Seagate 2015 Annual Report Download - page 37
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requiresubstantialattentionfromourseniormanagement,whichmaylimittheamountoftimeavailabletobedevotedtoourday-to-dayoperationsortothe
executionofourstrategy.Growthbystrategicalliance,acquisition,jointventureorinvestmentinvolvesanevenhigherdegreeofrisktotheextentwecombine
newproductofferingsandenternewmarketsinwhichwehavelimitedexperience,andnoassurancecanbegiventhatacquisitionsofentitieswithnewor
alternativebusinessmodelswillbesuccessfullyintegratedorachievetheirstatedobjectives.Therecanbenoassurancethatwewillrealizetheanticipatedbenefits
ofanystrategicalliance,acquisition,jointventureorinvestmentthatwemakeor,ifwedo,howlongitwilltaketoachievesuchbenefits.
Furthermore,theexpansionofourbusinessinvolvestheriskthatwemightnotmanageourgrowtheffectively,thatwewouldincuradditionaldebttofinance
theseacquisitionsorinvestments,thatwemayhaveimpairmentofgoodwilloracquiredintangibleassetsassociatedwiththeseacquisitionsandthatwewould
incursubstantialchargesrelatingtothewrite-offofin-processresearchanddevelopment,similartothatwhichweincurredinconnectionwithseveralofourprior
acquisitions.Eachoftheseitemscouldhaveamaterialadverseeffectonourfinancialconditionandresultsofoperations.
Inaddition,wecouldissueadditionalordinarysharesinconnectionwithfuturestrategicalliances,acquisitions,jointventuresorinvestments.Issuingsharesin
connectionwithsuchtransactionswouldhavetheeffectofdilutingyourownershippercentageoftheordinarysharesandcouldcausethepriceofourordinary
sharestodecline.
Servicingourindebtednessrequiresasignificantamountofcash,andwemaynothavesufficientcashflowfromourbusinesstopayoursubstantialdebt.
Weareleveragedandhavesignificantdebtserviceobligations.Oursignificantdebtanddebtservicerequirementscouldadverselyaffectourabilitytooperate
ourbusinessandmaylimitourabilitytotakeadvantageofpotentialbusinessopportunities.Forexample,ourhighlevelofdebtpresentsthefollowingrisks:
•wearerequiredtouseasubstantialportionofourcashflowfromoperationstopayprincipalandinterestonourdebt,therebyreducingthe
availabilityofourcashflowtofundworkingcapital,capitalexpenditures,productdevelopmentefforts,strategicacquisitions,investmentsand
alliances,andothergeneralcorporaterequirements;
•oursubstantialleverageincreasesourvulnerabilitytoeconomicdownturnsandadversecompetitiveandindustryconditionsandcouldplaceusata
competitivedisadvantagecomparedtothoseofourcompetitorsthatarelessleveraged;
•ourdebtserviceobligationscouldlimitourflexibilityinplanningfor,orreactingto,changesinourbusinessandourindustryandcouldlimitour
abilitytopursueotherbusinessopportunities,borrowmoremoneyforoperationsorcapitalinthefutureandimplementourbusinessstrategies;
•ourlevelofdebtmayrestrictusfromraisingadditionalfinancingonsatisfactorytermstofundworkingcapital,capitalexpenditures,product
developmentefforts,strategicacquisitions,investmentsandalliances,andothergeneralcorporaterequirements;and
•covenantsinourdebtinstrumentslimitourabilitytopayfuturedividendsormakeotherrestrictedpaymentsandinvestments.
Intheeventthatweneedtorefinancealloraportionofouroutstandingdebtasitmatures,wemaynotbeabletoobtaintermsasfavorableasthetermsofour
existingdebtorrefinanceourexistingdebtatall.Ifprevailinginterestratesorotherfactorsexistingatthetimeofrefinancingresultinhigherinterestratesupon
refinancing,thentheinterestexpenserelatingtotherefinanceddebtwouldincrease.Furthermore,ifanyratingagencychangesourcreditratingoroutlook,our
debtandequitysecuritiescould
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