EXHIBIT 99.1
| Investor Relations Contact: Rod Cooper (831.439.2371) | |
| rod.j.cooper@seagate.com | ||
| Media Relations Contact: | ||
| Brian Ziel (831.439.5429) | ||
| brian.ziel@seagate.com |
SEAGATE TECHNOLOGY REPORTS RECORD
FISCAL FOURTH QUARTER AND YEAR-END 2005 RESULTS
- Quarterly revenue increases 63% to record $2.18 billion, net income grows to a record $280 million, and shipments reach record 27.3 million units
- Annual revenue increases 21% to record $7.55 billion, net income rises 34% to record $707 million, and shipments reach record 98 million units
SCOTTS VALLEY, CA – July 19, 2005 – Seagate Technology (NYSE: STX) today reported revenue of $2.18 billion, net income of $280 million, and diluted earnings per share of $0.55 for the quarter ended July 1, 2005. This compares to revenue of $1.34 billion, a net loss of $33 million and a loss per share of $0.07 in the year-ago quarter. Seagate shipped a record 27.3 million disc drives in the quarter, representing a 49% increase from the year-ago quarter.
For the fiscal year ended July 1, 2005, Seagate reported revenue of $7.55 billion, net income of $707 million and diluted earnings per share of $1.41. This compares to revenue of $6.22 billion, net income of $529 million and diluted earnings per share of $1.06 for the fiscal year ended July 2, 2004. Seagate shipped a total of 98 million units during fiscal year 2005, an increase of 24% over fiscal year 2004.
“With record revenue, record net income, and record unit shipments, Seagate has just delivered the strongest quarterly performance that the disc drive industry has ever seen,” said Bill Watkins, Seagate Technology president and CEO. “The considerable growth we are experiencing is evidence of a significant evolutionary change that is occurring in the disc drive industry as our products have become a central, enabling technology for global digital convergence.
“During the fiscal year we saw growth in every major market of our business. Most notably, in the consumer electronics space – a market that independent analysts anticipate will reach $11
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Seagate Technology Reports Fiscal Fourth Quarter and Year-End 2005 Results
billion by 2008 – we’re seeing the widespread adoption of disc drives in applications that include game boxes, DVRs, set-top boxes, digital music players, handheld voice recorders, handheld GPS systems, and imaging systems, with future growth applications to include digital still and video cameras, PDAs, automotive diagnostic, navigation and entertainment systems, cell phones, personal media players, and other converged handheld devices.
“With our broad and growing product portfolio the company is well-positioned to continue addressing the dynamic set of customers and applications across the compute and various CE markets, and deliver the strong financial performance that our shareholders have come to expect.”
Consumer Electronics Products
During the June quarter Seagate extended its leadership position in the consumer electronics (CE) market, the fastest growing market in the disc drive industry. The company shipped a record 6.2 million drives in the June quarter for DVR, handheld and gaming applications, an increase of 222% from the year-ago quarter and an increase of 49% quarter-over-quarter. For the fiscal year, Seagate shipped 16.7 million disc drives for CE applications, a 165% increase over the 6.3 million the company shipped in fiscal year 2004.
In June, Seagate announced new breakthrough products that will be available in the coming months for a variety of CE applications, including an 8GB 1-inch drive for handheld devices, a low-cost 2.5-inch drive for DVRs and game consoles, a rugged 2.5-inch drive for cars and a ½ terabyte 3.5-inch drive for DVRs.
Mobile Computing Products
In the June quarter Seagate’s shipments of drives for the mobile computing space climbed to 2.0 million units, a 342% increase from the year-ago quarter and a sequential increase of 15%. Seagate shipped a total of 5.7 million units in fiscal year 2005, up from 3.6 million units in fiscal year 2004. During the June quarter, Seagate announced two new products that will strengthen the company’s broadening 2.5-inch product portfolio – Momentus 5400.3, the industry’s first 2.5-inch, 160GB notebook drive utilizing the next-generation perpendicular recording technology, and Momentus FDE, a notebook drive with hardware-based encryption technology.
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Seagate Technology Reports Fiscal Fourth Quarter and Year-End 2005 Results
Enterprise Products
Seagate shipped a record 3.7 million units and maintained its leadership position as industry demand in this space reached record levels. The 3.7 million units represent an increase of 300,000 units sequentially and 1.2 million units or 48% from the year-ago quarter. For the fiscal year, Seagate shipments grew to a record 13.5 million units, compared to 10.4 million units in fiscal year 2004, an increase of 30%.
Desktop Products
Seagate continued to lead the market with 15.3 million units shipped, up 15% year-over-year. Shipments of the company’s high-capacity – 200GB and larger – desktop-class drives grew 37%, sequentially. Total shipments grew to 62.2 million units for fiscal year 2005, up from 59 million units in fiscal 2004. Seagate experienced strong demand for its products throughout the quarter in all channels and exited the quarter with approximately 4.5 weeks of distribution channel inventory.
In June, Seagate announced a number of additions to its industry-leading desktop and personal compute product line. These products include: the Barracuda 7200.9, a massive ½ terabyte, 7200 RPM, 3.5-inch drive for high-performance PC applications; LD25, a cost-effective, power-efficient 2.5-inch drive for small footprint media PCs; the Seagate External Hard Drive, a ½ terabyte, one-touch back-up external drive; and, the Portable External Drive, a 120GB, 2.5-inch external drive with Firewire connectivity.
Pricing
The average selling price for all Seagate products, on a blended basis, increased approximately $1.00 over the March quarter. Price erosion on a “like for like” product basis during the June quarter was slightly higher than the March quarter, but lower than historical norms and lower than the company’s expectations entering the quarter.
Business Outlook
Seagate is confident in its extensive and growing product portfolio and the new revenue opportunities that they will deliver. This, together with the company’s ongoing solid operational execution, favorably positions the company to continue its strong financial performance in the September quarter and throughout the remainder of the calendar year. As a result, the company expects to report substantial year-over-year growth in the September quarter with revenue and
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Seagate Technology Reports Fiscal Fourth Quarter and Year-End 2005 Results
earnings to be comparable to the record levels of revenue and income from operations reported for the June quarter, excluding costs associated with expensing stock options. This outlook for the September quarter would represent an increase of approximately 40% in revenue and 393% in operating income from the year-ago quarter.
Dividend
The company has declared a quarterly cash distribution of $0.08 per share to be paid on or before August 19, 2005 to all common shareholders of record as of August 5, 2005.
Conference Call
Seagate will hold a conference call to review the fiscal fourth quarter and year-end results at 2:00 p.m. Pacific Time today. The conference call can be accessed online at www.seagate.com or by telephone as follows:
USA: (877) 223-6202
International: (706) 679-3742
Replay
A replay will be available beginning July 19 at 5 p.m. Pacific Time through July 26 at 8:59 p.m. Pacific Time. The replay can be accessed from www.seagate.com/newsinfo/invest or by telephone as follows:
USA: (800) 642-1687
International: (706) 645-9291
Access code: 7599756
For more information please visit:http://www.seagate.com/newsinfo/invest/financial_info
About Seagate
Seagate is the worldwide leader in the design, manufacturing and marketing of hard disc drives, providing products for a wide-range of Enterprise, Desktop, Mobile Computing, and Consumer Electronics applications. Seagate’s business model leverages technology leadership and world-class manufacturing to deliver industry-leading innovation and quality to its global customers, and to be the low cost producer 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 atwww.seagate.com.
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Seagate Technology Reports Fiscal Fourth Quarter and Year-End 2005 Results
Safe Harbor
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 future financial performance, price and product competition, customer demand for our products, and general market conditions. These forward-looking statements are based on information available to Seagate as of the date of this release and current expectations, forecasts and assumptions and involve a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements. Such risks and uncertainties include a variety of factors, some of which are beyond the company’s control. In particular, such risks and uncertainties include the variable demand and the aggressive pricing environment for disc drives; dependence on the company’s ability to successfully manufacture in increasing volumes on a cost-effective basis and with acceptable quality its current disc drive products; and the adverse impact of competitive product announcements and possible excess industry supply with respect to particular disc drive products. Information concerning additional 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/A as filed with the U.S. Securities and Exchange Commission on September 3, 2004 and in the company’s Quarterly Report on Form 10-Q as filed with the U.S. Securities and Exchange Commission on April 29, 2005. These forward-looking statements should not be relied upon as representing the company’s views as of any subsequent date and Seagate undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made.
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Seagate Technology Reports Fiscal Fourth Quarter and Year-End 2005 Results
SEAGATE TECHNOLOGY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
| Three Months Ended | Fiscal Year Ended | |||||||||||||||
July 1, 2005 | July 2, 2004 | July 1, 2005 | July 2, 2004 (a) | |||||||||||||
Revenue | $ | 2,179 | $ | 1,336 | $ | 7,553 | $ | 6,224 | ||||||||
Cost of revenue | 1,639 | 1,107 | 5,880 | 4,765 | ||||||||||||
Product development | 171 | 162 | 645 | 666 | ||||||||||||
Marketing and administrative | 87 | 65 | 306 | 290 | ||||||||||||
Restructuring costs, net | 1 | 39 | — | 59 | ||||||||||||
Total operating expenses | 1,898 | 1,373 | 6,831 | 5,780 | ||||||||||||
Income (loss) from operations | 281 | (37 | ) | 722 | 444 | |||||||||||
Interest income | 13 | 4 | 36 | 17 | ||||||||||||
Interest expense | (13 | ) | (10 | ) | (48 | ) | (45 | ) | ||||||||
Other, net | 10 | 13 | 22 | 12 | ||||||||||||
Other income (expense), net | 10 | 7 | 10 | (16 | ) | |||||||||||
Income (loss) before income taxes | 291 | (30 | ) | 732 | 428 | |||||||||||
Provision for (benefit from) income taxes | 11 | 3 | 25 | (101 | ) | |||||||||||
Net income (loss) | $ | 280 | $ | (33 | ) | $ | 707 | $ | 529 | |||||||
Net income (loss) per share: | ||||||||||||||||
Basic | $ | 0.59 | $ | (0.07 | ) | $ | 1.51 | $ | 1.17 | |||||||
Diluted | 0.55 | (0.07 | ) | 1.41 | 1.06 | |||||||||||
Number of shares used in per share calculations: | ||||||||||||||||
Basic | 475 | 459 | 468 | 452 | ||||||||||||
Diluted | 510 | 459 | 502 | 498 | ||||||||||||
| (a) | The information in this column was derived from the Company’s audited consolidated statement of operations for the year ended July 2, 2004. |
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Seagate Technology Reports Fiscal Fourth Quarter and Year-End 2005 Results
SEAGATE TECHNOLOGY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
| July 1, 2005 | July 2, 2004 (a) | |||||
ASSETS | ||||||
Cash and cash equivalents | $ | 746 | $ | 422 | ||
Short-term investments | 1,090 | 761 | ||||
Accounts receivable, net | 1,094 | 690 | ||||
Affiliate accounts receivable | — | 1 | ||||
Inventories | 431 | 449 | ||||
Other current assets | 141 | 138 | ||||
Total Current Assets | 3,502 | 2,461 | ||||
Property, equipment and leasehold improvements, net | 1,529 | 1,301 | ||||
Other assets, net | 213 | 180 | ||||
Total Assets | $ | 5,244 | $ | 3,942 | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
Accounts payable | $ | 1,108 | $ | 740 | ||
Accrued employee compensation | 266 | 141 | ||||
Accrued expenses | 356 | 315 | ||||
Accrued income taxes | 46 | 48 | ||||
Current portion of long-term debt | 4 | 4 | ||||
Total Current Liabilities | 1,780 | 1,248 | ||||
Other liabilities | 187 | 100 | ||||
Long-term debt, less current portion | 736 | 739 | ||||
Total Liabilities | 2,703 | 2,087 | ||||
Shareholders’ Equity | 2,541 | 1,855 | ||||
Total Liabilities and Shareholders’ Equity | $ | 5,244 | $ | 3,942 | ||
| (a) | The information in this column was derived from the Company’s audited consolidated balance sheet as of July 2, 2004. |
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Seagate Technology Reports Fiscal Fourth Quarter and Year-End 2005 Results
SEAGATE TECHNOLOGY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
| Fiscal Year Ended | ||||||||
| July 1, 2005 | July 2, 2004 (a) | |||||||
OPERATING ACTIVITIES | ||||||||
Net income | $ | 707 | $ | 529 | ||||
Adjustments to reconcile net income to net cash from operating activities: | ||||||||
Depreciation and amortization | 466 | 422 | ||||||
VERITAS tax indemnification | — | (125 | ) | |||||
Other non-cash operating activities, net | 19 | 17 | ||||||
Changes in operating assets and liabilities: | ||||||||
Current assets and liabilities | 132 | (184 | ) | |||||
Non-current assets and liabilities | 104 | (24 | ) | |||||
Net cash provided by operating activities | 1,428 | 635 | ||||||
INVESTING ACTIVITIES | ||||||||
Acquisition of property, equipment and leasehold improvements | (691 | ) | (605 | ) | ||||
Purchases of short-term investments | (4,796 | ) | (4,143 | ) | ||||
Maturities and sales of short-term investments | 4,465 | 3,822 | ||||||
Other investing activities, net | (47 | ) | (36 | ) | ||||
Net cash used in investing activities | (1,069 | ) | (962 | ) | ||||
FINANCING ACTIVITIES | ||||||||
Repayment of long-term debt | (3 | ) | (6 | ) | ||||
Issuance of common shares for employee stock plans | 90 | 96 | ||||||
Dividends to shareholders | (122 | ) | (90 | ) | ||||
Net cash used in financing activities | (35 | ) | — | |||||
Increase (decrease) in cash and cash equivalents | 324 | (327 | ) | |||||
Cash and cash equivalents at the beginning of the period | 422 | 749 | ||||||
Cash and cash equivalents at the end of the period | $ | 746 | $ | 422 | ||||
| (a) | The information in this column was derived from the Company’s audited consolidated statement of cash flows for the year ended July 2, 2004. |
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Seagate Technology Reports Fiscal Fourth Quarter and Year-End 2005 Results
SEAGATE TECHNOLOGY
FINANCIAL HIGHLIGHTS
| Change from Prior | Percentage Change | |||||||||||||||||||||||||
Q4 FY05 | Q3 FY05 | Q4 FY04 | Year | Quarter | Prior Yr | Prior Qtr | ||||||||||||||||||||
Units Shipped (000) | ||||||||||||||||||||||||||
Enterprise | 3,731 | 3,442 | 2,566 | 1,165 | 289 | 45 | % | 8 | % | |||||||||||||||||
Desktop | 15,309 | 15,544 | 13,356 | 1,953 | (235 | ) | 15 | % | -2 | % | ||||||||||||||||
Mobile | 2,033 | 1,774 | 460 | 1,573 | 259 | 342 | % | 15 | % | |||||||||||||||||
Consumer Electronics | 6,222 | 4,187 | 1,931 | 4,291 | 2,035 | 222 | % | 49 | % | |||||||||||||||||
| 27,295 | 24,947 | 18,313 | 8,982 | 2,348 | 49 | % | 9 | % | ||||||||||||||||||
Total Revenue ($M) | $ | 2,179 | $ | 1,969 | $ | 1,336 | $ | 843 | $ | 210 | 63 | % | 11 | % | ||||||||||||
Average Selling Price | $ | 80 | $ | 79 | $ | 73 | $ | 7 | $ | 1 | 10 | % | 1 | % | ||||||||||||
Gross Margin % | 24.8 | % | 24.2 | % | 17.1 | % | ||||||||||||||||||||
Channel Mix | ||||||||||||||||||||||||||
OEM | 76 | % | 70 | % | 74 | % | ||||||||||||||||||||
Distribution | 23 | % | 28 | % | 25 | % | ||||||||||||||||||||
Retail | 1 | % | 2 | % | 1 | % | ||||||||||||||||||||
Geographic Mix | ||||||||||||||||||||||||||
North America | 31 | % | 30 | % | 34 | % | ||||||||||||||||||||
Europe | 24 | % | 28 | % | 26 | % | ||||||||||||||||||||
Asia Pacific | 45 | % | 42 | % | 40 | % | ||||||||||||||||||||
Inventory Metrics ($M) | ||||||||||||||||||||||||||
Raw Material/WIP | $ | 188 | $ | 196 | $ | 130 | $ | 58 | $ | (8 | ) | 45 | % | -4 | % | |||||||||||
Finished Goods | $ | 243 | $ | 216 | $ | 319 | $ | (76 | ) | $ | 27 | -24 | % | 13 | % | |||||||||||
Total Inventory | $ | 431 | $ | 412 | $ | 449 | $ | (18 | ) | $ | 19 | -4 | % | 5 | % | |||||||||||
Inventory Turns | 15.2 | 14.5 | 9.9 | 5.3 | 0.7 | |||||||||||||||||||||
Channel Inventory - Desktop | ||||||||||||||||||||||||||
Weeks on Hand | 4.5 | 3.9 | 5.0 | (0.5 | ) | 0.6 | ||||||||||||||||||||
Cash Related Information ($M) | ||||||||||||||||||||||||||
Cash Flow from Operations | $ | 500 | $ | 433 | $ | 73 | $ | 427 | $ | 67 | 585 | % | 15 | % | ||||||||||||
Capital Investments | $ | 307 | $ | 199 | $ | 230 | $ | 77 | $ | 108 | 33 | % | 54 | % | ||||||||||||
Depreciation & Amort | $ | 121 | $ | 113 | $ | 100 | $ | 21 | $ | 8 | 21 | % | 7 | % | ||||||||||||
Days Sales Outstanding | 46 | 46 | 47 | (1 | ) | — | -2 | % | 0 | % | ||||||||||||||||
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