Maxtor Corporation Reports Fourth Quarter 2004 Results

(Auszug aus der Pressemitteilung)

MILPITAS, Calif., Feb. 3 – Maxtor Corporation

(NYSE: MXO) today announced its financial results for the fourth quarter and
fiscal year ended December 25, 2004. Revenue for the quarter was $1.031
billion. The Company reported a net loss on a GAAP basis in the fourth
quarter of 2004 of $70.2 million, or $(0.28) per share. Included in the GAAP
net loss were $5.1 million for the amortization of intangibles, $7.3 million
in executive and other severance related expenses, $7.8 million in impairment
charges related to real estate holdings, and $25.0 million due to a product
cancellation and impairments related to intangibles from the acquisition of
Quantum’s hard drive division in 2001. These charges were offset by a
favorable adjustment related to the previously announced settlement with
Quantum of $8.5 million. The net total of these charges unfavorably impacted
net income by $36.7 million. In the fourth quarter of 2003, revenue totaled
$1.171 billion. Net income on a GAAP basis in the fourth quarter of 2003 was
$39.2 million, or $0.15 per diluted share. The GAAP net income included a
charge for the amortization of intangible assets and stock-based compensation
expense totaling $23.8 million. Also included was income from discontinued
operations of $2.2 million.

“The fourth quarter was characterized by strong seasonal demand in the
desktop and enterprise markets, stable pricing and lean channel inventory,”
said Dr. C.S. Park, chairman and chief executive officer of Maxtor. “While
Maxtor’s core results were better than we anticipated in December, they
continue to reflect an uncompetitive cost and expense structure, primarily on
our desktop business. We shipped 14.7 million total disk drives and realized
a gross profit margin of 8.1%, an improvement from the 6.4% in the third
quarter.”

Of the unit shipments in the fourth quarter, 563,000 represented shipments
of SCSI drives and drives shipped to consumer electronics OEMs totaled
1,264,000. The average selling price was $70 compared with $67 in the third
quarter.

“As promised during our mid-quarter update in December, the Maxtor
management team has developed and begun execution of a 100 Day Plan,”
continued Dr. Park. “Key components of that plan are to rationalize the
product roadmap, improve our cost structure and reduce operating expenses. We
have identified specific actions associated with these initiatives and have
begun implementation.”

“We have prioritized our product development for 2005, eliminating
uncompetitive programs and increasing our funding for small form factor drive
development. MMC, our media subsidiary, continues to offer cost benefits and
we have initiatives underway to further reduce its costs. We are working with
our head partners to drive cost reductions across the head supply chain.
Finally, we expect to reduce U.S. headcount by up to 200 over the course of
the year. Some of the benefits of these activities will be evident in our
financial results in 2005 and some will accrue as we move into 2006,”
concluded Dr. Park.

Fiscal Year 2004 Financial Results
For fiscal year 2004, revenue totaled $3.796 billion. The net loss on a
GAAP basis was $181.9 million, or $(0.73) per share. Included in the GAAP net
loss were $36.0 million for the amortization of intangibles, $18.3 million in
executive and other severance related expenses, $20.3 million in facilities-
related restructuring charges, $7.8 million in impairment charges related to
real estate holdings, and $25.0 million due to a product cancellation and
impairments related to intangibles from the acquisition of Quantum’s hard
drive division in 2001. These charges were offset by a favorable adjustment
related to the previously announced settlement with Quantum of $8.5 million
and the Philips litigation settlement of $24.8 million. The net total of
these charges unfavorably impacted net income by $74.1 million. In 2003,
Maxtor generated $4.086 billion in revenue. Net income on a GAAP basis was
$102.7 million or $0.41 per diluted share. Included in the GAAP net income
were charges totaling $86.1 million for the amortization of intangible assets
and stock-based compensation expense. GAAP net income also included income
from discontinued operations of $2.2 million.

Restatement
Maxtor also announced that it has recorded balance sheet corrections to
reverse a $196.5 million net deferred tax liability, to reduce goodwill by
$165.0 million and increase equity by $31.5 million. In reviewing its deferred
tax position as part of the close for this quarter in connection with the
Quantum tax settlement, the Company determined that deferred tax assets at the
time of the 2001 acquisition of the Quantum HDD business were available to
offset deferred tax liabilities required at the time of the transaction,
resulting in these corrections. The Company also recorded corrections to
reduce long term liabilities related to a restructuring accrual for facilities
acquired in the Quantum HDD transaction by $13.8 million and to reduce
goodwill by the same amount. The unaudited 2003 balance sheet accompanying
this financial release reflects these corrections. These entries had no
impact on the Company’s income statements in periods subsequent to 2001.

These errors may constitute a material weakness in the Company’s internal
controls over financial reporting. As a result of these corrections,
management has recommended, and the Company’s audit committee has approved,
the restatement of its financial statements through the prompt filing of an
amended 2003 Form 10-K. The Company expects to timely file its 2004 Form
10-K.