Item 1. FINANCIAL STATEMENTS

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Item 1. FINANCIAL STATEMENTS


Table of Contents		Page
Condensed Consolidated Balance Sheets		4
Condensed Consolidated Statements of Operations		5
Condensed Consolidated Statements of Comprehensive (Loss) Income		6
Condensed Consolidated Statements of Cash Flows		7
Condensed Consolidated Statements of Shareholders’ (Deficit) Equity		8
Notes to Condensed Consolidated Financial Statements		10
	Note 1. Basis of Presentation and Summary of Significant Accounting Policies	10
	Note 2. Balance Sheet Information	11
	Note 3. Debt	14
	Note 4. Income Taxes	16
	Note 5. Restructuring and Exit Costs	16
	Note 6. Derivative Financial Instruments	17
	Note 7. Fair Value	20
	Note 8. Shareholders’ Deficit	24
	Note 9. Revenue	25
	Note 10. Guarantees	25
	Note 11. (Loss) Earnings Per Share	26
	Note 12. Legal, Environmental and Other Contingencies	27
	Note 13. Commitments	29
	Note 14. Subsequent Events	29

See Notes to Condensed Consolidated Financial Statements.

SEAGATE TECHNOLOGY HOLDINGS PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)


	March 31, 2023		July 1, 2022
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	766	$	615

Accounts receivable, net	994		1,532
Inventories	1,200		1,565
Other current assets	637		321
Total current assets	3,597		4,033
Property, equipment and leasehold improvements, net	1,753		2,239

Goodwill	1,237		1,237
Other intangible assets, net	1		9
Deferred income taxes	1,127		1,132
Other assets, net	252		294
Total Assets	$	7,967	$	8,944
LIABILITIES AND (DEFICIT) EQUITY
Current liabilities:

Accounts payable	$	1,697	$	2,058
Accrued employee compensation	84		252
Accrued warranty	73		65
Current portion of long-term debt	1,118		584
Accrued expenses	667		596

Total current liabilities	3,639		3,555
Long-term accrued warranty	88		83

Other non-current liabilities	404		135
Long-term debt, less current portion	4,840		5,062
Total Liabilities	8,971		8,835
Commitments and contingencies (See Notes 10, 12 and 13)

Shareholders’ (Deficit) Equity:
Ordinary shares and additional paid-in capital	7,342		7,190
Accumulated other comprehensive income	84		36
Accumulated deficit	(8,430)		(7,117)


Total Shareholders’ (Deficit) Equity	(1,004)		109
Total Liabilities and Shareholders’ (Deficit) Equity	$	7,967	$	8,944

See Notes to Condensed Consolidated Financial Statements.

SEAGATE TECHNOLOGY HOLDINGS PLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

(Unaudited)


	For the Three Months Ended				For the Nine Months Ended
	March 31, 2023		April 1, 2022		March 31, 2023		April 1, 2022
Revenue	$	1,860	$	2,802	$	5,782	$	9,033

Cost of revenue	1,541		1,996		4,735		6,323
Product development	191		233		625		694
Marketing and administrative	123		141		377		410
Amortization of intangibles	—		3		3		9
BIS settlement penalty	300		—		300		—
Restructuring and other, net	20		—		110		2
Total operating expenses	2,175		2,373		6,150		7,438

(Loss) income from operations	(315)		429		(368)		1,595

Interest income	2		—		4		1
Interest expense	(81)		(63)		(229)		(184)
Net gain recognized from early redemption of debt	3		—		207		—
Other, net	(9)		(15)		(25)		(14)
Other expense, net	(85)		(78)		(43)		(197)

(Loss) income before income taxes	(400)		351		(411)		1,398
Provision for income taxes	33		5		26		25
Net (loss) income	$	(433)	$	346	$	(437)	$	1,373

Net (loss) income per share:
Basic	$	(2.09)	$	1.59	$	(2.11)	$	6.18
Diluted	$	(2.09)	$	1.56	$	(2.11)	$	6.08
Number of shares used in per share calculations:
Basic	207		218		207		222
Diluted	207		222		207		226

See Notes to Condensed Consolidated Financial Statements.

SEAGATE TECHNOLOGY HOLDINGS PLC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In millions)

(Unaudited)


	For the Three Months Ended				For the Nine Months Ended
	March 31, 2023		April 1, 2022		March 31, 2023		April 1, 2022
Net (loss) income	$	(433)	$	346	$	(437)	$	1,373
Other comprehensive income (loss), net of tax:
Change in net unrealized (losses) gains on cash flow hedges:
Net unrealized (losses) gains arising during the period	(6)		56		45		58
(Gains) losses reclassified into earnings	(9)		6		2		18
Net change	(15)		62		47		76




Change in unrealized components of post-retirement plans:
Net unrealized gains arising during the period	—		—		—		1
Losses reclassified into earnings	—		—		1		1
Net change	—		—		1		2

Total other comprehensive (loss) income, net of tax	(15)		62		48		78
Comprehensive (loss) income	$	(448)	$	408	$	(389)	$	1,451

See Notes to Condensed Consolidated Financial Statements.

SEAGATE TECHNOLOGY HOLDINGS PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


	For the Nine Months Ended
	March 31, 2023		April 1, 2022
OPERATING ACTIVITIES
Net (loss) income	$	(437)	$	1,373
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	409		324
Share-based compensation	93		106

Deferred income taxes	4		2


Net gain on redemption and repurchase of debt	(207)		—
Other non-cash operating activities, net	15		46
Changes in operating assets and liabilities:
Accounts receivable, net	538		(186)
Inventories	365		(275)
Accounts payable	(327)		209
Accrued employee compensation	(168)		(88)
Accrued expenses, income taxes and warranty	69		19
Other assets and liabilities	370		(53)
Net cash provided by operating activities	724		1,477
INVESTING ACTIVITIES
Acquisition of property, equipment and leasehold improvements	(266)		(309)
Proceeds from the sale of assets	15		—
Purchases of investments	(1)		(18)
Proceeds from sale of investments	—		34




Net cash used in investing activities	(252)		(293)
FINANCING ACTIVITIES
Redemption and repurchase of debt	(71)		(701)
Dividends to shareholders	(437)		(458)
Repurchases of ordinary shares	(408)		(1,313)
Taxes paid related to net share settlement of equity awards	(41)		(45)
Proceeds from issuance of long-term debt	600		1,200
Proceeds from issuance of ordinary shares under employee stock plans	59		68
Other financing activities, net	(23)		(6)
Net cash used in financing activities	(321)		(1,255)

Increase (decrease) in cash, cash equivalents and restricted cash	151		(71)
Cash, cash equivalents and restricted cash at the beginning of the period	617		1,211
Cash, cash equivalents and restricted cash at the end of the period	$	768	$	1,140

See Notes to Condensed Consolidated Financial Statements.

SEAGATE TECHNOLOGY HOLDINGS PLC

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ (DEFICIT) EQUITY

For the Three Months Ended March 31, 2023 and April 1, 2022

(In millions)

(Unaudited)


	Number of Ordinary Shares	Par Value of Shares		Additional Paid-in Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total
Balance at December 30, 2022	206	$	—	$	7,281	$	99	$	(7,850)	$	(470)

Net loss								(433)		(433)
Other comprehensive loss						(15)				(15)
Issuance of ordinary shares under employee share plans	1			30						30

Tax withholding related to vesting of restricted share units	—							(2)		(2)
Dividends to shareholders ($0.70 per ordinary share)								(145)		(145)
Share-based compensation				31						31
Balance at March 31, 2023	207	$	—	$	7,342	$	84	$	(8,430)	$	(1,004)


	Number of Ordinary Shares	Par Value of Shares		Additional Paid-in Capital		Accumulated Other Comprehensive (Loss) Income		Accumulated Deficit		Total
Balance at December 31, 2021	219	$	—	$	7,084	$	(25)	$	(6,533)	$	526
Net income								346		346
Other comprehensive income						62				62
Issuance of ordinary shares under employee share plans	1			31						31
Repurchases of ordinary shares	(4)							(428)		(428)

Dividends to shareholders ($0.70 per ordinary share)								(152)		(152)
Share-based compensation				36						36
Balance at April 1, 2022	216	$	—	$	7,151	$	37	$	(6,767)	$	421

See Notes to Condensed Consolidated Financial Statements.

SEAGATE TECHNOLOGY HOLDINGS PLC

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ (DEFICIT) EQUITY

For the Nine Months Ended March 31, 2023 and April 1, 2022

(In millions)

(Unaudited)


	Number of Ordinary Shares	Par Value of Shares		Additional Paid-in Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total
Balance at July 1, 2022	210	$	—	$	7,190	$	36	$	(7,117)	$	109
Net loss								(437)		(437)
Other comprehensive income						48				48
Issuance of ordinary shares under employee share plans	3			59						59
Repurchases of ordinary shares	(5)							(400)		(400)
Tax withholding related to vesting of restricted share units	(1)							(41)		(41)
Dividends to shareholders ($2.10 per ordinary share)								(435)		(435)
Share-based compensation				93						93
Balance at March 31, 2023	207	$	—	$	7,342	$	84	$	(8,430)	$	(1,004)


	Number of Ordinary Shares	Par Value of Shares		Additional Paid-in Capital		Accumulated Other Comprehensive (Loss) Income		Accumulated Deficit		Total
Balance at July 2, 2021	227	$	—	$	6,977	$	(41)	$	(6,305)	$	631
Net income								1,373		1,373
Other comprehensive income						78				78
Issuance of ordinary shares under employee share plans	4			68						68
Repurchases of ordinary shares	(14)							(1,333)		(1,333)
Tax withholding related to vesting of restricted share units	(1)							(45)		(45)
Dividends to shareholders ($2.07 per ordinary share)								(457)		(457)
Share-based compensation				106						106
Balance at April 1, 2022	216	$	—	$	7,151	$	37	$	(6,767)	$	421

See Notes to Condensed Consolidated Financial Statements.

SEAGATE TECHNOLOGY HOLDINGS PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

**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”), solid state hybrid drives (“SSHDs”), storage subsystems, as well as a scalable edge-to-cloud mass data platform that includes data transfer shuttles and a storage-as-a-service cloud.

HDDs are devices that store digitally encoded data on rapidly rotating disks with magnetic surfaces. HDDs continue to be the primary medium of mass data storage due to their performance attributes, reliability, high capacities, superior quality and cost effectiveness. Complementing existing storage architectures, SSDs use integrated circuit assemblies as memory to store data, and most SSDs use NAND flash memory. In contrast to HDDs and SSDs, SSHDs combine the features of SSDs and HDDs in the same unit, containing a high-capacity HDD and a smaller SSD acting as a cache to improve performance.

The Company’s HDD products are designed for mass capacity storage and legacy markets. Mass capacity storage involves well-established use cases—such as hyperscale data centers and public clouds as well as emerging use cases. Legacy markets include markets the Company continues to sell to but that it does not plan to invest in significantly. The Company’s HDD and SSD product portfolio includes Serial Advanced Technology Attachment, Serial Attached SCSI and Non-Volatile Memory Express based designs to support a wide variety of mass capacity and legacy applications.

The Company’s systems portfolio includes storage subsystems for enterprises, cloud service providers, scale-out storage servers and original equipment manufacturers (“OEMs”). Engineered for modularity, mobility, capacity and performance, these solutions include the Company’s enterprise HDDs and SSDs, enabling customers to integrate powerful, scalable storage within existing environments or create new ecosystems from the ground up in a secure, cost-effective manner.

The Company’s Lyve portfolio provides a simple, cost-efficient and secure way to manage massive volumes of data across the distributed enterprise. The Lyve platform includes a shuttle solution that enables enterprises to transfer massive amounts of data from endpoints to the core cloud, a storage-as-a-service cloud offering that provides frictionless mass capacity storage at the metro edge.

Basis of Presentation and Consolidation

The unaudited Condensed Consolidated Financial Statements of the Company and the accompanying notes were prepared in accordance with United States (“U.S.”) Generally Accepted Accounting Principles (“GAAP”). The Company’s unaudited condensed 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 U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s condensed consolidated financial statements and accompanying notes. These estimates and assumptions include the impact of the COVID-19 pandemic. Actual results could differ materially from those estimates. The methods, estimates and judgments the Company uses in applying its most critical accounting policies have a significant impact on the results the Company reports in its condensed consolidated financial statements.

The Company’s consolidated financial statements for the fiscal year ended July 1, 2022 are included in its Annual Report on Form 10-K, as filed with the U.S. Securities and Exchange Commission (“SEC”) on August 5, 2022. The Company believes that the disclosures included in these unaudited condensed consolidated financial statements, when read in conjunction with its consolidated financial statements as of July 1, 2022, and the notes thereto, are adequate to make the information presented not misleading. The results of operations for the three and nine months ended March 31, 2023 are not necessarily indicative of the results to be expected for any subsequent interim period or for the Company’s fiscal year ending June 30, 2023.

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. In fiscal years with 53 weeks, the first quarter consists of 14 weeks and the remaining quarters consist of 13 weeks each. Both the three and nine months ended March 31, 2023 and the three and nine months ended April 1, 2022 consisted of 13 and 39 weeks, respectively. Fiscal years 2023 and 2022 both comprise of 52 weeks and end on June 30, 2023 and July 1, 2022, respectively. The fiscal quarters ended March 31, 2023, December 30, 2022 and April 1, 2022, are also referred to herein as the “March 2023 quarter”, the “December 2022 quarter” and the “March 2022 quarter”, respectively.

Summary of Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies disclosed in Note 1. Basis of Presentation and Summary of Significant Accounting Policies of “Financial Statements and Supplementary Data” contained in Part II, Item 8. of the Company’s Annual Report on Form 10-K for the fiscal year ended July 1, 2022, as filed with the SEC on August 5, 2022.

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 condensed 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 the guidance in the quarter ended September 30, 2022.

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 rollforward of the related obligations. The Company is required to adopt this guidance in the first quarter of fiscal year 2024. Early adoption is permitted. The Company is in the process of assessing the impact of this ASU on its condensed 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 condensed 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 March 31, 2023 and July 1, 2022:


	March 31, 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	$	235	$	—	$	235	$	60	$	—	$	60

Time deposits and certificates of deposit	1		—		1		1		—		1



Other debt securities	16		—		16		23		—		23
Total	$	252	$	—	$	252	$	84	$	—	$	84




Included in Cash and cash equivalents					$	234					$	59

Included in Other current assets					2						2
Included in Other assets, net					16						23
Total					$	252					$	84

As of March 31, 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 March 31, 2023 and July 1, 2022, the Company had no 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 March 31, 2023.

The fair value and amortized cost of the Company’s investments classified as available-for-sale debt securities as of March 31, 2023, by remaining contractual maturity were as follows:


(Dollars in millions)	Amortized Cost		Fair Value
Due in less than 1 year	$	236	$	236
Due in 1 to 5 years	15		15
Due in 6 to 10 years	—		—
Thereafter	1		1
Total	$	252	$	252

Cash, Cash Equivalents and Restricted Cash

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


(Dollars in millions)	March 31, 2023		July 1, 2022		April 1, 2022		July 2, 2021
Cash and cash equivalents	$	766	$	615	$	1,138	$	1,209
Restricted cash included in Other current assets	2		2		2		2
Total cash, cash equivalents and restricted cash shown in the Statements of Cash Flows	$	768	$	617	$	1,140	$	1,211

Accounts receivable, net

In connection with the Company’s factoring agreements, from time to time the Company sells trade receivables to a third party for cash proceeds less a discount. During the three and nine months ended March 31, 2023, the Company sold trade receivables without recourse for cash proceeds of $261 million and $672 million, respectively. As of March 31, 2023, the total amount that remained subject to servicing by the Company was $226 million. During the three and nine months ended April 1, 2022, the Company sold trade receivables without recourse for cash proceeds of $75 million, all of which remained subject to servicing by the Company as of April 1, 2022. The discounts on receivables sold were not material for the three and nine months ended March 31, 2023 and April 1, 2022.

Inventories

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


(Dollars in millions)	March 31, 2023		July 1, 2022
Raw materials and components	$	633	$	601
Work-in-process	302		414
Finished goods	265		550
Total inventories	$	1,200	$	1,565

Property, Equipment and Leasehold Improvements, net

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


(Dollars in millions)	March 31, 2023		July 1, 2022
Property, equipment and leasehold improvements	$	10,267	$	10,659
Accumulated depreciation and amortization	(8,514)		(8,420)
Property, equipment and leasehold improvements, net	$	1,753	$	2,239

During the March 2023 quarter, the Company recorded $355 million of held for sale land and buildings (collectively, the “properties”) which was included in Other current assets on its Condensed Consolidated Balance Sheet. Of the assets held for sale balance as of March 31, 2023, $243 million and $112 million are located in the Americas and in Asia, respectively. Depreciation related to the properties ceased as of the date these were determined to be held for sale. The sales of the properties are expected to be completed within one year, subject to customary closing conditions. As of July 1, 2022, the assets held for sale balance was not material.

Accrued Expenses

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


(Dollars in millions)	March 31, 2023		July 1, 2022

Dividends payable	$	145	$	147
Other accrued expenses	522		449
Total	$	667	$	596

Accumulated Other Comprehensive Income (“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 1, 2022	$	51	$	(14)	$	(1)	$	36
Other comprehensive income before reclassifications	45		—		—		45
Amounts reclassified from AOCI	2		1		—		3
Other comprehensive income	47		1		—		48
Balance at March 31, 2023	$	98	$	(13)	$	(1)	$	84

Balance at July 2, 2021	$	(18)	$	(22)	$	(1)	$	(41)
Other comprehensive income before reclassifications	58		1		—		59
Amounts reclassified from AOCI	18		1		—		19
Other comprehensive income	76		2		—		78
Balance at April 1, 2022	$	58	$	(20)	$	(1)	$	37

**3.**Debt

The following table provides details of the Company’s debt as of March 31, 2023 and July 1, 2022:


(Dollars in millions)	March 31, 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	$	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.	500		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 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
$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 Loans
$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.	585		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.	585		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.	585		—
	5,992		5,677
Less: unamortized debt issuance costs	(34)		(31)
Debt, net of debt issuance costs	5,958		5,646
Less: current portion of long-term debt	(1,118)		(584)
Long-term debt, less current portion	$	4,840	$	5,062

(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 Condensed Consolidated Statements of Operations for the nine months ended March 31, 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.

Debt Repurchases

During the March 2023 quarter, $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 the March 2023 quarter, which was included in Net gain recognized from early redemption of debt in the Company’s Condensed Consolidated Statements of Operations.

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, Seagate Technology Holdings plc and the Borrower entered into an amendment to its Credit Agreement (the “Seventh Amendment”), 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.

The Credit Agreement provides a term loan facility in an aggregate principal amount of $1.8 billion that is extended in three tranches of $600 million each for Term Loans A1, A2 and A3 (the “Term Loans”), and a $1.75 billion senior unsecured revolving credit facility (“Revolving Credit Facility”). During the March 2023 quarter the Company repaid $45 million principal amount of the Term Loans. As of March 31, 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) total leverage ratio and (3) a minimum liquidity amount. The Company was in compliance with the covenants as of March 31, 2023.

Future Principal Payments on Long-term Debt

At March 31, 2023, future principal payments on long-term debt were as follows (in millions):


Fiscal Year	Amount
Remainder of 2023	$	563
2024	586
2025	617
2026	667
2027	649

Thereafter	2,943
Total	$	6,025

**4.**Income Taxes

The Company recorded income tax provisions of $33 million and $26 million for the three and nine months ended March 31, 2023, respectively. The discrete items in the income tax provision were not material for the three and nine months ended March 31, 2023.

During the nine months ended March 31, 2023, the Company’s unrecognized tax benefits excluding interest and penalties increased by approximately $1 million to $115 million, substantially all of which would impact the effective tax rate, if recognized, subject to certain future valuation allowance reversals. The Company is not expecting material changes to its unrecognized tax benefits in the next twelve months beginning April 1, 2023.

The Company recorded income tax provisions of $5 million and $25 million for the three and nine months ended April 1, 2022, respectively. The income tax provision for the three months ended April 1, 2022 included approximately $6 million of net discrete tax benefit, primarily associated with a change in the applicable tax rate within its non-U.S. operations. The income tax provision for the nine months ended April 1, 2022 included approximately $15 million of net discrete tax benefit, primarily associated with net excess tax benefits related to share-based compensation expense.

The Company’s income tax provision recorded for the three and nine months ended March 31, 2023 and the three and nine months ended April 1, 2022 differed from the provision for income taxes that would be derived by applying the Irish statutory rate of 25% to income before income taxes, primarily due to the net effect of tax benefits related to (i) non-Irish earnings generated in jurisdictions that are subject to tax incentive programs and are considered indefinitely reinvested outside of Ireland and (ii) current year generation of research credits.

**5.**Restructuring and Exit Costs

The Company recorded restructuring and other, net of $20 million and $110 million, for the three and nine months ended March 31, 2023. For the nine months ended April 1, 2022, the Company recorded restructuring and other, net of $2 million. 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. All restructuring charges are reported in Restructuring and other, net on the Company’s Condensed Consolidated Statements of Operations.

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 is expected to be substantially completed by the end of the fiscal year 2023.

The following table summarizes the Company’s restructuring activities under its active restructuring plans:


	October 2022 Plan				Other Plans
(Dollars in millions)	Workforce Reduction Costs		Facilities and Other Exit Costs		Workforce Reduction Costs		Facilities and Other Exit Costs		Total
Accrual balances at July 1, 2022	$	—	$	—	$	—	$	5	$	5
Restructuring charges	104		7		10		—		121
Cash payments	(76)		(1)		(10)		(1)		(88)

Accrual balances at March 31, 2023	$	28	$	6	$	—	$	4	$	38
Total costs incurred inception to date as of March 31, 2023	$	104	$	7	$	73	$	24	$	208
Total expected charges to be incurred as of March 31, 2023	$	—	$	—	$	—	$	—	$	—

Of the accrued restructuring balance of $38 million at March 31, 2023, $35 million was included in Accrued expenses and $3 million was included in Other non-current liabilities in the Company’s Condensed Consolidated Balance Sheet. The accrued restructuring balance of $5 million at July 1, 2022 was included in Accrued expenses in the Company’s Condensed Consolidated Balance Sheet.

During the three and nine months ended March 31, 2023, the Company sold certain assets and recognized a gain of $11 million. The gain was included in Restructuring and other, net in the Company’s Condensed Consolidated Statements of Operations.

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 is expected to be substantially completed by the end of the fiscal year 2023, with estimated total pre-tax charges of approximately $150 million. These charges are expected to be primarily cash-based and consist of employee severance and other one-time termination benefits.

**6.**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 enters 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 designates the interest rate swaps as cash flow hedges. On September 26, 2022, the Company terminated its then existing interest rate swap agreements relating to Term Loans A1 and A2 and received cash proceeds of $110 million from the counterparty. The cash proceeds are reported within Net cash provided by operating activities in the Company’s Condensed 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 Condensed Consolidated Statement of Operations over the remaining period of the Term Loans A1 and A2. During the three and nine months ended March 31, 2023, $7 million and $15 million of the gains were amortized to interest expense in the Company’s Condensed Consolidated Statements of Operations.

On September 26, 2022, the Company 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. As of March 31, 2023, the aggregate notional amount of the Company’s interest-rate swap contracts was $1.6 billion, of which $600 million will mature through September 2025 and $1.0 billion 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 Condensed 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. There was no net unrealized gain or loss on cash flow hedges as of March 31, 2023 and the amount of net unrealized gain on cash flow hedges was $51 million as of July 1, 2022. As of March 31, 2023, the amount of existing net gains related to cash flow hedges recorded in AOCI included a net gain of $49 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 Condensed 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 loss of $1 million and a net gain of $10 million in Cost of revenue and Interest expense, respectively, related to the de-designation on discontinued cash flow hedges during the three months ended March 31, 2023. The Company recognized a net loss of $20 million and a net gain of $18 million in Cost of revenue and Interest expense, respectively, related to the de-designation on discontinued cash flow hedges during the nine months ended March 31, 2023. The Company recognized a net loss of $2 million and $4 million in Cost of revenue and Interest expense, respectively, related to the loss of hedge designation on discontinued cash flow hedges during the three months ended April 1, 2022. The Company recognized a net loss of $10 million and $8 million in Cost of revenue and Interest expense, respectively, related to the loss of hedge designation on discontinued cash flow hedges during the nine months ended April 1, 2022.

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 Condensed Consolidated Statements of Operations.

The following tables show the total notional value of the Company’s outstanding foreign currency forward exchange contracts as of March 31, 2023 and July 1, 2022. All of the foreign currency forward exchange contracts mature within 12 months.


	As of March 31, 2023
(Dollars in millions)	Contracts Designated as Hedges		Contracts Not Designated as Hedges
Singapore Dollar	$	210	$	44
Thai Baht	123		25
Chinese Renminbi	68		16
British Pound Sterling	63		11


Total	$	464	$	96


	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
Total	$	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 March 31, 2023, the notional investments underlying the TRS amounted to $105 million and the contract term is through January 2024, settled on a monthly basis, 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 Condensed Consolidated Balance Sheets as of March 31, 2023 and July 1, 2022:


	As of March 31, 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	$	6	Accrued expenses	$	—
Interest rate swap	Other current assets	4		Accrued expenses	(10)
Derivatives not designated as hedging instruments:
Foreign currency forward exchange contracts	Other current assets	2		Accrued expenses	—
Total return swap	Other current assets	3		Accrued expenses	—
Total derivatives		$	15		$	(10)


	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 Condensed Consolidated Statements of Comprehensive Income and the Condensed Consolidated Statements of Operations for the three and nine months ended March 31, 2023:


		Amount of Gain/(Loss) Recognized in Income on Derivatives
(Dollars in millions) Derivatives Not Designated as Hedging Instruments	Location of Gain/(Loss) Recognized in Income on Derivatives	For the Three Months		For the Nine Months
Foreign currency forward exchange contracts	Other, net	$	—	$	(6)
Total return swap	Operating expenses	8		—


(Dollars in millions) Derivatives Designated as Hedging Instruments		Amount of Gain/(Loss) Recognized in OCI on Derivatives (Effective Portion)					Location of Gain/(Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain/(Loss) Reclassified from Accumulated OCI into Income (Effective Portion)					Location of Gain/(Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing)		Amount of Gain/(Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	For the Three Months			For the Nine Months			For the Three Months	For the Nine Months				For the Three Months		For the Nine Months
Foreign currency forward exchange contracts		$	5		$	4	Cost of revenue	$	(1)	$	(20)		Other, net		$	(2)	$	(3)
Interest rate swap		(11)			41		Interest expense	10		18			Interest expense		—		—


(Dollars in millions) Derivatives Not Designated as Hedging Instruments	Location of Gain/(Loss) Recognized in Income on Derivatives	Amount of Gain/(Loss) Recognized in Income on Derivatives
	For the Three Months	For the Nine Months
Foreign currency forward exchange contracts	Other, net	$	1	$	(1)
Total return swap	Operating expenses	(7)		(1)


(Dollars in millions) Derivatives Designated as Hedging Instruments		Amount of Gain/(Loss) Recognized in OCI on Derivatives (Effective Portion)					Location of Gain/(Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain/(Loss) Reclassified from Accumulated OCI into Income (Effective Portion)					Location of Gain/(Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing)		Amount of Gain/(Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	For the Three Months			For the Nine Months			For the Three Months	For the Nine Months				For the Three Months		For the Nine Months
Foreign currency forward exchange contracts		$	(1)		$	(6)	Cost of revenue	$	(2)	$	(10)		Other, net		$	—	$	1
Interest rate swap		57			64		Interest expense	(4)		(8)			Interest expense		—		—

**7.**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:


	March 31, 2023								July 1, 2022
	Fair Value Measurements at Reporting Date Using								Fair Value Measurements at Reporting Date Using
(Dollars in millions)	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Balance		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Balance
Assets:
Money market funds	$	234	$	—	$	—	$	234	$	59	$	—	$	—	$	59






Total cash equivalents	234		—		—		234		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	—		15		—		15		—		65		—		65
Total assets	$	235	$	16	$	16	$	267	$	60	$	66	$	23	$	149
Liabilities:
Derivative liabilities	$	—	$	10	$	—	$	10	$	—	$	23	$	—	$	23

Total liabilities	$	—	$	10	$	—	$	10	$	—	$	23	$	—	$	23


	March 31, 2023								July 1, 2022
	Fair Value Measurements at Reporting Date Using								Fair Value Measurements at Reporting Date Using
(Dollars in millions)	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Balance		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Balance
Assets:
Cash and cash equivalents	$	234	$	—	$	—	$	234	$	59	$	—	$	—	$	59


Other current assets	1		16		—		17		1		66		—		67
Other assets, net	—		—		16		16		—		—		23		23
Total assets	$	235	$	16	$	16	$	267	$	60	$	66	$	23	$	149
Liabilities:
Accrued expenses	$	—	$	10	$	—	$	10	$	—	$	23	$	—	$	23
Total liabilities	$	—	$	10	$	—	$	10	$	—	$	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 March 31, 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 condensed consolidated financial statements at fair value. The Company determines the fair value of these instruments by considering the estimated amount it would pay or receive to terminate these agreements at the reporting date.

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 Condensed 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 $1 million and $4 million for the three and nine months ended March 31, 2023, respectively. The Company recorded a net gain of $2 million and $5 million for the three and nine months ended April 1, 2022, respectively. The adjusted carrying value of the investments accounted for under the equity method amounted to $56 million and $61 million as of March 31, 2023 and July 1, 2022, respectively.

For the investments that are accounted for under the measurement alternative, the Company recorded a net gain of $3 million for the nine months ended March 31, 2023, related to upward adjustments due to observable price changes. The Company recorded a net gain of $4 million for the nine months ended April 1, 2022. As of March 31, 2023 and July 1, 2022, the carrying value of the Company’s strategic investments under the measurement alternative was $99 million and $88 million, respectively.

Other Fair Value Disclosures

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:


	March 31, 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	$	539	$	540	$	538
4.875% Senior Notes due March 2024	500		495		499		494
4.750% Senior Notes due January 2025	479		470		479		471
4.875% Senior Notes due June 2027	504		487		504		483
4.091% Senior Notes due June 2029	465		443		466		427
3.125% Senior Notes due July 2029	163		130		500		396
4.125% Senior Notes due January 2031	275		235		500		410
3.375% Senior Notes due July 2031	72		56		500		393
9.625% Senior Notes due December 2032	750		852		—		—
5.750% Senior Notes due December 2034	489		449		489		433
SOFR Based Term Loan A1 due September 2025 (1)	585		574		600		588
SOFR Based Term Loan A2 due July 2027 (1)	585		562		600		586
SOFR Based Term Loan A3 due July 2027	585		568		—		—
	$	5,992	$	5,860	$	5,677	$	5,219
Less: unamortized debt issuance costs	(34)		—		(31)		—
Debt, net of debt issuance costs	$	5,958	$	5,860	$	5,646	$	5,219
Less: current portion of debt, net of debt issuance costs	(1,118)		(1,110)		(584)		(582)
Long-term debt, less current portion, net of debt issuance costs	$	4,840	$	4,750	$	5,062	$	4,637

(1) On August 18, 2022, the Company amended the Credit Agreement and replaced the LIBOR interest rates plus variable margin of Term Loans A1 and A2 with the SOFR interest rates plus a variable margin. Refer to “Note 3. Debt” for more details.

**8.**Shareholders’ Deficit

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 207,053,113 shares were outstanding as of March 31, 2023, and 100,000,000 preferred shares, par value $0.00001, of which none were issued or outstanding as of March 31, 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 March 31, 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 the nine months ended March 31, 2023:



(In millions)	Number of Shares Repurchased	Dollar Value of Shares Repurchased
Repurchases of ordinary shares (1)	5	$	400
Tax withholding related to vesting of equity awards	1	41
Total	6	$	441

(1) These amounts differ from the repurchases of ordinary shares amounts in the condensed consolidated statements of cash flows due to timing differences between repurchases and cash settlement thereof.

**9.**Revenue

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


	For the Three Months Ended				For the Nine Months Ended
(Dollars in millions)	March 31, 2023		April 1, 2022		March 31, 2023		April 1, 2022
Revenues by Channel
OEMs	$	1,358	$	2,149	$	4,268	$	6,615
Distributors	294		349		890		1,418
Retailers	208		304		624		1,000
Total	$	1,860	$	2,802	$	5,782	$	9,033
Revenues by Geography (1)
Asia Pacific	$	774	$	1,292	$	2,335	$	4,308
Americas	799		1,171		2,588		3,436
EMEA	287		339		859		1,289
Total	$	1,860	$	2,802	$	5,782	$	9,033

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

**10.**Guarantees

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 condensed 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. Changes in the Company’s product warranty liability during the nine months ended March 31, 2023 and April 1, 2022 were as follows:


	For the Nine Months Ended
(Dollars in millions)	March 31, 2023		April 1, 2022
Balance, beginning of period	$	148	$	136
Warranties issued	42		62
Repairs and replacements	(71)		(65)
Changes in liability for pre-existing warranties, including expirations	42		15
Balance, end of period	$	161	$	148

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

Basic (loss) 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 restricted share units and performance-based share units and shares to be purchased under the Employee Stock Purchase Plan. 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:


	For the Three Months Ended				For the Nine Months Ended
(In millions, except per share data)	March 31, 2023		April 1, 2022		March 31, 2023		April 1, 2022
Numerator:
Net (loss) income	$	(433)	$	346	$	(437)	$	1,373
Number of shares used in per share calculations:
Total shares for purposes of calculating basic net (loss) income per share	207		218		207		222
Weighted-average effect of dilutive securities:
Employee equity award plans	—		4		—		4
Total shares for purposes of calculating diluted net (loss) income per share	207		222		207		226
Net (loss) income per share:
Basic	$	(2.09)	$	1.59	$	(2.11)	$	6.18
Diluted	$	(2.09)	$	1.56	$	(2.11)	$	6.08

For the three and nine months ended March 31, 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 both the three and nine months ended March 31, 2023, and were not material for the three and nine months ended April 1, 2022.

**12.**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. A trial date has not been set.

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 a settlement agreement (the “Settlement Agreement”) with the U.S. Department of Commerce’s Bureau of Industry and Security (“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 the 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 for the March 2023 quarter, which is reflected under BIS settlement penalty on its Condensed Consolidated Statements of Operations. As of March 31, 2023, $30 million and $270 million were included in Accrued expense and Other non-current liabilities, respectively, on its Condensed 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.

**13.**Commitments

Unconditional Long-Term Purchase Obligations. As of March 31, 2023, the Company had unconditional long-term purchase obligations of approximately $3.2 billion, primarily related to purchases of inventory components. The Company expects the commitment to total $849 million, $641 million, $649 million, $684 million and $356 million for fiscal years 2024, 2025, 2026, 2027 and thereafter, respectively.

During the nine months ended March 31, 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 Condensed Consolidated Statements of Operations. As of March 31, 2023, $68 million remained unpaid and is expected to be paid within one year.

**14.**Subsequent Events

Dividend Declared

On April 20, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.70 per share, which will be payable on July 5, 2023 to shareholders of record as of the close of business on June 21, 2023.

Restructuring Plan

On April 20, 2023, the Company committed to the April 2023 plan to further reduce its cost structure in response to changes in macroeconomic and business conditions. See “Note 5. Restructuring and Exit Costs” for more information.

Subsequent Regulatory Settlement

On April 18, 2023, the Company entered into the Settlement Agreement with BIS that resolves BIS’ allegations regarding its sales of hard disk drives to Huawei between August 17, 2020 and September 29, 2021. See “Note 12. Legal, Environmental and Other Contingencies” for more information.

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