WDCWestern Digital

On In the previous fiscal year, on February 21, 2025 (the “Separation Date”), 2025, we completed the separation of our HDD and Flash business units (the “Separation”) Separation to create two independent public companies, with Western Digital focusing on WD continuing our existing HDD business and Sandisk Corporation (“Sandisk”), Sandisk, formerly a wholly-owned subsidiary of the Company, holding operating the Flash business. We believe the Separation has better positions each business unit to positioned us as a pure-play HDD company that can execute innovative technology and product development, capitalize on unique growth opportunities, extend respective our leadership positions, position, operate more efficiently with distinct capital structures, efficiently, and pursue capital allocation strategies that to maximize long-term shareholder value. The Separation was effected through a pro rata distribution of 80.1% of the outstanding shares of Sandisk common stock to holders of the Company’s common stock as of February 12, 2025, the record date for the distribution. The Company did not issue fractional shares of Sandisk common stock in connection with the distribution. Sandisk is now an independent public company, and Sandisk common stock commenced trading “regular way” under the symbol “SNDK” on the Nasdaq Stock Market LLC (“Nasdaq”) on February 24, 2025, which was the next trading day following the distribution date. The Company continues to trade on Nasdaq under the symbol “WDC” following the Separation. Following the Separation, the Company no longer consolidates Sandisk within the Company’s financial results. As part of the Separation, the Company we initially retained 28.8 million shares of Sandisk common stock, or a 19.9% stake. During the quarter ended stock. In June 27, 2025, the Company disposed of we used 21.3 million shares of Sandisk common stock, along with $4 million in cash, stock in a tax-free exchange for to reduce approximately $800 million in principal amount of the Company’s our term loan A-3. The Company expects A-3 (the “Term Loan A-3”). In February 2026, we executed a series of transactions pursuant to monetize its which we used 5.8 million shares of Sandisk common stock to further reduce our debt and fully redeem our previously outstanding 4.75% senior unsecured notes due 2026, 2.85% senior notes due 2029, 3.10% senior notes due 2032 and Term Loan A-3 through a tax-free exchange. In the fourth quarter of 2026, we completed two separate equity-for-equity exchanges, which used our remaining stake in 1.7 million shares of Sandisk within one year from the Separation Date. common stock to acquire 4.8 million shares of our common stock, thereby reducing our share count. As of July 3, 2026, we no longer held shares of Sandisk common stock.

We are subject to laws, rules and regulations relating to the collection, use, security and privacy of data, including data that relates to or identifies an individual person. We are also subject to the terms of our privacy policies and obligations to third parties related to privacy, data protection and security. In many cases, these requirements apply not only to third-party transactions, but also to transfers of information between our information systems and our subsidiaries, and among us, our subsidiaries and other parties with which we have commercial relations. Our possession and use of data, including personal data and employee data in conducting our business, subjects us to legal and regulatory obligations that require us to notify vendors, customers or employees or other parties with which we have commercial relations of a data security breach and to respond to regulatory inquiries and to enforcement proceedings. Managing these notifications, especially in large volumes, can lead to significant expenses, even with cybersecurity insurance coverage. Laws and regulations relating to the collection, use, security and privacy of data change over time and new laws and regulations become effective from time to time. We are subject to notice and privacy statement requirements, as well as obligations to respond to data subject requests. Global privacy and data protection legislation, enforcement and policy activity in this area are rapidly expanding and evolving, including with respect to the use of AI, and may be inconsistent from jurisdiction to jurisdiction. We may also be subject to restrictions on cross-border data transfers and requirements for localized storage of data that could increase our compliance costs and risks and affect the ability of our global operations to coordinate activities and respond to customers and individuals. Our use of AI technology may create new privacy and security risks, especially where personal data is involved. The use of AI may raise ethical concerns, lead to flawed outcomes, or present other privacy and security risks that could make it more difficult to adopt or implement effectively. Compliance requirements or even our inadvertent failure to comply with applicable laws may cause us to incur substantial costs, subject us to proceedings by governmental entities or others, and cause us to incur penalties or other significant legal liability or lead us to change our business practices.

In August 2022, MRT filed an action against the Company, alleging infringement of certain patents related to HDD media. Following a jury trial and judgment in favor of the plaintiff, in the fourth quarter of fiscal year 2024, the Company recognized an aggregate liability for this matter of $384 million with $291 million recognized as an Operating expense under Litigation matter for the year ended June 28, 2024 and $93 million recognized as Other non-current assets for the patent licenses, to be amortized over their remaining lives. In April 2025, the Company reached a global settlement of $130 million for all pending matters with MRT. As a result of the settlement, the Company reversed $201 million of previously recorded charges in Operating expense under Litigation matter and $6 million of post-judgment interest previously recorded in Other income (expense), net.

The Company manufactures, markets, and sells data storage devices and solutions in the United States (“U.S.”) and in foreign countries globally through its sales personnel, dealers, distributors, retailers, and subsidiaries. Its broad extensive portfolio of technology and products addresses the following key end markets: Cloud, Client, “Cloud,” “Client,” and Consumer. “Consumer.” Cloud is comprised primarily of products for public or private cloud environments and enterprise customers. Through the Client end market, the Company provides its OEM original equipment manufacturer (“OEM”) and channel customers a broad array of high-performance HDD solutions across desktop and notebooks. The Consumer end market provides a broad wide range of retail and other end-user products, which capitalize on the strength of the Company’s product brand recognition and vast presence around the world. The Company also generates immaterial license and royalty revenue from its extensive intellectual property portfolio, which is included in each of these three end market categories.