Seagate 2012 Annual Report Download - page 76

Table of Contents
SEAGATE TECHNOLOGY PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Accounting for Income Taxes. The Company accounts for income taxes pursuant to ASC Topic 740 (ASC 740), Income Taxes. In
applying ASC 740, the Company makes certain estimates and judgments in determining income tax expense for financial statement purposes.
These estimates and judgments occur in the calculation of tax credits, recognition of income and deductions and calculation of specific tax assets
and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes, as well
as tax liabilities associated with uncertain tax positions. The calculation of tax liabilities involves uncertainties in the application of complex tax
rules and the potential for future adjustment of the Company's uncertain tax positions by the Internal Revenue Service or other tax jurisdictions.
If estimates of these tax liabilities are greater or less than actual results, an additional tax benefit or provision will result. The deferred tax assets
the Company records each period depend primarily on the Company's ability to generate future taxable income in the United States and certain
non-U.S. jurisdictions. Each period, the Company evaluates the need for a valuation allowance for its deferred tax assets and, if necessary,
adjusts the valuation allowance so that net deferred tax assets are recorded only to the extent the Company concludes it is more likely than not
that these deferred tax assets will be realized. If the Company's outlook for future taxable income changes significantly, the Company's
assessment of the need for a valuation allowance may also change.
Comprehensive Income. In the first quarter of fiscal 2013, we adopted the revised requirements of ASU No. 2011-05, Comprehensive
Income (Topic 220)
—Presentation of Comprehensive Income to present comprehensive income in a separate statement. Comprehensive income
is comprised of net income and other gains and losses affecting equity that are excluded from net income.
Foreign Currency Remeasurement and Translation. The U.S. dollar is the functional currency for the majority of the Company's foreign
operations. Monetary assets and liabilities denominated in foreign currencies are remeasured into the functional currency of the subsidiary at the
balance sheet date. The gains and losses from the remeasurement of foreign currency denominated balances into the functional currency of the
subsidiary are included in Other, net of the Company's Consolidated Statements of Operations.
The Company translates the assets and liabilities of its non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange
rates in effect at the end of each period. Revenue and expenses for these subsidiaries are translated using rates that approximate those in effect
during the period. Gains and losses from these translations are recognized in foreign currency translation included in Accumulated other
comprehensive loss in shareholders' equity. The Company's subsidiaries that use the U.S. dollar as their functional currency remeasure monetary
assets and liabilities at exchange rates in effect at the end of each period, and inventories, property, and nonmonetary assets and liabilities at
historical rates. Gains and losses from these remeasurements were not significant and have been included in the Company's results of operations.
Concentrations
Concentration of Credit Risk. The Company's customer base for disk drive products is concentrated with a small number of OEMs and
distributors. The Company does not generally require collateral or other security to support accounts receivable. To reduce credit risk, the
Company performs ongoing credit evaluations on its customers' financial condition. The Company establishes an allowance for doubtful
accounts based upon factors surrounding the credit risk of customers, historical trends and other information. Hewlett-Packard Company and
Dell Inc. each accounted for more than 10% of the Company's accounts receivable as of June 28, 2013.
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