Seagate 2007 Annual Report Download - page 105

Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
—
(
Continued)
As of June 27, 2008, the Company had no amounts remaining under the August 2006 stock repurchase plan and had approximately
$2.0 billion remaining under the February 2008 stock repurchase plan. Share purchases during the fiscal year were as follows:
From the authorization of the August 2006 stock repurchase plan 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 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
104
Total
Number of
Shares
Purchased
Average
Price
Paid
per
Share
Total
Number of
Shares
Purchased
Under
Publicly
Announced
Plans
or
Programs
Approximate
Dollar Value
of Shares
That May
Yet be
Purchased
Under the
Plans
or Programs
(In millions)
(In millions)
(In millions)
August 2006 Stock Repurchase Plan
Total Through 4
th
Quarter of Fiscal Year 2007
62.0
$
24.62
62.0
$
974
First quarter
10.2
$
24.41
72.2
$
725
Second quarter
9.3
$
26.99
81.5
$
474
Third quarter
22.6
$
20.97
104.1
$
—
Fourth quarter
—
$
—
104.1
$
—
Total Through 4th Quarter of Fiscal Year 2008
104.1
$
24.02
104.1
$
—
February 2008 Stock Repurchase Plan
Third quarter
13.4
$
23.06
13.4
$
2,191
Fourth quarter
9.1
$
21.54
22.5
$
1,995
Total Through 4th Quarter of Fiscal Year 2008
22.5
$
22.44
22.5
$
1,995