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WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The preliminary purchase price allocation for Amplidata is as follows (in millions):
March 9,
2015
Tangible assets acquired and liabilities assumed ...................................... $(24)
Intangible assets .............................................................. 76
Goodwill .................................................................... 215
Total ....................................................................... $267
Since the date of acquisition, the Company recorded an increase of $42 million to goodwill which primarily
related to an adjustment to the value of deferred taxes acquired, an adjustment to the value of intangible assets
acquired, and an adjustment for the fair value of stock options assumed in the acquisition of Amplidata. The primary
area of the preliminary purchase price allocation that is not yet finalized due to information that may become available
subsequently is income taxes. Any changes in the fair value could potentially result in adjustments to goodwill. The
Company expects to finalize the purchase price allocation in 2016.
The $215 million of goodwill recognized is primarily attributable to the benefits the Company expects to derive
from an ability to create HDD storage solutions leveraging the core software acquired and is not expected to be
deductible for tax purposes. The impact to revenue and net income attributable to Amplidata was immaterial to the
Company’s consolidated financial statements.
Prior to the acquisition date, the Company held a non-controlling interest in Amplidata accounted for under the
cost method of accounting. Upon acquiring the outstanding ownership stake in Amplidata, the Company remeasured
its original equity interest to its fair value using the income approach, which utilizes estimates of discounted future
cash flows, and recognized a $9 million gain during the year ended July 3, 2015, which was recorded within the
employee termination benefits, asset impairments and other charges line item in the consolidated statements of
income.
Note 16. Thailand Flooding
In October 2011, severe flooding in Thailand inundated all of the Company’s Thailand manufacturing facilities
and submerged certain equipment located there. The Company maintains insurance coverage that provides property
and business interruption coverage in the event of losses arising from flooding. As a result, the Company recorded $37
million and $65 million of flood-related insurance recoveries in fiscal 2015 and 2014, respectively. These flood-related
insurance recoveries were included within the selling, general and administrative expenses within the Company’s
consolidated statements of income. All flood-related claims submitted by the Company to its insurers were closed as
of July 3, 2015.
Note 17. Employee Termination, Asset Impairment and Other Charges
Employee termination, asset impairment and other charges within the Company’s consolidated statements of
income primarily relate to charges to realign the Company’s operations with anticipated market demand and are as
follows:
Years Ended
July 3,
2015
June 27,
2014
June 28,
2013
Employee termination benefits ............................................ $ 82 $27 $109
Impairment of assets ................................................... 82 62 14
Contract termination and other ........................................... 12 6 15
Total ............................................................... $176 $95 $138
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