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Pro forma financial information has not been presented as the acquisition did not have a material impact on the
Company’s consolidated financial statements for the fiscal year ended July 3, 2009.
Komag
On September 5, 2007, the Company completed its acquisition of Komag, a media manufacturer, which was
followed by a merger of State M, the Company’s indirect wholly-owned subsidiary, and Komag whereby Komag became
an indirect wholly-owned subsidiary of the Company and changed its name to WD Media. The aggregate purchase price
for Komag was $1.0 billion, consisting of cash paid for outstanding shares, transaction fees, severance and other
employee-related equity payments.
The Company has identified and recorded the assets, including specifically identifiable intangible assets, and
liabilities assumed from Komag at their estimated fair values as of the acquisition date, and has allocated the residual
value to goodwill.
Sept. 5,
2007
Tangible assets acquired and liabilities assumed:
Cash ............................................................... $ 72
Short-term investments .................................................. 58
Accounts receivable ..................................................... 114
Inventories ........................................................... 204
Other current assets..................................................... 6
Property and equipment ................................................. 657
Deferred taxes and other non-current assets .................................... 118
Accounts payable ...................................................... (130)
Accrued expenses....................................................... (81)
Debt assumed ......................................................... (248)
Other liabilities ....................................................... (15)
Intangible assets ......................................................... 89
In-process research and development ........................................... 49
Goodwill .............................................................. 109
Total ................................................................. $1,002
The recorded values and estimated useful lives of the intangibles acquired from Komag were:
Estimated Fair
Value
Estimated
Weighted-Average
Useful Life
(in millions) (in years)
Existing technology .................................... $79 10
Customer substrate relationships............................ 10 3
Total acquired identifiable intangible assets .................. $89 9
The customer substrate relationships intangible asset was subsequently impaired in 2009 as a result of the
Company’s restructuring plan. See Note 13.
Komag had an in-process research and development project associated with technology for higher recording
densities on advanced perpendicular recording media. As these advanced products were not ready for commercial
79
WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)