Western Digital 2011 Annual Report Download - page 81

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Intangible assets of $24 million primarily relates to existing technology that is amortized to cost of revenue over the
weighted average useful life of 6 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.
Note 15. Quarterly Results of Operations (unaudited)
2011(1) First Second Third Fourth
Revenue, net .......................................... $2,396 $2,475 $2,252 $2,403
Gross margin ......................................... 437 475 410 469
Operating income ...................................... 211 240 158 172
Net income .......................................... 197 225 146 158
Basic income per common share ............................ $ 0.86 $ 0.98 $ 0.63 $ 0.68
Diluted income per common share .......................... $ 0.84 $ 0.96 $ 0.62 $ 0.67
2010(2)
Revenue, net .......................................... $2,208 $2,619 $2,641 $2,382
Gross margin ......................................... 514 687 665 535
Operating income ...................................... 319 473 441 293
Net income .......................................... 288 429 400 265
Basic income per common share ............................ $ 1.28 $ 1.89 $ 1.75 $ 1.15
Diluted income per common share .......................... $ 1.25 $ 1.85 $ 1.71 $ 1.13
(1) The third quarter of 2011 included $10 million of expenses related to the planned acquisition of HGST. The fourth
quarter of 2011 included a $25 million accrual for litigation contingencies, $7 million of expenses related to the
planned acquisition of HGST, and $2 million of debt commitment fees related to the planned acquisition of HGST.
(2) The fourth quarter of 2010 included $27 million in expenses related to litigation settlements.
75
WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)