Seagate Technology
Seagate Technology plc (Form: 8-K, Received: 10/28/2013 16:45:07)

 

 

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 28, 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 October 28, 2013, Seagate Technology plc (the “Company”) issued a press release reporting its financial results for the fiscal quarter ended September 27, 2013. The press release is attached to this Current Report on Form 8-K as Exhibit 99.1.

 

As provided in General Instruction B.2 of Form 8-K, the information in this Item 2.02 and the exhibit hereto are “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of such section.

 

Item 7.01 Regulation FD Disclosure.

 

The Company also announced that its Board of Directors has approved a quarterly cash dividend of $0.43 per share and that the Company has completed the previously disclosed repurchase of 32.7 million shares from Samsung Electronics Co., Ltd. The dividend of $0.43 per share was declared by the Board on October 23, 2013 and is payable on November 26, 2013, to shareholders of record at the close of business on November 12, 2013. The press release is attached to this Current Report on Form 8-K as Exhibit 99.1.

 

A slide presentation containing supplemental commentary about the Company’s financial results for the fiscal quarter ended September 27, 2013 will be made available on the Investors section of the Company’s website, www.seagate.com, after 4:30 p.m. New York City time on October 28, 2013. Investors and others should note that the Company routinely uses the Investor section of its corporate website to announce material information to investors and the marketplace. While not all of the information that the Company posts on its corporate website is of a material nature, some information could be deemed to be material. Accordingly, the Company encourages investors, the media, and others interested in the Company to review the information that it shares on www.seagate.com.

 

As provided in General Instruction B.2 of Form 8-K, the information in this Item 7.01 and the exhibit hereto are “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of such section.

 

Item 9.01                    Financial Statements and Exhibits.

 

(d) Exhibits.

 

The following exhibits are attached to this Current Report on Form 8-K:

 

Exhibit No.

 

Description

 

 

 

99.1

 

Press release, dated October 28, 2013, of Seagate Technology plc entitled “Seagate Technology Reports Fiscal First Quarter 2014 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 27, 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

 

2



 

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 Current Report is contained in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on August 7, 2013, the “Risk Factors” section of which is 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.

 

3



 

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 28, 2013

 

4


Exhibit 99.1

 

Media Contact:

Brian Ziel, (408) 658-1540

brian.ziel@seagate.com

SEAGATE

 

GRAPHIC

 

SEAGATE TECHNOLOGY REPORTS FISCAL FIRST QUARTER 2014 FINANCIAL RESULTS

 

·                   Increase in Revenue, EPS, gross margin and operating cash flow quarter-over-quarter

·                   Raises quarterly dividend per share by 13%

 

CUPERTINO, CA — October 28, 2013 — Seagate Technology plc (NASDAQ: STX) (the “Company” or “Seagate”) today reported financial results for the first quarter of fiscal year 2014 ended September 27, 2013.  During the first quarter, the Company reported revenue of approximately $3.5 billion, gross margin of 28.0%, net income of $427 million and diluted earnings per share of $1.16.  On a non-GAAP basis, which excludes the net impact of certain items, Seagate reported gross margin of 28.5%, net income of $473 million and diluted earnings per share of $1.29.

 

During the first quarter, the Company generated approximately $682 million in operating cash flow, paid cash dividends of $135 million and repurchased 4 million ordinary shares for approximately $182 million.  There were 359 million ordinary shares issued and outstanding as of the end of the quarter.

 

Subsequent to the first quarter, the Company repurchased 32.7 million ordinary shares from Samsung Electronics Co., Ltd. for approximately $1.5 billion.

 

“The solid financial results we achieved this quarter reflect the ongoing execution of our business model,” said Steve Luczo, Seagate’s chairman and chief executive officer. “While the challenges of technology transitions and macro uncertainty are driving us to manage our business conservatively, we remain focused on the fact that the demand for exabytes of storage continues to increase. We continue to invest in our market-leading storage technology portfolio to enable cloud, mobile and open source storage advancement as we believe these market trends represent new and significant opportunities for Seagate. ”

 

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 an increase in the quarterly cash dividend of $0.05 from $0.38 per share in the previous quarter to $0.43 per share this quarter, an increase of approximately 13%.  This dividend will be payable on November 26, 2013 to shareholders of record as of the close of business on November 12, 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 Investors website at www.seagate.com/investors. During today’s webcast, the Company will provide an outlook for its second fiscal quarters of 2014 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 December 27, 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 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, the “Risk Factors” section of which is 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)

 

 

 

September 27,

 

June 28,

 

 

 

2013

 

2013

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

1,924

 

$

1,708

 

Short-term investments

 

489

 

480

 

Restricted cash and investments

 

108

 

101

 

Accounts receivable, net

 

1,618

 

1,670

 

Inventories

 

871

 

854

 

Deferred income taxes

 

114

 

115

 

Other current assets

 

501

 

484

 

Total current assets

 

5,625

 

5,412

 

Property, equipment and leasehold improvements, net

 

2,187

 

2,269

 

Goodwill

 

477

 

476

 

Other intangible assets, net

 

369

 

405

 

Deferred income taxes

 

457

 

456

 

Other assets, net

 

230

 

225

 

Total Assets

 

$

9,345

 

$

9,243

 

LIABILITIES AND EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

1,683

 

$

1,690

 

Accrued employee compensation

 

220

 

335

 

Accrued warranty

 

171

 

176

 

Accrued expenses

 

439

 

407

 

Current portion of long-term debt

 

1

 

3

 

Total current liabilities

 

2,514

 

2,611

 

Long-term accrued warranty

 

147

 

144

 

Long-term accrued income taxes

 

93

 

87

 

Other non-current liabilities

 

130

 

121

 

Long-term debt, less current portion

 

2,772

 

2,774

 

Total Liabilities

 

5,656

 

5,737

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

Total Equity

 

3,689

 

3,506

 

Total Liabilities and Equity

 

$

9,345

 

$

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)

(Unaudited)

 

 

 

For the Three Months Ended

 

 

 

September 27,

 

September 28,

 

 

 

2013

 

2012

 

Revenue

 

$

3,489

 

$

3,732

 

 

 

 

 

 

 

Cost of revenue

 

2,514

 

2,671

 

Product development

 

294

 

268

 

Marketing and administrative

 

181

 

150

 

Amortization of intangibles

 

20

 

19

 

Restructuring and other, net

 

2

 

 

Total operating expenses

 

3,011

 

3,108

 

 

 

 

 

 

 

Income from operations

 

478

 

624

 

 

 

 

 

 

 

Interest income

 

5

 

2

 

Interest expense

 

(44

)

(55

)

Other, net

 

1

 

29

 

Other expense, net

 

(38

)

(24

)

 

 

 

 

 

 

Income before income taxes

 

440

 

600

 

Provision for income taxes

 

13

 

18

 

Net income

 

427

 

582

 

Less: Net income attributable to noncontrolling interest

 

 

 

Net income attributable to Seagate Technology plc

 

$

427

 

$

582

 

 

 

 

 

 

 

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

 

 

 

 

 

Basic

 

$

1.20

 

$

1.48

 

Diluted

 

1.16

 

1.42

 

Number of shares used in per share calculations:

 

 

 

 

 

Basic

 

357

 

394

 

Diluted

 

368

 

409

 

 

 

 

 

 

 

Cash dividends declared per Seagate Technology plc ordinary share

 

$

0.38

 

$

0.32

 

 



 

SEAGATE TECHNOLOGY PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

 

 

For the Three Months Ended

 

 

 

September 27,

 

September 28,

 

 

 

2013

 

2012

 

OPERATING ACTIVITIES

 

 

 

 

 

Net income

 

$

427

 

$

582

 

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

 

 

 

 

 

Depreciation and amortization

 

228

 

212

 

Share-based compensation

 

27

 

17

 

Deferred income taxes

 

(1

)

(5

)

Gain on sale of investments

 

 

(33

)

Gain on sale of property and equipment

 

(2

)

(6

)

Other non-cash operating activities, net

 

4

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable, net

 

49

 

648

 

Inventories

 

(17

)

110

 

Accounts payable

 

47

 

(373

)

Accrued employee compensation

 

(115

)

(132

)

Accrued expenses, income taxes and warranty

 

37

 

(57

)

Other assets and liabilities

 

(2

)

169

 

Net cash provided by operating activities

 

682

 

1,132

 

INVESTING ACTIVITIES

 

 

 

 

 

Acquisition of property, equipment and leasehold improvements

 

(161

)

(263

)

Proceeds from the sale of property and equipment

 

 

4

 

Proceeds from the sale of strategic investments

 

 

41

 

Purchases of short-term investments

 

(87

)

(74

)

Sales of short-term investments

 

49

 

64

 

Maturities of short-term investments

 

32

 

5

 

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

 

 

(36

)

Change in restricted cash and investments

 

 

(6

)

Other investing activities, net

 

(19

)

 

Net cash used in investing activities

 

(186

)

(265

)

FINANCING ACTIVITIES

 

 

 

 

 

Repurchases of ordinary shares

 

(182

)

(639

)

Dividends to shareholders

 

(135

)

(127

)

Proceeds from issuance of ordinary shares under employee stock plans

 

39

 

157

 

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

 

 

(72

)

Other financing activities, net

 

(4

)

 

Net cash used in financing activities

 

(282

)

(681

)

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

 

2

 

1

 

Increase in cash and cash equivalents

 

216

 

187

 

Cash and cash equivalents at the beginning of the period

 

1,708

 

1,707

 

Cash and cash equivalents at the end of the period

 

$

1,924

 

$

1,894

 

 



 

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

 

 

 

 

 

September 27,

 

September 28,

 

 

 

 

 

2013

 

2012

 

GAAP net income

 

 

 

$

427

 

$

582

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

Cost of revenue

 

(A)

 

20

 

20

 

Product development

 

(B)

 

3

 

4

 

Marketing and administrative

 

(B)

 

3

 

4

 

Amortization of intangibles

 

(C)

 

20

 

19

 

Restructuring and other, net

 

(D)

 

2

 

 

Other expense, net

 

(E)

 

(2

)

(35

)

Non-GAAP net income

 

 

 

$

473

 

$

594

 

 

 

 

 

 

 

 

 

Diluted net income per share:

 

 

 

 

 

 

 

GAAP

 

 

 

$

1.16

 

$

1.42

 

 

 

 

 

 

 

 

 

Non-GAAP

 

 

 

$

1.29

 

$

1.45

 

 

 

 

 

 

 

 

 

Shares used in diluted net income per share calculation

 

 

 

368

 

409

 

 


(A)        For the three months ended September 27, 2013, Cost of revenue on a GAAP basis totaled $2,514 million, while non-GAAP Cost of revenue, which excludes the net impact of certain adjustments, was $2,494 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”).

 

(B)        For the three months ended September 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.

 

(C)        For the three months ended September 27, 2013, Amortization of intangibles related to our Samsung HDD business and LaCie acquisitions.

 

(D)        For the three months ended September 27, 2013, Restructuring and other, net, primarily related to prior year restructuring plans, have been excluded on a non-GAAP basis.

 

(E)        For the three months ended September 27, 2013, Other expense has been adjusted on a non-GAAP basis primarily to exclude the impact of a gain recognized upon sales of investments and gains from remeasurement of certain monetary assets.