Seagate Technology plc (NASDAQ: STX) (the “Company” or “Seagate”) today
reported financial results for the third quarter of fiscal year 2014
ended March 28, 2014. For the third quarter, the Company reported
revenue of approximately $3.4 billion, gross margin of 28.2%, net income
of $395 million and diluted earnings per share of $1.17. On a non-GAAP
basis, which excludes the net impact of certain items, Seagate reported
gross margin of 28.5%, net income of $453 million and diluted earnings
per share of $1.34. For a detailed reconciliation of GAAP to non-GAAP
results, see accompanying financial tables.
During the third quarter, the Company generated approximately $443
million in operating cash flow, paid cash dividends of $140 million and
repurchased 3.5 million ordinary shares for $184 million. There were 326
million ordinary shares issued and outstanding as of the end of the
quarter. Cash, cash equivalents, restricted cash, and short-term
investments totaled approximately $2.3 billion at the end of the quarter.
“Seagate’s March quarter results reflect ongoing effective execution in
a dynamic market environment,” said Steve Luczo, Seagate’s chairman and
chief executive officer. “We are positioning the Company to lead in the
evolving storage ecosystem by leveraging and investing in our
market-leading product portfolio to enable shifts in the storage
landscape in hyperscale, performance and mobility. In addition, we are
maintaining our focus on operational discipline through conservative
demand forecasting and supply management.”
Seagate has issued a Supplemental Commentary document. The Supplemental
Commentary will not be read during today’s call, but is available on
Seagate’s Investors website at www.seagate.com/investors.
Quarterly Cash Dividend
The Board of Directors has approved a quarterly cash dividend of $0.43
per share, which will be payable on May 28, 2014 to shareholders of
record as of the close of business on May 14, 2014. 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 Investors website at www.seagate.com/investors.
During today’s webcast, the Company will provide an outlook for its
fourth fiscal quarter of 2014, 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 year ending June 27, 2014
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 risks, uncertainties and other factors that could
cause results to differ materially from the expectations described in
this press release is contained in the Company’s Annual Report on
Form 10-K filed with the U.S. Securities and Exchange Commission on
August 7, 2013, the “Risk Factors” section of which is incorporated into
this press release by reference, and other documents filed with or
furnished to the Securities and Exchange Commission. 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)
|
|
|
|
March 28, 2014
|
|
June 28, 2013
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
2,259
|
|
|
$
|
1,708
|
Short-term investments
|
|
|
47
|
|
|
480
|
Restricted cash and investments
|
|
|
4
|
|
|
101
|
Accounts receivable, net
|
|
|
1,633
|
|
|
1,670
|
Inventories
|
|
|
846
|
|
|
854
|
Deferred income taxes
|
|
|
116
|
|
|
115
|
Other current assets
|
|
|
246
|
|
|
484
|
Total current assets
|
|
|
5,151
|
|
|
5,412
|
Property, equipment and leasehold improvements, net
|
|
|
2,065
|
|
|
2,269
|
Goodwill
|
|
|
477
|
|
|
476
|
Other intangible assets, net
|
|
|
304
|
|
|
405
|
Deferred income taxes
|
|
|
467
|
|
|
456
|
Other assets, net
|
|
|
195
|
|
|
225
|
Total Assets
|
|
|
$
|
8,659
|
|
|
$
|
9,243
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
1,345
|
|
|
$
|
1,690
|
Accrued employee compensation
|
|
|
212
|
|
|
335
|
Accrued warranty
|
|
|
152
|
|
|
176
|
Accrued expenses
|
|
|
453
|
|
|
407
|
Current portion of long-term debt
|
|
|
—
|
|
|
3
|
Total current liabilities
|
|
|
2,162
|
|
|
2,611
|
Long-term accrued warranty
|
|
|
134
|
|
|
144
|
Long-term accrued income taxes
|
|
|
90
|
|
|
87
|
Other non-current liabilities
|
|
|
121
|
|
|
121
|
Long-term debt, less current portion
|
|
|
3,514
|
|
|
2,774
|
Total Liabilities
|
|
|
6,021
|
|
|
5,737
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
Total Equity
|
|
|
2,638
|
|
|
3,506
|
Total Liabilities and Equity
|
|
|
$
|
8,659
|
|
|
$
|
9,243
|
The information as of June 28, 2013 was derived from the Company’s
audited Consolidated Balance Sheet as of June 28, 2013.
|
|
|
|
|
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
|
|
|
March 28, 2014
|
|
March 29, 2013
|
|
March 28, 2014
|
|
March 29, 2013
|
Revenue
|
|
$
|
3,406
|
|
|
$
|
3,526
|
|
|
$
|
10,423
|
|
|
$
|
10,927
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
2,447
|
|
|
2,578
|
|
|
7,502
|
|
|
7,926
|
|
Product development
|
|
297
|
|
|
294
|
|
|
903
|
|
|
839
|
|
Marketing and administrative
|
|
190
|
|
|
168
|
|
|
561
|
|
|
457
|
|
Amortization of intangibles
|
|
26
|
|
|
20
|
|
|
71
|
|
|
59
|
|
Restructuring and other, net
|
|
2
|
|
|
1
|
|
|
20
|
|
|
2
|
|
Total operating expenses
|
|
2,962
|
|
|
3,061
|
|
|
9,057
|
|
|
9,283
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
444
|
|
|
465
|
|
|
1,366
|
|
|
1,644
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
1
|
|
|
2
|
|
|
7
|
|
|
6
|
|
Interest expense
|
|
(52
|
)
|
|
(53
|
)
|
|
(145
|
)
|
|
(163
|
)
|
Other, net
|
|
(3
|
)
|
|
16
|
|
|
44
|
|
|
41
|
|
Other expense, net
|
|
(54
|
)
|
|
(35
|
)
|
|
(94
|
)
|
|
(116
|
)
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
390
|
|
|
430
|
|
|
1,272
|
|
|
1,528
|
|
(Benefit from) provision for income taxes
|
|
(5
|
)
|
|
14
|
|
|
22
|
|
|
38
|
|
Net income
|
|
395
|
|
|
416
|
|
|
1,250
|
|
|
1,490
|
|
Less: Net income attributable to noncontrolling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net income attributable to Seagate Technology plc
|
|
$
|
395
|
|
|
$
|
416
|
|
|
$
|
1,250
|
|
|
$
|
1,490
|
|
|
|
|
|
|
|
|
|
|
Net income per share attributable to Seagate Technology plc ordinary
shareholders:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.21
|
|
|
$
|
1.16
|
|
|
$
|
3.68
|
|
|
$
|
3.98
|
|
Diluted
|
|
1.17
|
|
|
1.13
|
|
|
3.56
|
|
|
3.86
|
|
Number of shares used in per share calculations:
|
|
|
|
|
|
|
|
|
Basic
|
|
327
|
|
|
358
|
|
|
340
|
|
|
374
|
|
Diluted
|
|
338
|
|
|
369
|
|
|
351
|
|
|
386
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per Seagate Technology plc ordinary share
|
|
$
|
0.43
|
|
|
$
|
—
|
|
|
$
|
1.24
|
|
|
$
|
1.02
|
|
|
|
|
SEAGATE TECHNOLOGY PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
|
|
|
For the Nine Months Ended
|
|
|
March 28, 2014
|
|
March 29, 2013
|
OPERATING ACTIVITIES
|
|
|
|
|
Net income
|
|
$
|
1,250
|
|
|
$
|
1,490
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
Depreciation and amortization
|
|
668
|
|
|
651
|
|
Share-based compensation
|
|
87
|
|
|
56
|
|
Deferred income taxes
|
|
(17
|
)
|
|
(14
|
)
|
Gain on sale of investments
|
|
(32
|
)
|
|
(51
|
)
|
Gain on sale of property and equipment
|
|
(6
|
)
|
|
(34
|
)
|
Loss on redemption and repurchase of debt
|
|
7
|
|
|
31
|
|
Other non-cash operating activities, net
|
|
16
|
|
|
1
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
Restricted cash
|
|
104
|
|
|
—
|
|
Accounts receivable, net
|
|
32
|
|
|
769
|
|
Inventories
|
|
8
|
|
|
123
|
|
Accounts payable
|
|
(274
|
)
|
|
(462
|
)
|
Accrued employee compensation
|
|
(123
|
)
|
|
(85
|
)
|
Accrued expenses, income taxes and warranty
|
|
16
|
|
|
(124
|
)
|
Vendor non-trade receivables
|
|
204
|
|
|
—
|
|
Other assets and liabilities
|
|
41
|
|
|
308
|
|
Net cash provided by operating activities
|
|
1,981
|
|
|
2,659
|
|
INVESTING ACTIVITIES
|
|
|
|
|
Acquisition of property, equipment and leasehold improvements
|
|
(428
|
)
|
|
(658
|
)
|
Proceeds from the sale of property and equipment
|
|
—
|
|
|
29
|
|
Proceeds from the sale of strategic investments
|
|
72
|
|
|
—
|
|
Purchases of short-term investments
|
|
(87
|
)
|
|
(227
|
)
|
Sales of short-term investments
|
|
463
|
|
|
201
|
|
Maturities of short-term investments
|
|
61
|
|
|
26
|
|
Cash used in acquisition of LaCie S.A., net of cash acquired
|
|
—
|
|
|
(36
|
)
|
Other investing activities, net
|
|
(29
|
)
|
|
(16
|
)
|
Net cash provided by (used in) investing activities
|
|
52
|
|
|
(681
|
)
|
FINANCING ACTIVITIES
|
|
|
|
|
Repayments of long-term debt and capital lease obligations
|
|
(64
|
)
|
|
(421
|
)
|
Net proceeds from issuance of long-term debt
|
|
791
|
|
|
—
|
|
Repurchases of ordinary shares
|
|
(1,886
|
)
|
|
(1,612
|
)
|
Dividends to shareholders
|
|
(417
|
)
|
|
(381
|
)
|
Proceeds from issuance of ordinary shares under employee stock plans
|
|
98
|
|
|
233
|
|
Escrow deposit for acquisition of noncontrolling shares of LaCie S.A.
|
|
—
|
|
|
(72
|
)
|
Other financing activities, net
|
|
(5
|
)
|
|
—
|
|
Net cash used in financing activities
|
|
(1,483
|
)
|
|
(2,253
|
)
|
Effect of foreign currency exchange rate changes on cash and cash
equivalents
|
|
1
|
|
|
1
|
|
Increase (decrease) in cash and cash equivalents
|
|
551
|
|
|
(274
|
)
|
Cash and cash equivalents at the beginning of the period
|
|
1,708
|
|
|
1,707
|
|
Cash and cash equivalents at the end of the period
|
|
$
|
2,259
|
|
|
$
|
1,433
|
|
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, gross margin, gross margin as a percentage of revenue, operating
margin, operating expenses, and operating income 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.
|
|
|
|
|
|
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 March 28,
2014
|
|
For the Nine Months Ended March 28, 2014
|
GAAP net income
|
|
|
$
|
395
|
|
|
$
|
1,250
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
Cost of revenue
|
|
A
|
11
|
|
|
48
|
|
Product development
|
|
B
|
—
|
|
|
6
|
|
Marketing and administrative
|
|
B
|
17
|
|
|
23
|
|
Amortization of intangibles
|
|
C
|
26
|
|
|
71
|
|
Restructuring and other, net
|
|
D
|
2
|
|
|
20
|
|
Other expense (income), net
|
|
E
|
2
|
|
|
(31
|
)
|
Benefit from income taxes
|
|
F
|
—
|
|
|
(6
|
)
|
Non-GAAP net income
|
|
|
$
|
453
|
|
|
$
|
1,381
|
|
|
|
|
|
|
|
Diluted net income per share:
|
|
|
|
|
|
GAAP
|
|
|
$
|
1.17
|
|
|
$
|
3.56
|
|
|
|
|
|
|
|
Non-GAAP
|
|
|
$
|
1.34
|
|
|
$
|
3.93
|
|
|
|
|
|
|
|
Shares used in diluted net income per share calculation
|
|
|
338
|
|
|
351
|
|
A For the three and nine months ended March 28, 2014, Cost of
revenue on a GAAP basis totaled $2,447 million and $7,502 million,
respectively, while non-GAAP Cost of revenue, which excludes the net
impact of certain adjustments, was $2,436 million and $7,454 million,
respectively. The non-GAAP adjustments include amortization of
intangibles, and other acquisition related expenses associated with the
December 2011 acquisition of Samsung Electronics Co., Ltd.'s hard disk
drive business (the "Samsung HDD business") and the August 2012
acquisition of LaCie S.A. ("LaCie").
B For the three and nine months ended March 28, 2014, Product
development and Marketing and administrative expenses have been adjusted
on a non-GAAP basis to exclude the impact of acquisition costs
associated with the March 31, 2014 acquisition of Xyratex Ltd., and
acquisition and integration costs associated with the acquisitions of
the Samsung HDD business and LaCie.
C For the three and nine months ended March 28, 2014,
Amortization of intangibles related to our Samsung HDD business and
LaCie acquisitions have been excluded on a non-GAAP basis.
D For the three and nine months ended March 28, 2014,
Restructuring and other, net, primarily related to our existing
restructuring plans have been excluded on a non-GAAP basis.
E For the three and nine months ended March 28, 2014, Other
expense, net, has been adjusted on a non-GAAP basis primarily to exclude
the impact of losses recognized on the early redemption of debt,
partially offset by gains recognized upon the sale of certain strategic
investments.
F For the nine months ended March 28, 2014, Benefit from income
taxes has been adjusted on a non-GAAP basis primarily to exclude the
impact related to the release of valuation allowance on U.S. deferred
tax assets associated with increases in the Company's forecasted U.S.
taxable income.
![](http://cts.businesswire.com/ct/CT?id=bwnews&sty=20140429006977r1&sid=ntxv4&distro=nx)
Copyright Business Wire 2014