Western Digital 2001 Annual Report Download - page 6

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This business turned profitable in the year’s second quarter and
remained in the black through year-end. Gross margins more than
doubled, to 10.8 percent, and full-year operations produced a massive
reduction in operating losses, from $147 million to a near-breakeven
$3.6 million.
On a consolidated basis, operating expenses were cut by 13
percent and our net loss was reduced by nearly one-half. Before
non-recurring items, the net loss fell 72 percent.
The improving financial performance flowed to Western
Digital’s balance sheet as well. Debt was cut in half, working capital
increased six-fold, cash used in continuing operations was reduced by
over 40 percent, and shareholders’ equity moved back into positive
territory – a swing of $117 million. Equity growth was aided by the sale, near year’s end, of an additional nine
million shares of WD common stock to the clients of one of our substantial institutional shareholders,
Wellington Management, for $38 million.
A company-wide focus on cost controls and efficiency advances enabled Western Digital to emerge from
this period with the industry’s leanest operating expense structure, well positioned to address the emerging
opportunities for cost-efficient rotating magnetic storage.
In solidifying our place among the industry leaders, we worked closely with our recording-head and
media suppliers to achieve time-to-market and time-to-volume
leadership in the 7200 RPM segment of the hard drive business.
Drives rotating at this higher speed are preferred by users who
need top performance in high-capacity storage for music, video,
Internet downloads and other demanding applications. Western
Digital led the industry in these drives throughout the past year as
we brought to market 7200 RPM desktop hard drives with peak
capacities of 60, 80 and finally 100 gigabytes. The company’s
7200 RPM drives grew to account for 58 percent of our fourth
quarter revenue mix.
Results exclude non-recurring items.
FY1999
$214,000
FY2000 FY2001
$100,000
$150,000
$200,000
$250,000
$300,000
Dollars in thousands
$290,800
$219,700
Reduction in Desktop
OPERATING EXPENSES
Western Digital employs aggressive cost controls that
result in an expense structure regarded as the most
competitive in the hard drive industry.
FY1999
$(221,500)
Improvement in Desktop
OPERATING RESULTS
FY2000
$(250,000)
$(200,000)
$(150,000)
$(100,000)
$(50,000)
$0
Dollars in thousands
$(3,600)
FY2001
Results exclude non-recurring items.
$(147,400)
Western Digital's hard drive business achieved near
break-even results for 2001, an improvement of over
$200 million in just two years.
...business turned profitable in the year’s second quarter
and remained in the black through year-end.