<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 June 29, 2001

      [_] 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 000-31859

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

                            CRYSTAL DECISIONS, INC.
            (Exact name of registrant as specified in its charter)

                    Delaware                               77-0537234
         (State or other jurisdiction of                (I.R.S. Employer
         incorporation or organization)              Identification Number)

     895 Emerson St., Palo Alto, California                   94301
    (Address of principal executive offices)               (Zip Code)

                           Telephone: (650) 838-7410
             (Registrant's telephone number, including area code)

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

          Securities registered pursuant to Section 12(g) of the Act:
                       Common stock, par value of $0.001

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

   Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X]  No [_]

   Indicate by check mark 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 the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment of this Form 10-K. [X]

   On August 24, 2001, 75,468,204 shares of the registrant's common stock,
$0.001 par value per share, were issued and outstanding.


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

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

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

                          ANNUAL REPORT ON FORM 10-K

                    For the Fiscal Year Ended June 29, 2001

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                Page
                                            PART I                                              ----
<S>                                                                                             <C>
Item 1.   Business.............................................................................   3
Item 2.   Properties...........................................................................  10
Item 3.   Legal Proceedings....................................................................  10
Item 4.   Submission of Matters to a Vote of Security Holders..................................  11
                                            PART II
Item 5.   Market for Registrant's Common Equity and Related Stockholder Matters................  11
Item 6.   Selected Financial Data..............................................................  11
Item 7.   Management's Discussion and Analysis of Financial Condition and Results of Operations  12
Item 7A. Quantitative and Qualitative Disclosures About Market Risk............................  41
Item 8.   Financial Statements and Supplementary Data..........................................  43
Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.  82
                                           PART III
Item 10.  Directors and Executive Officers of the Registrant...................................  82
Item 11.  Executive Compensation...............................................................  84
Item 12.  Security Ownership of Certain Beneficial Owners and Management.......................  88
Item 13.  Certain Relationships and Related Transactions.......................................  89
                                            PART IV
Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.....................  92
SIGNATURES.....................................................................................  95
</TABLE>

                                      2

<PAGE>

                                    PART 1

Item 1. Business.

The Company

   Crystal Decisions, Inc. is an information infrastructure company that
creates software products and provides services for reporting, analysis and
information delivery. We develop, market and support an integrated highly
scalable suite of enterprise software products and solutions that are designed
to enable businesses to access disparate data sources and distribute secure,
interactive reports and analyses across and beyond these organizations. We
believe our solutions provide direct and rapidly achieved benefits including
improved decision-making, lower overall information technology ("IT") costs and
better business performance.

   We operate at the core of a broad industry segment that is often referred to
as "business intelligence." We believe our products meet an extensive range of
data-centric business and organizational needs commonly referred to under a
number of different labels, including information delivery, enterprise
reporting, enterprise business intelligence, enterprise information portals,
developer reporting, ad hoc query and reporting, business analytics, online
analytical processing ("OLAP") reporting, analytic application development and
packaged analytic applications. Our products are designed to help organizations
derive higher business value from their range of electronic data sources and
their enterprise information sources (including, but not limited to, enterprise
resource planning ("ERP"), customer relationship management ("CRM"), eCommerce
and business intelligence systems, as well as data warehouses and data marts).

   We believe we are positioned to take advantage of any acceleration in demand
for enterprise business intelligence across all industries. We believe our
solutions are both easy to use and deploy in smaller projects and powerful
enough for the most complex and large-scale applications. We provide a secure,
web-based information infrastructure that incorporates reporting, analysis,
query and information delivery. We developed our solutions to meet the
increasing demands of global organizations and provide an infrastructure
enabling business users, both inside and outside the organization, to access
interactive content ("reports") through a personalized web-based interface.

   Through our company and its predecessors, we have been providing reporting,
analysis and information delivery technologies and services for over 15 years.
As of June 29, 2001, we have shipped (directly, and bundled with our original
equipment manufacturer ("OEM") partners) over 10 million licenses of our
products worldwide, and our current customer base is diverse, including many
Fortune 1000 companies. While our primary market is North America, we have over
20 offices and operations in 10 countries worldwide, through which we market
and distribute our products. To facilitate international use, we have
translated many of our products into French, German, Japanese, Portuguese,
Italian and Spanish.

   We derive revenues from the sale of licenses for our software products and
from services that support our products, such as technical support, training,
consulting and maintenance. We sell our products through our direct sales force
and certain indirect sales channels, such as distributor and OEM relationships.
Our OEM relationships comprise over 250 hardware and software vendors and
system integrators that incorporate our reporting, analysis and information
delivery solutions as core components of their applications.

Development of Business

   We changed our name to Crystal Decisions, Inc. ("Crystal Decisions") from
Seagate Software Information Management Group Holdings, Inc. in March 2001. We
are incorporated in Delaware and are headquartered in Palo Alto, California.
Our majority shareholder is Seagate Software (Cayman) Holdings ("Suez
Software"), which is a wholly owned subsidiary of New SAC, a Cayman Islands
limited corporation ("New SAC"). Silver Lake Partners L.P. and Texas Pacific
Group control New SAC.

                                      3

<PAGE>

   Silver Lake Partners L.P. is a private investment firm headquartered in
Menlo Park, California and New York, New York, the general partner of which is
Silver Lake Technology Associates, L.L.C. Silver Lake Technology Associates
L.L.C. is a Delaware limited liability company, the managing members of which
are James A. Davidson, Glenn H. Hutchins, David J. Roux and Integral Capital
Partners. Texas Pacific Group is a private investment firm headquartered in
Fort Worth, Texas, which is managed by entities controlled by David Bonderman,
James G. Coulter and William S. Price III.

   We became a majority owned subsidiary of New SAC on November 22, 2000 when
Suez Software acquired 75,001,000 shares, or 99.7%, of our common stock under
the terms of a stock purchase agreement (the "Stock Purchase Agreement").

   Upon consummation of the Stock Purchase Agreement, New SAC, through Suez
Acquisition Company (Cayman) Limited ("Suez Acquisition Company"), purchased
for $1.840 billion cash, including transaction costs of $25 million, all of the
operating assets of Seagate Technology, Inc. ("Seagate Technology") and its
consolidated subsidiaries. This included Seagate Technology's rigid disc drive,
storage area network, removable tape storage solutions businesses and
operations, our common stock, and certain cash balances, but excluded the
approximately 128 million shares of VERITAS Software Corporation ("VERITAS")
common stock then held by Seagate Software Holdings, Inc. ("Seagate Software
Holdings") and certain of Seagate Technology's equity investments. Suez
Acquisition Company was a limited corporation organized under the laws of the
Cayman Islands and was organized solely for the purpose of entering into the
Stock Purchase Agreement with Seagate Technology and Seagate Software Holdings.
At the closing of the transactions contemplated by the Stock Purchase
Agreement, Suez Acquisition Company assigned all of its rights under such
agreements to New SAC.

   Prior to November 22, 2000, we were a majority owned subsidiary of Seagate
Software Holdings, a Delaware corporation and wholly owned subsidiary of
Seagate Technology. Seagate Technology was a data technology company that
provided products for storing, managing and accessing digital information on
computer systems.

   Through the exercise of options to purchase shares of our common stock, we
have minority stockholders who are our current and former employees, or are
other persons affiliated with our parent or subsidiaries. The outstanding
minority interests in our capital stock amounted to approximately 13.0% and
10.5% on a fully converted basis as of June 29, 2001 and June 30, 2000,
respectively. The minority interests consisted of our common stock including
interests related to outstanding options to purchase our common stock granted
pursuant to our 1999 and 2000 Stock Option Plans.

Industry Background

   Over the last decade, many organizations worldwide have invested in a wide
range of data collection systems to help improve operational efficiencies and
more effectively manage their business. There has been significant investment
in ERP, data warehousing and traditional database systems, and most recently an
increased corporate investment in CRM and supply chain management ("SCM")
systems.

   We believe there are common justifications behind the purchase of these
often large and expensive data systems which include:

      1. the need to capture, organize, store and protect critical information
   about specific aspects of corporate performance, such as customer
   information, financial performance, inventory management and employee
   information; and

      2. the need to utilize that captured information for faster, more
   effective planning and execution of business strategies.

                                      4

<PAGE>

   These system investments have been very successful in addressing the first
objective. Today, large volumes of corporate data are captured and processed.
However, we believe that the ability of the average company to utilize this
data to improve the planning and execution aspects of business activities can
present a challenge. The data collection systems may not provide robust
technologies for analyzing and reporting on the information therein. As a
result, we believe companies both large and small struggle with the ability to
efficiently extract information from these diverse systems and present it to
decision-makers at all levels in a manner that is intuitive, interactive and
efficient.

   We believe this creates an "information challenge" for business
organizations. The data is there, but the ability to access and present the
right information from all corporate data systems in a way that improves the
quality and speed of corporate decision-making often is not.

Enterprise Business Intelligence

   Recently, organizations have begun to invest in an additional layer of
technologies to address the information challenge. These technologies offer a
range of functionality and are known by many labels; however, industry analysts
tend to commonly group them under the umbrella label "Enterprise Business
Intelligence" or "EBI". Although broadly defined, the most common requirement
of EBI projects is "reporting"--a need to access and present relevant
information in a meaningful way to users.

   EBI solutions enable business users at many different levels in an
organization to access and manipulate data stored in various business
applications or systems, extract the required information and present it using
easy-to-understand reports, complete with interactive charts, graphs and tables
to aid the user. These reports can then be shared in a secure environment with
business users across the organization, providing users with the tools to make
better, more informed business decisions.

   EBI solutions have evolved considerably over the last decade, such that
today they typically comprise a common set of technologies for reporting, ad
hoc query, multi-dimensional OLAP reporting and analysis, data mining and
statistics. Moreover, we believe these systems now have the capability to
provide an information management foundation for the entire organization to
help achieve business objectives at any stage of the economic cycle.

   During a period of strong economic performance, some businesses may be
focused on expansion: penetrating new markets, introducing new products and
establishing partnerships to speed up delivery of products or services to the
market. We believe EBI systems, because of their ability to integrate data from
diverse sources--the digital raw material for business strategy--provide a rich
set of tools for analyzing and presenting information to those who will plan
and implement business strategy. We believe these tools are essential to
satisfy the demand for speed of execution in such positive economic conditions.

   In an economic downturn, the emphasis for some businesses may shift inward,
as they seek to consolidate operations and implement strategies that increase
efficiencies and productivity, while trying to maintain customer loyalty. We
believe EBI solutions prove invaluable in these conditions given their ability
to provide business insights which can help companies reduce expenses and
increase revenues.

   We believe that businesses have started to view EBI solutions as an
essential component of their information infrastructure and that the size and
sophistication of EBI deployments may be increasing.

The Crystal Decisions Solution

   Crystal Decisions is a global software and services company. Crystal
Decisions is focused on one objective: to help companies bring together their
people and information to improve business performance. We believe that every
organization and every decision-maker can benefit from the ability to access a
wide variety of corporate

                                      5

<PAGE>

data sources, and to analyze, report and distribute the information and
resultant business insights contained therein.

   We deliver a solution for reporting, analysis and information delivery which
includes proven and stable technology, as well as experienced professional
services and knowledgeable, round-the-clock technical support. We are a leader
in the end-user query and reporting segment of the business intelligence
software market, and our EBI solutions have been used by companies in many
different industries.

   We believe that companies are seeking to maximize their investments in core
information systems. We believe the increase in data being captured by these
systems and the number of users accessing the data, each of whom has different
needs, makes finding a solution complex. Crystal Decisions' products are
specifically designed to provide such a solution.

Products

   We provide a complete range of products designed to extend the value of our
industry standard reporting with market-robust analytics and the underlying
infrastructure required to manage and deliver corporate data. With a common
enterprise architecture as its foundation, our product suite provides scalable,
secure, and mission critical infrastructure and tools that are built to
withstand the most demanding business environments. Our products provide an
integrated, web-enabled platform to provide access, analysis, interpretation
and distribution of data designed to improve business performance through ad
hoc query and reporting to complex analysis. Customers use our products to
create, implement and deploy enterprise information solutions in an
application, on a desktop, across an organization or between organizations. Our
products extend eBusiness technology architectures for flexible deployment
using the world wide web. Our products support a variety of data sources,
including operational or legacy data stores, data marts, data warehouses,
eCommerce systems, ERP, CRM and business intelligence systems and other
data-centric computer software applications.

   Our products include:

  Enterprise Suite

   Crystal Enterprise(TM)--Crystal Enterprise provides an information delivery
and business intelligence suite which is an integrated, web-based solution for
reporting, analysis and delivery. Crystal Enterprise integrates and delivers
all of the component products on one extensible suite. The software offers a
customizable infrastructure for providing highly secure access to interactive,
actionable information to employees, customers and suppliers. It is designed to
help companies improve decision-making by organizing, categorizing and
delivering reports, analytic applications and strategic business information
into web or enterprise applications. Crystal Enterprise provides a scalable and
reliable infrastructure to securely deliver information to a higher volume of
users, and a multi-tier architecture for proven fault tolerance designed to
ensure maximum up time. The Crystal Enterprise product is the new generation of
the Seagate Info family of products, which evolved over five major versions as
the industry's leading market share enterprise reporting and BI suite.

   EnterprisePartner Kits--We provide a series of software toolkits and
packages that enable closer integration with our partners' products. Most kits
include data access drivers, sample reports and data structures and may include
special documentation, support and services. We currently offer packages for
SAP R/3, Siebel CRM and Baan ERP.

  Reporting

   Crystal Reports(R)--Crystal Reports is an integrated software package for
query, report design, application development and web report publishing
functions. Provided in a range of versions for both developers and end-users,
Crystal Reports allows users to access most types of structured data, format,
design and process a variety

                                      6

<PAGE>

of reports, integrate these reports into web, windows and enterprise
applications and distribute reports to end-users. The report design
capabilities of CR produce interactive documents that can be published in a
variety of formats including DHTML, RTF, Microsoft Excel(R), PDF and XML for
increased flexibility.

  Analytics

   Crystal Analysis(TM)--Based on our experience with both reporting and
advanced OLAP and analytics, Crystal Analysis combines end-user ad hoc query,
analytic reporting and OLAP, as well as Microsoft Excel(R) integration, in a
single end-user focused interface. Crystal Analysis will be provided in a range
of versions for business end-users, analysts and developers. It is a client
design tool that can be used as an extension to any of our other products and
integrates seamlessly with Crystal Reports, Crystal Enterprise and Crystal
Holos.

   Crystal Holos(TM)--Holos, an advanced analytic application development and
deployment environment represents the high end of our Analytics family of
products. It is designed to handle large amounts of relational and
multi-dimensional data. Holos enables the modeling of large amounts of data
with complex business logic and then provides multiple views of the data to
enable analysis, expose trends and accelerate decision-making. Holos integrates
with our enterprise and end-user products.

  Applications

   Analytic Application Templates(TM)--We provide a collection of solution
templates built for use with our enterprise products. These solutions help
accelerate customer adoption and success of our products. Designed to address
common enterprise needs and current market demand, the current templates
include applications for customer profiling, balanced scorecard, budgeting,
eCommerce analysis and telecommunications billing analysis. These packages
include reports, OLAP data structures and a framework of business logic to
begin implementations.

Sales and Marketing

   Our sales and marketing programs are organized by geographical regions. We
adapt certain products for foreign markets, including translation of
documentation and local language versions, and localize our marketing and sales
support programs accordingly.

   We utilize a direct sales force and indirect sales channels, such as OEM
relationships and a network of resellers and distributors, to reach our
customers. These distributors and OEMs may also sell other products that are
complementary to, or compete with, ours. We provide sales and marketing
programs to encourage the sale of our products, but there can be no assurance
that distributors and OEMs will not place a higher priority on competing
products. Our agreements with distributors are generally non-exclusive and may
be terminated by either party without cause. Our sales channels are supported
by our organization of pre-sales and technical specialists. Customers can also
purchase some of our products by downloading them over the internet.

   Our marketing efforts are designed to increase brand awareness and
acceptance of our products. We have an international marketing strategy that
consists of several key components: targeted print advertising in trade and
technical publications; on-line advertising on our website; cooperative
marketing programs with distributors and resellers; participation in seminars
and tradeshows; direct mailings to both prospective and existing customers; as
well as extensive public relations activities and programs to build
relationships with key analysts and influential third parties. Our
international marketing groups produce, or oversee the production of,
substantially all of the on-line and print product literature, brochures,
advertising and similar marketing and promotional material.

   We derived a substantial portion of our revenues from one distributor
customer, Ingram Micro, Inc. ("Ingram") during the last three fiscal years.
Ingram accounted for 17%, 20% and 13% of our total revenues in the fiscal years
ended June 29, 2001 ("fiscal 2001"), June 30, 2000 ("fiscal 2000") and July 2,
1999 ("fiscal

                                      7

<PAGE>

1999"). Our relationship with Ingram is subject to a number of agreements, each
of which may be terminated upon the expiration of a required notice period. We
cannot be certain that our relationship with Ingram will continue at all or the
extent to which it will continue. No other customer accounted for more than 10%
of our total revenues in fiscal 2001, fiscal 2000 or fiscal 1999. Our indirect
revenues include sales to distributors and OEMs and were 37%, 41% and 39% of
total revenues during fiscal 2001, fiscal 2000 and fiscal 1999, respectively.
Our revenues from sales outside of the United States were 32%, 34% and 39% of
total revenues during fiscal 2001, fiscal 2000 and fiscal 1999, respectively.

Professional Services, Technical Support and Maintenance

   We believe that high quality, real-time customer support is important to the
successful marketing and sale of our products. We provide a broad range of
support services such as consultation, training and technical support to ensure
the optimal use of our products. These services (including professional
services, technical support and maintenance) are designed to ensure ongoing
customer satisfaction and influence customers' future purchasing decisions.

   Our professional services organization provides consultation and training to
plan and execute the deployment of our products, and speed end-user adoption.
We provide a dedicated, international team of more than 120 people to meet this
need and help ensure that our customers gain a rapid return on their
investments in our technology. We have organized a network of certified partner
organizations to provide extensions to our service offerings in an effort to
ensure that customers fully understand the value of our whole product offering
and have a positive experience with our products.

   Our technical support efforts are designed to ensure that our products
perform to their potential. We believe effective technical support during
product evaluation substantially contributes to the maximum benefit derived
from our customers and that post-sale support has been and will continue to be
a substantial factor in maintaining customer satisfaction. We provide a range
of technical support products to match the needs of different organizations. We
operate technical support groups that are located at various sites around the
world, including North America and Europe. Certain technical support groups
also offer 24-hour, seven-day toll-free telephone services. We offer pre-sale
services and post-sale support to current users and potential customers
evaluating our products.

   We also offer maintenance programs for certain of our products, which
generally consist of unspecified product enhancements and upgrades. We
generally sell maintenance and technical support services in 12-month
increments.

Strategic Relationships

   We have a strategic relationship with Microsoft, under which Microsoft
bundles our range of access and analysis products with selected Microsoft
products. For example, Crystal Reports is bundled with several Microsoft
BackOffice products and with developer tools, such as Microsoft Visual Basic,
while Seagate Info has been bundled in Microsoft's BackOffice Server suite. We
also supply the integrated reporting tool for Microsoft's new Visual Studio.NET
product suite.

   We also have strategic partnerships with other technology vendors. We have
developed OEM and other strategic relationships with over 250 application
independent software vendors, application service providers and computer
hardware manufacturers. These strategic partners sell and support our products,
as well as integrate our products as components of their applications. As a
result of these strategic partnerships, we believe our customers our able to
maximize their investments in enterprise applications such as ERP, SCM and CRM
through integrated reporting and analysis solutions. Our strategic partners
include Baan, IBM, Lotus, PeopleSoft, SAP and Siebel.

                                      8

<PAGE>

Research and Development

   We employ over 300 people in research and development functions (planning,
development, quality assurance, maintenance and enhancements) in two main sites
in Vancouver, British Columbia and Ipswich, England. We believe our strong
commitment to research and development, continuous innovation and consistent
involvement of the customer in the product development process has resulted in
the development of a suite of technology strong products.

   We incurred research and development expenses of $28.2 million, $26.4
million and $22.6 million in fiscal 2001, fiscal 2000 and fiscal 1999,
respectively. Our customers did not fund our research and development expenses
in fiscal 2001, fiscal 2000 or fiscal 1999, respectively. We are pursuing our
product development objectives by developing new software products and product
enhancements internally, acquiring products, technologies and businesses
complementary to our existing products and forming alliances with other
technology companies.

Patents and Intellectual Property Rights

   Due to the rapidly changing nature of applicable technologies, we believe
that the improvement of existing products, reliance upon trade secrets and
unpatented proprietary know-how and development of new products are generally
more important than patent protection. We have one United States allowed patent
which we expect to be issued during fiscal 2002.  We have one patent
application pending in the United States and no foreign patent applications
pending. We believe that effective protection of intellectual property rights
is unavailable or limited in certain foreign countries. In addition, the laws
of many countries do not protect our proprietary rights to as great an extent
as the laws of the United States.

   Our license agreements include restrictions intended to protect and defend
our intellectual property. We realize that, although we have incorporated these
restrictions, there is a possibility for unauthorized use of our software. In
addition to relying on these contractual rights, we have an ongoing trademark
registration program pursuant to which we register certain of our product
names, slogans and logos in the United States and in some foreign countries.

Competition

   The segment of the software market in which we compete is comprised of
numerous competitors and we expect competition to increase. We have experienced
increased competition from additional entrants into our market including
companies that specialize in the development, marketing and support of software
products that assist users to access, analyze and interpret data to make
business decisions. Many of our current and prospective competitors may have
significantly greater financial, technical and marketing resources than we do.
In addition, many of our prospective customers may have the internal capability
to implement software solutions that assist users to analyze and interpret data
to make business decisions.

   The competitive factors affecting the market for our products include:

  .  product functionality;

  .  performance and reliability;

  .  demonstrable cost-effective benefits for users;

  .  price;

  .  quality of customer support and user documentation;

  .  ease of use and installation;

  .  vendor reputation;

                                      9

<PAGE>

  .  experience; and

  .  financial stability of the software provider.

   We believe that we currently compete effectively with respect to these
factors. Our ability to remain competitive will depend to a great extent upon
our ongoing performance in the areas of product development and customer
support. To be successful in the future, we believe that we must respond
promptly and effectively to the challenges of technological change and our
competitors' innovations by continually enhancing our product offerings.
Performance in these areas will in turn depend upon our ability to attract and
retain highly qualified technical personnel in a competitive market for
experienced and talented software developers.

Employees

   As of June 29, 2001, we had 1,340 employees, including 436 in sales and
marketing, 372 in services and support, 382 in research and development and 150
in general and administrative functions. None of our employees are represented
by a labor union or are the subject of a collective bargaining agreement. We
have never experienced a work stoppage and believe that our employee relations
are good.

   We believe our future success will depend in large part upon our ability to
attract and retain highly skilled managerial, engineering, sales and marketing
and finance personnel. The loss of the services of any of our key personnel,
the inability to attract or retain qualified personnel in the future or delays
in either hiring required personnel or the rate at which new people become
productive, particularly sales personnel and engineers, could have a material
adverse effect on our business, operating results and financial condition.
Competition for qualified employees is intense in the software industry.

Item 2. Properties.

   Our principal executive offices are located in Palo Alto, California. Our
other principal facilities are located in Canada and the United Kingdom. The
majority of our facilities are occupied under leases that expire at various
times through 2010. At June 29, 2001, our leased space approximates 295,000
square feet with 175,000 square feet located in Canada, 53,000 square feet
located in the United States, 52,000 square feet located in Europe and 15,000
square feet located in the Asia/Pacific region. These figures exclude
approximately 45,000 square feet of unoccupied space in Canada and
approximately 5,000 square feet leased to others in the United States.

   We believe that our facilities are adequate for our current needs and that
suitable additional or substitute space will be available as needed to
accommodate expansion of our operations. See note 18 of the Notes to the
Consolidated and Combined Financial Statements for information regarding our
lease obligations.

Item 3. Legal Proceedings.

   The following discussion contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act") and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). We are subject to litigation arising in the
ordinary course of our business. While we believe that the ultimate outcome of
these actions will not have a material adverse effect on us, the outcome of
these actions is not determinable and negative outcomes may adversely effect
our financial position, liquidity, or results of operations. Accordingly,
actual results could differ materially from those projected in the
forward-looking statements.

   On November 10, 1997, Vedatech Corporation ("Vedatech") commenced an action
in the Chancery Division of the High Court of Justice in the United Kingdom
against Crystal Decisions (UK) Limited, a wholly owned subsidiary of Crystal
Decisions. The original pleading alleged a breach of an oral agreement and
infringement of a Vedatech's U.K. copyright in one of our products and sought
monetary and injunctive relief.

                                      10

<PAGE>

On August 22, 2000, Vedatech requested and obtained permission from the court
to amend its action to include claims for unjust enrichment, unlawful
interference and quantum meruit. On May 9, 2001, Vedatech was given further
leave to amend its pleading. Vedatech seeks to enjoin Crystal Decisions (UK)
Limited from infringing the U.K. copyright and seeks forfeiture to Vedatech of
all infringing software copies. Of the relief sought, the only claim that has
been settled is a claim for JPY 26,624,181 (approximately U.S. $240,000) for
unpaid invoices. We have hired local counsel in the U.K., reviewed documents,
conducted interviews and participated in the discovery process. Taking into
account our counterclaim (which is approximately U.S. $200,000) and a deposit
with the court of an amount equal to U.S. $200,000, we have offered Vedatech
U.S. $400,000 in settlement of its quantum meruit claim. The court has granted
Vedatech's request to delay commencement of trial until February of 2002 with
the caveat that the hearing of the trial will be split between liability and
quantum (if required). We have defenses to all the causes of action, including
the claim for quantum meruit, and we intend vigorously to defend the actions.
Were an unfavorable outcome to arise, there can be no assurance that such
outcome would not have a material adverse affect on our liquidity, financial
position or results of operations. The outcome of this matter and amount of
related claims are not determinable at this time.

   In addition to the foregoing, we are subject to other litigation in the
ordinary course of our business. While we believe that the ultimate outcome of
these matters will not have a material adverse effect on us, the outcome of
these matters is not determinable and negative outcomes may adversely affect
our financial position, liquidity, or results of operations.

Item 4. Submission of Matters to a Vote of Security Holders.

   During the fourth quarter of fiscal 2001, no matter was submitted to a vote
of security holders through the solicitation of proxies or otherwise.

                                    PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.

   As of August 24, 2001, 75,468,204 shares of our common stock were
outstanding, which were held by 100 stockholders of record. There is no
established public trading market for any class of our securities

   We have never declared nor paid cash dividends on any of our capital stock
and do not anticipate that any cash dividends will be declared in the
foreseeable future. We currently intend to retain all available funds and any
future earnings to use in the operation of our business. In addition, the debt
that we guarantee restricts us from the payment of dividends without the
approval of the debt holder.

Item 6. Selected Financial Data.

   On November 22, 2000, New SAC, through Suez Software, acquired 99.7% of our
outstanding common stock resulting in a change in control of our company. Under
rules and regulations promulgated by the Securities and Exchange Commission,
because more than 95% of our outstanding common stock was acquired and a change
of ownership occurred, we restated all our assets and liabilities in the
financial statements as of November 22, 2000 on a "push down" accounting basis.
Accordingly, results of operations prior to November 22, 2000 and comparative
information presented do not reflect these adjustments.

   On November 16, 1999, Seagate Software Holdings contributed its Information
Management Business ("IMG business") to us in exchange for 75,000,000 shares of
our common stock. The accompanying selected historical consolidated and
combined financial data has been prepared using the historical cost basis of
accounting, adjusted for the application of push down accounting at November
22, 2000 and for the reorganization of the IMG business on November 16, 1999.
For all periods prior to November 16, 1999, the

                                      11

<PAGE>

selected financial data is presented as if we existed as an entity separate
from Seagate Software Holdings, after which we operated as a separate entity.
The consolidated and combined financial statements include the historical
assets, liabilities, revenues and expenses directly related to our operations.
For all periods prior to November 16, 1999, the combined financial statements
present the combined historical financial position, results of operations,
equity and cash flows of the ongoing IMG business of Seagate Software Holdings
that were contributed to us and are not necessarily indicative of what the
financial position, results of operations, equity or cash flows would have been
had we been an independent legal entity during the periods presented.

   The selected financial data set forth below should be read in conjunction
with Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations," our consolidated and combined financial statements and
notes thereto, and the other information contained elsewhere in this Form 10-K.
We have derived our selected statement of operations data for the fiscal years
ended June 29, 2001, June 30, 2000 and July 2, 1999 and the selected balance
sheet data as of June 29, 2001 and June 30, 2000 from the audited consolidated
and combined financial statements included elsewhere in this Form 10-K. The
selected combined balance sheet as of July 2, 1999 was derived from the audited
combined financial statements not included in this Form 10-K. The selected
combined statements of operations for the fiscal years ended July 3, 1998 and
June 27, 1997 and the selected balance sheet data as of July 3, 1998 and June
27, 1997 were derived from our unaudited combined financial statements that are
not included in this Form 10-K. We prepared the unaudited financial statements
on substantially the same basis as the audited combined financial statements
and, in our opinion, they include all adjustments, consisting principally of
normal recurring adjustments, that we consider necessary for a fair
presentation of our financial position and results of operations for those
periods. Historical results are not necessarily indicative of results of
operations to be expected for future periods.

<TABLE>
<CAPTION>
                                                                   For the years ended
                                             ---------------------------------------------------------------
                                              June 29,     June 30,     July 2,       July 3,     June 27,
                                              2001 (1)     2000 (2)     1999 (3)       1998         1997
                                             -----------  -----------  -----------  -----------  -----------
                                                   (in thousands, except for share and per share data)
<S>                                          <C>          <C>          <C>          <C>          <C>
Revenues.................................... $   166,861  $   126,518  $   141,757  $   115,952  $    74,534
Gross profit................................ $   118,167  $    82,543  $    93,056  $    80,196  $    58,745
Loss from operations........................ $   (12,937) $  (276,237) $   (98,957) $    (4,993) $   (20,207)
Net loss.................................... $   (11,469) $  (221,162) $   (96,375) $   (13,259) $   (20,507)
Net loss per share, basic and diluted....... $     (0.15) $     (2.95) $     (1.28) $     (0.18) $     (0.27)
Total assets................................ $   105,126  $    72,545  $    79,820  $    63,569  $    53,854
Stockholders' equity........................ $    35,609  $    23,113  $     2,883  $    16,641  $    30,311
Number of shares used in net loss per share,
  basic and diluted.........................  75,252,510   75,001,391   75,001,000   75,001,000   75,001,000
</TABLE>
--------
(1)The net loss for fiscal 2001 includes unusual items of $8,924, comprising
   $1,851 of compensation expense and $7,073 of in-process research and
   development write-offs as related to the Stock Purchase Agreement and the
   VERITAS Merger as described in the notes 10 and 2, respectively, to the
   consolidated and combined financial statements and notes thereto.

(2)The net loss for fiscal 2000 includes unusual items of $242,569 described in
   note 10 to the consolidated and combined financial statements and notes
   thereto under "October 1999 Seagate Technology Exchange of Shares."

(3)The net loss for fiscal 1999 includes unusual items of $86,714 described in
   note 10 to the consolidated and combined financial statements and notes
   thereto under "June 1999 Seagate Technology Exchange Offer."

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

   The following information should be read in conjunction with the audited
consolidated and combined financial statements and the notes thereto and other
information included elsewhere in this Form 10-K. Certain statements in this
Management's Discussion and Analysis of Financial Condition and Results of
Operations and

                                      12

<PAGE>

information contained elsewhere in this Form 10-K are forward-looking
statements within the meaning of Section 27A of the Securities Act, Section 21E
of the Exchange Act and the Private Securities Litigation Reform Act of 1995.
These statements refer to our future plans, objectives, expectations and
intentions. These statements may be identified by the use of words such as
"expect", "anticipate", "believe", "intend", "plan" and similar expressions.
Our actual results could differ materially from those anticipated in such
forward-looking statements. Factors that could contribute to these differences
include, but are not limited to, the risks discussed in the section titled
"Factors Affecting Future Operating Results" in this Form 10-K. We do not
undertake any obligation to publicly update any forward-looking statement to
reflect events or circumstances after the date on which any such statement is
made or to reflect the occurrence of unanticipated events.

Overview

   We are an information infrastructure company that creates software products
and provides services for reporting, analysis and information delivery. We
develop, market and support an integrated highly scalable suite of enterprise
software products and solutions that enable businesses to access disparate data
sources and distribute secure, interactive reports and analysis across and
beyond these organizations. We believe our solutions provide direct and rapidly
achieved benefits including improved decision-making, lower overall IT costs
and better business performance. We operate at the core of a broad industry
segment that is commonly referred to as "business intelligence." We believe our
products meet an extensive range of data-centric business and organizational
needs commonly referred to under a number of different labels, including
information delivery, enterprise reporting, enterprise business intelligence,
enterprise information portals, developer reporting, ad hoc query and
reporting, business analytics, OLAP reporting, analytic application development
and packaged analytic applications. We sell our products through our direct
sales force and certain indirect sales channels, such as distributor and OEM
relationships.

   We derive revenues from the sale of licenses for our software products and
from services that support our products such as maintenance, consulting,
training and technical support.

   We recognize revenues in accordance with Statement of Position ("SOP") 97-2,
"Software Revenue Recognition", as amended by SOP 98-4 "Deferral of the
Effective Date of a Provision of SOP 97-2" and by SOP 98-9 "Modification of SOP
97-2, Software Revenue Recognition with Respect to Certain Transactions". These
amendments deferred and then clarified, respectively, the specification of what
was considered vendor specific objective evidence ("VSOE") of fair value for
the various elements in a multiple-element arrangement. We adopted the
provisions of SOP 97-2 and SOP 98-4 as of the beginning of fiscal year 1999 and
adopted SOP 98-9 as of the beginning of fiscal year 2000.

   SOP 97-2 requires that the total arrangement fee from software arrangements
that include rights to multiple software products, post contract customer
support and/or other services be allocated to each element of the arrangement
based on their relative fair values. Under SOP 97-2, the determination of fair
value is based on VSOE.

   Prior to the second quarter of fiscal 2001 and in prior years, we could
establish VSOE for most elements of our multiple-element arrangements, and
accordingly, revenues were allocated to the individual elements on the basis of
VSOE. Fair value was established for each element based on its individual sales
price consistent with our pricing strategy. Our pricing strategy is established
by our pricing group, consisting of representatives from our marketing, sales,
finance and product development departments.

   During the second quarter of fiscal 2001, we adopted a new sales model that
requires the sale of maintenance and technical support with certain software
licenses, and as such, we are not able to establish sufficient VSOE for these
license products. As a result of this change in circumstance, when these
products are included in multiple-element arrangements, we apply the residual
method of accounting as specified in SOP 98-9 such that the total fair value of
the undelivered elements as indicated by VSOE, is deferred and subsequently

                                      13

<PAGE>

recognized in accordance with SOP 97-2 and the difference between the total
arrangement fee and the amount deferred for the undelivered elements is
accounted for as revenue related to the delivered elements. The impact on
revenues of applying the residual method of accounting in fiscal 2001 was not
material.

   Although not typical, some OEM arrangements contain end-user maintenance
elements for which VSOE has not been established, as sufficient evidence of
consistent pricing and renewal rates has not been present. In such
arrangements, we have recognized the arrangement fee ratably over the
maintenance period in accordance with the provisions set forth in SOP 97-2.

   We generally recognize licensing revenues, whether sold direct or through
distributors or resellers, upon product delivery, provided persuasive evidence
of an arrangement exists, fees are fixed or determinable and the resulting
receivable is deemed collectible by management. In instances where payments are
subject to extended terms, we do not recognize revenues until the date payments
become due.

   Our policy is to recognize no revenues on sales to distributors or resellers
if any resale contingencies exist. Some of the factors that are considered to
determine the existence of such contingencies include payment terms,
collectability and history with the distributor or reseller. We recognize
revenues when such contingencies have been resolved and the criteria for
revenue recognition in SOP 97-2 are met.

   We recognize revenues for sales to distributors and resellers with rights of
returns when the criteria for recognizing revenues, as outlined in Statement of
Financial Accounting Standards No. 48 ("SFAS 48") "Revenue Recognition When
Right of Return Exists" are met. However, we make estimates of future returns
and reduce the revenues and related receivables accordingly by the amount of
such estimates.

   Where rights of return exist and the criteria of SFAS 48 are not met, we do
not recognize revenues until such time that all of the criteria are met. We
consider factors including historical experience, nature of the product, fixed
or determinable fees, arms length contract terms, the level of inventory in the
distribution channels and the ability to reasonably estimate returns.

   We recognize revenues from technical support and maintenance ratably over
the term of the arrangement, generally one year. We recognize revenues from
training and consulting as the services are performed.

   Where our software arrangements require us to provide consulting services
for significant production, modification or customization of software, or where
these services are essential to the functionality of the software, we recognize
revenues in accordance with the provisions of SOP 81-1, "Accounting for
Performance of Construction-Type and Certain Production-Type Contracts". In
these arrangements, we recognize both the licensing revenues and consulting
services revenues using the percentage of completion method based on the cost
of labor inputs.

   We operate and report financial results on a fiscal year of 52 or 53 weeks
ending on the Friday closest to June 30. Accordingly, fiscal 2001 ended on June
29, 2001, fiscal 2000 ended on June 30, 2000 and fiscal 1999 ended on July 2,
1999. Fiscal 2001, 2000 and 1999 were each comprised of 52 weeks.

Sale of Seagate Technology

   On November 22, 2000, Seagate Technology, Seagate Software Holdings, and
Suez Acquisition Company, an entity affiliated with, among others, Silver Lake
Partners L.P. and Texas Pacific Group, completed the Stock Purchase Agreement,
and Seagate Technology and VERITAS completed an agreement and plan of merger
and reorganization, ("the Merger Agreement"). Suez Acquisition Company was a
limited liability company organized under the laws of the Cayman Islands and
formed solely for the purpose of entering into the Stock Purchase Agreement and
related acquisitions. At the closing of the transactions contemplated by the
Stock Purchase Agreement, Suez Acquisition Company assigned all of its rights
under the Stock Purchase Agreement to New SAC.

                                      14

<PAGE>

   Upon consummation of the Stock Purchase Agreement, New SAC, through Suez
Acquisition Company, purchased for $1.840 billion cash, including transaction
costs of $25.0 million, all of the operating assets of Seagate Technology and
its consolidated subsidiaries. This included Seagate Technology's rigid disc
drive, storage area network, removable tape storage solutions businesses and
operations, our common stock, and certain cash balances, but excluding the
approximately 128 million shares of VERITAS common stock then held by Seagate
Software Holdings and certain of Seagate Technology's equity investments. In
addition, the wholly owned subsidiaries of New SAC assumed substantially all of
the operating liabilities of Seagate Technology, Seagate Software Holdings and
their consolidated subsidiaries. New SAC also acquired Seagate Technology
Investments, Inc., a subsidiary of Seagate Technology, which holds certain
strategic equity investments in various companies. This transaction is referred
to hereafter as the New SAC Transaction.

   Immediately following the consummation of the Stock Purchase Agreement and
under the terms of the Merger Agreement, VERITAS acquired the remainder of
Seagate Technology and a wholly owned subsidiary of VERITAS merged with and
into Seagate Technology, with Seagate Technology becoming a wholly owned
subsidiary of VERITAS. This transaction is referred to as the VERITAS merger.
VERITAS did not acquire Seagate Technology's disc drive business or any other
Seagate Technology operating business, including ours. In the VERITAS merger,
the Seagate Technology stockholders received merger consideration consisting of
VERITAS stock and cash.

   As part of the New SAC Transaction, New SAC, Seagate Technology and we
agreed to assume and indemnify VERITAS for substantially all liabilities
arising in connection with the company's operating assets. On March 29, 2000,
Seagate Technology, VERITAS and New SAC entered into an indemnification
agreement. Pursuant to this agreement these entities and certain other
subsidiaries of Seagate Technology, including us, were required to indemnify
VERITAS and its affiliates for any liability for taxes of Seagate Technology,
and the subsidiaries of Seagate Technology, including us, acquired by New SAC,
in excess of an amount deposited into an escrow account by VERITAS. VERITAS
deposited $150 million in an escrow account. This amount may be withdrawn by
New SAC to satisfy these tax liabilities, including those of Crystal Decisions
and its subsidiaries.

  Transaction Financing and Consideration Paid

   New SAC financed the acquisition of the Seagate Technology operating assets,
including our common stock through:

  .  Equity financing of $916 million from Silver Lake Partners L.P., TPG
     Partners III, L.P., August Capital, Chase Capital Partners, GS Private
     Equity Partners L.P. and other investors, including the following
     directors of our company: Stephen J. Luczo, Gregory B. Kerfoot and Donald
     L. Waite.

  .  A senior secured credit facility of $700 million in the aggregate (in
     addition to a $200 million revolving loan facility) from the Chase
     Manhattan Bank, Goldman Sachs Credit Partners L.P. and Merrill Lynch
     Capital Corporation. This debt is guaranteed by various direct and
     indirect subsidiaries of New SAC including us and certain of our
     subsidiaries.

  .  Senior subordinated notes of approximately $210 million issued by Seagate
     Technology International at a discount to the aggregate principal amount
     of $210 million, for gross proceeds of approximately $201 million. Seagate
     Technology International is indirectly owned by New SAC. This debt is
     guaranteed by various direct and indirect subsidiaries of New SAC
     including us and certain of our subsidiaries.

  .  Certain cash reserves of Seagate Technology of approximately $149 million,
     net of estimated transaction costs of $100 million.

  .  In lieu of receiving consideration in connection with the Merger, most of
     Seagate Technology's senior management team converted a portion of their
     unvested Seagate Technology options and restricted stock ("rollover
     equity") with an aggregate value of $184 million into deferred
     compensation and an equity interest in New SAC. Although the amount of
     cash that Seagate Technology received from New SAC was reduced by the
     aggregate value of this converted equity, the total merger consideration
     received by

                                      15

<PAGE>

     Seagate Technology stockholders on a per share basis was not reduced due
     to the cancellation of a number of Seagate Technology stock options equal
     in value to the $184 million in rollover equity. As a result, while the
     cash component of the merger consideration received by Seagate Technology
     shareholders was reduced on a per share basis, the VERITAS shares
     component of the merger consideration was increased on a per share basis
     by an offsetting amount because of the antidilutive impact of the Seagate
     Technology stock options cancelled.

   The table below reconciles the total purchase price paid by New SAC for the
operating assets of Seagate Technology and its consolidated subsidiaries,
including the disc drive, tape drive, and intelligent storage businesses and
operations, and our company under purchase and push down accounting. The net
purchase price was allocated to the assets and liabilities of Seagate
Technology and subsidiaries, including our company, based on their fair values
at the date of the transaction. The fair values of the identifiable tangible
and intangible assets and liabilities of Seagate Technology and subsidiaries at
the date of the transaction exceeded the net purchase price by approximately
$909 million. Accordingly, the resultant negative goodwill was allocated to the
long-lived tangible and intangible assets, including our assets, on the basis
of relative fair values. This allocation reduced the recorded amounts by
approximately 46%. The fair values of tangible and intangible assets, including
in-process research and development, have been determined based upon
independent appraisals.

<TABLE>
<CAPTION>
                                                                 Allocated to
                                                                Purchase Price
  Purchase price allocation for New SAC (in millions)            for New SAC
  ---------------------------------------------------           --------------
  <S>                                                           <C>
  Net current assets (liabilities):
     Crystal Decisions.........................................     $    9
     All other businesses of New SAC...........................        930
  Long-term investments held by all other businesses of New SAC         42
  Tangible long-lived assets:
     Crystal Decisions.........................................          5
     All other businesses of New SAC...........................        773
  Intangible Assets:
     Crystal Decisions
         In-process research and development...................          7
         Developed technology..................................         15
         Assembled workforce...................................          7
     All other businesses of New SAC
         In-process research and development...................         52
         Developed technology..................................         61
         Assembled workforce...................................         46
         Trade name............................................         47
         Other intangible assets...............................          1
                                                                    ------
            Total Identified Intangible Assets.................        236
  Other long-term assets:
     All other businesses of New SAC...........................         42
  Other long-term deferred taxes:
     Crystal Decisions.........................................         (2)
     All other businesses of New SAC...........................        (73)
  Long-term liabilities owed by all other businesses of New SAC       (122)
                                                                    ------
  Net purchase price...........................................     $1,840
                                                                    ======
</TABLE>

   The purchase price under the Stock Purchase Agreement was fixed and no
contingencies have been identified that will result in a change in the overall
purchase price. However, we have recorded allowances against deferred tax
assets in accordance with Statement of Financial Accounting Standards No. 109

                                      16

<PAGE>

("SFAS 109") as a part of the purchase price allocation, which, if released in
the future could result in adjustments to the balances of long-lived assets.

   In addition, in connection with the purchase of the operating assets of
Seagate Technology, New SAC established a $350 million valuation allowance
against U.S. federal and state deferred tax assets arising from the
transaction. The realization of New SAC's federal and state deferred tax assets
subject to the valuation allowance will depend on its ability to generate
taxable income in the United States in future fiscal years, the timing and
amount of which are uncertain. New SAC anticipates that the tax benefits of the
deferred tax assets, when realized, will result in a reduction in values of the
intangible assets recorded in the purchase transaction, including those
recorded in the push down adjustments to our company.

Change in Control of Crystal Decisions, Inc.

   Prior to November 22, 2000, we were a majority owned subsidiary of Seagate
Software Holdings, a Delaware corporation, and wholly owned subsidiary of
Seagate Technology.

   As a result of the New SAC Transaction on November 22, 2000, New SAC,
through Suez Acquisition Company, acquired 99.7% of the outstanding capital
stock of our company. This transaction resulted in a change in control of our
company. Under rules and regulations promulgated by the Securities and Exchange
Commission, because more than 95% of our company was acquired and a change of
ownership occurred, we restated all our assets and liabilities in the financial
statements as of November 22, 2000 on a "push down" accounting basis.
Accordingly, results of operations prior to November 22, 2000 and comparative
information presented do not reflect these adjustments. New SAC did not
purchase shares of our common stock that are outstanding as a result of the
exercise of options to purchase these shares under our 1999 and 2000 Stock
Option Plans. Our minority stockholders continue to hold their interests in our
common stock and the outstanding unexercised options granted under the 1999 and
2000 Stock Option Plans remain outstanding.

   The table below lists the net purchase price allocation to our company of
the tangible and intangible assets acquired. The purchase price allocated to us
as a result of the New SAC Transaction is not necessarily indicative of what
the purchase price would have been for us on a stand-alone basis.

<TABLE>
<CAPTION>
                                                                Net Purchase
  Purchase Price Allocation                                   Price Allocation
  -------------------------                                   ----------------
                                                               (in thousands)
  <S>                                                         <C>
  Net current assets acquired................................     $ 9,138
  Tangible long-lived assets acquired........................       5,130
                                                                  -------
                                                                   14,268
                                                                  -------
  Intangible assets acquired:
     Developed technology (1)................................      15,234
     Assembled work force (2)................................       7,073
     In-process research and development (3).................       7,073
     Deferred tax liability..................................      (2,126)
                                                                  -------
                                                                   27,254
                                                                  -------
         Total...............................................     $41,522
                                                                  =======
</TABLE>
--------
(1) The value of the developed technology has been estimated by discounting the
    expected future cash flows attributable to all existing technology, taking
    into account risks related to the characteristics and applications of the
    technology, existing and future markets and assessments of the life cycle
    stage of the technology. The analysis resulted in a valuation for developed
    technology, which had reached technological feasibility and therefore was
    capable of being capitalized. The developed technology is being amortized
    on the straight-line basis over its estimated useful life (36 months) and
    the amortization is included in cost of revenues.

                                      17

<PAGE>

(2) The estimated value of the assembled work force has been determined by
    estimating the costs to replace the existing employees, including the
    recruiting, hiring and training costs for each category of employee. The
    assembled workforce is being amortized on a straight-line basis over its
    estimated useful life (36 months) and the amortization is included in
    amortization of goodwill and other intangibles.

(3) As the basis for identifying the in-process research and development
    ("IPR&D"), our developmental projects were evaluated in the context of
    Financial Accounting Standards Board Interpretation 4 and paragraph 11 of
    Statement of Financial Accounting Standards No. 2 ("SFAS 2") and SFAS 86.
    We have charged the value allocated to projects identified as IPR&D to
    expense in the period the transactions close. This write-off is necessary
    because the acquired technologies have not yet reached technological
    feasibility and have no future alternative uses.

   At the valuation date, our company was in the process of developing three
   next generation versions of existing technologies which were estimated to be
   about 85%, 70%, and 75% complete based on total man-hours and absolute time.
   We expect these three projects to be completed prior to the end of fiscal
   2002, at an estimated total cost of $28 million. As at June 29, 2001, these
   projects were on track for completion within the previously estimated time
   period. The nature of the efforts required to develop the purchased IPR&D
   into commercially viable products principally relate to the completion of
   all planning, designing, prototyping, verification and testing activities
   that are necessary to establish that the product can be produced to meet its
   design specifications, including functions, features and technical
   performance requirements. We expect that the acquired IPR&D will be
   successfully developed, but we cannot ensure that commercial viability of
   these products will be achieved.

   The value of our purchased IPR&D has been calculated by estimating the
   projected net cash flows related to such products, including costs to
   complete the development of the technology and the future revenues to be
   earned on commercialization of the products. These cash flows were then
   discounted back to their net present value. The projected net cash flows
   from such projects were based on management's estimates of revenues and
   operating profits related to these projects.

   Upon the completion of the New SAC Transaction on November 22, 2000, the tax
allocation agreement we had with Seagate Technology was terminated, and we will
not file federal income tax returns on a consolidated basis with New SAC or any
of its subsidiaries. We may enter into a state tax allocation agreement with
affiliates of New SAC, as applicable. Therefore, New SAC will not benefit from,
nor will it reimburse us pursuant to, the tax allocation agreement for federal
tax losses that we sustain subsequent to consummation of the transaction. In
prior periods, we have received substantial cash payments from our company's
tax losses utilized by Seagate Technology, which we have used to reduce our
obligations to Seagate Technology under an intercompany revolving loan
agreement. As a result of the termination of the federal tax allocation
agreement, we may not be able to convert any future tax losses into cash.

   As part of the financing of the New SAC Transaction, certain assets of New
SAC, the disc drive, tape drive and intelligent storage businesses and
operations, and certain other subsidiaries of New SAC including us and certain
of our subsidiaries are now pledged as a guarantee for debt issued to finance
the New SAC Transaction.

  Allocation of Purchase Price to our Company Pursuant to the Application of
  Push Down Accounting

   The New SAC Transaction on November 22, 2000 constituted a purchase of
Seagate Technology and resulted in a change in control of our company. The
accounting for the purchase transaction has been "pushed down" to our financial
statements. The consolidated and combined financial statements as of June 29,
2001 reflect the historical results of operations and financial position up to
the date of the New SAC Transaction. At November 22, 2000, the push down
purchase accounting adjustments resulted in the revaluation of our assets and
liabilities from the historical figures at November 22, 2000. Following this
the results of operations and financial position for the period from November
23, 2000 to June 29, 2001 reflect the effects of the restated balances.

                                      18

<PAGE>

   As a result of the New SAC Transaction and the push down accounting, our
results of operations after November 22, 2000, particularly the depreciation
and amortization charges, are not necessarily comparable to the results of
operations prior to that date.

   The following summarizes the impact of push down accounting on our results:

  .  Revenue. Deferred revenues were revalued at the transaction date and were
     reduced by $1.3 million. Consequently, revenues were lower by $1.2 million
     in fiscal 2001 than they would have been had the push down adjustments not
     occurred as the revenues have been adjusted on a declining basis during
     the twelve months following the date of the transaction.

  .  Depreciation and amortization. As a result of the allocation of negative
     goodwill to our long-lived tangible assets, our capital assets were
     reduced by $4.3 million. Consequently, we recorded approximately $1.5
     million less depreciation expense in fiscal 2001, than we would have
     recorded had the push down adjustments not been made. In addition, we
     recorded additional amortization expense of approximately $3.3 million in
     fiscal 2001 resulting from the recording of the incremental fair value of
     intangibles in the push down adjustments.

  .  In-process research and development. We wrote off IPR&D of $7.1 million as
     an expense during fiscal 2001.

  .  Tax effects. The tax provision of $1.2 million for fiscal 2001 was
     decreased by approximately $275,000 relating to the reversal of a portion
     of the deferred tax liabilities recorded in connection with the push down
     adjustments.

Other Significant Transactions Impacting Our Financial Reporting

   In August 1999, we were formed to acquire Seagate Software Holdings' IMG
business. On November 16, 1999, Seagate Software Holdings contributed the IMG
business to us in exchange for 75,000,000 shares of common stock. Prior to
November 16, 1999, Seagate Software Holdings entered into two separate share
exchange transactions with Seagate Technology. The first, the "June 1999
Seagate Technology Exchange Offer", relates to an offer Seagate Technology made
to the optionees and stockholders of Seagate Software Holdings to exchange
shares of Seagate Software Holdings common stock for shares of Seagate
Technology common stock. The June 1999 Seagate Technology Exchange Offer was
made at the time of the contribution of the Network & Storage Management Group
("NSMG") business to VERITAS. The second exchange transaction, the "October
1999 Seagate Technology Exchange of Shares" was the result of a reorganization
of Seagate Software Holdings. This reorganization resulted in Seagate Software
Holdings becoming a wholly owned subsidiary of Seagate Technology and the
minority stockholders of Seagate Software Holdings receiving Seagate Technology
common stock for their Seagate Software Holdings common stock and options. Each
of the June 1999 and October 1999 exchanges resulted in Seagate Software
Holdings recording compensation expense for stock options and shares held less
than six months and purchase accounting where shares were held by minority
shareholders longer than six months. A portion of the amount of excess purchase
price and compensation expense was allocated to us, as explained below.

  The June 1999 Seagate Technology Exchange Offer

   On May 28, 1999, Seagate Software Holdings contributed its NSMG business and
related assets and liabilities to VERITAS in exchange for shares of VERITAS
common stock. In a separate but related transaction on June 9, 1999, Seagate
Technology exchanged 5,275,772 shares of Seagate Technology common stock for
3,267,255 shares of Seagate Software Holdings common stock owned by employees,
directors and consultants of Seagate Software Holdings and its parent and
subsidiaries. The exchange ratio was determined based on the estimated value of
Seagate Software Holdings common stock divided by the fair market value of
Seagate Technology common stock. The estimated value of Seagate Software
Holdings common stock exchanged for Seagate Technology common stock was
determined based upon the sum of the fair value of the NSMG business,

                                      19

<PAGE>

as measured by the fair value of the shares received from VERITAS, plus the
estimated fair value of the IMG business of Seagate Software Holdings as
determined by the Seagate Software Holdings' Board of Directors, plus the
assumed proceeds from the exercise of all outstanding Seagate Software Holdings
stock options, divided by the number of fully converted shares of Seagate
Software Holdings. The Board of Directors of Seagate Software Holdings
considered a number of factors in determining the estimated fair value of the
IMG business, including historical and projected revenues, earnings and cash
flows and consultations with financial advisors.

   Seagate Software Holdings recorded the acquisition of its common stock by
Seagate Technology as an acquisition of the minority interest by Seagate
Technology. Seagate Software Holdings accounted for the exchange of shares of
its common stock outstanding and vested more than six months as the purchase of
a minority interest and, accordingly, the fair value of $51.8 million for the
shares exchanged was allocated to all the identifiable tangible and intangible
assets and liabilities of Seagate Software Holdings. For those shares
outstanding and vested less than six months, the fair value of the shares
purchased less the original purchase price paid by the employees was recorded
as compensation expense as this constituted an early settlement of an award of
stock or grant of an option. Compensation expense associated with the issuance
of Seagate Technology shares amounted to approximately $102.5 million, plus
$630,000 of employer portion of payroll taxes.

   Related to the June 1999 Seagate Technology Exchange Offer, Seagate Software
Holdings recorded additional compensation expense of $8.6 million for the
purchase of unvested stock options held by certain continuing employees. This
amount was not considered a capital contribution from Seagate Technology. In
addition, Seagate Software Holdings recorded compensation expense amounting to
$12.7 million for accelerated vesting on certain stock options for its former
Chief Executive Officer and several other employees, each of whom became
employees of VERITAS.

   Our consolidated and combined statement of operations for fiscal 1999
includes an allocation of compensation expense arising from the June 1999
Seagate Technology Exchange Offer attributable to us. Compensation expense was
allocated to us on the basis of employees specifically identified with our
business who participated in the exchange and for those employees of Seagate
Software Holdings and Seagate Technology who performed services for us, on the
basis of time estimates. Accordingly, we recorded $77.5 million of the $102.5
million of total compensation expense as a capital contribution from Seagate
Technology. In addition, as both the $630,000 aforementioned employer portion
of payroll taxes and the $8.6 million aforementioned compensation expense for
the purchase of unvested stock options related to certain of our continuing
employees, these amounts were reflected as expenses for fiscal 1999. We did not
record any of the aforementioned $12.7 million compensation expense that arose
from the accelerated vesting on certain stock options for employees who became
employees of VERITAS because the compensation expense was not attributable to
our employees.

   Our consolidated and combined financial statements for fiscal 1999 also
include an allocation of $5.4 million of the $51.8 million purchase price
allocation described above. The allocation to us was based on the fair value of
our assets relative to Seagate Software Holdings. A number of factors were
considered in determining our estimated fair value, including historical and
projected revenues, earnings and cash flows, as well as other factors and
consultations with financial advisors.

   The allocation of the purchase price to our intangible assets as of June 9,
1999 was as follows:

<TABLE>
    <S>                                                         <C>
    Developed technology....................................... $  686,000
    Trademark..................................................    158,000
    Assembled work force.......................................    207,000
    In-process research and development........................    109,000
    Goodwill...................................................  4,700,000
    Deferred tax liability.....................................   (412,000)
                                                                ----------
       Total purchase price allocated.......................... $5,448,000
                                                                ==========
</TABLE>

                                      20

<PAGE>

  Methodology

   The excess purchase price attributable to us was allocated to intangible and
tangible assets based on their fair market values for our company on a
stand-alone basis in accordance with the provisions of Accounting Principles
Board ("APB") Opinions No. 16 and 17.

   Our tangible net assets principally include cash, intercompany loan
receivable and payable, accounts receivable, other current assets and capital
assets. Liabilities principally include accounts payable, accrued employee
compensation and other accrued liabilities.

   To estimate the value of the developed technologies, we discounted the
expected future cash flows attributable to all existing technology, taking into
account risks related to the characteristics and applications of the
technology, existing and future markets and assessments of the life cycle stage
of the technology.

   We estimated the value of trademarks by considering, among other factors,
the assumption that in lieu of ownership of a trademark, a company would be
willing to pay a royalty in order to exploit the related benefits of such a
trademark.

   We estimated the value of the assembled workforce as the costs to replace
the existing employees, including recruiting, hiring and training costs for
each category of employee.

   We charged the value allocated to projects identified as in-process
technology to expense. These write-offs were necessary because the acquired
technologies had not reached technological feasibility at the date of purchase
and had no future alternative uses. We expect that the acquired IPR&D will be
successfully developed, but there can be no assurance that commercial viability
of these products will be achieved.

   The nature of the efforts required to develop the purchased in-process
technology into commercially viable products principally relate to the
completion of all planning, designing, prototyping, verification and testing
activities necessary to establish that the product can be produced to meet its
design specifications, including functions, features and technical performance
requirements. We estimated the value of our purchased in-process technology as
the projected net cash flows related to such products, including costs to
complete the development of the technology and the future revenues to be earned
upon commercialization of the products, excluding revenues attributable to
future development efforts. We then discounted these cash flows back to their
net present value. The projected net cash flows from such projects were based
upon our estimates of revenues and operating profits related to such projects.

   Goodwill was calculated as the residual difference between the estimated
amount of excess purchase price allocated to us and the values assigned to
identifiable tangible and intangible assets and liabilities.

  The October 1999 Seagate Technology Exchange of Shares

   On October 20, 1999, the stockholders of Seagate Software Holdings approved
the merger of Seagate Daylight Merger Corp., a wholly owned subsidiary of
Seagate Technology, with and into Seagate Software Holdings. Seagate Software
Holdings' assets consisted of the assets of the IMG business and its investment
in the common stock of VERITAS. The merger was effected on October 20, 1999.
Upon the closing of the merger, Seagate Software Holdings became a wholly owned
subsidiary of Seagate Technology. All outstanding options to purchase Seagate
Software Holdings common stock were accelerated immediately prior to the
merger. In connection with the merger, Seagate Software Holdings minority
stockholders and optionees received payment in the form of 3.23 shares of
Seagate Technology's common stock per share of Seagate Software Holdings common
stock, less any amounts due for the payment of the exercise price of
unexercised options. Seagate Technology issued 9,124,046 shares of its common
stock from treasury shares to optionees and minority stockholders of Seagate
Software Holdings in connection with the merger.

                                      21

<PAGE>

   Seagate Technology accounted for the exchange of shares of its common stock
as the acquisition of a minority interest for Seagate Software Holdings common
stock outstanding and vested more than six months held by employees and all
stock held by former employees and consultants. The fair value of the shares of
Seagate Technology issued was $19.4 million and was recorded as purchase price
and allocated to all the identifiable tangible and intangible assets and
liabilities of Seagate Software Holdings. Seagate Technology accounted for the
exchange of shares of its common stock for stock options in Seagate Software
Holdings held by employees and stock held and vested by employees less than six
months as the settlement of an earlier stock award. Seagate Technology recorded
compensation expense of $283.6 million, plus $2.1 million of employer portion
of payroll taxes, related to the purchase of a minority interest in Seagate
Software Holdings.

   Our consolidated and combined statement of operations for fiscal 2000
includes an allocation of compensation expense arising from the October 1999
Seagate Technology Exchange of Shares. Compensation expense was allocated to us
on the basis of employees specifically identified with our business and for
those employees that performed services for us, on the basis of time estimates.
Accordingly, we recorded $239.6 million of the $283.6 million compensation
expense related to the October 1999 Seagate Technology Exchange of Shares as a
capital contribution from Seagate Technology. In addition, the $2.1 million of
payroll taxes paid related to our employees and therefore we recorded that
amount as an expense for fiscal 2000.

   In addition, $877,000 of legal and accounting costs were incurred by us in
connection with our recapitalization and reorganization.

   Our consolidated and combined financial statements for fiscal 2000 also
include an allocation of $1.2 million of the $19.4 million purchase price
allocation described above. The allocation was based on the fair value of our
assets relative to the fair value of Seagate Software Holdings. A number of
factors were considered in determining our estimated fair value including
historical and projected revenues, earnings and cash flows, as well as other
factors and consultations with financial advisors.

   The allocation of the purchase price to our intangible assets as at October
20, 1999 was as follows:

<TABLE>
    <S>                                                         <C>
    Developed technology....................................... $  156,000
    Trademark..................................................     36,000
    Assembled work force.......................................     47,000
    In-process research and development........................     25,000
    Goodwill...................................................  1,071,000
    Deferred tax liability.....................................    (94,000)
                                                                ----------
       Total purchase price allocated.......................... $1,241,000
                                                                ==========
</TABLE>

   The excess purchase price attributable to us was allocated to intangible and
tangible assets based on their fair market values using the same methodolody as
described above for the June 1999 Seagate Technology Exchange Offer.

                                      22

<PAGE>

Results of Operations

   The following table sets forth certain consolidated statement of operations
data as a percent of total revenues for the period indicated:

<TABLE>
<CAPTION>
                                                        For the years ended
                                                     -------------------------
                                                     June 29, June 30, July 2,
                                                       2001     2000    1999
                                                     -------- -------- -------
  <S>                                                <C>      <C>      <C>
  Revenues:
     Licensing......................................    64%      59%     65%
     Maintenance, support and services..............    36%      41%     35%
                                                       ----     ----    ----
         Total revenues.............................   100%     100%    100%
                                                       ----     ----    ----

  Cost of revenues:
     Licensing......................................     3%       3%      3%
     Maintenance, support and services..............    24%      31%     25%
     Amortization of developed technologies.........     2%       0%      3%
     Write-off of developed technologies............     0%       0%      3%
                                                       ----     ----    ----
         Total cost of revenues.....................    29%      34%     34%
                                                       ----     ----    ----
  Gross profit......................................    71%      66%     66%

  Operating expenses:
     Sales and marketing............................    44%      51%     45%
     Research and development.......................    17%      21%     16%
     General and administrative.....................    11%      17%     10%
     Amortization of goodwill and other intangibles.     1%       2%      3%
     Unusual items..................................     1%     192%     61%
     Write-off of in-process research and
       development..................................     4%       0%      0%
     Restructuring costs............................     0%       1%      0%
                                                       ----     ----    ----
         Total operating expenses...................    78%     284%    135%
                                                       ====     ====    ====
</TABLE>

  Fiscal Years Ended June 29, 2001, June 30, 2000, and July 2, 1999

   Revenues

   Total revenues increased 32% to $166.9 million in fiscal 2001 from $126.5
million in fiscal 2000 and decreased 11% in fiscal 2000 from $141.8 million in
fiscal 1999. In each year presented, a majority of our revenues were derived
from licensing fees for our products. We also derive revenues from maintenance
related to the licensing of our products, consulting services, training
activities and technical support. The increase in total revenues in fiscal 2001
was primarily attributable to an increase in the size of our sales force
subsequent to turnover of the sales force and certain management positions in
October 1999 and an increase in productivity of our sales force. In addition,
the release of Crystal Enterprise in March 2001 and other product releases in
the second half of fiscal 2001 contributed to the overall revenue growth during
the fiscal year. While we intend to endeavor to maintain and increase our sales
productivity in the long-term, a potential slowdown in the global economy may
result in a decline in information technology spending by our existing and
prospective customers in the near future. As a result, we may not be able to
maintain the revenue growth rates we have achieved over the past year.

   In fiscal 2001, fiscal 2000 and fiscal 1999, revenues from a third-party
customer, Ingram, accounted for a total of $27.7 million, $25.3 million and
$18.3 million, respectively, and represented more than 10% of the total
revenues in each period. No other customers accounted for 10% or more of our
total revenues in fiscal 2001, fiscal 2000 or fiscal 1999.

                                      23

<PAGE>

   Licensing revenues. Licensing revenues increased 44% to $107.0 million in
fiscal 2001 from $74.2 million in fiscal 2000 and decreased 19% in fiscal 2000
from $92.0 million in fiscal 1999.

   The increase in licensing revenues in fiscal 2001 was primarily attributable
to an increase in the size and productivity of our direct sales force compared
to fiscal 2000, resulting in an expansion of our customer base. In addition,
new product releases during fiscal 2001 and the latter half of fiscal 2000,
such as Crystal Reports 8 in February 2000, Crystal Reports 8.5 and Crystal
Enterprise in March 2001, contributed to increases in revenues. The decline in
fiscal 2000 compared to fiscal 1999 was primarily attributable to significant
voluntary and involuntary turnover of our direct sales force in the first half
of the fiscal year. The time required to hire and train new sales personnel
resulted in lower productivity of the sales force in fiscal 2000 than in the
prior year. This resulted in a decline in license sales of our direct sales
dependent products, such as Seagate Info and Holos. We added new members to our
sales force throughout fiscal 2000 to near fiscal 1999 levels and continued to
invest in our sales force in fiscal 2001.

   Maintenance, support and services revenues. Our maintenance, support and
services revenues consist of revenues from maintenance related to our products,
consulting services, training activities and technical support. Maintenance,
support and services revenues increased 14% to $59.8 million in fiscal 2001
from $52.3 million in fiscal 2000 and increased 5% in fiscal 2000 from $49.7
million in fiscal 1999. As a percentage of total revenues, maintenance, support
and services revenues decreased to 36% of total revenues in fiscal 2001 from
41% in fiscal 2000 and increased to 41% in fiscal 2000 from 35% of total
revenues in fiscal 1999. The year-over-year absolute dollar increases in
maintenance, support and services revenues were attributable to the higher
cumulative installed customer base, from new and existing customers, which
resulted in increased sales of maintenance agreements and consulting services.

   Revenues based on the geographic location of customers were as follows (in
thousands):

<TABLE>
<CAPTION>
                                                  For the years ended
                                               --------------------------
                                               June 29, June 30, July 2,
                                                 2001     2000    1999
                                               -------- -------- --------
       <S>                                     <C>      <C>      <C>
       United States.......................... $113,175 $ 83,080 $ 86,945
       Europe.................................   31,812   28,570   38,625
       Other..................................   21,874   14,868   16,187
                                               -------- -------- --------
          Total revenues...................... $166,861 $126,518 $141,757
                                               ======== ======== ========
</TABLE>

   Revenues from sales outside of the United States represented 32%, 34% and
39% of total revenues for fiscal 2001, 2000 and 1999, respectively. Revenues
from sales outside of the United States increased in total by 24% to $53.7
million in fiscal 2001 from $43.4 million in fiscal 2000. The increase in
revenues from sales outside the United States in fiscal 2001 was primarily
attributable to the expansion of our customer bases and sales channels and an
increase in the size and productivity of our direct sales force in these
regions. Revenues from sales outside of the United States decreased in total by
21% from $43.4 million in fiscal 2000 to $54.8 million in fiscal 1999 because
the turnover in our direct sales force was greater in Europe than in the United
States. Our operating results from Europe and other regions are also impacted
by seasonal reductions in business activity in the summer months; however, to
date, the impact has not been material.

   A majority of our revenues are denominated in U.S. Dollars, the currency in
which we report our operating results. We also collect a portion of our
revenues in currencies other than the U.S. Dollar such as Canadian Dollars,
British Pounds Sterling, German Marks, French Francs, Australian Dollars and
Japanese Yen. We expect an increasing portion of our revenues to be denominated
and collected in the Single European Currency ("Euro") in the future. During
fiscal 2001, approximately 4% of our revenues were denominated and collected in
currencies that will be denominated and collected in the Euro. To date, the
foreign exchange gains and losses on transactions and revenues reported by
those subsidiaries to be denominated in the Euro have not been significant

                                      24

<PAGE>

nor have any costs related to the Euro conversion. Translation adjustments from
consolidation of such foreign operations are presented within comprehensive
income (loss).

  Cost of Revenues

   Cost of revenues increased 11% to $48.7 million in fiscal 2001 from $44.0
million in fiscal 2000. Cost of revenues decreased 10% to $44.0 million in
fiscal 2000 from $48.7 million in fiscal 1999. As a percentage of total
revenues, cost of revenues was 29% in fiscal 2001, and 34% in both fiscal 2000
and fiscal 1999. The absolute dollar increase in cost of revenues in fiscal
2001 is primarily attributable to a $2.9 million increase in the amortization
of developed technologies as a result of the push down accounting in fiscal
2001. Excluding the effect of the increase in amortization of developed
technologies, the cost of revenues was relatively unchanged. This was largely
attributable to a corporate-wide initiative to manage costs, while supporting
revenue growth. The absolute dollar decrease in cost of revenues in fiscal 2000
was a result of a $9.0 million decline in amortization and write-off of
developed technologies, offset in part by increased salaries and benefit
expenses related to increased technical support and professional services
personnel.

   Cost of licensing revenues. Cost of licensing revenues consists primarily of
materials, packaging and distribution of software, related fulfillment
personnel and third party royalties. The cost of licensing revenues increased
40% to $5.7 million in fiscal 2001 from $4.1 million in fiscal 2000, but
decreased 3% to $4.1 million in fiscal 2000 from $4.2 million in fiscal 1999.
As a percentage of licensing revenues, cost of licensing revenues decreased to
5% in fiscal 2001 from 6% in fiscal 2000 and 5% in fiscal 1999. The increase in
cost of licensing revenues in absolute dollars was primarily due to the
increased volume of shipments during fiscal 2001. We expect cost of licensing
revenues to increase in absolute dollars and as a percentage of total revenues
because of costs incurred with new product releases, increased order
fulfillment costs, new packaging of our products and printing costs associated
with revised documentation materials. The increased cost of licensing revenues
as a percentage of licensing revenues in fiscal 2000 was due in part to a
write-down of obsolete product materials.

   Cost of maintenance, support and services revenues. Cost of maintenance,
support and services revenues consists of personnel and related overhead costs
for technical support, training, consulting, maintenance services and the cost
of materials delivered with enhancement releases. The cost of maintenance,
support and services revenues increased 1% to $39.9 million in fiscal 2001 from
$39.7 million in fiscal 2000 and increased 13% from $35.2 million in fiscal
1999. As a percentage of maintenance, support and services revenues, cost of
maintenance, support and services revenues were 67% in fiscal 2001, 76% in
fiscal 2000, and 71% in fiscal 1999. The decline in cost of maintenance,
support and services revenues as a percentage of maintenance, support and
services revenues was primarily attributable to an increased use of company
personnel rather than sub-contracted consultants to perform customer services
and more efficient delivery of some of our support services. The absolute
dollar increase in fiscal 2000 was due to increases in maintenance, support and
services personnel and related salaries and benefits. Cost of maintenance,
support and services revenues may vary between periods because of the mix of
services we provide and the extent to which we use outside consultants to
assist us.

   Amortization and write-off of developed technologies. Amortization and
write-off of developed technologies increased to $3.1 million in fiscal 2001
from $198,000 in fiscal 2000. Amortization and write-off of developed
technologies decreased 98% to $198,000 in fiscal 2000 from $9.2 million in
fiscal 1999. As a percentage of total revenues, amortization and write-off of
developed technologies were 2% in fiscal 2001, 0% in fiscal 2000 and 6% in
fiscal 1999. The increase in amortization of developed technologies in fiscal
2001 was attributable to the push down of the net fair value of our intangible
assets of $29.4 million acquired by New SAC on November 22, 2000, which
included $15.2 million related to developed technologies. Effective November
23, 2000, we began amortizing developed technology over 36 months. The decrease
in the amortization and write-off of developed technologies in fiscal 2000 was
primarily attributable to intangible assets that were fully amortized during
fiscal 1999 and a $4.7 million write-off of certain developed technologies that
occurred during fiscal 1999.

                                      25

<PAGE>

  Gross Profit

   Our gross profit as a percentage of total revenues increased to 71% in
fiscal 2001 from 66% in fiscal 2000 and 66% in fiscal 1999. The increase in our
gross profit was primarily attributable to the low total dollar cost of
licensing revenues relative to total dollar amount of licensing revenues.
Therefore, while cost of licensing revenues generally increased by the same
magnitude as licensing revenues, the absolute dollar increase in cost of
licensing may be lower, resulting in improved gross profits. In addition, we
grew our maintenance, support and services revenues at a greater rate than the
cost of maintenance, support and services, resulting in improved gross profits.

  Operating Expenses

   Sales and Marketing. Sales and marketing expenses include salaries,
commissions and bonuses earned by sales and marketing personnel, advertising
and product promotional activities and related facilities and other costs.
Sales and marketing expenses increased 13% to $72.8 million in fiscal 2001 from
$64.6 million in fiscal 2000 and increased 1% to $64.6 million in fiscal 2000
from $64.1 million in fiscal 1999. As a percentage of total revenues, sales and
marketing expenses decreased to 44% in fiscal 2001 from 51% in fiscal 2000 and
increased in fiscal 2000 from 45% in fiscal 1999. The absolute dollar increase
in sales and marketing expenses in fiscal 2001 was primarily due to the
rebuilding and expansion of our sales force. The decrease as a percentage of
total revenues for fiscal 2001 was primarily attributable to the increase in
productivity of our sales force and the resultant increase in revenues. We
expect sales and marketing expenses to increase in absolute dollars and to vary
as a percentage of total revenues as we continue to increase our direct sales
force and promote our products and services.

   Research and Development. Research and development expenses consist
primarily of personnel and related costs associated with the development of new
products, the enhancement and localization of existing products, quality
assurance and testing. Research and development expenses increased 7% to $28.2
million in fiscal 2001 from $26.4 million in fiscal 2000 and increased 16% to
$26.4 million in fiscal 2000 from $22.6 million in fiscal 1999. As a percentage
of total revenues, research and development expenses decreased to 17% in fiscal
2001 from 21% in fiscal 2000 and increased in fiscal 2000 from 16% in fiscal
1999. The increases in research and development expenses in absolute dollars
for the respective periods were primarily due to increases in personnel and
related expenses. We expect research and development expenses to continue to
increase in absolute dollars as we continue to invest in our products.

   General and Administrative. General and administrative expenses consist
primarily of personnel costs for finance, legal, human resources, information
systems and other administrative costs, including bad debt expenses. General
and administrative expenses decreased 11% in fiscal 2001 to $18.6 million from
$20.9 million in fiscal 2000 and increased 51% to $20.9 million in fiscal 2000
from $13.8 million in fiscal 1999. As a percentage of total revenues, general
and administrative expenses decreased to 11% in fiscal 2001 from 17% in fiscal
2000 and increased in fiscal 2000 from 10% in fiscal 1999. The decrease in
absolute dollars in fiscal 2001 was primarily attributable to a decline in
outside services expense including accounting and other costs related to
meeting initial regulatory reporting requirements during fiscal 2000. The
decline was also because of more efficient management of general and
administrative expenses, including bad debt expenses, which declined by
approximately 70% compared to fiscal 2000. This decline was partially offset by
increases in personnel and related salaries and benefit costs. The increase in
absolute dollars in fiscal 2000 was primarily attributable to increases in
personnel costs related to the transition of accounting and other functions
from Seagate Technology, increased legal and accounting expenses associated
with increased legislative reporting requirements during fiscal 2000, and an
increase in bad debt expenses. We expect general and administration expenses to
vary in absolute dollars and as a percentage of total revenues as we continue
to progress our company.

   Amortization of Goodwill and Other Intangibles. Amortization of goodwill and
other intangibles decreased 33% in fiscal 2001 to $2.0 million from $3.0
million in fiscal 2000 and decreased 36% in fiscal 2000 to $3.0 million from
$4.8 million in fiscal 1999. As a percentage of total revenues, amortization of
goodwill and

                                      26

<PAGE>

intangibles decreased to 1% in fiscal 2001 from 2% in fiscal 2000, and
decreased to 2% in fiscal 2000 from 3% for fiscal 1999. Amortization of
goodwill and other intangibles up to November 22, 2000, arose from the purchase
of minority interests of prior share transactions between Seagate Software
Holdings and Seagate Technology. At November 22, 2000, as part of the New SAC
Transaction, the intangibles were revalued and pushed down to our Company at a
net fair value (excluding IPR&D) of $22.3 million. Assembled workforce
comprised $7.1 million of the revalued balance and we began amortizing this
balance over 36 months commencing on November 23, 2000. Amortization for fiscal
2001 decreased relative to fiscal 2000 due to a lower asset base and different
combination of assets. Amortization for fiscal 2000 decreased relative to
fiscal 1999 as intangible assets were fully amortized.

   Restructuring Costs. Restructuring costs were $573,000, representing less
than 1% of total revenues, for fiscal 2001. The charges related to the closure
of eight offices in Europe and were part of a restructuring plan announced in
September 2000 to consolidate the European sales organization into fewer office
locations. The charges were primarily comprised of costs related to the
termination of office leases and other related office closure costs, as well as
severance and benefits due to nine sales and marketing employees who were
terminated in September 2000. At June 29, 2001, amounts remaining accrued but
unpaid were not considered material. We believe this restructuring was not
significant and will not have a material impact on our future revenues,
operating costs or operating results.

   Restructuring charges were $1.3 million, representing 1% of total revenues,
in fiscal 2000. The charges resulted from a company-wide restructuring plan
announced in October 1999 to realign resources to better manage and control our
business. The charges comprised severance and benefits paid to approximately
125 employees from various locations and departments, including direct sales
force personnel, who were terminated on October 23, 1999. The restructuring
charges were paid during fiscal 2000 and no amounts were outstanding as of June
30, 2000. We believe there are no further restructuring liabilities related to
this plan. In addition, we believe that the future benefit of this plan, while
not quantifiable, is a more focused and productive company. Any benefits in the
form of cost reductions because of reduced salaries were realized by the end of
fiscal 2000 and are not expected to continue.

   Write-off of In-process Research and Development.  As part of the push down
of the purchase price allocation of the New SAC Transaction, $7.1 million of
IPR&D was recorded at November 22, 2000. This amount, which was 4% of our total
revenues in fiscal 2001, was written off in its entirety in fiscal 2001 as the
acquired technologies had not yet reached technological feasibility and there
were no future alternative uses.

   As the basis for identifying the IPR&D, our developmental projects were
evaluated in the context of Financial Accounting Standards Board Interpretation
4 and paragraph 11 of SFAS 2 and SFAS 86.

   At the valuation date, we were in the process of developing three next
generation versions of existing technologies which were estimated to be about
85%, 70% and 75% complete based on total man-hours and absolute time. We expect
these three projects to be completed prior to the end of fiscal 2002, at an
estimated total cost of $28 million. As at June 29, 2001, these projects were
on track for completion within the previously estimated time period. The nature
of the efforts required to develop the purchased IPR&D into commercially viable
products principally relate to the completion of all planning, designing,
prototyping, verification and testing activities that are necessary to
establish that the product can be produced to meet its design specifications,
including functions, features and technical performance requirements. We expect
that the acquired IPR&D will be successfully developed, but we cannot ensure
that commercial viability of these products will be achieved.

   The value of the purchased IPR&D was determined by estimating the projected
net cash flows related to such products, including costs to complete the
development of the technology and the future revenues to be earned on
commercialization of the products. These cash flows were then discounted back
to their net present value. The projected net cash flows from such projects
were based on management's estimates of revenues and operating profits related
to these projects.

                                      27

<PAGE>

   Unusual Items. Unusual items in fiscal 2001 of $1.9 million, or 1% of total
revenues, comprised the push down of compensation expense attributable to our
employees arising from the acceleration and net exercise of Seagate Technology
options to purchase 51,500 shares of Seagate Technology common stock held by
our employees on November 22, 2000, the closing date of the New SAC
Transaction. Upon closing of the New SAC Transaction, vesting of Seagate
Technology options, other than the $184 million rollover equity, was
accelerated in full. The options were net exercised for merger consideration of
0.4465 shares of VERITAS common stock and $8.55 cash per share of Seagate
Technology common stock. The accelerated vesting and net exercise of these
options resulted in this compensation expense.

   Unusual items in fiscal 2000 of $242.6 million, or 192% of total revenues,
comprised the compensation expense and associated expenses attributable to our
employees related to the October 1999 Seagate Technology Exchange of Shares. In
connection with the merger of Seagate Daylight Merger Corp., with and into
Seagate Software Holdings in October 1999, Seagate Software Holdings minority
stockholders and optionees received payment in the form of 3.23 shares of
Seagate Technology common stock per share of Seagate Software Holdings common
stock, less any amounts due for the payment of the exercise price of
unexercised options. Seagate Technology accounted for the exchange of shares of
its common stock for stock options in Seagate Software Holdings held by
employees and stock held and vested by employees less than six months as the
settlement of an earlier stock award. Seagate Technology recorded compensation
expense of $283.6 million, plus $2.1 million of employer portion of payroll
taxes, related to the purchase of minority interest in Seagate Software
Holdings. Of the $283.6 million of compensation expense, $239.6 million of
compensation expense was allocated to us on the basis of employees specifically
identified with our business and for those employees that performed services
for us, on the basis of time estimates. In addition, the $2.1 million of the
employer portion of payroll taxes paid related to our employees and therefore
was recorded as an expense. We also incurred legal and accounting costs of
$877,000 with respect to this transaction.

   Unusual items in fiscal 1999 of $86.7 million, or 61% of total revenues,
comprised the compensation expense attributable to our employees related to the
June 1999 Seagate Technology Exchange Offer. In June 1999, Seagate Technology
exchanged shares of its common stock for shares of Seagate Software Holdings
common stock owned by employees, directors and consultants of Seagate Software
Holdings and its parent and subsidiaries. For those shares outstanding and
vested less than six months, Seagate Software Holdings recorded compensation
expense of $102.5 million equal to the fair value of the shares purchased less
the original purchase price paid by the employees, plus $630,000 of employer
portion of payroll taxes. Of the $102.5 million of compensation expense,
Seagate Software Holdings allocated $77.5 million of compensation expense to us
on the basis of employees specifically identified with our business and for
those employees that performed services for us, on the basis of time estimates.
In addition, the $630,000 of employer portion of payroll taxes paid, related to
our employees and therefore was recorded as an expense. We also expensed the
$8.6 million of compensation expense for the purchase of unvested stock options
held by certain of our continuing employees.

   After the completion of the October 1999 Seagate Technology Exchange of
Shares transaction, we established new non-compensatory stock option plans, the
1999 Stock Option Plan ("1999 Plan") and our 2000 Stock Option Plan ("2000
Plan"), (collectively the "Crystal Decisions Plans"). The Crystal Decisions
Plans provide for the issuance of incentive and nonstatutory stock options to
employees, directors and consultants of our company, our parent and its
subsidiaries. We did not record any compensation expense under these plans in
fiscal 2001 or fiscal 2000.

   Interest and Other Income (Expense), Net. Interest and other income
(expense), net consists of interest income, interest expense and net foreign
currency exchange gains or losses. Interest and other income (expense), net
increased to $2.7 million in fiscal 2001 from $20,000 in fiscal 2000 and
decreased to $20,000 in fiscal 2000 from $56,000 in fiscal 1999. Interest and
other income (expense), net fluctuates on a year-to-year basis depending on
fluctuations in Seagate Technology LLC's in-house portfolio yield, LIBOR, our
net outstanding loan balance from Seagate Technology LLC, and for the net
foreign currency gains or losses, change in foreign currency exchange rates.
Beginning in fiscal 2001, we earned interest income on a monthly basis on net

                                      28

<PAGE>

receivable balances outstanding at a rate calculated to be Seagate Technology
LLC's in-house portfolio yield (average of 6.46% for fiscal 2001). The increase
in interest and other income during fiscal 2001 was primarily attributable to
interest earned on balances receivable under the revolving loan agreement
during the year and on excess cash managed by Seagate Technology LLC on our
behalf. Net interest income of $1,845,000 was earned and net interest expense
of $583,000 was incurred on the net receivable/payable balance for fiscal 2001
and fiscal 2000, respectively. The outstanding loan balance fluctuates
depending on working capital required to fund operations. In addition, our net
loan or receivable balance historically was offset by and fluctuated as a
result of amounts due or receivable from Seagate Technology under a tax
allocation agreement we had with Seagate Technology.

   During fiscal 2000 and fiscal 1999, for our borrowings from or balances due
from Seagate Technology, we paid or earned interest at LIBOR plus 2% per annum
on borrowings or amounts receivable (average of 7.85% in fiscal 2000).

   The net foreign currency exchange gain or loss represents the impact of
foreign currency fluctuations on the translation of foreign currency
transactions into U.S. Dollars and varies depending upon currency exchange
rates. We recorded foreign currencies gains of $701,000, $519,000 and $39,000,
respectively, for fiscal 2001, fiscal 2000, and fiscal 1999 as a result of
foreign currency fluctuations.

   Income Taxes. We recorded an income tax provision of $1.2 million at an
effective rate of -12% in fiscal 2001 compared with a $55.1 million income tax
benefit at an effective rate of 20% in fiscal 2000 and a $2.5 million income
tax benefit at an effective rate of 3% in fiscal 1999.

   A valuation allowance has been provided against the deferred tax assets
arising from temporary differences and operating losses carried forward due to
the uncertainty of their realizability. The tax expense for fiscal 2001
included benefits recorded during the period from July 1, 2000 to November 22,
2000 under the tax allocation agreement we had with Seagate Technology.

   The effective rate used to record the expense from income taxes for fiscal
2001 was different from the U.S. federal statutory tax rate primarily due to
operating in various foreign jurisdictions which have differing tax treatments
as compared to the U.S., as well as due to an increase in the valuation
allowance for U.S. deferred tax assets arising subsequent to the termination of
the tax allocation agreement on November 22, 2000 and nondeductible charges
arising from push down accounting. The effective rate used to record the income
tax benefit in fiscal 2000 was less than the U.S. federal statutory tax rate
primarily due to non-deductible expenses incurred in foreign jurisdictions in
connection with the October 1999 recapitalization and reorganization of Crystal
Decisions, including the October 1999 Seagate Technology Exchange of Shares.
The effective rate used to record the income tax benefit in fiscal 1999 was
less than the U.S. federal statutory tax rate primarily due to non-deductible
compensation expense for certain employees associated with the June 1999
Seagate Technology Exchange Offer and increases in the valuation allowance for
deferred tax assets.

   From the date of closing of the New SAC Transaction, we no longer file
federal income tax returns on a consolidated basis with Seagate Technology.
Therefore, Seagate Technology will not benefit from nor will it reimburse us
pursuant to the tax allocation agreement for tax losses sustained by us
subsequent to consummation of the transaction.

  Selected Quarterly Financial Data (Unaudited)

   The table below shows our unaudited quarterly statements of operations data
for each of the eight quarters in the period ended June 29, 2001. This
information has been derived from our unaudited consolidated and combined
financial statements, which, in our opinion, have been prepared on the same
basis as our audited consolidated and combined financial statements and include
all adjustments, consisting only of normal recurring

                                      29

<PAGE>

adjustments, necessary for the fair presentation of the information for the
quarters presented. The operating results for any quarter are not necessarily
indicative of the operating results for any future period.

<TABLE>
<CAPTION>
                                                                     For the Quarters Ended
                             -----------------------------------------------------------------------------------------
                              June 29,    Mar. 30,     Dec. 29,     Sept. 29,    June 30,     Mar. 31,     Dec. 31,
                                2001        2001         2000         2000         2000         2000         1999
                             ----------- -----------  -----------  -----------  -----------  -----------  -----------
                                                        (in thousands, except share and per share data)
<S>                          <C>         <C>          <C>          <C>          <C>          <C>          <C>
Revenues.................... $    46,218 $    43,594  $    40,145  $    36,904  $    33,956  $    34,387  $    30,298
Gross profit................ $    32,919 $    30,920  $    28,524  $    25,804  $    23,012  $    23,867  $    19,353
Net income (loss)........... $       564 $    (1,546) $    (8,308) $    (2,179) $    (2,173) $    (1,103) $  (213,234)
Net income (loss) per share,
 basis and diluted.......... $      0.01 $     (0.02) $     (0.11) $     (0.03) $     (0.03) $     (0.01) $     (2.84)
Weighted average number of
 shares, basic and diluted..  75,386,024  75,314,983   75,240,507   75,073,753   75,002,050   75,001,537   75,001,000
</TABLE>
<TABLE>
<CAPTION>


                               Oct. 1,
                                1999
                             -----------

<S>                          <C>
Revenues.................... $    27,877
Gross profit................ $    16,311
Net income (loss)........... $    (4,652)
Net income (loss) per share,
 basis and diluted.......... $     (0.06)
Weighted average number of
 shares, basic and diluted..  75,001,000
</TABLE>

   Net Revenues. Our quarterly revenues increased throughout fiscal 2001 and
fiscal 2000 because of the growth in the size and productivity of our sales
force during fiscal 2000 and fiscal 2001. In addition new product releases
during fiscal 2001 and fiscal 2000, such as Crystal Reports 8.0 in February
2000 and Crystal Reports 8.5 and Crystal Enterprise in March 2001, contributed
to the increases in revenues.

   Gross Profit. Our gross profit per quarter increased throughout fiscal 2001
and fiscal 2000 because of the growth in our licensing revenues, which have
higher margins than our maintenance, support and services revenues. In
addition, a decline in the cost of maintenance, support and services as a
percentage of total revenues during fiscal 2001 contributed to the increase in
gross profit. The decline in cost of maintenance, support and services revenues
as a percentage of maintenance, support and services revenues is primarily
attributable to an increased use of company personnel rather than
sub-contracted consultants to perform our services and more efficient delivery
of some of our support services.

   Net Income (Loss). Our net income (loss) position continued to improve
during fiscal 2001 and fiscal 2000 because of a company-wide effort to control
our costs. The net loss of $8.3 million for the quarter ended December 29, 2000
included a $7.1 million write-off of IPR&D and the push down of $1.9 million of
non-cash compensation expense, both arising from the New SAC Transaction.

   In addition, during the quarter ended December 31, 1999 we recorded an
unusual expense of $242.2 million. This unusual expense represented the
compensation expense and associated expenses attributable to our employees
related to the October 1999 Seagate Technology Exchange of Shares. This unusual
item expense was partially offset by $39.8 million of tax benefits for the
quarter at an effective rate of 16%. This effective rate was less than the U.S.
federal statutory tax rate primarily due to non-deductible compensation expense
for certain employees related to the October 1999 Seagate Technology Exchange
of Shares.

   Our operating results have varied significantly from quarter to quarter in
the past and may continue to fluctuate in the future. The quarterly
fluctuations are caused by a number of factors, including demand for our
products and services, size and timing of specific sales, product and price
competition, timing and market acceptance of new product introductions and
product enhancements by us and our competitors, the length of our sales cycle,
personnel changes, budgeting cycles of our customers, changes in technology and
changes caused by the rapidly evolving market for business intelligence
products. Many of these factors are beyond our control. Therefore, we believe
that results of operations for interim periods should not be relied upon as any
indication of the results to be expected or achieved in any future period.

Liquidity and Capital Resources

   Prior to the New SAC Transaction, Seagate Technology, as part of a general
services agreement, provided cash management services to us. New SAC continues
to provide these services through Seagate Technology LLC, a subsidiary of
Seagate Technology Holdings, Inc., and an indirect subsidiary of New SAC.
Seagate

                                      30

<PAGE>

Technology LLC uses a centralized cash management function for its domestic
operations, including certain of our domestic operations. As at June 29, 2001,
$31.0 million of our cash and cash equivalents were held in U.S. deposits
managed by Seagate Technology LLC on our behalf. The remainder of our cash
balances were maintained by our foreign operations. Foreign currency deposits
are primarily Canadian Dollars, British Pounds Sterling, Japanese Yen and
currencies tied to the Euro. Our cash is maintained in highly liquid operating
accounts. At June 29, 2001, our cash balances totaled $34.4 million, an
increase of $30.8 million from $3.6 million as of June 30, 2000. The increase
in cash at June 29, 2001 was attributable to the repayment of $31.0 million by
Seagate Technology LLC of the loan receivable balance under the revolving loan.
The revolving loan agreement provides for maximum outstanding borrowings of up
to $15.0 million.

   Prior to fiscal 2001, our operations were financed by borrowings from
Seagate Technology. These borrowings were available to us under a revolving
loan agreement with Seagate Technology that was renewed in July 2001 by Seagate
Technology LLC. As renewed on July 4, 2001, our revolving loan agreement with
Seagate Technology LLC expires on July 4, 2002. If not paid earlier, the loan
is payable or receivable upon termination of the agreement. As of June 30,
2000, the revolving loan was in a net receivable balance of $25.7 million, and
while the funds were available for use, no amounts were borrowed under the
agreement in fiscal 2001. The net receivable arose largely because of
offsetting amounts due from Seagate Technology under a tax allocation agreement
for income tax loss benefits utilized by Seagate Technology relative to our tax
loss position.

   Beginning July 4, 2000, we earned interest income on a monthly basis on net
receivable balances outstanding at a rate calculated to be Seagate Technology
LLC's in-house portfolio yield (average of 6.46% for fiscal 2001) and were
charged interest expense on a monthly basis on net amounts payable (nil for
fiscal 2001) at LIBOR plus 2% (average of 7.78% for fiscal 2001). During fiscal
2000 and fiscal 1999, we paid or earned interest at LIBOR plus 2% per annum on
net outstanding balances payable or receivable (average of 7.85% for fiscal
2000). Effective July 4, 2001, we will continue to earn interest on amounts due
under the revolving loan agreement at a rate calculated to be Seagate
Technology LLC's in-house portfolio yield; however, we will be charged interest
at LIBOR plus 3.5% on amounts borrowed.

   Net cash provided by operating activities was $13.0 million in fiscal 2001
and net cash used in operating activities was $21.6 million in fiscal 2000. The
cash provided by operating activities in fiscal 2001 was primarily attributable
to a $4.0 million increase in income tax benefits received from Seagate
Technology under a tax allocation agreement and earnings from operations of
$9.3 million after non-cash expenses. The cash used in operating activities in
fiscal 2000 was primarily attributable to the $66.2 million increase in income
tax benefits received from Seagate Technology under a tax allocation agreement
and a $13.3 million decrease in accrued employee compensation, offset by a
$24.2 million decline in accounts receivable and cash operating income of $28.4
million. The increase in income taxes receivable from Seagate Technology was
attributable to our tax losses utilized by Seagate Technology during fiscal
2000, relating to the fiscal 2000 tax benefit and prior years losses. The
decline in accrued employee compensation was primarily attributable to the
payment in fiscal 2000 of the $9.3 million compensation expense and related
employer portion of payroll taxes related to the June 1999 Seagate Technology
Exchange Offer. The decline in accounts receivable balance was the result of a
concerted effort to manage accounts receivable and reduce the days sales
outstanding in fiscal 2000 compared to fiscal 1999.

   Net cash used in investing activities was $9.6 million in fiscal 2001 and
$6.4 million in fiscal 2000. Net cash used in investing activities in fiscal
2001 was primarily for new office facilities, leasehold improvements, and the
purchase of computers, furniture and office equipment to support our expansion.
In the next 12 months, we intend to invest approximately $15.0 million in
capital assets. These anticipated capital expenditures include leasehold
improvements at office locations, computer equipment and enhancements to our
internal financial information systems. Additionally, product development
activities may require cash to acquire technology.

   Net cash provided by financing activities was $27.8 million in fiscal 2001
and $24.1 million in fiscal 2000. The net cash provided by financing activities
for fiscal 2001 was primarily attributable to the repayment of the

                                      31

<PAGE>

majority of the amounts due to us under a revolving loan from Seagate
Technology LLC and cash received from option exercises. The net cash provided
by financing activities in fiscal 2000 was attributable to amounts borrowed and
repaid under the revolving loan agreement with Seagate Technology LLC to fund
working capital and operating activities. The revolving loan balance was offset
by amounts due from or payable to Seagate Technology under the tax allocation
agreement. The net revolving loan balance as of June 29, 2001 was a receivable
balance of $3.4 million, a decrease of $22.3 million from the receivable
balance of $25.7 million at the end of fiscal 2000.

   We believe our combined sources of financing: current cash balances;
available borrowings from Seagate Technology LLC under the revolving loan
agreement; and cash flows generated from our operations will be sufficient to
meet our anticipated cash needs for working capital, capital expenditures and
lease commitments for at least the next 12 months. Should we require additional
financing that is not available from Seagate Technology LLC on terms that are
satisfactory to us, we may seek additional equity and financing from other
sources, subject to the concurrence by lenders who financed the New SAC
Transaction. As a result of the New SAC Transaction, we guaranteed the debt
used to finance the New SAC Transaction and pledged a majority of our assets.
As a result of restrictive covenants under the debt agreement, our ability to
raise additional debt or equity from other sources may be limited.

   Although our assets have been pledged and we, along with other subsidiaries
of New SAC, guaranteed debt in connection with the New SAC Transaction, New SAC
will not require our cash flow to be used to service the obligations pursuant
to the senior secured credit facility and the senior subordinated notes. We
believe that none of the guarantees or pledges of assets under the senior
credit facilities or the guarantee under the related Indenture are likely to be
invoked.

New Accounting Pronouncements

   On June 29, 2001, the Financial Accounting Standards Board approved the
issuance of Statements of Financial Accounting Standards No. 141 ("SFAS 141"),
"Business Combinations", and No. 142 ("SFAS 142"), "Goodwill and Other
Intangible Assets". SFAS 141 requires all business combinations initiated after
June 30, 2001 to be accounted for using the purchase method. In addition, SFAS
141 requires intangible assets to be recognized apart from goodwill. SFAS 141
applies to us effective July 1, 2001. Under SFAS 142, which is effective for
all fiscal years beginning after December 15, 2001, goodwill is no longer
subject to amortization over its estimated useful life. Rather, goodwill is
subject to at least an annual assessment for impairment applying a fair-value
based test. Additionally, intangible assets deemed to have indefinite lives
will no longer be amortized but will be subject to annual impairment tests in
accordance with the Statements. We are not required to adopt SFAS 142 until
June 29, 2002. We are still assessing the impact of these Statements on our
consolidated results of operations, financial position and cash flows.

Factors Affecting Future Operating Results

   You should be alerted that the following risks and uncertainties could
affect and in some instances in the past have affected our actual results and
could cause our results for future periods to differ materially. Additional
risks and uncertainties of which we are unaware or that we currently deem
immaterial also may become important factors and may adversely affect our
results of operations, financial condition or business.

  Risks Associated with the New SAC Transaction

   As a result of the New SAC Transaction, our business could be harmed
because:

  .  we will not receive any future benefits from our recently terminated
     intercompany tax allocation agreement, under which we received substantial
     cash payments, in the form of an offset to our loan under the revolving
     loan agreement from Seagate Technology for our income tax losses utilized
     by Seagate Technology relative to our tax loss position;

                                      32

<PAGE>

  .  we have pledged a majority of our assets to guarantee the debt obligation
     used to finance the New SAC Transaction, which could impair our ability to
     raise additional capital or debt;

  .  we may not continue to have access to the same level of administrative
     services and support from Seagate Technology LLC after the New SAC
     Transaction due to the more limited resources of Seagate Technology LLC,
     which may be a result of the burden of servicing the debt used to finance
     the New SAC Transaction, and we may incur additional changes or expenses
     to provide these services internally or obtain them from a third party;
     and

  .  we may continue to rely on our parent company and its affiliates to
     provide financing for some of our operating and capital needs.

  Risks from Restrictions under the Covenants of the Debt Financing of the New
  SAC Transaction

   New SAC and certain of its subsidiaries, including our company and certain
of our subsidiaries, are guarantors under the senior credit facilities and
senior subordinated notes used to finance the New SAC Transaction. In addition,
the majority of New SAC's and certain of its subsidiaries assets, including a
majority of our assets and our capital stock held indirectly by New SAC, have
been pledged against the debt under the senior credit facility.

   New SAC, and certain of its subsidiaries, including our company and certain
of our subsidiaries, have agreed to certain covenants, including restrictions
on future equity and borrowing transactions, business acquisitions and
disposals, making certain restricted payments and dividends, making certain
capital expenditures, incurring guarantee obligations and engaging in mergers
or consolidations. Further, our company, as part of the consolidated group, is
subject to certain financial covenants, which are assessed on the consolidated
operating results and financial position of New SAC and its subsidiaries.

   New SAC is highly leveraged and has significant debt service obligations. If
New SAC is unable to meet its debt obligations, we may be required to pay
amounts due under these debt agreements and may need to liquidate assets or New
SAC may need to sell its interests in our company as a whole to meet its
obligations.

   If New SAC is unable to meet the consolidated financial covenants under the
debt agreements, early repayment of debt may force us and certain of our
consolidated subsidiaries to contribute to the debt payments under the
guarantees and pledge obligations or to forego amounts receivable from Seagate
Technology LLC.

   The restrictive covenants under the debt agreements may prevent us from
making acquisitions, consolidations and certain capital expenditures, if
approval from the lenders are not obtained.

   We may be unable to obtain debt or other financing to support our liquidity
requirements and growth if waiver approval of the debt covenants cannot be
obtained or if New SAC is unable to provide additional financing to our
company.

  We Remain Liable to Third Parties after the New SAC Transaction and the
  Merger

   In the New SAC Transaction, Seagate Technology sold all of its operating
assets (including us) to New SAC, and New SAC and we have agreed to assume and
indemnify VERITAS for substantially all liabilities arising in connection with
our operating assets. As a result, we continue to face possible liabilities for
actions, events or circumstances arising or occurring both before and after the
New SAC Transaction and the Merger. Some areas of potential liability include:

  .  tax liabilities;

  .  obligations under federal, state and foreign pension and retirement
     benefit laws; and

  .  existing and future litigation.

                                      33

<PAGE>

   As a result of our obligations to indemnify VERITAS, we could experience a
material adverse effect on our business and financial performance.

  Risk from Composition of our Board of Directors

   As a result of the New SAC Transaction, the composition of our board of
directors has changed. Upon the closing of the New SAC Transaction in November
2000, our company became a majority owned subsidiary of Seagate Software
(Cayman) Holdings, a wholly owned subsidiary of New SAC. As a result of the
change in ownership, New SAC controls more than 85% of our common stock on a
fully diluted basis and has replaced two members of our board of directors and
added an additional director. Through its influence on our board of directors
and as majority stockholders, New SAC has the ability to change the direction
of our business, our operating budget and possible acquisition or sales of our
company.

  Revenue Growth and Economic Conditions

   The revenue growth and profitability of our business depend on the overall
demand for computer software and services, particularly in the Business
Intelligence and Information Infrastructure segments. Because a large
percentage of our revenue is derived from major corporate and government
customers, our business also depends on general economic and business
conditions. A softening of demand for computer software caused by a weakening
of the economy could cause our business, operating results and financial
condition to be materially adversely affected.

  Management of Growth

   Our future operating results will depend on our ability to manage growth,
continuously hire and retain significant numbers of qualified employees, and
accurately forecast revenues and control expenses. To manage our growth and
expansion, we need continuously to improve and implement our internal systems,
processes and controls. If we are unable successfully to do so then our
business, operating results and financial condition could be materially
adversely affected.

  Forecasting of Revenue

   Our management and sales force use a "pipeline" system, a common industry
practice, to forecast sales and trends in our business. Our sales personnel
monitor the status of all proposals, such as the date on which they estimate
that a customer will make a purchasing decision and the potential dollar amount
of the sale. We aggregate these estimates periodically in order to generate an
analysis of our sales pipeline. While this pipeline analysis provides us with
some guidance in business planning and budgeting, our estimates are necessarily
speculative and may not consistently correlate to revenues in a particular
quarter or over a longer period of time. Variations in the rate and timing of
conversion of our pipeline into actual revenue could cause us inaccurately to
plan or budget and thereby adversely affect our business. In particular, a
slowdown in the economy may cause purchasing decisions to be delayed, reduced
in amount or cancelled which will adversely affect the overall rate and timing
of conversion of our pipeline into actual revenue, so that our business,
operating results and financial condition could be materially adversely
affected.

  Dependence on Key Personnel and Hiring and Retention of Employees

   Our future performance depends to a significant degree upon the continued
service of our key members of management including particularly our President
and Chief Executive Officer, Gregory B. Kerfoot, our Chief Operating Officer,
William Gibson, and our Chief Financial Officer, Eric Patel as well as other of
our marketing, sales and product development personnel. We do not maintain key
man insurance on any of our officers or key employees. None of our officers or
key employees is bound by an employment agreement for any specific term. The
loss of one or more of our key personnel may have a material adverse effect on
our business, operating results and financial condition.

                                      34

<PAGE>

   We believe our future growth and success depends upon our ability to
attract, train and retain highly skilled management, marketing, sales and
product development personnel. We have experienced intense competition for such
personnel and there can be no assurance that we will be able to retain our key
employees or that we will be successful in attracting, assimilating and
retaining them in the future. If we cannot successfully hire and retain
qualified employees, our business, operating results and financial condition
would be materially adversely affected.

  Rights to use Software Licensed to us by Third Parties

   We occasionally license in certain technologies from third parties to be
used in our products, generally on a non-exclusive basis. The termination of
such licenses, or the failure of the third-party licensors adequately to
maintain or update their products, could delay our ability to ship certain of
our products while we seek to implement alternative technology offered by other
sources. In addition, alternate technology may not be available on commercially
reasonable terms or at all. If we are unable to obtain necessary or desirable
third-party technology licenses our business, operating results and financial
condition could be materially adversely affected.

  Risks from Potential Fluctuations in Annual and/or Quarterly Operating
  Results

   We often experience a high volume of sales at the end of our quarter.
Therefore, it may be late in the quarter before we are able to determine that
our costs are disproportionate to our actual sales. If this were to happen, we
would not be able to reduce these costs in a timely manner and, consequently,
we may experience a net loss or our net income may be reduced. In addition, our
operating results have been and, in the future, may be subject to significant
quarterly fluctuations as a result of a number of other factors including:

  .  general weakening of the economy resulting in a decrease in the overall
     demand for computer software and services;

  .  the size and timing of orders from and shipment of products to major
     customers;

  .  our ability to develop, introduce and market new products and product
     enhancements in a timely fashion;

  .  market acceptance of and demand for business intelligence and enterprise
     reporting software, generally, and our products in particular;

  .  the length of our sales cycles;

  .  personnel changes;

  .  our success in expanding our direct sales force and increasing our
     indirect distribution;

  .  changes in the prices of our products and our competitors' products;

  .  the mix of products and services of our customer orders, which can affect
     the timing of our revenue recognition;

  .  the amount of customization required for our customer orders, which can
     affect the timing of our revenue recognition;

  .  our ability accurately to predict the rate and timing of conversion of our
     direct sales "pipeline" into actual revenue;

  .  the impact of changes in foreign currency exchange rates on the cost of
     our products and the effective price of such products to foreign
     consumers;

  .  changes in our operating expense;

  .  competition and consolidation in our industry;

  .  the timing of new product releases; and

  .  seasonal factors, such as our typically lower pace of sales in our first
     fiscal quarter.

                                      35

<PAGE>

  Risks of Revenue Concentration

   We currently obtain most of our revenue from a limited number of software
products and anticipate this to be the case in the foreseeable future. Sales to
a small number of customers generate a disproportionate amount of our revenues.
For example, we derived 17% of our revenues from sales to Ingram in fiscal
2001. If Ingram reduces its purchases from us our business, financial condition
and results of operations would be materially adversely affected unless we
substantially increase sales to other customers. Because our contracts with
Ingram and other customers do not require them to purchase any specified number
of software licenses from us, we cannot be sure that our more significant
customers will continue to purchase our products at their current levels.

  Risks Associated with Long Sales Cycle

   To date, our customers have typically invested substantial time, money and
other resources and involved many people in the decision to license our
software products, including proprietary Crystal Reports, Crystal Enterprise,
Crystal Info and Crystal Holos. As a result, we may wait six to nine months
after the first contact with a customer for that customer to place an order
while they seek internal approval for the purchase of our products. During this
long sales cycle, events may occur that affect the size, timing or even
completion of the order. For example, the customer's budget and purchasing
priorities may change, or new competing technology may enter the marketplace.
We may lose sales or experience reduced sales as the result of this long sales
cycle, which would reduce our revenues.

  Risks Associated with Relying on Sales Staff, Channel Partners and Strategic
  Relationships

   We sell and support our products through:

  .  sales staff;

  .  third party distributors; and

  .  OEMs.

   We also have a strategic relationship with Microsoft that enables us to
bundle our products with Microsoft's products, and we have developed and are
developing certain utilities and products to be a part of Microsoft's products.
If Microsoft reduces the nature and extent of its relationship with us and
instead develops a relationship with one of our competitors, our business,
operating results and financial condition in the long term may be impacted.

   We have made significant expenditures in recent years to expand our sales
and marketing force. Our future success will depend in part upon the
productivity of our sales and marketing force. We believe that our ability to
continue to attract, integrate, train, motivate and retain new sales and
marketing personnel will also affect our success. We face intense competition
for sales and marketing personnel in the software industry, and we cannot be
sure that we will be successful in hiring and retaining such personnel in
accordance with our plans. Even if we hire and train sufficient numbers of
sales and marketing personnel, we cannot be sure that our recent and other
planned expenses will generate enough additional revenues to exceed these
costs.

   We generate a substantial portion of our revenues by selling our products to
distributors and OEMs. Our distributors and OEMs decide whether or not to
include our products with those they sell and generally can carry and sell
product lines that are competitive with ours. Because distributors and OEMs
carry other product lines and are not required to make a specified level of
purchases from us, we cannot be sure that they will prioritize selling our
products. These distributors are also generally entitled to terminate their
relationship with us without cause. Our business, financial results and
operating condition would be materially adversely affected if some or all of
our current distributors and OEMs discontinued selling our products and we
failed to find comparable replacements.

                                      36

<PAGE>

  New Product Development and Technological Change

   Our products are used in combination with other software. Our future success
depends on our ability to continue to support a number of popular operating
systems and databases. The emergence of new industry standards in related
fields may adversely affect the demand for our existing products. This could
happen, for example, if new web standards and technologies emerged that were
incompatible with customer deployments of our applications. Our applications
run primarily on the Microsoft operating systems. Therefore, our ability to
increase sales currently depends on the continued acceptance of the Microsoft's
operating system products. We cannot currently market all of our current
business intelligence applications to potential customers who use Unix
operating systems as their application server. Although we have invested
substantial resources to develop a complete Unix product line, we cannot be
certain that we will be able to introduce such a product line on a timely or
cost-effective basis or at all.

   Business intelligence applications are inherently complex, and it can take a
long time to develop and test major new products and product enhancements. In
addition, customers may delay their purchasing decisions because they
anticipate that new or enhanced versions of our products will soon become
available. We cannot be sure that we will succeed in developing and marketing,
on a timely and cost-effective basis, product enhancements or new products that
respond to technological change, introductions of new competitive products or
customer requirements, nor can we be sure that our new products and product
enhancements will achieve market acceptance.

   The markets for our products are characterized by rapidly changing
technology, changing customer needs, evolving industry standards and frequent
new product introductions and enhancements. Our future success therefore will
depend on our ability to design, develop, test and support new software
products and enhancements on a timely and cost-effective basis.

   If we do not respond to changing market conditions, emerging industry
standards and changing customer requirements by developing and introducing new
products in a timely manner, then our business, operating results or financial
condition could be materially adversely affected.

  Risks of Systems Failures

   Our operations are dependent on our ability to protect our computer
equipment and the information stored in our databases from damage by
catastrophic events such as fire, natural disaster, power loss,
telecommunications failures and unauthorized intrusion. We believe that we have
taken prudent measures to reduce the risk of interruption in our operations.
However, we cannot be sure that these measures are sufficient. Any damage or
failure that causes interruptions in our operations could have a material
adverse effect on our business, results of operations and financial condition.
For example, although we maintain business insurance, our operations may be
subject to some disruption that is not covered under our policies or the dollar
amount of the damages may exceed the applicable coverage limits.

  Risks from International Operations

   We have significant international operations including development
facilities, sales personnel and customer support operations. We derived 32%,
34% and 39% of our total revenues from sales outside of the United States for
fiscal 2001, fiscal 2000 and fiscal 1999, respectively. Our international
operations are subject to certain inherent risks including:

  .  fluctuations in currency exchange rates;

  .  uncertainties and potential disruption due to the currency conversion to
     the Euro in many European countries;

  .  import and export restrictions, as well as tariffs;

                                      37

<PAGE>

  .  lack of acceptance of localized products;

  .  longer payment cycles for sales in certain foreign countries;

  .  difficulties in staffing and managing international operations;

  .  seasonal reductions in business activity in the summer months in Europe
     and certain other countries;

  .  increases in tariffs, duties, price controls, other restrictions on
     foreign currencies or trade barriers imposed by foreign countries;

  .  potentially adverse tax consequences;

  .  management of an enterprise spread over various countries; and

  .  the burden of complying with a wide variety of foreign laws.

   These factors could have a material adverse effect on our business,
operating results and financial condition in the future. In addition, we intend
to continue to invest resources to expand our sales and support operations into
strategic international locations. If the international revenues generated by
these expanded operations are not adequate to offset the expense of
establishing these foreign operations then our business, operating results and
financial condition could be materially harmed.

   Our products are generally priced in U.S. Dollars even when sold to
customers who are located outside of the United States. Currency instability in
foreign financial markets may make our products more expensive than products
sold by other manufacturers that are priced in one of the effected currencies.
Therefore, foreign customers may reduce purchases of our products.

  Risks from Conversion to Euro

   On January 1, 1999, certain member states of the European Economic Community
fixed their respective currencies to a new currency, the Euro. On that day, the
Euro became a functional legal currency within these countries. Until December
31, 2001, business in these countries will be conducted both in the existing
national currency, such as the French Franc or the German Mark, as well as the
Euro. Companies operating in or conducting business in these countries will
need to ensure that their financial and other software systems are capable of
processing transactions and properly handling the existing currencies and the
Euro.

   In July 2001, we began conducting sales and paying expenses in the Euro.
Although the introduction and use of the Euro has not had a material adverse
impact on our financial condition to date, there can be no assurance that it
will not have such an impact in the future.

  Dependence on Proprietary Technology

   Our success is heavily dependent on our proprietary technology. We rely
primarily on the following to protect our proprietary rights:

  .  patents;

  .  copyrights;

  .  trademarks and trade secret rights;

  .  state and common law trade secret laws;

  .  confidentiality procedures;

  .  employee and third party nondisclosure agreements; and

  .  licensing restrictions.

                                      38

<PAGE>

   Such efforts provide only limited protection. We also rely in part on
shrink-wrap licenses that are not signed by end-users and, therefore, may be
unenforceable under the laws of certain jurisdictions.

   Even though we take these steps, we have only limited protection for our
proprietary rights in our software, which makes it difficult to prevent third
parties from infringing upon our rights. Someone may be able to copy or
otherwise obtain and use our products and technology without authorization.
Policing unauthorized use of our products is difficult. Although we cannot
determine the extent of existing piracy of our products, we expect that
software piracy will be a persistent problem. Third parties may also develop
similar technology independently. We believe that effective protection of
intellectual property rights is unavailable or limited in certain foreign
countries. In addition, the laws of many countries do not protect our
proprietary rights to as great an extent as the United States.

   Our competitors may successfully challenge the validity or scope of our
patents, copyrights and trademarks. We cannot be sure that our patents,
copyrights and trademarks will provide us with a competitive advantage or that
our competitors will not design around any patents issued to us. We are not
aware that any of our products infringe upon the proprietary rights of third
parties, but, in the future, third parties may claim that our current or future
products infringe that party's rights. We believe that software product
developers will be increasingly subject to claims of infringement as the
functionality of products in our industry segment overlaps. If we were subject
to a claim of infringement, regardless of the merit of our defense, such claim
would have the following impacts on us that could have a material adverse
effect on our business, operating results or financial condition in the
following ways:

  .  require costly litigation to resolve;

  .  absorb significant management time;

  .  require us to enter into unfavorable royalty or license agreements;

  .  require us to cease selling our products;

  .  require us to indemnify our customers; or

  .  require us to expend additional development resources to redesign our
     products.

  Government Regulation May Impact Our Business

   Due to increasing use of the internet and the dramatically increased access
to personal information, the U.S. federal and various state and foreign
governments have recently proposed increased limitations on the collection and
use of personal information of users of the internet and other public data
networks.

   Although we attempt to obtain permission from users prior to collecting or
processing their personal data, new laws or regulations governing personal
privacy may change the ways in which we and our customers and affiliates may
gather this personal information. In addition, in Europe, the European Union
Directive on Data Protection, a comprehensive administrative and regulatory
program, currently limits the ability of companies to collect, store and
exchange personal data with other entities.

   Our growing business, eBusiness and our marketing strategy depend upon our
receiving personal information about subscribers. Privacy concerns may cause
some potential subscribers to forego subscribing to our service. If new laws or
regulations prohibit us from using information in the ways that we currently
do, or if users opt out of making their personal preferences and information
available to us and our affiliates, this could have a material adverse effect
on our business, operating results and financial condition. If personal
information is misused by us, our legal liability may be increased and our
growth may be limited.

                                      39

<PAGE>

   Our success depends on increased use of the internet for eCommerce and other
commercial and personal activities. Consumers and businesses may choose not to
use the internet for a number of reasons, including:

  .  internet access costs;

  .  inconsistent service quality;

  .  unavailability of cost-effective, high-speed service;

  .  perceived security risks, such as a lack of confidence in encryption
     technology; and

  .  privacy concerns.

   In addition, governmental agencies and legislators may generate new laws and
regulations covering issues such as obscenity, freedom of expression, pricing,
content and quality of products and services, copyright and other intellectual
property issues and taxation. Such legislation or rule making could dampen the
growth in internet use generally and decrease the acceptance of the internet as
a commercial medium. If use of the internet decreases, some of our customers
may purchase fewer licenses for our software products and our operating results
would be harmed.

  Software Product Errors or Defects

   Software products as complex as those we offer frequently contain undetected
errors, defects, failures or viruses especially when first introduced or when
new versions or enhancements are released or are configured to individual
customer systems. Despite product testing, our products may contain undetected
defects, errors or viruses. If our products have errors, they could:

  .  cause a negative customer reaction that could reduce future sales;

  .  generate negative publicity regarding us and our products;

  .  harm our reputation;

  .  reduce or limit customers' adoption of our products;

  .  require us to incur additional service and warranty costs;

  .  require us to make extensive changes to the product;

  .  require us to divert additional development resources; or

  .  result in customers' delaying their purchase until the errors or defects
     have been remedied, which would cause our revenues to be reduced or
     delayed.

   Any of these occurrences could have a material adverse effect upon our
business, operating results or financial condition.

   Our license agreements with our customers typically contain provisions
designed to limit our exposure to potential product liability claims. Existing
or future federal, state or local laws or ordinances or unfavorable judicial
decisions may make these provisions ineffective. Because our products are used
in system management, resource optimization and business intelligence
applications, our liability could be substantial if we receive an unfavorable
judgment. In addition, our insurance against product liability risks may not be
adequate to cover a potential claim. These factors could have a material
adverse effect upon our business, operating results or financial condition.

  Risks of Litigation

   On November 10, 1997, Vedatech commenced an action in the Chancery Division
of the High Court of Justice in the United Kingdom against Crystal Decisions
(UK) Limited, a wholly owned subsidiary of Crystal

                                      40

<PAGE>

Decisions. The original pleading alleged a breach of an oral agreement and
infringement of a Vedatech's U.K. copyright in one of our products and sought
monetary and injunctive relief. On August 22, 2000, Vedatech requested and
obtained permission from the court to amend its action to include claims for
unjust enrichment, unlawful interference and quantum meruit. On May 9, 2001,
Vedatech was given further leave to amend its pleading. Vedatech seeks to
enjoin Crystal Decisions (UK) Limited from infringing the U.K. copyright and
seeks forfeiture to Vedatech of all infringing software copies. Of the relief
sought, the only claim that has been settled is a claim for JPY 26,624,181
(approximately U.S. $240,000) for unpaid invoices. We have hired local counsel
in the U.K., reviewed documents, conducted interviews and participated in the
discovery process. Taking into account our counterclaim (which is approximately
U.S. $200,000) and a deposit with the court of an amount equal to U.S.
$200,000, we have offered Vedatech U.S. $400,000 in settlement of its quantum
meruit claim. The court has granted Vedatech's request to delay commencement of
trial until February of 2002 with the caveat that the hearing of the trial will
be split between liability and quantum (if required). We have defenses to all
the causes of action, including the claim for quantum meruit, and we intend
vigorously to defend the actions. Were an unfavorable outcome to arise, there
can be no assurance that such outcome would not have a material adverse affect
on our liquidity, financial position or results of operations. The outcome of
this matter and amount of related claims are not determinable at this time.

   In addition to the foregoing, we are subject to other litigation in the
ordinary course of our business. While we believe that the ultimate outcome of
these matters will not have a material adverse effect on us, the outcome of
these matters is not determinable and negative outcomes may adversely affect
our financial position, liquidity, or results of operations.

   There is no established trading market for our common stock, and we do not
expect that any trading market will be established.

   Our common stock is not listed on any stock exchange, over-the-counter
market or other quotation system. We have not registered shares of our common
stock for sale to the public or registered for resale shares held by our
stockholders or that may be acquired by our optionees. We do not expect to
register our common stock for sale to the public or to apply for quotation of
our shares on any exchange, over-the-counter market or quotation system. As a
result, a purchaser of our common stock will not be able to dispose of the
shares the purchaser acquires from us unless the purchaser can rely on an
applicable exemption from registration, such as Rule 144 under the Securities
Act of 1933. We may not comply with the criteria required for a holder of our
common stock to utilize a given exemption.

   In the event that a trading market for our common stock develops, the market
prices of our common stock will likely be subject to substantial price and
volume fluctuations due to a number of factors, many of which will be beyond
our control, which may prevent our shareholders from reselling our common stock
at a profit.

   The securities markets have experienced significant price and volume
fluctuations in the past, and the market prices of the securities of technology
companies have been especially volatile. This market volatility, as well as
general economic, market or political conditions, could reduce the market price
of our common stock in spite of our operating performance. In addition, our
operating results could be below the expectations of investment analysts and
investors, and in response the market price of our common stock could decrease
significantly. Investors may be unable to resell their shares of our common
stock at or above the purchase price paid by the investors. In the past,
companies that have experienced volatility in the market price of their stock
have been the object of securities class action litigation. If we become the
object of securities class action litigation, it could result in substantial
costs, liabilities and a diversion of management's attention and resources.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

   The following discusses our exposure to market risk related to changes in
interest rates, equity prices and foreign currency exchange rates. This
discussion contains forward-looking statements that are subject to risks

                                      41

<PAGE>

and uncertainties. Actual results could vary materially as a result of a number
of factors including those set forth in the "Factors Affecting Future Operating
Results" section of this Form 10-K.

Interest Rate Risk

   Our exposure to market rate risk for changes in interest rates relates
primarily to our Intercompany Revolving Loan Agreement with Seagate Technology
LLC as further described in Item 7 - "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources". As at June 29, 2001, $31.0 million of our cash and cash equivalents
were held in U.S. deposits managed by Seagate Technology LLC on our behalf. The
remainder of our cash balances were maintained by our foreign operations. Our
interest income and expense, will fluctuate depending on fluctuations in
Seagate Technology LLC's in-house portfolio yield, LIBOR, the U.S. federal
interest rate, fluctuations in the amounts borrowed from Seagate Technology LLC
to fund working capital and operating activities, and fluctuations in our cash
and cash equivalent balance. For fiscal 2001, a 10% change in the LIBOR average
and U.S. federal interest rates would have generated an approximate 2% variance
in our net loss.

Equity Price Risk

   We do not have any investments in equity or debt securities traded in the
public markets; therefore, we do not currently have any direct equity price
risk.

Foreign Currency Risk

   A majority of our sales are in the United States and, therefore, are
recorded in U.S. Dollars, the currency in which we report our operating
results. We conduct a portion of our business in currencies other than the U.S.
Dollar. The functional currency of most of our foreign operations is the local
currency. In such cases, assets and liabilities recorded in foreign currencies
are translated at the exchange rate on the balance sheet date. Revenues and
expenses are translated at average rates of exchange prevailing during the
year. Gains and losses on foreign currency transactions are included in other
expenses. Translation adjustments resulting from this process are charged or
credited to other comprehensive income (loss). For those foreign operations
whose functional currency is the U.S. Dollar, financial results are translated
using a combination of current and historical exchange rates and any
translation adjustments are included in net earnings, along with all
transaction gains and losses for the period. Historically, we have generated
revenues and incurred a significant proportion of our expenses in Canadian
Dollars, British Pounds Sterling, Deutsche Marks, French Francs, Australian
Dollars and Japanese Yen and we expect to generate a portion of our revenues
and expenses in the Euro in the future. Certain European Union member states
have fixed the value of their respective national currencies to the Euro;
therefore, our results of operations are affected by the U.S. Dollar to Euro
exchange rate. Since the adoption of the Euro in January 1999, the overall
trend for the Euro has been a devaluation compared to the U.S. Dollar. During
fiscal 2001, approximately 4% of our revenues were denominated in currencies
for which a fixed value to the Euro has been established. Prior to July 2001,
none of our foreign operations had significant transactions in the Euro. We
implemented Euro-based transactions effective July 1, 2001 for the
participating countries. To date, the foreign exchange gains and losses on
transactions and revenues reported by our foreign subsidiaries have not been
significant. In addition, since most of our foreign operations conduct business
in their local currency, our earnings are not significantly impacted by
fluctuations in exchange rates. Translation adjustments from consolidation of
such foreign operations are presented within comprehensive income. We cannot
provide an assurance that foreign currency denominated transactions will
continue to be insignificant as revenues from the foreign operations increase
or exchange rates fluctuate significantly. We cannot predict the effect of
exchange rate fluctuations upon our future operating results. In fiscal 2001,
we did not engage in a foreign currency hedging program to cover any exposure
we may have had. For fiscal 2001, a combined variation of 10% of the exchange
rates of the main currencies in which we conduct business would have generated
a combined 1% variation of our revenues, offset by a 5% combined variation of
expenses.

                                      42

<PAGE>

Item 8. Financial Statements and Supplementary Data

                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                 Page
                                                                                 ----
<S>                                                                              <C>
Report of Ernst & Young LLP, Independent Auditors...............................  44

Consolidated Balance Sheets as of June 29, 2001 and June 30, 2000...............  45

Consolidated and Combined Statements of Operations for the Years Ended
  June 29, 2001, June 30, 2000 and July 2, 1999.................................  46

Consolidated and Combined Statements of Cash Flows for the Years Ended
  June 29, 2001, June 30, 2000 and July 2, 1999.................................  47

Consolidated and Combined Statements of Stockholders' Equity for the Years Ended
   June 29, 2001, June 30, 2000 and July 2, 1999................................  48

Notes to Consolidated and Combined Financial Statements.........................  49
</TABLE>

                                      43

<PAGE>

               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of
Crystal Decisions, Inc.

   We have audited the accompanying consolidated balance sheets of Crystal
Decisions, Inc. (formerly Seagate Software Information Management Group
Holdings, Inc.), as of June 29, 2001 and June 30, 2000 and the related
consolidated and combined statements of operations, stockholders' equity and
cash flows for each of the years in the three year period ended June 29, 2001.
Our audits also included the financial statement schedule listed in the Index
at Item 14(a) 2 of the Form 10-K. These financial statements and schedule are
the responsibility of Crystal Decisions, Inc.'s management. Our responsibility
is to express an opinion on these financial statements and schedule based on
our audits.

   We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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 Crystal
Decisions, Inc. at June 29, 2001 and June 30, 2000 and the consolidated and
combined results of its operations and its cash flows for each of the years in
the three year period ended June 29, 2001, in conformity with accounting
principles generally accepted in the United States. Also, in our opinion, the
related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.

                                          /S/ ERNST & YOUNG LLP
                                          Chartered Accountants

Vancouver, Canada
July 16, 2001

                                      44

<PAGE>

CRYSTAL DECISIONS, INC. (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP
                                HOLDINGS, INC.)

                          CONSOLIDATED BALANCE SHEETS
                (In thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                                                  (note 2)
                                                                                  June 29,  June 30,
                                                                                    2001      2000
                                                                                  --------  ---------
                                ASSETS (note 16)
                                ----------------
<S>                                                                               <C>       <C>
Current assets:
   Cash and cash equivalents (note 4)............................................ $ 34,379  $   3,621
   Loan receivable from Seagate Technology LLC (note 15).........................    3,429     25,681
   Accounts receivable, net (note 5).............................................   29,551     16,578
   Income taxes receivable (note 12).............................................    5,468      7,336
   Inventories...................................................................      725        674
   Prepaid and other current assets..............................................    3,115      4,021
                                                                                  --------  ---------
       Total current assets......................................................   76,667     57,911
Capital assets, net (note 6).....................................................   10,490      9,348
Goodwill and other intangibles, net (note 7).....................................   17,969      5,286
                                                                                  --------  ---------
       Total assets.............................................................. $105,126  $  72,545
                                                                                  ========  =========
<CAPTION>

                                  LIABILITIES
                                  -----------
<S>                                                                               <C>       <C>
Current liabilities:
   Accounts payable.............................................................. $ 11,247  $  10,190
   Accrued employee compensation.................................................    8,633      6,004
   Accrued expenses..............................................................   11,848     12,097
   Deferred revenue..............................................................   28,154     19,495
   Accrued income taxes (note 12)................................................    6,035      1,265
                                                                                  --------  ---------
       Total current liabilities.................................................   65,917     49,051
Deferred income taxes (note 12)..................................................    3,600        381
                                                                                  --------  ---------
       Total liabilities.........................................................   69,517     49,432

Commitments and contingencies (notes 2, 14, 15, 16, 18 and 19)

<CAPTION>
                              STOCKHOLDERS' EQUITY
                              --------------------
<S>                                                                               <C>       <C>
Common stock -- 150,000,000 shares authorized, shares issued and outstanding --
  75,397,915 and 75,002,050 at $0.001 par value per share as of June 29, 2001 and
  June 30, 2000..................................................................       75         75
Additional paid-in capital.......................................................   42,081    407,893
Accumulated deficit..............................................................   (6,517)  (384,688)
Accumulated other comprehensive loss.............................................      (30)      (167)
                                                                                  --------  ---------
       Total stockholders' equity................................................   35,609     23,113
                                                                                  --------  ---------
       Total liabilities and stockholders' equity................................ $105,126  $  72,545
                                                                                  ========  =========
</TABLE>



         See notes to consolidated and combined financial statements.

                                      45

<PAGE>

CRYSTAL DECISIONS, INC. ( formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT
                             GROUP HOLDINGS, INC.)

              CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
                (In thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                                              For the years ended
                                                                     -------------------------------------
                                                                      June 29,     June 30,      July 2,
                                                                        2001         2000         1999
                                                                     -----------  -----------  -----------
<S>                                                                  <C>          <C>          <C>
Revenues:
   Licensing (note 9)............................................... $   107,028  $    74,182  $    92,013
   Maintenance, support and services (note 9).......................      59,833       52,336       49,744
                                                                     -----------  -----------  -----------
       Total revenues...............................................     166,861      126,518      141,757

Cost of revenues:
   Licensing........................................................       5,740        4,096        4,243
   Maintenance, support and services................................      39,904       39,681       35,213
   Amortization of developed technologies...........................       3,050          198        4,545
   Write-off of developed technologies..............................          --           --        4,700
                                                                     -----------  -----------  -----------
       Total cost of revenues.......................................      48,694       43,975       48,701
                                                                     -----------  -----------  -----------
Gross profit........................................................     118,167       82,543       93,056

Operating expenses:
   Sales and marketing..............................................      72,795       64,594       64,062
   Research and development.........................................      28,211       26,356       22,635
   General and administrative (note 9)..............................      18,578       20,922       13,830
   Amortization of goodwill and other intangibles...................       2,023        3,038        4,772
   Write-off of in-process research and development (note 2)........       7,073           --           --
   Unusual items (note 10)..........................................       1,851      242,569       86,714
   Restructuring costs (note 11)....................................         573        1,301           --
                                                                     -----------  -----------  -----------
       Total operating expenses.....................................     131,104      358,780      192,013
                                                                     -----------  -----------  -----------
Loss from operations................................................     (12,937)    (276,237)     (98,957)
Interest income (note 15)...........................................       1,970          982          145
Interest expense (note 15)..........................................         (20)      (1,481)        (128)
Net foreign currency exchange gain..................................         701          519           39
                                                                     -----------  -----------  -----------
Interest and other income (expense), net............................       2,651           20           56
                                                                     -----------  -----------  -----------
Loss before income taxes............................................     (10,286)    (276,217)     (98,901)
Benefit from (provision for) income taxes (note 12).................      (1,183)      55,055        2,526
                                                                     -----------  -----------  -----------
Net loss............................................................ $   (11,469) $  (221,162) $   (96,375)
                                                                     ===========  ===========  ===========
Net loss per share (note 13):
   Basic and diluted................................................ $     (0.15) $     (2.95) $     (1.28)
                                                                     ===========  ===========  ===========
Weighted average number of shares used in basic and diluted net loss
  per share.........................................................  75,252,510   75,001,391   75,001,000
                                                                     ===========  ===========  ===========
</TABLE>


         See notes to consolidated and combined financial statements.

                                      46

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

              CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
                                (In thousands)

<TABLE>
<CAPTION>
                                                                                          For the years ended
                                                                                     -----------------------------
                                                                                     June 29,  June 30,   July 2,
                                                                                       2001      2000      1999
                                                                                     --------  ---------  --------
<S>                                                                                  <C>       <C>        <C>
Operating activities
Net loss............................................................................ $(11,469) $(221,162) $(96,375)
Adjustments to reconcile net loss to net cash from operating activities:
   Depreciation and amortization....................................................    9,446      7,538    12,775
   Bad debt expense.................................................................      691      2,288     1,049
   Deferred income taxes (note 12)..................................................    1,675        147       234
   Stock based compensation expense on Seagate Technology Exchange of Shares
     (note 10)......................................................................    1,851    239,574    77,519
   Write-off of developed technologies (note 7).....................................       --         --     4,700
   Write-off of in-process research and development.................................    7,073         25       109
                                                                                     --------  ---------  --------
                                                                                        9,267     28,410        11
                                                                                     --------  ---------  --------
Changes in operating assets and liabilities:
   Accounts receivable (note 5).....................................................  (13,383)    24,236   (14,278)
   Income taxes receivable..........................................................    1,868      4,319   (15,593)
   Income taxes receivable from Seagate Technology (note 12)........................   (3,978)   (66,245)    4,954
   Inventories......................................................................      (51)       307      (575)
   Prepaid and other current assets.................................................      918     (1,585)     (154)
   Accounts payable.................................................................    1,079     (2,133)    4,696
   Accrued employee compensation....................................................    2,674    (13,295)   13,132
   Accrued expenses.................................................................     (237)     1,297     2,077
   Deferred revenue.................................................................   10,110      1,985     4,596
   Accrued income taxes.............................................................    4,770      1,280        --
   Other liabilities................................................................       --       (225)      225
                                                                                     --------  ---------  --------
       Net cash and cash equivalents provided by (used in) operating activities.....   13,037    (21,649)     (909)
                                                                                     --------  ---------  --------
Investing activities
Acquisition of capital assets, net..................................................   (9,594)    (6,356)   (4,856)
                                                                                     --------  ---------  --------
       Net cash and cash equivalents (used in) investing activities.................   (9,594)    (6,356)   (4,856)
                                                                                     --------  ---------  --------
Financing activities
Issuance of common stock and common stock subject to repurchase (note 14)...........    1,583          5        --
Net borrowings/(repayments) from/(to) Seagate Technology LLC (note 15)..............   (4,773)    24,047     2,961
Payment from Seagate Technology LLC on intercompany revolving loan receivable.......   31,000         --        --
                                                                                     --------  ---------  --------
       Net cash and cash equivalents provided by financing activities...............   27,810     24,052     2,961
Effect of exchange rate changes on cash and cash equivalents........................     (495)       155        --
                                                                                     --------  ---------  --------
Increase (decrease) in cash and cash equivalents....................................   30,758     (3,798)   (2,804)
Cash and cash equivalents at the beginning of the period............................    3,621      7,419    10,223
                                                                                     --------  ---------  --------
Cash and cash equivalents at the end of the period.................................. $ 34,379  $   3,621  $  7,419
                                                                                     ========  =========  ========
Supplemental cash flow information:
   Cash paid for interest........................................................... $     20  $   1,481  $    128
                                                                                     ========  =========  ========
   Cash paid (received) for income taxes, net of refunds............................ $   (615) $   1,045  $ 12,591
                                                                                     ========  =========  ========
</TABLE>
         See notes to consolidated and combined financial statements.

                                      47

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

         CONSOLIDATED AND COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
       For the years ended June 29, 2001, June 30, 2000 and July 2, 1999
                       (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                                   Accumulated
                                                       Common Stock    Additional     Other
                                                     -----------------  Paid-In   Comprehensive Accumulated
                                                       Shares   Amount  Capital   Income (Loss)   Deficit     Total
                                                     ---------- ------ ---------- ------------- ----------- ---------
<S>                                                  <C>        <C>    <C>        <C>           <C>         <C>
Balance at July 3, 1998.............................         --  $--   $  84,049      $(257)     $ (67,151) $  16,641
Components of comprehensive loss:
   Foreign currency translation.....................                                   (372)                     (372)
   Net loss.........................................                                               (96,375)   (96,375)
                                                                                                            ---------
   Comprehensive loss...............................                                                          (96,747)
Equity contribution by Seagate Technology related to
 the acquisition of the minority interest of Seagate
 Software Holdings, Inc.............................                       5,448                                5,448
Compensation expense for Seagate Technology stock
 exchange offer (note 10)...........................                      77,519                               77,519
Income tax benefit from Seagate Technology stock
 option exercises (note 12).........................                          22                                   22
                                                     ----------  ---   ---------      -----      ---------  ---------
Balance at July 2, 1999.............................         --  $--   $ 167,038      $(629)     $(163,526) $   2,883
Components of comprehensive loss:
   Foreign currency translation.....................                                    462                       462
   Net loss.........................................                                              (221,162)  (221,162)
                                                                                                            ---------
   Comprehensive loss...............................                                                         (220,700)
Incorporation of Crystal Decisions..................      1,000                1                                    1
Contribution of IMG entities to Crystal Decisions... 75,000,000   75         (75)                                  --
Issuance of common stock upon exercise of employee
 stock options......................................      1,050                4                                    4
Equity contribution by Seagate Technology related to
 the acquisition of the minority interest of Seagate
 Software Holdings, Inc.............................                       1,242                                1,242
Compensation expense for Seagate Technology
 Exchange of Shares (note 10).......................                     239,574                              239,574
Income tax benefit from Seagate Technology stock
 option exercises (note 12).........................                         109                                  109
                                                     ----------  ---   ---------      -----      ---------  ---------
Balance at June 30, 2000............................ 75,002,050  $75   $ 407,893      $(167)     $(384,688) $  23,113
Components of comprehensive loss:
   Foreign currency translation.....................                                     46                        46
   Net loss.........................................                                               (11,469)   (11,469)
                                                                                                            ---------
   Comprehensive loss...............................                                                          (11,423)
Issuance of common stock eligible for repurchase
 (note 14)..........................................    225,000              900                                  900
Income tax benefit from Seagate Technology stock
 option exercises (note 12).........................                          33                                   33
Compensation expense for Seagate Technology Stock
 Options (note 10)..................................                       1,851                                1,851
Elimination of accumulated deficit and other
 comprehensive loss (note 2)........................                    (389,731)        91        389,640         --
Push down adjustments reflecting new bases of net
 assets (note 2)....................................                      20,452                               20,452
Issuance of common stock upon exercise of employee
 stock options......................................    170,865              683                                  683
                                                     ----------  ---   ---------      -----      ---------  ---------
Balance at June 29, 2001............................ 75,397,915  $75   $  42,081      $ (30)     $  (6,517) $  35,609
                                                     ==========  ===   =========      =====      =========  =========
</TABLE>

         See notes to consolidated and combined financial statements.

                                      48

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

            NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

1. Description of Business, Development of Business and Basis of Presentation

  Description of Business

   Crystal Decisions, Inc. ("Crystal Decisions" or the "Company") is an
information infrastructure company that creates software products and provides
services for reporting, analysis and information delivery. Crystal Decisions
develops, markets and supports an integrated highly scalable suite of
enterprise software products and solutions that enable businesses to access
disparate data sources and distribute secure, interactive reports and analyses
across and beyond these organizations. The Company believes its solutions
provide direct and rapidly achieved benefits including improved
decision-making, lower overall information technology ("IT") costs and better
business performance.

   Crystal Decisions operates at the core of a broad industry segment that is
often referred to as "business intelligence." The Company believes that its
products meet an extensive range of data-centric business and organizational
needs commonly referred to under a number of different labels, including
information delivery, enterprise reporting, enterprise business intelligence,
enterprise information portals, developer reporting, ad hoc query and
reporting, business analytics, on line analytical processing ("OLAP")
reporting, analytic application development and packaged analytic applications.
Crystal Decisions' products are designed to help organizations derive higher
business value from their range of electronic data sources and their enterprise
information sources (including, but not limited to, enterprise resource
planning, customer relationship management, eCommerce and business intelligence
systems, as well as data warehouses and data marts).

   While Crystal Decisions' primary market is North America, the Company has
over 20 offices and operations in 10 countries worldwide, through which the
Company markets and distributes products. The Company has significant
operations and certain administrative functions in Vancouver, Canada. The
Company's products are sold through a direct sales force and certain indirect
sales channels, such as distributors and original equipment manufacturer
("OEM") relationships.

   The Company changed its name to Crystal Decisions, Inc. from Seagate
Software Information Management Group Holdings, Inc. in March 2001. Crystal
Decisions is incorporated in Delaware and is headquartered in Palo Alto,
California.

   On November 22, 2000, the Company's majority stockholder became Seagate
Software (Cayman) Holdings ("Suez Software"), which is a wholly owned
subsidiary of New SAC, a Cayman Islands limited corporation ("New SAC"). Silver
Lake Partners L.P. and Texas Pacific Group control New SAC.

   Silver Lake Partners L.P. is a private investment firm headquartered in
Menlo Park, California and New York, New York. The general partner of Silver
Lake Partners L.P. is Silver Lake Technology Associates, L.L.C., a Delaware
limited liability company. Its managing members are James A. Davidson, Glenn H.
Hutchins, David J. Roux and Integral Capital Partners. Texas Pacific Group is a
private investment firm headquartered in Fort Worth, Texas, which is managed by
entities controlled by David Bonderman, James G. Coulter and William S. Price
III.

   The outstanding minority interests in the Company's common stock amounted to
approximately 13.0% and 10.5% on a fully converted basis as of June 29, 2001
and June 30, 2000, respectively. The Company's exercised common stock held by
current and former employees of the Company and its parent, as well as
outstanding options to purchase the Company's common stock comprise these
minority interests.

                                      49

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)


  Development of Business

   Prior to November 22, 2000, Crystal Decisions was a majority owned
subsidiary of Seagate Software Holdings, Inc. ("Seagate Software Holdings"), a
Delaware corporation, and wholly owned subsidiary of Seagate Technology, Inc.
("Seagate Technology"). Seagate Technology was a data technology company that
provided products for storing, managing and accessing digital information on
computer systems.

   Seagate Software Holdings commenced operations in May 1994 pursuant to
Seagate Technology's acquisition of Crystal Computer Services, Inc., a company
engaged in developing and marketing report writing software.

   Prior to May 28, 1999, Seagate Software Holdings comprised two business
units, the Information Management Group business ("IMG business") and the
Network Storage Management Group business ("NSMG business"). The NSMG business
developed and marketed software products and provided related services enabling
information technology professionals to manage distributed network resources
and to secure and protect enterprise data. On May 28, 1999, Seagate Software
Holdings contributed its NSMG business to VERITAS Software Corporation
("VERITAS") in exchange for VERITAS common stock.

   In August 1999, Crystal Decisions (formerly Seagate Software Information
Management Group Holdings, Inc.) was formed specifically to acquire the
operating assets and assume the liabilities of the IMG business. To
incorporate, Crystal Decisions issued 1,000 shares of its common stock to
Seagate Software Holdings for aggregate consideration of $1,000.

   On October 20, 1999, Seagate Technology acquired all outstanding shares and
options of Seagate Software Holdings. The acquisition was completed through the
merger of Seagate Daylight Merger Corp., a wholly owned subsidiary of Seagate
Technology, with and into Seagate Software Holdings. As a result of the merger,
Seagate Software Holdings became a wholly owned subsidiary of Seagate
Technology. The purpose of the transaction was to capitalize the IMG business.

   On November 16, 1999, Seagate Software Holdings contributed the operating
assets, liabilities and interests in subsidiaries of its IMG business to
Crystal Decisions. As consideration, Crystal Decisions issued 75,000,000 shares
of its common stock to Seagate Software Holdings. Seagate Software Holdings
retained the shares of VERITAS common stock and other non-operating assets.

   On November 22, 2000, 75,001,000 shares, or 99.7%, of the outstanding common
stock of Crystal Decisions was purchased by New SAC, through Suez Software, and
resulted in a "Change in Control of Crystal Decisions, Inc." as described in
note 2.

  Basis of Presentation

   The accompanying consolidated and combined financial statements present the
consolidated financial position of Crystal Decisions and its consolidated
subsidiaries as of June 29, 2001. These financial statements have been prepared
using the historical cost basis of accounting adjusted for the application for
push down accounting at November 22, 2000 and the reorganization of the IMG
business on November 16, 1999:

  .  Under rules and regulations promulgated by the Securities and Exchange
     Commission, because more than 95% of Crystal Decisions was acquired on
     November 22, 2000 and a change of ownership occurred as described in note
     2, Crystal Decisions restated all its assets and liabilities in the
     financial statements as of

                                      50

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

     November 22, 2000 on a "push down" accounting basis. Accordingly, results
     of operations prior to November 22, 2000 and comparative information
     presented do not reflect these adjustments.

  .  For all periods prior to November 16, 1999, these financial statements are
     presented as if Crystal Decisions had existed as an entity separate from
     Seagate Software Holdings. The financial statements include the historical
     assets, liabilities, revenues and expenses that are directly related to
     the IMG business. For all periods prior to November 16, 1999 when Crystal
     Decisions was carved out of Seagate Software Holdings, the consolidated
     and combined financial statements present the combined historical
     financial position, results of operations, equity and cash flows of the
     ongoing IMG business of Seagate Software Holdings and are not necessarily
     indicative of what the financial position, results of operations, equity
     or cash flows would have been had Crystal Decisions been an independent
     legal entity during the periods prior to November 16, 1999. For certain
     assets and liabilities of Crystal Decisions that were not specifically
     identifiable with the IMG business, estimates were used to allocate assets
     and liabilities to Crystal Decisions by applying methodologies management
     believed to be appropriate.

  .  For all periods prior to November 16, 1999, the statements of operations
     include all revenues and costs attributable to Crystal Decisions,
     including allocations of certain corporate administration, finance and
     management costs. Such costs were proportionately allocated to the IMG
     business based on detailed inquiries and estimates of time incurred by
     Seagate Software Holdings corporate marketing and general and
     administrative departmental managers. In addition, certain of Seagate
     Software Holdings operations were shared locations involving activities
     that pertained to the IMG business as well as to the NSMG business of
     Seagate Software Holdings. Costs incurred in shared locations were
     allocated based on specific identification, or where specific
     identification was not possible, costs were proportionately allocated
     between the IMG business and the NSMG business based on either headcount,
     square footage or a percentage of revenues as management believed was
     reasonable.

   Crystal Decisions operated on a stand-alone basis for fiscal 2001 and for
the majority of fiscal 2000. Management estimates that additional costs in the
form of professional fees and public reporting costs for fiscal 1999 of
$378,000 (unaudited) would have been incurred had the Company been reporting as
a stand-alone entity from Seagate Software Holdings.

   Crystal Decisions operates and reports financial results on a fiscal year of
52 or 53 weeks ending on the Friday closest to June 30. Accordingly, fiscal
2001 ended on June 29, 2001, fiscal 2000 ended on June 30, 2000 and fiscal 1999
ended on July 2, 1999. Fiscal 2001, 2000 and 1999 were each comprised of 52
weeks. Fiscal 2002 will be a 52-week year and will end on June 28, 2002.

   Certain comparative period figures have been reclassified to conform to the
basis of presentation adopted in fiscal 2001.

2. Change in Control of Crystal Decisions, Inc.

   New SAC, through Suez Software, acquired 75,001,000 shares, or 99.7%, of
Crystal Decisions' outstanding common stock under the terms of a stock purchase
agreement (the "Stock Purchase Agreement"). The Stock Purchase Agreement was
entered into on March 29, 2000 by Seagate Technology, Seagate Software Holdings
and Suez Acquisition Company (Cayman) Limited ("Suez Acquisition Company"), an
entity affiliated with, among others, Silver Lake Partners L.P. and Texas
Pacific Group. Suez Acquisition Company was a limited corporation organized
under the laws of the Cayman Islands and was organized solely for the purpose
of entering into the Stock Purchase Agreement with Seagate Technology and
Seagate Software Holdings. At the closing of

                                      51

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

the transactions on November 22, 2000 contemplated by the Stock Purchase
Agreement, Suez Acquisition Company assigned all of its rights under such
agreements to New SAC.

   Upon consummation of the Stock Purchase Agreement, New SAC, through Suez
Acquisition Company, purchased for $1.840 billion cash, including transaction
costs of $25.0 million, all of the operating assets of Seagate Technology and
its consolidated subsidiaries. This included Seagate Technology's rigid disc
drive, storage area network, removable tape storage solutions businesses and
operations, Crystal Decisions' common stock and certain cash balances, but
excluded the approximately 128 million shares of VERITAS common stock then held
by Seagate Software Holdings and certain of Seagate Technology's equity
investments. In addition, the wholly owned subsidiaries of New SAC assumed
substantially all of the operating liabilities of Seagate Technology, Seagate
Software Holdings and their consolidated subsidiaries. New SAC also acquired
Seagate Technology Investments, Inc., a subsidiary of Seagate Technology, which
holds certain strategic equity investments in various companies. This
transaction is referred to hereafter as the New SAC Transaction.

   Immediately thereafter, in a separate and independent transaction, Seagate
Technology and a wholly owned subsidiary of VERITAS completed a merger,
pursuant to which Seagate Technology become a wholly owned subsidiary of
VERITAS. At the time of the merger, Seagate Technology's assets included a
specified amount of cash, an investment in VERITAS, and certain specified
investments and liabilities.

   As part of the New SAC Transaction, New SAC, Seagate Technology, VERITAS,
and Crystal Decisions agreed to assume and indemnify VERITAS for substantially
all liabilities arising in connection with VERITAS' operating assets. On March
29, 2000, Seagate Technology, VERITAS and New SAC entered into an
Indemnification Agreement. Pursuant to this agreement these entities and
certain other subsidiaries of Seagate Technology, including Crystal Decisions,
were required to indemnify VERITAS and its affiliates for any liability for
taxes of Seagate Technology and the subsidiaries of Seagate Technology,
including Crystal Decisions, acquired by New SAC, in excess of an amount
deposited into an escrow account by VERITAS. VERITAS deposited $150 million in
an escrow account. This amount may be withdrawn by New SAC to satisfy these tax
liabilities, including those of Crystal Decisions and its subsidiaries.

  Transaction Financing and Consideration Paid

   New SAC financed the acquisition of the Seagate Technology operating assets,
including Crystal Decisions' common stock through:

  .  Equity financing of $916 million from Silver Lake Partners L.P., TPG
     Partners III, L.P., August Capital, Chase Capital Partners, GS Private
     Equity Partners L.P. and other investors, including the following
     directors of Crystal Decisions: Stephen J. Luczo, Gregory B. Kerfoot and
     Donald L. Waite.

  .  A senior secured credit facility of $700 million in the aggregate (in
     addition to a $200 million revolving credit facility) from the Chase
     Manhattan Bank, Goldman Sachs Credit Partners L.P. and Merrill Lynch
     Capital Corporation. This debt is guaranteed by various direct and
     indirect subsidiaries of New SAC including Crystal Decisions and certain
     of its subsidiaries.

  .  Senior subordinated notes of approximately $210 million issued by Seagate
     Technology International at a discount to the aggregate principal amount
     of $210 million, for gross proceeds of approximately $201 million. Seagate
     Technology International is indirectly owned by New SAC. This debt is
     guaranteed by various direct and indirect subsidiaries of New SAC
     including Crystal Decisions and certain of its subsidiaries.

                                      52

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)


  .  Certain cash reserves of Seagate Technology of approximately $149 million,
     net of estimated transaction costs of $100 million.

  .  In lieu of receiving consideration in connection with the Merger, most of
     Seagate Technology's senior management team converted a portion of their
     unvested Seagate Technology options and restricted stock ("rollover
     equity") with an aggregate value of $184 million into deferred
     compensation and an equity interest in New SAC. Although the amount of
     cash that Seagate Technology received from New SAC was reduced by the
     aggregate value of this converted equity, the total merger consideration
     received by Seagate Technology stockholders on a per share basis was not
     reduced due to the cancellation of a number of Seagate Technology stock
     options equal in value to the $184 million in rollover equity. As a
     result, while the cash component of the merger consideration received by
     Seagate Technology shareholders was reduced on a per share basis, the
     VERITAS shares component of the merger consideration was increased on a
     per share basis by an offsetting amount because of the antidilutive impact
     of the Seagate Technology stock options cancelled.

  Allocation of Purchase Price to Crystal Decisions Pursuant to the Application
  of Push Down Accounting

   The New SAC Transaction constituted a purchase transaction of Seagate
Technology and resulted in a change in control of Crystal Decisions. Under
purchase accounting rules, the net purchase price under this transaction was
allocated to the assets and liabilities of Seagate Technology and its
subsidiaries, including Crystal Decisions, based on their fair values at the
date of the transaction. The fair values of the identifiable tangible and
intangible assets and liabilities of Seagate Technology and its subsidiaries at
the date of the transaction exceeded the net purchase price by approximately
$909 million. Accordingly, the resultant negative goodwill has been allocated
to the long-lived tangible and intangible assets, including those of Crystal
Decisions, on the basis of relative fair values. This allocation reduced the
recorded amounts by approximately 46%. The fair values of tangible and
intangible assets, including in-process research and development, were
determined based upon independent appraisals.

   The consolidated and combined financial statements as of June 29, 2001
reflect the historical results of operations and financial position up to the
date of the transaction, November 22, 2000. The restatement of assets and
liabilities at that date reflects the push down purchase accounting
adjustments, which are followed by the results of operations and financial
position for the period from November 23, 2000 to June 29, 2001 which also
reflect the effects of the adjusted balances from the date of the New SAC
Transaction. As a result of the New SAC Transaction and the push down
accounting, the Company's results of operations after November 22, 2000,
particularly the depreciation and amortization charges, are not necessarily
comparable to the results of operations prior to that date.

                                      53

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)


   The table below reconciles the total purchase price paid by New SAC for the
operating assets of Seagate Technology and its consolidated subsidiaries,
including the disc drive, tape drive and intelligent storage businesses and
operations, and Crystal Decisions under purchase and push down accounting.

<TABLE>
<CAPTION>
                                                                Allocated to
                                                             Purchase Price for
 Purchase price allocation for New SAC (in millions)              New SAC
 ---------------------------------------------------         ------------------
 <S>                                                         <C>
 Net current assets (liabilities):
    Crystal Decisions.......................................       $    9
    All other businesses of New SAC.........................          930
 Long-term investments held by all other businesses of New
   SAC......................................................           42
 Tangible long-lived assets:
    Crystal Decisions.......................................            5
    All other businesses of New SAC.........................          773
 Intangible Assets:
    Crystal Decisions
        In-process research and development.................            7
        Developed technology................................           15
        Assembled workforce.................................            7
    All other businesses of New SAC
        In-process research and development.................           52
        Developed technology................................           61
        Assembled workforce.................................           46
        Trade name..........................................           47
        Other intangible assets.............................            1
                                                                   ------
           Total Identified Intangible Assets...............          236
 Other long-term assets:
    All other businesses of New SAC.........................           42
 Other long-term deferred taxes:
    Crystal Decisions.......................................           (2)
    All other businesses of New SAC.........................          (73)
 Long-term liabilities owed by all other businesses of New
   SAC......................................................         (122)
                                                                   ------
 Net purchase price.........................................       $1,840
                                                                   ======
</TABLE>

                                      54

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)


   The table below lists the net purchase price allocation to Crystal Decisions
of the tangible and intangible assets acquired. The purchase price allocated to
Crystal Decisions as a result of the New SAC Transaction is not necessarily
indicative of what the purchase price would have been for Crystal Decisions on
a stand-alone basis.

<TABLE>
<CAPTION>
                                                                Net Purchase
  Purchase Price Allocation                                   Price Allocation
  -------------------------                                   ----------------
                                                               (in thousands)
  <S>                                                         <C>
  Net current assets acquired................................     $ 9,138
  Tangible long-lived assets acquired........................       5,130
                                                                  -------
                                                                   14,268
                                                                  -------
  Intangible assets acquired:
     Developed technology (1)................................      15,234
     Assembled work force (2)................................       7,073
     In-process research and development (3).................       7,073
     Deferred tax liability..................................      (2,126)
                                                                  -------
                                                                   27,254
                                                                  -------
         Total...............................................     $41,522
                                                                  =======
</TABLE>
--------
(1)  The value of the developed technology has been estimated by discounting
     the expected future cash flows attributable to all existing technology,
     taking into account risks related to the characteristics and applications
     of the technology, existing and future markets and assessments of the life
     cycle stage of the technology. The analysis resulted in a valuation for
     developed technology, which had reached technological feasibility and
     therefore was capable of being capitalized. The developed technology is
     being amortized on the straight-line basis over its estimated useful life
     (36 months) and the amortization is included in cost of revenues.

(2)  The estimated value of the assembled work force has been determined by
     estimating the costs to replace the existing employees, including the
     recruiting, hiring and training costs for each category of employee. The
     assembled workforce is being amortized on a straight-line basis over its
     estimated useful life (36 months) and the amortization is included in
     amortization of goodwill and other intangibles.

(3)  As the basis for identifying the in-process research and development
     ("IPR&D"), Crystal Decisions' developmental projects were evaluated in the
     context of Financial Accounting Standards Board Interpretation 4 and
     paragraph 11 of Statement of Financial Accounting Standards ("SFAS") No. 2
     ("SFAS 2") and SFAS No. 86 ("SFAS 86"). Crystal Decisions has charged the
     value allocated to projects identified as IPR&D to expense in the period
     the transactions close. This write-off is necessary because the acquired
     technologies have not yet reached technological feasibility and have no
     future alternative uses.

     At the valuation date, Crystal Decisions was in the process of developing
     three next generation versions of existing technologies which were
     estimated to be about 85%, 70%, and 75% complete based on total man-hours
     and absolute time. Crystal Decisions expects these three projects to be
     completed prior to the end of fiscal 2002, at an estimated total cost of
     $28 million. As at June 29, 2001, these projects were on track for
     completion within the previously estimated time period. The nature of the
     efforts required to develop the purchased IPR&D into commercially viable
     products principally relate to the completion of all planning, designing,
     prototyping, verification and testing activities that are necessary to
     establish that the product can be produced to meet its design
     specifications, including functions, features and technical performance
     requirements. Crystal Decisions expects that the acquired IPR&D will be
     successfully developed, but it cannot ensure that commercial viability of
     these products will be achieved.

     The value of the purchased IPR&D for Crystal Decisions has been calculated
     by estimating the projected net cash flows related to such products,
     including costs to complete the development of the technology and the

                                      55

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

   future revenues to be earned on commercialization of the products. These
   cash flows were then discounted back to their net present value. The
   projected net cash flows from such projects were based on management's
   estimates of revenues and operating profits related to these projects.

   The purchase price under the Stock Purchase Agreement was fixed and no
contingencies have been identified that will result in a change in the overall
purchase price. However, the Company has recorded allowances against deferred
tax assets in accordance with SFAS 109 as a part of the purchase price
allocation, which, if released in the future could result in adjustments to the
balances of long-lived assets.

   In connection with the purchase of the operating assets of Seagate
Technology, New SAC established a $350 million valuation allowance against U.S.
federal and state deferred tax assets arising from the transaction. The
realization of New SAC's federal and state deferred tax assets subject to the
valuation allowance will depend on its ability to generate taxable income in
the United States in future fiscal years, the timing and amount of which are
uncertain. New SAC anticipates that the tax benefits of the deferred tax
assets, when realized, will result in a reduction in values of the intangible
assets recorded in the purchase transaction, including those recorded in the
push down adjustments to Crystal Decisions.

   Pro Forma Information. The following table presents the unaudited pro forma
results of operations for informational purposes, assuming the change of
control of Crystal Decisions occurred at the beginning of fiscal 2000:

<TABLE>
<CAPTION>
                                                       Fiscal years ended
                                                   --------------------------
                                                   June 29, 2001 June 30, 2000
                                                   ------------- -------------
                                                    (in thousands, except for
                                                       per share amounts)
                                                           (unaudited)
 <S>                                               <C>           <C>
 Net revenue......................................   $168,016      $126,518
 Net loss.........................................   $(10,120)     $(34,166)
                                                     ========      ========
 Pro forma basic and diluted net loss per share...   $  (0.13)     $  (0.46)
                                                     ========      ========
</TABLE>

   The pro forma results of operations give effect to certain adjustments
including the adjusted amortization and depreciation of revalued intangible and
tangible assets. The pro forma net loss for the fiscal years ending June 29,
2001 and June 30, 2000 do not include the following push down and purchase
price adjustments, as they represent non-recurring charges that resulted
directly from the New SAC Transaction and are not necessarily reflective of
ongoing operating results:

  .  unusual items of approximately $1.9 million and $242.6 million for the
     fiscal years ended June 29, 2001 and June 30, 2000, respectively as
     described in note 10;

  .  the effects of fair value adjustments to deferred revenue, reducing
     revenue by $1.3 million on a declining basis during the twelve months
     following the date of the transaction ($1.2 million reduction in revenue
     from date of transaction to June 29, 2001); and

  .  the write off of IPR&D charges of approximately $7.1 million during fiscal
     2001, in connection with the New SAC Transaction.

   Since the statement of operations, cash flows and stockholders' equity
reflect the comprehensive revaluation of Crystal Decisions' assets and
liabilities from November 22, 2000, the following presents the statement of
operations, cash flows and stockholders' equity for the period from July 1,
2000 to November 22, 2000, which represents the activity before the New SAC
Transaction, and the period from November 23, 2000 to June 29, 2001, which
represents that activity after the New SAC Transaction.

                                      56

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)


                            CRYSTAL DECISIONS, INC.

          CONSOLIDATED AND COMBINED CONDENSED STATEMENT OF OPERATIONS
                    FOR THE FISCAL YEAR ENDED JUNE 29, 2001
                                (In thousands)

<TABLE>
<CAPTION>
                                                                                Fiscal year
                                                                                   ended
                                                       Post New SAC Pre New SAC  June 29,
                                                       Transaction  Transaction    2001
                                                       ------------ ----------- -----------
<S>                                                    <C>          <C>         <C>
Revenues:
   Licensing..........................................   $ 72,789     $34,239    $107,028
   Maintenance, support and services..................     36,898      22,935      59,833
                                                         --------     -------    --------
       Total revenues.................................    109,687      57,174     166,861
Cost of revenues:
   Licensing..........................................      4,084       1,656       5,740
   Maintenance, support and services..................     23,564      16,340      39,904
   Amortization of developed technologies.............      2,962          88       3,050
                                                         --------     -------    --------
       Total cost of revenues.........................     30,610      18,084      48,694
                                                         --------     -------    --------
Gross profit..........................................     79,077      39,090     118,167
Operating expenses:
   Sales and marketing................................     45,134      27,661      72,795
   Research and development...........................     17,211      11,000      28,211
   General and administrative.........................     11,459       7,119      18,578
   Amortization of goodwill and other intangibles.....      1,375         648       2,023
   Write-off of in-process research and development...      7,073          --       7,073
   Unusual items......................................         --       1,851       1,851
   Restructuring costs................................         14         559         573
                                                         --------     -------    --------
       Total operating expenses.......................     82,266      48,838     131,104
                                                         --------     -------    --------
Loss from operations..................................     (3,189)     (9,748)    (12,937)
Interest and other income (expense), net..............      1,760         891       2,651
                                                         --------     -------    --------
Loss before income taxes..............................     (1,429)     (8,857)    (10,286)
Benefit from (provision for) income taxes.............     (5,088)      3,905      (1,183)
                                                         --------     -------    --------
Net loss..............................................   $ (6,517)    $(4,952)   $(11,469)
                                                         ========     =======    ========
</TABLE>

                                      57

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

                            CRYSTAL DECISIONS, INC.

          CONSOLIDATED AND COMBINED CONDENSED STATEMENT OF CASH FLOWS
                    FOR THE FISCAL YEAR ENDED JUNE 29, 2001
                                (In thousands)

<TABLE>
<CAPTION>
                                                                                            Fiscal year
                                                                                               ended
                                                                   Post New SAC Pre New SAC  June 29,
                                                                   Transaction  Transaction    2001
                                                                   ------------ ----------- -----------
<S>                                                                <C>          <C>         <C>
Net cash and cash equivalents provided by operating activities....   $10,217      $ 2,820     $13,037
Investing activities
Acquisition of capital assets, net................................    (7,693)      (1,901)     (9,594)
                                                                     -------      -------     -------
   Net cash and cash equivalents (used in) investing activities...    (7,693)      (1,901)     (9,594)
Financing activities
Issuance of common stock and common stock subject to repurchase...       634          949       1,583
Net borrowings/(repayments) from/(to) Seagate Technology LLC......    (4,593)        (180)     (4,773)
Payment from Seagate Technology LLC on intercompany revolving
  loan receivable.................................................    31,000           --      31,000
                                                                     -------      -------     -------
   Net cash and cash equivalents provided by financing activities.    27,041          769      27,810
Effect of exchange rate changes on cash and cash equivalents......      (101)        (394)       (495)
                                                                     -------      -------     -------
   Increase in cash and cash equivalents..........................    29,464        1,294      30,758
Cash and cash equivalents at the beginning of the period..........     4,915        3,621       3,621
                                                                     -------      -------     -------
Cash and cash equivalents at the end of the period................   $34,379      $ 4,915     $34,379
                                                                     =======      =======     =======
</TABLE>

                                      58

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

                            CRYSTAL DECISIONS, INC.

          CONSOLIDATED AND COMBINED STATEMENT OF STOCKHOLDERS' EQUITY
                    FOR THE FISCAL YEAR ENDED JUNE 29, 2001
                       (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                                Accumulated
                                                    Common Stock    Additional     Other
                                                  -----------------  Paid-In   Comprehensive Accumulated
                                                    Shares   Amount  Capital   Income (Loss)   Deficit    Total
                                                  ---------- ------ ---------- ------------- ----------- -------
<S>                                               <C>        <C>    <C>        <C>           <C>         <C>
Balance at June 30, 2000......................... 75,002,050  $75   $ 407,893      $(167)     $(384,688) $23,113
Components of comprehensive loss:
   Foreign currency translation..................                                     76                      76
   Net loss to November 22, 2000.................                                                (4,952)  (4,952)
                                                                                                         -------
   Comprehensive loss............................                                                         (4,876)
Issuance of common stock eligible for repurchase.    225,000              900                                900
Issuance of common stock upon exercise of
 employee stock options..........................     12,241               49                                 49
Income tax benefit from Seagate Technology stock
 option exercises................................                          33                                 33
Compensation expense for Seagate Technology
 Stock Options...................................                       1,851                              1,851
                                                  ----------  ---   ---------      -----      ---------  -------
Balance at November 22, 2000..................... 75,239,291  $75   $ 410,726      $ (91)     $(389,640) $21,070
Elimination of accumulated deficit and other
 comprehensive loss (note 2).....................                    (389,731)        91        389,640       --
Push down adjustments reflecting new bases of net
 assets (note 2).................................                      20,452                             20,452
                                                  ----------  ---   ---------      -----      ---------  -------
Adjusted Balance at November 22, 2000............ 75,239,291  $75   $  41,447         --             --  $41,522
                                                  ----------  ---   ---------      -----      ---------  -------
Components of comprehensive loss:
   Foreign currency translation..................                                    (30)                    (30)
   Net loss......................................                                                (6,517)  (6,517)
                                                                                                         -------
   Comprehensive loss............................                                                         (6,547)
Issuance of common stock upon exercise of
 employee stock options..........................    158,624              634                                634
                                                  ----------  ---   ---------      -----      ---------  -------
Balance at June 29, 2001......................... 75,397,915  $75   $  42,081      $ (30)     $  (6,517) $35,609
                                                  ==========  ===   =========      =====      =========  =======
</TABLE>

                                      59

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

3. Significant Accounting Policies

   Accounting Estimates. The preparation of financial statements, in conformity
with generally accepted accounting principles, requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the period. Actual results could differ materially from those estimates.

   Foreign Currency Translation. The functional currency for most of Crystal
Decisions' foreign operations is the local currency. In such cases, assets and
liabilities recorded in foreign currencies are translated into U.S. dollars at
the exchange rate on the balance sheet date. Revenues and expenses are
translated at average rates of exchange prevailing during the year. Gains and
losses on currency transactions other than the applicable functional currencies
are included in other income and expenses. Translation adjustments resulting
from this process are charged or credited to other comprehensive income (loss).
For those foreign operations whose functional currency is the U.S. dollar,
financial results are translated using a combination of current and historical
exchange rates and any translation adjustments are included in net income
(loss), along with all transaction gains and losses for the period.

   Revenue Recognition. Licensing revenues are derived from sales of software
licenses. Maintenance, support and services revenues consist of technical
support, training, consulting and maintenance.

   Crystal Decisions recognizes revenues in accordance with Statement of
Position ("SOP") 97-2, "Software Revenue Recognition", as amended by SOP 98-4
"Deferral of the Effective Date of a Provision of SOP 97-2" and by SOP 98-9
"Modification of SOP 97-2, Software Revenue Recognition with Respect to Certain
Transactions". These amendments deferred and then clarified, respectively, the
specification of what is considered vendor specific objective evidence of fair
value for the various elements in a multiple-element arrangement. Crystal
Decisions adopted the provisions of SOP 97-2 and SOP 98-4 as of the beginning
of fiscal year 1999 and adopted SOP 98-9 as of the beginning of fiscal year
2000.

   SOP 97-2 requires that the total arrangement fee from software arrangements
that include rights to multiple software products, post contract customer
support and/or other services be allocated to each element of the arrangement
based on their relative fair values. Under SOP 97-2, the determination of fair
value is based on vendor specific objective evidence ("VSOE").

   Prior to the second quarter of fiscal 2001 and in prior years, Crystal
Decisions could establish VSOE for most elements of its multiple-element
arrangements, and accordingly, revenues were allocated to the individual
elements on a basis of VSOE. Fair value was established for each element based
on its individual sales prices consistent with Crystal Decisions' pricing
strategy. The pricing strategy is established by the pricing group, consisting
of representatives from the Company's marketing, sales, finance and product
development departments.

   During the second quarter of fiscal 2001, Crystal Decisions adopted a new
sales model that requires the sale of maintenance and technical support with
certain software licenses, and as such, Crystal Decisions is no longer able to
establish sufficient VSOE for these license products. As a result of this
change in circumstance, when these products are included in multiple-element
arrangements, Crystal Decisions applies the residual method of accounting as
specified in SOP 98-9 such that the total fair value of the undelivered
elements as indicated by VSOE, is deferred and subsequently recognized in
accordance with SOP 97-2 and the difference between the total arrangement fee
and the amount deferred for the undelivered elements is accounted for as
revenue related to

                                      60

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

the delivered elements. The impact on revenues of applying the residual method
of accounting in fiscal 2001 was not material.

   Although not typical, some original equipment manufacturer ("OEM")
arrangements contain end-user maintenance elements for which VSOE has not been
established, as sufficient evidence of consistent pricing and renewal rates has
not been present. In such arrangements, Crystal Decisions has recognized the
arrangement fee ratably over the maintenance period in accordance with the
provisions set forth in SOP 97-2.

   Crystal Decisions generally recognizes licensing revenues, whether sold
direct or through distributors or resellers, upon product delivery, provided
persuasive evidence of an arrangement exists, fees are fixed or determinable
and the resulting receivable is deemed collectible by management. In instances
where payments are subject to extended payment terms, revenues are not
recognized until the date payments become due.

   Crystal Decisions' policy is not to recognize revenues on sales to
distributors or resellers if any resale contingencies exist. Some of the
factors that are considered to determine the existence of such contingencies
include payment terms, collectibility and history with the distributor or
reseller. Revenues are recognized when such contingencies are resolved and the
criteria for revenue recognition in SOP 97-2 are met.

   Crystal Decisions recognizes revenues for sales to distributors and
resellers with rights of return when the criteria for recognizing revenues, as
outlined in SFAS 48 -- "Revenue Recognition When Right of Return Exists", are
met. However, the Company makes estimates of future returns and reduces the
revenues and related receivables accordingly by the amount of such estimates.

   Where rights of return exist and the criteria of SFAS 48 are not met,
revenues are not recognized until such time that all of the criteria are met.
The Company considers factors including historical experience, nature of the
product, fixed or determinable fees, arms length contract terms, the level of
inventory in the distribution channels and the ability to reasonably estimate
returns.

   Revenues from technical support and maintenance are recognized ratably over
the term of the arrangement, generally one year. Revenues from training and
consulting are recognized as the services are performed.

   Deferred revenue represents amounts from customers under license,
maintenance and service arrangements for which the revenue earnings process has
not been completed. These amounts relate primarily to provision of technical
support and maintenance, arrangements with future deliverables and arrangements
where specified customer acceptance has not occurred.

   Where software arrangements require Crystal Decisions to provide consulting
services for significant production, modification, or customization of
software, or where these services are essential to the functionality of the
software, Crystal Decisions recognizes revenues in accordance with the
provisions of SOP 81-1, "Accounting for Performance of Construction-Type and
Certain Production-Type Contracts". In these arrangements, both the licensing
revenues and consulting services revenues are recognized using the percentage
of completion method based on the cost of labor inputs.

   Cash and Cash Equivalents. Crystal Decisions considers all highly liquid
investments with an original maturity of 90 days or less at the time of
purchase to be cash equivalents. Crystal Decisions maintains its cash and cash
equivalents with major banks in interest and non-interest bearing bank accounts
and in highly rated, short-term investments.

                                      61

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)


   Inventories. Inventories are stated at the lower of cost (first in, first
out method) or market and consist primarily of materials used in software
products, related supplies and packaging materials. During fiscal 2000, product
support materials in the amount of $350,000 were written off as obsolete. There
were no other revaluations of inventory to the lower of cost or market during
fiscal 2001, fiscal 2000 or fiscal 1999.

   Capital Assets. Property and equipment, including leasehold improvements,
are stated at cost. Depreciation is computed using the straight-line method
over the estimated useful lives of the assets up to ten years. Leasehold
improvements are depreciated using the straight-line method over the shorter of
the estimated useful lives of the leasehold improvement or the remaining
leasehold life.

   Goodwill and Other Intangibles. Goodwill in prior years represented the
excess of the purchase price of acquired companies over the estimated fair
values of tangible and intangible net assets acquired. Goodwill had been
amortized on a straight-line basis over four years. Under SFAS 121 "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of", the carrying values of long-term assets and intangibles other
than developed technology (included in other intangibles) are reviewed if facts
and circumstances suggest that they may be impaired. If this review indicates
that carrying values of long-term assets and other intangibles and associated
goodwill will not be recoverable based on projected undiscounted future cash
flows, carrying values are reduced to estimated fair values by first reducing
goodwill and second by reducing long-term assets and other intangibles. In
addition, Crystal Decisions has assessed in prior years the impairment of
goodwill not included in the scope of SFAS 121 under Accounting Principles
Board Opinion No. 17 ("APB 17"), "Intangible Assets".

   Other intangible assets consisted of trademarks, assembled workforce,
developed technology and customer bases up until the New SAC Transaction, after
which only assembled workforce and developed technology exists. Amortization of
intangibles was provided on a straight-line basis over the respective useful
lives of the assets ranging from 36 to 60 months, with remaining assembled
workforce and developed technology at June 29, 2001 being amortized over 36
months.

   Developed Technology. Crystal Decisions applies SFAS 86 "Accounting for the
Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed" to
software technologies developed internally, acquired in business acquisitions
and purchased.

   Internal development costs are included in research and development and are
expensed as incurred. SFAS 86 requires the capitalization of certain internal
development costs once technological feasibility is established, which, for
Crystal Decisions, generally occurs upon the completion of a working model. As
the time period between the completion of a working model and the general
availability of software has been short, capitalization of internal development
costs has not been material to date. Capitalized costs are amortized based on
the greater of the straight-line basis over the estimated product life
(generally 36 to 48 months) or the ratio of current revenues to the total of
current and anticipated future revenues.

   Purchased developed technology is amortized based on the greater of the
straight-line basis over the estimated useful life (36 to 48 months) or the
ratio of current revenues to the total of current and anticipated future
revenues. The recoverability of the carrying value of purchased developed
technology is reviewed periodically. The carrying value of developed technology
is compared to the estimated future gross revenues from that product reduced by
the estimated future costs of completing and disposing of that product,
including the costs of performing maintenance and customer support (net
undiscounted cash flows) and to the extent that the carrying value exceeds the
undiscounted cash flows the difference is written off.

                                      62

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)


   Advertising Expense. The cost of advertising is expensed as incurred.
Crystal Decisions does not incur any direct response advertising costs.

   Comprehensive Income (Loss). Accumulated other comprehensive income (loss)
comprised foreign currency translation gains and losses. Crystal Decisions has
reported the components of comprehensive loss on its consolidated and combined
statements of stockholders' equity.

   Stock-Based Compensation. Crystal Decisions accounts for employee
stock-based compensation under Accounting Principles Board Opinion No. 25 ("APB
25"), "Accounting for Stock Issued to Employees" and related interpretations.
Pro forma net income and net income per share are disclosures required by SFAS
123, "Accounting for Stock-Based Compensation" and are described in note 14.

   Income Taxes. The liability method is used in accounting for income taxes.
Under this method deferred tax assets and liabilities are determined based on
differences between financial reporting and income tax bases of assets and
liabilities, and are measured using the enacted tax rates and laws.

  New Accounting Pronouncement

   On June 29, 2001, the Financial Accounting Standards Board approved the
issuance of Statements of Financial Accounting Standards No. 141 ("SFAS 141"),
"Business Combinations", and No. 142 ("SFAS 142"), "Goodwill and Other
Intangible Assets". SFAS 141 requires all business combinations initiated after
June 30, 2001 to be accounted for using the purchase method. In addition, SFAS
141 requires intangible assets to be recognized apart from goodwill. SFAS 141
applies to the Company effective July 1, 2001. Under SFAS 142, which is
effective for all fiscal years beginning after December 15, 2001, goodwill is
no longer subject to amortization over its estimated useful life. Rather,
goodwill is subject to at least an annual assessment for impairment applying a
fair-value based test. Additionally, intangible assets deemed to have
indefinite lives will no longer be amortized but will be subject to annual
impairment tests in accordance with the Statements. Crystal Decisions is not
required to adopt SFAS 142 until June 29, 2002. The Company is still assessing
the impact of these Statements on its consolidated results of operations,
financial position and cash flows.

4. Concentration of Credit and Foreign Currency Risk

   Financial instruments that potentially subject Crystal Decisions to
significant concentrations of credit risk consist of primarily cash and cash
equivalents as well as accounts receivable.

   Crystal Decisions places its cash in high credit quality financial
institutions and its cash equivalents in highly rated, short-term investments.
Year-end cash balances represent both U.S. Dollar and foreign currency
deposits, primarily denominated in the Canadian Dollar, British Pounds
Sterling, Japanese Yen and currencies tied to the Euro. Seagate Technology LLC,
a subsidiary of Seagate Technology (US) Holdings, Inc., and an indirect
subsidiary of New SAC, uses a centralized cash management function for all of
its domestic operations. Crystal Decisions participates in this centralized
cash management function for certain of its domestic operations. At June 29,
2001, $31.0 million of Crystal Decisions' cash and cash equivalents were
invested in U.S. deposits managed by Seagate Technology LLC on the Company's
behalf. The carrying value of cash and cash equivalents approximates fair
value.

   Accounts receivable are derived from revenues earned from customers
primarily located in North America and Europe. Crystal Decisions performs
ongoing credit evaluations of its customers and generally does not require
collateral. Crystal Decisions maintains reserves for potential credit losses.

                                      63

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)


   Overall, Crystal Decisions' customer base is diverse however, a third-party
customer, Ingram Micro, Inc. ("Ingram") represented 17%, 20% and 13% of Crystal
Decisions' total revenues in fiscal 2001, fiscal 2000 and fiscal 1999,
respectively. No other customer represented 10% or more of the Company's total
revenues in fiscal 2001, 2000 or 1999. As a percentage of receivables, amounts
outstanding from Ingram represent 11% and 22% of the total receivable balance
in fiscal 2001 and fiscal 2000, respectively. Crystal Decisions' agreements
with Ingram may be terminated upon the expiration of a required notice period.

5. Accounts Receivable

   Accounts receivable are summarized below (in thousands):

<TABLE>
<CAPTION>
                                                 June 29, 2001 June 30, 2000
                                                 ------------- -------------
    <S>                                          <C>           <C>
    Accounts receivable.........................    $32,427       $19,272
    Less allowance for bad debts................     (1,779)       (1,679)
    Less allowance for returns..................     (1,097)       (1,015)
                                                    -------       -------
                                                    $29,551       $16,578
                                                    =======       =======
</TABLE>

6. Capital Assets

   Capital assets consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                              Estimated     June 29, June 30,
                                             Useful Life      2001     2000
                                          ----------------- -------- --------
  <S>                                     <C>               <C>      <C>
  Equipment.............................. Two to five years $ 8,782  $ 19,686
  Leasehold improvements.................   Life of lease     4,041     3,359
                                                            -------  --------
                                                             12,823    23,045
  Less accumulated depreciation..........                    (2,333)  (13,697)
                                                            -------  --------
                                                            $10,490  $  9,348
                                                            =======  ========
</TABLE>

   On November 22, 2000 and as a result of the New SAC Transaction, a portion
of the net purchase price under this transaction was allocated to the assets
and liabilities of Crystal Decisions based on their fair values at the date of
the transaction. As the fair values of these assets was greater than the amount
paid by New SAC, negative goodwill resulted, which was allocated against the
relative fair values of the long-lived tangible and intangible assets. As a
result, the net book value of the capital assets at November 22, 2000 was
reduced by approximately 46%, resulting in a net book value at that date of
$5.1 million (refer to note 2 for further information).

   Depreciation expense was $4.6 million, $4.3 million and $3.4 million in
fiscal 2001, fiscal 2000 and fiscal 1999, respectively. Depreciation expense
was $2.3 million for the five-month period ended November 22, 2000 and $2.3
million for the period from November 23, 2000 to June 29, 2001.

                                      64

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)


7. Goodwill and Other Intangibles

   Goodwill and other intangibles consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                              June 29, 2001 June 30, 2000
                                              ------------- -------------
      <S>                                     <C>           <C>
      Goodwill...............................    $    --      $  5,771
      Other intangibles
         Developed technologies..............     15,234        18,492
         Trademark...........................         --         6,506
         Assembled work force................      7,073         2,284
         Customer base.......................         --         4,025
                                                 -------      --------
             Total other intangibles.........     22,307        31,307
                                                 -------      --------
                                                  22,307        37,078
      Accumulated amortization...............     (4,338)      (31,792)
                                                 -------      --------
      Goodwill and other intangibles.........    $17,969      $  5,286
                                                 =======      ========
</TABLE>

   On November 22, 2000 and as a result of the New SAC Transaction, a portion
of the net purchase price under this transaction was allocated to the assets
and liabilities of Crystal Decisions based on their fair values at the date of
the transaction. As the fair values of these assets was greater than the amount
paid by New SAC, negative goodwill resulted, which was allocated against the
relative fair values of the long-lived tangible and intangible assets. The fair
market value of the intangible assets (excluding IPR&D) was $41 million, with
the resulting net book value being $22.3 million after the allocation of
negative goodwill (see note 2). The $22.3 million was represented by developed
technologies of $15.2 million and assembled work force of $7.1 million. The
remaining intangibles at November 22, 2000 are being amortized on a
straight-line basis over their estimated useful lives (36 months).

   Amortization expense for goodwill and other intangibles, including developed
technologies, was $735,000 for the period from July 1, 2000 to November 22,
2000 and $4,338,000 for the period from November 23, 2000 to June 29, 2001. In
fiscal 1999, cost of revenues included write-offs to net realizable value of
$4.7 million due to Crystal Decisions' decision not to use previously acquired
technology in future periods and to reflect the impairment of certain developed
technologies. In fiscal 1999, amortization of goodwill and other intangibles
also included a write-off of $1.5 million due to asset values that had become
impaired.

8. Advertising Expense

   Advertising expense included in sales and marketing expense, totaled $8.3
million, $10.9 million and $10.7 million in fiscal 2001, fiscal 2000 and fiscal
1999, respectively.

9. Related Party Transactions

   During the quarter ended December 29, 2000, Crystal Decisions signed a
software license agreement (the "License Agreement") with Seagate Technology.
Under the terms of the License Agreement, Crystal Decisions granted Seagate
Technology a non-exclusive, non-transferable, perpetual license to use its
business intelligence software and maintenance and support services. The total
value of the License Agreement was $1.6 million. The License Agreement was
priced at an approximate 50% discount to Crystal Decisions' established list
price. During fiscal 2001, Crystal Decisions recognized a total of $1.5 million
from the License Agreement. At June 29,

                                      65

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

2001, $151,000 remained as deferred revenue. In addition, Crystal Decisions'
earned approximately $223,000 of consulting revenues related to the License
Agreement. As of June 29, 2001, there were no outstanding amounts owed by
Seagate Technology included in accounts receivable.

   Historically, Seagate Technology provided substantial administrative and
financial services to Crystal Decisions under a General Services Agreement
dated June 28, 1997. During fiscal 2001, the General Services Agreement was
replaced by the following agreements between Crystal Decisions and Seagate
Technology LLC: a Corporate Services Agreement, a Payroll Services Agreement,
and a Management Services Agreement under substantially the same terms as the
General Services Agreement with Seagate Technology. The term of the new
agreements are each three years with successive renewal periods of one year.
Upon the closing of the New SAC Transaction, these agreements were assumed by
New SAC. Seagate Technology LLC provides various cash management, taxation,
administrative, accounting and similar corporate and managerial services as
requested by Crystal Decisions, for which it charges Crystal Decisions through
corporate expense allocations. The amount of corporate expense charges depends
upon the total amount of allocable costs incurred by Seagate Technology LLC on
behalf of Crystal Decisions less amounts charged as a specific cost or expense
rather than by allocation. Such costs have been proportionately allocated to
Crystal Decisions based on detailed inquiries and estimates of time incurred by
Seagate Technology LLC's corporate marketing and general and administrative
departmental managers. Management believes that the allocation method applied
to the costs provided under these agreements is reasonable. Charges to Crystal
Decisions for general and administrative expenses were $1,214,274, $657,749 and
$567,848 for fiscal 2001, fiscal 2000 and fiscal 1999 respectively. Management
estimates that additional costs for the services covered under this agreement
would have been $688,000 for fiscal 2000 (unaudited) and $755,000 for fiscal
1999 (unaudited) had the Company operated on a stand-alone basis from Seagate
Technology. Management believes the expenses incurred as charged by Seagate
Technology LLC under the new agreements for fiscal 2001 approximates the fair
market value of these services and thus no material additional costs would have
been incurred.

   Until October 22, 2000, the employees of Crystal Decisions also participated
in the Seagate Technology Employee Stock Purchase Plan (the "Purchase Plan").
The Purchase Plan permitted eligible employees who had completed thirty days of
employment prior to the inception of the offering period to purchase common
stock of Seagate Technology through payroll deductions at the lower of 85% of
the fair market value of the common stock at the beginning or at the end of
each six-month offering period. Under the Purchase Plan, Crystal Decisions
employees purchased 24,181, 57,245, and 35,113 shares of Seagate Technology
common stock in fiscal 2001, fiscal 2000, and fiscal 1999, respectively. The
Company did not make matching payments for such employee stock purchases. The
Purchase Plan terminated prior to the closing of the New SAC Transaction.

   The U.S. employees of Crystal Decisions are eligible to participate in the
Seagate Technology tax-deferred savings plan, the "Seagate Technology, Inc.
Savings and Investment Plan" ("the 401(k) plan"). The 401(k) plan is designed
to provide qualified employees with an accumulation of funds at retirement.
Qualified employees may elect to contribute to the 401(k) plan on a monthly
basis. Crystal Decisions may make annual contributions to the 401(k) plan at
the discretion of the Board of Directors. Contributions to the 401(k) plan were
not impacted by the November 22, 2000 New SAC Transaction. Crystal Decisions
made nominal contributions in fiscal 2001, fiscal 2000, and fiscal 1999.

   Refer to note 15 regarding the Revolving Loan Agreement between Crystal
Decisions and Seagate Technology LLC and note 4 regarding the Company's cash
management arrangement with Seagate Technology LLC.

                                      66

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)


10. Unusual Transactions

  Sale of Seagate Technology

   On November 22, 2000, the date of the closing of the New SAC Transaction,
vesting of Seagate Technology options were accelerated and net exercised for
merger consideration of 0.4465 shares of VERITAS and $8.55 cash per share of
Seagate Technology. The accelerated vesting and net exercise of these options
resulted in compensation expense to Seagate Technology. At November 22, 2000,
options to purchase 51,500 shares of Seagate Technology common stock were held
by certain Crystal Decisions employees. As a result, the Company recorded
approximately $1.9 million of non-cash compensation expense attributable to its
employees as a capital contribution from Seagate Technology. The compensation
expense is recorded as an unusual item in the Company's statement of operations
for fiscal 2001.

  The June 1999 Seagate Technology Exchange Offer

   On May 28, 1999, Seagate Software Holdings contributed its NSMG business and
related assets and liabilities to VERITAS in exchange for shares of VERITAS
common stock. In a separate but related transaction on June 9, 1999, Seagate
Technology exchanged 5,275,772 shares of Seagate Technology common stock for
3,267,255 shares of Seagate Software Holdings common stock owned by employees,
directors and consultants of Seagate Software Holdings and its parent and
subsidiaries. The exchange ratio was determined based on the estimated value of
Seagate Software Holdings common stock divided by the fair market value of
Seagate Technology common stock.

   The estimated value of Seagate Software Holdings common stock exchanged into
Seagate Technology common stock was determined based upon the sum of the fair
value of the NSMG business, as measured by the fair value of the shares
received from VERITAS, plus the estimated fair value of the IMG business of
Seagate Software Holdings as determined by the Seagate Software Holding's Board
of Directors, plus the assumed proceeds from the exercise of all outstanding
Seagate Software Holdings stock options, divided by the number of fully
converted shares of Seagate Software. The Board of Directors of Seagate
Software Holdings considered a number of factors in determining the estimated
fair value of the IMG business, including historical and projected revenues,
earnings and cash flows and consultations with financial advisors.

   Seagate Software Holdings recorded the acquisition of its common stock by
Seagate Technology as an acquisition of the minority interest by Seagate
Technology. Seagate Software Holdings accounted for the exchange of shares of
its common stock outstanding and vested more than six months as the purchase of
a minority interest and, accordingly, the fair value of the $51.8 million for
the shares exchanged was allocated to all the identifiable tangible and
intangible assets and liabilities of Seagate Software Holdings. For those
shares outstanding and vested less than six months, the fair value of the
shares purchased less the original purchase price paid by the employees was
recorded as compensation expense as this constituted an early settlement of an
award of stock or grant of an option. Compensation expense associated with the
issuance of Seagate Technology shares amounted to approximately $102.5 million,
plus $630,000 of employer portion of payroll taxes.

   Related to the June 1999 Seagate Technology Exchange Offer, Seagate Software
Holdings recorded additional compensation expense of $8.6 million for the
issuance of notes payable for the purchase of unvested stock options held by
certain continuing employees. This amount was not considered a capital
contribution from Seagate Technology because the notes payable were issued by
Seagate Software, Inc. In addition, Seagate Software Holdings recorded
compensation expense amounting to $12.7 million for accelerated vesting on
certain stock options for its former Chief Executive Officer and several other
employees, each of whom became employees of VERITAS.

                                      67

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)


   The consolidated and combined statement of operations for fiscal 1999
included an allocation of compensation expense arising from the June 1999
Seagate Technology Exchange Offer attributable to Crystal Decisions.
Compensation expense was allocated to Crystal Decisions on the basis of
employees specifically identified with the IMG business who participated in the
exchange and for those employees of Seagate Software Holdings and Seagate
Technology who performed services for the IMG business on the basis of time
estimates. Accordingly, Crystal Decisions recorded $77.5 million of
compensation expense out of the total compensation expense of $102.5 million
related to the June 1999 Seagate Technology Exchange Offer as a capital
contribution from Seagate Technology. In addition, as both the $630,000
aforementioned employer portion of payroll taxes and the $8.6 million
aforementioned compensation expense for the purchase of unvested stock options
related to certain continuing employees of Crystal Decisions, these amounts
have been reflected as expenses for fiscal 1999. None of the aforementioned
$12.7 million of compensation expense that arose from the accelerated vesting
on certain stock options for employees who became employees of VERITAS was
allocated to Crystal Decisions because the compensation expense was not
attributable to employees of Crystal Decisions.

   The following table summarizes the components of the unusual items expenses
for fiscal 1999 reported by Seagate Technology, that are attributable to the
employees of Crystal Decisions (in thousands):

<TABLE>
<CAPTION>
                                                          As reported by     Allocated to
                                                        Seagate Technology Crystal Decisions
                                                        ------------------ -----------------
<S>                                                     <C>                <C>
Compensation expense related to the issuance of Seagate
  Technology common stock..............................      $102,549           $77,519
Compensation expense for accelerating vesting on stock
  options held by certain employees who become
  employees of VERITAS.................................        12,719                --
Compensation expense for the purchase of unvested
  stock options held by certain continuing employees of
  Crystal Decisions....................................         8,565             8,565
Employer portion of payroll taxes......................           630               630
                                                             --------           -------
   Total unusual items.................................      $124,463           $86,714
                                                             ========           =======
</TABLE>

   The consolidated and combined financial statements of Crystal Decisions at
July 2, 1999 also include an allocation of $5.4 million of the $51.8 million
purchase price allocation described above. The allocation to Crystal Decisions
was based on the fair value of the IMG business relative to Seagate Software
Holdings. A number of factors were considered in determining the estimated fair
value of the IMG business, including historical and projected revenues,
earnings and cash flows, as well as other factors and consultations with
financial advisors.

   The allocation of the purchase price to the intangible assets of Crystal
Decisions as at June 9, 1999 was as follows:

<TABLE>
         <S>                                               <C>
         Developed technologies........................... $  686,000
         Trademark........................................    158,000
         Assembled work force.............................    207,000
         In-process research and development..............    109,000
         Goodwill.........................................  4,700,000
         Deferred tax liability...........................   (412,000)
                                                           ----------
            Total purchase price allocated................ $5,448,000
                                                           ==========
</TABLE>

                                      68

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)


  The October 1999 Seagate Technology Exchange of Shares

   On October 20, 1999, the stockholders of Seagate Software Holdings approved
the merger of Seagate Daylight Merger Corp., a wholly owned subsidiary of
Seagate Technology, with and into Seagate Software Holdings. The merger was
effected on October 20, 1999. Seagate Software Holdings' assets consisted of
the assets of the IMG business and its investment in the common stock of
VERITAS. Upon the closing of the merger, Seagate Software Holdings became a
wholly owned subsidiary of Seagate Technology. All outstanding options to
purchase Seagate Software Holdings common stock were accelerated immediately
prior to the merger. In connection with the merger, Seagate Software Holdings
minority stockholders and optionees received payment in the form of 3.23 shares
of Seagate Technology's common stock per share of Seagate Software Holdings
common stock less any amounts due for the payment of the exercise price of
unexercised options. Seagate Technology issued 9,124,046 shares of its common
stock from treasury shares to optionees and minority stockholders of Seagate
Software Holdings in connection with the merger.

   Seagate Technology accounted for the exchange of shares of its common stock
as the acquisition of a minority interest for Seagate Software Holdings common
stock outstanding and vested more than six months held by employees and all
stock held by former employees and consultants. The fair value of the shares of
Seagate Technology issued was $19.4 million and was recorded as purchase price
and allocated to all the identifiable tangible and intangible assets and
liabilities of Seagate Software Holdings. Seagate Technology accounted for the
exchange of shares of its common stock for stock options in Seagate Software
Holdings held by employees and stock held and vested by employees less than six
months as the settlement of an earlier stock award. Seagate Technology recorded
compensation expense of $283.6 million, plus $2.1 million of employer portion
of payroll taxes, related to the purchase of minority interest in Seagate
Software Holdings.

   The Crystal Decisions' consolidated and combined statement of operations for
fiscal 2000 includes an allocation of compensation expense arising from the
October 1999 Seagate Technology Exchange of Shares. Compensation expense was
allocated to Crystal Decisions on the basis of employees specifically
identified with the IMG business and for those employees that performed
services for the IMG business, on the basis of time estimates. Accordingly,
Crystal Decisions recorded $239.6 million of the $283.6 million compensation
expense related to the October 1999 Seagate Technology exchange of total of
shares and offsetting $239.6 million was recorded as a capital contribution
from Seagate Technology. In addition, the $2.1 million of employer portion of
payroll taxes paid related to Crystal Decisions employees and therefore Crystal
Decisions recorded that amount as an expense for fiscal 2000.

   In addition, $877,000 of legal and accounting costs were incurred by Crystal
Decisions in connection with the recapitalization and reorganization of Crystal
Decisions.

   The following table summarizes the components of the unusual items expense
for fiscal 2000 reported by Seagate Technology that are attributable to the
employees of Crystal Decisions (in thousands):

<TABLE>
<CAPTION>
                                                       As reported by     Allocated to
                                                     Seagate Technology Crystal Decisions
                                                     ------------------ -----------------
<S>                                                  <C>                <C>
Compensation expense associated with the exchange of
  Seagate Software Holdings common stock for Seagate
  Technology common stock...........................      $283,619          $239,574
Employer portion of payroll taxes...................         2,118             2,118
Transaction costs...................................           877               877
                                                          --------          --------
   Total unusual items..............................      $286,614          $242,569
                                                          ========          ========
</TABLE>

                                      69

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)


   The consolidated and combined financial statements of Crystal Decisions at
June 30, 2000 also include an allocation of $1.2 million of the $19.4 million
purchase price allocation described above. The allocation to Crystal Decisions
was based on the fair value of the IMG business relative to the fair value of
Seagate Software Holdings. A number of factors were considered in determining
the estimated fair value of the IMG business, including historical and
projected revenues, earnings and cash flows, as well as other factors and
consultations with financial advisors.

   The allocation of the purchase price to the intangible assets of Crystal
Decisions as at October 20, 1999 was as follows:

<TABLE>
         <S>                                               <C>
         Developed technologies........................... $  156,000
         Trademark........................................     36,000
         Assembled work force.............................     47,000
         In-process research and development..............     25,000
         Goodwill.........................................  1,071,000
         Deferred tax liability...........................    (94,000)
                                                           ----------
            Total purchase price allocated................ $1,241,000
                                                           ==========
</TABLE>

11. Restructuring Costs

   During fiscal 2001, Crystal Decisions incurred $573,000 of restructuring
charges. The charges related to the closure of eight offices in Europe and were
part of a restructuring plan announced in September 2000 to consolidate the
European sales organization into fewer office locations. The charges were
primarily comprised of costs related to the termination of office leases and
other related closure costs, as well as severance and benefits due to nine
sales and marketing employees who were terminated in September 2000. At June
29, 2001, amounts remaining accrued but unpaid were not considered material.

   During fiscal 2000, Crystal Decisions incurred $1.3 million of restructuring
charges for termination of excess personnel as Crystal Decisions realigned its
resources to better manage and control its business. The charges resulted from
a company-wide restructuring plan announced in October 1999 and were comprised
of charges of severance and benefits paid to approximately 125 employees from
various locations and departments, including direct sales force personnel, who
were terminated on October 23, 1999. The restructuring charges were paid during
fiscal 2000 and no amounts were outstanding as of June 30, 2000.

   The restructuring events described above were independent of each other.

12. Income Taxes

   Prior to the sale of the operating assets of Seagate Technology, Crystal
Decisions was included in the consolidated federal and certain combined and
consolidated foreign and state income tax returns of Seagate Technology.
Seagate Technology and Crystal Decisions had entered into a tax sharing
agreement (the "Tax Allocation Agreement") pursuant to which Crystal Decisions
computed hypothetical tax returns as if Crystal Decisions was not joined in
consolidated or combined returns with Seagate Technology. Crystal Decisions
paid Seagate Technology the positive amount of any such hypothetical taxes. If
the hypothetical tax returns showed entitlement to refunds, including any
refunds attributable to a carryback, then Seagate Technology would pay Crystal
Decisions the amount of such refunds. As the end of fiscal 2001 and 2000,
respectively, $4.0 million and $67.0 million of intercompany tax related
balances due to Crystal Decisions from Seagate Technology have been

                                      70

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

offset against amounts due, if any, to Seagate Technology under the Revolving
Loan Agreement (refer to note 15 for further discussion). On November 22, 2000,
the Tax Allocation Agreement was terminated.

   The provision for (benefit from) income taxes consisted of the following (in
thousands):

<TABLE>
<CAPTION>
                                                           For the years ended
                                                 ---------------------------------------
                                                 June 29, 2001 June 30, 2000 July 2, 1999
                                                 ------------- ------------- ------------
<S>                                              <C>           <C>           <C>
Current Tax Expense (Benefit):
   Federal......................................    $(1,418)     $(46,977)     $(3,646)
   State........................................     (1,056)       (7,440)      (1,694)
   Foreign......................................      2,128          (491)       2,814
                                                    -------      --------      -------
       Total Current Tax Expense (Benefit)......       (346)      (54,908)      (2,526)
                                                    -------      --------      -------
Deferred Tax Expense (Benefit):
   Federal......................................         --          (139)          --
   State........................................         --            (8)          --
   Foreign......................................      1,529            --           --
                                                    -------      --------      -------
       Total Deferred Tax Expense (Benefit).....      1,529          (147)          --
                                                    -------      --------      -------
Provision for (benefit from) Income Taxes.......    $ 1,183      $(55,055)     $(2,526)
                                                    =======      ========      =======
</TABLE>

   The benefit from income taxes has been computed on a separate return basis,
except that the tax benefits of certain of Crystal Decisions' tax losses and
credits were recognized by Crystal Decisions on a current basis if such losses
could be utilized by Seagate Technology in its tax returns.

   Income (Loss) before income taxes consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                                            For the years ended
                                                  ---------------------------------------
                                                  June 29, 2001 June 30, 2000 July 2, 1999
                                                  ------------- ------------- ------------
<S>                                               <C>           <C>           <C>
United States....................................   $(12,110)     $(271,991)   $(109,095)
Foreign:
   Canada........................................        331         (4,042)       9,668
   Europe........................................        676            116          750
   Other.........................................        817           (300)        (224)
                                                    --------      ---------    ---------
                                                    $(10,286)     $(276,217)   $ (98,901)
                                                    ========      =========    =========
</TABLE>

   Undistributed earnings of the Company's foreign subsidiaries are considered
to be indefinitely reinvested and, accordingly, no provision for U.S. federal
and state income taxes have been provided thereon. Upon distribution of those
earnings in the form of dividends or otherwise, the Company would be subject to
both U.S. income taxes (subject to an adjustment for foreign tax credits) and
withholding taxes payable to the various foreign countries.

   The pro forma information assuming a tax benefit based on a separate return
basis is as follows (in thousands):

<TABLE>
<CAPTION>
                                                       For the years ended
                                                   --------------------------
                                                   June 29, 2001 June 30, 2000
                                                   ------------- -------------
 <S>                                               <C>           <C>
 Loss before income taxes.........................   $(10,286)     $(276,217)
 Benefit from (provision for) income taxes........     (1,183)           491
                                                     --------      ---------
 Net loss.........................................   $(11,469)     $(275,726)
                                                     ========      =========
</TABLE>

                                      71

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)


   The income tax benefits relating to the exercise of certain employee stock
options of Seagate Technology shares by Crystal Decisions' employees under the
Seagate Technology Employee Stock Purchase Plan increased amounts due from
Seagate Technology pursuant to the Tax Allocation Agreement and were credited
to additional paid-in capital. Such amounts approximated $33,000, $109,000 and
$22,000, in fiscal 2001, fiscal 2000 and fiscal 1999, respectively.

   Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The significant
components of Crystal Decisions' deferred tax assets and liabilities were as
follows (in thousands):

<TABLE>
<CAPTION>
                                                          For the years ended
                                                      --------------------------
                                                      June 29, 2001 June 30, 2000
                                                      ------------- -------------
<S>                                                   <C>           <C>
Deferred Tax Assets
Reserves.............................................   $  1,008      $  1,953
Accrued compensation and benefits....................        948           802
Accrued expenses not currently deductible............      2,482         1,300
Excess of tax bases of goodwill and other intangibles
  over book basis....................................     10,675        31,754
Foreign net operating loss carryforwards.............        387           855
Other................................................        105         1,637
                                                        --------      --------
   Total Deferred Tax Assets.........................     15,605        38,301
Valuation allowance..................................    (15,605)      (38,301)
                                                        --------      --------
   Net Deferred Tax Assets...........................         --            --
                                                        --------      --------
Deferred Tax Liabilities
Capital Assets, goodwill and other intangibles.......      3,600           381
                                                        --------      --------
Net Deferred Tax Liabilities.........................   $  3,600      $    381
                                                        ========      ========
</TABLE>

   In connection with the November 22, 2000 purchase of the operating assets of
Seagate Technology, Crystal Decisions recorded a $13.7 million valuation
allowance for deferred tax assets. The $13.7 million of deferred tax assets
subject to the valuation allowance was based on the excess of tax bases over
the fair values of acquired property, plant and equipment, and liabilities
assumed at that date for which the Company expects to receive tax deductions in
its federal and state returns in future periods. The Company also recorded $2
million of foreign deferred tax liabilities as a result of the excess of the
fair market values of inventory, long-term investments, and acquired intangible
assets over their related tax bases.

   The realization of the tax benefits for the federal and state deferred tax
assets subject to the valuation allowance will depend primarily on the
Company's ability to generate sufficient taxable income in the United States in
future periods; the timing and amount of which are uncertain. Crystal Decisions
anticipates that the tax benefits of the deferred tax assets, when realized,
will first result in a reduction in values of the intangibles assets recorded
in the push down adjustments to Crystal Decisions. Any excess tax benefit would
then be realized as a reduction of future income tax expense.

   As of June 29, 2001, Crystal Decisions had foreign net operating loss
carryforwards of approximately $1.3 million, which are available to offset
future taxable income and do not expire.

                                      72

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)


   The reconciliation between the provision for (benefit from) income taxes at
the U.S. statutory rate and the effective rate are summarized as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                    For the years ended
                                                          ---------------------------------------
                                                          June 29, 2001 June 30, 2000 July 2, 1999
                                                          ------------- ------------- ------------
<S>                                                       <C>           <C>           <C>
Provision (benefit) at U.S. statutory rate...............    $(3,599)     $(95,765)     $(34,615)
State income taxes (benefit), net........................       (435)       (4,191)       (2,371)
Foreign income taxes in excess of the U.S. statutory rate      2,942         1,229           109
Write-off of in-process research and development.........        693            --            --
Non-deductible compensation expense......................         --        56,734        18,019
Valuation allowance......................................      1,913       (12,913)       13,631
Other individually immaterial items......................       (331)         (149)        2,701
                                                             -------      --------      --------
                                                             $ 1,183      $(55,055)     $ (2,526)
                                                             =======      ========      ========
</TABLE>

13. Net Loss Per Share

   Basic loss per common share has been computed using the weighted average
number of shares of common stock outstanding during each of the periods
presented, with the 75,001,000 shares held by its parent company being treated
as outstanding for all reporting periods. Diluted loss per share is computed
using the weighted average number of shares of common stock outstanding during
each of the periods presented assuming exercise of options to purchase common
stock, with the 75,001,000 shares held by its parent company being treated as
outstanding for all reporting periods. Options to purchase common stock were
excluded from the computation of diluted net loss per share, as their effect is
not dilutive.

   Below is a reconciliation of the numerator and denominator used to calculate
net loss per share (in thousands, except share and per share data).

<TABLE>
<CAPTION>
                                                               For the years ended
                                                     ---------------------------------------
                                                     June 29, 2001 June 30, 2000 July 2, 1999
                                                     ------------- ------------- ------------
<S>                                                  <C>           <C>           <C>
Basic and diluted net loss per share computation:
   Numerator:
       Net loss.....................................  $   (11,469)  $  (221,162) $   (96,375)
                                                      ===========   ===========  ===========
   Denominator:
       Weighted average number of common shares
         outstanding................................   75,252,510    75,001,391   75,001,000
                                                      ===========   ===========  ===========
Net loss per share--basic and diluted...............  $     (0.15)  $     (2.95) $     (1.28)
                                                      ===========   ===========  ===========
</TABLE>

14. Stockholders' Equity

   Crystal Decisions' authorized capital stock consists of 150,000,000 shares
of common stock; $0.001 par value per share. No dividends have been declared or
paid to date by Crystal Decisions.

   1999 and 2000 Stock Option Plans. he Crystal Decisions 1999 and 2000 Stock
Option Plans ("Crystal Decisions Plans") provide for the issuance of incentive
and nonstatutory stock options to employees, directors and consultants of
Crystal Decisions, New SAC and subsidiaries of the consolidated group.

                                      73

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)


   1999 Stock Option Plan. As of June 29, 2001, Crystal Decisions had reserved
22,500,000 shares under the 1999 Stock Option Plan. Options granted under this
plan are granted at fair market value, expire ten years from the date of the
grant and vest over 48 months, with the shares subject to the option vesting as
to 25% on the first anniversary of the vesting commencement date and as to
1/48/th/ per month thereafter. As of June 29, 2001 and June 30, 2000,
respectively, 10,680,856 and 8,626,879 options were outstanding under the 1999
stock option plan and 11,422,229 and 13,872,071 remained available for grant.

   2000 Stock Option Plan. As of June 29, 2001, Crystal Decisions had reserved
200,000 shares under the 2000 Stock Option Plan. Options granted under this
plan are granted at fair market value, expire ten years from the date of grant
and become fully vested and exercisable immediately prior to a merger or asset
sale, other than the Sale of Seagate Technology described in note 2, or on the
date an initial public offering of Crystal Decisions' common stock is declared
effective by the United States Securities and Exchange Commission. Compensation
expense will be measured at fair value upon vesting of these options as all of
the options under this plan have been granted to employees of New SAC or
another subsidiary within the consolidated group. As of June 29, 2001 and June
30, 2000, respectively, 106,450 and 161,450 options were outstanding under the
2000 stock option plan and 93,550 and 38,550 options, respectively, remained
available for grant.

   Options under the Crystal Decisions Plans were granted at an exercise price
equal to the fair market value of Crystal Decisions' common stock on the grant
date, as determined by the Company's Board of Directors.

   Prior to fiscal 2000, employees, directors and consultants of Crystal
Decisions participated in Seagate Software Holdings 1996 Stock Option Plan (the
"Holdings Plan"). Under the Holdings Plan, incentive or nonstatutory stock
options were issued to employees, directors and consultants of Seagate Software
Holdings, its parent and subsidiaries. Seagate Software Holdings had reserved a
total of 16,600,000 shares under the plan. Options granted under the Holdings
Plan were granted at fair market value, expired 10 years from the date of the
grant and vested equally over 48 months. During fiscal 1999, certain of these
options were exchanged for Seagate Technology common stock, (see note 10), and
in October 1999, the remaining options outstanding were accelerated, vested in
full and exercised. In connection with the merger of Seagate Software Holdings
and Seagate Daylight Merger Corp., the Holdings Plan was terminated. The SFAS
123 pro forma information disclosed below for fiscal 1999 was based on the
Holdings Plan.

   Following is a summary of stock option activity from the inception of the
Crystal Decisions Plans through fiscal 2001:

<TABLE>
<CAPTION>
                                                  Options Outstanding
                                             ------------------------------
                                               Number of
                                             Common Shares Weighted Average
                                               Issuable     Exercise Price
                                             ------------- ----------------
     <S>                                     <C>           <C>
     Balance at July 2, 1999................          --        $  --
        Granted.............................   9,501,899         4.00
        Exercised...........................      (1,050)        4.00
        Forfeited...........................    (712,520)        4.00
                                              ----------
     Balance at June 30, 2000...............   8,788,329         4.00
                                              ==========
        Granted.............................   3,305,615         4.00
        Exercised...........................    (395,865)        4.00
        Forfeited...........................    (910,773)        4.00
                                              ----------
     Balance at June 29, 2001...............  10,787,306         4.00
                                              ==========
</TABLE>

                                      74

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)


   Options available for grant under the Crystal Decisions Plans were
11,515,779 and 13,910,621 at June 29, 2001 and June 30, 2000, respectively. The
following tables summarize information about options outstanding at June 29,
2001:

<TABLE>
<CAPTION>
                         Options Outstanding              Exercisable Options
            --------------------------------------------- -------------------
                                Weighted Average Weighted            Weighted
                                   Remaining     Average             Average
            Exercise Number of  Contractual Life Exercise Number of  Exercise
             Price    Shares       (in years)     Price    Shares     Price
            -------- ---------- ---------------- -------- ---------  --------
  <S>       <C>      <C>        <C>              <C>      <C>        <C>
             $4.00   10,787,306       8.81        $4.00   3,243,627   $4.00
                     ----------                           ---------
  Total....  $4.00   10,787,306       8.81        $4.00   3,243,627   $4.00
                     ==========                           =========
</TABLE>

   Pro Forma Information. SFAS 123 requires Crystal Decisions to present pro
forma information regarding net income/(loss) and earnings/(loss) per share for
stock options granted after June 30, 1995 as if Crystal Decisions had accounted
for its stock options under the fair value method of SFAS 123. The fair value
of Crystal Decisions' stock options was estimated using a Black-Scholes option
valuation model. The Black-Scholes option valuation model was developed for use
in estimating the fair value of traded options that have no vesting
restrictions and are fully transferable. In addition, the Black-Scholes model
requires the input of highly subjective assumptions, including the expected
stock price volatility. Because Crystal Decisions stock options granted to
employees have characteristics significantly different from those of
exchange-traded options (and are not fully transferable) and because changes in
the subjective input assumptions can materially affect the fair value estimate,
in management's opinion, the Black-Scholes model does not necessarily provide a
reliable single measure of the fair value of the stock options granted to
employees.

   The weighted average deemed fair value of stock options granted under
Crystal Decisions Plans was $3.06 in fiscal 2001 and $2.83 in fiscal 2000. The
fair value was estimated assuming no expected dividends and the following
weighted average assumptions:

<TABLE>
<CAPTION>
                                            Crystal Decisions Options Plan
                                          ----------------------------------
                                          Fiscal 2001 Fiscal 2000 Fiscal 1999
                                          ----------- ----------- -----------
  <S>                                     <C>         <C>         <C>
  Expected life (in years)...............    2.82        1.97        3.31
  Risk-free interest rate................     5.6%        6.2%        5.2%
  Volatility.............................     .99         .95         .68
</TABLE>

   The weighted average fair value of shares granted under the Seagate
Technology Stock Purchase Plan ("Purchase Plan") were $11.47 and $10.18 per
share in fiscal 2000 and fiscal 1999, respectively. The fair value was
estimated assuming no dividends and the following weighted average assumptions:
an expected life of six months for both years, a risk-free interest rate of
5.7% and 4.6% for fiscal 2000 and 1999, respectively, and a volatility of .78
and .80 for fiscal 2000 and 1999, respectively. The weighted average purchase
price of shares granted under the Purchase Plan were $23.38 and $22.72 per
share in fiscal 2000 and fiscal 1999, respectively.

   For purposes of pro forma disclosures, the estimated fair value of the
options was amortized over the options' vesting period (for stock options) and
over the six-month purchase period for stock purchases under the Purchase Plan.
Crystal Decisions' pro forma information follows (in thousands):

<TABLE>
<CAPTION>
                                                   Fiscal year ended
                                        ---------------------------------------
                                        June 29, 2001 June 30, 2000 July 2, 1999
                                        ------------- ------------- ------------
<S>                                     <C>           <C>           <C>
Pro forma net loss.....................   $(18,653)     $(225,973)    $(96,956)
Pro forma net loss per common share....   $  (0.25)     $   (3.01)    $  (1.29)
</TABLE>

                                      75

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)


The effects on pro forma disclosures of applying SFAS 123 are not likely to be
representative of the effects on pro forma disclosures of future years as no
options were issued under the Crystal Decisions Plans prior to November 1999.

   Common Stock Subject to Repurchase. As of June 29, 2001, employees and
directors of Crystal Decisions exercised options to purchase a combined total
of 396,915 of Crystal Decisions common stock under the 1999 Stock Option Plan.
Under the provisions of the 1999 Stock Option Plan, certain employees and
directors have exercised certain of their options to purchase common stock,
including the unvested portion. At the option of Crystal Decisions and within
30 days of termination of these individuals, Crystal Decisions may but is not
obligated to repurchase the unvested shares at the original purchase price. As
of June 29, 2001, there were 129,001 unvested shares that could become subject
to repurchase with a balance and an aggregate repurchase price of $516,004.
There was no stock subject to repurchase as of June 30, 2000.

15. Revolving Loan Agreement with Seagate Technology LLC

   On July 4, 2001, Crystal Decisions and Seagate Technology LLC renewed the
Revolving Loan Agreement originally dated June 28, 1996 and previously renewed
on July 4, 2000. Prior to fiscal 2001, certain of Crystal Decisions' working
capital needs and operating activities had been financed by borrowings from
Seagate Technology under the Revolving Loan Agreement. As of June 30, 2000 the
Revolving Loan Agreement was a net receivable balance of $25.7 million, and
while the funds were available for use, no amounts were borrowed under the
agreement in fiscal 2001.

   The renewed Revolving Loan Agreement provides for maximum outstanding
borrowings of up to $15.0 million and expires on July 4, 2002. If not paid
earlier, the loan is payable or receivable upon termination of the agreement.
As of June 29, 2001 and June 30, 2000, the revolving loan balance was a net
receivable from Seagate Technology LLC and its affiliates of $3.4 million and
$25.7 million, respectively. The net receivable arose largely as a result of
offsetting amounts due from Seagate Technology under a Tax Allocation Agreement
for income tax loss benefits utilized by Seagate Technology relative to Crystal
Decisions' tax loss position. The decrease in the net receivable balance during
fiscal 2001 is attributable to the repayment of $31 million of the loan
receivable by Seagate Technology LLC, which is managed by Seagate Technology on
behalf of Crystal Decisions and is presented on the balance sheet as cash and
cash equivalents. The loan balance is presented on the balance sheet as a net
receivable or net payable in accordance with the terms of the loan agreement.

   During fiscal 2001, Crystal Decisions earned interest income on a monthly
basis on the net receivable revolving loan balance outstanding at a rate
calculated to be Seagate Technology LLC's in-house portfolio yield (average of
6.46% for fiscal 2001). Beginning in fiscal 1999, interest was earned or
charged on the net revolving loan balance receivable or payable outstanding on
a monthly basis at LIBOR plus 2% per annum, (average of 7.85% for fiscal 2000).
Prior to fiscal 1999, Crystal Decisions paid interest at 6% per annum. Interest
income and expense, as presented in the statement of operations, primarily
relates to interest on the revolving loan. Effective July 4, 2001, Crystal
Decisions will continue to earn interest on amounts due under the Revolving
Loan Agreement at a rate calculated to be Seagate Technology LLC's in-house
portfolio yield; however, the Company will be charged interest at LIBOR plus
3.5% on amounts borrowed. Net interest income of $1,845,000 was earned and net
interest expense of $583,000 was incurred on the net receivable/payable loan
balance for fiscal 2001 and fiscal 2000, respectively.

   Although Crystal Decisions has incurred net losses during the three-year
period ended June 29, 2001, the Company generated positive cash flow for fiscal
2001. Crystal Decisions believes that the Company's combined sources of
financing: current cash balances; available borrowings from Seagate Technology
LLC under the

                                      76

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

Revolving Loan Agreement; and cash flows generated from the Company's
operations, will be sufficient to meet the anticipated cash needs for working
capital and capital expenditures for at least the next 12 months. Should
Crystal Decisions require additional financing that is not available from
Seagate Technology LLC at terms that are satisfactory to Crystal Decisions,
Crystal Decisions may seek additional equity and financing from other sources,
subject to concurrence by the lenders who financed the New SAC Transaction. As
a result of the New SAC Transaction, Crystal Decisions guaranteed the debt used
to finance the New SAC Transaction and pledged a majority of its assets. As a
result of restrictive covenants under the debt agreement, the ability of
Crystal Decisions to raise additional debt or equity from other sources may be
limited. (Refer to note 16 for further discussion.)

16. Debt Guarantees and Pledge of Assets

  Senior Secured Credit Facility

   On the closing of the New SAC Transaction, New SAC entered into senior
credit facilities with a syndicate of banks and other financial institutions.
The senior credit facilities provide senior secured financing of up to $900
million, consisting of:

  .  a $200 million revolving credit facility for general corporate purposes,
     with a sub-limit of $100 million for letters of credit, which will
     terminate in November 2005;

  .  a $200 million term loan A facility due in scheduled installments with a
     maturity of November 2005; and

  .  a $500 million term loan B facility due in scheduled installments with a
     maturity of November 2006.

   At the closing of the transaction, New SAC did not borrow under the
revolving credit facility. At June 29, 2001, approximately $147 million of the
revolving credit facility was available and approximately $53 million of
existing letters of credit were outstanding.

   New SAC drew the full amount of the term loan A facility and the term loan B
facility on the closing of the New SAC Transaction to finance the acquisition
of Seagate Technology's operating assets, including Crystal Decisions. Of the
$700 million of outstanding loans under the term loan A and B facilities, $695
million remained outstanding at June 29, 2001 as a result of a debt repayment
of $5 million by New SAC in the quarter ended March 30, 2001. The amounts are
repayable in semi-annual payments due as follows (in thousands):

<TABLE>
                     <S>                           <C>
                     Fiscal:
                        2002...................... $ 22,500
                        2003......................   40,000
                        2004......................   50,000
                        2005......................   60,000
                        2006......................  285,000
                        thereafter................  237,500
                                                   --------
                        Total..................... $695,000
                                                   ========
</TABLE>

   The loans bear interest at variable rates dependent upon market interest
rates and the nature of the borrowings, as well as the consolidated financial
position of New SAC at applicable measurement dates. The average interest rates
being charged under these borrowings from the date of the New SAC Transaction
ranged from 6.56% (LIBOR plus 2.5%) to 9.69% (LIBOR plus 3%).


                                      77

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

   New SAC, and certain of its subsidiaries, including Crystal Decisions and
certain of its subsidiaries, are guarantors on a joint and several, whole and
unconditional basis under the senior credit facilities. In addition, the
majority of New SAC's and certain of its subsidiaries' assets, including
certain of Crystal Decisions' assets and its capital stock, have been pledged
against the debt under this credit agreement. New SAC, and certain of its
subsidiaries, including Crystal Decisions and certain of its subsidiaries, have
agreed to certain covenants under the loan agreements including restrictions on
future equity and borrowing transactions, business acquisitions and disposals,
making certain restricted payments and dividends, making certain capital
expenditures, incurring guarantee obligations and engaging in mergers or
consolidations. Further, Crystal Decisions, as part of the consolidated group,
is subject to certain financial covenants, which are assessed on the
consolidated operating results and financial position of New SAC and its
subsidiaries.

   The credit agreement provides for the release of Crystal Decisions from its
guarantee obligations and asset pledge upon an approved transfer or sale of
Crystal Decisions' common stock, or an initial public offering of at least 10%,
on a fully diluted basis, of Crystal Decisions' voting common stock.

  Senior Subordinated Notes

   In connection with the closing and financing of the New SAC Transaction,
Seagate Technology International, which is a indirectly owned by New SAC,
issued unsecured senior subordinated notes under an Indenture Agreement dated
November 22, 2000, at a discount to the aggregate principal amount of $210
million, for gross proceeds of approximately $201 million. The notes mature on
November 15, 2007 and bear interest payable semi-annually at a rate of 12.5%
per annum. New SAC and certain of its subsidiaries, including Crystal Decisions
and certain of its subsidiaries, are guarantors on a joint and several, whole
and unconditional basis, of the notes. In addition, New SAC and certain of its
subsidiaries, including Crystal Decisions and certain of its subsidiaries, have
agreed to certain restrictive covenants under the terms of these notes
including restrictions on future equity and borrowing transactions, business
acquisitions and disposals, making certain restricted payments and dividends,
making certain capital expenditures, incurring guarantee obligations and
engaging in mergers or consolidations. Crystal Decisions may be released from
its guarantee obligation if there are certain sales of its capital stock,
including an initial public offering, but would remain subject to the
restrictive covenants of the Indenture until Crystal Decisions and its
subsidiaries are no longer subsidiaries of New SAC or are deemed no longer to
be subject to the restrictive covenants.

   New SAC will not require Crystal Decisions' cash flow to be used to service
the obligations pursuant to the senior secured credit facility and the senior
subordinated notes. The Company believes that none of the guarantees or pledges
of assets under the senior credit facilities or the guarantees under the
Indenture are likely to be invoked.

17. Business Segment and Geographic Information

   Crystal Decisions operates in a single industry segment--information
infrastructure software. Crystal Decisions' products and services are sold
worldwide, through direct sales, distributor and OEM channels. Within the
segment, the chief operating decision maker, Crystal Decisions' chief executive
officer, evaluates the performance of the business based upon revenues from
product and services, revenues by geographic regions and revenues by product
channels.

                                      78

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)


  Product and services revenues (in thousands):

<TABLE>
<CAPTION>
                                                            For the years ended
                                                  ----------------------------------------
                                                  June 29, 2001 June 30, 2000 July 2, 1999
                                                  ------------- ------------- ------------
<S>                                               <C>           <C>           <C>
Licensing........................................   $107,028      $ 74,182      $ 92,013
Maintenance, support and services................     59,833        52,336        49,744
                                                    --------      --------      --------
       Total revenues............................   $166,861      $126,518      $141,757
                                                    ========      ========      ========
</TABLE>

  Geographic revenues (in thousands) (1)(2):

<TABLE>
<CAPTION>
                                                            For the years ended
                                                  ----------------------------------------
                                                  June 29, 2001 June 30, 2000 July 2, 1999
                                                  ------------- ------------- ------------
<S>                                               <C>           <C>           <C>
United States....................................   $113,175      $ 83,080      $ 86,945
Europe...........................................     31,812        28,570        38,625
Other............................................     21,874        14,868        16,187
                                                    --------      --------      --------
       Total revenues............................   $166,861      $126,518      $141,757
                                                    ========      ========      ========
</TABLE>

  Channel revenues (in thousands):

<TABLE>
<CAPTION>
                                                            For the years ended
                                                  ----------------------------------------
                                                  June 29, 2001 June 30, 2000 July 2, 1999
                                                  ------------- ------------- ------------
<S>                                               <C>           <C>           <C>
Direct...........................................   $105,243      $ 74,760      $ 85,773
Indirect (3).....................................     61,618        51,758        55,984
                                                    --------      --------      --------
       Total revenues............................   $166,861      $126,518      $141,757
                                                    ========      ========      ========
</TABLE>

  Long-lived tangible and intangible assets (in thousands):

<TABLE>
<CAPTION>
                                                     June 29, 2001 June 30, 2000
                                                     ------------- -------------
<S>                                                  <C>           <C>
United States.......................................    $12,310       $ 6,154
Canada..............................................     14,120         7,254
Other...............................................      2,029         1,226
                                                        -------       -------
       Total long-lived tangible and intangible
         assets.....................................    $28,459       $14,634
                                                        =======       =======
</TABLE>

  Reconciliation of total assets (in thousands):

<TABLE>
<CAPTION>
                                                   June 29, 2001 June 30, 2000
                                                   ------------- -------------
 <S>                                               <C>           <C>
 Total long-lived tangible and intangible assets..   $ 28,459       $14,634
 Other assets, including current..................     76,667        57,911
                                                     --------       -------
        Total assets..............................   $105,126       $72,545
                                                     ========       =======
</TABLE>
--------
(1) Europe includes South Africa and the Middle East.

(2) Revenues are attributed to geographic locations based on the location of
    the customer.

(3) Includes Distributors and OEMs.

                                      79

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)


   Overall, Crystal Decisions' customer base is diverse; however, a third-party
customer, Ingram, represented more than 10% of consolidated total revenues for
a total of $27.7 million, $25.3 million and $18.3 million for fiscal 2001, 2000
and 1999, respectively. No other customer accounted for 10% or more of Crystal
Decisions consolidated total revenues in fiscal 2001, 2000 or 1999.

18. Commitments

   Leases. Crystal Decisions leases its property, facilities and equipment
under non-cancelable lease agreements. Facility leases expire at various dates
through 2010 and contain various provisions for rental adjustments. The leases
require Crystal Decisions to pay property taxes, insurance and normal
maintenance costs. Crystal Decisions also occupies certain facilities owned by
Seagate Technology. Future minimum payments for operating leases were as
follows at June 29, 2001, in thousands:

<TABLE>
<CAPTION>
                                                       Operating
                                                        Leases
                                                       ---------
               <S>                                     <C>
               2002...................................  $ 5,944
               2003...................................    5,292
               2004...................................    4,555
               2005...................................    3,118
               2006...................................    2,187
               Thereafter.............................    2,072
                                                        -------
                                                        $23,168
                                                        =======
</TABLE>

   Total rent expense for all facility and equipment operating leases was
approximately $6.4 million, $5.7 million and $5.7 million for fiscal 2001,
fiscal 2000 and fiscal 1999, respectively.

   Canadian Registered Retirement Savings Program. In January 1999, Crystal
Decisions began sponsoring a tax deferred registered retirement savings program
for its Canadian employees. Employees voluntarily contribute to registered
retirement savings accounts and Crystal Decisions contributes 50% of the
amounts contributed by the employees, up to a maximum of $1,667 (CAD $2,500)
per employee or 6% of the individual employee's salary, whichever is less.
Expenses related to this program were $879,000, $530,000 and $215,000 in fiscal
2001, fiscal 2000, and fiscal 1999, respectively.

19. Contingencies

   On November 10, 1997, Vedatech Corporation ("Vedatech") commenced an action
in the Chancery Division of the High Court of Justice in the United Kingdom
against Crystal Decisions (UK) Limited, a wholly owned subsidiary of Crystal
Decisions. The original pleading alleged a breach of an oral agreement and
infringement of Vedatech's U.K. copyright in one of Crystal Decisions' products
and sought monetary and injunctive relief. On August 22, 2000, Vedatech
requested and obtained permission from the court to amend its action to include
claims for unjust enrichment, unlawful interference and quantum meruit. On May
9, 2001, Vedatech was given further leave to amend its pleading. Vedatech seeks
to enjoin Crystal Decisions (UK) Limited from infringing the U.K. copyright and
seeks forfeiture to Vedatech of all infringing software copies. Of the relief
sought, the only claim that has been settled is a claim for JPY 26,624,181
(approximately U.S. $240,000) for unpaid invoices. Crystal Decisions has hired
local counsel in the U.K., reviewed documents, conducted interviews and
participated in the discovery process. Taking into account Crystal Decisions'
counterclaim (which is approximately U.S. $200,000) and a deposit with the
court of an amount equal to

                                      80

<PAGE>

                            CRYSTAL DECISIONS, INC.
    (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP HOLDINGS, INC.)

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

U.S. $200,000, Crystal Decisions has offered Vedatech U.S. $400,000 in
settlement of its quantum meruit claim. The court has granted Vedatech's
request to delay commencement of the trial until February of 2002 with the
caveat that the hearing of the trial will be split between liability and
quantum (if required). The Company has defenses to all the causes of action,
including the claim for quantum meruit, and intends vigorously to defend the
actions. Were an unfavorable outcome to arise, there can be no assurance that
such outcome would not have a material adverse affect on the liquidity,
financial position or results of operations of the Company. The outcome of this
matter and amount of related claims are not determinable at this time.

   In addition to the foregoing, Crystal Decisions is subject to other
litigation in the ordinary course of its business. While Crystal Decisions
believes that the ultimate outcome of these matters will not have a material
adverse effect on the Company, the outcome of these matters is not determinable
and negative outcomes may adversely affect Crystal Decisions' financial
position, liquidity, or results of operations.

                                      81

<PAGE>

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

   None.

                                   PART III

Item 10. Directors and Executive Officers of the Registrant.

   Our directors and executive officers and certain information about them as
of August 24, 2001 are as follows:

<TABLE>
<CAPTION>
                                                                                   Director or
                                                                                    Executive
Name                          Age                    Position                     Officer Since
----                          ---                    --------                     -------------
<S>                           <C> <C>                                             <C>
Gregory B. Kerfoot........... 41  President, Chief Executive Officer and Director     1999
William Gibson............... 52  Chief Operating Officer                             2000
Eric Patel................... 44  Chief Financial Officer                             1999
Stephen J. Luczo............. 44  Chairman of the Board of Directors                  1999
Donald L. Waite.............. 68  Director                                            1999
David J. Roux................ 44  Director                                            2001
John W. Thompson............. 52  Director                                            2001
Justin Chang................. 34  Director                                            2001
</TABLE>

   Mr. Kerfoot has served as our Chief Executive Officer since August 2000 and
as President and a Director since August 1999. Mr. Kerfoot joined Seagate
Technology in May 1994 when Seagate Technology acquired Crystal Computer
Services, Inc. He continued as Director of Research and Development for the
subsidiary. In May 1996, he was appointed President of the Seagate Software
business and later in the year was named Executive Vice President and General
Manager of the Seagate Software business. In fiscal 1998, Mr. Kerfoot was named
Chief Strategic Officer for Seagate Software Holdings, as well as Executive
Vice President and General Manager of the Seagate Software business. In August
1999, he was appointed as our Chief Operating Officer.

   Mr. Gibson has served as our Chief Operating Officer since September 2000.
From April 1998 to August 2000, Mr. Gibson served as the President, Western
Region, of Rogers Wireless, Inc., a communications company. From August 1997 to
March 1998, Mr. Gibson served as Vice President-Business Units at Lucent
Technologies. Mr. Gibson served as Vice President and General Manager at Sprint
PCS from April 1997 to August 1997. Mr. Gibson served as Vice President and
Marketing Manager of Ameritech Cellular and Paging from June 1993 to April
1997.

   Mr. Patel has served as our Chief Financial Officer since November 1999.
From February 1997 to November 1999, Mr. Patel served in various capacities at
University Games, a board game manufacturing company, the most recent of which
was Chief Financial Officer and Vice President of Operations and International
Sales and Marketing. From May 1993 to November 1996, Mr. Patel served as
Director of Strategy for Dreyers Ice Cream.

   Mr. Luczo has served as our Chairman of the Board of Directors since August
1999 and served as our Chief Executive Officer from August 1999 to August 2000.
Mr. Luczo became the Chief Executive Officer and a director of Seagate
Technology LLC and New SAC on November 22, 2000. From July 1998 to May 2000, he
served as President and Chief Executive Officer of Seagate Technology and was a
director of Seagate Technology from July 1998 to November 2000. He joined
Seagate Technology in October 1993 as Senior Vice President, Corporate
Development. In March 1995, he became Executive Vice President, Corporate
Development of Seagate Technology and Chief Operating Officer of the Software
Group. Mr. Luczo also serves as a member of the board of directors of VERITAS,
a software company.


                                      82

<PAGE>

   Mr. Waite has served as a member of our board of directors since August
1999. From November 2000, Mr. Waite has served as Executive Vice President and
Chief Administrative Officer of New SAC and Seagate Technology LLC. Since March
1995, Mr. Waite served as Executive Vice President and Chief Administrative
Officer of Seagate Technology. Mr. Waite also served as Chief Financial Officer
of Seagate Technology from April 1984 to February 1998. Mr. Waite joined
Seagate Technology in 1983 and has served in various roles prior to March 1995.
Mr. Waite serves as a member of the board of directors of California Micro
Devices Corporation, a thin-film semiconductor company.

   Mr. Roux has served as a member of our board of directors since February
2001. Mr. Roux is a founder and managing member of Silver Lake partners, a
private equity firm. From February 1998 to November 1998, he served as the
Chief Executive Officer and President of Liberate Technologies, a software
platform provider. From September 1994 until December 1998, Mr. Roux held
various management positions with Oracle Corporation, most recently as
Executive Vice President of Corporate Development. Before joining Oracle, Mr.
Roux served as Senior Vice President, Marketing and Business Development at
Central Point Software from April 1992 to July 1994. Mr. Roux currently serves
as Chairman of the Board of Directors of Liberate Technologies and also is the
Chairman of the Board of Directors of New SAC and a member of the board of
directors of Gartner, Inc., a business technology advisor.

   Mr. Thompson has served as a member of our board of directors since February
2001. Mr. Thompson is Chairman of the Board of Directors, President and Chief
Executive Officer of Symantec Corporation, which he joined in April 1999. From
1971 to April 1999, Mr. Thompson held various executive and management
positions with International Business Machines Corporation, an information
technology provider. Mr. Thompson is a member of the boards of directors of New
SAC, NiSource, Inc., and United Parcel Service Inc.

   Mr. Chang has served as a member of our board of directors since February
2001. Mr. Chang is a partner of Texas Pacific Group ("TPG"), and has been an
executive of TPG since 1993. Prior to joining TPG, Mr. Chang was a financial
analyst in the Merchant Banking Group and the Mergers and Acquisitions Group of
Wasserstein Perella & Co., Inc. Mr. Chang is a member of the board of directors
of ON Semiconductor, a manufacturer of high performance analog integrated
circuits.

                                      83

<PAGE>

Item 11. Executive Compensation.

Summary Compensation Table

   The following table sets forth the compensation we paid to our Chief
Executive Officer, our President and our next most highly compensated executive
officers (collectively, the "Named Executive Officers"), each of whose
compensation exceeded $100,000 in fiscal 2001.

<TABLE>
<CAPTION>
                                                                                      Long-Term
                                                                                     Compensation
                                                                                      Securities
                                                                                      Underlying
                                           Fiscal                     Other Annual     Options
Name and Principal Position                 Year  Salary($) Bonus($) Compensation($) Granted (1)
---------------------------                ------ --------- -------- --------------- ------------
<S>                                        <C>    <C>       <C>      <C>             <C>
Gregory B. Kerfoot........................  2001  $235,386  $231,800     $    --             --
 President and Chief Executive Officer (2)  2000  $238,090  $     --     $    --      3,000,000
William Gibson............................  2001  $218,259  $120,620     $    --        400,000
 Chief Operating Officer (3)                2000  $     --  $     --     $    --             --
Eric Patel................................  2001  $188,024  $102,976     $82,690(5)     100,000
 Chief Financial Officer (4)                2000  $114,430  $ 56,771     $    --        250,000
Stephen J. Luczo..........................  2001  $ 16,038  $     --     $    --             --
 Chairman of the Board of Directors (6)     2000  $ 90,781  $     --     $    --        275,000
</TABLE>
--------
(1) The stock options listed in the table represent options to purchase our
    Common Stock. See "Executive Compensation--Option Grants in Fiscal 2001"
    for additional information regarding options to purchase our stock granted
    during fiscal 2001.

(2) Mr. Kerfoot served as our President and Chief Operating Officer during
    fiscal 2000 and was appointed as President and Chief Executive Officer in
    August 2000. The 2001 amount represents compensation for the full fiscal
    2001 year.

(3) Mr. Gibson's compensation for 2001 includes amounts since joining us in
    August 2000 as our Chief Operating Officer.

(4) Mr. Patel's compensation includes amounts since joining us in November 1999
    as our Chief Financial Officer for fiscal 2000 and amounts for the full
    fiscal year for fiscal 2001.

(5) Included in other annual compensation is approximately $76,900 related to
    an one-time net tax equalization amount that will be paid by the company on
    Mr. Patel's behalf after his repayment of certain advances for Canadian tax
    liabilities.

(6) Amount represents the percentage of Mr. Luczo's salary from which we
    directly benefited. Mr. Luczo served as our Chief Executive Officer during
    fiscal 2000 and fiscal 2001, until Mr. Kerfoot's appointment in August
    2000. We paid Seagate Technology directly for our percentage of Mr. Luczo's
    salary under a general services agreement. See the Related Party
    Transactions note to the Consolidated and Combined Financial Statements.

                                      84

<PAGE>

Option Grants in Fiscal 2001

   The following table sets forth certain information concerning grants of
stock options to each of our Named Executive Officers during fiscal 2001.

<TABLE>
<CAPTION>
                                                                              Potential Realizable Value
                              Number of   % of Total                          at Assumed Annual Rates of
                              Securities   Options    Exercise or            Stock Price Appreciation for
                              Underlying  Granted to  Base Price                   Option Term (3)
                               Options   Employees in  per Share  Expiration ----------------------------
Name                           Granted   Fiscal Year      (2)        Date          5%            10%
----                          ---------- ------------ ----------- ----------   ----------    ----------
<S>                           <C>        <C>          <C>         <C>        <C>            <C>
Gregory B. Kerfoot...........       --         --           --           --  $       --     $       --
William Gibson...............  400,000      12.10%       $4.00     11/20/10   1,006,231      2,549,988
Eric Patel...................  100,000       3.03%       $4.00     11/20/10     251,558        637,497
Stephen J. Luczo.............       --         --           --           --          --             --
</TABLE>
--------
(1) All stock options granted to Named Executive Officers in fiscal 2001 vest
    as to 25% of the shares subject to the option on the first anniversary of
    the vesting commencement date and as to 1/48th per month thereafter. Under
    the 1999 and 2000 Option Plans, our Board retains discretion to modify the
    terms, including the price, of outstanding options.

(2) Options were granted at an exercise price equal to the fair market value of
    our Common Stock on the grant date, as determined by the Compensation
    Committee of our Board of Directors. Given the fact that there is no
    trading value for our stock, the Board of Directors determines the fair
    market value by considering a number of factors, including, but not limited
    to, comparisons of certain of our key valuation metrics compared with
    similar metrics for comparable publicly traded companies, including
    measures of market capitalization based on revenue multiples and operating
    margins; our historical and current financial performance and prospects for
    future growth and profitability; and the status of product releases and
    product integration.

(3) Potential realizable value is based on the assumption that our common stock
    appreciates at the annual rate shown (compounded annually) from the date of
    grant until the expiration of the ten-year option term. These numbers are
    calculated based on the requirements promulgated by the Securities and
    Exchange Commission and do not reflect our estimate of future stock price
    growth.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values

   The following table sets forth certain information regarding the exercise of
stock options in the last fiscal year by the Named Executive Officers and the
value of options held by such individuals at the end of fiscal 2001.

<TABLE>
<CAPTION>
                                                     Number of Securities      Value of Unexercised
                               Number of            Underlying Unexercised    in-the-Money Options at
                                Shares     Value   Options at 2001 Year End      2001 Year End (2)
                               Acquired   Received ------------------------- -------------------------
Name                          on Exercise  ($)(1)  Exercisable Unexercisable Exercisable Unexercisable
----                          ----------- -------- ----------- ------------- ----------- -------------
<S>                           <C>         <C>      <C>         <C>           <C>         <C>
Gregory B. Kerfoot...........     --         --     1,249,999    1,750,001      $ --         $ --
William Gibson...............     --         --            --      400,000      $ --         $ --
Eric Patel...................     --         --        98,958      251,042      $ --         $ --
Stephen J. Luczo.............     --         --       114,583      160,417      $ --         $ --
</TABLE>
--------
(1) Market value of our common stock at the exercise date minus the exercise
    price.

(2) Market value of our common stock at fiscal year end minus the exercise
    price. The fair market value of our common stock on June 29, 2001, as
    determined by the Compensation Committee of our Board of Directors, was
    $4.00 per share. To determine the fair market value of our common stock,
    the Compensation Committee of the Board of Directors considers a number of
    factors, including, but not limited to, our current financial performance
    and prospects for future growth and profitability, the status of product
    releases and product integration, the absence of a resale market for our
    common stock, the control position held by Suez Software and ultimately New
    SAC and comparisons of certain of our key valuation metrics with similar
    metrics for comparable publicly traded companies, including measures of
    market capitalization based on revenue multiples, price-to-earnings ratios
    and operating margins.

                                      85

<PAGE>

Incentive Plans

  1999 Stock Option Plan

   Our board of directors approved our 1999 Stock Option Plan ("1999 Plan") in
November 1999 and reserved 22,500,000 shares of common stock for issuance under
the 1999 Plan.

   The 1999 Plan provides for grants of incentive stock options to employees,
including officers and employee directors and nonstatutory stock options to
employees and consultants, including nonemployee directors of our company, and
our parent and its subsidiaries. The purposes of our 1999 Plan are to attract
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to our employees and
consultants and to promote the success of our business. At the request of the
board of directors, the compensation committee administers our 1999 Plan and
determines the optionees and the terms of options granted, including the
exercise price, number of shares subject to the option and the exercisability
thereof.

   The term of the options granted under the 1999 Plan is set forth in the
option agreement. The term of an incentive stock option may not exceed ten
years and, in the case of an option granted to an optionee who owns more than
10% of our outstanding stock at the time of grant, the term of an option may
not exceed five years. Options granted under the 1999 Plan are granted at fair
market value and vest as to 25% of the shares subject to the option on the
first anniversary of the vesting commencement date and as to  1/48/th/ per
month thereafter of the shares subject to the option.

   With respect to any optionee who owns more than 10% of our outstanding
stock, the exercise price of any incentive stock option granted must be at
least 110% of the fair market value on the grant date.

   No incentive stock options may be granted to an optionee, which, when
combined with all other incentive stock options becoming exercisable in any
calendar year that are held by that person, would have an aggregate fair market
value in excess of $100,000. In any fiscal year, we may not grant any employee
options to purchase more than 5,000,000 shares.

   In the event of a merger of the company or a sale of substantially all of
the assets of the company, any option which is not assumed or instituted by a
successor or shall fully vest and then terminate upon the culmination of the
merger or sale.

   The 1999 Plan will terminate in November 2009, unless our board of directors
terminates it sooner.

   As of June 29, 2001 and June 30, 2000, respectively, we had cumulatively
issued 396,915 and 1,050 shares of common stock upon the exercise of options
under the 1999 Plan. In addition, there were 10,680,856 and 8,626,879 options
to purchase shares of our common stock outstanding as of June 29, 2001 and June
30, 2000, respectively.

  2000 Stock Option Plan

   Our board of directors approved our 2000 Stock Option Plan ("2000 Plan") in
June 2000 and reserved 200,000 shares of common stock for issuance under the
2000 Plan.

   The 2000 Plan provides for grants of incentive stock options to employees
and nonstatutory stock options to employees and consultants of our company, and
our parent and its subsidiaries. The purposes of our 2000 Plan are to attract
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to our employees and
consultants and to promote the success of our business. At the request of the
board of directors, the compensation committee administers our 2000 Plan and
determines the optionees and the terms of options granted, including the
exercise price, number of shares subject to the option and the exercisability
thereof.

                                      86

<PAGE>

   The term of the options granted under the 2000 Plan is set forth in the
option agreement. The term of an incentive stock option may not exceed ten
years and, in the case of an option granted to an optionee who owns more than
10% of our outstanding stock at the time of grant, the term of an option may
not exceed five years. Options granted under the 2000 Plan are granted at fair
market value and become fully vested and exercisable immediately prior to a
merger or asset sale (excluding the New SAC Transaction), or on the date upon
which an initial public offering is declared effective by the United States
Securities Exchange Commission. Compensation expense will have to be recognized
upon vesting of these options as all of the options under this plan have been
granted to employees of our parent or another subsidiary within the
consolidated group.

   With respect to any optionee who owns more than 10% of our outstanding
stock, the exercise price of any incentive stock option granted must be at
least 110% of the fair market value on the grant date.

   No incentive stock options may be granted to an optionee, which, when
combined with all other incentive stock options becoming exercisable in any
calendar year that are held by that person, would have an aggregate fair market
value in excess of $100,000. In any fiscal year, we may not grant any employee
options to purchase more than 5,000,000 shares.

   In the event of a merger of the company or a sale of substantially all of
the assets of the company, any option which is not assumed or instituted by a
successor or shall fully vest and then terminate upon the culmination of the
merger or sale.

   The 2000 Plan will terminate in June 2010, unless our board of directors
terminates it sooner.

   As of June 29, 2001 and June 30, 2000, respectively, we had granted 161,450
options to purchase shares of our common stock; however, no shares have been
issued upon the exercise of options under the 2000 Plan. Of the 161,450 options
granted, 106,450 remain outstanding at June 29, 2001.

Seagate Technology Employee Stock Purchase Plan

   Until October 22, 2000, our employees also participated in the Seagate
Technology Employee Stock Purchase Plan (the "Purchase Plan"). The Purchase
Plan permitted eligible employees who had completed thirty days of employment
prior to the inception of the offering period to purchase common stock of
Seagate Technology through payroll deductions. Under the Purchase Plan, our
employees purchased 24,181, 57,245, and 35,113 shares of Seagate Technology
common stock in fiscal 2001, 2000 and 1999, respectively. The Purchase Plan
terminated prior to the closing of the New SAC Transaction.

Employment Contracts, Change-of-Control Arrangements and Separation Agreements

   In July 2000, we entered into an offer letter agreement with William Gibson
in connection with Mr. Gibson's employment as our Chief Operating Officer. We
agreed with Mr. Gibson that in the event we terminated Mr. Gibson's employment
without just cause, we would provide him written notice of our intention to
terminate his employment. We also agreed that if we terminated Mr. Gibson's
employment without just cause, we would pay him: (i) his then current base
salary for one year, (ii) an amount equal to his bonus for the calendar year
immediately preceding his termination and (iii) an allowance of 10% of his
annual base salary in lieu of all other benefits. If applicable, we would be
required to pay these amounts to Mr. Gibson monthly over a one-year period.

   Other than our agreement with Mr. Gibson, we currently do not have change of
control or separation agreements with any of the Named Executive Officers. We
have no compensatory plan or arrangement with such current Named Executive
Officers where the amount to be paid exceeds $100,000 and that are activated
upon resignation, termination or retirement of any such Named Executive Officer
upon a change in control of our company.

                                      87

<PAGE>

Director Compensation

   Directors receive no additional cash compensation for service on our board
of directors or any of our committees or sub-committees. During fiscal 2001,
Messrs. Roux, Thompson and Chang were each granted options to purchase 50,000
shares of our common stock. During fiscal 2000, Gary Filler and Lawrence
Perlman, former directors, and Mr. Waite were each granted options to purchase
50,000 shares of our common stock.

Section 16(a) Beneficial Ownership Reporting Compliance

   Section 16(a) of the Securities Exchange Act of 1934 requires our executive
officers and directors and persons who own more than ten percent of a
registered class of our equity securities to file reports of ownership and
changes in ownership with the Securities and Exchange Commission
("Commission"). Executive officers, directors and stockholders owning greater
than ten percent are required by the Commission's regulation to furnish us with
copies of all Section 16(a) forms they file. Based solely on our review of such
forms, we believe that we have filed the appropriate forms for all individuals
that meet these requirements.

Item 12. Security Ownership of Certain Beneficial Owners and Management.

   The following table sets forth certain information regarding the beneficial
ownership of our outstanding shares of our common stock on an as-converted
basis as of August 24, 2001 by (i) each person who is known to us to be the
beneficial owner of 5% or more of our outstanding common stock, (ii) each of
our executive officers named in the Summary Compensation Table in Item 11,
(iii) each of our directors and (iv) all directors and executive officers as a
group.

<TABLE>
<CAPTION>
                                                                            Percentage
                                                                 Number of      of
                                                                   Common     Common
                                                                 Shares (1) Shares (1)
                                                                 ---------- ----------
<S>                                                              <C>        <C>
Seagate Software (Cayman) Holdings (2).......................... 75,001,000    99.4
   P.O. Box 265GT
   Walker House
   Georgetown
   Grand Cayman
   Cayman Islands
Stephen J. Luczo (3)............................................ 75,221,833    99.6
Donald L. Waite (4)............................................. 75,051,000    99.4
Gregory B. Kerfoot (5)..........................................  1,500,000     1.9
David J. Roux (6)............................................... 75,001,000    99.4
John W. Thompson (7)............................................ 75,001,000    99.4
Justin Chang....................................................          0       *
William Gibson (8)..............................................    108,333       *
Eric Patel (9)..................................................    144,791       *
All directors and executive officers as a group (8 persons) (10) 77,024,957    99.7
</TABLE>
--------
  *   Less than one percent.

 (1)  Applicable percentage ownership is based on 75,468,204 shares of common
      stock outstanding as of August 24, 2001 together with applicable options
      for each stockholder exercisable on August 24, 2001 or within 60 days
      thereafter. We have determined beneficial ownership in accordance with
      the rules of the Securities and Exchange Commission based on factors,
      including voting and investment power, with respect to shares subject to
      applicable community property laws. Common stock issuable upon the
      exercise of options currently exercisable or exercisable within 60 days
      after August 24, 2001 are deemed outstanding for computing the percentage
      ownership of the person holding such options, but are not deemed
      outstanding for computing the percentage of any other person.

                                      88

<PAGE>

 (2)  Seagate Software (Cayman) Holdings ("Suez Software") acquired 75,001,000
      shares of our outstanding common stock on November 22, 2000 in connection
      with the New SAC Transaction described in "Item 1--Business--Development
      of Business."

 (3) Includes 175,000 shares of common stock that are subject to repurchase by
     Crystal Decisions. Crystal Decisions' repurchase right lapses for 43,750
     shares on October 22, 2000, and thereafter at a rate of  1/48/th/ per
     month of the shares subject to the option. Includes 45,833 shares of
     common stock that may be acquired upon the exercise of stock options
     exercisable within 60 days after August 24, 2001. Includes 75,001,000
     shares of common stock beneficially owned by Suez Software to which Mr.
     Luczo may be deemed, in his capacity as director of New SAC and Suez
     Software, to have shared voting or dispositive power. Mr. Luczo disclaims
     such beneficial ownership.

 (4) Includes 50,000 shares of common stock that are subject to repurchase by
     the company. Crystal Decisions' repurchase right lapses for 12,500 shares
     on October 22, 2000, and thereafter at a rate of  1/48/th/ per month of
     the shares subject to the option. Includes 75,001,000 shares of common
     stock beneficially owned by Suez Software to which Mr. Waite may be
     deemed, in his capacity as an officer of New SAC, to have shared voting or
     dispositive power. Mr. Waite disclaims such beneficial ownership.

 (5) Includes 1,500,000 shares of common stock that may be acquired upon the
     exercise of stock options exercisable within 60 days after August 24,
     2001.

 (6) Represents 75,001,000 shares of common stock beneficially owned by Suez
     Software to which Mr. Roux may be deemed, in his capacity as a director of
     New SAC, to have shared voting or dispositive power. Mr. Roux disclaims
     such beneficial ownership.

 (7) Represents 75,001,000 shares of common stock beneficially owned by Suez
     Software to which Mr. Thompson may be deemed, in his capacity as a
     director of New SAC, to have shared voting or dispositive power. Mr.
     Thompson disclaims such beneficial ownership.

 (8) Includes 108,333 shares of common stock that may be acquired upon the
     exercise of stock options exercisable within 60 days after August 24,
     2001.

 (9) Includes 144,791 shares of common stock that may be acquired upon the
     exercise of stock options exercisable within 60 days after August 24,
     2001.

(10) See notes 3 through 9.

Item 13. Certain Relationships and Related Transactions.

   In August 1999, our company was formed specifically to acquire the operating
assets and assume the liabilities of the IMG business. In connection with our
incorporation, we issued 1,000 shares of our common stock to Seagate Software
Holdings for aggregate consideration of $1,000.

Seagate Technology Acquisition of Seagate Software Holdings, Inc.

   In October 1999, Seagate Technology completed an acquisition of all
outstanding shares and options to acquire common stock of Seagate Software
Holdings through the merger of Seagate Daylight Merger Corp. with and into
Seagate Software Holdings. In connection with the merger, Seagate Technology
issued 3.23 shares of its common stock for one share of Seagate Software
Holdings common stock to the holders of Seagate Software Holdings common stock
and options to purchase common stock. All options to purchase shares of Seagate
Software Holdings common stock were vested in full immediately prior to the
closing of the merger. In the event that an optionee of Seagate Software
Holdings had outstanding options immediately prior to the closing of the
merger, those options were net exercised, using the same fair market value as
was applied in the merger, such that the holder received shares of Seagate
Technology common stock. Approximately 3,991,105 shares of Seagate Software
Holdings common stock were tendered of which approximately 2,818,325 were
exchanged into approximately 9,124,046 shares of Seagate Technology common
stock. The difference between the shares outstanding and the shares exchanged
resulted from shares cancelled for the exercise price and payment of taxes.


                                      89

<PAGE>

   As a result of the merger, our directors and officers received the number of
shares of Seagate Technology common stock set forth opposite his name:

<TABLE>
<CAPTION>
                              Seagate Software Seagate Technology
Name                          Holdings Shares    Shares Issued
----                          ---------------- ------------------
<S>                           <C>              <C>
Stephen J. Luczo.............      76,100            246,370
Gary B. Filler...............      13,278             42,987
Lawrence Perlman.............       3,786             12,258
Donald L. Waite..............       8,000             25,900
Gregory B. Kerfoot...........     410,473          1,328,867
</TABLE>

   Shortly after the merger, Seagate Software Holdings contributed all of its
operating assets to us, and we assumed all of the related liabilities of
Seagate Software Holdings (the "Asset Contribution"). As consideration for
these assets, we issued 75,000,000 shares of our common stock to Seagate
Software Holdings.

Other Transactions with Seagate Technology LLC

   During the quarter ended December 29, 2000, we signed a software license
agreement (the "License Agreement") with Seagate Technology. Under the terms of
the License Agreement, we granted Seagate Technology a non-exclusive,
non-transferable, perpetual license to use its business intelligence software
and maintenance and support services. The total value of the License Agreement
was $1.6 million. The License Agreement was priced at an approximate 50%
discount to our established list price. During fiscal 2001, we recognized a
total of $1.5 million from the License Agreement. At June 29, 2001, $151,000
remained as deferred revenue. In addition, we earned approximately $223,000 of
consulting revenues related to the License Agreement. As of June 29, 2001,
there were no outstanding amounts owed by Seagate Technology to us included in
accounts receivable.

   Historically, Seagate Technology has provided substantial administrative and
financial services to us under a general services agreement between Seagate
Software Holdings and Seagate Technology dated June 28, 1997 (the "General
Services Agreement"). During fiscal 2001, the General Services Agreement was
replaced by the following agreements between Crystal Decisions and Seagate
Technology LLC: a Corporate Services Agreement, a Payroll Services Agreement,
and a Management Services Agreement. Under substantially the same terms as the
General Services Agreement, Seagate Technology LLC has continued to provide
various cash management, taxation, administrative, accounting and similar
corporate and managerial services as requested by us. Seagate Software Holdings
contributed its rights, and we assumed Seagate Software Holdings' obligations
under the General Services Agreement in connection with the Asset Contribution.
Seagate Technology LLC assumed Seagate Technology's rights and obligations
under the General Services Agreement in connection with the closing of the New
SAC Transaction on November 22, 2000.

   During fiscal 2001 and 2000, Seagate Technology charged us $1,214,274 and
$657,749, respectively, for various corporate services performed on our behalf.
The amounts paid to Seagate Technology represented a reasonable estimate of
Seagate Technology's direct and indirect costs incurred in performing services
for us. The cost allocated to us was intended to be on a basis no less
favorable than what we could obtain from an unaffiliated third party. We have
audit rights with respect to the computation and analysis of service fees
pursuant to the General Services Agreement. In addition, Seagate Technology is
required to indemnify, defend and hold us harmless against any and all claims,
suits, actions, demands, proceedings, losses, damages, liabilities, costs and
expenses, including, and without limitation, interest and reasonable attorneys'
fees, arising out of, relating to, or resulting from services performed by
Seagate Technology pursuant to the General Services Agreement, other than those
liabilities that would not have arisen but for any act, error and/or omission
by us and/or any of our officers, directors, employees and/or agents.

                                      90

<PAGE>

   Additionally, on July 4, 2000, we signed the revolving loan agreement with
Seagate Technology on substantially the same terms and conditions as the prior
agreement, which was dated July 4, 1998, between Seagate Software Holdings and
Seagate Technology. In connection with the Asset Contribution, Seagate Software
Holdings' rights and obligations under the 1998 Intercompany Revolving Loan
Agreement were contributed to and assumed by us. Under the revolving loan
agreement, Seagate Technology financed certain of our working capital
requirements. The revolving loan agreement provided for maximum borrowings of
up to $60.0 million and expired on July 4, 2001. On July 4, 2001, we renewed
this revolving loan agreement with Seagate Technology LLC. The revolving loan
agreement provides for maximum borrowings of up to $15.0 million and expires on
July 4, 2002. The loan is payable or receivable upon termination of the
agreement. We have receivables from Seagate Technology LLC of $3.4 million and
$25.7 million as of June 29, 2001 and June 30, 2000, respectively. Borrowings
from Seagate Technology were $16.5 million at July 2, 1999. Borrowings from
Seagate Technology consisted primarily of funding of our operating activities.
During fiscal 2001, there were $4.8 million of net repayments under the
revolving loan agreement In addition during fiscal 2001, Seagate Technology LLC
repaid $31.0 million of the loan receivable under the revolving loan agreement.
These monies are held and managed by Seagate Technology LLC on our behalf.
During fiscal 2000, net borrowings under the revolving loan agreement were $24
million.

   We were included in the consolidated federal and certain combined and
consolidated foreign and state income tax returns of Seagate Technology until
November 22, 2000. Seagate Technology and Seagate Software Holdings entered
into a tax allocation agreement dated April 4, 1996 pursuant to which we
computed hypothetical tax returns as if we were not joined in consolidated or
combined returns with Seagate Technology. We were required to pay Seagate
Technology the positive amount of any such hypothetical taxes. If the
hypothetical tax returns showed entitlement to refunds, including any refunds
attributable to a carryback, then Seagate Technology would pay us the amount of
such refunds. The amounts relating to the tax allocation agreement were
included in the net intercompany revolving loan balance. The tax allocation
agreement terminated upon the closing of the New SAC Transaction.

Transactions with VERITAS

   VERITAS and VERITAS Operating Corporation entered into a three-year Cross
License and OEM Agreement with Seagate Software Information Management (Canada)
Ltd., our wholly owned subsidiary, (the "Cross License Agreement") on May 28,
1999. The chairman of our board of directors, Stephen J. Luczo, is a member of
the board of directors of VERITAS. The Cross License Agreement provides for the
licensing of certain products between the parties and imposes restrictions on
the parties ability to compete with each other and to enter into agreements
with competitors of the other party. In fiscal 2001 and fiscal 2000,
respectively, we recognized no and $7,000 of revenues from VERITAS. We paid no
royalties to VERITAS in connection with the Cross License Agreement in either
fiscal year.

Sale of Seagate Technology

   Mr. Luczo, Mr. Kerfoot and Mr. Waite, who are members of our board of
directors, each invested in the equity component of the financing for the New
SAC Transaction and are shareholders of New SAC. Mr. Luczo and Mr. Waite also
participated in the financing of the New SAC Transaction through the roll-over
of a portion of their outstanding stock and options in Seagate Technology to
equity interests and deferred compensation in New SAC.

   In addition, Mr. Luczo and Mr. Waite entered into employment agreements with
New SAC. Each employment agreement has a three-year term, subject to automatic
successive one year renewals thereafter. Under the employment agreements, Mr.
Luczo was appointed and serves as Chief Executive Officer of New SAC and
Seagate Technology LLC, and Mr. Waite was appointed and serves as Executive
Vice President and Chief Administrative Officer of New SAC and Seagate
Technology LLC. Mr. Luczo also became a director of New SAC and Seagate
Technology LLC.

                                      91

<PAGE>

   Messrs. Luczo, Kerfoot, and Waite, and our former directors, Gary Filler and
Lawrence Perlman, also received shares of VERITAS common stock and cash to the
extent of their outstanding common stock and options in Seagate Technology, net
of any amounts rolled over into equity and deferred compensation in New SAC and
its affiliates. The per share amounts paid to these board members were the same
as the amounts paid to other holders of Seagate Technology common stock.

                                    PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.

   (a) 1. Financial Statements. See Item 8 of this Form 10-K

       2. Financial Statement Schedule. The following financial statement
          schedule of Crystal Decisions, Inc. for each of the years ended June
          29, 2001, June 30, 2000 and July 2, 1999 is filed as part of this
          Form 10-K and should be read in conjunction with the Consolidated and
          Combined Financial Statements, and related notes thereto, of Crystal
          Decisions, Inc.

<TABLE>
<CAPTION>
                                                                         Page Number
                                                                         -----------
<S>                                                                      <C>
             Schedule II--Valuation and Qualifying Accounts                  S-1
</TABLE>

          Schedules other than those listed above have been omitted since they
          are either not required, not applicable, or the information required
          to be set forth therein is included in the Consolidated and Combined
          Financial Statements and notes thereto.

       3. Exhibits. The following exhibits are included herein or incorporated
          herein by reference:

<TABLE>
<CAPTION>
 Exhibit
 Number
 ------
<C>       <S>

 3.1(1)   Certificate of Incorporation of Registrant

 3.2(1)   Bylaws of Registrant, as amended and restated

10.1(1)   1999 Stock Option Plan and form of Stock Option Agreement, as amended and restated

10.1.1(1) 1999 Stock Option Plan--Canadian Stock Option Agreement

10.1.2(1) 1999 Stock Option Plan--United Kingdom Sub-Plan, as amended and restated

10.2(1)   2000 Stock Option Plan and form of Stock Option Agreement

10.3(1)   Seagate Technology, Inc. Employee Stock Purchase Plan, as amended and restated

10.4(1)   Intercompany Revolving Loan Agreement dated July 4, 2000 between the Registrant and Seagate
          Technology LLC

10.4.1    Intercompany Revolving Loan Agreement dated July 4, 2001 between Crystal Decisions, Inc. and
          Seagate Technology LLC

10.5(1)   Form of Indemnification Agreement entered into between the Registrant and its directors and
          officers

10.6(1)   General Services Agreement dated June 28, 1997 between Seagate Software Holdings and Seagate
          Technology, Inc.

10.6.1(2) Management Services Agreement dated November 20, 2000 between Seagate Software
          Information Management Group Holdings, Inc. and Seagate Technology (US) Holdings, Inc.

10.6.2(2) Corporate Services Agreement dated July 1, 2000 between Seagate Software Information
          Management Group Holdings, Inc. and Seagate Technology LLC
</TABLE>

                                      92

<PAGE>

<TABLE>
<CAPTION>
 Exhibit
 Number
 ------
<C>        <S>

10.6.3(2)  Payroll Services Agreement dated July 14, 2000 between Seagate Software Information
           Management Group Holdings, Inc. and Seagate US LLC

10.7(1)    Tax Allocation Agreement dated April 4, 1996 between Seagate Software Holdings and Seagate
           Technology, Inc.

10.8(4)    Cross License and Original Equipment Manufacturing Agreement effective October 5, 1998 by
           and among Seagate Software Information Management Group, Inc., VERITAS Software
           Corporation and VERITAS Operating Corporation

10.8.1(1)  Amendment No. 1 to Cross License and OEM Agreement dated April 16, 1999

10.9(1)    Lease Agreement dated November 1, 1997 between Seagate Software Information Management
           Group, Inc. and Cathedral Ventures Limited

10.9.1(1)  Amendment to Lease agreement dated January 27, 1999

10.10(1)   Lease agreement, dated September 27, 1999 between Lauretton Investments Ltd., Seagate
           Software Information Management Group (Canada) Ltd. and Seagate Software, Inc.

10.10.1    Amendment to Lease agreement dated June 22, 2000, between Lauretton Investments Ltd.,
           Seagate Software Information Management Group (Canada) Ltd. and Seagate Software, Inc.

10.11(1)   Lease agreement, dated October 18, 1996, between Ravenseft Properties Limited and Holistic
           Systems Limited

10.11.1(1) Amendment to Lease agreement dated May 16, 2000

10.12(1)   Lease agreement, dated June 22, 1998, between Allstate Insurance Company and Seagate
           Software, Inc.

10.13(1)   Sublease agreement dated June 18, 1999, between Bellsouth Mobility Inc. and Seagate Software
           Inc.

10.14(3)   Seagate Software Information Management Group, Inc. Software License Agreement between
           Seagate Software Information Management Group, Inc. and Seagate Technology

10.15      Employment Agreement, dated as of July 20, 2000, by and between Seagate Software
           Information Management Group, Inc. and William Gibson

21.1       Subsidiaries of the Registrant

23.1       Consent of Ernst & Young LLP, Independent Accountants

24.1       Power of Attorney (see page 95 to this Form 10-K)
</TABLE>
--------
(1) Incorporated by reference to our Registration Statement on Form 10 filed on
    October 27, 2000 (File No. 000-31859).

(2) Incorporated by reference to our Quarterly Report on Form 10-Q for the
    period ended March 30, 2001.

(3) Incorporated by reference to our Quarterly Report on Form 10-Q for the
    period ended December 29, 2000. Previously filed at Exhibit 10.1 in that
    filing.

(4) Exhibit 10.8 initially filed with our Registration Statement on Form 10
    filed on October 27, 2000 (File No. 000-31859) is refiled without the
    request for Confidential Treatment.

                                      93

<PAGE>

   (b) Reports on Form 8-K.

       We did not file any reports on Form 8-K during the three months ended
June 29, 2001.

   (c) Exhibits.

       We hereby file as part of this Form 10-K the exhibits listed in Item
14(a)3, as set forth above.

   (d) Financial Statement Schedule.

       We hereby file as part of this Form 10-K the schedule listed in Item
14(a)2, as set forth above.

                                      94

<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.

                                          CRYSTAL DECISIONS, INC.

                                             /S/ GREGORY B. KERFOOT
                                          By: _________________________________
                                             Gregory B. Kerfoot
                                             President and Chief Executive
                                             Officer

Dated: September 27, 2001

                               POWER OR ATTORNEY

   KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
herein constitutes and appoints Gregory B. Kerfoot and Eric Patel, and each of
them, as his true and lawful attorneys-in-fact and agents, with full power of
substitution and re-substitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Form 10-K, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granted unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their or his substitutes, may lawfully do or
cause to be done by virtue hereof.

   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/ GREGORY B. KERFOOT President and Chief Executive Officer September 27, 2001
----------------------  (Principal Executive Officer)
 (Gregory B. Kerfoot)

    /S/ ERIC PATEL     Chief Financial Officer               September 27, 2001
----------------------  (Principal Accounting and
     (Eric Patel)       Financial Officer)

 /S/ STEPHEN J. LUCZO  Chairman of the Board of Directors    September 27, 2001
----------------------
  (Stephen J. Luczo)

 /S/ DONALD L. WAITE   Director                              September 27, 2001
----------------------
  (Donald L. Waite)

  /S/ DAVID J. ROUX    Director                              September 27, 2001
----------------------
   (David J. Roux)

 /S/ JOHN W. THOMPSON  Director                              September 27, 2001
----------------------
 (John. W. Thompson)

 /S/ JUSTIN T. CHANG   Director                              September 27, 2001
----------------------
  (Justin T. Chang)

                                      95

<PAGE>

CRYSTAL DECISIONS, INC. (formerly SEAGATE SOFTWARE INFORMATION MANAGEMENT GROUP
                                HOLDINGS, INC.)

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS--ACCOUNTS RECEIVABLE ALLOWANCES.

<TABLE>
<CAPTION>
                                                   Additions
                                     Balance at   Charged to                   Balance at
                                    Beginning of    Return     Reductions from   End of
Description                            Period      Reserves    Return Reserves   Period
-----------                         ------------ ------------- --------------- ----------
<S>                                 <C>          <C>           <C>             <C>
Return Reserves:
   Fiscal Year Ended June 29, 2001.  $1,015,000   $1,730,000     $1,648,000    $1,097,000
                                     ==========   ==========     ==========    ==========
   Fiscal Year Ended June 30, 2000.  $1,212,000   $1,130,000     $1,327,000    $1,015,000
                                     ==========   ==========     ==========    ==========
   Fiscal Year Ended July 2, 1999..  $  647,000   $2,067,000     $1,502,000    $1,212,000
                                     ==========   ==========     ==========    ==========
<CAPTION>
                                     Balance at  Additions to  Reductions from Balance at
                                    Beginning of Allowance for  Allowance for    End of
Description                            Period      Bad Debts      Bad Debts      Period
-----------                         ------------ ------------- --------------- ----------
<S>                                 <C>          <C>           <C>             <C>
Allowance for Bad Debts:
   Fiscal Year Ended June 29, 2001.  $1,679,000   $  801,000     $  701,000    $1,779,000
                                     ==========   ==========     ==========    ==========
   Fiscal Year Ended June 30, 2000.  $1,635,000   $3,191,000     $3,147,000    $1,679,000
                                     ==========   ==========     ==========    ==========
   Fiscal Year Ended July 2, 1999..  $  926,000   $1,049,000     $  340,000    $1,635,000
                                     ==========   ==========     ==========    ==========
</TABLE>


                                      S-1

<PAGE>

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
 Exhibit
 Number
 ------
<C>        <S>

 3.1(1)    Certificate of Incorporation of Registrant

 3.2(1)    Bylaws of Registrant, as amended and restated

10.1(1)    1999 Stock Option Plan and form of Stock Option Agreement, as amended and restated

10.1.1(1)  1999 Stock Option Plan--Canadian Stock Option Agreement

10.1.2(1)  1999 Stock Option Plan--United Kingdom Sub-Plan, as amended and restated

10.2(1)    2000 Stock Option Plan and form of Stock Option Agreement

10.3(1)    Seagate Technology, Inc. Employee Stock Purchase Plan, as amended and restated

10.4(1)    Intercompany Revolving Loan Agreement dated July 4, 2000 between the Registrant and Seagate
           Technology LLC

10.4.1     Intercompany Revolving Loan Agreement dated July 4, 2001 between Crystal Decisions, Inc. and
           Seagate Technology LLC

10.5(1)    Form of Indemnification Agreement entered into between the Registrant and its directors and
           officers

10.6(1)    General Services Agreement dated June 28, 1997 between Seagate Software Holdings and
           Seagate Technology, Inc.

10.6.1(2)  Management Services Agreement dated November 20, 2000 between Seagate Software
           Information Management Group Holdings, Inc. and Seagate Technology (US) Holdings, Inc.

10.6.2(2)  Corporate Services Agreement dated July 1, 2000 between Seagate Software Information
           Management Group Holdings, Inc. and Seagate Technology LLC

10.6.3(2)  Payroll Services Agreement dated July 14, 2000 between Seagate Software Information
           Management Group Holdings, Inc. and Seagate US LLC

10.7(1)    Tax Allocation Agreement dated April 4, 1996 between Seagate Software Holdings and Seagate
           Technology, Inc.

10.8(4)    Cross License and Original Equipment Manufacturing Agreement effective October 5, 1998 by
           and among Seagate Software Information Management Group, Inc., VERITAS Software
           Corporation and VERITAS Operating Corporation

10.8.1(1)  Amendment No. 1 to Cross License and OEM Agreement dated April 16, 1999

10.9(1)    Lease Agreement dated November 1, 1997 between Seagate Software Information Management
           Group, Inc. and Cathedral Ventures Limited

10.9.1(1)  Amendment to Lease agreement dated January 27, 1999

10.10(1)   Lease agreement, dated September 27, 1999 between Lauretton Investments Ltd., Seagate
           Software Information Management Group (Canada) Ltd. and Seagate Software, Inc.

10.10.1    Amendment to Lease agreement dated June 22, 2000, between Lauretton Investments Ltd.,
           Seagate Software Information Management Group (Canada) Ltd. and Seagate Software, Inc.

10.11(1)   Lease agreement, dated October 18, 1996, between Ravenseft Properties Limited and Holistic
           Systems Limited

10.11.1(1) Amendment to Lease agreement dated May 16, 2000
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number
------
<C>      <S>

10.12(1) Lease agreement, dated June 22, 1998, between Allstate Insurance Company and Seagate Software,
         Inc.

10.13(1) Sublease agreement dated June 18, 1999, between Bellsouth Mobility Inc. and Seagate Software
         Inc.

10.14(3) Seagate Software Information Management Group, Inc. Software License Agreement between
         Seagate Software Information Management Group, Inc. and Seagate Technology

10.15    Employment Agreement, dated as of July 20, 2000, by and between Seagate Software Information
         Management Group, Inc. and William Gibson

21.1     Subsidiaries of the Registrant

23.1     Consent of Ernst & Young LLP, Independent Accountants

24.1     Power of Attorney (see the signature page to this Form 10-K)
</TABLE>
--------
(1) Incorporated by reference to our Registration Statement on Form 10 filed on
    October 27, 2000 (File No. 000-31859).

(2) Incorporated by reference to our Quarterly Report on Form 10-Q for the
    period ended March 30, 2001.

(3) Incorporated by reference to our Quarterly Report on Form 10-Q for the
    period ended December 29, 2000. Previously filed at Exhibit 10.1 in that
    filing.

(4) Exhibit 10.8 initially filed with our Registration Statement on Form 10
    filed on October 27, 2000 (File No. 000-31859) is refiled without the
    request for Confidential Treatment.