News Summary
- Third quarter revenue was $2.8 billion, at the high end of the
guidance range.
- Third quarter GAAP earnings per share (EPS) was $(1.82) and
Non-GAAP EPS was $(1.37), which includes $200 million of
underutilization related charges in Flash and HDD.
- Third quarter GAAP operating loss was $472 million and Non-GAAP
operating loss was $304 million.
- Expect fiscal fourth quarter 2023 revenue to be in the range of
$2.40 billion to $2.60 billion.
- Expect Non-GAAP EPS in the range of $(2.20) to $(1.90) which
includes $220 to $240 million of underutilization charges in Flash
and HDD.
Western Digital Corp. (Nasdaq: WDC) today reported fiscal third
quarter 2023 financial results.
“Over the last several years, our team has focused on enhancing
business agility and delivering a range of innovative,
industry-leading products that address the increasing data storage
demands of our customers,” said David Goeckeler, Western Digital
CEO. “The groundwork we laid, combined with the actions we have
taken since the beginning of this fiscal year to right-size and
refocus our businesses, have enabled us to navigate a dynamic
environment. I am pleased that we delivered non-GAAP gross margin
at the higher end of our guidance range due to strong execution
across both our HDD and Flash businesses.”
Q3 2023 Financial Highlights
GAAP
Non-GAAP
Q3 2023
Q2 2023
Q/Q
Q3 2023
Q2 2023
Q/Q
Revenue ($M)
$2,803
$3,107
down 10%
$2,803
$3,107
down 10%
Gross Margin
10.2%
17.0%
down 6.8 ppt
10.6%
17.4%
down 6.8 ppt
Operating Expenses ($M)
$758
$849
down 11%
$602
$659
down 9%
Operating Loss ($M)
$(472)
$(321)
up 47%
$(304)
$(119)
*
Net Loss ($M)
$(572)
$(446)
up 28%
$(427)
$(135)
*
Earnings Per Share
$(1.82)
$(1.40)
up 30%
$(1.37)
$(0.42)
*
GAAP
Non-GAAP
Q3 2023
Q3 2022
Y/Y
Q3 2023
Q3 2022
Y/Y
Revenue ($M)
$2,803
$4,381
down 36%
$2,803
$4,381
down 36%
Gross Margin
10.2%
27.0%
down 16.8 ppt
10.6%
31.7%
down 21.1 ppt
Operating Expenses ($M)
$758
$857
down 12%
$602
$740
down 19%
Operating Income (Loss) ($M)
$(472)
$324
*
$(304)
$650
*
Net Income (Loss) ($M)
$(572)
$25
*
$(427)
$521
*
Earnings Per Share
$(1.82)
$0.08
*
$(1.37)
$1.65
*
* not a meaningful figure
The company had an operating cash outflow of $381 million and
ended the quarter with $2.22 billion of total cash and cash
equivalents.
Additional details can be found within the company’s earnings
presentation, which is accessible online at investor.wdc.com.
End Market Summary
Revenue ($M)
Q3 2023
Q2 2023
Q/Q
Q3 2022
Y/Y
Cloud
$1,205
$1,224
down 2%
$1,774
down 32%
Client
975
1,089
down 10%
1,732
down 44%
Consumer
623
794
down 22%
875
down 29%
Total Revenue
$2,803
$3,107
down 10%
$4,381
down 36%
In the fiscal third quarter:
- Cloud represented 43% of total revenue. Sequentially, an
increase in capacity enterprise drive shipments was offset by a
decrease in flash shipments. The year-over-year decline was
primarily due to a decline in shipments of both hard drive and
flash products, as well as price decreases in Flash.
- Client represented 35% of total revenue. On both a sequential
and year-over-year basis, the decrease was driven by price declines
across our flash products and a lower client SSD and hard drive
shipments for PC applications.
- Consumer represented 22% of total revenue. Sequentially, the
decrease was due to a seasonal decline in shipments of both retail
hard drive and flash products, as well as price declines in retail
Flash. The year-over-year decrease was driven by lower retail hard
drive shipments and price declines in Flash.
Business Outlook for Fiscal Fourth Quarter of 2023
Three Months Ending
June 30, 2023
GAAP(1)
Non-GAAP(1)
Revenue ($B)
$2.40 - $2.60
$2.40 - $2.60
Gross margin
2.4% - 4.4%
3.0% - 5.0%
Operating expenses ($M)
$730 - $750
$580 - $600
Interest and other expense, net ($M)
~$90
~$90
Income tax expense ($M)(2)
N/A
$60 - $70
Diluted earnings per share
N/A
$(2.20) - $(1.90)
Diluted shares outstanding (in
millions)
~321
~321
_______________________
(1) Non-GAAP gross margin guidance excludes stock-based
compensation expense of approximately $10 million to $15 million.
The company’s Non-GAAP operating expenses guidance excludes
amortization of acquired intangible assets, stock-based
compensation expense, employee termination, asset impairment and
other charges, and expenses related to strategic review, totaling
approximately $140 million to $160 million. In the aggregate,
Non-GAAP diluted earnings per share guidance excludes these items
totaling $150 million to $175 million. The timing and amount of
these charges excluded from Non-GAAP gross margin, Non-GAAP
operating expenses, and Non-GAAP diluted earnings per share cannot
be further allocated or quantified with certainty. Additionally,
the timing and amount of additional charges the company excludes
from its Non-GAAP income tax expense and Non-GAAP diluted earnings
per share are dependent on the timing and determination of certain
actions and cannot be reasonably predicted. Accordingly, full
reconciliations of Non-GAAP gross margin, Non-GAAP operating
expenses, Non-GAAP income tax expense and Non-GAAP diluted earnings
per share to the most directly comparable GAAP financial measures
(GAAP gross profit, GAAP operating expenses, income tax expense and
diluted earnings per share, respectively) are not available without
unreasonable effort.
(2) The Non-GAAP income tax expense is determined based on a
percentage of Non-GAAP pre-tax income or loss. Our estimated
Non-GAAP tax dollars may differ from our GAAP tax dollars (i) due
to differences in the tax treatment of items excluded from our
Non-GAAP net income; (ii) the fact that our GAAP income tax expense
or benefit recorded in any interim period is based on an estimated
forecasted GAAP tax rate for the full year, excluding loss
jurisdictions; and (iii) because our GAAP taxes recorded in any
interim period are dependent on the timing and determination of
certain GAAP operating expenses.
Investor Communications
The investment community conference call to discuss these
results and the company’s business outlook for the fiscal fourth
quarter of 2023 will be broadcast live online today at 1:30 p.m.
Pacific/4:30 p.m. Eastern. The live and archived conference
call/webcast and the earnings presentation can be accessed online
at investor.wdc.com.
About Western Digital
Western Digital is on a mission to unlock the potential of data
by harnessing the possibility to use it. With Flash and HDD
franchises, underpinned by advancements in storage technologies, we
create breakthrough innovations and powerful data storage solutions
that enable the world to actualize its aspirations. Core to our
values, we recognize the urgency to combat climate change and have
committed to ambitious carbon reduction goals approved by the
Science Based Targets initiative. Learn more about Western Digital
and the Western Digital®, SanDisk® and WD® brands at
www.westerndigital.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of federal securities laws, including statements
regarding expectations for the company’s business outlook and
financial performance for the fiscal fourth quarter of 2023; the
company's market position; overall market conditions; demand
trends; product innovations and cost reductions. 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. The preliminary
financial results for the company’s fiscal third quarter ended
March 31, 2023 included in this press release represent the most
current information available to management. The company’s actual
results when disclosed in its Form 10-Q may differ from these
preliminary results as a result of the completion of the company’s
financial closing procedures; final adjustments; completion of the
review by the company’s independent registered accounting firm; and
other developments that may arise between now and the disclosure of
the final results. Other risks and uncertainties that could cause
actual results to differ materially from those expressed or implied
in the forward-looking statements include: volatility in global
economic conditions; future responses to and effects of the
COVID-19 pandemic or other similar global health crises; impact of
business and market conditions; the outcome and impact of our
ongoing strategic review, including with respect to customer and
supplier relationships, regulatory and contractual restrictions,
stock price volatility and the diversion of management’s attention
from ongoing business operations and opportunities; impact of
competitive products and pricing; our development and introduction
of products based on new technologies and expansion into new data
storage markets; risks associated with cost saving initiatives,
restructurings, acquisitions, divestitures, mergers, joint ventures
and our strategic relationships; difficulties or delays in
manufacturing or other supply chain disruptions; hiring and
retention of key employees; our level of debt and other financial
obligations; changes to our relationships with key customers;
compromise, damage or interruption from cybersecurity incidents or
other data system security risks; actions by competitors; risks
associated with compliance with changing legal and regulatory
requirements and the outcome of legal proceedings; 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-K filed with the SEC on August 25, 2022, to which
your attention is directed. 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 or
revise these forward-looking statements to reflect new information
or events, except as required by law.
Western Digital, the Western Digital logo, SanDisk and WD are
registered trademarks or trademarks of Western Digital Corporation
or its affiliates in the US and/or other countries.
WESTERN DIGITAL
CORPORATION
PRELIMINARY CONDENSED
CONSOLIDATED BALANCE SHEETS
(in millions; unaudited; on a
US GAAP basis)
March 31, 2023
July 1, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
2,220
$
2,327
Accounts receivable, net
1,591
2,804
Inventories
3,979
3,638
Other current assets
693
684
Total current assets
8,483
9,453
Property, plant and equipment, net
3,668
3,670
Notes receivable and investments in Flash
Ventures
1,379
1,396
Goodwill
10,041
10,041
Other intangible assets, net
97
213
Other non-current assets
1,483
1,486
Total assets
$
25,151
$
26,259
LIABILITIES, CONVERTIBLE
PREFERRED STOCK AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
1,307
$
1,902
Accounts payable to related parties
265
320
Accrued expenses
1,158
1,636
Income taxes payable
1,013
869
Accrued compensation
343
510
Current portion of long-term debt
1,175
—
Total current liabilities
5,261
5,237
Long-term debt
5,898
7,022
Other liabilities
1,505
1,779
Total liabilities
12,664
14,038
Convertible preferred stock
876
—
Total shareholders’ equity
11,611
12,221
Total liabilities, convertible preferred
stock and shareholders’ equity
$
25,151
$
26,259
WESTERN DIGITAL
CORPORATION
PRELIMINARY CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share
amounts; unaudited; on a US GAAP basis)
Three Months Ended
Nine Months Ended
March 31, 2023
April 1, 2022
March 31, 2023
April 1, 2022
Revenue, net
$
2,803
$
4,381
$
9,646
$
14,265
Cost of revenue
2,517
3,200
7,851
9,836
Gross profit
286
1,181
1,795
4,429
Operating expenses:
Research and development
476
572
1,551
1,725
Selling, general and administrative
242
281
739
851
Employee termination, asset impairment,
and other charges
40
4
140
24
Total operating expenses
758
857
2,430
2,600
Operating income (loss)
(472
)
324
(635
)
1,829
Interest and other expense, net
(57
)
(62
)
(195
)
(217
)
Income (loss) before taxes
(529
)
262
(830
)
1,612
Income tax expense
43
237
161
413
Net income (loss)
$
(572
)
$
25
$
(991
)
$
1,199
Less: cumulative dividends allocated to
preferred shareholders
9
—
9
—
Net income (loss) attributable to common
shareholders
$
(581
)
$
25
$
(1,000
)
$
1,199
Income (loss) per common share:
Basic
$
(1.82
)
$
0.08
$
(3.14
)
$
3.84
Diluted
$
(1.82
)
$
0.08
$
(3.14
)
$
3.79
Weighted average shares outstanding:
Basic
319
313
318
312
Diluted
319
316
318
316
WESTERN DIGITAL
CORPORATION
PRELIMINARY CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited; on a
US GAAP basis)
Three Months Ended
Nine Months Ended
March 31, 2023
April 1, 2022
March 31, 2023
April 1, 2022
Operating Activities
Net income (loss)
$
(572
)
$
25
$
(991
)
$
1,199
Adjustments to reconcile net income (loss)
to net cash provided by operations:
Depreciation and amortization
213
216
643
708
Stock-based compensation
74
86
246
249
Deferred income taxes
9
3
34
41
Gain on disposal of assets
(8
)
(15
)
(7
)
(14
)
Non-cash portion of asset impairment
3
—
18
—
Amortization of debt issuance costs and
discounts
4
13
9
34
Other non-cash operating activities,
net
(63
)
29
6
42
Changes in:
Accounts receivable, net
314
390
1,213
(96
)
Inventories
(206
)
(15
)
(341
)
(45
)
Accounts payable
79
(196
)
(442
)
(100
)
Accounts payable to related parties
(103
)
7
(54
)
(2
)
Accrued expenses
(258
)
(79
)
(484
)
2
Income taxes payable
(12
)
(16
)
144
(50
)
Accrued compensation
(7
)
(83
)
(169
)
(149
)
Other assets and liabilities, net
152
33
(165
)
(234
)
Net cash provided by (used in) operating
activities
(381
)
398
(340
)
1,585
Investing Activities
Purchases of property, plant and
equipment, net
(110
)
(290
)
(688
)
(829
)
Activity related to Flash Ventures,
net
(36
)
40
46
23
Strategic investments and other, net
8
(3
)
22
(16
)
Net cash used in investing activities
(138
)
(253
)
(620
)
(822
)
Financing Activities
Employee stock plans, net
(13
)
(3
)
(20
)
(23
)
Net proceeds from convertible preferred
stock
882
—
882
—
Repayments of debt
—
(1,046
)
(1,180
)
(3,471
)
Proceeds from debt
—
896
1,180
1,894
Debt issuance costs
(1
)
(14
)
(6
)
(23
)
Net cash provided by (used in) financing
activities
868
(167
)
856
(1,623
)
Effect of exchange rate changes on
cash
—
(4
)
(3
)
(5
)
Net increase (decrease) in cash and cash
equivalents
349
(26
)
(107
)
(865
)
Cash and cash equivalents, beginning of
period
1,871
2,531
2,327
3,370
Cash and cash equivalents, end of
period
$
2,220
$
2,505
$
2,220
$
2,505
WESTERN DIGITAL
CORPORATION
Supplemental Operating Segment
Results
(in millions; except
percentages; unaudited)
Three Months Ended
Nine Months Ended
March 31, 2023
April 1, 2022
March 31, 2023
April 1, 2022
Net revenue:
Flash
$
1,307
$
2,243
$
4,686
$
7,353
HDD
1,496
2,138
4,960
6,912
Total net revenue
$
2,803
$
4,381
$
9,646
$
14,265
Gross profit:
Flash
$
(65
)
$
798
$
597
$
2,665
HDD
363
592
1,237
2,061
Total gross profit for segments
298
1,390
1,834
4,726
Unallocated corporate items:
Stock-based compensation expense
(12
)
(13
)
(38
)
(36
)
Amortization of acquired intangible
assets
—
—
(1
)
(65
)
Contamination related charges
—
(203
)
—
(203
)
Recoveries from a power outage
incident
—
7
—
7
Total unallocated corporate items
(12
)
(209
)
(39
)
(297
)
Consolidated gross profit
$
286
$
1,181
$
1,795
$
4,429
Gross margin:
Flash
(5.0
)%
35.6
%
12.7
%
36.2
%
HDD
24.3
%
27.7
%
24.9
%
29.8
%
Total gross margin for segments
10.6
%
31.7
%
19.0
%
33.1
%
Consolidated gross margin
10.2
%
27.0
%
18.6
%
31.0
%
The Company manages and reports under two reportable segments:
flash-based products (“Flash”) and hard disk drives (“HDD”). In the
table above, total gross profit for segments and total gross margin
for segments are Non-GAAP financial measures, which are also
referred to herein as Non-GAAP gross profit and Non-GAAP gross
margin, respectively.
WESTERN DIGITAL
CORPORATION
PRELIMINARY RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
(in millions;
unaudited)
Three Months Ended
Nine Months Ended
March 31, 2023
December 30,
2022
April 1, 2022
March 31, 2023
April 1, 2022
GAAP cost of revenue
$
2,517
$
2,579
$
3,200
$
7,851
$
9,836
Stock-based compensation expense
(12
)
(12
)
(13
)
(38
)
(36
)
Amortization of acquired intangible
assets
—
—
—
(1
)
(65
)
Contamination related charges
—
—
(203
)
—
(203
)
Recoveries from a power outage
incident
—
—
7
—
7
Non-GAAP cost of revenue
$
2,505
$
2,567
$
2,991
$
7,812
$
9,539
GAAP gross profit
$
286
$
528
$
1,181
$
1,795
$
4,429
Stock-based compensation expense
12
12
13
38
36
Amortization of acquired intangible
assets
—
—
—
1
65
Contamination related charges
—
—
203
—
203
Recoveries from a power outage
incident
—
—
(7
)
—
(7
)
Non-GAAP gross profit
$
298
$
540
$
1,390
$
1,834
$
4,726
GAAP operating expenses
$
758
$
849
$
857
$
2,430
$
2,600
Stock-based compensation expense
(62
)
(74
)
(73
)
(208
)
(213
)
Amortization of acquired intangible
assets
(39
)
(39
)
(39
)
(116
)
(116
)
Employee termination, asset impairment and
other charges
(40
)
(76
)
(4
)
(140
)
(24
)
Strategic review
(15
)
—
—
(15
)
—
Other
—
(1
)
(1
)
(1
)
(5
)
Non-GAAP operating expenses
$
602
$
659
$
740
$
1,950
$
2,242
GAAP operating income (loss)
$
(472
)
$
(321
)
$
324
$
(635
)
$
1,829
Cost of revenue adjustments
12
12
209
39
297
Operating expense adjustments
156
190
117
480
358
Non-GAAP operating income
(loss)
$
(304
)
$
(119
)
$
650
$
(116
)
$
2,484
GAAP interest and other expense,
net
$
(57
)
$
(64
)
$
(62
)
$
(195
)
$
(217
)
Non-cash economic interest and Other
(6
)
—
(2
)
(7
)
17
Non-GAAP interest and other expense,
net
$
(63
)
$
(64
)
$
(64
)
$
(202
)
$
(200
)
GAAP income tax expense
$
43
$
61
$
237
$
161
$
413
Income tax adjustments
17
(109
)
(172
)
19
(161
)
Non-GAAP income tax expense
$
60
$
(48
)
$
65
$
180
$
252
WESTERN DIGITAL
CORPORATION
PRELIMINARY RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
(in millions, except per share
amounts; unaudited)
Three Months Ended
Nine Months Ended
March 31, 2023
December 30,
2022
April 1, 2022
March 31, 2023
April 1, 2022
GAAP net income (loss)
$
(572
)
$
(446
)
$
25
$
(991
)
$
1,199
Stock-based compensation expense
74
86
86
246
249
Amortization of acquired intangible
assets
39
39
39
117
181
Contamination related charges
—
—
203
—
203
Recoveries from a power outage
incident
—
—
(7
)
—
(7
)
Employee termination, asset impairment and
other charges
40
76
4
140
24
Strategic review
15
—
—
15
—
Non-cash economic interest and Other
(6
)
1
(1
)
(6
)
22
Income tax adjustments
(17
)
109
172
(19
)
161
Non-GAAP net income (loss)
(427
)
(135
)
521
(498
)
2,032
Less: cumulative dividends allocated to
preferred shareholders
9
—
—
9
—
Non-GAAP net income (loss) attributable
to common shareholders
$
(436
)
$
(135
)
$
521
$
(507
)
$
2,032
Diluted income (loss) per common
share
GAAP
$
(1.82
)
$
(1.40
)
$
0.08
$
(3.14
)
$
3.79
Non-GAAP
$
(1.37
)
$
(0.42
)
$
1.65
$
(1.59
)
$
6.43
Diluted weighted average shares
outstanding:
GAAP
319
318
316
318
316
Non-GAAP
319
318
316
318
316
Cash flows
Cash flow provided by operating
activities
$
(381
)
$
35
$
398
$
(340
)
$
1,585
Purchases of property, plant and
equipment, net
(110
)
(258
)
(290
)
(688
)
(829
)
Activity related to Flash Ventures,
net
(36
)
(17
)
40
46
23
Free cash flow
$
(527
)
$
(240
)
$
148
$
(982
)
$
779
To supplement the condensed consolidated financial statements
presented in accordance with U.S. generally accepted accounting
principles (“GAAP”), the table above sets forth Non-GAAP cost of
revenue; Non-GAAP gross profit; Non-GAAP gross margin; Non-GAAP
operating expenses; Non-GAAP operating income and loss; Non-GAAP
interest and other expense, net; Non-GAAP income tax expense;
Non-GAAP net income and loss; Non-GAAP diluted income and loss per
common share and free cash flow (“Non-GAAP measures”). These
Non-GAAP measures are not in accordance with, or an alternative
for, measures prepared in accordance with GAAP and may be different
from Non-GAAP measures used by other companies. The company
believes the presentation of these Non-GAAP measures, when shown in
conjunction with the corresponding GAAP measures, provides useful
information to investors for measuring the company’s earnings
performance and comparing it against prior periods. Specifically,
the company believes these Non-GAAP measures provide useful
information to both management and investors as they exclude
certain expenses, gains and losses that the company believes are
not indicative of its core operating results or because they are
consistent with the financial models and estimates published by
many analysts who follow the company and its peers. As discussed
further below, these Non-GAAP measures exclude, as applicable,
stock-based compensation expense, amortization of acquired
intangible assets, contamination related charges, recoveries from a
power outage incident, employee termination, asset impairment and
other charges, expenses related to our strategic review, non-cash
economic interest, other adjustments, and income tax adjustments,
and the company believes these measures along with the related
reconciliations to the GAAP measures provide additional detail and
comparability for assessing the company’s results. These Non-GAAP
measures are some of the primary indicators management uses for
assessing the company’s performance and planning and forecasting
future periods. These measures should be considered in addition to
results prepared in accordance with GAAP, but should not be
considered a substitute for, or superior to, GAAP results.
As described above, the company excludes the following items
from its Non-GAAP measures:
Stock-based compensation expense.
Because of the variety of equity awards used by companies, the
varying methodologies for determining stock-based compensation
expense, the subjective assumptions involved in those
determinations, and the volatility in valuations that can be driven
by market conditions outside the company’s control, the company
believes excluding stock-based compensation expense enhances the
ability of management and investors to understand and assess the
underlying performance of its business over time and compare it
against the company’s peers, a majority of whom also exclude
stock-based compensation expense from their Non-GAAP results.
Amortization of acquired intangible
assets. The company incurs expenses from the amortization of
acquired intangible assets over their economic lives. Such charges
are significantly impacted by the timing and magnitude of the
company’s acquisitions and any related impairment charges.
Contamination related charges. In
February 2022, a contamination of certain materials used in the
company’s manufacturing process occurred and affected production
operation at the flash-based memory manufacturing facilities in
Yokkaichi and Kitakami, Japan, which are operated through the
company’s joint business ventures with Kioxia Corporation
(collectively, "Flash Ventures"). The contamination resulted in
scrapped inventory and rework costs, decontamination and other
costs needed to restore the facilities to normal capacity, and
under absorption of overhead costs, which are expensed as incurred.
These charges are inconsistent in amount and frequency, and the
company believes these charges are not part of the ongoing
production operation of its business.
Recoveries from a power outage
incident. In June 2019, an unexpected power outage incident
occurred at the flash-based memory manufacturing facilities
operated through the company’s joint venture with Kioxia
Corporation in Yokkaichi, Japan. The power outage incident resulted
in costs associated with the repair of damaged tools and the
write-off of damaged inventory and unabsorbed manufacturing
overhead costs which are expensed as incurred. During fiscal years
2021 and 2022, the company received recoveries for these losses
from other parties. The recoveries are inconsistent in amount and
frequency, and the company believes they are not part of the
ongoing production operation of its business.
Employee termination, asset impairment and
other charges. From time-to-time, in order to realign the
company’s operations with anticipated market demand or to achieve
cost synergies from the integration of acquisitions, the company
may terminate employees and/or restructure its operations. From
time-to-time, the company may also incur charges from the
impairment of intangible assets and other long-lived assets. In
addition, the company may record credits related to gains upon sale
of property due to restructuring or reversals of charges recorded
in prior periods. These charges or credits are inconsistent in
amount and frequency, and the company believes they are not
indicative of the underlying performance of its business.
Strategic review. The company
incurred expenses associated with its ongoing review of potential
strategic alternatives aimed at further optimizing the long-term
value for stockholders. The company believes these charges do not
reflect the company’s operating results and that they are not
indicative of the underlying performance of its business.
Non-cash economic interest. The
company has excluded non-cash economic interest expense associated
with its convertible notes recognized in periods prior to the
company’s adoption of the Financial Accounting Standards Board
Accounting Standards Update No. 2020-06, “Debt—Debt with Conversion
and Other Options (Subtopic 470-20) and Derivatives and
Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):
Accounting for Convertible Instruments and Contracts in an Entity’s
Own Equity”, which the company adopted at the beginning of its
fiscal year ending June 30, 2023. The exclusion of such amounts
from prior periods facilitates a comparison of the company's prior
period results to the current period presentation.
Other adjustments. From
time-to-time, the company incurs charges or gains that the company
believes are not a part of the ongoing operation of its business.
The resulting expense or benefit is inconsistent in amount and
frequency.
Income tax adjustments. Income tax
adjustments include the difference between income taxes based on a
forecasted annual Non-GAAP tax rate and a forecasted annual GAAP
tax rate as a result of the timing of certain Non-GAAP pre-tax
adjustments. The income tax adjustments also include adjustments to
estimates related to the current status of the rules and
regulations governing the transition to the Tax Cuts and Jobs Act
and the re-measurement of certain unrecognized tax benefits
primarily related to tax positions taken in prior quarters,
including interest. These adjustments are excluded because the
company believes that they are not indicative of the underlying
performance of its ongoing business.
Additionally, free cash flow is defined as cash flows provided
by operating activities less purchases of property, plant and
equipment, net, and the activity related to Flash Ventures, net.
The company considers free cash flow generated in any period to be
a useful indicator of cash that is available for strategic
opportunities including, among others, investing in the company’s
business, making strategic acquisitions, repaying debt and
strengthening the balance sheet.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230508005539/en/
Western Digital Corp.
Investor Contact: T. Peter Andrew 949.672.9655
peter.andrew@wdc.com investor@wdc.com
Media Contact: Robin Schultz 408.573.5043
robin.schultz@wdc.com
Western Digital (NASDAQ:WDC)
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