Seagate 2009 Annual Report Download - page 54

Table of Contents
Impairment of Goodwill and Other Long-Lived Assets, net of Recoveries. During fiscal year 2010, we committed to a plan to sell certain
equipment related to certain research activities that had ceased. In connection with this plan, we reclassified these assets as held for sale and
recorded a net impairment charge of approximately $57 million to adjust the carrying value of these assets to the estimated fair value, less cost to
sell.
Impairment of goodwill and other long-lived assets, net of recoveries decreased approximately $2.2 billion when compared to the prior
fiscal year due to the non-recurrence of the $2.3 billion impairment charge we recorded in fiscal year 2009 as a result of the significant adverse
change to our business climate. See prior year explanation for further details.
Other Income (Expense), net
The change in Other income (expense), net for fiscal year 2010 compared to fiscal year 2009 was primarily due to a $31 million increase in
interest expense resulting from higher average borrowing costs, a decrease in gains from foreign currency remeasurements of $15 million, a
$13 million write-down of an equity investment in fiscal year 2010, a $12 million decrease in interest income as a result of lower yields on our
cash and investments and an $8 million non-recurring gain recognized on the sale of an equity investment in fiscal year 2009. These were
partially offset by a $44 million loss related to our deferred compensation plan assets recorded in fiscal year 2009.
Income Taxes
We recorded an income tax benefit of $40 million for fiscal year 2010 compared to a provision for income taxes of $311 million for fiscal
year 2009. Our fiscal year 2009 provision for income taxes included $271 million of income tax expense recorded in the second quarter
associated with an increase in our valuation allowance for U.S. deferred tax assets related to a reduction in our forecasted U.S. taxable income.
In connection with our previously announced plans to move our corporate headquarters to Ireland, we initiated certain pre-reorganization
steps which resulted in our existing Cayman parent holding company becoming an Irish tax resident in fiscal year 2010. Our Irish tax resident
parent holding company owns various U.S. and non-U.S. subsidiaries that operate in multiple non-Irish taxing jurisdictions. Our worldwide
operating income is either subject to varying rates of tax or is exempt from tax due to tax holidays or tax incentive programs we operate under in
China, Malaysia, Singapore, Switzerland and Thailand. These tax holidays or incentives are scheduled to expire in whole or in part at various
dates through 2020.
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Fiscal Years Ended
(Dollars in millions)
July 2,
2010
July 3,
2009
(1)
Change
%
Change
Other income (expense),
net
$
(171
)
$
(149
)
$
(22
)
15
%
(1) As adjusted due to a required change in the accounting for convertible debt instruments implemented in the
first quarter of 2010, applied on a retrospective basis.
Fiscal Years Ended
(Dollars in millions)
July 2,
2010
July 3,
2009
(1)
Change
%
Change
Provision for (benefit
from) income taxes
$
(40
)
$
311
$
(351
)
(113
)%
(1) As adjusted due to a required change in the accounting for convertible debt instruments implemented in the
first quarter of 2010, applied on a retrospective basis.