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Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
At July 1, 2005, future minimum principal payments on long-term debt were as follows:
As of July 1, 2005, the Company had $35 million of outstanding standby letters of credit and bankers’ guarantees issued under its $150
million revolving credit facility.
The Company is restricted in its ability to pay dividends to its shareholders by the covenants contained in the indenture governing its
senior notes and the credit agreement governing its senior secured credit facilities. The covenants contained in the indenture governing the
Company’s senior notes limit the aggregate amount of restricted payments, including dividends to shareholders, to 50% of cumulative
consolidated net income plus 100% of net cash proceeds received from the issuance of capital, all of which are measured from the period
beginning June 30, 2001 and ending the most recent fiscal quarter for which financial statements are internally available. Currently, the most
significant restriction on the Company’s ability to pay dividends is under the credit agreement governing the Company’s senior secured credit
facilities, which limits annual dividends to $150 million. The Company’s declaration of dividends is also subject to Cayman Islands law and
the discretion of its board of directors.
3. Compensation
Fiscal Year
2006
$
4
2007
336
2008
—
2009
400
2010
—
Thereafter
—
$
740
Tax-Deferred Savings Plan
The Company has a tax-deferred savings plan, the Seagate 401(k) Plan (“the 401(k) plan”), for the benefit of qualified employees. The
401(k) plan is designed to provide employees with an accumulation of funds at retirement. Qualified employees may elect to make
contributions to the 401(k) plan on a monthly basis. The Company may make annual contributions at the discretion of its board of directors.
During fiscal years 2005, 2004 and 2003, the Company made contributions of $13 million, $14 million and $15 million, respectively.
Stock-Based Benefit Plans
Seagate Technology 2001 Share Option Plan —In December 2000, the Company’s board of directors adopted the Seagate Technology
2001 Share Option Plan (the “2001 Plan”). Under the terms of the 2001 Plan, eligible employees, directors, and consultants can be awarded
options to purchase common shares of the Company under vesting terms to be determined at the date of grant. In January 2002, the Company
increased the maximum number of common shares issuable under the 2001 Plan from 72 million to 100 million. No options to purchase the
Company’s common shares had been issued through June 29, 2001. From July 1, 2001 through July 1, 2005, options to purchase 99,025,033
common shares were granted to employees under the 2001 plan, net of cancellations. Options granted to exempt employees will generally vest
as follows: 25% of the shares will vest on the first anniversary of the vesting commencement date and the remaining 75% will vest
proportionately each month over the next 36 months. Options granted to non-exempt employees will vest on the first anniversary of the vesting
commencement date. Except for certain options granted below fair market value in fiscal year 2003 (see Deferred Stock Compensation), all
other options granted under the 2001 Plan were granted at fair market value, with options granted up through September 5, 2004 expiring ten
years from the date of grant and options granted subsequent to September 5, 2004 expiring seven years from the date of grant.
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