Seagate 2011 Annual Report Download - page 33

Table of Contents
certain of our debt instruments may become immediately due and payable. If such acceleration were to occur, we may not have adequate funds
to satisfy all of our outstanding obligations, the lenders could exercise their rights, as described above, and we could be forced into bankruptcy or
liquidation.
Substantially all of our Assets are Pledged as Collateral to Secure Certain Indebtedness
—Since substantially all of our assets are used to
secure portions of our existing debt obligations, we may be limited in our ability to incur additional indebtedness or to provide additional
credit support, and if we fail to meet our payment or other obligations under certain of our existing debt obligations, the lenders thereunder
could foreclose on, and acquire control of, substantially all of our assets.
Substantially all our assets and the assets of our significant subsidiaries organized in the United States, the Cayman Islands, the
Netherlands, Northern Ireland and Singapore, as well as certain assets located in the United States, the Cayman Islands, the Netherlands,
Northern Ireland and Singapore owned by other significant subsidiaries, and all proceeds therefrom, are pledged as security for borrowings under
our 10% Notes, as well as obligations under our hedging agreements, cash management arrangements and certain metal leasing arrangements.
Since substantially all of our assets are used to secure portions of our existing debt obligations, we have a limited amount of collateral that is
available for future secured debt or credit support. As a result, we may be limited in our ability to incur additional indebtedness or to provide
additional credit support for our existing indebtedness. In addition, our failure to comply with the terms of the indenture governing our 10%
Notes would entitle the lenders thereunder to declare all funds borrowed thereunder to be immediately due and payable. If we were unable to
meet these payment obligations, the lenders could foreclose on, and acquire control of, substantially all our assets that serve as collateral.
Failure to Pay Quarterly Dividends—
Our failure to pay quarterly dividends to our shareholders could cause the market price of our ordinary
shares to decline significantly.
Our ability to pay quarterly dividends will be subject to, among other things, our financial position and results of operations, available cash
and cash flow, capital requirements, and other factors. Any reduction or discontinuation of quarterly dividends could cause the market price of
our ordinary shares to decline significantly. Moreover, in the event our payment of quarterly dividends is reduced or discontinued, our failure or
inability to resume paying dividends at historical levels could result in a persistently low market valuation of our ordinary shares.
Purchase Commitments to Certain Suppliers
—If revenues fall or customer demand decreases significantly, we may not meet all of our
purchase commitments to certain suppliers.
From time to time, we enter into long-term, non-cancelable purchase commitments with certain suppliers in order to secure certain
components for the production of our products or to supplement our internal manufacturing capacity for certain components. If our actual
revenues in the future are lower than our projections or if customer demand decreases significantly below our projections, we may not meet all
of our purchase commitments with these suppliers. As a result, it is possible that we will have to shift output from our internal manufacturing
facilities to these suppliers or make penalty-type payments under these contracts.
Risks Associated with Future Strategic Alliances, Joint Ventures or Investments
—We may not be able to identify suitable strategic alliances,
acquisitions, joint ventures or investment opportunities, or successfully acquire and integrate companies that provide complementary
products or technologies.
Our growth strategy may involve pursuing strategic alliances with, making acquisitions of, forming joint ventures with or making
investments in other companies that are complementary to our business. There is substantial competition for attractive strategic alliance,
acquisition, joint venture and investment candidates. Accordingly, we may not be able to identify suitable strategic alliances, acquisition, joint
venture, or investment candidates. Even if we can identify them, we cannot assure you that we will be able
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