Seagate 2015 Annual Report Download - page 94

TableofContents
SEAGATETECHNOLOGYPLC
NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)
ThefollowingtablesummarizestheactivityrelatedtotheCompany'sgrossunrecognizedtaxbenefits:
ItistheCompany'spolicytoincludeinterestandpenaltiesrelatedtounrecognizedtaxbenefitsintheprovisionforincometaxesontheConsolidated
StatementsofOperations.Duringfiscalyear2016,theCompanyrecognizednetincometaxbenefitforinterestandpenaltiesof$8millionascomparedtonet
incometaxexpenseof$26millionduringfiscalyear2015,andincometaxexpenseof$8millionduringfiscalyear2014.AsofJuly1,2016,theCompanyhad
$12millionofaccruedinterestandpenaltiesrelatedtounrecognizedtaxbenefitscomparedto$20millioninfiscalyear2015.
Duringthe12monthsbeginningJuly2,2016,theCompanyexpectsthatitsunrecognizedtaxbenefitscouldbereducedbyapproximately$16millionasa
resultoftheexpirationofcertainstatutesoflimitation.
TheCompanyissubjecttotaxationinmanyjurisdictions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and2010.ThisauditsettlementdidnothaveamaterialimpactontheCompany'sfinancialstatements.
TheCompanyisnolongersubjecttoexaminationofitsU.S.federalincometaxreturnsforyearspriortofiscalyear2013.WithrespecttoU.S.stateandnon-
U.S.incometaxreturns,theCompanyisgenerallynolongersubjecttotaxexaminationforyearsendingpriortofiscalyear2005.
8.DerivativeFinancialInstruments
TheCompanyisexposedtoforeigncurrencyexchangerate,interestrate,andtoalesserextent,equitypricerisksrelatingtoitsongoingbusinessoperations.
TheCompanyentersintoforeigncurrencyforwardexchangecontractsinordertomanagetheforeigncurrencyexchangerateriskonforecastedexpenses
denominatedinforeigncurrenciesandtomitigatetheremeasurementriskofcertainforeigncurrencydenominatedliabilities.TheCompany'saccountingpolicies
fortheseinstrumentsarebasedonwhethertheinstrumentsareclassifiedasdesignatedornon-designatedhedginginstruments.TheCompanyrecordsall
derivativesintheConsolidatedBalanceSheetsatfairvalue.Thechangesinthefairvalueoftheeffectiveportionsofdesignatedcashflowhedgesarerecordedin
Accumulatedothercomprehensivelossuntilthehedgeditemisrecognizedinearnings.Derivativesthatarenotdesignatedashedginginstrumentsandthe
ineffectiveportionsofcashflowhedgesareadjustedtofairvaluethroughearnings.Theamountofnet
91
 FiscalYearsEnded 
(Dollarsinmillions) 
July1,
2016 
July3,
2015 
June27,
2014 
Balanceofunrecognizedtaxbenefitsatthebeginningoftheyear  $ 83 $ 115 $ 157
Grossincreasefortaxpositionsofprioryears   12  12  10
Grossdecreasefortaxpositionsofprioryears   (8)  (4)  (64)
Grossincreasefortaxpositionsofcurrentyear   11  9  13
Grossdecreasefortaxpositionsofcurrentyear   —  —  —
Settlements   —  (45)  —
Lapseofstatutesoflimitation   (27)  (3)  (3)
Non-U.S.exchange(gain)/loss   (1)  (1)  2
Balanceofunrecognizedtaxbenefitsattheendoftheyear  $ 70 $ 83 $ 115