##### Table of Contents









UNITED STATES







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FORM 10-K

|                                                   |  |                                                                                             
|-------------------------------------------------- |  | --------------------------------------------------------------------------------------------
|x                                                  |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR
    15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934
|                                                  
|For the Fiscal Year Ended June 28,
    2002       
|                                                  
|or                                                
|                                                  
|o                                                  |  | 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



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CRYSTAL DECISIONS, INC.

(Exact name of registrant as specified in its
charter)


|                                                                                        |  |                                                           
|--------------------------------------------------------------------------------------- |  | ----------------------------------------------------------
|Delaware
    (State or other jurisdiction of
    incorporation or organization)         |  | 77-0537234
    (I.R.S. Employer
    Identification Number)
|                                                                                       
|895 Emerson St.,
    Palo Alto, California
    (Address of principal executive offices) |  | 94301
    (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 o

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 30, 2002, 75,908,555 shares of the
registrants common stock, $0.001 par value per share, were
issued and outstanding.



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TABLE OF CONTENTS



|                  |                                                                                               |  |  |  |  |  |  | 
|----------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART 1           
|                  | Item 1. Business                                                                             
|                  | Item 2. Properties                                                                           
|                  | Item 3. Legal Proceedings                                                                    
|                  | Item 4. Submission of Matters to a Vote of Security Holders                                  
|PART II          
|                  | Item 5. Market for Registrants Common Equity and Related Stockholder Matters                
|                  | Item 6. Selected Financial Data                                                              
|                  | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                  | Item 7A. Quantitative and Qualitative Disclosures About Market Risk                          
|                  | Item 8. Financial Statements                                                                 
|                  | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
|PART III         
|                  | Item 10. Directors and Executive Officers of the Registrant                                  
|                  | Item 11. Executive Compensation                                                              
|                  | Item 12. Security Ownership of Certain Beneficial Owners and Management                      
|                  | Item 13. Certain Relationships and Related Transactions                                      
|                  | Item 14. Controls and Procedures                                                             
|PART IV          
|                  | Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K                     
|SIGNATURES       
|INDEX TO EXHIBITS
|Exhibit 10.1.4   
|Exhibit 10.10.2  
|Exhibit 21.1     
|Exhibit 23.1     
|Exhibit 99.1     



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##### Table of Contents



CRYSTAL DECISIONS, INC.

ANNUAL REPORT ON FORM 10-K

For the Fiscal Year Ended June 28,
2002

TABLE OF CONTENTS

|           |  |                                                                                          |    |      |    | 
|---------- |  | ---------------------------------------------------------------------------------------- | -- | ---- | -- | 
|           |  |                                                                                          |    | Page
|           |  |                                                                                          |    |     
|PART I    
|Item 1.    |  | Business                                                                                 |    |      | 3  | 
|Item 2.    |  | Properties                                                                               |    |      | 8  | 
|Item 3.    |  | Legal Proceedings                                                                        |    |      | 9  | 
|Item 4.    |  | Submission of Matters to a Vote of Security
    Holders                                  |    |      | 9  | 
|PART II   
|Item 5.    |  | Market for Registrants Common Equity and
    Related Stockholder Matters                |    |      | 10 | 
|Item 6.    |  | Selected Financial Data                                                                  |    |      | 11 | 
|Item 7.    |  | Managements Discussion and Analysis of Financial
    Condition and Results of Operations |    |      | 12 | 
|Item 7A.   |  | Quantitative and Qualitative Disclosures About
    Market Risk                           |    |      | 47 | 
|Item 8.    |  | Financial Statements and Supplementary Data                                              |    |      | 49 | 
|Item 9.    |  | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure |    |      | 50 | 
|PART III  
|Item 10.   |  | Directors and Executive Officers of the Registrant                                       |    |      | 51 | 
|Item 11.   |  | Executive Compensation                                                                   |    |      | 53 | 
|Item 12.   |  | Security Ownership of Certain Beneficial Owners
    and Management                       |    |      | 58 | 
|Item 13.   |  | Certain Relationships and Related Transactions                                           |    |      | 60 | 
|Item 14.   |  | Controls and Procedures                                                                  |    |      | 62 | 
|PART IV   
|Item 15.   |  | Exhibits, Financial Statement Schedules, and
    Reports on Form 8-K                     |    |      | 63 | 
|SIGNATURES |  |                                                                                          | 65 |     



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PART 1




Item 1.     Business

The Company

Crystal Decisions, Inc. is an information
management company that creates software products and provides
services for reporting, analysis and information delivery. We
develop, market and support an integrated, 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. We believe our products provide direct and
rapidly achieved benefits including improved decision-making,
lower overall information technology costs and better business
performance.

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 28, 2002, we shipped (directly, and bundled with our
original equipment manufacturer (OEM) partners) over
12 million licenses of our products. We have a diverse
customer base, including many Fortune 1000 companies. While our
primary market is North America, we have over 25 offices
and operations in 10 countries, through which we market and
distribute our products. To facilitate international use, we
have translated many of our products into other languages such
as French, German, Japanese and Spanish.

We changed our name to Crystal Decisions, Inc.
(Crystal Decisions) from Seagate Software
Information Management Group Holdings, Inc. in March 2001. We
were incorporated in Delaware in August 1999 and are
headquartered in Palo Alto, California. Our majority shareholder
is Seagate Software (Cayman) Holdings, 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.

We became a majority owned subsidiary of New SAC
on November 22, 2000 when Seagate Software (Cayman)
Holdings acquired 75,001,000 shares, or 99.7%, of our common
stock then outstanding under the terms of a stock purchase
agreement. Prior to November 22, 2000, we were a majority
owned subsidiary of Seagate Software Holdings, Inc., a Delaware
corporation, and a wholly owned subsidiary of Seagate
Technology, Inc.

Industry Background

Over the last decade, many organizations have
invested in a wide range of data collection systems to help
improve operational efficiencies and more effectively manage
their businesses. Businesses, governments and other entities
have spent billions of dollars implementing enterprise resource
planning, data warehousing and traditional database systems, as
well as customer relationship management and supply chain
management systems.

Organizations justify the disruption and expense
of the purchase of these data systems because they need to
improve their transactional efficiency. They also 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. They would like to utilize that captured
information for faster, more effective planning and execution of
business strategies. These system investments have been very
successful in addressing the first objective. Today, large
volumes of corporate data are captured and processed.

We believe that the ability of the average
company to utilize this data to improve the planning and
execution of the companys activities can present a
challenge. The data collection systems may not provide robust
technologies for analyzing and reporting on the information
therein. The increasing amount of data creates an opportunity
for businesses to make more informed decisions. Extracting data
from different systems, converting it into a standard format,
performing calculations or comparisons on it and then delivering
the results to the right person is a complex undertaking. We
believe large and small companies struggle 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. The data is there, but the ability to
access and present the



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right information from all corporate data systems
in a way that improves the quality and speed of corporate
decision making often is not.


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, but tend to be commonly grouped under
the umbrella label enterprise business intelligence.
The most common requirement of enterprise business intelligence
projects is reporting  accessing and presenting
relevant information in a meaningful way to users.

Enterprise business intelligence 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.

Enterprise business intelligence solutions have
evolved considerably over the last decade, so that today they
typically comprise a common set of technologies for reporting,
ad hoc query, multi-dimensional on-line analytical programming
reporting and analysis, data mining and statistics.

The Crystal Decisions Solution

We are a software and services company that 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
data sources, and to analyze, report and distribute the
information and resultant business insights contained therein.

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,
on-line analytical processing 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, customer relationship management, supply
chain management, e-commerce 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, or reports, through a personalized
web-based interface.

Products

We provide a complete range of products designed
to extend the value of our industry acclaimed reporting with
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 and secure infrastructure and tools that are built to
withstand 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 e-business 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,
e-commerce systems, enterprise resource



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planning, customer relationship management,
supply chain management and business intelligence systems and
other data centric computer software applications.


Our products include:



| |                 
| | ----------------
| | Enterprise Suite

Crystal Enterprise 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 our
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 high 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.

Enterprise Partner 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, SAP BW 3.0, Siebel 7.0 CRM and
Baan 2.0 ERP.



| |          
| | ---------
| | Reporting

Crystal Reports 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 users, Crystal Reports
allows users to access most types of structured data, format,
design and process a variety of reports, integrate these reports
into .NET, Java and COM applications and other popular
environments and distribute reports to users. The report design
capabilities of Crystal Reports produce interactive documents
that can be published in a variety of formats including DHTML,
RTF, Microsoft Excel, PDF and XML for increased flexibility.



| |          
| | ---------
| | Analytics

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

Holos 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 multidimensional 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 user products.



| |             
| | ------------
| | Applications

Analytic Application Templates 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, e-commerce analysis and telecommunications billing
analysis. These packages include reports, on-line analytical
processing data structures and a framework of business logic to
begin implementations.



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Sales and Marketing

Our sales and marketing programs are organized by
geographical regions, including North America, EMEA and the Asia
Pacific region. 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
distributors and resellers, 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, technical
    and business 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; and                                                                            
|
| |  | extensive public relations activities and
    programs to build relationships with key analysts, journalists
    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. As a
percent of our total revenues, Ingram accounted for 10%, 16% and
20% for fiscal years ended June 28, 2002 (fiscal
2002), June 29, 2001 (fiscal 2001) and
June 30, 2000 (fiscal 2000), respectively. 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 10% of
more of our total revenues in fiscal 2002, 2001 or 2000. Our
indirect revenues include sales to distributors and OEMs and as
a percent of total revenues were 33% in fiscal 2002, 37% in
fiscal 2001 and 40% in fiscal 2000. Our revenues from sales
outside of the United States as a percent of total revenues were
32% in fiscal 2002, 32% in fiscal 2001 and 34% in fiscal 2000.

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 to meet this need and help ensure
that our customers gain a rapid return on their investments in
our technology. We also 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 product offering and have a positive experience
with our products.



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Our technical support efforts are designed to
ensure that our customers are able to use our products to
perform to their potential. We believe effective technical
support during product evaluation accrues to the benefit of 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 products, including
developer tools, such as Microsoft Visual Basic. We 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 300 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 are able to maximize their investments
in enterprise applications such as enterprise resource planning,
supply chain management and customer relationship management
through integrated reporting and analysis solutions.

Research and Development

We incurred research and development expenses of
$30.5 million in fiscal 2002, $29.2 million in fiscal
2001 and $27.4 million in fiscal 2000. Our customers did
not fund our research and development expenses in fiscal 2002,
fiscal 2001 or fiscal 2000. 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
issued patent and one United States allowed patent, which we
expect to be issued during calendar 2002. We have four patent
applications pending in the United States and one foreign patent
application 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.



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Competition

The segment of the software market in which we
compete is comprised of numerous competitors, and we expect
competition to increase. 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;                                     
|
| |  | 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 28, 2002, we had 1,600 employees,
including 547 in sales and marketing, 417 in services and
support, 447 in research and development and 189 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, product development, sales and marketing 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 product developers, 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 fiscal 2015. At June 28, 2002, our leased
space approximated 311,000 square feet with approximately
185,000 square feet located in Canada, 58,000 square feet
located in the United States, 49,000 square feet located in
Europe and 19,000 square feet located in the Asia Pacific
region. These figures exclude approximately 87,000 square feet
of unoccupied space in Canada and approximately 3,000 square
feet leased to others in the United States.



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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.




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.

In November 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 action alleged a breach of
an oral agreement and infringement of Vedatechs U.K.
copyright in one of our products and sought monetary and
injunctive relief. In August 2000, Vedatech obtained permission
to amend its action to include claims for unjust enrichment,
unlawful interference and quantum meruit. In May 2001, Vedatech
sought to enjoin Crystal Decisions (UK) Limited from infringing
on the U.K. copyright and sought forfeiture to Vedatech of all
infringing software copies. Of the relief sought, only a claim
for JPY 26,624,181 (approximately U.S. $240,000) for unpaid
invoices initially was settled. The liability phase of the trial
was completed in March 2002, and we prevailed on all claims
except for the quantum meruit. The court ordered the parties to
mediate the quantum of that claim and, in August 2002, we came
to a mediated settlement with Vedatech. The mediated settlement
is not material to our operations and contains no continuing
obligations. On September 24, 2002, however, we received
documents indicating Vedatech is seeking to set aside the
settlement.

In addition to the foregoing, we are subject to
other litigation in the ordinary course of 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 effect our
financial position, liquidity or results of operations.




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

None.



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PART II






|        |                                                                          
|------- | -------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity and
    Related Stockholder Matters

As of August 30, 2002, 75,908,555 shares of
our common stock were outstanding, which were held by
198 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.



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Item 6.     Selected
Financial Data

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 Audited
Consolidated and Combined Financial Statements and the Notes
thereto, and the other information contained elsewhere in this
Form 10-K. We derived our selected statements of operations
data for the fiscal years ended June 28, 2002,
June 29, 2001 and June 30, 2000 and the selected
balance sheet data as of June 28, 2002 and June 29,
2001 from the Audited Consolidated and Combined Financial
Statements that are included under Item 8 in this
Form 10-K. The selected statements of operations data for
the fiscal years ended July 2, 1999 and July 3, 1998
and the selected balance sheet data as of June 30, 2000 and
July 2, 1999 were derived from our Audited Consolidated and
Combined Financial Statements that are not included in this
Form 10-K. The selected balance sheet data as of
July 3, 1998 was derived from our Unaudited Consolidated
and Combined Financial Statements that are not included in this
Form 10-K. The consolidated and combined statements of
operations data reflect certain comparative period figure
reclassifications to conform to the basis of presentation
adopted in fiscal 2002. Historical results are not necessarily
indicative of results of operations to be expected for future
periods.

|                                                                                  |  |                                       |         |          |  |          |         |         |  |         |          |   |  |   |         |   |  |   |         |  
|--------------------------------------------------------------------------------- |  | ------------------------------------- | ------- | -------- |  | -------- | ------- | ------- |  | ------- | -------- | - |  | - | ------- | - |  | - | ------- | -
|                                                                                  |  |                                      
|                                                                                  |  | For the fiscal years ended           
|                                                                                  |  |                                      
|                                                                                  |  | June 28,                              |         | June 29, |  | June 30, |         | July 2, |  | July 3,
|                                                                                  |  | 2002                                  |         | 2001     |  | 2000     |         | 1999    |  | 1998   
|                                                                                  |  |                                       |         |          |  |          |         |         |  |        
|                                                                                  |  |                                      
|                                                                                  |  | (in thousands, except per share data)
|Consolidated and Combined Statements of
    Operations Data:                      |  |                                       |         |          |  |          |         |         |  |         |          |   |  |   |         |   |  |   |         |  
|Revenues                                                                          |  | $                                     | 217,170 |          |  | $        | 167,722 |         |  | $       | 126,909  |   |  | $ | 142,565 |   |  | $ | 116,429 |  
|Gross profit                                                                      |  |                                       | 160,722 |          |  |          | 117,172 |         |  |         | 81,459   |   |  |   | 92,008  |   |  |   | 79,710  |  
|Income (loss) from operations                                                     |  |                                       | 14,936  |          |  |          | (12,937 | )       |  |         | (276,237 | ) |  |   | (98,957 | ) |  |   | (4,993  | )
|Net income (loss)                                                                 |  |                                       | 12,955  |          |  |          | (11,469 | )       |  |         | (221,162 | ) |  |   | (96,375 | ) |  |   | (13,259 | )
|Net income (loss) per share  basic                                               |  | $                                     | 0.17    |          |  | $        | (0.15   | )       |  | $       | (2.95    | ) |  | $ | (1.28   | ) |  | $ | (0.18   | )
|Net income (loss) per share 
    diluted                                         |  | $                                     | 0.17    |          |  | $        | (0.15   | )       |  | $       | (2.95    | ) |  | $ | (1.28   | ) |  | $ | (0.18   | )
|Weighted average number of shares used in basic
    net income (loss) per share   |  |                                       | 75,601  |          |  |          | 75,253  |         |  |         | 75,001   |   |  |   | 75,001  |   |  |   | 75,001  |  
|Weighted average number of shares used in diluted
    net income (loss) per share |  |                                       | 76,806  |          |  |          | 75,253  |         |  |         | 75,001   |   |  |   | 75,001  |   |  |   | 75,001  |  

|                                                  |  |                |         |          |  |          |         |         |  |         |        |  |  |   |         |   |  |   |        |  
|------------------------------------------------- |  | -------------- | ------- | -------- |  | -------- | ------- | ------- |  | ------- | ------ |  |  | - | ------- | - |  | - | ------ | -
|                                                  |  |               
|                                                  |  | As of         
|                                                  |  |               
|                                                  |  | June 28,       |         | June 29, |  | June 30, |         | July 2, |  | July 3,
|                                                  |  | 2002           |         | 2001     |  | 2000     |         | 1999    |  | 1998   
|                                                  |  |                |         |          |  |          |         |         |  |        
|                                                  |  |               
|                                                  |  | (in thousands)
|Consolidated and Combined Balance Sheet
    Data: |  |                |         |          |  |          |         |         |  |         |        |  |  |   |         |   |  |   |        |  
|Cash and cash equivalents                         |  | $              | 71,451  |          |  | $        | 34,379  |         |  | $       | 3,621  |  |  | $ | 7,419   |   |  | $ | 10,223 |  
|Working capital (deficit)                         |  |                | 24,434  |          |  |          | 10,750  |         |  |         | 8,860  |  |  |   | (11,163 | ) |  |   | (4,732 | )
|Total assets                                      |  |                | 136,846 |          |  |          | 105,126 |         |  |         | 72,545 |  |  |   | 79,820  |   |  |   | 63,568 |  
|Long-term liabilities                             |  |                | 583     |          |  |          | 3,600   |         |  |         | 381    |  |  |   | 459     |   |  |   |       |  
|Total stockholders equity                        |  |                | 41,452  |          |  |          | 35,609  |         |  |         | 23,113 |  |  |   | 2,883   |   |  |   | 16,641 |  

The net loss for fiscal 2001 included unusual
items of $8.9 million, comprising $1.9 million of
non-cash compensation expense and $7.1 million of
in-process research and development write-offs related to the
Stock Purchase Agreement and the acquisition of Seagate
Technology, Inc. by VERITAS Software Corporation.

The net loss for fiscal 2000 included unusual
items of $242.6 million.

The net loss for fiscal 1999 included unusual
items of $86.7 million.



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##### Table of Contents






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

The following discussion and analysis should
be read in conjunction with our 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 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
forward-looking statements involve risks and uncertainties. Our
actual results could differ materially from those anticipated in
such forward-looking statements as a result of certain factors,
as more fully described in the Factors Affecting Future
Operating Results section of this Item and elsewhere 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



| |        
| | -------
| | General

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

We operate in a broad industry segment that is
commonly referred to as business intelligence. We
believe that 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,
on-line analytical processing (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 distributors
and original equipment manufacturers (OEMs).

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 28, 2002, we shipped (directly, and bundled with our
OEM partners) over 12 million licenses of our products, and
our current customer base is diverse, including many Fortune
1000 companies. While our primary market is North America, we
have over 25 offices and operations in 10 countries,
through which we market and distribute our products. To
facilitate international use, we have translated many of our
products into other languages such as French, German, Japanese
and Spanish.

We were incorporated in Delaware in August 1999.
Our headquarters are located at 895 Emerson St., Palo Alto,
California 94301. Our telephone number is (650) 838-7410.

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 2002 ended on June 28,
2002 (fiscal 2002), fiscal 2001 ended on
June 29, 2001 (fiscal 2001) and fiscal 2000
ended on June 30, 2000 (fiscal 2000). Fiscal
2003 will end on June 27, 2003 and will be comprised of
52 weeks. Fiscal 2002, 2001 and 2000 were each comprised of
52 weeks. We have reclassified certain comparative period
figures to conform to the basis of presentation adopted in
fiscal 2002.

In view of our significant growth in recent
years, we believe that fiscal year-to-year comparisons of our
financial results are not necessarily meaningful and you should
not rely upon them as an indication of future performance.



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##### Table of Contents



Critical Accounting Policies and
Estimates

Our consolidated and combined financial
statements have been prepared in accordance with accounting
principles generally accepted in the United States and form the
basis for the following discussion and analysis on critical
accounting policies and estimates. The preparation of these
financial statements requires us to make estimates and
assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities. On a regular basis we
evaluate our estimates and assumptions. We base our estimates on
historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results
of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

We believe the following critical accounting
policies reflect our more significant estimates and assumptions
used in the preparation of our consolidated and combined
financial statements:

Revenue Recognition.We derive revenues from the sale of
licenses for our software products and from services such as
maintenance, consulting, training and technical support. We
recognize revenue in accordance with Statement of Position
(SOP) 972, Software Revenue Recognitionas amended by SOP 98-9 Modification of
SOP 97-2, Software Revenue Recognition with Respect to
Certain Transactions.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 we
deem the resulting receivable to be collectible. In instances
where payments are subject to extended terms, we do not
recognize revenues until the payments become due.

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). 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 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.

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

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

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

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 our ability to
reasonably estimate returns.

We recognize revenues from technical support and
maintenance, which consist of fees for ongoing support and
product updates, ratably over the term of the contract, which is
generally one year. We generally recognize revenues from
training and consulting as the services are performed.



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We record out-of-pocket expense reimbursements in
maintenance, support and services revenues in accordance with
Emerging Issues Task Force (EITF) Issue
No. 01-14, Income Statement Characterization of
Reimbursements Received for Out-of-Pocket Expense
Incurred(EITF 01-14).

Where we provide consulting services for
significant production, modification, or customization of our
software, or where these services are essential to the
functionality of our 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.

Allowance for Doubtful Accounts.We record an allowance for doubtful
accounts in general and administrative expenses. The allowance,
which is netted against our accounts receivable balance on our
consolidated balance sheets, totaled $2.1 million and
$1.8 million as of June 28, 2002 and June 29,
2001, respectively. The amounts represent estimated losses
resulting from the inability of our customers to make required
payments. The estimates are based on historical bad debt
write-offs, specific identification of probable bad debts based
on collection efforts, aging of accounts receivable and other
known factors. If the financial condition of our customers were
to deteriorate, resulting in an impairment of their ability to
make payments, additional allowances may be required.

Income Taxes.In
preparing our consolidated and combined financial statements, we
are required to estimate our income taxes in each of the
jurisdictions in which we operate. This process involves
estimating actual current tax liabilities together with
assessing temporary differences resulting from differing
treatment of items for tax and accounting purposes. These
differences result in deferred tax assets and liabilities which
are included within the consolidated balance sheet, as
applicable. Our deferred tax assets consist primarily of net
operating losses carried forward. We then assess the likelihood
that deferred tax assets will be recovered from future taxable
income, and, to the extent that we believe that recovery is not
more likely than not, we establish a valuation allowance. We
have provided a valuation allowance against all of our deferred
tax assets at June 28, 2002 and June 29, 2001. To the
extent we establish a valuation allowance against our deferred
tax assets or change this valuation allowance in a period, we
reflect the impact in the tax provision for (benefit from)
income taxes in the consolidated and combined statements of
operations.

Significant Transactions Affecting Our
Financial Reporting



| |                           
| | --------------------------
| | Sale of Seagate Technology

On November 22, 2000, Seagate Technology
Inc. (Seagate Technology), Seagate Software
Holdings, Inc. (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, completed the
transactions under the stock purchase agreement, and Seagate
Technology and VERITAS Software Corporation
(VERITAS) completed the transactions under the
agreement and plan of merger and reorganization. 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 under
the stock purchase agreement, Suez Acquisition Company assigned
all of its rights under the stock purchase agreement to New SAC
(New SAC), a Cayman islands limited corporation.
This transaction is referred to hereafter as the New SAC
Transaction.

Upon closing of the transactions under the stock
purchase agreement, New SAC, through Suez Acquisition Company,
purchased substantially all of the operating assets of Seagate
Technology and its consolidated subsidiaries for
$1.84 billion cash, including transaction costs of $25
million. 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 held certain strategic equity investments in
various companies.



14




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##### Table of Contents



Immediately following the closing of the
transactions under the stock purchase agreement and under the
terms of the agreement and plan of merger and reorganization,
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. 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.

In connection with the transactions effected
under the stock purchase agreement, New SAC and Seagate
Technology agreed to assume and indemnify VERITAS for
substantially all liabilities arising in connection with Seagate
Technologys and our 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.



| |                                           
| | ------------------------------------------
| | Change in Control of Crystal
    Decisions

As of November 22, 2000, as a result of the
completion of the transactions under a stock purchase agreement,
we became a majority owned subsidiary of Seagate Software
(Cayman) Holdings (Suez Software), which is a wholly
owned subsidiary of New SAC, whose predecessor was Seagate
Technology. Prior to November 22, 2000, we were a majority
owned subsidiary of Seagate Software Holdings, a Delaware
corporation, and a wholly owned subsidiary of Seagate Technology.

Silver Lake Partners L.P. and Texas Pacific Group
control New SAC. New SAC acquired 75,001,000 shares, or 99.7%,
of our outstanding common stock on November 22, 2000, with
our remaining outstanding common stock at that date being held
by our current and former employees and non-employee directors.
The minority interests in our common stock amounted to
approximately 16.1%, 13.0% and 10.5% on a fully converted basis
as of June 28, 2002, June 29, 2001 and June 30,
2000, respectively. These minority interests were comprised of
our outstanding common stock held by our current and former
employees and non-employee directors, as well as the outstanding
options to purchase our common stock held by our employees and
non-employee directors.

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.



15




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##### Table of Contents



The table below lists the net purchase price
allocation to our company of the tangible and intangible assets
acquired by New SAC. The purchase price allocated to us as a
result of the November 22, 2000 sale of Seagate Technology
is not necessarily indicative of what the purchase price would
have been for us on a stand alone basis.

|                                    |                                     |                  |        |        |  
|----------------------------------- | ----------------------------------- | ---------------- | ------ | ------ | -
|                                    |                                     | Net Purchase    
|Purchase Price Allocation           |                                     | Price Allocation
|                                    |                                     |                 
|                                    |                                     | (in thousands)  
|Net current assets acquired         |                                     | $                | 9,138  |       
|Tangible long-lived assets acquired |                                     |                  | 5,130  |       
|Intangible assets acquired:         |                                     |                  |        |       
|                                    | Developed technology                |                  |        | 15,234 |  
|                                    | Assembled work force                |                  |        | 7,073  |  
|                                    | In-process research and development |                  |        | 7,073  |  
|                                    | Deferred tax liability              |                  |        | (2,126 | )
|                                    |                                     |                  |        |       
|Total                               |                                     | $                | 41,522 |       
|                                    |                                     |                  |        |       

The net purchase price was allocated to the
assets and liabilities of Seagate Technology and its
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 its 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, were determined based upon
independent appraisals provided by New SAC.

Application
of SFAS No. 109, Accounting for Income Taxes(SFAS 109) to Deferred
Tax Assets as part of Purchase Price Allocation

The purchase price under the stock purchase
agreement was fixed and no contingencies were identified that
would have resulted in a change in the overall purchase price.
However, in allocating the purchase price New SAC recorded a
valuation allowance against deferred tax assets in accordance
with SFAS 109. The deferred tax assets subject to the valuation
allowance were based on the excess of tax bases over the fair
values of acquired property, plant and equipment and liabilities
assumed, for which New SAC expected to receive tax deductions in
U.S. federal and state returns in future periods based on
its ability to generate taxable income in the U.S.

During the fourth quarter of fiscal 2002, New SAC
evaluated and updated forecasts of projected U.S. taxable
income to determine if there was any amount of the deferred tax
assets related to the New SAC Transaction that New SACs
management believed would be more likely realizable than not. In
accordance with SFAS 109, this evaluation resulted in the
elimination of the valuation allowances that had been recorded
against a portion of the deferred tax assets associated with the
New SAC Transaction. In order to reflect tax benefits recognized
by New SAC, that were attributable to acquired deferred tax
assets, the net carrying values of the intangible assets that
were pushed down to our consolidated and combined financial
statements were reduced to zero on June 28, 2002 as follows
(in thousands):

|                                                                   |                                      |                   |       |        | 
|------------------------------------------------------------------ | ------------------------------------ | ----------------- | ----- | ------ | 
|                                                                   |                                      | Allocated to     
|                                                                   |                                      | Crystal Decisions
|                                                                   |                                      | at June 28, 2002 
|                                                                   |                                      |                  
|Reduction in the net carrying values of developed
    technologies |                                      | $                 | 7,194 |       
|Reduction in the net carrying values of assembled
    workforce    |                                      |                   | 3,340 |       
|                                                                   |                                      |                   |       |       
|                                                                   | Total reduction in intangible assets |                   | $     | 10,534 | 
|                                                                   |                                      |                   |       |       



16




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##### Table of Contents



As a result of the push down of intangible assets
to our consolidated and combined financial statements on
November 22, 2000, we recorded a deferred tax liability
related to these intangible assets. We calculated this deferred
tax liability as the tax-effected temporary differences related
to the excess of book over tax bases related to the intangible
assets. Pursuant to SFAS 109, the elimination of the
remaining book bases of intangible assets requires that the
associated deferred tax liability be reduced to zero. We
eliminated the net carrying values of our intangible assets at
June 28, 2002 and recorded this amount as a charge against
additional paid-in capital on our statement of
stockholders equity for fiscal 2002 as follows (in
thousands):

|                                     |                                                                     |   |        |       | 
|------------------------------------ | ------------------------------------------------------------------- | - | ------ | ----- | 
|Total reduction in intangible assets |                                                                     | $ | 10,534 |      
|Deferred tax liability               |                                                                     |   | (1,403 | )    
|                                     |                                                                     |   |        |      
|                                     | Elimination of intangible assets, net of deferred
    tax liability |   | $      | 9,131 | 
|                                     |                                                                     |   |        |      

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

As a result of revaluation of our assets and
liabilities from the historical figures at November 22,
2000 in connection with the New SAC Transaction, 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:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Revenues.We
    revalued deferred revenues at November 22, 2000. These were
    reduced by $1.3 million on a declining basis during the
    twelve months following the New SAC Transaction. Consequently,
    revenues were lower by $128,000 and $1.2 million for fiscal
    2002 and for fiscal 2001, respectively, than they would have
    been had the push down adjustments not occurred.                                                                                                                                                                                                                                                                                     
|
| |  | 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 for each of fiscal 2002 and fiscal 2001 than we would
    have recorded had the push down adjustments not been made. In
    addition, we recorded additional amortization expense of
    approximately $5.6 million and $3.3 million for fiscal
    2002 and for fiscal 2001, respectively, resulting from the
    recording of the incremental fair value of intangible assets in
    the push down adjustments.
|
| |  | In-process research and development.We wrote off in-process research and
    development of $7.1 million as an expense in fiscal 2001.
    We did not have any similar expenses in fiscal 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

As described previously under the heading,
Application of SFAS No. 109, the net carrying values
of the intangible assets pushed down to our consolidated and
combined financial statements were reduced to zero. Therefore,
commencing in the first quarter of fiscal 2003, we will no
longer provide for amortization related to these intangible
assets. Furthermore, while we will adopt SFAS No. 142,
Goodwill and Other Intangible Assets(SFAS 142), at the beginning of fiscal
2003, the non-amortization provisions and the impairment tests
will not be applicable until such time as we have recorded
goodwill and other intangible assets on our balance sheet.



| |                                                                     
| | --------------------------------------------------------------------
| | Other Significant Transactions Impacting
    Our Financial Reporting

In August 1999, we were formed to acquire Seagate
Software Holdings business intelligence software business.
On November 16, 1999, Seagate Software Holdings contributed
the business intelligence software business to us in exchange
for 75,000,000 shares of common stock. In October 1999,
Seagate Software Holdings entered into a share exchange
transaction with Seagate Technology. As a result of a
reorganization of Seagate Software Holdings, Seagate Software
Holdings became a wholly owned subsidiary of Seagate Technology
and the minority stockholders of Seagate Software Holdings
received Seagate Technology common stock for their Seagate
Software Holdings common stock and options. The October 1999
exchange 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



17




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##### Table of Contents



months. A portion of the amount of excess
purchase price and compensation expense was allocated to us, as
explained below.


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 business
intelligence software 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 to minority
stockholders and optionees 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 the purchase price of
this minority interest and was 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. During fiscal 2000, Seagate Technology recorded
compensation expense of $283.6 million, plus
$2.1 million of employer portion of payroll taxes related
to the purchase of the minority interest in Seagate Software
Holdings.

Our consolidated and combined statement of
operations for fiscal 2000 included an allocation of
compensation expense arising from the October 1999 Seagate
Technology exchange of shares of $239.6 million of the
total compensation expense of $283.6 million. 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. We recorded the offsetting entry as a capital
contribution from Seagate Technology on the statement of
stockholders equity. The $2.1 million of employer
portion of payroll taxes paid related to our employees and,
therefore, we recorded that amount as an expense for fiscal
2000. In addition, we incurred $877,000 of legal and accounting
costs in fiscal 2000 in connection with our recapitalization and
reorganization.

Our consolidated and combined financial
statements for fiscal 2000 also included an allocation of
$1.2 million of the $19.4 million purchase price
allocation previously described. The allocation was based on the
fair value of our assets relative to the fair value of Seagate
Software Holdings. We considered a number of factors in
determining our estimated fair value including historical and
projected revenues, earnings and cash flows, as well as other
factors and our consultations with financial advisors. The
allocation of the purchase price to our intangible assets as at
October 20, 1999 was as follows (in thousands):

|                                    |                                |   |       |       | 
|----------------------------------- | ------------------------------ | - | ----- | ----- | 
|Developed technology                |                                | $ | 156   |      
|Trademark                           |                                |   | 36    |      
|Assembled work force                |                                |   | 47    |      
|In-process research and development |                                |   | 25    |      
|Goodwill                            |                                |   | 1,071 |      
|Deferred tax liability              |                                |   | (93   | )    
|                                    |                                |   |       |      
|                                    | Total purchase price allocated |   | $     | 1,242 | 
|                                    |                                |   |       |      



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##### Table of Contents



Results of Operations

The following table sets forth certain
consolidated and combined statements of operations data
expressed as a percentage of total revenues for the periods
indicated:

|                                          |                                                          |                            |    |               |     |               |    |    |     |  |      |     |     | 
|----------------------------------------- | -------------------------------------------------------- | -------------------------- | -- | ------------- | --- | ------------- | -- | -- | --- |  | ---- | --- | --- | 
|                                          |                                                          |                           
|                                          |                                                          | For the fiscal years ended
|                                          |                                                          |                           
|                                          |                                                          | June 28, 2002              |    | June 29, 2001 |     | June 30, 2000
|                                          |                                                          |                            |    |               |     |              
|Revenues:                                 |                                                          |                            |    |               |     |               |    |    |     |  |      |    
|                                          | Licensing                                                |                            |    | 64            | %   |               |    | 64 | %   |  |      | 58  | %  
|                                          | Maintenance, support and services                        |                            |    | 36            |     |               |    | 36 |     |  |      | 42  |    
|                                          |                                                          |                            |    |               |     |               |    |    |     |  |      |    
|                                          |                                                          | Total revenues             |    |               | 100 |               |    |    | 100 |  |      |     | 100 | 
|                                          |                                                          |                            |    |               |     |               |    |    |     |  |      |    
|Cost of revenues:                         |                                                          |                            |    |               |     |               |    |    |     |  |      |    
|                                          | Licensing                                                |                            |    | 3             |     |               |    | 3  |     |  |      | 3   |    
|                                          | Maintenance, support and services                        |                            |    | 21            |     |               |    | 25 |     |  |      | 33  |    
|                                          | Amortization of developed technologies                   |                            |    | 2             |     |               |    | 2  |     |  |      |    |    
|                                          |                                                          |                            |    |               |     |               |    |    |     |  |      |    
|                                          |                                                          | Total cost of revenues     |    |               | 26  |               |    |    | 30  |  |      |     | 36  | 
|                                          |                                                          |                            |    |               |     |               |    |    |     |  |      |    
|Gross profit                              |                                                          |                            | 74 |               |     |               | 70 |    |     |  | 64   |    
|Operating expenses:                       |                                                          |                            |    |               |     |               |    |    |     |  |      |    
|                                          | Sales and marketing                                      |                            |    | 43            |     |               |    | 44 |     |  |      | 52  |    
|                                          | Research and development                                 |                            |    | 14            |     |               |    | 17 |     |  |      | 22  |    
|                                          | General and administrative                               |                            |    | 9             |     |               |    | 9  |     |  |      | 14  |    
|                                          | Amortization of goodwill and other intangible
    assets |                            |    | 1             |     |               |    | 1  |     |  |      | 2   |    
|                                          | Write-off of in-process research and development         |                            |    |              |     |               |    | 4  |     |  |      |    |    
|                                          | Unusual items                                            |                            |    |              |     |               |    | 1  |     |  |      | 191 |    
|                                          | Restructuring costs                                      |                            |    |              |     |               |    |   |     |  |      | 1   |    
|                                          |                                                          |                            |    |               |     |               |    |    |     |  |      |    
|                                          |                                                          | Total operating expenses   |    |               | 67  |               |    |    | 78  |  |      |     | 282 | 
|                                          |                                                          |                            |    |               |     |               |    |    |     |  |      |    
|Income (loss) from operations             |                                                          |                            | 7  |               |     |               | (8 | )  |     |  | (218 | )  
|Interest income and other income, net     |                                                          |                            | 1  |               |     |               | 2  |    |     |  |     |    
|                                          |                                                          |                            |    |               |     |               |    |    |     |  |      |    
|Income (loss) before income taxes         |                                                          |                            | 8  |               |     |               | (6 | )  |     |  | (218 | )  
|Benefit from (provision for) income taxes |                                                          |                            | (2 | )             |     |               | (1 | )  |     |  | 44   |    
|                                          |                                                          |                            |    |               |     |               |    |    |     |  |      |    
|Net income (loss)                         |                                                          |                            | 6  | %             |     |               | (7 | )% |     |  | (174 | )% 
|                                          |                                                          |                            |    |               |     |               |    |    |     |  |      |    
|Gross profit %:                           |                                                          |                            |    |               |     |               |    |    |     |  |      |    
|                                          | Licensing                                                |                            |    | 96            | %   |               |    | 95 | %   |  |      | 94  | %  
|                                          | Maintenance, support and services                        |                            |    | 40            | %   |               |    | 31 | %   |  |      | 22  | %  



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##### Table of Contents



Fiscal Years Ended June 28, 2002 and
June 29, 2001



| |         
| | --------
| | Revenues

The following table sets forth information
regarding the composition of our revenues and fiscal
year-to-year changes:

|                                           |                              |                        |         |         |   |               |    |   |  |   |         |    |  
|------------------------------------------ | ---------------------------- | ---------------------- | ------- | ------- | - | ------------- | -- | - |  | - | ------- | -- | -
|                                           |                              |                        |         | Percent |   |              
|                                           |                              | June 28, 2002          |         | Change  |   | June 29, 2001
|                                           |                              |                        |         |         |   |              
|                                           |                              |                       
|                                           |                              | (dollars in thousands)
|Licensing revenues                         |                              | $                      | 140,009 |         |   |               | 31 | % |  | $ | 107,028 |   
|                                           | Percentage of total revenues |                        |         | 64      | % |               |    |   |  |   |         | 64 | %
|Maintenance, support and services revenues |                              | $                      | 77,161  |         |   |               | 27 | % |  | $ | 60,694  |   
|                                           | Percentage of total revenues |                        |         | 36      | % |               |    |   |  |   |         | 36 | %
|Total revenues                             |                              | $                      | 217,170 |         |   |               | 29 | % |  | $ | 167,722 |   

Total revenues increased 29% to
$217.2 million for fiscal 2002 from $167.7 million for
fiscal 2001. In each year presented, 64% of our revenues were
derived from license fees for our products. We anticipate that
license fees will continue to represent the majority of our
total revenues for the foreseeable future.

The increase in total revenues was primarily
attributable to increases in revenues from our direct sales
channels. In addition, we increased revenues from our indirect
sales channels, mainly through revenues earned through new and
existing strategic partnerships. Both of these channels
benefited from the release of our Crystal 8 suite of
products including Crystal Enterprise 8.0 and 8.5 and Crystal
Reports 8.5. While we expect our revenues will continue to grow
and we believe that the current demand for our products is
strong, the current economic environment and the slowing global
economy have resulted in a decline in information technology
spending. We believe that this decline may cause our customers
and prospective customers to significantly decrease or delay
spending on information technology. As a result, we may not be
able to maintain the revenue growth rates we have previously
achieved.

The adoption of Emerging Issues Task Force
(EITF) Issue No. 01-14
(EITF 01-14), Income Statement
Characterization of Reimbursements Received for
Out-of-Pocket Expenses Incurred, resulted
in the reclassification of out-of-pocket reimbursable expenses
and an increase in both maintenance, support and services
revenues and cost of maintenance, support and services revenues
in the amounts of $872,000 and $861,000 for fiscal 2002 and
fiscal 2001, respectively.

Revenues from a third-party customer, Ingram
Micro, Inc. (Ingram), accounted for
$21.0 million for fiscal 2002 and $27.7 million for
fiscal 2001. The primary reason for the decrease during fiscal
2002 was the realignment of one of our products from this
channel to a direct sales channel. No other customer accounted
for 10% or more of our total revenues during these periods.

Licensing revenues.Licensing revenues consist of license fees for our products.
Licensing revenues increased 31% to $140.0 million for
fiscal 2002 from $107.0 million for fiscal 2001. The
increase in licensing revenues was primarily attributable to an
increase in the size and productivity of our direct sales force.
In addition, the release of our Crystal 8 suite of products has
continued to result in increased revenues in fiscal 2002. Our
direct sales force continued to add new customers, while
continuing to make additional sales to our existing customers.
In addition, the continued development of our strategic and OEM
partnerships has increased licensing revenues.

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 27% to $77.2 million for fiscal 2002 from
$60.7 million for fiscal 2001. The year-over-year absolute
dollar increase in maintenance, support and services revenues
was attributable to a higher cumulative installed customer base
receiving maintenance. In addition, both consulting and
technical support revenues increased as a result of new and
existing agreements with our customers, and the initiation of
new pricing arrangements for these services.



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##### Table of Contents



Concentration of
Customers.The following table sets
forth information regarding revenues by the geographic location
of our customers:

|              |                              |                        |         |         |   |               |    |   |  |   |         |    |  
|------------- | ---------------------------- | ---------------------- | ------- | ------- | - | ------------- | -- | - |  | - | ------- | -- | -
|              |                              |                        |         | Percent |   |              
|              |                              | June 28, 2002          |         | Change  |   | June 29, 2001
|              |                              |                        |         |         |   |              
|              |                              |                       
|              |                              | (dollars in thousands)
|United States |                              | $                      | 147,547 |         |   |               | 29 | % |  | $ | 113,993 |   
|              | Percentage of total revenues |                        |         | 68      | % |               |    |   |  |   |         | 68 | %
|Europe (1)    |                              | $                      | 41,770  |         |   |               | 31 | % |  | $ | 31,812  |   
|              | Percentage of total revenues |                        |         | 19      | % |               |    |   |  |   |         | 19 | %
|Other (2)     |                              | $                      | 27,853  |         |   |               | 27 | % |  | $ | 21,917  |   
|              | Percentage of total revenues |                        |         | 13      | % |               |    |   |  |   |         | 13 | %



|    |                                                   
|--- | --------------------------------------------------
|(1) | Europe includes South Africa and the Middle East. 
|(2) | Other includes Canada and the Asia Pacific region.

Geographically, we experienced strong revenue
growth in the U.S. with revenues increasing 29% to
$147.6 million for fiscal 2002 from $114.0 million for
fiscal 2001. We also experienced continued growth in revenues
outside the U.S. with revenues increasing 30% to
$69.6 million for fiscal 2002 from $53.7 million for
fiscal 2001. The absolute dollar increase in revenues was
primarily attributable to the increase in the size and
productivity of our direct sales force, which has resulted in
increased license revenues and the expansion of our customer
base in all regions.



| |                 
| | ----------------
| | Cost of Revenues

The following table sets forth information
regarding the composition of our cost of revenues and fiscal
year-to-year changes:

|                                          |                                                              |                        |        |         |   |               |    |    |  |   |        |    |  
|----------------------------------------- | ------------------------------------------------------------ | ---------------------- | ------ | ------- | - | ------------- | -- | -- |  | - | ------ | -- | -
|                                          |                                                              |                        |        | Percent |   |              
|                                          |                                                              | June 28, 2002          |        | Change  |   | June 29, 2001
|                                          |                                                              |                        |        |         |   |              
|                                          |                                                              |                       
|                                          |                                                              | (dollars in thousands)
|Cost of licensing revenues                |                                                              | $                      | 5,230  |         |   |               | (9 | )% |  | $ | 5,740  |   
|                                          | Percentage of licensing revenues                             |                        |        | 4       | % |               |    |    |  |   |        | 5  | %
|Cost of maintenance, support and services |                                                              | $                      | 46,140 |         |   |               | 10 | %  |  | $ | 41,760 |   
|                                          | Percentage of maintenance, support and services
    revenues |                        |        | 60      | % |               |    |    |  |   |        | 69 | %
|Amortization of developed technologies    |                                                              | $                      | 5,078  |         |   |               | 66 | %  |  | $ | 3,050  |   
|                                          | Percentage of total revenues                                 |                        |        | 2       | % |               |    |    |  |   |        | 2  | %
|Total cost of revenues                    |                                                              | $                      | 56,448 |         |   |               | 12 | %  |  | $ | 50,550 |   
|                                          | Percentage of total revenues                                 |                        |        | 26      | % |               |    |    |  |   |        | 30 | %

Cost of revenues increased 12% to
$56.4 million for fiscal 2002 from $50.6 million for
fiscal 2001. Cost of revenues as a percentage of total revenues
were 26% for fiscal 2002 and 30% for fiscal 2001. The absolute
dollar increase for fiscal 2002 in cost of revenues was
primarily attributable to increased maintenance, support and
services costs associated with increased revenues and a
$2.0 million increase in amortization of developed
technologies.

Cost of licensing
revenues.Cost of licensing revenues
consists primarily of materials, product packaging, distribution
costs, related fulfillment personnel and third party royalties.
Cost of licensing revenues decreased 9% to $5.2 million for
fiscal 2002 from $5.7 million for fiscal 2001. As a
percentage of licensing revenues, cost of licensing revenues
decreased to 4% for fiscal 2002 from 5% for fiscal 2001. We have
continued to realize cost savings relative to the increase in
licensing revenues due to initiatives to reduce our production,
fulfillment and shipping costs as a percentage of revenue. The
cost of licensing revenues may vary depending on the volume,
distribution method and mix of software licenses shipped.

Cost of maintenance, support and services
revenues.Cost of maintenance, support
and services revenues consists of personnel and related overhead
costs for maintenance services, consulting, training and
technical



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##### Table of Contents



support. Cost of maintenance, support and
services revenues increased 10% to $46.1 million for fiscal
2002 from $41.8 million for fiscal 2001. The absolute
dollar increase was the result of costs associated with
increased revenues. As a percentage of maintenance, support and
services revenues, cost of maintenance, support and services
revenues decreased to 60% for fiscal 2002 from 69% for fiscal
2001. The decline in cost of maintenance, support and services
revenues as a percentage of maintenance, support and services
revenues was primarily the result of the growth of maintenance
and technical support revenue without a corresponding increase
in the associated costs of these services. In addition, our
pricing for such services was slightly higher in fiscal 2002.
Cost of maintenance, support and services revenues may vary
between periods because of the mix of services and the margins
we obtain on those services. We expect the cost of maintenance,
support and services revenue to continue to grow in absolute
dollars in the future as we continue to expand our customer
support and professional services organizations to meet our
customers demand for our services.


Amortization of developed
technologies.Amortization of
developed technologies increased 66% to $5.1 million for
fiscal 2002 from $3.1 million for fiscal 2001 and remained
constant at 2% of total revenues. At November 22, 2000,
existing developed technologies were revalued as part of the New
SAC Transaction and effective November 23, 2000, we began
amortizing the $15.2 million of developed technologies pushed
down to our consolidated and combined statements of operations
over 36 months. At June 28, 2002, the net carrying
value of the $15.2 million of developed technologies was
reduced to zero as a result of the application of SFAS 109.
Therefore, commencing in the first quarter of fiscal 2003, we
will no longer provide for amortization related to this
intangible asset acquired as the result of the New SAC
Transaction. The absolute dollar increase for fiscal 2002 is the
result of amortization for fiscal 2001 being charged on a
different and smaller intangible asset base up to and including
the five months ended November 22, 2000.

Gross Profit.Our
gross profit as a percentage of total revenues increased to 74%
for fiscal 2002 from 70% for fiscal 2001. We continued to have
growth in our gross profit as the result of the low total dollar
cost of licensing revenues relative to the total dollar amount
of licensing revenues, resulting in improved gross profit
margins of 1% over fiscal 2001. In addition, our maintenance,
support and services revenues have been growing at a greater
rate than the cost of maintenance, support and services
revenues, resulting in increased margins of 9% over fiscal 2001.



22




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##### Table of Contents





| |                   
| | ------------------
| | Operating Expenses

The following table sets forth information
regarding the composition of our operating expenses and fiscal
year-to-year changes:

|                                                         |                              |                        |         |         |   |               |      |    |  |   |         |    |  
|-------------------------------------------------------- | ---------------------------- | ---------------------- | ------- | ------- | - | ------------- | ---- | -- |  | - | ------- | -- | -
|                                                         |                              |                        |         | Percent |   |              
|                                                         |                              | June 28, 2002          |         | Change  |   | June 29, 2001
|                                                         |                              |                        |         |         |   |              
|                                                         |                              |                       
|                                                         |                              | (dollars in thousands)
|Sales and marketing                                      |                              | $                      | 94,449  |         |   |               | 28   | %  |  | $ | 73,888  |   
|                                                         | Percentage of total revenues |                        |         | 43      | % |               |      |    |  |   |         | 44 | %
|Research and development                                 |                              | $                      | 30,515  |         |   |               | 4    | %  |  | $ | 29,236  |   
|                                                         | Percentage of total revenues |                        |         | 14      | % |               |      |    |  |   |         | 17 | %
|General and administrative                               |                              | $                      | 18,464  |         |   |               | 19   | %  |  | $ | 15,465  |   
|                                                         | Percentage of total revenues |                        |         | 9       | % |               |      |    |  |   |         | 9  | %
|Amortization of goodwill and other intangible
    assets |                              | $                      | 2,358   |         |   |               | 17   | %  |  | $ | 2,023   |   
|                                                         | Percentage of total revenues |                        |         | 1       | % |               |      |    |  |   |         | 1  | %
|Write-off of in-process research and development         |                              | $                      |        |         |   |               | (100 | )% |  | $ | 7,073   |   
|                                                         | Percentage of total revenues |                        |         |        |   |               |      |    |  |   |         | 4  | %
|Unusual items                                            |                              | $                      |        |         |   |               | (100 | )% |  | $ | 1,851   |   
|                                                         | Percentage of total revenues |                        |         |        |   |               |      |    |  |   |         | 1  | %
|Restructuring costs                                      |                              | $                      |        |         |   |               | (100 | )% |  | $ | 573     |   
|                                                         | Percentage of total revenues |                        |         |        |   |               |      |    |  |   |         |   |  
|Total operating expenses                                 |                              | $                      | 145,786 |         |   |               | 12   | %  |  | $ | 130,109 |   
|                                                         | Percentage of total revenues |                        |         | 67      | % |               |      |    |  |   |         | 78 | %

Sales and Marketing.Sales and marketing expenses include salaries, commissions and
bonuses earned by sales and marketing personnel, advertising and
product promotional activities, travel, facilities, information
systems and other related costs. Sales and marketing expenses
increased 28% to $94.4 million for fiscal 2002 from
$73.9 million for fiscal 2001. As a percentage of total
revenues, sales and marketing expenses decreased to 43% for
fiscal 2002 from 44% for fiscal 2001. The absolute dollar
increase in sales and marketing expenses was primarily
associated with increased personnel costs, as a result of
increased headcount in our sales force, and higher commissions
associated with increased revenues. The decrease as a percentage
of revenues results from increased productivity of our sales
force. From June 29, 2001 to June 28, 2002, our sales
and marketing headcount increased by 25%. 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
sales force headcount, increase sales productivity and promote
our products and services.

Research and
Development.Research and development
expenses are expensed as incurred and 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 and information systems
costs. Research and development expenses increased 4% to
$30.5 million for fiscal 2002 from $29.2 million for
fiscal 2001. The absolute dollar increase was primarily
associated with personnel costs related to development of future
and existing products. Research and development costs decreased
to 14% of total revenues for fiscal 2002 from 17% of total
revenues for fiscal 2001. The decrease in research and
development costs as a percentage of total revenues was the
result of revenues increasing at a greater rate than research
and development costs. While we have continued to add research
and development headcount and continue to release new products,
we have also been able to control costs. We expect research and
development expenses to continue to vary as a percentage of
total revenues in the future 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 and other administrative costs,
including bad debt expense. General and administrative expenses
increased 19% to $18.5 million for fiscal 2002 from
$15.5 million for fiscal 2001. As a percentage of total
revenues, general and administrative expenses remained at 9% for
fiscal 2002 and fiscal



23




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##### Table of Contents



2001. During the three months ended June 28,
2002 and for all comparative periods, we reclassified
information system costs previously including within general and
administrative expenses and allocated these costs across the
other functional groups consistent with other overhead
allocations. The increase in absolute dollars for fiscal 2002
was primarily attributable to higher salary expense associated
with our headcount growth and increased outside service costs
offset by continued cost management initiatives. We expect
general and administrative expenses to vary in absolute dollars
and as a percentage of total revenues as we continue to grow.


Amortization of Goodwill and Other Intangible
Assets.Amortization of goodwill and
other intangible assets increased 17% to $2.4 million for
fiscal 2002 from $2.0 million for fiscal 2001. As a
percentage of total revenues, amortization of goodwill and other
intangible assets remained constant at 1% of total revenues for
both fiscal 2002 and fiscal 2001. At November 22, 2000,
existing goodwill and other intangible assets were revalued as
part of the New SAC Transaction and effective November 23,
2000, we began amortizing the $7.1 million of assembled
workforce pushed down to our consolidated and combined
statements of operations over 36 months. At June 28,
2002, the net carrying value of the $7.1 million of
assembled workforce was reduced to zero as a result of
application of SFAS 109. Therefore, commencing in the first
fiscal quarter of 2003, we will no longer provide for
amortization related to this intangible asset acquired as a
result of the New SAC Transaction. The absolute dollar increase
was the result of amortization for fiscal 2001 being charged on
a different and smaller intangible asset base up to and
including the five months ended November 22, 2000.

Write-off of In-Process Research and
Development.We had no write-off of
in-process research and development for fiscal 2002. As part of
the push down of the purchase price allocation of the New SAC
Transaction, $7.1 million of in-process research and
development was recorded at November 22, 2000. This amount,
which was 4% of total revenues for 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.

Unusual Items.We
had no unusual items for fiscal 2002. We recorded
$1.9 million of compensation expense, representing 1% of
total revenues, during fiscal 2001 that was comprised of
non-cash 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 options were accelerated and each
share was net exercised for merger consideration of 0.4465
shares of VERITAS and $8.55 cash per share of Seagate Technology
common stock held. The accelerated vesting and net exercise of
these options resulted in this compensation expense.

Restructuring Costs.We had no restructuring charges during fiscal 2002.
Restructuring charges were $573,000 for fiscal 2001 and
represented less than 1% of total revenues. The charges for
fiscal 2001 related to the closure of eight offices in Europe
and were part of a restructuring plan announced in September
2000 to consolidate our European sales organization. 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. As at June 28, 2002,
no amounts remained outstanding.



| |                                          
| | -----------------------------------------
| | Interest Income and Other Income,
    Net

Interest income and other income, net was
comprised of the following:

|                                          |                                             |                        |       |         |  |               |      |    |  |   |       |       | 
|----------------------------------------- | ------------------------------------------- | ---------------------- | ----- | ------- |  | ------------- | ---- | -- |  | - | ----- | ----- | 
|                                          |                                             |                        |       | Percent |  |              
|                                          |                                             | June 28, 2002          |       | Change  |  | June 29, 2001
|                                          |                                             |                        |       |         |  |              
|                                          |                                             |                       
|                                          |                                             | (dollars in thousands)
|Interest income                           |                                             | $                      | 1,780 |         |  |               | (10  | )% |  | $ | 1,970 |      
|Interest expense                          |                                             |                        | (57   | )       |  |               | 185  | %  |  |   | (20   | )    
|Net foreign currency exchange gain (loss) |                                             |                        | (404  | )       |  |               | (158 | )% |  |   | 701   |      
|                                          |                                             |                        |       |         |  |               |      |    |  |   |       |      
|                                          | Total interest income and other income, net |                        | $     | 1,319   |  |               |      |    |  |   | $     | 2,651 | 
|                                          |                                             |                        |       |         |  |               |      |    |  |   |       |      



24




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##### Table of Contents



Net interest income fluctuates depending on
movements in the general level of interest rates in the U.S.,
our average cash and cash equivalents, and our net position
under the revolving loan agreement we had with Seagate
Technology LLC and the interest rates applied thereon.
Historically, net interest income was primarily attributable to
interest earned on balances receivable under the revolving loan
agreement. Interest income earned on the net receivable balance
under this agreement was approximately $301,000 and
$1.8 million for fiscal 2002 and fiscal 2001, respectively.
Commencing in October 2001, we earned the majority of our net
interest income from our cash and cash equivalent balances. As a
percentage of total revenues, net interest income decreased from
1% for fiscal 2001 to less than 1% for fiscal 2002. While our
cash and cash equivalents balances increased relative to the
prior periods interest earning balances, the average
interest rate was lower, resulting in a decrease in net interest
income for fiscal 2002.

Net foreign currency exchange gains and losses,
which represent the impact of foreign currency fluctuations on
the translation of foreign currency transactions into U.S.
dollars, varies depending upon movements in currency exchange
rates.



| |             
| | ------------
| | Income Taxes

|                                          |                    |                        |       |         |   |               |     |   |  |   |       |     |   
|----------------------------------------- | ------------------ | ---------------------- | ----- | ------- | - | ------------- | --- | - |  | - | ----- | --- | --
|                                          |                    |                        |       | Percent |   |              
|                                          |                    | June 28, 2002          |       | Change  |   | June 29, 2001
|                                          |                    |                        |       |         |   |              
|                                          |                    |                       
|                                          |                    | (dollars in thousands)
|Provision for (benefit from) income taxes |                    | $                      | 3,300 |         |   |               | 180 | % |  | $ | 1,183 |    
|                                          | Effective tax rate |                        |       | 20      | % |               |     |   |  |   |       | (12 | )%

We recorded an income tax provision of
$3.3 million at an effective rate of 20% for fiscal 2002
compared with a $1.2 million income tax provision at an
effective rate of negative 12% for fiscal 2001. The change in
the effective tax rate from a negative rate for fiscal 2001 to a
positive rate in 2002 is due primarily to the effect of our
becoming profitable and as a result of the absence of certain
non-cash charges associated with the New SAC Transaction. In
addition, the income tax provision 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. A valuation allowance has been provided
for fiscal 2002 and for fiscal 2001 against the deferred tax
assets arising primarily from temporary differences and net
operating losses carried forward due to the uncertainty of their
realizability.

The effective rate used to record the income tax
provision differed from the 35% U.S. federal statutory rate in
fiscal 2002 due primarily to the benefits of operating in
various foreign jurisdictions, including the availability of
research and development investment tax credits in Canada, an
increase in the valuation allowance and the inclusion of a
reconstituted net operating loss. The increase in the valuation
allowance and the inclusion of a reconstituted net operating
loss are the results of filing the U.S. federal and state income
tax returns for the year ended June 29, 2001 and reflecting
a final revised purchase price allocation schedule regarding the
November 22, 2000 New SAC Transaction. Other significant
items impacted by the above were the recognition of previously
deferred revenue and an adjustment to the acquisition related
intangible assets.

The effective rate used to record the income tax
provision differed from the 35% U.S. federal statutory rate in
fiscal 2001 due primarily to the benefits of operating in
various foreign jurisdictions, as well as 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 non-deductible charges arising from
push down accounting.



25




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##### Table of Contents



Fiscal Years Ended June 29, 2001 and
June 30, 2000



| |         
| | --------
| | Revenues

The following table sets forth information
regarding the composition of our revenues and fiscal
year-to-year changes:

|                                           |                              |                        |         |         |   |               |     |  |  |   |         |    |  
|------------------------------------------ | ---------------------------- | ---------------------- | ------- | ------- | - | ------------- | --- |  |  | - | ------- | -- | -
|                                           |                              |                        |         | Percent |   |              
|                                           |                              | June 29, 2001          |         | Change  |   | June 30, 2000
|                                           |                              |                        |         |         |   |              
|                                           |                              |                       
|                                           |                              | (dollars in thousands)
|Licensing revenues                         |                              | $                      | 107,028 |         |   |               | 44% |  |  | $ | 74,182  |   
|                                           | Percentage of total revenues |                        |         | 64      | % |               |     |  |  |   |         | 58 | %
|Maintenance, support and services revenues |                              | $                      | 60,694  |         |   |               | 15% |  |  | $ | 52,727  |   
|                                           | Percentage of total revenues |                        |         | 36      | % |               |     |  |  |   |         | 42 | %
|Total revenues                             |                              | $                      | 167,722 |         |   |               | 32% |  |  | $ | 126,909 |   

Total revenues increased 32% to
$167.7 million for fiscal 2001 from $126.9 million for
fiscal 2000. The increase in total revenues for fiscal 2001 was
primarily attributable to an increase in the size of our sales
force subsequent to a turnover of the sales force and certain
management positions in October 1999, and an increase in
productivity of our sales force since that time. In addition,
the release of Crystal Enterprise 8.0 in March 2001 and other
product releases in the second half of fiscal 2001 contributed
to the overall growth of revenues.

The adoption of EITF 01-14, resulted in the
reclassification of out-of-pocket reimbursable expenses and an
increase in both maintenance, support and services revenues and
cost of maintenance, support and services revenues in the
amounts of $861,000 and $391,000 for fiscal 2001 and fiscal
2000, respectively.

Revenues from Ingram accounted for
$27.7 million for fiscal 2001 and $25.3 million for
fiscal 2000, and represented more than 10% of the total revenues
in each year. No other customers accounted for 10% or more of
our total revenues for fiscal 2001 or fiscal 2000.

Licensing revenues.Licensing revenues increased 44% to $107.0 million for
fiscal 2001 from $74.2 million for fiscal 2000. In fiscal
2000 we experienced significant voluntary and involuntary
turnover of our direct sales force in the first half of the
fiscal year. We added new members to our sales force throughout
fiscal 2000 and continued to invest in our sales force in fiscal
2001 resulting in an increase in the percentage of total
revenues represented by licensing revenues. 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
8.0 in February 2000, Crystal Reports 8.5 and Crystal Enterprise
8.0 in March 2001, contributed to increases in revenues.

Maintenance, support and services
revenues.Maintenance, support and
service revenues increased 15% to $60.7 million for fiscal
2001 from $52.7 million for fiscal 2000. As a percentage of
total revenues, maintenance, support and services revenues
decreased to 36% of total revenues for fiscal 2001 from 42% of
total revenues for fiscal 2000. 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. The decline in maintenance, support and services
revenue as a percentage of total revenues resulted from the
accelerated growth in our license revenues for fiscal 2001.



26




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##### Table of Contents



Concentration of
Customers.The following table sets
forth information regarding revenues by the geographic location
of our customers:

|              |                              |                        |         |         |   |               |    |   |  |   |        |    |  
|------------- | ---------------------------- | ---------------------- | ------- | ------- | - | ------------- | -- | - |  | - | ------ | -- | -
|              |                              |                        |         | Percent |   |              
|              |                              | June 29, 2001          |         | Change  |   | June 30, 2000
|              |                              |                        |         |         |   |              
|              |                              |                       
|              |                              | (dollars in thousands)
|United States |                              | $                      | 113,993 |         |   |               | 36 | % |  | $ | 83,552 |   
|              | Percentage of total revenues |                        |         | 68      | % |               |    |   |  |   |        | 66 | %
|Europe (1)    |                              | $                      | 31,812  |         |   |               | 12 | % |  | $ | 28,453 |   
|              | Percentage of total revenues |                        |         | 19      | % |               |    |   |  |   |        | 22 | %
|Other (2)     |                              | $                      | 21,917  |         |   |               | 47 | % |  | $ | 14,904 |   
|              | Percentage of total revenues |                        |         | 13      | % |               |    |   |  |   |        | 12 | %



|    |                                                   
|--- | --------------------------------------------------
|(1) | Europe includes South Africa and the Middle East. 
|(2) | Other includes Canada and the Asia Pacific region.

Geographically, we experienced strong revenue
growth in the U.S. with revenues increasing 36% to
$114.0 million for fiscal 2001 from $83.6 million for
fiscal 2000. We also experienced continued growth in revenues
outside the U.S. with revenues increasing 24% to
$53.7 million for fiscal 2001 from $43.3 million for fiscal
2000. The absolute dollar increase in revenues was primarily
attributable to the increase in the size and productivity of our
direct sales force, which has resulted in increased license
sales and the expansion of our customer base in all regions.



| |                 
| | ----------------
| | Cost of Revenues

The following table sets forth information
regarding the composition of our cost of revenues and fiscal
year-to-year changes:

|                                          |                                                              |                        |        |         |   |               |      |   |  |   |        |    |  
|----------------------------------------- | ------------------------------------------------------------ | ---------------------- | ------ | ------- | - | ------------- | ---- | - |  | - | ------ | -- | -
|                                          |                                                              |                        |        | Percent |   |              
|                                          |                                                              | June 29, 2001          |        | Change  |   | June 30, 2000
|                                          |                                                              |                        |        |         |   |              
|                                          |                                                              |                       
|                                          |                                                              | (dollars in thousands)
|Cost of licensing revenues                |                                                              | $                      | 5,740  |         |   |               | 40   | % |  | $ | 4,096  |   
|                                          | Percentage of licensing revenues                             |                        |        | 5       | % |               |      |   |  |   |        | 6  | %
|Cost of maintenance, support and services |                                                              | $                      | 41,760 |         |   |               | 1    | % |  | $ | 41,156 |   
|                                          | Percentage of maintenance, support and services
    revenues |                        |        | 69      | % |               |      |   |  |   |        | 78 | %
|Amortization of developed technologies    |                                                              | $                      | 3,050  |         |   |               | 1431 | % |  | $ | 198    |   
|                                          | Percentage of total revenues                                 |                        |        | 2       | % |               |      |   |  |   |        |   |  
|Total cost of revenues                    |                                                              | $                      | 50,550 |         |   |               | 11   | % |  | $ | 45,450 |   
|                                          | Percentage of total revenues                                 |                        |        | 30      | % |               |      |   |  |   |        | 36 | %

Cost of revenues increased 11% to
$50.6 million for fiscal 2001 from $45.5 million for fiscal
2000. As a percentage of total revenues, cost of revenues
decreased to 30% for fiscal 2001 from 36% for fiscal 2000. The
absolute dollar increase in cost of revenues for fiscal 2001 is
primarily attributable to a $2.9 million increase in
amortization of developed technologies that we recorded as a
result of the push down accounting in fiscal 2001 related to the
New SAC Transaction. Excluding the effect of the increase in
amortization of developed technologies, the cost of revenues
increased nominally and not in direct proportion to our growth
in total revenues. This was largely attributable to a
corporate-wide initiative to manage costs, while supporting
revenue growth.

Cost of licensing
revenues.Cost of licensing revenues
increased 40% to $5.7 million for fiscal 2001 from
$4.1 million for fiscal 2000. As a percentage of licensing
revenues, cost of licensing revenues decreased to 5% for fiscal
2001 from 6% for fiscal 2000. The higher cost of licensing
revenues as a percentage of licensing revenues for fiscal 2000
was due in part to a write-down of obsolete product materials
and also due to initiatives to reduce our production,
fulfillment and shipping costs as a percentage of revenue. The
increase in



27




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##### Table of Contents



cost of licensing revenues in absolute dollars
was due primarily to the increased volume of shipments during
fiscal 2001.


Cost of maintenance, support and services
revenues.Cost of maintenance, support
and services revenues increased 1% to $41.8 million for
fiscal 2001 from $41.2 million for fiscal 2000. As a
percentage of maintenance, support and services revenues, cost
of maintenance, support and services revenues decreased to 69%
for fiscal 2001 from 78% for fiscal 2000. 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.

Amortization of developed
technologies.Amortization of
developed technologies increased to $3.1 million for fiscal
2001 from $198,000 for fiscal 2000. At November 22, 2000,
existing developed technologies were revalued as part of the New
SAC Transaction and effective November 23, 2000, we began
amortizing the $15.2 million of developed technologies
pushed down to our consolidated and combined statements of
operations over 36 months. The absolute dollar increase was
the result of amortization for fiscal 2000 being charged on a
different and smaller intangible asset base up to and including
the five months ended November 22, 2000. Amortization for
fiscal 2000 related to the amortization of previous allocations
of intangible assets to us created by the recapitalization of
our business.

Gross Profit.Our
gross profit as a percentage of total revenues increased to 70%
for fiscal 2001 from 64% for fiscal 2000. We continued to have
growth in our gross profit as the result of the low total dollar
cost of licensing revenues relative to the total dollar amount
of licensing revenues resulting in improved margins of 1% over
fiscal 2000. In addition, our maintenance, support and services
revenues have been growing at a greater rate than the cost of
maintenance, support and services revenues, resulting in
increased margins of 9% over fiscal 2000.



| |                   
| | ------------------
| | Operating Expenses

The following table sets forth information
regarding the composition of our operating expenses and fiscal
year-to-year changes:

|                                                         |                              |                        |         |         |   |               |     |    |  |   |         |     |  
|-------------------------------------------------------- | ---------------------------- | ---------------------- | ------- | ------- | - | ------------- | --- | -- |  | - | ------- | --- | -
|                                                         |                              |                        |         | Percent |   |              
|                                                         |                              | June 29, 2001          |         | Change  |   | June 30, 2000
|                                                         |                              |                        |         |         |   |              
|                                                         |                              |                       
|                                                         |                              | (dollars in thousands)
|Sales and marketing                                      |                              | $                      | 73,888  |         |   |               | 12  | %  |  | $ | 65,752  |    
|                                                         | Percentage of total revenues |                        |         | 44      | % |               |     |    |  |   |         | 52  | %
|Research and development                                 |                              | $                      | 29,236  |         |   |               | 7   | %  |  | $ | 27,377  |    
|                                                         | Percentage of total revenues |                        |         | 17      | % |               |     |    |  |   |         | 22  | %
|General and administrative                               |                              | $                      | 15,465  |         |   |               | (12 | )% |  | $ | 17,659  |    
|                                                         | Percentage of total revenues |                        |         | 9       | % |               |     |    |  |   |         | 14  | %
|Amortization of goodwill and other intangible
    assets |                              | $                      | 2,023   |         |   |               | (33 | )% |  | $ | 3,038   |    
|                                                         | Percentage of total revenues |                        |         | 1       | % |               |     |    |  |   |         | 2   | %
|Write-off of in-process research and development         |                              | $                      | 7,073   |         |   |               | 100 | %  |  | $ |        |    
|                                                         | Percentage of total revenues |                        |         | 4       | % |               |     |    |  |   |         |    |  
|Unusual items                                            |                              | $                      | 1,851   |         |   |               | n/m |    |  | $ | 242,569 |    
|                                                         | Percentage of total revenues |                        |         | 1       | % |               |     |    |  |   |         | 191 | %
|Restructuring costs                                      |                              | $                      | 573     |         |   |               | (56 | )% |  | $ | 1,301   |    
|                                                         | Percentage of total revenues |                        |         |        |   |               |     |    |  |   |         | 1   | %
|Total operating expenses                                 |                              | $                      | 130,109 |         |   |               | (64 | )% |  | $ | 357,696 |    
|                                                         | Percentage of total revenues |                        |         | 78      | % |               |     |    |  |   |         | 282 | %



| |                     
| | --------------------
| | n/m = not meaningful



28




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##### Table of Contents



Sales and Marketing.Sales and marketing expenses increased 12% to $73.9 million
for fiscal 2001 from $65.8 million for fiscal 2000. As a
percentage of total revenues, sales and marketing expenses
decreased to 44% for fiscal 2001 from 52% for fiscal 2000. The
absolute dollar increase in sales and marketing expenses for
fiscal 2001 was due primarily 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, the absence of costs associated with the turnover in
fiscal 2000, as well as to a decline in marketing expenses.

Research and
Development.Research and development
expenses increased 7% to $29.2 million for fiscal 2001 from
$27.4 million for fiscal 2000. As a percentage of total
revenues, research and development expenses decreased to 17% for
fiscal 2001 from 22% for fiscal 2000. The increase in research
and development expenses in absolute dollars was due primarily
to increases in personnel and related expenses related to
development of future and existing products. The decrease in
research and development costs as a percentage of total revenues
resulted from revenues increasing at a greater rate than
research and development costs and the more efficient use of our
research and development resources.

General and
Administrative.General and
administrative expenses decreased 12% to $15.5 million for
fiscal 2001 from $17.7 million for fiscal 2000. As a
percentage of total revenues, general and administrative
expenses decreased to 9% for fiscal 2001 from 14% for fiscal
2000. The decrease in absolute dollars for 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 due to 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 salaries and
benefit costs related to an increase in personnel.

Amortization of Goodwill and Other Intangible
Assets.Amortization of goodwill and
other intangible assets decreased 33% to $2.0 million for
fiscal 2001 from $3.0 million for fiscal 2000. At
November 22, 2000, existing goodwill and other intangible
assets were revalued and reduced to zero as part of the New SAC
Transaction and effective November 23, 2000, we began
amortizing the $7.1 million of assembled workforce pushed
down to our consolidated and combined statements of operations
over 36 months. The absolute dollar decrease was the result
of amortization for fiscal 2000 being charged on a different and
larger intangible asset base up to and including the five months
ended November 22, 2000. As a percentage of revenue,
amortization of goodwill and other intangible assets decreased
from 2% for fiscal 2000 to 1% for fiscal 2001 for reasons
consistent with the absolute dollar decrease.

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 in-process research and development was
recorded at November 22, 2000. This amount, which was 4% of
total revenues for 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. We had no write-offs of in-process research and
development for fiscal 2000.

Unusual Items.Unusual items in fiscal 2001 of
$1.9 million, or 1% of total revenues, comprised the push
down of non-cash 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 options were accelerated and each
share was net exercised for merger consideration of 0.4465
shares of VERITAS and $8.55 cash per share of Seagate Technology
common stock held. The accelerated vesting and net exercise of
these options resulted in this compensation expense.

Unusual items expense for fiscal 2000 of
$242.6 million, or 191% of total revenues, comprised the
compensation expense and associated expenses attributable to our
employees related to the October 1999 Seagate Technology
exchange of shares as described previously in this discussion
and analysis under the title  Other Significant
Transactions Impacting Our Financing Reporting. The
$242.6 million of unusual expense we recorded was comprised
of $239.6 million of compensation expense,
$2.1 million of employer portion payroll taxes thereon and
$877,000 of legal and accounting costs related to this
transaction.



29




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##### Table of Contents



Restructuring Costs.Restructuring costs were $573,000, representing less than 1% of
total revenues, for fiscal 2001. These charges were 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. 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 significant.

Restructuring charges were $1.3 million,
representing 1% of total revenues, for 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 or further
restructuring liabilities related to this plan were outstanding
as of June 30, 2000. Any benefits in the form of cost
reductions because of reduced salaries were realized by the end
of fiscal 2000 and were not expected to continue.



| |                                                    
| | ---------------------------------------------------
| | Interest Income and Other Income (Expense),
    Net

Interest income and other income, net was
comprised of the following:

|                                          |                                             |                        |       |         |  |               |     |    |  |   |        |    | 
|----------------------------------------- | ------------------------------------------- | ---------------------- | ----- | ------- |  | ------------- | --- | -- |  | - | ------ | -- | 
|                                          |                                             |                        |       | Percent |  |              
|                                          |                                             | June 29, 2001          |       | Change  |  | June 30, 2000
|                                          |                                             |                        |       |         |  |              
|                                          |                                             |                       
|                                          |                                             | (dollars in thousands)
|Interest income                           |                                             | $                      | 1,970 |         |  |               | 101 | %  |  | $ | 982    |   
|Interest expense                          |                                             |                        | (20   | )       |  |               | (99 | )% |  |   | (1,481 | ) 
|Net foreign currency exchange gain (loss) |                                             |                        | 701   |         |  |               | 35  | %  |  |   | 519    |   
|                                          |                                             |                        |       |         |  |               |     |    |  |   |        |   
|                                          | Total interest income and other income, net |                        | $     | 2,651   |  |               |     |    |  |   | $      | 20 | 
|                                          |                                             |                        |       |         |  |               |     |    |  |   |        |   

Net interest income fluctuates depending on
movements in the general level of interest rates in the U.S.,
our average cash and cash equivalents, and our net position
under the revolving loan agreement we had with Seagate
Technology LLC and the interest rates applied thereon. The
increase in interest income during fiscal 2001 was primarily
attributable to interest earned on balances receivable under the
revolving loan agreement during the year on excess cash managed
by Seagate Technology LLC on our behalf. During fiscal 2001, we
had a net receivable balance from Seagate Technology mainly as
the result of cash payments we received for our net operating
losses under the tax allocation agreement and we earned
$1.8 million on the net receivable balance under the
revolving loan agreement. During fiscal 2000, before the
realization of this benefit, we had a net payable position due
to Seagate Technology followed by a net receivable position
later in the fiscal year. We recorded interest expense related
to the monthly net payable balance and interest income related
to the monthly net receivable balance resulting in $583,000 of
net interest expense directly related to the revolving loan
agreement with Seagate Technology. The residual interest income
or expense in either fiscal year was the result of interest
income or expense on our cash balances.

Net foreign currency exchange gains and losses,
which represent the impact of foreign currency fluctuations on
the translation of foreign currency transactions into U.S.
dollars, varied depending upon movements in currency exchange
rates.





| |             
| | ------------
| | Income Taxes

|                                          |                    |                        |       |         |    |               |     |  |  |   |         |    |  
|----------------------------------------- | ------------------ | ---------------------- | ----- | ------- | -- | ------------- | --- |  |  | - | ------- | -- | -
|                                          |                    |                        |       | Percent |    |              
|                                          |                    | June 29, 2001          |       | Change  |    | June 30, 2000
|                                          |                    |                        |       |         |    |              
|                                          |                    |                       
|                                          |                    | (dollars in thousands)
|Provision for (benefit from) income taxes |                    | $                      | 1,183 |         |    |               | n/m |  |  | $ | (55,055 | ) 
|                                          | Effective tax rate |                        |       | (12     | )% |               |     |  |  |   |         | 20 | %



30




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##### Table of Contents



We recorded an income tax provision of
$1.2 million at an effective rate of negative 12% for
fiscal 2001 compared with a $55.1 million income tax
benefit at an effective rate of 20% for fiscal 2000. The change
in the effective tax rate from a positive rate in fiscal 2000 to
a negative rate in 2001 is due the absence of certain
non-deductible compensation expenses recorded in connection with
our October 1999 recapitalization and reorganization. In
addition, the income tax provision 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. A valuation allowance for fiscal 2001
and fiscal 2000 has been provided against the deferred tax
assets primarily arising from temporary differences and net
operating losses carried forward due to the uncertainty of their
realizability.

The effective rate used to record the income tax
provision differed from the 35% U.S. federal statutory rate in
fiscal 2001 due primarily to the benefits of 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 non-deductible charges
arising from push down accounting. The effective rate used to
record the income tax benefit in fiscal 2000 was less than the
35% U.S. federal statutory tax rate due primarily to
non-deductible expenses incurred in foreign jurisdictions in
connection with the October 1999 recapitalization and
reorganization of our Company, including the October 1999
Seagate Technology exchange of shares.

Selected Quarterly Financial Data
(Unaudited)

The table below shows selected data from our
unaudited quarterly consolidated statements of operations for
each of the four three month periods in fiscal 2002 and fiscal
2001. We derived this selected financial data from our unaudited
consolidated financial statements, which, in our opinion, have
been prepared on the same basis as our audited consolidated
financial statements and include all adjustments, consisting
only of normal recurring 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.

|                                      |  |                                       |        |          |  |          |        |           |  |          |        |          |  |          |        |           |  |   |        |  |  |   |        |   |  |   |         |   |  |   |        |  
|------------------------------------- |  | ------------------------------------- | ------ | -------- |  | -------- | ------ | --------- |  | -------- | ------ | -------- |  | -------- | ------ | --------- |  | - | ------ |  |  | - | ------ | - |  | - | ------- | - |  | - | ------ | -
|                                      |  |                                      
|                                      |  | For the three month periods ended    
|                                      |  |                                      
|                                      |  | June 28,                              |        | Mar. 29, |  | Dec. 28, |        | Sept. 28, |  | June 29, |        | Mar. 30, |  | Dec. 29, |        | Sept. 29,
|                                      |  | 2002                                  |        | 2002     |  | 2001     |        | 2001      |  | 2001     |        | 2001     |  | 2000     |        | 2000     
|                                      |  |                                       |        |          |  |          |        |           |  |          |        |          |  |          |        |          
|                                      |  |                                      
|                                      |  | (in thousands, except per share data)
|Total revenues                        |  |                                       | 61,374 |          |  |          | 56,175 |           |  |          | 51,570 |          |  |          | 48,051 |           |  |   | 46,521 |  |  |   | 43,785 |   |  |   | 40,395  |   |  |   | 37,021 |  
|Gross profit                          |  |                                       | 45,711 |          |  |          | 41,706 |           |  |          | 38,145 |          |  |          | 35,160 |           |  |   | 32,706 |  |  |   | 30,653 |   |  |   | 28,251  |   |  |   | 25,562 |  
|Income (loss) from operations         |  |                                       | 5,393  |          |  |          | 4,324  |           |  |          | 3,025  |          |  |          | 2,194  |           |  |   | 1,610  |  |  |   | (435   | ) |  |   | (10,985 | ) |  |   | (3,127 | )
|Net income (loss)                     |  | $                                     | 3,871  |          |  | $        | 4,023  |           |  | $        | 2,640  |          |  | $        | 2,421  |           |  | $ | 564    |  |  | $ | (1,546 | ) |  | $ | (8,308  | ) |  | $ | (2,179 | )
|                                      |  |                                       |        |          |  |          |        |           |  |          |        |          |  |          |        |           |  |   |        |  |  |   |        |   |  |   |         |   |  |   |        |  
|Net income (loss) per share  basic   |  | $                                     | 0.05   |          |  | $        | 0.05   |           |  | $        | 0.03   |          |  | $        | 0.03   |           |  | $ | 0.01   |  |  | $ | (0.02  | ) |  | $ | (0.11   | ) |  | $ | (0.03  | )
|                                      |  |                                       |        |          |  |          |        |           |  |          |        |          |  |          |        |           |  |   |        |  |  |   |        |   |  |   |         |   |  |   |        |  
|Net income (loss) per share  diluted |  | $                                     | 0.05   |          |  | $        | 0.05   |           |  | $        | 0.03   |          |  | $        | 0.03   |           |  | $ | 0.01   |  |  | $ | (0.02  | ) |  | $ | (0.11   | ) |  | $ | (0.03  | )
|                                      |  |                                       |        |          |  |          |        |           |  |          |        |          |  |          |        |           |  |   |        |  |  |   |        |   |  |   |         |   |  |   |        |  

During the three months ended March 29,
2002, the adoption of EITF 01-14 resulted in the
reclassification of out-of-pocket reimbursable expenses and an
increase in maintenance, support and services revenues and
related costs of revenues. During the three months ended
June 28, 2002 and for all comparative periods, we
reclassified our information systems costs, which were
previously included in general and administrative operating
expenses, across the other functional groups consistent with
other overhead allocations. This retroactive reclassification
resulted in changes to gross margins and total operating
expenses. Neither of these reclassifications impacted income
(loss) from operations or net income (loss) during any
of the periods presented.

For the three months ended December 29,
2000, the net income (loss) presented includes non-cash charges
totaling $8.9 million arising in connection with the New
SAC Transaction. Operating expenses included a $7.1 million
write-off of in-process research and development and the push
down of $1.9 million of non-cash compensation expense. We
did not incur such non-cash charges in any other quarterly
period presented.



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Our total revenues have continued to increase
quarter over quarter during the periods presented, however,
there can be no assurance that these increases will continue.
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

|                                                        |  |                        |        |         |  |               |     |         |  |               |        |   |  |  |     |   |  |   |         |  
|------------------------------------------------------- |  | ---------------------- | ------ | ------- |  | ------------- | --- | ------- |  | ------------- | ------ | - |  |  | --- | - |  | - | ------- | -
|                                                        |  |                        |        | Percent |  |               |     | Percent |  |              
|                                                        |  | June 28, 2002          |        | Change  |  | June 29, 2001 |     | Change  |  | June 30, 2000
|                                                        |  |                        |        |         |  |               |     |         |  |              
|                                                        |  |                       
|                                                        |  | (dollars in thousands)
|Working capital                                         |  | $                      | 24,434 |         |  |               | 127 | %       |  | $             | 10,750 |   |  |  | 21  | % |  | $ | 8,860   |  
|Cash and cash equivalents                               |  |                        | 71,451 |         |  |               | 108 | %       |  |               | 34,379 |   |  |  | 849 | % |  |   | 3,621   |  
|Net cash provided by (used in) operating
    activities |  |                        | 41,069 |         |  |               | 215 | %       |  |               | 13,037 |   |  |  | 160 | % |  |   | (21,649 | )
|Net cash used in investing activities                   |  |                        | (9,877 | )       |  |               | 3   | %       |  |               | (9,594 | ) |  |  | 51  | % |  |   | (6,356  | )
|Net cash provided by financing activities               |  |                        | 5,294  |         |  |               | (81 | )%      |  |               | 27,810 |   |  |  | 16  | % |  |   | 24,052  |  

Revolving Loan
Agreement and Cash Management Arrangement

Prior to the New SAC Transaction, as part of a
general services agreement, Seagate Technology provided cash
management services for us. After the closing of the New SAC
Transaction, during a transition period, Seagate Technology LLC
continued to provide these services for us. We began performing
these cash management functions internally during the first
quarter of fiscal 2002.

Prior to fiscal 2001, some of our working capital
requirements were financed by borrowings from Seagate Technology
available to us under a revolving loan agreement. These
borrowings were available to us under a revolving loan agreement
with Seagate Technology that was subsequently amended on
July 4, 2001 and renewed with Seagate Technology LLC. The
revolving loan agreement originally provided for maximum
outstanding borrowings of up to $60 million, however, on
renewal at July 4, 2001 the amount provided was reduced to
$15 million. The revolving loan agreement expired on
July 4, 2002 and was not renewed. There was no outstanding
receivable or payable balance under this agreement at
June 28, 2002 or upon its expiration.

Cash
Flows

Our cash and cash equivalents totaled
$71.5 million at June 28, 2002, representing 53% of
our net tangible assets, an increase of $37.1 million, or
108%, from $34.4 million at June 29, 2001. At
June 28, 2002, $66.6 million of our cash and cash
equivalents was held in U.S. dollar denominated bank
deposits or highly liquid investments which include marketable
securities which are principally money market funds, commercial
paper, market action preferreds and term deposits. The remaining
portion of our cash balances is denominated in the local
currencies of our foreign operations, including Canadian
Dollars, British Pounds Sterling, Japanese Yen, Euros and other
currencies. All of our cash is maintained in accounts with high
credit quality financial institutions and our cash equivalents
are maintained in highly rated instruments.

Operating
activities.Operating activities
provided cash of $41.1 million in fiscal 2002, primarily
from income after adjustments to exclude non-cash charges
including depreciation and amortization of $12.7 million,
and the net receipt of approximately $5.4 million of income
tax refunds, an increase in deferred revenue, partially offset
by an increase in accounts receivable. Operating activities
provided cash of $13.0 million in fiscal 2001, primarily
from income after adjustments to exclude non-cash charges
including $1.9 million of non-cash compensation expense, a
$7.1 million write-off of in-process research and
development and $9.4 million of depreciation and
amortization. The net favorable change in operating assets and
liabilities was comprised mainly of a $4.0 million
receivable from Seagate Technology under the tax



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allocation agreement, an increase in accounts
receivable and increased deferred revenue. Operating activities
used cash of $21.6 million in fiscal 2000, primarily from
income after adjustments to exclude non-cash charges including
$239.6 of non-cash compensation expense, a $66.2 million
increase in income tax benefits received from Seagate Technology
under the tax allocation agreement and $7.5 million of
depreciation and amortization. Other changes included an
increase of $13.3 million in accrued employee compensation,
offset by a $24.2 million decline in accounts receivable.


Investing activities.Investing activities used cash of
$9.9 million in fiscal 2002, consisting of purchases of
property and equipment, due primarily to the purchase of
computer equipment and costs related to the purchase and
implementation of a global enterprise resource planning system.
Investing activities used cash of $9.6 million in fiscal
2001, due primarily to leasehold improvements, the purchase of
computers, furniture and office equipment. Investing activities
used $6.4 million in fiscal 2000 for the purchase of
equipment. Purchases of property and equipment are expected to
be higher in fiscal 2003 than fiscal 2002 due to continued
improvements to our information systems infrastructure and costs
related to the completion of purchase and implementation of our
global enterprise resource planning system.

Financing activities.Financing activities provided cash of
$5.3 million in fiscal 2002, due primarily to the repayment
by Seagate Technology LLC of the remainder of the receivable
balance under the revolving loan agreement which was
$4.3 million (which was offset by net operating borrowings
of $871,000) and cash received of $1.9 million from the
issuance of common stock upon the exercise of stock options.
Financing activities provided cash of $27.8 million in
fiscal 2001, due primarily to the repayment by Seagate
Technology LLC of $31 million of the receivable balance
under the revolving loan agreement (which was offset by net
operating borrowings of $4.8 million) and cash received of
$1.6 million from the issuance of common stock upon the
exercise of stock options. Financing activities provided cash of
$24.0 million in fiscal 2000, due primarily to borrowings
from Seagate Technology under the revolving loan agreement.

The following table summarizes our facilities
operating lease commitments as of June 28, 2002:

|                        |  |              |        |      |  |           |       |           |  |            |        |  |  |   |       |  |  |   |        | 
|----------------------- |  | ------------ | ------ | ---- |  | --------- | ----- | --------- |  | ---------- | ------ |  |  | - | ----- |  |  | - | ------ | 
|                        |  |             
|                        |  | Fiscal Years
|                        |  |             
|                        |  | Total        |        | 2003 |  | 2004-2005 |       | 2006-2007 |  | After 2007
|Contractual Obligations |  |              |        |      |  |           |       |           |  |           
|Operating leases        |  | $            | 50,804 |      |  | $         | 7,159 |           |  | $          | 12,351 |  |  | $ | 7,442 |  |  | $ | 23,852 | 
|                        |  |              |        |      |  |           |       |           |  |            |        |  |  |   |       |  |  |   |        | 

On June 27, 2002, we signed a non-binding
term sheet and at September 26, 2002 we were negotiating an
agreement for an accounts receivable based bank line of credit
with Comerica Bank providing for up to a maximum of
$15 million in borrowings for general working capital
purposes.

We entered into a overdraft credit facility with
The Bank of Nova Scotia (the Bank) during fiscal
2002 whereby the bank will provide up to
Cdn. $4 million dollars credit for certain overdrafts.
The overdraft balances, if any, attract interest computed at the
banks prime lending rate payable monthly. The facility is
collaterized by a guarantee of the present and future
indebtedness and liability incurred by us to the Bank. Seagate
Technology International, an indirect subsidiary of New SAC, has
provided this guarantee.

During fiscal 2002 and fiscal 2001, our principal
source of liquidity has been our operating cash flow. There is a
risk that a decrease in demand for our products could reduce the
availability of operating cash flow. However, we believe that
cash from operations together with existing cash and cash
equivalents, the overdraft agreement with The Bank of Nova
Scotia, and anticipated borrowings from Comerica Bank being
negotiated currently will be sufficient to meet our anticipated
cash needs for working capital, capital expenditures and lease
commitments for at least the next 12 months.

Recent Accounting Pronouncements

In July 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 of accounting for business
combinations and includes new criteria for recognizing
intangible assets separately from goodwill. The adoption of
SFAS 141 has not had a material effect on our consolidated
financial position or results of



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operations. Under SFAS 142, which is
effective for all fiscal years beginning after December 15,
2001, goodwill and other intangible assets with indefinite lives
are no longer amortized but are reviewed at least annually for
impairment. Separate intangible assets that are deemed to have a
definite life will continue to be amortized over their estimated
useful life. The standard also establishes guidance for testing
for impairment of goodwill and other intangible assets with
indefinite useful lives. The provisions of SFAS 142 will apply
to us beginning in fiscal 2003. We do not expect that the
adoption of SFAS 142 will have a material impact on our
consolidated financial position or results of operations, as
there are no remaining intangible assets on the consolidated
balance sheet as at June 28, 2002.


In October 2001, the FASB approved the issuance
of SFAS No. 144 (SFAS 144),
Accounting for the Impairment or Disposal of Long-Lived
Assets.SFAS 144 supercedes SFAS No. 121
(SFAS 121), Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of.SFAS 144 retains the requirements of
SFAS 121 to (a) recognize an impairment loss if the
carrying amount of a long-lived asset is not recoverable from
its undiscounted cash flows, and (b) measure an impairment
loss as the difference between the carrying amount and the fair
value of the asset. SFAS 144 removes goodwill from its
scope. The provisions of SFAS 144 will apply to us beginning in
fiscal 2003. We do not expect that the adoption of SFAS 144
will have a material impact on our consolidated financial
position or results of operations.



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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 Relating to Our Business

We cannot assure
you that we will remain profitable because we have operated our
business on a stand alone basis for a relatively short period of
time.

We have incurred significant losses since our
inception to and including June 29, 2001. While we achieved
profitability in fiscal 2002, there is no assurance that we will
be able to sustain and increase profitability on a quarterly or
annual basis. We incurred net losses of $221.2 million for
fiscal 2000, $11.5 million for fiscal 2001, and net income
of $13.0 million for fiscal 2002. We expect to
significantly increase our expenses in the near term, especially
research and development and sales and marketing expenses.
Therefore, our operating results will be harmed if our revenues
do not keep pace with our expected increase in expenses or are
not sufficient for us to achieve profitability. If we do achieve
profitability in any period, we cannot be certain that we will
sustain or increase profitability on a quarterly or annual basis.

We are subject
to significant quarterly fluctuations in our operating results
due to a number of varying factors, including changes in demand
for our products and changes in the mix of our revenues, and the
unpredictability of our quarterly results may cause our stock
price to decline.

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 continue to 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;                                 
|
| |  | disruption and delay of business processes
    generally due to man-made or natural disasters;                                                             
|
| |  | 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;                                                                                                                            
|
| |  | 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 recognition of
    revenues;                               
|
| |  | the amount of customization required for our
    customer orders, which can affect the timing of our recognition
    of revenues;                          
|
| |  | our ability accurately to predict the rate and
    timing of conversion of our sales prospects into actual revenues;                                       
|
| |  | 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;



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| |   |                                                                                             
| | - | --------------------------------------------------------------------------------------------
| |  | changes in our operating expenses;                                                          
|
| |  | 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.

Our forecasts
are only estimates and if we overestimate revenues, our
operating results may be harmed if we cannot adjust our costs in
a timely manner.

Our management and sales force use a pipeline
system to estimate sales and identify trends in our business.
Our sales personnel monitor the status of all proposals,
estimate the date on which a customer is expected to 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 revenues could cause
us inaccurately to plan or budget and those variations could
adversely affect our business. In particular, a slowdown in the
economy may cause purchasing decisions to be delayed, reduced in
amount or cancelled, which would adversely affect the overall
rate and timing of conversion of our pipeline into actual
revenues, and our business, operating results and financial
condition could be materially adversely affected.

Our products
have long sales cycles, which make it difficult to plan our
expenses and forecast our revenues.

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. As a
result, we may wait six to 12 months after the first
contact with a potential customer for that potential customer to
place an order while the potential customer seeks 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 potential
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.

If the recent
economic slowdown continues and our customers delay or cancel
purchases of our software, then our results of operations may be
harmed.

The growth and profitability of our business
depend on the overall demand for computer software and services,
particularly in the business intelligence and information
management segments. If our customers continue to experience
recession or other economic conditions which impact their
operating budgets, they may delay or cancel purchases of our
software, which would reduce our revenues and cause our business
to suffer.

We cannot predict what impact the recent economic
slowdown in the United States and other countries will have on
the business intelligence software market or our business in
particular, but it may result in fewer purchases of licenses of
our software or substitution to our lower priced configurations
by our customers who previously licensed our higher priced
configurations. If the current economic slowdown continues, our
business, operating results and financial condition could be
materially and adversely affected.

Our growth may
not continue at historical growth rates.

Although we have experienced significant revenue
growth over the past two fiscal years, we cannot assure you that
we will continue to grow. If we do grow, we cannot assure you
that we will be able to maintain the historical rate or extent
of such growth in the future.



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We have grown
quickly and if we fail to manage our growth, our ability to
generate new revenues and achieve profitability may be
harmed.

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. For example, we began
to implement an enterprise resource planning system in May 2002.
If we do not successfully install, test and adopt this system as
scheduled, our business may be harmed by the management
distraction, lack of availability of desired information and
expense of the unsuccessful implementation. If we are unable
successfully to do so then our business, operating results and
financial condition could be materially adversely affected.

Our revenues
depend upon a large number of small orders from our large
distributors and if any of those distributors were to limit or
terminate its orders, then our revenues would be reduced
significantly.

Sales to a small number of distributors generate
a disproportionate amount of our revenues. For example, we
derived 10% in fiscal 2002 and 16% in fiscal 2001 of our total
revenues from sales to Ingram. If Ingram materially 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 distributors or OEMs do not
require them to purchase any specified number of software
licenses from us, we cannot be sure that our more significant
distributors or OEMs will continue to purchase our products at
their historical or current levels.

We rely on our
distributors and OEMs to market and distribute our products and
if we fail to maintain and expand these sales channels, our
ability to increase our revenues could be harmed.

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 and OEMs are also generally entitled to
terminate their relationship with us at any time. Thus, although
certain aspects of some of these relationships are contractual
in nature, many important aspects of these relationships depend
upon the continued cooperation of each party with us. Divergence
in strategy, change in forms, competitive product offerings or
contract defaults by any of these companies may interfere with
our ability to develop, market, sell or support our products,
which in turn could harm our business. In addition, one or more
of these companies may use the information they gain from their
relationship with us to develop or market competing products.

We have a
strategic relationship with Microsoft Corporation, and if we are
no longer able to sell our products bundled with
Microsofts, our revenues and financial condition would be
harmed.

We have a strategic relationship with Microsoft
that enables us to bundle our products with Microsofts,
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 may be
impacted in the long term.

We will not be
able to maintain our sales growth if we do not attract and
motivate qualified sales and marketing personnel.

We have made significant expenditures in recent
years to expand our sales force and marketing staff. Our future
success will depend in part upon the productivity of our sales
force and marketing staff. 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



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sure that our recent and other planned expenses
will generate enough additional revenues to exceed these costs.


We may have
difficulties providing and managing the increased technical
stability, performance and support requirements of an evolving
market, which could cause a decline in our revenues and an
increase in our expenses.

We are increasingly focusing our selling efforts
on larger, enterprise-wide deployments of our products. Many of
these deployments are on a Unix platform, and require greater
technical stability, performance and support than we have
typically had to provide in the past. We may have difficulty
providing and managing these increased technical requirements.
Any such difficulty could cause us to lose existing customers,
limit us to smaller deployments and cause us to expand our
research and development and technical support costs which could
cause a decline in our revenues and an increase in our expenses.

Risks Related to Our Industry and
Competition

If the market in
which we sell our business intelligence software does not grow
as we anticipate, our revenues will not grow.

If the market for our business intelligence
software does not grow as quickly or become as large as we
anticipate, our revenues will not grow. Our market is still
emerging, and our success depends upon its growth. Our potential
customers may:



| |   |                                                                     
| | - | --------------------------------------------------------------------
| |  | not understand or see the benefits of using our
    products;       
|
| |  | not achieve favorable results using our products;                   
|
| |  | experience technical difficulty in implementing
    our products; or
|
| |  | use alternative methods to solve the same
    business problems.    

If our products
are not compatible with various operating systems, we may lose
revenues.

Our products are used in combination with various
operating systems. Our future success depends on our ability to
continue to support popular operating systems and databases. Our
applications run primarily on the Microsoft operating systems.
Therefore, our ability to increase sales currently depends on
the continued acceptance of Microsofts operating system
products. In May 2002, we made Crystal Enterprise 8.5 generally
available, which runs on both UNIX and Microsoft platforms.
Although we intend to continue to invest substantial resources
to develop a complete UNIX product line, we cannot be certain
that we will be able to introduce other product lines on a
timely or cost-effective basis or at all or that these UNIX
products will be accepted by our customers. If we are unable to
develop and market, on a timely and cost-effective basis,
product enhancements or new products that respond to changes in
these currently popular operating systems and databases, our
sales will decrease and our results of operations will be harmed.

If our present
and potential strategic partners begin selling business
intelligence products, our operating results may
suffer.

We face indirect competition from present and
potential strategic partners that could decide to develop
business intelligence products. If Microsoft or our other
strategic partners were to develop and market business
intelligence products, it would have a material adverse effect
on our business, results of operations and financial condition.
If we fail to compete successfully against these new market
entrants, our business, operating results and financial
condition may be materially adversely affected.



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Our revenue
could be reduced if current or future competitors make
acquisitions in order make their products more attractive to our
mutual customer base.

We expect additional competition from other
established and/or emerging companies as a result of future
software industry consolidations. Current or future competitors
may make strategic acquisitions or establish strategic
partnerships, increasing the ability of their products to
address the needs of our customers. Our competitors may also
establish or strengthen cooperative relationships with our
current or future distributors or other parties with whom we
have relationships, thereby limiting our ability to sell through
these channels and reducing promotion of our products.

New product
introductions and pricing strategies by our competitors could
adversely affect our ability to license our products and could
result in pressure to price our licenses in a manner that
reduces our margins.

We compete principally with vendors of:



| |   |                                                              
| | - | -------------------------------------------------------------
| |  | integrated reporting, analysis and delivery
    software; and
|
| |  | ad hoc analysis software.                                    

We expect that our competitors will offer new and
existing products at lower prices, if necessary, to gain or
retain market share and customers. Our competitors may announce
new products services, or enhancements that better meet the
needs of customer requirements or changing industry standards.
We have experienced and expect to continue to experience intense
competition from a number of domestic and foreign companies.
Increased competition can be expected to cause price reductions
and reduce gross margins and loss of market share, any of which
could have a material adverse effect on our business, operating
results or financial condition.

Because some of
our current competitors have been in business longer than us and
have pre-existing relationships with our potential customers, we
might not be able to achieve sufficient market penetration to
sustain profitability or gain additional market share.

Rapid technological advances, changing customer
requirements and frequent new product and service introductions
and enhancements and evolving industry needs characterize the
market for business intelligence software and services. Some of
our competitors have been in business longer than we have and
have significantly greater financial, technical, sales and
marketing resources and greater name recognition than we do.
These competitors may be able to respond more quickly to new or
emerging technologies and changes in customer requirements, or
to devote greater resources to the development, promotion, sale
and support of their products than we are able to do. In
addition, some of our competitors may be more successful than we
are in attracting and retaining customers. This competition
could harm our ability to sell products and services, which may
lead to lower prices for our products, reduced gross margins and
reduced revenues.

Technological
advances and evolving industry standards could adversely impact
our future product sales.

The markets for our products are characterized by
rapidly changing technology, changing customer needs, evolving
industry standards and frequent new product introductions and
enhancements. 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. We cannot assure you 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, new industry standards, changed
customer requirements or competitive products. Additionally,
even if we are able to generate new products and product
enhancements in a timely and cost-effective manner, we cannot
assure you that our new products and product enhancements will
achieve market acceptance.



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Due to the
length of our product development cycle, if we fail to rapidly
react to market forces, we may be unable to develop new products
or improve our existing products to meet the new market
demands.

Business intelligence software is inherently
complex, and it can take a long time to develop and test major
new products and product enhancements. In addition, customers
may delay purchasing decisions because they anticipate that new
or enhanced versions of our products will soon become available.
Our future success will depend on our ability to design,
develop, test and support new software products and enhancements
on a timely and cost-effective basis. In particular, we cannot
assure you that we have developed the appropriate products to
respond effectively to the growing market interest in web-based
software, or if so, whether we can continue to bring those
products to market in a timely and cost-effective basis and
distribute those products in the face of competition from
similar products developed by existing or new competitors. We
cannot assure you that market interest in web-based software
will continue at the same rate, or that alternative methods of
deploying software will not become more popular. If we are
unable to identify a shift in the market demand quickly enough,
we may not be able to develop products to meet those new
demands, or bring them to market in a timely way. Such failure
to respond to changing market conditions could materially
adversely affect our business, operating results or financial
condition.

Risks Related to Our Intellectual
Property

If we fail to
protect our intellectual property rights, our end customers or
potential competitors might be able to use our technologies to
develop their own solutions, which could weaken our competitive
position or reduce our revenues.

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.                                   

These 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.

We have invested
substantial resources in developing our products and our brand,
and our operating results would suffer if we were subject to a
protracted infringement claim or one with a significant damage
award.

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



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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.

The inability to
obtain third-party licenses required to manufacture or develop
our products could require us to obtain substitute technology of
inferior quality or performance standards or at a greater cost,
which could harm our business, financial condition and results
of operations.

We occasionally license certain technologies from
third parties to be used in our products, generally on a
non-exclusive basis. The termination of these 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.

Undetected
product errors or defects could result in loss of revenues,
delayed market acceptance and claims against us.

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 U.S.
federal, state or foreign laws or ordinances or



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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.


Government
regulations, particularly regarding the import and export of
products, could negatively affect our revenues.

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 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, e-business 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.

Our success depends on increased use of the
Internet for e-commerce 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 export, 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.

Other Risks Related to Our Business

We derive a
substantial portion of our revenues from customers outside of
the United States, and our failure to address the difficulties
associated with marketing, selling and supporting our products
outside the United States, in addition to the attendant risks of
operating internationally, could cause our sales to
decline.

We have significant international operations
including development facilities, sales personnel and customer
support operations. For example, we derived 32% in fiscal 2002
and fiscal 2001 of our total revenues from sales outside of the
United States. As part of our business strategy, we plan to
continue to expand into additional international markets. Our
international operations are subject to certain inherent risks
including:



| |   |                                                        
| | - | -------------------------------------------------------
| |  | fluctuations in currency exchange rates;               
|
| |  | import and export restrictions, as well as
    tariffs;



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| |   |                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------
| |  | technical difficulties associated with product
    localization;                                                                              
|
| |  | lack of acceptance of localized products;                                                                                                     
|
| |  | longer payment cycles for sales in certain
    foreign countries;                                                                             
|
| |  | difficulties in staffing and managing
    international operations;                                                                           
|
| |  | higher operating costs;                                                                                                                       
|
| |  | 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;                                                                                
|
| |  | exposure to different legal standards or risk; 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.

The loss of key
personnel or any inability to attract and retain additional
personnel could affect our ability to successfully grow our
business.

Our future performance depends to a significant
degree upon the continued service of our key members of
management, as well as 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. We may experience vacancies in key roles from
time to time that may impact our future performance. Replacement
of any officer or key employee is subject to the inherent risk
of integration. The loss of one or more of our key personnel may
have a material adverse effect on our business, operating
results and financial condition.

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.

We are in the
process of adopting an enterprise resource planning system,
which may result in a short-term negative impact on our
operating expenses and capital expenditures, particularly if the
implementation takes longer than we expect.

In May 2002, we began to implement a global
enterprise resource planning system. We anticipate that the
implementation may not be completed until the end of fiscal
2003. We anticipate that the system will increase our internal
operational and financial efficiencies and increase information
analysis. However, we expect that the implementation will be a
complex and labor-intensive process that will require us to
invest a



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substantial amount of time, money and resources.
Because the enterprise resource planning software will be
configured for our operations, we expect that we may have
difficulties with the configuration that will need to be
resolved in an expeditious manner. We believe that the failure
to implement this system in a timely fashion could have a
material impact on our operating expenses and internal data
gathering and analysis. The most likely negative effects we may
experience in connection with the implementation of this system
would be:




| |   |                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | overtime work of our employees and the temporary
    use of outside resources may be required to resolve any software
    configuration issues and/or to process transactions manually
    until necessary issues are resolved;
|
| |  | disruption to our operations if the transition to
    the new enterprise resource planning system is not effected
    smoothly or if this system does not perform as expected; and                                             
|
| |  | increased demands on the time of our employees to
    resolve software configuration issues unique to our own
    applications.                                                                                                

Future changes
in accounting standards could cause adverse unexpected revenue
fluctuations or impact on our results of operations.

Future changes in accounting standards including
those affecting recognition of revenues or accounting for stock
options, could require us to change our accounting policies. If
a change in accounting standards caused us to defer revenues
recognized in current periods to subsequent periods, accelerate
recognition of deferred revenues to current periods or incur
expenses related to the grant of stock options to employees, we
may experience charges that negatively impact our operating
results.

If we acquire
any companies or technologies in the future, they could prove
difficult to integrate, disruptive to our business, dilute
stockholder value and/or adversely affect our operating
results.

We intend to expand through internal growth, as
well as to pursue strategic acquisitions, as part of our
business strategy. We may not be able to identify suitable
candidates for acquisition or investment strategy. If we are
able to identify suitable candidates, we may not be able to make
such acquisitions or investments on commercially acceptable
terms. However, if we were to complete an acquisition, the
acquisition could involve numerous risks including:



| |   |                                                                                    
| | - | -----------------------------------------------------------------------------------
| |  | difficulty integrating the operations and
    products of the acquired business;   
|
| |  | potential disruption of our ongoing business and
    the distraction of management;
|
| |  | unanticipated expenses related to technology
    integration;                      
|
| |  | risk of entering a market where we have limited
    or no prior experience; and    
|
| |  | the potential loss of key employees or customers
    of the acquired company.      

If we make acquisitions in the future,
acquisition related accounting charges may impact our balance
sheet and operating results. We may not be successful in
addressing these risks or any other problems encountered in
connection with such acquisitions.

There is no
established trading market for our common stock, and there may
never be any trading market 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 may never register
our common stock for sale to the public or apply for quotation
of our shares on any exchange, over-the-counter market or
quotation system. If no such registration occurs, 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 a
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.



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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.

Risks Related to our Relationship with New SAC
and Seagate Technology

As a result of
the sale of Seagate Technology and our former parent, Seagate
Software Holdings, to VERITAS, we may face indemnity claims and
if we are compelled to pay any indemnity claims, our business
may be significantly harmed.

In November 2000, an investor group purchased the
operating businesses of Seagate Technology, our former indirect
parent, and in connection with that transaction Seagate
Technology and our former direct parent, Seagate Software
Holdings were sold to VERITAS. In a concurrent transaction,
Seagate Technology sold all of its operating assets (including
our company) to New SAC, a company controlled by a group of
investors including Silver Lake Partners, Texas Pacific Group
and some of the former officers of Seagate Technology. We and
New SAC 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
liability for actions, events or circumstances arising or
occurring both before and after the sale of Seagate Technology
and Seagate Software Holdings to VERITAS. Some areas of
potential liability include:



| |   |                                                                                          
| | - | -----------------------------------------------------------------------------------------
| |  | tax liabilities;                                                                         
|
| |  | obligations under federal, state and foreign
    pension and retirement benefit laws; and
|
| |  | existing and future litigation.                                                          

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

Because New SAC
controls our Board of Directors, your ability to influence
corporate matters will be greatly limited.

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 80% of our common stock on a fully diluted
basis and five of the seven members of our board of directors
were appointed by or are officers of New SAC. Through its
influence on our board of directors and as a majority
stockholder, New SAC has the ability to change the direction of
our business, our operating budget, possible acquisitions or
sale of our company.

Risks of Litigation

From time to
time, we have to defend lawsuits and may have to pay damages in
connection with alleged failures of our products or services,
or, in the context of patent litigations, we may lose
significant intellectual property rights.

In November 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 Decisions, Inc. The original pleading
alleged a breach of an oral agreement and infringement of a
Vedatech U.K. copyright in one of our products and sought
monetary and injunctive relief. In August 2000, Vedatech
obtained permission to amend its action to include claims for
unjust enrichment, unlawful interference and quantum meruit. In
May 2001, Vedatech sought to enjoin Crystal Decisions (UK)
Limited from infringing the U.K. copyright and sought forfeiture
to Vedatech of all infringing software copies. Of the relief
sought, only a claim for JPY 26,624,181 (approximately U.S.
$240,000) for unpaid invoices initially was settled. The
liability phase of the trial was completed in March 2002, and we
prevailed on all claims except for the quantum meruit. The court
ordered the parties to mediate that quantum of that claim and,
in August 2002, we



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came to a mediated settlement with Vedatech. The
mediated settlement is not material to our operations and
contains no continuing obligations. On September 24, 2002,
however, we received documents indicating Vedatech is seeking to
set aside the settlement.


We are subject to 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.



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Item 7A.     Quantitative
and Qualitative Disclosures About Market Risk

Interest Rate
Risk

Our exposure to market rate risk for changes in
interest rates relates to our cash and cash equivalents and to
our revolving loan agreement as described in
Item 7  Managements Discussion and
Analysis of Financial Condition and Results of
Operations  Liquidity and Capital Resources. At
June 28, 2002, $66.6 million of the $71.5 million
balance of our cash and cash equivalents was held in U.S. dollar
denominated bank deposits and short-term money market
investments. The remainder of our cash and cash equivalents was
denominated in the local currencies of our foreign operations.

Our interest income and expense will fluctuate
depending on the general level of interest rates in the U.S. and
our average cash and cash equivalents. Our interest income and
expense fluctuated based on our net outstanding loan balance
receivable from or payable to Seagate Technology LLC, LIBOR and
Seagate Technology LLCs in-house portfolio rate during
fiscal 2002, fiscal 2001 and fiscal 2000. The principal portion
of our cash and cash equivalents are not subject to interest
rate risk; however, declines in interest rates over time will
reduce our interest income. For fiscal 2002 and fiscal 2001, a
hypothetical 100-basis point move in interest rates would have
resulted in approximately a 3% and 2% variance, respectively, in
our net income (loss).

Equity Price
Risk

We do not have any investments in equity or debt
securities traded in the public markets, nor do we currently use
derivative financial instruments. Therefore, we do not currently
have any direct equity price risk.

Foreign Currency
Risk

We conduct business on a global basis in
international currencies. As such, fluctuations in foreign
currency exchange rates relative to the U.S. dollar may have an
adverse or beneficial impact on our financial condition and
results of operations. The majority of our sales are denominated
in U.S. dollars, the currency in which we report our financial
statements. During fiscal 2002, 2001 and 2000, we derived 32%,
32% and 34% of our total revenues, respectively, from sales
outside the U.S. These revenues are largely denominated in local
currencies. To date, the foreign exchange gains and losses on
transactions reported by our foreign subsidiaries have not been
significant. 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 applicable local currency.

We are also exposed to foreign exchange rate
fluctuations as the financial results of our foreign
subsidiaries are translated into U.S. dollars on consolidation.
As exchange rates vary, these results, when translated, may vary
from expectations and adversely or beneficially impact overall
expected profitability. Assets and liabilities of the majority
of our subsidiaries are translated into U.S. dollars at exchange
rates in effect as of the applicable balance sheet date, and any
resulting translation adjustments are included as an adjustment
to stockholders equity, within comprehensive income
(loss). While the majority of our foreign operations fund their
operations from local denominated revenues, the conversion of
U.S. dollars to other currencies such as Canadian dollars and
British pounds may result in foreign exchange gains and losses.

We incur a large portion of our expenses in
Canadian dollars and we may incur foreign exchanges gains or
losses, which are recorded in our statement of operations, as
the functional currency of our Canadian subsidiary is the U.S.
dollar. As such, we may experience significant foreign exchange
gains or losses as the result of timing differences between
expenses being incurred and paid. During fiscal 2002, the
Canadian dollar weakened relative to the U.S. dollar, which
contributed to a net foreign exchange loss on our statement of
operations. In addition, we may be subject to increased U.S.
dollar costs as the result of a strengthening Canadian dollar.



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For fiscal 2002, a hypothetical combined
variation of 10% in the exchange rates of our main currencies in
which we conduct business would have generated a combined 2.5%
variation in our revenues, offset by a 2.1% combined variation
in our expenses. We cannot predict the effect of exchange rate
fluctuations upon our future operating results. To date, we have
not engaged in hedging the risks associated with foreign
exchange exposure. Although we may do so in the future, we
cannot be sure that any hedging techniques we may implement will
be successful of that our business, results of operations,
financial condition and cash flows will not be materially
adversely affected by exchange rate fluctuations



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Item 8.     Financial
Statements

The Consolidated and Combined Financial
Statements and related Notes and the report of the independent
auditors, are set forth on pages indicated in Item 15.



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

None.



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PART III




Item 10.     Directors
and Executive Officers of the Registrant

Our directors and executive officers and certain
information about them as of August 30, 2002 are as follows:

|                   |  |     |    |          |  |                                                                               |  |  |      | 
|------------------ |  | --- | -- | -------- |  | ----------------------------------------------------------------------------- |  |  | ---- | 
|                   |  |     |    |          |  | Director or                                                                  
|                   |  |     |    |          |  | Executive Officer                                                            
|Name               |  | Age |    | Position |  | Since                                                                        
|                   |  |     |    |          |  |                                                                              
|Gregory B. Kerfoot |  |     | 42 |          |  | President, Chief Executive Officer and Chairman
    of the Board of Directors |  |  | 1999 | 
|William Gibson     |  |     | 53 |          |  | Chief Operating Officer                                                       |  |  | 2000 | 
|Eric Patel         |  |     | 45 |          |  | Chief Financial Officer                                                       |  |  | 1999 | 
|Anthony L. Wind    |  |     | 40 |          |  | Chief Technical Officer                                                       |  |  | 2002 | 
|Andrew L. Handford |  |     | 36 |          |  | Vice Presidents, Products                                                     |  |  | 2002 | 
|Stephen J. Luczo   |  |     | 45 |          |  | Director                                                                      |  |  | 1999 | 
|Donald L. Waite    |  |     | 69 |          |  | Director                                                                      |  |  | 1999 | 
|David J. Roux      |  |     | 45 |          |  | Director                                                                      |  |  | 2001 | 
|John W. Thompson   |  |     | 53 |          |  | Director                                                                      |  |  | 2001 | 
|Justin T. Chang    |  |     | 35 |          |  | Director                                                                      |  |  | 2001 | 
|Fred D. Anderson   |  |     | 58 |          |  | Director                                                                      |  |  | 2002 | 

Mr. Kerfoot has served as our Chief
Executive Officer since August 2000 and as President and a
Director since August 1999. Mr. Kerfoot was appointed as
our Chairman of the Board of Directors in July 2002.
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
Crystal business. 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 also 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.

Mr. Luczo served as our Chairman of the
Board of Directors from August 1999 to July 2002 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. Mr. Luczo also serves as a member of
the board of directors of VERITAS Software Corporation, as well
as two privately held companies. Mr. Luczo is a member of
the VERITAS compensation committee, and participates as an ex
officio member of the Seagate Technology Holdings compensation
committee.

Mr. Wind has served as our Chief Technical
Officer since July 2001. Mr. Wind was the first designer
and developer of Crystal Reports, spearheading the expansion of
the companys integrated product line. From



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December 1999 to July 2001, Mr. Wind served
as our Vice President of Product Management and
Research & Development. From February 1998 to December
1999, Mr. Wind served as our Vice President of Product
Management. Mr. Wind served as our Director of Research
& Development from September 1994 to February of 1998.


Mr. Handford has served as Vice President,
Products, since October 2001. In this role, he is responsible
for the overall product strategy and product delivery process,
including leadership of R&D and Product Management
organizations. Since 1995, he has helped build and develop
Crystal Decisions and its product family through expanding roles
in Strategic Alliances, Product Management and Development. From
1999 to 2001, Mr. Handford served as Director of Product
Management. From 1997 to 1999, Mr. Handford held a series
of increasingly senior product management roles. From July 1995
to May 1997, Mr. Handford, as Strategic Alliances Manager,
developed a range of key partnerships for Crystal Decisions.

Mr. Waite has served as a member of our
board of directors since August 1999. Since 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 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. Mr. Roux is a member of the boards
of Gartner, Inc., VERITAS Software Corporation, Seagate
Technology Holdings, New SAC, and a number of other privately
held companies.

Mr. Thompson has served as a member of our
board of directors since February 2001. Mr. Thompson has
served as Chairman of the Board of Directors and Chief Executive
Officer of Symantec Corporation since April 1999. He also served
as Symantec Corporations President from April 1999 to
January 2002. Before joining Symantec, Mr. Thompson held
various executive and management positions with IBM Corporation
since 1971. Mr. Thompson is a member of the boards of
NiSource, Inc., United Parcel Service, Inc., New SAC and a
private company. Mr. Thompson serves as Chairman of the
compensation committee of Seagate Technology Holdings.

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.

Mr. Anderson was elected to serve on our
board of directors in August 2002. Mr. Anderson is
Executive Vice President and Chief Financial Officer of Apple
Computer, Inc., which he joined in April 1996. In his capacity
as CFO, Anderson oversees the controller, treasury, investor
relations, tax, information systems, internal audit, facilities,
corporate development and human resources functions.
Mr. Anderson serves as a director of 3Com Corporation and
on the Financial Accounting Standards board.

Board
Composition

Our board of directors currently consists of
seven members, each of whom is currently subject to election at
our annual meeting of stockholders. Our board of directors is
able to change the number of directors without the approval of
our stockholders.



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Section 16(a)
Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act
of 1934, as amended, 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 (SEC). Such persons are required
by SEC regulation to provide copies to the Company of all
Section 16(a) forms they file. Based solely on our review
of the copies of such forms and written representation from the
executive officers and directors, we believe that during fiscal
2002, our officers, directors and greater than 10% beneficial
owners complied with all applicable Section 16(a) filing
requirements.




Item 11.     Executive
Compensation

Summary
Compensation Table

The following table sets forth all compensation
awarded, earned or paid for services rendered in all capacities
to Crystal Decisions during each of the fiscal years ended 2002,
2001 and 2000, to (i) our Chief Executive Officer and
President, and (ii) our four next most highly compensated
executive officers (collectively, the Named Executive
Officers). We do not grant stock appreciation rights and
have no other long-term compensation benefits except for stock
options.

|                              |  |        |      |                     |  |              |         |                    |  |              |         |     |  |  |        |     |  |  |           | 
|----------------------------- |  | ------ | ---- | ------------------- |  | ------------ | ------- | ------------------ |  | ------------ | ------- | --- |  |  | ------ | --- |  |  | --------- | 
|                              |  |        |      |                     |  |              |         |                    |  | Long-term   
|                              |  |        |      |                     |  |              |         |                    |  | compensation
|                              |  |        |      |                     |  | Awards      
|                              |  |        |      | Annual compensation |  |             
|                              |  |        |      |                     |  | Securities  
|Name and                      |  | Fiscal |      |                     |  | Annual other |         | underlying options
|Principal Position            |  | Year   |      | Salary($)(1)        |  | Bonus($)(2)  |         | compensation($)    |  | granted (3) 
|                              |  |        |      |                     |  |              |         |                    |  |             
|Gregory Kerfoot               |  |        | 2002 |                     |  |              | 262,500 |                    |  |              | 500,000 |     |  |  |       |     |  |  | 500,000   | 
|President and Chief           |  |        | 2001 |                     |  |              | 235,386 |                    |  |              | 231,800 | (5) |  |  |       |     |  |  |          | 
|Executive Officer (4)         |  |        | 2000 |                     |  |              | 238,090 |                    |  |              |        |     |  |  |       |     |  |  | 3,000,000 | 
|William Gibson                |  |        | 2002 |                     |  |              | 245,223 |                    |  |              | 97,580  |     |  |  |       |     |  |  | 200,000   | 
|Chief Operating Officer (6)   |  |        | 2001 |                     |  |              | 218,259 |                    |  |              | 120,620 |     |  |  |       |     |  |  | 400,000   | 
|                              |  |        | 2000 |                     |  |              |        |                    |  |              |        |     |  |  |       |     |  |  |          | 
|Eric Patel                    |  |        | 2002 |                     |  |              | 189,172 |                    |  |              | 97,853  |     |  |  |       |     |  |  | 100,000   | 
|Chief Financial Officer (7)   |  |        | 2001 |                     |  |              | 188,024 |                    |  |              | 102,976 |     |  |  | 82,690 | (8) |  |  | 100,000   | 
|                              |  |        | 2000 |                     |  |              | 114,430 |                    |  |              | 56,771  |     |  |  |       |     |  |  | 250,000   | 
|Anthony Wind                  |  |        | 2002 |                     |  |              | 180,467 |                    |  |              | 52,548  |     |  |  |       |     |  |  | 57,000    | 
|Chief Technical Officer (9)   |  |        | 2001 |                     |  |              | 167,001 |                    |  |              | 55,050  |     |  |  |       |     |  |  | 50,000    | 
|                              |  |        | 2000 |                     |  |              | 148,855 |                    |  |              | 22,804  |     |  |  |       |     |  |  | 250,000   | 
|Andrew Handford               |  |        | 2002 |                     |  |              | 131,900 |                    |  |              | 49,013  |     |  |  |       |     |  |  | 28,125    | 
|Vice President, Products (10) |  |        | 2001 |                     |  |              | 115,787 |                    |  |              | 22,144  |     |  |  |       |     |  |  | 27,000    | 
|                              |  |        | 2000 |                     |  |              | 87,411  |                    |  |              | 9,553   |     |  |  |       |     |  |  | 100,000   | 



|    |                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Salary is base salary earned in the year.                                                                                                                                                                                                                                                                                                                                                                
|   
|(2) | Bonuses are reported in the year earned, even if
    actually paid in a subsequent year. All bonuses, except for
    bonuses paid to Mr. Kerfoot, were based on the attainment
    of specific sales and operational objectives and were paid in
    Canadian dollars. Bonuses paid to Mr. Kerfoot were based on
    the recommendation of the Compensation Committee, and were paid
    in U.S. dollars.
|   
|(3) | The stock options listed in the table represent
    options to purchase our common stock. See Executive
    Compensation  Option Grants in Fiscal 2002 for
    additional information regarding options to purchase our common
    stock granted during fiscal 2002.                                                                                                                                  
|   
|(4) | Mr. Kerfoot was appointed as our Chief
    Executive Officer in August 2000 and our President and Chief
    Operating Officer in August 1999.                                                                                                                                                                                                                                                            
|   
|(5) | Mr. Kerfoots bonus award was donated
    to the Crystal Decisions Foundation, a non-profit charitable
    organization.                                                                                                                                                                                                                                                                                 



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|    |                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(6) | Mr. Gibsons compensation for fiscal
    2001 includes amounts since joining us in August 2000 as our
    Chief Operating Officer.                                                                                                                                         
|   
|(7) | Mr. Patels compensation for fiscal
    2000 includes amounts since joining us in November 1999 as our
    Chief Financial Officer.                                                                                                                                        
|   
|(8) | For fiscal 2001, included in other annual
    compensation is approximately $76,900 related to an one-time net
    tax equalization amount that was paid by the company on
    Mr. Patels behalf after his repayment of certain
    advances for Canadian tax liabilities.
|   
|(9) | Mr. Wind was appointed as our Chief
    Technical Officer in fiscal 2002.                                                                                                                                                                                                  



|     |                                                                               
|---- | ------------------------------------------------------------------------------
|(10) | Mr. Handford was appointed as our Vice
    President, Products in fiscal 2002.

All named executives are employed in Canada and
paid in Canadian dollars. The amounts shown in the above table
are expressed in U.S. dollars converted from Canadian dollars
using the weighted average annual exchange rate for the relevant
fiscal year ended.



| |                             
| | ----------------------------
| | Option Grants in Fiscal 2002

The following table sets forth further
information regarding individual grants of stock options to each
of our Named Executive Officers during fiscal 2002. All grants
were made pursuant to the 1999 Plan, with an exercise price
equal to the fair market value of our common stock at the date
of grant. All stock options granted to the Named Executive
Officers in fiscal 2002 vest as to 25% of the original grant on
October 22, 2002, and as to  1/48 of the original
grant per month thereafter. The percentage of total options
granted is based on an aggregate of 3,844,618 options granted to
employees including executive officers in fiscal 2002.

|                |  |                   |         |                               |  |             |       |                               |  |          |      |        |  |  |          |  |  |   |           |  |  |   |           | 
|--------------- |  | ----------------- | ------- | ----------------------------- |  | ----------- | ----- | ----------------------------- |  | -------- | ---- | ------ |  |  | -------- |  |  | - | --------- |  |  | - | --------- | 
|                |  |                   |         |                              
|                |  | Individual Grants |         | Potential realizable value at
|                |  |                   |         | assumed annual rates of stock
|                |  | Number of         |         | Percent of total              |  |             |       | price appreciation for option
|                |  | securities        |         | options granted               |  | Exercise of |       |                               |  | term (2)
|                |  | underlying        |         | to employees in               |  | base price  |       | Expiration                    |  |         
|Name            |  | options granted   |         | fiscal year                   |  | ($)/Sh (1)  |       | Date                          |  | 5%($)    |      | 10%($)
|                |  |                   |         |                               |  |             |       |                               |  |          |      |       
|Gregory Kerfoot |  |                   | 500,000 |                               |  |             | 13.01 | %                             |  | $        | 4.25 |        |  |  | 11/13/11 |  |  | $ | 1,336,401 |  |  | $ | 3,386,703 | 
|William Gibson  |  |                   | 200,000 |                               |  |             | 5.20  | %                             |  | $        | 4.25 |        |  |  | 11/13/11 |  |  |   | 534,560   |  |  |   | 1,354,681 | 
|Eric Patel      |  |                   | 100,000 |                               |  |             | 2.60  | %                             |  | $        | 4.25 |        |  |  | 11/13/11 |  |  |   | 267,280   |  |  |   | 677,341   | 
|Anthony Wind    |  |                   | 57,000  |                               |  |             | 1.48  | %                             |  | $        | 4.25 |        |  |  | 11/13/11 |  |  |   | 103,890   |  |  |   | 308,920   | 
|Andrew Handford |  |                   | 28,125  |                               |  |             | 0.73  | %                             |  | $        | 4.25 |        |  |  | 11/13/11 |  |  |   | 67,384    |  |  |   | 178,101   | 



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | 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. As there is no public market for our stock, the
    compensation committee determines the fair market value of our
    common stock by considering 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 Seagate
    Software (Cayman) Holdings 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-earning rations and operating margins.
|   
|(2) | The table sets forth the hypothetical gains or
    option spreads that would exist for the option at
    the end of their respective ten-year terms based on assumed
    annualized rates of compound stock price appreciation of 5% and
    10% from the dates the options were granted until the expiration
    of the ten-year option term. The 5% and 10% assumed rates are
    promulgated by the SEC and do not represent our estimate or
    projection of future common stock prices or stock price growth.                                                                                                                                                                                                                                                                                                                                                                                                                                                                

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

The following table sets forth information
regarding stock option exercises by each of executive officers
named in the Summary Compensation Table above in fiscal 2002. In
addition, the table sets forth the number of shares covered by
stock options as of June 28, 2002, and the value of
unexercised in-the-money stock



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options, which is based on our fair market value
of common stock on June 28, 2002 of $6.00 per share, minus
the exercise price, multiplied by the number of shares issuable
on exercise of the option. These values have not been, and may
never be, realized.


|                |  |             |         |          |  |                          |         |                      |  |             |           |               |  |  |           |  |  |   |           |  |  |   |           | 
|--------------- |  | ----------- | ------- | -------- |  | ------------------------ | ------- | -------------------- |  | ----------- | --------- | ------------- |  |  | --------- |  |  | - | --------- |  |  | - | --------- | 
|                |  |             |         |          |  |                          |         |                     
|                |  |             |         |          |  | Number of securities     |         | Value of unexercised
|                |  | Number of   |         |          |  | underlying unexercised   |         | in-the-money options
|                |  | shares      |         | Value    |  | options at June 28, 2002 |         | at June 28, 2002 (2)
|                |  | acquired on |         | Received |  |                          |         |                     
|Name            |  | exercise    |         | $ (1)    |  | Exercisable              |         | Unexercisable        |  | Exercisable |           | Unexercisable
|                |  |             |         |          |  |                          |         |                      |  |             |           |              
|Gregory Kerfoot |  |             | 200,000 |          |  | $                        | 200,000 |                      |  |             | 1,799,999 |               |  |  | 1,500,001 |  |  | $ | 3,599,998 |  |  | $ | 2,875,002 | 
|William Gibson  |  |             |        |          |  |                          |        |                      |  |             | 183,333   |               |  |  | 416,667   |  |  |   | 366,666   |  |  |   | 783,334   | 
|Eric Patel      |  |             |        |          |  |                          |        |                      |  |             | 203,124   |               |  |  | 246,876   |  |  |   | 406,248   |  |  |   | 468,752   | 
|Anthony Wind    |  |             |        |          |  |                          |        |                      |  |             | 187,499   |               |  |  | 169,501   |  |  |   | 374,998   |  |  |   | 324,752   | 
|Andrew Handford |  |             |        |          |  |                          |        |                      |  |             | 77,916    |               |  |  | 77,209    |  |  |   | 155,832   |  |  |   | 147,387   | 



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Value realized represents the difference between
    the fair market value of the shares on the date of exercise less
    the exercise price paid.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(2) | Our Compensation Committee of our Board of
    Directors determines the fair market value of our common stock.
    The Compensation Committee 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
    Seagate Software (Cayman) Holdings 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.

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 non-employee 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 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.



55




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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 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 28, 2002, June 29, 2001 and
June 30, 2000, respectively, we had issued 863,146, 396,915
and 1,050 shares of our common stock upon the exercise of
options under the 1999 Plan. In addition, there were 13,391,242,
10,680,856 and 8,626,879 options to purchase shares of our
common stock outstanding as of June 28, 2002, 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.

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 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 28, 2002, June 29, 2001 and
June 30, 2000, 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 remained outstanding at
June 28, 2002 and June 29, 2001, and 161,450 remained
outstanding at June 30, 2000.



| |                                                    
| | ---------------------------------------------------
| | 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 and



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57,245 shares of Seagate Technology common
stock in fiscal 2001 and 2000, respectively. We did not make any
matching payments for such employee stock purchases. 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.



| |                      
| | ---------------------
| | Director Compensation

We do not currently pay our non-employee
directors any cash compensation for their service as members of
our board of directors or any of our committees or
sub-committees, except for reimbursement for reasonable expenses
incurred in connection with attendance at board and committee
meetings. Under the 1999 Plan, non-employee directors are
eligible to receive stock option grants at the discretion of the
board of directors. There were no grants of options to purchase
shares of our common stock during fiscal 2002. During fiscal
2001, Messrs. Chang, Roux and Thompson 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.



| |           
| | ----------
| | Committees

We have established an audit committee and a
compensation committee. Messrs. Anderson, Chang, Thompson
and Waite are members of the audit committee.
Messrs. Luczo, Roux and Thompson are members of the
compensation committee. The audit committee reviews our internal
accounting procedures, and consults with and reviews the
services provided by our independent auditors. The compensation
committee reviews and recommends to the board of directors the
compensation and benefits for all of our officers, and
establishes and reviews general policies relating to
compensation and benefits of our other employees.



| |                                                                
| | ---------------------------------------------------------------
| | Compensation Committee Interlocks and Insider
    Participation

Our board of directors established its
compensation committee in November 1999. During the fiscal year
ended June 28, 2002, our Compensation Committee consisted
of Messrs. Luczo, Roux and Thompson. Mr. Luczo was
formerly our Chief Executive Officer from August 1999 to August
2000 and his relationship is disclosed as part of
Item 13  Certain Relationships and Related
Transactions.



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Item 12.     Security
Ownership of Certain Beneficial Owners and Management

The following table sets forth certain
information, as of August 30, 2002, with respect to the
beneficial ownership of our common stock by (i) each person
who is known to us to beneficially own more than 5% of our
outstanding common stock, (ii) each of our directors,
(iii) each of our executive officers named in the Summary
Compensation Table in Item 11, and (iv) all current
directors and executive officers as a group.

|                                                                                                   |  |              |            |                 |  |  |      | 
|-------------------------------------------------------------------------------------------------- |  | ------------ | ---------- | --------------- |  |  | ---- | 
|                                                                                                   |  | Shares of    |            |                
|                                                                                                   |  | common stock |            | Percentage of  
|                                                                                                   |  | beneficially |            | common stock   
|Name and Address of Beneficial Owner                                                               |  | owned (1)    |            | outstanding (1)
|                                                                                                   |  |              |            |                
|Seagate Software (Cayman) Holdings                                                                 |  |              | 75,001,000 |                 |  |  | 98.8 | 
|P.O. Box 265GT
        Walker House
        Georgetown
        Grand Cayman
        Cayman Islands |  |              |            |                 |  |  |      | 

|                                                                              |  |  |            |  |  |  |      | 
|----------------------------------------------------------------------------- |  |  | ---------- |  |  |  | ---- | 
|Directors and Executive Officers (2)                                          |  |  |            | 
|                                                                              |  |  |            | 
|Stephen J. Luczo (3)                                                          |  |  | 75,246,833 |  |  |  | 99.0 | 
|Donald L. Waite (4)                                                           |  |  | 75,051,000 |  |  |  | 98.9 | 
|Gregory B. Kerfoot (5)                                                        |  |  | 2,374,998  |  |  |  | 3.0  | 
|David J. Roux (6)                                                             |  |  | 75,021,833 |  |  |  | 98.8 | 
|John W. Thompson (7)                                                          |  |  | 75,021,833 |  |  |  | 98.8 | 
|Justin T. Chang (8)                                                           |  |  | 20,833     |  |  |  | *    | 
|William Gibson (9)                                                            |  |  | 266,666    |  |  |  | *    | 
|Eric Patel (10)                                                               |  |  | 257,289    |  |  |  | *    | 
|Anthony L. Wind (11)                                                          |  |  | 226,748    |  |  |  | *    | 
|Andrew L. Handford (12)                                                       |  |  | 95,529     |  |  |  | *    | 
|Fred D. Anderson                                                              |  |  |           |  |  |  | *    | 
|All current directors and executive officers as a
    group (11 persons) (13) |  |  | 78,580,562 |  |  |  | 99.4 | 



|  |             
|- | ------------
|* | Less than 1%



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Applicable percentage ownership is based on
    75,908,555 shares of our common stock outstanding as of
    August 30, 2002 together with applicable options for each
    stockholder exercisable on August 30, 2002 or within
    60 days thereafter. We have determined beneficial ownership
    in accordance with the rules of the SEC based on factors,
    including voting and investment power, with respect to shares
    subject to applicable community property laws. Shares of common
    stock subject to options exercisable on or before
    October 29, 2002 (within 60 days of August 30,
    2002) are deemed to be outstanding and beneficially owned for
    purposes of computing the percentage ownership of such person
    but are not treated as outstanding for purposes of computing the
    ownership percentage of others.                                                          
|(2) | Unless otherwise indicated, the address of each
    of the individuals named is care of Crystal Decisions, Inc.,
    895 Emerson Street, Palo Alto, California 94301.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(3) | Includes 175,000 shares of common stock that are
    subject to repurchase by Crystal Decisions. Crystal
    Decisions repurchase right lapsed for 43,750 shares
    on October 22, 2000 and thereafter lapses at a rate
    of  1/48 per month of the shares subject to the
    option. At June 28, 2002, Crystal Decisions holds the
    repurchase right on 54,167 of the 175,000 shares subject to
    the option. Also, includes 70,833 shares of common stock
    that may be acquired upon the exercise of stock options
    exercisable on or after October 29, 2002. Includes
    75,001,000 shares of common stock beneficially owned by
    Seagate Software (Cayman) Holdings to which Mr. Luczo may
    be deemed, in his capacity as director of New SAC and Seagate
    Software (Cayman) Holdings, to have shared voting or dispositive
    power. Mr. Luczo disclaims such beneficial ownership.



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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(4) | Includes 50,000 shares of common stock that are
    subject to repurchase by the Crystal Decisions. Crystal
    Decisions repurchase right lapsed for 12,500 shares
    on October 22, 2000 and thereafter lapses at a rate
    of  1/48 per month of the shares subject to the
    option. At June 28, 2002, Crystal Decisions holds the
    repurchase right on 16,667 of the 50,000 shares subject to
    the option. Also, includes 75,001,000 shares of common
    stock beneficially owned by Seagate Software (Cayman) Holdings
    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 200,000 shares of common stock and
    2,174,998 shares of common stock that may be acquired upon
    the exercise of stock options exercisable on or after
    October 29, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(6) | Includes 20,833 shares of common stock that may
    be acquired upon the exercise of stock options exercisable on or
    after October 29, 2002. Includes 75,001,000 shares of
    common stock beneficially owned by Seagate Software (Cayman)
    Holdings 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) | Includes 20,833 shares of common stock that may
    be acquired upon the exercise of stock options exercisable on or
    after October 29, 2002. Includes 75,001,000 shares of
    common stock beneficially owned by Seagate Software (Cayman)
    Holdings 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 20,833 shares of common stock that may
    be acquired upon the exercise of stock options exercisable on or
    after October 29, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(9) | Includes 266,666 shares of common stock that may
    be acquired upon the exercise of stock options exercisable on or
    after October 29, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

|     |                                                                                                                                                  
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Includes 257,289 shares of common stock that may
    be acquired upon the exercise of stock options exercisable on or
    after October 29, 2002.
|(11) | Includes 226,748 shares of common stock that may
    be acquired upon the exercise of stock options exercisable on or
    after October 29, 2002.
|(12) | Includes 95,529 shares of common stock that may
    be acquired upon the exercise of stock options exercisable on or
    after October 29, 2002. 
|(13) | See notes 3 through 12.                                                                                                                          

Equity Compensation Plan Information

We maintain the 1999 Plan and the 2000 Plan,
pursuant to which we may grant equity awards to eligible
persons. The 1999 Plan and the 2000 Plan are described more
fully in Item 11  Executive
Compensation  Incentive Plans.

The following table gives information about
equity awards under the 1999 Plan and the 2000 Plan as of
June 28, 2002:

|                                                               |  |                      |            |                     |  |                          |      |  |  |  |           |    
|-------------------------------------------------------------- |  | -------------------- | ---------- | ------------------- |  | ------------------------ | ---- |  |  |  | --------- | ---
|                                                               |  |                      |            |                     |  | Number of securities    
|                                                               |  |                      |            |                     |  | remaining available     
|                                                               |  |                      |            |                     |  | for future issuance     
|                                                               |  | Number of securities |            |                     |  | under equity            
|                                                               |  | to be issued upon    |            | Weighed-average     |  | compensation plans      
|                                                               |  | exercise of          |            | exercise price of   |  | (excluding securities   
|Plan Category                                                  |  | outstanding options  |            | outstanding options |  | reflected in column (a))
|                                                               |  |                      |            |                     |  |                         
|                                                               |  | (a)                  |            | (b)                 |  | (c)                     
|Equity compensation plans approved by security
    holders (1) |  |                      | 13,497,692 | (2)                 |  | $                        | 4.14 |  |  |  | 8,339,412 | (3)
|Equity compensation plans not approved by
    security holders |  |                      |           |                     |  |                          |     |  |  |  |          |    
|                                                               |  |                      |            |                     |  |                          |      |  |  |  |           |    
|Total                                                          |  |                      | 13,497,692 |                     |  | $                        | 4.14 |  |  |  | 8,339,412 |    
|                                                               |  |                      |            |                     |  |                          |      |  |  |  |           |    



|    |                                                                      
|--- | ---------------------------------------------------------------------
|(1) | These plans consist of: (i) the 1999 Plan
    and (ii) the 2000 Plan.



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|    |                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Of these shares of common stock,
    13,391,242 shares were subject to outstanding options under
    the 1999 Plan and 106,450 shares were subject to
    outstanding options under the 2000 Plan.
|(3) | Of these shares of common stock, 8,245,862 shares
    remain available for future issuance under the 1999 Plan and
    93,550 shares remain available for future issuance under
    the 2000 Plan.






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 Information Management Group business of
Seagate Software Holdings. 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.

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

|                   |  |                  |         |                    |  |  |           | 
|------------------ |  | ---------------- | ------- | ------------------ |  |  | --------- | 
|                   |  | Seagate Software |         | Seagate Technology
|Name               |  | Holdings Shares  |         | Shares Issued     
|                   |  |                  |         |                   
|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 | 

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 and Seagate Technology
LLC

During the three months 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
certain products of its business intelligence software and
receive maintenance and support services related to these
products for one year. 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 2002 and fiscal 2001, respectively, we recognized
approximately $151,000 and $1.5 million of revenues from
the License Agreement. At December 28, 2001, all of the
revenues under the License Agreement had been recognized with no
amounts remaining as deferred revenue. The License Agreement
also provided for consulting services in connection with the
licensed products, for which we recorded approximately $30,000
and $327,000 of consulting revenues (adjusted for the



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application of EITF 01-14) in fiscal 2002
and fiscal 2001, respectively. The maintenance and support
services contract related to the License Agreement was renewed
during the three months ended December 28, 2001. Revenues
from the maintenance and support services contract are being
recognized ratably over the term of the contract, which is one
year. During fiscal 2002, we recognized approximately $282,000
in maintenance and support revenues related to the renewed
maintenance and support contract. As of June 28, 2002 and
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 2002, 2001 and 2000, Seagate
Technology LLC charged us $865,000, $1.2 million and
$658,000, respectively, for various corporate services performed
on our behalf. The amounts paid to Seagate Technology LLC
represented a reasonable estimate of 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.

Additionally, on July 4, 2000, we signed a
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 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 provided for maximum borrowings of up
to $15 million and expired on July 4, 2002 and was not
renewed. The loan balance was receivable or payable upon
termination of the agreement. There was no outstanding
receivable or payable balance under this agreement at
June 28, 2002 or upon its expiration. We had 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 2002 and 2001, respectively, there
were $871,000 and $4.8 million of net repayments under the
revolving loan agreement. In addition during fiscal 2002 and
2001, Seagate Technology LLC repaid $4.3 million and
$31.0 million of the loan receivable under the revolving
loan agreement. 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



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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. Our former Chairman of our Board of
Directors, Stephen J. Luczo, is a member of the board of
directors of VERITAS. The Cross License Agreement provided for
the licensing of certain products between the parties and
imposed restrictions on the parties ability to compete
with each other and to enter into agreements with competitors of
the other party. In fiscal 2002 and fiscal 2001 we recognized no
revenues from VERITAS. In fiscal 2000, we recognized $7,000 of
revenues from VERITAS. We paid no royalties to VERITAS in
connection with the Cross License Agreement in either fiscal
2002, fiscal 2001 or fiscal 2000.

On June 21, 2002, the Cross License
Agreement was terminated and VERITAS Software Global Corporation
and we entered into a Software License and Services Agreement
(the Software License Agreement). Under the Software
License Agreement, VERITAS granted us a perpetual, irrevocable,
non-exclusive, non-transferable worldwide license to use the
license software, solely in support of our internal business
operations. The Software License Agreement provided for the
purchase of annual maintenance and support, which was calculated
as a percentage of the actual list price of the licensed
software. In July 2002, we recorded approximately $622,000 as a
prepaid expense related to the annual maintenance and support
contract, which will be expensed ratably over fiscal 2003.

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.

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.

Other
Transactions

During the last quarter of fiscal 2001, the Board
awarded Mr. Kerfoot, our Chief Executive Officer, a bonus
in the amount of $231,800. The bonus award was donated to the
Crystal Decisions Foundation, a non-profit charitable
organization. In October 2001, in light of personal taxes due on
the bonus payment, the Company loaned Mr. Kerfoot
Cdn. $181,751. Mr. Kerfoot repaid the Company in full
in July 2002. No interest was due on the loan.






Item 14.     Controls
and Procedures


Not applicable.



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PART IV




Item 15.     Exhibits,
Financial Statement Schedules and Reports on
Form 8-K

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

|                                                                                                                                                                                                                                                                                                                                           |  |      |     | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | --- | 
|                                                                                                                                                                                                                                                                                                                                           |  | Page
|                                                                                                                                                                                                                                                                                                                                           |  |     
|1.  Financial Statements                                                                                                                                                                                                                                                                                                                   |  |      | F-1 | 
|2.  Financial Statement Schedule                                                                                                                                                                                                                                                                                                           |  |      |     | 
|The following financial statement schedule
    of Crystal Decisions, Inc. for each of the fiscal years ended
    June 28, 2002, June 29, 2001 and June 30, 2000 is filed as part
    of this Form 10-K and should be read in conjunction with the
    Audited Consolidated and Combined Financial Statements and
    related Notes thereto |  |      |     | 
|Schedule
    II  Valuation and Qualifying Accounts                                                                                                                                                                                                                                                                                        |  |      | S-1 | 
|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                                                                                                                                                                                                                                            |  |      |     | 

|        |           |             |  |                                                                                                                                                                                                                                    
|------- | --------- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |           |            
|Number  |           | Description
|       
|       
|        | 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                                                                                                                                                      
|        | 10.1.3(5) |             |  | 1999 Stock Option Plan  as amended
    August 13, 2001                                                                                                                                                                            
|        | 10.1.4    |             |  | 1999 Stock Option Plan  as amended
    August 13, 2001 (French Employees Only)                                                                                                                                                    
|        | 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(4) |             |  | 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                                                                                                                                                        



63




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##### Table of Contents



|        |            |             |  |                                                                                                                                                                                                              
|------- | ---------- | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |            |            
|Number  |            | Description
|       
|       
|        | 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 Laurelton Investments Ltd., Seagate Software Information
    Management Group (Canada) Ltd. and Seagate Software, Inc.                                
|        | 10.10.1(4) |             |  | Amendment to Lease agreement, dated June 22,
    2000, between Laurelton Investments Ltd., Seagate Software
    Information Management Group (Canada) Ltd. and Seagate Software,
    Inc.                    
|        | 10.10.2    |             |  | Amendment and Restatement to Lease agreement,
    dated February 28, 2002, between Laurelton Investments
    Ltd., and KBK No. 197 Ventures Ltd. and Crystal Decisions,
    Corp. and Crystal Decisions, 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 dated
    September 20, 2000       
|        | 10.15(4)   |             |  | 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 Independent Chartered Accountants                                                                                                                                                                 
|        | 24.1       |             |  | Power of Attorney (see page 65 to this
    Form 10-K)                                                                                                                                                        
|        | 99.1       |             |  | Certification pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002                                                                                                                                  



|    |                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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) | Incorporated by reference to our Annual Report on
    Form 10-K for the fiscal year ended June 29, 2001.                                                       
|   
|(5) | Incorporated by reference to our Quarterly Report
    on Form 10-Q for the period ended September 28, 2001.                                                    

(b) Reports on Form 8-K.

None.

(c) Exhibits.

We hereby file as part of this Form 10-K the
exhibits listed in Item 15(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 15(a)2, as set forth above.



64




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##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the Registrant
has duly caused this annual report on Form 10-K to be
signed on its behalf by the undersigned thereunto duly
authorized in the City of Palo Alto, California, on
September 26, 2002.



| |                        
| | -----------------------
| | CRYSTAL DECISIONS, INC.



| |     |                       
| | --- | ----------------------
| | By: | /s/ GREGORY B. KERFOOT

| |                                                                              
| | -----------------------------------------------------------------------------
| |                                                                              
| | Gregory B. Kerfoot                                                           
| | Chief Executive Officer, President and
    Chairman of the Board of Directors
| | (Principal Executive Officer)                                                



| |     |               
| | --- | --------------
| | By: | /s/ ERIC PATEL

| |                                                 
| | ------------------------------------------------
| |                                                 
| | Eric Patel                                      
| | Chief Financial Officer                         
| | (Principal Financial and Accounting
    Officer)

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each
person whose signature appears below hereby constitutes and
appoints Gregory B. Kerfoot and Eric Patel and each of them
acting individually, as his or her attorney-in-fact, each with
full power of substitution, for him in any and all capacities,
to sign any and all amendments to this Report on Form 10-K,
and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and
Exchange Commission.



65




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##### Table of Contents



Pursuant to the requirements of the Securities
Exchange Act of 1934, this Report on Form 10-K has been
signed on behalf of the Registrant by the following persons and
in the capacities and on the dates indicated:

|                                           |  |                                                                                                                 |  |                   
|------------------------------------------ |  | --------------------------------------------------------------------------------------------------------------- |  | ------------------
|Signature                                  |  | Title                                                                                                           |  | Date              
|                                           |  |                                                                                                                 |  |                   
|/s/ GREGORY B. KERFOOT(Gregory B. Kerfoot) |  | Chief Executive Officer,
    President and Chairman of the Board of Directors
    (Principal Executive Officer) |  | September 26, 2002
|                                          
|/s/ ERIC PATEL(Eric Patel)                 |  | Chief Financial Officer
    (Principal Financial and Accounting Officer)                                        |  | September 26, 2002
|                                          
|/s/ STEPHEN J. LUCZO(Stephen J. Luczo)     |  | Director                                                                                                        |  | September 26, 2002
|                                          
|/s/ DONALD L. WAITE(Donald L. Waite)       |  | Director                                                                                                        |  | September 26, 2002
|                                          
|/s/ FRED D. ANDERSON(Fred D. Anderson)     |  | Director                                                                                                        |  | September 26, 2002
|                                          
|/s/ JUSTIN T. CHANG(Justin T. Chang)       |  | Director                                                                                                        |  | September 26, 2002
|                                          
|/s/ DAVID J. ROUX(David J. Roux)           |  | Director                                                                                                        |  | September 26, 2002
|                                          
|/s/ JOHN W. THOMPSON(John W. Thompson)     |  | Director                                                                                                        |  | September 26, 2002



66




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##### Table of Contents



CERTIFICATIONS

I, Gregory B. Kerfoot, certify that:



| |    |                                                                                                                                                                                                                                                                                                                                                 
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | I have reviewed this annual report on
    Form 10-K of Crystal Decisions, Inc.;                                                                                                                                                                                                                                                                 
|
| | 2. | Based on my knowledge, this annual report does
    not contain any untrue statement of a material fact or omit to
    state a material fact necessary to make the statements made, in
    light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    annual report; and
|
| | 3. | Based on my knowledge, the financial statements,
    and other financial information included in this annual report,
    fairly present in all material respects the financial condition,
    results of operations and cash flows of the registrant as of,
    and for, the periods presented in this annual report.                           

Date: September 26, 2002



| |                                      
| | -------------------------------------
| | /s/ GREGORY B. KERFOOT               
| |                                      
| | Gregory B. Kerfoot                   
| | President and Chief Executive Officer

I, Eric Patel, certify that:



| |    |                                                                                                                                                                                                                                                                                                                                                 
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | I have reviewed this annual report on
    Form 10-K of Crystal Decisions, Inc.;                                                                                                                                                                                                                                                                 
|
| | 2. | Based on my knowledge, this annual report does
    not contain any untrue statement of a material fact or omit to
    state a material fact necessary to make the statements made, in
    light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    annual report; and
|
| | 3. | Based on my knowledge, the financial statements,
    and other financial information included in this annual report,
    fairly present in all material respects the financial condition,
    results of operations and cash flows of the registrant as of,
    and for, the periods presented in this annual report.                           

Date: September 26, 2002



| |                        
| | -----------------------
| | /s/ ERIC PATEL         
| |                        
| | Eric Patel             
| | Chief Financial Officer



67




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CRYSTAL DECISIONS, INC.

Schedule II  Valuation and
Qualifying Accounts  Accounts receivable
allowances.

|                                 |  |                |       |                 |  |                 |       |            |  |   |       |  |  |   |       | 
|-------------------------------- |  | -------------- | ----- | --------------- |  | --------------- | ----- | ---------- |  | - | ----- |  |  | - | ----- | 
|                                 |  | Balance at     |       | Additions       |  |                 |       | Balance at
|                                 |  | Beginning of   |       | Charged to      |  | Reductions from |       | End of    
|Description                      |  | Year           |       | Return Reserves |  | Return Reserves |       | Year      
|                                 |  |                |       |                 |  |                 |       |           
|                                 |  |               
|                                 |  | (in thousands)
|Return Reserves:                 |  |                |       |                 |  |                 |       |            |  |   |       |  |  |   |       | 
|Fiscal year ended June 28, 2002: |  | $              | 1,097 |                 |  | $               | 1,551 |            |  | $ | 2,173 |  |  | $ | 475   | 
|                                 |  |                |       |                 |  |                 |       |            |  |   |       |  |  |   |       | 
|Fiscal year ended June 29, 2001: |  | $              | 1,015 |                 |  | $               | 1,730 |            |  | $ | 1,648 |  |  | $ | 1,097 | 
|                                 |  |                |       |                 |  |                 |       |            |  |   |       |  |  |   |       | 
|Fiscal year ended June 30, 2000: |  | $              | 1,212 |                 |  | $               | 1,130 |            |  | $ | 1,327 |  |  | $ | 1,015 | 
|                                 |  |                |       |                 |  |                 |       |            |  |   |       |  |  |   |       | 

|                                 |  |                |       |               |  |                 |       |            |  |   |       |  |  |   |       | 
|-------------------------------- |  | -------------- | ----- | ------------- |  | --------------- | ----- | ---------- |  | - | ----- |  |  | - | ----- | 
|                                 |  |                |       | Additions     |  |                 |       |           
|                                 |  |                |       | Charged to    |  | Reductions from |       |           
|                                 |  | Balance at     |       | Allowance for |  | Allowance for   |       | Balance at
|                                 |  | Beginning of   |       | Doubtful      |  | Doubtful        |       | End of    
|Description                      |  | Year           |       | Accounts      |  | Accounts        |       | Year      
|                                 |  |                |       |               |  |                 |       |           
|                                 |  |               
|                                 |  | (in thousands)
|Allowance for Doubtful Accounts: |  |                |       |               |  |                 |       |            |  |   |       |  |  |   |       | 
|Fiscal year ended June 28, 2002: |  | $              | 1,779 |               |  | $               | 644   |            |  | $ | 275   |  |  | $ | 2,148 | 
|                                 |  |                |       |               |  |                 |       |            |  |   |       |  |  |   |       | 
|Fiscal year ended June 29, 2001: |  | $              | 1,679 |               |  | $               | 801   |            |  | $ | 701   |  |  | $ | 1,779 | 
|                                 |  |                |       |               |  |                 |       |            |  |   |       |  |  |   |       | 
|Fiscal year ended June 30, 2000: |  | $              | 1,635 |               |  | $               | 3,191 |            |  | $ | 3,147 |  |  | $ | 1,679 | 
|                                 |  |                |       |               |  |                 |       |            |  |   |       |  |  |   |       | 



S- 1




---



##### Table of Contents



INDEX TO FINANCIAL STATEMENTS

|                                                                                                                                                |  |      |     | 
|----------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                                                                |  | Page
|                                                                                                                                                |  |     
|Report of Ernst & Young LLP, Independent
    Auditors                                                                                           |  |      | F-2 | 
|Consolidated Balance Sheets as of June 28,
    2002 and June 29, 2001.                                                                          |  |      | F-3 | 
|Consolidated and Combined Statements of
    Operations for the Fiscal Years Ended June 28, 2002,
    June 29, 2001 and June 30, 2000.           |  |      | F-4 | 
|Consolidated and Combined Statements of
    Stockholders Equity for the Fiscal Years Ended
    June 28, 2002, June 29, 2001 and June 30, 2000. |  |      | F-5 | 
|Consolidated and Combined Statements of Cash
    Flows for the Fiscal Years Ended June 28, 2002,
    June 29, 2001 and June 30, 2000.           |  |      | F-6 | 
|Notes to Consolidated and Combined Financial
    Statements                                                                                     |  |      | F-7 | 



F- 1




---



##### Table of Contents



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., as of
June 28, 2002 and June 29, 2001 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 28, 2002. Our audits
also included the financial statement schedule listed in
Item 15(a) 2 of the Form 10-K. These consolidated and
combined financial statements and schedule are the
responsibility of Crystal Decisions, Inc.s management. Our
responsibility is to express an opinion on these consolidated
and combined 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 consolidated and combined
financial statements referred to above present fairly, in all
material respects, the consolidated financial position of
Crystal Decisions, Inc. at June 28, 2002 and June 29,
2001 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 28, 2002, 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 consolidated and combined
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 12, 2002 (except as to note 17


which is as of September 24, 2002)




F- 2




---



##### Table of Contents



CRYSTAL DECISIONS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share
data)


|                                                                                                                                                                                                      |                                                                                                    |                                            |        |          |         |  |        |        |         | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------ | -------- | ------- |  | ------ | ------ | ------- | 
|                                                                                                                                                                                                      |                                                                                                    |                                            |        | (note 2)
|                                                                                                                                                                                                      |                                                                                                    | June 28,                                   |        | June 29,
|                                                                                                                                                                                                      |                                                                                                    | 2002                                       |        | 2001    
|                                                                                                                                                                                                      |                                                                                                    |                                            |        |         
|ASSETS (note 14)                                                                                                                                                                                      |                                                                                                    |                                            |        |          |         |  |        |       
|                                                                                                                                                                                                     
|Current assets:                                                                                                                                                                                       |                                                                                                    |                                            |        |          |         |  |        |       
|                                                                                                                                                                                                      | Cash and cash equivalents                                                                          |                                            | $      | 71,451   |         |  | $      | 34,379 |        
|                                                                                                                                                                                                      | Loan receivable from Seagate Technology LLC (note
    12)                                          |                                            |        |         |         |  |        | 3,429  |        
|                                                                                                                                                                                                      | Accounts receivable, net of allowance for
    doubtful accounts of $2,148 and $1,779, respectively |                                            |        | 40,391   |         |  |        | 29,551 |        
|                                                                                                                                                                                                      | Income taxes receivable                                                                            |                                            |        | 1,048    |         |  |        | 5,468  |        
|                                                                                                                                                                                                      | Inventories, net                                                                                   |                                            |        | 607      |         |  |        | 725    |        
|                                                                                                                                                                                                      | Prepaid and other current assets (note 9)                                                          |                                            |        | 5,748    |         |  |        | 3,115  |        
|                                                                                                                                                                                                      |                                                                                                    |                                            |        |          |         |  |        |       
|                                                                                                                                                                                                      |                                                                                                    | Total current assets                       |        |          | 119,245 |  |        |        | 76,667  | 
|Property and equipment, net (note 4)                                                                                                                                                                  |                                                                                                    |                                            | 15,901 |          |         |  | 10,490 |       
|Intangible assets, net (note 5)                                                                                                                                                                       |                                                                                                    |                                            |       |          |         |  | 17,969 |       
|Other assets (note 9)                                                                                                                                                                                 |                                                                                                    |                                            | 1,700  |          |         |  |       |       
|                                                                                                                                                                                                      |                                                                                                    |                                            |        |          |         |  |        |       
|                                                                                                                                                                                                      |                                                                                                    | Total assets                               |        | $        | 136,846 |  |        | $      | 105,126 | 
|                                                                                                                                                                                                      |                                                                                                    |                                            |        |          |         |  |        |       
|LIABILITIES AND STOCKHOLDERS
    EQUITY                                                                                                                                                              |                                                                                                    |                                            |        |          |         |  |        |       
|                                                                                                                                                                                                     
|Current liabilities:                                                                                                                                                                                  |                                                                                                    |                                            |        |          |         |  |        |       
|                                                                                                                                                                                                      | Accounts payable                                                                                   |                                            | $      | 14,518   |         |  | $      | 11,247 |        
|                                                                                                                                                                                                      | Accrued employee compensation                                                                      |                                            |        | 13,066   |         |  |        | 8,633  |        
|                                                                                                                                                                                                      | Accrued expenses                                                                                   |                                            |        | 11,842   |         |  |        | 11,848 |        
|                                                                                                                                                                                                      | Deferred revenue                                                                                   |                                            |        | 40,887   |         |  |        | 28,154 |        
|                                                                                                                                                                                                      | Accrued income taxes                                                                               |                                            |        | 14,498   |         |  |        | 6,035  |        
|                                                                                                                                                                                                      |                                                                                                    |                                            |        |          |         |  |        |       
|                                                                                                                                                                                                      |                                                                                                    | Total current liabilities                  |        |          | 94,811  |  |        |        | 65,917  | 
|Deferred income taxes (note 9)                                                                                                                                                                        |                                                                                                    |                                            | 583    |          |         |  | 3,600  |       
|                                                                                                                                                                                                      |                                                                                                    |                                            |        |          |         |  |        |       
|                                                                                                                                                                                                      |                                                                                                    | Total liabilities                          |        |          | 95,394  |  |        |        | 69,517  | 
|Commitments and contingencies (notes 6, 12, 14,
    16 and 17)                                                                                                                                        |                                                                                                    |                                            |        |          |         |  |        |       
|                                                                                                                                                                                                     
|Stockholders Equity:                                                                                                                                                                                 |                                                                                                    |                                            |        |          |         |  |        |       
|Common stock  150,000,000 shares
    authorized, shares issued and outstanding  75,864,146
    and 75,397,915 at $0.001 par value per share as of June 28,
    2002 and June 29, 2001, respectively |                                                                                                    |                                            | 76     |          |         |  | 75     |       
|Additional paid-in capital                                                                                                                                                                            |                                                                                                    |                                            | 34,814 |          |         |  | 42,081 |       
|Retained earnings (accumulated deficit)                                                                                                                                                               |                                                                                                    |                                            | 6,438  |          |         |  | (6,517 | )     
|Accumulated other comprehensive income (loss)                                                                                                                                                         |                                                                                                    |                                            | 124    |          |         |  | (30    | )     
|                                                                                                                                                                                                      |                                                                                                    |                                            |        |          |         |  |        |       
|                                                                                                                                                                                                      |                                                                                                    | Total stockholders equity                 |        |          | 41,452  |  |        |        | 35,609  | 
|                                                                                                                                                                                                      |                                                                                                    |                                            |        |          |         |  |        |       
|                                                                                                                                                                                                      |                                                                                                    | Total liabilities and stockholders equity |        | $        | 136,846 |  |        | $      | 105,126 | 
|                                                                                                                                                                                                      |                                                                                                    |                                            |        |          |         |  |        |       

See accompanying notes.



F- 3




---



##### Table of Contents



CRYSTAL DECISIONS, INC.

CONSOLIDATED AND COMBINED STATEMENTS OF
OPERATIONS

(In thousands, except per share
data)


|                                                     |                                                                                               |                            |         |          |         |          |         |         |         |   |          |         |         | 
|---------------------------------------------------- | --------------------------------------------------------------------------------------------- | -------------------------- | ------- | -------- | ------- | -------- | ------- | ------- | ------- | - | -------- | ------- | ------- | 
|                                                     |                                                                                               |                           
|                                                     |                                                                                               | For the fiscal years ended
|                                                     |                                                                                               |                           
|                                                     |                                                                                               | June 28,                   |         | June 29, |         | June 30,
|                                                     |                                                                                               | 2002                       |         | 2001     |         | 2000    
|                                                     |                                                                                               |                            |         |          |         |         
|Revenues:                                            |                                                                                               |                            |         |          |         |          |         |         |         |   |          |        
|                                                     | Licensing (note 6)                                                                            |                            | $       | 140,009  |         |          | $       | 107,028 |         |   | $        | 74,182  |        
|                                                     | Maintenance, support and services (note 6)                                                    |                            |         | 77,161   |         |          |         | 60,694  |         |   |          | 52,727  |        
|                                                     |                                                                                               |                            |         |          |         |          |         |         |         |   |          |        
|                                                     |                                                                                               | Total revenues             |         |          | 217,170 |          |         |         | 167,722 |   |          |         | 126,909 | 
|                                                    
|Cost of revenues:                                    |                                                                                               |                            |         |          |         |          |         |         |         |   |          |        
|                                                     | Licensing                                                                                     |                            |         | 5,230    |         |          |         | 5,740   |         |   |          | 4,096   |        
|                                                     | Maintenance, support and services                                                             |                            |         | 46,140   |         |          |         | 41,760  |         |   |          | 41,156  |        
|                                                     | Amortization of developed technologies                                                        |                            |         | 5,078    |         |          |         | 3,050   |         |   |          | 198     |        
|                                                     |                                                                                               |                            |         |          |         |          |         |         |         |   |          |        
|                                                     |                                                                                               | Total cost of revenues     |         |          | 56,448  |          |         |         | 50,550  |   |          |         | 45,450  | 
|                                                     |                                                                                               |                            |         |          |         |          |         |         |         |   |          |        
|Gross profit                                         |                                                                                               |                            | 160,722 |          |         |          | 117,172 |         |         |   | 81,459   |        
|                                                    
|Operating expenses:                                  |                                                                                               |                            |         |          |         |          |         |         |         |   |          |        
|                                                     | Sales and marketing                                                                           |                            |         | 94,449   |         |          |         | 73,888  |         |   |          | 65,752  |        
|                                                     | Research and development                                                                      |                            |         | 30,515   |         |          |         | 29,236  |         |   |          | 27,377  |        
|                                                     | General and administrative (note 6)                                                           |                            |         | 18,464   |         |          |         | 15,465  |         |   |          | 17,659  |        
|                                                     | Amortization of goodwill and other intangible
    assets                                      |                            |         | 2,358    |         |          |         | 2,023   |         |   |          | 3,038   |        
|                                                     | Write-off of in-process research and development
    (note 2)                                 |                            |         |         |         |          |         | 7,073   |         |   |          |        |        
|                                                     | Unusual items (note 7)                                                                        |                            |         |         |         |          |         | 1,851   |         |   |          | 242,569 |        
|                                                     | Restructuring costs (note 8)                                                                  |                            |         |         |         |          |         | 573     |         |   |          | 1,301   |        
|                                                     |                                                                                               |                            |         |          |         |          |         |         |         |   |          |        
|                                                     |                                                                                               | Total operating expenses   |         |          | 145,786 |          |         |         | 130,109 |   |          |         | 357,696 | 
|                                                     |                                                                                               |                            |         |          |         |          |         |         |         |   |          |        
|Income (loss) from operations                        |                                                                                               |                            | 14,936  |          |         |          | (12,937 | )       |         |   | (276,237 | )      
|                                                     | Interest income                                                                               |                            |         | 1,780    |         |          |         | 1,970   |         |   |          | 982     |        
|                                                     | Interest expense                                                                              |                            |         | (57      | )       |          |         | (20     | )       |   |          | (1,481  | )      
|                                                     | Net foreign currency exchange gain (loss)                                                     |                            |         | (404     | )       |          |         | 701     |         |   |          | 519     |        
|                                                     |                                                                                               |                            |         |          |         |          |         |         |         |   |          |        
|Interest income and other income, net                |                                                                                               |                            | 1,319   |          |         |          | 2,651   |         |         |   | 20       |        
|                                                     |                                                                                               |                            |         |          |         |          |         |         |         |   |          |        
|Income (loss) before income taxes                    |                                                                                               |                            | 16,255  |          |         |          | (10,286 | )       |         |   | (276,217 | )      
|Provision for (benefit from) income taxes (note 9)   |                                                                                               |                            | 3,300   |          |         |          | 1,183   |         |         |   | (55,055  | )      
|                                                     |                                                                                               |                            |         |          |         |          |         |         |         |   |          |        
|Net income (loss)                                    |                                                                                               | $                          | 12,955  |          |         | $        | (11,469 | )       |         | $ | (221,162 | )      
|                                                     |                                                                                               |                            |         |          |         |          |         |         |         |   |          |        
|Net income (loss) per share 
    basic (note 10):   |                                                                                               | $                          | 0.17    |          |         | $        | (0.15   | )       |         | $ | (2.95    | )      
|                                                     |                                                                                               |                            |         |          |         |          |         |         |         |   |          |        
|                                                     | Weighted average number of shares used in basic
    net income (loss) per share calculation   |                            |         | 75,601   |         |          |         | 75,253  |         |   |          | 75,001  |        
|                                                     |                                                                                               |                            |         |          |         |          |         |         |         |   |          |        
|Net income (loss) per share 
    diluted (note 10): |                                                                                               | $                          | 0.17    |          |         | $        | (0.15   | )       |         | $ | (2.95    | )      
|                                                     |                                                                                               |                            |         |          |         |          |         |         |         |   |          |        
|                                                     | Weighted average number of shares used in diluted
    net income (loss) per share calculation |                            |         | 76,806   |         |          |         | 75,253  |         |   |          | 75,001  |        
|                                                     |                                                                                               |                            |         |          |         |          |         |         |         |   |          |        

See accompanying notes.



F- 4




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##### Table of Contents



CRYSTAL DECISIONS, INC.

CONSOLIDATED AND COMBINED STATEMENTS OF
STOCKHOLDERS EQUITY

For the fiscal years ended June 28, 2002,
June 29, 2001 and June 30, 2000


(In thousands, except share data)


|                                                                                                                                                  |  |              |            |            |  |              |    |               |  |               |          |       |  |   |          |   |  |   |      |   |  |   |          |  
|------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ---------- | ---------- |  | ------------ | -- | ------------- |  | ------------- | -------- | ----- |  | - | -------- | - |  | - | ---- | - |  | - | -------- | -
|                                                                                                                                                  |  |              |            |            |  | Retained     |    | Accumulated   |  |              
|                                                                                                                                                  |  | Common Stock |            | Additional |  | Earnings     |    | Other         |  |              
|                                                                                                                                                  |  |              |            | Paid-In    |  | (Accumulated |    | Comprehensive |  |              
|                                                                                                                                                  |  | Shares       |            | Amount     |  | Capital      |    | Deficit)      |  | Income (Loss) |          | Total
|                                                                                                                                                  |  |              |            |            |  |              |    |               |  |               |          |      
|Balance at July 2, 1999                                                                                                                           |  |              |           |            |  | $            |   |               |  | $             | 167,038  |       |  | $ | (163,526 | ) |  | $ | (629 | ) |  | $ | 2,883    |  
|Components of comprehensive loss:                                                                                                                 |  |              |            |            |  |              |    |               |  |               |          |       |  |   |          |   |  |   |      |   |  |   |          |  
|Foreign currency translation adjustments                                                                                                          |  |              |           |            |  |              |   |               |  |               |         |       |  |   |         |   |  |   | 462  |   |  |   | 462      |  
|Net loss                                                                                                                                          |  |              |           |            |  |              |   |               |  |               |         |       |  |   | (221,162 | ) |  |   |     |   |  |   | (221,162 | )
|                                                                                                                                                  |  |              |            |            |  |              |    |               |  |               |          |       |  |   |          |   |  |   |      |   |  |   |          |  
|Total 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. (note 7) |  |              |           |            |  |              |   |               |  |               | 1,242    |       |  |   |         |   |  |   |     |   |  |   | 1,242    |  
|Compensation expense for Seagate Technology
    exchange of shares (note 7)                                                                       |  |              |           |            |  |              |   |               |  |               | 239,574  |       |  |   |         |   |  |   |     |   |  |   | 239,574  |  
|Income tax benefit from Seagate Technology stock
    option exercises (note 9)                                                                    |  |              |           |            |  |              |   |               |  |               | 109      |       |  |   |         |   |  |   |     |   |  |   | 109      |  
|                                                                                                                                                  |  |              |            |            |  |              |    |               |  |               |          |       |  |   |          |   |  |   |      |   |  |   |          |  
|Balance at June 30, 2000                                                                                                                          |  |              | 75,002,050 |            |  | $            | 75 |               |  | $             | 407,893  |       |  | $ | (384,688 | ) |  | $ | (167 | ) |  | $ | 23,113   |  
|Components of comprehensive loss:                                                                                                                 |  |              |            |            |  |              |    |               |  |               |          |       |  |   |          |   |  |   |      |   |  |   |          |  
|Foreign currency translation adjustments                                                                                                          |  |              |           |            |  |              |   |               |  |               |         |       |  |   |         |   |  |   | 46   |   |  |   | 46       |  
|Net loss                                                                                                                                          |  |              |           |            |  |              |   |               |  |               |         |       |  |   | (11,469  | ) |  |   |     |   |  |   | (11,469  | )
|                                                                                                                                                  |  |              |            |            |  |              |    |               |  |               |          |       |  |   |          |   |  |   |      |   |  |   |          |  
|Total comprehensive loss                                                                                                                          |  |              |           |            |  |              |   |               |  |               |         |       |  |   |         |   |  |   |     |   |  |   | (11,423  | )
|Issuance of common stock eligible for repurchase
    (note 11)                                                                                    |  |              | 225,000    |            |  |              |   |               |  |               | 900      |       |  |   |         |   |  |   |     |   |  |   | 900      |  
|Income tax benefit from Seagate Technology stock
    option exercises (note 9)                                                                    |  |              |           |            |  |              |   |               |  |               | 33       |       |  |   |         |   |  |   |     |   |  |   | 33       |  
|Compensation expense for Seagate Technology Stock
    Options (note 7)                                                                            |  |              |           |            |  |              |   |               |  |               | 1,851    |       |  |   |         |   |  |   |     |   |  |   | 1,851    |  
|Elimination of accumulated deficit and other
    comprehensive loss (note 2)                                                                      |  |              |           |            |  |              |   |               |  |               | (389,731 | )     |  |   | 389,640  |   |  |   | 91   |   |  |   |         |  
|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   |       |  | $ | (6,517   | ) |  | $ | (30  | ) |  | $ | 35,609   |  
|Components of comprehensive income:                                                                                                               |  |              |            |            |  |              |    |               |  |               |          |       |  |   |          |   |  |   |      |   |  |   |          |  
|Foreign currency translation adjustments                                                                                                          |  |              |           |            |  |              |   |               |  |               |         |       |  |   |         |   |  |   | 154  |   |  |   | 154      |  
|Net income                                                                                                                                        |  |              |           |            |  |              |   |               |  |               |         |       |  |   | 12,955   |   |  |   |     |   |  |   | 12,955   |  
|                                                                                                                                                  |  |              |            |            |  |              |    |               |  |               |          |       |  |   |          |   |  |   |      |   |  |   |          |  
|Total comprehensive income                                                                                                                        |  |              |           |            |  |              |   |               |  |               |         |       |  |   |         |   |  |   |     |   |  |   | 13,109   |  
|Elimination of intangible assets, net of deferred
    tax liability (note 2)                                                                      |  |              |           |            |  |              |   |               |  |               | (9,131   | )     |  |   |         |   |  |   |     |   |  |   | (9,131   | )
|Issuance of common stock upon exercise of
    employee stock options                                                                              |  |              | 466,231    |            |  |              | 1  |               |  |               | 1,864    |       |  |   |         |   |  |   |     |   |  |   | 1,865    |  
|                                                                                                                                                  |  |              |            |            |  |              |    |               |  |               |          |       |  |   |          |   |  |   |      |   |  |   |          |  
|Balance at June 28, 2002                                                                                                                          |  |              | 75,864,146 |            |  | $            | 76 |               |  | $             | 34,814   |       |  | $ | 6,438    |   |  | $ | 124  |   |  | $ | 41,452   |  
|                                                                                                                                                  |  |              |            |            |  |              |    |               |  |               |          |       |  |   |          |   |  |   |      |   |  |   |          |  

See accompanying notes.



F- 5




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##### Table of Contents



CRYSTAL DECISIONS, INC.

CONSOLIDATED AND COMBINED STATEMENTS OF CASH
FLOWS

(In thousands)


|                                                                                            |                                                                                        |                                                         |        |          |        |          |         |         |        |   |          |         |         |  
|------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------- | ------------------------------------------------------- | ------ | -------- | ------ | -------- | ------- | ------- | ------ | - | -------- | ------- | ------- | -
|                                                                                            |                                                                                        |                                                        
|                                                                                            |                                                                                        | For the fiscal years ended                             
|                                                                                            |                                                                                        |                                                        
|                                                                                            |                                                                                        | June 28,                                                |        | June 29, |        | June 30,
|                                                                                            |                                                                                        | 2002                                                    |        | 2001     |        | 2000    
|                                                                                            |                                                                                        |                                                         |        |          |        |         
|Operating activities                                                                        |                                                                                        |                                                         |        |          |        |          |         |         |        |   |          |        
|Net income (loss)                                                                           |                                                                                        | $                                                       | 12,955 |          |        | $        | (11,469 | )       |        | $ | (221,162 | )      
|Adjustments to reconcile net income
    (loss) to net cash from operating activities:       |                                                                                        |                                                         |        |          |        |          |         |         |        |   |          |        
|                                                                                            | Depreciation and amortization                                                          |                                                         |        | 12,677   |        |          |         | 9,446   |        |   |          | 7,538   |        
|                                                                                            | Bad debt expense and other reserves                                                    |                                                         |        | 32       |        |          |         | 773     |        |   |          | 2,091   |        
|                                                                                            | Deferred income taxes (note 9)                                                         |                                                         |        | (2,314   | )      |          |         | 1,529   |        |   |          | 147     |        
|                                                                                            | Stock based compensation expense on Seagate
    Technology exchange of shares (note 7) |                                                         |        |         |        |          |         | 1,851   |        |   |          | 239,574 |        
|                                                                                            | Write-off of in-process research and development                                       |                                                         |        |         |        |          |         | 7,073   |        |   |          | 25      |        
|Changes in operating assets and liabilities:                                                |                                                                                        |                                                         |        |          |        |          |         |         |        |   |          |        
|                                                                                            | Accounts receivable, net                                                               |                                                         |        | (10,948  | )      |          |         | (13,465 | )      |   |          | 24,433  |        
|                                                                                            | Income taxes receivable                                                                |                                                         |        | 5,119    |        |          |         | 1,868   |        |   |          | 4,319   |        
|                                                                                            | Income taxes receivable from Seagate Technology
    (note 9)                           |                                                         |        |         |        |          |         | (3,978  | )      |   |          | (66,245 | )      
|                                                                                            | Inventories, net                                                                       |                                                         |        | 118      |        |          |         | (51     | )      |   |          | 307     |        
|                                                                                            | Prepaid and other current assets                                                       |                                                         |        | (944     | )      |          |         | 918     |        |   |          | (1,585  | )      
|                                                                                            | Accounts payable                                                                       |                                                         |        | 2,257    |        |          |         | 1,079   |        |   |          | (2,133  | )      
|                                                                                            | Accrued employee compensation                                                          |                                                         |        | 4,408    |        |          |         | 2,674   |        |   |          | (13,295 | )      
|                                                                                            | Accrued expenses                                                                       |                                                         |        | (6       | )      |          |         | (237    | )      |   |          | 1,072   |        
|                                                                                            | Deferred revenue                                                                       |                                                         |        | 12,653   |        |          |         | 10,110  |        |   |          | 1,985   |        
|                                                                                            | Accrued income taxes                                                                   |                                                         |        | 5,062    |        |          |         | 4,916   |        |   |          | 1,280   |        
|                                                                                            |                                                                                        |                                                         |        |          |        |          |         |         |        |   |          |        
|                                                                                            |                                                                                        | Net cash provided by (used in) operating
    activities |        |          | 41,069 |          |         |         | 13,037 |   |          |         | (21,649 | )
|                                                                                            |                                                                                        |                                                         |        |          |        |          |         |         |        |   |          |        
|Investing activities                                                                        |                                                                                        |                                                         |        |          |        |          |         |         |        |   |          |        
|Purchases of property and equipment                                                         |                                                                                        |                                                         | (9,877 | )        |        |          | (9,594  | )       |        |   | (6,356   | )      
|                                                                                            |                                                                                        |                                                         |        |          |        |          |         |         |        |   |          |        
|                                                                                            |                                                                                        | Net cash used in investing activities                   |        |          | (9,877 | )        |         |         | (9,594 | ) |          |         | (6,356  | )
|                                                                                            |                                                                                        |                                                         |        |          |        |          |         |         |        |   |          |        
|Financing activities                                                                        |                                                                                        |                                                         |        |          |        |          |         |         |        |   |          |        
|Issuance of common stock and common stock subject
    to repurchase                         |                                                                                        |                                                         | 1,865  |          |        |          | 1,583   |         |        |   | 5        |        
|Net borrowings (repayments) from (to) Seagate
    Technology LLC (note 12)                  |                                                                                        |                                                         | (871   | )        |        |          | (4,773  | )       |        |   | 24,047   |        
|Payment from Seagate Technology LLC on
    intercompany revolving loan receivable (note 12) |                                                                                        |                                                         | 4,300  |          |        |          | 31,000  |         |        |   |         |        
|                                                                                            |                                                                                        |                                                         |        |          |        |          |         |         |        |   |          |        
|                                                                                            |                                                                                        | Net cash provided by financing activities               |        |          | 5,294  |          |         |         | 27,810 |   |          |         | 24,052  |  
|Effect of foreign exchange rates on cash and cash
    equivalents                           |                                                                                        |                                                         | 586    |          |        |          | (495    | )       |        |   | 155      |        
|                                                                                            |                                                                                        |                                                         |        |          |        |          |         |         |        |   |          |        
|Net increase (decrease) in cash and cash
    equivalents                                    |                                                                                        |                                                         | 37,072 |          |        |          | 30,758  |         |        |   | (3,798   | )      
|Cash and cash equivalents at the beginning of the
    period                                |                                                                                        |                                                         | 34,379 |          |        |          | 3,621   |         |        |   | 7,419    |        
|                                                                                            |                                                                                        |                                                         |        |          |        |          |         |         |        |   |          |        
|Cash and cash equivalents at the end of the period                                          |                                                                                        | $                                                       | 71,451 |          |        | $        | 34,379  |         |        | $ | 3,621    |        
|                                                                                            |                                                                                        |                                                         |        |          |        |          |         |         |        |   |          |        
|Supplemental cash flow information:                                                         |                                                                                        |                                                         |        |          |        |          |         |         |        |   |          |        
|                                                                                            | Cash received for interest income                                                      |                                                         | $      | 1,780    |        |          | $       | 2,952   |        |   | $        |        |        
|                                                                                            | Cash paid for interest expenses                                                        |                                                         | $      | 57       |        |          | $       | 1,437   |        |   | $        | 64      |        
|                                                                                            | Cash paid (received) for income taxes, net of
    refunds                              |                                                         | $      | (5,374   | )      |          | $       | (615    | )      |   | $        | 1,045   |        

See accompanying notes.



F- 6




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##### Table of Contents



CRYSTAL DECISIONS, 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
management company, which is incorporated in Delaware and is
headquartered in Palo Alto, California, that creates software
products and provides services for reporting, analysis and
information delivery. Crystal Decisions develops, markets and
supports an integrated, 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s products, commonly referred to as business
intelligence software, provide employees, partners and customers
with access to the information they need to make better business
decisions and ultimately reduce costs and increase productivity.

While Crystal Decisions primary market is
North America, the Company has over 25 offices and
operations in 10 countries, 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 manufacturers
(OEMs).

Crystal Decisions is a majority owned subsidiary
of Seagate Software (Cayman) Holdings, a Cayman Islands limited
corporation (Suez Software), which is a wholly owned
subsidiary of New SAC, a Cayman Islands limited corporation
(New SAC), which is also the majority shareholder of
Seagate Technology LLC, whose predecessor was Seagate
Technology, Inc. (Seagate Technology). Prior to
November 22, 2000, the Company was a majority owned
subsidiary of Seagate Software Holdings, Inc. (Seagate
Software Holdings, formerly known as Seagate Software,
Inc.), a Delaware corporation and wholly owned subsidiary of
Seagate Technology. The minority interests in the Companys
capital stock amounted to approximately 16.1%, 13.0% and 10.5%
on a fully converted basis as of June 28, 2002,
June 29, 2001 and June 30, 2000, respectively. These
minority interests are comprised of the Companys
outstanding common stock held by current and former employees
and non-employee directors of the Company as well as the
outstanding unexercised options granted to purchase the
Companys common stock.

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.



| |                        
| | -----------------------
| | Development of Business

Seagate Software Holdings commenced operations in
May 1994 when Seagate Technology acquired 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.

On August 23, 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



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##### Table of Contents



CRYSTAL DECISIONS, INC.


NOTES TO CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS  (Continued)

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. On
the closing of the merger, Seagate Software Holdings became a
wholly owned subsidiary of Seagate Technology. 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 then outstanding common stock of Crystal Decisions
was purchased by New SAC, through Suez Software, and resulted in
a change in control of Crystal Decisions as described in
Note 2.



| |                      
| | ---------------------
| | Basis of Presentation

The consolidated and combined financial
statements of Crystal Decisions have been prepared by the
Company in accordance with generally accepted accounting
principles in the United States (U.S.), applied on a
consistent basis. The accompanying financial statements present
the consolidated financial position of Crystal Decisions and its
wholly owned subsidiaries after elimination of intercompany
transactions and balances. These consolidated and combined
financial statements have been prepared using the historical
cost basis of accounting adjusted for the reorganization of the
IMG business on November 16, 1999 and the application for
push down accounting at November 22, 2000 as the result of
the change in control of Crystal Decisions.

For all fiscal years 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 years 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, stockholders 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, stockholders
equity or cash flows would have been had Crystal Decisions been
an independent legal entity during the years 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 fiscal years prior to November 16,
1999, the consolidated and combined statement 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.

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



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##### Table of Contents



CRYSTAL DECISIONS, 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 do not reflect these adjustments.

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 2002 ended
on June 28, 2002 (Fiscal 2002), fiscal 2001
ended on June 29, 2001 (Fiscal 2001) and fiscal
2000 ended on June 30, 2000 (Fiscal 2000).
Fiscal 2002, 2001 and 2000 were each comprised of 52 weeks.
Certain comparative period figures have been reclassified to
conform to the basis of presentation adopted in fiscal 2002.

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) on
November 22, 2000. 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. On November 22, 2000, the date of the closing of
the transactions under the Stock Purchase Agreement, Suez
Acquisition Company assigned all of its rights under the Stock
Purchase Agreement to New SAC.

Upon consummation of the Stock Purchase
Agreement, New SAC, through Suez Acquisition Company, purchased
for $1.84 billion cash, including transaction costs of
$25 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 became 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. This
transaction is referred to hereafter as the VERITAS merger.

As part of the New SAC Transaction, Seagate
Technology, New SAC and certain of their subsidiaries including
Crystal Decisions and VERITAS entered into an Indemnification
Agreement on March 29, 2000. The Indemnification Agreement
provides that New SAC is required to indemnify VERITAS and its
affiliates for specified liabilities of Seagate Technology and
Seagate Software Holdings, including selected taxes. In return,
VERITAS, Seagate Technology and their affiliates agreed to
indemnify New SAC and its consolidated subsidiaries, including
Crystal Decisions, for specified liabilities, including all
taxes of Seagate Technology for which New SAC is not required to
indemnify VERITAS and its affiliates. VERITAS deposited
$150 million in an escrow account, of which the full amount
remains. This amount may be applied by New SAC to satisfy these
tax liabilities, including those of Crystal Decisions and its
subsidiaries.



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##### Table of Contents



CRYSTAL DECISIONS, INC.


NOTES TO CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS  (Continued)



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

The New SAC Transaction constituted a purchase 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 closing of the New SAC Transaction.
The fair values of the identifiable tangible and intangible
assets and liabilities of Seagate Technology and its
subsidiaries at the date of the New SAC 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 those
of Crystal Decisions, on the basis of relative fair values. This
allocation reduced the recorded amounts of these assets at
November 22, 2000 by approximately 46%. The fair values of
tangible and intangible assets, including in-process research
and development, were determined based upon independent
appraisals provided by New SAC.

The accounting for the purchase transaction has
been pushed down from New SAC to Crystal
Decisions consolidated and combined financial statements.
Crystal Decisions June 28, 2002 and June 29,
2001 consolidated balance sheets reflect the new bases of its
assets and liabilities at those dates in accordance with the
pushed down purchase accounting adjustments, followed by the
results of operations for the period from November 23, 2000
to June 29, 2001 and from June 30, 2001 to
June 28, 2002. The consolidated and combined statements of
operations and cash flows do not reflect the new bases of the
assets and liabilities at November 22, 2000 resulting from
the push down 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.



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##### Table of Contents



CRYSTAL DECISIONS, INC.


NOTES TO CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS  (Continued)

The table below summarizes 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.

|                                                                  |                                  |                                     |       |     |    | 
|----------------------------------------------------------------- | -------------------------------- | ----------------------------------- | ----- | --- | -- | 
|                                                                  |                                  | Allocated to                       
|                                                                  |                                  | purchase price for                 
|Purchase price allocation for New SAC                             |                                  | New SAC                            
|                                                                  |                                  |                                    
|                                                                  |                                  | (in millions)                      
|Net current assets:                                               |                                  |                                     |       |    
|                                                                  | 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:               |                                     |       |     |   
|                                                                  |                                  | Developed technology                |       |     | 15 | 
|                                                                  |                                  | Assembled workforce                 |       |     | 7  | 
|                                                                  |                                  | In-process research and development |       |     | 7  | 
|                                                                  | All other businesses of New SAC: |                                     |       |     |   
|                                                                  |                                  | Developed technology                |       |     | 61 | 
|                                                                  |                                  | Assembled workforce                 |       |     | 46 | 
|                                                                  |                                  | In-process research and development |       |     | 52 | 
|                                                                  |                                  | Trade names                         |       |     | 47 | 
|                                                                  |                                  | Other intangible assets             |       |     | 1  | 
|Other long-term assets:                                           |                                  |                                     |       |    
|                                                                  | All other businesses of New SAC  |                                     |       | 42  |   
|Other long-term deferred tax liabilities:                         |                                  |                                     |       |    
|                                                                  | 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 |    
|                                                                  |                                  |                                     |       |    

The table below summarizes 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



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##### Table of Contents



CRYSTAL DECISIONS, INC.


NOTES TO CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS  (Continued)

Transaction was not necessarily indicative of
what the purchase price would have been for Crystal Decisions on
a stand alone basis.

|                                                |                                         |                  |       |        |        | 
|----------------------------------------------- | --------------------------------------- | ---------------- | ----- | ------ | ------ | 
|                                                |                                         | Net Purchase    
|Purchase price allocation for Crystal Decisions |                                         | Price Allocation
|                                                |                                         |                 
|                                                |                                         | (in thousands)  
|Net current assets acquired                     |                                         | $                | 9,138 |       
|Tangible long-lived assets acquired             |                                         |                  | 5,130 |       
|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 | )     
|                                                |                                         |                  |       |       
|                                                |                                         | Total            |       | $      | 41,522 | 
|                                                |                                         |                  |       |       



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The value of the developed technology was
    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 was amortized on the
    straight-line basis over its estimated useful life
    (36 months) and the amortization was included in cost of
    revenues.
|   
|(2) | The estimated value of the assembled work force
    was 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 was
    amortized on a straight-line basis over its estimated useful
    life (36 months) and the amortization was included in
    amortization of goodwill and other intangible assets.                                                                                                                                                                                                                                                                
|   
|(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
    on November 23, 2000. This write-off was necessary because
    the acquired technologies had not yet reached technological
    feasibility and had no future alternative uses.                                                  



| |                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------
| | Application of SFAS No. 109,
    Accounting for Income Taxes (SFAS 109)
    to Deferred Tax Assets as part of Purchase Price
    Allocation

The purchase price under the Stock Purchase
Agreement was fixed and no contingencies were identified that
would result in a change in the overall purchase price. However,
in allocating the purchase price New SAC recorded a valuation
allowance against deferred tax assets in accordance with
SFAS 109. The deferred tax assets subject to the valuation
allowance were based on the excess of tax bases over the fair
values of acquired property, plant and equipment and liabilities
assumed, for which New SAC expected to receive tax deductions in
U.S. federal and state returns in future periods based on
its ability to generate taxable income in the U.S.

During the fourth quarter of fiscal 2002, New SAC
evaluated and updated forecasts of projected U.S. taxable
income to determine if there was any amount of the deferred tax
assets related to the New SAC Transaction that management
believed would be more likely realizable than not. In accordance
with SFAS 109, this evaluation resulted in the elimination
of the tax valuation allowances that had been recorded against a
portion of the deferred tax assets associated with the New SAC
Transaction. In order to reflect tax



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##### Table of Contents



CRYSTAL DECISIONS, INC.


NOTES TO CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS  (Continued)

benefits recognized by New SAC, that were
attributable to acquired deferred tax assets, the net carrying
value of the intangible assets that were pushed down to the
consolidated and combined financial statements of Crystal
Decisions were reduced to zero on June 28, 2002 as follows
(in thousands):

|                                                                   |                                      |                   |       |        | 
|------------------------------------------------------------------ | ------------------------------------ | ----------------- | ----- | ------ | 
|                                                                   |                                      | Allocated to     
|                                                                   |                                      | Crystal Decisions
|                                                                   |                                      | at June 28, 2002 
|                                                                   |                                      |                  
|Reduction in the net carrying values of developed
    technologies |                                      | $                 | 7,194 |       
|Reduction in the net carrying values of assembled
    workforce    |                                      |                   | 3,340 |       
|                                                                   |                                      |                   |       |       
|                                                                   | Total reduction in intangible assets |                   | $     | 10,534 | 
|                                                                   |                                      |                   |       |       

As a result of the push down of intangible assets
to the Companys consolidated and combined financial
statements on November 22, 2000, a deferred tax liability
was recorded related to these intangibles. This deferred tax
liability was calculated as the tax-effected temporary
differences related to the excess of book over tax bases related
to intangible assets for a foreign subsidiary of the Company.
Pursuant to SFAS 109, the elimination of the remaining book
bases of intangible assets requires that the associated deferred
tax liability be reduced to zero. The elimination of the net
carrying value of the intangible assets at June 28, 2002
was recorded as a charge against additional paid-in capital on
the statement of stockholders equity as follows (in
thousands):

|                                     |                                                                     |   |        |       | 
|------------------------------------ | ------------------------------------------------------------------- | - | ------ | ----- | 
|Total reduction in intangible assets |                                                                     | $ | 10,534 |      
|Deferred tax liability               |                                                                     |   | (1,403 | )    
|                                     |                                                                     |   |        |      
|                                     | Elimination of intangible assets, net of deferred
    tax liability |   | $      | 9,131 | 
|                                     |                                                                     |   |        |      



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##### Table of Contents



CRYSTAL DECISIONS, INC.


NOTES TO CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS  (Continued)

Selected
Financial Information for Fiscal 2001 Pre and Post 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.

CRYSTAL DECISIONS, INC.

CONSOLIDATED AND COMBINED CONDENSED STATEMENT
OF OPERATIONS


FOR THE FISCAL YEAR ENDED JUNE 29,
2001


(In thousands)


|                                                |                                                          |                          |        |              |        |                   |        |        |         |   |         |         |         | 
|----------------------------------------------- | -------------------------------------------------------- | ------------------------ | ------ | ------------ | ------ | ----------------- | ------ | ------ | ------- | - | ------- | ------- | ------- | 
|                                                |                                                          | Pre New SAC              |        | Post New SAC |        | Fiscal year ended
|                                                |                                                          | Transaction              |        | Transaction  |        | June 29, 2001    
|                                                |                                                          |                          |        |              |        |                  
|Revenues:                                       |                                                          |                          |        |              |        |                   |        |        |         |   |         |        
|                                                | Licensing                                                |                          | $      | 34,239       |        |                   | $      | 72,789 |         |   | $       | 107,028 |        
|                                                | Maintenance, support and services                        |                          |        | 23,219       |        |                   |        | 37,475 |         |   |         | 60,694  |        
|                                                |                                                          |                          |        |              |        |                   |        |        |         |   |         |        
|                                                |                                                          | Total revenues           |        |              | 57,458 |                   |        |        | 110,264 |   |         |         | 167,722 | 
|Cost of revenues:                               |                                                          |                          |        |              |        |                   |        |        |         |   |         |        
|                                                | Licensing                                                |                          |        | 1,656        |        |                   |        | 4,084  |         |   |         | 5,740   |        
|                                                | Maintenance, support and services                        |                          |        | 17,048       |        |                   |        | 24,712 |         |   |         | 41,760  |        
|                                                | Amortization of developed technologies                   |                          |        | 88           |        |                   |        | 2,962  |         |   |         | 3,050   |        
|                                                |                                                          |                          |        |              |        |                   |        |        |         |   |         |        
|                                                |                                                          | Total cost of revenues   |        |              | 18,792 |                   |        |        | 31,758  |   |         |         | 50,550  | 
|                                                |                                                          |                          |        |              |        |                   |        |        |         |   |         |        
|Gross profit                                    |                                                          |                          | 38,666 |              |        |                   | 78,506 |        |         |   | 117,172 |        
|Operating expenses:                             |                                                          |                          |        |              |        |                   |        |        |         |   |         |        
|                                                | Sales and marketing                                      |                          |        | 28,111       |        |                   |        | 45,777 |         |   |         | 73,888  |        
|                                                | Research and development                                 |                          |        | 11,443       |        |                   |        | 17,793 |         |   |         | 29,236  |        
|                                                | General and administrative                               |                          |        | 5,802        |        |                   |        | 9,663  |         |   |         | 15,465  |        
|                                                | Amortization of goodwill and other intangible
    assets |                          |        | 648          |        |                   |        | 1,375  |         |   |         | 2,023   |        
|                                                | Write-off of in-process research and development         |                          |        |             |        |                   |        | 7,073  |         |   |         | 7,073   |        
|                                                | Unusual items                                            |                          |        | 1,851        |        |                   |        |       |         |   |         | 1,851   |        
|                                                | Restructuring costs                                      |                          |        | 559          |        |                   |        | 14     |         |   |         | 573     |        
|                                                |                                                          |                          |        |              |        |                   |        |        |         |   |         |        
|                                                |                                                          | Total operating expenses |        |              | 48,414 |                   |        |        | 81,695  |   |         |         | 130,109 | 
|                                                |                                                          |                          |        |              |        |                   |        |        |         |   |         |        
|Loss from operations                            |                                                          |                          | (9,748 | )            |        |                   | (3,189 | )      |         |   | (12,937 | )      
|Interest income and other income (expense), net |                                                          |                          | 891    |              |        |                   | 1,760  |        |         |   | 2,651   |        
|                                                |                                                          |                          |        |              |        |                   |        |        |         |   |         |        
|Loss before income taxes                        |                                                          |                          | (8,857 | )            |        |                   | (1,429 | )      |         |   | (10,286 | )      
|Benefit from (provision for) income taxes       |                                                          |                          | 3,905  |              |        |                   | (5,088 | )      |         |   | (1,183  | )      
|                                                |                                                          |                          |        |              |        |                   |        |        |         |   |         |        
|Net loss                                        |                                                          | $                        | (4,952 | )            |        | $                 | (6,517 | )      |         | $ | (11,469 | )      
|                                                |                                                          |                          |        |              |        |                   |        |        |         |   |         |        



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##### Table of Contents



CRYSTAL DECISIONS, 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)


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



F- 15




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##### Table of Contents



CRYSTAL DECISIONS, INC.


NOTES TO CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS  (Continued)

CRYSTAL DECISIONS, INC.

CONSOLIDATED AND COMBINED CONDENSED


STATEMENT OF STOCKHOLDERS
EQUITY


FOR THE FISCAL YEAR ENDED JUNE 29,
2001


(In thousands, except share data)


|                                                                      |  |              |            |            |  |              |    |               |  |               |          |       |  |   |          |   |  |   |      |   |  |   |        |  
|--------------------------------------------------------------------- |  | ------------ | ---------- | ---------- |  | ------------ | -- | ------------- |  | ------------- | -------- | ----- |  | - | -------- | - |  | - | ---- | - |  | - | ------ | -
|                                                                      |  |              |            |            |  | Retained     |    | Accumulated   |  |              
|                                                                      |  | Common Stock |            | Additional |  | Earnings     |    | Other         |  |              
|                                                                      |  |              |            | Paid-In    |  | (Accumulated |    | Comprehensive |  |              
|                                                                      |  | Shares       |            | Amount     |  | Capital      |    | Deficit)      |  | Income (Loss) |          | Total
|                                                                      |  |              |            |            |  |              |    |               |  |               |          |      
|Balance at June 30, 2000                                              |  |              | 75,002,050 |            |  | $            | 75 |               |  | $             | 407,893  |       |  | $ | (384,688 | ) |  | $ | (167 | ) |  | $ | 23,113 |  
|Components of comprehensive loss:                                     |  |              |            |            |  |              |    |               |  |               |          |       |  |   |          |   |  |   |      |   |  |   |        |  
|Foreign currency translation adjustments                              |  |              |           |            |  |              |   |               |  |               |         |       |  |   |         |   |  |   | 76   |   |  |   | 76     |  
|Net loss to November 22, 2000                                         |  |              |           |            |  |              |   |               |  |               |         |       |  |   | (4,952   | ) |  |   |     |   |  |   | (4,952 | )
|                                                                      |  |              |            |            |  |              |    |               |  |               |          |       |  |   |          |   |  |   |      |   |  |   |        |  
|Total 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  |       |  | $ | (389,640 | ) |  | $ | (91  | ) |  | $ | 21,070 |  
|Elimination of accumulated deficit and other
    comprehensive loss   |  |              |           |            |  |              |   |               |  |               | (389,731 | )     |  |   | 389,640  |   |  |   | 91   |   |  |   |       |  
|Push down adjustments reflecting new bases of net
    assets          |  |              |           |            |  |              |   |               |  |               | 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 adjustments                              |  |              |           |            |  |              |   |               |  |               |         |       |  |   |         |   |  |   | (30  | ) |  |   | (30    | )
|Net loss                                                              |  |              |           |            |  |              |   |               |  |               |         |       |  |   | (6,517   | ) |  |   |     |   |  |   | (6,517 | )
|                                                                      |  |              |            |            |  |              |    |               |  |               |          |       |  |   |          |   |  |   |      |   |  |   |        |  
|Total 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   |       |  | $ | (6,517   | ) |  | $ | (30  | ) |  | $ | 35,609 |  
|                                                                      |  |              |            |            |  |              |    |               |  |               |          |       |  |   |          |   |  |   |      |   |  |   |        |  



|   |                                               
|-- | ----------------------------------------------
|3. | Summary of Significant Accounting
    Policies

Use of Estimates.The preparation of the consolidated
and combined financial statements, in conformity with generally
accepted accounting principles, requires management to make
estimates and assumptions that affect the amounts reported in
the consolidated and combined financial statements and
accompanying notes. Estimates are used for, but are not limited
to, allowance for doubtful accounts, certain reserves, useful
lives for equipment and intangible assets, employee benefits,
income taxes, and litigation. Actual results could differ
materially from those estimates.



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##### Table of Contents



CRYSTAL DECISIONS, INC.


NOTES TO CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS  (Continued)

Foreign Currency Translation.The functional currency of the Company
and subsidiaries is the applicable local currency in accordance
with SFAS 52, Foreign Currency
Translation. The Companys reporting currency is
the U.S. dollar. Assets and liabilities of the
Companys subsidiaries with functional currencies other
than the U.S. dollar are translated into U.S. dollar
equivalents at the rate of exchange in effect on the balance
sheet date. Revenues and expenses are translated at the weighted
average monthly rates for the period. Translation gains and
losses are recorded as a separate component of
stockholders equity, and transaction gains and losses are
reflected in determining net 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.

Due to the number of currencies involved, the
constant change in currency exposures, and the substantial
volatility of currency exchange rates, the effect of exchange
rate fluctuations upon future operating results could be
significant. To date, the Company has not undertaken hedging
transactions to cover any currency or translation exposure.

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(SOP 97-2), 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 (VSOE)
of fair value for the various elements in a multiple-element
arrangement.

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.

Prior to the second quarter of fiscal 2001,
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 price consistent with Crystal Decisions pricing
strategy. The pricing strategy was established by
representatives from the Companys marketing, sales,
finance, product development and, where applicable, technical
support and consulting 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
the delivered elements. The impact on revenues of applying the
residual method of accounting in fiscal 2001 was not material.

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



F- 17




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##### Table of Contents



CRYSTAL DECISIONS, INC.


NOTES TO CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS  (Continued)

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 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, collectability 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
generally 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 Crystal Decisions provides 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.

The adoption of Emerging Issues Task Force
(EITF) Issue No. 01-14, Income
Statement Characterization of Reimbursements Received for
Out-of-Pocket Expense Incurred(EITF 01-14), by the Company on
December 29, 2001, has resulted in the reclassification of
out-of-pocket reimbursable expenses and an increase in both
maintenance, support and services revenues and cost of
maintenance, support and services revenues in the amounts of
$872,000, $861,000 and $391,000 for the fiscal years ended
June 28, 2002, June 29, 2001 and June 30, 2000,
respectively. The Company now records out-of-pocket expense
reimbursements as revenue versus a reduction of costs of
revenues incurred. Comparative consolidated and combined
statements of operations have been reclassified. The adoption of
EITF 01-14 has not affected net income (loss) in any
past or current period.

Cash and Cash Equivalents.Cash includes cash equivalents, which
are investments that are generally held to maturity and have
maturity dates of three months or less at the time of purchase.
Cash equivalents are considered highly liquid investments with
insignificant interest rate risk and include marketable
securities that are principally money market funds, commercial
paper, market action preferreds and term deposits. Investments
with maturity dates greater than 90 days but less than one
year at the time of purchase are considered to be short-term
investments. There were no investments with maturities of more
than 90 days but less than one year at June 28, 2002.
Crystal Decisions maintains its cash and cash equivalents with
major



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##### Table of Contents



CRYSTAL DECISIONS, INC.


NOTES TO CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS  (Continued)

banks in interest and non-interest bearing bank
accounts. Cash equivalents are carried at cost, which
approximates fair value.

Concentration of Credit Risk.At June 28, 2002, receivables due
from Ingram Micro, Inc. (Ingram), a distributor,
were approximately 7% of the Companys accounts receivable
balance before allowances and reserves. The Company performs
ongoing credit evaluations of its customers and maintains
reserves for potential credit losses. Such losses have been
within managements expectations. The Company generally
requires no collateral from its customers.

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 2002, fiscal 2001 or
fiscal 2000.

Property and Equipment.Equipment and leasehold improvements
are stated at cost less accumulated depreciation. Equipment is
depreciated using the straight-line method over the estimated
useful lives of the assets ranging from two to five years.
Leasehold improvements are depreciated using the straight-line
method over the shorter of the estimated useful life of the
asset or the remaining terms of the lease.

Goodwill and Other Intangible Assets.Amortization of goodwill and purchased
intangible assets has been provided on a straight-line basis
over the respective useful lives of the assets, which range from
three to five 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 are reviewed if facts and circumstances suggest that they
may be impaired. If this review indicates that carrying values
of long-term assets will not be recoverable based on projected
undiscounted future cash flows, carrying values of long-term
assets are reduced. At June 28, 2002, there was no
remaining goodwill or other intangible assets.

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 or purchased.

SFAS 86 requires the capitalization of
certain internal development costs once technological
feasibility is established, which generally occurs upon the
completion of a working model. Internal development costs
incurred prior to the establishment of technical feasibility are
expensed as incurred and are included as research and
development expense. As the time period between the completion
of a working model and the general availability of software has
been short, costs qualifying for capitalization were
insignificant for fiscal 2002, fiscal 2001 and fiscal 2000.
Accordingly, there were no capitalized software development
costs at June 28, 2002 or June 29, 2001.

Purchased developed technology is amortized based
on a straight-line basis over the estimated useful life (36 to
48 months). 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.

Advertising Expense.Advertising costs are expensed as
incurred. Advertising costs, included in sales and marketing
expense, totaled $8.9 million, $8.3 million and
$10.9 million for fiscal 2002, fiscal 2001 and fiscal 2000,
respectively.

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



F- 19




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##### Table of Contents



CRYSTAL DECISIONS, INC.


NOTES TO CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS  (Continued)

Stock-Based Compensation.Crystal Decisions has elected to
follow Accounting Principles Board Opinion No. 25
(APB 25), Accounting for Stock Issued
to Employeesand related interpretations in accounting
for its stock options. Pro forma net income (loss) and net
income (loss) per share are disclosures required under SFAS
No. 123, Accounting for Stock Based
Compensation(SFAS 123)
(Note 11). The Company grants stock options to employees
for a fixed number of shares with an exercise price equal to the
fair market value of the shares at the date of grant, and no
compensation expense is recorded.

Income Taxes.The
Company accounts for its income taxes in accordance with SFAS
No. 109, Accounting for Income Taxes(SFAS 109). SFAS 109 prescribes the
liability method. Under this method deferred tax assets and
liabilities are determined based on the difference between the
financial statement carrying amounts and the tax bases of assets
and liabilities, and are measured using the enacted statutory
tax rates that will be in effect for the year in which the
differences are expected to reverse. The Company records a
valuation allowance to reduce its deferred tax assets when
uncertainty regarding their realizability exists.



|   |                       
|-- | ----------------------
|4. | Property and Equipment

Property and equipment consisted of the following
(in thousands):

|                              |  |             |                   |               |  |               |        |   |  |   |        |  
|----------------------------- |  | ----------- | ----------------- | ------------- |  | ------------- | ------ | - |  | - | ------ | -
|                              |  | Estimated   |                   |               |  |              
|                              |  | Useful Life |                   | June 28, 2002 |  | June 29, 2001
|                              |  |             |                   |               |  |              
|Equipment                     |  |             | Two to five years |               |  | $             | 18,766 |   |  | $ | 8,782  |  
|Leasehold improvements        |  |             | Life of lease     |               |  |               | 4,142  |   |  |   | 4,041  |  
|                              |  |             |                   |               |  |               |        |   |  |   |        |  
|                              |  |             |                   |               |  |               | 22,908 |   |  |   | 12,823 |  
|Less accumulated depreciation |  |             |                   |               |  |               | (7,007 | ) |  |   | (2,333 | )
|                              |  |             |                   |               |  |               |        |   |  |   |        |  
|                              |  |             |                   |               |  | $             | 15,901 |   |  | $ | 10,490 |  
|                              |  |             |                   |               |  |               |        |   |  |   |        |  

Depreciation expense was $5.2 million,
$4.6 million and $4.3 million in fiscal 2002, fiscal
2001 and fiscal 2000, 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.

During fiscal 2002, Crystal Decisions entered
into a series of agreements for the purchase and implementation
of a global enterprise resource planning system and recorded
approximately $1.7 million of costs as equipment related to
the purchase and implementation of this system in accordance
with SOP 98-1, Accounting for the Costs of
Computer Software Developed or Obtained for Internal
Use.



|   |                  
|-- | -----------------
|5. | Intangible Assets

Intangible assets consisted of the following (in
thousands):

|                                                                                                                   |                         |               |         |               |  |   |        |        | 
|------------------------------------------------------------------------------------------------------------------ | ----------------------- | ------------- | ------- | ------------- |  | - | ------ | ------ | 
|                                                                                                                   |                         | June 28, 2002 |         | June 29, 2001
|                                                                                                                   |                         |               |         |              
|Developed technologies                                                                                             |                         | $             | 15,234  |               |  | $ | 15,234 |       
|Assembled work force                                                                                               |                         |               | 7,073   |               |  |   | 7,073  |       
|                                                                                                                   |                         |               |         |               |  |   |        |       
|                                                                                                                   | Total intangible assets |               |         | 22,307        |  |   |        | 22,307 | 
|Accumulated amortization                                                                                           |                         |               | (11,773 | )             |  |   | (4,338 | )     
|Reduction in the net carrying values of
    intangible assets pursuant to the application of SFAS 109 (Note
    2) |                         |               | (10,534 | )             |  |   |       |       
|                                                                                                                   |                         |               |         |               |  |   |        |       
|                                                                                                                   |                         | $             |        |               |  | $ | 17,969 |       
|                                                                                                                   |                         |               |         |               |  |   |        |       



F- 20




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##### Table of Contents



CRYSTAL DECISIONS, INC.


NOTES TO CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS  (Continued)

On November 22, 2000, as a result of the New
SAC Transaction, the existing net carrying values of goodwill
and other intangible assets were revalued and reduced to zero by
a charge to additional paid-in capital. These balances arose as
a result of goodwill and intangible assets being pushed down to
Crystal Decisions consolidated and combined financial
statements resulting from the October 1999 Seagate Technology
exchange of shares (Note 7) and the June 1999 Seagate
Technology exchange offer. The amortization expense related to
these assets was $735,000 for the period from July 1, 2000
to November 22, 2000.

As described in Note 2, Crystal Decisions
revalued its intangible assets as a result of the New SAC
Transaction. The revalued intangible assets had a net book value
of $22.3 million, comprised of $15.2 million of
developed technologies and $7.1 million of assembled
workforce. Commencing on November 23, 2000, these
intangible assets were being amortized on a straight-line basis
over their estimated useful lives (36 months). Amortization
on these intangible assets was $7.4 million and
$4.3 million, respectively, for fiscal 2002 and for the
period from November 23, 2000 to June 29, 2001.

6.     Related Party
Transactions

During the three months 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 certain products of its business intelligence
software and receive maintenance and support services related to
these products for one year. 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 2002 and fiscal 2001,
respectively, Crystal Decisions recognized approximately
$151,000 and $1.5 million of revenues from the License
Agreement. At December 28, 2001, all of the revenues under
the License Agreement had been recognized with no amounts
remaining as deferred revenue. The License Agreement also
provided for consulting services in connection with the licensed
products, for which Crystal Decisions recorded approximately
$30,000 and $327,000 of consulting revenues (adjusted for the
application of EITF 01-14) in fiscal 2002 and fiscal 2001,
respectively. The maintenance and support services contract
related to the License Agreement was renewed during the three
months ended December 28, 2001. Revenues from the
maintenance and support services contract are being recognized
ratably over the term of the contract, which is one year. During
fiscal 2002, Crystal Decisions recognized approximately $282,000
in maintenance and support revenues related to the renewed
maintenance and support contract. As of June 28, 2002 and
June 29, 2001, there were no amounts outstanding from
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. Seagate Technology LLC, an indirect subsidiary of
New SAC, provides various 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 general and administrative departmental managers.
Crystal Decisions management believes that the allocation
methods applied to the costs provided under the agreements in
place are reasonable. Crystal Decisions has begun to perform
internally a number of the services that it previously



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##### Table of Contents



CRYSTAL DECISIONS, INC.


NOTES TO CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS  (Continued)

relied upon Seagate Technology LLC to provide and
expects that overall the charges will be less for fiscal 2003
than fiscal 2002. Amounts charged to Crystal Decisions general
and administrative expense were $865,000, $1.2 million and
$658,000 for fiscal 2002, fiscal 2001 and fiscal 2000,
respectively. Since December 2001, these balances have included
a quarterly charge of $25,000 for consulting and advisory fees
that are paid on Crystal Decisions behalf by Seagate
Technology LLC to certain New SAC investors. Management believes
Seagate Technology LLC charged Crystal Decisions the fair market
value of these services and thus no material additional costs
would have been incurred had Crystal Decisions obtained these
services from a third party.

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 and 57,245 shares of
Seagate Technology common stock in fiscal 2001 and fiscal 2000,
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 contributes 50% of the amounts contributed by
the employees, up to a maximum of $2,500 per employee or 6% of
the individual employees salary, whichever is less.
Contributions to the 401(k) plan were not impacted by the
November 22, 2000 New SAC Transaction. Crystal Decisions
made matching contributions of $367,000, $295,000 and $186,000
in fiscal 2002, fiscal 2001 and fiscal 2000, respectively.

See also Notes 2, 7, 9, 12 and 16 for other
related party transactions.

7.     Unusual
Transactions

Compensation
Expense for Seagate Technology Stock Options on 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 each share was 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 was recorded as an unusual
item in the consolidated and combined statement of operations
for fiscal 2001.

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



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##### Table of Contents



CRYSTAL DECISIONS, INC.


NOTES TO CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS  (Continued)

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 to
minority stockholders and optionees 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 in 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 the purchase price of
this minority interest and was 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. During fiscal 2000, Seagate Technology recorded
compensation expense of $283.6 million, plus
$2.1 million of employer portion of payroll taxes, related
to the purchase of the 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 of $239.6 million of
the total compensation expense of $283.6 million.
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. The offsetting entry
was recorded as a capital contribution from Seagate Technology
on the statement of stockholders equity. The
$2.1 million of employer portion of payroll taxes paid
related to Crystal Decisions employees was recorded as an
unusual expense in fiscal 2000. In addition, Crystal Decisions
incurred $877,000 of legal and accounting costs in fiscal 2000
in connection with its recapitalization and reorganization.

The components of the unusual items expense
recorded in fiscal 2000 that are attributable to the employees
of Crystal Decisions consisted of the following (in thousands):

|                                                                                                                                        |  |                |         |              |  |   |         | 
|--------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ------- | ------------ |  | - | ------- | 
|                                                                                                                                        |  | As expensed by |         | Allocated to
|                                                                                                                                        |  | Seagate        |         | Crystal     
|                                                                                                                                        |  | Technology     |         | Decisions   
|                                                                                                                                        |  |                |         |             
|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   | 
|Transactions costs                                                                                                                      |  |                | 877     |              |  |   | 877     | 
|                                                                                                                                        |  |                |         |              |  |   |         | 
|                                                                                                                                        |  | $              | 286,614 |              |  | $ | 242,569 | 
|                                                                                                                                        |  |                |         |              |  |   |         | 

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
previously that was pushed down to the consolidated and combined
financial statements of Crystal Decisions. The allocation to
Crystal Decisions was based on the estimated 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.



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##### Table of Contents



CRYSTAL DECISIONS, INC.


NOTES TO CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS  (Continued)

The allocation of the purchase price to the
intangible assets of Crystal Decisions as at October 20,
1999 consisted of the following (in thousands):

|                                    |                                |   |       |       | 
|----------------------------------- | ------------------------------ | - | ----- | ----- | 
|Developed technologies              |                                | $ | 156   |      
|Trademark                           |                                |   | 36    |      
|Assembled work force                |                                |   | 47    |      
|In-process research and development |                                |   | 25    |      
|Goodwill                            |                                |   | 1,071 |      
|Deferred tax liability              |                                |   | (93   | )    
|                                    |                                |   |       |      
|                                    | Total purchase price allocated |   | $     | 1,242 | 
|                                    |                                |   |       |      

8.     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 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 significant. At June 28, 2002, no amounts
remained outstanding.

During fiscal 2000, Crystal Decisions incurred
$1.3 million of restructuring charges related to the
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 for
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.

9.     Income
Taxes

Net income (loss) before provision for
(benefit from) income taxes consisted of the following (in
thousands):

|                                                                       |        |                            |        |               |  |               |         |     |  |   |          |        |  
|---------------------------------------------------------------------- | ------ | -------------------------- | ------ | ------------- |  | ------------- | ------- | --- |  | - | -------- | ------ | -
|                                                                       |        |                           
|                                                                       |        | For the fiscal years ended
|                                                                       |        |                           
|                                                                       |        | June 28, 2002              |        | June 29, 2001 |  | June 30, 2000
|                                                                       |        |                            |        |               |  |              
|U.S.                                                                   |        | $                          | 4,837  |               |  | $             | (12,110 | )   |  | $ | (271,991 | )     
|Foreign:                                                               |        |                            |        |               |  |               |         |     |  |   |          |       
|                                                                       | Canada |                            |        | 10,952        |  |               |         | 331 |  |   |          | (4,042 | )
|                                                                       | Europe |                            |        | 259           |  |               |         | 676 |  |   |          | 116    |  
|                                                                       | Other  |                            |        | 207           |  |               |         | 817 |  |   |          | (300   | )
|                                                                       |        |                            |        |               |  |               |         |     |  |   |          |       
|Net income (loss) before provision for
    (benefit from) income taxes |        | $                          | 16,255 |               |  | $             | (10,286 | )   |  | $ | (276,217 | )     
|                                                                       |        |                            |        |               |  |               |         |     |  |   |          |       



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##### Table of Contents



CRYSTAL DECISIONS, INC.


NOTES TO CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS  (Continued)

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

|                                          |              |                                      |       |               |        |               |       |        |       |   |         |         |         |  
|----------------------------------------- | ------------ | ------------------------------------ | ----- | ------------- | ------ | ------------- | ----- | ------ | ----- | - | ------- | ------- | ------- | -
|                                          |              |                                     
|                                          |              | For the fiscal years ended          
|                                          |              |                                     
|                                          |              | June 28, 2002                        |       | June 29, 2001 |        | June 30, 2000
|                                          |              |                                      |       |               |        |              
|Current tax expense (benefit):            |              |                                      |       |               |        |               |       |        |       |   |         |        
|                                          | U.S. Federal |                                      | $     | 803           |        |               | $     | (1,418 | )     |   | $       | (46,977 | )      
|                                          | U.S. State   |                                      |       | 97            |        |               |       | (1,056 | )     |   |         | (7,440  | )      
|                                          | Foreign      |                                      |       | 4,714         |        |               |       | 2,128  |       |   |         | (491    | )      
|                                          |              |                                      |       |               |        |               |       |        |       |   |         |        
|                                          |              | Total current tax expense (benefit)  |       |               | 5,614  |               |       |        | (346  | ) |         |         | (54,908 | )
|                                          |              |                                      |       |               |        |               |       |        |       |   |         |        
|Deferred tax expense (benefit):           |              |                                      |       |               |        |               |       |        |       |   |         |        
|                                          | U.S. Federal |                                      |       |              |        |               |       |       |       |   |         | (139    | )      
|                                          | U.S. State   |                                      |       |              |        |               |       |       |       |   |         | (8      | )      
|                                          | Foreign      |                                      |       | (2,314        | )      |               |       | 1,529  |       |   |         |        |        
|                                          |              |                                      |       |               |        |               |       |        |       |   |         |        
|                                          |              | Total deferred tax expense (benefit) |       |               | (2,314 | )             |       |        | 1,529 |   |         |         | (147    | )
|                                          |              |                                      |       |               |        |               |       |        |       |   |         |        
|Provision for (benefit from) income taxes |              | $                                    | 3,300 |               |        | $             | 1,183 |        |       | $ | (55,055 | )      
|                                          |              |                                      |       |               |        |               |       |        |       |   |         |        

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 was 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 applicable foreign tax credits) and
withholding taxes payable as imposed by the tax authorities of
those foreign countries.

A reconciliation of income taxes computed at the
U.S. statutory rate to the provision for (benefit from) income
taxes is as follows (in thousands):

|                                                                                       |  |                            |         |               |  |               |        |   |  |   |         |  
|-------------------------------------------------------------------------------------- |  | -------------------------- | ------- | ------------- |  | ------------- | ------ | - |  | - | ------- | -
|                                                                                       |  |                           
|                                                                                       |  | For the fiscal years ended
|                                                                                       |  |                           
|                                                                                       |  | June 28, 2002              |         | June 29, 2001 |  | June 30, 2000
|                                                                                       |  |                            |         |               |  |              
|Income tax provision for (benefit from) computed
    at the U.S. statutory rate of 35% |  | $                          | 5,689   |               |  | $             | (3,600 | ) |  | $ | (96,676 | )
|State income taxes (benefit), net                                                      |  |                            | 141     |               |  |               | (435   | ) |  |   | (4,191  | )
|Foreign income tax difference with respect to the
    U.S. statutory rate              |  |                            | (2,117  | )             |  |               | 2,942  |   |  |   | 1,229   |  
|Write-off of in-process research and development                                       |  |                            |        |               |  |               | 693    |   |  |   |        |  
|Non-deductible compensation expense                                                    |  |                            |        |               |  |               |       |   |  |   | 56,734  |  
|Reinstatement of net operating losses                                                  |  |                            | (53,492 | )             |  |               |       |   |  |   |        |  
|Valuation allowance                                                                    |  |                            | 53,324  |               |  |               | 1,913  |   |  |   | (12,913 | )
|Other                                                                                  |  |                            | (245    | )             |  |               | (330   | ) |  |   | 762     |  
|                                                                                       |  |                            |         |               |  |               |        |   |  |   |         |  
|                                                                                       |  | $                          | 3,300   |               |  | $             | 1,183  |   |  | $ | (55,055 | )
|                                                                                       |  |                            |         |               |  |               |        |   |  |   |         |  

Prior to the close of the New SAC Transaction,
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 the combined or consolidated 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



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##### Table of Contents



CRYSTAL DECISIONS, INC.


NOTES TO CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS  (Continued)

Crystal Decisions the amount of such refunds. In
prior periods, Crystal Decisions generated substantial cash
payments from the Companys tax losses utilized by Seagate
Technology, which were used to reduce the obligation under the
revolving loan agreement (Revolving Loan Agreement)
(Note 12). As of the end of fiscal 2001 and fiscal 2000,
respectively, $4.0 million and $67.0 million of
intercompany tax related balances due to Crystal Decisions from
Seagate Technology were offset against amounts due, if any, to
Seagate Technology under the Revolving Loan Agreement. On
November 22, 2000, the Tax Allocation Agreement was
terminated.

Until October 22, 2000, certain employees of
Crystal Decisions participated in the Seagate Technology
Employee Stock Purchase Plan. During fiscal 2001 and fiscal
2000, respectively, $33,000 and $109,000 of income tax benefits
relating to the exercise of stock options under this plan by the
Companys employees were credited to additional paid-in
capital. The offsetting entry increased amounts due to Seagate
Technology pursuant to the Tax Allocation Agreement.

During the three months ended June 28, 2002,
the Companys Canadian subsidiary transferred intellectual
property to another foreign subsidiary. The transaction resulted
in current taxes of $3.4 million, which was classified as
an asset on the consolidated balance sheet and will be amortized
over the life of the transferred asset, which the Company has
determined to be two years. As at June 28, 2002,
$1.7 million of the asset was classified as Prepaid
and other current assets and $1.7 million was
classified as Other assets on the consolidated
balance sheet.

Deferred income taxes reflect the net tax effects
of loss carryforwards and 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 consisted of the following (in
thousands):



|                                              |                                |                            |         |               |  |   |         |        | 
|--------------------------------------------- | ------------------------------ | -------------------------- | ------- | ------------- |  | - | ------- | ------ | 
|                                              |                                |                           
|                                              |                                | For the fiscal years ended
|                                              |                                |                           
|                                              |                                | June 28, 2002              |         | June 29, 2001
|                                              |                                |                            |         |              
|Deferred tax assets                           |                                |                            |         |               |  |   |         |       
|U.S. net operating loss carryforwards         |                                | $                          | 56,170  |               |  | $ |        |       
|Foreign net operating loss carryforwards      |                                |                            | 1,440   |               |  |   | 387     |       
|Accrued expenses and reserves                 |                                |                            | 3,849   |               |  |   | 4,438   |       
|Excess of tax bases over book bases of assets |                                |                            | 6,779   |               |  |   | 10,675  |       
|Other                                         |                                |                            | 691     |               |  |   | 105     |       
|                                              |                                |                            |         |               |  |   |         |       
|                                              | Total deferred tax assets      |                            |         | 68,929        |  |   |         | 15,605 | 
|Valuation allowance                           |                                |                            | (68,929 | )             |  |   | (15,605 | )     
|                                              |                                |                            |         |               |  |   |         |       
|                                              | Net deferred tax assets        |                            |         |              |  |   |         |       | 
|                                              |                                |                            |         |               |  |   |         |       
|Deferred tax liabilities                      |                                |                            |         |               |  |   |         |       
|Excess of book bases over tax bases of assets |                                |                            | 583     |               |  |   | 3,600   |       
|                                              |                                |                            |         |               |  |   |         |       
|                                              | Total deferred tax liabilities |                            | $       | 583           |  |   | $       | 3,600  | 
|                                              |                                |                            |         |               |  |   |         |       
|Net deferred tax liabilities                  |                                | $                          | 583     |               |  | $ | 3,600   |       
|                                              |                                |                            |         |               |  |   |         |       

The realization of the tax benefits of the
deferred tax assets subject to the valuation allowance will
depend primarily on the Companys ability to generate
sufficient taxable income in future periods, the timing and
amount of which are uncertain.



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##### Table of Contents



CRYSTAL DECISIONS, INC.


NOTES TO CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS  (Continued)

As of June 28, 2002, Crystal Decisions UK
(Limited), a dual US/ UK incorporated subsidiary, had U.S. net
operating loss carryforwards of approximately
$143.2 million. These losses expire in fiscal years 2012
through 2021, if not utilized, as follows: $5.7 million at
June 27, 2012, $7.1 million at July 3, 2013;
$20.4 million at July 2, 2019; $63.4 million at
June 30, 2020; and $46.6 million at November 22,
2020. These losses may only be applied to reduce taxable income
of the dual incorporated subsidiary for U.S. tax purposes. The
Company also had foreign net operating loss carryforwards of
approximately $4.8 million which are available to offset
future foreign taxable income and do not expire.

10.     Net Income
(Loss) Per Share

Basic net income (loss) per share has been
computed using the weighted average number of shares of common
stock outstanding during each of the fiscal years presented.
Diluted net income (loss) per share is computed using the
weighted average number of shares of common stock outstanding
and dilutive common stock equivalents outstanding during each of
the fiscal years presented assuming exercise of options to
purchase common stock. Common stock equivalents consist of
shares issuable upon the exercise of stock options using the
treasury stock method. The incremental shares included as common
stock equivalents result from the weighted average fair market
values of stock options being in excess of the exercise prices
for the stock options outstanding during fiscal 2002. Options to
purchase common stock were excluded from the computation of
diluted net income (loss) per share for the fiscal years
ended June 29, 2001 and June 30, 2000, as their effect
was not dilutive.

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

|                                                     |                                                                             |                            |      |               |        |               |       |        |         |   |       |        |          |  
|---------------------------------------------------- | --------------------------------------------------------------------------- | -------------------------- | ---- | ------------- | ------ | ------------- | ----- | ------ | ------- | - | ----- | ------ | -------- | -
|                                                     |                                                                             |                           
|                                                     |                                                                             | For the fiscal years ended
|                                                     |                                                                             |                           
|                                                     |                                                                             | June 28, 2002              |      | June 29, 2001 |        | June 30, 2000
|                                                     |                                                                             |                            |      |               |        |              
|Basic net income (loss) per share
    computation:   |                                                                             |                            |      |               |        |               |       |        |         |   |       |       
|Numerator:                                           |                                                                             |                            |      |               |        |               |       |        |         |   |       |       
|                                                     |                                                                             | Net income (loss)          |      | $             | 12,955 |               |       | $      | (11,469 | ) |       | $      | (221,162 | )
|                                                     |                                                                             |                            |      |               |        |               |       |        |         |   |       |       
|Denominator:                                         |                                                                             |                            |      |               |        |               |       |        |         |   |       |       
|                                                     | Weighted average number of common shares
    outstanding                    |                            |      | 75,601        |        |               |       | 75,253 |         |   |       | 75,001 |         
|                                                     |                                                                             |                            |      |               |        |               |       |        |         |   |       |       
|Net income (loss) per share  basic                  |                                                                             | $                          | 0.17 |               |        | $             | (0.15 | )      |         | $ | (2.95 | )     
|                                                     |                                                                             |                            |      |               |        |               |       |        |         |   |       |       
|Diluted net income (loss) per share
    computation: |                                                                             |                            |      |               |        |               |       |        |         |   |       |       
|Numerator:                                           |                                                                             |                            |      |               |        |               |       |        |         |   |       |       
|                                                     |                                                                             | Net income (loss)          |      | $             | 12,955 |               |       | $      | (11,469 | ) |       | $      | (221,162 | )
|                                                     |                                                                             |                            |      |               |        |               |       |        |         |   |       |       
|Denominator:                                         |                                                                             |                            |      |               |        |               |       |        |         |   |       |       
|                                                     | Weighted average number of common shares
    outstanding                    |                            |      | 75,601        |        |               |       | 75,253 |         |   |       | 75,001 |         
|                                                     | Dilutive effect of stock options under the
    treasury stock method        |                            |      | 1,205         |        |               |       |       |         |   |       |       |         
|                                                     |                                                                             |                            |      |               |        |               |       |        |         |   |       |       
|                                                     | Weighted average number of common shares
    outstanding on a diluted basis |                            |      | 76,806        |        |               |       | 75,253 |         |   |       | 75,001 |         
|                                                     |                                                                             |                            |      |               |        |               |       |        |         |   |       |       
|Net income (loss) per share 
    diluted            |                                                                             | $                          | 0.17 |               |        | $             | (0.15 | )      |         | $ | (2.95 | )     
|                                                     |                                                                             |                            |      |               |        |               |       |        |         |   |       |       



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##### Table of Contents



CRYSTAL DECISIONS, INC.


NOTES TO CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS  (Continued)

11.     Stockholders
Equity

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

1999 and 2000 Stock Option
Plans. The 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.

1999 Stock Option
Plan. Crystal Decisions reserved
22,500,000 shares under the 1999 Stock Option Plan. Options
granted under this plan are generally 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  1/48th of the option per month thereafter. As of
June 28, 2002, June 29, 2001 and June 30, 2000,
respectively, 13,391,242, 10,680,856 and 8,626,879 options were
outstanding under the 1999 stock option plan and 8,245,862,
11,422,229 and 13,872,071 remained available for grant.

2000 Stock Option
Plan. Crystal Decisions reserved
200,000 shares under the 2000 Stock Option Plan. Options granted
under this plan were 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 New SAC Transaction, or on the date an initial public
offering of Crystal Decisions common stock is declared
effective by the Securities and Exchange Commission.
Compensation expense will be measured at fair value upon vesting
of these options under SFAS 123 as all of the options under
this plan were granted to employees of Seagate Technology before
the New SAC Transaction. As of both June 28, 2002 and
June 29, 2001, 106,450 options were outstanding under the
2000 stock option plan and 93,550 options remained available for
grant. At June 30, 2000, 161,450 options were outstanding
under the 2000 stock option plan and 38,550 options 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.



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##### Table of Contents



CRYSTAL DECISIONS, INC.


NOTES TO CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS  (Continued)

Following is a summary of stock option activity
from the inception of the Crystal Decisions Plans through the
end of fiscal 2002:

|                         |           |                     |            |                |   |   |      |      | 
|------------------------ | --------- | ------------------- | ---------- | -------------- | - | - | ---- | ---- | 
|                         |           |                    
|                         |           | Options Outstanding
|                         |           |                    
|                         |           | Number of           |            |               
|                         |           | Common              |            | Weighted      
|                         |           | Shares              |            | Average       
|                         |           | Issuable            |            | Exercise Price
|                         |           |                     |            |               
|Balance at July 2, 1999  |           |                     |           |                |   | $ |     |     
|                         | Granted   |                     |            | 9,501,899      |   |   |      | 4.00 | 
|                         | Exercised |                     |            | (1,050         | ) |   |      | 4.00 | 
|                         | Cancelled |                     |            | (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 | 
|                         | Cancelled |                     |            | (910,773       | ) |   |      | 4.00 | 
|                         |           |                     |            |                |   |   |      |     
|Balance at June 29, 2001 |           |                     | 10,787,306 |                |   |   | 4.00 |     
|                         |           |                     |            |                |   |   |      |     
|                         | Granted   |                     |            | 3,844,618      |   |   |      | 4.49 | 
|                         | Exercised |                     |            | (466,231       | ) |   |      | 4.00 | 
|                         | Cancelled |                     |            | (668,001       | ) |   |      | 4.10 | 
|                         |           |                     |            |                |   |   |      |     
|Balance at June 28, 2002 |           |                     | 13,497,692 |                |   | $ | 4.14 |     
|                         |           |                     |            |                |   |   |      |     

Options available for grant under the Crystal
Decisions Plans were 8,339,412 and 11,515,779 at June 28,
2002 and June 29, 2001, respectively. The following table
summarizes the status of the Companys stock options
outstanding and exercisable at June 28, 2002:

|                    |      |                     |  |                  |            |          |  |           |      |          |  |   |      |  |  |  |           |  |  |   |      | 
|------------------- | ---- | ------------------- |  | ---------------- | ---------- | -------- |  | --------- | ---- | -------- |  | - | ---- |  |  |  | --------- |  |  | - | ---- | 
|                    |      |                    
|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   
|                    |      |                     |  |                  |            |          |  |           |      |         
|$                   | 4.00 |                     |  |                  | 10,083,907 |          |  |           | 7.85 |          |  | $ | 4.00 |  |  |  | 5,783,904 |  |  | $ | 4.00 | 
|$                   | 4.25 |                     |  |                  | 2,463,935  |          |  |           | 9.38 |          |  | $ | 4.25 |  |  |  | 673       |  |  | $ | 4.25 | 
|$                   | 5.00 |                     |  |                  | 684,450    |          |  |           | 9.77 |          |  | $ | 5.00 |  |  |  |          |  |  |   |     | 
|$                   | 6.00 |                     |  |                  | 265,400    |          |  |           | 9.92 |          |  | $ | 6.00 |  |  |  |          |  |  |   |     | 
|                    |      |                     |  |                  |            |          |  |           |      |          |  |   |      |  |  |  |           |  |  |   |      | 
|                    |      |                     |  |                  | 13,497,692 |          |  |           | 8.27 |          |  | $ | 4.14 |  |  |  | 5,784,577 |  |  | $ | 4.00 | 
|                    |      |                     |  |                  |            |          |  |           |      |          |  |   |      |  |  |  |           |  |  |   |      | 

Pro Forma
Information.SFAS 123 requires Crystal
Decisions to present pro forma information regarding net income
(loss) and net income (loss) per share for stock
options granted 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



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CRYSTAL DECISIONS, INC.


NOTES TO CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS  (Continued)

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 $2.88 in
fiscal 2002, $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:

|                         |  |             |      |             |  |             |      |   |  |  |      |  
|------------------------ |  | ----------- | ---- | ----------- |  | ----------- | ---- | - |  |  | ---- | -
|                         |  | Fiscal 2002 |      | Fiscal 2001 |  | Fiscal 2000
|                         |  |             |      |             |  |            
|Expected life (in years) |  |             | 3.00 |             |  |             | 2.82 |   |  |  | 1.97 |  
|Risk-free interest rate  |  |             | 4.0  | %           |  |             | 5.6  | % |  |  | 6.2  | %
|Volatility               |  |             | 101  | %           |  |             | 99   | % |  |  | 95   | %

The weighted average fair value of shares granted
under the Seagate Technology Employee Stock Purchase Plan
(Purchase Plan) was $11.47 in fiscal 2000. The fair
value was estimated assuming no dividends and the following
weighted average assumptions: an expected life of six months, a
risk-free interest rate of 5.7% and a volatility of .78. The
weighted average purchase price of shares granted under the
Purchase Plan was $23.38 per share in fiscal 2000. The estimated
fair value of the options was amortized over the six-month
purchase period for stock purchases under the Purchase Plan
ending October 22, 2000.

For purposes of pro forma disclosures, the
estimated fair value of the options was amortized over the
options vesting period. Crystal Decisions pro forma
information including the pro forma charge related to options
expense using the Black-Scholes model is as follows (in
thousands):

|                                                           |  |                    |        |               |  |               |         |   |  |   |          |  
|---------------------------------------------------------- |  | ------------------ | ------ | ------------- |  | ------------- | ------- | - |  | - | -------- | -
|                                                           |  |                   
|                                                           |  | Fiscal years ended
|                                                           |  |                   
|                                                           |  | June 28, 2002      |        | June 29, 2001 |  | June 30, 2000
|                                                           |  |                    |        |               |  |              
|Net income (loss) as reported                              |  | $                  | 12,955 |               |  | $             | (11,469 | ) |  | $ | (221,162 | )
|Pro forma net income (loss)                                |  | $                  | 6,264  |               |  | $             | (18,653 | ) |  | $ | (225,973 | )
|Pro forma net income (loss) per common
    share  basic   |  | $                  | 0.08   |               |  | $             | (0.25   | ) |  | $ | (3.01    | )
|Pro forma net income (loss) per common
    share  diluted |  | $                  | 0.08   |               |  | $             | (0.25   | ) |  | $ | (3.01    | )

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.Under the provisions of
the 1999 Stock Option Plan, an employee and certain non-employee
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 28, 2002 and June 29, 2001, respectively,
there were 70,834 and 129,001 unvested shares that could become
subject to repurchase at an aggregate repurchase price of
$283,336 and $516,004, respectively. There was no stock subject
to repurchase as of June 30, 2000.

12.     Revolving
Loan Agreement

On July 4, 2001, Crystal Decisions and
Seagate Technology LLC renewed the Revolving Loan Agreement
originally dated June 28, 1996, which was previously with
Seagate Technology. The renewed Revolving Loan Agreement
provided for maximum outstanding borrowings of up to
$15 million, which was reduced from the amended loan dated
July 4, 2000, which provided for maximum outstanding
borrowings of up to $60 million. The Revolving Loan
Agreement expired on July 4, 2002 and was not renewed. The
loan balance was receivable or payable upon termination of the
Revolving Loan Agreement and was presented on the consolidated
balance sheets as a net receivable or net payable in accordance
with the terms of the Revolving Loan Agreement.



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##### Table of Contents



CRYSTAL DECISIONS, INC.


NOTES TO CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS  (Continued)

Prior to fiscal 2001, certain of Crystal
Decisions working capital requirements were financed
through the revolving loan agreements and at July 2, 1999
there was a net payable balance due to Seagate Technology. While
Crystal Decisions continued to draw against the Revolving Loan
Agreement during fiscal 2000 there was a net receivable balance
due from Seagate Technology of $25.7 million at
June 30, 2000. As explained in Note 9, this receivable
balance arose largely as the result of offsetting amounts due
from Seagate Technology under the Tax Allocation Agreement for
income tax loss benefits utilized by Seagate Technology relative
to Crystal Decisions tax loss position.

During the three months ended June 29, 2001,
Seagate Technology LLC repaid $31.0 million of the balance
receivable under the Revolving Loan Agreement, thereby
decreasing the receivable balance at June 29, 2001 to
$3.4 million. During the three months ended
September 28, 2001, Seagate Technology LLC repaid the
remaining portion of the receivable balance. At June 28,
2002, or on the expiration of the Revolving Loan Agreement on
July 4, 2002, there was no balance receivable or payable
under the Revolving Loan Agreement by Crystal Decisions or
Seagate Technology LLC.

During all periods, interest income or expense
was calculated on a monthly basis on the outstanding net
receivable or net payable revolving loan balance. During fiscal
2002, net interest income of $301,000 was earned at an average
rate of 3.71% for the first fiscal quarter of 2002. During
fiscal 2001, net interest income of $1.8 million was earned
at an average rate of 6.46%. During fiscal 2002 and 2001,
interest income was earned at Seagate Technology LLCs
in-house portfolio yield rate. During fiscal 2000, net interest
expense of $583,000 was incurred at an average rate of 7.85%,
being LIBOR plus 2% per annum.

13.     Credit
Line

On June 27, 2002, Crystal Decisions and
Comerica Bank (Comerica) signed a non-binding term
sheet and at September 26, 2002, the parties were
negotiating an agreement for an accounts receivable based bank
line of credit providing for up to a maximum of $15 million
in borrowings for general working capital purposes.

14.     Debt
Guarantees and Pledge of Assets

On November 22, 2000, as part of the
financing of the New SAC Transaction, New SAC, through an
indirect subsidiary Seagate Technology (U.S.) Holdings, Inc.,
entered into a credit agreement for senior credit facilities
with a syndicate of banks and other financial institutions (the
Credit Agreement). The senior credit facilities
negotiated under the Credit Agreement provided senior secured
financing of up to $900 million, consisting of
$700 million of term loans and a $200 million
revolving credit facility. In addition, Seagate Technology
International, which is an indirect subsidiary of New SAC,
issued unsecured senior subordinated notes (the
Notes) under an Indenture dated November 22,
2000, at a discount to the aggregate principal amount of
$210 million, for gross proceeds of approximately
$201 million. The Notes had an original maturity date of
November 15, 2007 and incurred interest payable
semi-annually at a rate of 12.5% per annum.

Under these agreements, New SAC and certain of
its subsidiaries, including Crystal Decisions and certain of its
subsidiaries, were guarantors on a joint and several, whole and
unconditional basis, of the senior credit facilities and the
Notes. In addition, the majority of New SACs and certain
of its subsidiaries assets, including certain of Crystal
Decisions assets and its capital stock, were pledged
against the term loans under the Credit Agreement. Also, New
SAC, and certain of its subsidiaries, including Crystal
Decisions and certain of its subsidiaries, had agreed to certain
covenants under the Credit Agreement and the 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.



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##### Table of Contents



CRYSTAL DECISIONS, INC.


NOTES TO CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS  (Continued)

As New SAC did not require Crystal
Decisions cash flow to be used to service the obligations
pursuant to the Credit Agreement or the Notes, and as the
Company believed that none of the guarantees or pledges of
assets under the term loans or its guarantee obligations under
the Indenture were likely to be invoked, Crystal Decisions
consolidated and combined financial statements did not reflect
any of the proportionate debt and interest charges related to
the financing of the New SAC Transaction.

On May 13, 2002, New SAC and its affiliates
completed a refinancing of the secured credit facilities and a
tender offer for all of the outstanding Notes and repaid the
remaining balance outstanding on the terms loans under the
former senior secured credit facilities. At June 28, 2002,
Crystal Decisions and its subsidiaries have been released from
all of the guarantees, pledge of assets and restrictive
covenants that existed under the Credit Agreement and Indenture.

15.     Business
Segment and Geographic Information

Crystal Decisions operates in a single industry
segment  information management software. Crystal
Decisions products and services are sold through direct
and indirect methods. 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.

Product and
services revenues (in thousands):

|                                  |                |                            |         |               |  |               |         |         |  |   |        |         | 
|--------------------------------- | -------------- | -------------------------- | ------- | ------------- |  | ------------- | ------- | ------- |  | - | ------ | ------- | 
|                                  |                |                           
|                                  |                | For the fiscal years ended
|                                  |                |                           
|                                  |                | June 28, 2002              |         | June 29, 2001 |  | June 30, 2000
|                                  |                |                            |         |               |  |              
|Licensing                         |                | $                          | 140,009 |               |  | $             | 107,028 |         |  | $ | 74,182 |        
|Maintenance, support and services |                |                            | 77,161  |               |  |               | 60,694  |         |  |   | 52,727 |        
|                                  |                |                            |         |               |  |               |         |         |  |   |        |        
|                                  | Total revenues |                            | $       | 217,170       |  |               | $       | 167,722 |  |   | $      | 126,909 | 
|                                  |                |                            |         |               |  |               |         |         |  |   |        |        

Geographic
revenues (in thousands)(1):

|              |                |                            |         |               |  |               |         |         |  |   |        |         | 
|------------- | -------------- | -------------------------- | ------- | ------------- |  | ------------- | ------- | ------- |  | - | ------ | ------- | 
|              |                |                           
|              |                | For the fiscal years ended
|              |                |                           
|              |                | June 28, 2002              |         | June 29, 2001 |  | June 30, 2000
|              |                |                            |         |               |  |              
|United States |                | $                          | 147,547 |               |  | $             | 113,993 |         |  | $ | 83,552 |        
|Europe (2)    |                |                            | 41,770  |               |  |               | 31,812  |         |  |   | 28,453 |        
|Other (3)     |                |                            | 27,853  |               |  |               | 21,917  |         |  |   | 14,904 |        
|              |                |                            |         |               |  |               |         |         |  |   |        |        
|              | Total revenues |                            | $       | 217,170       |  |               | $       | 167,722 |  |   | $      | 126,909 | 
|              |                |                            |         |               |  |               |         |         |  |   |        |        

Channel
revenues (in thousands):

|             |                |                            |         |               |  |               |         |         |  |   |        |         | 
|------------ | -------------- | -------------------------- | ------- | ------------- |  | ------------- | ------- | ------- |  | - | ------ | ------- | 
|             |                |                           
|             |                | For the fiscal years ended
|             |                |                           
|             |                | June 28, 2002              |         | June 29, 2001 |  | June 30, 2000
|             |                |                            |         |               |  |              
|Direct       |                | $                          | 145,944 |               |  | $             | 106,104 |         |  | $ | 75,798 |        
|Indirect (4) |                |                            | 71,226  |               |  |               | 61,618  |         |  |   | 51,111 |        
|             |                |                            |         |               |  |               |         |         |  |   |        |        
|             | Total revenues |                            | $       | 217,170       |  |               | $       | 167,722 |  |   | $      | 126,909 | 
|             |                |                            |         |               |  |               |         |         |  |   |        |        



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##### Table of Contents



CRYSTAL DECISIONS, INC.


NOTES TO CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS  (Continued)

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

|              |                                                 |               |        |               |  |   |        |        | 
|------------- | ----------------------------------------------- | ------------- | ------ | ------------- |  | - | ------ | ------ | 
|              |                                                 | June 28, 2002 |        | June 29, 2001
|              |                                                 |               |        |              
|United States |                                                 | $             | 587    |               |  | $ | 12,310 |       
|Canada        |                                                 |               | 14,933 |               |  |   | 14,120 |       
|Other         |                                                 |               | 381    |               |  |   | 2,029  |       
|              |                                                 |               |        |               |  |   |        |       
|              | Total long-lived tangible and intangible assets |               | $      | 15,901        |  |   | $      | 28,459 | 
|              |                                                 |               |        |               |  |   |        |       

Reconciliation
of total assets (in thousands):

|                                                |              |               |         |               |  |   |        |         | 
|----------------------------------------------- | ------------ | ------------- | ------- | ------------- |  | - | ------ | ------- | 
|                                                |              | June 28, 2002 |         | June 29, 2001
|                                                |              |               |         |              
|Total long-lived tangible and intangible assets |              | $             | 15,901  |               |  | $ | 28,459 |        
|Other assets, including current                 |              |               | 120,945 |               |  |   | 76,667 |        
|                                                |              |               |         |               |  |   |        |        
|                                                | Total assets |               | $       | 136,846       |  |   | $      | 105,126 | 
|                                                |              |               |         |               |  |   |        |        



|    |                                                                                           
|--- | ------------------------------------------------------------------------------------------
|(1) | Revenues are attributed to geographic locations
    based on the location of the customer.
|(2) | Europe includes South Africa and the Middle East.                                         
|(3) | Other includes Canada and the Asia Pacific region.                                        
|(4) | Includes distributors and OEMs.                                                           

A third-party customer, Ingram, accounted for a
total of $21.0 million, $27.7 million and
$25.3 million of total revenues during fiscal 2002, fiscal
2001 and fiscal 2000, respectively. No other customer accounted
for 10% or more of Crystal Decisions consolidated total revenues
during fiscal 2002, fiscal 2001 or fiscal 2000.

16.     Commitments

Leases.Crystal
Decisions leases its facilities under lease agreements. Rent
expense for facilities under operating leases was approximately
$7.8 million, $6.4 million and $5.7 million for
fiscal 2002, fiscal 2001 and fiscal 2000, respectively. Facility
operating leases expire at various dates through fiscal 2015 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 for which rent
and related costs are charged at fair value. Approximate minimum
lease payments for the Companys facilities were as follows
at June 28, 2002 (in thousands):

|     |            |   |        |        | 
|---- | ---------- | - | ------ | ------ | 
|2003 |            | $ | 7,159  |       
|2004 |            |   | 6,937  |       
|2005 |            |   | 5,414  |       
|2006 |            |   | 4,049  |       
|2007 |            |   | 3,393  |       
|     | Thereafter |   |        | 23,852 | 
|     |            |   |        |       
|     |            | $ | 50,804 |       
|     |            |   |        |       

17.     Litigation

In November 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 action 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. In



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##### Table of Contents



CRYSTAL DECISIONS, INC.


NOTES TO CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS  (Continued)

August 2000, Vedatech obtained permission to
amend is action to include claims for unjust enrichment,
unlawful interference and quantum meruit. In May 2001, Vedatech
sought to enjoin Crystal Decisions (UK) Limited from infringing
the U.K. copyright and sought forfeiture to Vedatech of all
infringing software copies. Of the relief sought, only a claim
for JPY 26,624,181 (approximately U.S. $240,000) for unpaid
invoices initially was settled. The liability phase of the trial
was completed in March 2002, with Crystal Decisions prevailing
on all claims except for the quantum meruit. The court ordered
the parties to mediate the quantum of that claim and, in August
2002, the parties came to a mediated settlement. The mediated
settlement is not material to Crystal Decisions operations
and contains no continuing obligations. On September 24,
2002, however, Crystal Decisions received documents indicating
Vedatech is seeking to set aside the settlement.

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 effect Crystal
Decisions financial position, liquidity or results of
operations.

18.     Recent
Pronouncements

In July 2001, the Financial Accounting Standards
Board (FASB) issued 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 of accounting for business
combinations and includes new criteria for recognizing
intangible assets separately from goodwill. The adoption of SFAS
141 has not had a material effect on the consolidated financial
position or results of operation of the Company. Under
SFAS 142, which is effective for all fiscal years beginning
after December 15, 2001, goodwill and other intangible
assets with indefinite lives are no longer amortized but are
instead reviewed at least annually for impairment. Separate
intangible assets that are deemed to have a definite life will
continue to be amortized over their estimated useful life. The
standard also establishes guidance for testing for impairment of
goodwill and other intangible assets with indefinite useful
lives. The provisions of SFAS 142 will apply to Crystal
Decisions beginning in fiscal 2003. Crystal Decisions does not
expect that the adoption of SFAS 142 will have a material
impact on its consolidated financial position or results of
operations, as there are no remaining intangible assets on the
consolidated balance sheet as at June 28, 2002.

In October 2001, the FASB approved the issuance
of SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets(SFAS 144). SFAS 144 supercedes SFAS
No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed
of(SFAS 121). SFAS 144 retains
the requirements of SFAS 121 to (a) recognize an
impairment loss if the carrying amount of a long-lived asset is
not recoverable from its undiscounted cash flows, and
(b) measure an impairment loss as the difference between
the carrying amount and the fair value of the asset.
SFAS 144 removes goodwill from its scope. The provisions of
SFAS 144 will apply to Crystal Decisions beginning in
fiscal 2003. Crystal Decisions does not expect that the adoption
of SFAS 144 will have a material impact on its consolidated
financial position or results of operations.



F- 34




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##### Table of Contents






INDEX TO EXHIBITS

|        |            |             |  |                                                                                                                                                                                                                                    
|------- | ---------- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |            |            
|Number  |            | Description
|       
|       
|        | 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                                                                                                                                                      
|        | 10.1.3(5)  |             |  | 1999 Stock Option Plan  as amended
    August 13, 2001                                                                                                                                                                            
|        | 10.1.4     |             |  | 1999 Stock Option Plan  as amended
    August 13, 2001 (French Employees Only)                                                                                                                                                    
|        | 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(4)  |             |  | 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 Laurelton Investments Ltd., Seagate Software Information
    Management Group (Canada) Ltd. and Seagate Software, Inc.                                                       
|        | 10.10.1(4) |             |  | Amendment to Lease agreement dated June 22,
    2000, between Laurelton Investments Ltd., Seagate Software
    Information Management Group (Canada) Ltd. and Seagate Software,
    Inc.                                           
|        | 10.10.2    |             |  | Amendment and Restatement to Lease agreement
    dated February 28, 2002, between Laurelton Investments
    Ltd., and KBK No. 197 Ventures Ltd. and Crystal Decisions,
    Corp. and Crystal Decisions, 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.                                                                                                                              



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##### Table of Contents



|        |          |             |  |                                                                                                                                                                                                       
|------- | -------- | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |          |            
|Number  |          | Description
|       
|       
|        | 10.14(3) |             |  | Seagate Software Information Management Group,
    Inc. Software License Agreement between Seagate Software
    Information Management Group, Inc. and Seagate Technology dated
    September 20, 2000
|        | 10.15(4) |             |  | 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 Independent Chartered Accountants                                                                                                                                                          
|        | 24.1     |             |  | Power of Attorney (see the signature page to this
    Form 10-K)                                                                                                                                      
|        | 99.1     |             |  | Certification pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.                                                                                                                          



|    |                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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) | Incorporated by reference to our Annual Report on
    Form 10-K for the fiscal year ended June 29, 2001.                                                       
|   
|(5) | Incorporated by reference to our Quarterly Report
    on Form 10-Q for the period ended September 28, 2001.