Maxtor Corporation Reports First Quarter 2005 Results

(Auszug aus der Pressemitteilung)

MILPITAS, Calif., May 4 – Maxtor Corporation

(NYSE: MXO) today announced its financial results for the first quarter ended
April 2, 2005. Revenue for the quarter was $1.070 billion. The Company
reported a net loss in the first quarter of 2005 of $24.2 million, or $(0.10)
per share. Included in the net loss were a $4.9 million charge related to the
termination of the Company’s 2.5-inch drive program and $13.9 million in
severance-related charges associated with the reduction in force in the U.S.
and in Singapore. In the first quarter of 2004, revenue totaled $1.020
billion. Net income was $8.9 million, or $0.03 per diluted share.

„The first quarter reflected strength in our strategic SCSI and branded
products markets, augmented by a favorable industry environment,“ said Dr.
C.S. Park, chairman and chief executive officer of Maxtor. „Supply and demand
remained in good balance in the desktop market throughout the quarter and
demand in the enterprise market was extremely strong, resulting in relatively
stable prices. Compared with the updated guidance we gave in early March, we
achieved better than anticipated results.“

Drive shipments in the first quarter totaled 14.2 million. Desktop drives
represented 13.4 million of the total, including 1,029,000 shipped to consumer
electronics OEMs. SCSI drive shipments totaled 772,000. The average selling
price increased $5 to $75 in the first quarter compared with $70 in the fourth
quarter. The gross profit margin increased to 10.5% in the first quarter from
8.1% in the fourth quarter.

„We were pleased with the progress we made during the first quarter of our
turnaround plan,“ continued Dr. Park. „We continue our focus on new product
development and are on track to deliver new, competitive products scheduled
for the second half of 2005 and into 2006. The manufacturing transition of
one and two-platter desktop drives to China is going well and we are hitting
our target timeframe. We are close to a plan to move the majority of our MMC
media operation to Asia. Finally, we have been working aggressively to
improve manufacturing process efficiencies and to reduce the costs associated
with warranty and freight.“

Restatement Relating to Lease Accounting Entries
In connection with the preparation of the Company’s interim financial
statements for the quarter ended April 2, 2005, the Company’s accounting and
finance staff, in reviewing certain complex, non-routine transactions in
remediation of the material weakness in internal controls over financial
reporting as of December 25, 2004, determined that certain lease accounting
entries originally recorded in April 2001 were in error. The liabilities for
certain unfavorable leases assumed in connection with the Company’s
acquisition of Quantum Corporation’s HDD business in April 2001 had been
understated following the closing date due to an improperly calculated net
present value of the lease differential for the unfavorable leases. As a
result of this error, the Company’s net income was overstated and other
liabilities were understated by $1.7 million in fiscal 2001, $814 thousand in
fiscal 2002, $587 thousand in fiscal 2003 and $364 thousand in fiscal 2004.
In addition, the Company determined as part of a related review that the
straight line expense method was not employed in accounting for a lease the
Company commenced in April 2001 unrelated to the Quantum HDD transaction. As
a result of this error, the Company’s net income was overstated and other
liabilities were understated by $879 thousand in fiscal 2001, $1.0 million in
fiscal 2002, $744 thousand in fiscal 2003 and $580 thousand in fiscal 2004.

The cumulative impact of the adjustments is $6.7 million. The adjustments
are not material to any individual prior year; however under relevant
Securities and Exchange Commission accounting interpretations, a restatement
of the financial statements for such prior periods to correct immaterial
misstatements therein is required if the aggregate correcting adjustment
related to such errors would be material to the financial statements of the
current fiscal period. Accordingly, Maxtor will file a Form 10-K/A for the
year ended December 25, 2004 restating its financial statements for the years
ended December 28, 2002, December 27, 2003 and December 25, 2004 to reflect
these corrections.