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WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
SANavigator operated as a division of Connex from its inception in November 1999 until March 22,
2001, at which time it was incorporated as a wholly owned subsidiary of Connex. SANavigator was formed to
develop and market storage area network (SAN) management software and released its Ñrst product in
October 2000.
On July 1, 2001, the Company decided to discontinue Connex and SANavigator. Connex and
SANavigator are separate major lines of business and legal entities with separate facilities, operations,
management teams, and classes of end-user customers from the Company's hard drive business. As such, the
disposals have been accounted for as discontinued operations and, accordingly, the consolidated Ñnancial
statements for all periods presented have been reclassiÑed. On August 8, 2001 substantially all of the operating
assets of Connex were sold to Quantum Corporation for cash proceeds of $11.0 million, and on September 21,
2001 substantially all of the operating assets of SANavigator were sold to McData Corporation for cash
proceeds of $29.8 million. Approximately $4.1 million of the combined cash proceeds will be escrowed for one
year pending expiration of customary indemniÑcation periods. The transactions are expected to generate gains,
which will be recognized during the Ñrst quarter of 2002, when realized. At June 29, 2001 and June 30, 2000
the net liabilities of discontinued operations consisted principally of individually immaterial amounts of
inventories, Ñxed assets, accounts payable and accrued compensation. Combined operating results for Connex
and SANavigator in 1999, 2000 and 2001 were as follows:
Year Ended
July 3, June 30, June 29,
1999(1) 2000 2001
Revenues ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ Ì $ 381 $ 557
Operating losses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $(20,200) $(25,413) $(32,667)
(1) 1999 operating losses include in-process research and development charges of $12.0 million.
Note 11. Quarterly Results of Operations (unaudited)
First(1), (5) Second(2), (5) Third(3), (5) Fourth(4), (5)
(in thousands, except per share amounts)
2000
Revenues, net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 406,957 $560,174 $516,502 $473,566
Gross proÑt (loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (65,003) 20,555 12,032 42,021
Operating loss ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (185,919) (83,316) (78,069) (6,572)
Income (loss) from continuing operations (191,248) (86,344) (64,580) 12,670
Loss from discontinued operations ÏÏÏÏÏÏ (5,689) (5,130) (6,089) (8,505)
Net income (loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (106,315) (15,197) (70,669) 4,165
Basic and diluted earnings (loss) per
shareÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ (1.11) $ (.13) $ (.53) $ .03
2001
Revenues, net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 424,366 $561,570 $511,723 $455,733
Gross proÑt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 25,936 67,541 63,295 50,966
Operating income (loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (35,588) 1,999 985 (1,293)
Income (loss) from continuing operations (37,220) 2,838 1,037 (53,747)
Loss from discontinued operations ÏÏÏÏÏÏ (8,045) (9,827) (7,156) (7,639)
Net income (loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (35,526) 3,587 (5,748) (61,176)
Basic and diluted earnings (loss) per
shareÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ (0.24) $ 0.02 $ (0.03) $ (0.34)
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