Western Digital Announces Financial Results For Fourth Quarter And Fiscal Year 2014

30 Jul, 2014, 16:15 ET from Western Digital Corp.

IRVINE, Calif., July 30, 2014 /PRNewswire/ -- Western Digital® Corp. (NASDAQ: WDC) today reported financial results for the fourth quarter and fiscal year ended June 27, 2014. For the fourth quarter, the company reported revenue of $3.7 billion and net income of $317 million, or $1.32 per share. On a non-GAAP basis, net income was $445 million or $1.85 per share.1 In the year-ago quarter, the company reported revenue of $3.7 billion, a net loss of $265 million, or $1.12 per share. Non-GAAP net income in the year-ago quarter was $477 million, or $1.96 per share.2

The company generated $713 million in cash from operations during the June quarter, ending with total cash and cash equivalents of $4.8 billion. During the June quarter, the company utilized $272 million to repurchase 3.2 million shares of common stock. On May 14, the company declared a $0.40 per common-share dividend, which was paid on July 15.

For the fiscal year, the company achieved revenue of $15.1 billion and net income of $1.6 billion, or $6.68 per share, compared to fiscal year 2013 revenue of $15.4 billion and net income of $980 million, or $3.98 per share. On a non-GAAP basis, fiscal 2014 net income was $2.0 billion, or $8.10 per share, compared to fiscal 2013 net income of $2.1 billion or $8.53 per share.3  The company generated $2.8 billion in cash from operations during the fiscal year and it utilized $1.1 billion for dividends and share repurchases.

"We achieved strong financial results in the June quarter, with better-than-anticipated revenue, healthy gross margin performance and continued strong cash flow generation," said Steve Milligan, president and chief executive officer. "We did so by addressing continued robust demand in gaming and stronger-than-expected demand in notebook PCs, demonstrating our flexibility and capability in high-volume businesses. We also saw strength in our performance enterprise business.

"Longer term, we remain excited about Western Digital's strong strategic position at the center of the storage ecosystem, which continues to expand, evolve and transform. The creation of digital data continues unabated and the strategic value of that content is increasing. With our deep insight and experience, we will continue to play a vital role in unlocking the value of data with innovative and industry-leading storage devices and solutions."

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 investor.wdc.com. The telephone replay number is 1-800-324-4587 in the U.S. or +1-402-220-3854 for international callers.

About Western Digital

Western Digital Corp. (NASDAQ: WDC), Irvine, Calif., is a global provider of products and services that empower people to create, manage, experience and preserve digital content. Its subsidiaries design and manufacture storage devices, networking equipment and home entertainment products under the WD®, HGST and G-Technology brands. 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 concerning our position in the storage ecosystem, the growth of digital data and our role in the creation of additional data. 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 concerning the availability and cost of commodity materials and specialized product components; 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 May 5, 2014, to which your attention is directed. Readers are cautioned not to place undue reliance on these forward-looking statements, which speaks 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 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.

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1 Non-GAAP net income for the fourth quarter fiscal 2014 consists of GAAP net income of $317 million plus $47 million of amortization of intangibles related to the acquisitions of HGST, sTec, VeloBit and Virident, $13 million of charges related to litigation and $68 million of employee termination, asset impairment and other charges. Non-GAAP earnings per share of $1.85 for the fourth quarter is calculated by using the same 241 million diluted shares as is used for GAAP earnings per share. The tax effect of the aforementioned items was not material.

2 Non-GAAP net income for the fourth quarter fiscal 2013 consists of GAAP net loss of $265 million plus $681 million for charges related to an arbitration award, $46 million for amortization of intangibles related to the acquisition of HGST and $15 million for employee termination benefits and other unrelated charges. Non-GAAP earnings per share of $1.96 for the fourth quarter is calculated using 243 million diluted shares. The tax effect of the aforementioned items was not material.

3 Non-GAAP net income for fiscal 2014 consists of GAAP net income of $1.6 billion plus $195 million of amortization of intangibles related to the acquisitions of HGST, sTec, VeloBit and Virident, $64 million of charges related to litigation, $133 million of employee termination, asset impairment and other charges, $13 million of acquisition charges and $4 million of expense due to the write-off of debt issuance costs offset by a $65 million gain on an insurance recovery. Non-GAAP earnings per share of $8.10 for fiscal 2014 is calculated by using the same 242 million diluted shares as is used for GAAP earnings per share. Non-GAAP net income for fiscal 2013 consists of GAAP net income of $980 million plus $681 million for charges related to an arbitration award, $193 million for amortization of intangibles related to the acquisition of HGST, $138 million for employee termination benefits and other charges and a net $106 million for tax-related matters and other unrelated charges. Non-GAAP earnings per share of $8.53 for fiscal 2013 is calculated by using the same 246 million diluted shares as is used for GAAP earnings per share. The tax effect of the aforementioned items was not material.

 WESTERN DIGITAL CORPORATION 

CONDENSED CONSOLIDATED BALANCE SHEETS 

(in millions; unaudited)

June 27,

June 28,

2014

2013

ASSETS

Current assets:

Cash and cash equivalents

$     4,804

$     4,309

Short-term investments

284

Accounts receivable, net

1,989

1,793

Inventories

1,226

1,188

Other current assets

417

308

Total current assets

8,720

7,598

Property, plant and equipment, net

3,293

3,700

Goodwill 

2,559

1,954

Other intangible assets, net

454

605

Other non-current assets

473

179

Total assets

$   15,499

$   14,036

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$     1,971

$     1,990

Accrued arbitration award

758

706

Accrued expenses

412

480

Accrued compensation 

460

453

Accrued warranty

119

114

Current portion of long-term debt

125

230

Total current liabilities

3,845

3,973

Long-term debt

2,313

1,725

Other liabilities

499

445

Total liabilities

6,657

6,143

Total shareholders' equity

8,842

7,893

Total liabilities and shareholders' equity

$   15,499

$   14,036

WESTERN DIGITAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

     (in millions, except per share amounts; unaudited)

Three Months Ended

Years Ended

 June 27, 

 June 28, 

 June 27, 

 June 28, 

2014

2013

2014

2013

Revenue, net

$     3,651

$     3,728

$   15,130

$   15,351

Cost of revenue

2,622

2,678

10,770

10,988

Gross profit

1,029

1,050

4,360

4,363

Operating expenses:

Research and development

426

402

1,661

1,572

Selling, general and administrative

202

180

761

706

Charges related to arbitration award

13

681

52

681

Employee termination, asset impairment 

   and other charges

36

8

95

138

Total operating expenses

677

1,271

2,569

3,097

Operating income (loss)

352

(221)

1,791

1,266

Net interest and other

(5)

(9)

(39)

(44)

Income before (loss) income taxes

347

(230)

1,752

1,222

Income tax provision

30

35

135

242

Net income (loss)

$        317

$       (265)

$     1,617

$        980

Income (loss) per common share:

Basic

$       1.35

$      (1.12)

$       6.88

$       4.07

Diluted

$       1.32

$      (1.12)

$       6.68

$       3.98

Weighted average shares outstanding:

Basic

234

236

235

241

Diluted

241

236

242

246

 

WESTERN DIGITAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

     (in millions; unaudited)

Three Months Ended

Years Ended

 June 27, 

 June 28, 

 June 27, 

 June 28, 

2014

2013

2014

2013

Cash flows from operating activities

Net income (loss)

$        317

$       (265)

$     1,617

$        980

Adjustments to reconcile net income to net cash 

  provided by operations:

Depreciation and amortization

308

302

1,244

1,233

Stock-based compensation

31

30

156

137

Deferred income taxes

53

(24)

(13)

35

Gain from insurance recovery

(65)

Loss on disposal of assets

7

40

Non-cash portion of employee termination, asset 

impairment and other charges

36

3

62

19

Other non-cash operating activities, net

5

9

Changes in operating assets and liabilities, net

(44)

638

(234)

715

Net cash provided by operating activities

713

684

2,816

3,119

Cash flows from investing activities

Purchases of property, plant and equipment

(161)

(136)

(628)

(952)

Acquisitions, net of cash acquired

(823)

(1)

Purchases of investments

(91)

(561)

(17)

Proceeds from sales of investments

72

72

Other investing activities, net

4

Net cash used in investing activities

(180)

(136)

(1,936)

(970)

Cash flows from financing activities

Employee stock plans, net

75

53

215

205

Repurchases of common stock

(272)

(235)

(816)

(842)

Dividends to shareholders

(70)

(60)

(259)

(181)

Proceeds from debt, net of issuance costs

2,992

 ― 

Repayment of debt

(31)

(57)

(2,517)

(230)

Net cash used in financing activities 

(298)

(299)

(385)

(1,048)

Net increase in cash and cash equivalents

235

249

495

1,101

Cash and cash equivalents, beginning of period

4,569

4,060

4,309

3,208

Cash and cash equivalents, end of period

$     4,804

$     4,309

$     4,804

$     4,309

SOURCE Western Digital Corp.



RELATED LINKS

http://www.westerndigital.com