2014

WD® Announces Q2 Results and Operations Update, Reflecting Continued Progress in Flood Recovery

IRVINE, Calif., Jan. 23, 2012 /PRNewswire/ -- Western Digital Corp. (NYSE: WDC) today reported revenue of $2.0 billion, hard-drive unit shipments of 28.5 million and net income of $145 million, or $0.61 per share, for its second fiscal quarter ended Dec. 30, 2011. Excluding charges and expenses related to the Thailand flooding and the planned acquisition of Hitachi Global Storage Technologies (HGST), non-GAAP net income was $358 million, or $1.51 per share.(1) During the quarter, the company incurred charges and expenses of $199 million related to the flooding and expenses of $14 million associated with the planned acquisition of HGST.

In the year-ago quarter, the company reported revenue of $2.5 billion, net income of $225 million, or $0.96 per share, and shipped 52.2 million hard drives.

The company generated $378 million in cash from operations during the December quarter, ending with total cash and cash equivalents of $3.9 billion.

Operations Update
The company also announced it has made significant additional progress to restore its manufacturing capacity following the recent flooding in Thailand. It has continued to ramp HDD production in Thailand and yesterday  resumed slider production which had been suspended since October 10. The company now believes its manufacturing capacity will be back to pre-flood capabilities in the quarter ending September 2012.

"We have made substantial progress in restoring WD's manufacturing capabilities in the aftermath of the historic flooding in Thailand, and this is reflected in our second quarter financial results and in the resumption of our operations there," said John Coyne, president and chief executive officer. "While much work remains to be done over the next several quarters to reach our pre-flood manufacturing capabilities, the progress thus far is significantly ahead of our original expectations and is a tribute to the dedicated and effective actions of our employees, contractors and Thai government agencies, the efforts of our supply partners and the support of our customers. We are grateful to all involved in this extraordinary effort." 

HGST Acquisition
The company's plan to complete the acquisition of HGST is on track to close by March 2012. The company continues to work on obtaining the regulatory approval of the transaction from the remaining government agencies.

Conference Call
The investment community conference call to discuss these results will be broadcast live over the Internet today at 2 p.m. Pacific/5 p.m. Eastern. The live and archived conference call webcast can be accessed online at www.westerndigital.com/investor, click on "Conference Calls." The telephone replay number is 1-866-403-7115 in the U.S. or +1-203-369-0585 for international callers.

About WD
WD, one of the storage industry's pioneers and long-time leaders, provides products and services for people and organizations that collect, manage and use digital information. The company designs and produces reliable, high-performance hard drives and solid state drives that keep users' data accessible and secure from loss. Its advanced technologies are configured into applications for client and enterprise computing, embedded systems and consumer electronics, as well as its own consumer storage and home entertainment products.

WD was founded in 1970. The company's storage products are marketed to leading OEMs, systems manufacturers, selected resellers and retailers under the Western Digital® and WD® brand names. Visit the Investor section of the company's website (www.westerndigital.com) to access a variety of financial and investor information.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements concerning the company's belief that its manufacturing capacity will be back to pre-flood capabilities in the quarter ending September 2012 and the expected timing of its planned acquisition of HGST. 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 the impact of continued uncertainty and volatility in global economic conditions; supply and demand conditions in the hard drive industry; uncertainties about the timeframe for the full restoration of the company's operations in Thailand and the expansion of production capacity in Malaysia, as well as associated costs for such restoration and expansion; uncertainties concerning the availability and cost of commodity materials and specialized product components and the adverse impacts of the Thailand flooding on such availability and associated costs; delays in or failure to obtain any required regulatory approvals with respect to the company's planned acquisition of HGST, or failure to consummate or delays in consummating the transaction for other reasons; actions by competitors; unexpected advances in competing technologies; uncertainties related to the development and introduction of products based on new technologies and expansion into new data storage markets; business conditions and growth in the various hard drive markets; pricing trends and fluctuations in average selling prices; and other risks and uncertainties listed in the company's filings with the Securities and Exchange Commission (the "SEC"), including the company's recent Form 10-Q filed with the SEC on Oct. 28, 2011, to which your attention is directed. Readers are cautioned not to 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 subsequent events or circumstances.

Western Digital, WD, and the WD logo are registered trademarks of Western Digital Technologies, Inc.  All other trademarks mentioned herein belong to their respective owners.

(1) Non-GAAP net income for the second quarter fiscal 2012 consists of GAAP net income of $145 million plus $199 million for charges and expenses related to the flooding and $14 million of acquisition-related expenses. Non-GAAP earnings per share of $1.51 for the second quarter is calculated by using the same 237 million diluted shares as is used for GAAP earnings per share.

(Logo: http://photos.prnewswire.com/prnh/20000711/WDCLOGO)

 

 

 

 

 

 

 

 

 

 

WESTERN DIGITAL CORPORATION

 

 

 

 

 

 

 

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

 

(in millions; unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dec. 30,

 

Jul. 1,

 

 

 

 

 

 

2011

 

2011

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

$ 3,924

 

$ 3,490

 

Accounts receivable, net

747

 

1,206

 

Inventories

466

 

577

 

Other

261

 

214

 

 

Total current assets

5,398

 

5,487

Property, plant and equipment, net

2,091

 

2,224

Goodwill

151

 

151

Other intangible assets, net

63

 

71

Other assets

104

 

185

 

 

Total assets

$ 7,807

 

$ 8,118

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

$ 883

 

$ 1,545

 

Accrued expenses

364

 

349

 

Accrued warranty

124

 

132

 

Current portion of long-term debt

181

 

144

 

 

Total current liabilities

1,552

 

2,170

Long-term debt

50

 

150

Other liabilities

282

 

310

 

 

Total liabilities

1,884

 

2,630

Total shareholders' equity

5,923

 

5,488

 

 

Total liabilities and shareholders' equity

$ 7,807

 

$ 8,118

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WESTERN DIGITAL CORPORATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions, except per share amounts)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

 

 

 

 

Dec. 30,

 

Dec. 31,

 

Dec. 30,

 

Dec. 31,

 

 

 

 

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue, net

$ 1,995

 

$ 2,475

 

$ 4,689

 

$ 4,871

Cost of revenue

1,347

 

2,000

 

3,500

 

3,959

 

Gross margin

648

 

475

 

1,189

 

912

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

191

 

169

 

384

 

336

 

Selling, general and administrative

96

 

66

 

185

 

125

 

Charges related to flooding

199

 

-

 

199

 

-

 

 

Total operating expenses

486

 

235

 

768

 

461

Operating income

162

 

240

 

421

 

451

 

Net interest and other

(2)

 

(1)

 

(3)

 

(1)

Income before income taxes

160

 

239

 

418

 

450

 

Income tax provision

15

 

14

 

34

 

28

Net income

$ 145

 

$ 225

 

$ 384

 

$ 422

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income per common share:

 

 

 

 

 

 

 

 

Basic

$ 0.62

 

$ 0.98

 

$ 1.64

 

$ 1.83

 

Diluted

$ 0.61

 

$ 0.96

 

$ 1.62

 

$ 1.80

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

Basic

234

 

230

 

234

 

230

 

Diluted

237

 

235

 

237

 

235

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WESTERN DIGITAL CORPORATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions; unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

 

 

 

 

Dec. 30,

 

Dec. 31,

 

Dec. 30,

 

Dec. 31,

 

 

 

 

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

Net income

$ 145

 

$ 225

 

$ 384

 

$ 422

Adjustments to reconcile net income to net cash

 

 

 

 

 

 

 

provided by operations:

 

 

 

 

 

 

 

 

Depreciation and amortization

140

 

151

 

298

 

301

 

Stock-based compensation

24

 

18

 

41

 

37

 

Deferred income taxes

9

 

1

 

18

 

1

 

Non-cash portion of charges related to flooding

109

 

-

 

109

 

-

 

Changes in operating assets and liabilities

(49)

 

110

 

(120)

 

134

 

 

Net cash provided by operating activities

378

 

505

 

730

 

895

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

Purchases of property, plant and equipment

(120)

 

(250)

 

(253)

 

(450)

 

 

Cash used in investing activities

(120)

 

(250)

 

(253)

 

(450)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

Employee stock plans, net

22

 

22

 

20

 

31

Repurchases of common stock

-

 

-

 

-

 

(50)

Repayment of long-term debt

(31)

 

(25)

 

(63)

 

(50)

 

 

Net cash used in financing activities

(9)

 

(3)

 

(43)

 

(69)

Net increase in cash and cash equivalents

249

 

252

 

434

 

376

Cash and cash equivalents, beginning of period

3,675

 

2,858

 

3,490

 

2,734

Cash and cash equivalents, end of period

$ 3,924

 

$ 3,110

 

$ 3,924

 

$ 3,110

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SOURCE Western Digital Corp.



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