WESTERN DIGITAL CORP, 424B3, 1998-10-29

WESTERN DIGITAL CORP
424B3, 1998-10-29
COMPUTER STORAGE DEVICES

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<PAGE> 1

FILED PURSUANT TO RULE 424(b)(3)
REGISTRATION STATEMENT NO. 333-52463

PROSPECTUS SUPPLEMENT NO. 2
TO
PROSPECTUS DATED AUGUST 11, 1998

WESTERN DIGITAL CORPORATION
ZERO COUPON CONVERTIBLE SUBORDINATED DEBENTURES DUE 2018
AND SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION THEREOF
------------------------

The following information supplements, and must be read in connection with,
the information contained in the Prospectus, dated August 11, 1998 as
supplemented by Prospectus Supplement No. 1 dated September 2, 1998 (the
"Prospectus"), of Western Digital Corporation, a Delaware corporation. This
Prospectus Supplement must be delivered with a copy of the Prospectus. All
capitalized terms not otherwise defined herein have the respective meanings
ascribed to them in the Prospectus.

The following information replaces in its entirety the information provided
in the Prospectus under the caption "Selling Securityholders."
------------------------

SELLING SECURITYHOLDERS

The following table sets forth information as of October 28, 1998, with
respect to the Selling Securityholders, the respective principal amount of
Debentures beneficially owned by each Selling Securityholder, the principal
amount of Debentures offered hereby by each Selling Securityholder, the Common
Stock owned by each Selling Securityholder and the Common Stock issued or
issuable upon conversion of such Debentures, that may be sold from time to time
pursuant to this Prospectus. The Debentures and the Common Stock issued or
issuable upon conversion of such Debentures that may be offered pursuant to this
Prospectus will be offered by the Selling Securityholders.

<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
OF DEBENTURES PERCENT OF TOTAL COMMON STOCK COMMON STOCK
BENEFICIALLY OWNED OUTSTANDING OWNED PRIOR REGISTERED HEREBY
SELLING SECURITYHOLDERS AND OFFERED HEREBY DEBENTURES TO CONVERSION (1)
----------------------- ------------------- ---------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Bell Atlantic Master Trust...... $ 1,600,000 * -- 23,896
Black Diamond Ltd. ............. 5,491,000 * 47,170 82,008
Black Diamond Partners, L.P. ... 4,930,000 * 47,955 73,629
Bonannay Investments Limited.... 100,000 * -- 1,493
Boston College Endowment Fund... 542,000 * -- 8,094
BT Holdings..................... 11,000,000 * -- 164,285
Buffalo High Yield Fund,
Inc. ......................... 2,000,000 * -- 29,870
Business Investment Organisation
Co. Ltd. -- metal a/c......... 280,000 * -- 4,181
Canadian Imperial Holdings
Inc. ......................... 22,500,000 2 -- 336,037
Carrigaholt Capital (Bermuda)
L.P. ......................... 2,500,000 * -- 37,337
Century National Insurance
Company....................... 2,180,000 * -- 32,558
CFW-C, L.P. .................... 30,000,000 2 -- 448,050
Chapin Carpenter, Mary.......... 25,000 * -- 373
Charles Schwab Trust Company.... 240,000 * -- 3,584
Chrysler Insurance Company --
Total Return.................. 70,000 * -- 1,045
CIBC Oppenheimer Corp........... 14,000,000 1 -- 209,090
City of Richmond, Virginia...... 225,000 * -- 3,360
City of Worcester,
Massachusetts................. 400,000 * -- 5,974
Class IC Company, Ltd., The..... 2,500,000 * -- 37,337
Collins US Premier Equity
Trust......................... 250,000 * -- 3,733
Colonial Penn Life Insurance
Co. .......................... 500,000 * -- 7,467
Commonwealth Life Insurance
Comp. (Teamsters -- Camden
Non-Enhanced)................. 5,000,000 * -- 74,675
Connell, Eileen M............... 40,000 * -- 597
Corbel Investments, Ltd. ....... 400,000 * -- 5,974
Corporate Investment Services
SAL (Offshore) -- growth
a/c........................... 240,000 * -- 3,584
Cova Bond -- Debenture.......... 1,500,000 * -- 22,402
CPR (USA) Inc. ................. 7,650,000 * -- 114,252
Credit Research & Trading LLC... 500,000 * -- 7,467
Credit Suisse First Boston
Corporation................... 23,500,000 2 -- 350,972
Credit Suisse London Nominees
Limited....................... 4,000,000 * 91,500 59,740
Data General.................... 300,000 * -- 4,480
Delaware Public Employee
Retirement System............. 750,000 * -- 11,201
Delozier, Joseph and Jan........ 15,000 * -- 224
Detroit Edison Employees........ 2,250,000 * -- 33,603
Detroit Medical Endowment....... 850,000 * -- 12,694
Detroit Medical Pension......... 1,500,000 * -- 22,402
Deutsche Bank A.G............... 126,885,000 10 -- 1,895,027
Donaldson, Lufkin & Jenrette
Securities Corporation........ 561,000 * -- 8,378
</TABLE>

2
<PAGE> 3

<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
OF DEBENTURES PERCENT OF TOTAL COMMON STOCK COMMON STOCK
BENEFICIALLY OWNED OUTSTANDING OWNED PRIOR REGISTERED HEREBY
SELLING SECURITYHOLDERS AND OFFERED HEREBY DEBENTURES TO CONVERSION (1)
----------------------- ------------------- ---------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Double Black Diamond Offshore
LDC........................... $ 2,316,000 * 9,300 34,589
Employers' Reinsurance
Corporation................... 4,795,000 * -- 71,613
Ensign Peak Advisors............ 3,000,000 * -- 44,805
EQ Putnam Balanced Portfolio.... 50,000 * -- 746
Federated Equity Income Fund,
Inc. ......................... 29,000,000 2 -- 433,115
Federated Insurance Series, a
Massachusetts business trust,
on behalf of its Federated
Equity Income Fund II......... 600,000 * -- 8,961
Forest Alternative Strategies
Fund A-5...................... 15,000,000 1 -- 224,025
Forest Alternative Strategies
Fund A-5I..................... 1,080,000 * -- 16,129
Forest Alternative Strategies
Fund A-5M..................... 510,000 * -- 7,616
Forest Alternative Strategies
Fund B-3...................... 700,000 * -- 10,454
Forest Global Convertible Fund
A-1........................... 90,000 * -- 1,344
Forest Global Convertible Fund
A-5........................... 23,510,000 2 -- 351,121
Forest Global Convertible Fund
B-1........................... 400,000 * -- 5,974
Forest Global Convertible Fund
B-2........................... 500,000 * -- 7,467
Forest Global Convertible Fund
B-3........................... 400,000 * -- 5,974
Forest Global Convertible Fund
B-5........................... 800,000 * -- 11,948
Forest Greyhound c/o Forest
Investment Management LLC..... 400,000 * -- 5,974
Forest Performance Fund......... 800,000 * -- 11,948
Fort Dearborn Life Insurance
Company....................... 360,000 * -- 5,376
Fox Family Foundation DTD
10/10/87 c/o Forest Investment
Management LLC................ 100,000 * -- 1,493
Fox Family Portfolio Partnership
c/o Forest Investment
Management LLC................ 900,000 * -- 13,441
Franklin Investors Securities
Trust -- Convertible
Securities Fund............... 6,000,000 * -- 89,610
Franklin Strategic
Series -- Franklin Small Cap
Growth Fund................... 23,800,000 2 -- 355,453
Franklin U.S. Small Cap Growth
Fund.......................... 200,000 * -- 2,987
Fundamental Investors, Inc. .... 22,500,000 2 -- 336,037
Gencorp......................... 4,350,000 * -- 64,967
General Motors Domestic Group
Pension Trust................. 2,500,000 * -- 37,337
George Putnam Fund of Boston,
The........................... 8,810,000 * -- 131,577
Gleneagles Fund Company, The.... 1,500,000 * -- 22,402
</TABLE>

3
<PAGE> 4

<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
OF DEBENTURES PERCENT OF TOTAL COMMON STOCK COMMON STOCK
BENEFICIALLY OWNED OUTSTANDING OWNED PRIOR REGISTERED HEREBY
SELLING SECURITYHOLDERS AND OFFERED HEREBY DEBENTURES TO CONVERSION (1)
----------------------- ------------------- ---------------- ------------------- -----------------
<S> <C> <C> <C> <C>
GLG Global Convertible Fund
PLC........................... $10,000,000 * -- 149,350
Goldman, Sachs & Co.(3)......... 2,000,000 * -- 29,870
GPZ Trading LLC................. 8,000,000 * -- 119,480
Gruber-McBaine International.... 200,000 * -- 2,987
Habile Investments Limited...... 200,000 * -- 2,987
Halliburton High Yield.......... 1,250,000 * -- 18,668
Hamilton Global Investors
Limited....................... 6,000,000 * -- 89,610
Hamilton Partners Limited....... 4,000,000 * -- 59,740
Heritage Finance and Trust
Co. .......................... 350,000 * -- 5,227
Highbridge Capital
Corporation................... 15,000,000 1 -- 224,025
Houston Fire "B"................ 4,000,000 * -- 59,740
Houston Municipal............... 2,000,000 * -- 29,870
HSBC Securities Inc. ........... 7,100,000 * -- 106,038
Idanta Partners Ltd. ........... 8,000,000 * -- 119,480
Income Fund of America, Inc.,
The........................... 112,500,000 9 -- 1,680,187
Issa, Mr. Pierre & Mrs.
Claude........................ 80,000 * -- 1,194
J.P. Morgan & Co.
Incorporated.................. 19,400,000 1 -- 289,739
Jatyco Inc. -- No. 2 a/c........ 120,000 * -- 1,792
Kensington Value Fund LLC....... 1,000,000 * -- 14,935
Lagunitas Partners LP........... 200,000 * -- 2,987
LDG Limited..................... 1,500,000 * -- 22,402
Levin Charitable Trust.......... 40,000 * -- 597
Libertyview Fund LLC............ 300,000 * -- 4,480
Libertyview Plus Fund........... 8,550,000 * -- 127,097
LLT Limited..................... 810,000 * -- 12,907
Lombard Odier & Cie............. 1,814,000 * -- 27,092
Loomis Sayles Fixed Income
Fund.......................... 1,250,000 * -- 18,668
Loomis Sayles High Yield Fixed
Income Fund................... 400,000 * -- 5,974
Loomis Sayles Offshore High
Yield......................... 2,500,000 * -- 37,337
Maine State Retirement System... 3,500,000 * -- 52,272
Marsh & McLennan Companies
Inc. ......................... 360,000 * -- 5,376
Mellon Bank NA, Trustee for
General Motors Employees
Domestic Group Pension
Trust......................... 2,500,000 * -- 37,337
Merrill Lynch International
Ltd. ......................... 14,305,000 1 -- 213,645
Merrill Lynch Pierce Fenner &
Smith......................... 30,750,000 2 -- 459,251
Metropolitan Life fbo General
Motors........................ 750,000 * -- 11,201
Metropolitan Life LS High Yield
Series........................ 1,400,000 * -- 20,909
Millennium Trading Co. L.P. .... 9,000,000 * -- 134,415
Milwaukee County, Wisconsin..... 1,000,000 * -- 14,935
Minneapolis Teachers............ 1,650,000 * -- 24,642
Museum of Fine Arts, Boston..... 590,000 * -- 8,811
</TABLE>

4
<PAGE> 5

<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
OF DEBENTURES PERCENT OF TOTAL COMMON STOCK COMMON STOCK
BENEFICIALLY OWNED OUTSTANDING OWNED PRIOR REGISTERED HEREBY
SELLING SECURITYHOLDERS AND OFFERED HEREBY DEBENTURES TO CONVERSION (1)
----------------------- ------------------- ---------------- ------------------- -----------------
<S> <C> <C> <C> <C>
NationsBanc Montgomery
Securities, LLC............... $10,000,000 * -- 149,350
Nationwide Family of Funds, on
behalf of its Nationwide E
Equity Income Fund............ 120,000 * -- 1,792
Nationwide Separate Account
Trust Equity Income Fund...... 120,000 * -- 1,792
Navesink Equity Derivative Fund
LDC........................... 11,000,000 * -- 164,285
New England Strategic Income
Fund.......................... 3,000,000 * -- 44,805
New Hampshire State Retirement
System........................ 3,100,000 * -- 46,298
New York City Employees'
Retirement Plan............... 2,425,000 * -- 36,217
New York City Firemen's
Retirement Plan............... 2,400,000 * -- 35,844
New York City Teachers
Retirement System............. 9,650,000 * -- 144,122
New York State Electric & Gas
Ret. Ben. Plan................ 2,000,000 * -- 29,870
Nike Co. ....................... 400,000 * -- 5,974
Northwestern Mutual Life
Insurance Company, The
(Includes $1,000,000 in
principal amount held by The
Northwestern Mutual Life
Insurance Company Group
Annuity Separate Account)..... 8,000,000 * (4) 119,480
Oakmont Holdings Limited........ 40,000 * -- 597
Oppenheimer Variable Account
Funds for the Oppenheimer
Growth & Income Fund.......... 3,000,000 * -- 44,805
Orange County Retirement........ 2,250,000 * -- 33,603
Orrington International Fund
Ltd. ......................... 2,238,000 * -- 33,424
Orrington Investments LP........ 3,762,000 * -- 56,185
Palladin Overseas Fund Ltd. .... 1,500,000 * -- 22,402
Palladin Partners I. L.P. ...... 500,000 * -- 7,467
Paloma Securities L.L.C......... 22,650,000 2 7,400 338,277
Paloma Strategic Fund L.P. ..... 10,000,000 * -- 149,350
Parker-Hannifin Corporation..... 750,000 * -- 11,201
Partner Reinsurance Co. ........ 1,000,000 * -- 14,935
Partners Healthcare Services.... 2,100,000 * -- 31,363
Pension Reserves Investment
Trust......................... 2,000,000 * -- 29,870
Promutual....................... 2,540,000 * -- 37,934
Putnam Balanced Retirement
Fund.......................... 2,590,000 * -- 38,681
Putnam Convertible Income-Growth
Trust......................... 35,563,000 3 -- 531,133
Putnam Convertible Opportunities
and Income Trust.............. 1,945,000 * -- 29,048
</TABLE>

5
<PAGE> 6

<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
OF DEBENTURES PERCENT OF TOTAL COMMON STOCK COMMON STOCK
BENEFICIALLY OWNED OUTSTANDING OWNED PRIOR REGISTERED HEREBY
SELLING SECURITYHOLDERS AND OFFERED HEREBY DEBENTURES TO CONVERSION (1)
----------------------- ------------------- ---------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Putnam Equity Income Fund....... $ 3,780,000 * -- 56,454
Putnam Funds Trust -- Putnam
High Yield Total Return
Fund.......................... 245,000 * -- 3,659
Putnam High Income Convertible
and Bond Fund................. 4,000,000 * -- 59,740
Q Investments, L.P. ............ 2,750,000 * -- 41,071
R(2) Investments, LDC........... 6,990,000 * -- 104,395
Raytheon Master Trust........... 4,250,000 * -- 63,473
Rhode Island Retirement......... 9,625,000 * -- 143,749
Rohne-Poulenc Rorer Inc. Pension
Plan.......................... 800,000 * -- 11,948
Salomon Brothers Capital
Structure Arbitrage Fund...... 6,000,000 * (5) 89,610
Salomon Brothers Equity
Arbitrage Finance Ltd Fund.... 2,000,000 * (5) 29,870
Sanders, Mark and Cynthia....... 40,000 * -- 597
Shepherd Investments
International, Ltd. .......... 33,465,000 3 -- 499,799
Silverton International Fund
Limited....................... 8,600,000 * -- 128,441
Societe Generale Securities
Corporation................... 5,000,000 * -- 74,675
Southern Farm Bureau Life
Insurance Co. ................ 1,500,000 * 60,000 22,402
State of Connecticut Fund "F"... 5,000,000 * -- 74,675
Susquehanna Capital Group....... 19,850,000 2 -- 296,459
Talwar Trading & Investments
Ltd. ......................... 120,000 * -- 1,792
Teamsters Affiliates Pension
Plan.......................... 2,425,000 * -- 36,217
Teamsters Retirement and Family
Protection.................... 400,000 * -- 5,974
Tower, Peter & Elizabeth (Tower
Foundation)................... 150,000 * -- 2,240
TQA Arbitrage Fund, L.P. ....... 4,500,000 * -- 67,207
TQA Leverage Fund, L.P. ........ 3,000,000 * -- 44,805
TQA Vantage Fund, Ltd. ......... 5,500,000 * -- 82,142
TQA Vantage Plus, Ltd. ......... 1,500,000 * -- 22,402
Tribeca Investments, L.L.C...... 14,000,000 1 -- 209,090
UA General Officers Retirement
Plan.......................... 50,000 * -- 746
UA Local Union Officers &
Employees Pension............. 400,000 * -- 5,974
UA Office Employees Retirement
Plan.......................... 25,000 * -- 373
UFCW............................ 500,000 * -- 7,467
United Mine Workers............. 4,900,000 * -- 73,181
University of Rochester......... 590,000 * -- 8,811
Vivaldi Investments Limited..... 160,000 * -- 2,389
World Bank "B".................. 1,125,000 * -- 16,801
World Bank "RSBP"............... 2,000,000 * -- 29,870
</TABLE>

6
<PAGE> 7

- ---------------
* Less than one percent.

(1) The shares of Common Stock registered hereby are calculated on an "as
converted" basis using the conversion rate described on the cover page of
this Prospectus.

(2) The entity is either an investment company or a portfolio of an investment
company registered under Section 8 of the Investment Company Act of 1940, as
amended, or a private investment account advised by Fidelity Management &
Research Company ("FMR Co."). FMR Co. is a Massachusetts corporation and an
investment advisor registered under Section 203 of the Investment Advisors
Act of 1940, as amended, and provides investment advisory services to the
Fidelity entity identified above, and to other registered investment
companies and to certain other funds which are generally offered to a
limited group of investors.

(3) Goldman, Sachs & Co. was one of the Initial Purchasers in the private
placement of the Debentures by the Company on February 18, 1998.

(4) In the ordinary course of business, Northwestern Mutual Investment Services,
Inc., Robert W. Baird & Co. Incorporated, Baird/Mark Capital Group, and MGIC
Mortgage Securities Corporation, each of which is a broker-dealer and
affiliated with The Northwestern Mutual Life Insurance Company, may, from
time to time, have acquired or disposed of, or may in the future acquire or
dispose of, securities of the Company, for such broker-dealers' own accounts
or for the accounts of others. Other affiliates of The Northwestern Mutual
Life Insurance Company may, in the ordinary course of business, effect
transactions in the securities of the Company. Only security holdings of The
Northwestern Mutual Life Insurance Company are reflected. The Northwestern
Mutual Life Insurance Company and its affiliates may, in the ordinary course
of business, take part in transactions involving the real property of the
Company.

(5) Salomon Brothers Asset Management Inc. ("SBAM") acts as discretionary
investment advisor with respect to the noted accounts that hold the
debentures. Accordingly, SBAM may be deemed to be the beneficial owner of
such debentures. SBAM also acts as discretionary investment advisor with
respect to the Gaguine Family Trust, which holds 4,000 shares of the
Company's common stock. Accordingly, SBAM may be deemed to be the beneficial
owner of such shares.

Unless otherwise indicated, none of the Selling Securityholders has, or
within the past three years has had, any position, office or other material
relationship with the Company or any of its affiliates. Because the Selling
Securityholders may, pursuant to this Prospectus, sell all or some portion of
the Debentures or the Registrable Securities, no estimate can be given as to the
amount of the Debentures or the Registrable Securities that will be held by the
Selling Securityholders upon termination of any such sales. In addition, the
Selling Securityholders identified above may have sold, transferred or otherwise
disposed of all or a portion of their Debentures, in transactions exempt from
the registration requirements of the Securities Act, since the date on which
they provided the information regarding their Debentures. See "Plan of
Distribution."

The Debentures were originally issued by the Company in a private placement
on February 18, 1998 to the Initial Purchasers and were subsequently sold by the
Initial Purchasers, in transactions exempt from the registration requirements of
the Securities Act, to persons reasonably believed by such Initial Purchasers to
be "qualified institutional buyers" (as defined in Rule 144A under the
Securities Act).

7
<PAGE> 8

Generally, only Selling Securityholders identified above who beneficially
own the Debentures set forth opposite each such Selling Securityholder's name in
the foregoing table may sell such Debentures pursuant to the Shelf Registration
Statement. The Company may from time to time, in accordance with the
Registration Rights Agreement, include additional Selling Securityholders in
supplements or amendments to this Prospectus.

THE DATE OF THIS PROSPECTUS SUPPLEMENT IS OCTOBER 29, 1998

8
<PAGE> 9

PROSPECTUS
$1,297,200,000

[WESTERN DIGITAL LOGO]

ZERO COUPON CONVERTIBLE SUBORDINATED DEBENTURES DUE 2018
AND
SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION THEREOF

------------------------

This Prospectus relates to the resale from time to time by certain holders
identified in this Prospectus (the "Selling Securityholders") of up to
$1,297,200,000 aggregate principal amount at maturity of Zero Coupon Convertible
Subordinated Debentures due 2018 (the "Debentures") of Western Digital
Corporation, a Delaware corporation ("Western Digital" or the "Company"), and
the resale of up to 19,373,682 shares of Common Stock, par value $0.01 per share
of the Company (the "Common Stock") issued or issuable upon the conversion
thereof. The Debentures were originally issued by the Company in a private
placement on February 18, 1998 to the Initial Purchasers (as defined) and were
subsequently sold by the Initial Purchasers in transactions exempt from
registration under the Securities Act of 1933, as amended (the "Securities
Act"), in the United States to "qualified institutional buyers" as defined in
Rule 144A under the Securities Act and to certain "accredited investors."

Prior to February 18, 2003, the Debentures are not redeemable at the option
of the Company. Thereafter, the Debentures are redeemable at the option of the
Company at Redemption Prices (as defined) equal to the Issue Price plus accrued
Original Issue Discount to the date of redemption. See "Description of
Debentures -- Redemption of Debentures at the Option of the Company."

The Debentures will be purchased by the Company, at the option of the
holder, as of February 18, 2003, February 18, 2008 and February 18, 2013 for
Purchase Prices equal to the Issue Price plus accrued Original Issue Discount to
such dates. The Company may elect to pay any such Purchase Price in cash or
Common Stock, or any combination thereof. See "Description of
Debentures -- Purchase of Debentures at the Option of the Holder." The
Debentures may be redeemed at the option of the holder if there is a Fundamental
Change (as defined) at Redemption Prices equal to the Issue Price plus accrued
Original Issue Discount to the date of redemption, subject to adjustment in
certain circumstances as described herein. See "Description of
Debentures -- Redemption at Option of the Holder Upon a Fundamental Change." The
Debentures are subordinated in right of payment to all existing and future
Senior Indebtedness (as defined) of the Company and effectively subordinated in
right of payment to all indebtedness and other liabilities of the Company's
subsidiaries.

The Debentures are convertible into shares of Common Stock of the Company at
any time before maturity, unless previously redeemed or otherwise purchased, at
a conversion rate of 14.935 shares per $1,000 principal amount at maturity. The
conversion rate will not be adjusted for accrued Original Issue Discount (as
defined), but will be subject to adjustment in certain events. See "Description
of Debentures -- Conversion of Debentures." The Common Stock is listed on the
New York Stock Exchange ("NYSE") under the trading symbol "WDC." On August 10,
1998, the last reported sale price of the Common Stock as reported on NYSE was
$12 per share.

The Selling Securityholders may offer Debentures or Common Stock issued or
issuable upon conversion of the Debentures from time to time to purchasers
directly or through underwriters, dealers or agents. Such Debentures or Common
Stock issued or issuable upon conversion of the Debentures may be sold at market
prices prevailing at the time of sale or at negotiated prices. Each Selling
Securityholder will be responsible for payment of any and all commissions to
brokers, which will be negotiated on an individual basis.

The Debentures have been designated for trading in the Private Offerings,
Resales and Trading through Automated Linkages ("PORTAL") Market. Debentures
sold pursuant to this Prospectus are not eligible for trading on the PORTAL
Market.

The Company will not receive any of the proceeds from the sale by the
Selling Securityholders of any Debentures or the Common Stock issued or issuable
upon conversion thereof. The Selling Securityholders will pay all underwriting
discounts and selling commissions, if any, applicable to the sale of the
Debentures and the Common Stock issued or issuable upon conversion of the
Debentures. Expenses of preparing and filing the registration statement to which
this Prospectus relates and all post-effective amendments will be borne by the
Company. See "Plan of Distribution" for a description of the indemnification
arrangements between the Company and the Selling Securityholders.

------------------------

SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
DEBENTURES AND THE COMMON STOCK.

------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

------------------------

The date of this Prospectus is August 11, 1998
<PAGE> 10

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed with the Securities and Exchange Commission
(the "Commission") are hereby incorporated by reference into this Prospectus:

1. The Company's Annual Report on Form 10-K for the fiscal year ended June
28, 1997;

2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
September 27, 1997, December 27, 1997 and March 28, 1998;

3. The Company's Current Reports on Form 8-K filed February 12, 1998,
August 10, 1998 and August 10, 1998; and

4. The description of the Company's Common Stock contained in the Company's
Registration Statement on Form 8-B, filed April 3, 1987, and any
amendments or reports filed for the purpose of updating such
description.

All documents subsequently filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), prior to the termination of the offering
to which this Prospectus relates shall be deemed to be incorporated by reference
into this Prospectus and to be a part of this Prospectus from the date of filing
of such documents. Any statement contained in any document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus and the Registration Statement of
which it is a part to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as modified or superseded, to
constitute a part of this Prospectus and such Registration Statement. The
Company will provide without charge to each person, including any beneficial
owner, to whom this Prospectus is delivered, upon written or oral request of
such person, a copy of any and all of the documents that have been or may be
incorporated by reference herein (other than exhibits to such documents which
are not specifically incorporated by reference into such documents). Such
requests should be directed to Investor Relations, Western Digital Corporation,
8105 Irvine Center Drive, Irvine, California, 92618, (949) 932-5000.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information filed with the Commission by the Company can be inspected and copied
at the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
located at 500 West Madison Street, Room 1400, Chicago, Illinois 60661 and at 7
World Trade Center, Suite 1300, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, Washington, D.C. 20549, at prescribed rates, or on the
Commission's web site at http://www.sec.gov. The Company's Common Stock is
listed on the New York Stock Exchange, and reports, proxy statements and other
materials concerning the Company can be inspected at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005.

FORWARD-LOOKING STATEMENTS

This Prospectus contains or incorporates by reference forward-looking
statements, within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act, that involve risks and uncertainties. These statements
appear in a number of places in this Prospectus and include statements regarding
the intentions, plans, strategies, beliefs or current expectations of the
Company, its directors or its officers with respect to, among other things: (i)
the financial prospects of the Company; (ii) the Company's financing plans;
(iii) trends affecting the Company's financial condition or operating results;
(iv) the Company's strategies for growth, operations, and product development
and commercialization; and (v) conditions or trends in or factors affecting the
hard drive industry. Prospective investors are cautioned that any such

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<PAGE> 11

forward-looking statements are not guarantees of future performance and involve
risks and uncertainties that could cause actual results to differ materially
from those anticipated in the forward-looking statements. The information
contained in this Prospectus or incorporated herein by reference, including
without limitation, the information set forth under the headings "Risk Factors"
herein, and under the headings "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Company's
filings under the Exchange Act, identifies important factors that could cause
such differences, including without limitation, the highly competitive nature of
the hard drive industry, which is characterized by periods of severe price
competition and price erosion, which can result in shifting market share; and
rapid technological changes, which require the Company to continually develop
new hard drive products incorporating new technology on a timely and
cost-effective basis, and which can also adversely affect the volume and
profitability of sales of existing products and increase the risk of inventory
obsolescence.

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<PAGE> 12

PROSPECTUS SUMMARY

The following information is qualified in its entirety by the more detailed
information and consolidated financial statements (including the notes thereto)
appearing elsewhere in this Prospectus and in the documents incorporated by
reference herein. Except as otherwise indicated, all references to the "Company"
or "Western Digital" refer to Western Digital Corporation and its wholly-owned
subsidiaries, unless the context otherwise requires.

THE COMPANY

Western Digital is a leading manufacturer in the information storage
management industry and competes in two of the hard drive industry's major data
storage markets: the desktop personal computer hard drive market and the
"enterprise" hard drive market, directed at high-performance workstations,
servers and multi-user systems. Western Digital's products are marketed
worldwide to original equipment manufacturers, distributors, resellers and
retailers. The Company's strategy is to be the time-to-market and time-to-volume
leader, as well as a time-to-quality innovator, in the hard drive markets in
which it competes.

The Company is incorporated in the State of Delaware. Its principal
executive offices are located at 8105 Irvine Center Drive, Irvine, California
92618 and its telephone number is (949) 932-5000.

DESCRIPTION OF THE SECURITIES

Securities.................... $1,297,200,000 principal amount at maturity of
Zero Coupon Convertible Subordinated Debentures
due 2018 and shares of the Company's Common
Stock issued or issuable upon conversion of the
Debentures. There will be no periodic interest
payments on the Debentures. See "Description of
Debentures -- General."

Yield to Maturity of
Debentures.................... 5.25% per annum (computed on a semi-annual bond
equivalent basis) calculated from February 18,
1998.

Conversion.................... The Debentures are convertible, at the option
of the holder, at any time after 90 days
following the latest date of original issuance
thereof and prior to maturity, unless
previously redeemed or otherwise purchased by
the Company, into Common Stock at the rate of
14.935 shares per $1,000 principal amount at
maturity of Debentures (the "Conversion Rate").
The Conversion Rate will not be adjusted for
accrued Original Issue Discount (as defined),
but will be subject to adjustment upon the
occurrence of certain events. Upon conversion,
the holder will not receive any cash payment
representing accrued Original Issue Discount;
such accrued Original Issue Discount will be
deemed paid by the Common Stock received upon
conversion. See "Description of
Debentures -- Conversion of Debentures."

Subordination................. The Debentures are subordinated in right of
payment to all existing and future Senior
Indebtedness (as defined) of the Company and
effectively subordinated in right of payment to
all indebtedness and other liabilities of the
Company's subsidiaries. At June 27, 1998, the
Company had approximately $60 million of
indebtedness outstanding that would have
constituted Senior Indebtedness, and the
Company's subsidiaries had approximately $384
million of indebtedness and other liabilities
outstanding (excluding intercompany liabilities
and liabilities of a type not required to be
reflected

4
<PAGE> 13

on a balance sheet in accordance with generally
accepted accounting principles) to which the
Debentures would have been effectively
subordinated. In January 1998, the Company
entered into a $250 million secured credit
facility, consisting of a funded $50 million
term loan and a $200 million revolving credit
line (the "Senior Bank Facility"). The term
loan and any draws under the revolving credit
line, and borrowings under any comparable or
replacement credit facilities entered into by
the Company in the future, will be Senior
Indebtedness. The amount of Senior Indebtedness
will increase from time to time. See
"Description of Debentures -- Subordination of
Debentures."

Original Issue Discount....... The Debentures were originally offered at an
Original Issue Discount for Federal income tax
purposes equal to the excess of the principal
amount at maturity of the Debenture over the
amount of its Issue Price. Prospective
purchasers of Debentures should be aware that,
although there will be no periodic payments of
interest on the Debentures, accrued Original
Issue Discount will be included periodically in
a holder's gross income for Federal income tax
purposes prior to conversion, redemption, other
disposition or maturity of such holder's
Debentures, whether or not such Debentures are
ultimately converted, redeemed, sold (to the
Company or otherwise) or paid at maturity. See
"Certain Federal Income Tax Considerations."

Sinking Fund.................. None.

Redemption.................... The Debentures are not redeemable by the
Company prior to February 18, 2003. Beginning
on February 18, 2003, the Debentures are
redeemable for cash at any time at the option
of the Company, in whole or in part, at
Redemption Prices equal to the Issue Price plus
accrued Original Issue Discount to the date of
redemption. See "Description of
Debentures -- Redemption of Debentures at the
Option of the Company."

Fundamental Change............ The Debentures may be redeemed at the option of
the holder if there is a Fundamental Change (as
defined) at a Fundamental Change Redemption
Price equal to the Issue Price plus accrued
Original Issue Discount to the date of
redemption, subject to adjustment in certain
circumstances. See "Description of
Debentures -- Redemption at Option of the
Holder Upon a Fundamental Change."

Purchase at the Option of the
Holder........................ The Company will purchase Debentures at the
option of the holder as of February 18, 2003,
February 18, 2008 and February 18, 2013 at
Purchase Prices equal to the Issue Price plus
accrued Original Issue Discount to such dates.
The Company may, at its option, elect to pay
any such Purchase Price in cash or Common
Stock, or any combination thereof. See
"Description of Debentures -- Purchase of
Debentures at the Option of the Holder."

5
<PAGE> 14

RISK FACTORS

An investment in the Debentures and the Common Stock issued or issuable
upon conversion of the Debentures involves a high degree of risk. Prospective
investors should carefully consider the following risk factors primarily related
to the securities offered hereby, as well as the risk factors primarily related
to the Company's business and operations set forth in the Company's filings
under the Exchange Act, which are incorporated herein by reference, in addition
to the other information set forth in this Prospectus and in the documents
incorporated by reference herein, in connection with an investment in the
Debentures or the Common Stock issued or issuable upon conversion of the
Debentures. Some of such factors have affected the Company's financial condition
or operating results in the past or are currently affecting the Company, and all
of such factors could affect the Company's future financial condition or
operating results.

The Company's Business. The Company's business is subject to a number of
risks, trends and uncertainties, some relating to the hard drive industry in
general and others relating more specifically to the Company. The hard drive
industry is intensely competitive and is characterized by periods of severe
price competition and price erosion, which can result in shifting market share.
The demands of hard drive customers for greater storage capacity and higher
performance result in rapid technological changes in hard drive products. To
maintain or grow its market share, the Company must continually develop new hard
drive products that incorporate new technology on a timely and cost-effective
basis. Rapid technology changes also can adversely affect the volume and
profitability of sales of existing products and increase the risk of inventory
obsolescence. The specific nature of these risks or their applicability to the
Company may change over time and prospective investors are urged to view the
Company's filings under the Exchange Act for information regarding the affect of
these factors on the Company and the hard drive industry. Due to these factors,
no assurance can be given as to the Company's future financial condition or
operating results.

Possible Price Volatility of Common Stock and Debentures. The market price
of the Company's Common Stock has been, and may continue to be, extremely
volatile. The market price of the Debentures and the shares of Common Stock into
which the Debentures are convertible may be significantly affected by factors
such as actual or anticipated fluctuations in the Company's operating results,
announcements of technological innovations, new products introduced by the
Company or its competitors, periods of severe pricing pressures, developments
with respect to patents or proprietary rights, conditions and trends in the hard
drive industry, changes in financial estimates by securities analysts, general
market conditions and other factors. In addition, the stock market has
experienced extreme price and volume fluctuations that have particularly
affected the market price for many high technology companies that have often
been unrelated to the operating performance of these companies. These broad
market fluctuations may adversely affect the market price of the Debentures and
the Common Stock into which the Debentures are convertible, and there can be no
assurance that the market price of the Debentures and the Common Stock into
which the Debentures are convertible will not decline below the levels
prevailing at the date of this Prospectus or the date of any purchase of the
Debentures or Common Stock offered hereby. Securities class action litigation
suits are often brought against companies following periods of volatility in the
market price of their securities. A number of such suits have been filed against
the Company and any such litigation against the Company could result in
substantial costs and a diversion of resources and management's attention.

Subordination. The Debentures are unsecured and subordinated in right of
payment to all existing and future Senior Indebtedness (as defined) of the
Company. As a result of such subordination, in the event of bankruptcy,
liquidation or reorganization of the Company and in certain other events, the
assets of the Company will be available to pay its obligations with respect to
the Debentures only after all Senior Indebtedness has been paid in full, and
there may not be sufficient assets remaining to pay amounts due on any or all of
the Debentures then outstanding. The Debentures also are effectively
subordinated in right of payment to all the liabilities, including trade
payables, of the Company's subsidiaries. The Indenture does not prohibit or
limit the incurrence of Senior Indebtedness by the Company or the incurrence of
other indebtedness and other liabilities by the Company or its subsidiaries, and
the incurrence of additional indebtedness and other liabilities by the Company
or its subsidiaries could adversely affect the Company's ability to pay its
obligations with respect to the Debentures. As of June 27, 1998, the Company had
approximately $60 million of indebtedness outstanding that would have
constituted Senior Indebtedness, and
6
<PAGE> 15

as of the same date the Company's subsidiaries had approximately $384 million of
indebtedness and other liabilities outstanding (excluding intercompany
liabilities and liabilities of a type not required to be reflected on a balance
sheet in accordance with generally accepted accounting principles) to which the
Debentures would have been effectively subordinated. In January 1998, the
Company entered into the Senior Bank Facility, borrowings under which will be
Senior Indebtedness. The Company anticipates that from time to time it will
incur additional indebtedness, including Senior Indebtedness, and that it and
its subsidiaries will from time to time incur other additional indebtedness and
liabilities. The amount of Senior Indebtedness can be expected to increase and
prospective investors are urged to review the Company's filings under the
Exchange Act for information regarding indebtedness of the Company that may
constitute Senior Indebtedness. See "Description of Debentures -- Subordination
of Debentures."

Limitations on Repurchases and Redemptions of Debentures. On February 18,
2003, February 18, 2008 and February 18, 2013 (each, a "Purchase Date"), the
Company will become obligated to purchase, at the option of the holder thereof,
any outstanding Debenture, subject to certain conditions. In addition, upon a
Fundamental Change (as defined), each holder of the Debentures will have certain
rights, at the holder's option, to require the Company to redeem all or a
portion of such holder's Debentures. There can be no assurance that the Company
would have sufficient funds to pay the repurchase price on any Purchase Date (in
which case, the Company could be required to issue shares of Common Stock to pay
the repurchase price at valuations based on then prevailing market prices) or,
in the event of a Fundamental Change, the redemption price for all the
Debentures tendered by the holders thereof. The agreements governing the Senior
Bank Facility provide that a Fundamental Change would constitute an event of
default thereunder and cause the subordination provisions in the Indenture to
apply, preventing redemption of the Debentures until Senior Indebtedness is paid
in full. Also, any future credit agreements (including agreements governing the
Senior Bank Facility, if it is extended beyond its initial three-year term) or
other agreements relating to other indebtedness (including other Senior
Indebtedness) to which the Company becomes a party may provide that a
Fundamental Change and the maturing of any obligation to purchase or redeem the
Debentures would constitute an event of default thereunder and may restrict or
prohibit the repurchase or redemption of the Debentures. In the event a Purchase
Date or a Fundamental Change occurs at a time when the Company is prohibited
under its then existing agreements from repurchasing or redeeming the
Debentures, the Company could seek the consent of its then existing lenders to
repurchase or redeem the Debentures or could attempt to refinance the borrowings
that contain such prohibition. If the Company does not obtain such a consent or
repay such borrowings, the Company would remain prohibited from repurchasing the
Debentures or redeeming the Debentures. In such case, the Company's failure to
redeem Debentures required to be repurchased or redeemed under the terms of the
Indenture would constitute an Event of Default under the Indenture and would
likely constitute a default under the terms of any other indebtedness of the
Company outstanding at such time. In such circumstances, or if a Fundamental
Change would in and of itself constitute an event of default under Senior
Indebtedness then outstanding, the subordination provisions in the Indenture
would likely prohibit or restrict payments to the holders of Debentures. The
term "Fundamental Change" is limited to certain specified transactions and does
not include all events that could adversely affect the Company's financial
condition or operating results. The requirement that the Company offer to redeem
the Debentures upon a Fundamental Change will not necessarily protect holders of
the Debentures in the event of a highly leveraged transaction, reorganization,
merger or similar transaction involving the Company. See "Description of
Debentures -- Redemption at Option of the Holder Upon a Fundamental Change."

Absence of a Public Market. The Debentures were issued in a private
placement in February of 1998 to a small number of institutional buyers. The
Company does not intent to list the Debentures on any national exchange or
interdealer quotation system. Although the Initial Purchasers have made a market
in the Debentures, they are not obligated to do so and may discontinue such
market making at any time without notice. In addition, such market making
activity will be subject to the limits imposed by the Securities Act and the
Exchange Act. Accordingly, there can be no assurance that any market for the
Debentures will develop or, if one does develop, that it will be maintained. If
an active market for the Debentures fails to develop or be sustained, the
trading price of the Debentures could be adversely affected.

7
<PAGE> 16

Ratings Risks. Moody's Investors Service has informed the Company that it
has assigned a B3 rating to the Debentures, and the Company believes that one or
more other rating agencies may also rate the Debentures. However, there can be
no assurance that any agency that rates the Debentures will not reduce or cease
its rating, or that any other agency or agencies will rate the Debentures or, if
they do, what rating or ratings they will assign. If one or more rating agencies
assign the Debentures a rating lower than generally expected by investors, or
reduce their ratings, such event would likely have an adverse effect on the
market price of the Debentures.

Certain Anti-Takeover Features. The Company's Certificate of Incorporation
and Bylaws contain certain provisions that could have the effect of deterring or
preventing certain takeover attempts. The Company has also adopted a
shareholders rights plan that may have a similar effect. See "Description of
Capital Stock."

Original Issue Discount. The Debentures were originally offered at an
Original Issue Discount for Federal income tax purposes equal to the excess of
the principal amount at maturity of the Debenture over the amount of its Issue
Price. Prospective purchasers of Debentures should be aware that, although there
will be no periodic payments of interest on the Debentures, accrued Original
Issue Discount will be included periodically in a holder's gross income for
Federal income tax purposes prior to conversion, redemption, other disposition
or maturity of such holder's Debentures, whether or not such Debentures are
ultimately converted, redeemed, sold (to the Company or otherwise) or paid at
maturity. See "Certain Federal Income Tax Considerations."

RATIO OF EARNINGS TO FIXED CHARGES

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
--------------------------------------------------------
JUNE 30, JULY 1, JUNE 29, JUNE 28, JUNE 27,
1994 1995 1996 1997 1998
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges(1)....................... 5.89x 12.57x 12.90x 30.30x N/A
Pro forma ratio of adjusted earnings to fixed charges(2).... 7.79x N/A
</TABLE>

- ---------------
(1) For purposes of determining the ratio of earnings to fixed charges, earnings
consist of income (loss) before income taxes plus fixed charges. Fixed
charges consist of interest expense (including amortization of original
issue discount and debt issuance costs, as applicable) and the estimated
portion of operating lease rental expense which represents the interest
factor. For the year ended June 27, 1998, there was a deficiency of earnings
available to cover fixed charges amounting to $292.0 million.

(2) Pro forma ratio of adjusted earnings to fixed charges reflects the ratio of
adjusted earnings to fixed charges as if the Debentures and the term
borrowings of $50 million under the Company's revolving credit and term loan
facility providing a $200 million revolving credit line and a $50 million
term loan had been outstanding for the year ended June 27, 1998, and the
related estimated charges had been incurred for the year then ended. For the
year ended June 27, 1998, there was a deficiency of pro forma earnings
available to cover fixed charges amounting to $313.0 million.

USE OF PROCEEDS

The Company will not receive any of the proceeds from the sales by the
Selling Securityholders of the Debentures or the Common Stock issued or issuable
upon conversion thereof.

8
<PAGE> 17

DESCRIPTION OF DEBENTURES

The Debentures were issued under an indenture dated as of February 18, 1998
(the "Indenture"), between the Company and State Street Bank and Trust Company
of California, N.A., as trustee (the "Trustee"). A copy of the form of Indenture
and Registration Rights Agreement is available from the Trustee upon request by
a registered holder of the Debentures. The following summaries of certain
provisions of the form of Debenture and the Indenture do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, all the provisions of the form of Debenture and the Indenture, including the
definitions therein of certain terms that are not otherwise defined in this
Prospectus. Wherever particular provisions or defined terms of the Indenture (or
of the form of Debenture which is a part thereof) are referred to, such
provisions or defined terms are incorporated herein by reference. As used in
this "Description of Debentures," the "Company" refers to Western Digital
Corporation and does not, unless the context otherwise indicates, include its
subsidiaries.

GENERAL

The Debentures are unsecured obligations of the Company limited to
$1,297,200,000 aggregate principal amount at maturity and will mature on
February 18, 2018.

The Debentures were issued at a substantial discount from their principal
amount at maturity. See "Certain Federal Income Tax Considerations." There will
be no periodic payments of interest on the Debentures. The calculation of the
accrual of Original Issue Discount (the difference between the Issue Price of
the Debentures and the principal amount at maturity of a Debenture) in the
period during which a Debenture remains outstanding is on a semi-annual bond
equivalent basis using a year composed of twelve 30-day months; such accrual
commenced on the Issue Date of the Debentures. Maturity, conversion, purchase by
the Company at the option of a holder or redemption of a Debenture will cause
Original Issue Discount and interest, if any, to cease to accrue on such
Debenture, under the terms and subject to the conditions of the Indenture. The
Company may not reissue a Debenture that has matured or been converted,
purchased by the Company at the option of a holder, redeemed or otherwise
canceled (except for registration of transfer, exchange or replacement thereof).

The principal amount at maturity of each Debenture will be payable at the
office or agency of the paying agent, initially the Trustee, in the Borough of
Manhattan, The City of New York, or any other office of the paying agent
maintained for such purpose. Debentures may be presented for conversion or
exchange into Common Stock at the office of the conversion agent and Debentures
in definitive form may be presented for exchange for other Debentures or
registration of transfer at the office of the registrar, each such agent
initially being the Trustee. The Company will not charge a service charge for
any registration of transfer or exchange of Debentures; however, the Company may
require payment by a holder of a sum sufficient to cover any tax, assessment or
other governmental charge payable in connection therewith.

FORM, DENOMINATION AND REGISTRATION

The Debentures were issued in fully registered form, without coupons, in
denominations of $1,000 principal amount at maturity and multiples thereof.

Global Debenture; Book-Entry Form. Debentures originally issued to
"qualified institutional buyers," as defined in Rule 144A under the Securities
Act ("QIBs"), were evidenced by a global Debenture (the "Global Debenture"),
deposited with, or on behalf of, The Depository Trust Company, New York, New
York ("DTC") and registered in the name of Cede & Co. ("Cede") as DTC's nominee.
Except as set forth below, the Global Debenture may be transferred, in whole or
in part, only to another nominee of DTC or to a successor of DTC or its nominee.

QIBs may hold their interests in the Global Debenture directly through DTC,
or indirectly through organizations which are participants in DTC (the
"Participants"). Transfers between Participants will be effected in the ordinary
way in accordance with DTC rules and will be settled in clearing house funds.
The laws of some states require that certain persons take physical delivery of
securities in definitive form.

9
<PAGE> 18

Consequently, the ability to transfer beneficial interests in the Global
Debenture to such persons may be limited.

QIBs who are not Participants may beneficially own interests in the Global
Debenture held by DTC only through Participants or certain banks, brokers,
dealers, trust companies and other parties that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
("Indirect Participants"). So long as Cede, as the nominee of DTC, is the
registered owner of the Global Debenture, Cede for all purposes will be
considered the sole holder of the Global Debenture. Except as provided below,
owners of beneficial interests in the Global Debenture will not be entitled to
have certificates registered in their names, will not receive or be entitled to
receive physical delivery of certificates in definitive form, and will not be
considered the holders thereof.

Payment of interest (if any) on and the redemption price and the purchase
price of the Global Debenture will be made to Cede, the nominee for DTC, as the
registered owner of the Global Debenture by wire transfer of immediately
available funds. Neither the Company, the Trustee nor any paying agent will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global
Debenture or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.

The Company has been informed by DTC that, with respect to payment of
interest (if any) on and the redemption price or the purchase price of the
Global Debenture, DTC's practice is to credit Participants' accounts on the
payment date therefor with payments in amounts proportionate to their respective
beneficial interests in the Debentures represented by the Global Debenture as
shown on the records of DTC (adjusted as necessary so that such payments are
made with respect to whole Debentures only), unless DTC has reason to believe
that it will not receive payment on such payment date. Payments by Participants
to owners of beneficial interests in Debentures represented by the Global
Debenture held through such Participants will be the responsibility of such
Participants, as is now the case with securities held for the accounts of
customers registered in "street name."

Holders who desire to convert their Debentures into Common Stock should
contact their brokers or other Participants or Indirect Participants to obtain
information on procedures, including proper forms and cut-off times, for
submitting such request.

Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a person
having a beneficial interest in the Debentures represented by the Global
Debenture to pledge such interest to persons or entities that do not participate
in the DTC system, or otherwise take actions in respect of such interest, may be
affected by the lack of a physical certificate evidencing such interest.

Neither the Company nor the Trustee (or any registrar, paying agent or
conversion agent under the Indenture) will have any responsibility for the
performance by DTC or their Participants or Indirect Participants of their
respective obligations under the rules and procedures governing their
operations. DTC has advised the Company that it will take any action permitted
to be taken by a holder of Debentures (including, without limitation, the
presentation of Debentures for conversion as described below) only at the
direction of one or more Participants to whose account with DTC interests in the
Global Debenture are credited and only in respect of the principal amount of the
Debentures represented by the Global Debenture as to which such Participant or
Participants has or have given such direction.

DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and to facilitate the clearance and settlement
of securities transactions between Participants through electronic book-entry
changes to accounts of its Participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and may include
certain other organizations such as the Initial Purchasers. Certain of such
Participants (or their

10
<PAGE> 19

representatives), together with other entities, own DTC. Indirect access to the
DTC system is available to others such as banks, brokers, dealers and trust
companies that clear through, or maintain a custodial relationship with a
Participant, either directly or indirectly.

Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Debenture among participants of DTC, DTC is
under no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
the Company within 90 days, the Company will cause Debentures to be issued in
definitive form in exchange for the Global Debenture.

Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants and Indirect Participants to beneficial
owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements that may be in effect from time to time. Redemption
notices shall be sent to Cede. If less than all of the Debentures are being
redeemed, DTC will reduce the amount of the interest of each Participant in such
Debentures in accordance with its procedures.

Certificated Debentures. Debentures originally issued to investors that
were not QIBs were issued in definitive registered form and were not represented
by the Global Debenture. QIBs may request that any Debentures they hold in
definitive registered form be exchanged for interests in the Global Debenture.
Certificated Debentures may be issued in exchange for Debentures represented by
the Global Debenture if a depositary is unwilling or unable to continue as a
depositary for the Global Debenture as set forth above under "Global Debenture;
Book-Entry Form."

SUBORDINATION OF DEBENTURES

The Indebtedness evidenced by the Debentures is subordinated to the extent
provided in the Indenture to the prior payment in full in cash or other payment
satisfactory to the holders of Senior Indebtedness of all existing and future
Senior Indebtedness. Such subordination will not prevent the occurrence of any
Event of Default under the Indenture.

Upon any distribution of assets of the Company upon any dissolution,
winding up, voluntary or involuntary bankruptcy, insolvency, liquidation,
reorganization, receivership or similar proceeding relating to the Company or
its property, an assignment for the benefit of creditors or any marshaling of
the Company's assets or liabilities, the holders of Senior Indebtedness will be
entitled to receive payment in full, in cash or other payment satisfactory to
the holders of Senior Indebtedness, of all obligations due in respect of such
Senior Indebtedness before the holders of Debentures will be entitled to receive
any payment of the principal amount at maturity, Issue Price, accrued Original
Issue Discount, Redemption Price, Purchase Price, Fundamental Change Redemption
Price and interest, if any (including liquidated damages, if any) or other
payment in respect of the Debentures (a "Payment on the Debentures"), and until
all obligations with respect to Senior Indebtedness are paid in full in cash or
other payment satisfactory to the holders of Senior Indebtedness, any Payment on
the Debentures to which the holders of Debentures would be entitled shall be
made to the holders of Senior Indebtedness. By reason of the subordination, in
the event of the Company's dissolution, winding up, bankruptcy, liquidation,
reorganization or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshaling of the Company's
assets, holders of Senior Indebtedness may receive more, ratably, and the
holders of Debentures may receive less, ratably, than the other creditors of the
Company.

In the event that the Debentures are declared due and payable prior to
their stated maturity by reason of the occurrence of an Event of Default, then
the Company is obligated to notify promptly holders of Senior Indebtedness of
such acceleration. The Company may not pay monies owed pursuant to the
Debentures until 120 days have passed after such acceleration occurs and may
thereafter pay the Debentures only if the terms of the Indenture otherwise
permit payment at that time.

The Company also may not make any Payment on the Debentures if (i) a
default in any payment obligations in respect of Senior Indebtedness occurs and
is continuing, without regard to any applicable period of grace (whether at
maturity or at a date fixed for payment or by declaration or otherwise) (each a
"payment

11
<PAGE> 20

default") or (ii) any other default occurs and is continuing with respect to
Designated Senior Indebtedness that permits holders of the Designated Senior
Indebtedness as to which such default relates to accelerate its maturity and the
Trustee receives a notice of such default (a "Payment Blockage Notice") from the
Company or from a representative for any issue of Designated Senior
Indebtedness. Payments on the Debentures may and shall be resumed (a) in case of
a payment default, the earlier of the date on which such default is cured or
waived in accordance with the terms of the governing instrument or ceases to
exist and (b) in case of a nonpayment default, the earlier of the date on which
such nonpayment default is cured or waived in accordance with the terms of the
governing instrument or ceases to exist or 179 days after the date on which the
applicable Payment Blockage Notice is received by the Trustee, if the maturity
of such Designated Senior Indebtedness has not been accelerated, and in either
case only if the terms of the Indenture otherwise permit payment at that time.
No new period of payment blockage may be commenced pursuant to a Payment
Blockage Notice unless and until 365 days have elapsed since the initial
effectiveness of the immediately prior Payment Blockage Notice. No nonpayment
default that existed or was continuing on the date of delivery of any Payment
Blockage Notice to the Trustee shall be, or shall be made, the basis for a
subsequent Payment Blockage Notice unless such default shall have been cured or
waived for a period of not less than 90 days (it being acknowledged that (x) any
action of the Company or any of its Subsidiaries occurring subsequent to
delivery of a Payment Blockage Notice that would give rise to any event of
default pursuant to any provision of Senior Indebtedness under which an event of
default previously existed (or was continuing at the time of delivery of such
Payment Blockage Notice) shall constitute a new event of default for this
purpose and (y) any breach of a financial covenant giving rise to a nonpayment
default for a period ending subsequent to the date of delivery of the respective
Payment Blockage Notice shall constitute a new event of default for this
purpose).

The term "Senior Indebtedness" means the principal of, premium, if any,
interest (including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding), rent and end of term
payments payable on or in connection with, and, to the extent not included in
the foregoing, all amounts payable as fees, costs, expenses, liquidated damages,
indemnities, repurchase and other put obligations and other amounts to the
extent accrued or due on or in connection with, Indebtedness (as defined) of the
Company, whether outstanding on the date of the Indenture or thereafter created,
incurred, assumed, guaranteed or in effect guaranteed by the Company (including
all deferrals, renewals, extensions or refundings of, or amendments,
modifications or supplements to, the foregoing). Notwithstanding the foregoing,
the term Senior Indebtedness shall not include (i) Indebtedness evidenced by the
Debentures, (ii) Indebtedness of the Company to any subsidiary of the Company, a
majority of the voting stock of which is owned, directly or indirectly, by the
Company, (iii) accounts payable or other indebtedness to trade creditors created
or assumed by the Company in the ordinary course of business and (iv) any
particular Indebtedness in which the instrument creating or evidencing the same
or the assumption or guarantee thereof expressly provides that such Indebtedness
shall not be senior in right of payment to, or is pari passu with, or is
subordinated or junior to, the Debentures.

The term "Indebtedness" means, with respect to any Person (as defined) and
without duplication: (a) all indebtedness, obligations and other liabilities
(contingent or otherwise) of such Person for borrowed money (including
obligations of the Company in respect of overdrafts, foreign exchange contracts,
currency exchange agreements, interest rate protection agreements, and any loans
or advances from banks, whether or not evidenced by notes or similar
instruments) or evidenced by bonds, debentures, notes or similar instruments
(whether or not the recourse of the lender is to the whole of the assets of such
Person or to only a portion thereof); (b) all reimbursement obligations and
other liabilities (contingent or otherwise) of such Person with respect to
letters of credit, bank guarantees or bankers' acceptances; (c) all obligations
and liabilities (contingent or otherwise) in respect of leases of such Person
(i) required, in conformity with generally accepted accounting principles, to be
accounted for as capitalized lease obligations on the balance sheet of such
Person, or (ii) required, in conformity with generally accepted accounting
principles to be accounted for as an operating lease, provided either (A) such
operating lease requires, at the end of the term thereof, that such Person make
any payment other than accrued periodic rent in the event that such Person does
not acquire the leased real property and related fixtures subject to such lease,
or (B) such Person has an option to acquire the leased real property and related
fixtures, whether such option is exercisable at any time or under
12
<PAGE> 21

specified circumstances; (d) all obligations of such Person (contingent or
otherwise) with respect to an interest rate swap, cap or collar agreement or
other similar instrument or agreement; (e) all direct or indirect guaranties or
similar agreements by such Person in respect of, and obligations or liabilities
(contingent or otherwise) of such Person to purchase or otherwise acquire or
otherwise assure a creditor against loss in respect of, indebtedness,
obligations or liabilities of another Person of the kind described in clauses
(a) through (d); (f) any indebtedness or other obligations described in clauses
(a) through (d) secured by any mortgage, pledge, lien or other encumbrance
existing on property which is owned or held by such Person, regardless of
whether the indebtedness or other obligation secured thereby shall have been
assumed by such Person; and (g) any and all deferrals, renewals, extensions and
refundings of, or amendments, modifications or supplements to, any indebtedness,
obligation or liability of the kind described in clauses (a) through (f).

The term "Designated Senior Indebtedness" means the Company's Senior Bank
Facility and any particular Senior Indebtedness in which the instrument creating
or evidencing the same or the assumption or guarantee thereof (or related
agreements or documents to which the Company is a party) expressly provides that
such Senior Indebtedness shall be "Designated Senior Indebtedness" for purposes
of the Indenture; provided that such instrument, agreement or other document may
place limitations and conditions on the right of such Senior Indebtedness to
exercise the rights of Designated Senior Indebtedness; and provided further that
until such time as all amounts outstanding under the Senior Bank Facility have
been paid in full and all lending commitments under the Senior Bank Facility
have terminated, the Company may not designate any other Senior Indebtedness as
"Designated Senior Indebtedness" without the prior written consent of the agent
under the Senior Bank Facility, and such agent shall be the only person
authorized under the Indenture to provide written notice to the Trustee of any
such designation.

The Debentures are obligations exclusively of the Company. Since a portion
of the operations of the Company are conducted through subsidiaries, the cash
flow and the consequent ability to service debt, including the Debentures, are
dependent upon the earnings of its subsidiaries and the distribution of those
earnings to, or upon loans or other payments of funds by those subsidiaries to,
the Company. The subsidiaries are separate and distinct legal entities and have
no obligation, contingent or otherwise, to pay any amount pursuant to the
Debentures or to make any funds available therefor, whether by dividends, loans
or other payments. In addition, the payment of dividends and making of loans and
advances to the Company by its subsidiaries may be subject to statutory or
contractual restrictions, are contingent upon the earnings of those subsidiaries
and are subject to various business considerations.

Any right of the Company to receive assets of any of its subsidiaries upon
their liquidation or reorganization (and the consequent right of the holders of
the Debentures to participate in those assets) will be effectively subordinated
to the claims of that subsidiary's creditors (including trade creditors), except
to the extent that the Company is itself recognized as a creditor of such
subsidiary, in which case the claims of the Company would still be subordinate
to any security interests in the assets of such subsidiary and any indebtedness
of such subsidiary senior to that held by the Company.

At June 27, 1998, the Company had approximately $60 million of indebtedness
outstanding that would have constituted Senior Indebtedness, and as of the same
date the Company's subsidiaries had approximately $384 million of indebtedness
and other liabilities outstanding (excluding intercompany liabilities and
liabilities of a type not required to be reflected on a balance sheet in
accordance with generally accepted accounting principles) to which the
Debentures would have been effectively subordinated. In January 1998, the
Company entered into the Senior Bank Facility, borrowings under which will be
Senior Indebtedness. The Indenture does not limit the amount of additional
indebtedness, including Senior Indebtedness, which the Company can create,
incur, assume or guarantee, nor does the Indenture limit the amount of
indebtedness which any subsidiary can create, incur, assume or guarantee. The
amount of Senior Indebtedness can be expected to increase and prospective
investors are urged to review the Company's filings under the Exchange Act for
information regarding indebtedness of the Company that may constitute Senior
Indebtedness.

In the event that, notwithstanding the foregoing, the Trustee or any holder
of the Debentures receives any payment or distribution of assets of the Company
of any kind in contravention of any of the subordination provisions of the
Indenture, whether in cash, property or securities, including, without
limitation, by way of

13
<PAGE> 22

set-off or otherwise, in respect of the Debentures before all Senior
Indebtedness is paid in full in cash or other payment satisfactory to the
holders of Senior Indebtedness, then such payment or distribution will be held
by the recipient in trust for the benefit of, and paid over to, holders of
Senior Indebtedness or their representatives to the extent necessary to make
payment in full in cash or other payment satisfactory to the holders of Senior
Indebtedness of all Senior Indebtedness remaining unpaid, after giving effect to
any concurrent payment or distribution, or provision therefor, to or for the
holders of Senior Indebtedness.

The Company is obligated to pay reasonable compensation to the Trustee and
to indemnify the Trustee against certain losses, liabilities or expenses
incurred by it in connection with its duties relating to the Debentures. The
Trustee's claims for such payments will generally be senior to those of holders
of the Debentures in respect of all funds collected or held by the Trustee.

CONVERSION OF DEBENTURES

A holder of a Debenture may convert it into Common Stock of the Company at
any time after 90 days following the latest date of original issuance of the
Debentures through the close of business on February 18, 2018; provided that if
a Debenture is called for redemption, the holder may convert it only until the
close of business on the last trading day prior to the Redemption Date unless
the Company defaults in the payment of the Redemption Price. A Debenture in
respect of which a holder has delivered a Purchase Notice exercising the option
of such holder to require the Company to purchase such Debenture may be
converted only if such notice is withdrawn in accordance with the terms of the
Indenture. Similarly, a Debenture in respect of which a holder is exercising its
option to require redemption upon a Fundamental Change may be converted only if
such holder withdraws its election to exercise its option in accordance with the
terms of the Indenture. A holder may convert such holder's Debentures in part so
long as such part is $1,000 principal amount at maturity or a multiple thereof.

The initial Conversion Rate is 14.935 shares of Common Stock per $1,000
principal amount at maturity of Debentures, subject to adjustment upon the
occurrence of certain events, as described below. A holder entitled to a
fractional share of Common Stock shall receive cash equal to the then current
market value of such fractional share.

On conversion of a Debenture, a holder will not receive any cash payment
representing accrued Original Issue Discount. The Company's delivery to the
holder of the fixed number of shares of Common Stock into which the Debenture is
convertible (together with the cash payment, if any, in lieu of fractional
Common Stock) will be deemed to satisfy the Company's obligation to pay the
principal amount of the Debenture including the accrued Original Issue Discount
attributable to the period from the Issue Date to the Conversion Date. Thus, the
accrued Original Issue Discount is deemed to be paid in full rather than
canceled, extinguished or forfeited. The Conversion Rate will not be adjusted at
any time during the term of the Debentures for such accrued Original Issue
Discount.

To convert a certificated Debenture into Common Stock, a holder must (i)
complete and manually sign the conversion notice on the back of the Debenture
(or complete and manually sign a facsimile thereof) and deliver such notice to
the conversion agent, (ii) surrender the Debenture to the conversion agent,
(iii) if required, furnish appropriate endorsements and transfer documents, and
(iv) if required, pay all transfer or similar taxes. The procedure for
converting a Global Debenture is described above under "Form, Denomination and
Registration -- Global Debenture; Book-Entry Form." Pursuant to the Indenture,
the date on which all of the foregoing requirements have been satisfied is the
Conversion Date.

The Conversion Rate is subject to adjustment under formulae as set forth in
the Indenture in certain events, including: (i) the issuance of Common Stock of
the Company as a dividend or distribution on the Common Stock; (ii) certain
subdivisions and combinations of the Common Stock; (iii) the issuance to all
holders of Common Stock of certain rights or warrants to purchase Common Stock;
(iv) the distribution to all holders of Common Stock of capital stock (other
than Common Stock) or evidences of indebtedness of the Company or of assets
(including securities; but excluding those rights, warrants, dividends and
distributions referred to above or paid in cash); (v) distributions consisting
of cash, excluding any quarterly cash dividend on the Common Stock to the extent
that the aggregate cash dividend per share of Common Stock in any
14
<PAGE> 23

quarter does not exceed the greater of (x) the amount per share of Common Stock
of the next preceding quarterly cash dividend on the Common Stock to the extent
that such preceding quarterly dividend did not require an adjustment of the
Conversion Rate pursuant to this clause (v) (as adjusted to reflect subdivisions
or combinations of the Common Stock), and (y) 3.75 percent of the average of the
last reported sales price of the Common Stock during the ten trading days
immediately prior to the date of declaration of such dividend, and excluding any
dividend or distribution in connection with the liquidation, dissolution or
winding up of the Company; (vi) payment in respect of a tender offer or exchange
offer by the Company or any Subsidiary of the Company for the Common Stock to
the extent that the cash and value of any other consideration included in such
payment per share of Common Stock exceeds the Current Market Price (as defined)
per share of Common Stock on the trading day next succeeding the last date on
which tenders or exchanges may be made pursuant to such tender or exchange
offer; and (vii) payment in respect of a tender offer or exchange offer by a
person other than the Company or any Subsidiary (as defined) of the Company in
which, as of the closing date of the offer, the Board of Directors is not
recommending rejection of the offer. If an adjustment is required to be made as
set forth in clause (v) above as a result of a distribution that is a quarterly
dividend, such adjustment would be based upon the amount by which such
distribution exceeds the amount of the quarterly cash dividend permitted to be
excluded pursuant to clause (v) above. If an adjustment is required to be made
as set forth in clause (v) above as a result of a distribution that is not a
quarterly dividend, such adjustment would be based upon the full amount of the
distribution. The adjustment referred to in clause (vii) above will only be made
if the tender offer or exchange offer is for an amount that increases the
offeror's ownership of Common Stock to more than 25% of the total shares of
Common Stock outstanding, and if the cash and value of any other consideration
included in such payment per share of Common Stock exceeds the Current Market
Price per share of Common Stock on the business day next succeeding the last
date on which tenders or exchanges may be made pursuant to such tender or
exchange offer. The adjustment referred to in clause (vii) above will generally
not be made, however, if as of the closing of this offer, the offering documents
with respect to such offer disclose a plan or an intention to cause the Company
to engage in a consolidation or merger of the Company or a sale of all or
substantially all of the Company's assets.

Under the terms of the Company's Stockholder Rights Plan, upon conversion
of any Debentures prior to the redemption or expiration of the Rights, the
holders of such Debentures will receive, subject to certain limited conditions,
an appropriate number of Rights with respect to the shares of Common Stock
issued upon such conversion. See "Description of Capital Stock -- Anti-Takeover
Effects." In addition, the Indenture provides that if the Company amends the
Stockholder Rights Plan or implements a replacement or successor stockholders'
rights plan, such rights plan must provide that upon conversion of the
Debentures the holders will receive, in addition to the Common Stock issuable
upon such conversion, such rights whether or not such rights have separated from
the Common Stock at the time of such conversion.

No adjustment in the Conversion Rate will be required unless such
adjustment would require a change of at least 1% in the rate then in effect;
provided that any adjustment that would otherwise be required to be made shall
be carried forward and taken into account in any subsequent adjustment. Except
as stated above, the Conversion Rate will not be adjusted for the issuance of
Common Stock or any securities convertible into or exchangeable for Common Stock
or carrying the right to purchase any of the foregoing.

In the case of (i) any reclassification of the Common Stock, or (ii) a
consolidation or merger involving the Company or a sale or conveyance to another
corporation of the property and assets of the Company as an entirety or
substantially as an entirety, in each case as a result of which holders of
Common Stock shall be entitled to receive stock, securities, other property or
assets (including cash) with respect to or in exchange for such Common Stock,
the holders of the Debentures then outstanding will be entitled thereafter to
convert such Debentures into the kind and amount of shares of stock, securities
or other property or assets (including cash) which they would have owned or been
entitled to receive upon such reclassification, consolidation, merger, sale or
conveyance had such Debentures been converted immediately prior to such
reclassification, consolidation, merger, sale or conveyance assuming that a
holder of Debentures would not have exercised any rights of election as to the
stock, securities or other property or assets (including cash) receivable in
connection therewith.

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<PAGE> 24

In the event of a taxable distribution to holders of Common Stock or in
certain other circumstances requiring an adjustment to the Conversion Rate, the
holders of Debentures may, in certain circumstances, be deemed to have received
a distribution subject to United States income tax as a dividend; in certain
other circumstances, the absence of such an adjustment may result in a taxable
dividend to the holders of Common Stock. See "Certain Federal Income Tax
Considerations" below.

The Company from time to time may to the extent permitted by law increase
the Conversion Rate by any amount for any period of at least 20 days, in which
case the Company shall give at least 15 days' notice of such increase, if the
Board of Directors has made a determination that such increase would be in the
best interests of the Company, which determination shall be conclusive. The
Company may, at its option, make such increases in the Conversion Rate, in
addition to those set forth above, as the Board of Directors deems advisable to
avoid or diminish any income tax to holders of Common Stock resulting from any
dividend or distribution of stock (or rights to acquire stock) or from any event
treated as such for income tax purposes. See "Certain Federal Income Tax
Considerations."

REDEMPTION OF DEBENTURES AT THE OPTION OF THE COMPANY

No sinking fund is provided for the Debentures. Prior to February 18, 2003,
the Debentures are not redeemable at the option of the Company. Beginning on
February 18, 2003, the Company may (subject to applicable contractual
restrictions including under agreements governing Senior Indebtedness) redeem
the Debentures for cash as a whole at any time, or from time to time in part,
upon not less than 30 days' nor more than 60 days' notice of redemption given by
mail to holders of Debentures. The Debentures will be redeemable in multiples of
$1,000 principal amount at maturity.

The table below shows Redemption Prices of Debentures per $1,000 principal
amount at maturity thereof at February 18, 2003 and at each February thereafter
prior to maturity and at maturity on February 18, 2018, which prices reflect the
accrued Original Issue Discount calculated to each such date. The Redemption
Price of a Debenture redeemed between such dates would include an additional
amount reflecting the additional Original Issue Discount accrued since the next
preceding date in the table to the actual Redemption Date.

<TABLE>
<CAPTION>
(2) (3)
(1) ACCRUED ORIGINAL REDEMPTION
DEBENTURE ISSUE DISCOUNT PRICE
REDEMPTION DATE ISSUE PRICE AT 5.25% (1)+(2)
--------------- ----------- ---------------- ----------
<S> <C> <C> <C>
February 18, 2003..................... $354.71 $104.93 $ 459.64
February 18, 2004..................... 354.71 129.37 484.08
February 18, 2005..................... 354.71 155.12 509.83
February 18, 2006..................... 354.71 182.24 536.95
February 18, 2007..................... 354.71 210.80 565.51
February 18, 2008..................... 354.71 240.88 595.59
February 18, 2009..................... 354.71 272.55 627.26
February 18, 2010..................... 354.71 305.92 660.63
February 18, 2011..................... 354.71 341.05 695.76
February 18, 2012..................... 354.71 378.06 732.77
February 18, 2013..................... 354.71 417.04 771.75
February 18, 2014..................... 354.71 458.08 812.79
February 18, 2015..................... 354.71 501.31 856.02
February 18, 2016..................... 354.71 546.84 901.55
February 18, 2017..................... 354.71 594.80 949.51
February 18, 2018..................... 354.71 645.29 1,000.00
</TABLE>

If less than all of the outstanding Debentures held in certificated form
are to be redeemed, the Trustee shall select the Debentures held in such form to
be redeemed in principal amounts at maturity of $1,000 or multiples thereof by
lot, pro rata or by another method the Trustee considers fair and appropriate
(as long as such method is not prohibited by the rules of any stock exchange on
which the Debentures are then listed). If

16
<PAGE> 25

a portion of a holder's certificated Debentures is selected for partial
redemption and such holder converts a portion of such Debentures, such converted
portion shall be deemed to be the portion selected for redemption. Debentures
registered in the name of DTC or its nominee will be redeemed as described under
"-- Form, Denomination and Registration -- Global Debenture; Book-Entry Form."

REDEMPTION AT OPTION OF THE HOLDER UPON A FUNDAMENTAL CHANGE

If a Fundamental Change (as defined) occurs at any time prior to February
18, 2018, each holder of Debentures shall have the right, at the holder's
option, to require the Company to redeem any or all of such holder's Debentures
on the date (the "Repurchase Date") that is 45 days after the date of the
Company's notice of such Fundamental Change. The Debentures will be redeemable
in multiples of $1,000 principal amount at maturity.

The Company shall redeem such Debentures at a price (the "Fundamental
Change Redemption Price") equal to the Issue Price plus accrued Original Issue
Discount to the Repurchase Date; provided that if the Applicable Price (as
defined) in connection with the Fundamental Change is less than the Reference
Market Price (as defined), the Company shall redeem such Debentures at a price
equal to the foregoing Fundamental Change Redemption Price multiplied by the
fraction obtained by dividing the Applicable Price by the Reference Market
Price.

The Company shall mail to all holders of record of the Debentures a notice
of the occurrence of a Fundamental Change and of the redemption right arising as
a result thereof on or before the tenth day after the occurrence of such
Fundamental Change. The Company shall deliver to the Trustee a copy of such
notice. To exercise the redemption right, holders of Debentures must deliver, on
or before the 30th day after the date of the Company's notice of a Fundamental
Change, the Debentures to be so redeemed, duly endorsed for transfer, together
with the form entitled "Option to Elect Redemption Upon a Fundamental Change" on
the reverse thereof duly completed, to the Company (or an agent designated by
the Company for such purpose).

The term "Fundamental Change" means the occurrence of any transaction or
event in connection with which all or substantially all Common Stock shall be
exchanged for, converted into, acquired for or constitute solely the right to
receive consideration (whether by means of an exchange offer, liquidation,
tender offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise) which is not all or substantially all common
stock listed (or, upon consummation of or immediately following such transaction
or event, which will be listed) on a United States national securities exchange
or approved for quotation on the Nasdaq National Market or any similar United
States system of automated dissemination of quotations of securities prices. The
term "Applicable Price" means (i) in the event of a Fundamental Change in which
the holders of the Common Stock receive only cash, the amount of cash received
by the holder of one share of Common Stock and (ii) in the event of any other
Fundamental Change, the average of the reported last sale price for the Common
Stock during the ten trading days prior to the record date for the determination
of the holders of Common Stock entitled to receive cash, securities, property or
other assets in connection with such Fundamental Change, or, if there is no such
record date, the date upon which the holders of the Common Stock shall have the
right to receive such cash, securities, property or other assets in connection
with the Fundamental Change. The term "Reference Market Price" shall initially
mean $12.67 (which is equal to 66 2/3% of the last sale price of the Common
Stock on February 11, 1998, the day prior to the original issuance of the
Debentures) and in the event of any adjustment to the Conversion Rate pursuant
to the provisions of the Indenture, the Reference Market Price shall also be
adjusted so that the Reference Market Price shall be equal to the initial
Reference Market Price multiplied by a fraction the numerator of which is the
Conversion Rate specified on the cover of this Prospectus (without regard to any
adjustment thereto) and the denominator of which is the Conversion Rate
following such adjustment.

The Company will comply with the provisions of Rule 13e-4 and any other
tender offer rules under the Exchange Act which may then be applicable in
connection with the redemption rights of Debenture holders in the event of a
Fundamental Change.

The redemption rights of the holders of Debentures could discourage a
potential acquiror of the Company. The Fundamental Change redemption feature,
however, is not the result of management's
17
<PAGE> 26

knowledge of any specific effort to obtain control of the Company by means of a
merger, tender offer, solicitation or otherwise, or part of a plan by management
to adopt a series of anti-takeover provisions.

The term "Fundamental Change" is limited to certain specified transactions
and may not include other events that might adversely affect the financial
condition of the Company, nor would the requirement that the Company offer to
repurchase the Debentures upon a Fundamental Change necessarily afford the
holders of the Debentures protection in the event of a highly leveraged
transaction, reorganization, merger or similar transaction involving the
Company.

No Debentures may be redeemed at the option of holders upon a Fundamental
Change if there has occurred and is continuing an Event of Default described
under "Events of Default; Notice and Waiver" below (other than a default in the
payment of the Fundamental Change Redemption Price with respect to such
Debentures). In the event of a Fundamental Change and exercise by holders of the
Debentures of their associated rights to require the Company to redeem all or a
portion of their Debentures, there can be no assurance that the Company would
have sufficient funds to pay the redemption price for all the Debentures
tendered by the holders thereof. The agreements governing the Senior Bank
Facility provide that a Fundamental Change would constitute an event of default
thereunder and cause the subordination provisions in the Indenture to apply,
preventing redemption of the Debentures until Senior Indebtedness is paid in
full. Any future credit agreements (including an extension of the Senior Bank
Facility) or other agreements relating to other indebtedness (including other
Senior Indebtedness) to which the Company becomes a party may contain similar
default provisions and may provide that the maturing of any obligation to redeem
the Debentures upon a Fundamental Change would constitute an event of default
thereunder and may restrict or prohibit the redemption of the Debentures. In the
event a Fundamental Change occurs at a time when the Company is prohibited from
redeeming the Debentures, the Company could seek the consent of its then
existing lenders to redeem the Debentures or could attempt to refinance the
borrowings that contain such prohibition. If the Company does not obtain such a
consent or repay such borrowings, the Company would remain prohibited from
redeeming the Debentures. In such case, the Company's failure to redeem
Debentures required to be redeemed under the terms of the Indenture would
constitute an Event of Default under the Indenture and would likely constitute a
default under the terms of any other indebtedness of the Company outstanding at
such time. In such circumstances, or if a Fundamental Change would in and of
itself constitute an event of default under agreements governing Senior
Indebtedness then outstanding, the subordination provisions in the Indenture
would likely prohibit or restrict payments to the holders of Debentures.

PURCHASE OF DEBENTURES AT THE OPTION OF THE HOLDER

On February 18, 2003, February 18, 2008 and February 18, 2013 (each, a
"Purchase Date"), the Company will become obligated to purchase, at the option
of the holder thereof, any outstanding Debenture for which a written Purchase
Notice has been delivered by the holder to the office of the paying agent
(initially the Trustee) at any time from the opening of business on the date
that is 20 Business Days (as defined) prior to such Purchase Date until the
close of business on such Purchase Date and for which such Purchase Notice has
not been withdrawn, subject to certain additional conditions.

The Purchase Notice shall state (i) the certificate numbers of the
Debentures to be delivered by the holder thereof for purchase by the Company;
(ii) the portion of the principal amount at maturity of Debentures to be
purchased, which portion must be $1,000 or a multiple thereof; (iii) that such
Debentures are to be purchased by the Company pursuant to the applicable
provisions of the Debentures; and (iv) in the event the Company elects, pursuant
to the Company Notice (as defined), to pay the Purchase Price to be paid as of
such Purchase Date in Common Stock, in whole or in part, but such Purchase Price
is ultimately to be paid to such holder entirely in cash because any of the
conditions to payment of the Purchase Price (or portion thereof) in Common Stock
is not satisfied by the Purchase Date, as described below, whether such holder
elects (x) to withdraw such Purchase Notice as to some or all of the Debentures
to which it relates (stating the principal amount at maturity and certificate
numbers of the Debentures as to which such withdrawal shall relate), or (y) to
receive cash in respect of the entire Purchase Price for all Debentures subject
to such Purchase Notice. If the holder fails to indicate, in the Purchase Notice
and in any written notice of withdrawal relating to such Purchase Notice, such
holder's choice with respect to the election described in clause
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<PAGE> 27

(iv) above, such holder shall be deemed to have elected to receive cash in
respect of the entire Purchase Price for all Debentures subject to such Purchase
Notice in such circumstances. For a discussion of the tax treatment of a holder
receiving cash or Common Stock pursuant to its election to tender its Debentures
to the Company on a Purchase Date, see "Certain Federal Income Tax
Considerations."

Any Purchase Notice may be withdrawn by the holder by a written notice of
withdrawal delivered to the paying agent prior to the close of business on the
Purchase Date. The notice of withdrawal shall state the principal amount at
maturity and the certificate numbers of the Debentures as to which the
withdrawal notice relates and the principal amount at maturity, if any, which
remains subject to the Purchase Notice.

The Purchase Price payable in respect of a Debenture shall be equal to the
Issue Price plus accrued Original Issue Discount to the Purchase Date. The table
below shows the Purchase Prices of a Debenture as of the specified Purchase
Dates. The Company may elect to pay the Purchase Price payable as of any
Purchase Date in cash or Common Stock or any combination thereof.

<TABLE>
<CAPTION>
PURCHASE DATE PRICE
------------- -------
<S> <C>
February 18, 2003.................................. $459.64
February 18, 2008.................................. 595.59
February 18, 2013.................................. 771.75
</TABLE>

If the Company elects to pay the Purchase Price, in whole or in part, in
Common Stock, the number of shares to be delivered in respect of the portion of
the Purchase Price to be paid in Common Stock shall be equal to such portion of
the Purchase Price divided by the Market Price (as defined) of the Common Stock.
However, no fractional Common Stock will be delivered upon any purchase by the
Company of Debentures through the delivery of Common Stock in payment, in whole
or in part, of the Purchase Price. Instead, the Company will pay cash based on
the Market Price for all fractional Common Stock.

The Company will give notice (the "Company Notice") not less than 20
Business Days prior to the Purchase Date (the "Company Notice Date") to all
holders at their addresses shown in the register of the registrar (and to
beneficial owners as required by applicable law) stating, among other things,
whether the Company will pay the Purchase Price of the Debentures in cash or
Common Stock, or any combination thereof (specifying the percentage of each)
and, if the Company elects to pay in Common Stock, in whole or in part, the
method of calculating the Market Price of the Common Stock.

The "Market Price" means the average of the Sale Prices (as defined) of the
Common Stock for the five trading day period ending on the third Business Day
prior to the applicable Purchase Date (if the third Business Day prior to the
applicable Purchase Date is a trading day or, if it is not a trading day, then
on the last trading day prior to such third Business Day), appropriately
adjusted to take into account the occurrence during the period commencing on the
first of such trading days during such five trading day period and ending on
such Purchase Date of certain events that would result in an adjustment of the
Conversion Rate under the Indenture with respect to the Common Stock. The "Sale
Price" of the Common Stock on any date means the closing per share sale price
(or if no closing sale price is reported, the average bid and ask prices or, if
more than one in either case, the average of the average bid and average ask
prices) on such date as reported in the composite transactions for the principal
United States securities exchange on which the Common Stock is traded or, if the
Common Stock is not listed on a United States national or regional stock
exchange, as reported by the National Association of Securities Dealers
Automated Quotation System. Because the Market Price of the Common Stock is
determined prior to the applicable Purchase Date, holders of Debentures bear the
market risk with respect to the value of the Common Stock to be received from
the date of determination of such Market Price to such Purchase Date. The
Company may elect to pay the Purchase Price in Common Stock only if the
information necessary to calculate the Market Price is reported in a daily
newspaper of national circulation.

Upon determination of the actual number of shares of Common Stock in
accordance with the foregoing provisions, the Company will publish such
determination in a daily newspaper of national circulation.

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<PAGE> 28

The Company's right to purchase Debentures with Common Stock is subject to
the satisfaction of various conditions, including: (i) the registration of the
Common Stock under the Securities Act, if required; and (ii) compliance with
other applicable federal and state securities laws, if any. If such conditions
are not satisfied by a Purchase Date, the Company will pay the Purchase Price of
the Debentures to be purchased on such Purchase Date entirely in cash. See
"Certain Federal Income Tax Considerations." The Company will comply with the
provisions of Rule 13e-4 and any other tender offer rules under the Exchange Act
which may then be applicable and will file a Schedule 13E-4 or any other
schedule required thereunder in connection with any offer by the Company to
purchase Debentures at the option of holders.

Payment of the Purchase Price for a Debenture for which a Purchase Notice
has been delivered and not withdrawn is conditioned upon book-entry transfer or
delivery of such Debenture (together with necessary endorsements) to the paying
agent at its office in the Borough of Manhattan, The City of New York, or any
other office of the paying agent maintained for such purpose, at any time
(whether prior to, on or after the Purchase Date) after delivery of such
Purchase Notice. Payment of the Purchase Price for such Debenture will be made
promptly following the later of the Purchase Date or the time of book-entry
transfer or delivery of such Debenture. If the paying agent holds, in accordance
with the terms of the Indenture, money or securities sufficient to pay the
Purchase Price of such Debenture on the Business Day following the Purchase
Date, then, on and after such date, such Debenture will cease to be outstanding
and Original Issue Discount on such Debenture will cease to accrue whether or
not book-entry transfer of such Debenture is made or such Debenture is delivered
to the paying agent, and all other rights of the holder shall terminate (other
than the right to receive the Purchase Price upon delivery of the Debenture).

No Debentures may be purchased at the option of the holder for cash if
there has occurred (prior to, on or after the giving by the holders of such
Debentures of the required Purchase Notice) and is continuing an Event of
Default described under "Events of Default; Notice and Waiver" below (other than
a default in the payment of the Purchase Price with respect to such Debentures).

If the Company becomes obligated to purchase any outstanding Debenture on a
Purchase Date, there can be no assurance that the Company would have sufficient
funds to pay the Purchase Price on that Purchase Date (in which case, the
Company could be required to issue shares of Common Stock to pay the Purchase
Price at valuations based on then prevailing market prices) for all the
Debentures tendered by the holders thereof. Although the agreements governing
the Senior Bank Facility do not currently prohibit purchase of Debentures on a
Purchase Date, any future credit agreements (including an extension of the
Senior Bank Facility) or other agreements relating to other indebtedness
(including Senior Indebtedness) to which the Company becomes a party may provide
that the maturing of any obligation to purchase the Debentures would constitute
an event of default thereunder and may restrict or prohibit the repurchase of
the Debentures. In the event a Purchase Date occurs at a time when the Company
is prohibited from repurchasing the Debentures, the Company could seek the
consent of its then existing lenders to repurchase the Debentures or could
attempt to refinance the borrowings that contain such prohibition. If the
Company does not obtain such a consent or repay such borrowings, the Company
would remain prohibited from repurchasing the Debentures. The Company's failure
to repurchase Debentures required to be repurchased under the terms of the
Indenture would constitute an Event of Default under the Indenture and would
likely constitute a default under the terms of any other indebtedness of the
Company outstanding at such time, including Senior Indebtedness. In such
circumstances, the subordination provisions in the Indenture would likely
prohibit or restrict payments to the holders of Debentures.

MERGERS AND SALES OF ASSETS BY THE COMPANY

The Company may not consolidate with or merge into any other person or
convey, transfer or lease its properties and assets substantially as an entirety
to another person, unless, among other items, (i) the resulting, surviving or
transferee person (if other than the Company) is organized and existing under
the laws of the United States, any state thereof or the District of Columbia,
(ii) such successor person assumes all obligations of the Company under the
Debentures and the Indenture and (iii) the Company or such successor person
shall not immediately thereafter be in default under the Indenture. Upon the
assumption of the Company's obligations by such person in such circumstances,
subject to certain exceptions, the Company shall
20
<PAGE> 29

be discharged from all obligations under the Debentures and the Indenture.
Certain such transactions which would constitute a Fundamental Change would
permit each holder to require the Company to redeem the Debentures of such
holder as described under "Redemption at Option of the Holder Upon a Fundamental
Change."

EVENTS OF DEFAULT; NOTICE AND WAIVER

The Indenture provides that, if an Event of Default specified therein shall
have happened and be continuing, either the Trustee or the holders of not less
than 25% in aggregate principal amount at maturity of the Debentures then
outstanding may declare the Issue Price of the Debentures plus the Original
Issue Discount on the Debentures and any liquidated damages under the
Registration Rights Agreement accrued to the date of such declaration to be
immediately due and payable. In the case of certain events of bankruptcy or
insolvency, the Issue Price of the Debentures plus the Original Issue Discount
accrued thereon to the occurrence of such event shall automatically become and
be immediately due and payable. Under certain circumstances, the holders of a
majority in aggregate principal amount at maturity of the outstanding Debentures
may rescind any such acceleration with respect to the Debentures and its
consequences. Interest shall accrue at the rate of 5.25% per annum and be
payable on demand upon a default in the payment of the Issue Price, accrued
Original Issue Discount, accrued liquidated damages, if any, or any Redemption
Price, Purchase Price or Fundamental Change Redemption Price to the extent that
payment of such interest shall be legally enforceable.

Under the Indenture, Events of Default are defined as: (i) default in
payment of the principal amount at maturity, Issue Price, accrued Original Issue
Discount, accrued liquidated damages, if any, Redemption Price, Purchase Price
or Fundamental Change Redemption Price with respect to any Debenture when such
becomes due and payable (whether or not payment is prohibited by the provisions
of the Indenture), provided that in the case of any failure to pay liquidated
damages, such failure continues for a period of 30 days; (ii) failure by the
Company to comply with any of its other agreements in the Debentures or the
Indenture upon the receipt by the Company of notice of such default by the
Trustee or by holders of not less than 25% in aggregate principal amount at
maturity of the Debentures then outstanding and the Company's failure to cure
such default within 60 days after receipt by the Company of such notice; or
(iii) certain events of bankruptcy or insolvency.

The Trustee shall give notice to holders of the Debentures of any
continuing default known to the Trustee within 90 days after the occurrence
thereof, provided that the Trustee may withhold such notice if it determines in
good faith that withholding the notice is in the interests of the holders.

The holders of a majority in aggregate principal amount at maturity of the
outstanding Debentures may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee; provided that such direction shall not be in
conflict with any law or the Indenture and subject to certain other limitations.
Before proceeding to exercise any right or power under the Indenture at the
direction of such holders, the Trustee shall be entitled to receive from such
holders reasonable security or indemnity satisfactory to it against the costs,
expenses and liabilities which might be incurred by it in complying with any
such direction. No holder of any Debenture has any right to pursue any remedy
with respect to the Indenture or the Debentures, unless (i) such holder shall
have previously given the Company and the Trustee written notice of a continuing
Event of Default; (ii) the holders of at least 25% in aggregate principal amount
at maturity of the outstanding Debentures shall have made a written request to
the Trustee to pursue such remedy; (iii) such holder or holders have offered to
the Trustee reasonable indemnity satisfactory to the Trustee; (iv) the holders
of a majority in aggregate principal amount at maturity of the outstanding
Debentures have not given the Trustee a direction inconsistent with such request
within 60 days after receipt of such request; and (v) the Trustee shall have
failed to comply with the request within such 60-day period.

However, the right of any holder (x) to receive payment of the principal
amount at maturity, Issue Price, accrued Original Issue Discount, Redemption
Price, Purchase Price, Fundamental Change Redemption Price and any interest in
respect of a default in the payment of any such amounts on a Debenture, on or
after the due

21
<PAGE> 30

date expressed in such Debenture, (y) to institute suit for the enforcement of
any such payments or conversion or (z) to convert Debentures shall not be
impaired or adversely affected without such holder's consent. The holders of at
least a majority in aggregate principal amount at maturity of the outstanding
Debentures may waive an existing default and its consequences, other than (i)
any default in any payment on the Debentures, (ii) any default with respect to
the conversion rights of the Debentures or (iii) any default in respect of
certain covenants or provisions in the Indenture which may not be modified
without the consent of the holder of each Debenture as described in
"Modification" below. The Company is required to furnish to the Trustee annually
a statement as to any default by the Company in the performance and observance
of its obligations under the Indenture.

MODIFICATION

Modification and amendment of the Indenture or the Debentures may be
effected by the Company and the Trustee with the consent of the holders of not
less than a majority in aggregate principal amount at maturity of the Debentures
then outstanding. Notwithstanding the foregoing, no such amendment may, without
the consent of each holder affected thereby: (i) reduce the principal amount at
maturity, Issue Price, Purchase Price, Fundamental Change Redemption Price or
Redemption Price, or extend the stated maturity of any Debenture or alter the
manner or rate of accrual of Original Issue Discount or interest, or make any
Debenture payable in money or securities other than that stated in the
Debenture; (ii) make any change to the principal amount at maturity of
Debentures whose holders must consent to an amendment or any waiver under the
Indenture or modify the Indenture provisions relating to such amendments or
waivers; (iii) make any change that adversely affects the right to convert any
Debenture or the right to require the Company to purchase a Debenture or the
right to require the Company to redeem a Debenture upon a Fundamental Change;
(iv) modify the provisions of the Indenture relating to the subordination of the
Debentures in a manner adverse to the holders of the Debentures; or (v) impair
the right to institute suit for the enforcement of any payment with respect to,
or conversion of, the Debentures. The Indenture also provides for certain
modifications of its terms without the consent of the holders. No amendment may
be made to the subordination provisions of the Indenture that adversely affects
the rights of any holder of Senior Indebtedness then outstanding, unless the
holders of such Senior Indebtedness (as required pursuant to the terms of such
Senior Indebtedness) consent to such change.

TAXATION OF DEBENTURES

See "Certain Federal Income Tax Considerations" for a discussion of certain
tax aspects which will apply to a holder of Debentures.

INFORMATION CONCERNING THE TRUSTEE

State Street Bank and Trust Company of California, N.A., as Trustee under
the Indenture, has been appointed by the Company as paying agent, conversion
agent, registrar and custodian with regard to the Debentures.

22
<PAGE> 31

DESCRIPTION OF CAPITAL STOCK

AUTHORIZED CAPITAL STOCK

The Company's authorized capital stock consists of 230 million shares, of
which 225 million shares are designated as common stock, $.01 par value per
share (the "Common Stock") and 5 million shares are designated as preferred
stock, $.01 par value per share (the "Preferred Stock"). The Common Stock is
listed on the New York Stock Exchange under the symbol "WDC."

COMMON STOCK

The Company is authorized to issue 225 million shares of Common Stock.
Holders of Common Stock are entitled to one vote per share on all matters to be
voted on by stockholders and are entitled to receive such dividends as may be
declared by the Board of Directors out of funds legally available therefor and
to share pro rata in any distributions to holders of Common Stock. Holders of
Common Stock do not have the power to act by written consent without a meeting
or to call special meetings of the stockholders, except that stockholders
entitled to cast not less than ten percent of the votes at a special meeting may
call such a meeting at any time. In the event of liquidation, dissolution or
winding-up of the Company, subject to any preferential or pari passu rights of
any holders of shares of Preferred Stock, all remaining assets shall be
distributed to holders of Common Stock.

PREFERRED STOCK

The authorized shares of Preferred Stock are issuable, without further
stockholder approval, in one or more series as determined by the Board of
Directors, with such designations, powers, preferences, dividend rates,
liquidation and conversion rights and other qualifications, limitations and
restrictions as are specified by the Board of Directors. The issuance of shares
of Preferred Stock would necessarily create some preferences in favor of the
holders of such shares over the holders of Common Stock. No shares of Preferred
Stock are outstanding.

In connection with the Company's shareholder rights plan, the Board of
Directors designated a series of Preferred Stock as "Series A Junior
Participating Preferred Stock" consisting of 500,000 shares. Series A Preferred
Stockholders are entitled to receive, when, as and if declared by the Board of
Directors, quarterly dividends. Such dividends are cumulative. Subject to
provisions for adjustment, each share of Series A Preferred Stock shall entitle
the holder thereof to 100 votes on all matters submitted to a vote of the
stockholders of the Company. No shares of Series A Preferred Stock have been
issued.

ANTI-TAKEOVER EFFECTS

The internal affairs of the Company are governed by, among other things,
the laws of the State of Delaware, the Company's Certificate of Incorporation
(the "Certificate") and the Company's Bylaws (the "Bylaws"). The Certificate and
Bylaws contain provisions that may impede the acquisition of control of the
Company by means of a tender offer, proxy fight or other means.

The Bylaws provide that the number of directors shall be not less than five
nor more than twelve and that the specific numbers of directors at any time
shall be determined by the Board of Directors by resolution. The Bylaws provide
that any vacancy in the Board of Directors may be filled by a majority vote of
the remaining directors.

The Bylaws provide that special meetings of stockholders may be called only
by the Board of Directors, the Chairman of the Board, the President, or by
stockholders entitled to cast not less than ten percent of the votes at such
meeting. The Certificate provides that no action required to be taken or which
may be taken at any annual or special meeting of stockholders of the corporation
may be taken without a meeting, and the power of stockholders to consent in
writing without a meeting to the taking of any action is specifically denied.
The Bylaws establish an advance notice procedure for stockholder proposals to be
brought before an annual

23
<PAGE> 32

meeting of stockholders and for nominations by stockholders of candidates for
election as directors at a meeting at which directors are elected.

On December 1, 1988, the Company adopted a Stockholder Rights Plan and
declared a dividend of one Right for each outstanding share of Common Stock.
Pursuant to the Stockholder Rights Plan, as amended, each Right entitles a
shareholder to purchase one one-hundredth of a share of Series A Junior
Participating Preferred Stock at an exercise price of $150, subject to
adjustments. The Rights will not be exercisable or separable from the Common
Stock until ten days after a person or group publicly announces it has acquired,
or has tendered an offer for, 15% or more of the Company's outstanding Common
Stock.

If, after the Rights become exercisable, a person acquires more than 15% of
the outstanding Common Stock (except pursuant to an offer for all outstanding
shares of Common Stock which the independent directors determine to be fair to
and otherwise in the best interests of the Company and its stockholders), then
each Right holder will be entitled to receive upon exercise, Common Stock (or,
in certain circumstances, other consideration) having a value equal to two times
the exercise price of the Right. If, after the Rights become exercisable, the
Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving corporation or in which the Company's
outstanding Common Stock is exchanged for cash, stock or other property (other
than a merger which follows an offer deemed by the directors to be in the best
interests of the stockholders), or 50% or more of the Company's assets or
earning power is sold or transferred, each Right holder is entitled to receive,
upon exercise, common stock of the acquiring company having a value equal to two
times the exercise price of the Right. The Company is entitled to redeem the
Rights at $.01 per Right, as adjusted to reflect any stock split, stock dividend
or similar transaction, at any time prior to the earlier of the expiration of
the Rights on November 30, 1998 or ten days following the acquisition of 15% or
more of the Company's outstanding Common Stock by a person or group. The Rights
do not have any voting rights and are not entitled to dividends.

The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law, an anti-takeover law. In general, pursuant to the
statute, a corporation is prohibited from engaging in a business combination (as
defined in Section 203) with any Interested Stockholder (defined to mean any
person or group owning 15% or more of the corporation's outstanding voting
stock) for a period of three years following the time such person or group
became an Interested Stockholder. This prohibition does not apply if (i) prior
to such time, the corporation's board of directors approved either the business
combination or the transaction which resulted in the stockholder becoming an
Interested Stockholder, (ii) upon consummation of the transaction which resulted
in such person or group becoming an Interested Stockholder, such Interested
Stockholder owned at least 85% of the corporation's voting stock outstanding at
the time the transaction commenced (excluding from the calculation of such 85%
ownership level, shares owned by persons who are both officers and directors and
shares owned by employee benefit plans under which participants do not have the
right to determine confidentially whether shares held subject to the plan will
be tendered in a tender or exchange offer) or (iii) at or subsequent to such
time the business combination is approved by the corporation's board of
directors and authorized at an annual or special meeting of stockholders, not by
written consent, by the affirmative vote of at least two-thirds of the
corporation's outstanding voting stock, excluding stock owned by the Interested
Stockholder. In addition, subject to certain notice and related timing
requirements, business combinations consisting of (x) mergers or consolidations
requiring stockholder approval, (y) certain asset sales or related transactions
and (z) tender or exchange offers for 50% or more of the corporation's
outstanding voting stock are permitted where such business combination (i) is
with a person or group which either was not an Interested Stockholder during the
preceding three years or which became such with the approval of the
corporation's board of directors and (ii) is approved (or not opposed) by a
majority of the disinterested directors (as defined in Section 203). Any future
election to opt out of Section 203 can be effected only by an amendment to the
Certificate or the Bylaws. Any such election would not be effective until 12
months after the date of adoption of such amendment and would not apply to a
business combination with any Interested Stockholder who became such on or prior
to such date of adoption.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is American Stock
Transfer and Trust Company.
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<PAGE> 33

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

The following is a general discussion of the material U.S. federal income
tax consequences of the purchase, ownership and disposition of the Debentures
and Common Stock to U.S. Holders (as defined below), and the material U.S.
federal income and estate tax consequences relating to the purchase, ownership
and disposition of the Debentures and Common Stock to Non-U.S. Holders (as
defined below), but does not purport to be a complete analysis of all the
potential tax considerations relating thereto. This discussion is based upon the
Internal Revenue Code of 1986, as amended (the "Code"), existing and proposed
Treasury Regulations, and judicial decisions and administrative interpretations
thereunder, as of the date hereof, all of which are subject to change, possibly
with retroactive effect, or different interpretations. There can be no assurance
that the Internal Revenue Service (the "IRS") will not challenge one or more of
the tax consequences described herein, and the Company has not obtained, nor
does it intend to obtain, a ruling from the IRS with respect to the U.S. federal
tax consequences of acquiring or holding Debentures or Common Stock.

This discussion does not purport to address all tax consequences that may
be important to a particular holder in light of the holder's circumstances (such
as the alternative minimum tax provisions of the Code), or to certain categories
of investors (such as certain financial institutions, insurance companies,
tax-exempt organizations, dealers in securities, or persons who hold Debentures
or Common Stock as part of a hedge, conversion or constructive sale transaction,
straddle or other risk reduction transaction) that may be subject to special
rules. This discussion is limited to holders of Debentures who hold the
Debentures and any Common Stock into which the Debentures are converted as
capital assets. This discussion also does not address the tax consequences
arising under the laws of any foreign, state or local jurisdiction.

PERSONS CONSIDERING THE PURCHASE OF A DEBENTURE SHOULD CONSULT THEIR OWN
TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF ACQUIRING,
HOLDING, CONVERTING OR OTHERWISE DISPOSING OF THE DEBENTURES AND COMMON STOCK,
INCLUDING THE EFFECT AND APPLICABILITY OF STATE, LOCAL OR FOREIGN TAX LAWS.

U.S. HOLDERS

As used herein, the term "U.S. Holder" means a holder of a Debenture or
Common Stock that is (i) for U.S. federal income tax purposes, a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any
political subdivision thereof, (iii) an estate, the income of which is subject
to United States federal income taxation regardless of its source, (iv) a trust,
the administration of which is subject to the primary supervision of a court
within the United States and which has one or more United States persons with
authority to control all substantial decisions or (v) certain electing trusts
that were in existence on August 19, 1996 and treated as domestic trusts on such
date. As used herein, the term "Non-U.S. Holder" means a holder of a Debenture
or Common Stock that is not a U.S. Holder.

Original Issue Discount on the Debentures. The Debentures were issued at a
substantial discount from their stated redemption price at maturity. For U.S.
federal income tax purposes, the excess of the stated redemption price at
maturity of each Debenture over its issue price constitutes original issue
discount ("Original Issue Discount"). The issue price of the Debentures equals
the initial price at which a substantial amount of the Debentures was sold (not
including sales to underwriters or placement agents, including the Initial
Purchasers). U.S. Holders of the Debentures will be required to include Original
Issue Discount in income as it accrues, in accordance with the constant yield
method described below, before receipt of the cash attributable to such income,
regardless of such U.S. Holder's regular method of accounting for U.S. federal
income tax purposes. A U.S. Holder of a Debenture must include in gross income
for U.S. federal income tax purposes the sum of the daily portions of Original
Issue Discount with respect to the Debenture for each day during the taxable
year or portion of a taxable year on which such U.S. Holder holds the Debenture.
The daily portion is determined by allocating to each day of each accrual period
a pro rata portion of an amount equal to the adjusted issue price of the
Debenture at the beginning of the accrual period multiplied by the yield to

25
<PAGE> 34

maturity of the Debenture (determined by compounding at the close of each
accrual period and adjusted for the length of the accrual period). The adjusted
issue price of a Debenture at the start of any accrual period will be the issue
price of the Debenture increased by the accrued Original Issue Discount for each
prior accrual period. Under these rules, U.S. Holders will have to include in
gross income increasingly greater amounts of Original Issue Discount in each
successive accrual period. A U.S. Holder's original tax basis for determining
gain or loss on the sale or other disposition of a Debenture will be increased
by any accrued Original Issue Discount includable in such U.S. Holder's gross
income.

There are several circumstances under which the Company could make a
payment on a Debenture which would affect the yield to maturity of a Debenture,
including (as described under "Description of Debentures") the payment of
Liquidated Damages or the redemption or repurchase of Debentures. According to
Treasury Regulations, the possibility of a change in the yield will not be
treated as affecting the amount of Original Issue Discount required to be
realized by a holder (or the timing of such recognition) if the likelihood of
the change, as of the date the debt obligations are issued, is remote. The
Company intends to report on the basis that the likelihood of any change in the
yield on the Debentures is remote. The Company also intends to report on the
basis that there is no alternative payment schedule that would minimize the
yield on the Debentures to the Company.

Market Discount. Any principal payment or gain realized by a U.S. Holder on
disposition or retirement of a Debenture will be treated as ordinary income to
the extent that there is accrued market discount on the Debenture. The amount of
market discount on a Debenture for a U.S. Holder will equal the excess of the
adjusted issue price of such Debenture over the initial tax basis of such
Debentures in the hands of such holder. To the extent a U.S. Holder exchanges or
converts a Debenture into Common Stock in a transaction that is otherwise tax
free, any accrued market discount will carry over and generally be recognized
upon a disposition of the Common Stock. Unless a U.S. Holder irrevocably elects
to accrue market discount under a constant-interest method, accrued market
discount is the total market discount multiplied by a fraction, the numerator of
which is the number of days the U.S. Holder has held the obligation and the
denominator of which is the number of days from the date the U.S. Holder
acquired the obligation until its maturity. A U.S. Holder may be required to
defer a portion of its interest deductions for the taxable year attributable to
any indebtedness incurred or continued to purchase or carry a Debenture
purchased with market discount. Any such deferred interest expense would not
exceed the market discount that accrues during such taxable year and is, in
general, allowed as a deduction not later than the year in which such market
discount is includable in income. If the U.S. Holder elects to include market
discount in income currently as it accrues on all market discount instruments
acquired by the U.S. Holder in that taxable year or thereafter, (i) the interest
deferral described above will not apply and (ii) market discount will not carry
over into Common Stock as described above. Any such election may be terminated
only with the consent of the IRS and applies to all market discount bonds
acquired during or after the year for which it is made.

Acquisition Premium. A U.S. Holder will be considered to have "acquisition
premium" to the extent the U.S. Holder's initial tax basis in a Debenture is
greater than (x) the adjusted issue price of such Debenture but less than (y)
the stated redemption price at maturity of such Debenture. Acquisition premium
may offset the amount of Original Issue Discount on such Debenture that the U.S.
Holder is required to include in income.

Election. A U.S. Holder, subject to certain limitations, may elect to
include in gross income for U.S. federal income tax purposes all interest that
accrues on a Debenture by using the constant interest method. For this purpose,
interest includes Original Issue Discount, market discount, and de minimis
market discount as adjusted by any acquisition premium. Such election, if made
in respect of a market discount bond, will constitute an election to include
market discount in income currently on all market discount bonds held by such
U.S. Holder. See the discussion above under the caption "Market Discount." Any
such election may be terminated only with the consent of the IRS.

Sale, Exchange or Retirement of the Debentures. Upon the sale, exchange or
retirement of a Debenture, including as a result of a tender upon the occurrence
of a Fundamental Change, and, except as discussed in the

26
<PAGE> 35

next paragraph, on a Purchase Date, a holder will recognize gain or loss equal
to the difference between the sale or redemption proceeds and the U.S. Holder's
adjusted tax basis in the Debenture.

If a U.S. Holder elects to exercise its option to tender the Debentures to
the Company on a Purchase Date and the Company issues Common Stock in
satisfaction of all or part of the Purchase Price, the exchange of the
Debentures for Common Stock should qualify as a reorganization for federal
income tax purposes. If the Purchase Price is paid solely in Common Stock,
except in the case of a fractional share described below, a U.S. Holder will not
be required to recognize any gain realized and will not be permitted to
recognize any loss. If the Purchase Price is paid in a combination of Common
Stock and cash (other than cash received in lieu of a fractional share), gain
(but not loss) realized by the U.S. Holder would be recognized, but only to the
extent of the cash received. A U.S. Holder's initial tax basis in the Common
Stock received would be equal to such U.S. Holder's adjusted tax basis in the
Debenture tendered (except for any portion allocable to a fractional share of
Common Stock), increased by the amount of gain recognized (other than with
respect to a fractional share) and decreased by the amount of any cash received
(except cash received in lieu of a fractional share). The holding period for
Common Stock received in the exchange will include the holding period of the
Debenture tendered to the Company in exchange therefor. The receipt of cash in
lieu of a fractional share of Common Stock should generally result in capital
gain or loss, measured by the difference between the amount of cash received for
the fractional share and the U.S. Holder's tax basis in the fractional share
interest.

A U.S. Holder's adjusted tax basis in a Debenture will generally equal the
U.S. Holder's cost of the Debenture increased by any Original Issue Discount
previously included in income by such holder with respect to such Debenture and
decreased by any payments received thereon. Except to the extent of any accrued
market discount, gain or loss realized on the sale, exchange or retirement of a
Debenture will generally be capital gain or loss and will be long-term capital
gain or loss if the Debenture is held for more than one year. For individual
U.S. Holders, the maximum rate of U.S. federal income tax generally is 20% if
the Debenture disposed of is held for more than one year.

Conversion of Debentures. A U.S. Holder's conversion of a Debenture into
Common Stock will generally not be a taxable event (except with respect to cash
received in lieu of a fractional share). A U.S. Holder's basis in the Common
Stock received on conversion of a Debenture will be the same as the U.S.
Holder's basis in the Debenture at the time of conversion (exclusive of any tax
basis allocable to a fractional share), and the holding period for the Common
Stock received on conversion will include the holding period of the Debenture
converted. The receipt of cash in lieu of fractional Common Stock should
generally result in capital gain or loss (measured by the difference between the
cash received for the fractional share interest and the U.S. Holder's tax basis
in such fractional share interest).

Dividends; Adjustment of Conversion Price. Dividends, if any, paid on the
Common Stock generally will be includable in the income of a U.S. Holder as
ordinary income to the extent of the Company's current or accumulated earnings
and profits.

If at any time the Company makes a distribution of property to shareholders
that would be taxable to such shareholders as a dividend for U.S. federal income
tax purposes (for example, distributions of evidences of indebtedness or assets
of the Company, but generally not stock dividends or rights to subscribe for
Common Stock) and, pursuant to the anti-dilution provisions of the Indenture,
the Conversion Rate of the Debentures is increased, such increase may be deemed
to be the payment of a taxable dividend to U.S. Holders of Debentures. If the
Conversion Rate is increased at the discretion of the Company or in certain
other circumstances, such increase also may be deemed to be the payment of a
taxable dividend to U.S. Holders of Debentures.

Sale of Common Stock. Upon the sale or exchange of Common Stock, U.S.
Holders generally will recognize capital gain or capital loss (except to the
extent of any accrued market discount not previously included in income) equal
to the difference between the amount realized on such sale or exchange and the
U.S. Holder's adjusted tax basis in such shares. For individual U.S. Holders,
the maximum rate of United States federal income tax generally is 20% if the
Common Stock disposed of is held for more than one year.

27
<PAGE> 36

NON-U.S. HOLDERS

The following discussion is a summary of the principal U.S. federal income
and estate tax consequences resulting from the ownership of the Debentures or
Common Stock by Non-U.S. Holders.

Withholding Tax on Payments of Principal and Original Issue Discount on
Debentures. The payment of principal (including any Original Issue Discount
included therein) of a Debenture by the Company or any paying agent of the
Company to any Non-U.S. Holder will not be subject to U.S. federal withholding
tax, provided that in the case of payment of cash in respect of Original Issue
Discount (i) the Non-U.S. Holder does not actually or constructively own 10% or
more of the total voting combined power of all classes of stock of the Company,
(ii) the Non-U.S. Holder is not a controlled foreign corporation that is related
to the Company within the meaning of the Code, and (iii) either (A) the
beneficial owner of the Debenture certifies to the applicable payor or its
agent, under penalties of perjury, that it is not a U.S. Holder and provides its
name and address on United States Treasury Form W-8 (or a suitable substitute
form), or (B) a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business (a "financial institution") and holds the Debenture certifies under
penalties of perjury that such a Form W-8 (or a suitable substitute form) has
been received from the beneficial owner by it or by a financial institution
between it and the beneficial owner and furnishes the payor with a copy thereof.
Except to the extent otherwise provided under an applicable tax treaty, a
Non-U.S. Holder generally will be taxed in the same manner as a U.S. Holder with
respect to Original Issue Discount on a Debenture if such Original Issue
Discount is effectively connected with a U.S. trade or business of the Non-U.S.
Holder. Effectively connected interest received by a corporate Non-U.S. Holder
may also, under certain circumstances, be subject to an additional "branch
profits tax" at a 30% rate (or, if applicable, a lower treaty rate). Such
effectively connected Original Issue Discount will not be subject to withholding
tax if the holder delivers an IRS Form 4224 (and, beginning January 1, 2000, a
Form W-8) to the payor.

Dividends. Dividends, if any, paid on the Common Stock to a Non-U.S. Holder
generally will be subject to a 30% U.S. federal withholding tax, subject to
reduction for Non-U.S. Holders eligible for the benefits of certain income tax
treaties. Currently, for purposes of determining whether tax is to be withheld
at the 30% rate or at a reduced treaty rate, the Company will ordinarily presume
that dividends paid to an address in a foreign country are paid to a resident of
such country absent knowledge that such presumption is not warranted. Under
Treasury Regulations effective for payments after December 31, 1999, holders
will be required to satisfy certain applicable certification requirements to
claim treaty benefits. Except to the extent otherwise provided under an
applicable tax treaty, a Non-U.S. Holder generally will be taxed in the same
manner as a U.S. Holder on dividends paid (or deemed paid) that are effectively
connected with the conduct of a trade or business in the U.S. by the Non-U.S.
Holder. If such Non-U.S. Holder is a foreign corporation, it may also be subject
to a United States branch profits tax on such effectively connected income at a
30% rate or such lower rate as may be specified by an applicable income tax
treaty.

Gain on Disposition of the Debentures and Common Stock. A Non-U.S. Holder
generally will not be subject to U.S. federal income tax on gain realized on the
sale, exchange or redemption of a Debenture, including the exchange of a
Debenture for Common Stock, or the sale or exchange of Common Stock unless (i)
in the case of an individual Non-U.S. Holder, such holder is present in the
United States for 183 days or more in the year of such sale, exchange or
redemption and either (A) has a "tax home" in the United States and certain
other requirements are met, or (B) the gain from the disposition is attributable
to an office or other fixed place of business in the United States, (ii) the
Non-U.S. Holder is subject to tax pursuant to the provisions of U.S. tax law
applicable to certain U.S. expatriates, (iii) the gain is effectively connected
with the conduct of a United States trade or business by the Non-U.S. Holder, or
(iv) in the case of the disposition of Common Stock, the Company is a "United
States real property holding corporation." The Company does not believe that it
is currently a "United States real property holding corporation" or that it will
become one in the future.

U.S. Federal Estate Tax. A Debenture held by an individual who at the time
of death is not a citizen or resident of the United States (as specially defined
for U.S. federal estate tax purposes) will not be subject to U.S. federal estate
tax if the individual did not actually or constructively own 10% or more of the
total

28
<PAGE> 37

combined voting power of all classes of stock of the Company and, at the time of
the individual's death, payments with respect to such Debenture would not have
been effectively connected with the conduct by such individual of a trade or
business in the United States. Common Stock held by an individual who at the
time of death is not a citizen or resident of the United States (as specially
defined for United States federal estate tax purposes) will be included in such
individual's estate for U.S. federal estate tax purposes, unless an applicable
estate tax treaty otherwise applies.

BACKUP WITHHOLDING AND INFORMATION REPORTING

U.S. Holders. Information reporting will apply to payments of interest or
dividends on or the proceeds of the sale or other disposition of the Debentures
or shares of Common Stock made by the Company with respect to certain
noncorporate U.S. Holders, and backup withholding at a rate of 31% may apply
unless the recipient of such payment supplies a taxpayer identification number,
certified under penalties of perjury, as well as certain other information or
otherwise establishes an exemption from backup withholding. Any amount withheld
under the backup withholding rules is allowable as a credit against the U.S.
Holder's U.S. federal income tax, provided that the required information is
provided to the IRS.

Non-U.S. Holders. The Company must report annually to the IRS and to each
Non-U.S. Holder the amount of any dividends paid to, and the tax withheld with
respect to, such holder, regardless of whether any tax was actually withheld.
Copies of these information returns may also be made available under the
provisions of a specific treaty or agreement to the tax authorities of the
country in which the Non-U.S. Holder resides.

Under current Treasury Regulations, backup withholding and information
reporting will not apply to payments of principal, including cash payments in
respect of Original Issue Discount, on the Debentures by the Company or any
agent thereof to a Non-U.S. Holder if the Non-U.S. Holder certifies as to its
Non-U.S. Holder status under penalties of perjury or otherwise establishes an
exemption (provided that neither the Company nor its agent has actual knowledge
that the holder is a U.S. person or that the conditions of any other exemptions
are not in fact satisfied). The payment of the proceeds on the disposition of
Debentures or shares of Common Stock to or through the United States office of a
United States or foreign broker will be subject to information reporting and
backup withholding unless the owner provides the certification described above
or otherwise establishes an exemption. The proceeds of the disposition by a
Non-U.S. Holder of Debentures or shares of Common Stock to or through a foreign
office of a broker will not be subject to backup withholding or information
reporting. However, if such broker is (i) a U.S. person, (ii) a controlled
foreign corporation for United States tax purposes, or (iii) a foreign person,
50% or more of whose gross income from all sources for certain periods is from
activities that are effectively connected with a U.S. trade or business,
information reporting requirements will apply unless such broker has documentary
evidence in its files of the holder's Non-U.S. status and has no actual
knowledge to the contrary or unless the holder otherwise establishes an
exemption. Recently finalized Treasury Regulations would modify the application
of information reporting requirements and the back-up withholding tax to
Non-U.S. Holders effective January 1, 2000.

DEDUCTIBILITY OF INTEREST BY THE COMPANY

Legislation enacted in 1997 provides that interest on debt "payable in
equity" of the issuer or certain related parties is not deductible to the
issuer. For this purpose, debt payable in equity includes (i) an obligation of
which a substantial amount of the principal or interest is at the option of the
issuer or certain related parties payable in equity of the issuer or certain
related parties, (ii) an obligation which is part of an arrangement designed to
result in payment of the obligation with or by reference to equity of the issuer
or certain related parties and (iii) certain obligations convertible at the
option of the holder into equity of the issuer or certain related parties where
the holder is substantially certain to convert. The legislative history to this
provision provides, among other things, that the provision is not expected to
affect typical convertible debt with a conversion price significantly higher
than the market price for the stock to be received upon conversion on the date
of issuance of the debt. Because the conversion price for the Common Stock to be
received upon conversion of the Debentures exceeded the market price for the
Common Stock on the date of issuance of the Debentures, and the Company is only
permitted to pay the principal amount of the Debentures in Common Stock at the
option of the Holders, which option is not substantially certain to be
exercised, the Company
29
<PAGE> 38

intends to take the position that Original Issue Discount accrued on the
Debentures will not be subject to this recent legislation. In addition, the
Debentures should not be subject to legislation proposed in 1998 by the Clinton
Administration that would defer or deny deductions for Original Issue Discount
on certain convertible debt instruments.

SELLING SECURITYHOLDERS

The following table sets forth information as of August 10, 1998, with
respect to the Selling Securityholders, the respective principal amount of
Debentures beneficially owned by each Selling Securityholder, the principal
amount of Debentures offered hereby by each Selling Securityholder, the Common
Stock owned by each Selling Securityholder and the Common Stock issued or
issuable upon conversion of such Debentures, that may be sold from time to time
pursuant to this Prospectus. The Debentures and the Common Stock issued or
issuable upon conversion of such Debentures that may be offered pursuant to this
Prospectus will be offered by the Selling Securityholders.

<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
OF DEBENTURES COMMON
BENEFICIALLY PERCENT OF STOCK OWNED COMMON STOCK
OWNED AND TOTAL OUTSTANDING PRIOR TO REGISTERED HEREBY
SELLING SECURITYHOLDERS OFFERED HEREBY DEBENTURES CONVERSION (1)
----------------------- ---------------- ----------------- ----------- -----------------
<S> <C> <C> <C> <C>
Aim Charter Fund..................... $ 40,000,000 3 -- 597,400
Aim V.I. Growth and Income Fund...... 10,000,000 * -- 149,350
Aldebaran SAL........................ 60,000 * -- 896
Alexandra Global Investment Fund,
I.................................. 9,000,000 * -- 134,415
Alta Partners Holding, LDC........... 5,000,000 * -- 74,675
Alutrade International SA............ 600,000 * -- 8,961
American Stores...................... 2,000,000 * -- 29,870
AMOCO Corporation Master Trust....... 4,780,000 * -- 71,389
Argent Classic Convertible Arbitrage
Fund (Bermuda) L.P................. 38,500,000 3 -- 574,997
Argent Classic Convertible Arbitrage
Fund L.P........................... 12,500,000 * -- 186,687
Arkansas PERS........................ 1,500,000 * -- 22,402
Baltimore Gas & Electric............. 1,250,000 * -- 18,668
Bancamerica Robertson Stephens....... 1,500,000 * -- 22,402
Bear Stearns Securities Corp......... 214,550,000 17 -- 3,204,304
Bell Atlantic Master Trust........... 1,600,000 * -- 23,896
Black Diamond Ltd.................... 5,491,000 * 47,170 82,008
Black Diamond Partners, L.P.......... 4,930,000 * 47,955 73,629
Bonannay Investments Limited......... 100,000 * -- 1,493
Bond Fund Series-Oppenheimer Fund for
Growth............................. 11,000,000 * -- 164,285
Boston College Endowment Fund........ 542,000 * -- 8,094
Brotherhood of Teamsters Retirement
and Family Protection Plan......... 300,000 * -- 4,480
Brotherhood of Teamsters, Affiliates
Pension Plan....................... 1,950,000 * -- 29,123
BT Holdings.......................... 11,000,000 * -- 164,285
Buffalo High Yield Fund, Inc......... 2,000,000 * -- 29,870
Business Investment Organization Co.
Ltd. -- metal a/c.................. 280,000 * -- 4,181
Canadian Imperial Holdings Inc....... 22,500,000 2 -- 336,037
Carrigaholt Capital (Bermuda) L.P.... 2,500,000 * -- 37,337
</TABLE>

30
<PAGE> 39

<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
OF DEBENTURES COMMON
BENEFICIALLY PERCENT OF STOCK OWNED COMMON STOCK
OWNED AND TOTAL OUTSTANDING PRIOR TO REGISTERED HEREBY
SELLING SECURITYHOLDERS OFFERED HEREBY DEBENTURES CONVERSION (1)
----------------------- ---------------- ----------------- ----------- -----------------
<S> <C> <C> <C> <C>
Century National Insurance Company... 2,180,000 * -- 32,558
CFW-C, L.P........................... 30,000,000 2 -- 448,050
Chapin Carpenter, Mary............... 25,000 * -- 373
Charles Schwab Trust Company......... 240,000 * -- 3,584
Chrysler Corporation Master
Retirement Trust................... 3,785,000 * -- 56,528
Chrysler Insurance Company -- Total
Return............................. 70,000 * -- 1,045
City of Richmond, Virginia........... 200,000 * -- 2,987
City of Worcester, Massachusetts..... 400,000 * -- 5,974
Class IC Company, Ltd., The.......... 2,500,000 * -- 37,337
Collins US Premier Equity Trust...... 250,000 * -- 3,733
Colonial Penn Life Insurance Co...... 500,000 * -- 7,467
Commonwealth Life Insurance Comp
(Teamsters-Camden Non-Enhanced).... 5,000,000 * -- 74,675
Connell, Eileen M.................... 40,000 * -- 597
Corbel Investments, Ltd.............. 400,000 * -- 5,974
Corporate Investment Services SAL
(Offshore) -- growth a/c............. 240,000 * -- 3,584
Cova Bond -- Debenture............... 1,500,000 * -- 22,402
CPR (USA) Inc........................ 7,650,000 * -- 114,252
Credit Suisse London Nominees
Limited............................ 4,000,000 * 91,500 59,740
Data General......................... 300,000 * -- 4,480
Delozier, Joseph and Jan............. 15,000 * -- 224
Delta Air Lines Master Trust......... 2,220,000 * -- 33,155
Detroit Edison Employees............. 2,250,000 * -- 33,603
Detroit Medical Endowment............ 850,000 * -- 12,694
Detroit Medical Pension.............. 1,200,000 * -- 17,922
Deutsche Bank A.G.................... 94,035,000 7 -- 1,404,412
Donaldson, Lufkin & Jenrette
Securities Corporation............. 561,000 * -- 8,378
Double Black Diamond Offshore LDC.... 2,316,000 * 9,300 34,589
Employers' Reinsurance Corporation... 4,795,000 * -- 71,613
Ensign Peak Advisors................. 3,000,000 * -- 44,805
EQ Putnam Balanced Portfolio......... 50,000 * -- 746
Federated Equity Income Fund, Inc.... 29,000,000 2 -- 433,115
Federated Insurance Series, a
Massachusetts business trust, on
behalf of its Federated Equity
Income Fund II..................... 600,000 * -- 8,961
Fidelity Securities Fund: Fidelity
Growth and Income Portfolio........ 70,000,000 5 (2) 1,045,450
Forest Alternative Strategies Fund
A-5I............................... 1,080,000 * -- 16,129
Forest Alternative Strategies Fund
A-5M............................... 510,000 * -- 7,616
Forest Alternative Strategies Fund
B-3................................ 700,000 * -- 10,454
Forest Global Convertible Fund
A-1................................ 90,000 * -- 1,344
Forest Global Convertible Fund
A-5................................ 400,000 * -- 5,974
Forest Global Convertible Fund
B-1................................ 400,000 * -- 5,974
</TABLE>

31
<PAGE> 40

<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
OF DEBENTURES COMMON
BENEFICIALLY PERCENT OF STOCK OWNED COMMON STOCK
OWNED AND TOTAL OUTSTANDING PRIOR TO REGISTERED HEREBY
SELLING SECURITYHOLDERS OFFERED HEREBY DEBENTURES CONVERSION (1)
----------------------- ---------------- ----------------- ----------- -----------------
<S> <C> <C> <C> <C>
Forest Global Convertible Fund
B-2................................ 500,000 * -- 7,467
Forest Global Convertible Fund
B-3................................ 400,000 * -- 5,974
Forest Global Convertible Fund
B-5................................ 800,000 * -- 11,948
Forest Greyhound c/o Forest
Investment Management LLC.......... 400,000 * -- 5,974
Forest Performance Fund.............. 800,000 * -- 11,948
Fort Dearborn Life Insurance
Company............................ 360,000 * -- 5,376
Fox Family Foundation DTD 10/10/87
c/o Forest Investment Management
LLC................................ 100,000 * -- 1,493
Fox Family Portfolio Partnership c/o
Forest Investment Management LLC... 900,000 * -- 13,441
Franklin Investors Securities Trust
Convertible Securities Fund........ 6,000,000 * -- 89,610
Franklin Strategic Series -- Franklin
Small Cap Growth Fund.............. 23,800,000 2 -- 355,453
Franklin U.S. Small Cap Growth
Fund............................... 200,000 * -- 2,987
Fundamental Investors, Inc........... 22,500,000 2 -- 336,037
Gencorp.............................. 4,350,000 * -- 64,967
General Motors Domestic Group Pension
Trust.............................. 2,500,000 * -- 37,337
George Putnam Fund of Boston, The.... 8,810,000 * -- 131,577
Gleneagles Fund Company, The......... 1,500,000 * -- 22,402
GLG Global Convertible Fund PLC...... 10,000,000 * -- 149,350
Goldman, Sachs & Co.................. 26,826,000 2 -- 400,646
GPZ Trading LLC...................... 8,000,000 * -- 119,480
Gruber-McBaine International......... 200,000 * -- 2,987
Habile Investments Limited........... 200,000 * -- 2,987
Halliburton High Yield............... 1,250,000 * -- 18,668
Hamilton Global Investors Limited.... 6,000,000 * -- 89,610
Hamilton Partners Limited............ 4,000,000 * -- 59,740
Heritage Finance and Trust Co........ 350,000 * -- 5,227
Highbridge Capital Corporation....... 15,000,000 1 -- 224,025
Houston Fire "B"..................... 4,000,000 * -- 59,740
Houston Municipal.................... 2,000,000 * -- 29,870
HSBC Securities Inc.................. 7,100,000 * -- 106,038
Idanta Partners Ltd.................. 8,000,000 * -- 119,480
Income Fund of America, Inc., The.... 112,500,000 9 -- 1,680,187
Issa, Mr. Pierre & Mrs. Claude....... 80,000 * -- 1,194
J.P. Morgan & Co. Incorporated....... 19,400,000 1 -- 289,739
Jatyco Inc. -- No. 2 a/c............. 120,000 * -- 1,792
Jefferies & Co....................... 95,000 * -- 1,418
KA Management Ltd.................... 12,945,399 * -- 193,339
KA Trading LP........................ 5,554,601 * -- 82,957
Kapiolani Health..................... 365,000 * -- 5,451
Kensington Value Fund LLC............ 1,000,000 * -- 14,935
Lagunitas Partners LP................ 200,000 * -- 2,987
</TABLE>

32
<PAGE> 41

<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
OF DEBENTURES COMMON
BENEFICIALLY PERCENT OF STOCK OWNED COMMON STOCK
OWNED AND TOTAL OUTSTANDING PRIOR TO REGISTERED HEREBY
SELLING SECURITYHOLDERS OFFERED HEREBY DEBENTURES CONVERSION (1)
----------------------- ---------------- ----------------- ----------- -----------------
<S> <C> <C> <C> <C>
LDG Limited.......................... 1,500,000 * -- 22,402
Levin Charitable Trust............... 40,000 * -- 597
Libertyview Fund LLC................. 300,000 * -- 4,480
Libertyview Plus Fund................ 8,550,000 * -- 127,694
LLT Limited.......................... 810,000 * -- 12,097
Lombard Odier & Cie.................. 1,814,000 * -- 27,092
Loomis Sayles Fixed Income Fund...... 1,250,000 * -- 18,668
Loomis Sayles High Yield Fixed Income
Fund............................... 400,000 * -- 5,974
Loomis Sayles Offshore High Yield.... 2,500,000 * -- 37,337
Maine State Retirement System........ 3,500,000 * -- 52,272
Marsh & McLennan Companies Inc....... 360,000 * -- 5,376
Mellon Bank NA, Trustee for General
Motors Employees Domestic Group
Pension Trust...................... 2,500,000 * -- 37,337
Merrill Lynch International Ltd...... 11,500,000 * -- 171,752
Merrill Lynch Pierce Fenner &
Smith.............................. 30,750,000 2 -- 459,251
Metropolitan Life fbo General
Motors............................. 750,000 * -- 11,201
Metropolitan Life LS High Yield
Series............................. 1,400,000 * -- 20,909
Millennium Trading Co. L.P........... 9,000,000 * -- 134,415
Milwaukee County, Wisconsin.......... 1,000,000 * -- 14,935
Minneapolis Teachers................. 1,650,000 * -- 24,642
Museum of Fine Arts, Boston.......... 590,000 * -- 8,811
NationsBanc Montgomery Securities,
LLC................................ 5,000,000 * -- 74,675
Nationwide Family of Funds, on behalf
of its Nationwide Equity Income
Fund............................... 120,000 * -- 1,792
Nationwide Separate Account Trust
Equity Income Fund................. 120,000 * -- 1,792
Navesink Equity Derivative Fund
LDC................................ 11,000,000 * -- 164,285
New England Strategic Income Fund.... 3,000,000 * -- 44,805
New Hampshire State Retirement
System............................. 3,100,000 * -- 46,298
New York City Employees' Retirement
Plan............................... 2,425,000 * -- 36,217
New York City Firemen's Retirement
Plan............................... 2,400,000 * -- 35,844
New York City Teachers Retirement
System............................. 9,500,000 * -- 141,882
New York State Electric & Gas Ret.
Ben. Plan.......................... 2,000,000 * -- 29,870
Nike Co.............................. 400,000 * -- 5,974
Northwestern Mutual Life Insurance
Company, The (Includes $1,000,000
in principal amount held by The
Northwestern Mutual Life Insurance
Company Group Annuity Separate
Account)........................... 8,000,000 * (3) 119,480
Oakmont Holdings Limited............. 40,000 * -- 597
OCM Convertible Limited
Partnership........................ 190,000 * -- 2,837
</TABLE>

33
<PAGE> 42

<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
OF DEBENTURES COMMON
BENEFICIALLY PERCENT OF STOCK OWNED COMMON STOCK
OWNED AND TOTAL OUTSTANDING PRIOR TO REGISTERED HEREBY
SELLING SECURITYHOLDERS OFFERED HEREBY DEBENTURES CONVERSION (1)
----------------------- ---------------- ----------------- ----------- -----------------
<S> <C> <C> <C> <C>
OCM Convertible Trust................ 4,465,000 * -- 66,684
Oppenheimer Variable Account Funds
for the Oppenheimer Growth & Income
Fund............................... 3,000,000 * -- 44,805
Orange County Retirement............. 2,250,000 * -- 33,603
Orrington International Fund Ltd..... 2,238,000 * -- 33,424
Orrington Investments LP............. 3,762,000 * -- 56,185
Pacific Life Insurance Company....... 3,000,000 * -- 44,805
Palladin Overseas Fund Ltd........... 1,500,000 * -- 22,402
Palladin Partners I. L.P............. 500,000 * -- 7,467
Paloma Securities L.L.C.............. 22,650,000 2 7,400 338,277
Paloma Strategic Fund L.P............ 10,000,000 * -- 149,350
Parker-Hannifin Corporation.......... 750,000 * -- 11,201
Partner Reinsurance Co............... 1,000,000 -- 14,935
Partner Reinsurance Company Ltd...... 410,000 * -- 6,123
Partners Healthcare Services......... 2,100,000 * -- 31,363
Pension Reserves Investment Trust.... 2,000,000 * -- 29,870
Pepperdine University Pool A1........ 465,000 * -- 6,944
Pepperdine University Pool A2........ 295,000 * -- 4,405
Promutual............................ 2,540,000 * -- 37,934
Putnam Balanced Retirement Fund...... 2,590,000 * -- 38,681
Putnam Convertible Income-Growth
Trust.............................. 35,563,000 3 -- 531,133
Putnam Convertible Opportunities and
Income Trust....................... 1,945,000 * -- 29,048
Putnam Equity Income Fund............ 3,780,000 * -- 56,454
Putnam Funds Trust-Putnam High Yield
Total Return Fund.................. 245,000 * -- 3,659
Putnam High Income Convertible and
Bond Fund.......................... 4,000,000 * -- 59,740
R(2) Investments, LDC................ 3,000,000 * -- 44,805
Raytheon Corporation Master Pension
Trust.............................. 1,945,000 * -- 29,048
Raytheon Master Trust................ 4,250,000 * -- 63,473
Rhode Island Retirement.............. 9,625,000 * -- 143,749
Rohne-Poulenc Rorer Inc. Pension
Plan............................... 800,000 * -- 11,948
Salomon Brothers Capital Structure
Arbitrage Fund..................... 6,000,000 * (4) 89,610
Salomon Brothers Equity Arbitrage
Finance Ltd Fund................... 2,000,000 * (4) 29,870
Sanders, Mark and Cynthia............ 40,000 * -- 597
Shepherd Investments International,
Ltd................................ 33,465,000 3 -- 499,799
Silverton International Fund
Limited............................ 8,600,000 * -- 128,441
Societe Generale Securities
Corporation........................ 5,000,000 * -- 74,675
Southern Farm Bureau Life Insurance
Co................................. 1,500,000 * -- 22,402
Stark International.................. 14,625,000 1 -- 218,424
State Employees' Retirement Fund of
the State of Delaware.............. 1,325,000 * -- 19,788
</TABLE>

34
<PAGE> 43

<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
OF DEBENTURES COMMON
BENEFICIALLY PERCENT OF STOCK OWNED COMMON STOCK
OWNED AND TOTAL OUTSTANDING PRIOR TO REGISTERED HEREBY
SELLING SECURITYHOLDERS OFFERED HEREBY DEBENTURES CONVERSION (1)
----------------------- ---------------- ----------------- ----------- -----------------
<S> <C> <C> <C> <C>
State of Connecticut Combined
Investment Funds................... 4,705,000 * -- 70,269
State of Connecticut Fund "F"........ 5,000,000 * -- 74,675
State of Oregon -- Equity............ 10,000,000 * -- 149,350
Susquehanna Capital Group............ 22,000,000 2 -- 328,570
Talwar Trading & Investments Ltd..... 120,000 * -- 1,792
Teamsters Affiliates Pension Plan.... 2,125,000 * -- 31,736
Teamsters Retirement and Family
Protection......................... 300,000 * -- 4,480
Tower, Peter & Elizabeth (Tower
Foundation)........................ 150,000 * -- 2,240
TQA Arbitrage Fund, L.P.............. 1,000,000 * -- 14,935
TQA Leverage Fund, L.P............... 3,000,000 * -- 44,805
TQA Vantage Fund, Ltd................ 5,000,000 * -- 74,675
TQA Vantage Plus, Ltd................ 1,500,000 * -- 22,402
Tribeca Investments, L.L.C........... 20,000,000 2 -- 298,700
UA General Officers Retirement
Plan............................... 50,000 * -- 746
UA Local Union Officers & Employees
Pension............................ 400,000 * -- 5,974
UA Office Employees Retirement
Plan............................... 25,000 * -- 373
UFCW................................. 500,000 * -- 7,467
United Mine Workers.................. 4,900,000 * -- 73,181
University of Rochester.............. 590,000 * -- 8,811
Van Kampen American Capital
Convertible Securities Fund........ 1,280,000 * (5) 19,116
Van Kampen American Capital Harbor
Fund............................... 6,720,000 * (5) 100,363
Vanguard Convertible Securities Fund,
Inc................................ 3,455,000 * -- 51,600
Vivaldi Investments Limited.......... 160,000 * -- 2,389
World Bank "RSBP".................... 2,000,000 * -- 29,870
Worldwide Transactions Ltd........... 880,000 * 8,555 13,142
Zazove Aggressive Growth Fund,
L.P................................ 850,000 * -- 12,694
Zazove Convertible Fund, L.P......... 3,200,000 * -- 47,792
Zazove Global Convertible Fund,
L.P................................ 345,000 * -- 5,152
</TABLE>

- ---------------
* Less than one percent.

(1) The shares of Common Stock registered hereby are calculated on an "as
converted" basis using the conversion rate described on the cover page of
this Prospectus.

35
<PAGE> 44

(3) In the ordinary course of business, Northwestern Mutual Investment Services,
Inc., Robert W. Baird & Co. Incorporated, Baird/Mark Capital Group, and MGIC
Mortgage Securities Corporation, each of which is a broker-dealer and
affiliated with The Northwestern Mutual Life Insurance Company, may, from
time to time, have acquired or disposed of, or may in the future acquire or
dispose of, securities of the Company, for such broker-dealers' own accounts
or for the accounts of others. Other affiliates of The Northwestern Mutual
Life Insurance Company may, in the ordinary course of business, effect
transactions in the securities of the Company. Only security holdings of The
Northwestern Mutual Life Insurance Company are reflected. The Northwestern
Mutual Life Insurance Company and its affiliates may, in the ordinary course
of business, take part in transactions involving the real property of the
Company.

(4) Salomon Brothers Asset Management Inc. ("SBAM") acts as discretionary
investment advisor with respect to the noted accounts that hold the
debentures. Accordingly, SBAM may be deemed to be the beneficial owner of
such debentures. SBAM also acts as discretionary investment advisor with
respect to the Gaguine Family Trust, which holds 4,000 shares of the
Company's common stock. Accordingly, SBAM may be deemed to be the beneficial
owner of such shares.

(5) Van Kampen American Capital Asset Management, Inc. is the securityholder's
investment advisor and acts as investment advisor to other funds which
beneficially own securities of the Company.

36
<PAGE> 45

PLAN OF DISTRIBUTION

The Debentures and the shares of Common Stock issued or issuable upon
conversion of the Debentures (the "Registrable Securities") are being registered
to permit public secondary trading of such securities by the holders thereof
from time to time after the date of this Prospectus. The Company will not
receive any of the proceeds from the sale by the Selling Securityholders of the
Registrable Securities. The Company will bear all fees and expenses incident to
its obligation to register the Registrable Securities.

The Selling Securityholders may sell all or a portion of the Registrable
Securities beneficially owned by them and offered hereby from time to time
directly or through one or more underwriters, broker-dealers or agents. If the
Registrable Securities are sold through underwriters or broker-dealers, the
Selling Securityholder will be responsible for underwriting discounts or
commissions or agent's commission. Such Registrable Securities may be sold in
one or more transactions at fixed prices, at prevailing market prices at the
time of sale, at varying prices determined at the time of sale, or at negotiated
prices. Such sales may be effected in transactions (which may involve crosses or
block transactions) (i) on any national securities exchange or quotation service
on which the Registrable Securities may be listed or quoted at the time of sale
(including the New York Stock Exchange for the Common Stock), (ii) in the
over-the-counter market, or (iii) through the writing of options (whether such
options are listed on an options exchange or otherwise). In connection with
sales of the Registrable Securities or otherwise, the Selling Securityholder may
enter into hedging transactions with broker-dealers, which may in turn engage in
short sales of the Registrable Securities in the course of hedging in positions
they assume. The Selling Securityholder may also sell Registrable Securities
short and deliver Registrable Securities to close out short positions, or loan
or pledge Registrable Securities to broker-dealers that in turn may sell such
securities. If the Selling Securityholders effect such transactions by selling
Registrable Securities to or through underwriters, brokers, dealers or agents,
such underwriters, brokers, dealers or agents may receive commissions in the
form of discounts, concessions or commissions from the Selling Securityholders
or commissions from purchasers of Registrable Securities for whom they may act
as agent or to whom they may sell as principal (which discounts, concessions or
commissions as to particular underwriters, brokers, dealers or agents may be in
excess of those customary in the types of transactions involved).

The outstanding Common Stock is listed for trading on the NYSE under the
symbol "WDC". The Company does not intend to apply for listing of the Debentures
on any securities exchange or for quotation through Nasdaq. Accordingly, no
assurance can be given as to the development of liquidity or any trading market
for the Debentures. See "Risk Factors -- Absence of Public Market."

The Selling Securityholders and any broker-dealer participating in the
distribution of the Registrable Securities may be deemed to be "underwriters'
within the meaning of the Securities Act, and any commissions paid, or any
discounts or concessions allowed to any such broker-dealer may be deemed to be
underwriting commissions or discounts under the Securities Act.

Under the securities laws of certain states, the Registrable Securities may
be sold in such states only through registered or licensed brokers or dealers.
In addition, in certain states the Registrable Securities may not be sold unless
the Registrable Securities have been registered or qualified for sale in such
state or an exemption from registration or qualification is available and is
complied with.

There can be no assurance that any Selling Securityholder will sell any or
all of the Debentures or Registrable Securities registered pursuant to the shelf
registration statement, of which this Prospectus forms a part. In addition, any
securities covered by this Prospectus that qualify for sale pursuant to Rule 144
or Rule 144A of the Securities Act may be sold under Rule 144 or Rule 144A
rather than pursuant to this Prospectus.

Pursuant to the Registration Rights Agreement pursuant to which the
Registrable Securities have been registered, the Company and the Selling
Securityholders are obligated to indemnify each other against certain
liabilities arising under the Securities Act.

The Selling Securityholders and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without
37
<PAGE> 46

limitation, Regulation M, which may limit the timing of purchases and sales of
any of the Registrable Securities by the Selling Securityholders and any other
such person. Furthermore, Regulation M of the Exchange Act may restrict the
ability of any person engaged in the distribution of the Registrable Securities
to engage in market-making activities with respect to the particular Registrable
Securities being distributed. All of the foregoing may affect the marketability
of the Registrable Securities and the ability of any person or entity to engage
in market-making activities with respect to the Registrable Securities.

Upon sale pursuant to the shelf registration statement, of which this
Prospectus forms a part, the Registrable Securities will be freely tradable in
the hands of persons other than affiliates of the Company.

LEGAL MATTERS

The validity of the Debentures and the Common Stock issued or issuable upon
conversion of the Debentures was passed upon for the Company by Gibson, Dunn &
Crutcher LLP, Orange County, California.

INDEPENDENT AUDITORS

The consolidated financial statements of Western Digital Corporation as of
June 28, 1997 and June 29, 1996 and for each of the years in the three-year
period ended June 28, 1997, have been incorporated by reference herein and in
the registration statement, of which this Prospectus forms a part, in reliance
upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.

38
<PAGE> 47

================================================================================

NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING
SECURITYHOLDERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, IMPLY THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE AS OF WHICH SUCH INFORMATION IS GIVEN. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING
SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Incorporation of Certain Documents by
Reference............................. 2
Available Information................... 2
Forward-Looking Statements.............. 2
Prospectus Summary...................... 4
Risk Factors............................ 6
Ratio of Earnings to Fixed Charges...... 8
Use of Proceeds......................... 8
Description of Debentures............... 9
Description of Capital Stock............ 23
Certain Federal Income Tax
Considerations........................ 25
Selling Securityholders................. 30
Plan of Distribution.................... 37
Legal Matters........................... 38
Independent Auditors.................... 38
</TABLE>

================================================================================

$1,297,200,000

[WESTERN DIGITAL LOGO]

ZERO COUPON CONVERTIBLE
SUBORDINATED DEBENTURES
DUE 2018 AND
SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION THEREOF

------------------------
PROSPECTUS
------------------------

AUGUST 11, 1998

================================================================================