Western Digital 2000 Annual Report Download - page 18

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
The Company's worldwide headquarters, located on leased property in Irvine, California, house
management, research and development, administrative and sales personnel. The Company has extended the
current lease of this facility through January 2001. During the fourth quarter of 2000, the Company signed a
new 10-year lease agreement and plans to relocate its worldwide headquarters to a facility in Lake Forest,
California, commencing in November 2000. The Company leases facilities in San Jose, California and Irvine,
California, for research and development activities. The San Jose leases expire at various times beginning in
December 2002 through July 2006. The Irvine research and development facility lease expires in Septem-
ber 2010. Western Digital owns a manufacturing facility in Kuala Lumpur, Malaysia. 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).
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.
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 and the Company has Ñled motions to recover a portion of its legal and
other costs of defense. The Company does not believe that the outcome of this matter will have a material
adverse eÅect on its consolidated Ñnancial position, results of operation 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
not believe that the outcome of this matter will have a material adverse eÅect on its consolidated Ñnancial
position, results of operation or liquidity.
On October 23, 1998, Censtor Corporation (""Censtor'') initiated an arbitration proceeding against the
Company in California, alleging that it is owed royalties under a license agreement between Censtor and the
Company. In response, the Company Ñled a complaint in federal court in California seeking a determination
that the patents at issue are invalid. The federal court action has been stayed pending completion of the
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