Seagate Technology Holdings plc

Previous wording

•Critical Accounting Policies. Accounting policies and estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results.

Current wording

•Critical Accounting Estimates. Accounting policies and estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results.

Previous wording

During the December 2023 quarter, we shipped 95 exabytes of HDD storage capacity. We generated revenue of approximately $1.6 billion with a gross margin of 23%. Our operating cash flow was $169 million and we paid $146 million in dividends. Additionally, we recorded a net loss of $43 million from equity investments and recognized a gain of $30 million from the sale and leaseback of certain property.

Current wording

During the March 2024 quarter, we shipped 99 exabytes of HDD storage capacity. We generated revenue of approximately $1.7 billion with a gross margin of 26%. Ouroperating cash flow was $188 million and we paid $147 million in divi dends.

Previous wording

During the December 2023 quarter, we experienced gradual recovery within the U.S. cloud market, reflecting progress in customer inventory adjustments along with more stable end-market demand, although the data storage industry and our business continued to be impacted by macroeconomic headwinds. As a result of these market dynamics, we continued to execute cost discipline, manage our factory production levels in light of the lower demand and implement pricing actions to improve operational efficiencies and profitability. We expect the dynamic macroeconomic environment will continue to moderate our business and results of operations in what we believe is the early stage of industry-wide demand recovery.

Current wording

During the March 2024 quarter, we experienced ongoing recovery within the cloud market, reflecting continued progress in customer inventory adjustments which we believe are now mostly complete, along with an improvement in end-market demand. We continued to execute 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, however we expect the macroeconomic environment to remain dynamic and continue to impact our business and results of operations.

Previous wording

Revenue in the December 2023 quarter increased by $101 million compared to the September 2023 quarter, primarily due to an increase in mass capacity and legacy storage exabytes shipped, aswe experienced gradual recovery within the U.S. cloud market and positive seasonality within the consumer market.

Current wording

Revenue in the March 2024 quarter increased by $100 million compared to the December 2023 quarter, primarily due to an increase in mass capacity exabytes shipped, as we experienced ongoing recovery within the cloud market and favorable pricing actions undertaken by the Company, partially offset by seasonal decreases in legacy market exabytes shipped.

Previous wording

Revenue for the three and six months ended December 29, 2023 decreased by $332 million and $913 million from the three and six months ended December 30, 2022, respectively, primarily due to a decrease in exabytes shipped, reflecting broad-based demand slowdown resulting from weaker macroeconomic conditions.

Current wording

Revenue for the three and nine months ended March 29, 2024 decreased by $205 million and $1.1 billion from the three and nine months ended March 31, 2023, respectively, primarily due to a decrease in exabytes shipped due to lower broad-based market demand, slightly offset by an increase in revenue as a result of favorable pricing actions.

Previous wording

We maintain various sales incentive programs such as channel and OEM rebates. Sales incentive programs were approximately 18% of gross revenue for the December 2023 quarter, 20% for the September 2023 quarter and 17% for the December 2022 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 3% of quarterly gross revenue in all periods presented.

Current wording

Wemaintain various sales incentive programs such as channel and OEM rebates. Sales incentive programs were approximately 15%of gross revenue for the March 2024 quarter, 18% for the December 2023 quarter and 16% for the March 2023 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.

Previous wording

Gross margin for the December 2023 quarter increased compared to the September 2023 quarter, primarily driven by $118 million of order cancellation fees for the September 2023 quarter that did not recur, a $23 million reduction in factory underutilization charges, a $20 million decrease in depreciation expense due to the extension of useful lives of certain manufacturing equipment, $13 million of accelerated depreciation expense for certain capital equipment that did not recur, and favorable pricing actions undertaken by the Company.

Current wording

Gross margin for the March 2024 quarter increased compared to the March 2023 quarter, primarily driven by favorable pricing actions undertaken by the Company, a $30 million decrease in depreciation expense due to the extension of useful lives of certain manufacturing equipment, which was partially reflected in the reduction in factory underutilization charges, and $18 million of accelerated depreciation expense for certain capital equipment in March 2023 quarter that did not recur.

Previous wording

Gross margin for the six months ended December 29, 2023 decreased compared to the six months ended December 30, 2022 primarily driven by an increase of $6 million in order cancellation fees and less favorable product mix, partially offset by a $40 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 $26 million in accelerated depreciation expense for certain capital equipment, and pandemic-related lockdown in one of our factories in fiscal year 2023 that did not recur.

Current wording

Gross margin for the nine months ended March 29, 2024 increased compared to the nine months ended March 31, 2023 primarily driven by favorable pricing actions undertaken by the Company, a $72 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 $44 million in accelerated depreciation expense for certain capital equipment, and pandemic-related lockdown in one of our factories in fiscal year 2023 that did not recur, partially offset by an increase of $5 million in order cancellation fees and less favorable product mix.

Previous wording

In the December 2023 quarter, 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. Warranty cost related to new shipments was 0.9%, 0.9% and 0.7% of revenue for the December 2023 quarter, September 2023 quarter and December 2022 quarter, respectively.

Current wording

In the March 2024 quarter, total warranty cost was 0.5% of revenue and includeda favorable change in estimates of prior warranty accruals of 0.2% of revenue primarily due to decreases to our estimated future product return rates. Warranty cost related to new shipments was 0.8%, 0.9% and 0.8% of revenue for the March 2024 quarter, December 2023 quarter and March 2023 quarter, respectively.

Previous wording

Product development expense. Product development expenses decreased by $10 million in the December 2023 quarter compared to the September 2023 quarter, primarily due to a $7 million decrease in compensation and other employee benefits from the reduction in headcount as a result of our restructuring plans.

Current wording

Product development expense. Product development expenses increased by $3 million in the March 2024 quarter compared to the December 2023 quarter, primarily due to a $6 million increase in compensation and other employee benefits as a result of completion of temporary salary reductions and a $2 million increase in lease expense as we sold and leased back certain properties, partially offset by a $5 million decrease in materials expense.

Previous wording

Marketing and administrative expenses decreased by $17 million in the December 2023 quarter compared to the December 2022 quarter primarily due to a $23 million decrease in compensation and other employee benefits from the reduction in headcount as a result of our restructuring plans and temporary salary reduction and a $3 million decrease in advertising costs, partially offset by a $7 million recovery in the December 2022 quarter of an accounts receivable previously written off in prior years.

Current wording

Product development expenses decreased by $27 million in the March 2024 quarter compared to the March 2023 quarter, primarily due to a $23 million decrease in compensation and other employee benefits as a result of workforce reductions, a $9 million decrease in depreciation expense, and a $2 million decrease in materials expense, partially offset by a $7 million increase in lease expense as we sold and leased back certain properties.

Previous wording

Marketing and administrative expense. Marketing and administrative expenses increased by $3 million in the December 2023 quarter compared to the September 2023 quarter primarily due to a $2 million increase in advertising costs and a $1 million increase in compensation and other employee benefits due to the completion of the temporary salary reduction during the December 2023 quarter.

Current wording

Marketing and administrative expense. Marketing and administrative expenses increased by $8 million in the March 2024 quarter compared to the December 2023 quarter primarily due to a $5 million increase in compensation and other employee benefits due to the completion of the temporary salary reduction and a $3 million increase in legal costs.

Previous wording

Marketing and administrative expenses decreased by $41 million for thesix months ended December 29, 2023 compared to thesix months ended December 30, 2022 primarily due to a $26 million decrease in compensation and other employee benefits from the reduction in headcount as a result of our restructuring plans and temporary salary reduction, a $9 million decrease in advertising costs, an $8 million decrease in outside services expense, a $5 million decrease in legal costs and a $4 million decrease in travel expenses, partially offset by a $7 million recovery in the December 2022 quarter of an accounts receivable previously written off in prior years.

Current wording

Marketing and administrative expenses decreased by $48 million for thenine months ended March 29, 2024 compared to thenine months ended March 31, 2023 primarily due to a $31 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 travel expenses, a $6 million decrease in outside services expense and a $2 million increase in tax credit, partially offset by a $7 million recovery in the December 2022 quarter of an accounts receivable previously written off in prior years and a $2 million increase in depreciation expenses.

Previous wording

Restructuring and other, net. Restructuring and other, net for the three and six months ended December 29, 2023 was a $31 million benefit and $29 million benefit, respectively, primarily due to the net gain of$30 million from the sale and leaseback transaction during the December 2023 quarter.

Current wording

Restructuring and other, net. Restructuring and other, net for the March 2024 quarter was $2 million. For the nine months ended March 29, 2024, we recorded a benefit of $27 million primarily related to the net gain of $30 million from the sale and leaseback transaction during the December 2023 quarter.

Previous wording

Other expense increased by $250 million for the December 2023 quarter compared to the December 2022 quarter primarily due to $204 million of net gain recognized from the early redemption of debt in the December 2022 quarter and$43 millionof net loss from equity investments in the December 2023 quarter.

Current wording

Other expense, net. Other expense decreased by $43 million for the March 2024 quarter compared to the December 2023 quarter primarily due to $43 million of net loss from equity investments in the December 2023 quarter that did not recur.

Previous wording

Other expense increased by $188 million for the six months ended December 2023 compared to the six months ended December 2022 primarily due to $204 million of net gain recognized from the early redemption of debt in the six months ended December 2022, a$43 million net loss from equity investments and a$29 million net loss recognized from early redemption of debt in the six months ended December 2023 and a $20 million increase in interest expense. The increase is partially offset by$104 million of net gain recognized from the termination of interest rate swaps associated with the repayment of term loans in the six months ended December 2023.

Current wording

Other expense increased by $188 million for the nine months ended March 29, 2024 compared to the nine months ended March 31, 2023 primarily due to $207 million of net gain recognized from the early redemption of debt in the nine months ended March 31, 2023, a $43 million net loss from equity investments, a $29 million net loss recognized from early redemption of debt and a $17 million net increase in interest expense in the nine months ended March 29, 2024. The increase is partially offset by $104 million of net gain recognized from the termination of interest rate swaps associated with the repayment of term loans in the nine months ended March 29, 2024.

Previous wording

We recorded income tax provisions of $15 million and $52 million for the three and six months ended December 29, 2023, respectively. The discrete items in the income tax provision were not material for the three months ended December 29, 2023. The income tax provision for the six months ended December 29, 2023 included approximately $36 million of net discrete expense, primarily associated with an increase in our valuation allowance to account for the impacts of new tax guidance which clarifies the treatment of specified research and experimental expenditures issued by the U.S. Treasury Department under Internal Revenue Code Section 174 during the September 2023 quarter, partially offset by net excess tax benefits related to share-based compensation expense. Additional guidance issued by the U.S. Treasury Department in December 2023 did not result in any impacts. We will have income taxes payable based on profits generated in various jurisdictions.

Current wording

We recorded income tax provisions of $33 million and $85 million for the three and nine months ended March 29, 2024, respectively. The discrete items in the income tax provision were not material for the three months ended March 29, 2024. The income tax provision for the nine months ended March 29, 2024 included approximately $42 million of net discrete expense, primarily associated with an increase in our valuation allowance to account for the impacts of new tax guidance which clarifies the treatment of specified research and experimental expenditures issued by the U.S. Treasury Department under Internal Revenue Code Section 174 during the September 2023 quarter, partially offset by net excess tax benefits related to share-based compensation expense. Additional guidance issued by the U.S. Treasury Department in December 2023 did not result in any impacts. We will have income taxes payable based on profits generated in various jurisdictions.

Previous wording

During the six months ended December 29, 2023, our unrecognized tax benefits, excluding interest and penalties decreased by approximately $8 million to $108 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 beginning December 30, 2023.

Current wording

During the nine months ended March 29, 2024, our unrecognized tax benefits, excluding interest and penalties decreased by approximately $6 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 beginning March 30, 2024.

Previous wording

Our income tax provision recorded for the three and six months ended December 29, 2023 and December 30, 2022 differed from the provision for income taxes that would be derived by applying the Irish statutory rate of 25% to income before income taxes, primarily due to the net effect of tax benefits related to (i) non-Irish earnings generated in jurisdictions that are subject to tax incentive programs and are considered indefinitely reinvested outside of Ireland, (ii) increases in valuation allowance, and/or (iii) the generation of research credits during the current fiscal year.

Current wording

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

Previous wording

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 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.

Current wording

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 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 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.

Previous wording

Our cash and cash equivalents as of December 29, 2023 increasedby $1 million from June 30, 2023 primarily as a result of net cash of $296 million provided by operating activities and net proceeds of $1.5 billion from the issuance of exchangeable senior notes, partially offset by $1.3 billion redemption of term loans, dividends paid to our shareholders of $291 million, $128 million debt fees relating to issuance of long-term exchangeable debt and capped call transaction and payments for capital expenditures of $140 million.

Current wording

Our cash and cash equivalents as of March 29, 2024 increasedby $9 million from June 30, 2023 primarily as a result of net cash of $484 million provided by operating activities and net proceeds of $1.5 billion from the issuance of exchangeable senior notes, partially offset by $1.3 billion redemption of term loans, $438 million dividends paid to our shareholders, $128 million debt fees relating to issuance of long-term exchangeable debt and capped call transaction and $200 million payments for capital expenditures.

Previous wording

Cash provided by operating activities for the six months ended December 29, 2023 was $296 million and includes the effects of net loss adjusted for non-cash items including depreciation, amortization, share-based compensation and:

Current wording

Cash provided by operating activities for the nine months ended March 29, 2024 was $484 million and includes the effects of net loss adjusted for non-cash items including depreciation, amortization, share-based compensation and:

Previous wording

•a decrease of $150 million in accounts receivable, primarily due to lower revenue and higher accounts receivable factoring;

Current wording

•a decrease of $289 million in accounts receivable, primarily due to lower revenue and higher accounts receivable factoring;

Previous wording

•an increase of $54 million in accounts payable, primarily due to timing of payments; and

Current wording

•an increase of $108 million in accounts payable, primarily due to timing of payments; and

Previous wording

•a decrease of $28 million in accrued expenses primarily due to restructuring activities and BIS settlement penalty payment; and

Current wording

•a decrease of $50 million in accrued expenses primarily due to restructuring activities and BIS settlement penalty payment; and

Previous wording

•a decrease of $14 million in accrued employee compensation, primarily due to timing of payments.

Current wording

•a decrease of $25 million in accrued employee compensation, primarily due to timing of payments.

Previous wording

Net cash used in investing activities for the six months ended December 29, 2023 was $105 million, primarily attributable to payments of $140 million for the purchase of property, equipment and leasehold improvements, offset by proceeds of $35 million from the sale of assets, which included $34 million from the sale and leaseback transaction during the December 2023 quarter.

Current wording

Net cash used in investing activities for the nine months ended March 29, 2024 was $157 million, primarily attributable to payments of $200 million for the purchase of property, equipment and leasehold improvements, partially offset by proceeds of $38 million from the sale of assets which primarily included $34 million from the sale and leaseback transaction during the December 2023 quarter, as well as proceeds of $5 million from the sale of investments in the March 2024 quarter.

Previous wording

Net cash used in financing activities of $191 million for the six months ended December 29, 2023 was primarily attributable to the following activities:

Current wording

Net cash used in financing activities of $319 million for the nine months ended March 29, 2024 was primarily attributable to the following activities:

Previous wording

•$28 million taxes paid related to net share settlement of equity awards; partially offset by

Current wording

•$31 million taxes paid related to net share settlement of equity awards; partially offset by

Previous wording

•$44 million proceeds from issuance of ordinary shares under employee stock purchase plans.

Current wording

•$66 million proceeds from the issuance of ordinary shares under employee stock purchase plans.

Previous wording

Our primary sources of liquidity as of December 29, 2023 consist of: (1) approximately $787 million in cash and cash equivalents, (2) cash we expect to generate from operations and (3) $1.5 billion available for borrowing under the revolving credit facility of the Credit Agreement (the “Revolving Credit Facility”).

Current wording

Our primary sources of liquidity as of March 29, 2024 consist of: (1) approximately $795 million in cash and cash equivalents, (2) cash we expect to generate from operations and (3) $1.5 billion available for borrowing under the revolving credit facility of the Credit Agreement (the “Revolving Credit Facility”).

Previous wording

As of December 29, 2023, the existing Credit Agreement includes two financial covenants: (1) interest coverage ratio and (2) total net leverage ratio. The interest coverage ratio and total net leverage ratio covenants did not apply for the fiscal quarter ended December 29, 2023 and will not apply for the fiscal quarter ending March 29, 2024. Refer to “Part I, Item 1. Financial Statements—Note 3. Debt”for details of the financial covenants which will apply for the fiscal quarter ending June 28, 2024 and thereafter.

Current wording

As of March 29, 2024, the existing Credit Agreement includes two financial covenants: (1) interest coverage ratio and (2) total net leverage ratio. The interest coverage ratio and total net leverage ratio covenants did not apply for the fiscal quarter ended March 29, 2024. Refer to “Part I, Item 1. Financial Statements—Note 3. Debt”for details of the financial covenants which will apply for the fiscal quarter ending June 28, 2024 and thereafter.

Previous wording

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, see “Part II, Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q.

Current wording

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.

Previous wording

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 of December 29, 2023, we had unconditional purchase obligations of approximately $3.7 billion primarily related to purchases of inventory components with our suppliers. We expect $1.1 billion of these short-term commitments to be paid within one year and expect $2.6 billion of these long-term commitments to be paid thereafter.

Current wording

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 of March 29, 2024, we had unconditional purchase obligations of approximately $3.4 billion primarily related to purchases of inventory components with our suppliers. We expect $926 million of these short-term commitments to be paid within one year and expect $2.5 billion of these long-term commitments to be paid thereafter.

Previous wording

The Company recorded order cancellation fees to terminate certain purchase commitments related to the purchase of inventory components and equipment. During the six months ended December 29, 2023, we recorded order cancellation fees of $114 million, which were reflected under Cost of revenue on our Condensed Consolidated Statements of Operations. As of December 29, 2023, cumulative unpaid order cancellation fees on the Condensed Consolidated Balance Sheets were $144 million, with $127 million in Accrued expenses and $17 million in Accounts payable, all of which is expected to be paid within one year.

Current wording

We recorded order cancellation fees to terminate certain purchase commitments related to the purchase of inventory components and equi pment. As of March 29, 2024, cumulative unpaid order cancellation fees on the Condensed Consolidated Balance Sheets were $134 million, with $121 million in Accrued expenses and $13 million in Accounts payable, all of which is expected to be paid within one year In certain instances, our unpaid order cancellation fees may change based on the expected timing or ongoing negotiations with our suppliers.

Previous wording

On September 13, 2023, we issued the 2028 Notes of $1.5 billion and repaid Term Loans A1, A2 and A3 of $1.3 billion. The exchange was accounted for as a debt extinguishment and resulted in a net loss of $29 million for the six months ended December 29, 2023.

Current wording

On September 13, 2023, we issued the 2028 Notes of $1.5 billion and repaid Term Loans A1, A2 and A3 of $1.3 billion.

Previous wording

As of December 29, 2023, the future principal payment obligation on our long-term debt was $5.7 billion, which will mature in more than one year. As of December 29, 2023, future interest payments on this outstanding debt are estimated to be approximately $2.2 billion, of which $325 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.

Current wording

As of March 29, 2024, the future principal payment obligation on our long-term debt was $5.7 billion, of which $479 million will mature within one year. As of March 29, 2024, future interest payments on this outstanding debt are estimated to be approximately $2.1 billion, of which $323 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 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.

Previous wording

We accrued a settlement penalty of $300 million in the quarter ended March 31, 2023, related to BIS’ allegations of violations of the U.S. EAR, which were subsequently resolved by the Settlement Agreement in April 2023. 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$225 million thereafter. Refer to “Item 1. Financial Statements—Note 12. Legal, Environmental and Other Contingencies” for more details.

Current wording

We accrued a settlement penalty of $300 million in the quarter ended March 31, 2023, related to BIS’ allegations of violations of the U.S. EAR, which were subsequently resolved by the Settlement Agreement in April 2023. 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 $210 million thereafter. Refer to “Item 1. Financial Statements—Note 12. Legal, Environmental and Other Contingencies” for more details.

Previous wording

During the six months ended December 29, 2023, we made cash payments of $110 million related to the workforce reduction costs under the restructuring plans.

Current wording

During the nine months ended March 29, 2024, we made cash payments of $115 million related to the workforce reduction costs under the restructuring plans.

Previous wording

As of December 29, 2023, the future cash payments related to our remaining active restructuring plans were $10 million, of which $9 million is expected to be paid within one year.

Current wording

As of March 29, 2024, the future cash payments related to our remaining active restructuring plans were $7 million, which is expected to be paid within one year.