Table of Contents
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 25, 2001
WESTERN DIGITAL CORPORATION
(Exact Name of Registrant as Specified in Charter)
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Delaware
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001-08703
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33-095-6711
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(State or Other Jurisdiction
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(Commission
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(IRS Employer
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of Incorporation)
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File Number)
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Identification No.)
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20511 Lake Forest Drive
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Lake Forest, California
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92630
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(Address of Principal Executive Offices)
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(Zip Code)
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Registrant’s telephone number, including area code: (949) 672-7000
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
| ITEM 5. OTHER EVENTS. | ||||||||
| ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. | ||||||||
| SIGNATURE | ||||||||
| EXHIBIT 99.1 | ||||||||
| EXHIBIT 99.2 | ||||||||
| EXHIBIT 99.3 | ||||||||
Table of Contents
INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 5. OTHER EVENTS.
On October 25, 2001, Western Digital Corporation issued a press release announcing its financial results for its first quarter of the 2002 fiscal year. For its first quarter, the Registrant reported revenues of $440.9 million and a loss from continuing operations of $4.0 million, or $.02 per share. The results include an operating profit of approximately $4.0 million and unit shipments of 5.4 million by the Company’s hard drive business.
Attached hereto as Exhibits 99.1, 99.2 and 99.3, respectively, are copies of the October 25, 2001 press release, Investor Information Summary and Consolidated Statements of Operations with additional financial information for the Registrant’s first quarter of the 2002 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
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99.1
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Press Release dated October 25, 2001 announcing the Company’s financial results for its first quarter of the 2002 fiscal year. | |
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99.2
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Investor Information Summary. | |
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99.3
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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: October 25, 2001
| WESTERN DIGITAL CORPORATION | ||
| By: | /s/ MICHAEL A. CORNELIUS | |
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Michael A. Cornelius Vice President, Law and Administration and Secretary |
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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 REPORTS $4 MILLION PROFIT IN HDD BUSINESS
ON REVENUE OF $441 MILLION, UNIT SHIPMENTS OF 5.4 MILLION
LAKE FOREST, Calif.—Oct. 25, 2001—Western Digital Corp. (NYSE: WDC) today reported revenue of $440.9 million and a loss from continuing operations of $4.0 million, or $.02 per share, for its first fiscal quarter ended September 28, 2001. These results include an operating profit from the Company’s hard drive group of $4.0 million, and losses from continuing new ventures of $7.3 million. The Company shipped 5.4 million units in the quarter. In the year earlier period, Western Digital reported revenue of $424.4 million and a loss from continuing operations of $37.2 million, or $.25 per share, on unit shipments of 5.1 million.
Also in the current period, the Company reported a gain from disposal of
its discontinued Connex and SANavigator businesses of $24.5 million. Including
this gain, the Company reported net earnings of $20.5 million, or $.11 per
share. For the prior year, the Company reported a net loss, including
extraordinary gains and the cumulative effect of a change in accounting
principle, of $35.5 million, or $.24 per share. The prior year
Western Digital Reports $4 Million Profit in HDD Business
on Revenue of $441 Million, Unit Shipments of 5.4 Million
Page 2
results have been restated to reflect the adoption of SEC Staff Accounting Bulletin No. 101 in the fourth quarter of fiscal 2001, and the reclassification of Connex and SANavigator results as discontinued operations.
Matt Massengill, president and chief executive officer, said: “Our operating performance continues to reflect product cost efficiencies and the strength of our position with leading PC OEM and distribution customers. We have achieved this through leading quality and predictable supply of the technology they require in high volumes. In addition, we began to see the benefits of the emerging markets for rotating magnetic storage with initial shipments of WD drives to Microsoft for its new Xbox gaming system.
“Our hard drive business has been profitable for four consecutive quarters, a period that many regard as one the most challenging in the industry’s history,” said Massengill. “We have modeled our business to weather these times and to be in good position to deliver solid returns as the market recovers in the future. Reflecting continued improvement of our balance sheet, cash grew to $200 million in the first quarter, which included $35 million from the sale of our Connex and SANavigator businesses. The hard drive business itself generated $14 million in cash from operations.”
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 Cameo
Western Digital Reports $4 Million Profit in HDD Business
on Revenue of $441 Million, Unit Shipments of 5.4 Million
Page 3
Technologies, Keen Personal Media and SageTree meet the increasing demand for innovative information management solutions arising from the proliferation of Internet and broadband services.
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 expected performance of the Company’s business model. The forward-looking statements are based on current management expectations, and actual results may differ materially as a result of several factors, including: levels of operating expense and product cost; 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; and other factors discussed in our recent SEC filings, including but not limited to our Form 10-K for fiscal 2001. We undertake no obligation to update or alter our forward-looking statements to reflect new information or events or for any other reason.
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Western Digital is a registered trademark of Western Digital Technologies, Inc. Keen Personal Media and TV4me are trademarks of Keen Personal Media, Inc. SageTree is a registered trademark of SageTree, Inc. Cameo is a registered trademark of Cameo Technologies, Inc. All other brand and product names mentioned herein are the property of their respective companies.
WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
| Three Months Ended | |||||||||||||||
| Sep. 28, | Jun. 29, | Sep. 29, | |||||||||||||
| 2001 | 2001 | 2000 | |||||||||||||
Revenues, net |
$ | 440,943 | $ | 455,733 | $ | 424,366 | |||||||||
Costs and expenses: |
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Cost of revenues |
384,936 | 404,767 | 398,430 | ||||||||||||
Research and development |
31,541 | 24,811 | 32,001 | ||||||||||||
Selling, general and administrative |
28,636 | 27,448 | 29,523 | ||||||||||||
Total costs and expenses |
445,113 | 457,026 | 459,954 | ||||||||||||
Operating loss |
(4,170 | ) | (1,293 | ) | (35,588 | ) | |||||||||
Net interest and other nonoperating income (expense) |
156 | (52,454 | ) | (1,632 | ) | ||||||||||
Loss from continuing operations |
(4,014 | ) | (53,747 | ) | (37,220 | ) | |||||||||
Discontinued operations |
24,532 | (7,639 | ) | (8,045 | ) | ||||||||||
Extraordinary gain from redemption of debentures |
— | 210 | 11,243 | ||||||||||||
Cumulative effect of change in accounting principle |
— | — | (1,504 | ) | |||||||||||
Net income (loss) |
$ | 20,518 | $ | (61,176 | ) | $ | (35,526 | ) | |||||||
Basic and diluted income (loss) per common share: |
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Loss from continuing operations |
$ | (.02 | ) | $ | (.30 | ) | $ | (.25 | ) | ||||||
Discontinued operations |
.13 | (.04 | ) | (.05 | ) | ||||||||||
Extraordinary gain |
— | — | .07 | ||||||||||||
Cumulative effect of change in accounting principle |
— | — | (.01 | ) | |||||||||||
Basic and diluted |
$ | .11 | $ | (.34 | ) | $ | (.24 | ) | |||||||
Common shares used in computing per share amounts: |
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Basic and diluted |
186,635 | 179,390 | 148,044 | ||||||||||||
WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| Sep. 28, | Jun. 29, | |||||||||||
| 2001 | 2001 | |||||||||||
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| (unaudited) | ||||||||||||
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ASSETS
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Current
assets:
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Cash and
cash equivalents
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$ | 200,582 | $ | 167,582 | ||||||||
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Accounts
receivable, net
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212,085 | 127,767 | ||||||||||
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Inventories
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76,343 | 78,905 | ||||||||||
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Prepaid
expenses and other current assets
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11,107 | 11,455 | ||||||||||
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Total
current assets
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500,117 | 385,709 | ||||||||||
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Property
and equipment, net
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107,759 | 106,166 | ||||||||||
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Other
assets, net
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11,569 | 15,777 | ||||||||||
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Total
assets
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$ | 619,445 | $ | 507,652 | ||||||||
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LIABILITIES AND SHAREHOLDERS’
EQUITY
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Current
liabilities:
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Accounts
payable
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$ | 319,015 | $ | 224,544 | ||||||||
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Accrued
expenses
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111,240 | 115,802 | ||||||||||
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Total
current liabilities
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430,255 | 340,346 | ||||||||||
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Other
liabilities
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38,091 | 38,629 | ||||||||||
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Convertible
debentures
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113,974 | 112,491 | ||||||||||
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Minority
interest
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9,470 | 9,383 | ||||||||||
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Shareholders’
equity:
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Common
stock
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1,868 | 1,863 | ||||||||||
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Additional
paid-in capital
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586,989 | 586,660 | ||||||||||
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Accumulated
deficit
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(561,202 | ) | (581,720 | ) | ||||||||
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Total
shareholders’ equity
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27,655 | 6,803 | ||||||||||
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Total
liabilities and shareholders’ equity
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$ | 619,445 | $ | 507,652 | ||||||||
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Exhibit 99.2
WESTERN DIGITAL CORPORATION
INVESTOR INFORMATION SUMMARY
Q1 FY2002 (All $ amounts in millions)
| Q1 FY01 | Q2 FY01 | Q3 FY01 | Q4 FY01 | Q1 FY02 | |||||||||||||||||
REVENUE: |
$ | 424 | $ | 562 | $ | 512 | $ | 456 | $ | 441 | |||||||||||
REVENUE BY CHANNEL : |
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OEM |
70 | % | 58 | % | 55 | % | 54 | % | 62 | % | |||||||||||
RESELLER |
30 | % | 42 | % | 45 | % | 46 | % | 38 | % | |||||||||||
REVENUE BY GEOGRAPHY: |
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NORTH AMERICA |
58 | % | 57 | % | 60 | % | 60 | % | 56 | % | |||||||||||
EUROPE |
32 | % | 31 | % | 26 | % | 25 | % | 30 | % | |||||||||||
ASIA |
10 | % | 12 | % | 14 | % | 15 | % | 14 | % | |||||||||||
REVENUE CONCENTRATION : |
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10 LARGEST CUSTOMERS |
59 | % | 57 | % | 62 | % | 60 | % | 55 | % | |||||||||||
HARD DRIVES UNITS (MILLIONS): |
5.1 | 6.1 | 5.8 | 5.3 | 5.4 | ||||||||||||||||
WORLDWIDE HEADCOUNT : |
7,366 | 8,200 | 8,005 | 7,909 | 7,852 | ||||||||||||||||
ASSET MANAGEMENT |
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DSOs— AVERAGE |
24 | 28 | 23 | 26 | 44 | ||||||||||||||||
INVENTORY DETAIL : |
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TOTAL |
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RAW |
$ | 7 | $ | 8 | $ | 8 | $ | 22 | $ | 10 | |||||||||||
WIP |
$ | 11 | $ | 14 | $ | 12 | $ | 9 | $ | 27 | |||||||||||
FINISHED GOODS |
$ | 72 | $ | 58 | $ | 66 | $ | 48 | $ | 40 | |||||||||||
TOTAL INVENTORY, NET |
$ | 90 | $ | 80 | $ | 85 | $ | 79 | $ | 76 | |||||||||||
INVENTORY TURNS |
18 | 25 | 21 | 21 | 20 | ||||||||||||||||
| Note: | The prior year results have been restated to reflect the adoption of SAB 101 and the classification of Connex and SANavigator results as discontinued operations. |
Exhibit 99.3
WESTERN DIGITAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Restated for Discontinued Operations and 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 |
$ | 424,366 | $ | 561,570 | $ | 511,723 | $ | 455,733 | $ | 1,953,392 | ||||||||||||
Costs and expenses: |
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Cost of revenues |
398,430 | 494,029 | 448,428 | 404,767 | 1,745,654 | |||||||||||||||||
Research and development |
32,001 | 33,617 | 32,085 | 24,811 | 122,514 | |||||||||||||||||
Selling, general and administrative |
29,523 | 31,925 | 30,225 | 27,448 | 119,121 | |||||||||||||||||
Total costs and expenses |
459,954 | 559,571 | 510,738 | 457,026 | 1,987,289 | |||||||||||||||||
Operating income (loss) |
(35,588 | ) | 1,999 | 985 | (1,293 | ) | (33,897 | ) | ||||||||||||||
Net interest and other nonoperating income
(expense) |
(1,632 | ) | 839 | 52 | (52,454 | ) | (53,195 | ) | ||||||||||||||
Income (loss) from continuing operations |
(37,220 | ) | 2,838 | 1,037 | (53,747 | ) | (87,092 | ) | ||||||||||||||
Discontinued operations |
(8,045 | ) | (9,827 | ) | (7,156 | ) | (7,639 | ) | (32,667 | ) | ||||||||||||
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: |
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Loss from continuing operations |
$ | (0.25 | ) | $ | 0.02 | $ | 0.01 | $ | (0.30 | ) | $ | (0.52 | ) | |||||||||
Discontinued operations |
(0.05 | ) | (0.06 | ) | (0.04 | ) | (0.04 | ) | (0.19 | ) | ||||||||||||
Extraordinary gain |
0.07 | 0.06 | 0.00 | 0.00 | 0.13 | |||||||||||||||||
Cumulative effect of change in
accounting principle |
(0.01 | ) | — | — | — | (0.01 | ) | |||||||||||||||
Basic and diluted |
$ | (0.24 | ) | $ | 0.02 | $ | (0.03 | ) | $ | (0.34 | ) | $ | (0.59 | ) | ||||||||
Common shares used in computing per share amounts: |
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Basic and diluted |
148,044 | 171,175 | 176,250 | 179,390 | 168,715 | |||||||||||||||||
• The prior year results have been restated to reflect the adoption of SEC Staff Accounting Bulletin No. 101 in the fourth quarter of fiscal 2001, and the reclassification of Connex and SANavigator results as discontinued operations.