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 30, 2001 (July 25, 2001) WESTERN DIGITAL CORPORATION (Exact Name of Registrant as Specified in Charter) Delaware 001-08703 33-095-6711 (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 20511 Lake Forest Drive Lake Forest, California 92630 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (949) 672-7000 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 July 25, 2001, Western Digital Corporation issued a press release announcing its financial results for its fourth quarter and 2001 fiscal year. For its fourth quarter, the Registrant reported revenues of $456.0 million and a net loss of $9.0 million, or $.05 per share, before nonrecurring items. The results include an operating profit of approximately $2.8 million and unit shipments of 5.3 million by the Company's hard drive business. Including nonrecurring charges of $52.2 million, the total net loss for the fourth quarter was $61.2 million, or $.34 per share. For fiscal year 2001, the Company reported revenues of $1.95 billion and a net loss before nonrecurring items of $67.4 million, or $.40 per share. Including nonrecurring charges and extraordinary gains from bond redemptions, the total net loss for fiscal 2001 was $98.9 million, or $.59 per share. Attached hereto as Exhibit 99.1, 99.2.1 and 99.2.2, respectively, are copies of the July 25, 2001, press release, Investor Information Summary and Consolidated Statements of Operations with additional financial information for the Registrant's fourth quarter and 2001 fiscal year posted to the Registrant's website at www-westerndigital.com all of which are incorporated herein by this reference. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. Exhibit Description -------- ----------- 99.1 Press Release dated July 25, 2001, announcing the Company's financial results for its fourth quarter and 2001 fiscal year. 99.2.1 Investor Information Summary. 99.2.2 Consolidated Statements of Operations, restated for adoption of Staff Accounting Bulletin No. 101 ("SAB 101"). 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: July 30, 2001 WESTERN DIGITAL CORPORATION By: /s/ MICHAEL A. CORNELIUS ------------------------------- Michael A. Cornelius Vice President, Law and Administration and Secretary -2-
1 EXHIBIT 99.1 Company contacts: Bob Blair Western Digital Investor Relations 949.672.7834 bob.blair@wdc.com Steve Shattuck Western Digital Public Relations 949.672.7817 steve.shattuck@wdc.com FOR IMMEDIATE RELEASE: WESTERN DIGITAL ANNOUNCES FOURTH QUARTER, FISCAL YEAR END RESULTS HARD DRIVE BUSINESS POSTS SMALL FOURTH QUARTER OPERATING PROFIT AMID SOFT INDUSTRY ENVIRONMENT, ACHIEVES SUBSTANTIAL YEAR-OVER-YEAR IMPROVEMENT IN OPERATING PERFORMANCE LAKE FOREST, Calif. - July 25, 2001 - Western Digital Corp. (NYSE: WDC) today reported fourth quarter revenues of $456.0 million and a net loss of $9.0 million, or $.05 per share, before nonrecurring items. The results include an operating profit of approximately $2.8 million and unit shipments of 5.3 million by the Company's hard drive business. Including nonrecurring charges of $52.2 million, the total net loss for the fourth quarter was $61.2 million, or $.34 per share. The nonrecurring charges recorded in the fourth quarter result from adjustments to the carrying values of equity investments in and notes receivable from Komag Inc., and accrual of Komag contingent guarantees, all of which originally arose when Western Digital sold its disk media business to Komag in April 1999. The decision to take these charges was prompted by Komag's previous announcement that it did not pay its senior debt or the interest on its convertible bonds due June 30 and July 15, 2001, respectively. In the year-ago period, Western Digital reported revenues of $473.9 million and a net loss before nonrecurring items of $26.3 million, or $.19 per share. Including nonrecurring benefits for tax and other accrual adjustments of $30.5 million, the Company reported net income of $4.2 million, or $.03 per share. Matt Massengill, president and chief executive officer of Western Digital, said: "The fourth quarter reflected continued execution in our core hard drive business, culminating a 12-month positive swing in operating profit of nearly $190 million, with a near break-even operating performance for the fiscal year. We demonstrated continued leadership in
2 the high performance 7200 RPM segment - which accounted for 58 percent of our quarterly revenue - and we maintained our relentless focus on low-cost leadership and expense management. We also delivered on our commitment to reduce losses from our new-venture activities, which declined to $11.5 million from $15.0 million in the March quarter. Faced with soft PC demand in the fourth fiscal quarter, we adjusted our build plan downward to avoid contributing to excess supply in the industry, affecting our revenue and unit volumes. "Based on our flexible manufacturing model, we are positioned to weather the current PC environment and quickly respond to and participate in the eventual recovery in PC growth," said Massengill. "We remain excited about the prospects for incremental growth in the new applications of personal storage such as video game systems and personal video recorders. This quarter, we will begin volume production deliveries of WD hard drives to Microsoft for its new Xbox video game system." For fiscal year 2001, the Company reported revenues of $1.95 billion and a net loss before nonrecurring items of $67.4 million, or $.40 per share. Including nonrecurring charges and extraordinary gains from bond redemptions, the total net loss for fiscal 2001 was $98.9 million, or $.59 per share. For fiscal year 2000, the Company reported revenues of $1.96 billion and a net loss before nonrecurring items of $241.8 million, or $1.97 per share. Including nonrecurring items and extraordinary gains, the total net loss was $188.0 million, or $1.53 per share. During the fourth quarter, the Company adopted the provisions of SEC Staff Accounting Bulletin No. 101 ("SAB101"). As a result, revenues for the quarter and year ended June 29, 2001 were increased by $19.5 million and $13.1 million, respectively, and the operating loss for the quarter and year ended June 29, 2001 were reduced by $2.5 million, or $.01 per share, and $1.1 million, or $.01 per share, respectively. The adjustments made to implement SAB101 in the current quarter and restate prior quarters accordingly, reflect the deferral of revenue for quarter-end sales made to the Company's channel customers under certain shipping terms. ABOUT WESTERN DIGITAL Western Digital, one of the storage industry's pioneers and long-time leaders, provides products and services for people and organizations that collect, manage and use digital information. The Company's core business produces reliable, high-performance hard drives that keep users' data close-at-hand and secure from loss. Applying its data storage core competencies to emerging markets, Western Digital's new ventures meet the increasing demand for innovative information management solutions arising from the proliferation of the Internet and broadband services. Keen Personal Media helps cable TV MSOs build their brand and revenue by providing personal video recording technology and services. Connex designs Network Attached Storage products that enable IT managers to quickly expand network storage. SANavigator develops and markets software that simplifies the central management of Storage Area Networks. SageTree is a software company providing enterprise manufacturing and supply chain analytic applications. -2-
3 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. Visit the Investor section of the Company's Web site (www.westerndigital.com) to access a variety of financial and investor information. This release contains forward-looking statements, including statements relating to the Company's participation in the recovery in PC growth and the incremental growth in new applications for personal storage. The forward looking statements are based on current management expectations, and actual results may differ materially as a result of several factors, including: supply and demand conditions in the hard drive industry; overall economic conditions; changes in product and customer mix; pricing trends; actions by competitors; the pace of development of new markets; successful entry into new markets by the Company; the outcome of litigation between the Company and Cirrus Logic, Inc.; 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 is a registered trademark of Western Digital Technologies, Inc. Keen Personal Media and TV4me are trademarks of Keen Personal Media, Inc. Connex is a trademark of Connex, Inc. SageTree is a registered trademark of SageTree, Inc. SANavigator is a trademark of SANavigator, Inc. All other brand and product names mentioned herein are the property of their respective companies. -3-
4 WESTERN DIGITAL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) THREE MONTHS ENDED YEAR ENDED ----------------------------------------- ----------------------------- JUN. 29, MAR. 30, JUN. 30, JUN. 29, JUN. 30, 2001* 2001* 2000 2001* 2000 --------- --------- --------- ----------- ----------- Revenues, net ........................... $ 455,980 $ 511,728 $ 473,862 $ 1,953,949 $ 1,957,580 Costs and expenses: Cost of revenues .................. 405,644 449,155 432,275 1,750,503 1,949,511 Research and development .......... 28,687 35,554 35,202 136,569 163,198 Selling, general and administrative 30,581 33,190 21,461 133,441 138,323 Restructuring charges ............. -- -- -- -- 85,837 --------- --------- --------- ----------- ----------- Total costs and expenses ..... 464,912 517,899 488,938 2,020,513 2,336,869 --------- --------- --------- ----------- ----------- Operating loss .......................... (8,932) (6,171) (15,076) (66,564) (379,289) Net interest and other nonoperating income (expense) ...................... (52,454) 52 (259) (53,195) 4,874 --------- --------- --------- ----------- ----------- Loss before income taxes, extraordinary item and cumulative effect of change in accounting principle ............... (61,386) (6,119) (15,335) (119,759) (374,415) Income tax benefit ...................... -- -- 19,500 -- 19,500 --------- --------- --------- ----------- ----------- Income (loss) before extraordinary item and cumulative effect of change in accounting principle .................. (61,386) (6,119) 4,165 (119,759) (354,915) Extraordinary gain from redemption of debentures ............................ 210 371 -- 22,400 166,899 Cumulative effect of change in accounting principle .................. -- -- -- (1,504) -- --------- --------- --------- ----------- ----------- Net income (loss) ....................... $ (61,176) $ (5,748) $ 4,165 $ (98,863) $ (188,016) ========= ========= ========= =========== =========== Basic and diluted income (loss) per common share: Basic before extraordinary item and cumulative effect of change in accounting principle .................. $ (.34) $ (.03) $ .03 $ (.71) $ (2.89) Extraordinary gain ...................... $ .00 $ .00 $ -- $ .13 $ 1.36 Cumulative effect of change in accounting principle .................. $ -- $ -- $ -- $ (.01) $ -- --------- --------- --------- ----------- ----------- Basic ................................... $ (.34) $ (.03) $ .03 $ (.59) $ (1.53) ========= ========= ========= =========== =========== Diluted ................................. $ (.34) $ (.03) $ .03 $ (.59) $ (1.53) ========= ========= ========= =========== =========== Common shares used in computing per share amounts: Basic ................................... 179,390 176,250 139,547 168,715 122,624 ========= ========= ========= =========== =========== Diluted ................................. 179,390 176,250 143,337 168,715 122,624 ========= ========= ========= =========== =========== ------------ * The Company adopted Staff Accounting Bulletin No. 101 ("SAB 101") during its fourth quarter ended June 29, 2001. In accordance with the requirements of SAB 101, previously reported quarterly information for fiscal year 2001 has been restated. 4
5 WESTERN DIGITAL CORPORATION CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) JUN. 29, JUN. 30, 2001 2000 --------- --------- ASSETS Current assets: Cash and cash equivalents ............................... $ 167,582 $ 184,021 Accounts receivable, net ................................ 128,035 149,135 Inventories ............................................. 79,680 84,546 Prepaid expenses and other current assets ............... 11,774 33,693 --------- --------- Total current assets ............................... 387,071 451,395 Property and equipment, net ................................... 106,769 98,952 Intangible and other assets, net .............................. 15,779 65,227 --------- --------- Total assets ....................................... $ 509,619 $ 615,574 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable ........................................ $ 226,191 $ 266,841 Accrued expenses ........................................ 116,106 178,225 --------- --------- Total current liabilities .......................... 342,297 445,066 Other liabilities ............................................. 38,645 44,846 Convertible debentures ........................................ 112,491 225,496 Minority interest ............................................. 9,383 10,000 Shareholders' equity (deficit): Common stock, $.01 par value ............................ 1,863 1,436 Additional paid-in capital .............................. 586,660 371,587 Accumulated deficit ..................................... (581,720) (482,857) --------- --------- Total shareholders' equity (deficit) ............... 6,803 (109,834) --------- --------- Total liabilities and shareholders' equity (deficit) $ 509,619 $ 615,574 ========= ========= 5
1 EXHIBIT 99.2.1 WESTERN DIGITAL CORPORATION INVESTOR INFORMATION SUMMARY Q4 FY2001 (ALL $ AMOUNTS IN MILLIONS) Q4 FY00 Q1 FY01 Q2 FY01 Q3 FY01 Q4 FY01 ------- ------- ------- ------- ------- REVENUE: WITH SAB 101 EFFECT $ 474 $ 425 $ 562 $ 512 $ 456 REVENUE BY CHANNEL : OEM 65% 70% 58% 55% 54% RESELLER 35% 30% 42% 45% 46% REVENUE BY GEOGRAPHY: NORTH AMERICA 59% 58% 57% 60% 60% EUROPE 28% 32% 31% 26% 25% ASIA 13% 10% 12% 14% 15% REVENUE CONCENTRATION : 10 LARGEST CUSTOMERS 60% 59% 57% 62% 60% ------ ------ ------ ------ ------ HARD DRIVES UNITS (MILLIONS): WITH SAB 101 EFFECT 5.2 5.1 6.1 5.8 5.3 WORLDWIDE HEADCOUNT : 7,321 7,366 8,200 8,005 7,909 ASSET MANAGEMENT DSOs--AVERAGE 29 24 28 23 26 INVENTORY DETAIL : RAW $ 6 $ 7 $ 8 $ 8 $ 22 WIP $ 11 $ 11 $ 14 $ 12 $ 9 FINISHED GOODS $ 68 $ 73 $ 58 $ 67 $ 49 ------ ------ ------ ------ ------ TOTAL INVENTORY, NET $ 85 $ 91 $ 80 $ 86 $ 80 ------ ------ ------ ------ ------ INVENTORY TURNS 21 18 25 21 20 ====== ====== ====== ====== ====== ---------- Note: This information has been restated to reflect the adoption of SAB 101, effective as of July 1, 2000.
1 EXHIBIT 99.2.2 WESTERN DIGITAL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS Restated for the Adoption of SAB 101* (in thousands, except per share amounts) (UNAUDITED) THREE MONTHS ENDED --------------------------------------------------- YEAR ENDED SEP. 29, DEC. 29, MAR. 30, JUN. 29, JUN. 29, 2000 2000 2001 2001 2001 --------- --------- --------- --------- ----------- Revenues, net .................................... $ 424,593 $ 561,648 $ 511,728 $ 455,980 $ 1,953,949 Costs and expenses: Cost of revenues ...................... 399,366 496,338 449,155 405,644 1,750,503 Research and development .............. 34,961 37,367 35,554 28,687 136,569 Selling, general and administrative ... 33,899 35,771 33,190 30,581 133,441 --------- --------- --------- --------- ----------- Total costs and expenses .... 468,226 569,476 517,899 464,912 2,020,513 --------- --------- --------- --------- ----------- Operating loss ................................... (43,633) (7,828) (6,171) (8,932) (66,564) Net interest and other nonoperating income (expense) ...................................... (1,632) 839 52 (52,454) (53,195) --------- --------- --------- --------- ----------- Loss before income taxes, extraordinary item and cumulative effect of change in accounting principle ........................ (45,265) (6,989) (6,119) (61,386) (119,759) Income taxes ..................................... -- -- -- -- -- --------- --------- --------- --------- ----------- Loss before extraordinary item and cumulative effect of change in accounting principle ................... (45,265) (6,989) (6,119) (61,386) (119,759) Extraordinary gain from redemption of debentures ............................. 11,243 10,576 371 210 22,400 Cumulative effect of change in accounting principle ................... (1,504) -- -- -- (1,504) --------- --------- --------- --------- ----------- Net income (loss) ................................ (35,526) 3,587 (5,748) (61,176) (98,863) ========= ========= ========= ========= =========== Basic and diluted income (loss) per common share: Basic before extraordinary item and cumulative effect of change in accounting principle ................... $ (0.31) $ (0.04) $ (0.03) $ (0.34) $ (0.71) Extraordinary gain ............................... $ 0.08 $ 0.06 $ 0.00 $ 0.00 $ 0.13 Cumulative effect of change in accounting principle ................... $ (0.01) $ -- $ -- $ -- $ (0.01) --------- --------- --------- --------- ----------- Basic ............................................ $ (0.24) $ 0.02 $ (0.03) $ (0.34) $ (0.59) ========= ========= ========= ========= =========== Diluted .......................................... $ (0.24) $ 0.02 $ (0.03) $ (0.34) $ (0.59) ========= ========= ========= ========= =========== Common shares used in computing per share amounts: Basic ............................................ 148,044 171,175 176,250 179,390 168,715 ========= ========= ========= ========= =========== Diluted .......................................... 148,044 171,175 176,250 179,390 168,715 ========= ========= ========= ========= =========== ------------------ * During the fourth quarter ended June 29, 2001, the Company adopted Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial Statements". As a result, the Company changed its revenue recognition policy effective July 1, 2000 to recognize revenue on certain product shipments upon delivery rather than shipment. In accordance with the requirements of SAB 101, previously reported quarterly information for fiscal year 2001 has been restated.