Seagate 2006 Annual Report Download - page 30

Table of Contents
Our ability to generate cash is subject to general economic, financial, competitive, legislative, regulatory and other
factors that are beyond our control. We cannot assure you that:
If we cannot fund our liquidity needs, we will have to take actions such as reducing or delaying capital
expenditures, product development efforts, strategic acquisitions, investments and alliances, selling assets,
restructuring or refinancing our debt, or seeking additional equity capital. We cannot assure you that any of these
remedies could, if necessary, be affected on commercially reasonable terms, or at all. In addition, our existing debt
instruments permit us to incur a significant amount of additional debt. If we incur additional debt above the levels
now in effect, the risks associated with our substantial leverage, including the risk that we will be unable to service
our debt or generate enough cash flow to fund our liquidity needs, could intensify.
Restrictions Imposed by Debt Covenants — Restrictions imposed by our existing credit facility may limit our
ability to finance future operations or capital needs or engage in other business activities that may be in our
interest.
Our existing credit facility imposes, and the terms of any future debt may impose, operating and other
restrictions on us. Our existing credit facility may also limit, among other things, our ability to:
These covenants are subject to a number of important qualifications and exceptions, including exceptions that
permit us to make significant dividends.
Our credit facility also requires us to maintain compliance with specified financial ratios. Our ability to comply
with these ratios may be affected by events beyond our control.
A breach of any of the covenants described above or our inability to comply with the required financial ratios
could result in a default under our credit facility. If a default occurs, the Administrative Agent of the credit facility
may elect to declare all of our outstanding obligations under the credit facility, together with accrued interest and
other fees, to be immediately due and payable. If our outstanding indebtedness were to be accelerated, we cannot
assure you that our assets would be sufficient to repay in full that debt and any potential future indebtedness, which
would cause the market price of our common shares to decline significantly.
System Failures — System failures caused by events beyond our control could adversely affect computer
equipment and electronic data on which our operations depend.
Our operations are dependent upon our ability to protect our computer equipment and the information stored in
our databases from damage by, among other things, earthquake, fire, natural disaster, power loss,
telecommunications failures, unauthorized intrusion and other catastrophic events. As our operations become more
automated and increasingly interdependent, our exposure to the risks posed by these types of events will increase.
We do not
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•
our business will generate sufficient cash flow from operations;
• we will continue to realize the cost savings, revenue growth and operating improvements that resulted from
the execution of our long
-
term strategic plan; or
•
future sources of funding will be available to us in amounts sufficient to enable us to fund our liquidity needs.
•
pay dividends or make distributions in respect of our shares;
•
redeem or repurchase shares;
•
make investments or other restricted payments;
•
sell assets;
•
issue or sell shares of restricted subsidiaries;
•
enter into transactions with affiliates;
•
create liens; and
•
effect a consolidation or merger.