Seagate 2007 Annual Report Download - page 36

Table of Contents
Failure to Pay Quarterly Dividends—Our failure to pay quarterly dividends to our common shareholders could cause the market price
of our common shares to decline significantly.
On July 15, 2008, we declared a quarterly dividend of $0.12 per share that will be paid on or before August 15, 2008 to our common
shareholders of record as of August 1, 2008.
Our ability to pay quarterly dividends will be subject to, among other things, general business conditions within the disc drive industry, our
financial results, the impact of paying dividends on our credit ratings, and legal and contractual restrictions on the payment of dividends by our
subsidiaries to us or by us to our common shareholders, including restrictions imposed by the credit agreement governing our revolving credit
facility. Any reduction or discontinuation of quarterly dividends could cause the market price of our common shares to decline significantly. Our
payment of dividends to holders of our common shares may in certain future quarters result in upward adjustments to the conversion rate of the
2.375% Convertible Senior Notes due August 2012. Moreover, in the event our payment of quarterly dividends is reduced or discontinued, our
failure or inability to resume paying dividends at historical levels could result in a persistently low market valuation of our common shares.
Potential Governmental Action—Governmental action against companies located in offshore jurisdictions may lead to a reduction in
the demand for our common shares.
Recent federal and state legislation has been proposed, and additional legislation may be proposed in the future which, if enacted, could
have an adverse tax impact on either Seagate or its shareholders. For example, the eligibility for favorable tax treatment of taxable distributions
paid to U.S. shareholders of Seagate as qualified dividends could be eliminated.
Securities Litigation—Significant fluctuations in the market price of our common shares could result in securities class action claims
against us.
Significant price and value fluctuations have occurred with respect to the publicly traded securities of disc drive companies and technology
companies generally. The price of our common shares is likely to be volatile in the future. In the past, following periods of decline in the market
price of a company’
s securities, class action lawsuits have often been pursued against that company. If similar litigation were pursued against us,
it could result in substantial costs and a diversion of management’
s attention and resources, which could materially adversely affect our results of
operations, financial condition and liquidity.
Current Global Credit and Financial Market Conditions—Current global credit and financial market conditions could negatively
impact the value of our current portfolio of cash equivalents, short-term investments, or auction rate securities and our ability to meet our
financing objectives.
Our cash and cash equivalents are maintained in highly liquid investments with remaining maturities of 90 days or less at the time of
purchase. Our short-term investments consist primarily of readily marketable debt securities with remaining maturities of more than 90 days at
the time of purchase.
The recent negative conditions in the global credit markets have prevented some investors, including us, from liquidating auction rate
securities because the amount of securities submitted for sale at auction has exceeded the amount of purchase orders for such securities. During
the quarter ended June 27, 2008, all $31 million of our auction rate securities continued to fail at auction. As a result we recorded a temporary
unrealized loss of $3 million to other comprehensive income. We will continue to analyze our auction rate securities each reporting period for
impairment as we may be required to record an impairment charge if in the future we determine that there is a decline in the fair value which is
other than temporary.
While as of the date of this filing, we are not aware of any other downgrades, losses, failed auctions or other significant deterioration in the
fair value of our cash equivalents or short-term investments since June 27, 2008,
35