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WD® Announces Q2 Revenue of $2.475 Billion and Net Income of $225 Million, or $0.96 Per Share
Jan 18, 2011 (03:01 PM EST)


IRVINE, Calif., Jan. 18, 2011 /PRNewswire-FirstCall/ -- Western Digital Corp. (NYSE: WDC) today reported revenue of $2.475 billion, hard-drive unit shipments of 52.2 million and net income of $225 million, or $0.96 per share, for its second fiscal quarter ended Dec. 31, 2010. In the year-ago quarter, the company reported revenue of $2.619 billion, shipped 49.5 million hard drives, and reported net income and earnings per share of $429 million and $1.85, respectively.

The company generated $505 million in cash from operations during the December quarter, ending with total cash and cash equivalents of $3.1 billion.

“We are pleased to deliver better-than-expected revenues, profitability and gross margin in the December quarter, reflecting solid execution and an improvement in hard drive industry conditions compared with the prior two quarters,” said John Coyne, president and chief executive officer. “The opportunity for profitable growth in our industry remains tremendous and we are committed to improving our financial performance over the longer term. We plan to do so with a continued emphasis on our industry-leading low-cost structure, high quality, highly reliable and highly available products, and a sharp focus on matching production with true customer demand.”

The investment community conference call to discuss these results will be broadcast live over the Internet today at 3 p.m. PST/6 p.m. EST. The call will be accessible live and on an archived basis via the link below. The company is publishing an expanded investor summary sheet today on the investor relations section of its Web site. After the conclusion of today’s webcast conference call, the summary sheet will be updated to reflect the company’s guidance.

Audio webcast:

www.westerndigital.com/investor


Click on “Conference Calls”

Telephone replay:

888-568-0891 (toll free)


+1-402-998-1567 (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 designs and produces reliable, high-performance hard drives and solid state drives that keep users' data accessible and secure from loss. Its advanced technologies are configured into applications for client and enterprise computing, embedded systems and consumer electronics, as well as its own consumer storage and media products.

WD was founded in 1970. The company's storage products are marketed to leading OEMs, 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 opportunities for growth in the industry and WD’s financial performance. 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 continued uncertainty and volatility in 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 data storage 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 Oct. 29, 2010, 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. All other trademarks mentioned herein belong to their respective owners.

WESTERN DIGITAL CORPORATION


CONDENSED CONSOLIDATED BALANCE SHEETS


(in millions; unaudited)










Dec. 31,


Jul. 2,




2010


2010







ASSETS







Current assets:





Cash and cash equivalents

$  3,110


$ 2,734


Accounts receivable, net

1,250


1,256


Inventories

568


560


Other

192


170



Total current assets

5,120


4,720

Property and equipment, net

2,277


2,159

Goodwill

151


146

Other intangible assets, net

79


88

Other assets

216


215



Total assets

$  7,843


$ 7,328













LIABILITIES AND SHAREHOLDERS' EQUITY







Current liabilities:





Accounts payable

$  1,628


$ 1,507


Accrued expenses

262


281


Accrued warranty

135


129


Current portion of long-term debt

119


106



Total current liabilities

2,144


2,023

Long-term debt

231


294

Other liabilities

309


302



Total liabilities

2,684


2,619

Shareholders' equity

5,159


4,709



Total liabilities and shareholders' equity

$  7,843


$ 7,328



WESTERN DIGITAL CORPORATION


CONDENSED CONSOLIDATED STATEMENTS OF INCOME


(in millions, except per share amounts)

(unaudited)
























Three Months Ended


Six Months Ended




Dec. 31,


Jan. 1,


Dec. 31,


Jan. 1,




2010


2010


2010


2010











Revenue, net

$    2,475


$ 2,619


$    4,871


$ 4,827

Cost of revenue

2,000


1,932


3,959


3,626


Gross margin

475


687


912


1,201

Operating expenses:









Research and development

169


154


336


296


Selling, general and administrative

66


60


125


113



Total operating expenses

235


214


461


409

Operating income

240


473


451


792


Net interest and other

(1)


(2)


(1)


(4)

Income before income taxes

239


471


450


788


Income tax provision

14


42


28


71

Net income

$       225


$    429


$       422


$    717











Income per common share:









Basic

$      0.98


$   1.89


$      1.83


$   3.17


Diluted

$      0.96


$   1.85


$      1.80


$   3.10











Weighted average shares outstanding:









Basic

230


227


230


226


Diluted

235


232


235


231



WESTERN DIGITAL CORPORATION


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(in millions; unaudited)
























Three Months Ended


Six Months Ended




Dec. 31,


Jan. 1,


Dec. 31,


Jan. 1,




2010


2010


2010


2010











Cash flows from operating activities








Net income

$    225


$    429


$    422


$    717

Adjustments to reconcile net income to net cash








 provided by operations:









Depreciation and amortization

151


126


301


247


Stock-based compensation

18


13


37


27


Deferred income taxes

1


(5)


1


(5)


Changes in operating assets and liabilities

110


(6)


134


5



Net cash provided by operating activities

505


557


895


991

Cash flows from investing activities








Purchases of property and equipment

(250)


(199)


(450)


(375)

Sales and maturities of investments

-


3


-


3



Net cash used in investing activities

(250)


(196)


(450)


(372)

Cash flows from financing activities








Employee stock plans, net

22


37


31


60

Repurchases of common stock

-


-


(50)


-

Repayment of long-term debt

(25)


(19)


(50)


(38)



Net cash provided by (used in) financing activities

(3)


18


(69)


22

Net increase in cash and cash equivalents

252


379


376


641

Cash and cash equivalents, beginning of period

2,858


2,056


2,734


1,794

Cash and cash equivalents, end of period

$ 3,110


$ 2,435


$ 3,110


$ 2,435



(Logo:  http://photos.prnewswire.com/prnh/20000711/WDCLOGO)

SOURCE Western Digital Corp.