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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 29, 2024
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/5459c2cfb216c716491132f028f64fe2-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 April 22, 2024, 326,524,668 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 29, 2024 and June 30, 2023
Condensed Consolidated Statements of Operations — Three and Nine Months Ended March 29, 2024 and March 31, 2023
Condensed Consolidated Statements of Comprehensive Loss — Three and Nine Months Ended March 29, 2024 and March 31, 2023
Condensed Consolidated Statements of Cash Flows — Nine Months Ended March 29, 2024 and March 31, 2023
Condensed Consolidated Statements of Convertible Preferred Stock and Shareholders' Equity — Nine Months Ended March 29, 2024 and March 31, 2023
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.


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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 related to our agreed sale of a portion of our equity interest in SanDisk Semiconductor (Shanghai) Co. Ltd.; expectations regarding our product development and technology plans; expectations regarding capital expenditure plans and investments, including relating to our Flash Ventures joint venture with Kioxia Corporation (“Kioxia”); 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;
operational, financial and legal challenges and difficulties inherent in implementing a separation of the company's HDD and Flash businesses;
the final approval of the separation by the company's board of directors;
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;
the impact of business and market conditions;
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.

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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.
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PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements (unaudited)

WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except par value)
(Unaudited)
March 29,
2024
June 30,
2023
ASSETS
Current assets:
Cash and cash equivalents$1,894 $2,023 
Accounts receivable, net1,800 1,598 
Inventories3,215 3,698 
Other current assets623 567 
Total current assets7,532 7,886 
Property, plant and equipment, net3,253 3,620 
Notes receivable and investments in Flash Ventures1,099 1,410 
Goodwill10,034 10,037 
Other intangible assets, net78 80 
Other non-current assets1,805 1,513 
Total assets$23,801 $24,546 
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable$1,400 $1,293 
Accounts payable to related parties310 292 
Accrued expenses972 1,288 
Income taxes payable476 999 
Accrued compensation445 349 
Current portion of long-term debt450 1,213 
Total current liabilities4,053 5,434 
Long-term debt7,318 5,857 
Other liabilities1,433 1,415 
Total liabilities12,804 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 $968 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 capital4,018 3,936 
Accumulated other comprehensive loss(636)(548)
Retained earnings6,736 7,573 
Total shareholders’ equity10,121 10,964 
Total liabilities, convertible preferred stock and shareholders’ equity$23,801 $24,546 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(Unaudited)
Three Months EndedNine Months Ended
March 29,
2024
March 31,
2023
March 29,
2024
March 31,
2023
Revenue, net$3,457 $2,803 $9,239 $9,646 
Cost of revenue2,456 2,517 7,647 7,851 
Gross profit1,001 286 1,592 1,795 
Operating expenses:
Research and development494 476 1,369 1,551 
Selling, general and administrative203 242 608 739 
Employee termination, asset impairment, and other8 40 89 140 
Business separation costs23  59  
Total operating expenses728 758 2,125 2,430 
Operating income (loss)273 (472)(533)(635)
Interest and other expense:
Interest income10 10 30 15 
Interest expense(108)(80)(314)(223)
Other income, net3 14 54 27 
Total interest and other expense, net(95)(56)(230)(181)
Income (loss) before taxes178 (528)(763)(816)
Income tax expense43 43 74 159 
Net income (loss)135 (571)(837)(975)
Less: cumulative dividends allocated to preferred shareholders15 9 44 9 
Less: income attributable to preferred shareholders7    
Net income (loss) attributable to common shareholders$113 $(580)$(881)$(984)
Net income (loss) per common share:
Basic$0.35 $(1.82)$(2.72)$(3.09)
Diluted$0.34 $(1.82)$(2.72)$(3.09)
Weighted average shares outstanding:
Basic326 319 324 318 
Diluted335 319 324 318 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in millions)
(Unaudited)
Three Months EndedNine Months Ended
March 29,
2024
March 31,
2023
March 29,
2024
March 31,
2023
Net income (loss)$135 $(571)$(837)$(975)
Other comprehensive income (loss), before tax:
Actuarial pension gain (loss) (1) (1)
Foreign currency translation adjustment(75)(8)(55)11 
Net unrealized gain (loss) on derivative contracts(86)21 (45)233 
Total other comprehensive income (loss), before tax(161)12 (100)243 
Income tax benefit (expense) related to items of other comprehensive income (loss), before tax18 (6)12 (39)
Other comprehensive income (loss), net of tax(143)6 (88)204 
Total comprehensive loss$(8)$(565)$(925)$(771)

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
Nine Months Ended
March 29,
2024
March 31,
2023
Cash flows from operating activities
Net loss$(837)$(975)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation and amortization430 643 
Stock-based compensation226 246 
Deferred income taxes(120)30 
Gain on disposal of assets
(87)(7)
Non-cash asset impairment
99 18 
Gain on repurchase of debt
(4) 
Amortization of debt issuance costs and discounts14 9 
Other non-cash operating activities, net24 (8)
Changes in:
Accounts receivable, net(202)1,213 
Inventories483 (341)
Accounts payable211 (442)
Accounts payable to related parties18 (54)
Accrued expenses(310)(484)
Income taxes payable(524)144 
Accrued compensation97 (169)
Other assets and liabilities, net(178)(163)
Net cash used in operating activities
(660)(340)
Cash flows from investing activities
Purchases of property, plant and equipment(371)(702)
Proceeds from the sale of property, plant and equipment195 14 
Notes receivable issuances to Flash Ventures(184)(496)
Notes receivable proceeds from Flash Ventures391 542 
Strategic investments and other, net 22 
Net cash provided by (used in) investing activities
31 (620)
Cash flows from financing activities
Issuance of stock under employee stock plans40 49 
Taxes paid on vested stock awards under employee stock plans(66)(69)
Net proceeds from convertible preferred stock
(5)882 
Purchase of capped calls(155) 
Repurchases of debt(505) 
Repayments of debt(1,267)(1,180)
Proceeds from debt2,500 1,180 
Debt issuance costs(36)(6)
Net cash provided by financing activities
506 856 
Effect of exchange rate changes on cash(6)(3)
Net decrease in cash and cash equivalents
(129)(107)
Cash and cash equivalents, beginning of year2,023 2,327 
Cash and cash equivalents, end of period$1,894 $2,220 
Supplemental disclosure of cash flow information:
Cash paid for income taxes$874 $181 
Cash paid for interest$321 $252 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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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, 20231$876 324$3 $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 
Net income— — — — — — 135 135 
Employee stock plans— — — — (16)— — (16)
Stock-based compensation— — — — 77 — — 77 
Foreign currency translation adjustment— — — — — (75)— (75)
Net unrealized loss on derivative contracts— — — — — (68)— (68)
Balance at March 29, 20241$876 326$3 $4,018 $(636)$6,736 $10,121 

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

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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 $ 318$3 $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 
Net loss— — — — — — (571)(571)
Issuance of convertible preferred stock, net of issuance costs1 876 — — — — — — 
Employee stock plans— — 1 — (13)— — (13)
Stock-based compensation— — — — 74 — — 74 
Actuarial pension gain— — — — — (1)— (1)
Foreign currency translation adjustment— — — — — (9)— (9)
Net unrealized gain on derivative contracts— — — — — 16 — 16 
Balance at March 31, 20231$876 320$3 $3,831 $(375)$8,282 $11,741 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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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 on 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 Flash and HDD 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.
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WESTERN DIGITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Revision of Previously Issued Financial Statements

As previously disclosed in the Company’s Quarterly Report on Form 10-Q for the period ended December 28, 2023, 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, “Flash Ventures”). The errors related to unadjusted differences between 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 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 period detected would have been material to the Company's results of operations for that period. Accordingly, the Company has revised previously reported financial information presented herein for such immaterial errors. A summary of revisions to the Condensed Consolidated Financial Statements presented herein is included for comparative purposes in Note 17, Revision of Previously Issued Financial Statements.
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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.





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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 EndedNine Months Ended
March 29,
2024
March 31,
2023
March 29,
2024
March 31,
2023
$ in millions
Revenue, net:
Flash$1,705 $1,307 $4,926 $4,686 
HDD1,752 1,496 4,313 4,960 
Total net revenue$3,457 $2,803 $9,239 $9,646 
Gross profit:
Flash$467 $(65)$437 $597 
HDD545 363 1,157 1,237 
Total gross profit for segments1,012 298 1,594 1,834 
Unallocated corporate items:
Stock-based compensation expense(11)(12)(37)(38)
Amortization of acquired intangible assets(1) (2)(1)
Recovery from contamination incident1  37  
Total unallocated corporate items(11)(12)(2)(39)
Consolidated gross profit$1,001 $286 $1,592 $1,795 
Gross margin:
Flash27.4 %(5.0)%8.9 %12.7 %
HDD31.1 %24.3 %26.8 %24.9 %
Consolidated gross margin29.0 %10.2 %17.2 %18.6 %

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.

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WESTERN DIGITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Company’s disaggregated revenue information is as follows:
Three Months EndedNine Months Ended
March 29,
2024
March 31,
2023
March 29,
2024
March 31,
2023
(in millions)
Revenue by end market
Cloud$1,553 $1,205 $3,496 $4,258 
Client1,174 975 3,443 3,293 
Consumer730 623 2,300 2,095 
Total revenue
$3,457 $2,803 $9,239 $9,646 
Revenue by geography
Asia$1,740 $1,353 $4,990 $4,533 
Americas1,154 935 2,620 3,448 
Europe, Middle East and Africa563 515 1,629 1,665 
Total revenue
$3,457 $2,803 $9,239 $9,646 

The Company’s top 10 customers accounted for 42% and 38% of its net revenue for each of the three and nine months ended March 29, 2024 and 49% and 45% of its net revenue for the three and nine months ended March 31, 2023, respectively. For the three and nine months ended March 29, 2024 and March 31, 2023, 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 adjustment(2)(1)(3)
Balance at March 29, 2024$5,714 $4,320 $10,034 



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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 nine months ended March 29, 2024 and March 31, 2023, the Company sold trade accounts receivable aggregating $623 million and $626 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 March 29, 2024 and June 30, 2023, the amount of factored receivables that remained outstanding was $102 million and $150 million, respectively.

Inventories
March 29,
2024
June 30,
2023
(in millions)
Inventories:
Raw materials and component parts$1,666 $2,096 
Work-in-process1,045 979 
Finished goods504 623 
Total inventories$3,215 $3,698 

Property, plant and equipment, net
March 29,
2024
June 30,
2023
(in millions)
Property, plant and equipment:
Land$235 $269 
Buildings and improvements1,826 1,955 
Machinery and equipment8,655 8,704 
Computer equipment and software473 470 
Furniture and fixtures54 54 
Construction-in-process793 798 
Property, plant and equipment, gross12,036 12,250 
Accumulated depreciation(8,783)(8,630)
Property, plant and equipment, net$3,253 $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 March 29, 2024 and June 30, 2023, IPR&D included in intangible assets, net was $72 million and $80 million, respectively.

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

Changes in the warranty accrual were as follows:
Three Months EndedNine Months Ended
March 29,
2024
March 31,
2023
March 29,
2024
March 31,
2023
(in millions)
Warranty accrual, beginning of period$202 $289 $244 $345 
Charges to operations28 26 76 83 
Utilization(29)(43)(112)(137)
Changes in estimate related to pre-existing warranties2  (5)(19)
Warranty accrual, end of period$203 $272 $203 $272 

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:
March 29,
2024
June 30,
2023
(in millions)
Warranty accrual:
Current portion (included in Accrued expenses)$47 $97 
Long-term portion (included in Other liabilities)156 147 
Total warranty accrual$203 $244 

Other liabilities
March 29,
2024
June 30,
2023
(in millions)
Other liabilities:
Non-current net tax payable$201 $464 
Non-current portion of unrecognized tax benefits552 408 
Other non-current liabilities680 543 
Total other liabilities$1,433 $1,415 

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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 (55)(196)(251)
Amounts reclassified from accumulated other comprehensive loss  151 151 
Income tax benefit related to items of other comprehensive loss 1 11 12 
Net current-period other comprehensive loss (54)(34)(88)
Balance at March 29, 2024$(2)$(443)$(191)$(636)

During the three and nine months ended March 29, 2024, 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 March 29, 2024, 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 March 29, 2024, the Company did not have any foreign exchange forward contracts with credit-risk-related contingent features.

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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 March 29, 2024 and June 30, 2023, and indicate the fair value hierarchy of the valuation techniques utilized to determine such values:
March 29, 2024
 Level 1Level 2Level 3Total
(in millions)
Assets:
Cash equivalents - Money market funds$333 $ $ $333 
Short-term investments - Certificates of deposit
27   27 
Foreign exchange contracts 9  9 
Total assets at fair value$360 $9 $ $369 
Liabilities:
Foreign exchange contracts$ $142 $ $142 
Total liabilities at fair value$ $142 $ $142 

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.

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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 third quarter of 2024 and the fourth quarter of 2023, respectively.
March 29, 2024June 30, 2023
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
(in millions)
1.50% convertible notes due 2024
$ $ $1,099 $1,067 
Variable interest rate Delayed Draw Term Loan due 2024
300 300   
4.75% senior unsecured notes due 2026
2,295