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WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following table illustrates the changes in the balances of each component of accumulated comprehensive
income for 2014, 2013 and 2012:
Actuarial
Pension
Gains
(Losses)
Foreign
Currency
Translation
Gains
(Losses)
Unrealized
Gains
(Losses)
on Foreign
Exchange
Contracts
Accumulated
Other
Comprehensive
Income (Loss)
Balance at July 1, 2011 ............................. $— $— $ (5) $ (5)
Other comprehensive income before reclassifications ...... — — (12) (12)
Amounts reclassified from accumulated other
comprehensive income ........................... (3) 4 1 2
Net current-period other comprehensive income (loss) ....... (3) 4 (11) (10)
Balance at June 29, 2012 ............................ $(3) $ 4 $(16) $(15)
Other comprehensive loss before reclassifications ......... — — 13 13
Amounts reclassified from accumulated other
comprehensive income ........................... 14 (4) (43) (33)
Net current-period other comprehensive income (loss) ....... 14 (4) (30) (20)
Balance at June 28, 2013 ............................ $11 $— $(46) $(35)
Other comprehensive income before reclassifications ...... — — 13 13
Amounts reclassified from accumulated other
comprehensive income ........................... (4) — 38 34
Net current-period other comprehensive income (loss) ....... (4) — 51 47
Balance at June 27, 2014 ............................ $ 7 $— $ 5 $12
Foreign Exchange Contracts
Although the majority of the Company’s transactions are in U.S. dollars, some transactions are based in various
foreign currencies. The Company purchases short-term, foreign exchange contracts to hedge the impact of foreign
currency fluctuations on certain underlying assets, liabilities and commitments for operating expenses and product
costs denominated in foreign currencies. The purpose of entering into these hedging transactions is to minimize the
impact of foreign currency fluctuations on the Company’s results of operations. These contract maturity dates do not
exceed 12 months. All foreign exchange contracts are for risk management purposes only. The Company does not
purchase foreign exchange contracts for trading purposes. The Company had foreign exchange contracts with
commercial banks for British Pound Sterling, Euro, Japanese Yen, Malaysian Ringgit, Philippine Peso, Singapore
Dollar and Thai Baht, which were designated as either cash flow or fair value hedges and had an aggregate notional
amount of $1.5 billion and $2.0 billion at June 27, 2014 and June 28, 2013, respectively.
If the derivative is designated as a cash flow hedge, the effective portion of the change in fair value of the
derivative is initially deferred in other comprehensive income (loss), net of tax and presented within cash flow from
operations. These amounts are subsequently recognized into earnings when the underlying cash flow being hedged is
recognized into earnings. Recognized gains and losses on foreign exchange contracts entered into for manufacturing-
related activities are reported in cost of revenue and presented within cash flow from operations. Hedge effectiveness is
measured by comparing the hedging instrument’s cumulative change in fair value from inception to maturity to the
underlying exposure’s terminal value. The Company determined the ineffectiveness associated with its cash flow
hedges to be immaterial for all years presented.
66