Seagate 2014 Annual Report Download - page 53

TableofContents
AsofJuly3,2015andJune27,2014,wehadapproximately$83millionand$115million,respectively,ofunrecognizedtaxbenefitsexcludinginterestand
penalties.Theunrecognizedtaxbenefitsthat,ifrecognized,wouldimpacttheeffectivetaxrateare$83millionand$115millionasofJuly3,2015andJune27,
2014,respectively,subjecttocertainfuturevaluationallowanceoffsets.
Itisourpolicytoincludeinterestandpenaltiesrelatedtounrecognized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,wehad$20millionofaccruedinterestandpenaltiesrelatedtounrecognizedtaxbenefitscomparedto
$27millioninfiscalyear2014.
DuringthefiscalyearendedJuly3,2015,ourunrecognizedtaxbenefitsexcludinginterestandpenaltiesdecreasedbyapproximately$32millionprimarily
dueto(i)reductionsassociatedwithauditsettlementsof$45million,(ii)increasesincurrentyearunrecognizedtaxbenefitsof$9million,(iii)netincreasesin
prioryears'unrecognizedtaxbenefitsof$8million,(iv)reductionsassociatedwiththeexpirationofcertainstatutesoflimitationof$3million,(v)netreductions
fromotheractivity,includingnon-U.S.exchangegains,of$1million.
Duringthe12monthsbeginningJuly4,2015,weexpectthatourunrecognizedtaxbenefitscouldbereducedbyapproximately$11millionasaresultofthe
expirationofcertainstatutesoflimitation.
WearesubjecttotaxationinmanyjurisdictionsgloballyandarerequiredtofileU.S.federal,U.S.state,andnon-U.Sincometaxreturns.InJune2014,we
receivedtheRevenueAgent'sReportandNoticesofProposedAdjustmentsforourU.S.federalincometaxreturnsforfiscalyears2008,2009and2010.Weare
currentlycontestingcertainoftheseproposedadjustmentsthroughtheIRSAppealsOffice.Webelievethattheresolutionofthesedisputedissueswillnothavea
materialimpactonourfinancialstatements.Asdiscussedabove,onDecember31,2014,wereceivedafinalauditassessmentfromtheJiangsuProvinceStateTax
BureauofthePeople'sRepublicofChina.Asaresultoftheassessment,wemadepaymentsof$225millionrelatedtotaxandinterestassociatedwithchangesto
ourtaxfilingsinChinaforcalendaryears2007through2013.InconnectionwithresolvingourtaxauditwiththeChinesetaxauthorities,weobtainedanAdvance
PricingAgreement(APA)fromtheJiangsuProvinceStateTaxBureauduringthethirdquarter.TheAPAcoverstheperiodsthrough2018andprovidesthe
companyapredictablefuturetaxexpensethatprovidesstabilitytoourbusinessmodel.
WearenolongersubjecttotaxexaminationofU.S.federalincometaxreturnsforyearspriortofiscalyear2008.WithrespecttoU.S.stateandnon-U.S.
incometaxreturns,wearegenerallynolongersubjecttotaxexaminationforyearsendingpriortofiscalyear2005.
FiscalYear2014ComparedtoFiscalYear2013
Revenue
Revenueinfiscalyear2014decreasedapproximately4%,or$0.6billion,fromfiscalyear2013asaresultofa3%decreaseinunitsshippedanda$2decrease
intheASPduetopriceerosion,partiallyoffsetbyamorefavorableproductmix.
50
 FiscalYearsEnded 
(Dollarsinmillions) 
June27,
2014 
June28,
2013 Change 
%
Change 
Revenue  $ 13,724 $ 14,351 $ (627)  (4)%