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What changed in Seagate Technology's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Seagate Technology's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+329 added−346 removedSource: 10-K (2023-08-04) vs 10-K (2022-08-05)

Top changes in Seagate Technology's 2023 10-K

329 paragraphs added · 346 removed · 257 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

73 edited+8 added−18 removed77 unchanged
Biggest changeAccording to 5 Table of Contents IDC, we are fast approaching a new era of the Data Age, which we expect will have a positive impact on storage demand. The digital transformation has given rise to many new applications, all of which rely on faster access to and secure storage of data proliferating from endpoints through edge to cloud.
Biggest changeDigital transformation has given rise to many new applications, all of which rely on faster access to and secure storage of data proliferating from endpoints through edge to cloud, which we expect will have a positive impact on storage demand. As more applications require real-time decision making, some data processing and storage is moving closer to the network edge.
Nearline. Nearline applications require mass capacity devices and mass capacity subsystems that provide end-to-end solutions to businesses for the purpose of modular and scalable storage. Enterprise storage applications require both high-capacity and energy efficient storage devices to support low total cost of ownership. Seagate systems offer mass capacity storage solutions that provide foundational infrastructure for public and private clouds.
Nearline applications require mass capacity devices and mass capacity subsystems that provide end-to-end solutions to businesses for the purpose of modular and scalable storage. Enterprise storage applications require both high-capacity and energy efficient storage devices to support low total cost of ownership. Seagate systems offer mass capacity storage solutions that provide foundational infrastructure for public and private clouds.
Among other elements, the Lyve portfolio includes a shuttle solution that enables enterprises to transfer vast amounts of data from endpoints to the core cloud and a storage-as-a-service cloud that provides frictionless mass capacity storage at the metro edge. Legacy Markets Legacy markets include consumer, mission critical and client applications.
Among other elements, the Lyve portfolio includes a shuttle solution that enables enterprises to transfer vast amounts of data from endpoints to the core cloud and a storage-as-a-service cloud that provides frictionless mass capacity storage at the metro edge. Legacy Markets Legacy markets include consumer, client and mission critical applications.
Factors contributing to the growth of digital content include: • Creation, sharing and consumption of media-rich content, such as high-resolution photos, high definition videos and digital music through smart phones, tablets, digital cameras, personal video cameras, DVRs, gaming consoles or other digital devices; • Increasing use of video and imaging sensors to collect and analyze data used to improve traffic flow, emergency response times and manufacturing production costs, as well as for new security surveillance systems that feature higher resolution digital cameras and thus require larger data storage capacities; • Creation and collection of data through the development and evolution of the IoT ecosystem, big data analytics, AI and new technology trends such as autonomous vehicles and drones, smart manufacturing, and smart cities , as well as emerging trends that converge the digital and physical worlds such as the metaverse or use of digital twins; • The growing use of analytics, especially for action on data created at the edge instead of processing and analyzing at the data center, which is particularly important for verticals such as autonomous vehicles, property monitoring systems, and smart manufacturing; • Cloud migration initiatives and the ongoing advancement of the cloud, including the build out of large numbers of cloud data centers by CSPs and private companies transitioning on-site data centers into the cloud; and • Need for protection of increased digital content through redundant storage on backup devices and externally provided storage services.
Factors contributing to the growth of digital content include: • Creation, sharing and consumption of media-rich content, such as high-resolution photos, high definition videos and digital music through smart phones, tablets, digital cameras, personal video cameras, DVRs, gaming consoles or other digital devices; • Increasing use of video and imaging sensors to collect and analyze data used to improve traffic flow, emergency response times and manufacturing production costs, as well as for new security surveillance systems that feature higher resolution digital cameras and thus require larger data storage capacities; • Creation and collection of data through the development and evolution of the IoT ecosystem, big data analytics, machine learning and new technology trends such as autonomous vehicles and drones, smart manufacturing, and smart cities , as well as emerging trends that converge the digital and physical worlds such as the metaverse, use of digital twins or generative AI; • The growing use of analytics, especially for action on data created at the edge instead of processing and analyzing at the data center, which is particularly important for verticals such as autonomous vehicles, property monitoring systems, and smart manufacturing; • Cloud migration initiatives and the ongoing advancement of the cloud, including the build out of large numbers of cloud data centers by CSPs and private companies transitioning on-site data centers into the cloud; and • Need for protection of increased digital content through redundant storage on backup devices and externally provided storage services.
Accordingly, the program is highly localized, involving a cross-functional process to identify and execute on opportunities that are meaningful locally. In general, we maintain an emphasis on STEM, targeting K-12 students, supporting STEM efforts in a way that is age-appropriate and allows for fun as well as learning.
Accordingly, the program is highly localized, involving a cross-functional process to identify and execute on opportunities that are meaningful locally. We maintain an emphasis on STEM, targeting K-12 students, supporting STEM efforts in a way that is age-appropriate and allows for fun as well as learning.
Client applications include desktop and notebook storage that rely on low cost-per-HDD and SSD devices to provide built-in storage, digital video recorder (“DVR”) storage for video streaming in always-on consumer premise equipment and media center, and gaming storage for PC-based gaming systems as well as console gaming applications including both internal and external storage options.
Client applications include desktop and notebook storage that rely on low cost-per-HDD and SSD devices to provide built-in storage, digital video recorder (“DVR”) storage for video streaming in always-on consumer premise equipment and media center, and gaming storage for PC-based gaming systems as well as console gaming applications including both internal and external storage options. Mission critical storage.
These optimized drives are built to support the growing needs of the video imaging market with support for multiple streams and capacities up to 20TB. NAS. Our NAS drives are built to support the performance and reliability demanded by small and medium businesses, and incorporate interface software with custom-built health management, error recovery controls, power settings and vibration tolerance.
These optimized drives are built to support the growing needs of the video imaging market with support for multiple streams and capacities up to 24TB. NAS. Our NAS drives are built to support the performance and reliability demanded by small and medium businesses, and incorporate interface software with custom-built health management, error recovery controls, power settings and vibration tolerance.
As a result of these factors, we anticipate that the nature and volume of data being created will require greater storage capability, which is more efficiently and economically facilitated by higher capacity mass storage devices. In addition, the economics of storage infrastructure are also evolving.
As a result of these factors, we anticipate that the nature and volume of data being created will require greater storage capability, which is more efficiently and economically facilitated by higher capacity mass storage solutions. In addition, the economics of storage infrastructure are also evolving.
From 1996 to 2002, he served at Seagate in varying roles of increasing responsibility until his promotion to Vice President. Gianluca Romano, 53, has served as our Executive Vice President and Chief Financial Officer since January 2019. From October 2011 to December 2018, Mr.
From 1996 to 2002, he served at Seagate in varying roles of increasing responsibility until his promotion to Vice President. Gianluca Romano, 54, has served as our Executive Vice President and Chief Financial Officer since January 2019. From October 2011 to December 2018, Mr.
Price declines for like-for-like products (“price erosion”) tend to be more pronounced during periods of: 10 Table of Contents • economic contraction in which competitors may use discounted pricing to attempt to maintain or gain market share; • few new product introductions when competitors have comparable or alternative product offerings; and • industry supply exceeding demand.
Price declines for like-for-like products (“price erosion”) tend to be more pronounced during periods of: • economic contraction in which competitors may use discounted pricing to attempt to maintain or gain market share; • few new product introductions when competitors have comparable or alternative product offerings; and • industry supply exceeding demand.
Information contained on our website or in our annual GCAR is not incorporated by reference into this or any other report we filed with the Securities and Exchange Commission. Financial Information Financial information for our reportable business segment and about geographic areas is set forth in “Item 8. Financial Statements and Supplementary Data— Note 16.
Information contained on our website or in our annual ESG Performance Report is not incorporated by reference into this or any other report we filed with the Securities and Exchange Commission. Financial Information Financial information for our reportable business segment and about geographic areas is set forth in “Item 8. Financial Statements and Supplementary Data— Note 16.
Teh joined Seagate in 1989 as a field customer engineer and has served in varying roles of increasing responsibilities, including as Vice President, Asia Pacific Sales and Marketing (Singapore) from January 2008 to July 2010; Vice President, Sales Operations from 2006 to 2008; Vice President, Asia Pacific Sales from 2003 to 2006; Director, Marketing and APAC Distribution Sales from 1999 to 2003; and Country Manager, South Asia Sales from 1996 to 1999. 15 Table of Contents
Teh joined Seagate in 1989 as a field customer engineer and has served in varying roles of increasing responsibilities, including as Vice President, Asia Pacific Sales and Marketing (Singapore) from January 2008 to July 2010; Vice President, Sales Operations from 2006 to 2008; Vice President, Asia Pacific Sales from 2003 to 2006; Director, Marketing and APAC Distribution Sales from 1999 to 2003; and Country Manager, South Asia Sales from 1996 to 1999.
We continue to sell to these markets but do not plan significant additional investment. Consumer storage. Consumer applications are externally connected storage, both HDD and SSD-based, used to provide backup capabilities, augmented storage capacity, or portable storage for PCs, mobile devices and gaming consoles. Mission critical storage.
We continue to sell to these markets but do not plan significant additional investment. Consumer storage. Consumer applications are externally connected storage, both HDD and SSD-based, used to provide backup capabilities, augmented storage capacity, or portable storage for PCs, mobile devices and gaming consoles. Client storage.
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.
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 11 Table of Contents products, put on the market after July 1, 2006.
Our HDD and SSD product portfolio includes Serial Advanced Technology Attachment (“SATA”), Serial Attached SCSI (“SAS”) and Non-Volatile Memory Express (“NVMe”) based designs to support a wide variety of mass capacity and legacy applications. Our systems portfolio includes storage subsystems for enterprises, cloud service providers, scale-out storage servers and original equipment manufacturers (“OEMs”).
Our HDD and SSD product portfolio includes Serial Advanced Technology Attachment (“SATA”), Serial Attached SCSI (“SAS”) and Non-Volatile Memory Express (“NVMe”) based designs to support a wide variety of mass capacity and legacy applications. 3 Table of Contents Our systems portfolio includes storage subsystems for enterprises, cloud service providers (“CSPs”), scale-out storage servers and original equipment manufacturers (“OEMs”).
These voluntary, employee-led communities are built on a shared diversity of identity, experience or thought and provide a number of benefits to employees, including professional and leadership development. Seagate’s ERG community encompasses a wide array of diversity, such as LGBTQ+, women, people of color and interfaith, and includes over 26 chapters across six countries.
These voluntary, employee-led communities are built on a shared diversity of identity, experience or thought and provide a number of benefits to employees, including professional and leadership development. Seagate’s ERG community encompasses a wide array of diversity, such as LGBTQ+, women, people of color and interfaith, and includes over 27 chapters across seven countries.
Information in, or that can be accessed through, our website is not incorporated into this Form 10-K. Information About Our Executive Officers The following sets forth the name, age and position of each of the persons who were serving as executive officers as of August 5, 2022. There are no family relationships among any of our executive officers.
Information in, or that can be accessed through, our website is not incorporated into this Form 10-K. Information About Our Executive Officers The following sets forth the name, age and position of each of the persons who were serving as executive officers as of August 4, 2023. There are no family relationships among any of our executive officers.
Our high-capacity enterprise HDDs ship in capacities of up to 20TB. These products are designed for mass capacity data storage in the core and at the edge, as well as server environments and cloud systems that require high capacity, enterprise reliability, energy efficiency and integrated security. They are available in SATA and SAS interfaces. Enterprise Nearline SSDs.
Our high-capacity enterprise HDDs ship in capacities of up to 30TB. These products are designed for mass capacity data storage in the core and at the edge, as well as server environments and cloud systems that require high capacity, enterprise reliability, energy efficiency and integrated security. They are available in SATA and SAS interfaces.
Our global health and safety standards, as well as our accompanying management systems, frequently go beyond country or industry-level guidelines to ensure that we keep our employees healthy and safe. We also host regulatory visits that focus on issues such as safety, radiation, fire codes, food and transportation.
Our global health and safety standards, as well as our accompanying Environment, Health and Safety (“EHS”) management systems, frequently go beyond country or industry-level guidelines to ensure that we keep our employees healthy and safe. We regularly host health and safety regulatory visits that focus on issues such as safety, radiation, fire codes, food and transportation.
Schuelke, 59, has served as our Senior Vice President, Chief Legal Officer and Corporate Secretary since June 2017. From 2011 to January 2016, Ms. Schuelke was the Senior Vice President, General Counsel and Secretary at Altera Corporation (“Altera”), a manufacturer of programmable logic devices. Prior to that, Ms.
Katherine E. Schuelke, 60, has served as our Senior Vice President, Chief Legal Officer and Corporate Secretary since June 2017. From 2011 to January 2016, Ms. Schuelke was the Senior Vice President, General Counsel and Secretary at Altera Corporation (“Altera”), a manufacturer of programmable logic devices. Prior to that, Ms.
Legal, Environmental and Other Contingencies .” The costs of 11 Table of Contents engaging in intellectual property litigation in the past have been, and in the future may be, substantial, irrespective of the merits of the claim or the outcome.
Legal, Environmental and Other Contingencies .” The costs of engaging in intellectual property litigation in the past have been, and in the future may be, substantial, irrespective of the merits of the claim or the outcome.
The read/write heads are mounted vertically on an E-shaped assembly (“E-block”) that is actuated by a voice-coil motor to allow the heads to move from track to track. The E-block and the recording media are mounted inside the head disk assembly.
The read/write heads are mounted vertically on an E-shaped assembly (“E-block”) that is actuated by a voice-coil motor to allow the heads to move from track to track. The E-block and the 7 Table of Contents recording media are mounted inside the head disk assembly.
Our Total Rewards program is designed to attract, motivate and retain talented people in order to successfully meet our business goals. The program includes base pay, annual bonuses, commissions, equity awards, an employee share purchasing plan, retirement savings opportunities and other employee health and wellness benefits.
Our Total Rewards program is designed to attract, motivate and retain talented people in order to successfully meet our business goals. The program generally includes base pay, annual bonuses, commissions, equity awards, an employee stock purchase plan, retirement savings opportunities and other employee health and wellness benefits.
These solutions, including modular hardware and software, deliver a portfolio that streamlines data access, transport and management for today’s enterprise. Cloud. Lyve Cloud storage-as-a-service platform is an S3-compatible storage-only cloud designed to allow enterprises to unlock the value of their massive unstructured datasets.
Lyve is our platform built with mass data in mind. These solutions, including modular hardware and software, deliver a portfolio that streamlines data access, transport and management for today’s enterprise. Cloud. Lyve Cloud storage-as-a-service platform is an S3-compatible storage-only cloud designed to allow enterprises to unlock the value of their massive unstructured datasets.
We continuously seek to improve our manufacturing efficiency and reduce manufacturing costs by: • employing manufacturing automation; • employing machine learning algorithms and artificial intelligence; • improving product quality and reliability; 7 Table of Contents • integrating our supply chain with suppliers and customers to enhance our demand visibility and reduce our working capital requirements; • coordinating between our manufacturing group and our research and development organization to rapidly achieve volume manufacturing; and • operating our facilities at optimal capacities.
We continuously seek to improve our manufacturing efficiency and reduce manufacturing costs by: • employing manufacturing automation; • employing machine learning algorithms and AI; • improving product quality and reliability; • integrating our supply chain with suppliers and customers to enhance our demand visibility and reduce our working capital requirements; • coordinating between our manufacturing group and our research and development organization to rapidly achieve volume manufacturing; and • operating our facilities at optimal capacities.
Companies, such as Original Equipment Manufacturers (“OEMs”), that bundle and package storage solutions, distributors that integrate storage hardware and software into end-user applications, cloud service providers (“CSPs”) that provide cloud based solutions to businesses for the purpose of scale-out storage solutions and modular systems, and producers of solutions such as storage racks. Hyperscale data centers.
Storage solutions manufacturers and system integrators. Companies, such as Original Equipment Manufacturers (“OEMs”), that bundle and package storage solutions, distributors that integrate storage hardware and software into end-user applications, CSPs that provide cloud based solutions to businesses for the purpose of scale-out storage solutions and modular systems, and producers of solutions such as storage racks. Hyperscale data centers.
Our NAS HDD solutions are available in capacities up to 20TB. We also offer NAS SSDs with capacities up to 2TB. Legacy Applications Mission Critical HDDs and SSDs. We continue to support 10,000 and 15,000 RPM HDDs, offered in capacities up to 2.4TB, which enable increased throughput while improving energy efficiency.
Our NAS HDD solutions are available in capacities up to 24TB. We also offer NAS SSDs with capacities up to 4TB. 8 Table of Contents Legacy Applications Mission Critical HDDs and SSDs. We continue to support 10,000 and 15,000 RPM HDDs, offered in capacities up to 2.4TB, which enable increased throughput while improving energy efficiency.
Our advanced technology integration effort focuses disk drive and component research on recording subsystems, including read/write heads and recording media; market-specific product technology; and technology we believe may lead to new business opportunities.
Our advanced technology integration effort, such as our high-capacity enabling HAMR technology, focuses disk drive and component research on recording subsystems, including read/write heads and recording media; market-specific product technology; and technology we believe may lead to new business opportunities.
Industry Supply Balance From time to time, the storage industry has experienced periods of imbalance between supply and demand. To the extent that the storage industry builds or maintains capacity based on expectations of demand that do not materialize, price erosion may become more pronounced.
Industry Supply Balance From time to time, the storage industry has experienced periods of imbalance between supply and demand. To the extent that the storage industry builds or maintains capacity based on expectations of demand that do not materialize, price erosion may become more pronounced. Conversely, during periods where demand exceeds supply, price erosion is generally muted.
We also support inclusion through active employee communications, unconscious bias education and ongoing efforts to ensure our employees feel safe, respected and welcomed. During fiscal year 2022, we published our third annual Diversity, Equity, and Inclusion (“DEI”) Report, which provides an overview of our DEI efforts and outcomes including demographics on our workforce.
We also support inclusion through active employee communications, unconscious bias education and ongoing efforts to ensure our employees feel safe, respected and welcomed. In January 2023, we published our fourth annual Diversity, Equity, and Inclusion (“DEI”) Report, which provides an overview of our DEI efforts and outcomes including demographics on our workforce.
Edge-to-cloud data storage infrastructures, transport, and activation of mass data. The Seagate Lyve portfolio grew out of our mass capacity storage portfolio. It provides a simple, cost-efficient and secure way to manage, transport and activate massive volumes of data across the distributed enterprise.
These markets include storage for security and smart video installations. Edge-to-cloud data storage infrastructures, transport, and activation of mass data. The Seagate Lyve portfolio grew out of our mass capacity storage portfolio. It provides a simple, cost-efficient and secure way to manage, transport and activate massive volumes of data across the distributed enterprise.
The fiscal year 2021 DEI Report is available on our website. Health & Safety. All our manufacturing sites have health and safety management systems certified to ISO 45001. In addition, we are audited to health and safety standards set forth by the Responsible Business Alliance.
The fiscal year 2022 DEI Report is available on our website. Health & Safety. All our manufacturing sites have health and safety management systems certified to the International Organization for Standardization (“ISO”) 45001. In addition, we are audited to health and safety standards set forth by the Responsible Business Alliance.
Global Citizenship Report Additional information regarding our environmental, social and governance (“ESG”) commitment and progress can be found on the Global Citizenship section of our website and in our Global Citizenship Annual Report (“GCAR”).
Environmental, Social and Governance (“ESG”) Performance Report Additional information regarding our ESG commitment and progress can be found on the ESG section of our website and in our ESG Performance Report.
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, and Cortx, an open-source object storage software optimized for mass capacity and data intensive workloads.
The Lyve platform includes a shuttle solution that enables enterprises to transfer massive amounts of data from endpoints to the core cloud and a storage-as-a-service cloud offering that provides frictionless mass capacity storage at the metro edge.
Through our Environment, Health and Safety (“EHS”) Management Systems, we ensure that the focus remains on the continuous improvement and provide comprehensive health and safety training to our employees. We emphasize e-learning courses as our main vehicle for delivering such training because employees can learn at their own pace.
Through our EHS Management Systems, we ensure that the focus remains on the continuous improvement of employee health and safety programs. We continue to provide comprehensive health and safety training to our employees. We emphasize e-learning courses as our main vehicle for delivering such training because employees can learn at their own pace. Development, Retention, Compensation, Benefits & Engagement.
He was previously our President and Chief Operating Officer (“COO”) from June 2016 to September 2017. He also served as our President of Operations and Technology from October 2013 to June 2016 and as our Executive Vice President of Operations from March 2011 until October 2013. Prior to these positions, Dr.
He also served as our President of Operations and Technology from October 2013 to June 2016 and as our Executive Vice President of Operations from March 2011 until October 2013. Prior to these positions, Dr.
The nearline market includes storage for cloud computing, content delivery, archival, backup services and newer use cases. VIA and NAS. VIA and NAS drives are specifically designed to ensure the appropriate performance and reliability of the system for video analytics and camera enabled environments or network storage environments. These markets include storage for security and smart video installations.
The nearline market includes storage for cloud computing, content delivery, archival, backup services and emerging use cases such as generative AI. VIA and NAS. VIA and NAS drives are specifically designed to ensure the appropriate performance and reliability of the system for video analytics and camera enabled environments or network storage environments.
We offer capacity and performance-optimized systems that include all-flash, all-disk and hybrid arrays for workloads demanding high performance, capacity and efficiency. VIA. Our video and image HDDs are built to support the high-write workload of an always-on, always-recording video systems.
Our capacity-optimized systems feature multiple scalable configurations and can accommodate up to 96 26TB drives per chassis. We offer capacity and performance-optimized systems that include all-flash, all-disk and hybrid arrays for workloads demanding high performance, capacity and efficiency. VIA. Our video and image HDDs are built to support the high-write workload of an always-on, always-recording video systems.
Anticipated orders from many of our customers have in the past failed to materialize or OEM delivery schedules have been deferred or altered as a result of changes in their business needs. Our distributors generally enter into non-exclusive agreements for the resale of our products.
In addition, with limited lead-time, customers may defer most purchase orders without significant penalty. Anticipated orders from our customers have in the past failed to materialize or OEM delivery schedules have been deferred or altered as a result of changes in their business needs. Our distributors generally enter into non-exclusive agreements for the resale of our products.
Mission critical applications are defined as those that use very high-performance enterprise class HDDs and SSDs with sophisticated firmware to reliably support very high workloads. We expect that enterprises utilizing dedicated storage area networks will continue to drive market demand for mission critical enterprise storage solutions. Client storage.
Mission critical applications are defined as those that use very high-performance enterprise class HDDs and SSDs with sophisticated firmware to reliably support very high workloads. We expect that enterprises utilizing dedicated storage area networks will continue to drive market demand for mission critical enterprise storage solutions. 4 Table of Contents Participants in the data storage industry include: Major subcomponent manufacturers.
From 1994 until 2008, Mr. Romano held various finance positions at STMicroelectronics, an electronics and semiconductor manufacturer, most recently as Group Vice-President, Central & North Europe Finance Director, Shared Accounting Services Director. Ravinandan Naik, 51 has served as our Executive Vice President of Storage Services and Chief Information Officer (“CIO”) since February 2021. Prior to that Mr.
From 1994 until 2008, Mr. Romano held various finance positions at STMicroelectronics, an electronics and semiconductor manufacturer, most recently as Group Vice-President, Central & North Europe Finance Director, Shared Accounting Services Director. Ban Seng Teh, 57, has served as our Executive Vice President and Chief Commercial Officer since July 2022. Prior to that, Mr.
In addition to HDDs, we produce a broad range of data storage products including solid state drives (“SSDs”), solid state hybrid drives (“SSHDs”), storage subsystems, and offer storage solutions such as a scalable edge-to-cloud mass data platform that includes data transfer shuttles and a storage-as-a-service cloud.
In addition to HDDs, we produce a broad range of data storage products including solid state drives (“SSDs”) and storage subsystems and offer storage solutions such 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.
Patents and Licenses As of July 1, 2022, we had approximately 4,800 U.S. patents and 720 patents issued in various foreign jurisdictions as well as approximately 550 U.S. and 140 foreign patent applications pending. The number of patents and patent applications will vary at any given time as part of our ongoing patent portfolio management activity.
Patents and Licenses As of June 30, 2023, we had approximately 4,200 U.S. patents and 450 patents issued in various foreign jurisdictions as well as approximately 350 U.S. and 100 foreign patent applications pending. The number of patents and patent applications will vary at any given time as part of our ongoing patent portfolio management activity.
Companies that provide and host services and solutions, which include storage, backup, archiving, recovery and discovery of data. Demand for Data Storage In the Seagate-sponsored “Worldwide Global DataSphere Forecast, 2022-2026”, the International Data Corporation (“IDC”) forecasted that the global datasphere should grow from 84 zettabytes in 2021 to 221 zettabytes by 2026.
Companies that provide and host services and solutions, which include storage, backup, archiving, recovery and discovery of data. Demand for Data Storage In the “Worldwide Global DataSphere Forecast, 2023-2027”, published by the International Data Corporation (“IDC”), the global datasphere is forecasted to grow from 106 zettabytes in 2022 to 291 zettabytes by 2027.
A vertically integrated model, however, tends to have less flexibility when demand declines as it exposes us to higher unit costs when capacity utilization is not optimized.
A vertically integrated model, however, tends to have less flexibility when demand declines as it exposes us to higher unit costs when capacity utilization is not optimized which would lead to factory underutilization charges as we experienced in fiscal year 2023.
In our fiscal year 2022 survey, 92% of our global employees shared their feedback on their experience at Seagate. Following the conclusion of the survey, leaders were provided access to a dashboard with results that shared the key drivers of engagement specific to their own department.
In fiscal year 2023, we conducted two pulse surveys to obtain feedback from our global employees on their experience at Seagate. Following the conclusion of the surveys, leaders were provided access to a dashboard with results that shared the key drivers of engagement specific to their own department. 12 Table of Contents Giving Back.
The resulting mass data ecosystem is expected to require increasing amounts of data storage at the edge, in the core and in between. 4 Table of Contents Markets The principal data storage markets include: Mass Capacity Storage Markets Mass capacity storage supports high capacity, low-cost per terabyte (“TB”) storage applications, including nearline, video and image applications (“VIA”) and network-attached storage (“ NAS”) and edge-to-cloud data storage infrastructures.
Markets The principal data storage markets include: Mass Capacity Storage Markets Mass capacity storage supports high capacity, low-cost per terabyte (“TB”) storage applications, including nearline, video and image applications (“VIA”) and network-attached storage (“ NAS”) and edge-to-cloud data storage infrastructures. Nearline.
Retail sales made by us or our distributors typically require greater marketing support, sales incentives and price protection periods. See “Item 8. Financial Statements and Supplementary Data— Note 16. Business Segment and Geographic Information ” contained in this report for a description of our major customers.
Retail sales made by us or our distributors typically require greater marketing support, sales incentives and price protection periods. See “Item 8. Financial Statements and Supplementary Data— Note 16.
The utilization of public and private hyperscale storage and open-source solutions is reducing the total cost of ownership of storage while increasing the speed and efficiency with which customers can leverage massive computing and storage devices. Accordingly, we expect these trends will continue to create significant demand for data storage products and solutions going forward.
The utilization of public and private hyperscale storage and open-source solutions is reducing the total cost of ownership of storage while increasing the speed and efficiency with which customers can leverage massive computing and storage devices.
Data storage manufacturers typically attempt to offset price erosion with an improved mix of data storage products characterized by higher capacity, better performance and additional feature sets and product cost reductions. We believe the HDD industry experienced modest price erosion in fiscal years 2022 and 2021. Product Life Cycles and Changing Technology.
Data storage manufacturers typically attempt to offset price erosion with an improved mix of data storage products characterized by higher capacity, better performance and additional feature sets and product cost reductions.
This site contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. Website Access. Our website is www.seagate.com.
Securities and Exchange Commission (the “SEC”). Because we make filings to the SEC electronically, the public may access this information at the SEC's website: www.sec.gov. This site contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. Website Access. Our website is www.seagate.com.
Part of our product development strategy is to leverage a design platform and/or subsystem within product families to serve different market needs. This platform strategy allows for more efficient resource utilization, leverages best design practices, reduces exposure to changes in demand, and allows for achievement of lower costs through purchasing economies.
This platform strategy allows for more efficient resource utilization, leverages best design practices, reduces exposure to changes in demand, and allows for achievement of lower costs through purchasing economies of scale.
Our systems portfolio provides modular storage arrays, storage server platforms, multi-level configuration for disks (commonly referred as JBODs) and expansion shelves to expand and upgrade data center storage infrastructure and other enterprise applications. They feature speed, scalability and security. Our capacity-optimized systems feature multiple scalable configurations and can accommodate up to 106 20TB drives per chassis.
They are offered with multiple interfaces, including SAS, SATA, and NVMe and in capacities up to 15TB. Enterprise Nearline Systems. Our systems portfolio provides modular storage arrays, storage server platforms, multi-level configuration for disks (commonly referred as JBODs) and expansion shelves to expand and upgrade data center storage infrastructure and other enterprise applications. They feature speed, scalability and security.
Our gaming SSDs are specifically optimized internal storage for gaming rigs and are designed to enhance the gaming experience during game load and game play with capacities up to 4TB for SSD. 9 Table of Contents Lyve Edge-to-Cloud Mass Capacity Platform Lyve. Lyve is our new platform built with mass data in mind.
Our DVR HDDs are optimized for video streaming in always-on consumer premise equipment applications with capacities up to 8TB. Our gaming SSDs are specifically optimized internal storage for gaming rigs and are designed to enhance the gaming experience during game load and game play with capacities up to 4TB for SSD. Lyve Edge-to-Cloud Mass Capacity Platform Lyve.
Schuelke serves on the board of directors of SiTime Corporation, a provider of silicon timing solutions, and on its Compensation and Nominating and Corporate Governance Committees. Ban Seng Teh, 56, has served as our Executive Vice President of Global Sales and Marketing since July 2022. Prior to that, Mr.
Schuelke serves on the board of directors of SiTime Corporation, a provider of silicon timing solutions, and on its Compensation and Nominating and Corporate Governance Committees. KianFatt Chong, 60, has served as our Senior Vice President, Global Operations since October 2020. Prior to his current role, Mr.
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.
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 HDD storage architectures, SSDs use NAND flash memory integrated circuit assemblies to store data. Our HDD products are designed for mass capacity storage and legacy markets.
Mass capacity is and will continue to be the enabler of scale. We expect increased data creation will lead to the expansion of the need for storage in the form of HDDs, SSDs and systems.
We also believe that as architectures evolve to serve a growing commercial and consumer user base throughout the world, storage solutions will evolve as well. Mass capacity is and will continue to be the enabler of scale. We expect increased data creation will lead to the expansion of the need for storage in the form of HDDs, SSDs and systems.
Participants in the data storage industry include: Major subcomponent manufacturers. Companies that manufacture components or subcomponents used in data storage devices or solutions include companies that supply spindle motors, heads and media, and application specific integrated circuits (“ASICs”). Storage device manufacturers.
Companies that manufacture components or subcomponents used in data storage devices or solutions include companies that supply spindle motors, heads and media, and application specific integrated circuits (“ASICs”). Storage device manufacturers. Companies that transform components into storage products include disk drive manufacturers and semiconductor storage manufacturers that integrate flash memory into storage products such as SSDs.
Competition We compete primarily with manufacturers of hard drives used in the mass capacity storage and legacy markets, and with other companies in the data storage industry that provide SSDs and systems.
Business Segment and Geographic Information ” contained in this report for a description of our major customers. 9 Table of Contents Competition We compete primarily with manufacturers of hard drives used in the mass capacity storage and legacy markets, and with other companies in the data storage industry that provide SSDs and systems.
Social and Employee Matters As of July 1, 2022, we employed approximately 40,000 employees and temporary employees worldwide, of which approximately 36,000 were located in our Asia operations.
Social and Employee Matters As of June 30, 2023, we employed approximately 33,400 employees and temporary employees worldwide, of which approximately 27,100 were located in our Asia operations.
Our legacy markets, such as consumer storage applications, traditionally experienced seasonal variability in demand with higher levels of demand in the first half of the fiscal year, primarily driven by consumer spending related to back-to-school season and traditional holiday shopping season.
Our legacy markets, such as consumer storage applications, traditionally experienced seasonal variability in demand with higher levels of demand in the first half of the fiscal year, primarily driven by consumer spending related to back-to-school season and traditional holiday shopping season. 10 Table of Contents Research and Development We are committed to developing new component technologies, products, alternative storage technologies inclusive of systems, software and other innovative technology solutions to support emerging applications in data use and storage.
We design, fabricate and assemble a number of the most important components in our disk drives, including read/write heads and recording media. Our design and manufacturing operations are based on technology platforms that are used to produce various disk drive products that serve multiple data storage applications and markets.
Our design and manufacturing operations are based on technology platforms that are used to produce various disk drive products that serve multiple data storage applications and markets.
Business Segment and Geographic Information.” 13 Table of Contents Corporate Information Seagate Technology Holdings public limited company is a public limited company organized under the laws of Ireland. Available Information Availability of Reports.
Business Segment and Geographic Information.” Corporate Information Seagate Technology Holdings public limited company is a public limited company organized under the laws of Ireland. Available Information Availability of Reports. We are a reporting company under the Securities Exchange Act of 1934, as amended (the “1934 Exchange Act”), and we file reports, proxy statements and other information with the U.S.
Demand Trends We believe that continued growth in digital content creation will require increasingly higher storage capacity in order to store, aggregate, host, distribute, analyze, manage, protect, back up and use such content. We also believe that as architectures evolve to serve a growing commercial and consumer user base throughout the world, storage solutions will evolve as well.
Accordingly, we expect these trends will continue to create significant demand for data storage products and solutions going forward. 5 Table of Contents Demand Trends We believe that continued growth in digital content creation will require increasingly higher storage capacity in order to store, aggregate, host, distribute, analyze, manage, protect, back up and use such content.
However, certain parts of our business have been adversely affected by our suppliers’ capacity constraints and this could occur in the future. 8 Table of Contents Commodity and Other Manufacturing Costs.
Vertically integrated disk drive manufacturers like us, who manufacture their own components, are less dependent on external component suppliers than less vertically integrated disk drive manufacturers. However, certain parts of our business have been adversely affected by our suppliers’ capacity constraints and this could occur again in the future. Commodity and Other Manufacturing Costs.
SSDs complement hyperscale applications, high-density data centers, cloud environments and web servers. They are also used in mission-critical enterprise applications, consumer, gaming and NAS applications. The SSHDs that we manufacture contain technology that fuses some features of SSDs and HDDs.
SSDs complement hyperscale 6 Table of Contents applications, high-density data centers, cloud environments and web servers. They are also used in mission-critical enterprise applications, consumer, gaming and NAS applications. Manufacturing We primarily design and manufacture our own read/write heads and recording media, which are critical technologies for disk drives.
Schuelke 59 Senior Vice President, Chief Legal Officer and Corporate Secretary Ban Seng Teh 56 Executive Vice President, Global Sales and Marketing Dr. William D. Mosley, 55, has served as our Chief Executive Officer (“CEO”) since October 2017 and as a member of the Board since July 25, 2017.
Morris 56 Senior Vice President and Chief Technology Officer 13 Table of Contents Dr. William D. Mosley, 56, has served as our Chief Executive Officer (“CEO”) since October 2017 and as a member of the Board since July 2017. He previously served as our President and Chief Operating Officer (“COO”) from June 2016 to September 2017.
Conversely, during periods where demand exceeds supply, price erosion is generally muted. 6 Table of Contents Our Business Data Storage Technologies The design and manufacturing of HDDs depends on highly advanced technology and manufacturing techniques. Therefore, it requires high levels of research and development spending and capital equipment investments.
Our Business Data Storage Technologies The design and manufacturing of HDDs depends on highly advanced technology and manufacturing techniques. Therefore, it requires high levels of research and development spending and capital equipment investments. We design, fabricate and assemble a number of the most important components in our disk drives, including read/write heads and recording media.
Seagate also increased support of health & human services partnerships due to the pandemic, such as support of food banks, clinics, and non-profit organizations providing COVID-19 pandemic health care and relief, while sustaining many of our ongoing community partnerships.
In fiscal year 2023 we continued pivoting to virtual engagements and funding of STEM partners as they worked to deliver their programs online or in a socially distanced manner. Seagate also increased support of health & human services partnerships, such as support of food banks, clinics, and non-profit organizations, while sustaining many of our ongoing community partnerships.
OEM customers, including large hyperscale data center companies and CSPs, typically enter into master purchase agreements with us. Deliveries are scheduled only after receipt of purchase orders. In addition, with limited lead-time, customers may defer most purchase orders without significant penalty.
These products are cloud-vendor agnostic and can be integrated seamlessly with public or private cloud data centers and providers. Customers We sell our products to major OEMs, distributors and retailers. OEM customers, including large hyperscale data center companies and CSPs, typically enter into master purchase agreements with us. Deliveries are scheduled only after receipt of purchase orders.
There are a limited number of independent suppliers of components, such as recording heads and media, available to disk drive manufacturers. Vertically integrated disk drive manufacturers like us, who manufacture their own components, are less dependent on external component suppliers than less vertically integrated disk drive manufacturers.
There are a limited number of independent suppliers of components, such as recording heads and media, available to disk drive manufacturers. From time to time, we may enter into long-term supply arrangements with these independent suppliers.
Research and Development We are committed to developing new component technologies, products, alternative storage technologies inclusive of systems, software and other innovative technology solutions to support emerging applications in data use and storage. Our research and development activities are designed to bring new products to market in high volume, with quality attributes that our customers expect, before our competitors.
Our research and development activities are designed to bring new products to market in high volume, with quality attributes that our customers expect, before our competitors. Part of our product development strategy is to leverage a design platform and/or subsystem within product families to serve different market needs.
Name Age Positions Dr. William D. Mosley 55 Director and Chief Executive Officer Gianluca Romano 53 Executive Vice President and Chief Financial Officer Ravinandan Naik 51 Executive Vice President, Storage Services and Chief Information Officer Jeffrey D. Nygaard 58 Executive Vice President, Operations and Technology Katherine E.
Name Age Positions Dr. William D. Mosley 56 Director and Chief Executive Officer Gianluca Romano 54 Executive Vice President and Chief Financial Officer Ban Seng Teh 57 Executive Vice President and Chief Commercial Officer Katherine E. Schuelke 60 Senior Vice President, Chief Legal Officer and Corporate Secretary KianFatt Chong 60 Senior Vice President, Global Operations Dr. John C.
Removed
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. Our HDD products are designed for mass capacity storage and legacy markets.
Added
The resulting mass data ecosystem is expected to require increasing amounts of data storage at the edge, in the core and in between.
Removed
Companies that transform components into storage products include disk drive manufacturers and semiconductor storage manufacturers that integrate flash memory into storage products such as SSDs. Storage solutions manufacturers and system integrators.
Added
According to IDC, we are in a new era of the Data Age, whereby data is shifting to both the core and the edge. By 2027, nearly 71% of the world’s data will be generated in the core and edge, up from 54% in 2022.
Removed
The DataSphere Forecast study found that data is shifting to both the core and the edge, and by 2026 nearly 65% of the world’s data will be stored in the core and edge, up from 41% in 2016. As more applications require real-time decision making, some data processing and storage is moving closer to the network edge.
Added
Additionally, certain customers can utilize many of our HDDs with Shingled Magnetic Recording (“SMR”) technology enabled which increases the available storage capacity of the drive with certain performance trade-offs. Enterprise Nearline SSDs. Our enterprise SSDs are designed for high-performance, hyperscale, high-density and cloud applications.
Removed
They include HDDs with flash memory that acts as a cache to improve performance of frequently accessed data and are primarily targeted at PC gaming applications. Manufacturing We primarily design and manufacture our own read/write heads and recording media, which are critical technologies for disk drives.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe impact of the pandemic on our business has included or could in the future include: • disruptions to or restrictions on our ability to ensure the continuous manufacture and supply of our products and services, including insufficiency of our existing inventory levels and temporary or permanent closures or reductions in operational capacity of our facilities or the facilities of our direct or indirect suppliers or customers, and any supply chain disruptions; • temporary shortages of skilled employees available to staff manufacturing facilities due to stay at home orders and travel restrictions within as well as into and out of countries; • increases in operational expenses and other costs related to requirements implemented to mitigate the impact of the COVID-19 pandemic; • delays or limitations on the ability of our customers to perform or make timely payments; • reductions in short- and long-term demand for our products, or other disruptions in technology buying patterns; • adverse effects on economies and financial markets globally or in various markets throughout the world, potentially leading to a prolonged economic downturn or reductions in business and consumer spending, which may result in decreased net revenue, gross margins, or earnings and/or in increased expenses and difficulty in managing inventory levels; • delays to and/or lengthening of our sales or development cycles or qualification activity; • challenges for us, our direct and indirect suppliers and our customers in obtaining financing due to turmoil in financial markets; • workforce disruptions due to illness, quarantines, governmental actions, other restrictions, and/or the social distancing measures we have taken to mitigate the impact of the COVID-19 pandemic in an effort to protect the health and well-being of our employees, customers, suppliers and of the communities in which we operate; • increased vulnerability to cyberattacks due to the significant number of employees working remotely; and • our management team continuing to commit significant time, attention and resources to monitoring the COVID-19 pandemic and seeking to mitigate its effects on our business and workforce.
Biggest changeThe impact of the pandemic on our business has included or could in the future include: • disruptions to or restrictions on our ability to ensure the continuous manufacture and supply of our products and services as a result of labor shortages and workforce disruptions, including insufficiency of our existing inventory levels and temporary or permanent closures or reductions in operational capacity of our facilities or the facilities of our direct or indirect suppliers or customers, and any supply chain disruptions; • increases in operational expenses and other costs related to requirements implemented to mitigate the impact of the COVID-19 pandemic; • delays or limitations on the ability of our customers to perform or make timely payments; • reductions in short- and long-term demand for our products, or other disruptions in technology buying patterns; • adverse effects on economies and financial markets globally or in various markets throughout the world, which has led to, and could in the future, lead to, reductions in business and consumer spending, which have resulted or may result in decreased net revenue, gross margins, or earnings and/or in increased expenses and difficulty in managing inventory levels; • delays to and/or lengthening of our sales or development cycles or qualification activity; and • challenges for us, our direct and indirect suppliers and our customers in obtaining financing due to turmoil in financial markets.
If we fail to predict demand accurately for our products or if the markets for our products change, we may be unable to meet demand or we may have insufficient demand, which may materially adversely affect our financial condition and results of operations.
If we fail to predict demand accurately for our products or if the markets for our products change, we may have insufficient demand or we may be unable to meet demand, which may materially adversely affect our financial condition and results of operations.
Because our vertical design and manufacturing strategy, our operations have higher costs that are fixed or difficult to reduce in the short-term, including our costs related to utilization of existing facilities and equipment.
Because of our vertical design and manufacturing strategy, our operations have higher costs that are fixed or difficult to reduce in the short-term, including our costs related to utilization of existing facilities and equipment.
In addition, difficulties with implementing new technology systems, such as ERP, delays in our timeline for planned improvements, significant system failures or our inability to successfully modify our IT systems, policies, procedures or monitoring tools to respond to changes in our business needs in the past have caused and in the future may cause disruptions in our business operations, increase data security risks, and may have a material adverse effect on our business, financial condition and results of operations.
In addition, difficulties with implementing new technology systems, such as ERP, delays in our timeline for planned improvements, significant system failures or our inability to successfully modify our IT systems, policies, procedures or monitoring tools to respond to changes in our business needs in the past have caused and in the future may cause disruptions in our business operations, increase security risks, and may have a material adverse effect on our business, financial condition and results of operations.
A general weakening of, and related declining corporate confidence in, the global economy or the curtailment in government or corporate spending could cause current or potential customers to reduce their information technology (“IT”) budgets or be unable to fund data storage systems, which could cause customers to delay, decrease or cancel purchases of our products or cause customers not to pay us or to delay paying us for previously purchased products and services .
A general weakening of, and related declining corporate confidence in, the global economy or the curtailment in government or corporate spending could cause current or potential customers to reduce their information technology (“IT”) budgets or be unable to fund data storage products, which could cause customers to delay, decrease or cancel purchases of our products or cause customers to not pay us or to delay paying us for previously purchased products and services.
The insurance coverage we maintain that is intended to address certain data security risks may be insufficient to cover all types of claims or losses that may arise, and such insurance has been increasing in price over time. We cannot be certain that insurance coverage will continue to be available to us on economically reasonable terms, or at all.
The insurance coverage we maintain that is intended to address certain data security risks may be insufficient to cover all types of claims or losses that may arise and has been increasing in price over time. We cannot be certain that insurance coverage will continue to be available to us on economically reasonable terms, or at all.
If we are unable to fully utilize our purchase commitments or if we shift output from our internal manufacturing facilities in order to meet the commitments, our gross margin and operating margin could be materially adversely impacted. Due to the complexity of our products, some defects may only become detectable after deployment .
If we cancel purchase commitments, are unable to fully utilize our purchase commitments or if we shift output from our internal manufacturing facilities in order to meet the commitments, our gross margin and operating margin could be materially adversely impacted. Due to the complexity of our products, some defects may only become detectable after deployment .
Our operations are dependent upon our ability to protect our digital infrastructure and data. We manage and store various proprietary information and sensitive or confidential data relating to our operations, as well as to our customers, suppliers, employees and other third parties, and we will store subscribers’ data on our edge-to-cloud mass storage platform.
Our operations are dependent upon our ability to protect our digital infrastructure and data. We manage and store various proprietary information and sensitive or confidential data relating to our operations, as well as to our customers, suppliers, employees and other third parties, and we store subscribers’ data on our edge-to-cloud mass storage platform.
Consequently, we are in the process of implementing, and will continue to invest in and implement, modifications and upgrades to our IT systems and procedures, including making changes to legacy systems or acquiring new systems with new functionality, and building new policies, procedures, training programs and monitoring tools.
We are in the process of implementing, and will continue to invest in and implement, modifications and upgrades to our IT systems and procedures, including making changes to legacy systems or acquiring new systems with new functionality, and building new policies, procedures, training programs and monitoring tools.
Our market share, revenue and results of operations in the future may be adversely affected if we fail to: • develop new products, identify business strategies and timely introduce competitive product offerings to meet technological shifts, or we are unable to execute successfully; • consistently maintain our time-to-market performance with our new products; • produce these products in adequate volume; • meet specifications or satisfy compatibility requirements; • qualify these products with key customers on a timely basis by meeting our customers’ performance and quality specifications; or • achieve acceptable manufacturing yields, quality and costs with these products.
Our market share, revenue and results of operations in the future may be adversely affected if we fail to: • develop new products, identify business strategies and timely introduce competitive product offerings to meet technological shifts, or we are unable to execute successfully; • consistently maintain our time-to-market performance with our new products; • manufacture these products in adequate volume; • meet specifications or satisfy compatibility requirements; • qualify these products with key customers on a timely basis by meeting our customers’ performance and quality specifications; or • achieve acceptable manufacturing yields, quality and costs with these products.
In addition, the concentration of customers in our largest end markets magnifies the potential effect of missing a product qualification opportunity. If the delivery of our products is delayed, our customers may use our competitors’ products to meet their requirements.
In addition, the concentration of customers in our largest end markets magnifies the potential adverse effect of missing a product qualification opportunity. If the delivery of our products is delayed, our customers may use our competitors’ products to meet their requirements.
Risks Related to Owning our Ordinary Shares • The price of our ordinary shares may be volatile and could decline significantly. • Any decision to reduce or discontinue the payment of cash dividends to our shareholders or the repurchase of our ordinary shares pursuant to our previously announced share repurchase program could cause the market price of our ordinary shares to decline significantly. 17 Table of Contents RISKS RELATED TO OUR BUSINESS, OPERATIONS AND INDUSTRY Our ability to increase our revenue and maintain our market share depends on our ability to successfully introduce and achieve market acceptance of new products on a timely basis.
Risks Related to Owning our Ordinary Shares • The price of our ordinary shares may be volatile and could decline significantly. • Any decision to reduce or discontinue the payment of cash dividends to our shareholders or the repurchase of our ordinary shares pursuant to our previously announced share repurchase program could cause the market price of our ordinary shares to decline significantly. 16 Table of Contents RISKS RELATED TO OUR BUSINESS, OPERATIONS AND INDUSTRY Our ability to increase our revenue and maintain our market share depends on our ability to successfully introduce and achieve market acceptance of new products on a timely basis.
We often aim to lead the market in new technology deployments and leverage unique and customized technology from single source suppliers who are early adopters in the emerging market.
We also often aim to lead the market in new technology deployments and leverage unique and customized technology from single source suppliers who are early adopters in the emerging market.
Any change in export or import regulations, economic sanctions or related legislation, increased export and import controls, or change in the countries, governments, persons or technologies targeted by such regulations, in the countries where we operate could result in decreased use of our products and services by, or in our decreased ability to export or sell our products and services to, new or existing customers, which could materially adversely affect our business, results of operations and financial condition.
Any change in export or import regulations, economic sanctions or related legislation, increased export and import controls, or change in the countries, governments, persons or technologies targeted by such regulations, in the countries where we operate could result in decreased use of our products and services by, or in our decreased ability to export or sell our products and services to, new or existing customers, which could materially adversely affect our business, results of operations, financial condition and cash flows.
These fluctuations, which we expect to continue, have been and may continue to be precipitated by a variety of factors, including: • uncertainty in global economic and political conditions, and instability or war (such as the military action against Ukraine launched by Russia) or adverse changes in the level of economic activity in the major regions in which we do business; • pandemics, such as COVID-19, or other global health issues that impact our operations as well as those of our customers and suppliers; • competitive pressures resulting in lower prices by our competitors which may shift demand away from our products; • announcements of new products, services or technological innovations by us or our competitors, and delays or problems in our introduction of new, more cost-effective products, the inability to achieve high production yields or delays in customer qualification or initial product quality issues; • changes in customer demand or the purchasing patterns or behavior of our customers; • application of new or revised industry standards; • disruptions in our supply chain, including increased costs or adverse changes in availability of supplies of raw materials or components; • increased costs of electricity and/or other energy sources, freight and logistics costs or other materials or services necessary for the operation of our business; • the impact of corporate restructuring activities that we have and may continue to engage in; • changes in the demand for the computer systems and data storage products that contain our products; • unfavorable supply and demand imbalances; • our high proportion of fixed costs, including manufacturing and research and development expenses; • any impairments in goodwill or other long-lived assets; 26 Table of Contents • changes in tax laws, such as global tax developments applicable to multinational businesses; the impact of trade barriers, such as import/export duties and restrictions, sanctions, tariffs and quotas, imposed by the U.S. or other countries in which the Company conducts business; • the evolving legal and regulatory, economic, environmental and administrative climate in the international markets where the Company operates; and • adverse changes in the performance of our products.
These fluctuations, which we expect to continue, have been and may continue to be precipitated by a variety of factors, including: • uncertainty in global economic and political conditions, and instability or war or adverse changes in the level of economic activity in the major regions in which we do business; • pandemics, such as COVID-19, or other global health issues that impact our operations as well as those of our customers and suppliers; • competitive pressures resulting in lower prices by our competitors which may shift demand away from our products; • announcements of new products, services or technological innovations by us or our competitors, and delays or problems in our introduction of new, more cost-effective products, the inability to achieve high production yields or delays in customer qualification or initial product quality issues; • changes in customer demand or the purchasing patterns or behavior of our customers; • application of new or revised industry standards; • disruptions in our supply chain, including increased costs or adverse changes in availability of supplies of raw materials or components; • increased costs of electricity and/or other energy sources, freight and logistics costs or other materials or services necessary for the operation of our business; • the impact of corporate restructuring activities that we have and may continue to engage in; • changes in the demand for the computer systems and data storage products that contain our products; 25 Table of Contents • unfavorable supply and demand imbalances; • our high proportion of fixed costs, including manufacturing and research and development expenses; • any impairments in goodwill or other long-lived assets; • changes in tax laws, such as global tax developments applicable to multinational businesses; the impact of trade barriers, such as import/export duties and restrictions, sanctions, tariffs and quotas, imposed by the U.S. or other countries in which the Company conducts business; • the evolving legal and regulatory, economic, environmental and administrative climate in the international markets where the Company operates; and • adverse changes in the performance of our products.
Additionally, our nearline storage solutions is subject to variability of sales primarily due to the timing of IT spending or a reflection of cyclical demand from CSPs based on the timing of their procurement and deployment requirements and their ability to procure other components needed to build out data center infrastructure.
Additionally, our nearline storage solutions are subject to variability of sales primarily due to the timing of IT spending or a reflection of cyclical demand from CSPs based on the timing of their procurement and deployment requirements and their ability to procure other components needed to build out data center infrastructure.
Although we have controls and procedures to ensure compliance with all applicable regulations and orders, we cannot predict whether changes in laws or regulations by the U.S., China or another country will affect our ability to sell our products and services to existing or new customers.
Although we have controls and procedures to ensure compliance with all applicable regulations and orders, we cannot predict whether changes in laws or regulations by the U.S., China or another jurisdiction will affect our ability to sell our products and services to existing or new customers.
The impact of climate change may increase these risks due to changes in weather patterns, such as increases in storm intensity, sea-level rise, melting of permafrost and temperature extremes in areas where we or our suppliers and customers conduct business.
The impact of climate change may increase these risks due to changes in weather patterns, such as increases in storm intensity, sea-level rise and temperature extremes in areas where we or our suppliers and customers conduct business.
Our products could be shipped to those targets or for restricted end-uses by third parties, including potentially our channel partners, despite our precautions. In addition, if our partners fail to obtain appropriate import, export or re-export licenses or permits, we may also be adversely affected, through reputational harm as well as other negative consequences including government investigations and penalties.
Our products could be shipped to restricted end-users or for restricted end-uses by third parties, including potentially our channel partners, despite our precautions. In addition, if our partners fail to obtain appropriate import, export or re-export licenses or permits, we may also be adversely affected, through reputational harm as well as other negative consequences including government investigations and penalties.
Some of the actions that we face from time-to-time seek injunctions against the sale of our products and/or substantial monetary damages, which, if granted or awarded, could materially harm our business, financial condition and operating results . We cannot be certain that our products do not and will not infringe issued patents or other intellectual property rights of others.
Some of the actions that we face from time-to-time seek injunctions against the sale of our products and/or substantial monetary damages, which, if granted or awarded, could materially harm our business, financial condition and operating results . 29 Table of Contents We cannot be certain that our products do not and will not infringe issued patents or other intellectual property rights of others.
We believe that the deterioration of demand for disk drives in certain of the legacy markets has accelerated, and this deterioration may continue or further accelerate, which could cause our operating results to suffer. In addition, we believe announcements regarding competitive product introductions from time to time have caused customers to defer or cancel their purchases, making certain inventory obsolete.
The deterioration of demand for disk drives in certain of the legacy markets has accelerated, and we believe this deterioration may continue and may further accelerate, which has caused our operating results to suffer. In addition, we believe announcements regarding competitive product introductions from time to time have caused customers to defer or cancel their purchases, making certain inventory obsolete.
We have experienced and continuing to experience increased costs and production delays when we were unable to obtain the necessary equipment or sufficient quantities of some components, and/or have been forced to pay higher prices or make volume purchase commitments or advance deposits for some components, equipment or raw materials that were in short supply in the industry in general.
We have experienced and could in the future experience increased costs and production delays when we were unable to obtain the necessary equipment or sufficient quantities of some components, and/or have been forced to pay higher prices or make volume purchase commitments or advance deposits for some components, equipment or raw materials that were in short supply in the industry in general.
Even if we were not found to have violated such laws, the political and media scrutiny surrounding any governmental investigation of us could cause us significant expense and reputational harm. Such collateral consequences could have a material adverse impact on our business, results of operations, financial condition and cash flows.
Even if we were not found to have violated such laws, the political and media scrutiny surrounding any governmental investigation of us could 28 Table of Contents cause us significant expense and reputational harm. Such collateral consequences could have a material adverse impact on our business, results of operations, financial condition and cash flows.
The cost, quality, availability and supply of components, subassemblies, certain equipment and raw materials used to manufacture our products and key components like recording media and heads are critical to our success. Particularly important for our products are components such as read/write heads, substrates for recording media, ASICs, spindle motors, printed circuit boards, suspension assemblies and NAND flash memory.
The cost, quality and availability of components, subassemblies, certain equipment and raw materials used to manufacture our products are critical to our success. Particularly important for our products are components such as read/write heads, substrates for recording media, ASICs, spindle motors, printed circuit boards, suspension assemblies and NAND flash memory.
Some customers for both mass capacity storage and legacy markets hav e adopted SSDs as an alternative to hard drives in certain applications. Further adoption of SSDs or other alternative storage technologies may limit our total addressable HDD market, impact the competitiveness of our product portfolio and reduce our market share.
Some customers for both mass capacity storage and legacy markets have adopted SSDs as an alternative to hard drives in certain applications. Further adoption of SSDs or other alternative storage technologies may limit our total addressable HDD market, impact the competitiveness of our product portfolio and reduce our market share.
As a result, it is possible that our revenues will not be sufficient to recoup our up-front investments, in which case we will have to shift output from our internal manufacturing facilities to these suppliers or make penalty-type payments under the terms of these contracts.
As a result, it is possible that our revenues will not be sufficient to recoup our up-front investments, in which case we will have to shift output from our internal manufacturing facilities to these suppliers, resulting in higher internal manufacturing costs, or make penalty-type payments under the terms of these contracts.
Our ability to grow systems, SSD and Lyve revenues is subject to the following risks: • we may be unable to accurately estimate and predict data center capacity and requirements; • we may not be able to offer compelling solutions or services to enterprises, subscribers, or consumers; • we may be unable to obtain cost effective supply of NAND flash memory in order to offer competitive SSD solutions; and • our cloud systems revenues generally have a longer sales cycle, and growth is likely to depend on relatively large customer orders, which may increase the variability of our results of operations and the difficulty of matching revenues with expenses.
Our ability to grow systems, SSD and Lyve revenues is subject to the following risks: • we may be unable to accurately estimate and predict data center capacity and requirements; • we may be unable to offer compelling solutions or services to enterprises, subscribers or consumers; • we may be unable to obtain cost effective supply of NAND flash memory in order to offer competitive SSD solutions; and • our cloud systems revenues generally have a longer sales cycle, and growth is likely to depend on relatively large orders from a concentrated customer base, which may increase the variability of our results of operations and the difficulty of matching revenues with expenses.
Our worldwide sales operations subject us to risks that may adversely affect our business related to disruptions in international markets, currency exchange fluctuations, increased costs, and global health outbreaks . We are a global company and have significant sales operations outside of the United States, including sales personnel and customer support operations.
Our worldwide sales and manufacturing operations subject us to risks that may adversely affect our business related to disruptions in international markets, currency exchange fluctuations and increased costs. We are a global company and have significant sales operations outside of the United States, including sales personnel and customer support operations.
Quantitative and Qualitative Disclosures About Market Risk— Foreign Currency Exchange Risk ” of this report for additional information about our foreign currency exchange risk. 21 Table of Contents The shipping and transportation costs associated with our international operations are typically higher than those associated with our U.S. operations, resulting in decreased operating margins in some countries.
Quantitative and Qualitative Disclosures About Market Risk— Foreign Currency Exchange Risk ” of this report for additional information about our foreign currency exchange risk. The shipping and transportation costs associated with our international operations are typically higher than those associated with our U.S. operations, resulting in decreased operating margins in some countries.
We rely on sole or a limited number of direct and indirect suppliers for some or all of these components that we do not manufacture, including substrates for recording media, read/write heads, ASICs, spindle motors, printed circuit boards, suspension assemblies and NAND flash memory.
We rely on sole or a limited number of direct and indirect suppliers for some or all of these components and rare earth elements that we do not manufacture, including substrates for recording media, read/write heads, ASICs, spindle motors, printed circuit boards, suspension assemblies and NAND flash memory.
If we do not control our manufacturing and operating expenses, our ability to compete in the marketplace may be impaired. In the past, activities to reduce costs have included closures and transfers of facilities, significant personnel reductions, restructuring efforts and efforts to increase automation.
If we do not control our manufacturing and operating expenses, our ability to compete in the marketplace may be impaired. In the past, activities to reduce costs have included closures and transfers of facilities, significant personnel reductions, restructuring efforts, asset write-offs and efforts to increase automation.
Other factors that have affected and may continue to affect our ability to anticipate or meet the demand for our products and adversely affect our results of operations include: • competitive product announcements or technological advances that result in excess supply when customers cancel purchases in anticipation of newer products; 19 Table of Contents • variable demand resulting from unanticipated upward or downward pricing pressures; • our ability to successfully qualify, manufacture and sell our data storage products; • changes in our product mix, which may adversely affect our gross margins; • key customers deferring or canceling purchases or delaying product acceptances, or unexpected increases in their orders; • manufacturing delays or interruptions, particularly at our manufacturing facilities in China, Malaysia, Northern Ireland, Singapore, Thailand or the United States; • limited access to components that we obtain from a single or a limited number of suppliers; and • the impact of changes in foreign currency exchange rates on the cost of producing our products and the effective price of our products to non-U.S. customers.
We expect these factors will continue to impact our business and results of operations over the near term. 18 Table of Contents Other factors that have affected and may continue to affect our ability to anticipate or meet the demand for our products and adversely affect our results of operations include: • competitive product announcements or technological advances that result in excess supply when customers cancel purchases in anticipation of newer products; • variable demand resulting from unanticipated upward or downward pricing pressures; • our ability to successfully qualify, manufacture and sell our data storage products; • changes in our product mix, which may adversely affect our gross margins; • key customers deferring or canceling purchases or delaying product acceptances, or unexpected increases in their orders; • manufacturing delays or interruptions, particularly at our manufacturing facilities in China, Malaysia, Northern Ireland, Singapore, Thailand or the United States; • limited access to components that we obtain from a single or a limited number of suppliers; and • the impact of changes in foreign currency exchange rates on the cost of producing our products and the effective price of our products to non-U.S. customers.
The loss of one or more of our key personnel or the inability to hire and retain key personnel could have a material adverse effect on our business, results of operations and financial condition. We are subject to risks related to corporate and social responsibility and reputation.
The loss of one or more of our key personnel or the inability to hire and retain key personnel could have a material adverse effect on our business, results of operations and financial condition. 23 Table of Contents We are subject to risks related to corporate and social responsibility and reputation.
If our products do not keep pace with customer requirements, our results of operations will be adversely affected. • We operate in highly competitive markets and our failure to anticipate and respond to technological changes and other market developments, including price, could harm our ability to compete. • We may be adversely affected by the loss of, or reduced, delayed or canceled purchases by, one or more of our key customers. • We are dependent on sales to distributors and retailers, which may increase price erosion and the volatility of our sales. • We must plan our investments in our products and incur costs before we have customer orders or know about the market conditions at the time the products are produced.
If our products do not keep pace with customer requirements, our results of operations will be adversely affected. • We operate in highly competitive markets and our failure to anticipate and respond to technological changes and other market developments, including price, could harm our ability to compete. • We have been adversely affected by reduced, delayed, loss of or canceled purchases by, one or more of our key customers, including large hyperscale data center companies and CSPs. • We are dependent on sales to distributors and retailers, which may increase price erosion and the volatility of our sales. • We must plan our investments in our products and incur costs before we have customer orders or know about the market conditions at the time the products are produced.
When this occurs, our products may be deemed commodities, which could result in downward pressure on prices. 18 Table of Contents We also experience competition from other companies that produce alternative storage technologies such as flash memory, where increasing capacity, decreasing cost, energy efficiency and improvements in performance have resulted in increased competition with our lower capacity, smaller form factor disk drives and a declining trend in demand for HDDs in our legacy markets.
When this occurs, our products may be deemed commodities, which could result in downward pressure on prices. 17 Table of Contents We also experience competition from other companies that produce alternative storage technologies such as flash memory, where increasing capacity, decreasing cost, energy efficiency and improvements in performance have resulted in SSDs that offer increased competition with our lower capacity, smaller form factor HDDs and a declining trend in demand for HDDs in our legacy markets.
In addition, deterioration in business and economic conditions could exacerbate price erosion and volatility as distributors or retailers lower prices to compensate for lower demand and higher inventory levels. Our distributors’ and retailers’ ability to access credit to fund their operations may also affect their purchases of our products.
In addition, deterioration in business and economic conditions has exacerbated price erosion and volatility as distributors or retailers lower prices to compensate for lower demand and higher inventory levels. Our distributors’ and retailers’ ability to access credit to fund their operations may also affect their purchases of our products.
Risks Related to Information Technology, Data and Information Security • We could suffer a loss of revenue and increased costs, exposure to significant liability including legal and regulatory consequences, reputational harm and other serious negative consequences in the event of cyber-attacks, ransomware or other cyber security breaches or incidents that disrupt our operations or result in unauthorized access to, or the loss, corruption, unavailability or dissemination of proprietary or confidential information of our customers or about us or our customers or other third parties. • We must successfully maintain and upgrade our IT systems, and our failure to do so could have a material adverse effect on our business, financial condition and results of operations.
Risks Related to Information Technology, Data and Information Security • We could suffer a loss of revenue and increased costs, exposure to significant liability including legal and regulatory consequences, reputational harm and other serious negative consequences in the event of cyber-attacks, ransomware or other cyber security breaches or incidents that disrupt our operations or result in unauthorized access to, or the loss, corruption, unavailability or dissemination of proprietary or confidential information of our customers or about us or other third parties. • We must successfully implement our new global enterprise resource planning system and maintain and upgrade our information technology systems, and our failure to do so could have a material adverse effect on our business, financial condition and results of operations.
Due to the global nature of our business, we are subject to import and export restrictions and regulations, including the Export Administration Regulations administered by the U.S. Commerce Department’s Bureau of Industry and Security (“BIS”) and the trade and economic sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”).
Due to the global nature of our business, we are subject to import and export restrictions and regulations, including the Export Administration Regulations (“EAR”) administered by the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) and the trade and economic sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”).
The costs associated with litigation and government investigations can also be unpredictable depending on the complexity and length of time devoted to such litigation or investigation. Litigation, investigations or government proceedings may also divert the efforts and attention of our key personnel, which could also harm our business .
The costs associated with litigation and government proceedings can also be unpredictable depending on the complexity and length of time devoted to such litigation or proceeding. Litigation and governmental investigations or other proceedings may also divert the efforts and attention of our key personnel, which could also harm our business .
Violations of these laws and regulations could lead to significant penalties, restraints on our export or import privileges, monetary fines, government investigations, disruption of our operating activities, damage to our reputation and corporate brand, criminal proceedings and regulatory or other actions that could materially adversely affect our results of operations.
Actual or perceived violations of these laws and regulations could lead to significant penalties, restraints on our export or import privileges, monetary fines, government investigations, disruption of our operating activities, damage to our reputation and corporate brand, criminal 27 Table of Contents proceedings and regulatory or other actions that could materially adversely affect our results of operations.
While we have long-standing relationships with many of our customers, if any key customers were to significantly reduce, defer or cancel their purchases from us or delay product acceptances, or we were prohibited from selling to those key customers, our results of operations would be adversely affected.
While we have long-standing relationships with many of our customers, if any key customers have to significantly reduce, defer or cancel their purchases from us or delay product acceptances, or we were prohibited from selling to those key customers such as due to export regulations, our results of operations would be adversely affected.
The COVID-19 pandemic may also heighten other risks described in this Risk Factors section. 22 Table of Contents If we do not control our costs, we will not be able to compete effectively . We continually seek to make our cost structure and business processes more efficient.
The COVID-19 pandemic may also heighten other risks described in this Risk Factors section. 21 Table of Contents If we do not control our costs, we will not be able to compete effectively and our financial condition may be adversely impacted. We continually seek to make our cost structure and business processes more efficient.
If we fail to predict demand accurately for our products or if the markets for our products change, we may be unable to meet demand or we may have insufficient demand, which may materially adversely affect our financial condition and results of operations. • Changes in demand for computer systems, data storage subsystems and consumer electronic devices may in the future cause a decline in demand for our products , or an increase in demand for our products that we are unable to meet . • We have a long and unpredictable sales cycle for nearline storage solutions, which impairs our ability to accurately predict our financial and operating results in any period and may adversely affect our ability to forecast the need for investments and expenditures. • We experience seasonal declines in the sales of our consumer products during the second half of our fiscal year which may adversely affect our results of operations. • We may not be successful in our efforts to grow our systems, SSD and Lyve revenues. • Our worldwide sales operations subject us to risks that may adversely affect our business related to disruptions in international markets, currency exchange fluctuations, increased costs, and global health outbreaks. • The ongoing COVID-19 pandemic has impacted our business, operating results and financial condition, as well as the operations and financial performance of many of the customers and suppliers in industries that we serve.
If we fail to predict demand accurately for our products or if the markets for our products change, we may have insufficient demand or we may be unable to meet demand, which may materially adversely affect our financial condition and results of operations. • Changes in demand for computer systems, data storage subsystems and consumer electronic devices may in the future cause a decline in demand for our products. • We have a long and unpredictable sales cycle for nearline storage solutions, which impairs our ability to accurately predict our financial and operating results in any period and may adversely affect our ability to forecast the need for investments and expenditures. • We experience seasonal declines in the sales of our consumer products during the second half of our fiscal year which may adversely affect our results of operations. • We may not be successful in our efforts to grow our systems, SSD and Lyve revenues. • Our worldwide sales and manufacturing operations subject us to risks that may adversely affect our business related to disruptions in international markets, currency exchange fluctuations and increased costs. • The effects of the COVID-19 pandemic have negatively impacted and may, in the future, adversely impact our business, operating results and financial condition, as well as the operations and financial performance of many of the customers and suppliers in industries that we serve. • If we do not control our costs, we will not be able to compete effectively and our financial condition may be adversely impacted.
Defects in our products could also result in legal actions by our customers for breach of warranty, property damage, injury or death. Such legal actions, including but not limited to product liability claims could exceed the level of insurance coverage that we have obtained.
Defects in our products could also result in legal actions by our customers for breach of warranty, property damage, injury or death. Such legal actions, including but not limited to product liability claims could exceed the level of insurance coverage that we have obtained. Any significant uninsured claims could significantly harm our financial condition.
Our investment decisions in adding new assembly and test capacity require significant planning and lead-time, and a failure to accurately forecast demand for our products could cause us to over-invest or under-invest, which would lead to excess capacity, under-utilization charges, impairments or loss of sales and revenue opportunities. Sales to the legacy markets remain an important part of our business.
Our investment decisions in adding new manufacturing capacity require significant planning and lead-time, and a failure to accurately forecast demand for our products could cause us to over-invest or under-invest, which would lead to excess capacity, underutilization charges, or impairments. Sales to the legacy markets remain an important part of our business.
Furthermore, if there is consolidation among our customer base, our customers may be able to command increased leverage in negotiating prices and other terms of sale, which could adversely affect our profitability.
Furthermore, if there is consolidation among our customer base, or when supply exceeds demand in our industry, our customers may be able to command increased leverage in negotiating prices and other terms of sale, which could adversely affect our profitability.
The market price of our ordinary shares has fluctuated and may continue to fluctuate or decline significantly in response to various factors some of which are beyond our control, including : • general stock market conditions, or general uncertainty in stock market conditions due to global economic conditions and negative financial news unrelated to our business or industry, including the impact of the COVID-19 pandemic; • the timing and amount of or the discontinuance of our share repurchases; • actual or anticipated variations in our results of operations; • announcements of innovations, new products, significant contracts, acquisitions, or significant price reductions by us or our competitors, including those competitors who offer alternative storage technology solutions; • our failure to meet our guidance or the performance estimates of investment research analysts, or changes in financial estimates by investment research analysts; • significant announcements by or changes in financial condition of a large customer; • the ability of our customers to procure necessary components which may impact their demand or timing of their demand for our products, especially during a period of persistent supply chain shortages; • actual or perceived security breaches or security vulnerabilities; • the occurrence of major catastrophic events, including natural disasters, acts of war or climate change; • actual or anticipated changes in the credit ratings of our indebtedness by rating agencies; and • the sale of our ordinary shares held by certain equity investors or members of management.
The market price of our ordinary shares has fluctuated and may continue to fluctuate or decline significantly in response to various factors some of which are beyond our control, including : • general stock market conditions, or general uncertainty in stock market conditions due to global economic conditions and negative financial news unrelated to our business or industry, including the impact of the COVID-19 pandemic; • the timing and amount of or the discontinuance of our share repurchases; • actual or anticipated variations in our results of operations; • announcements of innovations, new products, significant contracts, acquisitions, or significant price reductions by us or our competitors, including those competitors who offer alternative storage technology solutions; • our failure to meet our guidance or the performance estimates of investment research analysts, or changes in financial estimates by investment research analysts; • significant announcements by or changes in financial condition of a large customer; • the ability of our customers to procure necessary components which may impact their demand or timing of their demand for our products, especially during a period of persistent supply chain shortages; 31 Table of Contents • reduction in demand from our key customers due to macroeconomic conditions that reduce cloud, enterprise or consumer spending; • actual or perceived security breaches or incidents or security vulnerabilities; • actual or anticipated changes in the credit ratings of our indebtedness by rating agencies; and • the sale of our ordinary shares held by certain equity investors or members of management.
Some of our key customer s such as OEM customers including large hyperscale data center companies and CSPs account for a large portion of our reven ue in our mass capacity markets.
Some of our key customers such as OEM customers including large hyperscale data center companies and CSPs account for a large portion of our revenue in our mass capacity markets.
Any further limitation that impedes our ability to export or sell our products and services could materially adversely affect our business, results of operations and financial condition. 30 Table of Contents Other countries also regulate the import and export of certain encryption and other technology, including import and export licensing requirements, and have enacted laws that could limit our ability to sell or distribute our products and services or could limit our partners’ or customers’ ability to sell or use our products and services in those countries, which could materially adversely affect our business, results of operations and financial condition.
Other countries also regulate the import and export of certain encryption and other technology, including import and export licensing requirements, and have enacted laws that could limit our ability to sell or distribute our products and services or could limit our partners’ or customers’ ability to sell or use our products and services in those countries, which could materially adversely affect our business, results of operations, financial condition and cash flows.
We risk damage to our reputation if we fail to act responsibly in a number of areas, such as diversity and inclusion, environmental stewardship, sustainability, supply chain management, climate change, workplace conduct, and human rights.
We face increasing scrutiny related to environmental, social and governance activities. We risk damage to our reputation if we fail to act responsibly in a number of areas, such as diversity and inclusion, environmental stewardship, sustainability, supply chain management, climate change, workplace conduct and human rights.
If we were ever found to have violated applicable export control laws, we may be subject to various penalties available under the laws, any of which could have a material and adverse impact on our business, results of operations and financial condition.
If we were ever found to have violated applicable export control laws, we may be subject to penalties which could have a material and adverse impact on our business, results of operations, financial condition and cash flows.
As our operations become more automated and increasingly interdependent and our edge-to-cloud mass storage platform service grows, our exposure to the risks posed by storage, transfer, and maintenance of data, such as corruption, loss or unavailability of, or damage to, and other security risks to, data, will continue to increase.
As our operations become more automated and increasingly interdependent and our edge-to-cloud mass storage platform service grows, our exposure to the risks posed by storage, transfer, and maintenance of data, such as damage, corruption, loss, unavailability, unauthorized acquisition and other proceeding, and other security risks, including risks of distributions to our platform or security breaches and incidents impacting our digital infrastructure and data, will continue to increase.
In addition, the equipment we use to manufacture our products and components is frequently custom made and comes from a few suppliers and the lead times required to obtain manufacturing equipment can be significant.
Certain rare earth elements are also critical in the manufacture of our products. In addition, the equipment we use to manufacture our products and components is frequently custom made and comes from a few suppliers and the lead times required to obtain manufacturing equipment can be significant.
Risks Related to Financial Performance or General Economic Conditions • We may not be able to generate sufficient cash flows from operations and our investments to meet our liquidity requirements, including servicing our indebtedness. • We are subject to counterparty default risks. • Our quarterly results of operations fluctuate, sometimes significantly, from period to period, and may cause our share price to decline. • Any cost reduction initiatives that we undertake may not deliver the results we expect, and these actions may adversely affect our business. • Changes in the macroeconomic environment may in the future negatively impact our results of operations. • The effect of geopolitical uncertainties, war, terrorism, natural disasters, public health issues and other circumstances, on national and/ or international commerce and on the global economy, could materially adversely affect our results of operations and financial condition.
Risks Related to Human Capital • The loss of or inability to attract, retain and motivate key executive officers and employees could negatively impact our business prospects. • We are subject to risks related to corporate and social responsibility and reputation. 15 Table of Contents Risks Related to Financial Performance or General Economic Conditions • Changes in the macroeconomic environment have impacted and may in the future negatively impact our results of operations. • We may not be able to generate sufficient cash flows from operations and our investments to meet our liquidity requirements, including servicing our indebtedness and continuing to declare our quarterly dividend. • We are subject to counterparty default risks. • Our quarterly results of operations fluctuate, sometimes significantly, from period to period, and may cause our share price to decline. • Any cost reduction initiatives that we undertake may not deliver the results we expect and these actions may adversely affect our business. • The effect of geopolitical uncertainties, war, terrorism, natural disasters, public health issues and other circumstances, on national and/or international commerce and on the global economy, could materially adversely affect our results of operations and financial condition.
There can be no assurance that laws, regulations and policies will not be changed in ways that will require us to modify our business model and objectives or affect our returns on investments by restricting existing activities and products, subjecting them to escalating costs or prohibiting them outright.
Laws, regulations and policies may change in ways that will require us to modify our business model and objectives or affect our returns on investments by restricting existing activities and products, subjecting them to escalating costs or prohibiting them outright.
Our business may not generate sufficient cash flows to enable us to meet our liquidity requirements, including working capital, capital expenditures, product development efforts, investments, servicing our indebtedness and other general corporate requirements. If we cannot fund our liquidity requirements, we may have to reduce or delay capital expenditures, product development efforts, investments and other general corporate expenditures.
Our business may not generate sufficient cash flows to enable us to meet our liquidity requirements, including working capital, capital expenditures, product development efforts, investments, servicing our indebtedness and other general corporate requirements.
Any disruption of or interference at our hosted infrastructure partners would impact our operations and our business could be adversely impacted. 32 Table of Contents RISKS RELATED TO INFORMATION TECHNOLOGY, DATA AND INFORMATION SECURITY We could suffer a loss of revenue and increased costs, exposure to significant liability including legal and regulatory consequences, reputational harm and other serious negative consequences in the event of cyber-attacks, ransomware or other cyber security breaches or incidents that disrupt our operations or result in unauthorized access to, or the loss, corruption, unavailability or dissemination of proprietary or confidential information of our customers or about us or other third parties .
RISKS RELATED TO INFORMATION TECHNOLOGY, DATA AND INFORMATION SECURITY We could suffer a loss of revenue and increased costs, exposure to significant liability including legal and regulatory consequences, reputational harm and other serious negative consequences in the event of cyber-attacks, ransomware or other cyber security breaches or incidents that disrupt our operations or result in unauthorized access to, or the loss, corruption, unavailability or dissemination of proprietary or confidential information of our customers or about us or other third parties .
Furthermore, it is difficult for us to evaluate the degree to which this seasonality may affect our business in future periods because of the rate and unpredictability of product transitions and new product introductions, as well as macroeconomic conditions. We may not be successful in our efforts to grow our systems, SSD and Lyve revenues.
Furthermore, it is difficult for us to evaluate the degree to which this seasonality may affect our business in future periods because of the rate and unpredictability of product transitions and new product introductions, as well as macroeconomic conditions.
Since our working capital needs peak during periods in which we are increasing production in anticipation of orders that have not yet been received, our results of operations will fluctuate even if the forecasted demand for our products proves accurate.
Since our working capital needs peak during periods in which we are increasing production in anticipation of orders that have not yet been received, our results of operations will fluctuate even if the forecasted demand for our products proves accurate. Failure to anticipate consumer demand for our branded solutions may also adversely impact our future results of operations.
As a result of our restructurings, we have experienced and may in the future experience a loss of continuity, loss of accumulated knowledge, disruptions to our operations and inefficiency during transitional periods.
As a result of our restructurings, we have experienced and may in the future experience a loss of continuity, loss of accumulated knowledge, disruptions to our operations and inefficiency during transitional periods. Any cost-cutting measures could impact employee retention.
Any resulting increase in competition could have a material adverse effect on our business, financial condition and results of operations . We may be adversely affected by the loss of, or reduced, delayed or canceled purchases by, one or more of our key customers .
Any resulting increase in competition could have a material adverse effect on our business, financial condition and results of operations. We have been adversely affected by reduced, delayed, loss of or canceled purchases by, one or more of our key customers, including large hyperscale data center companies and CSPs.
If our operating costs are higher than we expect or if we do not maintain adequate control of our costs and expenses, our results of operations may be adversely affected. Changes in the macroeconomic environment may in the future negatively impact our results of operations.
If our operating costs are higher than we expect or if we do not maintain adequate control of our costs and expenses, our results of operations may be adversely affected.
The costs to us to eliminate or address the foregoing security problems and security vulnerabilities before or after a security breach or incident could be significant. System redundancy may be ineffective or inadequate, certain legacy IT systems may not be easily remediated, and our disaster recovery planning may not be sufficient for all eventualities.
The costs to eliminate or address security problems and security vulnerabilities before or after a security breach or incident may be significant. Certain legacy information technology (“IT”) systems may not be easily remediated, and our disaster recovery planning may not be sufficient for all eventualities.
The ongoing COVID-19 pandemic has impacted our business, operating results and financial condition , as well as the operations and financial performance of many of the customers and suppliers in industries that we serve.
The effects of the COVID-19 pandemic have negatively impacted and may, in the future, adversely impact our business, operating results and financial condition, as well as the operations and financial performance of many of the customers and suppliers in industries that we serve.
In the event of a natural disaster, losses and significant recovery time could be required to resume operations and our financial condition and results of operations could be materially adversely affected.
Many of our suppliers and customers are also located in areas with risks of natural disasters. In the event of a natural disaster, losses and significant recovery time could be required to resume operations and our financial condition and results of operations could be materially adversely affected.
For example, significant inflation and related increases in interest rates, or a recession, could negatively affect our business, operating results or financial condition or the markets in which we operate, which, in turn, could adversely affect the price of our ordinary shares.
Significant inflation and related increases in interest rates, have negatively affected our business in recent quarters and could continue in the near future to negatively affect our business, operating results or financial condition or the markets in which we operate, which, in turn, could adversely affect the price of our ordinary shares.
Risks Associated with Supply and Manufacturing • Shortages or delays in the receipt of, or cost increases in, critical components, equipment or raw materials necessary to manufacture our products, may cause us to suffer lower operating margins, production delays and other material adverse effects. • Shortages or delays in critical components, as well as reliance on single-source suppliers, can affect our production and development of products and may harm our operating results. • If revenues fall or customer demand decreases significantly, we may not meet all of our purchase commitments to certain suppliers. • Due to the complexity of our products, some defects may only become detectable after deployment.
Risks Associated with Supply and Manufacturing • Shortages or delays in the receipt of, or cost increases in, critical components, equipment or raw materials necessary to manufacture our products, as well as reliance on single-source suppliers, may affect our production and development of products and may harm our operating results. • We have cancelled purchased commitments with suppliers and incurred cost associated with such cancellations, and if revenues fall or customer demand decreases significantly, we may not meet our purchase commitments to certain suppliers in the future, which could result in penalties, increased manufacturing costs or excess inventory. • Due to the complexity of our products, some defects may only become detectable after deployment.
Given the length of development and qualification programs and unpredictability of the sales cycle, we may be unable to accurately forecast product demand, which may result in lost sales or excess inventory and associated inventory reserves or write-downs, each of which could harm our business, financial condition and results of operations. 20 Table of Contents We experience seasonal declines in the sales of our consumer products during the second half of our fiscal year which may adversely affect our results of operations.
Given the length of development and qualification programs and unpredictability of the sales cycle, we may be unable to accurately forecast product demand, which may result in excess inventory and associated inventory reserves or write-downs, which could harm our business, financial condition and results of operations.
In addition, we also rely upon third-party hosted infrastructure partners globally to serve customers and operate certain aspects of our business or services.
In addition, we also rely upon third-party hosted infrastructure partners globally to serve customers and operate certain aspects of our business or services. Any disruption of or interference at our hosted infrastructure partners would impact our operations and our business could be adversely impacted.
The measures we and our vendors have implemented to secure our computer equipment and data belonging to us, our customers, suppliers, employees or other third parties have been and may continue to be vulnerable to phishing, employee error, hacking, ransomware and other cyberattacks, malfeasance, system error or other irregularities or incidents, including from breaches and incidents or attacks at third party vendors we utilize, and may not be sufficient for all eventualities.
Despite the measures we and our vendors put in place designed to protect our computer equipment and data, our customers, suppliers, employees or other third parties, the digital infrastructure and data have been and may continue to be vulnerable to phishing, employee or contractor error, hacking, cyberattacks, ransomware and other malware, malfeasance, system error or other irregularities or incidents, including from attacks or breaches and incidents at third party vendors we utilize.
Our future performance depends to a significant degree upon the continued service of key members of management as well as marketing, sales and product development personnel. We believe our future success will also depend in large part upon our ability to attract, retain and further motivate highly skilled management, marketing, sales and product development personnel.
We believe our future success will also depend in large part upon our ability to attract, retain and further motivate highly skilled management, marketing, sales and product development personnel.
Macroeconomic developments such as the withdrawal of the United Kingdom (“U.K.”) from the European Union (“EU”), slowing global economies, increased tariffs between the U.S and China, Mexico and other countries, or adverse economic conditions worldwide resulting from the COVID-19 pandemic and efforts of governments and private industry to slow the pandemic or efforts of governments to stimulate or stabilize the economy may adversely impact our business.
Macroeconomic developments such as slowing global economies, trade disputes, sanctions, increased tariffs between the U.S. and China, Mexico and other countries, the withdrawal of the United Kingdom from the EU, adverse economic conditions worldwide or efforts of governments to stimulate or stabilize the economy have and may continue to adversely impact our business.
Should major public health issues, including pandemics, arise, we could be negatively affected by stringent employee travel restrictions, additional limitations or cost increases in freight and other logistical services, governmental actions limiting the movement of products or employees between regions, increases in or changes to data collection and reporting obligations, delays in production ramps of new products, and disruptions in our operations and those of some of our key direct and indirect suppliers and customers.
Should major public health issues, including pandemics, arise, we could be negatively affected by stringent employee travel restrictions, additional limitations or cost increases in freight and other logistical services, governmental actions limiting the movement of products or employees between regions, increases in or changes to data collection and reporting obligations, delays in production ramps of new products, and disruptions in our operations and those of some of our key direct and indirect suppliers and customers. 26 Table of Contents LEGAL, REGULATORY AND COMPLIANCE RISKS Our business is subject to various laws, regulations, governmental policies, litigation, governmental investigations or governmental proceedings that may cause us to incur significant expense or adversely impact our results or operations and financial condition .
Our high level of debt presents the following risks: • we are required to use a substantial portion of our cash flow from operations to pay principal and interest on our debt, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, product development efforts, strategic acquisitions, investments and alliances and other general corporate requirements; • our substantial leverage increases our vulnerability to economic downturns, decreased availability of capital, and adverse competitive and industry conditions and could place us at a competitive disadvantage compared to those of our competitors that are less leveraged; • our debt service obligations could limit our flexibility in planning for, or reacting to, changes in our business and our industry, and could limit our ability to pursue other business opportunities, borrow more money for operations or capital in the future and implement our business strategies; • our level of debt may restrict us from raising, or make it more costly to raise, additional financing on satisfactory terms to fund working capital, capital expenditures, product development efforts, strategic acquisitions, investments and alliances and other general corporate requirements; and • covenants in our debt instruments limit our ability to pay future dividends or make other restricted payments and investments. 25 Table of Contents In addition, in the event that we need to refinance all or a portion of our outstanding debt as it matures or incur additional debt to fund our operations, we may not be able to obtain terms as favorable as the terms of our existing debt or refinance our existing debt or incur additional debt to fund our operations at all.
Our high level of debt presents the following risks: • we are required to use a substantial portion of our cash flow from operations to service our debt, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, product development efforts, strategic acquisitions, investments and alliances and other general corporate requirements; • our substantial leverage increases our vulnerability to economic downturns, decreases availability of capital and may subject us to a competitive disadvantage vis-à-vis those of our competitors that are less leveraged; • our debt service obligations could limit our flexibility in planning for, or reacting to, changes in our business and our industry, and could limit our ability to borrow additional funds on satisfactory terms for operations or capital to implement our business strategies; and • covenants in our debt instruments limit our ability to pay future dividends or make other restricted payments and investments, which could restrict our ability to execute on our business strategy or react to the economic environment. 24 Table of Contents In addition, our ability to service our debt obligations and comply with debt covenants depends on our financial performance.
Therefore, we cannot be certain that we will be able to protect our intellectual property rights in jurisdictions outside the United States . 31 Table of Contents We are at times subject to intellectual property proceedings and claims which could cause us to incur significant additional costs or prevent us from selling our products, and which could adversely affect our results of operations and financial condition .
We are at times subject to intellectual property proceedings and claims which could cause us to incur significant additional costs or prevent us from selling our products, and which could adversely affect our results of operations and financial condition .
In light of this small, consolidated supplier base, if our suppliers increased their prices as a result of inflationary pressures from the current macroeconomic conditions or other changes in economic conditions, our results of operations would be negatively affected.
In light of this small, consolidated supplier base, if our suppliers increased their prices as a result of inflationary pressures from the current macroeconomic conditions or other changes in economic conditions, and we could not pass these price increases to our customers, our operating margin would decline.
China, Malaysia, Northern Ireland, Singapore and Thailand, in which we have significant operating assets, and the European Union each have exercised and continue to exercise significant influence over many aspects of their domestic economies including, but not limited to, fair competition, tax practices, anti-corruption, anti-trust, data privacy, protection, security and sovereignty, price controls and international trade. 28 Table of Contents Our business is subject to state, federal, and international laws and regulations, relating to data privacy, data protection and data security involving matters including data use, data localization, data transfer, data storage, data retention and deletion, data access, and the protection of data and systems.
Jurisdictions such as China, Malaysia, Northern Ireland, Singapore, Thailand and the U.S., in which we have significant operating assets, and the European Union each have exercised and continue to exercise significant influence over many aspects of their domestic economies including, but not limited to, fair competition, tax practices, anti-corruption, anti-trust, data privacy, protection, security and sovereignty, price controls and international trade, which have had and may continue to have an adverse effect on our business operations and financial condition.
Under any of these circumstances, the resumption of normal business operations may be delayed or hampered by lingering effects of the COVID-19 pandemic on our operations, direct and indirect suppliers, partners, and customers.
These impacts, individually or in the aggregate, have had and could have a material and adverse effect on our business, results of operations and financial condition. Under any of these circumstances, the resumption of normal business operations has delayed or been hampered by lingering effects of the COVID-19 pandemic on our operations, direct and indirect suppliers, partners and customers.
RISKS ASSOCIATED WITH SUPPLY AND MANUFACTURING Shortages or delays in the receipt of, or cost increases in, critical components, equipment or raw materials necessary to manufacture our products, may cause us to suffer lower operating margins, production delays and other material adverse effects.
RISKS ASSOCIATED WITH SUPPLY AND MANUFACTURING Shortages or delays in the receipt of, or cost increases in, critical components, equipment or raw materials necessary to manufacture our products, as well as reliance on single-source suppliers, may affect our production and development of products and may harm our operating results.
Changes in demand for computer systems, data storage subsystems and consumer electronic devices may in the future cause a decline in demand for our products, or an increase in demand for our products that we are unable to meet. Our products are components in computers, data storage systems and consumer electronic devices.
Changes in demand for computer systems, data storage subsystems and consumer electronic devices may in the future cause a decline in demand for our products. Our products are incorporated in computers, data storage systems deployed in data centers and consumer electronic devices. Historically, the demand for these products has been volatile.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe believe that our existing properties are in good operating condition and are suitable for the operations for which they are used.
Biggest changeAs of June 30, 2023, we owned or leased a total of approximately 9.8 million square feet of space worldwide. We believe that our existing properties are in good operating condition and are suitable for the operations for which they are used.
ITEM 2. PROPERTIES Our principal executive offices are located in Ireland. Our principal manufacturing facilities are located in China, Malaysia, Northern Ireland, Singapore, Thailand and the United States. Our principal product development facilities are located in California, Colorado, Minnesota and Singapore. Our leased facilities are occupied under leases that expire on various dates through 2068.
ITEM 2. PROPERTIES Our principal executive offices are located in Ireland. Our principal manufacturing facilities are located in China, Malaysia, Northern Ireland, Singapore, Thailand and the United States. Our principal product development facilities are located in California, Colorado, Minnesota and Singapore. Our leased facilities are occupied under leases that expire on various dates through 2067.
Our main material manufacturing, product development and marketing and administrative facilities at July 1, 2022 are as follows: Location Building(s) Owned or Leased Approximate Square Footage Primary Use Europe Northern Ireland Springtown Owned 479,000 Manufacture of recording heads United States California Owned 412,000 Product development, marketing and administrative and operational offices Colorado Owned 528,000 Product development, administrative and operational offices Minnesota Owned/Leased 1,098,000 Manufacture of recording heads and product development Asia China Wuxi Leased 707,000 Manufacture of drives and drive subassemblies Malaysia Johor Owned (1) 631,000 Manufacture of substrates Singapore Woodlands Owned/Leased (1) 1,511,000 Manufacture of media, administrative and operational offices Ayer Rajah Owned (1) 410,000 Product development, administrative and operational offices Thailand Korat Owned/Leased 2,710,000 Manufacture of drives and drive subassemblies Teparuk Owned/Leased 453,000 Manufacture of drive subassemblies ___________________________________ (1) Land leases for these facilities expire on various dates through 2068.
Our material manufacturing, product development and marketing and administrative facilities at June 30, 2023 are as follows: Location Building(s) Owned or Leased Approximate Square Footage Primary Use Europe Northern Ireland Springtown Owned 479,000 Manufacture of recording heads United States California Leased 575,000 Product development, marketing and administrative and operational offices Colorado Leased 533,000 Product development, administrative and operational offices Minnesota Owned/Leased 1,096,000 Manufacture of recording heads and product development Asia China Wuxi Leased 707,000 Manufacture of drives and drive subassemblies Malaysia Johor Owned (1) 631,000 Manufacture of substrates Singapore Woodlands Owned/Leased (1) 1,511,000 Manufacture of media, administrative and operational offices Ayer Rajah Leased 410,000 Product development, administrative and operational offices Thailand Korat Owned/Leased 2,710,000 Manufacture of drives and drive subassemblies Teparuk Owned/Leased 453,000 Manufacture of drive subassemblies ___________________________________ (1) Land leases for these facilities expire on various dates through 2067.
Removed
As of July 1, 2022, we owned or leased a total of approximately 9.7 million square feet of space worldwide. The 9.7 million square feet of owned or leased space includes a total of 68,000 square feet that is currently subleased.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table sets forth information with respect to all repurchases of our shares made during the fiscal year ended July 1, 2022, including shares withheld for statutory tax withholdings related to vesting of employee equity awards: Period (In millions, except average price paid per share) Total Number of Shares Purchased (1) Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) 1st Quarter through 3rd Quarter of Fiscal Year 2022 15 $ 92.10 15 $ 2,844 April 2, 2022 through April 29, 2022 1 83.32 1 2,746 April 30, 2022 through May 27, 2022 2 81.66 2 2,568 May 28, 2022 through July 1, 2022 3 78.40 3 2,366 Through 4th Quarter of Fiscal Year 2022 21 21 $ 2,366 ___________________________________ (1) Repurchase of shares including tax withholdings.
Biggest changeThe following table sets forth information with respect to all repurchases of our ordinary shares made during the fiscal year ended June 30, 2023, including statutory tax withholdings related to vesting of employee equity awards (in millions, except average price paid per share): Period Total Number of Shares Purchased (1) Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) 1st Quarter through 3rd Quarter of Fiscal Year 2023 6 $ 74.55 6 $ 1,924 April 1, 2023 through April 28, 2023 — — — 1,924 April 29, 2023 through May 26, 2023 — — — 1,924 May 27, 2023 through June 30, 2023 — — — 1,921 Through 4th Quarter of Fiscal Year 2023 6 6 $ 1,921 ___________________________________ (1) Repurchase of shares including tax withholdings.
The graph assumes that on June 30, 2017, $100 was invested in our ordinary shares and $100 was invested in each of the other two indices, with dividends reinvested on the date of payment without payment of any commissions. Dollar amounts in the graph are rounded to the nearest whole dollar.
The graph assumes that on June 29, 2018, $100 was invested in our ordinary shares and $100 was invested in each of the other two indices, with dividends reinvested on the date of payment without payment of any commissions. Dollar amounts in the graph are rounded to the nearest whole dollar.
We did not sell any of our equity securities during fiscal year 2022 that were not registered under the Securities Act of 1933, as amended. Performance Graph The performance graph below shows the cumulative total shareholder return on our ordinary shares for the period from June 30, 2017 to July 1, 2022.
We did not sell any of our equity securities during fiscal year 2023 that were not registered under the Securities Act of 1933, as amended. Performance Graph The performance graph below shows the cumulative total shareholder return on our ordinary shares for the period from June 29, 2018 to June 30, 2023.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our ordinary shares trade on the NASDAQ Global Select Market under the symbol “STX.” As of August 1, 2022, there were approximately 489 ho lders of record of our ordinary shares.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our ordinary shares trade on the NASDAQ Global Select Market under the symbol “STX.” As of July 31, 2023, there were approximatel y 487 holders of record of our ordinary shares.
Dividends Our ability to pay dividends in the future will be subject to, among other things, general business conditions within the data storage industry, our financial results, the impact of paying dividends on our credit ratings and legal and contractual restrictions 37 Table of Contents on the payment of dividends by our subsidiaries to us or by us to our ordinary shareholders, including restrictions imposed by covenants on our debt instruments.
Computer Hardware 100.00 106.49 184.21 281.05 280.39 394.47 Dividends Our ability to pay dividends in the future will be subject to, among other things, general business conditions within the data storage industry, our financial results, the impact of paying dividends on our credit ratings and legal and contractual restrictions on the payment of dividends by our subsidiaries to us or by us to our ordinary shareholders, including restrictions imposed by covenants on our debt instruments. 34 Table of Contents Repurchases of Equity Securities All repurchases of our outstanding ordinary shares are effected as redemptions in accordance with our Constitution.
The performance shown in the graph represents past performance and should not be considered an indication of future performance. 6/30/2017 6/29/2018 6/28/2019 7/3/2020 7/2/2021 7/1/2022 Seagate Technology Holdings plc $ 100.00 $ 152.23 $ 134.61 $ 141.83 $ 251.12 $ 211.97 S&P 500 100.00 114.26 125.78 136.03 188.84 169.66 Dow Jones U.S.
The performance shown in the graph represents past performance and should not be considered an indication of future performance. 6/29/2018 6/28/2019 7/3/2020 7/2/2021 7/1/2022 6/30/2023 Seagate Technology Holdings plc $ 100.00 $ 88.32 $ 93.37 $ 178.82 $ 146.57 $ 137.65 S&P 500 100.00 110.42 118.70 167.13 149.39 178.66 Dow Jones U.S.
As of July 1, 2022, $2.4 billion remained available for repurchase of ordinary shares under the existing repurchase authorization limits. All repurchases are effected as redemptions in accordance with our Constitution. There is no expiration date on our repurchase authorizations.
As of June 30, 2023, $1.9 billion remained available for repurchase of ordinary shares under the existing repurchase authorization limits authorized by our Board of Directors on October 21, 2020 and February 22, 2021. There is no expiration date on our repurchase authorizations. The timing of purchases will depend upon prevailing market conditions, alternative uses of capital and other factors.
Removed
Computer Hardware 100.00 130.03 140.14 251.12 384.68 384.42 ___________________________________ (1) $100 invested on 6/30/2017 in shares and in indices, including reinvestment of dividends.
Added
We may limit or terminate the repurchase program at any time.
Removed
Repurchases of Our Equity Securities On October 21, 2020 and February 22, 2021, our Board of Directors authorized the repurchase of an additional $3.0 billion and $2.0 billion of our outstanding ordinary shares, respectively, and as a result, we had an aggregate authority to repurchase approximately $8.0 billion of our ordinary shares.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

51 edited+37 added−15 removed24 unchanged
Biggest changeResults of Operations We list in the tables below summarized information from our Consolidated Statements of Operations by dollar amounts and as a percentage of revenue: Fiscal Years Ended (Dollars in millions) July 1, 2022 July 2, 2021 Revenue $ 11,661 $ 10,681 Cost of revenue 8,192 7,764 Gross profit 3,469 2,917 Product development 941 903 Marketing and administrative 559 502 Amortization of intangibles 11 12 Restructuring and other, net 3 8 Income from operations 1,955 1,492 Other expense, net (276) (144) Income before income taxes 1,679 1,348 Provision for income taxes 30 34 Net income $ 1,649 $ 1,314 39 Table of Contents Fiscal Years Ended July 1, 2022 July 2, 2021 Revenue 100 % 100 % Cost of revenue 70 73 Gross margin 30 27 Product development 8 8 Marketing and administrative 5 5 Amortization of intangibles — — Restructuring and other, net — — Operating margin 17 14 Other expense, net (3) (2) Income before income taxes 14 12 Provision for income taxes — — Net income 14 % 12 % The following table summarizes information regarding consolidated revenues by channel, geography, and market and HDD exabytes shipped by market and price per terabyte: Fiscal Years Ended July 1, 2022 July 2, 2021 Revenues by Channel (%) OEMs 75 % 69 % Distributors 14 % 18 % Retailers 11 % 13 % Revenues by Geography (%) (1) Asia Pacific 46 % 49 % Americas 40 % 34 % EMEA 14 % 17 % Revenues by Market (%) Mass capacity 68 % 60 % Legacy 23 % 32 % Other 9 % 8 % HDD Exabytes Shipped by Market Mass capacity 541 417 Legacy 90 118 Total 631 535 HDD Price per Terabyte $ 17 $ 18 ____________________________________________________________ (1) Revenue is attributed to geography based on the bill from location.
Biggest changeLegal, Environmental and Other Contingencies ” for more details. 36 Table of Contents Results of Operations We list in the tables below summarized information from our Consolidated Statements of Operations by dollar amounts and as a percentage of revenue: Fiscal Years Ended (Dollars in millions) June 30, 2023 July 1, 2022 Revenue $ 7,384 $ 11,661 Cost of revenue 6,033 8,192 Gross profit 1,351 3,469 Product development 797 941 Marketing and administrative 491 559 Amortization of intangibles 3 11 BIS settlement penalty 300 — Restructuring and other, net 102 3 (Loss) income from operations (342) 1,955 Other expense, net (154) (276) (Loss) income before income taxes (496) 1,679 Provision for income taxes 33 30 Net (loss) income $ (529) $ 1,649 Fiscal Years Ended June 30, 2023 July 1, 2022 Revenue 100 % 100 % Cost of revenue 82 70 Gross margin 18 30 Product development 11 8 Marketing and administrative 7 5 Amortization of intangibles — — BIS settlement penalty 4 — Restructuring and other, net 1 — Operating margin (5) 17 Other expense, net (2) (3) (Loss) income before income taxes (7) 14 Provision for income taxes — — Net (loss) income (7) % 14 % 37 Table of Contents Revenue The following table summarizes information regarding consolidated revenues by channel, geography, and market and HDD exabytes shipped by market and price per terabyte: Fiscal Years Ended June 30, 2023 July 1, 2022 Revenues by Channel (%) OEMs 74 % 75 % Distributors 15 % 14 % Retailers 11 % 11 % Revenues by Geography (%) (1) Asia Pacific 45 % 46 % Americas 41 % 40 % EMEA 14 % 14 % Revenues by Market (%) Mass capacity 66 % 68 % Legacy 21 % 23 % Other 13 % 9 % HDD Exabytes Shipped by Market Mass capacity 380 541 Legacy 61 90 Total 441 631 HDD Price per Terabyte $ 15 $ 17 ____________________________________________________________ (1) Revenue is attributed to geography based on the bill from location.
We continue to actively monitor the effects and potential impacts of the pandemic, inflation and other macroeconomic factors on all aspects of our business, supply chain, liquidity and capital resources including governmental policies that could periodically shut down an entire city where we, our suppliers or our customers operate.
We continue to actively monitor the effects and potential impacts of inflation, other macroeconomic factors and the pandemic on all aspects of our business, supply chain, liquidity and capital resources including governmental policies that could periodically shut down an entire city where we, our suppliers or our customers operate.
Share repurchases From time to time, at the Company’s discretion, we may repurchase any of our outstanding ordinary shares through private, open market, or broker assisted purchases, tender offers, or other means, including through the use of derivative transactions.
Share repurchases From time to time, at our discretion, we may repurchase any of our outstanding ordinary shares through private, open market, or broker assisted purchases, tender offers, or other means, including through the use of derivative transactions.
Our income tax provision recorded for fiscal years 2022 and 2021 differed from the provision for income taxes that would be derived by applying the Irish statutory rate of 25% to income before income taxes, primarily due to the net effect of (i) 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.
Our income tax provision recorded for fiscal years 2023 and 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 (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.
Operating leases We are a lessee in several operating leases related to real estate facilities for warehouse and office space.
Operating leases We are a lessee in several operating leases related to real estate facilities for warehouse, office and lab space.
Although we are unable to predict the future impact of the pandemic on our business, results of operations, liquidity or capital resources at this time, we expect we will continue to be negatively affected if the pandemic and related public and private health measures result in substantial manufacturing or supply chain challenges, substantial reductions or delays in demand due to disruptions in the operations of our customers or partners, disruptions in local and global economies, volatility in the global financial markets, sustained reductions or volatility in overall demand trends, restrictions on the export or shipment of our products or our customer’s products, or other unexpected ramifications from the pandemic.
Although we are unable to predict the future impact on our business, results of operations, liquidity or capital resources at this time, we expect we will continue to be negatively affected if the inflation, other macroeconomic factors and the pandemic and related public and private health measures result in substantial manufacturing or supply chain challenges, substantial reductions or delays in demand due to disruptions in the operations of our customers or partners, disruptions in local and global economies, volatility in the global financial markets, sustained reductions or volatility in overall demand trends, restrictions on the export or shipment of our products or our customer’s products, or other unexpected ramifications.
If actual warranty costs differ substantially from our estimates, revisions to the estimated warranty liability would be required, which could have a material adverse effect on our results of operations. Income Taxes. We make certain estimates and judgments in determining income tax expense for financial statement purposes.
If actual warranty costs differ substantially from our estimates, revisions to the estimated warranty liability would be required, which could have a material adverse effect on our results of operations. 44 Table of Contents Income Taxes. We make certain estimates and judgments in determining income tax expense for financial statement purposes.
We will continue to evaluate and manage the retirement and replacement of existing debt and associated obligations, including evaluating the issuance of new debt securities, exchanging existing debt securities for other debt securities and retiring debt pursuant to privately negotiated 45 Table of Contents transactions, open market purchases, tender offers or other means or otherwise.
We will continue to evaluate and manage the retirement and replacement of existing debt and associated obligations, including evaluating the issuance of new debt securities, exchanging existing debt securities for other debt securities and retiring debt pursuant to privately negotiated transactions, open market purchases, tender offers or other means or otherwise.
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition and cash flows. Our MD&A is organized as follows: • Fiscal Year 2022 Summary.
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition and cash flows. Our MD&A is organized as follows: • Overview of Fiscal Year 2023.
Total sales programs were 14% and 14% of gross revenue in fiscal years 2022 and 2021, respectively. Adjustments to revenues due to under or over accruals for sales programs related to revenues reported in prior quarterly periods were less than 1% of gross revenue in fiscal years 2022 and 2021. Warranty.
Total sales programs were 17% and 14% of gross revenue in fiscal years 2023 and 2022, respectively. Adjustments to revenues due to under or over accruals for sales programs related to revenues reported in prior quarterly periods were approximately 1% and less than 1% of gross revenue in fiscal years 2023 and 2022, respectively. Warranty.
Discussions of year-to-year comparisons between fiscal years 2021 and 2020 are not included in this Annual Report on Form 10-K and can be found in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended July 2, 2021, which was filed with the SEC on August 6, 2021.
Discussions of year-to-year comparisons between fiscal years 2022 and 2021 are not included in this Annual Report on Form 10-K and can be found in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended July 1, 2022, which was filed with the SEC on August 5, 2022.
From time to time, we may repurchase any of our outstanding senior notes in open market or privately negotiated purchases or o therwise, or we may repurchase outstanding senior notes pursuant to the terms of the applicable indenture. Refer to “Item 8. Financial Statements and Supplementary Data—Note 4. Debt” for more details.
From time to time, we may repurchase, redeem or otherwise extinguish any of our outstanding senior notes in open market or privately negotiated purchases or o therwise, or we may repurchase or redeem outstanding senior notes pursuant to the terms of the applicable indenture. Refer to “Item 8. Financial Statements and Supplementary Data— Note 4. Debt ” for more details.
Basis of Presentation and Summary of Significant Accounting Policies” for information regarding the effect of new accounting pronouncements on our financial statements. 46 Table of Contents
Basis of Presentation and Summary of Significant Accounting Policies” for information regarding the effect of new accounting pronouncements on our financial statements.
As of July 1, 2022, no borrowings (including swing line loans) were outstanding and no commitments were utilized for letters of credit issued under the Revolving Credit Facility. The Revolving Credit Facility is available for borrowings, subject to compliance with financial covenants and other customary conditions to borrowing.
As of June 30, 2023, no borrowings (including swing line loans) were outstanding and no commitments were utilized for letters of credit issued under the Revolving Credit Facility. The Revolving Credit Facility is available for borrowings, subject to compliance with financial covenants and other customary conditions to borrowing.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities-Repurchases of Our Equity Securities.” As of July 1, 2022, $2.4 billion remained available for repurchase under our existing repurchase authorization limit. We may limit or terminate the repurchase program at any time. All repurchases are effected as redemptions in accordance with our Constitution.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities-Repurchases of Our Equity Securities.” As of June 30, 2023, $1.9 billion remained available for repurchase under our existing repurchase authorization limit. We may limit or terminate the repurchase program at any time. All repurchases are effected as redemptions in accordance with our Constitution.
However, some challenges posed by the pandemic to our industry and to our business continue to remain uncertain and cannot be predicted at this time. Consequently, we will continue to evaluate our financial position in light of future developments, particularly those relating to the pandemic.
However, some challenges to our industry and to our business continue to remain uncertain and cannot be predicted at this time. Consequently, we will continue to evaluate our financial position in light of future developments, particularly those relating to the global economic factors.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is a discussion of the Company’s financial condition, changes in financial condition and results of operations for the fiscal years ended July 1, 2022 and July 2, 2021.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is a discussion of the Company’s financial condition, changes in financial condition and results of operations for the fiscal years ended June 30, 2023 and July 1, 2022.
Liquidity Sources Our primary sources of liquidity as of July 1, 2022, consist of: (1) approximately $615 million in cash and cash equivalents, (2) cash we expect to generate from operations and (3) $1.75 billion available for borrowing under our senior unsecured revolving credit facility (“Revolving Credit Facility”), which is part of our credit agreement (the “Credit Agreement”).
Liquidity Sources Our primary sources of liquidity as of June 30, 2023, consist of: (1) approximately $786 million in cash and cash equivalents, (2) cash we expect to generate from operations and (3) $1.5 billion available for borrowing under our senior unsecured revolving credit facility (“Revolving Credit Facility”), which is part of our credit agreement (the “Credit Agreement”).
Accordingly, fiscal year 2022 and 2021 both comprised of 52 weeks and ended on July 1, 2022 and July 2, 2021, respectively. Fiscal year 2026 will be comprised of 53 weeks and will end on July 3, 2026.
Accordingly, fiscal year 2023 and 2022 both comprised of 52 weeks and ended on June 30, 2023 and July 1, 2022, respectively. Fiscal year 2026 will be comprised of 53 weeks and will end on July 3, 2026.
Income Tax As of July 1, 2022, we had a liability for unrecognized tax benefits and an accrual for the payment of related interest totaling $3 million, none of which is expected to be settled within one year.
Income Tax As of June 30, 2023, we had a liability for unrecognized tax benefits and an accrual for the payment of related interest totaling $4 million, none of which is expected to be settled within one year.
As of July 1, 2022, we had unconditional purchase obligations of approximately $4.5 billion, primarily related to purchases of inventory components with our suppliers. We expect $1.5 billion of these commitments to be paid within one year. Capital expenditures We incur material capital expenditures to design and manufacture our products that depend on advanced technologies and manufacturing techniques.
As of June 30, 2023, we had unconditional purchase obligations of approximately $3.7 billion, primarily related to purchases of inventory components with our suppliers. We expect $919 million of these commitments to be paid within one year. Capital expenditures We incur material capital expenditures to design and manufacture our products that depend on advanced technologies and manufacturing techniques.
As of July 1, 2022, the amount of future minimum rent expense for both occupied and vacated facilities net of sublease income under non-cancelable operating lease contracts was $58 million, of which $14 million is expected to be paid within one year. Refer to “Item 8. Financial Statements and Supplementary Data—Note 6. Leases” for details.
As of June 30, 2023, the amount of future minimum rent expense for both occupied and vacated facilities net of sublease income under non-cancelable operating lease contracts was $564 million, of which $53 million is expected to be paid within one year. Refer to “Item 8. Financial Statements and Supplementary Data— Note 6. Leases ” for details.
Long-term debt and interest payments on debt As of July 1, 2022, the future principal payment obligation on our long-term debt was $5.7 billion, of which $585 million will mature within one year.
Long-term debt and interest payments on debt As of June 30, 2023, the future principal payment obligation on our long-term debt was $5.5 billion, of which $63 million will mature within one year.
We anticipate that our effective tax rate in future periods will generally be less than the Irish statutory rate based on our ownership structure, our intention to indefinitely reinvest earnings from our subsidiaries outside of Ireland and the potential future increases in our valuation allowance for deferred tax assets. 42 Table of Contents Liquidity and Capital Resources The following sections discuss our principal liquidity requirements, as well as our sources and uses of cash and our liquidity and capital resources.
We anticipate that our effective tax rate in future periods will generally be less than the Irish statutory rate based on our ownership structure, our intention to indefinitely reinvest earnings from our subsidiaries outside of Ireland and the potential future changes in our valuation allowance for deferred tax assets.
The following table summarizes results from the Consolidated Statement of Cash Flows for the periods indicated: Fiscal Years Ended (Dollars in millions) July 1, 2022 July 2, 2021 Net cash flow provided by (used in): Operating activities $ 1,657 $ 1,626 Investing activities (352) (466) Financing activities (1,899) (1,673) Net decrease in cash, cash equivalents and restricted cash $ (594) $ (513) Cash Provided by Operating Activities Cash provided by operating activities for fiscal year 2022 was approximately $1.7 billion and includes the effects of net income adjusted for non-cash items including depreciation, amortization, share-based compensation and: • an increase of $228 million in accounts payable, primarily due to timing of payments and an increase in materials purchased; partially offset by • an increase of $374 million in accounts receivable, primarily due to linearity of sales; and • an increase of $361 million in inventories, primarily due to timing of shipments, and an increase in materials purchased for production of higher capacity drives and to mitigate supply chain disruptions.
Cash provided by operating activities for fiscal year 2022 was approximately $1.7 billion and includes the effects of net income adjusted for non-cash items including depreciation, amortization, share-based compensation and: • an increase of $228 million in accounts payable, primarily due to timing of payments and an increase in materials purchased; partially offset by • an increase of $374 million in accounts receivable, primarily due to linearity of sales; and • an increase of $361 million in inventories, primarily due to timing of shipments, and an increase in materials purchased for production of higher capacity drives and to mitigate supply chain disruptions.
Income Taxes Fiscal Years Ended (Dollars in millions) July 1, 2022 July 2, 2021 Change % Change Provision for income taxes $ 30 $ 34 $ (4) (12) % We recorded an income tax provision of $30 million for fiscal year 2022 compared to an income tax provision of $34 million for fiscal year 2021.
Income Taxes Fiscal Years Ended (Dollars in millions) June 30, 2023 July 1, 2022 Change % Change Provision for income taxes $ 33 $ 30 $ 3 10 % 39 Table of Contents We recorded an income tax provision of $33 million for fiscal year 2023 compared to an income tax provision of $30 million for fiscal year 2022.
In fiscal year 2021, we used $466 million for net cash investing activities, which was primarily due to payments for the purchase of property, equipment and leasehold improvements of approximately $498 million, partially offset by proceeds from the sale of investments of $29 million Cash Used in Financing Activities Net cash used in financing activities of $1.9 billion for fiscal year 2022 was primarily attributable to the following activities: • $1.8 billion in payments for repurchases of our ordinary shares; • $701 million net repurchases of long-term debt; and • $610 million in dividend payments; partially offset by • $1.2 billion from the issuance of long-term debt; and • $68 million in proceeds from the issuance of ordinary shares under employee stock plans.
Cash Used in Financing Activities Net cash used in financing activities of $988 million for fiscal year 2023 was primarily attributable to the following activities: • $1.6 billion repurchases of long-term debt; • $582 million in dividend payments; and • $408 million in payments for repurchases of our ordinary shares; partially offset by • $1.6 billion in proceeds from the issuance of long-term debt; and • $68 million in proceeds from the issuance of ordinary shares under employee stock plans. 41 Table of Contents Net cash used in financing activities of $1.9 billion for fiscal year 2022 was primarily attributable to the following activities: • $1.8 billion in payments for repurchases of our ordinary shares; • $701 million net purchases of long-term debt; and • $610 million in dividend payments; partially offset by • $1.2 billion from the issuance of long-term debt; and • $68 million in proceeds from the issuance of ordinary shares under employee stock plans.
Analysis of changes in our balance sheets and cash flows, discussion of our financial condition including potential sources of liquidity, and material cash requirements and their general purpose. • Critical Accounting Estimates.
Analysis of changes in our balance sheets and cash flows and discussion of our financial condition, including potential sources of liquidity, material cash requirements and their general purpose. • Critical Accounting Policies and Estimates. Accounting policies and estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results.
Cash and Cash Equivalents As of (Dollars in millions) July 1, 2022 July 2, 2021 Change Cash and cash equivalents $ 615 $ 1,209 $ (594) Our cash and cash equivalents decreased by $594 million from July 2, 2021 primarily as a result of repurchases of our ordinary shares of $1.8 billion, repayment of long-term debt of $701 million, payment of dividends to our shareholders of $610 million and payments for capital expenditures of $381 million, partially offset by net cash of $1.7 billion provided by operating activities and net proceeds of $1.2 billion from issuance of long-term debt.
Cash and Cash Equivalents As of (Dollars in millions) June 30, 2023 July 1, 2022 Change Cash and cash equivalents $ 786 $ 615 $ 171 Our cash and cash equivalents increased by $171 million from July 1, 2022 primarily as a result of net cash of $942 million provided by operating activities, net proceeds of $1.6 billion from issuance of long-term debt and proceeds from the sale of assets of $534 million, partially offset by repayment of long-term debt of $1.6 billion, payment of dividends to our shareholders of $582 million, repurchases of our ordinary shares of $408 million, and payments for capital expenditures of $316 million.
As of July 1, 2022, future interest payments on these outstanding debt is estimated to be approximately $1.3 billion, of which $223 million is expected to be paid within one year.
As of June 30, 2023, future interest payments on this outstanding debt is estimated to be approximately $2.2 billion, of which $324 million is expected to be paid within one year.
Amortization of Intangibles. Amortization of intangibles for fiscal year 2022 decreased by $1 million, as compared to fiscal year 2021, due to certain intangible assets that reached the end of their useful lives. Restructuring and Other, net. Restructuring and other, net for fiscal year 2022 was not material.
Amortization of Intangibles. Amortization of intangibles for fiscal year 2023 decreased by $8 million, as compared to fiscal year 2022, due to certain intangible assets that reached the end of their useful lives. BIS settlement penalty.
Overview of financial and other highlights affecting us in fiscal year 2022. • Results of Operations. Analysis of our financial results comparing fiscal years 2022 and 2021. • Liquidity and Capital Resources.
Highlights of events in fiscal year 2023 that impacted our financial position. • Results of Operations. Analysis of our financial results comparing fiscal years 2023 and 2022. • Liquidity and Capital Resources.
Although there can be no assurance, we believe that our financial resources, along with controlling our costs, will allow us to manage the ongoing impacts of the pandemic on our business operations for the foreseeable future.
Although there can be no assurance, we believe that our financial resources, along with controlling our costs and capital expenditures, will allow us to manage the ongoing impacts of macroeconomic and other headwinds including higher inflationary pressures, inventory adjustments by our customers and the overall market demand disruptions on our business operations for the foreseeable future.
We operate in some countries that have restrictive regulations over the movement of cash and/or foreign exchange across their borders. However, we believe our sources of cash will continue to be sufficient to fund our operations and meet our cash requirements for the next 12 months.
However, we believe our sources of cash will continue to be sufficient to fund our operations and meet our cash requirements for the next 12 months.
As of July 1, 2022, we had unconditional commitment of $307 million primarily related to purchases of equipment, of which approximately $167 million is expected to be paid within one year. For fiscal year 2023, we expect capital expenditures to be aligned to our long-term targeted range of 4% to 6% of revenue.
As of June 30, 2023, we had unconditional commitment of $238 million primarily related to purchases of equipment, of which approximately $137 million is expected to be paid within one year. For fiscal year 2024, we expect capital expenditures to be lower than fiscal year 2023.
Dividends On July 21, 2022, our Board of Directors declared a quarterly cash dividend of $0.70 per share, which will be payable on October 5, 2022 to shareholders of record as of the close of business on September 21, 2022.
Outside of one year, we are unable to make a reasonably reliable estimate of when cash settlement with a taxing authority will occur. 43 Table of Contents Dividends On July 26, 2023, our 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.
Our cash and cash equivalents are maintained in investments with remaining maturities of 90 days or less at the time of purchase. The principal objectives of our investment policy are the preservation of principal and maintenance of liquidity. We believe our cash equivalents are liquid and accessible.
Liquidity and Capital Resources The following sections discuss our principal liquidity requirements, as well as our sources and uses of cash and our liquidity and capital resources. Our cash and cash equivalents are maintained in investments with remaining maturities of 90 days or less at the time of purchase.
Our worldwide operating income is either subject to varying rates of income tax or is exempt from income tax due to tax incentive programs we operate under in Singapore and Thailand. These tax incentives are scheduled to expire in whole or in part at various dates through 2033 . Certain tax incentives may be extended if specific conditions are met.
These tax incentives are scheduled to expire in whole or in part at various dates through 2033 . Certain tax incentives may be extended if specific conditions are met.
Our Board of Directors increased the authorization for the repurchase of our outstanding ordinary shares by $3.0 billion on October 21, 2020, and $2.0 billion on February 22, 2021. During fiscal year 2022, we repurchased approximately 21 million of our ordinary shares including shares withheld for statutory tax withholdings related to vesting of employee equity awards. See “Item 5.
During fiscal year 2023, we repurchased approximately 6 million of our ordinary shares including shares withheld for statutory tax withholdings related to vesting of employee equity awards. See “Item 5.
For a further discussion of the uncertainties and business risks associated with the COVID-19 pandemic, see the section entitled “Risk Factors” in Part I, Item 1A of our Annual Report.
For a further discussion of the uncertainties and business risks associated with the COVID-19 pandemic, see “Part I, Item 1A. Risk Factors” of our Annual Report. Regulatory settlement On April 18, 2023, our subsidiaries Seagate Technology LLC and Seagate Singapore International Headquarters Pte.
Purchase obligations Purchase obligations are defined as contractual obligations for the purchase of goods or services, which are enforceable and legally binding on us, and that specify all significant terms.
Cash Requirements and Commitments Our liquidity requirements are primarily to meet our working capital, product development and capital expenditure needs, to fund scheduled payments of principal and interest on our indebtedness, and to fund our quarterly dividend and any future strategic investments. 42 Table of Contents Purchase obligations Purchase obligations are defined as contractual obligations for the purchase of goods or services, which are enforceable and legally binding on us, and that specify all significant terms.
Restructuring and other, net for fiscal year 2021 was $8 million, primarily comprised of workforce reduction costs and supplier transition costs, partially offset by a gain from the sale of a certain property and a gain upon termination of an operating lease.
Restructuring and other, net for fiscal year 2023 was $102 million, primarily comprised of workforce reduction costs and other exit costs under our October 2022 and April 2023 restructuring plans, partially offset by gains from the sale of certain properties and assets of $167 million. Restructuring and other, net for fiscal year 2022 was not material.
Cash provided by operating activities for fiscal year 2021 was approximately $1.6 billion and includes the effects of net income adjusted for non-cash items including depreciation, amortization, share-based compensation and: • an increase of $58 million in accrued employee compensation, primarily due to an increase in our variable compensation expense; partially offset by • an increase of $64 million in inventories, primarily due to an increase in materials purchased for increased production of higher capacity drives and to mitigate supply chain disruptions; and • an increase of $42 million in accounts receivable, primarily due to an increase in revenue. 43 Table of Contents Cash Used in Investing Activities In fiscal year 2022, we used $352 million for net cash investing activities, which was primarily due to payments for the purchase of property, equipment and leasehold improvements of $381 million and payments for the purchase of investments of $18 million, partially offset by proceeds from the sale of investments of $47 million.
In fiscal year 2022, we used $352 million for net cash investing activities, which was primarily due to payments for the purchase of property, equipment and leasehold improvements of $381 million and payments for the purchase of investments of $18 million, partially offset by proceeds from the sale of investments of $47 million.
We are not aware of any downgrades, losses or other significant deterioration in the fair value of our cash equivalents from the values reported as of July 1, 2022.
We are not aware of any downgrades, losses or other significant deterioration in the fair value of our cash equivalents from the values reported as of June 30, 2023. For additional information on risks and factors that could impact our ability to fund our operations and meet our cash requirements, including the pandemic, among others, see “Part I, Item 1A.
Other Expense, net Fiscal Years Ended (Dollars in millions) July 1, 2022 July 2, 2021 Change % Change Other expense, net $ (276) $ (144) $ (132) 92 % 41 Table of Contents Other expense, net for fiscal year 2022 increased by $132 million compared to fiscal year 2021 primarily due to a net $97 million higher non-recurring gain from our strategic investments in the prior-year period, a $29 million increase in interest expense from the issuance of long-term debt and a $21 million increase in losses on de-designated cash flow hedges.
Other Expense, net Fiscal Years Ended (Dollars in millions) June 30, 2023 July 1, 2022 Change % Change Other expense, net $ (154) $ (276) $ 122 (44) % Other expense, net for fiscal year 2023 decreased by $122 million compared to fiscal year 2022 primarily due to a $190 million net gain recognized from early redemption and extinguishment of certain senior notes, partially offset by a $64 million net increase in interest expense from the exchange and issuance of long-term debt.
Marketing and administrative expenses for fiscal year 2022 increased by $57 million from fiscal year 2021 primarily due to a $17 million increase in compensation and other employee benefits as a result of an increase in share-based compensation, a $16 million increase in outside services expense , a $6 million increase in travel expenses as a result of the easing of pandemic-related travel restrictions, a $5 million increase in advertising costs and a $3 million increase in information technology costs.
Marketing and administrative expenses for fiscal year 2023 decreased by $68 million from fiscal year 2022 primarily due to a $41 million decrease in variable compensation and related benefit expenses, a $24 million decrease in compensation and other employee benefits primarily from the reduction in headcount as a result of our October 2022 and April 2023 restructuring plans and a temporary salary reduction program and a $7 million recovery of an accounts receivable previously written-off in prior years , partially offset by a $2 million increase in travel expense as a result of the easing of pandemic-related travel restrictions.
Product development expenses for fiscal year 2022 increased by $38 million from fiscal year 2021 primarily due to a $25 million increase in materials expense, a $17 million increase in depreciation expenses, an $8 million increase in compensation and other employee benefits as a result of increase in share-based compensation and a $3 million increase in equipment expense, partially offset by a $12 million decrease in outside services expense and a $9 million decrease in variable compensation expense.
Product development expenses for fiscal year 2023 decreased by $144 million from fiscal year 2022 primarily due to a $70 million decrease in variable compensation and related benefit expenses, a $51 million decrease in compensation and other employee benefits primarily from the reduction in headcount as a result of our October 2022 and April 2023 restructuring plans and a temporary salary reduction program, a $14 million decrease in material expense and a $6 million decrease in equipment expense.
For additional information on factors that could impact our ability to fund our operations and meet our cash requirements, including the COVID-19 pandemic, see the section entitled “Risk Factors” in Part I, Item 1A of this Annual Report. 44 Table of Contents Cash Requirements and Commitments Our liquidity requirements are primarily to meet our working capital, product development and capital expenditure needs, to fund scheduled payments of principal and interest on our indebtedness, and to fund our quarterly dividend and any future strategic investments.
For additional information on risks and factors that could impact our ability to fund our operations and meet our cash requirements, among others, see “Part I, Item 1A. Risk Factors” of this Annual Report.
Revenue Fiscal Years Ended (Dollars in millions) July 1, 2022 July 2, 2021 Change % Change Revenue $ 11,661 $ 10,681 $ 980 9 % 40 Table of Contents Revenue in fiscal year 2022 increased approximately 9%, or $980 million, from fiscal year 2021, primarily due to an increase in mass capacity exabytes shipped, partially offset by a decrease in legacy exabytes shipped.
Fiscal Years Ended (Dollars in millions) June 30, 2023 July 1, 2022 Change % Change Revenue $ 7,384 $ 11,661 $ (4,277) (37) % Revenue in fiscal year 2023 decreased approximately 37%, or $4.3 billion, from fiscal year 2022, primarily due to a decrease in exabytes shipped and to a lesser extend price erosion, as a result of lower demand in mass capacity and legacy markets that were impacted by macroeconomic conditions and pandemic-related headwinds.
The Credit Agreement includes three financial covenants: (1) interest coverage ratio, (2) total leverage ratio and (3) a minimum liquidity amount. The term of the Revolving Credit Facility is through October 14, 2026. As of July 1, 2022, we were in compliance with all of the covenants under our debt agreements.
The Credit Agreement includes three financial covenants: (1) interest coverage ratio, (2) leverage ratio and (3) a minimum liquidity amount. On May 19, 2023, we entered into the Eighth Amendment to our Credit Agreement to increase the maximum permitted total net leverage ratio and reduce the minimum interest coverage ration during the covenant relief period.
Based on our current outlook and the information we currently have available to us, we expect to be in compliance with the covenants in our debt agreements over the next 12 months. As of July 1, 2022, cash and cash equivalents held by non-Irish subsidiaries was $614 million.
As of June 30, 2023, we were in compliance with all of the covenants under our debt agreements. Refer to “Item 8. Financial Statements and Supplementary Data— Note 4. Debt ” for more details. As of June 30, 2023, cash and cash equivalents held by non-Irish subsidiaries was $638 million.
Removed
Accounting estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results. • For an overview of our business, see “Part I - Item 1. Business— Overview .” 38 Table of Contents Fiscal Year 2022 Summary During fiscal year 2022, we shipped 631 exabytes of HDD storage capacity.
Added
For an overview of our business, see “Part I, Item 1. Business.” Overview of Fiscal Year 2023 During fiscal year 2023, we shipped 441 exabytes of HDD storage capacity. We generated revenue of approximately $7.4 billion with a gross margin of 18%. Our operating cash flow was $942 million.
Removed
We generated revenue of approximately $11.7 billion with a gross margin of 30%, net income of $1.6 billion, diluted EPS of $7.36 and our operating cash flow was $1.7 billion. We increased our unsecured revolving credit facility (“Revolving Credit Facility”) to $1.75 billion, borrowed $1.2 billion under our new term loan facility and repaid $701 million of our long-term debt.
Added
We repurchased approximately 5 million of our ordinary shares for $408 million and paid $582 million in dividends. 35 Table of Contents We reduced our outstanding debt by $195 million through exchange and repurchase of certain senior notes and Term Loans facility with longer duration senior notes and recorded a net gain of $190 million as a result of debt extinguishment.
Removed
We repurchased approximately 20 million of our ordinary shares for $1.8 billion and paid $610 million in dividends. Impact of COVID-19 Pandemic The pandemic continues to impact our business and results of operations.
Added
Additionally, we entered into a settlement agreement related to BIS’ allegations regarding violations of the U.S. EAR and recorded a settlement penalty of $300 million.
Removed
During fiscal year 2022, we experienced the ongoing impacts of supply chain disruptions, higher logistics, materials and operational costs globally, as well as other inflationary and macroeconomic pressures. Additionally, constraints from certain component shortages impacted our ability to fulfill demand primarily for our non-HDD business.
Added
Recent Developments, Economic Conditions and Challenges During fiscal year 2023, the data storage industry and our business continued to be impacted by macroeconomic uncertainties and customer inventory adjustments, which led to a significant slowdown in demand for our products, particularly in the mass capacity markets.
Removed
Our customers also continued to experience certain supply chain and demand disruptions, resulting in demand variations across certain of our end markets, including impacts from periodic governmental lockdown measures. We expect these factors will continue to impact our business and results of operations over the near term.
Added
In response to changes in market demand, we undertook actions to lower our cost structure and reduced manufacturing production plans, which resulted in factory underutilization charges. We expect these market conditions will continue to impact our business and results of operations over the near term.
Removed
We are also actively working on opportunities to lower our cost structure, drive further operational efficiencies and maintain supply chain discipline including adjusting our manufacturing production plans in response to these business conditions. We are complying with governmental rules and guidelines across all of our sites.
Added
Under these conditions, we are continuing to actively manage costs, drive operational efficiencies and maintain supply discipline. In light of the deterioration of economic conditions, we undertook the October 2022, April 2023 and other restructuring plans to reduce our cost in response to change in macroeconomic and business conditions during fiscal year 2023.
Removed
The mass capacity storage markets continued to increase as a percentage of our total revenue and exabytes shipped in fiscal year 2022. We expect this transition from legacy to mass capacity storage markets will continue, resulting in mass capacity continuing to increase as a percentage of our total revenue and total exabytes shipped in fiscal year 2023 and beyond.
Added
These restructuring plans were substantially completed by the end of fiscal year 2023 with total charges of approximately $269 million, mainly consisting of employee severance cost and other one-time termination benefits. Refer to “ Item 8. Financial Statements and Supplementary Data— Note 7. Restructuring and Exit Costs ” for more details.
Removed
The long-term outlook for legacy markets is for a decrease in exabyte demand.
Added
We are complying with governmental rules and guidelines across all of our sites.
Removed
Cost of Revenue and Gross Margin Fiscal Years Ended (Dollars in millions) July 1, 2022 July 2, 2021 Change % Change Cost of revenue $ 8,192 $ 7,764 $ 428 6 % Gross profit 3,469 2,917 552 19 % Gross margin 30 % 27 % For fiscal year 2022, gross margin increased compared to the prior fiscal year primarily due to an increase in mass capacity exabytes shipped and improved product mix shift towards higher capacity HDDs, partially offset by higher component and logistics costs resulting from the pandemic and global inflationary pressures.
Added
Ltd entered into the Settlement Agreement with the BIS that resolves BIS’ allegations regarding our sales of hard disk drives to Huawei between August 17, 2020 and September 29, 2021.
Removed
Operating Expenses Fiscal Years Ended (Dollars in millions) July 1, 2022 July 2, 2021 Change % Change Product development $ 941 $ 903 $ 38 4 % Marketing and administrative 559 502 57 11 % Amortization of intangibles 11 12 (1) (8) % Restructuring and other, net 3 8 (5) (63) % Operating expenses $ 1,514 $ 1,425 $ 89 Product Development Expense.
Added
Under the terms of the Settlement Agreement, we agreed to pay $300 million to the BIS in quarterly installments of $15 million over the course of five years beginning October 31, 2023.
Removed
These changes were partially offset by a $16 million decrease in foreign exchange remeasurement expense.
Added
We have also agreed to complete three audits of its compliance with the license requirements of Section 734.9 of the EAR, including one audit by an unaffiliated third-party consultant chosen by us with expertise in U.S. export control laws and two internal audits.
Removed
Our fiscal year 2022 income tax provision included net tax benefits of approximately $15 million related to share-based compensation, $6 million resulting from recognition of deferred tax assets and $5 million associated with change in the applicable tax rate within our non-U.S. operations.
Added
The Settlement Agreement also includes a denial order that is currently suspended and will be waived five years after the date of the order issued under the Settlement Agreement, provided that we have made full and timely payments under the Settlement Agreement and timely completed the audit requirements.
Removed
Our fiscal year 2021 income tax provision included net tax benefits of approximately $8 million primarily associated with share-based compensation and $13 million related to the United Kingdom tax rate changes enacted in June 2021. Our Irish tax resident parent holding company owns various U.S. and non-Irish subsidiaries that operate in multiple non-Irish income tax jurisdictions.
Added
While we are 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 us in connection with any violation of the EAR arising out of the transactions detailed in the Settlement Agreement.
Removed
Net cash used in financing activities of $1.7 billion for fiscal year 2021 was primarily attributable to the following activities: • $2.0 billion in payments for repurchases of our ordinary shares; and • $649 million in dividend payments; partially offset by • $986 million from the issuance of Senior Notes; and • $108 million in proceeds from the issuance of ordinary shares under employee stock plans.
Added
While we believed that we complied with all relevant export control laws at the time we made the hard disk drive sales at issue, we determined that engaging with BIS and settling this matter was in the best interest of Seagate, our customers and our shareholders.
Removed
Outside of one year, we are unable to make a reasonably reliable estimate of when cash settlement with a taxing authority will occur.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

10 edited+1 added−2 removed9 unchanged
Biggest change(Dollars in millions, except percentages) Fiscal Years Ended Fair Value at July 1, 2022 2023 2024 2025 2026 2027 Thereafter Total Assets Money market funds, time deposits and certificates of deposit Floating rate $ 61 $ — $ — $ — $ — $ — $ 61 $ 61 Average interest rate 0.99 % 0.99 % Other debt securities Fixed rate $ — $ — $ — $ 15 $ — $ 8 $ 23 $ 23 Debt Fixed rate $ 540 $ 500 $ 479 $ — $ 505 $ 2,490 $ 4,514 $ 4,045 Average interest rate 4.75 % 4.88 % 4.75 % — % 4.88 % 4.09 % 4.41 % Variable rate $ 45 $ 60 $ 83 $ 563 $ 60 $ 390 $ 1,201 $ 1,174 Average interest rate 2.92 % 2.92 % 2.92 % 2.94 % 2.90 % 2.90 % 2.92 % Foreign Currency Exchange Risk.
Biggest change(Dollars in millions, except percentages) Fiscal Years Ended Fair Value at June 30, 2023 2024 2025 2026 2027 2028 Thereafter Total Assets Money market funds, time deposits and certificates of deposit Floating rate $ 74 $ — $ — $ — $ — $ — $ 74 $ 74 Average interest rate 5.12 % — % — % — % — % — % 5.12 % Other debt securities Fixed rate $ — $ — $ 15 $ — $ — $ 1 $ 16 $ 16 Debt Fixed rate $ — $ 479 $ — $ 505 $ — $ 3,245 $ 4,229 $ 4,112 Average interest rate — % 4.75 % — % 4.88 % — % 6.88 % 6.40 % Variable rate $ 63 $ 103 $ 497 $ 107 $ 519 $ — $ 1,289 $ 1,259 Average interest rate 5.60 % 5.61 % 5.84 % 5.52 % 5.60 % — % 5.69 % Foreign Currency Exchange Risk.
We recognized a net loss of $11 million and $10 million in Cost of revenue and Interest expense related to the loss of hedge designations on discontinued cash flow hedges during fiscal year 2022, respectively.
We 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 loss of hedge designations on discontinued cash flow hedges during fiscal year 2023.
We recognized a net gain of $14 million and a net loss of $7 million in Cost of revenue and Interest expense related to the loss of hedge designations on discontinued cash flow hedges during the fiscal year 2021. 47 Table of Contents The table below provides information as of July 1, 2022 about our foreign currency forward exchange contracts.
We recognized a net loss of $11 million and $10 million in Cost of revenue and Interest expense, respectively, related to the loss of hedge designations on discontinued cash flow hedges during the fiscal year 2022. The table below provides information as of June 30, 2023 about our foreign currency forward exchange contracts.
Our exposure to market risk for changes in interest rates relates primarily to our cash investment portfolio. As of July 1, 2022, we had no available-for-sale debt securities that had been in a continuous unrealized loss position for a period greater than 12 months. During fiscal year 2022, we recorded a $13 million impairment loss relating to available-for-sale debt securities.
Our exposure to market risk for changes in interest rates relates primarily to our cash investment portfolio. As of June 30, 2023, we had no available-for-sale debt securities that had been in a continuous unrealized loss position for a period greater than 12 months.
(Dollars in millions, except average contract rate) Notional Amount Average Contract Rate Estimated Fair Value (1) Foreign currency forward exchange contracts: Singapore Dollar $ 230 $ 1.36 $ (4) Thai Baht 168 $ 33.58 (8) Chinese Renminbi 116 $ 6.54 (3) British Pound Sterling 79 $ 0.77 (5) Total $ 593 $ (20) ___________________________________________________________________________________ (1) Equivalent to the unrealized net gain (loss) on existing contracts.
(Dollars in millions, except average contract rate) Notional Amount Average Contract Rate Estimated Fair Value (1) Foreign currency forward exchange contracts: Singapore Dollar $ 356 $ 1.34 $ (2) Thai Baht 145 $ 33.96 (5) Chinese Renminbi 76 $ 6.83 (3) British Pound Sterling 65 $ 0.81 2 Total $ 642 $ (8) ___________________________________________________________________________________ (1) Equivalent to the unrealized net gain (loss) on existing contracts.
We are subject to equity market risks due to changes in the fair value of the notional investments selected by our employees as part of our non-qualified deferred compensation plan—the Seagate Deferred Compensation Plan (the “SDCP”).
We are subject to equity market risks due to changes in the fair value of the notional investments selected by our employees as part of our non-qualified deferred compensation plan—the Seagate Deferred Compensation Plan (the “SDCP”). 46 Table of Contents In fiscal year 2014, we entered into a Total Return Swap (“TRS”) in order to manage the equity market risks associated with the SDCP liabilities.
The TRS is designed to substantially offset changes in the SDCP liabilities due to changes in the value of the investment options made by employees. See “Item 8. Financial Statements and Supplementary Data— Note 8. Derivative Financial Instruments” of this Report on Form 10-K. 48 Table of Contents
We pay 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 liabilities due to changes in the value of the investment options made by employees. See “Item 8. Financial Statements and Supplementary Data— Note 8.
The table below presents principal amounts and related fixed or weighted-average interest rates by year of maturity for our investment portfolio and debt obligations as of July 1, 2022.
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. 45 Table of Contents The table below presents principal amounts and related fixed or weighted-average interest rates by year of maturity for our investment portfolio and debt obligations as of June 30, 2023.
We have fixed rate and variable rate debt obligations. We enter into debt obligations for general corporate purposes including capital expenditures and working capital needs. Our Term Loans bear interest at a variable rate equal to LIBOR plus a variable margin.
We had no impairments related to credit losses for available-for-sale debt securities as of June 30, 2023. We have fixed rate and variable rate debt obligations. We enter into debt obligations for general corporate purposes including capital expenditures and working capital needs.
At this time, we have not identified any material exposure associated with the phase out of LIBOR by the end of 2022. We have entered into certain interest rate swap agreements to convert the variable interest rate on the Term Loans to fixed interest rates.
Our Term Loans bear interest at a variable rate equal to Secured Overnight Financing Rate (“SOFR”) plus a variable margin. We have entered into certain interest rate swap agreements to convert the variable interest rate on the Term Loans to fixed interest rates.
Removed
As of July 1, 2022, the aggregate notional amount of the Company’s interest-rate swap contracts was $1.2 billion, of which $600 million will mature in September 2025 and $600 million will mature in July 2027.
Added
Derivative Financial Instruments” of this Annual Report. 47 Table of Contents
Removed
In fiscal year 2014, we entered into a Total Return Swap (“TRS”) in order to manage the equity market risks associated with the SDCP liabilities. We pay a floating rate, based on the LIBOR plus an interest rate spread, on the notional amount of the TRS.

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