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Investor Relations:
Bob Blair
Western Digital Corporation
949.932.7834
[email protected]
Public Relations:
Steve Shattuck
Western Digital Corporation
949.932.5178
[email protected]
FOR IMMEDIATE RELEASE:
WESTERN DIGITAL ANNOUNCES FOURTH QUARTER
YEAR END RESULTS
IRVINE, Calif. -- July 27, 2000 -- Western Digital Corporation (NYSE: WDC) today
reported revenues of $473.9 million and a proforma net loss of $26.3 million, or
$.19 per share, for its fourth quarter ended June 30, 2000. For the same period,
on a GAAP basis, Western Digital reported net income of $4.2 million and
earnings per share of $.03. The total results for the quarter included
non-recurring benefits for tax and other accrual adjustments of $30.5 million,
$11.0 million of which was included in selling, general and administrative
expenses. In the year-ago period, the Company reported revenues of $709.3
million and a proforma net loss of $81.5 million, or $.90 per share. The total
net loss for the year-ago period was $101.5 million, or $1.12 per share, and
included a restructuring charge of approximately $20 million for the sale of the
Company's media business.
Matt Massengill, president and chief executive officer, stated: "Both our
fourth quarter and year-over-year results reflect substantial progress at
Western Digital in a challenging industry
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Western Digital Announces Fourth Quarter
Year End Results
Page 2
environment. Price competition in the June quarter was significant and the
non-linear supply of microprocessors led to fewer desktop PCs being shipped in
the quarter than otherwise would have been the case. Nevertheless, the
reductions in operating expenses and manufacturing costs we implemented over the
last year enabled us to mitigate our operating loss for the quarter. Thus far
into the September quarter, we have seen signs of healthier demand as
availability of microprocessors has improved and our recovery of business with
major PC OEM customers continues, albeit at prices impacted by the June quarter
activity.
"For the year, we are pleased with the significant progress made by the WD
team on many fronts in the core HDD business," said Massengill, noting:
- Closing the gap on competitive gross margin performance, moving from
negative gross margins in Q1 to near double-digit performance in the
second half of fiscal 2000;
- Increased market share with major PC OEM customers, based on solid and
sustained time-to-market performance and supply chain management
expertise;
- Technology leadership with time-to-market WD Caviar(TM) 7200 RPM hard
drives, including shipment of its first Ultra ATA/100-enabled 7200 RPM
hard drive in the June quarter. 7200 RPM hard drives accounted for 32%
of the company's units shipped in the fourth quarter, up from 20% in the
March quarter;
- Reduction of nearly 30%, or $106 million, in operating expenses;
- Successful consolidation of three manufacturing operations into a single
highly-efficient site in Kuala Lumpur, Malaysia; and
- Improved asset management, including a combined 10-day decrease in
receivable and inventory days from the fourth quarter of 1999.
-MORE-
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Western Digital Announces Fourth Quarter
Year End Results
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"We launched two new ventures in fiscal 2000--Connex and SageTree--and
leveraged our storage technology expertise into a leadership position in the
emerging hard drive market for set-top boxes, home servers, television
receivers, audio juke boxes and other consumer products. The selection of the WD
Performer(TM) 15i hard drive by Microsoft WebTV Networks, Inc. for use in its
Ultimate TV service was a major validation of WD as a player in this space,"
continued Massengill.
For fiscal year 2000, the Company reported revenues of $2.0 billion and a
proforma net loss of $241.8 million, or $ 1.97 per share. The total net loss for
fiscal 2000 was $188.0 million, or $1.53 per share, and included: restructuring
and special charges of $158.3 million, of which $72.5 million was included in
cost of sales; a $14.7 million gain on disposition of investment securities;
$166.9 million of extraordinary gains for redemption of a portion of the
Company's convertible debt; and $30.5 million of non-recurring benefits for tax
and other accrual adjustments. For fiscal year 1999, the Company reported
revenues of $2.8 billion and a proforma net loss of $335.2 million, or $3.75 per
share. The total net loss for fiscal 1999 was $492.7 million, or $5.51 per
share, and included restructuring and special charges of approximately $157.5
million ($77.0 million of which was included in cost of sales, $12.0 million of
which was included in research and development expenses, and $7.5 million of
which was included in SG&A).
-MORE-
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Western Digital Announces Fourth Quarter
Year End Results
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ABOUT WESTERN DIGITAL
One of the data storage industry's longtime leaders, Western Digital
Corporation has leveraged its core strengths in becoming a leading Internet
solutions company. Western Digital provides services and products to manage,
store and communicate both digital content and network intelligence. The Company
remains an industry-leading designer and manufacturer of hard drives for desktop
computers and home entertainment applications. Through its Connex subsidiary,
Western Digital delivers enterprise-class storage functionality for the
department and mid-sized business markets, including storage management
software, network attached storage and storage area networks. The Company's
SageTree subsidiary markets packaged analytical applications and professional
services to help manufacturers manage quality and quality-related business
decisions throughout the entire supply chain and product lifecycle.
Western Digital was founded in 1970. The Company's storage products are
marketed to leading systems manufacturers and selected resellers under the
Western Digital brand name. Its home page can be found at
www.westerndigital.com.
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WESTERN DIGITAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS ENDED YEAR ENDED
----------------------------------------------- -----------------------------
JUNE 30, JULY 3, MARCH 31, JUNE 30, JULY 3,
2000 1999 2000 2000 1999
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues, net .......................... $ 473,862 $ 709,302 $ 516,587 $ 1,957,580 $ 2,767,206
Costs and expenses:
Cost of revenues .................. 432,275 688,429 505,003 1,949,511 2,770,054
Research and development .......... 35,202 52,003 33,770 163,198 216,986
Selling, general and administrative 21,461 44,597 33,970 138,323 195,958
Restructuring charges ............. -- 20,000 28,002 85,837 61,000
----------- ----------- ----------- ----------- -----------
Total costs and expenses ...... 488,938 805,029 600,745 2,336,869 3,243,998
----------- ----------- ----------- ----------- -----------
Operating loss ......................... (15,076) (95,727) (84,158) (379,289) (476,792)
Net interest and other income (expense) (259) (5,759) 13,489 4,874 (15,898)
----------- ----------- ----------- ----------- -----------
Loss before income taxes and
extraordinary item ................ (15,335) (101,486) (70,669) (374,415) (492,690)
Income tax benefit ..................... 19,500 -- -- 19,500 --
----------- ----------- ----------- ----------- -----------
Income (loss) before extraordinary item 4,165 (101,486) (70,669) (354,915) (492,690)
Extraordinary gain from redemption of
debentures ........................ -- -- -- 166,899 --
----------- ----------- ----------- ----------- -----------
Net income (loss) ...................... $ 4,165 $ (101,486) $ (70,669) $ (188,016) $ (492,690)
=========== =========== =========== =========== ===========
Basic and diluted earnings (loss) per
common share:
Basic before extraordinary item ........ $ .03 $ (1.12) $ (.53) $ (2.89) $ (5.51)
Extraordinary gain ..................... $ -- $ -- $ -- $ 1.36 $ --
----------- ----------- ----------- -----------
Basic .................................. $ .03 $ (1.12) $ (.53) $ (1.53) $ (5.51)
=========== =========== =========== =========== ===========
Diluted ................................ $ .03 $ (1.12) $ (.53) $ (1.53) $ (5.51)
=========== =========== =========== =========== ===========
Common shares used in computing per
share amounts:
Basic .................................. 139,547 90,596 133,903 122,624 89,478
=========== =========== =========== =========== ===========
Diluted ................................ 143,337 90,596 133,903 122,624 89,478
=========== =========== =========== =========== ===========
</TABLE>
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WESTERN DIGITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
JUNE 30, JULY 3,
2000 1999
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .......................... $ 184,021 $ 226,147
Accounts receivable, net ........................... 149,135 273,435
Inventories ........................................ 84,546 144,093
Prepaid expenses and other current assets .......... 33,693 81,853
----------- -----------
Total current assets ........................... 451,395 725,528
Property and equipment, net ............................. 98,952 237,939
Intangible and other assets, net ........................ 65,227 58,935
----------- -----------
Total assets ................................... $ 615,574 $ 1,022,402
=========== ===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable ................................... $ 266,841 $ 335,907
Accrued expenses ................................... 178,225 248,201
Current portion of long-term debt .................. -- 10,000
----------- -----------
Total current liabilities ...................... 445,066 594,108
Long-term debt .......................................... 225,496 534,144
Other liabilities ....................................... 44,846 47,940
Minority interest ....................................... 10,000 --
Shareholders' deficit:
Common stock, $.01 par value ....................... 1,436 906
Additional paid-in capital ......................... 371,587 140,145
Accumulated deficit ................................ (482,857) (294,841)
----------- -----------
Total shareholders' deficit .................... (109,834) (153,790)
----------- -----------
Total liabilities and shareholders' deficit .... $ 615,574 $ 1,022,402
=========== ===========
</TABLE>
Note: Certain July 3, 1999 amounts have been reclassified to conform to the June
30, 2000 presentation.
