Exhibit 99.1
Company contacts:
Bob Blair
Investor Relations
949.672.7834
robert.blair@wdc.com
Steve Shattuck
Public Relations
949.672.7817
steve.shattuck@wdc.com
FOR IMMEDIATE RELEASE:
WESTERN DIGITAL ANNOUNCES LITIGATION SETTLEMENT;
UPDATES FISCAL 2003 FINANCIAL RESULTS
LAKE FOREST, Calif. -- Aug. 25, 2003 -- Western Digital Corp. (NYSE: WDC) today
announced the settlement of its litigation with Cirrus Logic Inc. (NYSE: CRUS).
Under the terms of the settlement, Western Digital will make a one-time payment
to Cirrus Logic on or before October 17, 2003 of $45 million. As reflected in
the company's public filings, Western Digital had previously recorded an
obligation totaling approximately $26.5 million relating to this dispute. In
accordance with generally accepted accounting principles, the difference of
approximately $18.5 million between the settlement amount and the amount
previously recorded will be reflected as a charge to cost of revenue in the
fourth quarter ended June 27, 2003.
The company on July 24, 2003 reported net income of $48.8 million and $200
million for its fourth quarter and year ended June 27, 2003, respectively, or
earnings per share of $.23 and $.97, respectively. After taking into account the
litigation settlement and related tax impact, the updated net income amounts for
the above periods are $31 million and $182 million,
Western Digital Announces Litigation Settlement;
Updates Fiscal 2003 Financial Results
Page 2
respectively, or earnings per share of $.15 and $.89, respectively. Updated
statements of income and balance sheets are attached to this release. The
company's financial statements will be filed in its Form 10-K as scheduled in
late September.
"We are pleased to resolve this long-standing dispute," said Matt
Massengill, chairman and chief executive officer of Western Digital. "With this
settlement, we avoid the continued expense and distraction of this litigation
and potential trial, and remain focused on our business."
In July 2001, Western Digital stopped paying Cirrus Logic for read channel
chips that had been delivered, cancelled all outstanding purchase orders and
filed suit against Cirrus Logic for breach of contract and other claims
resulting from Cirrus' role as a strategic supplier of read channel chips for
the company's hard drives. In August 2001, Cirrus Logic filed a cross-complaint,
seeking compensatory damages of approximately $53 million, including the
disputed payable of $26.5 million mentioned above. The matter was scheduled to
go to trial in December 2003.
Western Digital has not purchased read channel devices from Cirrus Logic
since July 2001 and all of its current and planned future products incorporate
read channel chips from other suppliers.
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 produces reliable,
high-performance hard drives that keep users' data close-at-hand and secure from
loss.
Western Digital Announces Litigation Settlement;
Updates Fiscal 2003 Financial Results
Page 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.
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Western Digital and the Western Digital logo are trademarks of Western Digital
Technologies, Inc. Other marks may be mentioned herein that belong to other
companies.
WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED YEAR ENDED
------------------------------------------- ---------------------------
JUN. 27, MAR. 28, JUN. 28, JUN. 27, JUN. 28,
2003 2003 2002 2003 2002
----------- ----------- ----------- ----------- -----------
Revenue, net $ 680,279 $ 705,839 $ 540,672 $ 2,718,517 $ 2,151,152
Cost of revenue 587,085 583,819 466,654 2,275,579 1,869,551
----------- ----------- ----------- ----------- -----------
Gross margin 93,194 122,020 74,018 442,938 281,601
----------- ----------- ----------- ----------- -----------
Operating expenses:
Research and development 33,636 34,726 30,628 134,686 120,128
Selling, general and administrative . 31,130 30,205 26,161 121,407 110,797
----------- ----------- ----------- ----------- -----------
Total operating expenses 64,766 64,931 56,789 256,093 230,925
----------- ----------- ----------- ----------- -----------
Operating income 28,428 57,089 17,229 186,845 50,676
Net interest and other (expense) income 3,902 (316) (537) 1,537 1,371
----------- ----------- ----------- ----------- -----------
Income from continuing operations
before income taxes 32,330 56,773 16,692 188,382 52,047
Income tax (expense) benefit (1,293) (2,271) (484) (7,588) 1,140
----------- ----------- ----------- ----------- -----------
Income from continuing operations 31,037 54,502 16,208 180,794 53,187
Discontinued operations -- -- (3,090) 1,320 12,241
----------- ----------- ----------- ----------- -----------
Net income $ 31,037 $ 54,502 $ 13,118 $ 182,114 $ 65,428
=========== =========== =========== =========== ===========
Diluted income per common share:
Income from continuing operations $ .15 $ .26 $ .08 $ .88 $ .28
Discontinued operations -- -- (.01) .01 .06
----------- ----------- ----------- ----------- -----------
$ .15 $ .26 $ .07 $ .89 $ .34
=========== =========== =========== =========== ===========
Common shares used in computing per share amounts:
Diluted 213,473 207,724 197,714 205,536 193,708
=========== =========== =========== =========== ===========
WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
JUN. 27, JUN. 28,
2003 2002
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 393,241 $ 223,728
Accounts receivable, net 243,903 218,832
Inventories 97,768 73,395
Other 9,153 13,205
--------- ---------
Total current assets 744,065 529,160
Property and equipment, net 122,087 107,520
--------- ---------
Total assets $ 866,152 $ 636,680
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 352,274 $ 302,998
Accrued expenses 153,406 103,474
Convertible debentures -- 86,204
--------- ---------
Total current liabilities 505,680 492,676
Other liabilities 33,080 41,142
Shareholders' equity:
Common stock 2,036 1,954
Additional paid-in capital 659,534 617,200
Accumulated deficit (334,178) (516,292)
--------- ---------
Total shareholders' equity 327,392 102,862
--------- ---------
Total liabilities and shareholders' equity $ 866,152 $ 636,680
========= =========