Western Digital 2003 Annual Report Download - page 58

Download and view the complete annual report

Please find page 58 of the 2003 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 76

  • 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
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76

WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Temporary diÅerences and carryforwards, which give rise to a signiÑcant portion of deferred tax assets and liabilities
at June 27, 2003 and June 28, 2002 are as follows (in millions):
2003 2002
Deferred tax assets:
NOL carryforwardÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 252.5 $ 234.0
Business credit carryforward ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 40.4 44.2
Reserves and accrued expenses not currently deductible ÏÏÏÏÏÏÏÏÏÏÏ 66.2 83.0
All other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2.1 8.0
361.2 369.2
Valuation allowanceÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (361.2) (369.2)
Total deferred tax assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ Ì $ Ì
Deferred tax liabilities:
Unremitted income of foreign subsidiaries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 9.3 $ 9.0
Total deferred tax liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 9.3 $ 9.0
Reserves and accrued expenses not currently deductible include the following (in millions):
2003 2002
Sales related reserves and adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 43.3 $ 42.6
Accrued compensation and beneÑtsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 10.9 5.7
Inventory reserves and adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.4 2.0
Other accrued liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 10.6 32.7
Total deferred tax assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 66.2 $ 83.0
During 2002, the Company repatriated a signiÑcant amount of prior years' earnings of its foreign subsidiaries. As a
result, there was a signiÑcant reduction in net operating loss carryforwards. The repatriation occurred following the
enactment in 2002 of favorable but temporary U.S. tax law changes. Remaining net undistributed earnings from foreign
subsidiaries at June 27, 2003, on which no U.S. tax has been provided, amounted to approximately $217.3 million. The
net undistributed earnings are intended to Ñnance local operating requirements. Accordingly, an additional United States
tax provision has not been made on these earnings.
The Company determines deferred taxes for each of its tax-paying subsidiaries within each tax jurisdiction. The
deferred tax assets indicated above are attributable primarily to tax jurisdictions where a history of earnings has not been
established. The taxable earnings in these tax jurisdictions are also subject to volatility. Therefore, the Company believes a
valuation allowance is needed to reduce the deferred tax asset to an amount that is ""more likely than not'' to be realized.
52