- Annual revenue grows 12%; quarterly revenue grows 6% year-over-year
- Annual net income increases to $1.3 billion
- Annual shipments grow 15% to 183 million
- Quarterly shipments up 10% to 43 million year-over-yearSCOTTS VALLEY, Calif., July 15 /CNW/ -- Seagate Technology (NYSE: STX)
today reported disc drive unit shipments of approximately 43 million, revenue
of $2.9 billion, GAAP net income of $160 million, and diluted net income per
share of $0.32 for the quarter ended June 27, 2008. GAAP net income and
diluted net income per share includes approximately $23 million of purchased
intangibles amortization and other charges associated with Seagate's recent
acquisitions. Excluding these items, non-GAAP net income and diluted net
income per share were $183 million and $0.37, respectively. Included in both
GAAP and non-GAAP results are restructuring charges of approximately $36
million or approximately $0.07 per share.
For the twelve months ended June 27, 2008, Seagate reported revenue of
$12.7 billion, GAAP net income of $1.3 billion, and diluted net income per
share of $2.36. GAAP net income and diluted net income per share includes
approximately $113 million of purchased intangibles amortization and other
charges associated with Seagate's recent acquisitions and also a net gain from
asset sales of approximately $19 million. Excluding these items, non-GAAP net
income and diluted net income per share were $1.4 billion and $2.54,
respectively. Included in both GAAP and non-GAAP results are restructuring
and other charges of approximately $88 million or approximately $0.16 per
share.
"We delivered strong growth in fiscal year 2008, with unit volume and
revenue up 15% and 12%, respectively over fiscal year 2007, and with net
income of $1.3 billion," said Bill Watkins, Seagate chief executive officer.
"Sequentially, our market-leading share positions remained unchanged in the
enterprise and desktop markets, we grew our leading share position in the
consumer electronics market, and we grew share in the notebook and retail
markets. Were it not for some product execution issues in the notebook and
nearline markets, we believe we would have delivered an even stronger quarter
and year, with improved share positions. We have now made significant strides
in reclaiming our product leadership in these areas. While we expect that the
residual effects of the previously missed execution will be reflected in the
first quarter, we believe that we will grow revenue and improve earnings
throughout the remainder of FY2009."
A reconciliation of adjustments made to GAAP net income and diluted net
income per share can be found following the financial statements included with
this press release. Additional information relating to the financial results
for the fourth fiscal quarter of 2008 can be found online at seagate.com.Business OutlookFor the September quarter, Seagate expects to report revenue of $3.15 -
$3.3 billion, and GAAP diluted net income per share of $0.18 - $0.22.
Adjusting for approximately $20 million of purchased intangibles amortization
and other charges associated with past closed acquisitions, non-GAAP diluted
net income per share for the September quarter is expected to fall within the
range of $0.22 - $0.26. The GAAP and non-GAAP outlook for the September
quarter does not include restructuring costs or accelerated depreciation
charges relating to the previously announced closing of our substrate
operations in Limavady and the finished media operations in Milpitas.
Additionally, the outlook does not include the impact of any future
acquisitions, stock repurchases or potential restructuring activities the
company may undertake during the quarter.
For fiscal 2009, Seagate believes the demand trends for storage continue
to support healthy industry unit growth of 10-15% and industry revenue growth
of 5-10%. Specific to Seagate, the company is confident that its performance
relative to time-to-market, inventory management and its overall cost
structure will improve as it executes the plans that are currently in place.
Financial performance improvement will be incremental as the company
implements numerous changes across the business during the first half of the
fiscal year. As such, Seagate expects gross margins to begin improving with
the December quarter and settle into the targeted range of 21-25% for the
balance of the fiscal year.Dividend and Stock RepurchaseThe company has declared a quarterly dividend of $0.12 per share to be
paid on or before August 15, 2008 to all common shareholders of record as of
August 1, 2008.
During the quarter ended June 27, 2008 the company purchased, under a
10b5-1 qualified stock repurchase plan, 9.1 million of its common shares at an
average cost of $21.36. The company has authorization to purchase
approximately $2.0 billion of additional shares under the current stock
repurchase program.Conference CallSeagate will hold a conference call to review the fiscal fourth quarter
and year-end 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: 53915411
ReplayA replay will be available beginning today at 6:00 p.m. Pacific Time
through July 22 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: 53915411
About SeagateSeagate is the worldwide leader in the design, manufacture and marketing
of hard disc drives and storage solutions, providing products for a wide-range
of applications, including Enterprise, Desktop, Mobile Computing, Consumer
Electronics and Branded Solutions. Seagate's business model leverages
technology leadership and world-class manufacturing to deliver
industry-leading innovation and quality to its global customers, with the goal
of being the time-to-market leader in all markets in which it participates.
The company is committed to providing award-winning products, customer support
and reliability to meet the world's growing demand for information storage.
Seagate can be found around the globe and at http://www.seagate.com.Cautionary Note Regarding Forward-Looking StatementsThis 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, including expected
revenue, net income and diluted earnings per share (presented on a GAAP basis
as well as on a non-GAAP adjusted basis), price and product competition,
customer demand for our products, 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, such risks and
uncertainties include the impact of the variable demand and the aggressive
pricing environment for disc drives, particularly in view of current economic
conditions; dependence on Seagate's ability to successfully qualify,
manufacture and sell its disc drive products in increasing volumes on a
cost-effective basis and with acceptable quality, particularly the new disc
drive products with lower cost structures; the impact of competitive product
announcements and possible excess industry supply with respect to particular
disc drive products; our ability to achieve projected cost savings in
connection with our announced restructuring plans; and market conditions and
alternative cash imperatives which could impact our ability to repurchase
stock. Information concerning risk, 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 27,
2007 and in the company's Quarterly Report on Form 10-Q as filed with the U.S.
Securities and Exchange Commission on April 29, 2008, 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)June 27, June 29,
2008 2007 (a)
ASSETS
Cash and cash equivalents $990 $988
Short-term investments 151 156
Accounts receivable, net 1,410 1,383
Inventories 945 794
Deferred income taxes 274 196
Other current assets 502 284
Total Current Assets 4,272 3,801Property, equipment and
leasehold improvements, net 2,464 2,278
Goodwill 2,352 2,300
Other intangible assets 111 188
Deferred income taxes 616 574
Other assets, net 305 331
Total Assets $10,120 $9,472LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $1,652 $1,301
Accrued employee compensation 440 157
Accrued expenses, other 825 786
Accrued income taxes 10 75
Current portion of long-term debt 360 330
Total Current Liabilities 3,287 2,649
Other non-current liabilities 367 353
Long-term accrued income taxes 210 -
Long-term debt, less current portion 1,670 1,733
Total Liabilities 5,534 4,735Shareholders' Equity 4,586 4,737
Total Liabilities and Shareholders' Equity $10,120 $9,472(a) The information in this column was derived from the Company's audited
consolidated balance sheet as of June 29, 2007.SEAGATE TECHNOLOGY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)For the Three Months Ended For the Year Ended
June 27, June 29, June 27, June 29,
2008 2007 2008 2007Revenue $2,899 $2,744 $12,708 $11,360Cost of revenue 2,208 2,150 9,503 9,175
Product development 270 221 1,028 904
Marketing and
administrative 175 143 659 589
Amortization of
intangibles 13 13 54 49
Restructuring and
other, net 36 29 88 29
Total operating
expenses 2,702 2,556 11,332 10,746Income from operations 197 188 1,376 614Interest income 6 14 57 73
Interest expense (30) (33) (126) (141)
Other, net 9 2 22 15
Other expense, net (15) (17) (47) (53)Income before
income taxes 182 171 1,329 561
Provision for
(benefit from)
income taxes 22 (370) 67 (352)
Net income $160 $541 $1,262 $913Net income per share:
Basic $0.33 $1.00 $2.46 $1.64
Diluted 0.32 0.96 2.36 1.56Number of shares
used in per share
calculations:
Basic 484 539 512 558
Diluted 500 564 538 587SEAGATE TECHNOLOGY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)For the Year Ended
June 27, June 29,
2008 2007OPERATING ACTIVITIES
Net income $1,262 $913
Adjustments to reconcile
net income to net cash
from operating activities:
Depreciation and amortization 844 851
Stock-based compensation 113 128
Deferred income taxes 10 (365)
Allowance for doubtful accounts
receivable, net of recoveries (3) 40
Redemption charges on 8% Senior Notes due 2009 - 19
In-process research and development 4 4
Other non-cash operating activities, net (16) 36
Changes in operating assets and liabilities:
Current assets and liabilities 133 (781)
Non-current assets and liabilities 191 98
Net cash provided by operating activities 2,538 943INVESTING ACTIVITIES
Acquisition of property, equipment and
leasehold improvements (930) (906)
Proceeds from sale of fixed assets 29 55
Purchases of short-term investments (486) (322)
Maturities and sales of short-term investments 460 997
Acquisitions, net of cash acquired (78) (178)
Other investing activities, net 14 (48)
Net cash used in investing activities (991) (402)FINANCING ACTIVITIES
Net proceeds from issuance of long-term debt - 1,477
Repayment of debt (34) (405)
Redemption premium on 8% Senior Notes due 2009 - (16)
Proceeds from exercise of employee
stock options and employee stock purchase plan 178 219
Dividends to shareholders (216) (212)
Repurchases of common shares (1,479) (1,526)
Other financing activities, net 6 -
Net cash used in financing activities (1,545) (463)Increase in cash and cash equivalents 2 78
Cash and cash equivalents at the
beginning of the year 988 910
Cash and cash equivalents at the end of the year $990 $988Use of non-GAAP financial informationOur results of operations have undergone significant change in the past
two years, most significantly in connection with our acquisition of Maxtor. To
help the readers of our condensed consolidated financial statements prepared
on a GAAP basis better understand our past financial performance and our
expectations of our future results, we supplementally disclose, after making
certain non-GAAP adjustments, non-GAAP net income and non-GAAP diluted net
income per share. We also provide forecasts of these non-GAAP financial
measures. A reconciliation of the adjustments to GAAP net income and diluted
net income per share for the quarter and annual periods are presented in the
tables below. In addition, an explanation of the ways in which our board of
directors and management use these non-GAAP financial measures to evaluate the
business, the substance behind our management's decision to use these non-GAAP
financial measures, the material limitations associated with the use of these
non-GAAP financial measures, the manner in which Seagate management
compensates for those limitations, and the substantive reasons why we believe
that these non-GAAP financial measures provide useful information to investors
is included under the caption "Use of Non-GAAP Financial Measures" in the Form
8-K furnished today with the U.S. Securities and Exchange Commission. This
additional non-GAAP financial information is not meant to be considered in
isolation or as a substitute for net income or diluted net income per share
prepared in accordance with GAAP. You should not compare our non-GAAP net
income or non-GAAP diluted net income per share results with those of other
companies, as the adjustments made to our GAAP results are unique to Seagate.SEAGATE TECHNOLOGY
ADJUSTMENTS TO GAAP NET INCOME AND DILUTED NET INCOME PER SHARE
(In millions, except per share data)
(Unaudited)For the For the
Three Months Ended Year Ended
June 27, 2008 June 27, 2008GAAP net income $160 $1,262
Non-GAAP adjustments:
Acquisition related adjustments:
- Amortization of purchased
intangible assets A 20 94
- Write-off of in-process research
and development B - 4
- Stock-based compensation C 3 15
- Gain on the sale of certain assets D - (19)
Adjustments for taxes E - -
Non-GAAP net income 183 1,356Diluted net income per share:
GAAP $ 0.32 $ 2.36Non-GAAP $ 0.37 $ 2.54Shares used in diluted net income
per share calculation: 500 538A For the three months and year ended June 27, 2008, amortization of
purchased intangible assets acquired in acquisitions was allocated as
follows:For the For the
Three Months Ended Year Ended
June 27, 2008 June 27, 2008Cost of revenue $7 $40
Amortization of intangibles 13 54Total amortization of purchased
intangible assets $20 $94B To exclude the write-off of in-process research and development related
to the MetaLINCS acquisition (allocated to Product development)
C For the three months and year ended June 27, 2008, stock-based
compensation expense related to the Maxtor acquisition was allocated as
follows:For the For the
Three Months Ended Year Ended
June 27, 2008 June 27, 2008Cost of revenue $1 $2
Product development 2 10
Marketing and administrative - 3Total stock-based compensation expense $3 $15D To exclude the gain on the sale of certain assets (allocated to Other
income, net)E To exclude the tax effects, where applicable, of adjustments to GAAP net
income
For further information: Media Relations, Brian Ziel, +1-831-439-5429,
brian.ziel@seagate.com, or Investor Relations, Rod Cooper, +1-831-439-2371,
rod.j.cooper@seagate.com, both of Seagate Technology Web Site:
http://www.seagate.com
