
	Balance at (in millions)
Balance at June 28, 2024	$	7,207
Divestiture (1)	(382)
Impairment charges	(1,830)
Foreign currency translation adjustment	4
Balance at June 27, 2025	4,999
Foreign currency translation adjustment	(5)
Balance at July 3, 2026	$	4,994

(1) On September 28, 2024, the Company sold its majority interest in a subsidiary. See Note 10, Related Parties and Related Commitments and Contingencies for additional disclosures.

Goodwill attributed to the Company represents the historical goodwill balances in WDC’s business arising from acquisitions specific to the Company.

The Company determined that its single operating segment was also its single reporting unit. Goodwill is not amortized. Instead, it is tested for impairment annually as of the beginning of the Company’s fourth quarter or more frequently if events or changes in circumstances indicate that goodwill may be impaired.

For the year ended June 27, 2025, subsequent to the completion of the separation, the Company identified potential impairment indicators related to macroeconomic indicators, industry developments, the trading price of the Company’s common stock and resulting market capitalization that warranted a quantitative impairment analysis of long-lived assets and goodwill.

In accordance with ASC No. 360, “Property, Plant, and Equipment,” the Company performed a recoverability test at the asset group level, which was determined to be equivalent to its reporting unit, to assess potential impairment of long-lived assets comprised of property, plant and equipment. The results of the recoverability test showed that the estimated undiscounted net cash flows to be generated from the use and eventual disposition of the Company’s long-lived assets exceeded its net carrying value. As a result, no write-down of depreciable long-lived assets was recognized as of June 27, 2025.

In accordance with ASC No. 350, “Intangibles - Goodwill and Other,” the Company performed a quantitative test by measuring the fair value of its reporting unit based on a weighting of two valuation methodologies: an income approach and a market approach.

The income approach valued the projected discounted cash flows that are expected to be generated by the Company’s reporting unit and required judgments and estimates surrounding general economic conditions and company-specific performance inputs such as revenue growth rates, gross margins, operating costs, capital expenditures, assumed tax rates and other assumptions deemed reasonable by management.

The market approach valued the reporting unit based on financial performance and market multiples of comparable public companies, including consideration of a control premium representing the estimated amount a market participant would pay to obtain a controlling interest in the Company.

The results of the quantitative test indicated that the carrying value of the Company’s reporting unit exceeded its estimated fair value, resulting in the recognition of a $1.8 billion goodwill impairment charge during the third quarter of the year ended June 27, 2025 which was recorded in the accompanying Consolidated Statements of Operations.

Prior to the separation, from time to time and in connection with factoring agreements, WDC sold certain of the Company’s trade accounts receivable without recourse to third-party purchasers in exchange for cash.

In 2024, WDC sold trade accounts receivable of the Company and received cash proceeds of $339 million. The discounts on the trade accounts receivable sold during the period were not material and were recorded in Other income (expense), net, in the Consolidated Statements of Operations.

During the year ended July 3, 2026, and June 27, 2025, there were no trade accounts receivable sold by the Company. There were no factored receivables outstanding as of July 3, 2026 and June 27, 2025.


	2026		2025
	(in millions)
Inventories:
Raw materials and component parts	$	1,938	$	1,517
Work-in-process	313		262
Finished goods	447		300
Total inventories	$	2,698	$	2,079

The Company recorded inventory charges of $91 million and $45 million in fiscal years 2026 and 2025, respectively, as part of Cost of revenue. The Company released a portion of its inventory provision amounting to $22 million in fiscal year 2024 as part of Cost of revenue. The Company’s inventory provisions amounted to $125 million and $126 million for the years ended July 3, 2026 and June 27, 2025.


	2026		2025
	(in millions)
Property, plant and equipment:
Land	$	9	$	10
Machinery and equipment	1,564		1,480
Buildings and improvements	397		390
Computer equipment and software	176		176
Furniture and fixtures	18		18
Construction-in-process	46		51
Property, plant and equipment, gross	2,210		2,125
Accumulated depreciation	(1,536)		(1,506)
Property, plant and equipment, net	$	674	$	619

Depreciation expense for property, plant and equipment totaled $149 million, $163 million, and $224 million in 2026, 2025, and 2024, respectively.

Intangibles are amortized over the estimated useful life based on the pattern in which the economic benefits are expected to be received. As of July 3, 2026 the amount of finite-lived intangible assets is immaterial. As of June 27, 2025, all finite-lived intangible assets were fully amortized.


	2026		2025
	(in millions)
Warranty accrual, beginning of period	$	44	$	48
Charges to operations	62		27
Utilization	(30)		(35)
Changes in estimate related to pre-existing warranties	(28)		4
Warranty accrual, end of period	$	48	$	44

The current portion of the warranty accrual was classified in Accrued expenses and the long-term portion was classified in Other liabilities as noted below:


	2026		2025
	(in millions)
Other liabilities:
Non-current lease liability	$	177	$	193
Tax indemnification liability	128		110
Other non-current liabilities	73		62
Total other liabilities	$	378	$	365

In connection with, and at the time of, the separation, the Company recorded a $112 million liability to indemnify WDC as a result of the Tax Matters Agreement entered into between the parties in connection with the separation. The indemnification pertains to certain WDC tax positions where the underlying issues are determined to be related to the Company’s business before the spin-off. As WDC receives tax assessments, settles with tax authorities, or when the statute of limitations lapses, the indemnification liabilities will be reassessed and adjusted accordingly. The outstanding balance of the liability as of July 3, 2026 and June 27, 2025 was $128 million and $110 million, respectively.

Accumulated other comprehensive loss (“AOCL”), net of tax, refers to expenses, gains, and losses that are recorded as an element of equity but are excluded from net income. The components of AOCL were as follows:


	Foreign Currency Translation Adjustment		Unrealized Losses on Derivative Contracts		Total Accumulated Comprehensive Loss
	(in millions)
Balance at June 28, 2024	$	(208)	$	(244)	$	(452)
Other comprehensive income	10		222		232
Income tax expense related to items of other comprehensive income	—		(19)		(19)
Net current-period other comprehensive income	10		203		213
Net transfer to Western Digital Corporation	(4)		(6)		(10)
Balance at June 27, 2025	$	(202)	$	(47)	$	(249)
Other comprehensive income	(54)		61		7
Income tax expense related to items of other comprehensive income	—		(14)		(14)
Net current-period other comprehensive income	(54)		47		(7)
Balance at July 3, 2026	$	(256)	$	—	$	(256)

During the years ended July 3, 2026, June 27, 2025, and June 28, 2024, the amounts reclassified out of AOCL included losses of $74 million, $189 million, and $215 million related to foreign exchange contracts. The losses related to foreign contracts were substantially all charged to Cost of revenue in the Consolidated Statements of Operations.