Discontinued Operations

9 Months Ended

Mar. 28, 2025

Discontinued Operations and Disposal Groups [Abstract]

On October 30, 2023, the Company announced that its Board of Directors had completed its strategic review of the business and, after evaluating a comprehensive range of alternatives, authorized the Company to pursue a plan to separate its HDD and Flash business units to create two independent, public companies. In connection with the Separation, the Company has incurred separation and transition costs, which are recorded as Business separation costs within discontinued operations in the Company’s Condensed Consolidated Financial Statements as further detailed in the summary of net income (loss) from discontinued operations, net of taxes, below.

On February 21, 2025, the Company completed the previously announced separation of its Flash business (the “Separation”) through a pro rata distribution of 80.1% of the outstanding shares of Sandisk Corporation (“Sandisk”) to Western Digital stockholders. The Separation is intended to be tax-free for U.S. federal income tax purposes. To reflect the completion of the Separation, the Company recorded a decrease in shareholders’ equity for the net book value of applicable assets and liabilities derecognized in connection with the Separation, net of the Company’s retained 19.9% ownership interest, initially based on the net book value of the applicable assets and liabilities derecognized. As a result of the Separation, Sandisk became an independent public company and Western Digital no longer consolidates Sandisk into the Company’s financial results. The historical net income of Sandisk and applicable assets and liabilities included in the Separation are now reported in the Company’s Condensed Consolidated Financial Statements as discontinued operations. Following the Separation, as the Company no longer controls or has the ability to exert significant influence over Sandisk, the Company measures, at fair value on a recurring basis, its retained ownership interest in Sandisk common stock (see additional information in Note 6, Fair Value Measurements and Investments). The Company expects to monetize its stake in Sandisk within one year from the Separation date.

The Company entered into various agreements to effect the Separation and provide for the temporary framework of the relationship between Western Digital and Sandisk following the Separation, including, among others, a separation and distribution agreement, a tax matters agreement, and a transition services agreement. The transition services agreement provides for transition service support to be provided for various periods of time ranging up to 15 months. The amounts involved under these agreements are not expected to be material.

The historical results of Sandisk have been reflected as discontinued operations in the Company’s Condensed Consolidated Financial Statements for all periods prior to the Separation on February 21, 2025.

The following table provides a summary of the assets and liabilities classified as discontinued operations:


Assets and Liabilities of Discontinued Operations	June 28, 2024
	(in millions)
Assets
Cash and cash equivalents	$	328
Accounts receivable, net	935
Inventories	1,955
Other current assets	313
Current assets of discontinued operations	$	3,531
Property, plant and equipment, net	$	808
Notes receivable and investments in Flash Ventures	991
Goodwill	5,713
Other non-current assets	1,101
Non-current assets of discontinued operations	$	8,613
Liabilities
Accounts payable	$	357
Accounts payable to related parties	313
Accrued expenses	427
Income taxes payable	54
Accrued compensation	173
Current liabilities of discontinued operations	$	1,324

Non-current liabilities of discontinued operations	$	368

The following table provides a summary of net income (loss) from discontinued operations, net of taxes:


	Three Months Ended				Nine Months Ended
Net Income (Loss) from Discontinued Operations, Net of Taxes	March 28, 2025		March 29, 2024		March 28, 2025		March 29, 2024
	(in millions)
Revenue, net	$	602	$	1,705	$	4,361	$	4,926
Cost of revenue	485		1,223		2,892		4,410

Operating expenses:
Research and development	185		251		718		686
Selling, general and administrative	84		27		229		66
Gain on business divestiture	—		—		(113)		—
Business separation costs	57		23		144		59
Employee termination, asset impairment and other	—		2		3		(74)

Operating income (loss)	(209)		179		488		(221)




Total interest and other income (expense), net	1		11		(36)		4
Income (loss) before taxes	(208)		190		452		(217)
Income tax expense	44		47		236		101
Net income (loss) from discontinued operations, net of taxes	$	(252)	$	143	$	216	$	(318)

Cash flows related to discontinued operations have not been segregated and are included in the Condensed Consolidated Statements of Cash Flows for all periods presented. The following table provides selected financial information related to cash flows from discontinued operations:


	Nine Months Ended
Select Cash Flow Information from Discontinued Operations	March 28, 2025		March 29, 2024
	(in millions)
Depreciation and amortization	$	117	$	166
Purchases of property, plant and equipment	139		128
Stock-based compensation	98		71

On February 21, 2025, prior to the effective time of the Separation, Sandisk entered into a loan agreement (the “Sandisk Loan Agreement”) by and among Sandisk, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and others party thereto. The Sandisk Loan Agreement comprises a term loan B facility in the principal amount of $2 billion (the “Sandisk Term Loan Facility”) and a revolving credit facility in the principal amount of $1.5 billion (the “Sandisk Revolving Credit Facility” and together with the Sandisk Term Loan Facility, the “Sandisk Facilities”). The obligations under this facility were retained by Sandisk upon the Separation.

The Company previously had business ventures with Kioxia Corporation (“Kioxia”), which consisted of three separate legal entities: Flash Partners Ltd., Flash Alliance Ltd., and Flash Forward Ltd. The Company also previously had a business venture with Unisplendour Corporation Limited and Unissoft (Wuxi) Group Co. Ltd., both collectively referred to as the “Unis Venture.” All business ventures with Kioxia and Unis Venture were distributed to Sandisk in connection with the Separation and are included in discontinued operations.

Prior to the Separation, effective September 28, 2024, the Company sold 80% of its equity interest in an indirect wholly-owned subsidiary in its Flash business, SanDisk Semiconductor (Shanghai) Co. Ltd. (“SDSS”), resulting in a gain on divestiture of $113 million. Net proceeds from the sale received prior to the Separation were $401 million. The rights to the remaining future proceeds from the sale and the 20% retained interest in SDSS were distributed to Sandisk in connection with the Separation.