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EXHIBIT 99.1
WESTERN DIGITAL ANNOUNCES FIRST QUARTER FISCAL 2001 FINANCIAL RESULTS
IRVINE, Calif.--Oct. 26, 2000--Western Digital Corp. (NYSE: WDC) today reported
revenue of $440.2 million and a net loss of $33.5 million, or $.23 per share,
for its first quarter ended September 29, 2000. The net loss includes an
extraordinary gain of $11.2 million relating to the redemption of some of the
Company's debentures for common stock. Excluding the extraordinary gain, the net
loss would have been $44.8 million, or $.30 per share.
In the year earlier period, Western Digital reported revenue of $407.0 million
and a net loss of $106.3 million, or $1.11 per share. The net loss for the
year-earlier period includes restructuring charges of $32.3 million, special
charges to cost of sales of $37.7 million for the September 1999 product recall,
and an extraordinary gain of $90.6 million. Excluding the non-recurring charges
and the extraordinary gain, the net loss for the year-earlier period would have
been $126.9 million, or $1.32 per share.
Matt Massengill, president and chief executive officer, stated: "The first
quarter was a challenging one for the desktop drive industry, as it began with
low price points and ended with component shortages that constrained our ability
to meet total demand. In this environment, we were pleased to deliver bottom
line performance in line with expectations. It is also worth noting that our
balance sheet improved incrementally in Q1 with a substantial reduction in debt,
and growth in working capital. We continue to make good progress in the
operations of the core hard drive business while at the same time laying the
groundwork to participate in evolving, non-traditional markets for data storage.
"In the current quarter, demand for desktop drives is seasonally strong but the
ability to meet total demand will continue to be throttled by the shortage in
components," Massengill noted. "Reflecting the supply/demand dynamics, we have
raised prices on a number of high-volume capacity points. Although this will
strengthen gross margin performance for the quarter, the impact will be tempered
by the fact that we are not seeing typical cost reductions from our supply
base."
Massengill noted that Western Digital is the only hard drive supplier to have
shipped both 7200 RPM and 5400-RPM 20 GB/platter desktop drives in the September
quarter. "Our improving position with major PC OEM customers has been the result
of consistent execution in time-to-market and quality over the last year," he
said, "and our performance on the next generation 20 GB-per-platter platforms
solidifies this standing." In the second fiscal quarter, the 20 GB-per-platter
family is expected to account for approximately 80% of the Company's mix.
Earlier this month, Western Digital made several announcements that highlighted
the implementation of its strategy to participate in evolving, high-growth
markets beyond the traditional desktop PC market for hard drives:
o The announcement of a multi-year contract with Microsoft to supply
the new value line-platform WD Protege hard drives for the
forthcoming Microsoft Xbox, this industry leader's entry into the
video game market. Gartner Group forecasts the video game market
will grow to 39 million units by 2002. WD's shipments of the WD
Protege drives to Microsoft are expected to commence in June 2001.
o The launch of Keen Personal Media, a Western Digital company that
provides interactive broadband software and services and hardware
for television and Internet content management and TV-based
electronic commerce.
o The signing of a joint development agreement with Scientific-Atlanta
to develop and license the Keen PM digital video recorder storage
management subsystem software to Scientific-Atlanta for use in their
set-top boxes. Scientific-Atlanta is a major supplier to cable
companies, who reach 70 percent of North American households. There
are approximately 69 million cable households in the U.S., according
to Nielsen Media Research. Forrester Research predicts that the
number of digital set-top boxes will grow to over 28 million by 2004
from the 4 million units that will be installed by the end of this
year.
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Massengill concluded: "Like other WD new ventures such as Connex and SageTree,
Keen PM is in the very early stages of development as a business, but we are
very enthused about attacking an expansive broadband market opportunity with
value-added software and services-based solutions."
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 software applications and
professional services to help manufacturers manage quality and quality-related
business decisions throughout the entire supply chain and product lifecycle.
Western Digital's Keen Personal Media subsidiary provides broadband software,
services and hardware for interactive television and Internet content
management.
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.
FORWARD-LOOKING STATEMENT
This release contains forward-looking statements, including statements relating
to demand for desktop drives, component shortages and pricing, improving gross
profit margin, product mix and the Company's participation in, and growth in,
the market for video game consoles and digital set-top boxes. The
forward-looking statements are based on current management expectations, and
actual results may differ materially as a result of several factors, including:
market acceptance for the Company's products; the Company's ability to execute
future production ramps and utilize manufacturing assets efficiently; changes in
product and customer mix; pricing trends; actions by competitors; negotiations
with MSOs and others; growth of demand for set-top boxes; successful entry into
new markets by the Company and its subsidiaries; 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 and WD Caviar are registered trademarks. WD Protege and WD
Performer are trademarks of Western Digital Corporation. Keen PM is a trademark
of Keen Personal Media, Inc. All other brand and product names mentioned herein
are the property of their respective companies.
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WESTERN DIGITAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------
SEPT. 29, JUN. 30, OCT. 2,
2000 2000 1999
---------- --------- ---------
<S> <C> <C> <C>
Revenues, net $ 440,222 $ 473,862 $ 406,957
Costs and expenses:
Cost of revenues 414,493 432,275 472,300
Research and development 34,961 35,202 50,143
Selling, general and administrative 33,899 21,461 43,822
Restructuring charges -- -- 32,300
--------- --------- ---------
Total costs and expenses 483,353 488,938 598,565
--------- --------- ---------
Operating loss (43,131) (15,076) (191,608)
Net interest and other income (expense) (1,632) (259) (5,329)
--------- --------- ---------
Loss before income taxes and extraordinary item (44,763) (15,335) (196,937)
Income tax benefit -- 19,500 --
--------- --------- ---------
Income (loss) before extraordinary item (44,763) 4,165 (196,937)
Extraordinary gain from redemption
of debentures 11,243 -- 90,622
--------- --------- ---------
Net income (loss) $ (33,520) $ 4,165 $(106,315)
--------- --------- ---------
Basic and diluted income (loss)
per common share:
Basic before extraordinary item: $ (.30) $ .03 $ (2.05)
Extraordinary gain $ .07 $ -- $ .94
--------- --------- ---------
Basic $ (.23) $ .03 $ (1.11)
========= ========= =========
Diluted $ (.23) $ .03 $ (1.11)
========= ========= =========
Common shares used in computing
per share amounts:
Basic 148,044 139,547 95,918
========= ========= =========
Diluted 148,044 143,337 95,918
========= ========= =========
</TABLE>
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WESTERN DIGITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
SEP. 29, JUN. 30,
2000 2000
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 166,949 $ 184,021
Accounts receivable, net 146,318 149,135
Inventories 60,027 84,546
Prepaid expenses and other current assets 25,567 33,693
--------- ---------
Total current assets 398,861 451,395
Property and equipment, net 100,102 98,952
Intangible and other assets, net 63,764 65,227
--------- ---------
Total assets $ 562,727 $ 615,574
========= =========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 236,471 $ 266,841
Accrued expenses 144,448 178,225
--------- ---------
Total current liabilities 380,919 445,066
Other liabilities 46,844 44,846
Convertible Debentures 178,512 225,496
Minority interest 9,644 10,000
Shareholders' deficit:
Common stock, $.01 par value 1,596 1,436
Additional paid-in capital 461,589 371,587
Accumulated deficit (516,377) (482,857)
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Total shareholders' deficit (53,192) (109,834)
--------- ---------
Total liabilities and shareholders' deficit $ 562,727 $ 615,574
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</TABLE>
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