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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 27, 1997
OR
[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NO. 0-10630
SEAGATE TECHNOLOGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 94-2612933
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER
920 DISC DRIVE 95066
SCOTTS VALLEY, CALIFORNIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
Registrant's telephone number, including area code: (408) 438-6550
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Securities registered pursuant to Section 12 (b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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COMMON STOCK, PAR VALUE $.01 PER SHARE 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 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 market value of the voting stock held by non-affiliates of the
registrant, based upon the closing price of Common Stock on June 27, 1997 as
reported by the New York Stock Exchange, was approximately $6.417 billion.
Shares of Common Stock held by each 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 be deemed to be affiliates. This determination of affiliate
status is not necessarily a conclusive determination for other purposes.
The number of outstanding shares of the registrant's Common Stock on June
27, 1997 was 244,548,374
DOCUMENTS INCORPORATED BY REFERENCE
Parts of the following documents are incorporated by reference to Parts I,
II, III, IV of this form 10-K Report: (1) Proxy Statement for registrant's
1997 Annual Meeting of Stockholders (the "Proxy Statement") and (2)
registrant's Annual Report to Stockholders for the fiscal year ended June 27,
1997 (the "Annual Report to Stockholders").
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PART I
The information contained in this Report includes forward-looking
statements, based on current expectations, that involve risks and
uncertainties which could cause actual results to differ materially from those
expressed in the forward-looking statements. Various important factors known
to Seagate Technology, Inc. that could cause such material differences are
identified below in Part I, Item 1 of this report and in the "Management's
Discussion and Analysis of Results of Operations and Financial Condition"
included in the Company's 1997 Annual Report to Stockholders, which is
incorporated by reference into Part II, Item 7 of this Report.
ITEM 1. BUSINESS
MERGER WITH CONNER
Effective February 2, 1996 Seagate Technology, Inc. (herein "Seagate
Technology", "Seagate" or the "Company") merged with Conner Peripherals, Inc.
("Conner"). Conner was involved in the design, manufacture and marketing of
information storage products including disc drives, tape drives and storage
management software. To effect the combination Seagate issued 48,956,044
shares of its common stock in exchange for all of the outstanding common stock
of Conner and issued options to purchase 4,939,160 shares of Seagate common
stock in exchange for all the outstanding options to purchase Conner common
stock. In connection with the merger, on February 16, 1996 the Company
acquired the minority interest in Arcada Holdings, Inc. ("Arcada"), formerly a
majority-owned subsidiary of Conner. Seagate acquired the minority interest in
Arcada by exchanging 2,553,340 shares of Seagate common stock and options to
purchase 1,813,936 shares of Seagate common stock for all the outstanding
common stock and options to purchase common stock of Arcada. All share amounts
have been restated to reflect a two-for-one stock split, effected in the form
of a stock dividend, in November 1996. See "Software Products."
GENERAL
Seagate operates in a single industry segment by designing, manufacturing
and marketing products for storage, retrieval and management of data on
computer and data communications systems. These products include disc drives
and disc drive components, tape drives and software.
Seagate designs, manufactures and markets a broad line of rigid magnetic
disc drives for use in computer systems ranging from notebook computers and
desktop personal computers to workstations and supercomputers as well as in
multimedia applications such as digital video and video-on-demand. The
Company's products currently include rigid disc drive models with form factors
from 2.5 to 5.25 inches and capacities from 1 gigabyte ("GB") to 23 GB. The
Company sells its products to original equipment manufacturers ("OEMs") for
inclusion in their computer systems or subsystems, and to distributors,
resellers, dealers and retailers. The Company has pursued a strategy of
vertical integration and accordingly designs and manufactures rigid disc drive
components including recording heads, discs, disc substrates, motors and
custom integrated circuits. It also assembles certain of the key subassemblies
for use in its products including printed circuit board and head stack
assemblies. The Company's products are currently manufactured primarily in the
Far East with limited production in the United States and the Republic of
Ireland.
In addition to its core product line of rigid disc drives and related
components, the Company has broadened its strategy to more fully address the
markets for storage, retrieval and management of data. In line with this
broadened strategy, the Company has made the following investments:
In January 1993, the Company began investing in SanDisk Corporation
("SanDisk"), a flash memory company.
In December 1994, the Company acquired Applied Magnetics Corporation's tape
head subsidiary, a manufacturer of magnetic recording heads for tape drives.
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In February 1996, The Company added tape drives to its product line as a
result of its merger with Conner.
In June 1997, the Company invested in Gadzoox Networks, Inc., a manufacturer
of Fibre Channel based storage network connectivity products.
In August 1997, the Company acquired Quinta Corporation, a developer of
optically assisted Winchester disc drives.
The Company has also invested in, and currently intends to continue
investigating opportunities to invest in software activities. See "Software
Products."
The Company anticipates that its broadened strategy may include additional
acquisitions of, investments in and strategic alliances with complementary
businesses, products and technologies to enable lower cost per megabyte,
faster time to market, increased capacity, and better performance
characteristics for its products. The Company's strategy includes acquiring
companies that possess technology and development personnel which provide
long-term growth potential to the Company's business. However, implementation
of this broadened strategy entails risks of entering markets in which the
Company may have limited or no experience. In addition, such broadened
strategy could result in the diversion of management's attention from the core
rigid disc drive business which could adversely impact the core business.
Acquisitions involve numerous risks, including difficulties in the
assimilation of the operations and products of the acquired businesses,
retention of management and the potential loss of key employees or customers
of the acquired businesses.
SOFTWARE PRODUCTS
The Company is seeking to leverage its name recognition, existing presence
in global markets, distribution channels and OEM relationships by offering
software products directed towards the client/server and network computing
environments.
The Company anticipates that users of computer systems will increasingly
rely upon client/server network computing environments and believes that as
this reliance increases, users will demand software that more efficiently and
securely stores, manages and accesses data and transforms it into usable
information. As such, the Company has broadened its core competencies to
include software products and technologies to meet these requirements.
The Company has acquired a number of software companies since May 1994
including Crystal Computer Services, Inc., Palindrome Corporation, Network
Computing, Inc., NetLabs, Inc., Frye Computer Systems, Inc., Creative
Interaction Technologies, Inc., OnDemand Software, Inc., Calypso Software
Systems, Inc. and Holistic Systems, Ltd. The Company's software products and
technologies were further expanded as a result of the merger with Conner and
its Arcada Software subsidiary. In addition, the Company has taken an equity
position in Dragon Systems, Inc., a developer and producer of voice
recognition software.
To further facilitate the software expansion strategy, the Company's
software acquisitions were consolidated under Seagate Software, Inc., a newly
established subsidiary of Seagate Technology, in April 1996. Headquartered in
Scotts Valley, California, Seagate Software is comprised of two operating
groups, each focused on strategically critical areas of LAN, intranet and
enterprise client/server environments.
Seagate Software, Network and Storage Management Group (NSMG) was formed in
December 1996 by combining the resources of Seagate Software, Network and
Systems Management Group and Seagate Software, Storage Management Group.
Seagate Software, Network and Systems Management Group was formed in July
1996, and was the combination of NetLabs, Inc., Network Computing, Inc., Frye
Computer Services, Inc., Creative Interaction Technologies, Inc., OnDemand
Software, Inc., and Calypso Software Systems, Inc. Seagate Software, Storage
Management Group was formed in February 1996 by combining Palindrome
Corporation with Arcada Software. NSMG provides comprehensive software
solutions for LAN, intranet and enterprise-wide
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client/server network, systems and storage management in Novell NetWare,
Microsoft Windows NT, Microsoft Windows, IBM OS/2 and OS400, UNIX and DOS
environments. Included in these product offerings are solutions for systems
management spanning several related disciplines, including job and process
management, enterprise automation, storage management, output management,
problem resolution, asset management, security management, distribution
management, change and configuration management, finance and resource
management, networking and connectivity, capacity planning and performance
management.
Seagate Software, Information Management Group (IMG) was established in June
1996 and includes Crystal Computer Services, Inc., and Holistic Systems, Ltd.
IMG provides enterprise business intelligence systems and provides customers
with information access and analysis offerings that scale from the desktop to
the enterprise including: query and reporting, automated report scheduling and
distribution, information delivery across the World Wide Web, on-line
analytical processing (OLAP), forecasting, statistical analysis, discovery and
data mining.
RIGID DISC DRIVE TECHNOLOGY
Magnetic disc drives are used in computer systems to record, store and
retrieve digital information. Most computer applications require access to a
greater volume of data than can economically be stored in the random access
memory of the computer's central processing unit (commonly known as
"semiconductor" memory). This information can be stored on a variety of
storage devices, including rigid disc drives, both fixed and removable,
flexible disc drives, magnetic tape drives, optical disc drives and
semiconductor memory. Rigid disc drives provide access to large volumes of
information faster than optical disc drives, flexible disc drives or magnetic
tape drives and at substantially lower cost than high-speed semiconductor
memory.
Although products vary, all rigid disc drives incorporate the same basic
technology. One or more rigid discs are attached to a spindle assembly that
rotates the discs at a high constant speed around a hub. The discs (also known
as media or disc media) are the components on which data is stored and from
which it is retrieved. Each disc typically consists of a substrate of finely
machined aluminum or glass with a magnetic layer of a "thin-film" metallic
material.
Rigid disc drive performance is commonly measured by four key
characteristics: average access time (commonly expressed in milliseconds),
which is the time needed to position the heads over a selected track on the
disc surface; media data transfer rate (commonly expressed in megabits per
second), which is the rate at which data is transferred to and from the disc;
storage capacity (commonly expressed in megabytes or gigabytes), which is the
amount of data that can be stored on the disc; and spindle rotation speed
(commonly expressed in revolutions per minute), which has an effect on speed
of access to data.
Read/write heads, mounted on an arm assembly similar in concept to that of a
record player, fly extremely close to each disc surface, and record data on
and retrieve it from concentric tracks in the magnetic layers of the rotating
discs.
Upon instructions from the drive's electronic circuitry, a head positioning
mechanism (an "actuator") guides the heads to the selected track of a disc
where the data will be recorded or retrieved. The disc drive communicates with
the host computer through an internal controller. Disc drive manufacturers may
use one or more of several industry standard interfaces, such as SCSI (Small
Computer System Interface), ATA (AT Attachment), and FC-AL (Fibre Channel--
Arbitrated Loop).
Areal density is a measure of storage capacity per square inch on the
recording surface of a disc. It represents the number of bits of information
on a linear inch of the recording track (called bits per inch or bpi)
multiplied by the number of recording tracks on a radial inch of the disc.
With the proliferation of multimedia applications, the demand for increased
drive capacities has and continues to increase at an accelerating rate since
sound and moving pictures require many times the storage capacity of simple
text. The Company has and continues to aggressively pursue a range of
technologies to increase areal densities across the entire range of its
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products. As a result, Seagate drives today use advanced signal processing
techniques such as PRML (Partial Response Maximum Likelihood) read/write
channels, advanced servo systems, higher precision mechanics, and advanced
head technologies. To attain greater areal densities, the Company currently
incorporates magneto-resistive ("MR") heads into a substantial portion of its
disc drives. MR heads have discrete read and write structures which take
advantage of special magnetic properties in certain metals to achieve
significantly higher storage capacities. There can be no assurance that the
Company's MR head development effort will continue to be successful. See
"Product Development."
MARKET OVERVIEW
Rigid disc drives are used in a broad range of computer systems as well as
for multimedia applications such as digital video and video-on-demand. The
Company defines the major computer system markets to include mobile computers,
desktop personal computers, workstation systems and server/multi-user systems.
Users of computer systems are increasingly demanding additional data storage
capacity with higher performance in order to (i) use more sophisticated
applications software, including database management, CAD/CAM/CAE, desktop
publishing, video editing and enhanced graphics applications, and (ii) operate
in multi-user, multitasking and multimedia environments. Additionally, there
is a sizable market for rigid disc drives in the existing installed base of
computer systems some of which require additional storage capacity. These
requirements for storage upgrades can be served through authorized
distribution channels.
Personal Computers--Desktop and Mobile
Desktop and portable personal computers are used in a number of
environments, ranging from homes to businesses and multi-user networks.
Software applications are primarily word processing, spreadsheet, desktop
publishing, database management, multimedia and other related applications.
The Company believes the minimum storage requirements in the past year for
entry-level personal computers were generally 810 megabytes ("MB") to 1.7 GB
of formatted capacity with seek times ranging from 12.5 milliseconds ("msec")
down to 10.5 msec. The entry level capacities continue to increase. In
addition, users of personal computers have become increasingly price
sensitive. The Company's objective for the desktop and mobile personal
computer market is to design drives for high-volume, low-cost manufacture.
Smaller footprint systems, such as mobile, laptop, notebook and
ultraportable computers require rigid disc drives in form factors of less than
3.5 inches that emphasize durability and low power consumption in addition to
capacity and performance characteristics found in their desktop functional
equivalents. Personal digital assistants, hand-held and pen-based computers
may use 1.8 inch or 2.5 inch hard disc drives or flash memory such as a PCMCIA
card for additional memory. These mobile applications also emphasize low power
consumption as well as very high degrees of durability.
Workstation Systems
Workstation systems include high performance microcomputers, technical
workstations, servers and minicomputers. Applications are characterized by
compute-intensive and data-intensive solutions, such as CAD/CAM/CAE, network
management, larger database management systems, scientific applications and
small to medium-sized business applications such as materials requirement
planning, payroll, general ledger systems and related management reports.
Workstation systems typically require rigid disc drive storage capacities of 2
GB and greater per drive, average seek times of 8 msec and rotation speeds of
7,200 rpm to 10,000 rpm. Due to the leading edge characteristics required by
end-users of workstation systems, manufacturers of such systems emphasize
performance as well as price as the key selling points.
Server/Multi-user Systems
Large systems include mainframes and supercomputers. Typical applications
are medium and large business management systems, transaction processing,
parallel processing and other applications requiring intensive data
manipulation. Also included in high-end applications are systems designed for
video-on-demand and near-line storage.
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Users of these systems generally require capacities of 4 GB and greater per
drive with average seek times of 8 msec and rotation speeds of 5,400 rpm to
10,000 rpm. End-users of large systems are less concerned than users of
smaller systems with the size, weight, power consumption and absolute cost of
the drive. As with workstation systems, disc drive products are typically
designed into these systems by the OEM with emphasis on performance,
reliability and capacity. In this market segment, data storage subsystems are
used containing large numbers of disc drives. Because data integrity is
paramount, high device reliability and maintainability are key features.
Mainframe, supercomputer and digital video systems also benefit from very high
data transfer rates (up to ten times that in small computer systems).
Users of these systems may also utilize redundant arrays of inexpensive disc
drives ("RAID"). A RAID combines multiple small drives into an array of disc
drives which yield performance equal to or exceeding a single high performance
drive. The array of drives appears to the computer as a single storage drive.
PRODUCTS
RIGID DISC DRIVES
The Company's products include over 50 rigid disc drive models with form
factors from 2.5 to 5.25 inches and capacities from 1 GB to 23 GB. The Company
provides more than one product at some capacity points and differentiates
products on a price/performance and form factor basis. The Company believes
that its broad range of rigid disc drives is particularly appealing to
customers, such as large OEMs, which require a wide variety of drive
capacities, performance levels and interfaces. Producing for several market
segments also broadens the Company's customer base and reduces the Company's
reliance on any one segment of the computer market. The Company continues to
devote its resources to developing products with industry leading performance
characteristics and to being among the first to introduce such products to
market. The Company continuously seeks to enhance its market presence in
emerging segments of the rigid disc drive market by drawing on its established
capabilities in high-volume, low-cost production. The Company believes it
offers the broadest range of disc storage products available. See "Product
Development".
Mobile Computing
In fiscal 1994, the Company introduced its Marathon family of 2.5 inch disc
drives for the mobile computing market with its 420 MB Marathon 420sl in a
12.7 millimeter ("mm") high form factor. In February 1995 the Company
announced the Marathon 810. This 810 MB product resulted from application of
the Marathon 420sl technology to the 19 mm form factor. Volume production of
the Marathon 810 commenced during the first quarter of fiscal 1996.
In February 1996, the Company announced the Marathon 2250 and 1685 with
reduced height, from 19 mm to 17 mm in formatted capacities of 2.2 GB and 1.6
GB. Also introduced were the Marathon 1350sl and 840sl in the 12.7 mm high
form factor in formatted capacities of 1.3 GB and 840 MB, respectively. These
products began volume production in the second quarter of fiscal 1997.
In June 1996, the Company announced the Marathon 810sl. This product
features 810 MB in the 12.7 mm form factor and represents an enhancement of
the Marathon 420sl product through the use of MR heads and other leading
technologies. Volume production of the Marathon 810sl commenced during the
first quarter of fiscal 1997.
In April 1997, the Company announced the Marathon 2130sl and 1420sl in the
12.7 mm form factor with formatted capacities of 2.1 GB and 1.4 GB,
respectively. These two models are expected to begin volume production during
the first quarter of fiscal 1998.
All of the Company's mobile computing products currently utilize MR heads.
Future plans for disc drives for the mobile computing market segment include
continued higher capacities, lower cost designs and lower profile form
factors.
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Desktop Computing
In fiscal 1997, the Company continued to introduce new disc drive products
for the desktop computing market. In the first quarter of fiscal 1997, the
Company began volume production of the Medalist 1276 (model ST31276A). The
first product designed and launched after the Company's merger with Conner
Peripherals, the Medalist 1276 brought a 1.2 GB drive into the value PC
segment in a Fast ATA-2 interface. The drive utilizes internally sourced
heads, media, and other key components, making this a highly vertically
integrated product design.
During the second quarter of fiscal 1997, volume production commenced on the
Medalist 1720 (ST31720A). This 1.7 GB hard drive is leveraged from the
Medalist 1276 and is cost optimized for the entry level PC market. Also during
the second quarter of fiscal 1997, the Company began shipping a new value-
class 2.1 GB hard drive, the Medalist 2132 (ST32132A). The Medalist 2132
features SeaShield, a protective cover for the drive's printed circuit board.
This feature helps improve reliability and makes installation easier.
SeaShield has been well received in the distributor and reseller channels
because it makes the Medalist 2132 easy to integrate into a computer system.
The Company intends to continue the SeaShield concept across future desktop
drive platforms. Finally during the second quarter of fiscal 1997, the Company
also began volume production of the Medalist Pro 2520 (ST52520A), a
performance class 2.5 GB drive in a slim-line 19 mm high form factor. The
Medalist Pro 2520 is one of the Company's fastest ATA drives to date and has
won at least three industry press awards.
In the third quarter of fiscal 1997, the Company began shipping the Medalist
2160 SCSI (ST52160NA), a high performance, low cost 2 GB SCSI disc drive.
Leveraged from a high volume ATA design, it features a 5,400 rpm rotation
speed, 11 msec average seek time, 500,000 hour MTBF (mean time between
failures), industry leading low acoustics, and low power consumption. The
Medalist 2160 is targeted to systems that require SCSI yet do not need the
larger capacities offered in the Company's high- end SCSI line. Also in the
third quarter of fiscal 1997, the Company began volume shipments of a value
class 3.2 GB hard drive, the Medalist 3240 (ST33240A). The Medalist 3240
features a 4,500 rpm spindle speed, a 12 msec seek time and multimedia-ready
performance, meaning the drive can run full-screen, full-motion video.
During the fourth quarter of fiscal 1997, the Company began production of
the Medalist 4340 (ST34340A), a value-class 4.3 GB hard drive leveraged from
the Medalist 3240. The Medalist 4340 offers the same features as the Medalist
3240. Depopulated versions of the Medalist 4340 also began production,
including the Medalist 2120 (ST32120A), an entry level 2.1 GB hard drive, and
the Medalist 1010 (ST31010A), an entry level, single platter 1 GB hard drive.
The Medalist 1010 is targeted to entry level systems and emerging markets such
as the ultra-low cost personal computer market. Volume shipments of the
Medalist 4340, 2120 and 1010 are expected to commence in the first quarter of
fiscal 1998.
Workstation Systems
In 1992, the Company introduced the Barracuda family of 3.5 inch drives. At
7,200 rpm the Barracuda had the highest rotation speed of any drives produced
at that time. In fiscal year 1997, the Company introduced two new products in
the Barracuda family, the Barracuda 4LP and the Barracuda 4XL. The Barracuda 4
LP is a 4 GB formatted capacity, high-performance drive in the low-profile
form factor. Volume production of the Barracuda 4LP began in the second
quarter of fiscal 1997. The Barracuda 4XL is a 4.5 GB formatted capacity drive
in the low-profile form factor. The Barracuda 4XL, which began volume
production during the fourth quarter of fiscal 1997, is designed to provide a
balance of price and performance for the workstation market as it matures. The
Barracuda family of drives has replaced the 5,400 rpm HAWK family in this
market where drive performance has become a major consideration in the buying
decision.
Server/Multi-user Systems
High-end applications range from digital video, video-on-demand, high-end
file servers, mainframes and minicomputers to supercomputers. The Barracuda 9,
a 9.1 GB formatted capacity drive, is the third generation of ultrahigh
performance disc drives in the Barracuda family, described above. The
Barracuda 9 began volume production in the second quarter of fiscal 1997. The
Barracuda 4LP and 4XL, discussed under "Workstation Systems" above, are also
used in server/multi-user systems.
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In August 1996, the Company announced the 3.5 inch Cheetah family, with
rotation speeds of 10,000 rpm, formatted capacities of 4.5 GB and 9.1 GB, seek
times of 7.5 msec, sustained data rates in excess of 15 MB per second and MTBF
of 1,000,000 hours. This drive is focused at the very high performance segment
of the market. Volume production of the Cheetah 4LP and the Cheetah 9 began in
the third and fourth quarters of fiscal 1997, respectively.
Addressing the high-end 5.25 inch market the Company has continued to
leverage its Elite product line. In the third quarter of fiscal year 1997,
production commenced on the Elite 23, a high performance, 5.25 inch disc drive
with 23 GB of formatted capacity, a rotation speed of 5,400 rpm and MTFB of
500,000 hours.
The Barracuda, Cheetah and Elite families all utilize industry leading
technologies such as MR heads, PRML channels, embedded servo and laser
textured media. The SCSI interface is common for all drives in these families,
facilitating customer migration from one product to the next as capacity and
performance requirements change.
TAPE DRIVES
Tape drives are peripheral hardware devices which enable low cost storage
and protection of large volumes of data through the use of small tape
cartridges. Computer systems of all types increasingly need dedicated backup
storage peripherals that combine high capacity, high performance, low cost and
reliability. Seagate's full line of minicartridge and Digital Audio Tape
("DAT") products meets the needs of the desktop and server markets to
complement Seagate's line of disc drive products. In June 1997, the Company
entered the mid-range server backup market with the first shipment of the
Sidewinder 50. This 50 GB drive offers high reliability and performance and is
based on Sony Electronics, Inc.'s advanced intelligent tape (AIT) technology
standard. A substantial portion of the Company's tape drive products employ
head technologies developed by the Company.
Minicartridge Tape Drives: Seagate's family of low profile minicartridge
tape drives is designed to provide from 3.2 GB to 8 GB of data storage on a
single low-cost removable cartridge. The entry level products incorporate a
floppy or parallel port interface and are designed for desktop PC
applications. The Company's 8 GB minicartridge products are available with
either SCSI or IDE (Integrated Drive Electronics) 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 are bundled with
software and other accessories and marketed under the "TapeStor" brand. All
minicartridge products are currently manufactured for Seagate by Matsushita-
Kotobuki Electronics Industries, Ltd. ("MKE") in Singapore. However, the
Company began manufacturing the minicartridge products in Singapore during the
first quarter of fiscal 1998.
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, reliability, state-of-the-art backup performance
and low cost per megabyte in a small form factor. The Seagate family of DAT
products provides a balance of these features, storing up to 24 GB of data on
a single 4 mm cartridge. All Seagate DAT products use the industry accepted
high speed SCSI-2 interface which is the dominant systems interface for
storage peripherals of this class. All DAT products are currently manufactured
by MKE in Japan.
OTHER PRODUCTS
The Company offers warranty and out-of-warranty repair service to users of
its disc and tape drives. The Company also designs and manufactures disc drive
components, primarily thin-film heads, principally for use in its own products
but also for sale to other disc drive manufacturers. In addition, the Company
offers software products directed towards the client/server and network
computing environments. See "Software Products."
MARKETING AND CUSTOMERS
The Company sells its products to OEMs, distributors, resellers, dealers and
retailers. OEM customers incorporate Seagate drives into computer systems for
resale. OEMs either manufacture and assemble computer system components into
computer systems; purchase components to build their systems; or purchase
complete
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computer systems and integrate the drives and other hardware and software.
Distributors typically resell Seagate disc drives to small OEMs, dealers and
other resellers. Certain resellers to which the Company directly sells its
products also resell Seagate drives as part of enhanced packages (e.g., an
add-on kit for a computer or as part of their own computers). Shipments to
OEMs were 71%, 72% and 74% of net sales in fiscal 1997, 1996 and 1995,
respectively. In 1997 sales to Compaq Computer Corporation accounted for
approximately 11% of the Company's consolidated net sales. No other customer
accounted for 10% or more of consolidated net sales in 1997. No customer
accounted for 10% or more of consolidated net sales in 1996 or 1995.
OEMs
OEM customers typically enter into purchase agreements with the Company.
These agreements provide for pricing, volume discounts, order lead times,
product support obligations and other terms and conditions, usually for
periods of 12 to 24 months, although product support obligations generally
extend substantially beyond this period. These master agreements typically do
not commit the customer to buy any minimum quantity of products. Deliveries
are scheduled only after receipt of purchase orders. In addition, with limited
lead time, customers may cancel or defer most purchase orders without
significant penalty. Anticipated orders from many of Seagate's customers have
in the past failed to materialize or OEM delivery schedules have been deferred
as a result of changes in their business needs. Such order fluctuations and
deferrals have had a material adverse effect on the Company's operations in
the past, and there can be no assurance that the Company will not experience
such adverse effects in the future.
Distributors
The Company's distributors, located throughout the world, generally enter
into non-exclusive agreements for the redistribution of the Company's
products. Distributors typically furnish the Company with a non-binding
indication of their near-term requirements. Product deliveries are generally
scheduled based on a weekly confirmation by the distributor of its
requirements for that week. The agreements typically provide the distributors
with price protection with respect to their inventory of Seagate drives at the
time of a reduction by Seagate in its selling price for the drives, and also
provide limited rights to return the product.
Service and Warranty
Seagate warrants its products against defects in design, materials and
workmanship by the Company generally for two to five years depending upon the
capacity category of the drive, with the higher capacity products being
warranted for the longer periods. Warranty periods for drives have been
increasing and may continue to increase. The Company's products are
refurbished or repaired at facilities located in the United States, Singapore
and Malaysia.
Sales Offices
The Company maintains sales offices throughout the United States and in
Australia, England, France, Germany, Hong Kong, Ireland, Italy, Japan,
Singapore, South Korea, Sweden, Taiwan and Thailand. Foreign sales are subject
to certain controls and restrictions, including, in the case of certain
countries, approval by the office of Export Administration of the United
States Department of Commerce and other United States governmental agencies.
BACKLOG
In view of customers' rights to cancel or defer orders with little or no
penalty, the Company believes backlog in the disc drive industry can be
misleading.
The Company's backlog includes only those orders for which a delivery
schedule has been specified by the customer. Substantially all orders shown as
backlog at June 27, 1997 were scheduled for delivery within six
8
months. Because many customers place large orders for delivery throughout the
year, and because of the possibility of customer cancellation of orders or
changes in delivery schedules, the Company's backlog as of any particular date
is not indicative of the Company's potential sales for any succeeding fiscal
period. The Company's order backlog at June 27, 1997 was approximately
$960,000,000 compared with approximately $1,105,000,000 at June 28, 1996.
MANUFACTURING
The Company's business objectives require it to establish manufacturing
capacity in anticipation of market demand. The key elements of the Company's
manufacturing strategy are: high-volume, low-cost assembly and test; vertical
integration in the manufacture of selected components; and establishment and
maintenance of key vendor relationships. The highly competitive disc drive
industry requires that the Company manufacture significant volumes of high-
quality drives at low unit cost. To do this, the Company must rapidly achieve
high manufacturing yields and obtain uninterrupted access to high-quality
components in required volumes at competitive prices.
Manufacturing of the Company's rigid disc drives is a complex process,
requiring a "clean room" environment, the assembly of precision components
within narrow tolerances and extensive testing to ensure reliability. The
first step in the manufacturing of a rigid disc drive is the assembly of the
actuator mechanism, heads, discs, and spindle motor in a housing to form the
head-disc assembly (the "HDA"). The assembly of the HDA involves a combination
of manual and semiautomated processes. After the HDA is assembled, a servo
pattern is magnetically recorded on the disc surfaces. Upon completion,
circuit boards are mated to the HDA and the completed unit is thoroughly
tested prior to packaging and shipment. Final assembly and test operations of
the Company's disc drives take place primarily at facilities located in
Singapore, Thailand, Malaysia, China, Ireland, Minnesota and Oklahoma.
Subassembly and component operations are performed at the Company's facilities
in Singapore, Malaysia, Thailand, Minnesota, California, Northern Ireland,
Indonesia, Mexico, China and Scotland. In addition, independent entities
manufacture or assemble components for the Company in the United States,
Europe and various Far East countries including Hong Kong, Japan, Korea,
China, the Philippines, Singapore, Malaysia, Taiwan and Thailand.
The Company believes its competitors' manufacturing processes for disc drive
and actuator assembly may be more fully automated than its own. The Company
believes that it must continue to develop automated manufacturing processes in
order to remain competitive. In this regard, the Company has inherited a semi-
automated process through its merger with Conner that it believes has enhanced
its productivity and efficiency and it is continuing to selectively evaluate
which steps in the manufacturing process would benefit from automation. There
can be no assurance that the Company's efforts to develop and improve its
automated manufacturing processes will be successful. Any failure of the
Company to continue to develop and improve its automated manufacturing
processes could have a material adverse effect on the Company's business.
The cost, quality and availability of certain components including heads,
media, ASICs (application specific integrated circuits), spindle motors,
actuator motors, printed circuit boards and custom semiconductors are critical
to the successful production of disc drives. The Company's design and vertical
integration have allowed it to internally manufacture substantial percentages
of its critical components other than ASICs and motors. The Company's
objectives of vertical integration are to maintain control over component
technology, quality and availability, and to reduce costs. The Company
believes that its strategy of vertical integration gives it an advantage over
other disc drive manufacturers. However, this strategy entails a high level of
fixed costs and requires a high volume of production to be successful. During
periods of decreased production, these high fixed costs in the past have had
and in the future could have a material adverse effect on the Company's
results of operations.
All three stages of manufacturing for both magneto-resistive and inductive
thin-film heads are carried out at the Company's facilities. These three
stages are wafer production, slider fabrication and head gimbal assembly. For
disc, or media, production the Company purchases aluminum substrate blanks
from third parties mainly in
the U.S. and Japan. These blanks are machined, plated and polished to produce
finished substrates at the
9
Company's plants in California and Mexico. While the majority of its substrate
needs are produced internally, the Company also purchases substrates from
third party suppliers, primarily in the Far East. In an effort to reduce its
dependence on third party suppliers, the Company has established a new
substrate plant in Limavady, Northern Ireland. Production began in this plant
in August 1997. The Company's media manufacturing plants in California and
Singapore put these substrates through the manufacturing processes necessary
to deposit the magnetic storage alloy layer, the protective carbon overcoat
and the lubricant as well as to achieve the proper degree of final surface
smoothness and also carry out the quality assurance activities necessary to
deliver finished media to Seagate's disc drive manufacturing plants. As is the
case for substrates, the Company's internal media manufacturing operations
supply the majority of its needs for media but media is also purchased from
third party suppliers located in the U.S. and the Far East. In a similar
effort to reduce dependence on third party suppliers, the Company has recently
announced plans to construct a new media manufacturing plant in Ringaskiddy,
County Cork, Ireland. Spindle motors are sourced principally from outside
vendors in the Far East, although the Company is increasing its internal motor
manufacturing capabilities. Actuator motors are sourced both from outside
vendors and internally. The Company designs, generally in partnership with a
major ASIC manufacturer, nearly all of its ASICs for motor and actuator
control and manufactures a small portion of these circuits. It designs all or
part of many of the other ASICs in the drive such as interface controllers,
read/write channels and pre-amplifiers, and procures these from third parties.
The vast majority of the high-volume surface-mount printed circuit assemblies
are assembled internally. The Company evaluates the need for second sources
for all of its components on a case-by-case basis and, where it is deemed
desirable and feasible to do so, secures multiple sources. The Company has
experienced production delays when unable to obtain sufficient quantities of
certain components or assembly capacity. The Company attempts to maintain
component inventory levels adequate for its short-term needs. However, an
inability to obtain essential components, if prolonged, would adversely affect
the Company's business.
Because of the significant fixed costs associated with the production of its
products and components and the industry's history of declining prices, the
Company must continue to produce and sell its disc drives in significant
volume, continue to lower manufacturing costs and carefully monitor inventory
levels. Toward these ends, the Company continually evaluates its components
and manufacturing processes as well as the desirability of transferring volume
production of disc drives and related components between facilities, including
transfer overseas to countries where labor costs and other manufacturing costs
are significantly lower than in the U.S., principally Singapore, Thailand,
Malaysia and China. In addition, the Company is considering expanding its
manufacturing operations into other third world countries. Frequently,
transfer of production of a product to a different facility requires
qualification of such new facility by certain of the Company's OEM customers.
There can be no certainty that such changes and transfers will be implemented
on a cost-effective basis without delays or disruption in the Company's
production and without adversely affecting the Company's results of
operations.
Offshore operations are subject to certain inherent risks, including delays
in transportation, changes in governmental policies, tariffs, import/export
regulations, and fluctuations in currency exchange rates in addition to
geographic limitations on management controls and reporting. Although the
Company has not had any significant adverse experience in this regard and has
significant experience in the offshore production of its products, there can
be no assurance that the inherent risks of offshore operations will not
adversely effect the Company's future operating results. Recently, several Far
East currencies have significantly declined in value relative to the U.S.
Dollar. As a result, the Company will be required to mark-to-market a portion
of the foreign currency forward exchange contracts that it has taken out as a
hedge of these currencies and may be required to take a charge against income
in the first quarter of fiscal 1998 ending October 3, 1997. It is anticipated
that the amount of this charge will be material as it relates to the expected
financial results for that quarter. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Disclosures about Market
Risk." Certain of the Far East countries in which the Company operates have
experienced political unrest and the Company's operations have been adversely
affected for short periods of time.
PRODUCT DEVELOPMENT
The Company's strategy for new products emphasizes developing and
introducing on a timely and cost effective basis products that offer
functionality and performance equal to or better than competitive product
10
offerings. The rigid disc drive industry is characterized by ongoing, rapid
technological change, relatively short product life cycles and rapidly
changing user needs. The Company believes that its future success will depend
upon its ability to develop, manufacture and market products which meet
changing user needs, and which successfully anticipate or respond to changes
in technology and standards on a cost-effective and timely basis. Accordingly,
the Company is committed to the development of new component technologies, new
products, and the continuing evaluation of alternative technologies. The
Company is presently concentrating its product development efforts on new disc
drives and improved disc drive components as described below.
The Company develops new disc drive products and the processes to produce
them at six locations: Longmont, Colorado; Moorpark and San Jose, California;
Oklahoma City, Oklahoma; Bloomington, Minnesota; and Singapore. Generally
speaking, Longmont, Moorpark, and Singapore are responsible for development of
3.5 inch form factor drives intended for desktop personal computer systems;
San Jose is responsible for development of 2.5 inch form factor drives
intended for mobile personal computers; Oklahoma City is responsible for
development of 3.5 inch disc drives with capacities and interfaces intended
for use in minicomputers, supermicrocomputers, workstations and file servers;
and Bloomington is responsible for 3.5 inch and 5.25 inch products principally
intended for use in systems ranging from workstations and superminicomputers
to mainframe and supercomputers as well as new markets such as digital video
and video-on-demand.
The Company has focused its components research and development efforts in
four main areas: heads, media, motors and ASICs. The major emphasis of this
research and development effort is higher capacity, reduced size and power
consumption, improved performance and reliability, and reduced cost. Disc
drive customers require new products to have greater reliability with ever
decreasing defective parts per million ("DPPMs") and ever increasing mean time
between failures ("MTBFs").
The principal areas of research and development relating to motors are
improved bearings, smaller form factors, lower power requirements, quieter
operation, higher reliability, improved magnets and lower cost. With
continuing data storage density, the Company is researching alternatives to
ball bearing spindle motors. Two of the candidates are the hydrodynamic
bearing spindle motor and the contact free active magnetic bearing spindle
motor. Among the advantages of these motors are decreased operating vibration,
leakage free and superior drive level positioning which may enable the Company
to achieve track densities above 20,000 tracks per inch. The motor design and
development engineering group is located in Scotts Valley, California.
The Company's head research and development efforts are focused on
increasing recording densities, reducing the size and mass of the slider,
developing suspensions and assembly technology for reduced head size, reducing
the cost and increasing the reliability. This research and development
includes substantial effort to develop and manufacture MR heads and advanced
air bearing sliders for high areal density and small form factor products.
While the Company currently produces a substantial portion of its disc drives
utilizing its MR heads, there can be no assurance that the Company's MR head
development effort will continue to be successful and a failure of the Company
to successfully manufacture and market products incorporating MR head
technology in a timely manner could have a material adverse effect on the
Company's business and results of operations.
Media research and development is primarily related to achieving higher
areal densities consistent with the efforts undertaken in the head operations
of the Company as well as developing the capability to produce media of
reduced dimensions from those of current main-stream products. These media
research and development refforts are subdivided into several main approaches
to achieving these goals: developing smoother, flatter substrates that permit
lower head flying heights; developing thinner, smaller-diameter substrates to
support development of physically smaller disc drives; developing improved
magnetic storage alloys, overcoat materials and surface lubricants that permit
higher coercivities and improved electromagnetic performance as well as use
with MR heads while providing enhanced wear and reliability performance; and,
finally, developing enhanced substrate and media manufacturing processes that
allow the Company to implement the results of its other developments while
increasing the consistency and reducing the cost of producing high performance
magnetic storage media. As a consequence of these efforts, the Company
reviews, on an on-going basis, not only improved versions and smaller size
versions of the industry-standard aluminum and glass substrates but also
substrates of
11
alternative materials. The Company experiments with the elemental content of
the storage alloys and overcoat materials and the sputtering processes used to
deposit them. The Company evaluates different lubricants and pursues
variations in the techniques used to obtain the proper degree of surface
smoothness including both mechanical and other processes. There can be no
assurance that the Company's media development efforts will be successful.
ASIC development has been and will continue to be focused on optimizing the
architecture for system performance, cost and reliability. In addition, the
focus has been and will continue to be on reducing the number of parts, the
amount of power consumption, and the size, and increasing areal densities by
use of advanced signal processing techniques such as PRML read/write channels.
In August 1997, the Company acquired Quinta Corporation, a developer of
ultra-high capacity disc drive technologies, including a new optically
assisted Winchester ("OAW") technology. OAW technology is designed to
integrate optical, magnetic and telecommunications technologies for the
purpose of building a new class of high capacity cost-effective disc drive
storage devices.
In addition to developing new products and components, the Company devotes
significant resources to product engineering aimed at improving manufacturing
processes, lowering manufacturing costs and increasing volume production of
new and existing products. Process engineering groups are located with the
disc drive development groups and the reliability engineering groups in
locations listed above; however, most of the Company's volume production is
done in locations remote from these groups and the development of the volume
processes are completed at the volume manufacturing sites.
No assurance can be given that the Company will be able to successfully
complete the design or introduction of new products in a timely manner, that
the Company will be able to manufacture new products in volume with acceptable
manufacturing yields, or successfully market these products, or that these
products will perform to specifications on a long-term basis. Failure to meet
any of the above objectives in a timely manner could have a material adverse
effect on the Company's business and results of operations.
During the fiscal years ended June 27, 1997, June 28, 1996 and June 30,
1995, the Company's product development expenses were $459,330,000,
$420,429,000 and $353,506,000, respectively.
PATENTS AND LICENSES
The Company has over 765 U.S. patents and 376 foreign patents and has
approximately 495 U.S. and 662 foreign patent applications pending. Due to the
rapid technological change that characterizes the rigid disc drive industry,
the Company believes that the improvement of existing products, reliance upon
trade secrets and unpatented proprietary know-how and development of new
products are generally more important than patent protection in establishing
and maintaining a competitive advantage. Nevertheless, the Company believes
that patents are of value to its business and intends to continue its efforts
to obtain patents, when available, in connection with its research and
development program. There can be no assurance that any patents obtained will
provide substantial protection or be of commercial benefit to the Company, or
that their validity will not be challenged.
Because of rapid technological development in the disc drive industry,
certain of the Company's products have been and it is possible other products
could be accused of infringement of existing patents. The rigid disc drive
industry has been characterized by significant litigation relating to patent
and other intellectual property rights. From time to time, the Company
receives claims that certain of its products infringe patents of third
parties. Although the Company has been able to resolve some such claims or
potential claims by obtaining licenses or rights under the patents in question
without a material adverse affect on the Company, other such claims are
pending which if resolved unfavorably to the Company could have a material
adverse effect on the Company's business. For a description of current
disputes see the "Litigation" note to the Company's consolidated financial
statements. In addition, the costs of engaging in intellectual property
litigation may be
12
substantial regardless of outcome. The Company has patent cross licenses with
Areal Technology, Hewlett-Packard Company, NEC Corporation, Toshiba
Corporation, Hitachi, Ltd., Quantum Corporation, Ceridian Corporation
(formerly Control Data Corporation), IBM, Hyundai Electronics America (Maxtor
Corporation), Read-Rite Corporation, Applied Magnetics Corporation, Headway
Technologies, Inc., Kubota Corporation (Akashic Memories Corp.), Asahi Komag
Co., Ltd., Showa Denko K.K., StorMedia Inc. Co., Ltd., TDK Corporation,
Fujitsu Limited and Micropolis (S) Pte Ltd. and is licensed under certain
Unysis, Bull and Bull SA disc drive and controller patents by virtue of such
companies' former ownership of Magnetic Peripherals Inc., now merged into the
Company. Additionally, the Company has agreements in principle with other
major disc drive companies.
COMPETITION
The rigid disc drive industry is intensely competitive, with manufacturers
competing for a limited number of major customers. The principal competitive
factors in the rigid disc drive market include product quality and
reliability, form factor, storage capacity, price per unit, price per
megabyte, product performance, production volume capability and responsiveness
to customers. The relative importance of these factors varies with different
customers and for different products. The Company believes that it is
generally competitive as to these factors.
The Company has experienced and expects to continue to experience intense
competition from a number of domestic and foreign companies, some of which
have far greater resources than the Company. In addition to independent rigid
disc drive manufacturers, the Company also faces competition from present and
potential customers, including IBM, Toshiba, NEC and Fujitsu Limited who
continually evaluate whether to manufacture their own drives or purchase them
from outside sources. These manufacturers also sell drives to third parties
which results in direct competition with the Company.
Product life cycles are relatively short in the disc drive industry. The
Company expects its competitors to offer new and existing products at prices
necessary to gain or retain market share and customers. To remain competitive,
the Company believes it will be necessary to continue to reduce its prices and
aggressively enhance its product offerings. In addition to the foregoing, the
ability of the Company to compete successfully will also depend on its ability
to provide timely product introductions and to continue to reduce production
costs. The Company's establishment and ongoing expansion of production
facilities in Singapore, Thailand, Malaysia, China and Ireland are directed
toward such cost reductions. The Company believes that its future success will
depend upon its ability to develop, manufacture and market products of high
quality and reliability which meet changing user needs, and which successfully
anticipate or respond to changes in technology and standards on a cost-
effective and timely basis, of which there can be no assurance.
The introduction of products using alternative technologies could be a
significant source of competition. For example, optical recording and high-
speed semiconductor memory could compete with the Company's products in the
future. Although optical disc technologies are attractive for certain archival
and imaging applications, they have lower performance and are more costly than
magnetic disc drives and the Company does not believe that they will be
competitive with magnetic disc drives in the immediate future in markets
requiring on-line, random access, non-volatile mass storage. Semiconductor
memory (SRAM and DRAM) is much faster than magnetic disc drives, but currently
is volatile (i.e., subject to loss of data in the event of power failure) and
much more costly. Flash EE prom, a nonvolatile semiconductor memory, is
currently much more costly and, while it has higher read performance than disc
drives, it has lower write performance. Flash EE prom could become competitive
in the near future for applications requiring less storage capacity (i.e.,
less than 200 MB) than is required in the Company's more traditional computer
related market place.
ENVIRONMENTAL MATTERS
The United States Environmental Protection Agency (EPA) and/or similar state
agencies have identified the Company as a potentially responsible party with
respect to environmental conditions at several different sites to which
hazardous wastes had been shipped or from which they were released. These
sites were acquired by the Company from Ceridian Corporation ("Ceridian")
(formerly Control Data Corporation) in fiscal 1990. Other
13
parties have also been identified at certain of these sites as potentially
responsible parties. Many of these parties either have shared or likely will
share in the costs associated with the sites. Investigative and/or remedial
activities are ongoing at such sites.
The Company's portion of the estimated cost of investigation and remediation
of known contamination at the sites to be incurred after June 27, 1997 was
approximately $16,500,000. Through June 27, 1997 the Company had recovered
approximately $4,300,000 from Ceridian through its indemnification and cost
sharing agreements with Ceridian and, in addition, expects to recover
approximately $9,700,000 from Ceridian over the next 30 years. After deducting
the expected recoveries from Ceridian, the expected aggregate undiscounted
liability was approximately $6,800,000 at June 27, 1997 with payments expected
to begin in 1999. The total liability for all sites recorded by the Company
after considering the estimated effects of inflation, reimbursements by
Ceridian and discounting was approximately $3,100,000 at June 27, 1997.
The Company believes that the indemnification and cost-sharing agreements
entered into with Ceridian and the reserves that the Company has established
with respect to its future environmental costs are such that, based on present
information available to it, future environmental costs related to currently
known contamination will not have a material adverse effect on its financial
condition or results of operations.
EMPLOYEES
From June 28, 1996 to June 27, 1997, the number of persons employed
worldwide by the Company increased from approximately 87,000 to approximately
111,000. Approximately 93,000 of the Company's employees were located in the
Company's Far East operations as of June 27, 1997. In addition, the Company
makes use of supplemental employees, principally in manufacturing, who are
hired on an as-needed basis. Management believes that the future success of
the Company will depend in part on its ability to attract and retain qualified
employees at all levels, of which there can be no assurance. The Company
believes that its employee relations are good.
14
ITEM 2. PROPERTIES
Seagate's executive offices are located in Scotts Valley, California.
Principal manufacturing facilities are located in Singapore, Thailand,
Malaysia, Minnesota, California, Oklahoma, China, Northern Ireland and
Ireland. A major portion of the Company's facilities are occupied under leases
which expire at various times through 2015. The following is a summary of
square footage owned or leased by the Company:
FACILITIES (SQUARE FEET)
- -------------------------------------------------------------------------------
MANUFACTURING PRODUCT
LOCATION & WAREHOUSE DEVELOPMENT ADMINISTRATIVE TOTAL
-------- ------------- ----------- -------------- ----------
NORTH AMERICA
California
Central California.. 16,768 36,934 30,325 84,027 (1)
Northern California. 789,445 127,668 452,098 1,369,211 (2)
Southern California. 345,590 99,415 45,331 490,336 (3)
Colorado.............. 48,850 140,400 25,044 214,294 (4)
Minnesota............. 873,605 73,498 205,163 1,152,266 (5)
Oklahoma.............. 293,701 77,497 93,492 464,690 (6)
Northeast USA......... 2,000 39,820 10,100 51,920
Southeast USA......... 8,750 43,975 79,402 132,127 (7)
Other USA............. 46,341 17,782 18,887 83,010
Canada/Mexico......... 137,460 16,922 22,578 176,960
--------- ------- --------- ----------
TOTAL NORTH AMERICA..... 2,562,510 673,911 982,420 4,218,841
--------- ------- --------- ----------
EUROPE
England............... -- 9,052 33,873 42,925 (8)
Ireland............... 135,000 -- 20,000 155,000 (9)
Northern Ireland...... 264,700 4,900 51,500 321,100 (10)
Netherlands........... 92,234 -- 28,955 121,189
Scotland.............. 73,555 3,680 19,988 97,223 (11)
Other Europe.......... -- -- 46,428 46,428 (12)
--------- ------- --------- ----------
TOTAL EUROPE............ 565,489 17,632 200,744 783,865
--------- ------- --------- ----------
ASIA
China................. 302,039 -- -- 302,039
Malaysia.............. 1,312,242 -- 158,245 1,470,487 (13)
Philippines........... -- -- 999 999 (14)
Singapore............. 1,755,498 27,248 219,945 2,002,691 (15)
Thailand.............. 1,517,833 -- 239,632 1,757,465 (16)
Other Pacific Rim..... 30,167 -- 49,836 80,003
--------- ------- --------- ----------
TOTAL ASIA.............. 4,917,779 27,248 668,657 5,613,684
--------- ------- --------- ----------
TOTAL................... 8,045,778 718,791 1,851,821 10,616,390
========= ======= ========= ==========
- --------
(1) Includes approximately 30,598 square feet owned by the Company.
(2) Includes approximately 324,756 square feet owned by the Company. Excludes
101,338 square feet unoccupied and approximately 22,336 square feet
subleased to others.
(3) Includes approximately 105,709 square feet owned by the Company. Excludes
approximately 38,209 square feet subleased to others.
(4) Excludes approximately 31,000 square feet under construction.
(5) Includes approximately 647,046 square feet owned by the Company. Excludes
approximately 220,002 square feet subleased to others.
(6) Includes approximately 235,610 square feet owned by the Company.
15
(7) Excludes approximately 12,641 square feet unoccupied and approximately
4,395 square feet subleased to others.
(8) Excludes approximately 10,000 square feet unoccupied and approximately
22,388 square feet subleased to others.
(9) Includes approximately 155,000 square feet owned by the Company.
(10) Includes approximately 321,100 square feet owned by the Company.
(11) Excludes approximately 10,775 square feet unoccupied.
(12) Excludes approximately 130,290 owned square feet unoccupied. Excludes
approximately 32,600 square feet under construction.
(13) Includes approximately 1,468,727 square feet owned by the Company.
Excludes approximately 170,000 square feet under construction.
(14) Excludes approximately 355,000 square feet under construction.
(15) Includes approximately 1,571,698 square feet owned by the Company.
Excludes approximately 14,000 square feet under construction.
(16) Includes approximately 320,037 square feet owned by the Company. Excludes
approximately 200,000 square feet under construction.
16
ITEM 3. LEGAL PROCEEDINGS
The information required by this item is incorporated by reference to pages
28 and 33-35 of the Annual Report to Stockholders, filed as Exhibit 13.1
hereto.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
The present executive officers of the Company are as follows:
EXECUTIVE
OFFICER
NAME AGE POSITION SINCE
---- --- -------- ---------
Alan F. Shugart 66 President, Chief Executive Officer and 1979
Chairman of the Board
Bernardo A. Carballo 48 Executive Vice President, Worldwide Sales, 1991
Marketing, Product Line Management and
Customer Service
Brendan C. Hegarty 54 Executive Vice President, Chief Operating 1989
Officer, Recording Head Group
Stephen J. Luczo 40 Executive Vice President, Corporate 1993
Development and Chairman of the Board of
Directors, Seagate Software Inc.
Thomas F. Mulvaney 48 Senior Vice President, General Counsel, and 1996
Assistant Secretary
Ronald D. Verdoorn 47 Executive Vice President, Chief Operating 1991
Officer, Storage Products Group
Donald L. Waite 64 Executive Vice President, Chief 1983
Administrative Officer, Chief Financial
Officer and Secretary
William D. Watkins 44 Executive Vice President, Chief Operating 1996
Officer, Recording Media Group
Officers are elected annually by the Board of Directors and serve at the
discretion of the Board.
Mr. Shugart was Chairman of the Board and Chief Executive Officer of the
Company from its inception in 1979 until 1991. From 1979 until 1983 he also
served as the Company's President. He now serves as Chairman of the Board,
President and Chief Executive Officer. He was re-appointed Chairman of the
Board in October 1992. Mr. Shugart is also currently a Director of Valence
Technology, Inc. and SanDisk Corporation.
Mr. Carballo was General Manager, Product Line Management for the Company's
Oklahoma City operations at the time of the Company's acquisition of Imprimis
in 1989. In 1990 he was promoted to Vice President, Product Line Management,
Oklahoma City operations, in September 1991 he was promoted to Senior Vice
President, Sales, Marketing and Product Line Management and in March 1995 he
was promoted to Executive Vice President Worldwide Sales, Marketing, Product
Line Management and Customer Service. Prior to joining the Company, Mr.
Carballo had seventeen years with Control Data/Imprimis.
Dr. Hegarty joined Control Data/Imprimis in 1988 as Vice President, Thin-Film
Heads. In October 1989 he was named Seagate's Vice President of Component
Operations in Bloomington, Minnesota, and in August 1990 was promoted to Senior
Vice President and Chief Technical Officer. In March 1995 he was promoted to
Executive Vice President, Chief Operating Officer, Components Group. From
October 1990 to October 1993 Dr. Hegarty was also a Director of the Company.
Prior to joining Control Data/Imprimis, Dr. Hegarty had twenty-one years with
IBM in the U.K., Netherlands and the U.S.
17
Mr. Luczo joined the Company in October 1993 as Senior Vice President,
Corporate Development. In March 1995 he was promoted to Executive Vice
President, Corporate Development and Chief Operating Officer of the Software
Group and in July 1997 he was appointed Chairman of the Board of the Software
Group. Prior to joining the Company he was Senior Managing Director of the
Global Technology Group of Bear, Stearns & Co. Inc., an investment banking
firm, from September 1993 to October 1993. He served as Co-Head of the Global
Technology Group of Bear, Stearns & Co. Inc. from February 1992 to October
1993. Prior to joining Bear, Stearns & Co. Inc., Mr. Luczo was with Salomon
Brothers Inc., an investment banking firm, from 1984 to February 1992, most
recently as Vice President and Head of West Coast Technology.
Mr. Mulvaney joined the Company in February 1996. Prior to joining the
Company he was Vice President, General Counsel and Secretary at Conner
Peripherals from May 1995 until February 1996. Prior to joining Conner
Peripherals, Mr. Mulvaney was with VLSI Technology, Inc. from May 1990 to May
1995 where he served as Vice President, General Counsel and Secretary, and
held departmental responsibility for legal, human resources, corporate
communications and facilities.
Mr. Verdoorn joined the Company in 1983. From 1987 to 1991 he was Vice
President, Far East Manufacturing and in November 1991 he was promoted to
Senior Vice President, Manufacturing Operations. In March 1995 he was promoted
to Executive Vice President, Chief Operating Officer of the Storage Products
Group. He also serves as a Director of EA Industries, Inc.
Mr. Waite joined the Company in 1983 as Vice President of Finance and Chief
Financial Officer, and was promoted to Senior Vice President, Finance in 1984.
In March 1995 he was promoted to Executive Vice President, Chief
Administrative Officer and Chief Financial Officer. He also serves as a
Director of California Micro Devices.
Mr. Watkins joined the Company in February 1996. Prior to joining the
Company he was President and General manager of the Conner Disc Division from
January 1990 until February 1996.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The information required by this Item is incorporated by reference to pages
1-3 of the Annual Report to Stockholders, filed as Exhibit 13.1 hereto.
There have been no sales of unregistered securities by the Company since
July 1, 1994.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is incorporated by reference to pages
1-3 of the Annual Report to Stockholders, filed as Exhibit 13.1 hereto.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this Item is incorporated by reference to pages
3-12 of the Annual Report to Stockholders, filed as Exhibit 13.1 hereto.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is incorporated by reference to pages
1-3 and 13-37 of the Annual Report to Stockholders, filed as Exhibit 13.1
hereto.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
18
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding directors of the Company and compliance with Section
16(a) of the Securities Exchange Act of 1934, as amended, are hereby
incorporated herein by reference to the sections entitled "Election of
Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance,"
respectively, in the Company's Proxy Statement to be filed with the Commission
within 120 days of the end of the Registrant's fiscal year pursuant to General
Instruction G(3) to Form 10-K. The information required by that Item
concerning executive officers is set forth in Part I of this Report.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to the
Company's Proxy Statement to be filed with the Commission within 120 days of
the end of the Registrant's fiscal year pursuant to General Instruction G(3)
to Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated by reference to the
Company's Proxy Statement to be filed with the Commission within 120 days of
the end of the Registrant's fiscal year pursuant to General Instruction G(3)
to Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated by reference to the
Company's Proxy Statement to be filed with the Commission within 120 days of
the end of the Registrant's fiscal year pursuant to General Instruction G(3)
to Form 10-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this Report:
1.Financial Statements. The following Consolidated Financial Statements of
Seagate Technology, Inc. and Report of Independent Auditors are incorporated
by reference in Item 8:
Report of Independent Auditors
Consolidated Balance Sheets--June 27, 1997 and June 28, 1996.
Consolidated Statements of Income--Years Ended June 27, 1997, June 28,
1996 and June 30, 1995.
Consolidated Statements of Stockholders' Equity--Years Ended June 27,
1997 and June 28, 1996 and June 30, 1995.
Consolidated Statements of Cash Flows--Years Ended June 27, 1997, June
28, 1996 and June 30, 1995.
Notes to Consolidated Financial Statements.
19
2.Financial Statement Schedules. The following consolidated financial
statement schedules of Seagate Technology, Inc. are filed as part of this
Report and should be read in conjunction with the Consolidated Financial
Statements of Seagate Technology, Inc.:
SCHEDULE PAGE
-------- ----
II--Valuation and Qualifying Accounts................................ 23
Report of Independent Accountants for Seagate Peripherals, Inc.
(formerly Conner Peripherals, Inc.)................................. 24
Report of Independent Accountants on Financial Statement Schedule II
for Seagate Peripherals, Inc. (formerly Conner Peripherals, Inc.)... 25
Schedules not listed above have been omitted because they are not applicable
or are not required or the information required to be set forth therein is
included in the Consolidated Financial Statements or notes thereto.
3.Exhibits:
NOTES:
------
3.1 Certificate of Incorporation of Registrant, as amended. (A)
3.2 By-Laws of Registrant, as amended. (B)
4.1 Indenture, dated as of March 1, 1997 (the "Indenture"),
between Seagate Technology, Inc. (the "Company") and First
Trust of California, National Association, as Trustee. (C)
4.2 Officers' Certificate pursuant to Section 301 of the
Indenture, without Exhibits, establishing the terms of the
Company's senior notes and senior debentures. (C)
4.3 Form of Senior Note. (C)
4.4 Form of Senior Debenture. (C)
10.1 1983 Incentive Stock Option Plan and form of Stock Option
Agreement. (E)
10.2 Seagate Technology Employee Stock Purchase Plan. (N)
10.3 Registrant's Executive Stock Plan. (L)
10.4 Conner Peripherals, Inc. 1986 Incentive Stock Plan. (L)
10.5 Ground and building lease dated March 31, 1983 between the
Registrant and First Scotts Valley, Inc. (E)
10.6 Ground lease dated July 15, 1982 between the Registrant and
First Scotts Valley, Inc. (G)
10.7 Grant Deed dated June 25, 1983 between the Registrant and
Albert L. and Anne Russo. (A)
10.8 Lease Agreement dated May 20, 1985 between Seagate
Singapore, Pte., Ltd. and Jurong Town Corporation, and
related Mortgage Agreement. (H)
10.9 Lease Agreements dated from April 1, 1983 through May 16,
1985 between Seagate Technology Singapore, Pte., Ltd. and
Jurong Town Corporation. (H)
10.10 Lease Agreement dated September 11, 1984 between Seagate
Technology Singapore, Pte., Ltd. and the Science Counsel of
Singapore. (I)
10.11 Lease Agreement dated from August 16, 1985 through June 8,
1988 between Seagate Technology Singapore, Pte., Ltd. and
Jurong Town Corporation. (I)
10.12 Deed of Assignment dated February 18, 1987 between Seagate
Technology Singapore, Pte., Ltd. and the Hong Kong and
Shanghai Banking Corporation. (I)
10.13 Factory Development Master Agreement dated December 14,
1987 and Amendment 1 thereto dated January 21, 1988 between
Seagate Technology (Thailand) Ltd. and Mrs. Curairat
Bonython. (I)
10.14 Master Agreement dated June 10, 1988 between Seagate
Technology (Thailand) Ltd. and Chokchai International Co.,
Ltd. (I)
10.15 Lease Agreement dated July 18, 1987 and Amendment No. 1
thereto dated June 10, 1988 between Seagate Technology
(Thailand) Ltd. and Chokchai International Co., Ltd. (I)
10.16 Industrial Lease dated December 31, 1983 between Mission
Business Company and Grenex, Inc. (H)
10.17 1991 Incentive Stock Option Plan and Form of Option
Agreement, as amended.
20
10.18 Acquisition Agreement dated as of September 29, 1989 by and (J)
among Seagate Technology, Inc. and Control Data Corporation,
Imprimis Technology Incorporated and Magnetic Peripherals,
Inc.
10.19 Amended and Restated Directors' Option Plan and Form of Option
Agreement. (K)
10.20 Amended and Restated Archive Corporation Stock Option and
Restricted Stock Purchase Plan--1981. (L)
10.21 Amended and Restated Archive Corporation Incentive Stock
Option Plan--1981. (L)
10.22 Conner Peripherals, Inc.--Arcada Holdings, Inc. Stock Option
Plan. (M)
10.23 Arcada Holdings, Inc. 1994 Stock Option Plan. (M)
11.1 Computation of Net Income per Share (see page 26).
13.1 Portions of the 1997 Annual Report to Stockholders.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Price Waterhouse LLP, Independent Accountants for
Seagate Peripherals, Inc. (formerly Conner Peripherals, Inc.)
24.1 Power of Attorney (included on page 22).
27 Financial Data Schedule
- --------
(A) Incorporated by reference to exhibits filed in response to Item 16,
"Exhibits," of the Company's Registration Statement on Form S-3 (File No.
33-13430) filed with the Securities and Exchange Commission on April 14,
1987.
(B) Incorporated by reference to exhibits filed in response to Item 14 (a),
"Exhibits," of the Company's Form 10-K, as amended, for the year ended
June 30, 1990.
(C) Incorporated by reference to exhibits filed in response to Item 7(b),
"Financial Statements and Exhibits" of the Company's Current Report on
Form 8-K dated March 4, 1997.
(D) Incorporated by reference to exhibits filed in response to Item 30(b),
"Exhibits," of the Company's Registration Statement on Form S-1 and
Amendment No. 1 thereto (File No. 2-73663), as declared effective by the
Securities and Exchange Commission on September 24, 1981.
(E) Incorporated by reference to exhibits filed in response to Item 14(a),
"Exhibits," of the Company's Form 10-K for the year ended June 30, 1983.
(F) Incorporated by reference to exhibits filed in response to Item 20,
"Exhibits," of the Company's Registration Statement on Form S-8/S-3 (file
No. 2-98486) filed with the Securities and Exchange Commission on June 19,
1985.
(G) Incorporated by reference to exhibits filed in response to Item 16(a),
"Exhibits," of the Company's Registration Statement on Form S-1 (File No.
2-78672) filed with the Securities and Exchange Commission on August 3,
1982.
(H) Incorporated by reference to exhibits filed in response to Item 14(a),
"Exhibits," of the Company's Form 10-K for the year ended June 30, 1985.
(I) Incorporated by reference to exhibits filed in response to Item 14(a),
"Exhibits," of the Company's Form 10-K for the year ended June 30, 1988.
(J) Incorporated by reference to exhibits filed in response to Item 7(c),
"Exhibits," of the Company's Current Report on Form 8-K dated October 2,
1989.
(K) Incorporated by reference to exhibits filed in response to Item 14(a),
"Exhibits," of the Company's Form 10-K for the year ended June 30, 1991.
(L) Incorporated by reference to exhibits filed with Registrant's Registration
Statement on Form S-8 (registration number 333-697) as filed with the
Commission on February 5, 1996.
(M) Incorporated by reference to exhibits filed with Registrant's Registration
Statement on Form S-8 (registration number 333-1059) as filed with the
Commission on February 21, 1996.
(N) Incorporated by reference to exhibits filed in response to Item 30(b).
"Exhibits," of the Company's Registration Statement on Form S-1 and
Amendment No. 1 thereto (File No. 2-73663), as declared effective by the
Securities and Exchange Commission on September 24, 1981.
(b) Reports on Form 8-K. No reports on Form 8-K were filed by the Company
during the quarter ended June 27, 1997.
21
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.
SEAGATE TECHNOLOGY, INC.
/s/ ALAN F. SHUGART
By: _________________________________
(Alan F. Shugart, Chairman of
the Board,
President and Chief
Executive Officer)
Dated: August 19, 1997
POWER OF ATTORNEY
Know All Men By These Presents, that each person whose signature appears
below constitutes and appoints Alan F. Shugart and Donald L. Waite, jointly
and severally, his or her attorney-in-fact, each with the power of
substitution, for him or her in any and all capacities, to sign 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, hereby ratifying and confirming 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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Alan F. Shugart Chairman of the Board, August 19, 1997
____________________________________ President and Chief
Alan F. Shugart Executive Officer
/s/ Donald L. Waite Executive Vice President, August 19, 1997
____________________________________ Chief Administrative Officer
Donald L. Waite and Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ Gary B. Filler Director August 19, 1997
____________________________________
Gary B. Filler
/s/ Kenneth Haughton Director August 19, 1997
____________________________________
Kenneth Haughton
/s/ Robert A. Kleist Director August 19, 1997
____________________________________
Robert A. Kleist
/s/ Lawrence Perlman Director August 19, 1997
____________________________________
Lawrence Perlman
/s/ Thomas P. Stafford Director August 19, 1997
____________________________________
Thomas P. Stafford
/s/ Laurel L. Wilkening Director August 19, 1997
____________________________________
Laurel L. Wilkening
22
SEAGATE TECHNOLOGY, INC.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
COL. A COL. B COL. C COL. D COL. E COL. F
------ ----------- ---------- ---------- ------------ -----------
ADDITIONS
---------------------
CHARGED TO
BALANCE AT CHARGED TO OTHER BALANCE AT
BEGINNING COSTS AND ACCOUNTS-- DEDUCTIONS-- END OF
DESCRIPTION OF PERIOD EXPENSES DESCRIBE DESCRIBE PERIOD
----------- ----------- ---------- ---------- ------------ -----------
YEAR ENDED JUNE 27,
1997:
Deducted from asset
accounts:
Allowance for
doubtful accounts.. $66,656,000 $5,729,000 $-- $11,972,000(1) $60,413,000
=========== ========== ==== =========== ===========
YEAR ENDED JUNE 28,
1996:
Deducted from asset
accounts:
Allowance for
doubtful accounts.. $71,702,000 $3,744,000 $-- $ 8,790,000(2) $66,656,000
=========== ========== ==== =========== ===========
YEAR ENDED JUNE 30,
1995:
Deducted from asset
accounts:
Allowance for
doubtful accounts.. $64,689,000 $8,898,000 $-- $ 1,885,000(3) $71,702,000
=========== ========== ==== =========== ===========
- --------
(1) $11,972,000 uncollectible accounts written off, net of recoveries.
(2) $8,790,000 uncollectible accounts written off, net of recoveries.
(3) $1,885,000 uncollectible accounts written off, net of recoveries.
23
REPORT OF INDEPENDENT ACCOUNTANTS
FOR SEAGATE PERIPHERALS, INC.
(FORMERLY CONNER PERIPHERALS, INC.)
To the Board of Directors and Stockholders of
Seagate Peripherals, Inc. (formerly Conner Peripherals, Inc.)
In our opinion, the consolidated balance sheet and the related consolidated
statements of operations, of stockholders' equity and of cash flows of Seagate
Peripherals, Inc. (formerly Conner Peripherals, Inc.) and its subsidiaries
(not presented separately herein) present fairly, in all material respects,
their financial position at December 31, 1995, and the results of their
operations and their cash flows for the year then ended, in conformity with
generally accepted accounting principles. These consolidated financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for the
opinion expressed above.
PRICE WATERHOUSE LLP
San Jose, California
January 15, 1996, except for Note 6, Note 10 and
Note 16 which are as of February 28, 1996
24
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE FOR
SEAGATE PERIPHERALS, INC.
(FORMERLY CONNER PERIPHERALS, INC.)
To the Board of Directors and Stockholders of
Seagate Peripherals, Inc. (formerly Conner Peripherals, Inc.)
Our audit of the consolidated financial statements of Seagate Peripherals,
Inc. (formerly Conner Peripherals, Inc.) and its subsidiaries referred to in
our report dated January 15, 1996 appearing on page 24 of this Form 10-K also
included an audit of Financial Statement Schedule II of Seagate Peripherals,
Inc. (formerly Conner Peripherals, Inc.) and its subsidiaries (not presented
separately herein). In our opinion, this Financial Statement Schedule of
Seagate Peripherals, Inc. (formerly Conner Peripherals, Inc.) and its
subsidiaries presents fairly, in all material respects, the information set
forth therein when read in conjunction with the related consolidated financial
statements.
PRICE WATERHOUSE LLP
San Jose, California
January 15, 1996
25
SEAGATE TECHNOLOGY, INC.
INDEX TO EXHIBITS
EXHIBITS NOTES
- -------- -----
3.1 Certificate of Incorporation of Registrant, as amended. (A)
3.2 By-Laws of Registrant, as amended. (B)
4.1 Indenture, dated as of March 1, 1997 (the "Indenture), between
Seagate Technology, Inc. (the "Company") and First Trust of
California, National Association, as Trustee. (C)
4.2 Officers' Certificate pursuant to Section 301 of the Indenture,
without Exhibits, establishing the terms of the Company's senior
notes and senior debentures. (C)
4.3 Form of Senior Note. (C)
4.4 Form of Senior Debenture. (C)
10.1 1983 Incentive Stock Option Plan and form of Stock Option
Agreement. (E)
10.2 Seagate Technology Employee Stock Purchase Plan. (N)
10.3 Registrant's Executive Stock Plan. (L)
10.4 Conner Peripherals, Inc. 1986 Incentive Stock Plan. (L)
10.5 Ground and building lease dated March 31, 1983 between the
Registrant and First Scotts Valley, Inc. (E)
10.6 Ground lease dated July 15, 1982 between the Registrant and
First Scotts Valley, Inc. (G)
10.7 Grant Deed dated June 25, 1983 between the Registrant and Albert
L. and Anne Russo. (A)
10.8 Lease Agreement dated May 20, 1985 between Seagate Singapore,
Pte., Ltd. and Jurong Town Corporation, and related Mortgage
Agreement. (H)
10.9 Lease Agreements dated from April 1, 1983 through May 16, 1985
between Seagate Technology Singapore, Pte., Ltd. and Jurong Town
Corporation. (H)
10.10 Lease Agreement dated September 11, 1984 between Seagate Technology
Singapore, Pte., Ltd. and the Science Counsel of Singapore. (I)
10.11 Lease Agreement dated from August 16, 1985 through June 8, 1988
between Seagate Technology Singapore, Pte., Ltd. and Jurong Town
Corporation. (I)
10.12 Deed of Assignment dated February 18, 1987 between Seagate
Technology Singapore, Pte., Ltd. and the Hong Kong and Shanghai
Banking Corporation. (I)
10.13 Factory Development Master Agreement dated December 14, 1987 and
Amendment 1 thereto dated January 21, 1988 between Seagate
Technology (Thailand) Ltd. and Mrs. Curairat Bonython. (I)
10.14 Master Agreement dated June 10, 1988 between Seagate Technology
(Thailand) Ltd. and Chokchai International Co., Ltd. (I)
10.15 Lease Agreement dated July 18, 1987 and Amendment No. 1 thereto
dated June 10, 1988 between Seagate Technology (Thailand) Ltd. and
Chokchai International Co., Ltd. (I)
10.16 Industrial Lease dated December 31, 1983 between Mission Business
Company and Grenex, Inc. (H)
10.17 1991 Incentive Stock Option Plan and Form of Option Agreement, as
amended.
10.18 Acquisition Agreement dated as of September 29, 1989 by and among
Seagate Technology, Inc. and Control Data Corporation, Imprimis
Technology Incorporated and Magnetic Peripherals, Inc. (J)
10.19 Amended and Restated Directors' Option Plan and Form of Option
Agreement. (K)
10.20 Amended and Restated Archive Corporation Stock Option and
Restricted Stock Purchase Plan - 1981. (L)
10.21 Amended and Restated Archive Corporation Incentive Stock Option
Plan - 1981. (L)
10.22 Conner Peripherals, Inc. - Arcada Holdings, Inc. Stock Option
Plan. (M)
10.23 Arcada Holdings, Inc. 1994 Stock Option Plan. (M)
11.1 Computation of Net Income per Share (see page 26).
13.1 Portions of the 1997 Annual Report to Stockholders.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Price Waterhouse LLP, Independent Accountants for
Seagate Peripherals, Inc. (formerly Conner Peripherals, Inc.)
24.1 Power of Attorney (included on page 22).
27 Financial Data Schedule
- --------------------
(A) Incorporated by reference to exhibits filed in response to Item 16,
"Exhibits," of the Company's Registration Statement on Form S-3 (File No.
33-13430) filed with the Securities and Exchange Commission on April 14,
1987.
(B) Incorporated by reference to exhibits filed in response to Item 14(a),
"Exhibits," of the Company's Form 10-K, as amended, for the year ended June
30, 1990.
(C) Incorporated by reference to exhibits filed in response to Item 7(b),
"Financial Statements and Exhibits" of the Company's Current Report on Form
8-K dated March 4, 1997.
(D) Incorporated by reference to exhibits filed in response to Item 30(b),
"Exhibits," of the Company's Registration Statement on Form S-1 and
Amendment No. 1 thereto (File No. 2-73663), as declared effective by the
Securities and Exchange Commission on September 24, 1981.
(E) Incorporated by reference to exhibits filed in response to Item 14(a),
"Exhibits," of the Company's Form 10-K for the year ended July 30, 1983.
(F) Incorporated by reference to exhibits filed in response to Item 20,
"Exhibits," of the Company's Registration Statement on Form S-8/S-3 (file
No. 2-98486) filed with the Securities and Exchange Commission on June 19,
1985.
(G) Incorporated by reference to exhibits filed in response to Item 16(a),
"Exhibits," of the Company's Registration Statement on Form S-1 (File No.
2-78672) filed with the Securities and Exchange Commission on August 3,
1982.
(H) Incorporated by reference to exhibits filed in response to Item 14(a),
"Exhibits," of the Company's Form 10-K for the year ended June 30, 1985.
(I) Incorporated by reference to exhibits filed in response to Item 14(a),
"Exhibits," of the Company's Form 10-K for the year ended June 30, 1988.
(J) Incorporated by reference to exhibits filed in response to Item 7(c),
"Exhibits," of the Company's Current Report on Form 8-K dated October 2,
1989.
(K) Incorporated by reference to exhibits filed in response to Item 14(a),
"Exhibits," of the Company's Form 10-K for the year ended June 30, 1991.
(L) Incorporated by reference to exhibits filed with the Registrant's
Registration Statement on Form S-8 (registration number 333-697) as filed
with the Commission on February 5, 1996.
(M) Incorporated by reference to exhibits filed with the Registrant's
Registration Statement on Form S-8 (registration number 333-1059) as filed
with the Commission on February 21, 1996.
(N) Incorporated by reference to exhibits filed in response to Item 30(b).
"Exhibits" of the Company's Registration Statement on Form S-1 and Amendment
No. 1 thereto (File No. 2-73663), as declared effective by the Securities
and Exchange Commission on September 24, 1981.
(b) Reports on Form 8-K. No reports on Form 8-K were filed by the Company
-------------------
during the quarter ended June 27, 1997.