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Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
longer realizable as a result of the Maxtor acquisition and Seagate filing U.S. tax returns with Maxtor on a
consolidated basis in subsequent years.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant
components of the Company’s deferred tax assets and liabilities were as follows:
During fiscal year 2007 the Company reduced its valuation allowance recorded in prior years for deferred tax
assets by $641 million of which $319 million was recorded as a deferred tax benefit and $322 million was recorded a
as reduction to Maxtor goodwill. The release of the previously recorded U.S. valuation allowance was largely due to
the completion during 2007 of the restructuring of the Company’
s intercompany arrangements, which will enable the
Company to forecast future U.S. taxable income with greater certainty and U.S. taxable income from the
intercompany sale of certain Maxtor assets.
83
June 29,
June 30,
2007
2006
(In millions)
Deferred Tax Assets
Accrued warranty
$
129
$
108
Inventory valuation accounts
32
26
Receivable reserves
22
26
Accrued compensation and benefits
119
86
Depreciation
185
192
Restructuring allowance
16
46
Other accruals and deferred items
115
95
Net operating losses and tax credit carry
-
forwards
436
522
Capitalized research and development
32
62
Other assets
12
10
Total Deferred Tax Assets
1,098
1,173
Valuation allowance
(399
)
(979
)
Net Deferred Tax Assets
$
699
$
194
Deferred Tax Liabilities
Unremitted earnings of certain foreign entities
$
(5
)
$
(78
)
Acquired intangibles assets
(31
)
(42
)
Total Deferred Tax Liabilities
$
(36
)
$
(120
)
Net Deferred Tax Assets/(Liabilities)
$
663
$
74
Deferred taxes on Inter
-
company transactions
$
105
$
4
Total Deferred Tax Assets
$
768
$
78
As Reported on the Balance Sheet
Current assets
—
Deferred Income taxes
$
196
$
48
Non
-
current assets
—
Deferred Tax Assets
574
33
Other non
-
current liabilities
(2
)
(3
)
Total Deferred Income Taxes
$
768
$
78