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☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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33-0956711
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||
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer Identification No.)
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5601 Great Oaks Parkway
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San Jose,
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California
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95119
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
|
Trading symbol(s)
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Name of each exchange on which registered
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Common Stock, $.01 Par Value Per Share
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WDC
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The Nasdaq Stock Market LLC
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(Nasdaq Global Select Market)
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PAGE NO.
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PART I
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||
Item 1.
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Business
|
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Item 1A.
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Risk Factors
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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PART II
|
||
Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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Item 6.
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Selected Financial Data
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Item 7.
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Management’s Discussion and Analysis of Financial Conditions and Results of Operations
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Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 8.
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Financial Statements and Supplementary Data
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Item 9.
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Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
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Item 9A.
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Controls and Procedures
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Item 9B.
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Other Information
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PART III
|
||
Item 10.
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Director, Executive Officers and Corporate Governance
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Item 11.
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Executive Compensation
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence
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Item 14.
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Principal Accounting Fees and Services
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PART IV
|
||
Item 15.
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Exhibits, Financial Statement Schedules
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Item 16.
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Form 10‑K Summary
|
•
|
expectations regarding our Flash Ventures joint venture with Toshiba Memory Corporation, the flash industry and our flash wafer output plans;
|
•
|
our cost and expense reduction actions;
|
•
|
our quarterly cash dividend policy and share repurchase program;
|
•
|
expectations regarding our product development and technology plans;
|
•
|
expectations regarding our future results of operations;
|
•
|
expectations regarding the outcome of legal proceedings in which we are involved;
|
•
|
expectations regarding the repatriation of funds from our foreign operations;
|
•
|
our beliefs regarding tax benefits and the timing of future payments, if any, relating to the unrecognized tax benefits, and the adequacy of our tax provisions;
|
•
|
expectations regarding capital investments and sources of funding for those investments; and
|
•
|
our beliefs regarding the sufficiency of our available liquidity to meet our working capital, our debt and debt covenants, our dividend plans and our capital expenditure needs.
|
•
|
Technology Leadership: We continue to innovate and develop advanced technologies across platforms for both HDD and flash to deliver timely new products and solutions to meet growing demands for scale, performance and cost efficiency in the market.
|
•
|
Broad Product Portfolio: We leverage our capabilities in firmware, software and systems in both HDD and flash to deliver compelling and differentiated integrated storage solutions to our customers that offer the best combinations of performance, cost, power consumption, form factor, quality and reliability, while creating new use cases for our solutions in emerging markets.
|
•
|
Operational Excellence: We are focused on delivering the best value for our customers in data center, client and consumer markets through a relentless focus on appropriately scaling our operations across both HDD and flash technologies to efficiently support business growth, achieving best in class cost, quality and cycle-time, maintaining industry leading manufacturing capabilities, and having a competitive advantage in supply-chain management.
|
•
|
differentiates us as the leading developer and manufacturer of integrated products and solutions based on both HDD and flash, making us a more strategic supply partner to our large-scale customers who have storage needs across the data infrastructure ecosystem;
|
•
|
enables scaling for efficiency and flexibility, allowing us to leverage our HDD and flash R&D and capital expenditures to deliver storage solutions to multiple markets;
|
•
|
results in continued diversification of our HDD and flash storage solutions portfolio and entry into additional growing adjacent markets; and
|
•
|
allows us to achieve strong financial performance, including healthy cash generation, thereby enabling organic and inorganic business investments and return of cash to shareholders.
|
•
|
We seek to protect the human rights and civil liberties of our employees through policies, procedures, and programs that avoid risks of compulsory and child labor, both within our company and throughout our supply chain.
|
•
|
We foster a workplace of dignity, respect, diversity, and inclusion through our recruiting and advancement practices, internal communications, and employee resource groups.
|
•
|
We educate our employees annually on relevant ethics and compliance topics, publish accessible guidance on ethical issues and related company resources in our Global Code of Conduct, and encourage reporting of ethical concerns through any of several global and local reporting channels.
|
•
|
We support local communities throughout the world, focusing on hunger relief, environmental quality, and STEM (science, technology, engineering, and math) education, especially for underrepresented and underprivileged youth.
|
•
|
We utilize a robust integrated management system, with associated policies and procedures, to evaluate and manage occupational health and safety risks, environmental compliance, and chemical and hazardous substance risks.
|
•
|
We innovate to reduce the energy used by our products, the energy used to manufacture them, and the amount of new materials required to manufacture them.
|
•
|
obtaining requisite governmental permits and approvals, compliance with foreign laws and regulations and changes in foreign laws and regulations;
|
•
|
the need to comply with regulations on international business, including the Foreign Corrupt Practices Act, the United Kingdom Bribery Act 2010, the anti-bribery laws of other countries and rules regarding conflict minerals;
|
•
|
copyright levies or similar fees or taxes imposed in European and other countries;
|
•
|
exchange, currency and tax controls and reallocations;
|
•
|
weaker protection of IP rights;
|
•
|
trade restrictions, such as export controls, export bans, embargoes, sanctions, license and certification requirements (including on encryption technology), new or increased tariffs and fees and complex customs regulations; and
|
•
|
difficulties in managing international operations, including appropriate internal controls.
|
•
|
R&D expenses and results;
|
•
|
difficulties faced in manufacturing ramp;
|
•
|
market acceptance/qualification;
|
•
|
effective management of inventory levels in line with anticipated product demand;
|
•
|
the vertical integration of some of our products, which may result in more capital expenditures and greater fixed costs than if we were not vertically integrated;
|
•
|
our ability to cost effectively respond to customer requests for new products or features and software associated with our products;
|
•
|
our ability to increase our software development capability; and
|
•
|
the effectiveness of our go-to-market capability in selling new products.
|
•
|
our interests could diverge from our partners’ interests or we may not agree with co-venturers on ongoing activities, technology transitions or on the amount, timing or nature of further investments in the relationship;
|
•
|
we may experience difficulties and delays in product and technology development at, ramping production at, and transferring technology to, our business ventures;
|
•
|
our control over the operations of our business ventures is limited;
|
•
|
due to financial constraints, our co-venturers may be unable to meet their commitments to us or may pose credit risks for our transactions with them;
|
•
|
due to differing business models, financial constraints or long-term business goals, our partners may decide not to join us in funding capital investment by our business ventures, which may result in higher levels of cash expenditures by us or prevent us from proceeding in the investment;
|
•
|
we may lose the rights to technology or products being developed by the strategic relationship, including if any of our co-venturers is acquired by another company or otherwise transfers its interest in the business venture, files for bankruptcy or experiences financial or other losses;
|
•
|
a bankruptcy event involving a co-venturer could result in the early termination or adverse modification of the business venture or agreements governing the business venture;
|
•
|
we may experience difficulties or delays in collecting amounts due to us from our co-venturers;
|
•
|
the terms of our arrangements may turn out to be unfavorable; and
|
•
|
changes in tax, legal or regulatory requirements may necessitate changes in the agreements with our co-venturers.
|
•
|
limiting our ability to obtain additional financing for working capital, capital expenditures, acquisitions or other general corporate purposes;
|
•
|
requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes;
|
•
|
imposing financial and other restrictive covenants on our operations, including limiting our ability to (i) declare or pay dividends or repurchase shares of our common stock; (ii) purchase assets, make investments, complete acquisitions, consolidate or merge with or into, or sell all or substantially all of our assets to, another person; (iii) dispose of assets; (iv) incur liens; and (v) enter into transactions with affiliates; and
|
•
|
making us more vulnerable to economic downturns and limiting our ability to withstand competitive pressures or take advantage of new opportunities to grow our business.
|
•
|
weakness in demand for one or more product categories;
|
•
|
the timing of orders from and shipment of products to major customers or loss of major customers;
|
•
|
our product mix;
|
•
|
reductions in the ASPs of our products and lower margins;
|
•
|
excess output, capacity or inventory, resulting in lower ASPs, financial charges or impairments, or insufficient output, capacity or inventory, resulting in lost revenue opportunities;
|
•
|
inability to successfully implement technology transitions or other technology developments, or other failure to reduce product costs to keep pace with reduction in ASPs;
|
•
|
manufacturing delays or interruptions;
|
•
|
delays in design wins or customer qualifications, acceptance by customers of competing products in lieu of our products;
|
•
|
variations in the cost of and lead times for components for our products, disruptions of our supply chain;
|
•
|
increase in costs due to warranty claims; and
|
•
|
higher costs as a result of currency exchange rate fluctuations.
|
•
|
price protection adjustments and other sales promotions and allowances on products sold to retailers, resellers and distributors;
|
•
|
inventory adjustments for write-down of inventories to lower of cost or net realizable value;
|
•
|
testing of goodwill and other long-lived assets for impairment;
|
•
|
accruals for product returns;
|
•
|
accruals for litigation and other contingencies;
|
•
|
liabilities for unrecognized tax benefits; and
|
•
|
provisional estimates related to tax reform.
|
•
|
actual or anticipated fluctuations in our operating results, including those resulting from the seasonality of our business;
|
•
|
perceptions about our strategic relationships and joint ventures, access to supply of flash-based memory, new technologies and technology transitions;
|
•
|
announcements of technological innovations or new products by us or our competitors, which may decrease the volume and profitability of sales of our existing products and increase the risk of inventory obsolescence;
|
•
|
strategic actions by us or competitors, such as acquisitions and restructurings;
|
•
|
periods of severe pricing pressures due to oversupply or price erosion resulting from competitive pressures or industry consolidation;
|
•
|
proposed or adopted regulatory changes or developments or anticipated or pending investigations, proceedings or litigation that involve or affect us or our competitors;
|
•
|
failure to meet analysts’ revenue or earnings estimates or changes in financial estimates or publication of research reports and recommendations by financial analysts relating specifically to us or the storage industry in general;
|
•
|
announcements relating to dividends and share repurchases; and
|
•
|
macroeconomic conditions that affect the market generally and, in particular, developments related to market conditions for our industry.
|
Location
|
|
Buildings Owned or Leased
|
|
Approximate Square Footage
|
|
Description
|
|
United States
|
|
|
|
|
|
|
|
California
|
|
|
|
|
|
|
|
Fremont
|
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Leased
|
|
290,000
|
|
|
Manufacturing of head wafers and R&D
|
Irvine
|
|
Leased
|
|
490,000
|
|
|
R&D, administrative, marketing and sales
|
Milpitas
|
|
Owned
|
|
589,000
|
|
|
R&D, marketing and sales, and administrative
|
San Jose
|
|
Owned and Leased
|
|
2,750,000
|
|
|
Manufacturing of head wafers, head, media and product development, R&D, administrative, marketing and sales
|
Colorado
|
|
|
|
|
|
|
|
Longmont
|
|
Leased
|
|
62,000
|
|
|
R&D
|
Minnesota
|
|
|
|
|
|
|
|
Rochester
|
|
Leased
|
|
121,000
|
|
|
Product development
|
Asia
|
|
|
|
|
|
|
|
China
|
|
|
|
|
|
|
|
Shanghai
|
|
Owned
|
|
774,000
|
|
|
Assembly and test of SSDs
|
Shenzhen
|
|
Owned and Leased
|
|
567,000
|
|
|
Manufacturing of media
|
Japan
|
|
|
|
|
|
|
|
Fujisawa
|
|
Owned
|
|
661,000
|
|
|
Product development
|
Malaysia
|
|
|
|
|
|
|
|
Johor
|
|
Owned
|
|
277,000
|
|
|
Manufacturing of substrates
|
Kuala Lumpur
|
|
Owned
|
|
146,000
|
|
|
R&D
|
Kuching
|
|
Owned
|
|
285,000
|
|
|
Manufacturing and development of substrates
|
Penang
|
|
Owned
|
|
1,664,000
|
|
|
Assembly and test of SSDs, manufacturing of media, and R&D
|
Philippines
|
|
|
|
|
|
|
|
Laguna
|
|
Owned
|
|
632,000
|
|
|
Manufacturing of HGAs and slider fabrication
|
Thailand
|
|
|
|
|
|
|
|
Bang Pa-In
|
|
Owned
|
|
1,577,000
|
|
|
Slider fabrication, manufacturing of HDDs and HGAs, and R&D
|
Prachinburi
|
|
Owned
|
|
838,000
|
|
|
Manufacturing of HDDs
|
India
|
|
|
|
|
|
|
|
Bangalore
|
|
Owned and Leased
|
|
638,000
|
|
|
R&D and marketing
|
Middle East
|
|
|
|
|
|
|
|
Israel
|
|
|
|
|
|
|
|
Kfar Saba
|
|
Owned
|
|
167,000
|
|
|
R&D and marketing
|
Tefen
|
|
Owned
|
|
64,000
|
|
|
R&D and marketing
|
|
June 27,
2014 |
|
July 3,
2015 |
|
July 1,
2016 |
|
June 30,
2017 |
|
June 29,
2018 |
|
June 28,
2019 |
||||||||||||
Western Digital Corporation
|
$
|
100.00
|
|
|
$
|
88.77
|
|
|
$
|
52.89
|
|
|
$
|
103.62
|
|
|
$
|
92.72
|
|
|
$
|
59.52
|
|
S&P 500 Index
|
$
|
100.00
|
|
|
$
|
107.42
|
|
|
$
|
111.71
|
|
|
$
|
131.70
|
|
|
$
|
150.64
|
|
|
$
|
166.33
|
|
Dow Jones U.S. Technology Hardware & Equipment Index
|
$
|
100.00
|
|
|
$
|
113.29
|
|
|
$
|
104.58
|
|
|
$
|
147.70
|
|
|
$
|
192.40
|
|
|
$
|
207.45
|
|
|
June 28,
2019 |
|
June 29,
2018 |
|
June 30,
2017 |
|
July 1,
2016 |
|
July 3,
2015 |
||||||||||
|
(in millions, except per share and employee data)
|
||||||||||||||||||
Revenue, net
|
$
|
16,569
|
|
|
$
|
20,647
|
|
|
$
|
19,093
|
|
|
$
|
12,994
|
|
|
$
|
14,572
|
|
Gross profit
|
3,752
|
|
|
7,705
|
|
|
6,072
|
|
|
3,435
|
|
|
4,221
|
|
|||||
Net income (loss)
|
(754
|
)
|
|
675
|
|
|
397
|
|
|
242
|
|
|
1,465
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
(2.58
|
)
|
|
$
|
2.27
|
|
|
$
|
1.38
|
|
|
$
|
1.01
|
|
|
$
|
6.31
|
|
Diluted
|
$
|
(2.58
|
)
|
|
$
|
2.20
|
|
|
$
|
1.34
|
|
|
$
|
1.00
|
|
|
$
|
6.18
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends declared per common share
|
$
|
2.00
|
|
|
$
|
2.00
|
|
|
$
|
2.00
|
|
|
$
|
2.00
|
|
|
$
|
1.80
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Working capital
|
$
|
4,660
|
|
|
$
|
6,182
|
|
|
$
|
6,712
|
|
|
$
|
5,635
|
|
|
$
|
5,275
|
|
Total assets
|
$
|
26,370
|
|
|
$
|
29,235
|
|
|
$
|
29,860
|
|
|
$
|
32,862
|
|
|
$
|
15,170
|
|
Long-term debt
|
$
|
10,246
|
|
|
$
|
10,993
|
|
|
$
|
12,918
|
|
|
$
|
13,660
|
|
|
$
|
2,149
|
|
Shareholders’ equity
|
$
|
9,967
|
|
|
$
|
11,531
|
|
|
$
|
11,418
|
|
|
$
|
11,145
|
|
|
$
|
9,219
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Number of employees (1)
|
61,800
|
|
|
71,600
|
|
|
67,600
|
|
|
72,900
|
|
|
76,400
|
|
|
|
(1)
|
Excludes temporary employees and contractors.
|
|
Management’s Discussion and Analysis of Financial Conditions and Results of Operations
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
(in millions, except percentages)
|
|||||||||||||||||||
Revenue, net
|
$
|
16,569
|
|
|
100.0
|
%
|
|
$
|
20,647
|
|
|
100.0
|
%
|
|
$
|
19,093
|
|
|
100.0
|
%
|
Cost of revenue
|
12,817
|
|
|
77.4
|
|
|
12,942
|
|
|
62.7
|
|
|
13,021
|
|
|
68.2
|
|
|||
Gross profit
|
3,752
|
|
|
22.6
|
|
|
7,705
|
|
|
37.3
|
|
|
6,072
|
|
|
31.8
|
|
|||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Research and development
|
2,182
|
|
|
13.2
|
|
|
2,400
|
|
|
11.6
|
|
|
2,441
|
|
|
12.8
|
|
|||
Selling, general and administrative
|
1,317
|
|
|
7.9
|
|
|
1,473
|
|
|
7.1
|
|
|
1,445
|
|
|
7.6
|
|
|||
Employee termination, asset impairment, and other charges
|
166
|
|
|
1.0
|
|
|
215
|
|
|
1.0
|
|
|
232
|
|
|
1.2
|
|
|||
Total operating expenses
|
3,665
|
|
|
22.1
|
|
|
4,088
|
|
|
19.8
|
|
|
4,118
|
|
|
21.6
|
|
|||
Operating income
|
87
|
|
|
0.5
|
|
|
3,617
|
|
|
17.5
|
|
|
1,954
|
|
|
10.2
|
|
|||
Interest and other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest income
|
57
|
|
|
0.3
|
|
|
60
|
|
|
0.3
|
|
|
26
|
|
|
0.1
|
|
|||
Interest expense
|
(469
|
)
|
|
(2.8
|
)
|
|
(676
|
)
|
|
(3.3
|
)
|
|
(847
|
)
|
|
(4.4
|
)
|
|||
Other income, net
|
38
|
|
|
0.2
|
|
|
(916
|
)
|
|
(4.4
|
)
|
|
(364
|
)
|
|
(1.9
|
)
|
|||
Total interest and other expense, net
|
(374
|
)
|
|
(2.3
|
)
|
|
(1,532
|
)
|
|
(7.4
|
)
|
|
(1,185
|
)
|
|
(6.2
|
)
|
|||
Income (loss) before taxes
|
(287
|
)
|
|
(1.7
|
)
|
|
2,085
|
|
|
10.1
|
|
|
769
|
|
|
4.0
|
|
|||
Income tax expense
|
467
|
|
|
2.8
|
|
|
1,410
|
|
|
6.8
|
|
|
372
|
|
|
1.9
|
|
|||
Net income (loss)
|
$
|
(754
|
)
|
|
(4.6
|
)%
|
|
$
|
675
|
|
|
3.3
|
%
|
|
$
|
397
|
|
|
2.1
|
%
|
|
|
(1)
|
Percentages may not total due to rounding.
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in millions, except percentages)
|
||||||||||
Revenue by Geography:
|
|
|
|
|
|
||||||
Americas
|
$
|
4,361
|
|
|
$
|
5,622
|
|
|
$
|
5,108
|
|
Europe, Middle East and Africa
|
3,109
|
|
|
3,858
|
|
|
3,276
|
|
|||
Asia
|
9,099
|
|
|
11,167
|
|
|
10,709
|
|
|||
Total revenue
|
$
|
16,569
|
|
|
$
|
20,647
|
|
|
$
|
19,093
|
|
|
|
|
|
|
|
||||||
Revenue by End Market:
|
|
|
|
|
|
||||||
Client Devices
|
$
|
8,095
|
|
|
$
|
10,108
|
|
|
$
|
9,520
|
|
Data Center Devices & Solutions
|
5,038
|
|
|
6,075
|
|
|
5,505
|
|
|||
Client Solutions
|
3,436
|
|
|
4,464
|
|
|
4,068
|
|
|||
Total revenue
|
$
|
16,569
|
|
|
$
|
20,647
|
|
|
$
|
19,093
|
|
|
|
|
|
|
|
||||||
Revenue by Form Factor:
|
|
|
|
|
|
||||||
HDD
|
$
|
8,746
|
|
|
$
|
10,698
|
|
|
$
|
10,640
|
|
Flash-based
|
7,823
|
|
|
9,949
|
|
|
8,453
|
|
|||
Total revenue
|
$
|
16,569
|
|
|
$
|
20,647
|
|
|
$
|
19,093
|
|
|
|
|
|
|
|
||||||
Exabytes Shipped
|
383
|
|
|
389
|
|
|
313
|
|
|
|
(1)
|
Revenue for 2019 is presented in accordance with Accounting Standards Codification (“ASC”) 606. Revenue for 2018 and 2017 is presented in accordance with ASC 605. For information related to our transition from ASC 605 to ASC 606, see Part II, Item 8, Note 1, Organization and Basis of Presentation, of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in millions, except percentages)
|
||||||||||
Income (loss) before taxes
|
$
|
(287
|
)
|
|
$
|
2,085
|
|
|
$
|
769
|
|
Income tax expense (benefit)
|
467
|
|
|
1,410
|
|
|
372
|
|
|||
Effective tax rate
|
(163
|
)%
|
|
68
|
%
|
|
48
|
%
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in millions)
|
||||||||||
Net cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
1,547
|
|
|
$
|
4,205
|
|
|
$
|
3,437
|
|
Investing activities
|
(1,272
|
)
|
|
(1,655
|
)
|
|
(636
|
)
|
|||
Financing activities
|
(1,829
|
)
|
|
(3,900
|
)
|
|
(4,595
|
)
|
|||
Effect of exchange rate changes on cash
|
4
|
|
|
1
|
|
|
(3
|
)
|
|||
Net decrease in cash and cash equivalents
|
$
|
(1,550
|
)
|
|
$
|
(1,349
|
)
|
|
$
|
(1,797
|
)
|
|
Total
|
|
1 Year (2020)
|
|
2-3 Years (2021-2022)
|
|
4-5 Years (2023-2024)
|
|
More than 5 Years (Beyond 2024)
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Long-term debt, including current portion(1)
|
$
|
10,694
|
|
|
$
|
276
|
|
|
$
|
587
|
|
|
$
|
7,531
|
|
|
$
|
2,300
|
|
Interest on debt
|
1,902
|
|
|
423
|
|
|
815
|
|
|
445
|
|
|
219
|
|
|||||
Flash Ventures related commitments(2)
|
5,867
|
|
|
2,620
|
|
|
2,366
|
|
|
808
|
|
|
73
|
|
|||||
Operating leases
|
291
|
|
|
59
|
|
|
78
|
|
|
38
|
|
|
116
|
|
|||||
Purchase obligations and other commitments
|
2,977
|
|
|
2,050
|
|
|
523
|
|
|
194
|
|
|
210
|
|
|||||
Mandatory Deemed Repatriation Tax
|
1,104
|
|
|
62
|
|
|
199
|
|
|
285
|
|
|
558
|
|
|||||
Total
|
$
|
22,835
|
|
|
$
|
5,490
|
|
|
$
|
4,568
|
|
|
$
|
9,301
|
|
|
$
|
3,476
|
|
|
|
(1)
|
Principal portion of debt, excluding discounts and issuance costs.
|
(2)
|
Includes reimbursement for depreciation and lease payments on owned and committed equipment, funding commitments for loans and equity investments and payments for other committed expenses, including R&D and building depreciation. Funding commitments assume no additional operating lease guarantees. Additional operating lease guarantees can reduce funding commitments.
|
2020
|
|
$
|
62
|
|
2021
|
|
99
|
|
|
2022
|
|
100
|
|
|
2023
|
|
99
|
|
|
2024
|
|
186
|
|
|
2025
|
|
248
|
|
|
2026
|
|
310
|
|
|
Total
|
|
$
|
1,104
|
|
|
Contract Amount
|
|
Weighted-Average Contract Rate (1)
|
|
Mark to Market Unrealized Gain (Loss)
|
|||||
|
(in millions, except weighted-average contract rate)
|
|||||||||
Designated Hedges (cash flow hedges):
|
|
|
|
|
|
|||||
Japanese yen
|
$
|
1,087
|
|
|
108.98
|
|
|
$
|
21
|
|
Malaysian ringgit
|
38
|
|
|
4.17
|
|
|
—
|
|
||
Philippine peso
|
31
|
|
|
53.13
|
|
|
1
|
|
||
Thai baht
|
156
|
|
|
31.68
|
|
|
5
|
|
||
Total designated forward contracts
|
$
|
1,312
|
|
|
|
|
$
|
27
|
|
|
Non-Designated Hedges:
|
|
|
|
|
|
|||||
British pound sterling
|
$
|
25
|
|
|
0.79
|
|
|
$
|
—
|
|
Euro
|
252
|
|
|
0.88
|
|
|
(1
|
)
|
||
Japanese yen
|
3,520
|
|
|
108.35
|
|
|
(28
|
)
|
||
Malaysian ringgit
|
247
|
|
|
4.16
|
|
|
1
|
|
||
Philippine peso
|
80
|
|
|
51.74
|
|
|
1
|
|
||
Thai baht
|
269
|
|
|
31.20
|
|
|
4
|
|
||
Total non-designated forward contracts
|
$
|
4,393
|
|
|
|
|
$
|
(23
|
)
|
|
|
(1)
|
Expressed in units of foreign currency per U.S. dollar.
|
|
PAGE NO.
|
Consolidated Financial Statements:
|
|
Report of Independent Registered Public Accounting Firm
|
|
Consolidated Balance Sheets — As of June 28, 2019 and June 29, 2018
|
|
Consolidated Statements of Operations — Three Years Ended June 28, 2019
|
|
Consolidated Statements of Comprehensive Income (Loss) — Three Years Ended June 28, 2019
|
|
Consolidated Statements of Cash Flows — Three Years Ended June 28, 2019
|
|
Consolidated Statements of Shareholders' Equity — Three Years Ended June 28, 2019
|
|
Notes to Consolidated Financial Statements
|
|
/s/ KPMG LLP
|
|
June 28,
2019 |
|
June 29,
2018 |
||||
ASSETS
|
|||||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
3,455
|
|
|
$
|
5,005
|
|
Accounts receivable, net
|
1,204
|
|
|
2,197
|
|
||
Inventories
|
3,283
|
|
|
2,944
|
|
||
Other current assets
|
535
|
|
|
492
|
|
||
Total current assets
|
8,477
|
|
|
10,638
|
|
||
Property, plant and equipment, net
|
2,843
|
|
|
3,095
|
|
||
Notes receivable and investments in Flash Ventures
|
2,791
|
|
|
2,105
|
|
||
Goodwill
|
10,076
|
|
|
10,075
|
|
||
Other intangible assets, net
|
1,711
|
|
|
2,680
|
|
||
Other non-current assets
|
472
|
|
|
642
|
|
||
Total assets
|
$
|
26,370
|
|
|
$
|
29,235
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|||||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
1,567
|
|
|
$
|
2,265
|
|
Accounts payable to related parties
|
331
|
|
|
259
|
|
||
Accrued expenses
|
1,296
|
|
|
1,274
|
|
||
Accrued compensation
|
347
|
|
|
479
|
|
||
Current portion of long-term debt
|
276
|
|
|
179
|
|
||
Total current liabilities
|
3,817
|
|
|
4,456
|
|
||
Long-term debt
|
10,246
|
|
|
10,993
|
|
||
Other liabilities
|
2,340
|
|
|
2,255
|
|
||
Total liabilities
|
16,403
|
|
|
17,704
|
|
||
Commitments and contingencies (Notes 6, 9, 13 and 16)
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Preferred stock, $0.01 par value; authorized — 5 shares; issued and outstanding — none
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value; authorized — 450 shares; issued — 312 shares in 2019 and 2018; outstanding — 295 shares in 2019 and 296 shares in 2018
|
3
|
|
|
3
|
|
||
Additional paid-in capital
|
3,851
|
|
|
4,254
|
|
||
Accumulated other comprehensive loss
|
(68
|
)
|
|
(39
|
)
|
||
Retained earnings
|
7,449
|
|
|
8,757
|
|
||
Treasury stock — common shares at cost; 17 shares in 2019 and 16 shares in 2018
|
(1,268
|
)
|
|
(1,444
|
)
|
||
Total shareholders’ equity
|
9,967
|
|
|
11,531
|
|
||
Total liabilities and shareholders’ equity
|
$
|
26,370
|
|
|
$
|
29,235
|
|
|
Year Ended
|
||||||||||
|
June 28,
2019 |
|
June 29,
2018 |
|
June 30,
2017 |
||||||
Revenue, net
|
$
|
16,569
|
|
|
$
|
20,647
|
|
|
$
|
19,093
|
|
Cost of revenue
|
12,817
|
|
|
12,942
|
|
|
13,021
|
|
|||
Gross profit
|
3,752
|
|
|
7,705
|
|
|
6,072
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Research and development
|
2,182
|
|
|
2,400
|
|
|
2,441
|
|
|||
Selling, general and administrative
|
1,317
|
|
|
1,473
|
|
|
1,445
|
|
|||
Employee termination, asset impairment, and other charges
|
166
|
|
|
215
|
|
|
232
|
|
|||
Total operating expenses
|
3,665
|
|
|
4,088
|
|
|
4,118
|
|
|||
Operating income
|
87
|
|
|
3,617
|
|
|
1,954
|
|
|||
Interest and other income (expense):
|
|
|
|
|
|
||||||
Interest income
|
57
|
|
|
60
|
|
|
26
|
|
|||
Interest expense
|
(469
|
)
|
|
(676
|
)
|
|
(847
|
)
|
|||
Other income (expense), net
|
38
|
|
|
(916
|
)
|
|
(364
|
)
|
|||
Total interest and other expense, net
|
(374
|
)
|
|
(1,532
|
)
|
|
(1,185
|
)
|
|||
Income (loss) before taxes
|
(287
|
)
|
|
2,085
|
|
|
769
|
|
|||
Income tax expense
|
467
|
|
|
1,410
|
|
|
372
|
|
|||
Net income (loss)
|
$
|
(754
|
)
|
|
$
|
675
|
|
|
$
|
397
|
|
|
|
|
|
|
|
||||||
Income (loss) per common share
|
|
|
|
|
|
||||||
Basic
|
$
|
(2.58
|
)
|
|
$
|
2.27
|
|
|
$
|
1.38
|
|
Diluted
|
$
|
(2.58
|
)
|
|
$
|
2.20
|
|
|
$
|
1.34
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
292
|
|
|
297
|
|
|
288
|
|
|||
Diluted
|
292
|
|
|
307
|
|
|
296
|
|
|||
|
|
|
|
|
|
||||||
Cash dividends declared per share
|
$
|
2.00
|
|
|
$
|
2.00
|
|
|
$
|
2.00
|
|
|
Year Ended
|
||||||||||
|
June 28,
2019 |
|
June 29,
2018 |
|
June 30,
2017 |
||||||
Net income (loss)
|
$
|
(754
|
)
|
|
$
|
675
|
|
|
$
|
397
|
|
Other comprehensive income (loss), before tax:
|
|
|
|
|
|
||||||
Actuarial pension gain (loss)
|
(39
|
)
|
|
(2
|
)
|
|
39
|
|
|||
Foreign currency translation adjustment
|
28
|
|
|
18
|
|
|
(115
|
)
|
|||
Net unrealized gain (loss) on derivative contracts and available-for-sale securities
|
(39
|
)
|
|
7
|
|
|
(75
|
)
|
|||
Total other comprehensive income (loss), before tax
|
(50
|
)
|
|
23
|
|
|
(151
|
)
|
|||
Income tax benefit (expense) related to items of other comprehensive income (loss), before tax
|
21
|
|
|
(4
|
)
|
|
(10
|
)
|
|||
Other comprehensive income (loss), net of tax
|
(29
|
)
|
|
19
|
|
|
(161
|
)
|
|||
Total comprehensive income (loss)
|
$
|
(783
|
)
|
|
$
|
694
|
|
|
$
|
236
|
|
|
Year Ended
|
||||||||||
|
June 28,
2019 |
|
June 29,
2018 |
|
June 30,
2017 |
||||||
Cash flows from operating activities
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
(754
|
)
|
|
$
|
675
|
|
|
$
|
397
|
|
Adjustments to reconcile net income (loss) to net cash provided by operations:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
1,812
|
|
|
2,056
|
|
|
2,128
|
|
|||
Stock-based compensation
|
306
|
|
|
377
|
|
|
394
|
|
|||
Deferred income taxes
|
374
|
|
|
(348
|
)
|
|
12
|
|
|||
Loss on disposal of assets
|
39
|
|
|
21
|
|
|
18
|
|
|||
Write-off of issuance costs and amortization of debt discounts
|
38
|
|
|
221
|
|
|
285
|
|
|||
Cash premium on extinguishment of debt
|
—
|
|
|
720
|
|
|
—
|
|
|||
Loss on convertible debt and related instruments
|
—
|
|
|
—
|
|
|
5
|
|
|||
Non-cash portion of employee termination, asset impairment and other charges
|
—
|
|
|
16
|
|
|
13
|
|
|||
Other non-cash operating activities, net
|
(8
|
)
|
|
(19
|
)
|
|
94
|
|
|||
Changes in:
|
|
|
|
|
|
||||||
Accounts receivable, net
|
993
|
|
|
(244
|
)
|
|
(487
|
)
|
|||
Inventories
|
(339
|
)
|
|
(598
|
)
|
|
(204
|
)
|
|||
Accounts payable
|
(588
|
)
|
|
(15
|
)
|
|
223
|
|
|||
Accounts payable to related parties
|
72
|
|
|
53
|
|
|
38
|
|
|||
Accrued expenses
|
(42
|
)
|
|
(17
|
)
|
|
231
|
|
|||
Accrued compensation
|
(135
|
)
|
|
(26
|
)
|
|
115
|
|
|||
Other assets and liabilities, net
|
(221
|
)
|
|
1,333
|
|
|
175
|
|
|||
Net cash provided by operating activities
|
1,547
|
|
|
4,205
|
|
|
3,437
|
|
|||
Cash flows from investing activities
|
|
|
|
|
|
||||||
Purchases of property, plant and equipment
|
(876
|
)
|
|
(835
|
)
|
|
(578
|
)
|
|||
Proceeds from the sale of property, plant and equipment
|
119
|
|
|
26
|
|
|
21
|
|
|||
Acquisitions, net of cash acquired
|
—
|
|
|
(100
|
)
|
|
—
|
|
|||
Purchases of investments
|
(79
|
)
|
|
(89
|
)
|
|
(281
|
)
|
|||
Proceeds from sale of investments
|
175
|
|
|
48
|
|
|
94
|
|
|||
Proceeds from maturities of investments
|
7
|
|
|
19
|
|
|
417
|
|
|||
Investments in Flash Ventures
|
—
|
|
|
—
|
|
|
(20
|
)
|
|||
Notes receivable issuances to Flash Ventures
|
(1,364
|
)
|
|
(1,313
|
)
|
|
(549
|
)
|
|||
Notes receivable proceeds from Flash Ventures
|
766
|
|
|
571
|
|
|
292
|
|
|||
Strategic investments and other, net
|
(20
|
)
|
|
18
|
|
|
(32
|
)
|
|||
Net cash used in investing activities
|
(1,272
|
)
|
|
(1,655
|
)
|
|
(636
|
)
|
|||
Cash flows from financing activities
|
|
|
|
|
|
||||||
Issuance of stock under employee stock plans
|
118
|
|
|
220
|
|
|
235
|
|
|||
Taxes paid on vested stock awards under employee stock plans
|
(115
|
)
|
|
(171
|
)
|
|
(124
|
)
|
|||
Excess tax benefits from employee stock plans
|
—
|
|
|
—
|
|
|
119
|
|
|||
Proceeds from acquired call option
|
—
|
|
|
—
|
|
|
61
|
|
|||
Settlement of convertible debt
|
—
|
|
|
—
|
|
|
(492
|
)
|
|||
Repurchases of common stock
|
(563
|
)
|
|
(591
|
)
|
|
—
|
|
|||
Dividends paid to shareholders
|
(584
|
)
|
|
(593
|
)
|
|
(574
|
)
|
|||
Settlement of debt hedge contracts
|
—
|
|
|
28
|
|
|
(21
|
)
|
|||
Proceeds from (repayment of) revolving credit facility
|
(500
|
)
|
|
500
|
|
|
—
|
|
|||
Repayment of debt
|
(181
|
)
|
|
(17,074
|
)
|
|
(11,697
|
)
|
|||
Proceeds from debt
|
—
|
|
|
13,840
|
|
|
7,908
|
|
|||
Debt issuance costs
|
(4
|
)
|
|
(59
|
)
|
|
(10
|
)
|
|||
Net cash used in financing activities
|
(1,829
|
)
|
|
(3,900
|
)
|
|
(4,595
|
)
|
|||
Effect of exchange rate changes on cash
|
4
|
|
|
1
|
|
|
(3
|
)
|
|||
Net decrease in cash and cash equivalents
|
(1,550
|
)
|
|
(1,349
|
)
|
|
(1,797
|
)
|
|||
Cash and cash equivalents, beginning of year
|
5,005
|
|
|
6,354
|
|
|
8,151
|
|
|||
Cash and cash equivalents, end of year
|
$
|
3,455
|
|
|
$
|
5,005
|
|
|
$
|
6,354
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Cash paid for income taxes
|
$
|
377
|
|
|
$
|
220
|
|
|
$
|
184
|
|
Cash paid for interest
|
$
|
431
|
|
|
$
|
708
|
|
|
$
|
777
|
|
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Shares issued in conjunction with settlement of convertible notes
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
16
|
|
Shares received in conjunction with assumed call options
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(11
|
)
|
|
Common Stock
|
|
Treasury Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Retained Earnings
|
|
Total Shareholders’ Equity
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
||||||||||||||||||
Balance at July 1, 2016
|
312
|
|
|
$
|
3
|
|
|
(28
|
)
|
|
$
|
(2,238
|
)
|
|
$
|
4,429
|
|
|
$
|
103
|
|
|
$
|
8,848
|
|
|
$
|
11,145
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
397
|
|
|
397
|
|
||||||
Employee stock plans
|
—
|
|
|
—
|
|
|
10
|
|
|
583
|
|
|
(472
|
)
|
|
—
|
|
|
—
|
|
|
111
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
394
|
|
|
—
|
|
|
—
|
|
|
394
|
|
||||||
Increase in excess tax benefits from employee stock plans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
104
|
|
|
—
|
|
|
—
|
|
|
104
|
|
||||||
Shares issued in conjunction with settlement of convertible notes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
16
|
|
||||||
Shares received in conjunction with assumed call options
|
—
|
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
||||||
Dividends to shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35
|
|
|
—
|
|
|
(612
|
)
|
|
(577
|
)
|
||||||
Actuarial pension gain
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27
|
|
|
—
|
|
|
27
|
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(113
|
)
|
|
—
|
|
|
(113
|
)
|
||||||
Net unrealized loss on derivative contracts and available-for-sale securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(75
|
)
|
|
—
|
|
|
(75
|
)
|
||||||
Balance at June 30, 2017
|
312
|
|
|
3
|
|
|
(18
|
)
|
|
(1,666
|
)
|
|
4,506
|
|
|
(58
|
)
|
|
8,633
|
|
|
11,418
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
675
|
|
|
675
|
|
||||||
Adoption of new accounting standards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19
|
)
|
|
—
|
|
|
70
|
|
|
51
|
|
||||||
Employee stock plans
|
—
|
|
|
—
|
|
|
9
|
|
|
813
|
|
|
(764
|
)
|
|
—
|
|
|
—
|
|
|
49
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
377
|
|
|
—
|
|
|
—
|
|
|
377
|
|
||||||
Equity value of convertible debt issuance, net of deferred taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
125
|
|
|
—
|
|
|
—
|
|
|
125
|
|
||||||
Repurchases of common stock
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
(591
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(591
|
)
|
||||||
Dividends to shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29
|
|
|
—
|
|
|
(621
|
)
|
|
(592
|
)
|
||||||
Actuarial pension loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
18
|
|
||||||
Net unrealized gain on derivative contracts and available-for-sale securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||||
Balance at June 29, 2018
|
312
|
|
|
3
|
|
|
(16
|
)
|
|
(1,444
|
)
|
|
4,254
|
|
|
(39
|
)
|
|
8,757
|
|
|
11,531
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(754
|
)
|
|
(754
|
)
|
||||||
Employee stock plans
|
—
|
|
|
—
|
|
|
7
|
|
|
739
|
|
|
(736
|
)
|
|
—
|
|
|
—
|
|
|
3
|
|
||||||
Adoption of new accounting standards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
56
|
|
|
56
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
306
|
|
|
—
|
|
|
—
|
|
|
306
|
|
||||||
Repurchases of common stock
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
(563
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(563
|
)
|
||||||
Dividends to shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27
|
|
|
—
|
|
|
(610
|
)
|
|
(583
|
)
|
||||||
Actuarial pension loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(34
|
)
|
|
—
|
|
|
(34
|
)
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|
—
|
|
|
25
|
|
||||||
Net unrealized loss on derivative contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20
|
)
|
|
—
|
|
|
(20
|
)
|
||||||
Balance at June 28, 2019
|
312
|
|
|
$
|
3
|
|
|
(17
|
)
|
|
$
|
(1,268
|
)
|
|
$
|
3,851
|
|
|
$
|
(68
|
)
|
|
$
|
7,449
|
|
|
$
|
9,967
|
|
Note 1.
|
Organization and Basis of Presentation
|
Note 2.
|
Recent Accounting Pronouncements
|
Note 3.
|
Supplemental Financial Statement Data
|
|
June 28,
2019 |
|
June 29,
2018 |
||||
|
(in millions)
|
||||||
Inventories:
|
|
|
|
||||
Raw materials and component parts
|
$
|
1,142
|
|
|
$
|
1,048
|
|
Work-in-process
|
968
|
|
|
878
|
|
||
Finished goods
|
1,173
|
|
|
1,018
|
|
||
Total inventories
|
$
|
3,283
|
|
|
$
|
2,944
|
|
|
June 28,
2019 |
|
June 29,
2018 |
||||
|
(in millions)
|
||||||
Property, plant, and equipment:
|
|
|
|
||||
Land
|
$
|
294
|
|
|
$
|
306
|
|
Buildings and improvements
|
1,743
|
|
|
1,949
|
|
||
Machinery and equipment
|
7,267
|
|
|
7,209
|
|
||
Computer equipment and software
|
441
|
|
|
440
|
|
||
Furniture and fixtures
|
56
|
|
|
48
|
|
||
Construction-in-process
|
202
|
|
|
234
|
|
||
Property, plant and equipment, gross
|
10,003
|
|
|
10,186
|
|
||
Accumulated depreciation
|
(7,160
|
)
|
|
(7,091
|
)
|
||
Property, plant, and equipment, net
|
$
|
2,843
|
|
|
$
|
3,095
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in millions)
|
||||||||||
Warranty accrual, beginning of period
|
$
|
318
|
|
|
$
|
311
|
|
|
$
|
279
|
|
Charges to operations
|
162
|
|
|
176
|
|
|
177
|
|
|||
Utilization
|
(142
|
)
|
|
(151
|
)
|
|
(151
|
)
|
|||
Changes in estimate related to pre-existing warranties
|
12
|
|
|
(18
|
)
|
|
6
|
|
|||
Warranty accrual, end of period
|
$
|
350
|
|
|
$
|
318
|
|
|
$
|
311
|
|
|
2019
|
|
2018
|
||||
|
(in millions)
|
||||||
Warranty accrual
|
|
|
|
||||
Current portion
|
$
|
188
|
|
|
$
|
168
|
|
Long-term portion
|
162
|
|
|
150
|
|
||
Total warranty accrual
|
$
|
350
|
|
|
$
|
318
|
|
|
2019
|
|
2018
|
||||
|
(in millions)
|
||||||
Other non-current liabilities:
|
|
|
|
||||
Non-current net tax payable
|
$
|
928
|
|
|
$
|
1,315
|
|
Payables related to unrecognized tax benefits
|
699
|
|
|
508
|
|
||
Other non-current liabilities
|
713
|
|
|
432
|
|
||
Total other non-current liabilities
|
$
|
2,340
|
|
|
$
|
2,255
|
|
|
Actuarial Pension Gains (Losses)
|
|
Foreign Currency Translation Adjustment
|
|
Unrealized Gains (Losses) on Derivative Contracts and available-for-sale securities
|
|
Total Accumulated Comprehensive Income (Loss)
|
||||||||
|
(in millions)
|
||||||||||||||
Balance at July 1, 2017
|
$
|
(18
|
)
|
|
$
|
(39
|
)
|
|
$
|
(1
|
)
|
|
$
|
(58
|
)
|
Other comprehensive income (loss) before reclassifications
|
(2
|
)
|
|
18
|
|
|
25
|
|
|
41
|
|
||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
(18
|
)
|
||||
Income tax benefit (expense) related to items of other comprehensive income (loss)
|
1
|
|
|
—
|
|
|
(5
|
)
|
|
(4
|
)
|
||||
Net current-period other comprehensive income (loss)
|
(1
|
)
|
|
18
|
|
|
2
|
|
|
19
|
|
||||
Balance at June 29, 2018
|
(19
|
)
|
|
(21
|
)
|
|
1
|
|
|
(39
|
)
|
||||
Other comprehensive income (loss) before reclassifications
|
(39
|
)
|
|
28
|
|
|
(48
|
)
|
|
(59
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
9
|
|
|
9
|
|
||||
Income tax benefit (expense) related to items of other comprehensive income (loss)
|
5
|
|
|
(3
|
)
|
|
19
|
|
|
21
|
|
||||
Net current-period other comprehensive loss
|
(34
|
)
|
|
25
|
|
|
(20
|
)
|
|
(29
|
)
|
||||
Balance at June 28, 2019
|
$
|
(53
|
)
|
|
$
|
4
|
|
|
$
|
(19
|
)
|
|
$
|
(68
|
)
|
Note 4.
|
Fair Value Measurements and Investments
|
|
June 28,
2019 |
|
June 29,
2018 |
||||
|
(in millions)
|
||||||
Cash and cash equivalents
|
$
|
3,455
|
|
|
$
|
5,005
|
|
Short-term available-for-sale securities (included within Other current assets)
|
—
|
|
|
23
|
|
||
Long-term available-for-sale securities (included within Other non-current assets)
|
—
|
|
|
93
|
|
||
Total cash, cash equivalents and available-for-sale securities
|
$
|
3,455
|
|
|
$
|
5,121
|
|
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.
|
|
June 28, 2019
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
1,388
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,388
|
|
Certificates of deposit
|
—
|
|
|
17
|
|
|
—
|
|
|
17
|
|
||||
Total cash equivalents
|
1,388
|
|
|
17
|
|
|
—
|
|
|
1,405
|
|
||||
Foreign exchange contracts
|
—
|
|
|
44
|
|
|
—
|
|
|
44
|
|
||||
Interest rate swap contracts
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||
Total assets at fair value
|
$
|
1,388
|
|
|
$
|
63
|
|
|
$
|
—
|
|
|
$
|
1,451
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
$
|
—
|
|
|
$
|
40
|
|
|
$
|
—
|
|
|
$
|
40
|
|
Interest rate swap contract
|
—
|
|
|
65
|
|
|
—
|
|
|
65
|
|
||||
Total liabilities at fair value
|
$
|
—
|
|
|
$
|
105
|
|
|
$
|
—
|
|
|
$
|
105
|
|
|
June 29, 2018
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
2,554
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,554
|
|
Certificates of deposit
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||
Total cash equivalents
|
2,554
|
|
|
4
|
|
|
—
|
|
|
2,558
|
|
||||
Short-term available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Corporate notes and bonds
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
||||
Asset-backed securities
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||
Municipal notes and bonds
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||
Equity securities
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Total short-term available-for-sale securities
|
5
|
|
|
18
|
|
|
—
|
|
|
23
|
|
||||
Long-term available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
U.S. Government agency securities
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
||||
International government securities
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Corporate notes and bonds
|
—
|
|
|
65
|
|
|
—
|
|
|
65
|
|
||||
Asset-backed securities
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
||||
Municipal notes and bonds
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
||||
Total long-term available-for-sale securities
|
3
|
|
|
90
|
|
|
—
|
|
|
93
|
|
||||
Foreign exchange contracts
|
—
|
|
|
51
|
|
|
—
|
|
|
51
|
|
||||
Interest rate swap contracts
|
—
|
|
|
16
|
|
|
—
|
|
|
16
|
|
||||
Total assets at fair value
|
$
|
2,562
|
|
|
$
|
179
|
|
|
$
|
—
|
|
|
$
|
2,741
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
$
|
—
|
|
|
$
|
28
|
|
|
$
|
—
|
|
|
$
|
28
|
|
|
June 28, 2019
|
|
June 29, 2018
|
||||||||||||
|
Carrying
Value
|
|
Fair
Value
|
|
Carrying
Value |
|
Fair
Value |
||||||||
|
(in millions)
|
||||||||||||||
0.50% convertible senior notes due 2020
|
$
|
33
|
|
|
$
|
31
|
|
|
$
|
31
|
|
|
$
|
34
|
|
Variable interest rate Term Loan A-1 maturing 2023
|
4,824
|
|
|
4,780
|
|
|
4,982
|
|
|
5,013
|
|
||||
Variable interest rate U.S. Term Loan B-4 maturing 2023
|
2,424
|
|
|
2,370
|
|
|
2,448
|
|
|
2,452
|
|
||||
1.50% convertible notes due 2024
|
958
|
|
|
986
|
|
|
931
|
|
|
1,114
|
|
||||
4.750% senior unsecured notes due 2026
|
2,283
|
|
|
2,263
|
|
|
2,280
|
|
|
2,238
|
|
||||
Total
|
$
|
10,522
|
|
|
$
|
10,430
|
|
|
$
|
10,672
|
|
|
$
|
10,851
|
|
Note 5.
|
Derivative Instruments and Hedging Activities
|
Note 6.
|
Debt
|
|
June 28,
2019 |
|
June 29,
2018 |
||||
|
(in millions)
|
||||||
0.50% convertible senior notes due 2020
|
$
|
35
|
|
|
$
|
35
|
|
Revolving credit facility maturing 2023
|
—
|
|
|
500
|
|
||
Variable interest rate Term Loan A-1 maturing 2023
|
4,834
|
|
|
4,991
|
|
||
Variable interest rate U.S. Term Loan B-4 maturing 2023
|
2,425
|
|
|
2,449
|
|
||
1.50% convertible notes due 2024
|
1,100
|
|
|
1,100
|
|
||
4.750% senior unsecured notes due 2026
|
2,300
|
|
|
2,300
|
|
||
Total debt
|
10,694
|
|
|
11,375
|
|
||
Issuance costs and debt discounts
|
(172
|
)
|
|
(203
|
)
|
||
Subtotal
|
10,522
|
|
|
11,172
|
|
||
Less current portion of long-term debt
|
(276
|
)
|
|
(179
|
)
|
||
Long-term debt
|
$
|
10,246
|
|
|
$
|
10,993
|
|
|
|
Future Debt Payments
|
||
|
|
(in millions)
|
||
Fiscal year
|
|
|
||
2020
|
|
$
|
276
|
|
2021
|
|
311
|
|
|
2022
|
|
276
|
|
|
2023
|
|
6,431
|
|
|
2024
|
|
1,100
|
|
|
2025 and thereafter
|
|
2,300
|
|
|
Total debt maturities
|
|
10,694
|
|
|
Issuance costs and debt discounts
|
|
(172
|
)
|
|
Net carrying value
|
|
$
|
10,522
|
|
Note 7.
|
Goodwill and Other Intangible Assets
|
|
Carrying Amount
|
||
|
(in millions)
|
||
Balance at June 30, 2017
|
$
|
10,014
|
|
Goodwill recorded in connection with acquisitions
|
61
|
|
|
Balance at June 29, 2018
|
10,075
|
|
|
Foreign currency translation adjustment
|
1
|
|
|
Balance at June 28, 2019
|
$
|
10,076
|
|
|
June 28, 2019
|
||||||||||||
|
Weighted Average Amortization Period
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||
|
(in years)
|
|
(in millions)
|
||||||||||
Finite:
|
|
|
|
|
|
|
|
||||||
Existing technology
|
3
|
|
$
|
4,332
|
|
|
$
|
(3,316
|
)
|
|
$
|
1,016
|
|
Trade names and trademarks
|
7
|
|
648
|
|
|
(310
|
)
|
|
338
|
|
|||
Customer relationships
|
6
|
|
635
|
|
|
(372
|
)
|
|
263
|
|
|||
Other
|
2
|
|
180
|
|
|
(180
|
)
|
|
—
|
|
|||
Leasehold interests
|
31
|
|
29
|
|
|
(7
|
)
|
|
22
|
|
|||
Total finite intangible assets
|
|
|
5,824
|
|
|
(4,185
|
)
|
|
1,639
|
|
|||
In-process research and development
|
|
|
72
|
|
|
—
|
|
|
72
|
|
|||
Total intangible assets
|
|
|
$
|
5,896
|
|
|
$
|
(4,185
|
)
|
|
$
|
1,711
|
|
|
June 29, 2018
|
||||||||||||
|
Weighted Average Amortization Period
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||
|
(in years)
|
|
(in millions)
|
||||||||||
Finite:
|
|
|
|
|
|
|
|
||||||
Existing technology
|
3
|
|
$
|
4,323
|
|
|
$
|
(2,528
|
)
|
|
$
|
1,795
|
|
Trade names and trademarks
|
7
|
|
648
|
|
|
(222
|
)
|
|
426
|
|
|||
Customer relationships
|
6
|
|
635
|
|
|
(299
|
)
|
|
336
|
|
|||
Other
|
2
|
|
180
|
|
|
(161
|
)
|
|
19
|
|
|||
Leasehold interests
|
31
|
|
32
|
|
|
(8
|
)
|
|
24
|
|
|||
Total finite intangible assets
|
|
|
5,818
|
|
|
(3,218
|
)
|
|
2,600
|
|
|||
In-process research and development
|
|
|
80
|
|
|
—
|
|
|
80
|
|
|||
Total intangible assets
|
|
|
$
|
5,898
|
|
|
$
|
(3,218
|
)
|
|
$
|
2,680
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(In millions)
|
||||||||||
Intangible asset amortization
|
$
|
968
|
|
|
$
|
1,185
|
|
|
$
|
1,169
|
|
|
Future Intangible Asset Amortization Expense
|
||
|
(in millions)
|
||
Fiscal year
|
|
||
2020
|
$
|
758
|
|
2021
|
503
|
|
|
2022
|
226
|
|
|
2023
|
134
|
|
|
2024 and thereafter
|
18
|
|
|
Total future amortization expense
|
$
|
1,639
|
|
Note 8.
|
Pension and Other Post-Retirement Benefit Plans
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in millions)
|
||||||||||
Change in benefit obligation:
|
|
|
|
|
|
||||||
Projected benefit obligation at beginning of period
|
$
|
260
|
|
|
$
|
249
|
|
|
$
|
326
|
|
Service cost
|
6
|
|
|
6
|
|
|
8
|
|
|||
Interest cost
|
2
|
|
|
2
|
|
|
1
|
|
|||
Actuarial loss (gain)
|
13
|
|
|
9
|
|
|
(22
|
)
|
|||
Benefits paid
|
(9
|
)
|
|
(9
|
)
|
|
(30
|
)
|
|||
Settlement/Curtailment
|
—
|
|
|
—
|
|
|
(6
|
)
|
|||
Non-U.S. currency movement
|
8
|
|
|
3
|
|
|
(28
|
)
|
|||
Projected benefit obligation at end of period
|
280
|
|
|
260
|
|
|
249
|
|
|||
Change in plan assets:
|
|
|
|
|
|
||||||
Fair value of plan assets at beginning of period
|
200
|
|
|
189
|
|
|
212
|
|
|||
Actual return on plan assets
|
2
|
|
|
8
|
|
|
15
|
|
|||
Employer contributions
|
10
|
|
|
10
|
|
|
10
|
|
|||
Benefits paid
|
(9
|
)
|
|
(9
|
)
|
|
(30
|
)
|
|||
Non-U.S. currency movement
|
5
|
|
|
2
|
|
|
(18
|
)
|
|||
Fair value of plan assets at end of period
|
208
|
|
|
200
|
|
|
189
|
|
|||
Unfunded status
|
$
|
72
|
|
|
$
|
60
|
|
|
$
|
60
|
|
|
June 28,
2019 |
|
June 29,
2018 |
||||
|
(in millions)
|
||||||
Current liabilities
|
$
|
1
|
|
|
$
|
1
|
|
Non-current liabilities
|
71
|
|
|
59
|
|
||
Net amount recognized
|
$
|
72
|
|
|
$
|
60
|
|
|
2019
|
|
2018
|
|
2017
|
|||
Discount rate
|
0.4
|
%
|
|
0.7
|
%
|
|
0.8
|
%
|
Rate of compensation increase
|
0.6
|
%
|
|
0.7
|
%
|
|
0.8
|
%
|
|
2019
|
|
2018
|
|
2017
|
|||
Discount rate
|
0.7
|
%
|
|
0.8
|
%
|
|
0.4
|
%
|
Expected long-term rate of return on plan assets
|
2.5
|
%
|
|
2.5
|
%
|
|
2.5
|
%
|
Rate of compensation increase
|
0.7
|
%
|
|
0.8
|
%
|
|
0.8
|
%
|
|
June 28, 2019
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
Equity:
|
|
|
|
|
|
||||||||||
Equity commingled/mutual funds(1)(2)
|
$
|
—
|
|
|
$
|
68
|
|
|
$
|
—
|
|
|
$
|
68
|
|
Fixed income:
|
|
|
|
|
|
|
|
||||||||
Fixed income commingled/mutual funds(1)(3)
|
—
|
|
|
131
|
|
|
—
|
|
|
131
|
|
||||
Cash equivalents and short-term investments
|
9
|
|
|
—
|
|
|
—
|
|
|
9
|
|
||||
Fair value of plan assets
|
$
|
9
|
|
|
$
|
199
|
|
|
$
|
—
|
|
|
$
|
208
|
|
|
June 29, 2018
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
Equity:
|
|
|
|
|
|
|
|
||||||||
Equity commingled/mutual funds(1)(2)
|
$
|
—
|
|
|
$
|
68
|
|
|
$
|
—
|
|
|
$
|
68
|
|
Fixed income:
|
|
|
|
|
|
|
|
||||||||
Fixed income commingled/mutual funds(1)(3)
|
—
|
|
|
125
|
|
|
—
|
|
|
125
|
|
||||
Cash equivalents and short-term investments
|
3
|
|
|
4
|
|
|
—
|
|
|
7
|
|
||||
Fair value of plan assets
|
$
|
3
|
|
|
$
|
197
|
|
|
$
|
—
|
|
|
$
|
200
|
|
|
|
(1)
|
Commingled funds represent pooled institutional investments.
|
(2)
|
Equity mutual funds invest primarily in equity securities.
|
(3)
|
Fixed income mutual funds invest primarily in fixed income securities.
|
Note 9.
|
Commitments, Contingencies and Related Parties
|
|
June 28,
2019 |
|
June 29,
2018 |
||||
|
(in millions)
|
||||||
Notes receivable, Flash Partners
|
$
|
551
|
|
|
$
|
767
|
|
Notes receivable, Flash Alliance
|
878
|
|
|
48
|
|
||
Notes receivable, Flash Forward
|
743
|
|
|
700
|
|
||
Investment in Flash Partners
|
200
|
|
|
191
|
|
||
Investment in Flash Alliance
|
296
|
|
|
283
|
|
||
Investment in Flash Forward
|
123
|
|
|
116
|
|
||
Total notes receivable and investments in Flash Ventures
|
$
|
2,791
|
|
|
$
|
2,105
|
|
|
June 28,
2019 |
||
|
|
||
Notes receivable
|
$
|
2,172
|
|
Equity investments
|
619
|
|
|
Operating lease guarantees
|
1,575
|
|
|
Inventory
|
197
|
|
|
Maximum estimable loss exposure
|
$
|
4,563
|
|
|
Lease Amounts
|
||||||
|
(Japanese yen, in billions)
|
|
(U.S. dollar, in millions)
|
||||
Total guarantee obligations
|
¥
|
170
|
|
|
$
|
1,575
|
|
Annual Installments
|
|
Payment of Principal Amortization
|
|
Purchase Option Exercise Price at Final Lease Terms
|
|
Guarantee Amount
|
||||||
|
|
(in millions)
|
||||||||||
2020
|
|
$
|
419
|
|
|
$
|
66
|
|
|
$
|
485
|
|
2021
|
|
321
|
|
|
109
|
|
|
430
|
|
|||
2022
|
|
235
|
|
|
50
|
|
|
285
|
|
|||
2023
|
|
137
|
|
|
67
|
|
|
204
|
|
|||
2024
|
|
51
|
|
|
120
|
|
|
171
|
|
|||
Thereafter
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total guarantee obligations
|
|
$
|
1,163
|
|
|
$
|
412
|
|
|
$
|
1,575
|
|
|
|
Lease Amounts
|
||
|
|
(in millions)
|
||
Fiscal year
|
|
|
||
2020
|
|
$
|
59
|
|
2021
|
|
45
|
|
|
2022
|
|
33
|
|
|
2023
|
|
22
|
|
|
2024
|
|
16
|
|
|
Thereafter
|
|
116
|
|
|
Total future minimum lease payments
|
|
$
|
291
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(In millions)
|
||||||||||
Rent expense, net
|
$
|
47
|
|
|
$
|
49
|
|
|
$
|
56
|
|
|
|
Long-term purchase commitments
|
||
|
|
(in millions)
|
||
Fiscal year
|
|
|
||
2020
|
|
$
|
136
|
|
2021
|
|
244
|
|
|
2022
|
|
263
|
|
|
2023
|
|
154
|
|
|
2024
|
|
40
|
|
|
Thereafter
|
|
210
|
|
|
Total
|
|
$
|
1,047
|
|
Note 10.
|
Business Segment, Revenue Information, Geographic Information and Concentration of Risk
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in millions)
|
||||||||||
Client Devices
|
$
|
8,095
|
|
|
$
|
10,108
|
|
|
$
|
9,520
|
|
Data Center Devices & Solutions
|
5,038
|
|
|
6,075
|
|
|
5,505
|
|
|||
Client Solutions
|
3,436
|
|
|
4,464
|
|
|
4,068
|
|
|||
Total revenue
|
$
|
16,569
|
|
|
$
|
20,647
|
|
|
$
|
19,093
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in millions)
|
||||||||||
HDD
|
$
|
8,746
|
|
|
$
|
10,698
|
|
|
$
|
10,640
|
|
Flash-based
|
7,823
|
|
|
9,949
|
|
|
8,453
|
|
|||
Total revenue
|
$
|
16,569
|
|
|
$
|
20,647
|
|
|
$
|
19,093
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in millions)
|
||||||||||
Net revenue(1)
|
|
|
|
|
|
||||||
United States
|
$
|
3,602
|
|
|
$
|
4,640
|
|
|
$
|
3,881
|
|
China
|
3,861
|
|
|
4,393
|
|
|
4,271
|
|
|||
Hong Kong
|
3,122
|
|
|
4,022
|
|
|
3,257
|
|
|||
Rest of Asia
|
2,116
|
|
|
2,752
|
|
|
3,181
|
|
|||
Europe, Middle East and Africa
|
3,109
|
|
|
3,858
|
|
|
3,276
|
|
|||
Other
|
759
|
|
|
982
|
|
|
1,227
|
|
|||
Total
|
$
|
16,569
|
|
|
$
|
20,647
|
|
|
$
|
19,093
|
|
|
|
(1)
|
Net revenue is attributed to geographic regions based on the ship-to location of the customer. License and royalty revenue is attributed to countries based upon the location of the headquarters of the licensee.
|
(2)
|
Prior year information is presented in accordance with the accounting guidance in effect during that period and has not been updated for Topic 606. The impact of the adoption of Topic 606 was not material
|
|
June 28,
2019 |
|
June 29,
2018 |
||||
|
(in millions)
|
||||||
Long-lived assets(1)
|
|
|
|
||||
United States
|
$
|
962
|
|
|
$
|
1,187
|
|
Malaysia
|
667
|
|
|
737
|
|
||
China
|
420
|
|
|
427
|
|
||
Thailand
|
405
|
|
|
349
|
|
||
Rest of Asia
|
335
|
|
|
336
|
|
||
Europe, Middle East and Africa
|
54
|
|
|
59
|
|
||
Total
|
$
|
2,843
|
|
|
$
|
3,095
|
|
|
|
(1)
|
Long-lived assets include property, plant and equipment and are attributed to the geographic location in which they are located.
|
Note 11.
|
Western Digital Corporation 401(k) Plan
|
Note 12.
|
Shareholders’ Equity
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in millions)
|
||||||||||
Options
|
$
|
16
|
|
|
$
|
25
|
|
|
$
|
41
|
|
Restricted and performance stock units
|
263
|
|
|
325
|
|
|
330
|
|
|||
Employee stock purchase plan
|
27
|
|
|
27
|
|
|
23
|
|
|||
Total
|
$
|
306
|
|
|
$
|
377
|
|
|
$
|
394
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in millions)
|
||||||||||
Cost of revenue
|
$
|
48
|
|
|
$
|
49
|
|
|
$
|
49
|
|
Research and development
|
155
|
|
|
170
|
|
|
173
|
|
|||
Selling, general and administrative
|
103
|
|
|
157
|
|
|
161
|
|
|||
Employee termination, asset impairment, and other charges
|
—
|
|
|
1
|
|
|
11
|
|
|||
Subtotal
|
306
|
|
|
377
|
|
|
394
|
|
|||
Tax benefit
|
(50
|
)
|
|
(66
|
)
|
|
(105
|
)
|
|||
Total
|
$
|
256
|
|
|
$
|
311
|
|
|
$
|
289
|
|
|
Unamortized Compensation Costs
|
|
Weighted Average Service Period
|
||
|
(in millions)
|
|
(years)
|
||
Options
|
$
|
7
|
|
|
1.0
|
RSUs and PSUs (1)
|
485
|
|
|
2.4
|
|
ESPP
|
65
|
|
|
1.9
|
|
Total unamortized compensation cost
|
$
|
557
|
|
|
|
|
|
(1)
|
Weighted average service period assumes the performance metrics are met for the PSUs.
|
|
Number of Shares
|
|
Weighted Average Exercise Price Per Share
|
|
Weighted Average Remaining Contractual Life
|
|
Aggregate Intrinsic Value
|
|||||
|
(in millions)
|
|
|
|
(in years)
|
|
(in millions)
|
|||||
Options outstanding at July 1, 2016
|
9.0
|
|
|
$
|
55.74
|
|
|
|
|
|
||
Granted
|
2.8
|
|
|
44.83
|
|
|
|
|
|
|||
Exercised
|
(3.5
|
)
|
|
37.72
|
|
|
|
|
$
|
120
|
|
|
Canceled or expired
|
(0.9
|
)
|
|
71.31
|
|
|
|
|
|
|||
Options outstanding at June 30, 2017
|
7.4
|
|
|
58.14
|
|
|
|
|
|
|||
Exercised
|
(2.2
|
)
|
|
44.52
|
|
|
|
|
$
|
99
|
|
|
Canceled or expired
|
(0.4
|
)
|
|
60.85
|
|
|
|
|
|
|||
Options outstanding at June 29, 2018
|
4.8
|
|
|
64.23
|
|
|
|
|
|
|||
Exercised
|
(0.4
|
)
|
|
39.58
|
|
|
|
|
$
|
8
|
|
|
Canceled or expired
|
(0.5
|
)
|
|
74.79
|
|
|
|
|
|
|||
Options outstanding at June 28, 2019
|
3.9
|
|
|
$
|
65.72
|
|
|
2.6
|
|
$
|
8
|
|
Exercisable at June 28, 2019
|
3.3
|
|
|
$
|
68.97
|
|
|
2.3
|
|
$
|
6
|
|
|
Number of Shares
|
|
Weighted Average Grant Date Fair Value
|
|
Aggregate Intrinsic Value at Vest Date
|
|||||
|
(in millions)
|
|
|
|
(in millions)
|
|||||
RSUs and PSUs outstanding at July 1, 2016
|
15.7
|
|
|
$
|
41.92
|
|
|
|
||
Granted
|
6.0
|
|
|
44.13
|
|
|
|
|||
Vested
|
(5.9
|
)
|
|
46.98
|
|
|
$
|
399
|
|
|
Forfeited
|
(2.1
|
)
|
|
43.89
|
|
|
|
|||
RSUs and PSUs outstanding at June 30, 2017
|
13.7
|
|
|
45.01
|
|
|
|
|||
Granted
|
6.3
|
|
|
74.68
|
|
|
|
|||
Vested
|
(6.3
|
)
|
|
45.20
|
|
|
$
|
552
|
|
|
Forfeited
|
(1.1
|
)
|
|
50.35
|
|
|
|
|||
RSUs and PSUs outstanding at June 29, 2018
|
12.6
|
|
|
58.31
|
|
|
|
|||
Granted
|
7.3
|
|
|
54.82
|
|
|
|
|||
Vested
|
(6.3
|
)
|
|
53.21
|
|
|
$
|
360
|
|
|
Forfeited
|
(2.0
|
)
|
|
58.63
|
|
|
|
|||
RSUs and PSUs outstanding at June 28, 2019
|
11.6
|
|
|
$
|
62.07
|
|
|
|
|
2017
|
Suboptimal exercise factor
|
2.69
|
Range of risk-free interest rates
|
0.59% to 1.42%
|
Range of expected stock price volatility
|
0.35 to 0.49
|
Weighted-average expected volatility
|
0.40
|
Post-vesting termination rate
|
1.71%
|
Dividend yield
|
3.42%
|
Fair value
|
$13.72
|
Weighted-average expected term (in years)
|
3.6
|
|
2019
|
|
2018
|
|
2017
|
Weighted-average expected term (in years)
|
1.26
|
|
1.24
|
|
1.26
|
Risk-free interest rate
|
2.39%
|
|
2.25%
|
|
0.81%
|
Stock price volatility
|
0.41
|
|
0.35
|
|
0.42
|
Dividend yield
|
4.92%
|
|
2.42%
|
|
4.02%
|
Fair value
|
$8.28
|
|
$16.89
|
|
$10.06
|
|
Number of Shares
|
|
|
(in millions)
|
|
Outstanding awards and shares available for award grants
|
33
|
|
ESPP
|
12
|
|
Total
|
45
|
|
Note 13.
|
Income Tax Expense
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in millions)
|
||||||||||
Foreign
|
$
|
(642
|
)
|
|
$
|
2,398
|
|
|
$
|
560
|
|
Domestic
|
355
|
|
|
(313
|
)
|
|
209
|
|
|||
Income (loss) before taxes
|
$
|
(287
|
)
|
|
$
|
2,085
|
|
|
$
|
769
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in millions)
|
||||||||||
Current:
|
|
|
|
|
|
||||||
Foreign
|
$
|
181
|
|
|
$
|
166
|
|
|
$
|
127
|
|
Domestic - Federal
|
(91
|
)
|
|
1,597
|
|
|
229
|
|
|||
Domestic - State
|
3
|
|
|
(5
|
)
|
|
4
|
|
|||
|
93
|
|
|
1,758
|
|
|
360
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Foreign
|
226
|
|
|
(39
|
)
|
|
56
|
|
|||
Domestic - Federal
|
141
|
|
|
(300
|
)
|
|
(44
|
)
|
|||
Domestic - State
|
7
|
|
|
(9
|
)
|
|
—
|
|
|||
|
374
|
|
|
(348
|
)
|
|
12
|
|
|||
Income tax expense
|
$
|
467
|
|
|
$
|
1,410
|
|
|
$
|
372
|
|
|
June 28,
2019 |
|
June 29,
2018 |
||||
|
(in millions)
|
||||||
Deferred tax assets:
|
|
|
|
||||
Sales related reserves and accrued expenses not currently deductible
|
$
|
48
|
|
|
$
|
53
|
|
Accrued compensation and benefits not currently deductible
|
124
|
|
|
145
|
|
||
Net operating loss carryforward
|
285
|
|
|
443
|
|
||
Business credit carryforward
|
410
|
|
|
448
|
|
||
Long-lived assets
|
144
|
|
|
161
|
|
||
Other
|
135
|
|
|
118
|
|
||
Total deferred tax assets
|
1,146
|
|
|
1,368
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Long-lived assets
|
(413
|
)
|
|
(491
|
)
|
||
Unremitted earnings of certain non-U.S. entities
|
(220
|
)
|
|
(5
|
)
|
||
Other
|
(32
|
)
|
|
(43
|
)
|
||
Total deferred tax liabilities
|
(665
|
)
|
|
(539
|
)
|
||
Valuation allowances
|
(619
|
)
|
|
(614
|
)
|
||
Deferred tax assets (liabilities), net
|
$
|
(138
|
)
|
|
$
|
215
|
|
Jurisdiction
|
NOL/Tax Credit Carryforward Amount
|
|
Expiration
|
||
|
(in millions)
|
|
|
||
Federal NOL (Pre 2017 Act Generation)
|
$
|
700
|
|
|
2021 to 2037
|
Federal NOL (Post 2017 Act Generation)
|
—
|
|
|
No expiration
|
|
State NOL
|
619
|
|
|
2021 to 2038
|
|
Federal tax credits
|
59
|
|
|
2020 to 2034
|
|
State tax credits
|
578
|
|
|
No expiration
|
Jurisdiction
|
|
NOL Carryforward Amount
|
|
Expiration
|
||
|
|
(in millions)
|
|
|
||
Japan
|
|
$
|
132
|
|
|
2024 to 2026
|
Belgium
|
|
105
|
|
|
No expiration
|
|
China
|
|
133
|
|
|
2023 to 2024
|
|
Spain
|
|
52
|
|
|
No expiration
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in millions)
|
||||||||||
Unrecognized tax benefit, beginning balance
|
$
|
551
|
|
|
$
|
522
|
|
|
$
|
491
|
|
Gross increases related to current year tax positions
|
172
|
|
|
38
|
|
|
35
|
|
|||
Gross increases related to prior year tax positions
|
8
|
|
|
30
|
|
|
3
|
|
|||
Gross decreases related to prior year tax positions
|
(24
|
)
|
|
(9
|
)
|
|
(8
|
)
|
|||
Settlements
|
(1
|
)
|
|
(19
|
)
|
|
(8
|
)
|
|||
Lapse of statute of limitations
|
(11
|
)
|
|
(11
|
)
|
|
(19
|
)
|
|||
Acquisitions
|
—
|
|
|
—
|
|
|
28
|
|
|||
Unrecognized tax benefit, ending balance
|
$
|
695
|
|
|
$
|
551
|
|
|
$
|
522
|
|
Note 14.
|
Net Income (Loss) Per Common Share
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in millions, except per share data)
|
||||||||||
Net income (loss)
|
$
|
(754
|
)
|
|
$
|
675
|
|
|
$
|
397
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
292
|
|
|
297
|
|
|
288
|
|
|||
Employee stock options, RSUs, PSUs and ESPP
|
—
|
|
|
10
|
|
|
8
|
|
|||
Diluted
|
292
|
|
|
307
|
|
|
296
|
|
|||
Income (loss) per common share
|
|
|
|
|
|
||||||
Basic
|
$
|
(2.58
|
)
|
|
$
|
2.27
|
|
|
$
|
1.38
|
|
Diluted
|
$
|
(2.58
|
)
|
|
$
|
2.20
|
|
|
$
|
1.34
|
|
Note 15.
|
Employee Termination, Asset Impairment and Other Charges
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in millions)
|
||||||||||
Employee termination and other charges:
|
|
|
|
|
|
||||||
Closure of Foreign Manufacturing Facilities
|
$
|
22
|
|
|
$
|
56
|
|
|
$
|
10
|
|
Business Realignment
|
144
|
|
|
50
|
|
|
72
|
|
|||
Restructuring Plan 2016
|
—
|
|
|
92
|
|
|
128
|
|
|||
Total employee termination and other charges
|
166
|
|
|
198
|
|
|
210
|
|
|||
Asset impairment:
|
|
|
|
|
|
||||||
Restructuring Plan 2016
|
—
|
|
|
16
|
|
|
—
|
|
|||
Closure of Foreign Manufacturing Facility
|
—
|
|
|
—
|
|
|
11
|
|
|||
Total asset impairment
|
—
|
|
|
16
|
|
|
11
|
|
|||
Stock-based compensation accelerations and adjustments:
|
|
|
|
|
|
||||||
Business Realignment
|
—
|
|
|
1
|
|
|
11
|
|
|||
Total stock-based compensation accelerations and adjustments
|
—
|
|
|
1
|
|
|
11
|
|
|||
Total employee termination, asset impairment, and other charges
|
$
|
166
|
|
|
$
|
215
|
|
|
$
|
232
|
|
|
Employee Termination Benefits
|
|
Contract Termination and Other
|
|
Total
|
||||||
|
(in millions)
|
||||||||||
Accrual balance at June 29, 2018
|
$
|
56
|
|
|
$
|
—
|
|
|
$
|
56
|
|
Charges
|
10
|
|
|
12
|
|
|
22
|
|
|||
Cash payments
|
(36
|
)
|
|
(10
|
)
|
|
(46
|
)
|
|||
Accrual balance at June 28, 2019
|
$
|
30
|
|
|
$
|
2
|
|
|
$
|
32
|
|
|
Employee Termination Benefits
|
|
Contract Termination and Other
|
|
Total
|
||||||
|
(in millions)
|
||||||||||
Accrual balance at June 29, 2018
|
$
|
31
|
|
|
$
|
5
|
|
|
$
|
36
|
|
Charges
|
131
|
|
|
13
|
|
|
144
|
|
|||
Cash payments
|
(125
|
)
|
|
(10
|
)
|
|
(135
|
)
|
|||
Accrual balance at June 28, 2019
|
$
|
37
|
|
|
$
|
8
|
|
|
$
|
45
|
|
Note 16.
|
Legal Proceedings
|
Note 17.
|
Separate Financial Information of Guarantor Subsidiaries
|
Condensed Consolidating Balance Sheet
|
|||||||||||||||||||
As of June 28, 2019
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
Company |
||||||||||
|
(in millions)
|
||||||||||||||||||
ASSETS
|
|||||||||||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
8
|
|
|
$
|
985
|
|
|
$
|
2,462
|
|
|
$
|
—
|
|
|
$
|
3,455
|
|
Accounts receivable, net
|
—
|
|
|
779
|
|
|
425
|
|
|
—
|
|
|
1,204
|
|
|||||
Intercompany receivables
|
2,409
|
|
|
5,808
|
|
|
1,581
|
|
|
(9,798
|
)
|
|
—
|
|
|||||
Inventories
|
—
|
|
|
990
|
|
|
2,438
|
|
|
(145
|
)
|
|
3,283
|
|
|||||
Loans due from consolidated affiliates
|
—
|
|
|
—
|
|
|
50
|
|
|
(50
|
)
|
|
—
|
|
|||||
Other current assets
|
2
|
|
|
251
|
|
|
282
|
|
|
—
|
|
|
535
|
|
|||||
Total current assets
|
2,419
|
|
|
8,813
|
|
|
7,238
|
|
|
(9,993
|
)
|
|
8,477
|
|
|||||
Property, plant and equipment, net
|
—
|
|
|
873
|
|
|
1,970
|
|
|
—
|
|
|
2,843
|
|
|||||
Notes receivable and investments in Flash Ventures
|
—
|
|
|
—
|
|
|
2,791
|
|
|
—
|
|
|
2,791
|
|
|||||
Goodwill
|
—
|
|
|
388
|
|
|
9,688
|
|
|
—
|
|
|
10,076
|
|
|||||
Other intangible assets, net
|
—
|
|
|
23
|
|
|
1,688
|
|
|
—
|
|
|
1,711
|
|
|||||
Investments in consolidated subsidiaries
|
20,772
|
|
|
16,355
|
|
|
—
|
|
|
(37,127
|
)
|
|
—
|
|
|||||
Loans due from consolidated affiliates
|
—
|
|
|
674
|
|
|
—
|
|
|
(674
|
)
|
|
—
|
|
|||||
Other non-current assets
|
60
|
|
|
51
|
|
|
361
|
|
|
—
|
|
|
472
|
|
|||||
Total assets
|
$
|
23,251
|
|
|
$
|
27,177
|
|
|
$
|
23,736
|
|
|
$
|
(47,794
|
)
|
|
$
|
26,370
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|||||||||||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
—
|
|
|
$
|
195
|
|
|
$
|
1,372
|
|
|
$
|
—
|
|
|
$
|
1,567
|
|
Accounts payable to related parties
|
—
|
|
|
—
|
|
|
331
|
|
|
—
|
|
|
331
|
|
|||||
Intercompany payables
|
1,871
|
|
|
3,515
|
|
|
4,412
|
|
|
(9,798
|
)
|
|
—
|
|
|||||
Accrued expenses
|
195
|
|
|
522
|
|
|
579
|
|
|
—
|
|
|
1,296
|
|
|||||
Accrued compensation
|
—
|
|
|
214
|
|
|
133
|
|
|
—
|
|
|
347
|
|
|||||
Loans due to consolidated affiliates
|
—
|
|
|
50
|
|
|
—
|
|
|
(50
|
)
|
|
—
|
|
|||||
Current portion of long-term debt
|
276
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
276
|
|
|||||
Total current liabilities
|
2,342
|
|
|
4,496
|
|
|
6,827
|
|
|
(9,848
|
)
|
|
3,817
|
|
|||||
Long-term debt
|
10,213
|
|
|
—
|
|
|
33
|
|
|
—
|
|
|
10,246
|
|
|||||
Loans due to consolidated affiliates
|
674
|
|
|
—
|
|
|
—
|
|
|
(674
|
)
|
|
—
|
|
|||||
Other liabilities
|
55
|
|
|
1,795
|
|
|
490
|
|
|
—
|
|
|
2,340
|
|
|||||
Total liabilities
|
13,284
|
|
|
6,291
|
|
|
7,350
|
|
|
(10,522
|
)
|
|
16,403
|
|
|||||
Total shareholders’ equity
|
9,967
|
|
|
20,886
|
|
|
16,386
|
|
|
(37,272
|
)
|
|
9,967
|
|
|||||
Total liabilities and shareholders’ equity
|
$
|
23,251
|
|
|
$
|
27,177
|
|
|
$
|
23,736
|
|
|
$
|
(47,794
|
)
|
|
$
|
26,370
|
|
Condensed Consolidating Balance Sheet
|
|||||||||||||||||||
As of June 29, 2018
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
Company |
||||||||||
|
(in millions)
|
||||||||||||||||||
ASSETS
|
|||||||||||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
40
|
|
|
$
|
668
|
|
|
$
|
4,297
|
|
|
$
|
—
|
|
|
$
|
5,005
|
|
Accounts receivable, net
|
—
|
|
|
1,358
|
|
|
839
|
|
|
—
|
|
|
2,197
|
|
|||||
Intercompany receivables
|
1,903
|
|
|
4,256
|
|
|
2,674
|
|
|
(8,833
|
)
|
|
—
|
|
|||||
Inventories
|
—
|
|
|
990
|
|
|
2,159
|
|
|
(205
|
)
|
|
2,944
|
|
|||||
Other current assets
|
20
|
|
|
195
|
|
|
277
|
|
|
—
|
|
|
492
|
|
|||||
Total current assets
|
1,963
|
|
|
7,467
|
|
|
10,246
|
|
|
(9,038
|
)
|
|
10,638
|
|
|||||
Property, plant and equipment, net
|
—
|
|
|
1,092
|
|
|
2,003
|
|
|
—
|
|
|
3,095
|
|
|||||
Notes receivable and investments in Flash Ventures
|
—
|
|
|
—
|
|
|
2,105
|
|
|
—
|
|
|
2,105
|
|
|||||
Goodwill
|
—
|
|
|
387
|
|
|
9,688
|
|
|
—
|
|
|
10,075
|
|
|||||
Other intangible assets, net
|
—
|
|
|
38
|
|
|
2,642
|
|
|
—
|
|
|
2,680
|
|
|||||
Investments in consolidated subsidiaries
|
20,847
|
|
|
19,893
|
|
|
—
|
|
|
(40,740
|
)
|
|
—
|
|
|||||
Loans due from consolidated affiliates
|
943
|
|
|
16
|
|
|
—
|
|
|
(959
|
)
|
|
—
|
|
|||||
Other non-current assets
|
182
|
|
|
29
|
|
|
431
|
|
|
—
|
|
|
642
|
|
|||||
Total assets
|
$
|
23,935
|
|
|
$
|
28,922
|
|
|
$
|
27,115
|
|
|
$
|
(50,737
|
)
|
|
$
|
29,235
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|||||||||||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
—
|
|
|
$
|
279
|
|
|
$
|
1,986
|
|
|
$
|
—
|
|
|
$
|
2,265
|
|
Accounts payable to related parties
|
—
|
|
|
—
|
|
|
259
|
|
|
—
|
|
|
259
|
|
|||||
Intercompany payables
|
1,066
|
|
|
4,648
|
|
|
3,119
|
|
|
(8,833
|
)
|
|
—
|
|
|||||
Accrued expenses
|
198
|
|
|
505
|
|
|
571
|
|
|
—
|
|
|
1,274
|
|
|||||
Accrued compensation
|
—
|
|
|
297
|
|
|
182
|
|
|
—
|
|
|
479
|
|
|||||
Current portion of long-term debt
|
179
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
179
|
|
|||||
Total current liabilities
|
1,443
|
|
|
5,729
|
|
|
6,117
|
|
|
(8,833
|
)
|
|
4,456
|
|
|||||
Long-term debt
|
10,962
|
|
|
—
|
|
|
31
|
|
|
—
|
|
|
10,993
|
|
|||||
Loans due to consolidated affiliates
|
—
|
|
|
427
|
|
|
532
|
|
|
(959
|
)
|
|
—
|
|
|||||
Other liabilities
|
(1
|
)
|
|
1,768
|
|
|
488
|
|
|
—
|
|
|
2,255
|
|
|||||
Total liabilities
|
12,404
|
|
|
7,924
|
|
|
7,168
|
|
|
(9,792
|
)
|
|
17,704
|
|
|||||
Total shareholders’ equity
|
11,531
|
|
|
20,998
|
|
|
19,947
|
|
|
(40,945
|
)
|
|
11,531
|
|
|||||
Total liabilities and shareholders’ equity
|
$
|
23,935
|
|
|
$
|
28,922
|
|
|
$
|
27,115
|
|
|
$
|
(50,737
|
)
|
|
$
|
29,235
|
|
Condensed Consolidating Statement of Operations
|
|||||||||||||||||||
For the year ended June 28, 2019
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
Company |
||||||||||
|
(in millions)
|
||||||||||||||||||
Revenue, net
|
$
|
—
|
|
|
$
|
12,860
|
|
|
$
|
17,189
|
|
|
$
|
(13,480
|
)
|
|
$
|
16,569
|
|
Cost of revenue
|
—
|
|
|
11,237
|
|
|
15,138
|
|
|
(13,558
|
)
|
|
12,817
|
|
|||||
Gross profit
|
—
|
|
|
1,623
|
|
|
2,051
|
|
|
78
|
|
|
3,752
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and development
|
—
|
|
|
1,376
|
|
|
806
|
|
|
—
|
|
|
2,182
|
|
|||||
Selling, general and administrative
|
2
|
|
|
865
|
|
|
450
|
|
|
—
|
|
|
1,317
|
|
|||||
Intercompany operating expense (income)
|
16
|
|
|
(1,523
|
)
|
|
1,507
|
|
|
—
|
|
|
—
|
|
|||||
Employee termination, asset impairment, and other charges
|
—
|
|
|
85
|
|
|
81
|
|
|
—
|
|
|
166
|
|
|||||
Total operating expenses
|
18
|
|
|
803
|
|
|
2,844
|
|
|
—
|
|
|
3,665
|
|
|||||
Operating income (loss)
|
(18
|
)
|
|
820
|
|
|
(793
|
)
|
|
78
|
|
|
87
|
|
|||||
Interest and other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest income
|
10
|
|
|
25
|
|
|
46
|
|
|
(24
|
)
|
|
57
|
|
|||||
Interest expense
|
(478
|
)
|
|
(9
|
)
|
|
(6
|
)
|
|
24
|
|
|
(469
|
)
|
|||||
Other income (expense), net
|
1
|
|
|
(6
|
)
|
|
43
|
|
|
—
|
|
|
38
|
|
|||||
Total interest and other income (expense), net
|
(467
|
)
|
|
10
|
|
|
83
|
|
|
—
|
|
|
(374
|
)
|
|||||
Income (loss) before taxes
|
(485
|
)
|
|
830
|
|
|
(710
|
)
|
|
78
|
|
|
(287
|
)
|
|||||
Equity in earnings from subsidiaries
|
(418
|
)
|
|
(867
|
)
|
|
—
|
|
|
1,285
|
|
|
—
|
|
|||||
Income tax expense (benefit)
|
(149
|
)
|
|
457
|
|
|
159
|
|
|
—
|
|
|
467
|
|
|||||
Net loss
|
$
|
(754
|
)
|
|
$
|
(494
|
)
|
|
$
|
(869
|
)
|
|
$
|
1,363
|
|
|
$
|
(754
|
)
|
Condensed Consolidating Statement of Operations
|
|||||||||||||||||||
For the year ended June 29, 2018
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
Company |
||||||||||
|
(in millions)
|
||||||||||||||||||
Revenue, net
|
$
|
—
|
|
|
$
|
14,913
|
|
|
$
|
20,155
|
|
|
$
|
(14,421
|
)
|
|
$
|
20,647
|
|
Cost of revenue
|
—
|
|
|
12,913
|
|
|
14,573
|
|
|
(14,544
|
)
|
|
12,942
|
|
|||||
Gross profit
|
—
|
|
|
2,000
|
|
|
5,582
|
|
|
123
|
|
|
7,705
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and development
|
—
|
|
|
1,551
|
|
|
849
|
|
|
—
|
|
|
2,400
|
|
|||||
Selling, general and administrative
|
8
|
|
|
1,044
|
|
|
421
|
|
|
—
|
|
|
1,473
|
|
|||||
Intercompany operating expense (income)
|
—
|
|
|
(1,626
|
)
|
|
1,626
|
|
|
—
|
|
|
—
|
|
|||||
Employee termination, asset impairment, and other charges
|
1
|
|
|
47
|
|
|
167
|
|
|
—
|
|
|
215
|
|
|||||
Total operating expenses
|
9
|
|
|
1,016
|
|
|
3,063
|
|
|
—
|
|
|
4,088
|
|
|||||
Operating income (loss)
|
(9
|
)
|
|
984
|
|
|
2,519
|
|
|
123
|
|
|
3,617
|
|
|||||
Interest and other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest income
|
211
|
|
|
8
|
|
|
51
|
|
|
(210
|
)
|
|
60
|
|
|||||
Interest expense
|
(674
|
)
|
|
(21
|
)
|
|
(191
|
)
|
|
210
|
|
|
(676
|
)
|
|||||
Other expense, net
|
(905
|
)
|
|
(9
|
)
|
|
(2
|
)
|
|
—
|
|
|
(916
|
)
|
|||||
Total interest and other expense, net
|
(1,368
|
)
|
|
(22
|
)
|
|
(142
|
)
|
|
—
|
|
|
(1,532
|
)
|
|||||
Income (loss) before taxes
|
(1,377
|
)
|
|
962
|
|
|
2,377
|
|
|
123
|
|
|
2,085
|
|
|||||
Equity in earnings from subsidiaries
|
1,698
|
|
|
2,223
|
|
|
—
|
|
|
(3,921
|
)
|
|
—
|
|
|||||
Income tax expense (benefit)
|
(354
|
)
|
|
1,633
|
|
|
131
|
|
|
—
|
|
|
1,410
|
|
|||||
Net income
|
$
|
675
|
|
|
$
|
1,552
|
|
|
$
|
2,246
|
|
|
$
|
(3,798
|
)
|
|
$
|
675
|
|
Condensed Consolidating Statement of Operations
|
|||||||||||||||||||
For the year ended June 30, 2017
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
Company |
||||||||||
|
(in millions)
|
||||||||||||||||||
Revenue, net
|
$
|
—
|
|
|
$
|
14,732
|
|
|
$
|
16,381
|
|
|
$
|
(12,020
|
)
|
|
$
|
19,093
|
|
Cost of revenue
|
—
|
|
|
12,786
|
|
|
12,203
|
|
|
(11,968
|
)
|
|
13,021
|
|
|||||
Gross profit
|
—
|
|
|
1,946
|
|
|
4,178
|
|
|
(52
|
)
|
|
6,072
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and development
|
—
|
|
|
1,619
|
|
|
822
|
|
|
—
|
|
|
2,441
|
|
|||||
Selling, general and administrative
|
6
|
|
|
1,006
|
|
|
433
|
|
|
—
|
|
|
1,445
|
|
|||||
Intercompany operating expense (income)
|
—
|
|
|
(1,736
|
)
|
|
1,736
|
|
|
—
|
|
|
—
|
|
|||||
Employee termination, asset impairment, and other charges
|
—
|
|
|
88
|
|
|
144
|
|
|
—
|
|
|
232
|
|
|||||
Total operating expenses
|
6
|
|
|
977
|
|
|
3,135
|
|
|
—
|
|
|
4,118
|
|
|||||
Operating income (loss)
|
(6
|
)
|
|
969
|
|
|
1,043
|
|
|
(52
|
)
|
|
1,954
|
|
|||||
Interest and other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest income
|
347
|
|
|
11
|
|
|
22
|
|
|
(354
|
)
|
|
26
|
|
|||||
Interest expense
|
(843
|
)
|
|
(10
|
)
|
|
(348
|
)
|
|
354
|
|
|
(847
|
)
|
|||||
Other income (expense), net
|
(290
|
)
|
|
49
|
|
|
(61
|
)
|
|
(62
|
)
|
|
(364
|
)
|
|||||
Total interest and other income (expense), net
|
(786
|
)
|
|
50
|
|
|
(387
|
)
|
|
(62
|
)
|
|
(1,185
|
)
|
|||||
Income (loss) before taxes
|
(792
|
)
|
|
1,019
|
|
|
656
|
|
|
(114
|
)
|
|
769
|
|
|||||
Equity in earnings from subsidiaries
|
907
|
|
|
287
|
|
|
—
|
|
|
(1,194
|
)
|
|
—
|
|
|||||
Income tax expense (benefit)
|
(282
|
)
|
|
259
|
|
|
395
|
|
|
—
|
|
|
372
|
|
|||||
Net income
|
$
|
397
|
|
|
$
|
1,047
|
|
|
$
|
261
|
|
|
$
|
(1,308
|
)
|
|
$
|
397
|
|
Condensed Consolidating Statement of Comprehensive Income (Loss)
|
|||||||||||||||||||
For the year ended June 28, 2019
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
Company |
||||||||||
|
(in millions)
|
||||||||||||||||||
Net loss
|
$
|
(754
|
)
|
|
$
|
(494
|
)
|
|
$
|
(869
|
)
|
|
$
|
1,363
|
|
|
$
|
(754
|
)
|
Other comprehensive income (loss), before tax:
|
|
|
|
|
|
|
|
|
|
||||||||||
Actuarial pension loss
|
(39
|
)
|
|
(39
|
)
|
|
(39
|
)
|
|
78
|
|
|
(39
|
)
|
|||||
Foreign currency translation adjustment
|
28
|
|
|
31
|
|
|
31
|
|
|
(62
|
)
|
|
28
|
|
|||||
Net unrealized gain (loss), on derivative contracts and available-for-sale securities
|
(39
|
)
|
|
40
|
|
|
38
|
|
|
(78
|
)
|
|
(39
|
)
|
|||||
Total other comprehensive income (loss), before tax
|
(50
|
)
|
|
32
|
|
|
30
|
|
|
(62
|
)
|
|
(50
|
)
|
|||||
Income tax benefit related to items of other comprehensive income (loss)
|
21
|
|
|
1
|
|
|
2
|
|
|
(3
|
)
|
|
21
|
|
|||||
Other comprehensive income (loss), net of tax
|
(29
|
)
|
|
33
|
|
|
32
|
|
|
(65
|
)
|
|
(29
|
)
|
|||||
Total comprehensive loss
|
$
|
(783
|
)
|
|
$
|
(461
|
)
|
|
$
|
(837
|
)
|
|
$
|
1,298
|
|
|
$
|
(783
|
)
|
Condensed Consolidating Statement of Comprehensive Income (Loss)
|
|||||||||||||||||||
For the year ended June 29, 2018
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
Company |
||||||||||
|
(in millions)
|
||||||||||||||||||
Net income
|
$
|
675
|
|
|
$
|
1,552
|
|
|
$
|
2,246
|
|
|
$
|
(3,798
|
)
|
|
$
|
675
|
|
Other comprehensive income, before tax:
|
|
|
|
|
|
|
|
|
|
||||||||||
Actuarial pension loss
|
(2
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
4
|
|
|
(2
|
)
|
|||||
Foreign currency translation adjustment
|
18
|
|
|
15
|
|
|
15
|
|
|
(30
|
)
|
|
18
|
|
|||||
Net unrealized gain on derivative contracts and available-for-sale securities
|
7
|
|
|
(10
|
)
|
|
(6
|
)
|
|
16
|
|
|
7
|
|
|||||
Total other comprehensive income, before tax
|
23
|
|
|
3
|
|
|
7
|
|
|
(10
|
)
|
|
23
|
|
|||||
Income tax benefit (expense) related to items of other comprehensive income
|
(4
|
)
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
(4
|
)
|
|||||
Other comprehensive income, net of tax
|
19
|
|
|
4
|
|
|
6
|
|
|
(10
|
)
|
|
19
|
|
|||||
Total comprehensive income
|
$
|
694
|
|
|
$
|
1,556
|
|
|
$
|
2,252
|
|
|
$
|
(3,808
|
)
|
|
$
|
694
|
|
Condensed Consolidating Statement of Comprehensive Income (Loss)
|
|||||||||||||||||||
For the year ended June 30, 2017
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
Company |
||||||||||
|
(in millions)
|
||||||||||||||||||
Net income
|
$
|
397
|
|
|
$
|
1,047
|
|
|
$
|
261
|
|
|
$
|
(1,308
|
)
|
|
$
|
397
|
|
Other comprehensive loss, before tax:
|
|
|
|
|
|
|
|
|
—
|
|
|||||||||
Actuarial pension gain
|
39
|
|
|
39
|
|
|
39
|
|
|
(78
|
)
|
|
39
|
|
|||||
Foreign currency translation adjustment
|
(115
|
)
|
|
(113
|
)
|
|
(136
|
)
|
|
249
|
|
|
(115
|
)
|
|||||
Net unrealized loss on derivative contracts and available-for-sale securities
|
(75
|
)
|
|
(75
|
)
|
|
(73
|
)
|
|
148
|
|
|
(75
|
)
|
|||||
Total other comprehensive loss, before tax
|
(151
|
)
|
|
(149
|
)
|
|
(170
|
)
|
|
319
|
|
|
(151
|
)
|
|||||
Income tax expense related to items of other comprehensive loss
|
(10
|
)
|
|
(10
|
)
|
|
(8
|
)
|
|
18
|
|
|
(10
|
)
|
|||||
Other comprehensive loss, net of tax
|
(161
|
)
|
|
(159
|
)
|
|
(178
|
)
|
|
337
|
|
|
(161
|
)
|
|||||
Total comprehensive income
|
$
|
236
|
|
|
$
|
888
|
|
|
$
|
83
|
|
|
$
|
(971
|
)
|
|
$
|
236
|
|
Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||||||
For the year ended June 28, 2019
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
Company |
||||||||||
|
(in millions)
|
||||||||||||||||||
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
160
|
|
|
$
|
(1,286
|
)
|
|
$
|
2,723
|
|
|
$
|
(50
|
)
|
|
$
|
1,547
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property, plant and equipment
|
—
|
|
|
(250
|
)
|
|
(626
|
)
|
|
—
|
|
|
(876
|
)
|
|||||
Proceeds from the sale of property, plant and equipment
|
—
|
|
|
116
|
|
|
3
|
|
|
—
|
|
|
119
|
|
|||||
Purchases of investments
|
—
|
|
|
(11
|
)
|
|
(68
|
)
|
|
—
|
|
|
(79
|
)
|
|||||
Proceeds from sale of investments
|
—
|
|
|
—
|
|
|
175
|
|
|
—
|
|
|
175
|
|
|||||
Proceeds from maturities of investments
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
|||||
Notes receivable issuances to Flash Ventures
|
—
|
|
|
—
|
|
|
(1,364
|
)
|
|
—
|
|
|
(1,364
|
)
|
|||||
Notes receivable proceeds from Flash Ventures
|
—
|
|
|
—
|
|
|
766
|
|
|
—
|
|
|
766
|
|
|||||
Strategic investments and other, net
|
—
|
|
|
2
|
|
|
(22
|
)
|
|
—
|
|
|
(20
|
)
|
|||||
Intercompany loan from (to) consolidated affiliates
|
943
|
|
|
(659
|
)
|
|
1
|
|
|
(285
|
)
|
|
—
|
|
|||||
Advances from (to) parent and consolidated affiliates
|
(342
|
)
|
|
342
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net cash provided by (used in) investing activities
|
601
|
|
|
(460
|
)
|
|
(1,128
|
)
|
|
(285
|
)
|
|
(1,272
|
)
|
|||||
Cash flows from financing activities
|
|
|
|
|
|
|
—
|
|
|
|
|||||||||
Issuance of stock under employee stock plans
|
118
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
118
|
|
|||||
Taxes paid on vested stock awards under employee stock plans
|
(115
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(115
|
)
|
|||||
Repurchases of common stock
|
(563
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(563
|
)
|
|||||
Dividends paid to shareholders
|
(584
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(584
|
)
|
|||||
Repayment of debt
|
(181
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(181
|
)
|
|||||
Repayment of revolving credit facility
|
(500
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(500
|
)
|
|||||
Debt issuance costs
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|||||
Intercompany loan from (to) consolidated affiliates
|
674
|
|
|
(377
|
)
|
|
(582
|
)
|
|
285
|
|
|
—
|
|
|||||
Change in investment in consolidated subsidiaries
|
362
|
|
|
2,440
|
|
|
(2,852
|
)
|
|
50
|
|
|
—
|
|
|||||
Net cash provided by (used in) financing activities
|
(793
|
)
|
|
2,063
|
|
|
(3,434
|
)
|
|
335
|
|
|
(1,829
|
)
|
|||||
Effect of exchange rate changes on cash
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|||||
Net increase (decrease) in cash and cash equivalents
|
(32
|
)
|
|
317
|
|
|
(1,835
|
)
|
|
—
|
|
|
(1,550
|
)
|
|||||
Cash and cash equivalents, beginning of year
|
40
|
|
|
668
|
|
|
4,297
|
|
|
—
|
|
|
5,005
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
8
|
|
|
$
|
985
|
|
|
$
|
2,462
|
|
|
$
|
—
|
|
|
$
|
3,455
|
|
Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||||||
For the year ended June 29, 2018
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
Company |
||||||||||
|
(in millions)
|
||||||||||||||||||
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
(144
|
)
|
|
$
|
211
|
|
|
$
|
4,158
|
|
|
$
|
(20
|
)
|
|
$
|
4,205
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property, plant and equipment
|
—
|
|
|
(220
|
)
|
|
(615
|
)
|
|
—
|
|
|
(835
|
)
|
|||||
Proceeds from the sale of property, plant and equipment
|
—
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
26
|
|
|||||
Acquisitions, net of cash acquired
|
—
|
|
|
(94
|
)
|
|
(6
|
)
|
|
—
|
|
|
(100
|
)
|
|||||
Purchases of investments
|
—
|
|
|
(21
|
)
|
|
(68
|
)
|
|
—
|
|
|
(89
|
)
|
|||||
Proceeds from sale of investments
|
—
|
|
|
—
|
|
|
48
|
|
|
—
|
|
|
48
|
|
|||||
Proceeds from maturities of investments
|
—
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
19
|
|
|||||
Notes receivable issuances to Flash Ventures
|
—
|
|
|
—
|
|
|
(1,313
|
)
|
|
—
|
|
|
(1,313
|
)
|
|||||
Notes receivable proceeds from Flash Ventures
|
—
|
|
|
—
|
|
|
571
|
|
|
—
|
|
|
571
|
|
|||||
Strategic investments and other, net
|
—
|
|
|
(2
|
)
|
|
20
|
|
|
—
|
|
|
18
|
|
|||||
Intercompany loan from consolidated affiliates
|
3,757
|
|
|
—
|
|
|
—
|
|
|
(3,757
|
)
|
|
—
|
|
|||||
Advances from (to) parent and consolidated affiliates
|
(86
|
)
|
|
86
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net cash provided by (used in) investing activities
|
3,671
|
|
|
(251
|
)
|
|
(1,318
|
)
|
|
(3,757
|
)
|
|
(1,655
|
)
|
|||||
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Issuance of stock under employee stock plans
|
220
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
220
|
|
|||||
Taxes paid on vested stock awards under employee stock plans
|
(171
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(171
|
)
|
|||||
Repurchases of common stock
|
(591
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(591
|
)
|
|||||
Dividends paid to shareholders
|
(593
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(593
|
)
|
|||||
Settlement of debt hedge contracts
|
28
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|||||
Repayment of debt
|
(17,074
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,074
|
)
|
|||||
Proceeds from debt
|
13,840
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,840
|
|
|||||
Proceeds from revolving credit facility
|
500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
500
|
|
|||||
Debt issuance costs
|
(59
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(59
|
)
|
|||||
Intercompany loan to consolidated affiliates
|
—
|
|
|
(119
|
)
|
|
(3,638
|
)
|
|
3,757
|
|
|
—
|
|
|||||
Change in investment in consolidated subsidiaries
|
395
|
|
|
(385
|
)
|
|
(30
|
)
|
|
20
|
|
|
—
|
|
|||||
Net cash used in financing activities
|
(3,505
|
)
|
|
(504
|
)
|
|
(3,668
|
)
|
|
3,777
|
|
|
(3,900
|
)
|
|||||
Effect of exchange rate changes on cash
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Net increase (decrease) in cash and cash equivalents
|
22
|
|
|
(544
|
)
|
|
(827
|
)
|
|
—
|
|
|
(1,349
|
)
|
|||||
Cash and cash equivalents, beginning of year
|
18
|
|
|
1,212
|
|
|
5,124
|
|
|
—
|
|
|
6,354
|
|
|||||
Cash and cash equivalents, end of year
|
$
|
40
|
|
|
$
|
668
|
|
|
$
|
4,297
|
|
|
$
|
—
|
|
|
$
|
5,005
|
|
Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||||||
For the year ended June 30, 2017
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
Company |
||||||||||
|
(in millions)
|
||||||||||||||||||
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
(360
|
)
|
|
$
|
(836
|
)
|
|
$
|
4,593
|
|
|
$
|
40
|
|
|
$
|
3,437
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property, plant and equipment
|
—
|
|
|
(240
|
)
|
|
(338
|
)
|
|
—
|
|
|
(578
|
)
|
|||||
Proceeds from the sale of property, plant and equipment
|
—
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
21
|
|
|||||
Purchases of investments
|
—
|
|
|
—
|
|
|
(281
|
)
|
|
—
|
|
|
(281
|
)
|
|||||
Proceeds from sale of investments
|
—
|
|
|
—
|
|
|
94
|
|
|
—
|
|
|
94
|
|
|||||
Proceeds from maturities of investments
|
—
|
|
|
—
|
|
|
417
|
|
|
—
|
|
|
417
|
|
|||||
Investments in Flash Ventures
|
—
|
|
|
—
|
|
|
(20
|
)
|
|
—
|
|
|
(20
|
)
|
|||||
Notes receivable issuances to Flash Ventures
|
—
|
|
|
—
|
|
|
(549
|
)
|
|
—
|
|
|
(549
|
)
|
|||||
Notes receivable proceeds from Flash Ventures
|
—
|
|
|
—
|
|
|
292
|
|
|
—
|
|
|
292
|
|
|||||
Strategic investments and other, net
|
—
|
|
|
(1
|
)
|
|
(31
|
)
|
|
—
|
|
|
(32
|
)
|
|||||
Intercompany loans from consolidated affiliates
|
1,300
|
|
|
39
|
|
|
—
|
|
|
(1,339
|
)
|
|
—
|
|
|||||
Advances from (to) consolidated affiliates
|
(158
|
)
|
|
166
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|||||
Net cash provided by (used in) investing activities
|
1,142
|
|
|
(36
|
)
|
|
(395
|
)
|
|
(1,347
|
)
|
|
(636
|
)
|
|||||
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Issuance of stock under employee stock plans
|
235
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
235
|
|
|||||
Taxes paid on vested stock awards under employee stock plans
|
(124
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(124
|
)
|
|||||
Excess tax benefits from employee stock plans
|
119
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
119
|
|
|||||
Proceeds from acquired call option
|
—
|
|
|
—
|
|
|
61
|
|
|
—
|
|
|
61
|
|
|||||
Settlement of convertible debt
|
—
|
|
|
—
|
|
|
(492
|
)
|
|
—
|
|
|
(492
|
)
|
|||||
Dividends paid to shareholders
|
(574
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(574
|
)
|
|||||
Settlement of debt hedge contracts
|
—
|
|
|
(21
|
)
|
|
—
|
|
|
—
|
|
|
(21
|
)
|
|||||
Repayment of debt
|
(8,702
|
)
|
|
(2,995
|
)
|
|
—
|
|
|
—
|
|
|
(11,697
|
)
|
|||||
Proceeds from debt
|
7,908
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,908
|
|
|||||
Debt issuance costs
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|||||
Intercompany loan to consolidated affiliates
|
—
|
|
|
(5,454
|
)
|
|
4,115
|
|
|
1,339
|
|
|
—
|
|
|||||
Change in investment in consolidated subsidiaries
|
384
|
|
|
9,348
|
|
|
(9,700
|
)
|
|
(32
|
)
|
|
—
|
|
|||||
Net cash provided by (used in) financing activities
|
(764
|
)
|
|
878
|
|
|
(6,016
|
)
|
|
1,307
|
|
|
(4,595
|
)
|
|||||
Effect of exchange rate changes on cash
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
18
|
|
|
6
|
|
|
(1,821
|
)
|
|
—
|
|
|
(1,797
|
)
|
|||||
Cash and cash equivalents, beginning of year
|
—
|
|
|
1,206
|
|
|
6,945
|
|
|
—
|
|
|
8,151
|
|
|||||
Cash and cash equivalents, end of year
|
18
|
|
|
1,212
|
|
|
5,124
|
|
|
—
|
|
|
6,354
|
|
Note 18.
|
Quarterly Results of Operations (unaudited)
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
|
(in millions, except per share amounts)
|
||||||||||||||
2019
|
|
|
|
|
|
|
|
||||||||
Revenue, net
|
$
|
5,028
|
|
|
$
|
4,233
|
|
|
$
|
3,674
|
|
|
$
|
3,634
|
|
Gross profit
|
1,664
|
|
|
1,044
|
|
|
579
|
|
|
465
|
|
||||
Operating income (loss)
|
686
|
|
|
176
|
|
|
(394
|
)
|
|
(381
|
)
|
||||
Net income (loss)
|
511
|
|
|
(487
|
)
|
|
(581
|
)
|
|
(197
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic income (loss) per common share
|
$
|
1.75
|
|
|
$
|
(1.68
|
)
|
|
$
|
(1.99
|
)
|
|
$
|
(0.67
|
)
|
Diluted income (loss) per common share
|
$
|
1.71
|
|
|
$
|
(1.68
|
)
|
|
$
|
(1.99
|
)
|
|
$
|
(0.67
|
)
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
|
(in millions, except per share amounts)
|
||||||||||||||
2018
|
|
|
|
|
|
|
|
||||||||
Revenue, net
|
$
|
5,181
|
|
|
$
|
5,336
|
|
|
$
|
5,013
|
|
|
$
|
5,117
|
|
Gross profit
|
1,913
|
|
|
2,013
|
|
|
1,927
|
|
|
1,852
|
|
||||
Operating income (loss)
|
905
|
|
|
955
|
|
|
914
|
|
|
843
|
|
||||
Net income (loss)
|
681
|
|
|
(823
|
)
|
|
61
|
|
|
756
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic income (loss) per common share
|
$
|
2.31
|
|
|
$
|
(2.78
|
)
|
|
$
|
0.20
|
|
|
$
|
2.53
|
|
Diluted income (loss) per common share
|
$
|
2.23
|
|
|
$
|
(2.78
|
)
|
|
$
|
0.20
|
|
|
$
|
2.46
|
|
(1)
|
Financial Statements. The financial statements included in Part II, Item 8 of this document are filed as part of this Annual Report on Form 10‑K.
|
(2)
|
Financial Statement Schedules.
|
(3)
|
Exhibits. The exhibits listed in the Exhibit Index below are filed with, or incorporated by reference in, this Annual Report on Form 10‑K, as specified in the Exhibit List, from exhibits previously filed with the SEC. Certain agreements listed in the Exhibit List that we have filed or incorporated by reference may contain representations and warranties by us or our subsidiaries. These representations and warranties have been made solely for the benefit of the other party or parties to such agreements and (i) may have been qualified by disclosures made to such other party or parties, (ii) were made only as of the date of such agreements or such other date(s) as may be specified in such agreements and are subject to more recent developments, which may not be fully reflected in our public disclosures, (iii) may reflect the allocation of risk among the parties to such agreements and (iv) may apply materiality standards different from what may be viewed as material to investors. Accordingly, these representations and warranties may not describe the actual state of affairs at the date hereof and should not be relied upon.
|
Exhibit
Number
|
|
Description
|
|
Amended and Restated Certificate of Incorporation of Western Digital Corporation, as amended to date (Filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on February 8, 2006)
|
|
|
Amended and Restated By-Laws of Western Digital Corporation, as amended effective as of May 2, 2018 (Filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 1-08703) with the Securities and Exchange Commission on May 7, 2018)
|
|
|
Description of Western Digital Corporation’s Capital Stock†
|
|
|
Indenture (including Form of 0.5% Convertible Senior Notes due 2020), dated as of October 29, 2013, by and between SanDisk Corporation and The Bank of New York Mellon Trust Company, N.A. (Filed as Exhibit 4.1 to SanDisk Corporation’s Current Report on Form 8-K (File No. 000-26734) with the Securities and Exchange Commission on October 29, 2013)
|
|
|
First Supplemental Indenture to the Indenture filed as Exhibit 4.2 hereto, dated as of May 12, 2016, among SanDisk Corporation, The Bank of New York Mellon Trust Company, N.A., as trustee, and Western Digital Corporation (Filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 1-08703) with the Securities and Exchange Commission on May 12, 2016)
|
|
|
Indenture (including Form of 4.750% Senior Notes due 2026), dated as of February 13, 2018, among Western Digital Corporation; HGST, Inc., WD Media, LLC, Western Digital (Fremont), LLC and Western Digital Technologies, Inc., as guarantors; and U.S. Bank National Association, as trustee (Filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 333-222762) with the Securities and Exchange Commission on February 13, 2018)
|
|
|
Indenture (including Form of 1.50% Convertible Senior Notes due 2024), dated as of February 13, 2018, among Western Digital Corporation; HGST, Inc., WD Media, LLC, Western Digital (Fremont), LLC and Western Digital Technologies, Inc., as guarantors; and U.S. Bank National Association, as trustee (Filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K (File No. 333-222762) with the Securities and Exchange Commission on February 13, 2018)
|
|
|
Western Digital Corporation Amended and Restated 2017 Performance Incentive Plan (formerly named the Western Digital Corporation Amended and Restated 2004 Performance Incentive Plan), amended and restated as of August 2, 2018 (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-08703) with the Securities and Exchange Commission on November 7, 2018)*
|
|
|
Form of Notice of Grant of Stock Option and Option Agreement - Executives, under the Western Digital Corporation 2017 Performance Incentive Plan (Filed as Exhibit 10.1.1 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on February 6, 2018)*
|
|
|
Form of Notice of Grant of Stock Option and Option Agreement - Non-Executives, under the Western Digital Corporation 2017 Performance Incentive Plan (Filed as Exhibit 10.1.2 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on February 6, 2018)*
|
|
|
Form of Notice of Grant of Stock Units and Stock Unit Award Agreement - Executives, under the Western Digital Corporation 2017 Performance Incentive Plan (Filed as Exhibit 10.1.3 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on February 6, 2018)*
|
|
|
Form of Notice of Grant of Stock Units and Stock Unit Award Agreement, under the Western Digital Corporation 2017 Performance Incentive Plan (Filed as Exhibit 10.1.4 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on February 6, 2018)*
|
|
|
Form of Notice of Grant of Performance Stock Units and Performance Stock Unit Award Agreement - Executives, under the Western Digital Corporation 2017 Performance Incentive Plan (Filed as Exhibit 10.1.5 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on February 6, 2018)*
|
|
|
Form of Notice of Grant of Performance Stock Units and Performance Stock Unit Award Agreement - Financial Measures, under the Western Digital Corporation 2017 Performance Incentive Plan (Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on November 6, 2018)*
|
|
|
Form of Notice of Grant of Performance Stock Units and Performance Stock Unit Award Agreement - TSR Measure, under the Western Digital Corporation 2017 Performance Incentive Plan (Filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on November 6, 2018)*
|
|
|
Form of Notice of Grant of Stock Option and Option Agreement - Executives, as amended on November 3, 2015, under the Western Digital Corporation Amended and Restated 2004 Performance Incentive Plan (now named the Western Digital Corporation 2017 Performance Incentive Plan) (Filed as Exhibit 10.1.1 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on February 10, 2016)*
|
|
|
Form of Notice of Grant of Stock Option and Option Agreement - Non-Executives, as amended on November 3, 2015, under the Western Digital Corporation Amended and Restated 2004 Performance Incentive Plan (now named the Western Digital Corporation 2017 Performance Incentive Plan) (Filed as Exhibit 10.1.2 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on February 10, 2016)*
|
|
|
Form of Notice of Grant of Stock Units and Stock Unit Award Agreement - Executives, as amended on November 3, 2015, under the Western Digital Corporation Amended and Restated 2004 Performance Incentive Plan (now named the Western Digital Corporation 2017 Performance Incentive Plan) (Filed as Exhibit 10.1.3 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on February 10, 2016)*
|
Exhibit
Number
|
|
Description
|
|
Form of Notice of Grant of Stock Units and Stock Unit Award Agreement, as amended on November 3, 2015, under the Western Digital Corporation Amended and Restated 2004 Performance Incentive Plan (now named the Western Digital Corporation 2017 Performance Incentive Plan) (Filed as Exhibit 10.1.4 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on February 10, 2016)*
|
|
|
Form of Notice of Grant of Performance Stock Units and Performance Stock Unit Award Agreement for Mark Long, dated September 17, 2015, under the Western Digital Corporation Amended and Restated 2004 Performance Incentive Plan (now named the Western Digital Corporation 2017 Performance Incentive Plan) (Filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on November 10, 2015)*
|
|
|
Form of Notice of Grant of Performance Stock Units and Performance Stock Unit Award Agreement (revised March 2016) under the Western Digital Corporation Amended and Restated 2004 Performance Incentive Plan (now named the Western Digital Corporation 2017 Performance Incentive Plan) (Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on May 9, 2016)*
|
|
|
Western Digital Corporation Amended and Restated 2004 Performance Incentive Plan (now named the Western Digital Corporation 2017 Performance Incentive Plan) Non-Employee Director Option Grant Program, as amended September 6, 2012, and Form of Notice of Grant of Stock Option and Option Agreement - Non-Employee Directors (Filed as Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on November 2, 2012)*
|
|
|
Western Digital Corporation 2017 Performance Incentive Plan Non-Employee Director Restricted Stock Unit Grant Program, as amended November 1, 2017 (Filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on February 6, 2018)*
|
|
|
Form of Notice of Grant of Restricted Stock Units and Restricted Stock Unit Award Agreement - Vice President and Above under the Western Digital Corporation 2017 Performance Incentive Plan (Filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on November 6, 2018)*
|
|
|
Form of Notice of Grant of Restricted Stock Units and Restricted Stock Unit Award Agreement under the Western Digital Corporation 2017 Performance Incentive Plan (Filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on November 6, 2018)*
|
|
|
Western Digital Corporation Incentive Compensation Plan, as Amended and Restated August 5, 2015 (Filed as Exhibit 10.1.8 to the Company’s Annual Report on Form 10‑K (File No. 1-08703) with the Securities and Exchange Commission on August 21, 2015)*
|
|
|
Western Digital Corporation Amended and Restated 2005 Employee Stock Purchase Plan, as amended August 2, 2018 (Filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No. 1-08703) with the Securities and Exchange Commission on November 7, 2018)*
|
|
|
SanDisk Corporation 2013 Incentive Plan (Filed as Exhibit 4.2 to the Company’s Registration Statement on Form S-8 (File No. 333-211420) with the Securities and Exchange Commission on May 17, 2016)*
|
|
|
Amended and Restated Deferred Compensation Plan, amended and restated effective January 1, 2013 (Filed as Exhibit 10.4 to the Company’s Annual Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on November 2, 2012)*
|
|
|
Western Digital Corporation Amended and Restated Change of Control Severance Plan, amended and restated as of November 3, 2015 (Filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No. 1-08703) with the Securities and Exchange Commission on November 5, 2015)*
|
|
|
Western Digital Corporation Executive Severance Plan, amended and restated as of February 2, 2017 (Filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on February 7, 2017)*
|
|
|
Form of Indemnity Agreement for Directors of Western Digital Corporation (Filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on November 8, 2002)*
|
|
|
Form of Indemnity Agreement for Officers of Western Digital Corporation (Filed as Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on November 8, 2002)*
|
|
|
Form of Indemnification Agreement entered into between SanDisk Corporation and its directors and officers (Filed as Exhibit 10.10 to the Company’s Annual Report on Form 10-K (File No. 1-08703) with the Securities and Exchange Commission on August 24, 2018)*
|
|
|
Offer Letter, dated as of April 1, 2019, to Robert Eulau (Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on May 7, 2019)*
|
|
|
Severance Agreement, dated as of June 15, 2019, by and between Western Digital Corporation and Mark Long*†
|
|
|
Loan Agreement, dated as of April 29, 2016, by and among Western Digital Corporation, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and the lenders and financial institutions from time to time party thereto (Filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on May 9, 2016)
|
|
|
Amendment No. 1, dated as of August 17, 2016, to the Loan Agreement dated as of April 29, 2016, by and among Western Digital Corporation, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, the lenders party thereto and the other loan parties thereto (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-08703) with the Securities and Exchange Commission on August 18, 2016)
|
Exhibit
Number
|
|
Description
|
|
Amendment No. 2, dated as of September 22, 2016, to the Loan Agreement dated as of April 29, 2016, by and among Western Digital Corporation, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, the lenders party thereto and the other loan parties thereto (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-08703) with the Securities and Exchange Commission on September 22, 2016)
|
|
|
Amendment No. 3, dated as of March 14, 2017, to the Loan Agreement dated as of April 29, 2016, by and among Western Digital Corporation, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, the lenders party thereto and the other loan parties thereto (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-08703) with the Securities and Exchange Commission on March 14, 2017)
|
|
|
Amendment No. 4, dated as of March 23, 2017, to the Loan Agreement dated as of April 29, 2016, by and among Western Digital Corporation, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, the lenders party thereto and the other loan parties thereto (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-08703) with the Securities and Exchange Commission on March 23, 2017)
|
|
|
Amendment No. 5, dated as of November 8, 2017, to the Loan Agreement dated as of April 29, 2016, by and among Western Digital Corporation, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, the lenders party thereto and the other loan parties thereto (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-08703) with the Securities and Exchange Commission on November 8, 2017)
|
|
|
Amendment No. 6, dated as of November 29, 2017, to the Loan Agreement dated as of April 29, 2016, by and among Western Digital Corporation, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, the lenders party thereto and the other loan parties thereto (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-08703) with the Securities and Exchange Commission on November 29, 2017)
|
|
|
Amendment No. 7, dated as of February 27, 2018, to the Loan Agreement dated as of April 29, 2016, by and among Western Digital Corporation, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, the lenders party thereto and the other loan parties thereto (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-08703) with the Securities and Exchange Commission on February 27, 2018)
|
|
|
Amendment No. 8, dated as of May 15, 2018, to the Loan Agreement dated as of April 29, 2016, by and among Western Digital Corporation, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, the lenders party thereto and the other loan parties thereto (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-08703) with the Securities and Exchange Commission on May 15, 2018)
|
|
|
Amendment No. 9, dated as of April 29, 2019, to the Loan Agreement dated as of April 29, 2016, by and among Western Digital Corporation, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, the lenders party thereto and the other loan parties thereto (Filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (File No. 000-26734) with the Securities and Exchange Commission on May 7, 2019)
|
|
|
Guaranty Agreement, dated as of April 29, 2016, by and among Western Digital Corporation, the subsidiary guarantors party thereto and JPMorgan Chase Bank, N.A., as administrative agent for the guaranteed creditors (Filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No.1-08703) with the Securities and Exchange Commission on April 29, 2016)
|
|
|
Security Agreement, dated as of May 12, 2016, by and among the debtors (as defined therein) party thereto and JPMorgan Chase Bank, N.A., as collateral agent (Filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No. 1-08703) with the Securities and Exchange Commission on May 12, 2016)
|
|
|
Flash Alliance Master Agreement, dated as of July 7, 2006, by and among SanDisk Corporation, Toshiba Corporation and SanDisk (Ireland) Limited (Filed as Exhibit 10.1 to SanDisk Corporation’s Quarterly Report on Form 10-Q (File No. 000-26734) with the Securities and Exchange Commission on November 8, 2006)#
|
|
|
Operating Agreement of Flash Alliance, Ltd., dated as of July 7, 2006, by and between Toshiba Corporation and SanDisk (Ireland) Limited (Filed as Exhibit 10.2 to SanDisk Corporation’s Quarterly Report on Form 10-Q (File No. 000-26734) with the Securities and Exchange Commission on November 8, 2006)#
|
|
|
Joint Venture Restructure Agreement, dated as of January 29, 2009, by and among SanDisk Corporation, SanDisk (Ireland) Limited, SanDisk (Cayman) Limited, Toshiba Corporation, Flash Partners Limited and Flash Alliance Limited (Filed as Exhibit 10.1 to SanDisk Corporation’s Quarterly Report on Form 10-Q (File No. 000-26734) with the Securities and Exchange Commission on May 7, 2009)#
|
|
|
New Y2 Facility Agreement, dated October 20, 2015, by and among SanDisk Corporation, SanDisk (Ireland) Limited, SanDisk (Cayman) Limited, SanDisk Flash B.V., Toshiba Corporation, Flash Partners Limited, Flash Alliance Limited and Flash Forward Limited (Filed as Exhibit 10.37 to SanDisk Corporation’s Annual Report on Form 10‑K (File No. 000-26734) with the Securities and Exchange Commission on February 12, 2016)#
|
|
|
FAL Commitment and Extension Agreement, dated as of December 12, 2017, by and among Western Digital Corporation, SanDisk LLC, SanDisk (Ireland) Limited and Toshiba Memory Corporation (Filed as Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on February 6, 2018)#
|
|
|
Y6 Facility Agreement, dated as of December 12, 2017, by and among Western Digital Corporation, SanDisk LLC, SanDisk (Cayman) Limited, SanDisk (Ireland) Limited, SanDisk Flash B.V., Flash Partners, Ltd., Flash Alliance, Ltd., Flash Forward, Ltd. and Toshiba Memory Corporation (Filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on February 6, 2018)#
|
|
|
K1 Facility Agreement, dated as of May 15, 2019, by and among Western Digital, SanDisk LLC, SanDisk (Cayman) Limited, SanDisk (Ireland) Limited, SanDisk Flash B.V., Flash Partners, Ltd., Flash Alliance, Ltd., Flash Forward Ltd., Toshiba Memory Corporation and Toshiba Memory Corporation Iwate†##
|
Exhibit
Number
|
|
Description
|
|
Confidential Settlement and Mutual Release Agreement, dated as of December 12, 2017, by and among Western Digital Corporation, SanDisk LLC, SanDisk (Cayman) Limited, SanDisk (Ireland) Limited, SanDisk Flash B.V., Toshiba Corporation and Toshiba Memory Corporation (Filed as Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on February 6, 2018)#
|
|
|
Confidential Settlement and Mutual Release Agreement, dated as of December 12, 2017, by and among Western Digital Corporation, SanDisk LLC, SanDisk (Cayman) Limited, SanDisk (Ireland) Limited, SanDisk Flash B.V., Bain Capital Private Equity, L.P., BCPE Pangea Cayman, L.P., BCPE Pangea Cayman2, Ltd., Bain Capital Fund XII, L.P., Bain Capital Asia Fund III, L.P. and K.K. Pangea (Filed as Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on February 6, 2018)#
|
|
|
Subsidiaries of Western Digital Corporation†
|
|
|
Consent of Independent Registered Public Accounting Firm†
|
|
|
Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002†
|
|
|
Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002†
|
|
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
|
|
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
|
|
101.INS
|
|
XBRL Instance Document†
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document†
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document†
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document†
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document†
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document†
|
|
|
†
|
Filed with this report.
|
**
|
Furnished with this report.
|
*
|
Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to applicable rules of the Securities and Exchange Commission.
|
#
|
Pursuant to a request for confidential treatment, certain portions of this exhibit have been redacted from the publicly filed document and have been furnished separately to the Securities and Exchange Commission as required by Rule 24b-2 under the Securities Exchange Act of 1934, as amended.
|
##
|
As permitted by Regulation S-K, Item 601(b)(10)(iv) of the Securities Exchange Act of 1934, as amended, certain confidential portions of this exhibit have been redacted from the publicly filed document.
|
|
WESTERN DIGITAL CORPORATION
|
|
|
|
|
|
By:
|
/s/ ROBERT K. EULAU
|
|
|
Robert K. Eulau
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ STEPHEN D. MILLIGAN
|
|
Chief Executive Officer, Director
(Principal Executive Officer) |
|
August 27, 2019
|
Stephen D. Milligan
|
|
|
|
|
|
|
|
|
|
/s/ ROBERT K. EULAU
|
|
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer) |
|
August 27, 2019
|
Robert K. Eulau
|
|
|
|
|
|
|
|
|
|
/s/ MATTHEW E. MASSENGILL
|
|
Chairman of the Board
|
|
August 27, 2019
|
Matthew E. Massengill
|
|
|
|
|
|
|
|
|
|
/s/ KIMBERLY E. ALEXY
|
|
Director
|
|
August 27, 2019
|
Kimberly E. Alexy
|
|
|
|
|
|
|
|
|
|
/s/ MARTIN I. COLE
|
|
Director
|
|
August 27, 2019
|
Martin I. Cole
|
|
|
|
|
|
|
|
|
|
/s/ KATHLEEN A. COTE
|
|
Director
|
|
August 27, 2019
|
Kathleen A. Cote
|
|
|
|
|
|
|
|
|
|
/s/ HENRY T. DENERO
|
|
Director
|
|
August 27, 2019
|
Henry T. DeNero
|
|
|
|
|
|
|
|
|
|
/s/ TUNҪ DOLUCA
|
|
Director
|
|
August 27, 2019
|
Tunҫ Doluca
|
|
|
|
|
|
|
|
|
|
/s/ MICHAEL D. LAMBERT
|
|
Director
|
|
August 27, 2019
|
Michael D. Lambert
|
|
|
|
|
|
|
|
|
|
/s/ LEN J. LAUER
|
|
Director
|
|
August 27, 2019
|
Len J. Lauer
|
|
|
|
|
|
|
|
|
|
/s/ STEPHANIE A. STREETER
|
|
Director
|
|
August 27, 2019
|
Stephanie A. Streeter
|
|
|
|
|
•
|
455,000,000 shares of common stock, par value $0.01 per share (“Common Stock”); and
|
•
|
5,000,000 shares of preferred stock, par value $0.01 per share (“Preferred Stock”).
|
•
|
before the stockholder became interested, the board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
|
•
|
upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, shares owned by persons who are directors and also officers, and employee stock plans, in some instances; or
|
•
|
at or after the time the stockholder became interested, the business combination was approved by the board of directors of the corporation and authorized at an annual or special meeting of the stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock which is not owned by the interested stockholder.
|
A.
|
Severance Benefit. Executive will receive a cash lump sum payment of One Million Three Hundred Fifty Thousand Dollars ($1,350,000), less standard withholdings and authorized deductions, which payment shall be made on or within thirty (30) days following the Separation Date (“Severance Payment”).
|
B.
|
COBRA Payment. Executive shall receive a cash lump sum payment of Twenty Three Thousand, Four Hundred Fifty Four Dollars ($23,454), which represents a payment equal to the equivalent of eighteen (18) months’ payment for health care continuation costs under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) (“COBRA Payment”) (presently estimated at $1,303 per month), less required tax withholdings and authorized deductions. Such payment shall be made on or within thirty (30) days following the Separation Date. Executive understands that Executive remains responsible for working with Western Digital’s outside benefits administrator to elect COBRA benefits and must timely elect coverage in order to be eligible for COBRA benefits, should Executive elect COBRA. A COBRA election form and enrollment package will be mailed to Executive’s home address approximately two weeks after the end of the month in which Executive’s Separation Date
|
C.
|
STI Bonus. Executive acknowledges and agrees that, except as set forth in this Section 2(a).C., he has been paid all bonuses he is owed by Western Digital through the Separation Date. For the STI bonus for the Fiscal 2019 bonus cycle, Executive shall receive a payment in the amount of Seven Hundred Eleven Thousand, Five Hundred Sixty Three Dollars ($711,563), less standard withholding and authorized deductions, which represents a payment equal to Executive’s prorated bonus opportunity (through the Separation Date) under the STI for the Fiscal Year 2019 bonus cycle, assuming 100% of the performance targets are met regardless of the actual funding by Western Digital. Such payment shall be made on or within thirty (30) days following the Separation Date. Except as set forth in this Section 2(a).C., Executive will not be entitled to additional payments under the STI.
|
D.
|
Stock Options. Executive’s stock options granted by Western Digital that were outstanding on the Separation Date shall vest and become exercisable as of the Separation Date as to any such stock options that would have vested after the Separation Date if Executive had remained employed with Western Digital through December 15, 2019. Any such stock option that remained unvested as of the Separation Date after giving effect to the acceleration contemplated by the preceding sentence terminated as of the Separation Date and Executive shall have no further right with respect thereto or in respect thereof. Notwithstanding anything to the contrary herein, the exercisability of Executive’s outstanding vested and exercisable stock options (including any stock options that accelerated pursuant to the first sentence of this paragraph) as of the Separation Date shall continue to be governed by the stock incentive plans and stock option agreements applicable to such options. To the extent that any stock option is vested and exercisable by the Executive on the Executive’s Separation Date, it may be exercised by the Executive at any time within three months following the Executive’s Separation Date (subject to earlier termination at the end of the option term or in connection with a change in control of Western Digital as provided in the applicable option documentation). Any stock option, to the extent it is exercisable for the three-month period following the Executive’s Separation Date and not exercised during such period, shall terminate at the close of business on the last day of the three-month period and Executive shall have no further right with respect thereto or in respect thereof.
|
E.
|
Stock Units. Executive’s Western Digital stock units granted prior to August 30, 2018 that were subject to only time-based (as opposed to performance-based) vesting requirements and were outstanding and unvested on the Separation Date shall vest and become payable as of the Separation Date as to any such stock units that would have vested after the Separation Date if Executive had remained employed with Western Digital through December 15, 2019. Executive’s Western Digital stock units granted on August 30, 2018 that were subject to only time-based vesting requirements and were outstanding and unvested on the Separation Date will vest and become payable on January 1, 2020 as to any such units that would have vested after the Separation Date if Executive had remained employed with Western Digital through December 15, 2019. All outstanding stock units held by the Executive shall continue to accrue dividends until such stock units are paid and settled. Stock unit payments will be subject to applicable tax withholding in accordance with the applicable award terms and conditions. Any stock unit that remained unvested as of the Separation Date (and is not to vest on January 1, 2020) after giving effect to the acceleration contemplated by the preceding provisions of
|
F.
|
Performance Stock Units. Executive’s Western Digital performance stock units (“PSUs”) granted on September 17, 2015 that were outstanding and unvested as of the Separation Date shall vest and become payable with respect to the number of stock units previously credited with respect to the award by the Compensation Committee of the Board of Directors of Western Digital in the ordinary course (as well as any accrued dividend equivalents thereon, to the extent applicable), in accordance with each applicable Notice of Grant of Performance Stock Units and Performance Stock Unit Award Agreement – Executives and Standard Terms and Conditions for Performance Stock Unit Awards – Executives. In addition, Executive’s PSUs granted on August 2, 2017 that were outstanding and unvested as of the Separation Date shall vest and become payable at the target number of stock units subject to the award (as well as any accrued dividend equivalents thereon, to the extent applicable) in accordance with the applicable Notice of Grant of Stock Units and Performance Stock Unit Award Agreement – Executives and Standard Terms and Conditions for Performance Stock Unit Awards – Executives. In addition, Executive’s PSUs granted on August 30, 2018 that were outstanding and unvested on the Separation Date shall be prorated and will become vested and payable on August 30, 2021 (the scheduled vesting date) with respect to the number of stock units credited by the Compensation Committee of the Board of Directors of Western Digital in the ordinary course (as well as any accrued dividend equivalents thereon, to the extent applicable), and prorated as referenced above, in accordance with the Notice of Grant of Performance Stock Units and Performance Stock Unit Award Agreement (for each Financial and TSR Measures) and Standard Terms and Conditions for Performance Stock Unit Award (for each Financial and TSR Measures). All outstanding PSUs held by the Executive shall continue to accrue dividends until such PSUs are paid and settled. PSU payments will be subject to applicable tax withholding in accordance with the applicable award terms and conditions. Any PSUs that remained unvested as of the Separation Date (and are not to vest on August 30, 2021) after giving effect to the acceleration contemplated by the preceding provisions of this Section 2(a).F terminated as of the Separation Date and Executive shall have no further right with respect thereto or in respect thereof.
|
G.
|
Outplacement Services. Executive shall receive Tier I Executive Outplacement Services for a period of twelve (12) months to be provided by a vendor approved by Western Digital, at Western Digital’s sole discretion, for the use of Executive only (“Outplacement Services”). These services are not transferable or assignable to any other person. Executive is not entitled to the cash value of these services, which must be commenced within 30 days of the Separation Date. If tax withholding is required with respect to the Outplacement Services, Executive will make arrangements satisfactory to Western Digital to satisfy such withholding obligations.
|
H.
|
Insurance and Indemnification. For matters related to Executive’s tenure with Western Digital, Executive shall continue to be (a) an insured person under Western Digital’s Director and Officer Insurance Policy and (b) entitled to indemnification from Western Digital to the greatest extent permitted by law.
|
I.
|
Notwithstanding anything to the contrary herein or in any other plan, agreement or arrangement, Executive shall not be entitled to any further additional or continued vesting as to any stock option, stock unit, PSU or other equity or equity-based award on or following the Separation Date except as expressly provided in Sections 2(a).D-F above, and the
|
A.
|
Executive understands and agrees that, by signing this Agreement, in exchange for the Separation Benefits that Executive will receive under Section 2(a) above, Executive is waiving, releasing and discharging, and promising not to sue, Western Digital Corporation and each and all of its divisions, subsidiaries, parents, predecessors, successors, assigns, and affiliated or related corporations and entities, past and present, including but not limited to Western Digital Technologies, Inc., Western Digital (Fremont), LLC, WD Media, LLC, and HGST, Inc., as well as each and all of its and their owners, trustees, officers, directors, managers, shareholders, members, partners, administrators, fiduciaries, representatives, attorneys, assignees, successors, insurers, benefit plans, agents and employees, past and present, and each of them (collectively, “Released Parties”), from and with respect to any and all claims, wages, demands, actions, class actions, rights, liens, agreements, contracts, covenants, suits, causes of action, charges, grievances, obligations, debts, costs, expenses, penalties, attorneys’ fees, damages, judgments, orders and liabilities of any kind, known or unknown, suspected or unsuspected, and whether or not concealed or hidden, arising out of or in any way connected with Executive’s employment relationship with, or the termination of Executive’s employment with, any of the Released Parties, including but in no way limited to, any act or omission committed or omitted prior to the date of execution of this Agreement. This general release of claims includes, but is in no way limited to, any and all wage and hour claims, claims for wrongful discharge, breach of contract, violation of public policy, tort, or violation of any statute, constitution or regulation, including but not limited to any claim under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, as amended (“ADEA”), the Employee Retirement Income Security Act of 1974 (“ERISA”), the Americans with Disabilities Act of 1990, the Older Workers Benefits Protection Act (“OWBPA”), the Fair Labor Standards Act (“FLSA”), the federal Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) and Cal-COBRA, the Immigration and Nationality Act section 1324a, the federal Worker Adjustment and Retraining Notification Act (“WARN”), California WARN Labor Code sections 1400 et seq., the California Fair
|
B.
|
The foregoing release does not extend to Executive’s right to receive (i) any vested rights or benefits under the terms of any “employee benefit plan,” as defined in Section 3(3) of ERISA or any Western Digital nonqualified deferred compensation plan; (ii) Executive’s vested rights, if any, under any stock option grant or stock award pursuant to the terms of such grant agreement or applicable equity award plan; (iii) indemnification under California Labor Code § 2802 California Corporations Code §317, Western Digital’s by-laws, any indemnification agreement between Western Digital and Executive, or any other federal or state statute, law, regulation or provision that confers upon Executive a right to defense or indemnification arising out of the services he performed for Western Digital or any of the Releasees; (iv) the payments and benefits set forth in this Agreement; or (v) any other rights or claims under applicable federal, state or local law that cannot be waived or released by private agreement as a matter of law. Executive understands that nothing in the release shall preclude Executive from filing a claim for unemployment or workers compensation insurance. Executive further understands that nothing in this Release or Agreement, including the provisions addressing General Release by Executive, Litigation and Investigation Cooperation, and/or confidentiality obligations, is intended to or shall limit, prevent, impede or interfere with Executive’s participation in government investigations, testifying in proceedings brought by a government agency regarding the Company’s past or future conduct, or voluntarily communicating, without prior notice to or approval by the Company, with the government (including, but not limited to, government agencies such as the Securities and Exchange Commission, Equal Employment Opportunity Commission, and the National Labor Relations Board) about a potential violation of law or regulation. Notwithstanding the above, unless otherwise prohibited by law, by signing this Agreement, Executive expressly acknowledges and agrees to release and waive any right to claim or recover, and will not accept, any form of monetary or other damages or any other form of relief from Western Digital in connection with any charge, complaint, or lawsuit filed by Executive or by anyone else on Executive’s behalf, for any released claims.
|
C.
|
This general release applies to claims or rights that Executive may possess either individually or as a class member, and Executive waives and releases any right to participate in or receive money or benefits from any class action settlement or judgment after the date this Agreement is signed that relates in any way to Executive’s employment with Western Digital.
|
D.
|
This general release is binding on Executive’s heirs, family members, dependents, beneficiaries, executors, administrators, successors and assigns.
|
E.
|
The obligations stated in this general release are intended as full and complete satisfaction of any and all claims the Executive has now or has had in the past. By signing this general release, Executive specifically represents that Executive has made reasonable effort to become fully apprised of the nature and consequences of this general release, and that Executive understands that if any facts with respect to any matter covered by this release are found to
|
F.
|
Executive represents and warrants that neither Medicare nor Medicaid has made any payment for medical services or items pursuant to 42 U.S.C. § 1395y and the corresponding regulations, or otherwise, relating to the Released Matter. “Released Matter” means any released accident, occurrence, injury, illness, disease, loss, claim, demand, damages, or matter that is subject to this Agreement and the releases herein. Executive acknowledges and agrees that neither Western Digital nor any of the Released Parties has any obligation or responsibility to reimburse Medicare, Medicaid, the Centers for Medicare and Medicaid Services, or any other entity or person for any past or future injury related medical expenses that have arisen or may hereafter arise out or relate in any way to the Released Matters. Executive acknowledges and agrees that it is Executive’s responsibility alone to reimburse such entities for any payments made on their behalf for such past or future medical expenses, if any, and Executive agrees to indemnify and hold harmless Western Digital and the Released Parties from any and all claims, demands, liens, subrogated interests and/or causes of action of any nature or character that have been or may in the future be asserted by Medicare and/or Medicaid and/or persons acting on behalf of Medicare and/or Medicaid concerning medical, hospital, or other expenses arising of the Released Matters, or concerning any claim based on inaccurate or inadequate information provided by Executive concerning Executive’s status as a Medicare or Medicaid beneficiary.
|
G.
|
Executive promises not to pursue any claim that Executive has settled by this release. If Executive breaks this promise, Executive agrees to pay all of Western Digital’s costs and expenses (including reasonable attorneys’ fees) related to the defense of any claims. Executive understands that nothing in this Agreement shall be deemed to preclude Executive from challenging the knowing and voluntary nature of this release before a court or the Equal Employment Opportunity Commission (“EEOC”), or from filing a charge with the EEOC, the National Labor Relations Board, or any other federal, state or local agency charged with the enforcement of any employment laws. Executive expressly acknowledges and agrees, however, that, by signing this release, Executive is waiving the right to, and will not accept, any form of monetary or other damages or any other form of relief from Western Digital based on claims asserted in such a charge or complaint.
|
15.
|
Non-Disparagement. Executive agrees that Executive shall not (a) directly or indirectly, make or ratify any statement, public or private, oral or written, to any person that disparages, either professionally or personally, Western Digital, as well as its directors, officers, and employees, past and present, and each of them, in each such case in his or her capacity as a service provider to Western Digital, or (b) make any statement or engage in any conduct that has the purpose of materially disrupting the business of Western Digital. Western Digital agrees that it shall direct its current Board of Directors (for such time as they remain on the Board of Directors) its current Executive Officers
|
A.
|
Provided that Executive has exhausted the claims and appeals procedure of the Plan with respect to any claim for benefits or for breach of fiduciary duty, any dispute regarding Executive’s employment with Western Digital or termination of such employment, and any
|
B.
|
In the event that an enforceable Western Digital Dispute Resolution Agreement between Executive and Western Digital does not exist, and provided that Executive has exhausted the claims and appeals procedure previously mentioned in this paragraph with respect to any claims for benefits or for breach of fiduciary duty, the following shall apply: Any dispute regarding Executive’s employment with Western Digital or its termination, and any aspect of this Agreement (including but not limited to the enforceability, unconscionability, interpretation, construction, or breach of this Agreement, except as expressly provided otherwise herein) shall be settled by final and binding arbitration before a single arbitrator in the county in which Executive worked in accordance with the JAMS Employment Arbitration Rules and Procedures (“Rules”) as the exclusive remedy for such dispute, and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. A copy of the Rules can be found at: http://www.jamsadr.com/rules-employment-arbitration. The arbitration proceedings do not provide for jury trials, but for a hearing before one independent, neutral arbitrator. Therefore, in agreeing to arbitrate claims, both Executive and Western Digital and its affiliates are waiving a trial or hearing before a jury. Any claim shall be brought in the parties’ individual capacity, and not as a plaintiff or class member in any purported or actual class or collective action proceeding, and accordingly Executive waives all purported and actual class and collective action claims, unless applicable law prohibits such waiver, which itself, notwithstanding the foregoing, shall be a question for a court of competent jurisdiction to resolve. In the event of (1) a California Private Attorney General Action claim; (2) a purported or actual class or collective action claim determined to be non-waivable pursuant to applicable law; or (3) any claim determined to be non-arbitrable pursuant to applicable law, such claim(s) shall be brought as a civil action and the parties shall seek such civil action to be stayed pending resolution of all arbitrable claims in arbitration.
|
C.
|
This arbitration provision shall be viewed as a post-employment agreement, with both Executive and Western Digital splitting equally any fees of the arbitrator and JAMS.
|
(a) If to WD or SanDisk:
Western Digital Corporation
951 SanDisk Drive
Milpitas, CA 95035 USA
Telephone: (408) 801-1000
E-mail: [***]
Attention: Executive Vice President, Silicon Technology
|
With a copy to:
Western Digital Corporation
5601 Great Oaks Parkway
San Jose, CA 95119
Telephone: (408) 717-6000
E-mail: [***]
Attention: Chief Legal Officer
|
(b) If to TMC :
Toshiba Memory Corporation
1-21, Shibaura 3-Chome,
Minato-ku, Tokyo 108-0023 Japan
Telephone: [***]
E-mail: [***]
Attention: Executive Vice President
and Chief Operating Officer
|
With a copy to:
Toshiba Memory Corporation
1-21, Shibaura 3-Chome,
Minato-ku, Tokyo 108-0023 Japan
Telephone: [***]
E-mail: [***]
Attention: Executive Officer, General Manager, Legal Affairs Division
|
(c) If to TMI :
Toshiba Memory Iwate Corporation
6-6, Kita-kogyodanchi, Kitakami-shi,
Iwate 024-8510 Japan
Telephone: [***]
E-mail: [***]
Attention: President and Chief Executive Officer
|
With a copy to:
Toshiba Memory Corporation
1-21, Shibaura 3-Chome,
Minato-ku, Tokyo 108-0023 Japan
Telephone: [***]
E-mail: [***]
Attention: Executive Officer, General Manager, Legal Affairs Division
|
(d) If to any of the JVs, then to each of the addressees at (a) and (b) above.
|
WESTERN DIGITAL CORPORATION
|
TOSHIBA MEMORY CORPORATION
|
By: /s/ Siva Sivaram
Name: Siva Sivaram
Title: Executive Vice President, Silicon Technology
|
By: /s/ Yasuo Naruke
Name: Yasuo Naruke
Title: President and Chief Executive Officer
|
SANDISK LLC
|
TOSHIBA MEMORY IWATE CORPORATION
|
By: /s/ Siva Sivaram
Name: Siva Sivaram
Title: Chief Executive Officer
|
By: /s/ Akimichi Yonekura
Name: Akimichi Yonekura
Title: President and Chief Executive Officer
|
SANDISK (CAYMAN) LIMITED
|
FLASH PARTNERS, LTD.
|
By: /s/ Stephanie Wells
Name: Stephanie Wells
Title: Director
|
By: /s/ Shinichi Nitta
Name: Shinichi Nitta
Title: President and Chief Executive Officer
|
SANDISK (IRELAND) LIMITED
|
FLASH ALLIANCE, LTD.
|
By: /s/ Stephanie Wells
Name: Stephanie Wells
Title: Director
|
By: /s/ Shinichi Nitta
Name: Shinichi Nitta
Title: President and Chief Executive Officer
|
SANDISK FLASH B.V.
|
FLASH FORWARD, LTD.
|
By: /s/ Stephanie Wells
Name: Stephanie Wells
Title: Director
|
By: /s/ Shinichi Nitta
Name: Shinichi Nitta
Title: President and Chief Executive Officer
|
i.
|
more than 50% of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are, or
|
ii.
|
which does not have outstanding shares or securities (as may be the case in a partnership, joint venture or unincorporated association), but more than 50% of whose ownership interest representing the right to make decisions (equivalent to those generally reserved for the board of directors of a corporation) for such other Person is,
|
1.
|
FRAMEWORK
|
1.1
|
New Y2 Production Framework 2
|
1.2
|
Other Activities 2
|
1.3
|
FFL as Primary Investment Vehicle 2
|
1.4
|
Former JV Capacity 2
|
2.
|
K1 FACILITY AND CONSTRUCTION 5
|
2.1
|
Purpose of K1 5
|
2.2
|
First JV Wafer Out 5
|
2.3
|
Rights and Responsibilities in Construction 5
|
2.4
|
Phases of Construction 6
|
2.5
|
Construction Costs and Related Costs 6
|
2.6
|
Incentives 7
|
2.7
|
Insurance 7
|
3.
|
PRODUCTS; RIGHTS TO CLEANROOM SPACE; TOOLS 7
|
3.1
|
BiCS Products 7
|
3.2
|
Rights to Cleanroom Space 8
|
3.3
|
Tool Acquisition, Usage and Layout 9
|
3.4
|
NAND Flash Memory Products 10
|
4.
|
RAMP-UP PROCESS 10
|
4.1
|
K1 Minimum Commitment 10
|
4.2
|
Existing Facility BiCS Expansion 11
|
4.3
|
Other Facility Expansions 12
|
4.4
|
BiCS Conversions and BiCS Technology Transitions 13
|
4.5
|
Failure to Invest 13
|
4.6
|
Prior Agreement 14
|
4.7
|
Adjustment Payment 14
|
4.8
|
[***] and K1 Capacity Transfers 14
|
5.
|
BiCS PRODUCTS PRIORITY 24
|
5.1
|
[***] 24
|
5.2
|
[***] 24
|
5.3
|
JV Manufacturing Source 24
|
5.4
|
Prior Agreement 25
|
6.
|
K1 OPERATING COMMITTEE 25
|
6.1
|
Committee Purpose and Authority 25
|
6.2
|
Parent Party Representatives 25
|
6.3
|
Committee Meetings 25
|
6.4
|
Dispute Resolution 26
|
7.
|
ENGINEERS AND HEADCOUNT PLAN 26
|
7.1
|
K1 JV Engineers; Personnel 26
|
7.2
|
K1 JV Headcount Plan 26
|
7.3
|
Staffing 26
|
7.4
|
Integration; Headcount Working Group 27
|
7.5
|
WD Team 27
|
7.6
|
Indemnification 28
|
7.7
|
Other Personnel 28
|
8.
|
MANUFACTURING COSTS 29
|
8.1
|
K1 Manufacturing Costs 29
|
8.2
|
K1 Manufacturing Cost Allocation Framework 30
|
8.3
|
K1 Manufacturing Cost Allocation Methodology 30
|
8.4
|
K1 Product Manufacturing Costs 30
|
8.5
|
Accounting and Cost Methodology 30
|
8.6
|
No Duplication of Costs or Expenses 31
|
8.7
|
Masks and Probe Cards 31
|
9.
|
FOUNDRY AND PURCHASE AND SUPPLY ARRANGEMENTS 31
|
9.1
|
K1 Foundry Arrangements 31
|
9.2
|
Purchase and Supply Agreements 32
|
9.3
|
Equal Right to JV Production 32
|
9.4
|
Forecasts/Production Planning 32
|
9.5
|
K1 Product Output Allocation 32
|
9.6
|
Alternative Use of Allocated Capacity 33
|
10.
|
RESEARCH AND DEVELOPMENT 33
|
10.1
|
[***] 33
|
10.2
|
[***] 33
|
10.3
|
[***] 33
|
10.4
|
[***] 34
|
10.5
|
No Change to Common R&D 34
|
11.
|
K1 INFORMATION AND DATA SHARING 34
|
11.1
|
Management and Operating Reports 34
|
11.2
|
Production Control; Access to K1 Data 34
|
11.3
|
Engineering Wafers 35
|
11.4
|
Unilateral Capacity Data 35
|
11.5
|
[***] 35
|
12.
|
OTHER MODIFICATIONS TO CERTAIN MASTER OPERATIVE DOCUMENTS 35
|
12.1
|
JV Master Agreements 35
|
12.2
|
JV Operating Agreements 37
|
12.3
|
JV Foundry Agreements 37
|
12.4
|
JV Purchase and Supply Agreements 39
|
12.5
|
JV Lease Agreements 40
|
12.6
|
Information Security Agreement 42
|
12.7
|
Undertaking 42
|
12.8
|
Settlement Agreement 42
|
12.9
|
ISCO Supplement 42
|
13.
|
CONFIDENTIALITY AND DISCLOSURE 42
|
13.1
|
Public Announcements 42
|
13.2
|
Non-Disclosure Obligations 42
|
13.3
|
Ownership and Return of Information 44
|
14.
|
TERM AND TERMINATION 44
|
14.1
|
Term 44
|
14.2
|
Termination 44
|
14.3
|
Termination for Material Breach 44
|
14.4
|
Termination in Good Faith 45
|
14.5
|
Survival 45
|
14.6
|
Effect on Other Collaborations 46
|
15.
|
REPRESENTATIONS AND WARRANTIES 46
|
15.1
|
Organization and Standing 46
|
15.2
|
Authority; Enforceability 46
|
15.3
|
No Conflict 46
|
15.4
|
Proceedings 46
|
15.5
|
Litigation; Decrees 47
|
15.6
|
Compliance with Other Instruments 47
|
15.7
|
Patents and Proprietary Rights 47
|
15.8
|
Compliance with Laws 48
|
15.9
|
Patent Cross Licenses 48
|
16.
|
MISCELLANEOUS 48
|
16.1
|
Entire Agreement 48
|
16.2
|
Undertaking as to Affiliate Obligations 48
|
16.3
|
Governing Law 48
|
16.4
|
Dispute Resolution; Arbitration 49
|
16.5
|
Remedies 49
|
16.6
|
Relationship of the Parties 49
|
16.7
|
Official Language 50
|
16.8
|
No Implied Licenses 50
|
16.9
|
Export Laws 50
|
16.10
|
Definitions; Interpretation 50
|
16.11
|
Notices and Contact Information 51
|
16.12
|
Assignment 53
|
16.13
|
Amendment and Waiver 53
|
16.14
|
Severability 53
|
16.15
|
Counterparts; Effectiveness 53
|
Name of Entity
|
|
State or Other Jurisdiction of Incorporation or Organization
|
Amplidata N.V.
|
|
Belgium
|
Amplidata, Inc.
|
|
Delaware
|
EasyStore Memory Limited
|
|
Ireland
|
Fusion Multisystems Ltd.
|
|
Canada
|
Fusion-io (Beijing) Info Tech Co., Ltd
|
|
China
|
Fusion-io Holdings S.A.R.L.
|
|
Luxembourg
|
Fusion-io LLC
|
|
Delaware
|
Fusion-io Poland SP.Z.O.O.
|
|
Poland
|
Fusion-io Singapore Private Ltd
|
|
Singapore
|
HGSP (Shenzhen) Co., Ltd.
|
|
China
|
HGSP Holdco Hong Kong Limited
|
|
Hong Kong
|
HGST (Shenzhen) Co., Ltd.
|
|
China
|
HGST (Thailand) Ltd.
|
|
Thailand
|
HGST Asia Pte. Ltd.
|
|
Singapore
|
HGST Consulting (Shanghai) Co., Ltd.
|
|
China
|
HGST Europe, Ltd.
|
|
United Kingdom
|
HGST Japan, Ltd.
|
|
Japan
|
HGST Malaysia Sdn. Bhd.
|
|
Malaysia
|
HGST Netherlands B.V.
|
|
Netherlands
|
HGST Philippines Corp.
|
|
Philippines
|
HGST Singapore Pte. Ltd.
|
|
Singapore
|
HGST Technologies India Private Limited
|
|
India
|
HGST Technologies Malaysia Sdn. Bhd.
|
|
Malaysia
|
HGST, Inc.
|
|
Delaware
|
HICAP Properties Corp.
|
|
Philippines
|
Keen Personal Media, Inc.
|
|
Delaware
|
Pacifica Insurance Corporation
|
|
Hawaii
|
Prestadora SD, S. de R.L. de C.V.
|
|
Mexico
|
Read-Rite Philippines, Inc.
|
|
Philippines
|
Rising Silicon Inc.
|
|
Texas
|
Sandbox Expansion LLC
|
|
Delaware
|
SanDisk (Cayman) Limited
|
|
Cayman Islands
|
SanDisk (Ireland) Limited
|
|
Ireland
|
SanDisk 3D IP Holdings Ltd
|
|
Cayman Islands
|
SanDisk 3D LLC
|
|
Delaware
|
SanDisk B.V.
|
|
Netherlands
|
SanDisk Bermuda Limited
|
|
Bermuda
|
SanDisk Bermuda Unlimited
|
|
Bermuda
|
SanDisk BiCS IP Holdings Ltd
|
|
Cayman Islands
|
SanDisk Brasil Participações Ltda.
|
|
Brazil
|
SanDisk C.V.
|
|
Netherlands
|
SanDisk China Limited
|
|
Ireland
|
SanDisk China LLC
|
|
Delaware
|
Name of Entity
|
|
State or Other Jurisdiction of Incorporation or Organization
|
SanDisk Enterprise IP LLC
|
|
Texas
|
SanDisk Equipment Y.K.
|
|
Japan
|
SanDisk Flash B.V.
|
|
Netherlands
|
SanDisk France SAS
|
|
France
|
SanDisk G.K.
|
|
Japan
|
SanDisk GmbH
|
|
Germany
|
SanDisk Holding B.V.
|
|
Netherlands
|
SanDisk Holdings LLC
|
|
Delaware
|
SanDisk Hong Kong Limited
|
|
Hong Kong
|
SanDisk IL Ltd.
|
|
Israel
|
SanDisk India Device Design Centre Private Limited
|
|
India
|
SanDisk Information Technology (Shanghai) Co. Ltd.
|
|
China
|
SanDisk International Holdco B.V.
|
|
Netherlands
|
SanDisk International Limited
|
|
Ireland
|
SanDisk International Middle East FZE
|
|
United Arab Emirates
|
SanDisk Italy S.R.L.
|
|
Italy
|
SanDisk Korea Limited
|
|
Korea
|
SanDisk Latin America Holdings LLC
|
|
Delaware
|
SanDisk LLC
|
|
Delaware
|
SanDisk Malaysia Sdn. Bhd.
|
|
Malaysia
|
SanDisk Manufacturing Americas, LLC
|
|
Delaware
|
SanDisk Manufacturing Unlimited Company
|
|
Ireland
|
SanDisk Operations Holdings Limited
|
|
Ireland
|
SanDisk Pazarlama Ve Ticaret Limited Sirketi
|
|
Turkey
|
SanDisk Scotland, Limited
|
|
United Kingdom
|
SanDisk Semiconductor (Shanghai) Co. Ltd.
|
|
China
|
SanDisk Spain, S.L.U.
|
|
Spain
|
SanDisk Storage Malaysia Sdn. Bhd.
|
|
Malaysia
|
SanDisk Sweden AB
|
|
Sweden
|
SanDisk Switzerland Sarl
|
|
Switzerland
|
SanDisk Taiwan Limited
|
|
Taiwan
|
SanDisk Technologies LLC
|
|
Texas
|
SanDisk Trading (Shanghai) Co. Ltd.
|
|
China
|
SanDisk Trading Holdings Limited
|
|
Ireland
|
SanDisk UK, Limited
|
|
United Kingdom
|
SanDisk, Limited
|
|
Japan
|
SD International Holdings Ltd.
|
|
Cayman Islands
|
Shenzhen Hailiang Storage Products Co., Ltd.
|
|
China
|
SMART Storage Systems GmbH
|
|
Austria
|
STEC Bermuda, LP
|
|
Bermuda
|
STEC Europe B.V.
|
|
Netherlands
|
STEC Germany GmbH
|
|
Germany
|
STEC Hong Kong Ltd.
|
|
Hong Kong
|
Name of Entity
|
|
State or Other Jurisdiction of Incorporation or Organization
|
STEC International Holding, Inc.
|
|
California
|
STEC Italy SRL
|
|
Italy
|
STEC R&D Ltd.
|
|
Cayman Islands
|
Suntech Realty, Inc.
|
|
Philippines
|
Tegile Systems Private Limited
|
|
India
|
Virident Systems International Holdings Ltd.
|
|
Cayman Islands
|
Virident Systems, LLC
|
|
Delaware
|
Viviti Technologies Pte. Ltd.
|
|
Singapore
|
WD Media (Malaysia) Sdn.
|
|
Malaysia
|
WD Media (Singapore) Pte. Ltd.
|
|
Singapore
|
Western Digital (Argentina) S.A.
|
|
Argentina
|
Western Digital (France) SARL
|
|
France
|
Western Digital (Fremont), LLC
|
|
Delaware
|
Western Digital (I.S.) Limited
|
|
Ireland
|
Western Digital (Malaysia) Sdn. Bhd.
|
|
Malaysia
|
Western Digital (S.E. Asia) Pte Ltd
|
|
Singapore
|
Western Digital (Thailand) Company Limited
|
|
Thailand
|
Western Digital (UK) Limited
|
|
United Kingdom
|
Western Digital Australia Pty Ltd
|
|
Australia
|
Western Digital Canada Corporation
|
|
Ontario, Canada
|
Western Digital Capital Global, Ltd.
|
|
Cayman Islands
|
Western Digital Capital, LLC
|
|
Delaware
|
Western Digital Deutschland GmbH
|
|
Germany
|
Western Digital Do Brasil Comercio E Distribuicao De Produtos De Informatica Ltda.
|
|
Brazil
|
Western Digital Federal, LLC
|
|
Delaware
|
Western Digital Hong Kong Limited
|
|
Hong Kong
|
Western Digital Information Technology (Shanghai) Company Ltd.
|
|
China
|
Western Digital International Ltd.
|
|
Cayman Islands
|
Western Digital Ireland, Ltd.
|
|
Cayman Islands
|
Western Digital Japan Ltd.
|
|
Japan
|
Western Digital Korea, Ltd.
|
|
Korea
|
Western Digital Latin America, Inc.
|
|
Delaware
|
Western Digital Netherlands B.V.
|
|
Netherlands
|
Western Digital Taiwan Co., Ltd.
|
|
Taiwan
|
Western Digital Tech and Regional Center (M) Sdn. Bhd.
|
|
Malaysia
|
Western Digital Technologies, Inc.
|
|
Delaware
|
|
/s/ STEPHEN D. MILLIGAN
|
|
Stephen D. Milligan
|
|
Chief Executive Officer
|
|
/s/ ROBERT K. EULAU
|
|
Robert K. Eulau
|
|
Chief Financial Officer and Chief Accounting Officer
|
|
/s/ STEPHEN D. MILLIGAN
|
|
Stephen D. Milligan
|
|
Chief Executive Officer
|
|
/s/ ROBERT K. EULAU
|
|
Robert K. Eulau
|
|
Chief Financial Officer and Chief Accounting Officer
|