Seagate 2015 Annual Report Download - page 75
Download and view the complete annual report
Please find page 75 of the 2015 Seagate annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.TableofContents
SEAGATETECHNOLOGYPLC
NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)
Concentrations
ConcentrationofCreditRisk.TheCompany'scustomerbasefordiskdriveproductsisconcentratedwithasmallnumberofOEMsanddistributors.The
Companydoesnotgenerallyrequirecollateralorothersecuritytosupportaccountsreceivable.Toreducecreditrisk,theCompanyperformsongoingcredit
evaluationsonitscustomers'financialcondition.TheCompanyestablishesanallowancefordoubtfulaccountsbaseduponfactorssurroundingthecreditriskof
customers,historicaltrendsandotherinformation.Hewlett-PackardCompanyandDellInc.eachaccountedformorethan10%oftheCompany'saccounts
receivableasofJuly1,2016.
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,theCompanymaymakeprepaymentsto
certainsuppliers.Shouldthesesuppliersbeunabletodeliverontheirobligationsorexperiencefinancialdifficulty,theCompanymaynotbeabletorecoverthese
prepayments.
RecentAccountingPronouncements
InMay2014,August2015,April2016andMay2016,theFinancialAccountingStandardsBoard("FASB")issuedASU2014-09(ASCTopic606),Revenue
fromContractswithCustomers,ASU2015-14(ASCTopic606)RevenuefromContractswithCustomers,DeferraloftheEffectiveDate,ASU2016-10(ASC
Topic606)RevenuefromContractswithCustomers,IdentifyingPerformanceObligationsandLicensing,andASU2016-12(ASCTopic606)Revenuefrom
ContractswithCustomers,Narrow-ScopeImprovementsandPracticalExpedients,respectively.ASCTopic606outlinesasinglecomprehensivemodelforentities
touseinaccountingforrevenuearisingfromcontractswithcustomersandsupersedesmostcurrentrevenuerecognitionguidance,includingindustry-specific
guidance.Italsorequiresentitiestodisclosebothquantitativeandqualitativeinformationthatenablefinancialstatementsuserstounderstandthenature,amount,
timing,anduncertaintyofrevenueandcashflowsarisingfromcontractswithcustomers.TheamendmentsintheseASUsareeffectiveforfiscalyears,andinterim
periodswithinthoseyears,beginningafterDecember15,2017.EarlyadoptionispermittedforannualperiodsbeginningafterDecember15,2016.Thisstandard
maybeappliedretrospectivelytoallpriorperiodspresented,orretrospectivelywithacumulativeadjustmenttoretainedearningsintheyearofadoption.The
Companyisintheprocessofassessingtheimpact,ifany,onitsconsolidatedfinancialstatementsandplanstoadoptthemodifiedretrospectivetransitionapproach.
InApril2015andAugust2015,theFASBissuedASU2015-03(ASCSubtopic835-30),Interest-ImputationofInterest:SimplifyingthePresentationofDebt
IssuanceCostsandASU2015-15(ASC
72