Western Digital 2007 Annual Report Download - page 44

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From time to time, we modify the timing of payments to our vendors. We make these modifications primarily to manage
our vendor relationships and to manage our cash flows, including our cash balances. Generally, we make the payment
modifications through negotiations with or by granting to or receiving from our vendors’ payment term accommodations.
Investing Activities
Net cash used in investing activities for 2007 was $383 million as compared to $303 million for 2006 and
$274 million for 2005. During 2007, cash used in investing activities consisted of $324 million for capital expenditures
and $59 million for short-term investments. During 2006, cash used in investing activities consisted of $268 million for
capital expenditures and $35 million for short-term investments. The increase in capital expenditures in 2007 compared
to 2006 primarily consists of equipment purchased to support our investments in advanced head technologies, new
product platforms and capacity for our broadening and growing product portfolio. The increase in capital expenditures in
2006 compared to 2005 was primarily a result of assets purchased to upgrade our head manufacturing capabilities,
increased desktop and mobile hard drive production capabilities and for the normal replacement of existing assets.
Additionally, during 2006, we purchased our previously leased head wafer manufacturing facility in Fremont, California
for $27 million. For 2008, we expect capital additions to be between $600 million and $650 million, of which
approximately $200 million will be utilized for the expansion of our head wafer fabrication capacity. Depreciation and
amortization for 2008 is expected to be between $270 and $290 million.
Financing Activities
Net cash used in financing activities for 2007 was $86 million as compared to net cash provided by financing
activities of $1 million for 2006 and net cash used in financing activities of $7 million for 2005. The net cash used in
financing activities in 2007 consisted of $73 million used for repurchases of our common stock and $43 million used for
repayments of long-term debt, offset by $30 million received through the exercise of common stock options and our
Employee Stock Purchase Plan. The net cash provided by financing activities in 2006 consisted of $78 million received
through the exercise of common stock options and our Employee Stock Purchase Plan, offset by $54 million used in
repurchases of our common stock and $23 million used for repayments of long-term debt. The net cash used in financing
activities in 2005 consisted of $45 million used for repurchases of our common stock and $20 million for debt
repayments, offset by $58 million received upon issuance of common stock under employee plans.
Off-Balance Sheet Arrangements
Other than facility and equipment lease commitments incurred in the normal course of business and certain
indemnification provisions (see Capital Commitments below), we do not have any off-balance sheet financing
arrangements or liabilities, guarantee contracts, retained or contingent interests in transferred assets, or any obligation
arising out of a material variable interest in an unconsolidated entity. We do not have any majority-owned subsidiaries
that are not included in the consolidated financial statements. Additionally, we do not have an interest in, or relationships
with, any special-purpose entities.
Capital Commitments
The following is a summary of our significant contractual cash obligations and commercial commitments as of
June 29, 2007 (in millions):
Total
Less than
1 Year 1-3 Years 3-5 Years
More than
5 Years
Long-term debt, including current portion . . . $ — $ — $ — $— $—
Capital lease obligations . . . . . . . . . . . . . . . 22 12 10 — —
Operating leases . . . . . . . . . . . . . . . . . . . . . 44 11 20 8 5
Purchase obligations(1)(2) . . . . . . . . . . . . . . 3,338 2,584 754 — —
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . $3,404 $2,607 $784 $ 8 $ 5
(1) Includes long-term purchase agreements entered into before August 16, 2007.
(2) These amounts do not reflect the reduction to commitments resulting from our planned acquisition of Komag.
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