Seagate 2002 Annual Report Download - page 80

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SEAGATE TECHNOLOGY AND ITS PREDECESSOR
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS—(CONTINUED)
Fair Value Disclosures —The carrying value of cash and cash equivalents approximates fair value. The fair values of short-term
investments, notes, marketable equity securities, debentures and interest rate swap agreements are estimated based on quoted market prices.
The carrying values and fair values of the Company’s financial instruments are as follows:
Derivative Financial Instruments —The Company may enter into foreign currency forward exchange and option contracts to manage
exposure related to certain foreign currency commitments, certain foreign currency denominated balance sheet positions and anticipated
foreign currency denominated expenditures. The Company does not enter into derivative financial instruments for trading purposes. During
fiscal years 2003 and 2002, the period from November 23, 2000 to June 29, 2001 and the period from July 1, 2000 to November 22, 2000, the
Company did not have any foreign currency forward exchange or purchased currency option contracts.
In December 2000, the Company entered into interest rate swap agreements to hedge a portion of its floating rate debt as required under
the terms of the loan agreement. On May 13, 2002, in connection with the repayment of the former senior secured credit facilities, a loss of $4
million under the swap agreement was recognized and included as an element of the debt refinancing charges. The swap agreement was then
redesignated as a hedge for a portion of the floating rate debt under the new senior secured credit facilities. The interest rate swap agreement
expired in November 2002. The Company does not enter into swap agreements for trading purposes.
The Company does transact business in various foreign countries and its primary foreign currency cash flows are in emerging market
countries in Asia and in some European countries. Net foreign currency transaction gains and losses included in the determination of net
income (loss) were a gain of $1 million for fiscal year 2003, a loss of $8 million for fiscal year 2002, and gains of $3 million and $1 million for
the period from November 23, 2000 to June 29, 2001 and July 1, 2000 to November 22, 2000, respectively.
Accounts Receivable
June 27, 2003
June 28, 2002
Carrying
amount
Estimated
fair value
Carrying
amount
Estimated
fair value
(in millions)
Cash equivalents
$
684
$
684
$
554
$
554
Short
-
term investments
445
445
231
231
Marketable equity securities
5
5
7
7
8.0% senior subordinated notes, due 2009
(400
)
(433
)
(400
)
(400
)
Senior Credit Facilities:
Libor plus 2% Term Loan B
(348
)
(348
)
(350
)
(350
)
Interest rate swaps (3 month LIBOR)
—
—
(
4
)
(4
)
74
June 27,
2003
June 28,
2002
(in millions)
Accounts Receivable:
Accounts receivable
$
643
$
643
Allowance for non
-
collection
(32
)
(29
)
$
611
$
614