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WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Organization and Summary of Significant Accounting Policies
Western Digital Corporation (the “Company” or “Western Digital” or “WD”) designs, develops, manufactures and
sells hard drives. A hard drive is a device that stores data on one or more rotating magnetic media to allow fast access to
data. The Company sells its products worldwide to original equipment manufacturers and original design manufacturers
for use in computer systems, subsystems or CE devices, and to distributors, resellers and retailers. The Company’s hard
drives are used in desktop computers, notebook computers, external storage appliances, enterprise applications such as
servers, workstations, network attached storage, storage area networks and video surveillance equipment and in consumer
electronics products such as digital video recorders and satellite and cable set-top boxes.
The Company also designs, develops, manufactures and sells solid-state drives and media players. A solid-state drive
is a storage device that uses semiconductor, non-volatile media, rather than magnetic disks and magnetic heads, to store
and allow fast access to data. The Company sells its solid-state drives worldwide to OEMs and distributors for use in the
embedded systems market which includes network-communications, industrial, embedded-computing, medical, mil-
itary, aerospace, media-appliance and data-streaming applications. A media player is a device that connects to a user’s
television or home theater system and plays digital movies, music and photos from any of the Company’s WD»-branded
external hard drives or other USB mass storage devices. The Company sells its media players worldwide to resellers and
retailers under the WD»brand.
The Company has prepared its consolidated financial statements in accordance with accounting principles generally
accepted in the United States (“U.S. GAAP”) and has adopted accounting policies and practices which are generally
accepted in the industry in which it operates. The Company’s significant accounting policies are summarized below.
Fiscal Year
The Company has a 52 or 53-week fiscal year. The 2009 fiscal year which ended on July 3, 2009 consisted of
53 weeks. The 2008 and 2007 fiscal years, which ended on June 27, 2008 and June 29, 2007, respectively, consisted of
52 weeks each.
Basis of Presentation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated in consolidation. The accounts of foreign
subsidiaries have been remeasured using the U.S. dollar as the functional currency. As such, gains or losses resulting from
remeasurement of these accounts from local currencies into U.S. dollars are reflected in the results of operations. These
gains and losses were immaterial to the consolidated financial statements.
On March 27, 2009, the Company completed its acquisition of SiliconSystems, Inc. (“SiliconSystems”). On
September 5, 2007, the Company completed its acquisition of Komag, Inc. (“Komag”). The acquisitions are further
described in Note 14 below. The results of operations of SiliconSystems and Komag since the dates of their acquisitions
are included in the consolidated financial statements. The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries, including SiliconSystems and Komag. All significant inter-company
accounts and transactions have been eliminated in consolidation.
Cash and Cash Equivalents
The Company’s cash equivalents represent highly liquid investments in money market funds, U.S. Treasury
securities, and U.S. Government agency securities with original maturities of three months or less.
Investments
The Company’s investments consist primarily of auction-rate securities, which are primarily investments in
insurance products with original maturities greater than three months. The Company has classified these investments as
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