Separate Financial Information of Guarantor Subsidiaries

On April 13, 2016, the Company completed an offering of $3.35 billion aggregate principal amount of 10.500% senior unsecured notes due 2024 (the “Original Notes”), which it expects to exchange for new 10.500% senior unsecured notes due 2024 (the “Exchange Notes” and, together with the Original Notes, collectively, the “Notes”) pursuant to a registration statement on Form S-4. The Notes are, or will be, fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis, subject to certain customary guarantor release conditions, by the following wholly-owned subsidiaries of the Company: HGST, Inc., WD Media, LLC, Western Digital (Fremont), LLC and Western Digital Technologies, Inc. (collectively, the “Guarantor Subsidiaries”). The Company’s other domestic subsidiaries and its foreign subsidiaries (collectively, the “Non-Guarantor Subsidiaries”) do not guarantee the Notes. The following condensed consolidating financial information reflects the summarized financial information of Western Digital Corporation (“Parent”), the Guarantor Subsidiaries on a combined basis, and the Non-Guarantor Subsidiaries on a combined basis.



Condensed Consolidating Balance Sheets
As of July 1, 2016
(in millions)

	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Total Company
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	1,206	$	6,945	$	—		$	8,151
Short-term investments	—		—		227		—			227
Accounts receivable, net	—		985		476		—			1,461
Intercompany receivables	934		886		2,546		(4,366		)	—
Inventories	—		896		1,450		(217		)	2,129
Other current assets	4		276		379		(43		)	616
Total current assets	938		4,249		12,023		(4,626		)	12,584
Property, plant and equipment, net	—		1,265		2,238		—			3,503
Notes receivable and investments in Flash Ventures	—		—		1,171		—			1,171
Goodwill	—		324		9,627		—			9,951
Other intangible assets, net	—		28		5,006		—			5,034
Investments in consolidated subsidiaries	18,009		27,020		—		(45,029		)	—
Loans due from consolidated affiliates	6,000		55		—		(6,055		)	—
Other non-current assets	50		33		702		(166		)	619
Total assets	$	24,997	$	32,974	$	30,767	$	(55,876	)	$	32,862
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	—	$	239	$	1,649	$	—		$	1,888
Intercompany payables	119		4,043		204		(4,366		)	—
Accounts payable to related parties	—		—		168		—			168
Accrued expenses	109		462		404		20			995
Accrued compensation	—		222		170		—			392
Accrued warranty	—		4		168		—			172
Bridge loan	—		2,995		—		—			2,995
Current portion of long-term debt	14		—		325		—			339
Total current liabilities	242		7,965		3,088		(4,346		)	6,949
Long-term debt	13,610		—		50		—			13,660
Loans due to consolidated affiliates	—		6,000		55		(6,055		)	—
Other liabilities	—		862		475		(229		)	1,108
Total liabilities	13,852		14,827		3,668		(10,630		)	21,717
Stockholders’ equity	11,145		18,147		27,099		(45,246		)	11,145
Total liabilities and stockholders’ equity	$	24,997	$	32,974	$	30,767	$	(55,876	)	$	32,862



Condensed Consolidating Balance Sheets
As of July 3, 2015
(in millions)

	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Total Company
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	661	$	4,363	$	—		$	5,024
Short-term investments	—		—		262		—			262
Accounts receivable, net	—		1,325		207		—			1,532
Intercompany receivables	880		745		3,602		(5,227		)	—
Inventories	—		926		674		(232		)	1,368
Other current assets	—		116		40		171			327
Total current assets	880		3,773		9,148		(5,288		)	8,513
Property, plant and equipment, net	—		1,106		1,859		—			2,965
Goodwill	—		161		2,605		—			2,766
Other intangible assets, net	—		16		316		—			332
Investments in consolidated subsidiaries	8,488		10,969		—		(19,457		)	—
Loans due from consolidated affiliates	—		95		—		(95		)	—
Other non-current assets	—		230		530		(166		)	594
Total assets	$	9,368	$	16,350	$	14,458	$	(25,006	)	$	15,170
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	—	$	223	$	1,658	$	—		$	1,881
Intercompany payables	35		4,516		676		(5,227		)	—
Accrued expenses	114		180		170		6			470
Accrued compensation	—		177		153		—			330
Accrued warranty	—		2		148		—			150
Revolving credit facility	—		—		255		—			255
Current portion of long-term debt	—		152		—		—			152
Total current liabilities	149		5,250		3,060		(5,221		)	3,238
Long-term debt	—		2,149		—		—			2,149
Loans due to consolidated affiliates	—		—		95		(95		)	—
Other liabilities	—		308		256		—			564
Total liabilities	149		7,707		3,411		(5,316		)	5,951
Stockholders’ equity	9,219		8,643		11,047		(19,690		)	9,219
Total liabilities and stockholders’ equity	$	9,368	$	16,350	$	14,458	$	(25,006	)	$	15,170



Condensed Consolidating Statements of Income
For the year ended July 1, 2016
(in millions)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total Company
Revenue, net	$	—		$	12,600		$	13,285		$	(12,891	)	$	12,994
Cost of revenue	—			11,796			10,662			(12,899		)	9,559
Gross profit	—			804			2,623			8			3,435
Operating expenses:
Research and development	—			1,095			532			—			1,627
Selling, general and administrative	4			645			348			—			997
Intercompany operating expense (income)	—			(1,087		)	1,087			—			—
Employee termination, asset impairment and other charges	—			105			240			—			345
Total operating expenses	4			758			2,207			—			2,969
Operating income (loss)	(4		)	46			416			8			466
Other income (expense):
Interest income	54			2			24			(54		)	26
Interest expense	(184		)	(128		)	(8		)	54			(266		)
Other income (expense), net	11			(30		)	(54		)	—			(73		)
Total other expense, net	(119		)	(156		)	(38		)	—			(313		)
Income (loss) before taxes	(123		)	(110		)	378			8			153
Income tax benefit	(44		)	(27		)	(18		)	—			(89		)
Equity in earnings from consolidated subsidiaries	321			400			—			(721		)	—
Net income	$	242		$	317		$	396		$	(713	)	$	242



Condensed Consolidating Statements of Income
For the year ended July 3, 2015
(in millions)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total Company
Revenue, net	$	—		$	14,942		$	15,356		$	(15,726	)	$	14,572
Cost of revenue	—			14,086			11,935			(15,670		)	10,351
Gross profit	—			856			3,421			(56		)	4,221
Operating expenses:
Research and development	—			1,191			455			—			1,646
Selling, general and administrative	4			548			236			—			788
Intercompany operating expense (income)	—			(1,237		)	1,237			—			—
Employee termination, asset impairment and other charges	—			49			127			—			176
Total operating expenses	4			551			2,055			—			2,610
Operating income (loss)	(4		)	305			1,366			(56		)	1,611
Other income (expense):
Interest income	—			3			12			(1		)	14
Interest expense	—			(46		)	(4		)	1			(49		)
Other income (expense), net	—			—			1			—			1
Total other income (expense), net	—			(43		)	9			—			(34		)
Income (loss) before taxes	(4		)	262			1,375			(56		)	1,577
Income tax expense (benefit)	(1		)	108			5			—			112
Equity in earnings from consolidated subsidiaries	1,468			1,381			—			(2,849		)	—
Net income	$	1,465		$	1,535		$	1,370		$	(2,905	)	$	1,465



Condensed Consolidating Statements of Income
For the year ended June 27, 2014
(in millions)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total Company
Revenue, net	$	—		$	15,473		$	15,956		$	(16,299	)	$	15,130
Cost of revenue	—			14,693			12,378			(16,301		)	10,770
Gross profit	—			780			3,578			2			4,360
Operating expenses:
Research and development	—			1,149			512			—			1,661
Selling, general and administrative	5			513			295			—			813
Intercompany operating expense (income)	—			(1,143		)	1,143			—			—
Employee termination, asset impairment and other charges	—			21			74			—			95
Total operating expenses	5			540			2,024			—			2,569
Operating income (loss)	(5		)	240			1,554			2			1,791
Other income (expense):
Interest income	—			2			13			—			15
Interest expense	—			(25		)	(31		)	—			(56		)
Other income (expense), net	—			—			2			—			2
Total other expense, net	—			(23		)	(16		)	—			(39		)
Income (loss) before taxes	(5		)	217			1,538			2			1,752
Income tax expense (benefit)	(2		)	136			1			—			135
Equity in earnings from consolidated subsidiaries	1,620			1,537			—			(3,157		)	—
Net income	$	1,617		$	1,618		$	1,537		$	(3,155	)	$	1,617



Condensed Consolidating Statements of Comprehensive Income
For the year ended July 1, 2016
(in millions)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total Company
Net income	$	242		$	317		$	396		$	(713	)	$	242
Other comprehensive income, before tax:
Actuarial pension loss	(73		)	(73		)	(73		)	146			(73		)
Foreign currency translation adjustment	74			74			74			(148		)	74
Net unrealized gain on foreign exchange contracts	99			99			93			(192		)	99
Total other comprehensive income, before tax	100			100			94			(194		)	100
Income tax benefit related to items of other comprehensive income	23			23			23			(46		)	23
Other comprehensive income, net of tax	123			123			117			(240		)	123
Total comprehensive income	$	365		$	440		$	513		$	(953	)	$	365



Condensed Consolidating Statements of Comprehensive Income
For the year ended July 3, 2015
(in millions)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total Company
Net income	$	1,465		$	1,535		$	1,370		$	(2,905	)	$	1,465
Other comprehensive loss, before tax:
Actuarial pension loss	(2		)	(2		)	(2		)	4			(2		)
Net unrealized loss on foreign exchange contracts	(30		)	(30		)	(25		)	55			(30		)
Total other comprehensive loss, before tax	(32		)	(32		)	(27		)	59			(32		)
Income tax expense related to items of other comprehensive loss	—			—			—			—			—
Other comprehensive loss, net of tax	(32		)	(32		)	(27		)	59			(32		)
Total comprehensive income	$	1,433		$	1,503		$	1,343		$	(2,846	)	$	1,433



Condensed Consolidating Statements of Comprehensive Income
For the year ended June 27, 2014
(in millions)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total Company
Net income	$	1,617		$	1,618		$	1,537		$	(3,155	)	$	1,617
Other comprehensive income, before tax:
Actuarial pension loss	(4		)	(4		)	(4		)	8			(4		)
Net unrealized gain on foreign exchange contracts	51			51			47			(98		)	51
Total other comprehensive income, before tax	47			47			43			(90		)	47
Income tax expense related to items of other comprehensive income	—			—			—			—			—
Other comprehensive income, net of tax	47			47			43			(90		)	47
Total comprehensive income	$	1,664		$	1,665		$	1,580		$	(3,245	)	$	1,664



Condensed Consolidating Statements of Cash Flows
For the year ended July 1, 2016
(in millions)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total Company
Cash flows from operating activities
Net cash provided by (used in) operating activities	$	(210	)	$	1,018		$	1,299		$	(124	)	$	1,983
Cash flows from investing activities
Purchases of property, plant and equipment	—			(233		)	(351		)	—			(584		)
Acquisitions, net of cash acquired	—			(13,767		)	3,932			—			(9,835		)
Purchases of investments	—			—			(632		)	—			(632		)
Proceeds from sales and maturities of investments	—			—			1,609			—			1,609
Notes receivable issuances to Flash Ventures	—			—			(106		)	—			(106		)
Notes receivable proceeds from Flash Ventures	—			—			16			—			16
Strategic investments and other, net	(34		)	(10		)	(32		)	—			(76		)
Intercompany loans from (to) consolidated affiliates	(6,000		)	40			—			5,960			—
Advances to consolidated affiliates	(8,845		)	(96		)	(229		)	9,170			—
Net cash provided by (used in) investing activities	(14,879		)	(14,066		)	4,207			15,130			(9,608		)
Cash flows from financing activities
Issuance of stock under employee stock plans	117			—			—			—			117
Taxes paid on vested stock awards under employee stock plans	(50		)	—			—			—			(50		)
Excess tax benefits from employee stock plans	7			—			—			—			7
Proceeds from acquired call option	—			—			409			—			409
Settlement of convertible debt	—			—			(2,611		)	—			(2,611		)
Repurchases of common stock	(60		)	—			—			—			(60		)
Proceeds from revolving credit facility	—			125			—			—			125
Repayment of revolving credit facility	—			(125		)	(255		)	—			(380		)
Dividends paid to shareholders	(464		)	—			—			—			(464		)
Repayment of debt	—			(2,313		)	—			—			(2,313		)
Proceeds from debt	14,108			3,000			—			—			17,108
Debt issuance costs	(497		)	(27		)	—			—			(524		)
Payment upon settlement of acquired warrants	—			—			(613		)	—			(613		)
Intercompany loan from parent	—			6,000			(40		)	(5,960		)	—
Change in investment in consolidated subsidiaries	1,928			6,933			185			(9,046		)	—
Net cash provided by (used in) financing activities	15,089			13,593			(2,925		)	(15,006		)	10,751
Effect of exchange rate changes on cash	—			—			1			—			1
Net increase in cash and cash equivalents	—			545			2,582			—			3,127
Cash and cash equivalents, beginning of year	—			661			4,363			—			5,024
Cash and cash equivalents, end of year	$	—		$	1,206		$	6,945		$	—		$	8,151



Condensed Consolidating Statements of Cash Flows
For the year ended July 3, 2015
(in millions)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total Company
Cash flows from operating activities
Net cash provided by operating activities	$	23		$	150		$	2,066		$	3		$	2,242
Cash flows from investing activities
Purchases of property, plant and equipment	—			(189		)	(423		)	—			(612		)
Acquisitions, net of cash acquired	—			(16		)	(241		)	—			(257		)
Purchases of investments	—			(130		)	(727		)	—			(857		)
Proceeds from sales and maturities of investments	—			630			138			—			768
Strategic investments and other, net	—			6			(1		)	—			5
Return of capital from subsidiaries	—			255			—			(255		)	—
Intercompany loans to consolidated affiliates	—			(60		)	—			60			—
Advances from (to) consolidated affiliates	1,015			(114		)	2			(903		)	—
Net cash provided by (used in) investing activities	1,015			382			(1,252		)	(1,098		)	(953		)
Cash flows from financing activities
Issuance of stock under employee stock plans	212			—			—			—			212
Taxes paid on vested stock awards under employee stock plans	(64		)	—			—			—			(64		)
Excess tax benefits from employee stock plans	19			—			—			—			19
Repurchases of common stock	(970		)	—			—			—			(970		)
Dividends paid to shareholders	(396		)	—			—			—			(396		)
Repayment of debt	—			(125		)	—			—			(125		)
Proceeds from debt	—			—			255			—			255
Return of capital to parent	—			—			(255		)	255			—
Intercompany loan from parent	—			—			60			(60		)	—
Change in investment in consolidated subsidiaries	161			(1,071		)	10			900			—
Net cash provided by (used in) financing activities	(1,038		)	(1,196		)	70			1,095			(1,069		)
Net increase (decrease) in cash and cash equivalents	—			(664		)	884			—			220
Cash and cash equivalents, beginning of year	—			1,325			3,479			—			4,804
Cash and cash equivalents, end of year	$	—		$	661		$	4,363		$	—		$	5,024



Condensed Consolidating Statements of Cash Flows
For the year ended June 27, 2014
(in millions)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total Company
Cash flows from operating activities
Net cash provided by (used in) operating activities	$	34		$	(111	)	$	2,898		$	(5	)	$	2,816
Cash flows from investing activities
Purchases of property, plant and equipment	—			(205		)	(423		)	—			(628		)
Acquisitions, net of cash acquired	—			(15		)	(808		)	—			(823		)
Purchases of investments	—			(513		)	(48		)	—			(561		)
Proceeds from sales and maturities of investments	—			72			—			—			72
Strategic investments and other, net	—			—			4			—			4
Intercompany loans to consolidated affiliates	—			(35		)	—			35			—
Advances from (to) consolidated affiliates	671			(921		)	—			250			—
Net cash provided by (used in) investing activities	671			(1,617		)	(1,275		)	285			(1,936		)
Cash flows from financing activities
Issuance of stock under employee stock plans	187			—			—			—			187
Taxes paid on vested stock awards under employee stock plans	(32		)	—			—			—			(32		)
Excess tax benefits from employee stock plans	60			—			—			—			60
Repurchases of common stock	(816		)	—			—			—			(816		)
Dividends paid to shareholders	(259		)	—			—			—			(259		)
Repayment of debt	—			(563		)	(1,954		)	—			(2,517		)
Proceeds from debt	—			2,992			—			—			2,992
Intercompany loan from parent	—			—			35			(35		)	—
Change in investment in consolidated subsidiaries	155			(844		)	934			(245		)	—
Net cash provided by (used in) financing activities	(705		)	1,585			(985		)	(280		)	(385		)
Net increase (decrease) in cash and cash equivalents	—			(143		)	638			—			495
Cash and cash equivalents, beginning of year	—			1,468			2,841			—			4,309
Cash and cash equivalents, end of year	$	—		$	1,325		$	3,479		$	—		$	4,804