background image
WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
The Credit Facility requires the Company to comply with a leverage ratio and an interest coverage ratio calcu-
lated on a consolidated basis for the Company and its subsidiaries. In addition, the Credit Facility contains customary
covenants, including covenants that limit or restrict, subject to certain exceptions, the Company's and its subsidiaries'
ability to incur liens, incur indebtedness, make certain restricted payments, merge, consolidate or dispose of sub-
stantially all of its assets, and enter into certain speculative hedging arrangements and make any material change in
the nature of its 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 outstanding 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 28, 2013, the Company was in compliance with all covenants.
Note 4.
Commitments and Contingencies
Lease Commitments
The Company leases certain facilities and equipment under long-term, non-cancelable operating leases. The
Company's operating leases consist of leased property and equipment that expire at various dates through 2022.
Rental expense under these operating leases, including month-to-month rentals, was $64 million, $41 million and
$23 million in 2013, 2012 and 2011, respectively. Future minimum lease payments under operating leases that have
initial or remaining non-cancelable lease terms in excess of one year at June 28, 2013 are as follows (in millions):
Operating
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 40
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
32
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
46
Total future minimum payments . . . . . . . . . . . . . . . . . . . . . . . . .
$170
Product Warranty Liability
Changes in the warranty accrual for 2013, 2012 and 2011 were as follows (in millions):
2013
2012
2011
Warranty accrual, beginning of period . . . . . . .
$ 260
$ 170
$ 170
Warranty liabilities assumed as a result of the
Acquisition . . . . . . . . . . . . . . . . . . . . . . . .
--
139
--
Charges to operations . . . . . . . . . . . . . . . . . .
178
154
172
Utilization . . . . . . . . . . . . . . . . . . . . . . . . . . .
(221)
(196)
(160)
Changes in estimate related to pre-existing
warranties . . . . . . . . . . . . . . . . . . . . . . . . .
(30)
(7)
(12)
Warranty accrual, end of period . . . . . . . . . . . . .
$ 187
$ 260
$ 170
Accrued warranty also includes amounts classified in other liabilities in the consolidated balance sheets of $73
million at June 28, 2013 and $89 million at June 29, 2012.
68