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Western Digital® Announces Q1 Revenue Of $4 Billion And Non-GAAP Net Income Of $594 Million, Or $2.36 Per Share(1)

October 22, 2012

IRVINE, Calif., Oct. 22, 2012 /PRNewswire/ — Western Digital(®) Corp. (NASDAQ: WDC) today reported revenue of $4.0 billion, hard-drive shipments of 62.5 million and net income of $519 million, or $2.06 per share for its first fiscal quarter ended Sept. 28, 2012. On a non-GAAP basis, net income was $594 million or $2.36 per share.(1) In the year-ago quarter, the company reported revenue of $2.7 billion, net income of $239 million, or $1.01 per share, and shipped 57.8 million hard drives. Non-GAAP net income in the year-ago quarter was $260 million, or $1.10 per share.(2)

The company generated $936 million in cash from operations during the September quarter, ending with total cash and cash equivalents of $3.5 billion. During the quarter, the company utilized $218 million to buy back 5.2 million shares of common stock. On Sept.13, the company declared a $0.25 per common share dividend, which was paid Oct. 15.

“We are pleased to deliver another quarter of strong financial performance, continuing our track record of consistent execution,” said John Coyne, chief executive officer. “While the macroeconomic environment is dampening near term demand, we remain confident in the continued long-term growth in the creation, storage and management of digital content. Western Digital has never been better positioned to address this opportunity, with great people, deep technology, a broad product portfolio and strong customer and supplier relationships.”

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 866-395-1651 in the U.S. or +1-203-369-0471 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(TM) brands. Visit the Investor section of the company’s website (www.westerndigital.com) to access a variety of financial and investor information.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements concerning industry demand and the company’s position in the industry. 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 the impact of continued uncertainty and volatility in global economic conditions; supply and demand conditions in the hard drive industry; uncertainties concerning the availability and cost of commodity materials and specialized product components; actions by competitors; unexpected advances in competing technologies; uncertainties related to the development and introduction of products based on new technologies and expansion into new data storage markets; business conditions and growth in the various hard drive markets; pricing trends and fluctuations in average selling prices; and other risks and uncertainties listed in the company’s filings with the Securities and Exchange Commission (the “SEC”), including the company’s recent Form 10-K filed with the SEC on Aug. 20, 2012, to which your attention is directed. Readers are cautioned not to 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 subsequent events or circumstances.

Western Digital, WD and the WD logo are registered trademarks in the U.S. and other countries. Other marks may be mentioned herein that belong to other companies. ___________________________

(1) Non-GAAP net income for the first quarter 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 employee termination benefits and other charges was not material.

(2) Non-GAAP net income for the first quarter of fiscal 2012 consists of GAAP net income of $239 million plus $21 million of HGST acquisition-related expenses and unrelated litigation accruals. Non-GAAP earnings per share of $1.10 for the first quarter is calculated by using the same 237 million diluted shares as is used for GAAP earnings per share. The tax effect of the acquisition-related expenses and unrelated litigation accruals was not material.


                                                     WESTERN DIGITAL CORPORATION

                                               CONDENSED CONSOLIDATED BALANCE SHEETS

                                                      (in millions; unaudited)

                                                                                     Sept. 28,                       Jun. 29,
                                                                                          2012                           2012
                                                                                          ----                           ----

                                                            ASSETS

    Current assets:
                                       Cash and cash
                                       equivalents                                      $3,537                         $3,208
                                       Accounts
                                       receivable, net                                   1,951                          2,364
                                      Inventories                                        1,304                          1,210
                                      Other                                                394                            359
                                      -----
                                      Total current assets                               7,186                          7,141
    Property, plant and equipment, net                                                   4,027                          4,067
    Goodwill                                                                             1,944                          1,975
    Other intangible assets, net                                                           746                            799
    Other assets                                                                           269                            224
                                                                                           ---                            ---
                                      Total assets                                     $14,172                        $14,206
                                                                                       =======                        =======

                                             LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities:
                                      Accounts payable                                  $2,545                         $2,773
                                      Accrued expenses                                     774                            858
                                      Accrued warranty                                     146                            171
                                       Current portion
                                       of long-term
                                       debt                                                230                            230
                                      --------
                                      Total current liabilities                          3,695                          4,032
    Long-term debt                                                                       1,898                          1,955
    Other liabilities                                                                      542                            550
                                                                                           ---                            ---
                                      Total liabilities                                  6,135                          6,537
    Total shareholders' equity                                                           8,037                          7,669
                                       Total liabilities and
                                       shareholders' equity                            $14,172                        $14,206
                                                                                       =======                        =======

                                                    WESTERN DIGITAL CORPORATION

                                          CONDENSED CONSOLIDATED STATEMENTS OF INCOME

                                              (in millions, except per share amounts)
                                                            (unaudited)

                                                                     Three Months Ended
                                                                     ------------------
                                                                               Sept. 28,                       Sept. 30,
                                                                                    2012                            2011
                                                                                    ----                            ----

    Revenue, net                                                                  $4,035                          $2,694
    Cost of revenue                                                                2,842                           2,153
                                                                                   -----                           -----
                                         Gross margin                              1,193                             541
                                         -------
    Operating expenses:
                                          Research and
                                          development                                396                             193
                                          Selling,
                                          general and
                                          administrative                             179                              89
                                          Employee
                                          termination
                                          benefits and
                                          other charges                               26                               ?
                                         -------
                                         Total operating expenses                    601                             282
                                                                                     ---                             ---
    Operating income                                                                 592                             259
                                          Net interest
                                          and other                                  (14)                             (1)
                                         -------
    Income before income taxes                                                       578                             258
                                          Income tax
                                          provision                                   59                              19
                                         -------
    Net income                                                                      $519                            $239
                                                                                    ====                            ====

    Income per common share:
                                         Basic                                     $2.11                           $1.03
                                         =====
                                         Diluted                                   $2.06                           $1.01
                                         =======

    Weighted average shares outstanding:
                                         Basic                                       246                             233
                                         =====
                                         Diluted                                     252                             237
                                         =======

                                                 WESTERN DIGITAL CORPORATION

                                    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                  (in millions; unaudited)

                                                   Three Months Ended
                                                   ------------------
                                                             Sept. 28,                       Sept. 30,
                                                                  2012                            2011
                                                                  ----                            ----

    Cash flows from operating activities
    Net income                                                    $519                            $239
    Adjustments to reconcile net income to net cash
      provided by operations:
                         Depreciation
                         and
                         amortization                              313                             158
                         Stock-based
                         compensation                               39                              17
                         Deferred
                         income taxes                              (12)                              9
                         Changes in
                         operating
                         assets and
                         liabilities,
                         net                                        77                             (71)
                        -------
                         Net cash provided by
                         operating activities                      936                             352
                                                                   ---                             ---

    Cash flows from investing activities
    Purchases of property, plant and equipment                    (382)                           (134)
    Acquisition                                                     (9)                              ?
                                                                   ---                             ---
                         Cash used in investing
                         activities                               (391)                           (134)
                                                                  ----                            ----

    Cash flows from financing activities
    Employee stock plans, net                                       60                              (2)
    Repurchases of common stock                                   (218)                              ?
    Repayment of debt                                              (58)                            (31)
                                                                   ---                             ---
                         Net cash used in
                         financing activities                     (216)                            (33)
                                                                  ----                             ---
    Net increase in cash and cash equivalents                      329                             185
    Cash and cash equivalents, beginning of
     period                                                      3,208                           3,490
                                                                 -----                           -----
    Cash and cash equivalents, end of period                    $3,537                          $3,675
                                                                ======                          ======

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SOURCE Western Digital Corp.


Source: PR Newswire