Seagate Technology Reports Fiscal First Quarter 2010 Results

十月 20, 2009

SCOTTS VALLEY, Calif. - Seagate Technology (NASDAQ: STX) today reported financial results for the quarter ended October 2, 2009 of 46.3 million disk drive unit shipments, revenue of $2.66 billion, gross margin of 24.5%, net income of $179 million and diluted earnings per share of $0.35. The financial results for the quarter include $10 million of purchased intangibles amortization, $46 million of restructuring and a write down of long-lived assets of $64 million. The aggregate impact of these items is $120 million or approximately $0.23 per share.

During the first fiscal quarter, Seagate reduced short-term borrowings and long-term debt by approximately $465 million primarily with the maturity of its $300 million floating rate senior notes and by paying down its revolving credit facility by $150 million. Subsequent to the end of the first fiscal quarter, Seagate paid off the remaining balance of its revolving credit facility of $200 million and made open market purchases of $20 million, bringing the total debt reduction during fiscal 2010 to approximately $685 million.

"At a time when economic conditions remained challenging we are very pleased with the company’s financial performance, delivering strong revenues, margins and cash generation," said Steve Luczo, Seagate CEO. "The company has returned to its operating model well ahead of our expectations of six months ago and now expects to sustain gross margin of 22-26%. Although mission critical enterprise demand in particular has yet to recover to historical levels, we benefitted from our time-to-market product delivery to customers integrating our notebook, desktop and enterprise drives."

Business Outlook  
While visibility has improved throughout the calendar year, the ongoing uncertainty in global economic conditions makes it difficult to predict product demand and other related matters, which makes it more likely that Seagate's actual results could differ materially from current expectations.

For the December quarter, the company is planning for the overall industry demand for disk drives to be 153 - 160 million units. As a result, the company expects revenue to be approximately $2.75 - $2.85 billion and gross margin as a percent of revenue to be near the high end of the company's targeted range of 22-26%. In today's financial results conference call, the company will also provide an update on current and expected business conditions, including key underlying assumptions, for its financial outlook for fiscal year 2010.

The December quarter outlook does not include the impact of any potential new restructuring activities, future mergers, acquisitions, financing, dispositions or other business combinations the company may undertake. The company's policy is to refrain from commenting on any such activities.

Additional information relating to the financial results for the fiscal first quarter of 2010 can be found online at seagate.com.

Conference Call
Seagate will hold a conference call to review the fiscal first quarter results at 2:00 p.m. Pacific Time today. The conference call can be accessed online at seagate.com or by phone as follows:
USA: (800) 591-6945
International: (617) 614-4911
Participant Passcode: 40885241

Replay
A replay will be available beginning today at 6:00 p.m. Pacific Time. The replay can be accessed from seagate.com.

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, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, but are not limited to, statements related to the Company’s future operating and financial performance in the December 2009 quarter, and thereafter, and include statements regarding expected revenue, gross margin, product competition, customer demand for disk drives and general market conditions. These forward-looking statements are based on information available to Seagate as of the date of this press release. Current expectations, forecasts and assumptions involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those anticipated by these forward-looking statements. Such risks, uncertainties, and other factors may be beyond the Company’s control. In particular, the decline in global economic conditions continues to pose a risk to the Company’s operating and financial performance as consumers and businesses have, and may continue to, defer purchases in response to tighter credit and negative financial conditions. Such risks and uncertainties also include the impact of the variable demand, particularly in view of current business and economic conditions; dependence on Seagate’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; and the Company’s ability to achieve projected cost savings. 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 as filed with the U.S. Securities and Exchange Commission on August 19, 2009, 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 Seagate undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made.

#  #  #

 

Seagate Technology
Condensed Consolidated Balance Sheets
(In millions)
(Unaudited)

 
October 2,
2009
   
July 3,
2009 (a)
Assets              
Cash and cash equivalents
$
1,530
 
$
1,427
  Short-term investments  
96
     
114
 
  Restricted cash and investments   166       508  
  Accounts receivable, net  
1,242
     
1,033
 
  Inventories  
622
     
587
 
  Deferred income taxes  
99
 
 
 
97
 
  Other current assets  
552
     
528
 
   
 
  Total Current Assets  
4,307
     
4,294
 
               
Property, equipment and leasehold   improvements, net  
2,039
     
2,229
 
  Deferred income taxes
 
369
 
 
 
372
 
  Other assets, net  
184
     
192
 
   
 
  Total Assets
$
6,899
   
$
7,087
 
Liabilities and Shareholders' Equity              
  Short-term borrowings
$
215
   
$
350
 
  Accounts payable
 
1,674
   
 
1,573
 
  Accrued employee compensation  
142
     
144
 
  Accrued warranty  
206
     
213
 
  Accrued expenses  
440
     
483
 
  Accrued income taxes  
13
     
10
 
  Current portion of long-term debt  
107
     
421
 
   
 
  Total Current Liabilities
 
2,797
     
3,194
 
               
  Long-term accrued warranty  
212
     
224
 
  Long-term accrued income taxes  
67
     
69
 
  Other non-current liabilities  
134
     
120
 
  Long-term debt, less current portion  
1,910
     
1,926
 
   
 
  Total Liabilities
 
5,120
     
5,533
 
             
  Shareholders' Equity  
1,779
     
1,554
 
 
 
  Total Liabilities and Shareholders'  Equity
$
6,899
   
$
7,087
 
 
(a)  As adjusted due to changes to the accounting for convertible debt instruments implemented in the first quarter of fiscal year 2010.






 

Seagate Technology
Condensed Consolidated Statements of Operations
(In millions, except per share data)
(Unaudited)
   
For the 3 Months Ended
 
October 2,
2009
October 3,
2008(a)
Revenue
$
2,663
 
$
3,033
 
           
Cost of revenue  
2,010
   
2,508
 
Product development  
208
   
260
 
Marketing and administrative  
106
   
148
 
Amortization of intangibles   8     14  
Restructuring and other, net  
46
    23  
Impairment of long-lived assets  
64
    blank space  
  Total operating expenses  
2,442
   
2,953
 
   
   
Income (loss) from operations
 
221
   
80
 
   
Interest income  
1
   
7
 
Interest expense   (45)     (33)  
Other, net  
3
    (13)  
  Other income (expense), net   (41)     (39)  
   
   
Income (loss) before income taxes
 
180
   
41
 
Provision for (benefit from) income   taxes
 
1
   
(16)
 
 
Net income (loss)
$
179
 
$
57
 
 
Net income (loss) per share:    
  Basic
$
0.36
 
$
0.12
 
  Diluted  
0.35
   
0.12
 
Number of shares used in per share calculations:    
  Basic  
494
   
485
 
  Diluted  
512
   
494
 


(a)  As adjusted due to changes to the accounting for convertible debt instruments implemented in the first quarter of fiscal year 2010.


 

Seagate Technology
Condensed Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
 
For the 3 Months Ended
null

October 2,
2009
October 3,
2008 (a)
Operating Activities              
Net income
$
179
   
$
57
 
Adjustments to reconcile net income to net  cash provided by (used in) operating activities:              
Depreciation and amortization  
204
     
253
 
  Stock-based compensation   11       27  
  Impairment of long-lived assets   64       blank space  
Other non-cash operating activities, net  
4
     
(8)
 
Changes in operating assets and liabilities:              
    Accounts receivable  
(209)
     
16
 
    Inventories  
(35)
     
36
 
    Accounts payable  
112
     
278
 
    Accrued employee compensation   (2)       (287)  
    Accrued warranty   (19)       blank space  
    Accrued expenses   (54)       26  
  Other assets and liabilities  
23
     
(94)
 
   
 
  Net cash provided by (used in) operating  activities
 
278
     
304
 
   
 
 
Investing Activities              
Acquisition of property, equipment and  leasehold   improvements  
(89)
     
(280)
 
Purchases of short-term investments  
(41)
     
(90)
 
Maturities and sales of short-term investments  
58
     
93
 
Decrease in restricted cash and investments   10       space  
Other investing activities, net  
(2)
     
12
 
   
 
Net cash provided by (used in) investing activities  
(64)
     
(265)
 
   
 
               
Financing Activities              
Proceeds from short-term borrowings   15       space  
Repayment of short-term borrowings   (150)       space  
Retirements and maturities of long-term debt   (334)       space  
Decrease in restricted cash and investments   332       space  
Proceeds from exercise of employee stock   options and employee stock purchase plan   26       35  
Dividends to shareholders         (59)  
   
 
Net cash provided by (used in) financing activities  
(111)
     
(24)
 
   
 
               
  Increase (decrease) in cash and cash              
  equivalents   103       15  
             
Cash and cash equivalents at the beginning of
  the period
 
1,427
     
990
 
 
 
Cash and cash equivalents at the end of the   period
$
1,530
   
$
1,005
 
(a) 

As adjusted due to changes to the accounting for convertible debt instruments implemented in the first quarter of fiscal year 2010.