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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 27, 1998
Western Digital Corporation
(Exact Name of Registrant as Specified in Charter)
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Delaware 001-08703 95-264-7125
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
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8105 Irvine Center Drive, Irvine, California 92618
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (949) 932-5000
N/A
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(Former Name or Former Address, if Changed Since Last Report)
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Total of sequentially numbered pages: 3.
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ITEM 5. OTHER EVENTS.
On July 27, 1998, the registrant issued a press release announcing its
fourth quarter and year-end results.
A copy of the press release is attached as Exhibit 99.4.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
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Exhibit Description
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99.4 Press Release Regarding Announcement of Fourth Quarter and Year-End
Results.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this current report to be signed on its behalf by
the undersigned hereunto duly authorized.
Western Digital Corporation
Date: August 10, 1998 By: /s/ MICHAEL A. CORNELIUS
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Michael A. Cornelius
Vice President, Law and
Administration and Secretary
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EXHIBIT 99.4
WESTERN DIGITAL ANNOUNCES FOURTH QUARTER, YEAR-END RESULTS
IRVINE, CA. -- July 27, 1998 -- Western Digital Corporation (NYSE:WDC) today
reported revenue of $650.5 million and a net loss of $162.7 million, or $1.84
per share, for its fourth fiscal quarter ended June 27, 1998. As disclosed on
June 9, 1998, the fourth quarter results included certain costs of approximately
$22 million related principally to the new technology licensing and component
supply agreement with IBM Corporation. In the year-earlier period, Western
Digital reported revenue of $1.08 billion and net income of $87.9 million, or
$.95 diluted earnings per share. For fiscal 1998, the Company reported revenue
of $3.54 billion and a net loss of $290.2 million, or $3.32 per share, including
special charges of $148 million in the second fiscal quarter and the previously
mentioned IBM-related costs in the fourth quarter. In fiscal 1997, Western
Digital earned net income of $267.6 million, or $2.86 diluted earnings per
share, on revenue of $4.18 billion.
Chuck Haggerty, chairman, president and chief executive officer, stated: "Our
disappointing results for the fiscal year and the fourth quarter reflect nearly
a full year's sustained oversupply and price declines of nearly 50% in the
desktop segment of the hard drive industry. So far in the seasonally weak
September quarter, inventories of desktop drives in the distribution channel
remain too high, preventing a return to a more normal market for some time. This
industry must get back to rational pricing for the value of the technology being
delivered."
Haggerty noted that the Company had taken several actions in the face of the
industry downturn, including an approximate 20 percent reduction in employment
since November, 1997, reduced work weeks and substantial production cutbacks in
its Singapore and Malaysian plants , and a 30 percent reduction in its planned
capital spending for fiscal year 1999. "In anticipation of the industry's
eventual recovery, we have positioned Western Digital for a return to a
leadership position in desktop drives and continue to invest heavily in our
Enterprise storage business," said Haggerty. "Industry analysts estimate that we
have earned an 8% share of the high-end market in approximately six quarters of
volume shipments. A 50% increase in research and development spending on
high-end drives in fiscal 1999 will help transform Western Digital into a
full-line supplier in this segment in the next 18 months."
"The transition to MR head technology in the desktop segment has gone extremely
well and is complete, and we are now in qualification with customers on our
third-generation MR program. As a matter of fact, Western Digital now has the
highest first pass yields on its disk drives in Company history. As a result of
this transition, our volumes and share with leading PC OEM customers increased
sequentially in the June quarter for the first time in a year. Our new
relationship with IBM, the industry's technology leader and its best-capitalized
company,
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positions us to leap ahead of the competition in the desktop industry's
forthcoming product transitions involving Giant MR heads."
"In the face of harsh industry conditions and our large operating losses over
the last three quarters, we have remained focused on balance sheet management .
We see continued opportunities to improve our working capital performance in the
quarters ahead. At the end of the June quarter, the Company's cash position was
$460 million. I believe Western Digital is strong and will get stronger as we go
forward."Western Digital Corporation is a leader in information storage products
and services. The Company designs and manufactures hard drives for personal and
enterprise-wide computing, and markets them to leading systems manufacturers and
selected resellers under the Western Digital brand name. Western Digital is the
first Fortune 500, multinational company to have been awarded company-wide ISO
9001 registration, linking all WD organizations with a consistent global
standard for quality processes. The Company was founded in 1970 and has long
been noted for its storage and end-market systems-level design knowledge. The
company's World Wide Web home page can be found at
http://www.westerndigital.com.
This release contains forward-looking statements based on current management
expectations, including: statements relating to current and anticipated industry
supply, inventory and pricing trends, the Company's return to market leadership,
investment in the Enterprise storage business, utilization of IBM technology in
future product transitions and future working capital. The forward looking
statements are based on current management expectations, and actual results may
differ materially as a result of several factors, including: overall supply and
customer demand in the hard drive industry; pricing trends and other competitive
factors; continued improvement in time to market and time to volume of the
Company's new hard drives; changes in customer order patterns; continued
successful qualification of the Company's drives with key OEM customers;
business conditions and growth in the personal and enterprise computing
industry; and other factors discussed in the Company's Form 10-K for the year
ended June 28, 1997, its recent Form 10-Qs, its other SEC filings, and its press
release dated June 9, 1998. Western Digital undertakes no obligation to update
forward-looking statements to reflect events or circumstances occurring after
the date of such statements.
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WESTERN DIGITAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
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Three Months Ended Year Ended
June 27, 1998 June 28, 1997 Mar 28, 1998 June 27, 1998 June 28, 1997
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Revenues, net $ 650,503 $ 1,079,883 $ 831,297 $ 3,541,525 $ 4,177,857
Costs and expenses:
Cost of revenues 692,243 890,733 795,015 3,441,475 3,527,574
Research and development 70,010 40,224 46,949 203,733 150,157
Selling, general and administrative 50,719 48,996 47,551 192,142 198,530
Total costs and expenses 812,972 979,953 889,515 3,837,350 3,876,261
Operating income (loss) (162,469) 99,930 (58,221) (295,825) 301,596
Net interest income (expense) (250) 3,474 (536) 3,817 13,223
Income (loss) before income taxes (162,719) 103,404 (58,757) (292,008) 314,819
Provision (benefit) for income taxes -- 15,510 (13,735) (1,791) 47,223
Net income (loss) $ (162,719) $ 87,894 $ (45,022) $ (290,217) $ 267,596
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Earnings (loss) per common share:
Basic $(1,84) $ 1.02 $ (.51) $ (3.32) $ 3.07
Diluted $(1,84) $ .95 $ (.51) $ (3.32) $ 2.86
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Common shares used in computing
per share amounts:
Basic 88,226 86,395 87,812 87,525 87,261
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Diluted 88,226 92,688 87,812 87,525 93,522
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WESTERN DIGITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
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June 27, 1998 June 28, 1997
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ASSETS
Current Assets:
Cash and cash equivalents $ 459,830 $ 208,276
Accounts receivable, net 369,013 545,552
Inventories 186,516 224,474
Prepaid expenses 36,763 39,593
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Total current assets $1,052,122 $1,017,895
Property and equipment, net 346,987 247,895
Intangible and other assets, net 43,579 41,332
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Total assets $1,442,688 $1,307,122
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current Liabilities:
Accounts payable $ 330,130 $ 417,984
Accrued expenses 258,449 235,721
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Total current liabilities 588,579 653,705
Long-term debt 519,188 --
Deferred income taxes 17,163 33,430
Shareholders' equity:
Common stock, $.01 par value 883 859
Additional paid-in capital 119,026 131,062
Retained earnings 197,849 488,066
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Total shareholders' equity 317,758 619,987
Total liabilities and shareholders' equity $1,442,688 $1,307,122
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