Seagate 2008 Annual Report Download - page 32

Table of Contents
Our ability to generate cash is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond
our control. We cannot assure you that:
•
our business will generate sufficient cash flow from operations;
• we will continue to realize the cost savings, revenue growth and operating improvements that result from the execution of our
long-term strategic plan; or
•
future sources of funding will be available to us in amounts sufficient to enable us to fund our liquidity needs.
If we cannot fund our liquidity needs, we will have to take actions such as reducing or delaying capital expenditures; product development
efforts, strategic acquisitions, investments and alliances, and other general corporate requirements. We cannot assure you that any of these
remedies could, if necessary, be effected on commercially reasonable terms, or at all, or that they would permit us to meet our scheduled debt
service obligations. Our amended credit facility and the indenture governing our 10% Notes limit the use of certain proceeds from any
disposition of assets that are part of the collateral and, as a result, we may not be allowed, under those documents, to use proceeds from such
dispositions to satisfy all current debt service obligations. In addition if we incur additional debt, the risks associated with our substantial
leverage, including the risk that we will be unable to service our debt or generate enough cash flow to fund our liquidity needs, could intensify.
Restrictions Imposed by Debt Covenants
—Restrictions imposed by our amended credit facility and the indenture governing our 10% Senior
Secured Second
-Priority Notes due 2014 may limit our ability to finance future operations or capital needs or engage in other business
activities that may be in our interest.
Our amended credit facility and the indenture governing our 10% Notes impose, and the terms of any future debt may impose, operating
and other restrictions on us. Our amended credit facility and the indenture limit, among other things, our ability to:
• incur additional indebtedness and issue certain preferred stock;
•
create liens;
•
pay dividends or make distributions in respect of our capital stock;
• redeem or repurchase capital stock or debt;
• make certain investments or other restricted payments;
•
sell assets;
•
issue or sell capital stock of subsidiaries;
• enter into transactions with affiliates;
• engage to any material extent in business other than our current business; and
•
effect a consolidation 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
(inclusive), and $300 million, in the aggregate, during any period of four consecutive quarters thereafter.
Our amended credit facility also requires us to maintain compliance with specified financial covenants. Specifically, our amended credit
facility contains three financial covenants: (1) a covenant to maintain minimum cash, cash equivalents and marketable securities; (2) a fixed
charge coverage ratio; and (3) a net leverage ratio. Our ability to comply with these covenants may be affected by events beyond our
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