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WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Stock-based Compensation
The Company accounts for all stock-based compensation at fair value. Stock-based compensation cost is measured
at the grant date based on the value of the award and is recognized as expense over the vesting period. The fair values
of all stock options granted are estimated using a binomial option-pricing model, and the fair values of all ESPP pur-
chase rights are estimated using the Black-Scholes-Merton option-pricing model. The Company accounts for stock
appreciation rights (“SARs”) as liability awards based upon management’s intention to settle such awards in cash. The
SARs liability is recognized for that portion of fair value for the service period rendered at the reporting date. The
share-based liability is remeasured at each reporting date through the requisite service period. Both the binomial and
the Black-Scholes-Merton option-pricing models require the input of highly subjective assumptions. The Company is
required to use judgment in estimating the amount of stock-based awards that are expected to be forfeited. If actual
forfeitures differ significantly from the original estimate, stock-based compensation expense and the results of oper-
ations could be materially affected.
Other Comprehensive Income (Loss)
Other comprehensive income (loss) refers to revenue, expenses, gains and losses that are recorded as an element of
shareholders’ equity but are excluded from net income. The Company’s other comprehensive income (loss) is com-
prised of unrealized gains and losses on foreign exchange contracts, foreign currency translation gains and losses, and
actuarial gains and losses related to pensions. The income tax impact on components of other comprehensive income is
immaterial for all periods presented.
The following table illustrates the changes in the balances of each component of accumulated comprehensive
income for 2015, 2014 and 2013:
Actuarial
Pension
Gains
(Losses)
Foreign
Currency
Translation
Gains
(Losses)
Unrealized
Gains
(Losses)
on Foreign
Exchange
Contracts
Accumulated
Other
Comprehensive
Income (Loss)
Balance at June 29, 2012 ............................ $(3) $ 4 $(16) $(15)
Other comprehensive income 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
Other comprehensive income before reclassifications .... — — (74) (74)
Amounts reclassified from accumulated other
comprehensive income ......................... (2) — 44 42
Net current-period other comprehensive income (loss) ....... (2) — (30) (32)
Balance at July 3, 2015 ............................. $ 5 $— $(25) $(20)
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