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Press release from PR Newswire

Western Digital® Announces Record Financial Results

Wednesday, July 25, 2012

Western Digital® Announces Record Financial Results16:15 EDT Wednesday, July 25, 2012Full-Year Revenue Grew 31 Percent; Earnings More Than DoubledIRVINE, Calif., July 25, 2012 /PRNewswire-FirstCall/ -- Western Digital® Corp. (NASDAQ: WDC) today reported revenue of $12.5 billion and net income of $1.6 billion, or $6.58 per share for fiscal year 2012, compared to fiscal 2011 revenue of $9.5 billion and net income of $726 million, or $3.09 per share. On a non-GAAP basis, fiscal 2012 net income was $2.1 billion or $8.61 per share, compared to fiscal 2011 net income of $770 million or $3.28 per share.1 Both the GAAP and non-GAAP fiscal 2012 results include results from the company's newly acquired HGST subsidiary from the acquisition date of March 8 through the end of fiscal 2012.For its fourth fiscal quarter ended June 29, 2012, the company reported revenue of $4.8 billion, hard-drive shipments of 71.0 million and net income of $745 million, or $2.87 per share. On a non-GAAP basis, net income was $872 million, or $3.35 per share.2 In the year-ago quarter, the company reported revenue of $2.4 billion, net income of $158 million, or $0.67 per share, and shipped 53.8 million hard drives. Non-GAAP net income in the year-ago quarter was $193 million, or $0.81 per share.3The company generated $1.1 billion in cash from operations during the June quarter, ending with total cash and cash equivalents of $3.2 billion. During the quarter, the company repaid $558 million of debt and spent $604 million to buy back over 16 million shares of common stock."Fiscal 2012 was one of the most challenging and exciting years in our 42-year history," said John Coyne, chief executive officer. "While responding to two major natural disasters and completing the largest acquisition in the history of the industry, we achieved year-over-year revenue growth of 31 percent and more than doubled earnings per share."In the June quarter, demand was in line with our forecast as industry shipments reached 157 million units, bringing total HDD shipments for the year to 599 million units. Our WD and HGST subsidiaries both performed ahead of plan in Q4, delivering great products with consistent execution, resulting in strong revenue growth, gross margin and cash flows."The investment community conference call to discuss these results and the company's September quarter and fiscal year 2013 outlook 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 800-274-1341 in the U.S. or +1-203-369-3636 for international callers.About Western Digital Western Digital, a storage industry pioneer and long-time leader, 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 storage technologies serve a wide range of host applications including client and enterprise computing, embedded systems and consumer electronics, as well as its own storage systems. Its home entertainment products enable rich engagement with stored digital content.Western Digital was founded in 1970. The company's products are marketed to leading OEMs, systems manufacturers, selected resellers and retailers under the Western Digital®, WD® and HGST? brand names. 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 of Western Digital Technologies, Inc.  All other trademarks mentioned herein belong to their respective owners.1 Non-GAAP net income for fiscal 2012 consists of GAAP net income of $1.6 billion plus $214 million of charges and expenses related to the flooding net of recoveries, $91 million for costs recognized upon the sale of acquired inventory that was written-up to fair value, $80 million related to restructuring, $63 million for amortization of intangibles related to the acquisition, $62 million of acquisition-related expenses, $7 million of litigation accruals, less $20 million of tax effects related to the aforementioned items. Non-GAAP earnings per share of $8.61 for fiscal 2012 is calculated by using the same 245 million diluted shares as is used for GAAP earnings per share. Non-GAAP net income for fiscal 2011 consists of GAAP net income of $726 million plus $44 million of acquisition-related expenses and unrelated litigation accruals. Non-GAAP earnings per share of $3.28 for fiscal 2011 is calculated by using the same 235 million diluted shares as is used for GAAP earnings per share.2 Non-GAAP net income for the fourth quarter fiscal 2012 consists of GAAP net income of $745 million plus $51 million for amortization of intangibles related to the acquisition, $80 million related to restructuring less a $4 million tax effect related to the restructuring. Non-GAAP earnings per share of $3.35 for the fourth quarter is calculated by using the same 260 million diluted shares as is used for GAAP earnings per share. 3 Non-GAAP net income for the fourth quarter fiscal 2011 consists of GAAP net income of $158 million plus $35 million of acquisition-related expenses and unrelated litigation accruals. Non-GAAP earnings per share of $0.81 for the fourth quarter is calculated by using the same 237 million diluted shares as is used for GAAP earnings per share.  WESTERN DIGITAL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in millions; unaudited)Jun. 29,Jul. 1, 20122011ASSETSCurrent assets:Cash and cash equivalents$ 3,208$ 3,490Accounts receivable, net2,3641,206Inventories1,210577Other359214Total current assets7,1415,487Property, plant and equipment, net4,0672,224Goodwill 1,975151Other intangible assets, net79971Other assets224185Total assets$ 14,206$ 8,118LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities:Accounts payable$ 2,773$ 1,545Accrued expenses858349Accrued warranty171132Current portion of long-term debt230144Total current liabilities4,0322,170Long-term debt1,955150Other liabilities550310Total liabilities6,5372,630Total shareholders' equity7,6695,488Total liabilities and shareholders' equity$ 14,206$ 8,118 WESTERN DIGITAL CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share amounts)(unaudited)Three Months EndedYears EndedJun. 29, Jul. 1, Jun. 29, Jul. 1, 2012201120122011Revenue, net$ 4,754$ 2,403$ 12,478$ 9,526Cost of revenue3,2821,9348,8407,735Gross margin1,4724693,6381,791Operating expenses:Research and development4061881,055703Selling, general and administrative178109518307Charges related to flooding, net? ? 214? Restructuring80? 80? Total operating expenses6642971,8671,010Operating income 8081721,771781Net interest and other(7)(2)(14)(1)Income before income taxes8011701,757780Income tax provision561214554Net income $ 745$ 158$ 1,612$ 726Income per common share:Basic$ 2.93$ 0.68$ 6.69$ 3.14Diluted$ 2.87$ 0.67$ 6.58$ 3.09Weighted average shares outstanding:Basic254233241231Diluted260237245235 WESTERN DIGITAL CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(in millions; unaudited)Three Months EndedYears EndedJun. 29, Jul. 1, Jun. 29, Jul. 1, 2012201120122011Cash flows from operating activitiesNet income $ 745$ 158$ 1,612$ 726Adjustments to reconcile net income to net cash provided by operations:Depreciation and amortization339150825602Stock-based compensation31159269Deferred income taxes(8)163420Non-cash portion of charges related to flooding? ? 119? Non-cash portion of restructuring56? 56? Changes in operating assets and liabilities, net(35)108329238Net cash provided by operating activities1,1284473,0671,655Cash flows from investing activitiesPurchases of property, plant and equipment(324)(153)(717)(778)Acquisitions, net of cash acquired15(15)(3,526)(15)Proceeds from the sale of equipment76? 76? Cash used in investing activities(233)(168)(4,167)(793)Cash flows from financing activitiesEmployee stock plans, net931214150Repurchases of common stock(604)? (604)(50)Proceeds from debt, net of issuance costs? ? 2,775? Repayment of assumed debt? ? (585)? Repayment of debt(558)(31)(908)(106)Net cash provided by (used in) financing activities (1,069)(19)819(106)Effect of exchange rate changes on cash5? (1)? Net increase (decrease) in cash and cash equivalents(169)260(282)756Cash and cash equivalents, beginning of period3,3773,2303,4902,734Cash and cash equivalents, end of period$ 3,208$ 3,490$ 3,208$ 3,490(Logo:  http://photos.prnewswire.com/prnh/20000711/WDCLOGO)SOURCE Western Digital Corp.For further information: Bob Blair, Western Digital Investor Relations, +1-949-672-7834, robert.blair@wdc.com, or Steve Shattuck, Western Digital Public Relations, +1-949-672-7817, steve.shattuck@wdc.com