Cover Page
Cover Page - shares | 3 Months Ended | |
Oct. 02, 2020 | Oct. 30, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Oct. 2, 2020 | |
Document Transition Report | false | |
Entity File Number | 1-8703 | |
Entity Registrant Name | WESTERN DIGITAL CORPORATION | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 33-0956711 | |
Entity Address, Address Line One | 5601 Great Oaks Parkway | |
Entity Address, City or Town | San Jose, | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 95119 | |
City Area Code | 408 | |
Local Phone Number | 717-6000 | |
Title of 12(b) Security | Common Stock, $.01 Par Value Per Share | |
Trading Symbol | WDC | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 304,245,045 | |
Entity Central Index Key | 0000106040 | |
Current Fiscal Year End Date | --07-02 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Oct. 02, 2020 | Jul. 03, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 2,995 | $ 3,048 |
Accounts receivable, net | 2,097 | 2,379 |
Inventories | 3,355 | 3,070 |
Other current assets | 558 | 551 |
Total current assets | 9,005 | 9,048 |
Non-current assets: | ||
Property, plant and equipment, net | 2,897 | 2,854 |
Notes receivable and investments in Flash Ventures | 1,746 | 1,875 |
Goodwill | 10,069 | 10,067 |
Other intangible assets, net | 758 | 941 |
Other non-current assets | 927 | 877 |
Total assets | 25,402 | 25,662 |
Current liabilities: | ||
Accounts payable | 1,949 | 1,945 |
Accounts payable to related parties | 404 | 407 |
Accrued expenses | 1,293 | 1,296 |
Accrued compensation | 497 | 472 |
Current portion of long-term debt | 286 | 286 |
Total current liabilities | 4,429 | 4,406 |
Non-current liabilities: | ||
Long-term debt | 9,086 | 9,289 |
Other liabilities | 2,311 | 2,416 |
Total liabilities | 15,826 | 16,111 |
Commitments and contingencies (Notes 9, 10, 12 and 15) | ||
Preferred stock, $0.01 par value; authorized — 5 shares; issued and outstanding — none | 0 | 0 |
Common stock, $0.01 par value; authorized — 450 shares; issued — 312 shares; outstanding — 304 shares and 302 shares, respectively | 3 | 3 |
Additional paid-in capital | 3,537 | 3,717 |
Accumulated other comprehensive income (loss) | (101) | (157) |
Retained earnings | 6,658 | 6,725 |
Treasury stock — common shares at cost; 8 shares and 10 shares, respectively | (521) | (737) |
Total shareholders’ equity | 9,576 | 9,551 |
Total liabilities and shareholders’ equity | $ 25,402 | $ 25,662 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Oct. 02, 2020 | Jul. 03, 2020 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Preferred stock shares authorized | 5,000,000 | 5,000,000 |
Preferred stock shares issued | 0 | 0 |
Preferred stock shares outstanding | 0 | 0 |
Common stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Common stock shares authorized | 450,000,000 | 450,000,000 |
Common stock shares issued | 312,000,000 | 312,000,000 |
Common stock shares outstanding | 304,000,000 | 302,000,000 |
Treasury stock shares | 8,000,000 | 10,000,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Oct. 02, 2020 | Oct. 04, 2019 | |
Income Statement [Abstract] | ||
Revenue, net | $ 3,922 | $ 4,040 |
Cost of revenue | 3,018 | 3,282 |
Gross profit | 904 | 758 |
Operating expenses: | ||
Research and development | 555 | 574 |
Selling, general and administrative | 256 | 305 |
Employee termination, asset impairment, and other charges | 23 | 8 |
Total operating expenses | 834 | 887 |
Operating income (loss) | 70 | (129) |
Interest and other income (expense): | ||
Interest income | 2 | 12 |
Interest expense | (84) | (122) |
Other income, net | 9 | 2 |
Total interest and other expense, net | (73) | (108) |
Loss before taxes | (3) | (237) |
Income tax expense | 57 | 39 |
Net loss | $ (60) | $ (276) |
Loss per common share | ||
Loss per common share, basic and diluted (USD per share) | $ (0.20) | $ (0.93) |
Weighted average shares outstanding: | ||
Weighted average shares outstanding, basic and diluted (in shares) | 303 | 296 |
Cash dividends declared per share (in USD per share) | $ 0 | $ 0.50 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Millions | 3 Months Ended | |
Oct. 02, 2020 | Oct. 04, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (60) | $ (276) |
Other comprehensive income (loss), before tax: | ||
Actuarial pension gain | 1 | 1 |
Foreign currency translation adjustment | 32 | 5 |
Net unrealized gain (loss) on derivative contracts and available-for-sale securities | 30 | (33) |
Total other comprehensive income (loss), before tax | 63 | (27) |
Income tax benefit (expense) related to items of other comprehensive income (loss), before tax | (7) | 5 |
Net current-period other comprehensive loss | 56 | (22) |
Total comprehensive loss | $ (4) | $ (298) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Oct. 02, 2020 | Oct. 04, 2019 | |
Cash flows from operating activities | ||
Net loss | $ (60) | $ (276) |
Adjustments to reconcile net loss to net cash provided by operations: | ||
Depreciation and amortization | 374 | 406 |
Stock-based compensation | 76 | 77 |
Deferred income taxes | 11 | (27) |
Loss on disposal of assets | 1 | 2 |
Amortization of debt discounts | 10 | 10 |
Other non-cash operating activities, net | (6) | (21) |
Changes in: | ||
Accounts receivable, net | 282 | (243) |
Inventories | (285) | (5) |
Accounts payable | 99 | 155 |
Accounts payable to related parties | (3) | 176 |
Accrued expenses | (23) | 100 |
Accrued compensation | 26 | 75 |
Other assets and liabilities, net | (139) | (176) |
Net cash provided by operating activities | 363 | 253 |
Cash flows from investing activities | ||
Purchases of property, plant and equipment | (337) | (145) |
Proceeds from the sale of property, plant and equipment | 7 | 0 |
Acquisitions, net of cash acquired | 0 | (22) |
Notes receivable issuances to Flash Ventures | (114) | (171) |
Notes receivable proceeds from Flash Ventures | 277 | 357 |
Strategic investments and other, net | 1 | 15 |
Net cash provided by (used in) investing activities | (166) | 34 |
Cash flows from financing activities | ||
Issuance of stock under employee stock plans | 1 | 26 |
Taxes paid on vested stock awards under employee stock plans | (41) | (52) |
Dividends paid to shareholders | 0 | (147) |
Repayment of debt | (213) | (319) |
Net cash used in financing activities | (253) | (492) |
Effect of exchange rate changes on cash | 3 | (2) |
Net decrease in cash and cash equivalents | (53) | (207) |
Cash and cash equivalents, beginning of year | 3,048 | 3,455 |
Cash and cash equivalents, end of period | 2,995 | 3,248 |
Supplemental disclosure of cash flow information: | ||
Cash paid for income taxes | 144 | 67 |
Cash paid for interest | $ 104 | $ 143 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Shareholders' Equity - USD ($) shares in Thousands, $ in Millions | Total | Cumulative Effect, Period of Adoption, Adjustment | Common Stock | Treasury Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Retained EarningsCumulative Effect, Period of Adoption, Adjustment |
Beginning balance (in shares) at Jun. 28, 2019 | 312,000 | (17,000) | ||||||
Beginning balance at Jun. 28, 2019 | $ 9,967 | $ (5) | $ 3 | $ (1,268) | $ 3,851 | $ (68) | $ 7,449 | $ (5) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net loss | (276) | (276) | ||||||
Employee stock plans (in shares) | 3,000 | |||||||
Employee stock plans | (26) | $ 181 | (207) | |||||
Stock-based compensation | 77 | 77 | ||||||
Dividends to shareholders | (149) | 7 | (156) | |||||
Actuarial pension gain | 1 | 1 | ||||||
Foreign currency translation adjustment | 4 | 4 | ||||||
Net unrealized loss on derivative contracts | (27) | (27) | ||||||
Ending balance (in shares) at Oct. 04, 2019 | 312,000 | (14,000) | ||||||
Ending balance at Oct. 04, 2019 | 9,566 | $ 3 | $ (1,087) | 3,728 | (90) | 7,012 | ||
Beginning balance (in shares) at Jul. 03, 2020 | 312,000 | (10,000) | ||||||
Beginning balance at Jul. 03, 2020 | 9,551 | $ (7) | $ 3 | $ (737) | 3,717 | (157) | 6,725 | $ (7) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net loss | (60) | (60) | ||||||
Employee stock plans (in shares) | 2,000 | |||||||
Employee stock plans | (40) | $ 216 | (256) | |||||
Stock-based compensation | 76 | 76 | ||||||
Actuarial pension gain | 1 | 1 | ||||||
Foreign currency translation adjustment | 32 | 32 | ||||||
Net unrealized loss on derivative contracts | 23 | 23 | ||||||
Ending balance (in shares) at Oct. 02, 2020 | 312,000 | (8,000) | ||||||
Ending balance at Oct. 02, 2020 | $ 9,576 | $ 3 | $ (521) | $ 3,537 | $ (101) | $ 6,658 |
Organization and Basis of Prese
Organization and Basis of Presentation | 3 Months Ended |
Oct. 02, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | Organization and Basis of Presentation Western Digital Corporation (“Western Digital” or the “Company”) is a leading developer, manufacturer, and provider of data storage devices and solutions that address the evolving needs of the information technology (“IT”) industry and the infrastructure that enables the proliferation of data in virtually every other industry. The Company creates environments for data to thrive. The Company is driving the innovation needed to help customers capture, preserve, access and transform an ever-increasing diversity of data. Everywhere data lives, from advanced data centers to mobile sensors to personal devices, the Company’s industry-leading solutions deliver the possibilities of data. The Company’s broad portfolio of technology and products address the following key end markets: Client Devices; Data Center Devices and Solutions; and Client Solutions. The Company also generates license and royalty revenue from its extensive intellectual property (“IP”), which is included in each of these three end market categories. The accounting policies followed by the Company are set forth in Part II, Item 8, Note 1, Organization and Basis of Presentation, of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10‑K for the fiscal year ended July 3, 2020. In the opinion of management, all adjustments necessary to fairly state the Condensed Consolidated Financial Statements have been made. All such adjustments are of a normal, recurring nature. Certain information and footnote disclosures normally included in the Consolidated Financial Statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in the Company’s Annual Report on Form 10‑K for the fiscal year ended July 3, 2020. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year. Fiscal Year The Company’s fiscal year ends on the Friday nearest to June 30 and typically consists of 52 weeks. Approximately every five to six years, the Company reports a 53-week fiscal year to align the fiscal year with the foregoing policy. Fiscal year 2021, which ends on July 2, 2021, will be comprised of 52 weeks, with all quarters presented consisting of 13 weeks. Fiscal year 2020, which ended on July 3, 2020, was comprised of 53 weeks, with the first quarter consisting of 14 weeks and the remaining quarters consisting of 13 weeks each. Use of Estimates Company management has made estimates and assumptions relating to the reporting of certain assets and liabilities in conformity with U.S. GAAP. These estimates and assumptions have been applied using methodologies that are consistent throughout the periods presented with consideration given to the potential impacts of the coronavirus disease 2019 (“COVID-19”) pandemic. However, actual results could differ materially from these estimates and be significantly affected by the severity and duration of the pandemic, the extent of actions to contain or treat COVID-19, how quickly and to what extent normal economic and operating activity can resume, and the severity and duration of the global economic downturn that results from the pandemic. Segment Information The Company manufactures, markets, and sells data storage devices and solutions in the U.S. and in foreign countries through its sales personnel, dealers, distributors, retailers, and subsidiaries. Historically, the Company has managed and reported under a single operating segment. Late in the first quarter of fiscal 2021, the Chief Executive Officer, who is the Company’s Chief Operating Decision Maker (“CODM”), announced a decision to reorganize the Company’s business by forming two separate product business units: flash-based products and hard disk drives (“HDD”). Beginning in the second fiscal quarter, the Company is in the process of transitioning to this new operating model and discrete information has not yet been established to align with the new business structure. Management expects to finalize its assessment of its operating segments when the transition is completed, which is expected to be by the end of fiscal 2021. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Oct. 02, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Accounting Pronouncements Recently Adopted In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updates (“ASU”) No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 seeks to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments, including trade receivables, and other commitments to extend credit held by a reporting entity at each reporting date. The amendments require an entity to replace the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects current expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments are effective for fiscal years (and interim periods within those fiscal years) beginning after December 15, 2019, which for the Company is the first quarter of fiscal 2021. The Company adopted this standard effective July 4, 2020 (the beginning of fiscal 2021) with no material impact on its Condensed Consolidated Financial Statements. In November 2018, the FASB issued ASU No. 2018-18, “Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606” (“ASU 2018-18”). ASU 2018-18 clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue when the collaborative arrangement participant is a customer in the context of a unit of account and precludes recognizing as revenue consideration received from a collaborative arrangement participant if the participant is not a customer. This ASU requires retrospective adoption to the date the Company adopted Accounting Standards Codification (ASC) 606 by recognizing a cumulative-effect adjustment to the opening balance of retained earnings of the earliest annual period presented. The Company adopted this standard effective July 4, 2020 (the beginning of fiscal 2021) with no material impact on its Condensed Consolidated Financial Statements. Recently Issued Accounting Pronouncements Not Yet Adopted In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”). ASU 2019-12 removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. This ASU is effective for fiscal years (and interim periods within those fiscal years) beginning after December 15, 2020, which for the Company is the first quarter of fiscal 2022. Early adoption is permitted. The Company does not expect this update to have a material impact on its Condensed Consolidated Financial Statements. |
Revenues
Revenues | 3 Months Ended |
Oct. 02, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Revenues Contract assets represent the Company’s rights to consideration where performance obligations are completed but the customer payments are not due until another performance obligation is satisfied. The Company did not have any contract assets as of either October 2, 2020 or July 3, 2020. The Company incurs sales commissions and other direct incremental costs to obtain sales contracts. The Company has applied the practical expedient to recognize the direct incremental costs of obtaining contracts as an expense when incurred if the amortization period is expected to be one year or less or the amount is not material, with these costs charged to Selling, general and administrative expenses. Other direct incremental costs to obtain contracts that have an expected benefit of greater than one year are amortized over the period of expected cash flows from the related contracts, and the amortization expense is recorded as a reduction to revenue. Total capitalized contract costs as of October 2, 2020 and July 3, 2020 as well as the related amortization for the three months ended October 2, 2020 and October 4, 2019 were not material. Contract liabilities relate to customers’ payments in advance of performance under the contract and primarily relate to remaining performance obligations under support and maintenance contracts. As of October 2, 2020 and July 3, 2020, contract liabilities were not material. The Company applies the practical expedients and does not disclose transaction price allocated to the remaining performance obligations for (i) arrangements that have an original expected duration of one year or less, which mainly consist of support and maintenance contracts, and (ii) variable consideration amounts for sale-based or usage-based royalties for IP license arrangements, which typically range longer than one year. Remaining performance obligations are mainly attributed to right-to-access patent license arrangements and customer support and service contracts, which will be recognized over the remaining contract period. The transaction price allocated to the remaining performance obligations as of October 2, 2020 was $102 million, which is mainly attributable to the functional IP license and service arrangements. The Company expects to recognize this amount as revenue as follows: $31 million during the remainder of fiscal 2021, $40 million in fiscal 2022, and $31 million in fiscal 2023 and thereafter. The Company’s disaggregated revenue information is as follows: Three Months Ended October 2, October 4, (in millions) Revenue by Product Hard disk drives (“HDD”) $ 1,844 $ 2,408 Flash-based 2,078 1,632 Total Revenue $ 3,922 $ 4,040 Revenue by End Market Client Devices $ 1,946 $ 1,616 Data Center Devices & Solutions 1,129 1,532 Client Solutions 847 892 Total Revenue $ 3,922 $ 4,040 Revenue by Geography Americas $ 1,079 $ 1,313 Europe, Middle East and Africa 629 779 Asia 2,214 1,948 Total Revenue $ 3,922 $ 4,040 The Company’s top 10 customers accounted for 44% of its net revenue for the three months ended October 2, 2020, and 43% of its net revenue for the three months ended October 4, 2019. For the three months ended October 2, 2020, no single customer accounted for 10% of the Company’s net revenue, and for the three months ended October 4, 2019, one customer accounted for 11% of the Company’s net revenue. |
Supplemental Financial Statemen
Supplemental Financial Statement Data | 3 Months Ended |
Oct. 02, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Supplemental Financial Statement Data | Supplemental Financial Statement Data Accounts receivable, net From time to time, in connection with factoring agreements, the Company sells trade accounts receivable without recourse to third party purchasers in exchange for cash. During the three months ended October 2, 2020 and October 4, 2019, the Company sold trade accounts receivable and received cash proceeds of $128 million and $85 million, respectively. The discounts on the trade accounts receivable sold during the periods were not material and were recorded within Other income, net in the Condensed Consolidated Statements of Operations. As of October 2, 2020 and July 3, 2020, the amount of factored receivables that remained outstanding was $128 million and $113 million, respectively. Inventories October 2, July 3, (in millions) Inventories: Raw materials and component parts $ 1,426 $ 1,306 Work-in-process 964 956 Finished goods 965 808 Total inventories $ 3,355 $ 3,070 Property, plant and equipment, net October 2, July 3, (in millions) Property, plant and equipment: Land $ 286 $ 294 Buildings and improvements 1,865 1,837 Machinery and equipment 7,514 7,391 Computer equipment and software 430 429 Furniture and fixtures 52 52 Construction-in-process 327 297 Property, plant and equipment, gross 10,474 10,300 Accumulated depreciation (7,577) (7,446) Property, plant and equipment, net $ 2,897 $ 2,854 Goodwill Carrying Amount (in millions) Balance at July 3, 2020 $ 10,067 Foreign currency translation adjustment 2 Balance at October 2, 2020 $ 10,069 Intangible assets October 2, July 3, (in millions) Finite-lived intangible assets $ 5,543 $ 5,541 In-process research and development 80 80 Accumulated amortization (4,865) (4,680) Intangible assets, net $ 758 $ 941 As part of prior acquisitions, the Company recorded at the time of the acquisition acquired in-process research and development (“IPR&D”) for projects in progress that had not yet reached technological feasibility. IPR&D is initially accounted for as an indefinite-lived intangible asset. Once a project reaches technological feasibility, the Company reclassifies the balance to existing technology and begins to amortize the intangible asset over its estimated useful life. Product warranty liability Changes in the warranty accrual were as follows: Three Months Ended October 2, October 4, (in millions) Warranty accrual, beginning of period $ 408 $ 350 Charges to operations 35 49 Utilization (31) (48) Changes in estimate related to pre-existing warranties (21) 6 Warranty accrual, end of period $ 391 $ 357 The current portion of the warranty accrual is classified in Accrued expenses and the long-term portion is classified in Other liabilities as noted below: October 2, July 3, (in millions) Warranty accrual Current portion (included in Accrued expenses) $ 191 $ 205 Long-term portion (included in Other liabilities) 200 203 Total warranty accrual $ 391 $ 408 Other liabilities October 2, July 3, (in millions) Other liabilities: Non-current net tax payable $ 711 $ 815 Payables related to unrecognized tax benefits 715 720 Other non-current liabilities 885 881 Total other liabilities $ 2,311 $ 2,416 Accumulated other comprehensive income (loss) Accumulated other comprehensive income (loss) (“AOCI”), net of tax refers to expenses, gains and losses that are recorded as an element of shareholders’ equity but are excluded from net income. The following table illustrates the changes in the balances of each component of AOCI: Actuarial Pension Gains (Losses) Foreign Currency Translation Adjustment Unrealized Gains (Losses) on Derivative Contracts Total Accumulated Comprehensive Income (Loss) (in millions) Balance at July 3, 2020 $ (58) $ (2) $ (97) $ (157) Other comprehensive loss before reclassifications 1 32 18 51 Amounts reclassified from accumulated other comprehensive loss — — 12 12 Income tax benefit (expense) related to items of other comprehensive loss — — (7) (7) Net current-period other comprehensive loss 1 32 23 56 Balance at October 2, 2020 $ (57) $ 30 $ (74) $ (101) During the three months ended October 2, 2020 and October 4, 2019, the amounts reclassified out of AOCI related to derivative contracts were substantially all charged to Cost of revenue in the Condensed Consolidated Statements of Operations. |
Fair Value Measurements and Inv
Fair Value Measurements and Investments | 3 Months Ended |
Oct. 02, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements and Investments | Fair Value Measurements and Investments Financial Instruments Carried at Fair Value Financial assets and liabilities that are remeasured and reported at fair value at each reporting period are classified and disclosed in one of the following three levels: 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. The following tables present information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of October 2, 2020 and July 3, 2020, and indicate the fair value hierarchy of the valuation techniques utilized to determine such values: October 2, 2020 Level 1 Level 2 Level 3 Total (in millions) Assets: Cash equivalents - Money market funds $ 861 $ — $ — $ 861 Foreign exchange contracts — 24 — 24 Total assets at fair value $ 861 $ 24 $ — $ 885 Liabilities: Foreign exchange contracts $ — $ 10 $ — $ 10 Interest rate swap contract — 120 — 120 Total liabilities at fair value $ — $ 130 $ — $ 130 July 3, 2020 Level 1 Level 2 Level 3 Total (in millions) Assets: Cash equivalents - Money market funds $ 1,079 $ — $ — $ 1,079 Foreign exchange contracts — 28 — 28 Total assets at fair value $ 1,079 $ 28 $ — $ 1,107 Liabilities: Foreign exchange contracts $ — $ 9 $ — $ 9 Interest rate swap contract — 133 — 133 Total liabilities at fair value $ — $ 142 $ — $ 142 During the three months ended October 2, 2020 and October 4, 2019, the Company had no transfers of financial assets and liabilities between levels and there were no changes in valuation techniques and the inputs used in the fair value measurement. Financial Instruments Not Carried at Fair Value The carrying value of the Company’s revolving credit facility approximates its fair value given the revolving nature of the balance and the variable market interest rate. For financial instruments where the carrying value (which includes principal adjusted for any unamortized issuance costs, and discounts or premiums) differs from fair value (which is based on quoted market prices), the following table represents the related carrying value and fair value for each of the Company’s outstanding financial instruments. Each of the financial instruments presented below was categorized as Level 2 for all periods presented, based on the frequency of trading immediately prior to the end of the first quarter of 2021 and the fourth quarter of 2020, respectively. October 2, 2020 July 3, 2020 Carrying Fair Carrying Fair (in millions) 0.50% convertible senior notes due 2020 $ 35 $ 34 $ 34 $ 30 Variable interest rate Term Loan A-1 maturing 2023 4,514 4,427 4,576 4,474 Variable interest rate Term Loan B-4 maturing 2023 1,543 1,536 1,692 1,656 1.50% convertible notes due 2024 994 1,043 987 1,036 4.75% senior unsecured notes due 2026 2,286 2,475 2,286 2,428 Total $ 9,372 $ 9,515 $ 9,575 $ 9,624 |
Derivatives Instruments and Hed
Derivatives Instruments and Hedging Activities | 3 Months Ended |
Oct. 02, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities As of October 2, 2020, the Company had outstanding foreign exchange forward contracts that were designated as either cash flow hedges or non-designated hedges. Substantially all of the contract maturity dates of these foreign exchange forward contracts do not exceed 12 months. In addition, the Company had outstanding pay-fixed interest rate swaps that were designated as cash flow hedges of variable rate interest payments on a portion of its term loans through February 2023. As of October 2, 2020, the amount of existing net losses related to cash flow hedges recorded in AOCI included $70 million related to the Company’s interest rate swaps that is expected to be reclassified to earnings after twelve months. In addition, as of October 2, 2020, the Company did not have any foreign exchange forward contracts with credit-risk-related contingent features. Changes in fair values of the non-designated foreign exchange contracts are recognized in Other income, net and are largely offset by corresponding changes in the fair values of the foreign currency denominated monetary assets and liabilities. For each of the three months ended October 2, 2020 and October 4, 2019, total net realized and unrealized transaction and foreign exchange contract currency gains and losses were not material to the Company’s Condensed Consolidated Financial Statements. Netting Arrangements Under certain provisions and conditions within agreements with counterparties to the Company’s foreign exchange forward contracts, subject to applicable requirements, the Company has the right of offset associated with the Company’s foreign exchange forward contracts and is allowed to net settle transactions of the same currency with a single net amount payable by one party to the other. As of October 2, 2020 and July 3, 2020, the effect of rights of offset was not material and the Company did not offset or net the fair value amounts of derivative instruments in its Condensed Consolidated Balance Sheets. |
Debt
Debt | 3 Months Ended |
Oct. 02, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Debt Debt consisted of the following as of October 2, 2020 and July 3, 2020: October 2, July 3, (in millions) 0.50% convertible senior notes due 2020 $ 35 $ 35 Variable interest rate Term Loan A-1 maturing 2023 4,520 4,583 Variable interest rate Term Loan B-4 maturing 2023 1,543 1,693 1.50% convertible notes due 2024 1,100 1,100 4.75% senior unsecured notes due 2026 2,300 2,300 Total debt 9,498 9,711 Issuance costs and debt discounts (126) (136) Subtotal 9,372 9,575 Less current portion of long-term debt (286) (286) Long-term debt $ 9,086 $ 9,289 The credit agreement governing the revolving credit facility and Term Loan A-1 requires the Company to comply with certain financial covenants, consisting of a leverage ratio and an interest coverage ratio. As of October 2, 2020, the Company was in compliance with these financial covenants. |
Pensions and Other Post-Retirem
Pensions and Other Post-Retirement Benefit Plans | 3 Months Ended |
Oct. 02, 2020 | |
Retirement Benefits [Abstract] | |
Pensions and Other Post-Retirement Benefit Plans | Pension and Other Post-Retirement Benefit Plans The Company has pension and other post-retirement benefit plans in various countries. The Company’s principal pension plans are in Japan, Thailand and the Philippines. All pension and other post-retirement benefit plans outside of the Company’s Japan, Thailand and Philippines defined benefit pension plans (the “Pension Plans”) are immaterial to the Condensed Consolidated Financial Statements. The expected long-term rate of return on the Pension Plans assets is 2.5%. Obligations and Funded Status The following table presents the unfunded status of the benefit obligations for the Pension Plans: October 2, July 3, (in millions) Benefit obligation at end of period $ 374 $ 366 Fair value of plan assets at end of period 221 215 Unfunded status $ 153 $ 151 The following table presents the unfunded amounts related to the Pension Plans as recognized on the Company’s Condensed Consolidated Balance Sheets: October 2, July 3, (in millions) Current liabilities $ 1 $ 1 Non-current liabilities 152 150 Net amount recognized $ 153 $ 151 |
Related Parties and Related Com
Related Parties and Related Commitments and Contingencies | 3 Months Ended |
Oct. 02, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Related Parties and Related Commitments and Contingencies | Related Parties and Related Commitments and Contingencies Flash Ventures The Company’s business ventures with Kioxia Corporation (“Kioxia”) consist of three separate legal entities: Flash Partners Ltd. (“Flash Partners”), Flash Alliance Ltd. (“Flash Alliance”), and Flash Forward Ltd. (“Flash Forward”), collectively referred to as “Flash Ventures”. The following table presents the notes receivable from, and equity investments in, Flash Ventures as of October 2, 2020 and July 3, 2020: October 2, July 3, (in millions) Notes receivable, Flash Partners $ 271 $ 273 Notes receivable, Flash Alliance 231 301 Notes receivable, Flash Forward 597 670 Investment in Flash Partners 208 203 Investment in Flash Alliance 307 300 Investment in Flash Forward 132 128 Total notes receivable and investments in Flash Ventures $ 1,746 $ 1,875 During the three months ended October 2, 2020 and October 4, 2019, the Company made net payments to Flash Ventures of $981 million and $682 million, respectively, for purchased flash-based memory wafers and net loans and investments. The Company makes, or will make, loans to Flash Ventures to fund equipment investments for new process technologies and additional wafer capacity. The Company aggregates its Flash Ventures’ notes receivable into one class of financing receivables due to the similar ownership interest and common structure in each Flash Venture entity. For all reporting periods presented, no loans were past due and no loan impairments were recorded. The Company’s notes receivable from each Flash Ventures entity, denominated in Japanese yen, are secured by equipment owned by that Flash Ventures entity. As of October 2, 2020 and July 3, 2020, the Company had Accounts payable balances due to Flash Ventures of $404 million and $407 million, respectively. The Company’s maximum reasonably estimable loss exposure (excluding lost profits) as a result of its involvement with Flash Ventures, based upon the Japanese yen to U.S. dollar exchange rate at October 2, 2020, is presented below. Investments in Flash Ventures are denominated in Japanese yen, and the maximum estimable loss exposure excludes any cumulative translation adjustment due to revaluation from the Japanese yen to the U.S. dollar. October 2, (in millions) Notes receivable $ 1,099 Equity investments 647 Operating lease guarantees 2,004 Inventory and prepayments 575 Maximum estimable loss exposure $ 4,325 The Company is obligated to pay for variable costs incurred in producing its share of Flash Ventures’ flash-based memory wafer supply, based on its three-month forecast, which generally equals 50% of Flash Ventures’ output. In addition, the Company is obligated to pay for half of Flash Ventures’ fixed costs regardless of the output the Company chooses to purchase. The Company is not able to estimate its total wafer purchase commitment obligation beyond its rolling three-month purchase commitment because the price is determined by reference to the future cost of producing the semiconductor wafers. In addition, the Company is committed to fund 49.9% to 50.0% of each Flash Ventures entity’s capital investments to the extent that each Flash Ventures entity’s operating cash flow is insufficient to fund these investments. In June 2019, an unexpected power outage incident occurred at the flash-based memory manufacturing facilities operated in Yokkaichi, Japan. The power outage incident impacted the facilities and process tools and resulted in damage to flash wafers in production and a reduction in the Company’s flash wafer availability. As a result of this incident, the Company incurred charges of $68 million for the three months ended October 4, 2019, which were recorded in Cost of revenue and primarily consisted of unabsorbed manufacturing overhead costs. During the three months ended October 2, 2020, the Company received a recovery of $30 million related to this incident from its insurance carriers, which was recorded in Cost of revenue. The Company continues to pursue recovery of its losses associated with this event; however, the total amount of recovery cannot be estimated at this time. In May 2019, the Company entered into additional agreements with Kioxia to extend Flash Ventures to a new wafer fabrication facility, known as “K1,” located in Kitakami, Japan. The primary purpose of K1 is to provide clean room space to continue the transition of existing flash-based wafer capacity to newer technology nodes. Output from the initial production line at K1 began in the third quarter of fiscal year 2020, although meaningful output from K1 is not expected to begin until the end of calendar 2020. The Company has paid for most of its share of initial K1 equipment investments and relocation costs. Other period expenses associated with the initial production ramp at K1 are expected to begin trailing off toward the end of calendar year 2020 as output increases. The Company also agreed to prepay an aggregate of approximately $360 million over a 3-year period beginning in the first half of fiscal year 2020 toward K1 building depreciation, to be credited against future wafer charges. As of October 2, 2020, remaining committed prepayments totaled $178 million. Inventory Purchase Commitments with Flash Ventures. Purchase orders placed under Flash Ventures for up to three months are binding and cannot be canceled. Research and Development Activities. The Company participates in common research and development (“R&D”) activities with Kioxia and is contractually committed to a minimum funding level. R&D commitments are immaterial to the Condensed Consolidated Financial Statements. Off-Balance Sheet Liabilities Flash Ventures sells to and leases back from a consortium of financial institutions a portion of its tools and has entered into equipment lease agreements of which the Company guarantees half or all of the outstanding obligations under each lease agreement. The lease agreements are subject to customary covenants and cancellation events related to Flash Ventures and each of the guarantors. The occurrence of a cancellation event could result in an acceleration of Flash Ventures’ obligations and a call on the Company’s guarantees. The following table presents the Company’s portion of the remaining guarantee obligations under the Flash Ventures’ lease facilities in both Japanese yen and U.S. dollar-equivalent, based upon the Japanese yen to U.S. dollar exchange rate as of October 2, 2020. Lease Amounts (Japanese yen, in billions) (U.S. dollar, in millions) Total guarantee obligations ¥ 211 $ 2,004 The following table details the breakdown of the Company’s remaining guarantee obligations between the principal amortization and the purchase option exercise price at the end of the term of the Flash Ventures lease agreements, in annual installments as of October 2, 2020 in U.S. dollars, based upon the Japanese yen to U.S. dollar exchange rate as of October 2, 2020: Annual Installments Payment of Principal Amortization Purchase Option Exercise Price at Final Lease Terms Guarantee Amount (in millions) Remaining nine months of 2021 $ 407 $ 80 $ 487 2022 469 51 520 2023 356 69 425 2024 194 123 317 2025 55 113 168 Thereafter 15 72 87 Total guarantee obligations $ 1,496 $ 508 $ 2,004 The Company and Kioxia have agreed to mutually contribute to, and indemnify each other and Flash Ventures for, environmental remediation costs or liability resulting from Flash Ventures’ manufacturing operations in certain circumstances. The Company has not made any indemnification payments, nor recorded any indemnification receivables, under any such agreements. As of October 2, 2020, no amounts have been accrued in the Condensed Consolidated Financial Statements with respect to these indemnification agreements. Unis Venture |
Leases and Other Commitments
Leases and Other Commitments | 3 Months Ended |
Oct. 02, 2020 | |
Leases [Abstract] | |
Leases and Other Commitments | Leases and Other Commitments Leases The Company leases certain domestic and international facilities and data center space under long-term, non-cancelable operating leases that expire at various dates through 2034. These leases include no material variable or contingent lease payments. Operating lease assets and liabilities are recognized based on the present value of the remaining lease payments discounted using the Company’s incremental borrowing rate. Operating lease assets also include prepaid lease payments minus any lease incentives. Extension or termination options present in the Company’s lease agreements are included in determining the right-of-use asset and lease liability when it is reasonably certain the Company will exercise those options. Lease expense is recognized on a straight-line basis over the lease term. The following table summarizes supplemental balance sheet information related to operating leases as of October 2, 2020: Lease Amounts Minimum lease payments by fiscal year: (in millions) Remaining nine months of 2021 $ 35 2022 35 2023 29 2024 29 2025 27 Thereafter 144 Total future minimum lease payments 299 Less: Imputed Interest (56) Present value of lease liabilities 243 Less: Current portion (included in Accrued expenses) 37 Long-term operating lease liabilities (included in Other liabilities) $ 206 Operating lease right-of-use assets (included in Other non-current assets) $ 228 Weighted average remaining lease term in years 9.0 Weighted average discount rate 4.2 % The following table summarizes supplemental disclosures of operating cost and cash flow information related to operating leases: Three Months Ended October 2, October 4, (in millions) Cost of operating leases $ 13 $ 12 Cash paid for operating leases 12 16 Operating lease assets obtained in exchange for operating lease liabilities 7 49 Purchase Agreements and Other Commitments In the normal course of business, the Company enters into purchase orders with suppliers for the purchase of components used to manufacture its products. These purchase orders generally cover forecasted component supplies needed for production during the next quarter, are recorded as a liability upon receipt of the components, and generally may be changed or canceled at any time prior to shipment of the components. The Company also enters into long-term agreements with suppliers that contain fixed future commitments, which are contingent on certain conditions such as performance, quality and technology of the vendor’s components. As of October 2, 2020, the Company had the following minimum long-term commitments: Long-term commitments (in millions) Fiscal year: Remaining nine months of 2021 $ 328 2022 596 2023 523 2024 322 2025 148 Thereafter 190 Total $ 2,107 |
Shareholders' Equity
Shareholders' Equity | 3 Months Ended |
Oct. 02, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Shareholders' Equity | Shareholders’ Equity Stock-based Compensation Expense The following tables present the Company’s stock-based compensation for equity-settled awards by type (i.e., stock options, restricted stock units (“RSUs”), restricted stock unit awards with performance conditions or market conditions (“PSUs”), and rights to purchase shares of common stock under the Company’s Employee Stock Purchase Plan (“ESPP”)) and financial statement line as well as the related tax benefit included in the Company’s Condensed Consolidated Statements of Operations: Three Months Ended October 2, October 4, (in millions) Options $ — $ 2 RSUs and PSUs 67 66 ESPP 9 9 Total $ 76 $ 77 Three Months Ended October 2, October 4, (in millions) Cost of revenue $ 12 $ 12 Research and development 39 41 Selling, general and administrative 25 24 Subtotal 76 77 Tax benefit (11) (12) Total $ 65 $ 65 Windfall tax benefits and tax deficiencies for shortfalls related to the vesting and exercise of stock-based awards, which are recognized as a component of the Company’s Income tax expense, were not material for the periods presented. Compensation cost related to unvested stock options, RSUs, PSUs, and rights to purchase shares of common stock under the ESPP will generally be amortized on a straight-line basis over the remaining average service period. The following table presents the unamortized compensation cost and weighted average service period of all unvested outstanding awards as of October 2, 2020: Unamortized Compensation Costs Weighted Average Service Period (in millions) (years) RSUs and PSUs (1) $ 743 3.0 ESPP 29 0.8 Total unamortized compensation cost $ 772 (1) Weighted average service period assumes the performance metrics are met for the PSUs. Plan Activities Stock Options The following table summarizes stock option activity under the Company’s incentive plans: 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 July 3, 2020 2.7 $ 69.16 2.1 $ — Exercised — 18.30 $ — Canceled or expired (0.2) 68.81 Options outstanding at October 2, 2020 2.5 69.21 1.5 $ — Exercisable at October 2, 2020 2.5 $ 69.21 1.5 $ — RSUs and PSUs The following table summarizes RSU and PSU activity under the Company’s incentive plans: Number of Shares Weighted Average Grant Date Fair Value Aggregate Intrinsic Value at Vest Date (in millions) (in millions) RSUs and PSUs outstanding at July 3, 2020 13.3 $ 60.92 Granted 7.9 37.86 Vested (3.7) 61.20 $ 149 Forfeited (0.5) 65.04 RSUs and PSUs outstanding at October 2, 2020 17.0 49.70 RSUs and PSUs are generally settled in an equal number of shares of the Company’s common stock at the time of vesting of the units. Stock Repurchase Program The Company’s Board of Directors has authorized a stock repurchase program for the repurchase of up to $5.0 billion of the Company’s common stock, which authorization is effective through July 25, 2023. The Company did not make any stock repurchases during the three months ended October 2, 2020 and has not repurchased any shares of its common stock pursuant to its stock repurchase program since the first quarter of fiscal 2019. The remaining amount available to be repurchased under the Company’s current stock repurchase program as of October 2, 2020 was $4.5 billion. Repurchases under the stock repurchase program may be made in the open market or in privately negotiated transactions and may be made under a Rule 10b5-1 plan. The Company expects stock repurchases to be funded principally by operating cash flows. Dividends to Shareholders The Company issued a quarterly cash dividend from the first quarter of fiscal 2013 up to the third quarter of fiscal 2020. In April 2020, the Company suspended its dividend to reinvest in the business and to support its ongoing deleveraging efforts. |
Income Tax Expense
Income Tax Expense | 3 Months Ended |
Oct. 02, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Tax Expense | Income Tax Expense On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted in response to the COVID-19 pandemic in the U.S. The CARES Act, among other things, allows net operating losses arising in tax years 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes and increases the business interest expense limitation from 30% to 50% of adjusted taxable income for tax years 2019 and 2020. Additionally, countries around the world continue to implement emergency tax measures to provide relief similar to the CARES Act. The Company at present does not expect that any of the provisions of the CARES Act or the emergency tax measures around the world would result in a material cash benefit. However, the Company continues to monitor and evaluate the regulatory and interpretive guidance related to the CARES Act as well as in other jurisdictions. The Tax Cuts and Jobs Act (the “2017 Act”), enacted on December 22, 2017, includes a broad range of tax reform proposals affecting businesses. The Company completed its accounting for the tax effects of the enactment of the 2017 Act during the second quarter of fiscal 2019. However, the U.S. Treasury and the Internal Revenue Service (“IRS”) have issued tax guidance on certain provisions of the 2017 Act since the enactment date, and the Company anticipates the issuance of additional regulatory and interpretive guidance. The Company applied a reasonable interpretation of the 2017 Act along with the then-available guidance in finalizing its accounting for the tax effects of the 2017 Act. Any additional regulatory or interpretive guidance would constitute new information, which may require further refinements to the Company’s estimates in future periods. The following table presents the Company’s Income tax expense and the effective tax rate: Three Months Ended October 2, October 4, (in millions) Loss before taxes $ (3) $ (237) Income tax expense 57 39 Effective tax rate (1,900) % (16) % The primary drivers of the difference between the effective tax rate for the three months ended October 2, 2020 and the U.S. Federal statutory rate of 21% are the relative mix of earnings and losses by jurisdiction, the deduction for foreign derived intangible income, credits and tax holidays in Malaysia, the Philippines and Thailand that will expire at various dates during fiscal years 2021 through 2030. In addition, the effective tax rate for the three months ended October 2, 2020 includes the discrete effects of net tax deficiencies from shortfalls of $11 million related to the vesting of stock-based awards and additional tax expense of $10 million from the re-measurement of purchase accounting deferred tax liabilities due to restructuring activities. The discrete items have no impact on the amount of income taxes paid by the Company. The primary drivers of the difference between the effective tax rate for the three months ended October 4, 2019 and the U.S. Federal statutory rate of 21% are the relative mix of earnings and losses by jurisdiction, the deduction for foreign derived intangible income, credits, and tax holidays in Malaysia, Philippines and Thailand that expired or will expire at various dates during fiscal years 2020 through 2030. The IRS previously completed its field examination of the Company’s federal income tax returns for fiscal years 2008 through 2012 and proposed certain adjustments. As previously disclosed, the Company received Revenue Agent Reports from the IRS for fiscal years 2008 through 2009, proposing adjustments relating to transfer pricing with the Company’s foreign subsidiaries and intercompany payable balances. The Company disagrees with the proposed adjustments and in September 2015, filed a protest with the IRS Appeals Office and received the IRS rebuttal in July 2016. The Company and the IRS Appeals Office did not reach a settlement on the disputed matters. On June 28, 2018, the IRS issued a statutory notice of deficiency with respect to the disputed matters for fiscal years 2008 through 2009, seeking to increase the Company’s U.S. taxable income by an amount that would result in additional federal tax through fiscal year 2009 totaling approximately $516 million, subject to interest and penalties. The Company filed a petition with the U.S. Tax Court in September 2018. On December 10, 2018, the IRS issued a statutory notice of deficiency with respect to fiscal years 2010 through 2012, seeking to increase the Company’s U.S. taxable income by an amount that would result in additional federal tax for fiscal years 2010 through 2012 totaling approximately $549 million, subject to interest and penalties. Approximately $535 million of the total additional federal tax for fiscal years 2010 through 2012 relates to proposed adjustments for transfer pricing with the Company’s foreign subsidiaries, intercompany payable balances and the utilization of certain tax attributes. The Company filed a petition with the U.S. Tax Court in March 2019. The U.S. Tax Court consolidated the case for fiscal years 2008 through 2009 with the case for fiscal years 2010 through 2012. On May 4, 2020, the IRS filed with the U.S. Tax Court Amendments to Answer to assert penalties totaling $340 million on the proposed adjustments relating to transfer pricing with respect to fiscal years 2008 through 2009 and fiscal years 2010 through 2012. In September 2020, the IRS proposed adjustments relating to transfer pricing with the Company’s foreign subsidiaries for fiscal years 2013 through 2015 that, if sustained, would result in additional federal tax totaling approximately $271 million. The Company disagrees with the proposed adjustments. The Company continues to believe that its tax positions are properly supported and will vigorously contest the position taken by the IRS. The Company believes that adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax examinations cannot be predicted with certainty. If any issues addressed in the Company’s tax examinations are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs. As of October 2, 2020, it was not possible to estimate the amount of change, if any, in the unrecognized tax benefits that is reasonably possible within the next twelve months. Any significant change in the amount of the Company’s liability for unrecognized tax benefits would most likely result from additional information or settlements relating to the examination of the Company’s tax returns. As of October 2, 2020, the liability for unrecognized tax benefits (excluding accrued interest and penalties) was approximately $711 million. Accrued interest and penalties related to unrecognized tax benefits as of October 2, 2020 was approximately $141 million. Of these amounts, approximately $715 million could result in potential cash payments. The Company is not able to provide a reasonable estimate of the timing of future tax payments related to these obligations. |
Net Loss Per Common Share
Net Loss Per Common Share | 3 Months Ended |
Oct. 02, 2020 | |
Earnings Per Share [Abstract] | |
Net Loss Per Common Share | Net Loss Per Common Share The following table presents the computation of basic and diluted loss per common share: Three Months Ended October 2, October 4, (in millions, except per share data) Net loss $ (60) $ (276) Weighted average shares outstanding: Basic and diluted 303 296 Loss per common share Basic and diluted $ (0.20) $ (0.93) Anti-dilutive potential common shares excluded 16 15 The Company computes basic loss per common share using Net loss and the weighted average number of common shares outstanding during the period. Diluted loss per common share is computed using Net loss and the weighted average number of common shares and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares include dilutive outstanding employee stock options, RSUs and PSUs, and rights to purchase shares of common stock under the Company’s ESPP. For the three months ended October 2, 2020 and the three months ended October 4, 2019, the Company recorded net losses, and all shares subject to outstanding equity awards have been excluded for those periods because including them would be anti-dilutive. |
Employee Termination, Asset Imp
Employee Termination, Asset Impairment and Other Charges | 3 Months Ended |
Oct. 02, 2020 | |
Postemployment Benefits [Abstract] | |
Employee Termination, Asset Impairment and Other Charges | Employee Termination, Asset Impairment and Other Charges The Company recorded the following charges related to employee termination benefits, asset impairment, and other charges: Three Months Ended October 2, October 4, (in millions) Employee termination and other charges: Closure of Foreign Manufacturing Facilities $ — $ 4 Business Realignment 23 4 Total employee termination, asset impairment, and other charges $ 23 $ 8 Business Realignment The Company periodically incurs charges as part of the integration process of recent acquisitions and to realign its operations with anticipated market demand, primarily consisting of organization rationalization designed to streamline its business, reduce its cost structure and focus its resources. The following table presents an analysis of the components of the activity against the reserve during the three months ended October 2, 2020: Employee Termination Benefits Contract Termination and Other Total (in millions) Accrual balance at July 3, 2020 $ 13 $ — $ 13 Charges 20 2 22 Cash payments (20) (2) (22) Accrual balance at October 2, 2020 $ 13 $ — $ 13 |
Legal Proceedings
Legal Proceedings | 3 Months Ended |
Oct. 02, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Proceedings | Legal Proceedings Tax For disclosures regarding statutory notices of deficiency issued by the IRS on June 28, 2018 and December 10, 2018, and petitions filed by the Company with the U.S. Tax Court in September 2018 and March 2019, see Note 12, Income Tax Expense. Other Matters In the normal course of business, the Company is subject to legal proceedings, lawsuits and other claims. Although the ultimate aggregate amount of probable monetary liability or financial impact with respect to these other matters is subject to many uncertainties, management believes that any monetary liability or financial impact to the Company from these matters, individually and in the aggregate, would not be material to the Company’s financial condition, results of operations or cash flows. However, any monetary liability and financial impact to the Company from these matters could differ materially from the Company’s expectations. |
Organization and Basis of Pre_2
Organization and Basis of Presentation (Policies) | 3 Months Ended |
Oct. 02, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Western Digital Corporation (“Western Digital” or the “Company”) is a leading developer, manufacturer, and provider of data storage devices and solutions that address the evolving needs of the information technology (“IT”) industry and the infrastructure that enables the proliferation of data in virtually every other industry. The Company creates environments for data to thrive. The Company is driving the innovation needed to help customers capture, preserve, access and transform an ever-increasing diversity of data. Everywhere data lives, from advanced data centers to mobile sensors to personal devices, the Company’s industry-leading solutions deliver the possibilities of data. The Company’s broad portfolio of technology and products address the following key end markets: Client Devices; Data Center Devices and Solutions; and Client Solutions. The Company also generates license and royalty revenue from its extensive intellectual property (“IP”), which is included in each of these three end market categories. The accounting policies followed by the Company are set forth in Part II, Item 8, Note 1, Organization and Basis of Presentation, of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10‑K for the fiscal year ended July 3, 2020. In the opinion of management, all adjustments necessary to fairly state the Condensed Consolidated Financial Statements have been made. All such adjustments are of a normal, recurring nature. Certain information and footnote disclosures normally included in the Consolidated Financial Statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in the Company’s Annual Report on Form 10‑K for the fiscal year ended July 3, 2020. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year. |
Fiscal Year | Fiscal YearThe Company’s fiscal year ends on the Friday nearest to June 30 and typically consists of 52 weeks. Approximately every five to six years, the Company reports a 53-week fiscal year to align the fiscal year with the foregoing policy. Fiscal year 2021, which ends on July 2, 2021, will be comprised of 52 weeks, with all quarters presented consisting of 13 weeks. Fiscal year 2020, which ended on July 3, 2020, was comprised of 53 weeks, with the first quarter consisting of 14 weeks and the remaining quarters consisting of 13 weeks each. |
Use of Estimates | Use of Estimates Company management has made estimates and assumptions relating to the reporting of certain assets and liabilities in conformity with U.S. GAAP. These estimates and assumptions have been applied using methodologies that are consistent throughout the periods presented with consideration given to the potential impacts of the coronavirus disease 2019 (“COVID-19”) pandemic. However, actual results could differ materially from these estimates and be significantly affected by the severity and duration of the pandemic, the extent of actions to contain or treat COVID-19, how quickly and to what extent normal economic and operating activity can resume, and the severity and duration of the global economic downturn that results from the pandemic. |
Segment Information | Segment Information The Company manufactures, markets, and sells data storage devices and solutions in the U.S. and in foreign countries through its sales personnel, dealers, distributors, retailers, and subsidiaries. Historically, the Company has managed and reported under a single operating segment. Late in the first quarter of fiscal 2021, the Chief Executive Officer, who is the Company’s Chief Operating Decision Maker (“CODM”), announced a decision to reorganize the Company’s business by forming two separate product business units: flash-based products and hard disk drives (“HDD”). Beginning in the second fiscal quarter, the Company is in the process of transitioning to this new operating model and discrete information has not yet been established to align with the new business structure. Management expects to finalize its assessment of its operating segments when the transition is completed, which is expected to be by the end of fiscal 2021. |
Recent Accounting Pronouncements | Accounting Pronouncements Recently Adopted In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updates (“ASU”) No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 seeks to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments, including trade receivables, and other commitments to extend credit held by a reporting entity at each reporting date. The amendments require an entity to replace the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects current expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments are effective for fiscal years (and interim periods within those fiscal years) beginning after December 15, 2019, which for the Company is the first quarter of fiscal 2021. The Company adopted this standard effective July 4, 2020 (the beginning of fiscal 2021) with no material impact on its Condensed Consolidated Financial Statements. In November 2018, the FASB issued ASU No. 2018-18, “Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606” (“ASU 2018-18”). ASU 2018-18 clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue when the collaborative arrangement participant is a customer in the context of a unit of account and precludes recognizing as revenue consideration received from a collaborative arrangement participant if the participant is not a customer. This ASU requires retrospective adoption to the date the Company adopted Accounting Standards Codification (ASC) 606 by recognizing a cumulative-effect adjustment to the opening balance of retained earnings of the earliest annual period presented. The Company adopted this standard effective July 4, 2020 (the beginning of fiscal 2021) with no material impact on its Condensed Consolidated Financial Statements. Recently Issued Accounting Pronouncements Not Yet Adopted In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”). ASU 2019-12 removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. This ASU is effective for fiscal years (and interim periods within those fiscal years) beginning after December 15, 2020, which for the Company is the first quarter of fiscal 2022. Early adoption is permitted. The Company does not expect this update to have a material impact on its Condensed Consolidated Financial Statements. |
Fair Value Measurements and Investments | Financial assets and liabilities that are remeasured and reported at fair value at each reporting period are classified and disclosed in one of the following three levels: 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. |
Revenues (Tables)
Revenues (Tables) | 3 Months Ended |
Oct. 02, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The Company’s disaggregated revenue information is as follows: Three Months Ended October 2, October 4, (in millions) Revenue by Product Hard disk drives (“HDD”) $ 1,844 $ 2,408 Flash-based 2,078 1,632 Total Revenue $ 3,922 $ 4,040 Revenue by End Market Client Devices $ 1,946 $ 1,616 Data Center Devices & Solutions 1,129 1,532 Client Solutions 847 892 Total Revenue $ 3,922 $ 4,040 Revenue by Geography Americas $ 1,079 $ 1,313 Europe, Middle East and Africa 629 779 Asia 2,214 1,948 Total Revenue $ 3,922 $ 4,040 |
Supplemental Financial Statem_2
Supplemental Financial Statement Data (Tables) | 3 Months Ended |
Oct. 02, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Inventories | Inventories October 2, July 3, (in millions) Inventories: Raw materials and component parts $ 1,426 $ 1,306 Work-in-process 964 956 Finished goods 965 808 Total inventories $ 3,355 $ 3,070 |
Schedule of Property, Plant and Equipment, Net | Property, plant and equipment, net October 2, July 3, (in millions) Property, plant and equipment: Land $ 286 $ 294 Buildings and improvements 1,865 1,837 Machinery and equipment 7,514 7,391 Computer equipment and software 430 429 Furniture and fixtures 52 52 Construction-in-process 327 297 Property, plant and equipment, gross 10,474 10,300 Accumulated depreciation (7,577) (7,446) Property, plant and equipment, net $ 2,897 $ 2,854 |
Schedule of Goodwill | Goodwill Carrying Amount (in millions) Balance at July 3, 2020 $ 10,067 Foreign currency translation adjustment 2 Balance at October 2, 2020 $ 10,069 |
Schedule of Intangible Assets | Intangible assets October 2, July 3, (in millions) Finite-lived intangible assets $ 5,543 $ 5,541 In-process research and development 80 80 Accumulated amortization (4,865) (4,680) Intangible assets, net $ 758 $ 941 |
Schedule of Product Warranty Liability | Product warranty liability Changes in the warranty accrual were as follows: Three Months Ended October 2, October 4, (in millions) Warranty accrual, beginning of period $ 408 $ 350 Charges to operations 35 49 Utilization (31) (48) Changes in estimate related to pre-existing warranties (21) 6 Warranty accrual, end of period $ 391 $ 357 The current portion of the warranty accrual is classified in Accrued expenses and the long-term portion is classified in Other liabilities as noted below: October 2, July 3, (in millions) Warranty accrual Current portion (included in Accrued expenses) $ 191 $ 205 Long-term portion (included in Other liabilities) 200 203 Total warranty accrual $ 391 $ 408 |
Schedule of Other Liabilities | Other liabilities October 2, July 3, (in millions) Other liabilities: Non-current net tax payable $ 711 $ 815 Payables related to unrecognized tax benefits 715 720 Other non-current liabilities 885 881 Total other liabilities $ 2,311 $ 2,416 |
Schedule of Accumulated Other Comprehensive Income (Loss) | The following table illustrates the changes in the balances of each component of AOCI: Actuarial Pension Gains (Losses) Foreign Currency Translation Adjustment Unrealized Gains (Losses) on Derivative Contracts Total Accumulated Comprehensive Income (Loss) (in millions) Balance at July 3, 2020 $ (58) $ (2) $ (97) $ (157) Other comprehensive loss before reclassifications 1 32 18 51 Amounts reclassified from accumulated other comprehensive loss — — 12 12 Income tax benefit (expense) related to items of other comprehensive loss — — (7) (7) Net current-period other comprehensive loss 1 32 23 56 Balance at October 2, 2020 $ (57) $ 30 $ (74) $ (101) |
Fair Value Measurements and I_2
Fair Value Measurements and Investments (Tables) | 3 Months Ended |
Oct. 02, 2020 | |
Fair Value Disclosures [Abstract] | |
Financial Assets and Liabilities Measured at Fair Value on Recurring Basis | The following tables present information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of October 2, 2020 and July 3, 2020, and indicate the fair value hierarchy of the valuation techniques utilized to determine such values: October 2, 2020 Level 1 Level 2 Level 3 Total (in millions) Assets: Cash equivalents - Money market funds $ 861 $ — $ — $ 861 Foreign exchange contracts — 24 — 24 Total assets at fair value $ 861 $ 24 $ — $ 885 Liabilities: Foreign exchange contracts $ — $ 10 $ — $ 10 Interest rate swap contract — 120 — 120 Total liabilities at fair value $ — $ 130 $ — $ 130 July 3, 2020 Level 1 Level 2 Level 3 Total (in millions) Assets: Cash equivalents - Money market funds $ 1,079 $ — $ — $ 1,079 Foreign exchange contracts — 28 — 28 Total assets at fair value $ 1,079 $ 28 $ — $ 1,107 Liabilities: Foreign exchange contracts $ — $ 9 $ — $ 9 Interest rate swap contract — 133 — 133 Total liabilities at fair value $ — $ 142 $ — $ 142 |
Related Costs And Fair Values Based On Quoted Market Prices | For financial instruments where the carrying value (which includes principal adjusted for any unamortized issuance costs, and discounts or premiums) differs from fair value (which is based on quoted market prices), the following table represents the related carrying value and fair value for each of the Company’s outstanding financial instruments. Each of the financial instruments presented below was categorized as Level 2 for all periods presented, based on the frequency of trading immediately prior to the end of the first quarter of 2021 and the fourth quarter of 2020, respectively. October 2, 2020 July 3, 2020 Carrying Fair Carrying Fair (in millions) 0.50% convertible senior notes due 2020 $ 35 $ 34 $ 34 $ 30 Variable interest rate Term Loan A-1 maturing 2023 4,514 4,427 4,576 4,474 Variable interest rate Term Loan B-4 maturing 2023 1,543 1,536 1,692 1,656 1.50% convertible notes due 2024 994 1,043 987 1,036 4.75% senior unsecured notes due 2026 2,286 2,475 2,286 2,428 Total $ 9,372 $ 9,515 $ 9,575 $ 9,624 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Oct. 02, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Debt consisted of the following as of October 2, 2020 and July 3, 2020: October 2, July 3, (in millions) 0.50% convertible senior notes due 2020 $ 35 $ 35 Variable interest rate Term Loan A-1 maturing 2023 4,520 4,583 Variable interest rate Term Loan B-4 maturing 2023 1,543 1,693 1.50% convertible notes due 2024 1,100 1,100 4.75% senior unsecured notes due 2026 2,300 2,300 Total debt 9,498 9,711 Issuance costs and debt discounts (126) (136) Subtotal 9,372 9,575 Less current portion of long-term debt (286) (286) Long-term debt $ 9,086 $ 9,289 |
Pensions and Other Post-Retir_2
Pensions and Other Post-Retirement Benefit Plans (Tables) | 3 Months Ended |
Oct. 02, 2020 | |
Retirement Benefits [Abstract] | |
Obligations and Funded Status | The following table presents the unfunded status of the benefit obligations for the Pension Plans: October 2, July 3, (in millions) Benefit obligation at end of period $ 374 $ 366 Fair value of plan assets at end of period 221 215 Unfunded status $ 153 $ 151 |
Unfunded Amounts Recognized on Consolidated Balance Sheets | The following table presents the unfunded amounts related to the Pension Plans as recognized on the Company’s Condensed Consolidated Balance Sheets: October 2, July 3, (in millions) Current liabilities $ 1 $ 1 Non-current liabilities 152 150 Net amount recognized $ 153 $ 151 |
Related Parties and Related C_2
Related Parties and Related Commitments and Contingencies (Tables) | 3 Months Ended |
Oct. 02, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Notes Receivable and Investments in Related Parties | The following table presents the notes receivable from, and equity investments in, Flash Ventures as of October 2, 2020 and July 3, 2020: October 2, July 3, (in millions) Notes receivable, Flash Partners $ 271 $ 273 Notes receivable, Flash Alliance 231 301 Notes receivable, Flash Forward 597 670 Investment in Flash Partners 208 203 Investment in Flash Alliance 307 300 Investment in Flash Forward 132 128 Total notes receivable and investments in Flash Ventures $ 1,746 $ 1,875 |
Variable Interest Entity Maximum Loss Exposure | The Company’s maximum reasonably estimable loss exposure (excluding lost profits) as a result of its involvement with Flash Ventures, based upon the Japanese yen to U.S. dollar exchange rate at October 2, 2020, is presented below. Investments in Flash Ventures are denominated in Japanese yen, and the maximum estimable loss exposure excludes any cumulative translation adjustment due to revaluation from the Japanese yen to the U.S. dollar. October 2, (in millions) Notes receivable $ 1,099 Equity investments 647 Operating lease guarantees 2,004 Inventory and prepayments 575 Maximum estimable loss exposure $ 4,325 |
Schedule of Guarantor Obligations | The following table presents the Company’s portion of the remaining guarantee obligations under the Flash Ventures’ lease facilities in both Japanese yen and U.S. dollar-equivalent, based upon the Japanese yen to U.S. dollar exchange rate as of October 2, 2020. Lease Amounts (Japanese yen, in billions) (U.S. dollar, in millions) Total guarantee obligations ¥ 211 $ 2,004 |
Remaining Guarantee Obligations | The following table details the breakdown of the Company’s remaining guarantee obligations between the principal amortization and the purchase option exercise price at the end of the term of the Flash Ventures lease agreements, in annual installments as of October 2, 2020 in U.S. dollars, based upon the Japanese yen to U.S. dollar exchange rate as of October 2, 2020: Annual Installments Payment of Principal Amortization Purchase Option Exercise Price at Final Lease Terms Guarantee Amount (in millions) Remaining nine months of 2021 $ 407 $ 80 $ 487 2022 469 51 520 2023 356 69 425 2024 194 123 317 2025 55 113 168 Thereafter 15 72 87 Total guarantee obligations $ 1,496 $ 508 $ 2,004 |
Leases and Other Commitments (T
Leases and Other Commitments (Tables) | 3 Months Ended |
Oct. 02, 2020 | |
Leases [Abstract] | |
Supplemental Balance Sheet Disclosures | The following table summarizes supplemental balance sheet information related to operating leases as of October 2, 2020: Lease Amounts Minimum lease payments by fiscal year: (in millions) Remaining nine months of 2021 $ 35 2022 35 2023 29 2024 29 2025 27 Thereafter 144 Total future minimum lease payments 299 Less: Imputed Interest (56) Present value of lease liabilities 243 Less: Current portion (included in Accrued expenses) 37 Long-term operating lease liabilities (included in Other liabilities) $ 206 Operating lease right-of-use assets (included in Other non-current assets) $ 228 Weighted average remaining lease term in years 9.0 Weighted average discount rate 4.2 % |
Supplemental Cash Flow Disclosures | The following table summarizes supplemental disclosures of operating cost and cash flow information related to operating leases: Three Months Ended October 2, October 4, (in millions) Cost of operating leases $ 13 $ 12 Cash paid for operating leases 12 16 Operating lease assets obtained in exchange for operating lease liabilities 7 49 |
Long-term Purchase Agreements | As of October 2, 2020, the Company had the following minimum long-term commitments: Long-term commitments (in millions) Fiscal year: Remaining nine months of 2021 $ 328 2022 596 2023 523 2024 322 2025 148 Thereafter 190 Total $ 2,107 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 3 Months Ended |
Oct. 02, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award | The following tables present the Company’s stock-based compensation for equity-settled awards by type (i.e., stock options, restricted stock units (“RSUs”), restricted stock unit awards with performance conditions or market conditions (“PSUs”), and rights to purchase shares of common stock under the Company’s Employee Stock Purchase Plan (“ESPP”)) and financial statement line as well as the related tax benefit included in the Company’s Condensed Consolidated Statements of Operations: Three Months Ended October 2, October 4, (in millions) Options $ — $ 2 RSUs and PSUs 67 66 ESPP 9 9 Total $ 76 $ 77 Three Months Ended October 2, October 4, (in millions) Cost of revenue $ 12 $ 12 Research and development 39 41 Selling, general and administrative 25 24 Subtotal 76 77 Tax benefit (11) (12) Total $ 65 $ 65 |
Employee Service Share-based Compensation , Unrecognized Costs | The following table presents the unamortized compensation cost and weighted average service period of all unvested outstanding awards as of October 2, 2020: Unamortized Compensation Costs Weighted Average Service Period (in millions) (years) RSUs and PSUs (1) $ 743 3.0 ESPP 29 0.8 Total unamortized compensation cost $ 772 (1) Weighted average service period assumes the performance metrics are met for the PSUs. |
Stock Option Activity | The following table summarizes stock option activity under the Company’s incentive plans: 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 July 3, 2020 2.7 $ 69.16 2.1 $ — Exercised — 18.30 $ — Canceled or expired (0.2) 68.81 Options outstanding at October 2, 2020 2.5 69.21 1.5 $ — Exercisable at October 2, 2020 2.5 $ 69.21 1.5 $ — |
Restricted Stock Unit | The following table summarizes RSU and PSU activity under the Company’s incentive plans: Number of Shares Weighted Average Grant Date Fair Value Aggregate Intrinsic Value at Vest Date (in millions) (in millions) RSUs and PSUs outstanding at July 3, 2020 13.3 $ 60.92 Granted 7.9 37.86 Vested (3.7) 61.20 $ 149 Forfeited (0.5) 65.04 RSUs and PSUs outstanding at October 2, 2020 17.0 49.70 |
Income Tax Expense (Tables)
Income Tax Expense (Tables) | 3 Months Ended |
Oct. 02, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rate Reconciliation | The following table presents the Company’s Income tax expense and the effective tax rate: Three Months Ended October 2, October 4, (in millions) Loss before taxes $ (3) $ (237) Income tax expense 57 39 Effective tax rate (1,900) % (16) % |
Net Loss Per Common Share (Tabl
Net Loss Per Common Share (Tables) | 3 Months Ended |
Oct. 02, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table presents the computation of basic and diluted loss per common share: Three Months Ended October 2, October 4, (in millions, except per share data) Net loss $ (60) $ (276) Weighted average shares outstanding: Basic and diluted 303 296 Loss per common share Basic and diluted $ (0.20) $ (0.93) Anti-dilutive potential common shares excluded 16 15 |
Employee Termination, Asset I_2
Employee Termination, Asset Impairment and Other Charges (Tables) | 3 Months Ended |
Oct. 02, 2020 | |
Postemployment Benefits [Abstract] | |
Schedule of Restructuring Reserve by Type of Cost | The Company recorded the following charges related to employee termination benefits, asset impairment, and other charges: Three Months Ended October 2, October 4, (in millions) Employee termination and other charges: Closure of Foreign Manufacturing Facilities $ — $ 4 Business Realignment 23 4 Total employee termination, asset impairment, and other charges $ 23 $ 8 The following table presents an analysis of the components of the activity against the reserve during the three months ended October 2, 2020: Employee Termination Benefits Contract Termination and Other Total (in millions) Accrual balance at July 3, 2020 $ 13 $ — $ 13 Charges 20 2 22 Cash payments (20) (2) (22) Accrual balance at October 2, 2020 $ 13 $ — $ 13 |
Organization and Basis of Pre_3
Organization and Basis of Presentation (Details) | 12 Months Ended |
Jul. 03, 2020segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of operating segments | 1 |
Revenues - Revenue Remaining Pe
Revenues - Revenue Remaining Performance Obligation (Details) $ in Millions | Oct. 02, 2020USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 102 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-03 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 31 |
Revenue, remaining performance obligation period | 9 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-07-03 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 40 |
Revenue, remaining performance obligation period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-07-02 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 31 |
Revenue, remaining performance obligation period |
Revenues - Disaggregation of Re
Revenues - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 02, 2020 | Oct. 04, 2019 | |
Disaggregation of Revenue [Line Items] | ||
Revenue, net | $ 3,922 | $ 4,040 |
Americas | ||
Disaggregation of Revenue [Line Items] | ||
Revenue, net | 1,079 | 1,313 |
Europe, Middle East and Africa | ||
Disaggregation of Revenue [Line Items] | ||
Revenue, net | 629 | 779 |
Asia | ||
Disaggregation of Revenue [Line Items] | ||
Revenue, net | 2,214 | 1,948 |
Client Devices | ||
Disaggregation of Revenue [Line Items] | ||
Revenue, net | 1,946 | 1,616 |
Data Center Devices & Solutions | ||
Disaggregation of Revenue [Line Items] | ||
Revenue, net | 1,129 | 1,532 |
Client Solutions | ||
Disaggregation of Revenue [Line Items] | ||
Revenue, net | 847 | 892 |
Hard disk drives (“HDD”) | ||
Disaggregation of Revenue [Line Items] | ||
Revenue, net | 1,844 | 2,408 |
Flash-based | ||
Disaggregation of Revenue [Line Items] | ||
Revenue, net | $ 2,078 | $ 1,632 |
Revenues - Additional Informati
Revenues - Additional Information (Details) - Revenue from Contract with Customer - Customer Concentration Risk | 3 Months Ended | |
Oct. 02, 2020 | Oct. 04, 2019 | |
Top Ten Customers | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 44.00% | 43.00% |
One Customer | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 11.00% |
Supplemental Financial Statem_3
Supplemental Financial Statement Data - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Oct. 02, 2020 | Oct. 04, 2019 | Jul. 03, 2020 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Proceeds on sale of trade accounts receivable | $ 128 | $ 85 | |
Factored Receivables | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Outstanding factored receivables | $ 128 | $ 113 |
Supplemental Financial Statem_4
Supplemental Financial Statement Data - Inventory (Details) - USD ($) $ in Millions | Oct. 02, 2020 | Jul. 03, 2020 |
Inventories: | ||
Raw materials and component parts | $ 1,426 | $ 1,306 |
Work-in-process | 964 | 956 |
Finished goods | 965 | 808 |
Total inventories | $ 3,355 | $ 3,070 |
Supplemental Financial Statem_5
Supplemental Financial Statement Data - Property, Plant and Equipment (Details) - USD ($) $ in Millions | Oct. 02, 2020 | Jul. 03, 2020 |
Property, plant and equipment: | ||
Property, plant and equipment, gross | $ 10,474 | $ 10,300 |
Accumulated depreciation | (7,577) | (7,446) |
Property, plant and equipment, net | 2,897 | 2,854 |
Land | ||
Property, plant and equipment: | ||
Property, plant and equipment, gross | 286 | 294 |
Buildings and improvements | ||
Property, plant and equipment: | ||
Property, plant and equipment, gross | 1,865 | 1,837 |
Machinery and equipment | ||
Property, plant and equipment: | ||
Property, plant and equipment, gross | 7,514 | 7,391 |
Computer equipment and software | ||
Property, plant and equipment: | ||
Property, plant and equipment, gross | 430 | 429 |
Furniture and fixtures | ||
Property, plant and equipment: | ||
Property, plant and equipment, gross | 52 | 52 |
Construction-in-process | ||
Property, plant and equipment: | ||
Property, plant and equipment, gross | $ 327 | $ 297 |
Supplemental Financial Statem_6
Supplemental Financial Statement Data - Goodwill Roll Forward (Details) $ in Millions | 3 Months Ended |
Oct. 02, 2020USD ($) | |
Goodwill [Roll Forward] | |
Goodwill balance, beginning of period | $ 10,067 |
Foreign currency translation adjustment | 2 |
Goodwill balance, end of period | $ 10,069 |
Supplemental Financial Statem_7
Supplemental Financial Statement Data - Intangible Assets (Details) - USD ($) $ in Millions | Oct. 02, 2020 | Jul. 03, 2020 |
Intangible Assets and Goodwill [Abstract] | ||
Finite-lived intangible assets | $ 5,543 | $ 5,541 |
In-process research and development | 80 | 80 |
Accumulated amortization | (4,865) | (4,680) |
Intangible assets, net | $ 758 | $ 941 |
Supplemental Financial Statem_8
Supplemental Financial Statement Data - Warranty Accrual Roll Forward (Details) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 02, 2020 | Oct. 04, 2019 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Warranty accrual, beginning of period | $ 408 | $ 350 |
Charges to operations | 35 | 49 |
Utilization | (31) | (48) |
Changes in estimate related to pre-existing warranties | (21) | 6 |
Warranty accrual, end of period | $ 391 | $ 357 |
Supplemental Financial Statem_9
Supplemental Financial Statement Data - Total Warranty Accrual (Details) - USD ($) $ in Millions | Oct. 02, 2020 | Jul. 03, 2020 | Oct. 04, 2019 | Jun. 28, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Current portion (included in Accrued expenses) | $ 191 | $ 205 | ||
Long-term portion (included in Other liabilities) | 200 | 203 | ||
Total warranty accrual | $ 391 | $ 408 | $ 357 | $ 350 |
Supplemental Financial State_10
Supplemental Financial Statement Data - Other Liabilities (Details) - USD ($) $ in Millions | Oct. 02, 2020 | Jul. 03, 2020 |
Other liabilities: | ||
Non-current net tax payable | $ 711 | $ 815 |
Payables related to unrecognized tax benefits | 715 | 720 |
Other non-current liabilities | 885 | 881 |
Total other liabilities | $ 2,311 | $ 2,416 |
Supplemental Financial State_11
Supplemental Financial Statement Data - Accumulated Other Comprehensive Income Roll Forward (Details) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 02, 2020 | Oct. 04, 2019 | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | $ 9,551 | $ 9,967 |
Income tax benefit (expense) related to items of other comprehensive loss | (7) | 5 |
Net current-period other comprehensive loss | 56 | (22) |
Ending balance | 9,576 | 9,566 |
Actuarial Pension Gains (Losses) | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | (58) | |
Other comprehensive loss before reclassifications | 1 | |
Amounts reclassified from accumulated other comprehensive loss | 0 | |
Income tax benefit (expense) related to items of other comprehensive loss | 0 | |
Net current-period other comprehensive loss | 1 | |
Ending balance | (57) | |
Foreign Currency Translation Adjustment | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | (2) | |
Other comprehensive loss before reclassifications | 32 | |
Amounts reclassified from accumulated other comprehensive loss | 0 | |
Income tax benefit (expense) related to items of other comprehensive loss | 0 | |
Net current-period other comprehensive loss | 32 | |
Ending balance | 30 | |
Unrealized Gains (Losses) on Derivative Contracts | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | (97) | |
Other comprehensive loss before reclassifications | 18 | |
Amounts reclassified from accumulated other comprehensive loss | 12 | |
Income tax benefit (expense) related to items of other comprehensive loss | (7) | |
Net current-period other comprehensive loss | 23 | |
Ending balance | (74) | |
Accumulated Other Comprehensive Income (Loss) | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | (157) | (68) |
Other comprehensive loss before reclassifications | 51 | |
Amounts reclassified from accumulated other comprehensive loss | 12 | |
Income tax benefit (expense) related to items of other comprehensive loss | (7) | |
Net current-period other comprehensive loss | 56 | |
Ending balance | $ (101) | $ (90) |
Fair Value Measurements and I_3
Fair Value Measurements and Investments - Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - Fair Value, Measurements, Recurring - USD ($) $ in Millions | Oct. 02, 2020 | Jul. 03, 2020 |
Assets: | ||
Total assets at fair value | $ 885 | $ 1,107 |
Liabilities: | ||
Total liabilities at fair value | 130 | 142 |
Level 1 | ||
Assets: | ||
Total assets at fair value | 861 | 1,079 |
Liabilities: | ||
Total liabilities at fair value | 0 | 0 |
Level 2 | ||
Assets: | ||
Total assets at fair value | 24 | 28 |
Liabilities: | ||
Total liabilities at fair value | 130 | 142 |
Level 3 | ||
Assets: | ||
Total assets at fair value | 0 | 0 |
Liabilities: | ||
Total liabilities at fair value | 0 | 0 |
Cash equivalents - Money market funds | ||
Assets: | ||
Cash equivalents - Money market funds | 861 | 1,079 |
Cash equivalents - Money market funds | Level 1 | ||
Assets: | ||
Cash equivalents - Money market funds | 861 | 1,079 |
Cash equivalents - Money market funds | Level 2 | ||
Assets: | ||
Cash equivalents - Money market funds | 0 | 0 |
Cash equivalents - Money market funds | Level 3 | ||
Assets: | ||
Cash equivalents - Money market funds | 0 | 0 |
Foreign exchange contracts | ||
Assets: | ||
Foreign exchange contracts | 24 | 28 |
Liabilities: | ||
Derivative liability | 10 | 9 |
Foreign exchange contracts | Level 1 | ||
Assets: | ||
Foreign exchange contracts | 0 | 0 |
Liabilities: | ||
Derivative liability | 0 | 0 |
Foreign exchange contracts | Level 2 | ||
Assets: | ||
Foreign exchange contracts | 24 | 28 |
Liabilities: | ||
Derivative liability | 10 | 9 |
Foreign exchange contracts | Level 3 | ||
Assets: | ||
Foreign exchange contracts | 0 | 0 |
Liabilities: | ||
Derivative liability | 0 | 0 |
Interest rate swap contracts | ||
Liabilities: | ||
Derivative liability | 120 | 133 |
Interest rate swap contracts | Level 1 | ||
Liabilities: | ||
Derivative liability | 0 | 0 |
Interest rate swap contracts | Level 2 | ||
Liabilities: | ||
Derivative liability | 120 | 133 |
Interest rate swap contracts | Level 3 | ||
Liabilities: | ||
Derivative liability | $ 0 | $ 0 |
Fair Value Measurements and I_4
Fair Value Measurements and Investments - Debt Instrument Fair Value (Details) - USD ($) $ in Millions | Oct. 02, 2020 | Jul. 03, 2020 |
0.50% convertible senior notes due 2020 | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate (percentage) | 0.50% | 0.50% |
1.50% convertible notes due 2024 | Convertible Debt | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate (percentage) | 1.50% | 1.50% |
4.75% senior unsecured notes due 2026 | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate (percentage) | 4.75% | 4.75% |
Carrying Value | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 9,372 | $ 9,575 |
Carrying Value | 0.50% convertible senior notes due 2020 | ||
Debt Instrument [Line Items] | ||
Long-term debt | 35 | 34 |
Carrying Value | Variable interest rate Term Loan A-1 maturing 2023 | ||
Debt Instrument [Line Items] | ||
Long-term debt | 4,514 | 4,576 |
Carrying Value | Variable interest rate Term Loan B-4 maturing 2023 | ||
Debt Instrument [Line Items] | ||
Long-term debt | 1,543 | 1,692 |
Carrying Value | 1.50% convertible notes due 2024 | ||
Debt Instrument [Line Items] | ||
Long-term debt | 994 | 987 |
Carrying Value | 4.75% senior unsecured notes due 2026 | ||
Debt Instrument [Line Items] | ||
Long-term debt | 2,286 | 2,286 |
Level 2 | Fair Value | ||
Debt Instrument [Line Items] | ||
Long-term debt | 9,515 | 9,624 |
Level 2 | Fair Value | 0.50% convertible senior notes due 2020 | ||
Debt Instrument [Line Items] | ||
Long-term debt | 34 | 30 |
Level 2 | Fair Value | Variable interest rate Term Loan A-1 maturing 2023 | ||
Debt Instrument [Line Items] | ||
Long-term debt | 4,427 | 4,474 |
Level 2 | Fair Value | Variable interest rate Term Loan B-4 maturing 2023 | ||
Debt Instrument [Line Items] | ||
Long-term debt | 1,536 | 1,656 |
Level 2 | Fair Value | 1.50% convertible notes due 2024 | ||
Debt Instrument [Line Items] | ||
Long-term debt | 1,043 | 1,036 |
Level 2 | Fair Value | 4.75% senior unsecured notes due 2026 | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 2,475 | $ 2,428 |
Derivatives Instruments and H_2
Derivatives Instruments and Hedging Activities (Details) $ in Millions | Oct. 02, 2020USD ($) |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Unrealized loss expected to be reclassified into earnings | $ 70 |
Debt - Schedule of Debt (Detail
Debt - Schedule of Debt (Details) - USD ($) $ in Millions | Oct. 02, 2020 | Jul. 03, 2020 |
Debt Instrument [Line Items] | ||
Debt | $ 9,498 | $ 9,711 |
Issuance costs and debt discounts | (126) | (136) |
Net carrying value | 9,372 | 9,575 |
Less current portion of long-term debt | (286) | (286) |
Long-term debt | $ 9,086 | $ 9,289 |
0.50% convertible senior notes due 2020 | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate (percentage) | 0.50% | 0.50% |
Debt | $ 35 | $ 35 |
Variable interest rate Term Loan A-1 maturing 2023 | ||
Debt Instrument [Line Items] | ||
Debt | 4,520 | 4,583 |
Variable interest rate Term Loan B-4 maturing 2023 | ||
Debt Instrument [Line Items] | ||
Debt | $ 1,543 | $ 1,693 |
4.75% senior unsecured notes due 2026 | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate (percentage) | 4.75% | 4.75% |
Debt | $ 2,300 | $ 2,300 |
Convertible Debt | 1.50% convertible notes due 2024 | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate (percentage) | 1.50% | 1.50% |
Debt | $ 1,100 | $ 1,100 |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 02, 2020 | Oct. 04, 2019 | |
Debt Instrument [Line Items] | ||
Repayment of debt | $ 213 | $ 319 |
Variable interest rate Term Loan B-4 maturing 2023 | ||
Debt Instrument [Line Items] | ||
Repayment of debt | $ 150 |
Pensions and Other Post-Retir_3
Pensions and Other Post-Retirement Benefit Plans - Additional Information (Details) | 3 Months Ended |
Oct. 02, 2020 | |
Retirement Benefits [Abstract] | |
Expected long-term rate of return on plan assets | 2.50% |
Pensions and Other Post-Retir_4
Pensions and Other Post-Retirement Benefit Plans - Obligations and Funded Status (Details) - USD ($) $ in Millions | Oct. 02, 2020 | Jul. 03, 2020 |
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | ||
Benefit obligation at end of period | $ 374 | $ 366 |
Fair value of plan assets at end of period | 221 | 215 |
Unfunded status | $ 153 | $ 151 |
Pensions and Other Post-Retir_5
Pensions and Other Post-Retirement Benefit Plans - Unfunded Amounts Recognized on Consolidated Balance Sheets (Details) - USD ($) $ in Millions | Oct. 02, 2020 | Jul. 03, 2020 |
Retirement Benefits [Abstract] | ||
Current liabilities | $ 1 | $ 1 |
Non-current liabilities | 152 | 150 |
Net amount recognized | $ 153 | $ 151 |
Related Parties and Related C_3
Related Parties and Related Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
May 31, 2019 | Oct. 02, 2020 | Oct. 04, 2019 | Jul. 03, 2020 | |
Related Party Transactions [Abstract] | ||||
Accounts payable to related parties | $ 404 | $ 407 | ||
Investment funding commitments | 50.00% | |||
Costs associated with underutilized capacity as a result of unexpected power outage incident | $ 68 | |||
Partial insurance recovery of business interruption | $ 30 | |||
Western Digital Corp | Minimum | ||||
Related Party Transactions [Abstract] | ||||
Investment funding commitments | 49.90% | |||
Western Digital Corp | Maximum | ||||
Related Party Transactions [Abstract] | ||||
Investment funding commitments | 50.00% | |||
Flash Ventures | ||||
Related Party Transactions [Abstract] | ||||
Investments in Flash Ventures | $ (981) | $ (682) | ||
Accounts payable to related parties | 404 | $ 407 | ||
Flash Ventures | ||||
Related Party Transactions [Abstract] | ||||
Remaining committed prepayments | $ 178 | |||
Unis Venture | ||||
Related Party Transactions [Abstract] | ||||
Equity method investment, ownership percentage | 49.00% | |||
Unissoft (Wuxi) Group Co Ltd. | Unis Venture | ||||
Related Party Transactions [Abstract] | ||||
Partner's ownership in venture business | 51.00% | |||
Prepayments of Future Depreciation | Flash Ventures | ||||
Related Party Transactions [Abstract] | ||||
Other commitment | $ 360 | |||
Other commitment, period | 3 years | |||
Revenue from Contract with Customer | Unis Venture | Product Concentration Risk | ||||
Related Party Transactions [Abstract] | ||||
Concentration risk, percentage | 2.00% | 1.00% | ||
Accounts Receivable | Product Concentration Risk | Unis Venture | ||||
Related Party Transactions [Abstract] | ||||
Concentration risk, percentage | 6.00% | 4.00% |
Related Parties and Related C_4
Related Parties and Related Commitments and Contingencies - Equity Investments (Details) - USD ($) $ in Millions | Oct. 02, 2020 | Jul. 03, 2020 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total notes receivable and investments in Flash Ventures | $ 1,746 | $ 1,875 |
Flash Partners Ltd | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes receivable, related parties | 271 | 273 |
Investments | 208 | 203 |
Flash Alliance Ltd | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes receivable, related parties | 231 | 301 |
Investments | 307 | 300 |
Flash Forward Ltd | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes receivable, related parties | 597 | 670 |
Investments | 132 | 128 |
Flash Ventures | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total notes receivable and investments in Flash Ventures | $ 1,746 | $ 1,875 |
Related Parties and Related C_5
Related Parties and Related Commitments and Contingencies - Maximum Loss Exposure (Details) - Oct. 02, 2020 - Flash Ventures $ in Millions, ¥ in Billions | USD ($) | JPY (¥) |
Guarantor Obligations [Line Items] | ||
VIE, reporting entity involvement, maximum loss exposure, amount | $ 4,325 | |
Notes receivable | ||
Guarantor Obligations [Line Items] | ||
VIE, reporting entity involvement, maximum loss exposure, amount | 1,099 | |
Equity investments | ||
Guarantor Obligations [Line Items] | ||
VIE, reporting entity involvement, maximum loss exposure, amount | 647 | |
Operating lease guarantees | ||
Guarantor Obligations [Line Items] | ||
Operating lease guarantees | 2,004 | ¥ 211 |
Inventory and prepayments | ||
Guarantor Obligations [Line Items] | ||
Inventory and prepayments | $ 575 |
Related Parties and Related C_6
Related Parties and Related Commitments and Contingencies - JV Lease Guarantees (Details) - Oct. 02, 2020 $ in Millions, ¥ in Billions | JPY (¥) | USD ($) |
Operating lease guarantees | Flash Ventures | ||
Loss Contingencies [Line Items] | ||
Total guarantee obligations | ¥ 211 | $ 2,004 |
Related Parties and Related C_7
Related Parties and Related Commitments and Contingencies - Joint Venture Lease Amounts (Details) - Flash Ventures $ in Millions | Oct. 02, 2020USD ($) |
Guarantor Obligations [Line Items] | |
Remaining nine months of 2021 | $ 487 |
2022 | 520 |
2023 | 425 |
2024 | 317 |
2025 | 168 |
Thereafter | 87 |
Total guarantee obligations | 2,004 |
Payment of Principal Amortization | |
Guarantor Obligations [Line Items] | |
Remaining nine months of 2021 | 407 |
2022 | 469 |
2023 | 356 |
2024 | 194 |
2025 | 55 |
Thereafter | 15 |
Total guarantee obligations | 1,496 |
Purchase Option Exercise Price at Final Lease Terms | |
Guarantor Obligations [Line Items] | |
Remaining nine months of 2021 | 80 |
2022 | 51 |
2023 | 69 |
2024 | 123 |
2025 | 113 |
Thereafter | 72 |
Total guarantee obligations | $ 508 |
Leases and Other Commitments -
Leases and Other Commitments - Supplemental Balance Sheet (Details) $ in Millions | Oct. 02, 2020USD ($) |
Leases [Abstract] | |
Remaining nine months of 2021 | $ 35 |
2022 | 35 |
2023 | 29 |
2024 | 29 |
2025 | 27 |
Thereafter | 144 |
Total future minimum lease payments | 299 |
Less: Imputed Interest | (56) |
Present value of lease liabilities | 243 |
Less: Current portion (included in Accrued expenses) | 37 |
Long-term operating lease liabilities (included in Other liabilities) | 206 |
Operating lease right-of-use assets (included in Other non-current assets) | $ 228 |
Weighted average remaining lease term in years | 9 years |
Weighted average discount rate | 4.20% |
Leases and Other Commitments _2
Leases and Other Commitments - Supplemental Cash Flow (Details) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 02, 2020 | Oct. 04, 2019 | |
Leases [Abstract] | ||
Cost of operating leases | $ 13 | $ 12 |
Cash paid for operating leases | 12 | 16 |
Operating lease assets obtained in exchange for operating lease liabilities | $ 7 | $ 49 |
Leases and Other Commitments _3
Leases and Other Commitments - Long-Term Commitments (Details) $ in Millions | Oct. 02, 2020USD ($) |
Leases [Abstract] | |
Remaining nine months of 2021 | $ 328 |
2022 | 596 |
2023 | 523 |
2024 | 322 |
2025 | 148 |
Thereafter | 190 |
Total | $ 2,107 |
Shareholders' Equity - Stock-Ba
Shareholders' Equity - Stock-Based Compensation Expense (Details) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 02, 2020 | Oct. 04, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expenses on stock-based compensation | $ 76 | $ 77 |
Tax benefit | (11) | (12) |
Total | 65 | 65 |
Cost of revenue | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expenses on stock-based compensation | 12 | 12 |
Research and development | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expenses on stock-based compensation | 39 | 41 |
Selling, general and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expenses on stock-based compensation | 25 | 24 |
Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expenses on stock-based compensation | 0 | 2 |
RSUs and PSUs | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expenses on stock-based compensation | 67 | 66 |
ESPP | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expenses on stock-based compensation | $ 9 | $ 9 |
Shareholders' Equity - Unrecogn
Shareholders' Equity - Unrecognized Share-based Compensation (Details) $ in Millions | 3 Months Ended |
Oct. 02, 2020USD ($) | |
Employee Service Share-based Compensation, Unrecognized Service Costs [Line Items] | |
Unamortized Compensation Costs | $ 772 |
RSUs and PSUs | |
Employee Service Share-based Compensation, Unrecognized Service Costs [Line Items] | |
Unamortized Compensation Costs | $ 743 |
Weighted Average Service Period | 3 years |
ESPP | |
Employee Service Share-based Compensation, Unrecognized Service Costs [Line Items] | |
Unamortized Compensation Costs | $ 29 |
Weighted Average Service Period | 9 months 18 days |
Shareholders' Equity - Stock Op
Shareholders' Equity - Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended |
Oct. 02, 2020 | Jul. 03, 2020 | |
Number of Shares | ||
Options outstanding, beginning balance, shares | 2.7 | |
Exercised, shares | 0 | |
Canceled or expired, shares | (0.2) | |
Options outstanding, ending balance, shares | 2.5 | 2.7 |
Exercisable, period end, shares | 2.5 | |
Weighted Average Exercise Price Per Share | ||
Options outstanding, beginning balance, exercise price, in dollars per share | $ 69.16 | |
Exercised, exercise price, in dollars per share | 18.30 | |
Canceled or expired, exercise price, in dollars per share | 68.81 | |
Options outstanding, ending balance, exercise price, in dollars per share | 69.21 | $ 69.16 |
Exercisable, period end, exercise price, in dollars per share | $ 69.21 | |
Options outstanding, weighted average remaining contractual term | 1 year 6 months | 2 years 1 month 6 days |
Exercisable, period end, weighted average remaining contractual life | 1 year 6 months | |
Aggregate Intrinsic Value | ||
Exercised, intrinsic value | $ 0 | |
Options outstanding, ending balance, intrinsic value | 0 | $ 0 |
Exercisable, period end, intrinsic value | $ 0 |
Shareholders' Equity - Restrict
Shareholders' Equity - Restricted Stock Units And Performance Share Units (Details) - Restricted Stock Units And Performance Share Units $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended |
Oct. 02, 2020USD ($)$ / sharesshares | |
Number of Shares | |
Outstanding, beginning balance, shares | shares | 13.3 |
Granted, shares | shares | 7.9 |
Vested, shares | shares | (3.7) |
Forfeited, shares | shares | (0.5) |
Outstanding, ending balance, shares | shares | 17 |
Weighted Average Grant Date Fair Value | |
Outstanding, beginning balance, grant date fair value, in dollars per share | $ / shares | $ 60.92 |
Granted, grant date fair value, in dollars per share | $ / shares | 37.86 |
Vested, grant date fair value, in dollars per share | $ / shares | 61.20 |
Forfeited, grant date fair value, in dollars per share | $ / shares | 65.04 |
Outstanding, ending balance, grant date fair value, in dollars per share | $ / shares | $ 49.70 |
Aggregate value of restricted stock awards vested | $ | $ 149 |
Shareholders' Equity - Share Re
Shareholders' Equity - Share Repurchase Program (Details) | Oct. 02, 2020USD ($) |
Stock Repurchase Program Effective Until July 25, 2023 | |
Equity, Class of Treasury Stock [Line Items] | |
Stock repurchase program, number of shares authorized to be repurchased | $ 5,000,000,000 |
Share Repurchase Program | |
Equity, Class of Treasury Stock [Line Items] | |
Stock repurchase program, remaining authorized repurchase, amount | $ 4,500,000,000 |
Income Tax Expense - Tax Expens
Income Tax Expense - Tax Expense and Effective Tax Rate (Details) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 02, 2020 | Oct. 04, 2019 | |
Income Tax Disclosure [Abstract] | ||
Income (loss) before taxes | $ (3) | $ (237) |
Income tax expense | $ 57 | $ 39 |
Effective tax rate | (1900.00%) | (16.00%) |
Income Tax Expense - Additional
Income Tax Expense - Additional Information (Details) - USD ($) $ in Millions | Dec. 10, 2018 | Jun. 28, 2018 | Oct. 02, 2020 | Sep. 30, 2020 | May 04, 2020 |
Income Tax Disclosure [Line Items] | |||||
Net tax deficiencies | $ 11 | ||||
Additional tax expense from re-measurement of deferred tax liabilities | 10 | ||||
Unrecognized tax benefits | 711 | ||||
Penalties and interest accrued on unrecognized tax benefits | 141 | ||||
Potential payables related to unrecognized tax benefits | $ 715 | ||||
Internal Revenue Service (IRS) | Tax Year 2008 Through 2009 | |||||
Income Tax Disclosure [Line Items] | |||||
Federal tax, subject to interest | $ 516 | ||||
Internal Revenue Service (IRS) | Tax Years 2010 Through 2012 | |||||
Income Tax Disclosure [Line Items] | |||||
Federal tax, subject to interest | $ 549 | ||||
Federal tax related to adjustments for transfer pricing | $ 535 | ||||
Penalties asserted | $ 340 | ||||
Internal Revenue Service (IRS) | Tax Years 2013 Through 2015 | |||||
Income Tax Disclosure [Line Items] | |||||
Additional tax | $ 271 |
Net Loss Per Common Share (Deta
Net Loss Per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Oct. 02, 2020 | Oct. 04, 2019 | |
Earnings Per Share [Abstract] | ||
Net loss | $ (60) | $ (276) |
Weighted average shares outstanding: | ||
Weighted average shares outstanding, basic and diluted (in shares) | 303 | 296 |
Loss per common share | ||
Loss per common share, basic and diluted (USD per share) | $ (0.20) | $ (0.93) |
Anti-dilutive potential common shares excluded (in shares) | 16 | 15 |
Employee Termination, Asset I_3
Employee Termination, Asset Impairment and Other Charges - Expense Recognition (Details) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 02, 2020 | Oct. 04, 2019 | |
Restructuring Cost and Reserve [Line Items] | ||
Total employee termination, asset impairment, and other charges | $ 23 | $ 8 |
Closure of Foreign Manufacturing Facilities | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | 0 | 4 |
Business Realignment | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | $ 23 | $ 4 |
Employee Termination, Asset I_4
Employee Termination, Asset Impairment and Other Charges - Business Realignment Activities (Details) - Business Realignment $ in Millions | 3 Months Ended |
Oct. 02, 2020USD ($) | |
Restructuring Reserve [Roll Forward] | |
Accrual balance at July 3, 2020 | $ 13 |
Charges | 22 |
Cash payments | (22) |
Accrual balance at October 2, 2020 | 13 |
Employee Termination Benefits | |
Restructuring Reserve [Roll Forward] | |
Accrual balance at July 3, 2020 | 13 |
Charges | 20 |
Cash payments | (20) |
Accrual balance at October 2, 2020 | 13 |
Contract Termination and Other | |
Restructuring Reserve [Roll Forward] | |
Accrual balance at July 3, 2020 | 0 |
Charges | 2 |
Cash payments | (2) |
Accrual balance at October 2, 2020 | $ 0 |