Seagate Technology Reports Fiscal Fourth Quarter And Year-End 2013 Fiancial Results

Jul 24, 2012

London, UK– July 24, 2013 – Seagate Technology plc (NASDAQ: STX) (the “Company”) today reported financial results forH the quarter and fiscal year ended June 28, 2013. During the fourth quarter, the Company reported revenue of approximately $3.4 billion, gross margin of 27.4%, net income of $348 million and diluted earnings per share of $0.94.  On a non-GAAP basis, which excludes the net impact of certain items, Seagate reported gross margin of 28.0%, net income of $447 million and diluted earnings per share of $1.20.  

During the fourth quarter, the Company generated approximately $394 million in operating cash flow, paid cash dividends of $137 million and repurchased 1 million of ordinary shares for approximately $42 million.  The Company issued long-term debt of approximately $1 billion, and repurchased approximately $700 million total par value of its 2016 Notes and 2018 Notes.  

For the fiscal year ended June 28, 2013, on a GAAP basis the Company reported revenue of $14.4 billion, gross margin of 27.5%, net income of $1.8 billion and diluted earnings per share of $4.81.  On a non-GAAP basis, the Company reported gross margin of 28.0% and diluted earnings per share of $5.31.  In fiscal year 2013, the Company returned 71% of its operating cash flow, or 96% of free cash flow, to shareholders in dividends and share redemptions. Cash, cash equivalents, restricted cash, and short-term investments totaled approximately $2.3 billion at the end of the fiscal year. 

“Seagate’s financial results reflect strong execution in a time of change, uncertainty and opportunity,” said Steve Luczo, Seagate’s chairman, president and chief executive officer. “Looking ahead, we believe the market trends of data growth driven by cloud, mobile and open source advancement will present new and significant opportunities for Seagate.  We will continue to balance near-term financial performance and long term strategic development while maximising shareholder value.” 

For a detailed reconciliation of GAAP to non-GAAP results, see accompanying financial tables.

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 has approved a quarterly cash dividend of $0.38 per share, which will be payable on August 21, 2013 to shareholders of record as of the close of business on August 7, 2013. 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.

July 2013 Stock Repurchase Program
The Board of Directors has authorised the Company to repurchase up to $2.5 billion of its outstanding ordinary shares (the “July 2013 Authorisation”).  Seagate, as a result of the July 2013 Authorisation and other current repurchase authorisations, currently has a total authorised unutilised capacity for repurchases of approximately $3.3 billion under these authorisations.

Investor Communications
Seagate management will hold a public webcast today at 5:15 a.m. Pacific Daylight Time that can be accessed on its Investor Relations website at www.seagate.com/investors. During today's webcast, the Company will provide an outlook for its first fiscal quarters of 2014 including key underlying assumptions.  Seagate is planning an investor and analyst meeting on September 10, 2013 to discuss the Company’s longer-term strategic plan.

Replay
A replay will be available beginning today at approximately 9:00 a.m. Pacific Daylight Time at www.seagate.com/investors.

About Seagate
Seagate is a world leader in hard disk drives and storage solutions. Learn more at www.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 September 27, 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 risks, uncertainties and other factors that could cause results to differ materially from those projected in the forward-looking statements is contained in the Company's Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commissionon August 8, 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)

 

June 28, 2013

 

June 29, 2012 (a)

ASSETS

     
Current assets:      

Cash and cash equivalents

 

$1,708

     

$1,707

 

Short-term investments

480

   

411

 

Restricted cash and investments

101

   

93

 

Accounts receivable, net

1,670

   

2,319

 

Inventories

854

   

909

 

Deferred income taxes

115

   

104

 

Other current assets

484

   

767

 
Total current assets

5,412

   

6,310

 
Property, equipment and leasehold improvements, net

2,269

   

2,284

 
Goodwill

476

   

463

 
Other intangible assets

405

   

506

 
Deferred income taxes

456

   

396

 
Other assets, net

225

   

147

 

Total Assets

 

$9,243

     

$10,106

 

LIABILITIES AND EQUITY

     
Current liabilities:      

Accounts payable

 

$1,690

     

$2,286

 

Accrued employee compensation

335

   

344

 

Accrued warranty

176

   

235

 

Accrued expenses

407

   

531

 

Current portion of long-term debt

3

   

 
Total current liabilities

2,611

   

3,396

 
Long-term accrued warranty

144

   

128

 
Long-term accrued income taxes

87

   

84

 
Other non-current liabilities

121

   

138

 
Long-term debt, less current portion

2,774

   

2,863

 

Total Liabilities

5,737

   

6,609

 
       
Equity:      

Total Equity

3,506

   

3,497

 

Total Liabilities and Equity

 

$9,243

     

$10,106

 
 
(a) The information in this column 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 Fiscal Years Ended

 

June 28,
2013

 

June 29,
2012

 

June 28,
2013

 

June 29, 2012(a)

Revenue

 

$3,425

 

 

 

$4,482

 

 

 

$14,351

 

 

 

$14,939

 

 

 

 

 

 

 

 

 

Cost of revenue

2,486

 

 

2,998

 

 

10,411

 

 

10,255

 

Product development

294

 

 

269

 

 

1,133

 

 

1,006

 

Marketing and administrative

176

 

 

140

 

 

635

 

 

528

 

Amortisation of intangibles

20

 

 

18

 

 

79

 

 

38

 

Restructuring and other, net

1

 

 

 

 

2

 

 

4

 

Total operating expenses

2,977

 

 

3,425

 

 

12,260

 

 

11,831

 

 

 

 

 

 

 

 

 

Income from operations

448

 

 

1,057

 

 

2,091

 

 

3,108

 

 

 

 

 

 

 

 

 

Interest income

2

 

 

2

 

 

8

 

 

8

 

Interest expense

(50)

 

 

(55)

 

 

(214)

 

 

(241)

 

Other, net

(97)

 

 

9

 

 

(54)

 

 

7

 

Other expense, net

(145)

 

 

(44)

 

 

(260)

 

 

(226)

 

 

 

 

 

 

 

 

 

Income before income taxes

303

 

 

1,013

 

 

1,831

 

 

2,882

 

Provision for (benefit from) income taxes

(45)

 

 

 

 

(7)

 

 

20

 

Net income attributable to Seagate Technology plc

 

$348

 

 

 

$1,013

 

 

 

$1,838

 

 

 

$2,862

 

 

 

 

 

 

 

 

 

Net income per share attributable to Seagate Technology plc ordinary shareholders:

 

 

 

 

 

 

 

Basic

 

$0.97

 

 

 

$2.46

 

 

 

$4.97

 

 

 

$6.72

 

Diluted

0.94

 

 

2.37

 

 

4.81

 

 

6.49

 

Number of shares used in per share calculations:

 

 

 

 

 

 

 

Basic

359

 

 

411

 

 

370

 

 

426

 

Diluted

371

 

 

427

 

 

382

 

 

441

 

 

 

 

 

 

 

 

 

Cash dividends declared per Seagate Technology plc ordinary share

 

$0.38

 

 

 

$0.25

 

 

 

$1.40

 

 

 

$0.86

 

 

 

(a) The information in this column was derived from the Company’s audited Consolidated Statement of Operations for the year ended June 29, 2012.

 

SEAGATE TECHNOLOGY PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

For the Fiscal Years Ended

 

June 28,
2013

 

June 29, 2012(a)

OPERATING ACTIVITIES

 

 

 

Net income

 

$1,838

 

 

 

$2,862

 

Adjustments to reconcile net income to net cash from operating activities:

 

 

 

Depreciation and amortisation

873

 

 

814

 

Share-based compensation

76

 

 

51

 

Loss on redemption of debt

141

 

 

17

 

Gain on sale of investments

(61)

 

 

(12)

 

Gain on sale of property and equipment

(36)

 

 

(25)

 

Deferred income taxes

(70)

 

 

(28)

 

Other non-cash operating activities, net

12

 

 

7

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable, net

661

 

 

(824)

 

Inventories

102

 

 

99

 

Accounts payable

(538)

 

 

157

 

Accrued employee compensation

(14)

 

 

145

 

Accrued expenses, income taxes and warranty

(170)

 

 

54

 

Vendor Receivables

272

 

 

(82)

 

Other assets and liabilities

(39)

 

 

27

 

Net cash provided by operating activities

3,047

 

 

3,262

 

INVESTING ACTIVITIES

 

 

 

Acquisition of property, equipment and leasehold improvements

(786)

 

 

(636)

 

Proceeds from the sale of property and equipment

29

 

 

20

 

Purchases of short-term investments

(351)

 

 

(454)

 

Sales of short-term investments

296

 

 

397

 

Maturities of short-term investments

38

 

 

119

 

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

(15)

 

 

1

 

Net cash used in investing activities

(825)

 

 

(1,114)

 

FINANCING ACTIVITIES

 

 

 

Net proceeds from issuance of long-term debt

986

 

 

 

Repayments of long-term debt and capital lease obligations

(1,224)

 

 

(670)

 

Proceeds from issuance of ordinary shares under employee stock plans

259

 

 

344

 

Dividends to shareholders

(518)

 

 

(372)

 

Repurchases of ordinary shares

(1,654)

 

 

(2,426)

 

Escrow deposit for acquisition of noncontrolling shares of LaCie S.A.

(72)

 

 

 

Other financing activities, net

1

 

 

6

 

Net cash (used in) provided by financing activities

(2,222)

 

 

(3,118)

 

Effects of foreign currency exchange rate changes on cash and cash equivalents

1

 

 

 

(Decrease) increase in cash and cash equivalents

1

 

 

(970)

 

Cash and cash equivalents at the beginning of the year

1,707

 

 

2,677

 

Cash and cash equivalents at the end of the year

 

$1,708

 

 

 

$1,707

 

 

(a) The information in this column was derived from the Company’s audited Consolidated Statement of Cash Flows for the year ended June 29, 2012.

Use of non-GAAP financial information
To supplement the preliminary financial information presented in accordance with generally accepted accounting principles (GAAP), the Company provides non-GAAP measures of gross margin which are adjusted from results based on GAAP to exclude certain expenses. These non-GAAP financial measures are provided to enhance the user's overall understanding of the Company's current financial performance and its prospects for the future. Specifically, the Company believes non-GAAP results provide useful information to both management and investors as these non-GAAP results exclude certain expenses that the Company believes are not indicative of its core operating results and because it is consistent with the financial models and estimates published by financial analysts who follow the Company.

These non-GAAP results are some of the primary measurements management uses to assess the Company's performance, allocate resources and plan for future periods. Reported non-GAAP results should only be considered as supplemental to results prepared in accordance with GAAP, and not considered as a substitute for, or superior to, GAAP results. These non-GAAP measures may differ from the non-GAAP measures reported by other companies in the Company's industry.