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SEAGATE TECHNOLOGY PLC
FORM 10-K
(Annual Report)
Filed 08/05/16 for the Period Ending 07/01/16
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 2016, 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 08/05/16 for the Period Ending 07/01/16 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
    ...fiscal year ended July 1, 2016 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) (1) 234-3136...

  • Page 3
    ... Regulation 14A relating to the registrant's Annual General Meeting of Shareholders, to be held on October 19, 2016, 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...

  • Page 4
    ...9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 117 9A. Controls and Procedures 117 9B. Other Information 118 PART III Directors, Executive Officers and Corporate Governance 10. 119 11. Executive Compensation 119 12. Security...

  • Page 5
    13. Certain Relationships and Related Transactions, and Director Independence 119 14. Principal Accountant Fees and Services PART IV 2 119 15. Exhibits and Financial Statement Schedules 120 SIGNATURES 121 EXHIBIT INDEX 123

  • Page 6
    ... in global economic conditions; the impact of variable demand and the adverse pricing environment for disk drives, particularly in view of current business and economic conditions; the Company's ability to successfully qualify, manufacture and sell its disk drive products in increasing volumes on...

  • Page 7
    ...cyber-attacks or other data breaches that disrupt its operations or results in the dissemination of proprietary or confidential...statements is also set forth in "Item 1A. Risk Factors" of this Annual Report on Form 10K, which we encourage you to carefully read. These forward-looking statements should ...

  • Page 8
    ..., where our products are designed for a wide variety of end user devices such as digital video recorders ("DVRs"), personal data backup systems, portable external storage systems, digital media systems and surveillance systems. Our Cloud Systems and Solutions builds on the Seagate legacy to extend...

  • Page 9
    ... and host services and solutions, which include storage, backup, archiving, recovery and discovery of electronic data. Hyperscale Data Centers. Increasingly, large hyperscale data center companies are designing their own storage subsystems and having those built by contract manufacturers for use...

  • Page 10
    ... big data analytics and new technology trends such as self-driving 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...

  • Page 11
    ...investments. We design, fabricate and 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...

  • Page 12
    ... of design and manufacture of read/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...

  • Page 13
    ... in China, Malaysia, Northern Ireland, Singapore, Thailand and in the United States. In addition, third parties manufacture and assemble components and disk drive assemblies for us in various countries worldwide. Suppliers of Components and Industry Constraints. There are a limited number of...

  • Page 14
    ... 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 workload of an always-on...

  • Page 15
    ...storage 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...

  • Page 16
    ... that we currently address. Principal Disk Drive Competitors. There are three companies in the electronic data storage industry that manufacture disk drives Seagate, selling the Seagate, LaCie, Maxtor and Samsung brands; Western Digital Corporation, operating the Western Digital and Hitachi...

  • Page 17
    ... developing new component technologies, products and alternative storage technologies. Our research and development focus is designed to bring new products to market in high volume, with quality attributes that our customers expect, before our competitors. Part of our product development strategy is...

  • Page 18
    ... and Restriction of Chemicals, EC 1907/2006) also restricts substances of very high concern ("SVHCs") in products. Employees At July 1, 2016, we employed approximately 45,500 employees and temporary employees worldwide, of which approximately 36,100 were located in our Asian operations. We believe...

  • Page 19
    ... that file electronically with the SEC. Web Site Access. Our website is www.seagate.com. We make available, free of charge at the "Investors" section of our website, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or...

  • Page 20
    ... Solutions since July 2015. Mr. Brace joined Seagate in September 2014 as Executive Vice President and Chief Technology Officer of Silicon Solutions, and was promoted to Interim President of Cloud Systems and Electronics Solutions on April 30, 2015. He was previously employed by LSI Corporation...

  • Page 21
    ...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 of suppliers; 18...

  • Page 22
    ...operations in the future may be adversely affected if we fail to consistently maintain our time-to-maturity performance with our new products; produce these products in sufficient volume; qualify these products with key customers on a timely basis by meeting our customers' performance and quality...

  • Page 23
    ... sources of competition 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...

  • Page 24
    ..., which could significantly harm our financial condition. If we do not develop products in time to keep pace with technological changes, our results of operations will be adversely affected. Our customers have demanded new generations of disk drive products as advances in computer hardware and...

  • Page 25
    ...of our products causes participants in our industry to have higher than anticipated inventory levels, we experience even more intense price competition from other manufacturers than usual. Increases in the areal density of disk drives may outpace customers' demand for storage capacity. The rate of...

  • Page 26
    ...the major regions in which we do business; competitive pressures resulting in lower selling prices by our competitors targeted to encourage shifting of customer demand; delays or problems in our introduction of new products, particularly new disk drives with lower cost structures, the inability to...

  • Page 27
    ... on our business, results of operations, financial condition and prospects. We are dependent on sales to distributors and retailers, which may increase price erosion and the volatility of our sales. A substantial portion of our sales has been to distributors of disk drive products. Certain of...

  • Page 28
    ... 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 29
    ... regulations, price controls, export control laws, including the trade and economic sanctions administered by the Office of Foreign Assets Control, and other restraints on trade. In addition, the governments of many countries, including China, Malaysia, Northern Ireland, Singapore and Thailand, in...

  • Page 30
    ...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...

  • Page 31
    ... media, ASICs, spindle motors, printed circuit boards, and suspension assemblies. We rely on sole suppliers or a limited number of suppliers for some of these components that we do not manufacture, including aluminum and glass substrates, read/write heads, ASICs, spindle motors, printed circuit...

  • Page 32
    ...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 33
    ... 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; and increased insurance costs. Defects in our products could also result in...

  • Page 34
    ... our business, operating results or financial condition which, in turn, could adversely affect our stock price. A general weakening of, and related declining corporate confidence in, the global economy or the curtailment in government or corporate spending could cause current or potential customers...

  • Page 35
    ...harm our business, financial condition and operating results. We cannot be certain that our products do not and will not infringe issued patents or other intellectual property rights of others. We may not be aware of currently filed patent applications that relate to our products or technology. If...

  • Page 36
    ... customers, suppliers and employees and through other security measures; and others will not gain access to our trade secrets. • In addition, our competitors may be able to design their products around our patents and other proprietary rights. Enforcement of our rights often requires litigation...

  • Page 37
    ... time available to be devoted to our day-to-day operations or to the execution of our strategy. Growth by strategic alliance, acquisition, joint venture or investment involves an even higher degree of risk to the extent we combine new product offerings and enter new markets in which we have limited...

  • Page 38
    ... price reductions by us or our competitors, including those competitors who offer alternative storage technology solutions; our failure to meet the performance estimates of investment research analysts; the timing of announcements by us or our competitors of significant contracts or acquisitions...

  • Page 39
    ... traded securities of technology companies. The price of our ordinary shares is likely to be volatile in the future. In the past, following periods of decline in the market price of a company's securities, class action lawsuits have often been pursued against that company. If similar litigation...

  • Page 40
    ... are as follows: Location Building(s) Owned or Leased Approximate Square Footage Primary Use United States California Colorado Minnesota Europe Northern Ireland Springtown Asia China Suzhou Wuxi Malaysia Johor Penang Seremban Singapore Woodlands Science Park AMK Thailand Korat Teparuk Korea...

  • Page 41
    ...of Contents PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 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...

  • Page 42
    ... 185.84 103.93 125.32 156.19 168.87 174.77 131.29 102.88 155.52 190.99 152.43 6/28/2013 6/27/2014 7/3/2015 7/1/2016 $100 invested on 7/1/11 in stock and in indices, including reinvestment of dividends. Copyright©2,016 Bloomberg Finance L.P. All rights reserved. 39

  • Page 43
    ... in the future will be subject to, among other things, general business conditions within the disk drive industry, our financial results, the impact of paying dividends on our credit ratings and legal and contractual restrictions on the payment of dividends by our subsidiaries to us or by us to our...

  • Page 44
    ... per share: 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 13-week quarters in fiscal year 2016, which ended on the...

  • Page 45
    ...-week quarters for the remaining quarters of fiscal year 2015. (In millions, except per share data) July 1, 2016 Fiscal Year 2016 Quarters Ended October 2, January 1, April 1, 2015 2016 2016 Revenue Gross margin Income from operations Net income (loss) Net income (loss) per share...

  • Page 46
    ...: uncertainty in global economic conditions, the impact of the variable demand and adverse pricing environment for disk drives, particularly in view of current business and economic conditions; our ability to successfully qualify, manufacture and sell our disk drive products in increasing volumes on...

  • Page 47
    ... incorporated in our reported financial results. • • Our Company We are a leading provider of electronic data storage technology and solutions. Our principal products are hard disk drives, commonly referred to as disk drives, hard drives or HDDs. In addition to HDDs, we produce a broad...

  • Page 48
    ... big data analytics and new technology trends such as self-driving 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...

  • Page 49
    ... 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 50
    ... July 1, 2014 2015 2016 Revenue Cost of revenue Gross margin Product development Marketing and administrative Amortization of intangibles Restructuring and other, net Gain on arbitration award, net Income from operations Other income (expense), net Income before income taxes Provision for...

  • Page 51
    Table of Contents The following table summarizes information regarding average drive selling prices ("ASPs") excluding storage systems; drive volume shipments, exabytes shipped, and revenues by channel and geography: Unit Shipments: Enterprise Client Compute Client Non-Compute Total Units ...

  • Page 52
    ... award 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. Other income (expense), net (Dollars in millions) Fiscal Years Ended July 3, July 1, 2015 2016 Change...

  • Page 53
    ... holding company owns various U.S. and non-U.S. subsidiaries that operate in multiple non-Irish income tax jurisdictions. Our worldwide operating income is either subject to varying rates of income tax or is exempt from income tax due to tax holiday programs we operate under in Malaysia, Singapore...

  • Page 54
    ...our U.S. net operating losses and $99 million of our tax credit carryforwards are subject to annual limitations from $1 million to $45 million pursuant to U.S. tax law. As of July 1, 2016 and July 3, 2015, we had approximately $70 million and $83 million, respectively, of unrecognized tax benefits...

  • Page 55
    ...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 56
    ... to tax holidays or tax incentive programs and are considered indefinitely reinvested outside of Ireland, (ii) tax expense associated with the China assessment recorded during the December 2014 quarter, and (iii) an increase in valuation allowance for certain deferred tax assets. The acquisition of...

  • Page 57
    ... of credit. • • Cash Used in Investing Activities In fiscal year 2016, we used $1.2 billion for net cash investing activities, which was primarily due to payments for the purchase of property, equipment and leasehold improvements of approximately $587 million and the acquisition of Dot Hill...

  • Page 58
    ...; (2) a fixed charge coverage ratio; and (3) a net leverage ratio. On April 28, 2016, the Revolving Credit Agreement was amended in order to increase the allowable net leverage ratio to adjust for our current financial liquidity position. We were in compliance with the modified covenants as of July...

  • Page 59
    ... global macroeconomic conditions and financial, business and other factors, some of which are beyond our control. On August 2, 2016, our Board of Directors approved a quarterly cash dividend of $0.63 per share, which will be payable on October 5, 2016 to shareholders of record as of the close...

  • Page 60
    ... obligations for the purchase of goods or services, which are enforceable and legally binding on us, and that specify all significant terms. Consists of funding requirements related to strategic commitments. (2) (3) As of July 1, 2016, we had a liability for unrecognized tax benefits and an...

  • Page 61
    ... time revenue 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...

  • Page 62
    ... estimates. 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...

  • Page 63
    ... The Company determined no material available-for-sale securities were other-than-temporarily impaired as of July 1, 2016. We currently do not use derivative financial instruments in our investment portfolio. We have fixed rate debt obligations. We enter into debt obligations for general corporate...

  • Page 64
    ... be adversely affected by changes in currency exchange rates. The changes in fair value of these hedges are recognized in earnings in the same period as the gains and losses from the remeasurement of the assets and liabilities. These foreign currency forward exchange contracts are not designated as...

  • Page 65
    ... 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 SDCP liabilities. The Company pays a floating rate, based on LIBOR...

  • Page 66
    ...DATA SEAGATE TECHNOLOGY PLC CONSOLIDATED BALANCE SHEETS (In millions, except share and per share data) July 1, 2016 July 3, 2015 Current assets: Cash and cash equivalents Short-term investments Accounts receivable, net Inventories Deferred income taxes Other current assets Total current...

  • Page 67
    ...Technology 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. 64 July 1, 2016 Fiscal Years Ended June 27, July 3, 2014 2015...

  • Page 68
    Table of Contents SEAGATE TECHNOLOGY PLC CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Fiscal Years Ended June 27, July 3, July 1, 2014 2015 2016 Net income Other comprehensive income (loss), net of tax: Cash flow hedges Change in net unrealized (loss) gain on ...

  • Page 69
    ... Accounts receivable, net Inventories 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...

  • Page 70
    ... STATEMENTS OF SHAREHOLDERS' EQUITY For Fiscal Years Ended July 1, 2016, July 3, 2015 and June 27, 2014 (In millions) Number of Ordinary Shares 359 Seagate Technology plc Ordinary Shareholders Accumulated Other Additional Par Accumulated Comprehensive Paid-in...

  • Page 71
    ... FINANCIAL STATEMENTS 1. Basis of Presentation and Summary of Significant Accounting Policies Organization Seagate Technology plc (the "Company") is a leading provider of electronic data storage technology and solutions. Our principal products are hard disk drives, commonly referred to as disk...

  • Page 72
    ... or use for other than current operations. Allowances for Doubtful Accounts. The Company maintains an allowance for uncollectible ...reporting unit goodwill carrying value over its implied fair value is recognized as an impairment loss. The Company tests other long-lived assets, including property...

  • Page 73
    ... the time revenue is recognized. The Company generally warrants its products for a period of 1 to 5 years. The Company's warranty provision considers estimated product failure rates and trends (including the timing of product returns during the warranty periods), and estimated repair or replacement...

  • Page 74
    ... 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...

  • Page 75
    ... 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 76
    ... beginning of an interim or annual reporting period. The Company early adopted this ASU for the December 2015 quarter on a prospective basis. See "Note 7. Income Taxes" for disclosure of the financial statement impact of this adoption. In January 2016, the FASB issued ASU 2016-01 (ASC Subtopic 825...

  • Page 77
    ... July 1, 2016: (Dollars in millions) Amortized Cost Unrealized Gain/(Loss) Fair Value Available-for-sale securities: Money market funds Corporate bonds Certificates of deposit Total Included in Cash and cash equivalents Included in Short-term investments Included in Other current assets...

  • Page 78
    Table of Contents SEAGATE TECHNOLOGY PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) The fair value and amortized cost of the Company's investments classified as available-for-sale at July 1, 2016 by remaining contractual maturity was as follows: (Dollars in millions) Amortized Cost...

  • Page 79
    ...these vendors who manufacture completed sub-assemblies or finished goods for the Company. The Company does not reflect the sale of these components in revenue and does not recognize any profits on these sales. The costs of the completed sub-assemblies are included in inventory upon purchase from the...

  • Page 80
    ... year ended 2016, the Company determined it would discontinue the use of certain manufacturing property and equipment in the short-term, and that certain other manufacturing property and equipment was permanently impaired, and as a result recognized a charge of $53 million from the write-off and...

  • Page 81
    ... SEAGATE TECHNOLOGY PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) 3. Acquisitions Dot Hill Systems Corp. On October 6, 2015 , the Company acquired all of the outstanding shares of Dot Hill Systems Corp. ("Dot Hill"), a supplier of software and hardware storage systems. The Company...

  • Page 82
    Table of Contents SEAGATE TECHNOLOGY PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) LSI's Flash Business 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 ...

  • Page 83
    ... of data storage technology. The Company paid $13.25 per share, or approximately $376 million in cash for the acquisition. The acquisition of Xyratex further strengthens the Company's vertically integrated supply and manufacturing chain for disk drives and provides access to important capital...

  • Page 84
    ... 3, 2015 Goodwill acquired Goodwill disposed Foreign currency translation effect As of July 1, 2016 Other Intangible Assets Other intangible assets consist primarily of existing technology, customer relationships, in-process research and development ("IPR&D") and trade names acquired in business...

  • Page 85
    ... to a restructuring plan (the "June 2016 Plan") as part of the Company's efforts to reduce its cost structure to align with the current macroeconomic conditions. The June 2016 Plan included reducing worldwide headcount by approximately 1,600 employees. The June 2016 Plan is expected to be largely...

  • Page 86
    Table of Contents SEAGATE TECHNOLOGY PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) approximately $15 million related to the February 2016 Plan, comprised primarily of employee termination costs. September 2015 Plan -On September 4, 2015, the Company committed to a restructuring plan (...

  • Page 87
    ... of each year. The issuer under the 2016 Notes is Seagate HDD Cayman, and the obligations under the 2016 Notes are unconditionally guaranteed by certain of the Company's significant subsidiaries. The 2016 Notes are redeemable at the option of the Company in whole or in part, on not less than 30, nor...

  • Page 88
    ... The interest on the 2021 Notes is payable semi-annually on January 1 and July 1 of each year. The 2021 Notes are redeemable any time prior to May 1, 2016 at the option of the Company, in whole or in part, at a redemption price of 100% of the principal amount plus an "applicable premium" and accrued...

  • Page 89
    ...interest on the Notes is payable semi-annually on June 1 and December 1 of each year, commencing on June 1, 2015. At any time before June 1, 2034, 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...

  • Page 90
    ... redemption date. The issuer under the 2034 Notes is Seagate HDD Cayman, and the obligations under the 2034 Notes are fully and unconditionally guaranteed, on a senior unsecured basis, by the Company. During fiscal year 2016, the Company repurchased $10 million aggregate principal amount of its 2034...

  • Page 91
    ... SEAGATE TECHNOLOGY PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) 7. Income Taxes The provision for (benefit from) income taxes consisted of the following: (Dollars in millions) Fiscal Years Ended June 27, July 3, July 1, 2014 2015 2016 Current income tax expense...

  • Page 92
    ... financial reporting purposes and the amounts used for income tax purposes. The significant components of the Company's deferred tax assets and liabilities were as follows: (Dollars in millions) Fiscal Years Ended July 3, July 1, 2015 2016 Deferred tax assets Accrued warranty Inventory...

  • Page 93
    ...of the Company's operations in Malaysia, Singapore, and Thailand operate under various tax holiday programs, which expire in whole or in part at various dates through 2024. Certain of the tax holidays may be extended if specific conditions are met. The net impact of these tax holiday programs was to...

  • Page 94
    ... globally and is required to file U.S. federal, U.S. state and non-U.S. income tax returns. On April 4, 2016, the IRS approved the audit settlement reached in December 2015 regarding all disputed issues associated with the Company's U.S. federal income tax returns for fiscal years 2008, 2009...

  • Page 95
    ... recognize any material net gains or losses related to the loss of hedge designation on discontinued cash flow hedges during fiscal years 2016, 2015 and 2014. As of July 1, 2016, the Company's existing foreign currency forward exchange contracts mature within 12 months. The deferred amount currently...

  • Page 96
    ...of Contents SEAGATE TECHNOLOGY PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) The following tables show the Company's derivative instruments measured at gross fair value as reflected in the Consolidated Balance Sheets as of July 1, 2016 and July 3, 2015: Derivatives designated as...

  • Page 97
    ... Portion) $ (13) Cost of revenue $ 1 Foreign currency forward exchange contracts Total return swap (a) Derivatives Not Designated as Hedging Instruments Other, net $ Operating expenses $ Location of Gain or (Loss) Recognized in Income on Derivatives Amount of Gain or (Loss...

  • Page 98
    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 99
    ... 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 1, 2016: Fair Value Measurements at Reporting Date Using Significant Quoted Prices in Significant Other Active Markets...

  • Page 100
    ... SEAGATE TECHNOLOGY PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) 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...

  • Page 101
    Table of Contents SEAGATE TECHNOLOGY PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) measurement date. The Company corroborates the prices obtained from the pricing service against other independent sources and, as of July 1, 2016, has not found it necessary to make any adjustments to the...

  • Page 102
    ... of preferred shares, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a change in control of the Company and might harm the market price of its ordinary shares and the...

  • Page 103
    ... July 1, 2016, there were approximately 32.7 million ordinary shares available for issuance under the EIP. Dot Hill Systems 2009 Equity Incentive Plan (the "DHEIP"). Seagate Technology plc acquired the Dot Hill Systems 2009 Equity Incentive Plan effective October 6, 2015. The Company assumed the...

  • Page 104
    ... Awards") will generally be counted against the Share Reserve as one and five-tenths shares for every one share granted. As of July 1, 2016, there were approximately 1 million ordinary shares available for issuance under the DHEIP. Seagate Technology plc Employee Stock Purchase Plan (the "ESPP...

  • Page 105
    ...-line interpolation to determine the rate from the available term maturities. Fair Value -The fair value of the Company's nonvested awards and performance awards subject to an AEPS condition for fiscal years 2016, 2015, and 2014, is the price per share of the Company's common stock on the grant...

  • Page 106
    ... of Contents SEAGATE TECHNOLOGY PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) The fair value of the Company's shares related to options granted to employees, shares issued from the ESPP and performance awards subject to TSR/ROIC conditions for fiscal years 2016, 2015 and 2014 were...

  • Page 107
    ... SEAGATE TECHNOLOGY PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Stock Option Activity The Company ...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 1, 2016. During fiscal years 2016, 2015, and 2014...

  • Page 108
    .... This plan is designed to permit certain discretionary employer contributions, in excess of the tax limits applicable to the 401(k) plan and to permit employee deferrals in excess of certain tax limits. In the quarter ended December 27, 2013, the Company entered into a TRS in order to manage the...

  • Page 109
    ...July 1, 2014 2015 2016 Employee equity award plans 3 - - 13. Business Segment and Geographic Information The Company has concluded that its manufacture and distribution of electronic storage solutions constitutes one reporting segment. The Company's manufacturing operations are...

  • Page 110
    ... of operations. Accordingly, actual results could differ materially. Intellectual Property Litigation Convolve, Inc. ("Convolve") and Massachusetts Institute of Technology ("MIT") v. Seagate Technology LLC, et al. -On July 13, 2000, Convolve and MIT filed suit against Compaq Computer Corporation...

  • Page 111
    ... the Company on July 14, 2014. Convolve filed a notice of appeal on August 13, 2014. On February 10, 2016, the U.S. Court of Appeals for the Federal Circuit: 1) affirmed the district court's summary judgment of no direct infringement by Seagate because Seagate's ATA/SCSI disk drives do not meet the...

  • Page 112
    .... 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 be confirmed. In the arbitration award...

  • Page 113
    ... the number of financially viable parties. The Company has fulfilled its responsibilities at some of these sites and remains involved in only a few at this time. While the Company's ultimate costs in connection with these sites is difficult to predict with complete accuracy, based on its current...

  • Page 114
    ... manufacturing and product development facilities and purchases of equipment approximated $110 million at July 1, 2016. 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...

  • Page 115
    ... Product Warranty The Company estimates probable product warranty costs at the time revenue is recognized. The Company generally warrants its products for a period of 1 to 5 years. The Company uses estimated repair or replacement costs and uses statistical modeling to estimate product return rates...

  • Page 116
    ...Party Transactions Samsung Electronics Co. Ltd. ("Samsung") In connection with the Company's acquisition of the Samsung HDD business, Samsung became a shareholder of the Company and appointed one of its executives to the Company's Board of Directors. On October 22, 2013, Samsung filed an amendment...

  • Page 117
    ... July 1, 2016, 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 as of July 1, 2016, based on...

  • Page 118
    ... FIRM The Board of Directors and Shareholders of Seagate Technology public limited company We have audited Seagate Technology public limited company (plc)'s internal control over financial reporting as of July 1, 2016, based on criteria established in Internal Control-Integrated Framework...

  • Page 119
    Table of Contents SUPPLEMENTARY FINANCIAL DATA (UNAUDITED) For quarterly financial data see "Part II, Item 6. Selected Financial Data." 116

  • Page 120
    ...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 1, 2016...

  • Page 121
    Table of Contents ITEM 9B. OTHER INFORMATION Not applicable. 118

  • Page 122
    ...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 Governance...

  • Page 123
    ... IV 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...

  • Page 124
    ... duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SEAGATE TECHNOLOGY PUBLIC LIMITED COMPANY /s/ STEPHEN J. LUCZO (Stephen J. Luczo, Chief Executive Officer, Director and Chairman of the Board of Directors) Date: August 5, 2016 POWER OF ATTORNEY...

  • Page 125
    ...COLEMAN III (William T. Coleman III) Director August 5, 2016 /s/ JAY L. GELDMACHER (Jay L. Geldmacher) Director August 5, 2016 /s/ DAMBISA MOYO (Dr. Dambisa Moyo) Director August 5, 2016 /s/ KRISTEN M. ONKEN (Kristen M. Onken) Director August 5, 2016 /s/ C.S. PARK (Dr. C.S. Park...

  • Page 126
    ... Forms of Global Note for the Senior Notes due 2011 and Senior Notes due 2016 of Seagate Technology HDD Holdings issued pursuant to the Indenture 4.4 First Supplemental Indenture, dated as of March 1, 2010, among Seagate Technology HDD Holdings, Seagate HDD Cayman, Seagate Technology and U.S. Bank...

  • Page 127
    ... as of May 28, 2014, among Seagate HDD Cayman, Seagate Technology plc and Morgan Stanley & Co. LLC. 8-K 4.30 8-K 4.10 5/28/2014 8-K 4.10 5/28/2014 5/28/2014 8-K 4.30 4.20 Indenture dated as of December 2, 2014, among Seagate HDD Cayman, as issuer, the Company, as guarantor, and...

  • Page 128
    ... Share Unit Agreement 10.13+ Seagate Technology Public Limited Company 2012 Equity Incentive Plan Option Agreement 10.14+ Seagate Technology plc Amended and Restated Employee Stock Purchase Plan 8-K 10-K 10-K 10-K 10-K 10-K 10.15+ Dot Hill Systems Corp. 2009 Equity Incentive Plan, as...

  • Page 129
    ... director or officer named therein 10.31(b) Indemnity, Subrogation and Contribution Agreement, dated as of January 18, 2011, among Seagate Technology Public Limited Company, Seagate HDD Cayman, as Borrower, the Subsidiary parties thereto and The Bank of Nova Scotia, as Administrative Agents 10...

  • Page 130

  • Page 131
    ... 10.10 1/16/2015 10.10 4/29/2016 10.48 2/2/2011 Filing Date Filed Herewith 8-K 001- 31560 001- 31560 001- 31560 10-Q 10.39 U.S. Guarantee Agreement, dated as of January 18, 2011, among Seagate Technology Public Limited Company, Seagate HDD Cayman, as Borrower, the...

  • Page 132
    ...as of January 18, 2011, among Seagate Technology Public Limited Company, Seagate HDD Cayman, as Borrower, The Subsidiary Parties thereto and The Bank of Nova Scotia, as Administrative Agent 21.1 List of Subsidiaries 10-K Form 001- 31560 Incorporated by Reference File No. Exhibit 10.46...

  • Page 133
    ... X The certifications attached as Exhibit 32.1 that accompany this 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 plc under the Securities Act of 1933, as amended, or...

  • Page 134

  • Page 135
    ...Credit Agreement (as defined below) is among SEAGATE TECHNOLOGY PUBLIC LIMITED COMPANY, an Irish public limited company (" STX "), SEAGATE HDD CAYMAN, an exempt limited liability company organized under the laws of the Cayman...good and valuable consideration, the receipt and sufficiency of which is ...

  • Page 136
    ...the Existing Credit Agreement is ... agreed to in writing by the applicable ... not include Platinum Leases or Swap...order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate...current or former directors, officers or employees...

  • Page 137
    ... by an authorized officer or representative of STX and of the Borrower and on behalf of the Required Lenders. SECTION 3.1.2. Fees and Expenses . The Administrative Agent shall have received all of its reasonable and documented fees and out-of-pocket expenses incurred in connection with the...

  • Page 138
    ... Credit Agreement. SECTION 4.3. Fees and Expenses . The Borrower agrees to reimburse the Administrative Agent for its reasonable and documented out-of-pocket expenses in connection with this Amendment, including the reasonable fees, charges and disbursements of counsel for the Administrative Agent...

  • Page 139
    ... have caused this Amendment to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written. SEAGATE TECHNOLOGY PUBLIC LIMITED COMPANY By: /s/ [illegible] Title: SEAGATE HDD CAYMAN By: /s/ [illegible] Title:

  • Page 140
    By: Title: THE BANK OF NOVA SCOTIA By: /s/ [illegible] Title: Managing Director

  • Page 141
    Bank of America N.A. By: /s/ [illegible] Title: Director

  • Page 142
    BNP Paribas By: /s/ Mathew Harvey Name: Mathew Harvey Title: Managing Director BNP Paribas By: /s/ Fiona Buckley Name: Fiona Buckley Title: Vice President

  • Page 143
    Morgan Stanley Bank N.A By: /s/ [illegible] T itle: Authorized Signatory

  • Page 144
    By: Title: Wells Fargo Bank N.A. By: /s/ Susan T. Gallagher Susan T. Gallagher Director

  • Page 145
    ...) Maxtor Global Ltd. Maxtor Luxembourg S.Ã r.l. Maxtor Peripherals (S) Pte Ltd Maxtor International S.Ã r.l. Seagate Memory Products International Seagate International (Johor) Sdn. Bhd. Seagate Technology China Holding Company Seagate Technology Manufacturing (Hong Kong) Limited Seagate Technology...

  • Page 146
    ... International Headquarters Pte. Ltd. Seagate Singapore International Headquarters Pte. Ltd. (Netherlands Branch) Seagate Technology International (Wuxi) Company Limited Seagate Technology (Netherlands) B.V. Seagate Technology Republic Ireland Limited Nippon Seagate Inc. Seagate Technology Services...

  • Page 147
    QuickLinks Exhibit 21.1 Seagate Technology Public Limited Company Subsidiaries as of July 1, 2016

  • Page 148
    ...) of Seagate Technology public limited company (plc) and in the related Prospectuses, as applicable, of our reports dated August 5, 2016, with respect to the consolidated financial statements of Seagate Technology plc, and the effectiveness of internal control over financial reporting of Seagate...

  • Page 149
    QuickLinks Exhibit 23.1 Consent of Independent Registered Public Accounting Firm

  • Page 150
    ... 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 151
    QuickLinks Exhibit 31.1 CERTIFICATION

  • Page 152
    ... 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 153
    QuickLinks Exhibit 31.2 CERTIFICATION

  • Page 154
    ... a part of the Annual Report of Seagate Technology plc (the "Company") on Form 10-K for the fiscal year ended July 1, 2016, 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 155
    QuickLinks 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