Seagate Technology
Seagate Technology plc (Form: 8-K, Received: 10/31/2012 08:23:32)

 

 

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 31, 2012

 


 

SEAGATE TECHNOLOGY PUBLIC LIMITED COMPANY

(Exact name of registrant as specified in its charter)

 


 

Ireland

 

001-31560

 

98-0648577

(State or other jurisdiction

of incorporation)

 

(Commission File Number)

 

(IRS Employer

Identification No.)

 

38/39 Fitzwilliam Square

Dublin 2, Ireland

 

N/A

(Address of principal executive office)

 

(Zip Code)

 

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 31, 2012, Seagate Technology plc (the “Company”) issued a press release and supplemental commentary reporting its financial results for the fiscal quarter ended September 28, 2012.  The press release and supplemental commentary are attached to this Current Report on Form 8-K as Exhibit 99.1 and 99.2, respectively.

 

The information in this Current Report on Form 8-K including the exhibits hereto is “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 31, 2012, of Seagate Technology plc entitled “Seagate Technology Reports Fiscal First Quarter 2013 Financial Results.”

 

 

 

99.2

 

Supplemental Commentary, dated October 31, 2012, of Seagate Technology plc entitled “Seagate Technology plc Fiscal First Quarter 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 December 28, 2012 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 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 our 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 the 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; and 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 the risk that we will incur significant incremental costs in connection with the implementation of our recently executed transaction with Samsung Electronics Co., Ltd or that we will not achieve the benefits expected from such transactions. Information concerning risks, 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 with the U.S. Securities and Exchange Commission on August 8, 2012 which statements are incorporated into this Current report 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.

 

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

 

Name:

Patrick J. O’Malley

 

Title:

Executive Vice President and Chief Financial Officer

 

Date: October 31, 2012

 

3


Exhibit 99.1

 

 

 

Media Relations Contact:

 

 

GRAPHIC

Brian Ziel (408.658.1540)

 

brian.ziel@seagate.com

 

SEAGATE TECHNOLOGY REPORTS FISCAL FIRST QUARTER 2013

FINANCIAL RESULTS

 

CUPERTINO, CA — October 31, 2012 — Seagate Technology plc (NASDAQ: STX) today reported financial results for the quarter ended September 28, 2012. During the first quarter, on a GAAP basis the company reported revenue of approximately $3.7 billion, gross margin of 28.4%, net income of $582 million and diluted earnings per share of $1.42. On a non-GAAP basis, which excludes the net impact of certain items, Seagate reported gross margin of 29.0%, net income of $594 million, and diluted earnings per share of $1.45.

 

In the September quarter, Seagate generated approximately $1.1 billion in cash from operations, paid cash dividends of $127 million and redeemed approximately 20.5 million ordinary shares, or approximately 5% of ordinary shares at the beginning of the fiscal quarter for approximately $669 million. During the nine months ended September 28, 2012, Seagate redeemed approximately 109 million ordinary shares, resulting in an approximate reduction of 17% of the Company’s share count. Cash, cash equivalents, restricted cash, and short-term investments totaled approximately $2.5 billion at the end of the first quarter, a sequential increase of approximately $259 million.

 

“Seagate continues to adapt to dynamic industry conditions, managing inventory and demand with our customers while maintaining investments in our technology portfolio that will position us for continued success in the marketplace over the long-term,” said Steve Luczo, Seagate chairman and chief executive officer. “Returning value to shareholders remains a top priority with over 70% of our operating cash flow going towards share redemptions and dividends this quarter.”

 

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 rather it is available in the investors section of seagate.com.

 

1



 

Quarterly Cash Dividend

 

The Board of Directors has approved a quarterly cash dividend of $0.32 per share, which will be payable on November 29, 2012 to shareholders of record as of the close of business on November 14, 2012. 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 5:30 a.m. Pacific Time on its Investor Relations website at www.seagate.com/investors. During today’s webcast, the company will provide an outlook for its second fiscal quarter of 2013 including key underlying assumptions.

 

Replay

 

A replay will be available beginning today at approximately 10:00 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 December 28, 2012 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 document 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 our 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 the 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; and 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 the risk that we will incur significant incremental costs in connection with the implementation of our recently executed transaction with Samsung Electronics Co., Ltd or that we will not achieve the benefits expected from such transactions. Information concerning risks, 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 with the U.S. Securities and Exchange Commission on August 8, 2012 which statements are incorporated into this document 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

(In millions)

(Unaudited)

 

 

 

September 28,
2012

 

June 29,
2012

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

1,894

 

$

1,707

 

Short-term investments

 

476

 

411

 

Restricted cash and investments

 

100

 

93

 

Accounts receivable, net

 

1,684

 

2,319

 

Inventories

 

845

 

909

 

Deferred income taxes

 

112

 

104

 

Other current assets

 

638

 

767

 

Total current assets

 

5,749

 

6,310

 

Property, equipment and leasehold improvements, net

 

2,243

 

2,284

 

Goodwill

 

475

 

463

 

Other intangible assets

 

517

 

506

 

Deferred income taxes

 

403

 

396

 

Other assets, net

 

135

 

147

 

Total Assets

 

$

9,522

 

$

10,106

 

LIABILITIES AND EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

1,808

 

$

2,286

 

Accrued employee compensation

 

217

 

344

 

Accrued warranty

 

209

 

235

 

Accrued expenses

 

516

 

531

 

Current portion of long-term debt

 

3

 

 

Total current liabilities

 

2,753

 

3,396

 

Long-term accrued warranty

 

128

 

128

 

Long-term accrued income taxes

 

87

 

84

 

Other non-current liabilities

 

152

 

138

 

Long-term debt, less current portion

 

2,867

 

2,863

 

Total Liabilities

 

5,987

 

6,609

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

Total Equity

 

3,535

 

3,497

 

Total Liabilities and Equity

 

$

9,522

 

$

10,106

 

 

The information as of June 29, 2012 was derived from the Company’s audited Consolidated Balance Sheet as of June 29, 2012.

 



 

SEAGATE TECHNOLOGY PLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

(Unaudited)

 

 

 

For the Three Months Ended

 

 

 

September 28,
2012

 

September 30,
2011

 

Revenue

 

$

3,732

 

$

2,811

 

 

 

 

 

 

 

Cost of revenue

 

2,671

 

2,262

 

Product development

 

268

 

208

 

Marketing and administrative

 

150

 

105

 

Amortization of intangibles

 

19

 

 

Restructuring and other, net

 

 

 

Total operating expenses

 

3,108

 

2,575

 

 

 

 

 

 

 

Income from operations

 

624

 

236

 

 

 

 

 

 

 

Interest income

 

2

 

1

 

Interest expense

 

(55

)

(69

)

Other, net

 

29

 

(16

)

Other expense, net

 

(24

)

(84

)

 

 

 

 

 

 

Income before income taxes

 

600

 

152

 

Provision for income taxes

 

18

 

12

 

Net income

 

582

 

140

 

Less: Net income attributable to noncontrolling interest

 

 

 

Net income attributable to Seagate Technology plc

 

$

582

 

$

140

 

 

 

 

 

 

 

Net income per share attributable to Seagate Technology plc ordinary shareholders:

 

 

 

 

 

Basic

 

$

1.48

 

$

0.33

 

Diluted

 

1.42

 

0.32

 

Number of shares used in per share calculations:

 

 

 

 

 

Basic

 

394

 

421

 

Diluted

 

409

 

433

 

 

 

 

 

 

 

Cash dividends declared per Seagate Technology plc ordinary share

 

$

0.32

 

$

0.18

 

 



 

SEAGATE TECHNOLOGY PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

 

 

For the Three Months Ended

 

 

 

September 28,
2012

 

September 30,
2011

 

OPERATING ACTIVITIES

 

 

 

 

 

Net income

 

$

582

 

$

140

 

Adjustments to reconcile net income to net cash from operating activities:

 

 

 

 

 

Depreciation and amortization

 

212

 

182

 

Share-based compensation

 

17

 

12

 

Loss on redemption of debt

 

 

5

 

Gain on sale of property and equipment

 

(6

)

(10

)

Gain on sale of strategic investments

 

(33

)

 

Deferred income taxes

 

(5

)

 

Other non-cash operating activities, net

 

 

10

 

 

 

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable, net

 

648

 

49

 

Inventories

 

110

 

47

 

Accounts payable

 

(373

)

(298

)

Accrued employee compensation

 

(132

)

(57

)

Accrued expenses, income taxes and warranty

 

(57

)

12

 

Other assets and liabilities

 

169

 

68

 

Net cash provided by operating activities

 

1,132

 

160

 

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

Acquisition of property, equipment and leasehold improvements

 

(263

)

(218

)

Proceeds from the sale of property and equipment

 

4

 

8

 

Proceeds from the sale of equity investments

 

41

 

 

Purchases of short-term investments

 

(74

)

(254

)

Sales of short-term investments

 

64

 

214

 

Maturities of short-term investments

 

5

 

87

 

Cash used in acquisition of LaCie S.A., net of cash acquired

 

(36

)

 

Change in restricted cash and investments

 

(6

)

14

 

Net cash used in investing activities

 

(265

)

(149

)

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

Repayments of long-term debt and capital lease obligations

 

 

(34

)

Repurchases of ordinary shares

 

(639

)

(128

)

Escrow deposit for acquisition of noncontrolling shares of LaCie S.A.

 

(72

)

 

Proceeds from issuance of ordinary shares under employee stock plans

 

157

 

26

 

Dividends to shareholders

 

(127

)

(78

)

Net cash used in by financing activities

 

(681

)

(214

)

 

 

 

 

 

 

Effect of foreign currency exchange rate changes on cash and cash equivalents

 

1

 

 

Increase (decrease) in cash and cash equivalents

 

187

 

(203

)

Cash and cash equivalents at the beginning of the period

 

1,707

 

2,677

 

Cash and cash equivalents at the end of the period

 

$

1,894

 

$

2,474

 

 



 

Use of non-GAAP financial information

 

To supplement the preliminary financial information presented in accordance with generally accepted accounting principles (GAAP), the Company provides non-GAAP measures of net income, diluted EPS and gross margin which are adjusted from results based on GAAP to exclude certain expenses. These non-GAAP financial measures are provided to enhance the user’s overall understanding of the Company’s current financial performance and its 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 that the Company believes are not indicative of its 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 the Company’s 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

 

 

 

 

 

September 28,
2012

 

September 30,
2011

 

 

 

 

 

 

 

 

 

GAAP net income

 

 

 

$

582

 

$

140

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

Cost of revenue

 

A

 

20

 

 

Product development

 

B

 

4

 

 

Marketing and administrative

 

B

 

4

 

(6

)

Amortization of intangibles

 

C

 

19

 

 

Other expense, net

 

D

 

(35

)

12

 

Non-GAAP net income

 

 

 

$

594

 

$

146

 

 

 

 

 

 

 

 

 

Diluted net income per share:

 

 

 

 

 

 

 

GAAP

 

 

 

$

1.42

 

$

0.32

 

 

 

 

 

 

 

 

 

Non-GAAP

 

 

 

$

1.45

 

$

0.34

 

 

 

 

 

 

 

 

 

Shares used in diluted net income per share calculation

 

 

 

409

 

433

 

 

A    For the three months ended September 28, 2012, Cost of revenue on a GAAP basis totaled $2,671 million, while non-GAAP Cost of revenue was $2,651 million. The non-GAAP adjustments include amortization expense of other intangible assets, and other acquisition related expenses related to our December 2011 acquisition of Samsung Electronics Co., Ltd’s hard disk drive business (“Samsung HDD business”) and the August 2012 acquisition of LaCie S.A (“LaCie”).

 

B    For the three months ended September 28, 2012, Product development and Marketing and administrative expenses have been adjusted on a non-GAAP basis to exclude the net impact of acquisition and integration costs associated with our acquisitions of Samsung’s HDD business, and LaCie.

 

For the three months ended September 30, 2011, non-GAAP adjustments to Product development and Marketing and administrative expenses reflect the net impact from the reversal of previously accrued litigation costs and a gain on the sale of a building, offset by costs associated with the previously announced transaction with Samsung and an adjustment to the expected exit costs related to certain sub-leased facilities.

 

C    For the three months ended September 28, 2012, Amortization of intangibles related to the acquisitions of Samsung’s HDD business and LaCie have been excluded on a non-GAAP basis.

 

D    For the three months ended September 28, 2012, Other expense, net on a GAAP basis was $24 million, while non-GAAP Other expense, net, was $59 million. The non-GAAP adjustment includes a gain recognized upon sales of certain strategic investments.

 

For the three months ended September 30, 2011, non-GAAP adjustments to Other expense, net reflect a loss related to the early retirement of the principal amount of our 10% secured notes and a write-down of an equity investment.

 


Exhibit 99.2

 

Seagate Technology plc Fiscal First Quarter 2013 Financial Results

 

Supplemental Commentary

October 31, 2012

 

The information in this written commentary is being provided to the investment community concurrently with our press release. Please note that these remarks will not be read during the earnings conference call. The live call will consist of opening comments from Steve Luczo, Chairman, President and CEO, followed by a Q&A session with the executive management team.

 

Cautionary Note Regarding Forward-Looking Statements

 

This document 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 December 28, 2012 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 document 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 our 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 the 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; and 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 the risk that we will incur significant incremental costs in connection with the implementation of our recently executed transaction with Samsung Electronics Co., Ltd or that we will not achieve the benefits expected from such transactions. Information concerning risks, 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 with the U.S. Securities and Exchange Commission on August 8, 2012 which statements are incorporated into this document 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.

 

1



 

Fiscal First Quarter 2013 Financial Highlights

 

These results reflect the acquisition of Samsung’s hard drive business in December 2011 and the completion of the majority acquisition of LaCie in August 2012.

 

Revenue, Non-GAAP Gross Margin and Earnings Per Diluted Share

 

Seagate achieved first quarter revenue of $3.7 billion, up 33% year over year. Non-GAAP gross margin as a percentage of revenue was 29.0% and non- GAAP earnings per diluted share were $1.45, up 326% year-over-year.

 

Operating Results and Selected Balance Sheet Items

 

Seagate successfully delivered its portfolio of products to a broad base of customers and product shipments in the September quarter increased 14% on a year-over-year basis.

 

Fiscal Q1 Operating Expenses were $437 million, up $124 million year-over-year, primarily due to the impact of the acquisition of LaCie and the Samsung HDD business, an increase in variable performance-based compensation, and the impact of a reversal of previously accrued litigation costs in the September 2011 quarter. Within this line item, Product Development expenses were $268 million, Sales, Marketing, General and Administrative expenses were $150 million and Amortization of Intangibles associated with our Samsung and LaCie business acquisitions were $19 million.

 

Inventory at the end of the September quarter was $845 million, down approximately 7%, sequentially. Inventory turns were 12.6, down from 13.2, sequentially. Fiscal Q1 Days Sales Outstanding were 41, down 6 days sequentially.

 

Amortization of Acquisition Related Intangibles

 

As a result of the acquisition of Samsung’s HDD business and LaCie, Seagate recognized a non-cash $36 million expense for amortization of acquisition-related intangibles in the September quarter, with approximately $17 million recorded in Cost of Revenue and $19 million in Amortization of Intangibles.

 

Cash Flow from Operations and Share Repurchase

 

For the September quarter, Cash Flow from Operations was $1.1 billion, Capital Investment was $263 million and free cash flow (Cash Flow from Operations less Capital Investments) was $869 million. Cash, Cash Equivalents, Restricted Cash, and Short-Term Investments totaled $2.5 billion at the end of the September 2012 quarter, up approximately $259 million sequentially.

 

During the September quarter, the Company returned over 70% of operating cash flow to shareholders in share redemptions and dividends. The company redeemed 20.5 million ordinary shares for approximately $669 million and paid $127 million in dividends. As of September 28, 2012 Seagate had

 

2



 

approximately 386 million ordinary shares outstanding and the weighted average share count for the September quarter was 409 million fully diluted shares.

 

Disk Drive Market Commentary

 

All references to addressable markets in this document reflect the Company’s best estimates of industry hard drive product shipments based on external reporting sources. (1 exabyte = approximately 1 billion gigabytes)

 

During the September quarter, the industry is estimated to have shipped approximately 139 million hard drives, reflecting approximately 96 exabytes of storage capacity. Within this, Seagate shipped 57.6 million hard drives, representing 42% market share and approximately 43 exabytes of storage. Seagate continues to focus on improving its mix of product sales towards higher capacity hard drives.

 

Enterprise class shipments in the September quarter decreased 9% year-over-year to 6.3 million. These results include 3.3 million hard drives for mission critical applications and 3.0 million hard drives for nearline applications.

 

Client compute shipments in the September quarter increased 22% year-over-year to 40.7 million disk drives, including 20.3 million mobile hard drives and 20.4 million desktop hard drives.

 

Non-compute shipments in the September quarter increased slightly year-over-year to 10.6 million hard drives, including 5.8 million consumer electronics (“CE”) hard drives and 4.8 million Seagate branded hard drives.

 

Products and Technology Developments

 

In August, Seagate completed its acquisition of a controlling interest in LaCie, one of the world’s premier brands of external storage products for consumers and businesses.

 

Also in August, Seagate announced a strategic alliance with Supermicro, a global leader in high-performance, high-efficiency server technology and green computing, to focus on expanding the market for Seagate Pulsar SSDs. As part of the initiative, Supermicro customers have access to the latest Pulsar product line.

 

At the Intel developer forum in September, Seagate demonstrated new advancements in solid state hybrid drives, accelerated with Intel Smart Response Technology, which run common office productivity applications almost on par with solid state drives.

 

Later in the month, Seagate announced the Seagate Cloud Builder Alliance, a new strategic partner category within the company’s existing Seagate Partner Program. The new program provides technical information, customer insights, market knowledge and delivers partners the tools needed to expand their businesses providing cloud storage technology.

 

Lastly, Seagate recently announced three new enterprise-class hard disk drives optimized for traditional data centers and emerging cloud infrastructures. The new line of drives provides the highest capacity-to-power ratios while ensuring consistent performance and high reliability.

 

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