Courseware Exhibits for Seagate Technology BuyoutCase No. N-201-063 16-Apr-01

Copyright c 2001 by the President and Fellows of Harvard College. No part of this publication may bereproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any meams --electronic, mechanical, photocopying, recording, or optherwise -- without the premission of Harvard Business School.

Copyright c 2001 by the President and Fellows of Harvard College. No part of this publication may bereproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any meams --electronic, mechanical, photocopying, recording, or optherwise -- without the premission of Harvard Business School.

Exhibit 2. Summary Financial Data on Veritas Software Veritas Software

Dec-96 Dec-97 Dec-98

Balance Sheet ($ Million)

Cash and Equivalents $67.6 $151.3 $278.2 Net Receivables 16 30.3 52.7Inventories NA NA NANet Property, Plant, and Equipment 7 10.1 26.5TOTAL ASSETS 94.5 241.9 349.1Accounts Payable 1.8 1.6 5Short-term Debt 0.1 0 0Long-term Debt 0.5 100 100Shareholders’ Equity 75 104.2 169.9

Stock Market Information

Total Book Debt (3/10/00) —$ Millions 451

1.81Stock Price (3/10/00)—$/Share 168.69Shares Outstanding (3/10/00) —Millions 393.6Source: Compustat and SEC Filings.

Equity Betaa

a Equity beta estimated using daily returns over the six-month period from 9/1/99 to 3/1/00.

Exhibit 5. Worldwide Hard Disk Drive Industry Historical Performance and Projections, 1991-2003E

1991 1992 1993 1994 1995 1996

Total Sales (000s of units) 33.1 38.4 51.8 69 90 106.8 Y/Y % Change 16.0% 34.9% 33.2% 30.4% 18.7%

Total Revenues (millions of $ $24,300 $26,200 $21,730 $22,966 $22,991 $27,596 Y/Y % Change 7.8% -17.1% 5.7% 0.1% 20.0%

Source: Computer Industry Abstracts (various issues) and “Disk Drive Quarterly Report” (June 1999) by Salomon Smith Barney.

Exhibit 5. Worldwide Hard Disk Drive Industry Historical Performance and Projections, 1991-2003E

1997 1998 1999 2000E 2001E 2002E 2003E

129.3 143.6 165.9 187.8 212.5 238.1 268.221.0% 11.1% 15.5% 13.2% 13.1% 12.1% 12.6%

$27,340 $25,483 $25,273 $26,640 $28,409 $30,450 $32,699 -0.9% -6.8% -0.8% 5.4% 6.6% 7.2% 7.4%

Source: Computer Industry Abstracts (various issues) and “Disk Drive Quarterly Report” (June 1999) by Salomon Smith Barney.

Exhibit 6. Historical Operating Performance and Capitalization Ratios for Seagate Technology and U.S. Disk Drive Industry (1981 to 1999)

1981 1982 1983 1984 1985 1986

Seagate

Sales 9.79 40.45 110.41 343.9 214.65 459.84% Growth 313.2% 173.0% 211.5% -37.6% 114.2%

EBITDA 0.87 10.7 18.82 63.51 0.07 58.34% Sales 8.9% 26.5% 17.0% 18.5% 0.0% 12.7%

EBIT 0.65 9.89 16.16 55.72 -12.01 39.18% Sales 6.6% 24.4% 14.6% 16.2% -5.6% 8.5%

Assets 9.47 43.47 157.25 214.72 275.23 305.08Depreciation & Amortization 0.22 0.81 2.65 7.8 12.08 19.17CAPX 2.45 5.04 38.83 42.66 31.22 38.68

Debt/Book Assets 19% 1% 5% 5% 13% 5%Debt/Mkt. Assets NA 0% 1% 2% 9% 2%(Debt-Cash)/Book Assets 18% -27% -10% -2% 11% -10%(Debt-Cash)/Market Assets NA -6% -2% -1% 7% -5%EBITDA Interest Coverage 10.12 57.84 47.05 73.51 0.04 20.26EBIT Interest Coverage 7.56 53.46 40.4 64.49 -6.84 13.61

Disk Drive Industry Medians

EBITDA as % of Sales 8.9% 6.2% 7.3% 0.7% -4.4% 8.6%EBIT as % of Sales 5.4% 3.2% 3.4% -3.5% -10.3% 5.3%Debt/Book Assets 19% 9% 5% 12% 19% 13%Debt/Mkt. Assets 7% 4% 1% 5% 7% 5%(Debt-Cash)/Book Assets 9% -5% -12% -6% -5% -7%(Debt-Cash)/Mkt Assets 0% -2% -6% -2% -3% -4%EBITDA Interest Coverage 3.31 3.46 4.12 -1.58 -3.19 6.2EBIT Interest Coverage 2.19 1.42 2.34 -3.37 -7.57 2.25

Source: Casewriters’ estimates based on data compiled from Compustat.

Exhibit 6. Historical Operating Performance and Capitalization Ratios for Seagate Technology and U.S. Disk Drive Industry (1981 to 1999)

1987 1988 1989 1990 1991 1992 1993 1994 1995

958.07 1,265.97 1,371.57 2,413.18 2,676.98 2,875.27 3,043.60 3,500.10 4,539.57108.3% 32.1% 8.3% 75.9% 10.9% 7.4% 5.9% 15.0% 29.7%

208.24 150.77 90.97 297.24 255.57 309.04 439.05 449.17 629.8521.7% 11.9% 6.6% 12.3% 9.5% 10.7% 14.4% 12.8% 13.9%

180.63 100.4 12.96 179.32 117.31 139.91 284.03 310.96 442.9818.9% 7.9% 0.9% 7.4% 4.4% 4.9% 9.3% 8.9% 9.8%

814.12 1,093.95 1,076.77 1,851.46 1,880.06 1,816.60 2,031.19 2,877.53 3,361.2627.6 50.37 78.02 117.91 138.26 169.13 155.02 138.21 186.8678.4 284.41 78.09 102.38 90.87 90.66 173.57 197.68 353.43

37% 28% 29% 31% 23% 18% 14% 19% 16%14% 20% 24% 28% 27% 16% 14% 18% 12%

-11% 20% 11% 17% 9% -10% -17% -27% -21%-4% 14% 9% 15% 11% -9% -17% -26% -15%

41.01 6.88 3.77 6.1 6.01 9.09 18.67 17.05 19.1135.57 4.58 0.54 3.68 2.76 4.11 12.08 11.81 13.44

7.8% 6.2% 7.3% 9.6% 8.6% 8.9% 3.9% 2.5% 4.7%4.5% 2.3% 5.3% 5.9% 4.3% 5.9% -0.3% -2.4% 1.9%16% 12% 13% 10% 13% 16% 19% 12% 10%

7% 8% 8% 9% 8% 16% 13% 7% 3%-11% 0% -5% -7% 2% -1% -9% -4% -8%

-4% -3% -2% -4% -1% -3% -3% -2% -3%6.37 8.15 5.74 6.03 4.06 9 4.38 5.58 3.591.94 4.58 2.71 3.3 1.55 4.31 -0.05 0.37 1.84

1996 1997 1998 1999

8,588.35 8,940.02 6,819.00 6,802.0089.2% 4.1% -23.7% -0.2%

1,004.53 1,521.03 451 101111.7% 17.0% 6.6% 14.9%

627.38 1,019.83 -138 3987.3% 11.4% -2.0% 5.9%

5,239.64 6,722.88 5,645.00 7,072.00377.15 501.20 589.00 613.00906.94 890.46 709.00 603.00

15% 10% 12% 10%11% 6% 8% 8%-7% -24% -20% -13%-5% -13% -13% -10%

17.99 43.66 8.84 20.2511.24 29.27 -2.71 8.29

7.0% 9.3% 5.6% 6.1%3.9% 7.5% -1.4% 1.1%13% 6% 14% 9%

4% 1% 7% 4%-6% -21% -9% -23%-5% -8% -5% -5%7.06 13 4.2 -0.095.04 8.52 -2.04 -2.91

Exhibit 7. Summary Financial Data on Publicly Traded Hard Disk Drive Manufacturers

Seagate TechnologyJun-97 Jun-98 Jun-99 Mar-97 Mar-98

Income Statement ($ Million)

Sales $8,940 $6,819 $6,802 $4,591 $4,615 Cost of Goods Sold 6,918 5,830 5,250 4,093 4,242Gross Margin 2,022 989 1,552 498 373EBITDA 1,521 451 1,011 146 -6Depreciation + Amortization 501 589 613 109 68Operating Profit 1,020 -138 398 37 -74Interest Expense 35 51 48 20 11Net Income 658 -530 1,176 41 -53Capital Expenditures 890 709 603 164 119

Balance Sheet ($ Million)

Cash and Equivalents $2,284 $1,827 $1,623 NA $325 Net Receivables 1,041 799 872 NA 586Inventories 808 508 451 NA 212Net Property, Plant, and Equipment 1,787 1,669 1,687 NA 228TOTAL ASSETS 6,723 5,645 7,072 NA 1,646Accounts Payable 863 577 714 NA 401Short-term Debt 1 1 1 NA 0Long-term Debt 702 704 703 NA 109Shareholders’ Equity 3,476 2,937 3,563 NA 906

2,717 2,241 1,773NA 739

Capital Market Information ($ Million)

Year-end Market Equity Capitalization $5,861 $5,844 $8,620 NA NA

1.2Total Book Debt (3/10/00) 704Debt Rating BBBStock Price (3/10/00)—$/Share 64.25Shares Outstanding (3/10/00) —Millions 227.2Source: Data compiled from Compustat and SEC Filings.

stock prices or market capitalization, prior to that date.

Quantum HDDa

Net Working Capitalb

Equity Betasc

aQuantum HDD was floated in August 1999 as a separately traded subsidiary of Quantum Corporation, containing just the hard disk drive operations. As a result, there is no information on historical

bNet Working Capital = Total Current Assets – Total Current Liabilities (excluding Short-Term Debt).cEquity betas estimated using daily returns over the six-month period from 9/1/99 to 3/1/00.

Western Digital MaxtorMar-99 Jun-97 Jun-98 Jun-99 Dec-96 Dec-97 Dec-98

$3,599 $4,178 $3,542 $2,767 $799 $1,424 $2,409 3,308 3,464 3,187 2,562 842 1,287 2,034

291 714 355 205 -43 137 375-61 365 -41 -188 -191 -32 13471 63 107 131 47 66 74

-133 302 -148 -319 -238 -97 609 0 12 33 18 37 29

-153 268 -290 -493 -256 -110 3182 156 199 107 54 82 95

$524 $208 $460 $226 $31 $33 $258 392 546 369 273 89 248 318148 224 187 144 81 155 153199 248 347 238 92 99 108

1,470 1,307 1,443 1,022 315 555 863342 418 330 336 110 207 428

0 0 0 10 204 245 5115 0 519 534 229 224 145791 620 318 -154 -327 -221 169

364 464 72 93 440 170709

NA $2,716 $1,043 $589 NA NA $1,320

0.8 0.6 1110 236 114

B2 B2 B18.875 5.1875 11.625

82.6 129.1 113.2

Quantum HDDa

Quantum HDD was floated in August 1999 as a separately traded subsidiary of Quantum Corporation, containing just the hard disk drive operations. As a result, there is no information on historical

Exhibit 8. Projected Operating Performance of Seagate Disk Drive Business

Year Ending June 30,

2000 2001 2002 2003 2004 2005 2006

Base Case ($ Million)

Revenues $6,619 $7,417 $8,564 $9,504 $10,416 $11,359 $12,350

Gross Margin 1,264 1,409 1,696 2,043 2,312 2,624 3,026

EBITA 141 189 316 449 499 614 724

Depreciation 625 626 642 666 708 726 729

Capital Expenditures 627 690 720 795 700 725 750

Upside Case ($ Million)

Revenues $6,619 $8,185 $10,146 $11,283 $12,626 $13,961 $15,404

EBITA 141 365 689 783 867 1,000 1,167

Downside Case ($ Million)

Revenues $6,619 $7,393 $7,797 $8,310 $8,801 $9,269 $9,759

EBITA 141 189 322 363 378 403 407

Source: Casewriters’ estimates based on revenues and EBITA projections contained in SEC filings and casewriter estimates. The “downside case” is identical to the “buyer case” contained in the SEC filings.

Source: Casewriters’ estimates based on revenues and EBITA projections contained in SEC filings and casewriter estimates.