Western Digital 2014 Annual Report Download - page 100

Download and view the complete annual report

Please find page 100 of the 2014 Western Digital annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 124

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124

WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Since the date of acquisition, the Company recorded an increase of $4 million to goodwill to reflect an adjust-
ment to the value of deferred tax assets and an adjustment to the value of investments acquired in the acquisition of
Virident. The $506 million of goodwill recognized is primarily attributable to the benefits the Company expects to
derive from an ability to create server-side flash storage solutions leveraging the core technology acquired and is not
expected to be deductible for tax purposes. The impact to revenue and net income attributable to Virident was imma-
terial to the Company’s consolidated financial statements in 2014.
Acquisition of sTec
On September 12, 2013, the Company completed its acquisition of sTec, a provider of enterprise solid-state
drives. As a result of the acquisition, sTec has been fully integrated into the Company’s HGST subsidiary and become
a wholly owned indirect subsidiary of the Company. The purchase price of the acquisition was approximately $336
million, consisting of $325 million which was funded with available cash, and $11 million related to the fair value of
stock options and RSUs assumed. The acquisition augmented HGST’s existing solid-state storage capabilities.
The Company identified and recorded the assets acquired and liabilities assumed at their estimated fair values at
the date of acquisition, and allocated the remaining value of $89 million to goodwill. The values assigned to the
acquired assets and liabilities are based on preliminary estimates of fair value available as of the date of this Annual
Report on Form 10-K, and may be adjusted as further information becomes available during the measurement period
of up to 12 months from the date of the acquisition. The primary areas of the preliminary purchase price allocation
that are not yet finalized due to information that may become available subsequently include contingencies and
income taxes, and any changes in these fair values could potentially result in material adjustments to goodwill. The
individual tangible and intangible assets acquired as well as the liabilities assumed in the acquisition were immaterial
to the Company’s consolidated financial statements. In addition, pro forma financial information has not been pre-
sented as the acquisition did not have a material impact on the Company’s consolidated financial statements for 2014.
The preliminary purchase price allocation for sTec was as follows (in millions):
September 12,
2013
Tangible assets acquired and liabilities assumed .................................. $189
Intangible assets .......................................................... 58
Goodwill ................................................................ 89
Total ................................................................... $336
Since the date of acquisition, the Company recorded a $1 million increase to goodwill to reflect an adjustment to
the value of deferred tax assets acquired in the acquisition of sTec. The $89 million of goodwill recognized is primar-
ily attributable to the benefits the Company expects to derive from augmenting HGST’s existing solid-state storage
capabilities and accelerating its ability to expand its participation in the growing area of enterprise solid-state drives
and is not expected to be deductible for tax purposes. The impact to revenue and net income attributable to sTec was
immaterial to the Company’s consolidated financial statements for 2014 .
Acquisition of VeloBit
On July 9, 2013, the Company acquired VeloBit, a privately held provider of high-performance storage I/O
optimization software. As a result of the acquisition, VeloBit was fully integrated into the Company’s HGST sub-
sidiary and became a wholly owned indirect subsidiary of the Company. The acquisition built on HGST’s strategy to
enhance the overall value of datacenter storage by integrating HGST SSDs with software. The acquisition was not
material to the Company’s consolidated financial statements.
94