Adjustments Coincide with Expiration of External Supply Obligations
PENANG, MALAYSIA and SAN JOSE, CALIF. – Mar. 20, 2008 – Western Digital® (NYSE: WDC) announced today that the majority of its media and substrate supply obligations to external customers related to its acquisition of Komag in 2007 will be fulfilled by May 2008, as planned, and that consequently WD will streamline its media and substrate operations to serve only its own hard drive business.
As part of the realignment of media manufacturing resources, the company will focus its Penang, Malaysia facilities solely on the production of magnetic media, while substrate plating and polishing operations, currently in Penang, will be consolidated into the company’s two other Malaysian substrate facilities in Kuching and Johor Bahru, maximizing operational efficiencies. Additionally, some positions in the company’s San Jose, Calif. development and media operations facility will be affected with the cessation of external business. As a result of these actions, WD will reduce its labor force by approximately 800 employees – approximately 770 in Malaysia and approximately 30 in the United States – representing less than 2 percent of the company’s total worldwide employee population of approximately 42,500.
The total cost of these actions is currently estimated to be approximately $16 million, including termination benefits and asset impairment charges. The portion of these costs, if any, that will be charged against the company’s third quarter operating results and the portion, if any, that will be reflected as an adjustment to the Komag acquisition purchase price allocation is still being determined and will be separately disclosed during WD’s third quarter earnings release conference call in April. This realignment is consistent with the integrated media operations business model guidance previously provided by the company.
Don Blake, vice president and general manager, WD Media, said, “This action sizes our media and substrate operation to the current demands of a single customer-WD’s hard drive business. It efficiently streamlines our media and substrate operations while enhancing focus on the development of future manufacturing technologies to support media and substrate requirements resulting from continued success in our hard drive business.”
WD, one of the storage industry’s pioneers and long-time leaders, provides products and services for people and organizations that collect, manage and use digital information. The company produces reliable, high-performance hard drives that keep users’ data accessible and secure from loss. WD applies its storage expertise to consumer products for external, portable and shared storage applications.
WD was founded in 1970. The company’s storage products are marketed to leading systems manufacturers, selected resellers and retailers under the Western Digital and WD brand names.
Visit the Investor section of the company’s Web site (www.westerndigital.com) to access a variety of financial and investor information.