STX Seagate Technology Holdings PLC

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): October 27, 2014

 

 

SEAGATE TECHNOLOGY PUBLIC LIMITED COMPANY

(Exact name of registrant as specified in its charter)

 

 

 

 

Registrant’s telephone number, including area code: (353) (1) 234-3136

 

N/A

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Item 2.02 Results of Operations and Financial Condition.

 

On October 27, 2014, Seagate Technology plc (the “Company”) issued a press release reporting its financial results for the fiscal quarter ended October 3, 2014.  The press release is attached to this Current Report on Form 8-K as Exhibit 99.1.

 

As provided in General Instruction B.2 of Form 8-K, the information in this Item 2.02 and the exhibit hereto are “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of such section.

 

Item 7.01 Regulation FD Disclosure.

 

The Company had previously announced that its Board of Directors approved a quarterly cash dividend of $0.54 per share. The dividend of $0.54 per share was declared by the Board on October 22, 2014 and is payable on November 25, 2014, to shareholders of record at the close of business on November 11, 2014. The press release is attached to this Current Report on Form 8-K as Exhibit 99.1.

 

Seagate has issued a Supplemental Financial Information document. The Supplemental Financial Information is available on Seagate’s Investors website at www.seagate.com/investors. Seagate management will hold a public webcast today at 6:00 a.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 second fiscal quarter of 2015 including key underlying assumptions.  A replay will be available beginning today at approximately 9:00 a.m. Pacific Time at www.seagate.com/investors. Investors and others should note that the Company routinely uses the Investors section of its corporate website to announce material information to investors and the marketplace. While not all of the information that the Company posts on its corporate website is of a material nature, some information could be deemed to be material. Accordingly, the Company encourages investors, the media, and others interested in the Company to review the information that it shares on www.seagate.com.

 

As provided in General Instruction B.2 of Form 8-K, the information in this Item 7.01 and the exhibit hereto are “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of such section.

 

Item 9.01      Financial Statements and Exhibits.

 

(d) Exhibits.

 

The following exhibits are attached to this Current Report on Form 8-K:

 

Exhibit No.		Description
99.1		Press release, dated October 27, 2014, of Seagate Technology plc entitled “Seagate Technology Reports Fiscal First Quarter 2015 Financial Results.”

 

Cautionary Note Regarding Forward-Looking Statements

 

This Current Report 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 January 2, 2015 and beyond. These statements identify prospective information and may include words such as “expects,” “intends,” “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 Current Report 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; the Company’s ability to successfully qualify, manufacture and sell its disk drive products in increasing volumes on a cost-

 

2

 

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 Current Report is contained in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on August 7, 2014, the “Risk Factors” section of which is incorporated into this Current Report 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.

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

 

	SEAGATE TECHNOLOGY PUBLIC LIMITED COMPANY
	By:	/s/ PATRICK J. O’MALLEY
	Name:	Patrick J. O’Malley
	Title:	Executive Vice President and Chief Financial Officer

 

Date: October 27, 2014

 

4

Exhibit 99.1

 

 

Press Release

 

Media Relations Contact:

Clive Over (408) 658-1617

clive.over@seagate.com

 

Investor Relations Contact:

(408) 658-1222

stx@seagate.com

 

SEAGATE TECHNOLOGY REPORTS FISCAL FIRST QUARTER 2015 FINANCIAL RESULTS

 

CUPERTINO, CA — October 27, 2014 — Seagate Technology plc (NASDAQ: STX) (the “Company” or “Seagate”) today reported financial results for the first quarter of fiscal year 2015 ended October 3, 2014.  For the first quarter, the Company reported revenue of approximately $3.8 billion, gross margin of 27.8%, net income of $381 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 28.1%, 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 first quarter, the Company generated approximately $602 million in operating cash flow, paid cash dividends of $140 million and repurchased approximately 3 million ordinary shares for $183 million. There were 327 million ordinary shares issued and outstanding as of the end of the quarter.  Cash, cash equivalents, restricted cash, and short-term investments totaled approximately $2.2 billion at the end of the quarter.

 

“We achieved strong financial results in the first fiscal quarter, driven by consistent execution and better-than-anticipated market demand for our PC and Cloud storage products,” said Steve Luczo, Seagate’s chairman and chief executive officer. “We continue to improve our position in the evolving storage market by leveraging and investing in our core storage technology and expanding our product portfolio with Cloud systems and solutions and integrated flash technology.  We remain confident in our cash flow generation and the opportunities ahead for Seagate as evidenced by our recently announced target annual dividend increase of 26% to $2.16.”

 

Seagate has issued a Supplemental Financial Information document. The Supplemental Financial Information is available on Seagate’s Investors website at www.seagate.com/investors.

 

Quarterly Cash Dividend

 

As previously disclosed on October 22, 2014, the Board of Directors has approved a quarterly cash dividend of $0.54 per share, which will be payable on November 25, 2014 to shareholders of record as of the close of business on November 11, 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 6:00 a.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 second fiscal quarter of 2015 including key underlying assumptions.

 

Replay

 

A replay will be available beginning today at approximately 9:00 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 January 2, 2015 and beyond as well as our plans with respect to future dividend payments. These statements identify prospective information and may include words such as “expects,” “intends,” “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; 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; the Company’s ability to achieve projected cost savings in connection with restructuring plans and fluctuations in interest rates. 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, 2014, 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.

 

The inclusion of Seagate’s website address in this press release is intended to be an inactive textual reference only and not an active hyperlink. The information contained in, or that can be accessed through, Seagate’s website is not part of this press release.

 

 

SEAGATE TECHNOLOGY PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

 

		October 3,  2014			June 27, 2014 (a)
ASSETS
Current assets:
Cash and cash equivalents		$	2,190		$	2,634
Short-term investments		11			20
Restricted cash and investments		4			4
Accounts receivable, net		1,909			1,729
Inventories		1,071			985
Deferred income taxes		125			126
Other current assets		273			279
Total current assets		5,583			5,777
Property, equipment and leasehold improvements, net		2,156			2,136
Goodwill		873			537
Other intangible assets, net		468			359
Deferred income taxes		499			499
Other assets, net		186			184
Total Assets		$	9,765		$	9,492
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable		$	1,740		$	1,549
Accrued employee compensation		245			296
Accrued warranty		145			148
Accrued expenses		466			405
Total current liabilities		2,596			2,398
Long-term accrued warranty		128			125
Long-term accrued income taxes		87			90
Other non-current liabilities		199			127
Long-term debt		3,809			3,920
Total Liabilities		6,819			6,660
Equity:
Total Equity		2,946			2,832
Total Liabilities and Shareholders’ Equity		$	9,765		$	9,492

 

(a) The information as of June 27, 2014 was derived from the Company’s audited Consolidated Balance Sheet as of June 27, 2014.

 

 

SEAGATE TECHNOLOGY PLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

(Unaudited)

 

		For the Three Months Ended
		October 3,  2014			September 27,  2013
Revenue		$	3,785		$	3,489
Cost of revenue		2,734			2,514
Product development		342			294
Marketing and administrative		216			181
Amortization of intangibles		31			20
Restructuring and other, net		6			2
Total operating expenses		3,329			3,011
Income from operations		456			478
Interest income		1			5
Interest expense		(54		)	(44		)
Other, net		(11		)	1
Other expense, net		(64		)	(38		)
Income before income taxes		392			440
Provision for income taxes		11			13
Net income		381			427
Less: Net income attributable to noncontrolling interest		—			—
Net income attributable to Seagate Technology plc		$	381		$	427
Net income per share attributable to Seagate Technology plc ordinary shareholders:
Basic		$	1.17		$	1.20
Diluted		1.13			1.16
Number of shares used in per share calculations:
Basic		327			357
Diluted		337			368
Cash dividends declared per Seagate Technology plc ordinary share		$	0.43		$	0.38

 

 

SEAGATE TECHNOLOGY PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

		For the Three Months Ended
		October 3,  2014			September 27,  2013
OPERATING ACTIVITIES
Net income		$	381		$	427
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		218			228
Share-based compensation		42			27
Deferred income taxes		2			(1		)
Gain on sale of property and equipment		—			(2		)
Loss on repurchase of debt		14			—
Other non-cash operating activities, net		(2		)	4
Changes in operating assets and liabilities:
Accounts receivable, net		(179		)	49
Inventories		(49		)	(17		)
Accounts payable		183			47
Accrued employee compensation		(51		)	(115		)
Accrued expenses, income taxes and warranty		29			37
Vendor non-trade receivables		21			—
Other assets and liabilities		(7		)	(2		)
Net cash provided by operating activities		602			682
INVESTING ACTIVITIES
Acquisition of property, equipment and leasehold improvements		(172		)	(161		)
Purchases of short-term investments		(5		)	(87		)
Sales of short-term investments		—			49
Maturities of short-term investments		14			32
Cash used in acquisition of business		(450		)	—
Other investing activities, net		(6		)	(19		)
Net cash used in investing activities		(619		)	(186		)
FINANCING ACTIVITIES
Repayments of long-term debt		(124		)	—
Repurchases of ordinary shares		(183		)	(182		)
Dividends to shareholders		(140		)	(135		)
Proceeds from issuance of ordinary shares under employee stock plans		39			39
Other financing activities, net		(12		)	(4		)
Net cash used in financing activities		(420		)	(282		)
Effect of foreign currency exchange rate changes on cash and cash equivalents		(7		)	2
(Decrease) increase in cash and cash equivalents		(444		)	216
Cash and cash equivalents at the beginning of the period		2,634			1,708
Cash and cash equivalents at the end of the period		$	2,190		$	1,924

 

 

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
		October 3, 2014			September 27, 2013
GAAP net income		$	381		$	427
Non-GAAP adjustments:
Cost of revenue	(A)	12			20
Product development	(B)	4			3
Marketing and administrative	(C)	4			3
Amortization of intangibles	(D)	31			20
Restructuring and other, net	(E)	6			2
Other expense, net	(F)	15			(2		)
Non-GAAP net income		$	453		$	473
Diluted net income per share:
GAAP		$	1.13		$	1.16
Non-GAAP		$	1.34		$	1.29
Shares used in diluted net income per share calculation		$	337		$	368

 

(A)       For the three months ended October 3, 2014, Cost of revenue on a GAAP basis totaled $2.7 billion, while non-GAAP Cost of revenue, which excludes the net impact of certain adjustments, was $2.7 billion.  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”), the August 2012 acquisition of LaCie S.A. (“LaCie”), March 31, 2014 acquisition of Xyratex Ltd. (“Xyratex”) and the September 2014 acquisition of LSI Corporation’s (“LSI”) Accelerated Solutions Division (“ASD”) and Flash Components Division (“FCD”) (collectively, the “Flash Business”).

 

(B)       For the three months ended October 3, 2014, Product development expense has been adjusted on a non-GAAP basis primarily to exclude the impact of acquisition and integration costs associated with the acquisition of LSI’s Flash Business and Xyratex.

 

(C)       For the three months ended October 3, 2014, Marketing and administrative expense has been adjusted on a non-GAAP basis primarily to exclude the impact of acquisition and integration costs associated with the acquisition of LSI’s Flash Business, Xyratex, and LaCie.

 

(D)       For the three months ended October 3, 2014, Amortization of intangibles primarily related to our acquisitions have been excluded on a non-GAAP basis.

 

(E)       For the three months ended October 3, 2014, Restructuring and other, net, includes a restructuring charge recorded during the September 2014 quarter associated with a reduction in the work force.

 

(F)        For the three months ended October 3, 2014, Other expense, net, has been adjusted on a non-GAAP basis primarily to exclude the net impact of losses recognized on the early redemption and repurchase of debt.