WD Announces Q2 Revenue of $1.8 Billion and Net Income of $14 Million, or $0.06 Per Share
Posted on: Wednesday, 28 January 2009, 15:15 CST
Non-GAAP Net Income of $123 Million, or $0.55 per share
LAKE FOREST, Calif., Jan. 28 /PRNewswire-FirstCall/ -- Western Digital Corp. (NYSE: WDC) today reported revenue of $1.8 billion, on shipments of approximately 35.5 million units and net income of $14 million, or $0.06 per share, for its fiscal second quarter ended Dec. 26, 2008. The company's results include charges of $113 million associated with the restructuring plan announced on Dec. 17, 2008. Excluding the restructuring charges and the related tax benefit of $4 million, non-GAAP net income was $123 million or $0.55 per share.(1)
In the year-ago quarter, the company reported revenue of $2.2 billion, of which $2.1 billion related to the sale of hard drives. Year-ago unit shipments were 34.2 million and net income was $305 million, or $1.35 per share.
The company shipped 13.8 million 2.5-inch mobile drives and 4.1 million 3.5-inch units for the PVR/DVR market, compared with 8.7 million and 4.1 million units a year ago, respectively. Branded products accounted for 22 percent of hard drive revenue in the December quarter compared with 18 percent in the year-ago quarter.
The company generated $300 million in cash from operations during the December quarter, ending with total cash and cash equivalents of $1.4 billion.
"Against a backdrop of unprecedented global economic turmoil and a rapid intra-quarter fall off in demand for hard drives, WD acted swiftly to align production and operating expenses with significantly lower-than-originally planned unit volumes," said John Coyne, president and chief executive officer. "With a strong balance sheet and competitive cost structure, we plan to continue investing in next-generation product platforms and technologies during this downturn. We are focused on maintaining our leadership in technology deployment, ease-of-use features, and availability of the right products for our diversified customer base. We remain enthused about our long-term prospects as a full-line storage supplier in addressing the demands of both the commercial and consumer markets as the digitization of content continues to grow."
The investment community conference call to discuss these results will be broadcast live over the Internet today at 2 p.m. PST/5 p.m. EST. The call will be accessible live and on an archived basis via the link below:
Audio Webcast: www.westerndigital.com/investor
Click on "Conference Calls"
Telephone Replay: 888-562-6879 (toll-free)
+1-402-220-6534 (international)
About WD
WD, one of the storage industry's pioneers and long-time leaders, provides products and services for people and organizations that collect, manage and use digital information. The company produces reliable, high-performance hard drives that keep users' data accessible and secure from loss. WD applies its storage expertise to consumer products for external, portable and shared storage applications.
WD was founded in 1970. The company's storage products are marketed to leading systems manufacturers, selected resellers and retailers under the Western Digital and WD brand names. Visit the Investor section of the company's Web site (www.westerndigital.com) to access a variety of financial and investor information.
This press release contains forward-looking statements concerning the amount and timing of the expected charges and related tax benefit associated with WD's business restructuring plan, the strength of WD's balance sheet and the competitiveness of its cost structure, WD's investment in next-generation product platforms and technologies, WD's leadership in technology deployment and product features and availability, and WD's prospects as a full-line storage supplier for commercial and consumer markets. The amount of restructuring charges recorded in the December quarter is based on current estimates and assumptions related to, among other things, the fair values of assets that will be disposed. These estimates may change up until the date of actual disposal or completion of the restructuring plan. The foregoing forward-looking statements are based on WD's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements, including: the impact of current negative global economic conditions; supply and demand conditions in the hard drive industry; 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 hard drive markets; business conditions and growth in the various hard drive markets; pricing trends and fluctuations in average selling prices; changes in the availability and cost of commodity materials and specialized product components that WD does not make internally; and other risks and uncertainties listed in WD's recent Form 10-Q filed with the SEC on October 31, 2008, 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 WD 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 of Western Digital Technologies, Inc. in the U.S. and other countries.
(1) Non-GAAP net income consists of GAAP net income of $14 million plus $113 million of restructuring charges less $4 million of tax benefits related to the restructuring charges. Non-GAAP earnings per share of $0.55 is calculated by using the same 224 million diluted shares as is used for GAAP earnings per share.
WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions; unaudited)
Dec. 26, Jun. 27,
2008 2008
------ ------
ASSETS
Current assets:
Cash and cash equivalents $1,376 $1,104
Accounts receivable, net 926 1,010
Inventories 446 456
Other 147 161
------ ------
Total current assets 2,895 2,731
Property and equipment, net 1,620 1,668
Goodwill 116 116
Other intangible assets, net 70 81
Other assets 270 279
------ ------
Total assets $4,971 $4,875
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,075 $1,181
Accrued expenses 243 266
Accrued warranty 94 90
Current portion of long-term debt 60 27
------ ------
Total current liabilities 1,472 1,564
Long-term debt 444 482
Other liabilities 134 133
------ ------
Total liabilities 2,050 2,179
Shareholders' equity 2,921 2,696
------ ------
Total liabilities and shareholders' equity $4,971 $4,875
====== ======
WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
------------------ ----------------
Dec. 26, Dec. 28, Dec. 26, Dec. 28,
2008 2007 2008 2007
------ ------ ------ ------
Revenue, net $1,823 $2,204 $3,933 $3,970
Cost of revenue 1,533 1,691 3,219 3,134
------ ------ ------ ------
Gross margin 290 513 714 836
------ ------ ------ ------
Operating expenses:
Research and
development 119 122 252 213
Selling, general
and administrative 42 59 99 107
Acquired in-process
research and
development - - - 49
Restructuring 113 - 113 -
------ ------ ------ ------
Total operating
expenses 274 181 464 369
------ ------ ------ ------
Operating income 16 332 250 467
Net interest and other (9) (16) (13) (13)
------ ------ ------ ------
Income before
income taxes 7 316 237 454
Income tax provision
(benefit) (7) 11 12 80
------ ------ ------ ------
Net income $14 $305 $225 $374
====== ====== ====== ======
Net income per
common share:
Basic $0.06 $1.39 $1.01 $1.71
====== ====== ====== ======
Diluted $0.06 $1.35 $1.00 $1.66
====== ====== ====== ======
Common shares used in
computing per share
amounts:
Basic 222 220 222 219
====== ====== ====== ======
Diluted 224 226 225 225
====== ====== ====== ======
WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
Three Months Ended Six Months Ended
------------------ ----------------
Dec. 26, Dec. 28, Dec. 26, Dec. 28,
2008 2007 2008 2007
------ ------ ------ ------
Cash flows from operating
activities
Net income $14 $305 $225 $374
Adjustments to reconcile
net income to net cash
provided by operations:
Depreciation and
amortization 122 111 239 189
In-process research and
development - - - 49
Deferred income taxes (7) 2 (7) 62
Stock-based compensation 11 9 21 17
Loss on investments 6 8 9 8
Non-cash portion of
restructuring 80 - 80 -
Changes in operating assets
and liabilities 74 84 34 39
------ ------ ------ ------
Net cash provided by
operating activities 300 519 601 738
------ ------ ------ ------
Cash flows from investing
activities
Acquisitions, net of cash
acquired - (4) - (915)
Capital expenditures (140) (169) (302) (332)
Investments, net - 142 1 207
------ ------ ------ ------
Net cash used in investing
activities (140) (31) (301) (1,040)
------ ------ ------ ------
Cash flows from financing
activities
Acquisition-related debt,
net - (240) - 510
Issuance of common stock
under employee plans, net 10 22 9 32
Repurchase of common stock - - (36) (16)
Tax benefit from employee
stock plans (4) - 4 -
Repayment of long-term debt (3) (4) (5) (7)
------ ------ ------ ------
Net cash provided by (used
in) financing activities 3 (222) (28) 519
------ ------ ------ ------
Net increase in cash and
cash equivalents 163 266 272 217
Cash and cash equivalents,
beginning of period 1,213 651 1,104 700
------ ------ ------ ------
Cash and cash equivalents,
end of period $1,376 $917 $ 1,376 $917
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(Logo: http://www.newscom.com/cgi-bin/prnh/20000711/WDCLOGO)
SOURCE Western Digital Corp.
Source: PR Newswire
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