Western Digital 2009 Annual Report Download - page 50

Contractual Obligations and Commitments
The following is a summary of our significant contractual cash obligations and commercial commitments as of
July 3, 2009 (in millions):
Total
Less than
1 Year 1-3 Years 3-5 Years
More than
5 Years
Long-term debt, including current
portion .................... $ 481 $ 81 $250 $150 $—
Capital lease obligations .......... 1 1 — — —
Operating leases ............... 52 16 19 13 4
Unrecognized tax benefits under
FIN48.................... 45 — 7 38 —
Purchase obligations ............ 3,320 3,305 6 6 3
Total...................... $3,899 $3,403 $282 $207 $ 7
Long-Term Debt
In February 2008, Western Digital Technologies, Inc. (“WDTI”), a wholly-owned subsidiary of the Company,
entered into a five-year Credit Agreement (“Credit Facility”) that provides for a $750 million unsecured loan consisting
of a $500 million term loan facility and a $250 million revolving credit facility. The revolving credit facility includes
borrowing capacity available for letters of credit and for short-term borrowings referred to as swingline. In addition,
WDTI may elect to expand the Credit Facility by up to $250 million if existing or new lenders provide additional term or
revolving commitments. The $500 million term loan had a variable interest rate of 1.63% as of July 3, 2009 and requires
sixteen quarterly principal payments, that began in June 2009, of approximately $19 million, $25 million, $31 million
and $50 million per quarter for each four quarter increment. The Credit Facility requires WDTI to comply with a
leverage ratio and an interest coverage ratio calculated on a consolidated basis for the Company and its subsidiaries. In
addition, the Credit Facility contains customary covenants, including covenants that limit or restrict WDTI’s and its
subsidiaries’ ability to: incur liens, incur indebtedness, make certain restricted payments, merge or consolidate and enter
into certain speculative hedging arrangements. As of July 3, 2009, WDTI had $250 million available for future
borrowings on the revolving credit facility and was in compliance with all covenants.
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. We also enter into purchase orders with
suppliers for capital equipment that are recorded as a liability upon receipt of the equipment. Our ability to change or
cancel a capital equipment purchase order without penalty depends on the nature of the equipment being ordered. 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 of components or capital equipment.
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 have also entered into
long-term purchase agreements with various component suppliers that carry fixed volumes and pricing which obligate us
to make certain future purchases, contingent on certain conditions of performance, quality and technology of the vendor’s
components. These arrangements are included under “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
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