Western Digital Announces Q1 Revenue Of $3.8 Billion And Non-GAAP Net Income Of $514 Million, Or $2.12 Per Share(1)

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Oct 24, 2013, 04:15 ET

IRVINE, Calif., Oct. 24, 2013 /PRNewswire-FirstCall/ -- Western Digital^® Corp. (NASDAQ: WDC) today reported revenue of $3.8 billion and net income of $495 million, or $2.05 per share for its first fiscal quarter ended Sept. 27, 2013. On a non-GAAP basis, net income was $514 million or $2.12 per share.¹ In the year-ago quarter, the company reported revenue of $4.0 billion, net income of $519 million, or $2.06 per share. Non-GAAP net income in the year-ago quarter was $594 million, or $2.36 per share.²

The company generated $680 million in cash from operations during the September quarter, ending with total cash and cash equivalents of $4.9 billion. During the quarter, the company utilized $150 million to buy back 2.3 million shares of common stock. On Sept. 19, the company declared a $0.25 per common share dividend, which was paid on Oct. 15.

"We continued to perform well in the September quarter as we remained focused on delivering value to our customers through differentiated and innovative storage solutions in all of our served markets," said Steve Milligan, president and chief executive officer. "Our HGST and WD subsidiaries continued to execute very well. Outstanding linearity drove strong operating results, with gross margins above the midpoint of our model range and earnings per share well above the high end of our guidance. Longer term, we are very excited about our ability to enable the ongoing creation, storage and management of digital content by consumers and businesses."

The investment community conference call to discuss these results will be broadcast live over the Internet today at 3 p.m. Pacific/6 p.m. Eastern. The live and archived conference call webcast can be accessed online at investor.wdc.com. The telephone replay number is 1-800-685-6364 in the U.S. or +1-402-998-0553 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.

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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¹Non-GAAP net income for the first quarter fiscal 2014 consists of GAAP net income of $495 million plus $47 million of amortization of intangibles related to the acquisitions of HGST, sTec and VeloBit, $13 million of charges related to litigation, $13 million for acquisition-related expenses and $11 million related to fixed asset impairment and other charges, offset by a gain of $65 million for a flood-related insurance recovery. Non-GAAP earnings per share of $2.12 for the first quarter is calculated by using the same 242 million diluted shares as is used for GAAP earnings per share. The tax effect of the non-GAAP charges was not material.

²Non-GAAP net income for the first quarter fiscal 2013 consists of GAAP net income of $519 million plus $49 million of amortization of intangibles related to the acquisition of HGST and $26 million related to employee termination benefits and other charges. Non-GAAP earnings per share of $2.36 for the first quarter is calculated by using the same 252 million diluted shares as is used for GAAP earnings per share. The tax effect of the non-GAAP charges was not material.

WESTERN DIGITAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions; unaudited)

			Sept. 27,	June 28,
			2013	2013

ASSETS

Current assets:
	Cash and cash equivalents		$ 4,869	$ 4,309
	Accounts receivable, net		1,791	1,793
	Inventories		1,244	1,188
	Other current assets		357	308
		Total current assets	8,261	7,598
Property, plant and equipment, net			3,638	3,700
Goodwill			2,051	1,954
Other intangible assets, net			616	605
Other non-current assets			240	179
		Total assets	$ 14,806	$ 14,036


LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
	Accounts payable		$ 2,061	$ 1,990
	Accrued arbitration award		719	706
	Accrued expenses		406	480
	Accrued compensation		388	453
	Accrued warranty		123	114
	Short-term debt		500	—
	Current portion of long-term debt		230	230
		Total current liabilities	4,427	3,973
Long-term debt			1,668	1,725
Other liabilities			458	445
		Total liabilities	6,553	6,143
Total shareholders' equity			8,253	7,893
		Total liabilities and shareholders' equity	$ 14,806	$ 14,036

WESTERN DIGITAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share amounts; unaudited)



			Three Months Ended
			Sept. 27,	Sept. 28,
			2013	2012

Revenue, net			$ 3,804	$ 4,035
Cost of revenue			2,716	2,842
	Gross profit		1,088	1,193
Operating expenses:
	Research and development		401	396
	Selling, general and administrative		132	179
	Charges related to arbitration award		13	—
	Employee termination benefits and other charges		—	26
		Total operating expenses	546	601
Operating income			542	592
	Net interest and other		(10)	(14)
Income before income taxes			532	578
Income tax provision			37	59
Net income			$ 495	$ 519

Income per common share:
	Basic		$ 2.10	$ 2.11
	Diluted		$ 2.05	$ 2.06

Weighted average shares outstanding:
	Basic		236	246
	Diluted		242	252

WESTERN DIGITAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions; unaudited)


			Three Months Ended
			Sept. 27,	Sept. 28,
			2013	2012

Cash flows from operating activities
Net income			$ 495	$ 519
Adjustments to reconcile net income to net cash
provided by operations:
	Depreciation and amortization		312	313
	Stock-based compensation		42	39
	Deferred income taxes		(10)	(12)
	Gain from insurance recovery		(65)	—
	Changes in operating assets and liabilities, net		(94)	77
		Net cash provided by operating activities	680	936

Cash flows from investing activities
Purchases of property, plant and equipment			(136)	(382)
Acquisitions, net of cash acquired			(263)	(9)
Other investing activities, net			39	―
		Net cash used in investing activities	(360)	(391)

Cash flows from financing activities
Employee stock plans, net			7	60
Repurchases of common stock			(150)	(218)
Dividends to shareholders			(59)	―
Proceeds from debt			500	―
Repayment of debt			(58)	(58)
		Net cash provided by (used in) financing activities	240	(216)
Net increase in cash and cash equivalents			560	329
Cash and cash equivalents, beginning of period			4,309	3,208
Cash and cash equivalents, end of period			$ 4,869	$ 3,537