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SEAGATE TECHNOLOGY AND ITS PREDECESSOR
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS—(CONTINUED)
4. Income Taxes
The U.S. federal and state tax Allocation Agreement (“Tax Allocation Agreement”) between the Predecessor and its U.S. subsidiaries
was terminated on November 22, 2000, and the Company no longer files its federal income tax returns on a consolidated basis with affiliates of
New SAC. Therefore, the Company does not benefit from nor does the Company reimburse any affiliates of New SAC pursuant to the Tax
Allocation Agreement for U.S. federal tax losses that may be sustained subsequent to consummation of the November 2000 transactions. In
prior periods, the Predecessor had recorded substantial intercompany payables for utilization of tax losses of its U.S. subsidiaries that have been
netted against the Predecessor’s business equity interest in the U.S. subsidiaries.
Certain U.S. subsidiaries of the Company are included in certain unitary and combined U.S. state tax returns with certain U.S. affiliates of
New SAC and have entered into a tax sharing agreement effective November 23, 2000. Pursuant to the terms of the state tax sharing agreement
(“State Tax Allocation Agreement”), hypothetical U.S. state tax returns (with certain modifications) are calculated as if the U.S. subsidiaries of
the Company were filing on a separate return basis. The Company’s U.S. subsidiaries are required to reimburse participating New SAC U.S.
affiliates to the extent the Company’s U.S. subsidiaries utilize the tax attributes of these U.S. affiliates of New SAC to reduce their separately
computed income tax liabilities within 30 days of the close of the fiscal year such affiliates would have otherwise been able to utilize their own
tax attributes. If New SAC’s participating U.S. affiliates utilize tax attributes of the Company’s U.S. subsidiaries, the Company’s U.S.
subsidiaries will be reimbursed for those tax attributes within 30 days of the close of the fiscal year during which the Company’s U.S.
subsidiaries would have otherwise been able to utilize the tax attributes to reduce their separately computed tax liabilities. As of June 27, 2003,
there were no outstanding balances for taxes due to or from any New SAC affiliates.
The provision for (benefit from) income taxes consisted of the following:
82
Seagate Technology
Predecessor
Fiscal
Year
Ended
June 27,
2003
Fiscal
Year
Ended
June 28,
2002
Period from
November 23,
2000 to
June 29,
2001
Period from
July 1,
2000 to
November 22,
2000
(in millions)
Current Tax Expense (Benefit):
U.S. Federal
$
—
$
—
$
—
$
(
188
)
U.S. State
—
—
—
(
75
)
Foreign
34
24
9
12
34
24
9
(251
)
Deferred Tax Expense (Benefit):
U.S. Federal
$
(18
)
$
66
$
—
$
7
U.S. State
(3
)
8
—
38
Foreign
6
(12
)
—
—
(15
)
62
—
45
Provision for (Benefit from) income taxes
$
19
$
86
$
9
$
(206
)
Income (loss) before income taxes consisted of the following:
Seagate Technology
Predecessor
Fiscal
Year
Ended
June 27,
2003
Fiscal
Year
Ended
June 28,
2002
Period from
November 23,
2000 to
June 29,
2001
Period from
July 1,
2000 to
November 22,
2000
(in millions)
U.S.
$
198
$
(83
)
$
(296
)
$
609
Foreign
462
322
195
(1,227
)
$
660
$
239
$
(101
)
$
(618
)