Seagate 2012 Annual Report Download - page 35

Table of Contents
assets, have exercised and continue to exercise significant influence over many aspects of their domestic economies and
international trade.
• Potential Adverse Tax Consequences. Our international operations create a risk of potential adverse tax consequences, including
imposition of withholding or other taxes on payments by subsidiaries.
• Increased Costs. The shipping and transportation costs associated with our international operations are typically higher than
those associated with our U.S. operations, resulting in decreased operating margins in some foreign countries.
• Credit and Access to Capital Risks. Our international customers could have reduced access to working capital due to higher
interest rates, reduced bank lending resulting from contractions in the money supply or the deterioration in the customer's or its
bank's financial condition, or the inability to access other financing.
• Global Health Outbreaks. The occurrence of a pandemic disease may adversely impact our operations, and some of our key
customers. Such diseases could also potentially disrupt the timeliness and reliability of the distribution network we rely on.
Political Risks Associated with International Operations
—Our international operations subject us to risks related to economic conditions,
political unrest and terrorism.
We have manufacturing facilities in parts of the world that periodically experience political unrest. This could disrupt our ability to
manufacture important components as well as cause interruptions and/or delays in our ability to ship components to other locations for continued
manufacture and assembly. Any such delays or interruptions could result in delays in our ability to fill orders and have an adverse effect on our
results of operations and financial condition. U.S. and international responses to the ongoing hostilities in various regions and the risk of terrorist
attacks or hostilities elsewhere in the world could exacerbate these risks.
Macroeconomic developments like the debt crisis in certain countries in the European Union and slowing economies in parts of Asia and
South America could negatively affect our business, operating results or financial condition which, in turn, could adversely affect our stock
price. 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 hardware systems,
which could cause customers to delay, decrease or cancel purchases of our products or cause customers not to pay us or to delay paying us for
previously purchased products and services.
In addition, political unrest in regions like the Middle East, terrorist attacks around the globe and the potential for other hostilities in various
parts of the world, potential public health crises and natural disasters continue to contribute to a climate of economic and political uncertainty
that could adversely affect our results of operations and financial condition, including our revenue growth and profitability. These factors
generally have the strongest effect on our sales.
Legal and Operational Risks Associated with International Operations
—Our international operations subject us to risks related to staffing
and management, legal and regulatory requirements and the protection of intellectual property.
Operating outside of the United States creates difficulties associated with staffing and managing our international manufacturing facilities,
complying with local legal and regulatory requirements and protecting our intellectual property. We cannot assure you that we will continue to
be found to be operating in compliance with applicable customs, currency exchange control regulations, transfer pricing regulations or any other
laws or regulations to which we may be subject. We also cannot assure you that these laws will not be modified.
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