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8-K - 8-K - Seagate Technology Holdings plca11-10013_28k.htm
EX-99.1 - PRESS RELEASE - Seagate Technology Holdings plca11-10013_2ex99d1.htm
EX-99.3 - SUPPLEMENTAL COMMENTARY - Seagate Technology Holdings plca11-10013_2ex99d3.htm

Exhibit 99.2

 

 

 

 

Media Relations Contact:

Brian Ziel (831.439.5429)

brian.ziel@seagate.com

 

 

 

Investor Relations Contact:

 

Rod Cooper (831.439.2371)

 

rod.j.cooper@seagate.com

 

SEAGATE TECHNOLOGY PLC REPORTS FISCAL THIRD QUARTER
2011 FINANCIAL RESULTS

 

SCOTTS VALLEY, CA — April 19, 2011 — Seagate Technology plc (NASDAQ: STX) today reported financial results for the quarter ended April 1, 2011. The company shipped 49 million disk drives and reported revenue of $2.7 billion, gross margin of 19.1%, net income of $93 million and diluted earnings per share of $0.21. On a non-GAAP basis, which excludes the net impact of loss on redemption of debt, purchased intangibles amortization, restructuring and tax adjustments related to prior fiscal years, Seagate reported net income of $113 million and diluted earnings per share of $0.25 for the quarter ended April 1, 2011.

 

For the nine months ended April 1, 2011, the company reported revenue of $8.1 billion, gross margin of 19.7%, net income of $392 million and diluted earnings per share of $0.83. On a non-GAAP basis, which excludes the net impact of loss on redemption of debt, purchased intangibles amortization, restructuring and tax adjustments related to prior fiscal years, Seagate reported net income of $452 million and diluted earnings per share of $0.95.

 

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

 

Investor Communications

 

Seagate will hold a conference call to review the recently announced strategic alignment with Samsung as well as Seagate’s third fiscal quarter results today at 5:30 a.m. Pacific Time. This call will replace the call formerly scheduled for 3:45 p.m. today. The conference call will consist of comments from Steve Luczo, CEO,  and Pat O’Malley, CFO, followed by a question and answer session with the executive management team. During today’s conference call, the company will provide an outlook for its fourth fiscal quarter of 2011, including key underlying assumptions.

 

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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 investor relations section of seagate.com.

 

Conference Call

 

The conference call can be accessed online at seagate.com or by phone as follows:

 

USA: (800) 299-9630

International: (617) 786-2904

Participant Passcode: 22585275

 

Replay

 

A replay will be available beginning today at 8:00 a.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. When used, the words “anticipates”, “believes”, “expects”, “may”, “should” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are based on information available to the Company 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, global economic conditions may pose a risk to the Company’s operating and financial performance. Such risks and uncertainties also include the impact of variable demand; 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; 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, Form 10-K/A and Quarterly Reports on Form 10-Q as filed with the U.S. Securities and Exchange Commission on August 20, 2010, October 6, 2010, November 3, 2010 and February 3, 2011, respectively, 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.

 

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SEAGATE TECHNOLOGY PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

 

 

 

April 1,
2011

 

July 2,
2010 (a)

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

2,201

 

$

2,263

 

Short-term investments

 

279

 

252

 

Restricted cash and investments

 

103

 

114

 

Accounts receivable, net

 

1,394

 

1,400

 

Inventories

 

834

 

757

 

Deferred income taxes

 

107

 

118

 

Other current assets

 

586

 

514

 

Total current assets

 

5,504

 

5,418

 

Property, equipment and leasehold improvements, net

 

2,208

 

2,263

 

Deferred income taxes

 

373

 

395

 

Other assets, net

 

195

 

171

 

Total assets

 

$

8,280

 

$

8,247

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

1,778

 

$

1,780

 

Accrued employee compensation

 

136

 

263

 

Accrued warranty

 

198

 

189

 

Accrued expenses

 

419

 

422

 

Accrued income taxes

 

14

 

14

 

Current portion of long-term debt

 

560

 

329

 

Total current liabilities

 

3,105

 

2,997

 

Long-term accrued warranty

 

163

 

183

 

Long-term accrued income taxes

 

68

 

59

 

Other non-current liabilities

 

105

 

111

 

Long-term debt, less current portion

 

2,352

 

2,173

 

Total liabilities

 

5,793

 

5,523

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

Total shareholders’ equity

 

2,487

 

2,724

 

Total liabilities and shareholders’ equity

 

$

8,280

 

$

8,247

 

 


(a) The information in this column was derived from the Company’s audited Consolidated Balance Sheet as of July 2, 2010.

 

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SEAGATE TECHNOLOGY PLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

(Unaudited)

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

 

April 1,
2011

 

April 2,
2010

 

April 1,
2011

 

April 2,
2010

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

2,695

 

$

3,049

 

$

8,112

 

$

8,738

 

Cost of revenue

 

2,179

 

2,148

 

6,517

 

6,261

 

Product development

 

224

 

224

 

646

 

658

 

Marketing and administrative

 

110

 

105

 

317

 

323

 

Amortization of intangibles

 

 

8

 

2

 

23

 

Restructuring and other, net

 

3

 

4

 

14

 

50

 

Impairment of long-lived assets

 

 

 

 

64

 

Total operating expenses

 

2,516

 

2,489

 

7,496

 

7,379

 

Income from operations

 

179

 

560

 

616

 

1,359

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

2

 

2

 

6

 

4

 

Interest expense

 

(59

)

(41

)

(151

)

(127

)

Other, net

 

 

1

 

(21

)

(7

)

Other expense, net

 

(57

)

(38

)

(166

)

(130

)

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

122

 

522

 

450

 

1,229

 

Provision for (benefit from) income taxes

 

29

 

4

 

58

 

(1

)

Net income

 

$

93

 

$

518

 

$

392

 

$

1,230

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.21

 

$

1.05

 

$

0.85

 

$

2.48

 

Diluted

 

0.21

 

1.00

 

0.83

 

2.38

 

Number of shares used in per share calculations:

 

 

 

 

 

 

 

 

 

Basic

 

437

 

493

 

459

 

495

 

Diluted

 

453

 

520

 

475

 

519

 

 

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SEAGATE TECHNOLOGY PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

 

 

For the Nine Months Ended

 

 

 

April 1,
2011

 

April 2,
2010

 

OPERATING ACTIVITIES

 

 

 

 

 

Net income

 

$

392

 

$

1,230

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

567

 

584

 

Share-based compensation

 

38

 

38

 

Loss on redemption of debt

 

26

 

¾

 

Impairment of long-lived assets

 

¾

 

64

 

Deferred income taxes

 

35

 

10

 

Other non-cash operating activities, net

 

(5

)

22

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable, net

 

7

 

(418

)

Inventories

 

(77

)

(98

)

Accounts payable

 

181

 

242

 

Accrued employee compensation

 

(127

)

70

 

Accrued expenses, income taxes and warranty

 

(10

)

(131

)

Other assets and liabilities

 

(80

)

(5

)

Net cash provided by operating activities

 

947

 

1,608

 

INVESTING ACTIVITIES

 

 

 

 

 

Acquisition of property, equipment and leasehold improvements

 

(685

)

(372

)

Purchases of short-term investments

 

(208

)

(278

)

Sales of short-term investments

 

118

 

75

 

Maturities of short-term investments

 

59

 

101

 

Change in restricted cash and investments

 

13

 

26

 

Other investing activities, net

 

¾

 

1

 

Net cash used in investing activities

 

(703

)

(447

)

FINANCING ACTIVITIES

 

 

 

 

 

Proceeds from short-term borrowings

 

 

15

 

Repayment of short-term borrowings

 

 

(365

)

Repayments of long-term debt and capital lease obligations

 

(377

)

(385

)

Net proceeds from issuance of long-term debt

 

736

 

 

Repurchases of ordinary shares

 

(710

)

(251

)

Change in restricted cash and investments

 

2

 

379

 

Proceeds from issuance of ordinary shares under employee stock plans

 

48

 

81

 

Other financing activities, net

 

(5

)

¾

 

Net cash used in financing activities

 

(306

)

(526

)

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

 

(62

)

635

 

Cash and cash equivalents at the beginning of the period

 

2,263

 

1,427

 

Cash and cash equivalents at the end of the period

 

$

2,201

 

$

2,062

 

 

5



 

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 and diluted net income per share, 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 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, gains and losses 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.

 

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SEAGATE TECHNOLOGY PLC

ADJUSTMENTS TO GAAP NET INCOME AND DILUTED NET INCOME PER SHARE

(In millions, except per share amounts)

(Unaudited)

 

 

 

 

 

For the
Three Months Ended
April 1,
2011

 

For the
Nine Months Ended
April 1,
2011

 

 

 

 

 

 

 

 

 

GAAP net income

 

 

 

$

93

 

$

392

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

Loss on redemption of debt

 

A

 

2

 

26

 

Restructuring charges

 

B

 

3

 

14

 

Amortization of purchased intangible assets

 

C

 

1

 

6

 

Adjustments for taxes

 

D

 

14

 

14

 

 

 

 

 

 

 

 

 

Non-GAAP net income

 

 

 

$

113

 

$

452

 

 

 

 

 

 

 

 

 

Diluted net income per share:

 

 

 

 

 

 

 

GAAP

 

 

 

$

0.21

 

$

0.83

 

 

 

 

 

 

 

 

 

Non-GAAP

 

 

 

$

0.25

 

$

0.95

 

 

 

 

 

 

 

 

 

Shares used in diluted net income per share calculation:

 

 

 

453

 

475

 

 

A   For the three months ended April 1, 2011, the Company incurred a loss upon the partial redemption of its 10.00% Senior Secured Second-Priority Notes due 2014.  The nine months ended April 1, 2011, included the loss upon redemption of its 5.75% Subordinated Debentures due March 2012 and its 2.375% Convertible Senior Notes due August 2012.

 

B   For the three and nine months ended April 1, 2011, the Company recorded restructuring charges associated with previously announced restructuring activities.

 

C   For the three and nine months ended April 1, 2011, amortization of purchased intangible assets acquired in acquisitions was allocated as follows:

 

 

 

For the
Three Months Ended
April 1,
2011

 

For the
Nine Months Ended
April 1,
2011

 

 

 

 

 

 

 

Cost of revenue

 

$

1

 

$

4

 

Amortization of intangibles

 

¾

 

2

 

 

 

 

 

 

 

Total amortization of purchased intangible assets

 

$

1

 

$

6

 

 

D   To exclude the tax effects, where applicable, of adjustments to GAAP net income. In addition, during the three and nine months ended April 1, 2011, the Company recorded discrete tax charges of approximately $14 million primarily as a result of information obtained during the March quarter related to ongoing negotiations with non-U.S. tax authorities on tax positions taken in prior fiscal years.

 

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