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): April 28, 2015
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 April 28, 2015, Western Digital Corporation (“Western Digital”) announced financial results for the third fiscal quarter ended April 3, 2015. 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 Quarterly Fact Sheet for the third fiscal quarter ended April 3, 2015 is attached hereto as Exhibit 99.2 and is incorporated herein by reference.
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, 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 April 28, 2015 announcing financial results for the third fiscal quarter ended April 3, 2015. | |
| 99.2 | Third Quarter Fiscal Year 2015 Western Digital Corporation Quarterly Fact Sheet. | |
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: April 28, 2015 |
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 FINANCIAL RESULTS FOR
THIRD QUARTER FISCAL 2015
IRVINE, Calif. — Apr. 28, 2015 — Western Digital® Corp. (NASDAQ: WDC) today reported revenue of $3.5 billion and net income of $384 million, or $1.63 per share, for its third fiscal quarter ended Apr. 3, 2015. On a non-GAAP basis, net income was $441 million or $1.87 per share. In the year-ago quarter, the company reported revenue of $3.7 billion and net income of $375 million, or $1.55 per share. Non-GAAP net income in the year-ago quarter was $470 million, or $1.94 per share.
The company generated $684 million in cash from operations during the third fiscal quarter, ending with total cash and cash equivalents of $4.8 billion. It utilized $240 million to repurchase 2.2 million shares of common stock. On Feb. 3, the company declared a cash dividend of $0.50 per share of its common stock, which was paid on Apr. 16.
“I am satisfied with our execution and results in light of current PC demand challenges that were largely driven by weak macro-economic conditions,” said Steve Milligan, president and chief executive officer. “We delivered a solidly profitable quarter with continued strong cash generation, improved average selling price and healthy gross margins.
“We continue to carefully balance the management of short term market dynamics with a strong focus on long term value creation. This is reflected in our balanced approach to capital allocation. Fiscal year to date, we returned $1.1 billion to our shareholders in share repurchases and dividends, while continuing to invest in high growth market opportunities.”
Western Digital Announces Financial Results For Third Quarter Fiscal 2015
Page 2
The investment community conference call to discuss these results 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 1-800-925-0240 in the U.S. or +1-402-998-0856 for international callers.
About Western Digital
Founded in 1970, Western Digital Corp. (NASDAQ: WDC), Irvine, Calif., is an industry-leading developer and manufacturer of storage solutions that enable people to create, manage, experience and preserve digital content. Its HGST and WD® subsidiaries are long-time innovators in the storage industry. Western Digital Corporation is responding to changing market needs by providing a full portfolio of compelling, high-quality storage products with effective technology deployment, high efficiency, flexibility and speed. Our products are marketed under the HGST, WD and G-Technology™ brands to OEMs, distributors, resellers, cloud infrastructure providers and consumers. Financial and investor information is available on the company’s Investor Relations website at investor.wdc.com.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning the company’s management of short term market dynamics, its focus on long term value creation, its approach to capital allocation, and its investments. These forward-looking statements are based on management’s current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including volatility in global economic conditions; business conditions and growth in the storage ecosystem; pricing trends and fluctuations in average selling prices; the availability and cost of commodity materials and specialized product components; actions by competitors; unexpected advances in competing technologies; the development and introduction of products based on new technologies and expansion into new data storage markets; and other risks and uncertainties listed in the company’s filings with the Securities and Exchange Commission (the “SEC”), including the company’s Form 10-Q filed with the SEC on Feb. 10, 2015, to which your attention is directed.
Western Digital Announces Financial Results For Third Quarter Fiscal 2015
Page 3
You should not place undue reliance on these forward-looking statements, which speak only as of the date hereof, and the company undertakes no obligation to update these forward-looking statements to reflect new information or events.
###
Western Digital, WD and the WD logo are registered trademarks in the U.S. and other countries. HGST trademarks are intended and authorized for use only in countries and jurisdictions in which HGST has obtained the rights to use, market and advertise the brand. Other marks may be mentioned herein that belong to other companies.
WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions; unaudited)
| Apr. 3, 2015 |
Jun. 27, 2014 |
|||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 4,812 | $ | 4,804 | ||||
| Short-term investments |
228 | 284 | ||||||
| Accounts receivable, net |
1,696 | 1,989 | ||||||
| Inventories |
1,322 | 1,226 | ||||||
| Other current assets |
371 | 417 | ||||||
|
|
|
|
|
|||||
| Total current assets |
8,429 | 8,720 | ||||||
| Property, plant and equipment, net |
3,051 | 3,293 | ||||||
| Goodwill |
2,745 | 2,559 | ||||||
| Other intangible assets, net |
400 | 454 | ||||||
| Other non-current assets |
551 | 473 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 15,176 | $ | 15,499 | ||||
|
|
|
|
|
|||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 2,020 | $ | 1,971 | ||||
| Accrued arbitration award |
— | 758 | ||||||
| Accrued expenses |
503 | 412 | ||||||
| Accrued compensation |
398 | 460 | ||||||
| Accrued warranty |
156 | 119 | ||||||
| Current portion of long-term debt |
141 | 125 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
3,218 | 3,845 | ||||||
| Long-term debt |
2,203 | 2,313 | ||||||
| Other liabilities |
529 | 499 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
5,950 | 6,657 | ||||||
| Total shareholders’ equity |
9,226 | 8,842 | ||||||
|
|
|
|
|
|||||
| Total liabilities and shareholders’ equity |
$ | 15,176 | $ | 15,499 | ||||
|
|
|
|
|
|||||
WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts; unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| Apr. 3, 2015 |
Mar. 28, 2014 |
Apr. 3, 2015 |
Mar. 28, 2014 |
|||||||||||||
| Revenue, net |
$ | 3,550 | $ | 3,703 | $ | 11,381 | $ | 11,479 | ||||||||
| Cost of revenue |
2,518 | 2,627 | 8,090 | 8,148 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross profit |
1,032 | 1,076 | 3,291 | 3,331 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating expenses: |
||||||||||||||||
| Research and development |
402 | 418 | 1,265 | 1,235 | ||||||||||||
| Selling, general and administrative |
199 | 201 | 583 | 559 | ||||||||||||
| Charges related to arbitration award |
— | 13 | 15 | 39 | ||||||||||||
| Employee termination, asset impairment and other charges |
10 | 25 | 72 | 59 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total operating expenses |
611 | 657 | 1,935 | 1,892 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating income |
421 | 419 | 1,356 | 1,439 | ||||||||||||
| Net interest and other |
(9 | ) | (13 | ) | (26 | ) | (34 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income before income taxes |
412 | 406 | 1,330 | 1,405 | ||||||||||||
| Income tax provision |
28 | 31 | 85 | 105 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income |
$ | 384 | $ | 375 | $ | 1,245 | $ | 1,300 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income per common share: |
||||||||||||||||
| Basic |
$ | 1.66 | $ | 1.60 | $ | 5.34 | $ | 5.51 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Diluted |
$ | 1.63 | $ | 1.55 | $ | 5.23 | $ | 5.37 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted average shares outstanding: |
||||||||||||||||
| Basic |
231 | 235 | 233 | 236 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Diluted |
236 | 242 | 238 | 242 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| Apr. 3, 2015 |
Mar. 28, 2014 |
Apr. 3, 2015 |
Mar. 28, 2014 |
|||||||||||||
| Operating Activities |
||||||||||||||||
| Net income |
$ | 384 | $ | 375 | $ | 1,245 | $ | 1,300 | ||||||||
| Adjustments to reconcile net income to net cash provided by operations: |
||||||||||||||||
| Depreciation and amortization |
285 | 307 | 864 | 936 | ||||||||||||
| Stock-based compensation |
37 | 41 | 117 | 125 | ||||||||||||
| Deferred income taxes |
(22 | ) | (27 | ) | 9 | (66 | ) | |||||||||
| Gain from insurance recovery |
— | — | (37 | ) | (65 | ) | ||||||||||
| Loss on disposal of assets |
2 | 4 | 14 | 33 | ||||||||||||
| Non-cash portion of employee termination, asset impairment and other charges |
(7 | ) | 17 | 12 | 26 | |||||||||||
| Other non-cash operating activities, net |
— | 4 | — | 4 | ||||||||||||
| Changes in operating assets and liabilities, net |
5 | (24 | ) | (470 | ) | (189 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net cash provided by operating activities |
684 | 697 | 1,754 | 2,104 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Investing Activities |
||||||||||||||||
| Purchases of property, plant and equipment |
(150 | ) | (161 | ) | (456 | ) | (467 | ) | ||||||||
| Acquisitions, net of cash acquired |
(241 | ) | — | (247 | ) | (823 | ) | |||||||||
| Purchases of investments |
(92 | ) | (470 | ) | (687 | ) | (470 | ) | ||||||||
| Proceeds from sales of investments |
35 | — | 665 | — | ||||||||||||
| Proceeds from sale of property, plant and equipment |
— | — | 7 | — | ||||||||||||
| Other investing activities, net |
(10 | ) | — | 6 | 4 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net cash used in investing activities |
(458 | ) | (631 | ) | (712 | ) | (1,756 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Financing Activities |
||||||||||||||||
| Employee stock plans, net |
48 | 42 | 112 | 139 | ||||||||||||
| Repurchases of common stock |
(240 | ) | (244 | ) | (772 | ) | (544 | ) | ||||||||
| Dividends to shareholders |
(93 | ) | (71 | ) | (280 | ) | (189 | ) | ||||||||
| Proceeds from debt |
— | 2,492 | — | 2,992 | ||||||||||||
| Repayment of debt |
(31 | ) | (2,371 | ) | (94 | ) | (2,486 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net cash used in financing activities |
(316 | ) | (152 | ) | (1,034 | ) | (88 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in cash and cash equivalents |
(90 | ) | (86 | ) | 8 | 260 | ||||||||||
| Cash and cash equivalents, beginning of period |
4,902 | 4,655 | 4,804 | 4,309 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Cash and cash equivalents, end of period |
$ | 4,812 | $ | 4,569 | $ | 4,812 | $ | 4,569 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
WESTERN DIGITAL CORPORATION
GAAP TO NON-GAAP NET INCOME RECONCILIATION
(in millions, except per share amounts; unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| Apr. 3, 2015 |
Mar. 28, 2014 |
Apr. 3, 2015 |
Mar. 28, 2014 |
|||||||||||||
| GAAP net income |
$ | 384 | $ | 375 | $ | 1,245 | $ | 1,300 | ||||||||
| Non-GAAP adjustments: |
||||||||||||||||
| Amortization of intangibles |
44 | 50 | 135 | 148 | ||||||||||||
| Employee termination, asset impairment and other charges |
10 | 25 | 72 | 59 | ||||||||||||
| Charges related to arbitration award |
— | 13 | 15 | 39 | ||||||||||||
| Acquisition-related expense |
3 | — | 3 | 13 | ||||||||||||
| Flood-related insurance recovery |
— | — | (37 | ) | (65 | ) | ||||||||||
| Other |
— | 7 | 51 | 22 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Non-GAAP net income |
$ | 441 | $ | 470 | $ | 1,484 | $ | 1,516 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Diluted net income per common share: |
||||||||||||||||
| GAAP |
$ | 1.63 | $ | 1.55 | $ | 5.23 | $ | 5.37 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Non-GAAP |
$ | 1.87 | $ | 1.94 | $ | 6.24 | $ | 6.26 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted average shares outstanding: |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Diluted |
236 | 242 | 238 | 242 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
The table above sets forth non-GAAP net income and non-GAAP diluted net income per common share. These non-GAAP net income and diluted net income per common share measures exclude amortization of intangibles related to acquisitions, certain employee termination, asset impairment and other charges, certain charges related to an arbitration award and other charges that are unusual, non-recurring or may not be indicative of ongoing operations. The Company believes that non-GAAP net income and non-GAAP earnings per share are useful measures to investors as an alternative method for measuring the Company’s earnings performance and comparing it against prior periods. The presentation of these adjusted amounts vary from numbers presented in accordance with U.S. GAAP and therefore may not be comparable to amounts reported by other companies. The tax effect of the aforementioned items was not material to the condensed consolidated statements of income for the three and nine month periods ended April 3, 2015 and March 28, 2014.
Exhibit 99.2
| Amounts in millions, except |
Q4 FY11 |
Q1 FY12 |
Q2 FY12 |
Q3 FY12 |
Q4 FY12 |
Q1 FY13 |
Q2 FY13 |
Q3 FY13 |
Q4 FY13 |
Q1 FY14 |
Q2 FY14 |
Q3 FY14 |
Q4 FY14 |
Q1 FY15 |
Q2 FY15 |
Q3 FY159 |
Revenue by Channel R4Q Ending Q3 FY15
Revenue by Geography R4Q Ending Q3 FY15
| |||||||||||||||||||||||||||||||||||||||||||||||||
| TAM |
165.8 | 176.3 | 119.1 | 146.4 | 156.7 | 139.1 | 135.8 | 135.9 | 133.3 | 140.2 | 142.2 | 138.1 | 138.0 | 147.3 | 140.8 | 125.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| HDD Share |
32.5 | % | 32.8 | % | 23.9 | % | 30.2 | % | 45.3 | % | 44.9 | % | 43.6 | % | 44.3 | % | 44.9 | % | 44.7 | % | 44.4 | % | 43.8 | % | 45.7 | % | 44.0 | % | 43.4 | % | 43.6 | % | ||||||||||||||||||||||||||||||||||
| Units (HDD)2 |
53.8 | 57.8 | 28.5 | 44.2 | 71.0 | 62.5 | 59.2 | 60.2 | 59.9 | 62.6 | 63.1 | 60.4 | 63.1 | 64.7 | 61.0 | 54.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| ASP (HDD) |
$ | 44 | $ | 46 | $ | 69 | $ | 68 | $ | 65 | $ | 62 | $ | 62 | $ | 61 | $ | 60 | $ | 58 | $ | 60 | $ | 58 | $ | 56 | $ | 58 | $ | 60 | $ | 61 | ||||||||||||||||||||||||||||||||||
| Revenue |
$ | 2,403 | $ | 2,694 | $ | 1,995 | $ | 3,035 | $ | 4,754 | $ | 4,035 | $ | 3,824 | $ | 3,764 | $ | 3,728 | $ | 3,804 | $ | 3,972 | $ | 3,703 | $ | 3,651 | $ | 3,943 | $ | 3,888 | $ | 3,550 | ||||||||||||||||||||||||||||||||||
| Gross Profit |
$ | 469 | $ | 541 | $ | 648 | $ | 977 | $ | 1,472 | $ | 1,193 | $ | 1,059 | $ | 1,061 | $ | 1,050 | $ | 1,099 | $ | 1,156 | $ | 1,076 | $ | 1,029 | $ | 1,149 | $ | 1,110 | $ | 1,032 | ||||||||||||||||||||||||||||||||||
| Gross Margin |
19.5 | % | 20.1 | % | 32.5 | % | 32.2 | % | 31.0 | % | 29.6 | % | 27.7 | % | 28.2 | % | 28.2 | % | 28.9 | % | 29.1 | % | 29.1 | % | 28.2 | % | 29.1 | % | 28.5 | % | 29.1 | % | ||||||||||||||||||||||||||||||||||
| R&D |
$ | 188 | $ | 193 | $ | 191 | $ | 265 | $ | 406 | $ | 396 | $ | 378 | $ | 396 | $ | 402 | $ | 401 | $ | 416 | $ | 418 | $ | 426 | $ | 437 | $ | 426 | $ | 402 | ||||||||||||||||||||||||||||||||||
| SG&A |
77 | 71 | 85 | 122 | 178 | 179 | 162 | 185 | 180 | 132 | 226 | 201 | 202 | 220 | 164 | 199 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other |
32 | 18 | 210 | 48 | 80 | 26 | 41 | 63 | 689 | 24 | 36 | 38 | 49 | 23 | 54 | 10 | ||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||
| Total Operating Expenses |
$ | 297 | $ | 282 | $ | 486 | $ | 435 | $ | 664 | $ | 601 | $ | 581 | $ | 644 | $ | 1,271 | $ | 557 | $ | 678 | $ | 657 | $ | 677 | $ | 680 | $ | 644 | $ | 611 | ||||||||||||||||||||||||||||||||||
| Operating Income (Loss) |
$ | 172 | $ | 259 | $ | 162 | $ | 542 | $ | 808 | $ | 592 | $ | 478 | $ | 417 | $ | (221 | ) | $ | 542 | $ | 478 | $ | 419 | $ | 352 | $ | 469 | $ | 466 | $ | 421 | |||||||||||||||||||||||||||||||||
| Net Income (Loss) |
$ | 158 | $ | 239 | $ | 145 | $ | 483 | $ | 745 | $ | 519 | $ | 335 | $ | 391 | $ | (265 | ) | $ | 495 | $ | 430 | $ | 375 | $ | 317 | $ | 423 | $ | 438 | $ | 384 | |||||||||||||||||||||||||||||||||
| EPS |
$ | 0.67 | $ | 1.01 | $ | 0.61 | $ | 1.96 | $ | 2.87 | $ | 2.06 | $ | 1.36 | $ | 1.60 | $ | (1.12 | ) | $ | 2.05 | $ | 1.77 | $ | 1.55 | $ | 1.32 | $ | 1.76 | $ | 1.84 | $ | 1.63 | |||||||||||||||||||||||||||||||||
| Diluted Shares Outstanding |
237 | 237 | 237 | 246 | 260 | 252 | 246 | 245 | 236 | 242 | 243 | 242 | 241 | 240 | 238 | 236 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP Results |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross Profit10 |
$ | 469 | $ | 541 | $ | 648 | $ | 1,077 | $ | 1,511 | $ | 1,231 | $ | 1,097 | $ | 1,099 | $ | 1,085 | $ | 1,135 | $ | 1,196 | $ | 1,115 | $ | 1,078 | $ | 1,188 | $ | 1,187 | $ | 1,069 | ||||||||||||||||||||||||||||||||||
| Gross Margin10 |
19.5 | % | 20.1 | % | 32.5 | % | 35.5 | % | 31.8 | % | 30.5 | % | 28.7 | % | 29.2 | % | 29.1 | % | 29.8 | % | 30.1 | % | 30.1 | % | 29.5 | % | 30.1 | % | 30.5 | % | 30.1 | % | ||||||||||||||||||||||||||||||||||
| Operating Expenses 10 |
$ | 262 | $ | 261 | $ | 273 | $ | 383 | $ | 572 | $ | 564 | $ | 529 | $ | 559 | $ | 564 | $ | 574 | $ | 616 | $ | 605 | $ | 598 | $ | 638 | $ | 620 | $ | 591 | ||||||||||||||||||||||||||||||||||
| Net Income |
$ | 193 | $ | 260 | $ | 358 | $ | 619 | $ | 872 | $ | 594 | $ | 513 | $ | 514 | $ | 477 | $ | 514 | $ | 532 | $ | 470 | $ | 445 | $ | 504 | $ | 539 | $ | 441 | ||||||||||||||||||||||||||||||||||
| EPS6 |
$ | 0.81 | $ | 1.10 | $ | 1.51 | $ | 2.52 | $ | 3.35 | $ | 2.36 | $ | 2.09 | $ | 2.10 | $ | 1.96 | $ | 2.12 | $ | 2.19 | $ | 1.94 | $ | 1.85 | $ | 2.10 | $ | 2.26 | $ | 1.87 | ||||||||||||||||||||||||||||||||||
| Revenue By Channel |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OEM |
55 | % | 53 | % | 59 | % | 64 | % | 69 | % | 63 | % | 61 | % | 60 | % | 66 | % | 64 | % | 62 | % | 62 | % | 65 | % | 63 | % | 63 | % | 64 | % | ||||||||||||||||||||||||||||||||||
| Distributors |
29 | % | 29 | % | 25 | % | 28 | % | 21 | % | 24 | % | 24 | % | 26 | % | 23 | % | 24 | % | 24 | % | 25 | % | 23 | % | 24 | % | 23 | % | 23 | % | ||||||||||||||||||||||||||||||||||
| Retail |
16 | % | 18 | % | 16 | % | 8 | % | 10 | % | 13 | % | 15 | % | 14 | % | 11 | % | 12 | % | 14 | % | 13 | % | 12 | % | 13 | % | 14 | % | 13 | % | ||||||||||||||||||||||||||||||||||
| Revenue by Geography |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Americas |
20 | % | 19 | % | 22 | % | 21 | % | 27 | % | 23 | % | 27 | % | 27 | % | 28 | % | 26 | % | 25 | % | 25 | % | 24 | % | 27 | % | 27 | % | 29 | % | ||||||||||||||||||||||||||||||||||
| EMEA |
20 | % | 22 | % | 21 | % | 18 | % | 18 | % | 18 | % | 23 | % | 22 | % | 19 | % | 20 | % | 23 | % | 21 | % | 20 | % | 21 | % | 24 | % | 21 | % | ||||||||||||||||||||||||||||||||||
| Asia/ANZ |
60 | % | 59 | % | 57 | % | 61 | % | 55 | % | 59 | % | 50 | % | 51 | % | 53 | % | 54 | % | 52 | % | 54 | % | 56 | % | 52 | % | 49 | % | 50 | % | ||||||||||||||||||||||||||||||||||
| Top 10 Customers Revenue |
53 | % | 49 | % | 51 | % | 53 | % | 53 | % | 44 | % | 45 | % | 45 | % | 48 | % | 48 | % | 42 | % | 44 | % | 45 | % | 45 | % | 44 | % | 43 | % | ||||||||||||||||||||||||||||||||||
| Enterprise SSD Revenue |
$ | — | $ | — | $ | — | $ | 11 | $ | 54 | $ | 70 | $ | 89 | $ | 92 | $ | 104 | $ | 106 | $ | 155 | $ | 134 | $ | 113 | $ | 156 | $ | 187 | $ | 224 | ||||||||||||||||||||||||||||||||||
| Non-PC Revenue12 |
35 | % | 36 | % | 34 | % | 31 | % | 45 | % | 46 | % | 51 | % | 51 | % | 52 | % | 53 | % | 54 | % | 53 | % | 54 | % | 55 | % | 58 | % | 60 | % | ||||||||||||||||||||||||||||||||||
| PC Units5 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notebook |
16.867 | 19.622 | 9.814 | 18.067 | 32.773 | 25.887 | 21.300 | 21.547 | 23.989 | 22.912 | 22.662 | 21.814 | 22.899 | 23.396 | 21.178 | 18.785 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Desktop |
22.348 | 21.588 | 11.391 | 15.975 | 21.211 | 16.819 | 17.717 | 18.383 | 16.185 | 17.307 | 16.825 | 16.635 | 16.182 | 16.320 | 15.375 | 13.523 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-PC Units |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer Electronics4 |
6.459 | 7.188 | 2.352 | 3.643 | 4.155 | 8.019 | 6.452 | 6.517 | 6.544 | 8.474 | 8.794 | 8.573 | 10.906 | 10.485 | 9.295 | 8.610 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Branded |
5.672 | 7.060 | 3.191 | 2.926 | 4.986 | 5.767 | 7.139 | 6.517 | 5.281 | 6.146 | 7.018 | 6.272 | 6.012 | 6.780 | 7.156 | 6.090 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Enterprise |
2.463 | 2.369 | 1.724 | 3.616 | 7.913 | 5.988 | 6.633 | 7.211 | 7.897 | 7.771 | 7.783 | 7.129 | 7.098 | 7.763 | 8.041 | 7.519 | ||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||
| Total HDD |
53.809 | 57.827 | 28.472 | 44.227 | 71.038 | 62.480 | 59.241 | 60.175 | 59.896 | 62.610 | 63.082 | 60.423 | 63.097 | 64.744 | 61.045 | 54.527 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Average GB Shipped |
608 | 634 | 578 | 581 | 668 | 708 | 804 | 805 | 797 | 811 | 874 | 888 | 875 | 1,002 | 1,087 | 1,123 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| EB Shipped |
32.7 | 36.7 | 16.5 | 25.7 | 47.4 | 44.3 | 47.6 | 48.4 | 47.7 | 50.8 | 55.1 | 53.6 | 55.2 | 64.9 | 66.4 | 61.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| R4Q EB Shipped |
117.8 | 128.5 | 114.6 | 111.5 | 126.3 | 133.9 | 165.1 | 187.8 | 188.0 | 194.5 | 202.0 | 207.2 | 214.7 | 228.8 | 240.1 | 247.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Volume and HDD Share2 |
Revenue and Non-GAAP Gross Margin10 | Non-GAAP EPS Analysis | ||
|
|
| ||
Note: Refer to “Non-GAAP Financial Measures” for information about non-GAAP financial measures included in this quarterly fact sheet.
| Balance sheet, cash flows, |
Q4 FY11 |
Q1 FY12 |
Q2 FY12 |
Q3 FY12 |
Q4 FY12 |
Q1 FY13 |
Q2 FY13 |
Q3 FY13 |
Q4 FY13 |
Q1 FY14 |
Q2 FY14 |
Q3 FY14 |
Q4 FY14 |
Q1 FY15 |
Q2 FY15 |
Q3 FY15 |
Business Model (Non-GAAP)
Gross Margin* 27%-32%
Operating Expense* 10%-12%
Operating Income* 15%-22%
Tax 7%-10% of Income Before Tax
Capital Expenditures* 5%-7%
Conversion Cycle 4-8 Days
*Percent of Revenue | |||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and Cash Equivalents |
$ | 3,490 | $ | 3,675 | $ | 3,924 | $ | 3,377 | $ | 3,208 | $ | 3,537 | $ | 3,816 | $ | 4,060 | $ | 4,309 | $ | 4,869 | $ | 4,655 | $ | 4,569 | $ | 4,804 | $ | 5,159 | $ | 4,902 | $ | 4,812 | ||||||||||||||||||||||||||||||||||
| Available-for-Sale (AFS) Securities |
— | — | — | — | — | — | — | — | — | — | — | 470 | 499 | 454 | 465 | 523 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt |
(294 | ) | (263 | ) | (231 | ) | (2,743 | ) | (2,185 | ) | (2,128 | ) | (2,128 | ) | (2,013 | ) | (1,955 | ) | (2,398 | ) | (2,340 | ) | (2,469 | ) | (2,438 | ) | (2,406 | ) | (2,375 | ) | (2,344 | ) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||
| Net Cash, Cash Equivalents & AFS Securities |
$ | 3,196 | $ | 3,412 | $ | 3,693 | $ | 634 | $ | 1,023 | $ | 1,409 | $ | 1,688 | $ | 2,047 | $ | 2,354 | $ | 2,471 | $ | 2,315 | $ | 2,570 | $ | 2,865 | $ | 3,207 | $ | 2,992 | $ | 2,991 | ||||||||||||||||||||||||||||||||||
| Cash Flow From Operations |
$ | 447 | $ | 352 | $ | 378 | $ | 1,208 | $ | 1,128 | $ | 936 | $ | 772 | $ | 727 | $ | 684 | $ | 680 | $ | 727 | $ | 697 | $ | 713 | $ | 827 | $ | 243 | $ | 684 | ||||||||||||||||||||||||||||||||||
| Free Cash Flow |
$ | 294 | $ | 218 | $ | 258 | $ | 1,069 | $ | 804 | $ | 554 | $ | 526 | $ | 539 | $ | 548 | $ | 544 | $ | 557 | $ | 536 | $ | 552 | $ | 667 | $ | 97 | $ | 534 | ||||||||||||||||||||||||||||||||||
| Capital Expenditures |
$ | 153 | $ | 134 | $ | 120 | $ | 139 | $ | 324 | $ | 382 | $ | 246 | $ | 188 | $ | 136 | $ | 136 | $ | 170 | $ | 161 | $ | 161 | $ | 160 | $ | 146 | $ | 150 | ||||||||||||||||||||||||||||||||||
| Depreciation and Amortization |
$ | 150 | $ | 158 | $ | 140 | $ | 188 | $ | 339 | $ | 313 | $ | 309 | $ | 309 | $ | 302 | $ | 312 | $ | 317 | $ | 307 | $ | 308 | $ | 289 | $ | 290 | $ | 285 | ||||||||||||||||||||||||||||||||||
| EBITDA |
$ | 322 | $ | 417 | $ | 302 | $ | 730 | $ | 1,147 | $ | 905 | $ | 787 | $ | 726 | $ | 81 | $ | 854 | $ | 795 | $ | 726 | $ | 660 | $ | 758 | $ | 756 | $ | 706 | ||||||||||||||||||||||||||||||||||
| Accounts Receivable, Net |
$ | 1,206 | $ | 1,356 | $ | 747 | $ | 2,377 | $ | 2,364 | $ | 1,951 | $ | 1,732 | $ | 1,700 | $ | 1,793 | $ | 1,791 | $ | 1,959 | $ | 1,802 | $ | 1,989 | $ | 1,915 | $ | 1,880 | $ | 1,696 | ||||||||||||||||||||||||||||||||||
| Inventory |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Raw Materials |
$ | 172 | $ | 170 | $ | 191 | $ | 329 | $ | 245 | $ | 237 | $ | 193 | $ | 191 | $ | 167 | $ | 208 | $ | 201 | $ | 204 | $ | 168 | $ | 178 | $ | 154 | $ | 173 | ||||||||||||||||||||||||||||||||||
| Work in Process |
263 | 275 | 185 | 667 | 552 | 559 | 581 | 583 | 575 | 579 | 581 | 519 | 493 | 509 | 510 | 498 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Finished Goods |
142 | 200 | 90 | 286 | 413 | 508 | 430 | 423 | 446 | 457 | 511 | 554 | 565 | 585 | 618 | 651 | ||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||
| Total Inventory |
$ | 577 | $ | 645 | $ | 466 | $ | 1,282 | $ | 1,210 | $ | 1,304 | $ | 1,204 | $ | 1,197 | $ | 1,188 | $ | 1,244 | $ | 1,293 | $ | 1,277 | $ | 1,226 | $ | 1,272 | $ | 1,282 | $ | 1,322 | ||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment, Net |
$ | 2,224 | $ | 2,209 | $ | 2,091 | $ | 4,171 | $ | 4,067 | $ | 4,027 | $ | 3,938 | $ | 3,803 | $ | 3,700 | $ | 3,638 | $ | 3,509 | $ | 3,406 | $ | 3,293 | $ | 3,202 | $ | 3,099 | $ | 3,051 | ||||||||||||||||||||||||||||||||||
| Accounts Payable |
$ | 1,545 | $ | 1,708 | $ | 883 | $ | 2,774 | $ | 2,773 | $ | 2,545 | $ | 2,185 | $ | 2,037 | $ | 1,990 | $ | 2,061 | $ | 2,106 | $ | 1,902 | $ | 1,971 | $ | 2,016 | $ | 2,071 | $ | 2,020 | ||||||||||||||||||||||||||||||||||
| Days Sales Outstanding11 |
46 | 46 | 34 | 71 | 45 | 44 | 41 | 41 | 44 | 43 | 45 | 44 | 50 | 48 | 44 | 44 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Days Inventory Outstanding11 |
27 | 27 | 31 | 57 | 34 | 42 | 40 | 40 | 40 | 42 | 42 | 44 | 42 | 45 | 42 | 48 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Days Payables Outstanding11 |
73 | 72 | 60 | 123 | 77 | 82 | 72 | 69 | 67 | 69 | 68 | 65 | 68 | 71 | 68 | 73 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash Conversion Cycle11 |
— | 1 | 5 | 5 | 2 | 4 | 9 | 12 | 17 | 16 | 19 | 23 | 24 | 22 | 18 | 19 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Turns11 |
13 | 13 | 12 | 6 | 11 | 9 | 9 | 9 | 9 | 9 | 9 | 8 | 9 | 8 | 9 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends Paid |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 121 | $ | — | $ | 60 | $ | 59 | $ | 59 | $ | 71 | $ | 70 | $ | 94 | $ | 94 | $ | 93 | ||||||||||||||||||||||||||||||||||
| Shares Repurchased |
— | — | — | — | 16.4 | 5.2 | 4.2 | 5.2 | 4.4 | 2.3 | 2.0 | 2.8 | 3.2 | 2.2 | 3.2 | 2.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares Repurchased |
$ | — | $ | — | $ | — | $ | — | $ | 604 | $ | 218 | $ | 146 | $ | 243 | $ | 235 | $ | 150 | $ | 150 | $ | 244 | $ | 272 | $ | 223 | $ | 309 | $ | 240 | ||||||||||||||||||||||||||||||||||
| Remaining Amount Authorized |
$ | 416 | $ | 416 | $ | 416 | $ | 416 | $ | 1,312 | $ | 2,594 | $ | 2,448 | $ | 2,205 | $ | 1,970 | $ | 1,820 | $ | 1,670 | $ | 1,426 | $ | 1,154 | $ | 931 | $ | 622 | $ | 2,382 | ||||||||||||||||||||||||||||||||||
| R4Q Economic Profit8 |
$ | 92 | $ | 113 | $ | 15 | $ | (83 | ) | $ | 542 | $ | 801 | $ | 976 | $ | 884 | $ | (59 | ) | $ | (176 | ) | $ | (109 | ) | $ | (158 | ) | $ | 415 | $ | 332 | $ | 328 | $ | 320 | |||||||||||||||||||||||||||||
| R4Q ROIC8 |
13.2 | % | 13.6 | % | 11.9 | % | 14.8 | % | 20.4 | % | 21.3 | % | 21.0 | % | 20.0 | % | 10.1 | % | 9.7 | % | 10.5 | % | 10.2 | % | 15.1 | % | 14.2 | % | 14.1 | % | 14.1 | % | ||||||||||||||||||||||||||||||||||
| R4Q ROA8 |
9.2 | % | 9.5 | % | 8.5 | % | 10.5 | % | 14.3 | % | 14.9 | % | 14.7 | % | 14.2 | % | 7.0 | % | 6.7 | % | 7.2 | % | 7.0 | % | 10.6 | % | 10.0 | % | 10.1 | % | 10.2 | % | ||||||||||||||||||||||||||||||||||
| Worldwide Headcount3 |
65,431 | 67,799 | 67,121 | 106,604 | 103,111 | 96,002 | 93,820 | 87,565 | 85,777 | 87,586 | 87,976 | 84,556 | 84,072 | 83,277 | 83,993 | 80,767 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross vs. Net Cash, Cash Equivalents & AFS Securities |
R&D10 and Capital Expenditures | Free Cash Flow | R4Q ROIC & R4Q Economic Profit8 | |||
|
|
|
|
| |||
Note: Refer to “Non-GAAP Financial Measures” for information about non-GAAP financial measures included in this quarterly fact sheet.
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, paying dividends 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 and Non-GAAP Gross Profit: Non-GAAP gross margin is a non-GAAP measure defined as non-GAAP gross profit divided by revenue. Non-GAAP gross profit is a non-GAAP measure defined as gross profit before any charges to cost of goods sold that are unusual, non-recurring, or may not be indicative of ongoing operations. Because we believe some charges may not be indicative of ongoing operations, we believe that non-GAAP gross profit is a useful measure to investors as an alternative method for measuring our operating performance and comparing it against prior periods’ performance.
Non-GAAP Operating Expenses: Non-GAAP operating expenses is a non-GAAP measure defined as operating expenses before any charges that are unusual, non-recurring, or may not be indicative of ongoing operations. Because we believe some charges may not be indicative of ongoing operations, we believe that non-GAAP operating expenses is a useful measure to investors as an alternative method for measuring our expense management and comparing it against prior periods’ performance.
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 charges that are unusual, non-recurring, or may not be indicative of ongoing operations, or any tax impact related to those charges. Because we believe some charges may not be indicative of ongoing operations, we believe that non-GAAP net income and non-GAAP EPS are useful measures to investors as an alternative method for measuring our earnings performance and comparing it against prior periods’ performance.
| In millions, except gross margin and per share amounts |
Q4 FY11 |
Q1 FY12 |
Q2 FY12 |
Q3 FY12 |
Q4 FY12 |
Q1 FY13 |
Q2 FY13 |
Q3 FY13 |
Q4 FY13 |
Q1 FY14 |
Q2 FY14 |
Q3 FY14 |
Q4 FY14 |
Q1 FY15 |
Q2 FY15 |
Q3 FY15 |
||||||||||||||||||||||||||||||||||||||||||||||||
| Reconciliation of Cash Flows from Operations to Free Cash Flow |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash Flows from Operations |
$ | 447 | $ | 352 | $ | 378 | $ | 1,208 | $ | 1,128 | $ | 936 | $ | 772 | $ | 727 | $ | 684 | $ | 680 | $ | 727 | $ | 697 | $ | 713 | $ | 827 | $ | 243 | $ | 684 | ||||||||||||||||||||||||||||||||
| Capital Expenditures |
(153 | ) | (134 | ) | (120 | ) | (139 | ) | (324 | ) | (382 | ) | (246 | ) | (188 | ) | (136 | ) | (136 | ) | (170 | ) | (161 | ) | (161 | ) | (160 | ) | (146 | ) | (150 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
| Free Cash Flow |
$ | 294 | $ | 218 | $ | 258 | $ | 1,069 | $ | 804 | $ | 554 | $ | 526 | $ | 539 | $ | 548 | $ | 544 | $ | 557 | $ | 536 | $ | 552 | $ | 667 | $ | 97 | $ | 534 | ||||||||||||||||||||||||||||||||
| Reconciliation of Net Income to EBITDA |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Income (Loss) |
$ | 158 | $ | 239 | $ | 145 | $ | 483 | $ | 745 | $ | 519 | $ | 335 | $ | 391 | $ | (265 | ) | $ | 495 | $ | 430 | $ | 375 | $ | 317 | $ | 423 | $ | 438 | $ | 384 | |||||||||||||||||||||||||||||||
| Interest |
2 | 1 | 2 | 4 | 7 | 14 | 10 | 11 | 9 | 10 | 11 | 13 | 5 | 9 | 8 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Expense |
12 | 19 | 15 | 55 | 56 | 59 | 133 | 15 | 35 | 37 | 37 | 31 | 30 | 37 | 20 | 28 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation and Amortization |
150 | 158 | 140 | 188 | 339 | 313 | 309 | 309 | 302 | 312 | 317 | 307 | 308 | 289 | 290 | 285 | ||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
| EBITDA |
$ | 322 | $ | 417 | $ | 302 | $ | 730 | $ | 1,147 | $ | 905 | $ | 787 | $ | 726 | $ | 81 | $ | 854 | $ | 795 | $ | 726 | $ | 660 | $ | 758 | $ | 756 | $ | 706 | ||||||||||||||||||||||||||||||||
| Reconciliation of Gross Margin to Non-GAAP Gross Margin & Gross Profit to Non-GAAP Gross Profit |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross Profit10 |
$ | 469 | $ | 541 | $ | 648 | $ | 977 | $ | 1,472 | $ | 1,193 | $ | 1,059 | $ | 1,061 | $ | 1,050 | $ | 1,099 | $ | 1,156 | $ | 1,076 | $ | 1,029 | $ | 1,149 | $ | 1,110 | $ | 1,032 | ||||||||||||||||||||||||||||||||
| Acquisition-Related Fair Value Adjustments |
— | — | — | 91 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Other |
— | — | — | — | — | — | — | — | — | — | — | — | 10 | — | 39 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of Intangibles |
— | — | — | 9 | 39 | 38 | 38 | 38 | 35 | 36 | 40 | 39 | 39 | 39 | 38 | 37 | ||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
| Non-GAAP Gross Profit10 |
$ | 469 | $ | 541 | $ | 648 | $ | 1,077 | $ | 1,511 | $ | 1,231 | $ | 1,097 | $ | 1,099 | $ | 1,085 | $ | 1,135 | $ | 1,196 | $ | 1,115 | $ | 1,078 | $ | 1,188 | $ | 1,187 | $ | 1,069 | ||||||||||||||||||||||||||||||||
| Revenue |
$ | 2,403 | $ | 2,694 | $ | 1,995 | $ | 3,035 | $ | 4,754 | $ | 4,035 | $ | 3,824 | $ | 3,764 | $ | 3,728 | $ | 3,804 | $ | 3,972 | $ | 3,703 | $ | 3,651 | $ | 3,943 | $ | 3,888 | $ | 3,550 | ||||||||||||||||||||||||||||||||
| Gross Margin10 |
19.5 | % | 20.1 | % | 32.5 | % | 32.2 | % | 31.0 | % | 29.6 | % | 27.7 | % | 28.2 | % | 28.2 | % | 28.9 | % | 29.1 | % | 29.1 | % | 28.2 | % | 29.1 | % | 28.5 | % | 29.1 | % | ||||||||||||||||||||||||||||||||
| Non-GAAP Gross Margin10 |
19.5 | % | 20.1 | % | 32.5 | % | 35.5 | % | 31.8 | % | 30.5 | % | 28.7 | % | 29.2 | % | 29.1 | % | 29.8 | % | 30.1 | % | 30.1 | % | 29.5 | % | 30.1 | % | 30.5 | % | 30.1 | % | ||||||||||||||||||||||||||||||||
| Reconciliation of Operating Expenses to Non-GAAP Operating Expenses |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Operating Expenses |
$ | 297 | $ | 282 | $ | 486 | $ | 435 | $ | 664 | $ | 601 | $ | 581 | $ | 644 | $ | 1,271 | $ | 557 | $ | 678 | $ | 657 | $ | 677 | $ | 680 | $ | 644 | $ | 611 | ||||||||||||||||||||||||||||||||
| Less: |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisition-Related Expense |
(10 | ) | (14 | ) | (14 | ) | (34 | ) | — | — | — | — | (7 | ) | (13 | ) | — | — | — | — | — | (3 | ) | |||||||||||||||||||||||||||||||||||||||||
| Litigation |
(25 | ) | (7 | ) | — | — | — | — | — | — | (681 | ) | (13 | ) | (25 | ) | (13 | ) | (13 | ) | (26 | ) | (1 | ) | — | |||||||||||||||||||||||||||||||||||||||
| Charges and Insurance Recoveries Related to Flooding, Net |
— | — | (199 | ) | (15 | ) | — | — | — | — | — | 65 | — | — | — | — | 37 | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of Intangibles |
— | — | — | (3 | ) | (12 | ) | (11 | ) | (11 | ) | (11 | ) | (11 | ) | (11 | ) | (11 | ) | (11 | ) | (8 | ) | (7 | ) | (7 | ) | (7 | ) | |||||||||||||||||||||||||||||||||||
| Restructuring and other |
— | — | — | — | (80 | ) | (26 | ) | (41 | ) | (74 | ) | (8 | ) | (11 | ) | (26 | ) | (28 | ) | (58 | ) | (9 | ) | (53 | ) | (10 | ) | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
| Non-GAAP Operating Expenses |
262 | 261 | 273 | 383 | 572 | 564 | 529 | 559 | 564 | 574 | 616 | 605 | 598 | 638 | 620 | 591 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Reconciliation of Net Income (Loss) to Non-GAAP Net Income |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Income (Loss) |
$ | 158 | $ | 239 | $ | 145 | $ | 483 | $ | 745 | $ | 519 | $ | 335 | $ | 391 | $ | (265 | ) | $ | 495 | $ | 430 | $ | 375 | $ | 317 | $ | 423 | $ | 438 | $ | 384 | |||||||||||||||||||||||||||||||
| Acquisition-Related Expense |
10 | 14 | 14 | 34 | — | — | — | — | 7 | 13 | — | — | — | — | — | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Litigation |
25 | 7 | — | — | — | — | — | — | 681 | 13 | 25 | 13 | 13 | 26 | 23 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Charges and Insurance Recoveries Related to Flooding, Net |
— | — | 199 | 15 | — | — | — | — | — | (65 | ) | — | — | — | — | (37 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Acquisition-Related Fair Value Adjustments |
— | — | — | 91 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of Intangibles |
— | — | — | 12 | 51 | 49 | 49 | 49 | 46 | 47 | 51 | 50 | 47 | 46 | 45 | 44 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring and other |
— | — | — | — | 80 | 26 | 41 | 74 | 8 | 11 | 26 | 28 | 68 | 9 | 70 | 10 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Write-off of debt issuance costs |
— | — | — | — | — | — | — | — | — | — | — | 4 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Tax Impact |
— | — | — | (16 | ) | (4 | ) | — | 88 | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
| Non-GAAP Net Income |
$ | 193 | $ | 260 | $ | 358 | $ | 619 | $ | 872 | $ | 594 | $ | 513 | $ | 514 | $ | 477 | $ | 514 | $ | 532 | $ | 470 | $ | 445 | $ | 504 | $ | 539 | $ | 441 | ||||||||||||||||||||||||||||||||
| EPS |
$ | 0.67 | $ | 1.01 | $ | 0.61 | $ | 1.96 | $ | 2.87 | $ | 2.06 | $ | 1.36 | $ | 1.60 | $ | (1.12 | ) | $ | 2.05 | $ | 1.77 | $ | 1.55 | $ | 1.32 | $ | 1.76 | $ | 1.84 | $ | 1.63 | |||||||||||||||||||||||||||||||
| Non-GAAP EPS |
$ | 0.81 | $ | 1.10 | $ | 1.51 | $ | 2.52 | $ | 3.35 | $ | 2.36 | $ | 2.09 | $ | 2.10 | $ | 1.96 | $ | 2.12 | $ | 2.19 | $ | 1.94 | $ | 1.85 | $ | 2.10 | $ | 2.26 | $ | 1.87 | ||||||||||||||||||||||||||||||||
| Diluted Shares Outstanding |
237 | 237 | 237 | 246 | 260 | 252 | 246 | 245 | 236 | 242 | 243 | 242 | 241 | 240 | 238 | 236 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP Diluted Shares Outstanding6 |
237 | 237 | 237 | 246 | 260 | 252 | 246 | 245 | 243 | 242 | 243 | 242 | 241 | 240 | 238 | 236 | ||||||||||||||||||||||||||||||||||||||||||||||||
Non-GAAP Financial Measures
Economic Profit: Economic profit (EP) is a non-GAAP financial measure defined as net operating profit after taxes less the value of invested capital multiplied by the weighted average cost of capital, where net operating profit after taxes is defined as income from operations minus tax expense and invested capital is defined as the sum of current debt, long-term debt and equity. Management uses EP to evaluate business performance and allocate resources, and it is a component in determining management’s incentive compensation. Management believes EP provides additional perspective to investors about financial returns generated by the business and represents profit generated over and above the cost of capital used by the business to generate that profit.
| In millions |
Q2 FY10 |
Q3 FY10 |
Q4 FY10 |
Q1 FY11 |
Q2 FY11 |
Q3 FY11 |
Q4 FY11 |
Q1 FY12 |
Q2 FY12 |
Q3 FY12 |
Q4 FY12 |
Q1 FY13 |
Q2 FY13 |
Q3 FY13 |
Q4 FY13 |
Q1 FY14 |
Q2 FY14 |
Q3 FY14 |
Q4 FY14 |
Q1 FY15 |
Q2 FY15 |
Q3 FY15 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reconciliation of Operating Income (Loss) to R4Q Economic Profit |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Income (Loss) |
$ | 473 | $ | 441 | $ | 293 | $ | 211 | $ | 240 | $ | 158 | $ | 172 | $ | 259 | $ | 162 | $ | 542 | $ | 808 | $ | 592 | $ | 478 | $ | 417 | $ | (221 | ) | $ | 542 | $ | 478 | $ | 419 | $ | 352 | $ | 469 | $ | 466 | $ | 421 | |||||||||||||||||||||||||||||||||||||||||||
| Income Tax Provision |
(42 | ) | (40 | ) | (27 | ) | (14 | ) | (14 | ) | (13 | ) | (12 | ) | (19 | ) | (15 | ) | (55 | ) | (56 | ) | (59 | ) | (133 | ) | (15 | ) | (35 | ) | (37 | ) | (37 | ) | (31 | ) | (30 | ) | (37 | ) | (20 | ) | (28 | ) | ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||
| Net Operating Profit After Taxes |
431 | 401 | 266 | 197 | 226 | 145 | 160 | 240 | 147 | 487 | 752 | 533 | 345 | 402 | (256 | ) | 505 | 441 | 388 | 322 | 432 | 446 | 393 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| R4Q Net Operating Profit After Taxes |
972 | 1,320 | 1,388 | 1,295 | 1,090 | 834 | 728 | 771 | 692 | 1,034 | 1,626 | 1,919 | 2,117 | 2,032 | 1,024 | 996 | 1,092 | 1,078 | 1,656 | 1,583 | 1,588 | 1,593 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Invested Capital x WACC |
(488 | ) | (534 | ) | (562 | ) | (581 | ) | (606 | ) | (621 | ) | (636 | ) | (658 | ) | (677 | ) | (1,117 | ) | (1,084 | ) | (1,118 | ) | (1,141 | ) | (1,148 | ) | (1,083 | ) | (1,172 | ) | (1,201 | ) | (1,236 | ) | (1,241 | ) | (1,251 | ) | (1,260 | ) | (1,273 | ) | ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||
| R4Q Economic Profit |
$ | 484 | $ | 786 | $ | 826 | $ | 714 | $ | 484 | $ | 213 | $ | 92 | $ | 113 | $ | 15 | $ | (83 | ) | $ | 542 | $ | 801 | $ | 976 | $ | 884 | $ | (59 | ) | $ | (176 | ) | $ | (109 | ) | $ | (158 | ) | $ | 415 | $ | 332 | $ | 328 | $ | 320 | |||||||||||||||||||||||||||||||||||||||
Formulas
Share = Units (HDD) / TAM
ASP = Revenue / Units (HDD)
Free Cash Flow = Cash Flow from Operations – Capital Expenditures
EBITDA = Net Income (Loss) + Interest + 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 Economic Profit = R4Q Net Operating Profit After Taxes – (Invested Capital x WACC)
| • | Invested Capital = Short-term debt + Current portion of long-term debt + Long-term debt + Total shareholders’ equity |
| • | WACC7 = 11% |
R4Q ROIC = R4Q (Net Income (Loss) + Interest Expense) / R4Q Average (Short-term debt + Current portion of long-term debt + Long-term debt + Total shareholders’ equity)
R4Q ROA = R4Q Net Income (Loss) / R4Q Average Total Assets
Footnotes
| 1. | ASP, Revenue by Channel and Revenue by Geography exclude external sales of media/substrates. |
| 2. | Unit volume excludes WD TV Media Players without hard drives, WD Livewire, SSD and media. |
| 3. | Worldwide Headcount excludes temporary and contracted employees. |
| 4. | Consumer Electronics includes gaming. |
| 5. | PC includes shipments to distributors, second/third tier external HDD manufacturers, and white box manufacturers. |
| 6. | Q4 FY13 non-GAAP EPS is calculated using the same number of shares used for Q4 FY13 GAAP EPS plus 7 million dilutive shares. Dilutive shares are not included in the Q4 FY13 GAAP EPS calculation as Q4 FY13 resulted in a net loss. |
| 7. | WACC of 11% is an internal assumption. |
| 8. | Q2 FY12 includes charges related to the flooding. Q4 FY13 includes charges related to the arbitration award. |
| 9. | TAM is preliminary and based on internal information. |
| 10. | Certain FY14 prior quarter amounts have been reclassified from gross profit, R&D and SG&A to the other charges line within operating expenses to conform to the annual presentation of FY14 in Part II, Item 8, Note 18 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K. |
| 11. | Q1 FY15 cash conversion cycle calculated using 98 days due to a 14 week quarter. Q1 FY15 inventory turns calculated using 371 days due to a 53 week year. |
| 12. | Non-PC revenue percentage includes consumer electronics, enterprise applications, branded products, and SSD. |