Western Digital 1998 Annual Report Download - page 42

Download and view the complete annual report

Please find page 42 of the 1998 Western Digital annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 61

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61

WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Use of Estimates
Company management has made a number of estimates and assumptions relating to the reporting of assets and
liabilities in conformity with generally accepted accounting principles. Actual results could differ from these
estimates.
Reclassifications
Certain prior years' amounts have been reclassified to conform to the current year presentation.
Note 2. Supplemental Financial Statement Data (in thousands)
1996 1997 1998
Net Interest Income
Interest income.............................................................................. $13,134 $ 13,223 $ 15,952
Interest expense ............................................................................ — — 12,135
Net interest income....................................................................... $13,134 $ 13,223 $ 3,817
Cash paid for interest.................................................................... $ $ $ 2,073
Inventories
Finished goods.............................................................................. $137,762 $126,363
Work in process............................................................................ 56,352 28,287
Raw materials and component parts............................................. 30,360 31,866
$224,474 $ 186,516
Property and Equipment
Land and buildings........................................................................ $ 53,080 $ 92,234
Machinery and equipment............................................................. 285,986 415,469
Furniture and fixtures.................................................................... 13,260 14,060
Leasehold improvements.............................................................. 63,335 79,490
415,661 601,253
Accumulated depreciation and amortization................................. (167,766) (254,266)
Net property and equipment.......................................................... $247,895 $ 346,987
Note 3. Long-Term Debt
Line of Credit
In January 1998, and as amended in February and June 1998, the Company replaced its then existing revolving
credit facility with a secured revolving credit and term loan facility ("Senior Bank Facility"). The Senior Bank
Facility provides the Company with a $200 million revolving credit line and a $50 million term loan, both of which
expire in January 2001. The Senior Bank Facility is secured by the Company's accounts receivable, inventory, 66% of
its stock in its foreign subsidiaries and the other assets (excluding real property) of the Company. At the option of the
Company, borrowings bear interest at either Libor plus a margin determined by a total debt funded ratio or a base rate,
with option periods of one to six months. The Senior Bank Facility requires the Company to maintain certain financial
ratios, prohibits the payment of dividends and contains a number of other restrictive covenants. As of June 27, 1998,
the $50 million term loan was funded but there were no borrowings under the revolving credit line.