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What changed in Seagate Technology's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Seagate Technology's 2023 and 2024 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 2024 report.

+372 added−357 removedSource: 10-K (2024-08-02) vs 10-K (2023-08-04)

Top changes in Seagate Technology's 2024 10-K

372 paragraphs added · 357 removed · 288 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

74 edited+13 added−14 removed70 unchanged
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.
Biggest changeWe expect these trends 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. We believe this will result in a buildup of private and edge cloud environments that will enable fast and secure access to data throughout the IoT ecosystem.
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”).
Our HDD and SSD product portfolio 3 Table of Contents 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 (“CSPs”), scale-out storage servers and original equipment manufacturers (“OEMs”).
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 private and public clouds.
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.
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. Cloud and hyperscale data centers.
We believe the proliferation and personal creation of media-rich digital content, further enabled by fifth-generation wireless (“5G”) technology, the edge, the Internet of Things (“IoT”), machine learning (“ML”) and artificial intelligence (“AI”), will continue to create demand for higher capacity storage solutions.
We believe the proliferation and personal creation of media-rich digital content, further enabled by fifth-generation wireless (“5G”) technology, the edge, the Internet of Things (“IoT”), machine learning (“ML”) and generative artificial intelligence (“AI”), will continue to create demand for higher capacity storage solutions.
Similar legislation has been or may be enacted in other jurisdictions, including in the U.S., Canada, Mexico, Taiwan, China and Japan. The EU REACH Directive (Registration, Evaluation, Authorization, and Restriction of Chemicals, EC 1907/2006) also restricts substances of very high concern in products.
Similar legislation has been or may be enacted in other jurisdictions, including in Canada, China, Japan, Mexico, Taiwan, the U.S. and others. The EU REACH Directive (Registration, Evaluation, Authorization, and Restriction of Chemicals, EC 1907/2006) also restricts substances of very high concern in products.
Mass capacity storage involves well-established use cases—such as hyperscale data centers and public clouds as well as emerging use cases. Legacy markets are those that we continue to sell to but we do not plan to invest in significantly.
Mass capacity storage involves well-established use cases, such as hyperscale data centers and private and public clouds as well as emerging use cases. Legacy markets are those that we continue to sell to but we do not plan to invest in significantly.
If we or our suppliers fail to comply with the substance restrictions, recycle requirements or other environmental requirements as they are enacted worldwide, it could have a materially adverse effect on our business.
If we or our suppliers fail to comply with the substance restrictions, recycle content requirements or other environmental requirements as they are enacted worldwide, it could have a materially adverse effect on our business .
While the advance of solid state technology in many end markets is expected to increase, we believe that in the foreseeable future, cloud, edge and traditional enterprise which require high-capacity storage solutions will be best served by HDDs due to their ability to deliver reliable, energy-efficient and the most cost effective mass storage devices.
While the advance of solid state technology in many end markets is expected to increase, we believe that in the foreseeable future, cloud, edge and traditional enterprise that require high-capacity storage solutions will be best served by HDDs due to their ability to deliver reliable, scalable, energy-efficient and the most cost-effective mass storage devices.
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.
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, 58, has served as our Executive Vice President and Chief Commercial Officer since July 2022. Prior to that, Mr.
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.
These optimized drives are built to support the growing needs of the video imaging market with support for multiple streams and capacities up to 30TB. 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.
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.
From 1996 to 2002, he served at Seagate in varying roles of increasing responsibility until his promotion to Vice President. Gianluca Romano, 55, has served as our Executive Vice President and Chief Financial Officer since January 2019. From October 2011 to December 2018, Mr.
We differentiate products on the basis of capacity, performance, product quality, reliability, price, form factor, interface, power consumption efficiency, security features and other customer integration requirements. Our industry is characterized by continuous and significant advances in technology that contribute to rapid product life cycles. Currently our product offerings include: Mass Capacity Storage Enterprise Nearline HDDs.
We differentiate products on the basis of capacity, performance, product quality, reliability, price, form factor, interface, power consumption efficiency, security features and other customer integration requirements. Our industry is characterized by continuous and significant advances in technology that contribute to rapid product life cycles. Currently our product offerings include: 8 Table of Contents Mass Capacity Storage Enterprise Nearline HDDs.
We maintain a highly integrated approach to our business by designing and manufacturing a significant portion of the components we view as critical to our products, such as read/write heads and recording media. Read/Write Heads. The function of the read/write head is to scan across the disk as it spins, magnetically recording or reading information.
We maintain a highly integrated approach to our business by designing and manufacturing a significant portion of the components we view as critical to our products, such as read/write heads and recording media. 7 Table of Contents Read/Write Heads. The function of the read/write head is to scan across the disk as it spins, magnetically recording or reading information.
Our external storage solutions, with capacities up to 20TB are shipped, under the Seagate Ultra Touch, One Touch, Expansion and Basics product lines, as well as under the LaCie brand name.
Our external storage solutions with capacities up to 24TB are shipped, under the Seagate Ultra Touch, One Touch, Expansion and Basics product lines, as well as under the LaCie brand name.
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.
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.
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.
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. Participants in the data storage industry include: Major subcomponent manufacturers.
Disk drives that we manufacture are commonly differentiated by the following key characteristics: • input/output operations per second (“IOPS”), commonly expressed in megabytes per second, which is the maximum number of reads and writes to a storage location; • storage capacity, commonly expressed in TB, which is the amount of data that can be stored on the disk drive; • spindle rotation speed, commonly expressed in revolutions per minute (“RPM”), which has an effect on speed of access to data; • interface transfer rate, commonly expressed in megabytes per second, which is the rate at which data moves between the disk drive and the computer controller; • average seek time, commonly expressed in milliseconds, which is the time needed to position the heads over a selected track on the disk surface; • data transfer rate, commonly expressed in megabytes per second, which is the rate at which data is transferred to and from the disk drive; • product quality and reliability, commonly expressed in annualized return rates; and • energy efficiency, commonly measured by the power output such as energy per TB necessary to operate the disk drive.
Disk drives that we manufacture are commonly differentiated by the following key characteristics: • input/output operations per second (“IOPS”), commonly expressed in megabytes per second, which is the maximum number of reads and writes to a storage location; • storage capacity, commonly expressed in TB, which is the amount of data that can be stored on the disk drive; • areal density, which is a measurement of the storage capacity per square inch on the recording surface of a disk; 6 Table of Contents • spindle rotation speed, commonly expressed in revolutions per minute (“RPM”), which has an effect on speed of access to data; • interface transfer rate, commonly expressed in megabytes per second, which is the rate at which data moves between the disk drive and the computer controller; • average seek time, commonly expressed in milliseconds, which is the time needed to position the heads over a selected track on the disk surface; • data transfer rate, commonly expressed in megabytes per second, which is the rate at which data is transferred to and from the disk drive; • product quality and reliability, commonly expressed in annualized return rates; and • energy efficiency, commonly measured by the power output such as energy per TB necessary to operate the disk drive.
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.
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. 4 Table of Contents Client storage.
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.
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 years 2024 and 2023.
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.
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.
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.
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 including generative AI content growth or applications that converge the digital and physical worlds such as the metaverse or use of digital twins; 1 Worldwide IDC Global DataSphere Forecast, 2024–2028: AI Everywhere, But Upsurge in Data Will Take Time, Doc #US52076424, May 2024. 5 Table of Contents • 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.
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 high-capacity enterprise HDDs, including HAMR-based Mozaic drives, ship in capacities of up to 32TB. 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.
Some of our operations require environmental permits and controls to prevent and reduce air and water pollution, and these permits are subject to modification, renewal and revocation by issuing authorities. We have established environmental management systems and continually update environmental policies and standard operating procedures for our operations worldwide.
Some of our operations require environmental permits and controls to prevent and reduce air and water pollution, and these permits are subject to modification, renewal and revocation by issuing authorities . We have established an environmental management system and continually review and update our environmental policies and standard operating procedures for our operations worldwide as needed.
We compete with manufacturers of storage solutions and the other principal manufacturers in the data storage solution industry including: • Micron Technology, Inc.; • Samsung Electronics; • SK hynix, Inc.; • Kioxia Holdings Corporation; • Toshiba Corporation; and • Western Digital Corporation, operating the Western Digital, Hitachi Global Storage Technologies and SanDisk brands. Price Erosion.
We compete with manufacturers of storage solutions and the other principal manufacturers in the data storage solution industry including: • Micron Technology, Inc.; • Samsung Electronics; • SK hynix, Inc.; • Kioxia Holdings Corporation; • Toshiba Corporation; and • Western Digital Corporation. Price Erosion.
Our core technology platforms focus on the areal density of media and read/write head technologies, including innovations like shingled-magnetic-recording ("SMR") technology, the high-capacity enabling heat-assisted magnetic recording (“HAMR”) technology, and the throughput-optimizing multi actuator MACH.2 technology.
Our core technology platforms focus on the areal density of media and read/write head technologies, including the Mozaic platform, which is our implementation of the high-capacity enabling heat-assisted magnetic recording (“HAMR”) technology as well as innovations like shingled-magnetic-recording ("SMR") technology, and the throughput-optimizing multi actuator MACH.2 technology.
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 NAS HDD solutions are available in capacities up to 24TB. We also offer NAS SSDs with capacities up to 4TB. Legacy Applications Mission Critical HDDs and SSDs. Although we have stopped offering 15,000 RPM HDDs, we continue to support 10,000 RPM HDDs, offered in capacities up to 2.4TB, which enable increased throughput while improving energy efficiency.
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.
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.
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.
These voluntary, employee-led communities are built on a shared diversity of identity, experience or thought and and provide many benefits to employees, including professional and leadership development. Seagate’s ERG community encompasses a wide array of diverse identities, such as LGBTQ+, women, people of color and interfaith, with 30 chapters across seven countries.
Chong was Senior Vice President, Global Drive Operations from December 2013 to September 2020. He served as Vice President of China Operations from July 2003 to November 2013, expanding and also spearheading the first campus concept in Seagate with multiple manufacturing operations disciplines all located in a single site. Since joining Seagate in 1989 as an engineer, Mr.
Prior to his current role, Mr. Chong was Senior Vice President, Global Drive Operations from December 2013 to September 2020. He served as Vice President of China Operations from July 2003 to November 2013, expanding and also spearheading the first campus concept in Seagate with multiple manufacturing operations disciplines all located in a single site.
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.
Revenue ” contained in this report for a description of our major customers. 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.
Morris was the Vice President of HDD and SSD Products from August 2015 to August 2019. Before that, he served as Vice President of Design Engineering and Enterprise Development Group driving focus on technical and strategic alignment with enterprise and cloud customers from September 2013 to August 2015. Since joining the Company in 1996, Dr.
Prior to his current role, Dr. Morris was the Vice President of HDD and SSD Products from August 2015 to August 2019. Before that, he served as Vice President of Design Engineering and Enterprise Development Group driving focus on technical and strategic alignment with enterprise and cloud customers from September 2013 to August 2015.
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 previously served as 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.
We rely on our diverse workforce to develop, deliver and sustain our business strategy and achieve our goals. One way we embrace our diverse employees and promote a culture of inclusion is through the support of employee resource groups (“ERG”).
We believe that our employee relations are good. Diversity, Equity & Inclusion. One of our core values is inclusion. We rely on our diverse workforce to develop, deliver and sustain our business strategy to achieve our goals. One way we embrace our diverse employees and promote a culture of inclusion is through the support of employee resource groups (“ERG”).
Environmental Matters Our operations are subject to laws and regulations in the various jurisdictions in which we operate relating to the protection of the environment, including those governing discharges of pollutants into the air and water, the management and disposal of hazardous substances and wastes and the cleanup of contaminated sites.
Environmental Matters Our operations are subject to U.S. and foreign laws and regulations relating to the protection of the environment, including those governing discharges of pollutants into the air and water, the management and disposal of hazardous substances and wastes and the cleanup of contaminated sites.
The portfolio of learning and training formats include but are not limited to mentoring and coaching, e-learning opportunities, LinkedIn Learning classroom training, on-the-job training and other strategic internal programs that cover topics ranging from leadership and technical skills to health, safety and the environment.
We also encourage our employees to participate in the many learning opportunities available at Seagate. The portfolio of learning and training formats include but are not limited to mentoring and coaching, e-learning opportunities, LinkedIn Learning classroom training, on-the-job training and other strategic internal programs that cover topics ranging from leadership and technical skills to health, safety and the environment.
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.
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.
Morris has held a variety of engineering leadership positions and has been a key contributor to many of Seagate’s core technologies. 14 Table of Contents
Since joining the Company in 1996, Dr. Morris has held a variety of engineering leadership positions and has been a key contributor to many of Seagate’s core technologies. 14 Table of Contents
Chong has held a variety of leadership positions and has been a key strategic contributor for many Seagate’s operations and manufacturing capabilities across the global footprints. Dr. John C. Morris, 56, has served as our Senior Vice President, HDD and SSD Products and Chief Technology Officer since 2019. Prior to his current role, Dr.
Since joining Seagate in 1989 as an engineer, Mr. Chong has held a variety of leadership positions and has been a key strategic contributor for many of Seagate’s operations and manufacturing capabilities across the global footprints. Dr. John C. Morris, 57, has served as our Senior Vice President, HDD and SSD Products and Chief Technology Officer since 2019.
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.
All our manufacturing sites have health and safety management systems certified to the International Organization for Standardization (“ISO”) 45001 standard. In addition, we are audited to health and safety standards set forth by the Responsible Business Alliance (“RBA”).
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.
Information in, or that can be accessed through, our website is not incorporated into this Form 10-K. 13 Table of Contents 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 2, 2024.
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.
According to IDC, we are in a new era of the Data Age, whereby data is shifting to both the core and the edge. It is expected that by 2028, nearly 76% of the world’s data will be generated in the core and edge, up from 58% in 2023.
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.
Patents and Licenses As of June 28, 2024, we had approximatel y 4,000 U .S. patents and 300 patents issued in various non-U.S. jurisdictions, as well as approximately 150 U.S. and 100 non-U.S. 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.
ITEM 1. BUSINESS We are a leading provider of data storage technology and infrastructure solutions. Our principal products are hard disk drives, commonly referred to as disk drives, hard drives or HDDs.
ITEM 1. BUSINESS We are a leading provider of data storage technology and infrastructure solutions that enable enterprises and end users to confidently store and unlock the value of their data. Our principal products are hard disk drives, commonly referred to as disk drives, hard drives or HDDs.
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.
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. In January 2024, the Company established Singapore as its principal executive offices to better align its operational footprint.
Our portfolio includes devices with SATA, SAS and NVMe interfaces. The SSDs differ from HDDs in that they are without mechanical parts. SSDs store data on NAND flash memory cells, or metal-oxide semiconductor transistors using a charge on a capacitor to represent a binary digit. SSD technology offers fast access to data and robust performance.
The SSDs differ from HDDs in that they are without mechanical parts. SSDs store data on NAND flash memory cells, or metal-oxide semiconductor transistors using a charge on a capacitor to represent a binary digit. SSD technology offers fast access to data and robust performance. SSDs complement hyperscale applications, high-density data centers, cloud environments and web servers.
Areal density is measured by storage capacity per square inch on the recording surface of a disk. The storage capacity of a disk drive is determined by the size and number of disks it contains as well as the areal density capability of these disks. We also offer SSDs as part of our storage solutions portfolio.
The total storage capacity of a disk drive is determined by the size and number of disks it contains as well as the areal density capability of these disks. We also offer SSDs as part of our storage solutions portfolio. Our portfolio includes devices with SATA, SAS and NVMe interfaces.
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.
Our retail channel consists of our branded storage products sold to retailers either by us directly or by our distributors. 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 17.
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.
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 of scale.
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.
Additionally, certain customers can utilize many of our HDDs with SMR technology enabled which increases the available storage capacity of the drive with certain performance trade-offs. Enterprise SSDs. Our enterprise SSDs are designed for high-performance, hyperscale, high-density and cloud applications. They are offered with multiple interfaces, including SAS, SATA, and NVMe and in capacities up to 15TB. Enterprise Nearline Systems.
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.
Our legacy markets, such as consumer 10 Table of Contents 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.
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.
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.
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 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 96 26TB dri ves per chassis.
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.
The utilization of private and public cloud 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.
This integrated approach enables us to lower costs and to improve the functionality of components so that they work together efficiently. We believe that because of our vertical design and manufacturing strategy, we are well positioned to take advantage of the opportunities to leverage the close interdependence of components for disk drives.
We believe that because of our vertical design and manufacturing strategy, we are well positioned to take advantage of the opportunities to leverage the close interdependence of components for disk drives. Our manufacturing efficiency and flexibility are critical elements of our integrated business strategy.
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.
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.
We may be subject to various state, federal and international laws and regulations governing environmental matters, including those restricting the presence of certain substances in electronic products.
Based on our current estimates of cleanup costs and our expected allocation of these costs, we do not expect costs in connection with these sites to be material . 11 Table of Contents We may be subject to various state, federal and international laws and regulations governing the environment, including those restricting the presence of certain substances in electronic products.
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.
Lee 54 Senior Vice President, Chief Legal Officer and Corporate Secretary KianFatt Chong 61 Senior Vice President, Global Operations Dr. John C. Morris 57 Senior Vice President and Chief Technology Officer Dr. William D. Mosley, 57, has served as our Chief Executive Officer (“CEO”) since October 2017 and as a member of the Board since July 2017.
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.
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. This integrated approach enables us to lower costs and to improve the functionality of components so that they work together efficiently.
In addition, we are investing in upskilling and re-deploying employees as needed to support our future growth and respond to the changing demands of the business. For example, our internal mobility and career development tool provides Seagate employees the opportunity to establish networking and mentor connections, identify and participate in internal part-time projects, and explore internal full-time positions.
For example, our internal mobility and career development tool provides Seagate employees with the opportunity to establish networking and mentor connections, identify and participate in internal part-time projects, and explore internal full-time positions. Our Total Rewards program is designed to attract, motivate and retain talented people to meet our business goals.
We believe that our employees are crucial to our current success and that our future success will depend, in part, on our ability to attract, retain and further motivate qualified employees at all levels. We believe that our employee relations are good. Diversity, Equity & Inclusion. One of our core values is inclusion.
Social and Employee Matters As of June 28, 2024, we employed approximately 30,000 full-time employees worldwide, of which approximately 25,200 were located in our Asia operations. We believe that our employees are crucial to our current success and that our future success will depend, in part, on our ability to attract, retain and further motivate qualified employees at all levels.
In addition, we offer sales programs to distributors on a quarterly and periodic basis to promote the sale of selected products in the sales channel. Our retail channel consists of our branded storage products sold to retailers either by us directly or by our distributors.
The agreements and related sales programs typically provide the distributors with limited rights of return and price protection. In addition, we offer sales programs to distributors on a quarterly and periodic basis to promote the sale of selected products in the sales channel.
Our community engagement program is designed to provide support to our local communities, with an emphasis on science, technology, engineering and mathematics (“STEM”) and also address health and human services, and environmental opportunities. The program is reflective of Seagate’s vertically integrated model, with multiple large facilities across EMEA, Asia and the United States.
Our community engagement program is designed to provide support to our local communities, with an emphasis on science, technology, engineering and mathematics (“STEM”).
Large hyperscale data center companies, many of which are CSPs, are increasingly designing their own storage subsystems and having them built by contract manufacturers for their own data centers. This trend is reshaping the storage system and subsystem market, driving both innovation in system design and changes in the competitive landscape of large storage system vendors. Storage services.
Large cloud and hyperscale data center companies, many of which are CSPs, are increasingly designing their own storage subsystems and having them built by contract manufacturers for their own data centers. The leading hyperscale data center companies are also implementing advanced AI technologies to enhance their business growth.
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.
In January 2024, we published our fifth annual Diversity, Equity, and Inclusion (“DEI”) Report, which provides an overview of our DEI efforts and outcomes including demographics in our workforce. The fiscal year 2023 DEI Report is available on our website. Health & Safety.
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.
There are no family relationships among any of our executive officers. Name Age Positions Dr. William D. Mosley 57 Director and Chief Executive Officer Gianluca Romano 55 Executive Vice President and Chief Financial Officer Ban Seng Teh 58 Executive Vice President and Chief Commercial Officer James C.
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.
The program generally includes base pay, annual bonuses, commissions, equity awards, an employee share purchasing plan, retirement savings opportunities and other employee health and wellness benefits. Our compensation programs and guidelines are structured to align pay with both company and employee performance and aim to provide internally and externally competitive total compensation.
Our engagement survey includes facets of the employee experience throughout the employee life cycle. Employee experience is what employees encounter and observe over the course of their career at Seagate. A positive employee experience can have an impact on everything from recruiting to Seagate's bottom line.
A positive employee experience can have an impact on everything from recruiting to Seagate's bottom line. In fiscal year 202 4, we conducted our Employee Experience Survey to obtain feedback from our global workforce on their experience at Seagate.
We believe the HDD industry, in the prevailing supply and demand environment, experienced higher than usual price erosion in fiscal year 2023 and modest price erosion in fiscal year 2022. Product Life Cycles and Changing Technology.
We believe our HDDs’ supply and demand were well balanced for most of fiscal year 2024 leading to flat to higher pricing, compared to higher than usual price erosion in fiscal year 2023 driven primarily by demand contraction. Product Life Cycles and Changing Technology.
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.
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 compensation programs and guidelines are structured to align pay with performance and aim to provide internally and externally competitive total compensation. Employee engagement is the psychological commitment and passion that drives discretionary effort. It predicts individual performance and is the measure of the relationship between employees and the Company.
Employee engagement is the psychological commitment and passion that drives discretionary effort. It predicts individual performance and is the measure of the relationship between employees and the Company. Our engagement survey includes facets of the employee experience throughout the employee life cycle. Employee experience is what employees encounter and 12 Table of Contents observe during their career at Seagate.
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.
Lyve is our as-a-service platform built with mass data in mind. These solutions, including modular hardware and software delivered in a consumption-based model, support enterprises’ on-premise and cloud storage infrastructure needs. 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.
They typically furnish us with a non-binding indication of their near-term requirements and product deliveries are generally scheduled accordingly. The agreements and related sales programs typically provide the distributors with limited rights of return and price protection.
While not entirely eliminating order deferments or cancellations from our key OEM customers, we expect these changes will dampen demand volatility over time. 9 Table of Contents Our distributors generally enter into non-exclusive agreements for the resale of our products. They typically furnish us with a non-binding indication of their near-term requirements and product deliveries are generally scheduled accordingly.
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.
Demand for Data Storage In the “Worldwide Global DataSphere Forecast, 2024-2028”, published by the International Data Corporation 1 (“IDC”), the global datasphere is forecasted to grow at a compound rate of more than 24% over the next five years to reach 394 zettabytes by 2028.
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We believe this will result in a buildup of private and edge cloud environments that will enable fast and secure access to data throughout the IoT ecosystem.
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To support this AI-driven expansion, they are increasing the storage capacity of both AI-specific and traditional cloud infrastructure. Storage services. Companies that provide and host services and solutions, which include storage, backup, archiving, recovery and discovery of data.
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Our manufacturing efficiency and flexibility are critical elements of our integrated business strategy.
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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. Additionally, the proliferation of generative AI applications is expected to accelerate the creation of digital content such as text, images and video over the long-term.
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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.
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Conversely, during periods where demand exceeds supply, we usually have better pricing power and price erosion is generally muted. As production lead-times for our latest generation of high-capacity HDDs have extended, we began to require longer term demand forecasts and commitments from customers to improve supply predictability and create greater alignment between supply and demand.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeLegal, 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. • Some of our products and services are subject to export control laws and other laws affecting the countries in which our products and services may be sold, distributed, or delivered, and any changes to or violation of these laws could have a material adverse effect on our business, results of operations, financial condition and cash flows. • Changes in U.S. trade policy, including the imposition of sanctions or tariffs and the resulting consequences, may have a material adverse impact on our business and results of operations. • We may be unable to protect our intellectual property rights, which could adversely affect our business, financial condition and results of operations. • 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. • Our business and certain products and services depend in part on IP and technology licensed from third parties, as well as data centers and infrastructure operated by third parties.
Biggest changeLegal, Regulatory and Compliance Risks • Our business is subject to various laws, regulations and governmental policies that may cause us to incur significant expense or adversely impact our results of operations and financial condition. • Some of our products and services are subject to export control laws and other laws affecting the countries in which our products and services may be sold, distributed, or delivered, and any changes to or violation of these laws could have a material and adverse effect on our business, results of operations, financial condition and cash flows. • Our business is exposed to risks associated with litigation, investigations and regulatory proceedings that may cause us to incur significant expense or adversely impact our results of operations and financial condition. • Tax-related matters could have a material and adverse effect on our business, results of operations or financial condition. • Changes in U.S. trade policy, including the imposition of sanctions or tariffs and the resulting consequences, may have a material and adverse impact on our business and results of operations.
ITEM 1A. RISK FACTORS Summary of Risk Factors The following is a summary of the principal risks and uncertainties that could materially adversely affect our business, results of operations, financial condition, cash flows, brand and/or the price of our outstanding ordinary shares, and make an investment in our ordinary shares speculative or risky.
ITEM 1A. RISK FACTORS Summary of Risk Factors The following is a summary of the principal risks and uncertainties that could materially and adversely affect our business, results of operations, financial condition, cash flows, brand and/or the price of our outstanding ordinary shares, and make an investment in our ordinary shares speculative or risky.
Accordingly, we cannot accurately determine the ultimate effect that our new products will have on our results of operations. Our failure to accurately anticipate customers’ needs and accurately identify the shift in technological changes could materially adversely affect our long-term financial results.
Accordingly, we cannot accurately determine the ultimate effect that our new products will have on our results of operations. Our failure to accurately anticipate customers’ needs and accurately identify the shift in technological changes could materially and adversely affect our long-term financial results.
If prices decline significantly in this distribution channel or our distributors or retailers reduce purchases of our products or if distributors or retailers experience financial difficulties or terminate their relationships with us, our revenues and results of operations would be adversely affected.
If prices decline significantly in this distribution channel or our distributors or retailers reduce purchases of our products, experience financial difficulties or terminate their relationships with us, our revenues and results of operations would be adversely affected.
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.
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 and adversely affect our financial condition and results of operations.
Unexpected slowdowns in demand for computers, data storage subsystems or consumer electronic devices generally result in sharp declines in demand for our products. Declines in customer spending on the systems and devices that incorporate our products could have a material adverse effect on demand for our products and on our financial condition and results of operations.
Unexpected slowdowns in demand for computers, data storage subsystems or consumer electronic devices generally result in sharp declines in demand for our products. Declines in customer spending on the systems and devices that incorporate our products could have a material and adverse effect on demand for our products and on our financial condition and results of operations.
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 ability to grow our 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.
A weakened dollar could increase the effective cost of our expenses such as payroll, utilities, tax and marketing expenses, as well as overseas capital expenditures. Any of these events could have a material adverse effect on our results of operations.
A weakened dollar could increase the effective cost of our expenses such as payroll, utilities, tax and marketing expenses, as well as overseas capital expenditures. Any of these events could have a material and adverse effect on our results of operations.
If we fail to forecast demand accurately or if there is a partial or complete reduction in long-term demand for our products, we could be required to write off inventory, record excess capacity charges, which could negatively impact our gross margin and our financial results.
If we fail to forecast demand accurately or if there is a partial or complete reduction in long-term demand for our products, we could be required to write off inventory and/or record excess capacity charges, which could negatively impact our gross margin and financial results.
Defects in our products, third-party components or in the networks and systems of which they form a part, directly or indirectly, have resulted in and may in the future result in: • increased costs and product delays until complex solution level interoperability issues are resolved; • costs associated with the remediation of any problems attributable to our products; • loss of or delays in revenues; • loss of customers; • failure to achieve market acceptance and loss of market share; • increased service and warranty costs; and • increased insurance costs.
Defects in our products, third-party components or in the networks and systems of which they form a part, directly or indirectly, have resulted in and may in the future result in: • increased costs and product delays until the complex solution-level interoperability issues are resolved; • costs associated with the remediation of any problems attributable to our products; • loss of or delays in revenues; • loss of customers; • failure to achieve market acceptance and loss of market share; • increased service and warranty costs; and • increased insurance costs.
Any harm to our reputation could impact employee engagement and retention, our corporate culture and the willingness of customers, suppliers and partners to do business with us, which could have a material adverse effect on our business, results of operations and cash flows.
Any harm to our reputation could impact employee engagement and retention, our corporate culture and the willingness of customers, suppliers and partners to do business with us, which could have a material and adverse effect on our business, results of operations and cash flows.
Other factors that could have a material adverse effect on demand for our products and on our financial condition and results of operations include inflation, slower growth or recession, conditions in the labor market, healthcare costs, access to credit, consumer confidence and other macroeconomic factors affecting consumer and business spending behavior.
Other factors that could have a material and adverse effect on demand for our products, financial condition and results of operations include inflation, slower growth or recession, conditions in the labor market, healthcare costs, access to credit, consumer confidence and other macroeconomic factors affecting consumer and business spending behavior.
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 .
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 and adversely affect our results of operations and financial condition .
If we fail to comply with applicable environmental laws, regulations, initiatives, or standards of conduct, our customers may refuse to purchase our products and we could be subject to fines, penalties and possible prohibition of sales of our products into one or more states or countries, liability to our customers and damage to our reputation, which could result in a material adverse effect on our financial condition or results of operations.
If we fail to comply with applicable environmental laws, regulations, initiatives, or standards of conduct, our customers may refuse to purchase our products and we could be subject to fines, penalties and possible prohibition of sales of our products into one or more states or countries, liability to our customers and damage to our reputation, which could result in a material and adverse effect on our financial condition or results of operations.
As the laws and regulations to which we are subject to continue to change and vary greatly from jurisdiction to jurisdiction, compliance with such laws and regulations may be onerous, may create uncertainty as to how they will be applied and interpreted, and may continue to increase our cost of doing business globally.
As the laws and regulations to which we are subject continue to change and vary greatly from jurisdiction to jurisdiction, compliance with such laws and regulations may be onerous, may create uncertainty as to how they will be applied and interpreted, and may continue to increase our cost of doing business globally.
Some of our products and services are subject to export control laws and other laws affecting the countries in which our products and services may be sold, distributed, or delivered, and any changes to or violation of these laws could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Some of our products and services are subject to export control laws and other laws affecting the countries in which our products and services may be sold, distributed, or delivered, and any changes to or violation of these laws could have a material and adverse effect on our business, results of operations, financial condition and cash flows.
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.
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 and adversely affect our business, results of operations, financial condition and cash flows.
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.
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 and adversely affect our business, results of operations, financial condition and cash flows.
Changes in U.S. trade policy, including the imposition of sanctions or tariffs and the resulting consequences, may have a material adverse impact on our business and results of operations. We face uncertainty with regard to U.S. government trade policy. Current U.S. government trade policy includes tariffs on certain non-U.S. goods, including information and communication technology products.
Changes in U.S. trade policy, including the imposition of sanctions or tariffs and the resulting consequences, may have a material and adverse impact on our business and results of operations. We face uncertainty with regard to U.S. government trade policy. Current U.S. government trade policy includes tariffs on certain non-U.S. goods, including information and communication technology products.
Security breaches or incidents and unauthorized access to, or loss, corruption, unavailability, or processing of data we and our vendors maintain or otherwise process has exposed us and could expose us, our vendors and customers or other third parties to a risk of loss or misuse of this data.
Security breaches or incidents and unauthorized access to, or loss, corruption, unavailability, or processing of data we and our vendors maintain or otherwise process has exposed us and could expose us, or our vendors, customers or other third parties to a risk of loss or misuse of this data.
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.
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 and 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.
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 (“IT”) systems, and our failure to do so could have a material and adverse effect on our business, financial condition and results of operations.
Changes in macroeconomic conditions may affect consumer and enterprise spending, and as a result, our customers may postpone or cancel spending in response to volatility in credit and equity markets, negative financial news and/or declines in income or asset values, all of which may have a material adverse effect on the demand for our products and/or result in significant decreases in our product prices.
Changes in macroeconomic conditions may affect consumer and enterprise spending, and as a result, our customers may postpone or cancel spending in response to volatility in credit and equity markets, negative financial news and/or declines in income or asset values, all of which may have a material and adverse effect on the demand for our products and/or result in significant changes in our product prices.
If our transitions to more advanced technologies, including the transition to HDDs utilizing HAMR technology, require development and production cycles that are longer than anticipated or if we otherwise fail to implement new HDD technologies successfully, we may lose sales and market share, which could significantly harm our financial results.
If our transitions to more advanced technologies, including the transition to HDDs utilizing HAMR technology, require development and production cycles that are longer than anticipated or if we otherwise fail to implement new HDD technologies successfully, we may lose sales and market share, which could significantly harm our financial results and reputation.
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.
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, preamplifiers, spindle motors, printed circuit boards, suspension assemblies and NAND flash memory.
If actual demand for our products is lower than the forecast, we may also experience excess and obsolescence of inventory, higher inventory carrying costs, factory underutilization charges and manufacturing rework costs, which have resulted in and could result in adverse material effects on our financial condition and results of operations.
If actual demand for our products is lower than the forecast, we may also experience excess and obsolescence of inventory, higher inventory carrying costs, factory underutilization charges and manufacturing rework costs, which have resulted in and could in the future result in material and adverse effects on our financial condition and results of operations.
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.
In addition, deterioration in business and economic conditions has exacerbated price erosion and volatility as distributors and 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.
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 .
We must successfully implement our new global enterprise resource planning system and maintain and upgrade our information technology (“IT”) systems, and our failure to do so could have a material and adverse effect on our business, 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. 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.
Changes in demand for computer systems, data storage subsystems and consumer electronic devices has previously and 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.
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.
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 competition, could harm our ability to compete and risk the commoditization of our products. • 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.
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.
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; • 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; 25 Table of Contents • 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; • pandemics or other global health issues that impact our operations as well as those of our customers and suppliers; • 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; • 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 United States 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.
In the event of any such counterparty default, we could incur significant losses, which could have a material adverse effect on our business, results of operations, or financial condition.
In the event of any such counterparty default, we could incur significant losses, which could have a material and adverse effect on our business, results of operations, or financial condition.
Additionally, we cannot ensure that our interpretation of relevant restrictions and regulations will be accepted in all cases by relevant regulatory and enforcement authorities. On April 18, 2023, we entered into a Settlement Agreement with BIS (the “Settlement Agreement”) that resolves BIS’ allegations regarding our sales of hard disk drives to Huawei.
Additionally, we cannot ensure that our interpretation of relevant restrictions and regulations will be accepted in all cases by relevant regulatory and enforcement authorities. On April 18, 2023, we entered into a Settlement Agreement with BIS (the “Settlement Agreement”) that resolved BIS’ allegations regarding our sales of hard disk drives to Huawei.
Our results of operations in one or more future quarters may fail to meet the expectations of investment research analysts or investors, which could cause an immediate and significant decline in our market value. Any cost reduction initiatives that we undertake may not deliver the results we expect, and these actions may adversely affect our business .
Our results of operations in one or more future quarters may fail to meet the expectations of investment research analysts or investors, which could cause an immediate and significant decline in our market value. Any cost reduction initiatives that we undertake may not deliver the results we expected and these actions may adversely affect our business .
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.
Additionally, our nearline storage solutions are subject to variability of sales primarily due to the timing of IT spending as 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.
The declaration and payment of any future dividends is at the discretion of our Board of Directors. Our previously announced share repurchase program was paused in the December 2022 quarter, remained paused through the end of fiscal year 2023 and there are no assurances as to if and when the program will resume.
The declaration and payment of any future dividends is at the discretion of our Board of Directors. Our previously announced share repurchase program was paused in the December 2022 quarter, remained paused through the end of fiscal year 2024 and there are no assurances as to if and when the program will resume.
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.
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, temporary salary reductions, restructuring efforts, asset write-offs and efforts to increase automation.
In addition, our competitors may be able to design their products around our patents and other proprietary rights. Enforcement of our rights often requires litigation. If we bring a patent infringement action and are not successful, our competitors would be able to use similar technology to compete with us.
In addition, our competitors may be able to design their products to circumvent our patents and other proprietary rights. Enforcement of our rights often requires litigation. If we bring a patent infringement action and are not successful, our competitors would be able to use similar technology to compete with us.
From time to time, we enter into long-term, non-cancelable purchase commitments or make large up-front investments with certain suppliers in order to secure certain components or technologies for the production of our products or to supplement our internal manufacturing capacity for certain components.
From time to time, we enter into long-term, non-cancelable purchase commitments or make large up-front investments with certain suppliers to secure certain components or technologies for the production of our products or to supplement our internal manufacturing capacity for certain components.
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.
If we were ever found to have violated applicable export control or sanctions 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.
If a significant transaction or regulatory impact involving any of our key customers results in the loss of or reduction in purchases by these key customers, it could have a materially adverse effect on our business, results of operations and financial condition.
If a significant transaction or regulatory impact involving any of our key customers results in the loss of or reduction in purchases by these key customers, it could have a material and adverse effect on our business, results of operations and financial condition.
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 leveraged and require significant amounts of cash to service our debt.
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 leveraged and require significant amounts of cash to service our outstanding indebtedness.
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.
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.
If our products experience increases in failure rates, are of low quality or are not reliable, customers may reduce their purchases of our products, our factory utilization may decrease and our manufacturing rework and scrap costs and our service and warranty costs may increase.
If our products experience increases in failure rates, are of low quality or are not reliable, customers may reduce their purchases of our products, our factory utilization may decrease and our manufacturing rework and scrap costs, along with our service and warranty costs may increase.
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.
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.
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.
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 proceedings and regulatory or other actions that could materially and adversely affect our results of operations.
Financial Statements and Supplementary Data — Note 14. Legal, Environmental and Other Contingencies ” contained in this report for a description of pending intellectual property proceedings . Our business and certain products and services depend in part on IP and technology licensed from third parties, as well as data centers and infrastructure operated by third parties.
Financial Statements and Supplementary Data — Note 14. Legal, Environmental and Other Contingencies ” contained in this report for a description of material intellectual property proceedings . Our business and certain products and services depend in part on intellectual property and technology licensed from third parties, as well as data centers and infrastructure operated by third parties.
Additionally, defending against claims, litigation or regulatory inquiries or proceedings relating to any security breach or other security incident, regardless of merit, could be costly and divert attention of key personnel.
Additionally, defending against claims, litigation or regulatory inquiries or proceedings relating to any actual or potential security breach or other security incident, regardless of merit, could be costly and divert attention of key personnel.
Volatility in fuel costs, political instability or constraints in or increases in the costs of air transportation may lead us to develop alternative shipment methods, which could disrupt our ability to receive raw materials, or ship finished product, and as a result our business and results of operations may be harmed.
Volatility in fuel costs, political instability or constraints and increases in the costs or reliability of air transportation may lead us to develop alternative shipment methods, which could disrupt our ability to receive raw materials, or ship finished products, and as a result our business and results of operations may be harmed.
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.
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 changes to such conditions, and we could not pass these price increases to our customers, our operating margin would decline.
Historically, our results of operations have substantially depended upon our ability to be among the first-to-market with new data storage product offerings. We may face technological, operational and financial challenges in developing new products. In addition, our investments in new product development may not yield the anticipated benefits.
Historically, our results of operations have substantially depended upon our ability to be among the first-to-market with new data storage product offerings. We have faced and may continue to face technological, operational and financial challenges in developing new products. In addition, our investments in new product development may not yield the anticipated results.
Our principal sources of competition include HDD and SSD manufacturers, and companies that provide storage subsystems, including electronic manufacturing services and contract electronic manufacturing. The markets for our data storage products are characterized by technological change, which is driven in part by the adoption of new industry standards.
Our principal sources of competition include HDD and SSD manufacturers, and companies that provide storage subsystems, including electronic manufacturing services and contract electronic manufacturing. 17 Table of Contents The markets for our data storage products are characterized by technological change, which is driven in part by the adoption of new industry standards.
Our business, particularly our Lyve products and related services, is subject to state, federal, and international laws and regulations relating to data privacy, data protection and data security, including security breach notification, data retention, transfer and localization.
Our business, particularly our Lyve products and related offerings, is subject to state, federal, and international laws and regulations relating to data privacy, data protection and data security, including security breach notification, data retention, transfer and localization.
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.
Our operations are dependent upon our ability to protect our digital infrastructure and data. We manage, store and otherwise process 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 Lyve, our edge-to-cloud mass storage platform.
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.
RISKS RELATED TO FINANCIAL PERFORMANCE OR GENERAL ECONOMIC CONDITIONS Changes in the macroeconomic environment have impacted and may continue to negatively impact our results of operations.
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.
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.
We may be unable to protect our intellectual property rights, which could adversely affect our business, financial condition and results of operations . We rely on a combination of patent, trademark, copyright and trade secret laws, confidentiality agreements, security measures and licensing arrangements to protect our intellectual property rights.
RISKS RELATED TO INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS We may be unable to protect our intellectual property rights, which could adversely affect our business, financial condition and results of operations . We rely on a combination of patent, trademark, copyright and trade secret laws, confidentiality agreements, security measures and licensing arrangements to protect our intellectual property rights.
Our business operations are subject to interruption by natural disasters such as floods and earthquakes, fires, power or water shortages, terrorist attacks, other hostile acts, labor disputes, public health issues (such as the COVID-19 pandemic) and related mitigation actions, and other events beyond our control.
Our business operations are subject to interruption by natural disasters such as floods and earthquakes, fires, power or water shortages, terrorist attacks, other hostile acts, labor disputes, public health issues and related mitigation actions, and other events beyond our control.
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.
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 United States, China or another jurisdiction will affect our ability to sell our products and services to existing or new customers.
For example, due to customer inventory adjustments, we have experienced a slowdown in demand for our products, particularly in the mass capacity markets. These reductions in demand have required us to significantly reduce manufacturing production plans and recognize factory underutilization charges.
For example, due to customer inventory adjustments, we have experienced a slowdown in demand for our products, particularly in the mass capacity markets. These reductions in demand have required us to significantly reduce manufacturing production plans and recognize factory underutilization charges in fiscal years 2024 and 2023.
We are focused on increasing workforce flexibility and scalability, and improving overall competitiveness by leveraging our global capabilities, as well as external talent and skills, worldwide. Our strategy involves, to a substantial degree, increasing revenue and exabytes volume while at the same time controlling expenses.
We are focused on increasing workforce flexibility and scalability, and improving overall competitiveness by leveraging our global capabilities, as well as external talent and skills, worldwide. Our strategy involves, to a substantial degree, increasing revenue and exabytes volume while controlling expenses.
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.
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; • 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, quality and security specifications; or • achieve acceptable manufacturing yields, quality and margins with these products.
From time to time, we engage in restructuring plans that have resulted and may continue to result in workforce reduction and consolidation of our real estate facilities and our manufacturing footprint. In addition, management will continue to evaluate our global footprint and cost structure, and additional restructuring plans are expected to be formalized.
From time to time, we engage in restructuring plans that have resulted and may continue to result in workforce reduction and consolidation of our real estate facilities and our manufacturing footprint. In addition, management will continue to evaluate our global footprint and cost structure, and additional restructuring plans may be considered.
Geopolitical uncertainty, terrorism, instability or war, such as the military action against Ukraine launched by Russia, natural disasters, public health issues and other business interruptions have caused and could cause damage or disruption to international commerce and the global economy, and thus could have a strong negative effect on our business, our direct and indirect suppliers, logistics providers, manufacturing vendors and customers.
Geopolitical uncertainty, terrorism, instability or war, such as the military action against Ukraine launched by Russia and the latest developments in the Middle East conflict, natural disasters, public health issues and other business interruptions have caused and could cause damage or disruption to international commerce and the global economy, and thus could have a strong negative effect on our business, our direct and indirect suppliers, logistics providers, manufacturing vendors 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, 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.
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 purchase commitments with suppliers and incurred costs associated with such cancellations, and if revenues fall or customer demand decreases significantly, we may seek to cancel or may otherwise not meet our purchase commitments to certain suppliers in the future, which could result in damages, penalties, disputes, litigation, increased manufacturing costs or excess inventory. • Due to the complexity of our products, some defects may only become detectable after deployment, which may lead to increased costs and adversely affect our operating results.
We are subject from time-to-time to legal proceedings and claims, including claims of alleged infringement of the patents, trademarks and other intellectual property rights of third parties by us, or our customers, in connection with the use of our products.
We are subject from time-to-time to legal proceedings and claims, including claims of alleged infringement of the patents, trademarks and other intellectual property rights of third parties by us, or our customers, in connection with the manufacturing, use, sale or offering for sale of our products.
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 costs to eliminate or address security problems and security vulnerabilities before or after a security breach or incident may be significant. Certain legacy IT systems may not be easily remediated, and our disaster recovery planning may not be sufficient for all eventualities.
Disruptions in financial markets and the deterioration of global economic conditions have had and may continue to have an impact on our sales to customers and end-users. 20 Table of Contents Prices for our products are denominated predominantly in dollars, even when sold to customers that are located outside the U.S.
Disruptions in financial markets and the deterioration of global economic conditions have had and may continue to have an impact on our sales to customers and end-users. 20 Table of Contents Prices for our products are denominated predominantly in dollars, even when sold to customers located outside the United States.
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.
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; • 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; • reduction in demand from our key customers due to macroeconomic conditions that reduce cloud, enterprise or consumer spending; • the issuance of our ordinary shares upon exchange of some or all of our outstanding exchangeable notes for amounts in excess of the principal amount; • 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.
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 face intense competition in the data storage industry.
We operate in highly competitive markets and our failure to anticipate and respond to technological changes and other market developments, including price competition, could harm our ability to compete and risk the commoditization of our products. We face intense competition in the data storage industry.
The U.S., through the BIS and OFAC, places restrictions on the sale or export of certain products and services to certain countries, persons and entities, as well as for certain end-uses, such as military, military-intelligence and weapons of mass destruction end-uses.
The United States, through BIS and OFAC, places restrictions on the sale or export of certain products and services to certain countries, persons and entities, as well as for certain end-uses, such as military, military-intelligence and weapons of mass destruction end-uses.
Despite our best efforts to comply with the terms of the Settlement Agreement, failure to do so could result in significant penalties, including the loss of the suspension of the denial order which would prohibit us from exporting our products subject to the EAR outside of the United States, and could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Failure to comply with the Settlement Agreement could result in significant penalties, including the loss of the suspension of the denial order which would prohibit us from exporting our products subject to the EAR outside of the United States, and could have a material and adverse effect on our business, results of operations, financial condition and cash flows.
The reductions in workforce that result from our historical restructurings have also made and may continue to make it difficult for us to recruit and retain personnel. Increased difficulty in accessing, recruiting or retaining personnel may lead to increased manufacturing and employment compensation costs, which could adversely affect our results of operations.
The reductions in workforce, salary reductions and variability in our bonus payouts that resulted from our historical restructurings have also made and may continue to make it difficult for us to recruit and retain personnel. Increased difficulty in accessing, recruiting or retaining personnel may lead to increased manufacturing and employment compensation costs, which could adversely affect our results of operations.
If one of our counterparties becomes insolvent or files for bankruptcy, our ability to recover any losses suffered as a result of that counterparty's default may be limited by the liquidity of the counterparty or the applicable laws governing the bankruptcy proceedings.
If one of our counterparties, including the option counterparties to the capped call transactions, becomes insolvent or files for bankruptcy, our ability to recover any losses suffered as a result of that counterparty's default may be limited by the liquidity of the counterparty or the applicable laws governing the bankruptcy proceedings.
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.
A general weakening of, and related declining corporate confidence in, the global economy or the curtailment in government or corporate spending could 24 Table of Contents cause current or potential customers to reduce their 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.
Such a default could result in an acceleration of other debt and may require us to change capital allocation or engage in distressed debt transactions on terms unfavorable to us, which could have a material negative impact on our financial performance, stock market price and operations.
Such a default could result in an acceleration of our indebtedness, including via cross-defaults, and may require us to change capital allocation or engage in distressed debt transactions on terms unfavorable to us, which could have a material negative impact on our financial performance, stock market price and operations.
Our results of operation are highly dependent on strong cloud and enterprise and/or consumer spending and the resulting demand for our products.
Our results of operations are highly dependent on strong cloud, enterprise and consumer spending and the resulting demand for our products.
We are dependent on sales to distributors and retailers, which may increase price erosion and the volatility of our sales . A substantial portion of our sales has been to distributors and retailers of disk drive products. Certain of our distributors and retailers may also market competing products.
We are dependent on sales to distributors and retailers, which may increase price erosion and the volatility of our sales . Sales to distributors and retailers of disk drive products account for a substantial portion of our revenue. Certain of our distributors and retailers may also market competing products.
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.
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.
We are subject to counterparty default risks. We have numerous arrangements with financial institutions that subject us to counterparty default risks, including cash and investment deposits, and foreign currency forward exchange contracts and other derivative instruments.
We have numerous arrangements with financial institutions that subject us to counterparty default risks, including the capped call transactions, cash and investment deposits, and foreign currency forward exchange contracts and other derivative instruments.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur 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.
Biggest changeOur material manufacturing, product development and marketing and administrative facilities at June 28, 2024 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 1,168,000 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 440,000 Product development, administrative and operational offices Thailand Korat Owned/Leased 2,706,000 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.
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.
ITEM 2. PROPERTIES Our principal executive offices are located in Singapore. 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.
As 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.
As of June 28, 2024, we owned or leased a total of approximately 9.6 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 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+2 added−2 removed1 unchanged
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.
Biggest changeThe following table sets forth information with respect to all repurchases of our ordinary shares made during the fiscal year ended June 28, 2024, including statutory tax withholdings related to vesting of employee equity awards (in millions, except average price paid per share): Period Total Number of Shares Repurchased (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 1st Quarter through 3rd Quarter of Fiscal Year 2024 1 — 1 $ 1,891 March 30, 2024 through April 26, 2024 — — — 1,891 April 27, 2024 through May 31, 2024 — — — 1,890 June 1, 2024 through June 28, 2024 — — — 1,883 Through 4th Quarter of Fiscal Year 2024 1 1 $ 1,883 ___________________________________ (1) For the fiscal year 2024, the total number of shares repurchased is approximately 1 million, primarily related to the tax withholding from the vesting of restricted stock units.
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.
We did not sell any of our equity securities during fiscal year 2024 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 28, 2019 to June 28, 2024.
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.
The graph assumes that on June 28, 2019, $100 was invested in our ordinary shares and $100 was invested in each of the other two indices, w ith dividends reinvested on the date of payment without payment of any commissions. Dollar amounts in the graph are rounded to the nearest whole dollar.
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.
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 30, 2024, there were approximately 467 holders of record of our ordinary shares.
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.
Computer Hardware 100.00 172.98 263.92 263.30 370.43 415.35 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. 37 Table of Contents Certain Taxation Considerations Under Singapore Law Dividend distributions by Seagate to its shareholders are not subject to withholding tax, as Singapore currently does not levy a withholding tax on dividend distributions.
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.
The performance shown in the graph represents past performance and should not be considered an indication of future performance. 6/28/2019 7/3/2020 7/2/2021 7/1/2022 6/30/2023 6/28/2024 Seagate Technology Holdings plc $ 100.00 $ 105.72 $ 202.47 $ 165.96 $ 155.86 $ 269.17 S&P 500 100.00 107.51 151.36 135.29 161.80 201.54 Dow Jones U.S.
Removed
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.
Added
Additionally, there is no tax on capital gains under current Singapore tax law, and thus any capital gains from disposal of shares are not taxable in Singapore. There is no reciprocal income tax treaty between the United States and Singapore regarding withholding taxes on dividends and capital gains.
Removed
We may limit or terminate the repurchase program at any time.
Added
Repurchases of Equity Securities All repurchases are effected as redemptions in accordance with our Constitution. As of June 28, 2024, $1.9 billion remained available for repurchase under the existing repurchase authorization limit authorized by our Board of Directors.

Item 7. Management's Discussion & Analysis

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

46 edited+23 added−38 removed28 unchanged
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.
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) June 28, 2024 June 30, 2023 Revenue $ 6,551 $ 7,384 Cost of revenue 5,015 6,033 Gross profit 1,536 1,351 Product development 654 797 Marketing and administrative 460 491 Amortization of intangibles — 3 BIS settlement penalty — 300 Restructuring and other, net (30) 102 Income (loss) from operations 452 (342) Other expense, net (7) (154) Income (loss) before income taxes 445 (496) Provision for income taxes 110 33 Net Income (loss) $ 335 $ (529) 39 Table of Contents Fiscal Years Ended June 28, 2024 June 30, 2023 Revenue 100 % 100 % Cost of revenue 77 82 Gross margin 23 18 Product development 10 11 Marketing and administrative 7 7 Amortization of intangibles — — BIS settlement penalty — 4 Restructuring and other, net — 1 Operating margin 6 (5) Other expense, net — (2) Income (loss) before income taxes 6 (7) Provision for income taxes 2 — Net Income (loss) 4 % (7) % 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 28, 2024 June 30, 2023 Revenues by Channel (%) OEMs 75 % 74 % Distributors 15 % 15 % Retailers 10 % 11 % Revenues by Geography (%) (1) Asia Pacific 53 % 45 % Americas 35 % 41 % EMEA 12 % 14 % Revenues by Market (%) Mass capacity 72 % 66 % Legacy 18 % 21 % Other 10 % 13 % HDD Exabytes Shipped by Market Mass capacity 355 380 Legacy 43 61 Total 398 441 HDD Price per Terabyte $ 15 $ 15 ________________________________________________ (1) Revenue is attributed to geography based on the bill from location. 40 Table of Contents Fiscal Years Ended (Dollars in millions) June 28, 2024 June 30, 2023 Change % Change Revenue $ 6,551 $ 7,384 $ (833) (11) % Revenue in fiscal year 2024 decreased approximately 11%, or $833 million, from fiscal year 2023, primarily due to a decrease in exabytes shipped as a result of lower broad-based market demand, slightly offset by an increase in revenue driven by favorable pricing actions undertaken by the Company.
Critical accounting estimates are those estimates that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. Based on this definition, our most critical accounting policies include: Revenue - Sales Program Accruals, Warranty and Income Taxes.
Critical accounting estimates are those estimates that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. Based on this definition, our most critical accounting policies include: Revenue - Sales Program Accruals and Income Taxes.
Below, we discuss these policies further, as well as the estimates and judgments involved. We also have other accounting policies and accounting estimates relating to uncollectible customer accounts, valuation of inventories, assessing goodwill and other long-lived assets for impairment, valuation of share-based payments and restructuring.
Below, we discuss these policies further, as well as the estimates and judgments involved. We also have other accounting policies and accounting estimates relating to warranty, uncollectible customer accounts, valuation of inventories, assessing goodwill and other long-lived assets for impairment, valuation of share-based payments and restructuring.
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.
Our income tax provision recorded for fiscal year 2023 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 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.
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 2024.
In evaluating our ability to recover our deferred tax assets, in full or in part, we consider all available positive and negative evidence, including our past operating results, and our forecast of future earnings, future taxable income and prudent and feasible tax planning strategies.
In evaluating our ability to recover our deferred tax assets, in full or in part, we consider all available positive and negative evidence, including our past operating results, and our forecast of future earnings, future taxable income and prudent and 46 Table of Contents feasible tax planning strategies.
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.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities-Repurchases of Our Equity Securities.” As of June 28, 2024, $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.
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.
Highlights of events in fiscal year 2024 that impacted our financial position. • Results of Operations. Analysis of our financial results comparing fiscal years 2024 and 2023. • Liquidity and Capital Resources.
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.
As of June 28, 2024, 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.
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.
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 28, 2024. 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.
As part of the Settlement Agreement with BIS, quarterly payments of $15 million will be made over the course of five years beginning October 31, 2023, of which $45 million is expected to be paid within one year and $255 million thereafter. Refer to “Item 8. Financial Statements and Supplementary Data— Note 14.
As part of the Settlement Agreement with BIS, quarterly payments of $15 million are made over the course of five years beginning October 31, 2023, of which $60 million is expected to be paid within one year and $195 million thereafter. Refer to “Item 8. Financial Statements and Supplementary Data— Note 14.
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.
For a further discussion of the uncertainties and business risks, 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.
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.
During fiscal year 2024, we repurchased approximately 1 million of our ordinary shares including shares withheld for statutory tax withholdings related to vesting of employee equity awards. See “Item 5.
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.
Outside of one year, we are unable to make a reasonably reliable estimate of when cash settlement with a taxing authority will occur. 45 Table of Contents Dividends On July 23, 2024, our Board of Directors declared a quarterly cash dividend of $0.70 per share, which will be payable on October 7, 2024 to shareholders of record as of the close of business on September 23, 2024.
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.
Accordingly, fiscal year 2024 and 2023 both comprised of 52 weeks and ended on June 28, 2024 and June 30, 2023, respectively. Fiscal year 2026 will be comprised of 53 weeks and will end on July 3, 2026.
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.
Income Tax As of June 28, 2024, we had a liability for unrecognized tax benefits and an accrual for the payment of related interest totaling $8 million, none of which is expected to be settled within one year.
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.
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 28, 2024 and June 30, 2023.
Refer to “Item 8. Financial Statements and Supplementary Data— Note 14.
Refer to “Item 8. Financial Statements and Supplementary Data— Note 18.
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.
Discussions of year-to-year comparisons between fiscal years 2023 and 2022 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 June 30, 2023, which was filed with the SEC on August 4, 2023.
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.
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.
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.
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.
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.
As of June 28, 2024, future interest payments on this outstanding debt is estimated to be approximately $2.0 billion, of which $323 million is expected to be paid within one year.
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”).
Liquidity Sources Our primary sources of liquidity as of June 28, 2024, consist of: (1) approximately $1.4 billion 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 (as defined below).
As of June 30, 2023, the future cash payments related to our remaining active restructuring plans were $119 million, of which $117 million is expected to be paid within one year.
As of June 28, 2024, the future cash payments related to our remaining active restructuring plans were $4 million, all of which is expected to be paid within one year.
Cash Used in Investing Activities In fiscal year 2023, we received $217 million for net cash investing activities, which was primarily due to proceeds of $534 million from the sale of assets, offset by payments for the purchase of property, equipment and leasehold improvements of $316 million.
Divestiture ” for more details), $40 million from the sale of assets and $14 million from the sale of investments, offset by payments for the purchase of property, equipment and leasehold improvements of $254 million. 43 Table of Contents In fiscal year 2023, we received $217 million for net cash investing activities, which was primarily due to proceeds of $534 million from the sale of assets, offset by payments for the purchase of property, equipment and leasehold improvements of $316 million.
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.
Total sales programs were 16% and 17% of gross revenue in fiscal years 2024 and 2023, respectively. Adjustments to revenues due to under or over accruals for sales programs related to revenues reported in prior periods were approximately 1% of gross revenue in fiscal years 2024 and 2023, respectively. Income Taxes.
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.
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 impact of market demand disruptions on our business operations for the foreseeable future.
The following table summarizes results from the Consolidated Statement of Cash Flows for the periods indicated: 40 Table of Contents Fiscal Years Ended (Dollars in millions) June 30, 2023 July 1, 2022 Net cash flow provided by (used in): Operating activities $ 942 $ 1,657 Investing activities 217 (352) Financing activities (988) (1,899) Net increase/(decrease) in cash, cash equivalents and restricted cash $ 171 $ (594) Cash Provided by Operating Activities Cash provided by operating activities for fiscal year 2023 was $942 million and includes the effects of net income adjusted for non-cash items including depreciation, amortization, share-based compensation and: • a decrease of $911 million in accounts receivable, primarily due to lower revenue and timing of collections; • a decrease of $425 million in inventories, primarily due to a decrease in units built to align with the prevailing demand environment; and • an increase of $110 million cash proceeds received from the settlement of certain interest rate swap agreements; partially offset by • a decrease of $421 million in accounts payable, primarily due to a decrease in materials purchased; and • a decrease of $152 million in accrued employee compensation, primarily due to cash paid to our employees as part of our variable compensation plans and a decrease in our variable compensation expense.
Cash provided by operating activities for fiscal year 2023 was $942 million and includes the effects of net income adjusted for non-cash items including depreciation, amortization, share-based compensation and: • a decrease of $911 million in accounts receivable, primarily due to lower revenue and timing of collections; • a decrease of $425 million in inventories, primarily due to a decrease in units built to align with the prevailing demand environment; and • an increase of $110 million cash proceeds received from the settlement of certain interest rate swap agreements; partially offset by • a decrease of $421 million in accounts payable, primarily due to a decrease in materials purchased; and • a decrease of $152 million in accrued employee compensation, primarily due to cash paid to our employees as part of our variable compensation plans and a decrease in our variable compensation expense.
Should funds be needed in the Irish parent company and should we be unable to fund parent company activities through means other than a taxable Irish dividend, we would be required to accrue and pay Irish taxes on such dividend.
Our current plans do not demonstrate a need to repatriate such earnings by means of a taxable dividend. Should funds be needed in the parent company and should we be unable to fund parent company activities through means other than a taxable dividend, we would be required to accrue and pay taxes on such dividend.
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.
As of June 28, 2024, we had unconditional commitments of $161 million primarily related to purchases of equipment, of which approximately $99 million is expected to be paid within one y ear. For fiscal year 2025, we expect capital expenditures to be higher than fiscal year 2024.
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.
For an overview of our business, see “Part I, Item 1. Business.” 38 Table of Contents Overview of Fiscal Year 2024 During fiscal year 2024, we shipped 398 exabytes of HDD storage capacity. We generated revenue of approximately $6.6 billion with a gross margin of 23%. Our operating cash flow was $918 million and we paid $585 million in dividends.
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.
Income Taxes Fiscal Years Ended (Dollars in millions) June 28, 2024 June 30, 2023 Change % Change Provision for income taxes $ 110 $ 33 $ 77 233 % We recorded an income tax provis ion of $110 million fo r fiscal year 2024 compared to an income tax provision of $33 million for fiscal year 2023 .
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.
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. Refer to “Item 8. Financial Statements and Supplementary Data— Note 14. Legal, Environmental and Other Contingencies ” for more details.
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.
Marketing and administrative expenses for fiscal year 2024 decreased by $31 million from fiscal year 2023 primarily due to a $17 million decrease in compensation and other employee benefits as a result of workforce and temporary salary reductions, a $12 million decrease in advertising costs, a $6 million decrease in outside services expense, a $5 million decrease in travel expense, partially offset by a $7 million recovery in the December 2022 quarter of an accounts receivable previously written off in prior years and a $3 million increase in depreciation expense.
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.
Refer to “Item 8. Financial Statements and Supplementary Data— Note 6. Leases ” for details. Long-term debt and interest payments on debt As of June 28, 2024, the future principal payment obligation on our long-term debt was $5.7 billion, of which $479 million will mature within one year.
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.
Risk Factors” 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.
This amount is potentially subject to taxation in Ireland upon repatriation by means of a dividend into our Irish parent. However, it is our intent to indefinitely reinvest earnings of non-Irish subsidiaries outside of Ireland and our current plans do not demonstrate a need to repatriate such earnings by means of a taxable Irish dividend.
This amount is potentially subject to taxation in Singapore upon repatriation by means of a dividend into our parent company, unless certain exemption is given, or a special approval is granted by the Ministry of Finance in Singapore. However, it is our intent to indefinitely reinvest earnings of subsidiaries outside of Ireland and Singapore.
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.
Operating leases We are a lessee in several operating leases related to real estate facilities for warehouse, office and lab space. As of June 28, 2024, the amount of future minimum rent expense for both occupied and vacated facilities under non-cancelable operating lease contracts was $564 million, of which $63 million is expected to be paid within one year.
Our Irish tax resident parent holding company owns various U.S. and non-Irish subsidiaries that operate in multiple non-Irish income tax jurisdictions. 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.
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 fiscal year 2036.
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.
Refer to “Part II, Item 8. Financial Statements— Note 4. Debt ” for more details. As of June 28, 2024, cash and cash equivalents held by our subsidiaries was $1.4 billion.
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.
Cash Used in Investing Activities In fiscal year 2024, we received $126 million for ne t cash investing activities, which was primarily due to the proceeds from the sale of SoC operations of $326 million (refer to “Item 8. Financial Statements and Supplementary Data— Note 18.
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.
Product development expenses for fiscal year 2024 decreased by $143 million from fiscal year 2023 primarily due to a $112 million decrease in compensation and other employee benefits as a result of workforce and temporary salary reductions, a $49 million decrease in depreciation expense and a $7 million decrease in materials expense, partially offset by a $24 million increase in lease expense as we sold and leased back certain properties.
During fiscal year 2023, we recorded restructuring and other, net of $102 million, primarily related to the workforce reduction costs under the October 2022 Plan and the April 2023 Plan, partially offset by gains from the sale of certain properties and assets. We made cash payments of $155 million for all active restructuring plans.
Legal, Environmental and Other Contingencies ” for more details. Restructuring During the fiscal year ended June 28, 2024, we made cash payments of $116 million, primarily related to workforce reduction costs under our restructuring plans.
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 June 28, 2024, we had unconditional purchase obligations of app roximately $1.2 billion, primarily related to purchases of inventory components with our suppliers. We expect $1.2 billion of these co mmitments to be paid within one year. In addition, we also had certain long-term market share based non-cancellable inventory purchase commitments as of June 28, 2024.
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.
The restructuring plans were substantially completed by the end of fiscal year 2023. 41 Table of Contents Other Expense, net Fiscal Years Ended (Dollars in millions) June 28, 2024 June 30, 2023 Change % Change Other expense, net $ 7 $ 154 $ (147) (95) % Other expense, net for fiscal year 2024 decreased by $147 million compared to fiscal year 2023 primarily due to a $313 million gain from the sale of SoC operations (refer to “Item 8.
Cost of Revenue and Gross Margin Fiscal Years Ended (Dollars in millions) June 30, 2023 July 1, 2022 Change % Change Cost of revenue $ 6,033 $ 8,192 $ (2,159) (26) % Gross profit 1,351 3,469 (2,118) (61) % Gross margin 18 % 30 % For fiscal year 2023, gross margin decreased compared to the prior fiscal year primarily driven by factory underutilization charges of $250 million associated with lower production levels and pandemic-related lockdown in one of our factories, order cancellation fees of $108 million, lower demand in mass capacity and legacy markets with less favorable product mix, price erosion, and accelerated depreciation expense for certain capital equipment. 38 Table of Contents Operating Expenses Fiscal Years Ended (Dollars in millions) June 30, 2023 July 1, 2022 Change % Change Product development $ 797 $ 941 $ (144) (15) % Marketing and administrative 491 559 (68) (12) % Amortization of intangibles 3 11 (8) (73) % BIS settlement penalty 300 — 300 * Restructuring and other, net 102 3 99 3,300 % Operating expenses $ 1,693 $ 1,514 $ 179 ______________________________ *Not a meaningful figure Product Development Expense.
Cost of Revenue and Gross Margin Fiscal Years Ended (Dollars in millions) June 28, 2024 June 30, 2023 Change % Change Cost of revenue $ 5,015 $ 6,033 $ (1,018) (17) % Gross profit 1,536 1,351 185 14 % Gross margin 23 % 18 % For fiscal year 2024, gross margin increased compared to the prior fiscal year primarily driven by favorable pricing actions undertaken by the Company and product mix, a $90 million reduction in factory underutilization charges which included the decrease in depreciation expense due to the extension of useful lives of certain manufacturing equipment, a decrease of $47 million in accelerated depreciation expense for certain capital equipment, a decrease of $21 million in order cancellation fees and $7 million pandemic-related lockdown charges in one of our factories in fiscal year 2023 that did not recur in fiscal year 2024, partially offset by lower exabytes shipped.
Removed
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.
Added
We issued $1.5 billion of exchangeable notes to primarily retire our term loans of $1.3 billion . Additionally, in April 2024, we sold certain intellectual property, equipment and other assets related to the design, development and manufacture of our System-on-Chip (“SoC”) products to Avago Technologies International Sales Pte.
Removed
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.
Added
Limited, a subsidiary of Broadcom Inc., for $600 million and we recorded a net gain of $313 million from this business divestiture. In connection with the transaction, the Company also restructured certain pre-existing purchase agreements. Refer to “Item 8. Financial Statements and Supplementary Data— Note 18. Divestiture ” for more details.
Removed
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.
Added
Recent Developments, Economic Conditions and Challenges During fiscal year 2024, we experienced ongoing recovery within the global cloud market, reflecting continued improvement in end-market demand. Demand recovery for our high capacity nearline drives has been faster than anticipated, which has extended product lead times and led to tighter overall supply conditions.
Removed
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.
Added
We continued to exercise cost discipline and implement pricing actions to improve operational efficiency and profitability. We believe that we are in the early stage of an industry-wide demand recovery and AI application deployment, however we expect the macroeconomic environment to remain dynamic and continue to impact our business and results of operations .
Removed
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.
Added
In the fiscal year 2024 , total warranty cost was 0.8% of revenue and included an unfavorable change in estimates of prior warranty accruals of 0.1% of revenue primarily due to changes to our estimated future product return rates.
Removed
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.
Added
Warranty cost related to new shipments was 0.8%, 0.7% and 0.7% of revenue for the fiscal years 2024 , 2023 and 2022 , respectively.
Removed
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.
Added
Operating Expenses Fiscal Years Ended (Dollars in millions) June 28, 2024 June 30, 2023 Change % Change Product development $ 654 $ 797 $ (143) (18) % Marketing and administrative 460 491 (31) (6) % Amortization of intangibles — 3 (3) * BIS settlement penalty — 300 (300) * Restructuring and other, net (30) 102 (132) (129) % Operating expenses $ 1,084 $ 1,693 $ (609) ______________________________ *Not a meaningful figure Product Development Expense.
Removed
We are complying with governmental rules and guidelines across all of our sites.
Added
Restructuring and Other, net. Restructuring and other, net for fiscal year 2024 was a benefit of $30 million primarily related to the net gain from the sale and leaseback transaction during the December 2023 quarter.
Removed
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.
Added
Financial Statements and Supplementary Data— Note 18. Divestiture ” for more details), a $104 million of net gain recognized from the termination of interest rate swaps associated with the repayment of term loans and a $5 million net increase in interest income in fiscal year 2024.
Removed
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.
Added
The decrease is partially offset by a $190 million of net gain recognized from the early redemption of debt in fiscal year 2023, a $41 million increase in net loss from equity investments, a $29 million net loss recognized from early redemption of debt and a $19 million net increase in interest expense in fiscal year 2024.
Removed
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.
Added
During the third quarter of fiscal year 2024, we established Singapore as our principal executive offices. Our parent holding company owns various U.S. and non-Singaporean subsidiaries that operate in multiple non-Singaporean income tax jurisdictions.
Removed
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.
Added
Certain tax incentives may be extended if specific conditions are met. Since we established Singapore as our principal executive offices in fiscal year 2024, the Singaporean statutory rate of 17% is used for purposes of the reconciliation between the provision for income taxes at the statutory rate and our effective tax rate.
Removed
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.
Added
For fiscal years 2023 and 2022, a notional Irish statutory rate of 25% was used.
Removed
In determining to engage with BIS and resolve this matter through a settlement agreement, we considered a number of factors, including the risks and cost of protracted litigation involving the U.S. government, as well as the size of the potential penalty and our desire to focus on current business challenges and long-term business strategy.
Added
Our income tax provision recorded for fiscal years 2024 differed from the provision for income taxes that would be derived by applying the Singaporean statutory rate of 17% to income before income taxes, primarily due to the net effect of (i) changes in valuation allowance and (ii) current year generation of research credits.
Removed
The Settlement Agreement includes a finding that we incorrectly interpreted the regulation at issue to require evaluation of only the last stage of our hard disk drive manufacturing process rather than the entire process. As part of this settlement, we have agreed not to contest BIS’ determination that the sales in question did not comply with the U.S. EAR.
Added
Risk Factors” of our Annual Report. 42 Table of Contents Cash and Cash Equivalents As of (Dollars in millions) June 28, 2024 June 30, 2023 Change Cash and cash equivalents $ 1,358 $ 786 $ 572 The following table summarizes results from the Consolidated Statements of Cash Flows for the periods indicated: Fiscal Years Ended (Dollars in millions) June 28, 2024 June 30, 2023 Net cash flow provided by (used in): Operating activities $ 918 $ 942 Investing activities 126 217 Financing activities (473) (988) Effect of foreign currency exchange rates 1 — Net increase in cash, cash equivalents and restricted cash $ 572 $ 171 Cash Provided by Operating Activities Cash provided by operating activities for fiscal year 2024 was $918 million and includes the effects of net income adjusted for non-cash items including depreciation, amortization, share-based compensation, net gain from business divestiture and: • an increase of $243 million in other assets and liabilities, primarily related to the restructuring of pre-existing purchase agreements as a result of the sale of SoC operations.
Removed
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.
Added
Divestiture ” for more details; • an increase of $227 million in accounts payable, primarily due to timing of payments; • a decrease of $192 million in accounts receivable, primarily due to lower revenue and higher accounts receivable factoring; and • an increase of $25 million cash proceeds received from the settlement of certain interest rate swap agreements; partially offset by • a decrease of $183 million in accrued expenses primarily due to lower restructuring activities; and • an increase of $99 million in inventories, primarily due to an increase in raw materials and work in progress inventory.
Removed
We expect the current market conditions will continue to persist at least through the first half of fiscal year 2024.
Added
Cash Used in Financing Activities Net cash used in financing activities of $473 million for fiscal year 2024 was primarily attributable to the following activities: • $1.3 billion repurchases of long-term debt; • $585 million in dividends paid to our shareholders; • $128 million debt fees relating to issuance of long-term debt and capped call transaction; and • $38 million taxes paid related to net share settlement of equity awards; partially offset by • $1.5 billion in net proceeds from the issuance of long-term debt; and • $66 million in proceeds from the issuance of ordinary shares under employee stock plans.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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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.
Biggest change(Dollars in millions, except percentages) Fiscal Years Ended Fair Value at June 28, 2024 2025 2026 2027 2028 2029 Thereafter Total Assets Money market funds, time deposits and certificates of deposit Floating rate $ 388 $ — $ — $ — $ — $ — $ 388 $ 338 Average interest rate 5.31 % — % — % — % — % — % 5.31 % Other debt securities Fixed rate $ — $ 15 $ — $ — $ — $ — $ 15 $ 15 Debt Fixed rate $ 479 $ — $ 505 $ 1,500 $ 495 $ 2,750 $ 5,729 $ 6,342 Average interest rate 4.75 % — % 4.88 % 3.50 % 4.09 % 7.38 % 5.64 % Foreign Currency Exchange Risk.
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.
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 SDCP. We entered into a Total Return Swap (“TRS”) in order to manage the equity market risks associated with the SDCP liabilities.
Derivative Financial Instruments” of this Annual Report. 47 Table of Contents
Derivative Financial Instruments” of this Annual Report. 48 Table of Contents
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.
Our exposure to market risk for changes in interest rates relates primarily to our cash investment portfolio. As of June 28, 2024, we had no available-for-sale investments that had been in a continuous unrealized loss position for a period greater than 12 months. We had no impairments related to credit losses for available-for-sale investments as of June 28, 2024.
The objective of the interest rate swap agreements is to eliminate the variability of interest payment cash flows associated with the variable interest rate under the Term Loans. We designated the interest rate swaps as cash flow hedges.
The objective of the interest rate swap agreements was to eliminate the variability of interest payment cash flows associated with the variable interest rate under the Term Loans. We designated the interest rate swaps as cash flow hedges. On September 13, 2023, we terminated our interest rate swap agreements as we repaid the Term Loans.
The change in fair value of these contracts is recognized in earnings in the same period as the gains and losses from the remeasurement of the assets and liabilities. All foreign currency forward exchange contracts mature within 12 months.
The change in fair value of these contracts is recognized in earnings in the same period as the gains and losses from the remeasurement of the assets and liabilities. All foreign currency forward exchange contracts mature within 12 months. For more information about our debt and use of derivative instruments, see “Item 8. Financial Statements and Supplementary Data— Note 8.
(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.
(Dollars in millions, except average contract rate) Notional Amount Average Contract Rate Estimated Fair Value (1) Foreign currency forward exchange contracts: Singapore Dollar $ 141 $ 1.35 $ — Chinese Renminbi 29 7.10 1 Thai Baht 21 35.24 (1) British Pound Sterling 9 0.78 — Total $ 200 $ — ___________________________________________________________________________________ (1) Equivalent to the unrealized net gain (loss) on existing contracts.
The table is provided in dollar equivalent amounts and presents the notional amounts (at the contract exchange rates) and the weighted-average contractual foreign currency exchange rates.
Derivative Financial Instruments ” of this Annual Report. 47 Table of Contents The table below provides information as of June 28, 2024 about our foreign currency forward exchange contracts. The table is provided in dollar equivalent amounts and presents the notional amounts (at the contract exchange rates) and the weighted-average contractual foreign currency exchange rates.
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.
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 28, 2024.
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.
We have fixed rate debt obligations, which we enter into for general corporate purposes including capital expenditures and working capital needs. We previously entered into certain interest rate swap agreements to convert the variable interest rate on the Term Loans to fixed interest rates.
Removed
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
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.
Removed
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.

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