Seagate Technology Reports Fiscal Fourth Quarter and Year-End 2010 Results
- Record fiscal year profit of $1.61 billion and earnings per share of $3.14
- Record fiscal year shipments of 193 million disk drives
- Record fourth quarter operating results
SCOTTS VALLEY, Calif. - July 20, 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 will hold a conference call to review the fourth fiscal quarter and full-year results today at 3:00 p.m. Pacific Time. The conference call will consist of opening comments from Steve Luczo followed by a question and answer session with the executive management team. During today's conference call, the company will provide an outlook for its first fiscal quarter of 2011, including key underlying assumptions.
Seagate has issued a Supplemental Commentary document that contains information historically presented during the conference call. The Supplemental Commentary will not be read during today's call, but rather it is available in the investor relations section of seagate.com.
Seagate is the world leader in hard disk drives and storage solutions. Learn more at seagate.com.