a variable margin ranging from 1.25% to 2.5%, (the “Term Loan A2”), repayable in quarterly installments beginning on December 31, 2022, with a final maturity date of July 30, 2027.						430						600
$600 borrowed on August 18, 2022 at SOFR plus a variable margin ranging from 1.25% to 2.5%, (the “Term Loan A3”), repayable in quarterly installments beginning on December 31, 2022, with a final maturity date of July 30, 2027.						430						—
						5,487						5,677
Less: unamortized debt issuance costs						(36)						(31)
Debt, net of debt issuance costs						5,451						5,646
Less: current portion of long-term debt						(63)						(584)
Long-term debt, less current portion						$	5,388					$	5,062

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(1) All unsecured senior notes are issued by Seagate HDD Cayman (“Seagate HDD”), and the obligations under these notes are fully and unconditionally guaranteed, on a senior unsecured basis, by Seagate Technology Unlimited Company (“STUC”) and STX.

Debt Exchange

2032 Notes. On November 30, 2022, Seagate HDD issued, in a private placement, $750 million in aggregate principal amount of 9.625% Senior Notes due on December 1, 2032, in connection with Seagate HDD’s exchange offers to certain eligible holders of Seagate HDD’s outstanding existing senior notes as set forth below:

(Dollars in millions)
Existing Notes						Principal Amount Outstanding as of July 1, 2022						Principal Amount Exchanged
July 2031 Notes						$	500					$	423
July 2029 Notes						500						336
January 2031 Notes						500						205
Total						$	1,500					$	964

The exchange was accounted for as a debt extinguishment and the Company recorded a net gain of $204 million, which was included in Net gain recognized from early redemption of debt in the Company’s Consolidated Statements of Operations for fiscal year 2023.

At any time prior to December 1, 2027, Seagate HDD may redeem the 2032 Notes at its option, in whole or in part, at any time and from time to time, at a “make-whole” redemption price. The “make-whole” redemption price will be equal to the greater of: (1) (a) the sum of the present values at such redemption date of the redemption price of the 2032 Notes that would apply if the new 2032 Notes were redeemed on December 1, 2027 plus the remaining scheduled payments of interest thereon to and including December 1, 2027 discounted to the redemption date on a semi-annual basis at the Treasury Rate plus 50 basis points less (b) interest accrued to the date of redemption, and (2) 100% of the principal amount of the 2032 Notes to be redeemed plus, in either case, accrued and unpaid interest thereon, if any, to, but excluding, the redemption date. At any time on or after December 1, 2027, Seagate HDD may redeem some or all of the 2032 Notes at the prices specified in the Indenture, plus accrued and unpaid interest to, but excluding, the redemption date. In addition, Seagate HDD may redeem with the net cash proceeds from one or more equity offerings up to 40% of the 2032 Notes before December 1, 2025, at a redemption price of 109.625% plus accrued and unpaid interest to, but excluding, the redemption date.

December 2029 Notes. On May 30, 2023, Seagate HDD Cayman issued, in a private placement, $500 million in aggregate principal amount of 8.25% Senior Notes which will mature on December 15, 2029. The interest on the December 2029 Notes is payable semi-annually on June 15 and December 15 of each year, commencing on December 15, 2023*.*

8.50% July 2031 Notes. On May 30, 2023, Seagate HDD Cayman issued, in a private placement, $500 million in aggregate principal amount of 8.50% Senior Notes which will mature on July 15, 2031. The interest on the July 2031 Notes is payable semi-annually on January 15 and July 15 of each year, commencing on January 15, 2024*.*

In connection with the issuance of the December 2029 and 8.50% July 2031 Notes, the entire outstanding principal amount of the 2024 Notes and $450 million principal amount of the Term Loans were repaid. The exchange was accounted for as a debt extinguishment and the Company recorded a net loss of $17 million, which was included in Net gain recognized from early redemption of debt in the Company’s Consolidated Statements of Operations for fiscal year 2023.

At any time before July 15, 2026, Seagate HDD may redeem the December 2029 or 8.50% July 2031 Notes of either series at its option, in whole or in part, at any time and from time to time, at a “make-whole” redemption price. The “make-whole” redemption price will be equal to the greater of: (1)(a) the sum of the present values at such redemption date of the redemption price of the applicable series of Notes that would apply if such series of Notes were redeemed on July 15, 2026 (at the price specified in the applicable Indenture) plus the remaining scheduled payments of interest thereon to, and including, July 15, 2026 discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using a discount rate equal to the Treasury Rate (as defined in the applicable Indenture) as of such redemption date; plus 50 basis points less (b) interest accrued to the date of redemption, and (2) 100% of the principal amount of such series of Notes to be redeemed plus, in either case, accrued and unpaid interest thereon, if any, to, but excluding, the redemption date. At any time on or after July 15, 2026, Seagate HDD may, at its option, redeem some or all of the Notes of either series at the prices specified in the applicable Indenture, plus accrued and unpaid interest thereon, if any, to, but excluding, the redemption date. In addition, Seagate HDD may redeem with the net cash proceeds from one or more equity offerings up to 40% of the outstanding principal amount of each series of Notes at any time prior to July 15, 2026, at a redemption price of 108.25%, in the case of the 2029 Notes, and a redemption price of 108.50%, in the case of the 2031 Notes, plus, in each case, accrued and unpaid interest to, but excluding, the redemption date.

Debt Repurchases

In February 2023, $20 million principal amount of the January 2031 Notes, $5 million principal amount of the June 2029 Notes, and $5 million principal amount of the July 2031 Notes were repurchased for cash at a discount to their principal amounts, plus accrued and unpaid interest. The Company recorded a gain of $3 million on these repurchases during fiscal year 2023, which was included in Net gain recognized from early redemption of debt in the Company’s Consolidated statements of Operations.

Credit Agreement

The Company’s subsidiary, Seagate HDD Cayman, entered into a credit agreement on February 20, 2019, which was amended on May 28, 2019, September 16, 2019, January 13, 2021, May 18, 2021, October 14, 2021, August 18, 2022, November 8, 2022, May 19, 2023 and June 26, 2023 (the “Credit Agreement”).

On August 18, 2022, Seagate Technology Holdings plc and Seagate HDD (the “Borrower”) entered into an amendment to its Credit Agreement (the “Sixth Amendment”), which provided for a new Term Loan facility in the aggregate principal amount of $600 million (“Term Loan A3”). Term Loan A3 was borrowed in full at the closing of the Sixth Amendment. The Sixth Amendment to the Credit Agreement also replaced the LIBOR interest rates plus variable margin for the Term Loans A1 and A2 with the SOFR interest rates plus a variable margin that will be determined based on the corporate credit rating of the Borrower or one of its parent entities. The Sixth Amendment also permits the Borrower to increase the revolving loan commitments or obtain new Term Loans of up to $100 million in aggregate (the “Incremental facility”), subject to the satisfaction of certain terms and conditions.

On November 8, 2022, the Borrower entered into the seventh amendment to its Credit Agreement to increase the maximum permitted total leverage ratio the Company must comply with during the covenant relief period that ends on June 28, 2024 and prohibit the Company from pursuing the use of the Incremental Facility during the covenant relief period. The maximum permitted total leverage ratio is 5.0 to 1.0 from the fiscal quarters ending December 30, 2022 to June 30, 2023. For the fiscal quarter ending September 29, 2023, the maximum permitted total leverage ratio is 4.75 to 1.0 and then steps down to 4.5 to 1.0 from the fiscal quarters ending December 29, 2023 to June 28, 2024. The maximum permitted leverage ratio will return to 4.0 to 1.0 for any fiscal quarter ending after June 28, 2024.

On May 19, 2023, the Borrower entered into the eight amendment to its Credit Agreement (the “Eighth Amendment”) to replace the total leverage ratio with a new total net leverage ratio during the covenant relief period which terminates on June 27, 2025. The maximum total net leverage ratio is 6.75 to 1.00 beginning with the fiscal quarter ending June 30, 2023, with periodic step downs during the covenant relief period, shifting to a maximum total leverage ratio of 4.0 to 1.0 for any fiscal quarter ending at any time other than during the covenant relief period. The minimum interest coverage ratio is 2.50 to 1.0 beginning with the fiscal quarter ending June 30, 2023, with periodic step downs and step ups during the covenant relief period, returning to a minimum interest coverage ratio of 3.25 to 1.0 for any fiscal quarter ending after June 28, 2024. The Eight Amendment also reduced the Revolving Credit Facility to $1.5 billion.

On June 26, 2023, the Borrower entered into the ninth amendment to its Credit Agreement to, among other things, modify the repayment schedules of the Term Loans to reflect the $450 million pay down of the Term Loans.

As of June 30, 2023, no borrowings (including Swingline loans) were outstanding and no commitments were utilized for letters of credit issued under the Revolving Credit Facility. STX and certain of its material subsidiaries, including STUC, fully and unconditionally guarantee both the Revolving Credit Facility and the Term Loans. The Credit Agreement includes three financial covenants: (1) interest coverage ratio, (2) leverage ratio and (3) a minimum liquidity amount. The Company was in compliance with the covenants as of June 30, 2023 and expects to be in compliance for the next 12 months.

Future Principal Payments on Long-term Debt

At June 30, 2023, future principal payments on long-term debt were as follows (in millions):

Fiscal Year						Amount
2024						$	63
2025						582
2026						497
2027						612
2028						519
Thereafter						3,245
Total						$	5,518

**5.**Income Taxes

(Loss) income before income taxes consisted of the following:

						Fiscal Years Ended
(Dollars in millions)						June 30, 2023						July 1, 2022						July 2, 2021
U.S.						$	300					$	145					$	191
Non-U.S.						(796)						1,534						1,157
						$	(496)					$	1,679					$	1,348

The provision for income taxes consisted of the following:

						Fiscal Years Ended
(Dollars in millions)						June 30, 2023						July 1, 2022						July 2, 2021
Current income tax expense:
U.S.						$	6					$	4					$	—
Non-U.S.						17						35						38
Total Current						23						39						38
Deferred income tax expense/(benefit):
U.S.						9						3						8
Non-U.S.						1						(12)						(12)
Total Deferred						10						(9)						(4)
Provision for income taxes						$	33					$	30					$	34

The significant components of the Company’s deferred tax assets and liabilities were as follows:

						Fiscal Years Ended
(Dollars in millions)						June 30, 2023						July 1, 2022
Deferred tax assets
Accrued warranty						$	38					$	34
Inventory carrying value adjustments						40						43
Receivable allowances						11						20
Accrued compensation and benefits						43						73
Capitalized research expenses						119						—
Depreciation						40						45
Restructuring accruals						14						—
Lease liabilities						62						5
Other accruals and deferred items						14						19
Net operating losses						542						671
Tax credit carryforwards						619						650
Other assets						1						1
Gross: Deferred tax assets						1,543						1,561
Less: Valuation allowance						(370)						(434)
Net: Deferred tax assets						1,173						1,127
Deferred tax liabilities
Unremitted earnings of certain non-U.S. entities						(4)						(5)
Acquisition-related items						(1)						(2)
Right-of-use assets						(62)						(5)
Other liabilities						(2)						—
Net: Deferred tax liabilities						(69)						(12)
Total net deferred tax assets						$	1,104					$	1,115

At June 30, 2023, the Company recorded $1.1 billion of net deferred tax assets. The realization of most of these deferred tax assets is primarily dependent on the Company’s ability to generate sufficient U.S. and certain non-Irish taxable income in future periods. Although realization is not assured, the Company’s management believes it is more likely than not that these deferred tax assets will be realized. The amount of deferred tax assets considered realizable, however, may increase or decrease in subsequent periods when the Company re-evaluates the underlying basis for its estimates of future U.S. and certain non-Irish taxable income.

The deferred tax asset valuation allowance decreased by $64 million in fiscal year 2023, which primarily relates to the expiration of unutilized tax credit carryforwards.

At June 30, 2023, the Company had U.S. and non-U.S. tax net operating loss carryforwards of approximately $3.6 billion and $391 million, respectively, which will expire at various dates beginning in fiscal year 2024, if not utilized. Net operating loss carryforwards of approximately $245 million are scheduled to expire in fiscal year 2024. At June 30, 2023, the Company had U.S. tax credit carryforwards of $739 million, of which $35 million are scheduled to expire at various dates in fiscal year 2024, if not utilized.

As of June 30, 2023, approximately $150 million and $60 million of the Company’s total U.S. net operating loss and tax credit carryforwards, respectively, are subject to annual limitations ranging from $1 million to $45 million pursuant to U.S. tax law.

For purposes of the reconciliation between the provision for income taxes at the statutory rate and the effective tax rate, the Irish statutory rate of 25% was applied as follows:

						Fiscal Years Ended
(Dollars in millions)						June 30, 2023						July 1, 2022						July 2, 2021
(Benefit) provision at statutory rate						$	(124)					$	420					$	337
Permanent differences						8						5						8
Valuation allowance						(18)						7						(2)
Effect of rates different than statutory						178						(371)						(287)
Research credit						(18)						(26)						(27)
Other individually immaterial items						7						(5)						5
Provision for income taxes						$	33					$	30					$	34

A substantial portion of the Company's operations in Singapore and Thailand operate under various tax incentive programs, which expire in whole or in part at various dates through 2033. Certain tax incentives may be extended if specific conditions are met. The net impact of these tax incentive programs was to decrease the Company’s net loss by approximately $14 million in fiscal year 2023 ($0.07 per share, basic), to increase the Company's net income by approximately $290 million in fiscal year 2022 ($1.29 per share, diluted) and to increase the Company’s net income by approximately $226 million in fiscal year 2021 ($0.92 per share, diluted).

The Company analyzes the potential for deferred tax liabilities with respect to the accumulated earnings of foreign subsidiaries on an annual basis. The analysis focuses on the outside basis differences in the stock of the foreign subsidiaries as well as the withholding tax obligations those subsidiaries may have with respect to any distribution. The undistributed earnings for which taxes are not provided are permanently reinvested or can be repatriated without incremental tax liability.

As of June 30, 2023 and July 1, 2022, the Company had approximately $116 million and $114 million, respectively, of unrecognized tax benefits excluding interest and penalties. These amounts, if recognized, would impact the effective tax rate subject to certain future valuation allowance offsets.

The following table summarizes the activities related to the Company’s gross unrecognized tax benefits:

						Fiscal Years Ended
(Dollars in millions)						June 30, 2023						July 1, 2022						July 2, 2021
Balance of unrecognized tax benefits at the beginning of the year						$	114					$	108					$	89
Gross increase for tax positions of prior years						—						1						7
Gross decrease for tax positions of prior years						(4)						(1)						(1)
Gross increase for tax positions of current year						7						6						15
Gross decrease for tax positions of current year						(1)						—						—
Settlements						—						—						(1)
Lapse of statutes of limitation						—						—						(1)
Balance of unrecognized tax benefits at the end of the year						$	116					$	114					$	108

It is the Company’s policy to include interest and penalties related to unrecognized tax benefits in the provision for income taxes on the Consolidated Statements of Operations. Interest and penalties recorded on these tax positions were not material to any periods presented in the Consolidated Statement of Operations. As of June 30, 2023, accrued interest and penalties related to unrecognized tax benefits did not materially change compared to fiscal year 2022.

During the 12 months beginning July 1, 2023, the Company does not expect a material change to its unrecognized tax benefits as a result of the expiration of certain statutes of limitation.

The Company is required to file U.S. and non-U.S. income tax returns. The Company is no longer subject to examination of its U.S. income tax returns for years prior to fiscal year 2019 and prior to fiscal year 2012 for non-U.S. income tax returns.

**6.**Leases

The Company is a lessee in several operating leases related to real estate facilities for warehouse, office and lab space.

The Company’s lease arrangements comprise operating leases with various expiration dates through 2067. The lease term includes the non-cancelable period of the lease, adjusted for options to extend or terminate the lease when it is reasonably certain that an option will be exercised.

During fiscal year 2023, the Company sold and leased back certain properties and recorded a net gain of $156 million within Restructuring and other, net on the Consolidated Statements of Operations.

Operating lease costs include short-term lease costs and are shown net of immaterial sublease income. The components of lease costs and other information related to leases were as follows:

						Fiscal Years Ended
(Dollars in millions)						June 30, 2023						July 1, 2022									July 2, 2021
Operating lease cost						$	21					$	16								$	15
Variable lease cost						3						4									4
Total lease cost						$	24					$	20								$	19
Operating cash outflows from operating leases						$	23					$	20								$	19

During fiscal year 2023, the Company obtained $353 million ROU assets in exchange for new operating lease liabilities. In fiscal years 2022 and 2021 the ROU assets obtained in exchange for new operating lease liabilities were immaterial.

						June 30, 2023						July 1, 2022						July 2, 2021
Weighted-average remaining lease term						9.6 years						9.3 years						7.2 years
Weighted-average discount rate						8.49		%				6.40		%				6.02		%

ROU assets and lease liabilities are included on the Company’s Consolidated Balance Sheet as follows:

(Dollars in millions)						Balance Sheet Location						June 30, 2023						July 1, 2022
ROU assets						Other assets, net						$	396					$	94
Current lease liabilities						Accrued expenses						51						14
Non-current lease liabilities						Other non-current liabilities						333						36

At June 30, 2023, future lease payments included in the measurement of lease liabilities were as follows (in millions):

Fiscal Year						Amount
2024						$	53
2025						55
2026						55
2027						55
2028						56
Thereafter						290
Total lease payments						564
Less: imputed interest						(180)
Present value of lease liabilities						$	384

**7.**Restructuring and Exit Costs

During fiscal years 2023, 2022 and 2021, the Company recorded restructuring and other, net of $102 million, $3 million and $8 million, respectively, on the Consolidated Statements of Operations. The Company’s restructuring plans are comprised primarily of charges related to workforce reduction costs, including severance and other one-time termination benefits and facilities and other exit costs. The Company’s significant restructuring plans are described below.

October 2022 Plan - On October 24, 2022, the Company committed to an October 2022 restructuring plan (the “October 2022 Plan”) to reduce its cost structure to better align the Company’s operational needs to current economic conditions while continuing to support the long-term business strategy. On March 29, 2023, in light of further deteriorating economic conditions, the Company committed to an expansion of the October 2022 Plan to further reduce its global headcount by approximately 480 employees to a total reduction of approximately 3,480 employees. This expanded plan includes aligning its business plan to near-term market conditions, along with other cost saving measures. The October 2022 Plan was substantially completed by the end of fiscal year 2023.

April 2023 Plan - On April 20, 2023, the Company committed to an April 2023 restructuring plan (the “April 2023 Plan”) to further reduce its cost structure in response to changes in macroeconomic and business conditions. The April 2023 Plan is intended to align the Company’s operational needs with the near-term demand environment while continuing to support the long-term business strategy. The April 2023 Plan was substantially completed by the end of fiscal year 2023.

The following table summarizes the Company’s restructuring activities under its active restructuring plans for fiscal years 2023, 2022 and 2021:

						April 2023 Plan												October 2022 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						Total
Accrual balances at July 3, 2020						$	—					$	—					$	—					$	—					$	43					$	5					$	48
Restructuring charges						—						—						—						—						6						8						14
Cash payments						—						—						—						—						(47)						(6)						(53)
Adjustments						—						—						—						—						—						(1)						(1)
Accrual balances at July 2, 2021						—						—						—						—						2						6						8
Restructuring charges						—						—						—						—						2						1						3
Cash payments						—						—						—						—						(4)						(2)						(6)
Adjustments						—						—						—						—						—						—						—
Accrual balances at July 1, 2022						—						—						—						—						—						5						5
Restructuring charges						145						3						104						7						10						—						269
Cash payments						(37)						(3)						(103)						(1)						(10)						(1)						(155)
Adjustments						—						—						—						(1)						1						—						—
Accrual balances at June 30, 2023						$	108					$	—					$	1					$	5					$	1					$	4					$	119
Total costs incurred to date as of June 30, 2023						$	145					$	3					$	104					$	7					$	73					$	24					$	356
Total expected costs to be incurred as of June 30, 2023						$	—					$	—					$	—					$	—					$	—					$	1					$	1

Of the accrued restructuring balance of $119 million at June 30, 2023, $117 million was included in Accrued expenses and $2 million was included in Other non-current liabilities in the Company’s Consolidated Balance Sheet. The accrued restructuring balance of $5 million at July 1, 2022 was included in Accrued expenses in the Company’s Consolidated Balance Sheet.

During fiscal year 2023, the Company sold certain properties and assets and recognized a net gain of $167 million. The net gain was included in Restructuring and other, net in the Company’s Consolidated Statements of Operations.

During fiscal year 2021, the Company recognized a gain of $3 million from the sale of a certain property and a gain of $2 million from termination of an operating lease, which were reported in Restructuring and other, net on the Company’s Consolidated Statements of Operations.

**8.**Derivative Financial Instruments

The Company is exposed to foreign currency exchange rate, interest rate and to a lesser extent, equity market risks relating to its ongoing business operations. From time to time, the Company enters into cash flow hedges in the form of foreign currency forward exchange contracts in order to manage the foreign currency exchange rate risk on forecasted expenses and investments denominated in foreign currencies.

The Company has entered into certain interest rate swap agreements to convert the variable interest rate on its Term Loans to fixed interest rates. The objective of the interest rate swap agreements is to eliminate the variability of interest payment cash flows associated with the variable interest rate under the Term Loans. The Company designated the interest rate swaps as cash flow hedges.

In September 2022, the Company terminated its then existing interest swap agreements relating to Term Loans A1 and A2 and entered into new interest swap agreements with a notional amount of $1.6 billion, to convert the variable interest rate on certain principal amounts of the Term Loans drawn under its Credit Agreement. The Company received cash proceeds of $110 million from the counterparty. The cash proceeds were reported within Net cash provided by operating activities in the Company’s Consolidated Statement of Cash Flows. The Company discontinued the related hedge accounting prospectively and as a result the realized gain of $110 million was accounted and reported in AOCI and is amortized to Interest expense in the Consolidated Statement of Operations over the remaining period of the Term Loans A1 and A2. During fiscal year 2023, $22 million of the gains were amortized to Interest expense in the Company’s Consolidated Statements of Operations.

In June 2023, in connection with the $450 million of early repayment of a portion of the outstanding Term Loans principal, the Company terminated $300 million of its then existing interest swap agreements relating to Term Loans A1 and A2 with an immaterial loss. The Company entered into a new interest swap agreement relating to Term Loan A3 with a notional amount of $45 million, to convert the variable interest rate on certain principal amounts of the Term Loans drawn under its Credit Agreement. The Company discontinued the related hedge accounting prospectively and as a result the immaterial realized loss was recorded in Interest expense in the Company’s Consolidated Statement of Operations in fiscal year 2023.

As of June 30, 2023, the aggregate notional amount of the Company’s interest-rate swap contracts was $1.3 billion, of which $429 million will mature through September 2025 and $859 million will mature through July 2027.

The Company’s accounting policies for these instruments are based on whether the instruments are classified as designated or non-designated hedging instruments. The Company records all derivatives on its Consolidated Balance Sheets at fair value. The changes in the fair value of highly effective designated cash flow hedges are recorded in AOCI until the hedged item is recognized in earnings. Derivatives that are not designated as hedging instruments or are not assessed to be highly effective are adjusted to fair value through earnings. The amount of net unrealized gains on cash flow hedges was $12 million and $51 million, respectively, as of June 30, 2023 and as of July 1, 2022. As of June 30, 2023, the amount of existing net gains related to cash flow hedges recorded in AOCI included a net gain of $39 million that is expected to be reclassified to earnings within twelve months.

The Company de-designates its cash flow hedges when the forecasted hedged transactions affect earnings or it is probable the forecasted hedged transactions will not occur in the initially identified time period. At such time, the associated gains and losses deferred in AOCI on the Company’s Consolidated Balance Sheets are reclassified into earnings and any subsequent changes in the fair value of such derivative instruments are immediately reflected in earnings. The Company recognized a net gain of $16 million and a net loss of $29 million in Cost of revenue and Interest expense, respectively related to the de-designation on discontinued cash flow hedges during fiscal year 2023. The Company recognized a net loss of $11 million and $10 million in Cost of revenue and Interest expense respectively related to the de-designation on discontinued cash flow hedges during fiscal year 2022. The Company recognized a net gain of $14 million in Cost of revenue and a net loss of $7 million in Interest expense related to the de-designation on discontinued cash flow hedges during the fiscal year 2021.

Other derivatives not designated as hedging instruments consist of foreign currency forward exchange contracts that the Company uses to hedge the foreign currency exposure on forecasted expenditures denominated in currencies other than the U.S. dollar. The Company also enters into foreign currency forward contracts with contractual maturities of less than one month, which are designed to mitigate the effect of changes in foreign exchange rates on monetary assets and liabilities. The Company recognizes gains and losses on these contracts, as well as the related costs in Other, net on its Consolidated Statements of Operations.

The following tables show the total notional value of the Company’s outstanding foreign currency forward exchange contracts as of June 30, 2023 and July 1, 2022. All of the foreign currency forward exchange contracts mature within 12 months.

						As of June 30, 2023
(Dollars in millions)						Contracts Designated as Hedges						Contracts Not Designated as Hedges
Singapore Dollar						$	195					$	161
Thai Baht						129						16
Chinese Renminbi						64						12
British Pound Sterling						57						8
						$	445					$	197

						As of July 1, 2022
(Dollars in millions)						Contracts Designated as Hedges						Contracts Not Designated as Hedges
Singapore Dollar						$	178					$	52
Thai Baht						133						35
Chinese Renminbi						92						24
British Pound Sterling						64						15
						$	467					$	126

The Company is subject to equity market risks due to changes in the fair value of the notional investments selected by its employees as part of its non-qualified deferred compensation plan: the Seagate Deferred Compensation Plan (the “SDCP”). In fiscal year 2014, the Company entered into a Total Return Swap (“TRS”) in order to manage the equity market risks associated with the SDCP’s liabilities. The Company pays a floating rate, based on SOFR plus an interest rate spread, on the notional amount of the TRS. The TRS is designed to substantially offset changes in the SDCP’s liabilities due to changes in the value of the investment options made by employees. As of June 30, 2023, the notional investments underlying the TRS amounted to $108 million. The contract term of the TRS is through January 2024 and is settled on a monthly basis, therefore limiting counterparty performance risk. The Company did not designate the TRS as a hedge. Rather, the Company records all changes in the fair value of the TRS to earnings to offset the market value changes of the SDCP’s liabilities.

The following tables show the Company’s derivative instruments measured at gross fair value as reflected in the Consolidated Balance Sheets as of June 30, 2023 and July 1, 2022:

						As of June 30, 2023
						Derivative Assets												Derivative Liabilities
(Dollars in millions)						Balance Sheet Location						Fair Value						Balance Sheet Location						Fair Value
Derivatives designated as hedging instruments:
Foreign currency forward exchange contracts						Other current assets						$	2					Accrued expenses						$	(10)
Interest rate swap						Other current assets						20						Accrued expenses						—
Derivatives not designated as hedging instruments:
Foreign currency forward exchange contracts						Other current assets						—						Accrued expenses						(1)
Total return swap						Other current assets						1						Accrued expenses						—
Total derivatives												$	23											$	(11)

						As of July 1, 2022
						Derivative Assets												Derivative Liabilities
(Dollars in millions)						Balance Sheet Location						Fair Value						Balance Sheet Location						Fair Value
Derivatives designated as hedging instruments:
Foreign currency forward exchange contracts						Other current assets						$	—					Accrued expenses						$	(14)
Interest rate swap						Other current assets						65						Accrued expenses						—
Derivatives not designated as hedging instruments:
Foreign currency forward exchange contracts						Other current assets						—						Accrued expenses						(5)
Total return swap						Other current assets						—						Accrued expenses						(4)
Total derivatives												$	65											$	(23)

The following tables show the effect of the Company’s derivative instruments on the Consolidated Statement of Comprehensive Income and Consolidated Statement of Operations for the fiscal year ended June 30, 2023:

Derivatives Not Designated as Hedging Instruments						Location of Gain/(Loss) Recognized in Income on Derivatives						Amount of Gain/(Loss) Recognized in Income on Derivatives
Foreign currency forward exchange contracts						Other, net						$	(7)
Total return swap						Operating expenses						6

**(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)
Foreign currency forward exchange contracts						$	(6)					Cost of revenue						$	16					Other, net						$	(4)
Interest rate swap						71						Interest expense						(29)						Interest expense						—

The following tables show the effect of the Company’s derivative instruments on the Consolidated Statement of Comprehensive Income and Consolidated Statement of Operations for the fiscal year ended July 1, 2022:

Derivatives Not Designated as Hedging Instruments						Location of Gain/(Loss) Recognized in Income on Derivatives						Amount of Gain/(Loss) Recognized in Income on Derivatives
Foreign currency forward exchange contracts						Other, net						$	(9)
Total return swap						Operating expenses						(18)

**(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)
Foreign currency forward exchange contracts						$	(22)					Cost of revenue						$	(11)					Other, net						$	1
Interest rate swap						70						Interest expense						(10)						Interest expense						—

**9.**Fair Value

Measurement of Fair Value

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

Fair Value Hierarchy

A fair value hierarchy is based on whether the market participant assumptions used in determining fair value are obtained from independent sources (observable inputs) or reflect the Company's own assumptions of market participant valuation (unobservable inputs). A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs that may be used to measure fair value are:

Level 1 - Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 - Quoted prices for identical assets and liabilities in markets that are inactive; quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly; or

Level 3 - Prices or valuations that require inputs that are both unobservable and significant to the fair value measurement.

The Company considers an active market to be one in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis and views an inactive market as one in which there are few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers. Where appropriate, the Company’s or the counterparty’s non-performance risk is considered in determining the fair values of liabilities and assets, respectively.

Items Measured at Fair Value on a Recurring Basis

The following tables present the Company’s assets and liabilities, by financial instrument type and balance sheet line item that are measured at fair value on a recurring basis, excluding accrued interest components, as of:

						June 30, 2023																								July 1, 2022
						Fair Value Measurements at Reporting Date Using																								Fair Value Measurements at Reporting Date Using
(US Dollars in millions)						Quoted Prices in Active Markets for Identical Instruments (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Total Balance						Quoted Prices in Active Markets for Identical Instruments (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Total Balance
Assets:
Money market funds						$	72					$	—					$	—					$	72					$	59					$	—					$	—					$	59
Total cash equivalents						72						—						—						72						59						—						—						59
Restricted cash and investments:
Money market funds						1						—						—						1						1						—						—						1
Time deposits and certificates of deposit						—						1						—						1						—						1						—						1
Other debt securities						—						—						16						16						—						—						23						23
Derivative assets						—						23						—						23						—						65						—						65
Total assets						$	73					$	24					$	16					$	113					$	60					$	66					$	23					$	149
Liabilities:
Derivative liabilities						$	—					$	11					$	—					$	11					$	—					$	23					$	—					$	23
Total liabilities						$	—					$	11					$	—					$	11					$	—					$	23					$	—					$	23

						June 30, 2023																								July 1, 2022
						Fair Value Measurements at Reporting Date Using																								Fair Value Measurements at Reporting Date Using
(US Dollars in millions)						Quoted Prices in Active Markets for Identical Instruments (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Total Balance						Quoted Prices in Active Markets for Identical Instruments (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Total Balance
Assets:
Cash and cash equivalents						$	72					$	—					$	—					$	72					$	59					$	—					$	—					$	59
Other current assets						1						24						—						25						1						66						—						67
Other assets, net						—						—						16						16						—						—						23						23
Total assets						$	73					$	24					$	16					$	113					$	60					$	66					$	23					$	149
Liabilities:
Accrued expenses						$	—					$	11					$	—					$	11					$	—					$	23					$	—					$	23
Total liabilities						$	—					$	11					$	—					$	11					$	—					$	23					$	—					$	23

The Company classifies items in Level 1 if the financial assets consist of securities for which quoted prices are available in an active market.

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. For the cash equivalents in the Company’s portfolio, multiple pricing sources are generally available. The pricing service uses inputs from multiple industry standard data providers or other third-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 June 30, 2023, 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 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.

Items Measured at Fair Value on a Non-Recurring Basis

From time to time, the Company enters into certain strategic investments for the promotion of business and strategic objectives, which are accounted for either under the equity method or the measurement alternative. Investments under the measurement alternative are recorded at cost, less impairment and adjusted for qualifying observable price changes on a prospective basis. If measured at fair value in the Consolidated Balance Sheets, these investments would generally be classified in Level 3 of the fair value hierarchy.

For the investments that are accounted for under the equity method, the Company recorded a net loss of $4 million in fiscal year 2023, and a net gain of $8 million and $48 million in fiscal years 2022 and 2021, respectively. The adjusted carrying value of the investments accounted under the equity method amounted to $55 million and $61 million as of June 30, 2023 and July 1, 2022 respectively.

For the investments that are accounted under the measurement alternative, the Company recorded a net loss of $5 million in fiscal year 2023, which included $9 million related to downward adjustments to write down the carrying amount of certain investments to their fair value. For fiscal years 2022 and 2021, the Company recorded a net gain of $4 million and $51 million, respectively. In fiscal year 2021, the Company recorded downward adjustment of $12 million to write down the carrying amount of certain investments to their fair value. As of June 30, 2023 and July 1, 2022, the carrying value of the Company’s strategic investments under the measurement alternative was $88 million and $88 million, respectively.

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 in order of maturity:

						June 30, 2023												July 1, 2022
(Dollars in millions)						Carrying Amount						Estimated Fair Value						Carrying Amount						Estimated Fair Value
4.750% Senior Notes due June 2023						$	—					$	—					$	540					$	538
4.875% Senior Notes due March 2024						—						—						499						494
4.750% Senior Notes due January 2025						479						472						479						471
4.875% Senior Notes due June 2027						504						484						504						483
4.091% Senior Notes due June 2029						465						436						466						427
3.125% Senior Notes due July 2029						163						126						500						396
8.250% Senior Notes due December 2029						500						522						—						—
4.125% Senior Notes due January 2031						275						227						500						410
3.375% Senior Notes due July 2031						72						53						500						393
8.500% Senior Notes due July 2031						500						524						—						—
9.625% Senior Notes due December 2032						750						830						—						—
5.750% Senior Notes due December 2034						489						438						489						433
SOFR Based Term Loan A1 due September 2025						430						426						600						588
SOFR Based Term Loan A2 due July 2027						430						420						600						586
SOFR Based Term Loan A3 due July 2027						430						413						—						—
						$	5,487					$	5,371					$	5,677					$	5,219
Less: unamortized debt issuance costs						(36)						—						(31)						—
Debt, net of debt issuance costs						$	5,451					$	5,371					$	5,646					$	5,219
Less: current portion of debt, net of debt issuance costs						(63)						(62)						(584)						(582)
Long-term debt, less current portion, net of debt issuance costs						$	5,388					$	5,309					$	5,062					$	4,637

**10.**Shareholders’ (Deficit) Equity

Share Capital

The Company’s authorized share capital is $13,500 and consists of 1,250,000,000 ordinary shares, par value $0.00001, of which 207,389,381 shares were outstanding as of June 30, 2023, and 100,000,000 preferred shares, par value $0.00001, of which none were issued or outstanding as of June 30, 2023.

Ordinary shares - Holders of ordinary shares are entitled to receive dividends when and as declared by the Company’s board of directors (the “Board of 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.

Preferred shares - The Company may issue preferred shares in one 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.

The Board of Directors may authorize the issuance of preferred shares with voting or conversion rights that could harm the voting power or other rights of the holders of the ordinary shares. The issuance of preferred shares, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a change in control of the Company and might harm the market price of its ordinary shares and the voting and other rights of the holders of ordinary shares.

Repurchases of Equity Securities

All repurchases are effected as redemptions in accordance with the Company’s Constitution.

As of June 30, 2023, $1.9 billion remained available for repurchase under the existing repurchase authorization limit approved by the Board of Directors.

The following table sets forth information with respect to repurchases of the Company’s ordinary shares during fiscal years 2023, 2022 and 2021:

(In millions)						Number of Shares Repurchased						Dollar Value of Shares Repurchased
Cumulative repurchased through July 3, 2020						392						$	12,386
Repurchased in fiscal year 2021(1)						34						2,081
Cumulative repurchased through July 2, 2021						426						14,467
Repurchased in fiscal year 2022(1)						21						1,857
Cumulative repurchased through July 1, 2022						447						16,324
Repurchased in fiscal year 2023(1)						6						444
Cumulative repurchased through June 30, 2023						453						$	16,768

---

(1) For fiscal years 2023, 2022 and 2021, includes net share settlements of $44 million, $51 million and $33 million for 1 million, 1 million and 1 million shares, respectively, in connection with tax withholding related to vesting of restricted share units.

**11.**Share-Based Compensation

Share-Based Compensation Plans

The Company’s share-based compensation plans have been established to promote the Company’s long-term growth and financial success by providing incentives to its employees, directors and consultants through grants of share-based awards. The provisions of the Company's share-based benefit plans, which allow for the grant of various types of equity-based awards, are also intended to provide greater flexibility to maintain the Company's competitive ability to attract, retain and motivate participants for the benefit of the Company and its shareholders.

Seagate Technology Holdings plc 2022 Equity Incentive Plan (the “2022 EIP”): On October 20, 2021, (the “Approval Date”), shareholders of the Company approved the adoption of the 2022 EIP in replacement of Seagate Technology Holdings plc 2012 Equity Inventive Plan (the “2012 EIP”), which was retired as of the Approval Date. The 2022 EIP provides for the grant of various types of awards including restricted share units (“RSUs”), options, performance-based share units (“PSUs”) and share appreciation rights. The maximum number of shares that may be delivered to the participants under the 2022 EIP shall not exceed (i) 14.1 million ordinary shares, plus (ii) any shares subject to any outstanding share awards granted under the 2012 EIP that, on or after the Approval Date expire, are cancelled or otherwise terminate, in whole or in part, without having been exercised or redeemed in full, or are settled in cash ((i) and (ii) together being the “Share Reserve”). The maximum aggregate number of shares that may be issued pursuant to RSUs or PSUs (collectively, “Full-Value Share Awards”) shall not exceed 12.3 million ordinary shares. Any shares that are subject to the 2022 EIP will be counted against the Share Reserve as one share for every one share granted. As of June 30, 2023, there were 9.9 million ordinary shares available for issuance of Full-Value Share Awards under the 2022 EIP.

Dot Hill Systems 2009 Equity Incentive Plan (the “DHEIP”). Effective May 18, 2021, Seagate Technology Holdings plc assumed the Dot Hill Systems 2009 Equity Incentive Plan, which was acquired by STUC effective October 6, 2015. The Company assumed the remaining authorized but unused share reserve of approximately 2.0 million shares, based on the conversion ratio, from the DHEIP on the acquisition date. Effective April 24, 2019, the Company terminated the DHEIP and thus, no further grants will be made under the DHEIP. Outstanding awards granted under the DHEIP will remain subject to the terms of the DHEIP.

Seagate Technology Holdings plc Employee Stock Purchase Plan (the “ESPP”). There are 60.0 million ordinary shares authorized to be issued under the ESPP. The ESPP consists of a six-month offering period with a maximum issuance of 1.5 million ordinary shares per offering period. The ESPP permits eligible employees to purchase ordinary shares through payroll deductions generally at 85% of the fair market value of the ordinary shares. As of June 30, 2023, there were approximately 6.6 million ordinary shares available for issuance under the ESPP.

Equity Awards

RSUs generally vest over a period of four years, with 25% vest on the first anniversary of the vesting commencement date and the remaining 75% vest ratably each quarter over the next 36 months, subject to continuous employment with the Company

through the vesting date. Options generally vest as follows: 25% of the awards will vest on the first anniversary of the vesting commencement date and the remaining 75% will vest ratably each month thereafter over the next 36 months, subject to continuous employment with the Company through the vesting date. Options granted under the 2022 EIP and 2012 EIP have an exercise price equal to the fair market value of the Company’s ordinary shares on the grant date. Fair market value is defined as the closing price of the Company's ordinary shares on NASDAQ on the grant date.

The Company granted PSUs to its senior executive officers under the 2022 EIP and 2012 EIP where vesting is subject to both the continued employment of the participant by the Company and the achievement of certain financial and operational performance goals established by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”). A single PSU represents the right to receive a single ordinary share of the Company. During fiscal years 2023, 2022 and 2021, the Company granted 0.3 million, 0.3 million and 0.3 million PSUs, respectively, where performance is measured based on a three-year average return on invested capital (“ROIC”) goal and a relative total shareholder return (“TSR”) goal, which is based on the Company’s ordinary shares measured against a benchmark TSR of a peer group over the same three-year period (the “TSR/ROIC” awards). For fiscal years 2023 and 2022, the PSUs granted to certain executive officers contain two ESG modifiers that will increase or decrease the PSU achievement level based on the Company’s performance against both a social goal of increasing gender diversity in leadership positions and an environmental goal of greenhouse gas reduction. These awards vest after the end of the performance period of three years from the grant date. A percentage of these units may vest only if at least the minimum ROIC goal is met regardless of whether the TSR goal is met. The number of share units to vest will range from 0% to 200% of the targeted units. In evaluating the fair value of these units, the Company used a Monte Carlo simulation on the grant date, taking the market-based TSR goal into consideration. Compensation expense related to these units is only recorded in a period if it is probable that the ROIC goal will be met, and it is to be recorded at the expected level of achievement.

The Company also granted 0.1 million and 0.1 million PSUs during fiscal years 2021 and 2020, respectively, to certain of its executive officers which are subject to a performance goal related to the Company's adjusted earnings per share (“AEPS”). These awards have a maximum seven-year vesting period, with 25% annual vesting starting on the first anniversary of the grant date. If the AEPS goal is not achieved, vesting is delayed to a following year in which the AEPS goal is achieved. Any unvested awards from prior years may vest cumulatively in a future year within the seven-year vesting period if the annual AEPS goal is achieved during a subsequent year. If the AEPS goal has not been met by the end of the seven-year period, any unvested shares will be forfeited.

Determining Fair Value of Seagate Technology Share Plans

Valuation and amortization method - The Company estimates the fair value of granted share options, RSUs and PSUs subject to an AEPS condition granted using the Black-Scholes-Merton valuation model and a single share award approach. This fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period or the remaining service (vesting) period.

Expected Term - Expected term represents the period that the Company’s share-based awards are expected to be outstanding and was determined based on historical experience of similar awards, giving consideration to the contractual terms of the share-based awards, vesting schedules and expectations of future employee behavior as influenced by changes to the terms of its share-based awards.

Expected Volatility - The Company uses a combination of the implied volatility of its traded options and historical volatility of its share price.

Expected Dividend - The Black-Scholes-Merton valuation model calls for a single expected dividend yield as an input. The dividend yield is determined by dividing the expected per share dividend during the coming year by the grant date share price. The expected dividend assumption is based on the Company’s current expectations about its anticipated dividend policy. Also, because the expected dividend yield should reflect marketplace participants’ expectations, the Company does not incorporate changes in dividends anticipated by management unless those changes have been communicated to or otherwise are anticipated by marketplace participants.

Risk-Free Interest Rate - The Company bases the risk-free interest rate used in the Black-Scholes-Merton valuation model on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term. Where the expected term of the Company's share-based awards do not correspond with the terms for which interest rates are quoted, the Company performed a straight-line interpolation to determine the rate from the available term maturities.

The fair value of the Company’s shares related to options and RSUs granted to employees, shares issued from the ESPP and PSUs subject to TSR/ROIC or AEPS conditions for fiscal years 2023, 2022 and 2021 were estimated using the following assumptions:

			Fiscal Years
			2023						2022						2021
Options
Expected term (in years)			4.2						4.2						4.2
Volatility			37 %						38 %						37 - 38 %
Weighted-average volatility			37		%				38		%				38		%
Expected dividend rate			3.7 %						2.8 %						3.2 - 5.2 %
Weighted-average expected dividend rate			3.7		%				2.8		%				4.7		%
Risk-free interest rate			3.5 %						0.6 %						0.2 - 0.7 %
Weighted-average fair value			$	17.28					$	21.02					$	10.77
RSUs
Expected term (in years)			1 - 2.2						1 - 2.5						1 - 2.5
Expected dividend rate			3.2 - 5.5 %						2.4 - 3.4 %						2.5 - 5.4 %
Weighted-average expected dividend rate			3.8		%				2.8		%				4.6		%
Weighted-average fair value			$	62.82					$	82.40					$	50.64
ESPP
Expected term (in years)			0.5						0.5						0.5
Volatility			39 - 40 %						36 - 39 %						39 - 44 %
Weighted-average volatility			39		%				37		%				42		%
Expected dividend rate			3.5 - 4.0 %						2.6 - 3.0 %						4.0 - 5.8 %
Weighted-average expected dividend rate			3.8		%				2.8		%				5.1		%
Risk-free interest rate			2.9 - 4.7 %						0.1 - 0.5 %						0.1 %
Weighted-average fair value			$	19.36					$	24.38					$	13.77
PSUs subject to TSR/ROIC conditions
Expected term (in years)			3.0						3.0						3.0
Volatility			40		%				39		%				38		%
Weighted-average volatility			40		%				39		%				38		%
Expected dividend rate			4.1		%				3.1		%				5.6		%
Weighted-average expected dividend rate			4.1		%				3.1		%				5.6		%
Risk-free interest rate			3.6		%				0.4		%				0.2		%
Weighted-average fair value			$	64.38					$	86.01					$	43.20
PSUs subject to an AEPS condition
Expected term (in years)			0						0						2.5
Expected dividend rate			—						—						3.2 - 5.2 %
Weighted-average expected dividend rate			—						—						4.9		%
Weighted-average fair value			—						—						$	45.50

Share-Based Compensation Expense

The Company recorded $115 million, $145 million and $112 million of share-based compensation during fiscal years 2023, 2022 and 2021, respectively. Management has made an estimate of expected forfeitures and is recognizing compensation costs only for those equity awards expected to vest. When estimating forfeitures, the Company considers voluntary termination behavior as well as the historical analysis of actual forfeited awards.

Share Option Activity

The Company issues new ordinary shares upon exercise of share options. The following is a summary of option activities:

Options						Number of Shares (In millions)						Weighted-Average Exercise Price						Weighted-Average Remaining Contractual Term (In years)						Aggregate Intrinsic Value (Dollars in millions)
Outstanding at July 1, 2022						1.6						$	49.26					3.6						$	36
Granted						0.2						$	68.83
Exercised						(0.2)						$	41.47
Forfeited						(0.1)						$	72.13
Outstanding at June 30, 2023						1.5						$	51.96					2.9						$	21
Vested and expected to vest at June 30, 2023						1.5						$	51.78					2.8						$	21
Exercisable at June 30, 2023						1.1						$	46.60					2.0						$	20

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s ordinary shares for the options that were in-the-money at June 30, 2023. During fiscal years 2023, 2022 and 2021, the aggregate intrinsic value of options exercised under the Company’s share option plans was $5 million, $11 million and $31 million, respectively, determined as of the date of option exercise. The aggregate fair value of options vested during fiscal years 2023, 2022 and 2021 was approximately $4 million, $4 million and $4 million, respectively.

At June 30, 2023, the total compensation cost related to options granted to employees but not yet recognized was approximately $5 million, net of approximately $2 million of estimated forfeitures. This cost is being amortized on a straight-line basis over a weighted-average remaining term of approximately 2.5 years and will be adjusted for subsequent changes in estimated forfeitures.

Unvested Awards Activity

The following is a summary of unvested award activities which do not contain a performance condition:

Unvested Awards						Number of Shares (In millions)						Weighted-Average Grant-Date Fair Value
Unvested at July 1, 2022						4.8						$	58.86
Granted						1.8						$	62.82
Forfeited						(1.0)						$	61.86
Vested						(1.9)						$	54.79
Unvested at June 30, 2023						3.7						$	62.07

At June 30, 2023, the total compensation cost related to unvested awards granted to employees but not yet recognized was approximately $156 million, net of estimated forfeitures of approximately $29 million. This cost is being amortized on a straight-line basis over a weighted-average remaining term of 2.1 years and will be adjusted for subsequent changes in estimated forfeitures. The aggregate fair value of unvested awards vested during fiscal years 2023, 2022 and 2021 were approximately $105 million, $96 million and $75 million, respectively.

Performance Awards

The following is a summary of unvested award activities which contain a performance condition:

Performance Awards						Number of Shares (In millions)						Weighted-Average Grant-Date Fair Value
Performance units at July 1, 2022						0.9						$	59.72
Granted						0.4						$	60.72
Forfeited						(0.2)						$	64.46
Vested						(0.4)						$	51.30
Performance units at June 30, 2023						0.7						$	64.29

At June 30, 2023, the total compensation cost related to performance awards granted to employees but not yet recognized was approximately $8 million, net of estimated forfeitures of approximately $2 million. This cost is being amortized on a straight-line basis over a weighted-average remaining term of 1.2 years. The aggregate fair value of performance awards vested during fiscal years 2023, 2022 and 2021 were approximately $16 million, $4 million and $8 million, respectively.

ESPP

During fiscal years 2023, 2022 and 2021, the aggregate intrinsic value of shares purchased under the Company's ESPP was approximately $10 million, $29 million and $27 million, respectively. At June 30, 2023, the total compensation cost related to options to purchase the Company's ordinary shares under the ESPP but not yet recognized was approximately $1.5 million. This cost will be amortized on a straight-line basis over a weighted-average period of approximately one month. During fiscal year 2023, the Company issued 0.9 million ordinary shares with a weighted-average exercise price of $62.36 per share.

Tax-Deferred Savings Plan

The Company has a tax-deferred savings plan, the Seagate 401(k) Plan (the "401(k) plan"), for the benefit of qualified employees. The 401(k) plan is designed to provide employees with an accumulation of funds at retirement. Qualified employees may elect to make contributions to the 401(k) plan on a bi-weekly basis. Pursuant to the 401(k) plan, the Company matches 50% of employee contributions, up to 6% of compensation, subject to maximum annual contributions of $6,000 per participating employee. During fiscal years 2023, 2022 and 2021, the Company made matching contributions of $15 million, $15 million and $15 million, respectively.

Deferred Compensation Plan

The Company has adopted the SDCP for the benefit of eligible employees. The plan is designed to permit certain discretionary employer contributions, in excess of the tax limits applicable to the 401(k) plan, and to permit employee deferrals in excess of certain tax limits. During fiscal year 2014, the Company entered into a TRS in order to manage the equity market risks associated with the SDCP liabilities. See Note 8. Derivative Financial Instruments contained in this report for additional information about the TRS.

**12.**Guarantees

Indemnifications of Officers and Directors

Seagate Technology, an exempted company incorporated with limited liability under the laws of the Cayman Islands (“Seagate-Cayman”) and wholly-owned subsidiary of STX, from time to time enters into indemnification agreements with the directors, officers, employees and agents of STX or any of its subsidiaries (each, an “Indemnitee”). The indemnification agreements provide indemnification in addition to any of Indemnitee’s indemnification rights under any 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 STX or any of its subsidiaries, arising out of his or her service as a director, officer, employee or agent of STX or any of its subsidiaries or of any other entity to which he or she provides services at the Company’s request. However, Indemnitees are not indemnified under the indemnification agreements for (i) any fraud or dishonesty in the performance of Indemnitee’s duty to STX or the applicable subsidiary 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 the Company. In addition, the indemnification agreements provide that Seagate-Cayman will advance expenses incurred by an Indemnitee in connection with enforcement of the indemnification 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.

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 indemnification agreements and no amount has been accrued in the Company’s consolidated financial statements with respect to these indemnification obligations.

Indemnification Obligations

The Company from time to time enters into agreements with customers, suppliers, partners and others in the ordinary course of business that provide indemnification for certain matters including, but not limited to, intellectual property infringement claims, environmental claims and breach of agreement claims. The nature of the Company’s indemnification obligations prevents the Company from making a reasonable estimate of the maximum potential amount it could be required to pay. Historically, the Company has not made any significant indemnification payments under such agreements and no amount has been accrued in the Company’s consolidated financial statements with respect to these indemnification obligations.

Product Warranty

The Company estimates probable product warranty costs at the time revenue is recognized. The Company generally warrants its products for a period of 1 to 5 years. The Company uses estimated repair or replacement costs and uses statistical modeling to estimate product warranty return rates in order to determine its warranty obligation. As of June 30, 2023, the Company’s reserve for product warranty was $168 million compared to $148 million as of July 1, 2022. The increase of $20 million was primarily driven by an increase in the Company’s warranty return rate as compared to prior year and higher cost of repair, partially offset by continued decline in total number of units under warranty.

Changes in the Company’s product warranty liability during the fiscal years ended June 30, 2023, July 1, 2022 and July 2, 2021 were as follows:

						Fiscal Years Ended
(Dollars in millions)						June 30, 2023						July 1, 2022						July 2, 2021
Balance, beginning of period						$	148					$	136					$	151
Warranties issued						55						79						76
Repairs and replacements						(92)						(88)						(81)
Changes in liability for pre-existing warranties, including expirations						57						21						(10)
Balance, end of period						$	168					$	148					$	136

13.****(Loss) Earnings Per Share

Basic earnings per share is computed by dividing income available to shareholders by the weighted-average number of shares outstanding during the period. Diluted earnings per share is computed by dividing income available to shareholders by the weighted-average number of shares outstanding during the period and the number of additional shares that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding options, unvested RSUs and PSUs and shares to be purchased under the ESPP. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. Under the treasury stock method, an increase in fair market value of the Company’s share price can result in a greater dilutive effect from potentially dilutive securities. The following table sets forth the computation of basic and diluted net (loss) income per share attributable to the shareholders of the Company:

						Fiscal Years Ended
(In millions, except per share data)						June 30, 2023						July 1, 2022						July 2, 2021
Numerator:
Net (loss) income						$	(529)					$	1,649					$	1,314
Number of shares used in per share calculations:
Total shares for purposes of calculating basic net (loss) income per share						207						220						242
Weighted-average effect of dilutive securities:
Employee equity award plans						—						4						3
Total shares for purposes of calculating diluted net (loss) income per share						207						224						245
Net (loss) income per share
Basic						$	(2.56)					$	7.50					$	5.43
Diluted						(2.56)						7.36						5.36

During fiscal year 2023, the Company recorded a net loss, and as such, all potentially dilutive securities related to the employee equity award plans have been excluded for those periods as including them would be anti-dilutive. The weighted average anti-dilutive shares that were excluded from the computation of diluted net (loss) income per share were 7 million for the fiscal year ended June 30, 2023, and were not material for the fiscal years ended July 1, 2022 and July 2, 2021.

**14.**Legal, Environmental and Other Contingencies

The Company assesses the probability of an unfavorable outcome of all its material litigation, claims or assessments to determine whether a liability had been incurred and whether it is probable that one or more future events will occur confirming the fact of the loss. In the event that an unfavorable outcome is determined to be probable and the amount of the loss can be reasonably estimated, the Company establishes an accrual for the litigation, claim or assessment. In addition, in the event an unfavorable outcome is determined to be less than probable, but reasonably possible, the Company will disclose an estimate of the possible loss or range of such loss; however, when a reasonable estimate cannot be made, the Company will provide disclosure to that effect. Litigation is inherently uncertain and may result in adverse rulings or decisions. Additionally, the Company may enter into settlements or be subject to judgments that may, individually or in the aggregate, have a material adverse effect on its results of operations. Accordingly, actual results could differ materially.

Litigation

Lambeth Magnetic Structures LLC v. Seagate Technology (US) Holdings, Inc., et al. On April 29, 2016, Lambeth Magnetic Structures LLC filed a complaint against Seagate Technology (US) Holdings, Inc. and Seagate Technology LLC in the U.S. District Court for the Western District of Pennsylvania, alleging infringement of U.S. Patent No. 7,128,988, “Magnetic Material Structures, Devices and Methods,” seeking damages as well as additional relief. The district court entered judgement in favor of Seagate on April 19, 2022. The parties filed post-trial motions with the district court in May 2022. On November 22, 2022, the court denied all pending post-trial motions. Lambeth Magnetic Structures LLC filed a notice of appeal to the Federal Circuit on December 20, 2022. A hearing date has not been set. The Company believes the asserted claims are without merit and intends to vigorously defend this case.

Seagate Technology LLC, et al. v. Headway Technologies, Inc., et al. On February 18, 2020, Seagate Technology LLC, Seagate Technology (Thailand) Ltd., Seagate Singapore International Headquarters Pte. Ltd. and Seagate Technology International (collectively, the “Seagate Entities”) filed a complaint in the U.S. District Court for the Northern District of California against defendant suppliers of HDD suspension assemblies. Defendants include NHK Spring Co. Ltd., TDK

Corporation, Hutchinson Technology Inc. and several of their subsidiaries and affiliates. The complaint includes federal and state antitrust law claims, as well as a breach of contract claim. The complaint alleges that defendants and their co-conspirators knowingly conspired for more than twelve years not to compete in the supply of suspension assemblies; that defendants misused confidential information that the Seagate Entities had provided pursuant to nondisclosure agreements, in breach of their contractual obligations; and that the Seagate Entities paid artificially high prices on purchases of suspension assemblies. The Seagate Entities seek to recover the overcharges they paid for suspension assemblies, as well as additional relief permitted by law. On March 22, 2022, the Seagate Entities dismissed with prejudice all claims being asserted against Defendants TDK Corporation, Hutchinson Technology Inc. and their subsidiaries and affiliates (collectively “TDK”) relating to the antitrust law claims, the breach of contract claim and other matters described in the complaint. On April 8, 2022, the court entered an Amended Stipulation and Order of Dismissal with Prejudice to dismiss all claims against TDK. On August 2, 2022, NHK Spring Co. Ltd. filed a motion for Partial Summary Judgment Regarding Foreign Commerce and on October 14, 2022, Seagate Entities’ filed their corresponding opposition. On May 15, 2023, the court issued a ruling that Seagate’s antitrust claims can proceed as to suspension assemblies that enter the United States but not as to suspension assembles that do not enter the United States. On July 28, 2023, the judge initiated a reconsideration of this ruling and requested further briefing. A trial date has not been set.

UA Local 38 Defined Contribution Pension Plan, et al. v. Seagate Technology Holdings PLC, et al. A putative class action lawsuit alleging violations of the federal securities laws was filed on July 10, 2023, in the U.S. District Court for the Northern District of California against Seagate Technology Holdings plc, Dr. William D. Mosley, and Gianluca Romano. The complaint alleges that it is a securities class action on behalf of all purchasers of Seagate common stock between September 15, 2020 to October 25, 2022 ( the “Class Period”) and asserts claims under Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b5-1. The complaint seeks unspecified monetary damages and other relief. As a second action, Public Employees’ Retirement System of Mississippi v. Seagate Technology Holdings plc, William David Mosley, and Gianluca Romano, was filed on July 26, 2023, asserting similar claims. The Company believes that the asserted claims are without merit and intends to vigorously defend these cases.

Environmental Matters

The Company’s operations are subject to U.S. and foreign laws and regulations relating to the protection of the environment, including those governing discharges of pollutants into the air and water, the management and disposal of hazardous substances and wastes and the cleanup of contaminated sites. Some of the Company’s operations require environmental permits and controls to prevent and reduce air and water pollution, and these permits are subject to modification, renewal and revocation by issuing authorities.

The Company has established environmental management systems and continually updates its environmental policies and standard operating procedures for its operations worldwide. The Company believes that its operations are in material compliance with applicable environmental laws, regulations and permits. The Company budgets for operating and capital costs on an ongoing basis to comply with environmental laws. If additional or more stringent requirements are imposed on the Company in the future, it could incur additional operating costs and capital expenditures.

Some environmental laws, such as the Comprehensive Environmental Response Compensation and Liability Act of 1980 (as amended, the “Superfund” law) and its state equivalents, can impose liability for the cost of cleanup of contaminated sites upon any of the current or former site owners or operators or upon parties who sent waste to these sites, regardless of whether the owner or operator owned the site at the time of the release of hazardous substances or the lawfulness of the original disposal activity. The Company has been identified as a responsible or potentially responsible party at several sites. At each of these sites, the Company has an assigned portion of the financial liability based on the type and amount of hazardous substances disposed of by each party at the site and the number of financially viable parties. The Company has fulfilled its responsibilities at some of these sites and remains involved in only a few at this time.

While the Company’s ultimate costs in connection with these sites is difficult to predict with complete accuracy, based on its current estimates of cleanup costs and its expected allocation of these costs, the Company does not expect costs in connection with these sites to be material.

The Company may be subject to various state, federal and international laws and regulations governing the environment, including those restricting the presence of certain substances in electronic products. For example, the European Union (“EU”) enacted the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment (2011/65/EU), which prohibits the use of certain substances, including lead, in certain products, including disk drives and server storage products, put on the market after July 1, 2006. Similar legislation has been or may be enacted in other jurisdictions, including in the U.S., Canada, Mexico, Taiwan, China, Japan and others. The EU REACH Directive (Registration, Evaluation, Authorization, and Restriction of Chemicals, EC 1907/2006) also restricts substances of very high concern 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.

BIS Settlement

On April 18, 2023, the Company’s subsidiaries Seagate Technology LLC and Seagate Singapore International Headquarters Pte. Ltd (collectively, “Seagate”), entered into the Settlement Agreement with BIS that resolves BIS’ allegations regarding Seagate’s sales of hard disk drives to Huawei between August 17, 2020 and September 29, 2021. Under the terms of the Settlement Agreement, Seagate has agreed to pay $300 million to BIS in quarterly installments of $15 million over the course of five years beginning October 31, 2023. Seagate has also agreed to complete three audits of its compliance with the license requirements of Section 734.9 of the U.S. Export Administration Regulations (“EAR”), including one audit by an unaffiliated third-party consultant chosen by Seagate with expertise in U.S. export control laws and two internal audits. The Settlement Agreement also includes a denial order that is suspended and will be waived five years after the date of the order issued under the Settlement Agreement, provided that Seagate has made full and timely payments under the Settlement Agreement and timely completed the audit requirements. While Seagate is in compliance with and upon successful compliance in full with the terms of the Settlement Agreement, BIS has agreed it will not initiate any further administrative proceedings against Seagate in connection with any violation of the EAR arising out of the transactions detailed in the Settlement Agreement.

While Seagate believed that it complied with all relevant export control laws at the time it made the hard disk drive sales at issue, Seagate determined that engaging with BIS and settling this matter was in the best interest of the Company, its customers, and its shareholders. In determining to engage with BIS and resolve this matter through a settlement agreement, the Company considered a number of factors, including the risks and cost of protracted litigation involving the U.S. government, as well as the size of the potential penalty and the Company’s desire to focus on current business challenges and long-term business strategy. The Settlement Agreement includes a finding that the Company incorrectly interpreted the regulation at issue to require evaluation of only the last stage of Seagate’s hard disk drive manufacturing process rather than the entire process. As part of this settlement, Seagate has agreed not to contest BIS’ determination that the sales in question did not comply with the U.S. EAR.

The Company accrued a charge of $300 million during fiscal year 2023, which is reflected under BIS settlement penalty on its Consolidated Statements of Operations. As of June 30, 2023, $45 million and $255 million were included in Accrued expense and Other non-current liabilities, respectively, on its Consolidated Balance Sheet.

Other Matters

From time to time, arising in the normal course of business, the Company is involved in a number of other judicial, regulatory or administrative proceedings and investigations incidental to its business, and the Company expects to be involved in such proceedings and investigations arising in the normal course of its business in the future. Although occasional adverse decisions or settlements may occur, the Company believes that the final disposition of such matters will not have a material adverse effect on its financial position or results of operations.

**15.**Commitments

Unconditional Long-Term Purchase Obligations. As of June 30, 2023, the Company had unconditional long-term purchase obligations of approximately $2.8 billion, primarily related to purchases of inventory components. The Company expects the commitment to total $297 million, $991 million, $981 million and $489 million, respectively, for fiscal years 2025, 2026, 2027, and 2028.

During fiscal year 2023, the Company recorded order cancellation fees of $108 million to terminate certain purchase commitments related to purchase of inventory components and equipment, which was reflected under Cost of revenue on its Consolidated Statements of Operations. As of June 30, 2023, $68 million remained unpaid and is expected to be paid within one year.

Unconditional Long-Term Capital Expenditures. As of June 30, 2023, the Company had unconditional long-term commitment of approximately $101 million, primarily related to purchases of equipment. The Company expects the capital expenditures to total $35 million, $39 million and $27 million, respectively, for fiscal years 2025, 2026, and 2027.

**16.**Business Segment and Geographic Information

The Company’s manufacturing operations are based on technology platforms that are used to produce various data storage and systems solutions that serve multiple applications and markets. The Company has determined that its Chief Operating Decision Maker, the Chief Executive Officer, evaluates performance of the Company and makes decisions regarding investments in the Company’s technology platforms and manufacturing infrastructure based on the Company’s consolidated

results. As a result, the Company has concluded that its manufacture and distribution of storage solutions constitutes one reporting segment.

In fiscal years 2023, 2022 and 2021, one customer accounted for approximately 10%, 10% and 11% of consolidated revenue, respectively.

The following table summarizes the Company’s operations by country:

						Fiscal Years Ended
(Dollars in millions)						June 30, 2023						July 1, 2022						July 2, 2021
Revenue from external customers (1):
Singapore						$	3,271					$	5,322					$	5,180
United States						3,053						4,694						3,656
The Netherlands						1,046						1,627						1,825
Other						14						18						20
Consolidated						$	7,384					$	11,661					$	10,681
Long-lived assets:
United States						$	667					$	670					$	612
Thailand						606						679						682
Singapore						460						557						570
Other						369						426						411
Consolidated						$	2,102					$	2,332					$	2,275

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(1) Revenue is attributed to countries based on the bill from location.

**17.**Revenue

The following table provides information about disaggregated revenue by sales channel and geographical region for the Company’s single reportable segment:

						Fiscal Years Ended
(Dollars in millions)						June 30, 2023						July 1, 2022						July 2, 2021
Revenues by Channel
OEMs						$	5,448					$	8,742					$	7,403
Distributors						1,119						1,676						1,854
Retailers						817						1,243						1,424
Total						$	7,384					$	11,661					$	10,681
Revenues by Geography(1)
Asia Pacific						$	3,285					$	5,340					$	5,198
Americas						3,053						4,694						3,656
EMEA						1,046						1,627						1,827
Total						$	7,384					$	11,661					$	10,681

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(1) Revenue is attributed to countries based on bill from locations.

**18.**Subsequent Events

Dividend Declared

On July 26, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.70 per share, which will be payable on October 10, 2023 to shareholders of record as of the close of business on September 26, 2023.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Seagate Technology Holdings public limited company

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Seagate Technology Holdings public limited company (the Company) as of June 30, 2023 and July 1, 2022, the related consolidated statements of operations, comprehensive (loss) income, shareholders’ (deficit) equity and cash flows for each of the three years in the period ended June 30, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at June 30, 2023 and July 1, 2022, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2023, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of June 30, 2023, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated August 4, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

			Revenue recognition—Sales incentive program rebates and discounts
Description of the Matter			The Company sells its products to original equipment manufacturers, distributors and retailers (collectively, “customers”). As explained in Note 1 to the consolidated financial statements, the Company reduces revenue for estimated future reductions to the final selling prices for shipped products including sales incentive programs, such as price protection and volume incentives.
			Auditing management’s estimates of future reductions to the final selling prices is complex as it requires management to make subjective assumptions including the amount of price adjustments on products as well as the timing of its channel sales of products through to end customers.

How We Addressed the Matter in Our Audit			We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the completeness of sales incentive programs, the accuracy and completeness of the underlying data used in the calculations and management’s assumptions of the amount of future reductions to the final selling prices as well as the timing of its channel sales of products through to end customers.
			To test the estimated sales incentive programs, our audit procedures included, among others, testing the completeness of sales incentive programs as well as the accuracy and completeness of the underlying data used in the calculations and evaluating the significant assumptions used by management to estimate its reserves related to remaining channel inventory. To test the completeness of the sales incentive programs, we inspected significant new sales contracts and agreements that include the contractual rights to discounts and rebates to validate they are being properly considered in the incentives reserve calculations and examined credit memos issued after year end. We also directly confirmed terms and conditions of agreements with a sample of the Company’s customers as well as inquired of sales representatives and other members of management to assess whether all contractual terms were provided to the Finance Department. To test the underlying data used in the sales incentive program reserve calculations, we confirmed ending on hand inventory at a sample of distributors and retailers. To test management’s assumptions of the amount of future reductions to the final selling prices as well as the timing of its distributors’ sales of products through to end customers we inquired with operations management and compared estimates with industry and analysts’ forecasts. In addition, we performed a retrospective review comparing prior period assumptions to the actual results in subsequent periods and performed sensitivity analyses to evaluate the potential effect of changes in the Company's significant assumptions.
			Realizability of deferred income taxes
Description of the Matter			At June 30, 2023, the Company had gross deferred tax assets of $1,543 million, partially offset by a valuation allowance of $370 million. As discussed in Note 5 to the consolidated financial statements, the Company recognizes a valuation allowance to reduce the carrying value of its deferred tax assets to the amount that management believes is more likely than not to be realized.
			Auditing the realizability of the deferred tax assets was complex as the assessment process includes forecasting future sources of taxable income and scheduling the use of the applicable deferred tax assets which includes subjective management assumptions, and the amounts involved are material to the financial statements as a whole.
How We Addressed the Matter in Our Audit			We obtained an understanding, evaluated the design and tested the operating effectiveness of controls that address the risks of material misstatement relating to the realizability of deferred tax assets. This included controls over management’s determination of sources and amount of future taxable income including income from operations and scheduling of the future reversal of existing taxable temporary differences.
			Among other audit procedures performed, we evaluated the assumptions used by the Company to develop projections of future taxable income by jurisdiction and tested the completeness and accuracy of the underlying data used in its projections. For example, we compared the projections of future taxable income with the actual results of prior periods, as well as management’s consideration of current industry and economic trends. We also assessed the historical accuracy of management’s projections and compared the projections of future taxable income with other forecasted financial information prepared by the Company. In addition, we tested the Company’s scheduling of the reversal of existing temporary taxable differences.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1980.

San Jose, California

August 4, 2023

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Seagate Technology Holdings public limited company

Opinion on Internal Control Over Financial Reporting

We have audited Seagate Technology Holdings public limited company’s internal control over financial reporting as of June 30, 2023, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Seagate Technology Holdings public limited company (the Company) maintained, in all material respects, effective internal control over financial reporting as of June 30, 2023, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of June 30, 2023 and July 1, 2022, and the related consolidated statements of operations, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended June 30, 2023 and the related notes and our report dated August 4, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

San Jose, California

August 4, 2023