Seagate Technology plc (NASDAQ:STX) (the “Company” or “Seagate”)
today reported financial results for the second quarter of fiscal
year 2015 ended January 2, 2015. For the second quarter, the
Company reported revenue of approximately $3.7 billion, gross
margin of 27.8%, net income of $933 million and diluted earnings
per share of $2.78. On a non-GAAP basis, which excludes the net
impact of certain items, including a $620 million net gain on the
arbitration award, Seagate reported gross margin of 28.2%, net
income of $452 million and diluted earnings per share of $1.35. For
a detailed reconciliation of GAAP to non-GAAP results, see the
accompanying financial tables.
During the second quarter, the Company generated approximately
$1.4 billion in operating cash flow, paid cash dividends of $177
million and repurchased approximately 0.3 million ordinary shares
for $18 million. There were 329 million ordinary shares issued and
outstanding as of the end of the quarter. Cash, cash equivalents,
restricted cash, and short-term investments totaled approximately
$3.3 billion at the end of the quarter.
“Seagate’s second fiscal quarter performance is the result of
consistent execution and our solid competitive positioning in the
storage technology marketplace,” said Steve Luczo, Seagate’s
chairman and chief executive officer. “In addition, our cash flow
generation remains strong as we continue to effectively balance
investing in our business with returning capital to
shareholders.”
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
The Board of Directors has approved a quarterly cash dividend of
$0.54 per share, which will be payable on February 24, 2015 to
shareholders of record as of the close of business on February 10,
2015. 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 third 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 April 3, 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) January 2, June 27,
2015 2014 (a) ASSETS Current assets: Cash and
cash equivalents $ 3,296 $ 2,634 Short-term investments 6 20
Restricted cash and investments 4 4 Accounts receivable, net 1,829
1,729 Inventories 1,129 985 Deferred income taxes 123 126 Other
current assets 245 279 Total current assets 6,632 5,777
Property, equipment and leasehold improvements, net 2,155 2,136
Goodwill 872 537 Other intangible assets, net 449 359 Deferred
income taxes 498 499 Other assets, net 208 184 Total Assets
$ 10,814 $ 9,492
LIABILITIES AND EQUITY Current
liabilities: Accounts payable $ 1,736 $ 1,549 Accrued employee
compensation 272 296 Accrued warranty 153 148 Accrued expenses 658
405 Total current liabilities 2,819 2,398 Long-term accrued
warranty 129 125 Long-term accrued income taxes 33 90 Other
non-current liabilities 186 127 Long-term debt 3,932 3,920
Total Liabilities 7,099 6,660 Equity: Total Equity 3,715
2,832 Total Liabilities and Equity $ 10,814 $ 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 For the Six Months Ended
January 2, December 27, January
2, December 27, 2015 2013
2015 2013 Revenue $ 3,696 $ 3,528 $ 7,481 $ 7,017
Cost of revenue 2,669 2,541 5,403 5,055 Product development
341 312 683 606 Marketing and administrative 218 190 434 371
Amortization of intangibles 32 25 62 45 Restructuring and other,
net 3 16 10 18 Gain on arbitration award, net (620 ) — (620
) — Total operating expenses 2,643 3,084 5,972
6,095 Income from operations 1,053 444 1,509
922 Interest income 1 1 3 6 Interest expense (50 ) (49 )
(104 ) (93 ) Other, net 122 46 109 47
Other income (expense), net 73 (2 ) 8 (40 )
Income before income taxes 1,126 442 1,517 882 Provision for income
taxes 193 14 203 27 Net income $ 933
$ 428 $ 1,314 $ 855 Net income
per share attributable to Seagate Technology plc ordinary
shareholders: Basic $ 2.84 $ 1.27 $ 4.02 $ 2.46 Diluted 2.78 1.24
3.91 2.39 Number of shares used in per share calculations: Basic
328 336 327 347 Diluted 336 346 336 357
Cash dividends declared per Seagate
Technology plc ordinary share
$ 0.54 $ 0.43 $ 0.97 $ 0.81
SEAGATE
TECHNOLOGY PLC CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (In millions) (Unaudited) For the
Six Months Ended January 2, December
27, 2015 2013 OPERATING ACTIVITIES Net
income $ 1,314 $ 855 Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
426 457 Share-based compensation 73 57 Deferred income taxes (4 )
(15 ) (Gain) loss on sale of property and equipment 1 (4 ) Gain on
sale of investments — (32 ) Loss on redemption and repurchase of
debt 52 — Other non-cash operating activities, net 2 8 Changes in
operating assets and liabilities: Restricted cash and investments —
104 Accounts receivable, net (99 ) 51 Inventories (107 ) (94 )
Accounts payable 209 (46 ) Accrued employee compensation (24 ) (68
) Accrued expenses, income taxes and warranty 167 41 Vendor
non-trade receivables 28 199 Other assets and liabilities 7
25 Net cash provided by operating activities 2,045
1,538
INVESTING ACTIVITIES Acquisition of property,
equipment and leasehold improvements (387 ) (304 ) Proceeds from
the sale of strategic investments — 72 Purchases of short-term
investments (5 ) (87 ) Sales of short-term investments 4 463
Maturities of short-term investments 19 61 Cash used in acquisition
of business (450 ) — Other investing activities, net (34 ) (28 )
Net cash (used in) provided by investing activities (853 ) 177
FINANCING ACTIVITIES Redemption and repurchase of
debt (535 ) — Net proceeds from issuance of long-term debt 498 791
Repurchases of ordinary shares (201 ) (1,702 ) Dividends to
shareholders (317 ) (277 ) Proceeds from issuance of ordinary
shares under employee stock plans 49 61 Other financing activities,
net (12 ) (5 ) Net cash used in financing activities (518 ) (1,132
) Effect of foreign currency exchange rate changes on cash and cash
equivalents (12 ) 2 Increase in cash and cash equivalents
662 585 Cash and cash equivalents at the beginning of the period
2,634 1,708 Cash and cash equivalents at the end of
the period $ 3,296 $ 2,293
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 we believe they are generally consistent with
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 For the Six
Months Ended Months Ended January 2, 2015
January 2, 2015 GAAP net income $ 933 $ 1,314 Non-GAAP
adjustments: Cost of revenue A 14 26 Product development B 6 10
Marketing and administrative B 7 11 Amortization of intangibles C
32 62 Restructuring and other, net D 3 10 Gain on arbitration
award, net E (620 ) (620 ) Other income (expense), net F (104 ) (89
) Provision for income taxes G 181 181 Non-GAAP net
income $ 452 $ 905 Diluted net income per
share: GAAP $ 2.78 $ 3.91 Non-GAAP $ 1.35 $ 2.69
Shares used in diluted net income per share calculation $ 336 $ 336
A For the three and six months ended January
2, 2015, Cost of revenue on a GAAP basis totaled $2.7 billion and
$5.4 billion, while non-GAAP Cost of revenue, which excludes the
net impact of certain adjustments, was $2.7 billion and $5.4
billion, respectively. The non-GAAP adjustments include
amortization of intangibles associated with acquisitions and other
acquisition related expenses. B For the three and six months
ended January 2, 2015, Product development and Marketing and
administrative expenses have been adjusted on a non-GAAP basis to
exclude the impact of acquisition and integration costs associated
with acquisitions. C For the three and six months ended
January 2, 2015, Amortization of intangibles primarily related to
our acquisitions has been excluded on a non-GAAP basis. D
For the three and six months ended January 2, 2015, Restructuring
and other, net, primarily related to a reduction in our work force
as a result of our ongoing focus on cost efficiencies in all areas
of our business. E For the three and six months ended
January 2, 2015, Gain on arbitration award, net, has been adjusted
on a non-GAAP basis to exclude the final award amount of $630
million, less litigation and other related costs of $10 million,
related to the arbitration award in the Company’s case against
Western Digital for the misappropriation of the Company’s trade
secrets. F For the three and six months ended January 2,
2015, Other income (expense), net, has been adjusted on a non-GAAP
basis mostly to exclude the partial payment of $143 million for
interest accrued on the final arbitration award amount in the
Company's case against Western Digital and the net impact of losses
recognized on the early redemption and repurchase of debt. G
For the three and six months ended January 2, 2015, Provision for
income taxes, has been adjusted on a non-GAAP basis primarily to
exclude the net tax expense associated with the final audit
assessment from the Jiangsu Province State Tax Bureau of the
People's Republic of China for changes to the Company's tax filings
for the calendar years 2007 through 2013.
Seagate Technology plcMedia Relations Contact:Clive Over,
408-658-1617clive.over@seagate.comorInvestor Relations
Contact:408-658-1222stx@seagate.com
Seagate Technology (NASDAQ:STX)
Historical Stock Chart
From Mar 2024 to Apr 2024
Seagate Technology (NASDAQ:STX)
Historical Stock Chart
From Apr 2023 to Apr 2024