WD(R) Announces Fiscal Q2 Revenue of $2.6 Billion With Net Income of $429 Million, or $1.85 per Share

Revenue Up 44 Percent, Hard Drive Shipments Up 39 Percent, From Year-ago Quarter

Jan 21, 2010, 16:15 ET from Western Digital Corp.

LAKE FOREST, Calif., Jan. 21 /PRNewswire-FirstCall/ -- Western Digital Corp. (NYSE: WDC) today reported revenue of $2.6 billion, hard drive shipments of 49.5 million units and net income of $429 million, or $1.85 per share, for its second fiscal quarter ended Jan. 1, 2010. In the year-ago quarter, the company reported revenue of $1.8 billion, hard drive shipments of 35.5 million units, and net income of $14 million. The year-ago net income included $113 million of restructuring charges.

The company generated a record $557 million in cash from operations during the second quarter, ending with total cash and cash equivalents of $2.4 billion.  

“We are very pleased with WD’s strong financial performance in our second fiscal quarter,” said John Coyne, president and chief executive officer. “For the third consecutive quarter, we increased output in a supply constrained environment, providing strong support of our customers’ growth opportunities, primarily in the consumer segment but, notably, with some emerging strength in the commercial sector. Continued customer preference for WD products, our timely investments in capital, the support of our supply partners and outstanding execution by the WD team generated record revenue and profits. A moderate pricing environment, combined with our passionate focus on cost and efficiency, enabled gross margins of 26.2 percent -- well above the high end of our model range.”

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:

Audio Webcast:

www.westerndigital.com/investor

Click on “Conference Calls”

Telephone Replay:

800-925-0904 (toll-free)

+1-203-369-3093 (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 Web site (www.westerndigital.com) to access a variety of financial and investor information.

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)

Jan. 1,

Jul. 3,

2010

2009 

ASSETS

Current assets:

Cash and cash equivalents

$2,435

$1,794

Accounts receivable, net

1,365

926

Inventories

453

376

Other

163

134

Total current assets

4,416

3,230

Property and equipment, net

1,696

1,584

Goodwill

139

139

Other intangible assets, net

83

89

Other assets

251

249

Total assets

$6,585

$5,291

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$1,507

$1,101

Accrued expenses

288

247

Accrued warranty

118

95

Current portion of long-term debt

94

82

Total current liabilities

2,007

1,525

Long-term debt

350

400

Other liabilities

237

174

Total liabilities

2,594

2,099

Shareholders' equity

3,991

3,192

Total liabilities and shareholders' equity

$6,585

$5,291

WESTERN DIGITAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share amounts)

(unaudited)

Three Months Ended

Six Months Ended

Jan. 1, 2010

Dec. 26, 2008

Jan. 1, 2010

Dec. 26, 2008

Revenue, net

$2,619 

$1,823 

$4,827 

$3,933 

Cost of revenue

1,932 

1,533 

3,626 

3,219 

Gross margin

687 

290 

1,201 

714 

Operating expenses:

Research and development

154 

119 

296 

252 

Selling, general and administrative

60 

42 

113 

99 

Restructuring

— 

113 

— 

113 

Total operating expenses

214 

274 

409 

464 

Operating income

473 

16 

792 

250 

Net interest and other

(2)

(9)

(4)

(13)

Income before income taxes

471 

788 

237 

Income tax provision (benefit)

42 

(7)

71 

12 

Net income

$429 

$14 

$717 

$225 

Income per common share:

Basic

$1.89 

$0.06 

$3.17 

$1.01 

Diluted

$1.85 

$0.06 

$3.10 

$1.00 

Common shares used in computing per share amounts:

Basic

227 

222 

226 

222 

Diluted

232 

224 

231 

225 

WESTERN DIGITAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions; unaudited)

Three Months Ended

Six Months Ended

Jan. 1,

2010

Dec. 26,

2008

Jan. 1,

2010

Dec. 26,

2008

Cash flows from operating activities

Net income

$429 

$14 

$717 

$225 

Adjustments to reconcile net income to net cash provided by operations:

Depreciation and amortization

126 

122 

247 

239 

Stock-based compensation

13 

11 

27 

21 

Deferred income taxes

(5)

(7)

(5)

(7)

Loss on investments

— 

— 

Non-cash portion of restructuring

— 

80 

— 

80 

Changes in operating assets and liabilities

(6)

74 

34 

Net cash provided by operating activities

557 

300 

991 

601 

Cash flows from investing activities

Purchases of property and equipment

(199)

(140)

(375)

(302)

Sales and maturities of investments

— 

Net cash used in investing activities

(196)

(140)

(372)

(301)

Cash flows from financing activities

Issuance of stock under employee stock plans, net

26 

10 

40 

Increase (decrease) in excess tax benefits from employee stock plans

11 

(4)

20 

Repurchases of common stock

— 

— 

— 

(36)

Repayment of long-term debt

(19)

(3)

(38)

(5)

Net cash provided by (used in) financing activities

18 

22 

(28)

Net increase in cash and cash equivalents

379 

163 

641 

272 

Cash and cash equivalents, beginning of period

2,056 

1,213 

1,794 

1,104 

Cash and cash equivalents, end of period

$2,435 

$1,376 

$2,435 

$1,376 

(Logo:  http://www.newscom.com/cgi-bin/prnh/20000711/WDCLOGO)

SOURCE Western Digital Corp.



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