Wednesday July 21, 4:16 pm Eastern Time
Company Press Release
SOURCE: Western Digital Corporation
Western Digital Announces Fourth Quarter, Year-End Results
IRVINE, Calif., July 21 /PRNewswire/ -- Western Digital Corporation (NYSE: WDC - news) today reported revenue of $709.3 million and a net loss of $101.5 million, or $1.12 per share, for its fourth quarter ended July 3, 1999. The net loss includes a restructuring charge of approximately $20 million for the sale of the Company's media business to Komag, Inc. Excluding this charge, net loss and net loss per share would have been $81.5 million and $.90, respectively. In the year-earlier period, Western Digital reported revenue of $650.5 million and a net loss of $162.7 million, or $1.84 per share. The results for the fourth quarter of 1998 included approximately $22 million related principally to the start of the technology licensing and component supply agreement with IBM Corporation.
For fiscal 1999, the Company reported revenue of $2.8 billion and a net loss of $492.7 million, or $5.51 per share, compared with a net loss of $290.2 million, or $3.32 per share, on revenue of $3.5 billion in fiscal 1998. Both fiscal 1998 and 1999 results included previously announced restructuring and special charges.
Chuck Haggerty, chairman, president and chief executive officer of Western Digital, said: ''The fourth quarter results reflect the brutal competitive pricing in the desktop hard drive industry. Nevertheless, our strategy to compete at the major PC OEMs on the basis of performance, quality and time to market of our hard drives -- and our customer service -- produced a sequential increase in total unit shipments to 5.7 million in the fourth quarter, compared with 5.1 million units in the March quarter. Notably, we saw improved performance in our Enterprise product line, as units, revenue and gross margin were at their highest levels in three quarters. Continued improvement and solid new product execution in this area are key to Western Digital's recovery.''
''Our focus will remain on crisp execution of new product plans in both the desktop and enterprise product lines. Our roadmaps align very well with our major OEM PC and server customers, so the opportunity is there to grow the business. In addition, our efforts to diversify the business model with contributions from the AV consumer and networked attached storage spaces are on target for initial revenue by the end of calendar 1999.''
Haggerty also noted the Company's strong asset management in the fourth quarter: ''Cash for the quarter finished at expected levels of about $226 million. Our days-sales-outstanding were at 38 days, a record low level for the Company, mostly due to a refined supply/demand process. Total inventory turns were 19 -- about four turns better than the March quarter -- and our best performance since Q3 in fiscal 1997.''
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. The Company was founded in 1970 and has long been noted for its storage and end-market systems-level design knowledge. The Company's home page can be found at westerndigital.com.
This release contains forward-looking statements, including statements relating to improved performance and product execution in the enterprise and desktop product lines, growth in the Company's OEM business, and expected contributions of revenue from AV consumer and networked attached storage by the end of calendar 1999. The forward looking statements are based on current management expectations, and actual results may differ materially as a result of several factors, including: improvement in time to market and time to volume of our new hard drives; successful qualification of our drives with key OEM customers; overall supply and customer demand in the hard drive industry; changes in customer order patterns; business conditions and growth in the personal and enterprise computing industry; development of non-traditional markets for hard drives; successful development and sale of the Company's first products for the AV consumer and networked attached storage markets; and other factors discussed in our recent SEC filings. We undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of such statements.
WESTERN DIGITAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended Year Ended
July 3, June 27, Mar. 27, July 3, June 27,
1999 1998 1999 1999 1998
Revenues, net $709,302 $650,503 $668,456 $2,767,206 $3,541,525
Costs and
expenses:
Cost of
revenues 688,429 692,243 628,592 2,770,054 3,441,475
Research and
development 52,003 70,010 62,699 216,986 203,733
Selling,
general and
administrative 44,597 50,719 46,210 195,958 192,142
Restructuring
provision 20,000 -- 41,000 61,000 --
Total costs
and expenses 805,029 812,972 778,501 3,243,998 3,837,350
Operating loss (95,727) (162,469) (110,045) (476,792) (295,825)
Net interest
income (expense) (5,759) (250) (4,248) (15,898) 3,817
Loss before
income taxes (101,486) (162,719) (114,293) (492,690) (292,008)
Provision for
income taxes -- -- -- -- (1,791)
Net loss $(101,486) $(162,719) $(114,293) $(492,690) $(290,217)
Loss per
common share:
Basic $(1.12) $(1.84) $(1.27) $(5.51) $(3.32)
Diluted $(1.12) $(1.84) $(1.27) $(5.51) $(3.32)
Common shares
used in
computing per
share amounts:
Basic 90,596 88,226 89,883 89,478 87,525
Diluted 90,596 88,226 89,883 89,478 87,525
WESTERN DIGITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
July 3, June 27,
1999 1998
ASSETS
Current assets:
Cash and cash equivalents $226,147 $459,830
Accounts receivable, net 273,435 369,013
Inventories 144,093 186,516
Prepaid expenses 44,672 36,763
Total current assets 688,347 1,052,122
Property and equipment, net 237,939 346,987
Intangible and other assets, net 96,116 43,579
Total assets $1,022,402 $1,442,688
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $335,907 $330,130
Accrued expenses 280,711 258,449
Current portion of long-term
debt 10,000 0
Total current liabilities 626,618 588,579
Long-term debt 534,144 519,188
Deferred income taxes 15,430 17,163
Shareholders' equity (deficit):
Common stock, $.01 par value 906 883
Additional paid-in capital 140,145 119,026
Retained earnings
(accumulated deficit) (294,841) 197,849
Total shareholders'
equity (deficit) (153,790) 317,758
Total liabilities and
shareholders' equity
(deficit) $1,022,402 $1,442,688 |
