Western Digital 2001 Annual Report Download - page 47

WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Organization and Summary of SigniÑcant Accounting Policies
Western Digital Corporation (""Western Digital'' or the ""Company'') has prepared its consolidated
Ñnancial statements in accordance with accounting principles generally accepted in the United States and has
adopted accounting policies and practices which are generally accepted in the industry in which it operates.
Following are the Company's signiÑcant accounting policies:
Fiscal Year
The Company has a 52 or 53-week Ñscal year. In order to align its manufacturing and Ñnancial calendars,
eÅective during the three months ended December 31, 1999, the Company changed its Ñscal calendar so that
each Ñscal month ends on the Friday nearest to the last day of the calendar month. Prior to this change, the
Company's Ñscal month ended on the Saturday nearest to the last day of the calendar month. The change did
not have a material impact on the Company's results of operations or Ñnancial position. The 1999, 2000 and
2001 Ñscal years ended on July 3, June 30, and June 29, respectively, and consisted of 52 weeks for the Ñscal
years 2000 and 2001, and 53 weeks for the Ñscal year 1999. All general references to years relate to Ñscal years
unless otherwise noted.
On April 6, 2001, the Company established a holding company organizational structure, under which
Western Digital Corporation operates as the parent company to its hard drive business, Western Digital
Technologies (""WDT''), and other subsidiaries. This administrative and legal change had no material impact
to the accounting and reporting structure of the Company or to the Company's results of operations or
Ñnancial position.
Basis of Presentation
The consolidated Ñnancial statements include the accounts of the Company and its majority owned
subsidiaries. All signiÑcant intercompany accounts and transactions have been eliminated in consolidation.
The accounts of foreign subsidiaries have been remeasured using the U.S. dollar as the functional currency. As
such, foreign exchange gains or losses resulting from remeasurement of these accounts are reÖected in the
results of operations. These foreign exchange gains and losses were immaterial to the consolidated Ñnancial
statements. Monetary and nonmonetary asset and liability accounts have been remeasured using the exchange
rate in eÅect at each year end and using historical rates, respectively. Income statement accounts have been
remeasured using average monthly exchange rates.
Cash Equivalents
The Company's cash equivalents represent highly liquid investments, primarily money market funds and
commercial paper, with original maturities of three months or less.
Concentration of Credit Risk
The Company designs, develops, manufactures and markets hard drives to personal computer manufac-
turers, resellers and retailers throughout the world. The Company performs ongoing credit evaluations of its
customers' Ñnancial condition and generally requires no collateral. The Company maintains reserves for
potential credit losses, and such losses have historically been within management's expectations. The
Company also has cash equivalent policies that limit the amount of credit exposure to any one Ñnancial
institution or investment instrument, and require that investments be made only with Ñnancial institutions or
in investment instruments evaluated as highly credit-worthy.
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