VERITAS Software, Summary of VERITAS/Seagate Transaction
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Summary of VERITAS Software/Seagate Technology, Inc. Exchange
Completed Exchange Items
Shares of VERITAS exchanged for each share of Seagate
0.44653368
Cash per share: Cash distributed for each share of Seagate
$8.5484095
Items in Escrow (as of December 31, 2000)
Cash per share: Estimated amount pending court approval of litigation settlement
$0.2040874
Cash per share: Estimated Present Value of Tax Refund Right
$0.08
Other Information
VERITAS stock price on 11/22/00 (average of high/low)
$93.5078
VERITAS shares issued
109,397,636
Total number of Seagate shares outstanding
244,993,020
VERITAS stock value used to determine cash paid in lieu of fractional shares
$118.425
General Tax Information
(excerpt from page 8 of the joint proxy statement/prospectus regarding the transaction)
We intend, but it is not certain, that the merger between Seagate and a subsidiary of VERITAS will qualify as a
“reorganization” within the meaning of Section 368 (a) of the Internal Revenue Code. If it qualifies, Seagate
stockholders will recognize gain, if any, for federal income tax purposes, but only up to the amount of cash received
and, in general, the fair market value as of the closing of the merger of their proportionate share of any amounts paid
following the completion of the merger for tax refunds and credits attributable to Seagate and the $150 million of
retained cash net of potential Seagate tax liabilities. To the extent a Seagate stockholder’s adjusted tax basis in his, her
or its shares of Seagate common stock exceeds the consideration received in exchange for such shares in connection
with the merger, the resulting loss will not be recognized for federal income tax purposes. If the merger fails to
qualify as a “reorganization,” it would be a fully taxable transaction.
The leveraged buyout will have no direct tax consequences to Seagate stockholders.
Review of Tax Treatment
The following discussion and examples do not address all federal income tax considerations that may be relevant to
particular stockholders of Seagate in light of their particular circumstances, such as stockholders who are banks,
insurance companies, tax-exempt organizations, dealers in securities, or foreign persons, stockholders who acquired
their shares in connection with stock option or leveraged buyout plans or in other compensatory transactions, who held
Seagate common stock as part of an integrated investment (including a "straddle") comprised of shares of Seagate
common stock and one or more of other positions, or who have previously entered into a constructive sale of Seagate
common stock. In addition, the following discussion and examples do not address the tax consequences of the merger
under foreign, state or local tax laws or the tax consequences of transactions effected before, after or concurrently with
the merger (whether or not such transactions are in connection with the merger), including, without limitation,
transactions in which Seagate common stock was acquired or VERITAS common stock is disposed of.
Accordingly, we urge Seagate stockholders to consult with their own tax advisors as to the specific tax
consequences of the merger, including the applicable federal, state, local and foreign tax consequences to them
of the merger in their particular circumstances, and to refer to the discussion of Material Federal Income Tax
VERITAS Software, Summary of VERITAS/Seagate Transaction
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Consequences in the Joint Proxy Statement/Prospectus, pages 169 through 173. We undertake no duty (and
express disclaim any such duty) to persons who may rely on this information.
(1) Cash Seagate stockholders received for their shares is taxable in the year 2000 up to the amount of the total gain
realized. The resulting gain should generally be capital gain, and should generally be long-term capital gain if the
Seagate common stock exchanged in the merger has been held for more than one year.
(2) Cash Seagate stockholders received in lieu of fractional shares is taxable in the year 2000. Capital gain or loss is
recognized for the difference between cash received and the tax basis of the fractional shares. The tax basis for
the fractional share is a pro-rata portion of the total basis in Seagate shares, computed as the basis multiplied by a
fraction, equal to the fractional share for which cash was received, divided by the total assumed VERITAS stock
received (whole shares of VERITAS stock received plus the fractional share).
(3) Cash Seagate stockholders may receive as part of the TRA is taxable in the year received. A portion of the
amounts received will be considered interest and the balance will be considered capital gain. The basis in the TRA
Right will be equal to the value of the TRA right treated as taxable in the year 2000.
(4) Cash Seagate stockholders may receive as part of the litigation settlement is taxable as capital gain in the year
received; and
(5) VERITAS stock Seagate stockholders received for their shares is not taxable* until they sell it, and the new basis
in the VERITAS stock is equal to the basis in their Seagate stock, adjusted for: (a) basis used in the fractional
share calculation, (b) the cash received, offset by the amount taxable in item (1). If the gain recognized in the year
2000 is equal to the cash received, then the basis in the VERITAS shares will normally be the basis in the Seagate
shares exchanged in the merger, less the basis allocated to fractional shares deemed sold.
* Disclaimer: The assertion that the shares are not taxable depends on whether the merger qualifies as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue Code. For more information and
related risks, please see the discussion beginning on pages 34, 56 and 169 of the Joint Proxy Statement/Prospectus
dated October 23, 2000 mailed by Seagate and VERITAS to their stockholders in connection with the merger.
VERITAS/Seagate Gain Examples:
(1)
(2)
Gain exceeds
Cash Received
Gain is less than
Cash Received
(3)
Loss
Assuming 1,000 shares of Seagate common stock owned as of merger date.
These computations are performed separately for each block of Seagate shares held.
Per share
VRTS shares
Fractional share
Cash
Est. Value of TRA
Est. Litigation
Total received in 2000
$
$
$
446 $ 93.5078
0.534 $118.4250
8,548
80
204
Basis of SEG shares
2 Cash for fractional share
Pro-rata basis
Fractional share
0.534
Total allocation
446.534
Percentage
0.1196%
Basis in SEG
$ 30,000
$ 41,704
$
63
$ 8,548 **
$
80 **
$
- **
$ 50,395
$
$
$
$
41,704
63
8,548 **
80 **
$
- **
$ 50,395
$ 41,704
$
63
$ 8,548 **
$
80 **
$
- **
$ 50,395
$ 30,000
$
45,000
$ 60,000
$
63
$
63
$
63
$
36 $
$
0.1196%
54 $ 60,000
$
72
0.1196%
45,000
VERITAS Software, Summary of VERITAS/Seagate Transaction
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(1)
(2)
Gain exceeds
Cash Received
Gain (loss) on sale of fractional share
Reported in 2000
2 Total gain (loss) realized
(Gain) loss on sale of fractional share
Remaining gain (loss) realized
Total gain recognized (**)
Reported in 2000
Gain (loss) deferred
Not reported in 2000
3 Basis in SEG
Less basis allocated to fractional shares
Less cash received
Plus gain recognized
Basis in VRTS
4 Sale of VRTS
Proceeds (if sold at same value as merger)
Basis in VRTS
$
Gain is less than
Cash Received
27
$
9
$ 20,395
$
(27)
$ 20,368
$
$
$
5,395
(9)
5,386
(3)
Loss
$
(9)
$ (9,605)
$
9
$ (9,596)
$ 8,628
$
5,386
$
-
$ 11,740
$
-
$ (9,596)
$ 30,000
$
(36)
$ (8,628)
$ 8,628
$ 29,964
$
$
$
$
$
45,000
(54)
(8,628)
5,386
41,704
$ 60,000
$
(72)
$ (8,628)
$
$ 51,300
$ 41,704
$ 29,964
$
$
41,704
41,704
$ 41,704
$ 51,300
-
$ (9,596)
5,386
9
5,395
$
$
(9)
$ (9,596)
$ (9,605)
Gain (loss) on sale of VRTS
Reported in year VRTS stock sold
$ 11,740
Gain from cash and "boot"
Gain (loss) on sale of fractional share
Gain (loss) on sale of VRTS
Total Gain (loss)
$ 8,628
$
27
$ 11,740
$ 20,395
Note:
Proceeds to be reported in future
(litigation settlement)
Reported in year received
$
204
$
$
$
$
$
$
204
$
204
WHERE YOU CAN FIND ADDITIONAL INFORMATION
The SEC maintains a website, located at http://www.sec.gov, which contains reports, proxy and information
statements and other information regarding VERITAS Software, including the registration statement and joint proxy
statement/prospectus regarding the business transaction referenced in the foregoing information. Investors and
security holders are advised to read the joint proxy statement/prospectus regarding the transaction, because it contains
important information. VERITAS Software and Seagate mailed the joint proxy statement/prospectus concerning the
transaction to their respective stockholders on or about October 23, 2000, and filed it with the SEC. Investors and
security holders may obtain a free copy of the joint proxy statement/prospectus and other documents filed by the
companies at the SEC’s web site at http://www.sec.gov. The joint proxy statement/prospectus and such other
documents may also be obtained from VERITAS Software or Seagate by directing such requests to the respective
investor relations contacts listed below.
This summary may include estimates and forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and 21E of the Securities Exchange Act of 1934. These forward-looking statements involve a
VERITAS Software, Summary of VERITAS/Seagate Transaction
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number of risks and uncertainties, including the risks and uncertainties described the joint proxy statement/prospectus
regarding the transaction referenced in the foregoing information, and the risk that some or all of the conditions needed
to trigger the additional cash payments referenced as “Items in Escrow” will not occur, which could cause the actual
results we achieve to differ materially from such forward-looking statements. For more information regarding potential
risks, see the "Factors That May Affect Future Results" section of VERITAS Software's most recent report on Form
10-Q on file with the SEC. We undertake no obligation to update any forward-looking statement to reflect events or
circumstances after the date hereof.