Seagate 2003 Annual Report Download - page 4

Download and view the complete annual report

Please find page 4 of the 2003 Seagate annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 123

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123

Table of Contents
Some of the statements and assumptions included in this Annual Report on Form 10-K are forward-
looking statements, including, in particular,
statements about our plans, strategies and prospects in “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” in Item 7. These statements identify prospective information. These forward-
looking statements are based on current expectations,
forecasts and assumptions and involve a number of risks and uncertainties that could cause actual results to differ, possibly materially, from
those in the forward-looking statements. These risks include, among others, risks related to price and product competition in our industry,
customer demand for our products, the development and introduction of new products, the impact of technological advances, risks related to
our intellectual property, general market conditions and the factors listed in the “Risk Factors” section of Item 7 of this Annual Report on
Form 10
-K. We undertake no obligation to update forward-
looking statements to reflect events or circumstances after the date they were made.
PART I
ITEM 1.
BUSINESS
We are a leader in the design, manufacturing and marketing of rigid disc drives. Rigid disc drives, which are commonly referred to as
disc drives or hard drives, are used as the primary medium for storing electronic information in systems ranging from desktop and notebook
computers, and consumer electronic devices 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 enterprise applications, where our products are used in enterprise servers,
mainframes and workstations; desktop applications, where our products are used in PCs; mobile computing applications, where our products
are used in notebook computers; and consumer electronic applications ,where our products are used in digital video recorders (DVR’
s), gaming
platforms, and digital music players.
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 fiscal years 2004, 2003 and 2002, approximately 60%, 61% and 66%, respectively, of our rigid disc drive
revenue was from sales to OEMs, including customers such as Hewlett-Packard, Dell, IBM, EMC, and Microsoft. 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. Also, we are currently expanding our direct sales to
retailers. For fiscal years 2004, 2003 and 2002, approximately 30%, 34% and 39%, respectively, of our revenue came from customers located
in North America, approximately 30%, 31% and 31%, respectively, came from customers located in Europe and approximately 40%, 35% and
30%, respectively, came from customers located in the Far East. Substantially all of our revenue is denominated in U.S. dollars.
Industry
Demand for Electronic Data Storage
We believe that the amount of data stored and accessed electronically is growing rapidly and that there are a number of key factors
driving this demand. We are particularly focused on three areas of growing demand for rigid disc drives:
Growth in Rigid Disc Drives for Consumer Electronics . High-performance computing and communications functions and,
increasingly, rigid disc drives are being incorporated into consumer electronics devices such as video game consoles, DVR’s and advanced
television set-top boxes. In addition, faster connections to the Internet and increased broadband capacity have encouraged consumers to
download greater amounts of text, video and audio data, expanding the market for rigid disc drives for use in new consumer and entertainment
appliances. The adoption and rapid growth of the use of rigid disc drives in these applications will be facilitated by the development of low-
cost rigid disc drives that meet the pricing requirements of the consumer electronics market.
3