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