Seagate Technology Holdings plc (STX, NASDAQ)
Industry: Computer Hardware
Annual report, fiscal year 2014


# SEAGATE TECHNOLOGY PLC

FORM 10-K
(Annual Report)

# Filed 08/08/14 for the Period Ending 06/27/14

Telephone (353) (1) 234-3136

CIK 0001137789

Symbol STX

SIC Code 3572 - Computer Storage Devices

Industry Computer Storage Devices

Sector Technology

Fiscal Year 06/28



# UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 27, 2014

□ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___
Commission File No. 001-31560

SEAGATE TECHNOLOGY PUBLIC LIMITED COMPANY

(Exact name of registrant as specified in its charter)

Ireland
(State or other jurisdiction of incorporation or organization)

98-0648577
(I.R.S. Employer Identification Number)

38/39 Fitzwilliam Square
Dublin 2, Ireland
(Address of principal executive offices)

Registrant's telephone number, including area code: (353) (1) 234-3136

Securities registered pursuant to Section 12 (b) of the Act:

Title of Each Class
Ordinary Shares, par value $0.00001 per share

Name of Each Exchange
on Which Registered
The NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☑ NO ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☑ NO ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES ☑ NO ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☑

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☑

Accelerated filer □

Non-accelerated filer □

Smaller reporting company □

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☑

The aggregate market value of the voting and non-voting ordinary shares held by non-affiliates of the registrant as of December 27, 2013, the last business day of the registrant's most recently completed second fiscal quarter, was approximately $18.3 billion based upon the closing price reported for such date by the NASDAQ.

The number of outstanding ordinary shares of the registrant as of July 25, 2014 was 326,812,299.

## DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A relating to the registrant's Annual General Meeting of Shareholders, to be held on October 22, 2014, will be incorporated by reference in this Form 10-K in response to Items 10, 11, 12, 13 and 14 of Part III. The definitive proxy statement will be filed with the SEC no later than 120 days after the registrant's fiscal year ended June 27, 2014.



## SEAGATE TECHNOLOGY PLC

## TABLE OF CONTENTS

Item | Page No.
PART I | 4
1. Business | 4
1A. Risk Factors | 17
1B. Unresolved Staff Comments | 36
2. Properties | 37
3. Legal Proceedings | 37
4. Mine Safety Disclosures | 37
PART II | 38
5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 38
6. Selected Financial Data | 41
7. Management's Discussion and Analysis of Financial Condition and Results of Operations | 43
7A. Quantitative and Qualitative Disclosures About Market Risk | 60
8. Financial Statements and Supplementary Data | 62
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 116
9A. Controls and Procedures | 116
9B. Other Information | 116
PART III | 117
10. Directors, Executive Officers and Corporate Governance | 117



11. Executive Compensation 117
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 117
13. Certain Relationships and Related Transactions, and Director Independence 117
14. Principal Accountant Fees and Services 117
PART IV
15. Exhibits and Financial Statement Schedules 118
SIGNATURES 119
EXHIBIT INDEX 121



## PRESENTATION OF FINANCIAL AND OTHER INFORMATION

In this Annual Report on Form 10-K (the "Form 10-K"), unless the context indicates otherwise, as used herein, the terms "we," "us," "Seagate," the "Company" and "our" refer to Seagate Technology public limited company ("plc"), an Irish public limited company, and its subsidiaries. References to "§" are to United States dollars.

We have compiled the market size information in this Form 10-K using statistics and other information obtained from several third-party sources.

Various amounts and percentages used in this Form 10-K have been rounded and, accordingly, they may not total 100%.

We own or otherwise have rights to the trademarks and trade names, including those mentioned in this Form 10-K, used in conjunction with the marketing and sale of our products.

## CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements and assumptions included in this Form 10-K are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act of 1934, each as amended, including, in particular, statements about our plans, strategies and prospects and estimates of industry growth for the fiscal year ending July 3, 2015 and beyond contained in "Item 1. Business," "Item 1A. Risk Factors," "Item 3. Legal Proceedings," and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations." These statements identify prospective information and include words such as "expects," "plans," "anticipates," "believes," "estimates," "predicts," "projects" and similar expressions. These forward-looking statements are based on information available to us as of the date of this report and are based on management's current views and assumptions. These forward-looking statements are conditioned upon and also involve a number of known and unknown risks, uncertainties and other factors that could cause actual results, performance or events to differ materially from those anticipated by such statements. Such risks, uncertainties and other factors may be beyond our control and may pose a risk to our operating and financial condition. Such risks and uncertainties include, but are not limited to;

- the uncertainty in global economic conditions as consumers and businesses may defer purchases in response to tighter credit and financial news;

- the impact of the variable demand and adverse pricing environment for disk drives, particularly in view of current business and economic conditions;

- dependence on our ability to successfully qualify, manufacture and sell our disk drive products in increasing volumes on a cost-effective basis and with acceptable quality, particularly new disk drive products with lower cost structures;

- the impact of competitive product announcements; possible excess industry supply with respect to particular disk drive products; and

• our ability to achieve projected cost savings in connection with restructuring plans.

Additional risks and uncertainties are set forth and are discussed in more detail in "Item 1A. Risk Factors" of this Form 10-K. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this Annual Report on Form 10-K. These forward-looking statements should not be relied upon as representing our views as of any subsequent date and we undertake no obligation to update forward-looking statements to reflect events or circumstances after the date they were made.



## PART I

## ITEM 1. BUSINESS

We are a leading provider of electronic data storage solutions. Our principal products are hard disk drives, commonly referred to as disk drives, hard drives or HDDs. Hard disk drives are devices that store digitally encoded data on rapidly rotating disks with magnetic surfaces. Disk drives continue to be the primary medium of mass data storage due to their performance attributes, high quality and cost effectiveness. In addition to HDDs, we produce a broad range of electronic data storage products including solid state hybrid drives ("SSHD") and solid state drives ("SSD").

Our products are designed for enterprise servers and storage systems in mission critical and nearline applications; client compute applications, where our products are designed primarily for desktop and mobile computing; and client non-compute applications, where our products are designed for a wide variety of end user devices such as digital video recorders ("DVRS"), personal data backup systems, portable external storage systems and digital media systems.

We continue to make strategic investments in order to expand our storage solutions, enter new market adjacencies, and expand our technical expertise. As a result of recent acquisitions, our product and solution portfolio for the enterprise data storage industry includes storage enclosures, integrated application platforms and high performance computing ("HPC") data storage solutions. Our storage subsystems support a range of high-speed interconnect technologies to meet demanding cost and performance specifications. Our modular subsystem architecture allows us to support many segments within the networked storage market by enabling different specifications of storage subsystem designs to be created from a standard set of interlocking technology modules.

In addition to our data storage products and subsystems, we provide data storage services for small to medium-sized businesses, including online backup, data protection and recovery solutions.

## Industry Overview

## Electronic Data Storage Industry

The electronic data storage industry is comprised of companies that manufacture components or subcomponents designed for electronic data storage devices and companies that provide storage solutions, software and services for enterprise cloud, big data and computing platforms.

## Markets

The principal markets served by the electronic data storage industry are:

Enterprise Storage. We define enterprise storage as those solutions which are designed for mission critical and nearline applications.

Mission critical applications are defined as those that are vital to the operation of large-scale enterprise work loads, requiring high performance and high reliability storage solutions. We expect the market for mission critical enterprise storage solutions to continue to be driven by enterprises utilizing dedicated storage area networks in an effort to reduce network complexity and increase energy savings. We believe that this will continue to drive demand for more energy efficient, smaller form factor solutions. These solutions are comprised principally of high performance enterprise class disk drives with sophisticated firmware and communications technologies.

Nearline applications are defined as those which require high capacity and energy efficient storage solutions. We expect such applications, which include storage for cloud computing, content delivery and backup services, will continue to grow and drive demand for solutions designed with these attributes. With the increased requirements for storage driven by the creation and consumption of media-rich digital



content, we expect the increased petabyte demand will require further build-out of datacenters by cloud service providers and other enterprises which utilize high capacity nearline devices.

Client Compute. We define client compute applications as solutions designed for desktop and mobile compute applications. We believe that the demand resulting from growing economies of certain countries and the continued proliferation of digital content will continue to drive demand for the client compute market. As the storage of digital content in the cloud becomes more prominent, some client compute applications require less built-in storage, and therefore alternative storage solutions are becoming more prevalent within the client compute market.

Client Non-Compute. We define client non-compute applications as solutions designed for consumer electronic devices and disk drives used for external storage and network-attached storage ("NAS"). Disk drives designed for consumer electronic devices are primarily used in applications such as DVRs and surveillance systems that require a higher capacity, low cost-per-gigabyte storage solution. Disk drives for external and NAS devices are designed for purposes such as personal data backup and portable external storage, and to augment storage capacity in the consumer's current desktop, notebook, tablet or DVR disk drive capacities. Client non-compute applications also include devices designed to display digital media in the home theater. We believe the proliferation and personal creation of media-rich digital content will continue to create increasing consumer demand for higher capacity storage solutions.

Participants in the electronic data storage industry include:

Major subcomponent manufacturers. Companies that manufacture components or subcomponents used in electronic data storage devices or solutions include companies that supply spindle motors, heads and media, application specific integrated circuits ("ASICs") and glass substrates.

Hardware storage solutions manufacturers. Companies that transform components into storage products include disk drive manufacturers and semiconductor storage manufacturers which include integrating flash memory into storage products such as SSDs.

System integrators. Companies that bundle and package storage solutions into client compute, client non-compute or enterprise applications as well as enterprise storage solutions. Distributors that integrate storage hardware and software into end-user applications are also included in this category.

Storage services. Companies that provide services and solutions related to the backup, archiving, recovery and discovery of electronic data.

## Demand for Electronic Data Storage

The continued advancement of cloud, mobile and open source computing are driving the growth of digital content. Factors contributing to this growth are the increased:

- creation and sharing of all types of media-rich digital content, such as high-resolution photos, high definition video and movies, and music by consumers and large amounts of electronic data by enterprises;

• aggregation and distribution of digital content through services and other offerings such as Amazon, Facebook, GoPro, Instagram, iTunes, LinkedIn, Netflix, Pandora and YouTube;

• consumption of digital content through smart phones, tablets, DVRs, and gaming consoles; and

• protection of digital content through storage on backup devices and externally provided storage services.

As a result of these factors, the nature and amount of content being created requires increasingly higher capacity storage in order to store, manage, distribute, utilize and backup such content. This in turn has resulted in the rapid growth in demand for electronic data storage solutions which we believe will continue to grow in developed countries as well as in emerging economies.



## Table of Contents

The amounts of data created as well as where and how data is stored continues to evolve with the proliferation of mobile devices, the growth of cloud computing, and the evolving Internet of Things. In addition, the economics of storage infrastructure is also evolving with the utilization of public and private hyper-scale storage and open-source solutions reducing the total cost of ownership of storage while increasing the speed and efficiency with which customers can leverage massive computing and storage power. Accordingly, we expect these trends will continue to create significant demand for electronic data storage solutions.

## Demand Trends for Disk Drives

We believe that continued growth in digital content requires increasingly higher storage capacity in order to store, aggregate, host, distribute, manage, backup and use such content. We also believe that as architectures evolve to serve the growing commercial and consumer user base throughout the world, the manner which hard drives are delivered to market and utilized by our customers will evolve as well.

We believe that in the foreseeable future the traditional enterprise and client compute markets that require high capacity storage solutions, as well as the data intensive client non-compute markets, will continue to be best served by hard disk drives due to the industry's ability to deliver cost effective, reliable and energy efficient mass storage devices. Furthermore, the increased use of client non-compute devices that consume media-rich digital content streamed from the cloud increases the demand for high capacity disk drives in nearline applications.

## Industry Supply Balance

From time to time the industry has experienced periods of imbalance between supply and demand. To the extent that the disk drive industry builds capacity based on expectations of demand that do not materialize, price erosion may become more pronounced. Conversely, during periods where demand exceeds supply, price erosion is generally muted.

In early October 2011, floodwaters north of Bangkok, Thailand inundated many manufacturing industrial parks that contained a number of the factories supporting the HDD industry's supply chain. The HDD industry had concentrated a large portion of its supply chain participants within these industrial parks in an effort to reduce cost and improve logistics. As a result, the inundation of floodwaters into these industrial parks had caused the closure or suspension of production by a number of participants within the HDD supply chain.

During the supply chain disruption in fiscal year 2012, we believe demand exceeded supply due to the impact from the flooding in Thailand, resulting in an increase in the average selling price ("ASP").

The industry’s ability to manufacture and ship drives had substantially recovered as of the end of fiscal year 2012. In fiscal years 2013 and 2014, we believe the HDD industry’s capacity to manufacture HDDs exceeded demand. However, following the impact of the flooding in Thailand and further industry consolidation in fiscal year 2012, the HDD industry has maintained improved pricing discipline resulting in benign price erosion in fiscal years 2013 and 2014.

## Our Business

## Disk Drive Technology

The design and manufacturing of disk drives depends on highly advanced technology and manufacturing techniques and therefore requires high levels of research and development spending and capital equipment investments. Manufacturing our disk drives is a complex process that begins with the production of individual components and ends with a fully assembled disk drive. We design, fabricate and assemble a number of the most important components found in our disk drives, including read/write heads and recording media. Our design and manufacturing operations are based on technology platforms that are used to produce various disk drive products that serve multiple data storage applications and markets.



Our core technology platforms are focused around the areal density of media and read/write head technologies. Using an integrated platform design and manufacturing leverage approach allows us to deliver a portfolio of disk drive products to service a wide range of electronic data storage applications and a wide range of industries.

Disk drives that we manufacture are commonly differentiated by the following key characteristics:

• storage capacity, commonly expressed in gigabytes (GB) or terabytes (TB), which is the amount of data that can be stored on the disk drive;

• spindle rotation speed, commonly expressed in revolutions per minute (RPM), which has an effect on speed of access to data;

- interface transfer rate, commonly expressed in megabytes per second, which is the rate at which data moves between the disk drive and the computer controller;

- average seek time, commonly expressed in milliseconds, which is the time needed to position the heads over a selected track on the disk surface;

- data transfer rate, commonly expressed in megabytes per second, which is the rate at which data is transferred to and from the disk drive;

- input/output operations per second (IOPS), commonly expressed in megabytes per second, which is the maximum number of reads and writes to a storage location;

• product quality and reliability, commonly expressed in annualized return rates; and

• energy efficiency, commonly measured by the power output necessary to operate the disk drive.

Areal density is a measure of storage capacity per square inch on the recording surface of a disk. The storage capacity of a disk drive is determined by the number of disks it contains as well as the areal density capability of these disks. We have been pursuing, and will continue to pursue, a number of technologies to increase areal densities across the entire range of our products for expanding disk drive capacities and reducing the number of disks and heads per drive to further reduce product costs.

## Manufacturing

Vertically integrated hard drive manufacturers design and produce their own read/write heads and recording media, which are critical technologies for disk drives. This integrated approach enables manufacturers to lower costs and to improve the functionality of components so that they work together efficiently.

We believe that because of our vertical design and manufacturing strategy, we are well suited to meet the challenges posed by the close interdependence of components for disk drives. Our manufacturing efficiency and flexibility are critical elements of our integrated business strategy. We continuously seek to improve our manufacturing efficiency and cost by:

• employing manufacturing automation to enhance our efficiency;

• improving product quality and reliability and reducing costs;

• integrating our supply chain with suppliers and customers to enhance our demand visibility and reduce our working capital requirements;

• coordinating between our manufacturing group and our research and development organization to rapidly achieve volume manufacturing; and

• leveraging the facilities we operate and the personnel we employ.

A vertically integrated model, however, tends to have less flexibility when demand moderates as it exposes us to higher unit costs as capacity utilization is not optimized.



## Table of Contents

Due to the significant challenges posed by the need to continually innovate and improve manufacturing efficiency and the continued demands on capital and research and development investments required to do so, the disk drive industry has undergone significant consolidation as disk drive manufacturers and component manufacturers merged with other companies or exited the industry.

## Components and Raw Materials

Disk drives incorporate certain components, including a head disk assembly and a printed circuit board mounted to the head disk assembly, which are sealed inside a rigid base and top cover containing the recording components in a contamination controlled environment. We maintain a highly integrated approach to our business by designing and manufacturing a significant portion of the components we view as critical to our products, such as recording heads and media.

Read/Write Heads. The function of the read/write head is to scan across the disk as it spins, magnetically recording or reading information. The tolerances of recording heads are extremely demanding and require state-of-the-art equipment and processes. Our read/write heads are manufactured with thin-film and photolithographic processes similar to those used to produce semiconductor integrated circuits, though challenges in magnetic film properties and topographical structures are unique to the disk drive industry. We perform all primary stages of design and manufacture of read/write heads at our facilities. We use a combination of internally manufactured and externally sourced read/write heads, the mix of which varies based on product mix, technology and our internal capacity levels.

Media. Information is written to the media, or disk, as it rotates at very high speeds past the read/write head. The media is made from non-magnetic material, usually aluminum alloy or glass, and is coated with a thin layer of magnetic material. We use a combination of internally manufactured and externally sourced finished media and aluminum substrates, the mix of which varies based on product mix, technology and our internal capacity levels. We purchase all of our glass substrates from third parties, which we use in the disk drives we make for mobile products.

Printed Circuit Board Assemblies. The printed circuit board assemblies (PCBAs) are comprised of standard and custom ASICs and ancillary electronic control chips. The ASICs control the movement of data to and from the read/write heads and through the internal controller and interface, which communicates with the host computer. The ASICs and control chips form electronic circuitry that delivers instructions to a head positioning mechanism called an actuator to guide the heads to the selected track of a disk where the data is recorded or retrieved. Disk drive manufacturers use one or more industry standard interfaces such as serial advanced technology architecture (SATA); small computer system interface (SCSI); serial attached SCSI (SAS); or Fibre Channel (FC) to communicate to the host systems. We outsource to third parties the manufacture and assembly of the PCBAs used in our disk drives. We do not manufacture any ASICs, but we participate in their proprietary design.

Head Disk Assembly. The head disk assembly consists of one or more disks attached to a spindle assembly powered by a spindle motor that rotates the disks at a high constant speed around a hub. Read/write heads, mounted on an arm assembly, similar in concept to that of a record player, fly extremely close to each disk surface and record data on and retrieve it from concentric tracks in the magnetic layers of the rotating disks. The read/write heads are mounted vertically on an E-shaped assembly (E-block) that is actuated by a voice-coil motor to allow the heads to move from track to track. The E-block and the recording media are mounted inside the head disk assembly. We purchase spindle motors from outside vendors and from time to time participate in the design of the motors that go into our products. We use a combination of internally manufactured and externally sourced head disk assemblies.

Disk Drive Assembly. Following the completion of the head disk assembly, it is mated to the PCBA, and the completed unit goes through extensive defect mapping and testing prior to packaging and shipment. Disk drive assembly and test operations occur primarily at facilities located in China and Thailand. We perform subassembly and component manufacturing operations at our facilities in China,



Malaysia, Northern Ireland, Singapore, Thailand and in the United States in Minnesota. In addition, third parties manufacture and assemble components and disk drive assemblies for us in various countries worldwide.

Suppliers of Components and Industry Constraints. There are a limited number of independent suppliers of components, such as recording heads and media, available to disk drive manufacturers. Vertically integrated disk drive manufacturers, who manufacture their own components, are less dependent on external component suppliers than less vertically integrated disk drive manufacturers.

Commodity and Other Manufacturing Costs. The production of disk drives requires rare earth elements, precious metals, scarce alloys and industrial commodities, which are subject to fluctuations in prices and the supply of which has at times been constrained. In addition to increased costs of components and commodities, volatility in fuel costs may also increase our costs related to commodities, manufacturing and freight. As a result, we may increase our use of ocean shipments to help offset any increase in freight costs.

## Products

We offer a broad range of storage solutions, for the enterprise, datacenter, client compute and client non-compute applications. We offer more than one product within each product category and differentiate products on the basis of price, performance, form factor, capacity, interface, power consumption efficiency, security features like full disk encryption and instant encryption key replacement through our Instant Erase technology, and other customer integration requirements. Our industry is characterized by continuous and significant advances in technology which contribute to rapid product life cycles. We list our main current product offerings below.

## Enterprise Storage

Enterprise Performance Family. Our 10,000 and 15,000 RPM Enterprise Performance Family disk drives feature increased throughput and improved energy efficiency, targeted at high random performance server application needs. Performance 10,000 RPM HDDs ship in storage capacities ranging from 300GB to 900GB, and our 15,000 RPM HDDs ship in storage capacities ranging from 146GB to 600GB.

Enterprise Capacity HDD Family. Our Enterprise Capacity disk drives ship in a 2.5-inch and 3.5-inch form factor and in storage capacities of up to 6TB that clock in at 7,200 RPM speeds. These products are designed for bulk data storage and server environments that require high capacity, enterprise reliability, energy efficiency and integrated security, SATA and SAS interfaces.

Enterprise Value HDD Family. Providing up to 3TB of SATA-based high capacity, 3.5-inch energy-efficient enterprise storage, the Enterprise Value hard disk drive offers low-cost bulk storage designed for vast amounts of unstructured data in the cloud. It features low power for energy efficient operations and ensures reliable operations in 24x7 multi-drive replicated environments.

Seagate Terascale HDD Family. Available in capacities up to 4TB in a 3.5-inch enterprise-class SATA hard drive, the Terascale HDD is designed to provide data centers with the storage scalability they need to meet demands in low workload, 24x7 replicated environments.

Seagate 1200 SSD. Available in capacities up to 800GB, the 1200 SSD features 12GB per second SAS, and delivers the speed and consistency needed for demanding enterprise storage and server applications.

## Client Compute

Laptop and Mobile HDDs and SSHDs. Our family of laptop drives ship in a variety of form factors (5mm to 9.5mm drive height), capacities (250GB to 2TB) and technologies (HDD and SSHD) to support



mobile needs. Used in applications ranging from traditional laptops to tablets, our drives are built to address a range of performance needs and sizes for affordable, high capacity storage.

Spinput SATA Mobile Family. Our Spinput M8 2.5-inch 5,400 RPM mobile computing disk drives come in storage capacities of up to 2TB and are marketed and sold under the Samsung Spinput brand name.

Desktop HDD and SSHDs. Our 3.5-inch family of desktop drives ship in both traditional HDD and SSHD configurations and offer up to 4TB of capacity. Desktop drives are designed for applications such as personal computers, workstations and personal external storage devices.

## Client Non-Compute

Video 3.5 and Video 2.5 HDDs. We sell our 3.5-inch and 2.5-inch Video HDDs for use in video applications like DVR's and media centers. These disk drives are optimized for video streaming in always-on applications with capacities up to 4TB to support leading-edge digital entertainment.

SV35 and Surveillance HDDs. Our surveillance drives are built to support the high-write workload of an always-on, always-recording video surveillance system. These surveillance optimized drives are built to support the growing needs of the surveillance market with support for multiple HD streams and capacities up to 4TB.

NAS HDDs. Our NAS drives are built to support the performance and reliability demanded by NAS systems, and include NASWorks \( ^{TM} \)  with custom-built error recovery controls, power settings, and vibration tolerance.

We ship external backup storage solutions under our Backup Plus and Expansion product lines, as well as under the Samsung and LaCie brand names. These product lines utilize our 3.5-inch and 2.5-inch disk drives, which are available in capacities up to 5TB and 2TB, respectively. In addition, we ship the Wireless Plus wireless drive for use with secondary mobile devices utilizing 2.5-inch 500GB, 1TB and 2TB drives as well as Samsung Wireless utilizing a 2.5-inch 1.5TB drive. We also ship network attached storage (NAS) solutions under our Central, NAS, NAS Pro and Rackmount NAS product lines. These product lines utilize our 3.5-inch disk drives; our Central products are available in capacities up to 4TB, and our NAS products are available in capacities up to 40TB.

## Customers

We sell our products to major OEMs, distributors and retailers.

The following table summarizes our revenue by channel and by geography:

<table><tr><td rowspan="2"></td><td colspan="4">Fiscal Years Ended</td></tr><tr><td>June 27, 2014</td><td>June 28, 2013</td><td>June 29, 2012</td><td></td></tr><tr><td>Revenues by Channel (%)</td><td></td><td></td><td></td><td></td></tr><tr><td>OEM</td><td>68%</td><td>68%</td><td>72%</td><td></td></tr><tr><td>Distributors</td><td>20%</td><td>21%</td><td>21%</td><td></td></tr><tr><td>Retail</td><td>12%</td><td>11%</td><td>7%</td><td></td></tr><tr><td>Revenues by Geography (%)  \( {}^{(1)} \)</td><td></td><td></td><td></td><td></td></tr><tr><td>Americas</td><td>27%</td><td>27%</td><td>26%</td><td></td></tr><tr><td>EMEA</td><td>19%</td><td>19%</td><td>19%</td><td></td></tr><tr><td>Asia Pacific</td><td>54%</td><td>54%</td><td>55%</td><td></td></tr></table>

(1) Revenue is attributed to countries based on the shipping location.



## Table of Contents

OEM customers typically enter into master purchase agreements with us. These agreements provide for pricing, volume discounts, order lead times, product support obligations and other terms and conditions including sales programs offered to promote selected products. Deliveries are scheduled only after receipt of purchase orders. In addition, with limited lead-time, customers may defer most purchase orders without significant penalty. Anticipated orders from many of our customers have in the past failed to materialize or OEM delivery schedules have been deferred or altered as a result of changes in their business needs.

Our distributors generally enter into non-exclusive agreements for the resale of our products. They typically furnish us with a non-binding indication of their near-term requirements and product deliveries are generally scheduled accordingly. The agreements and related sales programs typically provide the distributors with limited right of return and price protection rights. In addition, we offer sales programs to distributors on a quarterly and periodic basis to promote the sale of selected products in the sales channel.

Our retail channel consists of our branded storage products sold to retailers either by us directly or by our distributors. Retail sales made by us or our distributors typically require greater marketing support, sales incentives and price protection periods.

In fiscal years 2014, 2013 and 2012, Dell Inc. accounted for approximately 13%, 13% and 15% of consolidated revenue, respectively, while Hewlett-Packard Company accounted for approximately 13%, 10% and 14% of consolidated revenue, respectively. See "Item 1A. Risk Factors-Risks Related to Our Business-We may be adversely affected by the loss of, or reduced, delayed or canceled purchases by, one or more of our larger customers."

## Competition

We compete primarily with manufacturers of hard drives used in the enterprise, client compute and client non-compute applications, but have in the past few years also competed with manufacturers of solid-state drives. The markets that we compete in are intensely competitive. Disk drive manufacturers not only compete for a limited number of major disk drive customers but also compete with other companies in the electronic data storage industry that provide alternative storage solutions, such as flash memory and SSDs. Some of the principal factors used by customers to differentiate among electronic data storage solutions manufacturers are storage capacity, product performance, product quality and reliability, price per unit and price per gigabyte, time-to-market and time-to-volume leadership, storage/retrieval access times, data transfer rates, form factor, product warranty and support capabilities, supply continuity and flexibility, power consumption, total cost of ownership, and brand. While different markets and customers place varying levels of emphasis on these factors, we believe that our products are competitive with respect to each of these factors in the markets that we currently address.

Principal Disk Drive Competitors. Following further industry consolidation during fiscal year 2012, three disk drive companies remain:

• Seagate, selling the Seagate and Samsung brands;

• Western Digital Corporation, operating the Western Digital and Hitachi Global Storage Technologies subsidiaries; and

• Toshiba Corporation

Other Competitors. We also are experiencing competition from companies that provide alternative storage technologies such as flash memory and SSDs used in mobile applications such as tablets, notebooks and lower capacity hand held devices in addition to SSDs used in enterprise applications for rapid processing and high volume transactions. Additionally, we may in the future face indirect competition from customers who from time to time evaluate whether to offer electronic data storage products that may compete with our products.



## Table of Contents

Price Erosion. Historically, our industry has been characterized by price declines for disk drive products with comparable capacity, performance and feature sets ("like-for-like products"). Price declines for like-for-like products ("price erosion") have been more pronounced during periods of:

• economic contraction in which competitors may use discounted pricing to attempt to maintain or gain market share;

• few new product introductions when competitors have comparable or alternative product offerings; and

• industry supply exceeding demand.

In fiscal years 2013 and 2014, we believe the HDD industry’s capacity to manufacture HDDs exceeded demand. However, following industry consolidation during fiscal year 2012, the HDD industry has maintained improved pricing discipline resulting in benign price erosion in fiscal years 2013 and 2014.

Disk drive manufacturers typically attempt to offset price erosion with an improved mix of disk drive products characterized by higher capacity, better performance and additional feature sets and/or product cost reductions.

Product Life Cycles and Changing Technology. Success in our industry has been dependent to a large extent on the ability to balance the introduction and transition of new products with time-to-volume, performance, capacity and quality metrics at a competitive price, level of service and support that our customers expect. Generally those disk drive manufacturers that are able to introduce new products first benefit from improved product mix, favorable profit margins and less pricing pressure until comparable products are introduced. Changing technology also necessitates on-going investments in research and development, which may be difficult to recover due to rapid product life cycles and economic declines. Further, there is a continued need to successfully execute product transitions and new product introductions, as factors such as quality, reliability and manufacturing yields become of increasing competitive importance.

## Seasonality

The disk drive industry traditionally experiences seasonal variability in demand with higher levels of demand in the second half of the calendar year. This seasonality is driven by consumer spending in the back-to-school season from late summer to fall and the traditional holiday shopping season from fall to winter.

## Research and Development

We are committed to developing new component technologies, products and alternative storage technologies. Our research and development focus is designed to bring new products to market in high volume, with quality attributes that our customers expect, before our competitors. Part of our product development strategy is to leverage a design platform and/or subsystem within product families to serve different market needs. This platform strategy allows for more efficient resource utilization, leverages best design practices, reduces exposure to changes in demand, and allows for achievement of lower costs through purchasing economies. Our advanced technology integration effort focuses disk drive and component research on recording subsystems, including read/write heads and recording media, market-specific product technology and technology focused towards new business opportunities. The primary purpose of our advanced technology integration effort is to ensure timely availability of mature component technologies to our product development teams as well as allowing us to leverage and coordinate those technologies in the design centers across our products in order to take advantage of opportunities in the marketplace. During fiscal years 2014, 2013 and 2012, we had product development expenses of approximately $1,226 million, $1,133 million and $1,006 million, respectively, which represented 9%, 8% and 7% of our consolidated revenue, respectively.



## Patents and Licenses

As of June 27, 2014, we had 4,962 U.S. patents and 1,204 patents issued in various foreign jurisdictions as well as 1,236 U.S. and 1,112 foreign patent applications pending. The number of patents and patent applications will vary at any given time as part of our ongoing patent portfolio management activity. Due to the rapid technological change that characterizes the electronic data storage industry, we believe that, in addition to patent protection, the improvement of existing products, reliance upon trade secrets, protection of unpatented proprietary know-how and development of new products are also important to our business in establishing and maintaining a competitive advantage. Accordingly, we intend to continue our efforts to broadly protect our intellectual property, including obtaining patents, where available, in connection with our research and development program.

We have patent licenses with a number of companies. Additionally, as part of our normal intellectual property practices, we may be engaged in negotiations with other major electronic data storage companies and component manufacturers with respect to patent licenses.

The electronic data storage industry is characterized by significant litigation relating to patent and other intellectual property rights. Because of rapid technological development in the electronic data storage industry, some of our products have been, and in the future could be, alleged to infringe existing patents of third parties. From time to time, we receive claims that our products infringe patents of third parties. Although we have been able to resolve some of those claims or potential claims by obtaining licenses or rights under the patents in question without a material adverse effect on us, other claims have resulted in adverse decisions or settlements. In addition, other claims are pending, which if resolved unfavorably to us could have a material adverse effect on our business and results of operations. For more information on these claims, see "Item 8. Financial Statements and Supplementary Data-Note 14. Legal, Environmental and Other Contingencies." The costs of engaging in intellectual property litigation in the past have been, and in the future may be, substantial, irrespective of the merits of the claim or the outcome.

## Backlog

In view of industry practice, whereby customers may cancel or defer orders with little or no penalty, we believe backlog in the disk drive industry is of limited indicative value in estimating future performance and results.

## Environmental Matters

Our operations are subject to U.S. and foreign laws and regulations relating to the protection of the environment, including those governing discharges of pollutants into the air and water, the management and disposal of hazardous substances and wastes and the cleanup of contaminated sites. Some of our operations require environmental permits and controls to prevent and reduce air and water pollution, and these permits are subject to modification, renewal and revocation by issuing authorities.

We have established environmental management systems and continually update environmental policies and standard operating procedures for our operations worldwide. We believe that our operations are in material compliance with applicable environmental laws, regulations and permits. We budget for operating and capital costs on an ongoing basis to comply with environmental laws. If additional or more stringent requirements are imposed on us in the future, we could incur additional operating costs and capital expenditures.

Some environmental laws, such as the Comprehensive Environmental Response Compensation and Liability Act of 1980 (as amended, the "Superfund" law) and its state equivalents, can impose liability for the cost of cleanup of contaminated sites upon any of the current or former site owners or operators or upon parties who sent waste to these sites, regardless of whether the owner or operator owned the site at the time of the release of hazardous substances or the lawfulness of the original disposal activity. We have



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been identified as a potentially responsible party at several sites. At each of these sites, we have an assigned portion of the financial liability based on the type and amount of hazardous substances disposed of by each party at the site and the number of financially viable parties. We have fulfilled our responsibilities at some of these sites and remain involved in only a few at this time.

While our ultimate costs in connection with these sites is difficult to predict with complete accuracy, based on current estimates of cleanup costs and our expected allocation of these costs, we do not expect costs in connection with these sites to be material.

We may be subject to various state, federal and international laws and regulations governing the environment, including those restricting the presence of certain substances in electronic products. For example, the European Union ("EU") enacted the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment, which prohibits the use of certain substances, including lead, in certain products, including disk drives, put on the market after July 1, 2006. Similar legislation has been or may be enacted in other jurisdictions, including in the United States, Canada, Mexico, Taiwan, China, Japan and others. The European Union REACH Directive (Registration, Evaluation, Authorization, and Restriction of Chemicals, EC 1907/2006) also restricts substances of very high concern ("SVHCs") in products. If we or our suppliers fail to comply with the substance restrictions, recycle requirements or other environmental requirements as they are enacted worldwide, it could have a materially adverse effect on our business.

## Employees

At June 27, 2014, we employed approximately 52,100 employees and temporary employees worldwide, of which approximately 41,400 employees were located in our Asian operations. We believe that our future success will depend in part on our ability to attract and retain qualified employees at all levels. We believe that our employee relations are good.

## Financial Information

Financial information for our reportable business segment and about geographic areas is set forth in "Item 8. Financial Statements and Supplementary Data- Note 13. Business Segment and Geographic Information."

## Corporate Information

On July 3, 2010, we consummated a reorganization pursuant to which Seagate Technology public limited company, a public limited company organized under the laws of Ireland, became the publicly traded parent of the Seagate corporate family. Prior to the reorganization our publicly traded parent was Seagate Technology, an exempted company incorporated with limited liability under the laws of the Cayman Islands.

## Available Information

Availability of Reports. We are a reporting company under the Securities Exchange Act of 1934, as amended (the "1934 Exchange Act"), and we file reports, proxy statements and other information with the U.S. Securities and Exchange Commission (the "SEC"). The public may read and copy any of our filings at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Because we make filings to the SEC electronically, the public may access this information at the SEC's website: www.sec.gov. This site contains reports, proxies and information statements and other information regarding issuers that file electronically with the SEC.

Web Site Access. Our website is www.seagate.com. We make available, free of charge at the "Investors" section of our website, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q,



Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the 1934 Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Reports of beneficial ownership filed pursuant to Section 16(a) of the 1934 Exchange Act are also available on our web site. Information in, or that can be accessed through, our web site is not incorporated into this Form 10-K.

## Executive Officers

The following sets forth the name, age and position of each of the persons who were serving as executive officers as of August 7, 2014. There are no family relationships among any of our executive officers.

<table><tr><td>Name</td><td>Age</td><td>Positions</td></tr><tr><td>Stephen J. Luczo</td><td>57</td><td>Chairman and Chief Executive Officer</td></tr><tr><td>Jamie Lerner</td><td>44</td><td>President, Cloud Systems and Solutions,</td></tr><tr><td>William D. Mosley</td><td>47</td><td>President, Operations and Technology</td></tr><tr><td>Albert A. &quot;Rocky&quot; Pimentel</td><td>59</td><td>President, Global Markets and Customers</td></tr><tr><td>Patrick J. O&#x27;Malley</td><td>52</td><td>Executive Vice President, Chief Financial Officer</td></tr><tr><td>Kenneth M. Massaroni</td><td>53</td><td>Executive Vice President, General Counsel and Chief Administrative Officer</td></tr><tr><td>D. Kurt Richarz</td><td>53</td><td>Executive Vice President, Sales</td></tr><tr><td>Mark Re</td><td>54</td><td>Senior Vice President, Chief Technology Officer</td></tr><tr><td>Douglas DeHaan</td><td>56</td><td>General Manager, Samsung HDD Brand of Products</td></tr><tr><td>David H. Morton Jr.</td><td>42</td><td>Senior Vice President, Finance, Treasurer and Principal Accounting Officer</td></tr></table>

Stephen J. Luczo. Mr. Luczo, 57, has served as our CEO since January 2009 and as Chairman of the Board since 2002. Mr. Luczo joined Seagate in October 1993 as Senior Vice President of Corporate Development. In September 1997, he was promoted to President and Chief Operating Officer of Seagate Technology (Seagate Technology plc's predecessor) and, in July 1998, he was promoted to CEO at which time he joined the Board as a director of Seagate Technology. Mr. Luczo resigned as CEO effective as of July 2004, but remained as Chairman of the Board. He served as non-employee Chairman from October 2006 to January 2009. From October 2006 until he rejoined us in January 2009, Mr. Luczo was a private investor. Mr. Luczo also served as our President from January 2009 until October 2013. Prior to joining Seagate in 1993, Mr. Luczo was Senior Managing Director of the Global Technology Group of Bear, Stearns & Co. Inc., an investment banking firm, from February 1992 to October 1993. Mr. Luczo served on the board of directors of Microsoft Corporation from May 2012 to March 2014.

Jamie Lerner. Mr. Lerner, 44, has served as our President of Cloud Systems and Solutions since March 2014. Prior to that, Mr. Lerner served as Senior Vice President and General Manager of the Cloud and Systems Management Technology Group at Cisco Systems, Inc. ("Cisco") from November 2012 until February 2014. Mr. Lerner also previously served as Vice President and General Manager of Cisco's Network Management Technology Group between October 2011 and November 2012 and as the Vice President and General Manager of the Service Provider Management Applications Business Unit at Cisco between November 2009 and October 2011. Prior to joining Cisco, Mr. Lerner served as the founder, President, and CEO of CITTIO Inc., an enterprise software company, from 2002 through 2009.

William D. Mosley. Mr. Mosley, 47, has served as our President, Operations and Technology since October 2013 and as Executive Vice President, Operations from March 2011 until October 2013. Prior to that, he served as Executive Vice President, Sales and Marketing from September 2009 through March 2011; Executive Vice President, Sales, Marketing and Product Line Management from February 2009 to September 2009; Senior Vice President, Global Disk Storage Operations from 2007 to 2009; and Vice President, Research and Development, Engineering from 2002 to 2007.



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Albert A. "Rocky" Pimentel. Mr. Pimentel, 59, has served as our President of Global Markets and Customers since October 2013 and as Executive Vice President, Chief Sales and Marketing Officer from April 2011 until October 2013. Prior to that, Mr. Pimentel served as a director of Seagate from 2009 until his resignation from the Board of Directors in April 2011. Mr. Pimentel served as Chief Operating Officer and Chief Financial Officer ("CFO") at McAfee, Inc., from 2008 until he retired in August 2010. He served as the Executive Vice President and CFO of Glu Mobile from 2004 to 2008. Prior to joining Glu Mobile, Mr. Pimentel served as Executive Vice President and CFO at Zone Labs from 2003 to 2004, which was acquired by Check Point Software in 2004.

Patrick J. O'Malley. Mr. O'Malley, 52, has served as our Executive Vice President and Chief Financial Officer since August 2008. Previously, he served as our Senior Vice President, Finance from 2005 to August 2008. Prior to that, he was our Senior Vice President, Consumer Electronics from 2004 to 2005. Mr. O'Malley was appointed to the board of directors of E2open, Inc. in January 2012.

Kenneth M. Massaroni. Mr. Massaroni, 53, was appointed our Executive Vice President, General Counsel and Chief Administrative Officer in July 2011. Prior to that, he served as our Senior Vice President, General Counsel and Corporate Secretary from April 2008 through July 2011; Vice President and Acting General Counsel from December 2007 to April 2008; and Vice President of Intellectual Property from 2006 to December 2007. Prior to joining Seagate in 2006, Mr. Massaroni was Vice President of Law, Deputy General Counsel and Assistant Secretary at Scientific-Atlanta Inc. from 1997 to 2006.

D. Kurt Richarz. Mr. Richarz, 53, has served as our Executive Vice President, Sales and Marketing since March 2011. Prior to that, he served as our Executive Vice President, Sales from May 2008 through March 2011; Executive Vice President, Sales and Customer Service Operations from May 2006 to May 2008; Senior Vice President of Global OEM Sales from 2007 to 2008, and Vice President of Global OEM Sales from 2006 to 2007. Mr. Richarz served as Vice President, Global OEM Account Sales and Senior Vice President of Worldwide Sales at Maxtor Corporation, from 2002 until we acquired Maxtor Corporation in 2006.

Mark Re. Mr. Re, 54, has served as our Senior Vice President, Research and Development since July 2013. Prior to that, he served as our Vice President, Research, from August 2003 to August 2006. Mr. Re currently serves on the Scientific Advisory Board for the Data Storage Institute, as well as on the Pittsburgh Technology Council and the Advanced Storage Technology Consortium.

Douglas DeHaan. Mr. DeHaan, 56, has been our General Manager, Samsung HDD Products since September 2012. Prior to that, he served as our Senior Vice President, Operations and Materials, from February 2009 until September 2012; Senior Vice President of Quality from 2008 to 2009; and Senior Vice President of Product and Process Development, Core Products, from 2003 to 2008.

David H. Morton Jr. Mr. Morton, 42, has served as our Senior Vice President, Finance, Treasurer and Principal Accounting Officer since April 2014 and our Vice President, Finance, Treasurer and Principal Accounting Officer from October 2009 to April 2014; Vice President of Finance, Sales and Marketing from March 2009 to October 2009; Vice President of Sales Operations from July 2007 to March 2009; Vice President of Finance, Storage Markets from October 2006 to July 2007; Executive Director of Consumer Electronics Finance from October 2005 to October 2006; and Executive Director of Corporate FP&A from June 2004 to October 2005.



## ITEM 1A. RISK FACTORS

## Risks Related to our Business

Changes in the macroeconomic environment have negatively impacted, and may continue to, negatively impact our results of operations.

Due to the continuing uncertainty about current macroeconomic conditions affecting consumer and enterprise spending, we believe our customers may postpone spending in response to tighter credit, unemployment, negative financial news and/or declines in income or asset values, which could have a material adverse effect on the demand for our products. Continuing high unemployment rates, low levels of consumer liquidity, risk of default on sovereign debt and volatility in credit and equity markets have weakened consumer confidence and decreased consumer and enterprise spending in many regions around the world. Other factors that could influence demand include conditions in the residential real estate and mortgage markets, labor and healthcare costs, access to credit, consumer confidence and other macroeconomic factors affecting consumer spending behavior. These and other economic factors could have a material adverse effect on demand for our products and on our financial condition and operating results.

Our industries are highly competitive and our failure to anticipate and respond to technological and market developments could harm our ability to compete.

We operate in markets that are highly competitive and subject to rapid change and that are significantly affected by new product introductions, substantial price erosion and lower prices as part of a strategy to gain or retain market share and customers. Should these practices continue, we may need to continually reduce our prices for existing products to retain our market share, which could adversely affect our results of operations.

Our ability to offset the effect of price erosion through new product introductions at higher average prices is diminished to the extent competitors introduce products into particular markets ahead of our similar, competing products. Our ability to offset the effect of price erosion is also diminished during times when supply exceeds demand for a particular product.

Market share for our products can be negatively affected by our customers' diversifying their sources of supply as our competitors enter the market for particular products, as well as by our ability to ramp volume production of new product offerings. When our competitors successfully introduce product offerings that are competitive with our recently introduced products, our customers may quickly diversify their sources of supply. Any significant decline in our market share in any of our principal market applications would adversely affect our results of operations.

Our principal sources of competition include:

• disk drive manufacturers, such as Western Digital Corporation and Toshiba;

• companies providing storage subsystems and components to OEMs;

• electronic manufacturing services ("EMS") companies acquiring the necessary skills and intellectual property to enter the enterprise data storage marketplace;

• other high performance computing ("HPC") data storage providers;

• collaborations between in-house development teams of existing and potential customers and a combination of EMS, contract electronic manufacturing ("CEM") or emerging technology companies.

We also experience competition from other companies that produce alternative storage technologies like flash memory, where increasing capacity, decreasing cost, energy efficiency and improvements in



performance ruggedness have resulted in competition with our lower capacity, smaller form factor disk drives. While this competition has traditionally been in the markets for handheld consumer electronics applications, these competitors have announced solid state drives (SSDs) for tablet, notebook and enterprise compute applications. Certain customers for both notebook and enterprise compute applications are adopting SSDs as alternatives to hard drives in certain applications. Further adoption of these alternative storage technologies may impact the competitiveness of our product portfolio and reduce our market share and adversely affect our results of operation.

The markets for our data storage system products are also characterized by technological change driven in part by the adoption of new industry standards. These standards provide mechanisms to ensure technology component interoperability can occur and may reduce our capability for differentiation or innovation and our affected products would revert to commodity status. This could lower the barriers to entry to our market away from our specialist research and development skills and enable entry for the general-purpose design skills found in some large EMS and CEM companies. Commodity markets are driven by extremely low margins and very aggressive competitive pricing. If our market becomes more commoditized and we fail to deliver innovative value-added alternatives to our customers, we will have difficulty competing against the larger EMS and CEM companies. If we are unable to compete successfully against our current and future competitors, we could experience profit margin reductions or loss of market share, which could significantly harm our financial condition.

Our quarterly results of operations fluctuate, sometimes significantly, from period to period, and may cause our share price to decline.

In the past, our quarterly revenue and results of operations have fluctuated, sometimes significantly, from period to period. These fluctuations, which we expect to continue, may be occasioned by a variety of factors, including:

• current uncertainty in global economic conditions may pose a risk to the overall economy;

• adverse changes in the level of economic activity in the major regions in which we do business;

• competitive pressures resulting in lower selling prices by our competitors targeted to encourage shifting of customer demand;

• delays or problems in our introduction of new products, particularly new disk drives with lower cost structures, the inability to achieve high production yields or delays in customer qualification or initial product quality issues;

• changes in purchasing patterns by our distributor customers;

• application of new or revised industry standards;

• disruptions in our supply chain;

• increased costs or adverse changes in availability of supplies of raw materials or components;

• the impact of corporate restructuring activities that we have and may continue to engage in;

• changes in the demand for the computer systems and data storage products that contain our products due to seasonality, economic conditions and other factors;

• changes in purchases from period to period by our primary customers;

• shifting trends in customer demand which, when combined with overproduction of particular products, particularly when the industry is served by multiple suppliers, results in unfavorable supply/demand imbalances;

• our high proportion of fixed costs, including research and development expenses;



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• any impairments in goodwill or other long-lived assets;

• announcements of new products, services or technological innovations by us or our competitors; and

• adverse changes in the performance of our products.

As a result, we believe that quarter-to-quarter comparisons of our revenue and results of operations may not be meaningful, and that these comparisons may not be an accurate indicator of our future performance. Our results of operations in one or more future quarters may fail to meet the expectations of investment research analysts or investors, which could cause an immediate and significant decline in the trading price of our ordinary shares.

If we fail to predict demand accurately for our products in any quarter, we may not be able to recapture the cost of our investments.

Our industry operates primarily on quarterly purchasing cycles, with much of the order flow in any given quarter typically coming at the end of that quarter. Our manufacturing process requires us to make significant product-specific investments in inventory in each quarter for that quarter's production. Since we typically receive the bulk of our orders late in a quarter after we have made our investments, there is a risk that our orders will not be sufficient to allow us to recapture the costs of our investment before the products resulting from that investment have become obsolete. We cannot assure you that we will be able to accurately predict demand in the future.

Our revenues in any quarter are substantially dependent upon customer orders in that quarter. We attempt to project future orders based in part on estimates from our major customers. Our customers' estimated requirements are not always accurate and we therefore cannot predict our quarterly revenues with any degree of certainty. In addition, we derive a portion of our revenues in each quarter from a number of relatively large orders. If one or more of our major customers decide to defer a purchase order or delays product acceptance in any given quarter, this is likely to result in reduced total revenues for that quarter.

The difficulty in forecasting demand also increases the difficulty in anticipating our inventory requirements, which may cause us to overproduce finished goods, resulting in inventory write-offs, or under-produce finished goods, adversely affecting our ability to meet customer requirements and our market share. Additionally, the risk of inventory write-offs could increase if we were to continue to hold higher inventory levels. We cannot be certain that we will be able to recover the costs associated with increased inventory.

Other factors that may negatively impact our ability to recapture the cost of investments in any given quarter include:

• the impact of variable demand and an aggressive pricing environment for disk drives;

- the impact of competitive product announcements and possible excess industry supply both with respect to particular disk drive products and with respect to competing alternative storage technology solutions such as SSDs in tablet, notebook and enterprise compute applications;

• our inability to reduce our fixed costs to match sales in any quarter because of our vertical manufacturing strategy, which means that we make more capital investments than we would if we were not vertically integrated;

• dependence on our ability to successfully qualify, manufacture and sell in increasing volumes on a cost-effective basis and with acceptable quality our disk drive products, particularly the new disk drive products with lower cost structures;



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• uncertainty in the amount of purchases from our distributor customers who from time to time constitute a large portion of our total sales;

• our product mix and the related margins of the various products;

• accelerated reduction in the price of our disk drives due to technological advances and/or an oversupply of disk drives in the market and shifting trends in demand which can create supply and demand imbalances;

• manufacturing delays or interruptions, particularly at our manufacturing facilities in China, Malaysia, Northern Ireland, Singapore, Thailand, the United Kingdom, or the United States;

• limited access to components that we obtain from a single or a limited number of suppliers;

- the impact of changes in foreign currency exchange rates on the cost of producing our products and the effective price of our products to foreign consumers; and

• operational issues arising out of the increasingly automated nature of our manufacturing processes.

In addition, the demand for client non-compute products can be even more volatile and unpredictable than the demand for client compute products. In some cases, our products manufactured for client non-compute applications are uniquely configured for a single customer's application, which creates a risk of unwanted and unselable inventory if the anticipated volumes are not realized. This potential for unpredictable volatility is increased by the possibility of competing alternative storage technologies like flash memory meeting the customers' cost and capacity metrics, resulting in a rapid shift in demand from our products and disk drive technology, generally, to alternative storage technologies. Unpredictable fluctuations in demand for our products or rapid shifts in demand from our products to alternative storage technologies in new client non-compute applications could materially adversely impact our future results of operations.

Market acceptance of new product introductions cannot be accurately predicted, and our results of operations will suffer if there is less demand for our new products than is anticipated.

The markets for our products are characterized by rapid technological change, frequent new product introductions and technology enhancements, uncertain product life cycles and changes in customer demand. The success of our new product introductions is dependent on a number of factors, including market acceptance, our ability to manage the risks associated with product transitions, the effective management of inventory levels in line with anticipated product demand and the risk that our new products will have quality problems or other defects in the early stages of introduction that were not anticipated in the design of those products. Accordingly, we cannot accurately determine the ultimate effect that our new products will have on our results of operations.

Historically, our results of operations have substantially depended upon our ability to be among the first-to-maturity with new product offerings. Our market share and results of operations in the future may be adversely affected if we fail to:

• consistently maintain our time-to-maturity performance with our new products;

• produce these products in sufficient volume;

• qualify these products with key customers on a timely basis by meeting our customers' performance and quality specifications; or

• achieve acceptable manufacturing yields, quality and costs with these products.

In addition, the success of our new product introductions is dependent upon our ability to qualify as a primary source of supply with our OEM customers. In order for our products to be considered by our customers for qualification, we must be among the leaders in time-to-market with those new products.



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Once a product is accepted, any failure or delay in the qualification process or a requirement that we requalify can result in our losing sales to that customer until new products are introduced. The limited number of high-volume OEMs magnifies the effect of missing a product qualification opportunity. These risks are further magnified because we expect competitive pressures to result in declining sales, eroding prices, and declining gross margins on our current generation products. If the delivery of our products is delayed, our OEM customers may use our competitors' products to meet their production requirements. We cannot assure that we will be among the leaders in time-to-market with new products or that we will be able to successfully qualify new products with our customers in the future.

We face the related risk that consumers and businesses may wait to make their purchases if they want to buy a new product that has been shipped or announced but not yet released. If this were to occur, we may be unable to sell our existing inventory of products that may be less efficient and cost effective compared to new products. As a result, even if we are among the first-to-maturity with a given product, subsequent introductions or announcements by our competitors of new products could cause us to lose revenue and not achieve a positive return on our investment in existing products and inventory.

If we cannot successfully deliver competitive products, our future results of operations may be adversely affected.

If we experience shortages or delays in the receipt of, or cost increases in, critical components, equipment or raw materials necessary to manufacture our products, we may suffer lower operating margins, production delays and other material adverse effects.

The cost, quality and supply of components, subassemblies, certain equipment and raw materials used to manufacture our products and key components like recording media and heads are critical to our success. The equipment we use to manufacture our products and components is frequently custom made and comes from a few suppliers and the lead times required to obtain manufacturing equipment can be significant. Particularly important for our products include read/write heads, aluminum or glass substrates for recording media, ASICs, spindle motors, printed circuit boards, and suspension assemblies.

We rely on sole suppliers or a limited number of suppliers for some of these components that we do not manufacture, including aluminum and glass substrates, read/write heads, ASICs, spindle motors, printed circuit boards, and suspension assemblies. Many of such component suppliers are geographically concentrated, in particular, in Thailand, which makes our supply chain more vulnerable to regional disruptions such as the severe flooding in Thailand in October 2011, which had a material impact on the production and availability of many components. If our vendors for these components are unable to meet our cost, quality, and supply requirements, we could experience a shortage in supply or an increase in production costs, which would adversely affect our results of operations.

Certain rare earth elements are critical in the manufacture of our products. We purchase components that contain rare earth elements from a number of countries, including the People's Republic of China. We cannot predict whether any nation will impose regulations, quotas or embargoes upon the rare earth elements incorporated into our products that would restrict the worldwide supply of such metals or increase their cost. We have experienced increased costs and production delays when we were unable to obtain the necessary equipment or sufficient quantities of some components, and/or have been forced to pay higher prices or make volume purchase commitments or advance deposits for some components, equipment or raw materials that were in short supply in the industry in general. If any major supplier were to restrict the supply available to us or increase the cost of the rare earth elements used in our products, we could experience a shortage in supply or an increase in production costs, which would adversely affect our results of operations.

Consolidation among component manufacturers has resulted and may continue to result in some component manufacturers exiting the industry or not making sufficient investments in research to develop new components.



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If there is a shortage of, or delay in supplying us with, critical components, equipment or raw materials, then:

• it is likely that our suppliers would raise their prices and, if we could not pass these price increases to our customers, our operating margin would decline;

• we might have to reengineer some products, which would likely cause production and shipment delays, make the reengineered products more costly and provide us with a lower rate of return on these products;

• we would likely have to allocate the components we receive to certain of our products and ship less of others, which could reduce our revenues and could cause us to lose sales to customers who could purchase more of their required products from manufacturers that either did not experience these shortages or delays or that made different allocations; and

• we might be late in shipping products, causing potential customers to make purchases from our competitors, thus causing our revenue and operating margin to decline.

We cannot assure you that we will be able to obtain critical components in a timely and economic manner.

We often aim to lead the market in new technology deployments and leverage unique and customized technology from single source suppliers who are early adopters in the emerging market. Our options in supplier selection in these cases are limited and the supplier based technology may consequently be single sourced until wider adoption of the technology occurs and any necessary licenses become available. In such cases any technical issues in the supplier's technology may cause us to delay shipments of our new technology deployments and therefore harm our financial position.

Changes in demand for computer systems and storage subsystems may in the future cause a decline in demand for our products.

Our products are components in computers, data storage systems, and consumer electronics devices. The demand for these products has been volatile. Unexpected slowdowns in demand for computer systems, storage subsystems or consumer electronics devices generally cause sharp declines in demand for our products. Declines in consumer spending could have a material adverse effect on demand for our products and services and on our financial condition and results of operations.

Causes of declines in demand for our products in the past have included weakness in macroeconomic environments, announcements or introductions of major new operating systems or semiconductor improvements or changes in consumer preferences, such as the shift to mobile devices. We believe these announcements and introductions have from time to time caused consumers to defer their purchases and made inventory obsolete. Whenever an oversupply of our products causes participants in our industry to have higher than anticipated inventory levels, we experience even more intense price competition from other manufacturers than usual.

We are dependent on sales to distributors and retailers, which may increase price erosion and the volatility of our sales.

A substantial portion of our sales has been to distributors of disk drive products. Certain of our distributors may also market other products that compete with our products. Product qualification programs in this distribution channel are limited, which increases the number of competing products that are available to satisfy demand, particularly in times of lengthening product cycles. As a result, purchasing decisions in this channel are based largely on price, terms and product availability. Sales volumes through this channel are also less predictable and subject to greater volatility than sales to our OEM customers. In addition, deterioration in business and economic conditions could exacerbate price erosion and volatility as



distributors lower prices to compensate for lower demand and higher inventory levels. Our distributors' ability to access credit for purposes of funding their operations may also affect purchases of our products by these customers.

If distributors reduce their purchases of our products or prices decline significantly in the distribution channel or if distributors experience financial difficulties or terminate their relationships with us, our revenues and results of operations would be adversely affected.

We believe that industry demand for storage products in the long-term is increasing due to the proliferation of media-rich digital content in consumer applications and is fueling increased consumer demand for storage. This has led to the expansion of our branded solutions such as external storage products to provide additional storage capacity and to secure data in case of disaster or system failure, or to provide independent storage solutions for multiple users in home or small business environments. Consumer spending on retail sales of our branded solutions has deteriorated in some markets and may continue to do so if poor global economic conditions continue and higher levels of unemployment persist. This could have a material adverse effect on demand for our products and services and on our financial condition and results of operations.

In addition, such retail sales of our branded solutions traditionally experience seasonal variability in demand with higher levels of demand in the first half of our fiscal year driven by consumer spending in the back-to-school season from late summer to fall and the traditional holiday shopping season from fall to winter. Additionally, our ability to reach such consumers depends on our maintaining effective working relationships with major retailers and distributors. Failure to anticipate consumer demand for our branded solutions as well as an inability to maintain effective working relationships with retail and online distributors may adversely impact our future results of operations.

We may be adversely affected by the loss of, or reduced, delayed or canceled purchases by, one or more of our larger customers.

Some of our key customers account for a large portion of our disk drive revenue. While we have longstanding relationships with many of our customers, if any of our key customers were to significantly reduce their purchases from us, our results of operations would be adversely affected. While sales to major customers may vary from period to period, a major customer that permanently discontinues or significantly reduces its relationship with us could be difficult to replace. In line with industry practice, new customers usually require that we pass a lengthy and rigorous qualification process at the customer's cost. Accordingly, it may be difficult or costly for us to attract new major customers. Additionally, mergers, acquisitions, consolidations or other significant transactions involving our customers generally entail risks to our business. If a significant transaction involving any of our key customers results in the loss of or reduction in purchases by these key customers, it could have a materially adverse effect on our business, results of operations, financial condition and prospects.

We have a long and unpredictable sales cycle for enterprise data storage solutions.

Our enterprise data storage solutions are technically complex and we typically supply them in high quantities to a small number of customers. Many of our products are also tailored to meet the specific requirements of individual customers, and are often integrated by our customers into the systems and products that they sell. Factors that affect the length of our sales cycle include:

• the time required for testing and evaluating our products before they are deployed;

• the size of the deployment; and

• the degree of system configuration necessary to deploy our products.



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As a result, our sales cycle for enterprise data storage solutions is often in excess of one year, and the length of our sales cycle is frequently unpredictable. In addition, the emerging and evolving nature of the market for the products that we sell may lead prospective customers to postpone their purchasing decisions. We invest resources and incur costs during this cycle that may not be recovered if we do not successfully conclude sales. These factors lead to difficulty in matching revenues with expenses, and to increased expenditures which together may adversely impact our results of operations.

## If we do not control our operating expenses, we will not be able to compete effectively in our industry.

We continually seek to make our cost structure and business processes more efficient. We are focused on increasing workforce flexibility and scalability, and improving overall competitiveness by leveraging our global capabilities, as well as external talent and skills, worldwide. Our strategy involves, to a substantial degree, increasing revenue and product volume while at the same time controlling operating expenses. If we do not control our operating expenses, our ability to compete in the marketplace may be impaired. In the past, activities to reduce operating costs have included closures and transfers of facilities, significant personnel reductions and efforts to increase automation. The reduction of personnel and closure of facilities may adversely affect our ability to manufacture our products in required volumes to meet customer demand and may result in other disruptions that affect our products and customer service. Our efforts to make our operations more efficient may result in restructuring and other charges.

## Increases in the areal density of disk drives may outpace customers' demand for storage capacity.

The rate of increase in areal density, or storage capacity per square inch on a disk, may be greater than the increase in our customers' demand for aggregate storage capacity, particularly in certain market applications like client compute. As a result, our customers' storage capacity needs may be satisfied with lower priced, low capacity disk drives. These factors could decrease our sales, especially when combined with continued price erosion, which could adversely affect our results of operations.

## If we do not develop products in time to keep pace with technological changes, our results of operations will be adversely affected.

Our customers have demanded new generations of disk drive products as advances in computer hardware and software have created the need for improved storage products, with features such as increased storage capacity, improved performance and reliability and lower cost. We, and our competitors, have developed improved products, and we will need to continue to do so in the future. Such product development requires significant investments in research and development. We cannot assure you that we will be able to successfully complete the design or introduction of new products in a timely manner, that we will be able to manufacture new products in sufficient volumes with acceptable manufacturing yields, that we will be able to successfully market these new products or that these products will perform to specifications on a long-term basis. In addition, the impact of slowing areal density growth may adversely impact our ability to be successful.

When we develop new products with higher capacity and more advanced technology, our results of operations may decline because the increased difficulty and complexity associated with producing these products increases the likelihood of reliability, quality or operability problems. If our products suffer increases in failures, are of low quality or are not reliable, customers may reduce their purchases of our products and our manufacturing rework and scrap costs and service and warranty costs may increase. In addition, a decline in the reliability of our products may make us less competitive as compared with other disk drive manufacturers or competing technologies.



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Due to the complexity of our products, some defects may only become detectable after deployment.

Our products are highly complex and are designed to operate in and form part of larger complex networks and storage systems. Defects in our products, or in the networks and systems of which they form a part, directly or indirectly, have resulted in and may in the future result in:

• increased costs and product delays until complex solution level interoperability issues are resolved;

• costs associated with the remediation of any problems attributable to our products;

• loss of or delays in revenues;

• loss of customers;

• failure to achieve market acceptance and loss of market share;

• increased service and warranty costs; and

• increased insurance costs.

Defects in our products could also result in legal actions by our customers for property damage, injury or death. Product liability claims could exceed the level of insurance coverage that we have obtained to cover defects in our products. Any significant uninsured claims could significantly harm our financial condition.

## Our substantial leverage may place us at a competitive disadvantage in our industry.

We are leveraged and have significant debt service obligations. Our significant debt and debt service requirements could adversely affect our ability to operate our business and may limit our ability to take advantage of potential business opportunities. For example, our high level of debt presents the following risks:

• we are required to use a substantial portion of our cash flow from operations to pay principal and interest on our debt, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, product development efforts, strategic acquisitions, investments and alliances, and other general corporate requirements;

• our substantial leverage increases our vulnerability to economic downturns and adverse competitive and industry conditions and could place us at a competitive disadvantage compared to those of our competitors that are less leveraged;

• our debt service obligations could limit our flexibility in planning for, or reacting to, changes in our business and our industry and could limit our ability to pursue other business opportunities, borrow more money for operations or capital in the future and implement our business strategies;

• our level of debt may restrict us from raising additional financing on satisfactory terms to fund working capital, capital expenditures, product development efforts, strategic acquisitions, investments and alliances, and other general corporate requirements; and

• covenants in our debt instruments limit our ability to pay future dividends or make other restricted payments and investments.

In the event that we need to refinance all or a portion of our outstanding debt as it matures, we may not be able to obtain terms as favorable as the terms of our existing debt or refinance our existing debt at all. If prevailing interest rates or other factors existing at the time of refinancing result in higher interest rates upon refinancing, then the interest expense relating to the refinanced debt would increase. Furthermore, if any rating agency changes our credit rating or outlook, our debt and equity securities could be negatively affected, which could adversely affect our ability to refinance existing debt or raise additional capital.



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Servicing our debt requires a significant amount of cash and our ability to generate cash may be affected by factors beyond our control.

Our business may not generate cash flow in an amount sufficient to enable us to pay the principal of, or interest on, our indebtedness or to fund our other liquidity needs, including working capital, capital expenditures, product development efforts, strategic acquisitions, investments and alliances and other general corporate requirements.

Our ability to generate cash is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We cannot assure you that:

• our business will generate sufficient cash flow from operations;

• we will continue to realize the cost savings, revenue growth and operating improvements that result from the execution of our long-term strategic plan; or

• future sources of funding will be available to us in amounts sufficient to enable us to fund our liquidity needs.

If we cannot fund our liquidity needs, we will have to take actions such as reducing or delaying capital expenditures, product development efforts, strategic acquisitions, investments and alliances, and other general corporate requirements. We cannot assure you that any of these remedies could, if necessary, be effected on commercially reasonable terms, or at all, or that they would permit us to meet our scheduled debt service obligations. In addition if we incur additional debt, the risks associated with our substantial leverage, including the risk that we will be unable to service our debt or generate enough cash flow to fund our liquidity needs, could intensify.

Our failure to pay quarterly dividends to our shareholders could cause the market price of our ordinary shares to decline significantly.

Our ability to pay quarterly dividends will be subject to, among other things, our financial position and results of operations, available cash and cash flow, capital requirements, and other factors. Any reduction or discontinuation of quarterly dividends could cause the market price of our ordinary shares to decline significantly. Moreover, in the event our payment of quarterly dividends is reduced or discontinued, our failure or inability to resume paying dividends at historical levels could result in a persistently low market valuation of our ordinary shares.

If revenues fall or customer demand decreases significantly, we may not meet all of our purchase commitments to certain suppliers.

From time to time, we enter into long-term, non-cancelable purchase commitments or make large up-front investments with certain suppliers in order to secure certain components or technologies for the production of our products or to supplement our internal manufacturing capacity for certain components. If our actual revenues in the future are lower than our projections or if customer demand decreases significantly below our projections, we may not meet all of our purchase commitments with these suppliers. As a result, it is possible that our revenues will not be sufficient to recoup our up-front investments, in which case we will have to shift output from our internal manufacturing facilities to these suppliers or make penalty-type payments under these contracts.

We may not be able to identify suitable strategic alliances, acquisitions, joint ventures or investment opportunities, or successfully acquire and integrate companies that provide complementary products or technologies.

Our growth strategy involves pursuing strategic alliances with, making acquisitions of, forming joint ventures with or making investments in other companies that are complementary to our business. There is substantial competition for attractive strategic alliance, acquisition, joint venture and investment



candidates. Accordingly, we may not be able to identify suitable strategic alliances, acquisition, joint venture, or investment candidates. Even if we can identify them, we cannot assure you that we will be able to partner with, acquire or invest in suitable candidates, or integrate acquired technologies or operations successfully into our existing technologies and operations. Moreover, our ability to finance potential strategic alliances, acquisitions, joint ventures or investments will be limited by our high degree of leverage, the covenants contained in the instruments that govern our outstanding indebtedness, and any agreements governing any other debt we may incur.

If we are successful in forming strategic alliances or acquiring, forming joint ventures or making investments in other companies, any of these transactions may have an adverse effect on our results of operations, particularly while the operations of an acquired business are being integrated. It is also likely that integration of acquired companies would lead to the loss of key employees from those companies or the loss of customers of those companies. In addition, the integration of any acquired companies would require substantial attention from our senior management, which may limit the amount of time available to be devoted to our day-to-day operations or to the execution of our strategy. Growth by strategic alliance, acquisition, joint venture or investment involves an even higher degree of risk to the extent we combine new product offerings and enter new markets in which we have limited experience, and no assurance can be given that acquisitions of entities with new or alternative business models will be successfully integrated or achieve their stated objectives.

Furthermore, the expansion of our business involves the risk that we might not manage our growth effectively, that we would incur additional debt to finance these acquisitions or investments, that we may have impairment of goodwill or acquired intangible assets associated with these acquisitions and that we would incur substantial charges relating to the write-off of in-process research and development, similar to that which we incurred in connection with several of our prior acquisitions. Each of these items could have a material adverse effect on our financial condition and results of operations.

In addition, we could issue additional ordinary shares in connection with future strategic alliances, acquisitions, joint ventures or investments. Issuing shares in connection with such transactions would have the effect of diluting your ownership percentage of the ordinary shares and could cause the price of our ordinary shares to decline.

We may not be successful in our efforts to grow our cloud systems and solutions business.

We have made and are continuing to make investments to expand and develop our cloud systems and solutions business, including our recent acquisition of Xyratex Ltd ("Xyratex"), a data storage technology company. Our cloud systems and solutions business is subject to the following risks:

• the cloud systems and solutions market may develop more slowly than we expect;

• we may not be able to offer compelling solutions to enterprises and consumers;

• our cloud systems and solutions business generally has a long and unpredictable sales cycle, and growth in this business is likely to depend on relatively large customer orders, which may increase the variability of our results of operations and the difficulty of matching revenues with expenses.

Our results of operations and share price may be adversely affected if we are not successful in our efforts to grow our cloud computing business as anticipated. In addition, our growth in this sector may bring us into closer competition with some of our customers or potential customers, which may decrease their willingness to do business with us.



We are at times subject to intellectual property legal proceedings and claims which could cause us to incur significant additional costs or prevent us from selling our products, and which could adversely affect our results of operations and financial condition.

We are subject from time-to-time to legal proceedings and claims, including claims of alleged infringement of the patents, trademarks and other intellectual property rights of third parties by us, or our customers, in connection with their use of our products. Intellectual property litigation can be expensive and time-consuming, regardless of the merits of any claim, and could divert our management's attention from operating our business. In addition, intellectual property lawsuits are subject to inherent uncertainties due to the complexity of the technical issues involved, which may cause actual results to differ materially from our expectations. Patent litigation has increased due to the current uncertainty of the law and the increasing competition and overlap of product functionality in the field. Some of the actions that we face from time-to-time seek injunctions against the sale of our products and/or substantial monetary damages, which if granted or awarded, could materially harm our business, financial condition and operating results.

We cannot be certain that our products do not and will not infringe issued patents or other intellectual property rights of others. We may not be aware of currently filed patent applications that relate to our products or technology. If patents are later issued on these applications, we may be liable for infringement. If our products were found to infringe the intellectual property rights of others, we could be required to pay substantial damages, cease the manufacture, use and sale of infringing products in one or more geographic locations, expend significant resources to develop non-infringing technology, discontinue the use of specific processes or obtain licenses to the technology infringed. We might not be able to obtain the necessary licenses on acceptable terms, or at all, or be able to reengineer our products successfully to avoid infringement. Any of the foregoing could cause us to incur significant costs and prevent us from selling our products, which could adversely affect our results of operations and financial condition. See "Item 8. Financial Statements and Supplementary Data- Note 14. Legal, Environmental and Other Contingencies" contained in this report for a description of pending intellectual property proceedings.

We may be unable to protect our intellectual property rights, which could adversely affect our business, financial condition and results of operations.

We rely on a combination of patent, trademark, copyright and trade secret laws, confidentiality procedures and licensing arrangements to protect our IP rights. In the past, we have been involved in significant and expensive disputes regarding our IP rights and those of others, including claims that we may be infringing patents, trademarks and other IP rights of third-parties. We expect that we will be involved in similar disputes in the future.

There can be no assurance that:

• any of our existing patents will continue to be held valid, if challenged;

• patents will be issued for any of our pending applications;

• any claims allowed from existing or pending patents will have sufficient scope or strength to protect us; or

• our patents will be issued in the primary countries where our products are sold in order to protect our rights and potential commercial advantage.

In addition, our competitors may be able to design their products around our patents and other proprietary rights. Enforcement of our rights often requires litigation. If we bring a patent infringement action and are not successful, our competitors would be able to use similar technology to compete with us. Moreover, the defendant in such an action may successfully countersue us for infringement of their patents or assert a counterclaim that our patents are invalid or unenforceable.



Furthermore, we have significant operations and sales in foreign countries where intellectual property laws and enforcement policies are often less developed, less stringent or more difficult to enforce than in the United States.

We are heavily dependent on our proprietary technology and our competitors may gain access to this technology.

We depend heavily on our proprietary technology and rely on a combination of patent, copyright and trade secret laws to protect our intellectual property and expertise. We also attempt to protect our trade secrets and other proprietary information through confidentiality agreements with our customers, suppliers and employees and through other security measures. Despite these efforts, we cannot give assurances that others will not gain access to our trade secrets or that we can fully protect our intellectual property. In addition, effective trade secret protection may be unavailable or limited in certain countries in which we operate. Nor can we guarantee that our competitors will not independently develop comparable technologies. We cannot rely on our patents to provide us with any significant competitive advantage. Failure to protect our proprietary rights could significantly harm our financial condition.

We could suffer a loss of revenue and increased costs, exposure to significant liability, reputational harm, and other serious negative consequences if we sustain cyber-attacks or other data security breaches that disrupt our operations or result in the dissemination of proprietary or confidential information about us or our customers or other third-parties.

Our operations are dependent upon our ability to protect our computer equipment and the electronic data stored in our databases from damage by, among other things, earthquake, fire, natural disasters, accidents, power disruptions, telecommunications failures, acts of terrorism or war, employee misconduct, physical or electronic break-ins, cyber-attacks, or similar events or disruptions. We manage and store various proprietary information and sensitive or confidential data relating to our operations. In addition, our outsourcing services and cloud computing businesses routinely process, store, and transmit large amounts of data for our customers and vendors, including sensitive and personally identifiable information. As our operations become more automated and increasingly interdependent, our exposure to the risks posed by these types of events will increase. We have been, and will likely continue to be, subject to computer viruses or other malicious codes, cyber-attacks, or other computer-related attempts to breach the information technology systems we use for these purposes. We may also be subject to information technology system failures and network disruptions due to these factors. Experienced computer programmers and hackers may be able to penetrate our network security and misappropriate or compromise our confidential information or that of third-parties, create system disruptions, or cause shutdowns. Computer programmers and hackers also may be able to develop and deploy viruses, worms, and other malicious software programs that attack our products or otherwise exploit any security vulnerabilities of our products. In addition, sophisticated hardware and operating system software and applications that we produce or procure from third-parties may contain defects in design or manufacture, including "bugs" and other problems that could unexpectedly interfere with the operation of the system.

The costs to us to eliminate or address the foregoing security problems and security vulnerabilities before or after a cyber-incident could be significant. System redundancy may be ineffective or inadequate, and our disaster recovery planning may not be sufficient for all eventualities. Our remediation efforts may not be successful and could result in interruptions, delays, or cessation of service, and loss of existing or potential customers that may impede our sales, manufacturing, distribution, or other critical functions. We could lose existing or potential customers for outsourcing services or other information technology solutions in connection with any actual or perceived security vulnerabilities in our products. In addition, breaches of our security measures and the unapproved dissemination of proprietary information or sensitive or confidential data about us or our customers or other third-parties, could expose us, our vendors and customers, or other third-parties affected to a risk of loss or misuse of this information, result in litigation and potential liability for us, damage our brand and reputation, or otherwise harm our



business. In addition, we rely in certain limited capacities on third-party data management providers whose possible security problems and security vulnerabilities may have similar effects on us.

We are subject to laws, rules, and regulations in the U.S. and other countries relating to the collection, use, and security of user data. In many cases, these laws apply not only to third-party transactions, but also to transfers of information between us and our subsidiaries, and among us, our subsidiaries and other parties with which we have commercial relations. Our ability to execute transactions and to possess and use personal information and data in conducting our business subjects us to legislative and regulatory burdens that may require us to notify vendors, customers or employees of a data security breach. We have incurred, and will continue to incur, significant expenses to comply with mandatory privacy and security standards and protocols imposed by law, regulation, industry standards, or contractual obligations. These laws, protocols and standards continue to develop and may be inconsistent from jurisdiction to jurisdiction. Complying with emerging and changing international requirements may cause us to incur substantial costs or require us to change our business practices. If we fail to comply with applicable federal, state or international privacy-related or data protection laws we may be subject to proceedings by governmental entities and incur penalties or significant legal liability.

Our international operations subject us to risks related to disruptions in foreign markets, currency exchange fluctuations, longer payment cycles, seasonality, limitations imposed by a variety of legal and regulatory regimes, potential adverse tax consequences, increased costs, our customers' credit and access to capital, health-related risks, and access to personnel.

We have significant operations in foreign countries, including manufacturing facilities, sales personnel and customer support operations. We have manufacturing facilities in China, Malaysia, Northern Ireland, Singapore and Thailand, in addition to those in the United States. A substantial portion of our client compute disk drive assembly occurs in our facility in China.

Our international operations are subject to economic risks inherent in doing business in foreign countries, including the following:

• Disruptions in Foreign Markets. Disruptions in financial markets and the deterioration of the underlying economic conditions in the past in some countries, including those in Asia, have had an impact on our sales to customers located in, or whose end-user customers are located in, these countries.

Fluctuations in Currency Exchange Rates. Prices for our products are denominated predominantly in U.S. dollars, even when sold to customers that are located outside the United States. Currency instability in Asia and other geographic markets may make our products more expensive than products sold by other manufacturers that are priced in the local currency. Moreover, many of the costs associated with our operations located outside the United States are denominated in local currencies. As a consequence, the increased strength of local currencies against the U.S. dollar in countries where we have foreign operations would result in higher effective operating costs and, potentially, reduced earnings. From time to time, fluctuations in foreign exchange rates have negatively affected our operations and profitability and there can be no assurance that these fluctuations will not adversely affect our operations and profitability in the future. We may attempt to manage the impact of foreign currency exchange rate changes by, among other things, entering into foreign currency forward exchange contracts. However, these contracts may not cover our full exposure and subject us to certain counterparty credit risks. See "Item 7A.Quantitative and Qualitative Disclosures About Market Risk-Foreign Currency Exchange Risk" of this report for additional information about our foreign currency exchange risk.

• Longer Payment Cycles. Our customers outside of the United States are often allowed longer time periods for payment than our U.S. customers. This increases the risk of nonpayment due to the



possibility that the financial condition of particular customers may worsen during the course of the payment period.

• Seasonality. Seasonal reductions in the business activities of our customers during the summer months, particularly in Europe, typically result in lower earnings during those periods.

• Legal and Regulatory Limitations. Our international operations are affected by limitations on imports, tariffs, duties, currency exchange control regulations, price controls, export control laws, including the trade and economic sanctions administered by the Office of Foreign Assets Control, and other restraints on trade. In addition, the governments of many countries, including China, Malaysia, Northern Ireland, Singapore and Thailand, in which we have significant operating assets, have exercised and continue to exercise significant influence over many aspects of their domestic economies and international trade. Although we have implemented policies and procedures designed to ensure compliance, there can be no assurance that our employees, contractors, or agents will not violate these or other applicable laws and regulations to which we may be subject. Violations of these laws and regulations could lead to significant penalties, including restraints on our export or import privileges, monetary fines, criminal proceedings and regulatory or other actions that could materially adversely affect our results of operations.

• Potential Adverse Tax Consequences. Our international operations create a risk of potential adverse tax consequences, including imposition of withholding or other taxes on payments by our subsidiaries. In addition, our taxable income in any jurisdiction is dependent upon acceptance of our operational practices and intercompany transfer pricing by local tax authorities as being on an arm's length basis. Due to inconsistencies in application of the arm's length standard among taxing authorities, as well as a lack of adequate treaty-based protection, transfer pricing challenges by tax authorities could, if successful, substantially increase our income tax expense. We are subject to tax audits around the world, and are under audit in various jurisdictions, and such jurisdictions may assess additional income tax against us. Although we believe our tax positions are reasonable, the final determination of tax audits could be materially different from our recorded income tax provisions and accruals. The ultimate results of an audit could have a material adverse effect on our operating results or cash flows in the period or periods for which that determination is made and could result in increases to our overall tax expense in subsequent periods.

• Increased Costs. The shipping and transportation costs associated with our international operations are typically higher than those associated with our U.S. operations, resulting in decreased operating margins in some foreign countries.

- Credit and Access to Capital Risks. Our international customers could have reduced access to working capital due to higher interest rates, reduced bank lending resulting from contractions in the money supply or the deterioration in the customer's or its bank's financial condition, or the inability to access other financing.

• Global Health Outbreaks. The occurrence of a pandemic disease may adversely impact our operations, and some of our key customers. Such diseases could also potentially disrupt the timeliness and reliability of the distribution network we rely on.

• Access to Personnel. There is substantial competition for qualified and capable personnel in certain jurisdictions in which we operate, including China, which may make it difficult for us to recruit and retain qualified employees in sufficient numbers. Increased difficulty in recruiting or retaining sufficient and adequate personnel in our international operations may lead to increased manufacturing and employment compensation costs, which could adversely affect our results of operations.



## Our international operations subject us to risks related to economic conditions, political unrest and terrorism.

We have manufacturing facilities in parts of the world that periodically experience political unrest. This could disrupt our ability to manufacture important components as well as cause interruptions and/or delays in our ability to ship components to other locations for continued manufacture and assembly. Any such delays or interruptions could result in delays in our ability to fill orders and have an adverse effect on our results of operations and financial condition. U.S. and international responses to the ongoing hostilities in various regions and the risk of terrorist attacks or hostilities elsewhere in the world could exacerbate these risks.

Macroeconomic developments like the debt crisis in certain countries in the European Union and slowing economies in parts of Asia and South America could negatively affect our business, operating results or financial condition which, in turn, could adversely affect our stock price. A general weakening of, and related declining corporate confidence in, the global economy or the curtailment in government or corporate spending could cause current or potential customers to reduce their information technology (IT) budgets or be unable to fund hardware systems, which could cause customers to delay, decrease or cancel purchases of our products or cause customers not to pay us or to delay paying us for previously purchased products and services.

In addition, political unrest in regions like the Middle East, terrorist attacks around the globe and the potential for other hostilities in various parts of the world, potential public health crises and natural disasters continue to contribute to a climate of economic and political uncertainty that could adversely affect our results of operations and financial condition, including our revenue growth and profitability. These factors generally have the strongest effect on our sales.

## The loss of key executive officers and employees could negatively impact our business prospects.

Our future performance depends to a significant degree upon the continued service of key members of management as well as marketing, sales and product development personnel. The loss of one or more of our key personnel may have a material adverse effect on our business, results of operations and financial condition. We believe our future success will also depend in large part upon our ability to attract, retain and further motivate highly skilled management, marketing, sales and product development personnel. We have experienced intense competition for personnel, and we cannot assure you that we will be able to retain our key employees or that we will be successful in attracting, assimilating and retaining personnel in the future.

## Significant fluctuations in the market price of our ordinary shares could result in securities class action claims against us.

Significant price and value fluctuations have occurred with respect to the publicly traded securities of technology companies. The price of our ordinary shares is likely to be volatile in the future. In the past, following periods of decline in the market price of a company's securities, class action lawsuits have often been pursued against that company. If similar litigation were pursued against us, it could result in substantial costs and a diversion of management's attention and resources, which could materially adversely affect our results of operations, financial condition and liquidity.

Deterioration in global credit and financial market conditions could negatively impact the value of our current portfolio of cash equivalents or short-term investments and our ability to meet our financing objectives.

Our cash and cash equivalents are maintained in highly liquid investments with remaining maturities of 90 days or less at the time of purchase. Our short-term investments consist primarily of readily marketable debt securities with remaining maturities of more than 90 days at the time of purchase. Our investment policy has as its principal objectives the preservation of principal and maintenance of liquidity.



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We mitigate default risk by investing in high-quality investment grade securities, limiting the time to maturity and by monitoring the counterparties and underlying obligors closely.

While as of the date of this filing, we are not aware of any material downgrades, losses, or other significant deterioration in the fair value of our cash equivalents or short-term investments, no assurance can be given that future deterioration in conditions of the global credit and financial markets would not negatively impact our current portfolio of cash equivalents or short-term investments or our ability to meet our financing objectives.

Failure to comply with applicable environmental laws and regulations could have a material adverse effect on our business, results of operations and financial condition.

The sale and manufacturing of products in certain states and countries may subject us and our suppliers to state, federal and international laws and regulations governing protection of the environment, including those governing discharges of pollutants into the air and water, the management and disposal of hazardous substances and wastes, the cleanup of contaminated sites, restrictions on the presence of certain substances in electronic products and the responsibility for environmentally safe disposal or recycling. We endeavor to ensure that we and our suppliers comply with all applicable environmental laws and regulations, however, compliance may increase our operating costs and otherwise impact future financial results. If additional or more stringent requirements are imposed on us in the future, we could incur additional operating costs and capital expenditures. If we fail to comply with applicable environmental laws, regulations, initiatives, or standards of conduct, our customers may refuse to purchase our products and we could be subject to fines, penalties and possible prohibition of sales of our products into one or more states or countries, liability to our customers and damage to our reputation, which could result in a material adverse effect on the financial condition or results of operations.

New conflict minerals regulations may cause us to incur additional expenses and could limit the supply and increase the cost of certain metals used in manufacturing our products.

In August 2012, the SEC adopted new rules establishing additional disclosure and reporting requirements regarding the use of specified minerals, or conflict minerals, that are necessary to the functionality or production of products manufactured or contracted to be manufactured. These new rules will require us to determine, disclose and report whether or not such conflict minerals originate from the Democratic Republic of the Congo or an adjoining country, the first such report of which was filed on May 30, 2014. These new rules could affect our ability to source certain materials used in our products at competitive prices and could impact the availability of certain minerals used in the manufacture of our products, including gold, tantalum, tin and tungsten. As there may be only a limited number of suppliers of "conflict free" minerals, we cannot be sure that we will be able to obtain necessary conflict free minerals in sufficient quantities or at competitive prices. Our customers, including our OEM customers, may require that our products be free of conflict minerals, and our revenues and margins may be harmed if we are unable to procure conflict free minerals at a reasonable price, or at all, or are unable to pass through any increased costs associated with meeting these demands. Additionally, we may face reputational challenges with our customers and other stakeholders if we are unable to sufficiently verify the origins of all minerals used in our products through the due diligence procedures that we implement. We may also face challenges with government regulators and our customers and suppliers if we are unable to sufficiently verify that the metals used in our products are conflict free. We expect that there may be material costs associated with complying with the disclosure requirements, such as costs related to determining the source of certain minerals used in our products, as well as costs related to possible changes to products, processes, or sources of supply as a consequence of such verification and disclosure requirements.



Because we experience seasonality in the sales of our products, our results of operations will generally be adversely impacted during the second half of our fiscal year.

Sales of computer systems, storage subsystems and consumer electronics tend to be seasonal, and therefore we expect to continue to experience seasonality in our business as we respond to variations in our customers' demand for our products. In particular, we anticipate that sales of our products will continue to be lower during the second half of our fiscal year. In the client compute and client non-compute market applications of our disk drive business, this seasonality is partially attributable to the historical trend in our results derived from our customers' increased sales of desktop computers, notebook computers, and consumer electronics during the back-to-school and winter holiday season. In the enterprise market our sales are seasonal because of the capital budgeting and purchasing cycles of our end users. Since our working capital needs peak during periods in which we are increasing production in anticipation of orders that have not yet been received, our results of operations will fluctuate seasonally even if the forecasted demand for our products proves accurate. Furthermore, it is difficult for us to evaluate the degree to which this seasonality may affect our business in future periods because of the rate and unpredictability of product transitions and new product introductions, particularly in the client non-compute market, as well as macroeconomic conditions.

## The price of our ordinary shares may be volatile and could decline significantly.

The stock market, in general, and the market for technology stocks in particular, has recently experienced volatility that has often been unrelated to the operating performance of companies. If these market or industry-based fluctuations continue, the trading price of our ordinary shares could decline significantly independent of our actual operating performance, and you could lose all or a substantial part of your investment. The market price of our ordinary shares could fluctuate significantly in response to several factors, including among others:

• general uncertainty in stock market conditions occasioned by global economic conditions, negative financial news and the continued instability of several large financial institutions;

• actual or anticipated variations in our results of operations;

• announcements of innovations, new products or significant price reductions by us or our competitors, including those competitors who offer alternative storage technology solutions;

• our failure to meet the performance estimates of investment research analysts;

• the timing of announcements by us or our competitors of significant contracts or acquisitions;

• general stock market conditions;

• the occurrence of major catastrophic events;

• changes in financial estimates by investment research analysts;

• changes in the credit ratings of our indebtedness by rating agencies; and

• the sale of our ordinary shares held by certain equity investors or members of management.

Political events, war, terrorism, natural disasters, public health issues and other circumstances could materially adversely affect our results of operations and financial condition.

War, terrorism, geopolitical uncertainties, natural disasters, public health issues, and other business interruptions have caused and could cause damage or disruption to international commerce and the global economy, and thus could have a strong negative effect on our business, our suppliers, logistics providers, manufacturing vendors and customers. Our business operations are subject to interruption by natural disasters such as floods and earthquakes, fire, power shortages, terrorist attacks, other hostile acts, labor



## Table of Contents

disputes, public health issues, and other events beyond our control. Such events could decrease demand for our products, make it difficult or impossible for us to make and deliver products to our customers, or to receive components from our suppliers, and create delays and inefficiencies in our supply chain. In the event of a natural disaster, losses and significant recovery time could be required to resume operations and our financial condition and operating results could be materially adversely affected. Should major public health issues, including pandemics, arise, we could be negatively affected by stringent employee travel restrictions, additional limitations in freight services, governmental actions limiting the movement of products between regions, delays in production ramps of new products, and disruptions in our operations and some of our key customers.

If we do not realize the expected benefits of our strategic alignment with Samsung, our business and financial condition may be materially impaired.

We may not achieve the desired benefits from our strategic alignment with Samsung. Even if we are able to successfully integrate the business that we acquired from Samsung into our business, we may not be able to realize the cost savings, synergies and growth that we anticipate from this transaction in the timeframe we currently expect, and the costs of achieving these benefits may be higher than we currently expect, because of a number of risks, including but not limited to:

• The possibility that the transaction may not further our business strategy as we expected;

• Our operating results or financial condition may be adversely impacted by liabilities that we assume in the transaction; and

• The risk of intellectual property disputes with respect to the acquired assets.

In addition, the Chinese Ministry of Commerce conditioned its approval of the Samsung acquisition on our compliance with several ongoing requirements, including: adopting measures to keep the Samsung HDD brand as a separate competitor to the Seagate HDD brand, expanding the Samsung HDD production capacity within six months of the decision, and investing at least $800 million per year for three years in R&D in our combined Samsung and Seagate HDD businesses. Compliance with these obligations may involve significant costs or require changes in business practices that result in reduced revenue. Noncompliance could result in extending the time under which we would be compelled to operate under these conditions.

As a result of these risks, the transaction may not contribute to our earnings as we expected, we may not achieve expected cost synergies when expected, or at all, and we may not achieve the other anticipated strategic and financial benefits of this transaction.

## Our ability to use our net operating loss and tax credit carryforwards might be limited.

At June 27, 2014, the use of approximately $376 million and $90 million of our U.S. net operating loss and tax credit carryforwards, respectively, is subject to an aggregate annual limitation of $46 million pursuant to U.S. tax law. To the extent these net operating loss and tax credit carryforwards are available, we intend to use them to reduce the corporate income tax liability associated with our operations in the U.S. Section 382 of the U.S. Internal Revenue Code generally imposes an annual limitation on the amount of net operating loss or tax credit carryforwards that might be used to offset taxable income when a corporation has undergone significant changes in ownership. As a result, future changes in ownership, such as changes in ownership resulting from future repurchases of our ordinary shares, could put limitations on the availability of our net operating loss or tax credit carryforwards. If certain ownership changes occur in the foreseeable future, there may be an additional annual limitation on our ability to use our total U.S. federal and state net operating loss and credit carryforwards of $2.9 billion, $1.8 billion, and $429 million, respectively. If these ownership changes were to occur, we estimate a one-time charge for additional U.S. income tax expense of approximately $400 million to $500 million may be recorded in the period such



## Table of Contents

change occurs. This additional income tax expense results from a decrease in our net U.S. deferred tax assets recorded through a combination of the write off of deferred tax assets and associated changes to our valuation allowance. We also estimate that the ensuing additional annual limitation on our ability to use tax attribute carryovers may result in increased U.S. income tax expense associated with such change of approximately $70 million to $85 million each year.

## ITEM 1B. UNRESOLVED STAFF COMMENTS

None.



## ITEM 2. PROPERTIES

Our company headquarters are located in Ireland, while our U.S. executive offices are located in Cupertino, California. Our principal manufacturing facilities are located in China, Malaysia, Northern Ireland, Singapore, Thailand and Minnesota. Our principal product development facilities are located in California, Colorado, Minnesota, Singapore and South Korea. Our leased facilities are occupied under leases that expire at various times through 2082.

Our material manufacturing, product development and marketing and administrative facilities at June 27, 2014 are as follows:

<table><tr><td>Location</td><td>Building(s) Owned or Leased</td><td>Approximate Square Footage</td><td>Primary Use</td></tr><tr><td>United States</td><td></td><td></td><td></td></tr><tr><td>California</td><td>Owned/Leased</td><td>1,051,000</td><td>Product development and marketing and administrative</td></tr><tr><td>Colorado</td><td>Owned</td><td>528,000</td><td>Product development</td></tr><tr><td>Minnesota</td><td>Owned/Leased</td><td>1,085,000</td><td>Manufacture of recording heads and product development</td></tr><tr><td>Europe</td><td></td><td></td><td></td></tr><tr><td>Northern Ireland</td><td></td><td></td><td></td></tr><tr><td>Springtown</td><td>Owned</td><td>479,000</td><td>Manufacture of recording heads</td></tr><tr><td>Asia</td><td></td><td></td><td></td></tr><tr><td>China</td><td></td><td></td><td></td></tr><tr><td>Suzhou</td><td>Owned/Leased (1)</td><td>1,103,000</td><td>Manufacture of drives</td></tr><tr><td>Wuxi</td><td>Leased</td><td>718,000</td><td>Manufacture of drives and drive subassemblies</td></tr><tr><td>Malaysia</td><td></td><td></td><td></td></tr><tr><td>Johor</td><td>Owned (1)</td><td>631,000</td><td>Manufacture of substrates</td></tr><tr><td>Penang</td><td>Owned (1)</td><td>402,000</td><td>Manufacture of drive subassemblies</td></tr><tr><td>Seremban</td><td>Owned/Leased (1)</td><td>386,000</td><td>Manufacture of test equipment and systems</td></tr><tr><td>Singapore</td><td></td><td></td><td></td></tr><tr><td>Woodlands</td><td>Owned (1)</td><td>1,404,000</td><td>Manufacture of media</td></tr><tr><td>Science Park</td><td>Leased</td><td>110,000</td><td>Product development</td></tr><tr><td>Thailand</td><td></td><td></td><td></td></tr><tr><td>Korat</td><td>Owned</td><td>1,723,000</td><td>Manufacture of drives and drive subassemblies</td></tr><tr><td>Teparuk</td><td>Owned</td><td>362,000</td><td>Manufacture of drive subassemblies</td></tr><tr><td>Korea</td><td></td><td></td><td></td></tr><tr><td>Suwon</td><td>Owned</td><td>220,000</td><td>Product development</td></tr></table>

(1) Land leases for these facilities expire at varying dates through 2067.

As of June 27, 2014, we owned or leased a total of approximately 12.2 million square feet of space worldwide. We occupied approximately 7.5 million square feet for the purpose of manufacturing, 1.9 million square feet for product development, 2.1 million square feet for marketing and administrative purposes. Included in the 12.2 million square feet of owned or leased space is a total of 0.7 million square feet that is currently unoccupied, primarily as a result of site closures at our facilities in Longmont, Colorado. We believe that our existing properties are in good operating condition and are suitable and adequate for the operations for which they are used. As of June 27, 2014, all of our material manufacturing facilities are operating at normal utilization levels and none of our manufacturing facilities are experiencing significant underutilization.

## ITEM 3. LEGAL PROCEEDINGS

See "Item 8. Financial Statements and Supplementary Data—Note 14. Legal, Environmental and Other Contingencies."

## ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.



## PART II

## ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

## Market Information

Our shares trade on the NASDAQ Global Select Market under the symbol "STX." The high and low sales prices of our shares, as reported by the NASDAQ Global Select Market, are set forth below for the periods indicated.

<table><tr><td rowspan="2">Fiscal Quarter</td><td colspan="2">Price Range</td></tr><tr><td>High</td><td>Low</td></tr><tr><td>Quarter ended September 28, 2012</td><td>$ 35.71</td><td>$ 23.86</td></tr><tr><td>Quarter ended December 28, 2012</td><td>$ 31.49</td><td>$ 24.90</td></tr><tr><td>Quarter ended March 29, 2013</td><td>$ 37.94</td><td>$ 29.80</td></tr><tr><td>Quarter ended June 28, 2013</td><td>$ 45.50</td><td>$ 33.22</td></tr><tr><td>Quarter ended September 27, 2013</td><td>$ 47.82</td><td>$ 37.17</td></tr><tr><td>Quarter ended December 27, 2013</td><td>$ 56.64</td><td>$ 42.73</td></tr><tr><td>Quarter ended March 28, 2014</td><td>$ 62.76</td><td>$ 48.21</td></tr><tr><td>Quarter ended June 27, 2014</td><td>$ 58.35</td><td>$ 48.49</td></tr></table>

As of August 1, 2014 there were approximately 997 holders of record of our ordinary shares. We did not sell any of our equity securities during fiscal year 2014 that were not registered under the Securities Act of 1933, as amended.



## Performance Graph

The performance graph below shows the cumulative total shareholder return on our ordinary shares for the period from July 3, 2009 to June 27, 2014. This is compared with the cumulative total return of the Dow Jones US Computer Hardware Index and the Standard & Poor's 500 Stock Index over the same period. The graph assumes that on July 3, 2009, $100 was invested in our ordinary shares and $100 was invested in each of the other two indices, with dividends reinvested on the date of payment without payment of any commissions. Dollar amounts in the graph are rounded to the nearest whole dollar. The performance shown in the graph represents past performance and should not be considered an indication of future performance.



<table><tr><td></td><td>7/3/2009</td><td>7/2/2010</td><td>7/1/2011</td><td>6/29/2012</td><td>6/28/2013</td><td>6/27/2014</td></tr><tr><td>Seagate Technology plc</td><td>100.00</td><td>70.48</td><td>88.51</td><td>139.96</td><td>264.96</td><td>354.43</td></tr><tr><td>S&amp;P 500</td><td>100.00</td><td>114.07</td><td>149.45</td><td>151.96</td><td>179.19</td><td>218.75</td></tr><tr><td>Dow Jones US Computer Hardware</td><td>100.00</td><td>142.12</td><td>181.79</td><td>238.67</td><td>187.02</td><td>282.71</td></tr></table>

* $100 invested on 7/3/09 in stock and in indices, including reinvestment of dividends.

Copyright \( ^{©} $  2014 Bloomberg Finance L.P. All rights reserved.



## Dividends

Our ability to pay dividends in the future will be subject to, among other things, general business conditions within the disk drive industry, our financial results, the impact of paying dividends on our credit ratings and legal and contractual restrictions on the payment of dividends by our subsidiaries to us or by us to our ordinary shareholders, including restrictions imposed by covenants on our debt instruments.

The following were dividends paid in the last two fiscal years:

<table><tr><td>Record Date</td><td>Paid Date</td><td>Dividend per Share</td></tr><tr><td>August 5, 2012</td><td>August 26, 2012</td><td>$ 0.32</td></tr><tr><td>November 14, 2012</td><td>November 29, 2012</td><td>$ 0.32</td></tr><tr><td>December 14, 2012</td><td>December 28, 2012</td><td>$ 0.38</td></tr><tr><td>May 15, 2013</td><td>May 29, 2013</td><td>$ 0.38</td></tr><tr><td>August 7, 2013</td><td>August 21, 2013</td><td>$ 0.38</td></tr><tr><td>November 12, 2013</td><td>November 26, 2013</td><td>$ 0.43</td></tr><tr><td>February 10, 2014</td><td>February 24, 2014</td><td>$ 0.43</td></tr><tr><td>May 14, 2014</td><td>May 28, 2014</td><td>$ 0.43</td></tr></table>

From the closing of our initial public offering in December 2002 through 2014, we have paid dividends, pursuant to our dividend policy then in effect, totaling approximately $2.5 billion in the aggregate.

## Repurchases of Our Equity Securities

All repurchases are effected as redemptions in accordance with the Company's Articles of Association. There is no expiration date on this authorization.

On July 24, 2013, the Board of Directors authorized the Company to repurchase $2.5 billion of its outstanding ordinary shares. As of June 27, 2014, $1.5 billion remained available for repurchase under the existing repurchase authorization limit.

The following table sets forth information with respect to all repurchases of our shares made during the fiscal year ended June 27, 2014:

<table><tr><td>Period</td><td>Total Number of Shares Purchased</td><td>Average Price Paid per Share</td><td>Total Number of Shares Purchased as Part of Pultar Policy Announced or Programmes</td><td>Approximate Dollar Value of Shares Purchased Under the Plans or Programs</td><td>Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs</td></tr><tr><td>(In millions, except average price paid per share)</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>1st Quarter through 3rd Quarter of Fiscal Year 2014</td><td>40.5</td><td>$ 46.57</td><td>40.5</td><td>$ 1,886</td><td>$ 1,517</td></tr><tr><td>March 29, 2014 through April 25, 2014</td><td>—</td><td>—</td><td>—</td><td>—</td><td>1,517</td></tr><tr><td>April 26, 2014 through May 23, 2014</td><td>0.5</td><td>49.60</td><td>0.5</td><td>26</td><td>1,491</td></tr><tr><td>May 24, 2014 through June 27, 2014</td><td>—</td><td>—</td><td>—</td><td>—</td><td>1,491</td></tr><tr><td>Through 4th Quarter of Fiscal Year 2014</td><td>41.0</td><td>$ 46.63</td><td>41.0</td><td>$ 1,912</td><td>$ 1,491</td></tr></table>






## ITEM 6. SELECTED FINANCIAL DATA

The following selected consolidated financial data set forth below is not necessarily indicative of results of future operations, and should be read in conjunction with "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Consolidated Financial Statements and related notes thereto included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report on Form 10-K, which are incorporated herein by reference, to fully understand factors that may affect the comparability of the information presented below.

The Consolidated Statements of Operations data for the fiscal years ended June 27, 2014, June 28, 2013 and June 29, 2012, and the Consolidated Balance Sheet data as of June 27, 2014 and June 28, 2013, are derived from our audited Consolidated Financial Statements appearing elsewhere in this Annual Report on Form 10-K. The Consolidated Statements of Operations data for the fiscal years ended July 1, 2011 and July 2, 2010, and the Consolidated Balance Sheet data at June 29, 2012, July 1, 2011 and July 2, 2010, are derived from our audited Consolidated Financial Statements that are not included in this Annual Report on Form 10-K.

<table><tr><td rowspan="2"></td><td colspan="5">Fiscal Years Ended</td></tr><tr><td>June 27, 2014</td><td>June 28, 2013</td><td>June 29, 2012</td><td>July 1, 2011</td><td>July 2, 2010</td></tr><tr><td>(Dollars in millions, except per share data)</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Revenue</td><td>$ 13,724</td><td>$ 14,351</td><td>$ 14,939</td><td>$ 10,971</td><td>$ 11,395</td></tr><tr><td>Gross margin</td><td>3,846</td><td>3,940</td><td>4,684</td><td>2,146</td><td>3,204</td></tr><tr><td>Income from operations</td><td>1,776</td><td>2,091</td><td>3,108</td><td>806</td><td>1,740</td></tr><tr><td>Net income</td><td>1,570</td><td>1,838</td><td>2,862</td><td>511</td><td>1,609</td></tr><tr><td>Total assets</td><td>9,492</td><td>9,243</td><td>10,106</td><td>9,225</td><td>8,247</td></tr><tr><td>Total debt</td><td>3,920</td><td>2,777</td><td>2,863</td><td>3,512</td><td>2,502</td></tr><tr><td>Equity</td><td>$ 2,832</td><td>$ 3,506</td><td>$ 3,497</td><td>$ 2,463</td><td>$ 2,724</td></tr><tr><td>Net income per share:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Basic</td><td>$ 4.66</td><td>$ 4.97</td><td>$ 6.72</td><td>$ 1.13</td><td>$ 3.28</td></tr><tr><td>Diluted</td><td>4.52</td><td>4.81</td><td>6.49</td><td>1.09</td><td>3.14</td></tr><tr><td>Number of shares used in per share computations:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Basic</td><td>337</td><td>370</td><td>426</td><td>451</td><td>491</td></tr><tr><td>Diluted</td><td>347</td><td>382</td><td>441</td><td>467</td><td>514</td></tr><tr><td>Cash dividends declared per share</td><td>$ 1.67</td><td>$ 1.40</td><td>$ 0.86</td><td>$ 0.18</td><td>$ —</td></tr></table>

## Supplementary Financial Data (Unaudited)

## Quarterly Data

The Company operated and reported financial results based on 13-week quarters in fiscal years 2014 and 2013, which ended on the Friday closest to September 30, December 31, March 31, and June 30.

<table><tr><td rowspan="2"></td><td colspan="5">Fiscal Year 2014 Quarters Ended</td></tr><tr><td>June 27, 2014</td><td>March 28, 2014</td><td>December 27, 2013</td><td>September 27, 2013</td><td></td></tr><tr><td>(In millions, except per share data)</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Revenue</td><td>$ 3,301</td><td>$ 3,406</td><td>$ 3,528</td><td>$ 3,489</td><td></td></tr><tr><td>Gross margin</td><td>925</td><td>959</td><td>987</td><td>975</td><td></td></tr><tr><td>Income from operations</td><td>410</td><td>444</td><td>444</td><td>478</td><td></td></tr><tr><td>Net income</td><td>320</td><td>395</td><td>428</td><td>427</td><td></td></tr><tr><td>Net income per share:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Basic</td><td>$ 0.98</td><td>$ 1.21</td><td>$ 1.27</td><td>$ 1.20</td><td></td></tr><tr><td>Diluted</td><td>0.95</td><td>1.17</td><td>1.24</td><td>1.16</td><td></td></tr></table>



Fiscal Year 2013 Quarters Ended

<table><tr><td rowspan="2">(In millions, except per share data)</td><td colspan="5">Fiscal Year 2013 Quarters Ended</td></tr><tr><td>June 28, 2013</td><td>March 29, 2013</td><td>December 28, 2012</td><td>September 28, 2012</td><td></td></tr><tr><td>Revenue</td><td>$ 3,425</td><td>$ 3,526</td><td>$ 3,668</td><td>$ 3,732</td><td></td></tr><tr><td>Gross margin</td><td>939</td><td>948</td><td>992</td><td>1,061</td><td></td></tr><tr><td>Income from operations</td><td>448</td><td>465</td><td>555</td><td>624</td><td></td></tr><tr><td>Net income</td><td>348</td><td>416</td><td>492</td><td>582</td><td></td></tr><tr><td>Net income per share:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Basic</td><td>$ 0.97</td><td>$ 1.16</td><td>$ 1.33</td><td>$ 1.48</td><td></td></tr><tr><td>Diluted</td><td>0.94</td><td>1.13</td><td>1.30</td><td>1.42</td><td></td></tr></table>



## ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion of the Company's financial condition, changes in financial condition and results of operations for the fiscal years ended June 27, 2014, June 28, 2013, and June 29, 2012.

You should read this discussion in conjunction with "Item 6. Selected Financial Data" and "Item 8. Financial Statements and Supplementary Data" included elsewhere in this Annual Report on Form 10-K. Except as noted, references to any fiscal year mean the twelve-month period ending on the Friday closest to June 30 of that year.

Some of the statements and assumptions included in this Annual Report on Form 10-K are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act of 1934, each as amended, including, in particular, statements about our plans, strategies and prospects and estimates of industry growth for the fiscal year ending July 3, 2015 and beyond. These statements identify prospective information and may include words such as "expects," "plans," "anticipates," "believes," "estimates," "predicts," "projects" and similar expressions. These forward-looking statements are based on information available to us as of the date of this Annual Report on Form 10-K and management's current views and assumptions. These forward-looking statements are conditioned upon and also involve a number of known and unknown risks, uncertainties and other factors that could cause actual results, performance or events to differ materially from those anticipated by these forward-looking statements. Such risks, uncertainties and other factors may be beyond our control and may pose a risk to our operating and financial condition. Such risks and uncertainties include, but are not limited to: uncertainty in global economic conditions, as consumers and businesses may defer purchases in response to tighter credit and financial news; the impact of variable demand and the adverse pricing environment for disk drives, particularly in view of current business and economic conditions; our ability to successfully qualify, manufacture and sell our disk drive products in increasing volumes on a cost-effective basis and with acceptable quality, particularly new disk drive products with lower cost structures; the impact of competing product announcements; possible excess industry supply with respect to particular disk drive products and our ability to achieve projected cost savings in connection with restructuring plans. Information concerning risks, uncertainties and other factors that could cause results to differ materially from those projected in such forward-looking statements is also set forth in "Item 1A.Risk Factors" of this Annual Report on Form 10-K, which we encourage you to carefully read. These forward-looking statements should not be relied upon as representing our views as of any subsequent date and we undertake no obligation to update forward-looking statements to reflect events or circumstances after the date they were made. The following is a discussion of the financial condition and results of operations for the fiscal years ended June 27, 2014, June 28, 2013, and June 29, 2012.

Our Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows. MD&A is organized as follows:

• Our Company. Discussion of our business.

• Business Overview. Discussion of industry trends and their impact on our business.

• Fiscal Year 2014 Summary. Overview of financial and other highlights affecting us for fiscal year 2014.

• Results of Operations. Analysis of our financial results comparing fiscal year 2014 to 2013 and comparing fiscal years 2013 to 2012.

• Liquidity and Capital Resources. An analysis of changes in our balance sheets and cash flows, and discussion of our financial condition including the credit quality of our investment portfolio and potential sources of liquidity.



• Contractual Obligations and Off-Balance-Sheet Arrangements. Overview of contractual obligations and contingent liabilities and commitments outstanding as of June 27, 2014 and an explanation of off-balance-sheet arrangements.

• Critical Accounting Estimates. Accounting estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results.

## Our Company

We are a leading provider of electronic data storage solutions. Our principal products are hard disk drives, commonly referred to as disk drives, hard drives or HDDs. Hard disk drives are devices that store digitally encoded data on rapidly rotating disks with magnetic surfaces. Disk drives continue to be the primary medium of mass data storage due to their performance attributes, high quality and cost effectiveness. In addition to HDDs, we produce a broad range of electronic data storage products including solid state hybrid drives ("SSHD") and solid state drives ("SSD").

Our products are designed for enterprise servers, and storage systems in mission critical and nearline applications; client compute applications, where our products are designed primarily for desktop and mobile computing; and client non-compute applications, where our products are designed for a wide variety of end user devices such as digital video recorders ("DVRS"), personal data backup systems, portable external storage systems and digital media systems.

We continue to make strategic investments in order to expand our storage solutions, enter new market adjacencies, and expand our technical expertise. As a result of recent acquisitions, our product and solution portfolio for the enterprise data storage industry includes storage enclosures, integrated application platforms and high performance computing ("HPC") data storage solutions. Our storage subsystems support a range of high-speed interconnect technologies to meet demanding cost and performance specifications. Our modular subsystem architecture allows us to support many segments within the networked storage market by enabling different specifications of storage subsystem designs to be created from a standard set of interlocking technology modules.

In addition to our data storage products and subsystems, we provide data storage services for small to medium-sized businesses, including online backup, data protection and recovery solutions.

## Business Overview

Our industry is characterized by several trends and factors that have a material impact on our strategic planning, financial condition and results of operations.

## Industry Supply Balance

From time to time the industry has experienced periods of imbalance between supply and demand. To the extent that the disk drive industry builds capacity based on expectations of demand that do not materialize, price erosion may become more pronounced. Conversely, during periods where demand exceeds supply, price erosion is generally muted.

In early October 2011, floodwaters north of Bangkok, Thailand inundated many manufacturing industrial parks that contained a number of the factories supporting the HDD industry's supply chain. The HDD industry had concentrated a large portion of its supply chain participants within these industrial parks in an effort to reduce cost and improve logistics. As a result, the inundation of floodwaters into these industrial parks had caused the closure or suspension of production by a number of participants within the HDD supply chain.

During the supply chain disruption in fiscal year 2012, we believe demand exceeded supply due to the impact from the flooding in Thailand, resulting in an increase in the average selling price ("ASP").



## Table of Contents

The industry’s ability to manufacture and ship drives had substantially recovered as of the end of fiscal year 2012. In fiscal years 2013 and 2014, we believe the HDD industry’s capacity to manufacture HDDs exceeded demand. However, following the impact of the flooding in Thailand and further industry consolidation in fiscal year 2012, the HDD industry has maintained improved pricing discipline resulting in benign price erosion in fiscal years 2013 and 2014.

## Demand Trends for Disk Drives

We believe that continued growth in digital content requires increasingly higher storage capacity in order to store, aggregate, host, distribute, manage, backup and use such content. We also believe that as architectures evolve to serve the growing commercial and consumer user base throughout the world, the manner which hard drives are delivered to market and utilized by our customers will evolve as well.

We believe that in the foreseeable future the traditional enterprise and client compute markets that require high capacity storage solutions, as well as the data intensive client non-compute markets, will continue to be best served by hard disk drives due to the industry's ability to deliver cost effective, reliable and energy efficient mass storage devices. Furthermore, the increased use of client non-compute devices that consume media-rich digital content streamed from the cloud increases the demand for high capacity disk drives in nearline applications.

Price Erosion. Historically, our industry has been characterized by price declines for disk drive products with comparable capacity, performance and feature sets ("like-for-like products").

Disk drive manufacturers typically attempt to offset price erosion with an improved mix of disk drive products characterized by higher capacity, better performance and additional feature sets and/or product cost reductions.

## Seasonality

The disk drive industry traditionally experiences seasonal variability in demand with higher levels of demand in the second half of the calendar year. This seasonality is driven by consumer spending in the back-to-school season from late summer to fall and the traditional holiday shopping season from fall to winter. In addition, corporate demand is typically higher during the second half of the calendar year.

## Fiscal Year 2014 Summary

During the fiscal year 2014, we shipped 220 million units totaling 202 exabytes, generating revenue of $13.7 billion and gross margins of 28% of revenue. Our operating cash flow was $2.6 billion. We issued $1 billion of 4.75% Senior Notes due 2025 and $800 million of 3.75% Senior Notes due 2018 during the June 2014 and December 2013 quarters, respectively. We repurchased approximately 41 million of our ordinary shares during the year for approximately $1.9 billion, paid dividends of $0.6 billion, paid $0.7 billion for the early redemption and repurchase of debt with a principal value of $0.7 billion. Additionally, we acquired all of the outstanding shares of Xyratex Ltd ("Xyratex"), a leading provider of data storage technology, for approximately $0.4 billion. During the June 2014 quarter, we entered into an agreement to acquire LSI's Accelerated Solutions Division and Flash Components Division from Avago for approximately $0.5 billion. The LSI acquisition is expected to close in the first quarter of the fiscal year 2015.



## Results of Operations

We list in the table below summarized information from our consolidated statements of operations by dollars and as a percentage of revenue:

<table><tr><td rowspan="2">(Dollars in millions)</td><td colspan="3">Fiscal Years Ended</td></tr><tr><td>June 27, 2014</td><td>June 28, 2013</td><td>June 29, 2012</td></tr><tr><td>Revenue</td><td>$ 13,724</td><td>$ 14,351</td><td>$ 14,939</td></tr><tr><td>Cost of revenue</td><td>9,878</td><td>10,411</td><td>10,255</td></tr><tr><td>Gross margin</td><td>3,846</td><td>3,940</td><td>4,684</td></tr><tr><td>Product development</td><td>1,226</td><td>1,133</td><td>1,006</td></tr><tr><td>Marketing and administrative</td><td>722</td><td>635</td><td>528</td></tr><tr><td>Amortization of intangibles</td><td>98</td><td>79</td><td>38</td></tr><tr><td>Restructuring and other, net</td><td>24</td><td>2</td><td>4</td></tr><tr><td>Income from operations</td><td>1,776</td><td>2,091</td><td>3,108</td></tr><tr><td>Other expense, net</td><td>(220)</td><td>(260)</td><td>(226)</td></tr><tr><td>Income before income taxes</td><td>1,556</td><td>1,831</td><td>2,882</td></tr><tr><td>(Benefit from) provision for income taxes</td><td>(14)</td><td>(7)</td><td>20</td></tr><tr><td>Net income</td><td>$ 1,570</td><td>$ 1,838</td><td>$ 2,862</td></tr></table>

<table><tr><td rowspan="2">(as a percentage of Revenue)</td><td colspan="3">Fiscal Years Ended</td></tr><tr><td>June 27, 2014</td><td>June 28, 2013</td><td>June 29, 2012</td></tr><tr><td>Revenue</td><td>100%</td><td>100%</td><td>100%</td></tr><tr><td>Cost of revenue</td><td>72</td><td>73</td><td>69</td></tr><tr><td>Gross margin</td><td>28</td><td>27</td><td>31</td></tr><tr><td>Product development</td><td>9</td><td>8</td><td>7</td></tr><tr><td>Marketing and administrative</td><td>5</td><td>4</td><td>4</td></tr><tr><td>Amortization of intangibles</td><td>1</td><td>1</td><td>—</td></tr><tr><td>Restructuring and other, net</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Income from operations</td><td>13</td><td>14</td><td>21</td></tr><tr><td>Other expense, net</td><td>(2)</td><td>(2)</td><td>(2)</td></tr><tr><td>Income before income taxes</td><td>11</td><td>12</td><td>19</td></tr><tr><td>(Benefit from) provision for income taxes</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Net income</td><td>11%</td><td>12%</td><td>19%</td></tr></table>



The following table summarizes information regarding revenue, volume shipments, exabytes, average selling prices (ASPs) and revenues by channel and geography:

<table><tr><td rowspan="2">(In millions, except percentages, exabytes and ASPs)</td><td colspan="4">Fiscal Years Ended</td></tr><tr><td>June 27, 2014</td><td>June 28, 2013</td><td>June 29, 2012</td><td></td></tr><tr><td>Net Revenue</td><td>$ 13,724</td><td>$ 14,351</td><td>$ 14,939</td><td></td></tr><tr><td>Unit Shipments:</td><td></td><td></td><td></td><td></td></tr><tr><td>Enterprise</td><td>31</td><td>30</td><td>29</td><td></td></tr><tr><td>Client Compute</td><td>144</td><td>151</td><td>156</td><td></td></tr><tr><td>Client Non-Compute</td><td>45</td><td>45</td><td>39</td><td></td></tr><tr><td>Total Units Shipped</td><td>220</td><td>226</td><td>224</td><td></td></tr><tr><td>ASP (per unit)</td><td>$ 61</td><td>$ 63</td><td>$ 66</td><td></td></tr><tr><td>Exabytes Shipped</td><td>202</td><td>185</td><td>150</td><td></td></tr><tr><td>Revenues by Channel (%)</td><td></td><td></td><td></td><td></td></tr><tr><td>OEM</td><td>68%</td><td>68%</td><td>72%</td><td></td></tr><tr><td>Distributors</td><td>20%</td><td>21%</td><td>21%</td><td></td></tr><tr><td>Retail</td><td>12%</td><td>11%</td><td>7%</td><td></td></tr><tr><td>Revenues by Geography (%)</td><td></td><td></td><td></td><td></td></tr><tr><td>Americas</td><td>27%</td><td>27%</td><td>26%</td><td></td></tr><tr><td>EMEA</td><td>19%</td><td>19%</td><td>19%</td><td></td></tr><tr><td>Asia Pacific</td><td>54%</td><td>54%</td><td>55%</td><td></td></tr></table>

Fiscal Year 2014 Compared to Fiscal Year 2013

Revenue

<table><tr><td rowspan="2">(Dollars in millions)</td><td colspan="4">Fiscal Years Ended</td></tr><tr><td>June 27, 2014</td><td>June 28, 2013</td><td>Change</td><td>% Change</td></tr><tr><td>Revenue</td><td>$ 13,724</td><td>$ 14,351</td><td>$ (627)</td><td>(4)%</td></tr></table>

Revenue in fiscal year 2014 decreased approximately 4%, or $0.6 billion, from fiscal year 2013 as a result of a 3% decrease in units shipped and a $2 decrease in the ASP due to price erosion, partially offset by a more favorable product mix.

Gross Margin

<table><tr><td rowspan="2">(Dollars in millions)</td><td colspan="4">Fiscal Years Ended</td></tr><tr><td>June 27, 2014</td><td>June 28, 2013</td><td>Change</td><td>% Change</td></tr><tr><td>Cost of revenue</td><td>$ 9,878</td><td>$ 10,411</td><td>$ (533)</td><td>(5)%</td></tr><tr><td>Gross margin</td><td>$ 3,846</td><td>$ 3,940</td><td>$ (94)</td><td>(2)%</td></tr><tr><td>Gross margin percentage</td><td>28%</td><td>27%</td><td></td><td></td></tr></table>

For fiscal year 2014, gross margin as a percentage of revenue increased to 28% from 27% in the prior fiscal year, as a result of improved product mix and cost savings due to increases in operational efficiencies, offset by modest price erosion.



## Table of Contents

Operating Expenses

<table><tr><td rowspan="2">(Dollars in millions)</td><td colspan="4">Fiscal Years Ended</td></tr><tr><td>June 27, 2014</td><td>June 28, 2013</td><td>Change</td><td>% Change</td></tr><tr><td>Product development</td><td>$ 1,226</td><td>$ 1,133</td><td>$ 93</td><td>8%</td></tr><tr><td>Marketing and administrative</td><td>722</td><td>635</td><td>87</td><td>14%</td></tr><tr><td>Amortization of intangibles</td><td>98</td><td>79</td><td>19</td><td>24%</td></tr><tr><td>Restructuring and other, net</td><td>24</td><td>2</td><td>22</td><td>1,100%</td></tr><tr><td>Operating expenses</td><td>$ 2,070</td><td>$ 1,849</td><td>$ 221</td><td></td></tr></table>

Product Development Expense. Product development expenses for fiscal year 2014 increased from fiscal year 2013 due to increased investments in HDD and alternative storage technologies of approximately $35 million and headcount related costs of approximately $36 million, net of a decrease in variable performance based compensation expenses of $26 million. In addition, the consolidation of Xyratex, acquired on March 31, 2014 contributed approximately $23 million to Product development expense.

Marketing and Administrative Expense. Marketing and administrative expenses for fiscal year 2014 increased from fiscal year 2013 due to a $40 million increase in headcount related expenses due to annual focal increases and increased investments in certain strategic initiatives as well as enhancement of core businesses of $25 million. In addition, the consolidation of Xyratex contributed approximately $15 million to Marketing and administrative expense.

Amortization of Intangibles. Amortization of intangibles for fiscal year 2014 increased from fiscal year 2013 due to the commencement of amortization of certain in-process research and development assets acquired from Samsung's HDD business in December of 2011 and LaCie in August of 2012.

Restructuring and Other, net. Restructuring and other, net for fiscal years 2014 increased from fiscal year 2013 primarily due to a restructuring charge recorded during the December 2013 quarter associated with a reduction in work force.

Other Expense, net

<table><tr><td rowspan="2">(Dollars in millions)</td><td colspan="4">Fiscal Years Ended</td></tr><tr><td>June 27, 2014</td><td>June 28, 2013</td><td>Change</td><td>% Change</td></tr><tr><td>Other expense, net</td><td>$ (220)</td><td>$ (260)</td><td>$ 40</td><td>(15)\%</td></tr></table>

Other expense, net. Other expense, net for fiscal year 2014 decreased by $40 million from fiscal year 2013 due to a $60 million decrease in losses from the early redemption and repurchase of debt and a decrease of $18 million in interest expense due to a reduction in the average interest rate on our outstanding debt. These decreases were partially offset by insurance proceeds of $25 million received during fiscal year 2013 for equipment damaged during the severe flooding in Thailand in October of 2011 and $17 million lower gains on sales of our available for sale securities and strategic investments.

Income Taxes

<table><tr><td rowspan="2">(Dollars in millions)</td><td colspan="4">Fiscal Years Ended</td></tr><tr><td>June 27, 2014</td><td>June 28, 2013</td><td>Change</td><td>% Change</td></tr><tr><td>(Benefit from) provision for income taxes</td><td>$ (14)</td><td>$ (7)</td><td>$ (7)</td><td>100%</td></tr></table>



## Table of Contents

We recorded an income tax benefit of $14 million for fiscal year 2014 compared to an income tax benefit of $7 million for fiscal year 2013. Our fiscal year 2014 benefit from income taxes included $58 million of income tax benefits related to the reversal of a portion of the valuation allowances recorded in prior periods and a net decrease in tax reserves related to audit settlements offset by tax reserves on non-U.S. tax positions taken in prior fiscal years. Our fiscal year 2013 benefit for income taxes included $52 million of income tax benefit from the reversal of a portion of the U.S. valuation allowance recorded in prior periods.

Our Irish tax resident parent holding company owns various U.S. and non-U.S. subsidiaries that operate in multiple non-Irish tax jurisdictions. Our worldwide operating income is either subject to varying rates of tax or is exempt from tax due to tax holidays or tax incentive programs we operate under in Malaysia, Singapore and Thailand. These tax holidays or incentives are scheduled to expire in whole or in part at various dates through 2020.

Our income tax benefit recorded for fiscal year 2014 differed from the provision for income taxes that would be derived by applying the Irish statutory rate of 25% to income before income taxes, primarily due to the net effect of (i) tax benefits related to non-U.S. earnings generated in jurisdictions that are subject to tax holidays or tax incentive programs and are considered indefinitely reinvested outside of Ireland and (ii) a decrease in valuation allowance for certain deferred tax assets. The acquisition of Xyratex is not expected to have a material impact on our effective tax rate in future periods. Fiscal year 2014 included a valuation allowance release associated with post-acquisitions restructuring. Our income tax benefit recorded for fiscal year 2013 differed from the provision for income taxes that would be derived by applying the Irish statutory rate of 25% to income before income taxes, primarily due to the net effect of (i) tax benefits related to non-U.S. earnings generated in jurisdictions that are subject to tax holidays or tax incentive programs and are considered indefinitely reinvested outside of Ireland, and (ii) a decrease in valuation allowance for certain U.S. deferred tax assets. The acquisition of a majority interest in the outstanding shares of LACie did not have a material impact on our effective tax rate in fiscal year 2013.

Based on our non-U.S. ownership structure and subject to (i) potential future increases in our valuation allowance for deferred tax assets; and (ii) a future change in our intention to indefinitely reinvest earnings from our subsidiaries outside of Ireland, we anticipate that our effective tax rate in future periods will generally be less than the Irish statutory rate.

At June 27, 2014, our deferred tax asset valuation allowance was approximately $888 million.

At June 27, 2014, we had net deferred tax assets of $615 million. The realization of these deferred tax assets is primarily dependent on our ability to generate sufficient U.S. and certain non-U.S. taxable income in future periods. Although realization is not assured, we believe that it is more likely than not that these deferred tax assets will be realized. The amount of deferred tax assets considered realizable, however, may increase or decrease in subsequent periods when we re-evaluate the underlying basis for our estimates of future U.S. and certain non-U.S. taxable income.

As of June 27, 2014, the use of approximately $376 million and $90 million of our total U.S. net operating loss and tax credit carry forwards, respectively, is subject to an aggregate annual limitation of $46 million pursuant to U.S. tax law. If certain ownership changes occur in the foreseeable future, there may be an additional annual limitation on our ability to use our total U.S. federal and state net operating loss and credit carryforwards of $2.9 billion, $1.8 billion and $429 million, respectively. It is reasonably possible that such a change could occur. If these ownership changes were to occur, we estimate a one-time charge for additional U.S. income tax expense of approximately $400 million to $500 million may be recorded in the period such change occurs. This additional income tax expense results from a decrease in our net U.S. deferred tax assets recorded through a combination of the write off of deferred tax assets and associated changes to our valuation allowance. We also estimate that the ensuing additional annual limitation on our ability to use our tax attribute carryovers may result in increased U.S. income tax expense associated with such change of approximately $70 million to $85 million each year.



As of June 27, 2014 and June 28, 2013, we had approximately $115 million and $157 million, respectively, of unrecognized tax benefits excluding interest and penalties. The unrecognized tax benefits that, if recognized, would impact the effective tax rate is $115 million and $157 million as of June 27, 2014 and June 28, 2013, respectively, subject to certain future valuation allowance reversals.

It is our policy to include interest and penalties related to unrecognized tax benefits in the provision for taxes on the Consolidated Statements of Operations. During fiscal year 2014, we recognized a net tax expense for interest and penalties of $8 million as compared to a net tax expense for interest and penalties of $2 million during each fiscal year 2013 and fiscal year 2012. As of June 27, 2014, we had $27 million of accrued interest and penalties related to unrecognized tax benefits compared to $19 million in fiscal year 2013.

During the fiscal year ended June 27, 2014, our unrecognized tax benefits excluding interest and penalties decreased by approximately $42 million primarily due to (i) net decreases in prior years unrecognized tax benefits of $54 million, (ii) increases in current year unrecognized tax benefits of $13 million, (iii) decreases associated with the expiration of certain statutes of limitation of $3 million, (iv) increases from other activity, including non-U.S. exchange gains, of $2 million.

During the 12 months beginning June 28, 2014, we expect that our unrecognized tax benefits could be reduced anywhere from $3 million to $50 million as a result of audit settlements and the expiration of certain statutes of limitation.

We are subject to taxation in many jurisdictions globally and are required to file U.S. federal, U.S. state, and non-U.S income tax returns. In June, 2014, we received the Revenue Agent's Report and Notices of Proposed Adjustments for our U.S. federal income tax returns for fiscal years 2008, 2009 and 2010. Our China subsidiaries are under examination by the Chinese tax administration for years 2004 through 2012. These examinations may result in proposed adjustments to our income taxes as filed during these periods. We believe that we have adequately provided for these matters, but there is a reasonable possibility that an adverse outcome of these examinations could have a material effect on our financial results. In this case, we would consider pursuing all possible remedies available to us, including appeals, judicial review and competent authority.

We are no longer subject to tax examination of U.S. federal income tax returns for years prior to fiscal year 2008. With respect to U.S. state and non-U.S. income tax returns, we are generally no longer subject to tax examination for years ending prior to fiscal year 2004. We believe we have provided adequately for all reasonable outcomes.

Fiscal Year 2013 Compared to Fiscal Year 2012

Revenue

<table><tr><td rowspan="2"></td><td colspan="5">Fiscal Years Ended</td></tr><tr><td>June 28, 2013</td><td>June 29, 2012</td><td>Change</td><td>% Change</td><td></td></tr><tr><td>(Dollars in millions)</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Revenue</td><td>$ 14,351</td><td>$ 14,939</td><td>$ (588)</td><td></td><td>(4)%</td></tr></table>

Revenue in fiscal year 2013 decreased approximately 4%, or $0.6 billion, from fiscal year 2012 due to a decrease in the average selling price per unit. The decrease in the average selling price to $63 per unit during fiscal year 2013, as compared to $66 per unit in the prior year, was primarily due to supply constraints beginning in the second quarter of fiscal year 2012 as a result of the severe flooding in Thailand, partially offset by a favorable product mix and slightly higher volumes in fiscal year 2013, which included a full period of Samsung labeled HDD products.



## Table of Contents

Gross Margin

<table><tr><td rowspan="2">(Dollars in millions)</td><td colspan="4">Fiscal Years Ended</td></tr><tr><td>June 28, 2013</td><td>June 29, 2012</td><td>Change</td><td>% Change</td></tr><tr><td>Cost of revenue</td><td>$ 10,411</td><td>$ 10,255</td><td>$ 156</td><td>2%</td></tr><tr><td>Gross margin</td><td>$ 3,940</td><td>$ 4,684</td><td>$ (744)</td><td>(16)%</td></tr><tr><td>Gross margin percentage</td><td>27%</td><td>31%</td><td></td><td></td></tr></table>

For fiscal year 2013, gross margin as a percentage of revenue decreased to 27% from 31% in the prior fiscal year, as a result of higher ASPs during fiscal year 2012. Our ASPs during fiscal year 2012 were increased due to the limited industry supply of hard drives as a result of the severe flooding in Thailand.

Operating Expenses

<table><tr><td rowspan="2">(Dollars in millions)</td><td colspan="4">Fiscal Years Ended</td></tr><tr><td>June 28, 2013</td><td>June 29, 2012</td><td>Change</td><td>% Change</td></tr><tr><td>Product development</td><td>$ 1,133</td><td>$ 1,006</td><td>$ 127</td><td>13%</td></tr><tr><td>Marketing and administrative</td><td>635</td><td>528</td><td>107</td><td>20%</td></tr><tr><td>Amortization of intangibles</td><td>79</td><td>38</td><td>41</td><td>108%</td></tr><tr><td>Restructuring and other, net</td><td>2</td><td>4</td><td>(2)</td><td>(50)%</td></tr><tr><td>Operating expenses</td><td>$ 1,849</td><td>$ 1,576</td><td>$ 273</td><td></td></tr></table>

Product Development Expense. Product development expenses for fiscal year 2013 increased from fiscal year 2012, primarily due to increased investments in HDD and alternative storage technologies of approximately $84 million, and headcount related costs of approximately $41 million, net of a decrease in variable performance based compensation of approximately $7 million.

Marketing and Administrative Expense. Marketing and administrative expenses for fiscal year 2013 increased from fiscal year 2012 primarily due to further investments in certain strategic initiatives as well as enhancement of our core business operations. This, along with our annual focal increases, resulted in additional headcount related costs of $64 million, net of a reduction in variable performance based compensation of $7 million. In addition, the consolidation of LaCie in fiscal year 2013 contributed approximately $32 million to Marketing and administrative expense.

Amortization of Intangibles. Amortization of intangibles for fiscal year 2013 increased as a result of the acquisition of Samsung's HDD business in December of 2011, and LaCie in August of 2012.

Restructuring and Other, net. Restructuring and other, net for fiscal years 2013 and 2012, was not material and primarily related to previously announced restructuring plans.

Other Expense, net

<table><tr><td rowspan="2">(Dollars in millions)</td><td colspan="4">Fiscal Years Ended</td></tr><tr><td>June 28, 2013</td><td>June 29, 2012</td><td>Change</td><td>% Change</td></tr><tr><td>Other expense, net</td><td>$ (260)</td><td>$ (226)</td><td>$ (34)</td><td>15%</td></tr></table>

Other expense, net for fiscal year 2013 compared to fiscal year 2012 increased due to a loss of $141 million on the early redemption and repurchase of debt. These losses were partially offset by gains recorded for sales of our available for sale securities and strategic investments of $61 million, insurance proceeds of $25 million for equipment damaged during the severe flooding in Thailand in October of 2011,



and a decrease in interest expense of $27 million due to a reduction in our average interest rate and total debt levels.

Income Taxes

<table><tr><td rowspan="2"></td><td colspan="5">Fiscal Years Ended</td></tr><tr><td>June 28, 2013</td><td>June 29, 2012</td><td>Change</td><td>% Change</td><td></td></tr><tr><td>(Dollars in millions)</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>(Benefit from) provision for income taxes</td><td>$ (7)</td><td>$ 20</td><td>$ (27)</td><td>(135)%</td><td></td></tr></table>

We recorded an income tax benefit of $7 million for fiscal year 2013 compared to an income tax provision of $20 million for fiscal year 2012. Our fiscal year 2013 benefit for income taxes included $52 million of income tax benefit from the reversal of a portion of the U.S. valuation allowance recorded in prior periods. Our fiscal year 2012 provision for income taxes included $35 million of income tax benefit from the reversal of a portion of the U.S. valuation allowance recorded in prior periods.

Our income tax benefit recorded for fiscal year 2013 differed from the provision for income taxes that would be derived by applying the Irish statutory rate of 25% to income before income taxes, primarily due to the net effect of (i) tax benefits related to non-U.S. earnings generated in jurisdictions that are subject to tax holidays or tax incentive programs and are considered indefinitely reinvested outside of Ireland, and (ii) a decrease in valuation allowance for certain U.S. deferred tax assets. The acquisition of a majority interest in the outstanding shares of LaCie did not have a material impact on our effective tax rate in fiscal year 2013. Our income tax provision recorded for fiscal year 2012 differed from the provision for income taxes that would be derived by applying the Irish statutory rate of 25% to income before income taxes, primarily due to the net effect of (i) tax benefits related to non-U.S. earnings generated in jurisdictions that are subject to tax holidays or tax incentive programs and are considered indefinitely reinvested outside of Ireland, and (ii) a decrease in valuation allowance for certain U.S. deferred tax assets. The acquisition of Samsung's HDD business did not have a significant impact on our effective tax rate in fiscal year 2012.

## Liquidity and Capital Resources

The following sections discuss our principal liquidity requirements, as well as our sources and uses of cash and our liquidity and capital resources. Our cash and cash equivalents are maintained in investments with remaining maturities of 90 days or less at the time of purchase. Our short-term investments consist primarily of readily marketable securities with remaining maturities of more than 90 days at the time of purchase. The principal objectives of our investment policy are the preservation of principal and maintenance of liquidity. We intend to maintain a highly liquid portfolio by investing only in those marketable securities that we believe have active secondary or resale markets. We believe our cash equivalents and short-term investments are liquid and accessible. We operate in some countries that have restrictive regulations over the movement of cash and/or foreign exchange across their borders. However, these restrictions have not impeded our ability to conduct our business, nor do we expect them to in the next 12 months. We are not aware of any downgrades, losses or other significant deterioration in the fair value of our cash equivalents or short-term investments and accordingly, we do not believe the fair value of our short-term investments has significantly changed from the values reported as of June 27, 2014.



Cash and cash equivalents, short-term investments, and restricted cash and investments

<table><tr><td rowspan="2"></td><td colspan="3">As of</td></tr><tr><td>June 27, 2014</td><td>June 28, 2013</td><td>Change</td></tr><tr><td>(Dollars in millions)</td><td>$ 2,634</td><td>$ 1,708</td><td>$ 926</td></tr><tr><td>Cash and cash equivalents</td><td>20</td><td>480</td><td>(460)</td></tr><tr><td>Short-term investments</td><td>4</td><td>101</td><td>(97)</td></tr><tr><td>Restricted cash and investments</td><td>$ 2,658</td><td>$ 2,289</td><td>$ 369</td></tr><tr><td>Total</td><td></td><td></td><td></td></tr></table>

Our cash and cash equivalents, short-term investments and restricted cash and investments increased from June 28, 2013 as a result of net cash provided by operating activities and the proceeds from the issuance of $800 million of our 3.75% Senior Notes due 2018 and $1 billion of our 4.75% Senior Notes due 2025. These cash inflows were partially offset by repurchases of our ordinary shares, redemption and repurchase of certain of our long-term debt, capital expenditures, dividends paid to our shareholders and the acquisition of Xyratex.

The following table summarizes results from the statement of cash flows for the periods indicated:

<table><tr><td rowspan="2"></td><td colspan="4">Fiscal Years Ended</td></tr><tr><td>June 27, 2014</td><td>June 28, 2013</td><td>June 29, 2012</td><td></td></tr><tr><td>(Dollars in millions)</td><td></td><td></td><td></td><td></td></tr><tr><td>Net cash flow provided by (used in):</td><td></td><td></td><td></td><td></td></tr><tr><td>Operating activities</td><td>$ 2,558</td><td>$ 3,047</td><td>$ 3,262</td><td></td></tr><tr><td>Investing activities</td><td>(322)</td><td>(825)</td><td>(1,114)</td><td></td></tr><tr><td>Financing activities</td><td>(1,311)</td><td>(2,222)</td><td>(3,118)</td><td></td></tr><tr><td>Effect of foreign currency exchange rates</td><td>1</td><td>1</td><td>—</td><td></td></tr><tr><td>Net increase (decrease) in cash and cash equivalents</td><td>$ 926</td><td>$ 1</td><td>$ (970)</td><td></td></tr></table>

Cash Provided by Operating Activities

Cash provided by operating activities for fiscal year 2014 was approximately $2.6 billion and includes the effects of net income adjusted for non-cash items including depreciation, amortization, stock-based compensation, and:

• a decrease of $217 million in vendor non-trade receivables primarily related to a change in the contractual relationship with some of our contract manufacturers which reduced the volume of components we sold to them;

• a decrease of $190 million in accounts payable due to a change in the contractual relationship with some of our contract manufacturers which resulted in a reduction in direct materials purchased and subsequently sold to our contract manufacturers; and

• a decrease of $104 million in restricted cash and investments primarily due to the restricted cash and investments held in a rabbi trust being replaced with a standby letter of credit.

Cash provided by operating activities for fiscal year 2013 was approximately $3.0 billion and includes the effects of net income adjusted for non-cash items including depreciation, amortization, stock-based compensation, and:

• a decrease of $661 million in accounts receivable, net, primarily due to a decrease in revenue in the fourth quarter of fiscal year 2013 compared to the prior year period;



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• a decrease of $538 million in accounts payable, primarily due to a reduction in direct materials purchases due to a decrease in build volume in the fourth quarter of fiscal year 2013 compared to the prior year period;

• a decrease of $272 million in vendor non-trade receivables primarily due to a decrease in build volumes in the fourth quarter of fiscal year 2013 compared to the prior year period;

• a decrease of $170 million in accrued expenses, income taxes and warranty, primarily due to decreases in costs related to sales activities resulting from lower sales volumes; and

• a decrease of $102 million in inventory, due to lower volumes in the fourth quarter of fiscal year 2013 compared to the prior year period.

Cash provided by operating activities for fiscal year 2012 was approximately $3.3 billion and includes the effects of net income adjusted for non-cash items including depreciation, amortization, stock-based compensation, impairment of long-lived assets, and:

• an increase of $824 million in accounts receivable, net, due to an increase in revenues;

• an increase of $157 million in accounts payable due to higher direct material purchases related to an increase in volume, partially offset by a change in supplier payment terms; and

• an increase of $145 million in accrued employee compensation reflecting an increase in variable performance-based compensation.

## Cash Used in Investing Activities

In fiscal year 2014, we used $0.3 billion for net cash investing activities, which was primarily due to payments for property, equipment and leasehold improvements of approximately $559 million and the acquisition of Xyratex, of $285 million, partially offset by $508 million of proceeds from sales of short-term investments.

In fiscal year 2013, we used $0.8 billion for net cash investing activities, which was primarily due to payments for property, equipment and leasehold improvements.

In fiscal year 2012, we used $1.1 billion for net cash investing activities, which was primarily due to payments for property, equipment and leasehold improvements of approximately $0.6 billion and net payments for the acquisition of Samsung's HDD business of $0.6 billion.

## Cash Used in Financing Activities

Net cash used in financing activities of $1.3 billion for fiscal year 2014 was primarily attributable to $1.9 billion paid to repurchase 41 million of our ordinary shares, $0.7 billion for the repurchase and redemption of long term debt and $0.6 billion in dividends paid to our shareholders. This use of cash was partially offset by $1.8 billion from aggregate cash generated from the issuance of our 3.75% Senior Notes due in 2018 and 4.75% Senior Notes due in 2025.

Net cash used in financing activities of $2.2 billion for fiscal year 2013 was attributable to $1.7 billion paid to repurchase 54 million of our ordinary shares, $1.2 billion for the repurchase and redemption of long term debt and $0.5 billion in dividends paid to our shareholders. This use of cash was partially offset by the proceeds from the issuance of $1 billion of our 4.75% notes due 2023 and $0.3 billion in proceeds from the issuance of ordinary shares under employee stock plans.

Net cash provided by financing activities of $3.1 billion for fiscal year 2012 was attributable to $2.4 billion paid to repurchase 101 million of our ordinary shares, $0.7 billion in long term debt repayments and $0.4 billion in dividends paid to our shareholders. This use of cash was partially offset by $0.3 billion in proceeds from the exercise of stock options and employee stock purchases.



## Table of Contents

## Liquidity Sources

Our primary sources of liquidity as of June 27, 2014, consisted of: (1) approximately $2.7 billion in cash and cash equivalents, and short-term investments, (2) cash we expect to generate from operations and (3) a $500 million revolving credit facility with an interest rate of LIBOR plus a variable margin to be determined based on the corporate credit rating of the Company at the time a loan is made.

As of June 27, 2014, no borrowings have been drawn under the revolving credit facility or had been utilized for letters of credit. The line of credit is available for borrowings, subject to compliance with financial covenants and other customary conditions to borrowing.

The credit agreement that governs our revolving credit facility, as amended, contains certain covenants that we must satisfy in order to remain in compliance with the credit agreement, as amended. The agreement includes three financial covenants: (1) minimum cash, cash equivalents and marketable securities; (2) a fixed charge coverage ratio; and (3) a net leverage ratio. As of June 27, 2014, we were in compliance with all of the covenants under our Revolving Credit Facility and debt agreements.

As of June 27, 2014, cash and cash equivalents held by non-Irish subsidiaries was $2.6 billion. This amount is potentially subject to taxation in Ireland upon repatriation by means of a dividend into our Irish parent. However, it is our intent to indefinitely reinvest earnings of non-Irish subsidiaries outside of Ireland and our current plans do not demonstrate a need to repatriate such earnings by means of a taxable Irish dividend. Should funds be needed in the Irish parent company and should we be unable to fund parent company activities through means other than a taxable Irish dividend, we would be required to accrue and pay Irish taxes on such dividend.

We believe that our sources of cash will be sufficient to fund our operations and meet our cash requirements for at least the next 12 months.

## Cash Requirements and Commitments

Our liquidity requirements are primarily to meet our working capital, research and development and capital expenditure needs, to fund scheduled payments of principal and interest on our indebtedness, and to fund our dividend. Our ability to fund these requirements will depend on our future cash flows, which are determined by future operating performance, and therefore, subject to prevailing global macroeconomic conditions and financial, business and other factors, some of which are beyond our control.

On July 17, 2014, our Board of Directors approved a quarterly cash dividend of $0.43 per share, which will be payable on August 22, 2014 to shareholders of record as of the close of business on August 8, 2014.

As of June 27, 2014, we were in compliance with all of the covenants under our debt agreements. Based on our current outlook, we expect to be in compliance with the covenants of our debt agreements over the next 12 months.



The carrying value of our long-term debt as of June 27, 2014 and June 28, 2013 was $3.9 billion and $2.8 billion, respectively. The table below presents the principal amounts of our outstanding long-term debt:

<table><tr><td rowspan="2">(Dollars in millions)</td><td colspan="3">As of</td></tr><tr><td>June 27, 2014</td><td>June 28, 2013</td><td>Change</td></tr><tr><td>6.8% Senior Notes due October 2016</td><td>$ 335</td><td>$ 335</td><td>$ —</td></tr><tr><td>3.75% Senior Notes due November 2018</td><td>800</td><td>—</td><td>800</td></tr><tr><td>7.75% Senior Notes due December 2018</td><td>—</td><td>238</td><td>(238)</td></tr><tr><td>6.875% Senior Notes due May 2020</td><td>534</td><td>600</td><td>(66)</td></tr><tr><td>7.00% Senior Notes due November 2021</td><td>251</td><td>600</td><td>(349)</td></tr><tr><td>4.75% Senior Notes due June 2023</td><td>1,000</td><td>1,000</td><td>—</td></tr><tr><td>4.75% Senior Notes due January 2025</td><td>1,000</td><td>—</td><td>1,000</td></tr><tr><td>Other</td><td>—</td><td>4</td><td>(4)</td></tr><tr><td>Total</td><td>$ 3,920</td><td>$ 2,777</td><td>$ 1,143</td></tr></table>

During fiscal year 2014, we repurchased approximately 41 million of our ordinary shares. See "Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities-Repurchases of Our Equity Securities."

On May 29, 2014, we entered into a definitive asset purchase agreement under which we will acquire the assets of LSI's Accelerated Solutions Division ("ASD") and Flash Components Division ("FCD") from Avago for $450 million in cash. The transaction is expected to close in the first quarter of fiscal year 2015, subject to the satisfaction of customary closing conditions and the receipt of certain regulatory approvals, including those required by the Hart-Scott-Rodino Antitrust Improvements Act.

For fiscal year 2015, we expect capital expenditures to be at or below our long-term targeted range of 6-8% of revenue. We require substantial amounts of cash to fund scheduled payments of principal and interest on our indebtedness, future capital expenditures and any increased working capital requirements. We will continue to evaluate and manage the retirement and replacement of existing debt and associated obligations, including evaluating the issuance of new debt securities, exchanging existing debt securities for other debt securities and retiring debt pursuant to privately negotiated transactions, open market purchases or otherwise. In addition, we may selectively pursue strategic alliances, acquisitions and investments, which may require additional capital.



## Contractual Obligations and Commitments

Our contractual cash obligations and commitments as of June 27, 2014, have been summarized in the table below:

<table><tr><td rowspan="2">(Dollars in millions)</td><td rowspan="2">Total</td><td colspan="5">Fiscal Year(s)</td></tr><tr><td>2015</td><td>2016-2017</td><td>2018-2019</td><td>Thereafter</td><td></td></tr><tr><td>Contractual Cash Obligations:</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Long-term debt</td><td>$ 3,920</td><td>$ —</td><td>$ 335</td><td>$ 800</td><td>$ 2,785</td><td></td></tr><tr><td>Interest payments on debt</td><td>1,482</td><td>216</td><td>360</td><td>344</td><td>562</td><td></td></tr><tr><td>Capital expenditures</td><td>189</td><td>109</td><td>80</td><td>—</td><td>—</td><td></td></tr><tr><td>Operating leases (1)</td><td>200</td><td>42</td><td>52</td><td>37</td><td>69</td><td></td></tr><tr><td>Purchase obligations (2)</td><td>772</td><td>772</td><td>—</td><td>—</td><td>—</td><td></td></tr><tr><td>Subtotal</td><td>6,563</td><td>1,139</td><td>827</td><td>1,181</td><td>3,416</td><td></td></tr><tr><td>Commitments:</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Letters of credit or bank guarantees</td><td>104</td><td>104</td><td>—</td><td>—</td><td>—</td><td></td></tr><tr><td>Total</td><td>$ 6,667</td><td>$ 1,243</td><td>$ 827</td><td>$ 1,181</td><td>$ 3,416</td><td></td></tr></table>

(1) Includes total future minimum rent expense under non-cancelable leases for both occupied and vacated facilities (rent expense is shown net of sublease income).

(2) Purchase obligations are defined as contractual obligations for the purchase of goods or services, which are enforceable and legally binding on us, and that specify all significant terms.

As of June 27, 2014, we had a liability for unrecognized tax benefits and an accrual for the payment of related interest totaling $90 million, none of which is expected to be settled within one year. Outside of one year, we are unable to make a reasonably reliable estimate of when cash settlement with a taxing authority will occur.

On May 29, 2014, we entered into a definitive asset purchase agreement under which we will acquire the assets of LSI's Accelerated Solutions Division ("ASD") and Flash Components Division ("FCD") from Avago for $450 million in cash. The transaction is expected to close in the first quarter of fiscal year 2015, subject to the satisfaction of customary closing conditions and the receipt of certain regulatory approvals, including those required by the Hart-Scott-Rodino Antitrust Improvements Act.

## Off-Balance Sheet Arrangements

As of June 27, 2014, we did not have any material off-balance sheet arrangements (as defined in Item 303(a)(4)(ii) of Regulation S-K).

## Critical Accounting Policies

The methods, estimates and judgments we use in applying our most critical accounting policies have a significant impact on the results we report in our consolidated financial statements. The SEC has defined the most critical accounting policies as the ones that are most important to the portrayal of our financial condition and operating results, and require us to make our most difficult and subjective judgments, often as a result of the need to make estimates of matters that are highly uncertain at the time of estimation. Based on this definition, our most critical policies include: establishment of sales program accruals, establishment of warranty accruals, accounting for income taxes, and the accounting for goodwill and other long-lived assets. Below, we discuss these policies further, as well as the estimates and judgments involved. We also have other accounting policies and accounting estimates relating to uncollectible customer accounts, valuation of inventory, valuation of share-based payments and restructuring. We believe that these other accounting policies and accounting estimates either do not generally require us to make



estimates and judgments that are as difficult or as subjective, or it is less likely that they would have a material impact on our reported results of operations for a given period.

Establishment of Sales Program Accruals. We establish certain distributor and OEM sales programs aimed at increasing customer demand. For OEM sales, rebates are typically based on an OEM customer's volume of purchases or other agreed upon rebate programs. For the distribution channel, these programs typically involve rebates related to a distributor's level of sales, order size, advertising or point of sale activity and price protection adjustments. We provide for these obligations at the time that revenue is recorded based on estimated requirements. We estimate these contra-revenue rebates and adjustments based on various factors, including price reductions during the period reported, estimated future price erosion, customer orders, distributor sell-through and inventory levels, program participation, customer claim submittals and sales returns. Our estimates reflect contractual arrangements but also our judgment relating to variables such as customer claim rates and attainment of program goals, and inventory and sell-through levels reported by our distribution customers. Currently, our distributors' inventories are within the historical range.

While we believe we have sufficient experience and knowledge of the market and customer buying patterns to reasonably estimate such rebates and adjustments, actual market conditions or customer behavior could differ from our expectations. As a result, actual payments under these programs, which may spread over several months after the related sale, may vary from the amount accrued. Accordingly, revenues and margins in the period in which the adjustment occurs may be affected.

Significant actual variations in any of the factors upon which we base our contra-revenue estimates could have a material effect on our operating results. In fiscal year 2014, sales programs were approximately 8% of gross revenue. For fiscal years 2013 and 2012, total sales programs ranged from 2% to 10% of gross revenues. Adjustments to revenues due to under or over accruals for sales programs related to revenues reported in prior quarterly periods averaged 0.3% of quarterly gross revenue for fiscal years 2012 through 2013, and were approximately 0.5% of gross revenue in fiscal year 2014. Any future shifts in the industry supply-demand balance as well as other factors may result in a more competitive pricing environment and may cause sales programs as a percentage of gross revenue to increase from the current or historical levels. If such rebates and incentives trend upwards, revenues and margins will be reduced.

Establishment of Warranty Accruals. We estimate probable product warranty costs at the time revenue is recognized. We generally warrant our products for a period of 1 to 5 years. Our warranty provision considers estimated product failure rates and trends (including the timing of product returns during the warranty periods), and estimated repair or replacement costs related to product quality issues, if any. We also exercise judgment in estimating our ability to sell certain repaired disk drives. Should actual experience in any future period differ significantly from our estimates, our future results of operations could be materially affected. Our judgment is subject to a greater degree of subjectivity with respect to newly introduced products because of limited experience with those products upon which to base our warranty estimates.

The actual results with regard to warranty expenditures could have an adverse or favorable effect on our results of operations if the actual rate of unit failure, the cost to repair a unit, or the actual cost required to satisfy customer claims differs from those estimates we used in determining the warranty accrual. Since we typically outsource our warranty repairs, our repair cost is subject to periodic negotiations with vendors and may vary from our estimates. We also exercise judgment in estimating our ability to sell certain repaired disk drives. To the extent such sales fall below our forecast, warranty cost will be adversely impacted.

We review our warranty accrual quarterly for products shipped in prior periods and which are still under warranty. Any changes in the estimates underlying the accrual may result in adjustments that impact the current period gross margins and income. In fiscal years 2014, 2013 and 2012 net changes in estimates of prior warranty accruals as a percentage of revenue were immaterial. Our total warranty cost was 1.3%,



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1.6% and 1.5% of revenue during fiscal years 2014, 2013 and 2012, respectively, while warranty cost related to new shipments (exclusive of the impact of re-estimates of pre-existing liabilities) were 1.3%, 1.3% and 1.1% respectively, for the same periods. Changes in anticipated failure rates of specific products and significant changes in repair or replacement costs have historically been the major reasons for significant changes in prior estimates. Any future changes in failure rates of certain products, as well as changes in repair costs or the cost of replacement parts, may result in increased or decreased warranty accruals.

Accounting for Income Taxes. We account for income taxes pursuant to Accounting Standards Codification (ASC) Topic 740 (ASC 740), Income Taxes. In applying, ASC 740, we make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of tax credits, recognition of income and deductions and calculation of specific tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes, as well as tax liabilities associated with uncertain tax positions. The calculation of tax liabilities involves uncertainties in the application of complex tax rules and the potential for future adjustment of our uncertain tax positions by the Internal Revenue Service or other tax jurisdictions. If estimates of these tax liabilities are greater or less than actual results, an additional tax benefit or provision will result. The deferred tax assets we record each period depend primarily on our ability to generate future taxable income in the United States and certain non-U.S. jurisdictions. Each period, we evaluate the need for a valuation allowance for our deferred tax assets and, if necessary, we adjust the valuation allowance so that net deferred tax assets are recorded only to the extent we conclude it is more likely than not that these deferred tax assets will be realized. If our outlook for future taxable income changes significantly, our assessment of the need for a valuation allowance may also change.

Assessing Goodwill and Other Long-lived Assets for Impairment. We account for goodwill in accordance with ASC Topic 350, Intangibles—Goodwill and Other. As permitted by ASC 350, we perform a qualitative assessment at the end of each reporting period to determine if any events or circumstances exist, such as an adverse change in business climate or a decline in the overall industry that would indicate that it would more likely than not reduce the fair value of a reporting unit below its carrying amount. Based on the qualitative assessment, if it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then the Company is not required to perform the two-step goodwill impairment test.

In accordance with ASC 360-05-4, Impairment or Disposal of Long-lived Assets, we test other long-lived assets, including property, equipment and leasehold improvements and other intangible assets subject to amortization, for recoverability whenever events or changes in circumstances indicate that the carrying values of those assets may not be recoverable. We assess the recoverability of an asset group by determining if the carrying value of the asset group exceeds the sum of the projected undiscounted cash flows expected to result from the use and eventual disposition of the assets over the remaining economic life of the primary asset in the asset group. If the recoverability test indicates that the carrying value of the asset group is not recoverable, we will estimate the fair value of the asset group using the same approaches indicated above for ASC 360 step two and compare it to its carrying value. The excess of the carrying value over the fair value is allocated pro rata to derive the adjusted carrying value of each asset in the asset group. The adjusted carrying value of each asset in the asset group is not reduced below its fair value.

## Recent Accounting Pronouncements

See "Item 8. Financial Statements and Supplementary Data-Note 1. Basis of Presentation and Summary of Significant Accounting Policies" for information regarding the effect of new accounting pronouncements on our financial statements.



## ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have exposure to market risks due to the volatility of interest rates, foreign currency exchange rates, equity and bond markets. A portion of these risks are hedged, but fluctuations could impact our results of operations, financial position and cash flows. Additionally, we have exposure to downgrades in the credit ratings of our counterparties as well as exposure related to our credit rating changes.

Interest Rate Risk. Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio. As of June 27, 2014, the Company had no available-for-sale securities that had been in a continuous unrealized loss position for a period greater than 12 months. The Company determined no available-for-sale securities were other-than-temporarily impaired as of June 27, 2014. We currently do not use derivative financial instruments in our investment portfolio.

We have fixed rate debt obligations. We enter into debt obligations for general corporate purposes including capital expenditures and working capital needs. We currently do not use interest rate derivatives to hedge interest rate exposure on our outstanding debt.

The table below presents principal amounts and related weighted average interest rates by year of maturity for our investment portfolio and debt obligations as of June 27, 2014. All short-term investments mature in four years or less.

Fiscal Years Ended

<table><tr><td>(Dollars in millions, except percentages)</td><td>2015</td><td>2016</td><td>2017</td><td>2018</td><td>2019</td><td>Thereafter</td><td>Total</td><td>Fair Value at June 27, 2014</td></tr><tr><td>Assets</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Cash</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>equivalents:</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Fixed rate</td><td>$ 2,309</td><td>$ —</td><td>$ —</td><td>$ —</td><td>$ —</td><td>$ —</td><td>$ 2,309</td><td>$ 2,309</td></tr><tr><td>Average interest rate</td><td>0.27%</td><td></td><td></td><td></td><td></td><td></td><td>0.27%</td><td></td></tr><tr><td>Short-term investments:</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Fixed rate</td><td>$ 19</td><td>$ —</td><td>$ 1</td><td>$ —</td><td>$ —</td><td>$ —</td><td>$ 20</td><td>$ 20</td></tr><tr><td>Average interest rate</td><td>0.18%</td><td></td><td>4.47%</td><td></td><td></td><td></td><td>0.40%</td><td></td></tr><tr><td>Total fixed income</td><td>$ 2,328</td><td>$ —</td><td>$ 1</td><td>$ —</td><td>$ —</td><td>$ —</td><td>$ 2,329</td><td>$ 2,329</td></tr><tr><td>Average interest rate</td><td>0.27%</td><td></td><td>4.47%</td><td></td><td></td><td></td><td>0.27%</td><td></td></tr><tr><td>Debt</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Fixed rate</td><td>$ —</td><td>$ —</td><td>$ 335</td><td>$ —</td><td>$ 800</td><td>$ —</td><td>2,785</td><td>$ 3,920</td></tr><tr><td>Average interest rate</td><td></td><td></td><td>6.80%</td><td></td><td>3.75%</td><td>5.36%</td><td>5.15%</td><td></td></tr></table>

Foreign Currency Exchange Risk. We may enter into foreign currency forward exchange contracts to manage exposure related to certain foreign currency commitments and anticipated foreign currency denominated expenditures. Our policy prohibits us from entering into derivative financial instruments for speculative or trading purposes. During fiscal years 2014 and 2013, we did not enter into any hedges of net investments in foreign operations.

We also hedge a portion of our foreign currency denominated balance sheet positions with foreign currency forward exchange contracts to reduce the risk that our earnings will be adversely affected by changes in currency exchange rates. The changes in fair value of these hedges are recognized in earnings in the same period as the gains and losses from the remeasurement of the assets and liabilities. These foreign currency forward exchange contracts are not designated as hedging instruments under ASC 815, Derivatives and Hedging. All these forward contracts mature within 12 months.

We evaluate hedging effectiveness prospectively and retrospectively and record any ineffective portion of the hedging instruments in Costs of Revenue on the Consolidated Statements of Operations. We did not






have any material net gains (losses) recognized in Costs of Revenue for cash flow hedges due to hedge ineffectiveness or discontinued cash flow hedges during fiscal years 2014 and 2013.

The table below provides information as of June 27, 2014 about our foreign currency forward exchange contracts. The table is provided in U.S. dollar equivalent amounts and presents the notional amounts (at the contract exchange rates) and the weighted average contractual foreign currency exchange rates.

<table><tr><td>(Dollars in millions, except average contract rate)</td><td>Notional Amount</td><td>Average Contract Rate</td><td>Estimated Fair Value (1)</td></tr><tr><td>Foreign currency forward exchange contracts:</td><td></td><td></td><td></td></tr><tr><td>Thai baht</td><td>$ 143</td><td>32.83</td><td>$ 2</td></tr><tr><td>British Pound Sterling</td><td>25</td><td>1.55</td><td>3</td></tr><tr><td>Malaysian Ringitt</td><td>9</td><td>3.32</td><td>—</td></tr><tr><td>Total</td><td>$ 177</td><td></td><td>$ 5</td></tr></table>

(1) Equivalent to the unrealized net gain (loss) on existing contracts.

Other Market Risks. We have exposure to counterparty credit downgrades in the form of credit risk related to our foreign currency forward exchange contracts and our fixed income portfolio. We monitor and limit our credit exposure for our foreign currency forward exchange contracts by performing ongoing credit evaluations. We also manage the notional amount of contracts entered into with any one counterparty, and we maintain limits on maximum tenor of contracts based on the credit rating of the financial institutions. Additionally, the investment portfolio is diversified and structured to minimize credit risk. As of June 27, 2014, we had no material credit exposure related to our foreign currency forward exchange contracts. Changes in our corporate issuer credit ratings have minimal impact on our financial results, but downgrades may negatively impact our future transaction costs and our ability to execute transactions with various counterparties.

We are subject to equity market risks due to changes in the fair value of the notional investments selected by our employees as part of our Seagate Deferred Compensation Plan (the "SDCP"). During the fiscal year 2014, the Company entered into a Total Return Swap ("TRS") in order to manage the equity market risks associated with the SDCP liabilities. The Company pays a floating rate, based on LIBOR plus an interest rate spread, on the notional amount of the TRS. The TRS is designed to substantially offset changes in the SDCP liability due to changes in the value of the investment options made by employees.



## ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

## SEAGATE TECHNOLOGY PLC

## CONSOLIDATED BALANCE SHEETS
(In millions, except share and per share data)

<table><tr><td></td><td>June 27, 2014</td><td>June 28, 2013</td></tr><tr><td>ASSETS</td><td></td><td></td></tr><tr><td>Current assets:</td><td></td><td></td></tr><tr><td>Cash and cash equivalents</td><td>$ 2,634</td><td>$ 1,708</td></tr><tr><td>Short-term investments</td><td>20</td><td>480</td></tr><tr><td>Restricted cash and investments</td><td>4</td><td>101</td></tr><tr><td>Accounts receivable, net</td><td>1,729</td><td>1,670</td></tr><tr><td>Inventories</td><td>985</td><td>854</td></tr><tr><td>Deferred income taxes</td><td>126</td><td>115</td></tr><tr><td>Other current assets</td><td>279</td><td>484</td></tr><tr><td>Total current assets</td><td>5,777</td><td>5,412</td></tr><tr><td>Property, equipment and leasehold improvements, net</td><td>2,136</td><td>2,269</td></tr><tr><td>Goodwill</td><td>537</td><td>476</td></tr><tr><td>Other intangible assets, net</td><td>359</td><td>405</td></tr><tr><td>Deferred income taxes</td><td>499</td><td>456</td></tr><tr><td>Other assets, net</td><td>184</td><td>225</td></tr><tr><td>Total Assets</td><td>$ 9,492</td><td>$ 9,243</td></tr><tr><td>LIABILITIES AND EQUITY</td><td></td><td></td></tr><tr><td>Current liabilities:</td><td></td><td></td></tr><tr><td>Accounts payable</td><td>$ 1,549</td><td>$ 1,690</td></tr><tr><td>Accrued employee compensation</td><td>296</td><td>335</td></tr><tr><td>Accrued warranty</td><td>148</td><td>176</td></tr><tr><td>Accrued expenses</td><td>405</td><td>407</td></tr><tr><td>Current portion of long-term debt</td><td>—</td><td>3</td></tr><tr><td>Total current liabilities</td><td>2,398</td><td>2,611</td></tr><tr><td>Long-term accrued warranty</td><td>125</td><td>144</td></tr><tr><td>Long-term accrued income taxes</td><td>90</td><td>87</td></tr><tr><td>Other non-current liabilities</td><td>127</td><td>121</td></tr><tr><td>Long-term debt, less current portion</td><td>3,920</td><td>2,774</td></tr><tr><td>Total Liabilities</td><td>6,660</td><td>5,737</td></tr></table>

Commitments and contingencies (See Notes 14 and 15)

<table><tr><td>Equity:</td><td></td><td></td></tr><tr><td>Seagate Technology plc shareholders&#x27; equity:</td><td></td><td></td></tr><tr><td>Preferred shares, $0.00001 par value per share—100 million authorized; no shares issued or outstanding</td><td>—</td><td>—</td></tr><tr><td>Ordinary shares, $0.00001 par value per share—1,250 million authorized; 326,539,322 issued and outstanding at June 27, 2014 and 359,437,036 issued and outstanding at June 28, 2013</td><td>—</td><td>—</td></tr><tr><td>Additional paid-in capital</td><td>5,511</td><td>5,286</td></tr><tr><td>Accumulated other comprehensive loss</td><td>(2)</td><td>(13)</td></tr><tr><td>Accumulated deficit</td><td>(2,677)</td><td>(1,778)</td></tr><tr><td>Total Seagate Technology plc Shareholders&#x27; Equity</td><td>2,832</td><td>3,495</td></tr><tr><td>Noncontrolling interest</td><td>—</td><td>11</td></tr><tr><td>Total Equity</td><td>2,832</td><td>3,506</td></tr><tr><td>Total Liabilities and Equity</td><td>$ 9,492</td><td>$ 9,243</td></tr></table>



## SEAGATE TECHNOLOGY PLC

## CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)

<table><tr><td rowspan="2"></td><td colspan="3">Fiscal Years Ended</td></tr><tr><td>June 27, 2014</td><td>June 28, 2013</td><td>June 29, 2012</td></tr><tr><td>Revenue</td><td>$ 13,724</td><td>$ 14,351</td><td>$ 14,939</td></tr><tr><td>Cost of revenue</td><td>9,878</td><td>10,411</td><td>10,255</td></tr><tr><td>Product development</td><td>1,226</td><td>1,133</td><td>1,006</td></tr><tr><td>Marketing and administrative</td><td>722</td><td>635</td><td>528</td></tr><tr><td>Amortization of intangibles</td><td>98</td><td>79</td><td>38</td></tr><tr><td>Restructuring and other, net</td><td>24</td><td>2</td><td>4</td></tr><tr><td>Total operating expenses</td><td>11,948</td><td>12,260</td><td>11,831</td></tr><tr><td>Income from operations</td><td>1,776</td><td>2,091</td><td>3,108</td></tr><tr><td>Interest income</td><td>8</td><td>8</td><td>8</td></tr><tr><td>Interest expense</td><td>(195)</td><td>(214)</td><td>(241)</td></tr><tr><td>Other, net</td><td>(33)</td><td>(54)</td><td>7</td></tr><tr><td>Other expense, net</td><td>(220)</td><td>(260)</td><td>(226)</td></tr><tr><td>Income before income taxes</td><td>1,556</td><td>1,831</td><td>2,882</td></tr><tr><td>(Benefit from) provision for income taxes</td><td>(14)</td><td>(7)</td><td>20</td></tr><tr><td>Net income</td><td>1,570</td><td>1,838</td><td>2,862</td></tr><tr><td colspan="4">Less: Net income attributable to noncontrolling interest</td></tr><tr><td>Net income attributable to Seagate Technology plc</td><td>$ 1,570</td><td>$ 1,838</td><td>$ 2,862</td></tr><tr><td>Net income per share attributable to Seagate Technology plc ordinary shareholders:</td><td></td><td></td><td></td></tr><tr><td>Basic</td><td>$ 4.66</td><td>$ 4.97</td><td>$ 6.72</td></tr><tr><td>Diluted</td><td>4.52</td><td>4.81</td><td>6.49</td></tr><tr><td>Number of shares used in per share calculations:</td><td></td><td></td><td></td></tr><tr><td>Basic</td><td>337</td><td>370</td><td>426</td></tr><tr><td>Diluted</td><td>347</td><td>382</td><td>441</td></tr><tr><td>Cash dividends declared per Seagate Technology plc ordinary share</td><td>$ 1.67</td><td>$ 1.40</td><td>$ 0.86</td></tr></table>

See notes to consolidated financial statements.



## SEAGATE TECHNOLOGY PLC

## CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)

<table><tr><td rowspan="2"></td><td colspan="4">Fiscal Years Ended</td></tr><tr><td>June 27, 2014</td><td>June 28, 2013</td><td>June 29, 2012</td><td></td></tr><tr><td>Net income</td><td>$ 1,570</td><td>$ 1,838</td><td>$ 2,862</td><td></td></tr><tr><td>Other comprehensive income, net of tax:</td><td></td><td></td><td></td><td></td></tr><tr><td>Cash flow hedges</td><td></td><td></td><td></td><td></td></tr><tr><td>Change in net unrealized gain (loss) on cash flow hedges</td><td>(1)</td><td>—</td><td>(7)</td><td></td></tr><tr><td>Less: reclassification for amounts included in net income</td><td>—</td><td>—</td><td>5</td><td></td></tr><tr><td>Net change</td><td>(1)</td><td>—</td><td>(2)</td><td></td></tr><tr><td>Marketable securities</td><td></td><td></td><td></td><td></td></tr><tr><td>Change in net unrealized gain (loss) on marketable securities</td><td>1</td><td>21</td><td>(3)</td><td></td></tr><tr><td>Less: reclassification for amounts included in net income</td><td>2</td><td>(23)</td><td>4</td><td></td></tr><tr><td>Net change</td><td>3</td><td>(2)</td><td>1</td><td></td></tr><tr><td>Post-retirement plans</td><td></td><td></td><td></td><td></td></tr><tr><td>Change in unrealized gain (loss) on post-retirement plans</td><td>1</td><td>(3)</td><td>(3)</td><td></td></tr><tr><td>Less: reclassification for amounts included in net income</td><td>—</td><td>—</td><td>1</td><td></td></tr><tr><td>Net change</td><td>1</td><td>(3)</td><td>(2)</td><td></td></tr><tr><td>Foreign currency translation adjustments</td><td></td><td></td><td></td><td></td></tr><tr><td>Foreign currency translation adjustments</td><td>8</td><td>1</td><td>—</td><td></td></tr><tr><td>Total other comprehensive income (loss), net of tax</td><td>11</td><td>(4)</td><td>(3)</td><td></td></tr><tr><td>Comprehensive income</td><td>1,581</td><td>1,834</td><td>2,859</td><td></td></tr><tr><td>Less: Comprehensive income attributable to noncontrolling interest</td><td>—</td><td>1</td><td>—</td><td></td></tr><tr><td>Comprehensive income attributable to Seagate Technology plc</td><td>$ 1,581</td><td>$ 1,833</td><td>$ 2,859</td><td></td></tr></table>

See notes to consolidated financial statements.



## SEAGATE TECHNOLOGY PLC

## CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)

<table><tr><td rowspan="2"></td><td colspan="4">Fiscal Years Ended</td></tr><tr><td>June 27, 2014</td><td>June 28, 2013</td><td>June 29, 2012</td><td></td></tr><tr><td>OPERATING ACTIVITIES</td><td></td><td></td><td></td><td></td></tr><tr><td>Net income</td><td>$ 1,570</td><td>$ 1,838</td><td>$ 2,862</td><td></td></tr><tr><td>Adjustments to reconcile net income to net cash from operating activities:</td><td></td><td></td><td></td><td></td></tr><tr><td>Depreciation and amortization</td><td>879</td><td>873</td><td>814</td><td></td></tr><tr><td>Share-based compensation</td><td>118</td><td>76</td><td>51</td><td></td></tr><tr><td>Loss on redemption and repurchase of debt</td><td>81</td><td>141</td><td>17</td><td></td></tr><tr><td>Gain on sale of investments</td><td>(32)</td><td>(61)</td><td>(12)</td><td></td></tr><tr><td>Gain on sale of property and equipment</td><td>(4)</td><td>(36)</td><td>(25)</td><td></td></tr><tr><td>Deferred income taxes</td><td>(67)</td><td>(70)</td><td>(28)</td><td></td></tr><tr><td>Other non-cash operating activities, net</td><td>14</td><td>12</td><td>7</td><td></td></tr><tr><td>Changes in operating assets and liabilities:</td><td></td><td></td><td></td><td></td></tr><tr><td>Restricted cash and investments</td><td>104</td><td>—</td><td>—</td><td></td></tr><tr><td>Accounts receivable, net</td><td>4</td><td>661</td><td>(824)</td><td></td></tr><tr><td>Inventories</td><td>(20)</td><td>102</td><td>99</td><td></td></tr><tr><td>Accounts payable</td><td>(190)</td><td>(538)</td><td>157</td><td></td></tr><tr><td>Accrued employee compensation</td><td>(55)</td><td>(14)</td><td>145</td><td></td></tr><tr><td>Accrued expenses, income taxes and warranty</td><td>(80)</td><td>(170)</td><td>54</td><td></td></tr><tr><td>Vendor non-trade receivables</td><td>217</td><td>272</td><td>(82)</td><td></td></tr><tr><td>Other assets and liabilities</td><td>19</td><td>(39)</td><td>27</td><td></td></tr><tr><td>Net cash provided by operating activities</td><td>2,558</td><td>3,047</td><td>3,262</td><td></td></tr><tr><td>INVESTING ACTIVITIES</td><td></td><td></td><td></td><td></td></tr><tr><td>Acquisition of property, equipment and leasehold improvements</td><td>(559)</td><td>(786)</td><td>(636)</td><td></td></tr><tr><td>Proceeds from the sale of property and equipment</td><td>3</td><td>29</td><td>20</td><td></td></tr><tr><td>Proceeds from the sale of strategic investments</td><td>72</td><td>—</td><td>—</td><td></td></tr><tr><td>Purchases of short-term investments</td><td>(88)</td><td>(351)</td><td>(454)</td><td></td></tr><tr><td>Sales of short-term investments</td><td>508</td><td>296</td><td>397</td><td></td></tr><tr><td>Maturities of short-term investments</td><td>61</td><td>38</td><td>119</td><td></td></tr><tr><td>Cash used in acquisition of businesses, net of cash acquired</td><td>(285)</td><td>(36)</td><td>(561)</td><td></td></tr><tr><td>Other investing activities, net</td><td>(34)</td><td>(15)</td><td>1</td><td></td></tr><tr><td>Net cash used in investing activities</td><td>(322)</td><td>(825)</td><td>(1,114)</td><td></td></tr><tr><td>FINANCING ACTIVITIES</td><td></td><td></td><td></td><td></td></tr><tr><td>Net proceeds from issuance of long-term debt</td><td>1,781</td><td>986</td><td>—</td><td></td></tr><tr><td>Repayments of long-term debt</td><td>(725)</td><td>(1,224)</td><td>(670)</td><td></td></tr><tr><td>Repurchases of ordinary shares</td><td>(1,912)</td><td>(1,654)</td><td>(2,426)</td><td></td></tr><tr><td>Dividends to shareholders</td><td>(557)</td><td>(518)</td><td>(372)</td><td></td></tr><tr><td>Proceeds from issuance of ordinary shares under employee stock plans</td><td>107</td><td>259</td><td>344</td><td></td></tr><tr><td>Other financing activities, net</td><td>(5)</td><td>(71)</td><td>6</td><td></td></tr><tr><td>Net cash used in financing activities</td><td>(1,311)</td><td>(2,222)</td><td>(3,118)</td><td></td></tr><tr><td>Effect of foreign currency exchange rate changes on cash and cash equivalents</td><td>1</td><td>1</td><td>—</td><td></td></tr><tr><td>Increase (decrease) in cash and cash equivalents</td><td>926</td><td>1</td><td>(970)</td><td></td></tr><tr><td>Cash and cash equivalents at the beginning of the year</td><td>1,708</td><td>1,707</td><td>2,677</td><td></td></tr><tr><td>Cash and cash equivalents at the end of the year</td><td>$ 2,634</td><td>$ 1,708</td><td>$ 1,707</td><td></td></tr><tr><td>Supplemental Disclosure of Cash Flow Information</td><td></td><td></td><td></td><td></td></tr><tr><td>Cash paid for interest</td><td>$ 198</td><td>$ 219</td><td>$ 221</td><td></td></tr><tr><td>Cash paid for income taxes, net of refunds</td><td>$ 50</td><td>$ 48</td><td>$ 8</td><td></td></tr></table>



## SEAGATE TECHNOLOGY PLC

## CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

## For Fiscal Years Ended June 27, 2014, June 28, 2013 and June 29, 2012 (In millions)

<table><tr><td rowspan="2"></td><td rowspan="2">Total Equity</td><td colspan="7">Seagate Technology plc Ordinary Shareholders</td></tr><tr><td>Number of Ordinary Shares</td><td>Par Value of Shares</td><td>Additional Paid-in Capital</td><td>Accumulated Other Comprehensive Loss</td><td>Accumulated Deficit</td><td>Total</td><td>Noncontrolling Interest</td></tr><tr><td>Balance at July 1, 2011</td><td>$ 2,463</td><td>425</td><td>—</td><td>$ 3,980</td><td>(6)</td><td>$ (1,511)</td><td>$ 2,463</td><td>—</td></tr><tr><td>Net income</td><td>2,862</td><td></td><td></td><td></td><td></td><td>2,862</td><td>2,862</td><td>—</td></tr><tr><td>Other comprehensive loss</td><td>(3)</td><td></td><td></td><td></td><td>(3)</td><td></td><td>(3)</td><td>—</td></tr><tr><td>Issuance of ordinary shares under employee stock plans</td><td>344</td><td>27</td><td></td><td>344</td><td></td><td></td><td>344</td><td></td></tr><tr><td>Repurchases of ordinary shares</td><td>(2,426)</td><td>(101)</td><td></td><td></td><td></td><td>(2,426)</td><td>(2,426)</td><td></td></tr><tr><td>Dividends to shareholders</td><td>(369)</td><td></td><td></td><td></td><td></td><td>(369)</td><td>(369)</td><td></td></tr><tr><td>Share-based compensation</td><td>51</td><td></td><td></td><td>51</td><td></td><td></td><td>51</td><td></td></tr><tr><td>Issuance of ordinary shares, in connection with the acquisition of Samsung HDD assets and liabilities</td><td>569</td><td>45</td><td></td><td>569</td><td></td><td></td><td>569</td><td></td></tr><tr><td>Tax benefit from exercise of stock options</td><td>6</td><td>—</td><td></td><td>6</td><td>—</td><td></td><td>6</td><td>—</td></tr><tr><td>Balance at June 29, 2012</td><td>3,497</td><td>396</td><td>—</td><td>4,950</td><td>(9)</td><td>(1,444)</td><td>3,497</td><td>—</td></tr><tr><td>Net income</td><td>1,838</td><td></td><td></td><td></td><td></td><td>1,838</td><td>1,838</td><td>—</td></tr><tr><td>Other comprehensive loss</td><td>(4)</td><td></td><td></td><td></td><td>(5)</td><td></td><td>(5)</td><td>1</td></tr><tr><td>Issuance of ordinary shares under employee stock plans</td><td>259</td><td>17</td><td></td><td>259</td><td></td><td></td><td>259</td><td></td></tr><tr><td>Repurchases of ordinary shares</td><td>(1,654)</td><td>(54)</td><td></td><td></td><td></td><td>(1,654)</td><td>(1,654)</td><td></td></tr><tr><td>Dividends to shareholders</td><td>(518)</td><td></td><td></td><td></td><td></td><td>(518)</td><td>(518)</td><td></td></tr><tr><td>Share-based compensation</td><td>76</td><td></td><td></td><td>76</td><td></td><td></td><td>76</td><td></td></tr><tr><td>Acquisition of majority shares of LaCie S.A.</td><td>72</td><td></td><td></td><td></td><td></td><td></td><td></td><td>72</td></tr><tr><td>Purchase of additional subsidiary shares from noncontrolli interest</td><td>(61)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>(62)</td></tr><tr><td>Tax benefit from exercise of stock options</td><td>1</td><td>—</td><td>—</td><td>1</td><td>—</td><td>—</td><td>1</td><td>—</td></tr><tr><td>Balance at June 28,</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr></table>



<table><tr><td>2013</td><td>3,506</td><td>359</td><td>—</td><td>5,286</td><td>(13)</td><td>(1,778)</td><td>3,495</td><td>11</td></tr><tr><td>Net income</td><td>1,570</td><td></td><td></td><td></td><td></td><td>1,570</td><td>1,570</td><td>—</td></tr><tr><td>Other</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>comprehensi</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>income</td><td>11</td><td></td><td></td><td></td><td>10</td><td></td><td>10</td><td>1</td></tr><tr><td>Issuance of</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>ordinary</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>shares</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>under</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>employee</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>stock plans</td><td>107</td><td>9</td><td></td><td>107</td><td></td><td></td><td>107</td><td></td></tr><tr><td>Repurchases</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>of ordinary</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>shares</td><td>(1,912)</td><td>(41)</td><td></td><td></td><td></td><td>(1,912)</td><td>(1,912)</td><td></td></tr><tr><td>Dividends to</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>shareholders</td><td>(557)</td><td></td><td></td><td></td><td></td><td>(557)</td><td>(557)</td><td></td></tr><tr><td>Share-based</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>compensatio</td><td>118</td><td></td><td></td><td>118</td><td></td><td></td><td>118</td><td></td></tr><tr><td>Purchase of</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>additional</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>subsidiary</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>shares from</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>noncontrolli</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>interest</td><td>(11)</td><td></td><td></td><td></td><td>1</td><td></td><td>1</td><td>(12)</td></tr><tr><td>Balance at</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>June 27,</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>2014</td><td>$ 2,832</td><td>327</td><td>$ —</td><td>$ 5,511</td><td>$ —</td><td>(2)</td><td>$ (2,677)</td><td>$ 2,832</td><td>$ —</td></tr></table>

See notes to consolidated financial statements.



# SEAGATE TECHNOLOGY PLC

# NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

## 1. Basis of Presentation and Summary of Significant Accounting Policies

## Organization

The Company is a leading provider of electronic data storage solutions. Its principal products are hard disk drives, commonly referred to as disk drives, hard drives or HDDs. Hard disk drives are devices that store digitally encoded data on rapidly rotating disks with magnetic surfaces. Disk drives are used as the primary medium for storing electronic data. In addition to HDDs, we produce a broad range of electronic data storage products including solid state hybrid drives ("SSHD") and solid state drives ("SSD").

The Company's products are designed for enterprise servers and storage systems in mission critical and nearline applications; client compute applications, where its products are designed primarily for desktop and mobile computing; and client non-compute applications, where its products are designed for a wide variety of end user devices such as digital video recorders ("DVRs"), personal data backup systems, portable external storage systems and digital media systems.

The Company continues to make strategic investments in order to expand its storage solutions, enter new market adjacencies, and expand our technical expertise. As a result of recent acquisitions, the Company's product and solution portfolio for the enterprise data storage industry includes storage enclosures, integrated application platforms and high performance computing ("HPC") data storage solutions. The Company's storage subsystems support a range of high-speed interconnect technologies to meet demanding cost and performance specifications. The Company's modular subsystem architecture allows it to support many segments within the networked storage market by enabling different specifications of storage subsystem designs to be created from a standard set of interlocking technology modules.

In addition to manufacturing and selling data storage products, the Company provides data storage services for small to medium-sized businesses, including online backup, data protection and recovery solutions.

## Basis of Presentation and Consolidation

The consolidated financial statements include the accounts of the Company and all its wholly-owned and majority-owned subsidiaries, after elimination of intercompany transactions and balances.

The preparation of financial statements in accordance with U.S. generally accepted accounting principles also requires management to make estimates and assumptions that affect the amounts reported in the Company's condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. The methods, estimates and judgments the Company uses in applying its most critical accounting policies have a significant impact on the results the Company reports in its condensed consolidated financial statements. The condensed consolidated financial statements reflect, in the opinion of management, all material adjustments necessary to present fairly the condensed consolidated financial position, results of operations, comprehensive income, cash flows and shareholders' equity for the periods presented. Such adjustments are of a normal and recurring nature.

The Company operates and reports financial results on a fiscal year of 52 or 53 weeks ending on the Friday closest to June 30. Accordingly, fiscal years 2014, 2013 and 2012 were comprised of 52 weeks and ended on June 27, 2014, June 28, 2013, and June 29, 2012, respectively. All references to years in the Notes to Consolidated Financial Statements represent fiscal years unless otherwise noted.



# SEAGATE TECHNOLOGY PLC

# NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Summary of Significant Accounting Policies

Cash, Cash Equivalents and Short-Term Investments. The Company considers all highly liquid investments with a remaining maturity of 90 days or less at the time of purchase to be cash equivalents. Cash equivalents are carried at cost, which approximates fair value. The Company's short-term investments are primarily comprised of readily marketable debt securities with remaining maturities of more than 90 days at the time of purchase. The Company has classified its entire investment portfolio as available-for-sale and it is stated at fair value with unrealized gains and losses included in Accumulated other comprehensive income (loss), which is a component of Shareholders' Equity. The Company evaluates the available-for-sale securities in an unrealized loss position for other-than-temporary impairment. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion are included in interest income. Realized gains and losses are included in Other, net. The cost of securities sold is based on the specific identification method.

Restricted Cash and Investments. Restricted cash and investments represents cash and cash equivalents and investments that are restricted as to withdrawal or use for other than current operations.

Allowances for Doubtful Accounts. The Company maintains an allowance for uncollectible accounts receivable based upon expected collectability. This reserve is established based upon historical trends, global macroeconomic conditions and an analysis of specific exposures. The provision for doubtful accounts is recorded as a charge to Marketing and administrative expense.

Inventory. Inventories are valued at the lower of cost (using the first-in, first-out method) or market. Market value is based upon an estimated average selling price reduced by estimated cost of completion and disposal.

Property, Equipment and Leasehold Improvements. Property, equipment and leasehold improvements are stated at cost. Equipment and buildings are depreciated using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated life of the asset or the remaining term of the lease. The costs of additions and substantial improvements to property, equipment and leasehold improvements, which extend the economic life of the underlying assets, are capitalized. The cost of maintenance and repairs to property, equipment and leasehold improvements are expensed as incurred.

Assessment of Goodwill and Other Long-lived Assets for Impairment. The Company accounts for goodwill in accordance with Accounting Standards Codification (ASC) Topic 350 (ASC 350), Intangibles—Goodwill and Other. During fiscal year 2012, the Company adopted ASU No. 2011-08, Intangibles—Goodwill and Other (ASC Topic 350)—Testing Goodwill for Impairment. The Company performs a qualitative assessment at the end of each reporting period to determine if any events or circumstances exist, such as an adverse change in business climate or a decline in the overall industry that would indicate that it would more likely than not reduce the fair value of a reporting unit below its carrying amount, including goodwill.

The Company tests other long-lived assets, including property, equipment and leasehold improvements and other intangible assets subject to amortization, for recoverability whenever events or changes in circumstances indicate that the carrying value of those assets may not be recoverable. The Company performs a recoverability test to assess the recoverability of an asset group. If the recoverability test indicates that the carrying value of the asset group is not recoverable, the Company will estimate the fair value of the asset group and the excess of the carrying value over the fair value is allocated pro rata to



# SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

derive the adjusted carrying value of assets in the asset group. The adjusted carrying value of each asset in the asset group is not reduced below its fair value.

The Company tests other intangible assets not subject to amortization whenever events occur or circumstances change, such as declining financial performance, deterioration in the environment in which the entity operates or deteriorating macroeconomic conditions that have a negative effect on future expected earnings and cash flows that could affect significant inputs used to determine the fair value of the indefinite-lived intangible asset.

Derivative Financial Instruments. The Company applies the requirements of ASC Topic 815 (ASC 815), Derivatives and Hedging. ASC 815 requires that all derivatives be recorded on the balance sheet at fair value and establishes criteria for designation and effectiveness of hedging relationships.

Establishment of Warranty Accruals. The Company estimates probable product warranty costs at the time revenue is recognized. The Company generally warrants its products for a period of 1 to 5 years. The Company's warranty provision considers estimated product failure rates and trends (including the timing of product returns during the warranty periods), and estimated repair or replacement costs related to product quality issues, if any. The Company also exercises judgment in estimating its ability to sell certain repaired disk drives. Should actual experience in any future period differ significantly from its estimates, the Company's future results of operations could be materially affected.

Revenue Recognition, Sales Returns and Allowances, and Sales Incentive Programs. The Company's revenue recognition policy complies with ASC Topic 605 (ASC 605), Revenue Recognition. Revenue from sales of products, including sales to distribution customers, is generally recognized when title and risk of loss has passed to the buyer, which typically occurs upon shipment from the Company or third party warehouse facilities, persuasive evidence of an arrangement exists, including a fixed or determinable price to the buyer, and when collectability is reasonably assured. Revenue from sales of products to certain direct retail customers and to customers in certain indirect retail channels is recognized on a sell-through basis.

The Company records estimated product returns at the time of shipment. The Company also estimates reductions to revenue for sales incentive programs, such as price protection, and volume incentives, and records such reductions when revenue is recorded. The Company establishes certain distributor and OEM sales programs aimed at increasing customer demand. For OEM sales, rebates are typically based on an OEM customer's volume of purchases from Seagate or other agreed upon rebate programs. For the distribution channel, these programs typically involve rebates related to a distributor's level of sales, order size, advertising or point of sale activity and price protection adjustments. The Company provides for these obligations at the time that revenue is recorded based on estimated requirements. Marketing development programs are recorded as a reduction to revenue.

Shipping and Handling. The Company includes costs related to shipping and handling in Cost of revenue for all periods presented.

Restructuring Costs. The Company records restructuring activities including costs for one-time termination benefits in accordance with ASC Topic 420 (ASC 420), Exit or Disposal Cost Obligations. The timing of recognition for severance costs accounted for under ASC 420 depends on whether employees are required to render service until they are terminated in order to receive the termination benefits. If employees are required to render service until they are terminated in order to receive the termination benefits, a liability is recognized ratably over the future service period. Otherwise, a liability is recognized when management has committed to a restructuring plan and has communicated those actions to



# SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

employees. Employee termination benefits covered by existing benefit arrangements are recorded in accordance with ASC Topic 712, Non-retirement Postemployment Benefits. These costs are recognized when management has committed to a restructuring plan and the severance costs are probable and estimable.

Advertising Expense. The cost of advertising is expensed as incurred. Advertising costs were approximately $52 million, $51 million and $39 million in fiscal years 2014, 2013 and 2012, respectively.

Stock-Based Compensation. The Company accounts for stock-based compensation under the provisions of ASC Topic 718 (ASC 718), Compensation-Stock Compensation. The Company has elected to apply the with-and-without method to assess the realization of excess tax benefits.

Accounting for Income Taxes. The Company accounts for income taxes pursuant to ASC Topic 740 (ASC 740), Incomes Taxes. In applying ASC 740, the Company makes certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of tax credits, recognition of income and deductions and calculation of specific tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes, as well as tax liabilities associated with uncertain tax positions. The calculation of tax liabilities involves uncertainties in the application of complex tax rules and the potential for future adjustment of the Company's uncertain tax positions by the Internal Revenue Service or other tax jurisdictions. If estimates of these tax liabilities are greater or less than actual results, an additional tax benefit or provision will result. The deferred tax assets the Company records each period depend primarily on the Company's ability to generate future taxable income in the United States and certain non-U.S. jurisdictions. Each period, the Company evaluates the need for a valuation allowance for its deferred tax assets and, if necessary, adjusts the valuation allowance so that net deferred tax assets are recorded only to the extent the Company concludes it is more likely than not that these deferred tax assets will be realized. If the Company's outlook for future taxable income changes significantly, the Company's assessment of the need for a valuation allowance may also change.

Comprehensive Income. In the first quarter of fiscal 2013, the Company adopted the revised requirements of ASU No. 2011-05, Comprehensive Income (Topic 220)—Presentation of Comprehensive Income to present comprehensive income in a separate statement. Comprehensive income is comprised of net income and other gains and losses affecting equity that are excluded from net income.

Foreign Currency Remeasurement and Translation. The U.S. dollar is the functional currency for the majority of the Company's foreign operations. Monetary assets and liabilities denominated in foreign currencies are remeasured into the functional currency of the subsidiary at the balance sheet date. The gains and losses from the remeasurement of foreign currency denominated balances into the functional currency of the subsidiary are included in Other, net on the Company's Consolidated Statements of Operations.

The Company translates the assets and liabilities of its non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange rates in effect at the end of each period. Revenue and expenses for these subsidiaries are translated using rates that approximate those in effect during the period. Gains and losses from these translations are recognized in foreign currency translation included in Accumulated other comprehensive loss, which is a component of shareholders' equity. The Company's subsidiaries that use the U.S. dollar as their functional currency remeasure monetary assets and liabilities at exchange rates in effect at the end of each period, and inventories, property, and nonmonetary assets and liabilities at historical rates. Gains and losses from these remeasurements were not significant and have been included in the Company's results of operations.



# SEAGATE TECHNOLOGY PLC

# NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

## Concentrations

Concentration of Credit Risk. The Company's customer base for disk drive products is concentrated with a small number of OEMs and distributors. The Company does not generally require collateral or other security to support accounts receivable. To reduce credit risk, the Company performs ongoing credit evaluations on its customers' financial condition. The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of customers, historical trends and other information. Hewlett-Packard Company and Dell Inc. each accounted for more than 10% of the Company's accounts receivable as of June 27, 2014.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash equivalents, short-term investments and foreign currency forward exchange contracts. The Company further mitigates concentrations of credit risk in its investments through diversification, by limiting its investments in the debt securities of a single issuer, and investing in highly rated securities.

In entering into foreign currency forward exchange contracts, the Company assumes the risk that might arise from the possible inability of counterparties to meet the terms of their contracts. The counterparties to these contracts are major multinational commercial banks, and the Company has not incurred and does not expect any losses as a result of counterparty defaults.

Supplier Concentration. Certain of the raw materials, components and equipment used by the Company in the manufacture of its products are available from a sole supplier or a limited number of suppliers. Shortages could occur in these essential materials and components due to an interruption of supply or increased demand in the industry. If the Company were unable to procure certain materials, components or equipment at acceptable prices, it would be required to reduce its manufacturing operations, which could have a material adverse effect on its results of operations. In addition, the Company has made prepayments to certain suppliers. Should these suppliers be unable to deliver on their obligations or experience financial difficulty, the Company may not be able to recover these prepayments.

## Recent Accounting Pronouncements

In July, 2013, the FASB issued ASU No. 2013-11, Income Taxes (ASC Topic 740)—Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The amendments in this ASU provide explicit guidance that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, with limited exceptions. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013 and do not require new recurring disclosures. The adoption of this new guidance will not have a material impact on the Company's consolidated financial statements.

In May 2014, The FASB issued ASU 2014-09 (ASC Topic 606), Revenue from Contracts with Customers. The ASU outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. It also requires entities to disclose both quantitative and qualitative information that enable financial statements users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The ASU will be effective for the Company's first quarter of fiscal year 2018. The Company is in the process of assessing the impact, if any, of ASU 2014-09 on its consolidated financial statements.



# SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

## 2. Balance Sheet Information

Investments

The following table summarizes, by major type, the fair value and amortized cost of the Company's investments as of June 27, 2014:

<table><tr><td>(Dollars in millions)</td><td>Amortized Cost</td><td>Unrealized Gain/(Loss)</td><td>Fair Value</td></tr><tr><td>Available-for-sale securities:</td><td></td><td></td><td></td></tr><tr><td>Money market funds</td><td>$ 793</td><td>$ —</td><td>$ 793</td></tr><tr><td>Commercial paper</td><td>1,261</td><td>—</td><td>1,261</td></tr><tr><td>Corporate bonds</td><td>6</td><td>—</td><td>6</td></tr><tr><td>U.S. treasuries and agency bonds</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Certificates of deposit</td><td>273</td><td>—</td><td>273</td></tr><tr><td>Auction rate securities</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Equity securities</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Other debt securities</td><td>—</td><td>—</td><td>—</td></tr><tr><td></td><td>2,333</td><td>—</td><td>2,333</td></tr><tr><td>Trading securities</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Total</td><td>$ 2,333</td><td>$ —</td><td>$ 2,333</td></tr><tr><td>Included in Cash and cash equivalents</td><td></td><td></td><td>$ 2,309</td></tr><tr><td>Included in Short-term investments</td><td></td><td></td><td>20</td></tr><tr><td>Included in Restricted cash and investments</td><td></td><td></td><td>4</td></tr><tr><td>Included in Other assets, net</td><td></td><td></td><td>—</td></tr><tr><td>Total</td><td></td><td></td><td>$ 2,333</td></tr></table>

As of June 27, 2014, the Company's Restricted cash and investments consisted of $4 million in cash and investments held as collateral at banks for various performance obligations.

During the fourth quarter of 2014, the Company sold all of its auction rate securities and recognized an immaterial loss on the sale which is included in Other, net in the Company's Consolidated Statement of Operations.

As of June 27, 2014, the Company had no available-for-sale securities that had been in a continuous unrealized loss position for a period greater than 12 months. The Company determined no available-for-sale securities were other-than-temporarily impaired as of June 27, 2014.

The fair value and amortized cost of the Company's investments classified as available-for-sale at June 27, 2014 by remaining contractual maturity was as follows:

<table><tr><td>(Dollars in millions)</td><td>Amortized Cost</td><td>Fair Value</td></tr><tr><td>Due in less than 1 year</td><td>$ 2,332</td><td>$ 2,332</td></tr><tr><td>Due in 1 to 5 years</td><td>1</td><td>1</td></tr><tr><td>Due in 5 to 10 years</td><td>—</td><td>—</td></tr><tr><td>Thereafter</td><td>—</td><td>—</td></tr><tr><td>Total</td><td>$ 2,333</td><td>$ 2,333</td></tr></table>



## SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Equity securities which do not have a contractual maturity date are not included in the above table.

The following table summarizes, by major type, the fair value and amortized cost of the Company's investments as of June 28, 2013:

<table><tr><td>(Dollars in millions)</td><td>Amortized Cost</td><td>Unrealized Gain/(Loss)</td><td>Fair Value</td></tr><tr><td>Available-for-sale securities:</td><td></td><td></td><td></td></tr><tr><td>Money market funds</td><td>$ 804</td><td>$ —</td><td>$ 804</td></tr><tr><td>Commercial paper</td><td>655</td><td>—</td><td>655</td></tr><tr><td>Corporate bonds</td><td>211</td><td>—</td><td>211</td></tr><tr><td>U.S. treasuries and agency bonds</td><td>96</td><td>—</td><td>96</td></tr><tr><td>Certificates of deposit</td><td>154</td><td>—</td><td>154</td></tr><tr><td>Auction rate securities</td><td>17</td><td>(2)</td><td>15</td></tr><tr><td>Equity securities</td><td>4</td><td>—</td><td>4</td></tr><tr><td>Other debt securities</td><td>107</td><td>(1)</td><td>106</td></tr><tr><td></td><td>2,048</td><td>(3)</td><td>2,045</td></tr><tr><td>Trading securities</td><td>74</td><td>5</td><td>79</td></tr><tr><td>Total</td><td>$ 2,122</td><td>$ 2</td><td>$ 2,124</td></tr><tr><td>Included in Cash and cash equivalents</td><td></td><td></td><td>$ 1,528</td></tr><tr><td>Included in Short-term investments</td><td></td><td></td><td>480</td></tr><tr><td>Included in Restricted cash and investments</td><td></td><td></td><td>101</td></tr><tr><td>Included in Other assets, net</td><td></td><td></td><td>15</td></tr><tr><td>Total</td><td></td><td></td><td>$ 2,124</td></tr></table>

As of June 28, 2013, the Company's Restricted cash and investments consisted of $79 million in cash and investments held in trust for payment of its non-qualified deferred compensation plan liabilities and $22 million in cash and investments held as collateral at banks for various performance obligations.

As of June 28, 2013, the Company's available-for-sale securities include investments in auction rate securities. Beginning in fiscal year 2008, the Company's auction rate securities failed to settle at auction and continued to fail through June 28, 2013. Since the Company continued to earn interest on its auction rate securities at the maximum contractual rate, there were no payment defaults with respect to such securities, and they were all collateralized, the Company expected to recover the entire amortized cost basis of these auction rate securities. During fiscal year 2013, the Company did not intend to sell these securities and as of June 28, 2013, concluded it was not more likely than not that the Company would have been required to sell the securities before the recovery of their amortized cost basis. As such, as of June 28, 2013, the Company believed the impairments totaling $2 million were not other-than-temporary and therefore were recorded in Accumulated other comprehensive loss. Given the uncertainty as to when the liquidity issues associated with these securities would improve, as of June 28, 2013, these securities were classified within Other assets, net in the Company's Consolidated Balance Sheet.

As of June 28, 2013, with the exception of the Company's auction rate securities, the Company had no available-for-sale securities that had been in a continuous unrealized loss position for a period greater than 12 months. The Company determined no available-for-sale securities were other-than-temporarily impaired as of June 28, 2013.



## SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Accounts Receivable, net

The following table provides details of the accounts receivable, net balance sheet item:

<table><tr><td>(Dollars in millions)</td><td>June 27, 2014</td><td>June 28, 2013</td></tr><tr><td>Accounts receivable</td><td>$ 1,741</td><td>$ 1,678</td></tr><tr><td>Allowance for doubtful accounts</td><td>(12)</td><td>(8)</td></tr><tr><td></td><td>$ 1,729</td><td>$ 1,670</td></tr></table>

Activity in the allowance for doubtful accounts is as follows:

<table><tr><td>(Dollars in millions)</td><td>Balance at Beginning of Period</td><td>Charges (credit) to Operations</td><td>Deductions (a)</td><td>Assumed from LaCie S.A.</td><td>Balance at End of Period</td></tr><tr><td>Fiscal year ended June 29, 2012</td><td>$ 10</td><td>3</td><td>(3)</td><td>—</td><td>$ 10</td></tr><tr><td>Fiscal year ended June 28, 2013</td><td>$ 10</td><td>(2)</td><td>(1)</td><td>1</td><td>$ 8</td></tr><tr><td>Fiscal year ended June 27, 2014</td><td>$ 8</td><td>4</td><td>—</td><td>—</td><td>$ 12</td></tr></table>

(a) Uncollectible accounts written off, net of recoveries.

Inventories

The following table provides details of the inventory balance sheet item:

<table><tr><td>(Dollars in millions)</td><td>June 27, 2014</td><td>June 28, 2013</td></tr><tr><td>Raw materials and components</td><td>$ 324</td><td>$ 213</td></tr><tr><td>Work-in-process</td><td>267</td><td>231</td></tr><tr><td>Finished goods</td><td>394</td><td>410</td></tr><tr><td></td><td>$ 985</td><td>$ 854</td></tr></table>

Other Current Assets

The following table provides details of the other current assets balance sheet item:

<table><tr><td>(Dollars in millions)</td><td>June 27, 2014</td><td>June 28, 2013</td></tr><tr><td>Vendor non-trade receivables</td><td>$ 112</td><td>$ 329</td></tr><tr><td>Other</td><td>167</td><td>155</td></tr><tr><td></td><td>$ 279</td><td>$ 484</td></tr></table>

Other current assets include non-trade receivables from certain manufacturing vendors resulting from the sale of components to these vendors who manufacture completed sub-assemblies or finished goods for the Company. The Company does not reflect the sale of these components in revenue and does not recognize any profits on these sales. The costs of the completed sub-assemblies are included in inventory upon purchase from the vendors.



## SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Property, Equipment and Leasehold Improvements, net

The components of property, equipment and leasehold improvements, net were as follows:

<table><tr><td>(Dollars in millions)</td><td>Useful Life in Years</td><td>June 27, 2014</td><td>June 28, 2013</td></tr><tr><td>Land and land improvements</td><td></td><td>$ 45</td><td>$ 44</td></tr><tr><td>Equipment</td><td>3 - 5</td><td>7,159</td><td>6,838</td></tr><tr><td>Buildings and leasehold improvements</td><td>Up to 48</td><td>1,452</td><td>1,401</td></tr><tr><td>Construction in progress</td><td></td><td>323</td><td>261</td></tr><tr><td></td><td></td><td>8,979</td><td>8,544</td></tr><tr><td>Less: accumulated depreciation and amortization</td><td></td><td>(6,843)</td><td>(6,275)</td></tr><tr><td></td><td></td><td>$ 2,136</td><td>$ 2,269</td></tr></table>

Depreciation expense, which includes amortization of leasehold improvements, was $748 million, $727 million and $739 million for fiscal years 2014, 2013, and 2012, respectively. Interest on borrowings related to eligible capital expenditures is capitalized as part of the cost of the qualified assets and amortized over the estimated useful lives of the assets. During fiscal years 2014, 2013, and 2012, the Company capitalized interest of $7 million, $10 million and $4 million, respectively.

Accumulated Other Comprehensive Income (Loss) ("AOCI")

The components of AOCI, net of tax, were as follows:

<table><tr><td>(Dollars in millions)</td><td>Unrealized Gains (Losses) on Cash Flow Hedges</td><td>Unrealized Gains (Losses) on Marketable Securities (a)</td><td>Unrealized Gains (Losses) on post-retirement plans</td><td>Foreign Currency Translation Adjustments</td><td>Total</td></tr><tr><td>Balance at June 29, 2012</td><td>$ —</td><td>(1)</td><td>$ (8)</td><td>$ —</td><td>$ (9)</td></tr><tr><td>Other comprehensive income (loss) before reclassifications</td><td>—</td><td>21</td><td>(3)</td><td>1</td><td>19</td></tr><tr><td>Amounts reclassified from AOCI</td><td>—</td><td>(23)</td><td>—</td><td>—</td><td>(23)</td></tr><tr><td>Other comprehensive income (loss)</td><td>—</td><td>(2)</td><td>(3)</td><td>1</td><td>(4)</td></tr><tr><td>Balance at June 28, 2013</td><td>—</td><td>(3)</td><td>(11)</td><td>1</td><td>(13)</td></tr><tr><td>Other comprehensive income (loss) before reclassifications</td><td>(1)</td><td>1</td><td>1</td><td>8</td><td>9</td></tr><tr><td>Amounts reclassified from AOCI</td><td>—</td><td>2</td><td>—</td><td>—</td><td>2</td></tr><tr><td>Other comprehensive income (loss)</td><td>(1)</td><td>3</td><td>1</td><td>8</td><td>11</td></tr><tr><td>Balance at June 27, 2014</td><td>$ (1)</td><td>$ —</td><td>(10)</td><td>$ 9</td><td>$ (2)</td></tr></table>

(a) The cost of a security sold or the amount reclassified out of AOCI into earnings was determined using the specific identification method.



# SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

## 3. Acquisitions

## Xyratex Ltd

On March 31, 2014, the Company acquired all of the outstanding shares of Xyratex Ltd ("Xyratex"), a leading provider of data storage technology. The Company paid $13.25 per share, or approximately $376 million in cash for the acquisition. The acquisition of Xyratex further strengthens the Company's vertically integrated supply and manufacturing chain for disk drives and provides access to important capital requirements, as well as expands the Company's storage solutions portfolio.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date:

<table><tr><td>(Dollars in millions)</td><td>Amount</td></tr><tr><td>Cash and cash equivalents</td><td>$ 91</td></tr><tr><td>Accounts receivable, net</td><td>67</td></tr><tr><td>Inventories</td><td>111</td></tr><tr><td>Other current and non-current assets</td><td>28</td></tr><tr><td>Property, plant and equipment</td><td>55</td></tr><tr><td>Intangible assets</td><td>80</td></tr><tr><td>Goodwill</td><td>60</td></tr><tr><td>Total assets</td><td>492</td></tr><tr><td>Accounts payable and accrued expenses</td><td>(116)</td></tr><tr><td>Total liabilities</td><td>(116)</td></tr><tr><td>Total</td><td>$ 376</td></tr></table>

The accounts receivables of $67 million are net of an immaterial allowance at March 31, 2014.

The following table shows the fair value of the separately identifiable intangible assets at the time of acquisition and the period over which each intangible asset will be amortized:

<table><tr><td rowspan="2">(Dollars in millions)</td><td colspan="3">Weighted-Average</td></tr><tr><td>Fair Value</td><td>Amortization Period</td><td></td></tr><tr><td>Existing technology</td><td>$ 23</td><td>5.5 years</td><td></td></tr><tr><td>Customer relationships</td><td>18</td><td>3.9 years</td><td></td></tr><tr><td>Total amortizable intangible assets acquired</td><td>41</td><td>4.8 years</td><td></td></tr><tr><td>In-process research and development</td><td>39</td><td></td><td></td></tr><tr><td>Total acquired identifiable intangible assets</td><td>$ 80</td><td></td><td></td></tr></table>

The goodwill recognized is primarily attributable to the synergies expected to arise after the acquisition, and is not deductible for income tax purposes.

The Company incurred a total of $10 million of expenses related to the acquisition of Xyratex in fiscal year 2014, which are included within Marketing and administrative expense on the Consolidated Statement of Operations.

The amounts of revenue and earnings of Xyratex included in the Company's Consolidated Statement of Operations from the acquisition date are not significant.



# SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

## LaCie S.A.

On August 3, 2012 the Company acquired 23,382,904 (or approximately 64.5%) of the outstanding shares of LaCie S.A. ("LaCie") for a price of €4.05 per share with a price supplement of €0.12 per share, which would have been payable if the Company had successfully acquired at least 95% of the outstanding shares of LaCie within 6 months of the acquisition. Of the amount paid at the acquisition date, €9 million is treated as compensation cost to one of the selling shareholders, who is now an employee of the Company, to be recognized over a period of 36 months from the acquisition date, and may be refunded to the Company if the selling shareholder is no longer employed at the end of that period. The transaction and related agreements are expected to accelerate the Company's growth strategy in the expanding consumer storage market, particularly in Europe, Japan and in premium distribution channels.

The acquisition-date fair value of the consideration transferred for the business combination totaled $111 million, including cash paid of $107 million, and contingent consideration of $4 million.

The following table summarizes the estimated fair values of the assets acquired, liabilities assumed, and noncontrolling interest at the acquisition date:

<table><tr><td>(Dollars in millions)</td><td>Amount</td></tr><tr><td>Cash and cash equivalents</td><td>$ 71</td></tr><tr><td>Accounts receivable</td><td>29</td></tr><tr><td>Marketable securities</td><td>27</td></tr><tr><td>Inventories</td><td>46</td></tr><tr><td>Other current and non-current assets</td><td>19</td></tr><tr><td>Property, plant and equipment</td><td>12</td></tr><tr><td>Intangible assets</td><td>45</td></tr><tr><td>Goodwill</td><td>13</td></tr><tr><td>Total assets</td><td>262</td></tr><tr><td>Accounts payable and accrued expenses</td><td>(73)</td></tr><tr><td>Current and non-current portion of long-term debt</td><td>(6)</td></tr><tr><td>Total liabilities</td><td>(79)</td></tr><tr><td>Noncontrolling interest</td><td>(72)</td></tr><tr><td>Total</td><td>$ 111</td></tr></table>

The following table shows the fair value of the separately identifiable intangible assets at the time of acquisition and the period over which each intangible asset will be amortized:

<table><tr><td rowspan="2"></td><td colspan="3">Weighted-Average</td></tr><tr><td>Fair Value</td><td>Amortization Period</td><td></td></tr><tr><td>(Dollars in millions)</td><td>$ 31</td><td>5.0 years</td><td></td></tr><tr><td>Customer relationships</td><td>1</td><td>5.0 years</td><td></td></tr><tr><td>Existing technology</td><td>13</td><td>5.0 years</td><td></td></tr><tr><td>Trade name</td><td>$ 45</td><td></td><td></td></tr><tr><td>Total acquired identifiable intangible assets</td><td></td><td></td><td></td></tr></table>

In fiscal 2013, the Company recorded adjustments to the fair value of certain assets acquired and liabilities assumed with LaCie S.A. that resulted in a net increase of $1 million to Goodwill, and a corresponding decrease in Intangible assets.



# SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The goodwill recognized is attributable primarily to the benefits the Company expects to derive from LaCie's brand recognition and the acquired workforce, and is not deductible for income tax purposes. The acquisition date fair value of the noncontrolling interest is based on the market price of their publicly traded shares as of the first trading date subsequent to the acquisition, as the shares did not trade on the acquisition date.

The €0.12 supplement was not paid as only 94.5% of the LaCie business was acquired within six months of the acquisition date, resulting in a reversal of the contingent consideration liability which was recorded in fiscal year 2013 as a reduction of Marketing and administrative expenses of $4 million.

The amounts of revenue and earnings of LaCie included in the Company's Consolidated Statement of Operations from the acquisition date are not significant.

The Company deposited $72 million into an escrow account in fiscal year 2013 with the intention of acquiring the remaining publicly held shares of LaCie through public and private transactions. As of December 27, 2013, the Company had completed the acquisition of all outstanding shares. The use of this deposit in fiscal year 2013 is treated as a non-cash financing activity and excluded from the Statement of Cash Flows.

## Samsung Hard Disk Drive Operations

On December 19, 2011, the Company completed the acquisition of Samsung Electronics Co., Ltd's ("Samsung") hard disk drive business pursuant to an Asset Purchase Agreement ("APA") by which the Company acquired certain assets and liabilities of Samsung relating to the research and development, manufacture and sale of hard-disk drives. The transaction and related agreements are expected to improve the Company's position as a supplier of 2.5-inch products; position the Company to better address rapidly evolving opportunities in markets including, but not limited to, mobile computing, cloud computing and solid state storage; expand the Company's customer access in China and Southeast Asia; and accelerate time to market for new products.

The acquisition-date fair value of the consideration transferred totaled $1,140 million, which consisted of $571 million of cash, $10 million of which was paid as a deposit upon signing the APA in the fourth quarter of fiscal year 2011, and 45.2 million ordinary shares with a fair value of $569 million. The fair value of the ordinary shares issued was determined based on the closing market price of the Company's ordinary shares on the acquisition date, less a 16.5% discount for lack of marketability as the shares issued are subject to a restriction that limits their trade or transfer for approximately a one year period.



## SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date:

<table><tr><td>(Dollars in millions)</td><td>Amount</td></tr><tr><td>Inventories</td><td>$ 141</td></tr><tr><td>Equipment</td><td>76</td></tr><tr><td>Intangible assets</td><td>580</td></tr><tr><td>Other assets</td><td>28</td></tr><tr><td>Total identifiable assets acquired</td><td>825</td></tr><tr><td>Warranty liability</td><td>(72)</td></tr><tr><td>Other liabilities</td><td>(45)</td></tr><tr><td>Total liabilities assumed</td><td>(117)</td></tr><tr><td>Net identifiable assets acquired</td><td>708</td></tr><tr><td>Goodwill</td><td>432</td></tr><tr><td>Net assets acquired</td><td>$ 1,140</td></tr></table>

The following table shows the fair value of the separately identifiable intangible assets at the time of acquisition and the period over which each intangible asset will be amortized:

<table><tr><td>(Dollars in millions)</td><td>Fair Value</td><td>Weighted-Average Amortization Period</td></tr><tr><td>Existing technology</td><td>$ 137</td><td>2.0 years</td></tr><tr><td>Customer relationships</td><td>399</td><td>5.8 years</td></tr><tr><td>Total amortizable intangible assets acquired</td><td>536</td><td>4.8 years</td></tr><tr><td>In-process research and development</td><td>44</td><td></td></tr><tr><td>Total acquired identifiable intangible assets</td><td>$ 580</td><td></td></tr></table>

During fiscal year 2012, the Company recorded adjustments to the fair value of certain assets acquired and liabilities assumed with the Samsung HDD business that resulted in a net decrease of $5 million to goodwill. These adjustments included a $7 million increase in other assets for spare parts and a $3 million increase to equipment, offset by a $3 million increase in warranty liability and a $2 million increase in other liabilities related to certain assumed vendor obligations. These adjustments were based on information about facts and circumstances that existed at the acquisition date.

The $432 million of goodwill recognized is attributable primarily to the benefits the Company expects to derive from enhanced scale and efficiency to better serve its markets and expanded customer presence in China and Southeast Asia. Except for approximately $4 million of goodwill relating to assembled workforce in Korea, none of the goodwill is expected to be deductible for income tax purposes.

The Company incurred a total of $22 million of expenses related to the acquisition of Samsung in fiscal year 2012, which are included within Marketing and administrative expense on the Consolidated Statement of Operations.



## SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The amounts of revenue and earnings of the acquired assets of Samsung's HDD business included in the Company's Consolidated Statement of Operations from the acquisition date to the period ended June 29, 2012, were as follows:

<table><tr><td>(Dollars in millions)</td><td>Amount</td></tr><tr><td>Revenue</td><td>$ 970</td></tr><tr><td>Net income</td><td>$ 104</td></tr></table>

The unaudited pro forma financial results presented below for the fiscal year ended June 29, 2012, include the effects of pro forma adjustments as if the acquisition date occurred as of the beginning of the prior fiscal year on July 3, 2010. The pro forma results combine the historical results of the Company for the fiscal year ended June 29, 2012 and the historical results of the acquired assets and liabilities of Samsung's HDD business, and include the effects of certain fair value adjustments and the elimination of certain activities excluded from the transaction. The pro forma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the earliest period presented, nor is it intended to be a projection of future results.

<table><tr><td>(Dollars in millions)</td><td>Fiscal Year Ended June 29, 2012</td></tr><tr><td>Revenue</td><td>$ 16,113</td></tr><tr><td>Net income</td><td>$ 2,761</td></tr></table>

The pro forma results for the fiscal year ended June 29, 2012, includes an adjustment of $65 million to reflect the additional depreciation and amortization that would have been charged assuming the fair value adjustments to property, plant and equipment and intangible assets had been applied on July 3, 2010.

## 4. Goodwill and Other Intangible Assets

Goodwill

The changes in the carrying amount of goodwill are as follows:

<table><tr><td>(Dollars in millions)</td><td>Amount</td></tr><tr><td>Balance as of June 29, 2012</td><td>$ 463</td></tr><tr><td>Goodwill acquired</td><td>13</td></tr><tr><td>Balance as of June 28, 2013</td><td>476</td></tr><tr><td>Goodwill acquired</td><td>60</td></tr><tr><td>Foreign currency translation effect</td><td>1</td></tr><tr><td>Balance as of June 27, 2014</td><td>$ 537</td></tr></table>

Other Intangible Assets

Other intangible assets consist primarily of existing technology, customer relationships and in-process research and development acquired in business combinations. With the exception of in-process research and development, acquired intangibles are amortized on a straight-line basis over the respective estimated useful lives of the assets. Amortization of the existing technology intangible asset is charged to Cost of revenue while the amortization of the other intangible assets is included in Operating expenses in the Consolidated Statements of Operations. In-process research and development has been determined to



## SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

have an indefinite useful life and is not amortized, but instead tested for impairment annually or more frequently if events or changes in circumstance indicate that the asset might be impaired. If the carrying amount of in-process research and development exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. There were no impairment charges recognized for in-process research and development. Upon completion of the in-process research and development, the related assets will be accounted for as a finite-lived intangible asset, and will be amortized over its useful life.

In fiscal years 2014, 2013 and 2012, amortization expense for other intangible assets was $131 million, $147 million and $75 million, respectively.

The carrying value of other intangible assets subject to amortization as of June 27, 2014, is set forth in the following table:

<table><tr><td>(Dollars in millions)</td><td>Gross Carrying Amount</td><td>Accumulated Amortization</td><td>Net Carrying Amount</td><td>Weighted Average Remaining Useful Life</td></tr><tr><td>Existing technology</td><td>$ 24</td><td>$ (1)</td><td>$ 23</td><td>5.2 years</td></tr><tr><td>Customer relationships</td><td>450</td><td>(192)</td><td>258</td><td>3.3 years</td></tr><tr><td>Trade name</td><td>10</td><td>(1)</td><td>9</td><td>3.1 years</td></tr><tr><td>In-process research and development  \( {}^{(a)} \)</td><td>44</td><td>(17)</td><td>27</td><td>1.0 year</td></tr><tr><td>Other intangible assets</td><td>4</td><td>(1)</td><td>3</td><td>4.4 years</td></tr><tr><td>Total amortizable other intangible assets</td><td>$ 532</td><td>$ (212)</td><td>$ 320</td><td>3.2 years</td></tr></table>

(a) During the fiscal year 2014 quarter ended December 2013, the In-process research and development was completed, and the related asset was accounted for as a finite-lived intangible asset.

The carrying value of In-process research and development not subject to amortization was $39 million on June 27, 2014.

The carrying value of other intangible assets subject to amortization as of June 28, 2013 is set forth in the following table:

<table><tr><td>(Dollars in millions)</td><td>Gross Carrying Amount</td><td>Accumulated Amortization</td><td>Net Carrying Amount</td><td>Weighted Average Remaining Useful Life</td></tr><tr><td>Existing technology</td><td>$ 138</td><td>$ (105)</td><td>$ 33</td><td>0.5 years</td></tr><tr><td>Customer relationships</td><td>431</td><td>(114)</td><td>317</td><td>4.3 years</td></tr><tr><td>Trade name</td><td>14</td><td>(3)</td><td>11</td><td>4.1 years</td></tr><tr><td>Total amortizable other intangible assets</td><td>$ 583</td><td>$ (222)</td><td>$ 361</td><td>3.9 years</td></tr></table>

The carrying value of In-process research and development not subject to amortization was $44 million on June 28, 2013.



## SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of June 27, 2014, expected amortization expense for other intangible assets for each of the next five years and thereafter is as follows:

<table><tr><td>(Dollars in millions)</td><td>Amount</td></tr><tr><td>2015</td><td>$ 112</td></tr><tr><td>2016</td><td>89</td></tr><tr><td>2017</td><td>78</td></tr><tr><td>2018</td><td>36</td></tr><tr><td>2019</td><td>3</td></tr><tr><td>Thereafter</td><td>2</td></tr><tr><td></td><td>$ 320</td></tr></table>

## 5. Restructuring and Exit Costs

During fiscal year 2014, the Company recorded restructuring charges of $24 million comprised primarily of charges related to employee termination costs associated with a reduction in force during fiscal year 2014. During fiscal years 2013 and 2012, the Company recorded restructuring and other charges of $2 million and $4 million, respectively, mainly comprised of post-employment costs associated with a number of small restructuring plans. The Company's significant restructuring plans are described below. All restructuring charges are reported in Restructuring and other, net on the Consolidated Statements of Operations.

Ang Mo Kio (AMK) Plan. In August 2009, the Company announced that it will close its AMK manufacturing operations in Singapore. Operations at this facility had ceased as of the third quarter of fiscal year 2011. The hard drive manufacturing operations have been relocated to other existing Seagate facilities and the Company's Asia International Headquarters remains in Singapore. This closure and relocation is part of the Company's ongoing focus on cost efficiencies in all areas of its business and is intended to facilitate leveraging manufacturing investments across fewer sites. The Company currently estimates total restructuring charges of approximately $50 million, all in cash, including approximately $42 million for post-employment benefits, approximately $6 million for the relocation of manufacturing equipment, and approximately $2 million for other plant closure and relocation costs. From the inception of the plan the Company has recorded $48 million in restructuring charges. During fiscal year 2014, there were no cash payments or other settlements under the AMK Plan and no restructuring charges related to the plan during fiscal year 2014. Payments under the AMK plan are expected to continue through fiscal year 2016.

2014 Plan. During fiscal year 2014, the Company recorded employee termination costs of $16 million and made cash payments of $16 million associated with a reduction in the work force. The 2014 Plan was substantially completed during the fiscal year ended June 27, 2014.

Other Restructuring and Exit Costs. Through June 27, 2014, the Company has recorded other restructuring charges of approximately $124 million, net of adjustments, related to the previously announced closures of its Pittsburgh, Pennsylvania and Milpitas, California facilities, and also has recorded certain exit costs aggregating to $269 million related to its acquisition of Maxtor. These plans are currently expected to result in total charges of approximately $400 million. During fiscal year 2014, the Company incurred restructuring charges of $4 million in post-employment benefits, $2 million in facility lease obligations and $2 million in other exit costs primarily related to the closures of its Pittsburgh, Pennsylvania and Milpitas, California facilities and to other smaller restructuring plans. In addition, recorded cash



## SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

payments and other settlements of $11 million related to these plans during fiscal year 2014. Restructuring activity relating to the Milpitas, California facility was completed during the fiscal year ended June 28, 2013. Payment of these exit costs relating to the Pittsburgh, Pennsylvania facility and other smaller restructuring plans are expected to continue through the end of fiscal year 2023.

The following table summarizes the Company’s restructuring activities under all the Company’s active restructuring plans for fiscal years 2014, 2013 and 2012:

<table><tr><td>(Dollars in millions)</td><td>Post-Employment Benefits</td><td>Operating Leases</td><td>Other Exit Costs</td><td>Total</td></tr><tr><td>All Restructuring Activities</td><td></td><td></td><td></td><td></td></tr><tr><td>Accrual balances at July 1, 2011</td><td>$ 8</td><td>$ 31</td><td>$ —</td><td>$ 39</td></tr><tr><td>Restructuring charges</td><td>3</td><td>—</td><td>2</td><td>5</td></tr><tr><td>Cash payments</td><td>(8)</td><td>(8)</td><td>(2)</td><td>(18)</td></tr><tr><td>Adjustments</td><td>—</td><td>(1)</td><td>—</td><td>(1)</td></tr><tr><td>Accrual balances at June 29, 2012</td><td>3</td><td>22</td><td>—</td><td>25</td></tr><tr><td>Restructuring charges</td><td>1</td><td>1</td><td>1</td><td>3</td></tr><tr><td>Cash payments</td><td>(2)</td><td>(7)</td><td>(1)</td><td>(10)</td></tr><tr><td>Adjustments</td><td>—</td><td>(1)</td><td>—</td><td>(1)</td></tr><tr><td>Accrual balances at June 28, 2013</td><td>2</td><td>15</td><td>—</td><td>17</td></tr><tr><td>Restructuring charges</td><td>18</td><td>3</td><td>2</td><td>23</td></tr><tr><td>Cash payments</td><td>(20)</td><td>(5)</td><td>(2)</td><td>(27)</td></tr><tr><td>Adjustments</td><td>2</td><td>(1)</td><td>—</td><td>1</td></tr><tr><td>Accrual balances at June 27, 2014</td><td>$ 2</td><td>$ 12</td><td>$ —</td><td>$ 14</td></tr></table>

Of the accrued restructuring balance of approximately $14 million at June 27, 2014, $7 million is included in Accrued expenses and $7 million is included in Other non-current liabilities in the Company's Consolidated Balance Sheet. Of the accrued restructuring balance of approximately $17 million at June 28, 2013, $6 million is included in Accrued expenses and $11 million is included in Other non-current liabilities in the Company's Consolidated Balance Sheet.

## 6. Debt

## Short-Term Borrowings

On January 18, 2011, the Company, and its subsidiary Seagate HDD Cayman entered into a Credit Agreement which provided for a $350 million senior secured revolving credit facility (the "Revolving Credit Facility"). On April 30, 2013, the Company and Seagate HDD Cayman entered into the Second Amendment to the Credit Agreement which increased the commitments available under the Revolving Credit Facility from $350 million to $500 million. The loans made under the Credit Agreement will bear interest at a rate of LIBOR plus a variable margin that will be determined based on the corporate credit rating of the Company. The Company and certain of its material subsidiaries fully and unconditionally guarantee the Revolving Credit Facility. The Revolving Credit Facility matures in April 2018, and is available for cash borrowings and for the issuance of letters of credit up to a sub-limit of $75 million. As of June 27, 2014, no borrowings have been drawn under the Revolving Credit Facility, or were utilized for letters of credit.



# SEAGATE TECHNOLOGY PLC

# NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Long-Term Debt

$600 million Aggregate Principal Amount of 6.8% Senior Notes due October 2016 (the "2016 Notes"). On September 20, 2006, the Company's subsidiary, Seagate Technology HDD Holdings, completed the sale of $600 million aggregate principal amount of the 2016 Notes, in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended. The interest on the 2016 Notes is payable semi-annually on April 1 and October 1 of each year. The issuer under the 2016 Notes is Seagate HDD Cayman, and the obligations under the 2016 Notes are unconditionally guaranteed by certain of the Company's significant subsidiaries. The 2016 Notes are redeemable at the option of the Company in whole or in part, on not less than 30, nor more than 60 days notice, at a "make-whole" premium redemption price. The "make-whole" redemption price will be equal to the greater of (1) 100% of the principal amount of the notes being redeemed, or (2) the sum of the present values of the remaining scheduled payments of principal and interest on the 2016 Notes being redeemed, discounted at the redemption date on a semi-annual basis at a rate equal to the sum of the applicable Treasury rate plus 50 basis points. During fiscal year 2013, the Company repurchased $265 million aggregate principal amount of its 2016 Notes for cash at a premium to their principal amount, plus accrued and unpaid interest, and recorded a loss on the repurchase of approximately $44 million, which is included in Other, net in the Company's Consolidated Statements of Operations.

$800 million Aggregate Principal Amount of 3.75% Senior Notes due November 2018 (the "Notes"). On November 5, 2013, Seagate HDD Cayman, issued $800 million in aggregate principal amount of 3.75% Senior Notes, which mature on November 15, 2018, in a private placement. The interest on the Notes is payable semi-annually on May 15 and November 15 of each year. The Notes are redeemable at the option of Seagate HDD Cayman in whole or in part, on not less than 30, nor more than 60 days' notice, at a "make-whole" premium redemption price. The "make-whole" premium redemption price will be equal to the greater of (1) 100% of the principal amount of the notes being redeemed, or (2) the sum of the present values of the remaining schedule payments of principal and interest on the Notes being redeemed, discounted at the redemption date on a semi-annual basis at a rate equal to the sum of the applicable Treasury rate plus 50 basis points. Accrued and unpaid interest, if any will be paid to, but excluding, the redemption date. The Notes are fully and unconditionally guaranteed by the Company on a senior unsecured basis. Seagate HDD Cayman and the Company are required to exchange the Notes for notes registered under the Securities Act of 1933, as amended, by January 30, 2015 if the Notes have not otherwise become freely transferable by that time.

$750 million Aggregate Principal Amount of 7.75% Senior Notes due December 2018 (the "2018 Notes"). On December 14, 2010, the Company's subsidiary, Seagate HDD Cayman, completed the sale of $750 million aggregate principal amount of the 2018 Notes in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended. During fiscal years 2014 and 2013, the Company repurchased $193 million and $513 million in aggregate principal amounts of its 2018 Notes, respectively, for cash at a premium to their principal amount, plus accrued and unpaid interest. During fiscal year 2014, the Company redeemed $44 million in aggregate principal amount of its 2018 Notes, for cash at a premium of its principal amount, plus accrued and unpaid interest. During fiscal years 2014 and 2013, the Company recorded losses on the repurchase and redemption of approximately $20 million and $75 million, respectively, which are included in Other, net in the Company's Consolidated Statements of Operations. As of June 27, 2014, the 2018 Notes were fully extinguished.

$600 million Aggregate Principal Amount of 6.875% Senior Notes due May 2020 (the "2020 Notes"). On May 13, 2010, the Company's subsidiary, Seagate HDD Cayman, completed the sale of $600 million aggregate principal amount of the 2020 Notes, in a private placement exempt from the registration



# SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

requirements of the Securities Act of 1933, as amended. The obligations under the 2020 Notes are fully and unconditionally guaranteed, on a senior unsecured basis, by the Company. The interest on the 2020 Notes is payable semi-annually on May 1 and November 1 of each year. The 2020 Notes are redeemable any time prior to May 1, 2015 at the option of the Company, in whole or in part, at a redemption price of 100% of the principal amount plus an "applicable premium" and accrued and unpaid interest, if any, to the redemption date. The "applicable premium" will be equal to the greater of (1) 1% of the principal amount of the 2020 Notes, or (2) the excess, if any, of (a) the present value of the redemption price on May 1, 2015 plus interest payments due through May 1, 2015, discounted at the applicable Treasury rate as of the redemption date plus 50 basis points; over (b) the principal amount of such note. The 2020 Notes are redeemable at any time on or after May 1, 2015 at various prices expressed as a percentage of principal amount, as set forth in the indentures, plus accrued and unpaid interest, if any, to the redemption date. The issuer under the 2020 Notes is Seagate HDD Cayman, and the obligations under the 2020 Notes are fully and unconditionally guaranteed, on a senior unsecured basis, by the Company. During fiscal year 2014, the Company repurchased $66 million aggregate principal amount of its 2020 Notes for cash at a premium to their principal amount, plus accrued and unpaid interest. The Company recorded a loss on the repurchase of approximately $7 million, which is included in Other, net in the Company's Consolidated Statement of Operations.

$600 million Aggregate Principal Amount of 7.00% Senior Notes due November 2021 (the "2021 Notes"). On May 18, 2011, the Company's subsidiary, Seagate HDD Cayman, completed the sale of $600 million aggregate principal amount of the 2021 Notes, in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended. The obligations under the 2021 Notes are fully and unconditionally guaranteed, on a senior unsecured basis, by the Company. The interest on the 2021 Notes is payable semi-annually on January 1 and July 1 of each year. The 2021 Notes are redeemable any time prior to May 1, 2016 at the option of the Company, in whole or in part, at a redemption price of 100% of the principal amount plus an "applicable premium" and accrued and unpaid interest, if any, to the redemption date. The "applicable premium" will be equal to the greater of (1) 1% of the principal amount of the 2021 Notes, or (2) the excess, if any, of (a) the present value of the redemption price on May 1, 2016 plus interest payments due through May 1, 2016, discounted at the applicable Treasury rate as of the redemption date plus 50 basis points; over (b) the principal amount of such note. The 2021 Notes are redeemable at any time on or after May 1, 2016 at various prices expressed as a percentage of principal amount, as set forth in the indentures, plus accrued and unpaid interest, if any, to the redemption date. In addition, any time before May 1, 2014, the Company may redeem up to 35% of the principal amount with the net cash proceeds from permitted sales of the Company's stock at a redemption price of 107% of the principal amount plus accrued interest to the redemption date. The issuer under the 2021 Notes is Seagate HDD Cayman and the obligations under the 2021 Notes are fully and unconditionally guaranteed, on a senior unsecured basis, by the Company. During fiscal year 2014, the Company repurchased $349 million aggregate principal amount of its 2021 Notes for cash at a premium to their principal amount, plus accrued and unpaid interest. The Company recorded a loss on the repurchase of approximately $54 million, which is included in Other, net in the Company's Condensed Consolidated Statement of Operations.

$1 billion Aggregate Principal Amount of 4.75% Senior Notes due June 1, 2023 (the "2023 Notes"). On May 22, 2013, Seagate HDD Cayman, issued $1 billion in aggregate principal amount of 4.75% Senior Notes, which mature on June 1, 2023, in a private placement with a requirement that if, under certain circumstances, the 2023 Notes have not otherwise become freely transferable by May 26, 2014, then the Company is required to register the 2023 Notes under the Securities Act of 1933, as amended. The obligations under the 2023 Notes are fully and unconditionally guaranteed, on a senior unsecured basis, by the Company. The interest on the 2023 Notes is payable semi-annually on June 1 and December 1 of each



# SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

year. The 2023 Notes are redeemable at the option of the Company in whole or in part, on not less than 30, nor more than 60 days notice, at a "make-whole" premium redemption price. The "make-whole" redemption price will be equal to the greater of (1) 100% of the principal amount of the notes being redeemed, or (2) the sum of the present values of the remaining scheduled payments of principal and interest on the 2023 Notes being redeemed, discounted at the redemption date on a semi-annual basis at a rate equal to the sum of the applicable Treasury rate plus 50 basis points. Accrued and unpaid interest, if any, will be paid to, but excluding, the redemption date.

§1 billion in aggregate principal amount of 4.75% Senior Notes due 2025 (the "Notes"). On May 28, 2014, Seagate HDD Cayman issued $1 billion in aggregate principal amount of 4.75% Senior Notes due 2025 (the "Notes"), which mature on January 1, 2025. The interest on the Notes will be payable in cash semiannually on January 1 and July 1 of each year, commencing on January 1, 2015. The Notes are redeemable at any time, upon not less than 30 nor more than 60 days' notice, Seagate HDD may redeem some or all of the Notes at a "make-whole" redemption price. The "make-whole" redemption price will be equal to the greater of (1) 100% of the principal amount of the Notes redeemed, and (2) the sum of the present values of the remaining scheduled payments of principal and interest on the Notes being redeemed, discounted to the redemption date on a semi-annual basis at a rate equal to the sum of the Treasury Rate plus 50 basis points. Accrued and unpaid interest, if any, will be paid to, but excluding, the redemption date. The Notes are fully and unconditionally guaranteed by the Company on a senior unsecured basis. Seagate HDD Cayman and the Company are required to exchange the Notes for notes registered under the Securities Act of 1933.

Other As part of our acquisition of LaCie S.A. during fiscal year 2013, long-term debt of $6 million was assumed. During fiscal year 2014, the long-term debt was fully repaid.

At June 27, 2014, future principal payments on long-term debt were as follows (in millions):

<table><tr><td>Fiscal Year</td><td>Amount</td></tr><tr><td>2015</td><td>$ —</td></tr><tr><td>2016</td><td>—</td></tr><tr><td>2017</td><td>335</td></tr><tr><td>2018</td><td>—</td></tr><tr><td>2019</td><td>800</td></tr><tr><td>Thereafter</td><td>2,785</td></tr><tr><td></td><td>$ 3,920</td></tr></table>



## SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

## 7. Income Taxes

The (benefit from) provision for income taxes consisted of the following:

<table><tr><td rowspan="2"></td><td colspan="4">Fiscal Years Ended</td></tr><tr><td>June 27, 2014</td><td>June 28, 2013</td><td>June 29, 2012</td><td></td></tr><tr><td>(Dollars in millions)</td><td></td><td></td><td></td><td></td></tr><tr><td>Current tax expense (benefit):</td><td></td><td></td><td></td><td></td></tr><tr><td>U.S. Federal</td><td>$ (12)</td><td>$ 3</td><td>$ 3</td><td>—</td></tr><tr><td>U.S. State</td><td>3</td><td>10</td><td>(2)</td><td></td></tr><tr><td>Non-U.S.</td><td>62</td><td>50</td><td>50</td><td></td></tr><tr><td>Total Current</td><td>53</td><td>63</td><td>48</td><td></td></tr><tr><td>Deferred tax expense (benefit):</td><td></td><td></td><td></td><td></td></tr><tr><td>U.S. Federal</td><td>(43)</td><td>(49)</td><td>(30)</td><td></td></tr><tr><td>U.S. State</td><td>2</td><td>(1)</td><td>2</td><td></td></tr><tr><td>Non-U.S.</td><td>(26)</td><td>(20)</td><td>—</td><td></td></tr><tr><td>Total Deferred</td><td>(67)</td><td>(70)</td><td>(28)</td><td></td></tr><tr><td>(Benefit from) provision for income taxes</td><td>$ (14)</td><td>$ (7)</td><td>$ 20</td><td></td></tr></table>

Income before income taxes consisted of the following:

<table><tr><td rowspan="2"></td><td colspan="4">Fiscal Years Ended</td></tr><tr><td>June 27, 2014</td><td>June 28, 2013</td><td>June 29, 2012</td><td></td></tr><tr><td>(Dollars in millions)</td><td></td><td></td><td></td><td></td></tr><tr><td>U.S.</td><td>$ 149</td><td>$ 175</td><td>$ 137</td><td></td></tr><tr><td>Non-U.S</td><td>1,407</td><td>1,656</td><td>2,745</td><td></td></tr><tr><td></td><td>$ 1,556</td><td>$ 1,831</td><td>$ 2,882</td><td></td></tr></table>

The Company recorded $0.3 million, $1 million and $6 million of excess tax benefits associated with stock option deductions in fiscal years 2014, 2013 and 2012, respectively.



## SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of the Company's deferred tax assets and liabilities were as follows:

<table><tr><td rowspan="2">(Dollars in millions)</td><td colspan="2">Fiscal Years Ended</td></tr><tr><td>June 27, 2014</td><td>June 28, 2013</td></tr><tr><td>Deferred tax assets</td><td></td><td></td></tr><tr><td>Accrued warranty</td><td>$ 99</td><td>$ 112</td></tr><tr><td>Inventory valuation accounts</td><td>49</td><td>55</td></tr><tr><td>Receivable allowance</td><td>15</td><td>13</td></tr><tr><td>Accrued compensation and benefits</td><td>103</td><td>107</td></tr><tr><td>Depreciation</td><td>140</td><td>125</td></tr><tr><td>Restructuring accruals</td><td>4</td><td>5</td></tr><tr><td>Other accruals and deferred items</td><td>39</td><td>44</td></tr><tr><td>Net operating losses and tax credit carry-forwards</td><td>1,081</td><td>1,103</td></tr><tr><td>Other assets</td><td>8</td><td>6</td></tr><tr><td>Total deferred tax assets</td><td>1,538</td><td>1,570</td></tr><tr><td>Valuation allowance</td><td>(888)</td><td>(989)</td></tr><tr><td>Net deferred tax assets</td><td>650</td><td>581</td></tr><tr><td>Deferred tax liabilities</td><td></td><td></td></tr><tr><td>Unremitted earnings of certain non-U.S. entities</td><td>(14)</td><td>(14)</td></tr><tr><td>Acquisition-related items (DTL)</td><td>(19)</td><td>(9)</td></tr><tr><td>Other liabilities</td><td>(2)</td><td>(4)</td></tr><tr><td>Total deferred tax liabilities</td><td>(35)</td><td>(27)</td></tr><tr><td>Total deferred tax assets</td><td>$ 615</td><td>$ 554</td></tr><tr><td>As Reported on the Balance Sheet</td><td></td><td></td></tr><tr><td>Current assets—deferred income taxes</td><td>$ 126</td><td>$ 115</td></tr><tr><td>Non-current assets—deferred income taxes</td><td>499</td><td>456</td></tr><tr><td>Current liabilities—Accrued expenses</td><td>—</td><td>(2)</td></tr><tr><td>Other non-current liabilities</td><td>(10)</td><td>(15)</td></tr><tr><td>Total deferred income taxes</td><td>$ 615</td><td>$ 554</td></tr></table>

The deferred tax asset valuation allowance decreased by approximately $101 million, $75 million and $82 million, in fiscal years 2014, 2013 and 2012, respectively. The valuation allowance decrease in fiscal year 2014 was primarily due to incremental future taxable income that resulted from acquisition activity.

At June 27, 2014, the Company recorded $615 million of net deferred tax assets. The realization of these deferred tax assets is primarily dependent on the Company's ability to generate sufficient U.S. and certain non-U.S. taxable income in future periods. Although realization is not assured, the Company's management believes that it is more likely than not that these deferred tax assets will be realized. The amount of deferred tax assets considered realizable, however, may increase or decrease in subsequent periods when the Company reevaluates the underlying basis for its estimates of future U.S. and certain non-U.S. taxable income.



# SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

At June 27, 2014, the Company had U.S. federal, state and non-U.S. tax net operating loss carryforwards of approximately $2.9 billion, $1.8 billion and $112 million, respectively, which will expire at various dates beginning in fiscal year 2016, if not utilized. At June 27, 2014, the Company had U.S. federal and state tax credit carryforwards of $348 million and $81 million, respectively, which will expire at various dates beginning in fiscal year 2016 if not utilized.

As of June 27, 2014, the use of approximately $376 million and $90 million of the Company's total U.S. net operating loss and tax credit carryforwards, respectively, is subject to an aggregate annual limitation of $46 million pursuant to U.S. tax law.

For purposes of the tax reconciliation between the provision for income taxes at the statutory rate and the effective tax rate, the Irish statutory rate of 25% was applied as follows:

<table><tr><td rowspan="2"></td><td colspan="4">Fiscal Years Ended</td></tr><tr><td>June 27, 2014</td><td>June 28, 2013</td><td>June 29, 2012</td><td></td></tr><tr><td>(Dollars in millions)</td><td></td><td></td><td></td><td></td></tr><tr><td>Provision (benefit) at statutory rate</td><td>$ 389</td><td>$ 458</td><td>$ 720</td><td></td></tr><tr><td>Net U.S. state income tax provision</td><td>3</td><td>12</td><td>(2)</td><td></td></tr><tr><td>Permanent differences</td><td>3</td><td>3</td><td>1</td><td></td></tr><tr><td>Valuation allowance</td><td>(100)</td><td>(97)</td><td>(70)</td><td></td></tr><tr><td>Non-U.S. losses with no tax benefits</td><td>8</td><td>27</td><td>1</td><td></td></tr><tr><td>Non-U.S. earnings taxed at less than statutory rate</td><td>(313)</td><td>(414)</td><td>(645)</td><td></td></tr><tr><td>Other individually immaterial items</td><td>(4)</td><td>4</td><td>15</td><td></td></tr><tr><td>(Benefit from) provision for income taxes</td><td>$ (14)</td><td>$ (7)</td><td>$ 20</td><td></td></tr></table>

A substantial portion of the Company's operations in Malaysia, Singapore, and Thailand operate under various tax holidays and tax incentive programs, which expire in whole or in part at various dates through 2020. Certain of the tax holidays may be extended if specific conditions are met. The net impact of these tax holidays and tax incentive programs was to increase the Company's net income by approximately $289 million in fiscal year 2014 ($0.83 per share, diluted), to increase the Company's net income by approximately $338 million in fiscal year 2013 ($0.89 per share, diluted), and to increase the Company's net income by $504 million in fiscal year 2012 ($1.14 per share, diluted).

Since establishing Irish tax residency in fiscal year 2010, the Company consists of an Irish tax resident parent holding company with various U.S. and non-U.S. subsidiaries that operate in multiple non-Irish taxing jurisdictions. The amount of temporary differences (including undistributed earnings) related to outside basis differences in the stock of non-Irish resident subsidiaries considered indefinitely reinvested outside of Ireland for which Irish income taxes have not been provided as of June 27, 2014 was approximately $2.8 billion. If such amount were remitted to Ireland as a dividend, it is likely that tax at 25% or approximately $700 million would result.

As of June 27, 2014 and June 28, 2013, the Company had approximately $115 million and $157 million, respectively, of unrecognized tax benefits excluding interest and penalties. The amount of unrecognized tax benefits, if recognized, that would impact the effective tax rate is $115 million and $157 million as of June 27, 2014 and June 28, 2013, respectively, subject to certain future valuation allowance reversals.



## SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the activity related to the Company’s gross unrecognized tax benefits:

<table><tr><td rowspan="2">(Dollars in millions)</td><td colspan="4">Fiscal Years Ended</td></tr><tr><td>June 27, 2014</td><td>June 28, 2013</td><td>June 29, 2012</td><td></td></tr><tr><td>Balance of unrecognized tax benefits at the beginning of the year</td><td>$ 157</td><td>$ 135</td><td>$ 128</td><td></td></tr><tr><td>Gross increase for tax positions of prior years</td><td>10</td><td>14</td><td>1</td><td></td></tr><tr><td>Gross decrease for tax positions of prior years</td><td>(64)</td><td>(4)</td><td>(3)</td><td></td></tr><tr><td>Gross increase for tax positions of current year</td><td>13</td><td>16</td><td>13</td><td></td></tr><tr><td>Gross decrease for tax positions of current year</td><td>—</td><td>—</td><td>—</td><td></td></tr><tr><td>Settlements</td><td>—</td><td>—</td><td>—</td><td></td></tr><tr><td>Lapse of statutes of limitation</td><td>(3)</td><td>(5)</td><td>(3)</td><td></td></tr><tr><td>Non-U.S. exchange (gain)/loss</td><td>2</td><td>1</td><td>(1)</td><td></td></tr><tr><td>Balance of unrecognized tax benefits at the end of the year</td><td>$ 115</td><td>$ 157</td><td>$ 135</td><td></td></tr></table>

It is the Company's policy to include interest and penalties related to unrecognized tax benefits in the provision for taxes on the Consolidated Statements of Operations. During fiscal year 2014, the Company recognized net tax expense for interest and penalties of $8 million as compared to net tax expense for interest and penalties of $2 million during each fiscal year 2013 and fiscal year 2012. As of June 27, 2014, the Company had $27 million of accrued interest and penalties related to unrecognized tax benefits compared to $19 million in fiscal year 2013.

During the 12 months beginning June 28, 2014, the Company expects that its unrecognized tax benefits could be reduced anywhere from $3 million to $50 million as a result of audit settlements and 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. In June, 2014, the Company received the Revenue Agent's Report and Notices of Proposed Adjustments for its U.S. federal income tax returns for fiscal years 2008, 2009 and 2010. The Company's China subsidiaries are under examination by the Chinese tax administration for years 2004 through 2012. These examinations may result in proposed adjustments to the income taxes as filed during these periods. The Company believes that it has adequately provided for these matters, but there is a reasonable possibility that an adverse outcome of these examinations could have a material effect on the Company's financial results. In this case, the Company would consider pursuing all possible remedies available, including appeals, judicial review and competent authority.

The Company is no longer subject to tax examination of U.S. federal income tax returns for years prior to fiscal year 2008. 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 2004. The Company believes it has provided adequately for all reasonable outcomes.

## 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



## SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 unrealized losses on cash flow hedges was $1 million as of June 27, 2014 and nil as of June 28, 2013.

The Company designates its cash flow hedges when the forecasted hedged transactions are realized or it is probable the forecasted hedged transactions will not occur in the initially identified time period. At such time, the associated gains and losses deferred in Accumulated other comprehensive loss are reclassified immediately into earnings and any subsequent changes in the fair value of such derivative instruments are immediately reflected in earnings. The Company did not recognize any material net gains or losses related to the loss of hedge designation on discontinued cash flow hedges during fiscal years 2014, 2013, and 2012. As of June 27, 2014, the Company's existing foreign currency forward exchange contracts mature within 12 months. The deferred amount currently recorded in Accumulated other comprehensive loss expected to be recognized into earnings over the next 12 months is immaterial.

The following tables show the total notional value of the Company’s outstanding foreign currency forward exchange contracts as of June 27, 2014 and June 28, 2013:

<table><tr><td rowspan="2">(Dollars in millions)</td><td colspan="3">As of June 27, 2014</td></tr><tr><td>Contracts Designated as Hedges</td><td>Contracts Not Designated as Hedges</td><td></td></tr><tr><td>Thai baht</td><td>$ —</td><td>$ 143</td><td></td></tr><tr><td>British Pound Sterling</td><td>25</td><td>—</td><td></td></tr><tr><td>Malaysian Ringitt</td><td>9</td><td>—</td><td></td></tr><tr><td></td><td>$ 34</td><td>$ 143</td><td></td></tr></table>

<table><tr><td rowspan="2">(Dollars in millions)</td><td colspan="3">As of June 28, 2013</td></tr><tr><td>Contracts Designated as Hedges</td><td>Contracts Not Designated as Hedges</td><td></td></tr><tr><td>Thai baht</td><td>$ —</td><td>$ 20</td><td></td></tr><tr><td>Singapore dollars</td><td>—</td><td>—</td><td></td></tr><tr><td>Chinese renminbi</td><td>—</td><td>—</td><td></td></tr><tr><td>Czech koruna</td><td>—</td><td>—</td><td></td></tr><tr><td></td><td>$ —</td><td>$ 20</td><td></td></tr></table>

The Company is subject to equity market risks due to changes in the fair value of the notional investments selected by its employees as part of its Non-qualified Deferred Compensation Plan—the Seagate Deferred Compensation Plan (the "SDCP"). In the quarter ended December 27, 2013, the Company entered into a Total Return Swap ("TRS") in order to manage the equity market risks associated with the SDCP liabilities. The Company pays a floating rate, based on LIBOR plus an interest rate spread, on the notional amount of the TRS. The TRS is designed to substantially offset changes in the SDCP liability due to changes in the value of the investment options made by employees. As of June 27, 2014, the notional investments underlying the TRS amounted to $90 million. The contract term of the TRS is approximately one year and is settled on a monthly basis, therefore limiting counterparty performance risk. The Company did not designate the TRS as a hedge. Rather, the Company records all changes in the fair value of the TRS to earnings to offset the market value changes of the SDCP liabilities.



## SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following tables show the Company's derivative instruments measured at gross fair value as reflected in the Consolidated Balance Sheets as of June 27, 2014 and June 28, 2013:

<table><tr><td rowspan="3">(Dollars in millions)</td><td colspan="5">As of June 27, 2014</td></tr><tr><td colspan="2">Asset Derivatives</td><td colspan="2">Liability Derivatives</td><td></td></tr><tr><td>Balance Sheet Location</td><td>Fair Value</td><td>Balance Sheet Location</td><td>Fair Value</td><td></td></tr><tr><td>Derivatives designated as hedging instruments:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Foreign currency forward exchange contracts</td><td>Other current assets</td><td>$ 3</td><td>Accrued expenses</td><td>$ —</td><td></td></tr><tr><td>Derivatives not designated as hedging instruments:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Foreign currency forward exchange contracts</td><td>Other current assets</td><td>2</td><td>Accrued expenses</td><td>—</td><td></td></tr><tr><td>Total return swap</td><td>Other current assets</td><td>—</td><td>Accrued expenses</td><td>—</td><td></td></tr><tr><td>Total derivatives</td><td></td><td>$ 5</td><td></td><td>$ —</td><td></td></tr></table>

<table><tr><td rowspan="3">(Dollars in millions)</td><td colspan="5">As of June 28, 2013</td></tr><tr><td colspan="2">Asset Derivatives</td><td colspan="2">Liability Derivatives</td><td></td></tr><tr><td>Balance Sheet Location</td><td>Fair Value</td><td>Balance Sheet Location</td><td>Fair Value</td><td></td></tr><tr><td>Derivatives designated as hedging instruments:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Foreign currency forward exchange contracts</td><td>Other current assets</td><td>$ —</td><td>Accrued expenses</td><td>$ —</td><td></td></tr><tr><td>Derivatives not designated as hedging instruments:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Foreign currency forward exchange contracts</td><td>Other current assets</td><td>—</td><td>Accrued expenses</td><td>(1)</td><td></td></tr><tr><td>Total derivatives</td><td></td><td>$ —</td><td></td><td>$ (1)</td><td></td></tr></table>

The following tables show the effect of the Company’s derivative instruments on the Consolidated Statement of Comprehensive Income and the Consolidated Statements of Operations for the fiscal year ended June 27, 2014:

<table><tr><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr></table>

<table><tr><td>Derivatives Not Designated as Hedging Instruments</td><td>Location of Gain or (Loss) Recognized in Income on Derivatives</td><td>Amount of Gain or (Loss) Recognized in Income on Derivatives</td></tr><tr><td>Foreign currency forward exchange contracts</td><td>Other, net</td><td>$ —</td></tr></table>



(a) The amounts of gains or losses recognized in income related to the ineffective portion of the hedging relationships and to the amount excluded from the assessment of hedge effectiveness were immaterial for the fiscal year ended June 27, 2014.



## SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company considers an active market to be one in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis, and views an inactive market as one in which there are few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers. Where appropriate the Company’s or the counterparty’s non-performance risk is considered in determining the fair values of liabilities and assets, respectively.

Items Measured at Fair Value on a Recurring Basis

The following table presents the Company's assets and liabilities that are measured at fair value on a recurring basis, excluding accrued interest components, as of June 27, 2014:

<table><tr><td rowspan="2"></td><td colspan="4">Fair Value Measurements at Reporting Date Using</td></tr><tr><td>Quoted Prices in Active Markets for Identical Instruments (Level 1)</td><td>Significant Other Observable Inputs (Level 2)</td><td>Significant Unobservable Inputs (Level 3)</td><td>Total Balance</td></tr><tr><td>(Dollars in millions)</td><td></td><td></td><td></td><td></td></tr><tr><td>Assets:</td><td></td><td></td><td></td><td></td></tr><tr><td>Money market funds</td><td>$ 793</td><td>$ —</td><td>$ —</td><td>$ 793</td></tr><tr><td>Commercial paper</td><td>—</td><td>1,261</td><td>—</td><td>1,261</td></tr><tr><td>U.S. treasuries and agency bonds</td><td>—</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Certificates of deposit</td><td>—</td><td>269</td><td>—</td><td>269</td></tr><tr><td>Corporate bonds</td><td>—</td><td>6</td><td>—</td><td>6</td></tr><tr><td>Other debt securities</td><td>—</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Equity securities</td><td>—</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Total cash equivalents and short-term investments</td><td>793</td><td>1,536</td><td>—</td><td>2,329</td></tr><tr><td>Restricted cash and investments:</td><td></td><td></td><td></td><td></td></tr><tr><td>Mutual Funds</td><td>—</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Other debt securities</td><td>—</td><td>4</td><td>—</td><td>4</td></tr><tr><td>Auction rate securities</td><td>—</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Derivative assets</td><td>—</td><td>5</td><td>—</td><td>5</td></tr><tr><td>Total assets</td><td>$ 793</td><td>$ 1,545</td><td>$ —</td><td>$ 2,338</td></tr><tr><td>Liabilities:</td><td></td><td></td><td></td><td></td></tr><tr><td>Derivative liabilities</td><td>$ —</td><td>$ —</td><td>$ —</td><td>$ —</td></tr><tr><td>Total return swap</td><td>—</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Total liabilities</td><td>$ —</td><td>$ —</td><td>$ —</td><td>$ —</td></tr></table>



## SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

<table><tr><td rowspan="2"></td><td colspan="4">Fair Value Measurements at Reporting Date Using</td></tr><tr><td>Quoted Prices in Active Markets for Identical Assets (Level 1)</td><td>Significant Other Observable Inputs (Level 2)</td><td>Significant Unobservable Inputs (Level 3)</td><td>Total Balance</td></tr><tr><td>(Dollars in millions)</td><td></td><td></td><td></td><td></td></tr><tr><td>Assets:</td><td></td><td></td><td></td><td></td></tr><tr><td>Cash and cash equivalents</td><td>$ 793</td><td>$ 1,516</td><td>$ —</td><td>$ 2,309</td></tr><tr><td>Short-term investments</td><td>—</td><td>20</td><td>—</td><td>20</td></tr><tr><td>Restricted cash and investments</td><td>—</td><td>4</td><td>—</td><td>4</td></tr><tr><td>Other current assets</td><td>—</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Other assets, net</td><td>—</td><td>5</td><td>—</td><td>5</td></tr><tr><td>Total assets</td><td>$ 793</td><td>$ 1,545</td><td>$ —</td><td>$ 2,338</td></tr><tr><td>Liabilities:</td><td></td><td></td><td></td><td></td></tr><tr><td>Accrued expenses</td><td>$ —</td><td>$ —</td><td>$ —</td><td>$ —</td></tr><tr><td>Total liabilities</td><td>$ —</td><td>$ —</td><td>$ —</td><td>$ —</td></tr></table>

The following table presents the Company's assets and liabilities that are measured at fair value on a recurring basis, excluding accrued interest components, as of June 28, 2013:

<table><tr><td rowspan="2"></td><td colspan="4">Fair Value Measurements at Reporting Date Using</td></tr><tr><td>Quoted Prices in Active Markets for Identical Instruments (Level 1)</td><td>Significant Other Observable Inputs (Level 2)</td><td>Significant Unobservable Inputs (Level 3)</td><td>Total Balance</td></tr><tr><td>(Dollars in millions)</td><td></td><td></td><td></td><td></td></tr><tr><td>Assets:</td><td></td><td></td><td></td><td></td></tr><tr><td>Money market funds</td><td>$ 787</td><td>$ —</td><td>$ —</td><td>$ 787</td></tr><tr><td>Commercial paper</td><td>—</td><td>655</td><td>—</td><td>655</td></tr><tr><td>U.S. treasuries and agency bonds</td><td>—</td><td>96</td><td>—</td><td>96</td></tr><tr><td>Certificates of deposit</td><td>—</td><td>149</td><td>—</td><td>149</td></tr><tr><td>Corporate bonds</td><td>—</td><td>211</td><td>—</td><td>211</td></tr><tr><td>Other debt securities</td><td>—</td><td>106</td><td>—</td><td>106</td></tr><tr><td>Equity securities</td><td>4</td><td>—</td><td>—</td><td>4</td></tr><tr><td>Total cash equivalents and short-term investments</td><td>791</td><td>1,217</td><td>—</td><td>2,008</td></tr><tr><td>Restricted Cash and Investments:</td><td></td><td></td><td></td><td></td></tr><tr><td>Mutual Funds</td><td>74</td><td>—</td><td>—</td><td>74</td></tr><tr><td>Other debt securities</td><td>22</td><td>5</td><td>—</td><td>27</td></tr><tr><td>Auction rate securities</td><td>—</td><td>—</td><td>15</td><td>15</td></tr><tr><td>Derivative assets</td><td>—</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Total assets</td><td>$ 887</td><td>$ 1,222</td><td>$ 15</td><td>$ 2,124</td></tr><tr><td>Liabilities:</td><td></td><td></td><td></td><td></td></tr><tr><td>Derivative liabilities</td><td>$ —</td><td>$ (1)</td><td>$ —</td><td>$ (1)</td></tr><tr><td>Total liabilities</td><td>$ —</td><td>$ (1)</td><td>$ —</td><td>$ (l)</td></tr></table>



## SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

<table><tr><td rowspan="2"></td><td colspan="5">Fair Value Measurements at Reporting Date Using</td></tr><tr><td>Quoted Prices in Active Markets for Identical Instruments (Level 1)</td><td>Significant Other Observable Inputs (Level 2)</td><td>Significant Unobservable Inputs (Level 3)</td><td>Total Balance</td><td></td></tr><tr><td>(Dollars in millions)</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Assets:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Cash and cash equivalents</td><td>$ 787</td><td>$ 741</td><td>$ —</td><td>$ 1,528</td><td></td></tr><tr><td>Short-term investments</td><td>4</td><td>476</td><td>—</td><td>480</td><td></td></tr><tr><td>Restricted cash and investments</td><td>96</td><td>5</td><td>—</td><td>101</td><td></td></tr><tr><td>Other current assets</td><td>—</td><td>—</td><td>—</td><td>—</td><td></td></tr><tr><td>Other assets, net</td><td>—</td><td>—</td><td>15</td><td>15</td><td></td></tr><tr><td>Total assets</td><td>$ 887</td><td>$ 1,222</td><td>$ 15</td><td>$ 2,124</td><td></td></tr><tr><td>Liabilities:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Accrued expenses</td><td>$ —</td><td>$ (1)</td><td>$ —</td><td>$ (1)</td><td></td></tr><tr><td>Total liabilities</td><td>$ —</td><td>$ (1)</td><td>$ —</td><td>$ (1</td><td></td></tr></table>

The Company classifies items in Level 1 if the financial assets consist of securities for which quoted prices are available in an active market.

The Company classifies items in Level 2 if the financial asset or liability is valued using observable inputs. The Company uses observable inputs including quoted prices in active markets for similar assets or liabilities. Level 2 assets include: agency bonds, corporate bonds, commercial paper, municipal bonds, and U.S. Treasuries. These debt investments are priced using observable inputs and valuation models which vary by asset class. The Company uses a pricing service to assist in determining the fair values of all of its cash equivalents and short-term investments. For the cash equivalents and short-term investments in the Company's portfolio, multiple pricing sources are generally available. The pricing service uses inputs from multiple industry standard data providers or other third party sources and various methodologies, such as weighting and models, to determine the appropriate price at the measurement date. The Company corroborates the prices obtained from the pricing service against other independent sources and, as of June 27, 2014, has not found it necessary to make any adjustments to the prices obtained. The Company's derivative financial instruments are also classified within Level 2. The Company's derivative financial instruments consist of foreign currency forward exchange contracts. The Company recognizes derivative financial instruments in its consolidated financial statements at fair value. The Company determines the fair value of these instruments by considering the estimated amount it would pay or receive to terminate these agreements at the reporting date.

As of June 27, 2014, we had no Level 3 assets due to the sale of our auction rate securities. As of June 28, 2013, the Company's Level 3 assets consisted of auction rate securities with a par value of $17 million, all of which were collateralized by student loans guaranteed by the Federal Family Education Loan Program. Beginning in fiscal year 2008, these securities failed to settle at auction and continued to fail until they were all sold in the fourth quarter of fiscal year 2014. Since there was no active market for these securities, the Company valued them using a discounted cash flow model. The valuation model was based on the income approach and reflected both observable and significant unobservable inputs.

The Company's auction rate securities were measured at fair value on a recurring basis, excluding accrued interest components, using significant unobservable inputs (Level 3). The fair value of the Company's auction rate securities for the fiscal year ended June 28, 2013 totaled $15 million.



# SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Items Measured at Fair Value on a Non-Recurring Basis

The Company enters into certain strategic investments for the promotion of business and strategic objectives. Strategic investments in equity securities where the Company does not have the ability to exercise significant influence over the investees, included in Other assets, net in the Consolidated Balance Sheets, are recorded at cost and are periodically analyzed to determine whether or not there are indicators of impairment. The carrying value of the Company's strategic investments at June 27, 2014 and June 28, 2013 totaled $46 million and $66 million, respectively, and consisted primarily of privately held equity securities without a readily determinable fair value.

During the fiscal years 2014, 2013 and 2012, the Company determined that certain of its equity investments accounted for under the cost method were other-than-temporarily impaired, and recognized charges of $2 million, $5 million and $7 million, respectively, in order to write down the carrying amount of the investment to its estimated fair value. These amounts were recorded in Other, net in the Consolidated Statements of Operations. Since there was no active market for the equity securities of the investee, the Company estimated fair value of the investee by using the market approach, which was then used to estimate the applicable portion of the fair value of its underlying intellectual property assets.

## Other Fair Value Disclosures

The Company's debt is carried at amortized cost. The fair value of the Company's debt is derived using the closing price of the same debt instruments as of the date of valuation, which takes into account the yield curve, interest rates, and other observable inputs. Accordingly, these fair value measurements are categorized as Level 2. The following table presents the fair value and amortized cost of the Company's debt in order of maturity:

<table><tr><td rowspan="2"></td><td colspan="3">June 27, 2014</td><td colspan="3">June 28, 2013</td></tr><tr><td>Carrying Amount</td><td>Estimated Fair Value</td><td>Carrying Amount</td><td>Estimated Fair Value</td><td>Carrying Amount</td><td>Estimated Fair Value</td></tr><tr><td>(Dollars in millions)</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>6.8% Senior Notes due October 2016</td><td>$ 335</td><td>$ 374</td><td>$ 335</td><td>$ 370</td><td></td><td></td></tr><tr><td>3.75% Senior Notes due November 2018</td><td>800</td><td>820</td><td>—</td><td>—</td><td></td><td></td></tr><tr><td>7.75% Senior Notes due December 2018</td><td>—</td><td>—</td><td>238</td><td>259</td><td></td><td></td></tr><tr><td>6.875% Senior Notes due May 2020</td><td>534</td><td>578</td><td>600</td><td>644</td><td></td><td></td></tr><tr><td>7.00% Senior Notes due November 2021</td><td>251</td><td>284</td><td>600</td><td>645</td><td></td><td></td></tr><tr><td>4.75% Senior Notes due June 2023</td><td>1,000</td><td>1,009</td><td>1,000</td><td>938</td><td></td><td></td></tr><tr><td>4.75% Senior Notes due January 2025</td><td>1,000</td><td>995</td><td>—</td><td>—</td><td></td><td></td></tr><tr><td>Other</td><td>—</td><td>—</td><td>4</td><td>4</td><td></td><td></td></tr><tr><td></td><td>3,920</td><td>4,060</td><td>2,777</td><td>2,860</td><td></td><td></td></tr><tr><td>Less short-term borrowings and current portion of long-term debt</td><td>—</td><td>—</td><td>(3)</td><td>(3)</td><td></td><td></td></tr><tr><td>Long-term debt, less current portion</td><td>$ 3,920</td><td>$ 4,060</td><td>$ 2,774</td><td>$ 2,857</td><td></td><td></td></tr></table>

## 10. Shareholders' Equity

## Share Capital

The Company’s authorized share capital is $13,500 and consists of 1,250,000,000 ordinary shares, par value $0.00001, of which 326,539,322 shares were outstanding as of June 27, 2014, and 100,000,000 preferred shares, par value $0.00001, of which none were issued or outstanding as of June 27, 2014.



# SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Ordinary shares —Holders of ordinary shares are entitled to receive dividends when and as declared by the Company's board of directors (the "Board of Directors"). Upon any liquidation, dissolution, or winding up of the Company, after required payments are made to holders of preferred shares, any remaining assets of the Company will be distributed ratably to holders of the preferred and ordinary shares. Holders of shares are entitled to one vote per share on all matters upon which the ordinary shares are entitled to vote, including the election of directors.

Preferred shares —The Company may issue preferred shares in one or more series, up to the authorized amount, without shareholder approval. The Board of Directors is authorized to establish from time to time the number of shares to be included in each series, and to fix the rights, preferences and privileges of the shares of each wholly unissued series and any of its qualifications, limitations or restrictions. The Board of Directors can also increase or decrease the number of shares of a series, but not below the number of shares of that series then outstanding, without any further vote or action by the shareholders.

The Board of Directors may authorize the issuance of preferred shares with voting or conversion rights that could harm the voting power or other rights of the holders of the ordinary shares. The issuance of preferred shares, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a change in control of the Company and might harm the market price of its ordinary shares and the voting and other rights of the holders of ordinary shares.

## Repurchases of Equity Securities

On February 1, 2010, the Company announced that its Board of Directors authorized an Anti-Dilution Share Repurchase Program (the "January 2010 Anti-Dilution Share Repurchase Program"). The repurchase program authorizes the Company to repurchase its ordinary shares to offset increases in diluted shares, such as those caused by employee stock plans and convertible debt, used in the determination of diluted net income per share. There was no minimum or maximum number of shares to be repurchased. On April 26, 2012, the Board of Directors authorized the Company to terminate the January 2010 Anti-Dilution Share Repurchase Program, which was so terminated effective April 26, 2012.

On November 29, 2010, the Company's Board of Directors authorized repurchases of up to an additional $2 billion of the Company's outstanding ordinary shares.

On January 25, 2012, the Board of Directors authorized the Company to repurchase an additional $1 billion of its outstanding ordinary shares.

On April 26, 2012, the Board of Directors authorized the Company to repurchase an additional $2.5 billion of its outstanding ordinary shares.

On July 24, 2013, the Board of Directors authorized the Company to repurchase an additional $2.5 billion of its outstanding ordinary shares.

All repurchases are effected as redemptions in accordance with the Company's Articles of Association.

As of June 27, 2014, $1.5 billion remained available for repurchase under the existing repurchase authorization limit.



## SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table sets forth information with respect to repurchases of the Company's ordinary shares during fiscal year 2014, 2013 and 2012:

<table><tr><td></td><td>Number of Shares Repurchased</td><td>Dollar Value of Shares Repurchased</td></tr><tr><td>(In millions)</td><td></td><td></td></tr><tr><td>Cumulative repurchased through July 1, 2011</td><td>89</td><td>$ 1,406</td></tr><tr><td>Repurchased in fiscal year 2012 (a)</td><td>101</td><td>2,426</td></tr><tr><td>Cumulative repurchased through June 29, 2012</td><td>190</td><td>3,832</td></tr><tr><td>Repurchased in fiscal year 2013</td><td>54</td><td>1,654</td></tr><tr><td>Cumulative repurchased through June 28, 2013</td><td>244</td><td>5,486</td></tr><tr><td>Repurchased in fiscal year 2014</td><td>41</td><td>1,912</td></tr><tr><td>Cumulative repurchased through June 27, 2014</td><td>285</td><td>$ 7,398</td></tr></table>

(a) Includes 21 million shares of repurchases for $305 million under the January 2010 Anti-Dilution Share Repurchase Program.

## 11. Compensation

## Stock-Based Compensation Plans

The Company’s stock-based compensation plans have been established to promote the Company’s long-term growth and financial success by providing incentives to its employees, directors, and consultants through grants of share-based awards. The provisions of the Company’s stock-based benefit plans, which allow for the grant of various types of equity-based awards, are also intended to provide greater flexibility to maintain the Company’s competitive ability to attract, retain and motivate participants for the benefit of the Company and its shareholders.

Seagate Technology plc 2012 Equity Incentive Plan (the "EIP"). On October 26, 2011, the shareholders approved the EIP and authorized the issuance of up to a total of 27.0 million ordinary shares, par value $0.0001 per share, plus any shares remaining available for grant under the Seagate Technology plc 2004 Share Compensation Plan (the "SCP") as of the effective date of the EIP (which was equal to 11.0 million ordinary shares as of the effective date of the EIP and which will increase by such additional number of shares as will be returned to the share reserve in respect of awards previously granted under the SCP) (together, the "Share Reserve"). Any shares that are subject to options or share appreciation rights granted under the EIP will be counted against the Share Reserve as one share for every one share granted, and any shares that are subject to restricted share bonus awards, restricted share units, performance share bonus awards or performance share awards (collectively, "Full-Value Share Awards") will generally be counted against the Share Reserve as two and one-tenth shares for every one share granted. As of June 27, 2014, there were approximately 15.7 million ordinary shares available for issuance under the EIP.

Seagate Technology plc 2004 Share Compensation Plan (the "SCP"). A maximum of 63.5 million ordinary shares were issuable under the SCP, including 10.0 million authorized for issuance of share awards and restricted units. On November 4, 2011, the Company filed Post-Effective Amendment No. 1 to deregister 11.0 million ordinary shares that remained available for grant as of October 27, 2011 under the SCP and no shares have been granted from the SCP subsequent to that date.



# SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Seagate Technology plc Stock Purchase Plan (the "ESPP"). There are 50.0 million ordinary shares authorized to be issued under the ESPP. In no event shall the total number of shares issued under the ESPP exceed 75.0 million ordinary shares. The ESPP consists of a six-month offering period with a maximum issuance of 1.5 million ordinary shares per offering period. The ESPP permits eligible employees to purchase ordinary shares through payroll deductions generally at 85% of the fair market value of the ordinary shares. As of June 27, 2014 there were approximately 10.2 million ordinary shares available for issuance under the ESPP.

i365, Inc. 2010 Equity Incentive Plan (the "i365 Plan"). In October 2010, i365, Inc. ("i365"), a wholly owned subsidiary of the Company, adopted the i365, Inc. 2010 Equity Incentive Plan (the "i365 Plan"). A maximum of 5.0 million shares of i365's common stock are issuable under the i365 Plan. Options granted to employees generally vest as follows: 25% of the options on the first anniversary of the vesting commencement date and the remaining 75% proportionately each month over the next 36 months. Options expire ten years from the date of grant. The compensation expense associated with options granted to date under the i365 Plan was not material for fiscal years 2014, 2013, and 2012, respectively.

LyveMinds Inc. 2012 Equity Incentive Plan (the "LyveMinds Plan"). On October 19, 2012, LyveMinds Inc., a majority-owned subsidiary of the Company, adopted the LyveMinds Inc. 2012 Equity Incentive Plan (the "LyveMinds Plan"). A maximum of 31.9 million shares of LyveMinds' common stock are issuable under the LyveMinds Plan to employees, directors, and consultants of LyveMinds. Options granted to LyveMinds employees generally vest as follows: 25% of the options on the first anniversary of the vesting commencement date and the remaining 75% proportionately each month over the next 36 months. Options expire ten years from the date of grant. LyveMinds, Inc. adopted the Amended and Restated 2012 Equity Incentive Plan on March 26, 2014 in connection with LyveMinds' reincorporation as a Delaware corporation. The compensation expense associated with options granted to date under the LyveMinds Plan was not material for fiscal years 2014, 2013, and 2012, respectively.

## Equity Awards

Full-Value Share Awards (e.g. restricted share units) generally vest over a period of three to four years, with cliff vesting of a portion of each award occurring annually. Options generally vest as follows: 25% of the options will vest on the first anniversary of the vesting commencement date and the remaining 75% will vest ratably each month thereafter over the next 36 months. Options granted under the EIP and SCP have an exercise price equal to the closing price of the Company's ordinary shares on date of grant.

The Company granted performance awards to its senior executive officers under the SCP and the EIP where vesting is subject to both the continued employment of the participant by the Company and the achievement of certain performance goals established by the Compensation Committee of the Company's Board of Directors, including market based performance goals. A single award represents the right to receive a single ordinary share of the Company. During fiscal year 2014, 2013 and 2012, the Company granted 0.4 million, 0.7 million and 0.6 million performance awards, respectively, where performance is measured based on a three-year average return on invested capital (ROIC) goal and a relative total shareholder return (TSR) goal, which is based on the Company's ordinary shares measured against a benchmark TSR of a peer group over the same three-year period (the "TSR/ROIC" awards). These awards vest after the end of the performance period of three years from the grant date. A percentage of these units may vest only if at least the minimum ROIC goal is met regardless of whether the TSR goal is met. The number of stock units to vest will range from 0% to 200% of the targeted units. In evaluating the fair value of these units, the Company used a Monte Carlo simulation on the grant date, taking the market-based TSR goal into consideration. Compensation expense related to these units is only recorded in a



# SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

period if it is probable that the ROIC goal will be met, and it is to be recorded at the expected level of achievement.

The Company also granted 0.3 million, 0.3 million and 0.6 million performance awards during fiscal years 2014, 2013 and 2012 respectively, to its senior executive officers which are subject to a performance goal related to the Company's adjusted earnings per share (the "AEPS" awards). These awards have a maximum seven-year vesting period, with 25% annual vesting starting on the first anniversary of the grant date. If the performance goal is not achieved, vesting is delayed to a following year in which the AEPS goal is achieved. Any unvested awards from prior years may vest cumulatively in a future year within the seven-year vesting period if the annual AEPS goal is achieved during a subsequent year. If the AEPS goal has not been met by the end of the seven year period, any unvested shares will be forfeited.

During fiscal year 2014, the Company did not grant any performance-based options and performance based restricted share units to its CEO. In fiscal year 2013, the Company granted 0.2 million performance-based options and 0.1 million performance-based restricted share units to its CEO which are based on the attainment of a minimum 40% TSR (the "40% TSR" awards). The 40% TSR awards cliff vest after three years, contingent upon continued service and the attainment of a minimum 40% TSR, inclusive of dividends and share price appreciation, over a three-year performance period, which TSR must be sustained for a minimum of 30 consecutive trading days.

## Determining Fair Value of Seagate Technology Stock Plans

Valuation and amortization method —The Company estimates the fair value of stock options granted using the Black-Scholes-Merton valuation model and a single option award approach. This fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period or the remaining service (vesting) period.

Expected Term —Expected term represents the period that the Company's stock-based awards are expected to be outstanding and was determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior as influenced by changes to the terms of its stock-based awards.

Expected Volatility —The Company uses a combination of the implied volatility of its traded options and historical volatility of its share price.

Expected Dividend —The Black-Scholes-Merton valuation model calls for a single expected dividend yield as an input. The dividend yield is determined by dividing the expected per share dividend during the coming year by the grant date share price. The expected dividend assumption is based on the Company's current expectations about its anticipated dividend policy. Also, because the expected dividend yield should reflect marketplace participants' expectations, the Company does not incorporate changes in dividends anticipated by management unless those changes have been communicated to or otherwise are anticipated by marketplace participants.

Risk-Free Interest Rate —The Company bases the risk-free interest rate used in the Black-Scholes-Merton valuation model on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term. Where the expected term of the Company's stock-based awards do not correspond with the terms for which interest rates are quoted, the Company performed a straight-line interpolation to determine the rate from the available term maturities.



## SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fair Value —The fair value of the Company’s nonvested awards and performance awards subject to an AEPS condition for fiscal years 2014, 2013, and 2012, is the price of the Company’s shares on the grant date. The weighted average grant date fair value of awards granted are as follows:

<table><tr><td rowspan="2"></td><td colspan="3">Fiscal Years</td></tr><tr><td>2014</td><td>2013</td><td>2012</td></tr><tr><td>Nonvested awards:</td><td></td><td></td><td></td></tr><tr><td>Weighted-average fair value</td><td>$ 41.18</td><td>$ 30.26</td><td>$ 13.14</td></tr><tr><td>Performance awards:</td><td></td><td></td><td></td></tr><tr><td>Weighted-average fair value</td><td>$ 48.69</td><td>$ 30.01</td><td>$ 11.16</td></tr></table>

The fair value of the Company’s shares related to options granted to employees, shares issued from the ESPP and performance awards subject to TSR/ROIC conditions for fiscal years 2014, 2013, and 2012 were estimated using the following assumptions:

<table><tr><td rowspan="2"></td><td colspan="3">Fiscal Years</td></tr><tr><td>2014</td><td>2013</td><td>2012</td></tr><tr><td>Options</td><td></td><td></td><td></td></tr><tr><td>Expected term (in years)</td><td>4.2</td><td>4.2</td><td>4.2</td></tr><tr><td>Volatility</td><td>35 - 41%</td><td>41 - 53%</td><td>49 - 53%</td></tr><tr><td>Weighted-average volatility</td><td>40%</td><td>52%</td><td>50%</td></tr><tr><td>Expected dividend rate</td><td>3.1% - 3.8%</td><td>3.6 - 5.8%</td><td>3.8 - 6.5%</td></tr><tr><td>Weighted-average expected dividend rate</td><td>3.7%</td><td>4.4%</td><td>5.9%</td></tr><tr><td>Risk-free interest rate</td><td>1.2 - 1.4%</td><td>0.5 - 1.1%</td><td>0.6 - 0.9%</td></tr><tr><td>Weighted-average fair value</td><td>$10.41</td><td>$8.96</td><td>$3.61</td></tr><tr><td>ESPP</td><td></td><td></td><td></td></tr><tr><td>Expected term (in years)</td><td>0.5</td><td>0.5</td><td>0.5</td></tr><tr><td>Volatility</td><td>34 - 36%</td><td>38 - 46%</td><td>45 - 54%</td></tr><tr><td>Weighted-average volatility</td><td>35%</td><td>42%</td><td>49%</td></tr><tr><td>Expected dividend rate</td><td>3.3 - 3.5%</td><td>2.2 - 4.2%</td><td>3.9 - 5.2%</td></tr><tr><td>Weighted-average expected dividend rate</td><td>3.4%</td><td>3.2%</td><td>4.7%</td></tr><tr><td>Risk-free interest rate</td><td>0.1%</td><td>0.1%</td><td>0.1 - 0.2%</td></tr><tr><td>Weighted-average fair value</td><td>$10.46</td><td>$7.74</td><td>$4.89</td></tr><tr><td>Performance restricted share awards subject to market condition</td><td></td><td></td><td></td></tr><tr><td>Expected term (in years)</td><td>3.00</td><td>2.98</td><td>2.96</td></tr><tr><td>Weighted-average volatility</td><td>46%</td><td>48%</td><td>65%</td></tr><tr><td>Expected dividend rate</td><td>3.8%</td><td>4.3%</td><td>6.4%</td></tr><tr><td>Risk-free interest rate</td><td>0.9%</td><td>0.3%</td><td>0.3%</td></tr><tr><td>Weighted-average fair value</td><td>$37.51</td><td>$26.41</td><td>$10.05</td></tr></table>

Stock Compensation Expense

The Company recorded $118 million, $76 million and $51 million of share-based compensation during fiscal years 2014, 2013, and 2012, respectively. Management has made an estimate of expected forfeitures and is recognizing compensation costs only for those equity awards expected to vest. When estimating forfeitures, the Company considers voluntary termination behavior as well as analysis of actual forfeited awards.



# SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

## Stock Option Activity

The Company issues new ordinary shares upon exercise of stock options. The following is a summary of option activities:

<table><tr><td rowspan="2">Options</td><td>Number of Shares</td><td>Weighted-Average Exercise Price</td><td>Weighted-Average Remaining Contractual Term</td><td>Aggregate Intrinsic Value</td></tr><tr><td>(In millions)</td><td></td><td>(In years)</td><td>(Dollars In millions)</td></tr><tr><td>Outstanding at June 28, 2013</td><td>9.5</td><td>$ 14.60</td><td>3.8</td><td>$ 286</td></tr><tr><td>Granted</td><td>0.9</td><td>$ 42.54</td><td></td><td></td></tr><tr><td>Exercised</td><td>(3.9)</td><td>$ 12.64</td><td></td><td></td></tr><tr><td>Forfeitures</td><td>(0.1)</td><td>$ 23.37</td><td></td><td></td></tr><tr><td>Expirations</td><td>—</td><td>$ —</td><td></td><td></td></tr><tr><td>Outstanding at June 27, 2014</td><td>6.4</td><td>$ 19.80</td><td>3.8</td><td>$ 238</td></tr><tr><td>Vested and expected to vest at June 27, 2014</td><td>6.2</td><td>$ 19.40</td><td>3.8</td><td>$ 231</td></tr><tr><td>Exercisable at June 27, 2014</td><td>3.5</td><td>$ 11.56</td><td>2.6</td><td>$ 157</td></tr></table>

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company's ordinary shares for the options that were in-the-money at June 27, 2014. During fiscal years 2014, 2013, and 2012, the aggregate intrinsic value of options exercised under the Company's stock option plans was $140 million, $272 million and $245 million, respectively, determined as of the date of option exercise. The aggregate fair value of options vested during fiscal year 2014 was approximately $12 million.

At June 27, 2014, the total compensation cost related to options granted to employees but not yet recognized was approximately $20 million, net of estimated forfeitures of approximately $1 million. This cost is being amortized on a straight-line basis over a weighted-average remaining term of approximately 2.4 years and will be adjusted for subsequent changes in estimated forfeitures.

## Nonvested Awards Activity

The following is a summary of nonvested award activities which do not contain a performance condition:

<table><tr><td>Nonvested Awards</td><td>Number of Shares (In millions)</td><td>Weighted-Average Grant-Date Fair Value</td></tr><tr><td>Nonvested at June 28, 2013</td><td>5.4</td><td>$ 22.07</td></tr><tr><td>Granted</td><td>3.5</td><td>$ 41.18</td></tr><tr><td>Forfeitures</td><td>(0.2)</td><td>$ 28.69</td></tr><tr><td>Vested</td><td>(1.7)</td><td>$ 20.36</td></tr><tr><td>Nonvested at June 27, 2014</td><td>7.0</td><td>$ 32.05</td></tr></table>

At June 27, 2014, the total compensation cost related to nonvested awards granted to employees but not yet recognized was approximately $164 million, net of estimated forfeitures of approximately



# SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

$11 million. This cost is being amortized on a straight-line basis over a weighted-average remaining term of 2.8 years and will be adjusted for subsequent changes in estimated forfeitures. The aggregate fair value of nonvested awards vested during fiscal year 2014 was approximately $73 million.

## Performance Awards

The following is a summary of nonvested award activities which contain a performance condition:

<table><tr><td>Performance Awards (In millions)</td><td>Number of Shares</td><td>Weighted-Average Grant-Date Fair Value</td></tr><tr><td>Performance units at June 28, 2013</td><td>2.6</td><td>$ 18.44</td></tr><tr><td>Granted</td><td>0.7</td><td>$ 42.50</td></tr><tr><td>Forfeitures</td><td>—</td><td>$ —</td></tr><tr><td>Vested</td><td>(0.6)</td><td>$ 14.55</td></tr><tr><td>Performance units at June 27, 2014</td><td>2.7</td><td>$ 25.43</td></tr></table>

At June 27, 2014, the total compensation cost related to performance awards granted to employees but not yet recognized was approximately $52 million. This cost is being amortized on a straight-line basis over a weighted-average remaining term of 3.0 years.

## ESPP

During fiscal years 2014, 2013 and 2012, the aggregate intrinsic value of shares purchased under the Company's ESPP was approximately $26 million, $17 million and $17 million respectively. At June 27, 2014, the total compensation cost related to options to purchase the Company's ordinary shares under the ESPP but not yet recognized was approximately $1.6 million. This cost will be amortized on a straight-line basis over a weighted-average period of approximately one month. During fiscal year 2014, the Company issued 1.7 million ordinary shares with a weighted-average purchase price of $31.95 per share.

## Tax-Deferred Savings Plan

The Company has a tax-deferred savings plan, the Seagate 401(k) Plan (the "401(k) plan"), for the benefit of qualified employees. The 401(k) plan is designed to provide employees with an accumulation of funds at retirement. Qualified employees may elect to make contributions to the 401(k) plan on a bi-weekly basis. Pursuant to the 401(k) plan, the Company matches 50% of employee contributions, up to 6% of compensation, subject to maximum annual contributions of $4,500 per participating employee. During fiscal years 2014, 2013, and 2012, the Company made matching contributions of $16 million, $14 million and $13 million, respectively.

## Deferred Compensation Plan

On January 1, 2001, the Company adopted the SDCP for the benefit of eligible employees. This plan is designed to permit certain discretionary employer contributions, in excess of the tax limits applicable to the 401(k) plan and to permit employee deferrals in excess of certain tax limits. In the quarter ended December 27, 2013, the Company entered into a Total Return Swap ("TRS") in order to manage the equity market risks associated with the SDCP liabilities. See "Note 8. Derivative Financial Instruments" contained in this report for additional information about the TRS.



# SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Through the second quarter of fiscal year 2014, the Company’s assets designated to pay benefits under the plan were held by a rabbi trust. The assets and liabilities of a rabbi trust were accounted for as assets and liabilities of the Company. As of June 28, 2013, the assets held in the rabbi trust were approximately $79 million and were included in Restricted cash and investments in the Consolidated Balance Sheets. The deferred compensation obligation related to the rabbi trust included in Accrued expenses on the accompanying Consolidated Balance Sheets was approximately $87 million as of June 28, 2013.

## 12. Earnings Per Share

The following table sets forth the computation of basic and diluted net income per share:

<table><tr><td rowspan="2"></td><td colspan="4">Fiscal Years Ended</td></tr><tr><td>June 27, 2014</td><td>June 28, 2013</td><td>June 29, 2012</td><td></td></tr><tr><td>(In millions, except per share data)</td><td></td><td></td><td></td><td></td></tr><tr><td>Numerator:</td><td></td><td></td><td></td><td></td></tr><tr><td>Net income attributable to Seagate Technology plc</td><td>$ 1,570</td><td>$ 1,838</td><td>$ 2,862</td><td></td></tr><tr><td>Number of shares used in per share calculations:</td><td></td><td></td><td></td><td></td></tr><tr><td>Total shares for purposes of calculating basic net income per share attributable to Seagate Technology plc</td><td>337</td><td>370</td><td>426</td><td></td></tr><tr><td>Weighted-average effect of dilutive securities:</td><td></td><td></td><td></td><td></td></tr><tr><td>Employee equity award plans</td><td>10</td><td>12</td><td>15</td><td></td></tr><tr><td>Total shares for purpose of calculating diluted net income per share attributable to Seagate Technology plc</td><td>347</td><td>382</td><td>441</td><td></td></tr><tr><td>Net income per share attributable to Seagate Technology plc shareholders:</td><td></td><td></td><td></td><td></td></tr><tr><td>Basic</td><td>$ 4.66</td><td>$ 4.97</td><td>$ 6.72</td><td></td></tr><tr><td>Diluted</td><td>$ 4.52</td><td>$ 4.81</td><td>$ 6.49</td><td></td></tr></table>

The following potential shares were excluded from the computation of diluted net income per share as their effect would have been anti-dilutive:

<table><tr><td rowspan="2"></td><td colspan="3">Fiscal Years Ended</td></tr><tr><td>June 27, 2014</td><td>June 28, 2013</td><td>June 29, 2012</td></tr><tr><td>(In millions)</td><td>—</td><td>—</td><td>7</td></tr><tr><td>Employee equity award plans</td><td></td><td></td><td></td></tr></table>

## 13. Business Segment and Geographic Information

The Company has concluded that its manufacture and distribution of disk drives constitutes one reporting segment. The Company's manufacturing operations are based on technology platforms that are used to produce various disk drive products that serve multiple disk drive applications and markets. The Company's main technology platforms are primarily focused around areal density of media and read/write head technologies. In addition, the Company also invests in certain other technology platforms including motors, servo formatting read/write channels, solid state and other technologies. The Company has determined that its Chief Executive Officer is the Company's chief operating decision maker (CODM) as he is responsible for reviewing and approving investments in the Company's technology platforms and manufacturing infrastructure.

In fiscal years 2014, 2013 and 2012, Dell Inc. accounted for approximately 13%, 13% and 15% of consolidated revenue, respectively, while Hewlett-Packard Company accounted for approximately 13%,



## SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

10% and 14% of consolidated revenue, respectively. No other customer accounted for more than 10% of consolidated revenue in any year presented.

Other long-lived assets consist of property, equipment and leasehold improvements, other intangible assets, capital leases, equity investments and other non-current assets as recorded by the Company's operations in each area.

The following table summarizes the Company's operations by geographic area:

<table><tr><td rowspan="2">(In millions)</td><td colspan="4">Fiscal Years Ended</td></tr><tr><td>June 27, 2014</td><td>June 28, 2013</td><td>June 29, 2012</td><td></td></tr><tr><td>Revenue from external customers (a) :</td><td></td><td></td><td></td><td></td></tr><tr><td>Singapore</td><td>$ 6,828</td><td>$ 7,429</td><td>$ 7,847</td><td></td></tr><tr><td>United States</td><td>3,679</td><td>3,620</td><td>3,845</td><td></td></tr><tr><td>The Netherlands</td><td>2,652</td><td>2,804</td><td>3,089</td><td></td></tr><tr><td>Other</td><td>565</td><td>498</td><td>158</td><td></td></tr><tr><td>Consolidated</td><td>$ 13,724</td><td>$ 14,351</td><td>$ 14,939</td><td></td></tr><tr><td>Long-lived assets:</td><td></td><td></td><td></td><td></td></tr><tr><td>Singapore</td><td>$ 788</td><td>$ 881</td><td>$ 868</td><td></td></tr><tr><td>Thailand</td><td>398</td><td>398</td><td>409</td><td></td></tr><tr><td>United States</td><td>500</td><td>427</td><td>318</td><td></td></tr><tr><td>China</td><td>167</td><td>212</td><td>270</td><td></td></tr><tr><td>Malaysia</td><td>146</td><td>129</td><td>144</td><td></td></tr><tr><td>Other</td><td>680</td><td>852</td><td>928</td><td></td></tr><tr><td>Consolidated</td><td>$ 2,679</td><td>$ 2,899</td><td>$ 2,937</td><td></td></tr></table>

(a) Revenue is attributed to countries based on the shipping location.

## 14. Legal, Environmental and Other Contingencies

The Company assesses the probability of an unfavorable outcome of all its material litigation, claims, or assessments to determine whether a liability had been incurred and whether it is probable that one or more future events will occur confirming the fact of the loss. In the event that an unfavorable outcome is determined to be probable and the amount of the loss can be reasonably estimated, the Company establishes an accrual for the litigation, claim or assessment. In addition, in the event an unfavorable outcome is determined to be less than probable, but reasonably possible, the Company will disclose an estimate of the possible loss or range of such loss; however, when a reasonable estimate cannot be made, the Company will provide disclosure to that effect. Litigation is inherently uncertain and may result in adverse rulings or decisions. Additionally, the Company may enter into settlements or be subject to judgments that may, individually or in the aggregate, have a material adverse effect on its results of operations. Accordingly, actual results could differ materially.

## Intellectual Property Litigation

Convolve, Inc. ("Convolve") and Massachusetts Institute of Technology ("MIT") v. Seagate Technology LLC, et al. —On July 13, 2000, Convolve and MIT filed suit against Compaq Computer Corporation and Seagate Technology LLC in the U.S. District Court for the Southern District of



# SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

New York, alleging infringement of U.S. Patent Nos. 4,916,635 (the "635 patent") and U.S. Patent No. 5,638,267 (the "267 patent"), misappropriation of trade secrets, breach of contract, and other claims. In the complaint, the plaintiffs requested injunctive relief, $800 million in compensatory damages and unspecified punitive damages, including for willful infringement. On January 16, 2002, Convolve filed an amended complaint, alleging defendants' infringement of U.S. Patent No. 6,314,473 (the "473 patent"). The district court ruled in 2010 that the '267 patent was out of the case.

On August 16, 2011, the district court granted in part and denied in part the Company's motion for summary judgment. On July 1, 2013, the U.S. Court of Appeals for the Federal Circuit: 1) affirmed the district court's summary judgment rulings that Seagate did not misappropriate any of the alleged trade secrets and that the asserted claims of the '635 patent are invalid; 2) reversed and vacated the district court's summary judgment of non-infringement with respect to the '473 patent; and 3) remanded the case for further proceedings on the '473 patent. On July 11, 2014, the district court issued its ruling on the Company's summary judgment motion regarding Convolve's only remaining cause of action, which alleged infringement of the '473 patent; the court granted the motion and directed the clerk of the court to close the case. The court entered judgment in favor of the Company on July 14, 2014. In view of the rulings made by the district court and the Court of Appeals and the uncertainty regarding the amount of damages, if any, that could be awarded Convolve in this matter, the Company does not believe that it is currently possible to determine a reasonable estimate of the possible range of loss related to this matter.

Alexander Shukh v. Seagate Technology —On February 12, 2010, Alexander Shukh filed a complaint against the Company in the U.S. District Court for the District of Minnesota, alleging, among other things, employment discrimination based on his Belarusian national origin and wrongful failure to name him as an inventor on several patents and patent applications. Mr. Shukh's employment was terminated as part of a company-wide reduction in force in fiscal year 2009. He seeks damages in excess of $75 million. The Company believes the claims are without merit and intends to vigorously defend this case. On March 31, 2014, the district court granted Seagate's summary judgment motion and entered judgment in favor of Seagate. Mr. Shukh filed a notice of appeal on April 7, 2014. In view of the uncertainty regarding the amount of damages, if any, that could be awarded in this matter, the Company does not believe that it is currently possible to determine a reasonable estimate of the possible range of loss related to this matter.

LEAP Co., Ltd. v. Seagate Singapore International Headquarters Pte. Ltd. and Nippon Seagate Inc. —On July 4, 2012, LEAP Co., Ltd. filed a lawsuit in the Tokyo District Court of Japan against Seagate Singapore International Headquarters Pte. Ltd., Nippon Seagate Inc. and Buffalo Inc. alleging wrongful termination of purchase agreements and other claims, and seeking approximately $38 million in damages. A date for the start of trial has not yet been scheduled. The Company believes the claims are without merit and intends to vigorously defend this case. In view of the uncertainty regarding the amount of damages, if any, that could be awarded in this matter, the Company does not believe that it is currently possible to determine a reasonable estimate of the possible range of loss related to this matter.

Realtek Semiconductor Corporation ITC Investigation re Certain Integrated Circuit Chips and Products Containing the Same —On September 19, 2012, Realtek Semiconductor Corporation filed a complaint with the International Trade Commission ("ITC") seeking an investigation pursuant to Section 337 of the Tariff Act of 1930, as amended ("Section 337"). The complaint names LSI Corporation and Seagate Technology as respondents and alleges infringement of U.S. patents relating to integrated circuit chips that include bond pad structures. Realtek seeks an order to exclude entry of infringing integrated circuit chips and products containing the infringing integrated circuit chips into the U.S. and a cease and desist order. The ITC initiated an investigation on October 18, 2012. On March 21, 2014, the Administrative Law Judge ("ALJ") issued an Initial Determination in favor of Seagate and LSI. On July 21, 2014, the Commission



# SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

gave notice that it had determined to affirm in part, reverse in part and vacate in part the ALJ's Initial Determination; the Commission found that no violation of Section 337 by Seagate or LSI has occurred based on findings that certain of the patent claims at issue were invalid, and that Realtek failed to show the existence of an industry in the U.S. that exploits the patent. In view of the uncertainty regarding the possible outcome of this case and the nature of the relief sought, the Company does not believe that it is currently possible to determine a reasonable estimate of the possible loss or range of loss, or other possible adverse result, if any, that may be incurred with respect to this matter.

Enova Technology Corporation v. Seagate Technology (US) Holdings, Inc., et al. —On June 5, 2013, Enova Technology Corporation filed a complaint against Seagate Technology (US) Holdings, Inc. and Seagate Technology LLC in the U.S. District Court for the District of Delaware alleging infringement of U.S. Patent No. 7,136,995, "Cryptographic Device," and U.S. Patent No. 7,900,057, "Cryptographic Serial ATA Apparatus and Method." The complaint seeks unspecified compensatory damages, enhanced damages, injunctive relief, attorneys' fees, and other relief. The trial is scheduled to begin May 9, 2016. The Company believes the claims are without merit and intends to vigorously defend this case. In view of the uncertainty regarding the amount of damages, if any, that could be awarded in this matter, the Company does not believe that it is currently possible to determine a reasonable estimate of the possible range of loss related to this matter.

## Environmental Matters

The Company's operations are subject to U.S. and foreign laws and regulations relating to the protection of the environment, including those governing discharges of pollutants into the air and water, the management and disposal of hazardous substances and wastes and the cleanup of contaminated sites. Some of the Company's operations require environmental permits and controls to prevent and reduce air and water pollution, and these permits are subject to modification, renewal and revocation by issuing authorities.

The Company has established environmental management systems and continually updates its environmental policies and standard operating procedures for its operations worldwide. The Company believes that its operations are in material compliance with applicable environmental laws, regulations and permits. The Company budgets for operating and capital costs on an ongoing basis to comply with environmental laws. If additional or more stringent requirements are imposed on the Company in the future, it could incur additional operating costs and capital expenditures.

Some environmental laws, such as the Comprehensive Environmental Response Compensation and Liability Act of 1980 (as amended, the "Superfund" law) and its state equivalents, can impose liability for the cost of cleanup of contaminated sites upon any of the current or former site owners or operators or upon parties who sent waste to these sites, regardless of whether the owner or operator owned the site at the time of the release of hazardous substances or the lawfulness of the original disposal activity. The Company has been identified as a potentially responsible party at several sites. At each of these sites, the Company has an assigned portion of the financial liability based on the type and amount of hazardous substances disposed of by each party at the site and the number of financially viable parties. The Company has fulfilled its responsibilities at some of these sites and remains involved in only a few at this time.

While the Company’s ultimate costs in connection with these sites is difficult to predict with complete accuracy, based on its current estimates of cleanup costs and its expected allocation of these costs, the Company does not expect costs in connection with these sites to be material.



# SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company may be subject to various state, federal and international laws and regulations governing the environment, including those restricting the presence of certain substances in electronic products. For example, the European Union ("EU") enacted the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment, which prohibits the use of certain substances, including lead, in certain products, including disk drives, put on the market after July 1, 2006. Similar legislation has been or may be enacted in other jurisdictions, including in the United States, Canada, Mexico, Taiwan, China, Japan and others. The European Union REACH Directive (Registration, Evaluation, Authorization, and Restriction of Chemicals, EC 1907/2006) also restricts substances of very high concern ("SVHCs") in products. If the Company or its suppliers fails to comply with the substance restrictions, recycle requirements or other environmental requirements as they are enacted worldwide, it could have a materially adverse effect on the Company's business.

## Other Matters

The Company is involved in a number of other judicial and administrative proceedings incidental to its business, and the Company may be involved in various legal proceedings arising in the normal course of its business in the future. Although occasional adverse decisions or settlements may occur, the Company believes that the final disposition of such matters will not have a material adverse effect on its financial position or results of operations.

## 15. Commitments

Leases. The Company leases certain property, facilities and equipment under non-cancelable lease agreements. Land and facility leases expire at various dates through 2082 and contain various provisions for rental adjustments including, in certain cases, a provision based on increases in the Consumer Price Index. Also, certain leases provide for renewal of the lease at the Company's option at expiration of the lease. All of the leases require the Company to pay property taxes, insurance and normal maintenance costs.

Future minimum lease payments for operating leases (including accrued lease payments relating to restructuring plans) with initial or remaining terms of one year or more were as follows at June 27, 2014 (lease payments are shown net of sublease income):

<table><tr><td>Fiscal Years Ending (Dollars in millions)</td><td>Operating Leases</td></tr><tr><td>2015</td><td>42</td></tr><tr><td>2016</td><td>31</td></tr><tr><td>2017</td><td>21</td></tr><tr><td>2018</td><td>15</td></tr><tr><td>2019</td><td>22</td></tr><tr><td>Thereafter</td><td>69</td></tr><tr><td></td><td>200</td></tr></table>

Total rent expense for all land, facility and equipment operating leases, net of sublease income, was $39 million, $35 million and $34 million for fiscal years 2014, 2013 and 2012, respectively. Total sublease rental income for fiscal years 2014, 2013 and 2012 was $2 million, $4 million and $6 million, respectively. The Company subleases a portion of its facilities that it considers to be in excess of current requirements. As of June 27, 2014, total future lease income to be recognized for the Company's existing subleases is approximately $5 million.



# SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company recorded amounts for both adverse and favorable leasehold interests and for exit costs that apply directly to the lease commitments assumed through the 2006 acquisition of Maxtor. As of June 27, 2014, the Company had a $4 million adverse leasehold interest related to leases acquired from Maxtor. The adverse leasehold interest is being amortized to Cost of revenue and Operating expenses over the remaining duration of the leases. In addition, the Company had $5 million and $9 million remaining in accrued exit costs related to the planned exit of Maxtor leased excess facilities at June 27, 2014 and June 28, 2013, respectively.

Capital Expenditures. The Company's non-cancelable commitments for construction of manufacturing and product development facilities and purchases of equipment approximated $189 million at June 27, 2014.

LSI Asset Acquisition. On May 29, 2014, the Company and Avago Technologies Limited, a leading semiconductor device supplier to the enterprise storage, wired, wireless and industrial end markets, announced that they had entered into a definitive asset purchase agreement under which the Company will acquire the assets of LSI's Accelerated Solutions Division ("ASD") and Flash Components Division ("FCD") from Avago for $450 million in cash. The acquisition strengthens the Company's strategy to deliver a full suite of storage solutions, by providing it with established Enterprise PCIe flash and SSD controller capabilities to deliver solutions for the growing flash storage market. The transaction is expected to close in the first quarter of fiscal year 2015, subject to the satisfaction of customary closing conditions and the receipt of certain regulatory approvals, including those required by the Hart-Scott-Rodino Antitrust Improvements Act. Because the transaction was pending at the time this Annual Report on Form 10-K was filed with the Securities and Exchange Commission, certain disclosures required by ASC Topic 805 Business Combinations have not been made herein.

## 16. Guarantees

## Indemnifications to Officers and Directors

On May 4, 2009, Seagate Technology, an exempted company incorporated with limited liability under the laws of the Cayman Islands ("Seagate-Cayman"), then the parent company, entered into a new form of indemnification agreement (the "Revised Indemnification Agreement") with its officers and directors of Seagate-Cayman and its subsidiaries (each, an "Indemnitee"). The Revised Indemnification Agreement provides indemnification in addition to any of Indemnitee's indemnification rights under Seagate-Cayman's Articles of Association, applicable law or otherwise, and indemnifies an Indemnitee for certain expenses (including attorneys' fees), judgments, fines and settlement amounts actually and reasonably incurred by him or her in any action or proceeding, including any action by or in the right of Seagate-Cayman or any of its subsidiaries, arising out of his or her service as a director, officer, employee or agent of Seagate-Cayman or any of its subsidiaries or of any other entity to which he or she provides services at Seagate-Cayman's request. However, an Indemnitee shall not be indemnified under the Revised Indemnification Agreement for (i) any fraud or dishonesty in the performance of Indemnitee's duty to Seagate-Cayman or the applicable subsidiary of Seagate-Cayman or (ii) Indemnitee's conscious, intentional or willful failure to act honestly, lawfully and in good faith with a view to the best interests of Seagate-Cayman or the applicable subsidiary of Seagate-Cayman. In addition, the Revised Indemnification Agreement provides that Seagate-Cayman will advance expenses incurred by an Indemnitee in connection with enforcement of the Revised Indemnification Agreement or with the investigation, settlement or appeal of any action or proceeding against him or her as to which he or she could be indemnified.

On July 3, 2010 pursuant to a corporate reorganization, the common shareholders of Seagate-Cayman became ordinary shareholders of Seagate Technology plc (the "Company") and Seagate-Cayman became a



# SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

wholly owned subsidiary of the Company, as described more fully in the Current Report on Form 8-K filed by the Company on July 6, 2010 (the "Redemostication"). On July 27, 2010, in connection with the Redemostication, the Company, as sole shareholder of Seagate-Cayman, approved a form of deed of indemnity (the "Deed of Indemnity"), which provides for the indemnification by Seagate-Cayman of any director, officer, employee or agent of the Company, Seagate-Cayman or any subsidiary of the Company (each, a "Deed Indemnitee"), in addition to any of a Deed Indemnitee's indemnification rights under the Company's Articles of Association, applicable law or otherwise, with a similar scope to the Revised Indemnification Agreement. Seagate-Cayman entered into the Deed of Indemnity with certain Deed Indemnitees effective as of July 3, 2010 and continues to enter into the Deed of Indemnity with additional Deed Indemnitees from time to time.

The nature of these indemnification obligations prevents the Company from making a reasonable estimate of the maximum potential amount it could be required to pay on behalf of its officers and directors. Historically, the Company has not made any significant indemnification payments under such agreements and no amount has been accrued in the accompanying consolidated financial statements with respect to these indemnification obligations.

## Intellectual Property Indemnification Obligations

The Company has entered into agreements with customers and suppliers that include limited intellectual property indemnification obligations that are customary in the industry. These guarantees generally require the Company to compensate the other party for certain damages and costs incurred as a result of third party intellectual property claims arising from these transactions. The nature of the intellectual property indemnification obligations prevents the Company from making a reasonable estimate of the maximum potential amount it could be required to pay to its customers and suppliers. Historically, the Company has not made any significant indemnification payments under such agreements and no amount has been accrued in the accompanying consolidated financial statements with respect to these indemnification obligations.

## Product Warranty

The Company estimates probable product warranty costs at the time revenue is recognized. The Company generally warrants its products for a period of 1 to 5 years. The Company uses estimated repair or replacement costs and uses statistical modeling to estimate product return rates in order to determine its warranty obligation. Changes in the Company's product warranty liability during the fiscal years ended June 27, 2014, June 28, 2013 and June 29, 2012 were as follows:

<table><tr><td rowspan="2"></td><td colspan="4">Fiscal Years Ended</td></tr><tr><td>June 27, 2014</td><td>June 28, 2013</td><td>June 29, 2012</td><td></td></tr><tr><td>Balance, beginning of period</td><td>$ 320</td><td>$ 363</td><td>$ 348</td><td></td></tr><tr><td>Warranties issued</td><td>177</td><td>193</td><td>169</td><td></td></tr><tr><td>Repairs and replacements</td><td>(228)</td><td>(276)</td><td>(284)</td><td></td></tr><tr><td>Changes in liability for pre-existing warranties, including expirations</td><td>1</td><td>37</td><td>58</td><td></td></tr><tr><td>Warranty liability assumed from acquisitions</td><td>3</td><td>3</td><td>72</td><td></td></tr><tr><td>Balance, end of period</td><td>$ 273</td><td>$ 320</td><td>$ 363</td><td></td></tr></table>



# SEAGATE TECHNOLOGY PLC

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

## 17. Related Party Transactions

In connection with the Company's acquisition of the Samsung HDD business, Samsung became a shareholder of the Company and appointed one of its executives to the Company's Board of Directors.

Samsung Electronics Co. Ltd. ("Samsung") The Company recorded revenue of $216 million, $413 million and $407 million from sales to Samsung for fiscal year 2014, 2013 and 2012, respectively. The Company made payments to Samsung in fiscal years 2014, 2013 and 2012 of $318 million, $393 million and $102 million, respectively, related to purchases of components and services. The Company had accounts payable to Samsung of $34 million and $48 million at June 27, 2014 and June 28, 2013, respectively. The Company had accounts receivable from Samsung of $25 million and $49 million at June 27, 2014 and June 28, 2013, respectively.

Microsoft Corporation ("Microsoft") During the years presented (through March 2014), the Company's Chairman and Chief Executive Officer also served on the board of Microsoft. The Company recorded revenue of $208 million, $141 million and $54 million from sales to Microsoft for fiscal years 2014, 2013 and 2012, respectively. The Company made payments to Microsoft in fiscal years 2014, 2013 and 2012 of $1 million, $2 million and $24 million, respectively, related to purchases of licensed software. The Company had accounts receivable from Microsoft of $35 million and $33 million at June 27, 2014 and June 28, 2013.



# REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of Seagate Technology public limited company

We have audited the accompanying consolidated balance sheets of Seagate Technology public limited company (plc) as of June 27, 2014 and June 28, 2013, and the related consolidated statements of operations, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended June 27, 2014. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Seagate Technology plc at June 27, 2014 and June 28, 2013, and the consolidated results of its operations and its cash flows for each of the three years in the period ended June 27, 2014, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Seagate Technology plc's internal control over financial reporting as of June 27, 2014, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 framework) and our report dated August 7, 2014 expressed an unqualified opinion thereon.

/S/ ERNST & YOUNG LLP

San Jose, California

August 7, 2014



# REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of Seagate Technology public limited company

We have audited Seagate Technology public limited company (plc)'s internal control over financial reporting as of June 27, 2014, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 framework) (the COSO criteria). Seagate Technology plc's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Seagate Technology plc maintained, in all material respects, effective internal control over financial reporting as of June 27, 2014, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Seagate Technology plc as of June 27, 2014 and June 28, 2013, and the related consolidated statements of operations, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended June 27, 2014 and our report dated August 7, 2014 expressed an unqualified opinion thereon.

/S/ ERNST & YOUNG LLP

San Jose, California
August 7, 2014



## SUPPLEMENTARY FINANCIAL DATA (UNAUDITED)

For quarterly financial data see "Part II, Item 6. Selected Financial Data."



## ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

## ITEM 9A. CONTROLS AND PROCEDURES

## Conclusions Regarding Disclosure Controls and Procedures

Our chief executive officer and our chief financial officer have concluded, based on the evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) by our management, with the participation of our chief executive officer and our chief financial officer, that our disclosure controls and procedures were effective as of June 27, 2014.

## Management's Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended). Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—1992 Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO.

Based on our evaluation under the 1992 framework in Internal Control—Integrated Framework, our management has concluded that our internal control over financial reporting was effective as of June 27, 2014. The effectiveness of our internal control over financial reporting as of June 27, 2014 has been audited by Ernst & Young LLP, the independent registered public accounting firm that audited our financial statements included in this Form 10-K, as stated in their report that is included herein.

## Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during our fourth fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Limitations on the Effectiveness of Controls

Our management, including our chief executive officer and chief financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Our disclosure controls and procedures and our internal controls have been designed to provide reasonable assurance of achieving their objectives. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Seagate have been detected. An evaluation was performed under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of June 27, 2014. Based on that evaluation, our management, including our chief executive officer and chief financial officer, concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

## ITEM 9B. OTHER INFORMATION

None.



## PART III

## ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information regarding our directors and compliance with Section 16(a) of the Securities Exchange Act of 1934, as amended, set forth in the sections entitled "Proposal 1—Election of Directors," "Corporate Governance" and "Section 16(a) Beneficial Ownership Reporting Compliance," in our Proxy Statement to be filed with the Commission within 120 days of the end of our fiscal year pursuant to General Instruction G(3) to Form 10-K are hereby incorporated by reference in this section. In addition, the information set forth in Part I of this report under "Item 1. Business—Executive Officers" is also incorporated by reference in this section.

We have adopted a Code of Business Conduct and Ethics that applies to all Seagate employees, officers and members of our Board of Directors, including our principal executive, finance and accounting officers. This Code of Business Conduct and Ethics is posted on our Website. The Internet address for our Website is www.seagate.com, and the Code of Business Conduct and Ethics may be found from our main Web page by clicking first on "Investors," next on "Corporate Governance" and then on "Code of Business Conduct and Ethics."

We intend to satisfy any disclosure requirements under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of this Code of Business Conduct and Ethics by posting such information on our Website, at the Internet address and location specified above.

## ITEM 11. EXECUTIVE COMPENSATION

The information regarding executive compensation required by this Item 11 set forth in the section entitled "Compensation of Executive Officers" in our Proxy Statement to be filed with the Commission within 120 days of the end of our fiscal year pursuant to General Instruction G(3) to Form 10-K is hereby incorporated by reference in this section.

## ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information regarding security ownership beneficial owners and management and related shareholders required by this Item 12 set forth in the section entitled "Security Ownership of Directors, Executive Officers and Certain Beneficial Owners" in our Proxy Statement to be filed with the Commission within 120 days of the end of our fiscal year pursuant to General Instruction G(3) to Form 10-K is hereby incorporated by reference in this section.

## ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information regarding certain relationships, related transactions and director independence required by this Item 13 set forth in the section entitled "Certain Relationships and Related Transactions" in our Proxy Statement to be filed with the Commission within 120 days of the end of our fiscal year pursuant to General Instruction G(3) to Form 10-K is hereby incorporated by reference in this section.

## ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information regarding principal accountant fees and services required by this Item 14 set forth in the section entitled "Information about the Independent Auditors" in our Proxy Statement to be filed with the Commission within 120 days of the end of our fiscal year pursuant to General Instruction G(3) to Form 10-K is hereby incorporated by reference in this section.



## PART IV

## ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this Report:

1. Financial Statements. The following Consolidated Financial Statements of Seagate Technology plc and Report of Independent Registered Public Accounting Firm are included in Item 8:

<table><tr><td></td><td>Page No.</td></tr><tr><td>Consolidated Balance Sheets</td><td>62</td></tr><tr><td>Consolidated Statements of Operations</td><td>63</td></tr><tr><td>Consolidated Statements of Comprehensive Income</td><td>64</td></tr><tr><td>Consolidated Statements of Cash Flows</td><td>65</td></tr><tr><td>Consolidated Statements of Shareholders&#x27; Equity</td><td>66</td></tr><tr><td>Notes to Consolidated Financial Statements</td><td>67</td></tr><tr><td>Reports of Independent Registered Public Accounting Firm</td><td>113</td></tr></table>

2. Financial Statement Schedules. All schedules are omitted because they are not applicable or the required information is included in the Financial Statements or in the notes thereto.

(b) Exhibits. The information required by this Item is set forth on the Exhibit Index (following the Signatures section of this report) and is included, or incorporated by reference, in this Annual Report on Form 10-K.



## SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

## SEGATE TECHNOLOGY PUBLIC LIMITED
COMPANY

/s/ STEPHEN J. LUCZO

(Stephen J. Luczo, Chief Executive Officer, Director and Chairman of the Board of Directors)

Date: August 7, 2014

## POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Stephen J. Luczo, Patrick J. O'Malley, and Kenneth M. Massaroni, and each of them, as his true and lawful attorneys-in-fact and agents, with power to act with or without the others and with full power of substitution and resubstitution, to do any and all acts and things and to execute any and all instruments which said attorneys and agents and each of them may deem necessary or desirable to enable the registrant to comply with the U.S. Securities Exchange Act of 1934, as amended, and any rules, regulations and requirements of the U.S. Securities and Exchange Commission thereunder in connection with the registrant's Annual Report on Form 10-K for the fiscal year ended June 27, 2014 (the "Annual Report"), including specifically, but without limiting the generality of the foregoing, power and authority to sign the name of the registrant and the name of the undersigned, individually and in his capacity as a director or officer of the registrant, to the Annual Report as filed with the U.S. Securities and Exchange Commission, to any and all amendments thereto, and to any and all instruments or documents filed as part thereof or in connection therewith; and each of the undersigned hereby ratifies and confirms all that said attorneys and agents and each of them shall do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

<table><tr><td>Signature</td><td>Title</td><td>Date</td></tr><tr><td>/s/ STEPHEN J. LUCZO</td><td>Chief Executive Officer, Director and Chairman of the Board of Directors (Principal Executive Officer)</td><td>August 7, 2014</td></tr><tr><td>(Stephen J. Luczo)</td><td></td><td></td></tr><tr><td>/s/ PATRICK J. O&#x27;MALLEY</td><td>Executive Vice President, Finance and Chief Financial Officer (Principal Financial Officer)</td><td>August 7, 2014</td></tr><tr><td>(Patrick J. O&#x27;Malley)</td><td></td><td></td></tr><tr><td>/s/ DAVID H. MORTON, JR.</td><td>Senior Vice President, Finance, Treasurer and Principal Accounting Officer (Principal Accounting Officer)</td><td>August 7, 2014</td></tr><tr><td>(David H. Morton, Jr.)</td><td></td><td></td></tr><tr><td>/s/ FRANK J. BIONDI, JR.</td><td>Director</td><td>August 7, 2014</td></tr><tr><td>(Frank J. Biondi, Jr.)</td><td></td><td></td></tr></table>



<table><tr><td>Signature</td><td>Title</td><td>Date</td></tr><tr><td>/s/ MICHAEL R. CANNON</td><td>Director</td><td>August 7, 2014</td></tr><tr><td>(Michael R. Cannon)</td><td></td><td></td></tr><tr><td>/s/ MEI-WEI CHENG</td><td>Director</td><td>August 7, 2014</td></tr><tr><td>(Mei-Wei Cheng)</td><td></td><td></td></tr><tr><td>/s/ WILLIAM T. COLEMAN III</td><td>Director</td><td>August 7, 2014</td></tr><tr><td>(William T. Coleman III)</td><td></td><td></td></tr><tr><td>/s/ JAY L. GELDMACHER</td><td>Director</td><td>August 7, 2014</td></tr><tr><td>(Jay L. Geldmacher)</td><td></td><td></td></tr><tr><td>/s/ SEH-WOONG JEONG</td><td>Director</td><td>August 7, 2014</td></tr><tr><td>(Dr. Seh-Woong Jeong)</td><td></td><td></td></tr><tr><td>/s/ LYDIA M. MARSHALL</td><td>Director</td><td>August 7, 2014</td></tr><tr><td>(Lydia M. Marshall)</td><td></td><td></td></tr><tr><td>/s/ KRISTEN M. ONKEN</td><td>Director</td><td>August 7, 2014</td></tr><tr><td>(Kristen M. Onken)</td><td></td><td></td></tr><tr><td>/s/ C.S. PARK</td><td>Director</td><td>August 7, 2014</td></tr><tr><td>(Dr. C.S. Park)</td><td></td><td></td></tr><tr><td>/s/ GREGORIO REYES</td><td>Director</td><td>August 7, 2014</td></tr><tr><td>(Gregorio Reyes)</td><td></td><td></td></tr><tr><td>/s/ EDWARD J. ZANDER</td><td>Director</td><td>August 7, 2014</td></tr><tr><td>(Edward J. Zander)</td><td></td><td></td></tr></table>



EXHIBIT INDEX

<table><tr><td rowspan="2">Exhibit No.</td><td rowspan="2">Exhibit Description</td><td colspan="4">Incorporated by Reference</td><td rowspan="2">Filed Herewith</td></tr><tr><td>Form</td><td>File No.</td><td>Exhibit</td><td>Filing Date</td></tr><tr><td>2.1</td><td>Scheme of Arrangement among Seagate Technology (&quot;Seagate-Cayman&quot;), Seagate Technology plc (&quot;Seagate-Ireland&quot;) and the Scheme Shareholders (incorporated by reference to Annex A to Seagate Technology&#x27;s Definitive Proxy Statement on Schedule 14A filed on March 5, 2010)</td><td>DEF 14A</td><td>001-31560</td><td>Annex A</td><td>3/5/2010</td><td></td></tr><tr><td>2.2</td><td>Agreement and Plan of Merger, dated as of December 21, 2013, among Seagate Technology International, Phoenix Acquisition Ltd and Xyratex Ltd.</td><td>8-K</td><td>001-31560</td><td>2.1</td><td>12/23/2013</td><td></td></tr><tr><td>3.1</td><td>Memorandum and Articles of Association of Seagate Technology plc, as amended and restated by Special Resolution dated October 30, 2013</td><td>8-K</td><td>001-31560</td><td>3.1</td><td>11/1/2013</td><td></td></tr><tr><td>3.2</td><td>Certificate of Incorporation of Seagate Technology plc</td><td>10-K</td><td>001-31560</td><td>3.2</td><td>8/20/2010</td><td></td></tr><tr><td>4.1</td><td>Specimen Ordinary Share Certificate</td><td>10-K</td><td>001-31560</td><td>4.1</td><td>8/20/2010</td><td></td></tr><tr><td>4.2</td><td>Indenture dated September 20, 2006 among Seagate Technology, Seagate Technology HDD Holdings and U.S. Bank National Association</td><td>8-K</td><td>001-31560</td><td>4.1</td><td>9/21/2006</td><td></td></tr><tr><td>4.3</td><td>Forms of Global Note for the Senior Notes due 2011 and Senior Notes due 2016 of Seagate Technology HDD Holdings issued pursuant to the Indenture</td><td>8-K</td><td>001-31560</td><td>4.1</td><td>9/21/2006</td><td></td></tr><tr><td>4.4</td><td>First Supplemental Indenture, dated as of March 1, 2010, among Seagate Technology HDD Holdings, Seagate HDD Cayman, Seagate Technology and U.S. Bank National Association, as trustee, amending and supplementing the Indenture, dated as of September 20,</td><td>8-K</td><td>001-31560</td><td>10.2</td><td>3/3/2010</td><td></td></tr></table>



2006, among Seagate Technology HDD Holdings, Seagate Technology and U.S. Bank National Association, as trustee

4.5 Supplemental Indenture, dated as of July 3, 2010, among Seagate HDD Cayman, as issuer, Seagate Technology, as original guarantor, Seagate Technology plc, as successor guarantor, and Wells Fargo Bank, National Association, as trustee, amending and supplementing the Indenture, dated as of May 13, 2010, among Seagate HDD Cayman, as issuer, Seagate Technology, as guarantor, and Wells Fargo Bank, National Association, as trustee
8-K 001-31560 10.1 7/6/2010



<table><tr><td rowspan="2">Exhibit No.</td><td rowspan="2">Exhibit Description</td><td colspan="4">Incorporated by Reference</td><td rowspan="2">Filed Herewith</td></tr><tr><td>Form</td><td>File No.</td><td>Exhibit</td><td>Filing Date</td></tr><tr><td>4.6</td><td>Indenture dated as of May 13, 2010, among Seagate HDD Cayman, as Issuer, Seagate Technology, as Guarantor, and Wells Fargo Bank, National Association, as Trustee</td><td>8-K</td><td>001-31560</td><td>4.1</td><td>5/14/2010</td><td></td></tr><tr><td>4.7</td><td>Form of 6.875% Senior Note due 2020</td><td>8-K</td><td>001-31560</td><td>4.1</td><td>5/14/2010</td><td></td></tr><tr><td>4.8</td><td>Registration Rights Agreement dated as of May 13, 2010, among Seagate HDD Cayman, Seagate Technology and Morgan Stanley &amp; Co. Incorporated and Banc of America Securities LLC</td><td>8-K</td><td>001-31560</td><td>4.3</td><td>5/14/2010</td><td></td></tr><tr><td>4.9</td><td>Indenture dated as of May 18, 2011, among Seagate HDD Cayman, as Issuer, Seagate Technology plc, as Guarantor, and Wells Fargo Bank, National Association, as Trustee</td><td>8-K</td><td>001-31560</td><td>4.1</td><td>5/18/2011</td><td></td></tr><tr><td>4.10</td><td>Form of 7.000% Senior Note due 2021</td><td>8-K</td><td>001-31560</td><td>4.1</td><td>5/18/2011</td><td></td></tr><tr><td>4.11</td><td>Registration Rights Agreement dated as of May 18, 2011, among Seagate HDD Cayman, Seagate Technology plc and Morgan Stanley &amp; Co. Incorporated</td><td>8-K</td><td>001-31560</td><td>4.3</td><td>5/18/2011</td><td></td></tr><tr><td>4.12</td><td>Fourth Supplemental Indenture, dated as of February 7, 2012, among Seagate Technology International, as issuer, Seagate Business Centre (UK) Limited and Wells Fargo Bank, National Association, as trustee, amending and supplementing the Indenture, dated as of May 1, 2009, among Seagate Technology International, as issuer, Seagate Technology and the other guarantors party thereto and Wells Fargo Bank, National Association, as trustee</td><td>10-K</td><td>001-31560</td><td>4.20</td><td>8/8/2012</td><td></td></tr><tr><td>4.13</td><td>Form of 4.75% Senior Note due 2023</td><td>8-K</td><td>001-31560</td><td>4.2</td><td>5/22/2013</td><td></td></tr><tr><td>4.14</td><td>Registration Rights Agreement dated as of</td><td>8-K</td><td>001-31560</td><td>4.3</td><td>5/22/2013</td><td></td></tr></table>



May 22, 2013, among Seagate HDD Cayman, Seagate Technology plc and Morgan Stanley & Co. LLC.

4.15 Form of 3.75% Senior Note due 2018

4.16 Registration Rights Agreement dated as of November 5, 2013, among Seagate HDD Cayman, Seagate Technology plc and Morgan Stanley & Co. LLC.

4.17 Form of 4.75% Senior Note due 2025

4.18 Registration Rights Agreement dated as of May 28, 2014, among Seagate HDD Cayman, Seagate Technology plc and Morgan Stanley & Co. LLC.

10.1+ Fifth Amended and Restated Seagate Technology Executive Officer Severance and Change in Control Plan



<table><tr><td rowspan="2">Exhibit No.</td><td rowspan="2">Exhibit Description</td><td colspan="4">Incorporated by Reference</td><td rowspan="2">Filed Herewith</td></tr><tr><td>Form</td><td>File No.</td><td>Exhibit</td><td>Filing Date</td></tr><tr><td>10.2+</td><td>Amended Seagate Technology plc 2001 Share Option Plan</td><td>10-K</td><td>001-31560</td><td>10.1</td><td>8/20/2010</td><td></td></tr><tr><td>10.3+</td><td>Seagate Technology plc 2001 Share Option Plan Form of Notice of Stock Option Grant and Option Agreement (includes Compensation Recovery Policy)</td><td>10-K</td><td>001-31560</td><td>10.3</td><td>8/20/2010</td><td></td></tr><tr><td>10.4(a)+</td><td>Form of Revised Indemnification Agreement between Seagate Technology and the director or officer named therein</td><td>10-Q</td><td>001-31560</td><td>10.4(b)</td><td>5/6/2009</td><td></td></tr><tr><td>10.4(b)+</td><td>Form of Deed of Indemnity between Seagate Technology plc and the director or company secretary named therein</td><td>8-K</td><td>001-31560</td><td>10.1</td><td>7/29/2010</td><td></td></tr><tr><td>10.5+</td><td>Seagate Technology Amended and Restated Executive Officer Performance Bonus Plan</td><td>8-K</td><td>001-31560</td><td>10.1</td><td>11/1/2013</td><td></td></tr><tr><td>10.6+</td><td>Amended Seagate Technology plc 2004 Share Compensation Plan</td><td>10-K</td><td>001-31560</td><td>10.6</td><td>8/20/2010</td><td></td></tr><tr><td>10.7+</td><td>Seagate Technology 2004 Stock Compensation Plan Form of Option Agreement (For Outside Directors)</td><td>10-Q</td><td>001-31560</td><td>10.7</td><td>11/4/2009</td><td></td></tr><tr><td>10.8+</td><td>Seagate Technology plc 2004 Share Compensation Plan Form of Notice of Stock Option Grant and Option Agreement (includes Compensation Recovery Policy)</td><td>10-K</td><td>001-31560</td><td>10.13</td><td>8/20/2010</td><td></td></tr><tr><td>10.9+</td><td>Seagate Technology plc 2004 Share Compensation Plan Form of Notice of Performance Share Bonus Grant and Agreement (includes Compensation Recovery Policy)</td><td>10-K</td><td>001-31560</td><td>10.16</td><td>8/20/2010</td><td></td></tr><tr><td>10.10+</td><td>Offer Letter, dated as of January 29, 2009, by and between Seagate Technology and Stephen J. Luczo</td><td>10-Q</td><td>001-31560</td><td>10.20</td><td>2/10/2009</td><td></td></tr><tr><td>10.11+</td><td>Seagate Technology plc 2004 Share Compensation Plan Form of Restricted Share Unit Agreement (includes</td><td>10-Q</td><td>001-31560</td><td>10.19</td><td>11/3/2010</td><td></td></tr></table>



<table><tr><td></td><td>Compensation Recovery Policy)</td><td></td><td></td><td></td></tr><tr><td>10.12+</td><td>Restated Seagate Deferred Compensation Plan</td><td>10-Q</td><td>001-31560</td><td>10.27</td></tr><tr><td>10.13+</td><td>Seagate Deferred Compensation Sub-Plan</td><td>10-Q</td><td>001-31560</td><td>10.28</td></tr><tr><td>10.14</td><td>Second Priority Mortgage of Shares in Seagate Technology, dated March 1, 2010, between Seagate Technology plc, as mortgage, and Wells Fargo Bank, National Association, as mortgagee</td><td>8-K</td><td>001-31560</td><td>10.23</td></tr><tr><td>10.15</td><td>Deed Poll of Assumption by Seagate Technology plc, dated July 2, 2010</td><td>8-K</td><td>001-31560</td><td>10.2</td></tr></table>



<table><tr><td rowspan="2">Exhibit No.</td><td rowspan="2">Exhibit Description</td><td colspan="4">Incorporated by Reference</td><td rowspan="2">Filed Herewith</td></tr><tr><td>Form</td><td>File No.</td><td>Exhibit</td><td>Filing Date</td></tr><tr><td>10.16</td><td>Credit Agreement, dated as of January 18, 2011, among Seagate Technology Public Limited Company, Seagate HDD Cayman, as Borrower, the lending institutions thereto, The Bank of Nova Scotia, as Administrative Agent, Morgan Stanley Senior Funding, Inc., Merrill Lynch Pierce Fenner and Smith Incorporated and BNP Paribas as Syndication Agents and Wells Fargo Bank, National Association, as Documentation Agent</td><td>10-Q</td><td>001-31560</td><td>10.47</td><td>2/3/2011</td><td></td></tr><tr><td>10.17</td><td>U.S. Guarantee Agreement, dated as of January 18, 2011, among Seagate Technology Public Limited Company, Seagate HDD Cayman, as Borrower, the Guarantor parties thereto and The Bank of Nova Scotia, as Administrative Agent</td><td>10-Q</td><td>001-31560</td><td>10.48</td><td>2/3/2011</td><td></td></tr><tr><td>10.18</td><td>U.S. Security Agreement, dated as of January 18, 2011, among Seagate Technology Public Limited Company, Seagate HDD Cayman, as Borrower, the Guarantor parties thereto and The Bank of Nova Scotia, as Administrative Agent</td><td>10-Q</td><td>001-31560</td><td>10.49</td><td>2/3/2011</td><td></td></tr><tr><td>10.19</td><td>U.S. Pledge Agreement, dated as of January 18, 2011, among Seagate Technology Public Limited Company, Seagate HDD Cayman, as Borrower, the Subsidiary Pledgor parties thereto and The Bank of Nova Scotia, as Administrative Agent</td><td>10-Q</td><td>001-31560</td><td>10.50</td><td>2/3/2011</td><td></td></tr><tr><td>10.20</td><td>Indemnity, Subrogation and Contribution Agreement, dated as of January 18, 2011, among Seagate Technology Public Limited Company, Seagate HDD Cayman, as Borrower, the Subsidiary parties thereto and The Bank of Nova Scotia, as Administrative Agent</td><td>10-Q</td><td>001-31560</td><td>10.52</td><td>2/3/2011</td><td></td></tr><tr><td>10.21</td><td>Asset Purchase Agreement by and among Samsung Electronics Co., Ltd., Seagate Technology International and Seagate</td><td>10-K</td><td>001-31560</td><td>10.53</td><td>8/17/2011</td><td></td></tr></table>



<table><tr><td></td><td>Technology plc dated April 19, 2011</td><td></td><td></td><td></td><td></td></tr><tr><td>10.22</td><td>Intellectual Property Agreement by and between Samsung Electronics Co., Ltd. and Seagate Technology International dated April 19, 2011</td><td>10-K</td><td>001-31560</td><td>10.54</td><td>8/17/2011</td></tr><tr><td>10.23</td><td>Shareholder Agreement by and between Seagate Technology plc and Samsung Electronics Co., Ltd. dated as of April 19, 2011</td><td>10-K</td><td>001-31560</td><td>10.55</td><td>8/17/2011</td></tr><tr><td>10.24+</td><td>Seagate Technology plc 2004 Share Compensation Plan Form of Executive Performance Unit Agreement</td><td>10-Q</td><td>001-31560</td><td>10.56</td><td>10/27/2011</td></tr><tr><td>10.25+</td><td>Seagate Technology plc 2012 Equity Incentive Plan</td><td>10-Q</td><td>001-31560</td><td>10.57</td><td>10/27/2011</td></tr></table>



<table><tr><td rowspan="2">Exhibit No.</td><td rowspan="2">Exhibit Description</td><td colspan="4">Incorporated by Reference</td><td rowspan="2">Filed Herewith</td></tr><tr><td>Form</td><td>File No.</td><td>Exhibit</td><td>Filing Date</td></tr><tr><td>10.26+</td><td>2012 Equity Incentive Plan Restricted Share Unit Agreement (outside directors)</td><td>10-K</td><td>001-31560</td><td>10.28</td><td>8/8/2013</td><td></td></tr><tr><td>10.27</td><td>Supplement No. 1, dated February 7, 2012, to the U.S. Guarantee Agreement, dated as of January 18, 2011, among Seagate Technology Public Limited Company, Seagate HDD Cayman, as Borrower, the Guarantor parties thereto and The Bank of Nova Scotia, as Administrative Agent</td><td>10-K</td><td>001-31560</td><td>10.45</td><td>8/8/2012</td><td></td></tr><tr><td>10.28</td><td>Supplement No. 1, dated February 7, 2012, to the Indemnity, Subrogation and Contribution Agreement, dated as of January 18, 2011, among Seagate Technology Public Limited Company, Seagate HDD Cayman, as Borrower, the Subsidiary parties thereto and The Bank of Nova Scotia, as Administrative Agent</td><td>10-K</td><td>001-31560</td><td>10.46</td><td>8/8/2012</td><td></td></tr><tr><td>10.29</td><td>Supplement No. 2, dated February 22, 2012, to the U.S. Guarantee Agreement, dated as of January 18, 2011, among Seagate Technology Public Limited Company, Seagate HDD Cayman, as Borrower, the Guarantor parties thereto and The Bank of Nova Scotia, as Administrative Agent</td><td>10-K</td><td>001-31560</td><td>10.48</td><td>8/8/2012</td><td></td></tr><tr><td>10.30</td><td>Supplement No. 2, dated February 22, 2012, to the Indemnity, Subrogation and Contribution Agreement, dated as of January 18, 2011, among Seagate Technology Public Limited Company, Seagate HDD Cayman, as Borrower, the Subsidiary parties thereto and The Bank of Nova Scotia, as Administrative Agent</td><td>10-K</td><td>001-31560</td><td>10.49</td><td>8/8/2012</td><td></td></tr><tr><td>10.31</td><td>Supplement No. 3, dated March 19, 2012, to the U.S. Guarantee Agreement, dated as of January 18, 2011, among Seagate Technology Public Limited Company, Seagate HDD Cayman, as Borrower, the Guarantor parties thereto and The Bank of Nova Scotia, as Administrative Agent</td><td>10-K</td><td>001-31560</td><td>10.50</td><td>8/8/2012</td><td></td></tr></table>



<table><tr><td>10.32</td><td>Supplement No. 3, dated March 19, 2012, to the Indemnity, Subrogation and Contribution Agreement, dated as of January 18, 2011, among Seagate Technology Public Limited Company, Seagate HDD Cayman, as Borrower, the Subsidiary parties thereto and The Bank of Nova Scotia, as Administrative Agent</td><td>10-K</td><td>001-31560</td><td>10.51</td><td>8/8/2012</td></tr><tr><td>10.33+</td><td>Summary description of Seagate Technology plc&#x27;s Compensation Policy for Non-Management Members of the Board of Directors with an effective date of October 24, 2012</td><td>10-K</td><td>001-31560</td><td>10.52</td><td>8/8/2012</td></tr></table>



<table><tr><td rowspan="2">Exhibit No.</td><td rowspan="2">Exhibit Description</td><td colspan="4">Incorporated by Reference</td><td rowspan="2">Filed Herewith</td></tr><tr><td>Form</td><td>File No.</td><td>Exhibit</td><td>Filing Date</td></tr><tr><td>10.34+</td><td>Seagate Technology Public Limited Company 2012 Equity Incentive Plan Executive Performance Unit Agreement.</td><td>10-K</td><td>001-31560</td><td>10.37</td><td>8/8/2013</td><td></td></tr><tr><td>10.35+</td><td>Seagate Technology Public Limited Company 2012 Equity Incentive Plan Restricted Share Unit Agreement.</td><td>10-K</td><td>001-31560</td><td>10.38</td><td>8/8/2013</td><td></td></tr><tr><td>10.36+</td><td>Seagate Technology Public Limited Company 2012 Equity Incentive Plan Option Agreement.</td><td>10-K</td><td>001-31560</td><td>10.39</td><td>8/8/2013</td><td></td></tr><tr><td>10.37+</td><td>Seagate Technology plc Amended and Restated Employee Stock Purchase Plan</td><td></td><td></td><td></td><td></td><td>X</td></tr><tr><td>10.38+</td><td>First Amendment to Seagate Deferred Compensation Plan</td><td>10-Q</td><td>001-31560</td><td>10.21</td><td>5/5/2010</td><td></td></tr><tr><td>10.39+</td><td>Second Amendment to Seagate Deferred Compensation Plan</td><td>10-Q</td><td>001-31560</td><td>10.21</td><td>5/3/2011</td><td></td></tr><tr><td>10.40+</td><td>Third Amendment to Seagate Deferred Compensation Plan</td><td>10-Q/A</td><td>001-31560</td><td>10.56</td><td>1/31/2013</td><td></td></tr><tr><td>10.41</td><td>Second Amendment, dated April 30, 2013, to the Credit Agreement, dated as of January 18, 2011</td><td>10-Q</td><td>001-31560</td><td>10.1</td><td>5/1/2013</td><td></td></tr><tr><td>10.42+</td><td>First Amendment, dated April 30, 2013, to the U.S. Guarantee Agreement, dated as of January 18, 2011</td><td>10-Q</td><td>001-31560</td><td>10.2</td><td>5/1/2013</td><td></td></tr><tr><td>10.43+</td><td>Summary description of Seagate Technology plc&#x27;s Compensation Policy for Non-Management Members of the Board of Directors with an effective date of October 30, 2013</td><td>10-K</td><td>001-31560</td><td>10.46</td><td>8/7/2013</td><td></td></tr><tr><td>10.44+</td><td>Offer Letter, dated as of February 6, 2014, by and between Seagate Technology and Jamie Lerner</td><td>8-K</td><td>001-31560</td><td>10.1</td><td>2/24/2014</td><td></td></tr><tr><td>10.45</td><td>Share Redemption Agreement between Seagate Technology plc and Samsung Electronics Co., Ltd.</td><td>8-K</td><td>001-31560</td><td>10.1</td><td>10/8/2013</td><td></td></tr><tr><td>10.46</td><td>Amendment and Termination</td><td>8-K</td><td>001-31560</td><td>10.2</td><td>10/8/2013</td><td></td></tr></table>



21.1 List of Subsidiaries X
23.1 Consent of Independent X
Registered Public Accounting Firm
24.1 Power of Attorney (see X
signature page to this annual report)
31.1 Certification of the Chief X
Executive Officer pursuant to rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002



<table><tr><td rowspan="2">Exhibit No.</td><td rowspan="2">Exhibit Description</td><td colspan="4">Incorporated by Reference</td></tr><tr><td>Form</td><td>File No.</td><td>Exhibit</td><td>Filing Date</td></tr><tr><td>31.2</td><td>Certification of the Chief Financial Officer pursuant to rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</td><td></td><td></td><td></td><td>X</td></tr><tr><td>32.1†</td><td>Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</td><td></td><td></td><td></td><td>X</td></tr><tr><td>101.INS</td><td>XBRL Instance Document.</td><td></td><td></td><td></td><td>X</td></tr><tr><td>101.SCH</td><td>XBRL Taxonomy Extension Schema Document.</td><td></td><td></td><td></td><td>X</td></tr><tr><td>101.CAL</td><td>XBRL Taxonomy Extension Calculation Linkbase Document.</td><td></td><td></td><td></td><td>X</td></tr><tr><td>101.LAB</td><td>XBRL Taxonomy Extension Label Linkbase Document.</td><td></td><td></td><td></td><td>X</td></tr><tr><td>101.PRE</td><td>XBRL Taxonomy Extension Presentation Linkbase Document.</td><td></td><td></td><td></td><td>X</td></tr><tr><td>101.DEF</td><td>XBRL Taxonomy Extension Definition Linkbase Document.</td><td></td><td></td><td></td><td>X</td></tr></table>

+ Management contract or compensatory plan or arrangement.

The certifications attached as Exhibit 32.1 that accompany this Annual Report on Form 10-K, are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Seagate Technology plc under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-K, irrespective of any general incorporation language contained in such filing.



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# FIFTH AMENDED AND RESTATED
SEAGATE TECHNOLOGY EXECUTIVE SEVERANCE AND CHANGE IN CONTROL
(CIC) PLAN

## SECTION 1. INTRODUCTION.

THE FIFTH AMENDED AND RESTATED SEAGATE TECHNOLOGY EXECUTIVE SEVERANCE AND CHANGE IN CONTROL (CIC) PLAN (the “Plan” or “Severance and CIC Plan”) was originally approved by the Board of Directors of SEAGATE TECHNOLOGY (the “Company”) on August 21, 2008 as the Seagate Technology Executive Officer Severance and Change in Control (CIC) Plan, and became effective on September 1, 2008. The Plan was previously amended and restated on each of April 29, 2009, July 29, 2009, and January 15, 2010 and is now further amended and restated in the form set forth herein on October 25, 2011. The purpose of the Plan is to provide for the payment of severance benefits to Potential Eligible Executives in the event their employment with the Company or any Applicable Subsidiary is terminated involuntarily, as provided herein, and to encourage such executives to continue as employees in the event of a Change in Control. Except as otherwise stated herein, this Plan shall supersede any severance benefit plan, policy or practice previously maintained by the Company or any Applicable Subsidiary (including, without limitation, the provisions of any employment agreement between any Eligible Executive and the Company or any Applicable Subsidiary). This Plan document also serves as the Summary Plan Description for the Plan. All capitalized terms shall have the meanings ascribed to them in the Plan.

## SECTION 2. DEFINITIONS AND ELIGIBILITY FOR BENEFITS.

(a) General Rules. Subject to the requirements set forth in this Section 2(a), the Company will grant severance benefits under the Plan to each Eligible Executive.

(i) “Potential Eligible Executive” refers to all executives employed by the Company or any Applicable Subsidiary with the Level of vice president or above selected to participate in this Plan as indicated in the Benefits Schedules attached hereto. An “Eligible Executive” is any Potential Eligible Executive, other than those excluded under this Section 2, whose employment with the Company or any Applicable Subsidiary is either (A) terminated by such executive for Good Reason or (B) terminated by the Company or an Applicable Subsidiary without Cause (either of (A) or (B), hereafter a “Termination Event”). An Eligible Executive shall be eligible for additional benefits under this Plan if the Termination Event occurs during a Change in Control Period. The Plan shall have no applicability whatsoever for executives employed by neither the Company nor an Applicable Subsidiary, and severance benefits available to such executives, if any, shall not be determined by reference to the Plan, but, rather, solely in accordance with applicable law or such other contractual rights as may apply.

(ii) In order to be eligible to receive benefits under the Plan, in addition to meeting the requirements of an “Eligible Executive” set forth in Section 2(a)(i) above, an Eligible Executive must execute within 60 days of the Eligible Employee’s receipt thereof (such 60-day period, the “Release Period”) (A) a general waiver and release on the form provided by the Company and (B) an agreement containing certain covenants on the form provided by the Company



and covering the matters set forth in Section 6 of this Plan, the scope and applicability of which covenants shall be determined by the Plan Administrator in its sole discretion (collectively, the “Release and Covenant Documents”), which Release and Covenant Documents shall be provided by the Company to the Participant within five (5) business days of the Termination Date.

(iii) Any Termination Event that triggers the payment of benefits under this Plan must occur during the term of this Plan as specified in Section 9(b).

(b) Exceptions. A Potential Eligible Executive who otherwise is an Eligible Executive will not receive benefits under the Plan in any of the following circumstances:

(i) The Potential Eligible Executive is terminated for Cause.

(ii) The Potential Eligible Executive voluntarily terminates employment with the Company or an Applicable Subsidiary without Good Reason. Voluntary terminations include, but are not limited to, resignation or failure to return from a leave of absence on the scheduled date.

(iii) The Potential Eligible Executive’s employment terminates by reason of death, Disability, or retirement.

## SECTION 3. ADDITIONAL DEFINITIONS.

Capitalized terms used in this Plan, unless defined elsewhere in this Plan, shall have the following meanings:

(a) Accrued Bonus Funding means the funding of the Bonus Plan as a percent of target funding as accrued and approved by the Plan Administrator quarterly based on actual financial performance of the Parent for the most recently completed fiscal quarter preceding the Eligible Executive’s Termination Date; provided, further, for the purposes of this Plan, the Accrued Bonus Funding for a given fiscal year or any portion thereof may not exceed 100% of target funding, even if the Plan Administrator has determined that the funding of the Bonus Plan shall accrue at a higher percentage.

(b) Applicable Subsidiary means any subsidiary of the Company included on Schedule A attached hereto.

(c) Beneficial Owner means the definition given in Rule 13d-3 promulgated under the Exchange Act.

(d) Benefit means, in the case of a Termination Event occurring outside of a Change in Control Period, an amount equal to the aggregate number of months of Pay specified in the Benefits Schedule applicable to an Eligible Executive and, in the case of a Termination Event occurring during a Change in Control Period, an amount equal to the aggregate number of months of Pay and Target Bonus specified in the Benefits Schedule applicable to an Eligible Executive.

(e) Board means the Board of Directors of the Parent.



(f) Bonus Plan means the Parent’s Executive Officer Performance Bonus Plan, the Executive Performance Bonus Plan or similar cash incentive bonus plan in which an Eligible Executive participates adopted by the Parent as a successor to one or more of the previously listed bonus plans from time to time. For the avoidance of doubt, one-time bonuses paid by the Parent or an Applicable Subsidiary to a Potential Eligible Executive that are not paid under one of the bonus plans described in the preceding sentence shall not be treated as cash incentive bonuses and therefore shall be excluded from the definition of “Accrued Bonus Funding,” “Pro Rata Bonus” and “Target Bonus” for purposes of this Plan. Examples of such one-time bonuses are sign-on bonuses, special recognition bonuses and guaranteed bonuses. For purposes of this Plan, no Eligible Executive shall be treated as participating in more than one Bonus Plan on the date of a Termination Event. In the event that an Eligible Executive is participating in more than one cash incentive bonus plan that would otherwise qualify as a Bonus Plan but for the preceding sentence, the cash incentive bonus plan that would produce the largest payment under the terms of this Plan shall be treated as the Bonus Plan for such Eligible Executive.

(g) Cause means (i) a Potential Eligible Executive’s continued failure to substantially perform the material duties of his or her office (other than as a result of total or partial incapacity due to physical or mental illness), (ii) fraud, embezzlement or theft by a Potential Eligible Executive of the property of the Parent or any of its subsidiaries, (iii) the conviction of such Potential Eligible Executive of, or plea of nolo contendere by the Potential Eligible Executive to, a felony under the laws of the United States or any state or foreign jurisdiction, (iv) a Potential Eligible Executive’s willful malfeasance or willful misconduct in connection with such Potential Eligible Executive’s duties to the Parent or any of its subsidiaries or any other act or omission which is materially injurious to the financial condition or business reputation of the Parent or any of its subsidiaries, or (v) a material breach by a Potential Eligible Executive of any of the provisions of (A) this Plan, (B) any non-compete, non-solicitation or confidentiality provisions to which such Potential Eligible Executive is subject or (C) any policy of the Parent or any of its subsidiaries or other agreement to which such Potential Eligible Executive is subject. However, no termination shall be deemed for Cause under clause (i), (iv) or (v) unless the Potential Eligible Executive is first given written notice by the Parent of the specific acts or omissions which the Parent or a subsidiary deems constitute grounds for a termination for Cause, is provided with at least 30 days after such notice to cure the specified deficiency and fails to substantially cure such deficiency within such time frame to the reasonable satisfaction of the Plan Administrator; provided, in each case, that the violation is curable.

(h) Change in Control means the consummation or effectiveness of any of the following events:

(i) The sale, exchange, lease or other disposition of all or substantially all of the assets of the Parent to a person or group of related persons, as such terms are defined or described in Sections 3(a)(9) and 13(d)(3) of the Exchange Act;

(ii) A merger, reorganization, recapitalization, consolidation or other similar transaction involving the Parent in which the voting securities of the Parent owned by the shareholders of the Parent immediately prior to such transaction do not represent more than fifty percent (50%) of the total voting power of the surviving controlling entity outstanding, immediately after such transaction;



(iii) Any person or group of related persons, as such terms are defined or described in Sections 3(a)(9) and 13(d)(3) of the Exchange Act, is or becomes the Beneficial Owner, directly or indirectly, of more than 50% of the total voting power of the voting securities of the Parent (including by way of merger, takeover (including an acquisition by means of a scheme of arrangement), consolidation or otherwise);

(iv) During any period of two (2) consecutive years, individuals who at the beginning of such period constituted the Board (together with any new directors whose election by such Board or whose nomination for election by the shareholders of the Parent was approved by a vote of a majority of the directors of the Parent then still in office, who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board then in office; or

(v) A dissolution or liquidation of the Parent.

Notwithstanding the foregoing, a restructuring of the Company for the purpose of changing the domicile of the Parent (including, but not limited to, any change in the structure of the Parent resulting from the process of moving its domicile between jurisdictions), reincorporation of the Parent or other similar transaction involving the Parent (a “Restructuring Transaction”) will not constitute a Change in Control if, immediately after the Restructuring Transaction, the shareholders of the Parent immediately prior to such Restructuring Transaction represent, directly or indirectly, more than fifty percent (50%) of the total voting power of the surviving entity.

(i) Change in Control Period means the period beginning on the date that is six (6) months preceding the effective date of a Change in Control and ending on the date that is twenty-four (24) months following the effective date of the Change in Control.

For the avoidance of doubt, no enhanced benefits payable to an Eligible Executive due to a Termination Event occurring within a Change in Control Period (that is, benefits in excess of the benefits due upon a Termination Event outside a Change in Control Period) shall be paid prior to the effective date of a Change in Control.

(j) Code means the Internal Revenue Code of 1986, as amended. Any specific reference to a section of the Code shall be deemed to include any regulations and other Treasury Department guidance promulgated thereunder.

(k) Company means Seagate Technology, an exempted limited liability company incorporated under the laws of the Cayman Islands, and any successor as provided in Section 9(c) hereof.

(I) Disability means the physical or mental incapacitation such that for a period of six consecutive months or for an aggregate of nine months in any 24-month consecutive period, a Potential Eligible Executive is unable to substantially perform his or her duties. Any question as to the existence of that Potential Eligible Executive’s physical or mental incapacitation as to which the Potential Eligible Executive or the Potential Eligible Executive’s representative and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to the Potential Eligible Executive and the Company. If the Potential Eligible Executive and the Company cannot agree as to a qualified independent physician, each shall appoint such a



physician and those two physicians shall select a third who shall make such determination in writing. The determination of “Disability” made in writing to the Company and the Potential Eligible Executive shall be final and conclusive for all purposes of the benefits under this Plan.

(m) Exchange Act means the Securities Exchange Act of 1934, as amended.

(n) Good Reason means a Potential Eligible Executive’s resignation of his or her employment with the Parent or a subsidiary as a result of the occurrence of one or more of the following actions without such Potential Eligible Executive’s express written consent, which action or actions remain uncured for at least 30 days following written notice from such Potential Eligible Executive to the Parent describing the occurrence of such action or actions and asserting that such action or actions constitute grounds for a Good Reason resignation, which notice must be provided by the Potential Eligible Executive no later than 90 days after the initial existence of such condition, provided that such resignation occurs no later than 60 days after the expiration of the cure period: (i) any material diminution in the level of such Potential Eligible Executive’s Level, authority or duties; (ii) a reduction of 10% or more in the level of the base salary or target bonus opportunity to be provided to such Potential Eligible Executive, other than a reduction that is equivalent to the reduction in base salaries and/or target bonus opportunities, as applicable, imposed on all other executives of the Parent at a similar level within the Parent; (iii) the relocation of such Potential Eligible Executive to a principal place of employment that increases such Potential Eligible Executive’s one-way commute by more than 50 miles; or (iv) the failure of any successor to the business of the Parent or to substantially all of the assets and/or business of the Parent to assume the Company’s obligations under this Plan as required by Section 9(c).

(o) IRS means the Internal Revenue Service.

(p) Level means a Potential Eligible Executive’s level or title as in effect on the Termination Date (or if greater, on the date on which an event constituting Good Reason arose).

(q) Non-U.S. Eligible Executive means any Eligible Executive not employed in the United States of America, including its territories and possessions, on the date of a Termination Event and who is not on assignment to a non-U.S. jurisdiction.

(r) Non-U.S. Benefit means, in the case of a Termination Event occurring during a Change in Control Period, an amount equal to the Thailand Severance Pay Amount, the Malaysia Severance Pay Amount, the Singapore Severance Pay Amount or the U.K. Severance Pay Amount, in each case as specified in the applicable Benefits Schedule for a Non-U.S. Eligible Executive, plus the number of months of Target Bonus specified in such applicable Benefits Schedule.

(s) Parent means Seagate Technology plc, an Irish public limited company.

(t) Pay means a Potential Eligible Executive’s monthly base pay at the rate in effect on the Termination Date (or if greater, on the date on which an event constituting Good Reason arose).

(u) Payment Confirmation Date means the date on which the Release and Covenants Documents required by Section 2(a)(ii) of this Plan become irrevocable; provided, however, if the Release Period spans two calendar years, then the Payment Confirmation Date will be the first



payroll date that occurs in the calendar year following the calendar year in which the Release and Covenants Documents become irrevocable.

(v) Plan means this Fifth Amended and Restated Seagate Technology Executive Severance and Change in Control Plan.

(w) Prior Year Bonus means, in respect of a Termination Event occurring outside of a Change in Control Period but prior to the payment date for the annual incentive bonus, the annual incentive bonus earned by an Eligible Executive for the year preceding the year in which the Termination Event occurs. If payable, the Prior Year Bonus shall be paid to the Eligible Executive at the same time that annual incentive bonuses are otherwise paid to the Company’s executives.

(x) Pro Rata Bonus for an Eligible Executive who is not a Non-U.S. Eligible Executive and whose Termination Event occurs outside of a Change in Control Period shall be calculated in relation to the fiscal year during which termination takes place, as set forth in this Section 3(x):

(i) If the Eligible Executive either was a “covered employee” within the meaning of Section 162(m) of the Code for the last fiscal year of the Parent completed prior to the Termination Event or, based on such Eligible Executive’s compensation paid through the date of the Termination Event, such Eligible Executive is projected, in the sole and reasonable determination of the Plan Administrator, to be a “covered employee” within the meaning of Section 162(m) of the Code assuming he or she remained employed through the end of the then current fiscal year (and so for purposes of this Plan shall be considered to be “subject to Section 162(m) of the Code”), the Pro Rata Bonus shall be the incentive bonus calculated for the year in which the Termination Date falls based on actual performance, determined by multiplying the bonus that would have been earned by the Eligible Executive had the executive remained in service until the date required to earn a full bonus for that year by a fraction, the numerator of which is the number of days the Eligible Executive was employed during the year in which the Termination Date occurs, through the Termination Date, and the denominator of which is 365. If payable in connection with a Termination Event, the Pro Rata Bonus calculated in accordance with this Section 3(x)(i) shall be paid to the Eligible Executive at the same time that annual incentive bonuses are otherwise paid to the Parent’s executives.

(ii) In all other cases, the amount of the Pro Rata Bonus shall be determined based on the Accrued Bonus Funding through the last completed fiscal quarter preceding the Termination Date, multiplied by the Eligible Executive’s then current Target Bonus, prorated for the number of days employed during the fiscal year of the Termination Event, divided by 365. If payable in connection with a Termination Event, the Pro Rata Bonus calculated in accordance with this Section 3(x)(ii) shall be paid to the Eligible Executive within 20 business days following the Payment Confirmation Date.

(iii) Other than as described in Sections 3(x)(i)-(ii) above, no Pro Rata Bonus shall be payable to any Eligible Executive.

(y) Restrictive Covenant Period means the longest period of months specified in the Eligible Executive’s Release and Covenant Documents during which the Eligible Executive shall be required to abide by one or more of the Covenants set forth in Section 6.



(z) Target Bonus means the Eligible Executive’s most recently approved target bonus level (expressed as a percentage of base pay) with respect to the Bonus Plan, multiplied by the Eligible Executive’s Pay.

(aa) Termination Date means the last date on which the Eligible Executive is in active employment status with the Company or any Applicable Subsidiary as determined by the Plan Administrator in its sole and reasonable discretion or, solely to the extent necessary to comply with Section 409A of the Code, such other date that constitutes a “separation from service” within the meaning of Section 409A of the Code.

(bb) U.S. Executive means an Eligible Executive who is a U.S. citizen or U.S. resident alien.

(cc) WARN Act means the federal Worker Adjustment and Retraining Notification Act and any other comparable law applicable under the laws of any state or foreign jurisdiction.

## SECTION 4. AMOUNT OF BENEFIT.

Severance benefits payable under the Plan are as follows:

(a) Subject to Sections 2(a), 6(f) and 8, Eligible Executives will receive the benefits described in Section 7 of the Plan and in the applicable Benefits Schedule attached hereto. The level of benefits applicable to an Eligible Executive shall be based in part upon his or her Level.

(b) Notwithstanding any other provision of the Plan to the contrary, any benefits payable to an Eligible Executive under this Plan shall be in lieu of any severance benefits payable by the Parent or any subsidiary to such individual under any other arrangement covering the individual, unless expressly otherwise agreed to by the Parent or the subsidiary in writing. Further, in the event that the Eligible Executive is entitled to receive severance benefits under any agreement or contract with the Parent or any subsidiary, any plan, policy, program or other arrangement adopted or established by the Parent or any subsidiary under the WARN Act or other applicable law providing for payments from the Parent or a subsidiary on account of termination of employment, including pay in lieu of advance notice of termination, or as otherwise legally required to be paid to any Non-U.S. Eligible Executive (“Other Benefits”), any severance benefits payable hereunder shall be reduced by the Other Benefits.

## SECTION 5. TIME OF PAYMENT AND FORM OF BENEFIT; INDEBTEDNESS.

(a) Benefits under this Plan shall be paid according to the payment schedule specified in the applicable Benefits Schedule attached hereto, subject to Section 6(f) and the following provisions:

(i) Any increase to the cash severance benefits payable on account of the occurrence of a Termination Event during a Change in Control Period but preceding the effective date of the Change in Control shall be paid on the later of (A) five (5) business days following the effective date of the Change in Control or (B) the first payroll date that occurs after the effective date of the Change in Control (provided such date occurs after the date on which the Release and



Covenants Document become irrevocable), and otherwise in accordance with the payout schedule set forth in the applicable Benefits Schedule.

(ii) In the event that an Eligible Executive would be entitled to an extension of the period to exercise outstanding options following termination of employment without Cause under the terms of the applicable option award agreement(s), then such extension shall also be applicable in the event that the Eligible Executive terminates employment for Good Reason, subject, however, to the same terms and limitations as set forth in the option award agreement applicable to a termination without Cause.

(iii) Unless otherwise required by applicable law, in no event shall payment of any Plan benefit be due prior to the Eligible Executive’s Payment Confirmation Date, and any payment shall be deemed to be timely made if paid within twenty (20) business days of such date.

(iv) Notwithstanding anything to the contrary in this Section 5(a), except for a Termination Event occurring during a Change in Control Period, the Plan Administrator may, in its sole discretion, determine an alternate payment schedule for any reason, provided that any such amendment does not give rise to additional taxation under Section 409A of the Code.

(b) Subject to compliance with Section 409A of the Code and other applicable law, if an Eligible Executive is indebted to the Parent or any subsidiary at his or her Termination Date, the Parent and its subsidiaries reserve the right to offset any severance payments under the Plan by the amount of such indebtedness.

## SECTION 6. ELIGIBLE EXECUTIVE COVENANTS

Severance benefits payable under the Plan are subject to the following covenants made by each Eligible Executive (the “Covenants”), the scope and applicability of which covenants shall be as set forth in the Release and Covenant Documents, but in any event shall not be substantially greater than as set forth in this Section 6:

(a) Non-Competition. During the Restrictive Covenant Period, an Eligible Executive will not directly or indirectly:

(i) engage in any business that competes with the business of the Parent or its subsidiaries (including, without limitation, any businesses which the Parent or its subsidiaries have specific plans to conduct in the future and as to which such Eligible Executive is aware of such planning) in any geographical area in which the Parent or its subsidiaries conduct such business (a “Competitive Business”);

(ii) enter the employ of, or render any services to, any person or entity (or any division of any person or entity) who or which engages in a Competitive Business;

(iii) acquire a financial interest in, or otherwise become actively involved with, any Competitive Business, directly or indirectly, as an individual, partner, shareholder, officer, director, principal, agent, trustee or consultant; or



(iv) interfere with, or attempt to interfere with, business relationships (whether formed before, on or after the date of this Plan) between the Parent or any of its subsidiaries and customers, clients, suppliers, partners, members or investors of the Parent or its subsidiaries.

Notwithstanding anything to the contrary in this Plan, an Eligible Executive may, directly or indirectly own, solely as a passive investment, securities of any person engaged in the business of the Parent or its subsidiaries which are actively traded on a public securities market (including the OTCBB and similar over-the-counter market) if such Eligible Executive (i) is not a controlling person of, or a member of a group which controls, such person and (ii) does not, directly or indirectly, own 5% or more of any class of such actively traded securities of such person.

(b) Non-Solicitation of Clients. During the Restrictive Covenant Period, an Eligible Executive will not, whether on such Eligible Executive’s own behalf or on behalf of or in conjunction with any person, company, business entity or other organization whatsoever, directly or indirectly solicit or assist in soliciting in competition with the Parent or its subsidiaries, the business of any client or prospective client:

(i) with whom such Eligible Executive had personal contact or dealings on behalf of the Parent during the one year period preceding such Eligible Executive’s Termination Date;

(ii) with whom employees reporting to such Eligible Executive have had personal contact or dealings on behalf of the Parent during the one year immediately preceding such Eligible Executive’s Termination Date; or

(iii) for whom such Eligible Executive had direct or indirect responsibility during the one year immediately preceding such Eligible Executive’s Termination Date.

(c) Non-Solicitation of Employees and Consultants. During the Restrictive Covenant Period, an Eligible Executive will not, whether on such Eligible Executive’s own behalf or on behalf of or in conjunction with any person, company, business entity or other organization whatsoever, directly or indirectly:

(i) solicit or encourage any employee of the Parent or its subsidiaries to leave the employment of the Parent or its subsidiaries; or

(ii) encourage to cease to work with the Parent or its subsidiaries any consultant then under contract with the Parent or its subsidiaries.

(d) During the term of an Eligible Executive’s employment with the Parent or its subsidiaries, such Eligible Executive will have access to and become acquainted with the Parent’s and its subsidiaries’ confidential and proprietary information, including but not limited to, information or plans regarding the Parent’s and its subsidiaries’ customer relationships, personnel or sales, marketing and financial operations and methods, trade secrets, formulas, devices, secret inventions, processes and other compilations of information, records and specifications (collectively, “Proprietary Information”). An Eligible Executive shall not at any time disclose any of the Parent’s or its subsidiaries’ Proprietary Information, directly or indirectly, or use it in any way except in the course of performing services for the Parent and its subsidiaries, as authorized in writing by the Parent or as required to be disclosed by applicable law. All files, records, documents,



computer-recorded information, drawings, specifications, equipment and similar items relating to the business of the Parent or its subsidiaries, whether prepared by an Eligible Executive or otherwise coming into such Eligible Executive’s possession, shall remain the exclusive property of the Parent or its subsidiaries, as the case may be. Notwithstanding the foregoing, Proprietary Information shall not include information that is or becomes generally public knowledge other than as a result of a breach of this Section 6(d) or any obligation that the Eligible Executive has to protect the confidentiality of the Proprietary Information of the Parent and its subsidiaries.

(e) It is expressly understood and agreed that although each Eligible Executive, the Parent and its subsidiaries consider the restrictions contained in the Covenants to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in the Covenants is an unenforceable restriction against an Eligible Executive, for which injunctive relief is unavailable, the provisions of the Covenants shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Furthermore, such a determination shall not limit the Company’s or an Applicable Subsidiary’s ability to cease providing payments or benefits due during the remainder of any Restrictive Covenant Period or to seek recovery of any prior payments or benefits made hereunder, if applicable, unless a court of competent jurisdiction has expressly declared that action to be unlawful. Alternatively, if any court of competent jurisdiction finds that any restriction contained in the Covenants is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained in the Covenants or other provisions of this Plan.

(f) All benefits payable to an Eligible Executive are contingent upon his or her full compliance with the foregoing obligations during the Restrictive Covenant Period. Accordingly, if the Eligible Executive, at any time, violates any Covenants, any proprietary information or confidentiality obligation to the Parent or any of its subsidiaries (including Section 6(d) above), including his or her obligations under the applicable At-Will Employment, Confidential Information and Invention Assignment Agreement (or any such similar agreement), or any other obligations under this Plan, (i) any remaining payments or benefits due under this Plan will terminate immediately following written notice from the Company of such violation and (ii) to the maximum extent permitted by applicable law, if the Eligible Executive has received any benefits under the Plan prior to the date of such written notice, the Eligible Executive shall deliver to the Parent or the Applicable Subsidiary, within 30 days, an amount equal to the aggregate of all such benefits.

## SECTION 7. CONTINUATION OF EMPLOYMENT BENEFITS.

## (a) Health Plan Benefits Continuation.

(i) Each Eligible Executive who is enrolled in a health, vision or dental plan sponsored by the Parent or a subsidiary may be eligible to continue coverage (the “Continued Coverage”) under such health, vision or dental plan (or to convert to an individual policy) under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”). The Company will notify the individual of any such right to continue health coverage at the time of termination. In the event that an Eligible Executive is not eligible to receive Continued Coverage (either because such Eligible Executive is not enrolled in any plan sponsored by the Parent or its subsidiaries or because such

Eligible Executive will be covered by a statutory scheme for continued health, vision or dental coverage that will not be an obligation of the Parent or its subsidiaries), it is understood and agreed that this Section 7(a) shall not be applicable to such Eligible Executive and, with respect to a Termination Event occurring during a Change in Control Period, he or she shall not be eligible to receive the COBRA Premiums. For greater certainty, no benefits shall be payable under this Section 7 to any Non-U.S. Eligible Executive.

(ii) Subject to Sections 2(a), 6(f) and 8 hereof, solely in connection with the Continued Coverage triggered by a Termination Event during a Change in Control Period, the Company or the Applicable Subsidiary will pay to the Eligible Executive a lump sum cash payment in an amount equal to 2.0 times the before-tax annual cost of such Eligible Executive’s premiums to cover the Eligible Executive and his or her eligible dependents, if any, in effect as of the Termination Event (the “Continued Coverage Payment”). The Continued Coverage Payment will include the coverage premium cost of an Eligible Executive’s dependents if, and only to the extent that, such dependents were enrolled in a health, vision or dental plan sponsored by the Parent or a subsidiary prior to the Eligible Executive’s Termination Date. No provision of this Plan will affect the continuation coverage rules under COBRA or any other applicable law. Therefore, the period during which an Eligible Executive must elect to continue the Parent’s or a subsidiary’s group medical, vision or dental coverage at his or her own expense under COBRA or other applicable law, the length of time during which Continued Coverage will be made available to the Eligible Executive, and all other rights and obligations of the Eligible Executive under COBRA or any other applicable law (except the obligation to pay the Continued Coverage Payment) will be applied in the same manner that such rules would apply in the absence of this Plan. It is expressly understood and agreed that the Eligible Executive will be solely responsible for the entire payment of premiums required under COBRA or other applicable law.

(b) Other Employee Benefits. All non-health benefits (such as life insurance and disability coverage) terminate as of the Eligible Executive’s Termination Date (except to the extent that any conversion privilege is available thereunder).

## SECTION 8. EXCISE TAXES

(a) In the event that any benefits payable to an Eligible Executive pursuant to this Plan or pursuant to any other plan, agreement or arrangement (“Payments”) (i) constitute “parachute payments” within the meaning of Section 280G of the Code, and (ii) but for this Section 8 would be subject to the excise tax imposed by Section 4999 of the Code, or any comparable successor provisions (the “Excise Tax”), then the Eligible Executive’s payments hereunder shall be either (a) provided to the Eligible Executive in full, or (b) provided to the Eligible



Executive as to such lesser extent which would result in no portion of such benefits being subject to the Excise Tax, whichever of the foregoing amounts, when taking into account applicable federal, state, local and foreign income and employment taxes, the Excise Tax, and any other applicable taxes, results in the receipt by the Eligible Executive, on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax. Unless the Company and the Eligible Executive otherwise agree in writing, any determination required under this Section 8 shall be made in writing in good faith by a recognized accounting firm selected by the Company (the “Accountants”). Any reduction in payments or benefits hereunder shall occur in the following order: (i) any cash severance, (ii) any other cash amount payable to the Eligible



Executive, (iii) any benefit valued as a “parachute payment,” and (iv) the acceleration of vesting of any equity-based awards. For purposes of making the calculations required by this Section 8, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of the Code and other applicable legal authority. The Company and the applicable Eligible Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 8. The Company (or the Applicable Subsidiary) shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 8.

(b) If, notwithstanding any reduction described in Section 8(a), the IRS determines that an Eligible Executive is liable for the Excise Tax as a result of the receipt of any Payments pursuant to this Plan, then the Eligible Executive shall be obligated to pay back to the Company or the Applicable Subsidiary, within thirty (30) days after a final IRS determination or in the event that the Eligible Executive challenges the final IRS determination, a final judicial determination, a portion of the Payments equal to the “Repayment Amount.” The Repayment Amount shall be the smallest such amount, if any, as shall be required to be paid to the Company or the Applicable Subsidiary so that the Eligible Executive’s net after-tax proceeds with respect to the Payments (after taking into account the payment of the Excise Tax and all other applicable taxes imposed on such benefits) shall be maximized. The Repayment Amount shall be zero if a Repayment Amount of more than zero would not result in the Eligible Executive’s net after-tax proceeds with respect to the Payments being maximized. If the Excise Tax is not eliminated pursuant to this Section 8(b), the Eligible Executive shall pay the Excise Tax.

(c) Notwithstanding any other provision of this Section 8, if (i) there is a reduction in the Payments to an Eligible Executive as described in this Section 8, (ii) the IRS later determines that the Eligible Executive is liable for the Excise Tax, the payment of which would result in the maximization of the Eligible Executive’s net after-tax proceeds (calculated as if the Eligible Executive’s benefits had not previously been reduced), and (iii) the Eligible Executive pays the Excise Tax, then the Company or the Applicable Subsidiary shall pay to the Eligible Executive those Payments which were reduced pursuant to this Section 8 as soon as administratively possible after the Eligible Executive pays the Excise Tax (but in any event within 30 days thereafter) so that the Eligible Executive’s net after-tax proceeds with respect to the payment of the Payments are maximized.

SECTION 9. RIGHT TO INTERPRET PLAN; AMEND AND TERMINATE; OTHER ARRANGEMENTS; BINDING NATURE OF PLAN.

(a) Exclusive Discretion. The “Plan Administrator” shall be the Compensation Committee of the Board. The Plan Administrator shall have the exclusive discretion and authority to establish rules, forms, and procedures for the administration of the Plan, and to construe and interpret the Plan and to decide any and all questions of fact, interpretation, definition, computation or administration arising in connection with the operation of the Plan, including, but not limited to, the eligibility to participate in the Plan, the designation of the Level relating to each applicable tier of benefits under the Plan as set forth in the Benefits Schedules, the amount of benefits paid under the Plan, the timing of payments under the Plan and the scope and applicability of the covenants contained in the Release and Covenant Documents. Benefits under this Plan will be paid only if the



Plan Administrator decides in its sole discretion that the Eligible Executive is entitled to receive them. The rules, interpretations, computations and other actions of the Plan Administrator shall be binding and conclusive on all persons. The Plan Administrator’s decisions shall not be subject to review unless they are found to be unreasonable or not to have been made in good faith. The Plan Administrator may appoint one or more individuals and delegate such of its powers and duties as it deems desirable to any such individual(s), in which case every reference herein made to the Plan Administrator shall be deemed to mean or include the appointed individual(s) as to matters within their jurisdiction. All reasonable expenses incurred by the Plan Administrator in connection with the administration of the Plan shall be paid by the Company or its subsidiaries.

## (b) Term Of Plan; Termination or Suspension; Amendment; Binding Nature Of Plan.

(i) This Plan shall be effective until July 31, 2010 and shall be extended thereafter for successive one-year periods unless the Board or the Compensation Committee, in its sole discretion, elects not to renew the Plan prior to the date that the Plan is then scheduled to expire. The Board or the Compensation Committee may also terminate or suspend the Plan at any time and for any reason or no reason, which termination or suspension, as applicable, shall become effective at the end of the term described in this Section 9(b)(i), provided, however, that no such termination or suspension shall affect the Company’s or any Applicable Subsidiary’s obligation to complete the delivery of benefits hereunder to any Potential Eligible Executive who becomes an Eligible Executive prior to the effective time of such termination or suspension; and further provided, that during a Change in Control Period, the Plan shall not be terminated or suspended.

(ii) The Board and the Compensation Committee reserve the right to amend this Plan or the benefits provided hereunder at any time and in any manner; provided, however, that no such amendment shall materially adversely affect the interests or rights of any Eligible Executive whose Termination Date has occurred prior to amendment of the Plan; and further provided, that during a Change in Control Period, the Plan shall not be amended in a manner adverse to a Potential Eligible Executive without his or her written consent.

(iii) Any action amending, suspending or terminating the Plan shall be in writing and approved by the Board or the Compensation Committee.

(c) Binding Effect On Successor To Company. This Plan shall be binding upon any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Parent, or upon any successor to the Parent as the result of a Change in Control, and any such successor or assignee shall be required to perform the Company’s obligations under the Plan, in the same manner and to the same extent that the Company would be required to perform if no such succession or assignment or Change in Control had taken place. In such event, the term “Company,” as used in the Plan, shall mean the Company as hereinafter defined and any successor or assignee as described above which by reason hereof becomes bound by the terms and provisions of this Plan.



## SECTION 10. NO IMPLIED EMPLOYMENT CONTRACT.

The Plan shall not be deemed (i) to give any employee or other person any right to be retained in the employ of the Parent or any subsidiary or (ii) to interfere with the right of the Parent or any subsidiary to discharge any employee or other person at any time and for any reason, which right is hereby reserved.

## SECTION 11. LEGAL CONSTRUCTION.

This Plan is intended to be governed by and shall be construed in accordance with the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and, to the extent not preempted by ERISA, the laws of the State of California, except that the Covenants as set forth in the Release and Covenant Documents shall in all cases be governed by the laws of the State or other jurisdiction specified therein. This Plan is intended to be (a) an employee welfare plan as defined in Section 3(1) of ERISA and (b) a “top-hat” plan maintained for the benefit of a select group of management or highly compensated employees of the Parent or its subsidiaries. This Plan is intended to meet requirements of Section 162(m) of the Code to provide for any payments under the Bonus Plan to qualify as performance-based compensation. Any feature of this Plan which is found to void the qualification of all payments under the Bonus Plan as performance-based compensation shall be modified to the extent necessary to comply with the requirements of Section 162(m) of the Code.

## SECTION 12. CLAIMS, INQUIRIES AND APPEALS.

(a) Applications For Benefits And Inquiries. Any application for benefits, inquiries about the Plan or inquiries about present or future rights under the Plan must be submitted to the Plan Administrator in writing. The Plan Administrator is:

The Compensation Committee of the Board of Directors of Seagate Technology plc
ATTN: Vice President of Compensation and Benefits
10200 S. De Anza Blvd.
Cupertino, California 95014

(b) Denial Of Claims. In the event that any application for benefits is denied in whole or in part, the Plan Administrator must notify the applicant, in writing, of the denial of the application, and of the applicant’s right to review the denial. The written notice of denial will be set forth in a manner designed to be understood by the employee, and will include specific reasons for the denial, specific references to the Plan provision upon which the denial is based, a description of any information or material that the Plan Administrator needs to complete the review and an explanation of the Plan’s review procedure.

This written notice will be given to the employee within 90 days after the Plan Administrator receives the application, unless special circumstances require an extension of time, in which case, the Plan Administrator has up to an additional 90 days for processing the application. If an extension of time for processing is required, written notice of the extension will be furnished to the applicant before the end of the initial 90-day period.



This notice of extension will describe the special circumstances necessitating the additional time and the date by which the Plan Administrator is to render its decision on the application. If written notice of denial of the application for benefits is not furnished within the specified time, the application shall be deemed to be denied. The applicant will then be permitted to appeal the denial in accordance with the Review Procedure described below.

(c) Request For A Review. Any person (or that person’s authorized representative) for whom an application for benefits is denied (or deemed denied), in whole or in part, may appeal the denial by submitting a request for a review to the Plan Administrator within 60 days after the application is denied (or deemed denied). The Plan Administrator will give the applicant (or his or her representative) an opportunity to review pertinent documents in preparing a request for a review. A request for a review shall be in writing and shall be addressed to:

## Seagate Technology

Plan Administrator for the Executive Severance and CIC Plan

ATTN: Vice President of Compensation and Benefits

10200 S. De Anza Blvd.

Cupertino, California 95014

A request for review must set forth all of the grounds on which it is based, all facts in support of the request and any other matters that the applicant feels are pertinent. The Plan Administrator may require the applicant to submit additional facts, documents or other material as it may find necessary or appropriate in making its review.

(d) Decision On Review. The Plan Administrator will act on each request for review within 60 days after receipt of the request, unless special circumstances require an extension of time (not to exceed an additional 60 days) for processing the request for a review. If an extension for review is required, written notice of the extension will be furnished to the applicant within the initial 60-day period. The Plan Administrator will give prompt, written notice of its decision to the applicant. In the event that the Plan Administrator confirms the denial of the application for benefits in whole or in part, the notice will outline, in a manner calculated to be understood by the applicant, the specific Plan provisions upon which the decision is based. If written notice of the Plan Administrator’s decision is not given to the applicant within the time prescribed in this Subsection (d), the application will be deemed denied on review.

(e) Rules And Procedures. The Plan Administrator will establish rules and procedures, consistent with the Plan and with ERISA, as necessary and appropriate in carrying out its responsibilities in reviewing benefit claims. The Plan Administrator may require an applicant who wishes to submit additional information in connection with an appeal from the denial (or deemed denial) of benefits to do so at the applicant’s own expense.

(f) Exhaustion Of Remedies. No legal action for benefits under the Plan may be brought until the claimant (i) has submitted a written application for benefits in accordance with the procedures described by Section 12(a) above, (ii) has been notified by the Plan Administrator that the application is denied (or the application is deemed denied due to the Plan Administrator’s failure to act on it within the established time period), (iii) has filed a written request for a review of the application in accordance with the appeal procedure described in Section 12(c) above and (iv) has



been notified in writing that the Plan Administrator has denied the appeal (or the appeal is deemed to be denied due to the Plan Administrator’s failure to take any action on the claim within the time prescribed by Section 12(d) above).

## SECTION 13. BASIS OF PAYMENTS TO AND FROM PLAN.

All benefits under the Plan shall be paid by the Company or the Applicable Subsidiary. The Plan shall be unfunded, and benefits hereunder shall be paid only from the general assets of the Company or the Applicable Subsidiary.

## SECTION 14. OTHER PLAN INFORMATION.

(a) Employer And Plan Identification Numbers. The Employer Identification Number assigned to the Company (which is the "Plan Sponsor" as that term is used in ERISA) by the Internal Revenue Service is 77-0545987. The Plan Number assigned to the Plan by the Plan Sponsor pursuant to the instructions of the Internal Revenue Service is 003.

(b) Ending Date For Plan’s Fiscal Year. The date of the end of the fiscal year for the purpose of maintaining the Plan’s records is the Friday which falls closest to, and including, June 30.

(c) Agent For The Service Of Legal Process. The agent for the service of legal process with respect to the Plan is the General Counsel, Seagate Technology, 10200 S. De Anza Blvd., Cupertino, California 95014. The service of legal process may also be made on the Plan by serving the Plan Administrator.

(d) Plan Sponsor And Administrator. The “Plan Sponsor” of the Plan is Seagate Technology, and the “Plan Administrator” of the Plan is the Compensation Committee of the Board. Each of the Plan Sponsor and the Plan Administrator can be reached by contacting the Vice President of Compensation and Benefits in writing 10200 S. De Anza Blvd., Cupertino, California 95014, and by telephone at (408) 658-1000. The Plan Administrator is the named fiduciary charged with the responsibility for administering the Plan.

## SECTION 15. STATEMENT OF ERISA RIGHTS.

Participants in this Plan (which is a welfare benefit plan sponsored by Seagate Technology) are entitled to certain rights and protections under ERISA if the participant is employed in the United States. If you are an Eligible Executive employed in the United States, you are considered a participant in the Plan and, under ERISA, you are entitled to:

(a) Examine, without charge, at the Plan Administrator’s office and at other specified locations, such as work sites, all Plan documents and copies of all documents filed by the Plan with the U.S. Department of Labor;

(b) Obtain copies of all Plan documents and Plan information upon written request to the Plan Administrator. The Administrator may make a reasonable charge for the copies; and



(c) Receive a summary of the Plan’s annual financial report, in the case of a plan which is required to file an annual financial report with the Department of Labor. (Generally, all pension plans and welfare plans with 100 or more participants must file these annual reports.)

In addition to creating rights for Plan participants, ERISA imposes duties upon the people responsible for the operation of the employee benefit plan. The people who operate the Plan, called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of you and other Plan participants and beneficiaries.

No one, including your employer or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a Plan benefit or exercising your rights under ERISA. If your claim for a Plan benefit is denied in whole or in part, you must receive a written explanation of the reason for the denial. You have the right to have the Plan Administrator review and reconsider your claim.

Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request materials from the Plan and do not receive them within 30 days, you may file suit in a federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator. If you have a claim for benefits that is denied or ignored, in whole or in part, you may file suit in a state or federal court. If it should happen that the Plan fiduciaries misuse the Plan’s money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court. The court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.

If you have any questions about the Plan, you should contact the Plan Administrator. If you have any questions, about your rights under ERISA, you should contact the nearest area office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquires, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.

## SECTION 16. EFFECT OF SECTION 409A OF THE CODE

This Plan is intended to comply with all applicable law, including Section 409A of the Code. If the Eligible Executive is a U.S. Executive, a termination of employment shall not be deemed to have occurred for purposes of any provision of this Plan providing for the payment of any amount or benefit that is considered deferred compensation under Section 409A of the Code upon or following a termination of employment unless such termination of employment is also a “separation from service” within the meaning of Section 409A of the Code. If an Eligible Executive is deemed on the Termination Date to be a “specified employee” (as such term is defined under Section 409A of the Code), then with regard to any payment or the provision of any benefit that is considered deferred compensation under Section 409A of the Code payable on account of a “separation from service,” to the extent required to avoid any taxes imposed under Section 409A(a)(1) of the Code, such payment



or benefit shall be made or provided, without interest, at the date which is no more than 15 days following the expiration of the six month period measured from the Termination Date.

No payment shall be made, no benefit shall be provided and no acceleration or modification may be made under this Plan that would result in the imposition of an additional tax under Section 409A of the Code upon a U.S. Executive. In the event that it is reasonably determined by the Plan Administrator that, as a result of Section 409A of the Code, payments under the Plan may not be made or benefits provided at the time or in the manner contemplated by the terms of the Plan without causing the U.S. Executive to be subject to taxation under Section 409A of the Code, the Company or the Applicable Subsidiary will make such payment or provide such benefit on the first day that would not result in the U.S. Executive incurring any tax liability under Section 409A of the Code and/or shall modify such payment or benefit to avoid incurring such tax liability. Notwithstanding the foregoing, neither the Parent nor any subsidiary, nor any of their employees or representatives, shall have any liability to the U.S. Executive with respect to the imposition of any early or additional tax under Section 409A of the Code.

For purposes of Section 409A of the Code, each payment made under this Plan shall be designated as a “separate payment” within the meaning of Section 409A of the Code. In addition, all benefits provided under this Plan to U.S. Executives shall be made or provided in accordance with the requirements of Section 409A of the Code including, where applicable, the requirement that (i) the amount of benefits provided during a calendar year may not affect the benefits to be provided in any other calendar year and (ii) the right to benefits may not be subject to liquidation or exchange for another benefit.



## SCHEDULE A

Potential Eligible Executives employed in the United States
Seagate Technology (US) Holdings, Inc. [Delaware]
Seagate US LLC [Delaware]
Seagate Technology LLC [Delaware]
LaCie Ltd.
Xyratex International Inc.

Potential Eligible Executives employed in Malaysia
Seagate International (Johor) Sdn. Bhd. [Malaysia]
Penang Seagate Industries (M) Sdn. Bhd. [Malaysia]
Xyratex (Malaysia) Sdn. Bhd.

Potential Eligible Executives employed in Thailand
Seagate Technology (Thailand) Limited
Xyratex Technology Limited

Potential Eligible Executives employed in United Kingdom
Seagate Technology (Marlow) Limited [United Kingdom]
Seagate Technology (Ireland) [Cayman Islands]
LaCie Ltd.
Xyratex Technology Limited

Potential Eligible Executives employed in Singapore
Seagate Singapore International Headquarters Pte. Ltd.
Seagate Technology International (Singapore branch)
Xyratex Technology Limited
Xyratex (Singapore) Pte. Ltd.



# BENEFIT SCHEDULES
FOR THE SEAGATE TECHNOLOGY
EXECUTIVE SEVERANCE AND CHANGE IN CONTROL (CIC) PLAN

The following benefits schedules set forth the benefits payable to Eligible Executives. The benefits schedules disclosed in public filings are for those for Eligible Executives who currently are, or are foreseeable to become, “named executive officers,” as defined in Item 402 of Regulation S-K and the other applicable rules and regulations promulgated by the Securities and Exchange Commission. The amount of benefits payable is dependent upon the Level in which the Eligible Executive falls and whether the Termination Event occurs during a Change in Control period, as more particularly described in the Plan.

The Plan Administrator shall determine in which Level an Eligible Executive shall be placed for purposes of receiving severance benefits under this Plan. The Plan Administrator’s determination shall be final and shall be binding and conclusive on all persons. The Plan Administrator retains the right to reclassify a Potential Eligible Executive prior to the date of the Termination Event and/or the occurrence of a Change in Control, except as expressly restricted by this Plan in connection with the occurrence of a Change in Control.

All payout schedules set forth in the Benefits Schedules shall be subject to the provisions of this Plan, including, without limitation, Sections 5 and 16.

Seagate Technology Confidential

## BENEFITS SCHEDULES FOR THE
SEAGATE TECHNOLOGY EXECUTIVE SEVERANCE AND CHANGE IN CONTROL (CIC) PLAN

Tier: 1 Salary Grade: 188

Location: U.S.

Benefits Payable in the Event of a Termination Event (involuntary termination):

## WITHOUT A CHANGE IN CONTROL

Base 24 months of Pay

Bonus Prior Year Bonus, if applicable, and Pro Rata Bonus

Other Outplacement services for two years following Termination Date

Payout Schedule The lesser of (i) 50% of the Benefit and (ii) twice the compensation limit then in effect under Section 401(a)(17) of the Code, payable within 20 business days following the Payment Confirmation Date, with the remainder payable 12 months following the Termination Date.

## DURING A CHANGE IN CONTROL PERIOD

Note: No enhanced benefits due to a Termination Event occurring within a Change in Control Period shall be paid prior to the effective date of a Change in Control.

Base 36 months of Pay

Bonus 36 months of Target Bonus (less any Pro Rata Bonus already paid, if applicable)

Equity Upon the later of (i) a Termination Event occurring during a Change in Control Period and (ii) immediately prior to the effective date of a Change in Control, other than as provided herein, there shall be full vesting of all unvested equity-based awards (whether or not granted prior to or following the adoption of this Plan). Notwithstanding the applicable provisions of the Eligible Executive’s award agreements or the relevant stock compensation plan governing such equity-based awards, if a Termination Event occurs during a Change in Control Period but prior to the effective date of the Change in Control, no unvested awards shall lapse or be forfeited solely on account of such Termination Event; provided, however, if the Change in Control has not occurred within the 6-month period following the Termination Event, all such unvested awards shall automatically lapse at the end of such 6-month period. In addition, if an award agreement specifies the manner and extent to which such award shall become accelerated in connection with a Change in Control, the terms of such award agreement will govern for purposes of determining the number of shares that will become vested in connection with a Termination Event during a Change in Control Period.

Other Continued Coverage Payment, and



Outplacement services for two years following the Termination Date

The lesser of (i) 100% of the Benefit and (ii) twice the compensation limit then in effect under Section 401(a)(17) of the Code, payable within 20 business days following the Payment Confirmation Date, with the remainder, if any, payable 6 months and 1 day following the Termination Date.



# BENEFITS SCHEDULES
FOR THE SEAGATE TECHNOLOGY
EXECUTIVE SEVERANCE AND CHANGE IN CONTROL (CIC) PLAN

Tier:

2

Salary Grade:

184 through 187

Location: U.S.

Benefits Payable in the Event of a Termination Event (involuntary termination):

## WITHOUT A CHANGE IN CONTROL

Base 20 months of Pay

Bonus Prior Year Bonus, if applicable, and Pro Rata Bonus

Other Outplacement services for two years following the Termination Date

Payout Schedule The lesser of (i) 50% of the Benefit and (ii) twice the compensation limit then in effect under Section 401(a)(17) of the Code, payable within 20 business days following the Payment Confirmation Date, with the remainder payable 12 months following the Termination Date.

## DURING A CHANGE IN CONTROL PERIOD

Note: No enhanced benefits due to a Termination Event occurring within a Change in Control Period shall be paid prior to the effective date of a Change in Control.

Base 24 months of Pay

Bonus 24 months of Target Bonus (less any Pro Rata Bonus already paid, if applicable)

Equity Upon the later of (i) a Termination Event occurring during a Change in Control Period and (ii) immediately prior to the effective date of a Change in Control, other than as provided herein, there shall be full vesting of all unvested equity-based awards (whether or not granted prior to or following the adoption of this Plan). Notwithstanding the applicable provisions of the Eligible Executive’s award agreements or the relevant stock compensation plan governing such equity-based awards, if a Termination Event occurs during a Change in Control Period but prior to the effective date of the Change in Control, no unvested awards shall lapse or be forfeited solely on account of such Termination Event; provided, however, if the Change in Control has not occurred within the 6-month period following the Termination Event, all such unvested awards shall automatically lapse at the end of such 6-month period. In addition, if an award agreement specifies the manner and extent to which such award shall become accelerated in connection with a Change in Control, the terms of such award agreement will govern for purposes of determining the number of shares that will become vested in connection with a Termination Event during a Change in Control Period.

Other Continued Coverage Payment, and

Outplacement services for two years following the Termination Date

Payout Schedule The lesser of (i) 100% of the Benefit and (ii) twice the compensation limit then in effect under Section 401(a)(17) of the Code, payable within 20 business days following the Payment Confirmation Date, with the remainder, if any, payable 6 months and 1 day following the Termination Date.



# BENEFITS SCHEDULES
FOR THE SEAGATE TECHNOLOGY
EXECUTIVE SEVERANCE AND CHANGE IN CONTROL (CIC) PLAN

Tier:

3

Salary Grade:

182 and 183

Location: U.S.

Benefits Payable in the Event of a Termination Event (involuntary termination):

## WITHOUT A CHANGE IN CONTROL

Base 16 months of Pay

Bonus Prior Year Bonus, if applicable, and Pro Rata Bonus

Other Outplacement services for 18 months following Termination Date

Payout Schedule The lesser of (i) 50% of the Benefit and (ii) twice the compensation limit then in effect under Section 401(a)(17) of the Code, payable within 20 business days following the Payment Confirmation Date, with the remainder payable 6 months and 1 day following the Termination Date.

## DURING A CHANGE IN CONTROL PERIOD

Note: No enhanced benefits due to a Termination Event occurring within a Change in Control Period shall be paid prior to the effective date of a Change in Control.

Base 18 months of Pay

Bonus 18 months of Target Bonus (less any Pro Rata Bonus already paid, if applicable)

Equity Upon the later of (i) a Termination Event occurring during a Change in Control Period and (ii) immediately prior to the effective date of a Change in Control, other than as provided herein, there shall be full vesting of all unvested equity-based awards (whether or not granted prior to or following the adoption of this Plan). Notwithstanding the applicable provisions of the Eligible Executive’s award agreements or the relevant stock compensation plan governing such equity-based awards, if a Termination Event occurs during a Change in Control Period but prior to the effective date of the Change in Control, no unvested awards shall lapse or be forfeited solely on account of such Termination Event; provided, however, if the Change in Control has not occurred within the 6-month period following the Termination Event, all such unvested awards shall automatically lapse at the end of such 6-month period. In addition, if an award agreement specifies the manner and extent to which such award shall become accelerated in connection with a Change in Control, the terms of such award agreement will govern for purposes of determining the number of shares that will become vested in connection with a Termination Event during a Change in Control Period.

Other Continued Coverage Payment, and

Outplacement services for 18 months following the Termination Date

Payout Schedule The lesser of (i) 100% of the Benefit and (ii) twice the compensation limit then in effect under Section 401(a)(17) of the Code, payable within 20 business days following the Payment Confirmation Date, with the remainder, if any, payable 6 months and 1 day following the Termination Date.



# BENEFITS SCHEDULES
FOR THE SEAGATE TECHNOLOGY
EXECUTIVE SEVERANCE AND CHANGE IN CONTROL (CIC) PLAN

Tier: 4 Salary Grade: 180

Location: U.S.

Benefits Payable in the Event of a Termination Event (involuntary termination):

## WITHOUT A CHANGE IN CONTROL

Base 12 months of Pay

Bonus Prior Year Bonus, if applicable, and Pro Rata Bonus

Other Outplacement services for one year following the Termination Date

Payout Schedule The lesser of (i) 100% of the Benefit and (ii) twice the compensation limit then in effect under Section 401(a)(17) of the Code, payable within 20 business days following the Payment Confirmation Date, with the remainder, if any, payable 6 months and 1 day following the Termination Date.

## DURING A CHANGE IN CONTROL PERIOD

Note: No enhanced benefits due to a Termination Event occurring within a Change in Control Period shall be paid prior to the effective date of a Change in Control.

Base 12 months of Pay

Bonus 12 months of Target Bonus (less any Pro Rata Bonus already paid, if applicable)

Equity Upon the later of (i) a Termination Event occurring during a Change in Control Period and (ii) immediately prior to the effective date of a Change in Control, other than as provided herein, there shall be full vesting of all unvested equity-based awards (whether or not granted prior to or following the adoption of this Plan). Notwithstanding the applicable provisions of the Eligible Executive’s award agreements or the relevant stock compensation plan governing such equity-based awards, if a Termination Event occurs during a Change in Control Period but prior to the effective date of the Change in Control, no unvested awards shall lapse or be forfeited solely on account of such Termination Event; provided, however, if the Change in Control has not occurred within the 6-month period following the Termination Event, all such unvested awards shall automatically lapse at the end of such 6-month period. In addition, if an award agreement specifies the manner and extent to which such award shall become accelerated in connection with a Change in Control, the terms of such award agreement will govern for purposes of determining the number of shares that will become vested in connection with a Termination Event during a Change in Control Period.

Other Continued Coverage Payment, and

Outplacement services for one year following the Termination Date

Payout Schedule The lesser of (i) 100% of the Benefit and (ii) twice the compensation limit then in effect under Section 401(a)(17) of the Code, payable within 20 business days following the Payment Confirmation Date, with the remainder, if any, payable 6 months and 1 day following the Termination Date.



# BENEFITS SCHEDULES
FOR THE SEAGATE TECHNOLOGY
EXECUTIVE SEVERANCE AND CHANGE IN CONTROL (CIC) PLAN

Tier: Non-US Salary Grade: 182 and 183

Location: Thailand

Benefits Payable in the Event of a Termination Event (involuntary termination):

## WITHOUT A CHANGE IN CONTROL

Base The number of months of Pay equal to the sum of (i) either (A) six months, for those Non-U.S. Eligible Executives with less than six years of service with the Parent or any of its subsidiaries prior to the Termination Event or (B) eight months for those Non-U.S. Eligible Executives with six or more years of service with the Parent or any of its subsidiaries prior to the Termination Event, plus, (ii) one additional month for each year of service over eight years, subject to an aggregate maximum of 24 months (“Thailand Severance Pay Amount”)

Bonus Prior Year Bonus, if applicable

Other Outplacement services for 18 months following the Termination Date

Payout Schedule The lesser of (i) 100% of the Thailand Severance Pay Amount and (ii) twice the compensation limit then in effect under Section 401(a)(17) of the Code, payable within 20 business days following the Payment Confirmation Date, with the remainder of the Thailand Severance Pay Amount, if any, payable 6 months and 1 day following the Termination Date.

## DURING A CHANGE IN CONTROL PERIOD

Note: No enhanced benefits due to a Termination Event occurring within a Change in Control Period shall be paid prior to the effective date of a Change in Control.

Base Thailand Severance Pay Amount (as defined above)

Bonus 18 months of Target Bonus

Equity Upon the later of (i) a Termination Event occurring during a Change in Control Period and (ii) immediately prior to the effective date of a Change in Control, other than as provided herein, there shall be full vesting of all unvested equity-based awards (whether or not granted prior to or following the adoption of this Plan). Notwithstanding the applicable provisions of the Eligible Executive’s award agreements or the relevant stock compensation plan governing such equity-based awards, if a Termination Event occurs during a Change in Control Period but prior to the effective date of the Change in Control, no unvested awards shall lapse or be forfeited solely on account of such Termination Event; provided, however, if the Change in Control has not occurred within the 6-month period following the Termination Event, all such unvested awards shall automatically lapse at the end of such 6-month period. In addition, if an award agreement specifies the manner and extent to which such award shall become accelerated in connection with a Change in Control, the terms of such award agreement will govern for purposes of determining the number of shares that will become vested in connection with a Termination Event during a Change in Control Period.

Other Outplacement services for 18 months following the Termination Date

Payout Schedule The lesser of (i) 100% of the Non-U.S. Benefit and (ii) twice the compensation limit then in effect under Section 401(a)(17) of the Code, payable within 20 business days following the Payment Confirmation Date, with the remainder, if any, payable 6 months and 1 day following the Termination Date.

Seagate Technology Confidential

BENEFITS SCHEDULES
FOR THE SEAGATE TECHNOLOGY
EXECUTIVE SEVERANCE AND CHANGE IN CONTROL (CIC) PLAN

Tier: Non-US Salary Grade: 180

Location: Thailand



## Benefits Payable in the Event of a Termination Event (involuntary termination):

## WITHOUT A CHANGE IN CONTROL

Base The number of months of Pay equal to the sum of (i) either (A) six months, for those Non-U.S. Eligible Executives with less than six years of service with the Parent or any of its subsidiaries prior to the Termination Event or (B) eight months for those Non-U.S. Eligible Executives with six or more years of service with the Parent or any of its subsidiaries prior to the Termination Event, plus, (ii) one additional month for each year of service over eight years, subject to an aggregate maximum of 24 months (“Thailand Severance Pay Amount”)

Bonus Prior Year Bonus, if applicable

Other Outplacement services for one year following the Termination Date

Payout Schedule The lesser of (i) 100% of the Thailand Severance Pay Amount and (ii) twice the compensation limit then in effect under Section 401(a)(17) of the Code, payable within 20 business days following the Payment Confirmation Date, with the remainder of the Thailand Severance Pay Amount, if any, payable 6 months and 1 day following the Termination Date.

## DURING A CHANGE IN CONTROL PERIOD

Note: No enhanced benefits due to a Termination Event occurring within a Change in Control Period shall be paid prior to the effective date of a Change in Control.

Base Thailand Severance Pay Amount (as defined above)

Bonus 12 months of Target Bonus

Equity Upon the later of (i) a Termination Event occurring during a Change in Control Period and (ii) immediately prior to the effective date of a Change in Control, other than as provided herein, there shall be full vesting of all unvested equity-based awards (whether or not granted prior to or following the adoption of this Plan). Notwithstanding the applicable provisions of the Eligible Executive’s award agreements or the relevant stock compensation plan governing such equity-based awards, if a Termination Event occurs during a Change in Control Period but prior to the effective date of the Change in Control, no unvested awards shall lapse or be forfeited solely on account of such Termination Event; provided, however, if the Change in Control has not occurred within the 6-month period following the Termination Event, all such unvested awards shall automatically lapse at the end of such 6-month period. In addition, if an award agreement specifies the manner and extent to which such award shall become accelerated in connection with a Change in Control, the terms of such award agreement will govern for purposes of determining the number of shares that will become vested in connection with a Termination Event during a Change in Control Period.

Other Outplacement services for one year following the Termination Date

Payout Schedule The lesser of (i) 100% of the Non-U.S. Benefit and (ii) twice the compensation limit then in effect under Section 401(a)(17) of the Code, payable within 20 business days following the Payment Confirmation Date, with the remainder, if any, payable 6 months and 1 day following the Termination Date.



# BENEFITS SCHEDULES
FOR THE
SEAGATE TECHNOLOGY
EXECUTIVE SEVERANCE AND CHANGE IN CONTROL (CIC) PLAN

Tier: Non-US Salary Grade: 182 and 183

Location: Malaysia

Benefits Payable in the Event of a Termination Event (involuntary termination):

## WITHOUT A CHANGE IN CONTROL

Base The number of months of Pay equal to the sum of (i) six months plus, (ii) one additional month for each year of service over six years, subject to an aggregate maximum of 24 months (“Malaysia Severance Pay Amount”)

Bonus Prior Year Bonus, if applicable

Other Outplacement services for 18 months following the Termination Date

Payout Schedule The lesser of (i) 100% of the Malaysia Severance Pay Amount and (ii) twice the compensation limit then in effect under Section 401(a)(17) of the Code, payable within 20 business days following the Payment Confirmation Date, with the remainder of the Malaysia Severance Pay Amount, if any, payable 6 months and 1 day following the Termination Date.

## DURING A CHANGE IN CONTROL PERIOD

Note: No enhanced benefits due to a Termination Event occurring within a Change in Control Period shall be paid prior to the effective date of a Change in Control.

Base Malaysia Severance Pay Amount (as defined above)

Bonus 18 months of Target Bonus

Equity Upon the later of (i) a Termination Event occurring during a Change in Control Period and (ii) immediately prior to the effective date of a Change in Control, other than as provided herein, there shall be full vesting of all unvested equity-based awards (whether or not granted prior to or following the adoption of this Plan). Notwithstanding the applicable provisions of the Eligible Executive’s award agreements or the relevant stock compensation plan governing such equity-based awards, if a Termination Event occurs during a Change in Control Period but prior to the effective date of the Change in Control, no unvested awards shall lapse or be forfeited solely on account of such Termination Event; provided, however, if the Change in Control has not occurred within the 6-month period following the Termination Event, all such unvested awards shall automatically lapse at the end of such 6-month period. In addition, if an award agreement specifies the manner and extent to which such award shall become accelerated in connection with a Change in Control, the terms of such award agreement will govern for purposes of determining the number of shares that will become vested in connection with a Termination Event during a Change in Control Period.

Other Outplacement services for 18 months following the Termination Date

Payout Schedule The lesser of (i) 100% of the Non-U.S. Benefit and (ii) twice the compensation limit then in effect under Section 401(a)(17) of the Code, payable within 20 business days following the Payment Confirmation Date, with the remainder, if any, payable 6 months and 1 day following the Termination Date.



# BENEFITS SCHEDULES
FOR THE SEAGATE TECHNOLOGY
EXECUTIVE SEVERANCE AND CHANGE IN CONTROL (CIC) PLAN

Tier: Non-US Salary Grade: 180

Location: Malaysia

Benefits Payable in the Event of a Termination Event (involuntary termination):

## WITHOUT A CHANGE IN CONTROL

Base The number of months of Pay equal to the sum of (i) six months plus, (ii) one additional month for each year of service over six years, subject to an aggregate maximum of 24 months (“Malaysia Severance Pay Amount”)

Bonus Prior Year Bonus, if applicable

Other Outplacement services for one year following the Termination Date

Payout Schedule The lesser of (i) 100% of the Malaysia Severance Pay Amount and (ii) twice the compensation limit then in effect under Section 401(a)(17) of the Code, payable within 20 business days following the Payment Confirmation Date, with the remainder of the Malaysia Severance Pay Amount, if any, payable 6 months and 1 day following the Termination Date.

## DURING A CHANGE IN CONTROL PERIOD

Note: No enhanced benefits due to a Termination Event occurring within a Change in Control Period shall be paid prior to the effective date of a Change in Control.

Base Malaysia Severance Pay Amount (as defined above)

Bonus 12 months of Target Bonus

Equity Upon the later of (i) a Termination Event occurring during a Change in Control Period and (ii) immediately prior to the effective date of a Change in Control, other than as provided herein, there shall be full vesting of all unvested equity-based awards (whether or not granted prior to or following the adoption of this Plan). Notwithstanding the applicable provisions of the Eligible Executive’s award agreements or the relevant stock compensation plan governing such equity-based awards, if a Termination Event occurs during a Change in Control Period but prior to the effective date of the Change in Control, no unvested awards shall lapse or be forfeited solely on account of such Termination Event; provided, however, if the Change in Control has not occurred within the 6-month period following the Termination Event, all such unvested awards shall automatically lapse at the end of such 6-month period. In addition, if an award agreement specifies the manner and extent to which such award shall become accelerated in connection with a Change in Control, the terms of such award agreement will govern for purposes of determining the number of shares that will become vested in connection with a Termination Event during a Change in Control Period.

Other Outplacement services for one year following the Termination Date

Payout Schedule The lesser of (i) 100% of the Non-U.S. Benefit and (ii) twice the compensation limit then in effect under Section 401(a)(17) of the Code, payable within 20 business days following the Payment Confirmation Date, with the remainder, if any, payable 6 months and 1 day following the Termination Date.

Seagate Technology Confidential

## BENEFITS SCHEDULES
FOR THE SEAGATE TECHNOLOGY
EXECUTIVE SEVERANCE AND CHANGE IN CONTROL (CIC) PLAN

Tier: Non-US Salary Grade: 182 and 183

Location: Singapore

Benefits Payable in the Event of a Termination Event (involuntary termination):



<table><tr><td>Base</td><td>The number of months of Pay equal to the sum of (i) six months plus, (ii) one additional month for each year of service over six years, subject to an aggregate maximum of 24 months (“Singapore Severance Pay Amount”)</td></tr><tr><td>Bonus</td><td>Prior Year Bonus, if applicable</td></tr><tr><td>Other</td><td>Outplacement services for 18 months following the Termination Date</td></tr><tr><td>Payout Schedule</td><td>The lesser of (i) 100% of the Singapore Severance Pay Amount and (ii) twice the compensation limit then in effect under Section 401(a)(17) of the Code, payable within 20 business days following the Payment Confirmation Date, with the remainder of the Singapore Severance Pay Amount, if any, payable 6 months and 1 day following the Termination Date.</td></tr><tr><td colspan="2">DURING A CHANGE IN CONTROL PERIOD</td></tr><tr><td colspan="2">Note: No enhanced benefits due to a Termination Event occurring within a Change in Control Period shall be paid prior to the effective date of a Change in Control.</td></tr><tr><td>Base</td><td>Singapore Severance Pay Amount (as defined above)</td></tr><tr><td>Bonus</td><td>18 months of Target Bonus</td></tr><tr><td>Equity</td><td>Upon the later of (i) a Termination Event occurring during a Change in Control Period and (ii) immediately prior to the effective date of a Change in Control, other than as provided herein, there shall be full vesting of all unvested equity-based awards (whether or not granted prior to or following the adoption of this Plan). Notwithstanding the applicable provisions of the Eligible Executive’s award agreements or the relevant stock compensation plan governing such equity-based awards, if a Termination Event occurs during a Change in Control Period but prior to the effective date of the Change in Control, no unvested awards shall lapse or be forfeited solely on account of such Termination Event; provided, however, if the Change in Control has not occurred within the 6-month period following the Termination Event, all such unvested awards shall automatically lapse at the end of such 6-month period. In addition, if an award agreement specifies the manner and extent to which such award shall become accelerated in connection with a Change in Control, the terms of such award agreement will govern for purposes of determining the number of shares that will become vested in connection with a Termination Event during a Change in Control Period.</td></tr><tr><td>Other</td><td>Outplacement services for 18 months following the Termination Date</td></tr><tr><td>Payout Schedule</td><td>The lesser of (i) 100% of the Non-U.S. Benefit and (ii) twice the compensation limit then in effect under Section 401(a)(17) of the Code, payable within 20 business days following the Payment Confirmation Date, with the remainder, if any, payable 6 months and 1 day following the Termination Date.</td></tr></table>



# BENEFITS SCHEDULES
FOR THE SEAGATE TECHNOLOGY
EXECUTIVE SEVERANCE AND CHANGE IN CONTROL (CIC) PLAN

Tier: Non-US Salary Grade: 180

Location: Singapore

Benefits Payable in the Event of a Termination Event (involuntary termination):

## WITHOUT A CHANGE IN CONTROL

Base The number of months of Pay equal to the sum of (i) six months plus, (ii) one additional month for each year of service over six years, subject to an aggregate maximum of 24 months (“Singapore Severance Pay Amount”)

Bonus Prior Year Bonus, if applicable

Other Outplacement services for one year following the Termination Date

Payout Schedule The lesser of (i) 100% of the Singapore Severance Pay Amount and (ii) twice the compensation limit then in effect under Section 401(a)(17) of the Code, payable within 20 business days following the Payment Confirmation Date, with the remainder of the Singapore Severance Pay Amount, if any, payable 6 months and 1 day following the Termination Date.

## DURING A CHANGE IN CONTROL PERIOD

Note: No enhanced benefits due to a Termination Event occurring within a Change in Control Period shall be paid prior to the effective date of a Change in Control.

Base Singapore Severance Pay Amount (as defined above)

Bonus 12 months of Target Bonus

Equity Upon the later of (i) a Termination Event occurring during a Change in Control Period and (ii) immediately prior to the effective date of a Change in Control, other than as provided herein, there shall be full vesting of all unvested equity-based awards (whether or not granted prior to or following the adoption of this Plan). Notwithstanding the applicable provisions of the Eligible Executive’s award agreements or the relevant stock compensation plan governing such equity-based awards, if a Termination Event occurs during a Change in Control Period but prior to the effective date of the Change in Control, no unvested awards shall lapse or be forfeited solely on account of such Termination Event; provided, however, if the Change in Control has not occurred within the 6-month period following the Termination Event, all such unvested awards shall automatically lapse at the end of such 6-month period. In addition, if an award agreement specifies the manner and extent to which such award shall become accelerated in connection with a Change in Control, the terms of such award agreement will govern for purposes of determining the number of shares that will become vested in connection with a Termination Event during a Change in Control Period.

Other Outplacement services for one year following the Termination Date

Payout Schedule The lesser of (i) 100% of the Non-U.S. Benefit and (ii) twice the compensation limit then in effect under Section 401(a)(17) of the Code, payable within 20 business days following the Payment Confirmation Date, with the remainder, if any, payable 6 months and 1 day following the Termination Date.



# BENEFITS SCHEDULES
FOR THE SEAGATE TECHNOLOGY
EXECUTIVE SEVERANCE AND CHANGE IN CONTROL (CIC) PLAN

Tier: Non-US Salary Grade: 182 and 183

Location: United Kingdom

Benefits Payable in the Event of a Termination Event (involuntary termination):

## WITHOUT A CHANGE IN CONTROL

Base The number of months of Pay equal to the sum of (i) six months plus, (ii) one additional month for each year of service over six years, subject to an aggregate maximum of 18 months (“U.K. Severance Pay Amount”)

Bonus Prior Year Bonus, if applicable

Other Outplacement services for 18 months following the Termination Date

Payout Schedule The lesser of (i) 100% of the U.K. Severance Pay Amount and (ii) twice the compensation limit then in effect under Section 401(a)(17) of the Code, payable within 20 business days following the Payment Confirmation Date, with the remainder of the U.K. Severance Pay Amount, if any, payable 6 months and 1 day following the Termination Date.

## DURING A CHANGE IN CONTROL PERIOD

Note: No enhanced benefits due to a Termination Event occurring within a Change in Control Period shall be paid prior to the effective date of a Change in Control.

Base U.K. Severance Pay Amount (as defined above)

Bonus 18 months of Target Bonus

Equity Upon the later of (i) a Termination Event occurring during a Change in Control Period and (ii) immediately prior to the effective date of a Change in Control, other than as provided herein, there shall be full vesting of all unvested equity-based awards (whether or not granted prior to or following the adoption of this Plan). Notwithstanding the applicable provisions of the Eligible Executive’s award agreements or the relevant stock compensation plan governing such equity-based awards, if a Termination Event occurs during a Change in Control Period but prior to the effective date of the Change in Control, no unvested awards shall lapse or be forfeited solely on account of such Termination Event; provided, however, if the Change in Control has not occurred within the 6-month period following the Termination Event, all such unvested awards shall automatically lapse at the end of such 6-month period. In addition, if an award agreement specifies the manner and extent to which such award shall become accelerated in connection with a Change in Control, the terms of such award agreement will govern for purposes of determining the number of shares that will become vested in connection with a Termination Event during a Change in Control Period.

Other Outplacement services for 18 months following the Termination Date

Payout Schedule The lesser of (i) 100% of the Non-U.S. Benefit and (ii) twice the compensation limit then in effect under Section 401(a)(17) of the Code, payable within 20 business days following the Payment Confirmation Date, with the remainder, if any, payable 6 months and 1 day following the Termination Date.



# BENEFITS SCHEDULES
FOR THE SEAGATE TECHNOLOGY
EXECUTIVE SEVERANCE AND CHANGE IN CONTROL (CIC) PLAN

Tier: Non-US Salary Grade: 180

Location: United Kingdom

Benefits Payable in the Event of a Termination Event (involuntary termination):

## WITHOUT A CHANGE IN CONTROL

Base The number of months of Pay equal to the sum of (i) six months plus, (ii) one additional month for each year of service over six years, subject to an aggregate maximum of 18 months (“U.K. Severance Pay Amount”)

Bonus Prior Year Bonus, if applicable

Other Outplacement services for one year following the Termination Date

Payout Schedule The lesser of (i) 100% of the U.K. Severance Pay Amount and (ii) twice the compensation limit then in effect under Section 401(a)(17) of the Code, payable within 20 business days following the Payment Confirmation Date, with the remainder of the U.K. Severance Pay Amount, if any, payable 6 months and 1 day following the Termination Date.

## DURING A CHANGE IN CONTROL PERIOD

Note: No enhanced benefits due to a Termination Event occurring within a Change in Control Period shall be paid prior to the effective date of a Change in Control.

Base U.K. Severance Pay Amount (as defined above)

Bonus 12 months of Target Bonus

Equity Upon the later of (i) a Termination Event occurring during a Change in Control Period and (ii) immediately prior to the effective date of a Change in Control, other than as provided herein, there shall be full vesting of all unvested equity-based awards (whether or not granted prior to or following the adoption of this Plan). Notwithstanding the applicable provisions of the Eligible Executive’s award agreements or the relevant stock compensation plan governing such equity-based awards, if a Termination Event occurs during a Change in Control Period but prior to the effective date of the Change in Control, no unvested awards shall lapse or be forfeited solely on account of such Termination Event; provided, however, if the Change in Control has not occurred within the 6-month period following the Termination Event, all such unvested awards shall automatically lapse at the end of such 6-month period. In addition, if an award agreement specifies the manner and extent to which such award shall become accelerated in connection with a Change in Control, the terms of such award agreement will govern for purposes of determining the number of shares that will become vested in connection with a Termination Event during a Change in Control Period.

Other Outplacement services for one year following the Termination Date

Payout Schedule The lesser of (i) 100% of the Non-U.S. Benefit and (ii) twice the compensation limit then in effect under Section 401(a)(17) of the Code, payable within 20 business days following the Payment Confirmation Date, with the remainder, if any, payable 6 months and 1 day following the Termination Date.



# SEAGATE TECHNOLOGY PUBLIC LIMITED COMPANY
AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN

## 1. PURPOSE

The purpose of this Plan is to provide an opportunity for Employees of Seagate Technology plc, an Irish company and its Designated Subsidiaries to purchase Ordinary Shares and thereby to have an additional incentive to contribute to the prosperity of the Corporation. It is the intention of the Corporation that the Plan qualify as an “Employee Stock Purchase Plan” under Section 423 of the Code and the Plan shall be administered in accordance with this intent. In addition, the Plan authorizes the grant of options pursuant to sub-plans or special rules adopted by the Committee designed to achieve desired tax or other objectives in particular locations outside of the United States, which sub-plans shall not be required to comply with the requirements of Section 423 of the Code or all of the specific provisions of the Plan, including but not limited to terms relating to eligibility, Offering Periods, Purchase Periods or Purchase Price.

## 2. DEFINITIONS

2.1 “Applicable Law” shall mean the legal requirements relating to the administration of an employee stock purchase plan under applicable Irish corporate laws, U.S. federal and applicable state laws (including the Code) and any stock exchange rules or regulations and the applicable laws governing the grant of options and the issuance of shares under an employee stock purchase plan in any country or jurisdiction where the Plan will be offered, as such laws, rules, regulations and requirements shall be in place from time to time.

2.2 “Beneficial Owner” means the definition given in Rule 13d-3 promulgated under the Exchange Act.

2.3 “Board” shall mean the Board of Directors of the Corporation.

2.4 “Change of Control” shall mean the consummation or effectiveness of any of the following events:

(i) The sale, exchange, lease or other disposition of all or substantially all of the assets of the Corporation to a person or group of related persons, as such terms are defined or described in Sections 3(a)(9) and 13(d)(3) of the Exchange Act;

(ii) A merger, reorganization, recapitalization, consolidation or other similar transaction involving the Corporation in which the voting securities of the Corporation owned by the shareholders of the Corporation immediately prior to such transaction do not represent



more than fifty percent (50%) of the total voting power of the surviving controlling entity outstanding immediately after such transaction;

(iii) Any person or group of related persons, as such terms are defined or described in Sections 3(a)(9) and 13(d)(3) of the Exchange Act, is or becomes the Beneficial Owner, directly or indirectly, of more than 50% of the total voting power of the voting securities of the Corporation (including by way of merger, takeover (including an acquisition by means of a scheme of arrangement), consolidation or otherwise); or

(iv) During any period of two (2) consecutive years, individuals who at the beginning of such period constituted the Board (together with any new directors whose election by such Board or whose nomination for election by the shareholders of the Corporation was approved by a vote of a majority of the directors of the Corporation then still in office, who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board then in office.

Notwithstanding the foregoing, a restructuring of the Corporation for the purpose of changing the domicile of the Corporation (including, but not limited to, any change in the structure of the Corporation resulting from the process of moving its domicile between jurisdictions), reincorporation of the Corporation or other similar transaction involving the Corporation (a “Restructuring Transaction”) will not constitute a Change of Control if, immediately after the Restructuring Transaction, the shareholders of the Corporation immediately prior to such Restructuring Transaction represent, directly or indirectly, more than fifty percent (50%) of the total voting power of the surviving entity.

“Code” shall mean the U.S. Internal Revenue Code of 1986, as amended. Any reference to a section of the Code herein shall be a reference to any successor or amended section of the Code.

“Committee” shall mean the committee appointed by the Board in accordance with Section 15 of the Plan.

“Companies Act” shall mean the Companies Act 1963 of Ireland.

“Compensation” shall mean an Employee’s base cash compensation and commissions, but shall exclude such items as allowances, differentials, bonuses or premiums such as those for working shifts or overtime, payments for incentive compensation, incentive payments, bonuses,



income from the exercise, vesting and/or the sale, exchange or other disposition of a compensatory share award granted to the Employee by the Corporation or a Designated Subsidiary, and other forms of extraordinary compensation. The Committee shall have the authority to determine and approve all forms of pay to be included in the definition of Compensation and may change the definition on a prospective basis.

2.9 “Corporation” shall mean Seagate Technology plc, a public company incorporated under the laws of the Republic of Ireland with limited liability under registered number 480010, or any successor thereto.

2.10 “Designated Subsidiary” shall mean a Subsidiary that has been designated by the Committee in its sole discretion as eligible to participate in the Plan with respect to its Employees.

2.11 “Effective Date” shall mean the date on which the registration statement on Form S-1 filed with the U.S. Securities and Exchange Commission pursuant to Rule 424 under the Securities Act for the initial public offering of Seagate Technology common stock (the “Registration Statement”) became effective.

2.12 “Employee” shall mean an individual classified as an employee (within the meaning of Code Section 3401(c) and the regulations thereunder) by the Corporation or a Designated Subsidiary on the Corporation’s or such Designated Subsidiary’s payroll records. Individuals classified as independent contractors, consultants, advisers, or members of the Board or the board of directors of a Designated Subsidiary are not considered “Employees” by virtue of such station.

2.13 “Exchange Act” shall mean the U.S. Securities Exchange Act of 1934, as amended.

2.14 “Fair Market Value” shall mean, as of any date of determination (i.e., an Offering Date or Purchase Date, as appropriate), the value of a Share determined as follows: (i) if the Ordinary Shares are listed on any established stock exchange (including the New York Stock Exchange) or traded on the NASDAQ Global Select Market, the Fair Market Value of a Share shall be the closing per-share sales price of such Shares as reported on such date on the Composite Tape of the principal national securities exchange on which such Shares are listed or admitted to trading or, if no Composite Tape exists for such national securities exchange on such date, then on the principal national securities exchange on which such Shares are listed or admitted to trading; or (ii) if the Shares are not listed or admitted to trading on a national securities exchange, then the Fair Market Value of a Share shall be determined in good faith by the Board, and, to the extent appropriate, based on the application of a reasonable valuation method. For purposes of the Offering Date under the first Offering Period,



the Fair Market Value of a share of Seagate Technology common stock shall be the initial price to the public as set forth in the final prospectus included with the Registration Statement.

2.15 “Offering Date” shall mean the first Trading Day of an Offering Period under the Plan; provided that the Offering Date of the first Offering Period will be the Effective Date.

2.16 “Offering Period” shall mean a period of approximately twelve (12) months during which an option granted pursuant to the Plan may be exercised; provided, however, that effective for Offering Periods commencing on or after February 1, 2006, the term “Offering Period” shall mean a period of approximately six (6) months during which an option granted pursuant to the Plan may be exercised. For Offering Periods that commence prior to February 1, 2006, the Plan shall be implemented by a series of Offering Periods of approximately twelve (12) months duration, with new Offering Periods commencing on the first Trading Day on or after February 1 and August 1 of each year and ending on the last Trading Day in the twelve month period ending on January 31 and July 31 of the subsequent year; provided that the first Offering Period shall commence on the Effective Date and shall end on the last Trading Day on or before January 31, 2004. Effective for Offering Periods that commence on or after February 1, 2006, the Plan shall be implemented by a series of Offering Periods of approximately six (6) months duration, with new Offering Periods commencing on the first Trading Day on or after February 1 and August 1 of each year and ending on the last Trading Day in the six-month period ending on the next July 31 and January 31, respectively. The duration and timing of Offering Periods may be changed or modified by the Committee from time to time.

2.17 “Offering Price” shall mean the Fair Market Value of a Share on the Offering Date of an Offering Period.

2.18 “Officer” shall mean a person who is an officer of the Corporation within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

2.19 “Ordinary Share” or “Share” means an ordinary share of the Corporation, nominal value US$0.00001.

2.20 “Participant” shall mean a participant in the Plan as described in Section 5 of the Plan.

2.21 “Plan” shall mean this Employee Stock Purchase Plan, as amended and restated.



“Purchase Date” shall mean the last Trading Day of each Purchase Period.

“Purchase Period” shall mean, with respect to Offering Periods that commence on prior to February 1, 2006, the period of approximately six (6) months commencing after one Purchase Date and ending with the next Purchase Date, with new Purchase Periods commencing on the first Trading Day on or after February 1 and August 1 of each year and ending on the last Trading Day in the six-month period ending on the next July 31 and January 31, respectively; provided that the first Purchase Period shall commence on the Effective Date and shall end at the completion of the seventh complete calendar month following the Effective Date unless otherwise determined by the Committee. The second Purchase Period of the first Offering Period shall begin on the first Trading Day following the end of the first Purchase Period and shall end on the last Trading Day on or before January 31, 2004. Subsequent Purchase Periods, if any, shall run consecutively after the termination of the preceding Purchase Period. Notwithstanding anything herein to the contrary, effective for Offering Periods that commence on or after February 1, 2006, “Purchase Period” shall have the same meaning as the term “Offering Period.” The duration and timing of Purchase Periods may be changed or modified by the Committee from time to time.

2.24 “Purchase Price” shall have the meaning set out in Section 8.2.

2.25 “Securities Act” shall mean the U.S. Securities Act of 1933, as amended.

2.26 “Shareowner” shall mean a record holder of Ordinary Shares entitled to vote such Shares under the Corporation’s by-laws.

2.27 “Subsidiary” shall mean any entity treated as a corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, within the meaning of Code Section 424(f), whether or not such corporation now exists or is hereafter organized or acquired by the Corporation or a Subsidiary, which is also a subsidiary within the meaning of Section 155 of the Companies Act.

2.28 “Trading Day” shall mean a day on which U.S. national stock exchanges and the national market system are open for trading and the Ordinary Shares are being publicly traded on one or more of such exchanges or markets.

## 3. ELIGIBILITY

3.1 Any individual who is an Employee on an Offering Date shall be eligible to participate in the Plan with respect to the Offering Period commencing on such Offering Date. The Committee may establish administrative rules requiring that



an individual be an Employee for some minimum period (not to exceed 30 days) prior to an Offering Date to be eligible to participate with respect to the Offering Period beginning on that Offering Date.

3.2 The Committee may determine that a designated group of highly compensated Employees is ineligible to participate in the Plan so long as the excluded category fits within the definition of “highly compensated employee” in Code Section 414(q).

3.3 No Employee may participate in the Plan if immediately after an option is granted the Employee owns or is considered to own (within the meaning of Code Section 424(d)) Ordinary Shares, including Shares which the Employee may purchase by conversion of convertible securities or under outstanding options granted by the Corporation, possessing five percent (5%) or more of the total combined voting power or value of all classes of securities of the Corporation or of any of its Subsidiaries.

3.4 Employees who are citizens or residents of a non-U.S. jurisdiction (without regard to whether they also are citizens or residents of the United States or resident aliens within the meaning of Section 7701(b)(1)(A) of the Code) may be excluded from participation in the Plan if the participation of such Employees is prohibited under the laws of the applicable jurisdiction or if complying with the laws of the applicable jurisdiction would cause the Plan to violate Code Section 423 (or to the extent permitted under Code Section 423). In the case of any sub-plan adopted pursuant to Section 16 which is not designed to qualify under Code Section 423, Employees may be excluded from participation in the Plan if the Committee has determined that participation of such Employees is not advisable or practicable.

3.5 All Employees who participate in the Plan shall have the same rights and privileges under the Plan, except for differences that may be mandated by local law and that are consistent with Code Section 423(b)(5); provided that individuals participating in a sub-plan adopted pursuant to Section 16 which is not designed to qualify under Code Section 423 need not have the same rights and privileges as Employees participating in the Code Section 423 Plan.

3.6 Employees may not participate in more than one Offering Period at a time.

## 4. OFFERING PERIODS AND PURCHASE PERIODS

4.1 Offering Periods. With respect to Offering Periods commencing prior to February 1, 2006, the Plan shall generally be implemented by a series of twelve (12) month Offering Periods with new Offering Periods commencing on the first Trading Day on or after February 1 and August 1 and ending on the last Trading Day in the twelve month periods ending on January 31 and July 31 of the next calendar year, respectively, or on such other date as the Committee shall determine. The first Offering Period shall commence on the Effective Date and



shall end on the last Trading Day on or before January 31, 2004. With respect to Offering Periods commencing on or after February 1, 2006, the Plan shall generally be implemented by a series of six (6) month Offering Periods with new Offering Periods commencing on the first Trading Day on or after February 1 and August 1 and ending on the last Trading Day in the six-month periods ending on the next July 31 and January 31, respectively, or on such other date as the Committee shall determine, and continuing thereafter until the Plan is terminated pursuant to Section 14 hereof. The Committee shall have the authority to change the frequency and/or duration of Offering Periods (including the commencement dates thereof) with respect to future offerings if such change is announced at least five (5) days prior to the scheduled beginning of the first Offering Period to be affected thereafter.

4.2 Purchase Periods. With respect to Offering Periods commencing prior to February 1, 2006, each Offering Period shall generally consist of two (2) consecutive Purchase Periods of six (6) months' duration, with new Purchase Periods commencing on the first Trading Day on or after February 1 and August 1 of each year and ending on the last Trading Day in the six-month period ending on the next July 31 and January 31, respectively. With respect to Offering Periods commencing on or after February 1, 2006, each Offering Period shall generally consist of one (1) Purchase Period that runs concurrently with the Offering Period. The last Trading Day of each Purchase Period shall be the “Purchase Date” for such Purchase Period; provided that the first Purchase Period shall commence on the Effective Date and shall end at the completion of the seventh complete calendar month following the Effective Date unless otherwise determined by the Committee. The second Purchase Period of the first Offering Period shall begin on the first Trading Day following the end of the first Purchase Period and shall end on the last Trading Day on or before January 31, 2004. Subsequent Purchase Periods, if any, shall run consecutively after the termination of the preceding Purchase Period. The Committee shall have the power to change the duration and/or frequency of Purchase Periods with respect to future purchases if such change is announced at least five (5) days prior to the scheduled beginning of the first Purchase Period to be affected.

## 5. PARTICIPATION

5.1 An Employee who is eligible to participate in the Plan in accordance with its terms at the beginning of an Offering Period shall automatically receive an option in accordance with Section 8.1 and may become a Participant by completing and submitting, on or before the date prescribed by the Committee with respect to a given Offering Period, a completed payroll deduction authorization and Plan enrollment form provided by the Corporation or by following an electronic or other enrollment process as prescribed by the Committee. An eligible Employee may authorize payroll deductions at the rate of any whole percentage of the Employee’s Compensation, not to exceed ten percent (10%) (or such other percentage as the Committee may establish from time to time before an Offering Date) of such Employee’s Compensation on each payday



during the Offering Period. All payroll deductions will be held in a general corporate account or a trust account, unless otherwise required by local law. No interest shall be paid or credited to the Participant with respect to such payroll deductions, unless otherwise required by local law. The Corporation shall maintain a separate bookkeeping account for each Participant under the Plan and the amount of each Participant’s payroll deductions shall be credited to such account. A Participant may not make any additional payments into such account, unless payroll deductions are prohibited under local law, in which case the provisions of Section 5.2 of the Plan shall apply.

5.2 Notwithstanding any other provisions of the Plan to the contrary, in locations where local law prohibits payroll deductions, an eligible Employee may elect to participate through contributions to his or her account under the Plan in a form acceptable to the Committee. In such event, any such Employees shall be deemed to be participating in a sub-plan, unless the Committee otherwise expressly provides that such Employees shall be treated as participating in the Plan.

5.3 Under procedures and at times established by the Committee, a Participant may withdraw from the Plan during a Purchase Period, by completing and filing a new payroll deduction authorization and Plan enrollment form with the Corporation or by following electronic or other procedures prescribed by the Committee. If a Participant withdraws from the Plan during a Purchase Period, his or her accumulated payroll deductions will be refunded to the Participant without interest (unless payment of interest is required by local law), his or her right to participate in the current Offering Period will be automatically terminated and no further payroll deductions for the purchase of Ordinary Shares will be made during the Offering Period. The Committee may establish rules pertaining to the timing of withdrawals, limiting the frequency with which Participants may withdraw and re-enroll in the Plan and may impose a waiting period on Participants wishing to re-enroll following withdrawal.

5.4 A Participant may change his or her rate of contribution through payroll deductions only during an open enrollment period or such other times specified by the Committee by filing a new payroll deduction authorization and Plan enrollment form or by following electronic or other procedures prescribed by the Committee. If a Participant has not followed such procedures to change the rate of contribution, the rate of contribution shall continue at the originally elected rate throughout the Purchase Period and future Purchase Periods (including Purchase Periods of subsequent Offering Periods). Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code, the Committee may reduce a Participant’s payroll deductions to zero percent (0%) at any time during a Purchase Period scheduled to end during the current calendar year. Payroll deductions shall re-commence at the rate provided in such Participant’s enrollment form at the beginning of the first Purchase Period which is scheduled to end in the following calendar year, unless terminated by the Participant as provided in Section 5.3.



## 6. TERMINATION OF EMPLOYMENT; CHANGES IN EMPLOYMENT

6.1 Termination. In the event any Participant terminates employment with the Corporation and its Designated Subsidiaries for any reason (including death) prior to the expiration of a Purchase Period, the Participant’s participation in the Plan shall terminate and all amounts credited to the Participant’s account shall be paid to the Participant or, in the case of death, to the Participant’s heirs or estate, without interest. Whether a termination of employment has occurred shall be determined by the Committee. If a Participant’s termination of employment occurs within a certain period of time as specified by the Committee (not to exceed 30 days) prior to the Purchase Date of the Purchase Period then in progress, his or her option for the purchase of Ordinary Shares will be exercised on such Purchase Date in accordance with Section 9 as if such Participant were still employed by the Corporation. Following the purchase of Shares on such Purchase Date, the Participant’s participation in the Plan shall terminate and all remaining amounts credited to the Participant’s account shall be paid to the Participant or, in the case of death, to the Participant’s heirs or estate, without interest (unless payment of interest is required by local law).

6.2 Leaves of Absence. The Committee may also establish rules regarding when leaves of absence or changes of employment status will be considered to be a termination of employment, and the Committee may establish termination of employment procedures for this Plan that are independent of similar rules established under other benefit plans of the Corporation and its Subsidiaries, provided, however, that such procedures are not in conflict with the requirements of Section 423 of the Code.

6.3 Transfers. If a Participant transfers employment between the Corporation and a Designated Subsidiary participating in the 423 Plan (as set forth in Appendix A to the Plan) or between Designated Subsidiaries participating in the 423 Plan, his or her participation in the Plan shall continue unless and until otherwise terminated in accordance with the Plan. Similarly, if a Participant transfers employment between Designated Subsidiaries participating in a Non-423 Sub-Plan (as set forth in Appendix A to the Plan), his or her participation in the Plan shall continue unless and until otherwise terminated in accordance with the Plan.

If a Participant transfers employment from the Corporation or a Designated Subsidiary participating in the 423 Plan to a Designated Subsidiary participating in a Non-423 Sub-Plan, his or her participation in the Plan shall continue, provided, however, that such participation will be under the applicable Non-423 Sub-Plan as of the date of such transfer and all of the Participant’s accumulated payroll deductions (whether taken while the Participant was employed by the Corporation or a Designated Subsidiary participating in the 423 Plan or while the Participant is employed by a Designated Subsidiary participating in a Non-423 Sub-Plan) shall be used to purchase Shares under the applicable Non-423 Sub-



Plan, subject to the Participant’s right to withdraw from the Plan in accordance with the withdrawal procedures in effect at such time.

If a Participant transfers employment from a Designated Subsidiary participating in a Non-423 Sub-Plan to the Corporation or a Designated Subsidiary participating in the 423 Plan, any accumulated payroll deductions taken while the Participant was employed by a Designated Subsidiary participating in a Non-423 Sub-Plan shall be used to purchase Shares under the applicable Non-423 Sub-Plan on the next Purchase Date following such transfer; however, no new payroll deductions shall be taken for the remainder of the Purchase Period in which the transfer occurs, and as of the next Offering Date following such transfer, the Participant shall participate in the 423 Plan and payroll deductions shall automatically resume and be used to purchase Shares under the 423 Plan, subject to the Participant’s right to withdraw from the Plan in accordance with the withdrawal procedures in effect at such time.

Notwithstanding the foregoing provisions of this Section 6.3, the Committee may establish additional and/or different rules to govern transfers of employment among the Corporation and any Designated Subsidiary, consistent with any applicable requirements of Code Section 423 and the terms of the Plan.

## 7. SHARES

Subject to adjustment as set forth in Section 11, the maximum number of Ordinary Shares, which may be issued pursuant to the Plan shall be fifty million (50,000,000) Shares. Subject to adjustment as set forth in Section 11, the maximum number of Shares that may be granted collectively to all Participants within any given Purchase Period is one and one-half million (1,500,000) Shares, unless and until the Board determines otherwise with respect to a Purchase Period. If, on a given Purchase Date, the number of Shares with respect to which options are to be exercised exceeds either maximum, the Corporation shall make pro rata allocation of the Shares remaining available for purchase in as uniform a manner as shall be practicable and as it shall determine to be equitable. The Shares subject to the Plan may be unissued Shares or reacquired Shares, bought on the market or otherwise.

## 8. OFFERING

8.1 On the Offering Date of each Offering Period, each eligible Employee, whether or not such Employee has elected to participate as provided in Section 5.1, shall be granted an option to purchase that number of whole Shares, not to exceed one thousand (1,000) Shares (or such other number of Shares as determined by the Committee and subject to adjustment as set forth in Section 11), which may be purchased with the payroll deductions accumulated on behalf of such Employee during each Purchase Period at the purchase price specified in Section 8.2 below, subject to the additional limitation that no Employee participating in the Section 423 Plan shall be granted an option to purchase Shares

under the Plan if such option would permit his or her rights to purchase Shares under all employee stock purchase plans (described in Section 423 of the Code) of the Corporation and its Subsidiaries to accrue at a rate which exceeds U.S. twenty-five thousand dollars (U.S. $25,000) of the Fair Market Value of such Shares (determined at the time such option is granted) for each calendar year in which such option is outstanding at any time. For purposes of the Plan, an option is “granted” on a Participant’s Offering Date. An option will expire upon the earlier to occur of (i) the termination of a Participant’s participation in the Plan or such Offering Period, (ii) the grant of an option to such Participant on a subsequent Offering Date, or (iii) the termination of the Offering Period. This Section 8.1 shall be interpreted so as to comply with Code Section 423(b)(8).

8.2 The Purchase Price under each option shall be with respect to a Purchase Period the lower of (i) a percentage (not less than eighty-five percent (85%)) established by the Committee (“Designated Percentage”) of the Offering Price, or (ii) the Designated Percentage of the Fair Market Value of a Share on the Purchase Date on which the Shares are purchased; provided that the Purchase Price may be adjusted by the Committee pursuant to Sections 11 or 12 in accordance with Section 424(a) of the Code. The Committee may change the Designated Percentage with respect to any future Offering Period, but not to below eighty-five percent (85%), and the Committee may determine with respect to any prospective Offering Period that the purchase price shall be the Designated Percentage of the Fair Market Value of a Share on the Purchase Date.

## 9. PURCHASE OF SHARES

Unless a Participant withdraws from the Plan as provided in Section 5.3 or except as provided in Sections 12 or 14 hereof, on the last Trading Day of each Purchase Period, a Participant’s option shall be exercised automatically for the purchase of that number of whole Shares which the accumulated payroll deductions credited to the Participant’s account at that time shall purchase at the applicable price specified in Section 8.2.

At the time the Shares are purchased or at the time some or all of the Shares issued under the Plan are disposed of (or at any other time that a taxable event related to the Plan occurs), the Participant must make adequate provision for any withholding obligation of the Corporation or a Designated Subsidiary with respect to federal, state, local and foreign income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to participation in the Plan and legally applicable to the Participant (including any amount deemed by the Committee, in its sole discretion, to be an appropriate charge to Participant even if legally applicable to the Corporation or the Participant’s employer). At any time, the Corporation or the Participant’s employer may withhold from the Participant’s wages or other cash compensation the amount necessary for the Corporation or the Participant’s employer to meet applicable withholding obligations, including any withholding required to make available to the Corporation or the Participant’s






attributable to the sale or early disposition of the Shares by the Participant. In addition or in the alternative, the Corporation or the Participant’s employer may withhold from the proceeds of the sale of Shares or by any other method of withholding the Corporation or the Participant’s employer deems appropriate.

## 10. PAYMENT AND DELIVERY

As soon as practicable after the exercise of an option, the Corporation shall deliver to the Participant a record of the Ordinary Shares purchased and the balance of any amount of payroll deductions credited to the Participant's account not used for the purchase, except as specified below. The Committee may permit or require that Shares be deposited directly with a broker designated by the Committee or to a designated agent of the Corporation, and the Committee may utilize electronic or automated methods of share transfer. The Committee may require that Shares be retained with such broker or agent for a designated period of time and/or may establish other procedures to permit tracking of the disposition of such Shares. The Corporation shall retain the amount of payroll deductions used to purchase Shares as full payment for the Shares and the Shares shall then be fully paid and non-assessable. No Participant shall have any voting, dividend or other Shareowner rights with respect to Shares subject to any option granted under the Plan until the Shares subject to the option have been purchased and delivered to the Participant as provided in this Section 10. The Committee may in its discretion direct the Corporation to retain in a Participant's account for the subsequent Purchase Period or Offering Period any payroll deductions which are not sufficient to purchase a whole Share or return such amount to the Participant. Any other amounts that may be left over in a Participant's account after a Purchase Date shall be returned to the Participant.

## 11. RECAPITALIZATION

Subject to any required action by the Shareowners of the Corporation, if there is any change in the outstanding Ordinary Shares because of a merger, consolidation, spin-off, reincorporation, reorganization, recapitalization, dividend in property other than cash, share split, reverse share split, share dividend, liquidating dividend, extraordinary dividend or distribution, combination, exchange or reclassification of the Ordinary Shares (including any such change in the number of Shares effected in connection with a change in domicile of the Corporation), change in corporate structure or any other increase or decrease in the number of Ordinary Shares, or other transaction effected without receipt of consideration by the Corporation, provided that conversion of any convertible securities of the Corporation shall not be deemed to have been “effected without consideration,” the number of securities covered by each option under the Plan which has not yet been exercised and the number of securities which have been authorized and remain available for issuance under the Plan, as well as the maximum number of securities which may be purchased by a single Participant and by all Participants in the aggregate in a given Purchase Period, and the price per share covered by each option under the Plan which has not yet been exercised,



may be appropriately adjusted by the Board, and the Board shall take any further actions which, in the exercise of its discretion, may be necessary or appropriate under the circumstances. The Board’s determinations under this Section 11 shall be conclusive and binding on all parties.

## 12. LIQUIDATION AND CHANGE OF CONTROL

12.1 In the event of the proposed liquidation or dissolution of the Corporation, the Offering Period will terminate immediately prior to the consummation of such proposed transaction, unless otherwise provided by the Board in its sole discretion, and all outstanding options shall automatically terminate and the amounts of all payroll deductions will be refunded without interest (unless payment of interest is required by local law) to the Participants.

12.2 In the event of a Change of Control, then in the sole discretion of the Board, (1) each option shall be assumed or an equivalent option shall be substituted by the successor corporation or parent or subsidiary of such successor entity, (2) a date established by the Board on or before the date of consummation of such Change of Control shall be treated as a Purchase Date, and all outstanding options shall be exercised on such date, (3) all outstanding options shall terminate and the accumulated payroll deductions will be refunded without interest (unless payment of interest is required by local law) to the Participants, or (4) outstanding options shall continue unchanged.

## 13. TRANSFERABILITY

Neither payroll deductions credited to a Participant’s bookkeeping account nor any rights to exercise an option or to receive Shares under the Plan may be voluntarily or involuntarily assigned, transferred, pledged, or otherwise disposed of in any way, and any attempted assignment, transfer, pledge, or other disposition shall be null and void and without effect. If a Participant in any manner attempts to transfer, assign or otherwise encumber his or her rights or interests under the Plan, other than as permitted by the Code, such act shall be treated as an election by the Participant to discontinue participation in the Plan pursuant to Section 5.3.

## 14. AMENDMENT OR TERMINATION OF THE PLAN

14.1 The Plan shall continue until terminated in accordance with Section 14.2.

14.2 The Board may, in its sole discretion, insofar as permitted by Applicable Law, terminate or suspend the Plan, or revise or amend it in any respect whatsoever, except that, without approval of the Shareowners, no such revision or amendment shall increase the number of Shares subject to the Plan, other than an adjustment under Section 11 of the Plan, or make other changes for which Shareowner approval is required under Applicable Law. Upon a termination or suspension of the Plan, the Board may in its discretion (i) return, without interest



(unless payment of interest is required by local law), the payroll deductions credited to Participants' accounts to such Participants, or (ii) set an earlier Purchase Date with respect to an Offering Period and Purchase Period then in progress.

## 15. ADMINISTRATION

15.1 The Board or the Compensation Committee shall appoint a committee of one or more individuals to administer the Plan (the "Committee"), which, unless otherwise specified by the Board, shall consist of the members of the Corporation's Benefits and Administrative Committee, as constituted from time to time in accordance with its charter, and generally made up of senior members of management from the Corporation's Legal, Finance and Human Resources functions. The Committee will serve for such period of time as the Board or the Compensation Committee of the Board may specify and whom the Board or the Compensation Committee of the Board may remove at any time. The Committee will have the authority and responsibility for the day-to-day administration of the Plan, the authority and responsibility specifically provided in this Plan and any additional duty, responsibility and authority delegated to the Committee by the Board or the Compensation Committee of the Board. The Committee shall have full power and authority to adopt, amend and rescind any rules and regulations which it deems desirable and appropriate for the proper administration of the Plan, to construe and interpret the provisions and supervise the administration of the Plan, to make factual determinations relevant to Plan entitlements and to take all action in connection with administration of the Plan as it deems necessary or advisable, consistent with the delegation from the Board or the Compensation Committee of the Board. The Committee may delegate to one or more individuals the day-to-day administration of the Plan, to the extent permitted by Applicable Law. The Board, the Compensation Committee of the Board and the Committee reserve the right to administer the Plan, to the extent such right otherwise exists, regardless of any delegation of authority such body may have previously made. Decisions of the Board, the Compensation Committee of the Board and the Committee, as applicable, shall be final and binding upon all participants. The Corporation shall pay all expenses incurred in the administration of the Plan.

15.2 In addition to such other rights of indemnification as they may have as members of the Board or officers or employees of the Corporation and subject to section 200 of the Companies Act, members of the Board and of the Committee shall be indemnified by the Corporation against all reasonable expenses, including attorneys' fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any right granted under the Plan, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Corporation) or paid by them in satisfaction of a judgment in any such action, suit or



proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the institution of such action, suit or proceeding, such person shall offer to the Corporation, in writing, the opportunity at its own expense to handle and defend the same.

## 16. COMMITTEE RULES FOR FOREIGN JURISDICTIONS

The Committee may adopt rules or procedures relating to the operation and administration of the Plan to accommodate the specific requirements of local laws and procedures. Without limiting the generality of the foregoing, the Committee is specifically authorized to adopt rules and procedures regarding handling of payroll deductions or other contributions by Participants, establishment of bank or trust accounts to hold payroll deductions or other contributions, payment of interest, conversion of local currency, payroll tax, withholding procedures and handling of share certificates which vary with local requirements; however, if such varying provisions are not in accordance with the provisions of Section 423(b) of the Code, including but not limited to the requirement of Section 423(b)(5) of the Code that all options granted under the Plan shall have the same rights and privileges unless otherwise provided under the Code and the regulations promulgated thereunder, then the individuals affected by such varying provisions shall be deemed to be participating under a sub-plan and not the Plan. The Committee may also adopt sub-plans applicable to particular Subsidiaries or locations, which sub-plans may be designed to be outside the scope of Code Section 423. The rules of such sub-plans may take precedence over other provisions of this Plan, with the exception of Section 7, but unless otherwise superseded by the terms of such sub-plan, the provisions of this Plan shall govern the operation of such sub-plan.

## 17. SECURITIES LAWS REQUIREMENTS

17.1 No option granted under the Plan may be exercised to any extent unless the Shares to be issued upon such exercise under the Plan are covered by an effective registration statement pursuant to the Securities Act and the Plan is in material compliance with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act, the Exchange Act, the rules and regulations promulgated thereunder, applicable state and foreign securities laws and the requirements of any stock exchange upon which the Shares may then be listed, subject to the approval of counsel for the Corporation with respect to such compliance. If on a Purchase Date in any Offering Period hereunder, the Plan is not so registered or in such compliance, options granted under the Plan which are not in compliance shall not be exercised on such Purchase Date, and the Purchase Date shall be delayed until the Plan is subject to such an effective registration statement and such compliance, except that the Purchase Date shall not be delayed more than twelve (12) months and the Purchase Date shall in no event be more than twenty-seven (27) months from the Offering Date. If, on the Purchase



Date of any offering hereunder, as delayed to the maximum extent permissible, the Plan is not registered and in such compliance, options granted under the Plan which are not in compliance shall not be exercised and all payroll deductions accumulated during the Offering Period (reduced to the extent, if any, that such deductions have been used to acquire Shares) shall be returned to the Participants, without interest (unless payment of interest is required by local law). The provisions of this Section 17 shall comply with the requirements of Section 423(b)(5) of the Code to the extent applicable.

17.2 As a condition to the exercise of an option, the Corporation may require the person exercising such option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Corporation, such a representation is required by any of the aforementioned provisions of Applicable Law.

## 18. GOVERNMENTAL REGULATIONS

This Plan and the Corporation’s obligation to sell and deliver Ordinary Shares under the Plan shall be subject to the approval of any governmental authority required in connection with the Plan or the authorization, issuance, sale, or delivery of Shares hereunder.

## 19. NO ENLARGEMENT OF EMPLOYEE RIGHTS

Nothing contained in this Plan shall be deemed to give any Employee or other individual the right to be retained in the employ or service of the Corporation or any Designated Subsidiary or to interfere with the right of the Corporation or Designated Subsidiary to discharge any Employee or other individual at any time, for any reason or no reason, with or without notice.

## 20. GOVERNING LAW

This Plan shall be governed by applicable laws of the State of California, without regard to such state’s conflict of laws rules.

## 21. EFFECTIVE DATE

This Plan shall be effective on the Effective Date, subject to approval of the Shareowners of the Corporation within twelve (12) months before or after its date of adoption by the Board.

## 22. REPORTS

Individual accounts shall be maintained for each Participant in the Plan. Statements of account shall be given or made available to Participants at least annually.



## 23. DESIGNATION OF BENEFICIARY FOR OWNED SHARES

With respect to Ordinary Shares purchased by the Participant pursuant to the Plan and held in an account maintained by the Corporation or its assignee on the Participant's behalf, the Participant may be permitted to file a written designation of beneficiary, who is to receive any Shares and cash, if any, from the Participant's account under the Plan in the event of such Participant's death subsequent to the end of a Purchase Period but prior to delivery to him or her of such Shares and cash. In addition, a Participant may be permitted to file a written designation of a beneficiary who is to receive any cash from the Participant's account under the Plan in the event of such Participant's death prior to the Purchase Date of an Offering Period. If a Participant is married and the designated beneficiary is not the spouse, spousal consent shall be required for such designation to be effective, to the extent required by local law. The Participant (and if required under the preceding sentence, his or her spouse) may change such designation of beneficiary at any time by written notice. Subject to local legal requirements (as determined by the Committee in its sole discretion), in the event of a Participant's death, the Corporation or its assignee shall deliver any Shares and/or cash to the designated beneficiary. Subject to local law (as determined by the Committee in its sole discretion), in the event of the death of a Participant and in the absence of a beneficiary validly designated who is living at the time of such Participant's death, the Corporation shall deliver such Shares and/or cash to the executor or administrator of the estate of the Participant, or if no such executor or administrator has been appointed (to the knowledge of the Corporation), the Corporation in its sole discretion, may deliver (or cause its assignee to deliver) such Shares and/or cash to the spouse, or to any one or more dependents or relatives of the Participant, or if no spouse, dependent or relative is known to the Corporation, then to such other person as the Corporation may determine. The provisions of this Section 23 shall in no event require the Corporation to violate local law, and the Corporation shall be entitled to take whatever action it reasonably concludes is desirable or appropriate in order to transfer the assets allocated to a deceased Participant's account in compliance with local law.

## 24. ADDITIONAL RESTRICTIONS OF RULE 16b-3

The terms and conditions of options granted hereunder to, and the purchase of Ordinary Shares by, persons subject to Section 16 of the Exchange Act shall comply with the applicable provisions of Rule 16b-3. This Plan shall be deemed to contain, and such options shall contain, and the Shares issued upon exercise thereof shall be subject to, such additional conditions and restrictions, if any, as may be required by Rule 16b-3 to qualify for the maximum exemption from Section 16 of the Exchange Act with respect to Plan transactions.



## 25. NOTICES

All notices or other communications by a Participant to the Corporation under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Corporation at the location, or by the person, designated by the Corporation for the receipt thereof.



# APPENDIX A
SEAGATE TECHNOLOGY PUBLIC LIMITED COMPANY
EMPLOYEE STOCK PURCHASE PLAN
PARTICIPATING EMPLOYERS

## 423 Plan

Seagate US LLC
LaCie Ltd. (US employees)
Xyratex International Inc. (US employees)

Countries Covered by Non-423 Sub-Plan for Contractors (See Appendix B)

Turkey

General Non-423 Sub-Plan (See Appendix C)

Seagate Technology Australia Pty. Limited
Seagate Technology Canada Inc.
Seagate Technology SAS
Seagate Technology GmbH
Seagate Technology HDD (India) Private Limited
Seagate Technology International, Netherlands Branch
Seagate Technology (Hong Kong) Limited
Seagate Technology (Ireland)
Nippon Seagate Inc.
Seagate Technology (Netherlands) B.V.
Seagate Technology AB
Seagate Technology Taiwan Ltd.
Seagate Technology UK Ltd. (including Dublin branch)
LaCie Technology Australia Pty. Ltd.
LaCie SPRL
LaCie Peripherals Inc.
LaCie SA
LaCie SAS
LaCie AB
LaCie GmbH
LaCie SRL
LaCie Electronique D2, S.A.
LaCie AG
LaCie Ltd. (UK employees)
LaCie Asia Ltd.
Xyratex Technology (Canada) Limited
Xyratex Japan Ltd.
Xyratex Mexico, SA de CV
Xyratex Technology Limited (UK employees)



Seagate Technology (Suzhou) Co. Ltd.
Seagate Technology International (Wuxi) Co. Ltd.
Penang Seagate Industries (M) Sdn. Bhd.
Seagate International (Johor) Sdn. Bhd.
Seagate Singapore International Headquarters Pte. Ltd.
Seagate Technology International, Singapore Branch
Seagate Technology (Thailand) Limited
Seagate Technology Services (Shanghai) Co. Ltd.
Xyratex Technology (Wuxi) Co.Ltd.
Xyratex (Malaysia) Sdn Bhd.
Xyratex (Singapore) Pte Ltd.
Xyratex Technology Limited (Singapore and Thailand employees)

## APPENDIX B

## SUBPLAN UNDER THE SEAGATE TECHNOLOGY PUBLIC LIMITED COMPANY EMPLOYEE STOCK PURCHASE PLAN

1. Purpose. The purpose of this subplan under the Seagate Technology Public Limited Company Employee Stock Purchase Plan (the “Subplan”) is to permit eligible contract workers who perform work for the Corporation (any one such individual a “Contractor,” and collectively, “Contractors”) in the countries designated from time to time by the Committee in its sole discretion and listed on Appendix A to the Seagate Technology Public Limited Company Employee Stock Purchase Plan (the “Plan”) to participate in the Plan.

2. Terms of the Subplan. The terms and conditions of the Subplan shall in all respects be identical to those set forth in the Plan except as set forth in this Subplan; provided, however, that the Subplan shall not be subject to the requirements of Section 423(b)(5) of the Code. Capitalized terms not otherwise defined in this Subplan shall have the same meaning as set forth in the Plan.

3. Definition of Employee. For purposes of the Subplan, references to Employees in the Plan shall include Contractors.

4. Subplan Countries. The Committee shall have the authority in its sole discretion to amend the list of countries designated by the Committee and listed on Appendix A to the Plan as necessary and desirable and for such amendments to take effect as shall be determined by the Committee in its sole and absolute discretion.

5. Terms of the Plan. Except as set forth above, Contractors who participate under the Plan shall be subject to the terms and conditions set forth in the Plan.



## APPENDIX C

## SUBPLAN UNDER THE SEAGATE TECHNOLOGY PUBLIC LIMITED COMPANY EMPLOYEE STOCK PURCHASE PLAN FOR CERTAIN EMPLOYEES OUTSIDE OF THE UNITED STATES

1. Purpose. The purpose of this subplan under the Seagate Technology Public Limited Company Employee Stock Purchase Plan (the "Subplan") is to set forth requirements with respect to the participation by eligible Employees employed outside of the United States at Seagate Technology Australia Pty. Limited, Seagate Technology Canada Inc., Seagate Technology SAS, Seagate Technology GmbH, Seagate Technology HDD (India) Private Limited, Seagate Technology International (Netherlands Branch), Seagate Technology (Hong Kong) Limited, Seagate Technology (Ireland), Nippon Seagate Inc., Seagate Technology (Netherlands) B.V., Seagate Technology AB, Seagate Technology Taiwan Ltd., Seagate Technology UK Ltd. (including the Dublin branch), LaCie Technology Australia Pty. Ltd., LaCie SPRL, LaCie Peripherals Inc., LaCie SA, LaCie SAS, LaCie AB, LaCie GmbH, LaCie SRL, LaCie Electronique D2, S.A., LaCie AG, LaCie Ltd. (UK employees), LaCie Asia Ltd., Xyratex Technology (Canada) Limited, Xyratex Japan Ltd., Xyratex Mexico, SA de CV, and Xyratex Technology Limited (UK) in the Seagate Technology Public Limited Company Employee Stock Purchase Plan (the "Plan").

2. Terms of the Subplan. Except as set forth in this Subplan, the terms and conditions of the Subplan shall in all respects be identical to those set forth in the Plan; provided, however, that the Subplan shall not be subject to the requirements of Section 423(b)(5) of the Code. Capitalized terms not otherwise defined in this Subplan shall have the same meaning as set forth in the Plan.

3. Eligibility. Employees of Seagate Technology UK Ltd. (“Seagate UK”) or any branch office of Seagate UK who are located in Russia shall not be eligible to participate in the Plan.



## APPENDIX D

## SUBPLAN UNDER THE SEAGATE TECHNOLOGY PUBLIC LIMITED COMPANY EMPLOYEE STOCK PURCHASE PLAN FOR EMPLOYEES IN CHINA, MALAYSIA, SINGAPORE AND THAILAND

1. Purpose. The purpose of this subplan under the Seagate Technology Public Limited Company Employee Stock Purchase Plan (the “Subplan”) is to set forth requirements with respect to the participation by eligible Employees at Seagate Technology International (Wuxi) Co. Ltd., Seagate Technology (Suzhou) Co. Ltd. and Seagate Technology Services (Shanghai) Co. Ltd. in China, Penang Seagate Industries (M) Sdn. Bhd. and Seagate International (Johor) Sdn. Bhd. in Malaysia, Seagate Technology International (Singapore Branch), Seagate Singapore International Headquarters Pte. Ltd. and Seagate Technology (Thailand) Limited in Thailand, Xyratex Technology (Wuxi) Co. Ltd. (Wuxi and Suzhou), Xyratex (Malaysia) Sdn Bhd., Xyratex (Singapore) Pte Ltd. and Xyratex Technology Limited (Singapore and Thailand) in the Seagate Technology Public Limited Company Employee Stock Purchase Plan (the “Plan”).

2. Terms of the Subplan. The terms and conditions of the Subplan shall in all respects be identical to those set forth in the Plan, except as set forth in this Subplan; provided, however, that the Subplan shall not be subject to the requirements of Section 423(b)(5) of the Code. Capitalized terms not otherwise defined in this Subplan shall have the same meanings as set forth in the Plan.

3. Minimum Purchase. Notwithstanding Sections 5, 8 and 9 of the Plan, purchases will not be made for Participants in China, Malaysia, Singapore or Thailand with respect to a given Purchase Period unless the applicable Participant has accumulated sufficient payroll deductions during such Purchase Period to purchase at least ten (10) whole Shares. In the event a Participant has not accumulated sufficient payroll deductions during a given Purchase Period to purchase at least ten (10) whole Shares, such Participant will be deemed to have withdrawn from the Plan with respect to that Purchase Period and his or her payroll deductions will be refunded to the Participant without interest promptly following the end of the Purchase Period.

4. Terms of the Plan. Except as set forth above, Participants in China, Malaysia, Singapore and Thailand shall be subject to the terms and conditions set forth in the Plan.



## Seagate Technology Public Limited Company Subsidiaries as of June 28, 2014

Seagate Technology Public Limited Company Ireland
Seagate Technology Cayman
Seagate Technology (Dublin Branch) Ireland
Seagate Technology HDD Holdings Cayman
Seagate Technology HDD Holdings (Dublin Branch) Ireland
Seagate HDD Cayman Cayman
Seagate Technology (US) Holdings, Inc. Delaware
EVault, Inc. Delaware
EVault Canada Inc. Canada
EVault (EMEA) B.V. Netherlands
EVault UK Limited United Kingdom
EVault GmbH Germany
EVault Solutions Pte. Ltd Singapore
LaCie Peripherals Inc Canada
LaCie Pty Ltd Australia
LaCie Ltd Oregon
Seagate Technology Canada Inc. Canada
Quinta Corporation California
Seagate US LLC Delaware
Seagate Technology LLC Delaware
Seagate Technology AB Sweden
Seagate Technology Australia Pty Limited Australia
Seagate Technology GmbH Germany
Seagate Technology (Hong Kong) Limited Hong Kong
Beijing Representative Office China
Shanghai Representative Office China
Shenzhen Representative Office China
Seagate Technology SAS France
Seagate Technology Taiwan Ltd. Taiwan
Xyratex Holdings Inc Delaware
Xyratex International Inc California
Seagate Technology International Cayman
Seagate Technology International (Netherlands Branch) Netherlands
Seagate Technology International (Singapore Branch) Singapore
Seagate Brasil Comércio e Distribuição de Produtos de Informática Ltda. Brazil
Sao Paulo Branch Brazil
Maxtor Global Ltd. Bermuda
Maxtor Luxembourg S.àr.l. Luxembourg
Maxtor Peripherals (S) Pte Ltd Singapore
Maxtor International S.àr.l. Switzerland
Maxtor International Manufacturing S.àr.l Switzerland
Penang Seagate Industries (M) Sdn. Bhd. Malaysia
Seagate Business Centre (UK) Ltd. United Kingdom
Seagate Business Centre (US) LLC Delaware
Seagate Business Centre (Singapore) Pte. Ltd. Singapore
Seagate Business Centre GmbH Germany
Seagate Korea Ltd. Korea
Seoul Branch Korea
Seagate International (Johor) Sdn. Bhd. Malaysia
Seagate Memory Products International Cayman
Seagate Technology International (Wuxi) Co. Ltd. China
Seagate Technology Services (Shanghai) Co. Ltd. China
Beijing Branch China



Shenzhen Branch
Dongguan Branch
Chengdu Branch
Seagate Technology (Netherlands) B.V.
Nippon Seagate Inc.
Seagate Technology Republic Ireland Limited
Seagate Technology Asia Holdings
Seagate Technology China Holding Company
Seagate Technology Manufacturing (Hong Kong) Limited
Seagate Technology (Suzhou) Co. Ltd.
Seagate Technology HDD (India) Private Limited
Seagate Technology (Ireland)
Springtown Branch
Seagate Technology (Malaysia) Holding Company
Senai Seagate Industries (M) Sdn. Bhd.
Seagate Technology UK Ltd.
Dublin Branch
Moscow Branch
Seagate Technology Media (Ireland)
Seagate Technology (Thailand) Limited
Xyratex Ltd
Xyratex (Malaysia) Sdn Bhd
Xyratex Singapore Pte Ltd.
Xyratex Technology Ltd.
Xyratex Technology Ltd (Singapore Branch)
Xyratex Technology Ltd (Thailand Branch)
Xyratex Technology (Canada) Ltd.
Xyratex Technology (Wuxi) Co. Ltd
Shanghai Branch
Suzhou Branch
Xyratex Philippines, Inc
Xyratex Havant Ltd
Xyratex Japan Limited
Xyratex Mexico SA de CV
Lyve Minds Inc
Lyve Minds LLC
Seagate Singapore International Headquarters Pte. Ltd.
Netherlands branch
LaCie S.A.
LaCie AB
LaCie AG
LaCie Asia Ltd
LaCie China Pte Ltd
LaCie Electronique D2, S.A.
LaCie GmbH
LaCie SAS
LaCie SPRL
LaCie SRL
LaCie Ltd
China
China
China
Netherlands
Japan
Ireland
Cayman
Hong Kong
Singapore
Spain
Germany
France
Belgium
Italy
United Kingdom



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Exhibit 23.1

## Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements (Form S-3 No. 333-186364 and Form S-8 Nos. 333-184704, 333-177609, 333-162958, 333-139433, 333-132420 and 333-101848) of Seagate Technology public limited company (plc) and in the related Prospectuses, as applicable, of our reports dated August 7, 2014, with respect to the consolidated financial statements of Seagate Technology plc, and the effectiveness of internal control over financial reporting of Seagate Technology plc, included in this Annual Report (Form 10-K) for the year ended June 27, 2014.

/s/ ERNST & YOUNG LLP

San Jose, California

August 7, 2014



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Exhibit 23.1

Consent of Independent Registered Public Accounting Firm



## CERTIFICATION

## I, Stephen J. Luczo, certify that:

1. I have reviewed this annual report on Form 10-K of Seagate Technology plc;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

August 7, 2014

/s/ STEPHEN J. LUCZO

Name: Stephen J. Luczo
Title: Chief Executive Officer



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Exhibit 31.1

CERTIFICATION



## CERTIFICATION

## I, Patrick J. O'Malley, certify that:

1. I have reviewed this annual report on Form 10-K of Seagate Technology plc;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

August 7, 2014

/s/ PATRICK J. O'MALLEY

Name: Patrick J. O'Malley
Title: Chief Financial Officer



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Exhibit 31.2

CERTIFICATION



# CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

This certification is not to be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and does not constitute a part of the Annual Report of Seagate Technology plc (the "Company") on Form 10-K for the fiscal year ended June 27, 2014, as filed with the Securities and Exchange Commission on the date hereof (the "Report").

In connection with the Report we, Stephen J. Luczo, Chief Executive Officer of the Company, and Patrick J. O'Malley, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 7, 2014

/s/ STEPHEN J. LUCZO

Stephen J. Luczo
Chief Executive Officer

Date: August 7, 2014

/s/ PATRICK J. O'MALLEY

Patrick J. O'Malley
Chief Financial Officer



CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002