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Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
year ended June 29, 2007, the Company paid $196 million of the accrued exit costs. The Company
’s payments for
severance and related benefits and for contractual settlements were substantially completed as of June 29, 2007,
while the costs associated with the exit of certain facilities will continue to the end of fiscal year 2016.
The following table summarizes the Company’s exit activities in connection with the Maxtor acquisition:
Accrued exit costs are included in short-term and long-term Accrued Restructuring on the Consolidated Balance
Sheet.
Stock-Based Compensation
The fair value of stock-based compensation related to the unearned stock options and nonvested shares assumed
from Maxtor was approximately $69 million, net of forfeitures, of which approximately $44 million has been
amortized through June 29, 2007. The remaining $25 million is being amortized on a straight-line basis over the
remaining estimated service (vesting) periods of the underlying stock options or nonvested shares.
Pro Forma Financial Information
The unaudited financial information in the table below summarizes the combined results of operations of the
Company and the results of Maxtor prior to the Merger, on a pro forma basis, as though the companies had been
combined as of July 3, 2004 for each period presented. Pro forma financial information for our other acquisitions
have not been presented, as the effects were not material to our historical consolidated financial statements either
individually or in aggregate. The pro forma financial information for all periods presented also includes the business
combination accounting effect on conforming Maxtor’s revenue recognition policy to the Company’s, adjustments
related to the fair value of acquired inventory and fixed assets, amortization charges from acquired intangible assets,
stock-based compensation charges for unvested options assumed and nonvested shares exchanged and related tax
effects of these adjustments. The pro forma financial information is presented for informational purposes only and is
not indicative of the results of operations that would have been achieved if the acquisition had taken place at the
beginning of the earliest period presented, nor does it intend to be a projection of future results.
The unaudited pro forma financial information for the fiscal year ended June 30, 2006 combines the Company’s
historical results for the fiscal year ended June 30, 2006 and, due to differences in our reporting periods, the historical
results of Maxtor for the period from July 3, 2005 to May 19, 2006. The unaudited pro forma financial information
for the fiscal year ended July 1, 2005 combines the Company’s historical results for the fiscal year ended July 1,
2005 and the historical results of Maxtor for the four fiscal quarters ending July 2, 2005.
97
Severance
and
Excess
Contract
Benefits
Facilities
Cancellations
Total
(In millions)
Accrued exit costs, May 19, 2006
$
117
$
43
$
91
$
251
Cash payments
(8
)
—
(
10
)
(18
)
Accrued exits costs, June 30, 2006
109
43
81
233
Purchase accounting adjustments
(9
)
2
3
(4
)
Cash payments
(99
)
(17
)
(80
)
(196
)
Accrued exit costs, June 29, 2007
$
1
$
28
$
4
$
33