<PAGE>


                                          
                                          
                                   UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C.  20549

                                     FORM 10-K

(Mark one)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934 

                    For the fiscal year ended December 27, 1997

                                        or

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934


For the transition period from _____________________ to  ______________________

                         Commission file Number:  0-14016

                              MAXTOR CORPORATION
      -------------------------------------------------------------------
              (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<CAPTION>
<S>                                                                       <C>
                            Delaware                                       77-0123732
---------------------------------------------------------------        ----------------------
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)           (I.R.S. EMPLOYER
                                                                          IDENTIFICATION NO.)
                                                                                                        
               510 Cottonwood Drive, Milpitas, CA                            95035        
---------------------------------------------------------------        ----------------------
          (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                         (ZIP CODE)

Registrant's telephone number, including area code:                       (408) 432-1700 

Securities registered pursuant to Section 12(b) of the Act:               None

Securities registered pursuant to Section 12(g) of the Act:               5.75% Convertible Subordinated Debentures,
                                                                                  due March 1, 2012
</TABLE>

Indicate by checkmark 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
                                           -----      -----

Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  ______

As of March 1, 1998, 88,059,701 shares of the registrant's Series A Preferred
Stock, $.01 par value, and 15,125 shares of the registrant's Common Stock, $.01
par value, were issued and outstanding, respectively.  As of such date, all of
the outstanding shares of Series A Preferred Stock were held by the parent of
the registrant, all outstanding shares of Common Stock were issued to employees
of registrant pursuant to its stock option plan, and there was no public market
for the Company's equity securities.

THIS ANNUAL REPORT ON FORM 10-K CONTAINS 106 PAGES OF WHICH THIS IS NUMBER 1. 
THE INDEX TO EXHIBITS BEGINS ON PAGE 66.

                                      1

<PAGE>
                                       PART I


ITEM 1.  BUSINESS

This report includes forward-looking statements which reflect the Company's
current views with respect to future events and financial performance.  These
forward-looking statements are subject to certain risks and uncertainties,
including those discussed in Item 1. Business, "Products", "Marketing and
Customers", "Manufacturing and Suppliers", "Research and Development", and
Competition"; Item 7. Management Discussions and Analysis of Financial
Condition and Results of Operations, "Results of Operations" and "Liquidity and
Capital Resources"; and elsewhere in this report, that could cause actual
results to differ materially from historical results or those anticipated.  In
this report, the words "anticipates," "believes," "expects," "intends," "future"
and similar expressions identify forward-looking statements.  Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date hereof.

Maxtor is a registered trademark and DiamondMax, CrystalMax and Formula 4 are
trademarks of Maxtor Corporation.  All other brand names and trademarks
appearing in this Report are the property of their respective holders.


GENERAL

Maxtor Corporation (Maxtor or the Company) was organized in 1982 and is
incorporated in the state of Delaware.  Maxtor develops, manufactures and
markets hard disk drive storage products for personal computer systems.  The
Company sells  3.5-inch desktop storage products in capacities from 1.0 gigabyte
up to 11.5 gigabytes. 

The Company's products are designed for desktop applications to meet both value
and high-performance needs of customers.  Customers include original equipment
manufacturers (OEMs), distributors, and national retailers. Additionally,
several smaller retailers and value-added resellers (VARs) carry Maxtor products
purchased through Maxtor's distribution network. The Company relies on suppliers
for components including heads, media (disks) and custom integrated circuits. 
All the Company's products are manufactured by Maxtor at its manufacturing
facility in Singapore and sold in North America, Europe and Asia.


                                      2

<PAGE>
BACKGROUND

A hard disk drive (HDD) is a magnetic data storage device that reads, writes and
stores digital data.  The main components are the head disk assembly (HDA) and
printed circuit board assembly (PCBA).  The HDA includes the head, media
(disks), head positioning mechanism (actuator) and spin motor.  The PCBA
includes custom integrated circuits, an interface connector to the main computer
and a power connector.  The components are contained in a hard base plate
protective package in a contamination-free environment.  HDDs are more cost
effective than a computer's random access memory because HDDs can hold a
substantially higher volume of data at a lower cost per megabyte.  Additionally,
HDDs continue to store and retrieve data faster than other storage devices such
as optical, floppy or magnetic tape.

The basic operation of a HDD has not changed since its introduction in the
1950's.  One or more disks (one to four for Maxtor products) are positioned
around a spindle hub that rotates the disks by a spin motor.  Disks are made of
a smooth aluminum  substrate to which a thin coating of magnetic material has
been applied.  Each disk has a slider suspended directly above it, holding an
electromagnetic device (head) that can read or write data to the disk while the
disk spins.  The head flies over the disk on a thin layer of air.  A key measure
in the HDD industry is areal density.  Areal density is a measure of stored bits
per square inch on the recording surface of the disk.  An increase in areal
density provides for greater storage capacity from the drive without increasing
the number of heads and disks, allowing companies to deliver higher capacity
devices at lower costs.  To achieve ever higher areal densities, every
successive generation of drives uses a combination of improved head positioning
(servo mechanisms), lower "flying heights" and other new technologies.

The HDD's integrated circuits include a drive interface and a controller.  The
drive interface "talks" to the user's computer, receiving instructions, while
the controller directs the flow of data to and from the disks, and controls the
movement of the heads.  The location of data is logically maintained in tracks,
divided into sectors, on each disk.  The user's computer sends instructions to
read or write data on the disks based on track and sector locations.  In order
to "speak" the same language between the HDD and the main computer, industry
standard interfaces are utilized.  Maxtor utilizes EIDE standard interfaces for
all its products.  

Maxtor has continually designed and implemented new HDD technologies, especially
related to heads and disks, in order to optimize performance, reliability,
durability and areal density.  Performance is generally measured by average seek
time in milliseconds (ms) to position the head over a selected track, the data
transfer rate in megabytes per second, and the spindle speed in rotations per
minute (rpm).  Reliability measures expected life of the HDD.  Durability
relates to the HDDs ability to withstand changing temperatures, humidity,
altitudes, vibration and shock.  Physical size is measured by standard form
factors (or package size) in inches, which is important to OEMs who require
compact components for their personal computer products.  The optimization of
these metrics have resulted in higher capacity products at lower costs.

The personal computer industry has been consistently driven by increased storage
needs caused by the increasing size and complexity of software applications. 
The result in the storage industry in which Maxtor competes has been short
product life cycles, ranging from six to 12 months.

PRODUCTS
Maxtor currently offers two families of products, CrystalMax and DiamondMax. 
The CrystalMax family is the Company's value product line, while the
DiamondMax family of HDDs offer power users high capacity and performance. In
the fourth quarter of 1996. Maxtor incorporated a new high-reliability four-disk
HDA, Formula 4, and digital signal processor (DSP) technology in its product
designs.  The DSP technology combines the processor and drive interface circuits
onto one chip.  Both technologies have increased the inherent reliability of the
drive.  Mean time between failure is greater than 500,000 hours compared to
greater than 300,000 hours for Maxtor's previous product families. The
DiamondMax and CrystalMax  series of drives both utilize Formula 4 HDA, which
allows for improved performance and reliability.  The Company has achieved
improved production economies by building on a common, advanced platform.

                                      3

<PAGE>

The CrystalMax family of HDD's was introduced in September 1996 as a follow-on
to Maxtor's 7000 Series product family which was designed to the needs of the
highly price-sensitive entry level to mid-range desktop PC market.  Capacities
range from 875 MB on one disk to 3.5 GB on four disks, meeting the increasing
demand for data storage.  Volume shipments commenced in the fourth calendar
quarter of 1996 for the 1.7 GB 81750A, 2.6 GB 82625A, and 3.5 GB 83500A
products.  The CrystalMax products shipped in volume through the second quarter
of  1997. 

In February 1997, Maxtor announced its CrystalMax 1080 series of hard drives, in
capacities of 2.1 GB 82100A, 3.2 GB 83201A and 4.3 GB 84320A.  CrystalMax 1080
products utilize thin film media with inductive heads and the DSP-based
architecture from the series, resulting in increased aerial density of 1080 MB
per disk.  Seek time also improved at sub-11 ms and buffer size is increased to
256K cache.  This family offers users all the benefits of the initial CrystalMax
series with additional performance.  Volume shipments commenced in the first
quarter of 1997.  

In October 1996, the Company announced its 3.5-inch, high performance DiamondMax
family of HDDs for the desktop.  Product offerings for this first generation of
DiamondMax products were 2.5 GB 82560A, 3.8 GB 83840A and 5.1 GB 85120A,
providing 1.28 GB of storage space per disk.  Volume shipments commenced on the
5.1 GB in the fourth calendar quarter of 1996. 

The DiamondMax family is Maxtor's first to use MR (magneto-resistive) heads and
PRML (Partial Response Maximum Likelihood) read channels.  MR heads provide more
signal than older inductive head technologies at today's high densities.  PRML
read channels further improve the usability of small data signals and contribute
to the product's fast internal data transfer rate of 8 to 13 MB per second.  The
DiamondMax family has ANSI ATA-3 Enhanced IDE interface, host transfer rates of
16.67 MB per second, less than 10 ms seek time, 5,400 rpm spindle speed and
contains 256K cache.  Like the CrystalMax family, these drives also feature the
custom on-the-fly Error Correction Code logic, are compliant with the S.M.A.R.T.
specification, have low power consumption and ATA power saving commands
supporting Green PC standards.  The DiamondMax family of products are designed
for power users who require high capacity and maximum performance from a HDD.

In June of 1997, Maxtor announced its second generation of MR technology based
drives for the desktop PC market.  The DiamondMax 1750 Series has capacities
ranging from 1.75 GB up to 7.0 GB of storage. These products were targeted to
address the broad range of desktop storage requirements in both the commercial
and consumer segments.  The 7.0 GB capacity of the DiamondMax 1750 was featured
by several PC vendors in their summer 1997 system announcements.  This second
generation of DiamondMax products introduces support for UDMA 33 interface and
has host transfer rates of up to 33 MB per second.

In September of 1997, Maxtor announced the DiamondMax 2160, its third generation
of MR based hard drives for desktop PC applications.  With capacities ranging
from 2.16 GB to 8.6 GB the drive is well positioned to address all of the most
popular storage capacities.  The timely introduction and fast production ramp of
the DiamondMax 2160 enabled Maxtor to be an industry leader at this capacity
point. This Time to Volume leadership is key to Maxtor's continued success in
the market.

In February 1998, Maxtor announced its fourth generation of MR product storage
drives.  The DiamondMax 2880 offers capacities from 2.88 GB to 11.5 GB.  The
Company began volume production of this product in the first quarter of 1998. 

                                       4

<PAGE>

IMPACT OF INDUSTRY CHARACTERISTICS ON THE COMPANY'S PRODUCTS
Competitive areal densities are continuing to increase dramatically.  Several
larger competitors have already focused their desktop drive products on MR
technology.  Currently, the Company believes this more aggressive MR-based areal
density curve is dictating the capacities of choice at major OEM accounts. The
Company's strategy is to introduce desktop products which incorporate MR
technology and which are increasingly less expensive to manufacture.

Short product life cycles also increase the importance of the Company's ability
to successfully manage product transitions.  Although the Company successfully
managed product transitions in the recent past, the Company has historically
experienced difficulties with some product transitions and there can be no
assurance that product transitions will be successfully managed in the future. 
New products introduced by competitors, as well as those introduced by the
Company, tend to displace older products.  The failure to adequately manage
product transitions could result in the loss of market opportunities, decreased
sales of existing products, cancellation of products or product lines, the
accumulation of obsolete and excess inventory, and unanticipated charges related
to obsolete inventories and capital equipment.  The Company's ability to
anticipate market trends and to successfully develop, manufacture in volume and
sell new products in a timely manner and at favorable gross margins will be
important factors affecting the Company's future results.


MARKETING AND CUSTOMERS

The Company has a direct sales force of approximately 100 sales professionals
that market the Company's products to OEMs, distributors and certain key
retailers in the personal computer (PC) industry.  Sales offices are located
throughout the U.S., and in Germany, Hong Kong, Great Britain, France,
Singapore, Taiwan, South Korea, Australia and Japan.  Market demand for the
Company's products generally follows the annual demand cycles experienced in the
PC industry, which typically rise during the late summer and fall months, peak
during the winter months and drop off in the spring and early summer months. 
However, market demand is highly volatile and there can be no assurances that
future demand cycles will follow historical trends.

CUSTOMER INFORMATION
During the year ended  December 27, 1997 two customers, Compaq and Dell
Computer, accounted for more than 21%  and 10%, respectively, of the Company's
revenue. During the nine months ended December 28, 1996 one customer, Southern
Electronics Distribution accounted for 11% of the Company's revenue.  During
the year ended March 30, 1996 no customer accounted for more than 10% of the
Company's revenue.

For financial data relating to major customers, export sales and geographic
information (foreign and domestic operations) refer to Part II, Item 8, Footnote
6, on  PAGE 35.

ORIGINAL EQUIPMENT MANUFACTURERS (OEMs)
A majority of industry's HDDs are sold into the OEM channel.  OEM customers
select HDD vendors seasonally based on the price, capacity and operational
specifications required for their PC product lines.  Once the vendor's HDD is
qualified, the OEM will generally purchase quantities in large blocks for the
life of that PC product.  An OEM will usually qualify several HDD vendors to
ensure adequate supply.  In order to be chosen as a qualified vendor, the
Company must be able to provide high quality, low cost products within the OEM's
requested time-frames.  Time-to-market and product quality are essential to
securing and maintaining the OEM relationship.  If a qualification opportunity
is missed, the HDD manufacturer may not have another opportunity to do business
with the OEM until the next generation of the manufacturer's  products are
introduced.

The PC industry exhibits volatile business conditions, generally related to
market share and price competition.  In addition, the industry has had a trend
toward consolidation among PC manufacturers,  Accordingly, maintaining long-term
vendor relationships with OEMs can be difficult.  The Company believes that its
success depends on its ability to develop excellent OEM customer relationships
and provide products that fit the needs of the OEM channel. OEMs accounted for
64% of the Company's revenue for the fiscal year ended December 27, 1997, 52% of
revenue for the nine months ended December 28, 1996 and 50% of revenue for the
fiscal year ended March 1996.

                                      5

<PAGE>

The Company generally negotiates pricing, volume discounts, order lead times,
product support requirements and other terms and conditions prior to receiving
the OEM's first purchase order.  Terms generally range from six months to two
years.  Shipments are not scheduled until purchase orders are received and 
cancellation of purchase orders may occur without significant penalty. 
Historically, the Company has experienced cancellations for orders, which had a
material adverse impact on the financial results of the Company during the nine
months ended December 28, 1996 and the year ended  March 30, 1996.

DISTRIBUTORS
The Company is also dependent upon sales to the commercial distribution channel.
Its distributors are located worldwide, and generally market the Company's
products to VARs (value-added resellers), dealers, smaller retailers, system
integrators and small OEMs.  Distributors generally enter into non-exclusive
agreements with the Company for purchase and redistribution of product on a
quick turnover basis.  Purchase orders are placed and revised on a weekly basis.
Distributors have limited rights to return product on a rotation basis. 
Distributors (including smaller retailers) accounted for 36% of revenue for the
year ended December 27, 1997, 48% of revenue for the nine months ended December
28, 1996 and 39% of revenue for the fiscal year ended March 30, 1996.

Because distributors are constrained by low overhead requirements, providing
competitive pricing and sales incentives are key to selling product through
distribution.  Price protection and sales incentive programs are the industry's
method of quickly effecting price corrections in the channel.  The industry has
and continues to experience volatile price erosion in the distribution channel. 
The Company believes price erosion is inherent with each product capacity point
introduced to the market.  Therefore, the Company also believes it must
introduce its new products before or at the same time as its competitors in
order to minimize the negative impact of price erosion on its financial results.
In 1998, the Company will continue to focus on time-to-market product
introductions and linearity of product flow into its sales channels to reduce
the negative impact of price erosion.

RETAILERS
The Company sells its retail-packaged products directly to major retail sectors
such as computer superstores, warehouse clubs and computer electronic stores. 
Its retail customer base is in the United States and Canada. Retailers accounted
for 9% of revenue for the year ended December 27, 1997, 8% of revenue for the
nine months ended December 28, 1996 and 5% of revenue for the fiscal year
ended March 30, 1996.

It appears that the demand for end-users to have more PC storage space will
continue due to a number of factors, including larger and more powerful software
applications, new capabilities (such as desktop video editing) and the wealth of
information available from the Internet and on-line services. As a result, the
Company believes the retail channel complements its other sales channels. 
Retailers supply to the aftermarket "upgrade" sector where end-users purchase
and install products to upgrade their computers. 


WARRANTY AND SERVICE
The Company currently warrants its products against defects in parts or labor
from the date of shipment.  Products currently in production are warranted for a
period of 36 months after shipment.  Products are generally repaired or
refurbished by the Company's Singapore facility.  The Company operates a
European drive exchange center in Ireland, a domestic drive exchange center in
San Jose, California, and an Asian drive exchange center in Singapore.
Additionally, the Company provides customer service and technical support for
end-users, as well as access to important information and software via the World
Wide Web.  The Company also believes that sales through the retail channel
increases brand awareness.  In 1998, the Company will continue to support the
growth of the retail channel.

                                      6

<PAGE>

BACKLOG
The Company generally sells standard products according to standard purchase
order terms.  Delivery dates are specified by purchase orders.  Such orders may
be subject to change or cancellation by the customer without significant
penalties.  The quantity actually purchased and shipment schedules are
frequently revised to reflect changes in the customer's needs.  At times, when
price competition is intense and price moves are frequent, the Company believes
most customers may place purchase orders below their projected needs, delay
placing orders or even cancel purchase orders with the expectation that future
price reductions may occur.  Conversely, at times when industry-wide production
is believed to be insufficient to meet demand, the Company believes that certain
customers may place purchase orders beyond their projected needs in order to
maintain a greater portion of product allocation.  

In addition, orders for the Company's products are filled for several large
customers from JIT ("just in time") inventory stocked warehouses, whereby orders
are not placed ahead of time on the Company's order entry backlog system. 
Instead, the Company receives a periodic forecast of requirements from the
customer.  Upon shipment from the JIT warehouse, the customer is invoiced. 

In light of these factors, backlog reporting as of any particular date may not
be indicative of the Company's actual revenues for any succeeding period, and,
therefore, is not necessarily an accurate barometer of the Company's future
revenue.

MANUFACTURING AND SUPPLIERS

The Company's disk drive manufacturing operations consist primarily of the final
assembly of high-level subassemblies and testing of completed products.  The
Company manufactures disk drive products in volume production at its
manufacturing facility located in Singapore.  The majority of all PCB assembly
is performed by an affiliate of the Company, International Manufacturing
Services, Inc. (IMS), under the terms of a manufacturing services agreement.
Maxtor owns 16% of the outstanding shares of IMS  (See Management Discussion and
Analysis of Financial Condition and Results of Operation - Liquidity, on page
23, for financial information regarding IMS).   In addition to risks typically
associated with the concentration of vital operations, foreign manufacturing is
subject to additional risks, including changes in governmental policies,
currency fluctuations, political instability, transportation delays and
interruptions, and the imposition of tariffs and export controls.  A disruption
of the Company's manufacturing operations could have an adverse effect on its
results of operations and customer relations.

Pilot production of the Company's products, as well as cost reduction, quality
and product improvement engineering on current products are conducted in the
Company's Longmont, Colorado facilities.  When a new product or a design change
to a current product is ready for volume production, it is transferred from the
Longmont pilot line to the Company's Singapore manufacturing facilities.

The Company seeks to maintain the flexibility necessary to accommodate the
continuous changes in product mix and volume requirements that result from the
characteristically short product life cycles of the disk drive industry.  The
Company accomplishes this by closely managing its vendor relationships for raw
materials and utilizes its capital equipment for the manufacture of multiple
product lines.

The Company's manufacturing processes require large volumes of leading edge,
high-quality components supplied by outside vendors.  Generally, the Company
does not have long-term supply agreements with its vendors, some of which have
limited financial and operational resources.  The Company has qualified multiple
vendors for components where practical.  However, some leading edge components
for the Company's new generation of products are available either only from
single sources or, even if potentially available from multiple sources, involve
relatively long lead times to manufacture, such that the Company cannot quickly
obtain additional supply or can do so only by incurring significant incremental
costs. The Company has periodically received notices from vendors that they are
unable to supply required volumes of certain key components.  Vendor
cancellations can adversely impact the Company's ability to ship products as
scheduled to its customers.  While the Company has qualified and continues to
qualify multiple vendors for many components, it is reliant on, and will
continue to be reliant on, the availability of supply from its vendors for many
semi-custom and custom integrated circuits, heads, media and other key
components.  In light of current industry conditions, including consolidation of
competitors, the Company is focused on developing excellent business
relationships with its vendors and utilizing strategic alliances for certain

                                      7

<PAGE>

components where practical.  There can be no assurance, however, that the
Company will be successful in such efforts or that in the future the Company's
vendors will meet the Company's needs for required volumes of high-quality
components in a timely and cost effective manner.  The Company's inability to
obtain sufficient quantities of components required, or to develop alternative
manufacturing capability if and as required in the future, could result in
delays or reductions in product shipments that could materially and adversely
affect the Company's business, results of operations and financial condition.

RESEARCH AND DEVELOPMENT

The Company participates in an industry that is characterized by rapid
technological change and short product life cycles.  The Company's ability to
compete effectively will depend on, among other things, its ability to
anticipate such change.  To compete effectively, the Company has and will
continue to devote substantial personnel and capital resources to develop 
high-quality products which can be produced in volume on a cost effective basis.
The Company believes that common architectures, vertical integration and new
technologies are among the key areas in which to direct its focus.

In order to develop cost effective products, the Company has focused on
implementing common architectures. Because the Company believes that sharing
common mechanics and electronics between product families will decrease the
product development period, thus enable it to compete more effectively, the
Company will continue to focus its efforts on implementing common architectures
where technologically feasible.  Common architectures utilized in the Company's
current products include the HDA, custom electronics and firmware.  The HDA is
the four-disk HDA, Formula 4 which represents a marked improvement in the shock
resistance and reliability of Maxtor products.  First in the industry, DSP-based
drive electronics and common PCBAs reduce product costs.   Further utilization
of a common firmware architecture allows for faster product development.  

The Company is highly dependent upon its vendors for components.  The Company
believes that vertical integration for certain components is necessary in order
to effectively compete in the market.  Vertical integration allows for joint
development of technology, provides a more robust component supply and allows
the Company an advance view of new components.  There can be no assurance that
the Company will be able to adequately vertically integrate as required by
market conditions.

The Company believes that increasing storage capacities, increasing performance
and lowering cost depends on developing and incorporating new data storage
technologies into the Company's products.  New technologies are difficult to
implement due to short product life cycles, without sufficient research and
development resources.  In the past, the Company has experienced difficulty
moving product from design to production with satisfactory yields.  During 1997,
the Company launched a new design effort for server class products.  In
addition, the Company will focus on developing new technologies to address areal
density targets, media tribology limitations and shock resistance issues, among
others, in order to provide high performance products.

For the year ended December 27, 1997, the nine months ended December 28, 1996,
and fiscal year ended March 30, 1996 the Company's research and development
expenses were $106.2 million, $87.8 million and $94.7 million, respectively.  In
order to effectively implement its product strategy, the Company intends to
continue to make significant investments in research and development. 

                                      8

<PAGE>
COMPETITION

The Company presently competes primarily with manufacturers of 3.5-inch disk
drives, including International Business Machines, Corporation; Quantum
Corporation; Seagate Technology, Inc; and Western Digital Corporation; each of
which  have larger market shares than the Company.  Seagate Technology, Inc, is
the dominant competitor in the 3.5-inch market. Potential entrants include other
major OEMs.  If such customers successfully develop disk drive manufacturing
capabilities,  the Company's market share could be reduced.

The principal methods of competition are timing of product introductions, price,
product capacity and performance.  When competitors introduce products which
offer lower prices, greater capacity and better performance, or any combination
of these factors, or when the Company's new products are not brought to market
on a timely basis, the selling price of its older products generally must be
reduced in order to compete effectively with competitors' new products. The
Company believes price erosion is an inherent factor for each product capacity
point introduced to the market.  Therefore, it believes it must introduce its
new products before or at the same time as its competitors in order to reduce
the negative impact of price erosion on its financial results.  In 1998, the
Company will focus on time-to-market product introductions and linearity of
product flow into its sales channels in order to reduce the negative impact of
price erosion.  There can be no assurance that the Company will be successful in
its efforts.

The disk drive industry has been subject to significant consolidation in the
past two years.  A number of companies, including Maxtor, have either merged or
been acquired and the number of competitors in the market have been reduced. 
Subsequent to the industry consolidation, some competitors remain better
positioned than Maxtor from a market share and financial resources availability
perspective. 

The Company believes that in order to successfully increase its market share and
improve its financial position, the Company must continue to lower its product
costs and introduce its products before or at the same time as its competitors.
However, there can be no assurance that the Company's efforts will be successful
in the new competitive environment.

PATENTS AND LICENSES

The Company has been granted approximately 170 U.S. and foreign patents related
to disk drive products and technologies, and has additional patent applications
pending in the United States and foreign countries. The Company has entered into
cross-license agreements with certain of its competitors and conducted
discussions with others concerning cross-license relationships.  

The Company further relies on trade secrets, copyrights, trademarks and
contractual provisions to protect its proprietary rights.  There can be no
assurance that the Company's protective measures will be adequate to protect the
Company's proprietary rights, that others have not or will not independently
develop or otherwise acquire equivalent or superior technology, or that the
Company will not be required to obtain royalty-bearing licenses to use other
intellectual property in order to utilize the inventions embodied in the patents
owned or currently licensed by the Company.  There can be no assurance that any
patents will be issued pursuant to the Company's current or future patent
applications. Or that patents issued pursuant to such applications or any
patents the Company owns or has licenses to use will not be invalidated,
circumvented or challenged.  Moreover, there can be no assurance that the rights
granted under any such patents will provide competitive advantages to the
Company or be adequate to safeguard and maintain the Company's proprietary
rights.  In addition, the laws of certain countries in which the Company's
products are or may be assembled, tested or sold, including various countries in
Asia, may not protect the Company's products and intellectual property rights to
the same extent as the laws of the United States.  The failure of the Company to
enforce and protect its intellectual property rights could have a material
adverse effect on the Company's business, financial condition and results of
operations.

The computer storage industry, like many technology-based industries, is
characterized by frequent claims and litigation involving patent and other
intellectual property rights.  The Company from time to time may be notified by
third parties that the Company may be infringing patents owned by or proprietary
rights of third parties.  If necessary, the Company may have to seek a license
under such patent or proprietary rights, or redesign or modify their products
and processes in order to avoid infringement of such patent or proprietary
rights.  There can be no assurance that such a license would be available on
acceptable terms, if at all, or that the Company could so avoid infringement of
such patent or proprietary rights, in which case the Company's business
financial condition and 

                                      9

<PAGE>

results of operations could be materially and adversely
affected.  Additionally, litigation may be necessary to protect the Company's
proprietary rights.  Any claims or litigation involving the Company's owned or
licensed patents or other intellectual property rights may be time consuming and
costly, or cause product shipment delays, either of which could have a material
adverse effect on the Company's business, financial condition and results of
operation.

                                     10

<PAGE>
EMPLOYEES

As of March 1, 1998, the Company had approximately 5,700 employees worldwide. 
The Company believes that its future success will depend on its ability to
continue to attract and retain a team of highly motivated and skilled
individuals.  None of the Company's employees are represented by a labor
organization.  The Company believes that its employee relations are positive.


ITEM 2.  PROPERTIES

The Company's administrative offices and new advanced technology operations are
located in Milpitas, California.   The Company currently plans to use the
additional floor space for expansion of the advanced technology operation.  The
Company also maintains engineering and pilot production facilities in Longmont,
Colorado.  All the Company's domestic facilities are leased.

The Company's manufacturing facilities are located in Singapore.  The Company
owns and occupies a 384,000 square-foot building in Singapore, situated on land
leased through the year 2016 (subject to an option to renew for an additional 30
years).  All the Company's sales offices, located in the United States, Europe
and Asia Pacific, are leased.

The Company believes as it pursues its growth strategy its requirements for
facilities are constantly under review and consideration and will be added as
the need arises.

ITEM 3.  LEGAL PROCEEDINGS 

STORMEDIA LITIGATION

The dispute between StorMedia and the Company arises out of the Agreement
between the Company and StorMedia which became effective on November 17, 1995,
under which StorMedia agreed to supply disk media, a key component of hard disk
drives, to the Company.  StorMedia's supply of disk media did not meet the
Company's specifications and functional requirements and, as a result, after
negotiations, the Company terminated the Agreement.

On September 18, 1996 a class action securities lawsuit was filed against
StorMedia Incorporated ("StorMedia") and certain of its officers in Superior
Court of the State of California, County of Santa Clara.  Among the allegations
against StorMedia was the assertion that StorMedia failed to perform under a
November 17,1995 Purchase Agreement ("Agreement") with Maxtor Corporation ("the
Company") and that StorMedia's failure to sue the Company for breach of the
Agreement was evidence that StorMedia had breached the Agreement. (A concurrent
class action was later filed in the U.S. District Court for the Northern
District of California by the same parties.)

One week later, on September 25,1996, StorMedia commenced an action in the U.S.
District Court for the Northern District of California entitled, STORMEDIA 
INCORPORATED V. HYUNDAI ELECTRONICS INDUSTRIES CO., LTD., ET AL., U.S. District
Court, Northern District, No. C-96 20805 RMW (EAI) (the "Federal Action"),
against Hyundai Electronics Industries Co., Ltd.  ("HEI")-- the Company's Korean
grandparent -- which also signed the Agreement.  StorMedia also sued M.H. Chung,
HEI's chairman; K.S. Yoo, the individual who signed the Agreement on behalf of
the Company.  StorMedia, however, did not sue the Company.

StorMedia filed an Amended Complaint of February 14,1997 in the Federal Action. 
The Amended Complaint alleged Fraud and Deceit (against all Defendants);
Negligent Misrepresentation (against all Defendants); Breach of Contract
(against HEI); Breach of Contract--Covenant Not to Compete (Against HEI); Breach
of the Implied Covenant of Good Faith and Fair Dealing (against HEI); and
Unlawful, Unfair or Fraudulent Business Practices (against HEI).  The plaintiff
alleged that HEI entered into a volume purchase agreement with StorMedia
Pursuant to which HEI and the Company committed to purchase rigid discs for use
in the Company's drives.  At the time HEI entered the Agreement, plaintiff
contends that HEI knew that it could not and would not purchase the volume of
products which it committed to purchase.  Plaintiff further contends that HEI
entered the contract in order to secure a source of components for the Company
only long enough for HEI to develop its own internal disc manufacturing capacity
and that it and the other defendants never intended to fully perform the
Agreement.

                                     11

<PAGE>

     Plaintiff sought damages in excess of $206 million dollars, punitive
damages, injunctive relief, attorneys' fees, pre-judgment and post-judgment
interest, and costs.





                                     12

<PAGE>
     On December 20, 1996, the Company filed a Complaint in Colorado state court
entitled MAXTOR CORPORATION V. STORMEDIA INC. ET AL., District Court, County of
Boulder Colorado, No. 96CV 161 ("Colorado Action"), against StorMedia
Incorporated, StorMedia International Ltd., and William J. Almon, StorMedia's
CEO.  The complaint alleges Breach of Contract (against all Defendants except
Almon), Breach of the Implied Warranty of Fitness (against all Defendants except
Almon), Breach of the Implied Warranty of Merchantability (against all
Defendants except Almon), Fraud (against all Defendants), and Negligent
Misrepresentation (against all Defendants).  The Company seeks damages in excess
of $100 million dollars, punitive damages, reasonable attorneys' fees and costs.
In March, 1997, the Colorado Action was stayed.

On October 24, 1997, the Company filed a Motion to Intervene in the Federal
Action.  HEI moved to dismiss the action for failure to join the Company as a
party.  On February 18, 1998, the U.S. District dismissed the Federal Action in
its entirety.  Accordingly, on February 20, 1998, the Company filed a Motion for
Relief from Stay in the Colorado action.  On February 24, STORMEDIA
INTERNATIONAL LTD. V. HYUNDAI ELECTRONICS INDUSTRIES CO., LTD., ET AL., in the
Superior Court of California, County of Santa Clara, Case No. CV 772103
("California Action").  This new complaint alleges Fraud and Deceit (against all
Defendants), Negligent Misrepresentation (against HEI and the Company). 
Plaintiff seeks damages in excess of $206 million dollars, punitive damages,
injunctive relief, attorneys' fees, pre-judgment and post-judgment interest, and
costs.  On March 26, 1998, the Company moved to stay the California Action in
light of the substantially identical action pending in Colorado.

There has been no discovery in the Colorado Action or the recently filed 
California Action.  There has been some initial discovery exchanged in the 
now dismissed Federal Action.  No depositions on the merits of the claims 
have been taken.  The Company believes that it has meritorious defenses to 
such claims and intends to defend the litigation vigorously.  However, due to 
the nature of the litigation and because the pending lawsuits are in the very 
early pre-trial stages, the Company cannot determine the possible loss, if 
any, that may ultimately be incurred either in the context of a trial or as a 
result of a negotiated settlement.  The two pending litigations could result 
in significant diversion of time by the Company's technical personnel.  While 
after consideration of the nature of the claims and facts relating to the 
litigation, including the results of preliminary discovery, management 
believes that the resolution of this matter will not have a material adverse 
effect on the Company's business, operating results and financial conditions, 
the results of these proceedings, including any potential settlement are 
uncertain and there can be no assurance that they will not have a material 
adverse effect on the Company's business, operating results, and financial 
condition.

The Company has been notified of certain other claims, including claims of
patent infringement.  While the ultimate outcome of these claims and the claims
described above is not determinable, it is reasonably possible that resolution
of these matters could have a material impact on the financial condition,
results of operations or cash flows of the Company. No amounts related to any 
claims or action have been accrued in the accompanying financial statements.

                                     13

<PAGE>
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS


The Company's annual meeting was held August 13, 1997, at which its then sole 
stockholder reelected Charles H. Christ and Y.H. Kim  as Class II directors 
each, to hold office for a three-year term, and ratified the appointment of 
Coopers & Lybrand L.L.P. as the Company's independent accounting firm for the 
year ended December 27, 1997.  On February 25, 1998, the Company's sole 
shareholder authorized by written consent an Amended and Restated 1996 Stock 
Option Plan, effective October 1, 1997 and an increase to 12,272,168 as the 
maximum number of shares reserved for issuance thereunder.

                                      PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
     STOCKHOLDER MATTERS

In January 1996, the Company became a wholly owned subsidiary of Hyundai
Electronics America (HEA).  As of the acquisition, trading of Maxtor common
stock on the NASDAQ National Market was suspended. Currently, there is no public
market for the Company's equity securities.  The Company's 5.75% convertible
subordinated Debentures, due March 1, 2012, $100,000,000 in aggregate principal
amount, remain publicly traded.

In June 1996, the Company entered into an exchange agreement with HEA whereby
HEA exchanged 600 shares of Common Stock for 58,208,955 shares of Series A
Preferred Stock, $.01 par value.  In December 1997, the Company and HEA entered
into a Debt Payment and Stock Purchase Agreement pursuant to which HEA accepted
29,850,746 new shares of the Corporation's preferred stock as payment for
$200,000,000 owed to HEA by the Corporation.  As of December 27, 1997,
88,059,701 shares of Series A Preferred Stock and 15,125 shares of Common Stock,
$.01 par value, were issued and outstanding.  At March 1, 1998, all of the
outstanding shares of Series A Preferred Stock were held by the parent of the
registrant and all outstanding shares of Common Stock were held by three
individuals who obtained shares upon exercise of options granted under the
Company's 1996 Stock Option Plan.

DIVIDEND POLICY

The holders of shares of Series A Preferred Stock are entitled to non-cumulative
dividends of $0.40 per share, when and as declared by the Board of Directors, in
preference of the holders of shares of the Common Stock.  No such dividends were
declared in 1997.  The Company has never paid cash dividends on its capital
stock.  The Company does not anticipate paying cash dividends in the near
future.  Under the terms of the Company's line of credit facilities, the Company
may not declare or pay any dividends without the prior consent of its lenders.

                                      14

<PAGE>


 ITEM 6.  SELECTED FINANCIAL INFORMATION     
(IN THOUSANDS)
<TABLE>
<CAPTION>

                                        December 27,  December 28,  December 28,   March 30,   March 25,    March 26, 
FISCAL YEAR ENDED                          1997          1996          1996          1996        1995         1994 
                                      (twelve months)(twelve months)(nine months)
                                                      (unaudited)(1)
                                      -------------- --------------- ------------- ---------- -----------  ------------
<S>                                     <C>            <C>           <C>            <C>         <C>         <C>    
Revenue                                 $1,424,320     $1,113,842    $798,884      $1,268,998   $906,799    $1,152,615
Gross margin                                71,384        (77,929)    (89,974)         72,693     56,130       (52,399)
Operating expenses:
  Research and development                 106,249        113,053      87,752          94,717     60,769        97,168
  Selling, general and administrative       62,520         82,944      60,701          82,775     81,600        78,854
  Other                                          -            (69)          -           4,460    (10,213)       19,500
Loss from operations                       (97,385)      (273,857)   (238,427)       (109,259)   (76,026)     (247,921)
Interest expense                            36,502         22,096      18,075          11,849      8,379        10,087
Interest and other income                   25,031          1,333       1,000           1,169      4,216         2,283
Provision for income taxes                   1,035          1,523         824           2,826      2,033         1,864
Net Loss                                  (109,891)      (296,143)   (256,326)       (122,765)   (82,222)     (257,589)
Total assets                               555,472        314,539     314,539         442,487    381,847       492,375
Long-term debt and capital lease
  obligations due after one year           224,313        229,109     229,109         100,181    101,967       107,393
Cash dividends declared                          -              -           -               -          -             -

</TABLE>


(1)  Unaudited information for the twelve months ended December 28, 1996 is
     provided to compare with the twelve months ended December 27, 1997
     in Item 7:  Management's Discussion and Analysis.


                                     15

<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH ITEM 1: BUSINESS,
ITEM 6: SELECTED FINANCIAL INFORMATION AND ITEM 8: CONSOLIDATED FINANCIAL 
STATEMENTS AND SUPPLEMENTARY DATA.

CHANGE IN FISCAL YEAR END

During 1996, the Company changed its fiscal year end to be consistent with 
the year end of its parent, Hyundai Electronics America ("HEA").  The fiscal 
year end changed from the last Saturday of March, the date used in the 
Company's prior filings of its Form 10-K with the Securities and Exchange 
Commission, to the last Saturday of December conforming to its 52/53-week 
year methodology.  

The current fiscal period ended on December 27, 1997 comprises twelve months 
or 52 weeks.  For discussion and analysis purposes, the twelve months ended 
December 27, 1997, comprising 52 weeks, are compared to the unaudited twelve 
months ended December 28, 1996, also comprising 52 weeks.  The nine months 
ended December 28, 1996 comprises 39 weeks and is compared to the nine months 
ended December 30, 1995, comprising 40 weeks.

RESULTS OF OPERATIONS

Twelve months ended December 27, 1997 compared to twelve months ended 
December 28, 1996

REVENUE AND GROSS PROFIT (LOSS)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------
(IN MILLIONS)                      December 27,  December 28, 
TWELVE MONTHS ENDED                   1997           1996         Change
--------------------------------------------------------------------------
                                                 (unaudited)
<S>                                 <C>           <C>            <C>
Revenue                             $1,424.3      $1,113.8       $ 310.5

Gross profit (loss)                 $   71.4      $  (77.9)      $ 149.3
    As a percentage of revenue           5.0%         (7.0%)

Net loss                            $ (109.9)     $ (296.1)      $ 186.2
--------------------------------------------------------------------------
</TABLE>

REVENUE

Revenue increased 28% in 1997, primarily due to an increase in unit shipments 
of approximately 48%, while average unit prices were lower by 14%.  Revenue 
from the OEM channel increased 56% even though the 1996 results included $44 
million in revenues from the Company's IMS affiliate, which is not included 
in the Company's 1997 results.  The increase in OEM revenues was offset by a 
4% decline in year over year revenues from the Company's Distributor Channel. 
 Revenue and unit volume growth in 1997 were favorably impacted by better 
time to market performance, strengthening of the customer base and a 
continued trend to shipping higher capacity drives.  This was offset somewhat 
by continued pricing pressures which resulted in lower year over year average 
unit selling prices.  

GROSS PROFIT (LOSS)

Gross profit as a percentage of revenue improved consistently, quarter over
quarter, throughout 1997.  The increase in gross profit is due mainly to the
increase in unit volumes and the introduction of new products which achieved
market acceptance due to a return to competitive aerial density.  As mentioned
above, the increase in revenues and profits due to increased shipment volumes
was somewhat offset in 1997 by continued pricing pressures which resulted in
lower year over year average unit selling prices.

The Company will continue its efforts to increase gross profit by reducing its
average unit manufacturing costs.  However, there can be no assurance that
average unit selling prices will not decline at a more rapid rate or that the
Company will be successful in its efforts to continue to gain improvements in 
gross profit percentages.

                                      16
<PAGE>

OPERATING EXPENSES

<TABLE>
<CAPTION>
--------------------------------------------------------------------------
(IN MILLIONS)                         December 27,  December 28, 
TWELVE MONTHS ENDED                      1997           1996        Change
--------------------------------------------------------------------------
                                                    (unaudited)
<S>                                    <C>          <C>            <C>
Research and development               $ 106.2      $ 113.1        $ (6.9)
   As a percentage of revenue              7.5%        10.1%
                                                    
Selling, general and administrative    $  62.5      $  82.9        $ (20.4)
   As a percentage of revenue              4.4%         7.4%
--------------------------------------------------------------------------
</TABLE>

In 1997 the Company continued to make substantial investments in research and 
development (R&D) related to new technology for its products.  Although R&D 
as a percentage of revenue decreased from 1996, the absolute dollar level of 
investment in R&D remained close to 1996 levels. The decrease in percentage 
of R&D expenditures compared to 1996 was expected partly because the Company 
redefined its products and technology road map to focus on its core desk top 
business (see discussion under Desktop Computer Products, page 4). 
Additionally during 1996, the Company established the new advanced technology 
group in Milpitas and a new production engineering group in Singapore.  

During 1998, the Company will focus on controlling spending while continuing R&D
activities that support timely product introduction and transition to volume
production.  There can be no assurances that the Company will be successful in
its efforts.

Selling, general and administrative expenses (SG&A) decreased as a percentage of
revenue and in absolute dollars due to the Company's ongoing efforts to control
costs.  Reductions in overall headcount and controlled marketing expenses
contributed to lower SG&A expenses throughout 1997.

INTEREST EXPENSE AND INTEREST INCOME

<TABLE>
<CAPTION>
--------------------------------------------------------------------
(IN MILLIONS)                  December 27,  December 28, 
TWELVE MONTHS ENDED               1997           1996        Change
--------------------------------------------------------------------
                                             (unaudited)
<S>                            <C>            <C>            <C>
Interest expense               $ 36.5         $ 22.1         $ 14.4 

Interest and other income      $ 25.0         $  1.3         $ 23.7 
--------------------------------------------------------------------

</TABLE>

Interest expense increased due to an increase in borrowings required during 
the first three quarters, in order to fund the Company's operations and an 
increase in the cost to borrow due to changes in the economic environment in 
Korea.   The Company's debt is guaranteed by Hyundai Electronics Industries, 
Co., Ltd. (HEI) and the rate at which the Company can borrow is substantially 
affected by the borrowing rates available to HEI.  The Company had $159.8 
million of short-term and $129 million of long-term lines of credit 
borrowings outstanding at December 27, 1997.  The Company expects to maintain 
approximately the same or higher levels of borrowings during the next fiscal 
year.  

Interest and other income increased because of a one time gain associated with
the reversal of a $20 million fully-reserved note which was paid in full by IMS.
However, cash availability overall has and will continue to be constrained in
1998 due to funding required for the Company's operations.

                                      17

<PAGE>

PROVISION FOR INCOME TAXES

<TABLE>
<CAPTION>
---------------------------------------------------------------------
(IN MILLIONS)                  December 27,  December 28, 
TWELVE MONTHS ENDED               1997           1996       Change
---------------------------------------------------------------------
                                             (unaudited)
<S>                            <C>            <C>           <C>
Provision for income taxes     $  1.0         $  1.5        $ (0.5)
---------------------------------------------------------------------
</TABLE>

The provision for income taxes consists primarily of foreign taxes.  The
decrease of $0.5 million is due to elimination of taxes in Hong Kong due to the
sale of a majority interest in IMS to certain IMS management and other investors
in June 1996.

The Company's effective tax rate for the periods 1997 and 1996 differs from the
combined federal and state rates due to the repatriation of foreign earnings
absorbed by current year domestic losses, and the Company's U.S. operating
losses not providing current tax benefits, offset in part by the tax savings
associated with the Company's Singapore operations and valuation of temporary
differences.  Income from the Singapore operation is not taxable as a result of
the Company's pioneer tax status in Singapore.

                                      18

<PAGE>

RESULTS OF OPERATIONS

NINE MONTHS ENDED DECEMBER 28, 1996 COMPARED TO NINE MONTHS ENDED 
DECEMBER 30, 1995

REVENUE AND GROSS PROFIT (LOSS)

<TABLE>
<CAPTION>
-----------------------------------------------------------------------
(IN MILLIONS)                  December 28,  December 30, 
NINE MONTHS ENDED               1996            1995          Change
-----------------------------------------------------------------------
                                             (unaudited)
<S>                            <C>            <C>           <C>
Revenue                        $  798.9       $ 954.0       $ (155.1)

Gross profit (loss)            $  (90.0)      $  60.6       $ (150.6)
   As a percentage of revenue     (11.3%)        6.4%

Net loss                       $ (256.3)      $ (82.9)      $ (173.4)
-----------------------------------------------------------------------
</TABLE>

Revenue decreased primarily due to a decrease in unit shipments of approximately
22%, while average unit prices for the nine months were comparable.  The
decrease in shipments was a result of a 32% decrease in revenue from the OEM
channel, partially offset by an increase in distribution revenue of 17%. 
Shipments to the OEM channel in the third quarter of 1996 were lower than
expected due to a shortage of qualified components from vendors.

As expected in the disk drive industry, products sold during the 1996 period
were higher in capacity than in the 1995 period.  However, prices for the higher
capacity products (1.3 to 2.0 GB) in 1996 remained relatively flat with the 
products in 1995 (which ranged from 540 MB to 1.6 GB).

Part of the revenue decrease is also attributed to the sale of International
Manufacturing Services, Inc. (IMS) in June 1996.  IMS revenue decreased by $25
million from the prior period.  Revenue for 1995 also reflects a 40-week period
as compared to a 39-week period for 1996.  The first quarter of 1995 was
extended to realign the fiscal year ended March 30, 1996.

Gross margin decreased primarily due to the decrease in unit shipments discussed
above and a substantial drop in average unit selling prices for lower capacity
products during the quarter ended June 29, 1996.  In June 1996, the Company
incurred a $42.3 million charge for products in inventory and scheduled to be
built over the following six months which had market prices lower than cost. 
Although the shift in sales of the Company's products was toward higher capacity
products, which generally had higher average selling prices per unit, the
increase in margins which resulted from this shift was more than offset by
intense pricing pressures on certain lower capacity products without
corresponding decreases in manufacturing costs.  Furthermore, the Company
incurred one-time charges of $6.5 million to consolidate certain manufacturing
activities in 1996, including the closure of a head stack assembly plant in
Thailand and a reduction in production shifts in Singapore.

                                      19

<PAGE>

OPERATING EXPENSES

<TABLE>
<CAPTION>
---------------------------------------------------------------------------
(IN MILLIONS)                        December 28,  December 30, 
NINE MONTHS ENDED                        1996         1995       Change
---------------------------------------------------------------------------
                                                 (unaudited)
<S>                                    <C>           <C>         <C>
Research and development               $ 87.8        $ 69.4      $ 18.4
     As a percentage of revenue          11.0%          7.3%

Selling, general and administrative    $ 60.7        $ 60.5      $  0.2
     As a percentage of revenue           7.6%          6.3%

Other                                  $   -         $  4.5      $ (4.5)
     As a percentage of revenue           0.0%         (0.5%)
----------------------------------------------------------------------------
</TABLE>

R&D expenses increased primarily due to the Company's continued commitment to
make substantial investments in new technology for its products. Additionally,
the Company established the new advanced technology group in Milpitas and a new
production engineering group in Singapore during 1996.  In the third quarter of
the 1996 period, the Company incurred charges of approximately $4.5 million
related to obsolete equipment and internally built equipment not utilized due to
rapid changes in product volumes and mix during the latter half of 1996.  

Selling, general and administrative (SG&A) expenses increased as a percentage of
revenue primarily due to the decrease in the revenue base.  SG&A spending in
absolute dollars was relatively unchanged due to the Company's ongoing effort to
control costs and expenditures.  Certain SG&A expenses decreased during the 1996
period due to an overall reduction in force and controlled spending in
marketing.  However, the decrease was offset by a substantial change in
executive staff and related severance costs incurred throughout the nine month
period. 

Other expenses decreased due to $4.5 million of professional fees incurred in
1995 related to the acquisition of the Company by HEA.  Effective January 1996,
HEA acquired by a cash tender offer of $6.70 per share all of the outstanding
shares of the Company's common stock which were not previously owned by HEA or
its affiliates and the Company became a wholly owned subsidiary of HEA.

                                      20
<PAGE>

INTEREST EXPENSE AND INTEREST INCOME

<TABLE>
<CAPTION>

(IN MILLIONS)                December 28,   December 30,
NINE MONTHS ENDED               1996           1995        Change
-------------------          ------------   ------------   ------
                                             (unaudited)
<S>                          <C>             <C>           <C>
Interest expense               $  18.1         $ 7.8       $ 10.3
Interest income                $   1.0         $ 0.8       $  0.2

</TABLE>

Interest expense increased due to a substantial increase in short-term and 
long-term borrowings required in order to fund the Company's operations.  The 
Company had $149.8 million of short-term and $129 million of long-term lines 
of credit borrowings outstanding at December 28, 1996, whereas $99 million of 
short-term borrowings were outstanding at December 30, 1995. 

Interest income increased slightly due to the availability of cash for 
investing purposes.

PROVISION FOR INCOME TAXES 

<TABLE>
<CAPTION>

(IN MILLIONS)                December 28,   December 30,
NINE MONTHS ENDED               1996           1995        Change
-------------------          ------------   ------------   ------
                                             (unaudited)
<S>                          <C>             <C>           <C>
Provision for income taxes     $ 0.8           $ 2.1       $ (1.3)

</TABLE>

The provision for income taxes consists primarily of foreign taxes.  The 
decrease of $1.3 million is due to elimination of taxes in Hong Kong  due to 
the sale of a majority interest in IMS to certain IMS management and other 
investors in June 1996.

The Company's effective tax rate for the periods 1996 and 1995 differs from 
the combined federal and state rates due to the repatriation of foreign 
earnings absorbed by current year losses, and the Company's U.S. operating 
losses not providing current tax benefits, offset in part by the tax savings 
associated with the Company's Singapore operations and valuation of temporary 
differences. Income from the Singapore operation is not taxable as a result 
of the Company's pioneer tax status in Singapore.

YEAR 2000 COMPLIANCE

Many currently installed computer systems and software products are coded to 
accept only two digit entries in the date code field.  Beginning in the year 
2000, these date code fields will need to accept four digit entries to 
distinguish 21st century dates from 20th century dates.  As a result, in less 
than two years, computer systems and/or software used by many companies may 
need to be upgraded to comply with such "Year 2000" requirements.  
Significant uncertainty exists in the software industry concerning the 
potential effects associated with such compliance.  The Company has evaluated 
its level of exposure to the risks and costs associate with Year 2000 
problems and is currently in the process of updating its information systems 
to be Year 2000 compliant.  The Company expects its information systems to be 
Year 2000 compliant by the end of fiscal 1999, and anticipates no disruptions 
in the manufacturing services it provides to its customers as a result of 
Year 2000 problems; however, no assurance can be given that such updates will 
be fully completed in a timely manner or that such disruptions will not 
occur.  Any disruption in manufacturing services provided by the Company as a 
result of Year 2000 noncompliance would materially adversely affect the 
Company's business, financial condition and results of operations.  Moreover, 
the Company could be adversely impacted by Year 2000 issues faced by major 
distributors, suppliers, customers, vendors and financial service 
organizations with which the Company interacts.

                                       21

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

<TABLE>
<CAPTION>
                                               As of and for
                                          the twelve months ended
                                               December 27,
(IN MILLIONS)                                        1997
--------------                             -----------------------
<S>                                        <C>
Cash and cash equivalents                         $   16.9
Net cash used in operating activities             $ (146.7)
Net cash used in investing activities             $  (61.3)
Net cash provided by financing activities         $  193.6
Short-term credit borrowings                      $  159.8
Long-term credit borrowings                       $  129.0

</TABLE>

As of December 27, 1997, the Company had cash and cash equivalents of $16.9 
million as compared to $31.3 million as of December 28, 1996, a decrease of 
$14.4 million. The decrease in the Company's cash and cash equivalents was 
primarily the result of operating losses and capital expenditures offset by 
external financing  to fund those activities.

Net cash used in operating activities was primarily attributable to the net 
loss less non-cash depreciation and amortization totaling approximately $65.6 
million an increase in accounts receivable and inventories of $142.9 million 
and $74.4 million, respectively, and an increase in accrued and other 
liabilities of $15.9 million.  These uses of cash in operating activities 
were offset by an increase in accounts payable of $102.1 million and increases 
in  payables to affiliates of $11.6 million.  In addition, the net loss 
included a gain of $20 million from the payment on a note from an affiliate, 
International Manufacturing Systems (IMS), Inc., that had been fully reserved.

The increases in accounts receivable and inventories, as well as the 
offsetting increases in accounts payable and payables to affiliates result 
from the increase in shipment volumes and resulting increases in revenue in 
1997 as compared to 1996.

On March 30, 1996, the Company entered into an accounts receivable 
securitization program with Citicorp Securities, Inc.  Under this program the 
Company could sell its qualified trade accounts receivable up to $100 million 
on a non-recourse basis.  The face amount of the eligible receivables are 
discounted based on the Corporate Receivables Corporation commercial paper 
rate (5.85% as of December 27, 1997) plus commission and is subject to a 10% 
retention.  As of December 27, 1997, $79.8 million in sales of accounts 
receivable, for which proceeds had not yet been received, were included in 
accounts receivable and $79.8 million in collections of accounts receivable 
not yet remitted were included in accrued and other liabilities. The 
Company's asset securitization program was subject to certain conditions, 
among which was a condition that all of HEI's long-term public senior debt 
securities achieve a specified rating. This condition was not met in February 
1998, and the Company obtained waivers of this condition through April 8, 
1998. 

The Company completed a new asset securitization program dated as of April 8, 
1998 (the "New Program") arranged by Citicorp to replace the existing 
program.  Under the New Program, the Company sells all of its trade accounts 
receivable through a special purpose vehicle with a purchase limit of $100 
million on a non-recourse basis, subject to increase to $150 million upon the 
fulfillment of the conditions subsequent described below.  On April 8, 1998, 
the uncollected purchase price under the existing program, in the amount of 
approximately $100 million, was transferred to represent the purchased 
interest of Citicorp's Corporate Receivables Corporation ("CRC") under the 
New Program. Continuance of the New Program is subject to certain conditions, 
including a condition that all of the long-term public senior debt securities 
of Hyundai Heavy Industries, Inc. ("HHI") achieve a specified rating.  In 
addition, the New Program remains subject to certain conditions subsequent 
related to obtaining appropriate waivers as may be necessary from lenders of 
the Company's credit facilities, or effecting a cure, of any outstanding 
defaults under such credit facilities of the Company and obtaining a 
performance guarantee from HHI of the obligations of the Company and Maxtor 
Receivables Corporation under the New Program.  This performance guarantee is 
similar to the arrangement that HEI provided under the Original Program.  The 
Company must satisfy these conditions subsequent by May 4, 1998 and presently 
believes that it will be able to successfully satisfy these conditions.

Net cash used in investing activities was primarily attributable to $82.5
million of capital expenditures offset by the collection of the $20 million 
note receivable from the Company's IMS affiliate that was fully reserved (see 
discussion of IMS transactions below).  A majority of the capital 
expenditures activity related to the acquisition of manufacturing and 
engineering equipment to develop new products and enhance the productivity of 
the Singapore manufacturing facility.  

                                       22

<PAGE>

In November 1994, the Company formed a wholly-owned subsidiary, IMS 
International Manufacturing Services, Ltd.   whose primary business was 
contract manufacturing for electronic original equipment manufacturers 
(OEMs).  The Company's printed circuit board (PCB) assembly plant in Hong 
Kong formed the foundation of the business, and a second plant was added in 
Thailand in May 1995.  In early June 1996 the Company reorganized all of the 
operations under a wholly-owned Delaware subsidiary, International 
Manufacturing Services, Inc. (IMS).  IMS not only supplies the Company, but a 
variety of external customers, with PCB assemblies, sub-assemblies and fully 
integrated box products.  In May 1996 the Company entered into an agreement 
to sell a majority interest in IMS to certain IMS management and other 
Investors ("Buyer").  At the completion of the transaction in June 1996 the 
Company received $25 million in cash and $20 million in notes from IMS, and 
retained a 23.5% ownership interest in IMS. Pursuant to the Agreements, the 
Company made various representations and warranties as to itself and IMS and 
has agreed to indemnify Buyer for any breaches thereof.  Generally, in the 
event that losses from such breaches when aggregated exceed $500,000, Buyer 
shall be entitled to indemnification for all losses, including the first 
$500,000 up to a maximum of $17,500,000, provided that tax and environmental 
representations are not subject to the liability limit. 

In October 1997, IMS completed an initial public offering of 5 million shares 
of common stock at $11.50 per share.  Under the terms of the note issued by 
IMS to the Company, IMS was required to pay the outstanding principal balance 
and all accrued an unpaid interest, aggregating $20.1 million, and IMS made 
the payment in full on October 28, 1997.  In connection with these 
transactions, the Company revalued its investment and recorded a $16.3 
million unrealized gain in IMS to reflect its current 16% ownership interest. 
 

Net cash provided by financing activities results mainly from an issuance of 
$200.0 million in preferred stock of the Company  to the Company's parent, 
HEA. In December 1997, the Company and HEA entered into a Debt Payment and 
Stock Purchase Agreement pursuant to which HEA accepted 29,850,746 new shares 
of the Corporation's preferred stock as payment for $200,000,000 owed to HEA 
by the Corporation.  As of December 27, 1997, 88,059,701 shares of Series A 
Preferred Stock and 15,125 shares of Common Stock, $.01 par value, were 
issued and outstanding.  In addition, cash increased due to a net increase in 
borrowings of $10.0 million in 1997.

On January 31, 1996 the Company signed a one year credit facility in the 
amount of $13.8 million to be used for capital equipment requirements at the 
Singapore facility.  This credit facility is guaranteed by HEI and all 
outstanding amounts of principal and accrued interest were payable on January 
30, 1998.  In January 1998, this facility was retired and all principal and 
interest owed under this facility have been paid. As of December 27, 1997, 
$13.8 million of borrowings under this line were outstanding.

On April 10, 1997, the Company obtained a $150 million intercompany line of 
credit from HEA.  This line of credit allows for draw downs up to $150 
million and interest is payable quarterly.  All outstanding amounts of 
principal and accrued interest are due and payable on April 10, 1998.  As of 
December 27, 1997 $65 million was outstanding under this facility. In March 
1998, this intercompany line was reduced to $100 million.

On August 29, 1996, the Company established two uncollateralized, revolving 
lines of credit totaling $215 million (the "Facilities") through Citibank, 
N.A. and syndicated among fifteen banks.  In September 1996, the Facilities 
were increased $10 million to a total of $225 million.  The Facilities are 
guaranteed by HEI and a total of $129 million of the Facilities is a three 
year committed Facility that is used primarily for general operating purposes 
and bears interest at a rate based on LIBOR plus 0.53 percent.  As of 
December 27, 1997, $129 million of borrowings under this line were 
outstanding.  A total of $96 million of the Facility is a 364-day committed 
facility, renewable annually at the option of the syndicate banks.  On August 
28, 1997, this Facility was amended and reduced to $31 million. The Facility 
is primarily for general operating purposes and bears interest at a rate 
based on LIBOR plus 0.53 percent.  As of December 27, 1997, $31 million under 
this line of credit were outstanding.

The Company has credit facilities amounting to $50 million in the aggregate 
from three banks. The facilities, which are guaranteed by HEI, will be used 
primarily for general operating purposes and bear interest at a rate ranging 
from 6.27 percent to 7.88 percent.  As of December 27, 1997, $50 million of 
borrowings under this line of credit were outstanding.  In January 1998 one 
$10 million facility was retired and all principal owing has been paid.

HEI is the guarantor of an aggregate $170 million outstanding under the 
Company's credit facilities as of December 27, 1997.  HEI has various 
obligations as guarantor, including the satisfaction of certain financial 
covenants.  Due to the economic conditions in the Republic of Korea and a 
significant recent devaluation of the Korean won versus the U.S. dollar, the 
Company believes that that HEI may be found not to be in compliance with 
certain financial covenants. The Company received notice on April 9, 1998 
from the administrative agent for the facilities that HEI is not in 
compliance with certain financial covenants. In the event HEI is not able to 
comply with its obligations as guarantor, there will be a default under the 
terms of the guaranty which will constitute a default under the Company's 
credit facilities guaranteed by HEI and a default under a credit facility 
with $30 million outstanding as of December 27, 1997 not guaranteed by HEI.  
The Company will endeavor to seek any necessary waivers; although there can 
be no such assurance, the Company believes that such waivers can be obtained. 
 The Company has a commitment from an affiliated company to provide an 
equivalent long-term facility in the event the waivers are not successfully 
obtained.  Consequently, the Company has not reclassified the debt 
outstanding under the credit facilities as a current liability.

                                       23

<PAGE>

The liquidity of the Company continued to be adversely affected during the 
fiscal year ended December 27, 1997 by significant losses from operations.  
The Company is implementing ongoing measures with that focus on a return to 
profitability and improved liquidity.  In addition to attempting to improve 
operating margins on product sales through the introduction of new products 
and reduction of manufacturing costs, the Company remains focused on 
controlling other operating expenses.  However, the Company believes that it 
must continue to make substantial investments in R&D since the timely 
introduction and transition to volume production of new products is essential 
to its future success.  

The Company expects that it will require alternative sources of liquidity, 
including additional sources of financing in fiscal 1998.  The Company is 
engaged in ongoing discussions with various parties regarding additional 
sources of financing.  While the Company believes that additional sources of 
financing will be available, there can be no assurance that financing will be 
available on terms which are favorable to the Company.

Subject to unforeseen changes in general business conditions, the Company 
believes that the combination of the measures described above and other 
available actions, together with its balances of cash and cash equivalents, 
equipment financing and line of credit borrowing capabilities (supported by 
HEI and HEA), will be sufficient to fund the Company's working capital and 
capital expenditure requirements through fiscal year 1998.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

                                       24

<PAGE>

ITEM 8.   CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<TABLE>
<CAPTION>
     INDEX TO CONSOLIDATED FINANCIAL STATEMENTS                          PAGE
<S>                                                                   <C>

     Financial Statements:

          Consolidated Balance Sheets - 
               December 27, 1997 and December 28, 1996                     26

          Consolidated Statements of Operations - 
            Fiscal year ended December 28, 1997, nine months ended 
            December 28, 1996 and fiscal year ended March 30, 1996         27

          Consolidated Statements of Stockholders' Equity (Deficit) -
            Fiscal year ended December 28, 1997, nine months ended 
            December 28, 1996 and fiscal year ended March 30, 1996         28

          Consolidated Statements of Cash Flows - 
            Fiscal year ended December 28, 1997, nine months ended 
            December 28, 1996 and fiscal year ended March 30, 1996    29 - 30

     Notes to Consolidated Financial Statements                       31 - 45

     Report of Coopers & Lybrand L.L.P., Independent Accountants           46

     Report of Ernst & Young LLP, Independent Auditors                     47

     Financial Statement Schedules:

</TABLE>

     The following consolidated financial statement schedule of Maxtor
     Corporation is filed as part of this Report and should be read in
     conjunction with the Consolidated Financial Statements of Maxtor
     Corporation.

          Schedule II    Valuation and qualifying accounts       S-1

     Schedules not listed above have been omitted since they are not applicable
     or are not required or the information required to be set therein is
     included in the Consolidated Financial Statements or notes thereto.

                                       25

<PAGE>

MAXTOR CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>

                                                                           December 27,    December 28,
ASSETS                                                                        1997            1996
                                                                           ------------    ------------
<S>                                                                        <C>             <C>
Current assets:
  Cash and cash equivalents                                                 $  16,925      $  31,313
  Accounts receivable, net of allowance for doubtful accounts
    of $3,573 at December 27, 1997 and $5,255 at December 28, 1996            241,777         82,876
  Accounts receivable from affiliates                                           5,870          6,248
  Inventories                                                                 155,312         80,878
  Prepaid expenses and other                                                   20,814          5,239
                                                                            ----------     ----------
       Total current assets                                                   440,698        206,554
Net property, plant and equipment                                              99,336         92,073
OTHER ASSETS                                                                   15,438         15,912
                                                                            ----------     ----------
                                                                            $ 555,472      $ 314,539
                                                                            ----------     ----------
                                                                            ----------     ----------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
  Short-term borrowings                                                     $ 100,057      $ 149,800
  Short-term borrowings due to affiliates                                      65,000             --
  Accounts payable                                                            206,563        109,956
  Accounts payable to affiliates                                               25,022         13,459
  Accrued and other liabilities                                               155,563        139,678
                                                                            ----------     ----------
       Total current liabilities                                              552,205        412,893
Long-term debt and capital lease obligations due after one year               224,313        229,109
Commitments and contingencies (Note 8)                                             --             --
Stockholder's deficit:
  Series A Preferred Stock, $0.01 par value, 95,000,000
    shares authorized; 88,059,701 shares issued and
    outstanding at December 27, 1997;  58,208,955 issued and 
    outstanding at December 28, 1996;  aggregated liquidation value 
    $590,000 at December 27, 1997 and $390,000 at December 28, 1996              880            582
  Common Stock, $0.01 par value, 110,000,000 shares authorized;
    15,125 shares issued and outstanding at December, 27, 1997;
    no shares issued and outstanding at December 28, 1996                          --             --
  Additional paid-in capital                                                  534,765        335,017
  Unrealized gain on investment in equity securities                           16,262             --
  Accumulated deficit                                                        (772,953)      (663,062)
                                                                            ----------     ----------
       Total stockholders' deficit                                           (221,046)      (327,463)
                                                                            ----------     ----------
                                                                             $555,472       $314,539
                                                                            ----------     ----------
                                                                            ----------     ----------

</TABLE>

SEE ACCOMPANYING NOTES.


                                       26
<PAGE>

MAXTOR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>

                                          YEAR            NINE MONTHS           YEAR
                                          ENDED               ENDED             ENDED   
                                       DECEMBER 27,        DECEMBER 28,       MARCH 30,
                                           1997                 1996             1996 
                                      --------------     ---------------    --------------
<S>                                    <C>                 <C>              <C>
Revenue                                 $1,384,799            $771,655          $1,264,627
Revenue from affiliates                     39,521              27,229               4,371                    
                                      --------------     ---------------    --------------
  Total revenue                          1,424,320             798,884           1,268,998                    
                                      --------------     ---------------    --------------

Cost of revenue                          1,316,774             861,551           1,192,403                    
Cost of revenue from affiliates             36,162              27,307               3,902                    
                                      --------------     ---------------    --------------
  Total cost of revenue                  1,352,936             888,858           1,196,305                    
                                      --------------     ---------------    --------------

Gross profit (loss)                         71,384             (89,974)             72,693                    
                                      --------------     ---------------    --------------
Operating expenses:
  Research and development                 106,249              87,752              94,717
  Selling, general and administrative       62,520              60,701              82,775
  Other                                         --                  --               4,460                    
                                      --------------     ---------------    --------------
Total operating expenses                   168,769             148,453             181,952                    
                                      --------------     ---------------    --------------
Loss from operations                       (97,385)           (238,427)           (109,259)
Interest expense                           (36,502)            (18,075)            (11,849)
Interest and Other Income                   25,031               1,000               1,169                    
                                      --------------     ---------------    --------------
Loss before income taxes                  (108,856)           (255,502)           (119,939)
Provision for income taxes                   1,035                 824               2,826                    
                                      --------------     ---------------    --------------
Net loss                                 $(109,891)          $(256,326)          $(122,765)                   
                                      --------------     ---------------    --------------
                                      --------------     ---------------    --------------

</TABLE>

SEE ACCOMPANYING NOTES.

                                      27

<PAGE>

MAXTOR CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                  
                                                                                                                                 
                                                Preferred stock                Common stock         Additional                   
                                             ---------------------      -------------------------    paid-in        Accumulated  
                                              Shares       Amount          Shares         Amount     capital          deficit    
                                           -----------  ----------      -------------  ----------  ------------   ---------------
<S>                                          <C>           <C>          <C>               <C>       <C>             <C>          
Balance, March 25, 1995                         --        $  --          51,697,287        $517      $327,357        $(283,971)  
Issuance of common stock under stock
   option plans                                 --           --           1,134,805          11         4,734                -   
Issuance of common stock under stock
   purchase plan                                --           --             800,426           8         2,972                -   
Shares canceled resulting from
   acquisition by HEA                           --           --         (53,631,918)       (536)          536                -   
Net Loss                                        --           --                  --          --            --         (122,765)  
                                           -----------  ----------      -------------  ----------  ------------   ---------------
Balance, March 30, 1996                         --           --                 600          --       335,599         (406,736)  
Exchange of common shares for
      Series A Preferred                    58,208,955      582                (600)         --          (582)               -   
Net loss                                        --           --                  --          --            --         (256,326)  
                                         -------------  ----------      -------------  ----------  ------------   ---------------
Balance, December 28, 1996                  58,208,955      582                  --          --       335,017         (663,062)  
Issuance of additional Series A
   Preferred to parent in exchange
   for debt                                 29,850,746      298                  --          --       199,702                    
Issuance of stock under stock
   option plan and related benefits                                          15,125                        46                    
Change in unrealized gain on 
   equity investment                                                                                       --                    
Net loss                                                                                                              (109,891)  
                                         -------------  ----------      -------------  ----------  ------------   ---------------
Balance, December 27, 1997                  88,059,701     $880              15,125         $--      $534,765        $(772,953 ) 
                                         -------------  ----------      -------------  ----------  ------------   ---------------
                                         -------------  ----------      -------------  ----------  ------------   ---------------

</TABLE>

<TABLE>
<CAPTION>

                                        Unrealized Gain       Total     
                                         on Investment    stockholder's 
                                          in Equity          equity    
                                          Securities        (deficit)  
                                        ---------------  --------------
<S>                                     <C>               <C>          
Balance, March 25, 1995                          $-          $43,903  
Issuance of common stock under stock                                  
   option plans                                   -            4,745  
Issuance of common stock under stock                                  
   purchase plan                                  -            2,980  
Shares canceled resulting from                                        
   acquisition by HEA                             -                   
Net loss                                          -         (122,765) 
                                        ---------------  --------------
Balance, March 30, 1996                           -          (71,137) 
Exchange of common shares for                                         
      Series A Preferred                          -                -  
Net loss                                          -         (256,326) 
                                        ---------------  --------------
Balance, December 28, 1996                        -         (327,463) 
Issuance of additional Series A                                       
   Preferred to parent in exchange                                    
   for debt                                       -          200,000  
Issuance of stock under stock                                         
   option plan and related benefits                               46
Change in unrealized gain on                                          
   equity investment                         16,262           16,262  
Net loss                                                    (109,891) 
                                        ---------------  --------------
Balance, December 27, 1997                  $16,262        $(221,046) 
                                        ---------------  --------------
                                        ---------------  --------------


</TABLE>

SEE ACCOMPANYING NOTES.

                                          28

<PAGE>

MAXTOR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                     Year       Nine months       Year
                                                                    ended          ended          ended     
                                                                  December 27,  December 28,    March 30,
                                                                      1997          1996          1996 
                                                                 -------------  -------------  -----------
<S>                                                               <C>           <C>             <C>
Increase (decrease) in cash and cash equivalents                           
Cash flows from operating activities:
   Net loss                                                       $(109,891)     $(256,326)     $(122,765)              
                                                                 -------------  -------------  -----------
   Adjustments to reconcile net loss
      to net cash used in operating activities:
           Depreciation and amortization                             65,642         47,064         45,200
           Reserves for lower of cost or market                          --         15,194             --
           Change in non-current deferred tax liabilities                --             --            300
           Loss on disposal of property, plant and equipment          4,366            700            669
           Gain on sale of subsidiary                                    --         (2,385)            --
           Gain on fully reserved note receivable from 
              affiliate                                             (20,000)            --             --               
           Other                                                       (157)          (589)            --
           Changes in assets and liabilities:
             Accounts receivable                                   (142,860)        62,786        (12,485)
             Accounts receivable from affiliates                        378         (1,822)        (2,229)              
               
             Net collections of accounts receivable
               sold to financing company                                 --         16,327             --
             Inventories                                            (74,434)        45,955        (66,255)
             Prepaid expenses and other                                 687          3,839         (2,947)
             Accounts payable                                       102,108        (37,297)        18,407
             Accounts payable to affiliates                          11,563          4,803          8,656
             Accrued and other liabilities                           15,885         13,015            637               
                                                                 -------------  -------------  -----------
   Total adjustments                                                (36,822)       167,590        (10,047)              
                                                                 -------------  -------------  -----------
   Net cash used in operating activities                           (146,713)       (88,736)      (132,812)              
                                                                 -------------  -------------  -----------
Cash flows from investing activities:
   Proceeds from sale of subsidiary                                      --         25,000             --
   Cash received on a note receivable from affiliate                 20,000             --             --
   Proceeds from maturities of available-for-sale investments            --             --         11,998
   Purchase of property, plant and equipment                        (82,489)       (53,780)       (72,656)
   Proceeds from disposals of property, plant and equipment             609            363            354
   Other assets                                                         621         (7,599)          (928)              
                                                                 -------------  -------------  -----------
   Net cash used in investing activities                            (61,259)       (36,016)       (61,232)              
                                                                 -------------  -------------  -----------
Cash flows from financing activities:
   Proceeds from issuance of debt, including short-term borrowings  319,363        410,715        145,595
   Principal payments on debt, including capital lease obligations (309,784)      (307,444)        (3,000)
   Proceeds from issuance of common stock, net of issuance                 
      of notes receivable and stock repurchase                           46             --          7,725
   Proceeds from intercompany notes issued to parent                200,000             --             --
   Net payments under accounts receivable securitization            (16,041)            --             --
                                                                 -------------  -------------  -----------
   Net cash provided by financing activities                        193,584        103,271        150,320               
                                                                 -------------  -------------  -----------
Net decrease in cash and cash equivalents                           (14,388)       (21,481)       (43,724)              
Cash and cash equivalents at beginning of period                     31,313         52,794         96,518               
                                                                 -------------  -------------  -----------
Cash and cash equivalents at end of period                          $16,925        $31,313        $52,794               
                                                                 -------------  -------------  -----------
                                                                 -------------  -------------  -----------
</TABLE>

SEE ACCOMPANYING NOTES.
                                          29
<PAGE>

MAXTOR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS - (CONTINUED)
(IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                              Year        Nine months    Year
                                                                              ended          ended       ended     
                                                                            December 27,  December 28,  March 30,
                                                                               1997           1996        1996 
                                                                           -------------  ------------- ---------
<S>                                                                         <C>           <C>           <C>
Supplemental disclosures of cash flow information:                                   

Cash paid (received) during the year for:
   Interest                                                                   $26,540        $13,444        $ 9,362
   Income taxes                                                                 1,025          2,009          1,801 
   Income tax refunds                                                              --             --         (3,173) 

Supplemental information on noncash investing and financing activities:
   Purchase of property, plant and equipment financed by accounts payable       2,670          8,171          4,949
   Purchase of property, plant and equipment financed by capital leases           881             --             --
   Exchange of Common Stock for Series A Preferred Stock                                         582             --  
   Exchange of notes payable for Series A Preferred Stock                     200,000             --             --
   Unrealized gain in equity investments                                       16,262             --             --
                                                                           -------------  ------------- ---------

</TABLE>

SEE ACCOMPANYING NOTES.

                                         30
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Maxtor 
Corporation and its wholly-owned subsidiaries (Maxtor or the Company). All 
significant intercompany accounts and transactions have been eliminated. 
Maxtor Corporation operates as a majority-owned subsidiary of Hyundai 
Electronics America (HEA).

FISCAL YEAR
During 1996, the Company changed its fiscal year end to be consistent with 
the year end of its parent, HEA. The fiscal year end changed from the last 
Saturday of March, the date used in the Company's prior filing of its Form 
10-K with the Securities and Exchange Commission, to the last Saturday of 
December conforming to its 52/53-week year methodology. The current year 
ended on December 27, 1997 comprises 52 weeks. Fiscal period ended on 
December 28, 1996 comprised 39 weeks. Fiscal year ended March 30, 1996 
comprised 53 weeks. 

NATURE OF BUSINESS
The Company develops, manufactures and markets hard disk drive products to 
customers who sell their products in the personal computer industry.
Products are designed for desktop applications to meet both value and 
high-performance needs of customers. Customers include original equipment 
manufacturers (OEMs), distributors, and national retailers. Additionally, 
several smaller retailers and value-added resellers (VARs) carry Maxtor 
products purchased through Maxtor's distribution network. The Company relies 
on suppliers for components including heads, disks and custom integrated 
circuits. Although printed circuit board assemblies and head stack 
assemblies are outsourced, head disk assemblies are completed by the Company. 
All the Company's products are manufactured by Maxtor at its manufacturing 
facility in Singapore and sold  in North America, Europe and Asia.

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 from those estimates.

The actual results with regard to warranty expenditures could have a material 
unfavorable impact on the Company if the actual rate of unit failure or the 
cost to repair a unit is greater than what the Company has used in estimating 
its warranty expense accrual.

Given the volatility of the market for disk drives and for the Company's 
products, the Company makes adjustments to the value of inventories based on 
estimates of potentially excess and obsolete inventories and negative margin 
products after considering forecasted demand and forecasted average selling 
prices. However, forecasts are always subject to revisions, cancellations, 
and rescheduling.  Actual demand will inevitably differ from such anticipated 
demand and such differences may have a material impact on the financial 
statements.

RISKS AND UNCERTAINTIES
The Company's business entails a number of risks.  As is typical in the disk 
drive industry, the Company must utilize leading edge components for its new 
generation of products which may only be available from a limited number of 
suppliers.  While the Company has qualified and continues to qualify multiple 
sources for many components, it is reliant on, and will continue to be 
reliant on, the availability of supply from its vendors for many semi-custom 
and custom integrated circuits, heads, media and other key components.  Any 
de-commitments from customers for product or delays of components from 
vendors could have an adverse impact on the Company's ability to ship products 
as scheduled to its customers.

The Company's ultimate parent is Hyundai Electronics Industries Co. Ltd. 
(HEI), a Korean corporation.  The Korean economy has recently suffered a 
period of economic turmoil, which has resulted in the devaluation of the 
Korean currency and large volatility in interest rates.  A significant 
portion of the Company's debt is guaranteed by HEI, and the Company is 
currently dependent upon the HEI guarantees.  The Company currently has a 
written letter of support from HEI to support operations through May 31, 1999.

As further described in Note 7, it is reasonably possible that further 
deteriorations in the Korean economy and the value of the Korean currency 
could have an adverse effect on the ability of the ultimate parent to 
continue to guarantee the debt of the Company.  While the Company believes 
that other sources of credit would be available, and has obtained a 
commitment from an affiliate company for certain debt, there is no assurance 
that such other credit would be available, either in the amount or at the 
rates currently available to the Company.

                                       31

<PAGE>

CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments, which are purchased with 
an original maturity of three months or less, to be cash equivalents.

EQUITY SECURITIES All equity securities are classified as available-for-sale. 
Available-for-sale securities are carried at fair value. Unrealized gains and 
losses on securities classified as available-for-sale, when material, are 
reported net of taxes as a separate component of stockholder's equity. 
Realized gains and losses on sales of all such investments are included in 
the results of operations computed using the specific identification cost 
method.

INVENTORIES
Inventories are stated at the lower of cost (computed on a first-in, 
first-out basis) or market.

PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost and are depreciated on the 
straight-line basis over the estimated useful lives of the assets, which 
generally range from three to five years, except for buildings which are 
depreciated over thirty years. Assets under capital leases and leasehold 
improvements are amortized over the shorter of the asset life or the 
remaining lease term. Capital lease amortization is included with 
depreciation expense.  Upon a disposal, the Company removes the asset and 
accumulated depreciation from its records and recognises the related gain or 
loss in results of operations.

REVENUE RECOGNITION AND PRODUCT WARRANTY
Revenue is recognized upon product shipment. Revenue from sales to certain 
distributors is subject to agreements providing limited rights of return, as 
well as price protection on unsold merchandise. Accordingly, the Company 
records reserves upon shipment for estimated returns, exchanges and credits 
for price protection. The Company also provides for the estimated cost to 
repair or replace products under warranty at the time of sale.  The Company 
currently warrants its products against defects in parts and labor from the 
date of shipment with an additional three months allowed for distributors to 
account for "shelf life". All products currently in production are warranted 
for a period of 36 months after shipment.

ADVERTISING EXPENSE
Cooperative advertising costs are charged as the related revenue is earned 
and other advertising costs are expensed as incurred. Advertising costs were 
not significant for the fiscal year ended December 27, 1997, the nine months 
ended December 28, 1996 and the fiscal year ended March 30, 1996, 
respectively.

ACCOUNTING FOR INCOME TAXES
The Company accounts for income taxes under the liability method.  Under the 
liability method, deferred tax assets and liabilities are determined based on 
differences between financial reporting and tax bases of assets and 
liabilities and are measured using the enacted tax rates and laws that will 
be in effect when the differences are expected to reverse. The Company is 
required to adjust its deferred tax liabilities in the period when tax rates 
or the provisions of the income tax laws change. Valuation allowances are 
established to reduce deferred tax assets to the amounts expected to be 
realized.

FOREIGN CURRENCY TRANSLATION
The functional currency for all foreign operations is the U.S. dollar. As 
such, all material foreign exchange gains or losses are included in the 
determination of net loss. Net foreign exchange losses included in net loss 
for the fiscal year ended December 27, 1997, the nine months ended 
December 28, 1996 and the fiscal year ended March 30, 1996 were immaterial.

                                       32

<PAGE>

CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject the Company to concentrations 
of credit risk consist primarily of accounts receivable and cash equivalents. 
The Company's products are sold worldwide to original equipment 
manufacturers, distributors, and retailers. Concentration of credit risk 
with respect to the Company's trade receivables is limited by the Company's 
ongoing credit evaluation process and the geographical dispersion of sales 
transactions. Therefore, the Company generally requires no collateral from 
its customers. The allowance for doubtful accounts is based upon the 
expected collectibility of all accounts receivable. The Company has cash 
equivalent and short-term investment policies that limit the amount of credit 
exposure to any one financial institution and restrict placement of these 
funds to financial institutions evaluated as highly credit-worthy. As of 
December 27, 1997, the Company had one customer who accounted for more than 
10% of the outstanding trade receivables. One customer accounted for more 
than 10% of outstanding trade receivables at March 30, 1996. If the customer 
fails to perform its obligations to the Company, such failure would have 
adverse effects upon the Company's financial position, results of operations, 
cash flows, and liquidity.

LONG-LIVED ASSETS
The Company reviews property and equipment and other long lived assets for 
impairment whenever events or changes in circumstances indicate that the 
carrying amount of an asset may not be recoverable. Recoverability is 
measured by comparison of its carrying amount to future net cash flows the 
assets are expected to generate. If such assets are considered to be 
impaired, the impairment to be recognized is measured as the amount by which 
the carrying amount of the asset exceeds the present value of the future net 
cash flows.

STOCK-BASED COMPENSATION
The Company has elected to continue to follow the provisions of APB No. 25, 
"Accounting for Stock Issued to Employees", for financial reporting purposes 
and has adopted the disclosure only provisions of Statement of Financial 
Accounting Standards (SFAS) No. 123. "Accounting for Stock-Based 
Compensation".  Accordingly, no compensation cost for the Company's 1996 
Stock Option Plan has been recognized.

FINANCIAL ASSETS AND EXTINGUISHMENT OF LIABILITIES
The Company accounts for its accounts receivable securitization program in 
accordance with (SFAS) No. 125, "Accounting for Transfers and Servicing of 
Financial Assets and Extinguishments of Liabilities".

RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement 
issued SFAS No. 130, "Reporting Comprehensive Income". This statement 
establishes requirements for disclosure of comprehensive income and is 
effective for financial statements issued for fiscal years beginning after 
December 15, 1997, with reclassification of earlier financial statements for 
comparative purposes. Comprehensive income generally represents all changes 
in stockholder's equity except those resulting from investments or 
contributions by stockholders. The Company is evaluating alternative formats 
for presenting this information, but does not expect this pronouncement to 
materially impact the Company's results of operations.

                                       33

<PAGE>

In June 1997, the Financial Accounting Standards Board issued Statement 
issued SFAS No 131, " Disclosures about Segments of an Enterprise and Related 
Information. This statement establishes standards for disclosure about 
operating segments in annual financial statements and selected information in 
interim financial reports. It also establishes standards for related 
disclosures about products and services, geographic areas and major 
customers. This statement supersedes SFAS No. 14, "Financial Reporting for 
Segments of a Business Enterprise.  The new standard becomes effective for 
fiscal years beginning after December 15, 1997, and requires that comparative 
information from earlier years be restated to conform to the requirements of 
this standard. The Company is evaluating the requirements of SFAS 131 and the 
effects, if any, on the Company's current reporting and disclosures.

2.  SUPPLEMENTAL FINANCIAL STATEMENT DATA

<TABLE>
<CAPTION>

                                                       December 27,      December 28,
                                                          1997               1996    
                                                       -----------       ------------
                                                               (In thousands)
<S>                                                    <C>                  <C>
Inventories:
                                                                               
  Raw materials                                         $48,834             $33,012
  Work-in-process                                        15,177              15,674
  Finished Goods                                         91,301              32,192
                                                      ---------           ---------
                                                       $155,312             $80,878
                                                      ---------           ---------
                                                      ---------           ---------
Prepaid expenses and other:

  Investment in equity security, at fair value          $16,262           $     --  
  Prepaid expenses and other                              4,552               5,239
                                                      ---------           ---------
                                                        $20,814              $5,239
                                                      ---------           ---------
                                                      ---------           ---------
Property, plant and equipment, at cost:

  Buildings                                             $32,453             $29,512
  Machinery and equipment                               220,213             194,644
  Furniture and fixtures                                 11,374              13,300
  Leasehold Improvements                                  9,012              12,695
                                                      ---------           ---------
                                                        273,052             250,151
  Less accumulated depreciation and amortization       (173,716)           (158,078)
                                                      ---------           ---------
    Net property, plant and equipment                   $99,336             $92,073
                                                      ---------           ---------
                                                      ---------           ---------
Accrued and other liabilities:
  
  Income taxes payable                                   $2,416              $5,088
  Accrued payroll and payroll-related expenses           29,116              17,159
  Accrued warranty                                       22,716              20,194
  Accrued expenses                                       21,561              42,780
  Advances under securitization                          79,754              54,386
                                                      ---------           ---------
                                                       $155,563            $139,607
                                                      ---------           ---------
                                                      ---------           ---------
</TABLE>

3.  RECLASSIFICATIONS

Certain reclassifications have been made to prior year financial statements 
to conform to current classifications.  These reclassifications had no impact 
on any prior years or the Company's net assets or results of operations.



                                       34

<PAGE>

4.  FINANCIAL INSTRUMENTS

FAIR VALUE DISCLOSURES
The fair values of cash and cash equivalents approximate carrying values due 
to the short period of time to maturity. The carrying values of notes 
receivable, which are classified in other assets, approximate fair values.  
The fair values of the Company's fixed rate debt are estimated based on the 
current rates offered to the Company for similar debt instruments of the same 
remaining maturities. The fair values of the Company's variable rate debt 
approximate carrying values as these instruments are adjusted periodically 
during the course of the year at market prices. The fair values of the 
Company's convertible subordinated debentures are based on the bid price of 
the last trade for the fiscal year ended December 27, 1997 and fiscal 
period December 28, 1996 respectively.

The carrying values and fair values of the Company's financial instruments 
are as follows:

<TABLE>
<CAPTION>
                                                December 27, 1997         December 28, 1996
                                             ------------------------   ----------------------
                                             Carrying      Estimated    Carrying    Estimated
                                              amount       fair value    amount     fair value
                                             --------      ----------   --------    ----------
                                                                 (In thousands) 
<S>                                           <C>          <C>          <C>          <C>
Cash and cash equivalents                     $16,925      $16,925      $31,313      $31,313
Notes receivable                               11,492       11,492       11,492       11,492
Short and long-term debt                                                           
    fixed rates                                13,800       13,800       13,800       13,800
    variable rates                            210,570      210,570      265,000      265,000
    debt from parent -- fixed rates            65,000       65,000           --           --
Convertible subordinated debentures           100,000       70,000      100,000       68,000
</TABLE>

DERIVATIVE FINANCIAL INSTRUMENTS
The Company enters into currency forward contracts to manage foreign currency 
exchange risk associated with the Company's manufacturing operations in 
Singapore.  The Company's policy is to hedge all material transaction 
exposures on a quarterly basis.  Contracts are generally entered into at the 
end of each fiscal quarter to reduce foreign currency exposures for the 
following fiscal quarter.  Contracts generally have maturities of three 
months or less.  Any gains or losses on these instruments are accounted for 
in accordance with Statement of Financial Accounting Standards No. 52, 
"Foreign Currency Translation," and are generally included in cost of 
revenue.  Unrealized gains or losses on foreign currency forward contracts 
that are designated and effective as hedges of firm commitments, are deferred 
and recorded in the same period as the underlying transaction.  Notional 
amounts of outstanding currency forward contracts were $0 and $17,286,000, as 
of December 27, 1997 and December 28, 1996, respectively.

5.  DISPOSALS OF OPERATIONS

INTERNATIONAL MANUFACTURING SERVICES
In May 1996, the Company entered into an agreement to sell a majority 
interest in International Manufacturing Services, Inc. (IMS) to certain IMS 
management and other investors.  At completion of the transaction in June 
1996, the Company received $25 million in cash and $20 million in notes from 
IMS, and retained a 23.5% ownership interest in IMS.  As of December 27, 1997 
the Company's ownership interest was 16%. The Company's share of IMS results 
of operations for the fiscal year ended December 27, 1997 and the fiscal 
period ended December 28, 1996 were not material to the Company's results of 
operations for either period presented.

6.  MAJOR CUSTOMERS AND GEOGRAPHIC INFORMATION

The Company operates in a single industry segment: the design, manufacture 
and sale of data storage products for desktop computer systems.  It has a 
world-wide sales, service and distribution network.  The Company markets and 
sells its products through a direct sales force to OEMs, distributors and 
other emerging sales channels such as computer specialty retailers and 
computer superstores.

During the year ended December 27, 1997 two customers, Compaq and Dell 
Computer,  accounted for more than 21%  and 10%, respectively, of the 
Company's revenue.  During the nine months ended December 28, 1996 one 
customer, Southern Electronics Distribution accounted for 11% of the 
Company's revenue.  During the year ended March 30, 1996 no customer 
accounted for more than 10% of the Company's revenue.

                                       35

<PAGE>

The Company's export sales represented  40%, 48% and 41% of total revenue for 
the year ended December 27, 1997, the nine months ended December 28, 1996 and 
the year ended March 30, 1996, respectively. Approximately 57%, 38% and 60%, 
of export sales were to Europe, while 36%, 55%,  and 35% of export sales were 
to Asia Pacific for the year ended December 27, 1997, the nine months ended 
December 28, 1996 and year ended March 30, 1996, respectively.

Operations outside the United States primarily consist of the manufacturing 
plant in Singapore that produces subassemblies and final assemblies for the 
Company's disk drive products.  The geographic breakdown of the Company's 
activities for each of the three fiscal periods is presented in the following 
table: 

<TABLE>
<CAPTION>

                                                U.S.      Asia Pacific      Eliminations  Consolidated
                                             ----------   -------------     ------------  ------------
                                                                  (In thousands)
<S>                                          <C>            <C>              <C>           <C>
YEAR ENDED DECEMBER 27, 1997 
----------------------------                                                                           
Revenue from unaffiliated customers          $1,384,703            $96       $       --    $1,384,799
Revenue from affiliated customers                39,521             --               --        39,521
Transfers between geographic locations           21,886      1,595,189       (1,617,075)           --
                                             ----------      ---------       ----------    ----------
Revenue                                       1,446,110      1,595,285       (1,617,075)    1,424,320
                                             ----------      ---------       ----------    ----------
Income (loss) from operations                  (284,915)       187,496               34       (97,385)
                                             ----------      ---------       ----------    ----------
Identifiable assets                             498,778        569,207         (512,513)      555,472
                                             ----------      ---------       ----------    ----------
NINE MONTHS ENDED DECEMBER 28, 1996
----------------------------------- 
<S>                                          <C>            <C>              <C>           <C>
Revenue from unaffiliated customers            $751,597        $20,058       $       --      $771,655
Revenue from affiliated customers                25,712          1,517               --        27,229
Transfers between geographic locations           14,150        918,488         (932,638)           --
                                             ----------      ---------       ----------    ----------
REVENUE                                         791,459        940,063         (932,638)      798,884
                                             ----------      ---------       ----------    ----------
Income (loss) from operations                  (323,061)        79,926            4,708      (238,427)
                                             ----------      ---------       ----------    ----------
Identifiable assets                             286,084        369,631         (341,176)      314,539
                                             ----------      ---------       ----------    ----------

YEAR ENDED MARCH 30, 1996
-------------------------
<S>                                          <C>            <C>              <C>           <C>
Revenue from unaffiliated customers          $1,196,105        $68,522       $       --    $1,264,627
Revenue from affiliated customers                 3,417            954               --         4,371
Transfers between geographic locations           14,600      1,585,545       (1,600,145)           --
                                             ----------      ---------       ----------    ----------
Revenue                                       1,214,122      1,655,021       (1,600,145)    1,268,998
                                             ----------      ---------       ----------    ----------
Income (loss) from operations                  (204,376)        95,035               82      (109,259)
                                             ----------      ---------       ----------    ----------
Identifiable assets                             326,106        397,837         (281,456)      442,487
                                             ----------      ---------       ----------    ----------

</TABLE>

Revenue from unaffiliated and affiliated customers is based on the origin of 
the sale.  Transfers between geographic locations are accounted for at 
amounts that are above cost.  Such transfers are eliminated in the 
consolidated financial statements.  Identifiable assets are those assets that 
can be directly associated with a particular geographic location through 
acquisition and/or utilization.  In determining each of the geographic 
locations' income (loss) from operations and identifiable assets, the 
expenses and assets relating to general corporate or headquarter activities 
are included in the amounts for the geographic locations where they were 
incurred, acquired or utilized.

                                                                            36

<PAGE>

7.  LINES OF CREDIT, DEBT AND CAPITAL LEASE OBLIGATIONS

Lines of credit, debt and capital lease obligations consist of the following:

<TABLE>
<CAPTION>
                                                                          December 27,    December 28,
(IN THOUSANDS)                                                                1997            1996 
                                                                           --------         --------
<S>                                                                       <C>             <C>
5.75% Convertible Subordinated Debentures due March 1, 2012                $100,000         $100,000
Short-term borrowings; interest payable at variable rates ranging from
  6.24% to 7.88% per annum                                                   80,967          136,000
Short-term borrowings from parent; interest payable at rate of 10.29%        65,000               -
Short-term borrowing; interest payable at a rate of 6.52%; collateralized
  by equipment                                                               13,800           13,800
Long-term borrowing, interest payable at variable rates ranging from
  6.18% to 6.24% per annum                                                  129,000          129,000
OTHER OBLIGATIONS                                                               603              180
                                                                            389,370          378,980
LESS AMOUNTS DUE WITHIN ONE YEAR                                            165,057          149,871
                                                                           --------         --------
Due after one year                                                         $224,313         $229,109
                                                                           --------         --------
                                                                           --------         --------
</TABLE>

Future aggregate maturities are as follows:

<TABLE>
<CAPTION>
FISCAL YEAR ENDING                                                 (IN THOUSANDS)
------------------                                                 --------------
<S>                                                                <C>
1998                                                               $165,057
1999                                                                134,313
2000                                                                  5,000
2001                                                                  5,000
2002                                                                  5,000
LATER YEARS                                                          75,000
-----------                                                        --------
Total                                                              $389,370
-----------                                                        --------
-----------                                                        --------
</TABLE>

The 5.75% Convertible Subordinated Debentures (Debentures) originally were
convertible at any time prior to maturity, unless previously redeemed, into
shares of common stock of the Company at a conversion rate of 25 shares per each
$1,000 principal amount of debentures (equivalent to a conversion price of $40
per common share), subject to adjustment in certain events.  Pursuant to the
terms of the Indenture governing the Debentures, dated March 1, 1987, upon the
closing of the acquisition by HEA under the Agreement and Plan of Merger, dated
November 2, 1995, between HEA and the Company, Debenture holders were entitled
to receive in lieu of shares of common stock of the Company the same
consideration per share received by holders of common stock at the closing of
the Merger.  A First Supplemental Indenture, dated January 11, 1996, provides
that each $1,000 principal amount of Debentures may be convertible to 25 shares
of common stock of the Company  (equivalent to a conversion price of $40 per
share), which is immediately converted into a cash payment of $167.50.  Interest
on the Debentures is payable on March 1 and September 1 of each year.  The
Debentures, at the option of the Company, are redeemable at 100.575% of
principal amount as of March 30, 1996 and thereafter at prices adjusting to the
principal amount on or after March 1, 1997, plus accrued interest.  The
Debentures are entitled to a sinking fund of $5,000,000 principal amount of
Debentures, payable annually beginning March 1, 1998, which is calculated to
retire at least 70% of the Debentures prior to maturity.  The Debentures are
subordinated in right to payment to all senior indebtedness.


                                       37
<PAGE>

On March 30, 1996, the Company entered into an accounts receivable 
securitization program with Citicorp Securities, Inc.  Under this program the 
Company could sell its qualified trade accounts receivable up to $100 million 
on a non-recourse basis.  The face amount of the eligible receivables are 
discounted based on the Corporate Receivables Corporation commercial paper 
rate (5.85% as of December 27, 1997) plus commission and is subject to a 10% 
retention.  As of December 27, 1997, $79.8 million in sales of accounts 
receivable, for which proceeds had not yet been received, were included in 
accounts receivable and $79.8 million in collections of accounts receivable 
not yet remitted were included in accrued and other liabilities.  The 
Company's asset securitization program was subject to certain conditions, 
among which was a condition that all of HEI's long-term public senior debt 
securities achieve a specified rating.  This condition was not met in 
February 1998, and the Company obtained waivers of this condition through 
April 8, 1998.

The Company completed a new asset securitization program dated as of April 8, 
1998 (the "New Program") arranged by Citicorp to replace the existing 
program.  Under the New Program, the Company sells all of its trade accounts 
receivable through a special purpose vehicle with a purchase limit of $100 
million on a non-recourse basis, subject to increase to $150 million, upon the 
fulfillment of the conditions subsequent described below.  On April 8, 1998, 
the uncollected purchase price under the existing program, in the amount of 
approximately $100 million, was transferred to represent the purchased 
interest of Citicorp's Corporate Receivables Corporation ("CRC") under the 
New Program.  Continuance of the New Program is subject to certain 
conditions, including a condition that all of the long-term public senior 
debt securities of Hyundai Heavy Industries, Inc. ("HHI") achieve a specified 
rating.  In addition, the New Program remains subject to certain conditions 
subsequent related to obtaining appropriate waivers as may be necessary from 
lenders of the Company's credit facilities, or effecting a cure, of any 
outstanding defaults under such credit facilities of the Company and 
obtaining a performance guarantee from HHI of the obligations of the Company 
and Maxtor Receivables Corporation under the New Program.  This performance 
guarantee is similar to the arrangement that HEI provided under the Original 
Program.  The Company must satisfy these conditions subsequent by May 4, 1998 
and presently believes that it will be able to successfully satisfy these 
conditions.

On January 31, 1996 the Company signed a one year credit facility in the amount
of $13.8 million to be used for capital equipment requirements at the Singapore
facility.  This credit facility is guaranteed by HEI and all outstanding amounts
of principal and accrued interest were payable on January 30, 1998.  In January
1998, this facility was retired and all principal and interest owed under this
facility have been paid. As of December 27, 1997, $13.8 million was 
outstanding.

On April 10, 1997, the Company obtained a $150 million intercompany line of
credit from HEA.  This line of credit allows for draw downs up to $150 million
and interest is payable quarterly.  All outstanding amounts of principal and
accrued interest are due and payable on April 10, 1998.  As of December 27,
1997,  $65 million was outstanding under this facility.  In March 1998, this
line was reduced to $100 million.

On August 29, 1996, the Company established two uncollateralized, revolving 
lines of credit totaling $215 million (the "Facilities") through Citibank, 
N.A. and syndicated among fifteen banks.  In September 1996, the Facilities 
were increased $10 million to a total of $225 million.  The Facilities are 
guaranteed by HEI and a total of $129 million of the Facilities is a three 
year committed Facility that is used primarily for general operating purposes 
and bears interest at a rate based on LIBOR plus 0.53 percent.  As of 
December 27, 1997, $129 million of borrowings under this line were 
outstanding. A total of $96 million of the Facility is a 364-day committed 
facility, renewable annually at the option of the syndicate banks.  On August 
28, 1997, this Facility was amended and reduced to $31 million.  The Facility 
is primarily for general operating purposes and bears interest at a rate 
based on LIBOR plus 0.53 percent.  As of December 27, 1997, $31 million under 
this line of credit were outstanding.

The Company has credit facilities amounting to $50 million in the aggregate from
three banks. The facilities, which are guaranteed by HEI, are used primarily
for general operating purposes and bear interest at rates ranging from 6.27
percent  to 7.88 percent.  As of December 27, 1997, $50 million of borrowings
under this line of credit were outstanding.  In January 1998 one $10 million
facility was retired and all principal owing has been paid.

HEI is the guarantor of an aggregate $170 million outstanding under the 
Company's credit facilities as of December 27, 1997.  HEI has various 
obligations as guarantor, including the satisfaction of certain financial 
covenants.  Due to the economic conditions in the Republic of Korea and a 
significant recent devaluation of the Korean won versus the U.S. dollar, the 
Company believes that HEI may be found not to be in compliance with certain 
financial covenants. The Company received notice on April 9, 1998 from the 
administrative agent for the facilities that HEI is not in compliance with 
certain financial covenants. In the event HEI is not able to comply with its 
obligations as guarantor, there will be a default under the terms of the 
guaranty which will constitute a default under the Company's credit 
facilities guaranteed by HEI and a default under a credit facility with $30 
million outstanding as of December 27, 1997 not guaranteed by HEI.  The 
Company will endeavor to seek any necessary waivers; although there can be no 
such assurance, the Company believes that such waivers can be obtained.  The 
Company has a commitment from an affiliated company to provide an equivalent 
long-term facility in the event the waivers are not successfully obtained.  
Consequently, the Company has not reclassified the debt outstanding under the 
credit facilities as a current liability.

Under the terms of the Company's line of credit facilities, the Company may not
declare or pay any dividends without the prior consent of its lenders.



                                      38
<PAGE>

8.  COMMITMENTS AND CONTINGENCIES

The Company leases certain of its principal facilities and certain machinery and
equipment under operating lease arrangements.  The future minimum annual rental
commitments as of December 27, 1997 are as follows:

<TABLE>
<CAPTION>
FISCAL YEAR ENDING                                            (IN THOUSANDS)
------------------                                            --------------
<S>                                                           <C>
1998                                                             $10,602
1999                                                               8,401
2000                                                               5,261
2001                                                               4,610
2002                                                               1,735
LATER YEARS                                                        8,556
-----------                                                    ---------
Total                                                            $39,165
-----------                                                    ---------
-----------                                                    ---------
</TABLE>

COMMITMENTS AND CONTINGENCIES

The above commitments extend through fiscal year 2016.  Rental expense was
approximately $10,654,000 for the year ended December 27, 1997, $8,905,000 for
the nine months ended December 28, 1996 and $11,960,000 for the year ended March
30, 1996.

LEGAL PROCEEDINGS

The dispute between StorMedia and the Company arises out of the Agreement
between the Company and StorMedia which became effective on November 17, 1995,
under which StorMedia agreed to supply disk media, a key component of hard disk
drives, to the Company.  StorMedia's supply of disk media did not meet the
Company's specifications and functional requirements and , as a result, after
negotiations, the Company terminated the Agreement.

On September 18, 1996 a class action securities lawsuit was filed against
StorMedia Incorporated ("StorMedia") and certain of its officers in Superior
Court of the State of California, County of Santa Clara.  Among the allegations
against StorMedia was the assertion that StorMedia failed to perform under the
November 17,1995 Purchase Agreement ("Agreement") with Maxtor Corporation ("the
Company") and that StorMedia's failure to sue the Company for breach of the
Agreement was evidence that StorMedia had breached the Agreement. (A concurrent
class action was later filed in the U.S. District Court for the Northern
District of California by the same parties.)

One week later, on September 25,1996, StorMedia commenced an action in the U.S.
District Court for the Northern District of California entitled, STORMEDIA 
INCORPORATED V. HYUNDAI ELECTRONICS INDUSTRIES CO., LTD., ET AL., U.S. District
Court, Northern District, No. C-96 20805 RMW (EAI) (the "Federal Action"),
against Hyundai Electronics Industries Co., Ltd.  ("HEI")-- the Company's Korean
grandparent -- which also signed the Agreement.  StorMedia also sued M.H. Chung,
HEI's chairman; K.S. Yoo, the individual who signed the Agreement on behalf of
the Company.  StorMedia, however, did not sue the Company.

StorMedia filed an Amended Complaint of February 14,1997 in the Federal Action. 
The Amended Complaint alleged Fraud and Deceit (against all Defendants);
Negligent Misrepresentation (against all Defendants); Breach of Contract
(against HEI); Breach of Contract--Covenant Not to Compete (Against HEI); Breach
of the Implied Covenant of Good Faith and Fair Dealing (against HEI); and
Unlawful, Unfair or Fraudulent Business Practices (against HEI).  The plaintiff
alleged that HEI entered into a volume purchase agreement with StorMedia
Pursuant to which HEI and the Company committed to purchase rigid discs for use
in the Company's drives.  At the time HEI entered the Agreement, plaintiff
contends that HEI knew that it could not and would not purchase the volume of
products which it committed to purchase.  Plaintiff further contends that HEI
entered the contract in order to secure a source of components for the Company
only long enough for HEI to develop its own internal disc manufacturing capacity
and that it and the other defendants never intended to fully perform the
Agreement.  Plaintiff sought damages in excess of $206 million dollars, punitive
damages, injunctive relief, attorneys' fees, pre-judgment and post-judgment
interest, and costs.


                                      39
<PAGE>

On December 20, 1996, the Company filed a Complaint in Colorado state court 
entitled MAXTOR CORPORATION V. STORMEDIA INC. ET AL., District Court, County 
of Boulder Colorado, No. 96CV 161 ("Colorado Action"), against StorMedia 
Incorporated, StorMedia International Ltd., and William J. Almon, StorMedia's 
CEO.  The complaint alleges Breach of Contract (against all Defendants except 
Almon), Breach of the Implied Warranty of Fitness (against all Defendants 
except Almon), Breach of the Implied Warranty of Merchantability (against all 
Defendants except Almon), Fraud ( against all Defendants, and Negligent 
Misrepresentation (against all Defendants).  The Company seeks damages in 
excess of $100 million dollars, punitive damages, reasonable attorneys' fees 
and costs. In March, 1997, the Colorado Action was stayed.

On October 24, 1997, the Company filed a Motion to Intervene in the Federal
Action.  HEI moved to dismiss the action for failure to join the Company as a
party.  On February 18, 1998, the U.S. District dismissed the Federal Action in
its entirety.  Accordingly, on February 20, 1998, the Company filed a Motion for
Relied from Stay in the Colorado action.  On February 24, STORMEDIA
INTERNATIONAL LTD. V. HYUNDAI ELECTRONICS INDUSTRIES CO., LTD., ET AL., in the
Superior Court of California, County of Santa Clara, Case No. CV 772103
("California Action").  This new complaint alleges Fraud and Deceit (against all
Defendants), Negligent Misrepresentation (against HEI and the Company). 
Plaintiff seeks damages in excess of $206 million dollars, punitive damages,
injunctive relief, attorneys' fees, pre-judgment and post-judgment interest, and
costs.  On March 26, 1998, the Company moved to stay the California Action in
light of the substantially identical action pending in Colorado.

There has been no discovery in the Colorado Action or the recently filed
California Action.  There has been some initial discovery exchanged in the now
dismissed Federal Action.  No depositions on the merits of the claims have been
take.  The Company believes that it has meritorious defenses to such claims and
intends to defend the litigation vigorously.  However, due to the nature of the
litigation and because the pending lawsuits are in the very early pre-trial
stages, the Company cannot determine the possible loss, if any, that may
ultimately be incurred either in the context of a trial or as a result of a
negotiated settlement.  The two pending litigations could result in significant
diversion of time by the Company's technical personnel.  While after
consideration of the nature of the claims and facts relating to the litigation,
including the results of preliminary discovery, management believes that the
resolution of this matter will not have a material adverse effect on the
Company's business, operating results and financial conditions, the results of
these proceedings, including any potential settlement are uncertain and there
can be no assurance that they will not have a material adverse effect on the
Company's business, operating results, and financial condition.


The Company has been notified of certain other claims, including claims of
patent infringement.  While the ultimate outcome of these claims and the claims
described above is not determinable, it is reasonably possible that resolution
of these matters could have a material impact on the financial condition,
results of operations or cash flows of the Company. No amounts related to any 
action has been accrued for the accompanying financial statements.


                                      40
<PAGE>

9.  RELATED PARTY TRANSACTIONS

In January 1996, the Company became a wholly owned subsidiary of HEA.
Subsequently, trading of Maxtor common stock on the NASDAQ National Market was
suspended. Currently, there is no public market for the Company's equity
securities.  The Company's 5.75% convertible subordinated Debentures, due March
1, 2012, remain publicly traded.

HEI has committed to provide the financial support necessary for the Company to
continue operations on an ongoing basis. 

The company purchased certain component parts from its parent (HEA) amounting 
to $15.5 million during 1997.

10.  STOCKHOLDERS' DEFICIT

PREFERRED STOCK

The Company has one class of $0.01 par value preferred stock with 95,000,000
shares authorized, designated as Series A Preferred Stock.  Each share of
preferred stock is convertible, at the option of the holder, to shares of the
Company's common stock on a one for one basis, subject to adjustment under
certain circumstances pursuant to anti-dilution provisions.  The preferred stock
automatically converts to common stock upon the earlier of the time the consent
of at least a majority of the outstanding Series A preferred stock subject to
such conversion is obtained, or the closing of the sale of the Corporation's
securities pursuant to a firm commitment, underwritten public offering.  The
holders of preferred shares are entitled to one vote for each share of common
stock into which the preferred stock is convertible.

Holders of Series A preferred stock are entitled to dividends, when and as
declared by the Board of Directors, at an annual rate of $0.40 per share. 
Dividends are noncumulative, and to date, no dividends have been declared or
paid by the Company.

The Series A preferred stock has a liquidation preference of $6.70 per share,
plus any declared but unpaid dividends on such shares.

In June 1996, the Company entered into an exchange agreement with HEA whereby
HEA exchanged 600 shares of Common Stock for 58,208,955 shares of Series A
Preferred Stock, $.01 par value.  As of December 27, 1997, 88,059,701 shares of
Series A Preferred Stock and 15,125 shares of Common Stock, $.01 par value, were
issued and outstanding.  As of December 27, 1997 all outstanding shares of
Series A Preferred Stock were held by HEA and all outstanding Common Stock,
issued pursuant to the Corporation 1996 Stock Option Plan were held by three
individuals.

At the time of the acquisition by HEA, the Company canceled its employee stock
purchase plan and stockholder rights plan.

On December 12, 1997 the Company entered into an exchange with HEA where HEA 
exchanged $200 million of debt to 29,850,746 million shares of Series A 
Preferred Stock.

                                      41
<PAGE>

STOCK OPTIONS

Effective as of the acquisition by HEA, the Company's Fiscal 1988, 1992, 1995
Stock Option Plans and the 1986 and 1996 Outside Directors Stock Option Plans
terminated and were subsequently replaced by the Company's 1996 Stock Option
Plan (the Plan).  The Plan was approved by the Board of Directors in May 1996
and provides for a maximum of 10,272,168 shares to be reserved for grant. 
Options under the Plan expire ten years from the date of grant. On February 
25, 1998 the Company's Board of Directors approved an additional 2 million 
common shares for issuance under its 1996 stock option plan.

The Plan generally provides for non-qualified stock options and incentive stock
options to be granted to eligible employees, consultants, affiliates and
directors of the Company at a price not less than 85% of the fair market value
at the date of grant, as determined by the Board of Directors.  The Board of
Directors or an executive committee appointed by the Board also approves other
terms such as number of shares granted and exercisability thereof.  Any person
who is not an employee may be granted only a non-qualified stock option. 
Options granted under the Plan vest over a four-year period with 25% vesting at
the first anniversary date of the vest date and 6.25% each quarter thereafter. 
The vesting schedule for new participants begins February 1, 1996 or hiring
date, whichever is later.

The Company has (i) the right to repurchase any vested shares at the greater 
of the exercise price or fair market value upon termination of service by the 
holder, and (ii) has a 90 day right of first refusal whereby the Company may 
repurchase all shares held by the holder on the same terms and at the same 
price as offered by a third party (the "Company's Repurchase Rights").  The 
holder must give the Company written notice prior to any proposed transfer. 

In the event that the Company has not completed an initial public offering 
("IPO") within six months of the date it reaches an "IPO Trigger Date", the 
Company is required to purchase all the common stock acquired  by 
participants under the Plan, if tendered, at fair market value (the 
"Pseudo-IPO Purchase").  The IPO trigger date is the date, on or before 
February 1, 2001, on which all of the following have occurred: a) the Company 
has a positive net income for four consecutive quarters, b) the fair market 
value of the Company as determined by an independent appraisal equals or 
exceeds $700,000,000, and  c) the Company receives the written opinion of a 
nationally recognized investment banking firm stating that the Company may 
undertake an underwritten IPO of the Company's common stock.

In February 1998, the Company adopted an Amended and Restated 1996 Stock 
Option Plan, effective October 1, 1997, which eliminated the Company's 
Repurchase Rights and the Pseudo-IPO Purchase provisions.

The following table summarizes option activity through December 27, 1997:


<TABLE>
<CAPTION>
                                                                    Options outstanding
                                                       -----------------------------------------
                                           Shares                         Average
(In Thousands, Except Share              available                       price per     Aggregate
and Per Share Amounts)                   for grant       Shares            share         value
                                        -----------    -----------       ---------     ---------
<S>                                     <C>            <C>               <C>           <C>      
Balance at March 25, 1995                3,180,512      6,152,965          $5.99       $ 36,833
Options granted                         (1,940,547)     1,940,547           4.75          9,226
Options exercised                                -     (1,134,805)          4.18         (4,745)
Options canceled                           992,862       (992,862)          5.56         (5,519)
Plan shares expired                       (151,886)             -              -              -
Options canceled due to acquisition     (2,080,941)    (5,965,845)          6.00        (35,795)
                                        -----------    -----------       ---------     ---------
Balance at March 30, 1996                       --             --             --             --
Shares reserved                         10,272,168             --             --             --
Options granted                         (9,322,198)     9,322,198           3.00         27,966
Option canceled                          2,216,698     (2,216,698)          3.00         (6,650)
                                        -----------    -----------       ---------     ---------
Balance at December 28, 1996             3,166,668      7,105,500           3.00         21,316 
                                        -----------    -----------       ---------     ---------
Options granted                         (3,244,750)     3,244,750           3.00          9,734
Options excercised                               -        (15,125)          3.00           (45)
Options canceled                         1,519,290     (1,519,290)          3.00         (4,558)
                                        -----------    -----------       ---------     ---------


Balance at December 27, 1997             1,441,208      8,815,835          $3.00       $ 26,447
                                        -----------    -----------       ---------     ---------
                                        -----------    -----------       ---------     ---------
</TABLE>

There were 2,458,162 shares vested as of December 27, 1997 at a weighted 
average exercise price of $3.00 and no shares vested as of December 28, 1996 
and March 30, 1996.  There were 15,125 shares outstanding subject to 
repurchase as of December 27, 1997 and no shares outstanding subject to 
repurchase as of  December 28, 1996  and March 30, 1996.

                                      42
<PAGE>

Under SFAS No. 123, the Company is required to calculate the pro-forma fair
market value of options granted and report the impact that would result from
recording the compensation expense.  Pro-forma net loss for the year ended
December 27, 1997 and nine months ended December 28,1996 is as follows. 
Comparable information for the year ended March 30, 1996 is not presented due to
the termination of all formerly existing options pursuant to the January 1996
acquisition by HEA.


<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 27, 1997
(IN THOUSANDS)                               As reported         Pro forma
----------------------------                 -----------         ---------
<S>                                          <C>                 <C>
Net loss                                     $109,891            $111,613
----------------------------                 -----------         ---------
----------------------------                 -----------         ---------
</TABLE>

<TABLE>
<CAPTION>
NINE  MONTHS ENDED DECEMBER 28, 1996
(IN THOUSANDS)                               As reported         Pro forma
----------------------------                 -----------         ---------
<S>                                          <C>                 <C>
Net loss                                     $256,326            $257,488
----------------------------                 -----------         ---------
----------------------------                 -----------         ---------
</TABLE>

The pro forma net loss disclosures made above are not necessarily 
representative of the effects on pro forma net income (loss) for future years 
as options granted typically vest over several years and additional option 
grants are expected to be made in future years.

Pro-forma compensation expense resulting from stock options is to be based 
upon fair value at the date of grant.  To calculate this fair value, the 
Company has elected to apply the Black-Scholes pricing model which is one of 
the currently accepted models recognized by SFAS 123.  

To compute the estimated grant date fair market value of the Company's stock 
option grants for 1996 and 1997, the following weighted-average assumptions 
were used:

<TABLE>
<CAPTION>
                                   Group A         Group A       Group B         Group B
                                    1997            1996          1997            1996
                                   -------         -------       -------         -------
<S>                                <C>             <C>           <C>             <C>
Risk-free interest rate            5.69%           6.14%         6.02%           6.21%
Weighted average expected life     4 years         4 years       5 years         5 years
</TABLE>

No dividend yield and no price volatility are assumed because the Company's 
equity security isn't traded publicly.

The weighted average expected life was calculated based on the vesting period
and the exercise behavior of each subgroup.  Group A represents higher paid
participants who tend to exercise prior to the vesting period to take advantage
of tax laws, and Group B represents all other participants.  The risk-free
interest rate was calculated in accordance with the grant date and expected life
calculated for each subgroup.

The following table summarizes information for stock options outstanding at
December 27, 1997:

<TABLE>
<CAPTION>
                Options Outstanding                        Options Exercisable
---------------------------------------------------     -------------------------
                           Weighted
                            Average        Weighted                      Weighted
                           Remaining       Average                       Average
Exercise      Number      Contractual      Exercise         Number       Exercise
Price      Outstanding       Life            Price       Exercisable       Price
--------   -----------    -----------      --------      -----------     --------
<S>        <C>            <C>              <C>           <C>             <C>
$3.00      8,815,835      8.81             $3.00         2,458,162       $3.00
--------   -----------    -----------      --------      -----------     --------
--------   -----------    -----------      --------      -----------     --------
</TABLE>

<PAGE>

11.  INCOME TAXES

The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
FISCAL PERIOD ENDED                            December 27,   December 28,   March 30,
(In thousands)                                    1997           1996           1996
                                             --------------- -------------- -----------
<S>                                            <C>            <C>            <C>
Current:                          
     Foreign                                      $1,035         $1,124        $2,526
                                             --------------- -------------- -----------
                                                   1,035          1,124         2,526
Deferred:                         
     Foreign                                           -           (300)          300  
                                             --------------- -------------- -----------
Total                                             $1,035         $  824        $2,826
                                             --------------- -------------- -----------
                                             --------------- -------------- -----------
</TABLE>

The provision for income taxes differs from the amount computed by applying 
the U.S. statutory rate of 35% for the twelve months ended December 27, 1997, 
the nine months ended December 28, 1996 and the twelve months ended March 30, 
1996 loss before income taxes.  The principal reasons for this difference are 
as follows:

<TABLE>
<CAPTION>
FISCAL PERIOD ENDED                                   December 27,   December 28,   March 30,
(In thousands)                                            1997           1996         1996
                                                    --------------- -------------- -----------
<S>                                                 <C>             <C>            <C>
Tax at U.S. statutory rate                             $(38,100)       $(89,442)    $(41,982)
Tax savings from foreign operations                     (63,487)        (27,104)     (30,757)
Repatriated foreign earnings absorbed             
     by current year losses                                   -               -       11,624
U.S. loss not providing current tax benefit             100,748          52,722       27,325
Valuation of temporary differences                        2,361          64,492       36,550
Other                                                      (487)            156           66
                                                    --------------- -------------- -----------
Total                                                  $  1,035        $    824     $  2,826
                                                    --------------- -------------- -----------
                                                    --------------- -------------- -----------
</TABLE>

Deferred income taxes reflect the tax effect of temporary differences between 
the carrying amount 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 are as 
follows:

<TABLE>
<CAPTION>
                                                   December 27,    December 28,
(IN THOUSANDS)                                         1997            1996 
                                                 --------------- ----------------
<S>                                              <C>             <C>
Deferred tax assets:     
  Inventory reserves and accruals                  $   8,975       $  16,211
  Depreciation                                         6,149           5,423
  Sales related reserves                              11,006          10,836
  Net operating loss carryforwards                   218,718         152,519
  Tax credit carryforwards                            19,335          18,252
  Capitalized research and development               102,049          77,466
  Notes receivable reserve                             1,220           7,561
  Other                                               10,965           2,496
                                                 --------------- ----------------
Total deferred tax assets                            378,417         290,764
Valuation allowance for deferred tax assets         (289,832)       (251,464)
                                                 --------------- ----------------
Net deferred tax assets                            $  88,585       $  39,300
                                                 --------------- ----------------
                                                 --------------- ----------------

Deferred tax liabilities:
  Unremitted earnings of certain foreign 
    entities                                       $  88,585       $  39,300
                                                 --------------- ----------------
Total deferred tax liabilities                     $  88,585       $  39,300
                                                 --------------- ----------------
                                                 --------------- ----------------
</TABLE>

Pre-tax income from foreign operations was approximately $86,000,000, 
$79,000,000 and $95,900,000 for the twelve months ended December 27, 1997, 
nine months ended December 28,1996 and twelve months ended March 30, 1996, 
respectively.  The Company currently enjoys a tax holiday for its operations 
in Singapore that has been extended until June 30, 2003.

During the year ended December 31, 1997 the valuation allowance for deferred 
tax assets increased by $38,368,000.

                                       44
<PAGE>

At December 27, 1997, for federal income tax purposes, the Company had net 
operating loss carryforwards of $616,700,000 and tax credit carryforwards of 
approximately $18,800,000 which will expire beginning in fiscal year 1999. 
Certain changes in stock ownership can result in a limitation on the amount 
of net operating loss and tax credit carryovers that can be utilized each 
year. The Company determined it had undergone such an ownership change.  
Consequently, utilization of approximately $253,000,000 of net operating loss 
carryforwards and the deduction equivalent of approximately $18,300,000 of 
tax credit carryforwards will be limited to approximately $22,400,000 per 
year.

The acquisition of the Company by Hyundai Electronics America (HEA) resulted 
in the Company becoming part of the HEA consolidated group for federal income 
tax purposes during January 1996.  As a result, the Company's tax loss for 
the post-acquisition period has been computed on a separate tax return basis. 
 The Company has not recorded any tax benefit in its financial statements for 
the amount of the post-change net operating loss to be included in the HEA 
consolidated income tax return.


                                       45
<PAGE>

                         REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Stockholders
of Maxtor Corporation:

We have audited the consolidated financial statements and the financial 
statement schedule of Maxtor Corporation (a subsidiary of Hyundai Electronics 
America) listed in the index on page 58 of this Form 10-K as of December 27, 
1997 and December 28, 1996 and for the year ended December 27, 1997 and the 
nine month period ended December 28, 1996.  These financial statements and 
financial statement schedule are the responsibility of the Company's 
management.  Our responsibility is to express an opinion on these financial 
statements and financial statement schedule 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 financial statements referred to above present fairly, in 
all material respects, the consolidated financial position of Maxtor 
Corporation as of December 27, 1997 and December 28, 1996, and the 
consolidated results of its operations and its cash flows for the year ended 
December 27, 1997 and the nine month period ended December 28, 1996, in 
conformity with generally accepted accounting principles.  In addition, 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 required to be 
included therein.

As discussed in Note 1 to the financial statements, the Company's ultimate 
parent, Hyundai Electronics Industries, Co., LTD., (HEI) is located in the 
Republic of Korea.  The Republic of Korea has recently experienced volatility 
in its currency and interest rates which have affected the operations of most 
Korean companies including HEI.  HEI has provided certain financial support 
to the Company in the past and is a guarantor of the Company's debt.

     
                                             COOPERS & LYBRAND L.L.P.

San Jose, California
February 3, 1998, except for Notes 7 and 10 for which 
the date is April 9, 1998

                                       46
<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS


We have audited the accompanying consolidated statement of operations, 
stockholders' equity (deficit) and cash flows for the year ended March 30, 
1996 of Maxtor Corporation (a wholly-owned subsidiary of Hyundai Electronics 
America). Our audit also included the financial statement schedule for the 
year ended March 30, 1996 listed in the Index at Item 14(a). These financial 
statements and schedule are the responsibility of the Company's management.  
Our responsibility is to express an opinion on these financial statements and 
schedule based on our audits.

We conducted our audit 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 audit provides a 
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above 
present fairly, in all material respects, the consolidated results of 
operations and cash flows of Maxtor Corporation for the year ended March 30, 
1996, in conformity with generally accepted accounting principles.  Also, in 
our opinion, the related financial statement schedule for the year ended 
March 30, 1996, when considered in relation to the basic financial statements 
taken as a whole, presents fairly, in all material respects, the information 
set forth therein.

                                             ERNST & YOUNG LLP



San Jose, California
April 25, 1996

                                       47

<PAGE>

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND  
          FINANCIAL DISCLOSURE
     
Incorporated by reference to Form 8-K filed on July 26, 1996.

                                      PART III
                                          
                                          
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following table lists the directors and executive officers of the Company 
and their ages as of March 25, 1998.  There are no family relationships 
between any director or executive officer of the Company.  Executive officers 
serve at the discretion of the Board of Directors.

<TABLE>
<CAPTION>
     NAME                         AGE             POSITION WITH THE COMPANY
     ----                         ---             -------------------------
     <S>                          <C>             <C>
     Mong Hun Chung                49             Chairman of the Board
     Dr. Chong Sup Park            50             Vice Chairman and Director
     Michael R. Cannon             45             President, Chief Executive Officer and Director
     Charles F. Christ             59             Director
     Charles Hill                  61             Director
     Y.H. Kim                      55             Director
     Philip S. Paul                59             Director
     Victor B. Jipson              45             Senior Vice President, Engineering
     Paul J. Tufano                44             Vice President, Finance, and Chief Financial Officer
     William F. Roach              54             Senior Vice President, Worldwide Sales and Marketing
     Glenn H. Stevens              47             Vice President, General Counsel and Secretary
     Phillip C. Duncan             47             Vice President, Human Resources 
     John Hagerman                 43             Vice President, Strategic Initiatives
     K. K. Kim                     46             Vice President, Strategic Alliances
     Misha Rozenberg               36             Vice President, Quality
     K. H. The                     44             Vice President, Worldwide Manufacturing
     David A. Wickersham           42             Vice President, Worldwide Materials
</TABLE>

Mong Hun Chung was elected Chairman of the Board in February 1994.  Mr. Chung 
has been Chairman of the Board of Directors of Hyundai Electronics Industries 
Co., Ltd. in Korea since January 1992.  He was President and Representative 
Director of Hyundai Electronics Industries Co., Ltd. in Korea from February 
1984 to December 1991.  Currently, Mr. Chung is also Vice Chairman of Hyundai 
Merchant Marine Co., Ltd. and holds directorship positions on the boards of 
other Hyundai Business Group companies.

C.S. Park was appointed Vice Chairman of the Company's Board of Directors in 
June 1996, and in September 1996 assumed the position of President and Chief 
Executive Officer of HEA.  Dr. Park had previously served as the Company's 
President and Chief Executive Officer from February 1995 until his 
appointment as Vice Chairman.  From 1993 until joining Maxtor, he was 
President and Chief Executive Officer and a director of Axil Computer, Inc., 
a workstation computer manufacturer and a Hyundai Business Group company, in 
Santa Clara, California.  Dr. Park remains a member of Axil's Board, and also 
holds directorship positions on the boards of other Hyundai Business Group 
companies.  He was formerly in various management positions with Hyundai 
Electronics Industries Co., Ltd., including the position of Senior Vice 
President, Semiconductor Sales and Marketing, which he held from 1990 to 
1992.  From 1985 to 1989, Dr. Park was President and Chief Executive Officer 
of Hyundai Electronics America.  He is currently a director of Storage 
Dimensions, Inc., an independent vendor of high-availability disk and tape 
storage systems.

Michael R. Cannon was appointed President, Chief Executive Officer and 
Director of the Company in July 1996.  From January 1993 until he joined 
Maxtor, Mr. Cannon held several senior management positions with IBM's 
Storage Systems division, including vice president, mobile and desktop 
business unit; vice president, product design; 

                                       48
<PAGE>

and vice president, worldwide operations.  From May 1991 to January 1993, he 
served as senior vice president of Syquest Technology Inc., and earlier held 
the position of vice president, Southeast Asia operations, with Imprimis 
Technology.

Charles F. Christ has been President, Chief Executive Officer and a director 
of Symbios Logic Inc. since September 1997.  From 1994 to 1997, Mr. Christ 
was Vice President and General Manager of the Components Division of Digital 
Equipment Corporation.  Prior to joining Digital Equipment Corporation in 
1990, Mr. Christ was a senior partner with the management consulting group of 
Coopers & Lybrand from 1989 to 1990.  Previously, he was President and Chief 
Executive Officer of Digital Sound Corporation, a telecommunications voice 
processing company, from 1986 to 1988.

Charles Hill has been a Senior Research Fellow at the Hoover Institution 
since 1989.  From 1982 to 1989, he served as Chief of Staff of the U.S. State 
Department and Executive Assistant to former U.S. Secretary of State George 
P. Shultz.  From 1990 to 1996, Mr. Hill was Special Consultant to the 
Secretary General of the United Nations.  Presently, he is 
Diplomat-in-Residence at Yale University.

Y. H. Kim was appointed president and resident director of Hyundai 
Electronics Industries Co., Ltd. in October, 1996.  Previously, Mr. Kim had 
been chief executive officer, president, and a director of HEA since 1990.  
He continues to be a member of HEA's board of directors, and also holds 
directorship positions on the boards of Symbios Logic Inc., TV/COM 
International, Inc., and Hyundai Semiconductors America (Hyundai Group 
Companies).

Philip S. Paul was elected director of the Company in March 1998.  Since 
1991, he has managed Paul Capital Partners, a  private equity firm.  From 
1985 to 1991, Mr. Paul was Chairman and Chief Executive Officer of Hillman 
Ventures, Inc., a venture capital firm  specializing in technology 
investments.  From 1982 to 1985, Mr. Paul was  President and Chief Executive 
Officer of Machine Intelligence Corp., a  robotics company.  He has served as 
a Director of Symbios Logic, an information storage company, since April 1995.

Victor B. Jipson became Senior Vice President, Engineering in 1995.  Before 
joining the Company, he was General Manager of IBM's Optical Storage 
Solutions business unit from 1991 to 1995.  He also held key management 
positions in research, technical strategy, product strategy and research and 
development with IBM from 1975 to 1991.

William F. Roach joined the Company as Senior Vice President, Worldwide Sales 
and Marketing in January 1997.  From 1989 to 1996, he held various sales and 
marketing positions with Quantum Corporation, an information storage products 
company, including Executive Vice President, Worldwide Sales, from 1994 to 
1996. Mr. Roach also held sales and marketing positions with Intel Corp., a 
semiconductor company, from 1977 to 1989.
 
Paul J. Tufano became the Company's Vice President, Finance and Chief 
Financial Officer in August 1996.  Prior to joining Maxtor, Mr. Tufano held a 
variety of management positions at IBM over a 17 year period from March 1979 
to July 1996. Just prior to his Maxtor appointment, Mr. Tufano was manager of 
worldwide logistics for IBM's storage systems division from October 1995 to 
July 1996. Other management positions included manager of plans and controls 
for its desktop and mobile storage products business unit, and controller for 
IBM's San Jose, California facility.  He is currently a director of 
International Manufacturing Services, Inc., a major electronic manufacturing 
service company.

Glenn H. Stevens joined the Company as Vice President, General Counsel and 
Secretary in June 1994.  From August 1992 to May 1994, Mr. Stevens had a 
private law practice.  From 1979 to August 1992, he held various positions 
within the legal department at U S West, Inc., a telecommunications products 
and services provider, including chief counsel and secretary for its research 
and development organization and chief intellectual property counsel for the 
family of U S West companies.

Philip C. Duncan has been Vice President, Human Resources since August 1996. 
Before joining the Company, he was Vice President, International Sales and 
Marketing and Human Resources of Berkeley Systems from June 1994 to July 
1996. He has also held senior human resources management positions at Syquest 
Technology from May 1992 to June 1994,  and at Cirrus Logic from April 1990 
to May 1992.

John Hagerman joined the Company in 1992 as Director, Mobile Products.  From 
1993 to June 1996 Mr. Hagerman was Vice President, Mobile Products;  from 
February 1996 to June 1996, he was Vice President, Strategic Planning; 

                                       49
<PAGE>

from June 1996 to October 1997, he was Vice President, Marketing and 
Strategic Planning and he became Vice President, Strategic Alliances in 
October 1997.

K. K. Kim became the Company's Vice President, Strategic Alliances in May 
1994. Prior to joining the Company, Mr. Kim was Director of Corporate 
Planning Office, Hyundai Electronics Industries Co., Ltd. from 1991 to 1994.  
Prior to 1991, he held various management positions with other Hyundai Group 
companies.

Misha Rozenberg joined the Company in May 1996 as Vice President, Supplier 
Quality, and became Vice President, Quality in March 1998.  From 1994 to 
1996, Mr. Rozenberg was a Senior Director with Conner Peripherals, Inc.  He 
was a manager with Apple Computer from 1993 to 1994.

K. H. Teh joined the Company in May 1997 as Vice President, Worldwide 
Manufacturing.  Previously he was with Iomega Corp., where he been Managing 
Director of its Malaysia manufacturing facility since September 1996.  From 
1994 to 1996, he was a Managing Director, Malaysia Manufacturing, with 
Quantum Corp., and had been a Senior Director with Syquest Technology from 
1993 to 1994.

David A. Wickersham joined the Company in March 1996 as Vice President of 
Materials, Services and Logistics and became Vice President, Worldwide 
Materials in March 1997.   From 1993 to 1996, Mr. Wickersham was Director, 
Corporate Materials of Exabyte Corp., a data storage and interchange 
applications company. Prior to 1993, he held various management positions 
with IBM, Storage Systems Division, including Site Materials Manager from 
1991 to 1993.
     
                                       50
<PAGE>

ITEM 11.       DIRECTORS AND EXECUTIVE COMPENSATION

DIRECTORS

Non-employee members of the Company's Board of Directors receive the 
following compensation:  (i) $22,000 per year; (ii) $1,000 per year for 
service as a committee chairperson; (iii) $1,500 per full-day quarterly Board 
meeting; and (iv) an initial grant of a nonqualified stock option to 
purchase 40,000 shares of the Corporation's Common Stock pursuant to the 
Corporation's 1996 Stock Option Plan or Amended and Restated 1996 Stock 
Option Plan.  

EXECUTIVE COMPENSATION

The following table sets forth compensation paid to the Company's Chief 
Executive Officer and the Company's four most highly paid senior executive 
officers during the fiscal year ended December 27, 1997.

                             SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

                                                      ANNUAL COMPENSATION                          LONG-TERM 
                              ----------------------------------------------------------------   COMPENSATION
                                                                                                    AWARDS
                                                                                 OTHER  ANNUAL   -------------      ALL OTHER
NAME AND                        FISCAL YR.        SALARY          BONUS            COMPENSA-        OPTIONS       COMPENSATION
PRINCIPAL POSITION              ENDED (10)           $              $               TION($)        (SHARES #)        ($)(11)
------------------            -------------    ------------   -------------      -------------   -------------    ------------
<S>                           <C>              <C>            <C>                <C>             <C>              <C>
Michael R. Cannon(1)          Dec. 27, 1997       500,000        500,000(2)              --               --              --
  President, and Chief        Dec. 28, 1996       240,387        200,000(2)              --          900,000              --
  Executive Officer           Mar. 30, 1996            --             --                 --               --              --

William Roach (3)             Dec. 27, 1997       339,242             --            116,667(4)       250,000              --
  Senior VP, Worldwide        Dec. 28, 1996            --             --                 --               --              --
  Sales and Marketing         Mar. 30, 1996            --             --                 --               --              --

Dr. Victor B. Jipson (5)      Dec. 27, 1997       258,846         50,000                 --               --           5,375
  Senior VP,                  Dec. 28, 1996       176,924        107,500                 --          100,000           3,173
  Engineering                 Mar. 30, 1996        70,768        166,490                 --               --           1,326

Paul J. Tufano (6)            Dec. 27, 1997       229,986         50,000(7)              --               --           5,937
  VP, Finance and             Dec. 28, 1996        92,879         50,000(7)              --          100,000           2,322
  Chief Financial Officer     Mar. 30, 1996            --             --                 --               --              --

Phillip Duncan (8)            Dec. 27, 1997       220,000             --                 --               --           5,224
  VP, Human                   Dec. 28, 1996        84,615         80,000(9)              --           80,000           2,094
  Resources                   Mar. 30, 1996            --             --                 --               --              --
</TABLE>

                                       51    

<PAGE>

(1)  Mr.Cannon joined the Company as President and Chief Executive Officer in
     July 1996.

(2)  Represents bonuses paid in accordance with the Company's offer letter to
     Mr. Cannon.

(3)  Mr. Roach joined the Company as Senior Vice President, Worldwide Sales and
     Marketing in January 1997.

(4)  Represents forgiveness of a  loan over a three year period in accordance
     with the Company's offer letter to Mr. Roach.

(5)  Represents bonus paid in accordance with the Company's offer letter to 
     Mr. Jipson.

(6)  Mr. Tufano joined the Company as Vice President, Finance and Chief
     Financial Officer in August 1996.

(7)  Represents bonus paid in accordance with the Company's offer letter to 
     Mr. Tufano.

(8)  Mr. Duncan joined the Company as Vice President, Human Resources in 
     August, 1996.

(9)  Represents bonus paid in accordance with the Company's offer letter to 
     Mr. Duncan.

(10) As a result of the Company's change in fiscal year end, the fiscal 
     period ended December 28, 1996 comprises nine months.

(11) The amounts shown in this column, unless otherwise indicated, represent 
     the Company's annual contribution  to the Maxtor Savings Retirement 
     Plan, a 401(k) plan.  All U.S. employees are eligible to participate in 
     this plan.

AGREEMENTS WITH EXECUTIVE OFFICERS

 In July 1996, the Company entered into a letter agreement with Mr. Michael 
R. Cannon, its current President and Chief Executive Officer, relating to 
terms of his employment, his initial level of compensation and payment of 
certain compensation in the event of his termination from the Company under 
certain circumstances.  The agreement provides for base compensation of 
$500,000 per year; payment of a sign-on bonus of $1,000,000, payable in four 
equal quarterly installments beginning on the last day of December, 1996; an 
annual bonus opportunity of approximately $250,000; and the grant of options 
to purchase 900,000 shares of the Company's Common Stock vesting over a four 
(4) year period.  The letter agreement further provides that in the event Mr. 
Cannon is terminated by the Company without cause, the Company shall pay Mr. 
Cannon the equivalent of one year's base salary plus any portion of the 
sign-on bonus remaining unpaid as of the date of such termination.

In August 1996, the Company entered into a letter agreement with Mr. Paul J. 
Tufano, its current Vice President, Finance and Chief Financial Officer, 
relating to terms of his employment, his initial level of compensation and 
payment of certain compensation in the event of his termination from the 
Company under certain circumstances.  The agreement provides for base 
compensation of $230,000 per year; payment of a sign-on bonus of $100,000, 
payable in two equal installments in July 1996 and January 1997; an annual 
bonus opportunity of approximately $115,000; and the grant of options to 
purchase 100,000 shares of the Company's Common Stock vesting over a four (4) 
year period.  The letter agreement further provides that in the event Mr. 
Tufano is terminated by the Company without cause, the Company shall pay Mr. 
Tufano the equivalent of  nine months' base salary plus any portion of the 
sign-on bonus remaining unpaid as of the date of such termination.

In January 1997, the Company entered into a letter agreement with Mr. William 
Roach, its Senior Vice President, Worldwide Sales and Marketing, relating to 
terms of his employment, his initial level of compensation, and a loan and 
associated repayment terms.  The agreement provides for base compensation of 
$350,000 per year; a $350,000 loan, forgivable on a prorated basis over a 
three-year term; a one-time annual bonus between approximately $175,000 and  
$350,000; and the grant of options to purchase 250,000 shares of the 
Company's Common Stock vesting over a 

                                       52
<PAGE>

four (4) year period.  In accordance with the foregoing agreement, on January 
10, 1997, Mr. Roach delivered to the Company a promissory note in the 
principal amount of $350,000 in exchange for payment to him by the Company of 
the loan amount.  The note provides for forgiveness of one-third of the 
outstanding principal balance on each of the first three anniversary dates of 
his employment, provided that Mr. Roach is an employee of Maxtor on each such 
date.  In addition, the promissory note shall be forgiven in full in the 
event of his termination by the Company for any reason other than willful 
misconduct of a culpable nature.  In the event Mr. Roach voluntarily 
terminates his employment with the Company, the balance then due shall become 
immediately due and payable.



                                       53

<PAGE>

                      STOCK OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth information with respect to stock options 
granted during the fiscal year ended December 27, 1997  to each of the 
executive officers named in the Summary Compensation Table:

<TABLE>
<CAPTION>

                                            INDIVIDUAL GRANTS                          POTENTIAL REALIZABLE
                        ---------------------------------------------------------        VALUE AT ASSUMED
                                        % OF TOTAL                                    ANNUAL RATES OF STOCK
                                          OPTIONS                                     PRICE APPRECIATION FOR
                        NUMBER OF       GRANTED TO                                        OPTION TERM (2) 
                         OPTIONS       EMPLOYEES IN   EXERCISE PRICE   EXPIRATION   -------------------------
NAME                    GRANTED (1)     FISCAL YEAR      PER SHARE        DATE          5%           10%
------                  -----------    ------------   --------------   ----------   ----------   ------------
<S>                     <C>            <C>            <C>              <C>          <C>          <C>
Michael R. Cannon            --             --               --            --            --          --
William F. Roach          250,000          7.70%           $3.00        01/02/07     $ 471,671   $ 1,195,307
Victor B. Jipson             --             --               --            --            --          --
Paul J. Tufano               --             --               --            --            ---         --
Phillip C. Duncan            --             --               --            --            ---         --

</TABLE>

------------------------

(1)  All options were granted under the Company's 1996 Stock Option Plan
     ("Plan").  Options granted under the Plan vest over a four-year period with
     25% vesting at the first anniversary date of the vest date and 6.25% each
     quarter thereafter.  The vesting schedule for new participants begins
     February 1, 1996 or hiring date, whichever is later.  Vested options are
     subject to repurchase by the Company.  The Board retains discretion to
     modify the terms, including the price of outstanding options.

(2)  In January 1996, the Company became a wholly owned subsidiary of HEA.  As
     of the acquisition and merger, trading of Maxtor common stock on the NASDAQ
     National Market was suspended. Currently, there is no public market for the
     Company's equity securities.  The potential realizable value was determined
     by the Company based on calculations of estimated stock appreciation at
     annual growth of 5% and 10%.

                                       54

<PAGE>

                      AGGREGATED FISCAL YEAR-END OPTION VALUES

The following table sets forth information regarding year-end stock option
values for each of the executive officers named in the Summary Compensation
Table for the fiscal year ended December 27, 1997:

<TABLE>
<CAPTION>

                                                              VALUE OF
                               NUMBER OF                     UNEXERCISED
                              UNEXERCISED                   IN-THE-MONEY 
                               OPTIONS AT                    OPTIONS AT
                            FISCAL YEAR END (1)           FISCAL YEAR END (2)
                        -------------------------     --------------------------
NAME                    UNEXERCISABLE  EXERCISABLE    UNEXERCISABLE  EXERCISABLE
----                    -------------  -----------    -------------  -----------
<S>                     <C>            <C>            <C>            <C>
Michael R. Cannon          675,000       225,000           --             --
William F. Roach           250,000            --           --             --
Victor B. Jipson            75,000         25,000          --             --
Paul J. Tufano              75,000         25,000          --             --
Phillip C. Duncan           60,000         20,000          --             --

</TABLE>

There were no option exercises during the twelve months ended December 27, 
1997.

(1)  All options were granted under the Company's 1996 Stock Option Plan
     ("Plan").  Options granted under the Plan vest over a four-year period with
     25% vesting at the first anniversary date of the vest date and 6.25% each
     quarter thereafter.  The vesting schedule for new participants begins
     February 1, 1996 or hiring date, whichever is later.  

(2)  As of December 27, 1997, the exercise price per share was equal to the fair
     market value per share, as determined by the Board of Directors. 
     Therefore, there was no value for unexercised in-the-money options.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

In January 1996, the Company became a wholly owned subsidiary of Hyundai 
Electronics America (HEA).  As of the acquisition, trading of Maxtor common 
stock on the NASDAQ National Market was suspended. Currently, there is no 
public market for the Company's equity securities.  The Company's 5.75% 
convertible subordinated Debentures, due March 1, 2012, $100,000,000 in 
aggregate principal amount,  remain publicly traded.

In June 1996, the Company entered into an exchange agreement with HEA whereby 
HEA exchanged 600 shares of Common Stock for 58,208,955 shares of Series A 
Preferred Stock, $.01 par value.  In December 1997, the Company and HEA 
entered into a Debt Payment and Stock Purchase Agreement pursuant to which 
HEA accepted 29,850,746 new shares of the Corporation's preferred stock as 
payment for $200,000,000 owed to HEA by the Corporation.  As of December 27, 
1997, 88,059,701 shares of Series A Preferred Stock and 15,125 shares of 
Common Stock, $.01 par value, were issued and outstanding.   At March 1, 
1998,  all of the outstanding shares of Series A Preferred Stock were held by 
the parent of the registrant and all outstanding shares of Common Stock were 
held by three individuals who obtained shares upon exercise of options 
granted under the Company's 1996 Stock Option Plan.

In January 1996, the Company became a wholly owned subsidiary of HEA.  As of 
the acquisition, trading of Maxtor common stock on the NASDAQ National Market 
was suspended. Currently, there is no public market for the Company's equity 
securities.  The Company's 5.75% convertible subordinated Debentures, due 
March 1, 2012, remain publicly traded.

                                       55

<PAGE>

                           STOCK OWNERSHIP OF MANAGEMENT
                           AND CERTAIN BENEFICIAL OWNERS

The following table sets forth certain information as of March 1, 1998, with 
respect to the beneficial ownership of Series A Preferred Stock and Common 
Stock of Maxtor by (i) all persons known to Maxtor to be the beneficial 
owners of five percent or more of the outstanding shares of Series A 
Preferred Stock or Common Stock of Maxtor, (ii) each of Maxtor's directors 
and nominees, (iii) each of the executive officers named in the Summary 
Compensation Table and (iv) all executive officers and directors of Maxtor as 
a group.

<TABLE>
<CAPTION>

                                      Number of Shares            Percent of 
                                     Beneficially Owned         Stock Outstanding
                                  -------------------------  ---------------------
Name or Identity of                Series A                                             
Beneficial Owner (1)              Preferred        Common     Preferred     Common (2)
--------------------              ----------     ----------   ---------     ------
<S>                               <C>            <C>          <C>           <C>
Hyundai Electronics               88,059,701     88,059,701     100.0%       96.4%
America,  3101 N. First
Street, San Jose, CA  95134

Mong Hun Chung (3)                     --            20,000       --            *

Dr. Chong Sup Park (3)                 --            20,000       --            *

Charles Hill (3)                       --            20,000       --            *

Y. H. Kim (3)                          --            20,000       --            *

Charles F. Christ (3)                  --            20,000       --            *

Michael R. Cannon (4)                  --           393,750       --            *

Victor B. Jipson (4)                   --            50,000       --            *

William F. Roach (4)                   --            78,125       --            *

Phillip C. Duncan (4)                  --            30,000       --            *

Paul J. Tufano (4)                     --            43,750       --            *

All executive officers
and directors as a
group (17  persons)                    --           780,625       --            *

</TABLE>

* Less than one percent (1%)

------------------------

(1)  The persons named in the table have sole voting and investment power 
with respect to all shares of Series A Preferred Stock and Common Stock shown 
as beneficially owned by them, subject to community property laws where 
applicable and the information contained in the footnotes to this table.

(2)  Calculated based on the total number of shares of Common Stock 
outstanding, Series A Preferred Stock outstanding which are convertible into 
shares of Common Stock, and shares subject to options granted under the 
Company's 1996 Stock Option Plan which are exercisable through May 1, 1998.

(3)  Includes 20,000 shares subject to an option granted under the Company's 
1996 Plan exercisable February 1998 and are subject to a right of repurchase 
by the Company.

(4)  All shares subject to an option granted under the Company's 1996 Plan 
and are subject to a right of repurchase by the Company.

                                       56

<PAGE>

For stock options issued to Directors and Officers under the 1996 Stock 
Option Plan, see Item 11:  Directors and Executive Compensation on page 50.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

For information concerning related party financing arrangements with HEA, 
refer to Part II, Item 8, Footnotes to Consolidated Financial Statements, 
Footnote 7, pages 32 - 33.

In December 1997, the Company and HEA entered into a Debt Payment and Stock 
Purchase Agreement pursuant to which HEA accepted 29,850,746 new shares of 
the Corporation's preferred stock as payment for $200,000,000 owed to HEA by 
the Corporation.  In June 1996, the Company entered into an exchange 
agreement with HEA whereby HEA exchanged 600 shares of Common Stock for 
58,208,955 shares of Series A Preferred Stock, $.01 par value.  As of March 
1, 1998, 88,059,701shares of Series A Preferred Stock and 15,125 shares of  
Common Stock, $.01 par value, were issued and outstanding. As of March 1, 
1998, all outstanding shares of Series A Preferred Stock were held by HEA, 
and all outstanding shares of Common Stock issued pursuant to the Corporation 
1996 Stock Option Plan were held by three individuals. 

In May 1996, the Company entered into an agreement to sell a majority 
interest in International Manufacturing Services, Inc. (IMS) to certain IMS 
management and other investors (Buyer).  At completion of the transaction in 
June 1996, the Company received $25 million in cash and $20 million in notes 
from IMS, and retained a 23.5% ownership interest in IMS. On October 22, 
1997, IMS completed am Initial Public Offering (IPO) of 5 million common 
shares at a price of $11.50 per share.  Under the terms of the note due to 
the Company, if the proceeds of the IPO are in excess of 45 million, IMS 
would be required to pay both principal and interest on the note.  The note 
and its related interest, which aggregated $20.1 million, was paid in full as 
of October 28, 1997.  As of December 27, 1997 the Company's ownership 
interest in IMS was 16%.

IMS supplies the Company with printed circuit board assemblies (PCBA), 
sub-assemblies and fully integrated box-build products under a manufacturing 
services agreement.  Former officers of the Company, Robert Behlman 
(President and CEO of IMS) and Nathan Kawaye (formerly Vice President and 
Chief Financial Officer of the Company), have left the Company and hold 
executive positions at IMS.

It is the Company's policy to enter into indemnification agreements with its 
officers and directors, (the "Agreements").  Pursuant to the Agreements, the 
Company has agreed to indemnify its officers and directors to the maximum 
extent permitted under Delaware law.

For information concerning severance and indebtedness arrangements with 
officers of the Company, refer to Part III, Item 11, Director and Executive 
Compensation, pages 44 - 45.

                                       57

<PAGE>

                                      PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)  The following documents are filed as part of this report:

     (1) Financial Statements and Financial Statement Schedules - See Index to
         Consolidated Financial Statements under Item 8 on page 20 of this
         report.
               
     (2) Exhibits
         See Index to Exhibits on pages 61 TO 72 hereof.


                                       58

<PAGE>

                                     SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, in the City of 
Milpitas, State of California, on the 9th day of April, 1998.

                                                MAXTOR CORPORATION
                                                  (Registrant)

                                        By /s/ Michael R. Cannon
                                           --------------------------
                                               Michael R. Cannon
                                               President, Chief Executive
                                               Officer, and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this 
report has been signed below by the following persons on behalf of the 
registrant and in the capacities and on the dates indicated.

Signature                      Title                             Date
---------                     ------                             -----

/s/ Michael R. Cannon         President, Chief Executive         April 9, 1998
------------------------      Officer, and Director
Michael R. Cannon


/s/ Paul J. Tufano            Vice President, Finance,           April 9, 1998
------------------------      Chief Financial Officer and 
Paul J. Tufano                Principal Accounting Officer


/s/ Mong Hun Chung            Chairman of the Board              April 9, 1998
------------------------      
Mong Hun Chung

/s/ Chong Sup Park            Vice Chairman of the Board         April 9, 1998
------------------------      
Dr. Chong Sup Park


/s/ Charles Hill              Director                           April 9, 1998
------------------------      
Charles Hill


/s/ Charles F. Christ         Director                           April 9, 1998
------------------------      
Charles F. Christ


/s/ Y. H. Kim                 Director                           April 9, 1998
------------------------      
Y. H. Kim


/s/ Philip S. Paul            Director                           April 9, 1998
------------------------      
Philip S. Paul


                                       59

<PAGE>

<TABLE>
<S>         <C>
 2.1  (31)  Agreement and Plan of Merger dated November 2, 1995 between
            Registrant, Hyundai Electronics America and Hyundai
            Acquisition, Inc.

 3.1  (6)   Certificate of Incorporation

 3.2  (8)   Certificate of Amendment of Certificate of Incorporation of
            Maxtor Corporation, dated December 23, 1987

 3.3  (8)   By-Laws as amended July 21, 1987

 3.4  (21)  Amended and Restated By-Laws of Maxtor Corporation, A
            Delaware Company, effective February 3, 1994

 3.5  (21)  Restated Certificate of Incorporation of Maxtor Corporation
            effective February 3, 1994

 3.6  (36)  Amended and Restated Certificate of Incorporation of Maxtor
            Corporation, dated June 6, 1996    

 3.7  (36)  Amended and Restated By-Laws, effective May 14, 1996   

 3.8  (37)  Exchange Agreement effective June 18, 1996, between Maxtor
            Corporation and Hyundai Electronics America  

 4.1  (3)   Form of Certificate of Shares of Registrant's Common Stock

 4.2  (7)   Maxtor Corporation Rights Plan

 4.3  (22)  Amendment to Rights Agreement between Registrant and the
            First National Bank of Boston, dated September 10, 1993

 4.4  (32)  Amendment No. 2 to Rights Agreement between Registrant and the First
            National Bank of Boston, dated November 2, 1995.

10.1  (1)   Omnilease Corporation Master Lease Agreement No. 300362,
            dated as of January 14, 1983 and addenda thereof

10.2  (1)   Lease Agreement between Orchard Investment Company No. 801,
            formerly Nelo, a California general partnership and Registrant, 
            dated March 23, 1984

10.3  (1)   Lease Commitment between Walter E. Heller & Company and
            Registrant, dated as of March 11, 1985

10.4  (1)   Stock Purchase Agreement between Steven P. Kitrosser and
            Registrant, dated May 21, 1985

10.5  (1)   Stock Purchase Agreement between James McCoy and Registrant,
            dated May 21, 1985

10.6  (1)   Equipment Lease Agreement between Pacific Western (formerly
            Pacific Valley) Bank and Registrant, dated June 26, 1985

10.7  (1)   Continuing Guaranty between Maxtor Singapore Limited and
            Bank of America N.T. & S.A., dated July 27, 1985

</TABLE>
                                       60

<PAGE>

<TABLE>
<S>         <C>

10.8  (9)   Lease Agreement between John Arrillaga, Separate Property
            Trust, Richard T. Perry, Separate Property Trust and
            Registrant, dated August 27, 1986

10.9  (3)   Marketing and Distribution Agreement between Ricoh Company,
            Ltd. and Registrant, dated October 14, 1986

10.10 (3)   Land Lease Agreement between Housing and Development
            Board, Singapore and Maxtor Singapore Limited, dated
            December 22, 1986

10.11 (3)   Indenture dated February 16, 1987

10.12 (8)   Stock Bonus Plan and Cash Bonus Plan between Storage
            Dimensions, Inc. and Registrant dated June 15, 1987

10.13 (8)   Merger Agreement between MAXSUB II, Inc., and Storage
            Dimensions, Inc. dated October 26, 1987

10.14 (3)   1986 Outside Directors' Stock Option Plan

10.15 (3)   Commitment from Union Bank to Registrant regarding letters of 
            credit for the benefit of the officers and directors of 
            the Registrant

10.16 (4)   Agreement and Plan of Reorganization

10.17 (9)   Revised Equipment Lease Agreement between Capital Associates 
            International, Inc. and Registrant, dated September 28, 1988

10.18 (9)   Credit Agreement between Bank of America National Trust
            and Savings Association and Registrant, dated October 18, 1988

10.19 (9)   Equipment Lease Agreement between Pitney Bowes Credit
            Corporation and Registrant, dated November 2, 1988

10.20 (9)   Equipment Lease Agreement between Concord Leasing (Asia) Pte Ltd.
            and Maxtor Singapore, Limited, dated November 16, 1988

10.21 (9)   Lease Agreement between Maxtor Singapore, Limited and
            Jurong Town Corporation, dated November 16, 1988

10.22 (9)   Lease Agreement between Greylands Business Park Phase II and 
            Storage Dimensions, Inc., dated December 14, 1988

10.23 (8)   Stock Purchase Agreement among Registrant, Storage Dimensions, Inc.,
            David A. Eeg, Gene E. Bowles, Jr., David P. Williams and David 
            Lance Robinson

10.24 (8)   Fiscal 1988 Stock Option Plan

10.25 (8)   Employee Stock Purchase Plan

10.26 (8)   Dual Currency Loan Agreement between Maxtor Singapore Limited, 
            Maxtor Delaware, Maxtor California and American Express Bank Limited

10.27 (8)   Amended and Restated Fiscal 1985 Stock Option Plan, including the 
            Immediately Exercisable Incentive Stock Option Agreement and the 
            Immediately Exercisable Nonqualified Stock Option Agreement

</TABLE>

                                       61

<PAGE>
<TABLE>
<S>         <C>

10.28 (9)   Loan Agreement between Probo Pacific Pte Ltd. and
            Maxtor Singapore Limited, dated March 20, 1989

10.29 (9)   Loan Agreement between Concord Leasing (Asia) Pte, Ltd.
            and Maxtor Singapore Limited, dated April 14, 1989

10.30 (10)  Product Discontinuance Agreement between Matsushita Communication 
            Industrial Co., Ltd. (MCI) and Registrant, dated August 23, 1989

10.31 (10)  Equipment Lease Agreement between Capital Associates International,
            Inc. and Registrant, dated October 17, 1989

10.32 (10)  Maxoptix Corporation 1989 Stock Option Plan

10.33 (9)   Forms for Promissory Note and Amended and Restated Promissory Note

10.34 (10)  Amended and Restated Credit Agreement between Bank of America 
            National Trust and Savings Association and Registrant, dated 
            January 31, 1990

10.35 (10)  Amendment to Lease Agreement between Orchard Investment Company 
            No. 801, formerly Nelo, a California general partnership, and 
            Registrant, dated February 15, 1990

10.36 (10)  Sublease Agreement between RACAL-VADIC, a Division of
            Racal Data Communications, Inc. ("Sublessor"), and Storage
            Dimensions, Inc. ("Sublessee"), dated February 16, 1990

10.37 (10)  Collateral Sharing and Subordination Agreement between
            Registrant and Standard Chartered Bank, dated April 5, 1990

10.38 (10)  Loan and Security Agreement between Registrant and
            MiniScribe Corporation, dated April 5, 1990

10.39 (11)  Agreement for the Sale and Purchase of Shares in Tratford Pte. Ltd.
            between the Registrant, MiniScribe Peripherals (Pte) Ltd. and 
            certain Individuals, dated May 8, 1990

10.40 (11)  Agreement for the Sale and Purchase of Shares in Silkmount Limited 
            between MaxSub Corporation, Silkmount Limited and certain 
            Individuals, dated May 18, 1990

10.41 (11)  Assignment of Debt between Registrant, MiniScribe (Hong
            Kong) Limited and certain Individuals, dated May 18, 1990

10.42 (10)  Asset Purchase Agreement between Registrant, MiniScribe
            Corporation and Standard Chartered Bank, dated May 30, 1990

10.43 (14)  License Agreement with Rodime PLC, dated December 8, 1987 
            assigned to Registrant on June 29, 1990

10.44 (14)  Patent Cross License Agreement with IBM dated October 1, 1984 
            assigned to Registrant effective June 30, 1990

10.45 (14)  Lease Agreement between MiniScribe Corporation and 345 Partnership 
            dated June 6, 1990, assigned to the Registrant effective 
            June 30, 1990

</TABLE>

                                       62

<PAGE>

<TABLE>
<S>         <C>

10.46 (14)  Lease Agreement between Maxtor Colorado and Pratt
            Partnership (Lot 1A), dated July 5, 1990

10.47 (14)  Lease Agreement between Maxtor Colorado and Pratt
            Partnership (Lot 1C), dated July 5, 1990

10.48 (14)  Lease Agreement between Maxtor Colorado and Pratt
            Partnership (Lot 4), dated July 5, 1990

10.49 (14)  Agreement for the Purchase of Land and Improvements
            between Registrant and Nixdorf, dated August 16, 1990

10.50 (15)  Grant Agreement dated 25 October 1990 between the Industrial 
            Development Authority, Maxtor Ireland Limited and Registrant

10.51 (12)  Amendment of Agreement between Registrant, Maxtor Colorado, Maxtor 
            California and Standard Chartered Bank, dated November 6, 1990

10.52 (14)  Guarantee for Dastek between Registrant, Dastek and
            Silicon Valley Bank, dated November 30, 1990

10.53 (10)  Judgment, William Lubliner vs. Maxtor Corporation, James M. McCoy,
            William J. Dobbin, B.J. Cassin, W. Charles Hazel and 
            George M. Scalise

10.54 (10)  Settlement Agreement, William Lubliner vs. Maxtor Corporation, et al

10.55 (10)  Fiscal 1991 Profit Sharing Plan Document

10.56 (10)  Board of Director Compensation Approved for Fiscal 1991

10.57 (14)  Resignation Agreement and General Release of Claims between 
            Alexander E. Malaccorto and the Registrant, dated January 11, 1991

10.58 (14)  Employment Agreement between James M. McCoy and
            Registrant, dated January 17, 1991

10.59 (14)  Resignation Agreement and General Release of Claims between 
            James N. Miler and the Registrant, dated January 20, 1991

10.60 (14)  Letter Agreement between George Scalise and the
            Registrant, dated February 22, 1991

10.61 (14)  Resignation Agreement and General Release of Claims between 
            Steven Strain and the Registrant, dated February 22, 1991

10.62 (14)  Foothill Capital Credit Facility between Registrant, Certain of its 
            Subsidiaries and Foothill Capital Corporation, dated April 22, 1991

10.63 (14)  Employment Agreement between Laurence Hootnick and Registrant, 
            dated May 3, 1991

10.64 (14)  Employment Agreement between Roger Nordby and Registrant, 
            dated May 7, 1991

10.65 (14)  Employment Agreement between Thomas F. Burniece and the Registrant, 
            dated May 12, 1991

</TABLE>

                                       63

<PAGE>

<TABLE>
<S>         <C>

10.66 (15)  Amendment of the Registrant's Continuing Guarantee in favor of 
            Foothill Capital Corporation, dated July 10, 1991

10.67 (15)  Settlement, Resignation and General Release of Claims between 
            Registrant and Taroon C. Kamdar, dated August 2, 1991

10.68 (15)  Amendment of Registrant's Continuing Guarantee in favor
            of Foothill Capital Corporation, dated August 9, 1991

10.69 (15)  Amendment No. 1 to Lease by and between John Arrillaga,
            Trustee, and Richard T. Peery, Trustee, and Registrant,
            dated August 23, 1991

10.70 (15)  Amendment of Registrant's Continuing Guarantee in favor
            of Foothill Capital Corporation, dated September 20, 1991

10.71 (13)  Amendment of Agreement between Registrant, Maxtor Colorado, Maxtor 
            California and Standard Chartered Bank, dated December 27, 1990, 
            and further amended July 26, 1991 and October 4, 1991

10.72 (15)  Lease Agreement between Registrant and Devcon
            Associates 31, dated December 6, 1991

10.73 (15)  Deed of Partial Discharge and Release between Barclays Bank PLC 
            and Maxtor Singapore Limited, dated December 19, 1991

10.74 (15)  Agreement for Purchase and Sale of Assets among Registrant, 
            Read-Rite International, Read-Rite Corporation and Maxtor 
            Singapore Limited, dated November 14, 1991, and amended 
            December 20, 1991

10.75 (15)  Asset Purchase Agreement among Registrant, Storage Dimensions, Inc.
            and USD Acquisition, Inc., dated December 27, 1991

10.76 (15)  Resignation Agreement and General Release of Claims
            between Registrant and David S. Dury, dated January 31, 1992

10.77 (15)  Sublease between Registrant and Hauser Chemical
            Research, Inc., dated March 23, 1992

10.78 (15)  First Amendment to Lease Agreement between PCA San Jose
            Associates and Registrant, dated March 25, 1992

10.79 (15)  Asset Purchase Agreement among Registrant, Maxtor Singapore LTD.,
            and Sequel, Inc., dated March 12, 1992, and amended March 25, 1992

10.80 (5)   Fiscal 1992 Stock Option Plan

10.81 (15)  Form of Indemnity Agreement between the Registrant and
            each of its Directors and Executive Officers

10.82 (15)  Maxtor/Sequel 8K/Panther Subcontract Manufacturing and
            Warranty Services Agreement, dated March 23, 1992

10.83 (15)  Maxtor Corporation 1992 Employee Stock Purchase Plan

10.84 (15)  Maxtor Corporation 1991 Employee Stock Purchase Plan

10.85 (15)  Maxtor Corporation FY'93 Incentive Plan Summary

</TABLE>

                                       64

<PAGE>
<TABLE>
<S>         <C>

10.86  (15) Fiscal 1992 Profit Sharing Plan Document

10.87  (17) Security Agreement between Registrant and Chrysler
            Capital Corporation, dated April 14, 1992

10.88  (17) Subordination, Non-Disturbance, Estoppel and Attornment Agreement 
            between Loma Mortgage USA, Inc. and Registrant, dated June 4, 1992

10.89  (17) Office Lease between Cabot Associates and Registrant,
            dated July 23, 1992

10.90  (17) Revolving Credit Agreement among Registrant, Barclays Bank PLC and 
            The First National Bank of Boston, dated as of September 9, 1992

10.91  (17) Security Agreement between Registrant and the CIT
            Group/Equipment Financing, Inc., dated September 18, 1992

10.92  (17) Deed of Priorities among Maxtor (Hong Kong) Limited, Registrant and 
            General Electric Capital Corporation, dated September 25, 1992

10.93  (17) Lease among Dares Developments (Woking) Limited, Maxtor
            Europe Limited and Registrant, dated October 1992

10.94  (16) Stock Purchase and Asset Acquisition Agreement among David A. Eeg, 
            Gene E. Bowles, Jr., CP Acquisition, L.P. No. 4A, CP Acquisition, 
            L.P. No. 4B, Capital Partners, Inc., FGS, Inc., Registrant, Storage 
            Dimensions, Inc. and SDI Acquisition Corporation, dated 
            December 4, 1992

10.95  (17) Loan and Security Agreement between Registrant and
            Household Bank, f.s.b., dated December 11, 1992

10.96  (17) Global Master Rental Agreement between Comdisco, Inc.
            and Registrant, dated December 16, 1992

10.97  (17) Amendment No. 1 to Lease between Devcon Associates 31
            and Registrant, dated December 21, 1992

10.98  (17) Continuing Guaranty among Maxtor Peripherals (S) Pte., Ltd., 
            Barclays Bank PLC and Registrant, dated January 26, 1993

10.99  (17) Amendment No. 2 to Lease between Devcon Associates 31
            and Registrant, dated February 1, 1993

10.100 (17) Instrument of Resignation, Appointment and Acceptance among 
            Registrant, The First National Bank of Boston and Bank of America 
            National Trust and Savings, dated as of March 22, 1993

10.101 (17) Waiver and First Amendment to Credit Agreement among Registrant, 
            Barclays Bank PLC and the First National Bank of
            Boston, dated as of April 16, 1993

10.102 (17) Waiver and First Amendment to Continuing Guaranty Among Registrant,
            Barclays Bank PLC and the Lenders dated as of April 19, 1993

10.103 (17) Security Agreement between Registrant and Barclays Bank PLC, 
            dated April 16, 1993

10.104 (17) Lease Agreement between Registrant and Pratt Partnership, dated 
            April 30, 1993

</TABLE>

                                       65

<PAGE>

<TABLE>
<S>         <C>

10.105 (17) Agreement for Stock Transfer Services between Registrant and The 
            First National Bank of Boston, dated May 6, 1993

10.106 (17) Maxtor Corporation CY93 Profit Sharing Plan

10.107 (17) Maxtor Corporation Management Incentive Plan for CY93

10.108 (18) Production Agreement between International Business Machines 
            Corporation and Registrant, dated July 27, 1993 (with certain 
            information deleted and indicated by blackout text)

10.109 (19) Letter of Intent between Registrant and Hyundai
            Electronics Co., Ltd., dated August 18, 1993

10.110 (20) Financing Agreement between Registrant and The CIT
            Group/Business Credit, Inc., dated September 16, 1993

10.111 (21) Form Letter Agreement between Registrant and All of Its Named 
            Executive Officers, except Laurence Hootnick, dated 
            November 17, 1993

10.112 (21) Waiver to Financing Agreement among Registrant and The
            CIT Group/Business Credit, Inc., dated January 12, 1994

10.113 (21) Stock Purchase Agreement between Registrant and Hyundai Electronics 
            Industries Co., Ltd., Hyundai Heavy Industries Co., Ltd., Hyundai 
            Corporation, and Hyundai Merchant Marine Co., Ltd., dated 
            September 10, 1993

10.114 (22) Confidential Resignation Agreement and General Release of Claims 
            between Registrant and Thomas F. Burniece III, dated 
            February 4, 1994
     
10.115 (22) License Agreement between Registrant and MiniStor
            Peripherals Corporation, dated February 23, 1994

10.116 (22) Confidential Resignation Agreement and General Release of Claims 
            between Registrant and John P. Livingston, dated April 8, 1994

10.117 (22) Tenancy Agreement between Barinet Company Limited and
            Maxtor (Hong Kong) Limited, dated April 26, 1994

10.118 (23) Confidential Resignation Agreement and General Release of Claims 
            between Registrant and Laurence R. Hootnick, dated June 14, 1994

10.119 (23) Confidential Resignation Agreement and General Release of Claims
            between Registrant and Mark Chandler, dated June 28, 1994

10.120 (24) Amendment No.2 to Lease between John Arrillaga & Richard T. Peery 
            and Registrant, dated June 28, 1994

10.121 (24) Amendment No. 3 to Lease between Devcon Associates 31 and 
            Registrant, dated June 28, 1994

10.122 (24) Confidential Resignation Agreement and General Release of Claims
            between Registrant and Skip Kilsdonk, dated September 7, 1994

10.123 (24) Confidential Resignation Agreement and General Release of Claims
            between Registrant and Sallee Peterson, dated September 23, 1994

</TABLE>

                                       66

<PAGE>

<TABLE>
<S>          <C>  


10.124 (24) Waiver to Financing Agreement among Registrant and The CIT 
            Group/Business Credit, Inc., dated October 11, 1994

10.125 (24) Amendment No. 1 to Financing Agreement between Registrant and 
            The CIT Group/Business Credit, Inc., dated October 31, 1994

10.126 (27) License agreement between Registrant and NEC Corporation, 
            dated October 18, 1994

10.127 (27) Lease Agreement for Premises Located at 1821 Lefthand Circle, 
            Suite D, between Registrant and Pratt Land Limited Liability 
            Company, dated October 19, 1994

10.128 (27) Lease Agreement for Premises Located at 1841 Lefthand Circle 
            between Registrant and Pratt Land Limited Liability Company, 
            dated October 19, 1994

10.129 (27) Lease Agreement for Premises Located at 1851 Lefthand Circle 
            between Registrant and Pratt Land Limited Liability Company, 
            dated October 19, 1994

10.130 (27) Lease Agreement for Premises Located at 2121 Miller Drive 
            between Registrant and Pratt Land Limited Liability Company, 
            dated October 19, 1994

10.131 (27) Lease Agreement for Premises Located at 2190 Miller Drive 
            between Registrant and Pratt Land Limited Liability Company, 
            dated October 19, 1994

10.132 (27) Confidential Resignation Agreement and General Release of 
            Claims between Registrant and Patricia M. Roboostoff, dated 
            November 30, 1994

10.133 (27) Stock Purchase Agreement between Registrant, Maxoptix 
            Corporation and Kubota Electronics America Corporation, dated 
            December 26, 1994

10.134 (28) Confidential Resignation Agreement and General Release of 
            Claims between Registrant and Larry J. Smart, dated February 
            7, 1995

10.135 (28) Lease Agreement by and between 345 Partnership and 
            Registrant, dated February 24, 1995

10.136 (28) Lease Agreement for Premises Located at 1900 Pike Road, Suite 
            A Longmont, CO, between Registrant as Tenant and Pratt Land 
            Limited Liability Company as Landlord, dated February 24, 1995

10.137 (28) Lease Agreement for Premises Located at 2040 Miller Drive 
            Suite A, B, & C between Registrant as Tenant and Pratt Land 
            Limited Liability Company as Landlord, dated February 24, 1995

10.138 (28) Manufacturing and Purchase Agreement by and Between 
            Registrant and Hyundai Electronics Industries Co., Ltd., 
            dated April 27, 1995 (with certain information deleted and 
            indicated by blank spaces)

10.139 (28) Lease Agreement for Premises Located at 2040 Miller Drive, 
            Suites D, E, & F, Longmont, CO, between Registrant as Tenant 
            and Pratt Management Company, LLC as Landlord


                                       67
<PAGE>


10.140 (29) Memorandum of Understanding concerning Guarantee by Hyundai 
            Electronics Co., Ltd. of Credit Facility for Registrant, 
            dated July 17, 1995

10.141 (29) Waiver to Financing Agreement among Registrant and The CIT 
            Group/Business Credit, Inc., dated August 2, 1995

10.142 (33) Credit Agreement among Registrant and The Initial Lenders and 
            the Issuing Bank and Citibank, N.A., dated August 31, 1995

10.143 (33) The Guaranty and Recourse Agreement among Registrant and 
            Hyundai Electronics Industries Co., Ltd., dated August 31, 
            1995

10.144 (33) Waiver to Financing Agreement among Registrant and the CIT 
            Group/Business Credit, Inc., and Assignment Agreement among  
            Registrant, the CIT Group/Business Credit, Inc., and Finova 
            Capital Corporation, dated October 11, 1995.

10.145 (33) Amendment to the Financing Agreement among Registrant and the 
            CIT Group/Business Credit, Inc., dated October 17, 1995

10.146 (34) First Supplemental Indenture, dated as of January 11, 1996, 
            between Maxtor and State Street Bank and Trust Company

10.147 (34) Credit Agreement, dated as of December 29, 1995 between 
            Maxtor Corporation and Hyundai Electronics America

10.148 (25) Maxtor Corporation 1995 Stock Option Plan

10.149 (26) Maxtor Corporation Individual Stock Option Agreement, dated 
            November 8, 1994

10.150 (30) Maxtor Corporation 1992 Employee Stock Purchase Plan and 1996 
            Outside Directors Stock Option Plan, dated October 9, 1995

10.151 (36) Maxtor Corporation 1996 Stock Option Plan**

10.152 (36) Intercompany Loan Agreement, dated as of April 10, 1996, 
            between Maxtor Corporation and Hyundai Electronics America

10.153 (36) Excerpts from the Execution Copy of Receivables Purchase and 
            Sale Agreement, dated as of March 30, 1996, between Maxtor 
            Corporation and Corporate Receivables Corporation and 
            Citicorp North America, Incorporated

10.154 (35) Recapitalization Agreement among the Company, International 
            Manufacturing Services, Incorporated and certain investors, 
            dated as of May 21, 1996

10.155 (35) Redemption Agreement between Maxtor Corporation and 
            International Manufacturing Services, Incorporated, dated as 
            of May 21, 1996 

10.156 (35) Manufacturing Services Agreement between Maxtor Corporation 
            and International Manufacturing Services, Incorporated, dated 
            June 13, 1996* 

10.157 (37) Credit Facility, dated as of July 31, 1996, between 
            Maxtor Corporation and Hyundai Electronics America  

10.158 (38) 364-Day Credit Agreement, dated August 29, 1996, among Maxtor 
            Corporation, Citibank, N.A., and Syndicate Banks

                                       68

<PAGE>

10.159 (38) Credit Agreement, dated August 29, 1996, among Maxtor 
            Corporation, Citibank, N.A., and Syndicate Banks

10.160 (39) Employment Agreement between Michael R. Cannon and 
            Registrant, dated June 17, 1996**

10.161 (39) Employment Agreement between Paul J. Tufano and Registrant, 
            dated July 12, 1996**

10.162 (39) Employment Agreement between William Roach and Registrant, 
            dated December 13, 1996**

10.163 (40) Intercompany Loan Agreement, dated as of April 10, 1997, 
            between Maxtor Corporation and Hyundai Electronics America

10.164      Debt Payment and Stock Purchase Agreement, dated as of           
            December 12, 1997, between Maxtor Corporation and Hyundai 
            Electronics America

10.165      Amendment to August 29, 1996 364-Day Credit Agreement, dated     
            August 27,  1997,  among Maxtor Corporation, Citibank, N.A. 
            and Syndicate Banks

10.166      Amendment and Restatement 1996 Stock Option Plan, effective
            October 1, 1997

23.1        Consent of Independent Accountants                               

23.2        Consent of Independent Auditors

27          Financial Data Schedule                                          

</TABLE>

*           Confidential treatment has been requested for portions of this
            document

**          Management contract, or compensatory plan or arrangement
-------------------------------------------------------------------------


(1)  Incorporated by reference to exhibits to Registration Statement No. 
     2-98568 effective August 7, 1985

(2)  Incorporated by reference to exhibits to Registration Statement No. 
     33-4092 effective April 2, 1986

(3)  Incorporated by reference to exhibits to Registration Statement No. 
     33-12123 effective February 26, 1987

(4)  Incorporated by reference to exhibits to Registration Statement No. 
     33-12768 effective April 23, 1987

(5)  Incorporated by reference to exhibits to Registration Statement No. 
     33-43172 effective October 7, 1992

(6)  Incorporated by reference to exhibits to Registration Statement No. 
     33-8607 effective September 10, 1986

(7)  Incorporated by reference to exhibits of Form 8-K filed February 8, 1988

(8)  Incorporated by reference to exhibits to Annual Report on Form 10-K 
     effective June 24, 1988

(9)  Incorporated by reference to exhibits to Annual Report on Form 10-K 
     effective June 24, 1989

(10) Incorporated by reference to exhibits to Annual Report on Form 10-K 
     effective June 1, 1990 

(11) Incorporated by reference to exhibits of Form 8-K filed July 13, 1990

(12) Incorporated by reference to exhibits of Form 8 filed November 13, 1990

(13) Incorporated by reference to exhibits of Form 8 filed January 8, 1991

(14) Incorporated by reference to exhibits to Annual Report on Form 10-K 
     effective July 15, 1991

(15) Incorporated by reference to exhibits to Annual Report on Form 10-K 
     effective June 25, 1992

(16) Incorporated by reference to exhibits of Form 8-K filed January 8, 1993

(17) Incorporated by reference to exhibits to Annual Report on Form 10-K 
     effective May 27, 1993

(18) Incorporated by reference to exhibits of Form 10-Q filed August 10, 1993

(19) Incorporated by reference to exhibits of Form 8-K filed August 19, 1993

(20) Incorporated by reference to exhibits of Form 10-Q filed November 8, 1993

(21) Incorporated by reference to exhibits of Form 10-Q filed February 7, 1994

(22) Incorporated by reference to exhibits of Form 10-K filed June 24, 1994

(23) Incorporated by reference to exhibits of Form 10-Q filed August 5, 1994

(24) Incorporated by reference to exhibits of Form 10-Q filed November 8, 1994

(25) Incorporated by reference to exhibits to Registration Statement No. 
     33-56405 effective November 10, 1994

(26) Incorporated by reference to exhibits to Registration Statement No. 
     33-56407 effective November 10, 1994

(27) Incorporated by reference to exhibits of Form 10-Q filed February 7, 1995


                                       69

<PAGE>

(28) Incorporated by reference to exhibits to Annual Report on Form 10-K 
     effective June 23, 1995

(29) Incorporated by reference to exhibits of Form 10-Q filed August 14, 1995

(30) Incorporated by reference to exhibits to Registration Statement No. 
     33-63295 effective October 10, 1995

(31) Incorporated by reference to exhibit III of Schedule 14D-9 filed 
     November 9, 1995

(32) Incorporated by reference to exhibit VI of schedule 14D-9 filed November 
     9, 1995

(33) Incorporated by reference to exhibits of Form 10-Q filed November 14, 
     1996

(34) Incorporated by reference to exhibits of Form 10-Q filed February 14, 
     1996

(35) Incorporated by reference to exhibits of Form 8-K filed June 28, 1996

(36) Incorporated by reference to exhibits of Form 10-K filed July 1, 1996

(37) Incorporated by reference to exhibits of Form 10-Q filed August 13, 1996

(38) Incorporated by reference to exhibits of Form 8-K filed September 13, 
     1996

(39) Incorporated by reference to exhibits of Form 10-K filed March 26, 1997

(40) Incorporated by reference to exhibits of Form 10-Q filed May 12, 1997


                                       70


<PAGE>

                                 MAXTOR CORPORATION


                                                                SCHEDULE II

                         VALUATION AND QUALIFYING ACCOUNTS

                                   (In thousands)

                          Allowance for Doubtful Accounts

<TABLE>
<CAPTION>

                                       ADDITIONS
                        BALANCE AT     CHARGED TO    DEDUCTIONS/    BALANCE AT
                        BEGINNING       COST AND     (RECOVERIES)    END OF
FISCAL YEAR ENDED       OF PERIOD       EXPENSES         [1]         PERIOD
-----------------       ---------     ----------     ------------   ----------
<S>                     <C>           <C>            <C>            <C>
December 27, 1997        $5,255         $1,000         $2,682         $3,573

December 28, 1996        $5,196         $1,355         $1,296         $5,255

March 30, 1996           $3,850         $1,232         $(114)         $5,196

</TABLE>

[1] Uncollectible accounts written off, net of recoveries


                                       S-1