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Seagate Technology Reports Fourth Quarter and Fiscal Year 2020 Financial Results

July 28, 2020

Fiscal Q4 2020 Highlights

  • Revenue of $2.52 billion
  • GAAP operating margin of 10.6%; non-GAAP operating margin of 14.8%
  • GAAP diluted earnings per share (EPS) of $0.64; non-GAAP diluted EPS of $1.20
  • Cash flow from operations of $388 million and free cash flow of $274 million
  • Revenue from mass capacity storage markets increased 35% year-over-year and represented 63% of FQ4 HDD revenue

Fiscal Year 2020 Highlights

  • Revenue of $10.51 billion
  • GAAP operating margin of 12.4%; non-GAAP operating margin of 14.7%
  • GAAP diluted EPS of $3.79; non-GAAP diluted EPS of $4.95
  • Cash flow from operations of $1.7 billion and free cash flow of $1.1 billion
  • Returned $1.5 billion to shareholders through dividends and share repurchases
  • Revenue from mass capacity storage markets increased 25% year-over-year and represented 57% of annual HDD revenue

FREMONT, Calif.--(BUSINESS WIRE)-- Seagate Technology plc (NASDAQ: STX) (the “Company” or “Seagate”) today reported financial results for its fourth quarter and fiscal year ended July 3, 2020.

“The June quarter was led by robust cloud and data center demand, which drove record exabyte shipments for our nearline mass capacity drives and strongly contributed to the Company's overall revenue and solid free cash flow generation. However, continued economic uncertainty and COVID-19 related disruptions impacted demand in other key end markets including video and image applications, mission critical and consumer markets and also impacted profitability as we incurred higher logistics and labor costs which together weighed on our fourth quarter results,” said Dave Mosley, Seagate’s chief executive officer.

“We are focused on managing the business well and executing on what we can control. Fiscal 2020 marked a strong year of progress as we grew mass capacity storage revenue by 25% and increased our overall revenue. We executed our technology roadmap, strengthened our balance sheet and delivered on our capital return program. Entering fiscal year 2021, the level of macro uncertainty remains high and we will continue to carefully manage our cash and expenses. However, we anticipate demand across our end markets to improve within the next six months and currently model revenue to be fairly flat in fiscal year 2021, supported by the strength of our mass capacity product portfolio. Longer-term, the unabated growth in data at the edge and in the cloud is driving secular demand for mass capacity storage and we believe Seagate’s financial strength and innovative product portfolio position us well for these trends.”

Quarterly Financial Results

 

GAAP

 

Non-GAAP

 

FQ4 2020

 

FQ4 2019

 

FQ4 2020

 

FQ4 2019

Revenue ($M)

$

2,517

 

 

$

2,371

 

 

$

2,517

 

 

$

2,371

 

Gross Margin

26.5

%

 

26.3

%

 

27.3

%

 

27.1

%

Operating Margin

10.6

%

 

14.0

%

 

14.8

%

 

13.2

%

Net Income ($M)

$

166

 

 

$

983

 

 

$

311

 

 

$

265

 

Diluted Earnings Per Share

$

0.64

 

 

$

3.54

 

 

$

1.20

 

 

$

0.95

 

Annual Financial Results

 

GAAP

 

Non-GAAP

 

FY 2020

 

FY 2019

 

FY 2020

 

FY 2019

Revenue ($M)

$

10,509

 

 

$

10,390

 

 

10,509

 

 

$

10,391

 

Gross Margin

27.0

%

 

28.2

%

 

27.7

%

 

28.9

%

Operating Margin

12.4

%

 

14.3

%

 

14.7

%

 

15.8

%

Net Income ($M)

$

1,004

 

 

$

2,012

 

 

$

1,311

 

 

$

1,474

 

Diluted Earnings Per Share

$

3.79

 

 

$

7.06

 

 

$

4.95

 

 

$

5.17

 

The Company generated $388 million in cash flow from operations and $274 million in free cash flow during the fiscal fourth quarter 2020. For fiscal year 2020, the Company generated $1.7 billion in cash flow from operations and $1.1 billion in free cash flow. Seagate maintained a healthy balance sheet and during the fiscal fourth quarter 2020, the Company paid cash dividends of $168 million and repurchased 1.1 million ordinary shares for $55 million. The Company restructured debt, increasing average debt maturity to nearly 7 years and reduced the amount payable in the next two fiscal years to approximately 6% of principal debt balance. The Company ended the fiscal year with cash and cash equivalents of $1.7 billion. There were 257 million ordinary shares issued and outstanding as of the end of the fiscal year.

All periods presented exclude share-based compensation from non-GAAP results. For a detailed reconciliation of GAAP to non-GAAP results, see accompanying financial tables.

In the fiscal fourth quarter of 2019, results reflect a tax benefit of $702 million primarily due to a one-time deferred tax benefit resulting from a release of a valuation allowance related primarily to our U.S. deferred tax assets, which is reflected in GAAP Net Income, but excluded from Non-GAAP Net Income. This was driven by improvements in the Company’s profitability outlook in the U.S. including our efforts to structurally and operationally align our enterprise data solutions business with the rest of the Company.

Seagate has issued a Supplemental Financial Information document, which is available on Seagate’s Investor Relations website at investors.seagate.com.

Quarterly Cash Dividend

The Board of Directors of the Company (the “Board”) declared a quarterly cash dividend of $0.65 per share, which will be payable on October 7, 2020 to shareholders of record as of the close of business on September 23, 2020. The payment of any future quarterly dividends will be at the discretion of the Board and will be dependent upon Seagate’s financial position, results of operations, available cash, cash flow, capital requirements and other factors deemed relevant by the Board.

Business Outlook

The business outlook for the fiscal first quarter 2021 is based on our current assumptions and expectations; actual results may differ materially, as a result of, among other things, the important factors discussed in the Cautionary Note Regarding Forward-Looking Statements section of this release.

The Company is providing the following guidance for its fiscal first quarter 2021:

  • Revenue of $2.3 billion, plus or minus $200 million
  • Non-GAAP diluted EPS of $0.85, plus or minus $0.15

Guidance regarding non-GAAP diluted EPS excludes known charges related to amortization of acquired intangible assets of $0.05 per share, estimated share-based compensation expenses of $0.11 per share and restructuring costs of $0.01 per share.

We have not reconciled our non-GAAP diluted EPS guidance for fiscal first quarter 2021 to the most directly comparable GAAP measure because material items that may impact these measures are out of our control and/or cannot be reasonably predicted, including, but not limited to, accelerated depreciation, impairment and other charges related to cost saving efforts, restructuring charges, strategic investment losses or impairment recognized, income tax adjustments on these measures, and other charges or benefits that may arise. The amounts of these measures are not currently available, but may be material to future results. A reconciliation of the non-GAAP diluted EPS guidance for fiscal first quarter 2021 to the corresponding GAAP measures is not available without unreasonable effort. A reconciliation of our historical non-GAAP financial measures to their nearest GAAP equivalent is contained in this release.

Investor Communications

Seagate management will hold a public webcast today at 2:00 p.m. Pacific / 5:00 p.m. Eastern that can be accessed on its Investor Relations website at investors.seagate.com.

An archived audio webcast of this event will be available on Seagate’s Investor Relations website at investors.seagate.com shortly following the event conclusion.

About Seagate

Seagate crafts the datasphere, helping to maximize humanity’s potential by innovating world-class, precision-engineered data management solutions with a focus on sustainable partnerships. Learn more about Seagate by visiting www.seagate.com or following us on Twitter, Facebook, LinkedIn, YouTube, and subscribing to our blog.

© 2020 Seagate Technology LLC. All rights reserved. Seagate, Seagate Technology, and the Spiral logo are registered trademarks of Seagate Technology LLC in the United States and/or other countries.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical fact. Forward-looking statements include, among other things, statements about the Company’s plans, strategies and prospects, financial outlook for future periods, including the fiscal first quarter 2021, expectations regarding the Company’s products, our ability to ramp production, storage industry trends and market demand, shifts in technology, the Company’s ability to meet market and industry expectations and the effects of these future trends, the possible effects of the economic conditions worldwide resulting from the COVID-19 pandemic, and expectations on the Company’s business as well as dividend issuance plans for the fiscal quarter ending October 2, 2020 and beyond. Forward-looking statements generally can be identified by words such as “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “projects,” “should,” “may,” “will,” "will continue," "can," "could" or the negative of these words, variations of these words and comparable terminology. Information concerning risks, uncertainties and other factors that could cause results to differ materially from the expectations described in this press release include, among others, those risks and uncertainties included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended June 28, 2019 filed with the U.S. Securities and Exchange Commission (“SEC”) on August 2, 2019, and in our Quarterly Reports on Form 10-Q filed with the SEC on November 1, 2019, February 5, 2020 and April 30, 2020. Additional information will also be set forth in our Annual Report on Form 10-K for the year ended July 3, 2020. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to us on, and which speak only as of, the date hereof. The Company undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made, unless required by applicable law.

The inclusion of Seagate’s website addresses in this press release are provided for convenience only. The information contained in, or that can be accessed through, Seagate’s websites and social media channels are not part of this press release.

SEAGATE TECHNOLOGY PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

 

July 3,
2020

 

June 28,
2019

 

(unaudited)

 

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

1,722

 

 

$

2,220

 

Accounts receivable, net

1,115

 

 

989

 

Inventories

1,142

 

 

970

 

Other current assets

135

 

 

184

 

Total current assets

4,114

 

 

4,363

 

Property, equipment and leasehold improvements, net

2,129

 

 

1,869

 

Goodwill

1,237

 

 

1,237

 

Other intangible assets, net

58

 

 

111

 

Deferred income taxes

1,120

 

 

1,114

 

Other assets, net

272

 

 

191

 

Total Assets

$

8,930

 

 

$

8,885

 

LIABILITIES AND EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

1,808

 

 

$

1,420

 

Accrued employee compensation

224

 

 

169

 

Accrued warranty

69

 

 

91

 

Current portion of long-term debt

19

 

 

 

Accrued expenses

602

 

 

552

 

Total current liabilities

2,722

 

 

2,232

 

Long-term accrued warranty

82

 

 

104

 

Long-term accrued income taxes

2

 

 

4

 

Other non-current liabilities

181

 

 

130

 

Long-term debt, less current portion

4,156

 

 

4,253

 

Total Liabilities

7,143

 

 

6,723

 

 

 

 

 

Total Equity

1,787

 

 

2,162

 

Total Liabilities and Equity

$

8,930

 

 

$

8,885

 

SEAGATE TECHNOLOGY PLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

 

For the Three Months Ended

 

For the Fiscal Years Ended

 

July 3,
2020

 

June 28,
2019

 

July 3,
2020

 

June 28,
2019

 

(unaudited)

 

(unaudited)

 

 

Revenue

$

2,517

 

 

$

2,371

 

 

$

10,509

 

 

$

10,390

 

 

 

 

 

 

 

 

 

Cost of revenue

1,850

 

 

1,747

 

 

7,667

 

 

7,458

 

Product development

222

 

 

241

 

 

973

 

 

991

 

Marketing and administrative

112

 

 

108

 

 

473

 

 

453

 

Amortization of intangibles

3

 

 

6

 

 

14

 

 

23

 

Restructuring and other, net

63

 

 

(63)

 

 

82

 

 

(22)

 

Total operating expenses

2,250

 

 

2,039

 

 

9,209

 

 

8,903

 

 

 

 

 

 

 

 

 

Income from operations

267

 

 

332

 

 

1,300

 

 

1,487

 

 

 

 

 

 

 

 

 

Interest income

1

 

 

17

 

 

20

 

 

84

 

Interest expense

(49)

 

 

(55)

 

 

(201)

 

 

(224)

 

Other, net

(59)

 

 

(3)

 

 

(87)

 

 

25

 

Other expense, net

(107)

 

 

(41)

 

 

(268)

 

 

(115)

 

 

 

 

 

 

 

 

 

Income before income taxes

160

 

 

291

 

 

1,032

 

 

1,372

 

(Benefit) provision for income taxes

(6)

 

 

(692)

 

 

28

 

 

(640)

 

Net income

$

166

 

 

$

983

 

 

$

1,004

 

 

$

2,012

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

Basic

$

0.65

 

 

$

3.57

 

 

$

3.83

 

 

$

7.13

 

Diluted

0.64

 

 

3.54

 

 

3.79

 

 

7.06

 

Number of shares used in per share calculations:

 

 

 

 

 

 

 

Basic

257

 

 

275

 

 

262

 

 

282

 

Diluted

260

 

 

278

 

 

265

 

 

285

 

 

 

 

 

 

 

 

 

Cash dividends declared per ordinary share

$

0.65

 

 

$

0.63

 

 

$

2.58

 

 

$

2.52

 

SEAGATE TECHNOLOGY PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

 

For the Fiscal Years Ended

 

July 3,
2020

 

June 28,
2019

 

(unaudited)

 

 

OPERATING ACTIVITIES

 

 

 

Net income

$

1,004

 

 

$

2,012

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

379

 

 

541

 

Share-based compensation

109

 

 

99

 

Loss on redemption and repurchase of debt

58

 

 

 

Deferred income taxes

(6)

 

 

(690)

 

Other non-cash operating activities, net

52

 

 

(97)

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable, net

(127)

 

 

204

 

Inventories

(166)

 

 

80

 

Accounts payable

394

 

 

(268)

 

Accrued employee compensation

55

 

 

(84)

 

Accrued expenses, income taxes and warranty

(39)

 

 

(81)

 

Other assets and liabilities

1

 

 

45

 

Net cash provided by operating activities

1,714

 

 

1,761

 

INVESTING ACTIVITIES

 

 

 

Acquisition of property, equipment and leasehold improvements

(585)

 

 

(602)

 

Proceeds from the sale of assets

1

 

 

144

 

Proceeds from settlement of foreign currency forward exchange contracts

 

 

29

 

Proceeds from redemption of debt security

 

 

1,283

 

Purchases of investments

(58)

 

 

(18)

 

Proceeds from sale of strategic investments

7

 

 

10

 

Net cash (used in) provided by investing activities

(635)

 

 

846

 

FINANCING ACTIVITIES

 

 

 

Redemption and repurchase of debt

(1,137)

 

 

(819)

 

Dividends to shareholders

(673)

 

 

(713)

 

Repurchases of ordinary shares

(850)

 

 

(963)

 

Taxes paid related to net share settlement of equity awards

(40)

 

 

(31)

 

Net proceeds from issuance of long-term debt

994

 

 

245

 

Proceeds from issuance of ordinary shares under employee stock plans

103

 

 

69

 

Other financing activities, net

(2)

 

 

 

Net cash used in financing activities

(1,605)

 

 

(2,212)

 

Effect of foreign currency exchange rate changes on cash, cash equivalents and restricted cash

(1)

 

 

(1)

 

(Decrease) increase in cash, cash equivalents and restricted cash

(527)

 

 

394

 

Cash, cash equivalents and restricted cash at the beginning of the year

2,251

 

 

1,857

 

Cash, cash equivalents and restricted cash at the end of the year

$

1,724

 

 

$

2,251

 

Use of non-GAAP financial information

The Company uses non-GAAP measures of adjusted revenue, gross margin, gross margin as a percentage of revenue, operating expenses, income from operations, operating margin as a percentage of revenue, net income, diluted EPS, and free cash flow, which are adjusted from results based on GAAP to exclude certain benefits, expenses, gains and losses. These non-GAAP financial measures are provided to enhance the user’s overall understanding of the Company’s current financial performance and its prospects for the future. Specifically, the Company believes non-GAAP results provide useful information to both management and investors as these non-GAAP results exclude certain benefits, expenses, gains and losses that it believes are not indicative of its core operating results and because it is similar to the approach used in connection with the financial models and estimates published by financial analysts who follow the Company. Free cash flow does not reflect all of the Company's expenses and non-cash items, and does not reflect the Company's uses of cash in financing and investing activities.

These non-GAAP results are some of the measurements management uses to assess the Company’s performance, allocate resources and plan for future periods. Reported non-GAAP results should only be considered as supplemental to results prepared in accordance with GAAP, and not considered as a substitute or replacement for, or superior to, GAAP results. These non-GAAP measures may differ from the non-GAAP measures reported by other companies in its industry.

SEAGATE TECHNOLOGY PLC

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

(In millions, except per share amounts and gross margin)

(Unaudited)

 

For the Three Months Ended

For the Twelve Months Ended

 

July 3,
2020

 

June 28,
2019

 

July 3,
2020

 

June 28,
2019

GAAP Revenue

$

2,517

 

 

$

2,371

 

 

$

10,509

 

 

$

10,390

 

Adjustment to discontinued products

 

 

 

 

 

 

1

 

Non-GAAP Revenue

$

2,517

 

 

$

2,371

 

 

$

10,509

 

 

$

10,391

 

 

 

 

 

 

 

 

 

GAAP Gross Margin

667

 

 

$

624

 

 

$

2,842

 

 

$

2,932

 

Adjustment to discontinued products

 

 

 

 

 

 

1

 

Accelerated depreciation, impairment and other charges related to cost saving efforts

3

 

 

 

 

3

 

 

 

Amortization of acquired intangible assets

9

 

 

12

 

 

38

 

 

52

 

Share-based compensation

7

 

 

6

 

 

27

 

 

23

 

Other charges

 

 

 

 

 

 

(1)

 

Non-GAAP Gross Margin

$

686

 

 

$

642

 

 

$

2,910

 

 

$

3,007

 

 

 

 

 

 

 

 

 

GAAP Gross Margin

26.5

%

 

26.3

%

 

27.0

%

 

28.2

%

Non-GAAP Gross Margin

27.3

%

 

27.1

%

 

27.7

%

 

28.9

%

 

 

 

 

 

 

 

 

GAAP Operating Expenses

$

400

 

 

$

292

 

 

$

1,542

 

 

$

1,445

 

Accelerated depreciation, impairment and other charges related to cost saving efforts

 

 

 

 

 

 

(2)

 

Amortization of acquired intangible assets

(2)

 

 

(5)

 

 

(11)

 

 

(19)

 

Restructuring and other, net

(63)

 

 

63

 

 

(82)

 

 

22

 

Share-based compensation

(22)

 

 

(20)

 

 

(82)

 

 

(76)

 

Other charges

 

 

 

 

(5)

 

 

 

Non-GAAP Operating Expenses

$

313

 

 

$

330

 

 

$

1,362

 

 

$

1,370

 

 

 

 

 

 

 

 

 

GAAP Income From Operations

$

267

 

 

$

332

 

 

$

1,300

 

 

$

1,487

 

Adjustment to discontinued products

1

Accelerated depreciation, impairment and other charges related to cost saving efforts

3

 

 

 

 

3

 

 

2

 

Amortization of acquired intangible assets

11

 

 

17

 

 

49

 

 

71

 

Restructuring and other, net

63

 

 

(63)

 

 

82

 

 

(22)

 

Share-based compensation

29

 

 

26

 

 

109

 

 

99

 

Other charges

 

 

 

 

5

 

 

(1)

 

Non-GAAP Income From Operations

$

373

 

 

$

312

 

 

$

1,548

 

 

$

1,637

 

 

 

 

 

 

 

 

 

GAAP Operating Margin

10.6

%

 

14.0

%

 

12.4

%

 

14.3

%

Non-GAAP Operating Margin

14.8

%

 

13.2

%

 

14.7

%

 

15.8

%

SEAGATE TECHNOLOGY PLC

RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

(In millions, except per share amounts and gross margin)

(Unaudited)

 

 

For the Three Months Ended

For the Twelve Months Ended

 

July 3,
2020

 

June 28,
2019

 

July 3,
2020

 

June 28,
2019

GAAP Net Income

$

166

 

 

$

983

 

 

$

1,004

 

 

$

2,012

 

Adjustment to discontinued products

 

 

 

 

 

 

1

 

Accelerated depreciation, impairment and other charges related to cost saving efforts

3

 

 

 

 

3

 

 

2

 

Amortization of acquired intangible assets

11

 

 

17

 

 

49

 

 

71

 

Restructuring and other, net

63

 

 

(63)

 

 

82

 

 

(22)

 

Losses and costs recognized on the modification or early redemption and repurchase of debt

32

 

 

 

 

62

 

 

 

Strategic investment losses or impairment recognized

19

 

 

 

 

20

 

 

2

 

Share-based compensation

29

 

 

26

 

 

109

 

 

99

 

Other charges

1

 

 

4

 

 

5

 

 

3

 

Income tax adjustments

(13)

 

 

(702)

 

 

(23)

 

 

(694)

 

Non-GAAP Net Income

$

311

 

 

$

265

 

 

$

1,311

 

 

$

1,474

 

 

 

 

 

 

 

 

 

Shares used in diluted net income per share calculation

260

 

 

278

 

 

265

 

 

285

 

GAAP Diluted Net Income Per Share

$

0.64

 

 

$

3.54

 

 

$

3.79

 

 

$

7.06

 

Non-GAAP Diluted Net Income Per Share

$

1.20

 

 

$

0.95

 

 

$

4.95

 

 

$

5.17

 

 

 

 

 

 

 

 

 

GAAP Net Cash Provided by Operating Activities

$

388

 

 

$

448

 

 

$

1,714

 

 

$

1,761

 

Acquisition of property, equipment and leasehold improvements

114

 

 

151

 

 

585

 

 

602

 

Free Cash Flow

$

274

 

 

$

297

 

 

$

1,129

 

 

$

1,159

 

The Company’s Non-GAAP measures are adjusted for the following items:

Adjustment to discontinued products

These adjustments relate to sales of certain discontinued products or changes in sales provision for discontinued products. These adjustments are inconsistent in amount and frequency and are excluded in the non-GAAP measures as these adjustments are not indicative of the underlying ongoing operating performance.

Accelerated depreciation, impairment and other charges related to cost saving efforts

These expenses are excluded in the non-GAAP measures due to the inconsistency in amount and frequency and are excluded to facilitate a more meaningful evaluation of the Company’s current operating performance and comparison to its past periods’ operating performance.

Amortization of acquired intangible assets

The Company records expense from amortization of intangible assets that were acquired in connection with its business combinations over their estimated useful lives. Such charges are inconsistent in size and are significantly impacted by the timing and magnitude of the Company’s acquisitions. Consequently, these expenses are excluded in the non-GAAP measures to facilitate a more meaningful evaluation of its current operating performance and comparison to its past periods’ operating performance.

Share-based compensation

As disclosed in the Company’s fiscal fourth quarter 2019 earnings release, share-based compensation expense is excluded from its non-GAAP results. These expenses consist primarily of expenses for employee share-based compensation. Given the variety of equity awards used by companies, the varying methodologies for determining share-based compensation expense, the subjective assumptions involved in those determinations, and the volatility in valuations that can be driven by market conditions outside the Company’s control, the Company believes excluding share-based compensation expense enhances the ability of management and investors to understand and assess the underlying performance of its business over time and compare it against the Company’s peers, a majority of whom also exclude share-based compensation expense from their non-GAAP results.

Other charges

The other charges primarily include impairments or write-offs of other assets and certain discontinued inventory and expense related to disposed business. These charges are inconsistent in amount and frequency and are excluded in the non-GAAP measures to facilitate a more meaningful evaluation of its current operating performance and comparison to its past periods’ operating performance.

Restructuring and other, net

Restructuring and other, net are costs associated with restructuring plans that are primarily related to costs associated with reduction in the Company’s workforce, exiting certain facilities and other related costs. These also exclude charges or gains from sale of properties. These costs or benefits do not reflect the Company’s ongoing operating performance and consequently are excluded from the non-GAAP measures to facilitate a more meaningful evaluation of its current operating performance and comparison to its past periods’ operating performance.

Losses and costs recognized on the modification or early redemption and repurchase of debt

From time to time, the Company incurs losses and fees from the early redemption and repurchase of certain long-term debt instruments. The losses represent the difference between the reacquisition costs and the par value of the debt extinguished. Other fees include any new fees associated with a modification and the write-off of any unamortized debt issuance costs associated with an extinguishment of debt. The amount of these charges may be inconsistent in size and varies depending on the timing of the repurchase of debt and consequently is excluded from the non-GAAP measures to facilitate a more meaningful evaluation of its current operating performance and comparison to its past periods’ operating performance.

Strategic investment losses or impairment recognized

From time to time, the Company incurs losses or gains from strategic investments accounted for under the equity method of accounting or records impairment charges which are not considered as part of its ongoing operating performance. The resulting expense or gain is inconsistent in amount and frequency and consequently is excluded from the non-GAAP measures to facilitate a more meaningful evaluation of its current operating performance and comparison to its past periods’ operating performance.

Income tax adjustments

Provision or benefit for income taxes represents the tax effects of non-GAAP adjustments determined using a hybrid with and without method and effective tax rate for the applicable adjustment and jurisdiction.

Free cash flow

Free cash flow is a non-GAAP measure defined as net cash provided by operating activities less acquisition of property, equipment and leasehold improvements. This non-GAAP financial measure is used by management to assess the Company's sources of liquidity, capital structure and operating performance.

Investor Relations Contact:
Shanye Hudson, (510) 661-1714
shanye.hudson@seagate.com

Media Contact:
Gregory Belloni, (415) 235-9092
gregory.belloni@seagate.com

Source: Seagate Technology plc