Seagate 2007 Annual Report Download - page 81

Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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(
Continued)
by the Internal Revenue Service or other tax jurisdiction. If estimates of these tax liabilities are greater or less than actual results, an additional
tax benefit or provision will result (see Note 4).
In June 2008, FASB EITF issued Issue No. 07-5, Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s
Own Stock (EITF No. 07-5). EITF No. 07-5 addresses the determination of whether an instrument (or an embedded feature) is indexed to an
entity’s own stock. EITF No. 07-
5 would require the Company to account for its embedded conversion options as derivatives and record them on
its balance sheet as a liability with subsequent fair value changes recorded in the income statement. Although EITF No. 07-5 would have no
impact on the Company’s actual past or future cash flows, it may require it to record an additional liability on its consolidated balance
sheet. Subsequent fair value adjustments may result in significant charges or credits recorded in the Company’s consolidated statement of
operations. As a result, its financial position and results of operations and earnings per share may be impacted. EITF No. 07-5 is effective for
financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Earlier application
by an entity that has previously adopted an alternative accounting policy is not permitted. During fiscal year 2009, the Company will be
evaluating the impact of the pending adoption of EITF No. 07-
5 on its fiscal year 2010 consolidated results of operations and financial condition.
In May 2008, the FASB issued FASB Staff Position (FSP), Accounting Principles Board (APB) Opinion No. 14, Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement ) (FSP APB No. 14), which,
may require the Company to recognize additional non-
cash interest expense related to its Convertible Senior Notes in its consolidated statements
of operations. FSP APB No. 14 requires the issuer to separately account for the liability (debt) and equity (conversion option) components of the
instrument in a manner that reflects the issuer’s nonconvertible debt borrowing rate. FSP APB No. 14 will be effective for financial statements
issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is not permitted. FSP
APB No. 14 must be applied retrospectively to all periods presented pursuant to the guidance of SFAS No. 154, Accounting Changes and Error
Corrections (SFAS No. 154). The Company’s accounting for the 2.375% Notes acquired from Maxtor and therefore its results of operations and
financial condition may be impacted by this FSP APB No. 14. During fiscal year 2009, the Company will be evaluating the impact of FSP APB
No. 14 on its fiscal year 2010 consolidated results of operations and financial condition.
In April 2008, the FASB issued FSP FAS 142-3, Determination of the Useful Life of Intangible Assets (FSP FAS 142-3). FSP FAS 142-3
amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized
intangible asset under SFAS No. 142. FSP FAS 142-3 is effective for fiscal years beginning after December 15, 2008 and early adoption is
prohibited. During fiscal year 2009, the Company will be evaluating the impact of the pending adoption of FSP FAS 142-3 on its fiscal year
2010 consolidated results of operations and financial condition.
In March 2008, the FASB issued SFAS No. 161,
Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB
Statement No. 133 (SFAS No. 161). SFAS No. 161 requires disclosure of how and why an entity uses derivative instruments, how derivative
instruments and related hedged items are accounted for and how derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. SFAS No. 161 is effective for fiscal years beginning after November 15, 2008, with early
adoption permitted. The Company will be evaluating the impact of the pending adoption of SFAS No. 161 on its consolidated results of
operations and financial condition.
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