Western Digital 2002 Annual Report Download - page 24

1998, the Company has redeemed Debentures with a book value of $435.9 million and an aggregate principal amount at
maturity of $1.1 billion through the issuance of cash and/or common stock. These redemptions were private,
individually negotiated transactions with certain institutional investors. As of June 28, 2002, the remaining book value of
the Debentures was $86.2 million, the aggregate principal amount at maturity was $193.5 million and the market value
was $83.0 million. Based on current forecasts that show the Company continuing to generate positive cash Öow from
operations, the Company now intends to satisfy the majority, if not all, of its put obligations in cash instead of common
stock. Accordingly, the Debentures have been classiÑed as a current liability at June 28, 2002. Debentures not put to the
Company in February 2003, if any, will be reclassiÑed as long-term debt.
During 2001, the Company entered into a three-year Senior Credit Facility, replacing a previous facility that had
matured on March 31, 2000. The Senior Credit Facility provides up to $125 million in revolving credit (subject to
outstanding letters of credit and a borrowing base calculation), matures on September 20, 2003 and is secured by
accounts receivable, inventory, 65% of the stock in its foreign subsidiaries and other assets. At the option of the
Company, borrowings bear interest at either LIBOR (with option periods of one to three months) or a base rate, plus a
margin determined by the borrowing base. The Senior Credit Facility requires the Company to maintain certain amounts
of tangible net worth, prohibits the payment of cash dividends on common stock and contains a number of other
covenants. As of the date hereof, there were no borrowings under the facility. However, the Company has issued a
$25 million standby letter of credit under the facility to Cirrus Logic, Inc. (""Cirrus'') concerning $25 million in disputed
accounts payable. These disputed accounts payable have been recorded in the Company's Ñnancial statements, but are
part of the Company's litigation against Cirrus (see Note 5 of Notes to Consolidated Financial Statements). The
availability under the Senior Credit Facility has been reduced by a corresponding amount of the outstanding letter of
credit.
During 2001 and 2000, respectively, the Company issued 23.5 and 24.6 million shares of common stock under
preexisting shelf registrations for net cash proceeds of $110.5 and $111.8 million. During 2002, no common stock was
issued under these shelf registrations and the Company withdrew them as management determined they would not be
utilized in the foreseeable future.
At June 28, 2002, the Company had cash and cash equivalents of $223.7 million, working capital of $34.8 million
(net of the Debentures) and shareholders' equity of $102.9 million. In addition, the Company has a Senior Credit
Facility providing up to $125 million in revolving credit (subject to outstanding letters of credit and a borrowing base
calculation). The Company believes its current cash and cash equivalents and its existing credit facility will be suÇcient to
meet its working capital needs through the foreseeable future. There can be no assurance that the Senior Credit Facility
will continue to be available to the Company. Also, the Company's ability to sustain its working capital position is
dependent upon a number of factors that are discussed below under the headings ""Risk factors related to the hard drive
industry in which we operate'' and ""Risk factors relating to Western Digital particularly.''
Commitments
The following is a summary of the Company's signiÑcant contractual cash obligations and commercial commitments
at June 28, 2002:
Convertible Debentures
The Company has zero coupon convertible subordinated debentures due February 18, 2018 (the ""Debentures'').
For a description of the Debentures, see the discussion under ""Liquidity and Capital Resources''.
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