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Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
$16 million of stock-based compensation in fiscal years 2007 and 2006, respectively in connection with the assumed
options and nonvested shares exchanged in the Maxtor acquisition (see Note 10).
As required by SFAS No. 123(R), management made an estimate of expected forfeitures and is recognizing
compensation costs only for those equity awards expected to vest.
Prior to the adoption of SFAS No. 123(R), the Company presented all tax benefits of deductions resulting from
the exercise of stock options as operating cash flows in its statement of cash flows. In accordance with guidance in
SFAS No. 123(R), the cash flows resulting from excess tax benefits (tax benefits related to the excess of proceeds
from employee’s exercises of stock options over the stock-
based compensation cost recognized for those options) are
classified as financing cash flows. The Company did not recognize any cash flows from excess tax benefits during
fiscal year 2007. The Company recorded approximately $44 million of excess tax benefits as a financing cash inflow
during fiscal year 2006.
Stock Option Activity
The Company issues new common shares upon exercise of stock options. The following is a summary of option
activity for the Company’s stock option plans, including options assumed from Maxtor (during fiscal year 2006), for
the fiscal year ended June 29, 2007:
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards
and the quoted price of the Company’s common shares for the 39.7 million options that were in-the-money at
June 29, 2007. During fiscal years 2007, 2006 and 2005 the aggregate intrinsic value of options exercised under the
Company’s stock option plans was $280 million, $228 million and $163 million, respectively, determined as of the
date of option exercise. The aggregate fair value of options vested during fiscal year 2007 was approximately
$101 million.
At June 29, 2007 the total compensation cost related to options granted to employees under the Company’
s stock
option plans (excluding options assumed in the Maxtor acquisition) but not yet recognized was approximately
$141 million, net of estimated forfeitures of approximately $30 million. This cost is being amortized on a straight-
line basis over a weighted-average remaining term of approximately 2.3 years and will be adjusted for subsequent
changes in estimated forfeitures. In addition to the stock-based compensation cost not yet recognized under the
Company’s stock option plans, the Company has additional stock-based compensation costs related to options
assumed in the Maxtor acquisition of approximately $7 million, which will be amortized over a weighted-average
period of approximately 1.8 years.
79
Weighted-
Weighted
-
Average
Average
Remaining
Aggregate
Number of
Exercise
Contractual
Intrinsic
Options
Shares
Price
Term
Value
(In millions)
(In millions)
Outstanding at June 30, 2006
68.8
$
10.21
Granted
7.7
22.66
Exercised
(17.3
)
9.12
Forfeitures and cancellations
(2.6
)
22.26
Outstanding at June 29, 2007
56.6
$
10.94
5.3
$
430
Vested and expected to vest at June 29, 2007
53.5
$
14.57
5.3
$
425
Exercisable at June 29, 2007
29.1
$
10.45
5.0
$
338