Western Digital 1995 Annual Report Download - page 10

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T C    all its fiscal 1995 goals for
financial performance, and led its industry in the key measurements we
consider most important for a manufacturing company in a brutally com-
petitive industry.
We maintained our high-velocity employment of assets, and led in the
turnover of inventory, operating assets and total assets. Our finished goods
inventory of hard drives, for example, was equal to three days’production at
year’s end. Our cash conversion cycle, which measures the elapsed time from
the outlay of cash for inventories to the receipt of cash, was reduced fur-
ther to 19 days.
Reflecting our “virtual vertical integration” manufacturing strategy,
Western Digital produced $26 in sales per dollar of property, plant and
equipment last year, more than twice the average for our industry. The
Company also doubled the merchant hard drive industry’s averages with its
28 percent operating return on operating assets and with returns of 16 percent on total assets
and 32 percent on shareholders’equity.
Western Digital’s balance sheet, already the industry’s strongest, improved further as the
last of our long-term debt was extinguished. Especially satisfying was the growth of our cash
position to $308 million, and the 64 percent growth in shareholders’equity to a record $473
million.
Last year’s $55 million in capital expenditures was directed mainly to the expansion of
hard drive media production and to the retooling of our Malaysian facility into a drive
manufacturing site. This year, spending will be increased to about $125 million as we expand
the Singapore manufacturing operation, increase the size of the Malaysian facility, and make
preparations for high-performance drive production.
Western Digital’s financial disciplines have enabled the Company to grow rapidly and
profitably. We will continue to adhere to them as we extend the Western Digital record of proven
performance.
   Asset Management Leadership  .
D. Scott Mercer
Average Operating
Asset Turns
D. Scott Mercer,
Ex ecutive Vice President, Chief Financial and Administrative Officer