Discontinued Operations

6 Months Ended

Jan. 02, 2026

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 (as defined below), the Company 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 from discontinued operations, net of taxes, below.

On February 21, 2025, the Company completed the 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 ownership interest, which was initially 19.9% and was 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 results of operations of Sandisk are now reported in the Company’s Condensed Consolidated Financial Statements as discontinued operations for all periods prior to the Separation on February 21, 2025. 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). In June 2025, the Company disposed of 21.3 million shares of Sandisk common stock, along with $4 million in cash, in a tax-free exchange for $800 million principal amount of the Company’s Term Loan A-3 maturing in January 2027 (the “Term Loan A-3”). The Company expects to monetize its remaining stake in Sandisk to further reduce its debt 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 following table provides a summary of the historical results of Sandisk for the three and six months ended December 27, 2024 which have been reflected as Net income from discontinued operations, net of taxes in the Condensed Consolidated Statements of Operations:


	Three Months Ended		Six Months Ended
Net Income from Discontinued Operations, Net of Taxes	December 27, 2024
	(in millions)
Revenue, net	$	1,876	$	3,759
Cost of revenue	1,267		2,405

Operating expenses:
Research and development	277		534
Selling, general and administrative	106		144
Gain on business divestiture	(113)		(113)
Business separation costs	44		87
Business realignment charges	3		2

Operating income	292		700




Total interest and other expense, net	17		40
Income before taxes	275		660
Income tax expense	147		192
Net income from discontinued operations, net of taxes	$	128	$	468

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:

Six Months Ended

Select Cash Flow Information from Discontinued Operations

December 27,
2024

(in millions)

Purchases of property, plant and equipment

115

Depreciation and amortization

Stock-based compensation