Seagate 2011 Annual Report Download - page 38

Table of Contents
Global Credit and Financial Market Conditions—Deterioration in global credit and financial market conditions could negatively impact the
value of our current portfolio of cash equivalents, short-term investments or auction rate securities and our ability to meet our financing
objectives.
Our cash and cash equivalents are maintained in highly liquid investments with remaining maturities of 90 days or less at the time of
purchase. Our short-term investments consist primarily of readily marketable debt securities with remaining maturities of more than 90 days at
the time of purchase. Our investment policy has as its principal objectives the preservation of principal and maintenance of liquidity. We
mitigate default risk by investing in high-quality investment grade securities, limiting the time to maturity and by monitoring the counter-parties
and underlying obligors closely.
While as of the date of this filing, we are not aware of any other material downgrades, losses, or other significant deterioration in the fair
value of our cash equivalents or short-term investments or auction rate securities since June 29, 2012, no assurance can be given that further
deterioration in conditions of the global credit and financial markets would not negatively impact our current portfolio of cash equivalents, short-
term investments or auction rate securities or our ability to meet our financing objectives.
Environmental Regulations
—Failure to comply with applicable environmental laws and regulations could have a material adverse effect on
our business, results of operations and financial condition.
The sale and manufacturing of products in certain states and countries may subject us to environmental and other regulations including, in
some instances, the responsibility for environmentally safe disposal or recycling. For example, the EU has enacted the Restriction of the Use of
Certain Hazardous Substances in Electrical and Electronic Equipment directive, which prohibits the use of certain substances in electronic
equipment, and the Waste Electrical and Electronic Equipment directive, which obligates parties that place electrical and electronic equipment
onto the market in the EU to put a clearly identifiable mark on the equipment, register with and report to EU member countries regarding
distribution of the equipment, and provide a mechanism to take-back and properly dispose of the equipment. Similar legislation may be enacted
in other locations where we manufacture or sell our products. Although we do not anticipate any material adverse effects based on the nature of
our operations and the focus of such legislation, we will need to ensure that we comply with these laws and regulations as they are enacted and
that our suppliers also comply with these laws and regulations. If we fail to timely comply with the legislation, our customers may refuse to
purchase our products, which would have a material adverse effect on our business, results of operations and financial condition. In addition, if
we were found to be in violation of these laws or noncompliance with these initiatives or standards of conduct, we could be subject to
governmental fines, liability to our customers and damage to our reputation, which would also have a material adverse effect on our business,
results of operations and financial condition.
Seasonality
—Because we experience seasonality in the sales of our products, our results of operations will generally be adversely impacted
during the second half of our fiscal year.
Sales of computer systems, storage subsystems and consumer electronics tend to be seasonal, and therefore we expect to continue to
experience seasonality in our business as we respond to variations in our customers' demand for disk drives. In particular, we anticipate that sales
of our products will continue to be lower during the second half of our fiscal year. In the client compute and client non-compute market
applications of our business, this seasonality is partially attributable to the historical trend in our results derived from our customers' increased
sales of desktop computers, notebook computers, and consumer electronics during the back-to-school and winter holiday season. In the
enterprise market our sales are seasonal because of the capital budgeting and purchasing cycles of our end users. Since our working capital needs
peak during periods in which we are increasing production in anticipation of orders that have not yet been received, our results of operations will
fluctuate seasonally even if the forecasted demand for our products proves accurate. Furthermore, it is difficult for us to evaluate the degree to
which this seasonality may affect our business in future periods because of the rate and unpredictability of product transitions
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