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Related Parties and Related Commitments and Contingencies (Tables)

6 Months Ended

Dec. 27, 2024

Commitments and Contingencies Disclosure [Abstract]

The following table presents the notes receivable from, and equity investments in, Flash Ventures for the periods presented:


	December 27, 2024		June 28, 2024
	(in millions)
Notes receivable, Flash Partners	$	72	$	1
Notes receivable, Flash Alliance	35		5
Notes receivable, Flash Forward	476		485
Investment in Flash Partners	41		148
Investment in Flash Alliance	118		219
Investment in Flash Forward	129		143
Total notes receivable and investments in Flash Ventures	$	871	$	1,001

The following presents a summary of the outstanding borrowings between the Company and subsidiaries of WDC for the periods presented, inclusive of any associated interest payable or interest receivable:


	Interest Rate	December 27, 2024		June 28, 2024
		(in millions)
Notes due from Parent
Revolving Credit Agreement due from Parent $101M - Oct. 3, 2019	AFR Rate (USD) or TIBOR + .35% (YEN)	$	—	$	(102)
Total Notes due from Parent		—		(102)
Notes due to Parent
Revolving Credit Agreement due to Parent $1B - Sep. 27, 2024	SOFR + 1.6%	553		—
Notes due to Parent $500M - Nov. 25, 2014	1-year swap + 2%	—		475
Notes Due to Parent $42B Yen - Apr. 29, 2014	TIBOR + .35%	—		262
Revolving Credit Agreement due to Parent $100M - Aug. 20, 2021	LIBOR Rate + 150 basis points	—		77
Total Notes due to Parent		553		814
	Total Notes due to Parent, net	$	553	$	712

The following presents interest expense and interest income on notes due to (from) Parent, which have been recorded within Interest expense and Interest income in the Condensed Combined Statements of Operations for the periods presented:


	Three Months Ended				Six Months Ended
	December 27, 2024		December 29, 2023		December 27, 2024		December 29, 2023
	(in millions)
Interest expense on notes due to Parent	$	2	$	9	$	4	$	20
Interest income on notes due from Parent	$	—	$	(1)	$	(1)	$	(3)

The table below summarizes the impact of expense allocations from WDC within the Condensed Combined Statements of Operations for the periods presented:


	Three Months Ended				Six Months Ended
	December 27, 2024		December 29, 2023		December 27, 2024		December 29, 2023
	(in millions)
Research and development	$	2	$	161	$	189	$	330
Selling general, and administrative	35		107		148		219
Business separation costs	21		34		41		34
Employee termination and other charges	3		13		5		(46)
Total allocation of Corporate Expenses	$	61	$	315	$	383	$	537

A reconciliation of Net transfers from (to) Parent on the Condensed Combined Statements of Changes in Parent Company Net Investment to the corresponding amounts on the Condensed Combined Statements of Cash Flows is as follows:


	Six Months Ended
	December 27, 2024		December 29, 2023
	(in millions)
Net transfers from Parent per Condensed Combined Statements of Changes in Parent Company Net Investment	$	491	$	171
Liability for unrecognized tax benefits transferred from Parent	14		—
Accumulated other comprehensive loss transferred from Parent	6		—
Strategic investments transferred from Parent	(7)		—
Other assets and liabilities, net transferred from Parent	(37)		—
Property, plant and equipment, net transferred from Parent	(25)		(2)
Notes due to Parent transferred from Parent	(673)		—
Notes due from Parent transferred to Parent	—		113
Deferred taxes, net transferred from Parent	—		(8)
Net transfers from (to) Parent per Condensed Combined Statements of Cash Flows	$	(231)	$	274

Schedule of Variable Interest Entities

The Company’s maximum reasonably estimable loss exposure (excluding lost profits) as a result of its involvement with Flash Ventures, based upon the Japanese yen to U.S. dollar exchange rate at December 27, 2024, is presented below. Investments in Flash Ventures are denominated in Japanese yen, and the maximum estimable loss exposure excludes any cumulative translation adjustment due to revaluation from the Japanese yen to the U.S. dollar.


	December 27, 2024
	(in millions)
Notes receivable	$	583
Equity investments	288
Operating lease guarantees	1,343
Inventory and prepayments	1,393
Maximum estimable loss exposure	$	3,607

Schedule of Guarantor Obligations

The following table presents the Company’s portion of the remaining guarantee obligations under the Flash Ventures’ lease facilities in both Japanese yen and U.S. dollar-equivalent, based upon the Japanese yen to U.S. dollar exchange rate as of December 27, 2024:


	Lease Amounts
	(Japanese yen, in billions)		(U.S. dollar, in millions)
Total guarantee obligations	¥	212	$	1,343

The following table details the breakdown of the Company’s remaining guarantee obligations between the principal amortization and the purchase option exercise price at the end of the term of the Flash Ventures lease agreements, in annual installments, in U.S. dollars, based upon the Japanese yen to U.S. dollar exchange rate as of December 27, 2024:


Annual Installments	Payment of Principal Amortization		Purchase Option Exercise Price at Final Lease Terms		Guarantee Amount
	(in millions)
Remaining six months of 2025	$	201	$	49	$	250
2026	406		113		519
2027	198		97		295
2028	83		93		176
2029	25		50		75
2030	4		24		28
Total guarantee obligations	$	917	$	426	$	1,343

- Definition

Tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

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