Western Digital 2000 Annual Report Download - page 45

WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
carrying value of $225.5 million. The carrying amounts of all other Ñnancial instruments in the consolidated
balance sheets, with the exception of the Komag common stock classiÑed as long-term (discussed below),
approximate fair values.
Investments
The Company's investments in unrestricted, marketable equity securities have been classiÑed as
""available for sale'', are included in other current assets, and are carried at fair value. The classiÑcation of a
security is determined at the acquisition date and reviewed periodically. The Company reviews, on a quarterly
basis, the fair market value of the available for sale securities and records an unrealized gain or loss resulting
from the diÅerence between the fair market value at the time of the acquisition and the fair market value on
the measurement date. The unrealized gains or losses are shown as a component of shareholders' deÑciency.
Securities that are not classiÑed as ""available for sale'' are carried at cost. The Company periodically reviews
its cost-basis investments for instances where fair value is less than cost to determine if the decline in value is
other than temporary. If the decline in value is judged to be other than temporary, the cost basis of the security
is written down to fair value. The amount of any write-down would be included in the results of operations as a
realized loss. Realized gains and losses resulting from the sale of securities are determined using the speciÑc
identiÑcation method.
The Company owned approximately 10.8 million shares of Komag common stock at June 30, 2000,
which when acquired on April 8, 1999, had a fair market value of $34.9 million. The stock is restricted as to
the number of shares which can be sold in a given time period. The restrictions lapse over a three and one-half
year period. As of June 30, 2000, approximately 60% of these shares could be sold within twelve months.
Because the Company has identiÑed these shares as ""available for sale'' under the provisions of Statement of
Financial Accounting Standards No. 115, ""Investments in Certain Debt and Equity Securities''
(""SFAS 115''), the amount sellable within twelve months was marked to market value using published
closing prices of Komag stock as of June 30, 2000. Accordingly, a total accumulated unrealized loss of $9.6
million was included in accumulated other comprehensive income (loss). The aggregate book value of the
total Komag shares was $25.3 million (market value of approximately $18.9 million) as of June 30, 2000, of
which $11.3 million related to shares sellable within twelve months and was classiÑed as current. Subsequent
to June 30, 2000, the Company sold some of its Komaq common stock holdings (see Note 11).
The Company owns approximately 1.3 million shares of Vixel Corporation (""Vixel'') common stock. The
Company has identiÑed these shares as ""available for sale'' under the provisions of SFAS 115. During the
three months ended October 2, 1999, Vixel completed an initial public oÅering and the shares were marked to
market value. At June 30, 2000 a total accumulated unrealized gain of $11.0 million is included in
accumulated other comprehensive income (loss). The investment in Vixel common stock is classiÑed as
current. The aggregate carrying value of the shares, which approximates market value, is $11.0 million as of
June 30, 2000.
Other Comprehensive Income (Loss)
The Company adopted Statement of Financial Accounting Standards No. 130, ""Reporting Comprehen-
sive Income'' (""SFAS 130''), beginning with the Company's fourth quarter of 1999. Prior to the fourth
quarter of 1999, the Company did not possess any components of other comprehensive income as deÑned by
SFAS 130. SFAS 130 separates comprehensive income into two components: net income (loss) and other
comprehensive income (loss). Other comprehensive income (loss) refers to revenue, expenses, gains and
losses that are recorded as an element of shareholders' equity (deÑciency) but are excluded from net income
(loss). While SFAS 130 establishes new rules for the reporting and display of comprehensive income (loss),
SFAS 130 has no impact on the Company's net loss or total shareholders' deÑciency. The Company's other
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