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WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
of the purchase price as a one-time charge for in-process research and development of $12.0 million to the
Company's results of operations in 1999. Approximately $0.4 million of assets were acquired in the
acquisition. The Company continued the development eÅorts of Connex after the acquisition and the
Consolidated Statements of Operations for 1999 and 2000 include development and administrative expenses in
the results of operations associated with these eÅorts. Connex began shipping products during the third quarter
of 2000.
Service Center Operations
During the quarter ended June 30, 2000, the Company entered into an agreement with Magnetic Data
Technologies Pte Ltd., a Singapore private limited company (""MDTPL''), for the outsourcing of the
Company's customer service center. As a result of the agreement, the Company transferred to MDTPL, Ñxed
assets, inventory and other assets totaling $11.7 million in exchange for notes receivable of $11.7 million due
over 3 years, bearing interest at 9%. The agreement contains certain cancellation provisions. No gain or loss
was recorded on the transaction. The note receivable is classiÑed in other assets on the consolidated balance
sheets. As of June 30, 2000, the outstanding balance on the note was $7.8 million.
Note 9. Loss Per Share
The following table illustrates the computation of basic and diluted loss per share:
Years Ended
June 27, July 3, June 30,
1998 1999 2000
(in thousands, except per share amounts)
Numerator:
Numerator for basic and diluted loss per share Ì net
loss ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $(290,217) $(492,690) $(188,016)
Denominator:
Denominator for basic loss per share Ì weighted
average number of common shares outstanding
during the period ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 87,525 89,478 122,624
Incremental common shares attributable to exercise
of outstanding options and ESPP contributions ÏÏÏ Ì Ì Ì
Denominator for diluted loss per share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 87,525 89,478 122,624
Basic and diluted loss per share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ (3.32) $ (5.51) $ (1.53)
As of June 27, 1998, July 3, 1999 and June 30, 2000, 12.4 million, 17.8 million and 20.9 million shares,
respectively, relating to the possible exercise of outstanding stock options were not included in the
computation of diluted loss per share. Also, for the same periods, an additional 19.4, 19.4 and 8.4 million
shares, respectively, issuable upon conversion of the Debentures were excluded from the computation of
diluted loss per share. The eÅects of these items were not included in the computation of diluted loss per share
as their eÅect would have been anti-dilutive.
Note 10. 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.
57