WESTERN DIGITAL CORPORATION IRVINE, Calif., Jan. 27, 2015 /PRNewswire/ -- Western Digital(®) Corp. (NASDAQ: WDC) today reported revenue of $3.9 billion and net income of $460 million, or $1.93 per share, for its second fiscal quarter ended Jan. 2, 2015. On a non-GAAP basis, net income was $539 million or $2.26 per share. In the year-ago quarter, the company reported revenue of $4.0 billion and net income of $430 million, or $1.77 per share. Non-GAAP net income in the year-ago quarter was $532 million, or $2.19 per share.
The company generated $243 million in cash from operations during the December quarter, net of the Seagate arbitration award payment of $773 million, ending with total cash and cash equivalents of $4.9 billion. During the December quarter, the company utilized $309 million to repurchase 3.2 million shares of common stock. On Nov. 4, the company declared a $0.40 per common-share dividend, which was paid on Jan. 15.
"We delivered strong financial results in the December quarter, with better-than-anticipated revenues, gross margins, and earnings," said Steve Milligan, president and chief executive officer. "The diversified nature of our business and solid execution by our HGST and WD(®) subsidiaries are enabling us to consistently deliver strong financial performance. Also, I am encouraged by the market's response to our strategic growth initiatives, which we believe position the company to thrive in the evolving data storage ecosystem."
The investment community conference call to discuss these results will be broadcast live over the Internet today at the revised time of 3PM Pacific/6PM Eastern. The live and archived conference call webcast can be accessed online at investor.wdc.com. The telephone replay number is 1-866-443-4169 in the U.S. or +1-203-369-1117 for international callers.
About Western Digital
Founded in 1970, Western Digital Corp. (NASDAQ: WDC), Irvine, Calif., is an industry-leading developer and manufacturer of storage solutions that enable people to create, manage, experience and preserve digital content. Its HGST and WD(®) subsidiaries are long-time innovators in the storage industry. Western Digital Corporation is responding to changing market needs by providing a full portfolio of compelling, high-quality storage products with effective technology deployment, high efficiency, flexibility and speed. Our products are marketed under the HGST, WD and G-Technology(TM) brands to OEMs, distributors, resellers, cloud infrastructure providers and consumers. Financial and investor information is available on the company's Investor Relations website at investor.wdc.com.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning the company's strategic investments positioning, execution and financial performance. These forward-looking statements are based on management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including volatility in global economic conditions; business conditions and growth in the storage ecosystem; pricing trends and fluctuations in average selling prices; the availability and cost of commodity materials and specialized product components; actions by competitors; unexpected advances in competing technologies; the development and introduction of products based on new technologies and expansion into new data storage markets; and other risks and uncertainties listed in the company's filings with the Securities and Exchange Commission (the "SEC"), including the company's Form 10-Q filed with the SEC on Nov. 4, 2014, and the company's registration statement on Form S-3 filed with the SEC on Nov. 5, 2014, to which your attention is directed. You should not place undue reliance on these forward-looking statements, which speak only as of the date hereof, and the company undertakes no obligation to update these forward-looking statements to reflect new information or events.
Western Digital, WD and the WD logo are registered trademarks in the U.S. and other countries. HGST trademarks are intended and authorized for use only in countries and jurisdictions in which HGST has obtained the rights to use, market and advertise the brand. Other marks may be mentioned herein that belong to other companies.
WESTERN DIGITAL CORPORATION
PRELIMINARY1 CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions; unaudited)
Jan. 2, Jun. 27,
2015 2014
---- ----
ASSETS
Current assets:
Cash and cash
equivalents $4,902 $4,804
Short-term
investments 241 284
Accounts
receivable,
net 1,880 1,989
Inventories 1,282 1,226
Other current
assets 355 417
Total
current
assets 8,660 8,720
Property, plant and equipment, net 3,099 3,293
Goodwill 2,566 2,559
Other intangible assets, net 359 454
Other non-current assets 455 473
--- ---
Total assets $15,139 $15,499
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts
payable $2,071 $1,971
Accrued
arbitration
award ? 758
Accrued
expenses 496 412
Accrued
compensation 451 460
Accrued
warranty 146 119
Current portion
of long-term
debt 125 125
Total
current
liabilities 3,289 3,845
Long-term debt 2,250 2,313
Other liabilities 496 499
--- ---
Total liabilities 6,035 6,657
Total shareholders' equity 9,104 8,842
----- -----
Total liabilities and
shareholders' equity $15,139 $15,499
======= =======
(1)On Jan. 15, 2015, the
Higher Regional Court of
Munich declared that
Western Digital must pay
levies on certain hard
drives sold in Germany
from January 2008 through
December 2010. This
decision pertains to third
party claims previously
disclosed in Western
Digital's periodic
filings, and the Company
believes this will not
have a material adverse
effect on its business. No
accrual for this matter
has been previously
recorded and the Company
is reviewing the decision
to determine whether or
not to record an accrual
in its results for the
quarter ended Jan. 2,
2015.
WESTERN DIGITAL CORPORATION
PRELIMINARY1 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts; unaudited)
Three Months Ended Six Months Ended
------------------ ----------------
Jan. 2, Dec. 27, Jan. 2, Dec. 27,
2015 2013 2015 2013
---- ---- ---- ----
Revenue, net $3,888 $3,972 $7,831 $7,776
Cost of revenue 2,756 2,816 5,550 5,521
----- ----- ----- -----
Gross
profit 1,132 1,156 2,281 2,255
Operating expenses:
Research and
development 426 416 863 817
Selling, general and
administrative 164 226 384 358
Charges related to
arbitration award 1 13 15 26
Employee termination,
asset impairment and
other charges 53 23 62 34
Total operating
expenses 644 678 1,324 1,235
--- --- ----- -----
Operating income 488 478 957 1,020
Net interest
and other (8) (11) (17) (21)
Income before income taxes 480 467 940 999
Income tax provision 20 37 57 74
Net income $460 $430 $883 $925
==== ==== ==== ====
Income per common share:
Basic $1.97 $1.82 $3.79 $3.92
Diluted $1.93 $1.77 $3.69 $3.81
Weighted average shares outstanding:
Basic 233 236 233 236
Diluted 238 243 239 243
WESTERN DIGITAL CORPORATION
PRELIMINARY1 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
Three Months Ended Six Months Ended
------------------ ----------------
Jan. 2, Dec. 27, Jan. 2, Dec. 27,
2015 2013 2015 2013
---- ---- ---- ----
Cash flows from operating activities
Net income $460 $430 $883 $925
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation and
amortization 290 317 579 629
Stock-based
compensation 41 42 80 84
Deferred income
taxes 21 (29) 31 (39)
Gain from
insurance
recovery (37) - (37) (65)
Loss on disposal
of assets 8 14 12 29
Non-cash portion of
employee termination, asset
impairment and other
charges 18 2 19 9
Changes in operating assets
and liabilities, net (558) (49) (497) (166)
Net cash provided by
operating activities 243 727 1,070 1,406
--- --- ----- -----
Cash flows from investing activities
Purchases of property, plant and equipment (146) (170) (306) (306)
Acquisitions, net of cash acquired (6) (560) (6) (823)
Purchases of investments (475) - (595) -
Proceeds from sales of investments 464 - 630 -
Proceeds from sale of property, plant and equipment 7 - 7 -
Other investing activities, net 28 (35) 16 4
Net cash used in
investing activities (128) (765) (254) (1,125)
---- ---- ---- ------
Cash flows from financing activities
Employee stock plans, net 62 91 64 98
Repurchases of common stock (309) (150) (532) (300)
Dividends to shareholders (94) (59) (188) (118)
Proceeds from debt - - - 500
Repayment of debt (31) (58) (62) (115)
--- ---
Net cash provided by
(used in) financing
activities (372) (176) (718) 65
---- ---- ---- ---
Net increase (decrease) in cash and cash equivalents (257) (214) 98 346
Cash and cash equivalents, beginning of period 5,159 4,869 4,804 4,309
----- ----- ----- -----
Cash and cash equivalents, end of period $4,902 $4,655 $4,902 $4,655
====== ====== ====== ======
WESTERN DIGITAL CORPORATION
PRELIMINARY1 GAAP TO NON-GAAP RECONCILIATION
(in millions, except per share amounts; unaudited)
Three Months Ended Six Months Ended
------------------ ----------------
Jan. 2, Dec. 27, Jan. 2, Dec. 27,
2015 2013 2015 2013
---- ---- ---- ----
GAAP net income $460 $430 $883 $925
Non-GAAP adjustments:
Amortization
of
intangibles 45 51 91 98
Employee termination,
asset impairment and
other charges 53 23 62 34
Charges related to
arbitration award 1 13 15 26
Acquisition-
related
expense - - - 13
Flood-related
insurance recovery (37) - (37) (65)
Other 17 15 29 15
Non-GAAP net income $539 $532 $1,043 $1,046
==== ==== ====== ======
Diluted net income per common share:
GAAP $1.93 $1.77 $3.69 $3.81
Non-GAAP $2.26 $2.19 $4.36 $4.30
Weighted average shares outstanding:
Diluted 238 243 239 243
The table above sets forth non-GAAP
net income and non-GAAP diluted net
income per common share. These non-
GAAP net income and diluted net
income per common share measures
exclude amortization of intangibles
related to acquisitions, certain
employee termination, asset
impairment and other charges,
certain charges related to an
arbitration award and other charges
that are unusual, non-recurring or
may not be indicative of ongoing
operations. The Company believes
that non-GAAP net income and non-
GAAP earnings per share are useful
measures to investors as an
alternative method for measuring the
Company's earnings performance and
comparing it against prior periods.
The presentation of these adjusted
amounts vary from numbers presented
in accordance with U.S. GAAP and
therefore may not be comparable to
amounts reported by other companies.
The tax effect of the aforementioned
items was not material to the
condensed consolidated statements of
income for the three and six month
periods ended January 2, 2015 and
December 27, 2013.
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SOURCE Western Digital Corp.
