Western Digital 2009 Annual Report Download - page 84

resulting in a gain of $18 million. The closure and disposal of the Company’s manufacturing facilities was to realign its
manufacturing capacity with the Company’s expectations regarding demand at that time. Total restructuring charges of
$112 million, partially offset by the $18 million gain on sale of assets, is included in Restructuring and other, net within
operating expenses on the accompanying consolidated statements of income.
The following table summarizes the Company’s restructuring activities for the year ended July 3, 2009
(in millions):
Employee
Termination
Benefits
Impaired Property
and Equipment
and Other
Intangible Assets
Contract
Termination
and Other Exit
Costs Total
Restructuring accrual at June 27, 2008 ...... $— $— $— $ —
Restructuring charge . . . .............. 27 81 4 112
Cash payments ..................... (27) — (4) (31)
Non-cash charge .................... — (81) — (81)
Restructuring accrual at July 3, 2009 ....... $— $— $— $ —
The asset impairment charge of $81 million consists of $76 million primarily related to the land, buildings,
machinery and equipment at the manufacturing facilities in Thailand and Malaysia and $5 million related to a customer
relationship intangible asset acquired from Komag. The impairment charge is based on the excess of the carrying values
over the estimated fair values of the assets in accordance with SFAS 144. The fair values of the land, buildings, and
equipment were estimated using the market approach. The intangible asset was valued using the income approach.
Note 14. Acquisitions
SiliconSystems
On March 27, 2009, the Company completed its acquisition of SiliconSystems, a supplier of solid-state drives for
the embedded systems market. The total acquisition cost of SiliconSystems was $66 million, consisting of $65 million in
cash paid to SiliconSystems shareholders and $1 million of other direct acquisition costs. In accordance with SFAS 141,
the Company has identified and recorded the assets, including specifically identifiable intangible assets, and liabilities
assumed from SiliconSystems at their estimated fair values as of the date of acquisition, and has allocated the remaining
value to goodwill. The values assigned to certain acquired assets and liabilities are preliminary, are based on information
available as of July 3, 2009, and may be adjusted as further information becomes available during the allocation period of
up to 12 months from the date of the acquisition. The allocation is as follows (in millions):
Mar. 27,
2009
Tangible assets acquired and liabilities assumed, net................................ $ 5
Intangible assets ......................................................... 24
In-process research and development ........................................... 14
Goodwill . ............................................................. 23
Total ................................................................. $66
Intangible assets of $24 million primarily relates to existing technology that will be amortized to cost of revenue
over the weighted average useful life of 6.3 years. In-process research and development of $14 million relates to projects
that had not reached technological feasibility and had no alternative future use, and therefore, did not qualify for
capitalization and was recorded as an operating expense during 2009 in the accompanying consolidated statements of
income.
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WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)