Seagate 8-K Current Report

7/28/2019 Seagate 8-K Current Report

1/17

S E A G A T E T E C H N O L O G Y P L C

F O R M 8 - K ( C u r r e n t r e p o r t f i l i n g )

F i l e d 0 1 / 3 1 / 1 2 f o r t h e P e r i o d E n d i n g 0 1 / 3 1 / 1 2

T e l e p h o n e ( 3 5 3 ) ( 1 ) 2 3 4 - 3 1 3 6

C I K 0 0 0 1 1 3 7 7 8 9

S y m b o l S T X

S I C C o d e 3 5 7 2 - C o m p u t e r S t o r a g e D e v i c e s

I n d u s t r y C o m p u t e r S t o r a g e D e v i c e s

S e c t o r T e c h n o l o g y

F i s c a l Y e a r 0 6 / 3 0

h t t p : / / w w w . e d g a r - o n l i n e . c o m

C o p y r i g h t 2 0 1 2 , E D G A R O n l i n e , I n c . A l l R i g h t s R e s e r v e d .

D i s t r i b u t i o n a n d u s e o f t h i s d o c u m e n t r e s t r i c t e d u n d e r E D G A R O n l i n e , I n c . T e r m s o f U s e .
http://www.edgar-online.com/


2/17

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORTPursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of report (date of earliest event reported): January 31, 2012

SEAGATE TECHNOLOGY PUBLIC LIMITED COMPANY(Exact name of Registrant as specified in its charter)

Registrants telephone number, including area code: (353) (1) 234-3136

NA(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any he following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Ireland 001-31560 98-0648577(State or other jurisdiction

of incorporation)(Commission File Number) (IRS Employer

Identification Number)

38/39 Fitzwilliam SquareDublin 2Ireland NA

(Address of principal executive office) (Zip Code)


3/17

tem 2.02 Results of Operations and Financial Condition.

On January 31, 2012, Seagate Technology plc (or the Company) issued a press release and supplemental commentary reporting its financiesults for the fiscal quarter ended December 30, 2011. The press release and supplemental commentary are attached to this Current Report

Form 8-K as Exhibit 99.1 and 99.2, respectively.

The information contained in this report, the attached press release and supplemental commentary is furnished but shall not be deemed to bfiled for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of such section.

tem 9.01 Financial Statements and Exhibits.

d) Exhibits.

The following exhibit is attached to this Current Report on Form 8-K:

Cautionary Note Regarding Forward-Looking Statements

This Current Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E ofecurities Exchange Act of 1934, each as amended, including, in particular, statements about future operations and cash flow, and whether

he magnitude and manner in which we pay any future dividends or make share repurchases. These statements identify prospective informatind include words such as expects, plans, anticipates, believes, estimates, predicts, projects and similar expressions. Theorward-looking statements are based on information available to the Company as of the date of this Current Report. Current expectations,

orecasts and assumptions involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially fromhose anticipated by these forward-looking statements. Such risks, uncertainties, and other factors may be beyond the Companys control. Inarticular, the uncertainty in global economic conditions continues to pose a risk to the Companys operating and financial performance asonsumers and businesses may defer purchases in response to tighter credit and negative financial news. Such risks and uncertainties alsonclude, but are not limited to, the impact of the variable demand and the adverse pricing environment for disk drives, particularly in view ofurrent business and economic conditions; dependence on the Companys ability to successfully qualify, manufacture and sell its disk driveroducts in increasing volumes on a cost-effective basis and with acceptable quality, particularly the new disk drive products with lower costructures; the impact of competitive product announcements and possible excess industry supply with respect to particular disk drive produhe Companys ability to achieve projected cost savings in connection with restructuring plans; the risk that we will incur significant

ncremental costs in connection with our recently executed transaction with Samsung Electronics Co., Ltd. ("Samsung") or that we will notchieve the benefits expected from such transaction; and significant disruption to the industry supply chain due to the severe flooding

hroughout parts of Thailand. Information concerning risks, uncertainties and other factors that could cause results to differ materially fromhose projected in the forward-looking statements is contained in the Companys Annual Report on Form 10-K and Form 10-K/A as filed wihe U.S. Securities and Exchange Commission on August 17, 2011 and August 24, 2011 respectively, and Quarterly Report on Form 10-Q asled with the U.S. Securities and Exchange Commission on October 27, 2011, which statements are incorporated into this Current Report byeference. These forward-looking statements should not be relied upon as representing the Companys views as of any subsequent date and t

Company undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made.

2

xhibit No. Description

99.1 Press release, dated January 31, 2012, of Seagate Technology plc entitled Seagate Technology Reports Fiscal Second Quar2012 Financial Results.

99.2 Supplemental Commentary, dated January 31, 2012, of Seagate Technology plc entitled Seagate Technology Fiscal SecondQuarter 2012 Financial Results.


4/17

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behahe undersigned, thereto duly authorized.

Date: January 31, 2012

3

SEAGATE TECHNOLOGY PUBLIC LIMITED COMPANY

By: /s/ PATRICK J. OMALLEYName: Patrick J. OMalleyTitle: Executive Vice President and Chief Financial Officer


5/17

Exhibit

Media Relations ConBrian Ziel (408.658.1

brian.ziel@seagate

Investor Relations ConRod Cooper (408.658.1

rod.j.cooper@seagate

SEAGATE TECHNOLOGY REPORTS FISCAL SECOND QUARTER 2012FINANCIAL RESULTS

CUPERTINO, CA January 31, 2012 Seagate Technology plc (NASDAQ: STX) today reported financial results for the quarter endedDecember 30, 2011. The company shipped 47 million disk drives and reported revenue of $3.2 billion, gross margin of 31.6%, net income o563 million and diluted earnings per share of $1.28. On a non-GAAP basis, which excludes the net impact of certain items, Seagate reportencome of $581 million and diluted earnings per share of $1.32 for the quarter ended December 30, 2011.

For the six months ended December 30, 2011, the company reported revenue of $6.0 billion, gross margin of 26.0%, net income of $703 milnd diluted earnings per share of $1.61. On a non-GAAP basis, which excludes the net impact of certain items, Seagate reported net income 727 million and diluted earnings per share of $1.67. Seagate returned $151 million to shareholders in the form of a dividend and repurchase191 million of Seagate ordinary shares which equates to approximately 13 million ordinary shares.

For a detailed reconciliation of non-GAAP to GAAP results, see accompanying financial tables.

Acquisition of Samsungs Hard Disk Drive Assets

eagate announced on December 19, 2011 the closing of the acquisition of the hard disk drive business of Samsung Electronics Co., Ltd. Reo this transaction, amortization of acquisition-related intangibles of $5 million (non-cash expense) is included in the GAAP basis net incomehe fiscal second quarter and six months ended December 30, 2011. For Seagates third fiscal quarter, which ends on March 30, 2012, it isxpected that amortization of acquisition-related intangibles will be approximately $35 million.

1


6/17

nvestor Communications

eagate will hold a conference call to review its second fiscal quarter today at 2:00 p.m. Pacific Time. The conference call will consist ofpening comments from Steve Luczo, CEO, followed by a question and answer session with the executive management team. During todayonference call, the company will provide an outlook for its third and fourth fiscal quarters of 2012 and its view of the remainder of the caleear, including key underlying assumptions.

eagate has issued a Supplemental Commentary document. The Supplemental Commentary will not be read during todays call, but rather itvailable in the investor relations section of seagate.com.

Conference Call

The conference call can be accessed online at http://www.seagate.com/investors or by telephone as follows:

USA: (866) 383-8108nternational: (617) 597-5343articipant Passcode: 13482450

Replay

A replay will be available beginning today at approximately 6:00 p.m. Pacific Time. The replay can be accessed from seagate.com.

About Seagate

eagate is the world leader in hard disk drives and storage solutions. Learn more at seagate.com.


This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, andection 21E of the Securities Exchange Act of 1934, each as amended, including, in particular, statements about our plans, strategies androspects and estimates of industry growth for the fiscal quarter ending December 30, 2011 and beyond. These statements identify prospectinformation and include words such as expects, plans, anticipates, believes, estimates, predicts, projects and similarxpressions. These forward-looking statements are based on information available to the Company as of the date of this press release. Curre

xpectations, forecasts and assumptions involve a number of risks, uncertainties, and other factors that could cause actual results to differmaterially from those anticipated by these forward-looking statements. Such risks, uncertainties, and other factors may be beyond the

Companys control. In particular, the uncertainty in global economic conditions continues to pose a risk to the Companys operating andnancial performance as consumers and businesses may defer purchases in response to tighter credit and financial news. Such risks andncertainties also include, but are not limited to, the impact of the variable demand and adverse pricing environment for disk drives,articularly in view of current business and economic conditions; dependence on the Companys ability to successfully qualify, manufactureell its disk drive products in increasing volumes on a cost-effective basis and with acceptable quality, particularly the new disk drive produc

with lower cost structures; the impact of competitive product announcements; and possible excess industry supply with respect to particular rive products; the Companys ability to achieve projected cost savings in connection with restructuring plans; the risk that we will incurignificant incremental costs in connection with our recently executed transaction with Samsung Electronics Co., Ltd. ("Samsung") or that w

will not achieve the benefits expected from such transaction; and significant disruption to the industry supply chain due to the severe floodinhroughout parts of Thailand.

2


7/17

nformation concerning risks, uncertainties and other factors that could cause results to differ materially from those projected in the forwarooking statements is contained in the Companys Annual Report on Form 10-K and Form 10-K/A as filed with the U.S. Securities and Exch

Commission on August 17, 2011, and August 24, 2011 respectively, and in the Companys Quarterly Report on Form 10-Q as filed with thU.S. Securities and Exchange Commission on October 27, 2011 which statements are incorporated into this press release by reference. Thesorward-looking statements should not be relied upon as representing the Companys views as of any subsequent date and the Company

ndertakes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made.

####

3


8/17

SEAGATE TECHNOLOGY PLCCONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)(Unaudited)

(a) The information in this column was derived from the Companys audited Consolidated Balance Sheet as of July 1, 2011.

4

December 30, 2011 July 1, 2011 (

ASSETSCurrent assets:

Cash and cash equivalents $ 1,825 $ 2,Short-term investments 407 Restricted cash and investments 93

Accounts receivable, net 1,627 1,4Inventories 827 Deferred income taxes 99 Other current assets 522

Total current assets 5,400 6,4roperty, equipment and leasehold improvements, net 2,210 2,

Goodwill 468 Other intangible assets 576 Deferred income taxes 376 Other assets, net 141

Total Assets $ 9,171 $ 9,

LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:

Accounts payable $ 1,461 $ 2,Accrued employee compensation 255 Accrued warranty 218 Accrued expenses 438 Current portion of long-term debt

Total current liabilities 2,372 3,4Long-term accrued warranty 183 Long-term accrued income taxes 75 Other non-current liabilities 151 Long-term debt, less current portion 2,925 2,

Total Liabilities 5,706 6,

Commitments and contingencies

hareholders equity:Total Shareholders Equity 3,465 2,

Total Liabilities and Shareholders Equity $ 9,171 $ 9,


9/17

SEAGATE TECHNOLOGY PLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In millions, except per share data)

(Unaudited)

5

For the Three Months Ended For the Six Months Ended

December 30,2011

December 31,2010

December 30,2011

December 312010

Revenue $ 3,195 $ 2,719 $ 6,007 $ 5,

Cost of revenue 2,185 2,190 4,448 4,roduct development 259 213 467 Marketing and administrative 141 102 245 Amortization of intangibles 2 1 3 Restructuring and other, net 3 7 3

Total operating expenses 2,590 2,513 5,166 4,

ncome from operations 605 206 841

nterest income 2 2 3 nterest expense (58 ) (46 ) (127)

Other, net 9 13 (8)

Other expense, net (47) (31) (132) (

ncome before income taxes 558 175 709 rovision for (benefit from) income taxes (5) 25 6

Net income $ 563 $ 150 $ 703 $

Net income per share:Basic $ 1.32 $ 0.32 $ 1.66 $ 0Diluted 1.28 0.31 1.61 0

Number of shares used in per share calculations:Basic 427 469 424 Diluted 439 486 436

Cash dividends declared per share $ 0.18 $

$ 0.36 $


10/17


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In millions)(Unaudited)

6

For the Six Months Ended

December 30,2011

December 32010

OPERATING ACTIVITIESNet income $ 703 $ Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 373 Share-based compensation 26 Loss on redemption of debt 5 (Gain) loss on sale of property and equipment (14 ) Deferred income taxes (4) Other non-cash operating activities, net 10

Changes in operating assets and liabilities:Accounts receivable, net (130) Inventories 181 Accounts payable (500) Accrued employee compensation 56 (Accrued expenses, income taxes and warranty (34 ) Other assets and liabilities 207

Net cash provided by operating activities 879

NVESTING ACTIVITIESAcquisition of property, equipment and leasehold improvements (361) (

urchases of short-term investments (309) (ales of short-term investments 260

Maturities of short-term investments 115 Change in restricted cash and investments 9 Cash used in acquisition of Samsung HDD assets and liabilities (561) Other investing activities, net 4

Net cash used in investing activities (843) (

FINANCING ACTIVITIESRepayments of long-term debt and capital lease obligations (594) (

Net proceeds from issuance of long-term debt Repurchases of ordinary shares (191) (

roceeds from issuance of ordinary shares under employee stock plans 51 Dividends to shareholders (154)

Net cash (used in) provided by financing activities (888)

Decrease) increase in cash and cash equivalents (852) Cash and cash equivalents at the beginning of the period 2,677 2,

Cash and cash equivalents at the end of the period $ 1,825 $ 2,


11/17

Use of non-GAAP financial information

To supplement the condensed consolidated financial statements presented in accordance with generally accepted accounting principles (GAAhe Company provides non-GAAP measures of net income and diluted net income per share, which are adjusted from results based on GAAPxclude certain expenses, gains and losses. These non-GAAP financial measures are provided to enhance the users overall understanding of

Companys current financial performance and its prospects for the future. Specifically, the Company believes non-GAAP results provide usenformation to both management and investors as these non-GAAP results exclude certain expenses, gains and losses that the Company beliere not indicative of its core operating results and because it is consistent with the financial models and estimates published by financial anal

who follow the Company.

These non-GAAP results are some of the primary measurements management uses to assess the Companys performance, allocate resources

lan for future periods. Reported non-GAAP results should only be considered as supplemental to results prepared in accordance with GAAPnd not considered as a substitute for, or superior to, GAAP results. These non-GAAP measures may differ from the non-GAAP measureseported by other companies in the Companys industry.

7


12/17


ADJUSTMENTS TO GAAP NET INCOME AND DILUTED NET INCOME PER SHARE(In millions, except per share amounts)

(Unaudited)

8

For the Three

Months EndedDecember 30,

2011

For the Six

Months EndedDecember 30,

2011

GAAP net income $ 563 $ 703Non-GAAP adjustments:

Total operating expenses (A) 25 19Other expense, net (B)

12Provision for (benefit from) income taxes (C) (7) (7)

Non-GAAP net income $ 581 $ 727

Diluted net income per share:GAAP $ 1.28 $ 1.61

Non-GAAP $ 1.32 $ 1.67

Shares used in diluted net income per share calculation 439 436

A) For the three months ended December 30, 2011, Total operating expenses on a GAAP basis totaled $2,590 million, while Non-GAAPTotal operating expenses, which excludes the net impact of certain adjustments was $2,565 million. The non-GAAP adjustments includcosts associated with the Samsung acquisition completed in December 2011, amortization expense of other intangible assets, an increaexpected exit costs related to certain leased facilities exited during the three months ended December 30, 2011, and an increase in reserrelated to post-employment benefits related to existing restructuring plans.

For the six months ended December 30, 2011, Total operating expenses on a GAAP basis totaled $5,166 million, while Non-GAAP Tooperating expenses, which excludes the net impact of certain adjustments was $5,147 million. The non-GAAP adjustments reflect the nimpact from costs associated with the Samsung acquisition completed in December 2011, amortization expense of other intangible asseadjustments to the expected exit costs related to certain leased and sub-leased facilities and an increase in reserves related to post-employment benefits related to existing restructuring plans, offset by the reversal of previously accrued litigation costs and a gain on thsale of a building.

B) For the six months ended December 30, 2011, Non-GAAP adjustments to Other expense, net on a GAAP basis was an expense of 132

million, which includes a $5 million loss related to the early retirement of $30 million of the principal amount of our 10% secured noteand a $7 million write-down of an equity investment. Excluding these items, non-GAAP other expense, net was $120 million.

C) For the three and six months ended December 30, 2011, Non-GAAP net income excludes $7 million discrete tax item for release ofvaluation allowance on U.S. deferred tax assets associated with increases in the Companys forecasted U.S. taxable income.


13/17

Exhibit

eagate Technology plc Fiscal Second Quarter 2012 Financial Results

upplemental Commentaryanuary 31, 2012

The information in this written commentary is being provided to the investment community concurrently with our press release. Please note hese remarks will not be read during the call. The live call will consist of opening comments from Steve Luczo, Chairman, President and CEollowed by a Q&A session with the executive management team.


This supplemental commentary contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, asmended, and Section 21E of the Securities Exchange Act of 1934, as amended. When used, the words anticipates, believes, expects,may, should and similar expressions are intended to identify such forward-looking statements. Forward-looking statements included in tommentary include statements regarding the Companys ability to generate free cash flow on a sustained basis, its ability to declare futureuarterly dividends, and its ability to maintain a strong balance sheet and to respond quickly to changing market dynamics. These forward-ooking statements are based on information available to the Company as of the date of this press release. Current expectations, forecasts andssumptions involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those anticipay these forward-looking statements. Such risks, uncertainties, and other factors may be beyond the Companys control. In particular, globalconomic conditions may pose a risk to the Companys operating and financial performance. Such risks and uncertainties also include the imf variable demand; dependence on the Companys ability to successfully qualify, manufacture and sell its disk drive products in increasingolumes on a cost-effective basis and with acceptable quality, particularly the new disk drive products with lower cost structures; the impactompetitive product announcements; and the Companys ability to achieve projected cost savings. Information concerning risks, uncertaintiend other factors that could cause results to differ materially from those projected in the forward-looking statements is contained in the

Companys Annual Report on Form 10-K and Form 10-K/A as filed with the U.S. Securities and Exchange Commission on August 17, 2011August 24, 2011 respectively, and in the Companys quarterly report on Form 10-Q as filed with the U.S. Securities and Exchange Commissn October 27, 2011 which statements are incorporated into this press release by reference. These forward-looking statements should not beelied upon as representing the Companys views as of any subsequent date and the Company undertakes no obligation to update forward-ooking statements to reflect events or circumstances after the date they were made.

1


14/17

Fiscal Second Quarter 2012 Financial Highlights

The industrys ability to manufacture and ship drives has been severely disrupted by flooding in Thailand in early October and is slowlyecovering. During the December 2011 quarter, the industry is estimated to have produced 105-110 million units and shipped 119 million unompared to unconstrained demand estimated to be 175 million units.

eagate closed the acquisition of the hard disk drive business of Samsung Electronics Co., Ltd., on December 19, 2011. The financial resultseported for our fiscal second quarter of 2012 (ended December 30, 2011) includes the operating results from the closing date of this transac

Units Shipped, Revenue and Gross Margin

eagate shipped 47 million units, down 8% sequentially and 4% compared to the year-ago quarter due to component supply constraints relathe Thailand flooding. Included in the unit shipments for the quarter were approximately 700,000 Samsung drives. Revenue was $3.2 billionross margin as a percent of revenue was 31.6%. Revenue and gross margin as a percent of revenue were higher sequentially as prices weredjusted in reaction to the significant shortfall of available HDDs compared to end demand.

Operating Expenses

roduct Development and Marketing and Administrative on a GAAP basis totaled $400 million for the December quarter, while non-GAAProduct Development and Marketing and Administrative costs, which excludes costs associated with the previously announced transaction wamsung, was $383 million. The increase in Product Development and Marketing and Administrative spending for the December 2011 quarue primarily to higher costs associated with the companys performance based variable compensation plan.

Amortization of Acquisition Related Intangibles

As a result of the acquisition of Samsungs HDD business, Seagate recognized a non-cash, $5 million expense for amortization of acquisitioelated intangibles in the December quarter with approximately half recorded in Cost of revenue and half in Amortization of intangibles. Foralance of fiscal year 2012, and all of fiscal year 2013, Seagate expects a quarterly, non-cash charge of approximately $35 million to be splitvenly between Cost of revenue and Amortization of intangibles.

Other Expense, Net

Other income and expense for the quarter on a GAAP basis was an expense of $47 million down from the previous quarter due primarily toower interest expense as debt matured and was retired in early October and a non-cash benefit related to the accounting for the employee fueferred compensation plan.

2


15/17

Provision for Income Taxes

The GAAP provision for income taxes in the December quarter was a benefit of $5 million. Excluding discrete items related to the valuation eferred tax assets, the non-GAAP provision for income taxes was a $2 million expense.

elected Balance Sheet Items

Cash, cash equivalents, restricted cash, and short-term investments totaled $2.3 billion at the end of the December 2011 quarter, downpproximately $663 million compared to the September 2011 quarter. During the quarter, cash of approximately $1.1 billion was used to reti

maturing debt and to complete the closing of the Samsung hard disk drive business acquisition.

For the December quarter, Cash Flow from Operations was $719 million, Capital Investment was $143 million and free cash flow (Cash Flowrom Operations less Capital Investments) was $576 million. For fiscal 2012, Capital Investment is expected to be below the low-end of theargeted range of 6-8% of revenue.

The company paid $63 million to repurchase 3.9 million of its ordinary shares and paid $76 million in dividends during the December quarteBetween January 1 and January 31, 2012 the company has paid $375 million to repurchase 19.3 million of its ordinary shares.

eagates inventory at the end of the December quarter was $827 million, which included approximately $114 million related to the acquiredamsung inventory of finished goods ($31 million), and raw material/work in process ($83 million).

Disk Drive Market Commentary

eagate provides data and commentary for the following major market categories 1] Enterprise, 2] Client Compute, and 3] Client non-CompA disk drive is associated with one of these three market categories based on how it is configured. For example, if a customer buys a standard

.5-inch ATA drive from Seagate, this would be included in the Client Compute category regardless of the application into which the drive iltimately integrated. The Client non-Compute category only contains drives specifically designed or configured for non-compute applicatio

All references to TAMs in this document is the companys best estimate of industry unit shipments based on preliminary information and isubject to change.

The industrys ability to manufacture and ship hard disk drives was severely disrupted by flooding in Thailand and is now slowly recoveringeagate minimized the impact to its customers during the quarter due to a geographically diversified supply-chain and manufacturing footprihipments of Seagate hard disk drives (excluding Samsung unit shipments of 700,000) decreased 9% sequentially while in aggregate the

ndustry, excluding Seagate, experienced a unit shipment decrease in excess of 40%.

3


16/17

Enterprise Market

The TAM for enterprise class disk drives, which includes disk drives for both mission critical and business critical applications, was down 3ver the year-ago quarter.

eagate shipped 6.4 million enterprise class drives in the December quarter. Mission critical server and storage applications accounted for 4.million and business critical applications consisted of 2.1 million units.

Client Compute Market

The TAM for client compute disk drives, which includes disk drives designed for use in mobile and desktop computers, was down 30% year

ver-year.

eagate shipped 32.7 million client compute disk drives in the December quarter. Mobile drives accounted for 15.6 million units, and desktorives accounted for 17.1 million units.

nventory of Seagate 3.5-inch ATA (desktop) disk drives in the distribution channel at the end of the December quarter, on a unit basis, waspproximately 50% lower than at the beginning of the quarter.

Client non-Compute Market

The client non-compute market consists of disk drives specifically configured for consumer electronic (CE) applications plus Seagate branroducts sold at retail. The December quarter TAM for the non-compute market was down approximately 38% .

eagate shipped 7.8 million client non-compute drives in the December quarter. CE accounted for 4.8 million and Seagate branded storage

roducts consisted of 3.0 million units.

Operations, Products and Technology

Operations

eagates component and drive assembly factories in Thailand were not directly impacted by the flood, and continue to be fully operational.However, this was not the case for some the HDD component suppliers with Thailand operations. Seagate continues to work with the compoupply base to rebuild its supply chain. Seagate believes that while the industrys ability to supply drives is slowly improving, demand willontinue to exceed supply during calendar year 2012.

The integration of acquired Samsung HDD business is well underway. The day the transaction closed, it was necessary to lift the SamsungHDD operations off the parent companys internal ERP, HR and Sales systems and transition them to Seagates global IT systems. All necesnterfaces, procedures and processes were in-place, demonstrated by our ability to ship 700,000 drives from the Seagate ERP systems in thelosing weeks of December. This was a large scale, cross-functional effort and is testament to the scalability of Seagates systems and businerocesses.

4


17/17

Products

Both the 300GB/platter mission critical and the 1TB/platter desktop and business critical product line transition were accelerated due to theomponent supply disruption and Seagate aggressively ramped volume of these products in the December quarter. Seagate continues on trac

with our 500GB/platter mobile product transition targeted for mid-year.

The addition of Samsungs Spinpoint M8 product to Seagates 2.5-inch portfolio delivers industry-leading capacity for mobile platforms andtrengthens Seagates position as a supplier of mobile storage products. As with many other products lines, external component shortagesesulting from the Thailand floods constrained production of the M8 product line in the December quarter. The ramp of the M8 product isxpected to improve during the calendar year as component availability is restored.

5

Documents

Seagate 8-K Current Report