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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): July 21, 1999
WESTERN DIGITAL CORPORATION
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(Exact Name of Registrant as Specified in Charter)
Delaware 001-08703 95-264-7125
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
8105 Irvine Center Drive
Irvine, California 92618
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (949) 932-5000
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 5. OTHER EVENTS.
(a) On July 21, 1999, the Registrant issued a press release announcing
its fourth quarter and year-end results. Attached hereto as Exhibit 99.1 and
incorporated by reference herein is a copy of the July 21, 1999 press release.
(b) On August 13, 1999, the Registrant issued a press release
announcing it was accelerating the consolidation of its high-volume desktop hard
drive manufacturing in Malaysia and a reduction in its Singapore customer repair
center and production-related work force. Attached hereto as Exhibit 99.2 and
incorporated by reference herein is a copy of the August 13, 1999 press release.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
Exhibit Description
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99.1 Press Release dated July 21, 1999.
99.2 Press Release dated August 13, 1999.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Date: August 19, 1999
WESTERN DIGITAL CORPORATION
By: /s/ Michael A. Cornelius
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Michael A. Cornelius
Vice President, Law and
Administration and Secretary
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EXHIBIT INDEX
Exhibit No. Document
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Exhibit 99.1 Press Release issued July 21, 1999.
Exhibit 99.2 Press Release issued August 13, 1999.
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EXHIBIT 99.1
Company Contact:
Robert J. Blair
Western Digital Corporation
212.867.4490
[email protected]
For Immediate Release
WESTERN DIGITAL ANNOUNCES FOURTH QUARTER, YEAR-END RESULTS
IRVINE, CA. - July 21, 1999 - Western Digital Corporation (NYSE:WDC)
today reported revenue of $709.3 million and a net loss of $101.5 million, or
$1.12 per share, for its fourth quarter ended July 3, 1999. The net loss
includes a restructuring charge of approximately $20 million for the sale of the
Company's media business to Komag, Inc. Excluding this charge, net loss and net
loss per share would have been $81.5 million and $.90, respectively. In the
year-earlier period, Western Digital reported revenue of $650.5 million and a
net loss of $162.7 million, or $1.84 per share. The results for the fourth
quarter of 1998 included approximately $22 million related principally to the
start of the technology licensing and component supply agreement with IBM
Corporation.
For fiscal 1999, the Company reported revenue of $2.8 billion and a net
loss of $492.7 million, or $5.51 per share, compared with a net loss of $290.2
million, or $3.32 per share, on revenue of $3.5 billion in fiscal 1998. Both
fiscal 1998 and 1999 results included previously announced restructuring and
special charges.
Chuck Haggerty, chairman, president and chief executive officer of
Western Digital, said: "The fourth quarter results reflect the brutal
competitive pricing in the desktop hard drive industry. Nevertheless, our
strategy to compete at the major PC OEMs on the basis of performance, quality
and time to market of our hard drives--and our customer service--produced a
sequential increase in total unit shipments to 5.7 million in the fourth
quarter, compared with 5.1 million units in the March quarter. Notably, we saw
improved performance in our Enterprise product line, as units, revenue and gross
margin were at their highest levels in three quarters. Continued improvement and
solid new product execution in this area are key to Western Digital's recovery."
"Our focus will remain on crisp execution of new product plans in both
the desktop and enterprise product lines. Our roadmaps align very well with our
major OEM PC and server customers, so the opportunity is there to grow the
business. In addition, our efforts to diversify the business model with
contributions from the AV consumer and networked attached storage spaces are on
target for initial revenue by the end of calendar 1999."
Haggerty also noted the Company's strong asset management in the fourth
quarter: "Cash for the quarter finished at expected levels of about $226
million. Our days-sales-outstanding were at 38 days, a record low level for the
Company, mostly due to a refined supply/demand process. Total inventory turns
were 19--about four turns better than the March quarter--and our best
performance since Q3 in fiscal 1997."
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Western Digital Corporation is a leader in information storage products
and services. The Company designs and manufactures hard drives for personal and
enterprise-wide computing, and markets them to leading systems manufacturers and
selected resellers under the Western Digital brand name. The Company was founded
in 1970 and has long been noted for its storage and end-market systems-level
design knowledge. The Company's home page can be found at
http://www.westerndigital.com.
This release contains forward-looking statements, including statements
relating to improved performance and product execution in the enterprise and
desktop product lines, growth in the Company's OEM business, and expected
contributions of revenue from AV consumer and networked attached storage by the
end of calendar 1999. The forward looking statements are based on current
management expectations, and actual results may differ materially as a result of
several factors, including: improvement in time to market and time to volume of
our new hard drives; successful qualification of our drives with key OEM
customers; overall supply and customer demand in the hard drive industry;
changes in customer order patterns; business conditions and growth in the
personal and enterprise computing industry; development of non-traditional
markets for hard drives; successful development and sale of the Company's first
products for the AV consumer and networked attached storage markets; and other
factors discussed in our recent SEC filings. We undertake no obligation to
update forward-looking statements to reflect events or circumstances occurring
after the date of such statements.
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WESTERN DIGITAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
--------------------------------------------- ----------------------------
JULY 3, JUNE 27, MAR. 27, JULY 3, JUNE 27,
1999 1998 1999 1999 1998
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<S> <C> <C> <C> <C> <C>
Revenues, net $ 709,302 $ 650,503 $ 668,456 $ 2,767,206 $ 3,541,525
Costs and expenses:
Cost of revenues 688,429 692,243 628,592 2,770,054 3,441,475
Research and development 52,003 70,010 62,699 216,986 203,733
Selling, general
and administrative 44,597 50,719 46,210 195,958 192,142
Restructuring provision 20,000 -- 41,000 61,000 --
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Total costs and expenses 805,029 812,972 778,501 3,243,998 3,837,350
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Operating loss (95,727) (162,469) (110,045) (476,792) (295,825)
Net interest income (expense) (5,759) (250) (4,248) (15,898) 3,817
Loss before income taxes (101,486) (162,719) (114,293) (492,690) (292,008)
Provision for income taxes -- -- -- -- (1,791)
Net loss $ (101,486) $ (162,719) $ (114,293) $ (492,690) $ (290,217)
=========== =========== =========== =========== ===========
Loss per common share:
Basic $ (1.12) $ (1.84) $ (1.27) $ (5.51) $ (3.32)
=========== =========== =========== =========== ===========
Diluted $ (1.12) $ (1.84) $ (1.27) $ (5.51) $ (3.32)
=========== =========== =========== =========== ===========
Common shares used in computing
per share amounts:
Basic 90,596 88,226 89,883 89,478 87,525
=========== =========== =========== =========== ===========
Diluted 90,596 88,226 89,883 89,478 87,525
=========== =========== =========== =========== ===========
</TABLE>
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WESTERN DIGITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
JULY 3, JUNE 27,
1999 1998
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 226,147 $ 459,830
Accounts receivable, net 273,435 369,013
Inventories 144,093 186,516
Prepaid expenses 44,672 36,763
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Total current assets 688,347 1,052,122
Property and equipment, net 237,939 346,987
Intangible and other assets, net 96,116 43,579
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Total assets $ 1,022,402 $ 1,442,688
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 335,907 $ 330,130
Accrued expenses 280,711 258,449
Current portion of long-term debt 10,000 0
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Total current liabilities 626,618 588,579
Long-term debt 534,144 519,188
Deferred income taxes 15,430 17,163
Shareholders' equity (deficit:
Common stock, $.01 par value 906 883
Additional paid-in capital 140,145 119,026
Retained Earnings (accumulated deficit) (294,841) 197,849
Total shareholders' equity (deficit) (153,790) 317,758
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Total liabilities and shareholders'
equity (deficit) $ 1,022,402 $ 1,442,688
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</TABLE>
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EXHIBIT 99.2
Company Contact:
Robert J. Blair
Western Digital Corporation
212.867.4490
[email protected]
For Immediate Release
WESTERN DIGITAL ANNOUNCES EXPANSION OF PRODUCT DESIGN ACTIVITY AT
CHAI CHEE SINGAPORE OPERATION; ACCELERATES MOVE OF DESKTOP HDD TO MALAYSIA
Chai Chee, Singapore--Aug. 13, 1999--Western Digital Corporation (NYSE:
WDC) today announced a plan to further develop its Chai Chee, Singapore facility
as a regional technical and manufacturing support center, focusing its resources
on value-add engineering rather than production volume. The Company also
indicated it was accelerating the consolidation of its high-volume desktop hard
drive production in its Kuala Lumpur, Malaysian facility to improve
manufacturing efficiencies and costs, while focusing its Singapore production
resources on desktop hard drive development and component qualification and on
production of high end WD Enterprise hard drives.
Arif Shakeel, Western Digital's senior vice president of operations,
stated: "The plan announced today reflects a significant move up the value chain
for WD Singapore, applying the accumulated experience of more than 10 years of
hard drive manufacturing to the design, development and production deployment
process. The engineering organization in Chai Chee has delivered the core
controller designs for WD's MR and GMR desktop product families and is currently
working on the next two generations of products for both the PC and home
entertainment marketplaces. We are expanding the existing electronics design
center and plan to double the existing staff to accommodate this growth."
Western Digital indicated it is in discussion with the EDB to add a
mechanical product design group in Chai Chee and to enlarge its existing tooling
and process design and development groups. These advances in Singapore's
engineering role are designed to improve linkage with Western Digital's
predominantly Asian-based supply partners, and speed the development of new
products.
The evolution of the engineering role in the Singapore facility will
complement the previously announced consolidation of worldwide materials
planning and procurement responsibility in Singapore.
The realignment of hard drive manufacturing will result in a reduction
among the production-related Chai Chee work force. In addition, due to the
ongoing improvement in WD hard drive quality and reliability in the field, the
customer repair center in Chai Chee will also be reduced in size. The plan
announced today will be implemented on a phased basis through December, 1999. It
will result in a reduction of approximately 2,000 direct and 500 indirect
workers at Chai Chee. Following these reductions, the WD Chai Chee workforce
will include approximately 1,200 direct and 500 indirect workers.
The first phase is effective today and will affect about 300 direct and
25 indirect workers, primarily in the customer service center. The Company has
made arrangements, together with the appropriate Singaporean government
agencies, to provide retraining and placement support to those people leaving
Western Digital.
