IRVINE, Calif., Oct. 28, 2015 /PRNewswire/ -- Western
Digital® Corp. (NASDAQ: WDC) today reported revenue of
$3.4 billion and net income of
$283 million, or $1.21 per share, for its first fiscal quarter
ended Oct. 2, 2015. On a non-GAAP
basis, net income was $366 million,
or $1.56 per share. In the year-ago
quarter, the company reported revenue of $3.9 billion and net income of $423 million, or $1.76 per share. Non-GAAP net income in the
year-ago quarter was $504 million, or
$2.10 per share.
The company generated $545 million
in cash from operations during the first fiscal quarter, ending
with total cash and cash equivalents of $5.1
billion. It utilized $60
million to repurchase 0.7 million shares of its common
stock. On Aug. 4, the company
declared a cash dividend of $0.50 per
share of its common stock, which was paid on Oct. 15.
"I am pleased with our execution and performance in the first
fiscal quarter," said Steve
Milligan, chief executive officer of Western Digital. "We
continue to benefit from our strong product and technology
positioning in today's storage market. I am very excited about our
future and ability to create long term value in the evolving
storage ecosystem, especially in light of our three recent
announcements regarding the planned investment in our company by
Unisplendour, the MOFCOM decision and our planned acquisition of
SanDisk."
The investment community conference call to discuss these
results and our current 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. A quarterly fact sheet including our guidance for
the second quarter fiscal 2016 will also be posted on our website
at investor.wdc.com. The telephone replay number is 1-800-947-5189
in the U.S. or +1-203-369-3554 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. It is a long-time innovator 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. Its products are marketed
under the HGST and WD 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.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the federal securities laws. These forward-looking
statements include, but are not limited to, statements regarding
Western Digital's product and technology positioning, the
anticipated benefits and timing of the integration of HGST and WD,
the investment in the company by Unisplendour Corporation and
Western Digital's proposed merger with SanDisk (including financing
of the proposed transaction and the benefits, results, effects and
timing of a transaction), all statements regarding Western
Digital's (and Western Digital's and SanDisk's combined) expected
future financial position, results of operations, cash flows,
dividends, financing plans, business strategy, budgets, capital
expenditures, competitive positions, growth opportunities, plans
and objectives of management, and statements containing the use of
forward-looking words, such as "may," "will," "could," "would,"
"should," "project," "believe," "anticipate," "expect," "estimate,"
"continue," "potential," "plan," "forecast," "approximate,"
"intend," "upside," and the like, or the use of future tense.
Statements contained herein concerning the business outlook or
future economic performance, anticipated profitability, revenues,
expenses, dividends or other financial items, and product or
services line growth of Western Digital (and the combined
businesses of Western Digital and SanDisk), together with other
statements that are not historical facts, are forward-looking
statements that are estimates reflecting the best judgment of
Western Digital based upon currently available information.
Statements concerning current conditions may also be
forward-looking if they imply a continuation of current
conditions.
Such forward-looking statements are inherently uncertain, and
stockholders and other potential investors must recognize that
actual results may differ materially from Western Digital's
expectations as a result of a variety of factors, including,
without limitation, those discussed below. These forward-looking
statements are based upon management's current expectations and
include known and unknown risks, uncertainties and other factors,
many of which Western Digital is unable to predict or control, that
may cause actual results, performance or plans to differ materially
from those expressed or implied by such 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 Western Digital's
most recent Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q and Current Reports on Form 8-K. You should not place undue
reliance on these forward-looking statements, which speak only as
of the date hereof, and Western Digital undertakes no obligation to
update these forward-looking statements to reflect new information
or events.
Risks and uncertainties related to the proposed merger include,
but are not limited to, the risk that SanDisk's stockholders do not
approve the merger or that Western Digital's stockholders do not
approve the issuance of stock in the merger (to the extent such
approval is required), potential adverse reactions or changes to
business relationships resulting from the announcement, pendency or
completion of the merger, uncertainties as to the timing of the
merger, the possibility that the closing conditions to the proposed
merger may not be satisfied or waived, including that a
governmental entity may prohibit, delay or refuse to grant a
necessary approval, adverse effects on Western Digital's stock
price resulting from the announcement or completion of the merger,
competitive responses to the announcement or completion of the
merger, costs and difficulties related to the integration of
SanDisk's businesses and operations with Western Digital's
businesses and operations, the inability to obtain, or delays in
obtaining, cost savings and synergies from the merger,
uncertainties as to whether the completion of the merger or any
transaction will have the accretive effect on Western Digital's
earnings or cash flows that it expects, unexpected costs,
liabilities, charges or expenses resulting from the merger,
litigation relating to the merger, the inability to retain key
personnel, and any changes in general economic and/or
industry-specific conditions. In addition to the factors set forth
above, other factors that may affect Western Digital's or SanDisk's
plans, results or stock price are set forth in Western Digital's
and SanDisk's respective filings with the SEC, including Western
Digital's and SanDisk's most recent Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Many of these factors are beyond Western Digital's and SanDisk's
control. Western Digital and SanDisk caution investors that any
forward-looking statements made by Western Digital or SanDisk are
not guarantees of future performance. Neither Western Digital nor
SanDisk intend, or undertake any obligation, to publish revised
forward-looking statements to reflect events or circumstances after
the date of this document or to reflect the occurrence of
unanticipated events.
Important Additional Information and Where to find It
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval. This communication may be deemed to be
solicitation material in respect of the proposed merger between
Western Digital and SanDisk. In connection with the proposed
merger, Western Digital intends to file a registration statement on
Form S-4 with the SEC that contains a preliminary joint proxy
statement of SanDisk and Western Digital that also constitutes a
preliminary prospectus of Western Digital. After the registration
statement is declared effective, Western Digital and SanDisk will
mail the definitive joint proxy statement/prospectus to their
respective stockholders. This material is not a substitute for the
joint proxy statement/prospectus or registration statement or for
any other document that Western Digital or SanDisk may file with
the SEC and send to Western Digital's and/or SanDisk's stockholders
in connection with the proposed merger. INVESTORS AND SECURITY
HOLDERS OF WESTERN DIGITAL AND SANDISK ARE URGED TO READ ALL
RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE JOINT PROXY
STATEMENT/PROSPECTUS, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED MERGER. Investors and security
holders will be able to obtain copies of the joint proxy
statement/prospectus (when filed) as well as other filings
containing information about Western Digital and SanDisk, without
charge, at the SEC's website, http://www.sec.gov. Copies of the
documents filed with the SEC by Western Digital will be available
free of charge on Western Digital's website at http://www.wdc.com.
Copies of the documents filed with the SEC by SanDisk will be
available free of charge on SanDisk's website at
http://www.sandisk.com.
Participants in Solicitation
Western Digital, SanDisk and their respective directors,
executive officers and certain other members of management and
employees may be soliciting proxies from their respective
stockholders in favor of the proposed transaction. Information
regarding the persons who may, under the rules of the SEC, be
considered participants in the solicitation of stockholders in
connection with the proposed transaction will be set forth in the
joint proxy statement/prospectus when it is filed with the SEC. You
can find information about Western Digital's executive officers and
directors in Western Digital's definitive proxy statement filed
with the SEC on Sept. 23, 2015. You
can find information about SanDisk's executive officers and
directors in its definitive proxy statement filed with the SEC on
April 27, 2015. You can obtain free
copies of these documents from Western Digital and SanDisk,
respectively, using the contact information above. Investors
may obtain additional information regarding the interest of such
participants by reading the joint proxy statement/prospectus
regarding the proposed merger when it becomes available.
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
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CONDENSED
CONSOLIDATED BALANCE SHEETS
|
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|
|
|
|
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(in millions;
unaudited)
|
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|
|
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|
|
|
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|
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|
Oct.
2,
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July
3,
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|
|
|
|
|
2015
|
|
2015
|
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|
ASSETS
|
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|
Current
assets:
|
|
|
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|
Cash and cash
equivalents
|
$ 5,081
|
|
$ 5,024
|
|
Short-term
investments
|
347
|
|
262
|
|
Accounts receivable,
net
|
1,616
|
|
1,532
|
|
Inventories
|
1,260
|
|
1,368
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|
Other current
assets
|
351
|
|
331
|
|
|
Total current
assets
|
8,655
|
|
8,517
|
Property, plant and
equipment, net
|
2,890
|
|
2,965
|
Goodwill
|
2,766
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|
2,766
|
Other intangible
assets, net
|
319
|
|
332
|
Other non-current
assets
|
631
|
|
601
|
|
|
Total
assets
|
$ 15,261
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|
$ 15,181
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|
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LIABILITIES AND
SHAREHOLDERS' EQUITY
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Current
liabilities:
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|
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|
Accounts
payable
|
$ 1,799
|
|
$ 1,881
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|
Accrued
expenses
|
528
|
|
470
|
|
Accrued
compensation
|
336
|
|
330
|
|
Accrued
warranty
|
141
|
|
150
|
|
Revolving credit
facility
|
255
|
|
255
|
|
Current portion of
long-term debt
|
172
|
|
156
|
|
|
Total current
liabilities
|
3,231
|
|
3,242
|
Long-term
debt
|
2,109
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|
2,156
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Other
liabilities
|
585
|
|
564
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|
|
Total
liabilities
|
5,925
|
|
5,962
|
Total shareholders'
equity
|
9,336
|
|
9,219
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|
|
Total liabilities and
shareholders' equity
|
$ 15,261
|
|
$ 15,181
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WESTERN DIGITAL
CORPORATION
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CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
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(in millions, except per
share amounts; unaudited)
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Three Months
Ended
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Oct.
2,
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|
Oct.
3,
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2015
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|
2014
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Revenue,
net
|
$ 3,360
|
|
$ 3,943
|
|
Cost of
revenue
|
2,405
|
|
2,794
|
|
|
Gross
profit
|
955
|
|
1,149
|
|
Operating
expenses:
|
|
|
|
|
|
Research and
development
|
385
|
|
437
|
|
|
Selling, general and
administrative
|
192
|
|
220
|
|
|
Charges related to
arbitration award
|
-
|
|
14
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|
|
Employee termination,
asset impairment and other charges
|
56
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|
9
|
|
|
|
Total operating
expenses
|
633
|
|
680
|
|
Operating
income
|
322
|
|
469
|
|
|
Net interest and
other
|
(8)
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|
(9)
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|
Income before income
taxes
|
314
|
|
460
|
|
Income tax
provision
|
31
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|
37
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|
Net income
|
$ 283
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|
$ 423
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Income per common
share:
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Basic
|
$ 1.23
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|
$ 1.81
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Diluted
|
$ 1.21
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|
$ 1.76
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|
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Weighted average
shares outstanding:
|
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Basic
|
231
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|
234
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|
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Diluted
|
234
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|
240
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WESTERN DIGITAL
CORPORATION
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CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
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(in millions;
unaudited)
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|
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|
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Three Months
Ended
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|
Oct.
2,
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Oct.
3,
|
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2015
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2014
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Operating
Activities
|
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Net income
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|
$ 283
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|
$ 423
|
|
Adjustments to
reconcile net income to net cash
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|
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|
|
provided by
operations:
|
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Depreciation and
amortization
|
|
236
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289
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Stock-based
compensation
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42
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39
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Deferred income
taxes
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(7)
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10
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Loss on disposal of
assets
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-
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4
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Non-cash portion of
employee termination, asset
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impairment and other
charges
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18
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|
1
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Changes in operating
assets and liabilities, net
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|
(27)
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|
61
|
|
|
|
Net cash provided by
operating activities
|
|
545
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|
827
|
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|
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Investing
Activities
|
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|
Purchases of
property, plant and equipment
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|
(151)
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|
(160)
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|
Purchases of
investments
|
|
(236)
|
|
(120)
|
|
Proceeds from sales
and maturities of investments
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|
|
124
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|
166
|
|
Other investing
activities, net
|
|
|
|
(10)
|
|
(12)
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|
Net cash used in
investing activities
|
|
(273)
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|
(126)
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Financing
Activities
|
|
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Employee stock plans,
net
|
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|
(9)
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|
2
|
|
Repurchases of common
stock
|
|
|
(60)
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|
(223)
|
|
Dividends paid to
shareholders
|
|
|
(115)
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|
(94)
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|
Repayment of
debt
|
|
|
|
|
(31)
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|
(31)
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Net cash used in
financing activities
|
|
(215)
|
|
(346)
|
|
Net increase in cash
and cash equivalents
|
|
|
57
|
|
355
|
|
Cash and cash
equivalents, beginning of period
|
|
5,024
|
|
4,804
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|
Cash and cash
equivalents, end of period
|
|
|
$ 5,081
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|
$ 5,159
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WESTERN DIGITAL
CORPORATION
|
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GAAP TO NON-GAAP
NET INCOME RECONCILIATION
|
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(in millions,
except per share amounts; unaudited)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
Oct.
2,
|
|
Oct.
3,
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
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|
GAAP net
income
|
|
$
283
|
|
$
423
|
Non-GAAP
adjustments:
|
|
|
|
|
|
Amortization of
intangible assets
|
|
25
|
|
46
|
|
Employee termination,
asset impairment and other charges
|
|
56
|
|
9
|
|
Charges related to
arbitration award
|
|
-
|
|
14
|
|
Other
|
2
|
|
12
|
Non-GAAP net
income
|
|
$
366
|
|
$
504
|
|
|
|
|
|
|
|
|
|
|
Diluted net income
per common share:
|
|
|
|
|
|
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GAAP
|
|
|
|
|
$
1.21
|
|
$
1.76
|
|
Non-GAAP
|
|
|
|
|
$
1.56
|
|
$
2.10
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
234
|
|
240
|
|
|
|
|
|
|
|
|
|
|
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 intangible assets
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 months ended October 2, 2015 and October 3,
2014.
|
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SOURCE Western Digital Corp.