Exhibit (a)(1)(A)
COMPANY NOTICE
TO HOLDERS OF
WESTERN DIGITAL TECHNOLOGIES, INC.
ZERO COUPON CONVERTIBLE
SUBORDINATED DEBENTURES DUE 2018
CUSIP NUMBERS: 958102AF2 AND 958102AH8
NOTICE IS HEREBY GIVEN pursuant to the terms and conditions of the
Indenture, dated February 18, 1998, as amended (the "Indenture"), between
Western Digital Technologies, Inc. (formerly, Western Digital Corporation), a
Delaware corporation (the "Company") and U.S. Bank, N.A., as successor to State
Street Bank and Trust Company of California, N.A., a national banking
association organized and existing under the laws of the United States of
America (the "Paying Agent"), relating to the Zero Coupon Convertible
Subordinated Debentures due 2018 of the Company (the "Debentures"), that at the
option of the holder thereof (the "Holder"), each Debenture will be purchased by
the Company for $459.64 per $1,000 principal amount at maturity of the
Debentures (the "Purchase Price"), subject to the terms and conditions of the
Indenture and this Company Notice, including the accompanying Purchase Notice
(the "Option"). Holders may surrender their Debentures from January 17, 2003,
through 5:00 p.m., New York City time, on February 18, 2003. This Company Notice
is being sent pursuant to the provisions of Section 3.8 of the Indenture and
paragraph 6 of the Debentures.
TO EXERCISE YOUR OPTION TO HAVE THE COMPANY PURCHASE THE DEBENTURES AND
RECEIVE PAYMENT OF $459.64 PER $1,000 PRINCIPAL AMOUNT AT MATURITY OF THE
DEBENTURES ("$1,000 PRINCIPAL AMOUNT"), YOU MUST VALIDLY SURRENDER THE
DEBENTURES AND THE REQUIRED DOCUMENTS TO THE PAYING AGENT (AND NOT HAVE
WITHDRAWN SUCH DEBENTURES), PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON
TUESDAY, FEBRUARY 18, 2003 (THE "PURCHASE DATE"). HOLDERS THAT SURRENDER
THROUGH DEPOSITORY TRUST COMPANY ("DTC") NEED NOT SUBMIT A PHYSICAL PURCHASE
NOTICE TO THE PAYING AGENT IF SUCH HOLDERS COMPLY WITH THE TRANSMITTAL
PROCEDURES OF DTC FOR PUT BONDS. SURRENDERED DEBENTURES MAY BE WITHDRAWN AT
ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON TUESDAY, FEBRUARY 18,
2003. THE RIGHTS OF HOLDERS TO SURRENDER DEBENTURES EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON TUESDAY, FEBRUARY 18, 2003.
The addresses for the Paying Agent are as follows:
In Person: By Registered or Certified Mail or
Overnight Courier:
Paula Oswald
U.S. Bank, N.A. U.S. Bank, N.A.
633 West Fifth Street, 12th Floor 2 Avenue de Lafayette
Los Angeles, California 90071 Corporate Trust Window, 5th Floor
(213) 362-7338 (phone) Boston, MA 02111-1724
(213) 362-7357 (fax)
or
U.S. Bank, N.A.
61 Broadway, 15th Floor
New York, NY 10006
Attention: Corporate Trust
Administration -
Western Digital Technologies, Inc.
Zero Coupon Convertible Subordinated
Debentures due 2018
Additional copies of this Company Notice may be obtained from the Paying
Agent at its addresses set forth above or from the Company's Investor Relations
at (800) 695-6399.
The date of this Company Notice is January 17, 2003
TABLE OF CONTENTS
PAGE
SUMMARY TERM SHEET.......................................................... 1
IMPORTANT INFORMATION CONCERNING THE OPTION................................. 5
1. Information Concerning the Company.............................. 5
2. Information Concerning the Debentures........................... 5
2.1 The Company's Obligation to Purchase the Debentures....... 5
2.2 Purchase Price............................................ 6
2.3 Conversion Rights of the Debentures....................... 6
2.4 Market for the Debentures and Western Digital Common
Stock..................................................... 6
2.5 Redemption................................................ 7
2.6 Fundamental Change........................................ 7
2.7 Subordination............................................. 8
3. Procedures to be Followed by Holders Electing to Surrender
Debentures for Purchase......................................... 8
3.1 Method of Delivery........................................ 8
3.2 Purchase Notice........................................... 8
3.3. Debenture Delivery........................................ 9
3.4 Notice of Guaranteed Delivery............................. 9
4. Right of Withdrawal............................................. 11
5. Payment for Surrendered Debentures.............................. 11
6. Debentures Acquired............................................. 11
7. Plans or Proposals of the Company and Western Digital........... 11
8. Interests of Directors, Executive Officers and Affiliates of
the Company and Western Digital in the Debentures............... 12
9. Purchases of Debentures by the Company, Western Digital and
their Respective Affiliates..................................... 13
10. Tax Considerations.............................................. 13
10.1 U.S. Federal Income Tax Considerations.................... 13
10.2 Sale of Debentures Pursuant to the Option................. 14
10.3 Backup Withholding........................................ 15
11. Additional Information.......................................... 15
12. No Solicitations................................................ 16
13. Definitions..................................................... 16
14. Conflicts....................................................... 16
No person has been authorized to give any information or to make any
representations other than those contained in this Company Notice and
accompanying Purchase Notice and, if given or made, such information or
representations must not be relied upon as having been authorized. This Company
Notice and accompanying Purchase Notice do not constitute an offer to buy or the
solicitation of an offer to sell securities in any circumstances or jurisdiction
in which such offer or solicitation is unlawful. The delivery of this Company
Notice shall not under any circumstances, create any implication that the
information contained herein is current as of any time subsequent to the date of
such information. None of the Company, Western Digital Corporation, or their
respective boards of directors or employees, are making any representation or
recommendation to any Holder as to whether or not to surrender such Holder's
Debentures. You should consult your own financial and tax advisors and must make
your own decision as to whether to surrender your Debentures for purchase and,
if so, the amount of Debentures to surrender.
SUMMARY TERM SHEET
The following are answers to some of the questions that you may have about
the Option. To understand the Option fully and for a more complete description
of the terms of the Option, we urge you to read carefully the remainder of this
Company Notice and the accompanying Purchase Notice because the information in
this summary is not complete, and those documents contain additional important
information. We have included page references to direct you to a more complete
description of the topics in this summary.
- - WHO IS OFFERING TO PURCHASE MY DEBENTURES?
Western Digital Technologies, Inc. (formerly, Western Digital Corporation), a
Delaware corporation (the "Company"), is offering to purchase its Zero Coupon
Convertible Subordinated Debentures due 2018 (the "Debentures"). (Page 5)
- - WHAT SECURITIES ARE YOU SEEKING TO PURCHASE?
We are offering to purchase all of the Debentures surrendered at the option
of the holder thereof (the "Holder"). As of January 15, 2003, there was
$160,897,000 aggregate principal amount at maturity of Debentures outstanding.
The Debentures were issued under an Indenture, dated February 18, 1998, as
amended (the "Indenture"), between the Company and U.S. Bank, N.A., as successor
to State Street Bank and Trust Company of California, a national banking
association organized and existing under the laws of the United States of
America (the "Paying Agent"). (Pages 5-7)
- - HOW MUCH ARE YOU OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
Pursuant to the Indenture, we will pay a purchase price of $459.64 per $1,000
principal amount of the Debentures (the "Purchase Price") with respect to any
and all Debentures validly surrendered and not withdrawn. The Company has
elected to make the payment of the Purchase Price in cash. If all outstanding
Debentures are validly surrendered for purchase and not withdrawn, the aggregate
Purchase Price would be approximately $74,000,000. (Page 6)
- WHAT IS THE MARKET VALUE OF THE DEBENTURES?
There is no established market for trading in the Debentures, except for
limited and sporadic quotations. To the extent available, Holders are urged to
obtain current market quotations for the Debentures prior to making any decision
to surrender Debentures for purchase pursuant to the Option. (Pages 6-7)
- - WHY ARE YOU MAKING THE OFFER?
The Company is required to make the offer pursuant to the terms of the
Debentures and the Indenture. (Page 5)
1
- - WHAT DO THE BOARDS OF DIRECTORS OF WESTERN DIGITAL AND THE COMPANY THINK OF
THE OPTION?
Although the Company's board of directors has approved the terms of the
Option included in the Indenture, neither the board of directors for the Company
nor for Western Digital Corporation, the sole stockholder of the Company
("Western Digital") is making any recommendation as to whether you should
surrender your Debentures for purchase. You must make your own decision whether
to surrender your Debentures for purchase and if so, the number of Debentures to
surrender. (Page 6)
- - WHEN DOES THE OPTION EXPIRE?
The Option expires February 18, 2003, at 5:00 p.m., New York City time. The
Company does not intend to extend the period Holders have to accept the Option.
(Page 6)
- - WHAT ARE THE CONDITIONS TO THE PURCHASE BY THE COMPANY OF THE DEBENTURES?
Provided that the purchase by the Company of validly surrendered Debentures
is not unlawful, such purchase will not be subject to any other conditions.
(Page 6)
- - HOW DO I SURRENDER MY DEBENTURES?
To surrender your Debentures for purchase pursuant to the Option, you must
deliver the required documents to the Paying Agent no later than 5:00 p.m., New
York City time, on February 18, 2003.
- - A Holder whose Debentures are held in certificated form must properly
complete and execute the Purchase Notice, and deliver such notice to the
Paying Agent, with any other required documents and the certificates
representing the Debentures to be surrendered for purchase.
- - A Holder whose Debentures are held by a broker, dealer, commercial bank,
trust company or other nominee must contact such nominee if such Holder
desires to surrender his or her Debentures and instruct such nominee to
surrender the Debentures on the Holder's behalf.
- - Holders who are Depository Trust Company ("DTC") participants should
surrender their Debentures electronically through DTC's Participant
Terminal System for handling put bonds. Holders that surrender through DTC
need not submit a physical Purchase Notice to the Paying Agent if such
Holders comply with the transmittal procedures of DTC.
(Pages 8-11)
- - IF I SURRENDER, WHEN WILL I RECEIVE PAYMENT FOR MY DEBENTURES?
We will accept for payment all validly surrendered Debentures immediately
upon expiration of the Option. We will promptly forward to the Paying Agent the
appropriate amount of cash
2
required to pay the Purchase Price for the surrendered Debentures, and the
Paying Agent will promptly distribute the cash to the Holders. (Page 11)
- - UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY SURRENDERED DEBENTURES FOR
PURCHASE?
You can withdraw previously surrendered Debentures at any time until 5:00
p.m., New York City time, on February 18, 2003. (Page 11)
- - HOW DO I WITHDRAW PREVIOUSLY SURRENDERED DEBENTURES FOR PURCHASE?
To withdraw previously surrendered Debentures, you must deliver a validly
executed notice of withdrawal substantially in the form enclosed, or a facsimile
of one, to the Paying Agent prior to 5:00 p.m., New York City time, on February
18, 2003. Holders that withdraw through DTC need not submit a physical notice of
withdrawal to the Paying Agent if such Holders comply with the withdrawal
procedures of DTC. (Page 11)
- - DO I NEED TO DO ANYTHING IF I DO NOT WISH TO SURRENDER MY DEBENTURES?
No. If you do not deliver a properly completed and duly executed Purchase
Notice before the expiration of the Option, we will not purchase your
Debentures, and such Debentures will remain outstanding, subject to their
existing terms. (Page 8)
- - IF I CHOOSE TO SURRENDER MY DEBENTURES FOR PURCHASE, DO I HAVE TO SURRENDER
ALL OF MY DEBENTURES?
No. You may surrender all of your Debentures for purchase, a portion of your
Debentures, or none of your Debentures. If you wish to surrender a portion of
your Debentures for purchase, however, you must surrender your Debentures in
$1,000 principal amount at maturity ("$1,000 principal amount") or an integral
multiple thereof. (Page 8)
- - IF I DO NOT SURRENDER MY DEBENTURES FOR PURCHASE, WILL I CONTINUE TO BE ABLE
TO EXERCISE MY CONVERSION RIGHTS?
Yes. If you do not surrender your Debentures for purchase, your conversion
rights will not be affected. You will continue to have the right to convert each
$1,000 principal amount of a Debenture into 14.935 shares of common stock of
Western Digital, subject to adjustment as specified in the Indenture. (Page 6)
- - IF I AM A U.S. RESIDENT FOR U.S. FEDERAL INCOME TAX PURPOSES, WILL I HAVE TO
PAY TAXES IF I SURRENDER MY DEBENTURES FOR PURCHASE IN THE OPTION?
The receipt of cash in exchange for Debentures pursuant to the Option will be
a taxable transaction for U.S. federal income tax purposes. You should consult
with your own tax advisor regarding the actual tax consequences to you. (Pages
13-15)
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- - WHO IS THE PAYING AGENT?
U.S. Bank, N.A., as successor to State Street Bank and Trust Company of
California, N.A. is trustee for the Debentures, and is serving as Paying Agent
in connection with the Option. Its address and telephone number are set forth on
the front cover page of this Company Notice.
- - WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE OPTION?
Questions and requests for assistance in connection with the surrender of
Debentures for purchase in the Option may be directed to Steven M. Slavin, the
Company's Vice President, Taxes and Treasurer, at (949) 672-7826.
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IMPORTANT INFORMATION CONCERNING THE OPTION
1. INFORMATION CONCERNING THE COMPANY. Western Digital Technologies, Inc.
(formerly, Western Digital Corporation), a Delaware corporation (the "Company"),
is offering to purchase its Zero Coupon Convertible Subordinated Debentures due
2018 (the "Debentures").
The Company designs, develops, manufactures and markets hard drives featuring
leading-edge technology. A hard drive is a storage device found in most
computers that stores data on one or more rotating magnetic disks that provide
fast access to data that must be readily available to users of computers or
other devices. The Company's hard drives are used in desktop personal computers,
servers, network attached storage devices, video game consoles, digital video
recording devices and satellite set-top boxes.
On April 6, 2001, the Company and its parent, Western Digital Corporation, a
Delaware corporation ("Western Digital") effected a holding company
organizational structure pursuant to a merger under Section 251(g) of the
Delaware General Corporation Law. Prior to the merger, the common stock of the
Company was traded on the New York Stock Exchange (the "NYSE"). By virtue of the
merger, all of the Company's outstanding capital stock was converted, on a share
for share basis, into capital stock of Western Digital, and Western Digital
assumed the obligations of the Company, without releasing the Company, under the
Indenture for the Debentures. The Company reserves the right to transfer or
assign, in whole or in part, to one or more of our affiliates, including Western
Digital, the right to purchase the Debentures surrendered, provided such
transfer or assignment will not relieve the Company or Western Digital of their
obligations under the Indenture.
The address of the principal executive offices of the Company and Western
Digital is 20511 Lake Forest Drive, Lake Forest, California 92630-7741. The
telephone number there is (949) 672-7000.
2. INFORMATION CONCERNING THE DEBENTURES. The Debentures were issued under an
Indenture, dated February 18, 1998, as amended (the "Indenture"), between the
Company and U.S. Bank, N.A., as successor to State Street Bank and Trust Company
of California, N.A., a national banking association organized and existing under
the laws of the United States of America (the "Paying Agent"). The yield to
maturity of the Debentures is 5.25% per annum (computed on a semi-annual bond
equivalent basis). The Debentures mature on February 18, 2018.
The Indenture was amended pursuant to the First Supplemental Indenture, dated
as of April 6, 2001, by and among the Company, Western Digital and the Paying
Agent (the "Supplemental Indenture") in connection with the creation of the
holding company organizational structure discussed above. The Supplemental
Indenture provides, among other things, for the assignment of the rights and
obligations of the Company under the Indenture to Western Digital, without
releasing the Company, and that upon conversion of the Debentures pursuant to
paragraph 9 of the Debentures Holders will receive common stock of Western
Digital in lieu of common stock of the Company.
2.1. THE COMPANY'S OBLIGATION TO PURCHASE THE DEBENTURES. Pursuant to the
Indenture, unless earlier redeemed, the Company is obligated to purchase all
Debentures validly surrendered for purchase and not withdrawn, at the Holder's
option on February 18, 2003, February 18, 2008 and February 18, 2013. The
purchase price on such dates shall equal
5
the Issue Price of $354.71 plus accrued Original Issue Discount (as defined in
the Indenture) as of the applicable purchase date.
The Option will expire at 5:00 p.m., New York City time, on February 18,
2003. Provided that the purchase by the Company of validly surrendered
Debentures is not unlawful, such purchase will not be subject to any other
conditions.
2.2. PURCHASE PRICE. Pursuant to the Indenture, the purchase price to be paid
by the Company for the Debentures on February 18, 2003 is $459.64 per $1,000
principal amount at maturity (the "Purchase Price"). The Purchase Price will be
paid in cash with respect to any and all Debentures validly surrendered for
purchase and not withdrawn. If all outstanding Debentures are validly
surrendered for purchase and not withdrawn, the aggregate Purchase Price would
be approximately $74,000,000. Original Issue Discount shall cease to accrue on
the Purchase Date for Debentures validly surrendered for purchase and not
withdrawn. Debentures surrendered for purchase will be accepted only in
principal amounts at maturity equal to $1,000 ("$1,000 principal amount") or
integral multiples thereof.
The Purchase Price is based solely on the requirements of the Indenture and
bears no relationship to the market price of the Debentures or the Western
Digital common stock into which the Debentures are convertible. Thus, the
Purchase Price may be significantly higher or lower than the current market
price of the Debentures. Holders of Debentures are urged to obtain the best
available information, to the extent available, as to potential current market
prices of the Debentures before making a decision with respect to whether to
surrender their Debentures for purchase.
None of the Company, Western Digital, or their respective boards of
directors or employees are making any recommendation to Holders as to whether to
surrender or refrain from surrendering Debentures for purchase pursuant to this
Company Notice. Each Holder must make his or her own decision whether to
surrender his or her Debentures for purchase and, if so, the principal amount of
Debentures to surrender based on their own assessment of current market value
and other relevant factors.
2.3. CONVERSION RIGHTS OF THE DEBENTURES. The Debentures are convertible into
the common stock of Western Digital in accordance with and subject to the terms
of the Indenture and paragraph 9 of the Debentures. The conversion rate of the
Debentures as of January 17, 2003 is 14.935 shares of Western Digital common
stock per $1,000 principal amount of the Debentures. The Paying Agent is
currently acting as Conversion Agent for the Debentures.
Holders that do not surrender their Debentures for purchase pursuant to
the Option will maintain the right to convert their Debentures into shares of
Western Digital's common stock. Any Debentures as to which a Purchase Notice has
been given may be converted only if the applicable Purchase Notice has been
validly withdrawn in accordance with the terms of the Indenture, which are
described in Section 4 below.
2.4. MARKET FOR THE DEBENTURES AND WESTERN DIGITAL COMMON STOCK. There is no
established market for trading in the Debentures, except for limited and
sporadic quotations. To the extent the Debentures are traded, prices of
Debentures may fluctuate widely depending on trading volume, the balance between
buy and sell orders, prevailing interest rates, the
6
Company's operating results and the market for similar securities. Holders of
Debentures are urged to obtain the best available information as to potential
current market prices of the Debentures before making a decision with respect to
whether to surrender their Debentures for purchase. The Debentures are held
through DTC, which is the sole record holder of the Debentures. As of January
15, 2003, there was $160,897,000 aggregate principal amount of Debentures at
maturity outstanding.
The common stock of Western Digital into which the Debentures are
convertible is listed on the NYSE, under the symbol "WDC". The following table
sets forth, for the fiscal quarters indicated, the high and low sales prices of
the common stock of Western Digital as reported on the NYSE. Western Digital has
not paid any dividends on its common stock and does not intend to pay any cash
dividends on its common stock in the foreseeable future.
HIGH LOW
YEAR ENDED JUNE 29, 2001
First Quarter...................................... $6.44 $3.56
Second Quarter..................................... $6.81 $2.19
Third Quarter...................................... $5.94 $2.31
Fourth Quarter..................................... $5.58 $2.98
YEAR ENDED JUNE 28, 2002
First Quarter...................................... $4.06 $1.95
Second Quarter..................................... $6.79 $2.15
Third Quarter...................................... $7.75 $5.20
Fourth Quarter..................................... $7.55 $3.07
YEAR ENDED JUNE 27, 2003
First Quarter...................................... $5.49 $2.98
Second Quarter..................................... $8.96 $4.12
Third Quarter (through January 15, 2003)........... $8.31 $6.07
On January 15, 2003, the last reported sales price of the common stock of
Western Digital on the NYSE was $7.71 per share. As of such date there were
195,628,464 shares outstanding of common stock of Western Digital. We urge you
to obtain current market information, to the extent available for the
Debentures, and for the common stock of Western Digital before making any
decision to surrender, your Debentures pursuant to the Option.
2.5 REDEMPTION. The Debentures are not redeemable by the Company prior
to February 18, 2003. Beginning on February 18, 2003, the Debentures are
redeemable for cash at any time at the option of the Company, in whole or in
part, at a redemption price equal to the Issue Price plus accrued Original Issue
Discount to the date of redemption.
2.6. FUNDAMENTAL CHANGE. The Debentures may be redeemed at the option of
the Holder if there is a Fundamental Change (as defined in the Indenture) at a
redemption price equal to the Issue Price plus accrued Original Issue Discount
to the date of redemption, subject to adjustment in certain circumstances.
7
2.7. SUBORDINATION. The Debentures are unsecured and subordinated in
right of payment to all existing and future Senior Indebtedness (as defined in
the Indenture) of the Company and effectively subordinated in right of payment
to all indebtedness and other liabilities of the Company's subsidiaries. The
Debentures are fully and unconditionally guaranteed by Western Digital.
The Company has a three-year senior credit facility that provides up to
$125 million in revolving credit (subject to outstanding letters of credit and a
borrowing base calculation). As of January 15, 2003, the Company had letters of
credit outstanding for approximately $30 million. The senior credit facility
matures on September 20, 2003. As of January 15, 2003, there were no borrowings
under the facility and the Company and its subsidiaries had no other borrowings.
The senior credit facility, and borrowings under any comparable or replacement
credit facilities entered into by the Company in the future, will be Senior
Indebtedness.
3. PROCEDURES TO BE FOLLOWED BY HOLDERS ELECTING TO SURRENDER
DEBENTURES FOR PURCHASE. You will not be entitled to receive the Purchase Price
for your Debentures unless you validly surrender the Debentures or meet the
conditions of guaranteed delivery set forth below on or before 5:00 p.m., New
York City time, on the Purchase Date. Only registered Holders are authorized to
surrender their Debentures for purchase. Holders may surrender for purchase some
or all of their Debentures, however any Debentures surrendered must be in $1,000
principal amount or an integral multiple thereof.
If Holders do not validly surrender their Debentures on or before 5:00
p.m., New York City time, on February 18, 2003, such Debentures will remain
outstanding and be subject to the existing terms of the Debentures.
3.1. METHOD OF DELIVERY. The method of delivery of Debentures, the
related Purchase Notice and all other required documents, including delivery
through DTC and acceptance through DTC's Participant Terminal System, is at the
election and risk of the person surrendering such Debentures and delivering such
Purchase Notice and, except as expressly otherwise provided in the Purchase
Notice, delivery will be deemed made only when actually received by the Paying
Agent. The date of any postmark or other indication of when a Debenture or the
Purchase Notice was sent will not be taken into account in determining whether
such materials were timely received. If such delivery is by mail, it is
suggested that you use properly insured, registered mail with return receipt
requested, and that you mail the required documents sufficiently in advance of
the Purchase Date to permit delivery to the Paying Agent prior to 5:00 p.m., New
York City time, on February 18, 2003.
3.2. PURCHASE NOTICE. Pursuant to the Indenture, the Purchase Notice must
contain:
- - the certificate number of the Debentures being surrendered for purchase;
- - the portion of the principal amount of the Debentures being surrendered for
purchase, which portion must be in principal amounts of $1,000 at maturity or
an integral multiple thereof; and
8
- - a statement that such Debentures shall be purchased as of the Purchase Date
pursuant to the terms and conditions specified in the Indenture and paragraph
6 of the Debentures.
Holders that surrender through DTC need not submit a physical Purchase
Notice to the Paying Agent if such Holders comply with the transmittal
procedures of DTC.
3.3. DEBENTURE DELIVERY.
Debentures in Certificated Form. To receive the Purchase Price, Holders of
Debentures in certificated form must deliver to the Paying Agent the Debentures
to be surrendered for purchase and the accompanying Purchase Notice or a copy
thereof, on or before 5:00 p.m., New York City time, on the Purchase Date. If
you desire to surrender your Debentures and you cannot comply with the
procedures for surrender on a timely basis, you must comply with the procedures
discussed below for guaranteed delivery.
Debentures Held Through a Custodian. A Holder whose Debentures are held by
a broker, dealer, commercial bank, trust company or other nominee must contact
such nominee if such Holder desires to surrender his or her Debentures and
instruct such nominee to surrender the Debentures for purchase on the Holder's
behalf.
Debentures in Global Form. A Holder who is a DTC participant, may elect to
surrender to the Company its beneficial interest in the Debentures by:
- delivering to the Paying Agent's account at the DTC through the
DTC's book-entry system its beneficial interest in the Debentures on
or prior to 5:00 p.m., New York City time, on the Purchase Date; and
- electronically transmitting their acceptance through DTC's
Participant Terminal System for handling put bonds, subject to the
terms and procedures of that system. In surrendering through DTC's
Participant Terminal System for handling put bonds, the electronic
instructions sent to the DTC by the Holder, and transmitted by the
DTC to the Paying Agent will acknowledge, on behalf of the DTC and
the Holder, receipt by the Holder of and agreement to be bound by
the Purchase Notice.
DEBENTURES AND THE PURCHASE NOTICE (WHERE REQUIRED) MUST BE DELIVERED TO
THE PAYING AGENT TO COLLECT PAYMENT. DELIVERY OF DOCUMENTS TO THE COMPANY,
WESTERN DIGITAL OR DTC DOES NOT CONSTITUTE DELIVERY TO THE PAYING AGENT.
3.4. NOTICE OF GUARANTEED DELIVERY. If you desire to surrender Debentures for
purchase pursuant to the Option and
- - certificates representing such Debentures are not immediately available,
- - time will not permit your Purchase Notice, certificates representing such
Debentures and all other required documents to reach the Paying Agent prior
to 5:00 p.m., New York City time, on the Purchase Date, or
9
- - the procedures for book-entry transfer (including delivery of an agent's
message) cannot be completed prior to 5:00 p.m., New York City time, on the
Purchase Date,
you may nevertheless surrender such Debentures with the effect that such
surrender will be deemed to have been received prior to 5:00 p.m., New York City
time, on the Purchase Date, if all the following conditions are satisfied:
- such surrender is made by or through an eligible guarantor
institution (each, an "Eligible Institution"), as defined in Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act");
- prior to 5:00 p.m., New York City time, on the Purchase Date, the
Paying Agent has received from such Eligible Institution, at the
address of the Paying Agent set forth on the front cover page of
this Company Notice, a properly completed and duly executed
Notice of Guaranteed Delivery (by facsimile transmission, mail or
hand delivery) substantially in the form enclosed herewith,
setting forth the name(s) and address(es) of the Holder(s) and
the principal amount at maturity of Debentures being surrendered
for purchase, and stating that the surrender is being made
thereby and guaranteeing that, within three NYSE trading days
after the date of execution of the Notice of Guaranteed Delivery,
a properly completed and executed Purchase Notice (or a manually
signed facsimile thereof), together with any required signature
guarantees (or in the case of a book-entry transfer, an agent's
message) and certificates evidencing the Debentures (or
confirmation of book-entry transfer of such Debentures into the
Paying Agent's account with DTC), and any other documents
required by the Purchase Notice, will be deposited by such
Eligible Institution with the Paying Agent; and
- such Purchase Notice (or manually signed facsimile thereof),
properly completed and duly executed, with any required signature
guarantees (or in the case of a book-entry transfer, an agent's
message), together with certificates for all physically delivered
Debentures in proper form for transfer (or confirmation of
book-entry transfer of such Debentures into the Paying Agent's
account with DTC) and all other required documents are received
by the Paying Agent within three NYSE trading days after the date
of execution of the Notice of Guaranteed Delivery.
The term "agent's message" means a message, transmitted to DTC and
received by the Paying Agent and forming a part of a book-entry transfer, that
states that DTC has received an express acknowledgement that the beneficial
owner of the Debentures agrees to be bound by the Purchase Notice and that the
Company may enforce the Purchase Notice against such person.
Under no circumstances will Debentures accrete in value by reason of any
delay in making payment to any person using the guaranteed delivery procedures.
The Purchase Price
10
for Debentures surrendered pursuant to the guaranteed delivery procedures will
be the same as that for Debentures delivered to the Paying Agent on or before
the Purchase Date.
4. RIGHT OF WITHDRAWAL. Debentures surrendered for purchase may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Purchase
Date. You may also withdraw surrendered Debentures at any time after the
expiration of 40 business days from the date of this Company Notice if your
Debentures have not yet been accepted for payment. In order to withdraw your
Debentures you must deliver to the Paying Agent a validly executed notice of
withdrawal, substantially in the form enclosed herewith, containing:
- the certificate number(s) and principal amount of the Debentures
with respect to which such notice of withdrawal is being submitted;
- the principal amount at maturity, if any, of such Debentures which
remain subject to the original Purchase Notice and which have been
or will be delivered for purchase by the Company; and
- the signature of the Holder in the same manner as the original
signature on the Purchase Notice by which such Debentures were
surrendered for purchase.
The signature on the notice of withdrawal must be guaranteed by an
Eligible Institution unless such Debentures have been surrendered for the
account of an Eligible Institution. Holders that withdraw through DTC need not
submit a physical notice of withdrawal to the Paying Agent if such Holders
comply with the withdrawal procedures of DTC. Any Debentures properly withdrawn
will be deemed not validly surrendered for purposes of the Option. Withdrawn
Debentures may be re-surrendered by following the surrender procedures described
in Section 3 above.
5. PAYMENT FOR SURRENDERED DEBENTURES. The Purchase Price for any
Debentures validly surrendered for purchase and not withdrawn shall be paid to
the Holder promptly following the later of the Purchase Date and the time of
delivery of the Debentures to the Paying Agent. Each Holder of a beneficial
interest in the Debentures that has properly delivered such beneficial interest
for purchase by the Company through DTC and not validly withdrawn such delivery
prior to 5:00 p.m., New York City time, on the Purchase Date, will receive the
Purchase Price through the facilities of DTC promptly following the Purchase
Date.
The total amount of funds required by the Company to purchase all of the
Debentures is approximately $74,000,000 (assuming all outstanding Debentures are
validly surrendered for purchase and accepted for payment). In the event any
Debentures are surrendered and accepted for payment, the Company intends to use
its cash on hand to purchase the Debentures. The Company does not believe that
it requires an alternative financing plan.
6. DEBENTURES ACQUIRED. Any Debentures purchased by the Company
pursuant to the Option will be cancelled by the Trustee, pursuant to the terms
of the Indenture.
7. PLANS OR PROPOSALS OF THE COMPANY AND WESTERN DIGITAL. The data
storage design and manufacturing industry is highly competitive. In the normal
course of business, Western Digital and the Company are continuously pursuing
potential acquisitions and/or dispositions that we believe would enhance our
operating results. Western Digital and the
11
Company expect to continue to pursue such acquisitions and dispositions under
appropriate circumstances. The consideration used in such acquisitions may be
debt (which may be senior or pari passu to the Debentures) or equity of the
Company or Western Digital. The Company and Western Digital currently have no
plans which we believe would be material to a Holder's decision to surrender
Debentures for purchase in the Option, which relate to or which would result in:
- - any extraordinary transaction, such as a merger, reorganization or
liquidation, involving the Company, Western Digital or any of their
respective subsidiaries;
- - any purchase, sale or transfer of a material amount of assets of the Company,
Western Digital or any of their respective subsidiaries;
- - any material change in the present dividend rate or policy, or indebtedness
or capitalization of the Company or Western Digital;
- - any change in the present board of directors or management of the Company or
Western Digital, including, but not limited to, any plans or proposals to
change the number or the term of directors or to fill any existing vacancies
on the board or to change any material term of the employment contract of any
executive officer;
- - any other material change in the corporate structure or business of the
Company or Western Digital;
- - any class of equity security of the Company or Western Digital to be delisted
from a national securities exchange or cease to be authorized to be quoted in
an automated quotation system operated by a national securities association;
- - any class of equity security of the Company or Western Digital becoming
eligible for termination of registration under Section 12(g)(4) of the
Exchange Act;
- - the suspension of the obligation of the Company or Western Digital to file
reports under Section 15(d) of the Exchange Act;
- - the acquisition by any person of additional securities of the Company or
Western Digital, or the disposition of securities of the Company or Western
Digital; or
- - any changes in the charter, bylaws or other governing instruments of the
Company or Western Digital or other actions that could impede the acquisition
of control of the Company or Western Digital.
8. INTERESTS OF DIRECTORS, EXECUTIVE OFFICERS AND AFFILIATES OF THE
COMPANY AND WESTERN DIGITAL IN THE DEBENTURES. To the knowledge of the Company
and Western Digital:
- - none of the Company, Western Digital or their respective executive officers,
directors, subsidiaries or other affiliates beneficially own any of the
Debentures;
- - none of the officers or directors of the subsidiaries of the Company or
Western Digital beneficially own any of the Debentures;
12
- - the Company will not purchase any Debentures from such persons; and
- - during the 60 days preceding the date of this Company Notice, none of the
Company, Western Digital or such officers, directors or affiliates have
engaged in any transactions in the Debentures.
A list of the directors and executive officers of Western Digital and the
Company is attached to this Company Notice as Annex A. As of January 15, 2003,
Western Digital's 12 executive officers and directors as a group beneficially
owned 4,999,400 shares of common stock of Western Digital, 3,629,216 of which
could have been acquired within 60 days after January 15, 2003, through the
exercise of stock options. In connection with their services to the Company and
Western Digital, each of our directors and executive officers has entered into
one or more agreements with Western Digital pursuant to which such executive
officer or director has been granted stock options, phantom stock units and/or
restricted stock of Western Digital.
Except as described above, none of the Company, Western Digital or, to our
knowledge, any of our affiliates, directors or executive officers, is a party to
any contract, arrangement, understanding or agreement with any other person
relating, directly or indirectly, to the Option or with respect to any of our
securities, including, but not limited to, any contract, arrangement,
understanding or agreement concerning the transfer or the voting of the
securities, joint ventures, loan or option arrangements, puts or calls,
guarantees of loans, guarantees against loss or the giving or withholding of
proxies, consents or authorizations.
9. PURCHASES OF DEBENTURES BY THE COMPANY, WESTERN DIGITAL AND THEIR
RESPECTIVE AFFILIATES. We and our affiliates, including our executive officers
and directors, will be prohibited under applicable federal securities laws from
purchasing Debentures (or the right to purchase Debentures) outside of the
Option until at least the tenth business day after the Purchase Date. Following
such time, if any Debentures remain outstanding, we and our affiliates may
purchase Debentures in the open market, in private transactions, through a
subsequent tender offer, or otherwise, any of which may be consummated at
purchase prices higher or lower than the Purchase Price. Any decision to
purchase Debentures after the Option will depend upon many factors, including
the market price of the Debentures, the amount of Debentures surrendered for
purchase pursuant to the Option, the business and financial position of the
Company and Western Digital and general economic and market conditions.
10. TAX CONSIDERATIONS.
10.1 U.S. FEDERAL INCOME TAX CONSIDERATIONS. The following discussion,
which is for general information only, is a summary of the material U.S. federal
income tax considerations relating to the surrender of Debentures for purchase
pursuant to the Option. This discussion does not purport to be a complete
analysis of all potential tax effects of the Option. This summary is based upon
laws, regulations, rulings and decisions currently in effect, all of which are
subject to change or differing interpretations at any time, possibly with
retroactive effect. Moreover, this summary applies only to Holders who hold
Debentures as "capital assets" within the meaning of Section 1221 of the
Internal Revenue Code of 1986, as amended (the "Code"), and does not purport to
deal with persons in special tax situations, such as financial institutions,
insurance companies, regulated investment companies, tax exempt investors,
dealers in Debentures and currencies, U.S. expatriates, persons holding
Debentures
13
as a position in a "straddle," "hedge," "conversion" or other integrated
transaction for tax purposes, or U.S. Holders (as defined below) whose
functional currency is not the U.S. dollar. Further, this discussion does not
address the consequences under U.S. federal estate or gift tax laws or the laws
of any U.S. state or locality or any foreign jurisdiction.
For purposes of this discussion, a "U.S. Holder" means a beneficial owner
of Debentures that is, for U.S. federal income tax purposes:
- - a citizen or resident of the United States;
- - a corporation (or other entity that has elected to be treated as a
corporation) created or organized in or under the laws of the United States
or any political subdivision thereof;
- - an estate the income of which is subject to U.S. federal income tax
regardless of its source;
- - a trust if a court within the United States is able to exercise primary
jurisdiction over its administration and one or more U.S. persons have
authority to control all of its substantial decisions; and
- - certain electing trusts that were in existence and treated as U.S. trusts on
August 20, 1996.
As used herein, the term "non-U.S. Holder" means a beneficial owner of
Debentures, other than a partnership, that is not a U.S. Holder as defined
above. The tax treatment of a partnership that holds Debentures will generally
depend on the status of the partners and the activities of the partnership.
Holders that are partnerships should consult their own tax advisors about the
U.S. federal income tax consequences of surrendering Debentures pursuant to the
Option.
10.2. SALE OF DEBENTURES PURSUANT TO THE OPTION. A U.S. Holder who
receives cash in exchange for Debentures pursuant to the Option will recognize
taxable gain or loss equal to the difference between (1) the amount of cash
received, and (2) the Holder's adjusted tax basis in the Debentures surrendered.
A U.S. Holder's adjusted tax basis in the Debentures will generally equal the
U.S. Holder's cost of the Debentures increased by any original issue discount
previously included in income by such Holder with respect to such Debentures.
Subject to the market discount rules discussed below, such gain or loss
generally will be capital gain or loss, and will be long-term capital gain or
loss if the Holder held the Debentures for more than one year. Long-term capital
gain of non-corporate taxpayers is generally subject to a maximum tax rate of
20%. The deductibility of capital losses is subject to limitations.
A U.S. Holder who acquired Debentures at a market discount generally will
be required to treat any gain recognized upon the purchase of its Debentures
pursuant to the Option as ordinary income rather than capital gain to the extent
of the accrued market discount, unless the U.S. Holder elected to include market
discount in income as it accrued. Subject to a de minimis exception, "market
discount" generally equals the excess of the "adjusted issue price" (the sum of
the issue price of the Debentures and the aggregate amount of original issue
discount
14
includible in gross income by all prior holders of the Debentures) of the
Debentures at the time acquired by the Holder over the Holder's initial tax
basis in the Debentures.
A non-U.S. Holder who receives cash in exchange for Debentures pursuant to
the Option generally will not be subject to U.S. federal income tax on any gain
recognized, unless (1) the gain is effectively connected with the conduct by
such non-U.S. Holder of a trade or business, or, in the case of a treaty
resident, is attributable to a permanent establishment or a fixed base in the
United States, or (2) such non-U.S. Holder is an individual who is present in
the U.S. for 183 days or more in the taxable year of disposition and certain
other conditions are met, in which case the gain will be taxable in the same
manner as described above with respect to U.S. Holders.
10.3. BACKUP WITHHOLDING. Under the backup withholding provisions of the
Code, a U.S. Holder who surrenders Debentures for purchase will generally be
subject to backup withholding at the rate of 30% of any gross payment if such
Holder fails to provide a certified Taxpayer Identification Number (Employer
Identification Number or Social Security Number). U.S. Holders electing to
surrender Debentures should complete the Substitute Form W-9 which is part of
the Purchase Notice and attach it to the Debentures being surrendered. If you
are a U.S. Holder exempt from backup withholding under the Code, please provide
your Taxpayer Identification Number and so indicate in Part 2 of the Substitute
Form W-9. If a non-U.S. Holder holds Debentures through the non-U.S. office of a
non-U.S. related broker or financial institution, backup withholding and
information reporting generally will not be required. Information reporting, and
possibly backup withholding, may apply if the Debentures are held by a non-U.S.
Holder through a U.S. broker or financial institution or the U.S. office of a
non-U.S. broker or financial institution and the non-U.S. Holder fails to
provide appropriate information (on Form W-8BEN or other applicable form).
Non-U.S. Holders should consult their tax advisors with respect to the
application of U.S. information reporting and backup withholding rules to the
disposition of Debentures pursuant to the Option.
ALL DESCRIPTIONS OF TAX CONSIDERATIONS ARE FOR YOUR GUIDANCE ONLY AND ARE
NOT TAX ADVICE. WE RECOMMEND THAT YOU CONSULT WITH YOUR TAX AND FINANCIAL
ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES OF SURRENDERING YOUR DEBENTURES
FOR PURCHASE, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND FOREIGN
TAX LAWS, BEFORE SURRENDERING YOUR DEBENTURES.
11. ADDITIONAL INFORMATION. Western Digital is subject to the reporting
and other informational requirements of the Exchange Act and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "SEC"). Such reports, proxy statements
and other information can be inspected and copied at the Public Reference
Section of the SEC located at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington D.C. 20549. Copies of such material can be obtained from the
Public Reference Section of the SEC at prescribed rates. Such material may also
be accessed electronically by means of the SEC's home page on the Internet at
www.sec.gov. Such reports and other information concerning Western Digital may
also be inspected at the offices of the NYSE located at 20 Broad Street, New
York, New York 10005.
Western Digital and the Company have filed with the SEC a Tender Offer
Statement on Schedule TO, pursuant to Section 13(e)(4) of the Exchange Act and
Rule 13e-4 promulgated
15
thereunder, furnishing certain information with respect to the Option. The
Tender Offer Statement on Schedule TO, together with any exhibits and any
amendments thereto, may be examined and copies may be obtained at the same
places and in the same manner as set forth above.
The documents listed below contain important information about Western
Digital, the Company and their financial condition:
- - Western Digital's annual report on Form 10-K for its fiscal year ended June
28, 2002, filed with the SEC on September 25, 2002;
- - All other reports filed by Western Digital with the SEC pursuant to Section
13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered
by the Form 10-K mentioned above;
- - All documents filed with the SEC by Western Digital pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this
Company Notice;
- - The description of Western Digital's common stock contained in Western
Digital's Registration Statement on Form 8-B (No. 1-08703), filed with the
SEC on April 3, 1987, and any amendments or reports filed for the purpose of
updating such description; and
- - The description of Western Digital's preferred stock purchase rights
contained in Western Digital's Registration Statement on Form 8-A12B (No.
1-08703), filed with the SEC on April 6, 2001, and any amendments or reports
filed for the purpose of updating such description.
In the event of conflicting information in these documents, the
information in the latest filed documents should be considered correct.
12. NO SOLICITATIONS. We have not employed any persons to make
solicitations or recommendations in connection with the Option.
13. DEFINITIONS. All capitalized terms used but not specifically defined
herein shall have the meanings given such terms in the Indenture.
14. CONFLICTS. In the event of any conflict between this Company Notice
and the accompanying Purchase Notice on the one hand and the terms of the
Indenture or any applicable laws on the other hand, the terms of the Indenture
or applicable laws, as the case may be, will control.
16
NONE OF THE COMPANY, WESTERN DIGITAL, OR THEIR RESPECTIVE BOARDS OF
DIRECTORS OR EMPLOYEES IS MAKING ANY RECOMMENDATION TO ANY HOLDER AS TO WHETHER
TO SURRENDER OR REFRAIN FROM SURRENDERING DEBENTURES PURSUANT TO THIS COMPANY
NOTICE. EACH HOLDER MUST MAKE HIS OR HER OWN DECISION WHETHER TO SURRENDER HIS
OR HER DEBENTURES AND, IF SO, THE PRINCIPAL AMOUNT OF DEBENTURES TO SURRENDER
BASED ON THEIR OWN ASSESSMENT OF CURRENT MARKET VALUE AND OTHER RELEVANT
FACTORS.
Western Digital Technologies, Inc.
Western Digital Corporation
January 17, 2003
17
ANNEX A
MEMBERS OF OUR BOARD OF DIRECTORS AND OUR EXECUTIVE OFFICERS
The following table sets forth the names of each of the members of our
Board of Directors and our executive officers.
NAME POSITION(S) HELD
- ---- ----------------
Matthew E. Massengill Chairman and Chief Executive Officer
Thomas E. Pardun Director
I.M. Booth Director
Peter D. Behrendt Director
Kathleen A. Cote Director
Henry T. DeNero Director
Michael D. Lambert Director
Roger H. Moore Director
Arif Shakeel President and Chief Operating Officer
D. Scott Mercer Senior Vice President and Chief Financial
Officer
David C. Fetah Vice President, Human Resources
Raymond M. Bukaty Vice President, General Counsel and
Secretary
The business address of each person set forth above is c/o Western Digital
Corporation, 20511 Lake Forest Drive, Lake Forest, California 92630-7741. The
telephone number there is (949) 672-7000.