Seagate 2002 Annual Report Download - page 103

SEAGATE TECHNOLOGY AND ITS PREDECESSOR
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS—(CONTINUED)
Employee Receivables
At June 27, 2003, amounts receivable from three officers totaled $1.8 million while amounts receivable from an additional 12 officers
and/or employees totaled $1.1 million. At June 28, 2002, amounts receivable from three officers totaled $2.2 million while amounts from an
additional 23 officers and/or employees totaled $1.8 million. Individual loans were made to these employees to assist them with relocation
costs and/or beginning employment at the Company. At June 27, 2003, the loans totaling $1.8 million bear interest at 8% per year and are due
in lump sum payments, including unpaid interest, in fiscal year 2006. Under the terms of these loans, $0.7 million of the $1.8 million, as well
as accrued and unpaid interest, will be forgiven if these officers remain employed for a specified period of time. In the periods in which these
officers fulfill their employment obligations, the amount of principal and interest, which are forgiven ratably over the required employment
term, will be charged to compensation expense. The loans totaling $1.1 million generally are non-interest bearing and are due in lump sum
payments at the end of a five-year period.
Distributions to New SAC
On March 19, 2002, the Company paid a distribution of $33 million to its shareholders, including New SAC, to enable New SAC to make
a distribution of approximately $33 million to its shareholders, which allowed members of the Company’s sponsor group to satisfy tax
obligations. Approximately $32 million of this amount was paid to New SAC. New SAC had previously distributed $32 million to its ordinary
shareholders, including the distribution of approximately $7 million paid to officers and employees of the Company who held ordinary shares
of New SAC.
On May 20, 2002, the Company made a distribution to its shareholders, including New SAC, to enable New SAC to make a distribution
to its preferred shareholders. The aggregate amount of the shareholder distribution was approximately $167 million. Of this amount,
approximately $166 million was paid to New SAC. New SAC in turn made a distribution to its preferred shareholders in May 2002 of the
entire $166 million, including the distribution of $5 million to officers and employees of the Company who held preferred shares of New SAC.
The payment of this distribution on preferred shares by New SAC triggered a required payment by the Company under its deferred
compensation plan of $32 million that was paid in May 2002.
On December 9, 2002, prior to the initial public offering of common stock of the Company, New SAC converted all its then-outstanding
400 million preferred shares into common shares of the Company. On December 13, 2002, the Company completed the initial public offering
of 72,500,000 of its common shares, 24,000,000 of which were sold by the Company and 48,500,000 of which were sold by New SAC, its
parent company, as selling shareholder, at a price of $12 per share. The Company received proceeds from its sale of the 24,000,000 newly
issued common shares of approximately $270 million after deducting underwriting fees, discounts and commissions. Immediately prior to the
closing of the Company’s initial public offering, it paid a return of capital distribution of $262 million, or $0.65 per share, to the holders of its
then-outstanding shares, including New SAC, which received $259 million. The Company also paid a lump sum of approximately $12 million
to members of its sponsor group in exchange for the discontinuation of an annual monitoring fee of $2 million. This payment was charged to
marketing and administrative expense during the quarter ended December 27, 2002. New SAC received proceeds of approximately $557
million from the sale of 48,500,000 common shares in the Company’s initial public offering, after deducting underwriting discounts and
commissions. New SAC distributed the $557 million net proceeds from the offering and the $259 million return of capital distribution from the
Company to its preferred and ordinary shareholders, including a total payment of approximately $38 million to officers and employees of the
Company who held preferred and ordinary shares of New SAC. The distribution by New SAC to its preferred stock holders triggered the
requirement by the Company to pay its remaining deferred compensation plan obligation to its participating officers and employees totaling
$147 million which was paid in December 2002.
In July 2003, the Company completed the secondary public offering of 69,000,000 of its common shares, all of which were sold by New
SAC, its parent company, as selling shareholder. See Note 17. Subsequent Events—Consummation of Secondary Public Offering.
In February 2003 and May 2003, the Company paid a total of approximately $26 million in distributions to its shareholders. Of the $26
million paid, New SAC received approximately $21 million. New SAC in turn distributed the $21 million it received to its ordinary
shareholders, including approximately $5 million paid to officers and employees of the Company who held ordinary shares of New SAC.
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