Quarterly Report (10-q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the quarterly period ended January 2, 2015

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

For the transition period from: to

Commission File Number 001-31560

SEAGATE TECHNOLOGY PUBLIC LIMITED COMPANY

(Exact name of registrant as specified in its charter)

Ireland		98-0648577
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

38/39 Fitzwilliam Square

Dublin 2, Ireland

(Address of principal executive offices)

Telephone: (353) (1) 234-3136

(Registrant’s telephone number, including area code)

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 x No o

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 (§232.405 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 x No o

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.

Large accelerated filer: x		Accelerated filer: o

Non-accelerated filer: o		Smaller reporting company: o
(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 o No x

As of January 26, 2015, 328,338,005 of the registrant’s ordinary shares, par value $0.00001 per share, were issued and outstanding.

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INDEX

SEAGATE TECHNOLOGY PLC

		PAGE NO.

PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements	3

	Condensed Consolidated Balance Sheets — January 2, 2015 and June 27, 2014 (Unaudited)	3

	Condensed Consolidated Statements of Operations — Three and Six Months ended January 2, 2015 and December 27, 2013 (Unaudited)	4

	Condensed Consolidated Statements of Comprehensive Income — Three and Six Months ended January 2, 2015 and December 27, 2013 (Unaudited)	5

	Condensed Consolidated Statements of Cash Flows — Six Months ended January 2, 2015 and December 27, 2013 (Unaudited)	6

	Condensed Consolidated Statement of Shareholders’ Equity — Six Months ended January 2, 2015 (Unaudited)	7

	Notes to Condensed Consolidated Financial Statements (Unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37

Item 4.	Controls and Procedures	39

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	40

Item 1A.	Risk Factors	40

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40

Item 3.	Defaults Upon Senior Securities	40

Item 4.	Mine Safety Disclosures	41

Item 5.	Other Information	41

Item 6.	Exhibits	41

	SIGNATURES	42

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PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SEAGATE TECHNOLOGY PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

	January 2, 2015			June 27, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	3,296		$	2,634
Short-term investments	6			20
Restricted cash and investments	4			4
Accounts receivable, net	1,829			1,729
Inventories	1,129			985
Deferred income taxes	123			126
Other current assets	245			279
Total current assets	6,632			5,777
Property, equipment and leasehold improvements, net	2,155			2,136
Goodwill	872			537
Other intangible assets, net	449			359
Deferred income taxes	498			499
Other assets, net	208			184
Total Assets	$	10,814		$	9,492
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	1,736		$	1,549
Accrued employee compensation	272			296
Accrued warranty	153			148
Accrued expenses	658			405
Total current liabilities	2,819			2,398
Long-term accrued warranty	129			125
Long-term accrued income taxes	33			90
Other non-current liabilities	186			127
Long-term debt	3,932			3,920
Total Liabilities	7,099			6,660
Commitments and contingencies (See Notes 11 and 13)
Equity:
Seagate Technology plc Shareholders’ Equity:
Ordinary shares and additional paid-in capital	5,621			5,511
Accumulated other comprehensive loss	(25		)	(2		)
Accumulated deficit	(1,881		)	(2,677		)
Total Seagate Technology plc Shareholders’ Equity	3,715			2,832
Noncontrolling interest	—			—
Total Equity	3,715			2,832
Total Liabilities and Equity	$	10,814		$	9,492

The information as of June 27, 2014 was derived from the Company’s audited Consolidated Balance Sheet as of June 27, 2014.

See Notes to Condensed Consolidated Financial Statements.

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SEAGATE TECHNOLOGY PLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

(Unaudited)

	For the Three Months Ended						For the Six Months Ended
	January 2, 2015			December 27, 2013			January 2, 2015			December 27, 2013
Revenue	$	3,696		$	3,528		$	7,481		$	7,017
Cost of revenue	2,669			2,541			5,403			5,055
Product development	341			312			683			606
Marketing and administrative	218			190			434			371
Amortization of intangibles	32			25			62			45
Restructuring and other, net	3			16			10			18
Gain on arbitration award, net	(620		)	—			(620		)	—
Total operating expenses	2,643			3,084			5,972			6,095
Income from operations	1,053			444			1,509			922
Interest income	1			1			3			6
Interest expense	(50		)	(49		)	(104		)	(93		)
Other, net	122			46			109			47
Other income (expense), net	73			(2		)	8			(40		)
Income before income taxes	1,126			442			1,517			882
Provision for income taxes	193			14			203			27
Net income	933			428			1,314			855
Less: Net income attributable to noncontrolling interest	—			—			—			—
Net income attributable to Seagate Technology plc	$	933		$	428		$	1,314		$	855
Net income per share attributable to Seagate Technology plc ordinary shareholders:
Basic	$	2.84		$	1.27		$	4.02		$	2.46
Diluted	2.78			1.24		3.91			2.39
Number of shares used in per share calculations:
Basic	328			336			327			347
Diluted	336			346			336			357
Cash dividends declared per Seagate Technology plc ordinary share	$	0.54		$	0.43		$	0.97		$	0.81

See Notes to Condensed Consolidated Financial Statements.

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SEAGATE TECHNOLOGY PLC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)

	For the Three Months Ended						For the Six Months Ended
	January 2, 2015			December 27, 2013			January 2, 2015			December 27, 2013
Net income	$	933		$	428		$	1,314		$	855
Other comprehensive income (loss), net of tax:
Cash flow hedges
Change in net unrealized gain (loss) on cash flow hedges	(6		)	(2		)	(9		)	(1		)
Less: reclassification for amounts included in net income	2			—			2			—
Net change	(4		)	(2		)	(7		)	(1		)
Marketable securities
Change in net unrealized gain (loss) on marketable securities	—			—			—			1
Less: reclassification for amounts included in net income	—			—			—			—
Net change	—			—			—			1
Post-retirement plans
Change in unrealized gain (loss) on post-retirement plans	—			1			—			1
Less: reclassification for amounts included in net income	—			—			—			—
Net change	—			1			—			1
Foreign currency translation adjustments	(6		)	—			(16		)	5
Total other comprehensive income (loss), net of tax	(10		)	(1		)	(23		)	6
Comprehensive income	923			427			1,291			861
Less: Comprehensive income attributable to noncontrolling interest	—			—			—			—
Comprehensive income attributable to Seagate Technology plc	$	923		$	427		$	1,291		$	861

See Notes to Condensed Consolidated Financial Statements.

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SEAGATE TECHNOLOGY PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

	For the Six Months Ended
	January 2, 2015			December 27, 2013
OPERATING ACTIVITIES
Net income	$	1,314		$	855
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	426			457
Share-based compensation	73			57
Deferred income taxes	(4		)	(15		)
(Gain) loss on sale of property and equipment	1			(4		)
Gain on sale of investments	—			(32		)
Loss on redemption and repurchase of debt	52			—
Other non-cash operating activities, net	2			8
Changes in operating assets and liabilities:
Restricted cash and investments	—			104
Accounts receivable, net	(99		)	51
Inventories	(107		)	(94		)
Accounts payable	209			(46		)
Accrued employee compensation	(24		)	(68		)
Accrued expenses, income taxes and warranty	167			41
Vendor non-trade receivables	28			199
Other assets and liabilities	7			25
Net cash provided by operating activities	2,045			1,538
INVESTING ACTIVITIES
Acquisition of property, equipment and leasehold improvements	(387		)	(304		)
Proceeds from the sale of strategic investments	—			72
Purchases of short-term investments	(5		)	(87		)
Sales of short-term investments	4			463
Maturities of short-term investments	19			61
Cash used in acquisition of business	(450		)	—
Other investing activities, net	(34		)	(28		)
Net cash (used in) provided by investing activities	(853		)	177
FINANCING ACTIVITIES
Redemption and repurchase of debt	(535		)	—
Net proceeds from issuance of long-term debt	498			791
Repurchases of ordinary shares	(201		)	(1,702		)
Dividends to shareholders	(317		)	(277		)
Proceeds from issuance of ordinary shares under employee stock plans	49			61
Other financing activities, net	(12		)	(5		)
Net cash used in financing activities	(518		)	(1,132		)
Effect of foreign currency exchange rate changes on cash and cash equivalents	(12		)	2
Increase in cash and cash equivalents	662			585
Cash and cash equivalents at the beginning of the period	2,634			1,708
Cash and cash equivalents at the end of the period	$	3,296		$	2,293

See Notes to Condensed Consolidated Financial Statements.

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SEAGATE TECHNOLOGY PLC

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

For the Six Months Ended January 2, 2015

(In millions)

(Unaudited)

				Seagate Technology plc Ordinary Shareholders
	Total Equity			Number of Ordinary Shares		Par Value of Shares		Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total			Noncontrolling Interest
Balance at June 27, 2014	$	2,832		327		$	—	$	5,511		$	(2	)	$	(2,677	)	$	2,832		$	—
Net income	1,314													1,314			1,314			—
Other comprehensive income	(23		)								(23		)				(23		)
Issuance of ordinary shares under employee stock plans	49			5				49									49
Repurchases of ordinary shares	(201		)	(3	)									(201		)	(201		)
Dividends to shareholders	(317		)											(317		)	(317		)
Share-based compensation	73							73									73
Other	(12		)					(12		)							(12		)
Balance at January 2, 2015	$	3,715		329		$	—	$	5,621		$	(25	)	$	(1,881	)	$	3,715		$	—

See Notes to Condensed Consolidated Financial Statements.

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SEAGATE TECHNOLOGY PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 its 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 supports 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 unaudited condensed 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 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’s Consolidated Financial Statements for the fiscal year ended June 27, 2014, are included in its Annual Report on Form 10-K as filed with the United States Securities and Exchange Commission (“SEC”) on August 7, 2014. The Company believes that the disclosures included in the unaudited condensed consolidated financial statements, when read in conjunction with its Consolidated Financial Statements as of June 27, 2014, and the notes thereto, are adequate to make the information presented not misleading.

The results of operations for the three and six months ended January 2, 2015, are not necessarily indicative of the results of operations to be expected for any subsequent interim period in the Company’s fiscal year ending July 3, 2015. The Company operates and reports financial results on a fiscal year of 52 or 53 weeks ending on the Friday closest to June 30. The three and six months ended January 2, 2015 consisted of 13 weeks and 27 weeks, respectively. The three and six months ended December 27, 2013 consisted of 13 weeks and 26 weeks, respectively. Fiscal year 2015 will be comprised of 53 weeks and will end on July 3, 2015. The fiscal quarters ended January 2, 2015, October 3, 2014, and December 27, 2013, are also referred to herein as the “December 2014 quarter”, the “September 2014 quarter”, and the “December 2013 quarter”, respectively.

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Summary of Significant Accounting Policies

There have been no significant changes in our significant accounting policies. Please refer to Note 1 of “Financial Statements and Supplementary Data” contained in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the fiscal year ended June 27, 2014, as filed with the SEC on August 7, 2014 for a discussion of the Company’s other significant accounting policies.

Recently Issued Accounting Pronouncements

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.

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 January 2, 2015:

(Dollars in millions)	Amortized Cost		Unrealized Gain/(Loss)		Fair Value
Available-for-sale securities:
Money market funds	$	1,324	$	—	$	1,324
Corporate bonds	6		—		6
Certificates of deposit	1,440		—		1,440
	$	2,770	$	—	$	2,770

Included in Cash and cash equivalents					$	2,760
Included in Short-term investments					6
Included in Restricted cash and investments					4
Total					$	2,770

As of January 2, 2015, the Company’s Restricted cash and investments consisted of $4 million in cash and investments held as collateral at banks for various performance obligations.

As of January 2, 2015, 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 that no available-for-sale securities were other-than-temporarily impaired as of January 2, 2015.

The fair value and amortized cost of the Company’s investments classified as available-for-sale at January 2, 2015, by remaining contractual maturity were as follows:

(Dollars in millions)	Amortized Cost		Fair Value
Due in less than 1 year	$	2,770	$	2,770
Due in 1 to 5 years	—		—
Thereafter	—		—
Total	$	2,770	$	2,770

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

(Dollars in millions)	Amortized Cost		Unrealized Gain/(Loss)		Fair Value
Available-for-sale securities:
Money market funds	$	793	$	—	$	793
Commercial paper	1,261		—		1,261
Corporate bonds	6		—		6
Certificates of deposit	273		—		273
Total	$	2,333	$	—	$	2,333

Included in Cash and cash equivalents					$	2,309
Included in Short-term investments					20
Included in Restricted cash and investments					4
Total					$	2,333

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.

Inventories

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

(Dollars in millions)	January 2, 2015		June 27, 2014
Raw materials and components	$	326	$	324
Work-in-process	328		267
Finished goods	475		394
	$	1,129	$	985

Property, Equipment and Leasehold Improvements, net

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

(Dollars in millions)	January 2, 2015			June 27, 2014
Property, equipment and leasehold improvements	$	9,263		$	8,979
Accumulated depreciation and amortization	(7,108		)	(6,843		)
	$	2,155		$	2,136

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Accumulated Other Comprehensive Income (Loss) (“AOCI”)

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

(Dollars in millions)	Unrealized Gains (Losses) on Cash Flow Hedges			Unrealized Gains (Losses) on Marketable Securities (a)			Unrealized Gains (Losses) on post- retirements			Foreign currency translation adjustments			Total
Balance at June 27, 2014	$	(1	)	$	—		$	(10	)	$	9		$	(2	)
Other comprehensive income (loss) before reclassifications	(9		)	—			—			(16		)	(25		)
Amounts reclassified from AOCI	2			—			—			—			2
Other comprehensive income (loss)	(7		)	—			—			(16		)	(23		)
Balance at January 2, 2015	$	(8	)	$	—		$	(10	)	$	(7	)	$	(25	)

Balance at June 28, 2013	$	—		$	(3	)	$	(10	)	$	—		$	(13	)
Other comprehensive income (loss) before reclassifications	(1		)	1			1			5			6
Amounts reclassified from AOCI	—			—			—			—			—
Other comprehensive income (loss)	(1		)	1			1			5			6
Balance at December 27, 2013	$	(1	)	$	(2	)	$	(9	)	$	5		$	(7	)

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

3. Debt

Short-Term Borrowings

As of January 2, 2015, the Company and its subsidiary, Seagate HDD Cayman, had a senior secured revolving credit facility (the “Revolving Credit Facility”) of $500 million. On January 15, 2015, the Company and its subsidiary, Seagate HDD Cayman, entered into the Third Amendment to the 2011 Credit Agreement (the “Amendment”) which increased the commitments available under the Revolving Credit Facility from $500 million to $700 million and also extended the maturity date on the Credit Agreement until January 15, 2020, provided that if the Company does not have Investment Grade Ratings (as defined in the Credit Agreement) on August 15, 2018, then the maturity date will be August 16, 2018 unless certain extension conditions have been satisfied. 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 is available for cash borrowings and for the issuance of letters of credit up to a sub-limit of $75 million. As of January 2, 2015, no borrowings had been drawn or letters of credit utilized under the Revolving Credit Facility.

Long-Term Debt

$600 million Aggregate Principal Amount of 6.8% Senior Notes due October 2016 (the “2016 Notes”). The interest on the 2016 Notes was payable semi-annually on April 1 and October 1 of each year. The issuer under the 2016 Notes was Seagate HDD Cayman, and the obligations under the 2016 Notes were unconditionally guaranteed by certain of the Company’s significant subsidiaries. During the December 2014 quarter, the 2016 Notes were fully extinguished through repurchase and redemption for cash at a premium to their principal amount, plus accrued and unpaid interest. The Company recorded a loss on the repurchase and redemption of approximately $34 million, which is included in Other, net in the Company’s Condensed Consolidated Statement of Operations.

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$800 million Aggregate Principal Amount of 3.75% Senior Notes due November 2018 (the “2018 Notes”). The interest on the 2018 Notes is payable semi-annually on May 15 and November 15 of each year. The issuer under the 2018 Notes is Seagate HDD Cayman, and the obligations under the 2018 Notes are fully and unconditionally guaranteed, on a senior unsecured basis, by the Company.

$600 million Aggregate Principal Amount of 6.875% Senior Notes due May 2020 (the “2020 Notes”). The interest on the 2020 Notes is payable semi-annually on May 1 and November 1 of each year. 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 the December 2014 quarter, the Company repurchased $30 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 of $2 million, which is included in Other, net in the Company’s Condensed Consolidated Statement of Operations.

$600 million Aggregate Principal Amount of 7.00% Senior Notes due November 2021 (the “2021 Notes”). The interest on the 2021 Notes is payable semi-annually on January 1 and July 1 of each year. 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 the December 2014 quarter, the Company repurchased $14 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 $2 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 2023 (the “2023 Notes”). The interest on the 2023 Notes is payable semi-annually on June 1 and December 1 of each year. The issuer under the 2023 Notes is Seagate HDD Cayman, and the obligations under the 2023 Notes are fully and unconditionally guaranteed, on a senior unsecured basis, by the Company.

$1 billion Aggregate Principal Amount of 4.75% Senior Notes due January 2025 (the “2025 Notes”). The interest on the 2025 Notes is payable semi-annually on January 1 and July 1 of each year, commencing on January 1, 2015. The issuer under the 2025 Notes is Seagate HDD Cayman, and the obligations under the 2025 Notes are fully and unconditionally guaranteed, on a senior unsecured basis, by the Company.

$500 million Aggregate Principal Amount of 5.75% Senior Notes due December 1, 2034 (the “2034 Notes”). On December 2, 2014, Seagate HDD Cayman issued, in a private placement, $500 million in aggregate principal amount of 5.75% Senior Notes due 2034 which mature on December 1, 2034. The interest on the Notes is payable semi-annually on June 1 and December 1 of each year, commencing on June 1, 2015. At any time before June 1, 2034, Seagate HDD Cayman may redeem some or all of the Notes at a “make-whole” redemption price. The ‘‘make-whole’’ redemption price will be equal to (1) 100% of the principal amount of the Notes redeemed, plus (2) the excess, if any of (x) 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, minus accrued and unpaid interest, if any, on the Notes being redeemed to, but excluding, the redemption date over (y) the principal amount of the Notes being redeemed, plus (3) accrued and unpaid interest, if any, on the Notes being redeemed to, but excluding, the redemption date. At any time on or after June 1, 2034, the Company may redeem some or all of the Notes at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. The issuer under the 2034 Notes is Seagate HDD Cayman, and the obligations under the 2034 Notes are fully and unconditionally guaranteed, on a senior unsecured basis, by the Company.

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At January 2, 2015, future principal payments on long-term debt were as follows (in millions):

Fiscal Year	Amount
Remainder of 2015	$	—
2016	—
2017	—
2018	—
2019	800
Thereafter	3,134
	$	3,934

4. Income Taxes

The Company recorded an income tax provision of $193 million and $203 million in the three and six months ended January 2, 2015, respectively. The income tax provision for the three and six months ended January 2, 2015, included approximately $181 million of net tax expense due to the final audit assessment received from the Jiangsu Province State Tax Bureau of the People’s Republic of China (China assessment) for calendar years 2007 through 2013.

The Company’s income tax provision recorded for the three and six months ended January 2, 2015 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, (ii) tax expense associated with the China assessment, and (iii) a decrease in valuation allowance for certain U.S. deferred tax assets.

The Tax Increase Prevention Act of 2014 (the Act) was enacted on December 19, 2014. The Act retroactively reinstated and extended the U.S. federal Research and Development Tax Credit (R&D Credit) to December 31, 2014, as well as the bonus depreciation on qualified property. The extension of the R&D Credit and bonus depreciation had no immediate impact on the Company’s income tax provision due to existing valuation allowances on its U.S. deferred tax assets. None of the other Act changes are expected to have a material impact on the Company’s income tax provision.

During the six months ended January 2, 2015, the Company’s unrecognized tax benefits excluding interest and penalties decreased by $42 million primarily due to (i) reductions associated with audit settlements of $45 million, (ii) reductions associated with the expiration of certain statutes of limitations of $4 million, (iii) increases in current year unrecognized tax benefits of $5 million, and (iv) net increases associated with changes in prior years’ positions of $2 million.

The unrecognized tax benefits that, if recognized, would impact the effective tax rate were $73 million at January 2, 2015, subject to certain future valuation allowance reversals. During the 12 months beginning January 3, 2015, the Company expects that its unrecognized tax benefits could be reduced by approximately $3 million as a result of the expiration of certain statutes of limitation.

The Company is subject to taxation in many jurisdictions globally and is required to file U.S. federal, U.S. state and non-U.S. income tax returns. 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 is currently contesting certain of these proposed adjustments through the IRS Appeals Office. The Company believes that the resolution of these disputed issues will not have a material impact on its financial statements. As discussed above, on December 31, 2014, the Company received the final audit assessment from the Jiangsu Province State Tax Bureau of the People’s Republic of China. The assessment is related to tax and interest associated with changes to the Company’s tax filings for calendar years 2007 through 2013.

The Company recorded an income tax provision of $14 million and $27 million in the three and six months ended December 27, 2013, respectively. The income tax provision recorded for the three and six months ended December 27, 2013 included approximately $4 million and $6 million, respectively, of net discrete tax expense primarily related to increases in income tax reserves recorded for non-U.S. income positions taken in prior fiscal years offset by the tax benefits from the reversal of a portion of the U.S. valuation allowance recorded in prior periods and tax benefits associated with the release of tax reserves associated with the expiration of certain statutes of limitation.

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The Company’s income tax provision recorded for the three and six months ended December 27, 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.

5. Acquisitions

LSI’s Flash Business

On September 2, 2014, the Company completed the acquisition of certain assets and liabilities of LSI Corporation’s (“LSI”) Accelerated Solutions Division and Flash Components Division (collectively, the “Flash Business”) from Avago Technologies Limited for $450 million in cash. The transaction is expected to strengthen Seagate’s strategy to deliver a full suite of storage solutions, providing Seagate with established enterprise PCIe flash and SSD controller capabilities to deliver solutions for the growing flash storage market.

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

(Dollars in millions)	Amount
Inventories	$	37
Property, plant and equipment	22
Intangible assets	141
Other assets	6
Goodwill	337
Total assets	543
Liabilities	(93		)
Total liabilities	(93		)
Total	$	450

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

(Dollars in millions)	Fair Value		Weighted- Average Amortization Period
Existing technology	$	84	3.5 years
Customer relationships	40		3.8 years
Trade names	17		4.5 years
Total acquired identifiable intangible assets	$	141

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The goodwill recognized is primarily attributable to the benefits the Company expects to derive from enhanced market opportunities, and is not deductible for income tax purposes.

The Company incurred approximately $1 million of expenses related to the acquisition of LSI’s Flash Business during the six months ended January 2, 2015, which are included within Marketing and administrative expense on the Consolidated Statement of Operations.

The amounts of revenue and earnings of LSI’s Flash Business included in the Company’s Consolidated Statement of Operations from the acquisition date are not significant.

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:

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

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

(Dollars in millions)	Fair Value		Weighted- Average Amortization Period
Existing technology	$	23	5.5 years
Customer relationships	18		3.9 years
Total amortizable intangible assets acquired	41		4.8 years
In-process research and development	39
Total acquired identifiable intangible assets	$	80

The goodwill recognized is primarily attributable to the synergies expected to arise from 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.

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

6. Goodwill and Other Intangible Assets

Goodwill

The changes in the carrying amount of goodwill for the six months ended January 2, 2015, are as follows:

(Dollars in millions)	Amount
Balance at June 27, 2014	$	537
Goodwill acquired	337
Foreign currency translation effect	(2		)
Balance at January 2, 2015	$	872

Other Intangible Assets

Other intangible assets consist primarily of existing technology, customer relationships, in-process research and development and trade names 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 is charged to Operating expenses in the Condensed Consolidated Statements of Operations. In-process research and development has been determined to 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 existing technology and will be amortized over their useful life.

The carrying value of other intangible assets subject to amortization as of January 2, 2015, is set forth in the following table:

(Dollars in millions)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Remaining Useful Life
Existing technology	$	159	$	(41	)	$	118	3.1 years
Customer relationships	488		(237		)	251		3.0 years
Trade names	27		(3		)	24		3.7 years
Other intangible assets	26		(1		)	25		4.7 years
Total amortizable other intangible assets	$	700	$	(282	)	$	418	3.2 years

The carrying value of In-process research and development not subject to amortization was $31 million on January 2, 2015.

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

(Dollars in millions)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Remaining Useful Life
Existing technology	$	68	$	(18	)	$	50	2.9 years
Customer relationships	450		(192		)	258		3.3 years
Trade names	10		(1		)	9		3.1 years
Other intangible assets	4		(1		)	3		4.4 years
Total amortizable other intangible assets	$	532	$	(212	)	$	320	3.2 years

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

For the three and six months ended January 2, 2015, amortization expense of other intangible assets was $39 million and $72 million. For the three and six months ended December 27, 2013, amortization expense of other intangible assets was $39 million and $76 million. As of January 2, 2015, expected amortization expense for other intangible assets for each of the next five fiscal years and thereafter is as follows:

(Dollars in millions)	Amount
Remainder of 2015	$	79
2016	137
2017	119
2018	58
2019	21
Thereafter	4
	$	418

7. Derivative Financial Instruments

The Company is exposed to market risks due to the volatility of interest rates, foreign currency exchange rates, and bond markets. The Company enters into foreign currency forward exchange contracts to manage the foreign currency exchange rate risk on forecasted expenses denominated in foreign currencies and to mitigate the remeasurement risk of certain foreign currency denominated liabilities. The Company’s accounting policies for these instruments are based on whether the instruments are classified as designated or non-designated hedging instruments. The Company records all derivatives in the Condensed Consolidated Balance Sheets at fair value. The changes in the fair values 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 $8 million and $1 million as of January 2, 2015 and June 27, 2014, respectively.

The Company dedesignates 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 net gains or losses related to the loss of hedge designation on discontinued cash flow hedges during the three and six months ended January 2, 2015. As of January 2, 2015, 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 $9 million.

The following tables show the total notional value of the Company’s outstanding foreign currency forward exchange contracts as of January 2, 2015 and June 27, 2014:

	As of January 2, 2015
(Dollars in millions)	Contracts Designated as Hedges		Contracts Not Designated as Hedges
Thai Baht	$	—	$	31
Singapore Dollars	171		17
Chinese Renminbi	86		—
	$	257	$	48

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	As of June 27, 2014
(Dollars in millions)	Contracts Designated as Hedges		Contracts Not Designated as Hedges
Thai Baht	$	—	$	143
British Pound Sterling	25		—
Malaysian Ringgit	9		—
	$	34	$	143

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 January 2, 2015, the notional investments underlying the TRS amounted to $92 million. The contract term of the TRS is through January 2016 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.

The following tables show the Company’s derivative instruments measured at fair value as reflected in the Condensed Consolidated Balance Sheet as of January 2, 2015 and June 27, 2014:

	As of January 2, 2015
	Asset Derivatives			Liability Derivatives
(Dollars in millions)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments:
Foreign currency forward exchange contracts	Other current assets	$	—	Accrued expenses	$	(9	)
Derivatives not designated as hedging instruments:
Foreign currency forward exchange contracts	Other current assets	$	—	Accrued expenses	$	(1	)
Total return swap	Other current assets	—		Accrued expenses	(1		)
Total derivatives		$	—		$	(11	)

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

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The following tables show the effect of the Company’s derivative instruments on the Condensed Consolidated Statement of Comprehensive Income and the Condensed Consolidated Statement of Operations for the three and six months ended January 2, 2015:

(Dollars in millions)

	Amount of Gain or (Loss) Recognized in OCI on Derivatives (Effective Portion)						Location of Gain or (Loss) Reclassified from Accumulated OCI into	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)						Location of Gain or (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded	Amount of Gain or (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing) (a)
Derivatives Designated as Hedging Instruments	For the Three Months			For the Six Months			Income (Effective Portion)	For the Three Months			For the Six Months			from Effectiveness Testing)	For the Three Months			For the Six Months

Foreign currency forward exchange contracts	$	(6	)	$	(10	)	Cost of revenue	$	(2	)	$	(2	)	Cost of revenue	$	(1	)	$	—

	Location of Gain or (Loss) Recognized in Income on	Amount of Gain or (Loss) Recognized in Income on Derivative
Derivatives Not Designated as Hedging Instruments	Derivative	For the Three Months			For the Six Months
Foreign currency forward exchange contracts	Other, net	$	(1	)	$	(5	)
Total return swap	Operating expenses	$	2		$	—

(a) The amount of gain or (loss) recognized in income represents $0 related to the ineffective portion of the hedging relationships and $(1) million and $0 related to the amount excluded from the assessment of hedge effectiveness for the three and six months ended January 2, 2015, respectively.

(Dollars in millions)

	Amount of Gain or (Loss) Recognized in OCI on Derivatives (Effective Portion)					Location of Gain or (Loss) Reclassified from Accumulated OCI into	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)				Location of Gain or (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded	Amount of Gain or (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing) (a)
Derivatives Designated as Hedging Instruments	For the Three Months			For the Six Months		Income (Effective Portion)	For the Three Months		For the Six Months		from Effectiveness Testing)	For the Three Months		For the Six Months

Foreign currency forward exchange contracts	$	(1	)	$	—	Cost of revenue	$	—	$	—	Cost of revenue	$	—	$	—

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	Location of Gain or (Loss) Recognized in	Amount of Gain or (Loss) Recognized in Income on Derivatives
Derivatives Not Designated as Hedging Instruments	Income on Derivatives	For the Three Months			For the Six Months
Foreign currency forward exchange contracts	Other, net	$	(4	)	$	(5	)

(a) The amount of gain or (loss) recognized in income represents $0 related to the ineffective portion of the hedging relationship and $0 related to the amount excluded from the assessment of hedge effectiveness for the three and six months ended December 27, 2013.

8. Fair Value

Measurement of Fair Value

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

Fair Value Hierarchy

A fair value hierarchy is based on whether the market participant assumptions used in determining fair value are obtained from independent sources (observable inputs) or reflects the Company’s own assumptions of market participant valuation (unobservable inputs). A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs that may be used to measure fair value:

Level 1 — Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 — Quoted prices for identical assets and liabilities in markets that are inactive; quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly; or

Level 3 — Prices or valuations that require inputs that are both unobservable and significant to the fair value measurement.

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.

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Items Measured at Fair Value on a Recurring Basis

The following tables present the Company’s assets and liabilities, by financial instrument type and balance sheet line item that are measured at fair value on a recurring basis, excluding accrued interest components, as of January 2, 2015:

	Fair Value Measurements at Reporting Date Using
(Dollars in millions)	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Balance
Assets:
Money market funds	$	1,324	$	—	$	—	$	1,324
Certificates of deposit	—		1,436		—		1,436
Corporate bonds	—		6		—		6
Total cash equivalents and short-term investments	1,324		1,442		—		2,766
Restricted cash and investments:
Other securities	—		4		—		4
Total assets	$	1,324	$	1,446	$	—	$	2,770
Liabilities:
Derivative liabilities	$	—	$	10	$	—	$	10
Total return swap	—		1		—		1
Total liabilities	$	—	$	11	$	—	$	11

	Fair Value Measurements at Reporting Date Using
(Dollars in millions)	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Balance
Assets:
Cash and cash equivalents	$	1,324	$	1,436	$	—	$	2,760
Short-term investments	—		6		—		6
Restricted cash and investments	—		4		—		4
Total assets	$	1,324	$	1,446	$	—	$	2,770
Liabilities:
Accrued expenses	$	—	$	11	$	—	$	11
Total liabilities	$	—	$	11	$	—	$	11

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	Fair Value Measurements at Reporting Date Using
(Dollars in millions)	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Balance
Assets:
Money market funds	$	793	$	—	$	—	$	793
Commercial paper	—		1,261		—		1,261
Certificates of deposit	—		269		—		269
Corporate bonds	—		6		—		6
Total cash equivalents and short-term investments	793		1,536		—		2,329
Restricted cash and investments:
Other securities	—		4		—		4
Derivative assets	—		5		—		5
Total assets	$	793	$	1,545	$	—	$	2,338
Liabilities:
Derivative liabilities	$	—	$	—	$	—	$	—
Total liabilities	$	—	$	—	$	—	$	—

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

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 January 2, 2015, has not found it necessary to make any adjustments to the prices obtained.

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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 and the TRS. The Company recognizes derivative financial instruments in its condensed 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.

The Company enters into certain strategic investments for the achievement 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, are included in Other assets, net in the Condensed 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 January 2, 2015 and June 27, 2014 totaled $71 million and $46 million, respectively, and consisted primarily of privately held equity securities without a readily determinable fair value.

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 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:

	January 2, 2015				June 27, 2014
(Dollars in millions)	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
3.75% Senior Notes due November 2018	$	800	$	824	$	800	$	820
6.875% Senior Notes due May 2020	476		501		534		578
7.00% Senior Notes due November 2021	158		174		251		284
4.75% Senior Notes due June 2023	1,000		1,050		1,000		1,009
4.75% Senior Notes due January 2025	1,000		1,032		1,000		995
5.75% Senior Notes due December 2034	498		537		—		—
Long-term debt	$	3,932	$	4,118	$	3,585	$	3,686

9. 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 328,835,128 shares were outstanding as of January 2, 2015, and 100,000,000 preferred shares, par value $0.00001, of which none were issued or outstanding as of January 2, 2015.

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.

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Repurchases of Equity Securities

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 January 2, 2015, $1.3 billion remained available for repurchase under the existing repurchase authorization limit.

The following table sets forth information with respect to repurchases of the Company’s shares during the six months ended January 2, 2015:

(In millions)	Number of Shares Repurchased	Dollar Value of Shares Repurchased
Repurchased during the three months ended October 3, 2014	3	$	183
Repurchased during the three months ended January 2, 2015 (1)	0	18
Fiscal year repurchased through January 2, 2015	3	$	201

(1) A total of 0.3 million shares were repurchased during the three months ended January 2, 2015.

10. Compensation

The Company recorded approximately $31 million and $73 million of stock-based compensation expense during the three and six months ended January 2, 2015, respectively. The Company recorded approximately $30 million and $57 million of stock-based compensation expense during the three and six months ended December 27, 2013, respectively.

11. 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 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 “Redomestication”). On July 27, 2010, in connection with the Redomestication, 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

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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 three and six months ended January 2, 2015 and December 27, 2013 were as follows:

	For the Three Months Ended						For the Six Months Ended
(Dollars in millions)	January 2, 2015			December 27, 2013			January 2, 2015			December 27, 2013
Balance, beginning of period	$	273		$	318		$	273		$	320
Warranties issued	40			48			80			96
Repairs and replacements	(46		)	(61		)	(100		)	(119		)
Changes in liability for pre-existing warranties, including expirations	15			(5		)	21			3
Warranty liability assumed from business acquisitions	—			—			8			—
Balance, end of period	$	282		$	300		$	282		$	300

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12. Earnings Per Share

Basic earnings per share is computed by dividing income available to shareholders by the weighted-average number of shares outstanding during the period. Diluted earnings per share is computed by dividing income available to shareholders by the weighted-average number of shares outstanding during the period and the number of additional shares that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding options, unvested restricted share units and shares to be purchased under the ESPP. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. Under the treasury stock method, an increase in fair market value of the Company’s share price can result in a greater dilutive effect from potentially dilutive securities. The following table sets forth the computation of basic and diluted net income per share attributable to the shareholders of Seagate Technology plc:

	For the Three Months Ended				For the Six Months Ended
(In millions, except per share data)	January 2, 2015		December 27, 2013		January 2, 2015		December 27, 2013
Numerator:
Net income attributable to Seagate Technology plc	$	933	$	428	$	1,314	$	855
Number of shares used in per share calculations:
Total shares for purposes of calculating basic net income per share attributable to Seagate Technology plc	328		336		327		347
Weighted-average effect of dilutive securities:
Employee equity award plans	8		10		9		10
Total shares for purpose of calculating diluted net income per share attributable to Seagate Technology plc	336		346		336		357
Net income per share attributable to Seagate Technology plc shareholders:
Basic	$	2.84	$	1.27	$	4.02	$	2.46
Diluted	$	2.78	$	1.24	$	3.91	$	2.39

The anti-dilutive shares related to employee equity award plans that were excluded from the computation of diluted net income per share attributable to Seagate Technology plc were immaterial for the three and six months ended January 2, 2015 and December 27, 2013.

13. 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.

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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 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 infringe US 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 granted the Company’s summary judgment motion regarding Convolve’s only remaining cause of action, which alleged infringement of the ‘473 patent. The court entered judgment in favor of the Company on July 14, 2014. Convolve filed a notice of appeal on August 13, 2014. The court of appeals has not yet set a date for oral argument. 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. 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. The court of appeals has not yet set a date for oral argument. 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 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. Realtek filed a notice of appeal on September 18, 2014. By agreement of the parties, Realtek’s appeal was dismissed on October 17, 2014. In view of the Commission’s July 21, 2014

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decision and the October 17, 2014 dismissal of Realtek’s appeal, the Company believes that this matter will not result in any loss or other adverse result.

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 July 11, 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.

Seagate Technology LLC v. Western Digital Corp. On October 8, 2014, the Minnesota Supreme Court ruled that the arbitration award in favor of the Company in its case against Western Digital for the misappropriation of the Company’s trade secrets should be confirmed. In the arbitration award, issued on January 23, 2012, the arbitrator determined that Western Digital and its former employee had misappropriated the Company’s trade secrets. The arbitrator awarded the Company $525 million in compensatory damages and, after adding interest, issued a final award of $630 million. Interest on the final award has been accruing at 10%. On October 14, 2014, the Company received a partial payment from Western Digital in the amount of $773 million. The amount of the final award, less litigation and other related costs, has been recorded by the Company in Gain on arbitration award, net, and the remaining amount received has been recorded in Other, net.

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.

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 and server storage products, 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

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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.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion of the financial condition and results of operations for our fiscal quarters ended January 2, 2015, October 3, 2014, and December 27, 2013, referred to herein as the “December 2014 quarter”, the “September 2014 quarter”, and the “December 2013 quarter”, respectively. Unless the context indicates otherwise, as used herein, the terms “we,” “us,” “Seagate,” the “Company” and “our” refer to Seagate Technology plc, an Irish public limited company, and its subsidiaries. References to “$” are to United States dollars.

You should read this discussion in conjunction with financial information and related notes included elsewhere in this report. We operate and report financial results on a fiscal year of 52 or 53 weeks ending on the Friday closest to June 30. The December 2014 and December 2013 quarters were both 13 weeks and the September 2014 quarter was 14 weeks. 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 Quarterly Report on Form 10-Q 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,” “intends,” “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 Quarterly Report on Form 10-Q 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 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 the 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. We also encourage you to read our Annual Report on Form 10-K for the year ended June 27, 2014, which contains information concerning risk, uncertainties and other factors that could cause results to differ materially from those projected in the forward-looking statements and this Form 10-Q. 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.

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

· Our Company. Overview of our business.

· Overview of the December 2014 quarter. Highlights of events in the December 2014 quarter that impacted our financial position.

· Results of Operations. An analysis of our financial results comparing the December 2014 quarter to the September 2014 quarter and the December 2013 quarter, and the six-month period ended December 2014 to the six-month period ended December 2013.

· 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.

· Critical Accounting Policies. Accounting policies and 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

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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.

Overview of the December 2014 Quarter

During the December 2014 quarter, we shipped 57 million units totaling 61 exabytes, generating revenue of $3.7 billion and gross margin of 28%. Our operating cash flow was $1.4 billion, which included $773 million from Western Digital as partial payment of the final award plus accrued interest in our arbitration case against Western Digital. We issued $500 million of 5.75% Senior Notes due 2034 and paid $411 million for the repurchase and redemption of $375 million par value of our outstanding debt as well as $177 million in dividends paid. In addition, we received the final audit assessment of $228 million from the Jiangsu Province State Tax Bureau of the People’s Republic of China related to tax and interest associated with changes to our tax filings for calendar years 2007 through 2013. The assessment was paid on January 4, 2015.

Results of Operations

We list in the tables below summarized information from our Condensed Consolidated Statements of Operations by dollars and as a percentage of revenue:

	For the Three Months Ended									For the Six Months Ended
(Dollars in millions)	January 2, 2015			October 3, 2014			December 27, 2013			January 2, 2015			December 27, 2013
Revenue	$	3,696		$	3,785		$	3,528		$	7,481		$	7,017
Cost of revenue	2,669			2,734			2,541			5,403			5,055
Gross margin	1,027			1,051			987			2,078			1,962
Product development	341			342			312			683			606
Marketing and administrative	218			216			190			434			371
Amortization of intangibles	32			31			25			62			45
Restructuring and other, net	3			6			16			10			18
Gain on arbitration award, net	(620		)	—			—			(620		)	—
Income from operations	1,053			456			444			1,509			922
Other income (expense), net	73			(64		)	(2		)	8			(40		)
Income before income taxes	1,126			392			442			1,517			882
Provision for income taxes	193			11			14			203			27
Net income	$	933		$	381		$	428		$	1,314		$	855

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	For the Three Months Ended						For the Six Months Ended
	January 2, 2015		October 3, 2014		December 27, 2013		January 2, 2015		December 27, 2013
Revenue	100	%	100	%	100	%	100	%	100	%
Cost of revenue	72		72		72		72		72
Gross margin	28		28		28		28		28
Product development	9		9		9		9		9
Marketing and administrative	6		6		5		6		5
Amortization of intangibles	1		1		1		1		1
Restructuring and other, net	—		—		1		—		—
Gain on arbitration award, net	(16	)	—		—		(8	)	—
Income from operations	28		12		12		20		13
Other income (expense), net	2		(2	)	—		—		(1	)
Income before income taxes	30		10		12		20		12
Provision for income taxes	5		—		—		2		—
Net income	25	%	10	%	12	%	18	%	12	%

Revenue

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

	For the Three Months Ended									For the Six Months Ended
(In millions, except percentages, exabytes and ASPs)	January 2, 2015			October 3, 2014			December 27, 2013			January 2, 2015			December 27, 2013
Unit Shipments:
Enterprise	9			9			8			18			16
Client Compute	36			39			36			75			72
Client Non-Compute	12			12			13			24			25
Total Units Shipped	57			60			57			117			113
ASPs (per unit)	$	61		$	60		$	62		$	61		$	62
Exabytes Shipped	61			60			52			121			101
Revenues by Channel (%)
OEMs	69		%	70		%	66		%	69		%	67		%
Distributors	18		%	18		%	21		%	18		%	21		%
Retailers	13		%	12		%	13		%	12		%	12		%
Revenues by Geography (%)
Americas	26		%	27		%	27		%	27		%	28		%
EMEA	18		%	17		%	20		%	17		%	19		%
Asia Pacific	56		%	56		%	52		%	56		%	53		%

Revenue in the December 2014 quarter decreased compared to the September 2014 quarter primarily due to a decrease in shipments and price erosion, partially offset by favorable product mix.

Revenue in the December 2014 quarter increased by $0.2 billion compared to the December 2013 quarter as a result of favorable product mix, partially offset by price erosion.

Revenue for the six months ended December 2014 increased by $0.5 billion, or 7%, as compared to the six months ended December 2013 primarily due to increased units shipped and favorable product mix, partially offset by price erosion.

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We maintain various sales programs such as point-of-sale rebates, sales price adjustments and price protection, aimed at increasing customer demand. Sales programs were approximately 9.4%, 9.2% and 7.5% of gross drive revenue for the December 2014 quarter, September 2014 quarter and December 2013 quarter, respectively. Adjustments to revenues due to under or over accruals for sales programs related to revenues reported in prior quarterly periods have averaged 0.3% of quarterly gross revenue and were 0.1% of quarterly gross revenue in the December 2014 quarter.

Cost of Revenue and Gross Margin

	For the Three Months Ended									For the Six Months Ended
(Dollars in millions)	January 2, 2015			October 3, 2014			December 27, 2013			January 2, 2015			December 27, 2013
Cost of revenue	$	2,669		$	2,734		$	2,541		$	5,403		$	5,055
Gross margin	1,027			1,051			987			2,078			1,962
Gross margin percentage	28		%	28		%	28		%	28		%	28		%

Gross margin as a percentage of revenue for the December 2014 quarter and the six months ended December 2014 was relatively flat when compared to the September 2014 quarter, December 2013 quarter and the six months ended December 2013. These margins reflect an environment where price erosion has been modest and was offset by improved product mix and cost savings due to increases in operational efficiencies.

In the December 2014 quarter, total warranty cost was 1.5% of revenue and included unfavorable changes in estimates of prior warranty accruals of approximately 0.4% of revenue. Warranty cost related to new shipments was 1.1%, 1.1% and 1.4% of revenue for the December 2014 quarter, September 2014 quarter and December 2013 quarter, respectively.

Operating Expenses

	For the Three Months Ended							For the Six Months Ended
(Dollars in millions)	January 2, 2015			October 3, 2014		December 27, 2013		January 2, 2015			December 27, 2013
Product development	$	341		$	342	$	312	$	683		$	606
Marketing and administrative	218			216		190		434			371
Amortization of intangibles	32			31		25		62			45
Restructuring and other, net	3			6		16		10			18
Gain on arbitration award, net	(620		)	—		—		(620		)	—
Operating expenses	$	(26	)	$	595	$	543	$	569		$	1,040

Product development expense. Product development expense for the December 2014 quarter was flat compared to the September 2014 quarter due to a full quarter effect of expenses related to LSI’s Flash Business acquired in September 2014 offset by the additional expenses related to a 14-week September 2014 quarter. Compared to the December 2013 quarter, Product development expense increased by $29 million, or 9% primarily due to an increase in headcount related costs of $28 million attributed to the consolidation of Xyratex and LSI’s Flash Business.

Product development expense for the six months ended December 2014 increased by $77 million, or 13% as compared to the corresponding period in the prior year mostly due to an increase in headcount related costs of $46 million attributed to consolidation of Xyratex and LSI’s Flash Business as well as a 14-week September 2014 quarter.

Marketing and administrative expense. Marketing and administrative expense for the December 2014 quarter was relatively flat when compared to the September 2014 quarter due to an increase in advertising and promotion expense partially offset by the additional expenses related to a 14-week September 2014 quarter. Compared to the December 2013 quarter, Marketing and administrative expense increased by $28 million, or 15%, which was primarily due to an increase in headcount related expense attributed to the consolidation of Xyratex and LSI’s Flash Business.

Marketing and administrative expense for the six months ended December 2014 increased by $63 million, or 17% as compared to the corresponding period in the prior year mostly due to an increase in headcount related expenses attributed to consolidation of Xyratex and LSI’s Flash Business as well as a 14-week September 2014 quarter.

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Amortization of intangibles. Amortization of intangibles for the December 2014 quarter was relatively flat when compared to the September 2014 quarter due to a full quarter effect of amortization expenses related to LSI’s Flash Business partially offset by additional expenses related to a 14-week September 2014 quarter. Compared to the December 2013 quarter, Amortization of intangibles increased by $7 million, or 28% as a result of the acquisitions of LSI’s Flash Business and Xyratex.

Amortization of intangibles for the six months ended December 2014 increased as compared to the corresponding period in the prior year by $17 million, or 38% as a result of the acquisitions of LSI’s Flash Business and Xyratex.

Restructuring and Other, net. Restructuring and other, net for the December 2014 quarter decreased when compared to the September 2014 quarter due to a restructuring charge recorded during the September 2014 quarter to reduce work force as a result of our ongoing focus on cost efficiencies in all areas of our business.

Restructuring and other, net for the December 2014 quarter and the six months ended December 2014 decreased when compared to the December 2013 quarter and the six months ended December 2013 due to a restructuring charge recorded during the December 2013 quarter to reduce work force as a result of our ongoing focus on cost efficiencies in all areas of our business.

Gain on arbitration award, net. Gain on arbitration award, net for the December 2014 quarter and the six months ended December 2014 was related to the final award amount of $630 million, less litigation and other related costs of $10 million, in the Company’s case against Western Digital for the misappropriation of the Company’s trade secrets.

Other income (expense), net

	For the Three Months Ended								For the Six Months Ended
(Dollars in millions)	January 2, 2015		October 3, 2014			December 27, 2013			January 2, 2015		December 27, 2013
Other income (expense), net	$	73	$	(64	)	$	(2	)	$	8	$	(40	)

Other income (expense), net increased for the December 2014 quarter when compared to the September 2014 quarter by $137 million, which was due to the partial payment of $143 million for interest accrued on the final arbitration award amount in the Company’s case against Western Digital, partially offset by a $23 million increase in losses from the early redemption and repurchase of debt. Compared to the December 2013 quarter, Other income (expense), net increased by $75 million primarily due to the partial payment of $143 million for interest accrued on the final arbitration award amount in the Company’s case against Western Digital, partially offset by a $37 million increase in losses from the early redemption and repurchase of debt and a gain of $32 million from the sale of one of our strategic investments recognized in the December 2013 quarter.

Other income (expense), net decreased for the six months ended December 2014 as compared to the corresponding period in the prior year primarily due to the partial payment of $143 million for interest accrued on the final arbitration award amount in our case against Western Digital, partially offset by a $52 million increase in losses from the early redemption and repurchase of debt and a gain of $32 million from the sale of one of our strategic investments in the December 2013 quarter.

Income taxes

	For the Three Months Ended						For the Six Months Ended
(Dollars in millions)	January 2, 2015		October 3, 2014		December 27, 2013		January 2, 2015		December 27, 2013
Provision for income taxes	$	193	$	11	$	14	$	203	$	27

Our income tax provision recorded for the December 2014 quarter and for the first half of fiscal year 2015 included approximately $181 million of net tax expense due to the final audit assessment received from the Jiangsu Province State Tax Bureau of the People’s Republic of China (China assessment) for calendar years 2007 through 2013.

Our income tax provision recorded for the December 2014 quarter and for the first half of fiscal year 2015 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, (ii) tax expense associated

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with the China assessment, and (iii) a decrease in valuation allowance for certain U.S. deferred tax assets. The acquisition of LSI’s Flash Business is not expected to have a material impact on our effective tax rate in fiscal year 2015.

The Tax Increase Prevention Act of 2014 (the Act) was enacted on December 19, 2014. The Act retroactively reinstated and extended the U.S. federal Research and Development Tax Credit (R&D Credit) to December 31, 2014, as well as the bonus depreciation on qualified property. The extension of the R&D Credit and bonus depreciation had no immediate impact on our income tax provision due to existing valuation allowances on our U.S. deferred tax assets. None of the other Act changes are expected to have a material impact on our income tax provision.

During the six months ended January 2, 2015, our unrecognized tax benefits excluding interest and penalties decreased by $42 million primarily due to (i) reductions associated with audit settlements of $45 million, (ii) reductions associated with the expiration of certain statutes of limitations of $4 million, (iii) increases in current year unrecognized tax benefits of $5 million, and (iv) net increases associated with changes in prior years’ positions of $2 million.

The unrecognized tax benefits that, if recognized, would impact the effective tax rate were $73 million at January 2, 2015, subject to certain future valuation allowance reversals. During the 12 months beginning January 3, 2015, we expect that our unrecognized tax benefits could be reduced by approximately $3 million as a result of 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. We are currently contesting certain of these proposed adjustments through the IRS Appeals Office. We believe that the resolution of these disputed issues will not have a material impact on our financial statements. As discussed above, on December 31, 2014, we received the final audit assessment from the Jiangsu Province State Tax Bureau of the People’s Republic of China. The assessment is related to tax and interest associated with changes to our tax filings for calendar years 2007 through 2013. Resolving the audit in connection with obtaining agreement from the China tax authorities on predictable, future tax expense provides stability to our business model. Additional, future tax expense required by the agreement is not expected to have a material impact on our financial statements.

Our income tax provision recorded for the December 2013 quarter and for the first half of fiscal year 2014 included approximately $4 million and $6 million, respectively, of net discrete tax expense primarily related to increases in income tax reserves recorded for non-U.S. income positions taken in prior fiscal years offset by the tax benefits from the reversal of a portion of the U.S. valuation allowance recorded in prior periods and tax benefits associated with the release of tax reserves associated with the expiration of certain statutes of limitation.

Our income tax provision for the December 2013 quarter and for the first half of 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 U.S. deferred tax assets.

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 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 in money market funds, time deposits, interest-bearing bank accounts, and would invest 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 January 2, 2015.

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Cash and Cash Equivalents, Short-term Investments, and Restricted Cash and Investments

(Dollars in millions)	January 2, 2015		June 27, 2014		Change
Cash and cash equivalents	$	3,296	$	2,634	$	662
Short-term investments	6		20		(14		)
Restricted cash and investments	4		4		—
Total	$	3,306	$	2,658	$	648

Our cash and cash equivalents, short-term investments and restricted cash and investments increased from June 27, 2014 as a result of net cash provided by our operating activities, which included an arbitration award partial payment of $773 million from Western Digital, and the proceeds from the issuance of $500 million of our 5.75% Senior Notes due 2034. These cash inflows were partially offset by early redemption and repayments of long-term debt, repurchase of our ordinary shares, dividends paid to our shareholders, capital expenditures and the acquisition of LSI’s Flash Business, as disclosed below.

Cash Provided by Operating Activities

Cash provided by operating activities for the six months ended January 2, 2015 of $2.0 billion includes the effects of net income adjusted for non-cash items including depreciation, amortization, share-based compensation and an increase of $167 million in accrued expenses, income taxes and warranty primarily related to $190 million in accrued income taxes associated with the final audit assessment received from the Jiangsu Province State Tax Bureau of the People’s Republic of China related to tax and interest associated with changes to our tax filings for the calendar years 2007 through 2013.

Net income includes a partial payment of $773 million for the arbitration award and related accrued interest, received from Western Digital.

Cash Provided by Investing Activities

Cash used for investing activities for the six months ended January 2, 2015 was $853 million which includes $387 million used for acquired property, equipment and leasehold improvements and $450 million used for the acquisition of LSI’s Flash Business.

Cash Used in Financing Activities

Net cash used in financing activities of $518 million for the six months ended January 2, 2015 was attributable to the following activities:

· $535 million of redemption and repayments of long-term debt;

· $317 million in dividend payments;

· $201 million paid to repurchase ordinary shares; and partially offset by

· net proceeds of $498 million received from issuance of our 5.75% Senior Notes due 2034.

Liquidity Sources, Cash Requirements and Commitments

Our primary sources of liquidity as of January 2, 2015 consisted of: (1) approximately $3.3 billion in cash, cash equivalents, and short-term investments, (2) cash we expect to generate from operations and (3) a $500 million senior revolving credit facility.

On January 15, 2015, the Company and Seagate HDD Cayman entered into the Third Amendment to the Credit Agreement (the “Amendment”) which increased the commitments available under the Revolving Credit Facility from $500 million to $700 million and also extended the maturity date on the Credit Agreement until January 15, 2020, provided that if the Company does not have Investment Grade Ratings (as defined in the Credit Agreement) on August 15, 2018, then the maturity date will be August 16, 2018 unless certain extension conditions have been satisfied. As of January 30, 2015, no borrowings have been drawn or letters of credit utilized under the Revolving Credit Facility. The line of credit is available for borrowings, subject to compliance with financial covenants and other customary conditions to borrowings.

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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 also 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 January 2, 2015, we were in compliance with all of the covenants under our Revolving Credit Facility and 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.

Our liquidity requirements are primarily to meet our working capital, product development and capital expenditure needs, to fund scheduled payments of principal and interest on our indebtedness, and to fund our quarterly 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.

For fiscal year 2015, we expect capital expenditures to be within our long-term targeted range of 6% to 8% of revenue.

From time to time we may repurchase any of our outstanding notes in open market or privately negotiated purchases or otherwise, or may repurchase outstanding notes pursuant to the terms of the applicable indenture.

The Company’s Board of Directors approved a quarterly cash dividend of $0.54 per share on January 20, 2015, which is payable on February 24, 2015 to shareholders of record at the close of business on February 10, 2015.

From time to time we may repurchase any of our outstanding ordinary shares through private, open market, or broker assisted purchases. As of January 2, 2015, $1.3 billion remained available for repurchase under our existing repurchase authorization limit. All repurchases are effected as redemptions in accordance with the Company’s Articles of Association.

On December 31, 2014, we received the final audit assessment from the Jiangsu Province State Tax Bureau of the People’s Republic of China. The assessment of $228 million was related to tax and interest associated with changes to our tax filings for calendar years 2007 through 2013. The assessment was paid on January 4, 2015.

Critical Accounting Policies

Our discussion and analysis of financial condition and results of operations are based upon our Condensed Consolidated Financial Statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of such statements requires us to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period and the reported amounts of assets and liabilities as of the date of the financial statements. Our estimates are based on historical experience and other assumptions that we consider to be appropriate in the circumstances. However, actual future results may vary from our estimates.

Since our fiscal year ended June 27, 2014, there have been no material changes in our critical accounting policies and estimates. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended June 27, 2014, as filed with the SEC on August 7, 2014, for a discussion of our critical accounting policies and estimates.

Recent Accounting Pronouncements

See Part I, Item 1. Financial Statements—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 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have exposure to market risks due to the volatility of interest rates, foreign currency exchange rates, 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.

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Interest Rate Risk. Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio. At January 2, 2015, we 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 January 2, 2015. We currently do not use derivative financial instruments in our investment portfolio.

We have fixed rate debt obligations. We enter into debt obligations to support general corporate purposes including capital expenditures and working capital needs.

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 January 2, 2015.

Fiscal Years Ended

(Dollars in millions, except percentages)	2015			2016		2017			2018		2019			Thereafter			Total			Fair Value at January 2, 2015
Assets
Cash equivalents:
Fixed rate	$	2,760		$	—	$	—		$	—	$	—		$	—		$	2,760		$	2,760
Average interest rate	0.14		%														0.14		%
Short-term investments:
Fixed rate	$	—		$	—	$	5		$	—	$	—		$	1		$	6		6
Average interest rate						8.77		%						4.67		%	8.09		%
Total fixed income	$	2,760		$	—	$	5		$	—	$	—		$	1		$	2,766		$	2,766
Average interest rate	0.14		%			8.77		%						4.67		%	0.15		%
Debt
Fixed rate	$	—		$	—	$	—		$	—	$	800		$	3,134		$	3,934		$	4,118
Average interest rate											3.75		%	5.35		%	5.02		%

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.

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 foreign currency forward contracts mature within 12 months.

We evaluate hedging effectiveness prospectively and retrospectively and record any ineffective portion of the hedging instruments in Cost of revenue on the Consolidated Statements of Operations. We did not have any material net gains (losses) recognized in Cost of revenue for cash flow hedges due to hedge ineffectiveness or discontinued cash flow hedges during the three months ended January 2, 2015.

The table below provides information as of January 2, 2015 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.

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(Dollars in millions, except average contract rate)	Notional Amount		Average Contract Exchange Rate	Estimated Fair Value (1)
Foreign currency forward exchange contracts:
Thai Baht	$	31	32.65	$	—
Singapore Dollars	188		1.27	(9		)
Chinese Renminbi	86		6.22	(1		)
Total	$	305		$	(10	)

(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 institution. Additionally, the investment portfolio is diversified and structured to minimize credit risk. As of January 2, 2015, 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”). In the quarter ended December 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.

ITEM 4. CONTROLS AND PROCEDURES

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 the end of the period covered by this quarterly report. Based on the evaluation, our management, including our chief executive officer and chief financial officer, concluded that our disclosure controls and procedures were effective as of January 2, 2015. During the quarter ended January 2, 2015, there were no changes in our internal control over financial reporting that materially affected, or were reasonably likely to materially affect our internal control over financial reporting.

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PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For a discussion of legal proceedings, see Part I, Item 1. Financial Statements—Note 13, Legal, Environmental and Other Contingencies of this Report on Form 10-Q.

ITEM 1A. RISK FACTORS

There have been no material changes to the description of the risk factors associated with our business previously disclosed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended June 27, 2014. In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in our Annual Report on Form 10-K as they could materially affect our business, financial condition and future results.

The Risk Factors are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition or operating results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Repurchase of Equity Securities

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

On July 24, 2013, the Board of Directors authorized the Company to repurchase $2.5 billion of its outstanding ordinary shares. As of January 2, 2015, $1.3 billion remained available for repurchase under the existing repurchase authorization limit. There is no expiration date on this authorization.

The following table sets forth information with respect to all repurchases of our shares made during fiscal quarter ended January 2, 2015:

(In millions, except average price paid per share)	Total Number of Shares Repurchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs

October 4, 2014 through October 31, 2014	0.3	$	65.03	0.3	$	1,290
November 1, 2014 through November 28, 2014	—	—		—	1,290
November 29, 2014 through January 2, 2015	—	—		—	1,290
Total	0.3	$	—	0.3	$	1,290

(1) During this period we purchased approximately 26 thousand ordinary shares in transactions unrelated to publicly announced share plans or programs. These transactions consisted of acquisitions of shares via share withholding for tax obligations due from our non-employee directors in connection with the vesting of certain equity awards. These purchases of shares do not affect our aggregate available authorization for the share purchase programs described above.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable

ITEM 6. EXHIBITS

See Exhibit Index on the page immediately following the signature page to this Report for a list of exhibits to this Report, which Exhibit Index is incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements 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.

		SEAGATE TECHNOLOGY PUBLIC LIMITED COMPANY


DATE:	January 30, 2015		BY:	/s/ STEPHEN J. LUCZO
				Stephen J. Luczo
				Chief Executive Officer, Director and Chairman of the Board of Directors
				(Principal Executive Officer)


DATE:	January 30, 2015		BY:	/s/ PATRICK J. O’MALLEY
				Patrick J. O’Malley
				Executive Vice President, Finance and Chief Financial Officer
				(Principal Financial Officer)

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EXHIBIT INDEX

Exhibit Number		Description of Exhibit

2.1		Agreement and Plan of Merger, dated as of December 21, 2013, among Seagate Technology International, Phoenix Acquisition Ltd and Xyratex Ltd., filed as Exhibit 2.1 to the current report on Form 8-K filed by Seagate Technology plc (the “Company”) on December 23, 2013 and incorporated herein by reference.

3.1		Memorandum and Articles of Association of the Company, as amended and restated by Special Resolution dated October 30, 2013, filed as Exhibit 3.1 to the Company’s current report on Form 8-K filed on November 1, 2013, and incorporated herein by reference.

3.2		Certificate of Incorporation of the Company, filed as Exhibit 3.2 to the Company’s annual report on Form 10-K for the fiscal year ended July 2, 2010 and incorporated herein by reference.

4.1		Indenture dated as of December 2, 2014, among Seagate HDD Cayman, as issuer, the Company, as guarantor, and U.S. Bank National Association, as trustee, filed as Exhibit 4.1 to the Company’s current report on Form 8-K filed on December 2, 2014 and incorporated herein by reference.

4.2		Form of 5.75% Senior Note due 2034, filed as Exhibit 4.2 to the Company’s current report on Form 8-K filed on December 2, 2014 and incorporated herein by reference.

4.3		Registration Rights Agreement dated as of December 2, 2014, among Seagate HDD Cayman, the Company and Morgan Stanley & Co. LLC, filed as Exhibit 4.3 to the Company’s current report on Form 8-K filed on December 2, 2014 and incorporated herein by reference.

10.1		Third amendment to credit agreement, filed as Exhibit 10.1 to the Company’s current report on Form 8-K filed on January 15, 2015 and incorporated herein by reference.

10.2		Amended and Restated Seagate Technology Public Limited Company 2012 Equity Incentive Plan, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 24, 2014 and incorporated herein by reference.

10.3+		2015 Seagate Deferred Compensation Plan (Effective as of January 1, 2015)

10.4+		Fourth Amendment to the Seagate Deferred Compensation Plan

31.1+		Certification of Stephen J. Luczo, Chairman and Chief Executive Officer of the Company, as required by Section 302 of the Sarbanes-Oxley Act of 2002.

31.2+		Certification of Patrick J. O’Malley, Executive Vice President and Chief Financial Officer of the Company, as required by Section 302 of the Sarbanes-Oxley Act of 2002.

32.1+†		Certification of Stephen J. Luczo, Chairman and Chief Executive Officer of the Company and Patrick J. O’Malley, Executive Vice President and Chief Financial Officer of the Company, as required by Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS+		XBRL Instance Document.

101.SCH+		XBRL Taxonomy Extension Schema Document.

101.CAL+		XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF+		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB+		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE+		XBRL Taxonomy Extension Presentation Linkbase Document.

+ Filed herewith.

† The certifications attached as Exhibit 32.1 that accompany this Form 10-Q 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

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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-Q, irrespective of any general incorporation language contained in such filing.

Exhibit 10.3

2015 SEAGATE DEFERRED

COMPENSATION PLAN

(Effective January 1, 2015)

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ARTICLE I DEFINITIONS		1
1.1.	Account	1
1.2.	Base Salary	2
1.3.	Beneficiary	2
1.4.	Board of Directors	2
1.5.	Bonus	2
1.6.	Change in Control. “Change in Control”	2
1.7.	Code	2
1.8.	Commissions	2
1.9.	Committee	2
1.10.	Company	2
1.11.	Company Contributions	2
1.12.	Compensation	2
1.13.	Disability	3
1.14.	Distributable Amount	3
1.15.	Distribution Event	3
1.16.	Effective Date	3
1.17.	Eligible Employee	3
1.18.	Employee	3
1.19.	ERISA	3
1.20.	Fund	4
1.21.	Investment Return	4
1.22.	Participant	4
1.23.	Participating Company	4
1.24.	Payment Commencement Date	4
1.25.	Plan	4
1.26.	Plan Year	4
1.27.	Related Company	4
1.28.	Specified Employee	5
ARTICLE II PARTICIPATION		5
2.1.	Participation	5
ARTICLE III DEFERRAL ELECTIONS		5
3.1.	Elections to Defer Compensation	5
3.2.	Company Contributions	7
3.3.	Investment Elections	7
ARTICLE IV ACCOUNTS		8
4.1.	Participant Accounts	8
ARTICLE V VESTING		9
5.1.	Account	9
ARTICLE VI DISTRIBUTIONS		9
6.1.	Distribution Options	9
6.2.	Distribution due to Separation from Service, Disability or Death	10
6.3.	Scheduled In-Service Withdrawals	11
6.4.	Unforeseeable Emergency	13

6.5.	Distributions to Specified Employees	13
6.6.	Section 162(m) Limitation	14
6.7.	Inability to Locate Participant	14
6.8.	Payment Upon Change in Control	14
ARTICLE VII ADMINISTRATION		14
7.1.	Committee	14
7.2.	Committee Action	14
7.3.	Powers and Duties of the Committee	15
7.4.	Construction and Interpretation	16
7.5.	Information	16
7.6.	Compensation, Expenses and Indemnity	16
7.7.	Quarterly Statements	16
ARTICLE VIII MISCELLANEOUS		17
8.1.	Unsecured General Creditor	17
8.2.	Trust; Unfunded Plan	17
8.3.	Restriction Against Assignment	17
8.4.	Withholding	17
8.5.	Amendment, Modification, Suspension or Termination	18
8.6.	Governing Law	18
8.7.	Receipt or Release	18
8.8.	Payments on Behalf of Persons under Incapacity	19
8.9.	No Employment Rights	19
8.10.	Headings, etc. Not Part of Agreement	19
8.11.	Liability Between Company and Participating Companies	19
8.12.	Code Sections 409A and 457A	19
8.13.	Department of Labor Determination	20
ARTICLE IX CLAIMS PROCEDURES		20
9.1.	Claim for Benefits	20
9.2.	Notice of Denial	20
9.3.	Review of Claim	20
9.4.	Decision After Review	21
9.5.	Legal Action	21
9.6.	Discretion of the Committee	21
EXHIBIT “A” PARTICIPATING COMPANIES		i

2015 SEAGATE DEFERRED COMPENSATION PLAN

Effective January 1, 2015

PURPOSE AND ESTABLISHMENT

This document includes the terms of the 2015 Seagate Deferred Compensation Plan. Capitalized terms, unless defined herein, shall have the meaning provided in Article I.

The Plan is intended to provide supplemental retirement benefits to Eligible Employees. The Plan is a successor to the Seagate Deferred Compensation Plan, which the Company froze with respect to all deferrals for performance periods after December 31, 2014. Effective January 1, 2015, the Company established this Plan to apply to amounts deferred with respect to performance periods after December 31, 2014 and any earnings attributable thereto.

The Company intends that the Plan constitute an unfunded deferred compensation plan for a select group of management or highly compensated employees within the meaning of ERISA sections 201(2), 301(a)(3) and 401(a)(1). All provisions of the Plan shall be interpreted and administered to the extent possible in a manner consistent with the stated intentions.

ARTICLE I

DEFINITIONS

Whenever the following words and phrases are used in this Plan, with the first letter capitalized, they shall have the meanings specified below:

1.1. Account. “Account” means, for each Participant, the bookkeeping account maintained by the Committee that is credited with amounts equal to (a) the portion of the Participant’s Compensation that he or she elects to defer, (b) Company Contributions, if any, made to the Plan for the Participant’s benefit, and (c) adjustments to reflect deemed earnings pursuant to Subsection 4.1(d).

1.2. Base Salary. “Base Salary” means the Employee’s base salary for the Plan Year, and does not include any other form of compensation such as Annual Bonuses, Commissions, restricted stock, proceeds from stock options or stock appreciation rights, expatriate premiums, hypothetical tax payments for expatriates, severance payments, moving expenses, car or other special allowance, non-monetary awards, other special compensation, salary replacements paid by the Company or any Participating Company such as short or long-term disability benefits, and any other similar amounts paid by the Company or any Participating Company to an Eligible Employee whether or not includible in taxable income. Base Salary is determined before: (a) any reduction pursuant to Code sections 125, 132(f)(4), or 401(k); (b) any reduction to reflect a deferral election in accordance with this Plan; (c) after-tax withholdings for insurance premium payments, including accident, death and disability, and life insurance premiums; and (d) Social Security and Medicare withholding obligations imposed on the Employer and any other withholding requirements imposed by law with respect to such amounts.

1.3. Beneficiary. “Beneficiary” or “Beneficiaries” means the beneficiary or beneficiaries last designated in writing by a Participant in accordance with procedures established by the Committee from time to time to receive the benefits specified hereunder in the event of the Participant’s death. No Beneficiary designation shall become effective unless and until it is filed with the Committee during the Participant’s lifetime.

1.4. Board of Directors. “Board of Directors” or “Board” means the Board of Directors of the Company. To the extent the compensation committee charter authorizes it, the Seagate compensation committee will on behalf of the Board.

1.5. Bonus. “Bonus” means the performance-based cash incentive compensation payable to a Participant under any bonus and cash incentive plans of the Company or a Participating Company, including the Key Contributor Performance Bonus Plan and the Executive Performance Bonus Plan, the amount of which, or the entitlement to which, is contingent on the satisfaction of organizational or individual performance criteria. For purposes of the Plan, Bonus shall not include any discretionary bonus payments, including Reward and Recognition bonuses.

1.6. Change in Control. “Change in Control” means a “change in the ownership” of the Company, a “change in effective control” of the Company or a “change in the ownership of a substantial portion of the assets” of the Company, in each case, as defined under Code Section 409A.

1.7. Code. “Code” means the Internal Revenue Code of 1986, as amended. Reference to a section of the Code includes such section and any comparable section or sections of any future legislation that amends, supplements or supersedes such section.

1.8. Commissions. “Commissions” means any fee, sum or percentage paid to an Employee for transacting a piece of business or performing a service for the Company.

1.9. Committee. “Committee” means the Seagate Benefits Administrative Committee appointed by the Board to administer the Plan in accordance with Article VII.

1.10. Company. “Company” means Seagate US LLC, and any successor thereto.

1.11. Company Contributions. “Company Contributions” is defined in Section 3.2.

1.12. Compensation. “Compensation” means the Base Salary, Commissions, and/or Bonuses that the Participant earns for services rendered to the Company or a Participating Company.

1.13. Disability. “Disability” means a condition under which a Participant either (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Company.

1.14. Distributable Amount. “Distributable Amount” means the aggregate vested amount credited to a Participant’s Account less any amounts previously distributed to (or deemed distributed to or forfeited by) that Participant without regard to whether such amounts are credited to any separate subaccounts established for the purpose of administering the Plan except to the extent that the Plan provides otherwise. Such amount shall be valued as of the date determined by the Committee or its delegate in its sole discretion. The Distributable Amount shall not include any other amounts deferred or credited with respect to deferrals pursuant to any other nonqualified deferred compensation plan sponsored by the Company.

1.15. Distribution Event. “Distribution Event” means, with respect to each Participant, (i) the Participant’s “separation from service” (as such term is defined under Code Section 409A) as an employee from the Company, all Participating Companies and all Related Companies, (ii) death, (iii) Disability, (iv) an unforeseeable emergency as described in Section 6.4 of the Plan, or (v) a Scheduled In-Service Withdrawal, if specified by the Participant pursuant to Article VI. A Participant’s Distribution Event election shall be made in writing at such time, on such form and subject to such procedures as the Committee may, in its sole and absolute discretion, specify from time to time. Notwithstanding the foregoing, a Distribution Event will not be deemed to have occurred if a Participant transfers employment or other service from one Participating Company to become employed by another Participating Company or any Related Company without any intervening employment.

1.16. Effective Date. “Effective Date” means January 1, 2015.

1.17. Eligible Employee. “Eligible Employee” means an Employee who is in a select group of management or highly compensated Employees including, without limitation, (i) all vice presidents and equivalent positions (or other high-level technical positions) and above, and (ii) any Employee who, for a relevant Plan Year, (A) has a Base Salary equal to or in excess of the amount set from time to time by the Committee or (B) has target commissions and a Base Salary, the sum of which is equal to or in excess of the amount set from time to time by the Committee, and who is selected for participation by the Committee, both in the Committee’s sole and absolute discretion.

1.18. Employee. “Employee” means a common-law employee of the Company or a Participating Company regularly performing services in the United States and subject to United States federal income tax.

1.19. ERISA. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

1.20. Fund. “Fund” or “Funds” means one or more of the investment funds selected by the Committee pursuant to Section 3.3.

1.21. Investment Return. “Investment Return” means, for each Fund, an amount equal to the pre-tax rate of gain or loss on the assets of such Fund (net of applicable fund and investment charges) during each valuation period, but not less frequently than monthly.

1.22. Participant. “Participant” means any Eligible Employee who elects to defer Compensation in accordance with Section 3.1, and any other individual with respect to whom an Account is maintained under this Plan.

1.23. Participating Company. “Participating Company” means each unrelated employer that the Committee and such employer agree shall be a participating employer in the Plan. Each Participating Company is set forth in Exhibit A.

1.24. Payment Commencement Date. “Payment Commencement Date” means as follows: (i) with respect to payments due to Disability, as soon as administratively possible after the first day of the month following the end of the calendar quarter in which the Participant suffers a condition that constitutes a Disability; (ii) with respect to payments due to separation from service, during the month following the end of the calendar quarter in which the Participant separates from service, or, during the year following the year in which the Participant separates from service, depending on the Participant’s election, and (iii) with respect to Scheduled In-Service Withdrawals, as set forth in Section 6.3(d). If a Participant has not elected a Payment Commencement Date under this Section 1.24, the Payment Commencement Date shall be during the first month following the end of the calendar quarter in which the Participant has a Distribution Event.

Notwithstanding any elections by a Participant, payments with respect to any Distribution Event may commence between the date of the Payment Commencement Date and the end of the year in which the Payment Commencement Date occurs, or if later, on or before the 15th day of the third calendar month following the Payment Commencement Date provided, however, that a Participant will not be permitted, directly or indirectly, to designate the taxable year of the payment. Any payment that complies with this Section and the payment delay for Specified Employees provided in Section 6.5 shall be deemed for all purposes to comply with the Plan requirements regarding the time and form of payment.

1.25. Plan. “Plan” means the 2015 Seagate Deferred Compensation Plan, as set forth herein, now in effect, or as amended from time to time.

1.26. Plan Year. “Plan Year” means the calendar year beginning each January 1 and ending December 31.

1.27. Related Company. “Related Company” means all entities that would be considered a single employer under Treas. Reg. § 1.409A-1(h)(3).

1.28. Specified Employee. “Specified Employee” shall mean any Participant who, as of the date of such Participant’s “separation from service” (as such term is defined under Section 409A of the Code), is identified as a “specified employee” pursuant to the Company’s Specified Employee Procedure.

ARTICLE II

PARTICIPATION

2.1. Participation. An Eligible Employee shall become a Participant in the Plan by electing to defer a portion of his or her Compensation in accordance with Section 3.1.

ARTICLE III

DEFERRAL ELECTIONS

3.1. Elections to Defer Compensation.

(a) Annual Elections. For each Plan Year, a Participant may elect to defer some or all of Base Salary, Bonuses, and/or Commissions to be paid for services to be performed during the Plan Year, and to the extent permitted by this Plan, the time and form of distribution of deferrals. Deferral Elections are effective on a calendar year basis and become irrevocable no later than the date specified by the Committee, but in any event before the beginning of the Plan Year to which the election relates. A Participant’s elections will become effective only if the forms required by the Committee have been properly completed and signed by the Participant (including, but not limited to, an electronic form), timely delivered to the Committee, and accepted by the Committee. A Participant who fails to file elections before the required date will be treated as having elected not to defer any amounts earned during the following Plan Year.

(b) Special Rules for New Eligible Employees.

(1) New Hires and Promotions. The Committee may, in its discretion, permit an Employee who becomes an Eligible Employee after the beginning of a Plan Year to defer Compensation for that Plan Year by filing with the Committee an irrevocable deferral election during the 30 day period following the date the Employee becomes an Eligible Employee. Any election by an Eligible Employee, pursuant to this Section, to defer Base Salary, Bonuses, and/or Commissions shall apply only to such amounts earned by the Eligible Employee after the date on which the deferral election is filed. Notwithstanding the foregoing, a newly Eligible Employee who participates in any other account balance plan that is aggregated with the Plan pursuant to Code Section 409A shall not be permitted to file an election to defer Compensation in accordance with this Section.

(2) Formerly Eligible Employees Who Again Become Eligible. An Employee who again becomes an Eligible Employee after a period of ineligibility may

defer Compensation in accordance with Section 3.1(b) only if the Employee was not eligible to defer compensation in the Plan and any other account balance plan aggregated with the Plan pursuant to Code Section 409A for the twenty-four (24) month period ending on the date on which the Employee again became an Eligible Employee. Any Employee who again becomes an Eligible Employee after a period of ineligibility and who has an Account cannot file new distribution elections for previously deferred amounts credited to such Account except as otherwise provided in the Plan.

(c) Special Rule for Performance-Based Bonuses. Notwithstanding any provision in the Plan to the contrary, the Committee may, in its discretion, allow a Participant to make a deferral election with respect to a Bonus on or before the date that is six months before the end of the performance period if (1) the Bonus is performance-based compensation within the meaning of Code Section 409A; (2) the performance period is at least 12 consecutive months; and (3) the Participant performs services continuously from the later of the beginning of the performance period or the date the performance criteria are established through the date the election is filed. Any election pursuant to this Section shall become irrevocable no later than the earlier of: (a) six months preceding the end of the performance period to which the Bonus relates; or (b) the date as of which the Bonus has become readily ascertainable, within the meaning of Code Section 409A.

(d) General Rule. The amount of Compensation that an Eligible Employee may elect to defer is as follows:

(1) Any whole percentage of Base Salary up to seventy percent (70%);

(2) Any whole percentage of Bonuses up to one hundred percent (100%); and/or

(3) Any whole percentage of Commissions up to seventy percent (70%);

provided, however, that, to the extent permitted by Code Section 409A, no election shall be effective to reduce the amount actually paid to an Eligible Employee for a calendar year to an amount that is less than the amount necessary to pay (i) FICA and other employment, state, local and foreign taxes payable with respect to the deferred amounts; (ii) any amounts necessary to satisfy any wage garnishment or similar obligations; and (iii) any amounts necessary to satisfy any debt owed by the Participant to the Company.

(e) Deferral Limits. The Committee may change the maximum deferral percentages and establish minimum deferral percentages from time to time in its sole discretion. Any such limits shall be communicated by the Committee.

(f) Effectiveness of Deferral Election. An election to defer Base Salary, Bonuses, and/or Commissions shall be effective with respect to Compensation that is paid with respect to services performed during the Plan Year except that a Participant’s deferral election for a Plan Year shall not be effective with respect to Compensation for the final payroll period of the Plan Year if such payroll period contains the last day of the Plan Year (i.e., December 31) and the Compensation for such payroll period is paid in the

following Plan Year. In such event, a Participant’s deferral election (if any) for the following Plan Year shall be effective with respect to Compensation for the final payroll period of the Plan Year, and if Participant does not file a deferral election for the following Plan Year, then no portion of such Compensation for the final payroll period shall be deferred. A Participant’s deferral election for a Plan Year shall remain in effect for the entire Plan Year for which the election relates (or if approved by the Committee pursuant to Section 3.1(b), the remainder of the Plan Year for which the election relates), notwithstanding any change in the Participant’s Base Salary, Bonuses and/or Commissions during the Plan Year.

(g) General Rule Applicable to Deferral Elections. If the Committee determines in good faith that a Participant is no longer an Eligible Employee, the Participant’s deferral elections for the Plan Year (if any) shall continue to the end of the Plan Year, but shall terminate thereafter, and the terms of the Plan shall continue to govern the Participant’s Account until his or her Account has been paid in full.

(h) Withholding of Deferral Amounts. The Committee shall have the sole discretion to withhold the percentage of Base Salary, Bonuses and/or Commissions designated by the Participant for deferral for a Plan Year at the times and in the amounts that the Committee, in its sole discretion, selects, which need not be uniform among Participants or as to payments to a single Participant; provided, however, that deferral amounts must be withheld not later than the end of the calendar year during which the Company would otherwise have paid the amounts to the Participant but for the Participant’s deferral election. Deferrals of Base Salary shall not be withheld during any period in which the Participant is on an unpaid leave of absence. All deferral amounts that are withheld in accordance with this Section shall be deemed for all purposes to comply with the Plan requirements regarding deferrals.

(i) Obligation to Report Errors. Each Participant is responsible for reviewing his or her pay statements and his or her periodic benefit statement to determine whether the Employer withheld the correct amount of Base Salary, Commission or Bonus deferrals from the Participant’s pay and credited the correct amount to the Participant’s Account. Participants are required to contact the Committee with respect to any deferral or distribution error during the calendar year. If the Participant fails to notify the Committee with respect to any deferral or distribution errors, the Employer is deemed to have acted in good faith and will not be liable for any adverse tax consequences to Participant or Participant claims relating to failure to defer or distribute the correct amounts.

3.2. Company Contributions. The Company and each Participating Company may make discretionary contributions to the Accounts of one or more Participants at such times and in such amounts, and subject to such vesting and other conditions, as the Company and each such Participating Company may determine.

3.3. Investment Elections. The Committee may, in its sole and absolute discretion, provide each Participant with a list of investment funds available for hypothetical investment, and the Participant may designate, in a manner specified by the Committee, one or more Funds that his

or her Account will be deemed to be invested in for purposes of determining the amount of earnings to be credited to that Account. The Committee may, from time to time, in its sole and absolute discretion, change the investment funds. The Investment Return of each such commercially available fund shall be used to determine the amount of earnings to be credited to Participants’ Accounts under Subsection 4.1(d). In making the designation pursuant to this Section, the Participant may specify that all or any one percent (1%) multiple of his or her Account be deemed to be invested in one or more of the Funds offered by the Committee. Subject to such limitations and conditions as the Committee may specify, a Participant may change the designation made under this Section each business day, in such manner and at such time or times as the Committee shall specify from time to time. If a Participant fails to elect a Fund under this Section or if the Committee does not provide such Participant with a list of Funds pursuant to this Section, then the Participant shall be deemed to have elected a money market or similar fund. The Company may, but need not, acquire investments corresponding to those designated by the Participants hereunder, and it is not under any obligation to maintain any investment it may make. Any such investments, if made, shall be Company (or if applicable, each Participating Company) property in which no Participant shall have any interest. Notwithstanding anything to the contrary, in no event shall a Participant’s Account be credited with investment earnings after the Participant’s Account has been fully distributed to the Participant.

ARTICLE IV

ACCOUNTS

4.1. Participant Accounts. The Committee shall establish and maintain an Account for each Participant under the Plan. Each Participant’s Account may be further divided into separate subaccounts (“investment fund subaccounts”), corresponding to investment Funds elected by the Participant pursuant to Section 3.3 or as otherwise determined by the Committee to be necessary or appropriate for proper Plan administration. A Participant’s Account shall be credited as follows:

(a) As of the date on which a payroll withholding is made for a Participant, or as soon as administratively practicable thereafter, the Committee shall credit the investment fund subaccounts of that Participant’s Account with an amount equal to Base Salary deferred by the Participant during each such pay period in accordance with the Participant’s election; that is, the portion of the Participant’s deferred Base Salary that the Participant has elected to be deemed to be invested in a certain type of investment Fund shall be credited to the investment fund subaccount corresponding to that investment Fund.

(b) As of the date on which each Bonus and/or Commission would have been paid, or as soon as administratively practicable thereafter, the Committee shall credit the investment fund subaccounts of the Participant’s Account with an amount equal to the portion of the Bonus and/or Commission deferred by the Participant’s election; that is, the portion of the Participant’s deferred Bonus and/or Commission that the Participant has elected to be deemed to be invested in a certain type of investment Fund shall be credited to the investment fund subaccount corresponding to that investment Fund.

(c) As soon as administratively practicable after the last day of the Plan Year or such earlier time or times as the Committee may determine, the Committee shall credit the

investment fund subaccounts of the Participant’s Account with an amount equal to the portion, if any, of any Company Contribution made to or for the Participant’s benefit in accordance with Section 3.2; that is, the portion of the Participant’s Company Contribution, if any, that the Participant has elected to be deemed to be invested in a certain type of investment Fund shall be credited to the investment fund subaccount corresponding to that investment Fund.

(d) At such time or times as the Committee may determine, but not less frequently than monthly, each investment fund subaccount of a Participant’s Account shall be credited with earnings in an amount equal to that determined by multiplying the balance credited to such investment fund subaccount as of the last day of the preceding valuation period by the Investment Return for the corresponding Fund selected by the Committee.

ARTICLE V

VESTING

5.1. Account

(a) Compensation Deferrals. A Participant’s Account attributable to Compensation deferred by a Participant pursuant to the terms of this Plan, together with any amounts credited to the Participant’s Account under Section 4.1 with respect to such deferrals, shall be one hundred percent (100%) vested at all times.

(b) Company Contributions. The value of a Participant’s Account attributable to any Company Contributions pursuant to Section 3.2 shall vest at such time or times as the Company (or each Participating Company with the approval of the Company), shall specify in connection with any such contributions. Unless otherwise specified, Participants shall be one hundred percent (100%) vested in such amounts together with any amounts credited to the Participants.

ARTICLE VI

DISTRIBUTIONS

6.1. Distribution Options. Each Participant may elect to receive his or her deferrals (and earnings thereon) either at separation from service or as a Scheduled In-Service Withdrawal, subject to the provisions of this Article VI. The Participant may make distribution elections, pursuant to the election form prescribed by the Committee from time to time, for each Plan Year’s deferrals (and earnings thereon). The election to receive payment of a Plan Year’s deferrals (and earnings thereon) at separation from service is irrevocable. Participants will receive payments upon death, in the event of an unforeseeable emergency, or upon the Participant’s Disability as set forth in this Article VI. In the event that a Participant experiences a separation from service or Disability prior to the commencement or completion of a Scheduled In-Service Withdrawal, then the relevant provisions of Section 6.2 shall apply to the Distributable Amount remaining in the Participant’s Account (if any) as of the date of the Participant’s separation from service or Disability and supersede the Participant’s Scheduled In-Service Withdrawal election.

6.2. Distribution due to Separation from Service, Disability or Death.

(a) Normal Form of Distribution. Subject to Subsection 6.2(b) below, in the event that a Participant separates from service for any reason or the Participant has a Disability, then the Participant’s entire Distributable Amount shall be paid to the Participant (and after the Participant’s death to his or her Beneficiary or Beneficiaries) in a cash lump sum payment payable on his or her Payment Commencement Date.

(b) Optional Forms of Distribution. A Participant may, in lieu of a lump sum distribution specified in Subsection 6.2(a) above, elect any of the following optional forms of distribution (subject to Subsection 6.2(c) below):

Form(s) of Distribution

Quarterly installments over 3 years

Quarterly installments over 5 years

Quarterly installments over 10 years

Quarterly installments over 15 years

Notwithstanding any elections by the Participant, if the Participant’s entire or remaining Distributable Amount becomes Fifty Thousand Dollars ($50,000) or less as of the Payment Commencement Date, such Distributable Amount shall be distributed in a lump sum on the Payment Commencement Date. Notwithstanding anything to the contrary, any such election under this Subsection 6.2(b) shall apply to distributions upon separation from service and Disability, but shall not apply to distributions payable upon the Participant’s death at any time. Notwithstanding anything to the contrary, a Participant may make an election to receive distribution in the installment form(s) of distribution above, in lieu of a lump sum distribution specified in Subsection 6.2(a) above, only during the first election period in which the Participant makes a deferral election, even if the Participant initially elects to receive only a Scheduled In-Service Withdrawal. Unless a Participant elects an installment form(s) of distribution at the time of the Participant’s initial deferral election, then the Participant will be deemed to have elected to receive such distributions in a lump sum for all Plan Years in which the Participant receives a distribution due to separation from service or Disability.

(1) A Participant may make a distribution election under Subsection 6.2(b) above and a Payment Commencement Date election by completing a form approved by and filed with the Committee by the end of the applicable election period during which the Participant first makes a deferral election, provided it is made at latest (i) before the end of the calendar year prior to the year in which services related to compensation in question will be performed, or (ii) in the case of new Participants’ initial election, if the Committee so approves, within 30 days after becoming eligible to participate in the Plan. A Participant may change the timing or form of distribution under this

Section provided that he or she files the change with the Committee at least one (1) year prior to his or her Payment Commencement Date; provided, however, such distribution election change shall be effective only if (i) the Participant makes such election at least one year prior to the date the previously elected payment or payments were to commence, (ii) the change does not take effect until at least one year after the Participant submits the revised election form; and (iii) to the extent required by Code Section 409A, the change provides for the deferral of the date of the payment for a minimum of five additional years. For purposes of the commencement date referred to in clause (i) of the preceding sentence, all distributions are considered scheduled to commence on the Payment Commencement Date except that distributions on account of separation from service are considered scheduled to commence on the first day of the month following the end of the calendar quarter in which the Participant separated from service or January 1 of the year following the year in which the Participant separated from service, depending on the Participant’s election. For purposes of the 5-year re-deferral limitation set forth in clause (iii) of the preceding sentence, distributions payable in installments (as opposed to a lump sum) shall be treated as a single payment payable on the date the installments are due to commence. A Participant may not make a new election once distributions from the Plan have commenced or which would first become effective at a time when distributions from the Plan have commenced. Any changes to an Employee’s distribution election pursuant to this Section 6.2(c) must be submitted on a separate form.

(2) If the Participant’s Distributable Amount is paid in installments, then the Participant’s Account shall continue to be credited with earnings pursuant to Subsection 4.1(d) and the installment amount shall be adjusted, as the Committee determines, to reflect gains and losses until all amounts credited to his or her Account under the Plan have been distributed.

(3) Amounts payable pursuant to this Section shall be subject to the limitation on payout under Section 6.6.

(d) Death Prior to or While Receiving Benefits. Notwithstanding any other provision of the Plan, if the Participant dies prior to receiving or while receiving any or all of his or her Account, such Participant’s Distributable Amount shall be paid to his or her Beneficiary or Beneficiaries in a cash lump sum payment including all vested and unvested Company Contributions no later than the later of (i) the calendar year in which the Participant dies, or (ii) two and one-half months after the Participant dies.

(e) Rehired Employees. If a Participant separates from service and begins receiving any or all of his or her Account (in “Pay Status”), and such Participant is subsequently rehired and again becomes eligible under the Plan, then such Participant’s prior Account must remain in Pay Status until fully paid pursuant to the terms of his or her initial distribution election. A Participant may not redefer his or her prior Account upon rehire.

6.3. Scheduled In-Service Withdrawals. A Participant may, in connection with his or her Compensation deferral election for a Plan Year, specify a withdrawal (a “Scheduled In-Service Withdrawal”) of all of his or her Account attributable to Compensation deferred for such Plan Year,

including any amounts credited with respect to such deferrals pursuant to Subsection 4.1(d), subject to the following restrictions:

(a) A Participant’s Scheduled In-Service Withdrawal election must specify a Scheduled In-Service Withdrawal date that is at least two (2) years beyond the end of the Plan Year to which such withdrawal election applies. A Participant may amend or postpone to a later future year his or her Scheduled In-Service Withdrawal election (including, without limitation, the form and/or timing of the distribution); provided, however, such amendment or postponement (i) occurs with at least one (1) year’s advance notice thereof, (ii) the change does not take effect until at least one year after the Participant submits the amendment or postponement; and (iii) the change provides for the deferral of the date of the payment for a minimum of five additional years.

(b) The election to take a Scheduled In-Service Withdrawal shall be made by completing a form approved by and filed with the Committee no later than the applicable Election Date.

(c) The amount payable to a Participant in connection with a Scheduled In-Service Withdrawal shall be, as elected by the Participant, all or a portion of the Compensation deferred for the Plan Year with respect to which the election applies, determined as the Committee or its delegate determines in its sole discretion, together with any earnings credited to such amount pursuant to Subsection 4.1(d), determined as of the date the Committee or its delegate determines in its sole discretion.

(d) Subject to section 6.6, payment of a Scheduled In-Service Withdrawal shall be made in either a single lump sum or in annual installments over a two (2), three (3), four (4) or five (5)-year period (as elected by the Participant); provided, however, that if a Participant’s total Distributable Amount for a Scheduled In-Service Withdrawal is Twenty-Five Thousand Dollars ($25,000) or less as of the Payment Commencement Date, such Distributable Amount shall be distributed in a lump sum on the Payment Commencement Date. Lump sum distributions shall be paid in the year specified on the election form. Annual installment distributions shall commence in the year specified on the election form, and shall continue to be paid as soon as administratively practicable after the beginning of each subsequent calendar year for the duration elected on the election form.

(e) If a Participant is receiving Scheduled In-Service distributions or has elected a Scheduled In-Service Withdrawal and distributions have not begun and has a Disability or a separation from service from the Company and all Related Companies for any reason, the Participant shall receive a distribution equal to the Participant’s remaining Distributable Amount in accordance with the Participant’s election, if any, applicable to a separation from service, and the distributions shall commence on the Payment Commencement Date related to the separation from service or Disability, whichever is applicable. A Participant shall not be deemed to have separated from service with the Company if the Participant transfers employment from one Participating Company and becomes employed by another Related Company without any intervening employment. In the event of the Participant’s death, before Scheduled In-Service distributions have begun or while the Participant is receiving Scheduled In-Service distributions, the

Participant’s Distributable Amount (or remaining Distributable Amount) shall be paid to his or her Beneficiary or Beneficiaries in a cash lump sum payment no later than the later of (i) the calendar year in which the Participant dies, or (ii) two and one-half months after the Participant dies.

6.4. Unforeseeable Emergency.

(a) Triggering an Unforeseeable Emergency. The Committee may, in its sole and absolute discretion, accelerate the date of distribution of a Participant’s Account due to an unforeseeable emergency at any time without penalty. An unforeseeable emergency withdrawal may be granted only for an unforeseeable, severe financial condition resulting from (i) the need to pay funeral expenses or medical expenses for the Participant, the Participant’s Spouse, the Participant’s Beneficiary or his or her dependent (as defined in Code Section 152(a), without regard to Section 152(b)(1), (b)(2), and (d)(1)(B)) resulting from a sudden and unexpected illness or accident; (ii) loss of the Participant’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, as a result of a natural disaster); or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, but which may not be relieved through other available resources of the Participant, as determined by the Committee, in its sole and absolute discretion. A distribution as provided hereunder shall not exceed the amount required to relieve the financial need of the Participant, nor shall such a distribution be made if the need may be satisfied from other resources reasonably available to the Participant. If a Participant receives a distribution pursuant to this Section, the Participant shall be ineligible to participate in the Plan for the balance of the Plan Year in which the distribution occurs and all of the following Plan Year.

(b) Distribution Attributable to an Unforeseeable Emergency. Unless the Committee, in its sole and absolute discretion, determines otherwise, distribution pursuant to this Section of less than the Participant’s entire interest in the Plan shall be made pro rata from his or her assumed investments according to the balances in such investments. Subject to the foregoing, payment of any amount with respect to which a Participant has filed a request under this Section shall be made in a single cash lump sum within 90 days after the date the Committee approves the Participant’s request.

6.5. Distributions to Specified Employees. Notwithstanding any other provision of the Plan, if a Participant becomes entitled to a distribution on account of a separation from service (other than due to death or Disability) and is a Specified Employee on the date of the separation from service, distributions shall not commence until at least six months following his or her separation from service (or, if earlier, his or her death). Payment to which a Specified Employee would otherwise be entitled to during this six-month period shall (A) if scheduled to be paid in a lump sum, be accumulated and paid, without interest, on the tenth (10th) business day that is six (6) months following the date of the Participant’s separation from service and (B) if scheduled to be paid in installments, each installment payment shall be delayed and the installment payments shall commence during the first month of the calendar quarter following the month that includes the six-month anniversary date of Participant’s separation from service.

6.6. Section 162(m) Limitation. Notwithstanding any other provision herein to the contrary, a distribution hereunder shall be delayed to the extent that the Company reasonably anticipates that if the distribution were made as scheduled, the Company or a Participating Company’s deduction with respect to such payment would not be permitted due to the application of Section 162(m) of the Code. In such event, the distribution shall be made either during the Participant’s first taxable year in which the Company reasonably anticipates, or should reasonably anticipate, that if the payment is made during such year, the deduction of such payment will not be barred by application of Section 162(m) of the Code or during the period beginning with the date of the Participant’s separation from service and ending on the later of the last day of the taxable year of the Participant in which the Participant separates from service or the 15th day of the third month following the Participant’s separation from service, and provided further that any scheduled payment to a Participant shall be delayed in accordance with this Section 6.6 only if all scheduled payments to the Participant that could be delayed in accordance with this Section are also delayed. Adjustment for earning shall continue to be applied under Subsection 4.1(d) during the period of deferral under this Section.

6.7. Inability to Locate Participant. In the event that the Committee is unable to locate a Participant or Beneficiary within two (2) years following the Participant’s Distribution Event, the amount allocated to the Participant’s Deferral Account shall be forfeited. If, after such forfeiture, the Participant or Beneficiary later claims such benefit, such benefit (calculated immediately prior to the forfeiture) shall be reinstated without interest or earnings.

6.8. Payment Upon Change in Control. Notwithstanding any other provisions of this Plan, unless otherwise determined by the Committee prior to a Change in Control, the Plan shall be terminated upon a Change in Control and the aggregate balance credited to and held in the Participants’ Accounts shall be distributed to them in a lump sum not later than the thirtieth day, or as soon as administratively possible thereafter, following a Change in Control.

ARTICLE VII

ADMINISTRATION

7.1. Committee. A Committee shall be appointed by, and serve at the pleasure of, the Board. The number of members comprising the Committee shall be determined by the Board, which may from time to time vary the number of members. A member of the Committee may resign by delivering a written notice of resignation to the Board. The Board may remove any member by delivering a certified copy of its resolution of removal to such member. Vacancies in the membership of the Committee shall be filled promptly by the Board.

7.2. Committee Action. The Committee shall act at meetings by affirmative vote of a majority of the members of the Committee. Any action permitted to be taken at a meeting may be taken without a meeting if a written consent to the action is signed by all members of the Committee and such written consent is filed with the minutes of the proceedings of the Committee. A member of the Committee shall not vote or act upon any matter that relates solely to himself or herself as a Participant. The chairman or any other member or members of the Committee designated by the chairman may execute any certificate or other written direction on behalf of the Committee.

7.3. Powers and Duties of the Committee.

(a) The Committee, on behalf of the Participants and their Beneficiaries, shall enforce the Plan in accordance with its terms, shall be charged with the general administration of the Plan and shall have all powers necessary to accomplish its purposes, including, but not by way of limitation, the following:

(1) To select the funds to be the Funds in accordance with Section 3.3 hereof;

(2) To construe and interpret the terms and provisions of this Plan, including, but not limited to, eligibility under the Plan;

(3) To amend, modify, suspend or terminate the Plan in accordance with Section 8.5;

(4) To compute and certify the amount and kind of benefits payable to Participants and their Beneficiaries and to direct the distribution of Plan assets;

(5) To maintain or cause to be maintained all records that may be necessary for the administration of the Plan;

(6) To provide for the disclosure of all information, and the filing or provision of all reports and statements to Participants, Beneficiaries or governmental agencies as shall be required by law;

(7) To make and publish such rules for the regulation of the Plan and procedures for the administration of the Plan as are not inconsistent with the terms hereof;

(8) To appoint a plan administrator or any other agent, and to delegate to them such powers and duties in connection with the administration of the Plan as the Committee may from time to time prescribe;

(9) To designate the Participating Companies that will participate in the Plan;

(10) To establish a trust in accordance with Section 8.2;

(11) To establish and revise, from time to time, the Charter governing the operation of the Committee, subject to the same restrictions under Section 8.5 applicable to the Committee’s authority to amend the Plan;

(12) To elect successor members to the Committee, when any other individual ceases to be a member of the Committee; and

(13) To perform all other acts deemed by the members of the Committee to be necessary or appropriate for the execution of their duties as members of the

Committee.

7.4. Construction and Interpretation. The Committee shall have full discretion to construe and interpret the terms and provisions of this Plan, which interpretation or construction shall be final and binding on all parties, unless such interpretation or construction is found to be arbitrary or capricious, including but not limited to the Company, any Participating Company, and any Participant or Beneficiary.

7.5. Information. To enable the Committee to perform its functions, the Company and each Participating Company, as applicable, shall supply full and timely information to the Committee on all matters relating to the Compensation of all Participants, their death or other cause of separation from service, and such other pertinent facts as the Committee may reasonably require.

7.6. Compensation, Expenses and Indemnity.

(a) The members of the Committee shall serve without compensation for their services hereunder.

(b) The Committee is authorized at the expense of the Company to employ such legal counsel as it may deem advisable to assist in the performance of its duties hereunder. Expenses and fees in connection with the administration of the Plan may be paid by the Company. The Company may allocate costs among itself and Participating Companies as it determines is equitable.

(c) To the extent not prohibited by applicable law, the Company and each Participating Company shall indemnify and save harmless the Committee and each member thereof, the Board and any delegate of the Committee against any and all expenses, liabilities and claims, including legal fees to defend against such liabilities and claims arising out of their discharge in good faith of responsibilities under or incident to their administration and direction of the Plan, other than expenses and liabilities arising out of their willful misconduct or gross negligence. This indemnity shall not preclude such further indemnities as may be available under insurance purchased by the Company or a Participating Company or provided by the Company or a Participating Company under any bylaw, agreement or otherwise, to the extent such indemnities are not prohibited under applicable law.

7.7. Quarterly Statements. Under procedures established by the Committee, a Participant shall receive a statement with respect to such Participant’s Account at least quarterly.

ARTICLE VIII

MISCELLANEOUS

8.1. Unsecured General Creditor. Participants and their Beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, claims, or interests in any specific property or assets of the Company or a Participating Company, including, but not limited to, assets held by a trust (if any). No assets of the Company or a Participating Company shall be held in any way as collateral security for the fulfilling of the obligations of the Company or a Participating Company under this Plan. Any and all of the assets of the Company and the Participating Companies shall be, and remain, the general unpledged, unrestricted assets of the Company and the Participating Companies. The obligation of the Company and each Participating Company under the Plan shall be merely that of an unfunded and unsecured promise to pay money in the future, and the rights of the Participants and Beneficiaries shall be no greater than those of unsecured general creditors.

8.2. Trust; Unfunded Plan. The Company may, in its sole discretion, establish a trust in respect of the obligations of the Company and each Participating Company under the Plan. The Company and each Participating Company may, from time to time and in their sole and absolute discretion, contribute assets to any such trust. The Committee may direct the trustee to pay benefits which become payable to a Participant or Beneficiary pursuant to the Plan terms from trust assets, or amounts payable to a Participant or Beneficiary under this Plan may be paid from the general assets of the Participant’s employer. Notwithstanding the existence of a trust (if any), the Plan is intended to be “unfunded” for purposes of ERISA and shall not be construed as providing income to Participants prior to the date that amounts deferred under the Plan are paid.

8.3. Restriction Against Assignment. The Company and each Participating Company shall pay all amounts payable hereunder only to the person or persons designated by the Plan and not to any other person or corporation. No part of a Participant’s Account shall be liable for the debts, contracts, or engagements of any Participant, his or her Beneficiary, or successors in interest, nor shall a Participant’s Account be subject to execution by levy, attachment, or garnishment or by any other legal or equitable proceeding, nor shall any such person have any right to alienate, anticipate, commute, pledge, encumber, or assign any benefits or payments hereunder in any manner whatsoever. If any Participant, Beneficiary or successor in interest is adjudicated bankrupt or purports to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any distribution or payment from the Plan, voluntarily or involuntarily, the Committee, in its sole and absolute discretion, may cancel such distribution or payment (or any part thereof) to or for the benefit of such Participant, Beneficiary or successor in interest in such manner as the Committee shall direct.

8.4. Withholding. Participant is responsible for all applicable taxes with respect to deferrals and distributions pursuant to the Plan. For each Plan Year during which a Participant has deferrals, the Participant’s employer(s) may, in a manner determined by the employer(s), withhold the Participant’s share of FICA and other required employment or state, local, and foreign taxes on deferrals from that portion of the Participant’s Base Salary, Commissions, or Bonus that is not deferred. To the extent required by the law in effect at the time of any distribution, the Participant’s employer may withhold from each payment made under the Plan all federal, state, local or foreign taxes that are required to be withheld by the employer in respect

of such payment. To the extent taxes owed by the Participant with respect to deferrals or distributions under the Plan are not withheld for any reason, Participant shall continue to be responsible for such taxes and in no event shall the Company or any Participating Company have any responsibility or liability to any Participant for any failure to comply with any applicable tax withholding requirements.

8.5. Amendment, Modification, Suspension or Termination. The Board hereby delegates to the Committee the authority to adopt and execute any amendment to the Plan under the provisions of this Section 8.5; provided that any such amendment does not significantly increase the benefits payable to members of the Committee, except in their capacity as members of a broad class of employees for whom benefits are being increased. Any such amendment shall be stated in an instrument in writing, executed in the same manner as the Plan. The Committee may amend, modify, suspend or terminate the Plan in whole or in part, except that no amendment, modification, suspension or termination shall have any retroactive effect to reduce any amounts allocated to a Participant’s Account, provided, however, that a termination or suspension of the Plan or any Plan amendment or modification that will significantly increase costs to the Company shall be subject to approval by the Board. In the event that this Plan is terminated, the timing of the disposition of the amounts credited to a Participant’s Account shall occur in accordance with Section 6.2, subject to earlier distribution at the discretion of the Committee; provided however, that upon any termination of this Plan, to the extent permissible under Section 409A of the Code without the imposition of any additional or accelerated taxes under Section 409A of the Code, the Company may in its sole discretion, accelerate the payment of all such amounts credited as of the date of termination of this Plan; provided that all such distributions (i) commence no earlier than the date that is twelve (12) months following the date of such termination (or such earlier date permitted under Section 409A of the Code without the imposition of any additional or accelerated taxes under Section 409A of the Code), and (ii) are completed by the date that is twenty-four (24) months following the date of such termination (or such later date permitted under Section 409A of the Code without the imposition of any additional or accelerated taxes under Section 409A of the Code). In addition, payments may be accelerated upon Plan termination as provided above only if, to the extent required under Code Section 409A, (i) all other nonqualified deferred compensation “account balance plans” (as such term is defined under Code Section 409A), in which any Participant hereunder participates are terminated along with this Plan, and (ii) the Company does not adopt any new nonqualified deferred compensation “account balance plan” (as such term is defined under Code Section 409A), for three years following the date of such Plan termination.

8.6. Governing Law. This Plan shall be construed, governed and administered in accordance with the laws of the State of California (other than the choice of law principles) to the extent not pre-empted by applicable federal law (such as the applicable provisions of ERISA).

8.7. Receipt or Release. Any payment to a Participant or the Participant’s Beneficiary in accordance with the provisions of the Plan shall, to the extent thereof, be in full satisfaction of all claims against the Committee, the Company and each Participating Company. The Committee may require such Participant or Beneficiary, as a condition precedent to such payment, to execute a receipt and release to such effect. Notwithstanding any provision of this Plan to the contrary, in no event shall the timing of the Participant’s or Beneficiary’s execution of a release, directly or indirectly, result in the Participant or Beneficiary designating the calendar year of payment, and if a payment that is subject to execution of a release could be made in more than one

taxable year, payment shall be made in the later taxable year.

8.8. Payments on Behalf of Persons under Incapacity. In the event that any amount becomes payable under the Plan to a person who, in the sole judgment of the Committee, is considered by reason of physical or mental condition to be unable to give a valid receipt therefor, the Committee may direct that such payment be made to any person found by the Committee, in its sole judgment, to have assumed the care of such person. Any payment made pursuant to such determination shall constitute a full release and discharge of the Committee, the Company and each Participating Company.

8.9. No Employment Rights. Participation in this Plan shall not confer upon any person any right to be employed by the Company or any Participating Company or any other right not expressly provided hereunder.

8.10. Headings, etc. Not Part of Agreement. Headings and subheadings in this Plan are inserted for convenience of reference only and are not to be considered in the construction of the provisions hereof.

8.11. Liability Between Company and Participating Companies. The Company and each Participating Company shall each be solely liable for liabilities relating to, resulting from and arising out of its own Employees’ participation in the Plan.

8.12. Code Sections 409A and 457A.

(a) The Plan is intended to be a nonqualified deferred compensation plan within the meaning of Code Section 409A and shall be operated and interpreted to meet the requirements of Code Section 409A to the maximum extent possible. For purposes of Code Section 409A, all payments to be made on account of termination of employment (including a separation from service) shall only be made upon a “separation from service” within the meaning of Code Section 409A.

(b) If any provision of the Plan would, in the reasonable, good faith judgment of the Company, result or likely result in the imposition on a Participant or any other person of, (i) any additional tax, accelerated taxation, interest or penalties under Code Section 409A or (ii) accelerated taxation, interest or penalties under Code Section 457A, the Company may modify the terms of the Plan, or may take any other such action, without a Participant’s consent or the consent of any other person, in the manner that the Company may reasonably and in good faith determine to be necessary or advisable to avoid the imposition of such additional tax, accelerated taxation, interest, or penalties or otherwise comply with Code Sections 409A and 457A. This Section does not create an obligation on the part of the Company to modify the Plan and does not guarantee that any amounts payable under the Plan will not be subject to additional taxes, accelerated taxation, interest or penalties under Code Sections 409A and 457A.

(c) Each Participant shall be solely responsible for the payment of all taxes that become due as a result of participating in this Plan. In no event shall the Company or any Participating Company have any responsibility or liability to any Participant for any failure to comply with Code Sections 409A or 457A.

8.13. Department of Labor Determination. In the event that any Participants are found to be ineligible, that is, not members of a select group of management or highly compensated employees, according to a determination made by the Department of Labor, the Committee may take whatever steps it deems necessary, in its sole and absolute discretion, to equitably protect the interests of affected Participants.

ARTICLE IX

CLAIMS PROCEDURES

9.1. Claim for Benefits. Any claim for benefits under this Plan must be submitted in writing to the Committee no later than 90 days after the date on which the event that caused the claim to arise occurred. If a claim for benefits is wholly or partially denied, the Committee, or its delegate, shall so notify the claimant within 90 days after receipt of the claim. If the Committee determines that an extension is necessary, the Committee will notify the claimant within the initial 90-day period that the Committee needs up to an additional 90 days to review the claim. In the case of a claim for disability benefits, the Committee shall notify the claimant within 45 days after the claim is received unless the Committee determines that an extension of time for processing is required due to matters beyond the control of the Plan, in which case written notice of the extension shall be furnished to the claimant prior to termination of the original 45-day period. Such extension shall not exceed 30 days from the end of the initial period. If, prior to the end of the first 30-day extension period, the Committee determines that, due to matters beyond the control of the Plan, an additional extension of time for processing is required, written notice of a second 30-day extension shall be furnished to the claimant prior to termination of the first 30-day extension.

9.2. Notice of Denial. The notice of denial shall be written in a manner calculated to be understood by the claimant and shall contain (a) the specific reason or reasons for denial of the claim, (b) specific references to the pertinent Plan provisions upon which the denial is based, (c) a description of any additional material or information necessary to perfect the claim together with an explanation of why such material or information is necessary and (d) an explanation of the claims review procedure and time limits, including a statement of the claimant’s right to bring a civil action under section 502(a) of ERISA following an adverse benefit determination on review. In the case of a claim for disability benefits, the notification shall also advise the claimant whether the Committee’s denial relied upon any specific rule, guideline, protocol or scientific or clinical judgment. The decision or action of the Committee shall be final, conclusive and binding on all persons having any interest in the Plan, unless a written appeal is filed as provided in Section 9.3 hereof.

9.3. Review of Claim. Within 60 days after the receipt by the claimant of notice of denial of a claim, the claimant may (a) file a request with the Committee that it conduct a full and fair review of the denial of the claim, (b) receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claim for benefits, and (c) submit questions and comments to the Committee in writing.

9.4. Decision After Review. Within 60 days after the receipt of a request for review under Section 9.3, the Committee, or its delegate, shall deliver to the claimant a written decision with respect to the claim, except that if there are special circumstances which require more time for processing, the 60-day period shall be extended to 120 days upon notice to that effect to the claimant. The decision shall be written in a manner calculated to be understood by the claimant and shall (a) include the specific reason or reasons for the decision, (b) contain a specific reference to the pertinent Plan provisions upon which the decision is based, (c) a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claim for benefits, and (d) a statement of the claimant’s right to bring a civil action under section 502(a) of ERISA. In the case of a claim for disability benefits, the notice shall set forth: (1) whether the Committee’s denial relied upon any specific rule, guideline, protocol or scientific or clinical judgment; and (2) the following statement: “You and your Plan may have other voluntary alternative dispute resolution options, such as mediation. One way to find out what may be available is to contact your local U.S. Department of Labor Office and your State insurance regulatory agency.”

9.5. Legal Action. A claimant may not bring any legal action relating to a claim for benefits under the Plan unless and until the claimant has followed the claims procedures under the Plan and exhausted his or her administrative remedies under such claims procedures. A claimant wishing to seek any further legal action with respect to a final adverse benefit determination must file such claim in a court of law within one year of the date on which the event that caused the claim to arise or lose any right to bring such action. Such legal action must be filed only in the United States District Court for the Northern District of California, San Jose, California courthouse.

9.6. Discretion of the Committee. All interpretations, determinations and decisions of the Committee, or its delegate, with respect to any claim shall be made in its sole discretion, and shall be final and conclusive.

IN WITNESS WHEREOF, the Seagate Benefits Administrative Committee, by its duly authorized officer, has executed this Plan this 13th day of November, 2014, but to be effective on the Effective Date.

	SEAGATE BENEFITS ADMINISTRATIVE
	COMMITTEE


	By:
		John Cleveland

	Title:	Vice President, Global Compensation, Benefits, Mobility & Compliance

EXHIBIT “A”

PARTICIPATING COMPANIES

Seagate Technology (US) Holdings, Inc.

Seagate Technology LLC

EVault, A Seagate Company

LaCie Ltd.

Xyratex International Inc.

Exhibit 10.4

FOURTH AMENDMENT

SEAGATE DEFERRED COMPENSATION PLAN

The Seagate Deferred Compensation Plan, as amended and restated as of January 1, 2009 (the “Plan”), is hereby amended by this Fourth Amendment (the “Amendment”).

WHEREAS, for purposes of this Amendment, capitalized terms used herein that are not defined shall have the meanings given to them in the Plan;

WHEREAS, Seagate US LLC (the “Company”) maintains the Plan, which is a nonqualified deferred compensation plan, for the benefit of Directors and eligible employees of the Company and Participating Companies;

WHEREAS, Section 9.4 of the Plan document provides that the Committee has the authority to amend, modify, suspend or terminate the Plan;

WHEREAS, pursuant to authority granted to the Committee under Section 9.4, the Committee has determined that it is appropriate to freeze the Plan with respect to all deferrals after the 2014 Plan Year;

WHEREAS, after the Plan is frozen, (1) any Employees who were Participants in the Plan will not be able to defer any portion of their Compensation into the Plan for Plan Years after 2014 (except as provided pursuant to Plan section 3.1(f) and described specifically below), (2) any individuals who have Accounts in the Plan shall continue to be Participants in the Plan, and (3) the Plan terms shall continue to govern Participant Accounts until paid in full;

WHEREAS, the Company intends to establish the 2015 Seagate Deferred Compensation Plan to govern amounts generally deferred with respect to performance periods after December 31, 2014, except as otherwise provided in the 2015 Seagate Deferred Compensation Plan and described generally below;

WHEREAS, based on the foregoing and pursuant to Plan section 3.1(f), (1) Participants’ Base Salary and Commission compensation that is earned between December 30, 2013 and December 28, 2014 is subject to Participants’ 2014 deferral elections (if any) and shall be subject to the Plan terms and (2) Participants’ Bonuses that are earned in 2014 (if any) are subject to Participant’s 2014 deferral elections (if any) and shall be subject to the Plan terms;

WHEREAS, pursuant to Plan section 3.1(c), Bonuses that may be earned in 2014 (and that if paid, shall be subject to the Plan) include any Bonuses paid (a) in August 2014, with respect to the Key Contributor Performance Bonus Plan, (b) in August 2014, with respect to the Executive Performance Bonus Plan provided that the Participant was continuously employed with the Company from July 1, 2013 (or the date the Company set the performance goals for the 2013-2014 performance period, if later) through the date the Participant completed his or her enrollment in the Plan for the 2014 Plan Year, and (c) in February 2015, with respect to the Key Contributor Performance Bonus Plan;

WHEREAS, the 2015 Seagate Deferred Compensation Plan shall govern deferrals of base salary and commission compensation that is earned after December 28, 2014 and any deferrals of bonuses earned after 2014, which shall include bonuses earned in 2015 pursuant to the Key Contributor Performance Bonus Plan or the Executive Performance Bonus Plan and which are typically paid in August 2015 or later;

WHEREAS, pursuant to authority granted to the Committee under Section 9.4, the Committee also desires to modify the Plan to clarify the original intent of certain provisions and how they have been administered since the effective date of the Plan; therefore, the Committee has determined that it is appropriate to amend the Plan effective January 1, 2009 to (1) clarify that salary replacements paid by the Company or any Participating Company such as short or long-term disability benefits are not included in Base Salary, (2) clarify the Distributable Amount and Specified Employee definitions, (3) remove the references to death from the Payment Commencement Date definition, (4) clarify the administration of Scheduled In-Service Withdrawals in the event of a Participant’s Disability or separation from service, (5) clarify the tax withholding provisions applicable to deferrals and distributions, and (6) clarify the responsibilities of the Company and the Participant related to compliance with Code Sections 409A and 457A; and

WHEREAS, pursuant to authority granted to the Committee under Section 9.4, the Committee has determined it is appropriate to amend the claims procedures to provide a convenient venue in the event of any legal action relating to the Plan and to require Participants to report distribution errors (if any) to the Committee.

NOW, THEREFORE, BE IT RESOLVED, that the Amendment, as set forth in the attached Exhibit A, is hereby approved and adopted effective as specified in Exhibit A.

Exhibit A

FOURTH AMENDMENT

SEAGATE DEFERRED COMPENSATION PLAN

The Seagate Deferred Compensation Plan, as amended and restated as of January 1, 2009 (the “Plan”), is hereby amended as follows:

1. Effective January 1, 2009, Section 1.2 is hereby amended by deleting and replacing the first sentence in that Section with the following:

2. Effective January 1, 2009, Section 1.16 is hereby amended in its entirety to read as follows:

1.16. Distributable Amount. “Distributable Amount” means the aggregate vested amount credited to a Participant’s Account less any amounts previously distributed to (or deemed distributed to or forfeited by) that Participant without regard to whether such amounts are credited to any separate subaccounts established for the purpose of administering the Plan except to the extent that the Plan provides otherwise. Such amount shall be valued as of the date determined by the Committee or its delegate in its sole discretion. The Distributable Amount shall not include any other amounts deferred or credited with respect to deferrals pursuant to any other nonqualified deferred compensation plan sponsored by the Company.

3. Effective January 1, 2009, Section 1.25 is hereby amended by deleting the phrases “or death” and “dies or” in the first sentence of that Section.

4. Effective immediately, Section 1.28 is hereby amended in its entirety to read as follows:

5. Effective for Plan Years after 2014, Section 2.1 is hereby amended in its entirety to read as follows:

2.1. Participation. Effective for Plan Years after 2014, Employees are no longer eligible to defer any portion of their Compensation, and effective for Plan Years after 2010, Directors are no longer eligible to defer any portion of their Compensation. Any Participants who have Accounts attributable to periods prior to 2015 shall continue to be Participants in the Plan and the Plan terms and Participant elections shall continue to govern Participant Accounts until paid in full.

6. Effective immediately, Section 3.1 is hereby amended by adding the following paragraph (i) to the end thereof:

(i) Obligation to Report Errors. Participants are required to contact the Committee with respect to any distribution error during the calendar year. If the Participant fails to notify the Committee with respect to any distribution errors, the Employer is deemed to have acted in good faith and will not be liable for any adverse tax consequences to Participant or Participant claims relating to failure to distribute the correct amounts.

7. Effective January 1, 2009, Section 7.1 is hereby amended by adding the following sentence to the end thereof:

In the event that a Participant experiences a separation from service or Disability prior to the commencement or completion of a Scheduled In-Service Withdrawal, then the relevant provisions of Section 7.2 shall apply to the Distributable Amount remaining in the Participant’s Account (if any) as of the date of the Participant’s separation from service or Disability and supersede the Participant’s Scheduled In-Service Withdrawal election.

8. Effective January 1, 2009, Section 7.3(e) is hereby amended by deleting and replacing the first sentence in that Section with the following:

9. Effective January 1, 2009, Section 9.3 is hereby amended in its entirety to read as follows:

9.3. Withholding. Participant is responsible for all applicable taxes with respect to deferrals and distributions pursuant to the Plan. For each Plan

Year during which a Participant has deferrals, the Participant’s employer(s) may, in a manner determined by the employer(s), withhold the Participant’s share of FICA and other required employment or state, local, and foreign taxes on deferrals from that portion of the Participant’s Base Salary, Commissions, or Bonus that is not deferred. To the extent required by the law in effect at the time of any distribution, the Participant’s employer may withhold from each payment made under the Plan all federal, state, local or foreign taxes that are required to be withheld by the employer in respect of such payment. To the extent taxes owed by the Participant with respect to deferrals or distributions under the Plan are not withheld for any reason, Participant shall continue to be responsible for such taxes and in no event shall the Company or any Participating Company have any responsibility or liability to any Participant for any failure to comply with any applicable tax withholding requirements.

10. Effective January 1, 2009, Section 9.11 is hereby amended in its entirety to read as follows:

9.11. Code Sections 409A and 457A.

11. Effective immediately, Section 10.5 is hereby amended by adding the following sentence to the end thereof:

A claimant wishing to seek any further legal action with respect to a final adverse benefit determination must file such claim in a court of law within one year of the date on which the event that caused the claim to arise occurred or lose any right to bring such action. Such legal action must be filed only in the United States District Court for the Northern District of California, San Jose, California courthouse.

12. Effective January 1, 2009, the Plan is hereby amended by replacing all references to “Subsection 4.1(c)” with references to “Subsection 4.1(d)”.

13. In all respects no amended, the Plan is hereby ratified and confirmed.

IN WITNESS WHEREOF, the Seagate Benefits Administrative Committee, by its duly authorized officer, has executed this Amendment to the Plan on November 13, 2014.

SEAGATE BENEFITS ADMINISTRATIVE COMMITTEE

By:
	John Cleveland

Title:	Vice President, Global Compensation, Benefits,
	Mobility & Compliance

EXHIBIT 31.1

CERTIFICATION

I, Stephen J. Luczo, certify that:

1. I have reviewed this quarterly report on Form 10-Q 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.

Date:	January 30, 2015	/s/ STEPHEN J. LUCZO

		Name:	Stephen J. Luczo
		Title:	Chief Executive Officer, Director and Chairman of the Board of Directors

EXHIBIT 31.2

CERTIFICATION

I, Patrick J. O’Malley, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Seagate Technology plc;

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.

Date:	January 30, 2015	/s/ PATRICK J. O’MALLEY

		Name:	Patrick J. O’Malley
		Title:	Executive Vice President, Finance and
			Chief Financial Officer

EXHIBIT 32.1

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 Quarterly Report of Seagate Technology plc (the “Company”) on Form 10-Q for the fiscal quarter ended January 2, 2015, 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:	January 30, 2015	/s/ STEPHEN J. LUCZO
		Stephen J. Luczo
		Chief Executive Officer, Director and Chairman of the Board of Directors

Date:	January 30, 2015	/s/ PATRICK J. O’MALLEY
		Patrick J. O’Malley
		Executive Vice President, Finance and Chief Financial Officer