SEAGATE TECHNOLOGY REPORTS FISCAL FOURTH QUARTER AND YEAR-END 2010 FINANCIAL RESULTS
July 22, 2010 | 11:16
Scotts Valley, CA – July 22, 2010 – Seagate Technology plc (NASDAQ: STX) today reported financial results for the quarter ended July 2, 2010 of 46.8 million disk drive unit shipments, revenue of $2.66 billion, gross margin of 27.4%, net income of $379 million and diluted earnings per share of $0.76. The financial results for the quarter include $6 million of purchased intangibles amortization expense, $16 million of restructuring charges, $3 million expense (Other income/expense) for the May 2010 termination of Seagate’s revolving credit facility offset by a $6 million recovery of previously impaired long-lived assets and a $50 million income tax benefit due principally to valuation allowance adjustments related to deferred tax assets. The aggregate impact of these items was a $31 million increase to net income or approximately $0.06 per diluted share.
For the fiscal year ended July 2, 2010 the company reported 193.2 million disk drive unit shipments, revenue of $11.4 billion, gross margin of 28.1%, net income of $1.61 billion and diluted earnings per share of $3.14. The financial results for the fiscal year ended July 2, 2010 include $35 million of purchased intangibles amortization expense, $66 million of restructuring costs, $3 million expense (Other income/expense) related to the May 2010 termination of the revolving credit line, a net write down of long-lived assets of $57 million offset by a $50 million income tax benefit due principally to valuation allowance adjustments related to deferred tax assets. The aggregate impact of these items was a $111 million reduction of net income or approximately $0.22 per diluted share.
“I'm very encouraged by our financial and operational performance throughout fiscal 2010,” said Steve Luczo, Seagate chairman, president and CEO. “In fiscal year 2010 we delivered record shipments, profitability and operating margin. The company responded well to the increase in global hard drive demand, which grew 22% year-over-year, introduced key new products, continued to strengthen the capital structure, and remained focused on improving key business fundamentals to position Seagate for future growth.
“Specific to our fiscal fourth quarter, two of our key assumptions entering the quarter did not materialize as expected and impacted our financial results – macro-economic stability and pricing reflective of balanced supply and demand. Industry demand in the fiscal fourth quarter was at the low end of our expectations due primarily to issues emanating from the debt crisis in Europe and slowing consumer spending especially in the U.S. and Europe. The lower unit shipments and unfavorable pricing at some key capacity points impacted Seagate’s ability to deliver revenue and earnings for the quarter within our target range. Despite these factors, Seagate reported the highest operating results for a June quarter in the company's history.”
Seagate is the world leader in hard disk drives and storage solutions. Learn more at 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 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, global economic conditions may pose a risk to the Company’s operating and financial performance. Such risks and uncertainties also include the impact of variable demand; 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 the Company’s ability to achieve projected cost savings. 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 as filed with the U.S. Securities and Exchange Commission on August 19, 2009 and in the Company’s Quarterly Report on Form 10-Q as filed with the U.S. Securities and Exchange Commission on May 5, 2010, 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 Seagate undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made.