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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Western Digital Corporation | NASDAQ:WDC | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.91 | -1.29% | 69.60 | 69.62 | 69.63 | 70.81 | 67.91 | 70.69 | 2,541,362 | 17:27:51 |
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|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
|
|
Delaware
|
|
33-0956711
|
|
||
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
||
|
|
|
|
|
|
|
|
5601 Great Oaks Parkway
|
San Jose,
|
California
|
|
95119
|
|
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
Title of each class
|
Trading symbol(s)
|
Name of each exchange on which registered
|
Common Stock, $.01 Par Value Per Share
|
WDC
|
The Nasdaq Stock Market LLC
|
|
|
(Nasdaq Global Select Market)
|
|
|
Large accelerated filer
|
Accelerated filer
|
Non-accelerated filer
|
Smaller reporting company
|
Emerging growth company
|
☒
|
☐
|
☐
|
☐
|
☐
|
•
|
expectations regarding our Flash Ventures joint venture with Kioxia Corporation, the flash industry and our flash wafer output plans;
|
•
|
expectations regarding pricing conditions for flash products;
|
•
|
the exit from our Storage Systems business;
|
•
|
expectations regarding our product development and technology plans;
|
•
|
expectations regarding the outcome of legal proceedings in which we are involved;
|
•
|
our quarterly cash dividend policy and share repurchase program;
|
•
|
expectations regarding the repatriation of funds from our foreign operations;
|
•
|
our beliefs regarding tax benefits and the timing of future payments, if any, relating to the unrecognized tax benefits, and the adequacy of our tax provisions;
|
•
|
expectations regarding capital investments and sources of funding for those investments; and
|
•
|
our beliefs regarding the sufficiency of our available liquidity to meet our working capital, debt and capital expenditure needs as well as our dividend plans.
|
Item 1.
|
Financial Statements (unaudited)
|
|
January 3,
2020 |
|
June 28,
2019 |
||||
ASSETS
|
|||||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
3,137
|
|
|
$
|
3,455
|
|
Accounts receivable, net
|
1,791
|
|
|
1,204
|
|
||
Inventories
|
3,122
|
|
|
3,283
|
|
||
Other current assets
|
577
|
|
|
535
|
|
||
Total current assets
|
8,627
|
|
|
8,477
|
|
||
Property, plant and equipment, net
|
2,722
|
|
|
2,843
|
|
||
Notes receivable and investments in Flash Ventures
|
2,321
|
|
|
2,791
|
|
||
Goodwill
|
10,069
|
|
|
10,076
|
|
||
Other intangible assets, net
|
1,311
|
|
|
1,711
|
|
||
Other non-current assets
|
810
|
|
|
472
|
|
||
Total assets
|
$
|
25,860
|
|
|
$
|
26,370
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|||||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
1,736
|
|
|
$
|
1,567
|
|
Accounts payable to related parties
|
364
|
|
|
331
|
|
||
Accrued expenses
|
1,559
|
|
|
1,296
|
|
||
Accrued compensation
|
537
|
|
|
347
|
|
||
Current portion of long-term debt
|
286
|
|
|
276
|
|
||
Total current liabilities
|
4,482
|
|
|
3,817
|
|
||
Long-term debt
|
9,547
|
|
|
10,246
|
|
||
Other liabilities
|
2,452
|
|
|
2,340
|
|
||
Total liabilities
|
16,481
|
|
|
16,403
|
|
||
Commitments and contingencies (Notes 9, 10, 12 and 15)
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Preferred stock, $0.01 par value; authorized — 5 shares; issued and outstanding — none
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value; authorized — 450 shares; issued — 312 shares; outstanding — 299 shares and 295 shares, respectively
|
3
|
|
|
3
|
|
||
Additional paid-in capital
|
3,731
|
|
|
3,851
|
|
||
Accumulated other comprehensive loss
|
(110
|
)
|
|
(68
|
)
|
||
Retained earnings
|
6,717
|
|
|
7,449
|
|
||
Treasury stock — common shares at cost; 13 shares and 17 shares, respectively
|
(962
|
)
|
|
(1,268
|
)
|
||
Total shareholders’ equity
|
9,379
|
|
|
9,967
|
|
||
Total liabilities and shareholders’ equity
|
$
|
25,860
|
|
|
$
|
26,370
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
January 3,
2020 |
|
December 28,
2018 |
|
January 3,
2020 |
|
December 28,
2018 |
||||||||
Revenue, net
|
$
|
4,234
|
|
|
$
|
4,233
|
|
|
$
|
8,274
|
|
|
$
|
9,261
|
|
Cost of revenue
|
3,299
|
|
|
3,189
|
|
|
6,581
|
|
|
6,553
|
|
||||
Gross profit
|
935
|
|
|
1,044
|
|
|
1,693
|
|
|
2,708
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
578
|
|
|
539
|
|
|
1,152
|
|
|
1,115
|
|
||||
Selling, general and administrative
|
298
|
|
|
309
|
|
|
603
|
|
|
665
|
|
||||
Employee termination, asset impairment, and other charges
|
9
|
|
|
20
|
|
|
17
|
|
|
66
|
|
||||
Total operating expenses
|
885
|
|
|
868
|
|
|
1,772
|
|
|
1,846
|
|
||||
Operating income (loss)
|
50
|
|
|
176
|
|
|
(79
|
)
|
|
862
|
|
||||
Interest and other income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest income
|
8
|
|
|
15
|
|
|
20
|
|
|
30
|
|
||||
Interest expense
|
(105
|
)
|
|
(118
|
)
|
|
(227
|
)
|
|
(234
|
)
|
||||
Other income, net
|
7
|
|
|
8
|
|
|
9
|
|
|
6
|
|
||||
Total interest and other expense, net
|
(90
|
)
|
|
(95
|
)
|
|
(198
|
)
|
|
(198
|
)
|
||||
Income (loss) before taxes
|
(40
|
)
|
|
81
|
|
|
(277
|
)
|
|
664
|
|
||||
Income tax expense
|
99
|
|
|
568
|
|
|
138
|
|
|
640
|
|
||||
Net income (loss)
|
$
|
(139
|
)
|
|
$
|
(487
|
)
|
|
$
|
(415
|
)
|
|
$
|
24
|
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) per common share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.47
|
)
|
|
$
|
(1.68
|
)
|
|
$
|
(1.40
|
)
|
|
$
|
0.08
|
|
Diluted
|
$
|
(0.47
|
)
|
|
$
|
(1.68
|
)
|
|
$
|
(1.40
|
)
|
|
$
|
0.08
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
298
|
|
|
290
|
|
|
297
|
|
|
291
|
|
||||
Diluted
|
298
|
|
|
290
|
|
|
297
|
|
|
296
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Cash dividends declared per share
|
$
|
0.50
|
|
|
$
|
0.50
|
|
|
$
|
1.00
|
|
|
$
|
1.00
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
January 3,
2020 |
|
December 28,
2018 |
|
January 3,
2020 |
|
December 28,
2018 |
||||||||
Net income (loss)
|
$
|
(139
|
)
|
|
$
|
(487
|
)
|
|
$
|
(415
|
)
|
|
$
|
24
|
|
Other comprehensive income (loss), before tax:
|
|
|
|
|
|
|
|
||||||||
Actuarial pension gain
|
2
|
|
|
1
|
|
|
3
|
|
|
1
|
|
||||
Foreign currency translation adjustment
|
(15
|
)
|
|
31
|
|
|
(10
|
)
|
|
(6
|
)
|
||||
Net unrealized gain (loss) on derivative contracts and available-for-sale securities
|
(6
|
)
|
|
7
|
|
|
(39
|
)
|
|
6
|
|
||||
Total other comprehensive income (loss), before tax
|
(19
|
)
|
|
39
|
|
|
(46
|
)
|
|
1
|
|
||||
Income tax benefit (expense) related to items of other comprehensive income (loss), before tax
|
(1
|
)
|
|
2
|
|
|
4
|
|
|
3
|
|
||||
Other comprehensive income (loss), net of tax
|
(20
|
)
|
|
41
|
|
|
(42
|
)
|
|
4
|
|
||||
Total comprehensive income (loss)
|
$
|
(159
|
)
|
|
$
|
(446
|
)
|
|
$
|
(457
|
)
|
|
$
|
28
|
|
|
Six Months Ended
|
||||||
|
January 3,
2020 |
|
December 28,
2018 |
||||
Cash flows from operating activities
|
|
|
|
||||
Net income (loss)
|
$
|
(415
|
)
|
|
$
|
24
|
|
Adjustments to reconcile net income (loss) to net cash provided by operations:
|
|
|
|
||||
Depreciation and amortization
|
805
|
|
|
952
|
|
||
Stock-based compensation
|
154
|
|
|
158
|
|
||
Deferred income taxes
|
(42
|
)
|
|
281
|
|
||
Loss (gain) on disposal of assets
|
(12
|
)
|
|
1
|
|
||
Amortization of debt discounts
|
20
|
|
|
19
|
|
||
Other non-cash operating activities, net
|
(20
|
)
|
|
37
|
|
||
Changes in:
|
|
|
|
||||
Accounts receivable, net
|
(587
|
)
|
|
482
|
|
||
Inventories
|
155
|
|
|
(483
|
)
|
||
Accounts payable
|
170
|
|
|
(256
|
)
|
||
Accounts payable to related parties
|
33
|
|
|
51
|
|
||
Accrued expenses
|
327
|
|
|
254
|
|
||
Accrued compensation
|
191
|
|
|
(134
|
)
|
||
Other assets and liabilities, net
|
(269
|
)
|
|
(212
|
)
|
||
Net cash provided by operating activities
|
510
|
|
|
1,174
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Purchases of property, plant and equipment
|
(305
|
)
|
|
(500
|
)
|
||
Proceeds from the sale of property, plant and equipment
|
—
|
|
|
3
|
|
||
Acquisitions, net of cash acquired
|
(22
|
)
|
|
—
|
|
||
Purchases of investments
|
—
|
|
|
(33
|
)
|
||
Proceeds from sale of investments
|
—
|
|
|
13
|
|
||
Proceeds from maturities of investments
|
—
|
|
|
7
|
|
||
Notes receivable issuances to Flash Ventures
|
(224
|
)
|
|
(508
|
)
|
||
Notes receivable proceeds from Flash Ventures
|
690
|
|
|
312
|
|
||
Strategic investments and other, net
|
21
|
|
|
(19
|
)
|
||
Net cash provided by (used in) investing activities
|
160
|
|
|
(725
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Issuance of stock under employee stock plans
|
72
|
|
|
61
|
|
||
Taxes paid on vested stock awards under employee stock plans
|
(54
|
)
|
|
(69
|
)
|
||
Repurchases of common stock
|
—
|
|
|
(563
|
)
|
||
Dividends paid to shareholders
|
(296
|
)
|
|
(292
|
)
|
||
Repayment of debt
|
(707
|
)
|
|
(75
|
)
|
||
Repayment of revolving credit facility
|
—
|
|
|
(500
|
)
|
||
Net cash used in financing activities
|
(985
|
)
|
|
(1,438
|
)
|
||
Effect of exchange rate changes on cash
|
(3
|
)
|
|
(3
|
)
|
||
Net decrease in cash and cash equivalents
|
(318
|
)
|
|
(992
|
)
|
||
Cash and cash equivalents, beginning of year
|
3,455
|
|
|
5,005
|
|
||
Cash and cash equivalents, end of period
|
$
|
3,137
|
|
|
$
|
4,013
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid for income taxes
|
$
|
181
|
|
|
$
|
264
|
|
Cash paid for interest
|
$
|
206
|
|
|
$
|
216
|
|
|
Common Stock
|
|
Treasury Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Retained Earnings
|
|
Total Shareholders’ Equity
|
||||||||||||||||||
|
Shares
|
|
Amount
|
Shares
|
|
Amount
|
|||||||||||||||||||||||
Balance at June 28, 2019
|
312
|
|
|
$
|
3
|
|
|
(17
|
)
|
|
$
|
(1,268
|
)
|
|
$
|
3,851
|
|
|
$
|
(68
|
)
|
|
$
|
7,449
|
|
|
$
|
9,967
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(276
|
)
|
|
(276
|
)
|
||||||
Adoption of New Accounting Standard
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
||||||
Employee stock plans
|
—
|
|
|
—
|
|
|
3
|
|
|
181
|
|
|
(207
|
)
|
|
—
|
|
|
—
|
|
|
(26
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
77
|
|
|
—
|
|
|
—
|
|
|
77
|
|
||||||
Dividends to shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
(156
|
)
|
|
(149
|
)
|
||||||
Actuarial pension gain
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||||
Net unrealized loss on derivative contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27
|
)
|
|
—
|
|
|
(27
|
)
|
||||||
Balance at October 4, 2019
|
312
|
|
|
3
|
|
|
(14
|
)
|
|
(1,087
|
)
|
|
3,728
|
|
|
(90
|
)
|
|
7,012
|
|
|
9,566
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(139
|
)
|
|
(139
|
)
|
||||||
Employee stock plans
|
—
|
|
|
—
|
|
|
1
|
|
|
125
|
|
|
(81
|
)
|
|
—
|
|
|
—
|
|
|
44
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
77
|
|
|
—
|
|
|
—
|
|
|
77
|
|
||||||
Dividends to shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
(156
|
)
|
|
(149
|
)
|
||||||
Actuarial pension gain
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
(13
|
)
|
||||||
Net unrealized loss on derivative contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
(8
|
)
|
||||||
Balance at January 3, 2020
|
312
|
|
|
$
|
3
|
|
|
(13
|
)
|
|
$
|
(962
|
)
|
|
$
|
3,731
|
|
|
$
|
(110
|
)
|
|
$
|
6,717
|
|
|
$
|
9,379
|
|
|
Common Stock
|
|
Treasury Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Retained Earnings
|
|
Total Shareholders’ Equity
|
||||||||||||||||||
|
Shares
|
|
Amount
|
Shares
|
|
Amount
|
|||||||||||||||||||||||
Balance at June 29, 2018
|
312
|
|
|
$
|
3
|
|
|
(16
|
)
|
|
$
|
(1,444
|
)
|
|
$
|
4,254
|
|
|
$
|
(39
|
)
|
|
$
|
8,757
|
|
|
$
|
11,531
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
511
|
|
|
511
|
|
||||||
Adoption of New Accounting Standards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
56
|
|
|
56
|
|
||||||
Employee stock plans
|
—
|
|
|
—
|
|
|
1
|
|
|
198
|
|
|
(256
|
)
|
|
—
|
|
|
—
|
|
|
(58
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
79
|
|
|
—
|
|
|
—
|
|
|
79
|
|
|||||||
Repurchases of common stock
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
(563
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(563
|
)
|
||||||
Dividends to shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
(152
|
)
|
|
(144
|
)
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37
|
)
|
|
—
|
|
|
(37
|
)
|
||||||
Balance at September 28, 2018
|
312
|
|
|
3
|
|
|
(23
|
)
|
|
(1,809
|
)
|
|
4,085
|
|
|
(76
|
)
|
|
9,172
|
|
|
11,375
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(487
|
)
|
|
(487
|
)
|
||||||
Employee stock plans
|
—
|
|
|
—
|
|
|
2
|
|
|
159
|
|
|
(109
|
)
|
|
—
|
|
|
—
|
|
|
50
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
79
|
|
|
—
|
|
|
—
|
|
|
79
|
|
||||||
Dividends to shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
(153
|
)
|
|
(146
|
)
|
||||||
Actuarial pension gain
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29
|
|
|
—
|
|
|
29
|
|
||||||
Net unrealized gain on derivative contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
||||||
Balance at December 28, 2018
|
312
|
|
|
$
|
3
|
|
|
(21
|
)
|
|
$
|
(1,650
|
)
|
|
$
|
4,062
|
|
|
$
|
(35
|
)
|
|
$
|
8,532
|
|
|
$
|
10,912
|
|
Note 1.
|
Organization and Basis of Presentation
|
Note 2.
|
Recent Accounting Pronouncements
|
Note 3.
|
Revenues
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
January 3,
2020 |
|
December 28, 2018
|
|
January 3,
2020 |
|
December 28, 2018
|
||||||||
|
(in millions)
|
||||||||||||||
Revenue by Product
|
|
|
|
|
|
|
|
||||||||
Hard disk drives (“HDD”)
|
$
|
2,396
|
|
|
$
|
2,060
|
|
|
$
|
4,804
|
|
|
$
|
4,554
|
|
Flash-based
|
1,838
|
|
|
2,173
|
|
|
3,470
|
|
|
4,707
|
|
||||
Total Revenue
|
$
|
4,234
|
|
|
$
|
4,233
|
|
|
$
|
8,274
|
|
|
$
|
9,261
|
|
|
|
|
|
|
|
|
|
||||||||
Revenue by End Market
|
|
|
|
|
|
|
|
||||||||
Client Devices
|
$
|
1,797
|
|
|
$
|
2,214
|
|
|
$
|
3,413
|
|
|
$
|
4,864
|
|
Data Center Devices & Solutions
|
1,489
|
|
|
1,074
|
|
|
3,021
|
|
|
2,520
|
|
||||
Client Solutions
|
948
|
|
|
945
|
|
|
1,840
|
|
|
1,877
|
|
||||
Total Revenue
|
$
|
4,234
|
|
|
$
|
4,233
|
|
|
$
|
8,274
|
|
|
$
|
9,261
|
|
|
|
|
|
|
|
|
|
||||||||
Revenue by Geography
|
|
|
|
|
|
|
|
||||||||
Americas
|
$
|
1,296
|
|
|
$
|
1,015
|
|
|
$
|
2,609
|
|
|
$
|
2,296
|
|
Europe, Middle East and Africa
|
811
|
|
|
817
|
|
|
1,590
|
|
|
1,701
|
|
||||
Asia
|
2,127
|
|
|
2,401
|
|
|
4,075
|
|
|
5,264
|
|
||||
Total Revenue
|
$
|
4,234
|
|
|
$
|
4,233
|
|
|
$
|
8,274
|
|
|
$
|
9,261
|
|
Note 4.
|
Supplemental Financial Statement Data
|
|
January 3,
2020 |
|
June 28,
2019 |
||||
|
(in millions)
|
||||||
Inventories:
|
|
|
|
||||
Raw materials and component parts
|
$
|
1,334
|
|
|
$
|
1,142
|
|
Work-in-process
|
847
|
|
|
968
|
|
||
Finished goods
|
941
|
|
|
1,173
|
|
||
Total inventories
|
$
|
3,122
|
|
|
$
|
3,283
|
|
|
January 3,
2020 |
|
June 28,
2019 |
||||
|
(in millions)
|
||||||
Property, plant and equipment:
|
|
|
|
||||
Land
|
$
|
294
|
|
|
$
|
294
|
|
Buildings and improvements
|
1,806
|
|
|
1,743
|
|
||
Machinery and equipment
|
7,171
|
|
|
7,267
|
|
||
Computer equipment and software
|
447
|
|
|
441
|
|
||
Furniture and fixtures
|
55
|
|
|
56
|
|
||
Construction-in-process
|
184
|
|
|
202
|
|
||
Property, plant and equipment, gross
|
9,957
|
|
|
10,003
|
|
||
Accumulated depreciation
|
(7,235
|
)
|
|
(7,160
|
)
|
||
Property, plant and equipment, net
|
$
|
2,722
|
|
|
$
|
2,843
|
|
|
Carrying Amount
|
||
|
(in millions)
|
||
Balance at June 28, 2019
|
$
|
10,076
|
|
Goodwill recorded in connection with an acquisition
|
14
|
|
|
Reduction in goodwill in connection with disposition of business
|
(20
|
)
|
|
Foreign currency translation adjustment
|
(1
|
)
|
|
Balance at January 3, 2020
|
$
|
10,069
|
|
|
January 3,
2020 |
|
June 28,
2019 |
||||
|
(in millions)
|
||||||
Finite-lived intangible assets
|
$
|
5,798
|
|
|
$
|
5,824
|
|
In-process research and development
|
80
|
|
|
72
|
|
||
Accumulated amortization
|
(4,567
|
)
|
|
(4,185
|
)
|
||
Intangible assets, net
|
$
|
1,311
|
|
|
$
|
1,711
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
January 3,
2020 |
|
December 28,
2018 |
|
January 3,
2020 |
|
December 28, 2018
|
||||||||
|
(in millions)
|
||||||||||||||
Warranty accrual, beginning of period
|
$
|
357
|
|
|
$
|
323
|
|
|
$
|
350
|
|
|
$
|
318
|
|
Charges to operations
|
50
|
|
|
47
|
|
|
99
|
|
|
81
|
|
||||
Utilization
|
(35
|
)
|
|
(42
|
)
|
|
(83
|
)
|
|
(68
|
)
|
||||
Changes in estimate related to pre-existing warranties
|
6
|
|
|
9
|
|
|
12
|
|
|
6
|
|
||||
Warranty accrual, end of period
|
$
|
378
|
|
|
$
|
337
|
|
|
$
|
378
|
|
|
$
|
337
|
|
|
January 3,
2020 |
|
June 28,
2019 |
||||
|
(in millions)
|
||||||
Warranty accrual
|
|
|
|
||||
Current portion (included in Accrued expenses)
|
$
|
193
|
|
|
$
|
188
|
|
Long-term portion (included in Other liabilities)
|
185
|
|
|
162
|
|
||
Total warranty accrual
|
$
|
378
|
|
|
$
|
350
|
|
|
January 3,
2020 |
|
June 28,
2019 |
||||
|
(in millions)
|
||||||
Other liabilities:
|
|
|
|
||||
Non-current net tax payable
|
$
|
839
|
|
|
$
|
928
|
|
Payables related to unrecognized tax benefits
|
708
|
|
|
699
|
|
||
Other non-current liabilities
|
905
|
|
|
713
|
|
||
Total other liabilities
|
$
|
2,452
|
|
|
$
|
2,340
|
|
|
Actuarial Pension Gains (Losses)
|
|
Foreign Currency Translation Adjustment
|
|
Unrealized Gains (Losses) on Derivative Contracts
|
|
Total Accumulated Comprehensive Income (Loss)
|
||||||||
|
(in millions)
|
||||||||||||||
Balance at June 28, 2019
|
$
|
(53
|
)
|
|
$
|
4
|
|
|
$
|
(19
|
)
|
|
$
|
(68
|
)
|
Other comprehensive income (loss) before reclassifications
|
3
|
|
|
(10
|
)
|
|
(20
|
)
|
|
(27
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
(19
|
)
|
|
(19
|
)
|
||||
Income tax benefit (expense) related to items of other comprehensive income (loss)
|
(1
|
)
|
|
1
|
|
|
4
|
|
|
4
|
|
||||
Net current-period other comprehensive income (loss)
|
2
|
|
|
(9
|
)
|
|
(35
|
)
|
|
(42
|
)
|
||||
Balance at January 3, 2020
|
$
|
(51
|
)
|
|
$
|
(5
|
)
|
|
$
|
(54
|
)
|
|
$
|
(110
|
)
|
Note 5.
|
Fair Value Measurements and Investments
|
Level 1.
|
Quoted prices in active markets for identical assets or liabilities.
|
Level 2.
|
Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
Level 3.
|
Inputs that are unobservable for the asset or liability and that are significant to the fair value of the assets or liabilities.
|
|
January 3, 2020
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents - Money market funds
|
$
|
1,051
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,051
|
|
Foreign exchange contracts
|
—
|
|
|
31
|
|
|
—
|
|
|
31
|
|
||||
Total assets at fair value
|
$
|
1,051
|
|
|
$
|
31
|
|
|
$
|
—
|
|
|
$
|
1,082
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
14
|
|
Interest rate swap contract
|
—
|
|
|
69
|
|
|
—
|
|
|
69
|
|
||||
Total liabilities at fair value
|
$
|
—
|
|
|
$
|
83
|
|
|
$
|
—
|
|
|
$
|
83
|
|
|
June 28, 2019
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
1,388
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,388
|
|
Certificates of deposit
|
—
|
|
|
17
|
|
|
—
|
|
|
17
|
|
||||
Total cash equivalents
|
1,388
|
|
|
17
|
|
|
—
|
|
|
1,405
|
|
||||
Foreign exchange contracts
|
—
|
|
|
44
|
|
|
—
|
|
|
44
|
|
||||
Interest rate swap contracts
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||
Total assets at fair value
|
$
|
1,388
|
|
|
$
|
63
|
|
|
$
|
—
|
|
|
$
|
1,451
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
$
|
—
|
|
|
$
|
40
|
|
|
$
|
—
|
|
|
$
|
40
|
|
Interest rate swap contract
|
—
|
|
|
65
|
|
|
—
|
|
|
65
|
|
||||
Total liabilities at fair value
|
$
|
—
|
|
|
$
|
105
|
|
|
$
|
—
|
|
|
$
|
105
|
|
|
January 3, 2020
|
|
June 28, 2019
|
||||||||||||
|
Carrying
Value
|
|
Fair
Value
|
|
Carrying
Value |
|
Fair
Value |
||||||||
|
(in millions)
|
||||||||||||||
0.50% convertible senior notes due 2020
|
$
|
33
|
|
|
$
|
33
|
|
|
$
|
33
|
|
|
$
|
31
|
|
Variable interest rate Term Loan A-1 maturing 2023
|
4,700
|
|
|
4,720
|
|
|
4,824
|
|
|
4,780
|
|
||||
Variable interest rate U.S. Term Loan B-4 maturing 2023
|
1,843
|
|
|
1,857
|
|
|
2,424
|
|
|
2,370
|
|
||||
1.50% convertible notes due 2024
|
973
|
|
|
1,085
|
|
|
958
|
|
|
986
|
|
||||
4.75% senior unsecured notes due 2026
|
2,284
|
|
|
2,419
|
|
|
2,283
|
|
|
2,263
|
|
||||
Total
|
$
|
9,833
|
|
|
$
|
10,115
|
|
|
$
|
10,522
|
|
|
$
|
10,430
|
|
Note 6.
|
Derivative Instruments and Hedging Activities
|
Note 7.
|
Debt
|
|
January 3,
2020 |
|
June 28,
2019 |
||||
|
(in millions)
|
||||||
0.50% convertible senior notes due 2020
|
$
|
35
|
|
|
$
|
35
|
|
Variable interest rate Term Loan A-1 maturing 2023
|
4,708
|
|
|
4,834
|
|
||
Variable interest rate U.S. Term Loan B-4 maturing 2023
|
1,843
|
|
|
2,425
|
|
||
1.50% convertible notes due 2024
|
1,100
|
|
|
1,100
|
|
||
4.75% senior unsecured notes due 2026
|
2,300
|
|
|
2,300
|
|
||
Total debt
|
9,986
|
|
|
10,694
|
|
||
Issuance costs and debt discounts
|
(153
|
)
|
|
(172
|
)
|
||
Subtotal
|
9,833
|
|
|
10,522
|
|
||
Less current portion of long-term debt
|
(286
|
)
|
|
(276
|
)
|
||
Long-term debt
|
$
|
9,547
|
|
|
$
|
10,246
|
|
Note 8.
|
Pension and Other Post-Retirement Benefit Plans
|
|
January 3,
2020 |
|
June 28,
2019 |
||||
|
(in millions)
|
||||||
Benefit obligation at end of period
|
$
|
278
|
|
|
$
|
280
|
|
Fair value of plan assets at end of period
|
210
|
|
|
208
|
|
||
Unfunded status
|
$
|
68
|
|
|
$
|
72
|
|
|
January 3,
2020 |
|
June 28,
2019 |
||||
|
(in millions)
|
||||||
Current liabilities
|
$
|
1
|
|
|
$
|
1
|
|
Non-current liabilities
|
67
|
|
|
71
|
|
||
Net amount recognized
|
$
|
68
|
|
|
$
|
72
|
|
Note 9.
|
Related Parties and Related Commitments and Contingencies
|
|
January 3,
2020 |
|
June 28,
2019 |
||||
|
(in millions)
|
||||||
Notes receivable, Flash Partners
|
$
|
412
|
|
|
$
|
551
|
|
Notes receivable, Flash Alliance
|
625
|
|
|
878
|
|
||
Notes receivable, Flash Forward
|
663
|
|
|
743
|
|
||
Investment in Flash Partners
|
200
|
|
|
200
|
|
||
Investment in Flash Alliance
|
297
|
|
|
296
|
|
||
Investment in Flash Forward
|
124
|
|
|
123
|
|
||
Total notes receivable and investments in Flash Ventures
|
$
|
2,321
|
|
|
$
|
2,791
|
|
|
January 3,
2020 |
||
|
|
||
Notes receivable
|
$
|
1,700
|
|
Equity investments
|
621
|
|
|
Operating lease guarantees
|
1,746
|
|
|
Inventory and prepayments
|
462
|
|
|
Maximum estimable loss exposure
|
$
|
4,529
|
|
|
Lease Amounts
|
||||||
|
(Japanese yen, in billions)
|
|
(U.S. dollar, in millions)
|
||||
Total guarantee obligations
|
¥
|
189
|
|
|
$
|
1,746
|
|
Annual Installments
|
|
Payment of Principal Amortization
|
|
Purchase Option Exercise Price at Final Lease Terms
|
|
Guarantee Amount
|
||||||
|
|
(in millions)
|
||||||||||
Remaining six months of 2020
|
|
$
|
239
|
|
|
$
|
35
|
|
|
$
|
274
|
|
2021
|
|
406
|
|
|
108
|
|
|
514
|
|
|||
2022
|
|
323
|
|
|
49
|
|
|
372
|
|
|||
2023
|
|
215
|
|
|
67
|
|
|
282
|
|
|||
2024
|
|
98
|
|
|
120
|
|
|
218
|
|
|||
Thereafter
|
|
12
|
|
|
74
|
|
|
86
|
|
|||
Total guarantee obligations
|
|
$
|
1,293
|
|
|
$
|
453
|
|
|
$
|
1,746
|
|
Note 10.
|
Leases and Other Commitments
|
|
Lease Amounts
|
||
Minimum lease payments by fiscal year:
|
(in millions)
|
||
Remaining six months of 2020
|
$
|
26
|
|
2021
|
45
|
|
|
2022
|
30
|
|
|
2023
|
25
|
|
|
2024
|
27
|
|
|
Thereafter
|
168
|
|
|
Total future minimum lease payments
|
321
|
|
|
Less: Imputed Interest
|
(63
|
)
|
|
Present value of lease liabilities
|
258
|
|
|
Less: Current portion (included in Accrued expenses)
|
41
|
|
|
Long-term operating lease liabilities (included in Other liabilities)
|
$
|
217
|
|
|
|
||
Operating lease right-of-use assets (included in Other non-current assets)
|
$
|
242
|
|
|
|
||
Weighted average remaining lease term in years
|
9.4
|
|
|
Weighted average discount rate
|
4.2
|
%
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
|
January 3,
2020 |
|
January 3,
2020 |
||||
|
(in millions)
|
||||||
Cost of operating leases
|
$
|
18
|
|
|
$
|
30
|
|
Cash paid for operating leases
|
13
|
|
|
29
|
|
||
Operating lease assets obtained in exchange for operating lease liabilities
|
1
|
|
|
50
|
|
|
|
Long-term commitments
|
||
|
|
(in millions)
|
||
Fiscal year:
|
|
|
||
Remaining six months of 2020
|
|
$
|
123
|
|
2021
|
|
304
|
|
|
2022
|
|
390
|
|
|
2023
|
|
407
|
|
|
2024
|
|
180
|
|
|
Thereafter
|
|
338
|
|
|
Total
|
|
$
|
1,742
|
|
Note 11.
|
Shareholders’ Equity
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
January 3,
2020 |
|
December 28,
2018 |
|
January 3,
2020 |
|
December 28, 2018
|
||||||||
|
(in millions)
|
||||||||||||||
Options
|
$
|
2
|
|
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
9
|
|
Restricted and performance stock units
|
70
|
|
|
70
|
|
|
136
|
|
|
137
|
|
||||
Employee stock purchase plan
|
5
|
|
|
5
|
|
|
14
|
|
|
12
|
|
||||
Total
|
$
|
77
|
|
|
$
|
79
|
|
|
$
|
154
|
|
|
$
|
158
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
January 3,
2020 |
|
December 28,
2018 |
|
January 3,
2020 |
|
December 28, 2018
|
||||||||
|
(in millions)
|
||||||||||||||
Cost of revenue
|
$
|
13
|
|
|
$
|
13
|
|
|
$
|
25
|
|
|
$
|
24
|
|
Research and development
|
41
|
|
|
42
|
|
|
82
|
|
|
81
|
|
||||
Selling, general and administrative
|
23
|
|
|
24
|
|
|
47
|
|
|
53
|
|
||||
Subtotal
|
77
|
|
|
79
|
|
|
154
|
|
|
158
|
|
||||
Tax benefit
|
(11
|
)
|
|
(14
|
)
|
|
(23
|
)
|
|
(25
|
)
|
||||
Total
|
$
|
66
|
|
|
$
|
65
|
|
|
$
|
131
|
|
|
$
|
133
|
|
|
Unamortized Compensation Costs
|
|
Weighted Average Service Period
|
||
|
(in millions)
|
|
(years)
|
||
Options
|
$
|
3
|
|
|
0.6
|
RSUs and PSUs (1)
|
640
|
|
|
2.7
|
|
ESPP
|
50
|
|
|
1.4
|
|
Total unamortized compensation cost
|
$
|
693
|
|
|
|
(1)
|
Weighted average service period assumes the performance metrics are met for the PSUs.
|
|
Number of Shares
|
|
Weighted Average Exercise Price Per Share
|
|
Weighted Average Remaining Contractual Life
|
|
Aggregate Intrinsic Value
|
|||||
|
(in millions)
|
|
|
|
(in years)
|
|
(in millions)
|
|||||
Options outstanding at June 28, 2019
|
3.9
|
|
|
$
|
65.72
|
|
|
|
|
|
||
Exercised
|
(0.6
|
)
|
|
43.48
|
|
|
|
|
$
|
8
|
|
|
Canceled or expired
|
(0.3
|
)
|
|
93.23
|
|
|
|
|
|
|||
Options outstanding at January 3, 2020
|
3.0
|
|
|
67.85
|
|
|
2.6
|
|
$
|
28
|
|
|
Exercisable at January 3, 2020
|
2.7
|
|
|
70.60
|
|
|
2.5
|
|
$
|
22
|
|
|
Number of Shares
|
|
Weighted Average Grant Date Fair Value
|
|
Aggregate Intrinsic Value at Vest Date
|
|||||
|
(in millions)
|
|
|
|
(in millions)
|
|||||
RSUs and PSUs outstanding at June 28, 2019
|
11.6
|
|
|
$
|
62.07
|
|
|
|
||
Granted
|
5.8
|
|
|
58.13
|
|
|
|
|||
Vested
|
(3.3
|
)
|
|
63.15
|
|
|
$
|
186
|
|
|
Forfeited
|
(0.8
|
)
|
|
63.37
|
|
|
|
|||
RSUs and PSUs outstanding at January 3, 2020
|
13.3
|
|
|
60.88
|
|
|
|
Note 12.
|
Income Tax Expense
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
January 3,
2020 |
|
December 28,
2018 |
|
January 3,
2020 |
|
December 28,
2018 |
||||||||
|
(in millions)
|
||||||||||||||
Income (loss) before taxes
|
$
|
(40
|
)
|
|
$
|
81
|
|
|
$
|
(277
|
)
|
|
$
|
664
|
|
Income tax expense
|
99
|
|
|
568
|
|
|
138
|
|
|
640
|
|
||||
Effective tax rate
|
(248
|
)%
|
|
701
|
%
|
|
(50
|
)%
|
|
96
|
%
|
Note 13.
|
Net Income (Loss) Per Common Share
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
January 3,
2020 |
|
December 28,
2018 |
|
January 3,
2020 |
|
December 28, 2018
|
||||||||
|
(in millions, except per share data)
|
||||||||||||||
Net income (loss)
|
$
|
(139
|
)
|
|
$
|
(487
|
)
|
|
$
|
(415
|
)
|
|
$
|
24
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
298
|
|
|
290
|
|
|
297
|
|
|
291
|
|
||||
Employee stock options, RSUs, PSUs and ESPP
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
||||
Diluted
|
298
|
|
|
290
|
|
|
297
|
|
|
296
|
|
||||
Income (loss) per common share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.47
|
)
|
|
$
|
(1.68
|
)
|
|
$
|
(1.40
|
)
|
|
$
|
0.08
|
|
Diluted
|
$
|
(0.47
|
)
|
|
$
|
(1.68
|
)
|
|
$
|
(1.40
|
)
|
|
$
|
0.08
|
|
Anti-dilutive potential common shares excluded
|
15
|
|
|
19
|
|
|
15
|
|
|
8
|
|
Note 14.
|
Employee Termination, Asset Impairment and Other Charges
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
January 3,
2020 |
|
December 28,
2018 |
|
January 3,
2020 |
|
December 28,
2018 |
||||||||
|
(in millions)
|
||||||||||||||
Employee termination and other charges:
|
|
|
|
|
|
|
|
||||||||
Closure of Foreign Manufacturing Facilities
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
4
|
|
|
$
|
11
|
|
Business Realignment
|
26
|
|
|
13
|
|
|
30
|
|
|
55
|
|
||||
Total employee termination and other charges
|
26
|
|
|
20
|
|
|
34
|
|
|
66
|
|
||||
Gain on disposition of assets:
|
|
|
|
|
|
|
|
||||||||
Business Realignment
|
(17
|
)
|
|
—
|
|
|
(17
|
)
|
|
—
|
|
||||
Total gain on disposition of assets
|
(17
|
)
|
|
—
|
|
|
(17
|
)
|
|
—
|
|
||||
Total employee termination, asset impairment, and other charges
|
$
|
9
|
|
|
$
|
20
|
|
|
$
|
17
|
|
|
$
|
66
|
|
|
Employee Termination Benefits
|
|
Contract Termination and Other
|
|
Total
|
||||||
|
(in millions)
|
||||||||||
Accrual balance at June 28, 2019
|
$
|
30
|
|
|
$
|
2
|
|
|
$
|
32
|
|
Charges
|
2
|
|
|
2
|
|
|
4
|
|
|||
Cash payments
|
(21
|
)
|
|
(4
|
)
|
|
(25
|
)
|
|||
Accrual balance at January 3, 2020
|
$
|
11
|
|
|
$
|
—
|
|
|
$
|
11
|
|
|
Employee Termination Benefits
|
|
Contract Termination and Other
|
|
Total
|
||||||
|
(in millions)
|
||||||||||
Accrual balance at June 28, 2019
|
$
|
37
|
|
|
$
|
8
|
|
|
$
|
45
|
|
Charges
|
26
|
|
|
4
|
|
|
30
|
|
|||
Cash payments
|
(35
|
)
|
|
(11
|
)
|
|
(46
|
)
|
|||
Accrual balance at January 3, 2020
|
$
|
28
|
|
|
$
|
1
|
|
|
$
|
29
|
|
Note 15.
|
Legal Proceedings
|
Note 16.
|
Separate Financial Information of Guarantor Subsidiaries
|
Condensed Consolidating Balance Sheet
|
|||||||||||||||||||
As of January 3, 2020
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
Company |
||||||||||
|
(in millions)
|
||||||||||||||||||
ASSETS
|
|||||||||||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
11
|
|
|
$
|
786
|
|
|
$
|
2,340
|
|
|
$
|
—
|
|
|
$
|
3,137
|
|
Accounts receivable, net
|
—
|
|
|
1,172
|
|
|
619
|
|
|
—
|
|
|
1,791
|
|
|||||
Intercompany receivables
|
2,617
|
|
|
7,840
|
|
|
2,839
|
|
|
(13,296
|
)
|
|
—
|
|
|||||
Inventories
|
—
|
|
|
716
|
|
|
2,472
|
|
|
(66
|
)
|
|
3,122
|
|
|||||
Loans due from consolidated affiliates
|
—
|
|
|
—
|
|
|
258
|
|
|
(258
|
)
|
|
—
|
|
|||||
Other current assets
|
—
|
|
|
364
|
|
|
213
|
|
|
—
|
|
|
577
|
|
|||||
Total current assets
|
2,628
|
|
|
10,878
|
|
|
8,741
|
|
|
(13,620
|
)
|
|
8,627
|
|
|||||
Property, plant and equipment, net
|
—
|
|
|
820
|
|
|
1,902
|
|
|
—
|
|
|
2,722
|
|
|||||
Notes receivable and investments in Flash Ventures
|
—
|
|
|
—
|
|
|
2,321
|
|
|
—
|
|
|
2,321
|
|
|||||
Goodwill
|
—
|
|
|
374
|
|
|
9,695
|
|
|
—
|
|
|
10,069
|
|
|||||
Other intangible assets, net
|
—
|
|
|
10
|
|
|
1,301
|
|
|
—
|
|
|
1,311
|
|
|||||
Investments in consolidated subsidiaries
|
20,637
|
|
|
15,471
|
|
|
—
|
|
|
(36,108
|
)
|
|
—
|
|
|||||
Loans due from consolidated affiliates
|
—
|
|
|
1,626
|
|
|
—
|
|
|
(1,626
|
)
|
|
—
|
|
|||||
Other non-current assets
|
56
|
|
|
255
|
|
|
499
|
|
|
—
|
|
|
810
|
|
|||||
Total assets
|
$
|
23,321
|
|
|
$
|
29,434
|
|
|
$
|
24,459
|
|
|
$
|
(51,354
|
)
|
|
$
|
25,860
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|||||||||||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
—
|
|
|
$
|
153
|
|
|
$
|
1,583
|
|
|
$
|
—
|
|
|
$
|
1,736
|
|
Accounts payable to related parties
|
—
|
|
|
364
|
|
|
—
|
|
|
—
|
|
|
364
|
|
|||||
Intercompany payables
|
2,285
|
|
|
4,953
|
|
|
6,058
|
|
|
(13,296
|
)
|
|
—
|
|
|||||
Accrued expenses
|
206
|
|
|
837
|
|
|
516
|
|
|
—
|
|
|
1,559
|
|
|||||
Accrued compensation
|
—
|
|
|
356
|
|
|
181
|
|
|
—
|
|
|
537
|
|
|||||
Loans due to consolidated affiliates
|
—
|
|
|
258
|
|
|
—
|
|
|
(258
|
)
|
|
—
|
|
|||||
Current portion of long-term debt
|
251
|
|
|
—
|
|
|
35
|
|
|
—
|
|
|
286
|
|
|||||
Total current liabilities
|
2,742
|
|
|
6,921
|
|
|
8,373
|
|
|
(13,554
|
)
|
|
4,482
|
|
|||||
Long-term debt
|
9,547
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,547
|
|
|||||
Loans due to consolidated affiliates
|
1,603
|
|
|
—
|
|
|
23
|
|
|
(1,626
|
)
|
|
—
|
|
|||||
Other liabilities
|
50
|
|
|
1,843
|
|
|
559
|
|
|
—
|
|
|
2,452
|
|
|||||
Total liabilities
|
13,942
|
|
|
8,764
|
|
|
8,955
|
|
|
(15,180
|
)
|
|
16,481
|
|
|||||
Total shareholders’ equity
|
9,379
|
|
|
20,670
|
|
|
15,504
|
|
|
(36,174
|
)
|
|
9,379
|
|
|||||
Total liabilities and shareholders’ equity
|
$
|
23,321
|
|
|
$
|
29,434
|
|
|
$
|
24,459
|
|
|
$
|
(51,354
|
)
|
|
$
|
25,860
|
|
Condensed Consolidating Balance Sheet
|
|||||||||||||||||||
As of June 28, 2019
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
Company |
||||||||||
|
(in millions)
|
||||||||||||||||||
ASSETS
|
|||||||||||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
8
|
|
|
$
|
985
|
|
|
$
|
2,462
|
|
|
$
|
—
|
|
|
$
|
3,455
|
|
Accounts receivable, net
|
—
|
|
|
779
|
|
|
425
|
|
|
—
|
|
|
1,204
|
|
|||||
Intercompany receivables
|
2,409
|
|
|
5,808
|
|
|
1,581
|
|
|
(9,798
|
)
|
|
—
|
|
|||||
Inventories
|
—
|
|
|
990
|
|
|
2,438
|
|
|
(145
|
)
|
|
3,283
|
|
|||||
Loans due from consolidated affiliates
|
—
|
|
|
—
|
|
|
50
|
|
|
(50
|
)
|
|
—
|
|
|||||
Other current assets
|
2
|
|
|
251
|
|
|
282
|
|
|
—
|
|
|
535
|
|
|||||
Total current assets
|
2,419
|
|
|
8,813
|
|
|
7,238
|
|
|
(9,993
|
)
|
|
8,477
|
|
|||||
Property, plant and equipment, net
|
—
|
|
|
873
|
|
|
1,970
|
|
|
—
|
|
|
2,843
|
|
|||||
Notes receivable and investments in Flash Ventures
|
—
|
|
|
—
|
|
|
2,791
|
|
|
—
|
|
|
2,791
|
|
|||||
Goodwill
|
—
|
|
|
388
|
|
|
9,688
|
|
|
—
|
|
|
10,076
|
|
|||||
Other intangible assets, net
|
—
|
|
|
23
|
|
|
1,688
|
|
|
—
|
|
|
1,711
|
|
|||||
Investments in consolidated subsidiaries
|
20,772
|
|
|
16,355
|
|
|
—
|
|
|
(37,127
|
)
|
|
—
|
|
|||||
Loans due from consolidated affiliates
|
—
|
|
|
674
|
|
|
—
|
|
|
(674
|
)
|
|
—
|
|
|||||
Other non-current assets
|
60
|
|
|
51
|
|
|
361
|
|
|
—
|
|
|
472
|
|
|||||
Total assets
|
$
|
23,251
|
|
|
$
|
27,177
|
|
|
$
|
23,736
|
|
|
$
|
(47,794
|
)
|
|
$
|
26,370
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|||||||||||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
—
|
|
|
$
|
195
|
|
|
$
|
1,372
|
|
|
$
|
—
|
|
|
$
|
1,567
|
|
Accounts payable to related parties
|
—
|
|
|
—
|
|
|
331
|
|
|
—
|
|
|
331
|
|
|||||
Intercompany payables
|
1,871
|
|
|
3,515
|
|
|
4,412
|
|
|
(9,798
|
)
|
|
—
|
|
|||||
Accrued expenses
|
195
|
|
|
522
|
|
|
579
|
|
|
—
|
|
|
1,296
|
|
|||||
Accrued compensation
|
—
|
|
|
214
|
|
|
133
|
|
|
—
|
|
|
347
|
|
|||||
Loans due to consolidated affiliates
|
—
|
|
|
50
|
|
|
—
|
|
|
(50
|
)
|
|
—
|
|
|||||
Current portion of long-term debt
|
276
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
276
|
|
|||||
Total current liabilities
|
2,342
|
|
|
4,496
|
|
|
6,827
|
|
|
(9,848
|
)
|
|
3,817
|
|
|||||
Long-term debt
|
10,213
|
|
|
—
|
|
|
33
|
|
|
—
|
|
|
10,246
|
|
|||||
Loans due to consolidated affiliates
|
674
|
|
|
—
|
|
|
—
|
|
|
(674
|
)
|
|
—
|
|
|||||
Other liabilities
|
55
|
|
|
1,795
|
|
|
490
|
|
|
—
|
|
|
2,340
|
|
|||||
Total liabilities
|
13,284
|
|
|
6,291
|
|
|
7,350
|
|
|
(10,522
|
)
|
|
16,403
|
|
|||||
Total shareholders’ equity
|
9,967
|
|
|
20,886
|
|
|
16,386
|
|
|
(37,272
|
)
|
|
9,967
|
|
|||||
Total liabilities and shareholders’ equity
|
$
|
23,251
|
|
|
$
|
27,177
|
|
|
$
|
23,736
|
|
|
$
|
(47,794
|
)
|
|
$
|
26,370
|
|
Condensed Consolidating Statement of Operations
|
|||||||||||||||||||
For the three months ended January 3, 2020
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
Company |
||||||||||
|
(in millions)
|
||||||||||||||||||
Revenue, net
|
$
|
—
|
|
|
$
|
3,304
|
|
|
$
|
4,041
|
|
|
$
|
(3,111
|
)
|
|
$
|
4,234
|
|
Cost of revenue
|
—
|
|
|
2,881
|
|
|
3,643
|
|
|
(3,225
|
)
|
|
3,299
|
|
|||||
Gross profit
|
—
|
|
|
423
|
|
|
398
|
|
|
114
|
|
|
935
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and development
|
—
|
|
|
362
|
|
|
216
|
|
|
—
|
|
|
578
|
|
|||||
Selling, general and administrative
|
—
|
|
|
196
|
|
|
102
|
|
|
—
|
|
|
298
|
|
|||||
Intercompany operating expense (income)
|
4
|
|
|
(397
|
)
|
|
393
|
|
|
—
|
|
|
—
|
|
|||||
Employee termination, asset impairment, and other charges
|
—
|
|
|
(5
|
)
|
|
14
|
|
|
—
|
|
|
9
|
|
|||||
Total operating expenses
|
4
|
|
|
156
|
|
|
725
|
|
|
—
|
|
|
885
|
|
|||||
Operating income (loss)
|
(4
|
)
|
|
267
|
|
|
(327
|
)
|
|
114
|
|
|
50
|
|
|||||
Interest and other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest income
|
—
|
|
|
16
|
|
|
5
|
|
|
(13
|
)
|
|
8
|
|
|||||
Interest expense
|
(118
|
)
|
|
—
|
|
|
—
|
|
|
13
|
|
|
(105
|
)
|
|||||
Other income, net
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
|||||
Total interest and other income (expense), net
|
(118
|
)
|
|
16
|
|
|
12
|
|
|
—
|
|
|
(90
|
)
|
|||||
Income (loss) before taxes
|
(122
|
)
|
|
283
|
|
|
(315
|
)
|
|
114
|
|
|
(40
|
)
|
|||||
Equity in earnings from subsidiaries
|
(42
|
)
|
|
(384
|
)
|
|
—
|
|
|
426
|
|
|
—
|
|
|||||
Income tax expense (benefit)
|
(25
|
)
|
|
55
|
|
|
69
|
|
|
—
|
|
|
99
|
|
|||||
Net loss
|
$
|
(139
|
)
|
|
$
|
(156
|
)
|
|
$
|
(384
|
)
|
|
$
|
540
|
|
|
$
|
(139
|
)
|
Condensed Consolidating Statement of Operations
|
|||||||||||||||||||
For the six months ended January 3, 2020
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
Company |
||||||||||
|
(in millions)
|
||||||||||||||||||
Revenue, net
|
$
|
—
|
|
|
$
|
6,665
|
|
|
$
|
8,025
|
|
|
$
|
(6,416
|
)
|
|
$
|
8,274
|
|
Cost of revenue
|
—
|
|
|
5,833
|
|
|
7,333
|
|
|
(6,585
|
)
|
|
6,581
|
|
|||||
Gross profit
|
—
|
|
|
832
|
|
|
692
|
|
|
169
|
|
|
1,693
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and development
|
—
|
|
|
726
|
|
|
426
|
|
|
—
|
|
|
1,152
|
|
|||||
Selling, general and administrative
|
1
|
|
|
399
|
|
|
203
|
|
|
—
|
|
|
603
|
|
|||||
Intercompany operating expense (income)
|
7
|
|
|
(822
|
)
|
|
815
|
|
|
—
|
|
|
—
|
|
|||||
Employee termination, asset impairment, and other charges
|
—
|
|
|
(5
|
)
|
|
22
|
|
|
—
|
|
|
17
|
|
|||||
Total operating expenses
|
8
|
|
|
298
|
|
|
1,466
|
|
|
—
|
|
|
1,772
|
|
|||||
Operating income (loss)
|
(8
|
)
|
|
534
|
|
|
(774
|
)
|
|
169
|
|
|
(79
|
)
|
|||||
Interest and other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest income
|
—
|
|
|
28
|
|
|
15
|
|
|
(23
|
)
|
|
20
|
|
|||||
Interest expense
|
(249
|
)
|
|
—
|
|
|
(1
|
)
|
|
23
|
|
|
(227
|
)
|
|||||
Other income, net
|
—
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
9
|
|
|||||
Total interest and other income (expense), net
|
(249
|
)
|
|
28
|
|
|
23
|
|
|
—
|
|
|
(198
|
)
|
|||||
Income (loss) before taxes
|
(257
|
)
|
|
562
|
|
|
(751
|
)
|
|
169
|
|
|
(277
|
)
|
|||||
Equity in earnings from subsidiaries
|
(206
|
)
|
|
(844
|
)
|
|
—
|
|
|
1,050
|
|
|
—
|
|
|||||
Income tax expense (benefit)
|
(48
|
)
|
|
94
|
|
|
92
|
|
|
—
|
|
|
138
|
|
|||||
Net loss
|
$
|
(415
|
)
|
|
$
|
(376
|
)
|
|
$
|
(843
|
)
|
|
$
|
1,219
|
|
|
$
|
(415
|
)
|
Condensed Consolidating Statement of Operations
|
|||||||||||||||||||
For the three months ended December 28, 2018
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
Company |
||||||||||
|
(in millions)
|
||||||||||||||||||
Revenue, net
|
$
|
—
|
|
|
$
|
3,392
|
|
|
$
|
4,857
|
|
|
$
|
(4,016
|
)
|
|
$
|
4,233
|
|
Cost of revenue
|
—
|
|
|
2,942
|
|
|
4,215
|
|
|
(3,968
|
)
|
|
3,189
|
|
|||||
Gross profit
|
—
|
|
|
450
|
|
|
642
|
|
|
(48
|
)
|
|
1,044
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and development
|
—
|
|
|
334
|
|
|
205
|
|
|
—
|
|
|
539
|
|
|||||
Selling, general and administrative
|
—
|
|
|
214
|
|
|
95
|
|
|
—
|
|
|
309
|
|
|||||
Intercompany operating expense (income)
|
—
|
|
|
(347
|
)
|
|
347
|
|
|
—
|
|
|
—
|
|
|||||
Employee termination, asset impairment, and other charges
|
—
|
|
|
6
|
|
|
14
|
|
|
—
|
|
|
20
|
|
|||||
Total operating expenses
|
—
|
|
|
207
|
|
|
661
|
|
|
—
|
|
|
868
|
|
|||||
Operating income (loss)
|
—
|
|
|
243
|
|
|
(19
|
)
|
|
(48
|
)
|
|
176
|
|
|||||
Interest and other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest income
|
2
|
|
|
4
|
|
|
12
|
|
|
(3
|
)
|
|
15
|
|
|||||
Interest expense
|
(118
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
3
|
|
|
(118
|
)
|
|||||
Other income (expense), net
|
—
|
|
|
(2
|
)
|
|
8
|
|
|
2
|
|
|
8
|
|
|||||
Total interest and other income (expense), net
|
(116
|
)
|
|
—
|
|
|
19
|
|
|
2
|
|
|
(95
|
)
|
|||||
Income (loss) before taxes
|
(116
|
)
|
|
243
|
|
|
—
|
|
|
(46
|
)
|
|
81
|
|
|||||
Equity in earnings from subsidiaries
|
(468
|
)
|
|
(133
|
)
|
|
—
|
|
|
601
|
|
|
—
|
|
|||||
Income tax expense (benefit)
|
(97
|
)
|
|
532
|
|
|
133
|
|
|
—
|
|
|
568
|
|
|||||
Net loss
|
$
|
(487
|
)
|
|
$
|
(422
|
)
|
|
$
|
(133
|
)
|
|
$
|
555
|
|
|
$
|
(487
|
)
|
Condensed Consolidating Statement of Operations
|
|||||||||||||||||||
For the six months ended December 28, 2018
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
Company |
||||||||||
|
(in millions)
|
||||||||||||||||||
Revenue, net
|
$
|
—
|
|
|
$
|
6,877
|
|
|
$
|
9,853
|
|
|
$
|
(7,469
|
)
|
|
$
|
9,261
|
|
Cost of revenue
|
—
|
|
|
5,947
|
|
|
8,039
|
|
|
(7,433
|
)
|
|
6,553
|
|
|||||
Gross profit
|
—
|
|
|
930
|
|
|
1,814
|
|
|
(36
|
)
|
|
2,708
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and development
|
—
|
|
|
697
|
|
|
418
|
|
|
—
|
|
|
1,115
|
|
|||||
Selling, general and administrative
|
1
|
|
|
465
|
|
|
199
|
|
|
—
|
|
|
665
|
|
|||||
Intercompany operating expense (income)
|
—
|
|
|
(754
|
)
|
|
754
|
|
|
—
|
|
|
—
|
|
|||||
Employee termination, asset impairment, and other charges
|
—
|
|
|
38
|
|
|
28
|
|
|
—
|
|
|
66
|
|
|||||
Total operating expenses
|
1
|
|
|
446
|
|
|
1,399
|
|
|
—
|
|
|
1,846
|
|
|||||
Operating income (loss)
|
(1
|
)
|
|
484
|
|
|
415
|
|
|
(36
|
)
|
|
862
|
|
|||||
Interest and other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest income
|
10
|
|
|
7
|
|
|
24
|
|
|
(11
|
)
|
|
30
|
|
|||||
Interest expense
|
(234
|
)
|
|
(8
|
)
|
|
(3
|
)
|
|
11
|
|
|
(234
|
)
|
|||||
Other income (expense), net
|
1
|
|
|
(2
|
)
|
|
7
|
|
|
—
|
|
|
6
|
|
|||||
Total interest and other income (expense), net
|
(223
|
)
|
|
(3
|
)
|
|
28
|
|
|
—
|
|
|
(198
|
)
|
|||||
Income (loss) before taxes
|
(224
|
)
|
|
481
|
|
|
443
|
|
|
(36
|
)
|
|
664
|
|
|||||
Equity in earnings from subsidiaries
|
7
|
|
|
212
|
|
|
—
|
|
|
(219
|
)
|
|
—
|
|
|||||
Income tax expense (benefit)
|
(241
|
)
|
|
650
|
|
|
231
|
|
|
—
|
|
|
640
|
|
|||||
Net income
|
$
|
24
|
|
|
$
|
43
|
|
|
$
|
212
|
|
|
$
|
(255
|
)
|
|
$
|
24
|
|
Condensed Consolidating Statement of Comprehensive Income (Loss)
|
|||||||||||||||||||
For the three months ended January 3, 2020
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
Company |
||||||||||
|
(in millions)
|
||||||||||||||||||
Net loss
|
$
|
(139
|
)
|
|
$
|
(156
|
)
|
|
$
|
(384
|
)
|
|
$
|
540
|
|
|
$
|
(139
|
)
|
Other comprehensive loss, before tax:
|
|
|
|
|
|
|
|
|
|
||||||||||
Actuarial pension gain
|
2
|
|
|
2
|
|
|
2
|
|
|
(4
|
)
|
|
2
|
|
|||||
Foreign currency translation adjustment
|
(15
|
)
|
|
(13
|
)
|
|
(13
|
)
|
|
26
|
|
|
(15
|
)
|
|||||
Net unrealized loss, on derivative contracts and available-for-sale securities
|
(6
|
)
|
|
(26
|
)
|
|
(14
|
)
|
|
40
|
|
|
(6
|
)
|
|||||
Total other comprehensive loss, before tax
|
(19
|
)
|
|
(37
|
)
|
|
(25
|
)
|
|
62
|
|
|
(19
|
)
|
|||||
Income tax benefit (expense) related to items of other comprehensive loss
|
(1
|
)
|
|
4
|
|
|
1
|
|
|
(5
|
)
|
|
(1
|
)
|
|||||
Other comprehensive loss, net of tax
|
(20
|
)
|
|
(33
|
)
|
|
(24
|
)
|
|
57
|
|
|
(20
|
)
|
|||||
Total comprehensive loss
|
$
|
(159
|
)
|
|
$
|
(189
|
)
|
|
$
|
(408
|
)
|
|
$
|
597
|
|
|
$
|
(159
|
)
|
Condensed Consolidating Statement of Comprehensive Income (Loss)
|
|||||||||||||||||||
For the six months ended January 3, 2020
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
Company |
||||||||||
|
(in millions)
|
||||||||||||||||||
Net loss
|
$
|
(415
|
)
|
|
$
|
(376
|
)
|
|
$
|
(843
|
)
|
|
$
|
1,219
|
|
|
$
|
(415
|
)
|
Other comprehensive loss, before tax:
|
|
|
|
|
|
|
|
|
|
||||||||||
Actuarial pension gain
|
3
|
|
|
3
|
|
|
3
|
|
|
(6
|
)
|
|
3
|
|
|||||
Foreign currency translation adjustment
|
(10
|
)
|
|
(8
|
)
|
|
(8
|
)
|
|
16
|
|
|
(10
|
)
|
|||||
Net unrealized loss, on derivative contracts and available-for-sale securities
|
(39
|
)
|
|
(34
|
)
|
|
(23
|
)
|
|
57
|
|
|
(39
|
)
|
|||||
Total other comprehensive loss, before tax
|
(46
|
)
|
|
(39
|
)
|
|
(28
|
)
|
|
67
|
|
|
(46
|
)
|
|||||
Income tax benefit (expense) related to items of other comprehensive loss
|
4
|
|
|
3
|
|
|
—
|
|
|
(3
|
)
|
|
4
|
|
|||||
Other comprehensive loss, net of tax
|
(42
|
)
|
|
(36
|
)
|
|
(28
|
)
|
|
64
|
|
|
(42
|
)
|
|||||
Total comprehensive loss
|
$
|
(457
|
)
|
|
$
|
(412
|
)
|
|
$
|
(871
|
)
|
|
$
|
1,283
|
|
|
$
|
(457
|
)
|
Condensed Consolidating Statement of Comprehensive Income (Loss)
|
|||||||||||||||||||
For the three months ended December 28, 2018
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
Company |
||||||||||
|
(in millions)
|
||||||||||||||||||
Net income
|
$
|
(487
|
)
|
|
$
|
(422
|
)
|
|
$
|
(133
|
)
|
|
$
|
555
|
|
|
$
|
(487
|
)
|
Other comprehensive income, before tax:
|
|
|
|
|
|
|
|
|
|
||||||||||
Actuarial pension gain
|
1
|
|
|
1
|
|
|
1
|
|
|
(2
|
)
|
|
1
|
|
|||||
Foreign currency translation adjustment
|
31
|
|
|
32
|
|
|
32
|
|
|
(64
|
)
|
|
31
|
|
|||||
Net unrealized gain, on derivative contracts and available-for-sale securities
|
7
|
|
|
30
|
|
|
30
|
|
|
(60
|
)
|
|
7
|
|
|||||
Total other comprehensive income, before tax
|
39
|
|
|
63
|
|
|
63
|
|
|
(126
|
)
|
|
39
|
|
|||||
Income tax benefit (expense) related to items of other comprehensive income
|
3
|
|
|
(2
|
)
|
|
(2
|
)
|
|
3
|
|
|
2
|
|
|||||
Other comprehensive income, net of tax
|
42
|
|
|
61
|
|
|
61
|
|
|
(123
|
)
|
|
41
|
|
|||||
Total comprehensive loss
|
$
|
(445
|
)
|
|
$
|
(361
|
)
|
|
$
|
(72
|
)
|
|
$
|
432
|
|
|
$
|
(446
|
)
|
Condensed Consolidating Statement of Comprehensive Income (Loss)
|
|||||||||||||||||||
For the six months ended December 28, 2018
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
Company |
||||||||||
|
(in millions)
|
||||||||||||||||||
Net income
|
$
|
24
|
|
|
$
|
43
|
|
|
$
|
212
|
|
|
$
|
(255
|
)
|
|
$
|
24
|
|
Other comprehensive income, before tax:
|
|
|
|
|
|
|
|
|
|
||||||||||
Actuarial pension gain
|
1
|
|
|
1
|
|
|
1
|
|
|
(2
|
)
|
|
1
|
|
|||||
Foreign currency translation adjustment
|
(6
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
4
|
|
|
(6
|
)
|
|||||
Net unrealized gain, on derivative contracts and available-for-sale securities
|
6
|
|
|
22
|
|
|
20
|
|
|
(42
|
)
|
|
6
|
|
|||||
Total other comprehensive income, before tax
|
1
|
|
|
21
|
|
|
19
|
|
|
(40
|
)
|
|
1
|
|
|||||
Income tax benefit (expense) related to items of other comprehensive income
|
4
|
|
|
(2
|
)
|
|
(1
|
)
|
|
2
|
|
|
3
|
|
|||||
Other comprehensive income, net of tax
|
5
|
|
|
19
|
|
|
18
|
|
|
(38
|
)
|
|
4
|
|
|||||
Total comprehensive income
|
$
|
29
|
|
|
$
|
62
|
|
|
$
|
230
|
|
|
$
|
(293
|
)
|
|
$
|
28
|
|
Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||||||
For the six months ended January 3, 2020
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
Company |
||||||||||
|
(in millions)
|
||||||||||||||||||
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
(24
|
)
|
|
$
|
499
|
|
|
$
|
(125
|
)
|
|
$
|
160
|
|
|
$
|
510
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property, plant and equipment
|
—
|
|
|
(84
|
)
|
|
(221
|
)
|
|
—
|
|
|
(305
|
)
|
|||||
Acquisitions, net of cash acquired
|
—
|
|
|
(2
|
)
|
|
(20
|
)
|
|
—
|
|
|
(22
|
)
|
|||||
Notes receivable issuances to Flash Ventures
|
—
|
|
|
—
|
|
|
(224
|
)
|
|
—
|
|
|
(224
|
)
|
|||||
Notes receivable proceeds from Flash Ventures
|
—
|
|
|
—
|
|
|
690
|
|
|
—
|
|
|
690
|
|
|||||
Strategic investments and other, net
|
—
|
|
|
6
|
|
|
15
|
|
|
—
|
|
|
21
|
|
|||||
Intercompany loan from (to) consolidated affiliates
|
—
|
|
|
(952
|
)
|
|
(208
|
)
|
|
1,160
|
|
|
—
|
|
|||||
Advances from (to) parent and consolidated affiliates
|
(71
|
)
|
|
71
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net cash provided by (used in) investing activities
|
(71
|
)
|
|
(961
|
)
|
|
32
|
|
|
1,160
|
|
|
160
|
|
|||||
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Issuance of stock under employee stock plans
|
72
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
72
|
|
|||||
Taxes paid on vested stock awards under employee stock plans
|
(54
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(54
|
)
|
|||||
Dividends paid to shareholders
|
(296
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(296
|
)
|
|||||
Repayment of debt
|
(707
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(707
|
)
|
|||||
Intercompany loan from (to) consolidated affiliates
|
929
|
|
|
208
|
|
|
23
|
|
|
(1,160
|
)
|
|
—
|
|
|||||
Change in investment in consolidated subsidiaries
|
154
|
|
|
55
|
|
|
(49
|
)
|
|
(160
|
)
|
|
—
|
|
|||||
Net cash provided by (used in) financing activities
|
98
|
|
|
263
|
|
|
(26
|
)
|
|
(1,320
|
)
|
|
(985
|
)
|
|||||
Effect of exchange rate changes on cash
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
3
|
|
|
(199
|
)
|
|
(122
|
)
|
|
—
|
|
|
(318
|
)
|
|||||
Cash and cash equivalents, beginning of year
|
8
|
|
|
985
|
|
|
2,462
|
|
|
—
|
|
|
3,455
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
11
|
|
|
$
|
786
|
|
|
$
|
2,340
|
|
|
$
|
—
|
|
|
$
|
3,137
|
|
Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||||||
For the six months ended December 28, 2018
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
Company |
||||||||||
|
(in millions)
|
||||||||||||||||||
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
103
|
|
|
$
|
(819
|
)
|
|
$
|
1,934
|
|
|
$
|
(44
|
)
|
|
$
|
1,174
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property, plant and equipment
|
—
|
|
|
(129
|
)
|
|
(371
|
)
|
|
—
|
|
|
(500
|
)
|
|||||
Proceeds from the sale of property, plant and equipment
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|||||
Purchases of investments
|
—
|
|
|
(11
|
)
|
|
(22
|
)
|
|
—
|
|
|
(33
|
)
|
|||||
Proceeds from sale of investments
|
—
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
13
|
|
|||||
Proceeds from maturities of investments
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
|||||
Notes receivable issuances to Flash Ventures
|
—
|
|
|
—
|
|
|
(508
|
)
|
|
—
|
|
|
(508
|
)
|
|||||
Notes receivable proceeds from Flash Ventures
|
—
|
|
|
—
|
|
|
312
|
|
|
—
|
|
|
312
|
|
|||||
Strategic investments and other, net
|
—
|
|
|
(1
|
)
|
|
(18
|
)
|
|
—
|
|
|
(19
|
)
|
|||||
Intercompany loan from (to) consolidated affiliates
|
943
|
|
|
(370
|
)
|
|
—
|
|
|
(573
|
)
|
|
—
|
|
|||||
Advances from (to) parent and consolidated affiliates
|
(215
|
)
|
|
215
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net cash provided by (used in) investing activities
|
728
|
|
|
(296
|
)
|
|
(584
|
)
|
|
(573
|
)
|
|
(725
|
)
|
|||||
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Issuance of stock under employee stock plans
|
61
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
61
|
|
|||||
Taxes paid on vested stock awards under employee stock plans
|
(69
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(69
|
)
|
|||||
Repurchases of common stock
|
(563
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(563
|
)
|
|||||
Dividends paid to shareholders
|
(292
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(292
|
)
|
|||||
Repayment of debt
|
(75
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(75
|
)
|
|||||
Proceeds from (repayment of) revolving credit facility
|
(500
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(500
|
)
|
|||||
Intercompany loan from (to) consolidated affiliates
|
370
|
|
|
(387
|
)
|
|
(556
|
)
|
|
573
|
|
|
—
|
|
|||||
Change in investment in consolidated subsidiaries
|
214
|
|
|
1,997
|
|
|
(2,255
|
)
|
|
44
|
|
|
—
|
|
|||||
Net cash provided by (used in) financing activities
|
(854
|
)
|
|
1,610
|
|
|
(2,811
|
)
|
|
617
|
|
|
(1,438
|
)
|
|||||
Effect of exchange rate changes on cash
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
(23
|
)
|
|
495
|
|
|
(1,464
|
)
|
|
—
|
|
|
(992
|
)
|
|||||
Cash and cash equivalents, beginning of year
|
40
|
|
|
668
|
|
|
4,297
|
|
|
—
|
|
|
5,005
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
17
|
|
|
$
|
1,163
|
|
|
$
|
2,833
|
|
|
$
|
—
|
|
|
$
|
4,013
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Three Months Ended
|
|||||||||||||||||||
|
January 3,
2020 |
|
December 28,
2018 |
|
$ Change
|
|
% Change
|
|||||||||||||
|
($ in millions)
|
|||||||||||||||||||
Revenue, net
|
$
|
4,234
|
|
|
100.0
|
%
|
|
$
|
4,233
|
|
|
100.0
|
%
|
|
$
|
1
|
|
|
—
|
%
|
Cost of revenue
|
3,299
|
|
|
77.9
|
|
|
3,189
|
|
|
75.3
|
|
|
110
|
|
|
3
|
|
|||
Gross profit
|
935
|
|
|
22.1
|
|
|
1,044
|
|
|
24.7
|
|
|
(109
|
)
|
|
(10
|
)
|
|||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Research and development
|
578
|
|
|
13.7
|
|
|
539
|
|
|
12.7
|
|
|
39
|
|
|
7
|
|
|||
Selling, general and administrative
|
298
|
|
|
7.0
|
|
|
309
|
|
|
7.3
|
|
|
(11
|
)
|
|
(4
|
)
|
|||
Employee termination, asset impairment, and other charges
|
9
|
|
|
0.2
|
|
|
20
|
|
|
0.5
|
|
|
(11
|
)
|
|
(55
|
)
|
|||
Total operating expenses
|
885
|
|
|
20.9
|
|
|
868
|
|
|
20.5
|
|
|
17
|
|
|
2
|
|
|||
Operating income (loss)
|
50
|
|
|
1.2
|
|
|
176
|
|
|
4.2
|
|
|
(126
|
)
|
|
(72
|
)
|
|||
Interest and other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest income
|
8
|
|
|
0.2
|
|
|
15
|
|
|
0.4
|
|
|
(7
|
)
|
|
(47
|
)
|
|||
Interest expense
|
(105
|
)
|
|
(2.5
|
)
|
|
(118
|
)
|
|
(2.8
|
)
|
|
13
|
|
|
(11
|
)
|
|||
Other income (expense), net
|
7
|
|
|
0.2
|
|
|
8
|
|
|
0.2
|
|
|
(1
|
)
|
|
(13
|
)
|
|||
Total interest and other expense, net
|
(90
|
)
|
|
(2.1
|
)
|
|
(95
|
)
|
|
(2.2
|
)
|
|
5
|
|
|
(5
|
)
|
|||
Income (loss) before taxes
|
(40
|
)
|
|
(0.9
|
)
|
|
81
|
|
|
1.9
|
|
|
(121
|
)
|
|
(149
|
)
|
|||
Income tax expense
|
99
|
|
|
2.3
|
|
|
568
|
|
|
13.4
|
|
|
(469
|
)
|
|
(83
|
)
|
|||
Net income (loss)
|
$
|
(139
|
)
|
|
(3.3
|
)
|
|
$
|
(487
|
)
|
|
(11.5
|
)
|
|
348
|
|
|
(71
|
)
|
|
|
(1)
|
Percentages may not total due to rounding.
|
|
Six Months Ended
|
|||||||||||||||||||
|
January 3,
2020 |
|
December 28,
2018 |
|
$ Change
|
|
% Change
|
|||||||||||||
|
($ in millions)
|
|||||||||||||||||||
Revenue, net
|
$
|
8,274
|
|
|
100.0
|
%
|
|
$
|
9,261
|
|
|
100.0
|
%
|
|
$
|
(987
|
)
|
|
(11
|
)%
|
Cost of revenue
|
6,581
|
|
|
79.5
|
|
|
6,553
|
|
|
70.8
|
|
|
28
|
|
|
—
|
|
|||
Gross profit
|
1,693
|
|
|
20.5
|
|
|
2,708
|
|
|
29.2
|
|
|
(1,015
|
)
|
|
(37
|
)
|
|||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Research and development
|
1,152
|
|
|
13.9
|
|
|
1,115
|
|
|
12.0
|
|
|
37
|
|
|
3
|
|
|||
Selling, general and administrative
|
603
|
|
|
7.3
|
|
|
665
|
|
|
7.2
|
|
|
(62
|
)
|
|
(9
|
)
|
|||
Employee termination, asset impairment, and other charges
|
17
|
|
|
0.2
|
|
|
66
|
|
|
0.7
|
|
|
(49
|
)
|
|
(74
|
)
|
|||
Total operating expenses
|
1,772
|
|
|
21.4
|
|
|
1,846
|
|
|
19.9
|
|
|
(74
|
)
|
|
(4
|
)
|
|||
Operating income (loss)
|
(79
|
)
|
|
(1.0
|
)
|
|
862
|
|
|
9.3
|
|
|
(941
|
)
|
|
(109
|
)
|
|||
Interest and other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest income
|
20
|
|
|
0.2
|
|
|
30
|
|
|
0.3
|
|
|
(10
|
)
|
|
(33
|
)
|
|||
Interest expense
|
(227
|
)
|
|
(2.7
|
)
|
|
(234
|
)
|
|
(2.5
|
)
|
|
7
|
|
|
(3
|
)
|
|||
Other income (expense), net
|
9
|
|
|
0.1
|
|
|
6
|
|
|
0.1
|
|
|
3
|
|
|
50
|
|
|||
Total interest and other expense, net
|
(198
|
)
|
|
(2.4
|
)
|
|
(198
|
)
|
|
(2.1
|
)
|
|
—
|
|
|
—
|
|
|||
Income (loss) before taxes
|
(277
|
)
|
|
(3.3
|
)
|
|
664
|
|
|
7.2
|
|
|
(941
|
)
|
|
(142
|
)
|
|||
Income tax expense
|
138
|
|
|
1.7
|
|
|
640
|
|
|
6.9
|
|
|
(502
|
)
|
|
(78
|
)
|
|||
Net income (loss)
|
$
|
(415
|
)
|
|
(5.0
|
)
|
|
$
|
24
|
|
|
0.3
|
|
|
(439
|
)
|
|
(1,829
|
)
|
(1)
|
Percentages may not total due to rounding.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
January 3,
2020 |
|
December 28, 2018
|
|
January 3,
2020 |
|
December 28, 2018
|
||||||||
|
(in millions)
|
||||||||||||||
Revenue by Product
|
|
|
|
|
|
|
|
||||||||
Hard disk drives (“HDD”)
|
$
|
2,396
|
|
|
$
|
2,060
|
|
|
$
|
4,804
|
|
|
$
|
4,554
|
|
Flash-based
|
1,838
|
|
|
2,173
|
|
|
3,470
|
|
|
4,707
|
|
||||
Total Revenue
|
$
|
4,234
|
|
|
$
|
4,233
|
|
|
$
|
8,274
|
|
|
$
|
9,261
|
|
|
|
|
|
|
|
|
|
||||||||
Revenue by End Market
|
|
|
|
|
|
|
|
||||||||
Client Devices
|
$
|
1,797
|
|
|
$
|
2,214
|
|
|
$
|
3,413
|
|
|
$
|
4,864
|
|
Data Center Devices & Solutions
|
1,489
|
|
|
1,074
|
|
|
3,021
|
|
|
2,520
|
|
||||
Client Solutions
|
948
|
|
|
945
|
|
|
1,840
|
|
|
1,877
|
|
||||
Total Revenue
|
$
|
4,234
|
|
|
$
|
4,233
|
|
|
$
|
8,274
|
|
|
$
|
9,261
|
|
|
|
|
|
|
|
|
|
||||||||
Revenue by Geography
|
|
|
|
|
|
|
|
||||||||
Americas
|
$
|
1,296
|
|
|
$
|
1,015
|
|
|
$
|
2,609
|
|
|
$
|
2,296
|
|
Europe, Middle East and Africa
|
811
|
|
|
817
|
|
|
1,590
|
|
|
1,701
|
|
||||
Asia
|
2,127
|
|
|
2,401
|
|
|
4,075
|
|
|
5,264
|
|
||||
Total Revenue
|
$
|
4,234
|
|
|
$
|
4,233
|
|
|
$
|
8,274
|
|
|
$
|
9,261
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
January 3,
2020 |
|
December 28,
2018 |
|
January 3,
2020 |
|
December 28,
2018 |
||||||||
|
(in millions, except percentages)
|
|
(in millions, except percentages)
|
||||||||||||
Income (loss) before taxes
|
$
|
(40
|
)
|
|
$
|
81
|
|
|
$
|
(277
|
)
|
|
$
|
664
|
|
Income tax expense (benefit)
|
99
|
|
|
568
|
|
|
138
|
|
|
640
|
|
||||
Effective tax rate
|
(248
|
)%
|
|
701
|
%
|
|
(50
|
)%
|
|
96
|
%
|
|
Six Months Ended
|
||||||
|
January 3,
2020 |
|
December 28,
2018 |
||||
|
(in millions)
|
||||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
510
|
|
|
$
|
1,174
|
|
Investing activities
|
160
|
|
|
(725
|
)
|
||
Financing activities
|
(985
|
)
|
|
(1,438
|
)
|
||
Effect of exchange rate changes on cash
|
(3
|
)
|
|
(3
|
)
|
||
Net decrease in cash and cash equivalents
|
$
|
(318
|
)
|
|
$
|
(992
|
)
|
|
Three Months Ended
|
||||
|
January 3,
2020 |
|
December 28,
2018 |
||
|
(in days)
|
||||
Days sales outstanding
|
38
|
|
|
37
|
|
Days in inventory
|
86
|
|
|
98
|
|
Days payables outstanding
|
(58
|
)
|
|
(64
|
)
|
Cash conversion cycle
|
66
|
|
|
71
|
|
|
Total
|
|
1 Year (Remaining 6 months of 2020)
|
|
2-3 Years (2021-2022)
|
|
4-5 Years (2023-2024)
|
|
More than 5 Years (Beyond 2024)
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Long-term debt, including current portion(1)
|
$
|
9,986
|
|
|
$
|
126
|
|
|
$
|
537
|
|
|
$
|
7,023
|
|
|
$
|
2,300
|
|
Interest on debt
|
1,526
|
|
|
182
|
|
|
716
|
|
|
409
|
|
|
219
|
|
|||||
Flash Ventures related commitments(2)
|
5,939
|
|
|
1,542
|
|
|
2,963
|
|
|
1,222
|
|
|
212
|
|
|||||
Operating leases
|
321
|
|
|
26
|
|
|
75
|
|
|
52
|
|
|
168
|
|
|||||
Purchase obligations and other commitments
|
3,278
|
|
|
1,604
|
|
|
748
|
|
|
588
|
|
|
338
|
|
|||||
Mandatory Deemed Repatriation Tax
|
1,056
|
|
|
14
|
|
|
199
|
|
|
285
|
|
|
558
|
|
|||||
Total
|
$
|
22,106
|
|
|
$
|
3,494
|
|
|
$
|
5,238
|
|
|
$
|
9,579
|
|
|
$
|
3,795
|
|
|
|
(1)
|
Principal portion of debt, excluding discounts and issuance costs.
|
(2)
|
Includes reimbursement for depreciation and lease payments on owned and committed equipment, funding commitments for loans and equity investments and payments for other committed expenses, including R&D and building depreciation. Funding commitments assume no additional operating lease guarantees. Additional operating lease guarantees can reduce funding commitments.
|
|
|
January 3,
2020 |
||
Remaining six months of 2020
|
|
$
|
14
|
|
2021
|
|
99
|
|
|
2022
|
|
100
|
|
|
2023
|
|
99
|
|
|
2024
|
|
186
|
|
|
2025
|
|
248
|
|
|
2026
|
|
310
|
|
|
Total
|
|
$
|
1,056
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
•
|
obtaining requisite governmental permits and approvals, compliance with foreign laws and regulations and changes in foreign laws and regulations;
|
•
|
the need to comply with regulations on international business, including the Foreign Corrupt Practices Act, the United Kingdom Bribery Act 2010, the anti-bribery laws of other countries and rules regarding conflict minerals;
|
•
|
copyright levies or similar fees or taxes imposed in European and other countries;
|
•
|
exchange, currency and tax controls and reallocations;
|
•
|
weaker protection of IP rights;
|
•
|
trade restrictions, such as export controls, export bans, embargoes, sanctions, license and certification requirements (including semiconductor, encryption and other technology), new or increased tariffs and fees and complex customs regulations; and
|
•
|
difficulties in managing international operations, including appropriate internal controls.
|
•
|
R&D expenses and results;
|
•
|
difficulties faced in manufacturing ramp;
|
•
|
market acceptance/qualification;
|
•
|
effective management of inventory levels in line with anticipated product demand;
|
•
|
the vertical integration of some of our products, which may result in more capital expenditures and greater fixed costs than if we were not vertically integrated;
|
•
|
our ability to cost effectively respond to customer requests for new products or features and software associated with our products;
|
•
|
our ability to increase our software development capability; and
|
•
|
the effectiveness of our go-to-market capability in selling new products.
|
•
|
our interests could diverge from our partners’ interests or we may not agree with co-venturers on ongoing activities, technology transitions or on the amount, timing or nature of further investments in the relationship;
|
•
|
we may experience difficulties and delays in product and technology development at, ramping production at, and transferring technology to, our business ventures;
|
•
|
our control over the operations of our business ventures is limited;
|
•
|
due to financial constraints, our co-venturers may be unable to meet their commitments to us or may pose credit risks for our transactions with them;
|
•
|
due to differing business models, financial constraints or long-term business goals, our partners may decide not to join us in funding capital investment by our business ventures, which may result in higher levels of cash expenditures by us or prevent us from proceeding in the investment;
|
•
|
we may lose the rights to technology or products being developed by the strategic relationship, including if any of our co-venturers is acquired by another company or otherwise transfers its interest in the business venture, files for bankruptcy or experiences financial or other losses;
|
•
|
a bankruptcy event involving a co-venturer could result in the early termination or adverse modification of the business venture or agreements governing the business venture;
|
•
|
we may experience difficulties or delays in collecting amounts due to us from our co-venturers;
|
•
|
the terms of our arrangements may turn out to be unfavorable; and
|
•
|
changes in tax, legal or regulatory requirements may necessitate changes in the agreements with our co-venturers.
|
•
|
limiting our ability to obtain additional financing for working capital, capital expenditures, acquisitions or other general corporate purposes;
|
•
|
requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes;
|
•
|
imposing financial and other restrictive covenants on our operations, including limiting our ability to (i) declare or pay dividends or repurchase shares of our common stock; (ii) purchase assets, make investments, complete acquisitions, consolidate or merge with or into, or sell all or substantially all of our assets to, another person; (iii) dispose of assets; (iv) incur liens; and (v) enter into transactions with affiliates; and
|
•
|
making us more vulnerable to economic downturns and limiting our ability to withstand competitive pressures or take advantage of new opportunities to grow our business.
|
•
|
weakness in demand for one or more product categories;
|
•
|
the timing of orders from and shipment of products to major customers or loss of major customers;
|
•
|
our product mix;
|
•
|
reductions in the ASPs of our products and lower margins;
|
•
|
excess output, capacity or inventory, resulting in lower ASPs, financial charges or impairments, or insufficient output, capacity or inventory, resulting in lost revenue opportunities;
|
•
|
inability to successfully implement technology transitions or other technology developments, or other failure to reduce product costs to keep pace with reduction in ASPs;
|
•
|
manufacturing delays or interruptions;
|
•
|
delays in design wins or customer qualifications, acceptance by customers of competing products in lieu of our products;
|
•
|
variations in the cost of and lead times for components for our products, disruptions of our supply chain;
|
•
|
increase in costs due to warranty claims; and
|
•
|
higher costs as a result of currency exchange rate fluctuations.
|
•
|
price protection adjustments and other sales promotions and allowances on products sold to retailers, resellers and distributors;
|
•
|
inventory adjustments for write-down of inventories to lower of cost or net realizable value;
|
•
|
testing of goodwill and other long-lived assets for impairment;
|
•
|
accruals for product returns;
|
•
|
accruals for litigation and other contingencies;
|
•
|
valuation allowances on deferred tax assets;
|
•
|
liabilities for unrecognized tax benefits; and
|
•
|
provisional estimates related to tax reform.
|
•
|
actual or anticipated fluctuations in our operating results, including those resulting from the seasonality of our business;
|
•
|
perceptions about our strategic relationships and joint ventures, access to supply of flash-based memory, new technologies and technology transitions;
|
•
|
announcements of technological innovations or new products by us or our competitors, which may decrease the volume and profitability of sales of our existing products and increase the risk of inventory obsolescence;
|
•
|
strategic actions by us or competitors, such as acquisitions and restructurings;
|
•
|
periods of severe pricing pressures due to oversupply or price erosion resulting from competitive pressures or industry consolidation;
|
•
|
proposed or adopted regulatory changes or developments or anticipated or pending investigations, proceedings or litigation that involve or affect us or our competitors;
|
•
|
failure to meet analysts’ revenue or earnings estimates or changes in financial estimates or publication of research reports and recommendations by financial analysts relating specifically to us or the storage industry in general;
|
•
|
announcements relating to dividends and share repurchases; and
|
•
|
macroeconomic conditions that affect the market generally and, in particular, developments related to market conditions for our industry.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
Exhibit
Number
|
|
Description
|
|
Amended and Restated Certificate of Incorporation of Western Digital Corporation, as amended to date (Filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on February 8, 2006)
|
|
|
Amended and Restated By-Laws of Western Digital Corporation, as amended effective as of May 2, 2018 (Filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 1-08703) with the Securities and Exchange Commission on May 7, 2018)
|
|
|
Western Digital Corporation Amended and Restated 2017 Performance Incentive Plan (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-08703) with the Securities and Exchange Commission on November 14, 2019)*
|
|
|
Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002†
|
|
|
Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002†
|
|
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
|
|
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
|
|
101.INS
|
|
XBRL Instance Document - formatted in Inline XBRL†
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document†
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document†
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document†
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document†
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document†
|
104
|
|
Cover Page Interactive Data File - formatted in Inline XBRL and contained in Exhibit 101
|
|
|
†
|
Filed with this report.
|
*
|
Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to applicable rules of the Securities and Exchange Commission.
|
**
|
Furnished with this report.
|
|
WESTERN DIGITAL CORPORATION
|
|
|
|
|
|
By:
|
/s/ Gene Zamiska
|
|
|
Gene Zamiska
|
|
|
Vice President, Global Accounting and Chief Accounting Officer
|
|
|
(Principal Accounting Officer)
|
1 Year Western Digital Chart |
1 Month Western Digital Chart |
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