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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 19, 1999
REGISTRATION NO. 333-______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
WESTERN DIGITAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C>
DELAWARE 95-264-7125
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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8105 IRVINE CENTER DRIVE
IRVINE, CALIFORNIA 92618
(949) 932-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
MICHAEL A. CORNELIUS
WESTERN DIGITAL CORPORATION
8105 IRVINE CENTER DRIVE
IRVINE, CALIFORNIA 92618
(949) 932-5000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPY TO:
RONALD S. BEARD
GIBSON, DUNN & CRUTCHER LLP
333 S. GRAND AVENUE
LOS ANGELES, CA 90071
(213) 229-7000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED
SALE TO PUBLIC: As soon as practicable after this
registration statement becomes effective.
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM AGGREGATE
TITLE OF SHARES TO BE REGISTERED OFFERING PRICE(1) AMOUNT OF REGISTRATION FEE
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<S> <C> <C>
COMMON STOCK $190,000,000 $52,820
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(1) The maximum aggregate offering price of Common Stock registered hereunder
will not exceed $190,000,000. Pursuant to Rule 457(o), the registration fee
is calculated on the aggregate maximum offering price of the Common Stock,
and the table does not specify information about the amount of shares to be
registered or the proposed maximum offering price per share.
If any of the securities being registered on this form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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PROSPECTUS
SUBJECT TO COMPLETION, DATED JANUARY 19, 1999
$190,000,000
[WESTERN DIGITAL LOGO]
COMMON STOCK
This is a public offering of shares of Common Stock, par value $0.01
per share, of Western Digital Corporation, a Delaware corporation. To the extent
required, the number of shares of Common Stock to be sold, the purchase price,
the public offering price, if applicable, the name of any agent or
broker-dealer, and any applicable commissions, discounts or other items
constituting compensation thereto with respect to a particular offering will be
set forth in a supplement or supplements to this prospectus.
The Common Stock is traded on the New York Stock Exchange under the
symbol "WDC." On January 15, 1999, the last reported sale price of the Common
Stock was $19 7/8 per share.
INVESTING IN THE COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK
FACTORS" BEGINNING ON PAGE 3.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
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THE DATE OF THIS PROSPECTUS IS JANUARY 19, 1999
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-732-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information that we
file with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus and supplements to this prospectus. The
information filed by us with the SEC in the future will update and supersede
this information. We incorporate by reference the documents listed below and any
future filings made by us with the SEC under Section 13(a), 13(c) or 15(d) of
the Securities Exchange Act of 1934 after the initial filing of the registration
statement that contains this prospectus and prior to the time that all the
securities offered by this prospectus are sold by us, an underwriter or a
selling stockholder.
1. The Company's Annual Report on Form 10-K for the fiscal year ended
June 27, 1998;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
September 26, 1998;
3. The Company's Current Reports on Form 8-K filed August 10, 1998,
August 10, 1998, October 26, 1998 and November 19, 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.
We have also filed a registration statement on Form S-3 with the SEC
under the Securities Act. This prospectus does not contain all of the
information set forth in the registration statement. You should read the
registration statement for further information about our company and the Common
Stock. You may request a copy of these filings, at no cost, by writing or
calling us at the following address or telephone number:
Corporate Secretary
Western Digital Corporation
8105 Irvine Center Drive
Irvine, California 92618
(949) 932-5000
You should rely only on the information contained in this prospectus.
We have authorized no one to provide you with different information. We are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus is
accurate as of any date other than the date on the front of this prospectus.
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, as amended, that involve risks and uncertainties.
Forward-looking statements can typically be identified by the use of
forward-looking words, such as "may," "will," "could," "project," "believe,"
"anticipate," "expect," "estimate," "continue," "potential," "plan,"
"forecasts," and the like. 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:
o the financial prospects of the Company;
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o the Company's financing plans;
o trends affecting the Company's financial condition or operating
results;
o the Company's strategies for growth, operations, and product
development and commercialization; and
o conditions or trends in or factors affecting the computer or hard
drive industry.
Forward-looking statements do not guarantee future performance and
involve risks and uncertainties that could cause actual results to differ
materially from those anticipated. The information contained in this prospectus,
or incorporated by reference, identifies important factors that could cause such
differences. Such factors include, among others, the highly competitive nature
of the computer 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.
Within this prospectus, we sometimes refer to years without specifying
the month or day of that year. In all such cases, unless we specifically refer
to a calendar year, the reference is to our fiscal year ended on or about June
30 of such year.
THE COMPANY
We design, develop, manufacture and market a broad line of rigid
magnetic disk drives (often referred to as "hard drives") for use in desktop
personal computers and, since 1997, in high-performance workstations, local area
network ("LAN") servers and multi-user systems. We market our products worldwide
to computer manufacturers, distributors, resellers and retailers. Our goal is to
become a leading manufacturer of hard drives in the hard drive markets in which
we compete.
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.
USE OF PROCEEDS
Our net proceeds, if any, from the sale of Common Stock registered by
the registration statement of which this prospectus forms a part will be used
for general corporate purposes or as stated in a supplement or supplements to
this prospectus.
RISK FACTORS
An investment in the Common Stock involves a high degree of risk. You
should carefully consider the following risk factors primarily related to the
Common Stock offered by this prospectus and to our business and operations. You
should also carefully consider the other information in this prospectus and in
the documents incorporated by reference. Some of these factors have affected our
financial condition or operating results in the past or are currently affecting
us. All of these factors could affect our future financial condition or
operating results. If any of the following risks actually occurs, our business,
financial condition or results of operations could be adversely affected. In
such case, the trading price of our Common Stock could decline, and you may lose
all or part of your investment.
Highly Competitive Industry.
The price of hard drives decreases over time due to increases in
supply, cost reductions and technological advances. This price erosion
accelerates when one or more competitors reduce prices to liquidate excess
inventories or attempt to gain market share. In addition, hard drive customers
consistently demand greater storage capacity and higher performance, which
requires us to continually develop products that incorporate new technology on a
timely
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and cost-effective basis. This in turn reduces the volume and profitability of
sales of existing products and increases the risk of inventory obsolescence.
The desktop portion of the hard drive industry is intensely competitive
and characterized by periods of oversupply and severe price erosion. During 1996
and 1997, we significantly increased our share of the desktop market, but most
of these gains were lost during 1998 for the following reasons:
o our decision to reduce production in the face of industry
oversupply and rapidly declining prices
o our late transition to magneto-resistive ("MR") head technology
o manufacturing and performance issues encountered as we continued
to produce thin film head products at higher storage capacities
than our competitors.
The enterprise portion of the hard drive industry is more concentrated,
with Seagate Technology having the largest market share. Performance, quality,
and reliability are even more important to the users of high-end products than
to users in the desktop market. However, this market has recently become much
more price competitive, and we expect this trend to continue.
Data Storage Industry Risks.
Our hard drives are components in computer systems. Demand for our hard
drives depends on the demand for computer systems manufactured by our customers
and on storage upgrades to existing systems. The demand for computer systems has
been volatile in the past and often has had an exaggerated effect on the demand
for hard drives in any given period. In calendar 1998, for example, the growth
in desktop PC sales slowed significantly, causing a sharp decline in demand for
hard drives. When the supply of hard drives exceeds demand, as it did in
calendar 1998, the oversupply of available products causes higher than
anticipated inventory levels and intense price competition. We expect that this
situation will occur again in the future.
Fluctuations in Quarterly Results.
We typically book and ship a high percentage of our total quarterly
sales in the third month of the quarter, which makes it difficult to match our
product build plans to customer demand for that quarter. If we do not forecast
total quarterly demand accurately, it can have a material adverse effect on our
quarterly results. Also, our operating results have been and may in the future
be subject to significant quarterly fluctuations as a result of a number of
other factors including:
o the timing of orders from and shipment of products to major
customers
o our product mix
o changes in the prices of our products
o manufacturing delays or interruptions
o acceptance by customers of competing products in lieu of our
products
o variations in the cost of components for our products
o limited access to components that we obtain from a single or a
limited number of suppliers
o competition and consolidation in the data storage industry
o seasonal and other fluctuations in demand for computers
o general economic conditions.
Possible Price Volatility of Common Stock.
The market price of our Common Stock has been, and may continue to be,
extremely volatile. Factors such as the following may significantly affect the
market price of our Common Stock:
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o actual or anticipated fluctuations in our operating results
o announcements of technological innovations by us or our
competitors
o new products introduced by us or our competitors
o periods of severe pricing pressures
o developments with respect to patents or proprietary rights
o conditions and trends in the hard drive industry
o changes in financial estimates by securities analysts
In addition, the stock market in recent months has experienced extreme
price and volume fluctuations that have particularly affected the stock price of
many high technology companies. These fluctuations are often unrelated to the
operating performance of the companies. As a result, the market price of our
Common Stock may decline below the price on the date of this prospectus or the
date of any purchase of the Common Stock offered by this prospectus.
Securities class action litigation suits are often brought against
companies after periods of volatility in the market price of their securities. A
number of such suits have been filed against us in the past, and any of these
litigation matters could result in substantial costs and a diversion of
resources and management's attention.
Rapid Technological Change and Product Development.
The hard drive industry is characterized by rapid technological
changes, particularly in recording head technology. MR heads, which enable
higher capacity per hard drive than conventional heads, became the leading
recording head technology during early 1998. Several of our major competitors
incorporated MR head technology into their products much earlier than we did and
achieved time-to-market leadership with certain MR products. We completed our
transition of desktop hard drives to MR head technology by the end of 1998, and
we are now beginning our transition to giant magneto-resistive ("GMR") heads,
the next recording head technology. However, if we fail to:
o regain time-to-market leadership with products incorporating MR
and then GMR head technology
o qualify these products with key customers on a timely basis
o produce these products in sufficient volume
then our market share could continue to fall and harm our operating results. Our
transition to GMR recording technology is our next important challenge. We have
just begun manufacturing our first hard drives with GMR technology, and
therefore it is too early for us to know how successful we will be in making
this technology transition compared to our competitors.
If we are to succeed in the enterprise hard drive portion of the market
we must successfully develop and timely introduce new products, and we must
increase the number of customers for our products. As we expand our product line
one of the many challenges we face is staffing. Hiring additional qualified
engineers is difficult because competition world wide for skilled hard drive
development engineers is intense. We also may encounter development delays or
quality issues which may adversely affect the introduction of new products. If
we experience any of these setbacks, we may miss crucial delivery time windows
on these new enterprise products, which would likely harm our operating results.
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Due to short product life cycles, we must regularly engage in new
product qualification with our customers. This process is typically complicated
and lengthy, and any failure or delay in qualifying new products with a customer
can result in our losing sales to that customer until the next generation of
products is introduced. Most of our customers qualify only a few vendors for a
certain product. This issue is particularly acute in the enterprise portion of
the market because the product life cycles for enterprise hard drives are longer
than those for desktop drives.
With the continued pressures to shorten the time required to introduce
new products, we must reduce the time to achieve acceptable manufacturing yields
and costs. Our inability to do so has harmed our operating results in the past
and could do so again in the future.
Advances in magnetic, optical or other data storage technologies could
result in competitive products that have better performance or lower cost per
unit of capacity than our products. Some of our competitors are developing
optically assisted recording products, but we have decided not to pursue this
technology at this time. If optically assisted recording products prove to be
superior in performance or cost per unit of capacity, we could be at a
competitive disadvantage to the companies offering those products.
Component Supply and Technology License Agreement with International
Business Machines Corporation ("IBM").
In June, 1998, we entered into a broad-based hard drive component
supply and technology licensing agreement with IBM. This agreement enables us to
incorporate IBM's technology, designs and hard drive components into our desktop
products. Implementation of this agreement presents several significant
challenges:
o most important, the need to adapt IBM's product designs and
manufacturing processes so that the hard drives with IBM
technology can be manufactured by us at a low enough cost to
compete in the high-volume desktop market
o our engineers must integrate IBM technology into our products
while continuing to conduct our own research and development
activities
IBM will be our sole supplier of the head components for desktop hard
drives manufactured under this agreement. Our business and operating results
would be harmed if those heads fail to satisfy our quality requirements or if
IBM is unable to meet our volume or delivery requirements. While we believe that
IBM's current and planned manufacturing capacity will meet our projected
requirements, growth of our sales of hard drives with IBM technology is
dependent upon IBM continuing to devote substantial financial resources to
support the manufacture of the components.
We entered into the agreement expecting that IBM will continue to lead
the hard drive industry in storage capacity and performance. We also believed
that we could leverage that leadership into our own time-to-market and
time-to-volume advantage in the desktop portion of the market. If IBM does not
maintain that leadership, we may not realize the benefits we had anticipated.
Although the agreement contains restrictions on IBM's ability to
license its technology to other companies, it is not exclusive, and competitors
may have access to both the products and the underlying technology. The
agreement continues until 2001, subject to several conditions including our
commitment to purchase specified quantities of components from IBM.
Customer Concentration and Changing Customer Models.
High volume customers for hard drives are concentrated among a small
number of computer manufacturers, distributors and retailers. We believe our
relationships with key customers are generally good. However, if we were to lose
one or more accounts, it could harm our operating results. Our customers are
generally not obligated to purchase any minimum volume and are generally able to
terminate their relationship with us at will. We have
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experienced reductions in our business, with resulting loss of revenue, with
certain customers largely as a result of delays and difficulties encountered in
our transition to MR head technology. Future changes in purchase volume or
customer relationships resulting in decreased demand for our hard drives,
whether by loss of or delays in orders, could harm our operating results.
The bottom line in our industry is that we must adapt to the ever
changing needs and desires of our customers. The trend among our customers is to
hold smaller inventories of components such as hard drives. This forces us to
maintain a certain base stock of product in locations adjacent to our customers'
manufacturing facilities and also complicates management of our inventory.
Some of our customers are considering or have already implemented a
"channel assembly" model in which the customer ships a minimal computer system
to a dealer or other assembler. We then ship parts directly to the assembler for
installation at its location. This exposes us to risk of inventory mismanagement
by both the customer and the assembler. Furthermore, if the assemblers are not
properly trained in manufacturing processes, it could increase the number of
product returns resulting from damage during assembly or improper installation.
The channel assembly model requires proper alignment between the customer and us
and requires us to retain more of our product in inventory. We are therefore
exposed to increased risk of inventory obsolescence.
Dependence on Suppliers of Components.
We depend on qualified suppliers for components. We qualify suppliers
much as customers qualify us, and it is an arduous process. A number of the
components used by us are available from a single or limited number of outside
suppliers. If a component is in short supply or a supplier fails to qualify a
component, we may experience delays or increased costs in obtaining that
component. To reduce this risk, we attempt to provide significant lead times
when buying these components. We may have to pay significant cancellation
charges to suppliers if we cancel orders, whether because of market oversupply
or transition to new products or technologies. This occurred in 1998 when we
accelerated our transition to MR recording head technology. Because we
manufacture fewer of our components than our competitors, an extended shortage
of required components or the failure of key suppliers to remain in business,
adjust to market conditions, or to meet our quality, yield or production
requirements could harm us more severely than our competitors.
Limitations on Protection and Use of Intellectual Property.
The hard drive industry has been characterized by significant
litigation, including, but not limited to, litigation relating to patent and
other intellectual property rights as well as products liability claims. From
time to time, we receive notices of alleged patent infringement or notice of
patents from patent holders. If we receive a valid claim of infringement we may
be required to obtain a license or cross license from the patent holder or we
may have to modify our existing technology or design new non-infringing
technology. Either of these solutions can increase our costs and harm our
operating results. We may also be liable for any past infringement. We are
currently evaluating several such notices of infringement. One of them involves
a company called Papst Licensing, which is asserting claims relating to several
motor patents. In 1994 Papst Licensing brought suit against us in federal court
in California alleging infringement by us of five of these motor patents. The
patents relate to disk drive motors that we purchase from motor vendors. Later
that year Papst dismissed its case without prejudice, but it has notified us
that it intends to reinstate the suit if we do not agree to enter into a license
agreement with Papst. Papst has also put us on notice with respect to several
additional patents. We do not believe that the outcome of this matter will harm
our operating results. However, loss of any intellectual property litigation
could force us to pay a large amount of money and/or prohibit us from
manufacturing certain products. In addition, the costs of defending such
litigation may be high, regardless of the outcome.
Our success depends in significant part on the proprietary nature of
our technology. Our patents may not provide us with meaningful advantages and
may be challenged. In addition to patent protection of certain intellectual
property rights, we consider elements of our product designs and processes to be
proprietary and confidential. We also believe that our non-patentable
intellectual property, particularly some of our process technology, is an
important factor in our success. We rely upon employee, consultant and vendor
non-disclosure
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agreements and a system of internal safeguards to protect our proprietary
information. Despite these safeguards, to the extent that a competitor is able
to reproduce or otherwise capitalize on our technology, it may be difficult,
expensive or impossible for us to obtain necessary legal protection. Also, the
laws of certain foreign countries may not protect our intellectual property to
the same extent as do the laws of the United States.
Estimates May be Changed or May be Different than Actual Results.
We have made and continue to make a number of estimates and assumptions
relating to the reporting of assets and liabilities. These estimates include,
but are not limited to:
o accruals for warranty against product defects
o price adjustment reserves on products sold to resellers and
distributors
o reserves for excess, obsolete and slow moving inventories
o reserves for accounts receivable
o estimates of product returns
The rapidly changing market conditions in the hard drive industry make it
difficult to estimate such accruals, and reserves and actual results may differ
significantly from our estimates and assumptions.
Potential Harm from Changing Market Demands.
Over the past two years the consumer market for desktop computers has
shifted significantly towards lower priced systems, especially those systems
priced below $1,000. These computers typically have hard drives with lower
capacity and performance than those which we produce. We currently participate
in this market only to a limited extent. If the market for those lower price
systems continues to grow and we do not develop lower cost hard drives that can
successfully compete in this market, our market share could continue to fall.
The market for hard drives is becoming more complex and fragmented. As
broadcasting and communications are increasingly digitized, industry analysts
expect that the technology of computers and consumer electronics and
communication devices will converge, and hard drives will be found in many
consumer products other than computers. We have recently entered into an
agreement with Sony Corporation to develop a new hard drive for consumer audio
and video applications. Some of our competitors have announced the development
of similar products. It is much too early to assess the impact, if any, of these
new developments or forecast any future market demands.
Foreign Manufacturing Risks.
Our products are currently manufactured in Singapore and Malaysia. We
are subject to certain risks associated with foreign manufacturing, including,
but not limited to:
o obtaining requisite United States and foreign governmental permits
and approvals
o currency exchange rate fluctuations or restrictions
o political instability and civil unrest
o transportation delays or higher freight rates
o labor problems
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o trade restrictions or higher tariffs
o exchange, currency and tax controls and reallocations
o loss or non-renewal of favorable tax treatment under agreements or
treaties with foreign tax authorities
We attempt to manage the impact of foreign currency exchange rate
changes by, among other things, entering into short-term, forward exchange
contracts. However, those contracts do not cover our full exposure and can be
canceled by the issuer if currency controls are put in place, as recently
occurred in Malaysia.
Inability to Meet Future Capital Needs.
In order to remain competitive, we will need to maintain adequate
financial resources for capital expenditures, working capital and research and
development. If we decide to increase or accelerate our capital expenditures or
research and development efforts, or if results of operations do not meet our
expectations, we could require additional debt or equity financing. However, we
cannot insure that additional financing will be available to us or available on
favorable terms. An equity financing could also be dilutive to our existing
stockholders.
Certain Anti-Takeover Features.
Our certificate of incorporation and bylaws contain provisions that
could have the effect of deterring or preventing certain takeover attempts. We
have has also adopted a shareholders rights plan that may have a similar effect.
Year 2000 Issue.
The Year 2000 issue is the result of computer programs,
microprocessors, and embedded date reliant systems using two digits rather than
four to define the applicable year. We consider a product to be "Year 2000
compliant" if the product's performance and functionality are unaffected by
processing of dates prior to, during and after the Year 2000, but only if all
products (for example hardware, software and firmware) used with the product
properly exchange accurate date data with it. We believe our hard drive products
are Year 2000 compliant, although some older, non-hard drive products previously
sold by us may not be Year 2000 compliant. Litigation may be brought against
makers of all component products of systems that are not Year 2000 compliant.
Our agreements with customers typically contain provisions designed to limit our
liability for such claims. These provisions may not provide protection from
liability, however, because of existing or future federal, state or local laws
or ordinances or unfavorable judicial decisions. Any such claims, with or
without merit, could materially harm our business.
We have committed people and resources to resolve potential Year 2000
issues, both internally and externally (with respect to our suppliers and
customers) for both information technology assets and non-information technology
assets. We are identifying Year 2000 dependencies in our systems, equipment and
processes and we are implementing changes to such systems, updating or replacing
such equipment, and modifying such processes to make them Year 2000 compliant.
Each of our business sites has identified critical systems for which contingency
plans are being developed in the event of any disruption caused by Year 2000
problems. Testing of our primary business transaction application has been
completed and all remaining testing is scheduled for completion by the end of
July 1999.
We are vulnerable to the failure of any of our key suppliers to remedy
their Year 2000 issues. Such failure could delay shipment of essential
components and disrupt or even halt our manufacturing operations. While all
suppliers are being notified of our Year 2000 compliance requirements, we have
established specific reviews with our critical suppliers, and they are requested
to report their progress to us on a quarterly basis. We regularly monitor this
progress and are actively involved with a few suppliers which are behind
schedule.
We are also communicating with our large customers to determine the
extent to which we are vulnerable to their failure to remedy their own Year 2000
issues. We also rely, both domestically and internationally, upon
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governmental agencies, utility companies, telecommunication service companies
and other service providers outside of our control. We cannot insure that these
third parties will not suffer business disruption caused by a Year 2000 issue,
which, in turn, could materially harm our business.
We anticipate that our systems, equipment and processes will be
substantially Year 2000 compliant by the end of July 1999. Expenditures related
to our Year 2000 project, which includes normal replacement of existing capital
assets, were approximately $7.5 million through December 1998 and are expected
to amount to approximately $35.0 million in total. Based on work to date, we
believe that the Year 2000 issue will not pose significant operational problems
for us. However, if we don't complete our remediation efforts on time, or if we
fail to identify all Year 2000 dependencies in our systems, equipment or
processes or those of our suppliers, customers or other organizations on which
we rely, it could have material adverse consequences for our business, including
delays in the manufacture or delivery of our products. As a result, we are
developing contingency plans in the event such problems arise. We expect to
complete the development of our contingency plans by the end of September 1999.
PLAN OF DISTRIBUTION
Our Common Stock may be offered for sale and sold in one or more
transactions, including block transactions, at a fixed price or prices (which
may be changed), at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at prices determined on a negotiated
or competitive bid basis. Shares of Common Stock may be sold directly, through
agents designated from time to time or to or through broker-dealers designated
from time to time, or by such other means as may be specified in the supplement
to this prospectus. Participating agents or broker-dealers in the distribution
of any of the shares of Common Stock may be deemed to be "underwriters" within
the meaning of the Securities Act. Any discount or commission received by any
underwriter and any participating agents or broker-dealers, and any profit on
the resale of the shares of Common Stock purchased by any of them may be deemed
to be underwriting discounts or commissions under the Securities Act.
To the extent required, the number of shares of Common Stock to be
sold, certain information relating to the underwriters, the purchase price, the
public offering price, if applicable, the name of any underwriter, agent or
broker-dealer, and any applicable commissions, discounts or other items
constituting compensation to such underwriters, agents or broker-dealers with
respect to a particular offering will be set forth in an accompanying supplement
to this prospectus.
Under the securities laws of certain states, the shares of Common Stock
registered hereunder may be sold in such states only through registered or
licensed brokers or dealers. In addition, in certain states the shares of Common
Stock registered by the registration statement that includes this prospectus may
not be sold unless such shares have been registered or qualified for sale in
such state or are exempt from registration or qualification and the applicable
procedures are complied with.
Any person participating in the distribution of Common Stock registered
by the registration statement that includes this prospectus will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including, without limitation, Regulation M, which may limit the
timing of purchases and sales of any of the Common Stock by such person.
Furthermore, Regulation M of the Exchange Act may restrict the ability of any
person engaged in the distribution of the Common Stock to engage in
market-making activities with respect to the Common Stock. All of the foregoing
may affect the marketability of the Common Stock and the ability of any person
or entity to engage in market-making activities with respect to the Common
Stock.
Upon sale under the registration statement that includes this
prospectus, the shares of Common Stock registered hereunder will be freely
tradable in the hands of persons other than affiliates of the Company.
LEGAL MATTERS
The validity of the shares of Common Stock covered by this prospectus
was passed upon by Gibson, Dunn & Crutcher LLP, Los Angeles, California.
10
<PAGE> 12
INDEPENDENT AUDITORS
The consolidated financial statements of Western Digital Corporation as
of June 27, 1998 and June 28, 1997 and for each of the years in the three-year
period ended June 27, 1998, 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 LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
11
<PAGE> 13
================================================================================
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. 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>
Where You Can Find More Information.............2
Forward-Looking Statements......................2
The Company.....................................3
Use of Proceeds.................................3
Risk Factors....................................3
Plan of Distribution...........................10
Legal Matters..................................10
Independent Auditors...........................11
</TABLE>
================================================================================
================================================================================
$190,000,000
[WESTERN DIGITAL LOGO]
COMMON STOCK
----------------
PROSPECTUS
----------------
JANUARY 19, 1999
================================================================================
<PAGE> 14
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses payable by us in connection
with the offering of the Common Stock being registered hereby. Normal commission
expenses and brokerage fees, if any, will be payable individually by a selling
stockholder. All amounts are estimated except the SEC registration fee.
<TABLE>
<S> <C>
SEC Registration Fee...................................................... $52,820
Printing Expenses.........................................................
Legal Fees and Expenses...................................................
Accounting Fees and Expenses..............................................
Conversion Agent and Registrar Fees.......................................
Miscellaneous.............................................................
-------
Total........................................................... $
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 145(a) of the General Corporation Law of the State of Delaware
(the "DGCL") provides that a Delaware corporation may indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation) by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding if he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had no cause to believe his
or her conduct was unlawful.
Section 145(b) of the DGCL provides that a Delaware corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses actually
and reasonably incurred by such person in connection with the defense or
settlement of such action or suit if he or she acted under similar standards to
those set forth above, except that no indemnification may be made in respect to
any claim, issue or matter as to which such person shall have been adjudged to
be liable to the corporation unless and only to the extent that the court in
which such action or suit was brought shall determine that despite the
adjudication of liability, but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to be indemnified for such
expenses which the court shall deem proper.
Section 145 of the DGCL further provides that to the extent a director
or officer of a corporation has been successful in the defense of any action,
suit or proceeding referred to in subsection (a) and (b) or in the defense of
any claim, issue or matter therein, he or she shall be indemnified against
expenses actually and reasonably incurred by him or her in connection therewith;
that indemnification provided for by Section 145 shall not be deemed exclusive
of any other rights to which the indemnified party may be entitled; and that the
corporation may purchase and maintain insurance on behalf of a director or
officer of the corporation against any liability asserted against such officer
or director and incurred by him or her in any such capacity or arising out of
his or her status as such, whether or not the corporation would have the power
to indemnify him or her against such liabilities under Section 145.
As permitted by Section 102(b)(7) of the DGCL our certificate of
incorporation provides that a director shall not be liable to the company or its
stockholders for monetary damages for breach of fiduciary duty as a director.
However, such provision does not eliminate or limit the liability of a director
for acts or omissions not in good faith or for breaching his or her duty of
loyalty, engaging in intentional misconduct or knowingly violating the law,
paying a dividend or approving a stock repurchase which was illegal, or
obtaining an improper personal benefit. A provision of this type has no effect
on the availability of equitable remedies, such as injunction or rescission, for
breach of fiduciary duty.
II-1
<PAGE> 15
Our bylaws require that directors and officers be indemnified to the
maximum extent permitted by Delaware law. We may, from time to time, enter into
indemnity agreements with each of our directors and officers requiring that we
pay on behalf of each director and officer party thereto any amount that he or
she is or becomes legally obligated to pay because of any claim or claims made
against him or her because of any act or omission or neglect or breach of duty
including any actual or alleged error or misstatement or misleading statement,
which he or she commits or suffers while acting in his or her capacity as a
director and/or officer of the company and solely because of his or her being a
director and/or officer. Under the DGCL, absent such an indemnity agreement,
indemnification of a director or officer is discretionary rather than mandatory
(except in the case of a proceeding in which a director or officer is successful
on the merits). Consistent with our bylaw provision on the subject, the
indemnity agreements require us to make prompt payment of defense and
investigation costs and expenses at the request of the director or officer in
advance of indemnification, provided that the recipient undertakes to repay the
amounts if it is ultimately determined that he or she is not entitled to
indemnification for such expense and provided further that such advance shall
not be made if it is determined that the director or officer acted in bad faith
or deliberately breached his or her duty to the company or its stockholders and,
as a result, it is more likely than not that it will ultimately be determined
that he or she is not entitled to indemnification under the terms of the
indemnity agreement. The indemnity agreements make the advance of litigation
expenses mandatory absent a special determination to the contrary. Under the
DGCL absent such an indemnity agreement, such advance would be discretionary.
Under the indemnity agreement, we would not be required to pay or reimburse the
director or officer for his or her expenses in seeking indemnification recovery
against us. By the terms of the indemnity agreement, its benefits are not
available if the director or officer has other indemnification or insurance
coverage for the subject claim or, with respect to the matters giving rise to
the claim, the director or officer:
(1) received a personal benefit,
(2) violated Section 16(b) of the Exchange Act or
analogous provisions of law, or
(3) committed certain acts of dishonesty. Absent the
indemnity agreement, indemnification that might be made available to
directors and officers could be changed by amendments to the Company's
Certificate of Incorporation or Bylaws.
Our directors' liability insurance policy insures our directors and
officers against the cost of defense, settlement or payment of a judgment under
certain circumstances.
ITEM 16. EXHIBITS
The following exhibits are filed herewith or incorporated by reference:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
<S> <C>
4.1* Certificate of Incorporation.
4.2* Bylaws of the Company.
4.3** Form of Common Stock Certificate.
5.1*** Opinion of Gibson, Dunn & Crutcher LLP as to legality of the securities registered hereby.
23.1*** Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 5.1).
23.3 Consent of KPMG LLP, independent public accountants.
24.**** Power of Attorney.
</TABLE>
- ----------
* Previously filed.
** Incorporated by reference to the Company's Registration Statement on Form
8-B, filed April 3, 1987.
*** To be filed by amendment.
**** Contained on signature page hereto.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
II-2
<PAGE> 16
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Securities Exchange Commission by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act that are incorporated by reference
in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-3
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Company certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Irvine, State of California, on January 19,
1999.
WESTERN DIGITAL CORPORATION
By: /s/ MICHAEL A. CORNELIUS
--------------------------------------
Michael A. Cornelius
Vice President, Law and Administration
and Secretary
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
CHARLES A. HAGGERTY and MICHAEL A. CORNELIUS his true and lawful
attorneys-in-fact and agents, each acting alone, with full powers of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, each acting alone, with full powers and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as full to all intents and purposes as he might or could do in person,
hereby ratifying and confirming that all said attorneys-in-fact and agents, each
acting alone, or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on January 19, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ CHARLES A. HAGGERTY Chairman of the Board, President and Chief
- ----------------------------------------- Executive Officer (Principal Executive Officer)
Charles A. Haggerty
/s/ DUSTON M. WILLIAMS Senior Vice President, and Chief Financial
- ----------------------------------------- Officer (Principal Financial and Accounting
Duston M. Williams Officer)
/s/ JAMES A. ABRAHAMSON Director
- -----------------------------------------
James A. Abrahamson
/s/ PETER D. BEHRENDT Director
- -----------------------------------------
Peter D. Behrendt
/s/ I.M. BOOTH Director
- -----------------------------------------
I.M. Booth
/s/ IRWIN FEDERMAN Director
- -----------------------------------------
Irwin Federman
/s/ ANDRE R. HORN Director
- -----------------------------------------
Andre R. Horn
/s/ ANNE O. KRUEGER Director
- -----------------------------------------
Anne O. Krueger
/s/ THOMAS E. PARDUN Director
- -----------------------------------------
Thomas E. Pardun
</TABLE>
II-4
<PAGE> 18
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
<S> <C>
4.1* Certificate of Incorporation.
4.2* Bylaws of the Company.
4.3** Form of Common Stock Certificate.
5.1*** Opinion of Gibson, Dunn & Crutcher LLP as to legality of the securities
registered hereby.
23.1*** Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 5.1).
23.3 Consent of KPMG LLP, independent public accountants.
24.**** Power of Attorney.
</TABLE>
- ----------
* Previously filed.
** Incorporated by reference to the Company's Registration Statement on Form
8-B, filed April 3, 1987.
*** To be filed by amendment.
**** Contained on the signature page hereto.
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-3 and related prospectus of Western Digital Corporation of
our report dated July 27, 1998, with respect to the consolidated balance sheets
of Western Digital Corporation as of June 27, 1998 and June 28, 1997, and the
related consolidated statements of operations, shareholders' equity and cash
flows for each of the years in the three-year period ended June 27, 1998, and
the related schedule, all of which are included in the Company's Annual Report
on Form 10-K for the year ended June 27, 1998 and to the reference to our firm
under the heading "Independent Auditors."
KPMG LLP
Orange County, California
January 19, 1999
