<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended December 31, 1999
Commission File Number 001-11403
SEAGATE TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-2612933
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
920 Disc Drive, Scotts Valley, California 95066
(Address of principal executive offices) (Zip Code)
Telephone: (831) 438-6550
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
On December 31, 1999, 215,847,927 shares of the registrant's common stock were
issued and outstanding.
<PAGE>
INDEX
SEAGATE TECHNOLOGY, INC.
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE NO.
--------------------------------------------------------------------------------------------
<S> <C> <C>
Item 1. Financial Statements (Unaudited)
Consolidated condensed statements of operations--
Three and six months ended December 31, 1999 and
January 1, 1999 3
Consolidated condensed balance sheets--
December 31, 1999 (As amended June 14, 2000)
and July 2, 1999 4
Consolidated condensed statements of cash flows--
Six months ended December 31, 1999 and
January 1, 1999 5
Notes to consolidated condensed financial statements
(As amended June 14, 2000 to revise Note 8) 6
PART II OTHER INFORMATION
--------------------------------------------------------------
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
</TABLE>
2
<PAGE>
SEAGATE TECHNOLOGY, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In Millions, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------------- --------------------------
December 31, January 1, December 31, January 1,
1999 1999 1999 1999
------------ ---------- ------------ -----------
<S> <C> <C> <C> <C>
Revenue $1,645 $1,801 $3,327 $3,354
Cost of sales 1,334 1,373 2,738 2,605
Product development 146 156 286 297
Marketing and administrative 125 135 243 266
Amortization of goodwill and
other intangibles 8 11 17 20
Restructuring costs 23 - 135 -
Unusual items 325 - 325 78
------ ------ ------ ------
Total Operating Expenses 1,961 1,675 3,744 3,266
Income (Loss) from Operations (316) 126 (417) 88
Interest income 21 27 42 53
Interest expense (13) (12) (26) (25)
Activity related to equity interest
in VERITAS (84) - (183) -
Gain on sale of VERITAS stock 344 - 537 -
Gain on sale of SanDisk stock 62 - 62 -
Other - 4 (2) 8
------ ------ ------ ------
Other Income (Expense), net 330 19 430 36
------ ------ ------ ------
Income before income taxes 14 145 13 124
Provision for income taxes 72 41 70 50
------ ------ ------ ------
Net Income (Loss) $ (58) $ 104 $ (57) $ 74
====== ====== ====== ======
Net income (loss) per share:
Basic $(0.27) $ 0.43 $(0.26) $ 0.30
Diluted (0.27) 0.42 (0.26) 0.30
Number of shares used in
per share computations:
Basic 214.8 244.9 216.7 245.0
Diluted 214.8 250.4 216.7 249.1
</TABLE>
See notes to consolidated condensed financial statements.
3
<PAGE>
SEAGATE TECHNOLOGY, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Millions)
(Unaudited)
<TABLE>
<CAPTION>
December 31, July 2,
ASSETS 1999 1999 (1)
------ ------------- ---------
<S> <C> <C>
Cash and cash equivalents $ 486 $ 396
Short-term investments 1,057 1,227
Accounts receivable, net 779 872
Inventories 369 451
Deferred income taxes 254 252
Other current assets 145 114
------- -------
Total Current Assets 3,090 3,312
Property, equipment and leasehold improvements, net 1,591 1,687
Investment in VERITAS Software, net 1,265 1,745
Goodwill and other intangibles, net 146 144
Other assets (2) 847 184
------- -------
Total Assets $ 6,939 $ 7,072
======= =======
LIABILITIES
-----------
Accounts payable $ 630 $ 714
Accrued employee compensation 189 205
Accrued expenses 574 577
Accrued income taxes 276 43
Current portion of long-term debt 1 1
------- -------
Total Current Liabilities 1,670 1,540
Deferred income taxes (2) 1,171 1,103
Other liabilities 168 163
Long-term debt, less current portion 704 703
------- -------
Total Liabilities 3,713 3,509
------- -------
STOCKHOLDERS' EQUITY
--------------------
Common stock 3 3
Additional paid-in capital 1,752 1,991
Retained earnings 2,202 2,355
Accumulated other comprehensive income (loss) (2) 392 (7)
Deferred compensation (36) (43)
Treasury common stock at cost (1,087) (736)
------- -------
Total Stockholders' Equity 3,226 3,563
------- -------
Total Liabilities and Stockholders' Equity $ 6,939 $ 7,072
======= =======
</TABLE>
(1) The information in this column was derived from the Company's audited
consolidated balance sheet as of July 2, 1999.
(2) See Note 8 to the consolidated condensed financial statements.
See notes to consolidated condensed financial statements.
4
<PAGE>
SEAGATE TECHNOLOGY, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In Millions)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
-------------------------
December 31, January 1,
1999 1999
------------ ----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ (57) $ 74
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 351 333
Deferred income taxes (192) 67
Non-cash portion of restructuring charge 76 -
Activity related to equity interest in VERITAS 183 -
Gain on sale of VERITAS stock (537) -
Gain on sale of SanDisk stock (62) -
Compensation expense for SSI exchange offer 284 -
Other, net 53 25
Changes in operating assets and liabilities:
Accounts receivable 85 (33)
Inventories 63 89
Accounts payable (86) (1)
Accrued income taxes (5) 5
Accrued expenses and employee compensation (135) 24
Other assets and liabilities, net 12 146
------- -------
Net cash provided by operating activities 33 729
INVESTING ACTIVITIES:
Acquisition of property, equipment and leasehold
improvements, net (279) (259)
Purchases of short-term investments (1,639) (3,676)
Maturities and sales of short-term investments 1,803 3,550
Proceeds from sale of VERITAS stock 834 -
Proceeds from sale of SanDisk stock 67 -
Other, net (19) (20)
------- -------
Net cash provided by (used in) investing activities 767 (405)
FINANCING ACTIVITIES:
Sale of common stock 65 39
Purchase of treasury stock (776) (101)
Other, net 1 (1)
------- -------
Net cash provided by (used in) financing activities (710) 63
Effect of exchange rate changes on cash and cash equivalents - (1)
------- -------
Increase in cash and cash equivalents 90 260
Cash and cash equivalents at the beginning of the period 396 666
------- -------
Cash and cash equivalents at the end of the period $ 486 $ 926
======= =======
</TABLE>
See notes to consolidated condensed financial statements.
5
<PAGE>
SEAGATE TECHNOLOGY, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
---------------------
The consolidated condensed financial statements have been prepared by the
Company, 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. The Company
believes the disclosures included in the unaudited consolidated condensed
financial statements, when read in conjunction with the consolidated
financial statements of the Company as of July 2, 1999 and notes thereto,
are adequate to make the information presented not misleading.
The consolidated condensed financial statements reflect, in the opinion of
management, all material adjustments necessary to summarize fairly the
consolidated financial position, results of operations and cash flows for
such periods. Such adjustments are of a normal recurring nature.
The results of operations for the three and six month periods ended
December 31, 1999 are not necessarily indicative of the results that may be
expected for the entire fiscal year ending June 30, 2000.
The Company operates and reports financial results on a fiscal year of 52
or 53 weeks ending on the Friday closest to June 30. Accordingly, fiscal
1999 was 52 weeks and ended on July 2, 1999 and fiscal 2000 will be 52
weeks and will end on June 30, 2000.
2. Net Income (Loss) Per Share
---------------------------
The following table sets forth the computation of basic and diluted net
income (loss) per share:
<TABLE>
<CAPTION>
(In Millions, Except Three Months Ended Six Months Ended
Per Share Data) ------------------------- -------------------------
December 31, January 1, December 31, January 1,
1999 1999 1999 1999
------------ ---------- ------------- ----------
<S> <C> <C> <C> <C>
Numerator:
Net income (loss) $ (58) $ 104 $ (57) $ 74
------ ------ ------ ------
Denominator:
Denominator for basic net
income (loss) per share - weighted
average shares outstanding 214.8 244.9 216.7 245.0
</TABLE>
6
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Incremental common shares
attributable to exercise of
outstanding options (assuming
proceeds would be used to
purchase treasury stock) - 5.5 - 4.1
------ ------ ------ ------
Denominator for diluted net
income (loss) per share - adjusted
weighted average shares 214.8 250.4 216.7 249.1
====== ====== ====== ======
Basic net income (loss)
per share $(0.27) $ 0.43 $(0.26) $ 0.30
====== ====== ====== ======
Diluted net income (loss)
per share $(0.27) $ 0.42 $(0.26) $ 0.30
====== ====== ====== ======
</TABLE>
For the quarter and six months ended December 31, 1999, all options to
purchase shares of common stock, including 8.3 million shares and 6.9
million shares, respectively, were excluded from the computation of diluted
net loss per share because the effect would be anti-dilutive. Options to
purchase 3.1 million shares and 10.1 million shares of common stock were
outstanding during the quarter and six months ended January 1, 1999,
respectively, but were not included in the computation of diluted net
income per share because the options' exercise price was greater than the
average market price of the common stock and, therefore, the effect would
be antidilutive.
3. Balance Sheet Information
-------------------------
(In millions)
<TABLE>
<CAPTION>
December 31, July 2,
1999 1999
------------- --------
<S> <C> <C>
Accounts Receivable:
Accounts receivable $ 851 $ 925
Allowance for non-collection (72) (53)
------- -------
$ 779 $ 872
======= =======
Inventories:
Components $ 95 $ 143
Work-in-process 68 54
Finished goods 206 254
------- -------
$ 369 $ 451
======= =======
Property, Equipment and Leasehold Improvements:
Property, equipment and leasehold improvements $ 3,549 $ 3,533
Allowance for depreciation and amortization (1,958) (1,846)
------- -------
$ 1,591 $ 1,687
======= =======
</TABLE>
7
<PAGE>
4. Income Taxes
------------
The effective tax rate used to record the provision for income taxes for
the six months ended December 31, 1999 was 534% compared with a 40%
effective tax rate used to record the provision for income taxes for the
six months ended January 1, 1999. The higher effective tax rate used to
record the provision for income taxes for the six months ended December 31,
1999 resulted primarily from the effects of net non-deductible charges
associated with the acquisition of the minority interest in Seagate
Software, the net gain from the sales of VERITAS Software Corporation
("VERITAS") and SanDisk Corporation ("SanDisk") common stock and activity
related to the Company's equity interest in VERITAS. Excluding these
items, the Company's settlement of litigation with Rodime PLC (the "Rodime
Settlement") and certain non-recurring restructuring costs, the pro forma
effective tax rate used to record the provision for income taxes for the
six months ended December 31, 1999 would have been 28%. The pro forma
effective tax rate of 28% is less than the statutory rate because a portion
of the Company's anticipated foreign operating income is not subject to
foreign income taxes and is considered to be permanently reinvested in non-
U.S. operations.
5. Supplemental Cash Flow Information
----------------------------------
(In millions)
<TABLE>
<CAPTION>
Six Months Ended
------------------------
December 31, January 1,
1999 1999
------------ ----------
<S> <C> <C>
Cash Transactions:
Cash paid for interest $ 26 $ 26
Cash paid for income taxes, net of refunds 261 (123)
Non-Cash Transactions:
Acquisition of minority interest 19 -
</TABLE>
6. Restructuring Costs
-------------------
In the quarters ended October 1, 1999 and December 31, 1999, the Company
recorded restructuring charges of $112 million and $23 million,
respectively, for a total of $135 million. These charges were a result of
a restructuring plan established to align the Company's global workforce
and manufacturing capacity with existing and anticipated future market
requirements and necessitated by the Company's improved productivity and
operating efficiencies (the "fiscal 2000 restructuring plan"). These
actions include workforce reductions, capacity reductions including closure
of facilities or portions of facilities, write-off of excess equipment and
consolidation of operations in the Company's recording media operations,
disc drive assembly and test facilities, printed circuit board assembly
manufacturing, recording head operations, software operations, customer
service operations, sales and marketing activities, and research and
development activities. The restructuring charges were comprised of $48
million for the write-off of excess manufacturing, assembly and test
equipment formerly utilized in Singapore, Thailand and Northern California;
$46 million for employee termination costs; $29 million for the write-off
of owned facilities located in Singapore; $5 million in lease termination
and holding costs; $5 million in renovation costs to restore facilities in
Singapore and Northern
8
<PAGE>
California to their pre-lease condition; and $2 million in contract
cancellations associated with one of the Singapore facilities. Prior to
this period, there was no indication of permanent impairment of the assets
associated with the closure and consolidation of facilities.
In connection with the restructuring activities taken to date, the Company
plans to reduce its workforce by approximately 11,300 employees.
Approximately 8,800 of the 11,300 employees had been terminated as of
December 31, 1999. As a result of employee terminations and the write-off
of equipment and facilities in connection with the restructuring charges
recorded in the quarters ended October 1, 1999 and December 31, 1999
related to the fiscal 2000 restructuring plan, the Company estimates that
after completion of these restructuring activities, annual salary and
depreciation expense will be reduced by approximately $82 million and $73
million, respectively. As the Company implements additional actions
pursuant to the fiscal 2000 restructuring plan, the Company anticipates
that additional charges will be taken related to these actions and that the
implementation of the fiscal 2000 restructuring plan will be substantially
complete by September 30, 2000.
In connection with the restructuring plan implemented in fiscal 1999,
approximately 800 of the planned workforce reduction of 1,250 employees had
been terminated as of December 31, 1999. As a result of employee
terminations and the write-off or write-down of equipment and facilities in
connection with the fiscal 1999 restructuring plan, the Company estimates
that after completion of these restructuring activities, annual salary and
depreciation expense will be reduced by approximately $27 million and $16
million, respectively. The Company anticipates that the implementation of
the fiscal 1999 restructuring plan will be substantially complete by the
end of March 2000.
The following table summarizes the Company's restructuring
activities for the six months ended December 31, 1999:
<TABLE>
<CAPTION>
Severance
and Excess Contract
In millions Benefits Facilities Equipment Cancellations Other Total
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Reserve balances,
July 2, 1999 $ 4 $ 18 $ - $ 3 $ 11 $ 36
Q1FY00 restructuring charge 27 33 48 2 2 112
Q2FY00 restructuring charge 19 1 - - 3 23
Cash charges (26) (5) - - (1) (32)
Non-cash charges - (28) (48) - - (76)
---------------------------------------------------------------------
Reserve balances,
December 31, 1999 $ 24 $ 19 $ - $ 5 $ 15 $ 63
=====================================================================
</TABLE>
7. Business Segments
-----------------
The Company has three operating segments, disc drives, software and tape
drives, however, only the disc drive business is a reportable segment under
the criteria of SFAS 131. The "other" category in the following tables
consists of tape drives, software, and
9
<PAGE>
out-of-warranty repair. The Chief Executive Officer (the "CEO") has been
identified as the Chief Operating Decision Maker as defined by SFAS 131.
The CEO evaluates performance and allocates resources based on revenue and
gross profit from operations. Gross profit from operations is defined as
revenue less cost of sales. The following tables summarize the Company's
operations by business segment:
In millions
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------------- ------------------------
December 31, January 1, December 31, January 1,
1999 1999 1999 1999
------------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
Revenue:
Disc Drives $ 1,534 $ 1,622 $3,100 $3,013
Other 111 179 227 341
-------- -------- ------ ------
Consolidated $ 1,645 $ 1,801 $3,327 $3,354
======== ======== ====== ======
Gross Profit:
Disc Drives $ 258 $ 325 $ 489 $ 563
Other 53 103 100 186
-------- -------- ------ ------
Consolidated $ 311 $ 428 $ 589 $ 749
======== ======== ====== ======
</TABLE>
<TABLE>
<CAPTION>
December 31, July 2,
1999 1999
------------ --------
<S> <C> <C>
Total Assets (see note 8):
Disc Drives $ 18,071 $ 16,553
Other 210 586
-------- --------
Operating Segments 18,281 17,139
Investment in VERITAS 1,265 1,745
Eliminations (12,607) (11,812)
-------- --------
Consolidated $ 6,939 $ 7,072
======== ========
</TABLE>
8. Comprehensive Income (As amended June 14, 2000)
-----------------------------------------------
During the quarter ended October 1, 1999, Gadzoox Networks Inc.
("Gadzoox"), a company in which Seagate Technology holds a 19.89% interest,
completed an initial public offering of its common stock. The Company is
required to account for its investment under Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt
and Equity Securities" ("SFAS 115"). The Company has identified this
investment as "available-for-sale". Under SFAS 115, an available-for-sale
security is recorded at fair value on the balance sheet and unrealized
holding gains and losses are reported, net of taxes, in a separate
component of stockholders' equity called accumulated other comprehensive
income, until realized. The Company recorded an unrealized gain on
securities, net of tax, of $146 million to record its investment in Gadzoox
at fair value as of October 1, 1999. For the six months ended December 31,
1999, the Company recorded net unrealized gains on securities of $117
million, net of tax, with respect to its investment in Gadzoox.
10
<PAGE>
The recorded investment in SanDisk has been amended to revise the
calculation of its fair value, unrealized holding gain and related taxes.
As a result, the balance sheet caption amounts of other assets, deferred
income tax liabilities and accumulated other comprehensive income increased
by $310 million, $122 million and $188 million, respectively. No other
financial statements were affected by this matter.
During the quarter ended December 31, 1999, the Company identified its
investment in SanDisk as "available-for-sale" after it had sold 1,000,000
shares of stock it held in SanDisk resulting in a final ownership
percentage of 15.8%. The Company recorded an unrealized gain on securities
of $285 million, net of $184 million of tax, to record its investment in
SanDisk at fair value as of December 31, 1999.
The components of comprehensive income, net of related tax, for the three
and six months ended December 31, 1999 and January 1, 1999 were as follows
(in millions):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------------- -------------------------
December 31, January 1, December 31, January 1,
1999 1999 1999 1999
------------- ----------- ------------- ----------
<S> <C> <C> <C> <C>
Net income (loss) $ (58) $ 104 $ (57) $ 74
Unrealized gain (loss) on securities 254 1 399 1
Foreign currency translation adjustments - (1) - -
----- ----- ----- -----
Comprehensive income (loss) $ 196 $ 104 $ 342 $ 75
===== ===== ===== =====
</TABLE>
The components of accumulated other comprehensive income, net of related
tax, at December 31, 1999 and July 2, 1999 were as follows (in millions):
<TABLE>
<CAPTION>
December 31, July 2,
1999 1999
------------- --------
<S> <C> <C>
Unrealized gain (loss) on securities $ 394 $ (5)
Foreign currency translation adjustments (2) (2)
----- -----
Accumulated other comprehensive income (loss) $ 392 $ (7)
===== =====
</TABLE>
9. Equity Investment in VERITAS Software Corporation
-------------------------------------------------
During the quarters ended October 1, 1999 and December 31, 1999, the
Company's Seagate Software Holdings, Inc. ("Seagate Software") subsidiary
sold 12,349,001 and 6,000,000 shares of VERITAS Software Corporation common
stock, adjusted for a 3 for 2 stock split on November 22, 1999, for
proceeds of $397 million and $437 million, respectively, net of
underwriting discounts and commissions. Seagate Software acquired such
shares in connection with Seagate Software's contribution of its Network &
Storage Management Group business to VERITAS. The sale of shares of VERITAS
common stock by Seagate Software in the quarters ended October 1, 1999 and
December 31, 1999 resulted in pre-tax gains of $193 million and $344
million, respectively. As of December 31, 1999, the Company held
approximately 33% of the outstanding common stock of VERITAS. The Company
accounts for its investment in VERITAS under the equity
11
<PAGE>
method and records its equity interest in VERITAS' net income (loss) on a
one-quarter lag. Summarized income statement information for VERITAS for
the three and six months ended September 30, 1999 is as follows (in
millions):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
1999 1999
------------------- -----------------
<S> <C> <C>
Revenue $ 183 $ 298
Gross profit 151 250
Net loss (184) (346)
</TABLE>
The Company's recorded equity in the net income of VERITAS for the three
and six months ended December 31, 1999 was $9 million and $7 million,
respectively, and differs from the Company's proportionate share of
VERITAS' reported net loss for the three and six months ended September 30,
1999. This difference is primarily because the Company eliminates from
VERITAS' net income (loss) the effect of VERITAS' accounting for the
Network & Storage Management Group business contribution, including
VERITAS' amortization expense related to intangible assets.
The Company's activity related to equity interest in VERITAS for the three
and six months ended December 31, 1999 consisted of the recorded equity in
the net income of VERITAS of $9 million and $7 million, respectively, as
described above, and the Company's amortization expense for goodwill and
other intangible assets relating to the investment in VERITAS amounting to
$93 million and $190 million, respectively.
10. Seagate Software Reorganization
-------------------------------
On October 20, 1999, the stockholders of Seagate Software, a majority-owned
subsidiary of the Company, approved the merger of Seagate Daylight Merger
Corp., a wholly-owned subsidiary of the Company, with and into Seagate
Software. Seagate Software's assets consist of the assets of the
Information Management Group ("IMG") and its investment in the common stock
of VERITAS Software Corporation. The merger was effected on October 20,
1999. As a result of the merger, Seagate Software became a wholly-owned
subsidiary of the Company. In connection with the merger, Seagate
Software's stockholders and optionees received payment in the form of 3.23
shares of the Company's common stock per share of Seagate Software common
stock less any amounts due for the payment of the exercise price for such
options. All outstanding Seagate Software stock options were accelerated
immediately prior to the merger. Seagate Technology issued 9,124,046
shares to optionees and minority stockholders of Seagate Software.
In connection with the reorganization, Seagate Software also formed a
wholly-owned subsidiary that assumed the name "Seagate Software, Inc."
("Software Operating Company"). Seagate Software transferred the IMG
assets into Software Operating Company. This new company, Software
Operating Company, is now the operating entity for the IMG business. A new
stock option plan has been established for Software Operating Company, and
employees of the IMG business are eligible to participate in the plan.
12
<PAGE>
Seagate Software accounted for the exchange of shares of its common stock
as the acquisition of a minority interest for Seagate Software common stock
outstanding and vested more than six months held by employees and all stock
held by former employees and consultants. The fair value of the shares of
Seagate Technology issued was $19 million and was recorded as purchase
price and allocated to the assets and liabilities received. The Company
accounted for the exchange of shares of its common stock for stock options
in Seagate Software held by employees and stock held and vested by
employees less than six months as the settlement of an earlier stock award.
During the quarter ended December 31, 1999, the Company recorded
compensation expense of $284 million, plus $2 million in payroll taxes,
related to the purchase of minority interest in Seagate Software.
<TABLE>
<CAPTION>
Allocation of minority interest purchase price to the intangible
assets of Seagate Software
In millions
--------------------------------------------------------------------------
<S> <C>
Distribution channel.......................................... $ 1
Developed technology.......................................... 1
Goodwill...................................................... 18
---
Subtotal...................................................... 20
Deferred tax liability........................................ (1)
---
Total......................................................... 19
===
Compensation relating to stock purchased from employees
Dollars in millions, except per share data
--------------------------------------------------------------------------
Seagate Software options exercised and
exchanged for Seagate Technology stock....................... 3,723,015
Plus: Seagate Software stock held for less than 6 months
and exchanged for Seagate Technology stock................... 17,952
-----------
Total Seagate Software shares exchanged...................... 3,740,967
Times: Exchange ratio into Seagate Technology stock.......... 3.23
-----------
Number of Seagate Technology shares issued................... 12,083,323
-----------
Value per share of Seagate Technology common
stock on October 20, 1999.................................... $ 29.00
Less: Average price paid per Seagate Technology share........ $ (5.50)
-----------
Average compensation expense per
Seagate Technology share issued.............................. $ 23.50
-----------
Total compensation expense................................... $ 284
===========
</TABLE>
11. Subsequent Events - Acquisition of XIOtech Corporation
-------------------------------------------------------
On January 28, 2000, the Company acquired XIOtech Corporation ("XIOtech"),
a provider of virtual storage and Storage Area Network (SAN) solutions, for
Seagate Technology
13
<PAGE>
common stock with a value of $360 million. The acquisition will be
accounted for under the purchase method. The purchase price allocation is
preliminary and it has been allocated based on the estimated fair market
value of net tangible and intangible assets acquired as well as in-process
research and development costs.
In the quarter ending March 31, 2000, the Company expects to record a
charge of approximately $105 million associated with the purchased in-
process research and development costs. The excess of the purchase price
over the net assets is approximately $241 million, will be recorded as
goodwill and other intangibles and will be amortized on a straight-line
basis over two to seven years.
12. Litigation
----------
In late 1992, Rodime PLC filed a complaint alleging infringement on a
certain patent. The process of litigation ensued and elapsed through
January 2000. On January 18, 2000, the U.S. Supreme Court denied the
Company's petition for certiorari. On the following day, through a
mediation process, the Company and Rodime agreed to a settlement amount of
$45 million to bring the related litigation to an end. As a result, a
previously recorded estimate of related settlement costs was revised and a
charge of $39 million was recorded in the three months ended December 31,
1999. See Part II, Item 1 of this Form 10-Q for a description of legal
proceedings.
14
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
The following exhibits are included herein:
10.16(1) 1999 Stock Option Plan
10.17(2) XIOtech Corporation 1996 Stock Option Plan
10.18(3) Form of Stockholder Agreement between Seagate Software, Inc., a
wholly-owned subsidiary of Seagate Technology, Inc., and VERITAS
Software Corporation
10.19(4) Form of Registration Rights Agreement between Seagate Software,
Inc., a wholly-owned subsidiary of Seagate Technology, Inc. and
VERITAS Software Corporation
27. Financial Data Schedule (As amended June 14, 2000)
(b) Reports on Form 8-K
The following reports on Form 8-K were filed with the Securities and Exchange
Commission during the fiscal quarter ended December 31, 1999 and the month of
January 2000:
A Form 8-K dated December 17, 1999 regarding the Company's announcement of its
agreement to acquire XIOtech Corporation.
A Form 8-K dated January 27, 2000 regarding the Company's announcement that it
had entered into a settlement with Rodime PLC.
(1) Incorporated by reference to exhibits filed by the Company in connection
with its Registration statement on Form S-8 (Reg. No. 333-92277) dated
December 7, 1999.
(2) Incorporated by reference to exhibits filed by the Company in connection
with its Registration statement on Form S-8 (Reg. No. 333-95719) dated
January 31, 2000.
(3) Incorporated by reference to exhibits filed by Seagate Software, Inc. (File
No. 000-23169) in connection with its Quarterly Report on Form 10-Q/A for
the period ended January 1, 1999 filed with the Securities and Exchange
Commission on April 21, 1999.
(4) Incorporated by reference to exhibits filed by Seagate Software, Inc. (File
No. 000-23169) in connection with its Quarterly Report on Form 10-Q/A for
the period ended January 1, 1999 filed with the Securities and Exchange
Commission on April 16, 1999.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SEAGATE TECHNOLOGY, INC.
------------------------
(Registrant)
DATE: June 14, 2000 BY: /s/ Charles C. Pope
_______________________
CHARLES C. POPE
Executive Vice President
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
DATE: June 14, 2000 BY: /s/ Stephen J. Luczo
_______________________
STEPHEN J. LUCZO
Chief Executive Officer
(Principal Executive Officer
and Director)
16
<PAGE>
SEAGATE TECHNOLOGY, INC.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number
-------
<S> <C>
10.16 (1) 1999 Stock Option Plan
10.17 (2) XIOtech Corporation 1996 Stock Option Plan
10.18 (3) Form of Stockholder Agreement between Seagate Software, Inc., a
wholly-owned subsidiary of Seagate Technology, Inc., and VERITAS
Software Corporation
10.19 (4) Form of Registration Rights Agreement between Seagate Software,
Inc., a wholly-owned subsidiary of Seagate Technology, Inc. and
VERITAS Software Corporation
27 Financial Data Schedule (As amended June 14, 2000)
</TABLE>
(1) Incorporated by reference to exhibits filed by the Company in connection
with its Registration statement on Form S-8 (Reg. No. 333-92277) dated
December 7, 1999.
(2) Incorporated by reference to exhibits filed by the Company in connection
with its Registration statement on Form S-8 (Reg. No. 333-95719) dated
January 31, 2000.
(3) Incorporated by reference to exhibits filed by Seagate Software, Inc. (File
No. 000-23169) in connection with its Quarterly Report on Form 10-Q/A for
the period ended January 1, 1999 filed with the Securities and Exchange
Commission on April 21, 1999.
(4) Incorporated by reference to exhibits filed by Seagate Software, Inc. (File
No. 000-23169) in connection with its Quarterly Report on Form 10-Q/A for
the period ended January 1, 1999 filed with the Securities and Exchange
Commission on April 16, 1999.
17
