EX-99.1 3 a76496ex99-1.htm EXHIBIT 99.1 Western Digital Corporation Exhibit 99.1

Exhibit 99.1

Company contacts:
Bob Blair
Western Digital Investor Relations

Steve Shattuck
Western Digital Public Relations



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.


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.





(in thousands, except per share amounts)

          Three Months Ended
          Sep. 28,   Jun. 29,   Sep. 29,
          2001   2001   2000
Revenues, net
  $ 440,943     $ 455,733     $ 424,366  
Costs and expenses:
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:
Loss from continuing operations
  $ (.02 )   $ (.30 )   $ (.25 )
Discontinued operations
    .13       (.04 )     (.05 )
Extraordinary gain
Cumulative effect of change in accounting principle
                (.01 )
Basic and diluted
  $ .11     $ (.34 )   $ (.24 )
Common shares used in computing per share amounts:
Basic and diluted
    186,635       179,390       148,044  





(in thousands)

            Sep. 28,   Jun. 29,
            2001   2001
Current assets:
Cash and cash equivalents
  $ 200,582     $ 167,582  
Accounts receivable, net
    212,085       127,767  
    76,343       78,905  
Prepaid expenses and other current assets
    11,107       11,455  
Total current assets
    500,117       385,709  
Property and equipment, net
    107,759       106,166  
Other assets, net
    11,569       15,777  
Total assets
  $ 619,445     $ 507,652  
Current liabilities:
Accounts payable
  $ 319,015     $ 224,544  
Accrued expenses
    111,240       115,802  
Total current liabilities
    430,255       340,346  
Other liabilities
    38,091       38,629  
Convertible debentures
    113,974       112,491  
Minority interest
    9,470       9,383  
Shareholders’ equity:
Common stock
    1,868       1,863  
Additional paid-in capital
    586,989       586,660  
Accumulated deficit
    (561,202 )     (581,720 )
Total shareholders’ equity
    27,655       6,803  
Total liabilities and shareholders’ equity
  $ 619,445     $ 507,652