Income Tax Expense (Benefit)
Effective Income Tax Rate (EITR)
Components of Deferred Tax Assets and Liabilities
Adjustments to Financial Statements: Removal of Deferred Taxes
Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)
Adjusted Net Profit Margin
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Western Digital Corp., income tax expense (benefit), continuing operations

US$ in millions

12 months ended:	Jun 30, 2023	Jul 1, 2022	Jul 2, 2021	Jul 3, 2020	Jun 28, 2019	Jun 29, 2018
Foreign	153)	143)	195)	157)	181)	166)
Domestic, Federal	33)	341)	154)	124)	(91)	1,597)
Domestic, State	(6)	25)	(1)	5)	3)	(5)
Current	180)	509)	348)	286)	93)	1,758)
Foreign	8)	27)	(20)	(29)	226)	(39)
Domestic, Federal	(36)	84)	(208)	(53)	141)	(300)
Domestic, State	(6)	3)	(14)	—)	7)	(9)
Deferred	(34)	114)	(242)	(82)	374)	(348)
Income tax expense	146)	623)	106)	204)	467)	1,410)

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
Current	Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations.	Western Digital Corp. current increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.
Deferred	Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations.	Western Digital Corp. deferred increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.
Income tax expense	Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Western Digital Corp. income tax expense increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Western Digital Corp., effective income tax rate (EITR) reconciliation

	Jun 30, 2023	Jul 1, 2022	Jul 2, 2021	Jul 3, 2020	Jun 28, 2019	Jun 29, 2018
U.S. Federal statutory tax rate	21.00%	21.00%	21.00%	21.00%	21.00%	28.00%
Tax rate differential on international income	-33.00%	-9.00%	8.00%	-443.00%	-75.00%	-34.00%
Tax effect of U.S. foreign income inclusion	-1.00%	0.00%	5.00%	-38.00%	-7.00%	1.00%
Tax effect of U.S. foreign minimum tax	0.00%	5.00%	1.00%	-235.00%	-38.00%	0.00%
Tax effect of U.S. foreign derived intangible income	4.00%	-1.00%	-14.00%	109.00%	11.00%	0.00%
Tax effect of U.S. non-deductible stock-based compensation	-1.00%	1.00%	1.00%	-21.00%	-1.00%	1.00%
Tax effect of U.S. permanent differences	0.00%	0.00%	1.00%	-26.00%	-3.00%	-1.00%
IRS Tentative Settlement	1.00%	15.00%	0.00%	0.00%	0.00%	0.00%
One-time mandatory deemed repatriation tax	0.00%	0.00%	0.00%	0.00%	-41.00%	75.00%
Re-measurement of deferred taxes	0.00%	0.00%	0.00%	0.00%	2.00%	-3.00%
Impact of 2017 Act	0.00%	0.00%	0.00%	0.00%	-39.00%	72.00%
Change in valuation allowance	1.00%	1.00%	-7.00%	-12.00%	-2.00%	5.00%
Unremitted earnings of certain non-U.S. entities	-1.00%	1.00%	6.00%	-114.00%	-79.00%	0.00%
Foreign income tax credits	0.00%	-3.00%	-5.00%	191.00%	23.00%	0.00%
R&D tax credits	5.00%	-4.00%	-8.00%	147.00%	24.00%	-4.00%
U.S. return to provision	-2.00%	0.00%	-3.00%	0.00%	0.00%	0.00%
Other	-3.00%	2.00%	5.00%	-22.00%	2.00%	0.00%
Effective tax rate	-9.00%	29.00%	11.00%	-443.00%	-163.00%	68.00%

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
Effective tax rate	Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Western Digital Corp. effective tax rate increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.

Western Digital Corp., components of deferred tax assets and liabilities

US$ in millions

	Jun 30, 2023	Jul 1, 2022	Jul 2, 2021	Jul 3, 2020	Jun 28, 2019	Jun 29, 2018
Sales related reserves and accrued expenses not currently deductible	52)	71)	88)	52)	48)	53)
Accrued compensation and benefits not currently deductible	88)	114)	143)	130)	124)	145)
Deferred revenue	—)	—)	128)	—)	—)	—)
Net operating loss carryforward	183)	195)	196)	251)	285)	443)
Business credit carryforward	478)	483)	461)	438)	410)	448)
Long-lived assets	56)	72)	101)	123)	144)	161)
Other	171)	178)	131)	133)	135)	118)
Deferred tax assets	1,028)	1,113)	1,248)	1,127)	1,146)	1,368)
Valuation allowances	(565)	(580)	(558)	(624)	(619)	(614)
Deferred tax assets, less valuation allowances	463)	533)	690)	503)	527)	754)
Long-lived assets	(48)	(128)	(202)	(294)	(413)	(491)
Unremitted earnings of certain non-U.S. entities	(297)	(288)	(280)	(228)	(220)	(5)
Other	(7)	(17)	(20)	(26)	(32)	(43)
Deferred tax liabilities	(352)	(433)	(502)	(548)	(665)	(539)
Deferred tax assets (liabilities), net	111)	100)	188)	(45)	(138)	215)

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
Deferred tax assets	Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Western Digital Corp. deferred tax assets decreased from 2021 to 2022 and from 2022 to 2023.
Deferred tax assets, less valuation allowances	Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Western Digital Corp. deferred tax assets, less valuation allowances decreased from 2021 to 2022 and from 2022 to 2023.
Deferred tax assets (liabilities), net	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting.	Western Digital Corp. deferred tax assets (liabilities), net decreased from 2021 to 2022 but then slightly increased 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: Noncurrent deferred tax assets, net	111)	100)	188)	—)	—)	215)
Total assets (adjusted)	24,318)	26,159)	25,944)	25,662)	26,370)	29,020)
Adjustment to Total Liabilities
Total liabilities (as reported)	12,706)	14,038)	15,411)	16,111)	16,403)	17,704)
Less: Noncurrent deferred tax liabilities, net	—)	—)	—)	45)	138)	—)
Total liabilities (adjusted)	12,706)	14,038)	15,411)	16,066)	16,265)	17,704)
Adjustment to Shareholders’ Equity
Shareholders’ equity (as reported)	11,723)	12,221)	10,721)	9,551)	9,967)	11,531)
Less: Net deferred tax assets (liabilities)	111)	100)	188)	(45)	(138)	215)
Shareholders’ equity (adjusted)	11,612)	12,121)	10,533)	9,596)	10,105)	11,316)
Adjustment to Net Income (loss)
Net income (loss) (as reported)	(1,706)	1,500)	821)	(250)	(754)	675)
Add: Deferred income tax expense (benefit)	(34)	114)	(242)	(82)	374)	(348)
Net income (loss) (adjusted)	(1,740)	1,614)	579)	(332)	(380)	327)

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
Net Profit Margin
Reported net profit margin	-13.85%	7.98%	4.85%	-1.49%	-4.55%	3.27%
Adjusted net profit margin	-14.13%	8.59%	3.42%	-1.98%	-2.29%	1.58%
Total Asset Turnover
Reported total asset turnover	0.50	0.72	0.65	0.65	0.63	0.71
Adjusted total asset turnover	0.51	0.72	0.65	0.65	0.63	0.71
Financial Leverage
Reported financial leverage	2.08	2.15	2.44	2.69	2.65	2.54
Adjusted financial leverage	2.09	2.16	2.46	2.67	2.61	2.56
Return on Equity (ROE)
Reported ROE	-14.55%	12.27%	7.66%	-2.62%	-7.56%	5.85%
Adjusted ROE	-14.98%	13.32%	5.50%	-3.46%	-3.76%	2.89%
Return on Assets (ROA)
Reported ROA	-6.98%	5.71%	3.14%	-0.97%	-2.86%	2.31%
Adjusted ROA	-7.16%	6.17%	2.23%	-1.29%	-1.44%	1.13%

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 net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Western Digital Corp. adjusted net profit margin ratio improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.
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 and from 2022 to 2023.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Western Digital Corp. adjusted ROE improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.
Adjusted ROA	A profitability ratio calculated as adjusted 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)
Net income (loss)	(1,706)	1,500)	821)	(250)	(754)	675)
Revenue, net	12,318)	18,793)	16,922)	16,736)	16,569)	20,647)
Profitability Ratio
Net profit margin¹	-13.85%	7.98%	4.85%	-1.49%	-4.55%	3.27%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income (loss)	(1,740)	1,614)	579)	(332)	(380)	327)
Revenue, net	12,318)	18,793)	16,922)	16,736)	16,569)	20,647)
Profitability Ratio
Adjusted net profit margin²	-14.13%	8.59%	3.42%	-1.98%	-2.29%	1.58%

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 Net profit margin = 100 × Net income (loss) ÷ Revenue, net
= 100 × -1,706 ÷ 12,318 = -13.85%

² Adjusted net profit margin = 100 × Adjusted net income (loss) ÷ Revenue, net
= 100 × -1,740 ÷ 12,318 = -14.13%

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Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Western Digital Corp. adjusted net profit margin 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)
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 Deferred Taxes
Selected Financial Data (US$ in millions)
Revenue, net	12,318)	18,793)	16,922)	16,736)	16,569)	20,647)
Adjusted total assets	24,318)	26,159)	25,944)	25,662)	26,370)	29,020)
Activity Ratio
Adjusted total asset turnover²	0.51	0.72	0.65	0.65	0.63	0.71

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 ÷ 24,318 = 0.51

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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 Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets	24,318)	26,159)	25,944)	25,662)	26,370)	29,020)
Adjusted shareholders’ equity	11,612)	12,121)	10,533)	9,596)	10,105)	11,316)
Solvency Ratio
Adjusted financial leverage²	2.09	2.16	2.46	2.67	2.61	2.56

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
= 24,318 ÷ 11,612 = 2.09

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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 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)
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 Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income (loss)	(1,740)	1,614)	579)	(332)	(380)	327)
Adjusted shareholders’ equity	11,612)	12,121)	10,533)	9,596)	10,105)	11,316)
Profitability Ratio
Adjusted ROE²	-14.98%	13.32%	5.50%	-3.46%	-3.76%	2.89%

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 × Adjusted net income (loss) ÷ Adjusted shareholders’ equity
= 100 × -1,740 ÷ 11,612 = -14.98%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Western Digital Corp. adjusted ROE 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)
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 Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income (loss)	(1,740)	1,614)	579)	(332)	(380)	327)
Adjusted total assets	24,318)	26,159)	25,944)	25,662)	26,370)	29,020)
Profitability Ratio
Adjusted ROA²	-7.16%	6.17%	2.23%	-1.29%	-1.44%	1.13%

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 × Adjusted net income (loss) ÷ Adjusted total assets
= 100 × -1,740 ÷ 24,318 = -7.16%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted 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 Income Taxes

Income Tax Expense (Benefit)

Effective Income Tax Rate (EITR)

Components of Deferred Tax Assets and Liabilities

Adjustments to Financial Statements: Removal of Deferred Taxes

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

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

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

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)