Seagate 2004 Annual Report Download - page 57

Table of Contents
third-party property damage or personal injury claims if we were to violate or become liable under environmental laws or become non-
compliant with environmental permits required at our facilities. Contaminants have been detected at some of our present and former sites,
principally in connection with historical operations. In addition, we have been named as a potentially responsible party at several superfund
sites. While we are not currently aware of any contaminated or superfund sites as to which material outstanding claims or obligations exist, the
discovery of additional contaminants or the imposition of additional cleanup obligations at these or other sites could result in significant
liability. In addition, the ultimate costs under environmental laws and the timing of these costs are difficult to predict. Liability under some
environmental laws relating to contaminated sites can be imposed retroactively and on a joint and several basis. In other words, one liable party
could be held liable for all costs at a site. Potentially significant expenditures could be required in order to comply with environmental laws that
may be adopted or imposed in the future.
Dependence on Key Personnel—The loss of some key executive officers and employees could negatively impact our business
prospects.
Our future performance depends to a significant degree upon the continued service of key members of management as well as marketing,
sales and product development personnel. The loss of one or more of our key personnel would have a material adverse effect on our business,
operating results and financial condition. We believe our future success will also depend in large part upon our ability to attract, retain and
further motivate highly skilled management, marketing, sales and product development personnel. All of the incentive compensation provided
to our senior management at the time of the privatization vested as of November 2004. We may not be able to provide our senior management
with adequate additional incentives to remain employed by us after this time. We have experienced intense competition for personnel, and we
cannot assure you that we will be able to retain our key employees or that we will be successful in attracting, assimilating and retaining
personnel in the future.
System Failures—
System failures caused by events beyond our control could adversely affect computer equipment and electronic data
on which our operations depend.
Our operations are dependent upon our ability to protect our computer equipment and the information stored in our databases from
damage by, among other things, earthquake, fire, natural disaster, power loss, telecommunications failures, unauthorized intrusion and other
catastrophic events. As our operations become more automated and increasingly interdependent, our exposure to the risks posed by these types
of events will increase. A significant part of our operations is based in an area of California that has experienced power outages and
earthquakes and is considered seismically active. We do not have a contingency plan for addressing the kinds of events referred to in this
paragraph that would be sufficient to prevent system failures and other interruptions in our operations that could have a material adverse effect
on our business, results of operations and financial condition.
Substantial Leverage—Our substantial leverage may place us at a competitive disadvantage in our industry.
We are leveraged and have significant debt service obligations. Our significant debt and debt service requirements could adversely affect
our ability to operate our business and may limit our ability to take advantage of potential business opportunities. For example, our high level
of debt presents the following risks to you:
• we are required to use a substantial portion of our cash flow from operations to pay principal and interest on our debt, thereby
reducing the availability of our cash flow to fund working capital, capital expenditures, product development efforts, strategic
acquisitions, investments and alliances and other general corporate requirements;
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• our interest expense could increase if prevailing interest rates increase, because a substantial portion of our debt bears interest at
floating rates;