FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________ to _________

Commission file number 1-10639

CONNER PERIPHERALS, INC.
[Exact name of registrant as specified in its charter]
DELAWARE 94-2968210
(State of incorporation) (I.R.S. Employer
Identification No.)

3081 ZANKER ROAD
SAN JOSE, CALIFORNIA 95134
(Address of principal executive offices)
Registrant's telephone number, including area code: (408) 456-4500

Securities registered pursuant to Section 12(b) of the Act-
Title of class and name of each exchange on which registered:
Common Stock, $.001 par value- New York Stock Exchange
6-1/2% Convertible Subordinated Debentures due 2002- New York Stock Exchange
6-3/4% Convertible Subordinated Debentures due 2001- New York Stock Exchange
Rights to Purchase Series A Participating Preferred Stock-
New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate value of voting stock held by nonaffiliates of the
Registrant was approximately $538,080,000 as of March 7, 1995 based upon the
closing sales price on the New York Stock Exchange reported for such date.
Shares of Common Stock held by each executive officer and director and by each
person who owns 5% or more of the outstanding Common Stock have been excluded in
that such persons may, under certain circumstances, be deemed to be affiliates.
This determination of affiliate status is not necessarily a conclusive
determination for other purposes. As of March 7, 1995, 52,495,602 shares of
Common Stock were issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Annual Report to Stockholders for the fiscal year ended
December 31, 1994 are incorporated by reference in Parts II and IV of this Form
10-K. Portions of the definitive proxy statement for the Annual Meeting of
Stockholders to be held April 25, 1995 are incorporated by reference in Part III
herein.

PART I

ITEM 1. BUSINESS

Conner Peripherals, Inc. ("Conner" or the "Company") was incorporated in
California in June 1985 and was reincorporated in Delaware in September 1992.
The Company's principal executive offices are located at 3081 Zanker Road, San
Jose, California 95134, and its telephone number is (408) 456-4500.

General
-------

Conner operates in one industry segment by designing, building and
selling information storage solutions products, including a large selection of
hard disk drives, tape drives, storage management software and integrated
storage systems for a wide range of computer applications.

In June 1992, the Company began the process of repositioning itself from
being solely a manufacturer of hard disk drives to becoming a leading
supplier of total storage solutions for the computer industry. In December 1992,
Conner completed the acquisition of Archive Corporation ("Archive") by means of
a merger. The acquisition of Archive established Conner's position in the tape
drive, software and storage systems markets, thereby supporting its strategy of
being a leader in information storage solutions and storage and data protection
products. During 1993, the Company took action to reduce excess manufacturing
capacity to a level more consistent with sustainable demand, to streamline
operations as well as administrative processes to reduce the Company's cost
structure and to further integrate and reduce selling, general and
administration and research and development activities of both disk and tape
drive operations. As a result, the Company recorded certain charges to Unusual
Items in 1993 (see Note 4 to the consolidated financial statements). During
1994, the Company qualified to ship certain 3.5-inch disk media manufactured in
Milpitas, California to certain third parties. This technically advanced media
has a high oersted rating and low glide height specification. Shipments will
commence during the first quarter of 1995 to these certain third parties. In
January 1994, the Company's then wholly-owned subsidiary, Arcada Software, Inc.,
("Arcada") acquired Quest Development Corporation for cash and issued shares to
a minority interest party representing approximately a 22% minority ownership
interest in Arcada. This acquisition was instrumental in implementing a total
storage solutions strategy. Arcada is engaged in developing, producing and
marketing software products for data storage management.

Demand for all of the Company's products is driven by several distinct
market trends. First, the shift from centralized computing based on mainframes
and minicomputers to networks and client-server architectures has resulted in an
increased demand for compact, high capacity, high-performance storage devices
and systems for use in networks of personal computers and workstations. Second,
the increasing complexity of personal computer and application software
operating systems, such as Windows, OS/2, as well as the software applications
designed to support them, has resulted in the demand for greater storage
capacity in individual computers. Third, the substantial storage requirements
necessary to store high resolution images, sound and video data applications is
adding significantly to the amount of storage required on personal computer
systems, both in business and home environments.

As the amount of data stored on individual computers increases, the need
for efficient and reliable data protection also increases. This need is causing
an increase in the demand for tape drives and the complex software which manages
the transfer of data from disk drives to tape drives on a network and on
individual computer systems.

The Company's products are sold to original equipment manufacturers
("OEMs"), distributors, value-added resellers ("VARs"), retailers and direct to
end-user customers in the U.S. and abroad through a variety of channels.

DISK DRIVES
-----------

Disk drives address the escalating requirements of high performance
microcomputers and workstations for greater storage capacity, faster access
time, lower power consumption and smaller size at increasingly lower costs
through the use of advanced technologies. These requirements are met through
the use of advanced technologies which have additionally allowed the Company to
manufacture the products at increasingly lower costs.

In a disk drive, one or more rigid disks are attached to a spin motor
assembly which rotates the disks at a constant speed within a sealed,
contamination-free enclosure. Typically, both surfaces of each disk are coated
with a thin layer of magnetic material. Magnetic heads record and retrieve data
from discrete magnetic domains located on pre-formatted concentric tracks in the
magnetic layers of the rotating disks. An actuator positions the head over the
proper track upon instructions from the drive's electronic circuitry. Most disk
drives are "intelligent" disk drives, which incorporate an embedded controller
to manage communications with the computer.

Disk Drive Design
-----------------

During the last five years, the Company has pioneered a variety of disk
drive innovations, many of which have achieved broad acceptance in the disk
drive industry in general. The Company was the first to utilize an architecture
employing a high microcode content, resulting in significant flexibility and
improved reliability in its drives. In addition, the Company was among the
earliest to introduce drives using a high-performance voice coil actuator and
on-board electronic diagnostics. As a result of various proprietary design
innovations, the Company's disk drives achieve high performance with low power
consumption. Finally, the Company was the first to introduce drives in a low-
profile one inch package. Many of these innovations are protected by patent
rights belonging to the Company.

The Company believes that its disk drive designs have certain important
performance characteristics. The benefits to the user include (1) fast access
time; (2) low heat dissipation; (3) quiet operation; (4) low power consumption;
and, (5) extended product life. Fast access is a performance requirement for
systems incorporating 64-bit and 32-bit microprocessors, such as Intel
Corporation's ("Intel") Pentium and 80486 and Motorola's 68000 family of
microprocessors. Low heat dissipation is an important determinant of a disk
drive's reliability because heat may contribute to component failure. Low heat
dissipation also allows the possibility of eliminating or reducing the size of
cooling fans in computers and thus increases the potential for quieter computer
system operation. Low power consumption is also a critical factor in all
portable computing applications because these computers use battery power
supplies and disk drives are a large power consumer in such systems.
Consequently, low power consumption in disk drives reduces the need for a
computer to consume a large amount of power in its operation. Although the
Company's products continue to perform well in a variety of these performance
characteristics, product offerings of the Company's competitors also incorporate
many of these design features and achieve comparable performance criteria.

The benefits of its disk drive designs also include reduced parts count,
higher reliability and the built-in ability for self-testing. These benefits
may result in the possibility of lower aggregate component costs and reduced
requirements for expensive disk drive test equipment, when compared to
conventional disk drive designs.

Disk Drive Products
-------------------

The Company's disk drive products include 2.5-inch and 3.5-inch disk
drives which offer storage capacities ranging from 210 megabytes to over 4
gigabytes of formatted capacity. The Company's products include the following
product families:

Filepro Series: The Filepro Series products include one and two-disk,
low-profile (one-inch high) 3.5-inch hard disk drives, in capacities of 210,
420, 425, 540, 850 and 1275 megabytes. The Filepro Series is designed to offer
the entry level PC user a combination of high capacity, performance, reliability
and low price.

Filepro Advantage Series: The Filepro Advantage Series of 3.5-inch disk
drives offers low cost storage for value systems, including networked and
desktop PCs used for advanced applications, databases and multimedia. The
Filepro Advantage Series is available in capacities of 540, 850 and 1275
megabytes.

Filepro Performance Series: The Filepro Performance Series drives are
available with approximately 1, 2 and 4 gigabytes of capacity and feature seek
times as fast as 8.5 milliseconds and data transfer rates of up to 20 megabytes
per second. These disk drives are primarily used in multi-user environments
including advanced workstation and network systems.

Filepro Notebook Series: The Filepro Notebook Series of 2.5-inch disk
drives provide capacities from 350 to 420 megabytes and address the needs of
mobile users of portable PCs and notebook computers, with low power, light
weight and a high degree of shock resistance.

TAPE DRIVES
-----------

Tape drives are peripheral hardware devices which enable low cost storage
or data protection of large volumes of data through use of tape stored on small
cartridges used singly or in the case of Digital Audio Tape ("DAT"), in multiple
autoloader applications.

Tape Drive Products
-------------------

Computer systems of all types increasingly need dedicated backup storage
peripherals that combine high capacity, exceptional performance, low cost and
reliability. Conner's full line of minicartridge, DAT and data cartridge tape
products meet the needs of the entry, value, performance and portable markets to
complement Conner's line of disk drive products.

Minicartridge Tape Drives: Conner's family of low profile minicartridge
tape drives are designed to provide from 250 megabytes to 4 gigabytes of data
protection on a single low cost removable cartridge. The entry level products
incorporate a floppy interface and are designed for desktop PC applications.
New product introductions in 1994 included the 420, 850 and 1700 megabyte models
with a floppy controller interface. The Company's recently introduced 4
gigabyte minicartridge products incorporate SCSI and IDE interfaces and address
the need for higher performance tape solutions at an economical price. All
minicartridge tape drives are sold either as bare drives or bundled solutions
marketed with the brand of Tape Stor. The entry level drives are currently
manufactured for Conner in Japan while the higher performance minicartridge
products are manufactured by Conner in Singapore.

DAT Drives: High speed, networked computer environments need automatic
data protection and backup in the form of dedicated removable storage
peripherals that combine high capacity, absolute reliability, state-of-the-art
backup performance and low cost per megabyte in a small form factor. The Conner
family of True Computer Grade Digital Audio Tape ("DAT") products provides a
balance of these features, storing up to 8 gigabytes of data on a single 4mm
cartridge. In addition, the Company offers DAT Autoloaders, which enable the
storage of up to 96 gigabytes through an automated loading mechanism which can
handle up to 12 DAT tape cartridges in a single tape drive.

Data Cartridge Drives: Conner Data Cartridge Drives provide high capacity
and field-proven data storage in a 5.25-inch, half-high form factor. These data
cartridge drives are available in internal and external models with capacities
ranging from 250 megabytes to 1.35 gigabytes, and provide high performance data
storage using the industry standard Quarter Inch Cartridge (QIC) format that
guarantees full backward read compatibility with previous generations of drives.

Conner MS System: Conner MS System is a turnkey system, fully tested to
ensure complete comparability featuring high performance tape drives and backup
software. This system includes a tape drive, SCSI controller (only certain
models), SCSI data cable, power cable (for external units), Backup Exec Novell-
certified software and manuals, installation manual, cleaning kit and a tape.
Conner MS systems are backward compatible with previous MaynStream systems and
Tapes.

Conner CS Series: Conner CS Series of mass storage solutions, formerly
Archive ST, is designed for workstation and PC-based Unix environments. The CS
Series includes data cartridge drives with capacities to 525 megabytes and
Conner DAT tape drive kits in capacities ranging from 2 to 8 gigabytes. This
product is tested and certified for compatibility with leading UNIX platforms
including SCO, IBM RISC System/6000, Sun, Hewlett-Packard, Digital Equipment
Corporation and UnixWare, Banyan Vines and NeXTSTEP as well as many others.

SOFTWARE PRODUCTS
-----------------

Through its Arcada Holdings, Inc. ("AHI") subsidiary, Conner offers a
variety of data protection and storage management software through Arcada
Software, Inc., a wholly-owned subsidiary of AHI ("Arcada"). Arcada develops
data protection and storage management software products that operate across
multiple desktop and client-server environments, including those of
International Business Machines Corporation, Microsoft, Inc. and Novell, Inc.
Arcada markets its products worldwide under the Backup Exec brand name to OEMs,
systems integrators, VARs, retailers, large corporate users and retail end-
users.

Backup Exec for NetWare: Backup Exec for NetWare delivers sophisticated
client/server based data protection for all servers and workstations on Novell-
based networks, including, DOS, Microsoft Windows, OS/2, Apple Macintosh and
UNIX workstations as well as NetWare 3.x and 4.x servers. Backup Exec was the
first storage software certified by Novell for its new NetWare 4.x network
operating system. Backup Exec is offered in single server, enterprise and
Windows workstation editions.

Backup Exec for Windows NT: Backup Exec for Windows NT is a 32-bit backup
application created for Microsoft Windows NT which offers a comprehensive data
storage solution for Windows NT single users, workstations and servers operating
in both local and wide area networks.

Arcada Backup for Minicartridge: Arcada Backup for Minicartridge offers
desktop data protection for DOS and Microsoft Windows users. Arcada sells its
product primarily to OEMs and to a lesser extent through the retail and
distribution channels. Currently, Arcada's products support substantially all
minicartridge tape drives.

Storage Exec: Storage Exec offers a single backup solution for mixed
Microsoft Windows NT Server and OS/2 LAN Manager environments by configuring,
scheduling, monitoring and controlling local and remote sites from a central
location. This product supports backup of multiple platforms including
Microsoft Windows NT, OS/2, Microsoft Windows for Workgroups and DOS.

STORAGE SYSTEMS
---------------

Conner Storage Systems integrate hardware and software solutions to allow
consumers to meet the demanding requirements of the current mixed network
environments. The products offered include those products manufactured or
developed by Conner, as well as integrated systems which include components or
products of third parties. Storage Systems products address the network storage
solution marketplace, including disk and RAID subsystems and storage management
software for local area networks and workstation environments. Conner Storage
Systems products are marketed and sold to VARs and distributors for resale to
large corporate users and financial institutions to manage their network storage
and data protection needs.

Storage Systems Products
------------------------

From basic single-user needs to complex network storage requirements,
Conner Storage Systems delivers turn-key solutions, coupled with customized
service and support. Conner's Storage Systems products address the needs of
users ranging from entry-level PCs to enterprise-wide network administrators.

Conner RAID Subsystems: Conner RAID Subsystems offer four families of
products which bring a new level of data availability and security, along with
system flexibility and scalability to meet a broad range of user needs within a
PC LAN environment. These products range in capacity from 1 to 25 gigabytes
that are low cost with comparable systems and offer a high level of performance.

Conner StorView Software: Conner StorView Software is a complete remote
workstation-based control and monitoring software application for Conner RAID
Subsystems providing users with a view of Conner RAID devices on the enterprise.

GENERAL SALES AND DISTRIBUTION
------------------------------

The Company sells its tape drive, disk drive, software and storage
systems products principally to OEMs through a direct sales force. The Company
focuses its sales efforts on manufacturers of desktop computers and
workstations, as well as manufacturers of portable computers and storage
subsystems such as servers and arrays.

Many of the Company's OEM customers enter into master purchase agreements
with the Company. These agreements do not require the OEMs to purchase minimum
quantities of the Company's products. Product deliveries are scheduled upon the
Company's receipt of purchase orders under the related agreements. Generally,
these purchase agreements also allow customers to reschedule delivery dates and
cancel purchase orders under certain circumstances without significant
penalties.

Sales of the Company's disk drives to Compaq Computer Corporation
("Compaq") accounted for approximately 13% in each of 1994 and 1993 and 15% of
the Company's net sales in 1992. Sales to Peripherals Europe GmbH accounted for
12% of the Company's net sales in 1992. No other customer represented more than
10% of net sales for the three years in the period ended December 31, 1994. The
Company's sales to any single OEM customer are subject to significant
variability from quarter to quarter based on a variety of factors including new
product acceptance, price, end-user demand, product availability and competitive
offerings.

The Company also sells products to non-OEM purchasers, such as
distributors. Such sales represented 26%, 29% and 31% of net sales for the
years in the period ended December 31, 1994, 1993 and 1992, respectively. The
Company's distributors typically enter into non-exclusive agreements for the
distribution of the Company's products within a specified geographic area.
Product deliveries are scheduled upon the Company's receipt of purchase orders.
Certain of these agreements provide the distributors with price protection with
respect to their inventory of drives and also provide limited rights to return
the products. The Company also sells its products through VARs and has expanded
its marketing efforts to address different channels that sell computer systems
through retailers that sell directly to end-users.

The Company's foreign sales are generally made directly or through
international distributors. Sales to foreign customers may be subject to
certain risks, including requirements for the obtaining of export/import
licenses, exposure to tariffs and other trade regulations, currency fluctuations
and repatriation of profits. The Company's foreign sales represented 48%, 54%
and 61% of total net sales for 1994, 1993 and 1992, respectively.

Geographic area information for the three years ended December 31, 1994
set forth in Note 14 "Foreign Operations" of the Company's 1994 Annual Report
for the year ended December 31, 1994 is incorporated herein by reference.

BACKLOG
-------

At December 31, 1994, the Company's backlog of orders was approximately
$205 million as compared to a backlog of approximately $486 million at December
31, 1993. Backlog includes only those units for which a customer has specified
delivery within six months.

Demand for the Company's products is cyclical as the industry has
recently experienced alternating periods of severe product shortages and
significant overcapacity. During periods of product shortages, the Company's
backlog has increased significantly and frequently reflects abnormal customer
order patterns, including double ordering, as customers seek to insure the
availability of products to support future production. During periods of
overcapacity, the Company's backlog has declined precipitously as both OEM
customers and distributors seek to reduce their inventories or reduce their
purchase commitments.

The Company's backlog may fluctuate due to certain OEM practices of
submitting single large purchase orders to be shipped over an extended period of
time. Lead times for the release of purchase orders from other customers depend
upon the scheduling practices of the customers, and the Company anticipates that
the rate of new purchase orders will vary significantly from month to month. In
addition, the Company's actual shipments depend on its production capacity and
component availability. Moreover, the pricing of the Company's products as
delivered often depends on the date of delivery as prices may be adjusted
between the time an order is booked into backlog and the time the product is
shipped.

Shipment patterns during a quarter are frequently characterized by a
significantly higher shipment volume in the third month of a quarter than that
experienced in the first two months of the quarter. This pattern often causes
quarterly results to be difficult to predict. During 1994, order lead times were
reduced by certain of the Company's customers. This trend has impacted the
Company's visibility to future orders and accordingly has also affected the
predictability of financial results. As a result, the Company is experiencing
significantly reduced customer order lead times which resulted in lower backlog
as of December 31, 1994. In addition, record tape drive shipments which occurred
in the fourth quarter of 1994 also attributed to the reduced backlog as of
December 31, 1994 when compared to the backlog as of December 31, 1993.

Based on its past experience and knowledge of the disk drive industry,
the Company anticipates that it will experience significant volatility in the
scheduling of present and future orders. For these reasons, the Company's
backlog as of any particular date may not be indicative of the Company's actual
sales for any succeeding fiscal period.

COMPETITION
-----------

The disk drive and tape drive industry is intensely competitive. The
principal competitive factors in the industry are price, early new product
availability, product performance, product quality, storage capacity
and responsiveness to customers demands which increasingly include schedule
predictability.

The Company believes that it is currently able to compete on the basis of
all of these factors. The Company believes that its reliance on outside
vendors, which is different from some other companies in the industry that have
become more vertically integrated, has given it a competitive advantage both in
establishing strong relationships with vendors and in permitting maximum
flexibility in product design. The Company believes that competition in the OEM
sector of the disk drive industry has become more intense as major disk drive
manufacturers commit greater resources to the timely introduction of new
products.

During 1994, the Company experienced a decline in sales of disk drive
products to major U.S. corporate accounts. The Company has implemented a
program to improve its timely introduction of disk drive products, supporting an
effort to address new design-in opportunities with major OEM customers.
However, there can be no assurance that the Company's efforts to regain its
position with major OEM customers will be successful, or that any such
improvement in sales to such customers will occur in the near term. In
particular, due in part to design cycles, the Company does not expect a
significant increase in penetration of corporate accounts in the first half of
1995. The Company believes that an increase in sales to major OEM customers is
important to the Company's long-term competitive position.

The information storage industry, and the disk drive industry in
particular, are intensely competitive. Recently, the industry has undergone a
period of increased price competition, and the Company expects that the
resulting environment of increased price degradation will continue. This
environment can be expected to place ongoing pressure on the Company's gross
margins and profitability. No assurance can be given as to the Company's
operating results during this period.

The Company primarily competes against independent manufacturers of 2.5-
inch and 3.5-inch disk drives, including companies such as Micropolis
Corporation, Maxtor Corporation, Quantum Corporation, Seagate Technology, Inc.
and Western Digital Corporation. The Company also competes indirectly with disk
drive divisions of larger computer manufacturers such as The Hewlett-Packard
Company, International Business Machines Corporation, Fujitsu, Hitachi and
Toshiba. Should other major OEMs successfully develop disk drive manufacturing
capabilities, the demand for the Company's products could be reduced. The
Company's principal competitors in tape drive products are Colorado Memory
Systems, Inc. (acquired by Hewlett-Packard), Exabyte Corporation, Iomega
Corporation and Rexon, Inc. The primary competitors in software products are
Cheyenne Software, Inc., Colorado Memory Systems, Inc. (acquired by Hewlett-
Packard), and Palindrome Corporation (acquired by Seagate Technology, Inc.). The
primary competitors in the storage systems products are Micropolis Corporation
and Storage Dimensions, Inc.

MANUFACTURING
-------------

The Company expects that it will continue to purchase a substantial
majority of its component requirements from outside sources. However, from time
to time, the Company may establish limited internal production of certain
components, particularly during periods of supply constraints or when internal
production capability may contribute to new product development efforts. For
example, the Company is currently manufacturing the majority of its media
requirements. In 1994, the Company qualified to ship certain 3.5-inch media to
third-parties commencing in the first quarter of 1995. The Company's disk drive
manufacturing operations consist primarily of final assembly of heads and disks
in a class-10 clean area as well as the formatting and testing of the assembly.
Printed circuit boards are tested before they are assembled with head/disk
assemblies into disk drives. After assembly, each disk drive is operated in a
self-diagnostic mode where actual data transfers take place and various
parameters in the disk drive are tested and adjusted specifically for that disk
drive. The Company's testing procedures may vary depending upon the
requirements of particular OEM customers.

From time-to-time, the Company has experienced production delays due to
contamination related issues, yield shortfalls and other production difficulties
and the Company could experience similar delays in the future. Control and
continuous improvement of process yields by both Conner and its suppliers are
key determinants of manufacturing output, efficiency, product
quality/reliability and overall profitability. Moreover, there can be no
assurance that a defect will not escape identification in the factory and
require costly recall from customer sites.

The Company is currently experiencing certain production difficulties
with respect to certain of its new products, and expects that it will continue
to experience manufacturing problems from time-to-time in the future. A
prolonged inability to increase production yields and efficiencies on its new
disk drive products would significantly impair the Company's profitability and
competitive position.

The Company's business conditions require it to establish high-volume
manufacturing capability in anticipation of market demand. The Company's
ability to establish high-volume, low-cost manufacturing capacity depends in
part on its ability to obtain uninterrupted access to advanced technology
components in required volumes and at competitive prices. At the present time,
certain of these components are available only from single sources, although the
Company maintains ongoing programs to qualify additional sources for such
components where practicable. In particular, the Company has recently
experienced shortages of certain semiconductor and head components, which
shortages have adversely affected the Company's sales and ability to satisfy
customer demand for certain products in recent periods. There can be no
assurance that these supply constraints will not recur.

To reduce its exposure to production delays at times of component
shortage, the Company often seeks to qualify alternative components when
practicable. However, a prolonged interruption, or a reduction in the supply of
one or more key components, could nevertheless occur and would adversely affect
the Company's operating results and customer relationships.

The Company continues to produce the majority of its disk drives in
Malaysia, Singapore, China and Italy. The Company began to manufacture in the
Peoples's Republic of China through Conner Shenzhen Peripherals Company Ltd., a
joint venture with Shenzhen CPC, in December 1992. Through this venture, Conner
became the first company to establish a disk drive manufacturing facility in the
People's Republic of China and it is anticipated that this manufacturing
operation will continue to increase production volumes during the first half of
1995. The expansion of production in offshore facilities requires tight
inventory and cost controls and employee training. In addition, the transfer of
production of a product to a new facility requires qualification of the facility
by certain of the Company's major OEM customers. Accordingly, such transfers may
have a short-term disruptive effect on the Company's operations. Foreign
manufacturing is also subject to certain risks, including changes of
governmental policies, transportation delays and interruptions and the
imposition of tariffs and import/export controls. There are also risks inherent
in being the first company to manufacture disk drives in the People's Republic
of China. Furthermore, currency exchange fluctuations could increase the cost of
components manufactured abroad.

A significant portion of Conner's tape drive manufacturing is done by one
outside vendor, Matsushita Kotubuki Electronics ("MKE"). Conner also
manufactures and/or assembles some of its own tape drive products in the same
Singapore facility that currently produces its disk drives. Any prolonged
interruption or reduction in supply of tape drives from MKE would adversely
affect the Company's operating results and customer relationships.

RESEARCH AND DEVELOPMENT
------------------------

The Company participates in an industry that is subject to rapid
technological changes, and its ability to remain competitive depends on, among
other things, its ability to maintain a leadership position in technology
innovation. As a result, the Company has devoted and will continue to devote
substantial resources to product development and process engineering efforts.
In 1994, 1993 and 1992 the Company's research and development expenses were
$130,771,000, $137,465,000 and $94,652,000, respectively. The Company's research
and development expenses in the past year reflect the Company's continued
prototype production and testing associated with planned introductions of
several new products and technologies. All of the Company's research and
development costs are expensed as incurred.

The Company's current disk drive research and new product development
efforts are principally directed to the development and prototype production of
new high performance 3.5-inch and 2.5-inch disk drives. Disk drives currently
in development employ more complex designs and a greater number of
technologically advanced components than previous disk drive generations.
Accordingly, it is possible that it will be more difficult to introduce these
disk drives to volume manufacturing than was the case with previous disk drive
generations.

The Company's disk drive research and new product development is
conducted primarily at its facilities in Longmont, Colorado and San Jose,
California. The Company's process engineering and final product development is
conducted principally at research and product development facilities and at its
facilities in Singapore.

The Company's tape drive research and new product development is
conducted primarily at its Costa Mesa, California facility. In 1994, tape
engineering resources were devoted to the development of several new tape
products including a "wide" minicartridge tape drive capable of 27% more storage
capacity than existing minicartridge tape drives and a SCSI interface
minicartridge tape drive with 2 to 4 megabytes of data storage capacity. The
"wide" and SCSI interface tape drives were both launched in 1994. Also, in 1994,
the Company substantially completed the development of the industry's first
ATAPI (ATA packet interface) IDE minicartridge tape drive, which was launched in
the first quarter of 1995. Development of tape drives to support the newly
announced "Travan" extended length tape cartridges also began in 1994. The
Company also continued devoting engineering resources to achieve cost reductions
in current tape products as well as in development of an arcuate scan technology
tape drive.

The Company's current software research and new product development
efforts are principally directed towards developing data protection management
software for Windows 1995, O/S2 and UNIX operating platforms in addition to
continued efforts in developing new versions of existing products. The Company's
software development is conducted principally at its facility in San Luis
Obispo, California.

PATENTS AND LICENSES
--------------------

The Company has been granted or has acquired 37 United States patents and
has approximately 85 patent applications pending related to disk drive
technology. The Company's issued patents include a patent covering the
Company's microprocessor and microcode based architecture, and a patent covering
the self-testing diagnostic features incorporated in its disk drives. In
addition, the Company has been granted a patent covering its brushless motor
design and a patent covering certain mechanical design features of its low
profile drives, including various design features related to the one-inch high
form factor.

The Company has obtained or applied for a variety of additional patents
relating to other aspects of its drives, including certain features used in
achieving the low power functionalities of its disk drives which are important
for laptop and notebook applications, as well as certain desktop applications.
The Company has also acquired or been granted 90 United States patents, and has
approximately 24 patent applications pending, as part of the Archive acquisition
in December 1992 which relate to tape drive designs or technologies.

In addition to patent protection, the Company relies on the laws of
unfair competition, copyright and trade secrets to protect its proprietary
rights. The Company believes that its technological know-how and abilities,
protectable under these bodies of law, are equally important to its business as
technical innovations are subject to patent protection.

As is typical in the disk drive industry, Conner has from time to time
been notified that it may be infringing certain patents and other intellectual
property rights of others, and the Company is engaged in several patent
infringement lawsuits, both as plaintiff and defendant. Although the Company may
offer licenses in connection with these claims, there can be no assurance that
such claims will not result in litigation in the future regarding patents, mask
works, copyrights, trademarks or trade secrets, or that any licenses or other
rights can be obtained on acceptable terms. See Item 3 "Legal Proceedings."

FACTORS AFFECTING EARNINGS AND STOCK PRICE
------------------------------------------

In the past, the Company's sales and earnings have experienced
significant fluctuations due to precipitous changes in industry demand, product
cycles and pricing pressures. During 1993, the Company experienced substantial
losses as a result of distribution problems in Europe, new product introduction
delays and severe competition across all the Company's product lines. Although
the Company has successfully introduced a range of new disk drive and tape drive
products since then, there can be no assurance that the Company will not again
experience these problems in the future. In addition, there can be no assurance
that the Company will succeed in ramping production of new products in time to
take advantage of customer demand or that the Company will achieve profitable
operations in any given period or fiscal quarter.

During the first quarter of 1995, the Company commenced initial volume
shipments of a significant number of new disk drive products. As is common
during periods of product transition, the Company has experienced certain
difficulties and delays in achieving volume production of certain of these
products, including the Company's new Cayman disk drives. In addition, during
the first quarter of 1995, the Company has experienced a shortfall in production
in the Company's Cabo family of 425/850/1275 megabyte drives due to the
decommitment of shipments by a supplier of components. The Company also believes
that price competition in the market for disk drives with capacities under one
gigabyte has further intensified. The Company's operating results during the
first quarter of 1995 will reflect these factors. There can be no assurance that
these factors may not continue to affect the Company's operating results in
future periods.

Due to the volatility in the Company's business, the Company expects that
its stock price will continue to be subject to significant fluctuations. The
Company's stock price could decline precipitously due to unsubstantiated rumors
or to actual short-term performance that fails to meet analysts' expectations
for sales or net income. Investors in the Company's securities must be willing
to accept the risk of such fluctuations and stock price volatility.

EMPLOYEES
---------

At December 31, 1994, the Company had 10,290 employees, of whom 490 were
in research and development or process development engineering; 390 were in
marketing and sales; 649 were in general administration; and 8,761 were in
operations, with 5,574 in direct labor and the remainder in quality assurance,
test and manufacturing engineering, procurement and material management,
production management and customer service. None of the Company's employees,
except those in Italy, are represented by a labor union. The Company believes
that its relationship with its employees is satisfactory.

ITEM 2. PROPERTIES
----------

Facilities
----------

The following table sets forth information concerning the principal
operating facilities of the Company and approximate square footage as of
February 15, 1995:

Square
Feet
----

Manufacturing and Distribution:
United States (9 buildings).............. 536,000
Asia (6 buildings)....................... 1,014,000
Europe (2 buildings)..................... 120,000

Administration, Research and Development:
United States (16 buildings)............. 467,000
Asia (1 building)........................ 1,200

Sales and Customer Service:
Sales and customer service offices
(30 buildings in North America,
Asia and Europe)......................... 161,000

The Company leases most of the operating facilities listed above with the
exception of certain owned facilities located in the United States and Asia. In
addition, certain owned and leased facilities have been vacated and/or
subleased to third parties. Such facilities were vacated as a result of the
Company's restructuring actions taken during 1993. Two owned facilities are
currently held for sale. The square footage of vacated and/or subleased
facilities is approximately 319,000. The Company considers that its
properties are generally in good condition, are well maintained and are
generally suitable and adequate to carry on the Company's business. All
manufacturing facilities operate at utilization levels considered satisfactory
by the Company, other than a manufacturing facility located in Europe which is
not currently utilized. The lease terms for this facility were renegotiated to
coincide with the reduction in utilization as a result of the Company's
restructuring actions taken during 1993.

ITEM 3. LEGAL PROCEEDINGS
-----------------

The Company and certain of its officers and certain directors are
defendants in a securities class action lawsuit which purports to represent a
class of investors who purchased or otherwise acquired the Company's common
stock between January 1992 and May 1993. Certain officers and directors are also
defendants in a related stockholders derivative suit. The complaints seek
unspecified damages and other relief. The Company intends to defend the actions
vigorously.

In August 1993, the Company was served with a patent infringement
complaint, filed by IBM, alleging that products manufactured by the Company have
infringed certain patents owned by IBM. In addition, the complaint seeks
declaratory relief to the effect that disk drives produced by IBM do not
infringe certain patents held by the Company and seeks to have such patents
declared invalid. The Company answered the complaint, denying all material
allegations and counterclaiming that IBM disk drives infringe certain patents
owned by Conner, including those patents contained in the IBM complaint. The
Company believes that it has meritorious defenses against these allegations,
that it has valid claims against IBM and will defend this action vigorously.
Although the Company has engaged in continuous discussions with IBM toward an
appropriate cross-licensing arrangement, the Company is unable to predict the
outcome of the settlement negotiations, the litigation and the ultimate effect,
if any, on its operations or financial condition. Regardless of the merits of
the respective patent claims, the Company believes that the existence of the IBM
litigation could have an adverse effect on its business. In addition, this
litigation is causing the Company to incur significant costs, including
substantial legal expenses.

In 1992, the Company filed a patent infringement lawsuit against Western
Digital Corporation ("Western Digital") alleging the infringement of five of the
Company's patents by Western Digital. Western Digital has filed a counterclaim
alleging infringement of certain of its patents by the Company. The Company
believes it has valid claims against Western Digital and meritorious defenses to
the claims asserted by Western Digital.

In 1994, the Company was served with a patent litigation claim alleging
that the Company's DC2000 tape drives infringe a patent held by Iomega
Corporation ("Iomega"). This claim was settled by the Company and Iomega during
1994 and had no material effect on the results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
--------------------------------------------------
STOCKHOLDER MATTERS
-------------------

Information regarding the market for the Registrant's common equity and
related stockholder matters is set forth under the heading "Consolidated
Statements of Stockholders' Equity" on page 25 and under the heading "Market
Price of Common Stock" on page 40 of the 1994 Annual Report, which sections are
incorporated herein by reference.

ITEM 6. SELECTED FINANCIAL DATA
-----------------------

Information regarding selected financial information is set forth under
the headings "Selected Financial Data" and "Summary Quarterly Data- Unaudited"
on page 13 of the 1994 Annual Report, which sections are incorporated herein by
reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
------------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------

Information regarding management's discussion and analysis of financial
condition and results of operations is set forth under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
pages 14 through 21 of the 1994 Annual Report, which section is incorporated
herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------

Consolidated Financial Statements of the Company at December 31, 1994 and
1993 and for each of the three years in the period ended December 31, 1994 and
the report of independent accountants therein, as well as the Company's
unaudited quarterly financial information for the two-year period ended December
31, 1994 is set forth on pages 22 through 39 and on page 13 of the 1994 Annual
Report, which sections are incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
------------------------------------------------
ACCOUNTING AND FINANCIAL DISCLOSURE
------------------------------------

Not applicable.

PART III

Certain information required by Part III is omitted from this Report on
Form 10-K in that the Company has filed a definitive proxy statement (the "Proxy
Statement") pursuant to Regulation 14A with respect to the Annual Meeting of
Stockholders to be held April 25, 1995 with the Securities and Exchange
Commission and certain information included therein is incorporated herein by
reference.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------

The information regarding directors of the Company is incorporated by
reference to the information under the caption "Proposal No. 1- Election of
Directors" in the Proxy Statement. The information concerning executive
officers of the Company is incorporated by reference to the information under
the caption "Proposal No. 1- Election of Directors" and under the caption "Other
Information- Executive Officers" in the Proxy Statement. The information
regarding compliance with Section 16(a) of the Securities Exchange Act of 1934
is incorporated by reference to the information under the caption "Other
Information- Compliance with Section 16(a) of the Securities Exchange Act of
1934" in the Proxy Statement.

ITEM 11. EXECUTIVE COMPENSATION
----------------------

The information required by this Item is incorporated by reference to the
information under the caption "Executive Officer Compensation" in the Proxy
Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
---------------------------------------------------
MANAGEMENT
----------

The information required by this Item is incorporated by reference to the
information under the caption "Other Information- Share Ownership by Principal
Stockholders and Management" in the Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------

The information required by this Item is incorporated by reference to the
information under the captions "Certain Transactions" and "Executive
Compensation- Compensation Committee Interlocks and Insider Participation" in
the Proxy Statement.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
-------------------------------------------------------
FORM 8-K
--------

(a) The financial statements listed in the following index to consolidated
financial statements are filed as part of this Annual Report on Form
10-K.

Page in
1. Financial Statements Annual Report
-------------

Consolidated Balance Sheets at December 31, 1994
and December 31, 1993 22

Consolidated Statements of Operations for the
three years ended December 31, 1994 23

Consolidated Statements of Cash Flows for the
three years ended December 31, 1994 24

Consolidated Statement of Stockholders' Equity
for the three years ended December 31, 1994 25

Notes to Consolidated Financial Statements 26

Report of Independent Accountants 39

2. Financial Statement Schedule

Schedule Description Page
-------- ----------- ----
VIII Valuation and Qualifying Accounts S-1
Report of Independent Accountants on
Financial Statement Schedule S-2

Schedules not listed above have been omitted because they are
inapplicable.

3. Exhibits

Refer to (c) below.

(b) Reports on Form 8-K

No reports on Form 8-K were filed on behalf of Registrant during the
quarter ended December 31, 1994.

2.1(5) Agreement and Plan of Merger between Conner
Peripherals, Inc., a Delaware corporation, and
Conner Peripherals, Inc., a California corporation,
dated July 13, 1992.

2.2(6) Agreement and Plan of Merger between Archive
Corporation, Conner Acquisition Corp. and Conner
Peripherals, Inc. dated November 18, 1992, as
amended.

3.1(5) Certificate of Incorporation of Registrant, as
amended to date.

3.2 Bylaws of Registrant, as amended to date.

3.3(10) Certificate of Designation of Rights Preferences and
Privileges of Series A Participating Preferred Stock
of Registrant.

4.1(2) Form of Indenture relating to Registrant's
6-3/4% Convertible Subordinated Debentures due 2001.

4.2(3) Form of Indenture relating to Registrant's
6-1/2% Convertible Subordinated Debentures due 2002.

4.3(10) Preferred Shares Rights Agreement dated November 29,
1994 between Registrant and The First National Bank
of Boston, Rights Agent.

10.1* Summary of Registrant's Profit Sharing Plan.

10.2(8)* Registrant's 1986 Incentive Stock Plan, together
with forms of agreements thereunder, as amended.

10.3* Registrant's Employee Stock Purchase Plan, as
amended.

10.4(4)* Registrant's 1992 Restricted Stock Plan.

10.5(7)* Stock Option and Restricted Stock Purchase Plan -
1981 and form of option agreement with respect
thereto.

10.6(7)* Incentive Stock Option Plan - 1981 and form of
option agreement with respect thereto.

10.7* Registrant's 1995 Director Stock Plan.

10.8(5)* Form of Officer and Director Amended and Restated
Indemnification Agreement.

10.9* Summaries of Registrant's Executive Incentive Plans.

10.10* Form of Change of Control Agreement entered into by
Registrant and Mr. Finis F. Conner.

10.11* Form of Change of Control Agreement entered into by
Registrant and Mr. David T. Mitchell and Mr. P.
Jackson Bell.

10.12* Form of Change of Control and Severence Agreement
entered into by Registrant and Mr. Donald Massaro,
Mr. Kenneth Potashner and Dr. Michael Workman.

10.13* Employment Contract/Termination Agreement between
Registrant and David T. Mitchell and form of
Employment Contract/Termination Agreement between
Registrant and P. Jackson Bell.

10.14(1) Lease Agreement dated August 19, 1988 between
Registrant and Corporate Plaza, Phase I, a
California general partnership, for certain land and
improvements commonly known as Corporate Plaza,
located in San Jose, California.

10.15 Amendments One, Two and Three to Lease Agreement
dated August 19, 1988 between Registrant and
Corporate Plaza, Phase I referenced above.

10.16(1) Lease Agreement dated June 16, 1988 between Conner
Peripherals, Singapore, Ltd. and Newton Investment
Ltd. for the sixth story of 151 Lorong Chuan,
Singapore.

10.17(1) Lease Agreement dated December 8, 1988 between
Conner Peripherals Singapore, Ltd. for the fifth
story of 151 Lorong Chuan, Singapore.

10.18(3) Amendment to Lease Agreements dated June 16, 1988
and December 8, 1988 between Conner Peripherals,
Singapore, Ltd. and Newton Investment Ltd. for the
sixth and fifth stories, respectively, of 151 Lorong
Chuan, Singapore, dated October 23, 1991. See
Exhibits 10.16 and 10.17 listed above.

10.19(9) Sixth Amendment dated December 22, 1993 ("Sixth
Amendment") to Note Purchase Agreement among
Registrant and Principal Mutual Life Insurance
Company, Northwestern National Life Insurance
Company, Northern Life Insurance Company, The North
Atlantic Life Insurance Company of America and
Ministers Life - a Mutual Life Insurance Company
dated June 1, 1989 ("Note Purchase Agreement").
Exhibit A to the Sixth Amendment is a copy of the
Amended and Restated Note Purchase Agreement which
includes all amendments and agreements entered into
to date with respect to the Note Purchase Agreement.

10.20(9) Fifth Amendment dated December 22, 1993 ("Fifth
Amendment") to the Note Agreement dated as of March
29, 1991 ("Note Agreement") among Registrant and the
Purchasers listed in such agreement relating to the
Registrant's Series A and Series B Senior Notes.
Exhibit A to the Fifth Amendment is a copy of the
Amended and Restated Note Agreement which includes
all amendments and agreements entered into to date
with respect to the Note Agreement.

10.21 Sixth Amendment dated October 31, 1994 to the Note
Agreement dated as of March 29, 1991 among
Registrant and the Purchasers listed in such
agreement relating to the Registrant's Series A and
Series B Senior Notes.

10.22(5) Lease Agreement to supersede the Lease Agreement
that is dated August 1, 1989, on August 1, 1992 for
Building 1 at 2400 Trade Centre Drive, Longmont, CO.

10.23(5) Stock Purchase Agreement between Compaq Computer
Corporation and Registrant dated July 28, 1992.

10.24(8) Lease Agreement dated March 21, 1992 between Newton
Investment Ltd. and Conner Peripherals Pte. Ltd. for
the third story of 151 Lorong Chuan, Singapore.

10.25(9) Sublease Agreement between the Registrant and
General Signal Corporation for the property located
at 195 South Milpitas Boulevard, Milpitas,
California, dated February 20, 1993.

10.26(9) Credit Agreement dated December 23, 1993 among
Registrant and Bank of America National Trust and
Savings Association, as Agent, and the other
financial institutions which are parties thereto.

10.27 First Amendment dated October 19, 1994 to Credit
Agreement dated December 23, 1993 among Registrant
Bank of America National Trust and Savings
Association, as Agent, and the other financial
institutions which are parties thereto.

10.28 Second Amendment dated November 16, 1994 to Credit
Agreement dated December 23, 1993 among Registrant
Bank of America National Trust and Savings
Association, as Agent, and the other financial
institutions which are parties thereto.

11.1 Statement regarding computation of Registrant's
earnings per share.

13.1 1994 Annual Report to Stockholders.

21.1 Subsidiaries of Registrant.

23.1 Consent of Independent Accountants.

24.1 Power of Attorney (see pages 25 and 26).

27.0 Article 5 of Regulation S-X - Financial Data
Schedule

______________________

(1) Incorporated by reference to exhibit filed with Registration Statement No.
33-26831.

(2) Incorporated by reference to exhibit filed with Registrant's Report on Form
10-K for the fiscal year ended December 31, 1990.

(3) Incorporated by reference to exhibit filed with Registrant's Report on Form
10-K for the fiscal year ended December 31, 1991.

(4) Incorporated by reference to exhibit filed with Registrant's Registration
Statement No. 33-46886.

(5) Incorporated by reference to exhibit filed with Registrant's Form 8-B filed
with the Securities and Exchange Commission on September 9, 1992.

(6) Incorporated by reference to exhibit filed with the Tender Offer Statement
on Schedule 14D-1, as amended, of Conner Acquisition Corporation and Conner
Peripherals, Inc., filed with the Securities and Exchange Commission on
November 24, 1992.

(7) Incorporated by reference to exhibit filed with Registrant's Registration
Statement No. 33-56878.

(8) Incorporated by reference to exhibit filed with Registrant's Report on Form
10-K for the fiscal year ended December 31, 1992.

(9) Incorporated by reference to exhibit filed with Registrant's Report on Form
10-K for the fiscal year ended December 31, 1993.

(10) Incorporated by reference to exhibit filed with Registrant's Registration
Statement on Form 8-A filed with the Securities and Exchange Commission on
November 30, 1994.
___________________________

* Denotes a management contract or compensatory plan or arrangement.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

CONNER PERIPHERALS, INC.

By:/s/ P. Jackson Bell
--------------------------------------
P. Jackson Bell, Executive Vice President
and Chief Financial Officer

Dated: March 24, 1995

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints P. Jackson Bell and Finis F. Conner and each of
them, his or her attorneys-in-fact, each with full power of substitution, for
him or her in any and all capacities, to sign on behalf of the undersigned any
amendments to this Report on Form 10-K and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, and each of the undersigned does hereby ratify and confirm
all that each of said attorneys-in-fact, or his substitute or substitutes, may
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

/s/ Finis F. Conner Chairman of the Board March 24, 1995
------------------------- of Directors and Chief
(Finis F. Conner) Executive Officer
Principal Executive
Officer

/s/ David T. Mitchell President, Chief March 24, 1995
------------------------- Operating Officer and Director
(David T. Mitchell)

/s/ P. Jackson Bell Executive Vice President March 24, 1995
------------------------- and Chief Financial Officer
(P. Jackson Bell)
(Principal Financial and
Accounting Officer)

/s/ William S. Anderson Director March 24, 1995
-------------------------
(William S. Anderson)

/s/ Mark Rossi Director March 24, 1995
-------------------------
(Mark Rossi)

/s/ Linda Wertheimer Hart Director March 24, 1995
-------------------------
(Linda Wertheimer Hart)

/s/ L. Paul Bremer Director March 24, 1995
-------------------------
(L. Paul Bremer)

/s/ W. Howard Lester Director March 24, 1995
-------------------------
(W. Howard Lester)

/s/ R. Elton White Director March 24, 1995
------------------
(R. Elton White)

CONNER PERIPHERALS, INC.

1994 ANNUAL REPORT ON FORM 10-K

Index to Financial Statement Schedule

Schedule Description Page
----------- ----------- -----

VIII Valuation and Qualifying Accounts S-1
Report of Independent Accountants on
Financial Statement Schedule S-2

CONNER PERIPHERALS, INC.

SCHEDULE VIII- VALUATION AND QUALIFYING ACCOUNTS

Balance at Charged Charged to Balance
Beginning of to Costs Other at End
Description Period and Expenses Accounts /1/ Deductions /2/ of Period
-------------- ------ ------------ ------------ -------------- ---------

1992:
Allowance for accounts
receivable $10,054,000 $19,339,000 $4,299,000 $ -- $33,692,000

1993:
Allowance for accounts
receivable $33,692,000 $ 9,749,000 $ -- $ (4,011,000) $39,430,000

1994:
Allowance for accounts $39,430,000 $ 2,273,000 $ -- $ (10,211,000) $31,492,000
receivable

____________________________________
/1/ Charged to Other Accounts in 1992 includes reserves relating to Archive
Corporation.

/2/ Accounts written off, net of recoveries.

S - 1

REPORT OF INDEPENDENT ACCOUNTANTS ON
-------------------------------------
FINANCIAL STATEMENT SCHEDULE
----------------------------

To the Board of Directors
of Conner Peripherals, Inc.

Our audits of the consolidated financial statements referred to in our report
dated January 11, 1995 appearing on page 39 of the 1994 Annual Report to
Stockholders of Conner Peripherals, Inc. (which report and consolidated
financial statements are incorporated by reference in this Annual Report on Form
10-K) also included an audit of the Financial Statement Schedule listed in item
14(a) of this Form 10-K. In our opinion, this Financial Statement Schedule
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.

/s/ PRICE WATERHOUSE LLP

Price Waterhouse LLP
San Jose, CA
January 11, 1995

S - 2

CONNER PERIPHERALS, INC.
1994 Annual Report on Form 10-K

Index to Exhibits

Number Description
------ -----------

3.2 Bylaws of Registrant, as amended to date.

10.1 Summary of Registrant's Profit Sharing Plan.

10.3 Registrant's Employee Stock Purchase Plan.

10.7 Registrant's 1995 Director Stock Plan.

10.9 Summaries of Registrant's Executive Incentive Plans.

10.10 Form of Change of Control Agreement entered into by Registrant
and Mr. Finis F. Conner.

10.11 Form of Change of Control Agreement entered into by Registrant
and Mr. David T. Mitchell and Mr. P. Jackson Bell.

10.12 Form of Change of Control and Severence Agreement entered
into by Registrant and Mr. Donald Massaro, Mr. Kenneth Potashner
and Dr. Michael Workman.

10.13 Employment Contract/Termination Agreement between Registrant and
David T. Mitchell and form of Employment Contract/Termination
Agreement between Registrant and P. Jackson Bell.

10.15 Amendments One, Two and Three to Lease Agreement dated
August 19, 1988 between Registrant and Corporate Plaza.

10.21 Sixth Amendment dated October 31, 1994 to the Note Agreement
dated as of March 29, 1991 among Registrant and the Purchasers listed
in such agreement relating to the Registrant's Series A and Series B
Senior Notes.

10.27 First Amendment dated October 19, 1994 to Credit Agreement dated
December 23, 1993 among Registrant Bank of America National Trust and
Savings Association, as Agent, and the other financial institutions
which are parties thereto.

10.28 Second Amendment dated November 16, 1994 to Credit Agreement dated
December 23, 1993 among Registrant Bank of America National Trust
and Savings Association, as Agent, and the other financial
institutions which are parties thereto.

11.1 Statement regarding computation of Registrant's earnings per share.

13.1 1994 Annual Report to Stockholders.

21.1 Subsidiaries of Registrant.

23.1 Consent of Independent Accountants.

24.1 Power of Attorney (see pages 25 and 26).

27.0 Article 5 of Regulation S-X - Financial Data Schedule