1 - -------------------------------------------------------------------------------- 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 27, 1998 Western Digital Corporation (Exact Name of Registrant as Specified in Charter) - -------------------------------------------------------------------------------- 8105 Irvine Center Drive, Irvine, California 92618 - ------------------------------------------------------------------ ----------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (949) 932-5000 N/A - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) - -------------------------------------------------------------------------------- Total of sequentially numbered pages: 3. 1
Delaware 001-08703 95-264-7125 - ----------------------------------- ---------------- -------------------- (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 2 ITEM 5. OTHER EVENTS. On July 27, 1998, the registrant issued a press release announcing its fourth quarter and year-end results. A copy of the press release is attached as Exhibit 99.4. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. 2
Exhibit Description - ------- ----------- 99.4 Press Release Regarding Announcement of Fourth Quarter and Year-End Results. 3 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this current report to be signed on its behalf by the undersigned hereunto duly authorized. Western Digital Corporation Date: August 10, 1998 By: /s/ MICHAEL A. CORNELIUS ------------------------------ Michael A. Cornelius Vice President, Law and Administration and Secretary 3
1 EXHIBIT 99.4 WESTERN DIGITAL ANNOUNCES FOURTH QUARTER, YEAR-END RESULTS IRVINE, CA. -- July 27, 1998 -- Western Digital Corporation (NYSE:WDC) today reported revenue of $650.5 million and a net loss of $162.7 million, or $1.84 per share, for its fourth fiscal quarter ended June 27, 1998. As disclosed on June 9, 1998, the fourth quarter results included certain costs of approximately $22 million related principally to the new technology licensing and component supply agreement with IBM Corporation. In the year-earlier period, Western Digital reported revenue of $1.08 billion and net income of $87.9 million, or $.95 diluted earnings per share. For fiscal 1998, the Company reported revenue of $3.54 billion and a net loss of $290.2 million, or $3.32 per share, including special charges of $148 million in the second fiscal quarter and the previously mentioned IBM-related costs in the fourth quarter. In fiscal 1997, Western Digital earned net income of $267.6 million, or $2.86 diluted earnings per share, on revenue of $4.18 billion. Chuck Haggerty, chairman, president and chief executive officer, stated: "Our disappointing results for the fiscal year and the fourth quarter reflect nearly a full year's sustained oversupply and price declines of nearly 50% in the desktop segment of the hard drive industry. So far in the seasonally weak September quarter, inventories of desktop drives in the distribution channel remain too high, preventing a return to a more normal market for some time. This industry must get back to rational pricing for the value of the technology being delivered." Haggerty noted that the Company had taken several actions in the face of the industry downturn, including an approximate 20 percent reduction in employment since November, 1997, reduced work weeks and substantial production cutbacks in its Singapore and Malaysian plants , and a 30 percent reduction in its planned capital spending for fiscal year 1999. "In anticipation of the industry's eventual recovery, we have positioned Western Digital for a return to a leadership position in desktop drives and continue to invest heavily in our Enterprise storage business," said Haggerty. "Industry analysts estimate that we have earned an 8% share of the high-end market in approximately six quarters of volume shipments. A 50% increase in research and development spending on high-end drives in fiscal 1999 will help transform Western Digital into a full-line supplier in this segment in the next 18 months." "The transition to MR head technology in the desktop segment has gone extremely well and is complete, and we are now in qualification with customers on our third-generation MR program. As a matter of fact, Western Digital now has the highest first pass yields on its disk drives in Company history. As a result of this transition, our volumes and share with leading PC OEM customers increased sequentially in the June quarter for the first time in a year. Our new relationship with IBM, the industry's technology leader and its best-capitalized company, 2 positions us to leap ahead of the competition in the desktop industry's forthcoming product transitions involving Giant MR heads." "In the face of harsh industry conditions and our large operating losses over the last three quarters, we have remained focused on balance sheet management . We see continued opportunities to improve our working capital performance in the quarters ahead. At the end of the June quarter, the Company's cash position was $460 million. I believe Western Digital is strong and will get stronger as we go forward."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. Western Digital is the first Fortune 500, multinational company to have been awarded company-wide ISO 9001 registration, linking all WD organizations with a consistent global standard for quality processes. The Company was founded in 1970 and has long been noted for its storage and end-market systems-level design knowledge. The company's World Wide Web home page can be found at http://www.westerndigital.com. This release contains forward-looking statements based on current management expectations, including: statements relating to current and anticipated industry supply, inventory and pricing trends, the Company's return to market leadership, investment in the Enterprise storage business, utilization of IBM technology in future product transitions and future working capital. The forward looking statements are based on current management expectations, and actual results may differ materially as a result of several factors, including: overall supply and customer demand in the hard drive industry; pricing trends and other competitive factors; continued improvement in time to market and time to volume of the Company's new hard drives; changes in customer order patterns; continued successful qualification of the Company's drives with key OEM customers; business conditions and growth in the personal and enterprise computing industry; and other factors discussed in the Company's Form 10-K for the year ended June 28, 1997, its recent Form 10-Qs, its other SEC filings, and its press release dated June 9, 1998. Western Digital undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of such statements. 3 WESTERN DIGITAL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) WESTERN DIGITAL CORPORATION CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended Year Ended June 27, 1998 June 28, 1997 Mar 28, 1998 June 27, 1998 June 28, 1997 Revenues, net $ 650,503 $ 1,079,883 $ 831,297 $ 3,541,525 $ 4,177,857 Costs and expenses: Cost of revenues 692,243 890,733 795,015 3,441,475 3,527,574 Research and development 70,010 40,224 46,949 203,733 150,157 Selling, general and administrative 50,719 48,996 47,551 192,142 198,530 Total costs and expenses 812,972 979,953 889,515 3,837,350 3,876,261 Operating income (loss) (162,469) 99,930 (58,221) (295,825) 301,596 Net interest income (expense) (250) 3,474 (536) 3,817 13,223 Income (loss) before income taxes (162,719) 103,404 (58,757) (292,008) 314,819 Provision (benefit) for income taxes -- 15,510 (13,735) (1,791) 47,223 Net income (loss) $ (162,719) $ 87,894 $ (45,022) $ (290,217) $ 267,596 =========== =========== =========== =========== =========== Earnings (loss) per common share: Basic $(1,84) $ 1.02 $ (.51) $ (3.32) $ 3.07 Diluted $(1,84) $ .95 $ (.51) $ (3.32) $ 2.86 =========== =========== =========== =========== =========== Common shares used in computing per share amounts: Basic 88,226 86,395 87,812 87,525 87,261 =========== =========== =========== =========== =========== Diluted 88,226 92,688 87,812 87,525 93,522 ===========
June 27, 1998 June 28, 1997 ASSETS Current Assets: Cash and cash equivalents $ 459,830 $ 208,276 Accounts receivable, net 369,013 545,552 Inventories 186,516 224,474 Prepaid expenses 36,763 39,593 ---------- ---------- Total current assets $1,052,122 $1,017,895 Property and equipment, net 346,987 247,895 Intangible and other assets, net 43,579 41,332 ---------- ---------- Total assets $1,442,688 $1,307,122 ========== ========== 4 LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities: Accounts payable $ 330,130 $ 417,984 Accrued expenses 258,449 235,721 ---------- ---------- Total current liabilities 588,579 653,705 Long-term debt 519,188 -- Deferred income taxes 17,163 33,430 Shareholders' equity: Common stock, $.01 par value 883 859 Additional paid-in capital 119,026 131,062 Retained earnings 197,849 488,066 ---------- ---------- Total shareholders' equity 317,758 619,987 Total liabilities and shareholders' equity $1,442,688 $1,307,122 ========== ==========