Western Digital 2006 Annual Report Download - page 44

Investing Activities
Net cash used in investing activities for 2006 was $337 million as compared to $314 million for 2005 and
$259 million for 2004. During 2006, cash used in investing activities consisted of $302 million for capital expenditures
and $35 million for short-term investments. During 2005, cash used in investing activities consisted of $233 million for
capital expenditures and $81 million for short-term investments. The net cash used in investing activities for 2004
consisted of $132 million for capital expenditures, $95 million for the Read-Rite asset acquisition and $32 million for
short-term investments. The increases in capital expenditures in 2006 and 2005 were primarily a result of assets
purchased to upgrade our head manufacturing capabilities, increased desktop and mobile hard drive production
capabilities and for the normal replacement of existing assets. Additionally, during 2006, we purchased our previously
leased head wafer manufacturing facility in Fremont, California for $27 million. The increase in short-term investments
in 2005 was a result of additional investments in auction rate securities. For 2007, we expect capital expenditures to be
approximately $350 million to $375 million consisting primarily of investments in advanced head technologies, new
product platforms and capacity for our broadening and growing product portfolio.
Financing Activities
Net cash provided by financing activities for 2006 was $1 million as compared to net cash used for financing
activities of $7 million for 2005 and net cash provided by financing activities of $21 million for 2004. The net cash
provided by financing activities in 2006 consisted of $78 million received through the exercise of common stock options
and our Employee Stock Purchase Plan, offset by repurchases of our common stock totaling $54 million and repayments
of long-term debt totaling $23 million. The net cash used in financing activities in 2005 consisted of $45 million used
for common stock repurchases and $20 million for debt repayments partially offset by $58 million received upon issuance
of common stock under employee plans. The net cash provided by financing activities for 2004 consisted primarily of
$24 million received upon issuance of common stock under employee plans and $14 million in net proceeds from long-
term debt partially offset by $16 million used for common stock repurchases.
Off-Balance Sheet Arrangements
Other than facility and equipment lease commitments incurred in the normal course of business and certain
indemnification provisions (see Capital Commitments below), we do not have any off-balance sheet financing
arrangements or liabilities, guarantee contracts, retained or contingent interests in transferred assets, or any obligation
arising out of a material variable interest in an unconsolidated entity. We do not have any majority-owned subsidiaries
that are not included in the consolidated financial statements. Additionally, we do not have an interest in, or relationships
with, any special-purpose entities.
Capital Commitments
The following is a summary of our significant contractual cash obligations and commercial commitments as of
June 30, 2006 (in millions):
Total
Less than
1 Year 1-3 Years 3-5 Years
More than
5 Years
Long-term debt, including
current portion ............ $ 25.0 $ 12.5 $ 12.5 $ — $ —
Capital lease obligations ....... 19.0 12.1 6.9 — —
Operating leases . ............ 51.2 11.2 18.8 14.1 7.1
Purchase obligations* ......... 4,673.0 2,628.9 2,044.1 — —
Total ................... $4,768.2 $2,664.7 $2,082.3 $14.1 $7.1
* Includes long-term purchase agreements entered into before September 15, 2006.
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