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SEAGATE TECHNOLOGY PLC
FORM 10-K
(Annual Report)
Filed 08/12/15 for the Period Ending 07/03/15
Telephone (353) (1) 234-3136
CIK 0001137789
Symbol STX
SIC Code 3572 - Computer Storage Devices
Industry Computer Storage Devices
Sector Technology
Fiscal Year 06/28
http://www.edgar-online.com
© Copyright 2015, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    SEAGATE TECHNOLOGY PLC FORM 10-K (Annual Report) Filed 08/12/15 for the Period Ending 07/03/15 Telephone CIK Symbol SIC Code Industry Sector Fiscal Year (353) (1) 234-3136 0001137789 STX 3572 - Computer Storage Devices Computer Storage Devices Technology 06/28 http://www.edgar-online.com © ...

  • Page 2
    ... For the fiscal year ended July 3, 2015 OR ý o SEAGATE TECHNOLOGY PUBLIC LIMITED COMPANY (Exact name of registrant as specified in its charter) 38/39 Fitzwilliam Square Dublin 2, Ireland (Address of principal executive offices) Registrant's telephone number, including area code: (353...

  • Page 3
    ...'s Annual General Meeting of Shareholders, to be held on October 21, 2015, will be incorporated by reference in this Form 10-K in response to Items 10, 11, 12, 13 and 14 of Part III. The definitive proxy statement will be filed with the SEC no later than 120 days after the registrant's fiscal year...

  • Page 4
    ... Operations 7A. Quantitative and Qualitative Disclosures About Market Risk 8. Financial Statements and Supplementary Data 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 9A. Controls and Procedures 9B. Other Information PART III 116...

  • Page 5
    13. Certain Relationships and Related Transactions, and Director Independence 116 116 14. Principal Accountant Fees and Services PART IV 120 118 117 15. Exhibits and Financial Statement Schedules SIGNATURES EXHIBIT INDEX 2

  • Page 6
    ... acceptable quality, particularly the new data storage devices with lower cost structures; the impact of competitive product announcements; currency fluctuations that may impact our margins and international sales; and possible excess industry supply with respect to particular disk drive products...

  • Page 7
    ... hybrid drives (SSHDs) combine the features of SSDs and HDDs in the same unit, containing a large hard disk drive and an SSD cache to improve performance of frequently accessed data. Our products are designed for enterprise servers and storage systems in mission critical and nearline applications...

  • Page 8
    ... digital storage archival offerings, and backup & recovery products and services. Systems can contain HDDs and SSDs and can offer file management systems, software, and even compute power. Participants in the electronic data storage industry include: Major subcomponent manufacturers. Companies...

  • Page 9
    ... new technology trends such as selfdriving cars and drones; Build out of large numbers of cloud data centers by cloud service providers and private companies transitioning on-site data centers into the cloud; Protection of increased digital content through redundant storage on backup devices and...

  • Page 10
    ... assemble a number of the most important components found in our disk drives, including read/write heads and recording media. Our design and manufacturing operations are based on technology platforms that are used to produce various disk drive products that serve multiple data storage applications...

  • Page 11
    ...write heads at our facilities. We use a combination of internally manufactured and externally sourced read/write heads, the mix of which varies based on product mix, technology and our internal capacity levels. Media. Information is written to the media, or disk, as it rotates at very high speeds...

  • Page 12
    ... testing prior to packaging and shipment. Disk drive assembly and test operations occur primarily at facilities located in China and Thailand. We perform subassembly and component manufacturing operations at our facilities in China, Malaysia, Northern Ireland, Singapore, Thailand and in the United...

  • Page 13
    ... HDDs are used in video applications like DVR's and media centers. These disk drives are optimized for video streaming in alwayson applications with capacities up to 4TB to support leading-edge digital entertainment. Surveillance HDDs. Our surveillance drives are built to support the high-write...

  • Page 14
    ...solutions manufacturers are storage capacity, product performance, product quality and reliability, price per unit and price per gigabyte, time-to-market and time-to-volume leadership, storage/retrieval access times, data transfer rates, form factor, product warranty and support capabilities, supply...

  • Page 15
    ...Principal Disk Drive Competitors. There are three companies in the electronic data storage industry that manufacture disk drives Seagate, selling the Seagate, LaCie, and Samsung brands; Western Digital Corporation, operating the Western Digital and Hitachi Global Storage Technologies subsidiaries...

  • Page 16
    ...timely availability of mature component technologies to our product development teams as well as allowing us to leverage and coordinate those technologies in the design centers across our products in order to take advantage of opportunities in the marketplace. During fiscal years 2015, 2014 and 2013...

  • Page 17
    ... the United States, Canada, Mexico, Taiwan, China, Japan and others. The European Union REACH Directive (Registration, Evaluation, Authorization, and Restriction of Chemicals, EC 1907/2006) also restricts substances of very high concern ("SVHCs") in products. Employees At July 3, 2015, we employed...

  • Page 18
    ...Electronics Solutions President, Operations and Technology President, Global Markets and Customers Executive Vice President, Chief Financial Officer Executive Vice President, General Counsel and Chief Administrative Officer Senior Vice President, Chief Technology Officer General Manager, Samsung HDD...

  • Page 19
    ... Systems and Electronics Solutions on April 30, 2015. He was previously employed by LSI Corporation ("LSI") from August 2005 through September 2014. At LSI, he was the Executive Vice President of the Storage Solutions Group from July 2012 to September 2014, Senior Vice President and General Manager...

  • Page 20
    ... supply and demand imbalances; manufacturing delays or interruptions, particularly at our manufacturing facilities in China, Malaysia, Northern Ireland, Singapore, Thailand, the United Kingdom, or the United States; limited access to components that we obtain from a single or a limited number...

  • Page 21
    ... leaders in time-to-market with those new products. Once a product is accepted, any failure or delay in the qualification process or a requirement that we requalify can result in our losing sales to that customer until new products are introduced. The limited number of high-volume OEMs magnifies the...

  • Page 22
    ... include disk drive manufacturers, such as Western Digital Corporation and Toshiba; companies providing storage subsystems and components to OEMs; electronic manufacturing services ("EMS") companies acquiring the necessary skills and intellectual property to enter the enterprise data storage...

  • Page 23
    ...likelihood of reliability, quality or operability problems. If our products suffer increases in failures, are of low quality or are not reliable, customers may reduce their purchases of our products and our manufacturing rework and scrap costs and service and warranty costs may increase. In addition...

  • Page 24
    ... of Contents lower priced, low capacity disk drives. These factors could decrease our sales, especially when combined with continued price erosion, which could adversely affect our results of operations. We may not be successful in our efforts to grow our cloud systems and solutions business. We...

  • Page 25
    ... in the trading price of our ordinary shares. 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...

  • Page 26
    ...for lower demand and higher inventory levels. Our distributors' ability to access credit for purposes of funding their operations may also affect purchases of our products by these customers. If distributors reduce their purchases of our products or prices decline significantly in the distribution...

  • Page 27
    ...with retail and online distributors may adversely impact our future results of operations. We may be adversely affected by the loss of, or reduced, delayed or canceled purchases by, one or more of our larger customers. Some of our key customers account for a large portion of our disk drive revenue...

  • Page 28
    ...not pass these price increases to our customers, our operating margin would decline; we might have to reengineer some products, which would likely cause production and shipment delays, make the reengineered products more costly and provide us with a lower rate of return on these products; we would...

  • Page 29
    ...certain suppliers. From time to time, we enter into long-term, non-cancelable purchase commitments or make large up-front investments with certain suppliers in order to secure certain components or technologies for the production of our products or to supplement our internal manufacturing capacity...

  • Page 30
    ... complex solution level interoperability issues are resolved; costs associated with the remediation of any problems attributable to our products; loss of or delays in revenues; loss of customers; failure to achieve market acceptance and loss of market share; increased service and warranty costs...

  • Page 31
    ... the price of our ordinary shares to decline. We are at times subject to intellectual property legal proceedings and claims which could cause us to incur significant additional costs or prevent us from selling our products, and which could adversely affect our results of operations and financial...

  • Page 32
    ... that others will not gain access to our trade secrets or that we can fully protect our intellectual property. In addition, effective trade secret protection may be unavailable or limited in certain countries in which we operate. Nor can we guarantee that our competitors will not independently...

  • Page 33
    ... and customer support operations. We have manufacturing facilities in China, Malaysia, Northern Ireland, Singapore and Thailand, in addition to those in the United States. A substantial portion of our client compute disk drive assembly occurs in our facility in China. Our international operations...

  • Page 34
    ...China, Malaysia, Northern Ireland, Singapore and Thailand, in which we have significant operating assets, have exercised and continue to exercise significant influence over many aspects of their domestic economies and international trade. Although we have implemented policies and procedures designed...

  • Page 35
    ... deliver products to our customers, or to receive components from our suppliers, and create delays and inefficiencies in our supply chain. In the event of a natural disaster, losses and significant recovery time could be required to resume operations and our financial condition and operating results...

  • Page 36
    ... large financial institutions; actual or anticipated variations in our results of operations; announcements of innovations, new products or significant price reductions by us or our competitors, including those competitors who offer alternative storage technology solutions; our failure to meet...

  • Page 37
    ... limitations on the availability of our net operating loss or tax credit carryforwards. 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...

  • Page 38
    ... manufacture of our products, including gold, tantalum, tin and tungsten. As there may be only a limited number of suppliers of "conflict free" minerals, we cannot be sure that we will be able to obtain necessary conflict free minerals in sufficient quantities or at competitive prices. Our customers...

  • Page 39
    ...of Contents ITEM 2. PROPERTIES Our company headquarters are located in Ireland, while our U.S. executive offices are located in Cupertino, California. Our principal manufacturing facilities are located in China, Malaysia, Northern Ireland, Singapore, Thailand and the United States. Our principal...

  • Page 40
    ... Market Information Our shares trade on the NASDAQ Global Select Market under the symbol "STX." The high and low sales prices of our shares, as reported by the NASDAQ Global Select Market, are set forth below for the periods indicated. Fiscal Quarter Price Range High Low Quarter...

  • Page 41
    ... not be considered an indication of future performance. Seagate Technology plc S&P 500 Dow Jones US Computer Hardware * 100.00 125.59 195.67 100.00 133.39 138.33 100.00 127.91 167.95 7/2/2010 7/1/2011 6/29/2012 6/28/2013 358.92 463.40 423.38 165.45...

  • Page 42
    ... with the Company's Articles of Association. There is no expiration date on these authorizations. The following table sets forth information with respect to all repurchases of our shares made during the fiscal year ended July 3, 2015: Total Number of Shares Purchased as Part of Publicly...

  • Page 43
    ...: Basic Diluted Number of shares used in per share computations: Basic Diluted Cash dividends declared per share Supplementary Financial Data (Unaudited) Quarterly Data The Company operated and reported financial results based on a 14-week quarter in its first quarter of fiscal year 2015 ending on...

  • Page 44
    ... 1.17 1.13 (In millions, except per share data) Fiscal Year 2014 Quarters Ended September 27, December 27, March 28, June 27, 2013 2013 2014 2014 Revenue Gross margin Income from operations Net income Net income per share: Basic Diluted 41 $ 3,301 $ 925...

  • Page 45
    ... and results of operations for the fiscal years ended, July 3, 2015, June 27, 2014 and June 28, 2013. You should read this discussion in conjunction with "Item 6. Selected Financial Data" and "Item 8. Financial Statements and Supplementary Data" included elsewhere in this Annual Report on Form 10...

  • Page 46
    ... hybrid drives (SSHDs) combine the features of SSDs and HDDs in the same unit, containing a large hard disk drive and an SSD cache to improve performance of frequently accessed data. Our products are designed for enterprise servers and storage systems in mission critical and nearline applications...

  • Page 47
    ... new technology trends such as selfdriving cars and drones; Build out of large numbers of cloud data centers by cloud service providers and private companies transitioning on-site data centers into the cloud; Protection of increased digital content through redundant storage on backup devices and...

  • Page 48
    ... and transition of new products with time-to-volume, performance, capacity and quality metrics at a competitive price, level of service and support that our customers expect. Generally, the drive manufacturer that introduces a new product first benefits from improved product mix, favorable profit...

  • Page 49
    ... Technologies Limited for $450 million in cash. Results of Operations We list in the tables below summarized information from our Consolidated Statements of Operations by dollars and as a percentage of revenue: (Dollars in millions) July 3, 2015 Fiscal Years Ended June 28, June 27, 2013...

  • Page 50
    ... geography: Unit Shipments: Enterprise Client Compute Client Non-Compute Total Units Shipped ASPs (per unit) Exabytes Shipped Revenues by Channel (%) OEMs Distributors Retailers Revenues by Geography (%) Americas EMEA Asia Pacific Fiscal Year 2015 Compared to Fiscal Year 2014 Revenue (Dollars...

  • Page 51
    ...Gain on arbitration award, net for fiscal year 2015 increased from fiscal year 2014 due to final award received in the amount of $630 million, less litigation and other related costs of $10 million, in the Company's case against Western Digital for the misappropriation of the Company's trade secrets...

  • Page 52
    ... varying rates of income tax or is exempt from income tax due to tax holiday programs we operate under in Malaysia, Singapore and Thailand. These tax holidays are scheduled to expire in whole or in part at various dates through 2022. Our income tax provision recorded for fiscal year 2015 differed...

  • Page 53
    ... tax benefits in the provision for income taxes on the Consolidated Statements of Operations. During fiscal year 2015, we recognized a net income tax expense for interest and penalties of $26 million, $8 million during fiscal year 2014 and $2 million during fiscal year 2013. As of July 3, 2015...

  • Page 54
    ... of Intangibles. Amortization of intangibles for fiscal year 2014 increased from fiscal year 2013 due to the commencement of amortization of certain in-process research and development assets acquired from Samsung's HDD business in December of 2011 and LaCie in August of 2012. Restructuring and...

  • Page 55
    ... 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. Liquidity and Capital...

  • Page 56
    ... the statement of cash flows for the periods indicated: (Dollars in millions) July 3, 2015 Fiscal Years Ended June 28, June 27, 2013 2014 Net cash flow provided by (used in): Operating activities Investing activities Financing activities Effect of foreign currency exchange rates Net...

  • Page 57
    ...a decrease of $272 million in vendor non-trade receivables primarily due to a decrease in build volumes in the fourth quarter of fiscal year 2013 compared to the prior year period; a decrease of $170 million in accrued expenses, income taxes and warranty, primarily due to decreases in costs related...

  • Page 58
    ... financing activities of $2.2 billion for fiscal year 2013 was attributable to the following activities 1.7 billion paid to repurchase 54 million of our ordinary shares; $1.2 billion for the repurchase and redemption of long term debt; $0.5 billion in dividends paid to our shareholders; partially...

  • Page 59
    ...158 $ 3,920 $ (335) - (534) (93) - - 700 500 238 From time to time we may repurchase any of our outstanding ordinary shares through private, open market, tender offers, broker assisted purchases or other means. During fiscal year 2015, we repurchased approximately 19 million of our ordinary...

  • Page 60
    ... make estimates of matters that are highly uncertain at the time of estimation. Based on this definition, our most critical policies include: establishment of sales program accruals, establishment of warranty accruals, accounting for income taxes, and the accounting for goodwill and other long-lived...

  • Page 61
    ... is recognized. We generally warrant our products for a period of 1 to 5 years. Our warranty provision considers estimated product failure rates and trends (including the timing of product returns during the warranty periods), and estimated repair or replacement costs related to product quality...

  • Page 62
    ... Any future changes in failure rates of certain products, as well as changes in repair costs or the cost of replacement parts, may result in increased or decreased warranty accruals. Accounting for Income Taxes. We account for income taxes pursuant to Accounting Standards Codification (ASC) Topic...

  • Page 63
    ... for general corporate purposes including capital expenditures and working capital needs. The table below presents principal amounts and related weighted average interest rates by year of maturity for our investment portfolio and debt obligations as of July 3, 2015. Fiscal Years Ended Fair Value...

  • Page 64
    ...market risks due to changes in the fair value of the notional investments selected by our employees as part of our Seagate Deferred Compensation Plan (the "SDCP"). In fiscal year 2014, the Company entered into a Total Return Swap ("TRS") in order to manage the equity market risks associated with the...

  • Page 65
    ... 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA SEAGATE TECHNOLOGY PLC CONSOLIDATED BALANCE SHEETS (In millions, except share and per share data) July 3, 2015 June 27, 2014 ASSETS Current assets: Cash and cash equivalents Short-term investments Restricted cash and investments Accounts...

  • Page 66
    ... plc ordinary shareholders: Basic Diluted Number of shares used in per share calculations: Basic Diluted Cash dividends declared per Seagate Technology plc ordinary share See notes to consolidated financial statements. 63 July 3, 2015 Fiscal Years Ended June 28, June 27, 2013 2014...

  • Page 67
    Table of Contents SEAGATE TECHNOLOGY PLC CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) July 3, 2015 Fiscal Years Ended June 28, June 27, 2013 2014 Net income Other comprehensive income (loss), net of tax: Cash flow hedges Change in net unrealized (loss) gain on ...

  • Page 68
    ... Accounts payable Accrued employee compensation Accrued expenses, income taxes and warranty Vendor non-trade receivables Other assets and liabilities Net cash provided by operating activities INVESTING ACTIVITIES Acquisition of property, equipment and leasehold improvements Proceeds from the sale...

  • Page 69
    Table of Contents SEAGATE TECHNOLOGY PLC CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY For Fiscal Years Ended July 3, 2015, June 27, 2014 and June 28, 2013 (In millions) Number of Ordinary Shares 396 Seagate Technology plc Ordinary Shareholders Accumulated Other ...

  • Page 70
    ... (SSHDs) combine the features of SSDs and HDDs in the same unit, containing a large hard disk drive and an SSD cache to improve performance of frequently accessed data. The Company's products are designed for enterprise servers and storage systems in mission critical and nearline applications...

  • Page 71
    ... SEAGATE TECHNOLOGY PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Summary of Significant Accounting Policies Cash, Cash Equivalents and Short-Term Investments. The Company considers all highly liquid investments with a remaining maturity of 90 days or less at the time of purchase...

  • Page 72
    ... an OEM customer's volume of purchases from Seagate or other agreed upon rebate programs. For the distribution channel, these programs typically involve rebates related to a distributor's level of sales, order size, advertising or point of sale activity and price protection adjustments. The Company...

  • Page 73
    ...is expensed as incurred. Advertising costs were approximately $64 million, $52 million and $51 million in fiscal years 2015, 2014 and 2013, respectively. Stock-Based Compensation. The Company accounts for stock-based compensation under the provisions of ASC Topic 718 (ASC 718), Compensation-Stock...

  • Page 74
    ... 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...

  • Page 75
    ... interim periods within those fiscal years. Earlier application is permitted by all entities as of the beginning of an interim or annual reporting period. The Company is in the process of assessing the impact, if any, on its consolidated financial statements. 2. Balance Sheet Information Investments...

  • Page 76
    ..., 2013 Fiscal year ended June 27, 2014 Fiscal year ended July 3, 2015 (a) (Dollars in millions) $ $ $ 10 8 12 (2) 4 - (1) - (3) Assumed from LaCie S.A. 1 $ - $ - $ Balance at End of Period 8 12 9 Uncollectible accounts written off, net of recoveries. 73

  • Page 77
    ... fiscal years 2015, 2014, and 2013, respectively. Interest on borrowings related to eligible capital expenditures is capitalized as part of the cost of the qualified assets and amortized over the estimated useful lives of the assets. During fiscal years 2015, 2014, and 2013, the Company capitalized...

  • Page 78
    ... the specific identification method. On September 2, 2014, the Company completed the acquisition of certain assets and liabilities of LSI Corporation's ("LSI") Accelerated Solutions Division and Flash Components Division (collectively, the "Flash Business") from Avago Technologies Limited for $450...

  • Page 79
    ... Statement of Operations from the acquisition date through the end of fiscal year ended July 3, 2015 were not significant. Xyratex Ltd On March 31, 2014, the Company acquired all of the outstanding shares of Xyratex Ltd ("Xyratex"), a leading provider of data storage technology. The Company...

  • Page 80
    ... the Company's Consolidated Statement of Operations from the acquisition date through the end of fiscal year ended June 27, 2014 are not significant. LaCie S.A. On August 3, 2012 the Company acquired 23,382,904 (or approximately 64.5%) of the outstanding shares of LaCie S.A. ("LaCie") for a price...

  • Page 81
    ... Amortization Period (Dollars in millions) Customer relationships Existing technology Trade name Total acquired identifiable intangible assets Fair Value $ $ 31 1 13 45 5.0 years 5.0 years 5.0 years In fiscal 2013, the Company recorded adjustments to the fair value...

  • Page 82
    Table of Contents SEAGATE TECHNOLOGY PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) The Company deposited $72 million into an escrow account in fiscal year 2013 with the intention of acquiring the remaining publicly held shares of LaCie through public and private transactions. As of ...

  • Page 83
    ... it will close its AMK manufacturing operations in Singapore. Operations at this facility had ceased as of the third quarter of fiscal year 2011. The hard drive manufacturing operations have been relocated to other existing Seagate facilities and the Company's Asia International Headquarters remains...

  • Page 84
    ... through the end of fiscal year 2023. The following table summarizes the Company's restructuring activities under all the Company's active restructuring plans for fiscal years 2015, 2014 and 2013: Other Post- Exit Operating Employment Leases Benefits Costs All Restructuring Activities...

  • Page 85
    ... or letters of credit utilized under the Revolving Credit Facility. Long-Term Debt $600 million Aggregate Principal Amount of 6.8% Senior Notes due October 2016 (the "2016 Notes"). On September 20, 2006, the Company's subsidiary, Seagate Technology HDD Holdings, completed the sale of $600 million...

  • Page 86
    ... redemption date. The issuer under the 2020 Notes is Seagate HDD Cayman, and the obligations under the 2020 Notes are fully and unconditionally guaranteed, on a senior unsecured basis, by the Company. During fiscal year 2014, the Company repurchased $66 million aggregate principal amount of its 2020...

  • Page 87
    Table of Contents SEAGATE TECHNOLOGY PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) HDD Cayman and the obligations under the 2021 Notes are fully and unconditionally guaranteed, on a senior unsecured basis, by the Company. During fiscal year 2014, the Company repurchased $349 million ...

  • Page 88
    ...payable semiannually on June 1 and December 1 of each year, commencing on December 1, 2015. At any time before March 1, 2027, Seagate HDD Cayman may redeem some or all of the Notes at a "make-whole" redemption price. The "make-whole" redemption price will be equal to (1) 100% of the principal amount...

  • Page 89
    ...(49) (1) (20) (70) (7) U.S. Non-U.S $ 101 $ 149 $ 175 1,869 1,407 1,656 $ 1,970 $ 1,556 $ 1,831 The Company recorded $2 million, $0.3 million and $1 million of excess tax benefits associated with stock option deductions in fiscal years 2015, 2014 and 2013, respectively. 86

  • Page 90
    ...(6) (10) $ 612 $ 615 The deferred tax asset valuation allowance increased by $41 million in 2015, and decreased by $101 million and $75 million, in fiscal years 2014 and 2013, respectively. At July 3, 2015, the Company recorded $612 million of net deferred tax assets. The realization of these...

  • Page 91
    ...expire at various dates beginning in fiscal year 2016, if not utilized. As of July 3, 2015, approximately $422 million and $90 million of the Company's total U.S. net operating loss and tax credit carryforwards, respectively, are subject to an aggregate annual limitation of $46 million pursuant to...

  • Page 92
    ...tax benefits in the provision for income taxes on the Consolidated Statements of Operations. During fiscal year 2015, the Company recognized net income tax expense for interest and penalties of $26 million, $8 million during fiscal year 2014 and $2 million during fiscal year 2013. As of July 3, 2015...

  • Page 93
    ... in the fair value of such derivative instruments are immediately reflected in earnings. The Company did not recognize any material net gains or losses related to the loss of hedge designation on discontinued cash flow hedges during fiscal years 2015, 2014, and 2013. As of July 3, 2015, the Company...

  • Page 94
    ... tables show the Company's derivative instruments measured at gross fair value as reflected in the Consolidated Balance Sheets as of July 3, 2015 and June 27, 2014: Derivatives designated as hedging instruments: Foreign currency forward exchange contracts Derivatives not designated as hedging...

  • Page 95
    ... 3, 2015. The following tables show the effect of the Company's derivative instruments on the Consolidated Statement of Comprehensive Income and the Consolidated Statements of Operations for the fiscal year ended June 27, 2014: Amount of Location of Gain Gain or (Loss) or (Loss) Recognized in...

  • Page 96
    Table of Contents SEAGATE TECHNOLOGY PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) 9. Fair Value Measurement of Fair Value Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market ...

  • Page 97
    ... The following table presents the Company's assets and liabilities that are measured at fair value on a recurring basis, excluding accrued interest components, as of July 3, 2015: Fair Value Measurements at Reporting Date Using Significant Quoted Prices in Significant Other Active Markets...

  • Page 98
    .... Level 2 assets include: agency bonds, corporate bonds, commercial paper, municipal bonds, U.S. Treasuries and certificates of deposits. These debt investments are priced using observable inputs and valuation models which vary by asset class. The Company uses a pricing service to assist in...

  • Page 99
    ... fair value. During the fiscal years 2015, 2014 and 2013, the Company determined that certain of its equity investments accounted for under the cost method were otherthan-temporarily impaired, and recognized charges of $7 million, $2 million and $5 million, respectively, in order to write...

  • Page 100
    Table of Contents SEAGATE TECHNOLOGY PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) categorized as Level 2. The following table presents the fair value and amortized cost of the Company's debt in order of maturity: 6.8% Senior Notes due October 2016 3.75% Senior Notes due November ...

  • Page 101
    ... available for repurchase under the existing repurchase authorization limit. The following table sets forth information with respect to repurchases of the Company's ordinary shares during fiscal years 2015, 2014 and 2013: Number of Shares Repurchased Dollar Value of Shares Repurchased (In...

  • Page 102
    ... was not material for fiscal years 2015, 2014, and 2013, respectively. Equity Awards Full-Value Share Awards (e.g. restricted share units) generally vest over a period of three to four years, with cliff vesting of a portion of each award occurring annually. Options generally vest as follows: 25...

  • Page 103
    ..., inclusive of dividends and share price appreciation, over a three-year performance period, which TSR must be sustained for a minimum of 30 consecutive trading days. Determining Fair Value of Seagate Technology Stock Plans Valuation and amortization method -The Company estimates the fair value of...

  • Page 104
    ... of Contents SEAGATE TECHNOLOGY PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Fair Value -The fair value of the Company's nonvested awards and performance awards subject to an AEPS condition for fiscal years 2015, 2014, and 2013, is the price per share of the Company's common stock...

  • Page 105
    ... value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company's ordinary shares for the options that were in-the-money at July 3, 2015. During fiscal years 2015, 2014, and 2013, the aggregate intrinsic value of options exercised under...

  • Page 106
    ...period of approximately one month. During fiscal year 2015, the Company issued 1.3 million ordinary shares with a weighted-average purchase price of $45.78 per share. Tax-Deferred Savings Plan The Company has a tax-deferred savings plan, the Seagate 401(k) Plan (the "40l(k) plan"), for the benefit...

  • Page 107
    ... and diluted net income per share: (In millions, except per share data) July 3, 2015 Fiscal Years Ended June 28, June 27, 2013 2014 Numerator: Net income attributable to Seagate Technology plc Number of shares used in per share calculations: Total shares for purposes of calculating...

  • Page 108
    ... SEAGATE TECHNOLOGY PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) The following table summarizes the Company's operations by geographic area: (In millions) July 3, 2015 Fiscal Years Ended June 28, June 27, 2013 2014 Revenue from external customers (a) : Singapore...

  • Page 109
    ... wrongful failure to name him as an inventor on several patents and patent applications. Mr. Shukh's employment was terminated as part of a company-wide reduction in force in fiscal year 2009. He seeks damages in excess of $75 million. On March 31, 2014, the district court granted Seagate's summary...

  • Page 110
    ...CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Seagate Technology LLC v. Western Digital Corp. On October 8, 2014, the Minnesota Supreme Court ruled that the arbitration award in favor of the Company in its case against Western Digital for the misappropriation of the Company's trade secrets should...

  • Page 111
    ... related to the planned exit of Maxtor leased excess facilities at July 3, 2015 and June 27, 2014, respectively. Capital Expenditures. The Company's non-cancelable commitments for construction of manufacturing and product development facilities and purchases of equipment approximated $147 million...

  • Page 112
    ...Contents SEAGATE TECHNOLOGY PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) 16. Guarantees Indemnifications to Officers and Directors On May 4, 2009, Seagate Technology, an exempted company incorporated with limited liability under the laws of the Cayman Islands ("Seagate-Cayman"), then...

  • Page 113
    ... product return rates in order to determine its warranty obligation. Changes in the Company's product warranty liability during the fiscal years ended July 3, 2015, June 27, 2014 and June 28, 2013 were as follows: Balance, beginning of period Warranties issued Repairs and replacements Changes...

  • Page 114
    ... years in the period ended July 3, 2015, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Seagate Technology plc's internal control over financial reporting...

  • Page 115
    ... Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Seagate Technology plc as of July 3, 2015 and June 27, 2014, and the related consolidated statements of operations, comprehensive income, shareholders' equity and cash flows for each of the three years in...

  • Page 116
    Table of Contents SUPPLEMENTARY FINANCIAL DATA (UNAUDITED) For quarterly financial data see "Part II, Item 6. Selected Financial Data." 113

  • Page 117
    ...Seagate have been detected. An evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of July 3, 2015...

  • Page 118
    ...ITEM 9B. OTHER INFORMATION Kenneth M. Massaroni, the Company's Executive Vice President, Chief Administrative Officer, General Counsel and Company Secretary will retire from the Company, effective September 1, 2015. Mr. Massaroni will assist the Company in an advisory role in connection with the...

  • Page 119
    ... principal accounting officer or controller or persons performing similar functions. This Code of Ethics is posted on our Website. The Internet address for our Website is www.seagate.com , and the Code of Ethics may be found from our main Web page by clicking first on "Investors," next on "Corporate...

  • Page 120
    ... ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) The following documents are filed as part of this Report: 1. Financial Statements. The following Consolidated Financial Statements of Seagate Technology plc and Report of Independent Registered Public Accounting Firm are included in Item...

  • Page 121
    ...of the U.S. Securities and Exchange Commission thereunder in connection with the registrant's Annual Report on Form 10-K for the fiscal year ended July 3, 2015 (the "Annual Report"), including specifically, but without limiting the generality of the foregoing, power and authority to sign the name of...

  • Page 122
    ...Date /s/ MICHAEL R. CANNON (Michael R. Cannon) Director August 11, 2015 /s/ MEI-WEI CHENG (Mei-Wei Cheng) Director August 11, 2015 /s/ WILLIAM T. COLEMAN III (William T. Coleman III) Director August 11, 2015 /s/ JAY L. GELDMACHER (Jay L. Geldmacher) Director August 11...

  • Page 123
    ...10 Registration Rights Agreement dated as of November 5, 2013, among Seagate HDD Cayman, Seagate Technology plc and Morgan Stanley & Co. LLC. 4.11 Indenture dated as of May 28, 2014, among Seagate HDD Cayman, as Issuer, Seagate Technology plc, as Guarantor, and U.S. Bank National Association, as...

  • Page 124
    ... 2034 4.16 Registration Rights Agreement dated as of December 2, 2014, among Seagate HDD Cayman, Seagate Technology plc and Morgan Stanley & Co. LLC. 4.17 Indenture dated as of May 14, 2015, among Seagate HDD Cayman, as Issuer, Seagate Technology plc, as Guarantor, and Wells Fargo Bank, National...

  • Page 125
    ....39 8/8/2013 10.37 8/8/2014 10.27 5/5/2010 10.26 5/5/2010 10.21 5/3/2011 10.11+ Seagate Technology Public Limited Company 2012 Equity Incentive Plan Executive PErformance Unit Agreement 10.12+ Seagate Technology Public Limited Company 2012 Equity Incentive Plan Restricted Share Unit...

  • Page 126
    122

  • Page 127
    ...X 10-Q 001- 31560 001- 31560 001- 315601 10.1 5/24/2013 1/16/2015 8-K 10.1 10.35 U.S. Guarantee Agreement, dated as of January 18, 2011, among Seagate Technology Public Limited Company, Seagate HDD Cayman, as Borrower, the Guarantor parties thereto and The Bank of Nova...

  • Page 128
    ..., dated as of January 18, 2011, among Seagate Technology Public Limited Company, Seagate HDD Cayman, as Borrower, the Guarantor parties thereto and The Bank of Nova Scotia, as Administrative Agent 10.39 First Amendment, dated April 30, 2013, to the U.S. Guarantee Agreement, dated as of January 18...

  • Page 129
    ... of the Chief Financial Officer pursuant to rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934,...Annual Report on Form 10-K, are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Seagate Technology...

  • Page 130

  • Page 131
    ... 31,2011 (this " A mendment "), to the Existing Credit A greement (as defined below) is among SEA GA TE TECHNOL OGY PUBL IC L IMITED COMPA NY , an Irish public limited company (" STX "), SEA GA TE HDD CA Y MA N, an exempt limited liability company organized under the laws of the Cayman Islands...

  • Page 132
    ... be governed by clause (c) of this Section), (b) Swap A greements entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment of...

  • Page 133

  • Page 134
    ... be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. SECTION 4.5. Headings . The headings of this A mendment are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. SECTION 4.6. Counterparts . This...

  • Page 135
    By: Title: THE BA NK OF NOV A SCOTIA By: /s/ [Illegible] Title: Managing Director Bank of A merica N.A . By: /s/ [Illegible] Title: Director

  • Page 136
    BNP Paribas By: /s/ Mathew Harvey Name: Mathew Harvey Title: Managing Director BNP Paribas By: /s/ Fiona Buckley Name: Fiona Buckley Title: V ice President Morgan Stanley Bank N.A By: /s/ [Illegible] Title: A uthorized Signatory

  • Page 137
    By: Title: Wells Fargo Bank N.A . By: /s/ Susan T. Gallagher Susan T. Gallagher Director

  • Page 138
    ...) Maxtor Global Ltd. Maxtor Luxembourg S.Ã r.l. Maxtor Peripherals (S) Pte Ltd Maxtor International S.Ã r.l. Maxtor International Manufacturing S.Ã r.l Penang Seagate Industries (M) Sdn. Bhd. Seagate Business Centre (UK) Ltd. Seagate Business Centre (US) LLC Seagate Business Centre (Singapore) Pte...

  • Page 139
    ...China China China China Netherlands Japan Ireland Cayman Cayman Hong Kong China India India India Cayman United Kingdom Cayman Malaysia United Kingdom Ireland Russia Cayman Thailand Bermuda Malaysia Singapore United Kingdom Singapore Thailand Canada China China China Philippines United Kingdom Japan...

  • Page 140
    QuickL inks Exhibit 21.1 Seagate Technology Public Limited Company Subsidiaries as of July 3, 2015

  • Page 141
    ... applicable, of our reports dated August 11, 2015, with respect to the consolidated financial statements of Seagate Technology plc, and the effectiveness of internal control over financial reporting of Seagate Technology plc, included in this Annual Report (Form 10-K) for the year ended July 3, 2015...

  • Page 142
    QuickL inks Exhibit 23.1 Consent of Independent Registered Public Accounting Firm

  • Page 143
    ... in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and any fraud, whether or not material, that involves management or other employees who...

  • Page 144
    QuickL inks Exhibit 31.1 CERTIFICATION

  • Page 145
    ... in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and any fraud, whether or not material, that involves management or other employees who...

  • Page 146
    QuickL inks Exhibit 31.2 CERTIFICATION

  • Page 147
    ... a part of the Annual Report of Seagate Technology plc (the "Company") on Form 10-K for the fiscal year ended July 3, 2015, as filed with the Securities and Exchange Commission on the date hereof (the "Report"). In connection with the Report we, Stephen J. Luczo, Chief Executive Officer of...

  • Page 148
    QuickL inks Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002