WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
The following table presents the unfunded amounts as recognized on the Company's consolidated balance sheets
as of June 29, 2012 (in millions):
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
(3)
Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(116)
Net amount recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(119)
The accumulated benefit obligation for the Japanese defined benefit pension plans was $283 million at June 29,
2012. Net losses and prior service credits for the defined benefit pension plans of $3 million and less than $1 million,
respectively, are recognized in accumulated other comprehensive loss in the consolidated balance sheet as of June 29,
2012. The amount expected to be amortized into net periodic benefit cost in fiscal 2013 is immaterial to the con-
solidated financial statements.
Assumptions
Weighted-Average Assumptions
The weighted-average actuarial assumptions used to determine benefit obligations for the Japanese defined bene-
fit pension plans were as follows from the Closing Date through June 29, 2012:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.8%
Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.4%
The weighted-average actuarial assumptions used to determine benefit costs for the Japanese defined benefit
pension plans were as follows from the Closing Date through June 29, 2012:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.9%
Expected long-term rate of return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.5%
Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.4%
The Company develops a discount rate by calculating when the estimated benefit payments will be due. Manage-
ment in Japan then matches the benefit payments to AA or higher bond ratings that match the timing of the expected
benefit payments to determine the appropriate discount rate.
The Company develops the expected long-term rate of return on plan assets by analyzing rates of return in Japan
as well as the investment portfolio applicable to the plan. Management's estimates of future rates of return on assets is
based in large part on the projected rate of return from the respective investment managers using a long-term view of
historical returns, as well as actuarial recommendations using the most current generational and mortality tables and
rates.
The Company develops the rate of compensation increase assumptions using local compensation practices and
historical rates of increases.
Plan Assets
Investment Policies and Strategies
The investment policy in Japan is to generate a stable return on investments over a long-term horizon in order to
have adequate pension funds to meet the Company's future obligations. In order to achieve this investment goal, a
diversified portfolio with target asset allocation and expected rate of return is established by considering factors such
as composition of participants, level of funded status, capacity to absorb risks, and the current economic environment.
The target asset allocation is 22% to 35% in equity securities, 46% to 62% in debt securities and the remaining 3%
to 32% in other assets. Risk management is accomplished through diversification, periodic review of plan asset
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