Seagate Technology
Seagate Technology plc (Form: 8-K, Received: 05/01/2013 16:41:39)

 

 

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): May 1, 2013

 


 

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 May 1, 2013, Seagate Technology plc (the “Company”) issued a press release and supplemental commentary reporting its financial results for the fiscal quarter ended March 29, 2013.  The press release and supplemental commentary are attached to this Current Report on Form 8-K as Exhibit 99.1 and 99.2, respectively.

 

As provided in General Instruction B.2 of Form 8-K, 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 May 1, 2013, of Seagate Technology plc entitled “Seagate Technology Reports Fiscal Third Quarter 2013 Financial Results.”

 

 

 

99.2

 

Supplemental Commentary, dated May 1, 2013, of Seagate Technology plc entitled “Seagate Technology plc Fiscal Third Quarter 2013 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 June 28, 2013 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 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 those projected in the forward-looking statements is contained in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on August 8, 2012 and in the Company’s quarterly report on Form 10-Q filed with the SEC on January 29, 2013, 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: May 1, 2013

 

 

 

 

3


Exhibit 99.1

 

 

 

Media Contact:

GRAPHIC

 

Brian Ziel, (408) 658-1540

 

brian.ziel@seagate.com

 

 

SEAGATE

 

SEAGATE TECHNOLOGY REPORTS FISCAL THIRD QUARTER 2013
FINANCIAL RESULTS

 

CUPERTINO, CA — May 1, 2013 — Seagate Technology plc (NASDAQ: STX) (the “Company”) today reported financial results for the quarter ended March 29, 2013. During the fiscal third quarter, the Company reported revenue of approximately $3.5 billion, gross margin of 26.9%, net income of $416 million and diluted earnings per share of $1.13.  On a non-GAAP basis, which excludes the net impact of certain items, Seagate reported gross margin of 27.6%, net income of $464 million and diluted earnings per share of $1.26.

 

The Company generated $678 million in operating cash flow, repurchased three million ordinary shares for approximately $102 million and paid $379 million for the early redemption of long-term debt. For the first nine months of the fiscal year, the Company has returned 75% of its operating cash flow to shareholders in dividends and share redemptions. Cash, cash equivalents, restricted cash, and short-term investments totaled approximately $2 billion at the end of the fiscal third quarter.

 

“Seagate’s operational results this quarter again reflect strong execution,” said Steve Luczo, Seagate’s chairman, president and chief executive officer. “The continued advancement of cloud, mobile and open source computing are trends that are shifting data volumes toward personal and corporate cloud environments, creating tremendous opportunities for Seagate’s leading storage technology portfolio.  Looking ahead, our top priorities are focused on the efficiency of our operations, extending our leadership in storage technology innovation and returning value to shareholders.”

 

For a detailed reconciliation of GAAP to non-GAAP results, see accompanying financial tables.

 

Seagate has issued a Supplemental Commentary document, which will not be read during today’s call, but is available in the “Investors” section of seagate.com.

 



 

Quarterly Cash Dividend

 

The Board of Directors has approved a quarterly cash dividend of $0.38 per share, which will be payable on May 29, 2013 to shareholders of record as of the close of business on May 15, 2013. 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 2:00 p.m. Pacific Daylight Time that can be accessed on its Investor Relations website at www.seagate.com/investors. During today’s webcast, the Company will provide an outlook for its fourth fiscal quarter of 2013, including key underlying assumptions.

 

Replay

 

A replay will be available beginning today at approximately 6:00 p.m. Pacific Daylight 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 June 28, 2013 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 those projected in the

 



 

forward-looking statements are contained in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on August 8, 2012, and in the Company’s Quarterly Report on Form 10-Q filed with the SEC on January 29, 2013, 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 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)

 

 

 

March 29,
2013

 

June 29,
2012

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

1,433

 

$

1,707

 

Short-term investments

 

476

 

411

 

Restricted cash and investments

 

101

 

93

 

Accounts receivable, net

 

1,562

 

2,319

 

Inventories

 

833

 

909

 

Deferred income taxes

 

111

 

104

 

Other current assets

 

471

 

767

 

Total current assets

 

4,987

 

6,310

 

Property, equipment and leasehold improvements, net

 

2,256

 

2,284

 

Goodwill

 

476

 

463

 

Other intangible assets, net

 

442

 

506

 

Deferred income taxes

 

413

 

396

 

Other assets, net

 

169

 

147

 

Total Assets

 

$

8,743

 

$

10,106

 

LIABILITIES AND EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

1,698

 

$

2,286

 

Accrued employee compensation

 

264

 

344

 

Accrued warranty

 

184

 

235

 

Accrued expenses

 

451

 

531

 

Current portion of long-term debt

 

4

 

 

Total current liabilities

 

2,601

 

3,396

 

Long-term accrued warranty

 

138

 

128

 

Long-term accrued income taxes

 

87

 

84

 

Other non-current liabilities

 

131

 

138

 

Long-term debt, less current portion

 

2,474

 

2,863

 

Total Liabilities

 

5,431

 

6,609

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

Total Equity

 

3,312

 

3,497

 

Total Liabilities and Equity

 

$

8,743

 

$

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

 

For the Nine Months Ended

 

 

 

March 29,
2013

 

March 30,
2012

 

March 29,
2013

 

March 30,
2012

 

Revenue

 

$

3,526

 

$

4,450

 

$

10,927

 

$

10,457

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

2,578

 

2,809

 

7,926

 

7,257

 

Product development

 

294

 

270

 

839

 

737

 

Marketing and administrative

 

168

 

142

 

457

 

388

 

Amortization of intangibles

 

20

 

18

 

59

 

20

 

Restructuring and other, net

 

1

 

1

 

2

 

4

 

Total operating expenses

 

3,061

 

3,240

 

9,283

 

8,406

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

465

 

1,210

 

1,644

 

2,051

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

2

 

2

 

6

 

5

 

Interest expense

 

(53

)

(59

)

(163

)

(185

)

Other, net

 

16

 

6

 

41

 

(2

)

Other expense, net

 

(35

)

(51

)

(116

)

(182

)

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

430

 

1,159

 

1,528

 

1,869

 

Provision for income taxes

 

14

 

13

 

38

 

20

 

Net income

 

416

 

1,146

 

1,490

 

1,849

 

Less: Net income attributable to noncontrolling interest

 

 

 

 

 

Net income attributable to Seagate Technology plc

 

$

416

 

$

1,146

 

$

1,490

 

$

1,849

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Basic

 

$

1.16

 

$

2.57

 

$

3.98

 

$

4.29

 

Diluted

 

1.13

 

2.48

 

3.86

 

4.16

 

Number of shares used in per share calculations:

 

 

 

 

 

 

 

 

 

Basic

 

358

 

446

 

374

 

431

 

Diluted

 

369

 

463

 

386

 

445

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per Seagate Technology plc ordinary share

 

$

 

$

0.25

 

$

1.02

 

$

0.61

 

 



 

SEAGATE TECHNOLOGY PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

 

 

For the Nine Months Ended

 

 

 

March 29,
2013

 

March 30,
2012

 

OPERATING ACTIVITIES

 

 

 

 

 

Net income

 

$

1,490

 

$

1,849

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

651

 

597

 

Share-based compensation

 

56

 

38

 

Deferred income taxes

 

(14

)

(5

)

Gain on sale of investments

 

(51

)

(12

)

Gain on sale of property and equipment

 

(34

)

(18

)

Loss on redemption and repurchase of debt

 

31

 

17

 

Other non-cash operating activities, net

 

1

 

7

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable, net

 

769

 

(983

)

Inventories

 

123

 

167

 

Accounts payable

 

(462

)

191

 

Accrued employee compensation

 

(85

)

63

 

Accrued expenses, income taxes and warranty

 

(124

)

(28

)

Other assets and liabilities

 

308

 

(66

)

Net cash provided by operating activities

 

2,659

 

1,817

 

INVESTING ACTIVITIES

 

 

 

 

 

Acquisition of property, equipment and leasehold improvements

 

(658

)

(497

)

Proceeds from the sale of property and equipment

 

29

 

11

 

Purchases of short-term investments

 

(227

)

(382

)

Sales of short-term investments

 

201

 

330

 

Maturities of short-term investments

 

26

 

118

 

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

 

(36

)

 

Cash used in acquisition of Samsung HDD assets and liabilities

 

 

(561

)

Other investing activities, net

 

(16

)

16

 

Net cash used in investing activities

 

(681

)

(965

)

FINANCING ACTIVITIES

 

 

 

 

 

Repayments of long-term debt and capital lease obligations

 

(421

)

(670

)

Repurchases of ordinary shares

 

(1,612

)

(1,172

)

Dividends to shareholders

 

(381

)

(266

)

Proceeds from issuance of ordinary shares under employee stock plans

 

233

 

214

 

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

 

(72

)

 

Other financing activities, net

 

 

3

 

Net cash used in financing activities

 

(2,253

)

(1,891

)

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

 

1

 

 

Decrease in cash and cash equivalents

 

(274

)

(1,039

)

Cash and cash equivalents at the beginning of the period

 

1,707

 

2,677

 

Cash and cash equivalents at the end of the period

 

$

1,433

 

$

1,638

 

 



 

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)

(Unaudited)

 

 

 

For the Three
Months Ended

 

For the Nine
Months Ended

 

 

 

March 29, 2013

 

March 29, 2013

 

 

 

 

 

 

 

GAAP net income

 

$

416

 

$

1,490

 

Non-GAAP adjustments:

 

 

 

 

 

Cost of revenue

(A)

24

 

63

 

Product development

(B)

11

 

18

 

Marketing and administrative

(C)

5

 

(8

)

Amortization of intangibles

(D)

20

 

59

 

Restructuring and other, net

(D)

1

 

2

 

Other expense, net

(E)

(13

)

(43

)

Non-GAAP net income

 

$

464

 

$

1,581

 

 

 

 

 

 

 

Diluted net income per share:

 

 

 

 

 

GAAP

 

$

1.13

 

$

3.86

 

 

 

 

 

 

 

Non-GAAP

 

$

1.26

 

$

4.10

 

 

 

 

 

 

 

Shares used in diluted net income per share calculation

 

369

 

386

 

 


(A) For the three months ended March 29, 2013, Cost of revenue on a GAAP basis totaled $2,578 million, while non-GAAP Cost of revenue, which excludes the net impact of certain adjustments, was $2,554 million.  For the nine months ended March 29, 2013, Cost of revenue on a GAAP basis totaled $7,926 million, while non-GAAP Cost of revenue, which excludes the net impact of certain adjustments, was $7,863 million.  The non-GAAP adjustments include amortization of intangibles, 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”) as well as the impact of the 2013 voluntary early retirement program (“2013 VERP”) offered by the Company to certain of its employees in the U.S. in January 2013.

 

(B) For the three and nine months ended March 29, 2013, Product development expense has been adjusted on a non-GAAP basis to exclude the net impact of acquisition and integration costs associated with the Samsung HDD business and costs associated with the 2013 VERP.

 

(C) For the three months ended March 29, 2013, Marketing and administrative expense has been adjusted on a non-GAAP basis to exclude acquisition and integration costs associated with LaCie and costs associated with the 2013 VERP. For the nine months ended March 29, 2013, Marketing and administrative expense has been adjusted on a non-GAAP basis to exclude the net impact of legal cost reimbursements, which were partially offset by acquisition and integration costs associated with the Samsung HDD business and LaCie and costs associated with the 2013 VERP.

 

(D) For the three and nine months ended March 29, 2013, Amortization of intangibles related to our Samsung HDD business and LaCie acquisitions and Restructuring and other, net, primarily related to prior year restructuring plans, have been excluded on a non-GAAP basis.

 

(E) For the three and nine months ended March 29, 2013, Other expense has been adjusted on a non-GAAP basis primarily to exclude the net impact of a gain recognized upon sales of investments, and a gain recognized from an insurance reimbursement related to the severe flooding in Thailand, partially offset by a loss recognized on the early redemption and repurchase of debt.

 


Exhibit 99.2

 

Seagate Technology plc Fiscal Third Quarter 2013 Financial Results

 

Supplemental Commentary

May 1, 2013

 

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 June 28, 2013 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 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 those projected in the forward-looking statements is contained in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on August 8, 2012, and in the Company’s quarterly report on Form 10-Q filed with the SEC on January 29, 2013, 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



 

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

 

Seagate achieved third quarter revenue of $3.5 billion. Non-GAAP gross margin as a percentage of revenue was sequentially flat at 27.6%, and non-GAAP earnings per diluted share were $1.26.

 

Operating Results and Selected Balance Sheet Items

 

Seagate successfully delivered its portfolio of products to a broad base of customers with product shipments in the March quarter of 56 million units.

 

Fiscal Q3 Operating Expenses were $483 million, up $46 million over last quarter. On a non-GAAP basis, Operating Expenses were $446 million, up $16 million sequentially, primarily due to increased employee-related expenses and investment in new storage technologies.

 

Inventory at the end of the December quarter was $833 million, up approximately 4%, sequentially. Fiscal Q3 Days Sales Outstanding was 40, slightly lower than the prior quarter.

 

Amortization of Acquisition Related Intangibles

 

As a result of the acquisition of Samsung’s HDD business and LaCie, Seagate recognized a non-cash $37 million expense for amortization of acquisition-related intangibles in the March quarter, with approximately $17 million recorded in Cost of Revenue and $20 million in Amortization of Intangibles.

 

Cash Flow Highlights

 

For the March quarter, the company generated $678 million in operating cash flow. We repurchased three million of our ordinary shares for approximately $102 million and paid $379 million for the early redemption of a portion of our long-term debt.  Cash, Cash Equivalents, Restricted Cash, and Short-Term Investments totaled $2.0 billion at the end of the March 2013 quarter.

 

During the first nine months of the fiscal year, the company generated $2.7 billion of operating cash flow, redeemed 53 million ordinary shares for approximately $1.6 billion and paid $381 million in dividends. In total, the company has returned 75% of its operating cash flow to shareholders in fiscal year 2013 to date.

 

As of March 29, 2013 Seagate had approximately 358 million ordinary shares outstanding and the daily weighted average dilutive share count for the March quarter was 369 million.

 

CapEx

 

During the first nine months of the fiscal year, the company spent $658 million in CapEx, of which, approximately $160 million was related to improvements of our global R&D facilities.

 

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Debt Profile

 

In the March quarter, the company elected to redeem the entire remaining outstanding 10.00% Senior Secured Note on May 1, 2013 for $351 million, including interest and a redemption premium. In the same period, the company also paid $28 million to repurchase a portion of its 7.75% Senior Notes, including interest and premium. The total amount paid for early redemption and repurchase of debt in the March quarter was $379 million, and the balance for future principal payments on long-term debt is currently $2.5 billion.

 

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 March quarter, the industry is estimated to have shipped approximately 136 million hard drives, reflecting approximately 109 exabytes of storage capacity. Within this, Seagate shipments represented 41% market share and over 47 exabytes of storage. Average capacity per drive was 842 GB.  For the first nine months of this fiscal year, Seagate has shipped over 138 exabytes of storage, reflecting 33% year-over-year growth.

 

Enterprise class shipments in the March quarter increased 3% sequentially to 7.5 million. These results include 3.6 million hard drives for mission critical applications and 3.9 million hard drives for nearline storage applications.

 

Client compute shipments in the March quarter decreased 7% sequentially to 36.6 million disk drives, including 17.0 million mobile hard drives and 19.6 million desktop hard drives.

 

Non-compute shipments in the March quarter totaled 11.6 million, roughly flat sequentially, including 5.8 million consumer electronics (“CE”) hard drives and 5.8 million Seagate branded hard drives.

 

Products and Technology Developments

 

Seagate continues to provide the market with innovative storage solutions through technology research, product development and strategic investment. Looking ahead Seagate is well positioned to address rapidly evolving opportunities in cloud computing, mobile computing, hybrid and solid state storage.

 

·                   In February, Seagate opened its Korean Design Center, a new research and development (R&D) hub dedicated to developing advanced 2.5-inch hard drive solutions and small form-factor products for the mobile compute and the retail markets.

 

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·                   Also in February, Seagate became a corporate sponsor member of the OpenStack Foundation and Open Compute Project as part of a collaborative effort to partner with industry leaders to define and promote open source standards for cloud computing.

 

·                   In March, Seagate began shipping its third-generation SSHD products, with a 1TB and 500GB (7mm) for notebooks and 2TB with 8GB of NAND flash for desktops.

 

·                   Also in March, Seagate shipped its two-billionth hard disk drive. It took Seagate 29 years to reach one billion units shipped and just four years to reach the two billion milestone, driven by explosive data growth in cloud and mobile applications.

 

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