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2015 ANNUAL REPORT
and Form 10-K

Table of contents

  • Page 1
    2015 ANNUAL REPORT and Form 10-K

  • Page 2
    ...hgst.com. WD has been a technology standard-setter in the industry's highest volume markets. WD's hard drives are deployed in personal computers, enterprise computing systems, consumer electronics and digital video applications, as well as in its external storage, personal cloud and business storage...

  • Page 3
    ... MILLIGAN President and Chief Executive Officer Western Digital Corporation DEAR FELLOW SHAREHOLDERS: We achieved solid financial performance in fiscal 2015, in light of macroeconomic and PC-industry headwinds that resulted in softer demand during much of the year. We also continued to advance our...

  • Page 4
    ...PLAN Dollars in millions EXABYTES SHIPPED AND AVERAGE TERABYTES SHIPPED EB shipped Avg TB $1,200 $1,000 $800 $600 $400 $200 $0 FY2011 FY2012 FY2013 FY2014 FY2015 300 3.0 200 2.0 100 1.0 0 FY2011 FY2012 FY2013 FY2014 FY2015 0.0 Share...revenue CASH FLOW FROM OPERATIONS Dollars in millions ...

  • Page 5
    ...Massengill. I also thank our employees for their dedication, and our shareholders, customers and partners for their support, and I look forward to reporting to you on our progress in the years ahead. Steve Milligan President and Chief Executive Officer Western Digital Corporation September 23, 2015

  • Page 6
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 7
    ...8703 WESTERN DIGITAL CORPORATION (Exact Name of Registrant as Specified in Its Charter) Delaware State or Other Jurisdiction of Incorporation or Organization 33-0956711 (I.R.S. Employer Identification No.) 3355 Michelson Drive, Suite 100 Irvine, California (Address of principal executive offices...

  • Page 8
    ..., otherwise. WDC, a Delaware corporation, is the parent company of our data storage business, which operates under two independent subsidiaries - HGST and WD. Our principal executive offices are located at 3355 Michelson Drive, Suite 100, Irvine, California 92612. Our telephone number is (949) 672...

  • Page 9
    ... digital data; ‰ our plans to continue to develop new products and expand into new storage markets and into emerging economic markets; ‰ our balancing of our hard drive business with investments in newer areas; ‰ developing relationships with customers; ‰ the emergence of new storage markets...

  • Page 10
    ...("Virident"), sTec, Inc. ("sTec") and VeloBit, Inc. ("VeloBit"). In March 2015, we acquired Amplidata, NV ("Amplidata"), a developer of object storage software for public and private cloud data centers, a key building block in a new systems business we have entered called active archive storage that...

  • Page 11
    ... provide storage for a range of cloud and corporate applications. Within datacenters, these drives are typically used in servers and storage systems. There are also newer enterprise systems level products that address a category of data storage previously deemed inaccessible and too costly to access...

  • Page 12
    ...platter high capacity HDDs as well as enterprise class SSDs in tiered storage architectures. Cloud computing delivers shared resources, software and information to users on demand on a multitude of devices, such as client PCs, tablets and smart phones. Most cloud computing models consist of services...

  • Page 13
    ... of up to 10 terabytes ("TB") to deliver unmatched total cost of ownership, mobile drives for the notebook, PC and gaming markets, a G-Technology line of branded products for professional content producers, enterprise storage software and a fully integrated active archive system. HGST also delivers...

  • Page 14
    ... high read/write speeds and include high capacities. For 2015, our HGST subsidiary continued its leadership as the first and only supplier of helium-filled HDDs. This advanced technology allows HGST to pack seven-platters in a standard 3.5" form factor providing up to 10TB capacity. This drives...

  • Page 15
    ... storage, backup, data protection and remote file access. We also provide external hard drives that connect to home or office networks, enabling consumers access from anywhere with an Internet connection and from smart phones, tablets and PCs via WD mobile apps and PC software. These My Cloud...

  • Page 16
    ... risks, see Part I, Item 1A of this Annual Report on Form 10-K. Research and Development We devote substantial resources to the development of new products and the improvement of existing products. We focus our engineering efforts on coordinating our product design and manufacturing processes...

  • Page 17
    ... costs. For our non-HDD products, we leverage the efficiencies of contract manufacturers when strategically advantageous. For a discussion of associated risks, see Part I, Item 1A of this Annual Report on Form 10-K. Materials and Supplies The main components of the hard drive are a head-disk...

  • Page 18
    ... products through our websites. For each of 2015 and 2014, sales to Hewlett Packard Company accounted for 11% of our net revenue. For 2013, no single customer accounted for 10% or more of our net revenue. For a discussion of associated risks, refer to Part I, Item 1A of this Annual Report on Form...

  • Page 19
    ... 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 to the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K. Environmental...

  • Page 20
    ... Sales and Sales Operations from 2007 to 2010, as Vice President, Worldwide Sales and Operations from 2005 to 2007, and as Vice President, Asia Pacific from 2003 to 2005. Prior to that, Mr. Murphy served in various roles at Read-Rite Corporation, including as the Executive Vice President, Customer...

  • Page 21
    ... and corporate finance services to a range of technology companies, including Fabrik, Inc., which was acquired by HGST in April 2009. Prior to that, Mr. Long served as a senior executive with both public and private venture-backed technology companies and was an investment banker with Credit Suisse...

  • Page 22
    ... share, all of which could adversely affect our operating results. Demand for our devices, software and solutions that we offer to our customers, which we refer to in this Item 1A as our "products", depends in large part on the demand for systems manufactured by our customers and on storage upgrades...

  • Page 23
    ...to which seasonality and cyclicality may affect our stock price or business in future periods because of the rate and unpredictability of product transitions and new product introductions and macroeconomic conditions. Our sales to the CE, cloud computing, network attached storage (NAS), surveillance...

  • Page 24
    ... to adversely affect our brand image and reputation. If customers no longer maintain a 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...

  • Page 25
    ...costeffectively develop heads and magnetic media with leading technology and overall quality, increasing capital expenditure costs and asset utilization risks for our business. We develop and manufacture a substantial portion of the heads and magnetic media used in the hard drive products we produce...

  • Page 26
    ...acceptable manufacturing yields using the technologies necessary to satisfy our customers' product needs, or we may encounter quality problems with the heads or magnetic media we manufacture. If we are unable to timely and cost-effectively develop heads and magnetic media with leading technology and...

  • Page 27
    ... goods or services at a quality level and cost acceptable to us can adversely affect our margins, revenues and operating results. We depend on an external supply base for technologies, software (including firmware), components, equipment and materials for use in our product design and manufacturing...

  • Page 28
    ... costs to us, each of which may have an adverse effect on our business and operations. In addition, moving to new technologies may require us to align to, and build, a new supply base, such as NAND flash. In the case of NAND suppliers, many of which are involved in developing storage products...

  • Page 29
    ... our operating costs. Changes in product life cycles could adversely affect our financial results. If product life cycles lengthen, we may need to develop new technologies or programs to reduce our costs on any particular product to maintain competitive pricing for that product. Longer product life...

  • Page 30
    ... to competitively offer products that our customers desire, which could harm our operating results. If we do not properly manage new product development, our competitiveness and operating results may be negatively affected. As advances in computer hardware and software are made, our customers have...

  • Page 31
    ... response to competing technologies. If our hard drive and solid state products fail to offer a superior value proposition to alternative storage products, we will be at a competitive disadvantage and our business will suffer. Our operations, and those of certain of our suppliers and customers, are...

  • Page 32
    ...interruption from natural disasters, power loss and telecommunications failures. Further, our products contain sophisticated hardware and operating system software and applications that may contain security problems, security vulnerabilities, or defects in design or manufacture, including "bugs" and...

  • Page 33
    ...unwillingness, or failure to support us in a timely manner with goods or services at a quality level and cost acceptable to us can adversely affect our margins, revenues and operating results," for a further description of the risks associated with our reliance on external suppliers. These strategic...

  • Page 34
    ... are unable to hire and integrate new key management, staff or skilled employees, or if we fail to implement succession plans for our key management or staff, our operating results would likely be harmed. Furthermore, if we do not realize the anticipated benefits of our intended realignment after we...

  • Page 35
    ... and may continue to generate federal, international or other regulatory responses in the near future. If we or our suppliers or partners fail to timely comply with applicable legislation, our customers may refuse to purchase our products or we may face increased operating costs as a result of taxes...

  • Page 36
    ... shares of our common stock at historical levels could cause the market price of our common stock to decline. Fluctuations in currency exchange rates as a result of our international operations may negatively affect our operating results. Because we manufacture and sell our products abroad...

  • Page 37
    ...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 38
    ...affect the stock prices of many high technology companies. These fluctuations often appear to be unrelated to the operating performance of the companies. Securities class action lawsuits are often brought against companies after periods of volatility in the market price of their securities. A number...

  • Page 39
    ..., security types, and maturities. These investments are subject to general credit, liquidity, market, political, sovereign and interest rate risks, which may be exacerbated by unusual events that affect global financial markets. A material part of our investment portfolio consists of U.S. government...

  • Page 40
    ... ...Singapore Thailand ...Bang Pa-In ...Navanakorn ...Prachinburi ... 73,000 65,000 114,000 Manufacturing of head wafers and research and development Research and development, administrative, marketing and sales Manufacturing of head wafers and head, media and product development; research and...

  • Page 41
    ... sales and technical support. We believe our present facilities are adequate for our current needs, although we from time to time upgrade our facilities to meet anticipated future technological and market requirements. New manufacturing facilities, in general, can be developed and become operational...

  • Page 42
    ... of record of our common stock as of August 13, 2015 was 1,144. The high and low sales prices of our common stock as reported by NASDAQ for each quarter of 2015 and 2014 were as follows: First Second Third Fourth 2015 High ...Low ...2014 High ...Low ...Repurchases of Equity Securities $103.51 $ 91...

  • Page 43
    ... be considered indicative of future stockholder returns. TOTAL RETURN TO STOCKHOLDERS (Assumes $100 investment on 7/2/10) 350 WESTERN DIGITAL CORPORATION 300 D O L L A R S 250 200 150 100 50 0 S&P 500 DOW JONES US TECHNOLOGY HARDWARE & EQUIPMENT 7/2/10 Total Return Analysis 7/1/11 6/29/12 6/28...

  • Page 44
    ... events. Our Company We are a leading developer, manufacturer and provider of data storage solutions that enable consumers, businesses, governments and other organizations to create, manage, experience and preserve digital content. Our product portfolio includes HDDs, SSDs, direct attached storage...

  • Page 45
    ... included in this Annual Report on Form 10-K. Results of Operations Fiscal 2015 Overview In accordance with accounting principles generally accepted in the United States ("U.S. GAAP"), operating results for Amplidata, Virident, and sTec, which were acquired on March 9, 2015, October 17, 2013...

  • Page 46
    ...22 21 20 Asia ...50 54 54 Revenues by Channel (%) Original Equipment Manufacturers ("OEM") ...64% 63% 63% Distributors ...23 24 24 Retailers ...13 13 13 Unit Shipments* PC ...136 157 162 Non-PC ...93 92 80 Total units shipped ...* Based on sales of HDD units only. Fiscal Year 2015 Compared to Fiscal...

  • Page 47
    ...research and development tax credit (the "R&D credit") that was signed into law on December 19, 2014. The differences between the effective tax rate and the U.S. Federal statutory rate are primarily due to tax holidays in Malaysia, the Philippines, Singapore and Thailand that expire at various dates...

  • Page 48
    ..., including gaming consoles. Changes in net revenue by geography and channel generally reflect normal fluctuations in market demand and competitive dynamics. Consistent with standard industry practice, we have sales incentive and marketing programs that provide customers with price protection and...

  • Page 49
    ..., was extended through December 31, 2013 as part of the American Taxpayer Relief Act of 2012. The differences between the effective tax rate and the U.S. Federal statutory rate are primarily due to tax holidays in Malaysia, the Philippines, Singapore and Thailand that expire at various dates from...

  • Page 50
    ... 8 days, and days payables outstanding ("DPOs") remained flat compared to 2014. Changes in DSOs are generally related to the linearity of shipments. For 2015, the decrease in DSOs was due to both the linearity of shipments and the sale of trade receivables in connection with our factoring agreement...

  • Page 51
    ... in this Annual Report on Form 10-K. Purchase Orders In the normal course of business, we enter into purchase orders with suppliers for the purchase of components used to manufacture our products. These purchase orders generally cover forecasted component supplies needed for production during the...

  • Page 52
    ... the prices, technology and quality of the supplier's products remaining competitive. These arrangements are not included under "Purchase obligations" in the table above. Please see Part I, Item 1A of this Annual Report on Form 10-K for a discussion of risks related to commitments. Foreign Exchange...

  • Page 53
    ...-through and inventory 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 differs from our expectations, our operating results could be materially affected. We also...

  • Page 54
    ... exercising judgment in determining the underlying estimates. Our 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. Our judgment is subject to a greater degree of subjectivity...

  • Page 55
    ... of technology acquired in business combinations and in-process research and development. In-process research and development is not amortized until the point at which it reaches technological feasibility. Instead, it is tested for impairment on an annual basis or more frequently whenever events or...

  • Page 56
    ... results of operations. The contract maturity dates do not exceed 12 months. We do not purchase foreign exchange contracts for trading purposes. See Part II, Item 8, Notes 1 and 12 in the Notes to Consolidated Financial Statements, included in this Annual Report on Form 10-K. As of July 3, 2015, we...

  • Page 57
    ...Three Years Ended July 3, 2015 ...Consolidated Statements of Shareholders' Equity - Three Years Ended July 3, 2015 ...Notes to Consolidated Financial Statements ...Financial Statement Schedule: Schedule II - Consolidated Valuation and Qualifying Accounts - Three Years Ended July 3, 2015 ... 52 54 55...

  • Page 58
    ... 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 and subsidiaries' internal control over financial reporting as of July 3, 2015...

  • Page 59
    ... statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the...

  • Page 60
    ... assets ...LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable ...Accrued arbitration award ...Accrued expenses ...Accrued compensation ...Accrued warranty ...Revolving credit facility ...Current portion of long-term debt ...Total current liabilities ...Long-term debt ...Other...

  • Page 61
    WESTERN DIGITAL CORPORATION CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share amounts) July 3, 2015 Years Ended June 27, 2014 June 28, 2013 Revenue, net ...Cost of revenue ...Gross profit ...Operating expenses: Research and development ...Selling, general and administrative ......

  • Page 62
    WESTERN DIGITAL CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions) July 3, 2015 Years Ended June 27, June 28, 2014 2013 Net income ...Other comprehensive income (loss), net of tax: Net actuarial pension gain (loss) ...Translation loss ...Net unrealized gain (loss) on foreign ...

  • Page 63
    ... sales and maturities of investments ...Other investing activities, net ...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 tax benefits from employee...

  • Page 64
    ... excess tax benefits from employee stock plans ...Repurchases of common stock ...Dividends to shareholders ...Net income ...Actuarial pension loss ...Unrealized loss on foreign exchange contracts ... (424) 1,465 $8,842 148 162 3 19 (970) (418) 1,465 (2) (30) $9,219 Balance at July 3, 2015 ... The...

  • Page 65
    ... "Western Digital") is a leading developer, manufacturer and provider of data storage solutions that enable consumers, businesses, governments and other organizations to create, manage, experience and preserve digital content. The Company's product portfolio includes hard disk drives ("HDDs"), solid...

  • Page 66
    ... fair value because of its variable interest rate. Concentration of Credit Risk The Company sells its products to computer manufacturers, resellers and retailers throughout the world. The Company performs ongoing credit evaluations of its customers' financial condition and generally requires...

  • Page 67
    ... levels, estimated amounts to be reimbursed to qualifying customers, historical pricing information and customer claim processing. If customer demand for the Company's products or market conditions differ from the Company's expectations, the Company's operating results could be materially affected...

  • Page 68
    ... failure rates and trends, estimated replacement costs, estimated repair costs which include scrap costs, and estimated costs for customer compensatory claims related to product quality issues, if any. A statistical warranty tracking model is used to help prepare estimates and assist the Company...

  • Page 69
    ... tax benefits, and may materially affect the Company's operating results. Income per Common Share The Company computes basic income per common share using net income and the weighted average number of common shares outstanding during the period. Diluted income per common share is computed using net...

  • Page 70
    WESTERN DIGITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Stock-based Compensation The Company accounts for all stock-based compensation at fair value. Stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense ...

  • Page 71
    ... requirements of applicable government authorities. The Company amortizes unrecognized actuarial gains and losses and prior service costs on a straight-line basis over the remaining estimated average service life of the participants. The measurement date for the plans is the Company's fiscal year...

  • Page 72
    ... in exchange for those goods or services. The new standard also requires entities to enhance disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In July 2015, the FASB approved a one-year deferral of the effective date of...

  • Page 73
    ... 9, 2014, the Company, Western Digital Technologies, Inc. ("WDT") and Western Digital Ireland, Inc. ("WDI") entered into a new credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto, which was subsequently amended on February 25, 2015 (as amended, the...

  • Page 74
    ...at June 27, 2014. Long-term Purchase Agreements The Company has entered into long-term purchase agreements with various component suppliers. The commitments depend on specific products ordered and may be subject to minimum quality requirements and future price negotiations. The Company expects these...

  • Page 75
    ... for purposes of this note, "WD" refers to Western Digital Corporation or one or more of its subsidiaries excluding HGST prior to the closing of the Company's acquisition of HGST on March 8, 2012 (the "HGST Closing Date"). HGST refers to Hitachi Global Storage Technologies Holdings Pte. Ltd. or one...

  • Page 76
    ..."), seeking an order from the court to determine the copyright levy issue. On May 21, 2013, ZPÜ filed a counter-claim against WD Germany with the Higher Court, seeking copyright levies for multimedia hard drives, external hard drives and network hard drives (collectively, "Covered Products") sold...

  • Page 77
    ... into 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 and Thailand as well as sales offices throughout the Americas, Asia Pacific, Europe...

  • Page 78
    ... Incentive Plan typically vest over periods ranging from one to four years from the date of grant. To the extent available, the Company issues shares out of treasury stock upon the vesting of awards or the exercise of employee stock options and ESPP. As of July 3, 2015, the maximum number of shares...

  • Page 79
    ... table summarizes stock option activity under the 2004 Performance Incentive Plan over the last three fiscal years (in millions, except per share amounts and remaining contractual lives): Number of Shares Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Life (in years...

  • Page 80
    ... Incentive Plan as of July 3, 2015 (in millions, except exercise price): Options Outstanding Weighted Average Remaining Contractual Life Weighted Average (in years) Exercise Price Options Exercisable Number of Shares Weighted Average Exercise Price Range of Exercise Prices Number of Shares...

  • Page 81
    ... 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 contractual life of...

  • Page 82
    ... 10b5-1 plan. The Company expects stock repurchases to be funded principally by operating cash flows and borrowings under the Credit Agreement. Stock Reserved for Issuance The following table summarizes all shares of common stock reserved for issuance at July 3, 2015 (in millions): Number of Shares...

  • Page 83
    ...14) 4 $135 $ 57 149 1 (7) (46) 88 $242 The Company's income tax provision for 2015 and 2013 reflects tax benefits of $27 million and $37 million, respectively, as a result of the retroactive extensions of the U.S. Federal research and development tax credit that were signed into law on December 19...

  • Page 84
    ...follows (in millions): 2015 2014 Deferred tax assets: Sales related reserves and accrued expenses not currently deductible ...Accrued compensation and benefits not currently deductible ...Domestic net operating loss carryforward ...Business credit carryforward ...Long-lived assets ...Other ...Total...

  • Page 85
    ... 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 2016 through 2025. Certain of the holidays may be extended if specific conditions...

  • Page 86
    ... unrecognized tax benefits at July 3, 2015, June 27, 2014 and June 28, 2013, if recognized, would affect the effective tax rate, subject to certain future valuation allowance reversals. The Company files U.S. Federal, U.S. state, and foreign tax returns. For both federal and state tax returns, with...

  • Page 87
    ...Company's financial assets and liabilities that are measured at fair value on a recurring basis as of July 3, 2015, and indicates 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...

  • Page 88
    ... the Company's financial assets and liabilities that are measured at fair value on a recurring basis as of June 27, 2014, and indicates 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...

  • Page 89
    ... for the model include forward rates and credit default swap rates. For more information on the Company's foreign exchange contracts, see Note 12 below. In 2015 and 2014, there were no transfers between levels. In 2014 the Company sold its auction rate securities, which were Level 3 financial assets...

  • Page 90
    ... exchange contracts with credit-risk-related contingent features. The Company opened $4.6 billion and $4.5 billion, and closed $4.8 billion and $4.9 billion, in foreign exchange contracts for the years ended July 3, 2015 and June 27, 2014, respectively. The fair value and balance sheet location...

  • Page 91
    ...in millions) Accumulated Amortization (in millions) $1,954 605 $2,559 207 $2,766 Net Carrying Amount (in millions) Existing technology ...Customer relationships ...Other ...Leasehold interests ...In-process research and development . . Total ... 5 4 3 31 - $ 638 152 74 39 105 $1,008 $471 126 68...

  • Page 92
    ... recorded in the employee termination, asset impairment and other charges within the Company's consolidated statements of income. The impairment charges primarily relate to acquired in-process research and development projects that were abandoned and resulted in full impairment in both 2015 and 2014...

  • Page 93
    ... used to determine benefit costs for the Japanese defined benefit pension plans were as follows for 2015, 2014 and 2013: 2015 2014 2013 Discount rate ...Expected long-term rate of return on plan assets ...Rate of compensation increase ... 1.6% 3.5% 1.0% 1.6% 3.5% 0.9% 1.8% 3.5% 1.2% The Company...

  • Page 94
    ... of assets between any level categories in 2015, 2014 or 2013. Fair Value Valuation Techniques Equity securities are valued at the closing price reported on the stock exchange on which the individual securities are traded. Equity commingled/mutual funds are typically valued using the NAV provided by...

  • Page 95
    ... to further HGST's strategy to expand into higher value data storage platforms and systems that address the growth in storage requirements in cloud data centers. The Company identified and recorded the assets acquired and liabilities assumed at their estimated fair values at the date of acquisition...

  • Page 96
    ... acquisition date, the Company held a non-controlling interest in Amplidata accounted for under the cost method of accounting. Upon acquiring the outstanding ownership stake in Amplidata, the Company remeasured its original equity interest to its fair value using the income approach, which utilizes...

  • Page 97
    WESTERN DIGITAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) In 2015 and 2014, the impairment charges primarily relate to equipment and in-process research and development projects that were abandoned and resulted in full impairment. The following table provides those amounts...

  • Page 98
    WESTERN DIGITAL CORPORATION SCHEDULE II - CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS Three years ended July 3, 2015 (in millions) Allowance for Doubtful Accounts Balance at June 29, 2012 ...Additions charges to operations ...Deductions ...Recovery ...Balance at June 28, 2013 ...Additions ...

  • Page 99
    ..., our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Annual Report on Form 10-K, our disclosure controls and procedures were effective. Management's Report on Internal Control over Financial Reporting Our management is responsible for...

  • Page 100
    assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and...

  • Page 101
    ... 10. Directors, Executive Officers and Corporate Governance There is incorporated herein by reference the information required by this Item included in the Company's Proxy Statement for the 2015 Annual Meeting of Stockholders, which will be filed with the SEC no later than 120 days after the close...

  • Page 102
    ... as part of this Annual Report on Form 10-K. All other schedules are omitted as the required information is inapplicable or the information is presented in the consolidated financial statements or related Notes. Separate financial statements have been omitted as we are primarily an operating company...

  • Page 103
    ... by the undersigned, thereunto duly authorized. WESTERN DIGITAL CORPORATION By: /s/ OLIVIER C. LEONETTI Olivier C. Leonetti Chief Financial Officer Dated: August 21, 2015 Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by...

  • Page 104
    ... Stock Unit Award Agreement, under the Western Digital Corporation Amended and Restated 2004 Performance Incentive Plan (Filed as Exhibit 10.1.7 to the Company's Annual Report on Form 10-K (File No. 1-08703) with the Securities and Exchange Commission on August 20, 2012)* Western Digital Corporation...

  • Page 105
    ... as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q (File No. 1-08703) with the Securities and Exchange Commission on May 12, 2015) Transition Services Agreement, dated March 7, 2011, among Hitachi, Ltd., Viviti Technologies Ltd. and Western Digital Corporation (Filed as Exhibit 10.4 to...

  • Page 106
    ... Document†XBRL Taxonomy Extension Definition Linkbase Document†Filed with this report. ** Furnished 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. 100

  • Page 107
    ... ...STEC Germany GmbH ...STEC Hong Kong Ltd...STEC India Private Limited ...STEC International Holding, Inc...STEC Italy SRL ...STEC Japan GK ...STEC Memory Technology Service (Shanghai) Co. Ltd... France Delaware Delaware California China China Thailand Singapore China United Kingdom Japan Malaysia...

  • Page 108
    ... Corporation ...Western Digital Capital, LLC ...Western Digital Capital Global, Inc...Western Digital Do Brasil Comercio E Distribuicao De Produtos De Informatica Ltda...Western Digital Hong Kong Limited ...Western Digital Information Technology (Shanghai) Company Ltd...Western Digital International...

  • Page 109
    ... July 3, 2015, and the related financial statement schedule, and the effectiveness of internal control over financial reporting as of July 3, 2015, which reports appear in the July 3, 2015, Annual Report on Form 10-K of Western Digital Corporation. /s/ August 21, 2015 Irvine, California KPMG LLP

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  • Page 111
    ... 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: August 21, 2015 /s/

  • Page 112
    ... 31.2 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Olivier C. Leonetti, certify that: 1. I have reviewed this Annual Report on Form 10-K of Western Digital Corporation; 2. Based on my knowledge, this report does not contain any untrue...

  • Page 113
    ... Exchange Act of 1934, as amended; and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ STEPHEN D. MILLIGAN Stephen D. Milligan President and Chief Executive Officer Dated: August 21, 2015

  • Page 114
    ... 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-K of the Company for the period ended July 3, 2015 (the "Report") fully complies with the requirements...

  • Page 115
    ... Executive Officer Western Digital Corporation Paula A. Price Senior Lecturer Harvard Business School Executive Officers Stephen D. Milligan President and Chief Executive Officer Olivier C. Leonetti Executive Vice President and Chief Financial Officer Michael D. Cordano President HGST Subsidiary...

  • Page 116
    ... advances in competing technologies; the development and introduction of products based on new technologies and expansion into new data storage markets; and other risks and uncertainties listed in Western Digital's Form 10-K for the fiscal year ended July 3, 2015, to which your attention is directed...