EX-99.1 2 d916409dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

Company contacts:

Bob Blair

Western Digital Investor Relations

949.672.7834

robert.blair@wdc.com

Steve Shattuck

Western Digital Public Relations

949.672.7817

steve.shattuck@wdc.com

FOR IMMEDIATE RELEASE:

WESTERN DIGITAL ANNOUNCES FINANCIAL RESULTS FOR

THIRD QUARTER FISCAL 2015

IRVINE, Calif. — Apr. 28, 2015 — Western Digital® Corp. (NASDAQ: WDC) today reported revenue of $3.5 billion and net income of $384 million, or $1.63 per share, for its third fiscal quarter ended Apr. 3, 2015. On a non-GAAP basis, net income was $441 million or $1.87 per share. In the year-ago quarter, the company reported revenue of $3.7 billion and net income of $375 million, or $1.55 per share. Non-GAAP net income in the year-ago quarter was $470 million, or $1.94 per share.

The company generated $684 million in cash from operations during the third fiscal quarter, ending with total cash and cash equivalents of $4.8 billion. It utilized $240 million to repurchase 2.2 million shares of common stock. On Feb. 3, the company declared a cash dividend of $0.50 per share of its common stock, which was paid on Apr. 16.

“I am satisfied with our execution and results in light of current PC demand challenges that were largely driven by weak macro-economic conditions,” said Steve Milligan, president and chief executive officer. “We delivered a solidly profitable quarter with continued strong cash generation, improved average selling price and healthy gross margins.

“We continue to carefully balance the management of short term market dynamics with a strong focus on long term value creation. This is reflected in our balanced approach to capital allocation. Fiscal year to date, we returned $1.1 billion to our shareholders in share repurchases and dividends, while continuing to invest in high growth market opportunities.”


Western Digital Announces Financial Results For Third Quarter Fiscal 2015

Page 2

 

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 1-800-925-0240 in the U.S. or +1-402-998-0856 for international callers.

About Western Digital

Founded in 1970, Western Digital Corp. (NASDAQ: WDC), Irvine, Calif., is an industry-leading developer and manufacturer of storage solutions that enable people to create, manage, experience and preserve digital content. Its HGST and WD® subsidiaries are long-time innovators in the storage industry. Western Digital Corporation is responding to changing market needs by providing a full portfolio of compelling, high-quality storage products with effective technology deployment, high efficiency, flexibility and speed. Our products are marketed under the HGST, WD and G-Technology™ brands to OEMs, distributors, resellers, cloud infrastructure providers and consumers. Financial and investor information is available on the company’s Investor Relations website at investor.wdc.com.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning the company’s management of short term market dynamics, its focus on long term value creation, its approach to capital allocation, and its investments. 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 volatility in global economic conditions; business conditions and growth in the storage ecosystem; pricing trends and fluctuations in average selling prices; the availability and cost of commodity materials and specialized product components; actions by competitors; unexpected advances in competing technologies; the development and introduction of products based on new technologies and expansion into new data storage markets; and other risks and uncertainties listed in the company’s filings with the Securities and Exchange Commission (the “SEC”), including the company’s Form 10-Q filed with the SEC on Feb. 10, 2015, to which your attention is directed.


Western Digital Announces Financial Results For Third Quarter Fiscal 2015

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You should not 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 new information or events.

###

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.


WESTERN DIGITAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions; unaudited)

 

     Apr. 3,
2015
     Jun. 27,
2014
 
ASSETS   

Current assets:

     

Cash and cash equivalents

   $ 4,812       $ 4,804   

Short-term investments

     228         284   

Accounts receivable, net

     1,696         1,989   

Inventories

     1,322         1,226   

Other current assets

     371         417   
  

 

 

    

 

 

 

Total current assets

  8,429      8,720   

Property, plant and equipment, net

  3,051      3,293   

Goodwill

  2,745      2,559   

Other intangible assets, net

  400      454   

Other non-current assets

  551      473   
  

 

 

    

 

 

 

Total assets

$ 15,176    $ 15,499   
  

 

 

    

 

 

 
LIABILITIES AND SHAREHOLDERS’ EQUITY   

Current liabilities:

Accounts payable

$ 2,020    $ 1,971   

Accrued arbitration award

  —        758   

Accrued expenses

  503      412   

Accrued compensation

  398      460   

Accrued warranty

  156      119   

Current portion of long-term debt

  141      125   
  

 

 

    

 

 

 

Total current liabilities

  3,218      3,845   

Long-term debt

  2,203      2,313   

Other liabilities

  529      499   
  

 

 

    

 

 

 

Total liabilities

  5,950      6,657   

Total shareholders’ equity

  9,226      8,842   
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

$ 15,176    $ 15,499   
  

 

 

    

 

 

 


WESTERN DIGITAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share amounts; unaudited)

 

     Three Months Ended     Nine Months Ended  
     Apr. 3,
2015
    Mar. 28,
2014
    Apr. 3,
2015
    Mar. 28,
2014
 

Revenue, net

   $ 3,550      $ 3,703      $ 11,381      $ 11,479   

Cost of revenue

     2,518        2,627        8,090        8,148   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

  1,032      1,076      3,291      3,331   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

Research and development

  402      418      1,265      1,235   

Selling, general and administrative

  199      201      583      559   

Charges related to arbitration award

  —        13      15      39   

Employee termination, asset impairment and other charges

  10      25      72      59   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

  611      657      1,935      1,892   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

  421      419      1,356      1,439   

Net interest and other

  (9   (13   (26   (34
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

  412      406      1,330      1,405   

Income tax provision

  28      31      85      105   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

$ 384    $ 375    $ 1,245    $ 1,300   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income per common share:

Basic

$ 1.66    $ 1.60    $ 5.34    $ 5.51   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

$ 1.63    $ 1.55    $ 5.23    $ 5.37   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding:

Basic

  231      235      233      236   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

  236      242      238      242   
  

 

 

   

 

 

   

 

 

   

 

 

 


WESTERN DIGITAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions; unaudited)

 

     Three Months Ended     Nine Months Ended  
     Apr. 3,
2015
    Mar. 28,
2014
    Apr. 3,
2015
    Mar. 28,
2014
 

Operating Activities

        

Net income

   $ 384      $ 375      $ 1,245      $ 1,300   

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

        

Depreciation and amortization

     285        307        864        936   

Stock-based compensation

     37        41        117        125   

Deferred income taxes

     (22     (27     9        (66

Gain from insurance recovery

     —          —          (37     (65

Loss on disposal of assets

     2        4        14        33   

Non-cash portion of employee termination, asset impairment and other charges

     (7     17        12        26   

Other non-cash operating activities, net

     —          4        —          4   

Changes in operating assets and liabilities, net

     5        (24     (470     (189
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

  684      697      1,754      2,104   
  

 

 

   

 

 

   

 

 

   

 

 

 

Investing Activities

Purchases of property, plant and equipment

  (150   (161   (456   (467

Acquisitions, net of cash acquired

  (241   —        (247   (823

Purchases of investments

  (92   (470   (687   (470

Proceeds from sales of investments

  35      —        665      —     

Proceeds from sale of property, plant and equipment

  —        —        7      —     

Other investing activities, net

  (10   —        6      4   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

  (458   (631   (712   (1,756
  

 

 

   

 

 

   

 

 

   

 

 

 

Financing Activities

Employee stock plans, net

  48      42      112      139   

Repurchases of common stock

  (240   (244   (772   (544

Dividends to shareholders

  (93   (71   (280   (189

Proceeds from debt

  —        2,492      —        2,992   

Repayment of debt

  (31   (2,371   (94   (2,486
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in financing activities

  (316   (152   (1,034   (88
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

  (90   (86   8      260   

Cash and cash equivalents, beginning of period

  4,902      4,655      4,804      4,309   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents, end of period

$ 4,812    $ 4,569    $ 4,812    $ 4,569   
  

 

 

   

 

 

   

 

 

   

 

 

 


WESTERN DIGITAL CORPORATION

GAAP TO NON-GAAP NET INCOME RECONCILIATION

(in millions, except per share amounts; unaudited)

 

     Three Months Ended      Nine Months Ended  
     Apr. 3,
2015
     Mar. 28,
2014
     Apr. 3,
2015
    Mar. 28,
2014
 

GAAP net income

   $ 384       $ 375       $ 1,245      $ 1,300   

Non-GAAP adjustments:

          

Amortization of intangibles

     44         50         135        148   

Employee termination, asset impairment and other charges

     10         25         72        59   

Charges related to arbitration award

     —           13         15        39   

Acquisition-related expense

     3         —           3        13   

Flood-related insurance recovery

     —           —           (37     (65

Other

     —           7         51        22   
  

 

 

    

 

 

    

 

 

   

 

 

 

Non-GAAP net income

$ 441    $ 470    $ 1,484    $ 1,516   
  

 

 

    

 

 

    

 

 

   

 

 

 

Diluted net income per common share:

GAAP

$ 1.63    $ 1.55    $ 5.23    $ 5.37   
  

 

 

    

 

 

    

 

 

   

 

 

 

Non-GAAP

$ 1.87    $ 1.94    $ 6.24    $ 6.26   
  

 

 

    

 

 

    

 

 

   

 

 

 

Weighted average shares outstanding:

  

 

 

    

 

 

    

 

 

   

 

 

 

Diluted

  236      242      238      242   
  

 

 

    

 

 

    

 

 

   

 

 

 

The table above sets forth non-GAAP net income and non-GAAP diluted net income per common share. These non-GAAP net income and diluted net income per common share measures exclude amortization of intangibles related to acquisitions, certain employee termination, asset impairment and other charges, certain charges related to an arbitration award and other charges that are unusual, non-recurring or may not be indicative of ongoing operations. The Company believes that non-GAAP net income and non-GAAP earnings per share are useful measures to investors as an alternative method for measuring the Company’s earnings performance and comparing it against prior periods. The presentation of these adjusted amounts vary from numbers presented in accordance with U.S. GAAP and therefore may not be comparable to amounts reported by other companies. The tax effect of the aforementioned items was not material to the condensed consolidated statements of income for the three and nine month periods ended April 3, 2015 and March 28, 2014.