Western Digital 2012 Annual Report Download - page 50

Off-Balance Sheet Arrangements
Other than facility lease commitments incurred in the normal course of business and certain indemnification
provisions (see “Contractual Obligations and 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 sub-
sidiaries that are not included in the consolidated financial statements. Additionally, we do not have an interest in, or
relationships with, any special-purpose entities.
Contractual Obligations and Commitments
The following is a summary of our known contractual cash obligations and commercial commitments as of
June 29, 2012 (in millions):
Total
Less than
1 Year 1-3 Years 3-5 Years
More than
5 Years
Long-term debt, including current
portion ...................... $2,185 $ 230 $460 $1,495 $—
Operating leases ................. 192 48 60 29 55
Unrecognized tax benefits ......... 245 — 104 141 —
Purchase obligations ............. 6,468 6,448 16 3 1
Total ....................... $9,090 $6,726 $640 $1,668 $56
Long-Term Debt
On March 8, 2012, in connection with the Acquisition, WDI and WDT entered into the Credit Facility that
provided for $2.8 billion of unsecured loan facilities, consisting of a $2.3 billion term loan facility and a $500 million
revolving credit facility. The $2.3 billion term loan facility and $500 million available under the revolving credit
facility were borrowed on the Closing Date and used to partially fund the Acquisition and repay our existing debt and
debt assumed in the Acquisition. The $500 million revolving credit facility was repaid in the fourth quarter of fiscal
2012. As of June 29, 2012, the outstanding balance of the term loan facility was $2.2 billion. We are required to
make principal payments on the term loan facility totaling $230 million a year for 2013 through 2016 and the
remaining $1.3 billion balance (subject to adjustment to reflect prepayments or an increase to its term loan facility) in
2017, with the term loan facility balance due and payable in full on March 8, 2017. See Part II, Item 8, Note 3 in the
Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
The Credit Facility requires us to comply with a leverage ratio and an interest coverage ratio calculated on a
consolidated basis for us and our subsidiaries. In addition, the Credit Facility contains customary covenants, including
covenants that limit or restrict, subject to certain exceptions, our ability to incur liens, incur indebtedness, make cer-
tain restricted payments, merge, consolidate or dispose of substantially all of our assets, enter into certain speculative
hedging arrangements and make any material change in the nature of our business. Upon the occurrence of an event of
default under the Credit Facility, the administrative agent at the request, or with the consent, of the Required Lenders
(as defined in the Credit Facility) may cease making loans, terminate the Credit Facility and declare all amounts out-
standing to be immediately due and payable, require the cash collateralization of letters of credit and/or exercise all
other rights and remedies available to it, the lenders and the letter of credit issuer. The Credit Facility specifies a
number of events of default (some of which are subject to applicable grace or cure periods), including, among other
things, non-payment defaults, covenant defaults, cross-defaults to other material indebtedness, bankruptcy and
insolvency defaults, material judgment defaults and a change of control default. As of June 29, 2012, we were in
compliance with all covenants under the Credit Facility.
On March 8, 2012, the Company repaid the entire outstanding principal amount of $231 million on its previous
term loan facility originally scheduled to mature on February 11, 2013, plus accrued and unpaid interest, as well as
$585 million of assumed debt from the acquisition of HGST.
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