<PAGE> 1
Confidential
SALE OF SEAGATE'S OPERATING ASSETS
AND SEAGATE MERGER WITH VERITAS
--------------------------------------------------------------------------------
Presentation to Seagate's Board of Directors
October 30, 2000
LEHMAN BROTHERS
<PAGE> 2
TABLE OF CONTENTS
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I. OVERVIEW OF THE TRANSACTION
-----------------------------------------------------------
II. TRANSACTION VALUATION SUMMARY
-----------------------------------------------------------
III. VALUATION OF SEAGATE INVESTMENT ASSETS
-----------------------------------------------------------
IV. VALUATION OF SEAGATE OPERATING ASSETS
-----------------------------------------------------------
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LEHMAN BROTHERS Seagate Technology, Inc.
<PAGE> 3
OVERVIEW OF THE TRANSACTION
--------------------------------------------------------------------------------
On March 29, 2000, Seagate Technology, Inc. ("Seagate" or the "Company")
announced that it entered into an approximately $20 billion integrated merger
and sale agreement with VERITAS Software, Inc. ("Veritas" ) and a Financial
Sponsor Group (the "Financial Sponsor Group") led by Silver Lake Partners and
Texas Pacific Group which was subsequently amended on August 29, 2000 and
October 18, 2000
- The Financial Sponsor Group will purchase the operating businesses of
Seagate, including $765 million of cash retained for working capital
purposes, for $2.05 billion in cash
> Following the LBO, Seagate's only assets will be 128.1 million
shares of Veritas stock, securities of SanDisk, Gadzoox
Networks, CVC, and Dragon Systems (the "Investment Portfolio")
and cash. Seagate has approximately $781 million of debt
outstanding, which will be retired with cash on hand prior to
closing
- Veritas will acquire Seagate in a stock-for-stock transaction whereby
it will issue Veritas shares in exchange for Seagate's total shares
outstanding (241.1 million fully diluted shares)
> The majority of the stock consideration is based on a fixed
exchange ratio, with no collar
> Veritas will issue 109.3 million shares to Seagate
shareholders as consideration for Seagate's Veritas stake
> Veritas will also issue additional shares for the Investment
Portfolio and any cash ($250 or $500 million) on Seagate's
balance sheet that Veritas elects to retain
> Based on closing prices as of October 11, 2000 and no cash
retained, Veritas estimates that it will issue approximately
109.7 million shares
> Remaining cash on the Seagate balance sheet after
payment of taxes, cash retained by Veritas and working capital
for the operating businesses will be distributed to Seagate
shareholders
- Based on closing prices as of October 11, 2000 Seagate stockholders
will receive total consideration of approximately $70.17(a) per share
consisting of approximately 0.455 Veritas shares and approximately
$7.35 in cash(a)
> Represents a 5.1% premium to its closing price on October 11,
2000 and a 44.0% premium to its one month trading average as
of March 8, 2000, the day prior to the news reports on the
transaction.
----------
(a) Does not include tax refunds (the "TRA Consideration") or $0.21 per share
related to the $50 million litigation settlement holdback.
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LEHMAN BROTHERS 1 Seagate Technology, Inc.
<PAGE> 4
OVERVIEW OF THE TRANSACTION
--------------------------------------------------------------------------------
SUMMARY OF KEY TERMS
Concept: - Leveraged buyout of the operating assets of
Seagate by Financial Sponsor Group (the "Asset
Transaction"), and merger with Veritas (the
"Merger")
Ownership: - Seagate shareholders will hold approximately
24% of Veritas' fully diluted shares
outstanding (approximately 28% of basic shares
outstanding)
LBO Consideration: - Financial Sponsor Group will pay to Seagate
$2.05 billion for the operating assets; net
cash paid to Seagate is approximately $1,285
million (including the retention of $765
million for working capital)
o Financial Sponsor Group will assume
substantially all of operating
liabilities and approximately $100
million of the excess golden parachute
liability
Merger Consideration: - Veritas will distribute cash of approximately
$1,771 million
o Includes cash from sale of assets and
cash on hand, net of debt, tax liability,
and other adjustments
o Excludes $50 million related to
litigation settlement holdback
o Up to $500 million ($250 million or $500
million) of cash can be reduced at option
of Veritas; Veritas shares will be issued
in lieu of retained cash
o Potential additional cash related to the
TRA Consideration
- Veritas will issue additional shares
o 109.3 million shares in exchange for the
128.1 million shares held by Seagate
o approximately 0.4 million shares in
exchange for other investments, depending
on market price of investments and
Veritas at closing
o an additional 0 - 4 million shares
depending on the amount of cash retained
($0 - $500mm)
Value to be Received by - Approximately $75.25 per share, excluding TRA
Shareholders as of March Consideration and no cash retention
28, 2000
o Cash of approximately $5.71 and 0.449
shares of Veritas stock
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LEHMAN BROTHERS 2 Seagate Technology, Inc.
<PAGE> 5
OVERVIEW OF THE TRANSACTION
--------------------------------------------------------------------------------
SUMMARY OF KEY TERMS (CONT'D)
Value to be Received by - Approximately $70.17 per share excluding TRA
Shareholders as of Consideration, no cash retention, and $0.21
October 11, 2000 per share related to the $50 million
litigation settlement holdback
o Cash of approximately $7.35 and 0.455
shares of Veritas stock
Options Treatment - $150 million - $250 million of in-the-money
options will be rolled into a new operating
company ("OpCo"), accounting for approximately
20% of OpCo, and the remaining options will be
accelerated
Treatment of Debt - Debt to be retired prior to closing
Tax Treatment: - Taxable sale of operating assets with
338(h)(10) election
- Non-taxable Merger with Veritas, except for
cash portion of merger consideration
Accounting Treatment: - Purchase accounting
Indemnification: - The Financial Sponsor Group will indemnify
Veritas against all tax and other liabilities
not relating to the Veritas shares
Break-up Fees: - $80 million paid by Seagate to the Financial
Sponsor Group if deal is terminated
- $440 million paid by Seagate to Veritas if
deal is terminated
- $50 million paid by Veritas to the Financial
Sponsor Group if Seagate takes a superior
offer and Veritas enters into a new merger
agreement
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LEHMAN BROTHERS 3 Seagate Technology, Inc.
<PAGE> 6
TRANSACTION STRUCTURE - ASSET TRANSACTION
--------------------------------------------------------------------------------
[FLOW CHART]
----------
As of October 11, 2000.
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LEHMAN BROTHERS 4 Seagate Technology, Inc.
<PAGE> 7
TRANSACTION STRUCTURE - MERGER INTO VERITAS
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[FLOW CHART]
----------
(a) Veritas may retain up to $500 mm of Seagate cash. Remainder, net of taxes is
distributed to shareholders.
(b) Assumed market prices as of October 11, 2000 and liquidity discount of 40%
for Gadzoox and LHSP. Total shares issued comprised of 109.3 mm Veritas shares
for Seagate's Veritas holdings, and 0.4 mm Veritas shares for other holdings,
assuming no cash retention.
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LEHMAN BROTHERS 5 Seagate Technology, Inc.
<PAGE> 8
SUMMARY OF MERGER CONSIDERATION - AS OF OCTOBER 11, 2000
--------------------------------------------------------------------------------
BASED ON MARKET VALUES AS OF OCTOBER 11, 2000, SEAGATE SHAREHOLDERS WOULD
RECEIVE LESS VALUE THAN AT THE TIME THE TRANSACTION WAS ANNOUNCED DUE TO THE
DECLINE IN VERITAS' SHARE PRICE
($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
CASH STOCK TOTAL PER SHARE(a)
-------- -------- -------- ------------
<S> <C> <C> <C> <C>
ASSET TRANSACTION:
Gross Amount $ 2,050 -- $ 2,050 $ 8.50
Less: Required Cash (765) -- (765) (3.17)
Plus: Excess Cash(b) 486 -- 486 2.02
-------- -------- -------- --------
Net Cash(c) $ 1,771 -- $ 1,771 $ 7.35
MERGER WITH VERITAS:
109.3 mm shares for VRTS holdings(d) -- 15,094 15,094 $ 62.62
0.4 mm shares for other investments(d)(e) -- 50 50 0.21
-------- -------- -------- --------
Total value of Veritas shares -- $ 15,144 $ 15,144 $ 62.82
IMPLIED TRANSACTION VALUE(f) $ 1,771 $ 15,144 $ 16,915 $ 70.17
======== ======== ======== ========
</TABLE>
----------
(a) Assumes 241.1 million fully diluted shares as of October 11, 2000.
(b) Seagate's remaining cash net of tax liability and other adjustments, and
excluding $50 million related to the litigation settlement holdback.
(c) Veritas can elect to retain up to $500 million of this cash amount and issue
shares in lieu of. Assumes that no cash is being retained by Veritas.
(d) Based on Veritas share price of $138.06 as of October 11, 2000.
(e) Market prices as of October 11, 2000.
(f) Excludes TRA Consideration, escrowed Lernout & Hauspie shares and funding of
tax trust.
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LEHMAN BROTHERS 6 Seagate Technology, Inc.
<PAGE> 9
TRANSACTION VALUATION SUMMARY - AS OF OCTOBER 11, 2000
--------------------------------------------------------------------------------
($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
VALUATION RANGE
--------------------------- VALUE OF
LOW HIGH TRANSACTION(f)
-------- -------- --------------
<S> <C> <C> <C>
Operating Assets(a) $ 1,900 - $ 5,000 $ 2,050
Veritas Stock(b) 10,611 - 10,611 15,094
Investments Portfolio(c) 64 - 64 50
Less: Net Debt (1,311)(d) - (1,311)(d) 279(e)
-------- -------- --------
Implied Market Value $ 13,886 - $ 16,986 $ 16,915
======== ======== ========
Implied Market Value per Share $ 57.61 $ 70.47 $ 70.17
</TABLE>
----------
(a) Based upon Lehman's implied valuation range as of October 11, 2000.
(b) Based upon the closing price of Veritas stock as of October 11, 2000, tax
rate of 40% and 128.1 million shares of Veritas.
(c) Based upon the closing prices of the Investment Portfolio as of October 11,
2000 and tax rate of 40%.
(d) Based upon Seagate 10-K dated June 30, 2000.
(e) Net of payment of $765 million to the Financial Sponsor Group and $486
million of excess cash balance per Proxy Statement dated August 30, 2000.
(f) Excludes TRA Consideration and $0.21 per share related to the litigation
settlement holdback.
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LEHMAN BROTHERS 7 Seagate Technology, Inc.
<PAGE> 10
VALUATION OF SEAGATE INVESTMENT ASSETS
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VALUATION PARAMETERS
- MARKET VALUE OF VERITAS STOCK AND INVESTMENT PORTFOLIO AS OF OCTOBER 11,
2000
- INCOME TAX EFFECT
- LIQUIDITY DISCOUNTS FOR INVESTMENT PORTFOLIO
- DISCOUNT TO MARKET ON VERITAS STOCK
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LEHMAN BROTHERS 8 Seagate Technology, Inc.
<PAGE> 11
KEY TERMS OF SEAGATE / VERITAS SHAREHOLDER AGREEMENT
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THE SHAREHOLDER AGREEMENT BETWEEN SEAGATE AND VERITAS CONTAINED MATERIAL
RESTRICTIONS THAT AFFECTED THE VALUE SEAGATE COULD REALIZE FOR ITS VERITAS
STOCK:
- Lock up on the shares for the twelve months ended May 28,
2000
- Limitations on the sale of Veritas stock which could be sold
each quarter
- Prohibited from increasing its ownership percentage for five
years
- Required to vote its shares in the same proportion as votes
cast by all other Veritas shareholders
- Registration and piggy-back rights
- Ability to recommend one director to the Veritas Board if
ownership was at least 15% (one nominee as long as ownership
was at least 5%)
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LEHMAN BROTHERS 9 Seagate Technology, Inc.
<PAGE> 12
VALUATION SUMMARY - VERITAS STOCK AS OF OCTOBER 11, 2000
--------------------------------------------------------------------------------
THE CONSIDERATION VALUE IS SUBSTANTIALLY GREATER THAN THE $10,611 MILLION
AFTER-TAX VALUE OF THE VERITAS STOCK AS OF OCTOBER 11, 2000
($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Implied Discount to Market Value Based on the No. of
Veritas Shares Received for Veritas Shares Held by Seagate
-------------------------------------------------------------------------
5% 10% 15% 20% 25% 30%
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Number of Shares (a)
Received (in millions) 121.657 115.254 108.851 102.448 96.045 89.641
Consideration Value (b)
($ in millions) $ 16,796 $ 15,912 $ 15,028 $ 14,144 $ 13,260 $ 12,376
Per Share Consideration (c) $ 69.66 $ 66.00 $ 62.33 $ 58.66 $ 55.00 $ 51.33
</TABLE>
----------
(a) Based on current holdings of 128.1 million shares of Veritas Stock.
(b) Based on market price of $138.06 per share as of October 11, 2000.
(c) Based upon 241.1 fully diluted shares as of October 11, 2000.
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LEHMAN BROTHERS 10 Seagate Technology, Inc.
<PAGE> 13
VALUATION SUMMARY - INVESTMENT PORTFOLIO AS OF OCTOBER 11, 2000
--------------------------------------------------------------------------------
PRIOR TO OCTOBER 11, 2000, SEAGATE SOLD ITS HOLDINGS IN SANDISK AND CVC, INC.
($ IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SEAGATE
SEAGATE HOLDINGS LIQUIDITY DISCOUNT VALUE RANGE
OWNERSHIP SHARES OWNERSHIP ------------------- -------------------
COMPANY TICKER PERCENTAGE (MILLION) VALUE(a) LOW HIGH LOW HIGH
----------------- ------ ---------- --------- --------- ----- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gadzoox ZOOX 19.1% 5.3 $27.0 20% 40% $ 16.2 $ 21.6
Lernout & Hauspie LHSP 2.3% 3.3 $35.9 20% 40% $ 21.5 $ 28.7
TOTAL $ 37.8 $ 50.3
APPROXIMATE TAX BASIS $ 66.8 $ 66.8
TAXABLE GAIN (LOSS) $(29.0) $(16.5)
TAX BENEFIT/(LOSS) @ 40% 11.6 6.6
------ ------
INVESTMENTS VALUE TO SEAGATE $ 49.4 $ 56.9
SHAREHOLDERS
PER SHARE (b) $ 0.20 $ 0.23
</TABLE>
----------
(a) Prices for Gadzoox and Lernout & Hauspie as of October 11, 2000 ($5.125 and
$10.875, respectively).
(b) Based on 241.1 fully diluted shares as of October 11, 2000.
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LEHMAN BROTHERS 11 Seagate Technology, Inc.
<PAGE> 14
IMPLIED ECONOMIC GAIN/LOSS TO VERITAS & SEAGATE SHAREHOLDERS
--------------------------------------------------------------------------------
VERITAS' OFFER TO PURCHASE SEAGATE'S VERITAS SHARES COMPARED TO SEAGATE'S TAX
EMBEDDED LIABILITY IN THE VERITAS SHARES FOR GIVEN PERCENTAGE DISCOUNT AS OF
OCTOBER 11, 2000
($ AND SHARES IN MILLIONS)
<TABLE>
<CAPTION>
EXCHANGE VERITAS VERITAS $ LOSS $ RECOVERED NET LOSS TO EMBEDDED TAX
RATIO SHARES ISSUED 2000E EPS ATTRIBUTABLE TO ATTRIBUTABLE TO SEAGATE LIABILITY TO SEAGATE
DISCOUNT IN MERGER ACCRETION DISCOUNT ACCRETION SHAREHOLDERS VS. SHAREHOLDERS(A)
--------- ------------- --------- --------------- --------------- ------------ --------------------
<S> <C> <C> <C> <C> <C> <C>
0.0% 128.1 0.0% $ 0 $ 0 $ 0 ($ 7,008)
2.0% 125.5 0.5% (354) 93 (261) (7,008)
4.0% 122.9 1.1% (707) 183 (524) (7,008)
6.0% 120.4 1.6% (1,061) 271 (790) (7,008)
8.0% 117.8 2.2% (1,414) 355 (1,059) (7,008)
10.0% 115.3 2.7% (1,768) 437 (1,331) (7,008)
12.0% 112.7 3.3% (2,122) 515 (1,607) (7,008)
14.0% 110.1 3.9% (2,475) 590 (1,885) (7,008)
-------------------------------------------------------------------------------------------------------------------------
14.6% 109.3 4.1% (2,585) 613 (1,972) (7,008)
-------------------------------------------------------------------------------------------------------------------------
16.0% 107.6 4.5% (2,829) 663 (2,166) (7,008)
18.0% 105.0 5.0% (3,182) 732 (2,450) (7,008)
20.0% 102.4 5.6% (3,536) 798 (2,738) (7,008)
22.0% 99.9 6.2% (3,890) 861 (3,029) (7,008)
24.0% 97.3 6.8% (4,243) 920 (3,323) (7,008)
26.0% 94.8 7.5% (4,597) 976 (3,621) (7,008)
28.0% 92.2 8.1% (4,950) 1,029 (3,922) (7,008)
30.0% 89.6 8.7% (5,304) 1,078 (4,226) (7,008)
</TABLE>
----------
(a) Based on an assumed tax rate of 40.0%.
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LEHMAN BROTHERS 12 Seagate Technology, Inc.
<PAGE> 15
\
VALUATION OF SEAGATE OPERATING ASSETS
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VALUATION PARAMETERS
- IMPLIED MARKET VALUATION
- COMPARABLE COMPANIES ANALYSIS
- DISCOUNTED CASH FLOW ANALYSIS
- LBO ANALYSIS
--------------------------------------------------------------------------------
LEHMAN BROTHERS 13 Seagate Technology, Inc.
<PAGE> 16
SEAGATE STOCK PRICE PERFORMANCE
--------------------------------------------------------------------------------
SEAGATE APPEARED TO OUTPERFORM ITS PEERS OVER THE 1-YEAR PERIOD PRIOR TO
ANNOUNCEMENT; HOWEVER, THE IMPLIED VALUE OF THE VERITAS STOCK IN SEAGATE WAS
INCREASINGLY DIMINISHING THE IMPLIED VALUE OF SEAGATE OPERATING ASSETS
<TABLE>
<CAPTION>
VERITAS SHARES,
OTHER HOLDINGS, OPERATING
DATE SEAGATE AND NET CASH ASSETS
------------- --------------------- --------------------- ----------------
<S> <C> <C> <C>
5/28/1999 7519.70625 2483.990498 5035.715752
6/01/1999 7535.275 2493.704492 5041.570508
6/02/1999 7831.08125 2514.534623 5316.546627
6/03/1999 8095.75 2501.058992 5594.691008
6/04/1999 7831.08125 2574.814004 5256.267246
6/07/1999 8220.3 2638.773619 5581.526381
6/08/1999 7784.375 2596.269254 5188.105746
6/09/1999 7659.825 2576.4295 5083.3955
6/10/1999 7644.25625 2515.604494 5128.651756
6/11/1999 7675.39375 2514.881498 5160.512252
6/14/1999 7690.9625 2487.245498 5203.717002
6/15/1999 7239.46875 2506.279746 4733.189004
6/16/1999 7223.9 2519.66875 4704.23125
6/17/1999 7068.2125 2503.834006 4564.378494
6/18/1999 7146.05625 2507.433629 4638.622621
6/21/1999 7457.43125 2582.384881 4875.046369
6/22/1999 7379.5875 2609.73475 4769.85275
6/23/1999 7441.8625 2615.364627 4826.497873
6/24/1999 7348.45 2587.569629 4760.880371
6/25/1999 7348.45 2559.465242 4788.984758
6/28/1999 7379.5875 2591.054119 4788.533381
6/29/1999 6787.975 2585.977367 4201.997633
6/30/1999 6383.1875 2615.575371 3767.612129
7/01/1999 6647.85625 2596.649873 4051.206377
7/02/1999 6678.99375 2639.679252 4039.314498
7/06/1999 6585.58125 2805.976754 3779.604496
7/07/1999 6819.1125 2763.404498 4055.708002
7/08/1999 6803.54375 2776.379881 4027.163869
7/09/1999 7052.64375 2774.190248 4278.453502
7/12/1999 7114.91875 2701.086252 4413.832498
7/13/1999 6990.36875 2741.520631 4248.848119
7/14/1999 7535.275 2823.998506 4711.276494
7/15/1999 7473 2844.120992 4628.879008
7/16/1999 6616.71875 3109.699179 3507.019571
7/19/1999 6585.58125 3157.613877 3427.967373
7/20/1999 6367.61875 73208.861383 3158.757367
7/21/1999 6445.4625 3277.704246 3167.758254
7/22/1999 6258.6375 3308.322994 2950.314506
7/23/1999 6367.61875 3329.810498 3037.808252
7/26/1999 6414.325 3196.417742 3217.907258
7/27/1999 6492.16875 3086.606879 3405.561871
7/28/1999 6819.1125 3144.913369 3674.199131
7/29/1999 6725.7 3046.225756 3679.474244
7/30/1999 6694.5625 3179.072867 3515.489633
8/02/1999 6896.95625 3128.556633 3768.399617
8/03/1999 6772.40625 3085.697504 3686.708746
8/04/1999 6678.99375 3012.065496 3666.928254
8/05/1999 6663.425 3149.108873 3514.316127
8/06/1999 6974.8 3045.314871 3929.485129
8/09/1999 6974.8 2909.470002 4065.329998
8/10/1999 6990.36875 2890.403883 4099.964867
8/11/1999 7130.4875 3067.4125 4063.075
8/12/1999 7037.075 3010.952498 4026.122502
8/13/1999 7286.175 3092.209744 4193.965256
8/16/1999 7644.25625 2968.510127 4675.746123
8/17/1999 7722.1 2971.851742 4750.248258
8/18/1999 7924.49375 2946.068258 4978.425492
8/19/1999 8095.75 2865.695627 5230.054373
8/20/1999 8080.18125 3081.819002 4998.362248
8/23/1999 8251.4375 3177.18225 5074.25525
8/24/1999 8282.575 3201.267373 5081.307627
8/25/1999 8173.59375 3261.91875 4911.675
8/26/1999 8173.59375 3228.096 4945.49775
8/27/1999 8189.1625 3143.659504 5045.502996
8/30/1999 8313.7125 3088.003498 5225.709002
8/31/1999 8267.00625 3138.382119 5128.624131
9/01/1999 8438.2625 3208.387867 5229.874633
9/02/1999 8469.4 3253.449746 5215.950254
9/03/1999 8905.325 3366.577131 5538.747869
9/07/1999 8718.5 3366.541879 5351.958121
9/08/1999 8251.4375 3436.288879 4815.148621
9/09/1999 8173.59375 3546.376123 4627.217627
9/10/1999 8375.9875 3535.877631 4840.109869
9/13/1999 8220.3 3353.689873 4866.610127
9/14/1999 7955.63125 3412.983 4542.64825
9/15/1999 8017.90625 3439.740367 4578.165883
9/16/1999 7955.63125 3484.138869 4471.492381
9/17/1999 8095.75 3709.63651 4386.11349
9/20/1999 8220.3 3724.807496 4495.492504
9/21/1999 8033.475 3623.270246 4410.204754
9/22/1999 7955.63125 3766.576119 4189.055131
9/23/1999 7473 3630.168381 3842.831619
9/24/1999 7332.88125 3647.070744 3685.810506
9/27/1999 7441.8625 3638.610752 3803.251748
9/28/1999 7410.725 3746.335506 3664.389494
9/29/1999 7535.275 3614.742006 3920.532994
9/30/1999 7628.6875 3575.131875 4053.555625
10/01/1999 7644.25625 3504.20851 4140.04774
10/04/1999 7753.2375 3657.955494 4095.282006
10/05/1999 7815.5125 3901.256629 3914.255871
10/06/1999 7908.925 3931.177504 3977.747496
10/07/1999 7581.98125 3856.090506 3725.890744
10/08/1999 7457.43125 3803.773871 3653.657379
10/11/1999 7908.925 3943.983371 3964.941629
10/12/1999 7815.5125 3870.280115 3945.232385
10/13/1999 7348.45 3809.304385 3539.145615
10/14/1999 7317.3125 3755.955744 3561.356756
10/15/1999 7130.4875 4065.531373 3064.956127
10/18/1999 6865.81875 3832.406256 3033.412494
10/19/1999 7005.9375 3836.51926 3169.41824
10/20/1999 7223.9 4063.83074 3160.06926
10/21/1999 6803.54375 4150.956365 2652.587385
10/22/1999 6850.25 4192.773373 2657.476627
10/25/1999 6741.26875 4194.08175 2547.187
10/26/1999 6678.99375 4025.782881 2653.210869
10/27/1999 6725.7 4144.513123 2581.186877
10/28/1999 7052.64375 4401.902242 2650.741508
10/29/1999 7332.88125 4640.326492 2692.554758
11/01/1999 7286.175 4593.921748 2692.253252
11/02/1999 7410.725 4538.031758 2872.693242
11/03/1999 7581.98125 4648.512377 2933.468873
11/04/1999 7877.7875 4734.818623 3142.968877
11/05/1999 7986.76875 4729.793611 3256.975139
11/08/1999 8344.85 4852.496248 3492.353752
11/09/1999 8547.24375 4987.698758 3559.544992
11/10/1999 8843.05 5046.558375 3796.491625
11/11/1999 8702.93125 4955.952361 3746.978889
11/12/1999 9216.7 5033.787369 4182.912631
11/15/1999 9403.525 5182.396877 4221.128123
11/16/1999 9341.25 5674.134867 3667.115133
11/17/1999 8952.03125 5607.614008 3344.417242
11/18/1999 9294.54375 5903.291752 3391.251998
11/19/1999 9652.625 6164.129363 3488.495637
11/22/1999 10010.70625 6466.590887 3544.115363
11/23/1999 9870.5875 6324.268637 3546.318863
11/24/1999 9699.33125 6392.481125 3306.850125
11/26/1999 9528.075 6547.172012 2980.902988
11/29/1999 9590.35 6357.745238 3232.604762
11/30/1999 9216.7 5896.560881 3320.139119
12/01/1999 9403.525 6018.729869 3384.795131
12/02/1999 9559.2125 6296.710625 3262.501875
12/03/1999 9901.725 6641.268875 3260.456125
12/06/1999 9964 6529.270988 3434.729012
12/07/1999 9746.0375 6505.725875 3240.311625
12/08/1999 9839.45 6584.202488 3255.247512
12/09/1999 9777.175 6745.923512 3031.251488
12/10/1999 9668.19375 6809.535512 2858.658238
12/13/1999 10228.66875 6735.817637 3492.851113
12/14/1999 9948.43125 6454.2635 3494.16775
12/15/1999 10166.39375 6743.209625 3423.184125
12/16/1999 11147.225 6990.374387 4156.850613
12/17/1999 11038.24375 7203.278 3834.96575
12/20/1999 10898.125 7601.088887 3297.036113
12/21/1999 10707.40781 7485.122 3222.285813
12/22/1999 11053.8125 8017.968113 3035.844387
12/23/1999 11614.2875 8476.235738 3138.051762
12/27/1999 12065.78125 7993.426262 4072.354988
12/28/1999 11692.13125 8078.264738 3613.866512
12/29/1999 11816.68125 8323.110512 3493.570738
12/30/1999 11660.99375 8151.370625 3509.623125
12/31/1999 11598.71875 8468.285738 3130.433012
1/03/2000 11458.6 8410.027332 3048.572668
1/04/2000 10431.0625 7810.300625 2620.761875
1/05/2000 10368.7875 7645.762613 2723.024887
1/06/2000 9886.15625 6961.018238 2925.138012
1/07/2000 10135.25625 7492.2755 2642.98075
1/10/2000 10524.475 8493.614 2030.861
1/11/2000 10960.4 7888.457738 3071.942262
1/12/2000 10213.1 7582.95275 2630.14725
1/13/2000 10337.65 8291.663 2045.987
1/14/2000 10758.00625 8638.180262 2119.825988
1/18/2000 10571.18125 8698.118738 1873.062512
1/19/2000 10259.80625 8707.760375 1552.045875
1/20/2000 10540.04375 9126.581012 1413.462738
1/21/2000 10555.6125 9932.57375 623.03875
1/24/2000 10119.6875 8894.477387 1225.210113
1/25/2000 10353.21875 9333.042875 1020.175875
1/26/2000 10306.5125 9190.737875 1115.774625
1/27/2000 10088.55 9289.717988 798.8320122
1/28/2000 10026.275 9068.077988 958.1970122
1/31/2000 9901.725 8657.67725 1244.04775
2/01/2000 10213.1 9111.3847 1101.7153
2/02/2000 10384.35625 9058.46665 1325.8896
2/03/2000 10508.90625 9163.984637 1344.921613
2/04/2000 10835.85 9243.52775 1592.32225
2/07/2000 11193.93125 9210.291113 1983.640137
2/08/2000 11427.4625 9914.632338 1512.830162
2/09/2000 11334.05 9670.059975 1663.990025
2/10/2000 11847.81875 10374.60799 1473.210762
2/11/2000 11567.58125 10071.59674 1495.984512
2/14/2000 11489.7375 9881.408 1608.3295
2/15/2000 11583.15 9752.470988 1830.679012
2/16/2000 11832.25 10113.62424 1718.625762
2/17/2000 11629.85625 10523.61474 1106.241512
2/18/2000 11209.5 10486.61725 722.88275
2/22/2000 11038.24375 10431.109 607.13475
2/23/2000 11598.71875 11021.76551 576.9532378
2/24/2000 11987.9375 11376.7451 611.1924034
2/25/2000 11614.2875 10973.21658 641.0709156
2/28/2000 11878.95625 11338.12975 540.8265
2/29/2000 11910.09375 11855.36094 54.7328138
3/01/2000 12688.53125 12077.29756 611.2336888
3/02/2000 12828.65 12259.33981 569.3101888
3/03/2000 13669.3625 13168.41325 500.94925
3/06/2000 13840.61875 14014.23063 -173.611875
3/07/2000 13716.06875 14402.5915 -686.52275
3/08/2000 13575.95 14100.4435 -524.4935
3/09/2000 14681.33125 14402.12622 279.2050284
3/10/2000 16066.95 14790.29088 1276.659125
3/13/2000 17312.45 14553.68575 2758.76425
3/14/2000 16207.06875 13743.25975 2463.809
3/15/2000 14669.65469 12020.04438 2649.610313
3/16/2000 16534.0125 13420.46425 3113.54825
3/17/2000 17125.625 14381.85063 2743.774375
3/20/2000 16440.6 12680.16063 3760.439375
3/21/2000 16238.20625 13176.62575 3061.5805
3/22/2000 16985.50625 14224.67163 2760.834625
3/23/2000 17405.8625 13970.8705 3434.992
3/24/2000 17686.1 14280.256 3405.844
3/27/2000 17872.925 14801.44 3071.485
3/28/2000 16938.8 13720.60525 3218.19475
</TABLE>
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LEHMAN BROTHERS 14 Seagate Technology, Inc.
<PAGE> 17
VALUATION SUMMARY OF OPERATING ASSETS
--------------------------------------------------------------------------------
($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Multiple Implied Implied
Range Enterprise Value Equity Value(b)
------------------- ------------------- -------------------
Low High Low High Low High
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Comparable Company Analysis:(a)
CY2000 Revenue 0.2x - 0.4x $1,404 - $2,807 $2,169 - $3,572
CY2000 EBITDA 3.0x - 5.0x 2,444 - 4,073 3,209 - 4,838
Comparable Company Value Range $2,200 - $4,800
------ ------
Discounted Cash Flow Analysis (2005E EBITDA Multiple):
14% - 16% Discount Rate - Base Case 3.0x - 5.0x $2,681 - $4,268 $3,446 - $5,033
14% - 16% Discount Rate - Sensitivity Case 3.0x - 5.0x 2,231 - 3,551 2,996 - 4,316
Discounted Cash Flow Value Range $3,000 - $5,000
------ ------
LBO Analysis
2005E EBITDA - Sensitivity Case 3.0x - 5.0x 1,122 - 1,767 1,887 - 2,532
LBO Analysis Value Range $1,900 - $2,500
------ ------
IMPLIED VALUATION RANGE $1,900 - $5,000
------ ------
</TABLE>
----------
(a) Based on management's Base Case projections.
(b) Equity value assumes $765 million in net cash.
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LEHMAN BROTHERS 15 Seagate Technology, Inc.
<PAGE> 18
COMPARABLE COMPANIES ANALYSIS
--------------------------------------------------------------------------------
($ IN MILLIONS)
<TABLE>
<CAPTION>
CY REVENUE MULTIPLES CY EBITDA MULTIPLES
MARKET ENTERPRISE -------------------------------- --------------------------------
COMPANY VALUE(a) VALUE LTM 2000E 2001E LTM 2000E 2001E
------------------- --------- ---------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HDD Quantum $1,052 $ 576 0.2x 0.2x 0.2x 18.5x 6.6x 5.8x
Maxtor 973 692 0.3x 0.2x 0.2x 8.7x 6.9x 6.2x
Western Digital 708 750 0.4x 0.4x 0.4x NM NM 36.4x
Iomega 1,276 973 0.7x 0.7x NA 4.7x 4.3x NA
MEAN 0.4X 0.4X 0.3X 10.6X 6.0X 16.1X
MEDIAN 0.3X 0.3X 0.2X 8.7X 6.6X 6.2X
REMOVABLE STORAGE:
DSS Quantum $2,221 $2,175 1.5x 1.5x 1.4x 4.6x 6.3x NA
Storage Technology 976 747 0.3x 0.3x NA 6.6x 3.8x NA
MEAN 0.9X 0.9X 1.4X 5.6X 5.0X NA
MEDIAN 0.9X 0.9X 1.4X 5.6X 5.0X NA
</TABLE>
----------
LTM as of June 30, 2000
(a) Assumes market prices as of October 11, 2000.
--------------------------------------------------------------------------------
LEHMAN BROTHERS 16 Seagate Technology, Inc.
<PAGE> 19
DISCOUNTED CASH FLOW ANALYSIS
--------------------------------------------------------------------------------
($ IN MILLIONS)
<TABLE>
<CAPTION>
5-YEAR DCF EQUITY VALUE
EBITDA --------------------------------------
DISCOUNT TERMINAL BASE SENSITIVITY UPSIDE
RATE MULTIPLE CASE CASE CASE
-------- -------- ------ ----------- ------
<S> <C> <C> <C> <C>
3.0x $3,657 $3,168 $5,375
14% 4.0x 4,345 3,742 6,353
5.0x 5,033 4,316 7,331
3.0x $3,549 $3,080 $5,210
15% 4.0x 4,209 3,630 6,148
5.0x 4,868 4,181 7,086
3.0x $3,446 $2,996 $5,054
16% 4.0x 4,079 3,524 5,953
5.0x 4,712 4,052 6,853
</TABLE>
--------------------------------------------------------------------------------
LEHMAN BROTHERS 17 Seagate Technology, Inc.
<PAGE> 20
LBO ANALYSIS - LEHMAN BROTHERS' SENSITIVITY CASE
--------------------------------------------------------------------------------
($ IN MILLIONS)
<TABLE>
<CAPTION>
EXIT
MULTIPLE 3.0x 4.0x 5.0x
-------------------------------------------------------------------------------
<S> <C> <C> <C>
2005E EBITDA $1,081 $1,081 $1,081
2005E Enterprise Value 3,244 4,325 5,407
2000E Equity Value 3,369 4,284 5,366
Max Debt/EBITDA Ratio 1.5x 1.5x 1.5x
Implied Equity Purchase Price(a) $1,887 $2,240 $2,532
</TABLE>
----------
(a) Maximum equity investment to realize a 5-year IRR of 30%.
--------------------------------------------------------------------------------
LEHMAN BROTHERS 18 Seagate Technology, Inc.
