wdc-20231229
00001060402024Q2false--06-28http://fasb.org/us-gaap/2023#AccruedLiabilitiesCurrenthttp://fasb.org/us-gaap/2023#OtherLiabilitiesNoncurrenthttp://fasb.org/us-gaap/2023#OtherAssetsNoncurrent54873151700001060402023-07-012023-12-2900001060402024-01-24xbrli:shares00001060402023-12-29iso4217:USD00001060402023-06-300000106040us-gaap:NonrelatedPartyMember2023-12-290000106040us-gaap:NonrelatedPartyMember2023-06-300000106040us-gaap:RelatedPartyMember2023-12-290000106040us-gaap:RelatedPartyMember2023-06-30iso4217:USDxbrli:shares00001060402023-09-302023-12-2900001060402022-10-012022-12-3000001060402022-07-022022-12-3000001060402022-07-0100001060402022-12-300000106040us-gaap:CommonStockMember2023-06-300000106040us-gaap:AdditionalPaidInCapitalMember2023-06-300000106040us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-300000106040us-gaap:RetainedEarningsMember2023-07-012023-09-2900001060402023-07-012023-09-290000106040us-gaap:CommonStockMember2023-07-012023-09-290000106040us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-290000106040us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-012023-09-2900001060402023-09-290000106040us-gaap:CommonStockMember2023-09-290000106040us-gaap:AdditionalPaidInCapitalMember2023-09-290000106040us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-290000106040us-gaap:RetainedEarningsMember2023-09-290000106040us-gaap:CommonStockMember2023-09-302023-12-290000106040us-gaap:AdditionalPaidInCapitalMember2023-09-302023-12-290000106040us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-302023-12-290000106040us-gaap:CommonStockMember2023-12-290000106040us-gaap:AdditionalPaidInCapitalMember2023-12-290000106040us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-290000106040us-gaap:RetainedEarningsMember2023-12-290000106040us-gaap:CommonStockMember2022-07-010000106040us-gaap:AdditionalPaidInCapitalMember2022-07-010000106040us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-010000106040us-gaap:RetainedEarningsMember2022-07-010000106040us-gaap:AdditionalPaidInCapitalMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2022-07-010000106040srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:RetainedEarningsMember2022-07-010000106040srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2022-07-010000106040us-gaap:RetainedEarningsMember2022-07-022022-09-3000001060402022-07-022022-09-300000106040us-gaap:CommonStockMember2022-07-022022-09-300000106040us-gaap:AdditionalPaidInCapitalMember2022-07-022022-09-300000106040us-gaap:AccumulatedTranslationAdjustmentMember2022-09-300000106040us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-022022-09-300000106040us-gaap:CommonStockMember2022-09-300000106040us-gaap:AdditionalPaidInCapitalMember2022-09-300000106040us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300000106040us-gaap:RetainedEarningsMember2022-09-3000001060402022-09-300000106040us-gaap:RetainedEarningsMember2022-10-012022-12-300000106040us-gaap:CommonStockMember2022-10-012022-12-300000106040us-gaap:AdditionalPaidInCapitalMember2022-10-012022-12-300000106040us-gaap:AccumulatedTranslationAdjustmentMember2022-12-300000106040us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-10-012022-12-300000106040us-gaap:CommonStockMember2022-12-300000106040us-gaap:AdditionalPaidInCapitalMember2022-12-300000106040us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-300000106040us-gaap:RetainedEarningsMember2022-12-30wdc:segment0000106040us-gaap:OperatingSegmentsMemberwdc:FlashSegmentMember2023-09-302023-12-290000106040us-gaap:OperatingSegmentsMemberwdc:FlashSegmentMember2022-10-012022-12-300000106040us-gaap:OperatingSegmentsMemberwdc:FlashSegmentMember2023-07-012023-12-290000106040us-gaap:OperatingSegmentsMemberwdc:FlashSegmentMember2022-07-022022-12-300000106040us-gaap:OperatingSegmentsMemberwdc:HDDMember2023-09-302023-12-290000106040us-gaap:OperatingSegmentsMemberwdc:HDDMember2022-10-012022-12-300000106040us-gaap:OperatingSegmentsMemberwdc:HDDMember2023-07-012023-12-290000106040us-gaap:OperatingSegmentsMemberwdc:HDDMember2022-07-022022-12-300000106040us-gaap:OperatingSegmentsMember2023-09-302023-12-290000106040us-gaap:OperatingSegmentsMember2022-10-012022-12-300000106040us-gaap:OperatingSegmentsMember2023-07-012023-12-290000106040us-gaap:OperatingSegmentsMember2022-07-022022-12-300000106040us-gaap:CorporateNonSegmentMember2023-09-302023-12-290000106040us-gaap:CorporateNonSegmentMember2022-10-012022-12-300000106040us-gaap:CorporateNonSegmentMember2023-07-012023-12-290000106040us-gaap:CorporateNonSegmentMember2022-07-022022-12-300000106040wdc:FlashSegmentMember2023-09-302023-12-29xbrli:pure0000106040wdc:FlashSegmentMember2022-10-012022-12-300000106040wdc:FlashSegmentMember2023-07-012023-12-290000106040wdc:FlashSegmentMember2022-07-022022-12-300000106040wdc:HDDMember2023-09-302023-12-290000106040wdc:HDDMember2022-10-012022-12-300000106040wdc:HDDMember2023-07-012023-12-290000106040wdc:HDDMember2022-07-022022-12-300000106040wdc:CloudMember2023-09-302023-12-290000106040wdc:CloudMember2022-10-012022-12-300000106040wdc:CloudMember2023-07-012023-12-290000106040wdc:CloudMember2022-07-022022-12-300000106040wdc:ClientDevicesMember2023-09-302023-12-290000106040wdc:ClientDevicesMember2022-10-012022-12-300000106040wdc:ClientDevicesMember2023-07-012023-12-290000106040wdc:ClientDevicesMember2022-07-022022-12-300000106040wdc:ConsumerMember2023-09-302023-12-290000106040wdc:ConsumerMember2022-10-012022-12-300000106040wdc:ConsumerMember2023-07-012023-12-290000106040wdc:ConsumerMember2022-07-022022-12-300000106040srt:AsiaMember2023-09-302023-12-290000106040srt:AsiaMember2022-10-012022-12-300000106040srt:AsiaMember2023-07-012023-12-290000106040srt:AsiaMember2022-07-022022-12-300000106040srt:AmericasMember2023-09-302023-12-290000106040srt:AmericasMember2022-10-012022-12-300000106040srt:AmericasMember2023-07-012023-12-290000106040srt:AmericasMember2022-07-022022-12-300000106040wdc:EuropeMiddleEastAndAfricaMember2023-09-302023-12-290000106040wdc:EuropeMiddleEastAndAfricaMember2022-10-012022-12-300000106040wdc:EuropeMiddleEastAndAfricaMember2023-07-012023-12-290000106040wdc:EuropeMiddleEastAndAfricaMember2022-07-022022-12-300000106040wdc:TopTenCustomersMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMember2023-07-012023-12-290000106040wdc:TopTenCustomersMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMember2023-09-302023-12-290000106040wdc:TopTenCustomersMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMember2022-10-012022-12-300000106040wdc:TopTenCustomersMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMember2022-07-022022-12-300000106040wdc:FlashSegmentMember2023-06-300000106040wdc:HDDMember2023-06-300000106040wdc:FlashSegmentMember2023-12-290000106040wdc:HDDMember2023-12-290000106040us-gaap:LandMember2023-12-290000106040us-gaap:LandMember2023-06-300000106040us-gaap:BuildingAndBuildingImprovementsMember2023-12-290000106040us-gaap:BuildingAndBuildingImprovementsMember2023-06-300000106040us-gaap:MachineryAndEquipmentMember2023-12-290000106040us-gaap:MachineryAndEquipmentMember2023-06-300000106040wdc:ComputerEquipmentandSoftwareMember2023-12-290000106040wdc:ComputerEquipmentandSoftwareMember2023-06-300000106040us-gaap:FurnitureAndFixturesMember2023-12-290000106040us-gaap:FurnitureAndFixturesMember2023-06-300000106040us-gaap:ConstructionInProgressMember2023-12-290000106040us-gaap:ConstructionInProgressMember2023-06-300000106040us-gaap:DevelopedTechnologyRightsMember2023-12-29wdc:project0000106040us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2023-06-300000106040us-gaap:AccumulatedTranslationAdjustmentMember2023-06-300000106040us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-06-300000106040us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2023-07-012023-12-290000106040us-gaap:AccumulatedTranslationAdjustmentMember2023-07-012023-12-290000106040us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-07-012023-12-290000106040us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2023-12-290000106040us-gaap:AccumulatedTranslationAdjustmentMember2023-12-290000106040us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-12-290000106040us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2023-12-290000106040us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2023-12-290000106040us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2023-12-290000106040us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2023-12-290000106040us-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-290000106040us-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-290000106040us-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-290000106040us-gaap:ForeignExchangeContractMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-290000106040us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-290000106040us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-290000106040us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-290000106040us-gaap:FairValueMeasurementsRecurringMember2023-12-290000106040us-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-290000106040us-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-290000106040us-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-290000106040us-gaap:ForeignExchangeContractMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-290000106040us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2023-06-300000106040us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2023-06-300000106040us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2023-06-300000106040us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2023-06-300000106040us-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-06-300000106040us-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-06-300000106040us-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-06-300000106040us-gaap:ForeignExchangeContractMemberus-gaap:FairValueMeasurementsRecurringMember2023-06-300000106040us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-06-300000106040us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-06-300000106040us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-06-300000106040us-gaap:FairValueMeasurementsRecurringMember2023-06-300000106040us-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-06-300000106040us-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-06-300000106040us-gaap:ForeignExchangeContractMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-06-300000106040us-gaap:ForeignExchangeContractMemberus-gaap:FairValueMeasurementsRecurringMember2023-06-300000106040wdc:OnePointFiftyPercentSeniorConvertibleNotesDueTwoThousandTwentyFourMemberus-gaap:ConvertibleDebtMember2023-12-290000106040wdc:OnePointFiftyPercentSeniorConvertibleNotesDueTwoThousandTwentyFourMemberus-gaap:ConvertibleDebtMember2023-06-300000106040wdc:OnePointFiftyPercentSeniorConvertibleNotesDueTwoThousandTwentyFourMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-290000106040wdc:OnePointFiftyPercentSeniorConvertibleNotesDueTwoThousandTwentyFourMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2023-12-290000106040wdc:OnePointFiftyPercentSeniorConvertibleNotesDueTwoThousandTwentyFourMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2023-06-300000106040wdc:OnePointFiftyPercentSeniorConvertibleNotesDueTwoThousandTwentyFourMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2023-06-300000106040us-gaap:CarryingReportedAmountFairValueDisclosureMemberwdc:DelayedDrawTermLoanMember2023-12-290000106040us-gaap:EstimateOfFairValueFairValueDisclosureMemberwdc:DelayedDrawTermLoanMemberus-gaap:FairValueInputsLevel2Member2023-12-290000106040us-gaap:CarryingReportedAmountFairValueDisclosureMemberwdc:DelayedDrawTermLoanMember2023-06-300000106040us-gaap:EstimateOfFairValueFairValueDisclosureMemberwdc:DelayedDrawTermLoanMemberus-gaap:FairValueInputsLevel2Member2023-06-300000106040wdc:FourPointSeventyFivePercentSeniorUnsecuredNotesDueTwoThousandTwentySixMember2023-06-300000106040wdc:FourPointSeventyFivePercentSeniorUnsecuredNotesDueTwoThousandTwentySixMember2023-12-290000106040us-gaap:CarryingReportedAmountFairValueDisclosureMemberwdc:FourPointSeventyFivePercentSeniorUnsecuredNotesDueTwoThousandTwentySixMember2023-12-290000106040us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Memberwdc:FourPointSeventyFivePercentSeniorUnsecuredNotesDueTwoThousandTwentySixMember2023-12-290000106040us-gaap:CarryingReportedAmountFairValueDisclosureMemberwdc:FourPointSeventyFivePercentSeniorUnsecuredNotesDueTwoThousandTwentySixMember2023-06-300000106040us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Memberwdc:FourPointSeventyFivePercentSeniorUnsecuredNotesDueTwoThousandTwentySixMember2023-06-300000106040us-gaap:CarryingReportedAmountFairValueDisclosureMemberwdc:TermLoanA2Member2023-12-290000106040us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Memberwdc:TermLoanA2Member2023-12-290000106040us-gaap:CarryingReportedAmountFairValueDisclosureMemberwdc:TermLoanA2Member2023-06-300000106040us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Memberwdc:TermLoanA2Member2023-06-300000106040wdc:ThreePointZeroZeroPercentConvertibleNotesDueTwoThousandTwentyEightMemberus-gaap:ConvertibleDebtMember2023-06-300000106040wdc:ThreePointZeroZeroPercentConvertibleNotesDueTwoThousandTwentyEightMemberus-gaap:ConvertibleDebtMember2023-12-290000106040wdc:ThreePointZeroZeroPercentConvertibleNotesDueTwoThousandTwentyEightMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-290000106040wdc:ThreePointZeroZeroPercentConvertibleNotesDueTwoThousandTwentyEightMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2023-12-290000106040wdc:ThreePointZeroZeroPercentConvertibleNotesDueTwoThousandTwentyEightMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2023-06-300000106040wdc:ThreePointZeroZeroPercentConvertibleNotesDueTwoThousandTwentyEightMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2023-06-300000106040wdc:TwoPointEightyFivePercentSeniorUnsecuredNotesDueTwoThousandTwentyNineMember2023-06-300000106040wdc:TwoPointEightyFivePercentSeniorUnsecuredNotesDueTwoThousandTwentyNineMember2023-12-290000106040us-gaap:CarryingReportedAmountFairValueDisclosureMemberwdc:TwoPointEightyFivePercentSeniorUnsecuredNotesDueTwoThousandTwentyNineMember2023-12-290000106040us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Memberwdc:TwoPointEightyFivePercentSeniorUnsecuredNotesDueTwoThousandTwentyNineMember2023-12-290000106040us-gaap:CarryingReportedAmountFairValueDisclosureMemberwdc:TwoPointEightyFivePercentSeniorUnsecuredNotesDueTwoThousandTwentyNineMember2023-06-300000106040us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Memberwdc:TwoPointEightyFivePercentSeniorUnsecuredNotesDueTwoThousandTwentyNineMember2023-06-300000106040wdc:ThreePointTenPercentSeniorUnsecuredNotesDueTwoThousandThirtyTwoMember2023-12-290000106040wdc:ThreePointTenPercentSeniorUnsecuredNotesDueTwoThousandThirtyTwoMember2023-06-300000106040us-gaap:CarryingReportedAmountFairValueDisclosureMemberwdc:ThreePointTenPercentSeniorUnsecuredNotesDueTwoThousandThirtyTwoMember2023-12-290000106040us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Memberwdc:ThreePointTenPercentSeniorUnsecuredNotesDueTwoThousandThirtyTwoMember2023-12-290000106040us-gaap:CarryingReportedAmountFairValueDisclosureMemberwdc:ThreePointTenPercentSeniorUnsecuredNotesDueTwoThousandThirtyTwoMember2023-06-300000106040us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Memberwdc:ThreePointTenPercentSeniorUnsecuredNotesDueTwoThousandThirtyTwoMember2023-06-300000106040us-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-290000106040us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2023-12-290000106040us-gaap:CarryingReportedAmountFairValueDisclosureMember2023-06-300000106040us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2023-06-300000106040wdc:ForeignExchangeForwardContractsDesignatedMember2023-07-012023-12-290000106040wdc:DelayedDrawTermLoanMember2023-12-290000106040wdc:DelayedDrawTermLoanMember2023-06-300000106040wdc:TermLoanA2Member2023-12-290000106040wdc:TermLoanA2Member2023-06-300000106040wdc:ThreePointZeroZeroPercentConvertibleNotesDueTwoThousandTwentyEightMember2023-12-290000106040wdc:ThreePointZeroZeroPercentConvertibleNotesDueTwoThousandTwentyEightMember2023-06-300000106040wdc:DelayedDrawTermLoanAgreementMember2023-08-310000106040wdc:DelayedDrawTermLoanAgreementMember2023-08-142023-08-140000106040wdc:DelayedDrawTermLoanAgreementMember2023-09-302023-12-290000106040wdc:SecuredOvernightFinancingRateSOFRMemberus-gaap:LineOfCreditMemberwdc:DelayedDrawTermLoanAgreementMembersrt:MinimumMember2023-07-012023-12-290000106040wdc:SecuredOvernightFinancingRateSOFRMemberus-gaap:LineOfCreditMemberwdc:DelayedDrawTermLoanAgreementMembersrt:MaximumMember2023-07-012023-12-290000106040us-gaap:BaseRateMemberus-gaap:LineOfCreditMemberwdc:DelayedDrawTermLoanAgreementMembersrt:MinimumMember2023-07-012023-12-290000106040us-gaap:BaseRateMemberus-gaap:LineOfCreditMemberwdc:DelayedDrawTermLoanAgreementMembersrt:MaximumMember2023-07-012023-12-290000106040wdc:DelayedDrawTermLoanAgreementMember2023-12-290000106040wdc:TermLoanA2Member2023-09-302023-12-290000106040wdc:SecuredOvernightFinancingRateSOFRMembersrt:MinimumMemberwdc:TermLoanA2Member2023-07-012023-12-290000106040wdc:SecuredOvernightFinancingRateSOFRMembersrt:MaximumMemberwdc:TermLoanA2Member2023-07-012023-12-290000106040us-gaap:BaseRateMembersrt:MinimumMemberwdc:TermLoanA2Member2023-07-012023-12-290000106040us-gaap:BaseRateMembersrt:MaximumMemberwdc:TermLoanA2Member2023-07-012023-12-290000106040wdc:SecuredOvernightFinancingRateSOFRMemberwdc:TermLoanA2Member2023-07-012023-12-290000106040wdc:ThreePointZeroZeroPercentConvertibleNotesDueTwoThousandTwentyEightMemberus-gaap:ConvertibleDebtMember2023-11-030000106040wdc:FourPointSeventyFivePercentSeniorUnsecuredNotesDueTwoThousandTwentySixMember2023-11-030000106040wdc:ThreePointZeroZeroPercentConvertibleNotesDueTwoThousandTwentyEightMemberus-gaap:ConvertibleDebtMember2023-11-032023-11-030000106040wdc:OnePointFiftyPercentSeniorConvertibleNotesDueTwoThousandTwentyFourMemberus-gaap:ConvertibleDebtMember2023-11-032023-11-03iso4217:USDwdc:Unit0000106040us-gaap:ConvertibleDebtSecuritiesMember2023-11-032023-11-030000106040wdc:OnePointFiftyPercentSeniorConvertibleNotesDueTwoThousandTwentyFourMemberus-gaap:ConvertibleDebtMemberus-gaap:SubsequentEventMember2024-02-012024-02-01wdc:entity0000106040wdc:FlashPartnersLtdMemberus-gaap:RelatedPartyMember2023-12-290000106040wdc:FlashPartnersLtdMemberus-gaap:RelatedPartyMember2023-06-300000106040wdc:FlashAllianceLtdMemberus-gaap:RelatedPartyMember2023-12-290000106040wdc:FlashAllianceLtdMemberus-gaap:RelatedPartyMember2023-06-300000106040us-gaap:RelatedPartyMemberwdc:FlashForwardLtdMember2023-12-290000106040us-gaap:RelatedPartyMemberwdc:FlashForwardLtdMember2023-06-300000106040wdc:FlashPartnersLtdMember2023-12-290000106040wdc:FlashPartnersLtdMember2023-06-300000106040wdc:FlashAllianceLtdMember2023-12-290000106040wdc:FlashAllianceLtdMember2023-06-300000106040wdc:FlashForwardLtdMember2023-12-290000106040wdc:FlashForwardLtdMember2023-06-300000106040us-gaap:EquityMethodInvesteeMember2023-12-290000106040us-gaap:EquityMethodInvesteeMember2023-06-300000106040us-gaap:RelatedPartyMember2023-09-302023-12-290000106040us-gaap:RelatedPartyMember2023-07-012023-12-290000106040us-gaap:RelatedPartyMember2022-10-012022-12-300000106040us-gaap:RelatedPartyMember2022-07-022022-12-300000106040us-gaap:RelatedPartyMemberus-gaap:NotesReceivableMember2023-12-290000106040us-gaap:RelatedPartyMemberus-gaap:EquityMethodInvestmentsMember2023-12-290000106040us-gaap:RelatedPartyMemberwdc:OffBalanceSheetGuaranteeMember2023-12-290000106040us-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:RelatedPartyMember2023-12-290000106040wdc:WesternDigitalCorpMembersrt:MinimumMember2023-12-290000106040wdc:WesternDigitalCorpMembersrt:MaximumMember2023-12-2900001060402021-07-032022-07-010000106040wdc:KioxiaCorporationMemberwdc:PrepaymentsOfFutureDepreciationMember2023-12-29iso4217:JPY0000106040wdc:PaymentOfPrincipalAmortizationMemberus-gaap:EquityMethodInvesteeMember2023-12-290000106040wdc:PurchaseOptionExercisePriceMemberus-gaap:EquityMethodInvesteeMember2023-12-290000106040us-gaap:EquityMethodInvesteeMember2023-12-290000106040wdc:UnisVentureMember2023-12-290000106040wdc:UnissoftWuxiGroupCoLtd.Memberwdc:UnisVentureMember2023-12-290000106040us-gaap:RevenueFromContractWithCustomerMemberus-gaap:ProductConcentrationRiskMemberwdc:UnisVentureMember2023-09-302023-12-290000106040us-gaap:RevenueFromContractWithCustomerMemberus-gaap:ProductConcentrationRiskMemberwdc:UnisVentureMember2023-07-012023-12-290000106040us-gaap:RevenueFromContractWithCustomerMemberus-gaap:ProductConcentrationRiskMemberwdc:UnisVentureMember2022-07-022022-12-300000106040us-gaap:RevenueFromContractWithCustomerMemberus-gaap:ProductConcentrationRiskMemberwdc:UnisVentureMember2022-10-012022-12-300000106040wdc:UnisVentureMemberwdc:AccountsReceivableBenchmarkMemberus-gaap:ProductConcentrationRiskMember2023-07-012023-12-290000106040wdc:UnisVentureMemberwdc:AccountsReceivableBenchmarkMemberus-gaap:ProductConcentrationRiskMember2022-07-022023-06-3000001060402023-09-012023-09-290000106040wdc:ThroughJanuary12039Member2023-09-012023-09-29wdc:option0000106040wdc:ThroughDecember2057Member2023-09-012023-09-290000106040wdc:RestrictedStockUnitsAndPerformanceStockUnitsMember2023-09-302023-12-290000106040wdc:RestrictedStockUnitsAndPerformanceStockUnitsMember2022-10-012022-12-300000106040wdc:RestrictedStockUnitsAndPerformanceStockUnitsMember2023-07-012023-12-290000106040wdc:RestrictedStockUnitsAndPerformanceStockUnitsMember2022-07-022022-12-300000106040wdc:EmployeeStockPurchasePlanMember2023-09-302023-12-290000106040wdc:EmployeeStockPurchasePlanMember2022-10-012022-12-300000106040wdc:EmployeeStockPurchasePlanMember2023-07-012023-12-290000106040wdc:EmployeeStockPurchasePlanMember2022-07-022022-12-300000106040us-gaap:CostOfSalesMember2023-09-302023-12-290000106040us-gaap:CostOfSalesMember2022-10-012022-12-300000106040us-gaap:CostOfSalesMember2023-07-012023-12-290000106040us-gaap:CostOfSalesMember2022-07-022022-12-300000106040us-gaap:ResearchAndDevelopmentExpenseMember2023-09-302023-12-290000106040us-gaap:ResearchAndDevelopmentExpenseMember2022-10-012022-12-300000106040us-gaap:ResearchAndDevelopmentExpenseMember2023-07-012023-12-290000106040us-gaap:ResearchAndDevelopmentExpenseMember2022-07-022022-12-300000106040us-gaap:SellingGeneralAndAdministrativeExpensesMember2023-09-302023-12-290000106040us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-10-012022-12-300000106040us-gaap:SellingGeneralAndAdministrativeExpensesMember2023-07-012023-12-290000106040us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-07-022022-12-300000106040wdc:RestrictedStockUnitsAndPerformanceStockUnitsMember2023-12-290000106040wdc:EmployeeStockPurchasePlanMember2023-12-2900001060402022-07-022023-06-300000106040wdc:RestrictedStockUnitsAndPerformanceShareUnitsMember2023-06-300000106040wdc:RestrictedStockUnitsAndPerformanceShareUnitsMember2023-07-012023-12-290000106040wdc:RestrictedStockUnitsAndPerformanceShareUnitsMember2023-12-290000106040us-gaap:SeriesAPreferredStockMemberus-gaap:PrivatePlacementMember2023-01-310000106040us-gaap:PrivatePlacementMemberus-gaap:ConvertiblePreferredStockMember2023-01-310000106040us-gaap:PrivatePlacementMemberus-gaap:ConvertiblePreferredStockMember2023-01-312023-01-310000106040wdc:January312030Memberus-gaap:PrivatePlacementMemberus-gaap:ConvertiblePreferredStockMember2023-01-312023-01-310000106040wdc:January312033Memberus-gaap:PrivatePlacementMemberus-gaap:ConvertiblePreferredStockMember2023-01-312023-01-310000106040us-gaap:ConvertiblePreferredStockMember2023-07-012023-12-290000106040us-gaap:ConvertiblePreferredStockMember2023-12-290000106040us-gaap:ConvertiblePreferredStockMember2022-07-022023-06-300000106040us-gaap:ConvertiblePreferredStockMember2023-06-300000106040wdc:TaxYears2008Through2012Member2023-12-290000106040wdc:TaxYears2008Through2012Member2023-07-012023-12-290000106040wdc:TaxYears2008Through2015Member2023-12-290000106040wdc:BusinessRealignmentActivitiesMember2023-09-302023-12-290000106040wdc:BusinessRealignmentActivitiesMember2022-10-012022-12-300000106040wdc:BusinessRealignmentActivitiesMember2023-07-012023-12-290000106040wdc:BusinessRealignmentActivitiesMember2022-07-022022-12-300000106040wdc:BusinessRealignmentActivitiesMemberus-gaap:OneTimeTerminationBenefitsMember2023-06-300000106040us-gaap:ContractTerminationMemberwdc:BusinessRealignmentActivitiesMember2023-06-300000106040wdc:BusinessRealignmentActivitiesMember2023-06-300000106040wdc:BusinessRealignmentActivitiesMemberus-gaap:OneTimeTerminationBenefitsMember2023-07-012023-12-290000106040us-gaap:ContractTerminationMemberwdc:BusinessRealignmentActivitiesMember2023-07-012023-12-290000106040wdc:BusinessRealignmentActivitiesMemberus-gaap:OneTimeTerminationBenefitsMember2023-12-290000106040us-gaap:ContractTerminationMemberwdc:BusinessRealignmentActivitiesMember2023-12-290000106040wdc:BusinessRealignmentActivitiesMember2023-12-290000106040srt:MinimumMember2023-12-290000106040srt:MaximumMember2023-12-290000106040srt:ScenarioPreviouslyReportedMember2022-10-012022-12-300000106040srt:RevisionOfPriorPeriodErrorCorrectionAdjustmentMember2022-10-012022-12-300000106040srt:ScenarioPreviouslyReportedMember2022-07-022022-12-300000106040srt:RevisionOfPriorPeriodErrorCorrectionAdjustmentMember2022-07-022022-12-300000106040srt:ScenarioPreviouslyReportedMemberus-gaap:RetainedEarningsMember2022-07-010000106040srt:RevisionOfPriorPeriodErrorCorrectionAdjustmentMemberus-gaap:RetainedEarningsMember2022-07-010000106040srt:ScenarioPreviouslyReportedMemberus-gaap:RetainedEarningsMember2022-12-300000106040srt:RevisionOfPriorPeriodErrorCorrectionAdjustmentMemberus-gaap:RetainedEarningsMember2022-12-300000106040us-gaap:AccumulatedOtherComprehensiveIncomeMembersrt:ScenarioPreviouslyReportedMember2022-07-010000106040us-gaap:AccumulatedOtherComprehensiveIncomeMembersrt:RevisionOfPriorPeriodErrorCorrectionAdjustmentMember2022-07-010000106040us-gaap:AccumulatedOtherComprehensiveIncomeMembersrt:ScenarioPreviouslyReportedMember2022-12-300000106040us-gaap:AccumulatedOtherComprehensiveIncomeMembersrt:RevisionOfPriorPeriodErrorCorrectionAdjustmentMember2022-12-300000106040us-gaap:AccumulatedTranslationAdjustmentMembersrt:ScenarioPreviouslyReportedMember2022-09-300000106040srt:RevisionOfPriorPeriodErrorCorrectionAdjustmentMemberus-gaap:AccumulatedTranslationAdjustmentMember2022-09-300000106040us-gaap:AccumulatedTranslationAdjustmentMembersrt:ScenarioPreviouslyReportedMember2022-12-300000106040srt:RevisionOfPriorPeriodErrorCorrectionAdjustmentMemberus-gaap:AccumulatedTranslationAdjustmentMember2022-12-300000106040srt:ScenarioPreviouslyReportedMember2023-06-300000106040srt:RevisionOfPriorPeriodErrorCorrectionAdjustmentMember2023-06-300000106040wdc:MichaelRayMember2023-09-302023-12-290000106040wdc:MichaelRayMember2023-07-012023-12-290000106040wdc:MichaelRayMember2023-12-290000106040wdc:KimberlyEAlexyMember2023-09-302023-12-290000106040wdc:KimberlyEAlexyMember2023-07-012023-12-290000106040wdc:KimberlyEAlexyMember2023-12-290000106040wdc:GeneZamiskaMember2023-09-302023-12-290000106040wdc:GeneZamiskaMember2023-07-012023-12-290000106040wdc:GeneZamiskaMember2023-12-29

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 December 29, 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

https://cdn.kscope.io/4e1b8d8fbf3a156604e46a9a3b826abd-wdcolor logo.gif.gif
WESTERN DIGITAL CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware33-0956711
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
5601 Great Oaks ParkwaySan Jose,California95119
(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 classTrading symbol(s)Name of each exchange on which registered
Common Stock, $0.01 Par Value Per ShareWDCThe 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 filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging 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 January 24, 2024, 325,859,745 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 December 29, 2023 and June 30, 2023
Condensed Consolidated Statements of Operations — Three and Six Months Ended December 29, 2023 and December 30, 2022
Condensed Consolidated Statements of Comprehensive Loss — Three and Six Months Ended December 29, 2023 and December 30, 2022
Condensed Consolidated Statements of Cash Flows — Six Months Ended December 29, 2023 and December 30, 2022
Condensed Consolidated Statements of Convertible Preferred Stock and Shareholders' Equity — Six Months Ended December 29, 2023 and December 30, 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 5.
Other Information
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.


3

Table of Contents
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 our plan to separate our HDD and Flash business units; the global macroeconomic environment; expectations regarding demand trends and market conditions for our products; expectations regarding long-term growth opportunities; 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 related expenditures; expectations regarding our effective tax rate and our unrecognized tax benefits; our ability to improve through-cycle profitability; and our beliefs regarding our capital allocation plans and the sufficiency of our available liquidity and access to capital markets 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 or implied in the forward-looking statements. These risks and uncertainties include, but are not limited to:

volatility in global or regional economic conditions and our responsive actions thereto;
dependence on a limited number of suppliers or disruptions in our supply chain;
the outcome, timing and impact of the planned separation of our HDD and Flash business units, including with respect to customer and supplier relationships, contractual restrictions, stock price volatility and the diversion of management’s attention from ongoing business operations and opportunities;
future responses to and effects of public health crises;
damage or disruption to our operations or to those of our suppliers;
hiring and retention of key employees;
compromise, damage or interruption from cybersecurity incidents or other data or system security risks;
product defects;
our reliance on strategic relationships with key partners, including Kioxia;
the competitive environment, including actions by our competitors, and the 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;
changes to our relationships with key customers;
our ability to respond to market and other changes in our distribution channel and retail market;
our level of debt and other financial obligations;
changes in tax laws or unanticipated tax liabilities;
fluctuations in currency exchange rates in connection with our international operations;
risks associated with compliance with changing legal and regulatory requirements and the outcome of legal proceedings;
risks associated with our goals relating to environmental, social and governance matters, including the company’s ability to meet its GHG emissions reduction and other ESG goals;
our reliance on intellectual property and other proprietary information; and
the other risks and uncertainties disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended June 30, 2023 (the “2023 Annual Report on Form 10-K”), as amended, supplemented or superseded in our other reports filed with the Securities and Exchange Commission, including under “Risk Factors” in Item 1A of our subsequent Quarterly Reports on Form 10-Q.

4

Table of Contents
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 2023 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 2023 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.
5

Table of Contents
PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements (unaudited)

WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except par value)
(Unaudited)
December 29,
2023
June 30,
2023
ASSETS
Current assets:
Cash and cash equivalents$2,481 $2,023 
Accounts receivable, net1,523 1,598 
Inventories3,216 3,698 
Other current assets618 567 
Total current assets7,838 7,886 
Property, plant and equipment, net3,315 3,620 
Notes receivable and investments in Flash Ventures1,344 1,410 
Goodwill10,037 10,037 
Other intangible assets, net79 80 
Other non-current assets1,772 1,513 
Total assets$24,385 $24,546 
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable$1,504 $1,293 
Accounts payable to related parties251 292 
Accrued expenses1,037 1,288 
Income taxes payable506 999 
Accrued compensation353 349 
Current portion of long-term debt1,042 1,213 
Total current liabilities4,693 5,434 
Long-term debt7,351 5,857 
Other liabilities1,397 1,415 
Total liabilities13,441 12,706 
Commitments and contingencies (Notes 9, 10, 12 and 16)
Convertible preferred stock, $0.01 par value; authorized — 5 shares; issued and outstanding — 1 shares; aggregate liquidation preference of $953 and $924, respectively
876 876 
Shareholders’ equity:
Common stock, $0.01 par value; authorized — 450 shares; issued and outstanding — 326 shares and 322 shares, respectively
3 3 
Additional paid-in capital3,957 3,936 
Accumulated other comprehensive loss(493)(548)
Retained earnings6,601 7,573 
Total shareholders’ equity10,068 10,964 
Total liabilities, convertible preferred stock and shareholders’ equity$24,385 $24,546 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
6

Table of Contents
WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(Unaudited)
Three Months EndedSix Months Ended
December 29,
2023
December 30,
2022
December 29,
2023
December 30,
2022
Revenue, net$3,032 $3,107 $5,782 $6,843 
Cost of revenue2,540 2,579 5,191 5,334 
Gross profit492 528 591 1,509 
Operating expenses:
Research and development444 523 875 1,075 
Selling, general and administrative198 250 405 497 
Employee termination, asset impairment, and other24 76 81 100 
Business separation costs36  36  
Total operating expenses702 849 1,397 1,672 
Operating loss(210)(321)(806)(163)
Interest and other expense:
Interest income12 3 20 5 
Interest expense(108)(73)(206)(143)
Other income, net47 10 51 13 
Total interest and other expense, net(49)(60)(135)(125)
Loss before taxes(259)(381)(941)(288)
Income tax expense28 70 31 116 
Net loss(287)(451)(972)(404)
Less: cumulative dividends allocated to preferred shareholders14  29  
Net loss attributable to common shareholders$(301)$(451)$(1,001)$(404)
 Net loss per common share:
Basic$(0.93)$(1.42)$(3.09)$(1.27)
Diluted$(0.93)$(1.42)$(3.09)$(1.27)
Weighted average shares outstanding:
Basic325 318 324 317 
Diluted325 318 324 317 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
7

Table of Contents
WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in millions)
(Unaudited)
Three Months EndedSix Months Ended
December 29,
2023
December 30,
2022
December 29,
2023
December 30,
2022
Net loss$(287)$(451)$(972)$(404)
Other comprehensive income, before tax:
Foreign currency translation adjustment58 106 20 19 
Net unrealized gain on derivative contracts99 288 41 212 
Total other comprehensive income, before tax157 394 61 231 
Income tax expense related to items of other comprehensive income, before tax(19)(49)(6)(33)
Other comprehensive income, net of tax138 345 55 198 
Total comprehensive loss$(149)$(106)$(917)$(206)

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
8

Table of Contents
WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
Six Months Ended
December 29,
2023
December 30,
2022
Cash flows from operating activities
Net loss$(972)$(404)
Adjustments to reconcile net loss to net cash provided by (used in) operations:
Depreciation and amortization290 430 
Stock-based compensation149 172 
Deferred income taxes(68)21 
Loss (Gain) on disposal of assets
(87)1 
Non-cash portion of asset impairment95 15 
Gain on repurchases of debt(4) 
Amortization of debt issuance costs and discounts9 5 
Other non-cash operating activities, net(28)56 
Changes in:
Accounts receivable, net75 899 
Inventories482 (135)
Accounts payable299 (521)
Accounts payable to related parties(41)49 
Accrued expenses(246)(226)
Income taxes payable(494)156 
Accrued compensation4 (162)
Other assets and liabilities, net(181)(315)
Net cash provided by (used in) operating activities
(718)41 
Cash flows from investing activities
Purchases of property, plant and equipment(274)(578)
Proceeds from the sale of property, plant and equipment193  
Proceeds from dispositions of business 7 
Notes receivable issuances to Flash Ventures(184)(235)
Notes receivable proceeds from Flash Ventures263 317 
Strategic investments and other, net26 7 
Net cash provided by (used in) investing activities
24 (482)
Cash flows from financing activities
Issuance of stock under employee stock plans40 48 
Taxes paid on vested stock awards under employee stock plans(50)(55)
Net proceeds from convertible preferred stock
(5) 
Purchase of capped calls(155) 
Repurchases of debt(505) 
Repayments of debt(338)(1,180)
Proceeds from debt2,200 1,180 
Debt issuance costs(36)(5)
Net cash provided by (used in) financing activities1,151 (12)
Effect of exchange rate changes on cash1 (3)
Net increase (decrease) in cash and cash equivalents
458 (456)
Cash and cash equivalents, beginning of year2,023 2,327 
Cash and cash equivalents, end of period$2,481 $1,871 
Supplemental disclosure of cash flow information:
Cash paid for income taxes$791 $192 
Cash paid for interest$182 $138 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
9

Table of Contents
WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY
(in millions)
(Unaudited)
Convertible Preferred StockCommon StockAdditional Paid-In CapitalAccumulated Other Comprehensive Loss Retained EarningsTotal Shareholders’ Equity
SharesAmountSharesAmount
Balance at June 30, 20231 $876 322 $3 $3,936 $(548)$7,573 $10,964 
Net loss— — — — — — (685)(685)
Employee stock plans— — 2 — (43)— — (43)
Stock-based compensation— — — — 77 — — 77 
Foreign currency translation adjustment— — — — — (38)— (38)
Net unrealized loss on derivative contracts— — — — — (45)— (45)
Balance at September 29, 20231876 3243 3,970 (631)6,888 10,230 
Net loss— — — — — — (287)(287)
Employee stock plans— — 2 — 33 — — 33 
Stock-based compensation— — — — 72 — — 72 
Purchase of capped calls related to the issuance of convertible notes, net of tax— — — — (118)— — (118)
Foreign currency translation adjustment— — — — — 58 — 58 
Net unrealized gain on derivative contracts— — — — — 80 — 80 
Balance at December 29, 20231$876 326$3 $3,957 $(493)$6,601 $10,068 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

10

Table of Contents
WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY
(in millions)
(Unaudited)
Convertible Preferred StockCommon StockAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Shareholders’ Equity
SharesAmountSharesAmount
Balance at July 1, 2022— $— 315 $3 $3,733 $(579)$9,166 $12,323 
Adoption of new accounting standards— — — — (128)— 91 (37)
Net income— — — — — — 47 47 
Employee stock plans— — 3 — (50)— — (50)
Stock-based compensation— — — — 86 — — 86 
Foreign currency translation adjustment— — — — — (87)— (87)
Net unrealized loss on derivative contracts— — — — — (60)— (60)
Balance at September 30, 2022— — 3183 3,641 (726)9,304 12,222 
Net loss— — — — — — (451)(451)
Employee stock plans— — 1 — 43 — — 43 
Stock-based compensation— — — — 86 — — 86 
Foreign currency translation adjustment— — — — — 117 — 117 
Net unrealized gain on derivative contracts— — — — — 228 — 228 
Balance at December 30, 2022— $— 319$3 $3,770 $(381)$8,853 $12,245 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
11

Table of Contents

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 NAND flash and hard disk drive technologies.

The Company’s broad portfolio of technology and products address the following key end markets: Cloud, Client and Consumer. The Company also generates immaterial license and royalty revenue from its extensive intellectual property portfolio, which is included in each of these three end market categories.

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 June 30, 2023. In the opinion of management, all adjustments necessary to fairly state the Condensed Consolidated Financial Statements have been made. Such adjustments consist of items of a normal, recurring nature as well as the revisions discussed further below. 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 June 30, 2023. 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 year 2024, which will end on June 28, 2024, and fiscal year 2023, which ended June 30, 2023, 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-based products (“Flash”) and hard disk drives (“HDD”).

The Chief Executive Officer, who is the Company’s Chief Operating Decision Maker (“CODM”), evaluates the performance of the Company and makes decisions regarding the 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 either not available or not used as a basis for the CODM to evaluate the performance of or to allocate resources to the segments.

Business Separation Costs

On October 30, 2023, the Company announced that its Board of Directors had completed its strategic review of its business and, after evaluating a comprehensive range of alternatives, authorized the Company to pursue a plan to separate its HDD and Flash business units to create two independent, public companies. As a result of the plan, the Company incurred separation and transition costs and expects to incur such costs through the completion of the separation of the businesses, which the Company targets in the second half of calendar year 2024. The separation and transition costs are recorded within Business separation costs in the Condensed Consolidated Statements of Operations.

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.
12

Table of Contents

WESTERN DIGITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Revision of Previously Issued Financial Statements

In connection with the preparation of its Condensed Consolidated Financial Statements as of and for the three and six months ended December 29, 2023, the Company identified certain errors related to the Company’s reporting and recording of its interests in its equity method investments in Flash Partners Ltd., Flash Alliance Ltd., and Flash Forward Ltd. (collectively, the “Flash Ventures”). The errors related to unadjusted differences between the Flash Ventures’ application of Japanese generally accepted accounting principles to certain lease-related transactions compared to the applicable U.S. generally accepted accounting principles. These unadjusted differences resulted in differences in the equity in earnings from these entities recognized by the Company in Other income (expense), net and the carrying value of the Company’s equity method investments in the Flash Ventures.

Based on an analysis of quantitative and qualitative factors in accordance with SAB No. 99, “Materiality,” and SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” and as described further in Note 17, Revision of Previously Issued Financial Statements, the Company evaluated the errors and determined the related impacts were not material to its financial statements for the prior periods when they occurred, but that correcting the cumulative errors in the current period would be material to the Company's results of operations for the three and six months ended December 29, 2023. Accordingly, the Company has revised previously reported financial information for such immaterial errors. A summary of revisions to previously reported financial information presented herein for comparative purposes is included in Note 17, Revision of Previously Issued Financial Statements.
13

Table of Contents

WESTERN DIGITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 2.    Recent Accounting Pronouncements

Accounting Pronouncements Recently Adopted

In September 2022, the Financial Accounting Standards Board (“FASB”) issued an accounting standards update (“ASU”) No. 2022-04, “Liabilities-Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations”, which requires annual and interim disclosures for entities that use supplier finance programs in connection with the purchase of goods and services. The ASU requires the Company to provide disclosure of outstanding obligations to such suppliers for all balance sheet dates presented beginning with the Company’s first quarter of 2024 and to provide certain rollforward information related to those obligations beginning in the Company’s first fiscal quarter of 2025. The ASU does not affect the recognition, measurement, or financial statement presentation of supplier finance program obligations. The Company adopted the guidance on the first day of fiscal year 2024, except for the rollforward information, which the Company is compiling and intends to provide beginning in fiscal year 2025. See Note 15, Supplier Finance Program, of the Notes to Condensed Consolidated Financial Statements for information regarding the supplier finance program.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”, which expands on segment reporting requirements primarily through enhanced disclosures surrounding significant segment expenses. The ASU expands on existing segment reporting requirements to require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to an entity's CODM, a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources. These incremental disclosures will be required beginning with the Company’s financial statements for the year ending June 27, 2025. The Company expects to provide any required disclosures at that time.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. The ASU calls for enhanced income tax disclosure requirements surrounding the tabular rate reconciliation and income taxes paid. The amendments are effective for the Company’s fiscal year 2026, with early adoption permitted. The Company is currently compiling the information required for these disclosures. These incremental disclosures will be required beginning with the Company’s financial statements for the year ending June 27, 2025. The Company expects to provide any required disclosures at that time.





14

Table of Contents

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 EndedSix Months Ended
December 29,
2023
December 30,
2022
December 29,
2023
December 30,
2022
$ in millions
Net revenue:
Flash$1,665 $1,657 $3,221 $3,379 
HDD1,367 1,450 2,561 3,464 
Total net revenue$3,032 $3,107 $5,782 $6,843 
Gross profit:
Flash$131 $240 $(30)$662 
HDD339 300 612 874 
Total gross profit for segments470 540 582 1,536 
Unallocated corporate items:
Stock-based compensation expense(13)(12)(26)(26)
Amortization of acquired intangible assets(1) (1)(1)
Recovery from contamination incident36  36  
Total unallocated corporate items22 (12)9 (27)
Consolidated gross profit$492 $528 $591 $1,509 
Gross margin:
Flash7.9 %14.5 %(0.9)%19.6 %
HDD24.8 %20.7 %23.9 %25.2 %
Consolidated gross margin16.2 %17.0 %10.2 %22.1 %

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. 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.

15

Table of Contents

WESTERN DIGITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Company’s disaggregated revenue information is as follows:
Three Months EndedSix Months Ended
December 29,
2023
December 30,
2022
December 29,
2023
December 30,
2022
(in millions)
Revenue by End Market
Cloud$1,071 $1,224 $1,943 $3,053 
Client1,122 1,089 2,269 2,318 
Consumer839 794 1,570 1,472 
Total Revenue$3,032 $3,107 $5,782 $6,843 
Revenue by Geography
Asia$1,699 $1,494 $3,250 $3,180 
Americas804 1,090 1,466 2,513 
Europe, Middle East and Africa529 523 1,066 1,150 
Total Revenue$3,032 $3,107 $5,782 $6,843 

The Company’s top 10 customers accounted for 39% of its net revenue for each of the three and six months ended December 29, 2023 and 47% and 48% of its net revenue for the three and six months ended December 30, 2022, respectively. For the three and six months ended December 29, 2023 and December 30, 2022, no single customer accounted for 10% or more of the Company’s net revenue.

Goodwill

Goodwill is not amortized. Instead, it is tested for impairment annually as of the beginning of the Company’s fourth quarter, or more frequently if events or changes in circumstances indicate that goodwill may be impaired. Management performed goodwill impairment assessments for each segment and concluded that there were no indications of impairment for the periods presented. The following table provides a summary of goodwill activity for the period:
FlashHDDTotal
(in millions)
Balance at June 30, 2023$5,716 $4,321 $10,037 
Foreign currency translation adjustment1 (1) 
Balance at December 29, 2023$5,717 $4,320 $10,037 



16

Table of Contents

WESTERN DIGITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 4.    Supplemental Financial Statement Data

Accounts receivable, net

From time to time, in connection with factoring agreements, the Company sells trade accounts receivable without recourse to third-party purchasers in exchange for cash. During the six months ended December 29, 2023 and December 30, 2022, the Company sold trade accounts receivable aggregating $392 million and $391 million, respectively. The discounts on the trade accounts receivable sold were not material and were recorded within Other income, net in the Condensed Consolidated Statements of Operations. As of December 29, 2023 and June 30, 2023, the amount of factored receivables that remained outstanding was $115 million and $150 million, respectively.

Inventories
December 29,
2023
June 30,
2023
(in millions)
Inventories:
Raw materials and component parts$1,692 $2,096 
Work-in-process966 979 
Finished goods558 623 
Total inventories$3,216 $3,698 

Property, plant and equipment, net
December 29,
2023
June 30,
2023
(in millions)
Property, plant and equipment:
Land$235 $269 
Buildings and improvements1,828 1,955 
Machinery and equipment8,684 8,704 
Computer equipment and software472 470 
Furniture and fixtures55 54 
Construction-in-process771 798 
Property, plant and equipment, gross12,045 12,250 
Accumulated depreciation(8,730)(8,630)
Property, plant and equipment, net$3,315 $3,620 

Other Intangible assets, net

As part of prior acquisitions, the Company recorded at the time of the acquisition acquired in-process research and development (“IPR&D”) for projects in progress that had not yet reached technological feasibility. IPR&D is initially accounted for as an indefinite-lived intangible asset. Once a project reaches technological feasibility, the Company reclassifies the balance to existing technology and begins to amortize the intangible asset over its estimated useful life. During the three months ended December 29, 2023, one IPR&D project reached technological feasibility and $8 million was reclassified from IPR&D to Existing technology and commenced amortization over an estimated useful life of three years. As of December 29, 2023 and June 30, 2023, IPR&D included in intangible assets, net was $72 million and $80 million, respectively.

17

Table of Contents

WESTERN DIGITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Product warranty liability

Changes in the warranty accrual were as follows:
Three Months EndedSix Months Ended
December 29,
2023
December 30,
2022
December 29,
2023
December 30,
2022
(in millions)
Warranty accrual, beginning of period$218 $340 $244 $345 
Charges to operations26 25 48 57 
Utilization(40)(60)(83)(94)
Changes in estimate related to pre-existing warranties(2)(16)(7)(19)
Warranty accrual, end of period$202 $289 $202 $289 

The current portion of the warranty accrual is classified in Accrued expenses and the long-term portion is classified in Other liabilities as noted below:
December 29,
2023
June 30,
2023
(in millions)
Warranty accrual:
Current portion (included in Accrued expenses)$50 $97 
Long-term portion (included in Other liabilities)152 147 
Total warranty accrual$202 $244 

Other liabilities
December 29,
2023
June 30,
2023
(in millions)
Other liabilities:
Non-current net tax payable$199 $464 
Non-current portion of unrecognized tax benefits501 408 
Other non-current liabilities697 543 
Total other liabilities$1,397 $1,415 

18

Table of Contents

WESTERN DIGITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Accumulated other comprehensive loss

Accumulated other comprehensive loss (“AOCL”), net of tax refers to expenses, gains and losses that are recorded as an element of shareholders’ equity but are excluded from net income. The following table illustrates the changes in the balances of each component of AOCL:
Actuarial Pension LossesForeign Currency Translation AdjustmentUnrealized Losses on Derivative ContractsTotal Accumulated Comprehensive Loss
(in millions)
Balance at June 30, 2023$(2)$(389)$(157)$(548)
Other comprehensive loss before reclassifications 20 (35)(15)
Amounts reclassified from accumulated other comprehensive loss  76 76 
Income tax expense related to items of other comprehensive loss 1 (7)(6)
Net current-period other comprehensive loss 21 34 55 
Balance at December 29, 2023$(2)$(368)$(123)$(493)

During the three and six months ended December 29, 2023, the amounts reclassified out of AOCL were losses related to foreign exchange contracts that were substantially charged to Cost of revenue in the Condensed Consolidated Statements of Operations.

As of December 29, 2023, substantially all existing net losses related to cash flow hedges recorded in AOCL are expected to be reclassified to earnings within the next twelve months. In addition, as of December 29, 2023, the Company did not have any foreign exchange forward contracts with credit-risk-related contingent features.

19

Table of Contents

WESTERN DIGITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 5.    Fair Value Measurements and Investments

Financial Instruments Carried at Fair Value

Financial assets and liabilities that are remeasured and reported at fair value at each reporting period are classified and disclosed in one of the following three levels:

Level 1.    Quoted prices in active markets for identical assets or liabilities.

Level 2.    Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3.    Inputs that are unobservable for the asset or liability and that are significant to the fair value of the assets or liabilities.

The following tables present information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of December 29, 2023 and June 30, 2023, and indicate the fair value hierarchy of the valuation techniques utilized to determine such values:
December 29, 2023
 Level 1Level 2Level 3Total
(in millions)
Assets:
Cash equivalents - Money market funds$568 $ $ $568 
Foreign exchange contracts 39  39 
Total assets at fair value$568 $39 $ $607 
Liabilities:
Foreign exchange contracts$ $87 $ $87 
Total liabilities at fair value$ $87 $ $87 

June 30, 2023
 Level 1Level 2Level 3Total
(in millions)
Assets:
Cash equivalents - Money market funds$371 $ $ $371 
Foreign exchange contracts 35  35 
Total assets at fair value$371 $35 $ $406 
Liabilities:
Foreign exchange contracts$ $192 $ $192 
Total liabilities at fair value$ $192 $ $192 

During the periods presented, the Company had no transfers of financial assets and liabilities between levels and there were no changes in valuation techniques or the inputs used in the fair value measurement.

20

Table of Contents

WESTERN DIGITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Financial Instruments Not Carried at Fair Value

For financial instruments where the carrying value (which includes principal adjusted for any unamortized issuance costs, and discounts or premiums) differs from fair value (which is based on quoted market prices), the following table represents the related carrying value and fair value for each of the Company’s outstanding financial instruments. Each of the financial instruments presented below was categorized as Level 2 for all periods presented, based on the frequency of trading immediately prior to the end of the second quarter of 2024 and the fourth quarter of 2023, respectively.
December 29, 2023June 30, 2023
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
(in millions)
1.50% convertible notes due 2024
$592 $589 $1,099 $1,067 
Variable interest rate Delayed Draw Term Loan due 2024
300 301   
4.75% senior unsecured notes due 2026
2,295 2,257 2,293 2,193 
Variable interest rate Term Loan A-2 maturing 20272,651 2,583 2,687 2,661 
3.00% convertible notes due 2028
1,564 1,960   
2.85% senior notes due 2029
496 430 496 400 
3.10% senior notes due 2032
495 399 495 371 
     Total$8,393 $8,519 $7,070 $6,692 

21

Table of Contents

WESTERN DIGITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 6.    Derivative Instruments and Hedging Activities

As of December 29, 2023, the Company had outstanding foreign exchange forward contracts that were designated as either cash flow hedges or non-designated hedges. Substantially all of the contract maturity dates of these foreign exchange forward contracts do not exceed 12 months. As of December 29, 2023, the Company did not have any derivative contracts with credit-risk-related contingent features.

Changes in fair values of the non-designated foreign exchange contracts are recognized in Other income, net and are largely offset by corresponding changes in the fair values of the foreign currency-denominated monetary assets and liabilities. For each of the three and six months ended December 29, 2023 and December 30, 2022, total net realized and unrealized transaction and foreign exchange contract currency gains and losses were not material to the Company’s Condensed Consolidated Financial Statements.

Unrealized gains or losses on designated cash flow hedges are recognized in AOCL. For more information regarding cash flow hedges, see Note 4, Supplemental Financial Statement Data - Accumulated other comprehensive loss.

Netting Arrangements

Under certain provisions and conditions within agreements with counterparties to the Company’s foreign exchange forward contracts, subject to applicable requirements, the Company has the right of offset associated with the Company’s foreign exchange forward contracts and is allowed to net settle transactions of the same currency with a single net amount payable by one party to the other. As of December 29, 2023 and June 30, 2023, the effect of rights of offset was not material and the Company did not offset or net the fair value amounts of derivative instruments in its Condensed Consolidated Balance Sheets.

22

Table of Contents

WESTERN DIGITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 7.    Debt

Debt consisted of the following:
December 29,
2023
June 30,
2023
(in millions)
1.50% convertible notes due 2024
$592 $1,100 
Variable interest rate Delayed Draw Term Loan due 2024300  
4.75% senior unsecured notes due 2026
2,300 2,300 
Variable interest rate Term Loan A-2 maturing 20272,662 2,700 
3.00% convertible notes due 2028
1,600  
2.85% senior notes due 2029
500 500 
3.10% senior notes due 2032
500 500 
Total debt8,454 7,100 
Issuance costs(61)(30)
Subtotal8,393 7,070 
Less current portion of long-term debt(1,042)(1,213)
Long-term debt$7,351 $5,857 

In August 2023, the Company drew $600 million of principal amount (the “Delayed Draw Term Loan”) under a loan agreement entered into in January 2023 and amended in June 2023 (the “Delayed Draw Term Loan Agreement”), which allowed the Company to draw a single loan of up to $600 million through August 14, 2023. The Delayed Draw Term Loan will mature on June 28, 2024. The Company repaid $300 million principal amount of the Delayed Draw Term Loan during the quarter ended December 29, 2023.

The Delayed Draw Term Loan bears interest, at the Company’s option, at a per annum rate equal to either (x) the Adjusted Term SOFR Rate (as defined in the Delayed Draw Term Loan Agreement) plus an applicable margin varying from 1.750% to 2.625% or (y) a base rate plus an applicable margin varying from 0.750% to 1.625%, in each case depending on the corporate family ratings of the Company from at least two of Standard & Poor’s Ratings Services, Moody’s Investors Service, Inc. and Fitch Ratings, Inc. (the “Credit Rating Agencies”). The all-in interest rate for the Delayed Draw Term Loan as of December 29, 2023 was 7.582%.

During the three months ended December 29, 2023, the Company made a $38 million scheduled repayment of the Term Loan A-2. The Term Loan A-2 Loan bears interest, at the Company’s option, at a per annum rate equal to either (x) the Adjusted Term SOFR (as defined in the loan agreement governing the Term Loan A-2) plus an applicable margin varying from 1.125% to 2.000% or (y) a base rate plus an applicable margin varying from 0.125% to 1.000%, in each case depending on the corporate family ratings of the Company from at least two of the Credit Rating Agencies, with an initial interest rate of Adjusted Term SOFR plus 1.500%. The all-in interest rate for Term Loan A-2 as of December 29, 2023 was 6.966%.

The loan agreements governing the Company’s revolving credit facility, Term Loan A-2 maturing 2027, and the Delayed Draw Term Loan require the Company to comply with certain financial covenants, consisting of a leverage ratio, a minimum liquidity and a free cash flow requirement. As of December 29, 2023, the Company was in compliance with these financial covenants.

On November 3, 2023, the Company issued $1.60 billion aggregate principal amount of convertible senior notes which bear interest at an annual rate of 3.00% and mature on November 15, 2028, unless earlier repurchased, redeemed or converted (the “2028 Convertible Notes”). The Company is not required to make principal payments on the 2028 Convertible Notes prior to the maturity date. The 2028 Convertible Notes are jointly and severally guaranteed by each of the Company’s wholly-owned subsidiaries that guarantees the 4.75% senior unsecured notes due 2026 (currently, Western Digital Technologies, Inc.).

23

Table of Contents

WESTERN DIGITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The 2028 Convertible Notes are convertible at an initial conversion price of approximately $52.20 per share of common stock. Prior to August 15, 2028, the 2028 Convertible Notes are convertible only upon the occurrence of certain events and during certain periods. Upon any conversion of the 2028 Convertible Notes, the Company will pay cash up to the aggregate principal amount of the notes to be converted and pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination thereof, at the Company’s election, in respect of the remainder, if any, of its conversion obligation in excess of the aggregate principal amount of the notes being converted.

Net proceeds from the 2028 Convertible Notes were approximately $1,563 million after deducting issuance costs of approximately $37 million. Debt issuance costs are amortized to interest expense over the term of the 2028 Convertible Notes. As of December 29, 2023, unamortized debt issuance costs were $36 million.

Contemporaneously with the issuance of the 2028 Convertible Notes, the Company entered into individually negotiated transactions with certain holders of the Company’s existing 2024 Convertible Notes to repurchase approximately $508 million aggregate principal amount of such notes at an immaterial discount.

In connection with the issuance of the 2028 Convertible Notes, the Company also entered into privately negotiated capped call transactions with certain counterparties (the “Capped Calls”). The Capped Calls each have a strike price of approximately $52.20 per share, subject to certain adjustments, which correspond to the initial conversion price of the 2028 Convertible Notes. The Capped Calls have initial cap prices of $70.26 per share, subject to certain adjustments. The Capped Calls cover, subject to anti-dilution adjustments, approximately 8 million shares of the Company’s common stock. The Company has the option to settle the Capped Calls in either shares, cash or a combination thereof. The Capped Calls are generally intended to reduce or offset the potential dilution to the Company’s common stock upon any conversion of the 2028 Convertible Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. However, if the market price per share of the Company’s common stock, as measured under the terms of the Capped Calls, exceeds the cap prices of the Capped Calls, there would nevertheless be dilution and/or there would not be an offset of such cash payments, in each case, to the extent that such market price exceeds the cap price of the Capped Calls. The Capped Calls are separate transactions, and not part of the terms of the 2028 Convertible Notes. As these transactions meet certain accounting criteria, the Capped Calls are recorded in stockholders’ equity and are not accounted for as derivatives. The cost of the Capped Calls of $155 million, net of $37 million in deferred tax assets, was recorded as a decrease to additional paid-in capital on the Company’s Condensed Consolidated Balance Sheets as of December 29, 2023.

On February 1, 2024, the Company settled all remaining 2024 Convertible Notes in accordance with their original terms for an aggregate cash principal payment of $592 million plus interest.


24

Table of Contents

WESTERN DIGITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 8.    Pension and Other Post-Retirement Benefit Plans

The Company has pension and other post-retirement benefit plans in various countries. The Company’s principal pension plans are in Japan, Thailand and the Philippines. All pension and other post-retirement benefit plans outside of the Company’s Japan, Thailand and the Philippines defined benefit pension plans (the “Pension Plans”) are immaterial to the Condensed Consolidated Financial Statements. The expected long-term rate of return on the Pension Plans assets is 2.5%.

Obligations and Funded Status

The following table presents the unfunded status of the benefit obligations for the Pension Plans:
December 29,
2023
June 30,
2023
(in millions)
Benefit obligation at end of period$273 $273 
Fair value of plan assets at end of period