Western Digital 2014 Annual Report Download - page 31

capacity and 60% of our hard drive manufacturing capacity was in Thailand. As a result of the flooding in Thailand,
our facilities were inundated and temporarily shut down. During that period, our ability to manufacture hard drives
was significantly constrained, adversely affecting our business, financial condition and results of operations. A sig-
nificant event that impacts any of our manufacturing sites, or the sites of our customers or suppliers, could adversely
affect our ability to manufacture or sell our products, and our business, financial condition and results of operations
could suffer.
Manufacturing and marketing our products globally subjects us to numerous risks.
We are subject to risks associated with our global manufacturing operations and global marketing efforts, includ-
ing:
‰obtaining requisite governmental permits and approvals;
‰currency exchange rate fluctuations or restrictions;
‰political instability and civil unrest;
‰limited transportation availability, delays, and extended time required for shipping, which risks may be com-
pounded in periods of price declines;
‰higher freight rates;
‰labor challenges, including difficulties finding and retaining talent or responding to labor disputes or dis-
ruptions;
‰trade restrictions or higher tariffs;
‰copyright levies or similar fees or taxes imposed in European and other countries;
‰exchange, currency and tax controls and reallocations;
‰increasing labor and overhead costs; and
‰loss or non-renewal of favorable tax treatment under agreements or treaties with foreign tax authorities.
Terrorist attacks may adversely affect our business and operating results.
The continued threat of terrorist activity and other acts of war or hostility have created uncertainty in the finan-
cial and insurance markets and have significantly increased the political, economic and social instability in some of the
geographic areas in which we operate. Additionally, it is uncertain what impact the reactions to such acts by various
governmental agencies and security regulators worldwide will have on shipping costs. Acts of terrorism, either domes-
tically or abroad, could create further uncertainties and instability. To the extent this results in disruption or delays of
our manufacturing capabilities or shipments of our products, our business, operating results and financial condition
could be adversely affected.
Sudden disruptions to the availability of freight lanes could have an impact on our operations.
We generally ship our products to our customers, and receive shipments from our suppliers, via air, ocean or land
freight. The sudden unavailability or disruption of cargo operations or freight lanes caused by, among other things,
labor difficulties or disputes, severe weather patterns or other natural disasters, or political instability or civil unrest,
could impact our operating results by impairing our ability to timely and efficiently deliver our products.
If we sustain system failures, cyber attacks to our systems or to our products or other data security breaches, we could suffer a loss
of revenue and increased costs, exposure to significant liability, reputational harm and other serious negative consequences.
We are heavily dependent on our technology infrastructure, among other functions, to operate our factories, provide
and sell our products and services, fulfill orders, manage inventory and bill, collect and make payments and we are sub-
ject to laws, rules and regulations in the U.S. and other countries relating to the collection, use and security of user data.
Our systems are vulnerable to damage or interruption from natural disasters, power loss, telecommunication failures,
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