Western Digital 2007 Annual Report Download - page 45

In anticipation of our planned acquisition of Komag, we intend to fund the transaction, including the expected
repurchase of Komag’s convertible notes due 2014 and related fees and expenses, through a combination of our cash and
proceeds from a senior unsecured term bridge loan facility of up to $1.3 billion.
Long-Term Debt
We maintained a $125 million credit facility (“Senior Credit Facility”) with a termination date of September 20,
2009. The facility provided for a revolving credit line (subject to outstanding letters of credit and a borrowing base
calculation) and a term loan. The term loan was paid in full as of March 30, 2007, a letter of termination was submitted
for the Senior Credit Facility on June 28
th
, 2007, and termination was finalized during the first quarter of 2008.
Purchase Orders
In the normal course of business, we issue purchase orders to suppliers for the purchase of hard drive components
used to manufacture our products. These purchase orders generally cover forecasted component supplies needed for
production during the next quarter, are recorded as a liability upon receipt of the components, and generally may be
changed or canceled at any time prior to shipment of the components. We may be obligated to pay for certain costs related
to changes to, or cancellation of, a purchase order, such as costs incurred for raw materials or work in process.
We have entered into long-term purchase agreements with various component suppliers. The commitments are
subject to minimum quality requirements. In addition, the dollar amount of the purchases may depend on the specific
products ordered and future price negotiations. The estimated related minimum purchase requirements are included in
“Purchase obligations” in the table above.
From time to time, we enter into other long-term purchase agreements for components with certain vendors.
Generally, future purchases under these agreements are not fixed and determinable as they depend on our overall unit
volume requirements and are contingent upon the prices, technology and quality of the supplier’s products remaining
competitive. These arrangements are not included under “Purchase obligations” in the table above. Please see Item 1A of
this Annual Report on Form 10-K for a discussion of risks related to these commitments.
Forward Exchange Contracts
We purchase short-term, forward exchange contracts to hedge the impact of foreign currency fluctuations on certain
underlying assets, liabilities and commitments for operating expenses and product costs denominated in foreign
currencies. See Part II, Item 7A, under the heading “Disclosure About Foreign Currency Risk,” for our current forward
exchange contract commitments.
Indemnifications
In the ordinary course of business, we may provide indemnifications of varying scope and terms to customers,
vendors, lessors, business partners and other parties with respect to certain matters, including, but not limited to, losses
arising out of our breach of such agreements, services to be provided by us, or from intellectual property infringement
claims made by third parties. In addition, we have entered into indemnification agreements with our directors and certain
of our officers that will require us, among other things, to indemnify them against certain liabilities that may arise by
reason of their status or service as directors or officers. We maintain director and officer insurance, which may cover
certain liabilities arising from our obligation to indemnify our directors and officers in certain circumstances.
It is not possible to determine the maximum potential amount under these indemnification agreements due to the
limited history of prior indemnification claims and the unique facts and circumstances involved in each particular
agreement. Such indemnification agreements may not be subject to maximum loss clauses. Historically, we have not
incurred material costs as a result of obligations under these agreements.
Stock Repurchase Program
Our Board of Directors has authorized us to repurchase $250 million of our common stock in open market
transactions. The term of the program is a five-year period from November 17, 2005 to November 17, 2010. We expect
stock repurchases to be funded principally by operating cash flows. During 2007, we repurchased 4.0 million shares of
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