Seagate 2006 Annual Report Download - page 6

Table of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements and assumptions included in this Annual Report on Form 10-K are forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 or Section 21E of the Securities Exchange
Act of 1934, each as amended, 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 and include words such as “expects,” “plans,” “anticipates,”
“believes,” “estimates,” “predicts,” “projects,” and similar expressions. 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, future financial performance, the anticipated impact of acquisitions and the
factors listed in the
“Risk Factors” section of Item 1A 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
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 storage products containing our disc drives under the Seagate Technology
(“Seagate”) and Maxtor Corporation (“Maxtor”) brands.
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
(“HP”) 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 for 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 of our branded storage products 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.
In addition to manufacturing and selling disc drives and branded storage products, we provide data storage
services for small to medium size businesses, including online backup, data protection and recovery solutions
through EVault, Inc. (“EVault”), which we acquired in fiscal year 2007.
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ITEM 1.
BUSINESS