Seagate 2003 Annual Report Download - page 76

Download and view the complete annual report

Please find page 76 of the 2003 Seagate annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 123

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123

Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Equipment and leasehold improvements include assets under capitalized leases. Amortization of leasehold improvements is included in
depreciation expense. Depreciation expense was $416 million, $390 million, and $320 million for fiscal years 2004, 2003 and 2002,
respectively.
Intangibles
Other intangible assets consist of licensed technology. Amortization of purchased intangibles is provided on a straight-line basis over the
respective useful lives of the assets of 60 months. Accumulated amortization of intangibles was $4 million and $3 million at July 2, 2004 and
June 27, 2003, respectively.
Supplemental Cash Flow Information
The components of depreciation and amortization expense are as follows:
Long-Term Debt and Credit Facilities
Fiscal Years Ended
July 2,
2004
June 27,
2003
June 28,
2002
(in millions)
Depreciation
$
416
$
390
$
320
Amortization:
Intangibles
1
2
28
Deferred compensation
8
12
12
Other assets
(3
)
39
45
$
422
$
443
$
405
In the fourth fiscal quarter of 2002, the Company and its subsidiaries completed a refinancing of all its outstanding debt obligations. The
refinancing was completed when the Company’s wholly-owned subsidiaries, Seagate Technology HDD Holdings (“HDD”) and Seagate
Technology (US) Holdings, Inc., entered into new senior secured credit facilities with a group of banks that permit up to $500 million of
borrowings consisting of a $150 million revolving credit and a five-
year $350 million, LIBOR + 2% term loan facility that was drawn in full as
part of the refinancing. At the same time, HDD issued $400 million aggregate principal amount of 8% senior notes due 2009. In addition,
Seagate Technology International (“STI”), a wholly-owned subsidiary of HDD, initiated a tender offer to purchase its outstanding 12
1
/
2
%
senior subordinated notes due 2007. All of the 12
1
/
2
% senior subordinated notes were paid. In addition, STI and Seagate Technology (US)
Holdings, Inc. repaid the remaining balance outstanding of $679 million, including accrued interest, on its Term A and Term B bank loans.
Neither the credit agreement governing the new senior secured credit facilities nor the indenture governing the outstanding 8% senior
notes due 2009 impose any restrictions on the ability of the Company’s consolidated subsidiaries to transfer funds to HDD, a co-borrower
under the new senior secured credit facilities and the issuer of the outstanding notes, in the form of dividends, loans or advances. The new
senior secured credit facilities are secured by a first priority pledge of substantially all the tangible and intangible assets of HDD and many of
its subsidiaries. In addition, Seagate Technology and many of its direct and indirect subsidiaries have guaranteed the obligations under the new
senior secured credit facilities.
As a result of the refinancing, $93 million was charged to operations in the fourth fiscal quarter of 2002. The $93 million charge was
comprised of a $50 million redemption premium on the 12
1
/
2
% senior subordinated notes, $31 million write-off of capitalized debt issue
costs related to the prior senior debt obligations (Term A and Term B loans) and the 12 ½% senior subordinated notes, $7 million write off of
unamortized discount on the
75