Aug 01, 2001

Seagate and IRS Settle Tax Dispute

Seagate Technology and its affiliated companies ("Seagate") announced today the settlement of a significant tax dispute with the United States Internal Revenue Service ("IRS") over Seagate's treatment of employee stock options under cost sharing arrangements with its foreign affiliates.

According to Seagate Vice President of Taxes Stephen P. Sedler, "Seagate is pleased with the settlement filed today in the United States Tax Court. With this settlement and other agreements reached administratively, Seagate and the IRS have resolved all current tax disputes."

In the settlement agreement filed in the Tax Court, Seagate and the IRS reported that the IRS had agreed to concede the employee stock option/cost sharing issue for the years in court (1991-92), for all open tax years through and including Seagate's fiscal year ending June 29, 2001, and with respect to a block of option grants authorized on July 24, 2001.

Seagate's settlement agreement with the IRS principally involves resolution of a dispute over Seagate's tax treatment of stock options granted to employees conducting research and development activities under so-called cost sharing arrangements with foreign affiliates. The IRS had taken the position in Field Service Advice from the National Office that Seagate was required to include the "cost" or value of stock options granted to research and development employees in the pool of costs to be jointly shared among Seagate and its foreign affiliates. Seagate disagreed and challenged the IRS's position in Court.

Seagate and its affiliated companies are controlled by New SAC, a Cayman Island limited liability company, organized in late 2000 to acquire the hard disc drive and storage solutions business, the tape drive business, the software business and certain other assets of Seagate Technology, Inc. These businesses include: Seagate Technology (which includes hard disc drives and XIOtech Corp.), Seagate Removable Storage Solutions, and Crystal Decisions (formerly known as Seagate Software). The acquisition closed on November 22, 2000.

For More Information, Contact:
Stephen P. Sedler, V.P. Taxes
831 439-2583

Seagate is represented by:
Mark Oates 312-861-7594
John Peterson 650-856-5538
Thomas Linguanti 312-861-2623
Baker & McKenzie.

Woody Monroy, Media Relations
831-439-2838