Apr 13, 1999
For the year-ago quarter ended April 3, 1998, revenue, net loss and net loss per share were $1.675 billion, $129 million and $0.53, respectively. Excluding the restructuring charge of $142 million and special charges of $24 million, and the tax effects related to these items, the pro forma net loss per share for the three months ended April 3, 1998 would have been $0.10.
For the immediately preceding quarter ended January 1, 1999, revenue was $1.801 billion with net income and diluted net income per share of $104 million and $0.42, respectively. For the nine months ended April 2, 1999, revenue was $5.159 billion and net income and diluted net income per share were $157 million and $0.63, respectively. Excluding the restructuring charge of $60 million, the $78 million charge in connection with an amendment to the purchase agreement for the August 1997 acquisition of Quinta Corporation and the $7 million charge related to the separation agreement with the Company's former Chief Executive Officer and the tax effects related to these items, the pro forma net income per share for the nine months ended April 2, 1999 would have been $1.09. This compares with revenue, net loss and net loss per share of $5.244 billion, $552 million and $2.27, respectively, for the nine months ended April 3, 1998. Excluding the restructuring charges of $347 million, the $216 million in-process research and development write-off in connection with the acquisition of Quinta Corporation, the $76 million charge for mark-to-market adjustments on certain of the Company's foreign currency forward exchange contracts, special charges of $83 million, the $22 million reduction in the previously settled Amstrad litigation, and the tax effects related to these items, the pro forma net loss per share would have been $0.10.
The Company has filed a registration statement with the Securities and Exchange Commission ("SEC") related to the proposed merger of the Network & Storage Management Group of its Seagate Software, Inc. subsidiary with Veritas Software Corporation. The Company is currently in the process of responding to comments received from the SEC related to the registration statement. The SEC comments address various matters including the accounting treatment for the Company's acquisition of Quinta Corporation in August 1997. These matters include the amount of the in-process research and development write-off and the period in which the Company should recognize contingent payments to current and former employee/shareholders of Quinta. Until the SEC's comments have been resolved Seagate will not be able to quantify the impact, if any, on the Company's financial statements. However, any such adjustments would not affect the Company's cash or liquidity position. The Company currently estimates consummating the Veritas merger in mid-May.
Seagate is changing its method of doing business with its North American distributors. In the future, sales to North American distributors will be on a consignment basis. Generally speaking, this change will delay Seagate's revenue recognition until the product is sold by the distributor. The Company expects substantially all inventory of Seagate products held by its North American distributors will be owned by Seagate as of the end of June 1999. The transition to this new method of doing business and the delay in the timing of revenue recognition will result in lower revenue from distribution for the fourth quarter of fiscal 1999 than would have been recognized using the Company's former method.
During the quarter ended April 2, 1999, the Company acquired approximately 23 million shares of its common stock for approximately $742 million under the June 1997 stock repurchase program as amended in February 1999.
This release contains forward-looking statements based on current expectations. These forward-looking statements entail various risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. These risks and uncertainties include, but are not limited to, the implementation of ongoing operational improvements, the resolution of the Securities and Exchange Commission's comments on the Company's recent S-4 filing, the timing of the close of the Veritas transaction, and the change in its method of doing business with its North American distributors. Seagate undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof.
Seagate Technology, Inc. is a leading provider of technology and products enabling people to store, access, and manage information. The Company is committed to providing best-in-class products to help people get information when, where and how they want it. Seagate is the world's largest manufacturer of disc drives, magnetic discs and read-write heads, an innovator in tape drives, and a leading developer of Enterprise Information Management software. Seagate can be found around the globe and at http://www.seagate.com. For automated news, stock and financial information by phone, dial toll-free 877-SEG-NYSE. Outside the U.S. and Canada, dial 760-704-4368.
SEAGATE TECHNOLOGY, INC. FINANCIAL HIGHLIGHTS (In Millions Except Per Share and Percent Data) Three Months Ended Nine Months Ended -------------------------- ----------------------- April 2, April 3, April 2, April 3, 1999 1998 1999 1998 ------------ ------------ ------------ ---------- Income Statement ---------------- Revenue $ 1,805 $ 1,675 $ 5,159 $ 5,244 Gross profit 434 204 1,183 690 As a percent of revenue 24.0% 12.2% 22.9% 13.2% Income (loss) before income taxes $ 105 $ (201) $ 229 $ (734) Provision (benefit) for income taxes 23 (72) 72 (182) Net income (loss): Amount $ 82 $ (129) $ 157 $ (552) As a percent of revenue 4.5% (7.7%) 3.0% (10.5%) Net income (loss) per share: Basic $ 0.35 $ (0.53) $ 0.65 $ (2.27) Diluted 0.34 (0.53) 0.63 (2.27) Number of shares used in per share computations: Basic 236.6 242.6 242.2 243.4 Diluted 243.9 242.6 247.3 243.4 April 2, April 3, 1999 1998 ------------ ------------ Balance Sheet ---------------- Cash, Cash Equivalents and Short-Term Investments $ 1,601 $ 1,721 Inventories 360 558 Inventory Turns 15.3 10.6
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