SEAGATE TECHNOLOGY HOLDINGS PLC The following is a discussion of the financial condition, changes in financial condition and results of operations for our fiscal quarters endedDecember 30, 2022 ,September 30, 2022 andDecember 31, 2021 , referred to herein as the "December 2022 quarter," the "September 2022 quarter," and the "December 2021 quarter," respectively. We operate and report financial results on a fiscal year of 52 or 53 weeks ending on the Friday closest toJune 30 . TheDecember 2022 quarter, theSeptember 2022 quarter and theDecember 2021 quarter were each 13 weeks. You should read this discussion in conjunction with financial information and related notes included elsewhere in this report. Unless the context indicates otherwise, as used herein, the terms "we," "us," "Seagate," the "Company" and "our" refer collectively toSeagate Technology Holdings plc , an Irish public limited company, and its subsidiaries. References to "$" or "dollars" are toUnited States dollars. This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to historical fact. These statements may include, among other things, statements about our plans, strategies and prospects; beliefs and assumptions of our management; anticipated market demand for our products; shifts in technology; estimates of industry growth; anticipated economic conditions worldwide; expectations regarding the outcome of theU.S. Commerce Department's Bureau of Industry and Security's inquiry and proposed charging letter; expectations regarding our ability to effectively manage our cash liquidity position and debt obligations, and comply with the covenants in our credit facilities; projections regarding our cost savings and restructuring efforts; the sufficiency of our sources of cash to meet cash needs for the next 12 months; and our expectations regarding capital expenditures. Forward-looking statements generally can be identified by words such as "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "projects," "may," "will," "will continue," "can," "could," or negative of these words, variations of these words and comparable terminology. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. Forward-looking statements are based on information available to the Company as of the date of this Quarterly Report on Form 10-Q and are subject to known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from historical experience and our present expectations or projections. Therefore, undue reliance should not be placed on forward-looking statements. These risks and uncertainties include, but are not limited to, those set forth in "Part II, Item 1A. Risk Factors" in this Quarterly Report on Form 10-Q. We undertake no obligation to update forward-looking statements. Our Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is provided in addition to the accompanying condensed 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 theDecember 2022 quarter. Highlights of events in theDecember 2022 quarter that impacted our financial position. •Results of Operations. Analysis of our financial results comparing theDecember 2022 quarter to theSeptember 2022 quarter and theDecember 2021 quarter. •Liquidity and Capital Resources. An analysis of changes in our balance sheet and cash flows, and discussion of our financial condition including potential sources of liquidity. •Critical Accounting Policies. Accounting policies and estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results.
For an overview of our business, see "Part I, Item 1. Financial Statements-Note 1. Basis of Presentation and Summary of Significant Accounting Policies-Organization."
Overview of the
During theDecember 2022 quarter, we shipped 113 exabytes of HDD storage capacity. We generated revenue of approximately$1.9 billion with a gross margin of 13%. Our operating cash flow was$251 million and we paid$145 million in dividends. We exchanged$964 million of certain senior notes with$750 million of new senior notes and recorded a net gain of$204 million as the result of debt extinguishment. 29
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During theDecember 2022 quarter, the data storage industry and our business continued to be impacted by macroeconomic headwinds. We continued to experience broad-based delay in customers' purchase plans, particularly in the mass capacity market, given overall macroeconomic slowdowns. The ongoing economic slowdown inChina due to the pandemic-related governmental lockdown measures, as well as the negative impact from the higher inflationary pressures in the consumer markets continued to impact our business during theDecember 2022 quarter. Additionally, our customers continued to experience demand disruptions, resulting in demand variations across certain of our end markets. These reductions in demand have required us to reduce manufacturing production plans, incur order cancellation fees to terminate certain purchase commitments that were made with our suppliers, recognize manufacturing underutilization charges and accelerate depreciation of certain capital equipment that would not be utilized as part of our operations. We expect these factors will continue to impact our business and results of operations over the near-term. Additionally, during theDecember 2022 quarter, our Board of Directors approved and committed to theOctober 2022 Plan to reduce our cost structure to better align our operational needs to current economic conditions while continuing to support the long-term business strategy. TheOctober 2022 Plan included reducing our worldwide headcount by approximately 3,000 employees, or 8% of the global workforce, along with other cost saving measures. We continue to actively monitor the effects and potential impacts of the macroeconomic conditions, pandemic and other factors on all aspects of our business, supply chain, liquidity and capital resources. We are also actively working on opportunities to lower our cost structure, drive further operational efficiencies and maintain supply chain discipline including adjusting our manufacturing production plans, annual capital expenditure plans and other meaningful cost savings measures in response to these business conditions. For a further discussion of the uncertainties and business risks associated with the COVID-19 pandemic, see the section entitled "Risk Factors" in Part II, Item 1A of our Quarterly Report on Form 10-Q for the fiscal quarter endedSeptember 30, 2022 . 30
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Results of Operations
We list in the tables below summarized information from our Condensed
Consolidated Statements of Operations by dollars and as a percentage of revenue:
For the Three Months Ended For the Six Months Ended
December 30, September 30, December 31, December 30, December 31,
(Dollars in millions) 2022 2022 2021 2022 2021
Revenue $ 1,887 $ 2,035 $ 3,116 $ 3,922 $ 6,231
Cost of revenue 1,641 1,553 2,168 3,194 4,327
Gross profit 246 482 948 728 1,904
Product development 200 234 228 434 461
Marketing and administrative 125 129 136 254 269
Amortization of intangibles - 3 3 3 6 Restructuring and other, net 81 9 1 90 2 (Loss) income from operations (160) 107 580 (53)
1,166
Other income (expense), net 122 (80) (66) 42
(119)
(Loss) income before income taxes (38) 27 514 (11)
1,047
(Benefit from) provision for income taxes (5) (2) 13 (7) 20 Net (loss) income$ (33) $ 29 $ 501 $ (4)$ 1,027 For the Three Months Ended For the Six Months Ended December 30, September 30, December 31, December 30, December 31, 2022 2022 2021 2022 2021 Revenue 100 % 100 % 100 % 100 % 100 % Cost of revenue 87 76 70 81 69 Gross margin 13 24 30 19 31 Product development 11 12 7 11 8 Marketing and administrative 7 7 4 6 4 Amortization of intangibles - - - - - Restructuring and other, net 4 - - 2 - Operating margin (8) 5 19 (1) 19 Other income (expense), net 6 (4) (3) 1 (2) (Loss) income before income taxes (2) 1 16 - 17 (Benefit from) provision for income taxes - - - - - Net (loss) income (2) % 1 % 16 % - % 17 % 31
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Revenue
The following table summarizes information regarding consolidated revenues by
channel, geography and market and HDD exabytes shipped by market and price per
terabyte:
For the Three Months Ended For the Six Months Ended
December 30, September 30, December 31, December 30, December 31,
2022 2022 2021 2022 2021
Revenues by Channel (%)
OEMs 72 % 76 % 70 % 74 % 72 %
Distributors 16 % 15 % 18 % 15 % 17 %
Retailers 12 % 9 % 12 % 11 % 11 %
Revenues by Geography (%) (1)
Asia Pacific 40 % 39 % 46 % 40 % 48 %
Americas 45 % 46 % 38 % 46 % 36 %
EMEA 15 % 15 % 16 % 14 % 16 %
Revenues by Market (%)
Mass capacity 66 % 68 % 66 % 67 % 65 %
Legacy 22 % 19 % 25 % 21 % 26 %
Other 12 % 13 % 9 % 12 % 9 %
HDD Exabytes Shipped by Market
Mass capacity 97 104 137 201 269
Legacy 16 14 26 30 53
Total 113 118 163 231 322
HDD Price per Terabyte $ 15 $ 15 $ 17 $ 15 $ 18 _________________________________
(1) Revenue is attributed to geography based on bill from locations.
Revenue in theDecember 2022 quarter decreased by$148 million from theSeptember 2022 quarter primarily due to the decrease in exabytes shipped as a result of lower market demand in mass capacity markets that were impacted by macroeconomic conditions and pandemic-related headwinds, partially offset by seasonal increase in legacy market exabytes shipped. Revenue for the three and six months endedDecember 30, 2022 decreased by$1.2 billion and$2.3 billion from the three and six months endedDecember 31, 2021 , respectively, primarily due to the decrease in exabytes shipped as a result of lower market demand in mass capacity and legacy markets that were impacted by macroeconomic conditions and pandemic-related headwinds. We expect the challenging macroeconomic environment and the pandemic-related impacts will continue to persist into at least the third quarter of fiscal year 2023. We maintain various sales incentive programs such as channel and OEM rebates. Sales incentive programs were approximately 17% of gross revenue for theDecember 2022 quarter, 18% for theSeptember 2022 quarter and 14% for theDecember 2021 quarter. Adjustments to revenues due to under or over accruals for sales incentive programs related to revenues reported in prior quarterly periods were less than 1% of quarterly gross revenue in all periods presented. 32
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Cost of Revenue and Gross Margin
For the Three Months Ended For the Six Months Ended
December 30, September 30, December 31, December 30, December 31,
(Dollars in millions) 2022 2022 2021 2022 2021
Cost of revenue $ 1,641 $ 1,553 $ 2,168 $ 3,194 $ 4,327
Gross profit 246 482 948 728 1,904
Gross margin 13 % 24 % 30 % 19 % 31 %
Gross margin for the December 2022 quarter decreased compared to both the
September 2022 quarter and the December 2021 quarter primarily driven by $108
million of order cancellation fees, $79 million of factory underutilization
charges associated with lower production levels, price erosion and acceleration
of depreciation expense for certain capital equipment.
Gross margin for the six months ended December 30, 2022 decreased compared to
the six months ended December 31, 2021 primarily driven by $139 million of
factory underutilization charges associated with lower production levels and
pandemic-related lockdown in one of our factories, $108 million of order
cancellation fees, price erosion and acceleration of depreciation expense for
certain capital equipment.
In the December 2022 quarter, total warranty cost was 1.5% of revenue and
included an unfavorable change in estimates of prior warranty accruals of 0.7%
of revenue primarily due to changes to our estimated future product return
rates. Warranty cost related to new shipments was 0.7%, 0.6% and 0.7% of revenue
for the December 2022 quarter, September 2022 quarter and December 2021 quarter,
respectively.
Operating Expenses
For the Three Months Ended For the Six Months Ended
December 30, September 30, December 31, December 30, December 31,
(Dollars in millions) 2022 2022 2021 2022 2021
Product development $ 200 $ 234 $ 228 $ 434 $ 461
Marketing and administrative 125 129 136 254 269
Amortization of intangibles - 3 3 3 6
Restructuring and other, net 81 9 1 90 2
Operating expenses $ 406 $ 375 $ 368 $ 781 $ 738
Product development expense. Product development expenses decreased by
$34 million in the December 2022 quarter compared to the September 2022 quarter
primarily due to a $22 million decrease in depreciation expense and a $12
million decrease in compensation and other employee benefits from the reduction
in headcount as a result of our October 2022 restructuring plan.
Product development expenses decreased by $28 million in the December 2022
quarter compared to the December 2021 quarter primarily due to an $18 million
decrease in variable compensation and related benefit expense, a $4 million
decrease in compensation and other employee benefits from the reduction in
headcount as a result of our October 2022 restructuring plan and a $4 million
decrease in materials expense.
Product development expenses decreased by $27 million for the six months ended
December 30, 2022 compared to the six months ended December 31, 2021 primarily
due to a $40 million decrease in variable compensation and related benefit
expense, a $3 million decrease in compensation and other employee benefits from
the reduction in headcount as a result of our October 2022 restructuring plan
and a $3 million decrease in equipment expense, partially offset by a $23
million increase in depreciation expense.
Marketing and administrative expense. Marketing and administrative expenses
decreased by $4 million in the December 2022 quarter compared to the September
2022 quarter primarily due to a $7 million recovery of an accounts receivable
previously written-off in prior years and a $4 million decrease in travel
expenses, partially offset by a $6 million increase in compensation and other
employee benefits as a result of increase in share-based compensation.
Marketing and administrative expenses decreased by $11 million in the December
2022 quarter compared to the December 2021 quarter primarily due to an $11
million decrease in variable compensation and related benefit expense and a $7
million recovery of an accounts receivable previously written-off in prior
years, partially offset by a $2 million increase in advertising costs.
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Marketing and administrative expenses decreased by$15 million for the six months endedDecember 30, 2022 compared to the six months endedDecember 31, 2021 primarily due to a$24 million decrease in variable compensation and related benefit expense and a$7 million recovery of an accounts receivable previously written-off in prior years, partially offset by a$5 million increase in travel expenses as a result of the easing of pandemic-related travel restrictions in the prior quarter, a$4 million increase in advertising costs and a$3 million increase in outside services expense. Amortization of intangibles. Amortization of intangibles decreased by$3 million in theDecember 2022 quarter compared to theSeptember 2022 quarter and also for the three and six months endedDecember 30, 2022 compared to the three and six months endedDecember 31, 2021 , due to certain intangible assets that reached the end of their useful lives. Restructuring and other, net. Restructuring and other, net for the three and six months endedDecember 30, 2022 was$81 million and$90 million , respectively, and primarily comprised of cost incurred related to the restructuring plan we committed to onOctober 24, 2022 to reduce our workforce by approximately 3,000 employees to better align our operational needs to current macroeconomic conditions while continuing to support the long-term business strategy. Other Income (Expense), Net For the Three Months Ended For the Six Months Ended December 30, September 30, December 31, December 30, December
31,
(Dollars in millions) 2022 2022 2021 2022 2021 Other income (expense), net$ 122 $ (80) $ (66)$ 42 $ (119) Other income (expense), net. Other income, net increased by$202 million for theDecember 2022 quarter compared to theSeptember 2022 quarter primarily due to a$204 million net gain recognized from early redemption and extinguishment of$964 million of debt from theJuly 2029 Notes,January 2031 Notes andJuly 2031 Notes in exchange with issuance of the newDecember 2032 Notes of$750 million . Other income, net increased by$188 million for theDecember 2022 quarter compared to theDecember 2021 quarter primarily due to a$204 million net gain recognized from early redemption and extinguishment of$964 million of debt from theJuly 2029 Notes,January 2031 Notes andJuly 2031 Notes in exchange with issuance of the newDecember 2032 Notes of$750 million , partially offset by a$14 million increase in interest expense. Other income, net increased by$161 million for the six months endedDecember 30, 2022 compared to the six months endedDecember 31, 2021 primarily due to a$204 million net gain recognized from early redemption and extinguishment of$964 million of debt from theJuly 2029 Notes,January 2031 Notes andJuly 2031 Notes in exchange with issuance of the newDecember 2032 Notes of$750 million , partially offset by a$26 million increase in interest expense and a$7 million higher non-recurring gain from our strategic investments in the prior comparable period. Income Taxes For the Three Months Ended For the Six Months Ended December 30,
2022 2022 2021 2022 2021
(Benefit from) provision for income taxes $ (5) $ (2) $ 13 $ (7) $ 20
We recorded income tax benefits of$5 million and$7 million for the three and six months endedDecember 30, 2022 , respectively. The discrete items in the income tax provision were not material for the three months endedDecember 30, 2022 . The income tax benefit for the six months endedDecember 30, 2022 included approximately$5 million of net discrete tax benefit, primarily associated with the excess tax benefits related to share-based compensation expense. OnAugust 16, 2022 , the Inflation Reduction Act of 2022 (the "IRA") was enacted intoU.S. law. The legislation includes a new corporate alternative minimum tax (the "CAMT") of 15% on the adjusted financial statement income ("AFSI") of corporations with average AFSI exceeding$1.0 billion over a three-year period. The CAMT is effective for us beginning in fiscal year 2024. We assessed the potential impact of the CAMT and do not expect to have a material impact to our financial statements or results of operations. During the six months endedDecember 30, 2022 , our unrecognized tax benefits excluding interest and penalties decreased by approximately$4 million to$110 million , substantially all of which would impact the effective tax rate, if recognized, subject to certain future valuation allowance reversals. We do not expect material changes to our unrecognized tax benefits in the next twelve months beginningDecember 31, 2022 . 34
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We recorded income tax provisions of$13 million and$20 million for the three and six months endedDecember 31, 2021 . The discrete items in the income tax provision were not material for the three months endedDecember 31, 2021 . The income tax provision for the six months endedDecember 31, 2021 included approximately$9 million of net discrete tax benefit, primarily associated with net excess tax benefits related to share-based compensation expense. Our income tax provision recorded for the three and six months endedDecember 30, 2022 andDecember 31, 2021 differed from the provision for income taxes that would be derived by applying the Irish statutory rate of 25% to income before income taxes, primarily due to the net effect of tax benefits related to (i) non-Irish earnings generated in jurisdictions that are subject to tax incentive programs and are considered indefinitely reinvested outside ofIreland and (ii) current year generation of research credits.
Liquidity and Capital Resources
The following sections discuss our principal liquidity requirements, as well as our sources and uses of cash and our liquidity and capital resources. Our cash and cash equivalents are maintained in investments with remaining maturities of 90 days or less at the time of purchase. The principal objectives of our investment policy are the preservation of principal and maintenance of liquidity. We believe our cash equivalents are liquid and accessible. We operate in some countries that have restrictive regulations over the movement of cash and/or foreign exchange across their borders. However, we believe our sources of cash will continue to be sufficient to fund our operations and meet our cash requirements for the next 12 months. 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 pandemic-related headwinds including higher inflationary pressures, inventory adjustments by our customers and the overall market demand disruptions on our business operations for the foreseeable future. However, some challenges to our industry and to our business continue to remain uncertain and cannot be predicted at this time. Consequently, we will continue to evaluate our financial position in light of future developments, particularly those relating to the global economic factors and the pandemic. 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 ofDecember 30, 2022 . Cash and Cash Equivalents December 30, July 1, (Dollars in millions) 2022 2022 Change Cash and cash equivalents $ 770$ 615 $ 155 Our cash and cash equivalents as ofDecember 30, 2022 increased by$155 million fromJuly 1, 2022 primarily as a result of net proceeds of$600 million from the issuance of long-term debt and net cash of$496 million provided by operating activities partially offset by the repurchases of our ordinary shares of$408 million , dividends paid to our shareholders of$292 million and payments for capital expenditures of$212 million .
Cash Provided by Operating Activities
Cash provided by operating activities for the six months ended
•a decrease of$692 million in accounts receivable, primarily due to lower revenue and timing of collections; •a decrease of$371 million in inventories, primarily due to a decrease in units built to align with the prevailing demand environment; •an increase of$110 million cash proceeds received from the settlement of certain interest rate swap agreements; partially offset by •a decrease of$919 million in accounts payable, primarily due to a decrease in materials purchased; and •a decrease of$145 million in accrued employee compensation, primarily due to cash paid to our employees as part of our discretionary spending plans. 35
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Cash Used in Investing Activities
Cash used in investing activities for the six months endedDecember 30, 2022 was$210 million , primarily attributable to payments for the purchase of property, equipment and leasehold improvements.
Cash Provided by Financing Activities
Net cash used in financing activities of
•$408 million in payments for repurchases of our ordinary shares; and •$292 million in dividend payments; partially offset by •$600 million in net proceeds from the issuance of Term Loan A3.
Liquidity Sources
Our primary sources of liquidity as ofDecember 30, 2022 consist of: (1) approximately$770 million in cash and cash equivalents, (2) cash we expect to generate from operations and (3)$1.75 billion available for borrowing under our Revolving Credit Facility, which is part of the Credit Agreement. As ofDecember 30, 2022 , no borrowings (including swing line loans) were outstanding and no commitments were utilized for letters of credit issued under the Revolving Credit Facility. The Revolving Credit Facility is available for borrowings, subject to compliance with financial covenants and other customary conditions to borrowing. The Credit Agreement includes three financial covenants: (1) interest coverage ratio, (2) total leverage ratio and (3) a minimum liquidity amount. The term of the Revolving Credit Facility is throughOctober 14, 2026 . As ofDecember 30, 2022 , we were in compliance with all of the covenants under our debt agreements. OnNovember 8, 2022 , we entered into the Seventh Amendment to our Credit Agreement to increase the maximum permitted total leverage ratio we must comply with during the covenant relief period which ends onJune 28, 2024 . We continue to evaluate our debt portfolio and structure to comply with our financial debt covenants. We believe that our sources of cash will be sufficient to fund our operations and meet our cash requirements for at least the next 12 months. Our ability to fund liquidity requirements beyond 12 months will depend on our future cash flows, which are determined by future operating performance, and therefore, subject to prevailing global macroeconomic conditions and financial, business and other factors, some of which are beyond our control. 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 II, Item 1A. Risk Factors" of this Quarterly Report on Form 10-Q.
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. As ofDecember 30, 2022 , our contractual cash requirements have not changed materially since our Annual Report on Form 10-K for the fiscal year endedJuly 1, 2022 , except for the purchase obligations, long-term debt obligations and restructuring.
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. 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. As ofDecember 30, 2022 , we had unconditional purchase obligations of approximately$4.3 billion primarily related to purchases of inventory components with our suppliers. We expect$1.2 billion of these commitments to be paid during the remainder of fiscal year 2023. During theDecember 2022 quarter, we recorded order cancellation fees of$108 million to terminate certain purchase commitments related to purchase of inventory component and equipment. We expect these amounts to be paid within one year. 36
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Long-term debt and interest payments on debt
OnAugust 18, 2022 , we amended our credit agreement and borrowed a new Term Loan A3 in the aggregate principal amount of$600 million . Term Loan A3 bears interest at a rate of SOFR plus a variable margin of 1.25% to 2.5%, in each case with such margin being determined based on the corporate credit rating of the Borrower or one of its parent entities. Term Loan A3 is repayable in quarterly installments beginning onDecember 31, 2022 and is scheduled to mature onJuly 30, 2027 . OnNovember 30, 2022 , the Company completed an exchange offer in which$964 million principal amount in aggregate of theJuly 2029 Notes,January 2031 Notes andJuly 2031 Notes were exchanged for$750 million principal amount of 9.625% Senior Notes due onDecember 1, 2032 . The exchange was accounted for as a debt extinguishment and resulted in a net gain of$204 million . As ofDecember 30, 2022 , the future principal payment obligation on our long-term debt was$6.1 billion , of which$636 million will mature within one year. As ofDecember 30, 2022 , future interest payments on this outstanding debt is estimated to be approximately$1.9 billion , of which$282 million is expected to be paid within one year. From time to time, we may repurchase any of our outstanding senior notes in open market or privately negotiated purchases or otherwise, or we may repurchase outstanding senior notes pursuant to the terms of the applicable indenture. Refer to "Item 1. Financial Statements-Note 3. Debt" for more details.
Restructuring
OnOctober 24, 2022 , our Board of Directors approved and committed to theOctober 2022 Plan to reduce its cost structure to better align our operational needs to current economic conditions while continuing to support the long-term business strategy. TheOctober 2022 Plan includes reducing our worldwide headcount by approximately 3,000 employees, or 8% of the global workforce, along with other cost saving measures. During theDecember 2022 quarter, we recorded restructuring charges of$81 million , primarily related to theOctober 2022 Plan, and made cash payments of$34 million for all active restructuring plans.
As of
Dividends
During theDecember 2022 quarter, our Board of Directors declared dividends of$0.70 per share, totaling$145 million , which was paid onJanuary 5, 2022 . OnJanuary 25, 2023 , our Board of Directors declared a quarterly cash dividend of$0.70 per share, payable onApril 6, 2023 to shareholders of record at the close of business onMarch 22, 2023 . 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.
Share repurchases
From time to time, at the Company's discretion, we may repurchase any of our outstanding ordinary shares through private, open market, or broker-assisted purchases, tender offers, or other means, including through the use of derivative transactions. As ofDecember 30, 2022 ,$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 ourConstitution .
Other
For fiscal year 2023, we expect capital expenditures to be below our long-term
targeted range of 4% to 6% of revenue. We require substantial amounts of cash to
fund any increased working capital requirements, future capital expenditures,
scheduled payments of principal and interest on our indebtedness and payments of
dividends. We will continue to evaluate and manage the retirement and
replacement of existing debt and associated obligations, including evaluating
the issuance of new debt securities, exchanging existing debt securities for
other debt securities and retiring debt pursuant to privately negotiated
transactions, open market purchases, tender offers or other means or otherwise.
In addition, we may selectively pursue strategic alliances, acquisitions, joint
ventures and investments, which may require additional capital.
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Critical Accounting Policies
Our discussion and analysis of financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance withU.S. generally accepted accounting principles. The preparation of such statements requires us to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period and the reported amounts of assets and liabilities as of the date of the financial statements. Our estimates are based on historical experience and other assumptions that we consider to be appropriate in the circumstances. However, actual future results may vary from our estimates. Other than as described in "Part I, Item 1. Financial Statements-Note 1. Basis of Presentation and Summary of Significant Accounting Policies", there have been no other material changes in our critical accounting policies and estimates. Refer to "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year endedJuly 1, 2022 , as filed with theSEC onAugust 5, 2022 , for a discussion of our critical accounting policies and estimates.
Recent Accounting Pronouncements
See "Part I, Item 1. Financial Statements-Note 1. Basis of Presentation and Summary of Significant Accounting Policies" for information regarding the effect of new accounting pronouncements on our financial statements.
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