Western Digital 2001 Annual Report Download - page 62

WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
The Company applies APB Opinion No. 25 in accounting for its stock option and ESPP plans and,
accordingly, no compensation expense has been recognized for the options in the consolidated Ñnancial
statements. Had the Company determined compensation expense based on the fair value at the grant date for
its options under SFAS 123, the Company's net loss and net loss per share would have been increased to the
amounts indicated below:
Year Ended
July 3, June 30, June 29,
1999 2000 2001
Pro forma net loss (in thousands) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $(538,637) $(227,799) $(128,642)
Pro forma net loss per share:
Basic and dilutedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ (6.02) $ (1.86) $ (0.76)
Stock Purchase Rights
In 1989, the Company implemented a plan to protect shareholders' rights in the event of a proposed
takeover of the Company. Under the plan, each share of the Company's outstanding common stock carried
one Right to Purchase Series A Junior Participating Preferred Stock (the ""Right''). The Right enabled the
holder, under certain circumstances, to purchase common stock of Western Digital or of an acquiring
company at a substantially discounted price ten days after a person or group publicly announces it has acquired
or has tendered an oÅer for 15% or more of the Company's outstanding common stock. On September 10,
1998 the Company's Board of Directors approved the adoption of a new Rights plan to replace the previous
plan, which expired in September of 1998. The Rights under the 1998 plan were similar to the rights under the
1989 plan except they were redeemable by the Company at $.01 per Right and expired in 2008. In connection
with the establishment of a holding company structure on April 6, 2001, the Company terminated the Rights
under the 1998 plan and adopted a new Rights plan. The 2001 plan is similar to the terminated 1998 plan,
except that the exercise price was reduced from $150.00 to $50.00 per share, and the expiration date for the
2001 Rights plan was extended to April 2011.
Note 7. Savings and ProÑt Sharing Plan
EÅective July 1, 1991, the Company adopted a Savings and ProÑt Sharing Plan, the Western Digital
Corporation Retirement Savings and ProÑt Sharing Plan (""the Plan''). The Plan includes an employee
401(k) plan. The Plan covers substantially all domestic employees, subject to certain eligibility requirements.
The Company may make annual contributions to the 401(k) plan at the discretion of the Board of Directors.
For 1999, 2000 and 2001 the Company made contributions to the 401(k) plan of $3.3 million, $2.3 million and
$1.7 million, respectively.
Note 8. Restructurings
1999 Restructuring Actions
In January 1999, the Company initiated a restructuring program which resulted in the combination of its
personal storage and enterprise storage divisions into a single hard drive operating unit. Accordingly, design,
manufacturing, materials, business and product marketing resources to address both the personal storage and
enterprise markets were combined. In connection with the combination, the Company's Tuas, Singapore
facility was closed and production of SCSI drives was moved to the Company's facility in Chai-Chee,
Singapore. This restructuring program, which was substantially completed by the end of the third quarter of
1999, resulted in a reduction of worldwide employee headcount of 934 employees, approximately 250 of which
were direct and indirect labor and the remainder were management, professional and administrative personnel.
A $41.0 million restructuring charge was recorded consisting of $19.6 million for the write-down of the Tuas
building and equipment to its estimated fair value of $7.8 million, based on a valuation done by an
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