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SEAGATE TECHNOLOGY AND ITS PREDECESSOR
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS—(CONTINUED)
On July 31, 2001, Seagate Delaware and the Internal Revenue Service filed a settlement stipulation with the United States Tax Court in
complete settlement of the remaining disputed tax matter reflected in the statutory notice of deficiency dated June 12, 1998. The settlement
stipulation is expressly contingent upon Seagate Delaware and the Internal Revenue Service entering into a closing agreement in connection
with certain tax matters arising in all or some part of the open tax years of Seagate Delaware and New SAC. The settlement remains before the
Joint Committee on Taxation for review. The parties are in the process of incorporating comments from the Joint Committee on Taxation into
the parties’ settlement agreements. The settlement and the anticipated execution of the closing agreement(s) will not result in an additional
provision for income taxes.
As of June 27, 2003, accrued income taxes include $125 million for tax indemnification amounts due to VERITAS Software Corporation
pursuant to the Indemnification Agreement between Seagate Delaware, Suez Acquisition Company and VERITAS Software Corporation. The
tax indemnification amount was recorded by the Company in connection with the purchase of the operating assets of Seagate Delaware and
represents U.S. tax liabilities previously accrued by Seagate Delaware for periods prior to the acquisition date of the operating assets. Certain of
Seagate Delaware’s federal and state tax returns are under examination by tax authorities. The Company believes that the $125 million tax
indemnification amount is adequate to cover any final assessments that may result from these examinations. The timing of the settlement of
these examinations is uncertain. To the extent the settlement of these examinations results in tax liabilities that are less than the $125 million
indemnification amount, the difference will be recorded as an income tax benefit and may significantly affect the Company’s effective tax rate
for the period in which the settlement occurs.
Certain of the Company’
s foreign tax returns for various fiscal years are under examination by tax authorities. The Company believes that
adequate amounts of tax have been provided for any final assessment that may result from these examinations.
5. Supplemental Cash Flow Information
85
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)
Cash Transactions:
Cash paid for interest
$
49
$
58
$
50
$
26
Cash paid (received) for income taxes, net of refunds
27
18
6
(63
)
The components of depreciation and amortization expense are as follows:
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)
Depreciation
$
390
$
320
$
164
$
238
Amortization:
Goodwill and intangibles
2
28
17
26
Deferred compensation
12
12
5
2
Other assets
39
45
(4
)
(5
)
$
443
$
405
$
182
$
261