Seagate 2009 Annual Report Download - page 37

Table of Contents
Suspension of Paying Quarterly Dividends
—Our policy of not paying dividends could result in a persistently low market valuation of our
ordinary shares.
On April 13, 2009, we announced that we had adopted a policy of no longer paying a quarterly dividend to our ordinary shareholders to
enhance liquidity. Our policy of not paying a quarterly dividend could result in a persistently low market valuation of our ordinary 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 and contractual restrictions on the payment of
dividends by our subsidiaries to us or by us to our ordinary shareholders.
Potential Governmental Action
—Governmental action against companies located in offshore jurisdictions may lead to a reduction in the
demand for our ordinary shares.
Recent U.S. federal and state legislation has been proposed, and additional legislation may be proposed in the future which, if enacted,
could have an adverse tax impact on either Seagate or its shareholders.
Securities Litigation
—Significant fluctuations in the market price of our ordinary shares could result in securities class action claims
against us.
Significant price and value fluctuations have occurred with respect to the publicly traded securities of disk drive companies and technology
companies generally. The price of our ordinary 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 pursued against that company. If similar litigation were pursued against us,
it could result in substantial costs and a diversion of management's attention and resources, which could materially adversely affect our results of
operations, financial condition and liquidity.
Current Global Credit and Financial Market Conditions—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 investments with remaining maturities of 90 days or less at the time of
purchase. Our short-term investments consist primarily of readily marketable debt securities with remaining maturities of more than 90 days at
the time of purchase. Our investment policy has as its principal objectives the preservation of principal and maintenance of liquidity. We
mitigate default risk by investing in high-quality investment grade securities, limiting the time to maturity and by monitoring the counter-parties
and underlying obligors closely.
As of July 2, 2010, we continued to hold auction rate securities with a par value of approximately $19 million, all of which are
collateralized by student loans guaranteed by the Federal Family Education Loan Program. Beginning in the March 2008 quarter, these securities
have continuously failed to settle at auction. As of July 2, 2010, the estimated fair value of these auction rate securities was $17 million. We
believe that the impairments totaling $2 million are temporary as we do not intend to sell these securities and have concluded it is not more likely
than not that we will be required to sell the securities before the recovery of the amortized cost basis.
While as of the date of this filing, we are not aware of any other material downgrades, losses, or other significant deterioration in the fair
value of our cash equivalents or short-term investments or auction rate securities since July 2, 2010, no assurance can be given that further
deterioration in conditions of the global credit and financial markets would not negatively impact our current portfolio of cash equivalents, short-
term investments or auction rate securities or our ability to meet our financing objectives.
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