|By Business Wire||
|January 27, 2014 04:01 PM EST||
Seagate Technology plc (NASDAQ: STX) (the “Company” or “Seagate”) today reported financial results for the second quarter of fiscal year 2014 ended December 27, 2013. During the second quarter, the Company reported revenue of $3.53 billion, gross margin of 28.0%, net income of $428 million and diluted earnings per share of $1.24. On a non-GAAP basis, which excludes the net impact of certain items, Seagate reported gross margin of 28.5%, net income of $455 million and diluted earnings per share of $1.32.
During the second quarter, the Company generated approximately $856 million in operating cash flow, paid cash dividends of $142 million and repurchased 33 million ordinary shares for approximately $1.5 billion. There were 328 million ordinary shares issued and outstanding as of the end of the quarter. Cash, cash equivalents, restricted cash, and short-term investments totaled approximately $2.3 billion at the end of the quarter.
“Seagate’s results in the December quarter reflect discipline in managing the profitability of our business and strong operational execution. We continue to strategically invest in our product portfolio and enhance our vertically integrated manufacturing capabilities to effectively capitalize on the cloud, mobile and open source storage trends that are being fueled by data growth,” said Steve Luczo, Seagate’s chairman and chief executive officer. “Our cash flow was very strong this quarter, and combined with the execution of our capital allocation strategy, we are on track to meet our goal of returning 70% of our operating cash flow to shareholders this fiscal year.”
For a detailed reconciliation of GAAP to non-GAAP results, see accompanying financial tables.
Seagate has issued a Supplemental Commentary document. The Supplemental Commentary will not be read during today's call, but 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 $0.43 per share, which will be payable on February 24, 2014 to shareholders of record as of the close of business on February 10, 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.
Seagate management will hold a public webcast today at 2:00 p.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 2014, including key underlying assumptions.
A replay will be available beginning today at approximately 6:00 p.m. Pacific Time at www.seagate.com/investors.
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 March 28, 2014 and beyond. These statements identify prospective information and include words such as “expects,” “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; dependence on 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; 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 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, 2013 and the Quarterly Report on Form 10-Q filed with the U.S. Securities and Exchange Commission on October 29, 2013, the “Risk Factors” sections of which 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 the Company undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made.
SEAGATE TECHNOLOGY PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
|Cash and cash equivalents||$||2,293||$||1,708|
|Restricted cash and investments||4||101|
|Accounts receivable, net||1,615||1,670|
|Deferred income taxes||116||115|
|Other current assets||267||484|
|Total current assets||5,289||5,412|
|Property, equipment and leasehold improvements, net||2,128||2,269|
|Other intangible assets, net||329||405|
|Deferred income taxes||465||456|
|Other assets, net||202||225|
|LIABILITIES AND EQUITY|
|Accrued employee compensation||267||335|
|Current portion of long-term debt||—||3|
|Total current liabilities||2,457||2,611|
|Long-term accrued warranty||141||144|
|Long-term accrued income taxes||103||87|
|Other non-current liabilities||122||121|
|Long-term debt, less current portion||3,572||2,774|
|Total Liabilities and Equity||$||8,890||$||9,243|
The information as of June 28, 2013 was derived from the Company’s audited Consolidated Balance Sheet as of June 28, 2013.
SEAGATE TECHNOLOGY PLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
|For the Three Months Ended||For the Six Months Ended|
|Cost of revenue||2,541||2,676||5,055||5,347|
|Marketing and administrative||190||139||371||289|
|Amortization of intangibles||25||20||45||39|
|Restructuring and other, net||16||1||18||1|
|Total operating expenses||3,084||3,113||6,095||6,221|
|Income from operations||444||555||922||1,179|
|Other expense, net||(2||)||(56||)||(40||)||(80||)|
|Income before income taxes||442||499||882||1,099|
|Provision for income taxes||14||7||27||25|
|Less: Net income attributable to noncontrolling interest||—||—||—||—|
|Net income attributable to Seagate Technology plc||$||428||$||492||$||855||$||1,074|
|Net income per share attributable to Seagate Technology plc ordinary shareholders:|
|Number of shares used in per share calculations:|
|Cash dividends declared per Seagate Technology plc ordinary share||$||0.43||$||0.70||$||0.81||$||1.02|
SEAGATE TECHNOLOGY PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|For the Six Months Ended|
|Adjustments to reconcile net income to net cash provided by operating activities:|
|Depreciation and amortization||457||430|
|Deferred income taxes||(15||)||(11||)|
|Gain on sale of investments||(32||)||(33||)|
|Gain on sale of property and equipment||(4||)||(8||)|
|Loss on redemption and repurchase of debt||—||6|
|Other non-cash operating activities, net||8||5|
|Changes in operating assets and liabilities:|
|Accounts receivable, net||51||683|
|Accrued employee compensation||(68||)||(62||)|
|Accrued expenses, income taxes and warranty||41||(97||)|
|Vendor non-trade receivables||199||305|
|Other assets and liabilities||25||(12||)|
|Net cash provided by operating activities||1,538||1,976|
|Acquisition of property, equipment and leasehold improvements||(304||)||(427||)|
|Proceeds from the sale of property and equipment||—||4|
|Proceeds from the sale of strategic investments||72||42|
|Purchases of short-term investments||(87||)||(168||)|
|Sales of short-term investments||463||125|
|Maturities of short-term investments||61||21|
|Cash used in acquisition of LaCie S.A., net of cash acquired||—||(36||)|
|Other investing activities, net||(28||)||(14||)|
|Net cash provided by (used in) investing activities||177||(453||)|
|Repayments of long-term debt and capital lease obligations||—||(58||)|
|Net proceeds from issuance of 3.75% Senior Notes||791||—|
|Repurchases of ordinary shares||(1,702||)||(1,510||)|
|Dividends to shareholders||(277||)||(377||)|
|Proceeds from issuance of ordinary shares under employee stock plans||61||168|
|Escrow deposit for acquisition of noncontrolling shares of LaCie S.A.||—||(72||)|
|Other financing activities, net||(5||)||—|
|Net cash used in financing activities||(1,132||)||(1,849||)|
|Effect of foreign currency exchange rate changes on cash and cash equivalents||2||2|
|Increase (decrease) in cash and cash equivalents||585||(324||)|
|Cash and cash equivalents at the beginning of the period||1,708||1,707|
|Cash and cash equivalents at the end of the period||$||2,293||$||1,383|
Use of non-GAAP financial information
To supplement the condensed consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP), the Company provides non-GAAP measures of net income, diluted net income per share and gross margin as a percentage of revenue, which are adjusted from results based on GAAP to exclude certain expenses, gains and losses. These non-GAAP financial measures are provided to enhance the user's overall understanding of the Company’s current financial performance and our prospects for the future. Specifically, the Company believes non-GAAP results provide useful information to both management and investors as these non-GAAP results exclude certain expenses, gains and losses that we believe are not indicative of our core operating results and because it is consistent with the financial models and estimates published by financial analysts who follow the Company.
These non-GAAP results are some of the primary measurements management uses to assess the Company’s performance, allocate resources and plan for future periods. Reported non-GAAP results should only be considered as supplemental to results prepared in accordance with GAAP, and not considered as a substitute for, or superior to, GAAP results. These non-GAAP measures may differ from the non-GAAP measures reported by other companies in our industry.
SEAGATE TECHNOLOGY PLC
ADJUSTMENTS TO GAAP NET INCOME AND DILUTED NET INCOME PER SHARE
(In millions, except per share amounts)
For the Three
For the Six Months
|GAAP net income||$||428||$||855|
|Cost of revenue||A||17||37|
|Marketing and administrative||B||3||6|
|Amortization of intangibles||C||25||45|
|Restructuring and other, net||D||16||18|
|Other expense, net||E||(31||)||(33||)|
|Benefit from income taxes||F||(6||)||(6||)|
|Non-GAAP net income||$||455||$||928|
|Diluted net income per share:|
|Shares used in diluted net income per share calculation||346||357|
|For the three and six months ended December 27, 2013, Cost of revenue on a GAAP basis totaled $2,541 million and $5,055 million, respectively, while non-GAAP Cost of revenue, which excludes the net impact of certain adjustments, was $2,524 million and $5,018 million, respectively. 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") and the August 2012 acquisition of LaCie S.A. ("LaCie").|
|For the three and six months ended December 27, 2013, 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 the Samsung HDD business and LaCie.|
|For the three and six months ended December 27, 2013, Amortization of intangibles related to our Samsung HDD business and LaCie acquisitions.|
|For the three and six months ended December 27, 2013, Restructuring and other, net, includes a restructuring charge recorded during the December 2013 quarter associated with a reduction in the work force.|
|For the three and six months ended December 27, 2013, Other expense, net, has been adjusted on a non-GAAP basis primarily to exclude the impact of a gain recognized upon the sale of certain strategic investments.|
|For the three and six months ended December 27, 2013, Benefit from income taxes has been adjusted on a non-GAAP basis primarily to exclude the impact related to the release of valuation allowance on U.S. deferred tax assets associated with increases in the Company's forecasted U.S. taxable income.|
SYS-CON Events announced today that Isomorphic Software will exhibit at DevOps Summit at 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Isomorphic Software provides the SmartClient HTML5/AJAX platform, the most advanced technology for building rich, cutting-edge enterprise web applications for desktop and mobile. SmartClient combines the productivity and performance of traditional desktop software with the simp...
Aug. 29, 2016 03:00 AM EDT Reads: 2,394
With so much going on in this space you could be forgiven for thinking you were always working with yesterday’s technologies. So much change, so quickly. What do you do if you have to build a solution from the ground up that is expected to live in the field for at least 5-10 years? This is the challenge we faced when we looked to refresh our existing 10-year-old custom hardware stack to measure the fullness of trash cans and compactors.
Aug. 29, 2016 02:15 AM EDT Reads: 1,817
Extreme Computing is the ability to leverage highly performant infrastructure and software to accelerate Big Data, machine learning, HPC, and Enterprise applications. High IOPS Storage, low-latency networks, in-memory databases, GPUs and other parallel accelerators are being used to achieve faster results and help businesses make better decisions. In his session at 18th Cloud Expo, Michael O'Neill, Strategic Business Development at NVIDIA, focused on some of the unique ways extreme computing is...
Aug. 29, 2016 02:15 AM EDT Reads: 2,198
The emerging Internet of Everything creates tremendous new opportunities for customer engagement and business model innovation. However, enterprises must overcome a number of critical challenges to bring these new solutions to market. In his session at @ThingsExpo, Michael Martin, CTO/CIO at nfrastructure, outlined these key challenges and recommended approaches for overcoming them to achieve speed and agility in the design, development and implementation of Internet of Everything solutions wi...
Aug. 29, 2016 01:45 AM EDT Reads: 2,174
Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is expected in the amount of information being processed, managed, analyzed, and acted upon by enterprise IT. This amazing is not part of some distant future - it is happening today. One report shows a 650% increase in enterprise data by 2020. Other estimates are even higher....
Aug. 29, 2016 01:15 AM EDT Reads: 3,008
With over 720 million Internet users and 40–50% CAGR, the Chinese Cloud Computing market has been booming. When talking about cloud computing, what are the Chinese users of cloud thinking about? What is the most powerful force that can push them to make the buying decision? How to tap into them? In his session at 18th Cloud Expo, Yu Hao, CEO and co-founder of SpeedyCloud, answered these questions and discussed the results of SpeedyCloud’s survey.
Aug. 29, 2016 01:00 AM EDT Reads: 2,222
Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more business becomes digital the more stakeholders are interested in this data including how it relates to business. Some of these people have never used a monitoring tool before. They have a question on their mind like “How is my application doing” but no id...
Aug. 29, 2016 12:00 AM EDT Reads: 1,889
Actian Corporation has announced the latest version of the Actian Vector in Hadoop (VectorH) database, generally available at the end of July. VectorH is based on the same query engine that powers Actian Vector, which recently doubled the TPC-H benchmark record for non-clustered systems at the 3000GB scale factor (see tpc.org/3323). The ability to easily ingest information from different data sources and rapidly develop queries to make better business decisions is becoming increasingly importan...
Aug. 28, 2016 11:15 PM EDT Reads: 2,150
The 19th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Digital Transformation, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportuni...
Aug. 28, 2016 10:30 PM EDT Reads: 4,060
Qosmos has announced new milestones in the detection of encrypted traffic and in protocol signature coverage. Qosmos latest software can accurately classify traffic encrypted with SSL/TLS (e.g., Google, Facebook, WhatsApp), P2P traffic (e.g., BitTorrent, MuTorrent, Vuze), and Skype, while preserving the privacy of communication content. These new classification techniques mean that traffic optimization, policy enforcement, and user experience are largely unaffected by encryption. In respect wit...
Aug. 28, 2016 08:30 PM EDT Reads: 1,844
Deploying applications in hybrid cloud environments is hard work. Your team spends most of the time maintaining your infrastructure, configuring dev/test and production environments, and deploying applications across environments – which can be both time consuming and error prone. But what if you could automate provisioning and deployment to deliver error free environments faster? What could you do with your free time?
Aug. 28, 2016 08:15 PM EDT Reads: 1,957
SYS-CON Events announced today that Hitrons Solutions will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Hitrons Solutions Inc. is distributor in the North American market for unique products and services of small and medium-size businesses, including cloud services and solutions, SEO marketing platforms, and mobile applications.
Aug. 28, 2016 07:30 PM EDT Reads: 714
Smart Cities are here to stay, but for their promise to be delivered, the data they produce must not be put in new siloes. In his session at @ThingsExpo, Mathias Herberts, Co-founder and CTO of Cityzen Data, will deep dive into best practices that will ensure a successful smart city journey.
Aug. 28, 2016 06:30 PM EDT Reads: 1,635
SYS-CON Events announced today that 910Telecom will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Housed in the classic Denver Gas & Electric Building, 910 15th St., 910Telecom is a carrier-neutral telecom hotel located in the heart of Denver. Adjacent to CenturyLink, AT&T, and Denver Main, 910Telecom offers connectivity to all major carriers, Internet service providers, Internet backbones and ...
Aug. 28, 2016 06:00 PM EDT Reads: 1,948
SYS-CON Events announced today that eCube Systems, a leading provider of middleware modernization, integration, and management solutions, will exhibit at @DevOpsSummit at 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. eCube Systems offers a family of middleware evolution products and services that maximize return on technology investment by leveraging existing technical equity to meet evolving business needs. ...
Aug. 28, 2016 05:30 PM EDT Reads: 788