Western Digital 2011 Annual Report Download - page 64

these operating leases, including month-to-month rentals, was $23 million, $22 million and $21 million in 2011, 2010
and 2009, respectively. Future minimum lease payments under operating leases that have initial or remaining non-
cancelable lease terms in excess of one year at July 1, 2011 are as follows (in millions):
2012 ............................................ $ 18
2013 ............................................ 17
2014 ............................................ 14
2015 ............................................ 11
2016 ............................................ 9
Thereafter ......................................... 46
Total future minimum payments ....................... $115
Product Warranty Liability
Changes in the warranty accrual for 2011, 2010 and 2009 were as follows (in millions):
2011 2010 2009
Warranty accrual, beginning of period ....... $170 $123 $114
Charges to operations ................. 172 183 126
Utilization ........................ (160) (138) (111)
Changes in estimate related to pre-existing
warranties ....................... (12) 2 (6)
Warranty accrual, end of period ........... $170 $170 $123
Accrued warranty also includes amounts classified in other liabilities in the consolidated balance sheets of
$38 million at July 1, 2011 and $41 million at July 2, 2010.
Long-term Purchase Agreements
The Company has entered into long-term purchase agreements with various component suppliers. The commit-
ments depend on specific products ordered and may be subject to minimum quality requirements and future price
negotiations. The Company expects these commitments to total $636 million for 2012, $6 million for 2013 and 2014,
$5 million for 2015, and $1 million for 2016.
Note 5. Legal Proceedings
When the Company becomes aware of a claim or potential claim, the Company assesses the likelihood of any loss or
exposure. The Company discloses information regarding each material claim where the likelihood of a loss contingency is
probable or reasonably possible. If a loss contingency is probable and the amount of the loss can be reasonably estimated,
the Company records an accrual for the loss. In such cases, there may be an exposure to potential loss in excess of the
amount accrued. Where a loss is not probable but is reasonably possible and where a loss in excess of the amount accrued
is reasonably possible, the Company discloses an estimate of the amount of the loss or range of possible losses for the claim
if a reasonable estimate can be made, unless the amount of such reasonably possible losses is not material to the
Company’s financial position, results of operations or cash flows. For the matters described below, the Company has either
recorded an accrual for losses that are probable and reasonably estimable or has determined that, while a loss is reasonably
possible, a reasonable estimate of the amount of loss or range of possible losses with respect to the claim, including the
amount of loss in excess of the amount accrued, cannot be made. The ability to predict the ultimate outcome of such
matters involves judgments, estimates and inherent uncertainties. The actual outcome of such matters could differ
materially from management’s estimates.
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WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)