Supplemental Financial Statement Data

3 Months Ended

Oct. 03, 2025

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Supplemental Financial Statement Data

Supplemental Financial Statement Data

Goodwill

The following table provides a summary of goodwill activity for the period presented:

	Goodwill
	(in millions)
Balance at June 27, 2025	$	4,999
Impairment charges	—
Foreign currency translation adjustment	(1)
Balance at October 3, 2025	$	4,998

Goodwill attributed to the Company represents the historical goodwill balances in WDC’s business arising from acquisitions specific to the Company.

The Company determined that its single operating segment was also its single reporting unit. Goodwill is not amortized. Instead, it is tested for impairment annually as of the beginning of the Company’s fourth quarter or more frequently if events or changes in circumstances indicate that goodwill may be impaired.

For the three months ended October 3, 2025 and September 27, 2024, the Company recorded no impairment charges.

Accounts receivable, net

From time to time, in connection with factoring agreements, WDC sold certain of the Company’s trade accounts receivable without recourse to third-party purchasers in exchange for cash. During the three months ended October 3, 2025, there were no trade accounts receivable sold by the Company. During the three months ended September 27, 2024, there were no trade accounts receivable sold by WDC. There were no factored receivables outstanding as of October 3, 2025 and June 27, 2025.

Inventories

	October 3, 2025		June 27, 2025
	(in millions)
Inventories:
Raw materials and component parts	$	1,289	$	1,517
Work-in-process	255		262
Finished goods	363		300
Total inventories	$	1,907	$	2,079

Property, plant and equipment, net

	October 3, 2025		June 27, 2025
	(in millions)
Property, plant and equipment:
Land	$	10	$	10
Machinery and equipment	1,499		1,480
Buildings and improvements	393		390
Computer equipment and software	182		176
Furniture and fixtures	18		18
Construction-in-process	58		51
Property, plant and equipment, gross	2,160		2,125
Accumulated depreciation	(1,530)		(1,506)
Property, plant and equipment, net	$	630	$	619

Product warranty liability

Changes in the warranty accrual were as follows:

	October 3, 2025
	(in millions)
Warranty accrual, beginning of period	$	44
Charges to operations	14
Utilization	(8)
Changes in estimate related to pre-existing warranties	4
Warranty accrual, end of period	$	54

The current portion of the warranty accrual was classified in Accrued expenses and the long-term portion was classified in Other liabilities as noted below:

	October 3, 2025		June 27, 2025
	(in millions)
Warranty accrual:
Current portion	$	26	$	22
Long-term portion	28		22
Total warranty accrual	$	54	$	44

Other liabilities

	October 3, 2025		June 27, 2025
	(in millions)
Other liabilities:
Non-current lease liability	$	188	$	193
Non-current net tax payable	112		131
Tax indemnification liability	125		110
Other non-current liabilities	68		62
Total other liabilities	$	493	$	496

In connection with the separation, the Company recorded a $112 million liability to indemnify WDC as a result of the Tax Matters Agreement entered into between the parties in connection with the separation. The indemnification pertains to certain WDC tax positions where the underlying issues are determined to be related to the Company’s business before the spin-off. As WDC receives tax assessments, settles with tax authorities, or when the statute of limitation lapses, the indemnification liabilities will be reassessed and adjusted accordingly. The outstanding balance of the liability as of October 3, 2025 was $125 million.

Accumulated other comprehensive loss

Accumulated other comprehensive loss (“AOCL”), net of tax, refers to expenses, gains, and losses that are recorded as an element of equity but are excluded from net income. The components of AOCL were as follows:

	Foreign Currency Translation Adjustment		Unrealized Income (Losses) on Derivative Contracts		Total Accumulated Comprehensive Loss
	(in millions)
Balance at June 27, 2025	$	(202)	$	(47)	$	(249)
Other comprehensive income (loss)	(14)		39		25
Income tax expense related to items of other comprehensive income	—		(10)		(10)
Net current-period other comprehensive income (loss)	(14)		29		15
Balance at October 3, 2025	$	(216)	$	(18)	$	(234)

As of October 3, 2025, substantially all existing net losses related to cash flow hedges recorded in AOCL are expected to be reclassified to earnings within the next twelve months.