Western Digital 1999 Annual Report Download - page 48

Bowne Conversion 43
Reclassifications
Certain prior years' amounts have been reclassified to conform to the current year presentation.
Note 2. Supplemental Financial Statement Data (in thousands)
1997 1998 1999
Net Interest Income
Interest income .................................................. $13,223 $15,952 $16,906
Interest expense ................................................. — 12,135 32,804
Net interest income (expense)............................ $ 13,223 $ 3,817 $ (15,898)
Cash paid for interest.......................................... $ — $ 2,073 $ 4,819
Inventories
Finished goods .................................................... $126,363 $101,828
Work in process ................................................. 28,287 26,307
Raw materials and component parts.................... 31,866 15,958
$ 186,516 $ 144,093
Property and Equipment
Land and buildings............................................... $92,234 $94,788
Machinery and equipment................................... 415,469 383,095
Furniture and fixtures.......................................... 14,060 13,407
Leasehold improvements.................................... 79,490 42,972
601,253 534,262
Accumulated depreciation and amortization........ (254,266) (296,323)
Net property and equipment............................... $ 346,987 $ 237,939
Supplemental disclosure of non-cash investing
activities
Proceeds from sale of Santa Clara disk media
operations....................................................... $ — $ — $ 77,100
Common stock issued and liabilities assumed in
connection with acquisition of Connex............ $ — $ — $ (10,000)
Note 3. Long-Term Debt
Line of Credit
The Company has a secured revolving credit and term loan facility ("Senior Bank Facility"). The Senior Bank Facility provides the
Company with up to $125.0 million in a revolving credit line (depending on borrowing base calculation) and a $50.0 million term loan,
both of which expire in November 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 or a base rate plus a margin determined by the borrowing base, with option periods of one to
three months. The Senior Bank Facility requires the Company to maintain certain amounts of net equity, prohibits the payment of cash
dividends on common stock and contains a number of other covenants. The Company was in compliance at July 3, 1999, with all terms
of the Senior Bank Facility. As of the date hereof, the $50.0 million term loan was funded, but there were no borrowings under the
revolving credit line. The term loan requires quarterly payments of $2.5 million beginning in September 1999 with the remaining balance
due in November 2001. The costs of the product recall discussed in note 11 may result in the Company not being in compliance with
certain financial covenants in the Senior Bank Facility in future periods. The availability of this facility will depend upon, among other
things, the actual cost of the recall and the Company's ability to recover such costs from third parties.
Convertible Debentures
On February 18, 1998, the Company received gross proceeds of $460.1 million (before the Initial Purchasers' discount) from a private
offering of 5.25% zero coupon convertible subordinated debentures due in 2018 (the "Debentures"). The principal amount at maturity
of the Debentures is $1.3 billion. The Debentures are subordinated to all senior debt; are convertible into shares of the Company's
common stock at the rate of 14.935 shares per $1,000 principal amount at maturity; are redeemable at the option of the Company any
time after February 18, 2003 at the issue price plus accrued original issue discount to the date of redemption; and will be repurchased by
the Company, at the option of the holder, as of February 18, 2003, February 18, 2008 or February 18, 2013, or if there is a Fundamental