Seagate 2002 Annual Report Download - page 24

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of the financial condition and results of operations for the period from July 1, 2000 through November 22,
2000, the period from November 23, 2000 through June 29, 2001, the fiscal year ended June 28, 2002 and the fiscal year ended June 27, 2003
for us and our predecessor. Financial information for the period from July 1, 2000 through November 22, 2000 is the historical financial
information of our predecessor, and when combined with the period from November 23, 2000 through June 29, 2001 is considered herein to be
pro forma fiscal year 2001. Through November 22, 2000, the rigid disc drive business that we now operate and the storage area networks
business that was operated through November 4, 2002 by XIOtech Corporation, our former wholly-owned subsidiary, were the rigid disc drive
and storage area networks divisions of Seagate Technology, Inc., a Delaware corporation, which is referred to herein as “Seagate Delaware”
.
Those divisions are our predecessor, and our operations prior to the sale of XIOtech were substantially identical to the operations of our
predecessor before the November 2000 transactions. Although we were incorporated on August 10, 2000, prior to November 23, 2000, our
operations were not material. Pro forma financial information related to revenue and cost of revenue for the fiscal year ended June 29, 2001 is
based on our historical consolidated financial statements for the period from November 23, 2000 through June 29, 2001 and the historical
combined financial statements of our predecessor for the period from July 1, 2000 through November 22, 2000, adjusted to give pro forma
effect to the November 2000 transactions and to eliminate the related compensation charges, as if the November 2000 transactions had
occurred on July 1, 2000.
You should read this discussion in conjunction with Item 6. Selected Financial Data and Item 8. Financial Statements and Supplementary
Data included elsewhere in this Report. Except as noted, references to any fiscal year mean the twelve
-month period ending on the Friday
closest to June 30 of that year.
Our Company
We are a leader in the design, manufacturing and marketing of rigid disc drives. Rigid disc drives are used as the primary medium for
storing electronic information in systems ranging from desktop computers and consumer electronics to data centers delivering information over
corporate networks and the Internet. We produce a broad range of rigid disc drive products that make us a leader in both the enterprise sector of
our industry, where our products are primarily used in enterprise servers, mainframes and workstations, and the personal storage sector of our
industry, where our products are used in PCs and consumer electronics. We have also recently introduced new products for the mobile sector,
where our rigid disc drives are used in notebook computers.
We sell our rigid disc drives primarily to major original equipment manufacturers, or OEMs, and also market to distributors under our
globally recognized brand name. For pro forma fiscal year 2001 and fiscal years 2002 and 2003, approximately 70%, 66% and 61%,
respectively, of our combined rigid disc drive revenue was from sales to OEMs, including customers such as Hewlett-Packard, including
Compaq, Dell, EMC, IBM and Sun Microsystems. We have longstanding relationships with many of these OEM customers. We also have key
relationships with major distributors, who sell our rigid disc drive products to small OEMs, dealers, system integrators and retailers throughout
most of the world. For pro forma fiscal year 2001 and fiscal years 2002 and 2003, approximately 40%, 39% and 34%, respectively, of our
revenue came from customers located in North America, approximately 34%, 31% and 31%, respectively, came from customers located in
Europe and approximately 26%, 30% and 35%, respectively, came from customers located in the Far East. Substantially all of our revenue is
denominated in U.S. dollars.
November 2000 Transactions
Overview
Prior to November 22, 2000, Suez Acquisition Company, the predecessor to New SAC, entered into a stock purchase agreement with
Seagate Delaware and Seagate Software Holdings, Inc., a subsidiary of Seagate Delaware. Concurrently, Seagate Delaware and VERITAS
Software Corporation entered into an agreement and plan of merger and reorganization. Suez Acquisition Company was an exempted company
incorporated with limited liability under the laws of the Cayman Islands and formed solely for the purpose of entering into the stock purchase
agreement and undertaking the related acquisitions. As discussed below, Suez Acquisition Company later assigned all of its rights and
obligations under the stock purchase agreement to New SAC, an exempted company incorporated with limited liability under the laws of the
Cayman Islands and formed for the same purpose.
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