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
Date of Report (Date of earliest event reported): July 25, 2012
Western Digital Corporation
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 001-08703 | 33-0956711 | ||
| (State or Other Jurisdiction of Incorporation or Organization) |
(Commission File Number) |
(I.R.S. Employer Identification No.) | ||
| 3355 Michelson Drive, Suite 100 Irvine, California |
92612 | |||
| (Address of Principal Executive Offices) | (Zip Code) | |||
(949) 672-7000
(Registrant’s Telephone Number, Including Area Code)
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:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 240.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | 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. |
On July 25, 2012, Western Digital Corporation (“Western Digital”) announced financial results for the fourth fiscal quarter and fiscal year ended June 29, 2012. 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 Western Digital’s Investor Information Summary for the fourth quarter ended June 29, 2012 is attached hereto as Exhibit 99.2 and is incorporated herein by reference.
In Western Digital’s press release attached as Exhibit 99.1 hereto, Western Digital reports certain financial information, including net income and earnings per share on both a GAAP and a non-GAAP basis for the fourth fiscal quarter and fiscal year ended June 29, 2012. These non-GAAP measures exclude expenses related to Western Digital’s acquisition of Hitachi Global Storage Technologies; costs recognized upon the sale of inventory that was written-up to fair value and amortization of intangibles related to the acquisition; expenses related to the flooding in Thailand; litigation accruals; restructuring charges; and tax effects related to the aforementioned items. Because management believes these expenses and gains may not be indicative of ongoing operations, management believes that the non-GAAP measures presented in the press release are useful to investors as an alternative method for measuring Western Digital’s operating performance and comparing it against prior periods’ performance.
In accordance with General Instruction B.2 of Form 8-K, the information in this Item 2.02, 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 (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits |
| 99.1 | Press Release issued by Western Digital Corporation on July 25, 2012 announcing financial results for the fourth fiscal quarter and fiscal year ended June 29, 2012. | |
| 99.2 | Fourth Quarter Fiscal Year 2012 Western Digital Corporation Investor Information Summary. | |
2
SIGNATURE
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, thereunto duly authorized.
| Western Digital Corporation | ||||
| (Registrant) | ||||
| By: | /s/ Michael C. Ray | |||
| Date: July 25, 2012 | Michael C. Ray | |||
| Senior Vice President, General Counsel and Secretary | ||||
Exhibit 99.1
Company contacts:
Bob Blair
Western Digital Investor Relations
949.672.7834
robert.blair@wdc.com
Steve Shattuck
Western Digital Public Relations
949.672.7817
steve.shattuck@wdc.com
FOR IMMEDIATE RELEASE:
WESTERN DIGITAL® ANNOUNCES RECORD FINANCIAL RESULTS
Full Year Revenue Grew 31 Percent; Earnings More Than Doubled
IRVINE, Calif. — Jul. 25, 2012 — Western Digital® Corp. (NASDAQ: WDC) today reported revenue of $12.5 billion and net income of $1.6 billion, or $6.58 per share for fiscal year 2012, compared to fiscal 2011 revenue of $9.5 billion and net income of $726 million, or $3.09 per share. On a non-GAAP basis, fiscal 2012 net income was $2.1 billion or $8.61 per share, compared to fiscal 2011 net income of $770 million or $3.28 per share.1 Both the GAAP and non-GAAP fiscal 2012 results include results from the company’s newly acquired HGST subsidiary from the acquisition date of March 8 through the end of fiscal 2012.
For its fourth fiscal quarter ended June 29, 2012, the company reported revenue of $4.8 billion, hard-drive shipments of 71.0 million and net income of $745 million, or $2.87 per share. On a non-GAAP basis, net income was $872 million, or $3.35 per share.2 In the year-ago quarter, the company reported revenue of $2.4 billion, net income of $158 million, or $0.67 per share, and shipped 53.8 million hard drives. Non-GAAP net income in the year-ago quarter was $193 million, or $0.81 per share.3
The company generated $1.1 billion in cash from operations during the June quarter, ending with total cash and cash equivalents of $3.2 billion. During the quarter, the company repaid $558 million of debt and spent $604 million to buy back over 16 million shares of common stock.
“Fiscal 2012 was one of the most challenging and exciting years in our 42-year history,” said John Coyne, chief executive officer. “While responding to two major natural disasters and completing the largest acquisition in the history of the industry, we achieved year-over-year revenue growth of 31 percent and more than doubled earnings per share.
Western Digital Announces Record Financial Results
Page 2
“In the June quarter, demand was in line with our forecast as industry shipments reached 157 million units, bringing total HDD shipments for the year to 599 million units. Our WD and HGST subsidiaries both performed ahead of plan in Q4, delivering great products with consistent execution, resulting in strong revenue growth, gross margin and cash flows.”
The investment community conference call to discuss these results and the company’s September quarter and fiscal year 2013 outlook will be broadcast live over the Internet today at 2 p.m. Pacific/5 p.m. Eastern. The live and archived conference call webcast can be accessed online at investor.wdc.com. The telephone replay number is 800-274-1341 in the U.S. or +1-203-369-3636 for international callers.
About Western Digital
Western Digital, a storage industry pioneer and long-time leader, 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 storage technologies serve a wide range of host applications including client and enterprise computing, embedded systems and consumer electronics, as well as its own storage systems. Its home entertainment products enable rich engagement with stored digital content.
Western Digital was founded in 1970. The company’s products are marketed to leading OEMs, systems manufacturers, selected resellers and retailers under the Western Digital®, WD® and HGST™ brand names. Visit the Investor section of the company’s website (www.westerndigital.com) to access a variety of financial and investor information.
###
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 Announces Financial Results
Page 3
| 1 | Non-GAAP net income for fiscal 2012 consists of GAAP net income of $1.6 billion plus $214 million of charges and expenses related to the flooding net of recoveries, $91 million for costs recognized upon the sale of acquired inventory that was written-up to fair value, $80 million related to restructuring, $63 million for amortization of intangibles related to the acquisition, $62 million of acquisition-related expenses, $7 million of litigation accruals, less $20 million of tax effects related to the aforementioned items. Non-GAAP earnings per share of $8.61 for fiscal 2012 is calculated by using the same 245 million diluted shares as is used for GAAP earnings per share. Non-GAAP net income for fiscal 2011 consists of GAAP net income of $726 million plus $44 million of acquisition-related expenses and unrelated litigation accruals. Non-GAAP earnings per share of $3.28 for fiscal 2011 is calculated by using the same 235 million diluted shares as is used for GAAP earnings per share. |
| 2 | Non-GAAP net income for the fourth quarter fiscal 2012 consists of GAAP net income of $745 million plus $51 million for amortization of intangibles related to the acquisition, $80 million related to restructuring less a $4 million tax effect related to the restructuring. Non-GAAP earnings per share of $3.35 for the fourth quarter is calculated by using the same 260 million diluted shares as is used for GAAP earnings per share. |
| 3 | Non-GAAP net income for the fourth quarter fiscal 2011 consists of GAAP net income of $158 million plus $35 million of acquisition-related expenses and unrelated litigation accruals. Non-GAAP earnings per share of $0.81 for the fourth 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)
| Jun. 29, | Jul. 1, | |||||||
| 2012 | 2011 | |||||||
| ASSETS |
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| Current assets: |
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| Cash and cash equivalents |
$ | 3,208 | $ | 3,490 | ||||
| Accounts receivable, net |
2,364 | 1,206 | ||||||
| Inventories |
1,210 | 577 | ||||||
| Other |
359 | 214 | ||||||
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| Total current assets |
7,141 | 5,487 | ||||||
| Property, plant and equipment, net |
4,067 | 2,224 | ||||||
| Goodwill |
1,975 | 151 | ||||||
| Other intangible assets, net |
799 | 71 | ||||||
| Other assets |
224 | 185 | ||||||
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| Total assets |
$ | 14,206 | $ | 8,118 | ||||
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| LIABILITIES AND SHAREHOLDERS’ EQUITY |
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| Current liabilities: |
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| Accounts payable |
$ | 2,773 | $ | 1,545 | ||||
| Accrued expenses |
858 | 349 | ||||||
| Accrued warranty |
171 | 132 | ||||||
| Current portion of long-term debt |
230 | 144 | ||||||
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| Total current liabilities |
4,032 | 2,170 | ||||||
| Long-term debt |
1,955 | 150 | ||||||
| Other liabilities |
550 | 310 | ||||||
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| Total liabilities |
6,537 | 2,630 | ||||||
| Total shareholders’ equity |
7,669 | 5,488 | ||||||
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| Total liabilities and shareholders’ equity |
$ | 14,206 | $ | 8,118 | ||||
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WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts)
(unaudited)
| Three Months Ended | Years Ended | |||||||||||||||
| Jun. 29, | Jul. 1, | Jun. 29, | Jul. 1, | |||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Revenue, net |
$ | 4,754 | $ | 2,403 | $ | 12,478 | $ | 9,526 | ||||||||
| Cost of revenue |
3,282 | 1,934 | 8,840 | 7,735 | ||||||||||||
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| Gross margin |
1,472 | 469 | 3,638 | 1,791 | ||||||||||||
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| Operating expenses: |
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| Research and development |
406 | 188 | 1,055 | 703 | ||||||||||||
| Selling, general and administrative |
178 | 109 | 518 | 307 | ||||||||||||
| Charges related to flooding, net |
— | — | 214 | — | ||||||||||||
| Restructuring |
80 | — | 80 | — | ||||||||||||
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| Total operating expenses |
664 | 297 | 1,867 | 1,010 | ||||||||||||
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| Operating income |
808 | 172 | 1,771 | 781 | ||||||||||||
| Net interest and other |
(7 | ) | (2 | ) | (14 | ) | (1 | ) | ||||||||
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| Income before income taxes |
801 | 170 | 1,757 | 780 | ||||||||||||
| Income tax provision |
56 | 12 | 145 | 54 | ||||||||||||
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| Net income |
$ | 745 | $ | 158 | $ | 1,612 | $ | 726 | ||||||||
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| Income per common share: |
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| Basic |
$ | 2.93 | $ | 0.68 | $ | 6.69 | $ | 3.14 | ||||||||
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| Diluted |
$ | 2.87 | $ | 0.67 | $ | 6.58 | $ | 3.09 | ||||||||
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| Weighted average shares outstanding: |
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| Basic |
254 | 233 | 241 | 231 | ||||||||||||
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| Diluted |
260 | 237 | 245 | 235 | ||||||||||||
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WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
| Three Months Ended | Years Ended | |||||||||||||||
| Jun. 29, | Jul. 1, | Jun. 29, | Jul. 1, | |||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Cash flows from operating activities |
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| Net income |
$ | 745 | $ | 158 | $ | 1,612 | $ | 726 | ||||||||
| Adjustments to reconcile net income to net cash provided by operations: |
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| Depreciation and amortization |
339 | 150 | 825 | 602 | ||||||||||||
| Stock-based compensation |
31 | 15 | 92 | 69 | ||||||||||||
| Deferred income taxes |
(8 | ) | 16 | 34 | 20 | |||||||||||
| Non-cash portion of charges related to flooding |
— | — | 119 | — | ||||||||||||
| Non-cash portion of restructuring |
56 | — | 56 | — | ||||||||||||
| Changes in operating assets and liabilities, net |
(35 | ) | 108 | 329 | 238 | |||||||||||
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| Net cash provided by operating activities |
1,128 | 447 | 3,067 | 1,655 | ||||||||||||
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| Cash flows from investing activities |
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| Purchases of property, plant and equipment |
(324 | ) | (153 | ) | (717 | ) | (778 | ) | ||||||||
| Acquisitions, net of cash acquired |
15 | (15 | ) | (3,526 | ) | (15 | ) | |||||||||
| Proceeds from the sale of equipment |
76 | — | 76 | — | ||||||||||||
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| Cash used in investing activities |
(233 | ) | (168 | ) | (4,167 | ) | (793 | ) | ||||||||
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| Cash flows from financing activities |
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| Employee stock plans, net |
93 | 12 | 141 | 50 | ||||||||||||
| Repurchases of common stock |
(604 | ) | — | (604 | ) | (50 | ) | |||||||||
| Proceeds from debt, net of issuance costs |
— | — | 2,775 | — | ||||||||||||
| Repayment of assumed debt |
— | — | (585 | ) | — | |||||||||||
| Repayment of debt |
(558 | ) | (31 | ) | (908 | ) | (106 | ) | ||||||||
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| Net cash provided by (used in) financing activities |
(1,069 | ) | (19 | ) | 819 | (106 | ) | |||||||||
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| Effect of exchange rate changes on cash |
5 | — | (1 | ) | — | |||||||||||
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| Net increase (decrease) in cash and cash equivalents |
(169 | ) | 260 | (282 | ) | 756 | ||||||||||
| Cash and cash equivalents, beginning of period |
3,377 | 3,230 | 3,490 | 2,734 | ||||||||||||
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| Cash and cash equivalents, end of period |
$ | 3,208 | $ | 3,490 | $ | 3,208 | $ | 3,490 | ||||||||
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| Page ? 1 Volume and Market Share EPS Analysis Revenue and Gross Margin Note: Refer to "Non-GAAP Financial Measures" for information about non-GAAP financial measures included in this investor summary (r) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY09 FY09 FY09 FY09 FY10 FY10 FY10 FY10 FY11 FY11 FY11 FY11 FY12 FY12 FY12 FY12 TAM 145.8 123.8 111.4 135.4 152.4 160.4 163.3 156.2 164.0 167.5 159.5 165.8 176.3 118.9 146.4 156.7 Share 27.0% 28.6% 28.3% 29.5% 28.9% 30.9% 31.3% 31.8% 30.9% 31.2% 31.2% 32.5% 32.8% 23.9% 30.2% 45.3% Units (HDD) 39.4 35.5 31.6 40.0 44.1 49.5 51.1 49.7 50.7 52.2 49.8 53.8 57.8 28.5 44.2 71.0 ASP (HDD) $53 $51 $50 $48 $49 $52 $51 $47 $46 $47 $45 $44 $46 $69 $68 $65 Revenue $2,109 $1,823 $1,592 $1,928 $2,208 $2,619 $2,641 $2,382 $2,396 $2,475 $2,252 $2,403 $2,694 $1,995 $3,035 $4,754 Gross Margin $424 $290 $253 $370 $514 $687 $665 $535 $437 $475 $410 $469 $541 $648 $977 $1,472 Gross Margin % 20.1% 15.9% 15.9% 19.2% 23.3% 26.2% 25.2% 22.5% 18.2% 19.2% 18.2% 19.5% 20.1% 32.5% 32.2% 31.0% R&D $133 $119 $125 $132 $142 $154 $160 $154 $167 $169 $179 $188 $193 $191 $265 $406 SG&A $57 $42 $49 $52 $53 $60 $64 $61 $59 $66 $63 $77 $71 $85 $122 $178 Other $ - $113 $18 ($23) $ - $ - $ - $27 $ - $ - $10 $32 $18 $210 $48 $80 Total Operating Expenses $190 $274 $192 $161 $195 $214 $224 $242 $226 $235 $252 $297 $282 $486 $435 $664 Operating Income $234 $16 $61 $209 $319 $473 $441 $293 $211 $240 $158 $172 $259 $162 $542 $808 Net Income $211 $14 $50 $196 $288 $429 $400 $265 $197 $225 $146 $158 $239 $145 $483 $745 EPS $0.93 $0.06 $0.22 $0.86 $1.25 $1.85 $1.71 $1.13 $0.84 $0.96 $0.62 $0.67 $1.01 $0.61 $1.96 $2.87 Diluted Shares Outstanding 226 224 226 227 230 232 234 235 234 235 236 237 237 237 246 260 Non-GAAP Results Gross Margin $424 $290 $253 $370 $514 $687 $665 $535 $437 $475 $410 $469 $541 $648 $1,077 $1,511 Net Income $211 $123 $68 $173 $288 $429 $400 $292 $197 $225 $156 $193 $260 $358 $619 $872 EPS $0.93 $0.55 $0.30 $0.76 $1.25 $1.85 $1.71 $1.24 $0.84 $0.96 $0.66 $0.81 $1.10 $1.51 $2.52 $3.35 Top 10 Customers Revenue 51% 49% 47% 52% 56% 55% 51% 52% 50% 48% 49% 53% 49% 51% 53% 53% Revenue by Channel OEM 56% 57% 48% 54% 52% 48% 49% 54% 50% 45% 47% 55% 53% 59% 64% 69% Distributors 26% 21% 30% 29% 31% 30% 33% 29% 32% 33% 33% 29% 29% 25% 28% 21% Retail 18% 22% 22% 17% 17% 22% 18% 17% 18% 22% 20% 16% 18% 16% 8% 10% Revenue by Geography Americas 23% 23% 26% 24% 22% 25% 24% 25% 23% 22% 22% 20% 19% 22% 21% 27% Europe 29% 29% 28% 22% 22% 25% 24% 21% 23% 25% 24% 20% 22% 21% 18% 18% Asia 48% 48% 46% 54% 56% 50% 52% 54% 54% 53% 54% 60% 59% 57% 61% 55% Compute Units Notebook 12.411 11.187 7.932 14.670 16.528 17.735 17.072 16.802 16.582 17.385 16.227 16.867 19.622 9.814 18.067 32.773 Desktop 17.484 14.225 14.659 16.349 18.282 19.290 21.461 20.282 20.918 20.411 20.118 22.348 21.588 11.391 15.975 21.211 Non-Compute Units Consumer Electronics 3.913 4.128 3.487 3.666 3.064 4.083 4.643 5.306 5.239 4.709 4.765 6.459 7.188 2.352 3.643 4.155 Branded 4.396 4.918 4.512 3.994 4.539 6.219 5.565 5.005 5.678 7.427 6.404 5.672 7.060 3.191 2.926 4.986 Enterprise Units 1.203 1.005 0.973 1.308 1.669 2.170 2.356 2.346 2.319 2.284 2.318 2.463 2.369 1.724 3.616 7.913 Total HDD Units 39.407 35.463 31.563 39.987 44.082 49.497 51.097 49.741 50.736 52.216 49.832 53.809 57.827 28.472 44.227 71.038 Amounts in millions; except per share amounts, ASP, percentages. Revenue by Geography Fiscal Year 2009 Revenue by Geography Fiscal Year 2012 Asia 58% Europe 19% Americas 23% Asia 49% Europe 27% Americas 24% Note: Q2'09 includes restructuring charge of $113M. Q2'12 and Q3'12 guidance excludes charges related to the flooding and acquisition-related expenses. Q4'12 excludes restructuring charges of $80M. |
| Page ? 2 (r) Free Cash Flow R4Q Return on Invested Capital R&D and Capital Expenditures Gross vs. Net Cash & Cash Equivalents Business Model (to be updated on Investor Day) Gross Margin 18%-23% Operating Expense 9%-10% Operating Income 8%-14% Tax 6%-9% of Income Before Tax Capital Expenditures 7%-8% Inventory Turns 12-16 Turns Conversion Cycle 4-8 Days Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY09 FY09 FY09 FY09 FY10 FY10 FY10 FY10 FY11 FY11 FY11 FY11 FY12 FY12 FY12 FY12 Cash and Cash Equivalents $1,213 $1,376 $1,579 $1,794 $2,056 $2,435 $2,826 $2,734 $2,858 $3,110 $3,230 $3,490 $3,675 $3,924 $3,377 $3,208 Debt $507 $504 $502 $482 $463 $444 $425 $400 $375 $350 $325 $294 $263 $231 $2,743 $2,185 Net Cash and Cash Equivalents $706 $872 $1,077 $1,312 $1,593 $1,991 $2,401 $2,334 $2,483 $2,760 $2,905 $3,196 $3,412 $3,693 $634 $1,023 Cash Flow From Operations $301 $300 $355 $349 $434 $557 $588 $363 $390 $505 $313 $447 $352 $378 $1,208 $1,128 Free Cash Flow $139 $160 $249 $238 $258 $358 $411 $178 $190 $255 $138 $294 $218 $258 $1,069 $804 Capital Expenditures $162 $140 $106 $111 $176 $199 $177 $185 $200 $250 $175 $153 $134 $120 $139 $324 Depreciation and Amortization $117 $122 $119 $122 $121 $126 $128 $134 $150 $151 $151 $150 $158 $140 $188 $339 EBITDA $351 $138 $180 $331 $440 $599 $569 $427 $361 $391 $309 $322 $417 $302 $730 $1,147 Accounts Receivable, Net $1,082 $926 $824 $926 $1,131 $1,365 $1,257 $1,256 $1,325 $1,250 $1,171 $1,206 $1,356 $747 $2,377 $2,364 Inventory Raw Materials $129 $124 $104 $97 $96 $102 $115 $159 $155 $141 $151 $172 $170 $191 $329 $245 Work in Process $168 $159 $152 $154 $173 $212 $254 $255 $266 $274 $260 $263 $275 $185 $667 $552 Finished Goods $180 $163 $129 $125 $126 $139 $138 $146 $140 $153 $163 $142 $200 $90 $286 $413 Inventory, Net $477 $446 $385 $376 $395 $453 $507 $560 $561 $568 $574 $577 $645 $466 $1,282 $1,210 Property, Plant and Equipment, Net $1,674 $1,620 $1,570 $1,584 $1,625 $1,696 $1,756 $2,159 $2,245 $2,277 $2,249 $2,224 $2,209 $2,091 $4,171 $4,062 Accounts Payable $1,215 $1,075 $1,001 $1,101 $1,342 $1,507 $1,508 $1,507 $1,703 $1,628 $1,486 $1,545 $1,708 $883 $2,774 $2,773 Days Sales Outstanding 47 46 47 47 47 47 43 48 50 46 47 46 46 34 71 45 Days Inventory Outstanding 26 27 26 24 21 21 23 28 26 26 28 27 27 31 57 34 Days Payables Outstanding 66 64 68 69 72 71 69 74 79 74 73 73 72 60 123 77 Cash Conversion Cycle 7 9 5 2 (4) (3) (3) 2 (3) (2) 2 - 1 5 5 2 Inventory Turns 14 14 14 15 17 17 16 13 14 14 13 13 13 12 6 11 Shares Repurchased 1.2 - - - - - - - 1.8 - - - - - - 16.4 Shares Repurchased $ $36 $ - $ - $ - $ - $ - $ - $ - $50 $ - $ - $ - $ - $ - $ - $604 Remaining Amount Authorized $466 $466 $466 $466 $466 $466 $466 $466 $416 $416 $416 $416 $416 $416 $416 $1,312 R4Q ROIC 33.5% 22.9% 14.9% 13.9% 15.3% 24.9% 31.2% 30.2% 26.4% 21.1% 15.6% 13.2% 13.6% 11.9% 14.8% 20.4% R4Q ROA 21.1% 14.7% 9.8% 9.2% 10.4% 17.0% 21.2% 20.7% 18.1% 14.6% 10.9% 9.2% 9.5% 8.5% 10.5% 14.3% Worldwide Headcount 51,409 50,838 43,898 45,991 52,208 55,128 61,803 62,500 62,817 62,991 61,349 65,431 67,799 67,121 106,604 103,111 Balance sheet, cash flows, earnings and share repurchase amounts in millions Note: Refer to "Non-GAAP Financial Measures" for information about non-GAAP financial measures included in this investor summary |
| Page ? 3 (r) Non-GAAP Financial Measures Free Cash Flow: Free cash flow is a non-GAAP financial measure defined as cash flows from operations less capital expenditures. We consider free cash flow to be useful as an indicator of our overall liquidity, as the amount of free cash flow generated in any period is representative of cash that is available for strategic opportunities including, among others, investing in the Company's business, making strategic acquisitions, strengthening the balance sheet, repaying debt and repurchasing stock. We also believe that free cash flow is one of several benchmarks used by investors for comparison of our liquidity with other companies in our industry, although our measure of free cash flow may not be directly comparable to similar measures reported by other companies. Free cash flow should not be construed as an alternative to cash flows from operations or other cash flow measurements determined in accordance with GAAP. EBITDA: EBITDA is a non-GAAP financial measure defined as net income before interest, income tax expense, depreciation and amortization. We include information concerning EBITDA because we believe it is a useful measure to evaluate our operating performance. As a measure of our operating performance, we believe EBITDA provides a measure of operating results unaffected by differences in capital structures, capital investment cycles and ages of related assets among otherwise comparable companies. While EBITDA is a relevant and widely used measure of operating performance, it does not represent net income as defined by GAAP and it should not be considered as an alternative to that measure in evaluating operating performance. Non-GAAP Gross Margin: Non-GAAP gross margin is a non-GAAP measure defined as gross margin before any unusual or non-recurring charges to cost of goods sold. For Q3 FY12, non-GAAP gross margin excludes costs recognized upon the sale of inventory that was written-up to fair value in connection with the HGST acquisition. Because we believe these costs may not be indicative of ongoing operations, we believe that non-GAAP gross margin is a useful measure to investors as an alternative method for measuring our operating performance and comparing it against prior periods' performance. |
| Page ? 4 (r) Non-GAAP Financial Measures Non-GAAP Net Income and non-GAAP EPS: Non-GAAP net income and non-GAAP EPS are non-GAAP measures defined as net income and EPS, respectively, before any unusual or non-recurring charges or any tax impact related to those charges. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY09 FY09 FY09 FY09 FY10 FY10 FY10 FY10 FY11 FY11 FY11 FY11 FY12 FY12 FY12 FY12 Reconciliation of Net Income to Non-GAAP Net Income Net Income $211 $14 $50 $196 $288 $429 $400 $265 $197 $225 $146 $158 $239 $145 $483 $745 Acquisition-Related Expense ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ 10 10 14 14 34 ^ Litigation Accruals ^ ^ ^ ^ ^ ^ ^ 27 ^ ^ ^ 25 7 ^ ^ ^ Charges Related to Flooding, Net of Recoveries ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ 199 15 ^ In-Process Research and Development Charge ^ ^ 14 ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ Acquisition-Related Adjustments to Fair Value of Inventory / Cost of Revenue ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ 91 ^ Amortization of Newly Acquired Intangible Assets ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ 12 51 Restructuring ^ 113 4 (23) ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ 80 Tax Impact ^ (4) ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ (16) (4) Non-GAAP Net Income $211 $123 $68 $173 $288 $429 $400 $292 $197 $225 $156 $193 $260 $358 $619 $872 EPS $0.93 $0.06 $0.22 $0.86 $1.25 $1.85 $1.71 $1.13 $0.84 $0.96 $0.62 $0.67 $1.01 $0.61 $1.96 $2.87 Non-GAAP EPS $0.93 $0.55 $0.30 $0.76 $1.25 $1.85 $1.71 $1.24 $0.84 $0.96 $0.66 $0.81 $1.10 $1.51 $2.52 $3.35 Diluted Shares Outstanding 226 224 226 227 230 232 234 235 234 235 236 237 237 237 246 260 |
| Page ? 5 Footnotes Q1 FY11 ASP, Revenue by Channel and Revenue by Geography exclude external sales of media/substrates Unit volume excludes WD TV Media Players without hard drives, WD Livewire, SSD and media Worldwide Headcount excludes temporary employees Consumer Electronics includes gaming Both the GAAP and non-GAAP results include the results of the newly acquired HGST subsidiary from the acquisition date of March 8, 2012 (r) Formulas Share = Units / TAM ASP = Revenue / Units Free Cash Flow = Cash Flow from Operations - Capital Expenditures EBITDA = Net income + Interest Expense + Income Tax Expense + Depreciation and Amortization Days Sales Outstanding (DSO) = Accounts Receivable / (Revenue / 91 days) Days Inventory Outstanding (DIO) = Inventory / (Cost of Revenue / 91 days) Days Payables Outstanding (DPO) = Accounts Payable / (Cost of Revenue / 91 days) Cash Conversion Cycle = DSO + DIO - DPO Inventory Turns = 364 days / DIO R4Q ROIC = R4Q (Net Income from Continuing Operations + Interest Expense) / R4Q Average (Equity + Debt) R4Q ROA = R4Q Net Income from Continuing Operations / R4Q Average Total Assets |