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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
ý |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended April 1, 2005 |
|
or |
|
o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to |
|
Commission File Number: 1-7534
STORAGE TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 84-0593263 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
|
| One StorageTek Drive, Louisville, Colorado | 80028-4309 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code 303-673-5151
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ý Yes o No
Indicate by check mark whether the
registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).
ý Yes
o No
The registrant had 107,315,018 shares
of common stock outstanding as of May 2, 2005.
2
| 04/01/05 |
12/31/04 |
|||||||
|---|---|---|---|---|---|---|---|---|
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,000,403 | $ | 853,410 | ||||
| Short-term investments | 105,117 | 281,028 | ||||||
| Accounts receivable | 432,027 | 519,273 | ||||||
| Inventories | 134,369 | 123,459 | ||||||
| Deferred income tax assets | 166,840 | 174,253 | ||||||
| Other current assets | 4,425 | 1,062 | ||||||
| Total current assets | 1,843,181 | 1,952,485 | ||||||
| Long-term investments | 45,591 | 48,408 | ||||||
| Property, plant, and equipment | 180,720 | 177,371 | ||||||
| Spare parts for maintenance | 50,309 | 49,048 | ||||||
| Deferred income tax assets | 46,475 | 46,569 | ||||||
| Other assets | 142,170 | 133,960 | ||||||
| Total assets | $ | 2,308,446 | $ | 2,407,841 | ||||
| LIABILITIES | ||||||||
| Current liabilities: | ||||||||
| Current portion of long-term debt | $ | 1,318 | $ | 1,551 | ||||
| Accounts payable | 105,950 | 121,019 | ||||||
| Accrued liabilities | 486,106 | 533,839 | ||||||
| Income taxes payable | 231,617 | 239,253 | ||||||
| Other current liabilities | 22,715 | 59,365 | ||||||
| Total current liabilities | 847,706 | 955,027 | ||||||
| Long-term debt | 10,263 | 11,006 | ||||||
| Total liabilities | 857,969 | 966,033 | ||||||
| Commitments and contingencies (Note 4 and 8) | ||||||||
| STOCKHOLDERS' EQUITY | ||||||||
| Common stock, $0.10 par value, 300,000,000 shares authorized; | ||||||||
| 114,621,988 shares issued at April 1, 2005, and | ||||||||
| 112,875,937 shares issued at December 31, 2004 | 11,462 | 11,288 | ||||||
| Capital in excess of par value | 1,065,479 | 1,019,101 | ||||||
| Retained earnings | 623,520 | 600,095 | ||||||
| Accumulated other comprehensive loss | (27,374 | ) | (38,772 | ) | ||||
| Treasury stock, 7,214,516 shares at April 1, 2005, | ||||||||
| and 5,448,350 shares at December 31, 2004, at cost | (190,718 | ) | (134,148 | ) | ||||
| Unearned compensation | (31,892 | ) | (15,756 | ) | ||||
| Total stockholders' equity | 1,450,477 | 1,441,808 | ||||||
| Total liabilities and stockholders' equity | $ | 2,308,446 | $ | 2,407,841 | ||||
The accompanying notes are an integral part of the consolidated financial statements.
3
| Quarter Ended |
||||||||
|---|---|---|---|---|---|---|---|---|
| 04/01/05 |
03/26/04 |
|||||||
| Revenue: | ||||||||
| Storage products | $ | 266,202 | $ | 294,606 | ||||
| Storage services | 233,054 | 220,466 | ||||||
| Total revenue | 499,256 | 515,072 | ||||||
| Cost of revenue: | ||||||||
| Storage products | 131,396 | 149,619 | ||||||
| Storage services | 133,284 | 127,250 | ||||||
| Total cost of revenue | 264,680 | 276,869 | ||||||
| Gross profit | 234,576 | 238,203 | ||||||
| Research and development costs | 47,371 | 48,502 | ||||||
| Selling, general, and administrative expense | 164,645 | 162,685 | ||||||
| Operating profit | 22,560 | 27,016 | ||||||
| Interest income | 7,176 | 3,181 | ||||||
| Interest expense | (219 | ) | (377 | ) | ||||
| Income before income taxes | 29,517 | 29,820 | ||||||
| Provision for income taxes | (6,092 | ) | (6,471 | ) | ||||
| Net income | $ | 23,425 | $ | 23,349 | ||||
| EARNINGS PER COMMON SHARE | ||||||||
| Earnings per share: | ||||||||
| Basic | $ | 0.22 | $ | 0.21 | ||||
| Diluted | $ | 0.22 | $ | 0.21 | ||||
| Weighted average shares: | ||||||||
| Basic | 106,070 | 110,551 | ||||||
| Diluted | 108,532 | 113,353 | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
4
| Quarter Ended |
||||||||
|---|---|---|---|---|---|---|---|---|
| 04/01/05 |
03/26/04 |
|||||||
| OPERATING ACTIVITIES | ||||||||
| Cash received from customers | $ | 576,374 | $ | 569,589 | ||||
| Cash paid to suppliers and employees | (521,580 | ) | (493,952 | ) | ||||
| Interest received | 5,859 | 2,634 | ||||||
| Interest paid | (194 | ) | (307 | ) | ||||
| Income taxes paid | (8,609 | ) | (7,516 | ) | ||||
| Net cash provided by operating activities | 51,850 | 70,448 | ||||||
| INVESTING ACTIVITIES | ||||||||
| Purchases of investments | (27,050 | ) | (151,700 | ) | ||||
| Proceeds from sale of investments | 205,460 | 125,665 | ||||||
| Purchases of property, plant, and equipment | (19,704 | ) | (14,738 | ) | ||||
| Proceeds from sale of property, plant, and equipment | 46 | 11 | ||||||
| Other assets | (4,207 | ) | (25,602 | ) | ||||
| Net cash provided (used in) investing activities | ||||||||
| 154,545 | (66,364 | ) | ||||||
| FINANCING ACTIVITIES | ||||||||
| Repurchases of common stock | (56,570 | ) | (29,190 | ) | ||||
| Proceeds from employee stock plans | 23,915 | 27,788 | ||||||
| Proceeds from other debt | 647 | 416 | ||||||
| Repayments of other debt | (978 | ) | (491 | ) | ||||
| Net cash used in financing activities | (32,986 | ) | (1,477 | ) | ||||
| Effect of exchange rate changes on cash | (26,416 | ) | (16,265 | ) | ||||
| Increase in cash and cash equivalents | 146,993 | (13,658 | ) | |||||
| Cash and cash equivalents - beginning of the period | 853,410 | 727,354 | ||||||
| Cash and cash equivalents - end of the period | $ | 1,000,403 | $ | 713,696 | ||||
| RECONCILIATION OF NET INCOME TO NET CASH | ||||||||
| PROVIDED BY OPERATING ACTIVITIES | ||||||||
| Net income | $ | 23,425 | $ | 23,349 | ||||
| Depreciation and amortization expense | 18,400 | 20,117 | ||||||
| Inventory writedowns | 4,814 | 2,862 | ||||||
| Translation loss | 8,028 | 8,981 | ||||||
| Other non-cash adjustments to income | 25,597 | 29,120 | ||||||
| (Increase) decrease in assets: | ||||||||
| Accounts receivable | 77,118 | 54,517 | ||||||
| Inventories | (12,445 | ) | 7,144 | |||||
| Other current assets | (8,975 | ) | 2,449 | |||||
| Spare parts | (6,589 | ) | (6,032 | ) | ||||
| Deferred income tax assets | 195 | (384 | ) | |||||
| Increase (decrease) in liabilities: | ||||||||
| Accounts payable | (14,100 | ) | (27,191 | ) | ||||
| Accrued liabilities | (37,925 | ) | (11,297 | ) | ||||
| Other current liabilities | (17,865 | ) | (25,326 | ) | ||||
| Income taxes payable | (7,828 | ) | (7,861 | ) | ||||
| Net cash provided by operating activities | $ | 51,850 | $ | 70,448 | ||||
The accompanying notes are an integral part of the consolidated financial statements.
5
| Accumulated | ||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Common | Capital in | Other | ||||||||||||||||||||||||
| Shares | Common | Excess of | Retained | Comprehensive | Treasury | Unearned | ||||||||||||||||||||
| Issued |
Stock |
Par Value |
Earnings |
Income (Loss) |
Stock |
Compensation |
Total |
|||||||||||||||||||
| Balances, December 31, 2004 | 112,876 | $ | 11,288 | $ | 1,019,101 | $ | 600,095 | $ | (38,772 | ) | $ | (134,148 | ) | $ | (15,756 | ) | $ | 1,441,808 | ||||||||
| Components of comprehensive | ||||||||||||||||||||||||||
| income: | ||||||||||||||||||||||||||
| Net income | -- | -- | -- | 23,425 | -- | -- | -- | 23,425 | ||||||||||||||||||
| Other comprehensive income | -- | -- | -- | -- | 11,398 | -- | -- | 11,398 | ||||||||||||||||||
| Total comprehensive income | -- | -- | -- | 23,425 | 11,398 | -- | -- | 34,823 | ||||||||||||||||||
| Shares issued upon exercise of | ||||||||||||||||||||||||||
| stock options | 1,237 | 124 | 24,288 | -- | -- | -- | -- | 23,352 | ||||||||||||||||||
| Shares repurchased under stock | ||||||||||||||||||||||||||