SEAGATE TECHNOLOGY REPORTS FISCAL SECOND QUARTER 2013 FINANCIAL RESULTS

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.

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“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,
2012

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,
2012

 

December 30,
2011

 

December 28,
2012

December 30,
2011

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,
2012

December 30,
2011

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

 

 

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