WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Property, Plant and Equipment
The property, plant and equipment acquired as part of the Acquisition were valued using either the replacement
cost or market value approach, as appropriate, as of the Closing Date. The following table summarizes the preliminary
estimated fair value of the property, plant and equipment acquired from HGST and their estimated useful lives:
Estimated Fair
Value
Estimated
Weighted-
Average
Useful Life
(In millions)
(In years)
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 214
--
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
240
30.5
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,316
3.9
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
3.4
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
39
3.9
Total property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,813
Inventories
The Company acquired $721 million of inventories as a result of the Acquisition. Finished goods were valued at
estimated selling prices less costs of disposal and a reasonable profit allowance for the selling effort. Work-in-process
inventory was valued at estimated selling prices less costs to complete, costs of disposal and a reasonable profit allow-
ance for the completion and selling effort, or at estimated replacement costs for certain components. Raw materials
were valued at estimated replacement cost at the Closing Date.
Warranty
The product warranty obligation assumed as a result of Acquisition was recognized at its estimated fair value of
$139 million.
Stock-Based Compensation
In connection with the Acquisition, each outstanding HGST option, cash-settled SAR and RSU that was
unvested as of the Closing Date was converted into equivalent options, cash-settled SARs and RSUs, with respect to
shares of the Company's common stock, using an equity award exchange ratio in accordance with the SPA. All awards
will be recognized by the Company over the remaining service periods. As of June 29, 2012, the future expense for the
assumed HGST unvested options, SARs and RSUs was $77.4 million, which will be recognized over a weighted aver-
age service period of approximately 1.8 years.
Identifiable Intangible Assets Acquired
The following table summarizes the preliminary fair values and estimated useful lives of the intangibles acquired
from HGST:
Estimated Fair
Value
Estimated
Weighted-
Average Useful Life
(In millions)
(In years)
Existing technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$438
3.7
Customer relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
146
3.4
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
64
2.8
Leasehold interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
43
28.4
In-process research and development . . . . . . . . . . . . . . . . . . . . . . . . . . .
143
--
Total acquired identifiable intangible assets . . . . . . . . . . . . . . . . . . .
$834
87