Seagate 2012 Annual Report Download - page 52

Table of Contents
Other Income (Expense), net
Other expense, net for fiscal year 2013 compared to fiscal year 2012 increased due to a loss of $141 million on the early redemption and
repurchase of debt. These losses were partially offset by gains recorded for sales of our available for sale securities and strategic investments of
$61 million, insurance proceeds of $25 million for equipment damaged during the severe flooding in Thailand in October of 2011, and a
decrease in interest expense of $27 million due to a reduction in our average interest rate and total debt levels.
Income Taxes
We recorded an income tax benefit of $7 million for fiscal year 2013 compared to an income tax provision of $20 million for fiscal year
2012. Our fiscal year 2013 benefit from income taxes included $52 million of income tax benefit from the reversal of a portion of the U.S.
valuation allowance recorded in prior periods. Our fiscal year 2012 provision for income taxes included $35 million of income tax benefit from
the reversal of a portion of the U.S. valuation allowance recorded in prior periods.
Our Irish tax resident parent holding company owns various U.S. and non-U.S. subsidiaries that operate in multiple non-Irish tax
jurisdictions. Our worldwide operating income is either subject to varying rates of tax or is exempt from tax due to tax holidays or tax incentive
programs we operate under in Malaysia, Singapore and Thailand. These tax holidays or incentives are scheduled to expire in whole or in part at
various dates through 2020.
Our income tax provision recorded for fiscal year 2013 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 (i) tax benefits related to non-U.S. earnings
generated in jurisdictions that are subject to tax holidays or tax incentive programs and are considered indefinitely reinvested outside of Ireland
and (ii) a decrease in valuation allowance for certain U.S. deferred tax assets. The acquisition of a majority interest in the outstanding shares of
LaCie did not have a material impact on our effective tax rate in fiscal year 2013. Our income tax provision recorded for fiscal year 2012
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 (i) tax benefits related to non-U.S. earnings generated in jurisdictions that are subject to tax holidays or tax
incentive programs and are considered indefinitely reinvested outside of Ireland, and (ii) a decrease in valuation allowance for certain U.S.
deferred tax assets. The acquisition of Samsung's HDD business did not have a significant impact on our effective tax rate in fiscal year 2012.
The American Taxpayer Relief Act of 2012 (ATRA 2012) was enacted on January 2, 2013. ATRA 2012 retroactively reinstated and
extended the federal Research and Development Tax Credit (R&D Credit) from January 1, 2012 to December 31, 2013 as well as bonus
depreciation on qualified property. Extension of the R&D Credit and bonus depreciation has no immediate impact on our income tax provision
due to existing valuation allowances on our U.S. deferred tax assets. None of the other ATRA 2012 changes are expected to have a material
impact on our income tax provision.
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Fiscal Years Ended
(Dollars in millions)
June 28,
2013
June 29,
2012
Change
%
Change
Other expense, net
$
(260
)
$
(226
)
$
(34
)
15
%
Fiscal Years Ended
(Dollars in millions)
June 28,
2013
June 29,
2012
Change
%
Change
Provision for (benefit from) income
taxes
$
(7
)
$
20
$
(27
)
(135
)%