Western Digital 2001 Annual Report Download - page 23

Download and view the complete annual report

Please find page 23 of the 2001 Western Digital annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 82

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82

United States, 6,630 employees in Malaysia, 27 employees in Singapore, and 78 employees at its international
sales oÇces as of June 29, 2001.
Many of the Company's employees are highly skilled, and the Company's continued success depends in
part upon its ability to attract and retain such employees. Accordingly, the Company oÅers employee beneÑt
programs which it believes are at least equivalent to those oÅered by its competitors. Despite these programs,
the Company has, along with most of its competitors, experienced diÇculty at times in hiring and retaining
certain skilled personnel. In critical areas, the Company has utilized consultants and contract personnel to Ñll
these needs until full-time employees could be recruited. The Company has never experienced a work
stoppage, none of its domestic employees are represented by a labor organization, and the Company considers
its employee relations to be good.
Item 2. Properties
During December 2000, the Company relocated its corporate headquarters from Irvine, California to
Lake Forest, California, signing a 10-year lease agreement for the Lake Forest facility. The lease for the Irvine
facility expired in January 2001. The Company's corporate headquarters houses management, research and
development, administrative and sales personnel. The Company leases one facility in San Jose, California and
one facility in Irvine, California, for research and development and new venture activities. The San Jose lease
expires in July 2006 and the Irvine research and development facility lease expires in September 2010.
Western Digital owns a manufacturing facility in Kuala Lumpur, Malaysia. The Company also leases oÇce
space in various other locations throughout the world primarily for sales and technical support.
The Company's present facilities are adequate for its current needs, although the process of upgrading its
facilities to meet technological and market requirements is expected to continue. The hard drive industry does
not generally require long lead time to develop and begin operations in new manufacturing facilities.
During 2000 the Company sold approximately 34 acres of land in Irvine, California, upon which it had
previously planned to build a new corporate headquarters, for $26 million (the approximate cost of the land).
The Company also sold its enterprise drive manufacturing facility in Tuas, Singapore for $11.0 million (for a
gain of $3.1 million) and its Rochester, Minnesota enterprise research and development facility for
$29.7 million (for a loss of $1.9 million).
Item 3. Legal Proceedings
The following discussion contains forward-looking statements within the meaning of the federal securities
laws. These statements relate to the Company's legal proceedings described below. Litigation is inherently
uncertain and may result in adverse rulings or decisions. Additionally, the Company may enter into
settlements or be subject to judgments that may, individually or in the aggregate, have a material adverse
eÅect on the Company's consolidated Ñnancial position, results of operations or liquidity. In addition, the costs
of defending such litigation, individually or in the aggregate, may be material, regardless of the outcome.
Accordingly, actual results could diÅer materially from those projected in the forward-looking statements.
In 1992 Amstrad plc (""Amstrad'') brought suit against the Company in California State Superior Court,
County of Orange, alleging that disk drives supplied to Amstrad by the Company in 1988 and 1989 were
defective and caused damages to Amstrad of not less than $186 million. The suit also sought punitive
damages. The Company denied the material allegations of the complaint and Ñled cross-claims against
Amstrad. The case was tried, and in June 1999 the jury returned a verdict in favor of Western Digital.
Amstrad has appealed the judgment. The Company does not believe that the outcome of this matter will have
a material adverse eÅect on its consolidated Ñnancial position, results of operations or liquidity.
In 1994 Papst Licensing (""Papst'') brought suit against the Company in federal court in California
alleging infringement by the Company of Ñve of its patents relating to disk drive motors that the Company
purchased from motor vendors. Later that year Papst dismissed its case without prejudice, but it has notiÑed
the Company that it intends to reinstate the suit if the Company does not enter into a license agreement with
Papst. Papst has also put the Company on notice with respect to several additional patents. The Company does
13