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2013
Annual Report & Form 10-K
Western Digital® Corporation

Table of contents

  • Page 1
    Western Digital Corporation ® Annual Report & Form 10-K 2013

  • Page 2
    .... HGST develops advanced hard drives, enterprise-class solid-state drives and innovative external storage solutions and services used to store, preserve and manage the world's most valued data. Founded by the pioneers of hard drives, HGST provides high-value storage for a broad range of markets...

  • Page 3
    ... Collaborative relationships with customers, the growth in digital data and the acquisition of HGST have led to a 106% increase in revenue since fiscal 2009. and light ultraportable devices and the Connected Life in homes and small and medium-sized businesses. Revenue for fiscal year 2013 was $15...

  • Page 4
    ... state hybrid drives and hard drives designed for new ultraportable devices, $1,055 $611 $703 $509 • FY2010 FY2011 FY2012 FY2013 hard drive and NAS solutions for small and medium-sized businesses (SMB), and FY2009 Research and development continued to increase as we invested in new products...

  • Page 5
    ... to support our future growth and recovered from the Thailand flooding. acquisitions of sTec and VeloBit, which collectively will enhance the value of our offerings in enterprise solid state storage, a fast growing, rapidly changing and highly strategic space, and the acquisition of Arkeia Software...

  • Page 6
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 7
    ...offices) 92612 (Zip Code) Registrant's telephone number, including area code: (949) 672-7000 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, $.01 Par Value Per Share The NASDAQ Stock Market LLC (NASDAQ Global...

  • Page 8
    ... Data ...Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...Item 9A. Controls and Procedures ...Item 9B. Other Information ...Item 10. Item 11. Item 12. Item 13. Item 14. PART III Directors, Executive Officers and Corporate Governance ...Executive...

  • Page 9
    ... executive offices are located at 3355 Michelson Drive, Suite 100, Irvine, California 92612. Our telephone number is (949) 672-7000 and our Web site is www.westerndigital.com. The information on our Web site is not incorporated in this Annual Report on Form 10-K. Western Digital, WD, the WD logo, WD...

  • Page 10
    ... experience and preserve digital content. We design and make storage devices and home entertainment products under the HGST, WD and G-Technology brands. Our principal products today are hard drives that use one or more rotating magnetic disks ("magnetic media") to store and allow fast access to data...

  • Page 11
    ... these efforts include our multi-platter high capacity drives and solid-state drives for the fast growing cloud computing storage market, our low-profile hard drives to address the emerging thin and light UltrabookTM PC and tablet markets, and our Connected Life innovations for the home and small-to...

  • Page 12
    ... data on internal drives because of their portability and security features. We believe hard drive shipments into the external storage market increased 42% in fiscal 2013 from fiscal 2012. Branded products also include media players that connect to a user's television or home theater system and play...

  • Page 13
    ..., Seagate Technology LLC and Toshiba Corporation. The storage industry is increasingly utilizing tiered architectures with hard drives and solid-state drives or solid state hybrid drives to address an expanding set of use cases and applications. Hard drives are highly substitutable due to the...

  • Page 14
    ..., data protection and remote file access. Lastly, our home entertainment solutions include media players which connect to a user's television or home theater system and play digital movies, music and photos from an integrated hard drive, network hard drives, any of our WD®-branded external hard...

  • Page 15
    ... disk surface has a head suspended directly above it, which can read data from or write data to the spinning disk. The PCBA includes both standard and custom integrated circuits, an interface connector to the host computer and a power connector. The integrated circuits on the printed circuit board...

  • Page 16
    ... and to reduce power consumption (by allowing the hard drive to spin down more often). The key challenges of adding the non-volatile memory to the hard drive card are in adding the control electronics for the NAND Flash, the firmware to manage the NAND Flash, qualifying the NAND Flash memory for use...

  • Page 17
    ... regions to provide various levels of testing, processing or recertification of returned products for our customers. For a further discussion of our service and warranty policy, see Part II, Item 8, Note 1 of the Notes to Consolidated Financial Statements included in this Annual Report on Form...

  • Page 18
    ... non-hard drive products, we leverage the efficiencies of contract manufacturers when strategically advantageous. For a discussion of risks related to manufacturing, see Item 1A of this Annual Report on Form 10-K. Materials and Supplies We use a number of components, equipment, goods and services in...

  • Page 19
    ...related to our skilled employees, see Item 1A of this Annual Report on Form 10-K. Available Information We maintain an Internet Web site at www.westerndigital.com. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished...

  • Page 20
    ... Corporation, including as the Executive Vice President of Worldwide Sales and Marketing from April 2001 until February 2005, where he formed and managed the Branded Products Business Unit. Mr. Nickl, 44, was promoted to Executive Vice President and Chief Financial Officer of WDC in August 2012...

  • Page 21
    ...expand Toshiba's capacity to manufacture 3.5-inch hard drives for the desktop, consumer electronics and near-line (business critical) applications. While this divestiture transaction closed in May 2012, we agreed to provide certain support service for those assets for a period of time. If we are not...

  • Page 22
    ... of declining average selling prices ("ASPs"), volatile gross margins and significant shifts in market share, all of which could adversely affect our operating results. Demand for our hard drives depends in large part on the demand for systems manufactured by our customers and on storage upgrades...

  • Page 23
    ..., could adversely affect our business and financial results or operating efficiencies. The data storage industry faces difficulties in accurately forecasting market and customer demand for its products. The variety and volume of products we manufacture is based in part on these forecasts. Accurately...

  • Page 24
    ...preference for WD®, HGST™ or G-Technology™ brand products, our operating results may be adversely affected. Sales in the distribution channel are important to our business, and if we fail to respond to demand changes in distribution markets or if distribution markets for hard drives weaken, our...

  • Page 25
    ... and asset utilization risks for our business. Under our business plan, we are developing and manufacturing a substantial portion of the heads and magnetic media used in the hard drive products we manufacture. Consequently, we are more dependent upon our own development and execution efforts and...

  • Page 26
    ... prices and operate their storage business unit at a loss over an extended period of time while still remaining profitable overall. In addition, if these competitors can increase sales of non-storage products to the same customers, they may benefit from selling their storage products at lower prices...

  • Page 27
    ...the best products to our customers and our profitability could suffer. Certain equipment and consumables we use in our manufacturing or testing processes are available only from a limited number of suppliers. Some of this equipment and consumables use materials that at times could be in short supply...

  • Page 28
    ... integrated into our products, and technology and production equipment that can be used to develop and manufacture our nextgeneration products efficiently. As consolidation in the hard drive supply chain increases, these suppliers may reevaluate their business models. The failure of these suppliers...

  • Page 29
    ... the higher the areal density, the more information can be stored on a single platter. Higher areal densities require existing head and magnetic media technology to be improved or new technologies developed to accommodate more data on a single disk. Historically, we have been able to achieve a large...

  • Page 30
    ... served digital entertainment markets for products such as digital cameras, MP3 players, USB flash drives, mobile phones and tablet devices that cannot be economically serviced using hard drive technology. Advances in semiconductor technology have resulted in solid-state storage emerging as...

  • Page 31
    ... ability to timely and efficiently deliver our products. We are vulnerable to system failures or attacks, which could harm our business. We are heavily dependent on our technology infrastructure, among other functions, to operate our factories, sell our products, fulfill orders, manage inventory and...

  • Page 32
    ... As disclosed in Part II, Item 8, Note 5 in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K on November 18, 2011, a sole arbitrator ruled against us in an arbitration in Minnesota. The arbitration involves claims brought by Seagate Technology LLC against us...

  • Page 33
    ... property rights, we consider elements of our product designs and processes to be proprietary and confidential. We rely upon employee, consultant and vendor nondisclosure agreements and contractual provisions and a system of internal safeguards to protect our proprietary information. However, any of...

  • Page 34
    ...our product prices to alleviate this increased credit risk. Additionally, as we attempt to expand our OEM and distribution channel sales into emerging economies such as Brazil, Russia, India and China, the customers with the most success in these regions may have relatively short operating histories...

  • Page 35
    ... doubtful accounts; ‰ accruals for product returns; ‰ accruals for warranty costs related to product defects; ‰ accruals for litigation and other contingencies; ‰ liabilities for unrecognized tax benefits; and ‰ expensing of stock-based compensation. The market price of our common stock is...

  • Page 36
    ... market price of our common stock. On March 8, 2012, as partial consideration for our acquisition of HGST, we issued 25 million shares of our common stock to Hitachi. We are required by the terms of an Investor Rights Agreement we entered into with Hitachi to file a Form S-3 registration statement...

  • Page 37
    ... the Internal Revenue Service for certain fiscal years and in connection with that examination, we received Revenue Agent Reports seeking certain adjustments to income as disclosed in Part II, Item 8, Note 9 in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10...

  • Page 38
    ...of hard drives Manufacturing of HGAs Manufacturing of head wafers and head development Product development Manufacturing of substrates Manufacturing of hard drives and printed circuit boards and research and development Manufacturing and development of substrates Manufacturing of media, research and...

  • Page 39
    ... office space in various other locations throughout the world primarily for research and development and sales and technical support. We believe our present facilities are adequate for our current needs, although the process of upgrading our facilities to meet technological and market requirements...

  • Page 40
    PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market Information for Common Stock Our common stock is listed on the NASDAQ Global Select Market ("NASDAQ") under the symbol "WDC." Until June 1, 2012, our common stock ...

  • Page 41
    ... Company's common stock held in the stock fund is purchased in open market transactions by the plan trustee. We recently discovered that we exceeded the number of shares that we had registered for offers and sales under the 401(k) Plan and, therefore, failed to maintain an effective SEC registration...

  • Page 42
    ...return of our common stock with the cumulative total return of the S&P 500 Index and the Dow Jones US Technology Hardware & Equipment Index for the five years ended June 28, 2013. The graph assumes that $100 was invested in our common stock at the close of market...or the Securities Exchange Act of ...

  • Page 43
    ... experience and preserve digital content. We design and make storage devices and home entertainment products under the HGST, WD and G-Technology brands. Our principal products today are hard drives that use one or more rotating magnetic disks ("magnetic media") to store and allow fast access to data...

  • Page 44
    Acquisition Hitachi Global Storage Technologies Holdings Pte. Ltd. ("HGST") Acquisition On March 8, 2012 (the "Closing Date"), we, through Western Digital Ireland ("WDI"), our indirect whollyowned subsidiary, completed the acquisition (the "Acquisition") of all the issued and outstanding paid-up ...

  • Page 45
    ... electronics and branded product shipments. We expect our revenue in the September quarter to remain flat or increase slightly from the June quarter reflecting modest price declines and a seasonal change in business mix. Summary Comparison of 2013, 2012 and 2011 The following table sets forth, for...

  • Page 46
    ..., as a result of our acquisition of HGST, our revenue by channel mix has become more heavily weighted toward OEM. Consistent with standard industry practice, we have sales incentive and marketing programs that provide customers with price protection and other incentives or reimbursements that are...

  • Page 47
    ... to tax holidays in Malaysia, the Philippines, Singapore and Thailand that expire at various dates from 2014 through 2025, the current year generation of income tax credits and the effect of California Proposition 39. On November 6, 2012, California voters approved California Proposition 39, which...

  • Page 48
    ... of hard drive products to the end customer within the shortest time horizon. In addition, as a result of our acquisition of HGST, our revenue by channel mix has become more heavily weighted toward OEM. In accordance with standard industry practice, we have sales incentive and marketing programs...

  • Page 49
    ... are primarily due to tax holidays in Malaysia, the Philippines, Singapore and Thailand that expire at various dates through 2025 and the current year generation of income tax credits. As of June 29, 2012, we had a recorded liability for unrecognized tax benefits of approximately $280 million, which...

  • Page 50
    ... of including HGST's accounts receivable, inventory and accounts payable balances as of June 29, 2012, but only including HGST's revenue and cost of sales from the date of Acquisition. From time to time, we modify the timing of payments to our vendors. We make modifications primarily to manage our...

  • Page 51
    ... facility) due and payable in full in fiscal 2017 on March 8, 2017. As of June 28, 2013, $500 million was available for future borrowings on the revolving credit facility. See Part II, Item 8, Note 3 in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K. The...

  • Page 52
    ... and Part II, Item 8, Notes 1 and 11 in the Notes to Consolidated Financial Statements, included in this Annual Report on Form 10-K. Indemnifications In the ordinary course of business, we may provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners...

  • Page 53
    ... eight years. See Part II, Item 8, Note 9 in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for information regarding our total tax liability for unrecognized tax benefits. Stock Repurchase Program On May 21, 2012, we announced that our Board of Directors...

  • Page 54
    ... tracking model captures specific detail on hard drive reliability, such as factory test data, historical field return rates, and costs to repair by product type. Our judgment is subject to a greater degree of subjectivity with respect to newly introduced products because of limited field experience...

  • Page 55
    .... The actual outcome of such matters could differ materially from management's estimates. Refer to Part II, Item 8, Note 5 in the Notes to Consolidated Financial Statements, included in this Annual Report on Form 10-K. Income Taxes We account for income taxes under the asset and liability method...

  • Page 56
    ...issued and adopted accounting pronouncements, including the respective dates of adoption and expected effects on our results of operations and financial condition, refer to Part II, Item 8, Note 1 of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K, which is...

  • Page 57
    ... the higher of (i) the federal funds rate plus 0.50%, (ii) the prime rate as announced by Bank of America, N.A. and (iii) the Eurodollar Rate plus 1.00% (the "Base Rate"), in each case plus an applicable margin. The applicable margin for borrowings under the Credit Facility ranges from 1.50% to 2.50...

  • Page 58
    Item 8. Financial Statements and Supplementary Data Index to Financial Statements and Financial Statement Schedule Page Consolidated Financial Statements: Reports of Independent Registered Public Accounting Firm ...Consolidated Balance Sheets - June 28, 2013 and June 29, 2012 ...Consolidated ...

  • Page 59
    ...presents fairly, in all material respects, the information set forth therein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Western Digital Corporation's internal control over financial reporting as of June 28, 2013, based on...

  • Page 60
    ...Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States...

  • Page 61
    ..., plant and equipment, net ...Goodwill ...Other intangible assets, net ...Other non-current assets ...Total assets ...LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable ...Accrued arbitration award ...Accrued expenses ...Accrued compensation ...Accrued warranty ...Current...

  • Page 62
    WESTERN DIGITAL CORPORATION CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share amounts) June 28, 2013 Years Ended June 29, 2012 July 1, 2011 Revenue, net ...Cost of revenue ...Gross profit ...Operating expenses: Research and development ...Selling, general and administrative ......

  • Page 63
    WESTERN DIGITAL CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions) June 28, 2013 Years Ended June 29, 2012 July 1, 2011 Net income ...Other ...) (10) $1,602 $726 - - (16) (16) $710 The accompanying notes are an integral part of these consolidated financial statements. 57

  • Page 64
    ...and equipment ...Acquisitions, net ...Purchase of investments ...Proceeds from the sale of equipment ...Net cash used in investing activities ...Cash flows from financing activities Issuance of stock under employee stock plans ...Taxes paid on vested stock awards under employee stock plans ...Excess...

  • Page 65
    ... exchange contracts ...(16) 233 3 25 1 $2 - 1 $ - 50 $1,091 9 92 876 73 82 (604) $ (5) 726 $4,400 $4,709 50 69 (50) 726 (16) 59 (16) 261 $3 (15) 10 (19) 261 $3 (24) Balance at July 1, 2011 ...Employee stock plans ...Stock based compensation ...Common stock issued in connection with acquisition...

  • Page 66
    ..., manage, experience and preserve digital content. The Company designs and makes storage devices and home entertainment products under the HGST, WD and G-Technology brands. The Company's principal products today are hard drives that use one or more rotating magnetic disks ("magnetic media") to store...

  • Page 67
    ... or, in the case of investments, these are recorded using appropriate market information. The carrying amount of debt approximates fair value because of its variable interest rate. Concentration of Credit Risk The Company sells its products to computer manufacturers, resellers and retailers...

  • Page 68
    ... levels, estimated amounts to be reimbursed to qualifying customers, historical pricing information and customer claim processing. If customer demand for hard drives or market conditions differ from the Company's expectations, the Company's operating results could be materially affected. The...

  • Page 69
    ... estimates and assist the Company in exercising judgment in determining the underlying estimates. The statistical tracking model captures specific detail on hard drive reliability, such as factory test data, historical field return rates, and costs to repair by product type. Management's judgment is...

  • Page 70
    ... shares of common stock under the Company's Employee Stock Purchase Plan ("ESPP") and restricted stock unit awards ("RSUs"). The following table illustrates the computation of basic and diluted income per common share (in millions, except per share data): June 28, 2013 Years Ended June 29, 2012...

  • Page 71
    WESTERN DIGITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Other Comprehensive Income (Loss) Other comprehensive income (loss) refers to revenue, expenses, gains and losses that are recorded as an element of shareholders' equity but are excluded from net income. The Company...

  • Page 72
    ...CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Pensions and Other Postretirement Benefit Plans The Company has defined benefit pension plans and other postretirement plans covering certain employees in various countries. The benefits are based on the employees' years of service...

  • Page 73
    WESTERN DIGITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Note 2. Supplemental Financial Statement Data June 28, June 29, 2013 2012 (In millions) Inventories: Raw materials and component parts ...$ Work-in-process ...Finished goods ...Total inventories ... 167 575 446 $...

  • Page 74
    ......Product Warranty Liability $ 40 32 26 13 13 46 $170 Changes in the warranty accrual for 2013, 2012 and 2011 were as follows (in millions): 2013 2012 2011 Warranty accrual, beginning of period ...Warranty liabilities assumed as a result of the Acquisition ...Charges to operations ...Utilization...

  • Page 75
    ... management's estimates. Solely for purposes of this footnote, "WD" refers to Western Digital Corporation or one or more of its subsidiaries prior to the acquisition of HGST, "HGST" refers to HGST or one or more of its subsidiaries as of the Closing Date, and "the Company" refers to Western Digital...

  • Page 76
    WESTERN DIGITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) stipulation from Rembrandt to dismiss the case. Rembrandt appealed the Court's claim construction ruling, and the Federal Circuit issued a summary affirmance in favor of WD in December 2012. Rembrandt did not appeal...

  • Page 77
    ... in one reportable operating segment, the hard drive business. Geographic Information The Company's operations outside the United States include manufacturing facilities in China, Japan, Malaysia, the Philippines, Singapore, and Thailand as well as sales offices throughout the Americas, Asia Pacific...

  • Page 78
    ...compensation (up to Internal Revenue Service ("IRS") limitations). Company contributions vest over a 5-year period of employment. For 2013, 2012, and 2011, the Company made Plan contributions of $19 million, $12 million and $9 million, respectively. Note 8. Shareholders' Equity Stock Incentive Plans...

  • Page 79
    ... plan's share limit as 1.72 shares for every one share actually issued in connection with such award. The 2004 Performance Incentive Plan was extended in 2013 and will terminate on August 6, 2022 unless terminated earlier by the Company's Board of Directors. Employee Stock Purchase Plan The Company...

  • Page 80
    WESTERN DIGITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Stock Option Activity The following table summarizes stock option activity under the Stock Plans over the last three fiscal years (in millions, except per share amounts and remaining contractual lives): Number of ...

  • Page 81
    ... 37.89 35.46 $35.82 $35.68 The fair value of each RSU is the market price of the Company's stock on the date of grant. RSUs are generally payable in an equal number of shares of the Company's common stock at the time of the vesting of the units. The aggregate value of RSUs that became fully-vested...

  • Page 82
    ... using a binomial option-pricing model. The binomial model requires the input of highly subjective assumptions. The Company uses historical data to estimate exercise, employee termination, and expected stock price volatility within the binomial model. The risk-free rate for periods within the...

  • Page 83
    ...stock reserved for issuance at June 28, 2013 (in millions): Number of Shares Maximum shares issuable in connection with: Outstanding awards and shares available for award grants ...ESPP ...Total ...Dividends to Shareholders 28.4 7.8 36.2 On September 13, 2012, the Company announced that its Board...

  • Page 84
    ...extended through December 31, 2013. In addition, on November 6, 2012, California voters approved California Proposition 39, which affects California state income tax apportionment for most multi-state taxpayers for tax years beginning on or after January 1, 2013. This proposition reduces the Company...

  • Page 85
    ...and June 29, 2012, respectively. During the current year, the Company generated an additional $25 million of benefits related to stockbased compensation deductions. The benefits generated in the current year, along with $20 million of the benefits related to prior years, were utilized in the current...

  • Page 86
    ... portion of the Company's manufacturing operations in Malaysia, the Philippines, Singapore and Thailand operate under various tax holidays and tax incentive programs which will expire in whole or in part at various dates from 2014 through 2025. Certain of the holidays may be extended if specific...

  • Page 87
    ... federal income tax returns for fiscal years 2006 and 2007 and issued Revenue Agent Reports ("RARs") that proposed adjustments to income before income taxes of approximately $970 million primarily related to transfer pricing and intercompany payable balances. The Company disagreed with the proposed...

  • Page 88
    ... the fair value hierarchy of the valuation techniques utilized to determine such value (in millions): Fair Value Measurements at Reporting Date Using Level 1 Level 2 Level 3 Total Assets: Cash equivalents Money market funds ...Auction-rate securities ...Total assets at fair value ...Liabilities...

  • Page 89
    ... on observable inputs including market interest rates from multiple pricing sources. Auction-Rate Securities. The Company's auction-rate securities have maturity dates through 2050, are primarily backed by insurance products and are accounted for as available-for-sale securities. These investments...

  • Page 90
    WESTERN DIGITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) For the year ended June 28, 2013, there were no transfers between levels and no changes in Level 3 financial assets measured on a recurring basis. For the year ended June 28, 2012, the Company had a $1 million ...

  • Page 91
    ...29, 2012 were as follows: Weighted Average Amortization Period (in years) Gross Carrying Amount (in millions) Accumulated Amortization (in millions) Net Carrying Amount (in millions) Existing technology ...Customer relationships ...Other ...Leasehold interests ...In-process research and development...

  • Page 92
    ... costs for the Japanese defined benefit pension plans were as follows for 2013 and 2012: 2013 2012 Discount rate ...Expected long-term rate of return on plan assets ...Rate of compensation increase ... 1.8% 3.5% 1.2% 1.9% 3.5% 1.4% The Company develops a discount rate by calculating when the...

  • Page 93
    ... assets. Risk management is accomplished through diversification, periodic review of plan asset performance, and appropriate realignment of asset allocation. Assumptions regarding the expected long-term rate of return on plan assets are periodically reviewed and are based on the historical trend of...

  • Page 94
    ... stock on the date of the Acquisition, less a 10% discount for lack of marketability as the shares issued were subject to a restriction that limited their trade or transfer for one year from the Closing Date. The purchase price consideration originally included preliminary estimates of the working...

  • Page 95
    ...paid by the Company during 2013 for a post-closing assumed pension adjustment. The aggregate purchase price for HGST was comprised of (in millions): Mar. 8, 2012 Acquisition of all issued and outstanding paid-up share capital of HGST ...Fair value of stock options, restricted stock-based awards and...

  • Page 96
    ..., severe flooding in Thailand inundated all of the Company's Thailand manufacturing facilities and submerged certain equipment located there. These facilities included the Company's magnetic head slider fabrication facilities, as well as its hard drive, head gimbal assembly and head stack assembly...

  • Page 97
    WESTERN DIGITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Note 17. Quarterly Results of Operations (unaudited) First Second Third Fourth 2013(1) Revenue, net ...Gross profit ...Operating income (loss) ...Net income (loss) ...Basic income (loss) per common share ...Diluted...

  • Page 98
    WESTERN DIGITAL CORPORATION SCHEDULE II - CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS Three years ended June 28, 2013 (in millions) Allowance for Doubtful Accounts Balance at July 2, 2010 ...Deductions ...Balance at July 1, 2011 ...Other ...Additions charged to operations ...Balance at June 29, ...

  • Page 99
    ... Framework. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of the end of the period covered by this Annual Report on Form 10-K. KPMG LLP, our independent registered public accounting firm, which audited the consolidated...

  • Page 100
    ... is set forth in Part I of this report under "Item 1. Business - Executive Officers of the Registrant." In addition, our Board of Directors has adopted a Code of Business Ethics that applies to all of our directors, employees and officers, including our Chief Executive Officer and Chief Financial...

  • Page 101
    ...Exhibit 2.2 to the Company's Annual Report on Form 10-K (File No. 1-8703) with the Securities and Exchange Commission on August 12, 2011) Second Amendment to Stock Purchase Agreement, dated November 23, 2011, among Western Digital Corporation, Western Digital Ireland, Ltd., Hitachi, Ltd., and Viviti...

  • Page 102
    .... (Filed as Exhibit 2.7 to the Company's Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on May 9, 2012) Amendment to Stock Purchase Agreement, dated July 9, 2012, among Western Digital Corporation, Western Digital Ireland, Ltd., Hitachi, Ltd., and Viviti...

  • Page 103
    ... Western Digital Corporation Amended and Restated Employee Stock Option Plan as amended (Filed as Exhibit 10.2.2 to the Company's Annual Report on Form 10-K (File No. 1-8703) with the Securities and Exchange Commission on September 14, 2005)* Western Digital Corporation 2005 Employee Stock Purchase...

  • Page 104
    ... Change of Control Severance Plan, amended and restated as of August 7, 2012 (Filed as Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on November 2, 2012)* Western Digital Corporation Executive Severance Plan, amended and...

  • Page 105
    ....2 to the Company's Quarterly Report on Form 10-Q (File No. 1-8703) with the Securities and Exchange Commission on January 27, 2012)≠Subsidiaries of Western Digital Corporation†Consent of Independent Registered Public Accounting Firm†Certification of Principal Executive Officer Pursuant to...

  • Page 106
    ... Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized. WESTERN DIGITAL CORPORATION By: WOLFGANG U. NICKL Wolfgang U. Nickl Executive Vice President and Chief Financial Officer /s/ Dated...

  • Page 107
    ... Philippines, Inc...RS Patent Holding Corporation ...Shenzhen Hailiang Storage Products Co., Ltd...SiliconSystems Inc...Simple Tech, LLC ...Velobit, Inc...Viviti Technologies Pte. Ltd...WD Media, LLC (formerly Komag Incorporated) ...WD Media (Malaysia) Sdn...WD Media (Singapore) Pte. Ltd...Western...

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    ... State or Other Jurisdiction of Incorporation or Organization Western Digital (Fremont), LLC ...Western Digital Hong Kong Limited ...Western Digital Information Technology (Shanghai) Company Ltd...Western Digital International Ltd...Western Digital Ireland, Ltd...Western Digital (I.S.) Limited...

  • Page 109
    ... June 28, 2013, and the related financial statement schedule, and the effectiveness of internal control over financial reporting as of June 28, 2013, which reports appear in the June 28, 2013, Annual Report on Form 10-K of Western Digital Corporation. /s/ August 16, 2013 Irvine, California KPMG LLP

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  • Page 111
    ... and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. STEPHEN D. MILLIGAN Stephen D. Milligan President and Chief Executive Officer Dated...

  • Page 112
    ... financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. WOLFGANG U. NICKL Wolfgang U. Nickl Executive Vice President and Chief Financial Officer Dated...

  • Page 113
    ... Chief Executive Officer Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Western Digital Corporation, a Delaware corporation (the "Company"), hereby certifies, to his knowledge, that: (i) the accompanying Annual Report on Form 10...

  • Page 114
    ... Chief Financial Officer Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Western Digital Corporation, a Delaware corporation (the "Company"), hereby certifies, to his knowledge, that: (i) the accompanying Annual Report on Form 10...

  • Page 115
    ... Executive Officer Western Digital Corporation Akio Yamamoto Director, Vice President and Executive Officer Representative of Medical Systems Operations Group Hitachi Medical Corporation Masahiro Yamamura Corporate Officer, General Manager Semiconductor Business Division of Hitachi, Ltd. Executive...

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    ...800.695.6399 Transfer Agent and Registrar American Stock Transfer & Trust Company, LLC Operations Center - 6201 15th Avenue Brooklyn, New York 11219 www.amstock.com 800.937.5449 Independent Registered Public Accounting Firm KPMG LLP Stock Exchange Listing Western Digital common stock is listed on...