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): April 17, 2015

 

 

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 April 17, 2015, Seagate Technology plc (the “Company”) issued a press release reporting its financial results for the fiscal quarter ended April 3, 2015. 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 also announced that its Board of Directors has approved a quarterly cash dividend of $0.54 per share. The dividend of $0.54 per share was declared by the Board on April 17, 2015 and is payable on May 15, 2015, to shareholders of record at the close of business on May 1, 2015. 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 fourth 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 April 17, 2015, of Seagate Technology plc entitled “Seagate Technology Reports Fiscal Third 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 and year ending July 3, 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: uncertainty in global economic conditions, as consumers and businesses may defer purchases in response to tighter credit and financial news; the impact of variable demand and the adverse pricing environment for disk drives, particularly in view of current business and economic conditions; our ability to successfully qualify, manufacture and sell our 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; currency fluctuations that may impact our margins and international sales, possible excess industry supply with respect to particular disk drive products and our 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.

 

2

 

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, III
	Name:	Patrick J. O’Malley
	Title:	Executive Vice President and Chief Financial Officer

 

Date: April 17, 2015

 

3

Exhibit 99.1

 

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 THIRD QUARTER 2015 FINANCIAL RESULTS

 

CUPERTINO, CA — April 17, 2015 — Seagate Technology plc (NASDAQ: STX) (the “Company” or “Seagate”) today reported financial results for the third quarter of fiscal year 2015 ended April 3, 2015.  For the third quarter, the Company reported revenue of approximately $3.3 billion, gross margin of 28.7%, net income of $291 million and diluted earnings per share of $0.88. On a non-GAAP basis, which excludes the net impact of certain items, Seagate reported gross margin of 28.9%, net income of $357 million and diluted earnings per share of $1.08. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial tables.

 

During the third quarter, the Company generated approximately $374 million in operating cash flow, paid cash dividends of $176 million and repurchased approximately 12 million ordinary shares for $706 million. Year to date, the Company has returned approximately $1.4 billion to shareholders in dividend and stock redemptions. Cash, cash equivalents, restricted cash, and short-term investments totaled approximately $2.6 billion at the end of the quarter.

 

“In light of dynamic market conditions this quarter we are quite satisfied with our operational performance and ability to return value to shareholders,” said Steve Luczo, Seagate’s chairman and chief executive officer. “Near-term macro uncertainty is affecting certain areas of our addressable market however we remain optimistic that market demand for exabytes of storage will continue to increase over the long-term. Looking ahead, we are focused on aligning our storage technology portfolio effectively to capitalize on market growth opportunities, demonstrating operating profitability and returning value to shareholders.”

 

Seagate has issued a Supplemental Financial Information document, which 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 May 15, 2015 to shareholders of record as of the close of business on May 1, 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 fourth 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 http://www.seagate.com/investors/.

 

About Seagate

 

Seagate creates space for the human experience by innovating how data is stored, shared and used. Learn more at www.seagate.com. Follow Seagate on Twitter, Facebook, LinkedIn, Spiceworks, Google+ and subscribe to our blog.

 

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 July 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; currency fluctuations that may impact our margins and international sales; 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 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)

 

		April 3,  2015			June 27, 2014 (a)
ASSETS
Current assets:
Cash and cash equivalents		$	2,604		$	2,634
Short-term investments		6			20
Restricted cash and investments		4			4
Accounts receivable, net		1,769			1,729
Inventories		1,083			985
Deferred income taxes		121			126
Other current assets		244			279
Total current assets		5,831			5,777
Property, equipment and leasehold improvements, net		2,182			2,136
Goodwill		871			537
Other intangible assets, net		410			359
Deferred income taxes		499			499
Other assets, net		243			184
Total Assets		$	10,036		$	9,492
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable		$	1,683		$	1,549
Accrued employee compensation		256			296
Accrued warranty		147			148
Accrued expenses		483			405
Current portion of long-term debt		474			—
Total current liabilities		3,043			2,398
Long-term accrued warranty		126			125
Long-term accrued income taxes		34			90
Other non-current liabilities		185			127
Long-term debt		3,457			3,920
Total Liabilities		6,845			6,660
Equity:
Total Equity		3,191			2,832
Total Liabilities and Equity		$	10,036		$	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 Nine Months Ended
		April 3,  2015			March 28,  2014			April 3,  2015			March 28,  2014
Revenue		$	3,330		$	3,406		$	10,811		$	10,423
Cost of revenue		2,375			2,447			7,778			7,502
Product development		346			297			1,029			903
Marketing and administrative		219			190			654			561
Amortization of intangibles		33			26			95			71
Restructuring and other, net		14			2			24			20
Gain on arbitration award, net		—			—			(620		)	—
Total operating expenses		2,987			2,962			8,960			9,057
Income from operations		343			444			1,851			1,366
Interest income		1			1			4			7
Interest expense		(48		)	(52		)	(152		)	(145		)
Other, net		8			(3		)	118			44
Other income (expense), net		(39		)	(54		)	(30		)	(94		)
Income before income taxes		304			390			1,821			1,272
Provision for income taxes		13			(5		)	216			22
Net income		$	291		$	395		$	1,605		$	1,250
Net income per share attributable to Seagate Technology plc ordinary shareholders:
Basic		$	0.90		$	1.21		$	4.92		$	3.68
Diluted		0.88			1.17			4.81			3.56
Number of shares used in per share calculations:
Basic		323			327			326			340
Diluted		330			338			334			351
Cash dividends declared per Seagate Technology plc ordinary share		$	0.54		$	0.43		$	1.51		$	1.24

 

 

SEAGATE TECHNOLOGY PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

		For the Nine Months Ended
		April 3,  2015			March 28,  2014
OPERATING ACTIVITIES
Net income		$	1,605		$	1,250
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		629			668
Share-based compensation		106			87
Deferred income taxes		(3		)	(17		)
(Gain) loss on sale of property and equipment		1			(6		)
Gain on sale of investments		—			(32		)
Loss on redemption and repurchase of debt		52			7
Other non-cash operating activities, net		(9		)	16
Changes in operating assets and liabilities:
Restricted cash and investments		—			104
Accounts receivable, net		(36		)	32
Inventories		(61		)	8
Accounts payable		149			(274		)
Accrued employee compensation		(40		)	(123		)
Accrued expenses, income taxes and warranty		(9		)	16
Vendor non-trade receivables		30			204
Other assets and liabilities		5			41
Net cash provided by operating activities		2,419			1,981
INVESTING ACTIVITIES
Acquisition of property, equipment and leasehold improvements		(546		)	(428		)
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		(90		)	(29		)
Net cash (used in) provided by investing activities		(1,068		)	52
FINANCING ACTIVITIES
Redemption and repurchase of debt		(536		)	(64		)
Net proceeds from issuance of long-term debt		498			791
Repurchases of ordinary shares		(907		)	(1,886		)
Dividends to shareholders		(493		)	(417		)
Proceeds from issuance of ordinary shares under employee stock plans		91			98
Other financing activities, net		(12		)	(5		)
Net cash used in financing activities		(1,359		)	(1,483		)
Effect of foreign currency exchange rate changes on cash and cash equivalents		(22		)	1
Increase in cash and cash equivalents		(30		)	551
Cash and cash equivalents at the beginning of the period		2,634			1,708
Cash and cash equivalents at the end of the period		$	2,604		$	2,259

 

 

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 Months Ended April 3, 2015			For the Nine Months Ended April 3, 2015
GAAP net income				$	291		$	1,605
Non-GAAP adjustments:
Cost of revenue		(A)		8			34
Product development		(B)		4			14
Marketing and administrative		(B)		7			18
Amortization of intangibles		(C)		32			94
Restructuring and other, net		(D)		14			23
Gain on arbitration award, net		(E)		—			(620		)
Other income (expense), net		(F)		1			(88		)
Provision for income taxes		(G)		—			181
Non-GAAP net income				$	357		$	1,261
Diluted net income per share:
GAAP				$	0.88		$	4.81
Non-GAAP				$	1.08		$	3.78
Shares used in diluted net income per share calculation				330			334

 

(A) For the three and nine months ended April 3, 2015, Cost of revenue on a GAAP basis totaled $2.4 billion and $7.8 billion, while non-GAAP Cost of revenue, which excludes the net impact of certain adjustments, was $2.4 billion and $7.7 billion, respectively. The non-GAAP adjustments include amortization of intangibles associated with acquisitions and other acquisition related expenses.

 

(B) For the three and nine months ended April 3, 2015, Product development and Marketing and administrative expenses have been adjusted on a non-GAAP basis to exclude the impact of integration costs associated with acquisitions.

 

(C) For the three and nine months ended April 3, 2015, Amortization of intangibles primarily related to our acquisitions has been excluded on a non-GAAP basis.

 

(D) For the three and nine months ended April 3, 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 nine months ended April 3, 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 nine months ended April 3, 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 nine months ended April 3, 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.