Seagate Finally to Cut WW Headcount by 2,950 People

On January 11, 2009, Seagate Technology committed to a restructuring plan intended to realign its cost structure with the current macroeconomic business environment.

The plan includes reducing worldwide headcount by approximately 2,950 people, representing approximately 6% of its global employee headcount, which is inclusive of the previously disclosed 10% reduction of the U.S. workforce.

The plan, which the company expects to largely complete by the end of the March quarter, is expected to result in total pretax charges of approximately $90 million. These charges will primarily be incurred in the December 2008 quarter, and will consist mainly of employee termination costs, with the majority of cash payments expected to be paid in the March 2009 quarter. The savings generated from these restructuring activities are expected to amount to approximately $130 million annually.
 
In connection with this overall cost reduction strategy, Seagate expects to reduce salaries of certain employees, including its named executive officers, as follows:

• 25% for Chief Executive Officer, Named Executive Officers and Executive Vice Presidents,
• 20% for Senior Vice Presidents,
• 15% for Vice Presidents, and 10% for management, sales, supervisors and professional employees.

The salary reductions are expected to be finalized shortly and become effective in February 2009. The estimated savings generated from these salary reductions are expected to amount to approximately $80 million annually.