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Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
obligation. Changes in the Company’s product warranty liability during the fiscal years ended July 2, 2004 and June 27, 2003 were as follows:
The Company offers extended warranties on certain of its products. Deferred revenue in relation to extended warranties has not been
material to date.
12. Related Party Transactions
Fiscal Year
Ended
July 2,
2004
Fiscal Year
Ended
June 27,
2003
(in millions)
Balance, beginning of period
$
134
$
160
Warranties issued
69
81
Repairs and replacements
(143
)
(125
)
Changes in liability for pre
-
existing warranties, including expirations
65
18
Balance, end of period
$
125
$
134
Affiliate Transactions
Historically, the Company has provided substantial services to other affiliated companies. Upon the closing of the stock purchase
agreement by New SAC, these services continue to be provided by the Company through New SAC. The services provided generally include
general management, treasury, tax, financial reporting, benefits administration, insurance, information technology, legal, accounts payable and
receivable and credit functions, among others. The Company charges for these services through corporate expense allocations. The amount of
corporate expense allocations depends upon the total amount of allocable costs incurred by the Company on behalf of the affiliated company
less amounts charged as specified cost or expense rather than by allocation. Such costs have been proportionately allocated to the affiliated
companies based on detailed inquiries and estimates of time incurred by the Company’s corporate marketing and general administrative
departmental managers. Management believes that the allocations charged to other affiliated companies are reasonable. Allocations charged to
other affiliated companies’ marketing and administrative expenses for fiscal years 2004, 2003 and 2002 were approximately $2 million, $4
million and $4 million, respectively. XIOtech Corporation and Certance Holdings (“Certance”) are affiliates of Seagate Technology. The
Company recorded revenue from XIOtech and Certance of $8 million and $3 million in fiscal year 2004, $23 million and $5 million in fiscal
year 2003, and $8 million and $7 million in fiscal year 2002, respectively. The amounts receivable from Xiotech and Certance were $1 million
from each at July 2, 2004 and $1 million and $5 million, respectively, at June 27, 2003. Purchases and sales to other affiliated companies were
not material for any of the periods presented.
Certain members of our board of directors are also on the boards of directors of Microsoft Corporation, Flextronics International Ltd.,
United Parcel Service, Inc., and E2open, Inc. The Company sells disc drives to Microsoft and Flextronics for use in their products. The
Company recorded net revenue of $113 million, $136 million and $124 million in fiscal years 2004, 2003 and 2002, respectively, for sales to
Microsoft and Flextronics. With respect to such sales, at July 2, 2004, the Company had accounts receivable and accounts payable of $23
million and $7 million, respectively, and at June 27, 2003, the Company had accounts receivable and accounts payable of $15 million and $0
million, respectively. The Company made payments to United Parcel Service of $114 million, $120 million and $92 million in fiscal years
2004, 2003 and 2002, respectively. At July 2, 2004 and June 27, 2003, the Company had accounts payable to United Parcel Service of $10
million and $17 million, respectively. Purchases from E2open, Inc. were $2 million, $1 million, and $2 million for fiscal
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