Seagate 2014 Annual Report Download - page 33

TableofContents
programmersandhackersmaybeabletopenetrateournetworksecurityandmisappropriateorcompromiseourconfidentialinformationorthatofthird-parties,
createsystemdisruptions,orcauseshutdowns.Computerprogrammersandhackersalsomaybeabletodevelopanddeployviruses,worms,andothermalicious
softwareprogramsthatattackourproductsorotherwiseexploitanysecurityvulnerabilitiesofourproducts.Inaddition,sophisticatedhardwareandoperating
systemsoftwareandapplicationsthatweproduceorprocurefromthird-partiesmaycontaindefectsindesignormanufacture,including"bugs"andotherproblems
thatcouldunexpectedlyinterferewiththeoperationofthesystem.
Thecoststoustoeliminateoraddresstheforegoingsecurityproblemsandsecurityvulnerabilitiesbeforeorafteracyber-incidentcouldbesignificant.System
redundancymaybeineffectiveorinadequate,andourdisasterrecoveryplanningmaynotbesufficientforalleventualities.Ourremediationeffortsmaynotbe
successfulandcouldresultininterruptions,delays,orcessationofservice,andlossofexistingorpotentialcustomersthatmayimpedeoursales,manufacturing,
distribution,orothercriticalfunctions.Wecouldloseexistingorpotentialcustomersforoutsourcingservicesorotherinformationtechnologysolutionsin
connectionwithanyactualorperceivedsecurityvulnerabilitiesinourproducts.Inaddition,breachesofoursecuritymeasuresandtheunapproveddisseminationof
proprietaryinformationorsensitiveorconfidentialdataaboutusorourcustomersorotherthird-parties,couldexposeus,ourvendorsandcustomers,orotherthird-
partiesaffectedtoariskoflossormisuseofthisinformation,resultinlitigationandpotentialliabilityforus,damageourbrandandreputation,orotherwiseharm
ourbusiness.Inaddition,werelyincertainlimitedcapacitiesonthird-partydatamanagementproviderswhosepossiblesecurityproblemsandsecurity
vulnerabilitiesmayhavesimilareffectsonus.
Wearesubjecttolaws,rules,andregulationsintheU.S.andothercountriesrelatingtothecollection,use,andsecurityofuserdata.Inmanycases,theselaws
applynotonlytothird-partytransactions,butalsototransfersofinformationbetweenusandoursubsidiaries,andamongus,oursubsidiariesandotherpartieswith
whichwehavecommercialrelations.Ourabilitytoexecutetransactionsandtopossessandusepersonalinformationanddatainconductingourbusinesssubjects
ustolegislativeandregulatoryburdensthatmayrequireustonotifyvendors,customersoremployeesofadatasecuritybreach.Wehaveincurred,andwill
continuetoincur,significantexpensestocomplywithmandatoryprivacyandsecuritystandardsandprotocolsimposedbylaw,regulation,industrystandards,or
contractualobligations.Theselaws,protocolsandstandardscontinuetodevelopandmaybeinconsistentfromjurisdictiontojurisdiction.Complyingwith
emergingandchanginginternationalrequirementsmaycauseustoincursubstantialcostsorrequireustochangeourbusinesspractices.Ifwefailtocomplywith
applicablefederal,stateorinternationalprivacy-relatedordataprotectionlawswemaybesubjecttoproceedingsbygovernmentalentitiesandincurpenaltiesor
significantlegalliability.
Ourinternationaloperationssubjectustorisksrelatedtodisruptionsinforeignmarkets,currencyexchangefluctuations,longerpaymentcycles,seasonality,
limitationsimposedbyavarietyoflegalandregulatoryregimes,potentialadversetaxconsequences,increasedcosts,ourcustomers'creditandaccessto
capital,health-relatedrisks,andaccesstopersonnel.
Wehavesignificantoperationsinforeigncountries,includingmanufacturingfacilities,salespersonnel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aresubjecttoeconomicrisksinherentindoingbusinessinforeigncountries,includingthefollowing:
•DisruptionsinForeignMarkets.Disruptionsinfinancialmarketsandthedeteriorationoftheunderlyingeconomicconditionsinthepastinsome
countries,includingthoseinAsia,havehadanimpactonoursalestocustomerslocatedin,orwhoseend-usercustomersarelocatedin,these
countries.
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