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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): October 20, 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.
On October 20, 1999, Western Digital Corporation issued a press release
announcing its first quarter results. Attached hereto as Exhibit 99.1 is a copy
of the October 20, 1999, press release which is incorporated herein by this
reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
Exhibit Description
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99.1 Press Release dated October 20, 1999, regarding Western Digital
Corporation's announcement of its first quarter results.
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: October 21, 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 99.1
Company Contact:
Robert J. Blair
Western Digital Corporation
949.932.7834
[email protected]
For Immediate Release
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WESTERN DIGITAL ANNOUNCES FIRST QUARTER RESULTS
IRVINE, CA -- October 20, 1999 -- Western Digital Corporation (NYSE:WDC) today
reported revenue of $407.0 million and a net loss of $106.3 million, or $1.11
per share, for its first quarter ended October 2, 1999. The net loss includes
restructuring charges of $32.3 million, primarily related to the transfer of all
desktop hard drive production from Singapore to Malaysia, and $37.7 million of
special charges to cost of sales for the product recall announced on September
27, 1999. Also included in the first quarter loss is an extraordinary gain of
$90.6 million for the redemption of some of the Company's debentures for common
stock. Excluding the non-recurring charges and the extraordinary gain, the net
loss and net loss per share would have been $126.9 million, or $1.32 per share.
In the year earlier period, Western Digital reported revenue of $650.9 million
and a net loss of $194.7 million, or $2.20 per share. The results for the first
quarter of 1999 included special charges of $84.5 million. Excluding these
special charges, net loss and net loss per share for the first quarter of 1999
would have been $110.2 million and $1.24, respectively.
Chuck Haggerty, chairman, president and chief executive officer of
Western Digital, stated: "The first quarter was another very competitive pricing
environment in the hard drive industry, complicated for Western Digital by the
product recall. The operations recovery plan is on schedule: 90% of the affected
drives have been captured and are being reworked; volume production resumed last
week of the WD Caviar 6.8GB/platter series with new chips; all major OEM
customers have reviewed and accepted the corrective action plan; and we expect
to be back to normal production levels in the first week of November.
"We are in qualification at all major OEM customers with our next
generation WD Caviar desktop series, the 9.1GB and 10.2GB/platter platforms, and
expect to be volume shipping to customers in October.
In the Enterprise market, Haggerty noted that the Company's shipments
will begin to shift in the next several quarters to more of the 10,000 RPM
drives as the Company expands its offerings in the high end and entry-level
segments of this market.
"WD's hard drives continue to win industry and customer accolades,"
Haggerty continued. "In the first quarter, PC World, VAR Business and
StorageReview.com recognized WD hard drives for industry-leading quality and
performance in their annual surveys.
"Our efforts to create the industry's most efficient manufacturing
operation have resulted in annualized cost savings of about $100 million. We
expect to achieve additional efficiencies and savings throughout our
organizations in the next several quarters."
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The Company made further progress in its diversification efforts into
audio/visual storage solutions and networked attached storage solutions in the
first quarter. In the A/V space, Western Digital introduced the WD Performer,
its first hard drive specifically for the home entertainment market and
featuring WhisperDrive acoustics technology. The WD Performer is in
qualification with a number of consumer electronics and set top box
manufacturers. The Company also introduced its innovative StreamWeaver
technology for its next-generation WD Performer drives, to enable consumers to
efficiently handle multiple streams of data in the home entertainment
environment. "By developing unique technology that facilitates the growth of
this market and by partnering with consumer AV leader Sony, we aim to establish
WD as a major industry player over the next year in this fast-growing emerging
space," said Haggerty.
Haggerty indicated that Connex, a wholly-owned subsidiary of Western
Digital, will be introducing its first network attached storage system shortly
and that initial shipments are scheduled for January 2000.
"Combined with our initiatives to restore the core hard drive business
to health and peak efficiency, the efforts in audio visual and network attached
storage solutions are key elements in transforming the WD business model in the
long term," said Haggerty.
Western Digital Corporation is a leading manufacturer of hard drives
used for information storage in desktop computers, servers, workstations and
home entertainment electronic products. Through its Connex subsidiary, the
company serves users of network-attached storage systems and enterprise-wide
storage area networks. Western Digital was founded in 1970 and has long been
noted for its storage and end-market systems-level design knowledge. The
company's products are marketed to leading systems manufacturers and selected
resellers under the Western Digital brand name. Its home page can be found at
http://www.westerndigital.com.
This release contains forward-looking statements, including statements
relating to the Company's resumption of normal production levels, the shift in
production to its 10,000 rpm Enterprise drive, expected volume shipment of the
Company's next generation drives, additional efficiencies and savings, expected
volume shipments of the WD Performer drive, the Company's position as an
industry player in the home entertainment environment, and shipments by Connex
of its first networked attached storage system. The forward looking statements
are based on current management expectations, and actual results may differ
materially as a result of several factors, including: an adequate supply of
components for the Company's drives; implementation of headcount reductions and
operational changes; successful production ramp of the Company's next generation
drives; leadership by the Company in home entertainment storage technology;
successful qualification of the Company's 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 Connex's first product for the networked
attached storage market; and other factors discussed in the Company's recent SEC
filings. The Company undertakes no obligation to update forward-looking
statements to reflect events or circumstances occurring after the date of such
statements.
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WESTERN DIGITAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
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OCT. 2, JULY 3, SEPT. 26,
1999 1999 1998
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Revenues, net ......................................... $ 406,957 $ 709,302 $ 650,858
Costs and expenses:
Cost of revenues ................................. 472,300 688,429 733,610
Research and development ......................... 50,143 52,003 51,921
Selling, general and administrative .............. 43,822 44,597 57,332
Restructuring provision .......................... 32,300 20,000 --
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Total costs and expenses ................... 598,565 805,029 842,863
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Operating loss ........................................ (191,608) (95,727) (192,005)
Net interest expense .................................. (5,329) (5,759) (2,653)
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Loss before income taxes and extraordinary item ....... (196,937) (101,486) (194,658)
Provision for income taxes ............................ -- -- --
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Loss before extraordinary item ........................ (196,937) (101,486) (194,658)
Extraordinary gain from redemption of debentures ...... 90,622 -- --
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Net Loss .............................................. $(106,315) $(101,486) $(194,658)
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Basic and diluted income (loss) per common share:
Loss per share before extraordinary item .............. $ (2.05) $ (1.12) $ (2.20)
Extraordinary gain .................................... .94 -- --
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Loss per share ........................................ $ (1.11) $ (1.12) $ (2.20)
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Common shares used in computing per share amounts ..... 95,918 90,596 88,545
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WESTERN DIGITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
OCT. 2, JULY 3,
1999 1999
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ASSETS
Current assets:
Cash and cash equivalents ........................... $ 185,054 $ 226,147
Accounts receivable, net ............................ 87,255 273,435
Inventories ......................................... 207,741 144,093
Prepaid expenses .................................... 45,675 44,672
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Total current assets ........................... 525,725 688,347
Property and equipment, net ............................... 186,981 237,939
Intangible and other assets, net .......................... 117,506 96,116
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Total assets ................................... $ 830,212 $ 1,022,402
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LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable .................................... $ 272,949 $ 335,907
Accrued expenses .................................... 291,119 280,711
Current portion of long-term debt ................... 10,000 10,000
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Total current liabilities ...................... 574,068 626,618
Long-term debt ............................................ 371,365 534,144
Deferred income taxes ..................................... 15,476 15,430
Shareholders' deficit:
Common stock, $.01 par value ........................ 1,123 906
Additional paid-in capital .......................... 247,413 142,268
Accumulated other comprehensive income (loss) ....... 21,923 (2,123)
Accumulated deficit ................................. (401,156) (294,841)
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Total shareholders' deficit .................... (130,697) (153,790)
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Total liabilities and shareholders' deficit .... $ 830,212 $ 1,022,402
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</TABLE>
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