SEAGATE TECHNOLOGY HOLDINGS PLC 
For the six months ended
As disclosed on
"We remain focused on executing against our business plan and on aligning
the company's cost structure with the current economic reality," said
Business Outlook
For the March quarter, in light of the company's view of the current
market environment and the uncertainty in global economic conditions, the
company is planning for the overall demand for disk drives to be approximately
110 million units. In addition, the company is assuming no significant changes
in its market share, and therefore expects revenue to be approximately
Current uncertainty in global economic conditions makes it particularly difficult to predict product demand and other related matters and makes it more likely that Seagate's actual results could differ materially from current expectations.
Cash and Liquidity
The company continues to remain focused on building liquidity and strengthening its balance sheet by taking decisive actions to reduce capital spending, lower operating expenses and to align production with demand to limit inventory and therefore believes it will generate or obtain sources of liquidity to support the business.
-- Cash and cash equivalents and short-term investments ended the quarter
at
-- During the quarter the company borrowed
-- Management has recommended, and the board has approved, reducing the
quarterly dividend to
-- Compared to the prior quarter, days sales outstanding (DSO) was flat at 42 days, days payable outstanding (DPO) decreased by 6 days to 64 and days of inventory outstanding (DIO) increased by 4 days to 37. In aggregate, our cash conversion cycle increased by 10 days to 15.
-- Total debt was
-- Investment in capital equipment for the first six months of the
company's fiscal year 2009 was approximately
Additional information relating to the financial results for the second fiscal quarter of 2009 can be found online at seagate.com.
Dividend
The board has approved a quarterly dividend of
Conference Call
Seagate will hold a conference call to review the fiscal second quarter
results at
USA: (877) 223-6202
International: (706) 679-3742
Conference ID: 78910747
Replay
A replay will be available beginning today at
USA: (800) 642-1687
International: (706) 645-9291
Conference ID: 78910747
About Seagate
Seagate is the worldwide leader in the design, manufacture and marketing of hard disk drives and storage solutions, providing products for a wide-range of applications, including Enterprise, Desktop, Mobile Computing, Consumer Electronics and Branded Solutions. Seagate's business model leverages technology leadership and world-class manufacturing to deliver industry-leading innovation and quality to its global customers, with the goal of being the time-to-market leader in all markets in which it participates. The company is committed to providing award-winning products, customer support and reliability to meet the world's growing demand for information storage. Seagate can be found around the globe and at http://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, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. These forward-looking
statements include, but are not limited to, statements related to the
company's future operating and financial performance, including expected
revenue, net loss and losses per share and product competition, customer
demand for our products, the impact of our cost reduction efforts, the
estimated charges we expect to incur with respect to the impairment of
our goodwill and long-lived assets and general market conditions. These
forward-looking statements are based on information available to Seagate as of
the date of this press release. Current expectations, forecasts and
assumptions involve a number of risks, uncertainties, and other factors that
could cause actual results to differ materially from those anticipated by
these forward-looking statements. Such risks, uncertainties, and other factors
may be beyond the company's control. In particular, uncertainty in global
economic conditions pose a risk to the overall economy as consumers and
businesses may defer purchases in response to tighter credit and negative
financial news. Such risks and uncertainties also include the impact of the
variable demand and the aggressive pricing environment for disk drives,
particularly in view of current business and economic conditions; dependence
on Seagate'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; our
ability to achieve projected cost savings in connection with our announced
restructuring plans; and market conditions and alternative cash imperatives
that could continue to delay our ability to repurchase additional common
shares pursuant to Seagate's previously announced share repurchase program.
Information concerning risk, 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 as filed
with the U.S. Securities and Exchange Commission on
SEAGATE TECHNOLOGY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
(preliminary)
January 2, June 27,
2009 (a) 2008 (b)
ASSETS
Cash and cash equivalents $1,161 $990
Short-term investments 148 151
Accounts receivable, net 1,040 1,410
Inventories 796 945
Deferred income taxes 157 274
Other current assets 486 502
Total Current Assets 3,788 4,272
Property, equipment and leasehold
improvements, net 2,513 2,464
Goodwill 2,318 2,352
Other intangible assets, net 78 111
Deferred income taxes 441 616
Other assets, net 217 305
Total Assets $9,355 $10,120
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term borrowings $350 $-
Accounts payable 1,370 1,652
Accrued employee compensation 156 440
Accrued warranty 212 226
Accrued expenses 586 599
Accrued income taxes 13 10
Current portion of long-term debt 320 360
Total Current Liabilities 3,007 3,287
Long-term accrued warranty 229 219
Long-term accrued income taxes 166 210
Other non-current liabilities 134 148
Long-term debt, less current portion 1,684 1,670
Total Liabilities 5,220 5,534
Shareholders' Equity 4,135 4,586
Total Liabilities and Shareholders' Equity $9,355 $10,120
(a) The information in this column is preliminary and does not yet reflect
charge(s) for impairment of goodwill and possibly other long-lived
assets, and any related tax effects, that are expected to be recorded
in the quarter ended January 2, 2009, and timely included in our Form
10-Q.
(b) The information in this column was derived from the Company's audited
consolidated balance sheet as of June 27, 2008.
SEAGATE TECHNOLOGY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
For the Three Months Ended For the Six Months Ended
(preliminary) (preliminary)
January 2, December 28, January 2, December 28,
2009 (a) 2007 2009 (a) 2007
Revenue $2,270 $3,420 $5,302 $6,705
Cost of revenue 1,948 2,531 4,455 5,008
Product development 235 262 495 504
Marketing and
administrative 142 167 289 319
Amortization of
intangibles 14 13 28 27
Restructuring and other,
net 78 27 101 32
Total operating
expenses 2,417 3,000 5,368 5,890
Income (loss) from
operations (147) 420 (66) 815
Interest income 5 19 12 35
Interest expense (30) (34) (60) (66)
Other, net (14) 18 (27) 14
Other income (expense),
net (39) 3 (75) (17)
Income (loss) before
income taxes (186) 423 (141) 798
Provision for
(benefit from)
income taxes 310 20 295 40
Net income (loss) $(496) $403 $(436) $758
Net income (loss)
per share:
Basic $(1.02) $0.77 $(0.90) $1.43
Diluted (1.02) 0.73 (0.90) 1.37
Number of shares used
in per share
calculations:
Basic 487 526 486 529
Diluted 487 556 486 558
(a) The information in this column is preliminary and does not yet reflect
charge(s) for impairment of goodwill and possibly other long-lived
assets, and any related tax effects, that are expected to be recorded
in the quarter ended January 2, 2009, and timely included in our Form
10-Q.
SEAGATE TECHNOLOGY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
For the Six Months Ended
(preliminary)
January 2, December 28,
2009 (a) 2007
OPERATING ACTIVITIES
Net income (loss) $(436) $758
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 481 420
Stock-based compensation 53 58
Deferred income taxes 300 12
Other non-cash operating activities, net (13) (9)
Changes in operating assets and liabilities:
Accounts receivable 368 (249)
Inventories 149 (36)
Accounts payable (282) 475
Accrued expenses, employee
compensation and warranty (389) 74
Other assets and liabilities 162 (25)
Net cash provided by (used in)
operating activities 393 1,478
INVESTING ACTIVITIES
Acquisition of property, equipment and
leasehold improvements (494) (362)
Proceeds from sale of fixed assets 3 24
Purchases of short-term investments (116) (383)
Maturities and sales of short-term investments 120 222
Proceeds from sale of investment in
equity securities 11 -
Acquisitions, net of cash acquired - (78)
Other investing activities, net 1 17
Net cash provided by (used in)
investing activities (475) (560)
FINANCING ACTIVITIES
Proceeds from short-term borrowings 350 -
Repayment of long-term debt (15) -
Proceeds from exercise of employee
stock options and employee stock purchase plan 36 132
Dividends to shareholders (118) (107)
Repurchases of common shares - (500)
Other financing activities, net - 2
Net cash provided by (used in)
financing activities 253 (473)
Increase (decrease) in cash and cash equivalents 171 445
Cash and cash equivalents at the beginning
of the period 990 988
Cash and cash equivalents at the end
of the period $1,161 $1,433
(a) The information in this column is preliminary and does not yet reflect
charge(s) for impairment of goodwill and possibly other long-lived
assets, and any related tax effects, that are expected to be recorded
in the quarter ended January 2, 2009, and timely included in our Form
10-Q.
SOURCE Seagate Technology
