1 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): July 21, 1999 WESTERN DIGITAL CORPORATION - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Delaware 001-08703 95-264-7125 - ----------------------------- ------------ ------------------- (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 8105 Irvine Center Drive Irvine, California 92618 - ---------------------------------------- ---------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (949) 932-5000 Not Applicable - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report)
2 INFORMATION TO BE INCLUDED IN THE REPORT ITEM 5. OTHER EVENTS. (a) On July 21, 1999, the Registrant issued a press release announcing its fourth quarter and year-end results. Attached hereto as Exhibit 99.1 and incorporated by reference herein is a copy of the July 21, 1999 press release. (b) On August 13, 1999, the Registrant issued a press release announcing it was accelerating the consolidation of its high-volume desktop hard drive manufacturing in Malaysia and a reduction in its Singapore customer repair center and production-related work force. Attached hereto as Exhibit 99.2 and incorporated by reference herein is a copy of the August 13, 1999 press release. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. Exhibit Description - ------- --------------- 99.1 Press Release dated July 21, 1999. 99.2 Press Release dated August 13, 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: August 19, 1999 WESTERN DIGITAL CORPORATION By: /s/ Michael A. Cornelius -------------------------------- Michael A. Cornelius Vice President, Law and Administration and Secretary 2
3 EXHIBIT INDEX Exhibit No. Document ----------- -------- Exhibit 99.1 Press Release issued July 21, 1999. Exhibit 99.2 Press Release issued August 13, 1999.
1 EXHIBIT 99.1 Company Contact: Robert J. Blair Western Digital Corporation 212.867.4490 bob.blair@wdc.com For Immediate Release WESTERN DIGITAL ANNOUNCES FOURTH QUARTER, YEAR-END RESULTS IRVINE, CA. - July 21, 1999 - Western Digital Corporation (NYSE:WDC) today reported revenue of $709.3 million and a net loss of $101.5 million, or $1.12 per share, for its fourth quarter ended July 3, 1999. The net loss includes a restructuring charge of approximately $20 million for the sale of the Company's media business to Komag, Inc. Excluding this charge, net loss and net loss per share would have been $81.5 million and $.90, respectively. In the year-earlier period, Western Digital reported revenue of $650.5 million and a net loss of $162.7 million, or $1.84 per share. The results for the fourth quarter of 1998 included approximately $22 million related principally to the start of the technology licensing and component supply agreement with IBM Corporation. For fiscal 1999, the Company reported revenue of $2.8 billion and a net loss of $492.7 million, or $5.51 per share, compared with a net loss of $290.2 million, or $3.32 per share, on revenue of $3.5 billion in fiscal 1998. Both fiscal 1998 and 1999 results included previously announced restructuring and special charges. Chuck Haggerty, chairman, president and chief executive officer of Western Digital, said: "The fourth quarter results reflect the brutal competitive pricing in the desktop hard drive industry. Nevertheless, our strategy to compete at the major PC OEMs on the basis of performance, quality and time to market of our hard drives--and our customer service--produced a sequential increase in total unit shipments to 5.7 million in the fourth quarter, compared with 5.1 million units in the March quarter. Notably, we saw improved performance in our Enterprise product line, as units, revenue and gross margin were at their highest levels in three quarters. Continued improvement and solid new product execution in this area are key to Western Digital's recovery." "Our focus will remain on crisp execution of new product plans in both the desktop and enterprise product lines. Our roadmaps align very well with our major OEM PC and server customers, so the opportunity is there to grow the business. In addition, our efforts to diversify the business model with contributions from the AV consumer and networked attached storage spaces are on target for initial revenue by the end of calendar 1999." Haggerty also noted the Company's strong asset management in the fourth quarter: "Cash for the quarter finished at expected levels of about $226 million. Our days-sales-outstanding were at 38 days, a record low level for the Company, mostly due to a refined supply/demand process. Total inventory turns were 19--about four turns better than the March quarter--and our best performance since Q3 in fiscal 1997."
2 Western Digital Corporation is a leader in information storage products and services. The Company designs and manufactures hard drives for personal and enterprise-wide computing, and markets them to leading systems manufacturers and selected resellers under the Western Digital brand name. The Company was founded in 1970 and has long been noted for its storage and end-market systems-level design knowledge. The Company's home page can be found at http://www.westerndigital.com. This release contains forward-looking statements, including statements relating to improved performance and product execution in the enterprise and desktop product lines, growth in the Company's OEM business, and expected contributions of revenue from AV consumer and networked attached storage by the end of calendar 1999. The forward looking statements are based on current management expectations, and actual results may differ materially as a result of several factors, including: improvement in time to market and time to volume of our new hard drives; successful qualification of our drives with key OEM customers; overall supply and customer demand in the hard drive industry; changes in customer order patterns; business conditions and growth in the personal and enterprise computing industry; development of non-traditional markets for hard drives; successful development and sale of the Company's first products for the AV consumer and networked attached storage markets; and other factors discussed in our recent SEC filings. We undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of such statements. 2
3 WESTERN DIGITAL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) THREE MONTHS ENDED YEAR ENDED --------------------------------------------- ---------------------------- JULY 3, JUNE 27, MAR. 27, JULY 3, JUNE 27, 1999 1998 1999 1999 1998 ----------- ----------- ----------- ----------- ----------- Revenues, net $ 709,302 $ 650,503 $ 668,456 $ 2,767,206 $ 3,541,525 Costs and expenses: Cost of revenues 688,429 692,243 628,592 2,770,054 3,441,475 Research and development 52,003 70,010 62,699 216,986 203,733 Selling, general and administrative 44,597 50,719 46,210 195,958 192,142 Restructuring provision 20,000 -- 41,000 61,000 -- ----------- ----------- ----------- ----------- ----------- Total costs and expenses 805,029 812,972 778,501 3,243,998 3,837,350 ----------- ----------- ----------- ----------- ----------- Operating loss (95,727) (162,469) (110,045) (476,792) (295,825) Net interest income (expense) (5,759) (250) (4,248) (15,898) 3,817 Loss before income taxes (101,486) (162,719) (114,293) (492,690) (292,008) Provision for income taxes -- -- -- -- (1,791) Net loss $ (101,486) $ (162,719) $ (114,293) $ (492,690) $ (290,217) =========== =========== =========== =========== =========== Loss per common share: Basic $ (1.12) $ (1.84) $ (1.27) $ (5.51) $ (3.32) =========== =========== =========== =========== =========== Diluted $ (1.12) $ (1.84) $ (1.27) $ (5.51) $ (3.32) =========== =========== =========== =========== =========== Common shares used in computing per share amounts: Basic 90,596 88,226 89,883 89,478 87,525 =========== =========== =========== =========== =========== Diluted 90,596 88,226 89,883 89,478 87,525 =========== =========== =========== =========== =========== 3
4 WESTERN DIGITAL CORPORATION CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) JULY 3, JUNE 27, 1999 1998 ----------- ----------- ASSETS Current assets: Cash and cash equivalents $ 226,147 $ 459,830 Accounts receivable, net 273,435 369,013 Inventories 144,093 186,516 Prepaid expenses 44,672 36,763 ----------- ----------- Total current assets 688,347 1,052,122 Property and equipment, net 237,939 346,987 Intangible and other assets, net 96,116 43,579 ----------- ----------- Total assets $ 1,022,402 $ 1,442,688 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 335,907 $ 330,130 Accrued expenses 280,711 258,449 Current portion of long-term debt 10,000 0 ----------- ----------- Total current liabilities 626,618 588,579 Long-term debt 534,144 519,188 Deferred income taxes 15,430 17,163 Shareholders' equity (deficit: Common stock, $.01 par value 906 883 Additional paid-in capital 140,145 119,026 Retained Earnings (accumulated deficit) (294,841) 197,849 Total shareholders' equity (deficit) (153,790) 317,758 ----------- ----------- Total liabilities and shareholders' equity (deficit) $ 1,022,402 $ 1,442,688 =========== =========== 4
1 EXHIBIT 99.2 Company Contact: Robert J. Blair Western Digital Corporation 212.867.4490 bob.blair@wdc.com For Immediate Release WESTERN DIGITAL ANNOUNCES EXPANSION OF PRODUCT DESIGN ACTIVITY AT CHAI CHEE SINGAPORE OPERATION; ACCELERATES MOVE OF DESKTOP HDD TO MALAYSIA Chai Chee, Singapore--Aug. 13, 1999--Western Digital Corporation (NYSE: WDC) today announced a plan to further develop its Chai Chee, Singapore facility as a regional technical and manufacturing support center, focusing its resources on value-add engineering rather than production volume. The Company also indicated it was accelerating the consolidation of its high-volume desktop hard drive production in its Kuala Lumpur, Malaysian facility to improve manufacturing efficiencies and costs, while focusing its Singapore production resources on desktop hard drive development and component qualification and on production of high end WD Enterprise hard drives. Arif Shakeel, Western Digital's senior vice president of operations, stated: "The plan announced today reflects a significant move up the value chain for WD Singapore, applying the accumulated experience of more than 10 years of hard drive manufacturing to the design, development and production deployment process. The engineering organization in Chai Chee has delivered the core controller designs for WD's MR and GMR desktop product families and is currently working on the next two generations of products for both the PC and home entertainment marketplaces. We are expanding the existing electronics design center and plan to double the existing staff to accommodate this growth." Western Digital indicated it is in discussion with the EDB to add a mechanical product design group in Chai Chee and to enlarge its existing tooling and process design and development groups. These advances in Singapore's engineering role are designed to improve linkage with Western Digital's predominantly Asian-based supply partners, and speed the development of new products. The evolution of the engineering role in the Singapore facility will complement the previously announced consolidation of worldwide materials planning and procurement responsibility in Singapore. The realignment of hard drive manufacturing will result in a reduction among the production-related Chai Chee work force. In addition, due to the ongoing improvement in WD hard drive quality and reliability in the field, the customer repair center in Chai Chee will also be reduced in size. The plan announced today will be implemented on a phased basis through December, 1999. It will result in a reduction of approximately 2,000 direct and 500 indirect workers at Chai Chee. Following these reductions, the WD Chai Chee workforce will include approximately 1,200 direct and 500 indirect workers. The first phase is effective today and will affect about 300 direct and 25 indirect workers, primarily in the customer service center. The Company has made arrangements, together with the appropriate Singaporean government agencies, to provide retraining and placement support to those people leaving Western Digital.