WESTERN DIGITAL CORPWDC
WESTERN DIGITAL CORP Fair Value Disclosure
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 June 27, 2025 and June 28, 2024, and indicate the fair value hierarchy of the valuation techniques utilized to determine such values:
| June 27, 2025 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
Retained interest in Sandisk | $ | 354 | $ | — | $ | — | $ | 354 | |||||||||||||||
| Cash equivalents – Money market funds | 285 | — | — | 285 | |||||||||||||||||||
| Foreign exchange contracts | — | 10 | — | 10 | |||||||||||||||||||
| Total assets at fair value | $ | 639 | $ | 10 | $ | — | $ | 649 | |||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Foreign exchange contracts | $ | — | $ | 4 | $ | — | $ | 4 | |||||||||||||||
| Total liabilities at fair value | $ | — | $ | 4 | $ | — | $ | 4 | |||||||||||||||
| June 28, 2024 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Cash equivalents – Money market funds | $ | 388 | $ | — | $ | — | $ | 388 | |||||||||||||||
| Foreign exchange contracts | — | 1 | — | 1 | |||||||||||||||||||
| Total assets at fair value | $ | 388 | $ | 1 | $ | — | $ | 389 | |||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Foreign exchange contracts | $ | — | $ | 18 | $ | — | $ | 18 | |||||||||||||||
| Total liabilities at fair value | $ | — | $ | 18 | $ | — | $ | 18 | |||||||||||||||
Retained Interest in Sandisk. The Company retained 28.8 million shares of Sandisk at the Separation. These shares are valued based on quoted market prices. As discussed in Note 8, Debt, the Company exchanged 21.3 million shares of Sandisk to settle a portion of the Company’s Term Loan A-3. As of June 27, 2025, the Company still held 7.5 million shares of Sandisk.
Money Market Funds. The Company’s money market funds are funds that invest in U.S. Treasury and U.S. Government agency securities. Money market funds are valued based on quoted market prices.
Foreign Exchange Contracts. The Company’s foreign exchange contracts are short-term contracts to hedge the Company’s foreign currency risk. Foreign exchange contracts are valued using an income approach that is based on a present value of future cash flows model. The market-based observable inputs for the model include forward rates and credit default swap rates. For more information on the Company’s foreign exchange contracts, see Note 7, Derivative Instruments and Hedging Activities. Derivative assets and liabilities are reflected in the Company’s Consolidated Balance Sheets under Other current assets and Accrued expenses, respectively.
During 2025 and 2024, 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 following table contains the related carrying value (which includes principal adjusted for any unamortized issuance costs, and discounts or premiums) and fair value (which is based on quoted market prices) 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 fourth quarter of 2025 and the fourth quarter of 2024, respectively.
| June 27, 2025 | June 28, 2024 | ||||||||||||||||||||||
| Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
4.75% senior unsecured notes due 2026 | $ | 500 | $ | 499 | $ | 2,296 | $ | 2,253 | |||||||||||||||
| Variable interest rate Term Loan A-2 maturing 2027 | — | — | 2,578 | 2,539 | |||||||||||||||||||
| Variable interest rate Term Loan A-3 maturing 2027 | 1,642 | 1,655 | — | — | |||||||||||||||||||
3.00% convertible notes due 2028 | 1,575 | 2,849 | 1,568 | 2,556 | |||||||||||||||||||
2.85% senior notes due 2029 | 498 | 463 | 496 | 434 | |||||||||||||||||||
3.10% senior notes due 2032 | 496 | 442 | 496 | 407 | |||||||||||||||||||
| Total | $ | 4,711 | $ | 5,908 | $ | 7,434 | $ | 8,189 | |||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Aug 14, 2025 | Showing above |
| 2024 | Aug 20, 2024 | |
| 2023 | Aug 22, 2023 | |
| 2022 | Aug 25, 2022 | |
| 2021 | Aug 27, 2021 | |
| 2020 | Aug 28, 2020 | |
| 2019 | Aug 27, 2019 | |
| 2018 | Aug 24, 2018 | |
| 2017 | Aug 29, 2017 | |
| 2016 | Aug 29, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.