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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 27, 2005
WESTERN DIGITAL CORPORATION
(Exact Name of Registrant as Specified in Charter)
| Delaware | 1-08703 | 33-0956711 | ||
| (State or Other | (Commission | (IRS Employer | ||
| Jurisdiction of | File Number) | Identification No.) | ||
| Incorporation) |
| 20511 Lake Forest Drive, Lake Forest, California | 92630 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (949) 672-7000
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |
| o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||||
| o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||||
| o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||||
| o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | ||||
| Item 2.02. Results of Operations and Financial Condition | ||||||||
| SIGNATURES | ||||||||
| INDEX TO EXHIBITS | ||||||||
| EXHIBIT 99.1 | ||||||||
| EXHIBIT 99.2 | ||||||||
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Item 2.02. Results of Operations and Financial Condition.
On January 27, 2005, Western Digital Corporation (the “Company”) announced financial results for the fiscal quarter ended December 31, 2004. A copy of the press release making this announcement is attached hereto as Exhibit 99.1 and is incorporated herein by reference. A copy of the Company’s Investor Information Summary for the fiscal quarter ended December 31, 2004 is attached hereto as Exhibit 99.2 and is incorporated herein by reference.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| WESTERN DIGITAL CORPORATION |
||||
| By: | /s/ Raymond M. Bukaty | |||
| Raymond M. Bukaty | ||||
| Dated: January 27, 2005 | Senior Vice President, Administration, General Counsel and Secretary |
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Table of Contents
INDEX TO EXHIBITS
| Exhibit | Description | |
99.1
|
Press Release issued by Western Digital Corporation on January 27, 2005 announcing financial results for the second fiscal quarter ended December 31, 2004. | |
99.2
|
Second Quarter Fiscal Year 2005 Western Digital Corporation Investor Information Summary. |
Exhibit 99.1
Company contacts:
Bob Blair
Investor Relations
949.672.7834
robert.blair@wdc.com
Steve Shattuck
Public Relations
949.672.7817
steve.shattuck@wdc.com
FOR IMMEDIATE RELEASE:
WD ANNOUNCES SECOND QUARTER REVENUE OF
$955 MILLION AND NET INCOME OF 26 CENTS PER SHARE
Strong Demand Spurs Unit Shipments of 16.2 Million; Company Generates $143 Million in Cash from Operations
LAKE FOREST, Calif. — Jan. 27, 2005 — Western Digital Corp. (NYSE: WDC) today reported revenues of $955 million on shipments of approximately 16.2 million units, and net income of $56.0 million, or $0.26 per share, for its second fiscal quarter ended Dec. 31, 2004.
The second quarter results represent a significant improvement over the company’s financial performance in its first fiscal quarter ended Oct. 1, 2004, when it reported revenues of $824 million on unit shipments of 14.2 million, and net income of $30.4 million, or $0.14 per share. A year ago in the December 2004 quarter, WD generated revenue of $835 million, shipped approximately 12.7 million units and earned $68.8 million, or $0.32 per share.
The unit volumes for the December quarter reflected strong demand in the desktop PC and personal and digital video recorder markets. The company shipped approximately 1.6 million
-MORE-
WD Announces Second Quarter Revenue of
$955 Million and Net Income of $0.26 Per Share
Page 2
drives for consumer electronics applications, an increase of over 200 percent increase from the year-ago period.
“In addition to the robust market demand, the second quarter results demonstrate the strength of the WD business model and our ongoing operational excellence,” said Matt Massengill, chairman and chief executive officer of Western Digital. The demand for hard drives in all segments was strong, especially in desktop and consumer electronics applications, and WD continued to serve these markets with world-class quality and highly reliable products.
“We expanded our coverage of high-growth markets in the second quarter,” said Massengill, noting that the company shipped in volume its 2.5-inch WD ScorpioÔ drives for mobile computing applications and shipped its new 320 GB WD CaviarÒ hard drive for the high-capacity markets. Additionally, the company shipped more than 4 million Serial ATA hard drives in the quarter. Last week, the company announced its entry into the miniature hard drive market with a 6 GB one-inch hard drive for handheld consumer applications.
From a balance sheet perspective, the company’s cash at the end of the quarter grew to $493 million, an increase of $87 million from the September quarter. The company generated $143 million in cash from operations, and it repurchased approximately 1.0 million shares of common stock for approximately $8 million. Since the inception in May 2004 of the company’s share repurchase program, it has repurchased approximately 5.1 million shares at a total cost of $39.3 million.
-MORE-
WD Announces Second Quarter Revenue of
$955 Million and Net Income of $0.26 Per Share
Page 3
The investment community conference call to discuss these results and the company’s outlook will be broadcast live over the Internet today at 2 p.m. PST/5 p.m. EST and archived at the following link: http://www.westerndigital.com/invest — click on Conference Calls. A telephone replay will also be available at 800-568-5476 (toll-free) or 402-220-2098 (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 close-at-hand and secure from loss.
WD was founded in 1970. The company’s storage products are marketed to leading systems manufacturers and selected resellers 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.
###
Western Digital and WD Caviar are registered trademarks, and WD, the WD logo and WD Scorpio are trademarks, of Western Digital Technologies, Inc. All other trademarks herein are property of their respective owner.
WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts)
(unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| Dec. 31, | Oct. 1, | Dec. 26, | Dec. 31, | Dec. 26, | ||||||||||||||||
| 2004 | 2004 | 2003 | 2004 | 2003 | ||||||||||||||||
Revenue, net |
$ | 954.9 | $ | 823.6 | $ | 834.8 | $ | 1,778.5 | $ | 1,549.0 | ||||||||||
Cost of revenue |
804.7 | 710.5 | 693.0 | 1,515.2 | 1,311.0 | |||||||||||||||
Gross margin |
150.2 | 113.1 | 141.8 | 263.3 | 238.0 | |||||||||||||||
Operating expenses: |
||||||||||||||||||||
Research and development |
59.7 | 54.0 | 44.0 | 113.7 | 107.7 | |||||||||||||||
Selling, general and administrative |
33.9 | 27.9 | 26.5 | 61.8 | 54.1 | |||||||||||||||
Total operating expenses |
93.6 | 81.9 | 70.5 | 175.5 | 161.8 | |||||||||||||||
Operating income |
56.6 | 31.2 | 71.3 | 87.8 | 76.2 | |||||||||||||||
Net interest and other income |
0.8 | — | — | 0.8 | 0.3 | |||||||||||||||
Income before income taxes |
57.4 | 31.2 | 71.3 | 88.6 | 76.5 | |||||||||||||||
Income tax expense |
1.4 | 0.8 | 2.5 | 2.2 | 2.7 | |||||||||||||||
Net income |
$ | 56.0 | $ | 30.4 | $ | 68.8 | $ | 86.4 | $ | 73.8 | ||||||||||
Net income per common share: |
||||||||||||||||||||
Basic |
$ | .27 | $ | .15 | $ | .33 | $ | .42 | $ | .36 | ||||||||||
Diluted |
$ | .26 | $ | .14 | $ | .32 | $ | .41 | $ | .34 | ||||||||||
Common shares used in computing per share amounts: |
||||||||||||||||||||
Basic |
205.1 | 205.2 | 205.4 | 205.1 | 204.8 | |||||||||||||||
Diluted |
213.6 | 212.6 | 217.9 | 213.1 | 216.9 | |||||||||||||||
WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions; unaudited)
| Dec. 31, | Jul. 2, | |||||||
| 2004 | 2004 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 492.5 | $ | 377.8 | ||||
Accounts receivable, net |
390.4 | 313.1 | ||||||
Inventories |
118.3 | 148.6 | ||||||
Other |
17.6 | 17.8 | ||||||
Total current assets |
1,018.8 | 857.3 | ||||||
Property and equipment, net |
330.1 | 274.7 | ||||||
Other assets, net |
19.8 | 27.2 | ||||||
Total assets |
$ | 1,368.7 | $ | 1,159.2 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 521.5 | $ | 434.9 | ||||
Accrued expenses |
118.3 | 90.4 | ||||||
Accrued warranty |
66.5 | 46.4 | ||||||
Current portion of long-term debt |
19.9 | 15.2 | ||||||
Total current liabilities |
726.2 | 586.9 | ||||||
Long-term debt |
42.7 | 52.7 | ||||||
Other liabilities |
31.5 | 32.0 | ||||||
Shareholders’ equity: |
||||||||
Common stock |
2.1 | 2.1 | ||||||
Additional paid-in capital |
662.7 | 668.4 | ||||||
Accumulated deficit |
(96.5 | ) | (182.9 | ) | ||||
Total shareholders’ equity |
568.3 | 487.6 | ||||||
Total liabilities and shareholders’ equity |
$ | 1,368.7 | $ | 1,159.2 | ||||
WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
| Six Months Ended | ||||||||
| Dec. 31, | Dec. 26, | |||||||
| 2004 | 2003 | |||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | 86.4 | $ | 73.8 | ||||
Adjustments to reconcile net income to net cash provided by operating
activities: |
||||||||
Depreciation and amortization |
61.5 | 47.2 | ||||||
In-process research and development expense |
— | 25.6 | ||||||
Changes in operating assets and liabilities |
88.2 | (91.3 | ) | |||||
Net cash provided by operating activities |
236.1 | 55.3 | ||||||
Cash flows from investing activities: |
||||||||
Capital expenditures, net |
(105.5 | ) | (64.1 | ) | ||||
Asset acquisition, net of cash acquired |
— | (94.8 | ) | |||||
Net cash used for investing activities |
(105.5 | ) | (158.9 | ) | ||||
Cash flows from financing activities: |
||||||||
Proceeds from shares issued under employee plans |
17.1 | 15.0 | ||||||
Repurchase of common stock |
(23.3 | ) | — | |||||
Repayment of long-term debt |
(9.7 | ) | — | |||||
Net proceeds from long-term debt |
— | 13.8 | ||||||
Net cash (used for) provided by financing activities |
(15.9 | ) | 28.8 | |||||
Net increase (decrease) in cash and cash equivalents |
114.7 | (74.8 | ) | |||||
Cash and cash equivalents, beginning of period |
377.8 | 393.2 | ||||||
Cash and cash equivalents, end of period |
$ | 492.5 | $ | 318.4 | ||||
Exhibit 99.2
WESTERN DIGITAL CORPORATION
INVESTOR INFORMATION SUMMARY
Q2 FY2005 (All $ amounts in millions)
| Q2 FY04 | Q3 FY04 | Q4 FY04 | Q1 FY05 | Q2 FY05 | |||||||||||||||||||||
REVENUE: |
$ | 835 | $ | 749 | $ | 749 | $ | 824 | $ | 955 | |||||||||||||||
REVENUE BY CHANNEL: |
|||||||||||||||||||||||||
OEM |
51 | % | 49 | % | 53 | % | 59 | % | 58 | % | |||||||||||||||
DISTRIBUTORS |
43 | % | 43 | % | 41 | % | 35 | % | 35 | % | |||||||||||||||
RETAIL |
6 | % | 8 | % | 6 | % | 6 | % | 7 | % | |||||||||||||||
REVENUE BY GEOGRAPHY: |
|||||||||||||||||||||||||
AMERICAS |
41 | % | 42 | % | 44 | % | 40 | % | 38 | % | |||||||||||||||
EUROPE |
31 | % | 30 | % | 27 | % | 30 | % | 32 | % | |||||||||||||||
ASIA |
28 | % | 28 | % | 29 | % | 30 | % | 30 | % | |||||||||||||||
REVENUE CONCENTRATION: |
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10 LARGEST CUSTOMERS |
56 | % | 51 | % | 54 | % | 52 | % | 49 | % | |||||||||||||||
HARD DRIVE UNITS (in millions): |
12.7 | 11.8 | 12.5 | 14.2 | 16.2 | ||||||||||||||||||||
WORLDWIDE HEADCOUNT: |
16,843 | 17,162 | 17,328 | 20,760 | 21,565 | ||||||||||||||||||||
ASSET MANAGEMENT: |
|||||||||||||||||||||||||
DAYS SALES OUTSTANDING |
39 | 37 | 38 | 44 | 37 | ||||||||||||||||||||
INVENTORY DETAIL: |
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RAW MATERIALS |
$ | 19 | $ | 9 | $ | 26 | $ | 11 | $ | 12 | |||||||||||||||
WORK IN PROCESS |
58 | 67 | 52 | 45 | 50 | ||||||||||||||||||||
FINISHED GOODS |
79 | 73 | 71 | 88 | 56 | ||||||||||||||||||||
TOTAL INVENTORY, NET |
$ | 156 | $ | 149 | $ | 149 | $ | 144 | $ | 118 | |||||||||||||||
INVENTORY TURNS |
18 | 17 | 17 | 20 | 27 | ||||||||||||||||||||