SEAGATE TECHNOLOGY INC, S-4, 1998-11-19

SEAGATE TECHNOLOGY INC
S-4, 1998-11-19
COMPUTER STORAGE DEVICES

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 19, 1998

REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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SEAGATE TECHNOLOGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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DELAWARE 3573 94-2612933
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NUMBER)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)

920 DISC DRIVE
SCOTTS VALLEY, CALIFORNIA 95066
(831) 438-6550
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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DONALD L. WAITE
EXECUTIVE VICE PRESIDENT
SEAGATE TECHNOLOGY, INC.
920 DISC DRIVE
SCOTTS VALLEY, CALIFORNIA 95066
(831) 438-6550
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)

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COPIES TO:

LARRY W. SONSINI, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable on or after the effective date of this Registration Statement.

If the securities being registered on this Form are to be offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [_]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the
"Securities Act"), check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

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CALCULATION OF REGISTRATION FEE

<TABLE>
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<CAPTION>
PROPOSED
AMOUNT MAXIMUM PROPOSED
TITLE OF EACH CLASS TO BE OFFERING PRICE AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED(1) REGISTERED(2) PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE(1)
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<S> <C> <C> <C> <C>
Common Stock, $0.01 par
value................. 3,660,800 1.3494318 $4,940,000 $1,375
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</TABLE>

(1) The registration fee has been computed pursuant to Rule 457(f)(2) under the
Securities Act, based on the book value of the shares of common stock of
Seagate Software, Inc. at November 3, 1998 that may be exchanged for the
securities being registered.
(2) Represents the estimated maximum number of shares of common stock, par
value $0.01 per share, of Seagate Technology, Inc. that may be issued
pursuant to the exchange offer described herein.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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OFFERING CIRCULAR/PROSPECTUS

[LOGO]

OFFER TO EXCHANGE SHARES OF SEAGATE TECHNOLOGY, INC. FOR YOUR SHARES OF SEAGATE
SOFTWARE, INC.

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OUR OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON , 1999
UNLESS EXTENDED

As of October 2, 1998, Seagate Technology, Inc., a Delaware corporation and one
of its subsidiaries (referred to in this Prospectus as "we," "us," "our" or
"Seagate Technology"), held approximately 99.6% of all outstanding shares of
Seagate Software, Inc., a Delaware corporation ("Seagate Software" or the
"Company"). The remaining shares of Seagate Software are held by current and
former employees, directors and consultants of Seagate Software and Seagate
Technology. In addition, options to purchase 11,161,077 shares of Seagate
Software common stock were outstanding as of October 2, 1998.

Seagate Technology is offering to exchange shares you hold of Seagate Software
common stock for shares of Seagate Technology common stock (the "Exchange
Offer"). If you hold options to purchase shares of Seagate Software common
stock, you have the right to exercise that portion of such options which is
vested and participate in the Exchange Offer as a stockholder of Seagate
Software. If you choose not to participate in this Exchange Offer and you are a
stockholder, you will continue to hold shares of Seagate Software common stock.
If you hold options to purchase Seagate Software common stock that are
unvested, or if you choose not to exercise your vested options and participate
in the Exchange Offer, you will continue to hold options to purchase shares of
Seagate Software common stock. As you know, no public market for shares of
Seagate Software common stock currently exists and there is no assurance that
such a market will ever exist.

If you accept the Exchange Offer, you will receive that number of shares of
Seagate Technology common stock calculated by multiplying the number of shares
of Seagate Software common stock that you tender by the Exchange Rate, as
described below.

The Exchange Rate equals the number obtained by dividing (A) the Seagate
Software Price (as defined below) by (B) the Seagate Technology Price (as
defined below).

The Seagate Software Price means the amount obtained by dividing (A) the
Seagate Software Network & Storage Management Group ("NSMG") Price (as defined
below) plus an amount representing the value of Seagate Software's Information
Management Group ("IMG") business to be determined by Seagate Software's Board
of Directors prior to the expiration date of our Exchange Offer, plus an amount
equal to the proceeds from the assumed exercise of all outstanding Seagate
Software stock options, by (B) the total number of shares of Seagate Software
common stock and options to purchase shares of Seagate Software common stock as
of the end of the third business day prior to the close of the Veritas
Transaction (as described below).

The NSMG Price will be determined based on the price of the shares of common
stock of a new company, Veritas Holding Corporation ("Newco"), that will be
issued to Seagate Software and Seagate Software optionees who will become Newco
employees in exchange for the contribution of the NSMG business in the Veritas
Transaction. The Newco common stock will be valued at the average closing price
of Veritas Software Corporation, a Delaware corporation ("Veritas") on the
Nasdaq National Market System for the five trading days ending three business
days prior to the effective time of the Veritas Transaction.

The Seagate Technology Price means the average closing price of a Seagate
Technology share of common stock on the New York Stock Exchange for the five
trading days ending three business days prior to the effective time of the
Veritas Transaction.

For an example of our Exchange Offer using the Exchange Rate, see the question
and answer section of this Offering Circular/Prospectus beginning on page 1.

NEITHER THE SEAGATE TECHNOLOGY BOARD OF DIRECTORS NOR THE SEAGATE SOFTWARE
BOARD OF DIRECTORS IS MAKING ANY RECOMMENDATION TO ANY SEAGATE SOFTWARE
STOCKHOLDER AS TO WHETHER TO TENDER ANY OR ALL SEAGATE SOFTWARE SHARES. EACH
SEAGATE SOFTWARE STOCKHOLDER MUST MAKE HIS OR HER OWN DECISION AS TO WHETHER TO
TENDER ANY OR ALL SEAGATE SOFTWARE SHARES.

Seagate Technology common stock is traded on the New York Stock Exchange under
the symbol "SEG." On , 199 , the closing price of Seagate Technology
common stock was $ . The Seagate Software common stock has no public market.

You have until 12:00 midnight, New York City time, on , 1999 to accept our
Exchange Offer (unless we extend this time). At that time our Exchange Offer
will expire. This Offering Circular/Prospectus and the enclosed letter of
transmittal describe how to accept our Exchange Offer. Once you accept our
Exchange Offer, you cannot withdraw your shares, except that you may withdraw
your shares prior to the expiration date of our Exchange Offer if we have not
accepted such shares.

In accordance with the provisions of an Agreement and Plan of Reorganization
dated as of October 5, 1998 (the "Veritas Agreement"), Seagate Technology,
Seagate Software and Veritas have agreed to combine Seagate Software's NSMG
business with Veritas (the "Veritas Transaction"). In exchange for the
contribution of the NSMG business, Seagate Software and the optionees of
Seagate Software who will become employees of Newco in the Veritas Transaction
will receive, on a fully-diluted basis, an approximately 40% interest in Newco,
the new entity that will own Veritas and NSMG. Our exchange will not occur
unless the Veritas Transaction closes by the expiration date of this Exchange
Offer.

This Offering Circular/Prospectus provides you with detailed information about
our Exchange Offer, including conditions to our Exchange Offer, and information
about Seagate Software. In addition, you may obtain information about Seagate
Technology from information contained in this Offering Circular/Prospectus and
from documents that we have filed with the Securities and Exchange Commission
(the "SEC"). Please read this entire document and the enclosed letter of
transmittal carefully.

In connection with your evaluation of this Exchange Offer, you should consider
the information under the sections entitled "Seagate Technology Risk Factors"
beginning on page 24, and "Factors Affecting Future Operating Results"
beginning on page 90.

NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THESE
SECURITIES OR DETERMINED THAT THIS OFFERING CIRCULAR/PROSPECTUS IS ACCURATE OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THE DATE OF THIS OFFERING CIRCULAR/PROSPECTUS IS , 199 .
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TABLE OF CONTENTS

<TABLE>
<S> <C>
QUESTIONS AND ANSWERS ABOUT OUR OFFER....................................... 1
SUMMARY..................................................................... 6
The Companies............................................................... 6
The Veritas Transaction..................................................... 7
Our Exchange Offer.......................................................... 7
When Our Exchange Offer Expires............................................. 9
Conditions to the Exchange Offer............................................ 9
When Our Exchange Offer Can Be Terminated................................... 9
How to Exchange Your Shares of Common Stock................................. 9
You Cannot Withdraw Your Shares............................................. 10
The Exchange Agent.......................................................... 10
Material U.S. Federal Income Tax Consequences of Exchange of Shares......... 10
Material Canadian Income Tax Consequences of Exchange of Shares............. 11
Material U.K. Income Tax Consequences of Exchange of Shares................. 11
Material Tax Consequences of Option Exercises............................... 11
Accounting Treatment........................................................ 12
Regulatory Approvals........................................................ 12
Where You Can Find More Information......................................... 13
Trademarks.................................................................. 14
Seagate Technology and Seagate Software Risk Factors........................ 14
SUMMARY SELECTED CONDENSED FINANCIAL DATA................................... 15
SEAGATE TECHNOLOGY RISK FACTORS............................................. 24
Data Storage Industry Risks................................................. 24
Fluctuations in Quarterly Results........................................... 24
Competition................................................................. 25
Risks Associated with New Product Development............................... 25
Risks from Vertical Integration of Manufacturing Operations................. 26
Customer Requirements and Concentration..................................... 27
Risks from International Operations......................................... 27
Risks from the Contribution of the Network & Storage Management Group....... 28
Acquisitions................................................................ 28
Risks of Systems Failures................................................... 29
Year 2000 Risks............................................................. 29
Impacts of Volatile Stock Price............................................. 31
Risks from Conversion to Single European Currency........................... 32
THE EXCHANGE OFFER.......................................................... 33
The Exchange Offer and the Exchange Rate.................................... 33
Background and Reasons for the Exchange Offer............................... 34
The Expiration Date......................................................... 34
Conditions to the Exchange Offer............................................ 35
Termination of the Exchange Offer........................................... 35
Exchange of Shares and Certificates......................................... 36
Exchange Agent for Shares and Certificates.................................. 37
Shares Subject to Repurchase................................................ 37
Fractional Shares........................................................... 38
Fees and Expenses........................................................... 38
Transfer Taxes.............................................................. 38
Appraisal Rights............................................................ 38
Proxies..................................................................... 38
Withdrawal Rights........................................................... 38
</TABLE>

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<TABLE>
<S> <C>
Regulatory Approvals Required............................................. 38
Material Income Tax Considerations........................................ 39
Material U.S. Income Tax Consequences of Exchange of Shares............... 40
Material Canadian Income Tax Consequences of Exchange of Shares........... 41
Material U.K. Income Tax Consequences of Exchange of Shares............... 42
Material Tax Consequences to Optionees.................................... 43
Accounting Treatment...................................................... 44
DESCRIPTION OF SEAGATE TECHNOLOGY CAPITAL STOCK........................... 46
COMPARISON OF STOCKHOLDER RIGHTS.......................................... 47
Stockholder Meetings...................................................... 47
Director Nominations...................................................... 47
Indemnification........................................................... 47
INFORMATION ABOUT SEAGATE TECHNOLOGY...................................... 49
General................................................................... 49
Stock and Dividend Information............................................ 50
INFORMATION ABOUT SEAGATE SOFTWARE AND THE INFORMATION MANAGEMENT GROUP... 51
General................................................................... 51
Products.................................................................. 51
Sales and Marketing....................................................... 52
Technical Support and Maintenance......................................... 53
Competition............................................................... 53
Patents and Intellectual Property Rights.................................. 54
Employees................................................................. 54
Facilities................................................................ 55
Legal Proceedings......................................................... 55
Market for and Dividends Paid on Seagate Software Common Stock............ 56
Security Ownership of Certain Beneficial Owners and Management of Seagate
Software................................................................. 56
SEAGATE TECHNOLOGY UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS..... 58
NOTES TO SEAGATE TECHNOLOGY UNAUDITED PRO FORMA CONDENSED FINANCIAL
STATEMENTS............................................................... 63
SEAGATE SOFTWARE UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS....... 69
NOTES TO SEAGATE SOFTWARE UNAUDITED PRO FORMA CONDENSED FINANCIAL
STATEMENTS............................................................... 74
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF SEAGATE SOFTWARE........................................... 80
Certain Forward-Looking Information....................................... 80
Overview.................................................................. 80
Three Months Ended October 2, 1998 versus Three Months Ended October 3,
1997..................................................................... 81
Fiscal Year 1998 versus Fiscal Year 1997.................................. 84
Fiscal Year 1997 versus Fiscal Year 1996.................................. 86
Liquidity and Capital Resources........................................... 88
New Accounting Pronouncements............................................. 89
Factors Affecting Future Operating Results................................ 90
</TABLE>

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<TABLE>
<S> <C>
LEGAL MATTERS............................................................... 98
EXPERTS..................................................................... 98
INDEPENDENT AUDITOR'S REPORT................................................ F-2
</TABLE>

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QUESTIONS AND ANSWERS ABOUT OUR OFFER

Q: WHAT AM I BEING OFFERED? HOW WILL I BENEFIT?

A: You are being offered the opportunity to exchange all or a portion of your
outstanding shares of Seagate Software common stock for Seagate Technology
common stock.

If you accept our Exchange Offer, you will become a stockholder of Seagate
Technology and your shares of Seagate Technology common stock will be
publicly tradable, subject to compliance with applicable laws.

Q: IS SEAGATE TECHNOLOGY'S OR SEAGATE SOFTWARE'S BOARD OF DIRECTORS
RECOMMENDING THAT I PARTICIPATE IN YOUR EXCHANGE OFFER?

A: Neither the Seagate Technology Board of Directors nor the Seagate Software
Board of Directors is making any recommendations to any Seagate Software
stockholder as to whether to tender all or a portion of your outstanding
Seagate Software shares. Each Seagate Software stockholder must make his or
her own decision as to whether to tender all or a portion of Seagate
Software shares.

Q: IF I CURRENTLY HOLD OPTIONS TO PURCHASE SHARES OF SEAGATE SOFTWARE COMMON
STOCK, HOW DOES THE EXCHANGE OFFER APPLY TO ME?

A: The Exchange Offer applies only to Seagate Software stockholders. It does
not apply to option holders. However, if you hold vested options to
purchase shares of Seagate Software common stock, you may exercise those
options which are vested at any time prior to the expiration date of the
Exchange Offer and participate in the Exchange Offer as a stockholder of
Seagate Software.

You should note that the Board of Directors of Seagate Software has amended
the terms of your options granted pursuant to the Seagate Software 1996
Stock Option Plan to provide that your vesting shall be increased from 20%
per year in the first two years, and 30% per year for the second two years
over a period of four years to a rate of 1/48th per month, retroactive to
your original grant date. However, the effectiveness of this amendment to
your options is contingent upon the closing of the Veritas Transaction. All
shares of Seagate Software common stock issuable upon exercise of your
vested options, including the shares for which retroactive vesting credit
is given, are eligible for this exchange.

Q: WHO IS SEAGATE TECHNOLOGY?

A: Seagate Technology is the majority stockholder of Seagate Software. Seagate
Technology is a Delaware corporation that designs, manufactures and markets
a broad line of rigid magnetic disc drives and tape drives for use in
computer systems ranging from desktop personal computers to workstations
and supercomputers as well as in multimedia applications such as digital
video and video-on-demand. It is headquartered in Scotts Valley,
California. As of October 2, 1998 it had approximately $5.6 billion in
total assets and $2.9 billion in stockholders' equity. See pages 49-50 for
more information on Seagate Technology.

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Q: WHAT IS THE VERITAS TRANSACTION?

A: In accordance with the provisions of the Veritas Agreement, Seagate
Technology, Seagate Software and Veritas have agreed to combine Seagate
Software's NSMG business with Veritas. In exchange for the contribution of
the NSMG business, Seagate Software and the Seagate Software optionees who
become employees of Newco will receive, on a fully-diluted basis, an
approximately 40% interest in Newco, the new entity that will own the NSMG
business and Veritas. The Exchange Offer will not occur unless the Veritas
Transaction closes by the expiration date of this Exchange Offer. If you
are an employee of the NSMG business, you have already received or will be
receiving a Management Information Circular/Joint Proxy
Statement/Prospectus which describes the Veritas Transaction in greater
detail.

Q: WHY IS SEAGATE TECHNOLOGY MAKING THE EXCHANGE OFFER?

A: As a result of the contribution of Seagate Software's NSMG business in
connection with the Veritas Transaction, optionees of Seagate Software who
will become Newco employees will be offered the opportunity to exchange
their Seagate Software options for options to purchase shares of Newco
common stock. The Veritas Transaction contemplates that Newco common stock
will be publicly traded. As a result, those employees who exchange their
Seagate Software options for Newco options will have the ability to sell
their shares in a public market. We wish to provide a similar opportunity
to all Seagate Software stockholders and holders of vested options,
including the significant number of such persons who will not transfer to
Newco and be eligible for the Newco option exchange offer (as described
below).

Q: PLEASE EXPLAIN THE EXCHANGE RATE.

A: The Exchange Rate equals the number obtained by dividing (A) the Seagate
Software Price by (B) the Seagate Technology Price. For a further
explanation of the calculation of the Exchange Rate, see pages 33-34.

This Exchange Rate is intended to reflect the relative values of the shares
of Seagate Software and Seagate Technology. If you choose to tender any of
your Seagate Software shares, you will receive Seagate Technology shares
intended to represent approximately the same value as the shares you
tendered. Neither Seagate Software nor Seagate Technology gives any
assurance that the Seagate Technology shares and the Seagate Software
shares exchanged therefor will be of equivalent value. The actual value of
the Seagate Technology shares exchanged for your Seagate Software shares
may be higher or lower than the value of the Seagate Software shares that
you tender for exchange. You may call the following number to hear a pre-
recorded message informing you of the Exchange Rate beginning two business
days prior to the closing date of the Veritas Transaction. 1-800-xxx-yyyy

Q: CAN YOU GIVE ME AN EXAMPLE OF HOW THESE FORMULAS WORK?

A: By way of example, if just prior to the expiration of the Exchange Offer
the Seagate Software Price is $35 and the

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Seagate Technology Price is $30, the Exchange Rate would be equal to
1.166667. If this were the actual Exchange Rate and you were to tender for
exchange 100 shares of Seagate Software common stock, you would receive 116
shares of Seagate Technology common stock in exchange.

Q: WHAT HAPPENS TO MY ABILITY TO SELL MY SHARES BACK TO SEAGATE SOFTWARE OR ANY
REPURCHASE RIGHTS HELD BY SEAGATE SOFTWARE?

A: If you accept the Exchange Offer, you will not have the ability to sell back
the Seagate Technology shares that you receive to either Seagate Software or
Seagate Technology. If the Seagate Software shares that you tender are
subject to a right of repurchase by Seagate Software, an equivalent portion
of the Seagate Technology shares that you receive in the exchange will be
similarly subject to repurchase by Seagate Software.

Q: IF I WILL BECOME AN EMPLOYEE OF NEWCO AND I HOLD OPTIONS TO PURCHASE SHARES
OF SEAGATE SOFTWARE COMMON STOCK, WHAT AM I ENTITLED TO DO?

A: If you are a holder of Seagate Software stock options and you will become an
employee of Newco, you have four choices:

. participate in this Exchange Offer with respect to your vested options by
exercising any or all of such vested portion;

. participate in the Newco option exchange offer with respect to your
vested as well as unvested options;

. participate in both this exchange and the Newco option exchange; or

. participate in neither this exchange nor the Newco option exchange and
continue to hold your options for Seagate Software common stock.

BUT NOTE: IF YOU DO NOT ACCEPT NEWCO'S OPTION EXCHANGE OFFER, WHEN YOU
LEAVE YOUR EMPLOYMENT WITH SEAGATE SOFTWARE, THE UNVESTED PORTION OF YOUR
STOCK OPTIONS WILL BE CANCELED. ALSO, YOU WILL HAVE ONLY 30 DAYS AFTER YOU
LEAVE THE EMPLOYMENT OF SEAGATE SOFTWARE TO EXERCISE THE VESTED PORTION OF
YOUR STOCK OPTIONS OR ELSE THEY WILL ALSO BE CANCELED. The Management
Information Circular/Joint Proxy Statement/Prospectus describes the terms
and conditions of the offer to exchange your Seagate Software options for
Newco options. NEITHER THE SEAGATE TECHNOLOGY BOARD OF DIRECTORS NOR THE
SEAGATE SOFTWARE BOARD OF DIRECTORS IS MAKING ANY RECOMMENDATION TO YOU
REGARDING YOUR PARTICIPATION IN EITHER THE NEWCO EXCHANGE OFFER OR THE
SEAGATE TECHNOLOGY EXCHANGE OFFER.

Q: WHAT IF I CHOOSE NOT TO PARTICIPATE IN THE EXCHANGE OFFER OR I ONLY HOLD
UNVESTED OPTIONS TO PURCHASE SHARES OF SEAGATE SOFTWARE COMMON STOCK?

A: If you are a stockholder of Seagate Software, and choose not to participate
in this Exchange Offer, you will continue to hold shares of Seagate Software
common stock. If you hold options to purchase Seagate Software common stock
that are

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unvested, or if you choose not to exercise your vested options and
participate in the Exchange Offer, you will continue to hold options to
purchase shares of Seagate Software common stock. However, if you are a
Seagate Software employee who will become a Newco employee, you may exchange
your Seagate Software stock options for Newco stock options as described
above. As you know, no public market for shares of Seagate Software common
stock currently exists. Following the Exchange Offer, Seagate Software may,
from time to time, evaluate various alternative means of liquidity (such as
a public offering or a sale of Seagate Software) for shares of its common
stock. In the event of any such transaction, the value of your shares of
Seagate Software may be greater or less than the value of such shares in
this Exchange Offer.

Q: WHAT DO I NEED TO DO NOW?

A: You received a letter of transmittal along with this Offering
Circular/Prospectus. If you wish to accept our Exchange Offer, you must:

. complete the letter of transmittal according to the instructions
provided;

. sign and date the letter of transmittal according to such instructions;
and

. mail or deliver the letter of transmittal and your stock certificates
that represent the Seagate Software common stock you wish to exchange
(along with any other necessary documents) to Harris Trust Company of New
York which is the exchange agent.

For detailed instructions, please see pages 36-37.

Q: IF I ACCEPT THE EXCHANGE OFFER, WHEN DO I NEED TO SEND MY LETTER OF
TRANSMITTAL AND STOCK CERTIFICATES?

A: Our Exchange Offer expires at 12:00 midnight, New York City time, on ,
1999 (unless we extend this time, which we will give public notice of). The
exchange agent must receive your letter of transmittal, stock certificates
and other necessary documents before the expiration date of our Exchange
Offer. Once you have tendered your documents, however, your tender is
irrevocable and you cannot withdraw your Seagate Software common stock,
except that you may withdraw your shares prior to the expiration date if we
have not accepted such shares. If we do not accept any shares of Seagate
Software common stock which have been offered for exchange, we will return
promptly to you those shares.

Q: WHAT ARE THE TAX CONSEQUENCES OF THE EXCHANGE TO ME IF I AM A SEAGATE
SOFTWARE STOCKHOLDER?

A: Seagate Software and Seagate Technology will receive tax opinions that the
exchange of shares by Seagate Software stockholders generally should be: (i)
tax free for U.S. federal income tax purposes; (ii) tax free for U.K. income
and capital gains tax purposes; and (iii) taxable for Canadian tax purposes.
However, tax opinions do not guarantee tax results. YOU SHOULD CONSULT YOUR
OWN TAX ADVISOR IN LIGHT OF YOUR PERSONAL CIRCUMSTANCES. PLEASE SEE PAGES
39-43 FOR A MORE DETAILED EXPLANATION OF THE TAX CONSEQUENCES OF THE
EXCHANGE.

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Q: WHAT ARE THE TAX CONSEQUENCES OF THE EXCHANGE TO ME IF I AM A SEAGATE
SOFTWARE OPTION HOLDER WHO EXERCISES OPTIONS TO PARTICIPATE IN THE EXCHANGE
OFFER?

If you are subject to U.S. taxation and have incentive stock options (as
will be true of most U.S. employees), then you will not have any regular
federal income tax liability upon the exercise of your incentive stock
options. However, the exercise of your incentive stock option may subject
you to alternative minimum tax for federal tax purposes. Please see pages
43-44 for a more detailed explanation of the tax consequences of the
exercise of your options.

If you are subject to U.S. taxation and have a nonstatutory stock option,
then, upon the exercise of your nonstatutory stock option, you will have
wage income equal to the difference between the exercise price of the
option and the fair market value of the stock on the date of exercise. If
you were an employee on the date the option was granted, then Seagate
Software will be required to collect from you the amount required to be
withheld for the amount of wage income you recognize. Please see pages 43-
44 for a more detailed explanation of the tax consequences of the exercise
of your options.

If you are subject to U.K. taxation, then upon the exercise of your stock
option, you will have taxable income equal to the difference between the
exercise price of the option and the fair market value of the stock on the
date of exercise. You will be required to pay taxes at the time of exercise
for the income recognized upon exercise of the option. Please see pages 43-
44 for a more detailed explanation of the tax consequences of the exercise
of your options.

If you are subject to Canadian taxation, then upon the exercise of your
stock option, you will have taxable income equal to the difference between
the exercise price of the option and the fair market value of the stock on
the date of exercise. Seagate Software will need to collect from you and
remit your social security contributions on the income recognized and may
have to withhold and remit tax in respect of the employment benefit on the
income recognized. Please see pages 43-44 for a more detailed explanation
of the tax consequences of the exercise of your options.

Q: IF I TENDER MY SEAGATE SOFTWARE SHARES, WHEN WILL I RECEIVE SEAGATE
TECHNOLOGY COMMON STOCK?

A: If the exchange occurs, promptly after the expiration date, we will send you
stock certificates representing your new shares of Seagate Technology common
stock.

Q: DOES SEAGATE TECHNOLOGY PAY DIVIDENDS?

A: Like Seagate Software, we have not historically paid dividends on Seagate
Technology common stock. We do not expect that Seagate Technology will pay
any dividends in the future.

Q: WHOM SHOULD I CALL WITH QUESTIONS?

A: If you have any questions about our offer or the exchange, please call Nancy
Hamm in our Investor Relations Department at (831) 439-2371.

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SUMMARY

This summary highlights certain information from this Offering
Circular/Prospectus and may not contain all of the information that is
important to you. To understand our Exchange Offer fully and for a more
complete description of the terms of our Exchange Offer and the exchange, you
should read carefully this entire Prospectus and the documents we have referred
you to. See "Where You Can Find More Information." (Page )

THE COMPANIES

Seagate Technology, Inc.
920 Disc Drive
Scotts Valley, California 95066
(831) 438-6550

Seagate Technology operates in a single industry segment by designing,
manufacturing and marketing products for storage, retrieval and management of
data on computer and data communications systems. These products include disc
drives and disc drive components, tape drives and software.

Seagate Software, Inc.
915 Disc Drive
Scotts Valley, California 95066
(831) 438-6550

Seagate Software develops and markets software products and provides related
services enabling business users and information technology ("IT")
professionals to store, access and manage enterprise information. Seagate
Software is currently comprised of two operating groups, the Information
Management Group ("IMG") and the Network & Storage Management Group ("NSMG").
Each operating group provides products in distinct segments of the Enterprise
Information Management ("EIM") market, which consists of three core
components--information delivery, information analysis and information
availability. NSMG offers network and storage management software solutions,
which focus on the availability component of EIM by enabling IT professionals
to manage distributed network resources and to secure and protect enterprise
data. NSMG's products include features such as system backup, disaster
recovery, migration, replication, automated client protection, storage resource
management, scheduling, event correlation and desktop management. IMG offers
business intelligence software solutions

6
<PAGE>

featuring the delivery and analysis components of EIM. IMG's products include
features such as query and reporting, automated report scheduling and
distribution, information delivery across the World Wide Web, on-line
analytical processing, forecasting, statistical analysis, discovery and data
mining. After the closing of the Veritas Transaction (as described below)
Seagate Software will continue to operate its IMG business. In fiscal 1998,
IMG's revenue represented approximately 40% of Seagate Software's total
revenue.

Headquartered in Scotts Valley, California, Seagate Software currently has over
40 offices and operations in 17 countries worldwide. After the contribution of
its NSMG business to Veritas in connection with the Veritas Transaction,
Seagate Software will have 31 offices and operations in 16 countries worldwide.
Seagate Software is a majority-owned and consolidated subsidiary of Seagate
Technology.

THE VERITAS TRANSACTION

In accordance with the provisions of the Veritas Agreement, Seagate Technology,
Seagate Software and Veritas have agreed to combine Seagate Software's NSMG
business with Veritas (the "Veritas Transaction"). In exchange for the
contribution of the NSMG business, Seagate Software and those optionees of
Seagate Software who will become employees of Newco will receive, on a fully
diluted basis, an approximately 40% interest in Newco, the new company that
will own Veritas and NSMG. Seagate Software employees who become employees of
Newco will be offered the opportunity to exchange their existing Seagate
Software stock options for similar options to purchase stock of Newco. Seagate
Technology and its IMG subsidiary will continue their product relationship with
the NSMG business through agreements we have negotiated in connection with the
Veritas Agreement. After the contribution of NSMG is completed, Seagate
Software will continue to operate the IMG business. The Veritas Transaction is
subject to numerous conditions, including stockholder and regulatory approvals.
Consequently, there can be no assurance that the Veritas Transaction will
close. This Exchange Offer is conditioned on the closing of the Veritas
Transaction.

OUR EXCHANGE OFFER

We are offering to acquire from Seagate Software stockholders all outstanding
shares of Seagate Software common stock in exchange for shares of Seagate
Technology common stock.

If you hold options to purchase shares of Seagate Software common stock, you
may exercise all or a portion of such options which are vested and participate
in the Exchange Offer as a stockholder of Seagate Software. If you hold options
to purchase shares of Seagate Software common stock and you will become an
employee of Newco, however, you may either a) participate in this Exchange
Offer with respect to your vested options by exercising any or all of such
vested portion, b) participate in the Newco option exchange offer with respect
to your vested as well as unvested options, c) participate in both exchange
offers, or d) choose to not participate in either exchange offer as described
below.

If you choose not to participate in this Exchange Offer and you are a
stockholder, you will continue to hold shares of Seagate Software common stock.
If you hold options to purchase Seagate Software common stock that are
unvested, or if you choose not to exercise your vested options and participate
in the Exchange Offer, you will continue to hold

7
<PAGE>

options to purchase shares of Seagate Software common stock. However, if you
will become a Newco employee, you may exchange your Seagate Software options
for Newco stock options.

If you will become a Newco employee and you elect not to participate in either
this Exchange Offer or the Newco option exchange offer, then you will continue
to hold your options for Seagate Software common stock until you leave your
employment with Seagate Software, at which time the unvested portion of your
stock options will be canceled. In addition, you will have only 30 days after
you leave the employment of Seagate Software to exercise the vested portion of
your stock options or else they will be also canceled.

As you know, no public market for shares of Seagate Software common stock
currently exists. Following the Exchange Offer, Seagate Software may, from time
to time, evaluate various alternative means of liquidity (such as a public
offering or a sale of Seagate Software) for shares of its common stock. In the
event of any such transaction, the value of your shares of Seagate Software may
be greater or less than the value of such shares in this Exchange Offer.

NEITHER THE SEAGATE TECHNOLOGY BOARD OF DIRECTORS NOR THE SEAGATE SOFTWARE
BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY SEAGATE SOFTWARE STOCKHOLDER
AS TO WHETHER TO TENDER ALL OR A PORTION OF SEAGATE SOFTWARE SHARES. EACH
SEAGATE SOFTWARE STOCKHOLDER MUST MAKE HIS OR HER OWN DECISION AS TO WHETHER TO
TENDER ALL OR A PORTION OF SEAGATE SOFTWARE SHARES.

The Exchange Rate equals the number obtained by dividing (A) the Seagate
Software Price by (B) the Seagate Technology Price.

The Seagate Software Price means the amount obtained by dividing (A) the NSMG
Price, plus an amount representing the value of the IMG business to be
determined by Seagate Software's Board of Directors prior to the Expiration
Date (as defined below) plus an amount equal to the proceeds from the assumed
exercise of all outstanding Seagate Software stock options, by (B) the total
number of shares of Seagate Software common stock and options to purchase
shares of Seagate Software common stock as of the end of the third business day
prior to the close of the Veritas Transaction. The NSMG Price will be
determined based on the value of the shares of common stock of Newco that will
be issued to Seagate Software and certain Seagate Software optionees in
exchange for the contribution of the NSMG business in the Veritas Transaction.
The Newco common stock will be valued at the average closing price of Veritas
on the Nasdaq National Market System for the five trading days ending three
business days prior to the effective time of the Veritas Transaction.

In our exchange, we will not issue any fractional shares to you. Instead, the
number of shares you receive in this Exchange Offer will be rounded down to the
nearest whole number of shares.

On , 199 , the last sales price of Seagate Technology common stock was
$ ,

8
<PAGE>

as reported on the New York Stock Exchange. The Seagate Software common stock
has no established public trading market.

WHEN OUR EXCHANGE OFFER EXPIRES

Our Exchange Offer will expire at 12:00 midnight, New York City time, on ,
1999 (unless we extend this time) (the "Expiration Date"). We will give public
notice of any extension of the Exchange Offer.

CONDITIONS TO THE EXCHANGE OFFER (SEE PAGE 35)

The exchange will not occur unless certain conditions are satisfied prior to
the Expiration Date. These conditions are as follows:

. the Registration Statement relating to the shares to be issued in the
exchange shall have become effective under the Securities Act of 1933, as
amended, and shall not be the subject of any stop-order or proceedings
seeking a stop-order;

. any applicable waiting periods for the Exchange Offer shall have expired or
been terminated and no decree, ruling, temporary restraining order,
preliminary injunction or permanent injunction or other order preventing the
consummation of the exchange shall have been issued by any federal or state
court or governmental agency which remains in effect; and

. the Veritas Transaction shall have closed. The conditions to the closing of
the Veritas Transaction are described in the Veritas Agreement and the
Veritas Management Information Circular/Joint Proxy Statement/Prospectus.
These conditions include, but are not limited to, the following:

- - the principal terms of the Veritas Agreement and the Veritas Transaction
shall have been approved and adopted by a majority of the Veritas
stockholders and a majority of the Seagate Software stockholders;

- - the Registration Statement relating to the shares to be issued by Newco in
the Veritas Transaction shall have become effective under the Securities Act
of 1933, as amended, and shall not be the subject of any stop-order or
proceedings seeking a stop-order and the Veritas Management Information
Circular/Joint Proxy Statement/Prospectus shall at the effective time of the
Veritas Transaction not be subject to any proceedings commenced or overtly
threatened by the SEC; and
- - any applicable waiting periods to close the Veritas Transaction shall have
expired or been terminated and no decree, ruling, temporary restraining
order, preliminary injunction or permanent injunction or other order
preventing the consummation of the Veritas Transaction shall have been issued
by any federal or state court or governmental agency which remains in effect.

WHEN OUR EXCHANGE OFFER CAN BE TERMINATED (SEE PAGE 35)

Seagate Technology reserves the right, in our sole discretion, to terminate our
Exchange Offer and not accept for exchange any tendered Seagate Software shares
not previously accepted for exchange or exchanged.

If the Exchange Offer is terminated without our acceptance of any of your
tendered shares of Seagate Software common stock, we will promptly return all
such shares that you have tendered.

HOW TO EXCHANGE YOUR SHARES OF COMMON STOCK

You received a letter of transmittal with this Offering Circular/Prospectus. If
you wish to accept our Exchange Offer, you must

9
<PAGE>

complete, sign and date the letter of transmittal, or a facsimile of it,
according to the instructions in this Offering Circular/Prospectus and letter
of transmittal. Then, you must mail or otherwise deliver the letter of
transmittal along with the stock certificates that represent your shares of
Seagate Software common stock that you wish to tender and any other required
documents to Harris Trust Company of New York, which is the exchange agent, at
the address set forth below. In addition, if you are exercising all or a
portion of your vested options to participate in the Exchange Offer, please
follow the instructions in the letter of transmittal with respect to such
exercise.

If, before the Expiration Date, you deliver to the exchange agent the letter of
transmittal, your stock certificates, and other necessary documents according
to the instructions in this Offering Circular/Prospectus and letter of
transmittal, then you will have accepted our tender offer with respect to the
shares of Seagate Software common stock that you tendered.

If any percentage of Seagate Software common stock shares that you surrender
are subject to a right of repurchase in favor of Seagate Software, then the
same percentage of Seagate Technology common stock shares that you receive by
accepting our Exchange Offer will be subject to the same repurchase terms in
favor of Seagate Software. In addition, you will not have the ability to sell
back the Seagate Technology shares that you receive to either Seagate Software
or Seagate Technology.

If the conditions to the exchange are satisfied or waived, then after the
Expiration Date, the exchange agent will send us written notice listing which
Seagate Software stockholders accepted our offer and validly tendered their
shares of Seagate Software common stock. After we receive such notice, and you
are one of the Seagate Software stockholders who have accepted our offer and
validly tendered your shares, we will promptly send your Seagate Technology
common stock to you, by registered mail.

If you wish to accept our offer and your stock certificates are not immediately
available or you cannot deliver your completed letter of transmittal, stock
certificates or other necessary documents before the Expiration Date, you may
deliver your letter of transmittal, stock certificates or other documents
according to the procedures described on page 36.

YOU CANNOT WITHDRAW YOUR SHARES

Once you have tendered your Seagate Software common stock, your tender is
irrevocable and you cannot withdraw your Seagate Software common stock, except
that you may withdraw your shares prior to the Expiration Date if we have not
accepted them. If the exchange is terminated without our acceptance of any
shares of Seagate Software common stock tendered, however, we will return
promptly all shares that you have tendered.

THE EXCHANGE AGENT

The exchange agent for our offer is Harris Trust Company of New York (the
"Exchange Agent"). Its address is by mail: Wall Street Station, P.O. Box 1010,
New York, NY 10268-1010 or by hand/overnight delivery: 88 Pine Street, 19th
Floor, New York, NY 10005.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF EXCHANGE OF SHARES (SEE PAGES
40-41)

Seagate Software and Seagate Technology will receive an opinion prior to the
exchange to the

10
<PAGE>

effect that the Exchange Offer should be tax-free to Seagate Software
stockholders for U.S. federal income tax purposes. However, the Internal
Revenue Service is not precluded from successfully asserting a contrary
position in which case the exchange of shares will be taxable to you for U.S.
federal income tax purposes. U.S. holders should also consult their own tax
advisors in light of their personal circumstances.

MATERIAL CANADIAN INCOME TAX CONSEQUENCES OF EXCHANGE OF SHARES (SEE PAGE 41)

Seagate Software and Seagate Technology will receive an opinion that the
Exchange Offer will be a taxable transaction for a Seagate Software stockholder
resident in Canada. Any Canadian resident holder of shares of Seagate Software
common stock will be considered to have disposed of the holder's shares of
Seagate Software common stock for proceeds (expressed in Canadian dollars)
determined at the time of the exchange equal to the total of the fair market
value of the shares of Seagate Technology common stock received. A gain or loss
(being the difference between the total proceeds and the cost amount of the
shares of Seagate Software common stock (expressed in Canadian dollars)) may be
realized on this disposition. Where the shares of Seagate Software common stock
are capital property to the holder, any such gain or loss would be a capital
gain or capital loss.

The cost amount of the shares of Seagate Technology common stock received will
be equal to the fair market value of the Seagate Technology common stock
received at the time of the exchange expressed in Canadian dollars. Canadian
holders should also consult their own tax advisors in light of their personal
circumstances.

MATERIAL U.K. INCOME TAX CONSEQUENCES OF EXCHANGE OF SHARES (SEE PAGES 42-43)

Capital Gains Tax. Seagate Software and Seagate Technology will receive an
opinion that the Exchange Offer will fall within the U.K. tax laws for
reorganizations with the result that:

(a) No gain or loss will be recognized by the holders of Seagate Software
common stock upon receipt of Seagate Technology common stock solely in
exchange for such Seagate Software common stock in the exchange.

(b) The aggregate tax basis of the Seagate Technology common stock so received
by the stockholders of Seagate Software in the exchange will be the same as
the aggregate tax basis of the Seagate Software common stock surrendered in
exchange therefor.

(c) The holding period of the Seagate Technology common stock so received by
each stockholder of Seagate Software in the exchange will include the
period for which the Seagate Software common stock surrendered in exchange
therefor was considered to be held as a capital asset on the date of the
exchange.

U.K. Income Tax. Seagate Software and Seagate Technology will receive an
opinion that the Exchange Offer constitutes a company reorganization, under
U.K. law, in which case, no income tax charge should arise on the Exchange
Offer. U.K. holders should also consult their own tax advisors in light of
their personal circumstances.

MATERIAL TAX CONSEQUENCES OF OPTION EXERCISES (SEE PAGES 43-44)

If you are subject to U.S. taxation and have an incentive stock option, then
you will not have

11
<PAGE>

any regular federal income tax liability upon the exercise of your incentive
stock option. However, the exercise of your incentive stock option may subject
you to alternative minimum tax for federal tax purposes. Please see pages 43-44
for a more detailed explanation of the tax consequences of the exercise of your
options.

If you are subject to U.S. taxation and have a nonstatutory stock option, then,
upon the exercise of your nonstatutory stock option, you will have wage income
equal to the difference between the exercise price of the option and the fair
market value of the stock on the date of exercise. If you were an employee on
the date the option was granted, then Seagate Software will be required to
collect from you the amount required to be withheld from the wage income you
recognize. Please see pages 43-44 for a more detailed explanation of the tax
consequences of the exercise of your options.

If you are subject to U.K. taxation, then upon the exercise of your stock
option, you will have taxable income equal to the difference between the
exercise price of the option and the fair market value of the stock on the date
of exercise. You will be required to pay taxes at the time of exercise for the
income recognized upon exercise of the option. Please see pages 43-44 for a
more detailed explanation of the tax consequences of the exercise of your
options.

If you are subject to Canadian taxation, then upon the exercise of your stock
option, you will have taxable income equal to the difference between the
exercise price of the option and the fair market value of the stock on the date
of exercise. Seagate Software will need to collect from you and remit your
social security contributions on the income recognized and may have to withhold
and remit tax in respect of the employment benefit on the income recognized.
Please see pages 43-44 for a more detailed explanation of the tax consequences
of the exercise of your options.

ACCOUNTING TREATMENT

The exchange of Seagate Technology shares for Seagate Software shares held for
more than six months and not subject to a right of repurchase in favor of
Seagate Software will be accounted for as a purchase of minority interest of
Seagate Software and, accordingly, the acquired assets and liabilities,
including goodwill and other intangibles, pertaining to the acquired minority
interest in Seagate Software will be recorded at their estimated fair values.
Any amount related to in-process research and development will be written off
in the period of acquisition.

Seagate Technology shares exchanged for Seagate Software shares acquired
through the exercise of employee stock options and held for less than six
months or Seagate Software shares subject to a right of repurchase in favor of
Seagate Software will result in compensation expense equal to the difference
between the price paid by the holder of the shares and the value of the Seagate
Technology shares at the date of the exchange. The compensation expense will be
recognized immediately, or if there is vesting, over the vesting period, of the
Seagate Technology shares issued. See "Seagate Technology Unaudited Pro Forma
Condensed Financial Statements" and "Seagate Software Unaudited Pro Forma
Condensed Financial Statements."

REGULATORY APPROVALS

Seagate Technology is not aware of any license or regulatory permit material to
its business that might be adversely affected by its acquisition of Seagate
Software common stock as
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<PAGE>

contemplated in the Exchange Offer or of any approval or other action by any
government or governmental, administrative or regulatory authority or agency,
domestic or foreign, that would be required for Seagate Technology's
acquisition or ownership of Seagate Software common stock as contemplated by
the Exchange Offer. Should any such approval or other action be required,
Seagate Technology currently contemplates that it will seek such approval or
other action. See "Regulatory Approvals Required."

WHERE YOU CAN FIND MORE INFORMATION

Seagate Technology files annual, quarterly and special reports, proxy
statements and other information with the SEC's public reference rooms in
Washington, D.C., New York, New York, and Chicago, Illinois. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference rooms.
Our SEC filings are also available to the public from the SEC's web site at
http://www.sec.gov.

Seagate Technology filed a Registration Statement on Form S-4 to register with
the SEC the Seagate Technology common stock to be issued to the Seagate
Software stockholders in the exchange. This Offering Circular/Prospectus is a
part of that Registration Statement. As allowed by SEC rules, this Offering
Circular/Prospectus does not contain all the information you can find in the
Registration Statement or the exhibits to the Registration Statement.

The SEC allows us to "incorporate by reference" the documents (and information
therein) we file with the SEC, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this Offering
Circular/Prospectus, and later information that we file with the SEC will
automatically update and supersede this information. We incorporate by
reference the Seagate Technology documents listed below and any future filings
with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended:

Annual Report on Form 10-K for the year ended July 3, 1998;
Proxy Statement dated September 24, 1998;
Quarterly Report on Form 10-Q for the quarter ended October 2, 1998;
Current Report on Form 8-K dated October 20, 1998; and The description of
Seagate Technology common stock, which is contained in the Registration
Statement on Form 8-A/A dated December 2, 1994.

You may request a copy of these filings, at no cost, by writing or telephoning:

Thomas F. Mulvaney, Esq.
Senior Vice President, General Counsel and Corporate Secretary
Seagate Technology, Inc.
920 Disc Drive
Scotts Valley, California 95066
(831) 438-6550

You should rely only on the information incorporated by reference or provided
in this Offering Circular/Prospectus or any supplement. We have not authorized
anyone else to provide you with different information. We are not making our
offer in any state where our offer is not permitted. You should not assume that
the information in this Offering Circular/Prospectus or any supplement is
accurate as of any date other than the date on the front of those documents.

13
<PAGE>

We obtained the information in this Offering Circular/Prospectus regarding
Seagate Software from Seagate Software management and publicly available
documents filed with the SEC.

TRADEMARKS

This Offering Circular/Prospectus contains trademarks of Seagate Technology and
Seagate Software and may contain trademarks of others.

SEAGATE TECHNOLOGY AND SEAGATE SOFTWARE RISK FACTORS

In connection with your evaluation of this Exchange Offer, you should consider
the information under the section entitled, "Seagate Technology Risk Factors"
beginning on page 24 and "Factors Affecting Future Operating Results" on page
90.

14
<PAGE>

SUMMARY SELECTED CONDENSED FINANCIAL DATA

We are providing the following financial information of Seagate Technology and
Seagate Software. Seagate Software is approximately 99.6% owned by Seagate
Technology on an outstanding shares basis. The consolidated historical results
of Seagate Technology include the results of Seagate Software. This financial
information should help you analyze the financial aspects of our Exchange
Offer.

The financial information of Seagate Technology for fiscal 1994 through fiscal
1998 is derived from Seagate Technology's audited financial statements for the
same periods, and the financial information for the three months ended October
3, 1997 and October 2, 1998 is derived from unaudited financial statements. The
financial information of Seagate Software is derived from Seagate Software's
audited financial statements for fiscal 1995 through fiscal 1998 and unaudited
financial statements for fiscal 1994 and the three months ended October 3, 1997
and October 2, 1998. The financial information for the three months ended
October 2, 1998 for Seagate Technology and Seagate Software is not necessarily
indicative of results that may be achieved for the remainder of fiscal 1999.
This financial information is only a summary and you should read it in
conjunction with the Seagate Technology financial statements (and related
notes) contained in the annual reports and other information on file with the
SEC and the Seagate Software financial statements (and related notes) contained
in this Offering Circular/Prospectus. See "Where You Can Find More Information"
on page 13.

SELECTED HISTORICAL FINANCIAL DATA OF SEAGATE TECHNOLOGY
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
FISCAL YEARS ENDED THREE MONTHS ENDED
------------------------------------------- ---------------------
JULY 3, JUNE 27, JUNE 28, JUNE 30, JULY 1, OCTOBER 2, OCTOBER 3,
1998 1997 1996 1995 1994 1998 1997
------- -------- -------- -------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue................. $6,819 $8,940 $8,588 $7,256 $5,865 $1,553 $1,896
Gross margin............ 989 2,022 1,581 1,373 1,171 321 295
Income (loss) from
operations............. (686) 858 287 459 473 (37) (200)
Income (loss) before
extraordinary gain..... (530) 658 213 313 330 (30) (240)
Net income (loss)....... (530) 658 213 319 330 (30) (240)
Basic income (loss) per
share before
extraordinary gain..... (2.17) 2.82 1.07 1.64 1.76 (0.12) (0.98)
Basic net income (loss)
per share.............. (2.17) 2.82 1.07 1.67 1.76 (0.12) (0.98)
Diluted income (loss)
per share before
extraordinary gain..... (2.17) 2.62 0.97 1.44 1.56 (0.12) (0.98)
Diluted net income
(loss) per share....... (2.17) 2.62 0.97 1.47 1.56 (0.12) (0.98)
Total assets............ 5,645 6,723 5,240 4,900 4,308 5,603 6,075
Long-term debt, less
current portion........ 704 702 798 1,066 1,177 703 703
Stockholders' equity.... $2,937 $3,476 $2,466 $1,936 $1,635 $2,928 $3,234
Number of shares used in
per share computations:
Basic.................. 243.6 233.6 199.7 190.6 186.9 245.0 244.6
Diluted................ 243.6 257.9 236.1 244.7 235.8 245.0 244.6
</TABLE>

Seagate Technology's fiscal 1998 results of operations include a $347 million
restructuring charge, a $223 million write-off of in-process research and
development incurred primarily in connection with the acquisition of Quinta
Corporation, a $76 million charge for mark-to-market adjustments on

15
<PAGE>

certain of Seagate Technology's foreign currency forward exchange contracts and
a $22 million reduction in the charge recorded in 1997 as a result of the
adverse judgment in the Amstrad PLC litigation (see "Management's Discussion
and Analysis of Financial Condition and Results of Operations" in Seagate
Technology's Form 10-K for the year ended July 3, 1998 incorporated by
reference in this Offering Circular/Prospectus). The 1997 results of operations
include a $153 million charge as a result of the adverse judgment in the
Amstrad PLC litigation. The 1996 results of operations include a $242 million
restructuring charge as a result of the merger with Conner Peripherals, Inc.
and a $99 million write-off of in-process research and development primarily
incurred in connection with the acquisition of software companies. The 1995
results of operations include a $73 million write-off of in-process research
and development incurred in connection with business acquisitions.

The results for the quarter ended October 2, 1998 include a $77 million charge
in connection with an amendment to the purchase agreement for the August 1997
acquisition of Quinta Corporation and a $7 million charge related to the
separation agreement with Seagate Technology's former Chief Executive Officer.

The results for the quarter ended October 3, 1997 include a $216 million write-
off of in process research and development incurred primarily in connection
with the acquisition of Quinta Corporation and a $63 million charge for mark-
to-market adjustments on certain of Seagate Technology's foreign currency
forward exchange contracts.

Prior periods have been restated to reflect the merger with Conner Peripherals,
Inc. in February 1996 on a pooling of interests basis, a two-for-one stock
split, effected in the form of a stock dividend, in November 1996, and
Statement of Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings Per
Share," adopted in the second quarter of fiscal 1998.

SEAGATE TECHNOLOGY--SUMMARY UNAUDITED PRO FORMA CONDENSED FINANCIAL DATA

The following information is provided to give the holders of Seagate Technology
stock pro forma financial information which gives a better picture of what the
results of operations and financial position of Seagate Technology might have
looked like had the exchange of Seagate Software shares for Seagate Technology
shares contemplated by the Exchange Offer and the Veritas Transaction occurred
at an earlier date. The pro forma financial information includes the effects of
the purchase by Newco of Telebackup Systems Inc., a Canadian Corporation
("Telebackup Purchase") immediately subsequent to the Veritas Transaction. This
information is provided as an example only. It does not show what the results
of operations or financial position of Seagate Technology would have been had
the Veritas Transaction, the TeleBackup Purchase, and the purchase of Seagate
Software shares by Seagate Technology actually occurred on the dates assumed.
This information also does not purport to indicate what Seagate Technology's
future operating results or consolidated financial position will be.

Please see "Seagate Technology--Unaudited Pro Forma Condensed Financial
Statements" beginning on page 58 for a more detailed explanation of this
analysis.

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<PAGE>

The pro forma financial information is presented in accordance with U.S. GAAP.
Seagate Software, and Seagate Technology through consolidation of Seagate
Software, will recognize a gain and record certain intangible assets on the
contribution of NSMG to Newco in exchange for Newco common stock. As a result
of the exchange of Seagate Software shares for Seagate Technology shares
pursuant to the Exchange Offer, Seagate Software and Seagate Technology will
record certain intangible assets and compensation expense.

The pro forma statement of operations data for the year ended July 3, 1998 and
the three months ended October 2, 1998, includes recurring adjustments which
assume that the Veritas Transaction, the TeleBackup Purchase, and the purchase
of Seagate Software stock by Seagate Technology took place on June 28, 1997,
the first day of Seagate Technology's fiscal year 1998. The pro forma statement
of operations data for Seagate Technology eliminates the historical results of
NSMG and includes Seagate Software's equity interest in the results of Newco
for the same periods, as described in the Notes to the Seagate Software--
Unaudited Pro Forma Condensed Financial Statements.

The pro forma balance sheet data has been prepared assuming the Veritas
Transaction, the TeleBackup Purchase, and the purchase of Seagate Software
stock by Seagate Technology took place on October 2, 1998.

17
<PAGE>

SEAGATE TECHNOLOGY--SELECTED UNAUDITED PRO FORMA
CONDENSED FINANCIAL INFORMATION
(In millions, except per share data)

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS
JULY 3, ENDED OCTOBER 2,
1998 1998
---------- ----------------
<S> <C> <C>
Pro Forma Statement of Operations Data(1):
Revenue........................................ $6,644 $1,505
Loss from operations........................... (699) (46)
Net loss....................................... (666) (67)
Net loss per share--basic...................... $(2.70) $(0.27)
Net loss per share--diluted.................... $(2.70) $(0.27)
Number of shares used in computing per share
amounts--basic................................ 247.0 248.5
Number of shares used in computing per share
amounts--diluted.............................. 247.0 248.5
</TABLE>

<TABLE>
<CAPTION>
AS OF
OCTOBER 2,
1998
----------
<S> <C>
Pro Forma Balance Sheet Data:
Working capital................................................... $2,219
Total assets...................................................... 6,500
Retained earnings................................................. 1,717
Stockholders' equity.............................................. 3,464
</TABLE>
- --------
(1) The pro forma statements of operations include the historical results of
Seagate Technology less the historical results of NSMG plus Seagate
Software's equity interest in the pro forma results of Newco for the same
periods as described in the notes to the Seagate Technology--Unaudited Pro
Forma Condensed Financial Statements (including recurring amortization of
related intangibles and goodwill) plus recurring amortization of
intangibles and goodwill associated with the purchase of shares of Seagate
Software stock by Seagate Technology. The pro forma balance sheet data of
Seagate Technology was prepared as if the Veritas Transaction, the
TeleBackup Purchase and the acquisition of shares of Seagate Software stock
by Seagate Technology had taken place on October 2, 1998.

SEAGATE TECHNOLOGY--COMPARATIVE PER SHARE DATA

The following tables present certain unaudited historical and pro forma per
share data that reflect the exchange of Seagate Software shares for Seagate
Technology shares pursuant to the Exchange Offer, the completion of the Veritas
Transaction and the TeleBackup Purchase based upon the historical financial
statements of Seagate Technology. The data presented below should be read in
conjunction with "Seagate Technology--Unaudited Pro Forma Condensed Financial
Statements" and the historical financial statements of Seagate Technology
incorporated by reference in this document and the historical financial
statements of Seagate Software included in this document. The unaudited pro
forma combined financial data does not necessarily indicate the operating
results that would have been achieved had the combinations been in effect as of
the beginning of the periods presented or future results of operations or
financial position.

18
<PAGE>

SEAGATE TECHNOLOGY--HISTORICAL

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
OR AS OF OR AS OF
JULY 3, 1998 OCTOBER 2, 1998
------------ ------------------
<S> <C> <C>
Net loss per share--basic.................... $(2.17) $(0.12)
Net loss per share--diluted.................. $(2.17) $(0.12)
Book value per common share(1)............... $12.00 $11.94
</TABLE>

SEAGATE TECHNOLOGY--PRO FORMA(2)(3)

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
JULY 3, OCTOBER 2,
1998 1998
---------- ------------------
<S> <C> <C>
Net loss per share--basic...................... $(2.70) $(0.27)
Net loss per share--diluted.................... $(2.70) $(0.27)
Book value per common share.................... $13.95
</TABLE>
- --------
(1) The historical book value per common share is computed by dividing
stockholders' equity as of the end of each period for which such
computation is made by the number of shares of common stock outstanding at
the end of each period.

(2) The pro forma comparative per share data has been calculated assuming
option holders exercise options to purchase 1,833,079 shares of Seagate
Software common stock and that these shares from the exercise of stock
options plus 467,000 shares held by existing minority interest shareholders
(2,300,079 shares out of 4,715,939 vested shares and options issued and
outstanding) are exchanged for Seagate Technology stock and assuming
33,398,286 shares of Newco are issued to Seagate Software in connection
with the Veritas Transaction.

(3) As a result of the Veritas Transaction, the TeleBackup Purchase and the
exchange of Seagate Software shares for Seagate Technology shares pursuant
to the Exchange Offer, Seagate Technology expects to incur write-offs
related to in-process research and development as well as compensation
costs currently estimated at $183.6 million. The pro forma book value per
share includes the effect of these charges; however, the pro forma net loss
per share does not reflect these charges since they are non-recurring.
These charges will be reflected in Seagate Technology's consolidated
financial statements in the period the Veritas Transaction, the TeleBackup
Purchase and the purchase by Seagate Technology of certain outstanding
shares of Seagate Software are completed.

19
<PAGE>

SELECTED HISTORICAL FINANCIAL DATA OF SEAGATE SOFTWARE(1)(2)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
------------------------------------------------- -----------------------
JULY 3, JUNE 27, JUNE 28, JUNE 30, JULY 1, OCTOBER 2, OCTOBER 3,
1998 1997 1996 1995 1994 1998 1997
-------- -------- --------- -------- -------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue................. $293,226 $216,950 $ 141,586 $ 92,796 $ 30,696 $ 74,875 $ 63,022
Gross profit............ 242,766 169,161 112,567 70,417 23,556 62,515 49,226
Income (loss) from
operations............. 6,905 (64,033) (137,806) (80,166) (11,068) 1,583 (3,399)
Net income (loss)....... (8,490) (57,700) (129,668) (82,864) (6,884) 852 (2,915)
Net income (loss) per
common share(3)
Basic.................. (51.59) (852.11) 3.09 (28.12)
Diluted................ (51.59) (852.11) 0.01 (28.12)
Total assets............ 136,040 143,594 201,598 101,928 20,854 123,272 136,040
Stockholders' equity.... $ 54,149 $ 61,618 $ 115,602 $ 47,215 $ 6,978 $ 56,016 $ 54,149
Number of shares used in
per share
computations(3)
Basic.................. 164,571 67,714 275,314 103,659
Diluted................ 164,571 67,714 59,984,218 103,659
</TABLE>
- --------
(1) The operating results for Seagate Software for 1998 include a $6.8 million
write-off for in-process research and development related to an acquisition
and $1.9 million for write-offs and write-downs of goodwill and
intangibles; 1997 operating results include $13.4 million of compensation
expense and $2.6 million for in-process research and development for
additional amounts paid with respect to the June 1996 acquisition of
Holistic Systems, Ltd., write-offs and write-downs of developed technology
and goodwill and intangibles of $6.9 million and $10.3 million,
respectively, and restructuring charges of $2.5 million; 1996 operating
results include write-offs aggregating $97.0 million for in-process
research and development related to acquisitions, $2.2 million for write-
offs and write-downs of goodwill and intangibles, and $9.5 million for
restructuring charges; 1995 operating results include $73.2 million for
write-offs of in-process research and development related to acquisitions.

(2) In February 1996, Seagate Technology, Inc., the parent company of Seagate
Software, merged with Conner Peripherals, Inc. ("Conner") in a transaction
accounted for as a pooling of interests. In connection with the merger with
Conner, Seagate Technology purchased the outstanding minority interests in
Conner's storage management operations, Arcada Holdings, Inc. ("Arcada").
Arcada had a fiscal year which ended on the Saturday closest to December
31. Accordingly, Arcada's results of operations for the year ended December
30, 1995 have been combined with Seagate Software's results for the year
ended June 30, 1995. To conform Arcada's fiscal year end to the year end of
Seagate Software, the combined statement of operations for Seagate Software
for the year ended June 28, 1996 includes six months (July 1, 1995 through
December 30, 1995) for Arcada which are also included in Seagate Software's
results for the year ended June 30, 1995. Arcada's duplicated results for
the period from July 1, 1995 to December 30, 1995 include revenues of $37.7
million, operating expenses of $29.3 million, and a net loss of $80,000.

(3) Prior to fiscal 1997, Seagate Software, Inc. had no formal capital
structure, and accordingly, share and per share information is not provided
for fiscal years prior to 1997.

SEAGATE SOFTWARE--SUMMARY UNAUDITED PRO FORMA CONDENSED FINANCIAL DATA

The following information is provided to give the holders of Seagate Software
stock pro forma financial information which gives a better picture of what the
results of operations and financial position of Seagate Software might have
looked like had the exchange of Seagate Software shares for Seagate Technology
shares contemplated by the Exchange Offer and the Veritas Transaction occurred
at an earlier date. The pro forma financial information also includes the
effects of the

20
<PAGE>

TeleBackup Purchase immediately subsequent to the Veritas Transaction. This
information is provided as an example only. It does not show what the results
of operations or financial position of Seagate Software would have been had the
Veritas Transaction, the TeleBackup Purchase and the purchase of Seagate
Software shares by Seagate Technology actually occurred on the dates assumed.
This information also does not purport to indicate what Seagate Software's
future operating results or consolidated financial position will be.

Please see "Seagate Software--Unaudited Pro Forma Condensed Financial
Statements" for a more detailed explanation of this analysis.

The pro forma financial information is presented in accordance with U.S. GAAP.
Seagate Software will recognize a gain and record certain intangible assets on
the contribution of NSMG to Newco in exchange for Newco common stock. In
addition, Seagate Technology will purchase certain outstanding shares of
Seagate Software and as a result Seagate Software will record certain
intangible assets and compensation expense.

The pro forma statement of operations data for the year ended July 3, 1998 and
the three months ended October 2, 1998, includes recurring adjustments which
assume that the Veritas Transaction, the TeleBackup Purchase and the purchase
of Seagate Software stock by Seagate Technology took place on June 28, 1997,
the first day of Seagate Software's fiscal 1998. The pro forma statement of
operations data for Seagate Software eliminates the historical results of NSMG
and includes Seagate Software's equity interest in the results of Newco for the
same periods, as described in the Notes to the Seagate Software--Unaudited Pro
Forma Condensed Financial Statements.

The pro forma balance sheet data has been prepared assuming the Veritas
Transaction, the TeleBackup Purchase and the purchase of Seagate Software stock
by Seagate Technology took place on October 2, 1998.

SEAGATE SOFTWARE--SELECTED UNAUDITED PRO FORMA CONDENSED FINANCIAL
INFORMATION(1)
(In thousands, except per share data)

<TABLE>
<CAPTION>
THREE
YEAR ENDED MONTHS ENDED
JULY 3, OCTOBER 2,
1998 1998
---------- ------------
<S> <C> <C>
Pro Forma Statement of Operations Data:
Total revenues..................................... $118,180 $26,342
Loss from operations............................... (5,371) (7,474)
Net loss........................................... (144,474) (35,615)
Net loss per share--basic.......................... $ (55.17) $(13.60)
Net loss per share--diluted........................ $ (55.17) $(13.60)
Number of shares used in computing per share
amounts--basic.................................... 2,619 2,619
Number of shares used in computing per share
amounts--diluted.................................. 2,619 2,619
</TABLE>

21
<PAGE>

<TABLE>
<CAPTION>
AS OF
OCTOBER 2,
1998
----------
<S> <C>
Pro Forma Balance Sheet Data:
Working capital.................................................. $ 4,410
Total assets..................................................... 1,025,138
Retained earnings................................................ 181,678
Stockholders' equity............................................. 593,693
</TABLE>
- --------
(1) The pro forma statements of operations include the historical results of
Seagate Software less the historical results of NSMG plus Seagate
Software's equity interest in the pro forma results of Newco for the same
periods as described in the notes to the Seagate Software-Unaudited Pro
Forma Condensed Financial Statements (including recurring amortization of
related intangibles and goodwill) plus recurring amortization of
intangibles and goodwill associated with the purchase of shares of Seagate
Software stock by Seagate Technology. The pro forma balance sheet data of
Seagate Software was prepared as if the Veritas Transaction, the TeleBackup
Purchase and the acquisition of shares of Seagate Software stock by Seagate
Technology had taken place on October 2, 1998.

SEAGATE SOFTWARE--COMPARATIVE PER SHARE DATA

The following tables present certain unaudited historical and pro forma per
share data that reflect the completion of the Veritas Transaction, the
TeleBackup Purchase and the purchase of Seagate Software shares by Seagate
Technology based upon the historical financial statements of Seagate Software.
The data presented below should be read in conjunction with "Seagate Software--
Unaudited Pro Forma Condensed Financial Statements" and the historical
financial statements of Seagate Software included in this Offering
Circular/Prospectus. The unaudited pro forma condensed financial data does not
necessarily indicate the operating results that would have been achieved had
the Veritas Transaction, the TeleBackup Purchase and the purchase of Seagate
Software shares by Seagate Technology been in effect as of the beginning of the
periods presented or future results of operations or financial position.

SEAGATE SOFTWARE--HISTORICAL

<TABLE>
<CAPTION>
THREE
YEAR ENDED MONTHS ENDED
OR AS OF OR AS OF
JULY 3, 1998 OCTOBER 2, 1998
------------ ---------------
<S> <C> <C>
Basic net income (loss) per share............... $ (51.59) $ 3.09
Diluted net income (loss) per share............. $ (51.59) $ 0.01
Book value per common share(1).................. $(1,509.97) $(1,185.75)
</TABLE>

SEAGATE SOFTWARE--PRO FORMA(2)(3)

<TABLE>
<CAPTION>
THREE
YEAR ENDED MONTHS ENDED
JULY 3, OCTOBER 2,
1998 1998
---------- -------------
<S> <C> <C>
Basic net loss per share............................ $(55.17) $(13.60)
Diluted net loss per share.......................... $(55.17) $(13.60)
Book value per common share......................... $ 0.62
</TABLE>

22
<PAGE>

- --------
(1) The historical book value per common share is computed by dividing
stockholders' equity as of the end of each period for which such
computation is made, adjusted for the preferred stockholder liquidation
preference, by the number of shares of common stock outstanding, not
subject to repurchase, at the end of each period.

(3) As a result of the Veritas Transaction, the TeleBackup Purchase and the
exchange of Seagate Software shares for Seagate Technology shares pursuant
to the Exchange Offer, Seagate Software expects to incur write-offs related
to in-process research and development as well as compensation costs
currently estimated at $183.6 million. The pro forma book value per share
includes the effect of these charges; however, the pro forma net loss per
share does not reflect these charges since they are non-recurring. These
charges will be reflected in Seagate Software's consolidated financial
statements in the period that the Veritas Transaction, the TeleBackup
Purchase and the purchase by Seagate Technology of certain outstanding
shares of Seagate Software are completed.

23
<PAGE>

SEAGATE TECHNOLOGY RISK FACTORS

Seagate Technology competes in the data storage industry, and there are a
number of factors that, in the past, have affected all of the companies in our
industry, including us. Many of these factors may also impact our business in
the future.

DATA STORAGE INDUSTRY RISKS

Our products are components in computer systems. The demand for computer
systems has been volatile in the past and often has had an exaggerated effect
on the demand for disc drive and tape drive products such as ours in any given
period. In the past, unexpected slowdowns in demand for computer systems have
generally caused sharp declines in demand for disc drives and tape drive
products. We expect that this situation will occur again in the future.

In our industry the supply of drives periodically exceeds demand. When this
happens, the over supply of available products causes higher than anticipated
inventory levels and intense price competition.

FLUCTUATIONS IN QUARTERLY RESULTS

We often experience a high volume of sales at the end of the quarter, so we may
not be able to determine that our fixed costs are too high relative to sales
until late in any given quarter. Since this happens late in the quarter, we do
not have enough time to reduce these costs. As a result, we would not be as
profitable or may even incur a loss. In addition, our operating results have
been and may in the future be subject to significant quarterly fluctuations as
a result of a number of other factors including:

. the timing of orders from and shipment of products to major customers,
. our product mix,
. changes in the prices of our products,
. manufacturing delays or interruptions,
. acceptance by customers of competing technologies in lieu of our products,
. variations in the cost of components for our products,
. limited access to components that we obtain from a single or a limited number
of suppliers,
. our inability to reduce our fixed costs to match revenues in any quarter
because of our vertical manufacturing strategy,
. the impact of changes in foreign currency exchange rates on the cost of our
products and the effective price of such products to foreign consumers,
. competition and consolidation in the data storage industry, and
. general economic conditions.

For example, revenue decreased to $1.553 billion in the first quarter of fiscal
1999 from $1.896 billion in the first quarter of fiscal 1998 as a result of
increased competition which resulted in significant price decreases and
continuing weakness in demand for Seagate Technology's disc drive products. Our
future operating results may also be adversely affected, if we receive an
adverse judgment or settlement in any of the legal proceedings to which we are
a party.

24
<PAGE>

COMPETITION

Even during periods when demand is stable, the data storage industry is
intensely competitive and vendors experience price erosion over the life of a
product. We expect that our competitors will offer new and existing products at
lower prices if necessary to gain or retain market share and customers. We also
expect that price erosion in our industry will continue for the foreseeable
future. Because we may need to reduce our prices to retain market share, the
competition could adversely affect our results of operations in any given
quarter. We have experienced and expect to continue to experience intense
competition from a number of domestic and foreign companies including the other
leading independent disc drive manufacturers, as well as large integrated
multinational manufacturers such as

. Fujitsu Limited,
. International Business Machines Corporation,
. NEC Corporation,
. Samsung Electronics Co. Ltd., and
. Toshiba Corporation.

We also face indirect competition from present and potential customers,
including several of the computer manufacturers listed above, that continuously
evaluate whether to manufacture their own drives or purchase them from outside
sources. If our customers decide to manufacture their own drives, it could have
a material adverse effect on our business, results of operations and financial
condition.

We also compete with manufacturers of products that use alternative data
storage and retrieval technologies. Products based upon such alternative
technologies, including optical recording technology and semiconductor memory
(flash memory, SRAM and DRAM), may compete with our products.

We may not be able to compete successfully against current or future
competitors. If we fail to compete successfully, our business, operating
results and financial condition may be materially adversely affected.

RISKS ASSOCIATED WITH NEW PRODUCT DEVELOPMENT

Seagate Technology's products are used in combination with other hardware, such
as microprocessors, and other software. We had research and development
expenses of $420 million, $459 million and $585 million in fiscal 1996, 1997
and 1998, respectively. Customers have demanded new generations of drive
products as advances in other hardware components and software have created the
need for improved storage products with features such as increased storage
capacity or more advanced technology. As a result, the life cycles of our
products have been shortened, and we have been required to constantly develop
and introduce new drive products on a cost-effective and timely basis.

When we develop new disc and tape drive products with higher capacity and more
advanced technology, our operating results may decline because the increased
difficulty and complexity of producing such disc drives increases the
likelihood of reliability, quality or operability problems. If our products
suffer increases in failures, are of low quality or are not reliable, customers
may reduce

25
<PAGE>

their purchases of our products and our manufacturing rework and scrap costs
and service and warranty costs may increase. In addition, a decline in the
reliability of our products may make us less competitive as compared with other
disc and tape drive manufacturers.

Seagate Technology's future success will also require strong demand by
consumers and businesses for computer systems, storage upgrades to computer
systems and multimedia applications, such as digital video and video-on-demand.
If delivery of our new products or those computer systems into which our
products are integrated is delayed, consumers and businesses may purchase
comparable products from our competitors or wait to make their purchases if
they want to buy the new product. If customers hold back in anticipation of a
new product or buy from a competitor instead, our operating results may be
significantly adversely impacted.

Consumers have shown that they want to purchase personal computers costing less
than $1000. We are developing low cost disc drives to meet the demand for disc
drives that are components of low cost personal computers. However, we may not
be able to produce disc drives that meet our quality and performance standards
at a cost low enough to yield gross margins comparable to those of our current
overall product mix.

Seagate Technology discontinued production of disc drives that use smaller
media than 3.5 inches, in January 1998. We are continuing research and
development of smaller drives, because we believe that to compete successfully
to supply components for mobile, laptop, notebook and ultraportable computers,
we must supply a smaller product. We intend to re-enter this market with a
durable, low power application in the future, although there can be no
assurance that we will be able to do so successfully.

RISKS FROM VERTICAL INTEGRATION OF MANUFACTURING OPERATIONS

The cost, quality and availability of certain components, including heads,
media, application specific integrated circuits, motors, printed circuit boards
and custom semiconductors are critical to the successful production of disc
drives. Our strategy of vertical integration has allowed us to internally
manufacture many of the critical components used in our products. We have
pursued a strategy of vertical integration of our manufacturing processes in
order to reduce costs, control quality and assure availability and quality of
certain components.

Vertical integration entails a high level of fixed costs and requires a high
volume of production and sales to be successful. During periods of decreased
production, such as we are now experiencing, these high fixed costs have had,
and could in the future have, a material adverse effect on our operating
results and financial condition. In addition, a strategy of vertical
integration has in the past and could continue to delay our ability to
introduce products containing market-leading technology.

Seagate Technology also relies on independent suppliers for certain components.
In the past, we have experienced production delays when we are unable to obtain
sufficient quantities of certain components. Any prolonged interruption or
reduction in the supply of any key components could have a material adverse
effect on our business, operating results and financial condition. We rely on
single or limited source suppliers for certain components used in our products.
We may not be able to obtain components that meet our specifications and
quality standards at prices that enable us to

26
<PAGE>

earn a profit on the finished products. In the past, shortages have occurred in
the market for certain components, including heads, media, application specific
integrated circuits and motors. As a result, certain suppliers substantially
increased the price of such components, and we are currently incurring
increased costs for certain of these components as a result of supply
shortages. If we experience any extended interruption or reduction in the
supply of any key components, our business, results of operations and financial
condition could be materially adversely affected.

CUSTOMER REQUIREMENTS AND CONCENTRATION

The data storage industry has been characterized by large volume OEM purchase
agreements and large distributor orders. Typically, our OEM purchase agreements
permit customers to cancel orders and reschedule delivery dates without
significant penalties. In the past, orders from many of our OEM customers were
canceled or delivery schedules were delayed as a result of changes in customer
requirements. These delays have had a material adverse effect on our results of
operations in the past, and may again in the future. Distributors typically
furnish Seagate Technology with non-binding indications of their near-term
requirements, with product deliveries based on our weekly confirmations. To the
extent actual orders from distributors decrease from their non-binding
forecasts, such variances could have a material adverse effect on our business,
results of operations and financial condition.

RISKS FROM INTERNATIONAL OPERATIONS

Seagate Technology has significant offshore operations including manufacturing
facilities, sales personnel and customer support operations. We have
manufacturing facilities in Singapore, Thailand, the People's Republic of
China, Scotland, Northern Ireland, and Malaysia, in addition to those in the
United States. Our offshore operations are subject to certain inherent risks
including:

. fluctuations in currency exchange rates, such as the $76 million pre-tax
charge to income Seagate Technology incurred in fiscal 1998 from marking our
hedge positions to market,
. longer payment cycles for sales in foreign countries,
. difficulties in staffing and managing international manufacturing operations,
. seasonal reductions in business activity in the summer months in Europe and
certain other countries,
. increases in tariffs and duties, price controls, restrictions on foreign
currencies and trade barriers imposed by foreign countries, and
. political unrest, particularly in areas in which we have manufacturing
facilities.

These factors could have a material adverse effect on our business, operating
results and financial condition in the future.

Seagate Technology's products are priced in U.S. dollars even when sold to
customers who are located abroad. The currency instability in the Asian and
other financial markets may make our products more expensive than products sold
by other manufacturers that are priced in one of the affected currencies.
Therefore, foreign customers may reduce purchases of our products. We
anticipate that the recent turmoil in financial markets and the recent
deterioration of the underlying

27
<PAGE>

economic conditions in certain countries, including those in Asia, may have an
impact on our sales to customers located in or whose end-user customers are
located in those countries due to:

. the impact of currency fluctuations on the relative price of our products,
. restrictions on government spending imposed by the International Monetary
Fund (the "IMF") in those countries receiving the IMF's assistance,
. customers' reduced access to working capital to fund purchases of disc drive
components or software, such as our products due to:
. higher interest rates,
. reduced bank lending due to contractions in the money supply or the
deterioration in the customer's or its bank's financial condition, or
. the inability to access other financing.

RISKS FROM THE SPIN-OFF OF THE NETWORK & STORAGE MANAGEMENT GROUP

We consolidated our software businesses into a single entity called Seagate
Software in 1996. Seagate Software's business currently consists of two primary
divisions, NSMG and IMG. Seagate Technology announced the Veritas Transaction
on October 5, 1998. Seagate Technology's Seagate Software subsidiary and
Seagate Software employees who will become Newco employees and who hold stock
options in Seagate Software will receive approximately 40% of the fully-diluted
equity in the new company. See "The Exchange Offer--Background and Reasons for
the Exchange Offer."

We face a number of risks prior to and after the closing of the Veritas
Transaction including:

. our management resources may be distracted from the day to day operations by
the transaction,
. IMG employees may be distracted by concerns about whether we continue to
operate that business or spin it off,
. NSMG customers may delay or cancel orders due to uncertainty about the spin-
off,
. the ongoing OEM relationship with NSMG and Seagate Technology's tape drive
operations may be disrupted,
. we have agreed not to compete in certain storage management software
businesses for a specified period of time after the closing of the Veritas
Transaction and may not be able to benefit from future opportunities in that
market,
. we will not have control over the management of Newco, although initially we
will have two representatives on its board of directors, and
. we will be limited from liquidating our interest in Newco for a certain
period of time. Thereafter, if we choose to do so, we will be required to
sell our interest in Newco in small increments to comply with certain SEC
rules or to bear the expense of filing a registration statement.

ACQUISITIONS

We intend to continue our expansion into complementary data technology
businesses through internal growth as well as acquisitions. Acquisitions
involve numerous risks, including difficulties in the assimilation of the
operations and products of the acquired businesses and the potential loss of
key employees or customers of the acquired businesses. We expect that we will
continue to incur

28
<PAGE>

substantial expenses as we acquire other businesses, including charges for the
write-off of in-process research and development. Our operating results have
fluctuated in the past and may fluctuate in the future because of the timing of
such write-offs. For example, we incurred a charge to operations in the first
quarter of fiscal 1998 of approximately $214 million for the write-off of in-
process research and development related to our acquisition of Quinta
Corporation, and we anticipate a substantial charge to operations later in
fiscal 1999 for the write-off of in-process research and development related to
the contribution of the NSMG business in the Veritas Transaction.

RISKS OF SYSTEMS FAILURES

Seagate Technology's operations are dependent on our ability to protect our
computer equipment and the information stored in our databases from damage by
fire, natural disaster, power loss, telecommunications failures, unauthorized
intrusion and other catastrophic events. We believe that we have taken prudent
measures to reduce the risk of interruption in our operations. However, we
cannot be sure that these measures are sufficient. Any damage or failure that
causes interruptions in our operations could have a material adverse effect on
our business, results of operations and financial condition.

YEAR 2000 RISKS

The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Computer programs that
have date-sensitive software may recognize a date using "00" as the year 1900
rather than the year 2000. Seagate Technology considers a product to be in
"Year 2000 compliance" if

. the product's performance and functionality are unaffected by processing of
dates prior to, during and after the year 2000, but only if
. all products (for example hardware, software and firmware) used with the
product properly exchange accurate date data with it.

Seagate Technology's Products. We are assessing the capability of our products
to determine whether or not they are in Year 2000 compliance. Although we
believe our disc and tape drive products and certain of our software products
are in Year 2000 compliance, we have determined that certain of our software
products are not and will not be Year 2000 compliant. We are taking measures to
inform our customers that those products are not and will not be Year 2000
compliant. To assist our customers in evaluating their Year 2000 issues, our
Seagate Software subsidiary has developed a list that indicates those products
that are Year 2000 compliant as stand-alone products. The list is located on
Seagate Software's World Wide Seagate web page and is periodically updated when
assessment of the Year 2000 compliance of additional products is completed. To
date, the costs Seagate Technology has incurred related to these programs have
been immaterial.

However, the assessment of whether a complete system will operate correctly
depends on the BIOS capability and software design and integration, and for
many end-users this will include BIOS, software and components provided by
companies other than Seagate Technology or Seagate Software. Seagate Technology
considers a disc drive or tape product to be Year 2000 capable if when used
properly and in conformity with the product information provided by us, our
product will

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accurately store, display, process, provide and/or receive data from, into and
between 1999 and 2000, including leap year calculations if all other technology
used in combination with the Seagate Technology disc drive or tape product
properly exchanges date data with the Seagate Technology product.

We do not believe we are legally responsible for costs incurred by customers
related to ensuring such customers' or end-users' Year 2000 capability.
Nevertheless, we are incurring various costs to provide customer support and
customer satisfaction services regarding Year 2000 issues and anticipate that
these expenditures will continue in fiscal 1999 and thereafter. In addition, we
have contacted our major customers to determine whether their products into
which our products have been and will be integrated are Year 2000 compliant.
Seagate Technology has received assurances of Year 2000 compliance from a
number of those customers. Many other customers have not responded and are
under no contractual obligation to provide us with Year 2000 compliance
information. Seagate Technology is taking steps with respect to new customer
agreements to ensure that the customers' products and internal systems are Year
2000 compliant.

Seagate Technology anticipates that substantial litigation may be brought
against vendors, including Seagate Technology, of all component products of
systems that are unable to properly manage data related to the Year 2000. Our
customer agreements typically contain provisions designed to limit our
liability for such claims. It is possible, however, that these measures will
not provide protection from liability claims, as a result of existing or future
federal, state or local laws or ordinances or unfavorable judicial decisions.
If any such claims are brought against Seagate Technology, regardless of their
merit, our business, financial condition and results of operations could be
materially adversely affected from factors that include increased warranty
costs, customer satisfaction issues and the costs of potential lawsuits.

Seagate Technology's Systems. We have also initiated a comprehensive program to
address Year 2000 readiness in our internal systems and with our customers and
suppliers. Our program has been designed to address our most critical internal
systems first and to gather information regarding the Year 2000 compliance of
products supplied to Seagate Technology and into which our products are
integrated. Assessment and remediation are proceeding in tandem, and we intend
to have our critical internal systems in Year 2000 compliance by July 3, 1999,
the first day of our fiscal year 2000. These activities are intended to
encompass all major categories of systems in use by Seagate Technology,
including manufacturing, engineering, sales, finance and human resources. To
date, we have not incurred material costs related to assessment and remediation
of Year 2000 readiness. We currently expect that the total cost of our Year
2000 readiness programs, excluding redeployed resources, will not exceed $10
million over the next fiscal year. This total cost estimate does not include
potential costs related to any customer or other claims or the costs of
internal software or hardware replaced in the normal course of business. The
total cost estimate is based on the current assessment of Seagate Technology's
Year 2000 readiness needs and is subject to change as the projects proceed.

We are installing and testing new computer software for our financial,
accounting, inventory control, order processing and other management
information systems. In the course of these upgrades, we are identifying Year
2000 dependencies in such systems and are implementing changes to such systems
to make them Year 2000 compliant. The successful implementation of these new
systems is crucial

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to the efficient operation of our business. We cannot provide any assurance
that we will implement our new systems in an efficient and timely manner or
that the new systems will be adequate to support our operations. Problems with
installation or initial operation of the new systems could cause substantial
management difficulties in operations planning, financial reporting and
management and thus could have a material adverse effect on our business,
financial condition and results of operations. We do not expect the cost of
bringing our systems into Year 2000 compliance to have a material effect on our
financial condition or results of operations.

We have also initiated formal communications with Seagate Technology's
significant suppliers and financial institutions to determine the extent to
which we are vulnerable to those third parties' failure to remedy their own
Year 2000 issues. To date, we have contacted our significant suppliers and
financial institutions and have received assurances of Year 2000 compliance
from a number of those contacted. However, most of Seagate Technology's
suppliers are under no contractual obligation to provide such information.
Seagate Technology is taking steps with respect to new supplier agreements to
ensure that the suppliers' products and internal systems are Year 2000
compliant. While we currently expect that the Year 2000 issues will not pose
significant operational problems, we could experience material adverse effects
on our business if the implementation of new systems is delayed. We could also
experience material adverse effects on our business if we fail to fully
identify all Year 2000 dependencies in our systems and in the systems of our
suppliers, customers and financial institutions. Those material adverse effects
could include delays in the delivery or sale of Seagate Technology's products.
Therefore, we are developing contingency plans for continuing operations in the
event such problems arise.

IMPACTS OF VOLATILE STOCK PRICE

Our stock price has varied greatly as has the volume of shares of our common
stock that are traded. We expect these fluctuations to continue due to factors
such as:

. announcements of new products, services or technological innovations by us or
our competitors
. announcements of major restructurings by us or our competitors
. quarterly variations in our results of operations
. changes in revenue or earnings estimates by the investment community and
speculation in the press or investment community
. general conditions in the data storage industry or the personal computer
industry
. changes in our revenue growth rates or the growth rates of our competitors
. sales of large blocks of our stock

The stock market may from time to time experience extreme price and volume
fluctuations. Many technology companies have experienced such fluctuations. In
addition, our stock price may be affected by general market conditions and
domestic and international macroeconomic factors unrelated to our performance.
Often such fluctuations have been unrelated to the operating performance of the
specific companies. The market price of our common stock may experience
significant fluctuations in the future.

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<PAGE>

RISKS FROM CONVERSION TO SINGLE EUROPEAN CURRENCY

On January 1, 1999, certain member states of the European Economic Community
will fix their respective currencies to a new currency, the Single European
Currency ("Euro"). On that day the Euro will become a functional legal currency
within these countries. During the three years beginning on January 1, 1999,
business in these countries will be conducted both in the existing national
currency, such as the French Franc or the deutsche Mark, as well as the Euro.
Companies operating in or conducting business in these countries will need to
ensure that their financial and other software systems are capable of
processing transactions and properly handling the existing currencies and the
Euro. We are still assessing the impact that the introduction and use of the
Euro will have on our internal systems. We will take corrective actions based
on such assessment but we do not presently expect that introduction and use of
the Euro will materially affect our foreign exchange and hedging activities or
use of derivative instruments or will result in any material increase in our
costs. While we will continue to evaluate the impact of the Euro introduction
over time, based on currently available information, we do not believe that the
introduction of the Euro will have a material adverse impact on our financial
condition or overall trends in results of operations.

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<PAGE>

THE EXCHANGE OFFER

THE EXCHANGE OFFER AND THE EXCHANGE RATE

We are offering to acquire from Seagate Software stockholders all outstanding
shares of Seagate Software common stock in exchange for shares of Seagate
Technology common stock. If you hold options to purchase shares of Seagate
Software common stock, you may exercise all or any portion of such options
which are vested and participate in the Exchange Offer as a stockholder of
Seagate Software.

If you hold options to purchase shares of Seagate Software common stock and you
will become an employee of Newco, you may (a) participate in this Exchange
Offer with respect to your vested options by exercising all or a portion of
such vested options, (b) participate in the Newco option exchange offer with
respect to your vested as well as unvested options, (c) participate in both
exchange offers, or (d) you may choose not to participate in either exchange
offer.

If you choose to not participate in this Exchange Offer and you are a
stockholder, you will continue to hold shares of Seagate Software common stock.
If you hold options to purchase Seagate Software common stock that are
unvested, or if you choose not to exercise your vested options and participate
in the Exchange Offer, you will continue to hold options to purchase shares of
Seagate Software common stock. However, if you are a Seagate Software employee
who will become a Newco employee, you may exchange your Seagate Software
options for Newco stock options.

If you are a Seagate Software employee who will become a Newco employee who
elects not to participate in either this Exchange Offer or the Newco option
exchange offer, then you will continue to hold your options for Seagate
Software common stock until you leave your employment with Seagate Software, at
which time, the unvested portion of your stock options will be canceled. In
addition, you will have only 30 days after you leave the employment of Seagate
Software to exercise the vested portion of your stock options or else they will
be also canceled.

As you know, no public market for shares of Seagate Software common stock
currently exists. Following the Exchange Offer, Seagate Software may, from time
to time, evaluate various alternative means of liquidity (such as a public
offering or a sale of Seagate Software) for shares of its common stock. In the
event of any such liquidity event, the value of your shares of Seagate Software
may be greater or less than the value of such shares in this Exchange Offer.

NEITHER THE SEAGATE TECHNOLOGY BOARD OF DIRECTORS NOR THE SEAGATE SOFTWARE
BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY SEAGATE SOFTWARE STOCKHOLDER
AS TO WHETHER TO TENDER ANY OR ALL SEAGATE SOFTWARE SHARES. EACH SEAGATE
SOFTWARE STOCKHOLDER MUST MAKE HIS OR HER OWN DECISION AS TO WHETHER TO TENDER
ANY OR ALL SEAGATE SOFTWARE SHARES.

The Exchange Rate equals the number obtained by dividing (A) the Seagate
Software Price by (B) the Seagate Technology Price.

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<PAGE>

The Seagate Software Price means the amount obtained by dividing (A) the NSMG
Price, plus an amount reflecting the value of the IMG business to be determined
by Seagate Software's Board of Directors prior to the Expiration Date, plus an
amount equal to the proceeds from the assumed exercise of all outstanding
Seagate Software stock options by (B) the total number of shares of Seagate
Software common stock and options to purchase shares of Seagate Software common
stock as of the end of the third business day prior to the close of the Veritas
Transaction. The amount reflecting the value of IMG will not be determined by
the Board of Directors of Seagate Software until three days prior to the
closing of the Veritas Transaction. The NSMG Price will be determined based on
the value of the shares of common stock of Newco that will be issued to Seagate
Software and certain Seagate Software optionees in exchange for the
contribution of the NSMG business in the Veritas Transaction. For this purpose,
the Newco common stock will be valued at the average closing price of Veritas
on the Nasdaq National Market System for the five trading days ending three
business days prior to the effective time of the Veritas Transaction.

In our exchange, we will not issue any fractional shares to you. Instead, the
number of shares you receive in this Exchange Offer will be rounded down to the
nearest whole number of shares.

On , 199 , the last sales price of Seagate Technology common stock was
$ , as reported on the New York Stock Exchange. The Seagate Software common
stock has no established public trading market.

BACKGROUND AND REASONS FOR THE EXCHANGE OFFER

The boards of directors of Veritas, Seagate Technology and Seagate Software
have agreed to combine the NSMG business of Seagate Software with the business
of Veritas. Pursuant to the Veritas Agreement, Seagate Software will contribute
the NSMG business to a newly-formed corporation, Newco. Seagate Software
together with the optionees of Seagate Software who become employees of Newco
will own approximately 40% of the fully-diluted equity securities of Newco.
Veritas stockholders, option holders and holders of convertible debt will
convert their Veritas securities on a one-for-one basis for Newco securities
and will receive approximately 60% of Newco. These transactions are referred to
as the "Veritas Transaction." The Veritas Transaction contemplates that Newco
common stock will be publicly traded. As a result, employees of Seagate
Software who will become Newco employees and who exchange their Seagate
Software options for Newco options will have the ability to sell their shares
in a public market. We wish to provide a similar opportunity for all Seagate
Software stockholders and holders of vested options, including the significant
number of such persons who will not transfer to Newco and be eligible for the
Newco option exchange offer.

THE EXPIRATION DATE

The Exchange Offer will expire on the Expiration Date, which is 12:00 midnight,
New York City time, on , 1999, unless we extend this time. If we extend
this time, we will publicly

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<PAGE>

announce the extension as soon as practicable after we make the extension. We
will make the public announcement no later than 9:00 a.m. Eastern time on the
next business day after the previously scheduled Expiration Date. Without
limiting the manner in which we may choose to make a public announcement, we
will not have any obligation to publish or communicate any such public
announcement other than by making a release to the Dow Jones News Service.

CONDITIONS TO THE EXCHANGE OFFER

The exchange will not occur unless certain conditions are satisfied prior to
the Expiration Date. These conditions are as follows:

- the principal terms of the Veritas Agreement and the Veritas Transaction
shall have been approved and adopted by a majority of the Veritas
stockholders and a majority of the Seagate Software stockholders;

- the Registration Statement relating to the shares to be issued by Newco
in the Veritas Transaction shall have become effective under the
Securities Act of 1933, as amended, and shall not be the subject of any
stop-order or proceedings seeking a stop-order and the Veritas Management
Information Circular/Joint Proxy Statement/Prospectus shall at the
effective time of the Veritas Transaction not be subject to any
proceedings commenced or overtly threatened by the SEC; and

- any applicable waiting periods for the Veritas Transaction shall have
expired or been terminated and no decree, ruling, temporary restraining
order, preliminary injunction or permanent injunction or other order
preventing the consummation of the Veritas Transaction shall have been
issued by any federal or state court or governmental agency which remains
in effect.

TERMINATION OF THE EXCHANGE OFFER

Seagate Technology reserves the right, in our sole discretion to terminate our
Exchange Offer and not accept for exchange any tendered Seagate Software shares
not already accepted for exchange or exchanged.

If the Exchange Offer is terminated without our acceptance of any tendered
shares of Seagate Software common stock, we will return promptly all such
shares tendered to the appropriate Seagate Software stockholders.

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<PAGE>

EXCHANGE OF SHARES AND CERTIFICATES

If you deliver a properly completed and executed letter of transmittal, which
you received along with this Offering Circular/Prospectus (a "Letter of
Transmittal"), and stock certificates representing your shares of Seagate
Software common stock prior to the Expiration Date to the Exchange Agent at its
address, then you will have accepted the Exchange Offer as to the number of
shares reflected on the stock certificates delivered by you. If you hold vested
options to purchase shares of Seagate Software common stock and you elect to
exercise such options and participate in the Exchange Offer, you should review
the Letter of Transmittal for instructions on tendering the shares that you
receive upon exercise of your options.

You must choose how to deliver the Letter of Transmittal, stock certificates,
and other necessary documents to the Exchange Agent and you bear the risk of
how you make this delivery. We recommend that you use an overnight or hand
delivery service rather than a mail service. In all cases, you should allow
sufficient time to assure timely delivery. You should send your Letter of
Transmittal, stock certificates, and other necessary documents to the Exchange
Agent at the address provided in this Offering Circular/Prospectus and the
Letter of Transmittal.

If you want us to issue the stock certificates representing your Seagate
Technology common stock in a name other than the name in which your stock
certificates are registered, you must properly endorse or otherwise place in
proper form for transfer the stock certificates you are surrendering.

If the Letter of Transmittal is signed by a person other than the registered
holder of any Seagate Software common stock listed therein, the stock
certificates reflecting ownership of such Seagate Software common stock must be
endorsed or accompanied by appropriate stock powers that authorize the person
to tender the Seagate Software common stock on behalf of the registered holder,
in either case signed as the name of the registered holder or holders appears
on these stock certificates.

If the Letter of Transmittal, any stock certificates representing Seagate
Software common stock tendered, or any stock powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of a
corporation, or others acting in a fiduciary or representative capacity, these
persons should so indicate when signing and, unless waived by us, submit with
the Letter of Transmittal evidence satisfactory to us of their authority to so
act.

After the Expiration Date, the Exchange Agent will send us written notice of
the amount of outstanding Seagate Software common stock validly tendered in the
Exchange. Promptly after we receive this notice, if all the conditions under
the Veritas Agreement or described in this Offering Circular/Prospectus are
satisfied or waived, then we will exchange each validly tendered share of
Seagate Software common stock for shares of Seagate Technology common stock
based on the Exchange Rate. We then will deliver by registered mail stock
certificates representing the appropriate number of shares of Seagate
Technology common stock to the appropriate stockholders. For information
regarding fractional shares, see "--Fractional Shares." (page )

All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of the tendered shares of Seagate Software
common stock will be determined by us in our sole discretion, and our
determination will be final and binding. We reserve the absolute right to

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<PAGE>

reject any and all shares of Seagate Software common stock not properly
tendered or any shares of Seagate Software common stock our acceptance of which
would, in the opinion of our counsel, be unlawful. We reserve the absolute
right to waive any irregularities or conditions of tenders as to particular
shares of Seagate Software common stock. Unless waived by us, any defects or
irregularities in connection with tenders of shares of Seagate Software common
stock must be cured within the time we determine. Neither we, the Exchange
Agent nor any other person shall be under any duty to give notification of
defects or irregularities with respect to tenders of shares of Seagate Software
common stock nor shall any of them incur any liability for failure to give any
notification. Tenders of shares of Seagate Software common stock will not be
deemed to have been made until such defects or irregularities have been cured
or waived. As soon as practicable following the Expiration Date, the Exchange
Agent will return without cost any stock certificates representing Seagate
Software common stock that were not properly tendered and as to which defects
or irregularities have not been cured or waived to the tendering holder of
these stock certificates, unless otherwise provided in the Letter of
Transmittal.

If any of the stock certificates representing your Seagate Software common
stock have been mutilated, lost, stolen or destroyed, you should contact the
Exchange Agent at the address below for further instruction.

EXCHANGE AGENT FOR SHARES AND CERTIFICATES

Harris Trust Company of New York is the Exchange Agent for our Exchange Offer.
If you have any questions or requests for additional copies of this Offering
Circular/Prospectus, please direct them to the Exchange Agent as follows:

By mail: Overnight, courier or hand delivery:
Harris Trust Company of New York Harris Trust Company of New York
Wall Street Station 88 Pine Street, 19th Floor
P.O. Box 1010 New York, NY 10005
New York, NY 10268-1010

By facsimile transmission:
(212) 701-7636

For confirmation by telephone:
(212) 701-7694

SHARES SUBJECT TO REPURCHASE

If any of the Seagate Software common stock shares that you surrender pursuant
to our Exchange Offer are subject to a right of repurchase in favor of Seagate
Software, such shares will be processed in the following manner:

You will receive Seagate Technology common stock in the same pro-rata
percentage (vested versus unvested) as your surrendered Seagate Software common
stock shares. For example, if 50% of the Seagate Software common stock shares
you surrender in the exchange are subject to repurchase by Seagate Software at
the Expiration Date, then 50% of the Seagate Technology common stock shares

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<PAGE>

issued to you will remain subject to repurchase by Seagate Software. Such
repurchase right shall lapse at a rate of 1/48 per month retroactive to the
issuance date of such shares.

You will receive a Seagate Technology common stock certificate from the
transfer agent that represents the vested portion of your Seagate Technology
common stock shares. The shares subject to a right of repurchase will be held
by Seagate Software until such time as they are no longer subject to a right of
repurchase, at which time Seagate Software will release such shares to you.

FRACTIONAL SHARES

We will not issue any fractional shares to you in the exchange. Instead, the
number of shares you receive in this Exchange Offer will be rounded down to the
nearest whole number of shares.

FEES AND EXPENSES

Seagate Technology will not make any payment to brokers, dealers or others
soliciting acceptances of the Exchange Offer.

TRANSFER TAXES

Holders who tender their Seagate Software shares for exchange will not be
obligated to pay any transfer tax in connection therewith.

APPRAISAL RIGHTS

Holders of Seagate Software shares will not have dissenters' rights or
appraisal rights in connection with the Exchange Offer.

PROXIES

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.

WITHDRAWAL RIGHTS

Once you have tendered your Seagate Software common stock, your tender is
irrevocable and you cannot withdraw your shares, except that your Seagate
Software shares tendered in our exchange may be withdrawn at any time prior to
the Expiration Date if we have not accepted such shares. If the exchange is
terminated without our acceptance of any tendered shares of Seagate Software
common stock, we will return promptly all shares tendered to the appropriate
Seagate Software stockholders. See "--Termination of the Exchange Offer."

REGULATORY APPROVALS REQUIRED

Seagate Technology is not aware of any license or regulatory permit material to
its business that might be adversely affected by its acquisition of Seagate
Software common stock as contemplated in

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<PAGE>

the Exchange Offer or of any approval or other action by any government or
governmental, administrative or regulatory authority or agency, domestic or
foreign, that would be required for Seagate Technology's acquisition or
ownership of Seagate Software common stock as contemplated by the Exchange
Offer. Should any such approval or other action be required, Seagate
Technology currently contemplates that it will seek such approval or other
action. Without limitation to any other approval that may be required to the
extent that the acquisition of Seagate Technology common stock by any
holder(s) of Seagate Software common stock, pursuant to the Exchange Offer,
results in the requirement of Seagate Technology and such holder(s) to file
Notification and Report Forms ("Notifications") under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), with the
Federal Trade Commission and the Antitrust Division of the Department of
Justice, Seagate Technology and such holder(s) will file the required
Notifications. We do not currently anticipate that any HSR filings will be
required with respect to the Exchange Offer. With respect to any such
holder(s) of Seagate Software common stock, the exchange could not occur until
the waiting period(s) under the HSR Act had expired or been granted early
termination; until such time, Seagate Technology would have no obligation
under the Exchange Offer, with respect to such holder(s), to accept for
payment and pay for Seagate Software common stock. Seagate Technology cannot
predict whether it may determine that it is required to delay the acceptance
for payment of, or payment for, Seagate Software common stock tendered
pursuant to the Exchange Offer pending the outcome of any such matter. There
can be no assurance that any such approval or other action, if needed, would
be obtained or would be obtained without substantial conditions or that the
failure to obtain any such approval or other action might not result in
adverse consequences to Seagate Technology's business. Seagate Technology's
obligations under the Exchange Offer to accept for payment and pay for Seagate
Software common stock are subject to certain conditions. See "Conditions to
the Exchange Offer."

MATERIAL INCOME TAX CONSIDERATIONS OF EXCHANGE OF SHARES

The following discussion addresses the material income tax considerations of
the Exchange Offer that are generally applicable to holders of vested shares
of Seagate Software common stock exchanging their Seagate Software common
stock for Seagate Technology common stock. Stockholders of Seagate Software
should be aware that the following discussion does not address all income tax
considerations that may be relevant to particular Seagate Software
stockholders in light of their particular circumstances, such as stockholders
who are dealers in securities, or (except as described below) who acquired
their Seagate Software common stock in compensatory transactions. In addition,
the following discussion does not address the tax consequences of any
transactions effectuated prior to or after the Exchange Offer (whether or not
such transactions are in connection with the Exchange Offer) except, to the
extent discussed below, the exercise of vested options or vested rights to
purchase Seagate Software common stock in anticipation of the exchange.
Furthermore, the following discussion does not address the tax consequences of
the Exchange Offer under the tax laws of countries other than the national
income and capital gains tax regimes of the United States, Canada and the
U.K., as set forth below. ACCORDINGLY, SEAGATE SOFTWARE STOCKHOLDERS ARE URGED
TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM
OF THE EXCHANGE, INCLUDING THE APPLICABLE U.S. FEDERAL, STATE, LOCAL, CANADIAN
(FEDERAL AND PROVINCIAL), U.K. AND OTHER FOREIGN TAX CONSEQUENCES TO THEM OF
THE EXCHANGE.

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MATERIAL U.S. INCOME TAX CONSEQUENCES OF EXCHANGE OF SHARES

The following discussion is based on the U.S. Internal Revenue Code (the
"Code"), applicable Treasury Regulations, judicial authority and administrative
rulings and practice, all as of the date hereof. The Internal Revenue Service
(the "IRS") is not precluded from adopting a contrary position. In addition,
there can be no assurance that future legislative, judicial or administrative
changes or interpretations will not adversely affect the accuracy of the
statements and conclusions set forth herein. Any such changes or
interpretations could be applied retroactively and could affect the tax
consequences of the transactions taken in connection with the Exchange Offer.

The exchange is intended to qualify as a reorganization under Section 368(a) of
the Code (a "Reorganization"). In the event the exchange so qualifies, subject
to the limitations and qualifications referred to herein:

(a) No gain or loss will be recognized by the holders of Seagate Software
common stock upon the receipt of Seagate Technology common stock solely in
exchange for such Seagate Software common stock in the Exchange Offer;

(b) The aggregate tax basis of the Seagate Technology common stock so received
by the stockholders of Seagate Software in the exchange will be the same as the
aggregate tax basis of the Seagate Software common stock surrendered in
exchange therefor;

(c) The holding period of the Seagate Technology common stock so received by
each stockholder of Seagate Software in the exchange will include the period
for which the Seagate Software common stock surrendered in exchange therefor
was considered to be held, provided that the Seagate Software common stock so
surrendered is held as a capital asset on the date of the exchange; and

(d) Neither Seagate Technology, nor Seagate Software will recognize gain or
loss solely as a result of the exchange.

Neither Seagate Technology nor Seagate Software has requested a ruling from the
IRS in connection with the exchange. Seagate Technology and Seagate Software
have received an opinion from Ernst & Young LLP (the "U.S. Tax Opinion"), to
the effect that, for U.S. federal income tax purposes, the exchange should
constitute a reorganization within the meaning of Section 368(a) of the Code.
The U.S. Tax Opinion neither binds the IRS nor precludes the IRS from adopting
a contrary position. The U.S. Tax Opinion is subject to certain assumptions and
qualifications and is based in part on the truth and accuracy of certain
representations of Seagate Technology and Seagate Software. Of particular
importance is the representation and assumption to the effect that no
consideration other than Seagate Technology stock is being issued as
consideration for the Seagate Software shares in the exchange.

A successful IRS challenge to the Reorganization status of the exchange would
result in a Seagate Software stockholder recognizing gain or loss with respect
to each share of Seagate Software common stock surrendered equal to the
difference between the stockholder's basis in such share and the fair market
value, as of the date of the exchange, of the Seagate Technology common stock
received in exchange therefor. In such event, a Seagate Software stockholder's
aggregate basis in the Seagate Technology common stock so received would equal
its fair market value, and the stockholder's holding period for such stock
would begin the day after the exchange.

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Even if the exchange qualifies as a Reorganization, a recipient of shares of
Seagate Technology common stock would recognize gain to the extent that such
shares were considered to be received in exchange for services or property
(other than solely Seagate Software common stock). All or a portion of such
gain may be taxable as ordinary income. Gain would also have to be recognized
to the extent that a Seagate Software stockholder was treated as receiving
(directly or indirectly) consideration other than Seagate Technology common
stock in exchange for the Seagate Software common stock.

SEAGATE SOFTWARE STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS IN
LIGHT OF THEIR PERSONAL CIRCUMSTANCES.

MATERIAL CANADIAN INCOME TAX CONSEQUENCES OF EXCHANGE OF SHARES

The following discussion addresses the material Canadian income tax
considerations that are generally applicable to Canadian resident holders of
Seagate Software common stock exchanging their Seagate Software common stock
for Seagate Technology common stock. Stockholders of Seagate Software should
be aware that the following discussion does not deal with all Canadian income
tax considerations that may be relevant to particular Seagate Software
stockholders in light of their particular circumstances.

The following discussion is based the Canadian income tax laws as of the date
hereof. Revenue Canada or an applicable Canadian provincial taxing authority
is not precluded from successfully adopting a contrary position. In addition,
there is no assurance that future legislative, judicial or administrative
changes or interpretations will not affect the accuracy of the statements and
conclusions set forth herein. Any such changes or interpretations could be
applied retroactively and could affect the tax consequences to stockholders of
Seagate Software participating in the Exchange Offer.

The Exchange Offer will be a taxable transaction for a Seagate Software
stockholder resident in Canada. Any Canadian resident holder of shares of
Seagate Software common stock would be considered to have disposed of the
holder's shares of Seagate Software common stock for proceeds (expressed in
Canadian dollars) determined at the time of the Exchange Offer equal to the
fair market value of the shares of Seagate Technology common stock received. A
gain or loss (being the difference expressed in Canadian dollars between the
proceeds and the tax basis of the shares of Seagate Software common stock
exchanged) may be realized on this disposition. Where the shares of Seagate
Software common stock are capital property to the holder, any such gain or
loss would be a capital gain or capital loss.

The tax basis of the shares of Seagate Technology common stock received in the
Exchange Offer will be equal to the fair market value (expressed in Canadian
dollars) of those shares determined at the time of the Exchange Offer.

SEAGATE SOFTWARE STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS IN
LIGHT OF THEIR PERSONAL CIRCUMSTANCES.

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MATERIAL U.K. INCOME TAX CONSEQUENCES OF EXCHANGE OF SHARES

The following is a discussion of the material United Kingdom ("U.K.") tax
considerations of the U.K. resident holders of Seagate Software common stock
exchanging their Seagate Software common stock for Seagate Technology common
stock. The discussion relates only to U.K. resident holders of stock in
Seagate Software and is confined to their U.K. tax position.

Stockholders of Seagate Software should be aware that the following discussion
does not deal with all U.K. tax considerations that may be relevant to
particular U.K. resident Seagate Software stockholders in light of their
particular circumstances.

The following discussion is based on our best judgement regarding the
application of U.K. taxation legislation. The views expressed are not binding
on the Courts and there is no assurance that the Inland Revenue will not seek
to assert a contrary position. Furthermore, no assurance can be given that
future legislation, judicial or administrative changes or interpretations will
not adversely affect the accuracy of the statements and conclusions set forth
herein. These could be on either a prospective or retroactive basis. We
undertake no responsibility to advise you of any new developments in the
application or interpretation of the U.K. taxation laws.

Neither Seagate Technology nor Seagate Software has requested advance
confirmation from the Inland Revenue that the Inland Revenue is satisfied that
the provisions of Section 135 will apply to the proposed exchange. Seagate
Technology and Seagate Software have received an opinion from The United
Kingdom firm of Ernst & Young a member of Ernst & Young International (the
"U.K. Tax Opinion"), to the effect that, for U.K. tax purposes, the proposed
transaction will fall within the rules applicable to reorganizations.

The U.K. Tax Opinion does not bind the Inland Revenue nor preclude the Inland
Revenue from adopting a contrary position. The U.K. Tax Opinion, subject to
certain assumptions and qualifications, is based in part on the truth and
accuracy of certain representations of Seagate Technology and Seagate
Software.

Capital Gains Tax. The Exchange Offer will fall within the U.K. tax laws for
reorganizations with the result that:

1. No gain or loss will be recognized by the holders of Seagate Software
common stock upon receipt of Seagate Technology common stock solely in
exchange for such Seagate Software common stock in the exchange.

2. The aggregate tax basis of the Seagate Technology common stock so received
by the stock holders of Seagate Software in the exchange will be the same as
the aggregate tax basis of the Seagate Software common stock surrendered in
exchange therefor.

3. The holding period of the Seagate Technology common stock so received by
each stockholder of Seagate Software in the exchange will include the period
for which the Seagate Software common stock surrendered in exchange therefor
was considered to be held as a capital asset on the date of the exchange.

42
<PAGE>

Income Tax. The U.K. Tax Opinion concludes that the Exchange Offer constitutes
a company reorganization, in which case, no income tax charge should arise on
the Exchange Offer.

SEAGATE SOFTWARE STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS IN
LIGHT OF THEIR PERSONAL CIRCUMSTANCES.

MATERIAL TAX CONSEQUENCES TO OPTIONEES

The following discussion addresses the material tax consequences to holders of
Seagate Software options who exercise their options in connection with the
Exchange Offer. The discussion is based on interpretations of the existing
authorities. The applicable taxing authorities are not precluded from
successfully adopting a contrary position to that described herein. In
addition, there is no assurance that future legislative, judicial, or
administrative changes or interpretations, will not affect the accuracy of the
statements and conclusions set forth herein. Any such changes or
interpretations could be applied retroactively and could affect the tax
consequences to holders of Seagate Software options who exercise their options.

ALL OPTION HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS PRIOR TO THE
EXERCISE OF ANY OPTIONS IN LIGHT OF THEIR PERSONAL CIRCUMSTANCES.

U.S. Consequences. You will not recognize taxable income upon the exercise of
an incentive stock option ("ISO"). However, the difference between the option
exercise price paid for the shares and the fair market value of the shares on
the date of exercise will be alternative minimum taxable income and may subject
you to the alternative minimum tax ("AMT") under Section 55 of the Code.

Assuming the U.S. Tax Opinion described above to the effect that the Exchange
Offer constitutes a reorganization is accurate, the Exchange Offer will not
trigger the tax consequences described in this and the next paragraph. If you
sell or otherwise dispose of the Seagate Technology common stock issued to you
pursuant to the Exchange Offer more than two years after the date of grant of
the related ISO and more than one year after the exercise of such ISO, then
upon such a sale or other disposition, any amount realized in excess of the
option exercise price will generally be treated as a long-term capital gain and
any loss sustained will be treated as a long-term capital loss.

If Seagate Technology shares issued in exchange for Seagate Software shares
received upon the exercise of an ISO are disposed of before the expiration of
either holding period described above, generally, you will recognize ordinary
income in the year of disposition in an amount equal to the excess (if any) of
the fair market value of the shares at exercise (or, if less, the amount
realized on the disposition of the shares) over the option exercise price paid
for such shares. Any further gain or loss realized by you will be taxed as
short-term or long-term capital gain or loss, as the case may be, and will not
result in any deduction by Seagate Software.

With respect to the exercise of a Nonstatutory Stock Option ("NSO"), you will
recognize ordinary income in an amount equal to the difference between the
option exercise price you pay for the shares and the fair market value of the
shares on the date of exercise. Your basis will be the fair market

43
<PAGE>

value of such shares. Upon a taxable disposition of the Seagate Technology
shares, any gain or loss is generally treated as capital gain or loss. As
described above, the Exchange Offer will not be considered a disposition of the
shares that will trigger any tax (assuming once again the Exchange Offer
constitutes a reorganization). If you were an employee at the time of grant,
any income recognized upon exercise of your NSO will constitute wages for which
Seagate Software will be required to withhold.

Canadian Consequences. A Canadian resident employee of Seagate Software who by
virtue of his or her employment with Seagate Software obtained a stock option
to acquire Seagate Software common stock and who exercises such vested option
is generally required to include in his or her employment income the value of
the Seagate Software common stock so acquired (determined at the time of
exercise) less the amount paid or to be paid by the employee to acquire those
shares. As a result of the exercise, the tax basis of the shares so acquired is
adjusted to equal the fair market value of the shares at the time of exercise.
Where the employee also owns other Seagate Software common stock, the tax basis
per share of the Seagate Software common stock is calculated as the total tax
basis of all shares of Seagate Software common stock owned by the employee
divided by the total number of such shares owned. Seagate Software will collect
from you and remit your social security contributions on the income recognized
and may have to withhold and remit tax in respect of the employment benefit on
the income recognized.

U.K. Consequences.

Options Obtained By Reason Of Employment. Where the option holder acquired the
options as a director or employee, he will be liable for U.K. income tax on an
amount equal to the excess of the market value (on the date of exercise of the
options) of the Seagate Software shares acquired as a result of the exercise of
the option, over the amount paid to exercise the option. The amount that is
subject to income tax is added to the cost of the shares acquired upon exercise
for purposes of computing the U.K. capital gains tax, if any, on the subsequent
sale of the shares.

Any further gain arising on the subsequent sale of the shares will make the
option holder liable for U.K. capital gains tax.

Options Not Obtained By Reason Of Employment. Where the option holder did not
acquire the options as a director or employee, the exercise of the options will
not result in either a U.K. income tax or U.K. capital gains tax liability.

Any gain (excess of sale proceeds over the exercise price) arising on the
subsequent sale of the shares will make the option holder liable for U.K.
capital gains tax.

ACCOUNTING TREATMENT

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<PAGE>

Seagate Technology shares exchanged for Seagate Software shares acquired
through the exercise of employee stock options and held for less than six
months or Seagate Software shares subject to a right of repurchase in favor of
Seagate Software will result in compensation expense equal to the difference
between the price paid by the holder of the shares and the value of the Seagate
Technology shares at the date of the exchange. The compensation expense will be
recognized immediately, or, if there is vesting, over the vesting period, of
the Seagate Technology shares issued.

The pro forma financial statements of Seagate Technology and Seagate Software
also include the impact of the Veritas Transaction and the TeleBackup Purchase
by Newco. See Seagate Technology--Unaudited Pro Forma Condensed Financial
Statements and Seagate Software--Unaudited Pro Forma Condensed Financial
Statements.

45
<PAGE>

DESCRIPTION OF SEAGATE TECHNOLOGY CAPITAL STOCK

The authorized capital stock of Seagate Technology consists of 600,000,000
shares of Seagate Technology common stock, $.01 par value, and 1,000,000 shares
of Seagate Technology preferred stock, $.01 par value.

As of October 2, 1998, there were 245,250,840 shares of Seagate Technology
common stock outstanding held of record by 7,483 registered stockholders.
Subject to preferences that may be applicable to any outstanding Seagate
Technology preferred stock, holders of Seagate Technology common stock are
entitled to receive ratably such dividends as may be declared by the Seagate
Technology Board of Directors out of funds legally available therefor. Seagate
Technology has not paid any cash dividends on the Seagate Technology common
stock. Each holder of Seagate Technology common stock is entitled to one vote
for each share held of record on all matters submitted to a vote of
stockholders, except that upon giving notice required by law, stockholders may
cumulate their votes in the election of directors. In the event of a
liquidation, dissolution or winding up of Seagate Technology, holders of
Seagate Technology common stock are entitled to share ratably in all assets
remaining after payment of liabilities and the liquidation preference of any
outstanding Seagate Technology preferred stock. Holders of Seagate Technology
common stock have no preemptive rights and have no rights to convert their
Seagate Technology common stock into any other securities and there are no
redemption provisions with respect to such shares. The transfer agent and
registrar for the Seagate Technology common stock is Harris Trust Company of
California.

As of October 2, 1998, there were no shares of Seagate Technology preferred
stock outstanding. The Seagate Technology preferred stock may be issued from
time to time in one or more series. The Seagate Technology board has authority
to fix the designation, powers, preferences and rights of each such series and
the qualifications, limitations and restrictions thereon and to increase or
decrease the number of shares of such series (but not below the number of
shares of such series then outstanding), without any further vote or action by
the stockholders. Seagate Technology has no present plans to issue any shares
of Seagate Technology preferred stock.

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<PAGE>

COMPARISON OF STOCKHOLDER RIGHTS

In the event that the Exchange Offer is consummated, Seagate Software's
stockholders whose shares of Seagate Software common stock are tendered
pursuant to the Exchange Offer will become Seagate Technology stockholders.
Their rights will be governed by the Seagate Technology Certificate of
Incorporation, the Seagate Technology Bylaws and the laws of the State of
Delaware.

Certain differences between the rights of Seagate Software stockholders and
Seagate Technology stockholders are set forth below. As both Seagate Software
and Seagate Technology are organized under the laws of Delaware, these
differences primarily arise from various provisions of the Seagate Technology
Certificate of Incorporation, the Seagate Technology Bylaws, the Seagate
Software Certificate of Incorporation and the Bylaws of Seagate Software. This
summary contains a description of the material differences in stockholder
rights, but is not meant to be relied upon as an exhaustive list or detailed
description of the provisions discussed herein and is qualified in its entirety
by reference to the laws of the State of Delaware, the Seagate Technology
Certificate of Incorporation, the Seagate Technology Bylaws, the Seagate
Software Certificate of Incorporation, and the Seagate Software Bylaws.

STOCKHOLDER MEETINGS

The Seagate Technology Bylaws provide that Seagate Technology stockholders
holding shares representing not less than 10% of the outstanding votes entitled
to vote at a stockholders' meeting may call a special meeting of stockholders.
Any stockholder request for a special meeting of stockholders must be in
writing, specifying the time of such meeting and the general nature of the
business proposed to be transacted, and must be delivered to the chairman of
the board, president, any vice president or secretary of Seagate Technology.
Under the Seagate Software Bylaws, Seagate Software's stockholders may call a
special meeting of stockholders, provided that one or more of the stockholders
calling for the special meeting, in the aggregate, hold not less than a
majority of the shares entitled to vote at such meeting.

DIRECTOR NOMINATIONS

The Seagate Technology Bylaws currently provide for a seven member board of
directors. Directors are elected at each annual meeting of stockholders to hold
office until the next annual meeting and until his or her successor is elected
and qualified or until his or her earlier resignation or removal. The Seagate
Software Bylaws provide that the number of directors shall be five, which
number may be changed by a Bylaw or Certificate of Incorporation amendment duly
adopted by the Seagate Software board or by the stockholders of Seagate
Software. The Seagate Software board currently consists of four directors.

INDEMNIFICATION

The Seagate Technology Certificate of Incorporation and the Seagate Software
Certificate of Incorporation provide that directors will not be personally
liable to their respective companies or stockholders for monetary damages for
breach of their fiduciary duty as directors and shall be indemnified to the
fullest extent authorized by Delaware law. The Seagate Technology Bylaws

47
<PAGE>

provide that directors, officers and certain other persons will be indemnified
with respect to third-party actions or suits, provided such person acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of Seagate Technology. The Seagate Technology
Bylaws further provide that directors, officers and certain other persons will
be indemnified with respect to actions or suits by or in the right of Seagate
Technology, provided that such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of
Seagate Technology; except that no indemnification shall be made in the event
that such person shall be adjudged to be liable to Seagate Technology, unless a
court determines that indemnification is fair and reasonable in view of all the
circumstances. The Seagate Technology Bylaws and the Seagate Software
Certificate of Incorporation require Seagate Technology and Seagate Software,
respectively, to pay all expenses incurred by a director or officer in
defending any proceeding within the scope of the indemnification provisions as
such expenses are incurred in advance of its final disposition, subject to
repayment if it is ultimately determined that such party was not entitled to
indemnity by Seagate Technology and Seagate Software, respectively. The Seagate
Software Bylaws provide that Seagate Software shall indemnify its officers and
directors to the fullest extent authorized by Delaware law and may elect to
indemnify its employees and agents to the fullest extent authorized by Delaware
law.

48
<PAGE>

INFORMATION ABOUT SEAGATE TECHNOLOGY

Certain statements in this Offering Circular/Prospectus are forward-looking
statements based on current expectations, and entail various risks and
uncertainties that could cause actual results to differ materially from those
expressed in such forward-looking statements. Such risks and uncertainties are
set forth under "Seagate Technology Risk Factors."

GENERAL

Seagate Technology designs, manufactures and markets a broad line of rigid
magnetic disc drives for use in computer systems ranging from desktop personal
computers to workstations and supercomputers as well as in multimedia
applications such as digital video and video-on-demand. Our products currently
include rigid disc drive models with form factors from 3.5 to 5.25 inches and
capacities from 1 gigabyte ("GB") to 47 GB. In January 1998, we discontinued
production of 2.5 inch disc drives for the mobile computer market due to
intense competition resulting in a substantial loss of market share. However,
we are continuing research and development in this area and intend to reenter
this market at a future date. We sell our products to original equipment
manufacturers ("OEMs") for inclusion in their computer systems or subsystems,
and to distributors, resellers, dealers, system integrators and retailers. We
have pursued a strategy of vertical integration and accordingly we design and
manufacture rigid disc drive components including recording heads, discs, disc
substrates, motors and custom integrated circuits. We also assemble certain of
the key subassemblies for use in our products including printed circuit board
and head stack assemblies. Seagate Technology products are currently
manufactured primarily in the Far East with limited production in the United
States. In addition to our core product line of rigid disc drives and related
components, we have broadened our strategy to more fully address the markets
for storage, retrieval and management of data.

In line with this broadened strategy, we have made the following investments:
In January 1993, we began investing in SanDisk Corporation ("SanDisk"), a flash
memory company. In July 1994, we began investing in Dragon Systems, Inc., a
developer of speech and language technology, including speech recognition
software. In December 1994, we acquired Applied Magnetics Corporation's tape
head subsidiary, a manufacturer of magnetic recording heads for tape drives. In
February 1996, we added tape drives to its product line as a result of its
merger with Conner Peripherals, Inc. ("Conner"). In June 1997, we began
investing in Gadzoox Networks, Inc., a manufacturer of Fibre Channel based
storage network connectivity products. In August 1997, we acquired Quinta
Corporation ("Quinta"), a developer of optically assisted Winchester disc
drives. We anticipate that our broadened strategy may include additional
acquisitions of, investments in and strategic alliances with complementary
businesses, products and technologies to enable lower cost per megabyte, faster
time to market, increased capacity, and better performance characteristics for
our products. Our strategy includes acquiring companies that possess technology
and development personnel which provide long-term growth potential to our
business. In addition, following the closing of the Veritas

49
<PAGE>

Transaction, those optionees of Seagate Software who will become employees of
Newco and Seagate Technology through its Seagate Software subsidiary will own
an approximately 40% interest on a fully-diluted basis of Newco (a new entity
that will own Veritas and Seagate Software's NSMG business).

Seagate Technology's executive offices are located at 920 Disc Drive, Scotts
Valley, California, 95066, and its telephone number is (831) 438-6550.

STOCK AND DIVIDEND INFORMATION

Seagate Technology's common stock trades on the New York Stock Exchange under
the symbol "SEG." The price range per share, reflected in the table below, is
the highest and lowest sale prices for Seagate Technology's common stock as
reported by the New York Stock Exchange during each quarter since the Company's
fiscal year 1997. Seagate Technology's present policy is to retain its earnings
to finance future growth. Seagate Technology has never paid cash dividends and
has no present intention to pay cash dividends. At October 2, 1998, there were
7,483 stockholders of record of Seagate Technology's common stock.
<TABLE>
<CAPTION>
HIGH LOW
-------- --------
<S> <C> <C>
1997:
First Quarter................................................. $29 5/16 $18 1/16
Second Quarter................................................ 42 3/4 25 7/8
Third Quarter................................................. 56 1/4 37 3/8
Fourth Quarter................................................ 54 1/4 32 1/2
1998:
First Quarter................................................. $45 3/4 $ 34 1/8
Second Quarter................................................ 40 5/8 18 7/16
Third Quarter................................................. 27 3/16 17 3/4
Fourth Quarter................................................ 29 5/8 19 7/16
1999:
First Quarter.................................................
</TABLE>

On , 199 , the last sales price of Seagate Technology common stock, as
reported by the New York Stock Exchange, was $ per share.

You should obtain current market quotations for Seagate Technology common
stock. In recent months, the market price of Seagate Technology common stock
has fluctuated substantially due to volatility in the market place. The market
price of Seagate Technology common stock will fluctuate between the date of
this Offering Circular/Prospectus and the closing date thereafter. We can give
you no assurances concerning the market price of Seagate Technology common
stock before or after the date on which the Exchange Offer is consummated.

50
<PAGE>

INFORMATION ABOUT SEAGATE SOFTWARE AND THE INFORMATION MANAGEMENT GROUP

GENERAL

Seagate Software develops and markets software products and provides related
services enabling business users and IT professionals to store, access and
manage enterprise information. Seagate Software is currently comprised of two
operating groups, IMG and NSMG. Each operating group provides products in
distinct segments of the Enterprise Information Management ("EIM") market. NSMG
offers network and storage management software solutions, which focus on the
availability component of EIM by enabling IT professionals to manage
distributed network resources and to secure and protect enterprise data. NSMG's
products include features such as system backup, disaster recovery, migration,
replication, automated client protection, storage resource management,
scheduling, event correlation and desktop management. NSMG will be contributed
to Newco in the Veritas Transaction.

IMG offers business intelligence software solutions featuring the delivery and
analysis components of EIM. IMG's products include features such as query and
reporting, automated report scheduling and distribution, information delivery
across the World Wide Web, on-line analytical processing, forecasting,
statistical analysis, discovery and data mining. After the closing of the
Veritas Transaction, Seagate Software will continue to operate its IMG
business. In fiscal 1998, IMG's revenue represented approximately 40% of
Seagate Software's total revenue.

Headquartered in Scotts Valley, California, Seagate Software currently has over
40 offices and operations in 17 countries worldwide. After the Veritas
Transaction, Seagate Software will have 31 offices and operations in 16
countries. Seagate Software is a majority-owned and consolidated subsidiary of
Seagate Technology.

PRODUCTS

Following the Veritas Transaction, IMG will continue to offer a breadth of
business intelligence software products featuring EIM functionality:

. Seagate Crystal Reports for Microsoft BackOffice(TM)--Generates a set of top-
requested reports to ease systems administration functions for the Microsoft
BackOffice family of products.

. Seagate Crystal Info(TM)--Provides decision-makers with shared access to
reporting and analysis capabilities, so users get fast access to business
information without having to interact with the database. Whether using a Web
browser or Windows, users can schedule, view and analyze reports and
multidimensional OLAP cubes in a secure environment. This product contains an
enterprise-friendly multi-tier architecture to lower network traffic and
increase user productivity.

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<PAGE>

. Seagate Crystal Reports(TM)--Provides query and report writing functions for
Windows. A developer and end-user tool, Seagate Crystal Reports allows users
to access most types of PC and structured query language data and design a
variety of reports and integrate them into database applications.

. Seagate Holos(R)--Provides a flexible OLAP development environment for
rapidly delivering a range of applications that focus on key business issues
and accurately reflect business processes. These "business-aware"
applications allow enterprises to harness and analyze the increasing volumes
of data and guide users to the information to improve decision making.

IMG will also continue to offer network and storage management products by
virtue of ongoing agreements with Newco.

IMG provides its software products to customers under non-exclusive, non-
transferable license agreements (including shrink-wrap licenses for certain
products). As is customary in the software industry, in order to protect its
intellectual property rights, IMG does not sell or transfer title to its
software products to customers. IMG enters into both object-code only and
source-code licenses of its products. Under IMG's current standard end-user
license agreement, licensed software may be used solely for the customers'
internal operations and only at specified sites, which may be comprised of a
stand-alone computer, a single network server with multiple terminals or
multiple network servers with multiple terminals.

SALES AND MARKETING

IMG utilizes a direct sales force and certain indirect sales channels, such as
distributors and OEM relationships, for sales of its selected products to end
users. These distributors and OEMs may also sell other products that are
complementary to or compete with those of IMG. IMG provides sales and marketing
programs to encourage the sale of its products, but there can be no assurance
that its distributors and OEMs will not place a higher priority on competing
products. Agreements with its distributors and OEMs are generally non-exclusive
and may be terminated by either party without cause.

IMG generally markets its products domestically and overseas through a network
of Seagate Software subsidiaries. These subsidiaries utilize authorized
distributors and direct sales forces. IMG adapts certain products for foreign
markets, including translation and documentation, and IMG prepares marketing
and sales support programs accordingly. IMG has organized its sales management
into geographical regions to increase the effectiveness of its sales efforts.
Each region has offices established in cities and countries near its largest
existing or prospective partners and customers.

IMG's marketing efforts are designed to increase awareness and consideration
of, and to generate leads for, its products. Marketing activities include print
advertising in trade and technical publications, on-line advertising on the
World Wide Web, cooperative marketing with distributors and resellers,
participation in seminars and tradeshows, mailings to end users and other
public relations efforts. IMG's marketing groups produce or oversee the
production of substantially all of the on-line and print product literature,
brochures, advertising and similar marketing and promotional material.

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<PAGE>

Revenue from one third-party customer, Ingram Micro, accounted for 12.2%, 8.7%,
13.9% and 10.1% of IMG's total revenues in fiscal 1996, 1997 and 1998 and the
quarter ended October 2, 1998, respectively. Indirect revenues, which include
sales to distributors and OEMs, were 60.2%, 32.2%, 40.1% and 34.3% of total
revenues during fiscal 1996, 1997 and 1998 and the quarter ended October 2,
1998, respectively. Revenues outside of the Americas were 18.3%, 27.8%, and
34.1% of total revenues during fiscal 1996, 1997 and 1998, respectively.

During fiscal 1996, 1997 and 1998 and the quarter ended October 2, 1998, IMG
generated export revenues from the United States of approximately $1.1 million,
$3.4 million, $8.3 million and $2.6 million, respectively. IMG's revenues
outside of the Americas were primarily denominated in the U.S. dollar, and
accordingly IMG believes that its exposure to foreign currency fluctuations is
not material and does not engage in foreign currency hedging programs.

TECHNICAL SUPPORT AND MAINTENANCE

IMG operates its own technical support groups. The technical support groups are
located at various sites around the world, including the U.S., Canada and
Europe, and provide pre-sale, installation and post-sale support to current
users and potential customers evaluating IMG's products. Certain technical
support groups also offer seven-day, 24-hour toll-free telephone services. IMG
believes that effective technical support during product evaluation
substantially contributes to product acceptance, and that post-sale support has
been, and will continue to be, a substantial factor in maintaining customer
satisfaction.

IMG offers maintenance programs for certain of its software products, which may
consist of product enhancements, updated products and technical support.
Generally, customers renew maintenance and support on an annual basis by paying
a maintenance fee. Maintenance revenue implicit in new product sales and
recurring maintenance charges are recognized ratably over the period the
maintenance and support services are to be provided.

COMPETITION

The business intelligence software market in which IMG competes is comprised of
numerous competitors and IMG expects competition to increase. IMG has recently
experienced increased competition from additional entrants into its market,
including companies that specialize in the development, marketing and support
of business intelligence products. Many of IMG's current and prospective
competitors have significantly greater financial, technical and marketing
resources than IMG. In addition, many prospective customers may have the
internal capability to implement business intelligence solutions.

The competitive factors affecting the market for IMG's software products
include the following:

. product functionality;
. performance and reliability;
. demonstrable cost effective benefits for users relative to cost;
. price;
. quality of customer support and user documentation;

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<PAGE>

. ease of installation;
. vendor reputation;
. experience; and
. financial stability.

IMG believes that it currently competes effectively with respect to these
factors. IMG's ability to remain competitive will depend, to a great extent,
upon its ongoing performance in the areas of product development and customer
support. To be successful in the future, IMG must respond promptly and
effectively to the challenges of technological change and its competitors'
innovations by continually enhancing its own product offerings. Performance in
these areas will, in turn, depend upon IMG's ability to attract and retain
highly qualified technical personnel in a competitive market for experienced
and talented software developers.

PATENTS AND INTELLECTUAL PROPERTY RIGHTS

Due to the rapidly changing nature of applicable technologies, IMG believes
that the improvement of existing products, reliance upon trade secrets and
unpatented proprietary know-how and development of new products are generally
more important than patent protection. IMG has no United States or foreign
patents, has one patent application pending in the United States, and has no
foreign patent applications pending.

IMG's license agreements have restrictions in place to protect and defend its
intellectual property. IMG realizes that although it has incorporated these
restrictions, there is a possibility for unauthorized use of its software. In
addition to relying on these contractual rights, IMG has an ongoing trademark
registration program in which it registers certain of its product names,
slogans, and logos in the United States and in some foreign countries.

EMPLOYEES

As of October 2, 1998, IMG employed 876 persons, and following the closing of
the Veritas Transaction, expects to employ approximately 1,000 persons. IMG's
success is highly dependent on its ability to attract and retain qualified
employees. Competition for qualified employees is intense in the software
industry. None of IMG's employees are represented by a labor union or are the
subject of a collective bargaining agreement. IMG has never experienced a work
stoppage and believes that its employee relations are good.

54
<PAGE>

FACILITIES

Seagate Software's executive offices are located in Scotts Valley, California.
Principal facilities are located in Florida, California, Canada and the United
Kingdom. A major portion of Seagate Software's facilities are occupied under
leases that expire at various times through 2006. The following is a summary of
square footage that will continue to be leased by Seagate Software following
the Veritas Transaction:

<TABLE>
<CAPTION>
SQUARE
LOCATION FEET
- -------- -------
<S> <C>
NORTH AMERICA
California
Southern CA........................................................ 2,556
Northern CA........................................................ 2,254
Colorado............................................................ 6,306(1)
Mid-Continent....................................................... 7,886(2)
Northeast USA....................................................... 9,140
Southeast USA....................................................... 8,632
Other Domestic...................................................... 220
Canada.............................................................. 99,848(3)
-------
Total North America................................................ 136,842
EUROPE
England............................................................. 30,776
Germany............................................................. 3,594
Other Europe........................................................ 9,384
-------
Total Europe....................................................... 43,754
ASIA
Australia........................................................... 12,180
Singapore........................................................... 2,125
Other Pacific Rim................................................... 5,675
Total Asia......................................................... 19,980
-------
Grand Total.......................................................... 200,576
=======
</TABLE>
- --------
(1) Excludes approximately 11,608 square feet of space under construction.
(2) Excludes approximately 2,071 square feet of unoccupied space.
(3) Excludes approximately 40,196 square feet of unoccupied space.

LEGAL PROCEEDINGS

On November 10, 1997, Vedatech Corporation commenced an action in the High
Court of Justice Chancery Division in the United Kingdom against Seagate
Software Information Management Group Ltd. claiming breach of an oral agreement
and infringement of a Vedatech U.K. copyright in the Japanese translation of
one of Seagate Software's products (the "Complaint") and seeking monetary and
injunctive relief. No specific damage amount has yet been claimed. Seagate
Software has hired local counsel in the U.K., reviewed documents and conducted
interviews. Seagate Software filed an initial response in the U.K. court on
January 13, 1998 and is now in the discovery process. Seagate Software believes
the Complaint has no merit and intends to vigorously defend the action.
However, if an unfavorable outcome were to arise, there can be no assurance
that such outcome would not have a material adverse effect on Seagate
Software's liquidity, financial position or results of operations.

55
<PAGE>

In addition to the foregoing, Seagate Software is engaged in legal actions
arising in the ordinary course of its business and believes that the ultimate
outcome of these actions will not have a material adverse effect on Seagate
Software's financial position, liquidity, or results of operations.

MARKET FOR AND DIVIDENDS PAID ON SEAGATE SOFTWARE COMMON STOCK

There is no established public trading market for Seagate Software common
stock. Seagate Software common stock is not listed on a national securities
exchange and is not authorized for quotation on an interdealer quotation
system. As of October 30, 1998, there were 272 holders of record of Seagate
Software common stock. Seagate Software has never paid cash dividends and has
no present intention to pay cash dividends.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF SEAGATE
SOFTWARE

The following table sets forth certain information regarding the beneficial
ownership of Seagate Software's outstanding shares of common stock and Series A
Preferred Stock on an as-converted basis (collectively with the common stock,
the "Common Equivalent Shares") as of October 30, 1998 by (i) each person who
is known to Seagate Software to be the beneficial owner of 5% or more of
Seagate Software's outstanding Common Equivalent Shares, (ii) each of Seagate
Software's executive officers named in the Seagate Software Summary
Compensation Table, (iii) each of the Seagate Software's directors in office as
of October 30, 1998, and (iv) all directors and executive officers as of
October 30, 1998 as a group.

<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
COMMON COMMON
EQUIVALENT EQUIVALENT
STOCKHOLDER SHARES SHARES(1)
----------- ---------- ----------
<S> <C> <C>
Seagate Technology, Inc.(2).......................... 54,695,833 98.2%
920 Disc Drive
Scotts Valley, CA 95066
Stephen J. Luczo(3).................................. 54,729,833 98.2
Donald L. Waite(4)................................... 54,715,833 98.3
Gary B. Filler(5).................................... 54,706,833 98.2
Lawrence Perlman(6).................................. 54,706,833 98.2
Ellen E. Chamberlain(7).............................. 32,000 *
Terence R. Cunningham(8)............................. 400,000 *
Gregory B. Kerfoot(9)................................ 120,000 *
All directors and executive officers as a group (7
persons)(10)........................................ 55,323,833 99.0
</TABLE>
--------
*Less than one percent.

(1) Applicable percentage ownership is based on 55,675,153 Common
Equivalent Shares outstanding as of October 30, 1998 together with
applicable options for such stockholder. Seagate Software's Series A
Preferred Stock and Special Voting Stock is reflected on an as-
converted basis assuming a 1:1 conversion. Beneficial ownership is
determined in accordance with the rules of the SEC based on factors
including voting and investment power with respect to shares subject to
applicable community property laws. Common Equivalent Shares subject to
options currently exercisable or exercisable within 60 days after
October 30, 1998 are deemed outstanding for computing the percentage
ownership of the person holding such options, but are not deemed
outstanding for computing the percentage of any other person.

56
<PAGE>

(2) Includes 7,200,000 shares of Class B Exchangeable Shares of Seagate
Software Information Management Group (Canada), Inc., Vancouver, British
Columbia ("the Information Management Group Vancouver"), which may be
exchanged at the option of the holder, Seagate Technology International
Holdings, a subsidiary of Seagate Technology, for an equal number of
shares of Series A Preferred Stock of Seagate Software within 60 days of
October 30, 1998 upon cancellation of the outstanding share of Seagate
Software's Special Voting Stock. Excludes 76,000 shares of Seagate
Software's common stock held by or issuable pursuant to options granted to
Messrs. Luczo, Waite, Filler and Perlman over which Seagate Technology
does not possess sole or shared voting or investment control and therefore
of which Seagate Technology disclaims beneficial ownership.

(3) Includes 34,000 shares of common stock that may be acquired upon the
exercise of stock options exercisable within 60 days after October 30,
1998. Includes 54,695,833 shares of Series A Preferred Stock (and
7,200,000 shares of Class B Exchangeable Shares of the Information
Management Group Vancouver) beneficially owned by Seagate Technology to
which Mr. Luczo may be deemed, in his capacity as an officer of Seagate
Technology, to have shared power to vote or dispose of. However, Mr. Luczo
disclaims such beneficial ownership.

(4) Includes 12,000 shares of common stock that are subject to repurchase by
Seagate Software. Seagate Software's repurchase right lapses for 6,000 and
6,000 shares on April 4, 1999 and 2000, respectively. Includes 54,695,833
shares of Series A Preferred Stock (and 7,200,000 shares of Class B
Exchangeable Shares of the Information Management Group Vancouver)
beneficially owned by Seagate Technology to which Mr. Waite may be deemed,
in his capacity as an officer of Seagate Technology, to have shared power
to vote or dispose of. However, Mr. Waite disclaims such beneficial
ownership.

(5) Includes 11,000 shares of common stock that may be acquired upon the
exercise of stock options exercisable within 60 days after October 30,
1998. Includes 54,695,833 shares of Series A Preferred Stock (and
7,200,000 shares of Class B Exchangeable Shares of the Information
Management Group Vancouver) beneficially owned by Seagate Technology to
which Mr. Filler may be deemed, in his capacity as a director of Seagate
Technology, to have shared power to vote or dispose of. However, Mr.
Filler disclaims such beneficial ownership.

(6) Includes 11,000 shares of common stock that may be acquired upon the
exercise of stock options exercisable within 60 days after October 30,
1998. Includes 54,695,833 shares of Series A Preferred Stock (and
7,200,000 shares of Class B Exchangeable Shares of the Information
Management Group Vancouver) beneficially owned by Seagate Technology to
which Mr. Perlman may be deemed, in his capacity as a director of Seagate
Technology, to have shared power to vote or dispose of. However, Mr.
Perlman disclaims such beneficial ownership.

(7) Includes 20,000 shares of common stock that may be acquired upon the
exercise of stock options exercisable within 60 days after October 30,
1998.

(8) Includes 280,000 shares of common stock that are subject to repurchase by
Seagate Software on various dates through 2001.

(9) Includes 120,000 shares of common stock that may be acquired upon the
exercise of stock options exercisable within 60 days after October 30,
1998.

(10) Includes 196,000 shares of common stock that may be acquired upon the
exercise of stock options exercisable within 60 days after October 30,
1998. See notes 2 through 7 to this table regarding reporting of shares
held by Seagate Technology.

Based on the number of outstanding shares of Seagate Technology common stock as
of October 2, 1998 and after giving effect to the issuance of Seagate
Technology common stock and options in the Exchange Offer (assuming that all
outstanding shares of Seagate Software common stock are exchanged for Seagate
Technology common stock pursuant to the Exchange Offer), no director or
executive officers of Seagate Software or 5% Seagate Software Stockholder will
beneficially own more than 1% of the outstanding Seagate Technology common
stock immediately after the Exchange Offer.

57
<PAGE>

SEAGATE TECHNOLOGY
UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS

The following unaudited pro forma condensed financial statements consist of the
Seagate Technology--Unaudited Pro Forma Condensed Statements of Operations for
the year ended July 3, 1998, and for the three months ended October 2, 1998,
and the Unaudited Pro Forma Condensed Balance Sheet as of October 2, 1998,
(collectively the "Seagate Technology--Unaudited Pro Forma Condensed Financial
Statements"). The Seagate Technology--Unaudited Pro Forma Condensed Financial
Statements give effect to the exchange of Seagate Software shares for Seagate
Technology shares pursuant to the Exchange Offer and the contribution by
Seagate Software of NSMG to Newco in exchange for shares of Newco. The Seagate
Technology--Unaudited Pro Forma Condensed Statements of Operations for the year
ended July 3, 1998, and for the three months ended October 2, 1998, gives
effect to the transactions as if they had taken place on June 28, 1997, the
first day of the fiscal year ended July 3, 1998. The Seagate Technology--
Unaudited Pro Forma Condensed Balance Sheet gives effect to the transactions as
if they had taken place on October 2, 1998. The Seagate Technology--Unaudited
Pro Forma Condensed Financial Statements are not necessarily indicative of what
the actual financial results would have been had the transaction taken place on
June 28, 1997 or October 2, 1998 and do not purport to indicate the future
results of operations or financial position of Seagate Technology.

Upon the contribution of NSMG to Newco in exchange for Newco stock Seagate
Software and Seagate Technology through consolidation of Seagate Software will
record a gain on the exchange equivalent to the difference between the fair
value of the Newco stock received reduced by approximately 41% and Seagate
Software's basis in the assets exchanged also reduced by approximately 41%.
Because Seagate Software will own approximately 41% of Newco, on an outstanding
share basis after the exchange, it will not recognize a gain on 100% of the
contribution of NSMG to Newco. Seagate Technology's ownership percentage in
Newco on an outstanding share basis does not take into account outstanding
stock options, warrants, or convertible securities. Subsequent to the merger,
Seagate Software and Seagate Technology will account for their investment in
Newco using the equity method. Under the equity method of accounting, Seagate
Software, and Seagate Technology will include in its financial results its
share of the net income or loss of Newco based upon the percentage of
outstanding shares of Newco owned by Seagate Software adjusted for the
difference in Seagate Software's carrying value of its investment and its
equity interest in Newco's net assets. The results of Newco will include the
results of TeleBackup if the TeleBackup Purchase described below is
consummated. The Seagate Technology Unaudited Pro Forma Statements have been
prepared assuming the TeleBackup Purchase is accounted for using the purchase
method of accounting.

In addition to the above, Newco plans to complete the TeleBackup Purchase
immediately after the completion of the contribution of NSMG to Newco.
TeleBackup develops and markets software technology that enables the automated
backup and recovery of electronic information created and stored on networked,
remote and mobile PC-based computer systems. The Seagate Technology--Unaudited
Pro Forma Condensed Financial Statements include the impact of the TeleBackup
purchase by Newco through the issuance of 1,550,000 shares of Newco determined
as of October 30 1998 using the closing price of Veritas common stock of $54.31
per share on November 6, 1998. Under the terms of the

58
<PAGE>

TeleBackup arrangement, the number of shares to be issued will increase up to
1,710,000 shares depending on the average price per share of Veritas common
stock for the ten day period ending two days before the closing date.

As a result of the exchange of Seagate Software shares for Seagate Technology
shares pursuant to the Exchange Offer, the Veritas Transaction, and the
TeleBackup Purchase, Seagate Technology preliminarily estimates that it will
record a pre-tax gain of approximately $1,042 million, expenses related to
write-offs of in-process research and development of approximately $124 million
and compensation expense of approximately $59 million in the period these
transactions are consummated. In addition, Seagate Technology and Seagate
Software, will record the value of certain intangible assets and goodwill that
will be amortized over periods of up to four years associated with these
transactions. The actual amount of the one-time gain and expenses, and the
amount of intangible assets and goodwill recorded is dependent on a number of
factors including, the price of Veritas stock prior to the merger, the number
and average exercise prices for Veritas and Seagate Software stock outstanding
prior to the merger, the number of shares of Seagate Software stock ultimately
exchanged into shares of Seagate Technology stock, and the completion of a
formal valuation by an independent third party.

The Seagate Technology--Unaudited Pro Forma Condensed Balance Sheet as of
October 2, 1998, reflects the recognition of the one-time gain and expenses for
in-process research and development and compensation. The Seagate Technology--
Unaudited Pro Forma Statements of Operations include the recurring effect of
the amortization of intangibles and goodwill and do not include the effect of
the one-time recognition of gain on the Veritas Transaction and one-time
expenses related to in-process research and development and compensation. The
gain and the charges related to in-process research and development as well as
compensation will be reflected in Seagate Technology's financial statements
when the Veritas Transaction and the TeleBackup Purchase are consummated.

The Seagate Technology--Unaudited Pro Forma Condensed Financial Statements
should be read in conjunction with the related notes included in this document
and the audited financial statements of Seagate Technology including the notes
that are included elsewhere in this Offering Circular/Prospectus.

59
<PAGE>

SEAGATE TECHNOLOGY--UNAUDITED PRO FORMA
CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED JULY 3, 1998
(IN MILLIONS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
----------------------------------
EQUITY INTEREST PURCHASE OF
SEAGATE LESS: IN OPERATIONS MINORITY
TECHNOLOGY NSMG OF NEWCO INTEREST PRO FORMA
---------- ----- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenue................. $6,819 $175 $ $ $6,644
Cost of sales........... 5,830 23 1 (6) 5,808
Marketing and
administrative......... 502 90 412
Product development..... 585 32 553
In-process research and
development............ 223 7 216
Amortization of goodwill
and other intangibles.. 40 12 1 (6) 29
Restructuring........... 347 347
Unusual items........... (22) (22)
------ ---- ----- --- ------
Total operating
expenses........... 7,505 164 2 7,343
------ ---- ----- --- ------
Income (loss) from
operations............. (686) 11 (2) (699)
Equity in income (loss)
of Newco, net of
amortization of related
intangibles............ -- -- 27 (1) (217)
(238)(2)
(6)(3)
Interest and other,
net.................... (18) (1) (17)
------ ---- ----- --- ------
Income (loss) before
income taxes........... (704) 10 (217) (2) (933)
Benefit from (provision
for) income taxes...... 174 (6) 84 (4) 267
3 (5)
------ ---- ----- --- ------
Net income (loss)....... $ (530) $ 4 $(130) $(2) $ (666)
====== ==== ===== === ======
Net income (loss) per
share:*
Basic................. $(2.17) $(2.70)
Diluted............... $(2.17) $(2.70)
Number of shares used in
per share
computations:*
Basic................. 243.6 247.0
Diluted............... 243.6 247.0
</TABLE>
- --------
(*) NSMG is an operating division of Seagate Software and it has no formal
capital structure; accordingly, share and per share information is not
presented.

See accompanying Notes to Seagate Technology--Unaudited Pro Forma
Condensed Financial Statements.

60
<PAGE>

SEAGATE TECHNOLOGY--UNAUDITED PRO FORMA
CONDENSED STATEMENT OF OPERATIONS
THREE MONTHS ENDED OCTOBER 2, 1998
(IN MILLIONS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
----------------------------------
EQUITY INTEREST PURCHASE OF
SEAGATE LESS: IN OPERATIONS MINORITY
TECHNOLOGY NSMG OF NEWCO INTEREST PRO FORMA
---------- ----- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenue................. $1,553 $ 48 $ $ $1,505
Cost of sales........... 1,232 4 1,228
Marketing and
administrative......... 131 24 107
Product development..... 141 9 132
Amortization of goodwill
and other intangibles.. 9 3 1 (6) 7
Unusual items........... 77 77
------ ---- ---- --- ------
Total operating
expenses........... 1,590 40 1 1,551
------ ---- ---- --- ------
Income (loss) from
operations............. (37) 8 (1) (46)
Equity in income (loss)
of Newco, net of
amortization of related
intangibles............ -- -- 8 (1) (53)
(59)(2)
(2)(3)
Interest and other,
net.................... 16 -- (16)
------ ---- ---- --- ------
Income (loss) before
income taxes........... (21) 8 (53) (1) (83)
Benefit from (provision
for) income taxes...... (9) (4) 20 (4) 16
1 (5)
------ ---- ---- --- ------
Net income (loss)....... $ (30) $ 4 $(32) $(1) $ (67)
====== ==== ==== === ======
Net income (loss) per
share:*
Basic................. $(0.12) $(0.27)
Diluted............... $(0.12) $(0.27)
Number of shares used in
per share
computations:*
Basic................. 245.0 248.4
Diluted............... 245.0 248.4
</TABLE>
- --------
* NSMG is an operating division of Seagate Software and it has no formal
capital structure; accordingly, share and per share information is not
presented.

See accompanying Notes to Seagate Technology--Unaudited Pro Forma
Condensed Financial Statements.

61
<PAGE>

SEAGATE TECHNOLOGY--UNAUDITED PRO FORMA
CONDENSED BALANCE SHEETS
AS OF OCTOBER 2, 1998
(IN MILLIONS)

<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
----------------------------------
PURCHASE OF
SEAGATE LESS: EQUITY INTEREST MINORITY
TECHNOLOGY NSMG IN NEWCO INTEREST PRO FORMA
---------- ----- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash
equivalents........... $ 431 $ 1 $ $ $ 430
Short-term
investments........... 1,443 -- 1,443
Accounts receivable,
net................... 761 17 744
Inventories............ 461 1 460
Deferred income taxes.. 232 -- 1 (7) 233
Other current assets... 244 7 5 (8) 242
------ ---- ------ --- ------
Total current assets... 3,572 26 6 3,552
Equipment and leasehold
improvements, net...... 1,665 12 1,653
Goodwill and other
intangibles, net....... 157 35 7 (13) 129
Equity investment in
Newco.................. -- -- 957 (9) 957
Other assets............ 209 209
------ ---- ------ --- ------
Total assets........... $5,603 $ 73 $ 963 $ 7 $6,500
====== ==== ====== === ======
LIABILITIES &
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable....... $ 521 $ 4 $ 5 (8) $ $ 522
Accrued employee
compensation.......... 182 9 173
Accrued expenses....... 646 9 637
Accrued income taxes... 5 6 1 (7) --
Current portion of
long-term debt........ 1 1
Deferred revenue....... 4 4 --
------ ---- ------ --- ------
Total current
liabilities........... 1,359 32 6 -- 1,333
Deferred income taxes... 431 2 388 (9) 1 (13) 818
Long-term debt.......... 703 -- 703
Other liabilities....... 182 182
------ ---- ------ --- ------
Total liabilities...... 2,675 34 394 1 3,036
------ ---- ------ --- ------
Stockholders'/Group
Equity:
Common stock........... 3 -- -- 3
Additional paid-in
capital............... 1,933 -- 59(10) 7 (13) 1,999

Retained Earnings...... 1,247 -- 1,042 (9) (1)(13) 1,717
(388)(9)
(124)(11)
(59)(10)
Group Equity........... 39 39 (12) --
Other comprehensive
income................ 5 -- 5
Deferred compensation.. (49) -- (49)
Treasury Common Stock.. (211) (211)
------ ---- ------ --- ------
Total stockholders'
equity/Group Equity... 2,928 39 569 6 3,464
------ ---- ------ --- ------
Total liabilities and
stockholders'
equity/Group Equity... $5,603 $ 73 $ 963 $ 7 $6,500
====== ==== ====== === ======
</TABLE>

See accompanying Notes to Seagate Technology--Unaudited Pro Forma
Condensed Financial Statements.

62
<PAGE>

NOTES TO SEAGATE TECHNOLOGY
UNAUDITED PRO FORMA
CONDENSED FINANCIAL STATEMENTS--(CONTINUED)

1. PRO FORMA BASIS OF PRESENTATION

These pro forma statements reflect the exchange of Seagate Software shares by
Seagate Technology pursuant to the Exchange Offer and the contribution of the
NSMG division of Seagate Software to Newco in exchange for the issuance of
approximately 33.4 million shares of Newco common stock representing an
approximate 41% interest in Newco on an outstanding share basis. The number of
shares to be received in the exchange is based on the capitalization of Seagate
Software and Veritas as of October 30, 1998 and the closing price of Veritas
common stock of $54.31 per share on November 6, 1998. The actual value will be
dependent on the average closing price per share of Veritas common stock on the
five days ending on the third business day prior to the closing date.

The exchange ratio for the exchange of Seagate Software shares for Seagate
Technology shares pursuant to the Exchange Offer will be determined based on
the estimated value of Seagate Software shares divided by the fair market value
of Seagate Technology common stock. The estimated value of the Seagate Software
shares will be determined based upon the sum of the fair value of NSMG (as
measured by the fair value of the shares to be received from Newco) plus the
estimated fair value for IMG as determined by the Seagate Software Board of
Directors plus the assumed proceeds from the exercise of all stock options,
divided by the number of fully converted shares of Seagate Software. The fair
value of shares purchased less the original price paid by the employees will be
recorded as compensation expense for those shares outstanding or vested less
than six months. The purchase of Seagate Software shares that have been
outstanding and vested more than six months will be accounted by Seagate
Software and Seagate Technology as a purchase of minority interest and,
accordingly, in these pro forma financial statements the fair value of the
shares exchanged has been allocated to all of the identifiable tangible and
intangible assets, including in-process research and development and goodwill,
and liabilities of Seagate Software. The amounts allocated to in-process
research and development will be expensed in the period in which the shares are
exchanged.

Because Seagate Software will own approximately 41% of Newco, including NSMG
after the exchange, it will not recognize a gain on 100% of the contribution of
NSMG. Seagate Software and Seagate Technology will record a gain on the
exchange equivalent to the difference between approximately 59% of the fair
value of the Newco stock received and approximately 59% of Seagate Technology's
basis in the assets exchanged. Seagate Software and Seagate Technology will
account for its investment in Newco using the equity method. Seagate Software
and Seagate Technology will allocate the difference between the recorded amount
of its investment in Newco and the amount of its underlying equity in the net
assets of Newco based upon the fair value of the underlying assets and
liabilities of Newco (see Note 2). Subsequent to the combination, Seagate
Software's and Seagate Technology's operating results will include
approximately 41% of the operating results of Newco, adjusted to amortize the
difference between the recorded amount of Seagate Software's investment and the
amount of its underlying equity in the net assets of Newco.

Newco plans to complete a transaction to purchase TeleBackup immediately
subsequent to the combination with NSMG. The Seagate Technology Unaudited Pro
Forma Statements include the

63
<PAGE>

NOTES TO SEAGATE TECHNOLOGY
UNAUDITED PRO FORMA
CONDENSED FINANCIAL STATEMENTS--(CONTINUED)

impact of the TeleBackup purchase by Newco and the issuance of 1,555,000 shares
of Newco determined as of October 30, 1998 using the closing price of Veritas
common stock of $54.31 on November 6, 1998. The actual value of the TeleBackup
combination will be determined based on the average closing price per share of
Veritas common stock for a few days before and after the closing date. Under
the terms of the TeleBackup arrangement, the number of shares to be issued will
increase up to 1,710,000 shares depending on the average price per share of
Veritas common stock for a ten day period ending two days before the closing
date.

The Seagate Technology--Unaudited Pro Forma Condensed Financial Statements have
been prepared based on assumptions relating to the fair value of the assets and
liabilities of Newco, TeleBackup and Seagate Software. The allocations are
based on preliminary information and the actual amounts may differ from those
reflected in the Seagate Technology--Unaudited Pro Forma Condensed Financial
Statements after completion of valuations and other procedures. Below is a
table of the computation of gain, asset and liability allocation and annual
amortization of the intangible assets received (dollars in thousands):

EXCHANGE OF SEAGATE SOFTWARE SHARES FOR SEAGATE TECHNOLOGY SHARES

<TABLE>
<CAPTION>
ANNUAL
AMORTIZATION AMORTIZATION OF
AMOUNT LIFE INTANGIBLES
------- ------------ ---------------
<S> <C> <C> <C>
Compensation expense associated with
the exchange of Seagate Software
shares outstanding and vested less
than 6 months....................... $58,709
Allocation of minority interest
purchase price to Intangible assets
of Seagate Software:
Distribution channel............... $ 840 4 years $ 210
Developed technology............... 1,400 2 to 4 years 467
Trademarks and workforce........... 154 4 years 39
In-process research and
development....................... 958
Goodwill........................... 5,401 4 years 1,350
Deferred tax liability............. (958)
-------
Total............................ $ 7,795
=======
</TABLE>

64
<PAGE>

NOTES TO SEAGATE TECHNOLOGY
UNAUDITED PRO FORMA
CONDENSED FINANCIAL STATEMENTS--(CONTINUED)

CONTRIBUTION OF NSMG TO NEWCO

<TABLE>
<S> <C>
COMPUTATION OF GAIN
Fair value of shares received.................................... $1,813,944
Less: Book value of NSMG......................................... 39,372
----------
Unadjusted gain.................................................. 1,774,572
Times: Pro rata adjustment....................................... 58.72%
----------
Pro rata gain.................................................... $1,042,056
==========
Deferred tax liability on pro rata gain.......................... $ 388,488
==========
COMPUTATION OF INVESTMENT IN NEWCO
Historical basis in NSMG......................................... $ 39,372
Add: Pro rata gain............................................... 1,042,056
----------
Investment in Newco.............................................. $1,081,428
==========
</TABLE>

<TABLE>
<CAPTION>
ANNUAL
AMORTIZATION AMORTIZATION OF
AMOUNT LIFE INTANGIBLES
---------- ------------ ---------------
<S> <C> <C> <C>
Allocation of Investment in Newco:
Tangible assets.................. $ 73,055
Intangible assets:
Distribution channel........... 123,900 4 years $30,975
Developed technology........... 206,500 2 to 4 years 68,833
Trademark and workforce........ 22,715 4 years 5,679
In-process research and
development................... 123,900
Goodwill....................... 531,358 4 years 132,840
----------
Investment in Newco.......... $1,081,428
==========
</TABLE>

65
<PAGE>

NOTES TO SEAGATE TECHNOLOGY
UNAUDITED PRO FORMA
CONDENSED FINANCIAL STATEMENTS--(CONTINUED)

ACQUISITION OF TELEBACKUP

<TABLE>
<CAPTION>
ANNUAL
AMORTIZATION AMORTIZATION OF
AMOUNT LIFE INTANGIBLES
-------- ------------ ---------------
<S> <C> <C> <C>
Estimated acquisition cost:
Estimated purchase price.......... $ 84,456
Acquisition costs................. 3,949
--------
Total estimated acquisition
cost........................... $ 88,405
========
Purchase price allocation:
Tangible net assets acquired...... $ 3,725
Intangible assets acquired
Distribution channel/OEM
agreements....................... 48,000 4 years $12,000
Developed technology............ 6,800 4 years 1,700
Trademark/assembled workforce... 3,030 4 years 757
In-process research and
development.................... 3,000
Goodwill........................ 44,390 4 years 11,098
Deferred tax liabilities........ (20,540)
--------
Total......................... $ 88,405
========
</TABLE>

Tangible net assets of Newco principally include cash and investments, accounts
receivable, fixed assets and other current assets. Liabilities principally
include accounts payable, accrued compensation, and other accrued liabilities.

The tangible net assets of TeleBackup acquired principally include cash and
fixed assets. Liabilities assumed principally include convertible debentures
and other non-current liabilities.

To estimate the value of the developed technology, the expected future cash
flows attributable to all existing technology was discounted, taking into
account risks related to the characteristics and applications of the
technology, existing and future markets, and assessments of the life cycle
stage of the technology. The developed technology is expected to be amortized
on the straight-line basis over its estimated useful life (two to four years)
which is expected to exceed the ratio of current revenues to the total of
current and anticipated revenues.

The value of the distribution networks and OEM agreements was estimated by
considering, among other factors, the size of the current and potential future
customer bases, the quality of existing relationships with customers, the
historical costs to develop customer relationships, the expected income and
associated risks. Associated risks included the inherent difficulties and
uncertainties in transitioning business relationships and risks related to the
viability of and potential changes to future target markets.

66
<PAGE>

NOTES TO SEAGATE TECHNOLOGY
UNAUDITED PRO FORMA
CONDENSED FINANCIAL STATEMENTS--(CONTINUED)

The value of trademarks was estimated by considering, among other factors, the
assumption that in lieu of ownership of a trademark, a company would be willing
to pay a royalty in order to exploit the related benefits of such trademark.

The value of the assembled workforce was estimated as the costs to replace the
existing employees, including recruiting, hiring, and training costs for each
category of employee.

The value allocated to projects identified as in-process technology at Newco,
TeleBackup and Seagate Software (for the minority interest acquired) will be
charged to expense in the period the transactions close. These write-offs are
necessary because the acquired technologies have not yet reached technological
feasibility and have no future alternative uses. Seagate Technology expects
that the acquired in-process research and development will be successfully
developed, but there can be no assurance that commercial viability of these
products will be achieved.

The nature of the efforts required to develop the purchased in-process
technology into commercially viable products principally relate to the
completion of all planning, designing, prototyping, verification and testing
activities that are necessary to establish that the product can be produced to
meet its design specifications, including functions, features and technical
performance requirements.

The value of the purchased in-process technology for Newco and TeleBackup was
estimated as the projected net cash flows related to such products, including
costs to complete the development of the technology and the future revenues to
be earned upon commercialization of the products, excluding revenues
attributable to future development efforts. These cash flows were then
discounted back to their net present value. The projected net cash flows from
such projects were based on management's estimates of revenues and operating
profits related to such projects.

Goodwill is calculated as the residual difference between the estimated amount
paid and the values assigned to identified tangible and intangible assets.

2. PRO FORMA NET LOSS PER SHARE

The Seagate Technology Unaudited Pro Forma Condensed Statements of Operations
have been prepared as if the exchange of Seagate Software shares for Seagate
Technology shares pursuant to the Exchange Offer, the Veritas Transaction, and
the TeleBackup Purchase had all occurred at the beginning of fiscal 1998.

The pro forma weighted average shares outstanding assumes the following (in
millions):

<TABLE>
<CAPTION>
YEAR THREE MONTHS
ENDED ENDED
JULY 3, 1998 OCTOBER 2, 1998
------------ ---------------
<S> <C> <C>
Weighted average historical shares outstanding... 243.6 245.0
Shares assumed issued pursuant to the Exchange
Offer........................................... 3.4 3.4
----- -----
Total weighted average shares outstanding........ 247.0 248.4
===== =====
</TABLE>

67
<PAGE>

NOTES TO SEAGATE TECHNOLOGY
UNAUDITED PRO FORMA
CONDENSED FINANCIAL STATEMENTS--(CONTINUED)

3. PRO FORMA ADJUSTMENTS

The Seagate Technology Unaudited Pro Forma Statements give effect to the
following pro forma adjustments:

(1) To include Seagate Technology's equity in the income of Newco prior to
the effect of the amortization of intangible assets, including goodwill,
associated with the Veritas Transaction and the TeleBackup Purchase.

(2) To reflect Seagate Technology's interest in the amortization of
intangibles and goodwill resulting from to the Veritas Transaction.

(3) To reflect Seagate Technology's interest in the amortization of
intangibles and goodwill resulting from the TeleBackup Purchase.

(4) To reflect the change in book/tax basis differences related to the
investment in Newco.

(5) To reflect the provision of income taxes for Seagate Technology's
equity in the amortization of intangibles and goodwill related to the
TeleBackup Purchase.

(6) To reflect the amortization of developed technology and intangibles and
goodwill resulting from the exchange of Seagate Software shares for Seagate
Technology shares pursuant to the Exchange Offer. The purchase of the
minority interest by Seagate Technology is recorded using fair values and
is reflected as a capital contribution to Seagate Software by Seagate
Technology and offsetting compensation expense or purchased in-process
research and development and intangibles recorded by Seagate Technology,
through consolidation.

(7) To reclassify a debit balance in accrued income taxes payable to other
current assets.

(8) To reclassify a loan receivable from Seagate Technology and affiliates
to a loan payable to Seagate Technology and affiliates.

(9) Deferred income tax liability provided on the gain resulting from the
Veritas Transaction.

(10) Contributed capital and compensation expense resulting from the
purchase of Seagate Software common stock in exchange for Seagate
Technology common stock.

(11) Write-off of in-process research and development resulting from the
Veritas Transaction.

(12) To eliminate NSMG's Group Equity.

(13) To record purchased in-process research and development, intangibles
and goodwill, deferred taxes and a capital contribution resulting from
exchange of Seagate Software shares for Seagate Technology shares pursuant
to the Exchange Offer.

68
<PAGE>

SEAGATE SOFTWARE
UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS

The following unaudited pro forma condensed financial statements consist of the
Seagate Software-Unaudited Pro Forma Condensed Statements of Operations for the
year ended July 3, 1998, and for the three months ended October 2, 1998, and
the Unaudited Pro Forma Condensed Balance Sheet as of October 2, 1998,
(collectively the "Seagate Software--Unaudited Pro Forma Condensed Financial
Statements"). The Seagate Software--Unaudited Pro Forma Condensed Financial
Statements give effect to the exchange of Seagate Software shares for Seagate
Technology shares pursuant to the Exchange Offer and the contribution by
Seagate Software of NSMG to Newco in exchange for shares of Newco, The Seagate
Software--Unaudited Pro Forma Condensed Statements of Operations for the year
ended July 3, 1998, and for the three months ended October 2, 1998, gives
effect to the transactions as if they had taken place on June 28, 1997, the
first day of the fiscal year ended July 3, 1998. The Seagate Software--
Unaudited Pro Forma Condensed Balance Sheet gives effect to the transactions as
if they had taken place on October 2, 1998. The Seagate Software--Unaudited Pro
Forma Condensed Financial Statements are not necessarily indicative of what the
actual financial results would have been had the transaction taken place on
June 28, 1997 or October 2, 1998 and do not purport to indicate the future
results of operations or financial position of Seagate Software.

Upon the contribution of NSMG to Newco in exchange for Newco stock, Seagate
Software will record a gain on the exchange equivalent to the difference
between the fair value of the Newco stock received reduced by approximately 41%
and Seagate Software's basis in the assets exchanged also reduced by
approximately 41%. Because Seagate Software will own approximately 41% of Newco
on an outstanding share basis after the exchange, it will not recognize a gain
on 100% of the contribution of NSMG to Newco. Seagate Software's ownership
percentage in Newco on an outstanding share basis does not take into account
outstanding stock options, warrants, or convertible securities. Subsequent to
the merger, Seagate Software will account for its investment in Newco using the
equity method. Under the equity method of accounting, Seagate Software will
include in its financial results its share of the net income or loss of Newco
based upon the percentage of outstanding shares of Newco owned by Seagate
Software adjusted for the difference in Seagate Software's carrying value of
its investment and its equity interest in Newco's net assets. The results of
Newco will include the results of TeleBackup if the TeleBackup purchase is
consummated. The Seagate Software--Unaudited Pro Forma Condensed Financial
Statements have been prepared assuming the TeleBackup Purchase is consummated
using the purchase method of accounting.

The accompanying Seagate Software--Unaudited Pro Forma Condensed Statements of
Operations for the year ended July 3, 1998 and the three months ended October
2, 1998, reflect the purchase of these shares in the exchange offer as if it
had taken place on June 28, 1997, the first day of the fiscal year ended July
3, 1998. The Seagate Software--Unaudited Pro Forma Condensed Balance Sheet
reflects the purchase of these shares as if it had taken place on October 2,
1998.

As a result of the contribution of NSMG to Newco and the issuance of stock of
Seagate Technology in exchange for certain stock of Seagate Software, Seagate
Software preliminarily estimates that it will record a pre-tax gain of
approximately $1,042 million and expenses related to write-offs of in-process
research and development of approximately $124 million and compensation expense
of

69
<PAGE>

approximately $59 million in the period these transactions are consummated. In
addition, Seagate Software will record the value of certain intangible assets
and goodwill that will be amortized over periods up to four years associated
with the exchange of Seagate Software shares for Seagate Technology shares
pursuant to the Exchange Offer. The actual amount of the one-time gain and
expenses, and the amount of intangible assets and goodwill recorded is
dependent on a number of factors including, the price of Veritas stock prior to
the merger, the number and average exercise prices for Veritas and Seagate
Software stock outstanding prior to the merger, the number of shares of Seagate
Software stock ultimately exchanged into shares of Seagate Technology stock,
and the completion of a formal valuation by an independent third party.

The Seagate Software--Unaudited Pro Forma Condensed Balance Sheet as of October
2, 1998, reflects the recognition of the one-time gain and expenses for in-
process research and development and compensation. The Seagate Software--
Unaudited Pro Forma Statements of Operations include the recurring effect of
the amortization of intangibles and goodwill and do not include the effect of
the one-time recognition of gain on the contribution of NSMG to Newco and one-
time expenses related to in-process research and development and compensation.
The gain and the charges related to in-process research and development as well
as compensation will be reflected in Seagate Software's financial statements
when the Network & Storage Management Group combination and the TeleBackup
Purchase are consummated.

The Seagate Software--Unaudited Pro Forma Condensed Financial Statements should
be read in conjunction with the related notes included in this document and the
audited financial statements of Seagate Software and NSMG, including the notes
to each, that are included elsewhere in this Offering Circular/Prospectus.

70
<PAGE>

SEAGATE SOFTWARE--UNAUDITED PRO FORMA
CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED JULY 3, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
-------------------------------------
EQUITY
INTEREST PURCHASE OF
SEAGATE LESS: IN OPERATIONS MINORITY
SOFTWARE NSMG OF NEWCO INTEREST PRO FORMA
-------- -------- ------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Licensing............. $243,285 $160,192 $ $ $ 83,093
Licensing from Seagate
Technology........... 5,469 5,048 421
Maintenance, support
and other............ 44,472 9,806 34,666
-------- -------- --------- ------- ---------
Total revenues...... 293,226 175,046 118,180
Cost of revenues:
Licensing............. 16,963 13,714 3,249
Licensing from Seagate
Technology........... 539 411 128
Maintenance, support
and other............ 19,687 2,067 17,620
Amortization of
developed
technologies......... 13,271 7,143 467 (6) 6,595
-------- -------- --------- ------- ---------
Total cost of
revenues........... 50,460 23,335 467 27,592
-------- -------- --------- ------- ---------
Gross profit............ 242,766 151,711 (467) 90,588
Operating expenses:
Sales and marketing... 129,343 68,314 61,029
Research and
development.......... 47,173 31,677 15,496
General and
administrative....... 37,124 22,254 14,870
In-process research
and development...... 6,800 6,800 --
Amortization of
goodwill and other
intangibles.......... 15,421 12,456 1,599 (6) 4,564
-------- -------- --------- ------- ---------
Total operating
expenses........... 235,861 141,501 1,599 95,959
-------- -------- --------- ------- ---------
Income (loss) from
operations............. 6,905 10,210 (2,066) (5,371)
Equity in income (loss)
of Newco, net of
amortization of
purchased intangibles.. -- -- 26,924 (1) (217,613)
(238,327)(2)
(6,210)(3)
Interest and other,
net.................... (10) (713) 703
-------- -------- --------- ------- ---------
Income before income
taxes.................. 6,895 9,497 (217,613) (2,066) (222,281)
Benefit from (provision
for) income taxes...... (15,385) (5,861) 84,561 (4) 286 (7) 77,807
2,484 (5)
-------- -------- --------- ------- ---------
Net income (loss)....... $ (8,490) $ 3,636 $(130,568) $(1,780) $(144,474)
======== ======== ========= ======= =========
Net income (loss) per
common share:*
Basic................. $ (51.59) $ (55.17)
Diluted............... $ (51.59) $ (55.17)
Number of shares used in
per share
computations:*
Basic................. 164,571 2,618,631
Diluted............... 164,571 2,618,631
</TABLE>
- --------
* NSMG is an operating division of Seagate Software and it has no formal
capital structure; accordingly, share and per share information is not
presented.

See accompanying Notes to Seagate Software--Unaudited Pro Forma
Condensed Financial Statements.

71
<PAGE>

SEAGATE SOFTWARE--UNAUDITED PRO FORMA
CONDENSED STATEMENT OF OPERATIONS
THREE MONTHS ENDED OCTOBER 2, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
-------------------------------------
EQUITY INTEREST PURCHASE OF
SEAGATE LESS: IN OPERATIONS MINORITY
SOFTWARE NSMG OF NEWCO INTEREST PRO FORMA
---------- ------- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Licensing............. $ 58,671 $43,552 $ $ $ 15,119
Licensing from Seagate
Technology........... 2,156 2,027 129
Maintenance, support
and other............ 14,048 2,954 11,094
---------- ------- -------- ----- ---------
Total revenues...... 74,875 48,533 26,342
Cost of revenues:
Licensing............. 2,935 2,502 433
Licensing from Seagate
Technology........... 129 129 --
Maintenance, support
and other............ 6,430 935 5,495
Amortization of
developed
technologies......... 2,866 800 117 (6) 2,183
---------- ------- -------- ----- ---------
Total cost of
revenues........... 12,360 4,366 117 8,111
---------- ------- -------- ----- ---------
Gross profit............ 62,515 44,167 (117) 18,231
Operating expenses:
Sales and marketing... 36,007 18,960 17,047
Research and
development.......... 12,787 8,839 3,948
General and
administrative....... 8,940 5,422 3,518
Amortization of
goodwill and other
intangibles.......... 3,198 2,406 400 (6) 1,192
---------- ------- -------- ----- ---------
Total operating
expenses........... 60,932 35,627 400 25,705
---------- ------- -------- ----- ---------
Income (loss) from
operations............. 1,583 8,540 (517) (7,474)
Equity in income (loss)
of Newco, net of
amortization of
purchased intangibles.. -- -- 8,090 (1) (53,044)
(59,582)(2)
(1,552)(3)
Interest and other,
net.................... 312 (147) 459
---------- ------- -------- ----- ---------
Income before income
taxes.................. 1,895 8,393 (53,044) (517) (60,059)
Benefit from (provision
for) income taxes...... (1,043) (4,197) 20,597 (4) 72 (7) 24,444
621 (5)
---------- ------- -------- ----- ---------
Net income (loss)....... $ 852 $ 4,196 $(31,826) $(445) $ (35,615)
========== ======= ======== ===== =========
Net income (loss) per
common share:*
Basic................. $ 3.09 $ (13.60)
Diluted............... $ 0.01 $ (13.60)
Number of shares used in
per share
computations:*
Basic................. 275,314 2,618,631
Diluted............... 59,984,218 2,618,631
</TABLE>
- --------
* NSMG is an operating division of Seagate Software and it has no formal
capital structure; accordingly, share and per share information is not
presented.

See accompanying Notes to Seagate Software--Unaudited Pro FormaCondensed
Financial Statements.

72
<PAGE>

SEAGATE SOFTWARE--UNAUDITED PRO FORMA
CONDENSED BALANCE SHEETS
AS OF OCTOBER 2, 1998
(IN THOUSANDS)

<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
--------------------------------------
PURCHASE OF
SEAGATE LESS: EQUITY INTEREST MINORITY
SOFTWARE NSMG IN NEWCO INTEREST PRO FORMA
--------- ------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash.................. $ 10,418 $ 1,266 $ $ $ 9,152
Accounts receivable,
net.................. 44,416 17,465 26,951
Inventories........... 776 418 358
Loan receivable from
Seagate Technology
and affiliates....... -- 4,781 4,781 (8) --
Other current assets.. 4,386 2,108 4,906 (9) 7,184
--------- ------- ---------- ------- ----------
Total current assets.. 59,996 26,038 9,687 43,645
Equipment and
leasehold
improvements, net.... 15,257 11,732 3,525
Goodwill and other
intangibles, net..... 48,019 35,374 7,795 (14) 20,440
Equity investment in
Newco................ -- -- 957,528 (10) 957,528
--------- ------- ---------- ------- ----------
Total assets........ $ 123,272 $73,144 $ 967,215 $ 7,795 $1,025,138
========= ======= ========== ======= ==========
LIABILITIES &
STOCKHOLDERS' EQUITY
Current liabilities:
Loan payable to
Seagate Technology... $ 3,895 $ -- $ 4,781 (8) $ $ 8,676
Accounts payable...... 11,795 4,140 7,655
Accrued employee
compensation......... 14,100 9,019 5,081
Accrued expenses...... 17,080 9,102 7,978
Accrued income taxes.. 652 5,558 4,906 (9) --
Deferred revenue...... 14,208 4,363 -- 9,845
--------- ------- ---------- ------- ----------
Total current
liabilities........ 61,730 32,182 9,687 39,235
Deferred income
taxes................ 1,343 1,343 388,488 (10) 958 (14) 389,446
Other liabilities..... 284 247 -- 37
--------- ------- ---------- ------- ----------
Total liabilities... 63,357 33,772 398,175 958 428,718
--------- ------- ---------- ------- ----------
Common stock subject
to repurchase........ 3,899 -- (1,172)(15) 2,727
Stockholders' Equity:
Convertible preferred
stock................ 55 -- 55
Common stock.......... -- -- --
Additional paid-in 344,744 -- 58,709 (11) 7,795 (14) 412,420
capital.............. 1,172 (15)
Retained
Earnings/(Accumulated
deficit)............. (288,323) -- 1,042,056 (10) (958)(14) 181,678
(388,488)(10)
(123,900)(12)
(58,709)(11)
Group Equity.......... -- 39,372 39,372 (13) --
Foreign currency
translation
adjustment........... (460) -- (460)
--------- ------- ---------- ------- ----------
Total stockholders'
equity/Group
Equity............. 56,016 39,372 569,040 8,009 593,693
--------- ------- ---------- ------- ----------
Total liabilities
and stockholders'
equity/Group
Equity........... $ 123,272 $73,144 $ 967,215 $ 7,795 $1,025,138
========= ======= ========== ======= ==========
</TABLE>

See accompanying Notes to Seagate Software--Unaudited Pro Forma Condensed
Financial Statements.

73
<PAGE>

NOTES TO SEAGATE SOFTWARE
UNAUDITED PRO FORMA
CONDENSED FINANCIAL STATEMENTS

1. PRO FORMA BASIS OF PRESENTATION

These pro forma statements reflect the contribution of NSMG division of Seagate
Software to Newco in exchange for the issuance of approximately 33,398,286
shares of Newco common stock representing an approximate 41% interest in Newco
on an outstanding share basis (approximately 35% on a fully converted basis).
The number of shares to be received in the exchange is based on the
capitalization of Seagate Software and Veritas as of October 30, 1998 and the
closing price of Veritas common stock of $54.31 per share on November 6, 1998.
The actual value will be dependent on the average closing price per share of
Veritas common stock on the five days ending on the third business day prior to
the closing date. In addition, Newco will offer holders of options to purchase
Seagate Software common stock who become employees of Newco the opportunity to
exchange their options to purchase Seagate Software common stock into options
to purchase Newco common stock. These pro rata financial statements assume that
all eligible option holders will elect to exchange their options. Accordingly,
based on the exchange ratio and 5,682,455 outstanding options held by employees
of NSMG as of October 30, 1998, Newco would issue options to purchase 4,033,252
shares of Newco stock to employees of NSMG.

Because Seagate Software will own approximately 41% of Newco, including NSMG
after the exchange, it will not recognize a gain on 100% of the contribution of
NSMG. Seagate Software will record a gain on the exchange equivalent to the
difference between 59% of the fair value of the Newco stock received and 59% of
Seagate Software's basis in the assets exchanged. Seagate Software will account
for its investment in Newco using the equity method. Seagate Software will
allocate the difference between the recorded amount of its investment in Newco
and the amount of its underlying equity in the net assets of Newco based upon
the fair value of the underlying assets and liabilities of Newco (see Note 2).
Subsequent to the combination, Seagate Software's operating results will
include approximately 41% of the operating results of Newco, adjusted to
amortize the difference between the recorded amount of Seagate Software's
investment and the amount of its underlying equity in the net assets of Newco.

Newco plans to complete a transaction to purchase TeleBackup immediately
subsequent to the combination with NSMG. The Seagate Software Unaudited Pro
Forma Statements include the impact of the TeleBackup purchase by Newco and the
issuance of 1,555,000 shares of Newco determined as of October 30, 1998 using
the closing price of Veritas common stock of $54.31 on November 6, 1998. The
actual value of the TeleBackup combination will be determined based on the
average closing price per share of Veritas common stock for a few days before
and after the closing date. Under the terms of the TeleBackup arrangement, the
number of shares to be issued will increase up to 1,710,000 shares depending on
the average price per share of Veritas common stock for a ten day period ending
two days before the closing date. In addition, TeleBackup's outstanding options
at the closing date will be exchanged for options to purchase Newco shares. As
of October 30, 1998, options to purchase 620,000 shares of Newco common stock
would be exchanged for the outstanding options to purchase TeleBackup common
stock.

74
<PAGE>

NOTES TO SEAGATE TECHNOLOGY
UNAUDITED PRO FORMA
CONDENSED FINANCIAL STATEMENTS--(CONTINUED)

In addition to the inclusion of the transactions described for Newco, Seagate
Technology will offer to purchase all outstanding shares of Seagate Software in
exchange for Seagate Technology shares. The exchange ratio will be determined
based on the estimated value of Seagate Software shares divided by the fair
market value of Seagate Technology common stock. The estimated value of the
Seagate Software shares will be determined based upon the sum of the fair value
of NSMG (as measured by the fair value of the shares to be received from Newco)
plus the estimated fair value for IMG as determined by the Seagate Software
Board of Directors plus the assumed proceeds from the exercise of all stock
options, divided by the number of fully converted shares of Seagate Software.
The fair value of shares purchased less the original price paid by the
employees will be recorded as compensation expense for those shares outstanding
or vested less than six months. The purchase of shares that have been
outstanding and vested more than six months will be accounted by Seagate
Software as a purchase of minority interest and, accordingly, in these pro
forma financial statements the fair value of the shares exchanged has been
allocated to all of the identifiable tangible and intangible assets, including
in-process research and development and goodwill, and liabilities of Seagate
Software. The amounts allocated to in-process research and development will be
expensed in the period in which the shares are exchanged.

The Seagate Software Unaudited Pro Forma Statements have been prepared based on
assumptions relating to the fair value of the assets and liabilities of Newco,
TeleBackup and Seagate Software. The allocations are based on preliminary
information and the actual amounts may differ from those reflected in the
Seagate Software Unaudited Pro Forma Statements after completion of valuations
and other procedures. Below is a table of the computation of gain, asset and
liability allocation and annual amortization of the intangible assets received
(dollars in thousands):

NEWCO

75
<PAGE>

NOTES TO SEAGATE TECHNOLOGY
UNAUDITED PRO FORMA
CONDENSED FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<CAPTION>
ANNUAL
AMORTIZATION AMORTIZATION OF
AMOUNT LIFE INTANGIBLES
---------- ------------ ---------------
<S> <C> <C> <C>
ALLOCATION OF INVESTMENT IN NEWCO:
Tangible assets.................. $ 73,055
Intangible assets:
Distribution channel........... 123,900 4 years $ 30,975
Developed technology........... 206,500 2 to 4 years 68,833
Trademark and workforce........ 22,715 4 years 5,679
In-process research and
development................... 123,900
Goodwill....................... 531,358 4 years 132,840
----------
Fair value portion of
investment in Newco......... $1,081,428
==========
</TABLE>

ACQUISITION OF MINORITY INTERESTS OF SEAGATE SOFTWARE

<TABLE>
<CAPTION>
ANNUAL
AMORTIZATION AMORTIZATION OF
AMOUNT LIFE INTANGIBLES
------- ------------ ---------------
<S> <C> <C> <C>
Compensation expense resulting from
the exchange of stock outstanding and
vested less than 6 months............ $58,709
Allocation of minority interest
purchase price Intangible assets
Distribution channel................ $ 840 4 years $ 210
Developed technology................ 1,400 2 to 4 years 467
Trademarks and workforce............ 154 4 years 39
In-process research and
development........................ 958
Goodwill............................ 5,401 4 years 1,350
Deferred tax liability.............. (958)
-------
Total............................. $ 7,795
=======
</TABLE>

TELEBACKUP

<TABLE>
<CAPTION>
ANNUAL
AMORTIZATION AMORTIZATION OF
AMOUNT LIFE INTANGIBLES
-------- ------------ ---------------
<S> <C> <C> <C>
Estimated acquisition cost
Estimated purchase price.......... $ 84,456
Acquisition costs................. 3,949
--------
Total estimated acquisition
cost........................... $ 88,405
========
Purchase price allocation
Tangible net assets acquired...... $ 3,725
Intangible assets acquired
Distribution channel/OEM
agreements..................... 48,000 4 years $12,000
Developed technology............ 6,800 4 years 1,700
Trademark/assembled workforce... 3,030 4 years 757
In-process research and
development.................... 3,000
Goodwill........................ 44,390 4 years 11,098
Deferred tax liabilities........ (20,540)
--------
Total......................... $ 88,405
========
</TABLE>

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<PAGE>

NOTES TO SEAGATE SOFTWARE
UNAUDITED PRO FORMA
CONDENSED FINANCIAL STATEMENTS--(CONTINUED)

The tangible net assets of TeleBackup acquired principally include cash and
fixed assets. Liabilities assumed principally include convertible debentures
and other non-current liabilities.

To determine the value of the developed technology, the expected future cash
flows attributable to all existing technology was discounted, taking into
account risks related to the characteristics and applications of the
technology, existing and future markets, and assessments of the life cycle
stage of the technology. The analysis resulted in a valuation for developed
technology which had reached technological feasibility and therefore was
capitalizable. The developed technology is being amortized on the straight-line
basis over its estimated useful life (two to four years) which is expected to
exceed the ratio of current revenues to the total of current and anticipated
revenues.

The value of the distribution networks and OEM agreements was determined by
considering, among other factors, the size of the current and potential future
customer bases, the quality of existing relationships with customers, the
historical costs to develop customer relationships, the expected income and
associated risks. Associated risks included the inherent difficulties and
uncertainties in transitioning business relationships and risks related to the
viability of and potential changes to future target markets.

The value of trademarks was determined by considering, among other factors, the
assumption that in lieu of ownership of a trademark, a company would be willing
to pay a royalty in order to exploit the related benefits of such trademark.

The value of the assembled workforce was derived by estimating the costs to
replace the existing employees, including recruiting, hiring, and training
costs for each category of employee.

The value allocated to projects identified as in-process technology at Newco,
TeleBackup and Seagate Software (for the minority interest acquired) will be
charged to expense in the period the transactions close. These write-offs are
necessary because the acquired technologies have not yet reached technological
feasibility and have no future alternative uses. Seagate Software expects that
the acquired in-process research and development will be successfully
developed, but there can be no assurance that commercial viability of these
products will be achieved.

The value of the purchased in-process technology for Newco and TeleBackup was
determined by estimating the projected net cash flows related to such products,
including costs to complete the

77
<PAGE>

NOTES TO SEAGATE SOFTWARE
UNAUDITED PRO FORMA
CONDENSED FINANCIAL STATEMENTS--(CONTINUED)

development of the technology and the future revenues to be earned upon
commercialization of the products. These cash flows were then discounted back
to their net present value. The projected net cash flows from such projects
were based on management's estimates of revenues and operating profits related
to such projects.

Goodwill is determined based on the residual difference between the amount paid
and the values assigned to identified tangible and intangible assets.

2. PRO FORMA NET LOSS PER SHARE

The Seagate Software Unaudited Pro Forma Condensed Statements of Operations
have been prepared as if the Veritas Transaction, the TeleBackup Purchase, and
the purchase of shares of Seagate Software common stock by Seagate Technology
had occurred at the beginning of the periods presented.

The pro forma weighted average shares outstanding assumes the following:

<TABLE>
<S> <C>
Estimated exercises of Seagate Software stock options
prior to the closing date that will be repurchased by
Seagate Technology............................................ 1,833,079
Outstanding shares held by current employees estimated to
be purchased by Seagate Technology............................ 467,000
Outstanding shares held by former employees all purchased
by Seagate Technology......................................... 256,052
Outstanding shares currently held by Seagate Technology........ 62,500
---------
Total common shares outstanding.............................. 2,618,631
=========
</TABLE>

3. PRO FORMA ADJUSTMENTS

The Seagate Software Unaudited Pro Forma Statements give effect to the
following pro forma adjustments:

(1)Equity in income of Newco computed at approximately 41% based on
estimated outstanding shares of Newco owned by Seagate Software prior to
the effect of the amortization of intangible assets, including goodwill,
associated with the NSMG combination and TeleBackup Purchase.

(2)To reflect the amortization of intangibles and goodwill related to the
Veritas Transaction.

(3)To reflect the impact on Seagate Software's equity in the amortization
of intangibles and goodwill related to the TeleBackup Purchase by Newco.

(4)To reflect the change in book/tax basis differences related to the
investment in Newco.

(5)To reflect the provision of income taxes for Seagate Software's equity
in the amortization of intangibles and goodwill related to the TeleBackup
Purchase.

78
<PAGE>

NOTES TO SEAGATE SOFTWARE
UNAUDITED PRO FORMA
CONDENSED FINANCIAL STATEMENTS--(CONTINUED)

(6)To reflect the amortization of developed technology and intangibles and
goodwill associated with the purchase of Seagate Software shares by Seagate
Technology. The purchase of the minority interest by Seagate Technology is
recorded using fair values and is reflected as a capital contribution to
Seagate Software by Seagate Technology and offsetting compensation expense
or purchased in-process research and development and intangibles recorded
by Seagate Software.

(7) To reflect the reduction of deferred taxes associated with intangible
assets related to the acquisition of Seagate Software shares by Seagate
Technology.

(8)To reclassify a loan receivable from Seagate Technology and affiliates
to a loan payable to Seagate Technology and affiliates.

(9)To reclassify the debit balance in accrued income taxes payable to other
current assets.

(10) Deferred income tax liability provided on recognition of pro rata
gain.

(11) Contributed capital and compensation expense related to the purchase
of Seagate Software common stock in exchange for Seagate Technology common
stock.

(12) Write-off of in-process research and development related to the
Veritas transation.

(13) To eliminate group equity from NSMG.

(14) To record purchased in-process research and development, intangibles
and goodwill, deferred taxes and a capital contribution associated with the
purchase of Seagate Software common stock by Seagate Technology.

(15) To record the purchase of Seagate Software common stock by Seagate
Technology.

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<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS OF SEAGATE SOFTWARE

CERTAIN FORWARD-LOOKING INFORMATION

Certain statements in this Management's Discussion and Analysis of Financial
Condition and Results of Operations of Seagate Software ("MD&A") and contained
elsewhere in this Offering Circular/Prospectus are forward-looking statements
based on current expectations, and entail various risks and uncertainties that
could cause actual results to differ from those projected in such forward-
looking statements. Certain of these risks and uncertainties are set forth
below in the section entitled "Factors Affecting Future Operating Results."

OVERVIEW

Seagate Software develops and markets software products and provides related
services enabling business users and IT professionals to manage enterprise
information. Headquartered in Scotts Valley, California, Seagate Software has
over 40 offices and operations in 17 countries worldwide. Following the Veritas
Transaction, Seagate Software will have 31 offices and operations in
16 countries worldwide. Seagate Software is a majority-owned and consolidated
subsidiary of Seagate Technology a data technology company that provides
products for storing, managing and accessing digital information on computer
systems. As of October 2, 1998, Seagate Technology and one of its subsidiaries
held 99.6% of Seagate Software's outstanding capital stock. On a fully
converted basis, the outstanding minority interests of Seagate Software
amounted to approximately 18.2%, which consisted of common stock, options to
purchase its common stock issued pursuant to the 1996 Stock Option Plan (the
"Option Plan") and common stock subject to repurchase. Such options and stock
are held by certain current and former employees, directors and consultants of
Seagate Software and Seagate Technology.

Seagate Software was incorporated in Delaware in November 1993 and commenced
operations in May 1994 pursuant to Seagate Technology's merger with Crystal
Computer Services, Inc., a company engaged in developing and marketing report
writing software. From August 1994 to June 1996, Seagate Technology acquired
eight software companies, which were engaged in developing and marketing
business intelligence ("BI") or network and/or storage management software
products. In February 1996, Seagate Technology merged with Conner Peripherals,
Inc. ("Conner") in a transaction accounted for as a pooling-of-interests. In
connection with the merger, Seagate Technology purchased the outstanding
minority interests in Conner's storage management software operations under
Arcada Holdings, Inc. ("Arcada").

In April 1996, Seagate Technology consolidated its software operations into
Seagate Software. In June 1998, Seagate Software acquired Eastman Software
Storage Management Group, Inc. ("Eastman"), a company engaged in developing,
producing and marketing hierarchical storage management ("HSM") products for
the Windows NT platform. The purchase price of approximately $10,000,000 was
paid in cash. Seagate Software accounted for the acquisition using the purchase
method, and the results of operations of Eastman are only included in Seagate
Software's operations since the acquisition was completed.

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<PAGE>

On October 5, 1998, Seagate Software signed a definitive agreement to
contribute its NSMG business to a new holding company (Newco) that will also
acquire Veritas. See "Notes to Seagate Software, Inc. Consolidated Financial
Statements--Subsequent Event."

Seagate Software expects to incur certain expenses in connection with the
contribution of NSMG to Newco. These expenses include a substantial one-time
write-off of in-process research and development during fiscal 1999 as well as
amortization of goodwill and intangibles for periods up to four years and
amortization of Seagate Software's portion of the amortization related to its
acquisition of Newco's stock and the consolidation of Newco's amortization of
its balance sheet items on a pro rata basis in fiscal 1999 and over the next
three to five years. Seagate Software also expects to record a substantial gain
on the sale of NSMG.

NSMG comprised approximately 53% of consolidated assets, 60% of consolidated
revenues, and (43)% of consolidated net loss at and for the fiscal year ended
1998 (60% of consolidated assets, 65% of consolidated revenues, and 493% of
consolidated net income at and for the first fiscal quarter of 1999). If the
exchange with Newco is consummated along the lines currently contemplated, it
will result in a substantial reduction in ongoing consolidated revenues and
will result in net losses in periods subsequent to the exchange resulting from
the amortization of intangible assets and goodwill.

Seagate Software operates and reports financial results on a fiscal year of 52
or 53 weeks ending on the Friday closest to June 30. Accordingly, fiscal 1998
was 53 weeks and ended on July 3, 1998 and fiscal 1999 will be 52 weeks and
will end on July 2, 1999. All references to years in this MD&A represent fiscal
years unless otherwise noted.

THREE MONTHS ENDED OCTOBER 2, 1998 VERSUS THREE MONTHS OCTOBER 3, 1997

Revenues. Seagate Software's revenues are primarily derived from the sale of
product licenses, software maintenance, technical support, training and
consulting. During the first quarter of 1999, Seagate Software began
recognizing license revenues in accordance with the American Institute of
Certified Public Accountants Statement of Position 97-2, "Software Revenue
Recognition". Revenues from software license agreements are generally
recognized at the time of product delivery, provided that fees are fixed or
determinable, evidence of an arrangement exists, collectibility is probable and
Seagate Software has vendor-specific objective evidence of fair value. Service
revenues from customer maintenance fees for ongoing customer support and
product updates are recognized ratably over the maintenance term, which is
typically 12 months. Service revenues from training and consulting are
recognized when such services are performed.

Total revenues increased 19% in the three months ended October 2, 1998, to
$74.9 million from $63.0 million for the three months ended October 3, 1997.
Licensing revenues increased 15% to $60.8 million for the three months ended
October 2, 1998 from $52.8 million for the three months ended October 3, 1997.
The increase in licensing revenues over the comparable year-ago quarter was
primarily due to a net increase in the number of NSMG product licenses sold for
sales of NSMG's Backup Exec for Windows NT and Desktop Management Suite and
IMG's Crystal Reports and Crystal Info products. Maintenance, support, and
other revenues increased 37% to $14.0 million for the three months ended
October 2, 1998 from $10.2 million for the three months ended October 3,

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<PAGE>

1997. The increase in maintenance, support and other revenues over the
comparable year-ago quarter was primarily due to increases in training and
consulting revenues resulting from a larger installed customer base.
Additionally, Seagate Software continued to expand both its indirect and direct
sales channels. Revenues from indirect sales channels increased 25% to $53.0
million in the three months ended October 2, 1998 from $42.2 million in the
three months ended October 3, 1997. Revenues from direct sales channels
increased 5% to $21.9 million in the three months ended October 2, 1998 from
$20.8 million in the three months ended October 3, 1997.

Cost of Revenues. The cost of revenues consists of amortization of acquired
developed technology, royalties, product packaging, documentation, duplication,
production and the cost of maintenance, consulting support and other services.
Acquired developed technology is amortized based on the greater of the
straight-line method over its estimated useful life (30 to 48 months) or the
ratio of current revenues to total current and anticipated future revenues.
Cost of revenues declined 10% to $12.4 million in the three months ended
October 2, 1998 from $13.8 million in the three months ended October 3, 1997.
The cost of license revenue as a percent of license revenue declined to 5% in
the three months ended October 2, 1998 from 10% in the comparable year-ago
quarter. This decrease over the comparable year-ago quarter was primarily due
to a charge of $1 million to reserve for obsolete inventory during the three
months ended October 3, 1997. Reductions in product packaging and documentation
costs, resulting from a shift in mix to CD-ROMs from disks and increased sales
of higher margin server products, also contributed to the decrease. The
increase in the cost of maintenance, support and other revenues over the
comparable year-ago quarter was primarily due to expansion of Seagate
Software's professional services work force necessary to support the growth in
training and consulting revenues. The 27% decrease in the amortization of
developed technology over the three months ended October 3, 1997 was primarily
due to certain intangible assets that were fully amortized during or at the
start of the first quarter of fiscal 1999.

Sales and Marketing. Sales and marketing expenses consist primarily of
personnel-related expenses, advertising, sales and marketing promotions and
customer technical support costs. Total sales and marketing expenses increased
25% to $36.0 million in the three months ended October 2, 1998 from $28.7
million in the three months ended October 3, 1997. The increase in sales and
marketing expenses over the comparable year-ago quarter was primarily due to
expansion of Seagate Software's sales force and increases in advertising,
promotion and technical support costs necessary to support revenue growth,
particularly outside of North America. As a percentage of total revenues, total
sales and marketing expenses were 48% and 46% in the three months ended October
2, 1998 and October 3, 1997, respectively.

Research and Development. Research and development expenses consist primarily
of personnel-related expenses, depreciation of development equipment and
facilities and occupancy costs. In accordance with Statement of Financial
Accounting Standards No. 86, "Accounting for the Costs of Computer Software to
be Sold, Leased or Otherwise Marketed," software development costs are expensed
as incurred until technological feasibility has been established, at which time
such costs are capitalized until the product is available for general release
to customers. To date, the establishment of technological feasibility of
Seagate Software's products and general release of such software has
substantially coincided. As a result, software development costs qualifying for
capitalization have been insignificant. Total research and development expenses
increased 12% to $12.8 million in the

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<PAGE>

three months ended October 2, 1998 from $11.4 million in the three months ended
October 3, 1997. The increase in research and development expenses over the
comparable year-ago quarter was primarily due to increases in personnel and
related expenses, many specifically related to the Eastman acquisition,
necessary to support new product development and localization costs. As a
percentage of total revenues, research and development expenses were 17% and
18% in the three months ended October 2, 1998 and October 3, 1997,
respectively.

General and Administrative. General and administrative expenses consist
primarily of personnel-related expenses for finance, legal, information
technology, human resources and general management, fixed asset provisions and
outside services. Total general and administrative expenses decreased 2% to
$8.9 million in the three months ended October 2, 1998 from $9.1 million in the
three months ended October 3, 1997. The decrease over the comparable year-ago
quarter was primarily due to management's efforts to reduce general management
and administrative costs. As a percentage of total revenues, general and
administrative expenses were 12% and 14% in the three months ended October 2,
1998 and October 3, 1997, respectively.

Amortization of Goodwill and Other Intangibles. Goodwill represents the excess
of the purchase price of acquired companies over the estimated fair values of
the tangible and intangible net assets acquired. Goodwill is amortized on a
straight-line basis over six to seven years. Other intangible assets consist of
acquired trademarks, assembled workforces, distribution networks, developed
technology, customer bases, and covenants not to compete. Amortization of other
intangibles, other than acquired developed technology, which is included in the
cost of revenues, is provided based on the straight-line method over the
respective useful lives of the assets ranging from one to five years. Total
amortization of goodwill and other intangibles decreased 7% to $3.2 million in
the three months ended October 2, 1998 from $3.5 million in the three months
ended October 3, 1997. The decrease in the amortization of goodwill and other
intangibles over the comparable year-ago quarter was primarily due to decreases
in amortization expense based on certain amounts becoming fully amortized
during or as of the start of the first fiscal quarter of 1999, partially offset
by increases in amortization expense due to goodwill acquired as part of the
Eastman acquisition. As a percentage of total revenues, amortization of
goodwill and other intangibles were 4% and 6% in the three months ended October
2, 1998 and October 3, 1997, respectively.

Interest Expense and Other, Net. Interest expense decreased 48% to $156,000 in
the three months ended October 2, 1998 from $300,000 in the three months ended
October 3, 1997. The decrease in interest expense over the comparable year-ago
quarter was primarily due to a lower level of outstanding borrowings from
Seagate Technology. Other income, net increased 184% to $468,000 in the three
months ended October 3, 1998 from $165,000 in the three months ended October 2,
1997 primarily due to foreign currency translation gains resulting from Seagate
Software's Canadian operations.

Income Taxes. Seagate Software expects its annual effective tax rate on
anticipated operating income for fiscal 1999 (see "Subsequent Event") to
approximate 55% absent the effects, if any, of the anticipated contribution of
Seagate Software's NMSG business to Veritas. The projected effective tax rate
exceeds the U.S. statutory rate primarily due to the amortization of goodwill
and certain other purchased intangible assets that is not deductible for tax
purposes, expected foreign losses in

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<PAGE>

certain jurisdictions for which no tax benefit can be recognized currently,
and foreign taxes on certain earnings generated in higher tax rate
jurisdictions. This expected annual effective tax rate of 55% has been used to
record the provision for income taxes for the three month period ended October
2, 1998 compared with a 17% effective tax rate, used to record the benefit for
income taxes for the three month period ended October 3, 1997. The effective
tax rate used to record the benefit for income taxes for the three month
period ended October 3, 1997 was less than the U.S. statutory rate primarily
due to increases in the valuation allowance for deferred tax assets and the
amortization of nondeductible goodwill.

Seagate Software is included in the consolidated federal and certain combined
and consolidated state and foreign income tax returns of Seagate Technology,
Seagate Software's majority stockholder. Seagate Technology and Seagate
Software have entered into a tax sharing agreement ("the Tax Allocation
Agreement"). Pursuant to certain terms of the Tax Allocation Agreement,
Seagate Software's ability to recognize the tax benefits of certain net
operating loss carryforwards and foreign and domestic tax credits can be
impacted by Seagate Technology's anticipated operating income for fiscal 1999.
Accordingly, Seagate Software's expected annual effective tax rate of 55% on
anticipated operating income may be subject to adjustment in future quarters.

FISCAL YEAR 1998 VERSUS FISCAL YEAR 1997

Revenues. Total revenues increased 35% to $293,226,000 in 1998 from
$216,950,000 in 1997. License revenues grew 33% to $243,285,000 in 1998 from
$183,556,000 in 1997 due primarily to increased sales of Seagate Backup Exec,
NSMG's leading storage management product featuring backup and restore
solutions for Microsoft's Windows NT Server and Windows NT Workstation
operating systems. License revenue growth was also due to increased sales of
Seagate Crystal Reports and Seagate Crystal Info, IMG's leading business
intelligence products featuring enterprise report writing and scheduling
technologies. Seagate Software continued to expand both its indirect and
direct sales channels. Indirect revenues, which include distribution and OEM
sales, increased 37% to $203,273,000 in 1998 from $147,991,000 in 1997 while
direct revenues, which include corporate licensing and other direct sales to
users, increased 30% to $89,953,000 in 1998 from $68,959,000 in 1997. Revenues
increased within the Americas 30% to $198,820,000 in 1998 from $153,368,000 in
1997 and internationally 48% to $94,407,000 in 1998 from $63,582,000 in 1997,
which was due in part to Seagate Software's continued expansion of its
European distribution channel. Revenues from Seagate Technology decreased 5%
primarily due to fewer unit shipments to Seagate Technology's OEM tape drive
operations. Total maintenance, support and other revenues grew 61% to
$44,472,000 in 1998 from $27,632,000 in 1997 primarily due to increases in the
sales of maintenance agreements and training and consulting services resulting
from a larger installed customer base.

During 1998 Seagate Software generated export revenues from the United States
of approximately $66,250,000. Revenues and expenses from Seagate Software's
operations outside of the Americas were approximately $26,809,000 and
$52,143,000, respectively, as translated to the U.S. dollar from foreign
currencies. The principal currency for such operations is the British pound.
Seagate Software believes that its exposure to foreign currency fluctuations
is not material and does not engage in foreign currency hedging programs.

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<PAGE>

Cost of Revenues. The decrease in the cost of license revenues to $16,963,000
in 1998 from $17,535,000 in 1997, representing 7% and 10% of related license
revenues, respectively, and the decrease in the cost of license revenues from
Seagate Technology was due primarily to reductions in product packaging and
documentation costs resulting from a shift in mix to CD-ROMs from disks and
increased sales of higher-margin server products. The increase in the cost of
maintenance, support and other revenues to $19,687,000 in 1998 from $6,560,000
in 1997, representing 44% and 24% of related service revenues, respectively,
was primarily due to expansion of Seagate Software's professional services
workforce necessary to support the growth in training and consulting revenues.
The decrease in the amortization of developed technology to $13,271,000 in 1998
from $21,860,000 in 1997, representing 5% and 10% of total revenues,
respectively, was primarily due to write-downs of certain developed
technologies amounting to approximately $6,918,000 during 1997 as a result of
asset values that had become impaired based on reductions in estimated future
cash flows.

Sales and Marketing. The increase in sales and marketing expenses to
$129,343,000 in 1998 from $107,706,000 in 1997, representing 44% and 50% of
total revenues, respectively, was primarily due to expansion of Seagate
Software's sales force and increases in advertising, promotion and technical
support costs necessary to support revenue growth. Such increases were
partially offset by reductions in workforce in 1997 within the NSMG business
unit due to facility consolidations.

Research and Development. The increase in research and development expenses to
$47,173,000 in 1998 from $42,842,000 in 1997, representing 16% and 20% of total
revenues, respectively, was primarily due to increases in personnel and related
expenses, new product development and localization costs, partially offset by
facility consolidations and reductions in workforce in 1997 within the NSMG
business unit.

General and Administrative. The increase in general and administrative expenses
to $37,124,000 in 1998 from $36,861,000 in 1997, representing 13% and 17% of
total revenues, respectively, was primarily due to increases in personnel and
related expenses and legal costs, partially offset by facility consolidations
and reductions in workforce in 1997 within the NSMG business unit.

Write-off of In-Process Research and Development. As a result of its
acquisitions, Seagate Software has acquired a number of projects and products
that were considered in-process research and development on the date of
acquisition. Seagate Software determined that purchased in-process technology
had not reached technological feasibility as no working model or detail program
design existed at the time of purchase, and no alternative uses had been
identified. Accordingly, in-process research and development was expensed when
acquired. During 1998, $6,800,000 of in-process research and development was
written off in connection with the purchase of Eastman Software Storage
Management Group, Inc. During 1997, total write-offs of in-process research and
development were $2,613,000. Seagate Software incurred this charge in
connection with additional amounts paid with respect to the June 1996
acquisition of Holistic Systems, Ltd. ("Holistic").

Amortization of Goodwill and Other Intangibles. The decrease in the
amortization of goodwill and other intangibles to $15,421,000 in 1998 from
$27,202,000 in 1997, representing 5% and 13% of total revenues, respectively,
was primarily due to decreases in amortization expense based on lower levels of
intangible assets and write-downs and write-offs of the carrying value of
goodwill and other

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<PAGE>

intangible assets of approximately $1,900,000 in 1998 versus $10,259,000 in
1997 as a result of asset values that had become impaired based on reductions
in estimated future cash flows.

Restructuring. Restructuring charges were $2,524,000 in 1997, representing 1%
of total revenues. The restructuring charges were incurred as a result of
reorganizations and closures within the NSMG business unit for the reduction of
personnel, write-off or write-down of equipment, intangibles and other assets,
closure of duplicate facilities, fees for legal and accounting services,
contract cancellations and other related expenses.

Unusual Items. Unusual items of $13,446,000 were recognized during 1997,
representing 6% of total revenues. In connection with the June 1996 acquisition
of Holistic, $18,000,000 of funds were placed in escrow pending the outcome of
certain purchase price contingencies. Prior to the expiration of the
contingency period, Seagate Software elected to release the funds to the
Holistic shareholders even though certain contingencies had not been met. Of
the $18,000,000 total contingency payment, Seagate Software recorded
$13,446,000 as compensation expense for amounts paid to former Holistic
shareholders who were employees of Seagate Software and recorded the remaining
$4,554,000 paid to non-employee shareholders as additional purchase price.

Seagate Software released the funds prior to the expiration of the contingency
period, because in order to position the IMG business unit for future growth
and product development, Seagate Software needed to begin an aggressive plan to
integrate the operations of Holistic. These activities resulted in the
diversion of the attention of certain Holistic employees from their
responsibilities at Holistic. As such, Holistic's ability to achieve the
purchase price contingencies necessary to trigger the $18,000,000 contingency
payment was impaired. Seagate Software believed that the Holistic employees
should not be penalized, because they had sacrificed achievement of their
individual goals in order to meet the overall needs of Seagate Software.
Accordingly, Seagate Software elected to make the full payment of $18,000,000.

Interest and Other, Net. Total interest and other, net decreased to a net
expense of $10,000 in 1998 from a net expense of $2,381,000 in 1997,
representing 0% and 1% of total revenues, respectively. The decrease in
interest and other, net was primarily due to lower interest expense on a lower
level of outstanding borrowings from Seagate Technology and an increase in
foreign exchange gains.

Income Taxes. Seagate Software recorded a $15,385,000 provision for income
taxes at an effective rate of 223% in 1998 compared with a $8,714,000 benefit
from income taxes at an effective rate of 13% for 1997. The effective rate used
to record the provision for income taxes in 1998 was greater than the statutory
rate primarily due to foreign tax rates that were in excess of the U.S.
statutory tax rate, increases in the valuation allowance for deferred tax
assets and goodwill amortization for certain acquisitions that were not
deductible for tax purposes. The effective rate used to record the benefit from
income taxes in 1997 was less than the statutory rate primarily due to
increases in the valuation allowance for deferred tax assets and goodwill
amortization for certain acquisitions that were not deductible for tax
purposes.

FISCAL YEAR 1997 VERSUS FISCAL YEAR 1996

Revenues. Total revenues increased 53% to $216,950,000 in 1997 from
$141,586,000 in 1996. The increase in licensing revenues was due in part to
growth in the market for business intelligence and

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IT infrastructure management software products and related services, expansion
of Seagate Software's European distribution channels and market demand for
NSMG's Seagate Backup Exec, a storage management product that supports
Microsoft's Windows NT operating system. The increase in maintenance, support
and other revenues was due in part to higher training and consulting revenues
resulting from a larger customer base. Additionally, the 1997 results included
a full year of operations for the 1996 acquisitions of OnDemand Software, Inc.
("OnDemand") and Holistic. These 1996 acquisitions accounted for increases in
licensing, licensing from Seagate Technology and maintenance, support and other
revenues of approximately $26,039,000, $842,000 and $14,758,000, respectively,
in 1997 as compared with 1996.

During 1997 Seagate Software generated export revenues from the United States
of approximately $44,129,000. Revenues and expenses from Seagate Software's
operations outside of the Americas were approximately $18,896,000 and
$23,938,000, respectively, as translated to the U.S. dollar from foreign
currencies. The principal currency for such operations is the British pound.

Cost of Revenues. The cost of revenues increased to $47,789,000 in 1997 from
$29,019,000 in 1996, representing 22% and 20% of total revenues, respectively.
The majority of the increase in absolute dollars was due to an increase in the
amortization of acquired developed technology due to a higher level of
intangible assets and an increase in IMG's costs related to service revenues
and related costs resulting from the inclusion of a full year of operations in
1997 of the 1996 acquisition of Holistic. Additionally, in 1997 Seagate
Software wrote off and wrote down certain developed technologies amounting to
approximately $6,918,000 as a result of asset values that had become impaired
based on Seagate Software's phasing out of certain products.

Sales and Marketing. Sales and marketing costs increased to $107,706,000 in
1997 from $71,129,000 in 1996, representing 50% of total revenues in both
periods. The increase in absolute dollars was due to increased personnel,
advertising and promotion costs necessary to support revenue growth and the
expansion of Seagate Software's European distribution channel. Additionally,
the 1997 results included a full year of operations for Seagate Software's 1996
acquisitions compared with a partial year of operations in 1996.

Research and Development. Research and development expenses increased to
$42,842,000 in 1997 from $36,897,000 in 1996, representing 20% and 26% of total
revenues, respectively. The increase in absolute dollars was primarily due to
increases in personnel and related expenses, new product development and
localization costs, partially offset by facility consolidations and reductions
in workforce within the NSMG business unit. Additionally, the 1997 results
included a full year of operations for Seagate Software's 1996 acquisitions
compared with a partial year of operations in 1996.

General and Administrative. Total general and administrative expenses increased
to $36,861,000 in 1997 from $22,852,000 in 1996, representing 17% and 16% of
total revenues, respectively. The increase in absolute dollars was primarily
due to increases in personnel and related expenses and increases in corporate
administrative expenses and information systems necessary to support Seagate
Software's growth. Additionally, the 1997 results included a full year of
operations for Seagate Software's 1996 acquisitions compared with a partial
year of operations in 1996.

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Write-off of In-Process Research and Development. During 1997, total write-offs
of in-process research and development were $2,613,000. Seagate Software
incurred this charge in connection with additional amounts paid with respect to
the June 1996 acquisition of Holistic. During 1996, total write-offs of in-
process research and development were $96,958,000, which resulted from Seagate
Software's 1996 acquisitions.

Amortization of Goodwill and Other Intangibles. Amortization of goodwill and
other intangibles increased to $27,202,000 in 1997 from $13,035,000 in 1996,
representing 13% and 9% of total revenues, respectively. The increase in
absolute dollars was primarily due to increased amortization expense on a
higher level of intangible assets and write-downs and write-offs of the
carrying value of goodwill and other intangible assets of approximately
$10,259,000 based on shortfalls of estimated future cash flows.

Restructuring. Restructuring charges were $2,524,000 in 1997 and $9,502,000 in
1996, representing 1% and 7% of total revenues, respectively. The restructuring
charges were incurred in both years as a result of reorganizations and closures
within the NSMG business unit for the reduction of personnel, write-off or
write-down of equipment, intangibles and other assets, closure of duplicate
facilities, fees for legal and accounting services, contract cancellations and
other related expenses.

Unusual Items. In connection with the June 1996 acquisition of Holistic,
Seagate Software recorded $13,446,000 in fiscal 1997, representing 6% of total
revenues, as compensation expense for amounts paid to former Holistic
shareholders who were employees of Seagate Software.

Interest and Other, Net. Total interest and other, net increased to a net
expense of $2,381,000 in 1997 from a net expense of $610,000 in 1996,
representing 1% and 0% of total revenues, respectively. The increase in
interest and other, net was primarily due to higher interest expense on a
higher level of outstanding borrowings from Seagate Technology.

Income Taxes. Seagate Software recorded a $8,714,000 benefit from income taxes
at an effective rate of 13% in 1997 compared with a $8,748,000 benefit from
income taxes at an effective rate of 6% for 1996. The effective rate used to
record the benefit from income taxes in each fiscal year was less than the
statutory rate primarily due to increases in the valuation allowance for
deferred tax assets and charges in 1996 for in-process research and development
for certain acquisitions that were not deductible for tax purposes.

LIQUIDITY AND CAPITAL RESOURCES

Seagate Software's total cash was $10,418,000 and $15,130,000 as of October 2,
1998 and July 3 1998, respectively. The decrease in cash was primarily due to a
reduction in Seagate Software's loan payable balance to Seagate Technology and
purchases of equipment, leasehold improvements and intangible assets, partially
offset by cash provided by operating activities and the sale of common stock.
Seagate Software's cash is maintained in highly liquid operating accounts and
primarily consists of bank deposits.

Seagate Software's operations have been financed by cash flows from operating
activities and borrowings from Seagate Technology. Such borrowings are
available to Seagate Software under a

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Revolving Loan Agreement between Seagate Software and Seagate Technology. Under
the Revolving Loan Agreement, Seagate Technology finances certain of Seagate
Software's working capital requirements. The Revolving Loan Agreement, which
provides for maximum borrowings of up to $60,000,000, is renewable every two
years and expires on July 3, 2000. Interest is paid at the LIBOR rate plus 2%
per annum on such borrowings (7.375% at October 2, 1998). The loan balance was
$3,895,000 as of October 2, 1998.

In addition to the Revolving Loan Agreement with Seagate Technology, certain
foreign subsidiaries have line of credit facilities with third party financial
institutions. These line of credit facilities provide for additional borrowings
of up to an equivalent of approximately $1,139,000 at October 2, 1998. Interest
rates payable on borrowings are based on local bank prime interest rates. At
October 2, 1998, there were no outstanding borrowings under any of these lines
of credit.

During the three months ended October 2, 1998, Seagate Software made
investments totaling approximately $1,918,000 for new office facilities,
leasehold improvements, computers, furniture and office equipment. Seagate
Software presently anticipates it will make investments in 1999 of
approximately $15,000,000 in equipment and leasehold improvements.
Additionally, product development activities may include cash used to acquire
technology. Seagate Software expects that such investments will be funded from
existing cash balances and cash flows from operations.

Seagate Software believes its current cash balances, its available borrowings
from Seagate Technology and cash flows generated from Seagate Software's
operations will be sufficient to meet its anticipated cash needs for working
capital and capital expenditures for at least the next 12 months. Furthermore,
Seagate Software anticipates that future operating and investing activities may
be financed by additional borrowings from Seagate Technology, equity financing
or other sources. Seagate Software believes that additional financing from
Seagate Technology will be available at a reasonable cost.

NEW ACCOUNTING PRONOUNCEMENTS

Seagate Software intends to adopt Statement of Financial Accounting Standards
No. 131, "Disclosures about Segments of an Enterprise and Related Information"
("SFAS 131") during fiscal 1999. This standard will require additional
disclosure, but will not have a material effect on Seagate Software's financial
position or results of operations. SFAS 131 changes the way companies report
segment information and requires segments to be determined based on how
management measures performance and makes decisions about allocating resources.
SFAS 131 will first be reflected in Seagate Software's 1999 Annual Report on
Form 10-K.

In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use" ("SOP 98-1"). SOP 98-1 provides
guidance on capitalization of the costs incurred for computer software
developed or obtained for internal use. It also provides guidance for
determining whether computer software is internal-use software and on
accounting for the proceeds of computer software originally developed or
obtained for internal use and then subsequently sold to the public. Seagate
Software has not yet determined the impact, if any, of adopting this statement.
The disclosures

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prescribed by SOP 98-1 will be effective for Seagate Software's consolidated
financial statements for the fiscal year ending June 30, 2000.

In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"). This statement establishes accounting and reporting standards for
derivative instruments and for hedging activities. It requires that derivatives
be recognized in the balance sheet at fair value and specifies the accounting
for changes in fair value. SFAS 133 is effective for all fiscal quarters of
fiscal years beginning after June 15, 1999, and will be effective for Seagate
Software's fiscal year 2000. Seagate Software generally does not use derivative
financial instruments.

FACTORS AFFECTING FUTURE OPERATING RESULTS

Risks from the Contribution of the Network & Storage Management Group. Seagate
Technology consolidated its software businesses into a single entity called
Seagate Software in 1996. Seagate Software's business currently consists of two
primary divisions, NSMG and IMG. Seagate Software announced on October 5, 1998
that Seagate Software will contribute its NSMG business to a newly formed
company, Newco, that will also acquire Veritas. Seagate Software and Seagate
Software optionees who will become employees of Newco will receive
approximately 40% of the fully-diluted equity in Newco.

Seagate Software faces a number of risks prior to and after the closing of the
contribution of NSMG including:

. Seagate Software's management resources may be distracted from day to day
operations by the transaction;

. employees of IMG may be distracted by concerns about whether Seagate Software
continues to operate that business or spin it off;

. NSMG customers may delay or cancel orders due to uncertainty about the
transaction;

. the ongoing OEM relationship with NSMG and Seagate Technology's tape drive
operations may be disrupted;

. Seagate Software has agreed not to compete in certain storage management
software businesses for a specified period of time after the closing and may
not be able to benefit from future opportunities in that market;

. Seagate Software will not have control over the management of Newco, although
initially Seagate Software will have two representatives on its board of
directors;

. Seagate Software will be limited from liquidating its interest in Newco for a
certain period of time. Thereafter, if Seagate Software chooses to do so,
Seagate Software will be required to sell its interest in Newco in increments
to comply with certain SEC rules or to bear the expense of filing a
registration statement; and

. Seagate Software's IMG division has shared certain employees with NSMG who
have provided accounting, legal, IT, and other services to Seagate Software.
Many of these employees will become employees of Newco. The IMG division may
experience delay and difficulty in conducting its day to day operations until
replacement services have been fully implemented.

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Potential Fluctuations in Annual and/or Quarterly Operating Results. Seagate
Software often experiences a high volume of sales at the end of the quarter.
Therefore, it may be late in the quarter before Seagate Software is able to
determine that its costs are too high in relation to its sales. If this were to
happen, Seagate Software would not be able to reduce these costs and,
consequently, Seagate Software's net income would be reduced or its net loss
increased. In addition, Seagate Software's operating results have been and may,
in the future, be subject to significant quarterly fluctuations as a result of
a number of other factors including:

. the timing of orders from and shipment of products to major customers;

. Seagate Software's ability to develop, introduce and market new products and
product enhancements in a timely fashion;

. changes in the prices of Seagate Software's products and its competitors'
products;

. Seagate Software's ability to fill orders received within a given quarter;

. Seagate Software's customers' preference for competing technologies in lieu
of its products;

. Seagate Software's inability to reduce its costs in relation to its revenues
(because Seagate Software ships its products shortly after it receives orders
and operates with no backlog);

. the impact of changes in foreign currency exchange rates on the cost of
Seagate Software's products and the effective price of such products to
foreign consumers;

. competition and consolidation in Seagate Software's industry; and

. general economic conditions.

Revenue Concentration. Seagate Software currently obtains most of its revenue
from a limited number of software products and anticipates this to be the case
for the foreseeable future. Seagate Software's new products must be accepted by
customers in order for Seagate Software to be successful. If Seagate Software's
products are not purchased as a result of competition, technological change or
other factors, then its business, operating results and financial condition
would be materially adversely affected.

Seagate Software's software products have a fixed life cycle that is difficult
to estimate. If Seagate Software does not develop and introduce new products
before its existing products have completed their life cycles, then Seagate
Software will be unable to sustain or increase its level of sales. Seagate
Software cannot be sure that it will continue to be successful in marketing its
key products or any new products, applications or product enhancements.

Sales to a small number of customers generate a disproportionate amount of
Seagate Software's revenues. For example, Seagate Software derived 24% of its
revenues from sales to its top customer, Ingram Micro Inc. ("Ingram"), in the
three months ended October 2, 1998. Seagate Software expects this trend to
continue after the close of the Veritas Transaction. If any significant
customer, reduces its purchases from Seagate Software, its business, financial
condition, and results of operations would be materially adversely affected
unless Seagate Software substantially increased sales to other customers.
Because Seagate Software's contracts with its customers do not require
customers to purchase any specified number of software licenses from Seagate
Software, Seagate Software cannot be sure that its significant customers will
continue to purchase its products at their current levels.

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Reliance on Sales Staff, Channel Partners and Strategic Relationships. Seagate
Software sells and supports its products through: its sales staff, third-party
distributors, and OEMs. Seagate Software also has a strategic relationship with
Microsoft that enables it to bundle its products with Microsoft's products, and
Seagate Software has developed and is developing certain utilities and products
to be part of Microsoft's products. If Microsoft reduces the nature and
quantity of its relationship with Seagate Software, Seagate Software's
business, operating results and financial condition would be materially
adversely affected.

Seagate Software has made significant expenditures in recent years to expand
its sales and marketing force. Seagate Software intends to continue to expand
the IMG sales and marketing force after the closing of the Veritas Transaction.
Seagate Software's future success will depend in part upon the productivity of
its IMG sales and marketing force. Seagate Software believes that its ability
to continue to attract, integrate, train, motivate and retain new sales and
marketing personnel will also affect its success. Seagate Software faces
intense competition for sales and marketing personnel in the software industry,
and Seagate Software cannot be sure that it will be successful in hiring and
retaining such personnel in accordance with its plans. Even if Seagate Software
hires and trains sufficient numbers of sales and marketing personnel, Seagate
Software cannot be sure that its recent and other planned expenses will
generate enough additional revenue to exceed these costs.

Seagate Software generates a substantial portion of its revenue by selling
products to its distributors and OEMs. Seagate Software distributors and OEMs
decide whether or not to include Seagate Software's products with those they
sell and generally can carry and sell product lines that are competitive with
Seagate Software's. Because OEMs and distributors carry other product lines and
are not required to make a specified level of purchases from Seagate Software,
Seagate Software cannot be sure that they will prioritize selling Seagate
Software's products. These distributors and OEMs are also generally entitled to
terminate Seagate Software's relationship without cause. Seagate Software's
business, financial results and operating condition following the closing of
the Veritas Transaction would be materially adversely affected if some or all
of its current distributors and OEMs discontinued selling IMG products and
Seagate Software failed to find comparable replacements.

New Product Development and Technological Change. Seagate Software's products
are used in combination with other software. Seagate Software had research and
development expenses of $36.9 million, $42.8 million, $47.1 million and $12.8
million in fiscal 1996, 1997 and 1998 and the three months ended October 2,
1998, respectively. IMG had research and development expenses of $4.4 million,
$9.3 million, $15.5 million and $3.9 million in fiscal 1996, 1997 and 1998 and
the three months ended October 2, 1998, respectively. Seagate Software's
products are used in combination with other software. The markets for Seagate
Software's products are characterized by rapidly changing technology, changing
customer needs, evolving industry standards and frequent new product
introductions. Seagate Software's future success will therefore depend on its
ability to design, develop, test and support new IMG software products and
enhancements on a timely and cost effective basis.

If Seagate Software does not respond to changing market conditions and customer
requirements by developing and introducing new IMG products in a timely manner
following the closing of the Veritas Transaction, then its business, operating
results or financial condition could be materially adversely affected.

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Competition. Seagate Software's industry, including the business intelligence
market IMG participates in, is intensely competitive and is characterized by
rapidly changing technology and evolving standards. Seagate Software expects
additional competition from other established and/or emerging companies and as
a result of future software industry consolidations. Seagate Software expects
that its competitors will offer new and existing products at lower prices if
necessary to gain or retain market share and customers. Seagate Software has
experienced and expects to continue to experience intense competition from a
number of domestic and foreign companies. Increased competition can be expected
to cause price reductions, reduced gross margins and loss of market share, any
of which could have a material adverse effect on Seagate Software's business,
operating results or financial condition. Current and potential competitors may
be able to respond more quickly to new or emerging technologies and changes in
customer requirements, or to devote greater resources to the development,
promotion, sale and support of their products than Seagate Software is able to
do.

It is possible that new competitors or alliances among Seagate Software's
competitors may emerge and rapidly acquire significant market share. In
addition, network operating system vendors could introduce new or upgrade
existing operating systems or environments that could render Seagate Software's
products obsolete and unmarketable.

Seagate Software also faces indirect competition from present and potential
customers, including Microsoft or other strategic partners, that continuously
evaluate whether to develop their own software products and components
internally or obtain them from outside sources. If Seagate Software's strategic
partners decide to develop the utilities and other products Seagate Software
has in the past provided, it could have a material adverse effect on Seagate
Software's business, results of operations and financial condition.

There can be no assurance that Seagate Software will be able to compete
successfully against current or future competitors. If Seagate Software fails
to compete successfully, its business, operating results and financial
condition may be materially adversely affected.

Acquisitions. Seagate Software intends to continue its expansion of IMG into
software through internal growth as well as acquisitions. Acquisitions involve
numerous risks including: the difficulties of integrating the operations and
products of the acquired businesses, and the potential loss of key employees or
customers of the acquired businesses. Seagate Software expects that it will
continue to incur substantial expenses as it acquires other businesses
including charges for the write-off of in-process research and development.
Seagate Software's operating results have fluctuated in the past and may
fluctuate in the future because of the timing of such write-offs. For example,
Seagate Software incurred a charge to operations in the fourth quarter of
fiscal 1998 of approximately $7 million for the write-off of in-process
research and development related to its acquisition of Eastman Software Storage
Management Group, Inc.

Risks of Systems Failures. Seagate Software operations are dependent of its
ability to protect Seagate Software's computer equipment and the information
stored in its databases from damage by catastrophic events such as fire,
natural disaster, power loss, telecommunications failures, and unauthorized
intrusion. Seagate Software believes that it has taken prudent measures to
reduce the risk of interruption in its operations. However, Seagate Software
cannot be sure that these measures

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are sufficient. Any damage or failure that causes interruptions in Seagate
Software's operations could have a material adverse effect on Seagate
Software's business, results of operations and financial condition.

Year 2000 Risks. The Year 2000 issue is the result of computer programs being
written using two digits rather than four to define the applicable year.
Computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculation causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in normal business activities.

Seagate Software considers a product to be "Year 2000 Ready" if the product's
performance and functionality are unaffected by processing of dates prior to,
during and after the year 2000, but only if all products (for example hardware,
firmware and software) used with the product properly exchange accurate date
data with it.

Seagate Software's Products. Seagate Software's products are used in numerous
operating environments. Seagate Software is assessing its products to determine
whether or not they are Year 2000 Ready. Although Seagate Software believes
certain of its software products are Year 2000 Ready, Seagate Software has
determined that certain of its software products are not and will not be Year
2000 Ready. The inability of one or more of Seagate Software's products to
properly manage and manipulate dates related to the Year 2000 could result in a
material adverse effect on its business, financial condition or results of
operations, including increased warranty costs, customer satisfaction issues
and potential lawsuits. Seagate Software is taking measures to inform its
customers that those products are not and will not be Year 2000 Ready. To
assist its customers in evaluating Year 2000 issues, Seagate Software has
developed a list of those products that are Year 2000 Ready as stand-alone
products. The list is located on Seagate Software's World Wide Web page and is
periodically updated when Seagate Software makes additional product
assessments.

Seagate Software anticipates that substantial litigation may be brought against
vendors, including Seagate Software, of all software components of systems that
are unable to properly manage data related to the Year 2000. Seagate Software's
customer agreements typically contain provisions designed to limit Seagate
Software's liability for such claims. As a result of existing or future
federal, state or local laws or ordinances or unfavorable judicial decisions,
it is possible that these measures will not provide protection from liability
claims. If any such claims are brought against Seagate Software, regardless of
their merit, Seagate Software's business, financial condition and results of
operations could be materially adversely affected from factors that include
increased warranty costs, customer satisfaction issues and the costs of
potential lawsuits.

Seagate's Systems. Seagate Software has also initiated a comprehensive program
to address Year 2000 readiness in its internal systems and with its customers
and suppliers. Seagate Software's program has been designed to address its most
critical internal systems first and to gather information regarding the Year
2000 compliance of products supplied to Seagate Software and into which Seagate
Software's products are integrated. Assessment and remediation are proceeding
in tandem, and Seagate Software intends to have its critical internal systems
Year 2000 Ready by July 3, 1999, the first day of Seagate Software's fiscal
year 2000. These activities are intended to encompass all

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major categories of systems in use by Seagate Software, including operations,
technical support, engineering, sales, finance and human resources. To date,
Seagate Software has not incurred material costs related to assessment and
remediation of Year 2000 readiness. Seagate Software is still in the process of
conducting its Year 2000 audit and therefore is unable to make a reasonable
estimate of the costs associated with Year 2000 readiness. Accordingly, no
assurance can be given that the costs required to address the Year 2000 issue
will not have a material adverse effect on Seagate Software's business,
financial condition or results of operations. The costs incurred to date
related to these programs have not been and are not expected to be material.

Seagate Software has also initiated formal communications with its significant
suppliers to determine the extent to which Seagate Software is vulnerable to
those third parties' failure to remedy their own Year 2000 issues. To date
Seagate Software has contacted its significant suppliers and has received
assurances of Year 2000 compliance from a number of those contacted. However,
most of Seagate Software's suppliers are under no contractual obligation to
provide such information to Seagate Software. Seagate Software could experience
material adverse effects on its business if it fails to fully identify all Year
2000 dependencies in Seagate Software's systems and in the systems of its
suppliers, customers and financial institutions. Those material adverse effects
could include delays in the delivery or sale of Seagate Software's products.
Therefore, Seagate Software is developing contingency plans for continuing
operations in the event such problems arise.

Customer Purchasing Patterns. Seagate Software believes that the purchasing
patterns of customer and potential customers may be affected by Year 2000
issues as companies expend significant resources to correct or patch their
current software systems for Year 2000 readiness. These expenditures may result
in reduced funds available to purchase products such as those offered by
Seagate Software, which could have a material adverse effect on Seagate
Software's business, operating results or financial condition.

Risks from International Operations. Seagate Software, including IMG, has
significant offshore operations including development facilities, sales
personnel and customer support operations. Seagate Software's offshore
operations are subject to certain inherent risks including:

. fluctuations in currency exchange rates;

. lack of acceptance of localized products;

. longer payment cycles for sales in foreign countries;

. difficulties in staffing and managing international operations;

. seasonal reductions in business activity in the summer months in Europe and
certain other countries;

. increases in tariffs, duties, price controls, other restrictions on foreign
currencies or trade barriers imposed by foreign countries;

. management of an enterprise spread over various countries;

. the burden of complying with a wide variety of foreign laws; and

. political unrest, particularly in areas in which Seagate Software has
facilities.

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These factors could have a material adverse effect on Seagate Software's
business, operating results and financial condition in the future.

Seagate Software's products are generally priced in U.S. dollars even when sold
to customers who are located abroad. The currency instability in the Asian and
other financial markets may make Seagate Software's products more expensive
than products sold by other manufacturers that are priced in one of the
affected currencies. Therefore, foreign customers may reduce purchases of
Seagate Software's products. Seagate Software anticipates that the recent
turmoil in financial markets and the recent deterioration of the underlying
economic conditions in certain countries, including those in Asia and the Far
East, may have an impact on Seagate Software's sales to customers located in or
whose end-user customers are located in those countries due to:

. the impact of currency fluctuations on the relative price of Seagate
Software's products;

. restrictions on government spending imposed by the International Monetary
Fund (the "IMF") in those countries receiving the IMF's assistance;

. customers' reduced access to working capital to fund software purchases, such
as Seagate Software's products, due to:

. higher interest rates,

. reduced bank lending due to contractions in the money supply or the
deterioration in the customer's or its bank's financial condition, or

. the inability to access other financing.

Dependence on Proprietary Technology. Seagate Software's success will be
heavily dependent on its proprietary technology. Seagate Software relies
primarily on the following to protect its proprietary rights:

. patents;

. copyrights;

. trademarks and trade secret rights;

. confidentiality procedures;

. employee and third party nondisclosure agreements; and

. licensing arrangements.

Such measures provide only limited protection.

Seagate Software also relies in part on shrink wrap licenses that are not
signed by end users and, therefore, may be unenforceable under the laws of
certain jurisdictions.

Even though Seagate Software takes these steps, someone may be able to copy or
otherwise obtain and use Seagate Software's products and technology without
authorization. Policing unauthorized use of Seagate Software's products is
difficult. Although Seagate Software cannot determine the extent of existing
piracy of its products, Seagate Software expects that software piracy will be a
persistent problem. Third parties may also develop similar technology
independently. Seagate Software believes that effective protection of
intellectual property rights is unavailable or limited in certain foreign
countries.

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Seagate Software's competitors may successfully challenge the validity or scope
of Seagate Software's patents, copyrights and trademarks. Seagate Software
cannot be sure that its patents, copyrights and trademarks will provide it with
a competitive advantage or that its competitors will not design around any
patents issued to it. IMG has one U.S. patent application, but no U.S. patents
or foreign patents or foreign patent applications pending. Seagate Software is
not aware that any of its products infringe upon the proprietary rights of
third parties, but, in the future, third parties may claim that Seagate
Software's current or future products infringe that party's rights. Seagate
Software believes that software product developers will be increasingly subject
to claims of infringement as the functionality of products in its industry
segment overlaps. If Seagate Software were subject to a claim of infringement,
regardless of its merit, such claim would have the following impacts on it that
could have a material adverse effect on Seagate Software's business, operating
results or financial condition:

. require costly litigation to resolve,

. absorb significant management time, and/or

. require Seagate Software to enter into royalty or license agreements.

Software Product Errors or Defects. Software products as complex as those
Seagate Software offers frequently contain errors or defects, especially when
first introduced or when new versions or enhancements are released. Despite
product testing, Seagate Software's products may contain defects or software
errors. If Seagate Software's products have errors, they could:

. cause a negative customer reaction that could reduce future sales;

. generate negative publicity regarding Seagate Software and its products;

. harm Seagate Software's reputation;

. reduce or limit customer's adoption of Seagate Software's products;

. require Seagate Software to make extensive changes to the product; or

. result in customers' delaying their purchase until the errors or defects have
been remedied, which would cause Seagate Software's revenues to be reduced or
delayed.

Any of these occurrences could have a material adverse effect upon Seagate
Software's business, operating results or financial condition.

Seagate Software's license agreements with its customers typically contain
provisions designed to limit Seagate Software's exposure to potential product
liability claims. Existing or future federal, state or local laws or ordinances
or unfavorable judicial decisions may make these provisions ineffective.
Because Seagate Software's products are used in system management, resource
optimization and business intelligence applications, Seagate Software's
liability could be substantial if Seagate Software recieves an unfavorable
judgement, which could have a material adverse effect upon Seagate Software's
business, operating results or financial condition.

Dependence on Key Personnel. Seagate Software's future performance depends to a
significant degree upon the continued service of its key members of management
as well as marketing, sales, and product development personnel. IMG's
performance following the closing of the Veritas Transaction will be dependent
upon such personnel. The loss of one or more of Seagate Software key

97
<PAGE>

personnel would have a material adverse effect on Seagate Software's business,
operating results and financial condition. Seagate Software believes its future
success, particularly with respect to IMG after the closing of the Veritas
Transaction, will also depend in large part upon its ability to attract and
retain highly skilled management, marketing, sales, and product development
personnel. Seagate Software has experienced intense competition for such
personnel and there can be no assurance that it will be able to retain its key
employees or that Seagate Software will be successful in attracting,
assimilating and retaining them in the future.

Risks from Conversion to Single European Currency. On January 1, 1999, certain
member states of the European Economic Community will fix their respective
currencies to a new currency, the Single European Currency ("Euro"). On that
day the Euro will become a functional legal currency within these countries.
During the three years beginning on January 1, 1999, business in these
countries will be conducted both in the existing national currency, such as the
French Franc or the deutsche Mark, as well as the Euro. Companies operating in
or conducting business in these countries will need to ensure that their
financial and other software systems are capable of processing transactions and
properly handling the existing currencies and the Euro.

Seagate Software is still assessing the impact that the introduction and use of
the Euro will have on its internal systems. Seagate Software will take
corrective actions based on such assessment but does not presently expect that
introduction and use of the Euro will materially affect its foreign exchange
and hedging activities or use of derivative instruments or will result in any
material increase in its costs. While Seagate Software will continue to
evaluate the impact of the Euro introduction over time, based on currently
available information, Seagate Software does not believe that the introduction
of the Euro will have a material adverse impact on Seagate Software's financial
condition or overall trends in results of operations.

LEGAL MATTERS

The validity of the Seagate Technology common stock to be issued in connection
with the Exchange Offer will be passed upon by Wilson Sonsini Goodrich &
Rosati, Professional Corporation.

EXPERTS

The consolidated financial statements of Seagate Technology, Inc. incorporated
by reference in Seagate Technology, Inc.'s Annual Report (Form 10-K) for the
year ended July 3, 1998, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon incorporated by reference
therein and incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.

The consolidated financial statements of Seagate Software, Inc. at July 3, 1998
and June 27, 1997, and for each of the three years in the period ended July 3,
1998, appearing in this Registration Statement have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon appearing
elsewhere herein, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.

98
<PAGE>

INDEX TO SEAGATE SOFTWARE FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
DESCRIPTION PAGE NO.
- ----------- --------
<S> <C>
Report of Ernst & Young LLP, Independent Auditors..................... F-2
Consolidated Balance Sheets--July 3, 1998 and June 27, 1997........... F-3
Consolidated Statements of Operations--Years Ended July 3, 1998, June
27, 1997
and June 28, 1996.................................................... F-4
Consolidated Statements of Cash Flows--Years Ended July 3, 1998, June
27, 1997
and June 28, 1996.................................................... F-5
Consolidated Statements of Stockholders' Equity--Years Ended July 3,
1998, June 27, 1997
and June 28, 1996.................................................... F-6
Notes to Consolidated Financial Statements............................ F-7
Condensed Consolidated Balance Sheets--October 2, 1998 (unaudited) and
July 3, 1998......................................................... F-28
Condensed Consolidated Statements of Operations--Three Months Ended
October 2, 1998
and October 3, 1997 (unaudited)...................................... F-29
Condensed Consolidated Statements of Cash Flows--Three Months Ended
October 2, 1998
and October 3, 1997 (unaudited)...................................... F-30
Notes to Condensed Consolidated Financial Statements (unaudited)...... F-31
</TABLE>

F-1
<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Stockholders Seagate Software, Inc.

We have audited the accompanying consolidated balance sheets of Seagate
Software, Inc. as of July 3, 1998 and June 27, 1997, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended July 3, 1998. These consolidated
financial statements are the responsibility of Seagate Software's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Seagate Software, Inc. at July 3, 1998 and June 27, 1997, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended July 3, 1998, in conformity with generally accepted accounting
principles.

/s/ Ernst & Young LLP

San Jose, California
July 17, 1998

F-2
<PAGE>

SEAGATE SOFTWARE, INC.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
JULY 3, JUNE 27,
1998 1997
--------- ---------
<S> <C> <C>
ASSETS
Cash..................................................... $ 15,130 $ 12,085
Accounts receivable, net................................. 46,564 28,172
Inventories.............................................. 1,117 3,206
Other current assets..................................... 2,474 4,040
--------- ---------
Total current assets................................... 65,285 47,503
Property, equipment and leasehold improvements, net...... 16,876 20,785
Goodwill and other intangibles, net...................... 53,879 75,306
--------- ---------
Total assets........................................... $ 136,040 $ 143,594
========= =========
LIABILITIES
Loan payable to Seagate Technology....................... $ 16,054 $ 28,971
Accounts payable......................................... 10,994 9,116
Accrued employee compensation............................ 14,365 10,267
Accrued expenses......................................... 15,339 16,035
Accrued income taxes..................................... 5,562 2,699
Deferred revenue......................................... 13,714 8,354
--------- ---------
Total current liabilities.............................. 76,028 75,442
Deferred income taxes.................................... 1,691 6,233
Other liabilities........................................ 255 301
--------- ---------
Total liabilities...................................... 77,974 81,976
Common stock subject to repurchase....................... 3,917 --
STOCKHOLDERS' EQUITY
Convertible preferred stock, $.001 par value--73,000,000
shares authorized;
Series A: shares issued and outstanding--54,633,333 in
1998 and 1997 (aggregate liquidation preference of
$409,750 in 1998 and 1997)............................ 55 55
Common stock, $.001 par value--95,600,000 shares
authorized; shares issued and outstanding--235,502 in
1998 and 83,355 in 1997................................. -- --
Additional paid-in capital............................... 343,526 342,091
Accumulated deficit...................................... (289,175) (280,685)
Foreign currency translation adjustment.................. (257) 157
--------- ---------
Total stockholders' equity............................. 54,149 61,618
--------- ---------
Total liabilities and stockholders' equity............. $ 136,040 $ 143,594
========= =========
</TABLE>

See notes to consolidated financial statements.

F-3
<PAGE>

SEAGATE SOFTWARE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
-----------------------------
JULY 3, JUNE 27, JUNE 28,
1998 1997 1996
-------- -------- ---------
<S> <C> <C> <C>
Revenues:
Licensing..................................... $243,285 $183,556 $ 124,380
Licensing from Seagate Technology............. 5,469 5,762 9,374
Maintenance, support and other................ 44,472 27,632 7,832
-------- -------- ---------
Total revenues.............................. 293,226 216,950 141,586
Cost of revenues:
Licensing..................................... 16,963 17,535 14,885
Licensing from Seagate Technology............. 539 1,834 3,999
Maintenance, support and other................ 19,687 6,560 194
Amortization of developed technologies........ 13,271 21,860 9,941
-------- -------- ---------
Total cost of revenues...................... 50,460 47,789 29,019
-------- -------- ---------
Gross profit.................................... 242,766 169,161 112,567
Operating expenses:
Sales and marketing........................... 129,343 107,706 71,129
Research and development...................... 47,173 42,842 36,897
General and administrative.................... 37,124 36,861 22,852
In-process research and development........... 6,800 2,613 96,958
Amortization of goodwill and other intangi-
bles......................................... 15,421 27,202 13,035
Restructuring costs........................... -- 2,524 9,502
Unusual items................................. -- 13,446 --
-------- -------- ---------
Total operating expenses.................... 235,861 233,194 250,373
-------- -------- ---------
Income (loss) from operations................... 6,905 (64,033) (137,806)
Interest expense................................ (1,021) (2,688) (970)
Other, net...................................... 1,011 307 360
-------- -------- ---------
Interest and other, net....................... (10) (2,381) (610)
-------- -------- ---------
Income (loss) before income taxes............... 6,895 (66,414) (138,416)
Benefit from (provision for) income taxes....... (15,385) 8,714 8,748
-------- -------- ---------
Net loss........................................ $ (8,490) $(57,700) $(129,668)
======== ======== =========
Net loss per common share:
Basic......................................... $ (51.59) $(852.11)
Diluted....................................... $ (51.59) $(852.11)
Number of shares used in per share computations:
Basic......................................... 164,571 67,714
Diluted....................................... 164,571 67,714
</TABLE>

See notes to consolidated financial statements.

F-4
<PAGE>

SEAGATE SOFTWARE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
-----------------------------
JULY 3, JUNE 27, JUNE 28,
1998 1997 1996
-------- -------- ---------
<S> <C> <C> <C>
Operating activities
Net loss........................................ $ (8,490) $(57,700) $(129,668)
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation and amortization................. 39,152 41,381 24,737
Deferred income taxes......................... (4,542) (7,505) (3,021)
Write-off of in-process research and
development.................................. 6,800 2,613 96,958
Write-off or write-down of goodwill and
intangibles.................................. 1,900 17,192 2,157
Unusual items................................. -- 13,446 --
Write-offs due to restructure................. -- 1,494 4,427
Changes in operating assets and liabilities:
Accounts receivable......................... (18,157) 4,583 (12,129)
Inventories................................. 2,099 (1,581) (11)
Other current assets........................ 1,575 (1,207) 1,080
Accounts payable............................ 1,552 (1,609) 4,887
Accrued employee compensation............... 4,020 2,078 2,570
Accrued expenses............................ (725) 2,430 4,629
Accrued income taxes........................ 3,633 5,796 (3,297)
Deferred revenue............................ 5,285 2,648 1,613
Other liabilities........................... (46) 44 (3,267)
-------- -------- ---------
Net cash provided by (used in) operating
activities................................... 34,056 24,103 (8,335)
INVESTING ACTIVITIES
Acquisitions of businesses, net of cash
acquired....................................... (10,000) -- (94,007)
Acquisition of property, equipment and leasehold
improvements, net.............................. (7,992) (15,823) (10,167)
Escrow establishment............................ -- -- (18,000)
Decrease in other non-current assets, net....... -- -- 1,560
Acquisition of intangibles...................... (4,270) -- --
-------- -------- ---------
Net cash (used in) investing activities....... (22,262) (15,823) (120,614)
FINANCING ACTIVITIES
Sale of common stock............................ 665 79 --
Sale of common stock subject to repurchase...... 3,917 -- --
Funding by Seagate Technology for acquisitions
of businesses.................................. -- -- 108,400
Borrowings from Seagate Technology, net......... (12,917) (4,020) 20,418
-------- -------- ---------
Net cash provided by (used in) financing
activities................................... (8,335) (3,941) 128,818
Effect of exchange rate changes on cash......... (414) 151 8
-------- -------- ---------
Increase (decrease) in cash................... 3,045 4,490 (123)
Elimination of Arcada's net cash activity for
the duplicated six months ended December 31,
1995......................................... -- -- 1,768
Cash at the beginning of the year............... 12,085 7,595 5,950
-------- -------- ---------
Cash at the end of the year..................... $ 15,130 $ 12,085 $ 7,595
======== ======== =========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest........................ $ 50 $ 214 $ 36
Cash paid for income taxes.................... 7,945 2, 357 4,892
</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE>

SEAGATE SOFTWARE, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
SERIES A
CONVERTIBLE COMMON FOREIGN
FOR THE YEARS ENDED JULY PREFERRED STOCK STOCK ADDITIONAL CURRENCY
3, 1998, JUNE 27, 1997 ----------------- -------------- PAID-IN TRANSLATION ACCUMULATED
AND JUNE 28, 1996 SHARES AMOUNT SHARES AMOUNT CAPITAL ADJUSTMENT DEFICIT TOTAL
- ------------------------ ---------- ------ ------- ------ ---------- ----------- ----------- --------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JUNE 30,
1995................... -- $ -- -- $ -- $140,610 $ 2 $ (93,397) $ 47,215
Acquisition by Seagate
Technology of OnDemand
Software, Inc. and
minority interest of
Arcada Holdings, Inc... -- -- -- -- 98,249 -- -- 98,249
Issuance of convertible
preferred stock and
common stock to Seagate
Technology pursuant to
the formation of
Seagate Software....... 34,500,000 34 62,500 -- (34) -- -- --
Issuance of convertible
preferred stock to
Seagate Technology
pursuant to the
acquisition of Calypso
Software Systems,
Inc. .................. 1,733,333 2 -- -- 13,797 -- -- 13,799
Issuance of convertible
preferred stock to
Seagate Technology
pursuant to the
acquisition of Holistic
Systems, Ltd. ......... 11,200,000 11 -- -- 84,046 -- -- 84,057
Income tax benefit from
Seagate Technology
stock option
exercises.............. -- -- -- -- 1,866 -- -- 1,866
Foreign currency
translation
adjustment............. -- -- -- -- -- 4 -- 4
Net loss................ -- -- -- -- -- -- (129,668) (129,668)
Elimination of Arcada
Holdings, Inc. activity
for the duplicated six
months ended December
31, 1995............... -- -- -- -- -- -- 80 80
---------- ----- ------- ----- -------- ----- --------- --------
BALANCE AT JUNE 28,
1996................... 47,433,333 47 62,500 -- 338,534 6 (222,985) 115,602
Income tax benefit from
Seagate Technology
stock option
exercises.............. -- -- -- -- 3,486 -- -- 3,486
Issuance of common stock
upon exercise of
employee stock
options................ -- -- 20,855 -- 79 -- -- 79
Issuance of convertible
preferred stock
pursuant to the
transfer to Seagate
Software of IMG
Vancouver.............. 7,200,000 8 -- -- (8) -- -- --
Foreign currency
translation
adjustment............. -- -- -- -- -- 151 -- 151
Net loss................ -- -- -- -- -- -- (57,700) (57,700)
---------- ----- ------- ----- -------- ----- --------- --------
BALANCE AT JUNE 27,
1997................... 54,633,333 55 83,355 -- 342,091 157 (280,685) 61,618
Income tax benefit from
Seagate Technology
stock option
exercises.............. -- -- -- -- 770 -- -- 770
Issuance of common stock
upon exercise of
employee stock
options................ -- -- 152,147 -- 665 -- -- 665
Foreign currency
translation
adjustment............. -- -- -- -- -- (414) -- (414)
Net loss................ -- -- -- -- -- -- (8,490) (8,490)
---------- ----- ------- ----- -------- ----- --------- --------
BALANCE AT JULY 3,
1998................... 54,633,333 $ 55 235,502 $ -- $343,526 $(257) $(289,175) $ 54,149
========== ===== ======= ===== ======== ===== ========= ========
</TABLE>

See notes to consolidated financial statements.

F-6
<PAGE>

SEAGATE SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business. Seagate Software, Inc. ("Seagate Software" or the
"Company") develops and markets software products and provides related services
enabling business users and information technology ("IT") professionals to
manage enterprise information. Headquartered in Scotts Valley, California,
Seagate Software has over 40 offices and operations in 17 countries worldwide.
Seagate Software is a majority-owned and consolidated subsidiary of Seagate
Technology, Inc. (the "Parent Company" or "Seagate Technology"), a data
technology company that provides products for storing, managing and accessing
digital information on computer systems. As of July 3, 1998, Seagate Technology
and one of its subsidiaries held 99.7% of Seagate Software's outstanding
capital stock. On a diluted basis, the outstanding minority interests of
Seagate Software amounted to approximately 17.8%, which consisted of Common
Stock and options to purchase Common Stock issued pursuant to the Option Plan.
Such options to purchase Seagate Software's Common Stock are held by certain
employees, directors and consultants of Seagate Software and Seagate
Technology.

Basis of Presentation. These financial statements are presented as if Seagate
Software had existed as an entity separate from Seagate Technology during the
periods presented and include the historical assets, liabilities, revenues and
expenses that are directly related to Seagate Software's operations.
Intercompany transactions and balances have been eliminated.

Prior to December 1996, Seagate Technology International ("STI"), a wholly-
owned subsidiary of Seagate Technology, owned all outstanding capital stock
(the "IMG Stock") of IMG Vancouver (formerly Crystal Services, Inc.). Pursuant
to an agreement among STI, Seagate Software and IMG Vancouver dated December
19, 1996, STI surrendered the IMG Stock (which was subsequently canceled by IMG
Vancouver) in exchange for 7,200,000 Convertible Preference Shares of IMG
Vancouver. On December 26, 1996, the Convertible Preference Shares were
exchanged for 7,200,000 Class B Exchangeable Shares of IMG Vancouver. These
Class B Exchangeable Shares do not have voting rights except as required by
law, but can be exchanged at STI's sole discretion for 7,200,000 shares of
Seagate Software Series A Preferred Stock. In connection with the issuance of
the Class B Exchangeable Shares described above, STI was granted voting rights
in Seagate Software equivalent to 7,200,000 shares of Series A Preferred Stock.
Also on December 26, 1996, IMG Vancouver issued

F-7
<PAGE>

SEAGATE SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

10,000 Class A Common Shares, which carry the right to vote, to Seagate
Software. Seagate Software therefore now owns all voting shares of IMG
Vancouver. For financial reporting purposes, Seagate Software has control over
IMG Vancouver and therefore consolidates the results of IMG Vancouver.
Additionally, the 7,200,000 shares of Series A Preferred Stock of Seagate
Software which STI could elect to receive in exchange for the Class B
Exchangeable Shares of IMG Vancouver have been treated as issued and
outstanding shares of Series A Preferred Stock of Seagate Software.

In June 1998, Seagate Software acquired all of the outstanding capital stock of
Eastman Software Storage Management Group, Inc. ("Eastman"), a company engaged
in developing, producing and marketing hierarchical storage management products
for the Windows NT platform. The purchase price of approximately $10,000,000
was paid in cash. Approximately $6,800,000 of the total purchase price
represented the value of in-process technology that had not yet reached
technological feasibility, had no alternative future use and was charged to
Seagate Software's operations in the quarter ended July 3, 1998. Seagate
Software accounted for the acquisition using the purchase method, and the
results of operations of Eastman are only included in Seagate Software's
operations since the acquisition was completed. Pro forma financial information
is not presented as such amounts are not material.

Seagate Software operates and reports financial results on a fiscal year of 52
or 53 weeks ending on the Friday closest to June 30. Accordingly, fiscal 1998
ended on July 3, 1998, fiscal 1997 ended on June 27, 1997 and fiscal 1996 ended
on June 28, 1996. Fiscal 1998 was comprised of 53 weeks and fiscals 1997 and
1996 were comprised of 52 weeks. Fiscal 1999 will be a 52-week year and will
end on July 2, 1999. All references to years in the notes to consolidated
financial statements represent fiscal years unless otherwise noted.

Arcada, which was acquired by Seagate Software pursuant to Seagate Technology's
merger with Conner, had a fiscal year that ended on the Saturday closest to
December 31. Accordingly, Arcada's statement of operations for the year ended
December 30, 1995 has been combined with Seagate Software's statement of
operations for the year ended June 30, 1995. In order to conform Arcada's
fiscal year end to Seagate Software's fiscal year end, Seagate Software's
consolidated statement of operations for the year ended June 28, 1996 includes
six months (July 1, 1995 through December 31, 1995) for Arcada which are also
included in Seagate Software's consolidated statement of operations for the
year ended June 30, 1995.

Economic Dependence on Seagate Technology. Seagate Software has incurred net
losses since inception and had net losses aggregating $195,858,000 during 1998,
1997 and 1996, and had a working capital deficit at July 3, 1998 of
$10,743,000. On July 4, 1998 Seagate Software and Seagate Technology renewed
the Revolving Loan Agreement on substantially the same terms and conditions as
the prior agreement which was dated June 28, 1996. Under the Revolving Loan
Agreement, Seagate Technology finances certain of Seagate Software's working
capital needs. The Revolving Loan Agreement provides for maximum outstanding
borrowings of up to $60,000,000 and is

F-8
<PAGE>

SEAGATE SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

renewable every two years. Outstanding borrowings from Seagate Technology were
$16,054,000 and $28,971,000 at July 3, 1998 and June 27, 1997, respectively.
Borrowings from Seagate Technology consist primarily of amounts used to fund
Seagate Software's operating activities. Beginning in fiscal 1999, Seagate
Software will pay interest at the LIBOR rate plus 2% per annum on such
borrowings; Seagate Software previously paid interest at 6%. Seagate Software
is economically dependent on Seagate Technology and believes that to the extent
future cash flows from operations and borrowings under the existing loan
agreement with Seagate Technology are not sufficient to fund Seagate Software's
working capital deficit and planned activities during the next 12 months, that
additional funding will be available at a reasonable cost from Seagate
Technology.

Accounting Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ materially from
those estimates.

Concentration of Credit Risk. Financial instruments that potentially subject
Seagate Software to significant concentrations of credit risk consist primarily
of cash and accounts receivable. Seagate Software places its cash and cash
equivalents in high credit quality financial institutions. Accounts receivable
are derived from revenues earned from customers primarily located in North
America and Europe. Seagate Software performs ongoing credit evaluations of its
customers and generally does not require collateral. Seagate Software maintains
reserves for potential credit losses and historically such losses have been
immaterial. Revenue from one third party customer, Ingram Micro Inc., accounted
for 22%, 18% and 16% of Seagate Software's total revenues in 1998, 1997 and
1996, respectively.

Foreign Currency Translation. The U.S. dollar is the functional currency for
most of Seagate Software's foreign operations. Gains and losses on the
remeasurement into U.S. dollars of amounts denominated in foreign currencies
are included in net income for those operations whose functional currency is
the U.S. dollar. Gains and losses on translation into U.S. dollars of foreign
operations whose functional currency is the local currency are recorded as a
separate component of stockholders' equity.

Cash Management. Seagate Technology uses a centralized cash management function
for all of its domestic operations, including certain domestic operations of
Seagate Software. A substantial majority of Seagate Software's cash is from
balances maintained by Seagate Software's foreign subsidiaries.

Cash and Cash Equivalents. Seagate Software considers all highly liquid
investments with an original maturity of 90 days or less at the time of
purchase to be cash equivalents. Seagate Software typically uses available cash
in excess of amounts required for operating activities to pay amounts due under
the Revolving Loan Agreement. Accordingly, Seagate Software has not had
significant cash equivalents to date.

Inventories. Inventories are stated at the lower of cost (first in, first out
method) or market, and consist primarily of materials used in software
products, related supplies and packaging materials.

F-9
<PAGE>

SEAGATE SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Property, Equipment and Leasehold Improvements. Property and equipment,
including leasehold improvements, are stated at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of the assets
which range from two to five years. Assets under capital leases and leasehold
improvements are amortized using the straight-line method over the shorter of
the estimated useful lives of the assets or the remaining lease term.

Goodwill and Other Intangible Assets. Goodwill represents the excess of the
purchase price of acquired companies over estimated fair values of tangible and
intangible net assets acquired. Goodwill is amortized on a straight-line basis
over five to seven years. The carrying values of long-term assets and
intangibles other than developed technology ("other intangibles") are reviewed
if facts and circumstances suggest that they may be impaired. If this review
indicates that carrying values of long-term assets and other intangibles and
associated goodwill will not be recoverable based on projected undiscounted
future cash flows, carrying values are reduced to estimated fair values by
first reducing goodwill and second by reducing long-term assets and other
intangibles.

Other intangible assets consist of trademarks, assembled workforces,
distribution networks, developed technology, customer bases, and covenants not
to compete related to acquisitions accounted for by the purchase method. See
Note on Business Combinations and Acquisitions. Amortization of purchased
intangibles, other than acquired developed technology, is provided on the
straight-line basis over the respective useful lives of the assets ranging from
36 to 60 months for trademarks, 24 to 48 months for assembled workforces and
distribution networks, 12 to 36 months for customer bases and 18 to 24 months
for covenants not to compete. In-process research and development without
alternative future use is expensed when acquired.

Developed Technology. Seagate Software applies Statement of Financial
Accounting Standards No. 86 ("SFAS 86"), "Accounting for the Costs of Computer
Software to Be Sold, Leased, or Otherwise Marketed", to software technologies
developed internally, acquired in business acquisitions, and purchased.

Internal development costs are included in research and development and are
expensed as incurred. SFAS 86 requires the capitalization of certain internal
development costs once technological feasibility is established, which based on
Seagate Software's development process generally occurs upon the completion of
a working model. As the time period between the completion of a working model
and the general availability of software has been short, capitalization of
internal development costs has not been material to date. Capitalized costs are
amortized based on the greater of the straight-line basis over the estimated
product life (generally 30 to 48 months) or the ratio of current revenues to
the total of current and anticipated future revenues.

Purchased developed technology is amortized based on the greater of the
straight-line basis over the estimated useful life (30 to 48 months) or the
ratio of current revenues to the total of current and anticipated future
revenues. The recoverability of the carrying value of purchased developed
technology and associated goodwill is reviewed periodically. If estimated
undiscounted future cash flows are not sufficient to recover combined carrying
value of the purchased developed technology

F-10
<PAGE>

SEAGATE SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

and associated goodwill, the carrying value of goodwill is first reduced and
then the carrying value of purchased developed technology is reduced by any
remaining differences.

Fair Value Disclosures. Seagate Software maintains its cash principally with
major banks in interest- and non-interest-bearing bank accounts. There are no
realized or unrealized gains or losses and fair value approximates carrying
value for all cash balances.

Pushdown and Carveout Accounting. Seagate Technology has provided substantial
services to Seagate Software, including general management, treasury, tax,
financial reporting, benefits administration, insurance, information
technology, legal, accounts payable and receivable and credit functions.
Seagate Technology has charged Seagate Software for these services through
corporate expense allocations. The amount of corporate expense allocations is
dependent upon the total amount of allocable costs incurred by Seagate
Technology on behalf of Seagate Software less amounts charged as a specific
cost or expense rather than by allocation. Included in general and
administrative expenses are corporate allocation charges of $1,004,000,
$1,939,000 and $2,242,000 for 1998, 1997 and 1996, respectively. Included in
sales and marketing expenses are corporate allocation charges of $769,000,
$19,000 and $18,000 for 1998, 1997 and 1996, respectively.

Seagate Software participated in Seagate Technology's profit sharing plan
through the first quarter of fiscal 1998 and in Seagate Technology's management
bonus plan during 1997. Seagate Software has since adopted its own bonus plan.
Compensation expenses recorded by Seagate Software under Seagate Technology's
plans totaled $0, $3,158,000 and $910,000 for 1998, 1997 and 1996,
respectively.

The employees of Seagate Software also participate in the Seagate Technology
Employee Stock Purchase Plan (the "Purchase Plan"). The Purchase Plan permits
eligible employees who have completed thirty days of employment prior to the
inception of the offering period to purchase common stock of Seagate Technology
through payroll deductions at the lower of 85% of the fair market value of the
common stock at the beginning or at the end of each six-month offering period.
Under the plan, 115,058, 80,643 and 41,574 shares of common stock of Seagate
Technology were issued to Seagate Software's employees in 1998, 1997 and 1996,
respectively.

The employees of Seagate Software also participate in the Seagate Technology
tax-deferred savings plan, the Seagate Technology, Inc. Savings and Investment
Plan ("the 401(k) plan"). The 401(k) plan is designed to provide qualified
employees with an accumulation of funds at retirement. Qualified employees may
elect to make contributions to the 401(k) plan on a monthly basis. Seagate
Software may make annual contributions to the 401(k) plan at the discretion of
the Board of Directors. No material contributions were made by Seagate Software
in fiscal years 1998, 1997 or 1996.

Revenue Recognition. Seagate Software recognizes revenue in accordance with the
American Institute of Certified Public Accountants Statement of Position 91-1,
"Software Revenue Recognition". Seagate Software's total revenues are derived
from license revenues for its various software products as well as maintenance,
support, training and consulting. Revenues for maintenance, support services,
training and consulting are recognized separately from software

F-11
<PAGE>

SEAGATE SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

licenses. License revenues are recognized upon delivery of the product if no
significant vendor obligations remain and collection of the resulting
receivable is probable. Allowances for estimated future returns and price
protection are provided upon shipment. Maintenance and support revenues consist
of ongoing support and product updates and are recognized ratably over the term
of the contract, which is typically twelve months. Revenues from training and
consulting are recognized when the services are performed.

In October 1997 and March 1998, the American Institute of Certified Public
Accountants issued Statements of Position 97-2, "Software Revenue Recognition"
("SOP 97-2") and 98-4, "Deferral of the Effective Date of a Provision of SOP
97-2, Software Revenue Recognition" ("SOP 98-4"), which Seagate Software
currently is required to adopt for transactions entered into after July 3,
1998. SOP 97-2 and SOP 98-4 provide guidance on recognizing revenue on software
transactions and supersede SOP 91-1. Seagate Software has assessed the impact
of the requirements of SOP 97-2 and SOP 98-4 and has changed certain of its
policies and procedures. Seagate Software believes that the adoption of SOP 97-
2 and SOP 98-4 will not have a significant impact on Seagate Software's
revenues or results of operations.

Advertising Expense. The cost of advertising is expensed as incurred. Seagate
Software does not incur any direct response advertising costs. Advertising
costs totaled $19,112,000, $21,617,000 and $15,748,000 for 1998, 1997 and 1996,
respectively.

Net Loss Per Share. The net loss per common share is computed using the
weighted average number of shares of common stock outstanding during the
period. Common equivalent shares from common stock options and convertible
preferred stock are excluded from the computation of diluted net loss per
share, as their effect is antidilutive. The net loss per common share for 1996
is not presented because Seagate Software's current capital structure did not
exist prior to April 1996, making presentation for prior periods not
meaningful. During 1998, Seagate Software adopted Statement of Financial
Accounting Standards No. 128, "Earnings per Share" ("SFAS 128"). The adoption
of SFAS 128 and the required restatement of the 1997 net loss per share had no
impact on Seagate Software because the weighted average shares used in the per
share computations were unchanged under SFAS 128 because the effect of stock
options would have been antidilutive. Below is a reconciliation of the
numerator and denominator used to calculate earnings per share (in thousands,
except share and per share data):

<TABLE>
<CAPTION>
JULY 3, JUNE 27,
1998 1997
-------- --------
<S> <C> <C>
Net loss per share computation -- basic and diluted:
Numerator: Net loss....................................... $ (8,490) $(57,700)
-------- --------
Denominator:
Weighted average number of common shares outstanding
during the period....................................... 164,571 67,714
-------- --------
Net loss per share -- basic and diluted................ $ (51.59) $(852.11)
======== ========
</TABLE>

F-12
<PAGE>

SEAGATE SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Incremental common shares attributable to the exercise of outstanding options
and common stock subject to repurchase (assuming the proceeds would be used to
purchase treasury stock) aggregating 2,118,034 shares for the year ended July
3, 1998 and 317,453 shares for 1997 were not included in the diluted net loss
per share computations because the effect would have been antidilutive.

ACCOUNTS RECEIVABLE. Accounts receivable are summarized below, in thousands:

<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Accounts receivable........................................ $48,200 $29,442
Less allowance for non-collection.......................... (1,636) (1,270)
------- -------
$46,564 $28,172
======= =======
</TABLE>

PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS. Property, equipment and
leasehold improvements consisted of the following, in thousands:

<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIFE 1998 1997
----------------- ------- -------
<S> <C> <C> <C>
Equipment................................. Two to five years $30,999 $30,009
Building and leasehold improvements....... Life of lease 9,424 6,428
------- -------
40,423 36,437
Less accumulated depreciation and
amortization............................. (23,547) (15,652)
------- -------
$16,876 $20,785
======= =======
</TABLE>

Depreciation expense was $11,727,000, $8,911,000 and $3,918,000 in 1998, 1997
and 1996, respectively.

GOODWILL AND OTHER INTANGIBLES. Goodwill and other intangibles consisted of the
following, in thousands:

<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Goodwill................................................. $ 44,953 $ 46,200
Developed technology..................................... 48,049 46,136
Trademarks............................................... 9,972 9,972
Assembled workforce...................................... 4,596 6,666
Distribution network..................................... 2,925 2,925
Other intangibles........................................ 13,813 12,853
-------- --------
124,308 124,752
Accumulated amortization................................. (70,429) (49,446)
-------- --------
Goodwill and other intangibles........................... $ 53,879 $ 75,306
======== ========
</TABLE>

Amortization of developed technologies is included in costs of revenues. In
1998, 1997 and 1996 the amortization of goodwill and other intangibles includes
write-offs and write-downs to the estimated fair value of $1,900,000,
$10,259,000 and $2,157,000, respectively. In 1997 the amortization of acquired
developed technologies included in cost of revenues includes write-downs and
write-offs to net realizable value of $6,918,000.

F-13
<PAGE>

SEAGATE SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Common Stock Subject to Repurchase. Current employees and directors of Seagate
Software and of Seagate Technology have exercised 740,065 shares of common
stock under the Option Plan. At July 3, 1998, 176,455 shares were vested and
563,610 shares were unvested. At the option of the employee or director, within
30 days of termination such vested and unvested shares may be sold back to
Seagate Software at the original issue price. In addition, upon termination,
unvested shares are subject to repurchase at the option of Seagate Software at
original issue price. Because of the obligation to repurchase vested and
unvested shares of common stock, Seagate Software has excluded the amounts
associated with the repurchase obligation from Stockholders' Equity in the
accompanying balance sheet. At July 3, 1998, the repurchase obligation amounted
to $3,917,000.

NEW ACCOUNTING PRONOUNCEMENTS

In October 1997 and March 1998, the American Institute of Certified Public
Accountants issued Statements of Position 97-2, "Software Revenue Recognition"
("SOP 97-2") and 98-4, "Deferral of the Effective Date of a Provision of SOP
97-2, Software Revenue Recognition" ("SOP 98-4"), which the Company currently
is required to adopt for transactions entered into after July 3, 1998. SOP 97-2
and SOP 98-4 provide guidance on recognizing revenue on software transactions
and supersede SOP 91-1. The Company has assessed the impact of the requirements
of SOP 97-2 and SOP 98-4 and has changed certain of its policies and
procedures. The Company believes that the adoption of SOP 97-2 and SOP 98-4
will not have a significant impact on the Company's revenues or results of
operations.

The Company intends to adopt Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" ("SFAS 130"), and No. 131, "Disclosures
about Segments of an Enterprise and Related Information" ("SFAS 131") during
fiscal 1999. Both standards will require additional disclosure, but will not
have a material effect on the Company's financial position or results of
operations. SFAS 130 establishes standards for the reporting and display of
comprehensive income and is expected to first be reflected in the Company's
first quarter of 1999 interim financial statements. The components of
comprehensive income include net income and items that are currently reported
directly as a component of stockholders' equity such as changes in foreign
currency translation adjustments and changes in the fair value of available-
for-sale financial instruments. SFAS 131 changes the way companies report
segment information and requires segments to be determined based on how
management measures performance and makes decisions about allocating resources.
SFAS 131 will first be reflected in the Company's 1999 Annual Report on Form
10-K.

In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use" ("SOP 98-1"). SOP 98-1 provides
guidance on capitalization of the costs incurred for computer software
developed or obtained for internal use. It also provides guidance for
determining whether computer software is internal-use software and on
accounting for the proceeds of computer software originally developed or
obtained for internal use and then subsequently sold to the public. The Company
has not yet determined the impact, if any, of adopting this statement. The
disclosures prescribed by SOP 98-1 will be effective for the Company's
consolidated financial statements for the fiscal year ending June 30, 2000.

F-14
<PAGE>

SEAGATE SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

BUSINESS COMBINATIONS AND ACQUISITIONS

The Company acquired Eastman Software Storage Management Group, Inc. in 1998
and Arcada Holdings, Inc., Holistic Systems, Ltd., Calypso Software Systems,
Inc., OnDemand Software, Inc. and Sytron Corporation in 1996. There were no
acquisitions in 1997.

Valuation of Acquired Intangible Assets. Values assigned to acquired in-process
research and development, developed technology, distribution networks, customer
bases, trademarks, and assembled workforces were determined using independent
valuations obtained by the Company.

To determine the value of in-process research and development, the Company
considered, among other factors, the state of development of each project, the
time and cost needed to complete each project, expected income, associated
risks which included the inherent difficulties and uncertainties in completing
each project and thereby achieving technological feasibility and risks related
to the viability of and potential changes to future target markets. This
analysis resulted in amounts assigned to in-process research and development
for projects that had not yet reached technological feasibility and which did
not have alternative future uses.

To determine the value of developed technologies, the expected future cash
flows of existing product technologies were evaluated, taking into account
risks related to the characteristics and applications of each product, existing
and future markets and assessments of the life cycle stage of each product.
Based on this analysis, the existing technologies that had reached
technological feasibility were capitalized.

To determine the value of the distribution networks and customer bases, the
Company considered, among other factors, the size of the current and potential
future customer bases, the quality of existing relationships with customers,
the historical costs to develop customer relationships, the expected income and
associated risks. Associated risks included the inherent difficulties and
uncertainties in transitioning the business relationships from the acquired
entity to the Company and risks related to the viability of and potential
changes to future target markets.

To determine the value of trademarks, the Company considered, among other
factors, the assumption that in lieu of ownership of a trademark, a company
would be willing to pay a royalty in order to exploit the related benefits of
such trademark.

To determine the value of assembled workforces, the Company considered, among
other factors, the costs to replace existing employees including search costs,
interview costs and training costs.

Goodwill is determined based on the residual difference between the amount paid
and the values assigned to identified tangible and intangible assets. If the
values assigned to identified tangible and intangible assets exceed the amounts
paid, including the effect of deferred taxes, the values assigned to long-term
assets were reduced proportionally until there was no negative goodwill.

Acquisition of Eastman Software Storage Management Group, Inc. In June 1998,
the Company acquired all of the outstanding capital stock of Eastman Software
Storage Management Group, Inc. ("Eastman"), a company engaged in developing,
producing and marketing hierarchical storage

F-15
<PAGE>

SEAGATE SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

management products for the Windows NT platform. The purchase price of
approximately $10,000,000 was paid in cash. Approximately $6,800,000 of the
total purchase price represented the value of in-process technology that had
not yet reached technological feasibility, had no alternative future uses and
was charged to the Company's operations in the quarter ended July 3, 1998. The
Company accounted for the acquisition using the purchase method, and the
results of operations of Eastman are only included in the Company's operations
since the date the acquisition was completed. Pro forma financial information
is not presented as such amounts are not material. The following is a summary
of the purchase price allocation, in thousands:

<TABLE>
<S> <C>
Current assets and other tangible assets........................ $ 535
Liabilities assumed............................................. (508)
Assembled workforce............................................. 340
Developed technology............................................ 500
In-process research and development............................. 6,800
Microsoft agreement............................................. 1,500
Goodwill........................................................ 833
-------
$10,000
=======
</TABLE>

Acquisition of Holistic Systems, Ltd. In June 1996, the Company acquired all of
the outstanding shares of Holistic Systems, Ltd. ("Holistic"), a company
engaged in developing, producing and marketing OLAP-compliant, integrated
enterprise business intelligence systems encompassing facilities for executive
information, decision support and other business intelligence applications. The
purchase price of approximately $85,458,000 was paid in cash, and a portion of
such consideration ($18,000,000) was placed in escrow for contingent
consideration. The escrow was released by the Company during the third quarter
of fiscal 1997. The Company accounted for the acquisition using the purchase
method, and the results of operations of Holistic are only included in the
Company's operations since the date the acquisition was completed. The
following is a summary of the initial purchase price allocation, in thousands:

<TABLE>
<S> <C>
Current assets and other tangible assets........................ $ 9,993
Liabilities assumed............................................. (5,087)
Trademarks...................................................... 5,889
Assembled workforce............................................. 1,890
Developed technology............................................ 16,453
Customer base................................................... 3,746
In-process research and development............................. 35,892
Restricted cash held in escrow.................................. 18,000
Deferred tax liability.......................................... (1,318)
Goodwill........................................................ --
-------
$85,458
=======
</TABLE>

As noted above, $18,000,000 of the acquisition consideration was held in escrow
as contingent consideration. The Company decided to release to the former
shareholders of Holistic the escrow funds of $18,000,000 in the third quarter
of fiscal 1997 even though the required contingencies had

F-16
<PAGE>

SEAGATE SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

not been satisfied. As a result, the Company recorded compensation expense as
an unusual item amounting to $13,446,000 for payments made to Company employees
who were also former shareholders of Holistic and an additional purchase price
amount of $4,554,000 for payments to former shareholders of Holistic who were
not employees of the Company. The additional purchase price was allocated based
on the same methodology as the original purchase price and in the third quarter
of 1997, the Company recorded an additional in-process research and development
write-off of $2,613,000, acquired intangible assets of $2,037,000 and a
deferred tax liability of $96,000.

Acquisition of Calypso Software Systems, Inc. In May 1996, the Company acquired
all of the outstanding shares of Calypso Software Systems, Inc. ("Calypso"), a
company engaged in developing, producing and marketing software for managing
systems and applications in complex, distributed client/server computer
networks. The purchase price of approximately $13,865,000 was paid in cash. The
Company accounted for the acquisition using the purchase method, and the
results of operations of Calypso are only included in the Company's operations
since the date the acquisition was completed. The following is a summary of the
purchase price allocation, in thousands:

<TABLE>
<S> <C>
Current assets and other tangible assets........................ $ 1,209
Liabilities assumed............................................. (245)
Assembled workforce............................................. 400
Developed technology............................................ 3,600
Customer base................................................... 540
In-process research and development............................. 5,400
Goodwill........................................................ 2,961
-------
$13,865
=======
</TABLE>

Acquisition of OnDemand Software, Inc. In March 1996, the Company acquired all
of the outstanding shares and stock options of OnDemand Software, Inc.
("OnDemand"), a company engaged in developing, producing and marketing
WinINSTALL, a product which automates installation, upgrades and uninstalls of
network applications throughout the enterprise. The purchase price of
approximately $13,425,000 was paid in cash. The Company accounted for the
acquisition using the purchase method, and the results of operations of
OnDemand are only included in the Company's operations since the date the
acquisition was completed. The following is a summary of the purchase price
allocation, in thousands:

<TABLE>
<S> <C>
Current assets and other tangible assets........................ $ 832
Liabilities assumed............................................. (227)
Assembled workforce............................................. 270
Developed technology............................................ 2,000
Covenant not to compete......................................... 50
In-process research and development............................. 8,900
Goodwill........................................................ 1,600
-------
$13,425
=======
</TABLE>

Acquisition of Minority Interest of Arcada Holdings, Inc. The combination of
Seagate Software with Arcada Holdings, Inc. ("Arcada"), a company which
develops, markets and supports data protection and storage management software
products that operated across multiple desktop and

F-17
<PAGE>

SEAGATE SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

client/server environments, was accounted for as a pooling-of-interests and,
accordingly, all prior periods presented in the accompanying consolidated
financial statements include the accounts and operations of Arcada. Arcada's
results of operations for the duplicated six months ended December 30, 1995
were as follows, in thousands:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 30, 1995
-----------------
<S> <C>
Net revenues........................................... $37,700
Operating expenses..................................... 29,320
Other income........................................... 588
Net loss............................................... (80)
</TABLE>

In connection with the pooling-of-interests, the Company acquired the then
outstanding minority interest of Arcada. The minority interest was
approximately 31% on a fully diluted basis. The acquisition of the minority
interest was accounted for as a purchase and in connection with the
acquisition, Seagate Technology issued common stock and options to purchase
common stock with a fair market value of approximately $85,074,000. The
following is a summary of the purchase price allocation for the acquisition of
the minority interest, in thousands:

<TABLE>
<S> <C>
Assembled workforce............................................. $ 1,355
Distribution network............................................ 94
Corporate accounts.............................................. 375
Strategic alliances............................................. 1,437
OEM agreements.................................................. 3,217
Value added resellers........................................... 2,030
Trademarks...................................................... 2,811
Developed technology............................................ 4,623
In-process research and development............................. 43,949
Deferred tax liability.......................................... (6,254)
Goodwill........................................................ 31,437
-------
$85,074
=======
</TABLE>

Acquisition of Sytron Corporation. In July 1995, Arcada Software, Inc., a
majority-owned subsidiary of Arcada, acquired the assets and liabilities of
Sytron Corporation ("Sytron"), a company which develops, produces and markets
software products for data storage management. The purchase price of
approximately $5,017,000 was paid in cash. Arcada accounted for the acquisition
using the purchase method, and the results of operations of Sytron are only
included in the Company's operations since the acquisition was completed. The
following is a summary of the purchase price allocation, in thousands:

<TABLE>
<S> <C>
Current assets and other tangible assets......................... $ 848
Liabilities assumed.............................................. (508)
Developed technology............................................. 1,487
In-process research and development.............................. 2,817
Goodwill......................................................... 373
------
$5,017
======
</TABLE>

F-18
<PAGE>

SEAGATE SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

STOCKHOLDERS' EQUITY

The Company's authorized capital stock consists of 95,600,000 shares of common
stock and 73,000,000 shares of preferred stock, 54,633,333 of which have been
designated as Series A preferred stock and 18,366,667 of which remain
undesignated.

PREFERRED STOCK. The Series A preferred have the following rights,
preferences and privileges:

Conversion. The holders of the Series A preferred stock have the right to
convert the Series A preferred stock at any time into common stock. The Series
A preferred stock will be automatically converted into common stock, at the
then-effective conversion price, upon the closing of a firm commitment
underwritten public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended. The initial conversion rate will
be one share of preferred stock for each share of common stock. The conversion
price of the Series A preferred stock will be subject to adjustment to reduce
the effect of dilution in the event that the Company issues additional shares
of common stock or equivalents.

Voting. Each share of Series A preferred stock entitles the holder to one vote
for each share of common stock into which such share could then be converted.
Except as required by law, the holders of shares of Series A preferred stock
and the holders of shares of common stock shall vote together as one class on
all matters submitted to a vote of stockholders of the Company.

Dividend Preference. The holders of shares of Series A preferred stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, an annual cash dividend in the amount
of $0.45 per share (as adjusted to reflect any stock split, stock dividend,
combination, recapitalization and the like (collectively a "Recapitalization")
with respect to the Series A preferred stock), prior and in preference to any
declaration or payment of any dividend (payable other than in common stock) on
the common stock of the Company. Such dividends shall not be cumulative, and no
right shall accrue to holders of Series A preferred stock by reason of the fact
that dividends on such shares are not declared or paid in any year. On the date
that is the end of the first fiscal year in which the Company recognizes net
income after taxes, the holders of shares of Series A preferred stock shall be
entitled to receive, out of funds legally available for the purpose, an annual
cash dividend in the amount of $0.45 per share (as adjusted to reflect any
Recapitalization) prior and in preference to any declaration or payment of any
dividend (payable other than in common stock) on the common stock of the
Company (the "Cumulative Dividend"). The Cumulative Dividend shall accrue from
the Cumulative Dividend Date and shall be payable only when, as and if
determined by the Board, provided, that if the Cumulative Dividend shall not
have been paid and a sum sufficient for the payment thereof set apart, the
deficiency shall first be fully paid before any dividend or other distribution
(other than dividends payable solely in common stock) shall be paid or declared
and set apart for the common stock of the Company. In the event any dividend
shall be paid to the holders of common stock such dividend shall be distributed
among the holders of the common stock and the Series A preferred stock in
proportion to the shares of common stock then held by them and the shares of
common stock which they then have the right to acquire upon the conversion of
the Series A preferred stock held by them.

F-19
<PAGE>

SEAGATE SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Liquidation Preference. In the event of any liquidation, dissolution or winding
up of the Company or other reorganization, a distribution of $7.50 per share,
as adjusted to reflect any Recapitalization of Series A preferred stock, plus
all accrued or declared but unpaid dividends, if any, shall be made to the
holders of Series A preferred stock before any amount shall be paid to the
holders of common stock.

Dividends. No dividends have been declared, or paid, to date by the Company on
any of the outstanding common stock or preferred stock.

Stock Option Plans. The Option Plan provides for the issuance of either
incentive or nonstatutory stock options to employees and consultants of the
Company. The Company has reserved a total of 12,600,000 shares under the Plan.
Options granted under the Company's Plan are granted at fair market value,
expire ten years from the date of the grant and vest over four years; 20% at
the end of years one and two and 30% at the end of years three and four.
Following is a summary of stock option activity from the inception of the plan
through the year ended July 3, 1998:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
----------------------------
NUMBER WEIGHTED AVERAGE
OF SHARES EXERCISE PRICE
---------- ----------------
<S> <C> <C>
Balance at June 30, 1995.......................... -- $ --
Granted......................................... 3,276,200 4.00
Exercised....................................... -- --
Canceled........................................ (45,088) 4.00
----------
Balance at June 28, 1996.......................... 3,231,112 4.00
Granted......................................... 2,851,255 5.42
Exercised....................................... (20,855) 4.00
Canceled........................................ (973,733) 4.36
----------
Balance at June 27, 1997.......................... 5,087,779 4.73
Granted......................................... 8,039,707 9.04
Exercised....................................... (892,212) 5.13
Canceled........................................ (1,299,143) 5.27
----------
Balance at July 3, 1998........................... 10,936,131 7.81
==========
</TABLE>

Options available for grant were 750,802, 7,491,366 and 9,368,888 at the end of
fiscal 1998, 1997 and 1996, respectively. The following tables summarize
information about options outstanding at July 3, 1998.

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING EXERCISABLE OPTIONS
----------------------------------- ---------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
EXERCISE NUMBER OF CONTRACTUAL EXERCISE NUMBER EXERCISE
PRICES SHARES LIFE (IN YEARS) PRICE OF SHARES PRICE
- -------- ---------- --------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
$ 4.00............... 2,288,427 8.0 $ 4.00 891,653 $ 4.00
$ 6.00............... 3,860,158 9.0 6.00 305,374 6.00
$ 7.50 - 11.00....... 2,043,397 9.6 8.83 11,760 7.86
$ 12.75.............. 2,744,149 10.0 12.75 -- --
---------- -----------
Total.............. 10,936,131 9.1 7.81 1,208,787 4.54
========== ===========
</TABLE>

F-20
<PAGE>

SEAGATE SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Pro Forma Information. In October 1995, the Financial Accounting Standards
Board released Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" ("SFAS 123"). SFAS 123 provides an alternative to
Accounting Principles Board Opinion 25, "Accounting for Stock Issued to
Employees" ("APBO 25") and requires additional disclosures. The Company has
elected to follow APBO 25 in accounting for stock options granted. Under APBO
25, the Company generally recognized no compensation expense with respect to
such options.

Pro forma information regarding net income and earnings per share is required
by SFAS 123 for stock options granted after June 30, 1995 as if the Company had
accounted for its stock options under the fair value method of SFAS 123. The
fair value of the Company's stock options was estimated using a Black-Scholes
option valuation model. The Black-Scholes option valuation model was developed
for use in estimating the fair value of traded options that have no vesting
restrictions and are fully transferable. In addition, the Black-Scholes model
requires the input of highly subjective assumptions, including the expected
stock price volatility. Because the Company's stock options granted to
employees have characteristics significantly different from those of exchange-
traded options (and are not fully transferable) and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the Black-Scholes model does not necessarily provide a
reliable single measure of the fair value of its stock options granted to
employees. The fair value of the Company's stock options granted to employees
was estimated assuming no expected dividends and the following weighted average
assumptions:

<TABLE>
<CAPTION>
SEAGATE SEAGATE
SOFTWARE TECHNOLOGY
INCENTIVE EMPLOYEE STOCK
STOCK OPTION PURCHASE PLAN
PLAN SHARES SHARES
---------------- ----------------
1998 1997 1996 1998 1997 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Expected life (in years).................... 3.67 3.65 3.65 .56 .50 .50
Risk-free interest rate..................... 5.7% 6.2% 5.6% 5.5% 5.4% 5.4%
Volatility.................................. .55 .55 .55 .63 .46 .46
</TABLE>

The weighted average exercise price and weighted average fair value of stock
options granted in 1998 under the Company's Plan were $9.04 and $4.20 per
share, respectively. The weighted average purchase price and weighted average
fair value of shares granted in 1998 under the Seagate Technology Employee
Stock Purchase Plan (the "Purchase Plan") were $26.99 and $12.03, respectively.

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized over the options' vesting period (for stock options) and over the
six-month purchase period for stock purchases under the Purchase Plan. Pro
forma net loss per common share for 1996 is not presented because the Company's
current capital structure did not exist prior to April 1996, making
presentation for prior periods not meaningful. The Company's pro forma
information follows, in thousands:

<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- ---------
<S> <C> <C> <C>
Net loss................................. $(15,716) $(61,568) $(130,043)
Net loss per common share................ $ (95.50) $(909.24)
</TABLE>

F-21
<PAGE>

SEAGATE SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The effects on pro forma disclosures of applying SFAS 123 are not likely to be
representative of the effects on pro forma disclosures of future years. Because
SFAS 123 is applicable only to options granted subsequent to June 30, 1995, and
the Company did not commence granting stock options for the purchase of Seagate
Software common stock until June 1996, the pro forma effect will not be fully
reflected until 2000.

INCOME TAXES

The Company is included in the consolidated federal and certain combined and
consolidated foreign and state income tax returns of Seagate Technology.
Seagate Technology and the Company have entered into a tax sharing agreement
(the "Tax Allocation Agreement") pursuant to which the Company computes
hypothetical tax returns (with certain modifications) as if the Company was not
included in consolidated or combined returns with Seagate Technology. The
Company must pay Seagate Technology the positive amount of any such
hypothetical taxes. If the hypothetical tax returns show entitlement to
refunds, including any refunds attributable to a carryback, then Seagate
Technology will pay the Company the amount of such refunds. At the end of
fiscal 1998, $8,500,000 in intercompany tax-related balances was due from the
Company to Seagate Technology. At the end of fiscal 1997 and 1996, there were
no intercompany tax-related balances outstanding between the Company and
Seagate Technology.

The (benefit from) provision for income taxes consisted of the following, in
thousands:

<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Current Tax Expense
Federal........................................ $ 9,444 $ (5,007) $ (7,196)
State.......................................... 1,575 (384) (762)
Foreign........................................ 8,908 4,182 996
-------- -------- --------
Total Current Tax Expense........................ 19,927 (1,209) (6,962)
Deferred Tax Expense
Federal........................................ (3,831) (6,330) (1,498)
State.......................................... (711) (1,175) (288)
-------- -------- --------
Total Deferred Tax Expense....................... (4,542) (7,505) (1,786)
-------- -------- --------
(Benefit from) Provision for Income Taxes........ $ 15,385 $ (8,714) $ (8,748)
======== ======== ========
</TABLE>

The (benefit from) provision for income taxes has been computed on a separate
return basis (with certain modifications), except that pursuant to the Tax
Allocation Agreement, the tax benefits of certain of the Company's fiscal 1997
and 1996 tax losses and credits were recognized in the year such losses and
credits were utilized by Seagate Technology in its tax returns. In fiscal 1998,
the Company did not recognize the benefit of certain tax credits because they
were not expected to be utilized by Seagate Technology in its tax returns.

F-22
<PAGE>

SEAGATE SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The pro forma information assuming a tax benefit based on a separate return
basis is as follows, in thousands:

<TABLE>
<CAPTION>
YEAR ENDED
JULY 3, 1998
------------
<S> <C>
Income before provision for income taxes.................... $6,895
Provision for income taxes.................................. 4,548
------
Net income.................................................. $2,347
======
</TABLE>

The income tax benefits related to the exercise of employee stock options
reduced amounts due to or increased amounts due from Seagate Technology
pursuant to the Tax Allocation Agreement and were credited to additional paid-
in capital. Such amounts approximated $770,000, $3,486,000 and $1,866,000 in
1998, 1997 and 1996, respectively.

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The significant
components of the Company's deferred tax assets and liabilities were as
follows, in thousands:

<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
DEFERRED TAX ASSETS
Receivable reserves........................................ $ 1,951 $ 1,859
Accrued warranty........................................... 244 192
Inventory write-downs not currently deductible............. 504 299
Accrued compensation and benefits.......................... 1,329 1,517
Depreciation............................................... (986) 827
Accrued restructuring...................................... -- 963
Accrued expenses not currently deductible.................. 2,532 850
Acquisition related items.................................. 36,264 34,745
Domestic and foreign net operating loss carryforwards...... 13,116 13,098
Tax credit carryforwards................................... 8,686 1,155
Other...................................................... 2,164 2,372
-------- --------
Total Deferred Tax Assets................................ 65,804 57,877
Valuation allowance........................................ (65,804) (57,877)
-------- --------
Net Deferred Tax Assets.................................. -- --
-------- --------
DEFERRED TAX LIABILITIES
Acquisition related items.................................. (1,691) (6,233)
-------- --------
Total Deferred Tax Liabilities........................... (1,691) (6,233)
-------- --------
Net Deferred Tax Liabilities............................... $ (1,691) $ (6,233)
======== ========
</TABLE>

A valuation allowance has been provided for the deferred tax assets as of the
end of fiscal 1998 and 1997. Realization of the deferred tax assets is
dependent on future earnings, the timing and amount of which are uncertain. In
addition, the net operating loss and tax credit carryforwards of acquired
subsidiaries are subject to further limitations on utilization due to the
"change in ownership"

F-23
<PAGE>

SEAGATE SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

provisions of Internal Revenue Code Section 382 and the "separate return
limitation year" rules of the federal consolidated return regulations.
Approximately $8,213,000 of the valuation allowance in fiscal 1998 and 1997 is
attributable to deferred tax assets that when realized, will reduce unamortized
goodwill or other intangible assets of the acquired subsidiaries. The valuation
allowance increased by $7,927,000, $11,946,000 and $26,038,000 in 1998, 1997
and 1996, respectively.

As of June 27, 1997, the Company has domestic and foreign net operating loss
carryforwards of approximately $37,515,000 expiring in 2003 through 2010 if not
used to offset future taxable income. In addition, the Company, as of July 3,
1998, has research and development tax credit carryforwards of approximately
$1,155,000 expiring in 2005 through 2011 and foreign tax credit carryforwards
of $7,351,000, expiring in 2003, if not used to offset future tax liabilities.

The reconciliation between the (benefit from) provision for income taxes at the
U.S. statutory rate and the effective rate is summarized as follows, in
thousands:

<TABLE>
<CAPTION>
1998 1997 1996
------- -------- --------
<S> <C> <C> <C>
(Benefit) provision at U.S. statutory rate.... $ 2,413 $(23,245) $(48,446)
State income taxes (benefit), net............. 393 (382) (762)
Foreign taxes in excess of the U.S. statutory
rate......................................... 2,084 255 25
In-process research and development........... -- -- 15,382
Goodwill and other acquisition related items.. 2,621 5,666 2,833
Valuation allowance........................... 7,927 8,871 22,216
Other......................................... (53) 121 4
------- -------- --------
$15,385 $ (8,714) $ (8,748)
======= ======== ========
</TABLE>

Cumulative undistributed earnings of certain foreign operations of the Company
of $2,633,000 are considered to be permanently invested in non-U.S. operations.
No U.S. federal and state income tax has been provided on these amounts.
Additional U.S. federal and state income taxes that would have to be provided
if these earnings were repatriated to the U.S. cannot be determined at this
time.

RESTRUCTURING COSTS

During 1996, the Company recorded restructuring charges totaling $9,502,000 as
a result of the acquisition of Arcada, a majority-owned subsidiary of Seagate
Technology that was acquired in connection with Seagate Technology's merger
with Conner. During 1997, the Company recorded restructuring charges of
approximately $2,524,000, which consisted of $3,481,000 resulting from NSMG's
consolidation efforts, offset by an adjustment to reduce the 1996 restructuring
by $957,000 based upon completion of certain aspects of the restructuring at
less than originally estimated. The restructuring activities are substantially
complete except for remaining liabilities pertaining to long-term lease
commitments on excess and duplicate facilities.

F-24
<PAGE>

SEAGATE SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The following table summarizes the Company's restructuring activity for the
three years ended July 3, 1998, in thousands:

<TABLE>
<CAPTION>
EQUIPMENT, CONTRACT
SEVERANCES INTANGIBLES CANCELLATIONS
AND EXCESS AND OTHER PROFESSIONAL AND OTHER
BENEFITS FACILITIES ASSETS FEES EXPENSES TOTAL
---------- ---------- ----------- ------------ ------------- -------
<S> <C> <C> <C> <C> <C> <C>
1996 restructuring
charges................ $1,554 $1,571 $ 5,630 $ 525 $ 222 $ 9,502
Cash charges............ (518) -- -- (568) -- (1,086)
Non-cash charges........ -- (121) (4,168) -- (138) (4,427)
------ ------ ------- ----- ----- -------
Reserve balances, June
28, 1996............... 1,036 1,450 1,462 (43) 84 3,989
1997 restructuring
charges................ 770 505 2,106 -- 100 3,481
Cash charges............ (975) (915) -- -- -- (1,890)
Non-cash charges........ -- (72) (1,422) -- -- (1,494)
Adjustments and
reclassifications...... (351) 267 (732) 43 (184) (957)
------ ------ ------- ----- ----- -------
Reserve balances, June
27, 1997............... 480 1,235 1,414 -- -- 3,129
Cash charges............ (373) (519) (9) -- -- (901)
Non-cash charges........ -- -- (1,045) -- -- (1,045)
Adjustments and
reclassifications...... (107) 467 (360) -- -- --
------ ------ ------- ----- ----- -------
Reserve balances, July
3, 1998................ $ -- $1,183 $ -- $ -- $ -- $ 1,183
====== ====== ======= ===== ===== =======
</TABLE>

LINES OF CREDIT

In addition to the Revolving Loan Agreement with Seagate Technology, certain
foreign subsidiaries have line of credit facilities with third party financial
institutions. These line of credit facilities provide for additional borrowings
of up to an equivalent of approximately $1,100,000 at July 3, 1998. Interest
rates payable on borrowings are based on local bank prime interest rates. At
July 3, 1998, there were no outstanding borrowings under any of these lines of
credit.

BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION

The Company operates in a single industry segment by developing, marketing and
supporting business intelligence and systems infrastructure management software
products, and related professional services. The following tables summarize the
Company's operations in different geographic areas, in thousands:

<TABLE>
<CAPTION>
YEAR ENDED JULY 3, 1998
--------------------------------------------
ADJUSTMENTS
NORTH AND
AMERICA EUROPE ELIMINATIONS CONSOLIDATED
-------- -------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues from unaffiliated
customers................... $275,606 $ 17,620 $ -- $293,226
Transfers between geographic
areas....................... 2,368 30 (2,398) --
-------- -------- ------- --------
Total net sales.............. $277,974 $ 17,650 $(2,398) $293,226
Income (loss) from opera-
tions....................... 20,734 (13,829) -- 6,905
Other income (expense), net.. 287 (297) -- (10)
-------- -------- ------- --------
Income (loss) before income
taxes....................... $ 21,021 $(14,126) $ -- $ 6,895
======== ======== ======= ========
Identifiable assets.......... $111,129 $ 24,911 $ -- $136,040
======== ======== ======= ========
</TABLE>

F-25
<PAGE>

SEAGATE SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<CAPTION>
YEAR ENDED JUNE 27, 1997
---------------------------------------------
ADJUSTMENTS
NORTH AND
AMERICA EUROPE ELIMINATIONS CONSOLIDATED
-------- -------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues from unaffiliated
customers.................. $203,324 $ 13,626 $ -- $216,950
Transfers between geographic
areas...................... 861 841 (1,702) --
-------- -------- ------- --------
Total net sales............. $204,185 $ 14,467 $(1,702) $216,950
Loss from operations........ (58,962) (5,071) -- (64,033)
Other expense, net.......... (2,315) (66) -- (2,381)
-------- -------- ------- --------
Loss before income taxes.... $(61,277) $ (5,137) $ -- $(66,414)
======== ======== ======= ========
Identifiable assets......... $103,880 $ 39,714 $ -- $143,594
======== ======== ======= ========
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED JUNE 28, 1996
----------------------------------------------
ADJUSTMENTS
NORTH AND
AMERICA EUROPE ELIMINATIONS CONSOLIDATED
--------- -------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues from unaffiliated
customers................. $ 139,123 $ 2,463 $ -- $ 141,586
Transfers between geo-
graphic areas............. 312 -- (312) --
--------- -------- ----- ---------
Total net sales............ $ 139,435 $ 2,463 $(312) $ 141,586
Loss from operations....... (102,273) (35,533) -- (137,806)
Other income (expense),
net....................... (644) 34 -- (610)
--------- -------- ----- ---------
Loss before income taxes... $(102,917) $(35,499) $ -- $(138,416)
========= ======== ===== =========
Identifiable assets........ $ 155,730 $ 45,868 $ -- $ 201,598
========= ======== ===== =========
</TABLE>

The loss from operations includes net revenues less operating expenses. The
loss from operations in Europe for the year ended June 28, 1996 is primarily
related to the write-off of $35,892,000 of in-process research and development
in connection with the Holistic acquisition. The loss from operations in Europe
for the year ended June 27, 1997 includes approximately $7,662,000 of
amortization of intangible assets relating to the Holistic acquisition and
$2,613,000 relating to the write-off of in-process research and development for
contingent payments made to the former shareholders of Holistic during 1997.
The loss from operations in Europe for the year ended July 3, 1998 includes
approximately $9,138,000 of amortization of intangible assets relating to the
Holistic acquisition. The identifiable assets by geographic area are those
assets used in the Company's operations in each area.

The Company generated export revenues from the United States of approximately
$66,250,000, $44,129,000 and $33,617,000 in 1998, 1997 and 1996, respectively.

COMMITMENTS

Leases. The Company leases certain property, facilities and equipment under
non-cancelable lease agreements. Facility leases expire at various dates
through 2008 and contain various provisions for rental adjustments. The leases
require the Company to pay property taxes, insurance and normal

F-26
<PAGE>

SEAGATE SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

maintenance costs. The Company also occupies certain facilities owned by
Seagate Technology. Future minimum payments for operating leases were as
follows at July 3, 1998, in thousands:

<TABLE>
<CAPTION>
OPERATING
LEASES
---------
<S> <C>
1999........................................................... $ 8,918
2000........................................................... 7,581
2001........................................................... 5,507
2002........................................................... 4,953
2003........................................................... 3,866
After 2003..................................................... 35,992
-------
$66,817
=======
</TABLE>

Total rent expense for all facility and equipment operating leases was
approximately $8,023,000, $5,292,000 and $3,181,000 for 1998, 1997 and 1996,
respectively.

Non-cancelable Capital Obligations. Non-cancelable capital obligations totaled
$384,291 as of July 3, 1998.

LEGAL PROCEEDINGS

On November 10, 1997, Vedatech Corporation commenced an action in the High
Court of Justice Chancery Division in the United Kingdom against Seagate
Software Information Management Group Ltd. claiming breach of an oral agreement
and infringement of a Vedatech U.K. copyright in the Japanese translation of
one of the Company's products (the "Complaint") and seeking monetary and
injunctive relief. No specific damage amount has yet been claimed. The Company
has hired local counsel in the U.K., reviewed documents and conducted
interviews. The Company filed an initial response in the U.K. court on January
13, 1998 and is now in the discovery process. The Company believes the
Complaint has no merit and intends to vigorously defend the action. However, if
an unfavorable outcome were to arise, there can be no assurance that such
outcome would not have a material adverse effect on the Company's liquidity,
financial position or results of operations.

In addition to the foregoing, the Company is engaged in legal actions arising
in the ordinary course of its business and believes that the ultimate outcome
of these actions will not have a material adverse effect on the Company's
financial position, liquidity or results of operations.

F-27
<PAGE>

SEAGATE SOFTWARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
OCTOBER 2, JULY 3,
1998 1998
----------- --------
(UNAUDITED) (1)
<S> <C> <C>
ASSETS
Cash...................................................... $ 10,418 $ 15,130
Accounts receivable, net.................................. 44,416 46,564
Inventories............................................... 776 1,117
Other current assets...................................... 4,386 2,474
-------- --------
Total current assets.................................... 59,996 65,285
Equipment and leasehold improvements, net................. 15,257 16,876
Goodwill and other intangibles, net....................... 48,019 53,879
-------- --------
Total assets............................................ $123,272 $136,040
======== ========
LIABILITIES
Loan payable to Seagate Technology........................ $ 3,895 $ 16,054
Accounts payable.......................................... 11,795 10,994
Accrued employee compensation............................. 14,100 14,365
Accrued expenses.......................................... 17,080 15,339
Accrued income taxes...................................... 652 5,562
Deferred revenue.......................................... 14,208 13,714
-------- --------
Total current liabilities............................... 61,730 76,028
Deferred income taxes..................................... 1,343 1,691
Other liabilities......................................... 284 255
-------- --------
Total liabilities....................................... 63,357 77,974
Common stock subject to repurchase........................ 3,899 3,917
STOCKHOLDERS' EQUITY
Convertible preferred stock............................... 55 55
Common stock.............................................. -- --
Additional paid-in capital................................ 344,744 343,526
Accumulated deficit....................................... (288,323) (289,175)
Foreign currency translation adjustment................... (460) (257)
-------- --------
Total stockholders' equity.............................. 56,016 54,149
======== ========
Total liabilities and stockholders' equity.............. $123,272 $136,040
======== ========
</TABLE>

(1) The information in this column was derived from Seagate Software's audited
consolidated balance sheet as of July 3, 1998.

See notes to condensed consolidated financial statements.

F-28
<PAGE>

SEAGATE SOFTWARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------
OCTOBER 2, OCTOBER 3,
1998 1997
----------- ----------
<S> <C> <C>
Revenues:
Licensing.............................................. $ 58,671 $ 51,797
Licensing from Seagate Technology...................... 2,156 1,000
Maintenance, support and other......................... 14,048 10,225
----------- --------
Total revenues..................................... 74,875 63,022
Cost of revenues:
Licensing.............................................. 2,935 4,969
Licensing from Seagate Technology...................... 129 285
Maintenance, support and other......................... 6,430 4,600
Amortization of developed technologies................. 2,866 3,942
----------- --------
Total cost of revenues............................. 12,360 13,796
----------- --------
Gross profit........................................... 62,515 49,226
Operating expenses:
Sales and marketing.................................... 36,007 28,697
Research and development............................... 12,787 11,393
General and administrative............................. 8,940 9,079
Amortization of goodwill and other intangibles......... 3,198 3,456
----------- --------
Total operating expenses........................... 60,932 52,625
----------- --------
Income (loss) from operations.......................... 1,583 (3,399)
Interest expense....................................... (156) (300)
Other, net............................................. 468 165
----------- --------
Interest and other, net............................ 312 (135)
----------- --------
Income (loss) before income taxes...................... 1,895 (3,534)
Benefit from (provision for) income taxes.............. (1,043) 619
----------- --------
Net income (loss)...................................... $ 852 $ (2,915)
=========== ========
Net income (loss) per common share:
Basic................................................ $ 3.09 $ (28.12)
Diluted.............................................. $ 0.01 $ (28.12)
Number of shares used in per share computations:
Basic................................................ 275,314 103,659
Diluted.............................................. 59,984,218 103,659
</TABLE>

See notes to condensed consolidated financial statements.

F-29
<PAGE>

SEAGATE SOFTWARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------
OCTOBER 2, OCTOBER 3,
1998 1997
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss)....................................... $ 852 $(2,915)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization......................... 8,247 10,245
Deferred income taxes................................. (348) (1,507)
Write-offs due to restructure......................... -- 553
Changes in operating assets and liabilities:
Accounts receivable................................. 2,148 (2,702)
Inventories......................................... 341 831
Other current assets................................ (1,912) 73
Accounts payable.................................... 801 (607)
Accrued employee compensation....................... (265) 717
Accrued expenses.................................... 1,741 (4,152)
Accrued income taxes................................ (4,810) (512)
Deferred revenue.................................... 494 443
Other liabilities................................... 29 (24)
-------- -------
Net cash provided by operating activities............. 7,318 443
INVESTING ACTIVITIES
Acquisition of equipment and leasehold improvements,
net.................................................... (572) (1,948)
Acquisition of intangibles.............................. (204) --
-------- -------
Net cash used in investing activities................. (776) (1,948)
FINANCING ACTIVITIES
Sale of common stock.................................... 278 169
Borrowings from Seagate Technology, net................. (11,337) (1,536)
-------- -------
Net cash used in financing activities................. (11,059) (1,367)
Effect of exchange rate changes on cash................. (195) (38)
-------- -------
Decrease in cash...................................... (4,712) (2,910)
Cash at the beginning of the period..................... 15,130 12,085
-------- -------
Cash at the end of the period........................... $ 10,418 $ 9,175
======== =======
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest................................ $ -- $ 14
Cash paid for income taxes............................ 5,201 991
</TABLE>

See notes to condensed consolidated financial statements.

F-30
<PAGE>

SEAGATE SOFTWARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION. The consolidated condensed financial statements have
been prepared by Seagate Software, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. Seagate Software believes the
disclosures included in the unaudited condensed consolidated financial
statements, when read in conjunction with the consolidated financial statements
of Seagate Software as of July 3, 1998 and notes thereto, are adequate to make
the information presented not misleading.

The condensed consolidated financial statements reflect, in the opinion of
management, all normal recurring adjustments necessary to summarize fairly the
consolidated financial position, results of operations and cash flows for such
periods.

The results of operations for the three months ended October 2, 1998 are not
necessarily indicative of the results that may be expected for the fiscal year
ending July 2, 1999.

Seagate Software operates and reports financial results on a fiscal year of 52
or 53 weeks ending on the Friday closest to June 30. Accordingly, fiscal 1998
was 53 weeks and ended on July 3, 1998 and fiscal 1999 will be 52 weeks and
will end on July 2, 1999. All references to years in this Form 10-Q represent
fiscal years unless otherwise noted.

REVENUE RECOGNITION. Seagate Software's revenues are primarily derived from the
sale of product licenses, software maintenance, technical support, training and
consulting. During the first quarter of 1999, Seagate Software began
recognizing license revenues in accordance with the American Institute of
Certified Public Accountants Statement of Position 97-2, "Software Revenue
Recognition". Revenues from software license agreements are generally
recognized at the time of product delivery, provided that fees are fixed or
determinable, evidence of an arrangement exists, collectibility is probable and
Seagate Software has vendor-specific objective evidence of fair value. Service
revenues from customer maintenance fees for ongoing customer support and
product updates are recognized ratably over the maintenance term, which is
typically 12 months. Service revenues from training and consulting are
recognized when such services are performed.

NET INCOME (LOSS) PER SHARE. Basic net income (loss) per common share is
computed using the weighted average number of shares of common stock
outstanding during the period. For periods in which Seagate Software had
losses, common equivalent shares from stock options, shares subject to
repurchase and convertible preferred stock are excluded from the computation of
diluted net loss per share, as their effect is antidilutive. Below is a
reconciliation of the numerator and denominator used to calculate basic and
diluted earnings per share (in thousands, except share and per share data):

F-31
<PAGE>

SEAGATE SOFTWARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------
OCTOBER 2, OCTOBER 3,
1998 1997
----------- ----------
<S> <C> <C>
Basic net income (loss) per share computation:
Numerator:
Net income (loss)................................... $ 852 $ (2,915)
----------- --------
Denominator:
Weighted average number of common shares outstanding
during the period.................................. 275,314 103,659
----------- --------
Net income (loss) per share--basic................ $ 3.09 $ (28.12)
=========== ========
Diluted net income (loss) per share computation:
Numerator:
Net income (loss)................................... $ 852 $ (2,915)
----------- --------
Denominator:
Weighted average number of common shares outstanding
during the period.................................. 275,314 103,659
Convertible preferred stock......................... 54,633,333 --
Incremental common shares attributable to exercise
of outstanding options and shares subject to
repurchase (assuming proceeds would be used to
purchase treasury stock)........................... 5,075,571 --
----------- --------
59,984,218 103,659
----------- --------
Net income (loss) per share--diluted.............. $ 0.01 $ (28.12)
=========== ========
</TABLE>

For the period ended October 3, 1997, 11,332 shares of common stock subject to
repurchase at an average exercise price of $6.00 per share and options to
purchase 7,789,770 shares of common stock at an average exercise price of $5.24
per share were excluded from the computation of diluted earnings per share
because the effect would have been antidilutive.

ACCOUNTS RECEIVABLE. Accounts receivable are summarized below, in thousands:

<TABLE>
<CAPTION>
OCTOBER 2, JULY 3,
1998 1998
---------- --------
<S> <C> <C>
Accounts receivable..................................... $ 46,126 $ 48,200
Less allowance for non-collection....................... (1,710) (1,636)
-------- --------
$ 44,416 $ 46,564
======== ========

EQUIPMENT AND LEASEHOLD IMPROVEMENTS. Equipment and leasehold improvements
consisted of the following, in thousands:

<CAPTION>
OCTOBER 2, JULY 3,
1998 1998
---------- --------
<S> <C> <C>
Equipment............................................... $ 32,431 $ 30,999
Leasehold improvements.................................. 8,495 9,424
-------- --------
40,926 40,423
Less accumulated depreciation and amortization.......... (25,669) (23,547)
-------- --------
$ 15,257 $ 16,876
======== ========
</TABLE>

F-32
<PAGE>

SEAGATE SOFTWARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)

GOODWILL AND OTHER INTANGIBLES. Goodwill and other intangibles consisted of the
following, in thousands:

<TABLE>
<CAPTION>
OCTOBER 2, JULY 3,
1998 1998
---------- --------
<S> <C> <C>
Goodwill................................................ $ 44,968 $ 44,953
Developed technology.................................... 48,239 48,049
Trademarks.............................................. 9,972 9,972
Assembled workforce..................................... 4,596 4,596
Distribution network.................................... 2,925 2,925
Other intangibles....................................... 13,813 13,813
-------- --------
124,513 124,308
Accumulated amortization................................ (76,494) (70,429)
-------- --------
Goodwill and other intangibles.......................... $ 48,019 $ 53,879
======== ========
</TABLE>

COMMON STOCK SUBJECT TO REPURCHASE. Current employees and directors of Seagate
Software and of Seagate Technology have exercised 732,042 shares of common
stock under the 1996 Stock Option Plan (the "Option Plan"). At October 2, 1998,
279,242 shares were vested and 452,800 shares were unvested. At the option of
the employee or director, within 30 days of termination such vested and
unvested shares may be sold back to Seagate Software at the original issue
price. In addition, upon termination, unvested shares are subject to repurchase
at the option of Seagate Software at original issue price. Because of the
obligation to repurchase vested and unvested shares of common stock, Seagate
Software has excluded the amounts associated with the repurchase obligation
from Stockholders' Equity in the accompanying balance sheet. At October 2,
1998, the repurchase obligation amounted to $3,899,000.

NEW ACCOUNTING PRONOUNCEMENTS

F-33
<PAGE>

SEAGATE SOFTWARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)

prescribed by SOP 98-1 will be effective for Seagate Software's consolidated
financial statements for the fiscal year ending June 30, 2000.

STOCKHOLDERS' EQUITY

Shares authorized and outstanding are as follows:

<TABLE>
<CAPTION>
SHARES OUTSTANDING
---------------------
OCTOBER 2, JULY 3,
1998 1998
---------- ----------
<S> <C> <C>
Preferred stock, par value $.001 per share,
73,000,000 shares authorized....................... 54,633,333 54,633,333
Common stock, par value $.001 per share, 95,600,000
shares authorized.................................. 298,320 235,502
</TABLE>

INCOME TAXES

Seagate Software expects its annual effective tax rate on anticipated operating
income for fiscal 1999 (see "Subsequent Event") to approximate 55% absent the
effects, if any, of the anticipated contribution of Seagate Software's Network
& Storage Management Group to Veritas Holding Corporation. The projected
effective tax rate exceeds the U.S. statutory rate primarily due to the
amortization of goodwill and certain other purchased intangible assets that are
not deductible for tax purposes, expected foreign losses in certain
jurisdictions for which no tax benefit can be recognized currently, and foreign
taxes on certain earnings generated in higher tax rate jurisdictions. This
expected annual effective tax rate of 55% has been used to record the provision
for income taxes for the three month period ended October 2, 1998 compared with
a 17% effective tax rate, used to record the benefit for income taxes for the
three month period ended October 3, 1997. The effective tax rate used to record
the benefit for income taxes for the three month period ended October 3, 1997
was less than the U.S. statutory rate primarily due to increases in the
valuation allowance for deferred tax assets and the amortization of
nondeductible goodwill.

F-34
<PAGE>

SEAGATE SOFTWARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)

and domestic tax credits can be impacted by Seagate Technology's anticipated
operating income for fiscal 1999. Accordingly, Seagate Software's expected
annual effective tax rate of 55% on anticipated operating income may be
subject to adjustment in future quarters.

COMPREHENSIVE INCOME

As of July 4, 1998 Seagate Software adopted Statement of Financial Accounting
Standards No. 130 ("SFAS 130"), Reporting Comprehensive Income. SFAS 130
establishes new rules for the reporting and display of comprehensive income
and its components; however, the adoption of SFAS 130 had no impact on Seagate
Software's net income or stockholders' equity. SFAS 130 requires that foreign
currency translation adjustments, which prior to adoption were reported
separately in stockholders' equity, be included in other comprehensive income.
Accordingly, the differences between Seagate Software's comprehensive income
and net income for the periods presented are not material.

LITIGATION

See page of this Offering Circular/Prospectus for a description of legal
proceedings.

SUBSEQUENT EVENT

Seagate Software, its parent company, Seagate Technology, Inc. ("STI") and its
Seagate Software Network & Storage Management Group, Inc. ("NSMG") subsidiary
announced on October 5, 1998 that they had entered into an Agreement and Plan
of Reorganization (the "Plan") as of such date with Veritas Holding
Corporation ("Newco") and Veritas Software Corporation ("Veritas"). Veritas
provides end-to-end storage management software solutions. The Plan provides
for the contribution by Seagate Software, STI and certain of their respective
subsidiaries to Newco of (a) the outstanding stock of NSMG and certain other
subsidiaries of Seagate Software, and (b) those assets used primarily in the
network storage management business of Seagate Software (the "NSMG Business"),
in consideration for the issuance of shares of Common Stock of Newco to
Seagate Software and the offer by Newco to grant options to purchase Common
Stock of Newco to certain of Seagate Software's employees who become employees
of Newco or its subsidiaries. As part of the Plan, Newco will also assume
certain liabilities of the NSMG Business. The Plan is structured to qualify as
a tax-free exchange. The merger will be accounted for as a non-monetary
transaction using the fair value of the assets exchanged.

Upon consummation of the merger, Newco shall issue shares of Common Stock to
Seagate Software equal to approximately 40% of the fully diluted Common Stock
equivalent equity interests in Newco (assuming conversion of all convertible
securities, including the Veritas convertible debentures, and exercise of all
assumed options and warrants) less that number of shares of Newco Common Stock
issuable upon exercise of Newco options issued to Seagate Software employees
who surrender

F-35
<PAGE>

SEAGATE SOFTWARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)

their outstanding options to purchase shares of Seagate Software's Common
Stock. Upon consummation of the merger, the former security holders of Veritas
will be issued Newco securities representing approximately 60% of the fully
diluted Common Stock equivalent equity interests in Newco.

The merger is subject to a number of conditions, including but not limited to
the effectiveness of a Registration Statement on Form S-4 to be filed by Newco
with the Securities and Exchange Commission, approval by the stockholders of
Veritas and Seagate Software, the expiration or termination of the waiting
period (and any extension thereof) under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and other customary closing conditions.

Seagate Software anticipates recording a substantial gain and certain expenses
in connection with the merger. The gain will be recorded in fiscal 1999. The
expenses will include a substantial one-time write-off of in-process research
and development during fiscal 1999 as well as amortization of goodwill and
intangibles over periods up to five years following the merger. The magnitude
of the gain and expenses will depend on several factors, including the average
stock price of Veritas around the date of the merger, the number of shares of
stock exchanged and an independent valuation of Veritas' business. Seagate
Software will account for its investment in Veritas using the equity method and
currently anticipates the merger will be consummated in the third quarter of
fiscal 1999.

NSMG comprised approximately 53% of consolidated assets, 60% of consolidated
revenues, and (43)% of consolidated net loss at and for the fiscal year ended
1998 (60% of consolidated assets, 65% of consolidated revenues, and 493% of
consolidated net income at and for the first fiscal quarter of 1999). If the
exchange with Veritas is consummated along the lines currently contemplated, it
will result in a substantial reduction in ongoing consolidated revenues and
will result in net losses in periods subsequent to the exchange resulting from
the amortization of intangible assets and goodwill.

F-36
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF OFFICERS AND DIRECTORS

Section 145 of the Delaware General Corporation Law (the "Delaware Law")
authorizes a court to award, or a corporation's board of directors to grant,
indemnity to directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act. The
Registrant's Certificate of Incorporation and Bylaws provide for
indemnification of the Registrant's directors, officers, employees and other
agents to the maximum extent permitted by the Delaware Law. In addition, the
Registrant has entered into indemnification agreements with its officers and
directors.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits. The following exhibits are filed as part of this Registration
Statement.

<TABLE>
<CAPTION>
NOTES:
------
<C> <S> <C>
2.1 Agreement and Plan of Reorganization dated as of October 5,
1998 by and among Veritas Holding Corporation, Veritas
Software Corporation, the Registrant, Seagate Software, Inc.
and Seagate Software Network & Storage Management Group,
Inc........................................................... (A)
3.1 Certificate of Incorporation of Registrant, as amended........ (B)
3.2 By-Laws of Registrant, as amended............................. (C)
4.1 Indenture, dated as of March 1, 1997 (the "Indenture") between
Seagate Technology, Inc. (the "Company") and First Trust of
California, National Association, as Trustee.................. (D)
4.2 Officers' Certificate pursuant to Section 301 of the
Indenture, without exhibits, establishing the terms of Seagate
Software's senior notes and senior debentures................. (D)
4.3 Form of Senior Note........................................... (D)
4.4 Form of Senior Debenture...................................... (D)
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, PC............... *
8.1 Opinion regarding U.S. federal tax matters.................... *
10.1 1983 Incentive Stock Option Plan and form of Stock Option
Agreement..................................................... (E)
10.2 Seagate Technology Employee Stock Purchase Plan, as amended... (J)
10.3 Registrant's Executive Stock Plan............................. (H)
10.4 Conner Peripherals, Inc. 1986 Incentive Stock Plan............ (H)
10.5 Building Agreement for Land at Private Lot A14547 in Yio Chu
Kang dated May 30, 1996 between Seagate Technology
International and Jurong Town Corporation..................... (J)
10.6 Lease Agreement dated July 18, 1994 between Universal
Appliances Limited and Seagate Technology (Thailand) Limited.. (J)
10.7 1991 Incentive Stock Option Plan and Form of Option Agreement,
as amended.................................................... (J)
10.8 Acquisition Agreement dated as of September 29, 1989 by and
among the Registrant, Control Data Corporation, Imprimus
Technology Incorporated and Magnetic Peripherals, Inc......... (F)
10.9 Amended and Restated Directors' Option Plan and Form of Option
Agreement..................................................... (G)
10.10 Amended and Restated Archive Corporation Stock Option and
Restricted Stock Purchase Plan--1981.......................... (H)
10.11 Amended and Restated Archive Corporation Incentive Stock
Option Plan--1981............................................. (H)
10.12 Conner Peripherals, Inc.--Arcada Holdings, Inc. Stock Option
Plan.......................................................... (I)
10.13 Arcada Holdings, Inc. 1994 Stock Option Plan.................. (I)
10.14 Separation Agreement and Release between the Registrant and
Alan F. Shugart dated as of July 29, 1998..................... (J)
</TABLE>

II-1
<PAGE>

<TABLE>
<CAPTION>
NOTES:
------
<C> <S> <C>
21.1 Subsidiaries of the Registrant................................ (J)
23.1 Consent of Ernst & Young LLP, Independent Auditors............
23.2 Consent of Ernst & Young LLP, Independent Auditors............
23.3 Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (included in Exhibit 5.1).........................
24.1 Power of Attorney (included on page II-6).....................
27.1 Financial Data Schedule....................................... (J)
</TABLE>
- --------
(A) Incorporated by reference to exhibits filed in response to Item 7(c),
"Exhibits," of Seagate Software's Current Report on Form 8-K dated October
5, 1998.
(B) Incorporated by reference to exhibits filed in response to Item 16,
"Exhibits," of Seagate Software's Registration Statement on Form S-3 (File
No. 33-13430) filed with the Securities and Exchange Commission on April
14, 1987.
(C) Incorporated by reference to exhibits filed in response to Item 14(a),
"Exhibits," of Seagate Software's Form 10-K, as amended, for the fiscal
year ended June 30, 1990.
(D) Incorporated by reference to exhibits filed in response to Item 7(b),
"Financial Statements and Exhibits" of Seagate Software's Current Report on
Form 8-K dated March 4, 1997.
(E) Incorporated by reference to exhibits filed in response to Item 14(a),
"Exhibits," of Seagate Software's Form 10-K for the fiscal year ended June
30, 1983.
(F) Incorporated by reference to exhibits filed in response to Item 7(c),
"Exhibits," of Seagate Software's Current Report on Form 8-K dated October
2, 1989.
(G) Incorporated by reference to exhibits filed in response to Item 14(a),
"Exhibits," of Seagate Software's Form 10-K for the fiscal year ended June
30, 1991.
(H) Incorporated by reference to exhibits filed with Registrant's Registration
Statement on Form S-8 (registration number 333-00697) as filed with the
Commission on February 5, 1996.
(I) Incorporated by reference to exhibits filed with Registrant's Registration
Statement on Form S-8 (registration number 333-01059) as filed with the
Commission on February 21, 1996.
(J) Incorporated by reference to exhibits filed with Registrant's Registration
Statement on Form 10-K for the fiscal year ended July 3, 1998 as filed with
the Commission on August 20, 1998.
* To be filed by amendment.

(b) Financial Statement Schedules.

Schedule II--Valuation and Qualifying Accounts

Schedules not listed above have been omitted because they are not
applicable or are not required or the information required to be set forth
therein is included in the Consolidated Financial Statements or notes
thereto.

II-2
<PAGE>

ITEM 22. UNDERTAKINGS

(a) the undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement or any material change to such
information in the Registration Statement set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective Registration Statement.

(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

(3) To remove form registration by means of post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.

(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(c) The undersigned registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable forms.

(d) The registrant undertakes that every prospectus: (i) that is filed pursuant
to paragraph (c) immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Securities Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the Registration Statement and will not be used until
such

II-3
<PAGE>

amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bonafide offering thereof.

(e) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, and otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final of such issue.

(f) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day after receipt
of such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through
the date of responding to the request.

(g) The undersigned registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and Seagate
Software being acquired involved therein, that was not the subject of and
included in the Registration Statement when it becomes effective.

II-4
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Scotts
Valley, State of California, on the 19th day of November 1998.

Seagate Technology, Inc.

/s/ Stephen J. Luczo
By: _________________________________
Stephen J. Luczo
Chief Executive Officer,
President,and a Director

II-5
<PAGE>

POWER OF ATTORNEY

The undersigned directors and officers of Seagate Technology, Inc. hereby
constitute and appoint Stephen J. Luczo and Charles C. Pope, with full power to
act and with full power of substitution and resubstitution, our true and lawful
attorneys-in-fact with full power to execute in our name and behalf in the
capacities indicated below any and all amendments (including post-effective
amendments and amendments thereto) to this Registration Statement and to file
the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission and hereby ratify and
confirm all that such attorneys- in-fact or substitutes shall lawfully do or
cause to be done by virtue hereof.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.

SIGNATURE TITLE DATE

<S> <C> <C>
/s/ Stephen J. Luczo Chief Executive November 19, 1998
- ------------------------------------- Officer, President,
STEPHEN J. LUCZO and a Director
(Principal
Executive Officer)

/s/ Charles C. Pope Senior Vice November 19, 1998
- ------------------------------------- President and Chief
CHARLES C. POPE Financial Officer
(Principal
Financial and
Accounting Officer)

/s/ Gary B. Filler Co-Chairman of the November 19, 1998
- ------------------------------------- Board
GARY B. FILLER

/s/ Lawrence Perlman Co-Chairman of the November 19, 1998
- ------------------------------------- Board
LAWRENCE PERLMAN

/s/ Kenneth Haughton Director November 19, 1998
- -------------------------------------
KENNETH HAUGHTON

/s/ Robert A. Kleist Director November 19, 1998
- -------------------------------------
ROBERT A. KLEIST

/s/ Thomas P. Stafford Director November 19, 1998
- -------------------------------------
THOMAS P. STAFFORD

/s/ Laurel L. Wilkening Director November 19, 1998
- -------------------------------------
LAUREL L. WILKENING
</TABLE>

II-6
<PAGE>

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
BALANCE AT CHARGED TO
BEGINNING OF COSTS AND DEDUCTIONS- BALANCE AT END
DESCRIPTION PERIOD EXPENSES DESCRIBE (1) OF PERIOD
----------- ------------ ---------- ------------ --------------
<S> <C> <C> <C> <C>
YEAR ENDED JULY 3, 1998:
Deducted from asset
accounts:
Allowance for doubtful
accounts.............. $1,270,000 $1,177,000 $811,000 $1,636,000
========== ========== ======== ==========
YEAR ENDED JUNE 27, 1997:
Deducted from asset
accounts:
Allowance for doubtful
accounts.............. $ 597,000 $1,522,000 $849,000 $1,270,000
========== ========== ======== ==========
YEAR ENDED JUNE 28, 1996:
Deducted from asset
accounts:
Allowance for doubtful
accounts.............. $ 405,000 $ 408,000 $216,000 $ 597,000
========== ========== ======== ==========
</TABLE>
- --------
(1) Uncollectible accounts written off, net of recoveries.

II-7
<PAGE>

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NO. DOCUMENT DESCRIPTION NOTES:
------- -------------------- ------
<C> <S> <C>
2.1 Agreement and Plan of Reorganization dated as of October 5, (A)
1998 by and among Veritas Holding Corporation, Veritas
Software Corporation, the Registrant, Seagate Software,
Inc. and Seagate Software Network & Storage Management
Group, Inc.
3.1 Certificate of Incorporation of Registrant, as amended. (B)
3.2 By-Laws of Registrant, as amended. (C)
4.1 Indenture, dated as of March 1, 1997 (the "Indenture") (D)
between Seagate Technology, Inc. (the "Company") and First
Trust of California, National Association, as Trustee.
4.2 Officers' Certificate pursuant to Section 301 of the (D)
Indenture, without exhibits, establishing the terms of
Seagate Software's senior notes and senior debentures.
4.3 Form of Senior Note. (D)
4.4 Form of Senior Debenture. (D)
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, PC. *
8.1 Opinion regarding U.S. federal tax matters. *
10.1 1983 Incentive Stock Option Plan and form of Stock Option (E)
Agreement.
10.2 Seagate Technology Employee Stock Purchase Plan, as amended. (J)
10.3 Registrant's Executive Stock Plan. (H)
10.4 Conner Peripherals, Inc. 1986 Incentive Stock Plan. (H)
10.5 Building Agreement for Land at Private Lot A14547 in Yio Chu (J)
Kang dated May 30, 1996 between Seagate Technology
International and Jurong Town Corporation.
10.6 Lease Agreement dated July 18, 1994 between Universal (J)
Appliances Limited and Seagate Technology (Thailand)
Limited.
10.7 1991 Incentive Stock Option Plan and Form of Option (J)
Agreement, as amended.
10.8 Acquisition Agreement dated as of September 29, 1989 by and (F)
among the Registrant, Control Data Corporation, Imprimus
Technology Incorporated and Magnetic Peripherals, Inc.
10.9 Amended and Restated Directors' Option Plan and Form of (G)
Option Agreement.
10.10 Amended and Restated Archive Corporation Stock Option and (H)
Restricted Stock Purchase Plan--1981.
10.11 Amended and Restated Archive Corporation Incentive Stock (H)
Option Plan--1981.
10.12 Conner Peripherals, Inc.--Arcada Holdings, Inc. Stock Option (I)
Plan.
10.13 Arcada Holdings, Inc. 1994 Stock Option Plan. (I)
10.14 Separation Agreement and Release between the Registrant and (J)
Alan F. Shugart dated as of July 29, 1998.
21.1 Subsidiaries of the Registrant. (J)
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Ernst & Young LLP, Independent Auditors
23.3 Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (included in Exhibit 5.1)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NO. DOCUMENT DESCRIPTION NOTES:
------- -------------------- ------
<C> <S> <C>
24.1 Power of Attorney (included on page II-6).
27.1 Financial Data Schedule. (J)
</TABLE>
- --------
(A) Incorporated by reference to exhibits filed in response to Item 7(c),
"Exhibits," of Seagate Software's Current Report on Form 8-K dated October
5, 1998.
(B) Incorporated by reference to exhibits filed in response to Item 16,
"Exhibits," of Seagate Software's Registration Statement on Form S-3 (File
No. 33-13430) filed with the Securities and Exchange Commission on April
14, 1987.
(C) Incorporated by reference to exhibits filed in response to Item 14(a),
"Exhibits," of Seagate Software's Form 10-K, as amended, for the fiscal
year ended June 30, 1990.
(D) Incorporated by reference to exhibits filed in response to Item 7(b),
"Financial Statements and Exhibits" of Seagate Software's Current Report on
Form 8-K dated March 4, 1997.
(E) Incorporated by reference to exhibits filed in response to Item 14(a),
"Exhibits," of Seagate Software's Form 10-K for the fiscal year ended June
30, 1983.
(F) Incorporated by reference to exhibits filed in response to Item 7(c),
"Exhibits," of Seagate Software's Current Report on Form 8-K dated October
2, 1989.
(G) Incorporated by reference to exhibits filed in response to Item 14(a),
"Exhibits," of Seagate Software's Form 10-K for the fiscal year ended June
30, 1991.
(H) Incorporated by reference to exhibits filed with Registrant's Registration
Statement on Form S-8 (registration number 333-00697) as filed with the
Commission on February 5, 1996.
(I) Incorporated by reference to exhibits filed with Registrant's Registration
Statement on Form S-8 (registration number 333-01059) as filed with the
Commission on February 21, 1996.
(J) Incorporated by reference to exhibits filed with Registrant's Registration
Statement on Form 10-K for the fiscal year ended July 3, 1998 as filed with
the Commission on August 20, 1998.
* To be filed by amendment.

<PAGE>

EXHIBIT 23.1

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" in this
Registration Statement (Form S-4) of Seagate Technology, Inc. for the
registration of shares of its common stock and to the incorporation by
reference therein of our report dated July 14, 1998 (except for the second
paragraph of the Acquisition note, as to which the date is July 31, 1998, and
the first and second paragraphs of the Patent Litigation note, as to which the
date is August 17, 1998) with respect to the consolidated financial statements
of Seagate Technology, Inc. incorporated by reference in its Annual Report
(Form 10-K) for the year ended July 3, 1998 and the related financial statement
schedules included therein, filed with the Securities and Exchange Commission.

/s/ Ernst & Young LLP

San Jose, California
November 13, 1998

<PAGE>

EXHIBIT 23.2

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to the
use of our reports dated July 17, 1998, with respect to the financial
statements of Seagate Software, Inc. included in this Registration Statement
(Form S-4) of Seagate Technology, Inc. for the registration of shares of its
common stock.

Our audits also included the financial statement schedule of Seagate Software,
Inc. for each of the three years in the period ended July 3, 1998 listed in
Item 21(b) of this Registration Statement. This schedule is the responsibility
of the Company's management. Our responsibility is to express an opinion based
on our audits. In our opinion, the financial statement schedule referred to
above, when considered in relation to the basic financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.

/s/ Ernst & Young LLP

San Jose, California
November 13, 1998