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Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The fair value of the Company’s investment in debt securities, by remaining contractual maturity, is as follows
(in millions):
Fair Value Disclosures — The carrying value of cash and equivalents approximates fair value. The fair values
of short-term investments, debentures, notes and loans are estimated based on quoted market prices as of June 29,
2007.
The carrying values and fair values of the Company’s financial instruments are as follows:
Derivative Financial Instruments — The Company recognizes all of its derivative financial instruments in the
balance sheet as either assets or liabilities. All derivative financial instruments are carried at fair value. The effective
portion of the gain or loss on a derivative designated as a cash flow hedge is reported in Other comprehensive income
and the ineffective portion is reported in earnings. Amounts in Other comprehensive income are reclassified into
earnings in the same period during which the hedged forecasted transaction affects earnings. The gain or loss on a
derivative instrument not qualifying for hedge accounting is recognized currently in earnings. The Company may
enter into foreign currency forward exchange contracts to manage exposure related to certain foreign currency
commitments, certain foreign currency denominated balance sheet positions and anticipated foreign currency
denominated expenditures. The Company’s policy prohibits it from entering into derivative financial instruments for
speculative or trading purposes. During fiscal years 2007, 2006 and 2005, the Company did not enter into any hedges
of net investments in foreign operations.
The Company has established a foreign currency hedging program to protect against the increase in value of
foreign currency cash flows resulting from operating and capital expenditures over the next year. The Company
hedges portions of its forecasted expenditures denominated in foreign currencies with forward exchange contracts.
When the U.S. dollar weakens significantly against the foreign currencies, the increase in value of the future foreign
currency expenditure is offset by gains in the value of the forward exchange contracts designated as hedges.
Conversely, as the U.S. dollar strengthens, the decrease in value of the future foreign currency cash flows is offset by
losses in the value of the forward exchange contracts. These forward foreign exchange contracts, carried at fair value,
may have maturities up to twelve months.
69
June 29,
June 30,
2007
2006
Due in less than 1 year
$
916
$
986
Due in 1 to 3 years
27
175
$
943
$
1,161
June 29, 2007
June 30, 2006
Carrying
Estimated
Carrying
Estimated
Amount
Fair Value
Amount
Fair Value
(In millions)
Cash equivalents
$
862
$
862
$
757
$
757
Short
-
term investments
157
156
831
823
Floating Rate Senior Notes due October 2009
(300
)
(300
)
—
—
6.375% Senior Notes due October 2011
(599
)
(588
)
—
—
6.8% Senior Notes due October 2016
(598
)
(577
)
—
—
6.8% Convertible Senior Notes due April 2010
(135
)
(145
)
(135
)
(144
)
5.75% Subordinated Debentures due March 2012
(45
)
(45
)
(49
)
(47
)
2.375% Convertible Senior Notes due August 2012
(326
)
(455
)
(326
)
(457
)
LIBOR Based China Manufacturing Facility Loan
(60
)
(60
)
(60
)
(60
)
8.0% Senior Notes due May 2009
—
—
(
400
)
(412
)