Western Digital 2015 Annual Report Download - page 52

achievement of pre-defined quantity or quality specifications or future price negotiations. The estimated related
minimum purchase requirements are included in “Purchase obligations” in the table above. We have also entered into
long-term purchase agreements with various component suppliers that carry fixed volumes and pricing which obligate
us to make certain future purchases, contingent on certain conditions of performance, quality and technology of the
vendor’s components. These arrangements are included under “Purchase obligations” in the table above.
We enter into, from time to time, 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 Part I,
Item 1A of this Annual Report on Form 10-K for a discussion of risks related to commitments.
Foreign Exchange Contracts
We purchase short-term, foreign exchange contracts to hedge the impact of foreign currency fluctuations on cer-
tain 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 a description of our
current foreign exchange contract commitments and Part II, Item 8, Notes 1 and 12 of the Notes to Consolidated
Financial Statements, included in this Annual Report on Form 10-K.
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 agreements, products or 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.
Unrecognized Tax Benefits
As of July 3, 2015, the amount of unrecognized tax benefits, including related accrued interest and penalties,
was $350 million, of which $291 million could result in potential cash payments. We are not able to provide a
reasonable estimate of the timing of future tax payments related to these obligations.
See Part II, Item 8, Note 9 in the Notes to Consolidated Financial Statements included in this Annual Report on
Form 10-K for information regarding our total tax liability for unrecognized tax benefits.
Stock Repurchase Program
Our Board of Directors previously authorized $3.0 billion for the repurchase of our common stock. On February 3,
2015, our Board of Directors authorized an additional $2.0 billion for the repurchase of our common stock and approved
the extension of our stock repurchase program to February 3, 2020. We repurchased 9.6 million shares of our common
stock for a total cost of $970 million in 2015. The remaining amount available to be purchased under our stock
repurchase program as of July 3, 2015 was $2.2 billion. Subsequent to July 3, 2015 and through August 13, 2015, we
repurchased an additional 0.7 million shares of our common stock for a total cost of $60 million. We may continue to
repurchase our common stock as we deem appropriate. Repurchases under our stock repurchase program may be made in
the open market or in privately negotiated transactions and may be made under a Rule 10b5-1 plan. We expect stock
repurchases to be funded principally by operating cash flows and borrowings under our credit agreement.
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