WD Announces Q1 Revenue of $2.4 Billion and Net Income of $197 Million, or $0.84 Per Share

Revenue Up 9 Percent, Hard Drive Shipments Up 15 Percent, From Year-ago Quarter, $390 Million Cash Generated from Operations

Oct 19, 2010, 16:15 ET from Western Digital Corp.

LAKE FOREST, Calif., Oct. 19 /PRNewswire-FirstCall/ -- Western Digital Corp. (NYSE: WDC) today reported revenue of $2.4 billion, hard-drive unit shipments of 50.7 million and net income of $197 million, or $0.84 per share for its first fiscal quarter ended Oct. 1, 2010. In the year-ago quarter, the company reported revenue of $2.2 billion, shipped 44.1 million hard drives, and reported net income and earnings per share of $288 million and $1.25, respectively.

"In a quarter characterized by aggressive industry pricing, we remained solidly profitable, grew revenues and unit shipments year-over-year, and generated $390 million in cash from operations," said John Coyne, president and chief executive officer. "Our low-cost business model and strong balance sheet enable us to weather the seasonality and cycles of the hard drive industry such as we experienced during the last two quarters.

"We will continue to focus on quality, reliability, availability and profitable growth to maintain our industry leadership," said Coyne. "We remain excited about the significant opportunities being created by the unabated growth in digital content in the home and workplace."

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 call will be accessible live and on an archived basis via the link below. The company is publishing an expanded investor summary sheet today on the investor relations section of its website. After the conclusion of today's webcasted conference call, the summary sheet will be updated to reflect the company's guidance.

Audio Webcast:

www.westerndigital.com/investor

Click on "Conference Calls"

Telephone Replay:

800-455-0163 (toll free)

+1-203-369-3804 (international)

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 media 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 concerning WD's industry leadership and growth opportunities. The foregoing forward-looking statements are based on WD's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed 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; 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; changes in the availability and cost of commodity materials and specialized product components that WD does not make internally; and other risks and uncertainties listed in WD's recent Form 10-K filed with the SEC on Aug. 13, 2010, 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 WD 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.

WESTERN DIGITAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions; unaudited)

Oct. 1,

Jul. 2,

2010

2010

ASSETS

Current assets:

Cash and cash equivalents

$       2,858

$      2,734

Accounts receivable, net

1,325

1,256

Inventories

561

560

Other

195

170

Total current assets

4,939

4,720

Property and equipment, net

2,245

2,159

Goodwill

150

146

Other intangible assets, net

83

88

Other assets

216

215

Total assets

$       7,633

$      7,328

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$       1,703

$      1,507

Accrued expenses

227

281

Accrued warranty

131

129

Current portion of long-term debt

113

106

Total current liabilities

2,174

2,023

Long-term debt

262

294

Other liabilities

308

302

Total liabilities

2,744

2,619

Shareholders' equity

4,889

4,709

Total liabilities and shareholders' equity

$       7,633

$      7,328

WESTERN DIGITAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share amounts)

(unaudited)

Three Months Ended

Oct. 1,

Oct. 2,

2010

2009

Revenue, net

$       2,396

$      2,208

Cost of revenue

1,959

1,694

Gross margin

437

514

Operating expenses:

Research and development

167

142

Selling, general and administrative

59

53

Total operating expenses

226

195

Operating income

211

319

Net interest and other

-

(2)

Income before income taxes

211

317

Income tax provision

14

29

Net income

$          197

$         288

Income per common share:

Basic

$         0.86

$        1.28

Diluted

$         0.84

$        1.25

Weighted average shares outstanding:

Basic

230

225

Diluted

234

230

WESTERN DIGITAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions; unaudited)

Three Months Ended

Oct. 1,

Oct. 2,

2010

2009

Cash flows from operating activities

Net income

$          197

$          288

Adjustments to reconcile net income to net cash

 provided by operations:

Depreciation and amortization

150

121

Stock-based compensation

19

13

Changes in operating assets and liabilities

24

12

Net cash provided by operating activities

390

434

Cash flows from investing activities

Purchases of property and equipment

(200)

(176)

Net cash used in investing activities

(200)

(176)

Cash flows from financing activities

Employee stock plans, net

(2)

14

Excess tax benefits from employee stock plans

11

9

Repurchases of common stock

(50)

-

Repayment of long-term debt

(25)

(19)

Net cash provided by (used in) financing activities

(66)

4

Net change in cash and cash equivalents

124

262

Cash and cash equivalents, beginning of period

2,734

1,794

Cash and cash equivalents, end of period

$       2,858

$       2,056

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SOURCE Western Digital Corp.



RELATED LINKS

http://www.westerndigital.com