Western Digital 2012 Annual Report Download - page 92

WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The fair values of stock options and SARs assumed were estimated using a Binomial option-pricing model. See
“Stock-Based Compensation” included below in this Note 14 for a further discussion concerning stock awards
assumed as a result of the Acquisition.
The purchase price consideration includes preliminary estimates of the working capital assets acquired and
liabilities assumed, and therefore, may be adjusted when finalized. The Company identified and recorded the assets
acquired and liabilities assumed at their estimated fair values at the Closing Date, and allocated the remaining value
of approximately $1.8 billion to goodwill. The values assigned to certain acquired assets and liabilities are prelimi-
nary, are based on information available as of the date of this Annual Report on Form 10-K, and may be adjusted as
further information becomes available during the measurement period of up to 12 months from the date of the
Acquisition. The primary areas of the preliminary purchase price allocation that are not yet finalized due to
information that may become available subsequently and may result in changes in the values allocated to various assets
and liabilities, include the fair values of property, plant and equipment acquired, the valuation of certain intangible
assets, contingencies and income taxes. Any changes in the fair values of the assets acquired and liabilities assumed
during the measurement period may result in material adjustments to goodwill. The preliminary purchase price
allocation was as follows (in millions):
Mar. 8,
2012
Tangible assets acquired and liabilities assumed:
Cash and cash equivalents ..................................................... $ 194
Accounts receivable .......................................................... 1,290
Inventories ................................................................. 721
Other current assets .......................................................... 219
Property, plant and equipment ................................................. 1,813
Other non-current assets ...................................................... 71
Accounts payable ............................................................ (841)
Accrued liabilities ........................................................... (594)
Debt assumed .............................................................. (585)
Pension and other post-retirement benefit liabilities ................................. (130)
Other liabilities ............................................................. (102)
Intangible assets .............................................................. 834
Goodwill .................................................................... 1,824
Total ....................................................................... $4,714
During the three months ended June 29, 2012, the Company recorded a $124 million net increase in goodwill
from the $1.7 billion recorded in the quarter ended March 30, 2012. This increase primarily relates to a net $161
million adjustment to equipment values, an increase to intangible assets of $41 million and other adjustments related
to additional information obtained subsequently that existed at the Closing Date. The adjustment to depreciation and
amortization as a result of these changes was not material to the Company’s consolidated financial statements.
From the beginning of 2012 through the Closing Date, the Company incurred $61 million of expenses related to
the Acquisition, of which $54 million are included within selling, general and administrative expense in the con-
solidated statements of income. The remaining $7 million of expenses related to debt commitment fees, which are
included within interest and other expense in the consolidated statements of income.
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