Seagate 2007 Annual Report Download - page 87

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Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
—
(
Continued)
The Company recorded $40 million of allowance for doubtful accounts in fiscal year 2007 due to the inherent uncertainties following the
termination of its distribution relationships with eSys, previously a distributor of Seagate products. The Company’s distribution relationships
were terminated due to eSys’ failure to comply with the terms of its commercial agreements with the Company. The Company is continuing to
pursue collection of all amounts owed by eSys; none has been received as of June 27, 2008. The remaining uncollected balance and the
corresponding reserve were written off in fiscal year 2008. Any amounts recovered on these receivables will be recorded in the period received.
Activity in the allowance for doubtful accounts is as follows:
Balance at
Beginning of
Period
Charges to
Operations
Deductions (1)
Assumed
from
Maxtor
Balance at
End of
Period
(In millions)
Fiscal year ended June 27, 2008
$
50
$
(3
)
$
(41
)
$
—
$
6
Fiscal year ended June 29, 2007
$
37
$
40
$
(27
)
$
—
$
50
Fiscal year ended June 30, 2006
$
32
$
(3
)
$
(2
)
$
10
$
37
Inventories
(1)
Uncollectible accounts written off, net of recoveries.
Inventories are summarized below:
Other Current Assets
June 27,
2008
June 29,
2007
(In millions)
Raw materials and components
$
352
$
277
Work
-
in
-
process
111
85
Finished goods
482
432
$
945
$
794
The Company has non-trade receivables from certain manufacturing vendors resulting from the sale of components to these vendors who
manufacture and sell completed sub-assemblies back to the Company. The Company does not reflect the sale of these components in Revenue
and does not recognize any profits on these sales. The costs of the completed sub-assemblies are included in inventory upon purchase from the
vendors.
86
June 27,
2008
June 29,
2007
(In millions)
Vendor non
-
trade receivables
$
348
$
110
Other current assets
154
174
$
502
$
284