UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended April 3, 1998
Commission File Number 0-10630
SEAGATE TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-2612933
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
920 DISC DRIVE, SCOTTS VALLEY, CALIFORNIA 95066
(Address of principal executive offices) (Zip Code)
TELEPHONE: (408) 438-6550
(Registrant's telephone number, including area code)
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
--- ---
On April 3, 1998, 243,058,385 shares of the registrant's common stock were
issued and outstanding.
1
INDEX
SEAGATE TECHNOLOGY, INC.
PART I FINANCIAL INFORMATION PAGE NO.
- --------------------------------------------------------------------------
Item 1. Financial Statements (Unaudited)
Consolidated condensed statements of income--
Three and nine months ended April 3, 1998 and
March 28, 1997 3
Consolidated condensed balance sheets--
April 3, 1998 and June 27, 1997 4
Consolidated condensed statements of cash flows--
Nine months ended April 3, 1998 and
March 28, 1997 5
Notes to consolidated condensed financial statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
PART II OTHER INFORMATION
- ----------------------------------
Item 1. Legal Proceedings 20
Item 6. Exhibits and Reports on Form 8-K 21
SIGNATURES 22
2
SEAGATE TECHNOLOGY, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In Thousands Except Per Share Data)
(Unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
April 3, March 28, April 3, March 28,
1998 1997 1998 1997
---- ---- ---- ----
Revenue $1,675,026 $2,501,823 $5,243,860 $6,962,804
Cost of sales 1,471,457 1,870,989 4,553,898 5,397,695
Product development 154,950 118,965 442,572 339,358
Marketing and administrative 118,857 130,590 374,145 367,916
Amortization of goodwill and
other intangibles 9,211 18,100 30,840 41,026
In-process research and development - 2,876 215,764 2,876
Restructuring costs 141,893 - 347,358 (9,554)
Unusual items - 13,446 (21,969) 13,446
---------- ---------- ---------- ----------
Total Operating Expenses 1,896,368 2,154,966 5,942,608 6,152,763
Income (Loss) from Operations (221,342) 346,857 (698,748) 810,041
Interest income 22,691 23,490 74,181 59,561
Interest expense (12,604) (4,002) (38,244) (22,016)
Other 10,630 (9,748) (71,191) (16,043)
---------- ---------- ---------- ----------
Other Income (Expense), net 20,717 9,740 (35,254) 21,502
---------- ---------- ---------- ----------
Income (loss) before income taxes (200,625) 356,597 (734,002) 831,543
Provision (benefit) for income taxes (72,110) 99,847 (182,098) 232,832
---------- ---------- ---------- ----------
Net Income (Loss) $ (128,515) $ 256,750 $ (551,904) $ 598,711
========== ========== ========== ==========
NET INCOME (LOSS) PER SHARE:
Basic $ (0.53) $ 1.04 $ (2.27) $ 2.62
Diluted (0.53) 1.01 (2.27) 2.38
NUMBER OF SHARES USED IN
PER SHARE COMPUTATIONS:
Basic 242,566 246,528 243,418 228,881
Diluted 242,566 255,298 243,418 258,840
See notes to consolidated condensed financial statements.
3
SEAGATE TECHNOLOGY, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands)
(Unaudited)
April 3, June 27,
1998 1997 (1)
----------- -----------
ASSETS
- ------
Cash and cash equivalents $ 526,072 $1,047,335
Short-term investments 1,195,112 1,236,262
Accounts receivable, net 831,089 1,040,835
Inventories 558,222 808,280
Deferred income taxes 275,306 253,372
Other current assets 283,377 166,223
---------- ----------
Total Current Assets 3,669,178 4,552,307
Property, equipment and leasehold improvements, net 1,693,160 1,786,625
Goodwill and other intangibles, net 173,213 199,061
Other assets 191,562 184,886
---------- ----------
Total Assets $5,727,113 $6,722,879
========== ==========
LIABILITIES
- -----------
Accounts payable $ 600,522 $ 863,141
Accrued employee compensation 182,356 200,360
Accrued expenses 645,301 702,453
Accrued income taxes 50 69,275
Current portion of long-term debt 1,474 1,125
---------- ----------
Total Current Liabilities 1,429,703 1,836,354
Deferred income taxes 514,387 478,840
Other liabilities 201,259 230,074
Long-term debt, less current portion 703,729 701,945
---------- ----------
Total Liabilities 2,849,078 3,247,213
---------- ----------
STOCKHOLDERS' EQUITY
- --------------------
Common stock 2,519 2,519
Additional paid-in capital 1,923,384 1,902,824
Retained earnings 1,325,622 1,946,963
Deferred compensation (55,917) (57,439)
Treasury common stock at cost (316,900) (318,617)
Foreign currency translation adjustment (673) (584)
---------- ----------
Total Stockholders' Equity 2,878,035 3,475,666
---------- ----------
Total Liabilities and Stockholders' Equity $5,727,113 $6,722,879
========== ==========
(1) The information in this column was derived from the Company's audited
consolidated balance sheet as of June 27, 1997.
See notes to consolidated condensed financial statements.
4
SEAGATE TECHNOLOGY, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Nine Months Ended
------------------------
April 3, March 28,
1998 1997
----------- -----------
OPERATING ACTIVITIES:
Net income (loss) $ (551,904) $ 598,711
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 496,795 446,157
Deferred income taxes 12,864 99,217
In-process research and development 215,764 2,876
Non-cash portion of restructuring charge 202,583 -
Unusual items - 13,446
Other, net 38,090 34,569
Changes in operating assets and liabilities:
Accounts receivable 209,746 (177,847)
Inventories 180,582 110,584
Accounts payable (268,563) 18,623
Accrued income taxes (60,937) 67,395
Accrued expenses (159,988) (29,450)
Other assets and liabilities, net (61,295) 122,897
----------- -----------
Net cash provided by operating activities 253,737 1,307,178
INVESTING ACTIVITIES:
Acquisition of property, equipment and leasehold
improvements, net (546,795) (606,524)
Purchases of short-term investments (3,282,755) (3,207,918)
Maturities and sales of short-term investments 3,325,786 2,541,963
Additional payments for acquisition of Quinta, net of cash acquired (194,147) -
Equity investments (21,663) (14,000)
Other, net 8,986 30,121
----------- -----------
Net cash used in investing activities (710,588) (1,256,358)
FINANCING ACTIVITIES:
Issuance of long-term debt - 698,592
Sale of common stock 36,821 71,982
Purchase of treasury stock (105,334) (297,393)
Other, net 564 (8,049)
----------- -----------
Net cash provided by (used in) financing activities (67,949) 465,132
Effect of exchange rate changes on cash and cash equivalents 3,537 1,361
----------- -----------
Increase (decrease) in cash and cash equivalents (521,263) 517,313
Cash and cash equivalents at the beginning of the period 1,047,335 503,754
----------- -----------
Cash and cash equivalents at the end of the period $ 526,072 $ 1,021,067
=========== ===========
See notes to consolidated condensed financial statements.
5
SEAGATE TECHNOLOGY, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
---------------------
The consolidated condensed financial statements have been prepared by the
Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. The Company
believes the disclosures included in the unaudited consolidated condensed
financial statements, when read in conjunction with the consolidated
financial statements of the Company as of June 27, 1997 and notes thereto,
are adequate to make the information presented not misleading.
The consolidated condensed financial statements reflect, in the opinion of
management, all material adjustments necessary to summarize fairly the
consolidated financial position, results of operations and cash flows for
such periods. Such adjustments are of a normal recurring nature, except
for the reversal of certain restructuring costs previously incurred in
connection with the February 1996 merger with Conner Peripherals, Inc.
("Conner") in the quarter ended September 27, 1996.
The results of operations for the three and nine month periods ended April
3, 1998 are not necessarily indicative of the results that may be expected
for the entire year ending July 3, 1998.
The Company operates and reports financial results on a fiscal year of 52
or 53 weeks ending on the Friday closest to June 30. Accordingly, fiscal
1997 was 52 weeks and ended on June 27, 1997 and fiscal 1998 will be 53
weeks and will end on July 3, 1998.
2. NET INCOME (LOSS) PER SHARE
---------------------------
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share." Statement No. 128 replaced the previously
reported primary and fully diluted earnings per share with basic and
diluted earnings per share. Unlike primary earnings per share, basic
earnings per share excludes any dilutive effects of options and convertible
securities. Diluted earnings per share is very similar to the previously
reported fully diluted earnings per share. All earnings per share amounts
for all periods have been presented, and where necessary, restated to
conform to the Statement No. 128 requirements. The adoption of Statement
No. 128 did not have a material impact on the Company's earnings per share.
For the periods in which the Company had net income, basic net income per
share was based on the weighted average number of shares of common stock
outstanding during the period. For the same periods diluted net income per
share further included the effect of stock options outstanding during the
period and assumed the conversion of the Company's convertible subordinated
debentures for the period of time that they were outstanding. For the
periods in which the Company had a net loss, the net loss per share was
computed using only the weighted average number of shares of common stock
outstanding during the period. The
6
following table sets forth the computation of basic and diluted net income
(loss) per share.
(In Thousands Except Three Months Ended Nine Months Ended
Per Share Data) --------------------- ---------------------
April 3, March 28, April 3, March 28,
1998 1997 1998 1997
--------- --------- --------- ---------
Basic Net Income (Loss) Per
---------------------------
Share Computation
-----------------
Numerator:
Net income (loss) $(128,515) $256,750 $(551,904) $598,711
--------- --------- --------- ---------
Denominator:
Weighted average number of
common shares outstanding
during the period 242,566 246,528 243,418 228,881
--------- --------- --------- ---------
Basic net income (loss)
per share $ (0.53) $ 1.04 $ (2.27) $ 2.62
========= ========= ========= =========
Diluted Net Income (Loss) Per
-----------------------------
Share Computation
-----------------
Numerator:
Net income (loss) $(128,515) $ 256,750 $(551,904) $598,711
Add convertible subordinated
debentures interest, net of
income tax effect - - - 16,504
--------- --------- --------- ---------
Total $(128,515) $ 256,750 $(551,904) $ 615,215
--------- --------- --------- ---------
Denominator:
Weighted average number of
common shares outstanding
during the period 242,566 246,528 243,418 228,881
Incremental common shares
attributable to exercise of
outstanding options (assuming
proceeds would be used to
purchase treasury stock) - 8,770 - 7,439
Incremental common shares
attributable to conversion of
convertible subordinated
debentures - - - 22,520
--------- --------- --------- ---------
Total 242,566 255,298 243,418 258,840
--------- --------- --------- ---------
Diluted net income (loss)
per share $ (0.53) $ 1.01 $ (2.27) $ 2.38
========= ========= ========= =========
7
Incremental common shares attributable to exercise of outstanding options
(assuming proceeds would be used to purchase treasury stock) of 2,883,000
and 4,460,000 for the three and nine months ended April 3, 1998,
respectively, were not included in the diluted net income per share
computation because the effect would be antidilutive.
3. BALANCE SHEET INFORMATION
-------------------------
(In thousands)
April 3, June 27,
1998 1997
---- ----
Accounts Receivable:
Accounts receivable $888,945 $1,101,248
Allowance for non-collection (57,856) (60,413)
----------- -----------
$831,089 $1,040,835
=========== ===========
Inventories:
Components $219,314 $ 358,667
Work-in-process 77,737 134,198
Finished goods 261,171 315,415
----------- -----------
$558,222 $ 808,280
=========== ===========
Property, Equipment and Leasehold Improvements:
Property, equipment and leasehold improvements $ 3,239,190 $ 3,058,444
Allowance for depreciation and amortization (1,546,030) (1,271,819)
----------- -----------
$ 1,693,160 $ 1,786,625
=========== ===========
4. INCOME TAXES
------------
The effective tax rate used to record the benefit for income taxes for the
nine months ended April 3, 1998 was 25% compared with a 28% effective tax
rate used to record the provision for income taxes for the comparable
period last year. The lower effective tax rate used to record the benefit
for income taxes for the nine months ended April 3, 1998 resulted primarily
from non-deductible charges incurred as a result of the acquisition of
Quinta Corporation. Excluding the acquisition of Quinta Corporation,
certain non-recurring restructuring costs and the reversal of certain
Amstrad litigation charges, the pro forma effective tax rate used to record
the benefit for income taxes for the nine months ended April 3, 1998 would
have been 28%. The pro forma effective tax rate of 28% is less than the
U.S. statutory rate primarily because a portion of the Company's
anticipated net earnings of foreign subsidiaries is not subject to foreign
income taxes and is considered to be permanently invested in non-U.S.
operations.
5. SUPPLEMENTAL CASH FLOW INFORMATION
----------------------------------
(In thousands)
Nine Months Ended
-------------------
April 3, March 28,
1998 1997
------- ---------
Cash Transactions:
Cash paid for interest $52,130 $24,402
Cash paid for income taxes 15,284 58,811
8
Non-Cash Transactions:
Conversion of debentures - 788,020
6. RESTRUCTURING COSTS
-------------------
In the quarters ended January 2, 1998 and April 3, 1998, the Company
recorded restructuring charges of $205,465,000 and $141,893,000,
respectively, for a total of $347,358,000. These charges reflect steps the
Company is taking to align worldwide operations with current market
conditions and to improve the productivity of its operations and the
efficiency of its development efforts. The restructuring charges comprised
$56,693,000 for reduction of personnel due to closure or consolidation of
certain operations, $77,717,000 for closure of excess facilities,
$148,572,000 to write off or write down equipment, intangibles and other
assets, and $64,376,000 for contract cancellations and other expenses. In
connection with this restructuring the Company currently expects a
workforce reduction of approximately 15,000 employees. Of the 15,000
employees, 8,144 are involuntary terminations of regular, full-time
employees, 1,528 are contract laborers, primarily engaged through temporary
employment agencies, and the remainder represent attrition. Approximately
13,300 of the 15,000 employees, including 7,591 of the 8,144 involuntary
terminations of regular, full-time employees, had been terminated as of
April 3, 1998. The Company anticipates that the implementation of the
restructuring plan will be substantially complete by the end of December
1998. The following table summarizes the Company's restructuring activity
for the nine months ended April 3, 1998 (in thousands):
CONTRACT
EQUIPMENT, CANCELLATIONS
SEVERANCES EXCESS INTANGIBLES AND OTHER
AND BENEFITS FACILITIES AND OTHER ASSETS EXPENSES TOTAL
------------ ---------- ---------------- -------- -----
Restructuring charges $ 56,693 $ 77,717 $ 148,572 $ 64,376 $ 347,358
Cash charges (44,687) (2,346) - (29,239) (76,272)
Non-cash charges - (54,011) (136,975) - (190,986)
-------- -------- --------- -------- ---------
Reserve balances,
April 3, 1998 $ 12,006 $ 21,360 $ 11,597 $ 35,137 $ 80,100
-------- -------- --------- -------- ---------
In 1996, the Company recorded restructuring charges totaling $241,720,000
as a result of the merger with Conner. During the first quarter of 1997,
the Company reversed $9,554,000 of its restructuring reserves as a result
of the completion of certain aspects of the restructuring plan at less than
the originally estimated cost. As of June 27, 1997, the implementation of
such restructuring plan was substantially complete.
7. ACQUISITION OF QUINTA
---------------------
In April and June 1997, Seagate invested an aggregate of $20 million to
acquire approximately ten percent (10%) of the outstanding stock of Quinta
Corporation ("Quinta"), a developer of ultra-high capacity disc drive
technologies, including a new optically-assisted Winchester (OAW)
technology. In August 1997, the Company completed the acquisition of
Quinta. Pursuant to the purchase agreement, the shareholders of Quinta
other than Seagate, received cash payments aggregating $230 million upon
closing of the transaction and are eligible to receive, upon achievement of
certain product development and early production milestones, additional
payments aggregating $95 million. As of April 3, 1998, milestone payments
totaling $19 million have been paid or accrued. As a result of this
acquisition, the Company incurred a one-time write-off of in-process
research and development of approximately $214 million in the quarter ended
October 3, 1997. Intangibles arising from the acquisition of Quinta are
being amortized on a straight-line basis over two years. This acquisition
was accounted
9
for as a purchase and, accordingly, the results of operations of Quinta
have been included in the Company's consolidated condensed financial
statements from the date of acquisition.
8. FOREIGN CURRENCY DERIVATIVES
----------------------------
The Company enters into foreign currency forward exchange and option
contracts to manage exposure related to certain foreign currency
commitments and anticipated foreign currency denominated expenditures
primarily in Singapore, Thailand and Malaysia. The goal of the Company's
hedging program is to economically guarantee or lock in the exchange rates
on a portion of the Company's local currency cash flows and not to
eliminate all short-term earnings volatility. Because not all economic
hedges qualify as accounting hedges, unrealized gains and losses may be
recognized in advance of the actual foreign currency cash flows. This
mismatch of accounting gains and losses and foreign currency cash flows was
especially pronounced for the first and second quarters of fiscal 1998 as a
result of the declines in the value of the Thai baht and Malaysian ringgit
relative to the U.S. dollar. Accordingly, the Company's results for the
nine months ending April 3, 1998 include approximately $76 million for
unrealized losses on foreign currency forward exchange contracts. Based on
uncertainty in the Southeast Asian foreign currency markets, the Company
has temporarily suspended purchasing foreign currency forward exchange and
option contracts for the Thai baht, Malaysian ringgit and Singapore dollar.
9. LITIGATION
----------
See Part II, Item 1 of this Form 10-Q for a description of legal
proceedings.
10
SEAGATE TECHNOLOGY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
CERTAIN FORWARD-LOOKING INFORMATION:
- ------------------------------------
This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements include the statements
relating to restructuring charges in the seventh paragraph under "Results of
Operations," the statements relating to the effective tax rate in the last
paragraph under "Results of Operations," the statements regarding capital
expenditures in the third paragraph under "Liquidity and Capital Resources," the
statements below under "Factors Affecting Future Operating Results" and the
statements under "Part II Other Information - Item 1. Legal Proceedings," among
others. These forward-looking statements are based on current expectations and
entail various risks and uncertainties that could cause actual results to differ
materially from those projected in the forward-looking statements. Such risks
and uncertainties are set forth below under "Factors Affecting Future Operating
Results."
RESULTS OF OPERATIONS:
- ----------------------
Revenue for the quarter ended April 3, 1998 was $1,675,026,000, as compared with
$2,501,823,000 for the comparable year-ago quarter, and $1,673,327,000 for the
immediately preceding quarter ended January 2, 1998. Revenue for the nine
months ended April 3, 1998 was $5,243,860,000 as compared with $6,962,804,000
for the comparable year-ago period. The decrease in revenue from the comparable
year-ago periods was due primarily to a continuing decline in the average unit
sales prices of the Company's products as a result of intensely competitive
market conditions, a lower level of unit shipments reflecting continuing
weakness in demand for the Company's disc drive products and a shift in mix away
from the Company's higher priced products. The Company expects that price
erosion in the data storage industry will continue for the foreseeable future.
This competition and continuing price erosion could adversely affect the
Company's results of operations in any given quarter and such adverse effect
often cannot be anticipated until late in any given quarter.
Gross margin as a percentage of revenue was 12.2% and 13.2% for the three and
nine months ended April 3, 1998, compared with 25.2% and 22.5% for the
comparable periods last year and 11.4% for the immediately preceding quarter
ended January 2, 1998. Without certain special net charges of $58,700,000 and
$16,832,000 recorded in the quarters ended January 2, 1998 and April 3, 1998,
respectively, primarily for inventory and equipment valuation adjustments and
vendor liability charges related to the Company's restructuring plan, pro forma
gross margin as a percentage of revenue was 15.0% for the quarter ended January
2, 1998 and 13.2% and 14.6% for the quarter and nine months ended April 3, 1998,
respectively. Certain inventory write-offs included in special charges in the
quarter ended January 2, 1998 were partially offset by recoveries on sale of a
portion of such inventories in the quarter ended April 3, 1998. The decrease in
pro forma gross margin as a percentage of revenue from the comparable year-ago
periods was primarily due to a continuing decline in the average unit sales
prices of the Company's products as a result of intensely competitive market
conditions, lower revenue and a shift in mix away from the Company's higher
capacity disc drives, partially offset by a reduction in material and scrap
costs per unit and improved gross margins of Seagate Software. The decrease in
pro forma gross margin as a percentage of revenue from the immediately preceding
quarter was primarily due to a continuing decline in the average unit sales
prices of the Company's products as a result of competitive market conditions
and a shift in mix away from
11
the Company's higher capacity disc drives, partially offset by a reduction in
material and scrap costs per unit.
Product development expenses for the three and nine months ended April 3, 1998
were $154,950,000 and $442,572,000, respectively, an increase of $35,985,000 and
$103,214,000 when compared with the comparable periods last year and an increase
of $10,661,000 when compared with the immediately preceding quarter ended
January 2, 1998. These expenses represented 9.3% and 8.4%, respectively, of
revenue for the three and nine months ended April 3, 1998 compared with 4.8% and
4.9%, respectively, for the comparable periods last year and 8.6% of revenue for
the immediately preceding quarter. The increase in expenses from the comparable
year-ago periods was primarily due to increases in salaries and related costs,
payments or accruals for such payments to former shareholders of Quinta
Corporation ("Quinta"), a wholly-owned subsidiary of the Company acquired in
August 1997, for achievement of certain product development milestones,
allocated occupancy costs and an overall increase in the Company's product
development efforts. The Company's product development activities include
efforts to improve its time-to-market performance, the development of ultra-high
capacity disc drive technologies, including a new optically-assisted Winchester
(OAW) technology being developed by Quinta and development efforts related to
its software and tape drive products. These increases in expenses were partially
offset by the absence of employee profit sharing and executive bonuses in the
three and nine months ended April 3, 1998. The increase in expenses from the
immediately preceding quarter was primarily due to payments to former
shareholders of Quinta upon achievement of certain product development
milestones and increases in recruitment and relocation costs.
Marketing and administrative expenses for the three and nine months ended April
3, 1998 were $118,857,000 and $374,145,000, respectively, a decrease of
$11,733,000 and an increase of $6,229,000 when compared with the comparable
periods last year and a decrease of $10,190,000 when compared with the
immediately preceding quarter ended January 2, 1998. These expenses represented
7.1% of revenue for the three and nine months ended April 3, 1998 compared with
5.2% and 5.3% for the comparable periods last year and 7.7% of revenue for the
immediately preceding quarter. The decrease in expenses from the comparable
year-ago quarter was primarily due to decreases in allocated occupancy costs and
the absence of employee profit sharing and executive bonuses in the quarter
ended April 3, 1998, partially offset by increases in advertising and promotion
expenses and salaries and related costs. The increase in expenses from the
comparable year-ago nine-month period was primarily due to increases in salaries
and related costs, increased marketing and administrative expenses related to
the Company's software products and services, particularly those of the
Information Management Group, and increased advertising and promotion expense,
partially offset by decreases in allocated occupancy costs, the absence of
employee profit sharing and executive bonuses in the nine months ended April 3,
1998 and decreases in legal expenses. The decrease in expenses from the
immediately preceding quarter was primarily due to a reduction in salaries and
related costs, reduced equipment expenses, decreases in travel and entertainment
expense and decreases in advertising and promotion expense.
Amortization of goodwill and other intangibles decreased by $8,889,000 and
$10,186,000 for the three and nine months ended April 3, 1998, when compared
with the comparable periods last year and decreased by $2,768,000 when compared
with the immediately preceding quarter ended January 2, 1998. The decrease in
amortization from the comparable periods last year was primarily due to the
inclusion in amortization expense of the write-down of goodwill and the write-
offs and write-downs, in the quarters ended December 27, 1996 and March 28,
1997, of certain intangible assets related to past acquisitions of software
companies whose value had become impaired and the resultant subsequent reduction
in amortization expense, partially offset
12
by additional amortization related to goodwill and intangibles arising from an
additional investment in Dragon Systems, Inc. ("Dragon") in September 1997 and
the acquisition of Quinta in August 1997. The decrease in amortization from the
immediately preceding quarter was primarily due to the write-downs of goodwill
and the write-offs and write-downs, in the quarter ended January 2, 1998, of
certain intangible assets related to past acquisitions of software companies
whose value had become impaired.
The $215,764,000 charge for the write-off of in-process research and development
in the quarter ended October 3, 1997 was primarily a result of the August 1997
acquisition of Quinta. See note 7, Acquisition of Quinta, to consolidated
condensed financial statements.
In the quarters ended January 2, 1998 and April 3, 1998, the Company recorded
restructuring charges of $205,465,000 and $141,893,000, respectively, for a
total of $347,358,000. These charges reflect steps the Company is taking to
align worldwide operations with current market conditions and to improve the
productivity of its operations and the efficiency of its development efforts.
The restructuring charges comprised $56,693,000 for reduction of personnel due
to closure or consolidation of certain operations, $77,717,000 for closure of
excess facilities, $148,572,000 to write off or write down equipment,
intangibles and other assets, and $64,376,000 for contract cancellations and
other expenses.
Amstrad PLC ("Amstrad") initiated a lawsuit against the Company in 1992
concerning the Company's sale of allegedly defective disc drives to Amstrad. On
November 6, 1997, the Company and Amstrad settled all of the outstanding
disputes. The settlement resulted in a $21,969,000 reduction against the
$153,000,000 charge recorded in June 1997. The $21,969,000 reduction is shown
as unusual items in the Consolidated Condensed Statements of Income for the nine
month period ended April 3, 1998.
Net other income increased by $10,977,000 and decreased by $56,756,000,
respectively, for the three and nine months ended April 3, 1998 when compared
with the comparable periods last year and increased by $26,514,000 from the
immediately preceding quarter ended January 2, 1998. The increase in net other
income from the comparable year-ago quarter was primarily due to a decrease in
the charge for minority interest in the Company's majority-owned subsidiary in
Shenzhen, China, partially offset by an increase in interest expense due to
higher average levels of long-term debt outstanding. The decrease in net other
income from the comparable year-ago nine-month period was primarily due to
charges for mark-to-market adjustments in the current year of $75,662,000 on
certain of the Company's foreign currency forward exchange contracts for the
Thai baht and the Malaysian ringgit and an increase in interest expense due to
higher average levels of long-term debt outstanding, partially offset by an
increase in interest income primarily due to higher average invested cash. The
increase from the immediately preceding quarter was primarily due to a decrease
in charges for mark-to-market adjustments on certain of the Company's foreign
currency forward exchange contracts and a decrease in the charge for minority
interest in the Company's majority-owned subsidiary in Shenzhen, China.
The effective tax rate used to record the benefit for income taxes for the nine
months ended April 3, 1998 was 25% compared with a 28% effective tax rate used
to record the provision for income taxes for the comparable period last year.
The lower effective tax rate used to record the benefit for income taxes for the
nine months ended April 3, 1998 resulted primarily from non-deductible charges
incurred as a result of the acquisition of Quinta Corporation. Excluding the
acquisition of Quinta Corporation, certain non-recurring restructuring costs and
the reversal of certain Amstrad litigation charges, the pro forma effective tax
rate used to record the benefit for income taxes for the nine months ended April
3, 1998 would have been 28%. The pro forma effective
13
tax rate of 28% is less than the U.S. statutory rate primarily because a portion
of the Company's anticipated net earnings of foreign subsidiaries is not subject
to foreign income taxes and is considered to be permanently invested in non-U.S.
operations. The Company expects its effective tax rate on operating income for
the remaining quarter of fiscal 1998 to approximate 28%. However, the actual
effective tax rate may vary from 28% if, for example, the Company incurs charges
in connection with future acquisitions.
FOREIGN CURRENCY RISK:
- ----------------------
The Company transacts business in various foreign countries. Its primary
foreign currency cash flows are in emerging market countries in Asia and in
certain European countries. The Company has established a foreign currency
hedging program utilizing foreign currency forward exchange contracts and
purchased currency options to hedge local currency cash flows for payroll,
inventory, other operating expenditures and fixed asset purchases in Singapore,
Thailand and Malaysia. Under this program, increases or decreases in the
Company's local currency operating expenses and other cash outflows, as
translated into U.S. dollars, are partially offset by realized gains and losses
on the hedging instruments. The goal of this hedging program is to economically
guarantee or lock in the exchange rates on the Company's foreign currency cash
outflows rather than to eliminate the possibility of short-term earnings
volatility. The Company does not use foreign currency forward exchange contracts
or purchased currency options for trading purposes.
Gains and losses related to qualified hedges of firm commitments and anticipated
transactions are deferred and are recognized in income or as adjustments of
carrying amounts when the hedged transaction occurs. All other foreign currency
hedge contracts are marked-to-market and unrealized gains and losses are
included in current period net income. Because not all economic hedges qualify
as accounting hedges, unrealized gains and losses may be recognized in income in
advance of the actual foreign currency cash flows. This mismatch of accounting
gains and losses and foreign currency cash flows was especially pronounced
during the first and second quarters of fiscal 1998 as a result of the declines
in value of the Thai baht and Malaysian ringgit, relative to the U.S. dollar.
This resulted in an unrealized pre-tax charge of $75,662,000 for the nine months
ended April 3, 1998. Based on uncertainty in the Southeast Asian foreign
currency markets, the Company has temporarily suspended purchasing foreign
currency forward exchange and option contracts for the Thai baht, Malaysian
ringgit and Singapore dollar.
The table below provides information about the Company's derivative financial
instruments, comprised of foreign currency forward exchange contracts and
purchased currency options. The table presents the notional amounts in U.S.
dollars (at the contract exchange rates) and the weighted average contractual
foreign currency exchange rates in local currency per U.S. dollar. Substantially
all instruments mature within six months.
April 3, 1998
----------------------------------------
Notional Average Estimated
In thousands of US$, except average contract rate Amount Contract Rate Fair Value (1)
- --------------------------------------------------- -------- -------- --------------
Foreign currency forward exchange contracts:
Malaysian ringgit $ 79,613 2.88 $(19,251)
Singapore dollar 143,317 1.46 (14,221)
Thai baht 33,932 26.84 (11,711)
-------- -------------
$256,862 $(45,183)(2)
Purchased currency options:
Malaysian ringgit $ 21,724 2.53 $ -
14
Singapore dollar 23,994 1.42 -
-------- -------------
$ 45,718 $ -
(1) Equivalent to the unrealized net gain (loss) on existing contracts.
(2) $17,644 of the total $45,183 unrealized loss on foreign currency forward
exchange contracts was deferred at April 3, 1998 because the forward exchange
contracts are hedges of firm commitments.
LIQUIDITY AND CAPITAL RESOURCES:
- --------------------------------
At April 3, 1998, the Company's cash, cash equivalents and short-term
investments totaled $1.721 billion, a decrease of $562 million from the June 27,
1997 balance. This decrease was primarily a result of expenditures of $547
million for property, equipment and leasehold improvements, the payment of $194
million in connection with the acquisition of Quinta, net of cash acquired, the
net payment of $123 million in connection with the adverse judgement in the
Amstrad PLC litigation and the repurchase of approximately 4 million shares of
the Company's common stock for $105 million, partially offset by net cash
provided by operating activities. Until required for other purposes, the
Company's cash and cash equivalents are maintained in highly liquid investments
with remaining maturities of 90 days or less at the time of purchase, while its
short-term investments primarily consist of readily marketable debt securities
with remaining maturities of more than 90 days at the time of purchase.
As of April 3, 1998, the Company had committed lines of credit of $66 million
which can be used for standby letters of credit and bankers' guarantees. At
April 3, 1998, nearly all had been utilized.
The Company expects investments in property and equipment in the current fiscal
year to approximate $750 million, of which approximately $551 million had been
incurred as of April 3, 1998. The Company plans to finance these investments
from existing cash balances and cash flows from operations. The $551 million
year-to-date investment comprised $187 million for manufacturing facilities and
equipment related to the Company's subassembly and disc drive final assembly and
test facilities in the United States, Far East and Ireland; $186 million for
manufacturing facilities and equipment for the recording head operations in the
United States, Malaysia, Northern Ireland, the Philippines and Thailand; $158
million for expansion of the Company's thin-film media operations in California,
Singapore and Northern Ireland; and $20 million for other purposes.
During the nine months ended April 3, 1998 the Company acquired approximately 4
million shares of its common stock for approximately $105 million. The
repurchase of these shares was primarily in connection with a new stock
repurchase program announced in June 1997 in which up to $600 million worth of
the Company's common stock was authorized to be acquired in the open market.
Although the Company may continue to repurchase shares of its common stock from
time to time, it has not repurchased any shares since October 1997.
FACTORS AFFECTING FUTURE OPERATING RESULTS:
- -------------------------------------------
The data storage industry in which the Company competes is subject to a number
of risks, each of which has affected the Company's operating results in the past
and could impact the Company's future operating results. The demand for disc
drive and tape drive products depends principally on demand for computer systems
and storage upgrades to computer systems, which has historically been volatile.
Changes in demand for computer systems often have an
15
exaggerated effect on the demand for disc drive and tape drive products in any
given period, and unexpected slowdowns in demand for computer systems generally
cause sharp declines in demand for such products. In addition, the Company's
future success will require, in part, that the market for computer systems,
storage upgrades to computer systems and multimedia applications, such as
digital video and video-on-demand, and hence the market for disc drives, remains
strong. Delays in the development, introduction and ramping of production of new
products has in the past and may continue to significantly adversely impact
operating results. The data storage industry has been characterized by periodic
situations in which the supply of drives exceeds demand, resulting in higher
than anticipated inventory levels and intense price competition. Even during
periods of consistent demand, this industry is characterized by intense
competition and ongoing price erosion over the life of a given drive product.
The Company expects that competitors will offer new and existing products at
prices necessary to gain or retain market share and customers. The Company
expects that price erosion in the data storage industry will continue for the
foreseeable future. This competition and continuing price erosion could
adversely affect the Company's results of operations in any given quarter and
such adverse effect often cannot be anticipated until late in any given quarter.
In addition, the demand of drive customers for new generations of products has
led to short product life cycles that require the Company to constantly develop
and introduce new drive products on a cost-effective and timely basis. Many of
these new drive products require increased storage capacity and more advanced
technology. The increased difficulty and complexity associated with production
of higher capacity disc drives increases the likelihood of reliability, quality
or operability problems that could result in reduced bookings, increased
manufacturing rework and scrap costs, increased service and warranty costs and a
decline in the Company's competitive position. There is also a demand developing
in the personal computer market for computer systems costing less than $1000.
The Company is positioning itself to participate in this market, however, there
can be no assurance that the Company will be able to produce disc drives for
this market at a cost low enough to yield gross margins comparable to those of
its current overall product mix. In addition, the Company's operating results
have been and may in the future be subject to significant quarterly fluctuations
as a result of a number of other factors, including the timing of orders from
and shipment of products to major customers, product mix, pricing, delays or
interruptions in the production of products, competing technologies, variations
in product cost, component availability due to single or limited sources of
supply, high fixed costs resulting from the Company's vertical integration
strategy, the Company's ability to attract and retain key technical employees,
foreign currency exchange fluctuations (see "Foreign Currency Risk"), increased
competition and general economic and industry fluctuations. For example, revenue
decreased to $1,675,026,000 in the third quarter of fiscal 1998 from
$2,501,823,000 in the third quarter of fiscal 1997 as a result of increased
competition resulting in significant price decreases and continuing weakness in
demand for the Company's disc drive products. The Company's future operating
results may also be adversely affected by an adverse judgment or settlement in
the legal proceedings in which the Company is currently involved. See Part II,
Item 1, Legal Proceedings of this Form 10-Q.
The Company has experienced and expects to continue to experience intense
competition from a number of domestic and foreign companies. These companies
include the other leading independent disc drive manufacturers as well as large
integrated multinational manufacturers such as Fujitsu Limited, Hyundai
Electronics America (Maxtor Corporation), International Business Machines
Corporation, NEC Corporation, Samsung Electronics Co., Ltd. and Toshiba
Corporation. Such competition could materially adversely affect the Company's
business, operating results and financial condition. There can be no assurance
that the Company will be able to compete successfully against current or future
competitors or that competitive pressures faced by the Company will not
materially adversely affect its business, operating results and financial
condition.
16
The cost, quality and availability of certain components, including heads,
media, application specific integrated circuits, motors, printed circuit boards
and custom semiconductors are critical to the successful production of disc
drives. The Company's strategy of vertical integration has allowed it to
internally manufacture many of the critical components used in its products.
The Company also relies on independent suppliers for certain components used in
its products. The Company has in the past experienced production delays when
unable to obtain sufficient quantities of certain components. Any prolonged
interruption or reduction in the supply of any key components could have a
material adverse effect on the Company's business, operating results and
financial condition. The Company has pursued a strategy of vertical integration
of its manufacturing process in order to reduce costs, control quality and
assure availability and quality of certain components. A strategy of vertical
integration entails a high level of fixed costs and requires a high volume of
production and sales to be successful. During periods of decreased production,
such as the Company is now experiencing, these high fixed costs have had, and
could in the future have, a material adverse effect on the Company's operating
results and financial condition. In addition, a strategy of vertical integration
has in the past and could continue to delay the Company's ability to introduce
products containing market-leading technology.
The Company has significant offshore operations. Offshore operations are
subject to certain inherent risks, including delays in transportation, changes
in governmental policies, tariffs and import/export regulations, political
unrest, fluctuations in currency exchange rates and geographic limitations on
management controls and reporting. There can be no assurance that the inherent
risks of offshore operations will not adversely affect the Company's business,
operating results and financial condition in the future. In addition, because
the Company's products are priced in U.S. dollars, the currency instability in
the Asian financial markets may have the effect of making the Company's products
more expensive to computer manufacturers and other users than those of other
disc drive manufacturers whose products may be priced in one of the affected
Asian currencies, and, therefore, those customers may reduce future purchases of
the Company's disc drive products. The Company anticipates that the recent
turmoil in Asian financial markets and the recent deterioration of the
underlying economic conditions in certain Asian countries may have an impact on
its sales to customers located in or whose end-user customers are located in
those countries due to the impact of currency fluctuations on the relative price
of the Company's products and restrictions on government spending imposed by the
International Monetary Fund (the "IMF") on those countries receiving the IMF's
assistance. In addition, customers in those countries may face reduced access
to working capital to fund purchases of disc drive components or software, such
as the Company's products, due to higher interest rates, reduced bank lending
due to contractions in the money supply or the deterioration in the customer's
or its bank's financial condition or the inability to access other financing.
The Company has incorporated its software acquisitions into a single entity
called Seagate Software, Inc. ("SSI") and is offering employees of SSI and
selected employees of the Company an opportunity to acquire an equity interest
in SSI. The Company intends to continue its expansion into software and other
complementary data technology businesses through internal growth as well as
acquisitions.
Acquisitions involve numerous risks, including difficulties in the assimilation
of the operations and products of the acquired businesses and the potential loss
of key employees or customers of the acquired businesses. The Company expects
that it will continue to incur charges as it acquires businesses, including
charges for the write-off of in-process research and development. The timing of
such write-offs has in the past and may in the future lead to fluctuations in
the Company's operating results on a quarterly and annual basis. For example,
the Company incurred a charge to operations in the first quarter of fiscal 1998
of approximately $216 million for the write-off of in-process research and
development, $214 million of which was in connection with the acquisition of
Quinta.
17
The Company's operations are dependent on its ability to protect its computer
equipment and the information stored in its databases against damage by fire,
natural disaster, power loss, telecommunications failures, unauthorized
intrusion and other catastrophic events. The Company believes it has taken
prudent measures to reduce the risk of interruption in its operations. However,
there can be no assurance that these measures are sufficient. Any damage or
failure that causes interruptions in the Company's operations could have a
material adverse effect on its business, results of operations and financial
condition.
The Company is currently in the process of transitioning to new computer
software for its financial, accounting, inventory control, order processing and
other management information systems. The successful implementation of these
new systems is crucial to the efficient operation of the Company's business.
There can be no assurance that the Company will implement its new systems in an
efficient and timely manner or that the new systems will be adequate to support
the Company's operations. Problems with installation or initial operation of
the new systems could cause substantial management difficulties in operations
planning, financial reporting and management and thus could have a material
adverse effect on the Company's business, financial condition and results of
operations.
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Computer programs that
have date-sensitive software may recognize a date using "00" as the year 1900
rather than the year 2000. The Company considers a product to be in "Year 2000
compliance" if the product's performance and functionality are unaffected by
processing of dates prior to, during and after the year 2000, but only if all
products (for example hardware, software and firmware) used with the product
properly exchange accurate date data with it. Although the Company believes its
disc and tape drive products and certain of its software products are in Year
2000 compliance, the Company has determined that certain of its software
products are not and will not be Year 2000 compliant, and is taking measures to
inform its customers of that fact. The Company anticipates that substantial
litigation may be brought against vendors, including the Company, of all
component products of systems that are unable to properly manage data related to
the Year 2000. The Company's agreements with customers typically contain
provisions designed to limit the Company's liability for such claims. It is
possible, however, that these measures will not provide protection from
liability claims, as a result of existing or future federal, state or local laws
or ordinances or unfavorable judicial decisions. Any such claims, with or
without merit, could result in a material adverse affect on the Company's
business, financial condition and results of operations, including increased
warranty costs, customer satisfaction issues and potential lawsuits.
The Company is identifying Year 2000 dependencies in its internal systems and is
implementing changes to such systems to make them Year 2000 compliant. The
Company has also initiated formal communications with all of its significant
suppliers and financial institutions, and is in the process of communicating
with its large customers to determine the extent to which the Company is
vulnerable to those third parties' failure to remedy their own Year 2000 Issue.
The Company anticipates that its systems will be substantially Year 2000
compliant by the end of June 1999. The cost of bringing the Company's systems
into Year 2000 compliance is in the process of being defined, however it is not
expected to have a material effect on the Company's financial condition or
results of operations. While the Company currently expects that the Year 2000
Issue will not pose significant operational problems, delays in the
implementation of new information systems, or a failure to fully identify all
Year 2000 dependencies in the Company's systems and in the systems of its
vendors, customers and financial institutions could have
18
material adverse consequences, including delays in the delivery or sale of
products. Therefore, the Company is developing contingency plans for continuing
operations in the event such problems arise.
The Company's stock price, like that of other technology companies, is subject
to significant volatility. The announcement of new products, services or
technological innovations or major restructurings by the Company or its
competitors, quarterly variations in the Company's results of operations,
changes in revenue or earnings estimates by the investment community and
speculation in the press or investment community are among the factors affecting
the Company's stock price. In addition, the stock price may be affected by
general market conditions and domestic and international macroeconomic factors
unrelated to the Company's performance. Because of the foregoing reasons,
recent trends should not be considered reliable indicators of future stock
prices or financial results.
19
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-----------------
The following discussion contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These statements relate to the Company's legal
proceedings described below. Litigation is inherently uncertain and may result
in adverse rulings or decisions. Additionally, the Company may enter into
settlements or be subject to judgments which may, individually or in the
aggregate, have a material adverse effect on the Company's results of
operations. Accordingly, actual results could differ materially from those
projected in the forward-looking statements.
PATENT LITIGATION
- -----------------
In November 1992, Rodime, PLC ("Rodime") filed a complaint in Federal Court for
the Central District of California, alleging infringement of U.S. Patent No. B1
4,638,383 and various state law unfair competition claims. It was the opinion
of the Company's patent counsel that the Company's products do not infringe any
valid claims of the Rodime patent in suit and thus the Company refused Rodime's
offer of a license for its patents. Other companies, however, such as IBM,
Hewlett-Packard and a number of Japanese companies have reportedly made payments
to and taken licenses from Rodime. On October 24, 1997 the Court entered a
Final Judgment against Rodime and in favor of Seagate. Rodime has appealed from
the final judgment. The Company intends to vigorously defend itself in the
appeal brought by Rodime.
On October 5, 1994, a patent infringement action was filed against the Company
by an individual, James M. White, in the U.S. District Court for the Northern
District of California for alleged infringement of U.S. Patent Nos. 4,673,996
and 4,870,519. Both patents relate to air bearing sliders. Prior to the filing
of the lawsuit, the Company filed a Petition for Reexamination of U.S. Patent
No. 4,673,996 with the United States Patent and Trademark Office ("PTO") and
this Petition was granted shortly after the lawsuit was filed. Subsequently,
the Company filed a Petition for Reexamination of U.S. Patent No. 4,870,519.
This second petition was also granted by the PTO. The District Court stayed the
action pending the outcome of the Reexaminations. Both patents have completed
reexamination and the stay of the action has been lifted. Mr. White's lawyers
filed a motion seeking a preliminary injunction to stop the sale of certain of
the Company's products. The Court denied the motion on July 1, 1997. It is the
opinion of the Company's patent counsel that the Company's products do not
infringe any valid or enforceable claims of the patents involved in the suit.
The Company intends to vigorously defend itself against any and all charges of
infringement of these patents.
On December 16, 1996, a patent infringement action was filed against the Company
by an individual, Virgle Hedgcoth, in the U.S. District Court for the Northern
District of California, San Jose Division, for alleged infringement of U.S.
Patent Nos. 4,735,840; 5,082,747; and 5,316,864. These patents relate to
sputtered magnetic thin-film recording discs for computers and their
manufacture. The Company answered the complaint denying infringement, alleging
that the patents are invalid and unenforceable, and counterclaiming for
declaratory judgment that a fourth Hedgcoth patent, No. 4,894,133, is invalid,
unenforceable and not infringed. Additionally, on July 1, 1997, Mr. Hedgcoth
filed a patent infringement action against the
20
Company in the same Court for alleged infringement of a fifth patent, U.S.
Patent No. 5,262,970, issued May 6, 1997. It is the opinion of the Company's
patent counsel that the Company's products do not infringe any valid or
enforceable claims of the patents in the two actions, and that the claims of the
patents in the two actions are invalid or unenforceable. The Company intends to
vigorously defend itself against any and all charges of infringement of Mr.
Hedgcoth's patents.
Papst Licensing, GmbH, has given the Company notice that it believes certain
former Conner Peripherals, Inc. ("Conner") disc drives infringe several of its
patents covering the use of spindle motors in disc drives. It is the opinion of
the Company's patent counsel that the former Conner disc drives do not infringe
any claims of the patents and that the asserted claims of the patents are
invalid. The Company also believes that subsequent to the merger with Conner,
the Company's earlier paid-up license under Papst's patents extinguishes any
ongoing liability. The Company also believes it enjoys the benefit of a license
under Papst's patents since Papst Licensing had granted a license to motor
vendors of Conner.
In the normal course of business, the Company receives and makes inquiry with
regard to other possible intellectual property matters including alleged patent
infringement. Where deemed advisable, the Company may seek or extend licenses
or negotiate settlements.
OTHER MATTERS
- -------------
The Company is involved in a number of other judicial and administrative
proceedings incidental to its business. Although occasional adverse decisions
(or settlements) may occur, the Company believes that the final disposition of
such matters will not have a material adverse effect on the Company's financial
position or results of operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits
The following exhibits are included herein:
27.1 Financial Data Schedule - As of and for the period ended April 3, 1998.
27.2 Financial Data Schedule - As of and for the periods ended October 3, 1997,
March 28, 1997 and June 27, 1997 restated for Statement of Financial
Accounting Standard No. 128, Earnings Per Share (SFAS 128).
27.3 Financial Data Schedule - As of and for the periods ended December 27,
1996, September 27, 1996 and June 28, 1996, restated for SFAS 128.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed with the Securities and Exchange
Commission during the three months ended April 3, 1998.
21
SIGNATURES
Pursuant to the requirements 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.
------------------------
(Registrant)
DATE: May 13, 1998 BY: /s/ Charles C. Pope
_______________________
CHARLES C. POPE
Senior Vice President, Finance
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
DATE: May 13, 1998 BY: /s/ Alan F. Shugart
_______________________
ALAN F. SHUGART
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer
and Director)
22
SEAGATE TECHNOLOGY, INC.
INDEX TO EXHIBITS
EXHIBIT
NUMBER
_______
27.1 Financial Data Schedule - As of and for the period ended April 3, 1998.
27.2 Financial Data Schedule - As of and for the periods ended October 3, 1997,
March 28, 1997 and June 27, 1997 restated for Statement of Financial
Accounting Standard No. 128, Earnings Per Share (SFAS 128).
27.3 Financial Data Schedule - As of and for the periods ended December 27,
1996, September 27, 1996 and June 28, 1996, restated for SFAS 128.
23