Seagate 2015 Annual Report Download - page 31
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Wearesubjecttolaws,rules,andregulationsintheU.S.andothercountriesrelatingtothecollection,use,andsecurityofuserdata.Inmanycases,theselaws
applynotonlytothird-partytransactions,butalsototransfersofinformationbetweenusandoursubsidiaries,andamongus,oursubsidiariesandotherpartieswith
whichwehavecommercialrelations.Ourabilitytoexecutetransactionsandtopossessandusepersonalinformationanddatainconductingourbusinesssubjects
ustolegislativeandregulatoryburdensthatmayrequireustonotifyvendors,customersoremployeesofadatasecuritybreach.Wehaveincurred,andwill
continuetoincur,significantexpensestocomplywithmandatoryprivacyandsecuritystandardsandprotocolsimposedbylaw,regulation,industrystandards,or
contractualobligations.Theselaws,protocolsandstandardscontinuetodevelopandmaybeinconsistentfromjurisdictiontojurisdiction.Complyingwith
emergingandchanginginternationalrequirementsmaycauseustoincursubstantialcostsorrequireustochangeourbusinesspractices.Ifwefailtocomplywith
applicablefederal,stateorinternationalprivacy-relatedordataprotectionlawswemaybesubjecttoproceedingsbygovernmentalentitiesandincurpenaltiesor
significantlegalliability.
Ifwedonotcontrolourfixedcosts,wewillnotbeabletocompeteeffectivelyinourindustry.
Wecontinuallyseektomakeourcoststructureandbusinessprocessesmoreefficient.Wearefocusedonincreasingworkforceflexibilityandscalability,and
improvingoverallcompetitivenessbyleveragingourglobalcapabilities,aswellasexternaltalentandskills,worldwide.Ourstrategyinvolves,toasubstantial
degree,increasingrevenueandproductvolumewhileatthesametimecontrollingoperatingexpenses.Ifwedonotcontrolouroperatingexpenses,ourabilityto
competeinthemarketplacemaybeimpaired.Inthepast,activitiestoreduceoperatingcostshaveincludedclosuresandtransfersoffacilities,significantpersonnel
reductionsandeffortstoincreaseautomation.
Ifweexperienceshortagesordelaysinthereceiptof,orcostincreasesin,criticalcomponents,equipmentorrawmaterialsnecessarytomanufactureour
products,wemaysufferloweroperatingmargins,productiondelaysandothermaterialadverseeffects.
Thecost,qualityandsupplyofcomponents,subassemblies,certainequipmentandrawmaterialsusedtomanufactureourproductsandkeycomponentslike
recordingmediaandheadsarecriticaltooursuccess.Theequipmentweusetomanufactureourproductsandcomponentsisfrequentlycustommadeandcomes
fromafewsuppliersandtheleadtimesrequiredtoobtainmanufacturingequipmentcanbesignificant.Particularlyimportantforourproductsincluderead/write
heads,aluminumorglasssubstratesforrecordingmedia,ASICs,spindlemotors,printedcircuitboards,andsuspensionassemblies.
Werelyonsolesuppliersoralimitednumberofsuppliersforsomeofthesecomponentsthatwedonotmanufacture,includingaluminumandglasssubstrates,
read/writeheads,ASICs,spindlemotors,printedcircuitboards,andsuspensionassemblies.Manyofsuchcomponentsuppliersaregeographicallyconcentrated,in
particular,inThailand,whichmakesoursupplychainmorevulnerabletoregionaldisruptionssuchastheseverefloodinginThailandinOctober2011,whichhada
materialimpactontheproductionandavailabilityofmanycomponents.Ifourvendorsforthesecomponentsareunabletomeetourcost,quality,andsupply
requirements,wecouldexperienceashortageinsupplyoranincreaseinproductioncosts,whichwouldadverselyaffectourresultsofoperations.
Certainrareearthelementsarecriticalinthemanufactureofourproducts.Wepurchasecomponentsthatcontainrareearthelementsfromanumberof
countries,includingthePeople'sRepublicofChina.Wecannotpredictwhetheranynationwillimposeregulations,quotasorembargoesupontherareearth
elementsincorporatedintoourproductsthatwouldrestricttheworldwidesupplyofsuchmetalsorincreasetheircost.Wehaveexperiencedincreasedcostsand
productiondelayswhenwewereunabletoobtainthenecessaryequipmentorsufficientquantitiesofsomecomponents,and/orhavebeenforcedtopayhigher
pricesormakevolumepurchasecommitmentsoradvancedepositsforsomecomponents,equipmentorrawmaterialsthatwereinshortsupplyintheindustryin
general.Ifanymajorsupplierweretorestrictthesupplyavailabletousorincreasethecostoftherareearthelementsusedinourproducts,we
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