NEW DELHI – January 29, 2013: Seagate Technology plc (NASDAQ: STX) (the “Company”) today reported financial results for the quarter ended December 28, 2012. During the fiscal second quarter, the Company reported revenue of approximately $3.7 billion, shipping 58 million units. On a GAAP basis, Seagate reported gross margin of 27.0%, net income of $492 million and diluted earnings per share of $1.30. On a non-GAAP basis, which excludes the net impact of certain items, Seagate reported gross margin of 27.6%, net income of $523 million and diluted earnings per share of $1.38. Cash flow from operations in the quarter was $844 million and the Company returned $1.1 billion to shareholders in dividends and share redemptions. Cash, cash equivalents, restricted cash, and short-term investments totaled approximately $2.0 billion at the end of the fiscal second quarter.
“Seagate is executing well in an environment where customer demand forecasting is challenging,” said Steve Luczo, Seagate’s chairman, president and chief executive officer. “Looking ahead, we will continue to manage our business conservatively to the demand environment, focus on profitability and effectively invest for market leadership in storage for mobility, cloud and open source. Creating value for shareholders remains a top priority, and in the first half of fiscal 2013, we returned over 95% of operating cash flows through share redemptions and dividends.”
Seagate has issued a Supplemental Commentary document. The Supplemental Commentary will not be read during today’s call, but rather it is available in the investors section of seagate.com.
Quarterly Cash Dividend
The Board of Directors approved an increase in our quarterly cash dividend to $0.38 per share which was paid on December 28, 2012, rather than in the March 2013 quarter. The payment of any future quarterly dividends will be at the discretion of the Board and will be dependent upon Seagate’s financial position, results of operations, available cash, cash flow, capital requirements and other factors deemed relevant by the Board.
About Seagate
Seagate is the world leader in hard disk drives and storage solutions. Learn more at seagate.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, each as amended, including, in particular, statements about our plans, strategies and prospects and estimates of industry growth for the fiscal quarter ending March 29, 2013 and beyond. These statements identify prospective information and include words such as “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “projects” and similar expressions. These forward-looking statements are based on information available to the Company as of the date of this press release and are based on management’s current views and assumptions. These forward-looking statements are conditioned upon and also involve a number of known and unknown risks, uncertainties, and other factors that could cause actual results, performance or events to differ materially from those anticipated by these forward-looking statements. Such risks, uncertainties, and other factors may be beyond the Company’s control and may pose a risk to the Company’s operating and financial condition. Such risks and uncertainties include, but are not limited to: the uncertainty in global economic conditions, as consumers and businesses may defer purchases in response to tighter credit and financial news; the impact of the variable demand and adverse pricing environment for disk drives, particularly in view of current business and economic conditions; dependence on the Company’s ability to successfully qualify, manufacture and sell its disk drive products in increasing volumes on a cost-effective basis and with acceptable quality, particularly the new disk drive products with lower cost structures; the impact of competitive product announcements; possible excess industry supply with respect to particular disk drive products; and the Company’s ability to achieve projected cost savings in connection with restructuring plans. Information concerning additional factors that could cause results to differ materially from those projected in the forward-looking statements are contained in the Company’s Annual Report on Form 10-K as filed with the SEC on August 8, 2012 and Quarterly Report on Form 10-Q as filed with the SEC on October 31, 2012, which statements are incorporated into this press release by reference. These forward-looking statements should not be relied upon as representing the Company’s views as of any subsequent date and the Company undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made.
# # #
SEAGATE TECHNOLOGY PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
|
December 28, 2012 |
June 29, |
||||||
|
ASSETS |
|||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ |
1,383 |
$ |
1,707 |
|||
| Short-term investments |
489 |
411 |
|||||
| Restricted cash and investments |
98 |
93 |
|||||
| Accounts receivable, net |
1,648 |
2,319 |
|||||
| Inventories |
800 |
909 |
|||||
| Deferred income taxes |
112 |
104 |
|||||
| Other current assets |
487 |
767 |
|||||
| Total current assets |
5,017 |
6,310 |
|||||
| Property, equipment and leasehold improvements, net |
2,228 |
2,284 |
|||||
| Goodwill |
476 |
463 |
|||||
| Other intangible assets, net |
480 |
506 |
|||||
| Deferred income taxes |
409 |
396 |
|||||
| Other assets, net |
132 |
147 |
|||||
| Total Assets | $ |
8,742 |
$ |
10,106 |
|||
|
LIABILITIES AND EQUITY |
|||||||
| Current liabilities: | |||||||
| Accounts payable | $ |
1,685 |
$ |
2,286 |
|||
| Accrued employee compensation |
287 |
344 |
|||||
| Accrued warranty |
195 |
235 |
|||||
| Accrued expenses |
473 |
531 |
|||||
| Current portion of long-term debt |
3 |
— |
|||||
| Total current liabilities |
2,643 |
3,396 |
|||||
| Long-term accrued warranty |
135 |
128 |
|||||
| Long-term accrued income taxes |
84 |
84 |
|||||
| Other non-current liabilities |
140 |
138 |
|||||
| Long-term debt, less current portion |
2,815 |
2,863 |
|||||
| Total Liabilities |
5,817 |
6,609 |
|||||
| Equity: | |||||||
| Total Equity |
2,925 |
3,497 |
|||||
| Total Liabilities and Equity | $ |
8,742 |
$ |
10,106 |
|||
The information as of June 29, 2012 was derived from the Company’s audited Consolidated Balance Sheet as of June 29, 2012.
SEAGATE TECHNOLOGY PLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
|
For the Three Months Ended |
|
For the Six Months Ended |
|||||||||||||
|
December 28, |
|
December 30, |
|
December 28, |
December 30, |
||||||||||
| Revenue | $ |
3,668 |
$ |
3,195 |
$ |
7,400 |
$ |
6,007 |
|||||||
| Cost of revenue |
2,676 |
2,185 |
5,347 |
4,448 |
|||||||||||
| Product development |
277 |
259 |
545 |
467 |
|||||||||||
| Marketing and administrative |
139 |
141 |
289 |
245 |
|||||||||||
| Amortization of intangibles |
20 |
2 |
39 |
3 |
|||||||||||
| Restructuring and other, net |
1 |
3 |
1 |
3 |
|||||||||||
| Total operating expenses |
3,113 |
2,590 |
6,221 |
5,166 |
|||||||||||
| Income from operations |
555 |
605 |
1,179 |
841 |
|||||||||||
| Interest income |
2 |
2 |
4 |
3 |
|||||||||||
| Interest expense |
(55 |
) |
(58 |
) |
(111 |
) |
(127 |
) | |||||||
| Other, net |
(3 |
) |
9 |
27 |
(8 |
) | |||||||||
| Other expense, net |
(56 |
) |
(47 |
) |
(80 |
) |
(132 |
) | |||||||
| Income before income taxes |
499 |
558 |
1,099 |
709 |
|||||||||||
| Provision for (benefit from) income taxes |
7 |
(5 |
) |
25 |
6 |
||||||||||
| Net income |
492 |
563 |
1,074 |
703 |
|||||||||||
| Less: Net income attributable to noncontrolling interest |
— |
— |
— |
— |
|||||||||||
| Net income attributable to Seagate Technology plc | $ |
492 |
$ |
563 |
$ |
1,074 |
$ |
703 |
|||||||
| Net income per share attributable to Seagate Technology plc ordinary shareholders: | |||||||||||||||
| Basic | $ |
1.33 |
$ |
1.32 |
$ |
2.81 |
$ |
1.66 |
|||||||
| Diluted |
1.30 |
1.28 |
2.73 |
1.61 |
|||||||||||
| Number of shares used in per share calculations: | |||||||||||||||
| Basic |
369 |
427 |
382 |
424 |
|||||||||||
| Diluted |
379 |
439 |
394 |
436 |
|||||||||||
| Cash dividends declared per Seagate Technology plc ordinary share | $ |
0.70 |
$ |
0.18 |
$ |
1.02 |
$ |
0.36 |
|||||||
SEAGATE TECHNOLOGY PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
|
For the Six Months Ended |
|||||||
|
December 28, |
December 30, |
||||||
| OPERATING ACTIVITIES | |||||||
| Net income | $ |
1,074 |
$ |
703 |
|||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization |
430 |
373 |
|||||
| Share-based compensation |
36 |
26 |
|||||
| Deferred income taxes |
(11 |
) |
(4 |
) | |||
| Gain on sale of strategic investments |
(33 |
) |
— |
||||
| Gain on sale of property and equipment |
(8 |
) |
(14 |
) | |||
| Loss on redemption of debt |
6 |
5 |
|||||
| Other non-cash operating activities, net |
5 |
10 |
|||||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable, net |
683 |
(130 |
) | ||||
| Inventories |
156 |
181 |
|||||
| Accounts payable |
(496 |
) |
(500 |
) | |||
| Accrued employee compensation |
(62 |
) |
56 |
||||
| Accrued expenses, income taxes and warranty |
(97 |
) |
(34 |
) | |||
| Other assets and liabilities |
293 |
207 |
|||||
| Net cash provided by operating activities |
1,976 |
879 |
|||||
| INVESTING ACTIVITIES | |||||||
| Acquisition of property, equipment and leasehold improvements |
(427 |
) |
(361 |
) | |||
| Proceeds from the sale of property and equipment |
4 |
9 |
|||||
| Purchases of short-term investments |
(168 |
) |
(309 |
) | |||
| Sales of short-term investments |
125 |
260 |
|||||
| Maturities of short-term investments |
21 |
115 |
|||||
| Proceeds from the sale of strategic investments |
42 |
(5 |
) | ||||
| Cash used in acquisition of LaCie S.A., net of cash acquired |
(36 |
) |
— |
||||
| Cash used in acquisition of Samsung HDD assets and liabilities |
— |
(561 |
) | ||||
| Other investing activities, net |
(14 |
) |
9 |
||||
| Net cash used in investing activities |
(453 |
) |
(843 |
) | |||
| FINANCING ACTIVITIES | |||||||
| Repayments of long-term debt and capital lease obligations |
(58 |
) |
(594 |
) | |||
| Repurchases of ordinary shares |
(1,510 |
) |
(191 |
) | |||
| Dividends to shareholders |
(377 |
) |
(154 |
) | |||
| Proceeds from issuance of ordinary shares under employee stock plans |
168 |
51 |
|||||
| Escrow deposit for acquisition of noncontrolling shares of LaCie S.A. |
(72 |
) |
— |
||||
| Net cash used in financing activities |
(1,849 |
) |
(888 |
) | |||
| Effect of foreign currency exchange rate changes on cash and cash equivalents |
2 |
— |
|||||
| Decrease in cash and cash equivalents |
(324 |
) |
(852 |
) | |||
| Cash and cash equivalents at the beginning of the period |
1,707 |
2,677 |
|||||
| Cash and cash equivalents at the end of the period | $ |
1,383 |
$ |
1,825 |
|||
