Seagate 2004 Annual Report Download - page 37

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Table of Contents
or repayment may result in increased flexibility with respect to payment of dividends and/or the ability to repurchase some of our common
shares.
The degree to which we are leveraged could materially and adversely affect our ability to obtain financing for working capital, capital
expenditures, product development efforts, strategic acquisitions, investments and alliances or other purposes and could make us more
vulnerable to industry downturns and competitive pressures. Although we are currently not a party to any agreement or letter of intent with
respect to potential investments in, or acquisitions of, complementary businesses, products or technologies, we may enter into these types of
arrangements in the future, which could also require us to seek additional equity or debt financing. Additional funds may not be available on
terms favorable to us or at all. We will require substantial amounts of cash to fund scheduled payments of principal and interest on our
indebtedness, future capital expenditures and any increased working capital requirements. If we are unable to meet our cash requirements out of
existing cash or cash flow from operations, we cannot assure you that we will be able to obtain alternative financing on terms acceptable to us,
if at all.
Discussion of Cash Flows
At July 1, 2005, our working capital was $1.722 billion, which included cash, cash equivalents and short-term investments of $1.836
billion. Cash, cash equivalents and short-term investments increased $653 million from fiscal year 2004 to fiscal year 2005. This increase was
primarily due to cash provided by operating activities and proceeds from employee stock option exercises and employee stock purchases
partially offset by investments in property, equipment and leasehold improvements and dividends to shareholders.
Cash provided by operating activities for fiscal year 2005 was $1.428 billion and consisted primarily of net income adjusted for
depreciation and amortization combined with an increase in our working capital.
During fiscal year 2005, we invested approximately $691 million in property, equipment and leasehold improvements, including deposits
and prepayments. The $691 million investment was comprised of:
•
$
257 million for manufacturing facilities and equipment related to our subassembly and disc drive final assembly and test facilities in
the United States and the Far East;
•
$240 million to upgrade the capabilities of our thin-film media operations in the United States, Singapore and Northern Ireland;
•
$165 million for manufacturing facilities and equipment for our recording head operations in the United States, the Far East and
Northern Ireland; and
In fiscal year 2006, we expect that our investment in property, equipment and leasehold improvements will be in the range of $700
million to $800 million in order to satisfy our customer’s requirements. We plan to finance these investments from existing cash balances and
cash we expect to generate from operations in fiscal year 2006.
At July 2, 2004, cash, cash equivalents and short-term investments were $1.183 billion, a decrease of $11 million from the end of fiscal
year 2003. This decrease was primarily due to investments in property, equipment and leasehold improvements and dividends to shareholders
offset by cash provided by operating activities and proceeds from employee stock option exercises.
During fiscal year 2004, we invested approximately $605 million in property, equipment and leasehold improvements, including deposits
and prepayments. The $605 million investment was comprised of:
•
$29 million for other purposes.
34
•
$
179 million for manufacturing facilities and equipment related to our subassembly and disc drive final assembly and test facilities in
the United States and the Far East;