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Western Digital® Announces Q2 Revenue Of $3.8 Billion And Non-GAAP Net Income Of $513 Million, Or $2.09 Per Share(1)

January 23, 2013

IRVINE, Calif., Jan. 23, 2013 /PRNewswire-FirstCall/ — Western Digital(®) Corp. (NASDAQ: WDC) today reported revenue of $3.8 billion, hard-drive shipments of 59.2 million and net income of $335 million, or $1.36 per share for its second fiscal quarter ended Dec. 28, 2012. On a non-GAAP basis, net income was $513 million or $2.09 per share.(1) In the year-ago quarter, the company reported revenue of $2.0 billion, net income of $145 million, or $0.61 per share, and shipped 28.5 million hard drives. Non-GAAP net income in the year-ago quarter was $358 million, or $1.51 per share.(2)

The company generated $772 million in cash from operations during the December quarter, ending with total cash and cash equivalents of $3.8 billion. During the quarter, the company utilized $146 million to buy back 4.2 million shares of common stock. On Dec. 3, the company declared a $0.25 per common share dividend, which was paid on Dec. 26.

“We are pleased with our December quarter results, reflecting outstanding execution and value creation by our HGST and WD(®) teams,” said Steve Milligan, president and chief executive officer. “In an environment marked by continued macroeconomic uncertainty, soft PC demand and inventory rebalancing by our customers, we continue to manage our business by focusing on those variables that we control, allowing us to generate better than expected revenue and profitability and strong cash generation.”

The investment community conference call to discuss these results will be broadcast live over the Internet today at 3 p.m. Pacific/6 p.m. Eastern. The live and archived conference call webcast can be accessed online at investor.wdc.com. The telephone replay number is 888-568-0860 in the U.S. or +1-402-998-0245 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 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 the company’s revenue, profitability and cash generation. 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-Q filed with the SEC on Nov. 2, 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 second quarter fiscal 2013 consists of GAAP net income of $335 million plus $88 million for a tax-related matter, $49 million of amortization of intangibles related to the acquisition of HGST and $41 million related to employee termination benefits and other charges. Non-GAAP earnings per share of $2.09 for the second quarter is calculated by using the same 246 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 second quarter fiscal 2012 consists of GAAP net income of $145 million plus $199 million for charges and expenses related to the flooding and $14 million of acquisition-related expenses. Non-GAAP earnings per share of $1.51 for the second 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)

                                                                                                  Dec. 28,                       Jun. 29,
                                                                                                             2012                           2012
                                                                                                             ----                           ----

                                            ASSETS

    Current assets:
                                     Cash and cash
                                     equivalents                                   $3,816                         $3,208
                                     Accounts
                                     receivable, net                       1,732                          2,364
                                    Inventories                            1,204                          1,210
                                    Other                                    423                            359

                                     Total current
                                     assets                                7,175                          7,141
    Property, plant and equipment, net                                                                    3,938                          4,067
    Goodwill                                                                                              1,907                          1,975
    Other intangible assets, net                                                                            709                            799
    Other assets                                                                                            200                            224
                                                                                                            ---                            ---
                                    Total assets                                                        $13,929                        $14,206
                                                                                                        =======                        =======

                           LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities:
                                    Accounts payable                               $2,185                         $2,773
                                    Accrued expenses                         722                            858
                                    Accrued warranty                         131                            171
                                     Current portion of
                                     long-term debt                          288                            230

                                     Total current
                                     liabilities                           3,326                          4,032
    Long-term debt                                                                                        1,840                          1,955
    Other liabilities                                                                                       516                            550
                                                                                                            ---                            ---
                                     Total
                                     liabilities                                    5,682                          6,537
    Total shareholders' equity                                                                            8,247                          7,669
                                                                                                          -----                          -----
                                     Total
                                     liabilities
                                     and
                                     shareholders'
                                     equity                                       $13,929                        $14,206
                                                                                  =======                        =======

                                                                                                              WESTERN DIGITAL CORPORATION

                                                                                                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

                                                                                                             Three Months Ended                    Six Months Ended
                                                                                                             ------------------                    ----------------
                                                                                                                           Dec. 28,                             Dec. 30,                             Dec. 28,                             Dec. 30,
                                                                                                                               2012                                 2011                                 2012                                 2011
                                                                                                                               ----                                 ----                                 ----                                 ----

    Revenue, net                                                                                                             $3,824                               $1,995                               $7,859                               $4,689
    Cost of revenue                                                                                                           2,765                                1,347                                5,607                                3,500
                                                                                                                              -----                                -----                                -----                                -----
                                         Gross profit                                    1,059                                  648                                2,252                                1,189

    Operating expenses:
                                          Research and
                                          development                                      378                                  191                                  774                                  384
                                          Selling, general and
                                          administrative                                  162                                   96                                  341                                  185
                                          Employee termination
                                          benefits and other
                                          charges                                41                  ?                                   67                                    ?
                                          Charges related
                                          to flooding                                                ?                                  199                                    ?                                  199

                                          Total operating
                                          expenses                               581                486                                1,182                                  768
                                                                                 ---                ---                                -----                                  ---
    Operating income                                                                                                            478                                  162                                1,070                                  421
                                          Net interest and
                                          other                                            (10)                                  (2)                                 (24)                                  (3)

    Income before income taxes                                                                                                  468                                  160                                1,046                                  418
                                          Income tax
                                          provision                                        133                                   15                                  192                                   34
    Net income                                                                                                                 $335                                 $145                                 $854                                 $384
                                                                                                                               ====                                 ====                                 ====                                 ====

    Income per common share:
                                         Basic                                                                                $1.38                                $0.62                                $3.50                                $1.64

                                         Diluted                                                                              $1.36                                $0.61                                $3.43                                $1.62

    Weighted average shares outstanding:
                                         Basic                                                                                  242                                  234                                  244                                  234

                                         Diluted                                                                                246                                  237                                  249                                  237

                                                                                      WESTERN DIGITAL CORPORATION

                                                                            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                        (in millions; unaudited)

                                                                       Three Months Ended                 Six Months Ended
                                                                       ------------------                 ----------------
                                                                            Dec. 28,                          Dec. 30,                          Dec. 28,                           Dec. 30,
                                                                                       2012                              2011                               2012                               2011
                                                                                       ----                              ----                               ----                               ----

    Cash flows from operating activities
    Net income                                                                         $335                              $145                               $854                               $384
    Adjustments to reconcile net income to net cash provided by operations:
                      Depreciation and
                      amortization          309               140                               622                               298
                      Stock-based
                      compensation           32                24                                71                                41
                      Deferred income
                      taxes                  80                 9                                68                                18
                      Non-cash portion
                      of employee
                      termination
                      benefits and other
                      charges
                          15                                   ?                                15                                 ?
                      Non-cash portion
                      of charges related
                      to flooding                             ?                               109                                 ?                                109
                      Changes in
                      operating assets
                      and liabilities,
                      net                     1               (49)                               78                              (120)

                      Net cash
                      provided by
                      operating
                      activities            772               378                             1,708                               730
                                            ---               ---                             -----                               ---

    Cash flows from investing activities
    Purchases of property, plant and equipment                                         (246)                             (120)                              (628)                              (253)
    Acquisitions, net of cash acquired                                                  (18)                                ?                                (27)                                 ?
    Purchase of investment                                                              (15)                                ?                                (15)                                 ?
                                                                                        ---                               ---                                ---                                ---
                      Net cash used
                      in investing
                      activities           (279)             (120)                             (670)                             (253)
                                           ----              ----                              ----                              ----

    Cash flows from financing activities
    Employee stock plans, net                                                            53                                22                                113                                 20
    Repurchases of common stock                                                        (146)                                ?                               (364)                                 ?
    Dividends to shareholders                                                          (121)                                ?                               (121)                                 ?
    Repayment of debt                                                                     ?                               (31)                               (58)                               (63)
                                                                                        ---                               ---                                ---                                ---
                      Net cash used
                      in financing
                      activities           (214)               (9)                             (430)                              (43)
                                           ----               ---                              ----                               ---

    Net increase in cash and cash equivalents                                           279                               249                                608                                434
    Cash and cash equivalents, beginning of period                                    3,537                             3,675                              3,208                              3,490
                                                                                      -----                             -----                              -----                              -----
    Cash and cash equivalents, end of period                                         $3,816                            $3,924                             $3,816                             $3,924
                                                                                     ======                            ======                             ======                             ======

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SOURCE Western Digital Corp.


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