EX-99.1 3 f91612exv99w1.txt EXHIBIT 99.1 EXHIBIT 99.1 CONTACT: Media Relations Investor Relations Diana Cartwright Jenifer Kirtland Maxtor Corporation Maxtor Corporation 408-894-5951 408-324-7056 MAXTOR CORPORATION REPORTS SECOND QUARTER 2003 FINANCIAL RESULTS COMPANY ACHIEVES REVENUE OF $910.9 MILLION; NET INCOME ON A GAAP BASIS OF $6.2 MILLION; AND PRO FORMA NET INCOME OF $27.0 MILLION Profits Driven by Improved Operating Efficiencies, Cost Management and Product Mix MILPITAS, Calif., July 22, 2003 -- Maxtor Corporation (NYSE: MXO) today announced its financial results for the second quarter ended June 28, 2003. Revenue for the quarter was $910.9 million. The Company reported net income on a GAAP basis of $6.2 million, or $0.03 per share. Included in the GAAP net income was a charge of $20.6 million for the amortization of intangible assets and $0.2 million in stock compensation expense. On a pro forma basis, excluding these charges, Maxtor reported net income of $27.0 million, or $0.11 per share. During the third quarter of 2002, the Company shut down its network attached storage business and, as a result, net income in prior periods has been reclassified to reflect both continuing and discontinued operations. In the second quarter of 2002, Maxtor reported revenue of $885.4 million from continuing operations and a loss from continuing operations on a GAAP basis of $103.3 million, or $(0.43) per share. Excluding $20.6 million for amortization of intangible assets and $0.6 million in stock compensation expense, the pro forma loss from continuing operations was $82.1 million, or $(0.34) per share in the second quarter of 2002. "We are pleased with our second quarter financial results, which were achieved during the seasonally weakest quarter of the year for the industry," said Paul Tufano, president and chief executive officer. "We met our commitments for volume and revenue and exceeded our pro forma profitability target. This was the result of our continued focus on operating efficiency and cost management, as well as a higher percentage of sales of 80 GB areal density desktop drives and SCSI server drives." Maxtor shipped 12.2 million hard drives in the second quarter. The gross profit margin was 16.4%. Operating expenses on a GAAP basis totaled $135.7 million. Excluding amortization of intangible assets of $20.6 million and stock compensation expense of $0.2 million, operating expenses on a pro forma basis declined to $115.0 million. "We were especially pleased with the growth in hard drives sold to consumer electronics OEM customers, primarily for PVR, DVR and set-top box applications," Mr. Tufano continued. "Shipments to these customers totaled 1,160,000 in the second quarter. Our server business also grew substantially from the first quarter. We shipped 574,000 SCSI drives in the second quarter compared with 460,000 in the first, reflecting increased volume shipments of the Atlas 10K IV 36 GB per platter drives and the initial ramp of our Atlas 15K SCSI drives. With the transition to 80 GB areal density essentially complete; a broader line of server drives and our leading position in consumer electronic applications, Maxtor is well-positioned as we enter the seasonally robust second half of the year." ABOUT MAXTOR Maxtor Corporation (www.maxtor.com) is one of the world's leading suppliers of information storage solutions. The company has an expansive line of storage products for desktop computers, near-line storage, high-performance Intel-based servers, and consumer electronics. Maxtor has a reputation as a proven market leader built by consistently providing high-quality products and service and support for its customers. Maxtor and its products can be found at www.maxtor.com or by calling toll-free (800) 2-MAXTOR. Maxtor is traded on the NYSE under the MXO symbol. This release contains forward-looking statements. These statements are based on current expectations and are subject to risks and uncertainties which could materially affect the company's results, including, but not limited to, market demand for hard disk drives, market acceptance of the company's products, the company's ability to execute future development and production ramps and utilize manufacturing assets efficiently, changes in product and customer mix, the availability of components, pricing trends, actions by competitors, international security and political stability, and general economic and industry conditions. These and other risk factors are contained in periodic reports filed with the SEC, including, but not limited to, the Form 10-K for fiscal 2002 and recent 10-Qs. Maxtor is under no obligation (and expressly disclaims any obligation) to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise. CONFERENCE CALL Maxtor has scheduled a conference call for analysts and investors today July 22, 2003, at 2:30 p.m. PT to discuss the second quarter results and to provide an outlook on the third quarter of 2003. Financial and statistical information to be discussed in the call will be available on the Company's website immediately prior to the commencement of the call. Additional information, including the most directly comparable GAAP financial measures to any non-GAAP financial measures discussed on the call are also posted on the Company's website. The dial-in number for the live call is (800) 597-0731. The call will be webcast on the company's site at www.maxtor.com. There will be a replay available shortly following the call through April 29, 2003. The dial-in number for the replay is (800) 252-6030, access code: 17903061. MAXTOR CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)
June 28, December 28, 2003 2002 ---------- ---------- ASSETS Current assets: Cash and cash equivalents $ 483,984 $ 306,444 Restricted cash 55,020 56,747 Marketable securities 87,614 87,507 Accounts receivable, net 436,800 363,664 Inventories 232,630 175,545 Prepaid expenses and other 60,788 33,438 ---------- ---------- Total current assets 1,356,836 1,023,345 Property, plant and equipment, net 322,892 364,842 Goodwill and other intangible assets, net 919,730 960,849 Other assets 14,974 11,798 ---------- ---------- Total assets $2,614,432 $2,360,834 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term borrowings, including current portion of long-term debt $ 88,754 $ 41,042 Accounts payable 641,721 642,206 Accrued and other liabilities 456,438 471,750 Liabilities of discontinued operations 5,506 11,646 ---------- ---------- Total current liabilities 1,192,419 1,166,644 Deferred taxes 196,455 196,455 Long-term debt 425,967 206,343 Other liabilities 192,200 199,071 ---------- ---------- Total liabilities 2,007,041 1,768,513 Total stockholders' equity 607,391 592,321 ---------- ---------- Total liabilities and stockholders' equity $2,614,432 $2,360,834 ========== ==========
MAXTOR CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share amounts) (Unaudited)
Three months ended Six months ended ----------------------------------- ----------------------------------- June 28, June 29, June 28, June 29, 2003 2002 2003 2002 ------------- ------------- ------------- ------------- Net revenues $ 910,903 $ 885,350 $ 1,849,792 $ 1,921,450 Cost of revenues 761,657 825,960 1,528,699 1,748,294 ------------- ------------- ------------- ------------- Gross profit 149,246 59,390 321,093 173,156 Operating expenses: Research and development 84,218 104,052 170,879 207,110 Selling, general and administrative 30,967 35,318 62,899 76,670 Amortization of intangible assets 20,562 20,562 41,124 41,124 ------------- ------------- ------------- ------------- Total operating expenses 135,747 159,932 274,902 324,904 ------------- ------------- ------------- ------------- Income/(loss) from operations 13,499 (100,542) 46,191 (151,748) Interest expense (8,325) (6,562) (13,747) (13,108) Interest and other income 1,459 2,376 2,786 5,405 Other gain/(loss) -- 1,577 88 1,577 ------------- ------------- ------------- ------------- Income/(loss) from continuing operations before income taxes 6,633 (103,151) 35,318 (157,874) Provision for income taxes 437 152 1,714 806 ------------- ------------- ------------- ------------- Income/(loss) from continuing operations 6,196 (103,303) 33,604 (158,680) Loss from discontinued operations -- (5,699) -- (15,360) ------------- ------------- ------------- ------------- Net Income/(loss) $ 6,196 $ (109,002) $ 33,604 $ (174,040) ============= ============= ============= ============= Net income/(loss) per share - basic Continuing operations $ 0.03 $ (0.43) $ 0.14 $ (0.67) Discontinued operations $ -- $ (0.03) $ -- $ (0.06) Net income/(loss) per share - diluted Continuing operations $ 0.03 $ (0.43) $ 0.14 $ (0.67) Discontinued operations $ -- $ (0.03) $ -- $ (0.06) Shares used in per share calculation -basic 241,120,075 238,803,423 242,382,530 237,892,949 -diluted 245,259,831 238,803,423 245,999,915 237,892,949
MAXTOR CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share amounts) (Unaudited)
Three months ended ------------------------------------------------------ GAAP Pro Forma June 28, Pro Forma June 28, 2003 Adjustments 2003 ------------- ------------- ------------- Net revenues $ 910,903 $ -- $ 910,903 Cost of revenues 761,657 (21)(1) 761,636 ------------- ------------- ------------- Gross profit 149,246 21 149,267 Operating expenses: Research and development 84,218 (136)(1) 84,082 Selling, general and administrative 30,967 (66)(1) 30,901 Amortization of intangible assets 20,562 (20,562)(3) -- ------------- ------------- ------------- Total operating expenses 135,747 (20,764) 114,983 ------------- ------------- ------------- Income/(Loss) from operations 13,499 20,785 34,284 Interest expense (8,325) -- (8,325) Interest and other income 1,459 -- 1,459 Other gain -- -- -- ------------- ------------- ------------- Income/(Loss) from continuing operations before income taxes 6,633 20,785 27,418 Provision for income taxes 437 -- 437 ------------- ------------- ------------- Income/(Loss) from continuing operations 6,196 20,785 26,981 Income/(Loss) from discontinued operations -- -- -- ------------- ------------- ------------- Net income/(loss) 6,196 20,785 26,981 ============= ============= ============= Net income/(loss) per share - basic Continuing operations $ 0.03 $ 0.11 Discontinued operations $ -- $ -- ------------- ------------- Total $ 0.03 $ 0.11 ============= ============= Net income/(loss) per share - diluted Continuing operations $ 0.03 $ 0.11 Discontinued operations $ -- $ -- ------------- ------------- Total $ 0.03 $ 0.11 ============= ============= Shares used in per share calculation -basic 241,120,075 241,120,075 -diluted 245,259,831 245,259,831
Three months ended ------------------------------------------------------ GAAP Pro Forma June 29, Pro Forma June 29, 2002 Adjustments 2002 ------------- ------------- ------------- Net revenues $ 885,350 $ -- $ 885,350 Cost of revenues 825,960 (48)(2) 825,912 ------------- ------------- ------------- Gross profit 59,390 48 59,438 Operating expenses: Research and development 104,052 (408)(2) 103,644 Selling, general and administrative 35,318 (144)(2) 35,174 Amortization of intangible assets 20,562 (20,562)(3) -- ------------- ------------- ------------- Total operating expenses 159,932 (21,114) 138,818 ------------- ------------- ------------- Income/(Loss) from operations (100,542) 21,162 (79,380) Interest expense (6,562) -- (6,562) Interest and other income 2,376 -- 2,376 Other gain 1,577 -- 1,577 ------------- ------------- ------------- Income/(Loss) from continuing operations before income taxes (103,151) 21,162 (81,989) Provision for income taxes 152 -- 152 ------------- ------------- ------------- Income/(Loss) from continuing operations (103,303) 21,162 (82,141) Income/(Loss) from discontinued operations (5,699) 768(4) (4,931) ------------- ------------- ------------- Net income/(loss) (109,002) 21,930 (87,072) ============= ============= ============= Net income/(loss) per share - basic Continuing operations $ (0.43) $ (0.34) Discontinued operations $ (0.03) $ (0.02) ------------- ------------- Total $ (0.46) $ (0.36) ============= ============= Net income/(loss) per share - diluted Continuing operations $ (0.43) $ (0.34) Discontinued operations $ (0.03) $ (0.02) ------------- ------------- Total $ (0.46) $ (0.36) ============= ============= Shares used in per share calculation -basic 238,803,423 238,803,423 -diluted 238,803,423 238,803,423
(1) Amounts reflect stock-based compensation related to the acquisition of the Quantum HDD business of $0.2 million. (2) Amounts reflect stock based compensation related to the acquisition of the Quantum HDD business of $0.6 million. (3) Amount reflects amortization of intangible assets of $20.6 million. (4) Amount reflects amortization of intangible assets of $0.8 million from discontinued operations. MAXTOR CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share amounts) (Unaudited)
Six months ended -------------------------------------------- GAAP Pro Forma June 28, Pro Forma June 28, 2003 Adjustments 2003 ------------- ----------- ------------- Net revenues $ 1,849,792 $ 1,849,792 Cost of revenues 1,528,699 (42)(1) 1,528,657 ------------- -------- ------------- Gross profit 321,093 42 321,135 Operating expenses: Research and development 170,879 (322)(1) 170,557 Selling, general and administrative 62,899 (132)(1) 62,767 Amortization of intangible assets 41,124 (41,124)(3) 0 ------------- -------- ------------- Total operating expenses 274,902 (41,578) 233,324 ------------- -------- ------------- Income/(Loss) from operations 46,191 41,620 87,811 Interest expense (13,747) 0 (13,747) Interest and other income 2,786 0 2,786 Other gain 88 0 88 ------------- -------- ------------- Income/(Loss) from continuing operations before income taxes 35,318 41,620 76,938 Provision for income taxes 1,714 0 1,714 ------------- -------- ------------- Income/(Loss) from continuing operations 33,604 41,620 75,224 Income/(Loss) from discontinued operations 0 0 0 ------------- -------- ------------- Net income/(loss) $ 33,604 $ 41,620 $ 75,224 ============= ======== ============= Net income/(loss) per share - basic Continuing operations $ 0.14 $ 0.31 Discontinued operations $ -- $ -- ------------- ------------- Total $ 0.14 $ 0.31 ============= ============= Net income/(loss) per share - diluted Continuing operations $ 0.14 $ 0.31 Discontinued operations $ -- $ -- ------------- ------------- Total $ 0.14 $ 0.31 ============= ============= Shares used in per share calculation -basic 242,382,530 242,382,530 -diluted 245,999,915 245,999,915
Six months ended ------------------------------------------------- GAAP Pro Forma June 29, Pro Forma June 29, 2002 Adjustments 2002 ------------- ----------- ------------- Net revenues $ 1,921,450 $ - $ 1,921,450 Cost of revenues 1,748,294 (442)(2) 1,747,852 ------------- -------- ------------- Gross profit 173,156 442 173,598 Operating expenses: Research and development 207,110 (3,756)(2) 203,354 Selling, general and administrative 76,670 (1,325)(2) 75,345 Amortization of intangible assets 41,124 (41,124)(3) 0 ------------- -------- ------------- Total operating expenses 324,904 (46,205) 278,699 ------------- -------- ------------- Income/(Loss) from operations (151,748) 46,647 (105,101) Interest expense (13,108) 0 (13,108) Interest and other income 5,405 0 5,405 Other gain 1,577 0 1,577 ------------- -------- ------------- Income/(Loss) from continuing operations before income taxes (157,874) 46,647 (111,227) Provision for income taxes 806 0 806 ------------- -------- ------------- Income/(Loss) from continuing operations (158,680) 46,647 (112,033) Income/(Loss) from discontinued operations (15,360) 1,536(4) (13,824) ------------- -------- ------------- Net income/(loss) $ (174,040) $ 48,183 $ (125,857) ============= ======== ============= Net income/(loss) per share - basic Continuing operations $ (0.67) $ (0.47) Discontinued operations $ (0.06) $ (0.06) ------------- ------------- Total $ (0.73) $ (0.53) ============= ============= Net income/(loss) per share - diluted Continuing operations $ (0.67) $ (0.47) Discontinued operations $ (0.06) $ (0.06) ------------- ------------- Total $ (0.73) $ (0.53) ============= ============= Shares used in per share calculation -basic 237,892,949 237,892,949 -diluted 237,892,949 237,892,949
1) Amounts reflect stock-based compensation related to the acquisition of the Quantum HDD business of $0.5 million. (2) Amounts reflect stock based compensation related to the acquisition of the Quantum HDD business of $5.5 million. (3) Amount reflects amortization of intangible assets of $41.1 million. (4) Amount reflects amortization of intangible assets of $1.5 million from discontinued operations.