Western Digital 2003 Annual Report Download - page 59

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WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Reconciliation of the United States Federal statutory rate to the Company's eÅective tax rate is as follows:
2003 2002 2001
U.S. Federal statutory rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 35.0% 35.0% (35.0)%
Current year U.S. loss not beneÑtted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.0 0.0 76.1
State income taxes, netÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.1 0.5 0.2
Tax rate diÅerential on international income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (21.9) (63.1) (42.7)
Tax eÅect of repatriation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 14.7 272.2 0.0
Utilization of NOL carryforward ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (23.5) (218.2) 0.0
Change in valuation allowance ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (4.2) (28.0) 0.0
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3.8 (0.2) 1.4
EÅective tax rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4.0% (1.8)% 0.0%
Certain income of selected subsidiaries is taxed at substantially lower income tax rates as compared to local statutory
rates. The lower rates reduced income taxes and improved the net income or loss by $33.6 million ($0.16 per diluted
share), $29.3 million ($0.15 per diluted share) and $30.0 million ($0.18 per diluted share) in 2003, 2002 and 2001,
respectively. These lower rates are in eÅect through Ñscal year 2004.
At June 27, 2003, the Company had Federal and state net operating loss carryforwards of approximately
$640.5 million and $471.8 million, respectively. In addition, the Company had various Federal and state tax credit
carryforwards of approximately $40.4 million. The loss carryforwards are available to oÅset future Federal and state
taxable income through 2022 and 2014, respectively. Approximately $24.0 million of the credit carryforwards are
available to oÅset future taxable income through 2023. The remaining $16.4 million are available indeÑnitely.
Note 11. Subsequent Events
Asset Acquisition (unaudited)
On July 31, 2003, the Company purchased substantially all of the assets of Read-Rite Corporation, including the
wafer fabrication equipment in Fremont, California and the manufacturing facility in Bang Pa-In, Thailand. The total
cost of the acquisition will be between $170 million and $180 million. This includes cash consideration of approximately
$95 million, assumed debt obligations of the Thailand operations of approximately $60 million and direct costs of the
acquisition and other miscellaneous assumed obligations totaling approximately $15 million to $25 million. The
Company will account for this transaction as an asset acquisition.
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