UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

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 (Address of Principal Executive Offices)		92630 (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))

 

 

TABLE OF CONTENTS

Item 2.02. Results of Operations and Financial Condition.
SIGNATURES
INDEX TO EXHIBITS
EXHIBIT 99.1
EXHIBIT 99.2

Item 2.02. Results of Operations and Financial Condition.

     On July 28, 2005, Western Digital Corporation (the “Company”) announced financial results for the fourth fiscal quarter and fiscal year ended July 1, 2005. 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 July 1, 2005 is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

     The Company’s press release reports net income and earnings per share on a GAAP and a non-GAAP basis for the fourth fiscal quarter and full fiscal year ended July 1, 2005 and for the full fiscal year ended July 2, 2004. The non-GAAP measures presented in the press release for the fourth fiscal quarter and full fiscal year ended July 1, 2005 exclude a $19 million charge for the settlement of a lawsuit. Including this item, net income on a GAAP basis was $41.2 million, or $.19 per share, for the fourth fiscal quarter ended July 1, 2005 and $198.4 million, or $.91 per share, for the full fiscal year ended July 1, 2005. The non-GAAP measures presented for the full fiscal year ended July 2, 2004 exclude $50.4 million of start-up expenses and other one-time charges related to the Company’s acquisition of the assets of Read-Rite Corp. in July 2003, reduced by $1.3 million, the amount of tax expense that would have been recorded had these charges not been incurred. Including these items, net income on a GAAP basis was $151.3 million, or $.70 per share, for the full fiscal year ended July 2, 2004. The Company believes that the non-GAAP measures presented in the press release are useful to investors in comparing the results of the quarter and the full fiscal year with prior periods because they provide investors with a basis to measure the core operating performance of the Company’s business against prior periods without regard to the settlement charge, start-up expenses and other one-time charges described above. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP. As used herein, “GAAP” refers to accounting principles generally accepted in the United States.

     In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1 and Exhibit 99.2, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

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
				Senior Vice President, Administration, General
				Counsel and Secretary

Dated: July 28, 2005

INDEX TO EXHIBITS

Exhibit		Description
99.1		Press Release issued by Western Digital Corporation on July 28, 2005 announcing financial results for the fourth fiscal quarter and fiscal year ended July 1, 2005.
99.2		Fourth 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:

Strong Demand in PC and Consumer Markets Spurs Solid Financial Performance

LAKE FOREST, Calif. — July 28, 2005 — Western Digital Corp. (NYSE: WDC) today reported revenue of $940 million on shipments of approximately 15.8 million units, and net income of $41.2 million, or $.19 per share for its fourth fiscal quarter ended July 1, 2005, including a previously-announced $19 million charge for settlement of a lawsuit. On a non-GAAP basis, net income was $60.2 million, or $.27 per share. Gross margin for the quarter was 17.0 percent.

     These results represented strong year-over-year performance, including 26 percent unit growth, 26 percent growth in revenue versus $749 million in the year ago period and 39 percent growth in net income over the $29.6 million reported last year. The growth in net income on a non-GAAP basis was 103 percent. A year ago, the company reported earnings of $.14 per share in the fiscal fourth quarter, shipped 12.5 million units, and posted gross margin of 13.5 percent.

WD Announces Fourth Quarter Revenue of $940 Million and
Net Income of $.19 Per Share, Including $19 Million Charge,
or EPS of $.27 on Non-GAAP Basis

Page 2

     From a balance sheet perspective, the company’s cash and short-term investments at the end of the quarter grew to $598 million, an increase of $24 million from the March quarter. The company generated $113 million in cash from operations in the June quarter. It also repurchased 1.7 million shares for approximately $21.7 million in the June quarter. Since the inception of the share repurchase program in May 2004, the company has repurchased 6.7 million shares for approximately $61 million.

     “We continue to increase our presence in markets for hard drives such as notebook PCs, enterprise applications and personal and digital video recorders while maintaining our leadership in the high-volume desktop PC business,” said Matt Massengill, chairman and chief executive officer of Western Digital. “We saw healthy demand in all of our markets in what is typically the slowest quarter of the year for our industry.”

     WD indicated that 23 percent of its Q4 revenue was derived from sources including consumer electronics, enterprise applications, notebook PCs and retail sales. Seventy-seven percent of the company’s fourth quarter revenue came from hard drives configured into desktop PCs. This compares with a mix in the year-ago quarter of 15 percent non-desktop PC revenue, 85 percent desktop PC revenue. In fiscal 2005, WD funded, developed or launched several new products aimed at the consumer electronics segments for personal and digital video recorders (PVR/DVR) and handheld devices and at the markets for notebook PCs, enterprise and retail consumer storage.

WD Announces Fourth Quarter Revenue of $940 Million and
Net Income of $.19 Per Share, Including $19 Million Charge,
or EPS of $.27 on Non-GAAP Basis

Page 3

     For the year ended July 1, 2005, WD reported revenue of $3.6 billion, net income of $198.4 million and diluted earnings per share of $.91, compared to $3.0 billion, $151.3 million and $.70, respectively, for the prior year ended July 2, 2004. The fiscal 2005 results included the $19 million charge for the lawsuit settlement. Excluding this item, net income on a non-GAAP basis would have been $217.4 million, or $1.00 per share. In the year-ago period, net income included $50.4 million of start-up expenses and other one-time charges related to the Read-Rite asset acquisition. Excluding these items and the related tax effects, net income on a non-GAAP basis would have been $200.4 million, or $.92 per share.¹

     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. PDT/5 p.m. EDT and archived at http://www.westerndigital.com/invest -- click on Conference Calls. A telephone replay will also be available at 800.774.9245 (toll-free) or 402.220.0379 (international).

     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 is a registered trademark and WD and the Western Digital logo are trademarks of Western Digital Technologies, Inc. All other trademarks herein are property of their respective owner.

WESTERN DIGITAL CORPORATION

		Three Months Ended												Year Ended
		Jul. 1,				Apr. 1,				Jul. 2,				Jul. 1,				Jul. 2,
		2005				2005				2004				2005				2004
Revenue, net		$	940.4			$	919.9			$	748.8			$	3,638.8			$	3,046.7
Cost of revenue			780.9				752.9				647.9				3,049.0				2,585.1
Gross margin			159.5				167.0				100.9				589.8				461.6
Operating expenses:
Research and development			64.1				60.7				46.8				238.5				201.0
Selling, general and administrative			57.0				35.6				24.3				154.4				105.7
Total operating expenses			121.1				96.3				71.1				392.9				306.7
Operating income			38.4				70.7				29.8				196.9				154.9
Net interest and other income (expense)			2.7				1.9				(0.1	)			5.4				0.3
Income before income taxes			41.1				72.6				29.7				202.3				155.2
Income tax benefit (expense)			0.1				(1.8	)			(0.1	)			(3.9	)			(3.9	)
Net income		$	41.2			$	70.8			$	29.6			$	198.4			$	151.3
Net income per common share:
Basic		$	.19			$	.34			$	.14			$	.96			$	.74
Diluted		$	.19			$	.32			$	.14			$	.91			$	.70
Common shares used in computing per share amounts:
Basic			211.4				208.8				206.5				207.6				205.7
Diluted			222.6				218.7				215.5				216.9				216.7

WESTERN DIGITAL CORPORATION

		Jul. 1,				Jul. 2,
		2005				2004*
ASSETS
Current assets:
Cash and cash equivalents		$	485.2			$	345.5
Short-term investments			113.2				32.3
Accounts receivable, net			402.9				313.1
Inventories			152.9				148.6
Other			27.0				17.8
Total current assets			1,181.2				857.3
Property and equipment, net			395.0				274.7
Other assets, net			12.4				27.2
Total assets		$	1,588.6			$	1,159.2
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	569.1			$	434.9
Accrued expenses			154.1				90.4
Accrued warranty			75.2				46.4
Current portion of long-term debt			20.1				15.2
Total current liabilities			818.5				586.9
Long-term debt			32.6				52.7
Other liabilities			35.4				32.0
Shareholders’ equity:
Common stock			2.1				2.1
Additional paid-in capital			684.5				668.4
Retained earnings (accumulated deficit)			15.5				(182.9	)
Total shareholders’ equity			702.1				487.6
Total liabilities and shareholders’ equity		$	1,588.6			$	1,159.2

WESTERN DIGITAL CORPORATION

		Year Ended
		Jul. 1,				Jul. 2,
		2005*				2004*
Cash flows from operating activities:
Net income		$	198.4			$	151.3
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			134.8				101.7
In-process research and development expense			—				25.6
Changes in operating assets and liabilities			127.5				(88.6	)
Net cash provided by operating activities			460.7				190.0
Cash flows from investing activities:
Capital expenditures, net			(233.4	)			(131.7	)
Short-term investments			(80.9	)			(32.3	)
Asset acquisition, net of cash acquired			—				(94.8	)
Net cash used for investing activities			(314.3	)			(258.8	)
Cash flows from financing activities:
Proceeds from shares issued under employee plans			57.8				23.9
Repurchase of common stock			(45.0	)			(16.0	)
Repayment of long-term debt			(19.5	)			(0.6	)
Net proceeds from long-term debt			—				13.8
Net cash (used for) provided by financing activities			(6.7	)			21.1
Net increase (decrease) in cash and cash equivalents			139.7				(47.7	)
Cash and cash equivalents, beginning of period			345.5				393.2
Cash and cash equivalents, end of period		$	485.2			$	345.5

Exhibit 99.2

WESTERN DIGITAL CORPORATION
INVESTOR INFORMATION SUMMARY
Q4 FY2005 (All $ amounts in millions)