Goodwill and Intangible Asset Disclosure
Adjustments to Financial Statements: Removal of Goodwill
Adjusted Financial Ratios: Removal of Goodwill (Summary)
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Western Digital Corp., balance sheet: goodwill and intangible assets

US$ in millions

	Jun 30, 2023	Jul 1, 2022	Jul 2, 2021	Jul 3, 2020	Jun 28, 2019	Jun 29, 2018
Goodwill	10,037)	10,041)	10,066)	10,067)	10,076)	10,075)
Existing technology	4,231)	4,231)	4,231)	4,248)	4,332)	4,323)
Trade names and trademarks	648)	648)	647)	648)	648)	648)
Customer relationships	611)	613)	618)	616)	635)	635)
Other	—)	—)	—)	—)	180)	180)
Leasehold interests	1)	1)	12)	29)	29)	32)
Finite-lived intangible assets, gross	5,491)	5,493)	5,508)	5,541)	5,824)	5,818)
Accumulated amortization	(5,491)	(5,360)	(5,146)	(4,680)	(4,185)	(3,218)
Finite-lived intangible assets, net	—)	133)	362)	861)	1,639)	2,600)
In-process research and development	80)	80)	80)	80)	72)	80)
Other intangible assets, net	80)	213)	442)	941)	1,711)	2,680)
Goodwill and other intangible assets, net	10,117)	10,254)	10,508)	11,008)	11,787)	12,755)

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).

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Item	Description	The company
Goodwill	Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.	Western Digital Corp. goodwill decreased from 2021 to 2022 and from 2022 to 2023.
Other intangible assets, net	Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Western Digital Corp. other intangible assets, net decreased from 2021 to 2022 and from 2022 to 2023.
Goodwill and other intangible assets, net	Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Western Digital Corp. goodwill and other intangible assets, net decreased from 2021 to 2022 and from 2022 to 2023.

Western Digital Corp., adjustments to financial statements

US$ in millions

	Jun 30, 2023	Jul 1, 2022	Jul 2, 2021	Jul 3, 2020	Jun 28, 2019	Jun 29, 2018
Adjustment to Total Assets
Total assets (as reported)	24,429)	26,259)	26,132)	25,662)	26,370)	29,235)
Less: Goodwill	10,037)	10,041)	10,066)	10,067)	10,076)	10,075)
Total assets (adjusted)	14,392)	16,218)	16,066)	15,595)	16,294)	19,160)
Adjustment to Shareholders’ Equity
Shareholders’ equity (as reported)	11,723)	12,221)	10,721)	9,551)	9,967)	11,531)
Less: Goodwill	10,037)	10,041)	10,066)	10,067)	10,076)	10,075)
Shareholders’ equity (adjusted)	1,686)	2,180)	655)	(516)	(109)	1,456)

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).

Western Digital Corp., Financial Data: Reported vs. Adjusted

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Western Digital Corp., adjusted financial ratios

	Jun 30, 2023	Jul 1, 2022	Jul 2, 2021	Jul 3, 2020	Jun 28, 2019	Jun 29, 2018
Total Asset Turnover
Reported total asset turnover	0.50	0.72	0.65	0.65	0.63	0.71
Adjusted total asset turnover	0.86	1.16	1.05	1.07	1.02	1.08
Financial Leverage
Reported financial leverage	2.08	2.15	2.44	2.69	2.65	2.54
Adjusted financial leverage	8.54	7.44	24.53	—	—	13.16
Return on Equity (ROE)
Reported ROE	-14.55%	12.27%	7.66%	-2.62%	-7.56%	5.85%
Adjusted ROE	-101.19%	68.81%	125.34%	—	—	46.36%
Return on Assets (ROA)
Reported ROA	-6.98%	5.71%	3.14%	-0.97%	-2.86%	2.31%
Adjusted ROA	-11.85%	9.25%	5.11%	-1.60%	-4.63%	3.52%

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).

Financial ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Western Digital Corp. adjusted total asset turnover ratio improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Western Digital Corp. adjusted financial leverage ratio decreased from 2021 to 2022 but then slightly increased from 2022 to 2023.
Adjusted ROE	A profitability ratio calculated as net income divided by adjusted shareholders’ equity.	Western Digital Corp. adjusted ROE deteriorated from 2021 to 2022 and from 2022 to 2023.
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Western Digital Corp. adjusted ROA improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Western Digital Corp., Financial Ratios: Reported vs. Adjusted

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	Jun 30, 2023	Jul 1, 2022	Jul 2, 2021	Jul 3, 2020	Jun 28, 2019	Jun 29, 2018
As Reported
Selected Financial Data (US$ in millions)
Revenue, net	12,318)	18,793)	16,922)	16,736)	16,569)	20,647)
Total assets	24,429)	26,259)	26,132)	25,662)	26,370)	29,235)
Activity Ratio
Total asset turnover¹	0.50	0.72	0.65	0.65	0.63	0.71
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Revenue, net	12,318)	18,793)	16,922)	16,736)	16,569)	20,647)
Adjusted total assets	14,392)	16,218)	16,066)	15,595)	16,294)	19,160)
Activity Ratio
Adjusted total asset turnover²	0.86	1.16	1.05	1.07	1.02	1.08

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).

2023 Calculations

¹ Total asset turnover = Revenue, net ÷ Total assets
= 12,318 ÷ 24,429 = 0.50

² Adjusted total asset turnover = Revenue, net ÷ Adjusted total assets
= 12,318 ÷ 14,392 = 0.86

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Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Western Digital Corp. adjusted total asset turnover ratio improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

	Jun 30, 2023	Jul 1, 2022	Jul 2, 2021	Jul 3, 2020	Jun 28, 2019	Jun 29, 2018
As Reported
Selected Financial Data (US$ in millions)
Total assets	24,429)	26,259)	26,132)	25,662)	26,370)	29,235)
Shareholders’ equity	11,723)	12,221)	10,721)	9,551)	9,967)	11,531)
Solvency Ratio
Financial leverage¹	2.08	2.15	2.44	2.69	2.65	2.54
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets	14,392)	16,218)	16,066)	15,595)	16,294)	19,160)
Adjusted shareholders’ equity	1,686)	2,180)	655)	(516)	(109)	1,456)
Solvency Ratio
Adjusted financial leverage²	8.54	7.44	24.53	—	—	13.16

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).

2023 Calculations

¹ Financial leverage = Total assets ÷ Shareholders’ equity
= 24,429 ÷ 11,723 = 2.08

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted shareholders’ equity
= 14,392 ÷ 1,686 = 8.54

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Solvency ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Western Digital Corp. adjusted financial leverage ratio decreased from 2021 to 2022 but then slightly increased from 2022 to 2023.

	Jun 30, 2023	Jul 1, 2022	Jul 2, 2021	Jul 3, 2020	Jun 28, 2019	Jun 29, 2018
As Reported
Selected Financial Data (US$ in millions)
Net income (loss)	(1,706)	1,500)	821)	(250)	(754)	675)
Shareholders’ equity	11,723)	12,221)	10,721)	9,551)	9,967)	11,531)
Profitability Ratio
ROE¹	-14.55%	12.27%	7.66%	-2.62%	-7.56%	5.85%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income (loss)	(1,706)	1,500)	821)	(250)	(754)	675)
Adjusted shareholders’ equity	1,686)	2,180)	655)	(516)	(109)	1,456)
Profitability Ratio
Adjusted ROE²	-101.19%	68.81%	125.34%	—	—	46.36%

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).

2023 Calculations

¹ ROE = 100 × Net income (loss) ÷ Shareholders’ equity
= 100 × -1,706 ÷ 11,723 = -14.55%

² Adjusted ROE = 100 × Net income (loss) ÷ Adjusted shareholders’ equity
= 100 × -1,706 ÷ 1,686 = -101.19%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as net income divided by adjusted shareholders’ equity.	Western Digital Corp. adjusted ROE deteriorated from 2021 to 2022 and from 2022 to 2023.

	Jun 30, 2023	Jul 1, 2022	Jul 2, 2021	Jul 3, 2020	Jun 28, 2019	Jun 29, 2018
As Reported
Selected Financial Data (US$ in millions)
Net income (loss)	(1,706)	1,500)	821)	(250)	(754)	675)
Total assets	24,429)	26,259)	26,132)	25,662)	26,370)	29,235)
Profitability Ratio
ROA¹	-6.98%	5.71%	3.14%	-0.97%	-2.86%	2.31%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income (loss)	(1,706)	1,500)	821)	(250)	(754)	675)
Adjusted total assets	14,392)	16,218)	16,066)	15,595)	16,294)	19,160)
Profitability Ratio
Adjusted ROA²	-11.85%	9.25%	5.11%	-1.60%	-4.63%	3.52%

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).

2023 Calculations

¹ ROA = 100 × Net income (loss) ÷ Total assets
= 100 × -1,706 ÷ 24,429 = -6.98%

² Adjusted ROA = 100 × Net income (loss) ÷ Adjusted total assets
= 100 × -1,706 ÷ 14,392 = -11.85%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Western Digital Corp. adjusted ROA improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Western Digital Corp. (NASDAQ:WDC)

Analysis of Goodwill and Intangible Assets

Goodwill and Intangible Asset Disclosure

Adjustments to Financial Statements: Removal of Goodwill

Western Digital Corp., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Goodwill (Summary)

Western Digital Corp., Financial Ratios: Reported vs. Adjusted

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)