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SEAGATE TECHNOLOGY
FORM 10-K
(Annual Report)
Filed 08/19/09 for the Period Ending 07/03/09
Telephone 345-949-8066
CIK 0001137789
Symbol STX
SIC Code 3572 - Computer Storage Devices
Industry Computer Storage Devices
Sector Technology
Fiscal Year 06/30
http://www.edgar-online.com
© Copyright 2009, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    ...FORM 10-K (Annual Report) Filed 08/19/09 for the Period Ending 07/03/09 Telephone CIK Symbol SIC Code Industry Sector Fiscal Year 345-949-8066 0001137789 STX 3572 - Computer Storage Devices Computer Storage Devices Technology 06/30 http://www.edgar-online.com © Copyright 2009, EDGAR Online, Inc...

  • Page 2
    ... Box 309, Ugland House Grand Cayman KY1-1104, Cayman Islands (Address of principal executive offices) Registrant's telephone number, including area code: (345) 949-8066 Securities registered pursuant to Section 12 (b) of the Act: Title of Each Class Name of Each Exchange on Which Registered Common...

  • Page 3
    ...closing price of $5.08 reported for such date by the NASDAQ. The number of outstanding common shares of the registrant as of August 13, 2009 was 495,417,050. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Proxy Statement to be delivered to shareholders in connection with our 2009 Annual Meeting...

  • Page 4
    ..., Executive Officers of the Registrant and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters Certain Relationships and Related Transactions, and Director Independence Principal Accountant Fees and Services PART...

  • Page 5
    ... OTHER INFORMATION In this Annual Report on Form 10-K (the "Form 10-K"), unless the context indicates otherwise, as used herein, the terms "we," "us," "Seagate," the "Company" and "our" refer to Seagate Technology, an exempted company incorporated with limited liability under the laws of the Cayman...

  • Page 6
    ...in electronic data storage devices or solutions include companies such as TDK Corporation ("TDK"), Fuji Electric Device Technology Company, Limited ("Fuji"), and Showa Denko K.K. ("Showa"), which supply heads and media to disk drive manufacturers; LSI Corporation ("LSI") and Marvell Technology Group...

  • Page 7
    ...store, aggregate, host, distribute, manage, back up and use such content. We believe this growth in digital content will result in increased demand for disk drive products. Historically, the electronic data storage industry has introduced alternative technologies that directly compete with hard disk...

  • Page 8
    ... increasing consumer demand for external branded storage solutions. Our branded solutions disk drives are accounted for within our mobile and desktop compute markets. Disk Drive Technology Overview The design and manufacturing of disk drives depends on highly advanced technology and manufacturing...

  • Page 9
    ... recording media. Our design and manufacturing operations are based on technology platforms that are used to produce various disk drive products that serve multiple data storage applications and markets. Our core technology platforms are focused around the areal density of media and read/write head...

  • Page 10
    ... customers who from time to time evaluate whether to offer electronic data storage products that may compete with our products. Components and Raw Materials All of our disk drive products incorporate certain components, including a head disk assembly and a printed circuit board mounted to the head...

  • Page 11
    ... prior to packaging and shipment. Disk drive assembly and test operations occur primarily at facilities located in China, Singapore and Thailand. We perform subassembly and component manufacturing operations at our facilities in China, Malaysia, Northern Ireland, Singapore, Thailand, and in the...

  • Page 12
    ..., mobile computing, desktop, consumer electronics and branded solutions market applications of the disk drive industry. In addition, we intend to introduce SSD products for select market applications in the future and anticipate that our enterprise SSD product will be available for customer...

  • Page 13
    ...We ship external backup storage solutions under our Free Agentâ„¢ and Maxtor OneTouchâ„¢ product lines. Both of these product lines utilize our 3.5-inch and 2.5-inch disk drives, which are available in capacities up to 2TB and 500GB, respectively. Customers We sell our disk drives primarily to major...

  • Page 14
    ... requirements and product deliveries are generally scheduled accordingly. The agreements and related sales programs typically provide the distributors with limited right of return and price protection rights. In addition, we offer sales programs to distributors on a quarterly and periodic basis to...

  • Page 15
    ... The markets that we compete in are intensely competitive. Disk drive manufacturers not only compete for a limited number of major disk drive customers but also compete with other companies in the electronic data storage industry that provide alternative storage solutions, such as flash memory, tape...

  • Page 16
    ...achievement of lower costs through purchasing economies. Our advanced technology integration effort focuses disk drive and component research on recording subsystems, including read/write heads and recording media, market-specific product technology as well as technology focused towards new business...

  • Page 17
    ... major electronic data storage companies and component manufacturers with respect to licenses. Backlog In view of our customers' rights to cancel or defer orders with little or no penalty, we believe backlog in the disk drive industry is of limited indicative value in estimating future performance...

  • Page 18
    ...2009, we employed approximately 47,000 employees, temporary employees and contractors worldwide, of which approximately 38,650 employees were located in our Asian operations. We believe that our future success will depend in part on our ability to attract and retain qualified employees at all levels...

  • Page 19
    ... site contains reports, proxies and information statements and other information regarding issuers that file electronically with the SEC. Web Site Access. Our Internet web site address is www.seagate.com . We make available, free of charge at the "Investor Relations" portion of this web site, Annual...

  • Page 20
    ..., he was Vice President, Finance, Storage Markets from 2007 to 2008. He previously held positions as Vice President, Finance, Asia Operations from 2005 to 2007 and Senior Director, Corporate Accounting, Compliance and External Reporting and Corporate Financial Planning & Analysis from 2003 to 2005...

  • Page 21
    ...competitors more time to enter the market. The growth of sales to distributors that serve producers of non-branded products in the personal storage sector may also contribute to increased price erosion. These customers generally have limited product qualification programs, which increases the number...

  • Page 22
    ... and potential customers who evaluate from time to time whether to manufacture their own disk drives or other electronic data storage products. We also experience competition from other companies that produce alternative storage technologies like flash memory, where increasing capacity, decreasing...

  • Page 23
    ... the computer systems, storage subsystems and consumer electronics that contain our disk drives, due to seasonality, economic conditions and other factors; changes in purchases from period to period by our primary customers, particularly as our competitors are able to introduce and produce in volume...

  • Page 24
    ... competition from other companies that produce alternative storage technologies like solid state or flash memory, where increased capacity, improving cost, lower power consumption and performance ruggedness have resulted in flash memory largely replacing disk drives in handheld applications. We...

  • Page 25
    ... from our distributor customers who from time to time constitute a large portion of our total sales; our product mix and the related margins of the various products; accelerated reduction in the price of our disk drives due to technological advances and/or an oversupply of disk drives in the market...

  • Page 26
    ... obtain manufacturing equipment can be significant. Particularly important components for disk drives include read/write heads, aluminum or glass substrates for recording media, ASICs, spindle motors, printed circuit boards, and suspension assemblies. We rely on sole suppliers or a limited number of...

  • Page 27
    ... systems, storage subsystems or consumer electronics devices generally cause sharp declines in demand for disk drive products. The decline in consumer spending could have a material adverse effect on demand for our products and services and on our financial condition and results of operations...

  • Page 28
    ... portion of our sales has been to distributors of desktop disk drive products. Certain of our distributors may also market other products that compete with our products. Product qualification programs in this distribution channel are limited, which increases the number of competing products that are...

  • Page 29
    ...online distributors may adversely impact our future results of operations. Importance of Controlling Operating Costs-If we do not control our operating expenses, we will not be able to compete effectively in our industry. Our strategy involves, to a substantial degree, increasing revenue and product...

  • Page 30
    ... customers' storage capacity needs may be satisfied with lower priced, low capacity disk drives. These factors could decrease our sales, especially when combined with continued price erosion, which could adversely affect our results of operations. Changes in Electronic Data Storage Products-Future...

  • Page 31
    ...likelihood of reliability, quality or operability problems. If our products suffer increases in failures, are of low quality or are not reliable, customers may reduce their purchases of our products and our manufacturing rework and scrap costs and service and warranty costs may increase. In addition...

  • Page 32
    ... or merger. These limitations are subject to a number of important qualifications and exceptions, including exceptions under our amended credit facility that permit us to pay dividends up to $45 million, in the aggregate, during the period beginning on April 4, 2009 and ending on January 1, 2010...

  • Page 33
    ... located in the United States, the Cayman Islands, the Netherlands, Northern Ireland and Singapore owned by other material subsidiaries, and all proceeds therefrom, are pledged as security for borrowings under our amended credit facility and our 10% Notes, as well as obligations under our hedging...

  • Page 34
    ..., non-cancelable purchase commitments with certain suppliers in order to secure certain components for the production of our products or to supplement our internal manufacturing capacity for certain components. If our actual revenues in the future are lower than our projections or if customer demand...

  • Page 35
    ... secured credit facility and any agreements governing any other debt we may incur. If we are successful in forming strategic alliances or acquiring, forming joint ventures or making investments in other companies, any of these transactions may have an adverse effect on our results of operations...

  • Page 36
    ..., sales personnel and customer support operations. We have manufacturing facilities in China, Malaysia, Northern Ireland, Singapore and Thailand, in addition to those in the United States. A substantial portion of our desktop disk drive assembly occurs in our facility in China. Our international...

  • Page 37
    ... Our international operations are affected by limitations on imports, currency exchange control regulations, transfer pricing regulations, price controls and other restraints on trade. In addition, the governments of many countries, including China, Malaysia, Northern Ireland, Singapore and Thailand...

  • Page 38
    ... respect to the publicly traded securities of disk 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...

  • Page 39
    ...-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...

  • Page 40
    ... of Contents ITEM 2. PROPERTIES Our company headquarters are located in the Cayman Islands, while our U.S. executive offices are in Scotts Valley, California. Our principal manufacturing facilities are located in China, Malaysia, Northern Ireland, Singapore, Thailand and in Minnesota. Our principal...

  • Page 41
    ..., we announced that we would close our Ang Mo Kio (AMK) facility in Singapore by the end of calendar year 2010. Our hard drive manufacturing operations will be relocated to other existing facilities and our Asia International Headquarters (IHQ) will remain in Singapore. We do not expect the closure...

  • Page 42
    ... 2008, and previously traded on the New York Stock Exchange under the symbol "STX" since December 11, 2002. Prior to that time there was no public market for our common shares. The high and low sales prices of our common shares, as reported by both the NASDAQ and the New York Stock Exchange, are set...

  • Page 43
    ...The performance shown in the graph represents past performance and should not be considered an indication of future performance. COMPARISON OF 60 MONTH CUMULATIVE TOTAL RETURN * Among Seagate Technology, The S&P 500 Index And The Dow Jones US Computer Hardware Index 7/2/04 7/1/05 6/30/06 6/29/07...

  • Page 44
    ... in a persistently low market valuation of our common shares. Our ability to pay quarterly dividends in the future will be subject to, among other things, general business conditions within the disk drive industry, our financial results, the impact of paying dividends on our credit ratings and legal...

  • Page 45
    ... 2009 June 27, 2008 June 29, 2007 2006 (1) July 1, 2005 Revenue Gross margin Income (loss) from operations Net income (loss) Total assets Total debt Shareholders' equity Net income (loss) per share: Basic Diluted Number of shares used in per share computations: Basic Diluted Cash dividends declared...

  • Page 46
    ... results of operations for the fiscal years ended July 3, 2009, June 27, 2008 and June 29, 2007. Unless the context indicates otherwise, as used herein, the terms "we," "us," "Seagate," the "Company" and "our" refer to Seagate Technology, an exempted company incorporated with limited liability under...

  • Page 47
    ...store, aggregate, host, distribute, manage, back up and use such content. We believe this growth in digital content will result in increased demand for disk drive products. Historically, the electronic data storage industry has introduced alternative technologies that directly compete with hard disk...

  • Page 48
    ... as much as 10 - 15% of the mobile market for the next few years, and that 80% of these devices will have hard disk drives installed initially. Disk Drives for Enterprise Storage. We define enterprise storage as disk drives used in mission critical applications, which is defined by the use of...

  • Page 49
    ... market share; few new product introductions when multiple competitors have comparable or alternative product offerings; temporary imbalances between industry supply and demand; and seasonally weaker demand, which may cause excess supply. Disk drive manufacturers typically attempt to offset price...

  • Page 50
    ... year 2009. The extent of our use of externally sourced recording heads, media and aluminum substrates varies based on product mix, technology and our internal capacity levels. We purchase from third parties all of our glass substrates, which are used to manufacture our disk drives for mobile and...

  • Page 51
    ..., the disk drive industry, including Seagate, adjusted production to realign to the lower demand. The industry, as well as Seagate, exited the June 2009 quarter with what we believe to be approximately four weeks of distribution channel inventory, which is at the low end of historical levels. Fiscal...

  • Page 52
    ...) 1,329 561 Provision for (benefit from) income taxes 311 67 (352) Net income (loss) $(3,086) $ 1,262 $ 913 Fiscal Years Ended July 3, June 27, June 29, (As a percentage of Revenue) 2009 2008 2007 Revenue Cost of revenue Gross margin Product development Marketing and administrative Amortization of...

  • Page 53
    ... to distributor and retail inventory levels, sales program participation and customer claims submittals in determining the provision for such programs. Sales programs recorded as contra revenue were approximately 12% and 9% of our gross revenue, for fiscal years 2009 and 2008, respectively. Desktop...

  • Page 54
    ... mobile compute market grew approximately 16% from fiscal year 2008, with Seagate shipping 37.6 million units in fiscal year 2009, an increase of 41% over fiscal year 2008. The increase in unit shipments was driven by more competitive product offerings as well as the continuing shift from desktop...

  • Page 55
    ... charges consisted of $173 million of employee termination benefits, $31 million related to lease obligations associated with the site closures and $6 million of other exit costs. As of the dates we committed to these restructuring plans we estimated annual savings upon completion of $130 million...

  • Page 56
    ... $22 million of this amount relates to deferred tax assets acquired in the Maxtor acquisition for which the related benefit would have been credited to goodwill if realized. The net increase in the valuation allowance in fiscal year 2008 was $34 million. At July 3, 2009, we had net deferred tax...

  • Page 57
    ...to valuation allowances that were recorded for the U.S. deferred tax assets related to these additional credits. On January 3, 2005, we underwent a change in ownership under IRC Section 382 due to the sale of common shares to the public by our then largest shareholder, New SAC. The annual limitation...

  • Page 58
    ... growth in fiscal year 2008 reflected a 15% growth in the number of disk drives shipped. We believe unit growth was driven by continued growth in digital content, the resulting increase in demand for storage and customer acceptance of our new products. Industry disk drive demand across all markets...

  • Page 59
    ... in millions) 2008 Cost of revenue Gross margin Gross margin percentage $9,503 $9,175 $ 328 $3,205 $2,185 $1,020 25% 19% 4% 47% For fiscal year 2008, cost of revenue increased due to a higher number of units shipped and a higher mix of products with higher average capacities, feature sets, and...

  • Page 60
    ... was either subject to varying rates of tax or was exempt from tax due to tax holidays or tax incentive programs we operated under in China, Malaysia, Singapore, Switzerland and Thailand. These tax holidays or incentives were scheduled to expire in whole or in part at various dates through 2020. Our...

  • Page 61
    ... to our foreign parent holding company. As of June 27, 2008, the deferred tax asset valuation allowance was $433 million. Approximately $22 million of this amount relates to deferred tax assets acquired in the Maxtor acquisition for which the related benefit would have been credited to goodwill if...

  • Page 62
    ... of our credit facility; these increases were partially offset by capital expenditures of $633 million and dividend payments of $132 million. 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...

  • Page 63
    ... to our subassembly and disk drive final assembly and test facilities in the Far East; $168 million for upgrading and expansion of our recording media operations in Malaysia and Singapore; $273 million for manufacturing facilities and equipment for our recording head operations in the United States...

  • Page 64
    ...to our subassembly and disk drive final assembly and test facilities in the Far East; $490 million to upgrade and expansion of our recording media operations in the United States, Malaysia and Singapore; $184 million for manufacturing facilities and equipment for our recording head operations in the...

  • Page 65
    ...: Fiscal Years Ended June 27, July 3, 2009 Change 2008 (Dollars in millions) LIBOR Based China Manufacturing Facility Loans $ - Floating Rate Senior Notes due October 2009 300 6.8% Convertible Senior Notes due April 2010 116 LIBOR Based Credit Facility 350 6.375% Senior Notes due October 2011...

  • Page 66
    .... The credit facility has various limitations on certain transactions that may occur, including limitations on: asset sales, liens, incurrence of additional debt, issuance of preferred stock, redemption and repurchases of debt or stock, and payment of dividends. The amended credit facility also...

  • Page 67
    ... July 3, 2009, we had authorization to repurchase approximately $2.0 billion our common shares remaining under the February 2008 stock repurchase plan, which expires February 2010. See Part II, Item 5: "Market for Registrant's Common Shares, Related Shareholder Matters and Issuer Purchases of Equity...

  • Page 68
    ...period reported, estimated future price erosion, customer orders, distributor sell-through and inventory levels, program participation, customer claim submittals and sales returns. Our estimates reflect contractual arrangements but also our judgment relating to variables such as customer claim rates...

  • Page 69
    ... considers estimated product failure rates and trends (including the timing of product returns during the warranty periods), estimated repair or replacement costs and estimated costs for customer compensatory claims related to product quality issues, if any. We use a statistical model to help...

  • Page 70
    ... is assignable: the Hard Disk Drive reporting unit and the Services reporting unit. Each of these reporting units constitutes a business and is the lowest level for which discrete financial information is available and is regularly reviewed by management. The acquired businesses underlying our...

  • Page 71
    ...exposure related to our credit rating changes. Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio and our credit facility. At July 3, 2009, we had no marketable securities that had been in a continuous unrealized loss position for a period greater...

  • Page 72
    ... settle at auction. As of July 3, 2009, the estimated fair value of these auction rate securities was $18 million. We believe that the impairments totaling $3 million are temporary given our ability and intent to hold these securities until liquidity returns to this market or until maturity of these...

  • Page 73
    ... speculative or trading purposes. During the fiscal years 2009, 2008 and 2007, we did not enter into any hedges of net investments in foreign operations. We transact business in various foreign countries. Our primary foreign currency cash flows are in countries where we have a manufacturing presence...

  • Page 74
    ... STATEMENTS AND SUPPLEMENTARY DATA SEAGATE TECHNOLOGY CONSOLIDATED BALANCE SHEETS (In millions, except share and per share data) July 3, 2009 June 27, 2008 ASSETS Current assets: Cash and cash equivalents Short-term investments Restricted cash and investments Accounts receivable, net Inventories...

  • Page 75
    Table of Contents SEAGATE TECHNOLOGY CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share data) Fiscal Year Ended June 27, June 29, 2008 2007 July 3, 2009 Revenue Cost of revenue Product development Marketing and administrative Amortization of intangibles Restructuring and other, ...

  • Page 76
    ...of long-term debt Retirements and maturities of long-term debt Increase in restricted cash and investments Redemption of 8% Senior Notes due 2009 Redemption premium on 8% Senior Notes due 2009 Proceeds from exercise of employee stock options and employee stock purchase plan Dividends to shareholders...

  • Page 77
    ... rate securities, net Net income Comprehensive income Issuance of common shares related to employee stock options and employee stock purchase plan Dividends to shareholders Tax benefit from stock options Repurchases of common shares Stock-based compensation Balance at June 27, 2008 Comprehensive...

  • Page 78
    ... Accounting Policies Nature of Operations Seagate Technology ("Seagate" or the "Company") designs, manufactures, markets and sells hard disk drives. Hard disk drives, which are commonly referred to as disk drives or hard drives, are used as the primary medium for storing electronic information...

  • Page 79
    ... considers estimated product failure rates and trends (including the timing of product returns during the warranty periods), estimated repair or replacement costs and estimated costs for customer compensatory claims related to product quality issues, if any. The Company uses a statistical model to...

  • Page 80
    ...: the Hard Disk Drive reporting unit and the Services reporting unit. Each of these reporting units constitutes a business and is the lowest level for which discrete financial information is available and is regularly reviewed by management. The acquired businesses underlying the Company's goodwill...

  • Page 81
    ... to, the reporting unit at which goodwill should be measured for impairment and the asset group to be tested for recoverability. The Company is also required to make estimates that may significantly impact the outcome of the analyses. Such estimates include, but are not limited to, future operating...

  • Page 82
    ... Revenue Recognition, Sales Returns and Allowances, and Sales Incentive Programs. The Company's revenue recognition policy complies with Staff Accounting Bulletin (SAB) No. 104, Revenue Recognition (SAB No. 104). Revenue from sales of products, including sales to distribution customers, is generally...

  • Page 83
    ... (loss) for those operations. Concentration of Credit Risk. The Company's customer base for disk drive products is concentrated with a small number of OEMs and distributors. The Company does not generally require collateral or other security to support accounts receivable. To reduce credit risk, the...

  • Page 84
    ...-3 and provides additional guidance on estimating fair value when volume and level of transaction activity for the asset or liability have significantly decreased. FSP SFAS No. 157-4 is effective for interim and annual periods ending after June 15, 2009 and was adopted by the Company in the fourth...

  • Page 85
    Table of Contents SEAGATE TECHNOLOGY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) 1. Summary of Significant Accounting Policies (Continued) No. 115-2 and SFAS No. 124-2 is effective for interim and annual periods ending after June 15, 2009 and was adopted by the Company beginning in the ...

  • Page 86
    ...requires that acquisition-related costs be recognized separately from the acquisition and expensed as incurred; that restructuring costs generally be expensed in periods subsequent to the acquisition date; and that changes in accounting for deferred tax asset valuation allowances and acquired income...

  • Page 87
    ...- 348 - 50 - 914 (2) $1,413 $1,281 114 18 $1,413 At July 3, 2009, with the exception of the Company's auction rate securities, the Company had no marketable securities that had been in a continuous unrealized loss position for a period greater than 12 months and determined no investments were other...

  • Page 88
    ... available-for-sale securities at June 27, 2008: Unrealized Amortized (Dollars in millions) Cost Gain/ (Loss) Fair Value U.S. treasuries and agency bonds Asset backed securities Corporate bonds Municipal bonds Auction rate securities Commercial paper Certificates of deposit Money market funds Total...

  • Page 89
    ..., the Company recorded $40 million of allowance for doubtful accounts following the termination of its distribution relationships with eSys, previously a distributor of Seagate products. The remaining uncollected balance and the corresponding reserve were written off in fiscal year 2008. Inventories...

  • Page 90
    ..., in the three months ended January 2, 2009, the Company recorded impairment charges of $2.1 billion for the goodwill of the Hard Disk Drive reporting unit, representing 100% of its carrying value, and $150 million for the goodwill of the Services reporting unit reducing the carrying value to $31...

  • Page 91
    ... guidance in SFAS No. 144, the Company determined that the asset group to be tested for recoverability was at the reporting unit level as it was the lowest level at which cash flows were identifiable. The Company tested the other long-lived assets of both the Hard Disk Drive and Services reporting...

  • Page 92
    ... charges are reported in Restructuring and other, net on the Consolidated Statement of Operations, unless otherwise noted. May 2009 Plan. The May 2009 Plan primarily consists of a reduction of approximately 1,100 employees, or 2.5% of the Company's global workforce. The May 2009 Plan is expected...

  • Page 93
    ...of the Company's first quarter of fiscal year 2010. Under this plan, the Company recorded $100 million during the fiscal year ended July 3, 2009. Other Employee (Dollars in millions) Benefits Operating Leases Exit Costs Total January 2009 Plan Accrual balances at June 27, 2008 Restructuring charges...

  • Page 94
    ..., of which $108 million related to employee termination benefits, $64 million related to the planned exit of leased or owned excess facilities and $93 million related to the cancellation or settlement of contractual obligations that will not provide any future economic benefit. The severance and...

  • Page 95
    ... July 3, 2009 is associated with the exit of certain facilities and payment of these exit costs are expected to continue through the end of fiscal year 2016. Other Employee (Dollars in millions) Benefits Operating Leases Exit Costs Total Maxtor Accrual balances at June 30, 2006 Purchase accounting...

  • Page 96
    ... SEAGATE TECHNOLOGY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) 4. Restructuring and Exit Costs (Continued) accruals relating to the sale of a surplus building impaired in a prior restructuring. The Company has completed these restructuring activities. Impaired Equipment Other Employee...

  • Page 97
    ...SEAGATE TECHNOLOGY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) 4. Restructuring and Exit Costs (Continued) The following table summarizes the Company's restructuring activities for fiscal years 2009, 2008 and 2007. Impaired Equipment Other Employee (Dollars in millions) Benefits Operating...

  • Page 98
    .... The credit facility has various limitations on certain transactions that may occur, including limitations on: asset sales, liens, incurrence of additional debt, issuance of preferred stock, redemption and repurchases of debt or stock, and payment of dividends. The amended credit facility also...

  • Page 99
    ... at the redemption date on a semi-annual basis at a rate equal to the sum of the applicable Treasury rate plus 50 basis points. Convertible Notes On June 1, 2009, in connection with the merger of Maxtor, an indirect wholly-owned subsidiary of the Company, with Seagate Technology (US) Holdings, Inc...

  • Page 100
    ... shares for 20 trading days within a period of 30 consecutive trading days ending on the trading day before the date of the mailing of the redemption notice exceeds 130% of the conversion price on such trading day. If, at any time, substantially all of the common shares are exchanged or acquired for...

  • Page 101
    ... Based China Manufacturing Facility Loan. As a result of the Maxtor acquisition, the Company assumed an outstanding plant construction loan in the amount of $30 million and an outstanding project loan in the amount of $30 million. These amounts were paid in fiscal years 2009 and 2008, respectively...

  • Page 102
    ... from the intercompany sale of certain Maxtor assets. This 2007 valuation allowance release also included a reduction of $322 million in Maxtor goodwill required as a result of the reversal of valuation allowance previously recorded as of the acquisition date against Maxtor related deferred tax...

  • Page 103
    ... in millions) July 3, 2009 2008 Deferred Tax Assets Accrued warranty Inventory valuation accounts Receivable reserves Accrued compensation and benefits Depreciation Restructuring allowance Other accruals and deferred items Net operating losses and tax credit carry-forwards Capitalized research and...

  • Page 104
    ... and $96 million of U.S. tax credit carryforwards subject to IRC Section 382 limitation associated with the January 3, 2005 ownership change. The applicable statutory rate in the Cayman Islands was zero for the Company for the fiscal years ended July 3, 2009, June 27, 2008 and June 29, 2007. For...

  • Page 105
    ... for (benefit from) income taxes $ 311 $ 67 $ (352) A substantial portion of the Company's manufacturing operations in China, Malaysia, Singapore, Switzerland and Thailand operate under various tax holidays and tax incentive programs, which expire in whole or in part at various dates through 2020...

  • Page 106
    ... foreign tax returns. The Internal Revenue Service (IRS) is currently examining fiscal years 2005 through 2007. For state and foreign tax returns, the Company is generally no longer subject to tax examinations for years prior to fiscal year 2001. The statute of limitation for U.S. Federal returns is...

  • Page 107
    ... SEAGATE TECHNOLOGY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) 7. Derivative Financial Instruments The Company is exposed to foreign currency exchange rate risk, interest rate risks, and to a lesser extent, equity market risks, relating to its ongoing business operations. The Company...

  • Page 108
    ...of Contents SEAGATE TECHNOLOGY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) 7. Derivative Financial Instruments (Continued) As of July 3, 2009, the total notional value of the Company's outstanding foreign currency forward exchange contracts was: Contracts Qualifying as Hedges (Dollars in...

  • Page 109
    ... Effectiveness (Effective Testing) Portion) $ (36) Cost of revenue Derivatives Not Designated as Hedging Instruments under Statement 133 Foreign currency forward exchange contracts Total return swap Location of Gain or (Loss) Recognized in Income on Derivative Other, net Operating expenses Amount...

  • Page 110
    ...or Level 3-Prices or valuations that require inputs that are both unobservable and significant to the fair value measurement. The Company considers an active market to be one in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on...

  • Page 111
    ... at Reporting Date Using Quoted Prices in Active Markets for Significant Other Significant Identical Observable Unobservable Instruments Total Inputs Inputs Balance (Level 1) (Level 2) (Level 3) (Dollars in millions) Assets: Money market funds Certificates of deposit Agency bonds Corporate bonds...

  • Page 112
    ... value of foreign currency exchange forward contracts and the fair value of the auction rate securities as of July 3, 2009. Amount represents the fair value of the Company's Total Return Swap as of July 3, 2009. Level 1 assets consist of money market funds for which quoted prices are available in an...

  • Page 113
    ... 28, 2008; these securities failed to settle at auction and have continued to fail through the fiscal quarter ended July 3, 2009. Since there is no active market for these securities the Company valued them using a pricing model provided by a third party valuation firm. The valuation model is based...

  • Page 114
    ... table represents the fair value of the Company's debt in order of priority: Reported as: July 3, 2009 Carrying Estimated (Dollars in millions) Amount Fair Value June 27, 2008 Carrying Estimated Amount Fair Value LIBOR Based Credit Facility 10.0% Senior Secured Second-Priority Notes due May 2014...

  • Page 115
    ... the authorized $2.5 billion February 2008 stock repurchase plan which expires February 2010. 10. Compensation Tax-Deferred Savings Plan The Company has a tax-deferred savings plan, the Seagate 401(k) Plan (the "40l(k) plan"), for the benefit of qualified employees. The 40l (k) plan is designed to...

  • Page 116
    ... shares exchanged retained all applicable terms and vesting periods. Stock Purchase Plan -The Company established an Employee Stock Purchase Plan (the "ESPP") in December 2002. As of July 3, 2009, there were 30 million shares authorized to be issued under the ESPP. In no event shall the total number...

  • Page 117
    ... of future employee behavior as influenced by changes to the terms of its stock-based awards. Expected Volatility -The Company uses a combination of the implied volatility of its traded options and historical volatility of its share price. Expected Dividend -The Black-Scholes-Merton valuation model...

  • Page 118
    ... fair value of the Company's stock options granted to employees, assumed from Maxtor and issued from the ESPP for fiscal years 2009, 2008 and 2007 were estimated using the following weighted-average assumptions: Fiscal Years Ended 2008 2009 2007 Options under Seagate Plans Expected term (in years...

  • Page 119
    ... date of option exercise. The aggregate fair value of options vested during fiscal year 2009 was approximately $61 million. At July 3, 2009 the total compensation cost related to options granted to employees under the Company's stock option plans (excluding options assumed in the Maxtor acquisition...

  • Page 120
    ... 19.10 13.01 6.28 14.12 10.79 At July 3, 2009, the total compensation cost related to nonvested shares granted to employees under the Company's stock option plans (excluding nonvested shares exchanged in the Maxtor acquisition) but not yet recognized was approximately $12 million, net of estimated...

  • Page 121
    ...employer contributions, in excess of the tax limits applicable to the 401(k) plan and to permit employee deferrals in excess of certain tax limits. Company assets designated to pay benefits under the plan are held by a rabbi trust. The Company has adopted the provisions of EITF No. 97-14, Accounting...

  • Page 122
    ... and Related Information , the Company has concluded that its manufacture and distribution of disk drives constitutes one reporting segment. The Company's manufacturing operations are based on technology platforms that are used to produce various disk drive products that serve multiple disk drive...

  • Page 123
    ... and Geographic Information (Continued) Company's main technology platforms are primarily focused around areal density of media and read/write head technologies. In addition, the Company also invests in certain other technology platforms including motors, servo formatting read/write channels, solid...

  • Page 124
    ... a Physical System" (the '267 patent), misappropriation of trade secrets, breach of contract, tortious interference with contract and fraud relating to Convolve and MIT's Input Shaping® and Convolve's Quick and Quiet™ technology. The plaintiffs claimed their technology is incorporated in Seagate...

  • Page 125
    .... -On December 12, 2008, Magsil Corporation and Massachusetts Institute of Technology filed a complaint in the US District Court for the District of Delaware against three Seagate entities, Maxtor Corporation, and twelve other hard disk drive and recording head manufacturing companies. The complaint...

  • Page 126
    ... Qimonda AG, naming LSI Corporation and six Seagate Technology entities as respondents. The complaint alleges that LSI and Seagate import products into the US that infringe seven Qimonda patents relating to the design and manufacture of semiconductor integrated chips. The Company filed an answer on...

  • Page 127
    ... amortized to Cost of revenue and Operating expenses over the remaining duration of the leases. In addition, the Company had $29 million and $17 million remaining in accrued exit costs related to the planned exit of Maxtor leased excess facilities at July 3, 2009 and June 27, 2008, respectively. 125

  • Page 128
    ... limited intellectual property indemnification obligations that are customary in the industry. These guarantees generally require the Company to compensate the other party for certain damages and costs incurred as a result of third party intellectual property claims arising from these transactions...

  • Page 129
    ... generally warrants its products for a period of one to five years. The Company uses estimated repair or replacement costs and uses statistical modeling to estimate product return rates in order to determine its warranty obligation. In addition, estimated settlements for customer compensatory claims...

  • Page 130
    ... which requires them to search large volumes of electronic data for relevant information. The purpose of the acquisition was to expand on the Company's software and services offerings. The purchase price has been allocated to the tangible and intangible assets acquired and liabilities assumed based...

  • Page 131
    ...) Existing technology $ Customer relationships Trade names Other Total acquired identifiable intangible assets $ 17. Related Party Transactions 7 3 1 1 12 4.0 4.0 4.0 2.0 3.9 A member of the Company's board of directors is on the board of directors of Microsoft Corporation ("Microsoft"). During...

  • Page 132
    ... Company and its subsidiaries at July 3, 2009 and June 27, 2008, the Condensed Consolidating Statements of Operations and Cash Flows for the fiscal years ended July 3, 2009, June 27, 2008 and June 29, 2007. The information classifies the Company's subsidiaries into Seagate Technology-parent company...

  • Page 133
    ... Sheet July 3, 2009 (In millions) Seagate Technology HDD Subsidiary Seagate Parent Combined Technology Company Guarantor Non-Guarantors Eliminations Consolidated Issuer Cash and cash equivalents $ 18 $ - $ Short-term investments - - Restricted cash and investments - - Accounts receivable, net...

  • Page 134
    ... Financial Information (Continued) Consolidating Balance Sheet June 27, 2008 (In millions) Seagate Technology HDD Subsidiary Seagate Parent Combined Technology Company Guarantor Non-Guarantors Eliminations Consolidated Issuer Cash and cash equivalents $ 3 $ - $ Short-term investments - - Accounts...

  • Page 135
    ... Statement of Operations Fiscal Year Ended July 3, 2009 (In millions) Seagate Technology HDD Subsidiary Seagate Parent Combined Technology Company Guarantor Non-Guarantors Eliminations Consolidated Issuer Revenue $ - $ Cost of revenue - Product development - Marketing and administrative...

  • Page 136
    ... from exercise of employee stock options and employee stock purchase plan Dividends to shareholders Other financing activities, net Net cash provided by (used in) financing activities Increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and...

  • Page 137
    ... Statement of Operations Fiscal Year Ended June 27, 2008 (In millions) Seagate Technology HDD Subsidiary Seagate Parent Combined Technology Company Guarantor Non-Guarantors Eliminations Consolidated Issuer Revenue $ - $ Cost of revenue - Product development - Marketing and administrative...

  • Page 138
    ... and employee stock purchase plan Dividends to shareholders Tax benefit from exercise of stock options Repurchases of common shares Net cash provided by (used in) financing activities Increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash...

  • Page 139
    ... Information (Continued) Consolidating Statement of Operations Fiscal Year Ended June 29, 2007 (In millions) Seagate Technology HDD Subsidiary Seagate Parent Combined Technology Company Guarantor Non-Guarantors Eliminations Consolidated Issuer Revenue $ Cost of revenue Product development Marketing...

  • Page 140
    ... and employee stock purchase plan Dividends to shareholders Repurchases of common shares and payments made under prepaid forward agreements Net cash provided by (used in) financing activities Increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period...

  • Page 141
    ... issuer for the eleven months ended May 29, 2009 and information for STUS-subsidiary issuer for the one month ended July 3, 2009. The information classifies the Company's subsidiaries into Seagate Technology-parent company guarantor, Maxtor-subsidiary issuer, STUS-subsidiary issuer, and the Combined...

  • Page 142
    ... Balance Sheet July 3, 2009 (In millions) Seagate Technology STUS Subsidiary Seagate Parent Combined Technology Company Guarantor Non-Guarantors Eliminations Consolidated Issuer Cash and cash equivalents Short-term investments Restricted cash and investments Accounts receivable, net Intercompany...

  • Page 143
    ... Financial Information (Continued) Consolidating Balance Sheet June 27, 2008 (In millions) Seagate Technology Maxtor Subsidiary Seagate Parent Combined Technology Company Guarantor Non-Guarantors Eliminations Consolidated Issuer Cash and cash equivalents $ 3 $ Short-term investments - Accounts...

  • Page 144
    ...Year Ended July 3, 2009 (In millions) Seagate Technology Seagate Parent Combined Technology Company (1) (2) (1 month) Guarantor (11 months) Non-Guarantors Eliminations Consolidated Maxtor Subsidiary Issuer STUS Subsidiary Issuer Revenue $ - $ Cost of revenue - Product development - Marketing and...

  • Page 145
    ... stock options and employee stock purchase plan Dividends to shareholders Investment by STUS in Non-Guarantor Other financing activities, net Net cash provided by (used in) financing activities Increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period...

  • Page 146
    ... Statement of Operations Fiscal Year Ended June 27, 2008 (In millions) Seagate Technology Maxtor Subsidiary Seagate Parent Combined Technology Company Guarantor Non-Guarantors Eliminations Consolidated Issuer Revenue $ - $ Cost of revenue - Product development - Marketing and administrative...

  • Page 147
    ... and employee stock purchase plan Dividends to shareholders Tax benefit from exercise of stock options Repurchases of common shares Net cash provided by (used in) financing activities Increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash...

  • Page 148
    ... Statement of Operations Fiscal Year Ended June 29, 2007 (In millions) Seagate Technology Maxtor Subsidiary Seagate Parent Combined Technology Company Guarantor Non-Guarantors Eliminations Consolidated Issuer Revenue $ Cost of revenue Product development Marketing and administrative Amortization...

  • Page 149
    ... by Non-Guarantor in Maxtor Proceeds from exercise of employee stock options and employee stock purchase plan Dividends to shareholders Repurchases of common shares and payments made under prepaid forward agreements Net cash provided by (used in) financing activities Increase (decrease) in cash and...

  • Page 150
    ... not impact previously reported net income (loss). October 3, Fiscal Year 2009 Quarters Ended (Dollars in millions, except per share data) 2008 January 2, 2009 April 3, 2009 July 3, 2009 Revenue Gross margin Income (loss) from operations Net income (loss) Net income (loss) per share: Basic Diluted...

  • Page 151
    ..., 2009. The Company announced on August 4, 2009 that it will close its Ang Mo Kio (AMK) facility in Singapore by the end of calendar year 2010. The hard drive manufacturing operations will be relocated to other existing Seagate facilities and the Company's Asia International Headquarters (IHQ) will...

  • Page 152
    Table of Contents SEAGATE TECHNOLOGY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) 20. Subsequent Events (Continued) of manufacturing equipment, and $10 million for other plant closure and relocation costs. The Company expects to record severance charges of up to $60 million as ...

  • Page 153
    ... in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Seagate Technology's internal control over financial reporting as of July 3, 2009, based on...

  • Page 154
    ... of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Seagate Technology as of July 3, 2009 and June 27, 2008, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the three years in the period ended...

  • Page 155
    ... Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) by our management, with the participation of our chief executive officer and our chief financial officer, that our disclosure controls and procedures were effective as of July 3, 2009. Management's Report on Internal...

  • Page 156
    ... and accounting officers. This Code of Business Conduct and Ethics is posted on our Website. The Internet address for our Website is www.seagate.com , and the Code of Business Conduct and Ethics may be found from our main Web page by clicking first on "Investors," next on "Corporate Governance...

  • Page 157
    ... Financial Statements of Seagate Technology and Report of Independent Registered Public Accounting Firm are included in Item 8: Page No. Consolidated Balance Sheets-July 3, 2009 and June 27, 2008 Consolidated Statements of Operations-Fiscal Years Ended July 3, 2009, June 27, 2008 and June 29...

  • Page 158
    ... of the U.S. Securities and Exchange Commission thereunder in connection with the registrant's Annual Report on Form 10-K for the fiscal year ended July 3, 2009 (the "Annual Report"), including specifically, but without limiting the generality of the foregoing, power and authority to sign the...

  • Page 159
    Table of Contents Signature Title Date /s/ FRANK J. BIONDI, JR. Director (Frank J. Biondi, Jr.) August 19, 2009 /s/ WILLIAM W. BRADLEY Director (William W. Bradley) August 19, 2009 /s/ DONALD E. KIERNAN Director (Donald E. Kiernan) August 19, 2009 /s/ DAVID F. MARQUARDT Director (David F. ...

  • Page 160
    ... Suez Acquisition Company (Cayman) Limited, Seagate Technology, Inc., Seagate Software Holdings, Inc., VERITAS Software Corporation and Victory Merger Sub, Inc. Agreement and Plan of Merger, dated as of December 20, 2005, by and among Seagate Technology, MD Merger Corporation and Maxtor Corporation...

  • Page 161
    ... Media (Ireland), Seagate International (Johor) Sdn. Bhd., Penang Seagate Industries (M) Sdn. Bhd., Seagate Singapore International Headquarters Pte. Ltd., Seagate Technology (Thailand) Limited, Seagate Technology (US) Holdings, Inc., Maxtor Corporation, i365 Inc. and Seagate Technology LLC...

  • Page 162
    ... of Option Agreement (For Officers and Non-Officer employees) Seagate Technology 2004 Stock Compensation Plan Form of Restricted Stock Bonus Agreement Seagate Technology 2004 Stock Compensation Plan Form of Restricted Stock Unit Agreement Seagate Technology Employee Stock Purchase Plan 160 10-Q 10...

  • Page 163
    ...2006, among Seagate Technology, Maxtor Corporation and U.S. Bank National Association, amending and supplementing the Indenture dated as of May 7, 2003 Seagate Technology 2004 Stock Compensation Plan Form of Performance Share Bonus Agreement (includes Compensation Recovery Policy) Form of Separation...

  • Page 164
    ...Holdings, Inc., Maxtor Corporation, i365 Inc., Seagate Technology LLC, Maxtor Global Ltd., Seagate Technology International, Seagate International (Johor) Sdn. Bhd., Seagate Technology (Thailand) Limited, Penang Seagate Industries (M) Sdn. Bhd., Seagate Technology (Ireland), Seagate Technology Media...

  • Page 165
    ...Holdings, Inc., Maxtor Corporation, i365 Inc., Seagate Technology LLC, Maxtor Global Ltd., Seagate Technology International, Seagate International (Johor) Sdn. Bhd., Seagate Technology (Thailand) Limited, Penang Seagate Industries (M) Sdn. Bhd., Seagate Technology (Ireland), Seagate Technology Media...

  • Page 166
    ...Seagate Technology Media (Ireland), as Chargors, and JPMorgan Chase Bank, N.A., as Administrative Agent or Chargee Second Lien U.S. Security Agreement dated as of May 1, 2009, among Seagate Technology International, Seagate Technology, Seagate Technology (US) Holdings, Inc., Maxtor Corporation, i365...

  • Page 167
    ... Seagate Technology HDD Holdings, as Borrower, Seagate Technology International, as the Second Lien Issuer, and each of the other Loan Parties (as defined therein) party thereto Second Supplemental Indenture, dated as of June 1, 2009, among Seagate Technology, Maxtor Corporation, Seagate Technology...

  • Page 168
    ... List of Subsidiaries Consent of Independent Registered Public Accounting Firm Power of Attorney (see signatue page to this annual report) Certification of the Chief Executive Officer pursuant to rules 13a14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section...

  • Page 169

  • Page 170
    ... Periods, or Purchase Price. 2. DEFINITIONS 2.1 " Applicable Law " shall mean the legal requirements relating to the administration of an employee stock purchase plan under applicable U.S. state corporate laws, U.S. federal and applicable state securities laws, the Code, any stock exchange rules...

  • Page 171
    ... "Corporation" shall mean Seagate Technology, a Cayman Islands limited company. 2.8 "Designated Subsidiary" shall mean a Subsidiary that has been designated by the Committee in its sole discretion as eligible to participate in the Plan with respect to its Employees. 2.9 "Effective Date" shall mean...

  • Page 172
    ...the Exchange Act and the rules and regulations promulgated thereunder. 2.17 2.18 2.19 "Participant" shall mean a participant in the Plan as described in Section 5 of the Plan. "Plan" shall mean this Employee Stock Purchase Plan. "Purchase Date" shall mean the last Trading Day of each Purchase Period...

  • Page 173
    ... mean a day on which U.S. national stock exchanges and the National Market System are open for trading and the Common Stock is being publicly traded on one or more of such markets. 3. ELIGIBILITY 3.1 Any Employee employed by the Corporation or by any Designated Subsidiary on an Offering Date shall...

  • Page 174
    ...February 1, 2006, each Offering Period shall generally consist of one (1) Purchase Period that runs concurrently with the Offering Period. The last Trading Day of each Purchase Period shall be the "Purchase Date" for such Purchase Period; provided that the first Purchase Period shall commence on the...

  • Page 175
    ...establish from time to time before an Offering Date) of such Employee's Compensation on each payday during the Offering Period. All payroll deductions will be held in a general corporate account or a trust account. No interest shall be paid or credited to the Participant with respect to such payroll...

  • Page 176
    ... any Participant terminates employment with the Corporation and its Designated Subsidiaries for any reason (including death) prior to the expiration of a Purchase Period, the Participant's participation in the Plan shall terminate and all amounts credited to the Participant's account shall be paid...

  • Page 177
    ... determine with respect to any prospective Offering Period that the option price shall be the Designated Percentage of the Fair Market Value of a share of the Common Stock on the Purchase Date. 9. PURCHASE OF STOCK Unless a Participant withdraws from the Plan as provided in Section 5.3 or except as...

  • Page 178
    amount to the 9

  • Page 179
    ... may be purchased by a Participant in a Purchase Period, the number of securities in the Annual Increase, and the price per share covered by each option under the Plan which has not yet been exercised, may be appropriately adjusted by the Board, and the Board shall take any further actions which, in...

  • Page 180
    ... or suspension of the Plan, the Board may in its discretion (i) return without interest, the payroll deductions credited to Participants' accounts to such Participants or (ii) set an earlier Purchase Date with respect to an Offering Period and Purchase Period then in progress. 15. ADMINISTRATION...

  • Page 181
    ... Committee may adopt rules or procedures relating to the operation and administration of the Plan to accommodate the specific requirements of local laws and procedures. Without limiting the generality of the foregoing, the Committee is specifically authorized to adopt rules and procedures regarding...

  • Page 182
    ... state and foreign securities laws and the requirements of any stock exchange upon which the Shares may then be listed, subject to the approval of counsel for the Corporation with respect to such compliance. If on a Purchase Date in any Offering Period hereunder, the Plan is not so registered...

  • Page 183
    ... Board. 22. REPORTS Individual accounts shall be maintained for each Participant in the Plan. Statements of account shall be given to Participants at least annually, which statements shall set forth the amounts of payroll deductions, the Purchase Price, the number of shares of Common Stock purchased...

  • Page 184
    ...16 of the Exchange Act with respect to Plan transactions. 25. NOTICES All notices or other communications by a Participant to the Corporation under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Corporation at the location, or by the...

  • Page 185
    ... requested, and addressed to: Kenneth M. Massaroni Senior Vice President and General Counsel Seagate Technology 920 Disc Drive Scotts Valley, California 95066 If Executive does not timely revoke his execution of this Agreement, then the eighth day following the date of his execution will be the...

  • Page 186
    ... is not limited to, formulae, customer lists, patterns, devices, inventions, processes, compilations of information, files, records, documents, drawings, specifications, and equipment Executive acknowledges and affirms that he has returned to Seagate, or will return to Seagate on the Effective Date...

  • Page 187
    ... the Seagate Technology 2004 Stock Compensation Plan (the "2004 Plan") and/or the Seagate Technology 2001 Share Option Plan ("2001 Plan"). All of the Equity Awards granted to Executive that remained unvested as of the Resignation Date are cancelled effective that same date. Executive's period in...

  • Page 188
    ... companies, related entities, employee benefit plans, and their fiduciaries, predecessors, successors, officers, directors, members, managers, shareholders, agents, employees and assigns (each a "Released Party") from any and all claims, causes of action, and liabilities up through the date...

  • Page 189
    ...court or tribunal relating to any claim within the scope of the general release set forth in Paragraph 7. Executive represents and warrants that he has not, with respect to any transaction or state of facts existing prior to the date hereof, filed any action, complaint, suit, claim, charge or motion...

  • Page 190
    ... Agreement voluntarily and of his own free will. 19. The intent of the Parties is that payments and benefits under this Agreement comply with Section 409A of the Internal Revenue Code of 1986, as amended and the regulations and other guidance promulgated thereunder and, accordingly, to the maximum...

  • Page 191
    ... period shall not expire until the next following day that is not a Saturday, Sunday, or legal holiday. (e.) As set forth in section 7(f)(1)(C) of the ADEA, as added by the Older Workers Benefit Protection Act of 1990, Executive understands that he is not waiving any rights or Claims provided...

  • Page 192
    .... THE PARTIES HAVE READ THIS RELEASE, UNDERSTAND AND ACCEPT EACH OF ITS TERMS, AND AGREE TO BE FULLY BOUND HEREUNDER. Dated: , 2009. Brian S. Dexheimer Seagate Technology Seagate Technology (US) Holdings, Inc. Dated: , 2009. By: Kenneth M. Massaroni Senior Vice President and General Counsel 8

  • Page 193
    ... Vice President and General Counsel Seagate Technology LLC 920 Disc Drive Scotts Valley, California 95066 Re: Notice of Resignation Dear Mr. Massaroni: This letter serves to confirm my resignation as a Division President of Seagate Technology effective July 3, 2009. Sincerely, Brian S. Dexheimer...

  • Page 194
    ... FROM: Lisa Kirk-Vice President, Human Resources DATE: July 3, 2009 RE: Disclosure Required by Older Workers Benefits Protection Act You and other executives selected for the Seagate Technology Executive Officers Severance and Change in Control (CIC) Plan are eligible to receive certain exit...

  • Page 195
    ... job information on record for you as of February 2, 2009. Employees listed as "ineligible" are ineligible either because their employment will not be terminated, or because they are not otherwise eligible for separation benefits. This special separation program is applicable to those Seagate Vice...

  • Page 196
    ... China Holding Company Seagate Technology Manufacturing (Hong Kong) Limited Seagate Technology (Suzhou) Co. Ltd. Seagate Technology HDD (India) Private Limited Seagate Technology (Ireland) Springtown Northern Ireland Branch Seagate Technology (Malaysia) Holding Company Senai Seagate Industries...

  • Page 197
    QuickLinks EXHIBIT 21.1

  • Page 198
    ... 333-101848) of Seagate Technology, as amended, of our reports dated August 19, 2009, with respect to the consolidated financial statements of Seagate Technology, and the effectiveness of internal control over financial reporting of Seagate Technology, included in this Annual Report (Form 10-K) for...

  • Page 199
    QuickLinks EXHIBIT 23.1 Consent of Independent Registered Public Accounting Firm

  • Page 200
    ... in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who...

  • Page 201
    QuickLinks EXHIBIT 31.1 CERTIFICATION

  • Page 202
    ... in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who...

  • Page 203
    QuickLinks EXHIBIT 31.2 CERTIFICATION

  • Page 204
    ... 15(d) of the Securities Exchange Act of 1934; and The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: August 19, 2009 /s/ STEPHEN J. LUCZO Stephen J. Luczo Chief Executive Officer Date: August 19...

  • Page 205
    QuickLinks EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANESOXLEY ACT OF 2002