
	Goodwill
	(in millions)
Balance at June 27, 2025	$	4,999

Impairment charges	—
Foreign currency translation adjustment	(5)
Balance at April 3, 2026	$	4,994

Goodwill represents the historical goodwill balances arising from acquisitions specific to the Company prior to the spin-off from WDC.

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.

During the three and nine months ended March 28, 2025, the Company identified potential impairment indicators related to macroeconomic indicators, industry developments, the trading price of the Company’s common stock and resulting market capitalization that warranted a quantitative impairment analysis of long-lived assets and goodwill.

In accordance with FASB ASC No. 360, “Property, Plant, and Equipment,” the Company performed a recoverability test at the asset group level, which was determined to be equivalent to its reporting unit to assess potential impairments of long-lived assets comprised of property, plant and equipment. The results of the recoverability test showed that the estimated undiscounted net cash flows to be generated from the use and eventual disposition of the Company’s long-lived assets exceeded its net carrying value. As a result, no write-down of depreciable long-lived assets was recognized as of March 28, 2025.

In accordance with ASC No. 350, “Intangibles - Goodwill and Other,” the Company performed a quantitative test by measuring the fair value of its reporting unit based on a weighting of two valuation methodologies: an income approach and a market approach.

The income approach valued the projected discounted cash flows that are expected to be generated by the Company’s reporting unit and required judgments and estimates surrounding general economic conditions and company-specific performance inputs such as revenue growth rates, gross margins, operating costs, capital expenditures, assumed tax rates and other assumptions deemed reasonable by management.

The market approach valued the reporting unit based on financial performance and market multiples of comparable public companies, including consideration of a control premium representing the estimated amount a market participant would pay to obtain a controlling interest in the Company.

The results of the quantitative test indicated that the carrying value of our reporting unit exceeded its estimated fair value, resulting in the recognition of a $1.8 billion goodwill impairment charge as of, and for the period ended, March 28, 2025, which was recorded in the accompanying Condensed Consolidated Statements of Operations.

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 and nine months ended April 3, 2026, there were no trade accounts receivable sold by the Company. During the three and nine months ended March 28, 2025, there were no trade accounts receivable sold by the Company. There were no factored receivables outstanding as of April 3, 2026 or June 27, 2025.


	April 3, 2026		June 27, 2025
	(in millions)
Inventories:
Raw materials and component parts	$	1,492	$	1,517
Work-in-process	332		262
Finished goods	414		300
Total inventories	$	2,238	$	2,079


	April 3, 2026		June 27, 2025
	(in millions)
Property, plant and equipment:
Land	$	10	$	10
Machinery and equipment	1,522		1,480
Buildings and improvements	395		390
Computer equipment and software	168		176
Furniture and fixtures	17		18
Construction-in-process	60		51
Property, plant and equipment, gross	2,172		2,125
Accumulated depreciation	(1,523)		(1,506)
Property, plant and equipment, net	$	649	$	619

Changes in the warranty accrual were as follows:



	Product Warranty Liability
	(in millions)
Balance at June 27, 2025	$	44
Charges to operations	54
Utilization	(21)
Changes in estimate related to pre-existing warranties	(4)
Balance at April 3, 2026	$	73

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:


	April 3, 2026		June 27, 2025
	(in millions)
Warranty accrual:
Current portion	$	35	$	22
Long-term portion	38		22
Total warranty accrual	$	73	$	44


	April 3, 2026		June 27, 2025
	(in millions)
Other liabilities:
Non-current lease liability	$	182	$	193
Tax indemnification liability	131		110
Other non-current liabilities	80		62
Total other liabilities	$	393	$	365

In connection with, and at the time of, 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 limitations lapses, the indemnification liabilities will be reassessed and adjusted accordingly. The outstanding balance of the liability as of April 3, 2026 was $131 million.

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 (loss). 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)	(51)		54		3
Income tax expense related to items of other comprehensive income	—		(13)		(13)
Net current-period other comprehensive income (loss)	(51)		41		(10)

Balance at April 3, 2026	$	(253)	$	(6)	$	(259)

During the three and nine months ended April 3, 2026, the amounts reclassified out of AOCL were losses related to foreign exchange contracts, substantially all of which were charged to Cost of revenue in the Condensed Consolidated Statements of Operations.

As of April 3, 2026, 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.