Seagate 2006 Annual Report Download - page 92

Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Issuance of Common Shares
During fiscal year 2007, the Company issued approximately 17.3 million of its common shares from the exercise
of stock options and approximately 3.4 million of its common shares related to the Company’s employee stock
purchase plan.
Repurchases of Equity Securities
On August 8, 2006, the Company announced that its board of directors authorized the use of up to $2.5 billion
for the repurchase of the Company’s outstanding common shares over a two-year period. From the authorization of
this repurchase program and through the fiscal year ended June 29, 2007, the Company repurchased approximately
62.0 million shares, all of which were cancelled and are no longer outstanding. The Company repurchased these
shares through a combination of open market purchases and prepaid forward agreements with large financial
institutions, according to which the Company prepaid the financial institutions a fixed amount to deliver a variable
number of shares at future dates. The Company entered into these agreements in order to take advantage of
repurchasing shares at a guaranteed discount to the Volume Weighted Average Price (“VWAP”) of its common
shares. The Company’s policy to date has been to enter into such transactions only when the discount that it receives
is higher than the foregone return on its cash prepayment to the financial institution. There were no explicit
commissions or fees on these prepaid forward agreements. Under the terms of these agreements, there was no
requirement for the financial institutions to return any portion of the prepayment to the Company. These prepaid
forward agreements were not derivatives because the Company had prepaid all amounts and had no remaining
obligation. The agreements do not contain an embedded derivative. The prepayments were recorded as a reduction to
shareholders’ equity when paid and the shares were deducted from shares outstanding. The agreements require the
physical delivery of shares; there were no settlement alternatives, except in the case of certain defined extraordinary
events which are outside the control of Seagate and the financial institutions. The parameters used to calculate the
final number of shares deliverable were the total notional amount of the contract and the average VWAP of the
Company’s stock during the contract period less the agreed upon discount. The contracts are indexed solely to the
price of Seagate’s common shares.
During fiscal year 2007, the Company repurchased 24.3 million shares through open market repurchases. In
addition, the Company made payments totaling $950 million under prepaid forward agreements and took delivery of
37.7 million shares using prepaid forward agreements. Shares physically delivered to the Company were cancelled
and were no longer outstanding. At June 29, 2007, there were no outstanding prepaid forward agreements to
repurchase the Company’s common shares.
As of June 29, 2007, the Company had approximately $974 million remaining under the authorized $2.5 billion
stock repurchase program. Share repurchases during fiscal year 2007 were as follows:
89
Approximate
Dollar Value
of Shares
Total Number of That May
Total
Shares Purchased
Yet be
Number of
Average Price
Under Publicly
Purchased Under
Shares Paid per
Announced Plans
the Plans
Purchased Share or Programs or Programs
(In millions)
(In millions) (In millions)
First quarter
6.8
$
22.47
6.8
$
2,347
Second quarter
23.0
$
25.26
29.8
$
1,766
Third quarter
22.5
$
26.26
52.3
$
1,175
Fourth quarter
9.7
$
20.76
62.0
$
974
Total Through 4
th
Quarter of Fiscal Year 2007
62.0
$
24.62
62.0
$
974