Seagate 2002 Annual Report Download - page 55

Political Risks Associated with International Operations—Our international operations subject us to risks related to political unrest
and terrorism.
•
Health
-Related Risks. We have manufacturing facilities in China, Singapore, Malaysia and Thailand, all of which are areas that have
recently experienced outbreaks of SARS. An outbreak of SARS in or near any of our facilities could result in the quarantine or
closure of such a facility and have an adverse effect on our results of operations and financial condition.
We have manufacturing facilities in parts of the world that periodically experience political unrest. This could disrupt our ability to
manufacture important components as well as cause interruptions and/or delays in our ability to ship components to other locations for
continued manufacture and assembly. Any such delays or interruptions could result in delays in our ability to fill orders and have an adverse
effect on our results of operation and financial condition. U.S. and international responses to the terrorist attacks on September 11, 2001, the
ongoing hostilities in Afghanistan and Iraq and the risk of hostilities with North Korea could exacerbate these risks.
Legal and Operational Risks Associated with International Operations—Our international operations subject us to risks related to
staffing and management, legal and regulatory requirements and the protection of intellectual property.
Operating outside of the United States creates difficulties associated with staffing and managing our international manufacturing
facilities, complying with local legal and regulatory requirements and protecting our intellectual property. We cannot assure you that we will
continue to be found to be operating in compliance with applicable customs, currency exchange control regulations, transfer pricing regulations
or any other laws or regulations to which we may be subject. We also cannot assure you that these laws will not be modified.
Conflicts of Interest of our Directors and Officers—Our directors and executive officers may have conflicts of interest because of
their ownership of capital stock of, and their employment with, our parent company and our affiliates.
Many of our directors and executive officers hold ordinary shares of our parent company, New SAC, and some of them hold shares of
capital stock and options to purchase the capital stock of our affiliate, Crystal Decisions, Inc., a business intelligence software solutions
company. Ownership of the capital stock of our parent company and our affiliates by our directors and officers could create, or appear to create,
potential conflicts of interest when our directors and officers are faced with decisions that could have different implications for us and for New
SAC or our affiliates.
Some of our directors also serve on the board of New SAC, and on the boards of Certance Holdings, a tape drive company, and Crystal
Decisions, a software company, both of which are owned by New SAC. Several of our executive officers also serve as officers and/or directors
of those entities as well as of other affiliates of ours. In view of these overlapping relationships, conflicts of interest may exist or arise with
respect to existing and future business dealings, including the relative commitment of time and energy by our directors and officers to us and to
our parent company and affiliates, potential acquisitions of businesses or properties and other business opportunities, the issuance of additional
securities, the election of new or additional directors and the payment of distributions by us. We cannot assure you that any conflicts of interest
will be resolved in our favor.
Risks Associated with Future Acquisitions—We may not be able to identify suitable strategic alliance, acquisition or investment
opportunities, or successfully acquire and integrate companies that provide complementary products or technologies.
Our growth strategy may involve pursuing strategic alliances with, and making acquisitions of or investments in, other companies that are
complementary to our business. There is substantial competition for attractive strategic alliance, acquisition and investment candidates. We
may not be able to identify suitable acquisition, investment or strategic partnership candidates. Even if we were able to identify them, we
cannot assure you that we will be able to partner with, acquire or invest in suitable candidates, or integrate acquired technologies or operations
successfully into our existing technologies and operations. Our ability to finance potential acquisitions will be limited by our high degree of
leverage, the covenants contained in the indenture that governs our outstanding 8% senior notes, the credit agreement that governs our senior
secured credit facilities and any agreements governing any other debt we may incur.
If we are successful in acquiring other companies, these acquisitions may have an adverse effect on our operating results, particularly
while the operations of the acquired business are being integrated. It is also likely that integration of acquired companies would lead to the loss
of key employees from those companies or the loss of customers of those companies. In addition, the integration of any acquired companies
would require substantial attention from our senior management, which may limit the amount of time available to be devoted to our day-to-day
operations or to the execution of our strategy. Furthermore, the expansion of our business involves the risk that we might not manage our
growth effectively, that we would incur additional debt to finance these acquisitions or investments and that we would incur substantial charges
relating to the write-off of in-process research and development, similar to that which we incurred in connection with several of our prior
acquisitions. Each of these items could have a material adverse effect on our financial position and results of operations.
50