Seagate 2006 Annual Report Download - page 85

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Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
In the fourth quarter of fiscal year 2004, the Company discontinued subsidizing its post-retirement medical plan
for new retirees subsequent to July 2, 2004. As a result, the benefit obligation accrued prior to July 2, 2004 for
current company employees was eliminated and the Company recorded a reduction in operating expenses of
approximately $14 million in its first quarter of fiscal year 2005 related to this reduction in benefit obligation. The
components of net periodic benefit cost associated with the Company’s post-retirement medical plan for fiscal years
2007 and 2006 were not significant. The remaining benefit obligation at June 29, 2007 was not significant.
The provision for (benefit from) income taxes consisted of the following:
Income before income taxes consisted of the following:
For fiscal year 2007 there were no tax benefits recorded to Additional Paid-In Capital associated with stock
option deductions. Current tax expense of $44 million and $15 million for fiscal years 2006 and 2005, respectively,
was associated with stock option deductions, the tax benefits of which were recorded directly to Additional Paid-In
Capital.
The U.S. federal and state deferred tax benefit of $359 million for fiscal year 2007 includes $319 million of
deferred tax benefit resulting from the release of valuation allowance recorded in prior years for deferred tax assets
(see discussion of valuation allowance release below). For fiscal year 2006, deferred tax expense of $33 million
related to the recording of a valuation allowance against deferred tax assets of Seagate that were considered to be no
82
4.
Income Taxes
Fiscal
Fiscal
Fiscal
Year
Year
Year
Ended
Ended
Ended
June 29,
June 30,
July 1,
2007
2006
2005
(In millions)
Current Tax Expense (Benefit):
U.S. Federal
$
6
$
35
$
15
U.S. State
(1
)
7
3
Foreign
8
19
(4
)
Total Current
$
13
$
61
$
14
Deferred Tax Expense (Benefit):
U.S. Federal
$
(319
)
$
29
$
1
U.S. State
(40
)
4
—
Foreign
(6
)
(10
)
10
Total Deferred
$
(365
)
$
23
11
Provision for (Benefit from) income taxes
$
(352
)
$
84
$
25
Fiscal
Fiscal
Fiscal
Year
Year
Year
Ended
Ended
Ended
June 29,
June 30,
July 1,
2007
2006
2005
(In millions)
U.S
$
(125
)
$
(18
)
$
92
Foreign
686
942
640
$
561
$
924
$
732