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): October 20, 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. On October 20, 1999, Western Digital Corporation issued a press release announcing its first quarter results. Attached hereto as Exhibit 99.1 is a copy of the October 20, 1999, press release which is incorporated herein by this reference. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. Exhibit Description - ------- ----------- 99.1 Press Release dated October 20, 1999, regarding Western Digital Corporation's announcement of its first quarter results. 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: October 21, 1999 WESTERN DIGITAL CORPORATION By: /s/ Michael A. Cornelius ------------------------------- Michael A. Cornelius Vice President, Law and Administration and Secretary 2
1 EXHIBIT 99.1 Company Contact: Robert J. Blair Western Digital Corporation 949.932.7834 bob.blair@wdc.com For Immediate Release - --------------------- WESTERN DIGITAL ANNOUNCES FIRST QUARTER RESULTS IRVINE, CA -- October 20, 1999 -- Western Digital Corporation (NYSE:WDC) today reported revenue of $407.0 million and a net loss of $106.3 million, or $1.11 per share, for its first quarter ended October 2, 1999. The net loss includes restructuring charges of $32.3 million, primarily related to the transfer of all desktop hard drive production from Singapore to Malaysia, and $37.7 million of special charges to cost of sales for the product recall announced on September 27, 1999. Also included in the first quarter loss is an extraordinary gain of $90.6 million for the redemption of some of the Company's debentures for common stock. Excluding the non-recurring charges and the extraordinary gain, the net loss and net loss per share would have been $126.9 million, or $1.32 per share. In the year earlier period, Western Digital reported revenue of $650.9 million and a net loss of $194.7 million, or $2.20 per share. The results for the first quarter of 1999 included special charges of $84.5 million. Excluding these special charges, net loss and net loss per share for the first quarter of 1999 would have been $110.2 million and $1.24, respectively. Chuck Haggerty, chairman, president and chief executive officer of Western Digital, stated: "The first quarter was another very competitive pricing environment in the hard drive industry, complicated for Western Digital by the product recall. The operations recovery plan is on schedule: 90% of the affected drives have been captured and are being reworked; volume production resumed last week of the WD Caviar 6.8GB/platter series with new chips; all major OEM customers have reviewed and accepted the corrective action plan; and we expect to be back to normal production levels in the first week of November. "We are in qualification at all major OEM customers with our next generation WD Caviar desktop series, the 9.1GB and 10.2GB/platter platforms, and expect to be volume shipping to customers in October. In the Enterprise market, Haggerty noted that the Company's shipments will begin to shift in the next several quarters to more of the 10,000 RPM drives as the Company expands its offerings in the high end and entry-level segments of this market. "WD's hard drives continue to win industry and customer accolades," Haggerty continued. "In the first quarter, PC World, VAR Business and StorageReview.com recognized WD hard drives for industry-leading quality and performance in their annual surveys. "Our efforts to create the industry's most efficient manufacturing operation have resulted in annualized cost savings of about $100 million. We expect to achieve additional efficiencies and savings throughout our organizations in the next several quarters."
2 The Company made further progress in its diversification efforts into audio/visual storage solutions and networked attached storage solutions in the first quarter. In the A/V space, Western Digital introduced the WD Performer, its first hard drive specifically for the home entertainment market and featuring WhisperDrive acoustics technology. The WD Performer is in qualification with a number of consumer electronics and set top box manufacturers. The Company also introduced its innovative StreamWeaver technology for its next-generation WD Performer drives, to enable consumers to efficiently handle multiple streams of data in the home entertainment environment. "By developing unique technology that facilitates the growth of this market and by partnering with consumer AV leader Sony, we aim to establish WD as a major industry player over the next year in this fast-growing emerging space," said Haggerty. Haggerty indicated that Connex, a wholly-owned subsidiary of Western Digital, will be introducing its first network attached storage system shortly and that initial shipments are scheduled for January 2000. "Combined with our initiatives to restore the core hard drive business to health and peak efficiency, the efforts in audio visual and network attached storage solutions are key elements in transforming the WD business model in the long term," said Haggerty. Western Digital Corporation is a leading manufacturer of hard drives used for information storage in desktop computers, servers, workstations and home entertainment electronic products. 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 has long been noted 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 at http://www.westerndigital.com. This release contains forward-looking statements, including statements relating to the Company's resumption of normal production levels, the shift in production to its 10,000 rpm Enterprise drive, expected volume shipment of the Company's next generation drives, additional efficiencies and savings, expected volume shipments of the WD Performer drive, the Company's position as an industry player in the home entertainment environment, and shipments by Connex of its first networked attached storage system. The forward looking statements are based on current management expectations, and actual results may differ materially as a result of several factors, including: an adequate supply of components for the Company's drives; implementation of headcount reductions and operational changes; successful production ramp of the Company's next generation drives; leadership by the Company in home entertainment storage technology; successful qualification of the Company's 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 Connex's first product for the networked attached storage market; 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. 2
3 WESTERN DIGITAL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) THREE MONTHS ENDED --------------------------------------- OCT. 2, JULY 3, SEPT. 26, 1999 1999 1998 --------- --------- --------- Revenues, net ......................................... $ 406,957 $ 709,302 $ 650,858 Costs and expenses: Cost of revenues ................................. 472,300 688,429 733,610 Research and development ......................... 50,143 52,003 51,921 Selling, general and administrative .............. 43,822 44,597 57,332 Restructuring provision .......................... 32,300 20,000 -- --------- --------- --------- Total costs and expenses ................... 598,565 805,029 842,863 --------- --------- --------- Operating loss ........................................ (191,608) (95,727) (192,005) Net interest expense .................................. (5,329) (5,759) (2,653) --------- --------- --------- Loss before income taxes and extraordinary item ....... (196,937) (101,486) (194,658) Provision for income taxes ............................ -- -- -- --------- --------- --------- Loss before extraordinary item ........................ (196,937) (101,486) (194,658) Extraordinary gain from redemption of debentures ...... 90,622 -- -- --------- --------- --------- Net Loss .............................................. $(106,315) $(101,486) $(194,658) ========= ========= ========= Basic and diluted income (loss) per common share: Loss per share before extraordinary item .............. $ (2.05) $ (1.12) $ (2.20) Extraordinary gain .................................... .94 -- -- --------- --------- --------- Loss per share ........................................ $ (1.11) $ (1.12) $ (2.20) ========= ========= ========= Common shares used in computing per share amounts ..... 95,918 90,596 88,545 ========= ========= ========= 3
4 WESTERN DIGITAL CORPORATION CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) OCT. 2, JULY 3, 1999 1999 ----------- ----------- ASSETS Current assets: Cash and cash equivalents ........................... $ 185,054 $ 226,147 Accounts receivable, net ............................ 87,255 273,435 Inventories ......................................... 207,741 144,093 Prepaid expenses .................................... 45,675 44,672 ----------- ----------- Total current assets ........................... 525,725 688,347 Property and equipment, net ............................... 186,981 237,939 Intangible and other assets, net .......................... 117,506 96,116 ----------- ----------- Total assets ................................... $ 830,212 $ 1,022,402 =========== =========== LIABILITIES AND SHAREHOLDERS' DEFICIT Current liabilities: Accounts payable .................................... $ 272,949 $ 335,907 Accrued expenses .................................... 291,119 280,711 Current portion of long-term debt ................... 10,000 10,000 ----------- ----------- Total current liabilities ...................... 574,068 626,618 Long-term debt ............................................ 371,365 534,144 Deferred income taxes ..................................... 15,476 15,430 Shareholders' deficit: Common stock, $.01 par value ........................ 1,123 906 Additional paid-in capital .......................... 247,413 142,268 Accumulated other comprehensive income (loss) ....... 21,923 (2,123) Accumulated deficit ................................. (401,156) (294,841) ----------- ----------- Total shareholders' deficit .................... (130,697) (153,790) ----------- ----------- Total liabilities and shareholders' deficit .... $ 830,212 $ 1,022,402 =========== =========== 4