Seagate 2007 Annual Report Download - page 52

Download and view the complete annual report

Please find page 52 of the 2007 Seagate annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 203

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181
  • 182
  • 183
  • 184
  • 185
  • 186
  • 187
  • 188
  • 189
  • 190
  • 191
  • 192
  • 193
  • 194
  • 195
  • 196
  • 197
  • 198
  • 199
  • 200
  • 201
  • 202
  • 203

Table of Contents
Marketing and Administrative Expense
Marketing and administrative expenses increased primarily due to increases of $53 million in variable performance-based compensation
compared to none in fiscal year 2007, $29 million in additional payroll expense resulting from increased headcount and salary increases, $38
million increase in expenses related to our data storage services and $32 million in incremental legal expenses. These increases were partially
offset by a charge of approximately $40 million in fiscal year 2007 for the provision of doubtful accounts receivable related to eSys
Technologies Pte. Ltd. and its related affiliate entities (“eSys”) and a charge of $35 million for costs associated with the Maxtor acquisition in
fiscal year 2007.
Amortization of Intangibles
The increase in the amortization of intangibles was due primarily to the acquisition of EVault.
Restructuring and Other
During fiscal year 2008, we recorded restructuring and other charges of $88 million, comprised mainly of restructuring charges related to
the planned closures of our Limavady, Northern Ireland and our Milpitas, California operations.
The restructuring charges associated with the Limavady facility were primarily related to employee termination costs of approximately $29
million and approximately $18 million related to expected grant repayments. We plan to cease production at our Limavady facility during the
first quarter of fiscal year 2009 and expect all activities related to this closure to be complete by the second half of fiscal year 2009. We expect
additional restructuring charges of approximately $10 million to be recorded primarily over the next two quarters, resulting in aggregate
restructuring charges of approximately $60 million to $65 million.
We recorded approximately $19 million in restructuring charges associated with employee termination costs related to the planned closure
of our media manufacturing facility in Milpitas, California. We plan to cease production at our Milpitas facility during the first quarter of fiscal
year 2009 and expect all activities related to this closure to be complete by the second half of fiscal year 2009. We expect additional
restructuring charges of approximately $17 million to be recorded primarily over the next two quarters, resulting in an aggregate restructuring
charge of approximately $36 million. In addition, as a result of the planned closure of the Milpitas facility, the Company expects approximately
$38 million relating to accelerated asset depreciation to be recorded to cost of revenue in the first quarter of fiscal year 2009.
The remaining restructuring and other charges were primarily comprised of employee termination costs as a result of plans to continue the
alignment of our global workforce with existing and anticipated business requirements around the world. We expect these restructuring activities
to be completed by the end of our fourth quarter of fiscal year 2009.
51
Fiscal Years Ended
(Dollars in millions)
June 27,
2008
June 29,
2007
Change
%
Change
Marketing and administrative
$
659
$
589
$
70
12
%
Fiscal Years Ended
(Dollars in millions)
June 27,
2008
June 29,
2007
Change
%
Change
Amortization of intangibles
$
54
$
49
$
5
10
%
Fiscal Years Ended
(Dollars in millions)
June 27,
2008
June 29,
2007
Change
%
Change
Restructuring and other
$
88
$
29
$
59
203
%