Seagate 2014 Annual Report Download - page 74
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SEAGATETECHNOLOGYPLC
NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)
assetsandliabilitiesathistoricalrates.GainsandlossesfromtheseremeasurementswerenotsignificantandhavebeenincludedintheCompany'sresultsof
operations.
Concentrations
ConcentrationofCreditRisk.TheCompany'scustomerbasefordiskdriveproductsisconcentratedwithasmallnumberofOEMsanddistributors.The
Companydoesnotgenerallyrequirecollateralorothersecuritytosupportaccountsreceivable.Toreducecreditrisk,theCompanyperformsongoingcredit
evaluationsonitscustomers'financialcondition.TheCompanyestablishesanallowancefordoubtfulaccountsbaseduponfactorssurroundingthecreditriskof
customers,historicaltrendsandotherinformation.Hewlett-PackardCompanyandDellInc.eachaccountedformorethan10%oftheCompany'saccounts
receivableasofJuly3,2015.
FinancialinstrumentsthatpotentiallysubjecttheCompanytoconcentrationsofcreditriskconsistprimarilyofcashequivalents,short-terminvestmentsand
foreigncurrencyforwardexchangecontracts.TheCompanyfurthermitigatesconcentrationsofcreditriskinitsinvestmentsthroughdiversification,bylimitingits
investmentsinthedebtsecuritiesofasingleissuer,andinvestinginhighlyratedsecurities.
Inenteringintoforeigncurrencyforwardexchangecontracts,theCompanyassumestheriskthatmightarisefromthepossibleinabilityofcounterpartiesto
meetthetermsoftheircontracts.Thecounterpartiestothesecontractsaremajormultinationalcommercialbanks,andtheCompanyhasnotincurredanddoesnot
expectanylossesasaresultofcounterpartydefaults.
SupplierConcentration.Certainoftherawmaterials,componentsandequipmentusedbytheCompanyinthemanufactureofitsproductsareavailable
fromasolesupplieroralimitednumberofsuppliers.Shortagescouldoccurintheseessentialmaterialsandcomponentsduetoaninterruptionofsupplyor
increaseddemandintheindustry.IftheCompanywereunabletoprocurecertainmaterials,componentsorequipmentatacceptableprices,itwouldberequiredto
reduceitsmanufacturingoperations,whichcouldhaveamaterialadverseeffectonitsresultsofoperations.Inaddition,theCompanyhasmadeprepaymentsto
certainsuppliers.Shouldthesesuppliersbeunabletodeliverontheirobligationsorexperiencefinancialdifficulty,theCompanymaynotbeabletorecoverthese
prepayments.
RecentAccountingPronouncements
InMay2014,theFASBissuedASU2014-09(ASCTopic606),RevenuefromContractswithCustomers.TheASUoutlinesasinglecomprehensivemodelfor
entitiestouseinaccountingforrevenuearisingfromcontractswithcustomersandsupersedesmostcurrentrevenuerecognitionguidance,includingindustry-
specificguidance.Italsorequiresentitiestodisclosebothquantitativeandqualitativeinformationthatenablefinancialstatementsuserstounderstandthenature,
amount,timing,anduncertaintyofrevenueandcashflowsarisingfromcontractswithcustomers.TheamendmentsinthisASUareeffectiveforfiscalyears,and
interimperiodswithinthoseyears,beginningafterDecember15,2017.EarlyadoptionispermittedforannualperiodsbeginningafterDecember15,2016.The
Companyisintheprocessofassessingtheimpact,ifany,onitsconsolidatedfinancialstatements.
InApril2015,theFASBissuedASU2015-03(ASCSubtopic835-30),Interest-ImputationofInterest:SimplifyingthePresentationofDebtIssuanceCosts.
TheamendmentsinthisASUrequirethatdebtissuancecostsrelatedtoarecognizeddebtliabilitybepresentedinthebalancesheetasadirectdeductionfromthe
carryingamountofthatdebtliability.TheamendmentsinthisASUareeffectiveforfiscalyears,andinterimperiodswithinthoseyears,beginningafter
December15,2015.Earlyadoptionispermittedforfinancialstatementsthathavenotbeenpreviouslyissued.Theadoptionofthisnewguidancewillnothavea
materialimpactontheCompany'sconsolidatedfinancialstatementsanddisclosures.
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