Western Digital (WDC)

 

Komag had an in-process research and development project associated with technology for higher recording densities on advanced perpendicular recording media. The project is expected to incorporate significant changes in the magnetic structure of the media to achieve higher recording density. As these advanced products were not ready for commercial production and had no alternative future use, the development effort did not qualify for capitalization. Accordingly, the Company recorded $49 million as a charge to research and development expense at the time of the Acquisition. Costs to complete the development of this technology were expected to approximate $5 million as of the acquisition date and utilize existing engineering personnel. This technology may be necessary to remain competitive with anticipated industry advances in areal recording densities for thin-film media. The in-process research and development was valued using the Excess Earnings Method under the Income Approach. This approach reflects the present value of projected cash flows that a market participant would expect to generate from these technologies less costs related to the contribution of other assets to those cash flows.

 

 

Komag had an in-process research and development project
associated with technology for higher recording densities on
advanced perpendicular recording media. The project is expected
to incorporate significant changes in the magnetic structure of
the media to achieve higher recording density. As these advanced
products were not ready for commercial production and had no
alternative future use, the development effort did not qualify
for capitalization. Accordingly, the Company recorded
$49 million as a charge to research and development expense
at the time of the Acquisition. Costs to complete the
development of this technology were expected to approximate
$5 million as of the acquisition date and utilize existing
engineering personnel. This technology may be necessary to
remain competitive with anticipated industry advances in areal
recording densities for thin-film media. The in-process research
and development was valued using the Excess Earnings Method
under the Income Approach. This approach reflects the present
value of projected cash flows that a market participant would
expect to generate from these technologies less costs related to
the contribution of other assets to those cash flows.