Seagate 2003 Annual Report Download - page 36

Table of Contents
short-term investments in excess of maturities. Net cash used in investing activities for fiscal year 2003 was primarily attributable to
expenditures for property, equipment and leasehold improvements and the purchases of short-term investments in excess of maturities. Net
cash used in investing activities for fiscal year 2002 was primarily attributable to expenditures for property, equipment and leasehold
improvements.
Net cash provided by (used in) financing activities was $0 million for fiscal year 2004, $9 million for fiscal year 2003, and ($409) million
for fiscal year 2002. Net cash provided by (used in) financing activities for fiscal year 2004 was primarily attributable to distributions to our
shareholders and principal payments on our senior credit facilities offset by cash provided from employee stock option exercises and employee
stock purchases. Net cash provided by financing activities for fiscal year 2003 was primarily attributable to cash provided from the sale of our
common shares partially offset by distributions to our shareholders. Net cash used in financing activities for fiscal year 2002 was primarily
attributable to the refinancing and overall reduction of all of our outstanding indebtedness, payment of distributions to our shareholders and
payment of the redemption premium on the 12
1
/
2
% senior subordinated notes.
Liquidity Sources and Cash Requirements and Commitments
On January 29, 2004, our board of directors amended our quarterly dividend policy and, pursuant to our amended dividend policy, we are
paying and expect to continue to pay our shareholders a quarterly distribution of up to $0.06 per share ($0.24 annually) so long as the aggregate
amount of the distributions does not exceed 50% of our cumulative consolidated net income plus 100% of net cash proceeds received from the
issuance of capital for the period beginning June 30, 2001 and ending the most recent fiscal quarter for which financial statements are internally
available. Our ability to continue to pay quarterly distributions will be subject to, among other things, general business conditions within the
rigid disc drive industry, our financial results, the impact of paying distributions on our credit ratings, and legal and contractual restrictions on
the payment of distributions by our subsidiaries to us or by us to our shareholders, including restrictions imposed by the covenants contained in
the indenture governing our senior notes. Currently, the most significant restriction on our ability to pay dividends is under the credit agreement
governing our senior secured credit facilities, which limits annual distributions to $150 million. On July 19, 2004, our board of directors
declared a quarterly distribution of $0.06 per share to be paid on or before August 20, 2004 to our shareholders of record as of August 6, 2004.
Our principal sources of liquidity as of July 2, 2004 consisted of: (1) $1.183 billion in cash, cash equivalents, and short-term investments,
(2) a $150 million revolving credit facility, of which $37 million had been used for outstanding letters of credit and bankers’ guarantees as of
July 2, 2004, and (3) cash we expect to generate from operations during this fiscal year.
Since the closing of the November 2000 transactions, our principal liquidity requirements have been to service our debt and meet our
working capital, research and development and capital expenditure needs. In addition, in the second half of fiscal year 2002 and through fiscal
years 2003 and 2004, we made distributions to our shareholders.
We believe that our sources of cash will be sufficient to fund our operations and meet our cash requirements for at least the next 12
months. Our ability to fund these requirements and comply with the financial covenants under our debt agreements will depend on our future
operations, performance and cash flow and is subject to prevailing economic conditions and financial, business and other factors, some of
which are beyond our control. In addition, as part of our strategy, we intend to selectively pursue strategic alliances, acquisitions and
investments that are complementary to our business. Any material future acquisitions, alliances or investments will likely require additional
capital. We cannot assure you that additional funds from available sources will be available on terms acceptable to us, or at all.
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