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Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
estimated using a Black-Scholes-Merton option-pricing formula and amortized on a straight-line basis over the
respective vesting periods of the awards.
Disclosures for fiscal years 2007 and 2006 are not presented because stock-based payments were accounted for
under the fair value method prescribed by SFAS No. 123(R) during this period. Additionally, the stock-based
employee compensation determined under the fair-value method has been adjusted to exclude the effect of the
options granted prior to the Company’s initial filing of its registration statement on Form S-1 in October 2002, as
those options were valued for pro forma purposes using a minimum fair value method.
Deferred Compensation Plan
On January 1, 2001, the Company adopted a deferred compensation plan for the benefit of eligible employees.
This plan is designed to permit certain discretionary employer contributions, in excess of the tax limits applicable to
the 401(k) plan and to permit employee deferrals in excess of certain tax limits. Company assets earmarked to pay
benefits under the plan are held by a rabbi trust. The Company has adopted the provisions of EITF
No. 97
-14, Accounting for Deferred Compensation Arrangements Where Amounts Earned are Held in a Rabbi Trust
and Invested (“EITF 97-14”). Under EITF 97-14, the assets and liabilities of a rabbi trust must be accounted for as
assets and liabilities of the Company. In addition all earnings and expenses of the rabbi trust are recorded as other
income or expense in the Company’s financial statements. At June 29, 2007 and June 30, 2006, the deferred
compensation amounts related to the rabbi trust were approximately $136 million and $101 million, respectively, and
are included in Other Assets, net and Accrued expenses on the accompanying balance sheets.
As a result of the Maxtor acquisition, the Company acquired a deferred compensation plan for the benefit of
eligible employees, which is designed to permit certain discretionary employer contributions, in excess of the tax
limits applicable to the 401(k) plan and to permit employee deferrals in excess of certain tax limits. Company assets
earmarked to pay benefits under the plan are held by a rabbi trust. At June 29, 2007, the deferred compensation
amounts related to the rabbi trust was approximately $3 million.
Post-Retirement Medical Plan
The Company’s post-
retirement medical plan offered medical coverage to eligible U.S. retirees and their eligible
dependents that were enrolled prior to July 2, 2004. Substantially all U.S. employees became eligible for these
benefits after 15 years of service and attaining age 60. The Company’s measurement date is March 31
st
of each year.
81
Fiscal Year Ended
July 1, 2005
(In millions,
except per share
data)
Net income
—
as reported
$
707
Deduct: Total stock-based employee compensation expense determined under fair value
method
(55
)
Net income
—
pro forma
$
652
Net income per share:
Basic
—
as reported
$
1.51
Basic
—
pro forma
1.39
Diluted
—
as reported
1.41
Diluted
—
pro forma
1.31