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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): January 25, 2000
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
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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 January 25, 2000, Western Digital Corporation issued a press release
announcing its second quarter results and reporting that its revenues were
$560.2 million and a net loss of $15.2 million, or $.13 per share, for its
second quarter ended December 31, 1999.
Attached hereto as Exhibit 99.1 is the copy of the January 25, 2000,
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 January 25, 2000, announcing Western Digital
Corporation's second quarter results and reporting that its revenues
were $560.2 million and a net loss of $15.2 million, or $.13 per
share, for its second quarter ended December 31, 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: January 31, 2000
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
Robert J. Blair
Western Digital Corporation
949.932.7834
[email protected]
FOR IMMEDIATE RELEASE:
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WESTERN DIGITAL ANNOUNCES SECOND QUARTER RESULTS
BETTER THAN EXPECTED RESULTS REFLECT IMPROVEMENTS IN DESKTOP HDD PRODUCT LINE
PERFORMANCE, COST REDUCTIONS AND OPERATING EFFICIENCIES
IRVINE, Calif. - Jan. 25, 2000 - Western Digital Corporation (NYSE:WDC) today
reported revenue of $560.2 million and a net loss of $15.2 million, or $.13 per
share, for its second quarter ended December 31, 1999. The net loss includes
restructuring charges of $25.5 million, primarily related to the closure of the
Company's hard drive manufacturing facility in Singapore, and an extraordinary
gain of $76.3 million relating to the redemption of some of the Company's
debentures for common stock. Excluding the restructuring charges and the
extraordinary gain, the net loss and net loss per share would have been $66.0
million, or $.54 on 121.1 million common shares. In the year-earlier period,
Western Digital reported revenue of $738.6 million and a net loss of $82.3
million, or $.93 per share.
For the six months ended December 31, 1999, revenue was $967.1 million and the
net loss and net loss per share were $121.5 million and $1.12, respectively,
including non-recurring charges of $95.5 million and extraordinary gains of
$166.9 million. This compares with year-earlier revenues, net loss and net loss
per share of $1.4 billion, $276.9 million and $3.12 per share, respectively,
including special charges of approximately $85 million.
Commenting on the December quarter performance, Western Digital president and
chief executive officer Matt Massengill stated: "Pricing and demand in the
desktop hard drive industry showed significant improvement in the December
quarter. In addition to market trends, there were several other key factors
behind our better-than-expected operating results, including greater operational
efficiencies, cost structure reductions, excellent cash and inventory
management, and our successful recovery from the completed product recall. Each
of the latter developments--combined with time to market leadership with new
WD-designed desktop products--attest to the continued improvement in our core
desktop hard drive operations."
Western Digital shipped 5.3 million drives in the December quarter, up sharply
from unit shipments of 3.4 million in the September quarter, including desktop
share re-gains at a number of major OEM and distribution customers. All of the
increase in units was attributable to the desktop recovery from the product
recall. Last week, the Company announced its decision to cease investments in
enterprise hard drives and exit that business; it will continue to support its
installed base of enterprise drive customers and ship its WD Enterprise and WD
Vantage drives through the remainder of the calendar year.
For the December quarter, the Company achieved a positive gross margin of 4%,
reflecting the healthier desktop pricing environment and significantly lower
manufacturing costs resulting from the transfer of all desktop production to a
single, highly utilized plant in Malaysia. Other noteworthy achievements in the
December quarter included:
o Qualification completed and volume shipments underway to all major
OEMs of the WD Caviar 9.1 GB/platter and 10.2 GB/platter 5400 RPM
desktop series;
o Production of the 10.2 GB/platter 7200 RPM WD Caviar desktop HDD,
and first to ship this mainstream, high performance platform to
the distribution channel and retail customers (qualifications
completed, first-to-volume shipments to OEM customers commenced in
early January);
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o Announcement of the N3000, the first product from Connex
addressing the network attached storage and storage area network
markets. Initial units of the N3000 were shipped this month.
o First volume shipments of the WD Performer HDD series, targeted at
the emerging home entertainment market for digital storage,
featuring the Company's WhisperDrive acoustics technology; and
o Development of the A/V StreamWeaver technology, which supports
multiple streams of data for simultaneous viewing and recording
required for A/V programming and DVR recording. The StreamWeaver
technology specification is now being used as a base document for
industry standardization; WD is working with several customers
that plan to incorporate the technology into future products.
Massengill noted that the new markets or market segments being addressed by
Western Digital subsidiaries Connex and SageTree and the Company's home
entertainment line are emerging high growth segments without entrenched market
share leaders. "Going forward, Western Digital will participate in markets in
the client and enterprise segments where it can attain industry leadership share
and satisfactory rates of return for our shareholders," stated Massengill.
"The growing amounts of data being stored on the Internet and the increase in
network bandwidth have established new high-growth opportunities for companies
that can help customers manage the flow, security and the scaling of that
information," said Massengill. "We believe Western Digital's core competencies
in LSI and HDD design, systems expertise, and low-cost manufacturing--leveraged
with our brand, customer relationships, and intellectual property--position us
to establish market leadership in selected segments of these new markets, as
well as in new client-side markets such as home entertainment."
This release contains forward-looking statements, including statements relating
to the Company's shipment of and support for its enterprise products, and the
company's future participation in new markets or market segments. The forward
looking statements are based on current management expectations, and actual
results may differ materially as a result of several factors, including: actual
sales of the company's enterprise drives; enterprise drive customer support
requirements; development of leadership positions by the Company in emerging
markets and market segments that are focused on management, distribution and
scaling of information and content; changes in customer order patterns; business
conditions and growth in the personal and enterprise computing industry;
development of non-traditional markets for hard drives; 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.
Western Digital Corporation is a leading manufacturer of hard drives used for
information storage in desktop computers and home entertainment electronic
products. Long known for its involvement in hard drive interface architecture,
Western Digital created the Integrated Drive Electronics (IDE) interface that
became the personal computer hard drive interface standard in 1986. 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 is well recognized 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 on the World Wide Web at www.westerndigital.com.
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WESTERN DIGITAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
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DEC. 31, OCT. 2, DEC. 26, DEC. 31, DEC. 26,
1999 1999 1998 1999 1998
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<S> <C> <C> <C> <C> <C>
Revenues, net ............................. $560,174 $ 406,957 $738,590 $ 967,131 $1,389,448
Costs and expenses:
Cost of revenues .................... 539,932 472,300 719,423 1,012,232 1,453,033
Research and development ............ 44,083 50,143 50,363 94,226 102,284
Selling, general and administrative . 39,070 43,822 47,819 82,892 105,151
Restructuring provision ............. 25,535 32,300 -- 57,835 --
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Total costs and expenses ....... 648,620 598,565 817,605 1,247,185 1,660,468
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Operating loss ............................ (88,446) (191,608) (79,015) (280,054) (271,020)
Net interest expense ...................... (3,028) (5,329) (3,238) (8,357) (5,891)
-------- --------- -------- ---------- ----------
Loss before income taxes and
extraordinary item ...................... (91,474) (196,937) (82,253) (288,411) (276,911)
Provision for income taxes ................ -- -- -- -- --
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Loss before extraordinary item ............ (91,474) (196,937) (82,253) (288,411) (276,911)
Extraordinary gain from redemption of
debentures .............................. 76,277 90,622 -- 166,899 --
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Net loss .................................. $(15,197) $(106,315) $(82,253) $ (121,512) $ (276,911)
======== ========= ======== ========== ==========
Basic and diluted income (loss)
per common share:
Loss per common share before
extraordinary item ...................... $ (.76) $ (2.05) $ (.93) $ (2.66) $ (3.12)
Extraordinary gain ........................ $ .63 $ .94 $ -- $ 1.54 $ --
-------- --------- -------- ---------- ----------
Loss per common share ..................... $ (.13) $ (1.11) $ (.93) $ (1.12) $ (3.12)
======== ========= ======== ========== ==========
Common shares used in computing
per share amounts ....................... 121,128 95,918 88,888 108,523 88,717
======== ========= ======== ========== ==========
</TABLE>
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WESTERN DIGITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
(UNAUDITED)
DEC. 31, JULY 3,
1999 1999
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ...................... $ 163,675 $ 226,147
Accounts receivable, net ....................... 198,360 273,435
Inventories .................................... 101,728 144,093
Prepaid expenses ............................... 95,471 81,853
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Total current assets ...................... 559,234 725,528
Property and equipment, net .......................... 156,891 237,939
Intangible and other assets, net ..................... 48,599 58,935
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Total assets .............................. $ 764,724 $ 1,022,402
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LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable ............................... $ 283,545 $ 335,907
Accrued expenses ............................... 291,195 252,791
Current portion of long-term debt .............. -- 10,000
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Total current liabilities ................. 574,740 598,698
Long-term debt ....................................... 236,291 534,144
Deferred income taxes and other ...................... 41,761 43,350
Shareholders' deficit:
Common stock, $.01 par value ................... 1,399 1,019
Additional paid-in capital ..................... 303,425 142,155
Accumulated other comprehensive income (loss) .. 23,461 (2,123)
Accumulated deficit ............................ (416,353) (294,841)
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Total shareholders' deficit ............... (88,068) (153,790)
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Total liabilities and shareholders' deficit $ 764,724 $ 1,022,402
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</TABLE>
Note: Certain July 3, 1999 amounts have been reclassified to conform to the
December 31, 1999 presentation.
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