During the first quarter, the Company generated approximately $824 million in operating cash flow, paid cash dividends of $163 million and repurchased approximately 20 million ordinary shares for $983 million. There were 299 million ordinary shares issued and outstanding as of the end of the quarter. Cash, cash equivalents, and short-term investments totaled approximately $1.9 billion at the end of the quarter.
“During the quarter, we made solid progress against our core initiatives to bolster our product portfolio, contain costs and return capital to shareholders,” said Steve Luczo, Seagate’s chairman and chief executive officer. “While lower than planned nearline enterprise demand temporarily impacted our financial results, we are pleased with the momentum we have across our products, which will be further supported by the newly acquired assets of Dot Hill and our ability to now completely integrate the Samsung hard drive business. As we look forward, we are focused on delivering storage solutions for a significant range of existing, growing and emerging areas, and believe we have the right strategy and portfolio to deliver value to shareholders.”
Seagate has issued a Supplemental Financial Information document, which is available on Seagate’s Investors website at www.seagate.com/investors.
Quarterly Cash Dividend
As previously disclosed on October 21, 2015, the Board has approved a quarterly cash dividend of $0.63 per share, which will be payable on November 20, 2015 to shareholders of record as of the close of business on November 6, 2015. 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 6:00 a.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 second fiscal quarter of 2016 including key underlying assumptions.
A replay will be available beginning today at approximately 9:00 a.m. Pacific Time athttp://www.seagate.com/investors.
Seagate creates space for the human experience by innovating how data is stored, shared and used. Learn more at www.seagate.com. Follow Seagate on Twitter, Facebook, LinkedIn, Spiceworks, YouTubeand subscribe to our blog. The contents of our website and social media channels are not a part of this release.
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 January 1, 2016 and the fiscal year ending July 1, 2016 and beyond as well as our plans with respect to future dividend payments. These statements identify prospective information and may include words such as “expects,” “intends,” “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; the impact of the variable demand and adverse pricing environment for disk drives, particularly in view of current business and economic conditions; 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; currency fluctuations that may impact the Company’s margins and international sales; possible excess industry supply with respect to particular disk drive products; disruptions to our supply chain or production capabilities; unexpected advances in competing technologies; the development and introduction of products based on new technologies and expansion into new data storage markets; and the Company’s ability to achieve projected cost savings in connection with restructuring plans and fluctuations in interest rates. 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 11, 2015, the “Risk Factors” section of which is incorporated into this press release by reference, and other documents filed with or furnished to the Securities and Exchange Commission. 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.
The inclusion of Seagate’s website address in this press release is intended to be an inactive textual reference only and not an active hyperlink. The information contained in, or that can be accessed through, Seagate’s website is not part of this press release.
SEAGATE TECHNOLOGY PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
|Cash and cash equivalents||$||1,915||$||2,479|
|Accounts receivable, net||1,522||1,735|
|Deferred income taxes||120||122|
|Other current assets||221||233|
|Total current assets||4,882||5,568|
|Property, equipment and leasehold improvements, net||2,247||2,278|
|Other intangible assets, net||329||370|
|Deferred income taxes||497||496|
|Other assets, net||250||259|
|LIABILITIES AND EQUITY|
|Accrued employee compensation||196||256|
|Total current liabilities||2,718||2,343|
|Long-term accrued warranty||101||113|
|Long-term accrued income taxes||26||33|
|Other non-current liabilities||172||183|
|Total Liabilities and Equity||$||9,079||$||9,845|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
|For the Three Months Ended|
|Cost of revenue||2,236||2,734|
|Marketing and administrative||182||216|
|Amortization of intangibles||34||31|
|Restructuring and other, net||59||6|
|Total operating expenses||2,839||3,329|
|Income from operations||86||456|
|Other income (expense), net||(55)||(64)|
|Income before income taxes||31||392|
|(Benefit from) provision for income taxes||(3)||11|
|Net income per share:|
|Number of shares used in per share calculations:|
|Cash dividends declared per Seagate Technology plc ordinary share||$||0.54||$||0.43|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|For the three months ended|
|Adjustments to reconcile net income to net cash provided by operating activities:|
|Depreciation and amortization||208||218|
|Deferred income taxes||—||2|
|Loss on redemption and repurchase of debt||—||14|
|Other non-cash operating activities, net||10||(2)|
|Changes in operating assets and liabilities:|
|Accounts receivable, net||213||(179)|
|Accrued employee compensation||(60)||(51)|
|Accrued expenses, income taxes and warranty||63||29|
|Vendor non-trade receivables||16||21|
|Other assets and liabilities||(14)||(7)|
|Net cash provided by operating activities||824||602|
|Acquisition of property, equipment and leasehold improvements||(209)||(172)|
|Purchases of short-term investments||—||(5)|
|Maturities of short-term investments||—||14|
|Cash used in acquisition of business||—||(450)|
|Other investing activities, net||—||(6)|
|Net cash used in investing activities||(209)||(619)|
|Redemption and repurchase of debt||(15)||(124)|
|Taxes paid related to net share settlement of equity awards||(53)||—|
|Repurchases of ordinary shares||(983)||(183)|
|Dividends to shareholders||(163)||(140)|
|Proceeds from issuance of ordinary shares under employee stock plans||40||39|
|Other financing activities, net||(4)||(12)|
|Net cash used in financing activities||(1,178)||(420)|
|Effect of foreign currency exchange rate changes on cash and cash equivalents||(1)||(7)|
|(Decrease) increase in cash and cash equivalents||(564)||(444)|
|Cash and cash equivalents at the beginning of the period||2,479||2,634|
|Cash and cash equivalents at the end of the period||$||1,915||$||2,190|
To supplement the condensed consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP), the Company provides non-GAAP measures of revenue, net income, diluted net income per share, gross margin, gross margin as a percentage of revenue, operating margin, operating expenses, and operating income which are adjusted from results based on GAAP to exclude certain expenses, gains and losses. These non-GAAP financial measures are provided to enhance the user's overall understanding of the Company’s current financial performance and our prospects for the future. Specifically, the Company believes non-GAAP results provide useful information to both management and investors as these non-GAAP results exclude certain expenses, gains and losses that we believe are not indicative of our core operating results and because it is consistent with the financial models and estimates published by financial analysts who follow the Company.
These non-GAAP results are some of the primary measurements management uses to assess the Company’s performance, allocate resources and plan for future periods. Reported non-GAAP results should only be considered as supplemental to results prepared in accordance with GAAP, and not considered as a substitute for, or superior to, GAAP results. These non-GAAP measures may differ from the non-GAAP measures reported by other companies in our industry.
|For the Three Months Ended October 2, 2015|
|GAAP net income||$||34|
|Cost of revenue||B||17|
|Marketing and administrative||D||4|
|Amortization of intangibles||E||33|
|Restructuring and other, net||F||59|
|Other expense, net||G||10|
|Non-GAAP net income||$||165|
|Diluted net income per share:|
|Shares used in diluted net income per share calculation||308|
A For the three months ended October 2, 2015, Revenue has been adjusted on a non-GAAP basis to exclude sales return provision for certain products that will be discontinued.
B For the three months ended October 2, 2015, Cost of revenue has been adjusted on a non-GAAP basis to exclude amortization of intangibles associated with acquisitions, other acquisition related expenses, and write off of certain discontinued inventory and assets.
C For the three months ended October 2, 2015, Product development expenses have been adjusted on a non-GAAP basis to exclude the impact of integration costs associated with acquisitions.
D For the three months ended October 2, 2015, Marketing and administrative expenses have been adjusted on a non-GAAP basis to exclude the write off of certain fixed assets and the impact of integration costs associated with acquisitions.
E For the three months ended October 2, 2015, Amortization of intangibles primarily related to our acquisitions has been excluded on a non-GAAP basis.
F For the three months ended October 2, 2015, Restructuring and other, net, primarily related to a reduction in our work force as a result of our ongoing focus on cost efficiencies in all areas of our business, has been excluded on a non-GAAP basis.
G For the three months ended October 2, 2015, Other income (expense), net has been adjusted on a non-GAAP basis to exclude the impairment of a certain strategic investment.