Seagate 2003 Annual Report Download - page 20

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Table of Contents
Within the two most recent fiscal years, we have made additional distributions unrelated to our quarterly dividend policy. These include:
•
an in-kind distribution of a $32 million promissory note to our shareholders of record immediately following our sale of XIOtech
Corporation on November 4, 2002; and
To the extent that the amount of any distribution exceeds our current and accumulated earnings and profits for U.S. federal income tax
purposes in any taxable year, the distribution will be treated as a return of capital for U.S. tax purposes, causing a reduction in a shareholder’s
adjusted tax basis in the common shares. We did not have current or accumulated earnings and profits for U.S. federal income tax purposes for
our taxable year ended July 2, 2004 and, accordingly, distributions paid on our common shares during this period were treated as a return of
capital for U.S. federal income tax purposes. There can be no assurances that we will not have current or accumulated earnings and profits for
U.S. federal income tax purposes in future years. To the extent that we do have current or accumulated earnings and profits for U.S. federal
income tax purposes, a distribution on our common shares will not be treated as a return of capital distribution and will be treated as dividend
income.
Furthermore, we currently believe that we are a foreign personal holding company for U.S. federal income tax purposes. Under recent
U.S. federal income tax legislation, U.S. shareholders who are individuals will not be eligible for reduced rates of taxation applicable to certain
dividend income (currently a maximum rate of 15%) on distributions on our common shares if we qualify as a foreign personal holding
company in the year in which such distributions were made or in the preceding taxable year.
19
•
a distribution of approximately $262 million to the holders of our then-outstanding shares immediately prior to our initial public
offering.