- Quarterly revenue of $2.35 billion
- Cash, Short-term Investments and Restricted Cash grew to $2.0 billion
- Expects sequential revenue growth and margin improvement
SCOTTS VALLEY, Calif., July 21 /PRNewswire-FirstCall/ -- Seagate Technology (Nasdaq: STX) today reported results for the quarter ended July 3, 2009 of 40.6 million disk drive unit shipments, revenue of $2.35 billion, a net loss of $81 million and net loss per share of $0.16. The financial results for the quarter include $21 million of purchased intangibles amortization and other charges associated with acquisitions, and $85 million of restructuring and related accelerated depreciation charges. The aggregate impact of these items is $106 million or approximately $0.22 per share.
"The overall organizational, operational, technical and product progress we have made during the last six months is reflected in our financial results for the June quarter and demonstrates meaningful progress toward the goal of returning to sustained GAAP profitability as soon as possible," said Steve Luczo, Seagate CEO. "We are also seeing signs that the storage markets are improving and are providing better visibility into the demand environment. Our approach to the September quarter with respect to our production volumes and product mix is to continue to manage our factories with an intense focus on maximizing our return on invested capital while satisfying our customers' requirements."
For the fiscal year ended July 3, 2009, the company reported disk drive unit shipments of 163.8 million, revenue of $9.8 billion, a net loss of $3.1 billion, and net loss per share of $6.32. The financial results for the fiscal year include $77 million of purchased intangibles amortization and other charges associated with acquisitions, charges related to restructuring activities of $266 million, a charge of $271 million that reflects an unfavorable adjustment to the valuation allowance related to the company's deferred tax assets and a $2.3 billion charge relating to the write-off of goodwill and other long-lived assets. The aggregate impact of these items is a $2.9 billion reduction in earnings, or a decrease of approximately $5.95 per share. Of the $266 million in restructuring related charges, $56 million was for accelerated depreciation charges, with $30 million recorded in cost of revenue and $26 million in product development expense. The majority of the remaining balance of the restructuring charges relate to global headcount reductions.
Business Outlook
While there are signs of improved visibility, the ongoing uncertainty in global economic conditions makes it difficult to predict product demand and other related matters, which makes it more likely that Seagate's actual results could differ materially from current expectations.
For the September quarter, the company is planning for the overall industry demand for disk drives to be 135-140 million units. Consequently, the company expects revenue to be approximately $2.4 - $2.6 billion and gross margin as a percent of revenue to improve by 200-350 basis points as compared to the June quarter. Product development and marketing/administrative costs are expected to decrease to approximately $315 million while other income and expense is expected to be a charge of approximately $40 million.
The September quarter outlook does not include the impact of any potential new restructuring activities, future mergers, acquisitions, financing, dispositions or other business combinations the company may undertake.
Additional information relating to the financial results for the fiscal fourth quarter and year-end 2009 can be found online at seagate.com.
Conference Call
Seagate will hold a conference call to review the fiscal fourth quarter results at 2:00 p.m. Pacific Time today. The conference call can be accessed online at seagate.com or by phone as follows:
USA: (877) 223-6202
International: (706) 679-3742
Conference ID: 15815830
Replay
A replay will be available beginning today at 6:00 p.m. Pacific Time through July 28 at 8:59 p.m. Pacific Time. The replay can be accessed from seagate.com or by phone as follows:
USA: (800) 642-1687
International: (706) 645-9291
Conference ID: 15815830
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. These forward-looking statements include, but are not limited to, statements related to the Company's future operating and financial performance in the September 2009 quarter, and thereafter, and include statements regarding expected revenue, gross margin, product competition, customer demand for disk drives, the Company's ability to return to profitability and general market conditions. These forward-looking statements are based on information available to Seagate 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, the decline in global economic conditions continues to pose a risk to the Company's operating and financial performance as consumers and businesses have, and may continue to, defer purchases in response to tighter credit and negative financial conditions. Such risks and uncertainties also include the impact of the variable demand and the aggressive pricing environment for disk drives, particularly in view of current business and economic conditions; dependence on Seagate'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; 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 is contained in the Company's Annual Report on Form 10-K as filed with the U.S. Securities and Exchange Commission on August 13, 2008, and in the Company's Quarterly Report on Form 10-Q as filed with the U.S. Securities and Exchange Commission on May 6, 2009, 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 Seagate undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made.
SEAGATE TECHNOLOGY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
July 3, June 27,
2009 2008 (a)
---- --------
ASSETS
Cash and cash equivalents $1,427 $990
Short-term investments 114 151
Restricted cash and investments 508 -
Accounts receivable, net 1,033 1,410
Inventories 587 945
Deferred income taxes 94 274
Other current assets 528 502
--- ---
Total Current Assets 4,291 4,272
Property, equipment and leasehold improvements, net 2,229 2,464
Goodwill 31 2,352
Other intangible assets, net 42 111
Deferred income taxes 375 616
Other assets, net 119 305
--- ---
Total Assets $7,087 $10,120
====== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term borrowings $350 $-
Accounts payable 1,573 1,652
Accrued employee compensation 144 440
Accrued warranty 213 226
Accrued expenses 483 599
Accrued income taxes 10 10
Current portion of long-term debt 421 360
--- ---
Total Current Liabilities 3,194 3,287
Long-term accrued warranty 224 219
Long-term accrued income taxes 69 210
Other non-current liabilities 120 148
Long-term debt, less current portion 1,956 1,670
----- -----
Total Liabilities 5,563 5,534
Shareholders' Equity 1,524 4,586
----- -----
Total Liabilities and Shareholders' Equity $7,087 $10,120
====== =======
(a) The information in this column was derived from the Company's
audited consolidated balance sheet as of June 27, 2008.
SEAGATE TECHNOLOGY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
For the Three Months For the Year
Ended Ended
July 3, June 27, July 3, June 27,
2009 2008 2009 2008 (a)
---- ---- ---- -------
Revenue $2,353 $2,899 $9,805 $12,708
Cost of revenue 1,946 2,208 8,395 9,503
Product development 215 270 953 1,028
Marketing and administrative 114 175 537 659
Amortization of intangibles 14 13 55 54
Restructuring and other, net 84 36 210 88
Impairment of goodwill and other
long-lived assets - - 2,290 -
--- --- ----- ---
Total operating expenses 2,373 2,702 12,440 11,332
----- ----- ------ ------
Income (loss) from operations (20) 197 (2,635) 1,376
Interest income 2 6 17 57
Interest expense (39) (30) (134) (126)
Other, net 3 9 (23) 22
---- ---- ---- ----
Other income (expense), net (34) (15) (140) (47)
---- ---- ----- ----
Income (loss) before income taxes (54) 182 (2,775) 1,329
Provision for (benefit from)
income taxes 27 22 311 67
--- --- ---- ---
Net income (loss) $(81) $160 $(3,086) $1,262
===== ==== ======== ======
Net income (loss) per share:
Basic $(0.16) $0.33 $(6.32) $2.46
Diluted (0.16) 0.32 (6.32) 2.36
Number of shares used in per share
calculations:
Basic 491 484 488 512
Diluted 491 500 488 538
(a) The information in this column was derived from the Company's
audited consolidated statement of operations for the year ended
June 27, 2008.
SEAGATE TECHNOLOGY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
For the Year Ended
------------------
July 3, June 27,
2009 2008 (a)
---- -------
OPERATING ACTIVITIES
Net income (loss) $(3,086) $1,262
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating
activities:
Depreciation and amortization 931 844
Stock-based compensation 83 113
Impairment of goodwill and other
long-lived assets 2,290 -
Deferred income taxes 306 10
Other non-cash operating
activities, net (1) (15)
Changes in operating assets and
liabilities:
Accounts receivable 372 (67)
Inventories 358 (151)
Accounts payable (79) 351
Accrued expenses, employee
compensation and warranty (568) 154
Other assets and liabilities 217 37
--- ---
Net cash provided by (used in)
operating activities 823 2,538
--- -----
INVESTING ACTIVITIES
Acquisition of property, equipment
and leasehold improvements (633) (930)
Proceeds from sale of fixed assets 7 29
Purchases of short-term investments (155) (486)
Maturities and sales of short-term
investments 192 460
Increase in restricted cash and
investments (128) -
Proceeds from sale of deferred
compensation plan investments 85 -
Proceeds from sale of investment
in equity securities 11 -
Acquisitions, net of cash acquired - (78)
Other investing activities, net 3 14
--- ---
Net cash provided by (used in)
investing activities (618) (991)
---- ----
FINANCING ACTIVITIES
Proceeds from short-term borrowings 350 -
Net proceeds from issuance of
long-term debt 399 -
Retirements and maturities of
long-term debt (55) (34)
Increase in restricted cash and
investments (380) -
Proceeds from exercise of employee stock
options and employee stock purchase plan 54 178
Dividends to shareholders (132) (216)
Repurchases of common shares - (1,479)
Other financing activities, net (4) 6
--- ---
Net cash provided by (used in)
financing activities 232 (1,545)
--- ------
Increase (decrease) in cash and
cash equivalents 437 2
Cash and cash equivalents at the
beginning of the period 990 988
--- ---
Cash and cash equivalents at the
end of the period $1,427 $990
====== ====
(a) The information in this column was derived from the Company's
audited consolidated statement of cash flows for the year ended
June 27, 2008.
SOURCE Seagate Technology
