Separate Financial Information of Guarantor Subsidiaries

The Company’s senior unsecured notes due 2026 (the “2026 Senior Unsecured Notes”) are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis, subject to certain customary guarantor release conditions, by certain 100% owned material domestic subsidiaries of the Company (or the “Guarantor Subsidiaries”). The guarantee by a Guarantor Subsidiary will be released in the event of (i) the release of a Guarantor Subsidiary from its guarantee of indebtedness under the credit agreement or other indebtedness that would have required the Guarantor Subsidiary to guarantee the 2026 Senior Unsecured Notes, (ii) the sale, issuance or other disposition of capital stock of a Guarantor Subsidiary such that it is no longer a restricted subsidiary under the indenture governing the 2026 Senior Unsecured Notes, (iii) the sale of all or substantially all of a Guarantor Subsidiary’s assets, (iv) the Company’s exercise of its defeasance options under the indenture governing the 2026 Senior Unsecured Notes, (v) the dissolution or liquidation of a Guarantor Subsidiary or (vi) the sale of all the equity interest in a Guarantor Subsidiary. The Company’s other domestic subsidiaries and its foreign subsidiaries (collectively, the “Non-Guarantor Subsidiaries”) do not guarantee the 2026 Senior Unsecured 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 Sheet
As of September 28, 2018

	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Total Company
	(in millions)
ASSETS
Current assets:
Cash and cash equivalents	$	5	$	1,061	$	3,580	$	—		$	4,646
Accounts receivable, net	—		1,326		893		—			2,219
Intercompany receivables	2,344		4,306		2,142		(8,792		)	—
Inventories	—		991		2,302		(174		)	3,119
Other current assets	27		243		317		—			587
Total current assets	2,376		7,927		9,234		(8,966		)	10,571
Property, plant and equipment, net	—		1,072		1,982		—			3,054
Notes receivable and investments in Flash Ventures	—		—		2,028		—			2,028
Goodwill	—		387		9,685		—			10,072
Other intangible assets, net	—		35		2,369		—			2,404
Investments in consolidated subsidiaries	21,369		18,981		—		(40,350		)	—
Loans due from consolidated affiliates	247		16		—		(263		)	—
Other non-current assets	59		45		472		—			576
Total assets	$	24,051	$	28,463	$	25,770	$	(49,579	)	$	28,705

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	—	$	193	$	1,888	$	—		$	2,081
Accounts payable to related parties	—		—		286		—			286
Intercompany payables	1,382		4,159		3,251		(8,792		)	—
Accrued expenses	162		561		582		—			1,305
Accrued compensation	—		295		205		—			500
Current portion of long-term debt	213		—		—		—			213
Total current liabilities	1,757		5,208		6,212		(8,792		)	4,385
Long-term debt	10,899		—		31		—			10,930
Loans due to consolidated affiliates	—		247		16		(263		)	—
Other liabilities	20		1,498		497		—			2,015
Total liabilities	12,676		6,953		6,756		(9,055		)	17,330
Total shareholders’ equity	11,375		21,510		19,014		(40,524		)	11,375
Total liabilities and shareholders’ equity	$	24,051	$	28,463	$	25,770	$	(49,579	)	$	28,705



Condensed Consolidating Balance Sheet
As of June 29, 2018

	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Total Company
	(in millions)
ASSETS
Current assets:
Cash and cash equivalents	$	40		$	668	$	4,297	$	—		$	5,005
Accounts receivable, net	—			1,358		839		—			2,197
Intercompany receivables	1,903			4,256		2,674		(8,833		)	—
Inventories	—			990		2,159		(205		)	2,944
Other current assets	20			195		277		—			492
Total current assets	1,963			7,467		10,246		(9,038		)	10,638
Property, plant and equipment, net	—			1,092		2,003		—			3,095
Notes receivable and investments in Flash Ventures	—			—		2,105		—			2,105
Goodwill	—			387		9,688		—			10,075
Other intangible assets, net	—			38		2,642		—			2,680
Investments in consolidated subsidiaries	20,847			19,893		—		(40,740		)	—
Loans due from consolidated affiliates	943			16		—		(959		)	—
Other non-current assets	182			29		431		—			642
Total assets	$	23,935		$	28,922	$	27,115	$	(50,737	)	$	29,235

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	—		$	279	$	1,986	$	—		$	2,265
Accounts payable to related parties	—			—		259		—			259
Intercompany payables	1,066			4,648		3,119		(8,833		)	—
Accrued expenses	198			505		571		—			1,274
Accrued compensation	—			297		182		—			479
Current portion of long-term debt	179			—		—		—			179
Total current liabilities	1,443			5,729		6,117		(8,833		)	4,456
Long-term debt	10,962			—		31		—			10,993
Loans due to consolidated affiliates	—			427		532		(959		)	—
Other liabilities	(1		)	1,768		488		—			2,255
Total liabilities	12,404			7,924		7,168		(9,792		)	17,704
Total shareholders’ equity	11,531			20,998		19,947		(40,945		)	11,531
Total liabilities and shareholders’ equity	$	23,935		$	28,922	$	27,115	$	(50,737	)	$	29,235



Condensed Consolidating Statement of Operations
For the three months ended September 28, 2018

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total Company
	(in millions)
Revenue, net	$	—		$	3,485		$	4,996		$	(3,453	)	$	5,028
Cost of revenue	—			3,005			3,824			(3,465		)	3,364
Gross profit	—			480			1,172			12			1,664
Operating expenses:
Research and development	—			363			213			—			576
Selling, general and administrative	1			251			104			—			356
Intercompany operating expense (income)	—			(407		)	407			—			—
Employee termination, asset impairment, and other charges	—			32			14			—			46
Total operating expenses	1			239			738			—			978
Operating income (loss)	(1		)	241			434			12			686
Interest and other income (expense):
Interest income	8			3			12			(8		)	15
Interest expense	(116		)	(6		)	(2		)	8			(116		)
Other income (expense), net	1			—			(1		)	(2		)	(2		)
Total interest and other income (expense), net	(107		)	(3		)	9			(2		)	(103		)
Income (loss) before taxes	(108		)	238			443			10			583
Income tax expense (benefit)	(144		)	118			98			—			72
Equity in earnings from subsidiaries	475			345			—			(820		)	—
Net income	$	511		$	465		$	345		$	(810	)	$	511



Condensed Consolidating Statement of Operations
For the three months ended September 29, 2017

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total Company
	(in millions)
Revenue, net	$	—		$	3,710		$	5,081		$	(3,610	)	$	5,181
Cost of revenue	—			3,200			3,647			(3,579		)	3,268
Gross profit	—			510			1,434			(31		)	1,913
Operating expenses:
Research and development	—			381			211			—			592
Selling, general and administrative	2			258			104			—			364
Intercompany operating expense (income)	—			(400		)	400			—			—
Employee termination, asset impairment, and other charges	—			11			41			—			52
Total operating expenses	2			250			756			—			1,008
Operating income (loss)	(2		)	260			678			(31		)	905
Interest and other income (expense):
Interest income	81			2			14			(81		)	16
Interest expense	(204		)	(6		)	(76		)	81			(205		)
Other income (expense), net	(8		)	11			(9		)	—			(6		)
Total interest and other income (expense), net	(131		)	7			(71		)	—			(195		)
Income (loss) before taxes	(133		)	267			607			(31		)	710
Income tax expense (benefit)	(57		)	54			32			—			29
Equity in earnings from subsidiaries	757			592			—			(1,349		)
Net income	$	681		$	805		$	575		$	(1,380	)	$	681



Condensed Consolidating Statement of Comprehensive Income (Loss)
For the three months ended September 28, 2018

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total Company
	(in millions)
Net income	$	511		$	465		345			$	(810	)	$	511
Other comprehensive loss, before tax:
Foreign currency translation adjustment	(37		)	(34		)	(34		)	68			(37		)
Net unrealized loss, on derivative contracts and available-for-sale securities	(1		)	(8		)	(10		)	18			(1		)
Total other comprehensive loss, before tax	(38		)	(42		)	(44		)	86			(38		)
Income tax benefit related to items of other comprehensive loss	1			—			1			(1		)	1
Other comprehensive loss, net of tax	(37		)	(42		)	(43		)	85			(37		)
Total comprehensive income	$	474		$	423		$	302		$	(725	)	$	474



Condensed Consolidating Statement of Comprehensive Income (Loss)
For the three months ended September 29, 2017

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total Company
	(in millions)
Net income	$	681		$	805		$	575		$	(1,380	)	$	681
Other comprehensive loss, before tax:
Foreign currency translation adjustment	(4		)	(4		)	(4		)	8			(4		)
Net unrealized gain (loss) on derivative contracts and available-for-sale securities	3			2			2			(4		)	3
Total other comprehensive loss, before tax	(1		)	(2		)	(2		)	4			(1		)
Income tax benefit (expense) related to items of other comprehensive loss	—			—			(2		)	2			—
Other comprehensive loss, net of tax	(1		)	(2		)	(4		)	6			(1		)
Total comprehensive income	$	680		$	803		$	571		$	(1,374	)	$	680



Condensed Consolidating Statement of Cash Flows
For the three months ended September 28, 2018

	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Total Company
	(in millions)
Cash flows from operating activities
Net cash provided by (used in) operating activities	(101	)	(691	)	1,244		253		705
Cash flows from investing activities
Purchases of property, plant and equipment	—		(63	)	(214	)	—		(277	)
Purchases of investments	—		(2	)	(9	)	—		(11	)
Proceeds from sale of investments	—		—		6		—		6
Proceeds from maturities of investments	—		—		3		—		3
Notes receivable issuances to Flash Ventures	—		—		(115	)	—		(115	)
Notes receivable proceeds from Flash Ventures	—		—		144		—		144
Strategic investments and other, net	—		—		(9	)	—		(9	)
Intercompany loan from consolidated affiliates	696		—		—		(696	)	—
Advances from (to) parent and consolidated affiliates	97		(97	)	—		—		—
Net cash provided by (used in) investing activities	793		(162	)	(194	)	(696	)	(259	)
Cash flows from financing activities							—
Issuance of stock under employee stock plans	8		—		—		—		8
Taxes paid on vested stock awards under employee stock plans	(66	)	—		—		—		(66	)
Repurchases of common stock	(563	)	—		—		—		(563	)
Dividends paid to shareholders	(148	)	—		—		—		(148	)
Repayment of debt	(38	)	—		—		—		(38	)
Intercompany loan to consolidated affiliates	—		(180	)	(516	)	696		—
Change in investment in consolidated subsidiaries	80		1,426		(1,253	)	(253	)	—
Net cash provided by (used in) financing activities	(727	)	1,246		(1,769	)	443		(807	)
Effect of exchange rate changes on cash	—		—		2		—		2
Net increase (decrease) in cash and cash equivalents	(35	)	393		(717	)	—		(359	)
Cash and cash equivalents, beginning of year	40		668		4,297		—		5,005
Cash and cash equivalents, end of period	5		1,061		3,580		—		4,646



Condensed Consolidating Statement of Cash Flows
For the three months ended September 29, 2017

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total Company
	(in millions)
Cash flows from operating activities
Net cash provided by (used in) operating activities	$	(6	)	$	145		$	1,031		$	(37	)	$	1,133
Cash flows from investing activities
Purchases of property, plant and equipment	—			(47		)	(113		)	—			(160		)
Proceeds from the sale of property, plant and equipment	—			—			5			—			5
Acquisitions, net of cash acquired	—			(93		)	—			—			(93		)
Purchases of investments	—			(10		)	(28		)	—			(38		)
Proceeds from sale of investments	—			—			14			—			14
Proceeds from maturities of investments	—			—			2			—			2
Notes receivable issuances to Flash Ventures	—			—			(229		)	—			(229		)
Notes receivable proceeds from Flash Ventures	—			—			98			—			98
Strategic investments and other, net							23			—			23
Advances from (to) consolidated affiliates	60			(62		)	—			2			—
Net cash provided by (used in) investing activities	60			(212		)	(228		)	2			(378		)
Cash flows from financing activities
Issuance of stock under employee stock plans	20			—						—			20
Taxes paid on vested stock awards under employee stock plans	(61		)	—						—			(61		)
Dividends paid to shareholders	(147		)	—						—			(147		)
Settlement of debt hedge contracts	26									—			26
Repayment of debt	(62		)							—			(62		)
Intercompany loan from (to) consolidated affiliates	300						(300		)	—			—
Change in investment in consolidated subsidiaries	117			(129		)	(23		)	35			—
Net cash provided by (used in) financing activities	193			(129		)	(323		)	35			(224		)
Effect of exchange rate changes on cash	—			—			1			—			1
Net increase (decrease) in cash and cash equivalents	247			(196		)	481			—			532
Cash and cash equivalents, beginning of year	18			1,212			5,124			—			6,354
Cash and cash equivalents, end of period	$	265		$	1,016		$	5,605		$	—		$	6,886