Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

Western Digital Corp., consolidated cash flow statement

US$ in millions

12 months ended:	Jun 30, 2023	Jul 1, 2022	Jul 2, 2021	Jul 3, 2020	Jun 28, 2019	Jun 29, 2018
Net income (loss)	(1,706)	1,500)	821)	(250)	(754)	675)
Depreciation and amortization	828)	929)	1,212)	1,566)	1,812)	2,056)
Stock-based compensation	318)	326)	318)	308)	306)	377)
Deferred income taxes	(34)	114)	(242)	(82)	374)	(348)
(Gain) loss on disposal of assets	(7)	(16)	(70)	(7)	39)	21)
Non-cash portion of asset impairment	19)	—)	—)	—)	—)	16)
Gain on business divestiture	—)	(9)	—)	—)	—)	—)
Amortization of debt issuance costs and discounts	13)	44)	40)	40)	38)	221)
Cash premium on extinguishment of debt	—)	—)	—)	—)	—)	720)
Other non-cash operating activities, net	71)	67)	(6)	6)	(8)	(19)
Accounts receivable, net	1,206)	(546)	121)	(1,175)	993)	(244)
Inventories	(60)	(22)	(546)	200)	(339)	(598)
Accounts payable	(459)	(129)	11)	192)	(588)	(15)
Accounts payable to related parties	(28)	(78)	(9)	75)	72)	53)
Accrued expenses	(352)	246)	257)	103)	(42)	(17)
Income taxes payable	130)	(74)	95)	81)	—)	—)
Accrued compensation	(162)	(123)	162)	124)	(135)	(26)
Other assets and liabilities, net	(185)	(349)	(266)	(357)	(221)	1,333)
Changes in assets and liabilities	90)	(1,075)	(175)	(757)	(260)	486)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operations	1,298)	380)	1,077)	1,074)	2,301)	3,530)
Net cash provided by (used in) operating activities	(408)	1,880)	1,898)	824)	1,547)	4,205)
Purchases of property, plant and equipment	(821)	(1,122)	(1,146)	(647)	(876)	(835)
Proceeds from the sale of property, plant and equipment	14)	15)	143)	—)	119)	26)
Acquisitions, net of cash acquired	—)	—)	—)	(22)	—)	(100)
Proceeds from dispositions of business	—)	32)	—)	—)	—)	—)
Purchases of investments	—)	—)	—)	—)	(79)	(89)
Proceeds from sale of investments	—)	—)	—)	—)	175)	48)
Proceeds from maturities of investments	—)	—)	—)	—)	7)	19)
Notes receivable issuances to Flash Ventures	(627)	(809)	(541)	(353)	(1,364)	(1,313)
Notes receivable proceeds from Flash Ventures	641)	718)	772)	1,284)	766)	571)
Strategic investments and other, net	31)	(26)	7)	16)	(20)	18)
Net cash (used in) provided by investing activities	(762)	(1,192)	(765)	278)	(1,272)	(1,655)
Issuance of stock under employee stock plans	93)	122)	134)	141)	118)	220)
Taxes paid on vested stock awards under employee stock plans	(80)	(90)	(56)	(72)	(115)	(171)
Net proceeds from convertible preferred stock	881)	—)	—)	—)	—)	—)
Repurchases of common stock	—)	—)	—)	—)	(563)	(591)
Dividends paid to shareholders	—)	—)	—)	(595)	(584)	(593)
Repayment of government grants	—)	—)	(9)	—)	—)	—)
Settlement of debt hedge contracts	—)	—)	—)	—)	—)	28)
Repayment of debt	(1,180)	(3,621)	(886)	(982)	(181)	(17,074)
Proceeds from debt issuance	1,180)	1,894)	—)	—)	—)	13,840)
Borrowings from (repayment of) revolving credit facility	—)	—)	—)	—)	(500)	500)
Debt issuance costs	(19)	(23)	—)	—)	(4)	(59)
Net cash provided by (used in) financing activities	875)	(1,718)	(817)	(1,508)	(1,829)	(3,900)
Effect of exchange rate changes on cash	(9)	(13)	6)	(1)	4)	1)
Net increase (decrease) in cash and cash equivalents	(304)	(1,043)	322)	(407)	(1,550)	(1,349)
Cash and cash equivalents, beginning of year	2,327)	3,370)	3,048)	3,455)	5,005)	6,354)
Cash and cash equivalents, end of year	2,023)	2,327)	3,370)	3,048)	3,455)	5,005)

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).

The financial data indicates significant volatility in net income over the six-year period. Starting with a positive net income of $675 million in 2018, there is a sharp decline into losses in 2019 and 2020, followed by a recovery and peak at $1.5 billion in 2022, before a significant loss of $1.7 billion in 2023. The depreciation and amortization expense shows a consistent downward trend from $2.06 billion in 2018 to $828 million in 2023, indicating reduced capital asset charges or amortization schedules over time.

Stock-based compensation maintains relative stability, fluctuating slightly around the $300 million mark annually. Deferred income taxes display irregular figures with notable positive and negative swings, reflecting variability in tax planning or asset/liability valuation changes. Gains and losses on disposal of assets are minor, with a slightly negative trend from 2019 onward.

Non-cash asset impairments and gains on divestitures are sporadic, with notable impairments recorded in 2018 and 2023 and a gain on business divestiture in 2022. Amortization of debt issuance costs decreases overall, revealing reduced associated financing costs or borrowings. The cash premium on extinguishment of debt was a significant item only in 2018, representing a one-time financing activity.

Changes in working capital show erratic movements. Accounts receivable swings from positive to negative changes, reflecting collection variability or sales fluctuations. Inventory changes oscillate around zero with no clear pattern. Accounts payable and expenses show inconsistent trends, with 2023 recording a notable negative change in accrued expenses and accounts payable, which could indicate timing differences in payments or accruals. Income taxes payable have limited data but show small positive or negative changes where reported.

Cash flow from operating activities peaks at $4.2 billion in 2018, declines substantially in the following years, with a minor recovery before turning negative in 2023 at -$408 million. Capital expenditures remain consistently significant, generally above $600 million per year, peaking at $1.15 billion in 2021, indicating sustained investment in property, plant, and equipment. Proceeds from asset sales are minor and inconsistent.

Investing activities show variability with negative cash flows in most years except 2020, driven largely by purchases of property and notes receivable issuances. Notes receivable transactions with Flash Ventures suggest ongoing strategic financing or investments, with issuances consistently exceeding proceeds. Strategic investments remain small and volatile.

Financing activities largely consist of repayments and issuances of debt, with large repayments in 2018 that taper off subsequently, alongside issuance spikes in 2018 and 2022. Stock transactions via employee plans show consistent though modest inflows and related tax outflows. Dividends and stock repurchases diminish after 2020, suggesting a shift in capital return policy or cash preservation efforts. The issuance of convertible preferred stock in 2023 indicates new capital infusion.

Cash and cash equivalents show a declining trend overall, decreasing from $6.35 billion at the start of 2018 to $2.02 billion at the end of 2023, despite intermittent increases. Exchange rate effects on cash are negligible with small positive or negative impacts throughout the years.

Profitability: Net income exhibited substantial volatility, improving notably in 2021-2022 before a steep decline in 2023.
Operating Efficiency: Depreciation and amortization expenses consistently decreased, while stock-based compensation stayed stable. Working capital components fluctuated without clear directional trends, indicating operational variability.
Cash Flow: Operating cash flow experienced a strong peak at the start, followed by declines and a negative balance in 2023. Investing cash flow was mostly negative, reflecting ongoing capital expenditures and investments. Financing cash flow was unstable, with debt repayments dominating early years and new debt issuance and equity financing occurring later.
Capital Management: Capital expenditures remained substantial, emphasizing ongoing investment in fixed assets. Reduction in share repurchases and dividends from 2021 onward suggests cautious capital distribution. The issuance of convertible preferred stock in 2023 signals capital raising efforts.
Liquidity: Overall cash and cash equivalents decreased significantly, implying tighter liquidity or increased cash usage over the period.

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Western Digital Corp. (NASDAQ:WDC)

Cash Flow Statement