Seagate Technology Reports Fiscal Third Quarter 2013 Financial Results

Seagate Technology Reports Fiscal Third Quarter 2013 Financial Results

CUPERTINO, Calif.--(BUSINESS WIRE)-- Seagate Technology plc (NAS: STX) (the "Company") today reported financial results for the quarter ended March 29, 2013. During the fiscal third quarter, the Company reported revenue of approximately $3.5 billion, gross margin of 26.9%, net income of $416 million and diluted earnings per share of $1.13. On a non-GAAP basis, which excludes the net impact of certain items, Seagate reported gross margin of 27.6%, net income of $464 million and diluted earnings per share of $1.26.

The Company generated $678 million in operating cash flow, repurchased three million ordinary shares for approximately $102 million and paid $379 million for the early redemption of long-term debt. For the first nine months of the fiscal year, the Company has returned 75% of its operating cash flow to shareholders in dividends and share redemptions. Cash, cash equivalents, restricted cash, and short-term investments totaled approximately $2 billion at the end of the fiscal third quarter.


"Seagate's operational results this quarter again reflect strong execution," said Steve Luczo, Seagate's chairman, president and chief executive officer. "The continued advancement of cloud, mobile and open source computing are trends that are shifting data volumes toward personal and corporate cloud environments, creating tremendous opportunities for Seagate's leading storage technology portfolio. Looking ahead, our top priorities are focused on the efficiency of our operations, extending our leadership in storage technology innovation and returning value to shareholders."

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

Seagate has issued a Supplemental Commentary document, which will not be read during today's call, but is available in the "Investors" section of seagate.com.

Quarterly Cash Dividend

The Board of Directors has approved a quarterly cash dividend of $0.38 per share, which will be payable on May 29, 2013 to shareholders of record as of the close of business on May 15, 2013. 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 Daylight Time that can be accessed on its Investor Relations website at www.seagate.com/investors. During today's webcast, the Company will provide an outlook for its fourth fiscal quarter of 2013, including key underlying assumptions.

Replay

A replay will be available beginning today at approximately 6:00 p.m. Pacific Daylight 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 June 28, 2013 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 controland 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 those projected in the forward-looking statements are contained in the Company's Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on August 8, 2012, and in the Company's Quarterly Report on Form 10-Q filed with the SEC on January 29, 2013, 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.

SEAGATE TECHNOLOGY PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

March 29,
2013

June 29,
2012

ASSETS

Current assets:

Cash and cash equivalents

$

1,433

$

1,707

Short-term investments

476

411

Restricted cash and investments

101

93

Accounts receivable, net

1,562

2,319

Inventories

833

909

Deferred income taxes

111

104

Other current assets

471

767

Total current assets

4,987

6,310

Property, equipment and leasehold improvements, net

2,256

2,284

Goodwill

476

463

Other intangible assets, net

442

506

Deferred income taxes

413

396

Other assets, net

169

147

Total Assets

$

8,743

$

10,106

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

1,698

$

2,286

Accrued employee compensation

264

344

Accrued warranty

184

235

Accrued expenses

451

531

Current portion of long-term debt

4

Total current liabilities

2,601

3,396

Long-term accrued warranty

138

128

Long-term accrued income taxes

87

84

Other non-current liabilities

131

138

Long-term debt, less current portion

2,474

2,863

Total Liabilities

5,431

6,609

Equity:

Total Equity

3,312

3,497

Total Liabilities and Equity

$

8,743

$

10,106

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

For the Nine Months Ended

March 29,
2013

March 30,
2012

March 29,
2013

March 30,
2012

Revenue

$

3,526

$

4,450

$

10,927

$

10,457

Cost of revenue

2,578

2,809

7,926

7,257

Product development

294

270

839

737

Marketing and administrative

168

142

457

388

Amortization of intangibles

20

18

59

20

Restructuring and other, net

1

1

2

4

Total operating expenses

3,061

3,240

9,283

8,406

Income from operations

465

1,210

1,644

2,051

Interest income

2

2

6

5

Interest expense

(53

)

(59

)

(163

)

(185

)

Other, net

16

6

41

(2

)

Other expense, net

(35

)

(51

)

(116

)

(182

)

Income before income taxes

430

1,159

1,528

1,869

Provision for income taxes

14

13

38

20

Net income

416

1,146

1,490

1,849

Less: Net income attributable to noncontrolling interest

Net income attributable to Seagate Technology plc

$

416

$

1,146

$

1,490

$

1,849

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

Basic

$

1.16

$

2.57

$

3.98

$

4.29

Diluted

1.13

2.48

3.86

4.16

Number of shares used in per share calculations:

Basic

358

446

374

431

Diluted

369

463

386

445

Cash dividends declared per Seagate Technology plc ordinary share

$

$

0.25

$

1.02

$

0.61

SEAGATE TECHNOLOGY PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

For the Nine Months Ended

March 29,
2013

March 30,
2012

OPERATING ACTIVITIES

Net income

$

1,490

$

1,849

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

Depreciation and amortization

651

597

Share-based compensation

56

38

Deferred income taxes

(14

)

(5

)

Gain on sale of investments

(51

)

(12

)

Gain on sale of property and equipment

(34

)

(18

)

Loss on redemption and repurchase of debt

31

17

Other non-cash operating activities, net

1

7

Changes in operating assets and liabilities:

Accounts receivable, net

769

(983

)

Inventories

123

167

Accounts payable

(462

)

191

Accrued employee compensation

(85

)

63

Accrued expenses, income taxes and warranty

(124

)

(28

)

Other assets and liabilities

308

(66

)

Net cash provided by operating activities

2,659

1,817

INVESTING ACTIVITIES

Acquisition of property, equipment and leasehold improvements

(658

)

(497

)

Proceeds from the sale of property and equipment

29

11

Purchases of short-term investments

(227

)

(382

)

Sales of short-term investments

201

330

Maturities of short-term investments

26

118

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

(36

)

Cash used in acquisition of Samsung HDD assets and liabilities

(561

)

Other investing activities, net

(16

)

16

Net cash used in investing activities

(681

)

(965

)

FINANCING ACTIVITIES

Repayments of long-term debt and capital lease obligations

(421

)

(670

)

Repurchases of ordinary shares

(1,612

)

(1,172

)

Dividends to shareholders

(381

)

(266

)

Proceeds from issuance of ordinary shares under employee stock plans

233

214

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

(72

)

Other financing activities, net

3

Net cash used in financing activities

(2,253

)

(1,891

)

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

1

Decrease in cash and cash equivalents

(274

)

(1,039

)

Cash and cash equivalents at the beginning of the period

1,707

2,677

Cash and cash equivalents at the end of the period

$

1,433

$

1,638

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 and gross margin as a percentage of revenue, 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 resul