IRVINE, Calif., Jan. 28, 2016 /PRNewswire/ -- Western
Digital® Corp. (NASDAQ: WDC) today reported revenue of
$3.3 billion and net income of
$251 million, or $1.07 per share, for its second fiscal quarter
ended Jan. 1, 2016. On a non-GAAP
basis, net income was $374 million,
or $1.60 per share. In the year-ago
quarter, the company reported revenue of $3.9 billion and net income of $438 million, or $1.84 per share. Non-GAAP net income in the
year-ago quarter was $539 million, or
$2.26 per share.
The company generated $598 million
in cash from operations during the second fiscal quarter, ending
with total cash and cash equivalents of $5.4
billion. On Nov. 3, 2015 the
company declared a cash dividend of $0.50 per share of its common stock, which was
paid on Jan. 15, 2016.
"We continue to execute well as we manage our business within an
increasingly challenging global economic environment," said
Steve Milligan, chief executive
officer. "Despite a lower-than-expected hard drive total available
market, we reported revenue and EPS within our guidance range, with
non-GAAP gross margin of 28.5 percent.[1] We also had strong free
cash flow performance of $449 million. Our storage shipments
for the December quarter grew to 69.1 exabytes."
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[1] GAAP gross margin
for the second quarter fiscal 2016 was 27.3%.
|
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 third quarter fiscal 2016 will also be posted on our website at
investor.wdc.com. The telephone replay number is 1-888-562-7214 in
the U.S. or +1-203-369-3936 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 ("Western Digital") 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 the
acquisition by Western Digital of SanDisk Corporation ("SanDisk")
pursuant to a merger of Schrader Acquisition Corporation with and
into 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 and
Western Digital's most recent registration statement on Form S-4.
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 filed 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 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 is set forth in the
preliminary joint proxy statement/prospectus filed with the SEC on
Dec. 11, 2015, as amended by
Amendment No. 1, dated Jan. 27, 2016.
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 filed
on Western Digital's most recent Form S-4.
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jan.
1,
|
|
July
3,
|
|
|
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$ 5,363
|
|
$ 5,024
|
|
Short-term
investments
|
497
|
|
262
|
|
Accounts receivable,
net
|
1,650
|
|
1,532
|
|
Inventories
|
1,238
|
|
1,368
|
|
Other current
assets
|
200
|
|
331
|
|
|
Total current
assets
|
8,948
|
|
8,517
|
Property, plant and
equipment, net
|
2,801
|
|
2,965
|
Goodwill
|
2,766
|
|
2,766
|
Other intangible
assets, net
|
292
|
|
332
|
Other non-current
assets
|
659
|
|
601
|
|
|
Total
assets
|
$ 15,466
|
|
$ 15,181
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$ 1,806
|
|
$ 1,881
|
|
Accrued arbitration
award
|
32
|
|
-
|
|
Accrued
expenses
|
505
|
|
470
|
|
Accrued
compensation
|
315
|
|
330
|
|
Accrued
warranty
|
144
|
|
150
|
|
Revolving credit
facility
|
255
|
|
255
|
|
Current portion of
long-term debt
|
188
|
|
156
|
|
|
Total current
liabilities
|
3,245
|
|
3,242
|
Long-term
debt
|
2,062
|
|
2,156
|
Other
liabilities
|
602
|
|
564
|
|
|
Total
liabilities
|
5,909
|
|
5,962
|
Total shareholders'
equity
|
9,557
|
|
9,219
|
|
|
Total liabilities and
shareholders' equity
|
$ 15,466
|
|
$ 15,181
|
|
|
|
|
|
|
|
|
|
WESTERN DIGITAL
CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, except per
share amounts; unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
Jan.
1,
|
|
Jan.
2,
|
|
Jan.
1,
|
|
Jan.
2,
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue,
net
|
$ 3,317
|
|
$ 3,888
|
|
$ 6,677
|
|
$ 7,831
|
Cost of
revenue
|
2,411
|
|
2,778
|
|
4,816
|
|
5,572
|
|
Gross
profit
|
906
|
|
1,110
|
|
1,861
|
|
2,259
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Research and
development
|
389
|
|
426
|
|
774
|
|
863
|
|
Selling, general and
administrative
|
207
|
|
164
|
|
399
|
|
384
|
|
Charges related to
arbitration award
|
32
|
|
1
|
|
32
|
|
15
|
|
Employee termination,
asset impairment and other charges
|
27
|
|
53
|
|
83
|
|
62
|
|
|
Total operating
expenses
|
655
|
|
644
|
|
1,288
|
|
1,324
|
Operating
income
|
251
|
|
466
|
|
573
|
|
935
|
|
Net interest and
other
|
(7)
|
|
(8)
|
|
(15)
|
|
(17)
|
Income before income
taxes
|
244
|
|
458
|
|
558
|
|
918
|
Income tax expense
(benefit)
|
(7)
|
|
20
|
|
24
|
|
57
|
Net income
|
$ 251
|
|
$ 438
|
|
$ 534
|
|
$ 861
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per common
share:
|
|
|
|
|
|
|
|
Basic
|
$ 1.08
|
|
$ 1.88
|
|
$ 2.31
|
|
$ 3.70
|
|
Diluted
|
$ 1.07
|
|
$ 1.84
|
|
$ 2.28
|
|
$ 3.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
232
|
|
233
|
|
231
|
|
233
|
|
Diluted
|
234
|
|
238
|
|
234
|
|
239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WESTERN DIGITAL
CORPORATION
|
|
|
|
|
|
|
|
|
|
|
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|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions;
unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
Jan.
1,
|
|
Jan.
2,
|
|
Jan.
1,
|
|
Jan.
2,
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Activities
|
|
|
|
|
|
|
|
Net income
|
$ 251
|
|
$ 438
|
|
$ 534
|
|
$ 861
|
Adjustments to
reconcile net income to net cash provided by
operations:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
252
|
|
290
|
|
488
|
|
579
|
|
Stock-based
compensation
|
37
|
|
41
|
|
79
|
|
80
|
|
Deferred income
taxes
|
22
|
|
21
|
|
15
|
|
31
|
|
Gain from insurance
recovery
|
-
|
|
(37)
|
|
-
|
|
(37)
|
|
Loss on disposal of
assets
|
6
|
|
8
|
|
6
|
|
12
|
|
Non-cash portion of
employee termination, asset
|
|
|
|
|
|
|
|
|
|
impairment and other
charges
|
-
|
|
18
|
|
18
|
|
19
|
|
Changes in operating
assets and liabilities, net
|
30
|
|
(536)
|
|
3
|
|
(475)
|
|
|
Net cash provided by
operating activities
|
598
|
|
243
|
|
1,143
|
|
1,070
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
Purchases of
property, plant and equipment
|
(149)
|
|
(146)
|
|
(300)
|
|
(306)
|
Acquisitions, net of
cash acquired
|
-
|
|
(6)
|
|
-
|
|
(6)
|
Purchases of
investments
|
(172)
|
|
(475)
|
|
(408)
|
|
(595)
|
Proceeds from sales
and maturities of investments
|
142
|
|
464
|
|
266
|
|
630
|
Proceeds from sale of
property, plant and equipment
|
-
|
|
7
|
|
-
|
|
7
|
Other investing
activities, net
|
(2)
|
|
28
|
|
(12)
|
|
16
|
|
|
Net cash used in
investing activities
|
(181)
|
|
(128)
|
|
(454)
|
|
(254)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
Employee stock plans,
net
|
12
|
|
62
|
|
4
|
|
64
|
Repurchases of common
stock
|
-
|
|
(309)
|
|
(60)
|
|
(532)
|
Dividends paid to
shareholders
|
(116)
|
|
(94)
|
|
(231)
|
|
(187)
|
Repayment of
debt
|
(31)
|
|
(31)
|
|
(63)
|
|
(63)
|
|
|
Net cash used in
financing activities
|
(135)
|
|
(372)
|
|
(350)
|
|
(718)
|
Net increase
(decrease) in cash and cash equivalents
|
282
|
|
(257)
|
|
339
|
|
98
|
Cash and cash
equivalents, beginning of period
|
5,081
|
|
5,159
|
|
5,024
|
|
4,804
|
Cash and cash
equivalents, end of period
|
$ 5,363
|
|
$ 4,902
|
|
$ 5,363
|
|
$ 4,902
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WESTERN DIGITAL
CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP TO NON-GAAP
RECONCILIATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions,
except per share amounts; unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
Jan.
1,
|
|
Jan.
2,
|
|
Jan.
1,
|
|
Jan.
2,
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross
profit
|
$
906
|
|
$ 1,110
|
|
$ 1,861
|
|
$ 2,259
|
|
Charges related to
cost saving initiatives
|
22
|
|
-
|
|
22
|
|
-
|
|
Other
charges
|
-
|
|
39
|
|
-
|
|
39
|
|
Amortization of
acquired intangible assets
|
16
|
|
38
|
|
33
|
|
77
|
Non-GAAP gross
profit
|
$
944
|
|
$ 1,187
|
|
$ 1,916
|
|
$ 2,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross
margin
|
27.3%
|
|
28.5%
|
|
27.9%
|
|
28.8%
|
Non-GAAP gross
margin
|
28.5%
|
|
30.5%
|
|
28.7%
|
|
30.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue,
net
|
$ 3,317
|
|
$ 3,888
|
|
$ 6,677
|
|
$ 7,831
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net
income
|
$
251
|
|
$
438
|
|
$ 534
|
|
$ 861
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
Amortization of
acquired intangible assets
|
24
|
|
45
|
|
49
|
|
91
|
|
Employee termination,
asset impairment and other charges
|
27
|
|
53
|
|
83
|
|
62
|
|
Charges related to
cost saving initiatives
|
37
|
|
-
|
|
37
|
|
-
|
|
Charges related to
arbitration award
|
32
|
|
1
|
|
32
|
|
15
|
|
Acquisition-related
charges
|
27
|
|
-
|
|
27
|
|
-
|
|
Insurance
recoveries
|
-
|
|
(37)
|
|
-
|
|
(37)
|
|
Other
charges
|
4
|
|
39
|
|
6
|
|
51
|
|
Income tax
adjustments
|
(28)
|
|
-
|
|
(28)
|
|
-
|
Non-GAAP net
income
|
$
374
|
|
$
539
|
|
$ 740
|
|
$ 1,043
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income
per common share:
|
|
|
|
|
|
|
|
|
GAAP
|
$
1.07
|
|
$
1.84
|
|
$ 2.28
|
|
$ 3.60
|
|
Non-GAAP
|
$
1.60
|
|
$
2.26
|
|
$ 3.16
|
|
$ 4.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
Diluted
|
234
|
|
238
|
|
234
|
|
239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To supplement the
condensed consolidated financial statements presented in accordance
with U.S. generally accepted accounting principles ("GAAP"), the
table above sets forth Non-GAAP gross margin, Non-GAAP net income
and Non-GAAP diluted net income per common share ("Non-GAAP
measures"). These Non-GAAP measures are not in accordance
with, or an alternative for, measures prepared in accordance with
GAAP and may be different from Non-GAAP measures used by other
companies. Western Digital Corporation believes the
presentation of Non-GAAP measures, when shown in conjunction with
the corresponding GAAP measures, provides useful information to
investors for measuring the Company's earnings performance and
comparing it against prior periods.
These Non-GAAP measures exclude amortization of acquired intangible
assets; employee termination, asset impairment and other charges;
charges related to cost saving initiatives; charges related to
arbitration award; acquisition-related charges; insurance
recoveries; other charges; and income tax adjustments. We exclude
these items for purposes of calculating these Non-GAAP measures to
facilitate a more meaningful evaluation of our current operating
performance and comparisons to our operating performance in prior
periods.
As described above, we exclude the following items from our
Non-GAAP measures:
Amortization of acquired intangible assets. We incur expenses
from the amortization of acquired intangible assets over their
economic lives. Such charges are significantly impacted by
the timing and magnitude of our acquisitions and any related
impairment charges.
Employee termination, asset impairment and other charges.
From time-to-time, in order to realign our operations with
anticipated market demand or to achieve cost synergies from the
integration of acquisitions, we may terminate employees and/or
restructure our operations. From time-to-time, we may also
incur charges from the impairment of intangible assets and other
long-lived assets. These charges (including any reversals of
charges recorded in prior periods) are inconsistent in amount and
frequency and are not a part of the ongoing operation of our
business.
Charges related to cost saving initiatives. In connection
with the transformation of our business, starting in the 2nd
quarter of fiscal 2016, we incur charges related to cost saving
initiatives which do not qualify for special accounting treatment
as exit or disposal activities. These charges, which are not part
of the ongoing operation of our business, primarily relate to costs
associated with rationalizing our channel partners or vendors,
transforming our information systems infrastructure, integrating
our product roadmap, and accelerated depreciation on
assets.
Charges related to arbitration award. In relation to an arbitration
award for claims brought against the Company by Seagate Technology
LLC, which was satisfied in October 2014, and the related dispute
over the calculation of post-award interest, we have recorded loss
contingencies. The resulting expense is inconsistent in amount and
frequency.
Acquisition-related charges. In connection with our business
combinations, we incur expenses which we would not have otherwise
incurred as part of our business operations. These expenses
include third-party professional service and legal fees,
third-party integration services, severance costs, non-cash
adjustments to the fair value of acquired inventory, contract
termination costs, retention bonuses, and changes to the fair value
of contingent consideration. We may also experience other
one-time accounting impacts in connection with these
transactions. These charges and impacts are related to
acquisitions, are inconsistent in amount and frequency, and have no
direct correlation to the operation of our business.
Insurance recoveries. From time-to-time, we receive insurance
recoveries related to losses or other events which occurred in a
prior period. Such recoveries are inconsistent in amount and
frequency.
Other charges. From time-to-time, we sell investments or other
assets which are not considered strategic or necessary to our
business; are a party to legal or arbitration proceedings, which
could result in an expense or benefit due to settlements, final
judgments, or accruals for loss contingencies; or incur other
charges or gains which are not a part of the ongoing operation of
our business. The resulting expense or benefit is
inconsistent in amount and frequency.
Income tax adjustments. Income tax adjustments reflect the
difference between income taxes based on a forecasted annual
non-GAAP tax rate and a forecasted annual GAAP tax rate as a result
of the timing of certain non-GAAP pre-tax adjustments.
|
CASH FROM
OPERATING ACTIVITIES TO FREE CASH FLOW
RECONCILIATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions;
unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
Jan.
1,
|
|
Jan.
2,
|
|
Jan.
1,
|
|
Jan.
2,
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
598
|
|
$
243
|
|
$ 1,143
|
|
$ 1,070
|
|
Purchases of
property, plant and equipment
|
(149)
|
|
(146)
|
|
(300)
|
|
(306)
|
Free cash
flow
|
$
449
|
|
$
97
|
|
$ 843
|
|
$ 764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To supplement the
condensed consolidated financial statements presented in accordance
with GAAP, the table above sets forth free cash flow, a Non-GAAP
measure. We define free cash flow as net cash provided by
operating activities less purchases of property, plant and
equipment. This Non-GAAP measure is not in accordance with,
or an alternative for, measures prepared in accordance with GAAP
and may be different from Non-GAAP measures used by other
companies.
We consider free cash flow to be a liquidity measure that, when
shown in conjunction with the corresponding GAAP measures, provides
useful information to investors about the amount of cash generated
by the business that, after the acquisition of property, plant and
equipment can be used for strategic opportunities including, among
others, investing in the Company's business, making strategic
acquisitions, strengthening the balance sheet, repaying debt,
paying dividends and repurchasing stock. Free cash flow should not
be construed as an alternative to cash flows from operations or
other cash flow measurements determined in accordance with
GAAP.
|
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SOURCE Western Digital Corp.