Western Digital 2015 Annual Report Download - page 45

Download and view the complete annual report

Please find page 45 of the 2015 Western Digital annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 116

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116

Acquisitions
Acquisition of Amplidata
On March 9, 2015, we acquired Amplidata, a developer of object storage software for public and private cloud
data centers. The purchase price of the acquisition was approximately $267 million, consisting of $245 million funded
with available cash at the time of the acquisition, $19 million related to the fair value of a previously-held cost
method investment and $3 million related to the fair value of stock options assumed. The acquisition is expected to
further HGST’s strategy to expand into higher value data storage platforms and systems that address the growth in
storage requirements in cloud data centers. The acquisition of Amplidata did not have a material impact on our con-
solidated financial statements for fiscal 2015.
Acquisition of Virident
On October 17, 2013, we acquired Virident, a provider of server-side flash storage solutions for virtualization,
database, cloud computing and webscale applications. Virident was fully integrated into our HGST subsidiary and
became our wholly owned indirect subsidiary. The purchase price of the acquisition was approximately $613 million,
consisting of $598 million which was funded with available cash and $15 million related to the fair value of stock
options assumed. The acquisition furthered HGST’s strategy to address the rapidly changing needs of enterprise cus-
tomers by delivering intelligent storage solutions that maximize application performance by leveraging the tightly
coupled server, storage and network resources of today’s converged datacenter infrastructures.
Acquisition of sTec
On September 12, 2013, we acquired sTec, a provider of enterprise SSDs. The purchase price of the acquisition
was approximately $336 million, consisting of $325 million which was funded with available cash and $11 million
related to the fair value of stock options and restricted stock units (“RSUs”) assumed. The acquisition augmented
HGST’s existing solid-state storage capabilities.
For additional information on our acquisitions, see Part II, Item 8, Note 15 of the Notes to Consolidated Finan-
cial Statements included in this Annual Report on Form 10-K.
Results of Operations
Fiscal 2015 Overview
In accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), operating
results for Amplidata, Virident, and sTec, which were acquired on March 9, 2015, October 17, 2013, and Sep-
tember 12, 2013, respectively, are included in our operating results only after the respective dates of acquisition.
The following is a summary of our financial performance for fiscal 2015:
‰In 2015, our net revenue decreased by 4% to $14.6 billion on HDD shipments of 229 million units as com-
pared to $15 billion on shipments of 249 million units in 2014.
‰Net revenue derived from enterprise SSDs was $811 million in 2015 as compared to $508 million in 2014.
‰HDD ASPs increased to $60 in 2015 from $58 in 2014.
‰Gross profit as a percentage of net revenue increased to 29.0% in 2015 from 28.8% in 2014.
‰Operating income decreased from $1.8 billion in 2014 to $1.6 billion in 2015.
‰Operating income in 2015 included $176 million of employee termination, asset impairment and other
charges and $15 million of charges related to an arbitration award as compared to $95 million and $52 mil-
lion, respectively, in 2014.
39