##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended July 1, 2005
 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: 1-7534
 STORAGE TECHNOLOGY CORPORATION
  Delaware
(State or other jurisdiction of
incorporation or organization)
    
    84-0593263
(I.R.S. Employer
Identification Number)
 One StorageTek Drive, Louisville, Colorado
(Address of principal executive offices)
    
    80028-4309
(Zip Code)
 303-673-5151
 þ o
 þ o




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STORAGE TECHNOLOGY CORPORATION
 INDEX TO FORM 10-Q
July 1, 2005
  
 PAGEPART I  FINANCIAL INFORMATIONItem 1  Financial StatementsConsolidated Balance Sheets
    
    
    3Consolidated Statements of Operations
    
    
    4Consolidated Statements of Cash Flows
    
    
    5Consolidated Statements of Changes in Stockholders Equity
    
    
    6Consolidated Statements of Comprehensive Income
    
    
    7Notes to Consolidated Financial Statements
    
    
    8Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3  Quantitative and Qualitative Disclosures about Market Risk
    
    
    26Item 4  Controls and Procedures
    
    
    27PART II  OTHER INFORMATIONItem 1  Legal Proceedings
    
    
    28Item 2  Changes in Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
    
    
    28Item 6  Exhibits
    
    
    28Signatures
    
    
    33Restated BylawsCertification Pursuant to Section 302Certification Pursuant to Section 302Certification Pursuant to Section 906Certification Pursuant to Section 906
  2




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STORAGE TECHNOLOGY CORPORATION
 
 CONSOLIDATED BALANCE SHEETS
 07/01/05
    
    12/31/04(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    860,193
    
    
    $
    853,410Short-term investments
    
    
    282,865
    
    
    
    281,028Accounts receivable
    
    
    461,090
    
    
    
    519,273Inventories
    
    
    127,121
    
    
    
    123,459Deferred income tax assets
    
    
    158,513
    
    
    
    174,253Other current assets
    
    
    7,660
    
    
    
    1,062Total current assets
    
    
    1,897,442
    
    
    
    1,952,485Long-term investments
    
    
    19,747
    
    
    
    48,408Property, plant, and equipment
    
    
    177,565
    
    
    
    177,371Spare parts for maintenance
    
    
    51,069
    
    
    
    49,048Deferred income tax assets
    
    
    46,282
    
    
    
    46,569Other assets
    
    
    140,618
    
    
    
    133,960Total assets
    
    $
    2,332,723
    
    
    $
    2,407,841LIABILITIESCurrent liabilities:Current portion of long-term debt
    
    $
    1,231
    
    
    $
    1,551Accounts payable
    
    
    110,047
    
    
    
    121,019Accrued liabilities
    
    
    489,936
    
    
    
    533,839Income taxes payable
    
    
    227,305
    
    
    
    239,253Other current liabilities
    
    
    2,471
    
    
    
    59,365Total current liabilities
    
    
    830,990
    
    
    
    955,027Long-term debt
    
    
    9,215
    
    
    
    11,006Total liabilities
    
    
    840,205
    
    
    
    966,033Commitments and contingencies (Notes 4 and 8)STOCKHOLDERS EQUITYCommon stock, $0.10 par value, 300,000,000 shares authorized;
116,057,016 shares issued at July 1, 2005, and
112,875,937 shares issued at December 31, 2004
    
    
    11,606
    
    
    
    11,288Capital in excess of par value
    
    
    1,101,444
    
    
    
    1,019,101Retained earnings
    
    
    654,673
    
    
    
    600,095Accumulated other comprehensive loss
    
    
    (15,541
    )
    
    
    (38,772
    )Treasury stock, 8,514,716 shares at July 1, 2005,
and 5,448,350 shares at December 31, 2004, at cost
    
    
    (229,204
    )
    
    
    (134,148
    )Unearned compensation
    
    
    (30,460
    )
    
    
    (15,756
    )Total stockholders equity
    
    
    1,492,518
    
    
    
    1,441,808Total liabilities and stockholders equity
    
    $
    2,332,723
    
    
    $
    2,407,841
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STORAGE TECHNOLOGY CORPORATION
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Quarter Ended
    
    Six Months Ended07/01/05
    
    06/25/04
    
    07/01/05
    
    06/25/04Revenue:Storage products
    
    $
    305,932
    
    
    $
    289,048
    
    
    $
    572,134
    
    
    $
    583,654Storage services
    
    
    243,367
    
    
    
    227,567
    
    
    
    476,421
    
    
    
    448,033Total revenue
    
    
    549,299
    
    
    
    516,615
    
    
    
    1,048,555
    
    
    
    1,031,687Cost of revenue:Storage products
    
    
    157,432
    
    
    
    152,096
    
    
    
    288,828
    
    
    
    301,715Storage services
    
    
    136,161
    
    
    
    126,687
    
    
    
    269,445
    
    
    
    253,937Total cost of revenue
    
    
    293,593
    
    
    
    278,783
    
    
    
    558,273
    
    
    
    555,652Gross profit
    
    
    255,706
    
    
    
    237,832
    
    
    
    490,282
    
    
    
    476,035Research and development costs
    
    
    50,126
    
    
    
    47,046
    
    
    
    97,497
    
    
    
    95,548Selling, general, and administrative expense
    
    
    177,031
    
    
    
    148,287
    
    
    
    341,676
    
    
    
    310,972Operating profit
    
    
    28,549
    
    
    
    42,499
    
    
    
    51,109
    
    
    
    69,515Interest income
    
    
    8,779
    
    
    
    3,319
    
    
    
    15,955
    
    
    
    6,500Interest expense
    
    
    (309
    )
    
    
    (318
    )
    
    
    (528
    )
    
    
    (695
    )Income before income taxes
    
    
    37,019
    
    
    
    45,500
    
    
    
    66,536
    
    
    
    75,320Provision for income taxes
    
    
    (5,866
    )
    
    
    (9,873
    )
    
    
    (11,958
    )
    
    
    (16,344
    )Net income
    
    $
    31,153
    
    
    $
    35,627
    
    
    $
    54,578
    
    
    $
    58,976EARNINGS PER COMMON SHAREBasic earnings per share
    
    $
    0.29
    
    
    $
    0.32
    
    
    $
    0.52
    
    
    $
    0.53Weighted-average shares
    
    
    105,742
    
    
    
    110,675
    
    
    
    105,906
    
    
    
    110,613Diluted earnings per share
    
    $
    0.29
    
    
    $
    0.32
    
    
    $
    0.50
    
    
    $
    0.52Weighted-average and dilutive potential shares
    
    
    107,738
    
    
    
    112,726
    
    
    
    108,131
    
    
    
    113,040
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STORAGE TECHNOLOGY CORPORATION
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six Months Ended07/01/05
    
    06/25/04OPERATING ACTIVITIESCash received from customers
    
    $
    1,080,750
    
    
    $
    1,115,656Cash paid to suppliers and employees
    
    
    (982,907
    )
    
    
    (962,099
    )Interest received
    
    
    15,065
    
    
    
    5,861Interest paid
    
    
    (474
    )
    
    
    (555
    )Income tax paid
    
    
    (13,855
    )
    
    
    (15,602
    )Net cash provided by operating activities
    
    
    98,579
    
    
    
    143,261INVESTING ACTIVITIESPurchases of investments
    
    
    (252,991
    )
    
    
    (244,108
    )Proceeds from sale of investments
    
    
    279,609
    
    
    
    193,515Purchases of property, plant, and equipment
    
    
    (35,270
    )
    
    
    (27,961
    )Proceeds from sale of property, plant, and equipment
    
    
    47
    
    
    
    13Other assets
    
    
    (5,759
    )
    
    
    (23,854
    )Net cash used in investing activities
    
    
    (14,364
    )
    
    
    (102,395
    )FINANCING ACTIVITIESPurchases of common stock
    
    
    (95,056
    )
    
    
    (56,155
    )Proceeds from employee stock plans
    
    
    52,286
    
    
    
    45,068Proceeds from other debt
    
    
    1,467
    
    
    
    428Repayments of other debt
    
    
    (2,114
    )
    
    
    (815
    )Net cash used in financing activities
    
    
    (43,417
    )
    
    
    (11,474
    )Effect of exchange rate changes on cash
    
    
    (34,015
    )
    
    
    (29,011
    )Increase in cash and cash equivalents
    
    
    6,783
    
    
    
    381Cash and cash equivalents  beginning of the period
    
    
    853,410
    
    
    
    727,354Cash and cash equivalents  end of the period
    
    $
    860,193
    
    
    $
    727,735RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIESNet income
    
    $
    54,578
    
    
    $
    58,976Depreciation and amortization expense
    
    
    38,835
    
    
    
    40,549Inventory writedowns
    
    
    13,891
    
    
    
    10,259Translation loss
    
    
    16,010
    
    
    
    18,684Other non-cash adjustments to income
    
    
    38,367
    
    
    
    33,567(Increase) decrease in assets:Accounts receivable
    
    
    32,194
    
    
    
    83,969Other current assets
    
    
    (9,461
    )
    
    
    (13,053
    )Inventories
    
    
    (10,860
    )
    
    
    4,407Spare parts
    
    
    (12,140
    )
    
    
    (10,837
    )Deferred income tax assets
    
    
    584
    
    
    
    (850
    )Decrease in liabilities:Accounts payable
    
    
    (8,731
    )
    
    
    (34,723
    )Accrued liabilities
    
    
    (20,724
    )
    
    
    (23,509
    )Other current liabilities
    
    
    (21,433
    )
    
    
    (16,870
    )Income taxes payable
    
    
    (12,531
    )
    
    
    (7,308
    )Net cash provided by operating activities
    
    $
    98,579
    
    
    $
    143,261
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STORAGE TECHNOLOGY CORPORATION
 
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 AccumulatedCommon
    
    
    
    
    
    Capital in
    
    
    
    
    
    OtherShares
    
    Common
    
    Excess of Par
    
    Retained
    
    Comprehensive
    
    Treasury
    
    UnearnedIssued
    
    Stock
    
    Value
    
    Earnings
    
    Income (Loss)
    
    Stock
    
    Compensation
    
    TotalBalances, December 31, 2004
    
    
    112,876
    
    
    $
    11,288
    
    
    $
    1,019,101
    
    
    $
    600,095
    
    
    $
    (38,772
    )
    
    $
    (134,148
    )
    
    $
    (15,756
    )
    
    $
    1,441,808Components of comprehensive
income:Net income
    
    
    
    
    
    
    
    
    
    
    
    

    
    
    54,578
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54,578Other comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,231
    
    
    
    
    
    
    
    
    
    
    
    23,231Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54,578
    
    
    
    23,231
    
    
    
    
    
    
    
    
    
    
    
    77,809Shares issued upon exercise
of stock options
    
    
    2,261
    
    
    
    226
    
    
    
    45,006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,232Shares issued under employee
stock purchase plan
    
    
    352
    
    
    
    35
    
    
    
    8,022
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,057Shares repurchased under
stock repurchase program
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (95,056
    )
    
    
    
    
    
    
    (95,056
    )Restricted stock activity
    
    
    626
    
    
    
    63
    
    
    
    21,089
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,704
    )
    
    
    6,448Other
    
    
    (58
    )
    
    
    (6
    )
    
    
    8,226
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,220Balances, July 1, 2005
    
    
    116,057
    
    
    $
    11,606
    
    
    $
    1,101,444
    
    
    $
    654,673
    
    
    $
    (15,541
    )
    
    $
    (229,204
    )
    
    $
    (30,460
    )
    
    $
    1,492,518
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STORAGE TECHNOLOGY CORPORATION
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 Quarter Ended
    
    Six Months Ended07/01/05
    
    06/25/04
    
    07/01/05
    
    06/25/04Net income
    
    $
    31,153
    
    
    $
    35,627
    
    
    $
    54,578
    
    
    $
    58,976Other comprehensive income:Foreign currency hedging contracts:Net gain (loss) on foreign currency cash
flow hedges, net of tax expense (benefit)
of $4,980, $(121), $9,091, and $462
    
    
    7,922
    
    
    
    (192
    )
    
    
    14,462
    
    
    
    735Reclassification adjustment for net losses
included in net income, net of tax benefit
of $2,309, $3,010, $5,624, and $6,467
    
    
    3,673
    
    
    
    4,788
    
    
    
    8,947
    
    
    
    10,287Unrealized gain (loss) on marketable securities:Holding gain (loss), net of tax expense
(benefit) of $150, $(276), $3, and $(134)
    
    
    238
    
    
    
    (461
    )
    
    
    4
    
    
    
    (160
    )Reclassification adjustment for net gains
included in net income, net of tax expense
of $0, $508, $78, and $830
    
    
    
    
    
    
    (1,186
    )
    
    
    (182
    )
    
    
    (1,936
    )Other comprehensive income
    
    
    11,833
    
    
    
    2,949
    
    
    
    23,231
    
    
    
    8,926Comprehensive income
    
    $
    42,986
    
    
    $
    38,576
    
    
    $
    77,809
    
    
    $
    67,902
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STORAGE TECHNOLOGY CORPORATION
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 NOTE 1  BASIS OF PREPARATION
    NOTE 2  STOCK-BASED COMPENSATION PLANS
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Quarter Ended
    
    Six Months Ended07/01/05
    
    06/25/04
    
    07/01/05
    
    06/25/04Net income, as reported
    
    $
    31,153
    
    
    $
    35,627
    
    
    $
    54,578
    
    
    $
    58,976Add: Stock-based
compensation expense
included in reported
net income, net of
related tax effects
    
    
    2,475
    
    
    
    1,260
    
    
    
    4,394
    
    
    
    2,515Deduct: Total
stock-based
compensation expense
determined under fair
value based method for
all awards, net of
related tax effects
    
    
    (8,539
    )
    
    
    (6,498
    )
    
    
    (16,477
    )
    
    
    (12,427
    )Pro forma net income
    
    $
    25,089
    
    
    $
    30,389
    
    
    $
    42,495
    
    
    $
    49,064Earnings per share:Basic, as reported
    
    $
    0.29
    
    
    $
    0.32
    
    
    $
    0.52
    
    
    $
    0.53Basic, pro forma
    
    $
    0.24
    
    
    $
    0.27
    
    
    $
    0.40
    
    
    $
    0.44Diluted, as reported
    
    $
    0.29
    
    
    $
    0.32
    
    
    $
    0.50
    
    
    $
    0.52Diluted, pro forma
    
    $
    0.24
    
    
    $
    0.27
    
    
    $
    0.40
    
    
    $
    0.44
 NOTE 3  INVENTORIES
  07/01/05
    
    12/31/04Raw materials
    
    $
    34,200
    
    
    $
    26,567Work-in-process
    
    
    29,087
    
    
    
    21,341Finished goods
    
    
    63,834
    
    
    
    75,551$
    127,121
    
    
    $
    123,459
 NOTE 4  LITIGATION
   9




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NOTE 5  CREDIT FACILITIES
  NOTE 6  OPERATIONS OF BUSINESS SEGMENTS
   Quarter Ended
    
    Six Months Ended07/01/05
    
    06/25/04
    
    07/01/05
    
    06/25/04Revenue:Storage products
    
    $
    305,932
    
    
    $
    289,048
    
    
    $
    572,134
    
    
    $
    583,654Storage services
    
    
    243,367
    
    
    
    227,567
    
    
    
    476,421
    
    
    
    448,033Total revenue
    
    $
    549,299
    
    
    $
    516,615
    
    
    $
    1,048,555
    
    
    $
    1,031,687Gross profit:Storage products
    
    $
    148,500
    
    
    $
    136,952
    
    
    $
    283,306
    
    
    $
    281,939Storage services
    
    
    107,206
    
    
    
    100,880
    
    
    
    206,976
    
    
    
    194,096Total gross profit
    
    $
    255,706
    
    
    $
    237,832
    
    
    $
    490,282
    
    
    $
    476,035
  10




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Quarter Ended
    
    Six Months Ended07/01/05
    
    06/25/04
    
    07/01/05
    
    06/25/04Tape products
    
    $
    242,457
    
    
    $
    215,044
    
    
    $
    454,354
    
    
    $
    438,133Disk products
    
    
    35,826
    
    
    
    46,186
    
    
    
    68,317
    
    
    
    90,404Network products
    
    
    17,310
    
    
    
    18,595
    
    
    
    30,107
    
    
    
    35,609Other
    
    
    10,339
    
    
    
    9,223
    
    
    
    19,356
    
    
    
    19,508Total storage products revenue
    
    $
    305,932
    
    
    $
    289,048
    
    
    $
    572,134
    
    
    $
    583,654
 NOTE 7  EARNINGS PER COMMON SHARE
  Quarter Ended
    
    Six Months Ended07/01/05
    
    06/25/04
    
    07/01/05
    
    06/25/04Net income
    
    $
    31,153
    
    
    $
    35,627
    
    
    $
    54,578
    
    
    $
    58,976Weighted average common
shares outstanding:Basic
    
    
    105,742
    
    
    
    110,675
    
    
    
    105,906
    
    
    
    110,613Effect of dilutive
common stock
equivalents
    
    
    1,996
    
    
    
    2,051
    
    
    
    2,225
    
    
    
    2,427Diluted
    
    
    107,738
    
    
    
    112,726
    
    
    
    108,131
    
    
    
    113,040Earnings per common share:Basic
    
    $
    0.29
    
    
    $
    0.32
    
    
    $
    0.52
    
    
    $
    0.53Diluted
    
    $
    0.29
    
    
    $
    0.32
    
    
    $
    0.50
    
    
    $
    0.52
  NOTE 8  INDEMNIFICATIONS AND WARRANTIES
   11




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Six Months Ended07/01/05
    
    06/25/04Balance at beginning of period
    
    $
    44,536
    
    
    $
    43,676Accruals for warranties issued
    
    
    15,244
    
    
    
    18,421Adjustments to warranties
    
    
    58
    
    
    
    (3,737
    )Amortization
    
    
    (26,138
    )
    
    
    (22,664
    )Balance at end of period
    
    $
    33,700
    
    
    $
    35,696
 NOTE 9  RECENT ACCOUNTING PRONOUNCEMENTS
   12




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NOTE 10  MERGER AGREEMENT WITH SUN MICROSYSTEMS, INC.
  NOTE 11  SUBSEQUENT EVENT
   13




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 FORWARD-LOOKING STATEMENTS
  SECOND QUARTER 2005 FINANCIAL OVERVIEW
 Financial Results
     14




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Financial Position and Liquidity
  FINANCIAL OUTLOOK
   SELECTED CONSOLIDATED STATEMENT OF OPERATIONS DATA
  Percentage Increase(Decrease) Based onQuarter Ended
    
    Dollar Amounts07/01/05
    
    06/25/04
    
    Q2 2005 vs. Q2 2004Revenue:Storage products
    
    
    55.7
    %
    
    
    56.0
    %
    
    
    5.8
    %Storage services
    
    
    44.3
    
    
    
    44.0
    
    
    
    6.9Total revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    6.3Gross profit:Storage products
    
    
    48.5
    %
    
    
    47.4
    %
    
    
    8.4Storage services
    
    
    44.1
    
    
    
    44.3
    
    
    
    6.3Total gross profit
    
    
    46.6
    
    
    
    46.0
    
    
    
    7.5Operating expenses:Research and development costs
    
    
    9.1
    
    
    
    9.1
    
    
    
    6.5Selling, general, and administrative expenses
    
    
    32.3
    
    
    
    28.7
    
    
    
    19.4Operating profit
    
    
    5.2
    
    
    
    8.2
    
    
    
    (32.8
    )Interest income
    
    
    1.6
    
    
    
    0.6
    
    
    
    164.5Interest expense
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    (2.8
    )Income before income taxes
    
    
    6.7
    
    
    
    8.8
    
    
    
    (18.6
    )Provision for income taxes
    
    
    1.0
    
    
    
    1.9
    
    
    
    (40.6
    )Net income
    
    
    5.7
    %
    
    
    6.9
    %
    
    
    (12.6
    )%
 15




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##### Table of Contents



PercentageIncrease (Decrease)Based on DollarQuarter Ended
    
    Amounts07/01/05
    
    06/25/04
    
    Q2 2005 vs. Q2 2004Supplemental data  storage products revenueTape products
    
    
    79.3
    %
    
    
    74.4
    %
    
    
    12.7
    %Disk products
    
    
    11.7
    
    
    
    16.0
    
    
    
    (22.4
    )Network products
    
    
    5.7
    
    
    
    6.4
    
    
    
    (6.9
    )Other
    
    
    3.3
    
    
    
    3.2
    
    
    
    12.1Total storage products revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    5.8
    %
 RESULTS OF OPERATIONS
 Storage ProductsRevenue and Gross Profit Margin
    Storage ServicesRevenue and Gross Profit Margin
    16




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##### Table of Contents



RESEARCH AND DEVELOPMENT
  SELLING, GENERAL, AND ADMINISTRATIVE EXPENSE
  INTEREST INCOME AND EXPENSE
  17




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##### Table of Contents



INCOME TAXES
      CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
  LIQUIDITY AND CAPITAL RESOURCES
 Sources and Uses of Cash
  Six Months Ended07/01/05
    
    06/25/04Operating activities
    
    $
    98,579
    
    
    $
    143,261Investing activities
    
    
    (14,364
    )
    
    
    (102,395
    )Financing activities
    
    
    (43,417
    )
    
    
    (11,474
    )
 18




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##### Table of Contents



Future Sources and Uses of Cash
     FACTORS THAT MAY AFFECT FUTURE RESULTS
 We may be materially affected by risks associated with the proposed merger with Sun
Microsystems
  
    
    We cannot assure that the merger will provide greater value to stockholders than if we
continued as an independent public company.We are unable to predict with certainty our future
prospects or the market price of our common stock. Therefore, we cannot provide any assurance that
the merger will provide greater value to stockholders than if we continued as an independent
company.
    
    Failure to complete the merger could have a negative impact on the market price of our
common stock and on our business.If the merger is not completed, the price of our common stock
may decline to the extent that the current market price reflects a market assumption that the
merger will be completed. In addition, our business and operations may be harmed to the extent
that customers, suppliers, and others believe that we cannot compete effectively without the
merger.
    
    The no solicitation restrictions and the termination fee provisions in the merger
agreement may discourage other companies from trying to acquire StorageTek.We are prohibited from
soliciting or encouraging proposals that may lead to a business combination with a party other than
Sun. We also agreed to pay Sun a termination fee in specified circumstances. These provisions could
discourage other parties from offering to acquire our company at a greater value than offered by
Sun.
    
    Our directors and officers have potential conflicts of interest that may have
influenced their decision to support the merger.The directors and officers of StorageTek have
interests in the merger that are in addition to, or different from, their interests as StorageTek
stockholders and these interests may have influenced their decision to support the merger.
    
    Delays in customer purchase decisions and increased competitive pressures may result
due to the announcement of the proposed merger.Our customers could delay purchase decisions
pending completion of the merger and our competitors may seek to exert competitive pressure over
our customers while the merger is pending.
  19




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##### Table of Contents



We may be materially affected by global economic and political conditions
   We may be materially affected by a decrease in demand for our tape products or by an inability to
maintain key competitive advantages in tape
   We may be materially affected by competition and by our ability to execute our information
lifecycle management strategy
   20




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##### Table of Contents



We may be materially affected by risks associated with new product development
  
    
    Hardware and software design flaws
    
    Product development delays
    
    Changes in data storage technologies
    
    Changes in operating systems
    
    Changes in industry standards
     
    
    Excess or obsolete inventory
    
    Insufficient inventory or manufacturing capacity to meet customer demand
    
    Delayed customer purchases
    
    Lost sales if customers purchase from our competitors
  We may be materially affected by the risks associated with expanding our service offerings
 21




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##### Table of Contents



We may be materially affected by uneven sales patterns and by our ability to forecast customer
demand accurately
   Our gross profit margin may be materially affected by product mix, channel mix, and resale of
third-party products
    We may be materially affected by our ability to grow our indirect channels successfully
  22




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##### Table of Contents



We may be materially affected by the risks associated with sole source suppliers
   Name of supplier
    
    Product or service providedImation Corporation
    
    T9840 and T9940 series tape mediaSanmina-SCI Corporation
    
    Printed circuit boards and certain other
manufacturing and repair    servicesEngenio Information Technologies, Inc
    
    Certain FlexLine disk productsFujitsu Electronics America
    
    Application-specific integrated circuits
(ASICs) for various tape
and     disk productsAustria Microsystems
    
    ASICs for various tape productsHerald Datanetics Ltd. (HDL)
    
    Key component used in certain tape products
   We may be materially affected by a failure to obtain quality parts and components in a timely
manner or by a failure to effectively manage inventory levels
  23




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##### Table of Contents



We may be materially affected by rapid technological change and evolving industry standards
  We may be materially affected by the risks associated with developing and protecting intellectual
property
     We may be materially affected by the risks associated with litigation
  24




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##### Table of Contents



We may be materially affected if we are unable to attract and retain our key employees
  We may be materially affected by the risks of conducting business outside the United States
   
    
    Adverse political and economic conditions
    
    Impositions of tariffs or quotas
    
    Changes in laws or regulations
    
    Difficulty in obtaining export licenses
    
    Potentially adverse tax or labor laws
    
    The burdens of complying with a variety of foreign laws
    
    Longer payment cycles typically associated with international sales
    
    Foreign currency fluctuations
    
    Other factors outside our control
  We may be materially affected by regulatory requirements
  25




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##### Table of Contents



Our manufacturing operations may be materially affected by weather-related risks
  We may be materially affected by restructuring activities
  
 ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Foreign Currency Exchange Rate Risk
    26




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##### Table of Contents



Interest Rate Risk
  Credit Risk
  
 ITEM 4  CONTROLS AND PROCEDURES
   27




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##### Table of Contents



PART II
 
 ITEM 1  LEGAL PROCEEDINGS
  
 ITEM 2  CHANGES IN SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES
  Total Number of
    
    Approximate Dollar ValueTotal Number of
    
    
    
    
    
    Shares Purchased as Part
    
    of Shares that May Yet BeShares Purchased
    
    Average Price Paid
    
    of Publicly Announced
    
    Purchased Under thePeriod
    
    (1)
    
    per Share
    
    Plans or Programs
    
    Plans or Programs (2)04/02/05  05/06/05
    
    
    615,800
    
    
    $
    28.58
    
    
    
    615,800
    
    
    $
    291,684,46905/07/05  06/03/05
    
    
    615,900
    
    
    $
    30.41
    
    
    
    615,900
    
    
    $
    272,953,07106/04/05  07/01/05
    
    
    68,500
    
    
    $
    31.49
    
    
    
    68,500
    
    
    $
    270,795,964Total
    
    
    1,300,200
    
    
    $
    29.60
    
    
    
    1,300,200
 
 (1)
    
    Excludes shares withheld to satisfy minimum tax withholding requirements associated with
restricted stock lapses.(2)
    
    On July 8, 2004, our Board of Directors authorized a stock repurchase program to acquire up
to $500 million of common stock. Purchases under this repurchase program may be made from
time-to-time, in the open market, through block trades or otherwise, and in privately
negotiated transactions. There is no fixed termination date for this repurchase program;
however, the repurchase program has been suspended as a result of the announced merger with
Sun Microsystems. 
 ITEM 6  EXHIBITS
  2.1
    
    Agreement and Plan of Merger by and among Sun Microsystems, Inc., Stanford Acquisition
Corporation, and Storage Technology Corporation dated as of June 2, 2005 (previously filed as
Exhibit 2.1 to our Current Report on Form 8-K, filed on June 6, 2005, and incorporated herein
by reference)3.1
    
    Restated Certificate of Incorporation of Storage Technology Corporation dated July 28, 1987
(previously filed as Exhibit 3.1 to our Annual Report on Form 10-K for the fiscal year ended
December 29, 2000, filed on February 21, 2001, and incorporated herein by reference)3.2
    
    Certificate of Amendment dated May 22, 1989, to the Restated Certificate of Incorporation
dated July 28, 1987 (previously filed as Exhibit 3.2 to our Annual Report on Form 10-K for the
fiscal year ended December 29, 2000, filed on February 21, 2001, and incorporated herein by
reference)3.3
    
    Certificate of Second Amendment dated May 28, 1992, to the Restated Certificate of
Incorporation dated July 28, 1987 (previously filed as Exhibit 3.3 to our Annual Report on
 28




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##### Table of Contents



Form 10-K for the fiscal year ended December 29, 2000, filed on February 21, 2001, and
incorporated herein by reference)3.4
    
    Certificate of Third Amendment dated May 21, 1999, to the Restated Certificate of
Incorporation dated July 28, 1987 (previously filed as Exhibit 3.1 to our Quarterly Report on
Form 10-Q for the fiscal quarter ended June 25, 1999, filed on August 9, 1999, and
incorporated herein by reference)3.52
    
    Restated Bylaws of Storage Technology Corporation, as amended through June 1, 20054.1
    
    Specimen Certificate of Common Stock, $0.10 par value of Registrant (previously filed as
Exhibit (c)(2) to our Current Report on Form 8-K, filed on June 2, 1989, and incorporated
herein by reference)10.11
    
    Storage Technology Corporation Amended and Restated 1987 Employee Stock Purchase
Plan, as amended through May 21, 2003 (previously filed as Exhibit 4.6 to our Registration
Statement on Form S-8 (Registration No. 333-106930) filed on July 10, 2003, and incorporated
herein by reference)10.21
    
    Storage Technology Corporation Amended and Restated 1995 Equity Participation
Plan, as amended through May 20, 2004 (previously filed as Exhibit 10.2 to our Quarterly
Report on Form 10-Q for the fiscal quarter ended June 25, 2004, filed on August 3, 2004, and
incorporated herein by reference)10.31
    
    Storage Technology Corporation 2004 Long Term Incentive Plan (previously filed as
Exhibit 10.3 to our Quarterly Report on Form 10-Q for the fiscal quarter ended June 25, 2004,
filed on August 3, 2004, and incorporated herein by reference)10.41
    
    Storage Technology Corporation Management by Objective Bonus Plan (previously
filed as Exhibit 10.3 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March
30, 2001, filed on May 14, 2001, and incorporated herein by reference)10.51
    
    Storage Technology Corporation 2004 Performance-Based Incentive Plan (previously
filed as Exhibit 10.5 to our Quarterly Report on Form 10-Q for the fiscal quarter ended June
25, 2004, filed on August 3, 2004, and incorporated herein by reference)10.61
    
    Storage Technology Corporation Amended and Restated Stock Option Plan for
Non-Employee Directors (previously filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q
for the fiscal quarter ended June 28, 1996, filed on August 12, 1996, and incorporated herein
by reference)10.71
    
    Storage Technology Corporation Flexible Option Plan, dated December 2001
(previously filed as Exhibit 10.5 to our Annual Report on Form 10-K for the fiscal year ended
December 28, 2001, filed on March 4, 2002, and incorporated herein by reference)10.81
    
    Severance Agreement, dated as of July 1, 2001, between StorageTek and Robert S.
Kocol (previously filed as Exhibit 10.9 to our Quarterly Report on Form 10-Q for the fiscal
quarter ended September 28, 2001, filed on November 8, 2001, and incorporated herein by
reference)10.91
    
    Offer Letter, dated May 10, 2001, from StorageTek to Michael McLay (previously
filed as Exhibit 10.17 to our Quarterly Report on Form 10-Q for the fiscal quarter ended June
29, 2001, filed on August 9, 2001, and incorporated herein by reference)
 29




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##### Table of Contents



10.101
    
    Offer Letter, dated February 9, 2001, from StorageTek to Roger Gaston (previously
filed as Exhibit 10.20 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March
30, 2001, filed on May 14, 2001, and incorporated herein by reference)10.111
    
    Offer Letter, dated July 16, 2001, from StorageTek to Roy Perry (previously filed
as Exhibit 10.28 to our Quarterly Report on Form 10-Q for the fiscal quarter ended September
28, 2001, filed on November 8, 2001, and incorporated herein by reference)10.121
    
    Offer Letter, dated June 27, 2001, from StorageTek to Angel Garcia (previously
filed as Exhibit 10.29 to our Quarterly Report on Form 10-Q for the fiscal quarter ended
September 28, 2001, filed on November 8, 2001, and incorporated herein by reference)10.131
    
    Form of Executive Severance Agreement (previously filed as Exhibit 10.32 to our
Quarterly Report on Form 10-Q for the fiscal quarter ended March 29, 2002, filed on May 13,
2002, and incorporated herein by reference)10.14
    
    Master Services Agreement (MSA), between each of StorageTek, Electronic Data Systems
Corporation, and EDS Information Services L.L.C., dated as of April 1, 2002 (previously filed
as Exhibit 10.33 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 29,
2002, filed on May 13, 2002, and incorporated herein by reference)10.15
    
    Authorization Letter #1 pursuant to the MSA, dated April 1, 2002 (previously filed as
Exhibit 10.34 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 29,
2002, filed on May 13, 2002, and incorporated herein by reference)10.16
    
    Authorization Letter #2 pursuant to the MSA, dated April 1, 2002 (previously filed as
Exhibit 10.35 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 29,
2002, filed on May 13, 2002, and incorporated herein by reference)10.17
    
    Master Secondary Storage Services Agreement, between StorageTek and Electronic Data Systems
Corporation, dated March 29, 2002 (previously filed as Exhibit 10.36 to our Quarterly Report
on Form 10-Q for the fiscal quarter ended March 29, 2002, filed on May 13, 2002, and
incorporated herein by reference)10.181
    
    Form of Indemnification Agreement, dated as of November 22, 2002, between
StorageTek and each director (previously filed as Exhibit 10.31 to our Annual Report on Form
10-K for the fiscal year ended December 27, 2002, filed on March 7, 2003, and incorporated
herein10.191
    
    Offer Letter, dated November 12, 2002, between StorageTek and Pierre Cousin
(previously filed as Exhibit 10.33 to our Annual Report on Form 10-K for the fiscal year ended
December 27, 2002, filed on March 7, 2003, and incorporated herein by reference)10.201
    
    Agreement, dated December 1, 2002, between StorageTek and Pierre Cousin
(previously filed as Exhibit 10.34 to our Annual Report on Form 10-K for the fiscal year ended
December 27, 2002, filed on March 7, 2003, and incorporated herein by reference)10.211
    
    Amended and Restated CEO Employment Agreement, dated March 27, 2003, between
StorageTek and Patrick J. Martin (previously filed as Exhibit 10.36 to our Quarterly Report on
Form 10-Q for the fiscal quarter ended March 28, 2003, filed on May 9, 2003, and incorporated
herein by reference)
 30




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##### Table of Contents



10.221
    
    Form of Executive Agreement, dated as of February 12, 2003, between StorageTek
and each executive officer (previously filed as Exhibit 10.37 to our Quarterly Report on Form

10-Q for the fiscal quarter ended March 28, 2003, filed on May 9, 2003, and incorporated
herein by reference)10.23
    
    Letter, dated July 24, 2003, from StorageTek to Bank of America, N.A. (previously filed as
Exhibit 10.32 to our Quarterly Report on Form 10-Q for the fiscal quarter ended June 27, 2003,
filed on August 8, 2003, and incorporated herein by reference)10.241
    
    Offer Letter, dated March 1, 2004, between StorageTek and Eula Adams (previously
filed as Exhibit 10.31 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March
26, 2004, filed on May 5, 2004, and incorporated herein by reference)10.251
    
    Credit Agreement, dated as of October 15, 2004, among StorageTek, the several
financial institutions thereto, Bank of America, N.A., as L/C Issuer and Administrative Agent
for the Banks, and Banc of America Securities LLC as Sole Lead Arranger and Sole Book Manager
(previously filed in our Quarterly Report on Form 10-Q for the fiscal quarter ended September
24, 2004, filed on November 1, 2004 and incorporated herein by reference)10.261
    
    Amended and Restated form of Stock Option Agreement for use in connection with
the Amended and Restated 1995 Equity Participation Plan (previously filed as Exhibit 10.1 to
our Current Report on Form 8-K, filed on December 21, 2004 and incorporated herein by
reference)10.271
    
    Amended and Restated form of Restricted Stock Agreement for use in connection
with the Amended and Restated 1995 Equity Participation Plan (previously filed as Exhibit 10.2
to our Current Report on Form 8-K, filed on December 21, 2004 and incorporated herein by
reference)10.281
    
    Amended and Restated form of Stock Option Agreement for use in connection with
StorageTeks 2004 Long Term Incentive Plan (previously filed as Exhibit 10.3 to our Current
Report on Form 8-K, filed on December 21, 2004 and incorporated herein by reference)10.291
    
    Amended and Restated form of Restricted Stock Agreement for use in connection
with StorageTeks 2004 Long Term Incentive Plan (previously filed as Exhibit 10.4 to our
Current Report on Form 8-K, filed on December 21, 2004 and incorporated herein by reference)10.301
    
    Amended and Restated form of the Restricted Stock Unit Agreement for use in
connection with StorageTeks 2004 Long Term Incentive Plan (previously filed as Exhibit 10.5
to our Current Report on Form 8-K, filed on December 21, 2004 and incorporated herein by
reference)10.311
    
    Offer Letter, dated January 27, 2005, between StorageTek and Brenda Zawatski
(previously filed as Exhibit 10.1 to our Current Report on Form 8-K, filed on February 2,
2005, and incorporated herein by reference)10.321
    
    Amended and Restated form of Restricted Stock Agreement for use in connection
with the Amended and Restated 1995 Equity Participation Plan (previously filed as Exhibit 10.1
to our Current Report on Form 8-K, filed on February 14, 2005, and incorporated herein by
reference)
 31




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##### Table of Contents



10.331
    
    Amended and Restated form of Restricted Stock Agreement for use in connection
with StorageTeks 2004 Long Term Incentive Plan (previously filed as Exhibit 10.2 to our
Current Report on Form 8-K, filed on February 14, 2005, and incorporated herein by reference)10.341
    
    Transition Agreement, between StorageTek and certain executive officers of
StorageTek (previously filed as Exhibit 10.1 to our Current Report on Fort 8-K, filed on March
30, 2005, and incorporated herein by reference)10.351
    
    Offer Letter, dated March 14, 2005, between StorageTek and Nigel Dessau
(previously filed as Exhibit 10.1 to our Current Report on Fort 8-K, filed on April 4, 2005,
and incorporated herein by reference)10.36
    
    Form of Voting Agreement, dated as of June 2, 2005, by and among Sun Microsystems, Inc.,
StorageTek, and each director of StorageTek (previously filed as Exhibit 10.1 to our Current
Report on Form 8-K, filed on June 6, 2005, and incorporated herein by reference)31.12
    
    Certification Pursuant to Exchange Act Rules 13a-14 and 15d-14, as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.22
    
    Certification Pursuant to Exchange Act Rules 13a-14 and 15d-14, as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.12
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 200232.22
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
 
 1
    
    Contract or compensatory plan or arrangement in which directors and/or officers participate2
    
    Indicates exhibit filed with this Quarterly Report on Form 10-Q 32




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##### Table of Contents



SIGNATURES
  STORAGE TECHNOLOGY
CORPORATION
(Registrant)August 9,
2005
    
    /s/ ROBERT S. KOCOL(Date)
    
    Robert S. KocolCorporate Vice Presidentand Chief Financial Officer(Principal Financial Officer)August 9,
2005
    
    /s/ THOMAS G. ARNOLD(Date)
    
    Thomas G. ArnoldVice President and Corporate Controller(Principal Accounting Officer)
 33




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##### Table of Contents



Exhibit Index
 Exhibit No.
    
    Description2.1
    
    Agreement and Plan of Merger by and among Sun Microsystems, Inc., Stanford Acquisition
Corporation, and Storage Technology Corporation dated as of June 2, 2005 (previously filed as
Exhibit 2.1 to our Current Report on Form 8-K, filed on June 6, 2005, and incorporated herein
by reference)3.1
    
    Restated Certificate of Incorporation of Storage Technology Corporation dated July 28, 1987
(previously filed as Exhibit 3.1 to our Annual Report on Form 10-K for the fiscal year ended
December 29, 2000, filed on February 21, 2001, and incorporated herein by reference)3.2
    
    Certificate of Amendment dated May 22, 1989, to the Restated Certificate of Incorporation
dated July 28, 1987 (previously filed as Exhibit 3.2 to our Annual Report on Form 10-K for the
fiscal year ended December 29, 2000, filed on February 21, 2001, and incorporated herein by
reference)3.3
    
    Certificate of Second Amendment dated May 28, 1992, to the Restated Certificate of
Incorporation dated July 28, 1987 (previously filed as
Exhibit 3.3 to our Annual Report on Form 10-K for the fiscal year ended December 29, 2000, filed on February 21, 2001, and
incorporated herein by reference)3.4
    
    Certificate of Third Amendment dated May 21, 1999, to the Restated Certificate of
Incorporation dated July 28, 1987 (previously filed as Exhibit 3.1 to our Quarterly Report on
Form 10-Q for the fiscal quarter ended June 25, 1999, filed on August 9, 1999, and
incorporated herein by reference)3.52
    
    Restated Bylaws of Storage Technology Corporation, as amended through June 1, 20054.1
    
    Specimen Certificate of Common Stock, $0.10 par value of Registrant (previously filed as
Exhibit (c)(2) to our Current Report on Form 8-K, filed on June 2, 1989, and incorporated
herein by reference)10.11
    
    Storage Technology Corporation Amended and Restated 1987 Employee Stock Purchase
Plan, as amended through May 21, 2003 (previously filed as Exhibit 4.6 to our Registration
Statement on Form S-8 (Registration No. 333-106930) filed on July 10, 2003, and incorporated
herein by reference)10.21
    
    Storage Technology Corporation Amended and Restated 1995 Equity Participation
Plan, as amended through May 20, 2004 (previously filed as Exhibit 10.2 to our Quarterly
Report on Form 10-Q for the fiscal quarter ended June 25, 2004, filed on August 3, 2004, and
incorporated herein by reference)10.31
    
    Storage Technology Corporation 2004 Long Term Incentive Plan (previously filed as
Exhibit 10.3 to our Quarterly Report on Form 10-Q for the fiscal quarter ended June 25, 2004,
filed on August 3, 2004, and incorporated herein by reference)10.41
    
    Storage Technology Corporation Management by Objective Bonus Plan (previously
filed as Exhibit 10.3 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March
30, 2001, filed on May 14, 2001, and incorporated herein by reference)10.51
    
    Storage Technology Corporation 2004 Performance-Based Incentive Plan (previously
filed as Exhibit 10.5 to our Quarterly Report on Form 10-Q for the fiscal quarter ended June
25, 2004, filed on August 3, 2004, and incorporated herein by reference)10.61
    
    Storage Technology Corporation Amended and Restated Stock Option Plan for
Non-Employee Directors (previously filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q
for the fiscal quarter ended June 28, 1996, filed on August 12, 1996, and incorporated herein
by reference)10.71
    
    Storage Technology Corporation Flexible Option Plan, dated December 2001
(previously filed as Exhibit 10.5 to our Annual Report on Form 10-K for the fiscal year ended
December 28, 2001, filed on March 4, 2002, and incorporated herein by reference)10.81
    
    Severance Agreement, dated as of July 1, 2001, between StorageTek and Robert S.
Kocol (previously filed as Exhibit 10.9 to our Quarterly Report on Form 10-Q for the fiscal
quarter ended September 28, 2001, filed on November 8, 2001, and incorporated herein by
reference)10.91
    
    Offer Letter, dated May 10, 2001, from StorageTek to Michael McLay (previously
filed as Exhibit 10.17 to our Quarterly Report on Form 10-Q for the fiscal quarter ended June
29, 2001, filed on August 9, 2001, and incorporated herein by reference)




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##### Table of Contents



Exhibit No.
    
    Description10.101
    
    Offer Letter, dated February 9, 2001, from StorageTek to Roger Gaston (previously
filed as Exhibit 10.20 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March
30, 2001, filed on May 14, 2001, and incorporated herein by reference)10.111
    
    Offer Letter, dated July 16, 2001, from StorageTek to Roy Perry (previously filed
as Exhibit 10.28 to our Quarterly Report on Form 10-Q for the fiscal quarter ended September
28, 2001, filed on November 8, 2001, and incorporated herein by reference)10.121
    
    Offer Letter, dated June 27, 2001, from StorageTek to Angel Garcia (previously
filed as Exhibit 10.29 to our Quarterly Report on Form 10-Q for the fiscal quarter ended
September 28, 2001, filed on November 8, 2001, and incorporated herein by reference)10.131
    
    Form of Executive Severance Agreement (previously filed as Exhibit 10.32 to our
Quarterly Report on Form 10-Q for the fiscal quarter ended March 29, 2002, filed on May 13,
2002, and incorporated herein by reference)10.14
    
    Master Services Agreement (MSA), between each of StorageTek, Electronic Data Systems
Corporation, and EDS Information Services L.L.C., dated as of April 1, 2002 (previously filed
as Exhibit 10.33 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 29,
2002, filed on May 13, 2002, and incorporated herein by reference)10.15
    
    Authorization Letter #1 pursuant to the MSA, dated April 1, 2002 (previously filed as
Exhibit 10.34 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 29,
2002, filed on May 13, 2002, and incorporated herein by reference)10.16
    
    Authorization Letter #2 pursuant to the MSA, dated April 1, 2002 (previously filed as
Exhibit 10.35 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 29,
2002, filed on May 13, 2002, and incorporated herein by reference)10.17
    
    Master Secondary Storage Services Agreement, between StorageTek and Electronic Data Systems
Corporation, dated March 29, 2002 (previously filed as Exhibit 10.36 to our Quarterly Report
on Form 10-Q for the fiscal quarter ended March 29, 2002, filed on May 13, 2002, and
incorporated herein by reference)10.181
    
    Form of Indemnification Agreement, dated as of November 22, 2002, between
StorageTek and each director (previously filed as Exhibit 10.31 to our Annual Report on Form
10-K for the fiscal year ended December 27, 2002, filed on March 7, 2003, and incorporated
herein10.191
    
    Offer Letter, dated November 12, 2002, between StorageTek and Pierre Cousin
(previously filed as Exhibit 10.33 to our Annual Report on Form 10-K for the fiscal year ended
December 27, 2002, filed on March 7, 2003, and incorporated herein by reference)10.201
    
    Agreement, dated December 1, 2002, between StorageTek and Pierre Cousin
(previously filed as Exhibit 10.34 to our Annual Report on Form 10-K for the fiscal year ended
December 27, 2002, filed on March 7, 2003, and incorporated herein by reference)10.211
    
    Amended and Restated CEO Employment Agreement, dated March 27, 2003, between
StorageTek and Patrick J. Martin (previously filed as Exhibit 10.36 to our Quarterly Report on
Form 10-Q for the fiscal quarter ended March 28, 2003, filed on May 9, 2003, and incorporated
herein by reference)




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##### Table of Contents



Exhibit No.
    
    Description10.221
    
    Form of Executive Agreement, dated as of February 12, 2003, between StorageTek
and each executive officer (previously filed as Exhibit 10.37 to our Quarterly Report on Form

10-Q for the fiscal quarter ended March 28, 2003, filed on May 9, 2003, and incorporated
herein by reference)10.23
    
    Letter, dated July 24, 2003, from StorageTek to Bank of America, N.A. (previously filed as
Exhibit 10.32 to our Quarterly Report on Form 10-Q for the fiscal quarter ended June 27, 2003,
filed on August 8, 2003, and incorporated herein by reference)10.241
    
    Offer Letter, dated March 1, 2004, between StorageTek and Eula Adams (previously
filed as Exhibit 10.31 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March
26, 2004, filed on May 5, 2004, and incorporated herein by reference)10.251
    
    Credit Agreement, dated as of October 15, 2004, among StorageTek, the several
financial institutions thereto, Bank of America, N.A., as L/C Issuer and Administrative Agent
for the Banks, and Banc of America Securities LLC as Sole Lead Arranger and Sole Book Manager
(previously filed in our Quarterly Report on Form 10-Q for the fiscal quarter ended September
24, 2004, filed on November 1, 2004 and incorporated herein by reference)10.261
    
    Amended and Restated form of Stock Option Agreement for use in connection with
the Amended and Restated 1995 Equity Participation Plan (previously filed as Exhibit 10.1 to
our Current Report on Form 8-K, filed on December 21, 2004 and incorporated herein by
reference)10.271
    
    Amended and Restated form of Restricted Stock Agreement for use in connection
with the Amended and Restated 1995 Equity Participation Plan (previously filed as Exhibit 10.2
to our Current Report on Form 8-K, filed on December 21, 2004 and incorporated herein by
reference)10.281
    
    Amended and Restated form of Stock Option Agreement for use in connection with
StorageTeks 2004 Long Term Incentive Plan (previously filed as Exhibit 10.3 to our Current
Report on Form 8-K, filed on December 21, 2004 and incorporated herein by reference)10.291
    
    Amended and Restated form of Restricted Stock Agreement for use in connection
with StorageTeks 2004 Long Term Incentive Plan (previously filed as Exhibit 10.4 to our
Current Report on Form 8-K, filed on December 21, 2004 and incorporated herein by reference)10.301
    
    Amended and Restated form of the Restricted Stock Unit Agreement for use in
connection with StorageTeks 2004 Long Term Incentive Plan (previously filed as Exhibit 10.5
to our Current Report on Form 8-K, filed on December 21, 2004 and incorporated herein by
reference)10.311
    
    Offer Letter, dated January 27, 2005, between StorageTek and Brenda Zawatski
(previously filed as Exhibit 10.1 to our Current Report on Form 8-K, filed on February 2,
2005, and incorporated herein by reference)10.321
    
    Amended and Restated form of Restricted Stock Agreement for use in connection
with the Amended and Restated 1995 Equity Participation Plan (previously filed as Exhibit 10.1
to our Current Report on Form 8-K, filed on February 14, 2005, and incorporated herein by
reference)




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##### Table of Contents



Exhibit No.
    
    Description10.331
    
    Amended and Restated form of Restricted Stock Agreement for use in connection
with StorageTeks 2004 Long Term Incentive Plan (previously filed as Exhibit 10.2 to our
Current Report on Form 8-K, filed on February 14, 2005, and incorporated herein by reference)10.341
    
    Transition Agreement, between StorageTek and certain executive officers of
StorageTek (previously filed as Exhibit 10.1 to our Current Report on Fort 8-K, filed on March
30, 2005, and incorporated herein by reference)10.351
    
    Offer Letter, dated March 14, 2005, between StorageTek and Nigel Dessau
(previously filed as Exhibit 10.1 to our Current Report on Fort 8-K, filed on April 4, 2005,
and incorporated herein by reference)10.36
    
    Form of Voting Agreement, dated as of June 2, 2005, by and among Sun Microsystems, Inc.,
StorageTek, and each director of StorageTek (previously filed as Exhibit 10.1 to our Current
Report on Form 8-K, filed on June 6, 2005, and incorporated herein by reference)31.12
    
    Certification Pursuant to Exchange Act Rules 13a-14 and 15d-14, as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.22
    
    Certification Pursuant to Exchange Act Rules 13a-14 and 15d-14, as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.12
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 200232.22
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
 
 1
    
    Contract or compensatory plan or arrangement in which directors and/or officers participate2
    
    Indicates exhibit filed with this Quarterly Report on Form 10-Q