SEAGATE TECHNOLOGY REPORTS FISCAL SECOND QUARTER 2013 FINANCIAL RESULTS

2013-01-28 00:00:00.0

CUPERTINO, CA — January 28, 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.”

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 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.

Investor Communications

Seagate management will hold a public webcast today at 2:00 p.m. Pacific 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 third fiscal quarter of 2013 including key underlying assumptions.

Replay

A replay will be available beginning today at approximately 6:00 p.m. Pacific 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 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(a)
ASSETS              
 
Current assets:              
Cash and cash equivalents
$
1,383
 
$
1707
  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
$
1685
   
$
2286
 
  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
null

December 28,
2012
December 28,
2012
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


Use of non-GAAP financial information

To supplement the condensed consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP), the Company provides non-GAAP measures of net income, diluted net income per share and gross margin as a percentage of revenue, which are adjusted from results based on GAAP to exclude certain expenses, gains and losses. These non-GAAP financial measures are provided to enhance the user's overall understanding of the Company’s current financial performance and our 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, gains and losses that we believe are not indicative of our 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 our industry.