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New Accounting Standards
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 provides
guidance for using fair value to measure assets and liabilities. It also responds to investors’ requests for expanded
information about the extent to which companies measure assets and liabilities at fair value, the information used to
measure fair value and the effect of fair value measurements on earnings. SFAS 157 applies whenever other standards
require (or permit) assets or liabilities to be measured at fair value. The standard does not expand the use of fair value in
any new circumstances, but provides clarification on acceptable fair valuation methods and applications. SFAS 157 was
effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within
those fiscal years, which for the Company is the first quarter of fiscal year 2009. On November 14, 2007, the FASB
provided a one year deferral for the adoption of SFAS 157 for non-financial assets and liabilities. The Company is
currently evaluating the impact the adoption of SFAS 157 will have on its consolidated financial statements.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial
Liabilities” (“SFAS 159”). SFAS 159 permits entities to choose to measure many financial assets and financial liabilities at
fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings.
SFAS 159 is effective for fiscal years beginning after November 15, 2007, which for the Company is the first quarter of
fiscal year 2009. The Company is evaluating the impact the adoption of SFAS 159 will have on its consolidated financial
statements.
In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (“SFAS 141(R)”). SFAS 141(R)
establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. The
statement also provides guidance for recognizing and measuring the goodwill acquired in the business combination or a
gain from a bargain purchase and determines what information to disclose to enable users of financial statements to
evaluate the nature and financial effects of the business combination. SFAS 141(R) is effective for financial statements
issued for fiscal years beginning after December 15, 2008, which for the Company is the first quarter of fiscal year 2010.
The Company is currently evaluating the impact the adoption of SFAS 141(R) will have on its consolidated financial
statements.
In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging
Activities-an amendment of FASB Statement No. 133” (“SFAS 161”). SFAS 161 updates guidance regarding disclosure
requirements for derivative instruments and hedging activities. It responds to constituents’ concerns that FASB
Statement No. 133 does not provide adequate information about how derivative and hedging activities affect an entity’s
financial position, financial performance, and cash flows. The disclosure of fair values of derivative instruments and their
gains and losses in a tabular format, as required by SFAS 161, should provide a more complete picture of the location in an
entity’s financial statements of both the derivative positions existing at period end and the effect of using derivatives
during the reporting period. SFAS 161 is effective for financial statements issued for fiscal years and interim period
beginning after November 15, 2008, which for the Company is the first quarter of fiscal year 2010. The Company is
currently evaluating the impact the adoption of SFAS 161 will have on its consolidated financial statements.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation.
58
WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)