Seagate 2015 Annual Report Download - page 29

TableofContents
forwardexchangecontracts.However,thesecontractsmaynotcoverourfullexposureandsubjectustocertaincounterpartycreditrisks.See
"Item7A.QuantitativeandQualitativeDisclosuresAboutMarketRisk-ForeignCurrencyExchangeRisk"ofthisreportforadditionalinformation
aboutourforeigncurrencyexchangerisk.
•LongerPaymentCycles.OurcustomersoutsideoftheUnitedStatesareoftenallowedlongertimeperiodsforpaymentthanourU.S.customers.
Thisincreasestheriskofnonpaymentduetothepossibilitythatthefinancialconditionofparticularcustomersmayworsenduringthecourseofthe
paymentperiod.
•Seasonality.Seasonalreductionsinthebusinessactivitiesofourcustomersduringthesummermonths,particularlyinEurope,typicallyresultin
lowerearningsduringthoseperiods.
•LegalandRegulatoryLimitations.Ourinternationaloperationsareaffectedbylimitationsonimports,tariffs,duties,currencyexchangecontrol
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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toensurecompliance,therecanbeno
assurancethatouremployees,contractors,oragentswillnotviolatetheseorotherapplicablelawsandregulationstowhichwemaybesubject.
Violationsoftheselawsandregulationscouldleadtosignificantpenalties,includingrestraintsonourexportorimportprivileges,monetaryfines,
criminalproceedingsandregulatoryorotheractionsthatcouldmateriallyadverselyaffectourresultsofoperations.
•PotentialAdverseTaxConsequences.Ourinternationaloperationscreateariskofpotentialadversetaxconsequences,includingimpositionof
withholdingorothertaxesonpaymentsbyoursubsidiaries.Inaddition,ourtaxableincomeinanyjurisdictionisdependentuponacceptanceofour
operationalpracticesandintercompanytransferpricingbylocaltaxauthoritiesasbeingonanarm'slengthbasis.Duetoinconsistenciesin
applicationofthearm'slengthstandardamongtaxingauthorities,aswellasalackofadequatetreaty-basedprotection,transferpricingchallenges
bytaxauthoritiescould,ifsuccessful,substantiallyincreaseourincometaxexpense.Wearesubjecttotaxauditsaroundtheworld,andareunder
auditinvariousjurisdictions,andsuchjurisdictionsmayassessadditionalincometaxagainstus.Althoughwebelieveourtaxpositionsare
reasonable,thefinaldeterminationoftaxauditscouldbemateriallydifferentfromourrecordedincometaxprovisionsandaccruals.Theultimate
resultsofanauditcouldhaveamaterialadverseeffectonouroperatingresultsorcashflowsintheperiodorperiodsforwhichthatdeterminationis
madeandcouldresultinincreasestoouroveralltaxexpenseinsubsequentperiods.Inlightoftheongoingfiscalchallengesmanycountriesare
facing,variouslevelsofgovernmentareincreasinglyfocusedontaxreformandotherlegislativeactiontoincreasetaxrevenue.Inaddition,the
OrganizationforEconomicCooperationandDevelopment'sBaseErosionandProfitShiftingrecommendationsarereshapinginternationaltaxrules
innumerouscountries.Theseactualandpotentialchangesintherelevanttaxlawsapplicabletocorporatemultinationalsalongwithpotential
changesinaccountingandotherlaws,regulations,administrativepractices,principles,andinterpretationscouldincreasetheriskofdoubletaxation,
causeincreasedtaxauditactivity,andcouldimpactoureffectivetaxrate.
•IncreasedCosts.Theshippingandtransportationcostsassociatedwithourinternationaloperationsaretypicallyhigherthanthoseassociatedwith
ourU.S.operations,resultingindecreasedoperatingmarginsinsomeforeigncountries.
•CreditandAccesstoCapitalRisks.Ourinternationalcustomerscouldhavereducedaccesstoworkingcapitalduetohigherinterestrates,reduced
banklendingresultingfromcontractionsinthe
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