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WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following table presents information about the Company’s financial assets that are measured at fair value on
a recurring basis as of July 1, 2011, and indicates the fair value hierarchy of the valuation techniques utilized to
determine such value (in millions):
Fair Value Measurements at
Reporting Date Using
Quoted Prices
in Active
Markets for
Identical
Instruments
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3) Total
Assets:
Cash equivalents
Money market funds ....................... $721 $ — $— $721
U.S. Treasury securities ..................... — 60 — 60
U.S. Government agency securities ............ — 78 — 78
Total cash equivalents .................... 721 138 — 859
Auction-rate securities ........................ — — 15 15
Total assets at fair value ................... $721 $138 $15 $874
Liabilities:
Foreign exchange contracts ..................... $ — $ 5 $— $ 5
Total liabilities at fair value ................ $ — $ 5 $— $ 5
Money Market Funds. The Company’s money market funds are funds that invest in U.S. Treasury securities and
are recorded within cash and cash equivalents in the consolidated balance sheets. Money market funds are valued based
on quoted market prices.
U.S. Treasury Securities. The Company’s U.S. Treasury securities are investments in Treasury bills with original
maturities of three months or less, are held in custody by a third party and are recorded within cash and cash equiv-
alents in the consolidated balance sheets. U.S. Treasury securities are valued using a market approach which is based
on observable inputs including market interest rates from multiple pricing sources.
U.S. Government Agency Securities. The Company’s U.S. Government agency securities are investments in fixed
income securities sponsored by the U.S. Government with original maturities of three months or less, are held in cus-
tody by a third party and are recorded within cash and cash equivalents in the consolidated balance sheets.
U.S. Government agency securities are valued using a market approach which is based on observable inputs including
market interest rates from multiple pricing sources.
Auction-Rate Securities. The Company’s auction-rate securities have maturity dates through 2050, are primarily
backed by insurance products and are accounted for as available-for-sale securities. These investments are classified as
long-term investments and recorded within other non-current assets in the consolidated balance sheets. Auction-rate
securities are valued by a third party using trade information related to the secondary market.
Foreign Exchange Contracts. The Company’s foreign exchange contracts are short-term contracts to hedge the
Company’s foreign currency risk related to the British Pound Sterling, Euro, Japanese Yen, Malaysian Ringgit,
Philippine Peso, Singapore Dollar and Thai Baht. Foreign exchange contracts are classified within other current assets
and liabilities in the consolidated balance sheets. Foreign exchange contracts are valued using an income approach that
is based on a present value of future cash flows model. The market-based observable inputs for the model include
forward rates and credit default swap rates.
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