Seagate Technology Reports Fiscal First Quarter 2013 Financial Results

Seagate Technology Reports Fiscal First Quarter 2013 Financial Results

CUPERTINO, Calif.--(BUSINESS WIRE)-- Seagate Technology plc (NAS: STX) today reported financial results for the quarter ended September 28, 2012. During the first quarter, on a GAAP basis the company reported revenue of approximately $3.7 billion, gross margin of 28.4%, net income of $582 million and diluted earnings per share of $1.42. On a non-GAAP basis, which excludes the net impact of certain items, Seagate reported gross margin of 29.0%, net income of $594 million, and diluted earnings per share of $1.45.

In the September quarter, Seagate generated approximately $1.1 billion in cash from operations, paid cash dividends of $127 million and redeemed approximately 20.5 million ordinary shares or approximately 5% of ordinary shares at the beginning of the fiscal quarter for approximately $669 million. During the nine months ended September 28, 2012, Seagate redeemed approximately 109 million ordinary shares, resulting in an approximate reduction of 17% of the Company's share count. Cash, cash equivalents, restricted cash, and short-term investments totaled approximately $2.5 billion at the end of the first quarter, a sequential increase of approximately $259 million.


"Seagate continues to adapt to dynamic industry conditions, managing inventory and demand with our customers while maintaining investments in our technology portfolio that will position us for continued success in the marketplace over the long-term," said Steve Luczo, Seagate chairman and chief executive officer. "Returning value to shareholders remains a top priority with over 70% of our operating cash flow going towards share redemptions and dividends this quarter."

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 has approved a quarterly cash dividend of $0.32 per share, which will be payable on November 29, 2012 to shareholders of record as of the close of business on November 14, 2012. 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 5:30 a.m. Pacific Time on its Investor Relations website at www.seagate.com/investors. During today's webcast, the company will provide an outlook for its second fiscal quarter of 2013 including key underlying assumptions.

Replay

A replay will be available beginning today at approximately 10:00 a.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 December 28, 2012 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 document 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 our 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 the 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; and possible excess industry supply with respect to particular disk drive products; the Company's ability to achieve projected cost savings in connection with restructuring plans and the risk that we will incur significant incremental costs in connection with the implementation of our recently executed transaction with Samsung Electronics Co., Ltd or that we will not achieve the benefits expected from such transactions. 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 with the U.S. Securities and Exchange Commission on August 8, 2012 which statements are incorporated into this document 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)

September 28,
2012

June 29,
2012 (a)

ASSETS

Current assets:

Cash and cash equivalents

$

1,894

$

1,707

Short-term investments

476

411

Restricted cash and investments

100

93

Accounts receivable, net

1,684

2,319

Inventories

845

909

Deferred income taxes

112

104

Other current assets

638

767

Total current assets

5,749

6,310

Property, equipment and leasehold improvements, net

2,243

2,284

Goodwill

475

463

Other intangible assets

517

506

Deferred income taxes

403

396

Other assets, net

135

147

Total Assets

$

9,522

$

10,106

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

1,808

$

2,286

Accrued employee compensation

217

344

Accrued warranty

209

235

Accrued expenses

516

531

Current portion of long-term debt

3

Total current liabilities

2,753

3,396

Long-term accrued warranty

128

128

Long-term accrued income taxes

87

84

Other non-current liabilities

152

138

Long-term debt, less current portion

2,867

2,863

Total Liabilities

5,987

6,609

Equity:

Total Equity

3,535

3,497

Total Liabilities and Equity

$

9,522

$

10,106

(a)

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

September 28,
2012

September 30,
2011

Revenue

$

3,732

$

2,811

Cost of revenue

2,671

2,262

Product development

268

208

Marketing and administrative

150

105

Amortization of intangibles

19

Restructuring and other, net

Total operating expenses

3,108

2,575

Income from operations

624

236

Interest income

2

1

Interest expense

(55

)

(69

)

Other, net

29

(16

)

Other expense, net

(24

)

(84

)

Income before income taxes

600

152

Provision for income taxes

18

12

Net income

582

140

Less: Net income attributable to noncontrolling interest

Net income attributable to Seagate Technology plc

$

582

$

140

Net income per share attributable to Seagate Technology plc ordinary shareholders:

Basic

$

1.48

$

0.33

Diluted

1.42

0.32

Number of shares used in per share calculations:

Basic

394

421

Diluted

409

433

Cash dividends declared per Seagate Technology plc ordinary share

$

0.32

$

0.18

SEAGATE TECHNOLOGY PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

For the Three Months Ended

September 28,
2012

September 30,
2011

OPERATING ACTIVITIES

Net income

$

582

$

140

Adjustments to reconcile net income to net cash from operating activities:

Depreciation and amortization

212

182

Share-based compensation

17

12

Loss on redemption of debt

5

Gain on sale of property and equipment

(6

)

(10

)

Gain on sale of strategic investments

(33

)

Deferred income taxes

(5

)

Other non-cash operating activities, net

10

Changes in operating assets and liabilities:

Accounts receivable, net

648

49

Inventories

110

47

Accounts payable

(373

)

(298

)

Accrued employee compensation

(132

)

(57

)

Accrued expenses, income taxes and warranty

(57

)

12

Other assets and liabilities

169

68

Net cash provided by operating activities

1,132

160

INVESTING ACTIVITIES

Acquisition of property, equipment and leasehold improvements

(263

)

(218

)

Proceeds from the sale of property and equipment

4

8

Proceeds from the sale of equity investments

41

Purchases of short-term investments

(74

)

(254

)

Sales of short-term investments

64

214

Maturities of short-term investments

5

87

Cash used in acquisition of LaCie S.A., net of cash acquired

(36

)

Change in restricted cash and investments

(6

)

14

Net cash used in investing activities

(265

)

(149

)

FINANCING ACTIVITIES

Repayments of long-term debt and capital lease obligations

(34

)

Repurchases of ordinary shares

(639

)

(128

)

Escrow deposit for acquisition of noncontrolling shares of LaCie S.A.

(72

)

Proceeds from issuance of ordinary shares under employee stock plans

157

26

Dividends to shareholders

(127

)

(78

)

Net cash used in by financing activities

(681

)

(214

)

Effect of foreign currency exchange rate changes on cash and cash equivalents

1

Increase (decrease) in cash and cash equivalents

187

(203

)

Cash and cash equivalents at the beginning of the period

1,707

2,677

Cash and cash equivalents at the end of the period

$

1,894

$

2,474