Summary
Western Digital Corporation (WDC) announced a significant restructuring initiative through the closure of its head component front end wafer manufacturing facility in Odawara, Japan. This strategic move, expected to be substantially complete by the end of the third quarter of fiscal 2016, is aimed at reducing manufacturing costs. The company anticipates total pre-tax charges of approximately $200 million related to this closure. These charges will include asset write-offs, employee termination costs, and other exit-related expenses, with a substantial portion expected to be cash expenditures.
Key Highlights
- 1Closure of the Odawara, Japan wafer manufacturing facility.
- 2Expected total pre-tax charges of approximately $200 million.
- 3Charges to be primarily incurred in the third quarter of fiscal 2016.
- 4Breakdown of charges: ~$90M asset charges, ~$90M employee termination, ~$20M other costs.
- 5Approximately $110 million of the total charges are expected to be cash expenditures.
- 6The closure is part of a strategy to reduce manufacturing costs.
Frequently Asked Questions
Western Digital is closing the Odawara, Japan wafer manufacturing facility to reduce its overall manufacturing costs.
The company estimates total pre-tax charges of approximately $200 million, consisting of asset charges, employee termination costs, and other exit-related expenses. Approximately $110 million of these charges are expected to be cash expenditures.
The closure is expected to be substantially completed by the end of the third quarter of fiscal 2016. The majority of the charges are also expected to be incurred in the third quarter of fiscal 2016.
The company cautions that these are forward-looking statements and actual results could differ materially. The charges or cash expenditures may exceed the estimated amounts, or occur in different fiscal periods than expected, due to various factors including economic conditions, competitive landscape, and technological advancements.