Seagate 2004 Annual Report Download - page 24

Table of Contents
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 fiscal year ended July 1, 2005, July 2, 2004 and
June 27, 2003. Unless the context indicates otherwise, as used herein, the terms
“we,” “us” and “our” refer to Seagate Technology, an
exempted company incorporated with limited liability under the laws of the Cayman Islands, and its subsidiaries. In November 2000, we
acquired the disc drive business and the storage area networks business of Seagate Technology, Inc., which we refer to herein as Seagate
Delaware, in a series of transactions that we refer to herein as the November 2000 transactions. We sold our storage area networks operating
business in November 2002.
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, 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 electronics devices to data centers delivering information over corporate networks and the Internet. We produce a
broad range of disc drive products that make us a leader in the industry with products addressing enterprise applications, where our products
are used in enterprise servers, mainframes and workstations; desktop applications, where our products are used in desktop computers; mobile
computing applications, where our products are used in notebook computers; and consumer electronics applications where our products are
used in digital video recorders, digital music players and gaming devices.
We sell our disc drives primarily to major original equipment manufacturers, or OEMs, and also market to distributors under our globally
recognized brand name. For fiscal years 2005, 2004 and 2003, approximately 72%, 64% and 63%, respectively, of our disc drive revenue was
from sales to OEMs, including customers such as Hewlett-Packard, Dell, IBM, EMC and Apple. We have longstanding relationships with
many of these OEM customers. We also have key relationships with major distributors, who sell our disc drive products to small OEMs,
dealers, system integrators and retailers throughout most of the world. Shipments to distributors were approximately 26%, 35% and 37% of our
disc drive revenue in fiscal years 2005, 2004 and 2003, respectively. Retail sales in fiscal year 2005 as a percentage of our disc drive revenue
increased to 1.7% from 0.9% and 0.1% in fiscal years 2004 and 2003, respectively. For fiscal years 2005, 2004 and 2003, approximately 31%,
29% and 33%, respectively, of our disc drive revenue came from customers located in North America, approximately 28%, 33% and 31%,
respectively, came from customers located in Europe and approximately 41%, 38% and 36%, respectively, came from customers located in the
Far East. Substantially all of our revenue is denominated in U.S. dollars.
November 2000 Transactions
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, which is now a wholly-owned subsidiary of Symantec Corporation (“VERITAS”) 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. 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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