Seagate 2006 Annual Report Download - page 39

Table of Contents
Year Ended July 1, 2005
Includes a $14 million reduction in operating expenses related to the reduction in accrued benefit obligations
associated with our post-retirement medical plan and approximately $10 million in income from the settlement of a
litigation matter.
Year Ended July 2, 2004
Includes a $125 million income tax benefit from the reversal of accrued income taxes relating to tax
indemnification amounts and a $59 million restructuring charge.
Year Ended June 27, 2003
Includes a $10 million write-down in our investment in a private company and a $9 million net restructuring
charge.
The following is a discussion of the financial condition and results of operations for the fiscal years ended
June 29, 2007, June 30, 2006 and July 1, 2005. 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.
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 the leader in the design, manufacture 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
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 a
wide variety of devices such as digital video recorders (DVRs), gaming devices and other consumer electronic
devices that require storage. We also sell under the Seagate and Maxtor brands storage products containing our disc
drives.
We sell our disc drives primarily to major original equipment manufacturers (OEMs), and also market to
distributors under our globally recognized brand names. For the fiscal years 2007, 2006 and 2005, approximately
64%, 72% and 72%, respectively, of our disc drive revenue was from sales to OEMs, of which Hewlett-Packard was
the only customer exceeding 10% of our disc drive revenue in all of these respective periods while Dell exceeded
10% of our disc drive revenue in fiscal years 2006 and 2005. We have longstanding relationships with many of our
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 30%, 25% and 26% of our disc drive revenue in fiscal years 2007, 2006 and 2005, respectively. Retail
sales in fiscal year 2007, as a percentage of our disc drive revenue, was 6%, compared to 3% and 2% in fiscal years
2006 and 2005, respectively. For fiscal years 2007, 2006 and 2005, approximately 30%, 30% and 31%, respectively,
of our disc drive revenue came from customers located in North America, approximately 27%, 27% and 28%,
respectively, came from customers located in Europe and approximately 43%, 43% and 41%, respectively, came
from customers located in the Far East. Substantially all of our revenue is denominated in U.S. dollars.
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ITEM 7.
MANAGEMENT
’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS