WESTERN DIGITAL REPORTS SECOND QUARTER RESULTS
WESTERN DIGITAL REPORTS SECOND QUARTER RESULTS IRVINE, Calif., Feb. 4 /PRNewswire/ -- Western Digital Corp.
(NYSE: WDC) today reported a net loss of $20.4 million, or $.70 per share, on revenue of $216.3 million for the second fiscal quarter ended Dec. 28, 1991, vs. a net loss of $98.5 million, or $3.37 per share on revenue of $230 million for the second quarter of fiscal 1991. The fiscal 1992 second quarter loss includes a one-time gain of $15.8 million from the sale of the company's local area network board business; results for the year-ago period included a pre-tax charge of $66 million related to its restructuring plan.
The net loss for the first six months of fiscal 1992 totaled $58.3 million, or $2.00 per share, on revenue of $415.4 million vs. a net loss of $96.8 million, or $3.31 per share, on revenue of $485.8 million in the first half of fiscal 1991. Roger W. Johnson, chairman, president and chief executive officer, stated, "There's no way that our continuing losses can be called acceptable. Our Q2 results do, however, reflect some very positive operational trends that indicate our recovery plan is right on track. Substantial improvements in our disk drive business more than offset continued weakness in our LSI product line as well as the loss of revenue and margin associated with the sale of our LAN business. The LAN business was solidly profitable on revenue of $31 million in the previous quarter. Our continued commitment to research and development in the face of losses also is paying off in revenue from new products. Assuming no further deterioration in the economy, we expect this will accelerate in the next several quarters. "We are particularly pleased with the ongoing improvement in the company's asset management, which helped us to fund the quarter-to- quarter revenue growth. Cash balances at the quarter's end were $34.9 million, compared with $37.7 million at the end of the first quarter and $36.1 million at the beginning of the fiscal year. It's important to note that the company's accounts payable practices remain well within industry standards as we continue to work closely with our suppliers in expanding our drive production. "The strength in our drives business is being fueled by demand for our mid-capacity 3.5-inch Caviar and Piranha product families, both of which we will be expanding later this year with higher capacity offerings to meet customers' increasing storage requirements for their faster, more powerful, cost-reduced desktop machines. In the second quarter, shipments of voice coil drives grew 78 percent and our overall drive revenue increased 45 percent from the immediately preceding quarter. "On the margin side, cost reduction programs, yield improvements and more favorable pricing contributed to the improving disk drive picture. Price declines slowed significantly, a welcome respite from the nearly 60 percent annualized rate of just a few quarters ago. A continuation of this trend would be of major benefit to the company in the quarters ahead as we continue to ramp our production of higher capacity drives. "In our graphics business, revenue was relatively flat from the previous quarter. Both margins and unit volume should increase by Q4 as we begin volume shipping several new products, including the WD90C31 Windows Accelerator chip for desktops and the 3.3-volt WD90C26 chip for laptops and notebooks. "Sluggish demand in Q2 for product related to portable machines contributed to lower revenue and margins in our systems logic product line, where we have adopted a niche strategy aimed at the smaller machines. This business will continue to track trends in the laptop/notebook market, and growth isn't expected until the second half of calendar 1992. "Despite the encouraging developments in our disk drive business and high expectations for our new graphics products, we remain cautious about the economic outlook and visibility within our industry. Neither the economy, our industry nor we are by any means out of the woods, and our primary focus will continue to be on improving our gross margins and generating cash through improved production processes and cost reductions, aggressive inventory management and continued tight control of capital expenditures and SG&A expense." Western Digital Corp., headquartered in Irvine, is a multinational company that designs and manufactures semiconductor, subsystem and intelligent drive products for OEMs and resellers which serve the microcomputer industry. The company's storage, video and systems logic products are designed to work in concert, and the resulting Interarchitecture products yield increased system functionality and performance. WESTERN DIGITAL CORP. Consolidated Statements of Operations (In thousands, except per share data) Three months ended Six months ended Dec. 28, Dec. 29, Sept. 28, Dec. 28, Dec. 29, 1991 1990 1991 1991 1990 Revenue $216,300 $229,970 $199,145 $415,445 $485,789 Cost of sales 205,624 201,359 187,604 393,228 399,804 Gross profit 10,676 28,611 11,541 22,217 85,985 Operating expenses: Research & development 19,035 23,270 20,564 39,599 43,450 Selling, general and administrative 22,140 32,529 23,111 45,251 65,315 Restructuring charges --- 66,040 --- --- 66,040 Total 41,175 121,839 43,675 84,850 174,805 Loss from operations (30,499) (93,228) (32,134) (62,633) (88,820) Net interest expense 5,397 2,664 5,661 11,058 4,866 Gain on sale of LAN business 15,784 --- --- 15,784 --- Loss before income taxes (20,112) (95,892) (37,795) (57,907) (93,686) Income taxes 265 2,600 149 414 3,152 Net loss ($20,377) ($98,492) ($37,944) ($58,321) ($96,838) Primary loss per common and common equivalent share ($.70) ($3.37) ($1.30) ($2.00) ($3.31) Common and common equivalent shares 29,208 29,209 29,208 29,208 29,265 WESTERN DIGITAL CORP. Consolidated Statements of Financial Position Assets (In thousands, except share data) Dec. 28, Sept. 28, 1991 1991 Current assets: Cash and cash equivalents $34,935 $37,675 Accounts receivable, net (a) 128,999 90,263 Inventories 148,964 168,547 Prepaid expenses 2,939 2,202 Total current assets 315,837 298,687 Property and equipment, net 213,506 230,195 Intangible and other assets 40,397 36,851 Total assets $569,740 $565,733 Liabilities and Shareholders' Equity Dec. 28, Sept. 28, 1991 1991 Current liabilities: Short-term bank borrowings and current installments of long-term debt (a) $11,061 $7,099 Current installments of capital lease obligations 8,804 9,423 Accounts payable 99,949 112,997 Accrued expenses 46,783 46,737 Total current liabilities 166,597 176,256 Convertible subordinated debentures 59,000 59,000 Long-term debt (a) 196,913 160,909 Capital lease obligations 6,405 8,366 Deferred income taxes 14,044 14,044 Total liabilities 442,959 418,575 Shareholders' equity: Preferred stock, $.10 par value --- --- Common stock, $.10 par value 2,921 2,921 Additional paid-in capital 157,075 157,075 Accumulated deficit (33,215) (12,838) Total shareholder's equity 126,781 147,158 Total liabilities and shareholders' equity $569,740 $565,733 (a) Effective Nov. 6, 1991, the company entered into a new trade receivables purchase and sale agreement with a bank. This new agreement takes the form of an accounts receivable financing arrangement; the original agreement constituted a sale of accounts receivable. The effect of the new agreement has been reflected in the balance sheet as of Dec. 28, 1991. -0- 2/4/92 /CONTACT: Robert J. Blair of Western Digital Corp., 714-932-7834/ (WDC) CO: Western Digital Corporation ST: California IN: CPR SU: ERN
EH-JL -- LA003 -- 6499 02/04/92 08:11 EST
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|Date:||Feb 4, 1992|
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