Western Digital 2008 Annual Report Download - page 47

The obligations of WDTI under the Credit Facility are guaranteed by the Company and WDTI’s wholly-owned
subsidiary, WD Media.
Purchase Orders
In the normal course of business, we enter into purchase orders with suppliers for the purchase of hard drive
components used to manufacture our products. These purchase orders generally cover forecasted component supplies
needed for production during the next quarter, are recorded as a liability upon receipt of the components, and generally
may be changed or canceled at any time prior to shipment of the components. In some cases, we may be obligated to pay
for certain costs related to changes to, or cancellation of, a purchase order, such as costs incurred for raw materials or
work-in-process.
We have entered into long-term purchase agreements with various component suppliers, which contain minimum
quantity requirements. However, the dollar amount of the purchases may depend on the specific products ordered,
achievement of pre-defined quantity or quality specifications or future price negotiations. The estimated related
minimum purchase requirements are included in “Purchase obligations” in the table above.
We enter into, from time to time, other long-term purchase agreements for components with certain vendors.
Generally, future purchases under these agreements are not fixed and determinable as they depend on our overall unit
volume requirements and are contingent upon the prices, technology and quality of the supplier’s products remaining
competitive. These arrangements are not included under “Purchase obligations” in the table above. Please see Item 1A of
this Annual Report on Form 10-K for a discussion of risks related to these commitments.
Forward Exchange Contracts
We purchase short-term, forward exchange contracts to hedge the impact of foreign currency fluctuations on certain
underlying assets, liabilities and commitments for operating expenses and product costs denominated in foreign
currencies. See Part II, Item 7A, under the heading “Disclosure About Foreign Currency Risk,” for our current forward
exchange contract commitments.
Indemnifications
In the ordinary course of business, we may provide indemnifications of varying scope and terms to customers,
vendors, lessors, business partners and other parties with respect to certain matters, including, but not limited to, losses
arising out of our breach of such agreements, products or services to be provided by us, or from intellectual property
infringement claims made by third parties. In addition, we have entered into indemnification agreements with our
directors and certain of our officers that will require us, among other things, to indemnify them against certain liabilities
that may arise by reason of their status or service as directors or officers. We maintain director and officer insurance, which
may cover certain liabilities arising from our obligation to indemnify our directors and officers in certain circumstances.
It is not possible to determine the maximum potential amount under these indemnification agreements due to the
limited history of prior indemnification claims and the unique facts and circumstances involved in each particular
agreement. Such indemnification agreements may not be subject to maximum loss clauses. Historically, we have not
incurred material costs as a result of obligations under these agreements.
Stock Repurchase Program
As announced on November 21, 2005, our Board of Directors previously authorized us to repurchase $250 million
of our common stock in open market transactions. Since the inception of this stock repurchase program through June 27,
2008, we have repurchased 17 million shares for a total cost of $248 million (including commissions). In April 2008, our
Board of Directors authorized a $500 million increase to repurchase our common stock in open market transactions
through March 31, 2013. We expect stock repurchases to be funded principally by operating cash flows. We may
continue to repurchase our stock as we deem appropriate and market conditions allow.
We believe our current cash, cash equivalents and other sources of cash will be sufficient to meet our working capital
needs through the foreseeable future. Our ability to sustain our working capital position is subject to a number of risks
that we discuss in Item 1A of this Annual Report on Form 10-K.
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