wdc-202303310000106040--06-302023Q3false3http://fasb.org/us-gaap/2022#AccruedLiabilitiesCurrenthttp://fasb.org/us-gaap/2022#OtherLiabilitiesNoncurrenthttp://fasb.org/us-gaap/2022#OtherAssetsNoncurrent0.3300001060402022-07-022023-03-3100001060402023-04-26xbrli:shares00001060402023-03-31iso4217:USD00001060402022-07-01iso4217:USDxbrli:shares00001060402022-12-312023-03-3100001060402022-01-012022-04-0100001060402021-07-032022-04-0100001060402021-07-0200001060402022-04-010000106040us-gaap:CommonStockMember2022-07-010000106040us-gaap:AdditionalPaidInCapitalMember2022-07-010000106040us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-010000106040us-gaap:RetainedEarningsMember2022-07-010000106040us-gaap:RetainedEarningsMember2022-07-022022-09-3000001060402022-07-022022-09-300000106040srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AdditionalPaidInCapitalMember2022-07-010000106040srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:RetainedEarningsMember2022-07-010000106040srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2022-07-010000106040us-gaap:CommonStockMember2022-07-022022-09-300000106040us-gaap:AdditionalPaidInCapitalMember2022-07-022022-09-300000106040us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-022022-09-3000001060402022-09-300000106040us-gaap:CommonStockMember2022-09-300000106040us-gaap:AdditionalPaidInCapitalMember2022-09-300000106040us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300000106040us-gaap:RetainedEarningsMember2022-09-300000106040us-gaap:RetainedEarningsMember2022-10-012022-12-3000001060402022-10-012022-12-300000106040us-gaap:CommonStockMember2022-10-012022-12-300000106040us-gaap:AdditionalPaidInCapitalMember2022-10-012022-12-300000106040us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-10-012022-12-3000001060402022-12-300000106040us-gaap:CommonStockMember2022-12-300000106040us-gaap:AdditionalPaidInCapitalMember2022-12-300000106040us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-300000106040us-gaap:RetainedEarningsMember2022-12-300000106040us-gaap:RetainedEarningsMember2022-12-312023-03-310000106040us-gaap:AdditionalPaidInCapitalMember2022-12-312023-03-310000106040us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-312023-03-310000106040us-gaap:CommonStockMember2023-03-310000106040us-gaap:AdditionalPaidInCapitalMember2023-03-310000106040us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310000106040us-gaap:RetainedEarningsMember2023-03-310000106040us-gaap:CommonStockMember2021-07-020000106040us-gaap:TreasuryStockCommonMember2021-07-020000106040us-gaap:AdditionalPaidInCapitalMember2021-07-020000106040us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-020000106040us-gaap:RetainedEarningsMember2021-07-020000106040us-gaap:RetainedEarningsMember2021-07-032021-10-0100001060402021-07-032021-10-010000106040us-gaap:TreasuryStockCommonMember2021-07-032021-10-010000106040us-gaap:AdditionalPaidInCapitalMember2021-07-032021-10-010000106040us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-032021-10-010000106040us-gaap:CommonStockMember2021-10-010000106040us-gaap:TreasuryStockCommonMember2021-10-010000106040us-gaap:AdditionalPaidInCapitalMember2021-10-010000106040us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-10-010000106040us-gaap:RetainedEarningsMember2021-10-0100001060402021-10-010000106040us-gaap:RetainedEarningsMember2021-10-022021-12-3100001060402021-10-022021-12-310000106040us-gaap:CommonStockMember2021-10-022021-12-310000106040us-gaap:TreasuryStockCommonMember2021-10-022021-12-310000106040us-gaap:AdditionalPaidInCapitalMember2021-10-022021-12-310000106040us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-10-022021-12-310000106040us-gaap:CommonStockMember2021-12-310000106040us-gaap:TreasuryStockCommonMember2021-12-310000106040us-gaap:AdditionalPaidInCapitalMember2021-12-310000106040us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310000106040us-gaap:RetainedEarningsMember2021-12-3100001060402021-12-310000106040us-gaap:RetainedEarningsMember2022-01-012022-04-010000106040us-gaap:AdditionalPaidInCapitalMember2022-01-012022-04-010000106040us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-04-010000106040us-gaap:CommonStockMember2022-04-010000106040us-gaap:TreasuryStockCommonMember2022-04-010000106040us-gaap:AdditionalPaidInCapitalMember2022-04-010000106040us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-010000106040us-gaap:RetainedEarningsMember2022-04-01wdc:segment0000106040srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AccountingStandardsUpdate202006Member2022-07-020000106040wdc:FlashSegmentMemberus-gaap:OperatingSegmentsMember2022-12-312023-03-310000106040wdc:FlashSegmentMemberus-gaap:OperatingSegmentsMember2022-01-012022-04-010000106040wdc:FlashSegmentMemberus-gaap:OperatingSegmentsMember2022-07-022023-03-310000106040wdc:FlashSegmentMemberus-gaap:OperatingSegmentsMember2021-07-032022-04-010000106040wdc:HDDMemberus-gaap:OperatingSegmentsMember2022-12-312023-03-310000106040wdc:HDDMemberus-gaap:OperatingSegmentsMember2022-01-012022-04-010000106040wdc:HDDMemberus-gaap:OperatingSegmentsMember2022-07-022023-03-310000106040wdc:HDDMemberus-gaap:OperatingSegmentsMember2021-07-032022-04-010000106040us-gaap:OperatingSegmentsMember2022-12-312023-03-310000106040us-gaap:OperatingSegmentsMember2022-01-012022-04-010000106040us-gaap:OperatingSegmentsMember2022-07-022023-03-310000106040us-gaap:OperatingSegmentsMember2021-07-032022-04-010000106040us-gaap:CorporateNonSegmentMember2022-12-312023-03-310000106040us-gaap:CorporateNonSegmentMember2022-01-012022-04-010000106040us-gaap:CorporateNonSegmentMember2022-07-022023-03-310000106040us-gaap:CorporateNonSegmentMember2021-07-032022-04-010000106040wdc:FlashSegmentMember2022-12-312023-03-31xbrli:pure0000106040wdc:FlashSegmentMember2022-01-012022-04-010000106040wdc:FlashSegmentMember2022-07-022023-03-310000106040wdc:FlashSegmentMember2021-07-032022-04-010000106040wdc:HDDMember2022-12-312023-03-310000106040wdc:HDDMember2022-01-012022-04-010000106040wdc:HDDMember2022-07-022023-03-310000106040wdc:HDDMember2021-07-032022-04-010000106040wdc:CloudMember2022-12-312023-03-310000106040wdc:CloudMember2022-01-012022-04-010000106040wdc:CloudMember2022-07-022023-03-310000106040wdc:CloudMember2021-07-032022-04-010000106040wdc:ClientDevicesMember2022-12-312023-03-310000106040wdc:ClientDevicesMember2022-01-012022-04-010000106040wdc:ClientDevicesMember2022-07-022023-03-310000106040wdc:ClientDevicesMember2021-07-032022-04-010000106040wdc:RetailProductsMember2022-12-312023-03-310000106040wdc:RetailProductsMember2022-01-012022-04-010000106040wdc:RetailProductsMember2022-07-022023-03-310000106040wdc:RetailProductsMember2021-07-032022-04-010000106040srt:AsiaMember2022-12-312023-03-310000106040srt:AsiaMember2022-01-012022-04-010000106040srt:AsiaMember2022-07-022023-03-310000106040srt:AsiaMember2021-07-032022-04-010000106040srt:AmericasMember2022-12-312023-03-310000106040srt:AmericasMember2022-01-012022-04-010000106040srt:AmericasMember2022-07-022023-03-310000106040srt:AmericasMember2021-07-032022-04-010000106040wdc:EuropeMiddleEastAndAfricaMember2022-12-312023-03-310000106040wdc:EuropeMiddleEastAndAfricaMember2022-01-012022-04-010000106040wdc:EuropeMiddleEastAndAfricaMember2022-07-022023-03-310000106040wdc:EuropeMiddleEastAndAfricaMember2021-07-032022-04-010000106040wdc:TopTenCustomersMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMember2022-12-312023-03-310000106040wdc:TopTenCustomersMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMember2022-07-022023-03-310000106040wdc:TopTenCustomersMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMember2022-01-012022-04-010000106040wdc:TopTenCustomersMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMember2021-07-032022-04-010000106040wdc:FlashSegmentMember2022-07-010000106040wdc:HDDMember2022-07-010000106040wdc:FlashSegmentMember2023-03-310000106040wdc:HDDMember2023-03-310000106040wdc:FlashSegmentMember2022-12-300000106040wdc:HDDMember2022-12-3000001060402023-04-012023-03-3100001060402023-07-012023-03-310000106040us-gaap:LandMember2023-03-310000106040us-gaap:LandMember2022-07-010000106040us-gaap:BuildingAndBuildingImprovementsMember2023-03-310000106040us-gaap:BuildingAndBuildingImprovementsMember2022-07-010000106040us-gaap:MachineryAndEquipmentMember2023-03-310000106040us-gaap:MachineryAndEquipmentMember2022-07-010000106040wdc:ComputerEquipmentandSoftwareMember2023-03-310000106040wdc:ComputerEquipmentandSoftwareMember2022-07-010000106040us-gaap:FurnitureAndFixturesMember2023-03-310000106040us-gaap:FurnitureAndFixturesMember2022-07-010000106040us-gaap:ConstructionInProgressMember2023-03-310000106040us-gaap:ConstructionInProgressMember2022-07-010000106040us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2022-07-010000106040us-gaap:AccumulatedTranslationAdjustmentMember2022-07-010000106040us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-07-010000106040us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2022-07-022023-03-310000106040us-gaap:AccumulatedTranslationAdjustmentMember2022-07-022023-03-310000106040us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-07-022023-03-310000106040us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2023-03-310000106040us-gaap:AccumulatedTranslationAdjustmentMember2023-03-310000106040us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-03-310000106040us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-03-310000106040us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2023-03-310000106040us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2023-03-310000106040us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2023-03-310000106040us-gaap:FairValueInputsLevel1Memberus-gaap:ForeignExchangeContractMemberus-gaap:FairValueMeasurementsRecurringMember2023-03-310000106040us-gaap:ForeignExchangeContractMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2023-03-310000106040us-gaap:ForeignExchangeContractMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2023-03-310000106040us-gaap:ForeignExchangeContractMemberus-gaap:FairValueMeasurementsRecurringMember2023-03-310000106040us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-03-310000106040us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2023-03-310000106040us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2023-03-310000106040us-gaap:FairValueMeasurementsRecurringMember2023-03-310000106040us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-07-010000106040us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-07-010000106040us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-07-010000106040us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2022-07-010000106040us-gaap:FairValueInputsLevel1Memberus-gaap:ForeignExchangeContractMemberus-gaap:FairValueMeasurementsRecurringMember2022-07-010000106040us-gaap:ForeignExchangeContractMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-07-010000106040us-gaap:ForeignExchangeContractMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-07-010000106040us-gaap:ForeignExchangeContractMemberus-gaap:FairValueMeasurementsRecurringMember2022-07-010000106040us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMember2022-07-010000106040us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel2Member2022-07-010000106040us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel3Member2022-07-010000106040us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMember2022-07-010000106040us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-07-010000106040us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-07-010000106040us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-07-010000106040us-gaap:FairValueMeasurementsRecurringMember2022-07-010000106040us-gaap:ConvertibleDebtMemberwdc:OnePointFiftyPercentSeniorConvertibleNotesDueTwoThousandTwentyFourMember2023-03-310000106040us-gaap:ConvertibleDebtMemberwdc:OnePointFiftyPercentSeniorConvertibleNotesDueTwoThousandTwentyFourMember2022-07-010000106040us-gaap:CarryingReportedAmountFairValueDisclosureMemberwdc:OnePointFiftyPercentSeniorConvertibleNotesDueTwoThousandTwentyFourMemberus-gaap:FairValueInputsLevel2Member2023-03-310000106040us-gaap:EstimateOfFairValueFairValueDisclosureMemberwdc:OnePointFiftyPercentSeniorConvertibleNotesDueTwoThousandTwentyFourMemberus-gaap:FairValueInputsLevel2Member2023-03-310000106040us-gaap:CarryingReportedAmountFairValueDisclosureMemberwdc:OnePointFiftyPercentSeniorConvertibleNotesDueTwoThousandTwentyFourMemberus-gaap:FairValueInputsLevel2Member2022-07-010000106040us-gaap:EstimateOfFairValueFairValueDisclosureMemberwdc:OnePointFiftyPercentSeniorConvertibleNotesDueTwoThousandTwentyFourMemberus-gaap:FairValueInputsLevel2Member2022-07-010000106040wdc:FourPointSeventyFivePercentSeniorUnsecuredNotesDueTwoThousandTwentySixMember2023-03-310000106040wdc:FourPointSeventyFivePercentSeniorUnsecuredNotesDueTwoThousandTwentySixMember2022-07-010000106040wdc:FourPointSeventyFivePercentSeniorUnsecuredNotesDueTwoThousandTwentySixMemberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2023-03-310000106040wdc:FourPointSeventyFivePercentSeniorUnsecuredNotesDueTwoThousandTwentySixMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2023-03-310000106040wdc:FourPointSeventyFivePercentSeniorUnsecuredNotesDueTwoThousandTwentySixMemberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2022-07-010000106040wdc:FourPointSeventyFivePercentSeniorUnsecuredNotesDueTwoThousandTwentySixMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2022-07-010000106040us-gaap:CarryingReportedAmountFairValueDisclosureMemberwdc:TermLoanA2Memberus-gaap:FairValueInputsLevel2Member2023-03-310000106040wdc:TermLoanA2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2023-03-310000106040us-gaap:CarryingReportedAmountFairValueDisclosureMemberwdc:TermLoanA2Memberus-gaap:FairValueInputsLevel2Member2022-07-010000106040wdc:TermLoanA2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2022-07-010000106040wdc:TwoPointEightyFivePercentSeniorUnsecuredNotesDueTwoThousandTwentyNineMember2023-03-310000106040wdc:TwoPointEightyFivePercentSeniorUnsecuredNotesDueTwoThousandTwentyNineMember2022-07-010000106040us-gaap:CarryingReportedAmountFairValueDisclosureMemberwdc:TwoPointEightyFivePercentSeniorUnsecuredNotesDueTwoThousandTwentyNineMemberus-gaap:FairValueInputsLevel2Member2023-03-310000106040wdc:TwoPointEightyFivePercentSeniorUnsecuredNotesDueTwoThousandTwentyNineMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2023-03-310000106040us-gaap:CarryingReportedAmountFairValueDisclosureMemberwdc:TwoPointEightyFivePercentSeniorUnsecuredNotesDueTwoThousandTwentyNineMemberus-gaap:FairValueInputsLevel2Member2022-07-010000106040wdc:TwoPointEightyFivePercentSeniorUnsecuredNotesDueTwoThousandTwentyNineMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2022-07-010000106040wdc:ThreePointTenPercentSeniorUnsecuredNotesDueTwoThousandThirtyTwoMember2023-03-310000106040wdc:ThreePointTenPercentSeniorUnsecuredNotesDueTwoThousandThirtyTwoMember2022-07-010000106040wdc:ThreePointTenPercentSeniorUnsecuredNotesDueTwoThousandThirtyTwoMemberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2023-03-310000106040wdc:ThreePointTenPercentSeniorUnsecuredNotesDueTwoThousandThirtyTwoMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2023-03-310000106040wdc:ThreePointTenPercentSeniorUnsecuredNotesDueTwoThousandThirtyTwoMemberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2022-07-010000106040wdc:ThreePointTenPercentSeniorUnsecuredNotesDueTwoThousandThirtyTwoMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2022-07-010000106040us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2023-03-310000106040us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2023-03-310000106040us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2022-07-010000106040us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2022-07-010000106040wdc:ForeignExchangeForwardContractsDesignatedMember2022-07-022023-03-310000106040wdc:TermLoanA2Member2023-03-310000106040wdc:TermLoanA2Member2022-07-010000106040us-gaap:RevolvingCreditFacilityMemberwdc:RevolvingCreditFacility2027Member2023-03-310000106040us-gaap:RevolvingCreditFacilityMemberwdc:DebtInstrumentCovenantPeriodTwoMember2023-03-310000106040wdc:DebtInstrumentCovenantPeriodThreeMemberus-gaap:RevolvingCreditFacilityMember2023-03-310000106040us-gaap:RevolvingCreditFacilityMemberwdc:DebtInstrumentCovenantPeriodFourMember2023-03-310000106040wdc:DebtInstrumentCovenantPeriodFiveMemberus-gaap:RevolvingCreditFacilityMember2023-03-310000106040wdc:DebtInstrumentCovenantPeriodSixMemberus-gaap:RevolvingCreditFacilityMember2023-03-310000106040wdc:DebtInstrumentCovenantPeriodSevenMemberus-gaap:RevolvingCreditFacilityMember2023-03-310000106040wdc:DebtInstrumentCovenantPeriodEightMemberus-gaap:RevolvingCreditFacilityMember2023-03-310000106040wdc:DebtInstrumentCovenantPeriodNineMemberus-gaap:RevolvingCreditFacilityMember2023-03-310000106040srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:ConvertibleDebtMemberwdc:OnePointFiftyPercentSeniorConvertibleNotesDueTwoThousandTwentyFourMember2023-03-310000106040srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:ConvertibleDebtMemberwdc:OnePointFiftyPercentSeniorConvertibleNotesDueTwoThousandTwentyFourMember2022-07-020000106040wdc:DelayedDrawTermLoanAgreementMemberus-gaap:RevolvingCreditFacilityMember2023-01-310000106040wdc:DelayedDrawTermLoanAgreementMemberus-gaap:LineOfCreditMember2023-01-012023-01-310000106040srt:MinimumMemberwdc:DelayedDrawTermLoanAgreementMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMemberus-gaap:LineOfCreditMember2023-01-012023-01-310000106040srt:MaximumMemberwdc:DelayedDrawTermLoanAgreementMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMemberus-gaap:LineOfCreditMember2023-01-012023-01-310000106040us-gaap:BaseRateMembersrt:MinimumMemberwdc:DelayedDrawTermLoanAgreementMemberus-gaap:LineOfCreditMember2023-01-012023-01-310000106040us-gaap:BaseRateMembersrt:MaximumMemberwdc:DelayedDrawTermLoanAgreementMemberus-gaap:LineOfCreditMember2023-01-012023-01-310000106040srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AccountingStandardsUpdate202006Memberus-gaap:ConvertibleDebtMemberwdc:OnePointFiftyPercentSeniorConvertibleNotesDueTwoThousandTwentyFourMember2022-07-02wdc:entity0000106040wdc:FlashPartnersLtdMember2023-03-310000106040wdc:FlashPartnersLtdMember2022-07-010000106040wdc:FlashAllianceLtdMember2023-03-310000106040wdc:FlashAllianceLtdMember2022-07-010000106040wdc:FlashForwardLtdMember2023-03-310000106040wdc:FlashForwardLtdMember2022-07-010000106040us-gaap:EquityMethodInvesteeMember2023-03-310000106040us-gaap:EquityMethodInvesteeMember2022-07-010000106040us-gaap:EquityMethodInvesteeMember2022-12-312023-03-310000106040us-gaap:EquityMethodInvesteeMember2022-07-022023-03-310000106040us-gaap:EquityMethodInvesteeMember2022-01-012022-04-010000106040us-gaap:EquityMethodInvesteeMember2021-07-032022-04-010000106040us-gaap:EquityMethodInvesteeMember2023-03-310000106040us-gaap:EquityMethodInvesteeMember2022-07-010000106040us-gaap:NotesReceivableMemberus-gaap:EquityMethodInvesteeMember2023-03-310000106040us-gaap:EquityMethodInvestmentsMemberus-gaap:EquityMethodInvesteeMember2023-03-310000106040us-gaap:EquityMethodInvesteeMemberwdc:OffBalanceSheetGuaranteeMember2023-03-310000106040us-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:EquityMethodInvesteeMember2023-03-310000106040us-gaap:EquityMethodInvesteeMember2023-03-310000106040srt:MinimumMemberwdc:WesternDigitalCorpMember2023-03-310000106040srt:MaximumMemberwdc:WesternDigitalCorpMember2023-03-31iso4217:JPY0000106040us-gaap:EquityMethodInvesteeMemberwdc:PaymentOfPrincipalAmortizationMember2023-03-310000106040wdc:PurchaseOptionExercisePriceMemberus-gaap:EquityMethodInvesteeMember2023-03-310000106040wdc:UnisVentureMember2023-03-310000106040wdc:UnisVentureMemberwdc:UnissoftWuxiGroupCoLtd.Member2023-03-310000106040wdc:UnisVentureMemberus-gaap:ProductConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMember2022-12-312023-03-310000106040wdc:UnisVentureMemberus-gaap:ProductConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMember2022-07-022023-03-310000106040wdc:UnisVentureMemberus-gaap:ProductConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMember2021-07-032022-04-010000106040wdc:UnisVentureMemberus-gaap:ProductConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMember2022-01-012022-04-010000106040wdc:UnisVentureMemberus-gaap:ProductConcentrationRiskMemberwdc:AccountsReceivableBenchmarkMember2022-07-022023-03-310000106040wdc:UnisVentureMemberus-gaap:ProductConcentrationRiskMemberwdc:AccountsReceivableBenchmarkMember2021-07-032022-07-010000106040wdc:RestrictedStockUnitsAndPerformanceStockUnitsMember2022-12-312023-03-310000106040wdc:RestrictedStockUnitsAndPerformanceStockUnitsMember2022-01-012022-04-010000106040wdc:RestrictedStockUnitsAndPerformanceStockUnitsMember2022-07-022023-03-310000106040wdc:RestrictedStockUnitsAndPerformanceStockUnitsMember2021-07-032022-04-010000106040wdc:EmployeeStockPurchasePlanMember2022-12-312023-03-310000106040wdc:EmployeeStockPurchasePlanMember2022-01-012022-04-010000106040wdc:EmployeeStockPurchasePlanMember2022-07-022023-03-310000106040wdc:EmployeeStockPurchasePlanMember2021-07-032022-04-010000106040us-gaap:CostOfSalesMember2022-12-312023-03-310000106040us-gaap:CostOfSalesMember2022-01-012022-04-010000106040us-gaap:CostOfSalesMember2022-07-022023-03-310000106040us-gaap:CostOfSalesMember2021-07-032022-04-010000106040us-gaap:ResearchAndDevelopmentExpenseMember2022-12-312023-03-310000106040us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-04-010000106040us-gaap:ResearchAndDevelopmentExpenseMember2022-07-022023-03-310000106040us-gaap:ResearchAndDevelopmentExpenseMember2021-07-032022-04-010000106040us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-12-312023-03-310000106040us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-01-012022-04-010000106040us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-07-022023-03-310000106040us-gaap:SellingGeneralAndAdministrativeExpensesMember2021-07-032022-04-010000106040wdc:RestrictedStockUnitsAndPerformanceStockUnitsMember2023-03-310000106040wdc:EmployeeStockPurchasePlanMember2023-03-310000106040wdc:RestrictedStockUnitsAndPerformanceShareUnitsMember2022-07-010000106040wdc:RestrictedStockUnitsAndPerformanceShareUnitsMember2022-07-022023-03-310000106040wdc:RestrictedStockUnitsAndPerformanceShareUnitsMember2023-03-310000106040us-gaap:SeriesAPreferredStockMemberus-gaap:PrivatePlacementMember2023-01-310000106040us-gaap:PrivatePlacementMemberus-gaap:ConvertiblePreferredStockMember2023-01-310000106040us-gaap:PrivatePlacementMemberus-gaap:ConvertiblePreferredStockMember2023-01-312023-01-310000106040us-gaap:PrivatePlacementMemberus-gaap:ConvertiblePreferredStockMemberwdc:January312030Member2023-01-312023-01-310000106040wdc:January312033Memberus-gaap:PrivatePlacementMemberus-gaap:ConvertiblePreferredStockMember2023-01-312023-01-310000106040us-gaap:PrivatePlacementMemberus-gaap:ConvertiblePreferredStockMember2023-03-310000106040us-gaap:PrivatePlacementMemberus-gaap:ConvertiblePreferredStockMember2022-07-022023-03-310000106040us-gaap:ConvertiblePreferredStockMember2023-01-312023-01-310000106040srt:MaximumMemberus-gaap:ConvertiblePreferredStockMember2023-01-312023-01-310000106040srt:MinimumMemberus-gaap:ConvertiblePreferredStockMember2023-01-312023-01-31wdc:day0000106040us-gaap:ConvertiblePreferredStockMember2022-07-022023-03-310000106040wdc:StockRepurchaseProgramEffectiveUntilJuly252023Member2023-03-310000106040wdc:ShareRepurchaseProgramMember2023-03-310000106040us-gaap:ConvertiblePreferredStockMember2023-01-310000106040srt:MinimumMemberwdc:TaxYears2008Through2012Member2023-03-310000106040srt:MaximumMemberwdc:TaxYears2008Through2012Member2023-03-310000106040srt:MinimumMemberwdc:TaxYears2013Through2015Member2023-03-310000106040srt:MaximumMemberwdc:TaxYears2013Through2015Member2023-03-310000106040srt:MinimumMember2023-03-310000106040srt:MaximumMember2023-03-310000106040wdc:BusinessRealignmentActivitiesMemberus-gaap:OneTimeTerminationBenefitsMember2022-07-010000106040wdc:BusinessRealignmentActivitiesMemberus-gaap:OneTimeTerminationBenefitsMember2022-07-022023-03-310000106040wdc:BusinessRealignmentActivitiesMemberus-gaap:OneTimeTerminationBenefitsMember2023-03-31
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One) | | | | | |
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2023
Or | | | | | |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number: 1-8703
WESTERN DIGITAL CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
| | | | | | | | | | | | | | | | | | | | |
| Delaware | | 33-0956711 | |
| (State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) | |
| | | | | | |
| 5601 Great Oaks Parkway | San Jose, | California | | 95119 | |
| (Address of principal executive offices) | | (Zip Code) | |
Registrant’s telephone number, including area code: (408) 717-6000
Securities registered pursuant to Section 12(b) of the Act: | | | | | | | | |
Title of each class | Trading symbol(s) | Name of each exchange on which registered |
Common Stock, $0.01 Par Value Per Share | WDC | The Nasdaq Stock Market LLC |
| | (Nasdaq Global Select Market) |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company”
in Rule 12b-2 of the Exchange Act. | | | | | | | | | | | | | | |
Large accelerated filer | Accelerated filer | Non-accelerated filer | Smaller reporting company | Emerging growth company |
☒ | ☐ | ☐ | ☐ | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý
As of the close of business on April 26, 2023, 319,937,433 shares of common stock, par value $0.01 per share, were outstanding.
WESTERN DIGITAL CORPORATION
INDEX
| | | | | | | | |
| | PAGE NO. |
PART I. FINANCIAL INFORMATION |
| | |
Item 1. | Financial Statements (unaudited) | |
| Condensed Consolidated Balance Sheets — As of March 31, 2023 and July 1, 2022 | |
| Condensed Consolidated Statements of Operations — Three and Nine Months Ended March 31, 2023 and April 1, 2022 | |
| Condensed Consolidated Statements of Comprehensive Income (Loss) — Three and Nine Months Ended March 31, 2023 and April 1, 2022 | |
| Condensed Consolidated Statements of Cash Flows — Nine Months Ended March 31, 2023 and April 1, 2022 | |
| Condensed Consolidated Statements of Convertible Preferred Stock and Shareholders' Equity — Nine Months Ended March 31, 2023 and April 1, 2022 | |
| Notes to Condensed Consolidated Financial Statements | |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | |
Item 4. | Controls and Procedures | |
| | |
PART II. OTHER INFORMATION |
Item 1. | Legal Proceedings | |
Item 1A. | Risk Factors | |
| | |
| | |
| | |
| | |
Item 6. | Exhibits | |
Unless otherwise indicated, references herein to specific years and quarters are to our fiscal years and fiscal quarters, and references to financial information are on a consolidated basis. As used herein, the terms “we,” “us,” “our,” the “Company,” “WDC” and “Western Digital” refer to Western Digital Corporation and its subsidiaries, unless we state, or the context indicates, otherwise.
WDC, a Delaware corporation, is the parent company of our data storage business. Our principal executive offices are located at 5601 Great Oaks Parkway, San Jose, California 95119. Our telephone number is (408) 717-6000.
Western Digital, the Western Digital logo, SanDisk, and WD are registered trademarks or trademarks of Western Digital or its affiliates in the U.S. and/or other countries. All other trademarks, registered trademarks and/or service marks, indicated or otherwise, are the property of their respective owners.
FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements within the meaning of the federal securities laws. Any statements that do not relate to historical or current facts or matters are forward-looking statements. You can identify some of the forward-looking statements by the use of forward-looking words, such as “may,” “will,” “could,” “would,” “project,” “believe,” “anticipate,” “expect,” “estimate,” “continue,” “potential,” “plan,” “forecast,” and the like, or the use of future tense. Statements concerning current conditions may also be forward-looking if they imply a continuation of current conditions. Examples of forward-looking statements include, but are not limited to, statements concerning: expectations regarding the impact of the network security incident; the global macroeconomic environment; expectations regarding supply chain conditions and constraints; expectations regarding demand trends and market conditions for our products and expected future financial performance; expectations regarding our product momentum and product development and technology plans; expectations regarding capital expenditure plans and investments, including relating to our Flash Ventures joint venture with Kioxia Corporation (“Kioxia”), and sources of funding for those expenditures; expectations regarding our effective tax rate and our unrecognized tax benefits; and our beliefs regarding the sufficiency of our available liquidity to meet our working capital, debt and capital expenditure needs.
These forward-looking statements are based on management’s current expectations, represent the most current information available to the Company as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and other factors that could cause actual results or performance to differ materially from those expressed in the forward-looking statements. These risks and uncertainties include, but are not limited to:
•volatility in global economic conditions;
•future responses to and effects of the COVID-19 pandemic or other similar global health crises;
•impact of business and market conditions;
•the outcome and impact of our ongoing strategic review, including with respect to customer and supplier relationships, regulatory and contractual restrictions, stock price volatility and the diversion of management’s attention from ongoing business operations and opportunities;
•impact of competitive products and pricing;
•our development and introduction of products based on new technologies and expansion into new data storage markets;
•risks associated with cost saving initiatives, restructurings, acquisitions, divestitures, mergers, joint ventures and our strategic relationships;
•difficulties or delays in manufacturing or other supply chain disruptions;
•hiring and retention of key employees;
•our level of debt and other financial obligations;
•changes to our relationships with key customers;
•compromise, damage or interruption from cybersecurity incidents or other data or system security risks;
•actions by competitors;
•risks associated with compliance with changing legal and regulatory requirements and the outcome of legal proceedings; and
•the other risks and uncertainties disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended July 1, 2022 (the “2022 Annual Report on Form 10-K”).
You are urged to carefully review the disclosures we make concerning these risks and review the additional disclosures we make concerning material risks and other factors that may affect the outcome of our forward-looking statements and our business and operating results, including those made in Part I, Item 1A of our 2022 Annual Report on Form 10-K and any of those made in our other reports filed with the Securities and Exchange Commission, including under “Risk Factors” in Item 1A of subsequent Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q that may from time to time amend, supplement or supersede the risks and uncertainties disclosed in the 2022 Annual Report on Form 10-K. You are cautioned not to place undue reliance on the forward-looking statements included in this Quarterly Report on Form 10-Q, which speak only as of the date of this document. We do not intend, and undertake no obligation, to update or revise these forward-looking statements to reflect new information or events after the date of this document or to reflect the occurrence of unanticipated events, except as required by law.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except par value)
(Unaudited) | | | | | | | | | | | |
| March 31, 2023 | | July 1, 2022 |
ASSETS |
Current assets: | | | |
Cash and cash equivalents | $ | 2,220 | | | $ | 2,327 | |
Accounts receivable, net | 1,591 | | | 2,804 | |
Inventories | 3,979 | | | 3,638 | |
Other current assets | 693 | | | 684 | |
Total current assets | 8,483 | | | 9,453 | |
Property, plant and equipment, net | 3,668 | | | 3,670 | |
Notes receivable and investments in Flash Ventures | 1,379 | | | 1,396 | |
Goodwill | 10,041 | | | 10,041 | |
Other intangible assets, net | 97 | | | 213 | |
Other non-current assets | 1,483 | | | 1,486 | |
Total assets | $ | 25,151 | | | $ | 26,259 | |
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY |
Current liabilities: | | | |
Accounts payable | $ | 1,307 | | | $ | 1,902 | |
Accounts payable to related parties | 265 | | | 320 | |
Accrued expenses | 1,158 | | | 1,636 | |
Income taxes payable | 1,013 | | | 869 | |
Accrued compensation | 343 | | | 510 | |
Current portion of long-term debt | 1,175 | | | — | |
Total current liabilities | 5,261 | | | 5,237 | |
Long-term debt | 5,898 | | | 7,022 | |
Other liabilities | 1,505 | | | 1,779 | |
Total liabilities | 12,664 | | | 14,038 | |
Commitments and contingencies (Notes 10, 11, 13 and 16) | | | |
Convertible preferred stock, $0.01 par value; authorized — 5 shares; issued and outstanding — 0.9 shares and 0 shares, respectively | 876 | | | — | |
Shareholders’ equity: | | | |
| | | |
Common stock, $0.01 par value; authorized — 450 shares; issued and outstanding — 320 shares and 315 shares, respectively | 3 | | | 3 | |
Additional paid-in capital | 3,831 | | | 3,733 | |
Accumulated other comprehensive loss | (362) | | | (554) | |
Retained earnings | 8,139 | | | 9,039 | |
Total shareholders’ equity | 11,611 | | | 12,221 | |
Total liabilities, convertible preferred stock and shareholders’ equity | $ | 25,151 | | | $ | 26,259 | |
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended | | |
| March 31, 2023 | | April 1, 2022 | | March 31, 2023 | | April 1, 2022 | | |
Revenue, net | $ | 2,803 | | | $ | 4,381 | | | $ | 9,646 | | | $ | 14,265 | | | |
Cost of revenue | 2,517 | | | 3,200 | | | 7,851 | | | 9,836 | | | |
Gross profit | 286 | | | 1,181 | | | 1,795 | | | 4,429 | | | |
Operating expenses: | | | | | | | | | |
Research and development | 476 | | | 572 | | | 1,551 | | | 1,725 | | | |
Selling, general and administrative | 242 | | | 281 | | | 739 | | | 851 | | | |
Employee termination, asset impairment, and other charges | 40 | | | 4 | | | 140 | | | 24 | | | |
Total operating expenses | 758 | | | 857 | | | 2,430 | | | 2,600 | | | |
Operating income (loss) | (472) | | | 324 | | | (635) | | | 1,829 | | | |
Interest and other income (expense): | | | | | | | | | |
Interest income | 10 | | | 1 | | | 15 | | | 4 | | | |
Interest expense | (80) | | | (75) | | | (223) | | | (229) | | | |
Other income, net | 13 | | | 12 | | | 13 | | | 8 | | | |
Total interest and other expense, net | (57) | | | (62) | | | (195) | | | (217) | | | |
Income (loss) before taxes | (529) | | | 262 | | | (830) | | | 1,612 | | | |
Income tax expense | 43 | | | 237 | | | 161 | | | 413 | | | |
Net income (loss) | (572) | | | 25 | | | (991) | | | 1,199 | | | |
Less: cumulative dividends allocated to preferred shareholders | 9 | | | — | | | 9 | | | — | | | |
| | | | | | | | | |
Net income (loss) attributable to common shareholders | $ | (581) | | | $ | 25 | | | $ | (1,000) | | | $ | 1,199 | | | |
| | | | | | | | | |
Income (loss) per common share: | | | | | | | | | |
Basic | $ | (1.82) | | | $ | 0.08 | | | $ | (3.14) | | | $ | 3.84 | | | |
Diluted | $ | (1.82) | | | $ | 0.08 | | | $ | (3.14) | | | $ | 3.79 | | | |
| | | | | | | | | |
Weighted average shares outstanding: | | | | | | | | | |
Basic | 319 | | | 313 | | | 318 | | | 312 | | | |
Diluted | 319 | | | 316 | | | 318 | | | 316 | | | |
| | | | | | | | | |
| | | | | | | | | |
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in millions)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| March 31, 2023 | | April 1, 2022 | | March 31, 2023 | | April 1, 2022 | | |
Net income (loss) | $ | (572) | | | $ | 25 | | | $ | (991) | | | $ | 1,199 | | | |
Other comprehensive income (loss), before tax: | | | | | | | | | |
Actuarial pension gain (loss) | (1) | | | 1 | | | (1) | | | 2 | | | |
Foreign currency translation adjustment | (7) | | | (82) | | | 8 | | | (123) | | | |
| | | | | | | | | |
| | | | | | | | | |
Net unrealized gain (loss) on derivative contracts and available-for-sale securities | 21 | | | (74) | | | 233 | | | (51) | | | |
Total other comprehensive income (loss), before tax | 13 | | | (155) | | | 240 | | | (172) | | | |
Income tax benefit (expense) related to items of other comprehensive income (loss), before tax | (6) | | | 15 | | | (48) | | | 12 | | | |
Other comprehensive income (loss), net of tax | 7 | | | (140) | | | 192 | | | (160) | | | |
Total comprehensive income (loss) | $ | (565) | | | $ | (115) | | | $ | (799) | | | $ | 1,039 | | | |
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited) | | | | | | | | | | | | | |
| Nine Months Ended | | |
| March 31, 2023 | | April 1, 2022 | | |
Cash flows from operating activities | | | | | |
Net income (loss) | $ | (991) | | | $ | 1,199 | | | |
Adjustments to reconcile net income (loss) to net cash provided by operations: | | | | | |
| | | | | |
Depreciation and amortization | 643 | | | 708 | | | |
Stock-based compensation | 246 | | | 249 | | | |
Deferred income taxes | 34 | | | 41 | | | |
Gain on disposal of assets | (7) | | | (14) | | | |
Non-cash portion of asset impairment | 18 | | | — | | | |
Amortization of debt issuance costs and discounts | 9 | | | 34 | | | |
| | | | | |
Other non-cash operating activities, net | 6 | | | 42 | | | |
Changes in: | | | | | |
Accounts receivable, net | 1,213 | | | (96) | | | |
Inventories | (341) | | | (45) | | | |
Accounts payable | (442) | | | (100) | | | |
Accounts payable to related parties | (54) | | | (2) | | | |
Accrued expenses | (484) | | | 2 | | | |
Income taxes payable | 144 | | | (50) | | | |
Accrued compensation | (169) | | | (149) | | | |
Other assets and liabilities, net | (165) | | | (234) | | | |
Net cash (used in) provided by operating activities | (340) | | | 1,585 | | | |
Cash flows from investing activities | | | | | |
Purchases of property, plant and equipment | (702) | | | (842) | | | |
Proceeds from the sale of property, plant and equipment | 14 | | | 13 | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Notes receivable issuances to Flash Ventures | (496) | | | (496) | | | |
Notes receivable proceeds from Flash Ventures | 542 | | | 519 | | | |
Strategic investments and other, net | 22 | | | (16) | | | |
Net cash used in investing activities | (620) | | | (822) | | | |
Cash flows from financing activities | | | | | |
Issuance of stock under employee stock plans | 49 | | | 62 | | | |
Taxes paid on vested stock awards under employee stock plans | (69) | | | (85) | | | |
Net proceeds from convertible preferred stock | 882 | | | — | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Repayments of debt | (1,180) | | | (3,471) | | | |
Proceeds from debt | 1,180 | | | 1,894 | | | |
Debt issuance costs | (6) | | | (23) | | | |
| | | | | |
Net cash provided by (used in) financing activities | 856 | | | (1,623) | | | |
Effect of exchange rate changes on cash | (3) | | | (5) | | | |
Net decrease in cash and cash equivalents | (107) | | | (865) | | | |
Cash and cash equivalents, beginning of year | 2,327 | | | 3,370 | | | |
Cash and cash equivalents, end of period | $ | 2,220 | | | $ | 2,505 | | | |
Supplemental disclosure of cash flow information: | | | | | |
Cash paid for income taxes | $ | 181 | | | $ | 376 | | | |
Cash paid for interest | $ | 252 | | | $ | 221 | | | |
Noncash exchange of TLA-1 notes for TLA-2 notes | $ | — | | | $ | 2,104 | | | |
| | | | | |
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY
(in millions)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Convertible Preferred Stock | | | Common Stock | | | | Additional Paid-In Capital | | Accumulated Other Comprehensive Loss | | Retained Earnings | | Total Shareholders’ Equity |
| Shares | | Amount | | | Shares | | Amount | | | |
Balance at July 1, 2022 | — | | | $ | — | | | | 315 | | | $ | 3 | | | | | | | $ | 3,733 | | | $ | (554) | | | $ | 9,039 | | | $ | 12,221 | |
Net income | — | | | — | | | | — | | | — | | | | | | | — | | | — | | | 27 | | | 27 | |
Adoption of new accounting standards | — | | | — | | | | — | | | — | | | | | | | (128) | | | — | | | 91 | | | (37) | |
Employee stock plans | — | | | — | | | | 3 | | | — | | | | | | | (50) | | | — | | | — | | | (50) | |
Stock-based compensation | — | | | — | | | | — | | | — | | | | | | | 86 | | | — | | | — | | | 86 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Foreign currency translation adjustment | — | | | — | | | | — | | | — | | | | | | | — | | | (80) | | | — | | | (80) | |
Net unrealized loss on derivative contracts | — | | | — | | | | — | | | — | | | | | | | — | | | (60) | | | — | | | (60) | |
Balance at September 30, 2022 | — | | | — | | | | 318 | | | 3 | | | | | | | 3,641 | | | (694) | | | 9,157 | | | 12,107 | |
Net loss | — | | | — | | | | — | | | — | | | | | | | — | | | — | | | (446) | | | (446) | |
| | | | | | | | | | | | | | | | | | | | |
Employee stock plans | — | | | — | | | | 1 | | | — | | | | | | | 43 | | | — | | | — | | | 43 | |
Stock-based compensation | — | | | — | | | | — | | | — | | | | | | | 86 | | | — | | | — | | | 86 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Foreign currency translation adjustment | — | | | — | | | | — | | | — | | | | | | | — | | | 97 | | | — | | | 97 | |
Net unrealized gain on derivative contracts | — | | | — | | | | — | | | — | | | | | | | — | | | 228 | | | — | | | 228 | |
Balance at December 30, 2022 | — | | | — | | | | 319 | | | 3 | | | | | | | 3,770 | | | (369) | | | 8,711 | | | 12,115 | |
Net loss | — | | | — | | | | — | | | — | | | | | | | — | | | — | | | (572) | | | (572) | |
| | | | | | | | | | | | | | | | | | | | |
Issuance of convertible preferred stock, net of issuance costs | 1 | | | 876 | | | | — | | | — | | | | | | | — | | | — | | | — | | | — | |
Employee stock plans | — | | | — | | | | 1 | | | — | | | | | | | (13) | | | — | | | — | | | (13) | |
Stock-based compensation | — | | | — | | | | — | | | — | | | | | | | 74 | | | — | | | — | | | 74 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Actuarial pension gain | — | | | — | | | | — | | | — | | | | | | | — | | | (1) | | | — | | | (1) | |
Foreign currency translation adjustment | — | | | — | | | | — | | | — | | | | | | | — | | | (8) | | | — | | | (8) | |
Net unrealized gain on derivative contracts | — | | | — | | | | — | | | — | | | | | | | — | | | 16 | | | — | | | 16 | |
Balance at March 31, 2023 | 1 | | | $ | 876 | | | | 320 | | | $ | 3 | | | | | | | $ | 3,831 | | | $ | (362) | | | $ | 8,139 | | | $ | 11,611 | |
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY
(in millions)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Common Stock | | Treasury Stock | | Additional Paid-In Capital | | Accumulated Other Comprehensive Loss | | Retained Earnings | | Total Shareholders’ Equity |
| | | | | | Shares | | Amount | Shares | | Amount |
Balance at July 2, 2021 | | | | | | 312 | | | $ | 3 | | | (4) | | | $ | (232) | | | $ | 3,608 | | | $ | (197) | | | $ | 7,539 | | | $ | 10,721 | |
Net income | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | 610 | | | 610 | |
| | | | | | | | | | | | | | | | | | | | |
Employee stock plans | | | | | | — | | | — | | | 3 | | | 207 | | | (283) | | | — | | | — | | | (76) | |
Stock-based compensation | | | | | | — | | | — | | | — | | | — | | | 76 | | | — | | | — | | | 76 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Actuarial pension gain | | | | | | — | | | — | | | — | | | — | | | — | | | 1 | | | — | | | 1 | |
Foreign currency translation adjustment | | | | | | — | | | — | | | — | | | — | | | — | | | 4 | | | — | | | 4 | |
Net unrealized gain on derivative contracts | | | | | | — | | | — | | | — | | | — | | | — | | | 25 | | | — | | | 25 | |
Balance at October 1, 2021 | | | | | | 312 | | | 3 | | | (1) | | | (25) | | | 3,401 | | | (167) | | | 8,149 | | | 11,361 | |
Net income | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | 564 | | | 564 | |
| | | | | | | | | | | | | | | | | | | | |
Employee stock plans | | | | | | 1 | | | — | | | 1 | | | 25 | | | 31 | | | — | | | — | | | 56 | |
Stock-based compensation | | | | | | — | | | — | | | — | | | — | | | 87 | | | — | | | — | | | 87 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Foreign currency translation adjustment | | | | | | — | | | — | | | — | | | — | | | — | | | (45) | | | — | | | (45) | |
Net unrealized loss on derivative contracts | | | | | | — | | | — | | | — | | | — | | | — | | | (5) | | | — | | | (5) | |
Balance at December 31, 2021 | | | | | | 313 | | | 3 | | | — | | | — | | | 3,519 | | | (217) | | | 8,713 | | | 12,018 | |
Net income | | | | | | — | | | — | | | — | | | — | | | — | | | — | | | 25 | | | 25 | |
| | | | | | | | | | | | | | | | | | | | |
Employee stock plans | | | | | | — | | | — | | | — | | | — | | | (5) | | | — | | | — | | | (5) | |
Stock-based compensation | | | | | | — | | | — | | | — | | | — | | | 86 | | | — | | | — | | | 86 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Actuarial pension gain | | | | | | — | | | — | | | — | | | — | | | — | | | 1 | | | — | | | 1 | |
Foreign currency translation adjustment | | | | | | — | | | — | | | — | | | — | | | — | | | (82) | | | — | | | (82) | |
Net unrealized gain on derivative contracts | | | | | | — | | | — | | | — | | | — | | | — | | | (59) | | | — | | | (59) | |
Balance at April 1, 2022 | | | | | | 313 | | | $ | 3 | | | — | | | $ | — | | | $ | 3,600 | | | $ | (357) | | | $ | 8,738 | | | $ | 11,984 | |
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
WESTERN DIGITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Organization and Basis of Presentation
Western Digital Corporation (“Western Digital” or the “Company”) is a leading developer, manufacturer, and provider of data storage devices and solutions based on both flash-based products (“Flash”) and hard disk drives (“HDD”) technologies. With dedicated Flash and HDD business units driving advancements in storage technologies, the Company creates and drives innovations needed to help customers capture, preserve, access, and transform an ever-increasing diversity of data.
The accounting policies followed by the Company are set forth in Part II, Item 8, Note 1, Organization and Basis of Presentation, of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10‑K for the year ended July 1, 2022. In the opinion of management, all adjustments necessary to fairly state the Condensed Consolidated Financial Statements have been made. All such adjustments are of a normal, recurring nature. Certain information and footnote disclosures normally included in the Consolidated Financial Statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in the Company’s Annual Report on Form 10‑K for the year ended July 1, 2022. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year.
Fiscal Year
The Company’s fiscal year ends on the Friday nearest to June 30 and typically consists of 52 weeks. Approximately every five to six years, the Company reports a 53-week fiscal year to align the fiscal year with the foregoing policy. Fiscal years 2023, which ends on June 30, 2023, and 2022, which ended on July 1, 2022, are each comprised of 52 weeks, with all quarters presented consisting of 13 weeks.
Segment Reporting
The Company manufactures, markets, and sells data storage devices and solutions in the United States (“U.S.”) and in foreign countries through its sales personnel, dealers, distributors, retailers, and subsidiaries. The Company manages and reports under two reportable segments: Flash and HDD.
The Company’s Chief Operating Decision Maker (“CODM”) evaluates performance of the Company and makes decisions regarding allocation of resources based on each operating segment’s net revenue and gross margin. Because of the integrated nature of the Company’s production and distribution activities, separate segment asset measures are not available or reviewed by the CODM to evaluate the performance of or to allocate resources to the segments.
Use of Estimates
Company management has made estimates and assumptions relating to the reporting of certain assets and liabilities in conformity with U.S. GAAP. These estimates and assumptions have been applied using methodologies that are consistent throughout the periods presented with consideration given to the potential impacts of current macroeconomic conditions. However, actual results could differ materially from these estimates.
Income (Loss) per Common Share
The Company computes net income (loss) per common share using a two-class method when shares are issued that meet the definition of participating securities. The two-class method determines net income (loss) per common share for each class of common stock and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires undistributed earnings for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. The Company’s convertible preferred stock contractually entitles the holders of such shares to participate in dividends but does not contractually require the holders of such shares to participate in the Company’s losses.
WESTERN DIGITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 2. Recent Accounting Pronouncements
Accounting Pronouncements Recently Adopted
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”). ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock and results in fewer instruments with embedded conversion features being separately recognized from the host contract as compared with prior standards. Those instruments that do not have a separately recognized embedded conversion feature will no longer recognize a debt issuance discount related to such a conversion feature and would recognize less interest expense on a periodic basis. Additionally, the ASU amends the calculation of the share dilution impact related to a conversion feature and eliminates the treasury method as an option. The Company adopted the new standard effective July 2, 2022, the first day of the year ending June 30, 2023, using the modified retrospective method. On the date of adoption, the Company recorded a reduction in Additional Paid-In Capital of $128 million, a reduction of unamortized debt discount of $48 million, a reduction of deferred income tax liabilities of $11 million, and an increase to retained earnings of $91 million for the after-tax impact of previously recognized amortization of the debt discount associated with the Company’s convertible senior notes.
In November 2021, the FASB issued ASU No. 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance” (“ASU 2021-10”). ASU 2021-10 increases the transparency of government assistance received by requiring most business entities to disclose information about government assistance received, including (1) the types of assistance, (2) the entity’s accounting for the assistance, and (3) the effect of the assistance on an entity’s financial statements. This ASU is effective for fiscal years (and interim periods within those fiscal years) beginning after December 15, 2021, which for the Company is the first quarter of 2023. The Company adopted this ASU on July 2, 2022, the first day of the year ending June 30, 2023, and the adoption did not have a material impact on its Condensed Consolidated Financial Statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
In September 2022, the FASB issued ASU No. 2022-04, “Liabilities-Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations”. This guidance requires annual and interim disclosures for entities that use supplier finance programs in connection with the purchase of goods and services. The ASU is effective for fiscal years beginning after December 15, 2022, which for the Company is the first quarter of 2024, with early adoption permitted, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. The Company is currently evaluating the extent of the impact of this ASU on its Condensed Consolidated Financial Statements.
WESTERN DIGITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 3. Business Segments, Geographic Information, and Concentrations of Risk
The following table summarizes the operating performance of the Company’s reportable segments: | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| March 31, 2023 | | April 1, 2022 | | March 31, 2023 | | April 1, 2022 |
| $ in millions |
Net revenue: | | | | | | | |
Flash | $ | 1,307 | | | $ | 2,243 | | | $ | 4,686 | | | $ | 7,353 | |
HDD | 1,496 | | | 2,138 | | | 4,960 | | | 6,912 | |
Total net revenue | $ | 2,803 | | | $ | 4,381 | | | $ | 9,646 | | | $ | 14,265 | |
Gross profit: | | | | | | | |
Flash | $ | (65) | | | $ | 798 | | | $ | 597 | | | $ | 2,665 | |
HDD | 363 | | | 592 | | | 1,237 | | | 2,061 | |
Total gross profit for segments | 298 | | | 1,390 | | | 1,834 | | | 4,726 | |
Unallocated corporate items: | | | | | | | |
Stock-based compensation expense | (12) | | | (13) | | | (38) | | | (36) | |
Amortization of acquired intangible assets | — | | | — | | | (1) | | | (65) | |
Contamination related charges | — | | | (203) | | | — | | | (203) | |
| | | | | | | |
Recoveries from a power outage incident | — | | | 7 | | | — | | | 7 | |
| | | | | | | |
Total unallocated corporate items | (12) | | | (209) | | | (39) | | | (297) | |
Consolidated gross profit | $ | 286 | | | $ | 1,181 | | | $ | 1,795 | | | $ | 4,429 | |
Gross margin: | | | | | | | |
Flash | (5.0) | % | | 35.6 | % | | 12.7 | % | | 36.2 | % |
HDD | 24.3 | % | | 27.7 | % | | 24.9 | % | | 29.8 | % |
Consolidated gross margin | 10.2 | % | | 27.0 | % | | 18.6 | % | | 31.0 | % |
Disaggregated Revenue
The Company’s broad portfolio of technology and products address multiple end markets. Cloud is comprised primarily of products for public or private cloud environments and end customers, which the Company believes it is uniquely positioned to address as the only provider of both Flash and HDD. Through the Client end market, the Company provides its original equipment manufacturer (“OEM”) and channel customers a broad array of high-performance flash and hard drive solutions across personal computer, mobile, gaming, automotive, virtual reality headsets, at-home entertainment, and industrial spaces. The Consumer end market is highlighted by the Company’s broad range of retail and other end-user products, which capitalize on the strength of the Company’s product brand recognition and vast points of presence around the world.
WESTERN DIGITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Company’s disaggregated revenue information is as follows: | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| Three Months Ended | | Nine Months Ended |
| March 31, 2023 | | April 1, 2022 | | March 31, 2023 | | April 1, 2022 |
| (in millions) |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Revenue by End Market | | | | | | | |
Cloud | $ | 1,205 | | | $ | 1,774 | | | $ | 4,258 | | | $ | 5,919 | |
Client | 975 | | | 1,732 | | | 3,293 | | | 5,439 | |
Consumer | 623 | | | 875 | | | 2,095 | | | 2,907 | |
Total Revenue | $ | 2,803 | | | $ | 4,381 | | | $ | 9,646 | | | $ | 14,265 | |
| | | | | | | |
Revenue by Geography | | | | | | | |
Asia | $ | 1,353 | | | $ | 2,400 | | | $ | 4,533 | | | $ | 7,685 | |
Americas | 935 | | | 1,377 | | | 3,448 | | | 4,398 | |
Europe, Middle East and Africa | 515 | | | 604 | | | 1,665 | | | 2,182 | |
Total Revenue | $ | 2,803 | | | $ | 4,381 | | | $ | 9,646 | | | $ | 14,265 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
The Company’s top 10 customers accounted for 49% and