Seagate 2006 Annual Report Download - page 104

Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
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 charged for these services through corporate expense allocations. The amount of
corporate expense allocations depended 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 were reasonable. There were no allocations
charged to other affiliated companies’ marketing and administrative expenses for fiscal years 2007 and 2006, and
these allocations were not material for fiscal year 2005. Xiotech Corporation and Certance were affiliates of Seagate
Technology. The Company recorded revenue from Xiotech of $1 million, $1 million and $7 million in fiscal years
2007, 2006 and 2005, respectively, and recorded revenue from Certance of $2 million for the period from July 3,
2004 through January 2005, at which time it was sold to a third party. There were no amounts receivable from
affiliated companies at June 29, 2007 and June 30, 2006. 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. and United Parcel Service, Inc. The Company sells disc drives to Microsoft and certain
subcontractors to Microsoft including Flextronics for us in their products. The Company recorded net revenue of
$113 million, $214 million and $181 million in fiscal years 2007, 2006 and 2005, respectively, for sales to Microsoft
and Microsoft subcontractors, including Flextronics. With respect to such sales, at June 29,2007 and June 20, 2006,
the Company had accounts receivable of $66 million and $67 million, respectively. The Company made purchases
from Flextronics in fiscal years 2007, 2006 and 2005 respectively of $177 million, $64 million and $24 million and
had related accounts payable at June 29, 2007 and June 30, 2006 of $37 million and $18 million, respectively. The
Company made payments for freight and logistic services to United Parcel Service of $160 million, $130 million and
$115 million in fiscal year 2007, 2006 and 2005, respectively. At June 29, 2007 and June 30, 2006, the Company had
accounts payable to United Parcel Service of $33 million and $26 million, respectively.
Another individual who has been a member of our board of directors since April 29, 2004 is also a director of
LSI Logic Corp. The Company recorded revenue of $46 million, $44 million and $36 million from sales to LSI
Logic for fiscal years 2007, 2006 and 2005, respectively. The Company had accounts receivable of $7 million and
$9 million from LSI Logic at June 29, 2007 and June 30, 2006, respectively. The Company also made payments to
LSI Logic of $220 million and $194 million in fiscal years 2007 and 2006, respectively, related to purchases of
various components. The Company had accounts payable to LSI Logic of $26 million and $46 million at June 29,
2007 and June 30, 2006, respectively.
A former member of our board of directors who became a director of Lenovo Group Limited on May 17, 2005,
resigned from the Company’s board of directors on May 19, 2006. The Company recorded revenue of $136 million
from sales to Lenovo Group Limited and its subcontractors for the period from July 2, 2005 to May 19, 2006 and
$29 million for the period from May 17, 2005 to July 1, 2005.
Another individual who has been a member of our board of directors since October 26, 2006 was also the chief
executive officer and a member of the board of directors of Solectron Corporation (“Solectron”). The individual
resigned from our board of directors on February 22, 2007. The Company recorded net revenue of $22 million from
sales to Solectron for the period from October 28, 2006 through February 22, 2007. Additionally, the Company made
purchases from Solectron of $2 million for the period from October 26, 2006 through February 22, 2007.
Dividends to New SAC
During fiscal year 2006, pursuant to its quarterly dividend policy, the Company paid dividends to its
shareholders aggregating approximately $155 million, or $0.32 per share, including New SAC. As of January 3,
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