MXO Maxtor Corp

MILPITAS, Calif., Jan. 31 /PRNewswire-FirstCall/ -- Maxtor Corporation (NYSE:MXO) today announced its financial results for the fourth quarter ended December 31, 2005. Revenue for the fourth quarter was $969 million. The Company reported a net loss of $15.7 million, or $(0.06) per share, for the fourth quarter of 2005. Included in the net loss was a $5.8 million gain from the sale of a building in Colorado, a $2.2 million gain from the sale of an equity security investment and a $2.9 million charge for the cancellation of the Company's one-inch drive program. Revenue in the fourth quarter of 2004 totaled $1.031 billion. The Company reported a net loss of $70.6 million, or $(0.28) per share, for the fourth quarter of 2004. "Our fourth quarter results were in line with the guidance we provided during our third quarter conference call in October," said Dr. C.S. Park, chairman and chief executive officer of Maxtor. "The results reflected seasonally strong unit demand and a slightly improved desktop product mix, partially offset by price declines on our enterprise SCSI drives." Drive shipments totaled 13.6 million in the fourth quarter compared with 13.2 million in the third quarter of 2005. The fourth quarter gross profit margin was 9.3% compared with 11.1% in the third quarter. The average selling price in the fourth quarter increased to $71 from $70 in the third quarter. The Company shipped 992,000 SCSI drives in the fourth quarter compared with 975,000 in the third. Drives sold to consumer electronics customers in the fourth quarter totaled 1.3 million compared with 1.1 million in the third quarter. Fiscal Year 2005 Financial Results For fiscal year 2005, revenue totaled $3.890 billion. The net loss was $43.3 million, or $(0.17) per share. In fiscal year 2004, Maxtor generated $3.796 billion in revenue and reported a net loss of $183.4 million, or $(0.74) per share. The Company shipped 53.0 million drives in fiscal year 2005 compared with 53.6 million in fiscal 2004. About Maxtor Maxtor Corporation (http://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 http://www.maxtor.com/ or by calling toll-free 800-2-MAXTOR. Maxtor is traded on the NYSE under the MXO symbol. Conference Call Maxtor has scheduled a conference call for analysts and investors today, January 31, 2006, at 2:00 p.m. PT to discuss the fourth quarter 2005 results. Financial information to be discussed on the call will be available on the Company's website immediately prior to the commencement of the call. The dial-in number for the live call is 800-374-1806 or 706-634-2296. The call will be webcast on the Company's site at http://www.maxtor.com/. There will be a replay available shortly following the call through February 7, 2006. The dial-in number for the replay is 800-642-1687 or 706-645-9291, access code: 4257273. Additional Information On December 21, 2005, Maxtor announced that it had entered into a definitive agreement with Seagate Technology, which provides for Seagate to acquire Maxtor in a merger transaction. In connection with the proposed transaction, Seagate plans to file with the SEC a Registration Statement on Form S-4 containing a Joint Proxy Statement/Prospectus and each of Seagate and Maxtor plan to file with the SEC other documents regarding the proposed transaction. The definitive Joint Proxy Statement / Prospectus will be mailed to stockholders of Seagate and Maxtor. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain free copies of the Registration Statement and the Joint Proxy Statement/Prospectus (when available) and other documents filed with the SEC by Seagate and Maxtor through the web site maintained by the SEC at http://www.sec.gov/. In addition, investors and security holders will be able to obtain free copies of the Registration Statement and the Joint Proxy Statement/Prospectus (when available) and other documents filed with the SEC from Seagate by directing a request to Seagate Technology, 920 Disc Drive, P.O. Box 66360, Scotts Valley, California 95067, Attention: Investor Relations (telephone: 831-439-5337) or going to Seagate's corporate website at http://www.seagate.com/, or from Maxtor by directing a request to Maxtor Corporation, 500 McCarthy Boulevard, Milpitas, California 95035, Attention: VP of Investor Relations (telephone: 408-894- 5000) or going to Maxtor's corporate website at http://www.maxtor.com/. Seagate and Maxtor, and their respective directors and executive officers, may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding Seagate's directors and executive officers is contained in Seagate's Annual Report on Form 10-K for the fiscal year ended July 1, 2005 and its proxy statement dated October 7, 2005, which were filed with the SEC. Information regarding Maxtor's directors and executive officers is contained in Maxtor's Annual Report on Form 10-K/A for the fiscal year ended December 25, 2004 and its proxy statement dated April 11, 2005, supplemental proxy statement dated May 10, 2005 and Current Report on Form 8-K dated August 24, 2005, which were filed with the SEC. Additional information regarding the interests of such potential participants will be included in the Joint Proxy Statement/Prospectus and the other relevant documents filed with the SEC (when available). MAXTOR CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share amounts) (Unaudited) Three months ended Twelve months ended December 31, December 25, December 31, December 25, 2005 2004 2005 2004 Net revenues $969,422 $1,031,182 $3,890,237 $3,796,328 Cost of revenues 879,583 948,479 3,459,324 3,429,161 Gross profit 89,839 82,703 430,913 367,167 Operating expenses: Research and development 75,275 78,254 293,559 317,573 Selling, general and administrative 34,098 29,255 144,480 130,456 Amortization of intangible assets 218 5,053 870 35,994 Restructuring and impairment charges (177) 33,755 18,625 65,148 Total operating expenses 109,414 146,317 457,534 549,171 Loss from operations (19,575) (63,614) (26,621) (182,004) Interest expense (7,205) (8,133) (34,384) (31,782) Interest income 4,156 1,609 11,928 5,255 Income from litigation -- -- -- 24,750 Other gain 7,803 14 7,898 81 Loss before income taxes (14,821) (70,124) (41,179) (183,700) Provision for (benefit from) income taxes 844 448 2,153 (261) Net loss $(15,665) $(70,572) $(43,332) $(183,439) Net loss per share - basic and diluted $(0.06) $(0.28) $(0.17) $(0.74) Shares used in per share calculation - basic and diluted 254,114,823 250,026,784 253,177,580 247,671,870 MAXTOR CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) December 31, December 25, 2005 2004 ASSETS Current assets: Cash and cash equivalents $497,509 $378,065 Marketable securities 67,722 103,969 Restricted cash 16,055 24,561 Accounts receivable, net 417,981 466,366 Inventories 240,462 229,410 Prepaid expenses and other 89,813 36,336 Total current assets 1,329,542 1,238,707 Property, plant and equipment, net 335,336 347,934 Goodwill and other intangible assets, net 490,062 490,932 Other assets 22,832 30,168 Total assets $2,177,772 $2,107,741 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term borrowings, including current portion of long-term debt $5,868 $82,561 Accounts payable 677,288 674,947 Accrued and other liabilities 300,758 324,369 Total current liabilities 983,914 1,081,877 Long-term debt, net of current portion 575,773 382,570 Other liabilities 65,113 66,695 Total liabilities 1,624,800 1,531,142 Total stockholders' equity 552,972 576,599 Total liabilities and stockholders' equity $2,177,772 $2,107,741 Maxtor Corporation Historical Trend Information Q304 Q404 Q105 Q205 Q305 Q405 Disk Drive Units shipped (K) 13,807 14,667 14,179 12,071 13,161 13,599 Revenue (M) $927 $1,031 $1,070 $925 $926 $969 Disk Drive Average ASP (blended) $67 $70 $75 $77 $70 $71 Revenue by Market Channel OEMs 47% 49% 51% 53% 52% 49% Distributors 43% 41% 38% 37% 38% 41% Retail 10% 10% 11% 10% 10% 10% Revenue by Geographic Location The Americas 36% 31% 32% 37% 36% 32% Europe/Middle East/Africa 36% 40% 38% 32% 35% 38% Asia Pacific & Japan 28% 29% 30% 31% 29% 30% Inventory 251 229 231 264 257 241 Raw Materials 71.9 79.9 75.7 86.7 93.1 55.4 WIP 53.5 57.8 48.9 50.2 51.1 56.1 Finished Goods 125.7 91.7 106.4 127.6 112.8 129.0 Turns 14 16 17 12 13 14 DSO 44 41 39 41 44 39 DATASOURCE: Maxtor Corporation CONTACT: Alan Bernheimer, Media Relations, +1-408-894-4233, or , or Jenifer Kirtland, Investor Relations, +1-408-324-7056, or , both of Maxtor Corporation Web site: http://www.maxtor.com/

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