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• Our operations are subject to a substantial risk of damage or disruption.
−Removed: • Public health crises have had, and could in the future have, a negative effect on our business.
• Our inability to attract, retain and develop highly skilled management and technical talent could negatively impact our business prospects.
−Removed: • Product defects could subject us to costly warranty claims, litigation or indemnification claims.
−Removed: • The compromise, damage or interruption of our technology infrastructure, systems or products from cyber incidents, data security breaches or other related problems could have a material negative impact on our business.
+Added: • Product defects could subject us to costly warranty claims, litigation, indemnification claims or termination of long-term sales agreements.
+Added: • The compromise, damage or interruption of our technology infrastructure, systems or products from cybersecurity incidents, data security breaches or other related problems could have a material negative impact on our business.
• We may be adversely affected by risks and challenges associated with the use of artificial intelligence (“AI”).
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• We rely substantially on strategic relationships that subject us to risks and uncertainties.
−Removed: • Competitive conditions, including declining average selling prices, volatile demand, technological change, industry consolidation and lengthy supply qualifications, in our industry can negatively impact our business.
+Added: • Competitive conditions, including declining average selling prices, volatile demand, technological change, industry consolidation, lengthy product qualifications, and supply constraints, in our industry can negatively impact our business.
• Failure to properly manage technology transitions and product development and introduction could harm our competitiveness and operating results.
−Removed: • We experience sales seasonality and cyclicality, and accurate forecasting has become more difficult.
+Added: • Our operating results may fluctuate due to changes in demand, industry cycles and the timing of customer deployments, including AI-related data center investments, and our ability to accurately forecast demand as a result of these changing market conditions.
• Failure to successfully execute on strategic initiatives may negatively impact our future results.
• Loss of revenue from a key customer, or customer base consolidation, could harm our operating results.
−Removed: • If we fail to respond to demand changes within our distribution channel or retail market or maintain and grow our applicable market share, our business could suffer.
+Added: • Long-term agreements, which we also refer to as New Business Models or “NBMs”, expose us to certain execution, financial, and market risks, which could be significant.
Financial Risks
−Removed: • Our level of debt may negatively impact our liquidity, restrict our operations and ability to respond to business opportunities and increase our vulnerability to adverse economic and industry conditions.
+Added: • Our guarantees of certain obligations of Flash Ventures may negatively impact our financial position, and terms and conditions of our revolving credit facility may restrict our operations and ability to respond to future business opportunities.
• Fluctuations in currency exchange rates may negatively affect our operating results.
• Increases in our customers’ credit risk could result in credit losses and term extensions under existing contracts with customers with credit losses could result in an increase in our operating costs.
+Added: • Our share repurchase program may not enhance shareholder value and could affect the price of our common stock and reduce our financial flexibility.
Legal and Compliance Risks
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• We are or may be subject to legal and regulatory requirements as well as customer, industry and coalition standards, and compliance with those requirements could increase our operating costs and failure to comply may harm our business.
−Removed: • Our aspirations, disclosures and actions related to environmental, social and governance matters expose us to risks that could adversely affect our reputation and performance.
+Added: • Our aspirations, disclosures and actions related to sustainability and governance matters expose us to risks that could adversely affect our reputation and performance.
• We and certain of our officers may at times be involved in litigation, investigations and governmental proceedings, which may be costly and could result in adverse court rulings, fines or penalties.
• Our industry’s and our company’s reliance on intellectual property and other proprietary information subjects us to the risk that key components of our business could be copied and also subjects us and our suppliers, customers and partners to the risk of significant litigation.
−Removed: • Future material impairments in the value of our goodwill, intangible assets and other long-lived assets would negatively affect our operating results.
RISKS RELATED TO THE SPIN-OFF
−Removed: • We may not achieve the expected benefits of the spin-off, and the spin-off may adversely impact our business.
−Removed: • We have incurred and may continue to incur material costs and expenses as a result of the spin-off.
• Failure to ensure compliance with Section 404 of the Sarbanes-Oxley Act or ineffective internal control over financial reporting could result in uncertainties regarding our financial statements and lead our stock price to suffer.
• Our historical financial information is not necessarily representative of the results that we would have achieved as a separate, public company and may not be reliable as to our future results.
−Removed: • WDC may fail to perform under various transaction agreements that were executed as part of the spin-off, or we may fail to have necessary systems and services in place when WDC is no longer obligated to provide services under the various agreements.
−Removed: • WDC’s indemnification of us for certain liabilities in connection with the spin-off may not be sufficient to protect us against the full amount of such liabilities, or WDC may not be able to satisfy its indemnification obligation in the future.
−Removed: • If we are required to make payments pursuant to our indemnities to WDC in connection with the spin-off, our financial results could be adversely impacted.
+Added: • Mutual indemnification obligations between WDC and us for certain liabilities in connection with the spin-off may not provide the protection we expect and could result in significant liabilities that could adversely affect our financial results.
• If the distribution of our shares does not continue to qualify for the Intended Tax Treatment or if we fail to preserve such treatment, we, WDC and WDC stockholders could be subject to significant United States (“U.S.”) federal income tax liabilities, and we could be required to indemnify WDC.
−Removed: • The spin-off and related internal restructuring transactions may expose us to potential liabilities arising out of state and federal fraudulent conveyance laws and legal dividend requirements.
−Removed: • Overlapping officer roles and directorships with WDC may give rise to actual or potential conflicts of interest.
−Removed: • Failure to have received third party consent for contracts and other assets from the spin-off requiring such consent could adversely impact our financial condition and future results of operations.
−Removed: • We may be unable to effectively make the changes necessary to operate as an independent company.
+Added: • We may be unable to implement, on a timely or cost-effective basis, the systems, internal controls, and governance structures necessary to operate effectively as an independent company.
RISKS RELATED TO OUR COMMON STOCK
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As a result, our business depends significantly on global and regional conditions.
−Removed: Adverse changes in global or regional economic conditions, including, but not limited to, volatility in the financial markets, tighter credit, recession, inflation, rising interest rates, slower growth in certain geographic regions, political uncertainty, geopolitical tensions or conflicts, trade war, other macroeconomic factors, changes to social conditions and regulations, could significantly harm demand for our products, increase credit and collectability risks, result in revenue reductions, reduce profitability as a result of underutilization of our assets, cause us to change our business practices, increase manufacturing and operating costs or result in impairment charges or other expenses.
−Removed: Our revenue growth is significantly dependent on the growth of international markets, and we may face challenges in international sales markets.
−Removed: We are subject to risks and regulatory obligations associated with our global manufacturing operations and global sales efforts, as well as risks and regulatory obligations associated with our utilization of contract manufacturers, including:
−Removed: • obtaining governmental approvals and compliance with evolving foreign regulations;
+Added: Adverse changes in global or regional economic conditions, including, but not limited to, volatility in the financial markets, tighter credit, recession, inflation, rising interest rates, slower growth in certain geographic regions, political uncertainty, geopolitical tensions or conflicts, trade war, other macroeconomic factors, or changes to social conditions and regulations, could significantly harm demand for our products, increase credit and collectability risks, result in revenue reductions, reduce profitability as a result of underutilization of our assets, cause us to change our business practices, increase manufacturing and operating costs or result in impairment charges or other expenses.
+Added: Public health crises and related government responses, including widespread disease outbreaks, quarantines, travel restrictions or business shutdowns, can also contribute to volatility in the financial markets, tighter credit conditions, reduced consumer and business spending and other adverse macroeconomic factors, any of which may negatively impact demand for our products and our financial performance.
+Added: We are subject to risks and regulatory obligations associated with our global manufacturing operations and global sales efforts, as well as risks and regulatory obligations associated with our utilization of global suppliers, including:
+Added: • obtaining governmental approvals and compliance with evolving domestic and foreign regulations;
• the need to comply with regulations on international business, including the Foreign Corrupt Practices Act, the United Kingdom Bribery Act 2010, the anti-bribery laws of other countries and rules regarding conflict minerals;
−Removed: • the impacts of political and economic instability;
+Added: • the impacts of social, political, immigration, and tax and trade policies in the U.S.
• exchange, currency and tax controls and reallocations;
• the continued evolution and implementation of complex global and local tax regimes;
−Removed: • weaker protection of intellectual property rights;
+Added: • varying levels of protection of intellectual property rights;
• policies and financial incentives by governments in China, the U.S.
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• financial volatility and disruptions to supply chain resulting from public health crises.
−Removed: For example, the United States has recently announced changes to U.S.
−Removed: trade policy, including increased tariffs on imported goods.
−Removed: In August 2025, President Trump and members of his administration have stated tariffs on semiconductors may be implemented soon, subject to exemptions.
−Removed: We are monitoring to assess potential implications on the Company.
+Added: For example, there are pending and ongoing investigations initiated by the United States under Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974 that may impact tariff rates for Sandisk products.
+Added: We continue to monitor changes to the U.S.
+Added: tariff regime to assess potential implications on the Company.
Though the majority of our products sold in the U.S.
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and other countries, the scope, amount, or duration of tariffs that may be imposed by any country, and the impact of these factors on our business, either directly or as a result of the impact on the business of our customers, are uncertain and may contribute to increased costs and reduced demand for our products, each of which could harm our financial performance.
−Removed: Uncertainty surrounding international trade policy and regulations could also have an adverse effect on consumer confidence and spending.
As a result of these risks, our business could be harmed.
We are dependent on a limited number of qualified suppliers who provide critical services, materials or components, and a disruption in our supply chain or other inability to source our supply requirements, or an increase in the costs of materials or components, could negatively affect our business.
−Removed: We depend on an external supply base for technologies, software (including firmware), controllers, dynamic random-access memory, components, equipment and materials for use in our product design and manufacturing.
+Added: We depend on an external supply base for technologies, software (including firmware), controllers, dynamic random-access memory (“DRAM”), components, equipment and materials for use in our product design and manufacturing.
We also depend on suppliers for a portion of our wafer testing, chip assembly, product assembly and product testing and on service suppliers for providing technical support for our products.
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We therefore depend on these suppliers to meet our business needs, including dedicating adequate engineering resources to develop components that can be successfully integrated into our products.
−Removed: Our suppliers have in the past been, and may in the future be, unable or unwilling to meet our requirements, including as a result of events outside of their control such as trade restrictions (including tariffs, quotas and embargoes), supply chain shortages, geopolitical conflicts, cybersecurity incidents, public health emergencies or natural disasters.
+Added: For example, many of our enterprise-grade SSD products incorporate DRAM, which is a commodity component that has experienced supply constraints and may remain in short supply for extended periods.
+Added: If we are unable to obtain sufficient quantities of DRAM on commercially reasonable terms, we may be required to allocate available flash memory and other resources to products that require less or no DRAM rather than to strategic products that may offer higher margins or stronger long-term growth opportunities.
+Added: Such constraints could adversely affect our product mix, revenues, gross margins, customer relationships and competitive position.
+Added: Our suppliers have in the past been, and may in the future be, unable or unwilling to meet our requirements, including as a result of events outside of their control such as trade restrictions (including tariffs, quotas, sanctions, and embargoes), supply chain shortages, labor disputes, geopolitical conflicts, industrial accidents, cybersecurity incidents, public health emergencies or natural disasters.
If we are unable to purchase sufficient quantities from our current suppliers or qualify and engage additional suppliers, or if we cannot purchase materials at a reasonable price, we may not be able to meet demand for our products.
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Delays, shortages or cost increases experienced by our suppliers in developing or sourcing materials and components for use in our products or incompatibility or quality issues relating to our products could also harm our business.
−Removed: We do not have long-term contracts with some of our existing suppliers, nor do we always have guaranteed manufacturing capacity with our suppliers, so we cannot guarantee that they will devote sufficient resources or capacity to manufacturing our products.
+Added: We do not have long-term contracts with some of our existing suppliers, nor do we always have guaranteed manufacturing capacity with many of our suppliers, so we cannot guarantee that they will devote sufficient resources or capacity to manufacturing our products.
Any significant problems that occur at our suppliers could lead to product shortages or quality assurance problems.
When we do have contractual commitments with suppliers in an effort to stabilize the supply of our components, those commitments may require us to buy a substantial number of components or make significant cash advances to the supplier and may not result in a satisfactory supply of our components.
−Removed: We may cancel or defer outstanding purchase commitments with certain suppliers due to changes in actual and forecasted demand, which may result in fees, penalties and other associated charges.
+Added: Additionally, if such suppliers were to experience operational or financial difficulties, be acquired by a competitor, or fail to perform required obligations under our supply agreements, our ability to source critical components could be impaired, potentially disrupting our product manufacturing and harming our business.
+Added: We may also cancel or defer outstanding purchase commitments with certain suppliers due to changes in actual and forecasted demand, which may result in fees, penalties and other associated charges.
Such cancellations or deferments may also negatively impact our relationships with certain suppliers or lead to a decline in the financial performance of certain suppliers, each of which could result in even more limited availability of components needed for our products.
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Our operations, and those of certain of our suppliers and customers, are subject to substantial risk of damage or disruption.
−Removed: We conduct our operations at large, high-volume, purpose-built facilities in Japan, Malaysia and throughout Asia.
+Added: We conduct our operations at large, high-volume, purpose-built facilities in Japan, Malaysia and other locations in Asia.
The facilities of many of our customers, our suppliers and our customers’ suppliers are also concentrated in certain geographic locations throughout Asia and elsewhere.
−Removed: If a fire (including a climate change-related fire), flood, earthquake, tsunami or other natural disaster, condition or event such as a power outage, contamination event, terrorist attack, cybersecurity incident, physical security breach, political instability, civil unrest, localized labor unrest or other employment issues, or a health epidemic negatively affects any of these facilities, it would significantly affect our ability to manufacture or sell our products and source components and would harm our business.
+Added: If a fire (including a climate change-related fire), flood, earthquake, tsunami or other natural disaster, condition or event such as power outage, contamination event, water scarcity, terrorist attack, cybersecurity incident, physical security breach, political instability, act of war, civil unrest, localized labor unrest, or a public health crisis or epidemic negatively affects any of these facilities or regions, it could significantly disrupt the supply of wafers, components, equipment or services;
+Added: impair customer demand;
+Added: significantly affect our ability to manufacture or sell our products;
+Added: or otherwise materially adversely affect our business and financial results.
Possible impacts include work and equipment stoppages and damage to or closure of our facilities, or those of our suppliers or customers, for an indefinite period of time.
−Removed: Impacts of any of these events may also include closures of our manufacturing facilities, under-absorbed overhead, increased logistics, component and other costs, decreased demand for our products, and manufacturing challenges.
−Removed: Climate change has in the past and is expected to continue to increase the incidence and severity of certain natural disasters, including wildfires and adverse weather events.
+Added: Impacts of any of these events may also include closures of our manufacturing facilities, under-absorbed overhead, increased logistics, component and other costs, decreased demand for our products, and manufacturing challenges, delays in production ramps, and interruptions or inefficiencies in our operations.
+Added: Climate change has in the past increased and is expected to continue to increase, the incidence and severity of certain natural disasters, including wildfires and adverse weather events.
In addition, the geographic concentration of our manufacturing sites could exacerbate the negative impacts resulting from any of these problems.
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If Kioxia fails to do so, we could suffer significant unreimbursable losses, and such failure could also cause Flash Ventures to breach various financing covenants.
−Removed: Public health crises have had, and could in the future have, a negative effect on our business.
−Removed: Public health crises may negatively impact our workforce and operations, as well as those of our strategic partners, customers, suppliers and logistics providers.
−Removed: Impacts of public health crises may include, without limitation, closures of our manufacturing facilities; under-absorbed overhead; increased logistics, component and other costs; decreased demand for our products; and manufacturing challenges.
−Removed: Employee infections or government restrictions to contain the spread of infectious disease, like travel restrictions, quarantines, business shutdowns, or trade controls, could harm employees’ productivity and hinder operations in Flash Ventures’ factories or our other worksites and our business and results of operations as a whole.
−Removed: Further, global pandemics and other public health crises may cause financial market instability, credit issues, and increased cybersecurity and data privacy risks as more employees work remotely.
−Removed: The degree to which any public health crises ultimately impact our business will depend on many factors beyond our control, which are highly uncertain and cannot be predicted at this time.
Our success depends on our ability to attract, retain and develop highly skilled management and technical talent.
The success of our business depends on our ability to attract, retain, and develop highly skilled management and technical talent capable of advancing NAND technology in an increasingly complex and competitive global environment.
−Removed: The rapid pace of innovation driven by AI, global research and development competition, evolving models of work, and intensifying customer demands for faster, more efficient solutions has significantly raised the bar for the type of technical expertise required to power current and next-generation technologies.
+Added: The rapid pace of innovation driven by AI, global research and development competition, evolving models of work, and intensifying customer demands for faster, more efficient solutions has significantly raised the bar for the technical expertise required to power current and next-generation technologies.
As a result, acquiring and retaining such talent has become increasingly difficult.
If we are unable to hire and retain key talent and to effectively manage succession planning for key leadership roles, our operating results could be harmed.
−Removed: These challenges are further compounded by uncertainty surrounding our post-separation performance and evolving organizational structure, which may impact employee confidence and lead to increased attrition or operational inefficiencies.
−Removed: While we have implemented retention arrangements for key employees to mitigate this risk, we may still experience further attrition following the payment of these incentives.
−Removed: Additionally, compensation is closely tied to the performance of our business and given the inherent cyclicality of the memory and storage markets, we may face periods where our ability to offer competitive compensation is constrained, placing us at a disadvantage in attracting or retaining top talent during downturns in our operating results.
−Removed: Constraints on global talent mobility and hiring may also affect our ability to attract and retain the specialized skills needed to support our business.
+Added: Constraints on global talent mobility and hiring, including changes in immigration laws and policies, travel restrictions, work permits regulation and administration, government restrictions to contain the spread of infectious disease, and limitations on the ability of employees to enter, leave, or return to jurisdictions in which we operate, may also affect our ability to attract and retain the specialized skills needed to support our business and may disrupt our operations.
+Added: As part of our compensation program, we grant equity incentives to our senior leaders to align their interests with stockholder interests and incentivize these leaders to further deliver stockholder value.
+Added: The unvested value of these awards has appreciated materially as a result of our stock price performance in fiscal 2026.
+Added: These awards generally vest either in February 2028 or September 2028.
+Added: If the value of these awards at such time remains materially appreciated above their grant date values, we could experience attrition among these leaders when the awards vest.
+Added: While our Board of Directors (the “Board”) and management are focused on continued incentives for, and retention of, this group, if we were to lose one or more of our senior leaders following the vest date of these awards, we could experience difficulties in finding qualified successors, competing effectively, executing our business plan and implementing our business strategy, which could adversely impact our operations and operating results.
While we continue to invest in employee development, workforce planning, and structural agility, the speed and complexity of technological change and market demands create ongoing people-related risks that may impact our ability to sustain long-term innovation and operational performance.
We are subject to risks related to product defects, which could result in product recalls or epidemic failures and could subject us to warranty claims in excess of our warranty provisions or which are greater than anticipated, litigation or indemnification claims.
−Removed: We warrant the majority of our products for periods of one to five years.
+Added: We provide warranties on the majority of our products for periods of one to five years.
We test our products in our manufacturing facilities through a variety of means.
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Moreover, there is a risk that product defects may trigger an epidemic failure clause in a customer agreement.
−Removed: If an epidemic failure occurs, we may be required to replace or refund the value of the defective product and to cover certain other costs associated with the consequences of the epidemic failure.
−Removed: In addition, product defects, product recalls or epidemic failures may cause damage to our reputation or customer relationships, lost revenue, indemnification for a recall of our customers’ products, warranty claims, litigation or loss of market share with our customers, including our original equipment manufacturer and original design manufacturer customers.
+Added: If an epidemic failure occurs, we may face termination of long-term sales agreements and may be required to replace or refund the value of the defective product and to cover certain other costs associated with the consequences of the epidemic failure.
+Added: In addition, product defects, product recalls or epidemic failures may cause damage to our reputation or customer relationships, lost revenue, indemnification for a recall of our customers’ products, warranty claims, litigation or loss of market share with our customers, including our OEMs and OEM customers.
Our business liability insurance may be inadequate or future coverage may be unavailable on acceptable terms, which could negatively impact our operating results and financial condition.
Our standard warranty provisions attempt to put limits on damages and exclude liability for consequential damages and for misuse, improper installation, alteration, accident or mishandling while in the possession of someone other than us, but may be unenforceable or fail to limit our liability as intended.
−Removed: We record an accrual for estimated warranty costs at the time revenue is recognized.
+Added: We record estimated warranty costs at the time revenue is recognized and subsequently review and adjust those estimates as additional information becomes available.
We may incur additional expenses if our warranty provisions do not reflect the actual cost of resolving issues related to defects in our products, whether as a result of a product recall, epidemic failure or otherwise.
If these additional expenses are significant, they could harm our business.
−Removed: The compromise, damage or interruption of our technology infrastructure, systems or products by cyber incidents, data security breaches, other security problems, design defects or system failures could have a material negative impact on our business.
−Removed: We experience cyber incidents of varying degrees on our technology infrastructure and systems and, as a result, unauthorized parties may obtain access to our computer systems and networks, including cloud-based platforms.
+Added: The compromise, damage or interruption of our technology infrastructure, systems or products by cybersecurity incidents, data security breaches, other security problems, design defects or system failures could have a material negative impact on our business.
+Added: We experience cybersecurity incidents of varying degrees on our technology infrastructure and systems and, as a result, unauthorized parties may obtain access to our computer systems and networks, including cloud-based platforms.
In addition, the technology infrastructure and systems of some of our suppliers, vendors, service providers, contract manufacturers, cloud solution providers and partners have in the past experienced, and may in the future experience, such incidents.
−Removed: Cyber incidents can be caused by ransomware, computer denial-of-service attacks, data exfiltration, worms and other malicious software programs or other attacks, including the covert introduction of malware to computers and networks, and the use of techniques or processes that change frequently, may be disguised or difficult to detect, or are designed to remain dormant until a triggering event, and may continue undetected for an extended period of time.
−Removed: Cyber incidents may result from social engineering or impersonation of authorized users, and may also result from efforts to discover and exploit any design flaws, bugs, security vulnerabilities or security weaknesses, intentional or unintentional acts by employees or other insiders with access privileges, intentional acts of vandalism or fraud by third parties and sabotage.
+Added: Cybersecurity incidents can be caused by ransomware, computer denial-of-service attacks, data exfiltration, worms and other malicious software programs or other attacks, including the covert introduction of malware to computers and networks, and the use of techniques or processes that change frequently, may be disguised or difficult to detect, or are designed to remain dormant until a triggering event, and may continue undetected for an extended period of time.
+Added: Cybersecurity incidents may result from social engineering or impersonation of authorized users, and may also result from efforts to discover and exploit any design flaws, bugs, security vulnerabilities or security weaknesses, intentional or unintentional acts by employees or other insiders with access privileges, intentional acts of vandalism or fraud by third parties and sabotage.
In some instances, efforts to correct vulnerabilities or prevent incidents may reduce the functionality or performance of our computer systems and networks, which could negatively impact our business.
−Removed: We believe malicious cyber acts are increasing in number and that cyber threat actors are increasingly organized and well-financed or supported by state actors, and are developing increasingly sophisticated systems and means to not only infiltrate systems, but also to evade detection or to obscure their activities.
−Removed: Geopolitical tensions or conflicts may create heightened risk of cyber incidents.
−Removed: Our increasing use of AI, including generative AI technologies, may also elevate the risk of cyber incidents.
−Removed: These technologies can be leveraged by threat actors to automate and scale cyberattacks, generate highly convincing phishing or social engineering content, identify and exploit vulnerabilities more efficiently, or create malicious code that is more difficult to detect.
−Removed: In addition, generative AI models may inadvertently expose sensitive information if not properly secured or trained on confidential data.
−Removed: The use of AI by malicious actors may also accelerate the development of novel attack techniques that are adaptive, evasive, and capable of bypassing traditional security controls.
−Removed: As AI tools become more accessible and sophisticated, the potential for their misuse increases, further complicating efforts to detect, prevent, and respond to cyber threats.
−Removed: Our products are also targets for malicious cyber acts.
+Added: We believe malicious cybersecurity acts are increasing in number and that cybersecurity threat actors are increasingly organized and well-financed or supported by state actors, and are developing increasingly sophisticated systems and means to not only infiltrate systems, but also to evade detection or to obscure their activities.
+Added: Geopolitical tensions or conflicts may create heightened risk of cybersecurity incidents.
+Added: Our increasing use of AI, including generative AI, agentic AI and AI-enabled automation technologies, may elevate the risk of cybersecurity incidents, whether through our authorized use of such technologies to perform business or operational tasks with limited human oversight or through malicious use by threat actors to automate, scale or adapt attacks against our systems, products, employees, customers, suppliers or partners.
+Added: These technologies may be leveraged by threat actors to generate more convincing phishing or social engineering content, identify and exploit vulnerabilities more efficiently, create malicious code that is more difficult to detect, or automate, scale, adapt or obscure cyberattacks.
+Added: In addition, AI systems may inadvertently expose sensitive information if not properly secured, governed, configured, monitored, or connected to systems or data containing confidential information.
+Added: As AI tools become more accessible and sophisticated, the potential for their misuse increases, further complicating efforts to detect, prevent, and respond to cybersecurity threats.
+Added: Our products are also targets for malicious cybersecurity acts.
While some of our products contain encryption or security algorithms to protect third-party content or user-generated data stored on our products, these products could still be hacked or the encryption schemes could be compromised, breached or circumvented by motivated and sophisticated attackers, which could harm our business by exposing us to litigation and indemnification claims and hurting our reputation.
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While AI may promote efficiency and offer analytical advantages, it is complex and rapidly-changing, and its implementation carries inherent risks.
−Removed: Implementation of AI technologies can be costly and time-consuming, and there is no guarantee that such technology will be effective or beneficial.
−Removed: The incorporation of AI algorithms or training methodologies into our decision-making processes may result in flawed, irrelevant, insufficient, or biased outputs, potentially impacting our strategic choices, operational effectiveness, and regulatory compliance.
+Added: Implementation of AI technologies can be costly and time-consuming, and the effectiveness or potential benefits of such technologies may vary depending on use case, integration, and oversight.
+Added: The incorporation of AI algorithms or training methodologies into our operations or decision-making processes may result in flawed, irrelevant, insufficient, inaccurate, biased or non-compliant outputs, potentially impacting our strategic choices, operational effectiveness, and regulatory compliance.
These inaccuracies can arise from limitations in training data, algorithmic design, or unintended consequences of machine learning models.
−Removed: Actual or perceived deficiencies or failures in our implementation or use of AI could result in competitive disadvantages, regulatory action, legal liability, brand or reputational harm, and negative financial results.
+Added: Actual or perceived deficiencies, failures or misuse in our implementation or use of AI could result in competitive disadvantages, operational inefficiencies, regulatory action, legal liability, brand or reputational harm, and negative financial results.
In addition, the use of AI in the development of our products could potentially lead to ambiguities in intellectual property ownership, infringement or misappropriation risks, which could impact our competitive position and expose us to litigation, monetary penalties, or operational disruptions.
−Removed: The unauthorized or unapproved use of generative AI tools by our employees, contractors, or other third parties may lead to the inadvertent disclosure of confidential, proprietary, or personal information, exposing us to data security, privacy, and legal risks and reputational harm.
+Added: The unauthorized or unapproved use of generative AI tools by our employees, contractors, or other third parties, as well as overreliance on AI automation or agentic AI without appropriate human oversight, may lead to the inadvertent disclosure of confidential, proprietary, or personal information, flawed or unauthorized actions, or other adverse consequences, including disruptions to business operations, exposing us to data security, privacy, legal, regulatory, and reputational risks.
Misuse of such tools can also result in violations of applicable laws and regulations, including data protection and intellectual property laws.
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As a result, a failure to accurately forecast supply and demand could cause us to over-invest or under-invest in inventory, technology transitions or the expansion of Flash Ventures’ capacity.
−Removed: Over-investment by us or our competitors can result in excess supply and lead to significant decreases in our product prices, significant excess, obsolete inventory or inventory write-downs or underutilization charges, and the potential impairment of our investments in Flash Ventures.
−Removed: For example, in 2023, WDC incurred $296 million in charges for unabsorbed manufacturing overhead costs as a result of reduced utilization of its manufacturing capacity and $108 million in charges to write down our inventory as a result of decreases in market pricing.
+Added: Over-investment by us or our competitors can result in excess supply and lead to significant decreases in
+Added: our product prices, significant excess, obsolete inventory or inventory write-downs or underutilization charges, and the potential impairment of our investments in Flash Ventures.
+Added: For example, in 2023, WDC incurred $296 million in charges for unabsorbed manufacturing overhead costs as a result of reduced utilization of its manufacturing capacity and $108 million in charges to write down its inventory as a result of decreases in market pricing.
In 2025, we incurred $75 million in charges as a result of underutilization of our manufacturing capacity and $24 million in charges to write down our inventory.
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If our supply is limited, we might make strategic decisions with respect to the allocation of our supply among our products and customers, which could result in less favorable gross margins or damage customer relationships.
−Removed: In addition, while Flash Ventures is operating, our agreements with Kioxia contain certain restrictions on our ability to work with third parties to manufacture flash-based memory or to fabricate flash-based memory beyond the capacity specified in the agreements, or to manufacture flash-based memory ourselves except to the extent that we acquire any manufacturing capacity of a Flash Ventures entity as a result of that entity’s dissolution, termination of its joint venture agreements or acquisition by us.
+Added: In addition, while Flash Ventures is operating, our agreements with Kioxia contain certain limitations on our ability to work with third parties to manufacture flash-based memory or to fabricate flash-based memory beyond the capacity specified in the agreements, or to manufacture flash-based memory ourselves except to the extent that we acquire any manufacturing capacity of a Flash Ventures entity as a result of that entity’s dissolution, termination of its joint venture agreements or acquisition by us.
This could also impair our ability to consolidate with other industry participants who manufacture flash-based memory.
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For example, each Flash Ventures entity operates for a defined period of time agreed upon between the joint venture partners.
−Removed: Absent further extensions as mutually agreed between us and Kioxia, Flash Partners Ltd.
−Removed: and Flash Alliance Ltd.
−Removed: are currently set to expire on December 31, 2029, and Flash Forward Ltd.
−Removed: is currently set to expire on December 31, 2034.
+Added: Absent further extensions as mutually agreed between us and Kioxia, Flash Partners Ltd., Flash Alliance Ltd.
+Added: and Flash Forward Ltd.
+Added: are currently set to expire on December 31, 2034.
Each Flash Ventures entity’s joint venture agreements may also earlier terminate upon the occurrence of certain specified events, including earlier dissolution by agreement of the parties or an event of default or bankruptcy.
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Although we and Kioxia have agreed to extend the operating period for each Flash Ventures entity since the start of Flash Ventures, there is a risk that we and Kioxia will be unable to agree on a further extension of one or more of the Flash Ventures entities.
−Removed: Additionally, under the Flash Ventures agreements, we cannot unilaterally direct most of Flash Ventures’ activities, and we have limited ability to source or fabricate flash outside of Flash Ventures.
+Added: Additionally, under the Flash Ventures agreements, we cannot unilaterally direct most of Flash Ventures’ activities, and we have some limitations on our ability to source flash outside of Flash Ventures.
Flash Ventures requires significant investments by both Kioxia and us for technology transitions and capacity expansions, and our business could be harmed if our technology roadmap and investment plans are not sufficiently aligned with Kioxia’s.
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There may exist conflicts of interest between Kioxia’s stakeholders and Flash Ventures or us with respect to, among other things, protecting and growing Flash Ventures’ business, intellectual property and competitively sensitive confidential information.
−Removed: Together with Kioxia, we fund a portion of the investments required for Flash Ventures through lease financings.
−Removed: Continued availability of lease financings for Flash Ventures is not guaranteed and could be limited by several factors, including investor capacity and risk allocation policies, our or Kioxia’s financial performance, changes to our or Kioxia’s business, ownership or corporate structure and the availability of tools and equipment eligible for lease financing.
+Added: Together with Kioxia, we have funded, and may continue to fund, a portion of the investments required for Flash Ventures through lease financings.
+Added: Continued availability of lease financings for Flash Ventures is not guaranteed and could be limited by several factors, including investor capacity and risk allocation policies, our or Kioxia’s financial performance, changes to our or Kioxia’s financing strategy, business, ownership or corporate structure and the availability of tools and equipment eligible for lease financing.
To the extent that lease financings are not accessible on favorable terms or at all, more cash would be required to fund investments.
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• changes in tax or regulatory requirements may necessitate changes to the agreements governing our strategic partnerships.
−Removed: We participate in a highly competitive industry that is often subject to declining average selling prices, volatile demand, rapid technological change and industry consolidation, as well as lengthy product qualifications, all of which can negatively impact our business.
+Added: We participate in a highly competitive industry that has been, and may continue to be, subject to declining average selling prices, volatile demand, rapid technological change and industry consolidation, as well as lengthy product qualifications, all of which can negatively impact our business.
Demand for our devices, software and solutions, which we refer to in this “Risk Factors” section as our “products,” depends in large part on the demand for systems manufactured by our customers and on storage upgrades to existing systems.
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The storage market has in the past experienced, and may continue to experience, periods of excess capacity leading to liquidation of excess inventories, inventory write-downs, underutilization charges, significant reductions in average selling prices and negative impacts on our revenue and gross margins, and volatile product life cycles that harm our ability to recover the cost of product development.
−Removed: Further, our average selling prices and gross margins tend to decline when there is a shift in the mix of product sales to lower priced products.
−Removed: We have faced declining gross margins relating to the Flash Business in the past, and may face potential gross margin pressures in the future, resulting from our average selling prices declining more rapidly than our cost of revenue.
−Removed: Rapid technological changes often reduce the volume and profitability of sales of existing products and increase the risk of inventory obsolescence and write-downs.
−Removed: Finally, the data storage industry has experienced consolidation over the past several years, which could enhance the resources and lower the cost structure of some competitors.
+Added: Further, our average selling prices and gross margins tend to decline when there is a meaningful shift in the mix of product sales to lower priced products.
+Added: We have faced declining gross margins relating to our business in the past, and may face potential gross margin pressures in the future, resulting from our average selling prices declining more rapidly than our cost of revenue.
+Added: Rapid technological changes have reduced, and may reduce in the future, the volume and profitability of sales of existing products and increase the risk of inventory obsolescence and write-downs.
+Added: Finally, the semiconductor memory chip and data storage industries have experienced consolidation over the past several years, which could enhance the resources and lower the cost structure of some competitors.
These factors could result in a substantial decrease in our market share and harm our business.
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We must also qualify our products with customers through potentially lengthy testing processes with uncertain results.
−Removed: Some of our competitors offer products that we do not offer, which may allow them to win sales from us, and some of our customers may be developing storage solutions internally, which may reduce their demand for our products.
+Added: Some of our competitors offer products that we do not offer (including DRAM), which may allow them to win sales from us or to more efficiently maintain product availability, pricing, and margins on products that incorporate DRAM, such as enterprise-grade SSDs.
+Added: Some of our customers may also be developing storage solutions internally, which may reduce their demand for our products or shift their demand to potentially lower-margin component products.
We expect that competition will continue to be intense, and our competitors may be able to gain a product offering or cost structure advantage over us, which would harm our business.
−Removed: Further, our competitors may utilize pricing strategies, including offering products at prices at or below cost, that we may be unable to competitively match.
+Added: Further, our competitors may utilize pricing strategies, including through aggressive expansion of their output capacities, which may allow them to offer products at prices at levels that we may be unable to competitively match.
We may also have difficulty effectively competing with manufacturers benefiting from governmental investments and may be subject to increased complexity and reduced efficiency in our supply chain as a result of governmental efforts to promote domestic semiconductor industries in various jurisdictions.
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The markets for our products continuously undergo technology transitions that may impact our product roadmaps and that we must anticipate in order to adapt our existing products or develop new products effectively.
+Added: Additionally, advances in NAND technology, including higher-capacity and higher-layer architectures, as well as increasing customer requirements for performance, reliability, security, and power efficiency, may increase the complexity of our product development, qualification, manufacturing, and commercialization.
If we fail to adapt to or implement new technologies or develop new products desired by our customers quickly and cost-effectively, or if technology transitions negatively impact our existing product roadmaps, our business may be harmed.
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In addition, if our customers choose to delay transition to new technologies, if demand for the products that we develop is lower than expected or if the supporting technologies to implement these new technologies are not available, we may be unable to achieve the cost structure required to support our profit objectives or may be unable to grow or maintain our market position.
−Removed: Additionally, new technologies could impact demand for our products in unforeseen or unexpected ways and new products could substitute for our current products and make them obsolete, each of which would harm our business.
+Added: Additionally, new technologies could impact demand for our products in unforeseen or unexpected ways that could harm our business.
+Added: For example, new products could substitute for our current products and make them obsolete, or new technologies could reduce the importance of and demand for our technology.
+Added: In particular, demand for our products depends increasingly on the use of NAND flash memory in AI infrastructure, and new or alternative technologies could emerge that perform these functions more efficiently or reduce the storage required per unit of AI compute.
+Added: If adopted at scale, such technologies could rapidly reduce or eliminate the importance of, and demand for, our technology in the AI infrastructure.
We also develop products to meet certain industry and technical standards, which may change and cause us to incur substantial costs as we adapt to new standards or invest in different manufacturing processes to remain competitive.
−Removed: We experience sales seasonality and cyclicality, which could cause our operating results to fluctuate.
−Removed: In addition, accurately forecasting demand has become more difficult, which could harm our business.
−Removed: Sales of many of our products tend to be seasonal and subject to supply-demand cycles.
−Removed: Changes in seasonal and cyclical supply and demand patterns have made it, and could continue to make it, more difficult for us to forecast demand.
−Removed: Changes in the product or channel mix of our business may also impact seasonal and cyclical patterns.
−Removed: For example, we often ship a high percentage of our total quarterly sales in the third month of the quarter, which makes it difficult for us to forecast our financial results before the end of each quarter.
+Added: Our operating results may fluctuate due to changes in demand, industry cycles and the timing of customer deployments, including AI-related data center investments, and our ability to accurately forecast demand as a result of these changing market conditions.
+Added: Sales of certain of our products tend to be seasonal and subject to supply-demand cycles.
+Added: As our business has increasingly shifted toward enterprise and datacenter applications, and as we have entered into multi-year agreements with certain customers that provide greater visibility into future demand, the impact of traditional seasonality and certain supply-demand fluctuations has been reduced.
+Added: Nonetheless, our business remains subject to changes in seasonal and cyclical supply and demand patterns, which have made it, and could continue to make it, more difficult for us to forecast demand.
+Added: Additionally, demand for certain of our products is increasingly influenced by AI-related deployments and our customers’ and partners’ ability to timely build complex data center infrastructure.
+Added: AI as a new demand driver is evolving rapidly, and the expected timing and magnitude of demand related to AI are difficult to predict.
+Added: Delays in data center build-outs could result in excess inventory, underutilization of capacity, or other costs if anticipated demand does not materialize or is not sustained.
As a result of the above or other factors, our forecast of financial results for a given quarter may differ materially from our actual financial results.
The variety and volume of products we manufacture are based in part on accurately forecasting market and customer demand for our products.
−Removed: Accurately forecasting demand has become increasingly difficult for us, our customers and our suppliers due to volatility in global economic conditions, end market dynamics and industry consolidation, resulting in less availability of historical market data for certain product segments.
−Removed: Further, for many of our original equipment manufacturer customers utilizing just-in-time inventory, we do not generally require firm order commitments and instead receive a periodic forecast of requirements, which may prove to be inaccurate.
+Added: While multi-year agreements with certain customers provide increased visibility into future demand and may reduce forecasting uncertainty for portions of our business, our ability, as well as our customers’ and suppliers’ ability, to accurately forecast demand, remains difficult due to volatility in global economic conditions, evolving end market dynamics, customer deployment schedules, and industry consolidation.
+Added: Further, for many of our OEM customers utilizing just-in-time inventory, we do not generally require firm order commitments and instead receive a periodic forecast of requirements, which may prove to be inaccurate.
In addition, because our products are designed to be largely interchangeable with competitors’ products, our demand forecasts may be impacted significantly by the strategic actions of our competitors.
−Removed: As forecasting demand becomes more difficult, the risk that our forecasts are not in line with demand increases.
−Removed: This has caused, and may in the future cause, our forecasts to exceed actual market demand, resulting in periods of product oversupply, excess inventory, underutilization of manufacturing capacity and price decreases, which has impacted and could further impact our sales, average selling prices and gross margin or require us to incur additional inventory write-downs or additional charges for unabsorbed manufacturing overhead, thereby negatively affecting our operating results and our financial condition.
−Removed: For example, in 2023, WDC incurred $296 million in charges for unabsorbed manufacturing overhead costs as a result of reduced utilization of its manufacturing capacity and $108 million in charges to write down its inventory as a result of decreases in market pricing.
−Removed: In 2025, we incurred $75 million in charges as a result of underutilization of our manufacturing capacity and $24 million in charges to write down our inventory.
−Removed: These charges were attributable to a significant imbalance of supply and demand and actions taken in response thereto.
+Added: Inaccurate demand forecasts could result in periods of product oversupply or undersupply, with the consequences described above under the “We rely substantially on strategic relationships with various partners, including Kioxia” and “We participate in a highly competitive industry” risk factors.
If market demand increases significantly beyond our forecasts or beyond our ability to add manufacturing capacity, then we may not be able to satisfy customer product needs, possibly resulting in a loss of market share if our competitors are able to meet customer demands.
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In addition, new legislation or additional regulations may affect or impair our ability to invest with or in certain other countries or require us to obtain regulatory approvals to do so, including investments in joint ventures, minority investments and outbound technology transfers to certain countries.
−Removed: Cost saving measures, restructurings and divestitures may result in workforce reduction and consolidation of our manufacturing or other facilities.
+Added: In March 2026, we made an equity investment in Nanya Technology Corporation (“Nanya”).The value of our investment could be impaired by adverse changes in Nanya’s financial performance, operating results, or market conditions, which could result in losses or impairment charges that adversely affect our results of operations.
+Added: Similarly, increases in the value of our investment could influence our financial results in accordance with GAAP accounting in a manner that is not representative of our core business, and regulatory restrictions on cross-border semiconductor investments, including potential outbound investment screening requirements, could constrain our ability to realize the full value of this investment.
+Added: Cost saving measures, restructurings and divestitures may result in workforce reduction or consolidation of our manufacturing or other facilities.
As a result of these actions, we may experience a loss of continuity, loss of accumulated knowledge, disruptions to our operations and inefficiency during transitional periods.
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Our ability to maintain strong relationships with our principal customers is essential to our future performance.
−Removed: We may experience events such as the loss of a key customer, prohibition or restriction of sales to a key customer by law, regulation or other government action, reductions in sales to or orders by a key customer, customer requirements to reduce our prices before we are able to reduce costs or the acquisition of a key customer by one of our competitors.
+Added: We may experience events such as the loss of a key customer, prohibition or restriction of sales to a key customer by law, regulation or other government action, reductions in sales to or orders by a key customer, reductions in customer demand due to technological changes, or customer requirements to reduce our prices before we are able to reduce costs or the acquisition of a key customer by one of our competitors.
These events may impact our operating results and financial condition.
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To the extent we are not successful in adequately responding to these changes, our operating results and financial condition could be harmed.
−Removed: Sales in the distribution channel and to the retail market are important to our business, and if we fail to respond to demand changes within these markets, or maintain and grow our applicable market share, our business could suffer.
−Removed: Our distribution customers typically sell to small computer manufacturers, dealers, systems integrators and other resellers.
−Removed: We face significant competition in this channel as a result of limited product qualification programs and a significant focus on price and availability of product.
−Removed: As a result of the shift to mobile devices, more computing devices are being delivered to the market as complete systems, which could weaken the distribution market.
−Removed: If we fail to respond to changes in demand in the distribution market, our business could suffer.
−Removed: Additionally, if the distribution market weakens as a result of technology transitions or a significant change in consumer buying preference, or if we experience significant price declines due to demand changes in the distribution channel, our operating results would be negatively impacted.
−Removed: Negative changes in the creditworthiness or the ability to access credit, or the bankruptcy or shutdown of any of our significant retail or distribution partners would harm our revenue and our ability to collect outstanding receivable balances.
−Removed: A significant portion of our sales is also made through retailers.
−Removed: Our success in the retail market depends in large part on our ability to maintain our brand image and corporate reputation and to expand into and gain market acceptance of our products in multiple retail market channels.
−Removed: Particularly in the retail market, negative publicity, whether or not justified, or allegations of product or service quality issues, even if false or unfounded, could damage our reputation and cause our customers to choose products offered by our competitors.
−Removed: Further, changes to the retail environment, such as store closures caused by macroeconomic conditions or changing customer preferences, may reduce the demand for our products.
−Removed: If customers no longer maintain a preference for our product brands or if our retailers are not successful in selling our products, our operating results may be negatively impacted.
+Added: Long-term agreements, which we also refer to as New Business Models or “NBMs”, expose us to certain execution, financial, and market risks, which could be significant.
+Added: We have entered into long-term agreements with certain customers, which we also refer to as New Business Models or “NBMs”, that commit us to deliver, and our customers to purchase, a stated volume of products, mostly over multi-year periods.
+Added: Our ability to fulfill our obligations under these agreements depends on a number of factors, including our manufacturing capacity, production yields, supply chain performance, and the availability of raw materials and other critical inputs.
+Added: If we are unable to deliver products in the quantities, at the times, or meeting the specifications required under these agreements, we may face contractual damages, other financial penalties, or early termination.
+Added: There can be no assurance that we will be able to perform these contractual obligations throughout the contract terms without disruption or shortfall.
+Added: Any failure to perform could harm our customer relationships, damage our reputation, and, in the aggregate, might have a material adverse effect on our results of operations and financial condition.
+Added: If a customer were to breach its purchase obligations, or if we were to breach our obligations and a customer were to terminate or reduce its volume commitments, we may need to find alternative customers for any affected product volumes.
+Added: Depending on market conditions at the time, we may be unable to resell those products at comparable prices, or at all, which could result in reduced revenue, lower margins, excess inventory, or manufacturing underutilization or asset impairment charges.
+Added: Additionally, a customer’s failure to satisfy its contractual purchase commitments may require us to enforce our contractual rights or pursue other remedies, and any resulting disputes, litigation, arbitration, or other proceedings could be costly, time-consuming, and could adversely affect our business or customer relationships.
+Added: Any such disputes, lost sales, reduced pricing, or operational inefficiencies resulting from such contractual breach could have a material adverse effect on our business, results of operations, and financial condition.
+Added: In addition, these long-term agreements may constrain a portion of our available supply and limit our flexibility to respond to changes in market conditions, including shifts in demand, pricing opportunities, or customer requirements.
+Added: As a result, we may be unable to allocate product volumes to other customers or market opportunities that could be more favorable, which could adversely affect our business, results of operations, and financial condition.
+Added: Each agreement includes certain financial guarantees that are intended to protect us if the customer fails to perform its purchase obligations.
+Added: In such event, these financial guarantees are intended to offset a portion of revenue that may be lost due to the customer’s failure to perform its purchase obligations, but they may not fully offset such lost revenue depending on the specific circumstances of such failure to perform, when during the contract term the customer’s failure to perform were to occur and other factors.
FINANCIAL RISKS
−Removed: Our level of debt may negatively impact our liquidity, restrict our operations and ability to respond to business opportunities and increase our vulnerability to adverse economic and industry conditions.
−Removed: In connection with the separation, we incurred debt financing in our capital structure, and in the future, we may incur additional debt.
−Removed: The amount of debt we incur may be substantial and may be on terms less favorable to us than those historically provided to WDC.
−Removed: Our level of debt and the terms governing our existing debt have had and could continue to have significant consequences, which may include, but are not limited to, the following:
−Removed: • limiting our ability to obtain additional financing for working capital, capital expenditures, acquisitions, capital contributions to Flash Ventures or other general corporate purposes;
−Removed: • requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes;
−Removed: • imposing financial and other restrictive covenants on our operations, including minimum liquidity and free cash flow requirements and limitations on our ability to (i) declare or pay dividends or repurchase shares of our common stock; (ii) purchase assets, make investments, complete acquisitions, consolidate or merge with or into, or sell all or substantially all of our assets to, another person; (iii) enter into sale/leaseback transactions or certain transactions with affiliates; (iv) incur additional indebtedness;
−Removed: and (v) incur liens; and
−Removed: • making us more vulnerable to economic downturns and limiting our ability to withstand competitive pressures or take advantage of new opportunities to grow our business.
−Removed: Our ability to meet our debt service obligations, comply with our debt covenants and deleverage will depend on our cash flows and financial performance, which may be affected by financial, business, economic and other factors.
−Removed: The rate at which we are able to or choose to deleverage is uncertain.
−Removed: Failure to meet our debt service obligations or comply with our debt covenants could result in an event of default under the applicable indebtedness.
−Removed: We may be unable to cure, or obtain a waiver of, an event of default or otherwise amend our debt agreements to prevent an event of default thereunder on terms acceptable to us or at all.
−Removed: In that event, the debt holders could accelerate the related debt, which may result in the cross-acceleration or cross-default of other debt, leases or other obligations.
−Removed: If we do not have sufficient funds available to repay indebtedness when due, whether at maturity or by acceleration, we may be required to sell important strategic assets, refinance such debt, incur additional debt or issue common stock or other equity securities, which we may not be able to do on terms acceptable to us, in amounts sufficient to meet our needs or at all.
−Removed: Our inability to service our debt obligations or refinance our debt could harm our business.
−Removed: Further, if we are unable to repay, refinance or restructure any of our indebtedness that is secured, the holder of such debt could proceed against the collateral securing the indebtedness.
−Removed: Refinancing our indebtedness may also require us to expense previous debt issuance costs or to incur new debt issuance costs.
−Removed: Our financing arrangements include debt with interest rates consisting of a variable reference rate plus an applicable margin.
−Removed: For debt incurred under our revolving credit facility, the applicable margin is determined by reference to our consolidated leverage ratio.
−Removed: As a result, rising reference rates or an increase in our consolidated leverage ratio could result in increased interest expense and debt service obligations.
−Removed: In addition, our credit ratings have impacted and could continue to impact the cost and availability of future borrowings and, accordingly, our cost of capital.
−Removed: Our credit ratings will reflect the views of the ratings agencies as to our financial strength, operating performance and ability to meet our debt obligations.
−Removed: There can be no assurance that we will achieve a particular credit rating or maintain a particular credit rating in the future.
−Removed: We also guarantee a significant amount of lease and other financial obligations of Flash Ventures owed to third parties.
+Added: Our guarantees of certain obligations of Flash Ventures could negatively impact our financial position, and the loan agreement governing our revolving credit facility contains various covenants and restrictions that may restrict our operations and ability to respond to future business opportunities.
+Added: We guarantee a significant amount of lease and other financial obligations of Flash Ventures owed to third parties.
In particular, Flash Ventures sells to and leases back a portion of its equipment from a consortium of financial institutions.
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If a resolution is not reached, we may be required to pay all of the outstanding lease obligations covered by our guarantees, which would significantly reduce our cash position and may force us to seek additional financing, which may not be available on terms acceptable to us, if at all.
−Removed: We may from time to time seek to further refinance our indebtedness by issuing additional shares of common stock, preferred stock or other securities that are convertible into common stock or grant the holder the right to purchase common stock, each of which may dilute our existing stockholders, reduce the value of our common stock, or both.
+Added: The loan agreement governing our existing revolving credit facility includes:
+Added: • limitations on our ability to obtain additional financing for working capital, capital expenditures, acquisitions, capital contributions to Flash Ventures or other general corporate purposes; and
+Added: • the imposition of financial and other restrictive covenants on our operations and limitations on our ability to (i) declare or pay dividends or repurchase shares of our common stock; (ii) purchase assets, make investments, complete acquisitions, consolidate or merge with or into, or sell all or substantially all of our assets to, another person; (iii) enter into sale/leaseback transactions or certain transactions with affiliates; (iv) incur additional indebtedness;
+Added: and (v) incur liens.
+Added: Our ability to comply with our debt covenants will depend on our financial performance, which may be affected by financial, business, economic and other factors.
+Added: Debt incurred under our revolving credit facility is subject to an applicable margin that is determined by reference to our consolidated leverage ratio.
+Added: As a result, an increase in our consolidated leverage ratio could result in increased interest expense and debt service obligations in the event that we draw on the revolving credit facility.
Fluctuations in currency exchange rates as a result of our international operations may negatively affect our operating results.
−Removed: Because we manufacture and sell our products abroad, our revenue, cost of revenue, margins, operating costs and cash flows are impacted by fluctuations in foreign currency exchange rates.
−Removed: dollar exhibits sustained weakness against most foreign currencies, the U.S.
+Added: Because we manufacture our products overseas and sell a large portion of our products abroad, fluctuations in foreign currency exchange rates affect our revenue, cost of revenue, margins, operating costs and cash flows.
+Added: dollar experiences sustained weakness against certain foreign currencies, the U.S.
dollar equivalents of unhedged manufacturing costs could increase because a significant portion of our production costs are foreign-currency denominated.
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The effectiveness of this hedging strategy is highly dependent on business, market and global economic conditions.
−Removed: We do not hedge all of our foreign currency exchange rate exposure, and even when used for hedging purposes, foreign exchange contracts do not cover our full exposure, can be canceled by the counterparty if currency controls are put in place and may actually harm our operating results.
+Added: We do not hedge all of our foreign currency exchange rate exposure, and even when used for hedging purposes, foreign exchange contracts can be canceled by the counterparty if currency controls are put in place and may actually harm our operating results.
Further, the ability to enter into foreign exchange contracts with financial institutions is based upon our available credit from such institutions and compliance with covenants and other restrictions.
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Increases in our customers’ credit risk could result in credit losses and term extensions under existing contracts with customers with credit losses could result in an increase in our operating costs.
−Removed: Some of our original equipment manufacturer customers have adopted a subcontractor model that requires us to contract directly with companies, such as original design manufacturers, that provide manufacturing and fulfillment services to our original equipment manufacturer customers.
−Removed: Because these subcontractors are generally not as well capitalized as our direct original equipment manufacturer customers, this subcontractor model exposes us to increased credit risks.
−Removed: Our agreements with our original equipment manufacturer customers may not permit us to increase our product prices to alleviate this increased credit risk.
−Removed: Additionally, as we attempt to expand our original equipment manufacturer and distribution channel sales into emerging economies, the customers with the most success in these regions may have relatively short operating histories, making it more difficult for us to accurately assess the associated credit risks.
+Added: Some of our OEM customers have adopted a subcontractor model that requires us to contract directly with companies, such as original design manufacturers, that provide manufacturing and fulfillment services to our OEM customers.
+Added: Because these subcontractors are generally not as well capitalized as our direct OEM customers, this subcontractor model exposes us to increased credit risks.
+Added: Our agreements with our OEM customers may not permit us to increase our product prices to alleviate this increased credit risk.
+Added: Additionally, as we attempt to expand our OEM and distribution channel sales into emerging economies, the customers with the most success in these regions may have relatively short operating histories, making it more difficult for us to accurately assess the associated credit risks.
Our customers’ credit risk may also be exacerbated by an economic downturn or other adverse global or regional economic conditions.
Any credit losses we may suffer as a result of these increased risks, or as a result of credit losses from any significant customer, especially in situations where there are term extensions under existing contracts with such customers, would increase our operating costs, which may negatively impact our operating results.
+Added: The amount and timing of our share repurchases may fluctuate, and share repurchases may not enhance shareholder value and could affect the price of our common stock and reduce our financial flexibility.
+Added: In April 2026, our Board authorized a share repurchase program of up to $6.0 billion of our common stock, and in August 2026, the Board authorized an additional share repurchase program of up to $14.0 billion of our common stock.
+Added: The Board may continue to authorize further repurchase programs from time to time.
+Added: The authorization does not obligate us to repurchase any particular amount of stock and may be modified, suspended, or terminated at any time.
+Added: The amount and timing of repurchases will depend on a variety of factors, including general market conditions;
+Added: our financial condition and operating results;
+Added: tax regulations impacting share repurchases;
+Added: the share price of our common stock;
+Added: contractual restrictions, such as financial or operating covenants in our debt arrangements;
+Added: our level of cash flow;
+Added: other priorities for use of cash;
+Added: and alternative investment opportunities.
+Added: We cannot guarantee that repurchases under the program will enhance shareholder value.
+Added: Repurchases may be made at prices that exceed future market prices and may not result in efficient use of capital.
+Added: In addition, funds used for share repurchases will reduce the cash available for other purposes, including investments in our business, technology development, capacity expansion, acquisitions, working capital needs, and debt repayment.
+Added: The existence of the repurchase program may create expectations among investors regarding the level, timing, and continuity of repurchases.
+Added: Any reduction, suspension, or discontinuation of repurchases, or any failure to repurchase shares at levels anticipated by investors, could negatively affect the market price of our common stock.
+Added: Repurchase activity may also increase volatility in the trading price of our common stock.
LEGAL AND COMPLIANCE RISKS
−Removed: We are subject to laws, rules and regulations relating to the collection, use, sharing and security of data, including personal data, and our failure to comply with these laws, rules and regulations could subject us to proceedings by governmental entities or others and cause us to incur penalties, significant legal liability or loss of customers, loss of revenue and reputational harm.
−Removed: We are subject to laws, rules and regulations relating to the collection, use, security and privacy of third-party data, including data that relates to or identifies an individual person.
+Added: We are subject to laws, rules and regulations relating to the collection, use, transfer, sharing and security of data, including personal data, and our failure to comply with these laws, rules and regulations could subject us to proceedings by governmental entities or others and cause us to incur penalties, significant legal liability or loss of customers, loss of revenue and reputational harm.
+Added: We are subject to privacy laws, rules and regulations relating to how we collect, use, transfer, and secure third-party data, including data that relates to or identifies an individual person.
We are also subject to the terms of our privacy policies and obligations to third parties related to privacy, data protection and cybersecurity.
In many cases, these requirements apply not only to third-party transactions, but also to transfers of information between us and our subsidiaries, and among us, our subsidiaries and other parties with which we have commercial relations.
−Removed: Our possession and use of third-party data, including personal data and employee data in conducting our business, subjects us to legal and regulatory burdens that require us to notify vendors, customers or employees or other parties with which we have commercial relations of a data security breach and to respond to regulatory inquiries and to enforcement proceedings.
−Removed: Laws and regulations relating to the collection, use, security and privacy of third-party data change over time and new laws and regulations become effective from time to time.
+Added: Our possession and use of third-party personal data, including customer and employee personal data used in conducting our business, subjects us to legal and regulatory burdens that require us to notify vendors, customers, employees, or other parties with which we have commercial relations of a data security breach and to respond to regulatory inquiries and to enforcement proceedings.
+Added: Privacy laws and regulations relating to the collection, use, transfer, and security of third-party personal data change over time and new laws and regulations become effective from time to time.
We are subject to notice and privacy policy requirements, as well as obligations to respond to requests to know and access personal information, correct personal information, delete personal information and say no to the sale of personal information.
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We are or may in the future be subject to state, federal and international legal and regulatory requirements, such as environmental, labor, health and safety, trade and public-company reporting and disclosure regulations, customers’ standards of corporate citizenship and industry and coalition standards, such as those established by the Responsible Business Alliance (“RBA”), and compliance with those regulations and requirements could cause an increase in our operating costs and failure to comply may harm our business.
−Removed: We are subject to, and may become subject to additional, state, federal and international laws and regulations governing our environmental, labor, trade, financial transactions, health and safety practices and public-company reporting and disclosures requirements.
+Added: We are subject to, and may become subject to additional, U.S.
+Added: state and federal, and international laws and regulations governing our environmental, labor, trade, financial transactions, health and safety practices and public-company reporting and disclosures requirements.
These laws and regulations, particularly those applicable to our international operations, are or may be complex, extensive and subject to change.
Implementing compliance with such laws and regulations may result in an increase in our operating costs, and failure to comply with such laws and regulations could also lead to significant liabilities.
−Removed: Legislation has been, and may in the future be, enacted in locations where we manufacture or sell our products, which could impair our ability to conduct business in certain jurisdictions or with certain customers and harm our operating results.
+Added: Legislation has been, and may in the future be, enacted in locations where we manufacture, ship or sell our products, which could impair our ability to conduct business in certain jurisdictions or with certain customers and harm our operating results.
In addition, climate change and financial reform legislation is a significant topic of discussion and has generated and may continue to generate federal, international or other regulatory responses in the near future, which could substantially increase the complexity of our disclosure requirements and our compliance and operating costs.
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In addition, if we or our suppliers, customers or partners were found to be in violation of these laws or noncompliant with these initiatives or standards of conduct, we could be subject to governmental fines, liability to our customers and damage to our reputation and corporate brand, which could cause our financial condition and operating results to suffer.
−Removed: Our aspirations, disclosures and actions related to environmental, social and governance matters expose us to risks that could adversely affect our reputation and performance.
−Removed: In addition to Sandisk’s commitment to operating responsibly, there is demonstrated interest from customers, investors, business partners, associates, and other stakeholders regarding Sandisk’s assessment and management of relevant environmental, social and governance matters.
−Removed: Where matters, or aspects of a matter, are determined to be material, we may announce initiatives and goals to mitigate such risks from time to time, for example, our intentions regarding operational and product energy efficiency and net zero emissions.
−Removed: These statements reflect our current plans and aspirations;
+Added: Our aspirations, disclosures and actions related to sustainability and governance matters expose us to risks that could adversely affect our reputation and performance.
+Added: In addition to Sandisk’s commitment and actions to operate responsibly, there is demonstrated interest from customers, investors, business partners, associates, and other stakeholders regarding Sandisk’s assessment and management of relevant sustainability and governance matters.
+Added: Where matters, or aspects of a matter, are determined to be material, we may announce initiatives and goals to mitigate such risks from time to time, for example, our intentions regarding operational energy use and efficiency as reflected in Sandisk’s commitment to net zero emissions by 2040.
+Added: These goals reflect our current plans and aspirations;
they are not guarantees that we will be able to achieve them.
−Removed: Our ability to achieve any environmental, social and governance objective is subject to numerous factors, including risks, many of which may be outside of our control.
−Removed: These may include availability and cost of clean energy sources, the evolving regulatory and reporting requirements affecting environmental, social and governance practices and disclosures, where and how our products are used and any related implications of their greenhouse gas emissions, and successful execution of our business strategy.
−Removed: Our failure to achieve our goals or accurately track and report on our performance in a timely basis, or in accordance with regulatory requirements, and the potential added costs involved, could adversely affect our reputation; financial performance and growth; our ability to attract or retain talent; and our attractiveness as a business partner or supplier, and could expose us to increased litigation risk, as well as increased scrutiny from the investment community and enforcement authorities.
+Added: Our ability to achieve any sustainability objective is subject to numerous factors, including risks, many of which may be outside of our control.
+Added: These may include availability and cost of clean energy sources, the evolving regulatory and reporting requirements affecting sustainability practices and disclosures, where and how our products are used and any related implications of associated greenhouse gas emissions, and successful execution of our business strategy.
+Added: Our failure to achieve our goals or accurately track and report on our performance in a timely basis, or in accordance with regulatory requirements, and the potential added costs involved, could adversely affect our reputation; financial performance and growth; and our attractiveness as a business partner or supplier, and could expose us to increased litigation risk, as well as increased scrutiny from the investment community and enforcement authorities.
We and certain of our officers may at times be involved in litigation, investigations and governmental proceedings, which may be costly, may divert the efforts of our key personnel and could result in adverse court rulings, fines or penalties, which could materially harm our business.
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With or without merit, such matters may be complex, may extend for a protracted period of time, may be very expensive, and the expense may be unpredictable.
−Removed: Litigation initiated by us could also result in counter-claims against us, which could increase the costs associated with the litigation and result in our payment of damages or other judgments against us.
+Added: Litigation initiated by us could also result in counter-claims against us,
+Added: which could increase the costs associated with the litigation and result in our payment of damages or other judgments against us.
In addition, litigation, investigations or governmental proceedings and any related publicity may divert the efforts and attention of some of our key personnel, affect demand for our products and harm the market prices of our securities.
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We may be engaged in litigation as a result of these indemnification obligations.
−Removed: Third-party claims for patent infringement are excluded from coverage under our insurance policies.
+Added: We do not maintain insurance coverage for third-party patent infringement claims.
A future obligation to indemnify our customers or suppliers may harm our business.
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We have not filed trademark registrations in all jurisdictions where our brands or logos may be used.
−Removed: Future material impairments in the value of our goodwill, intangible assets and other long-lived assets would negatively affect our operating results.
−Removed: We regularly review our goodwill and property, plant and equipment for potential impairment.
−Removed: Goodwill and indefinite-lived intangible assets are subject to impairment reviews on an annual basis, or more frequently if events or changes in circumstances indicate that goodwill may be impaired.
−Removed: We use qualitative factors to determine whether goodwill is more-likely-than-not impaired and whether a quantitative test for impairment is considered necessary.
−Removed: If we conclude from the qualitative assessment that goodwill is more-likely-than-not-impaired, we are required to perform a quantitative analysis to determine the amount of impairment.
−Removed: Subsequent to the completion of the separation, we identified potential impairment indicators related to the trading price of our common stock and a resulting market capitalization that was below its December 27, 2024 net book value.
−Removed: In accordance with Accounting Standards Codification No.
−Removed: 350, Intangibles - Goodwill and Other, we performed a quantitative test, which indicated that the carrying value of our reporting unit exceeded its estimated fair value resulting in the recognition of a $1.8 billion impairment charge as of, and for the nine months ended, March 28, 2025.
−Removed: Further adverse changes to macroeconomic conditions, our operating or financial results, or our estimates of the fair value of our reporting unit could impact the amount of any impairment charges or lead to additional impairment charges.
−Removed: Material impairment charges would negatively affect our results of operations.
RISKS RELATED TO THE SPIN-OFF
−Removed: We may not achieve some or all of the expected benefits of the spin-off, and the spin-off may adversely impact our business.
−Removed: We may not realize any strategic, financial, operational or other benefits from the spin-off.
−Removed: We cannot predict with certainty if or when anticipated benefits will occur or the extent to which they will be achieved.
−Removed: Following the completion of the spin-off, our operational and financial profile has changed and may continue to change, and we face new risks.
−Removed: We are now a smaller and less-diversified company compared to WDC prior to the spin-off and may be more vulnerable to changing market conditions, which could result in greater volatility in our financial results and cash flows.
−Removed: While we believe that the spin-off has positioned each company to better unlock its full standalone long- term potential, we cannot assure you that we will be successful.
−Removed: Further, there can be no assurance that the combined value of our shares and the shares of WDC is or will be equal to or greater than what the value of our common stock would have been had the spin-off not occurred.
−Removed: We or WDC may offer products or engage in businesses that compete with the other company’s products or businesses.
−Removed: Under the separation and distribution agreement between WDC and us, WDC is subject to certain limited noncompetition obligations for a specified period of time after the separation but otherwise will not be restricted in its ability to compete with us.
−Removed: We have incurred and expect to continue to incur ongoing material costs and expenses as a result of the spin-off.
−Removed: We have and will continue to incur costs and expenses as a result of the spin-off.
−Removed: These costs and expenses may arise from various factors, including, without limitation, financial reporting, the continuing development and implementation of our own accounting, legal, treasury, corporate governance, internal audit, investor relations and other compliance and corporate functions, the establishment of our own information technology system (including enterprise resource planning), and costs associated with complying with federal securities laws (including compliance with the Sarbanes- Oxley Act).
−Removed: We have incurred and expect to continue to incur ongoing costs and dis-synergies in connection with, or as a result of, the separation and related restructuring transactions, including costs of operating as independent, publicly traded companies that the two businesses will no longer be able to share.
−Removed: We cannot assure you that these costs will not be material to our business and financial results.
If we are unable to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act, or our internal control over financial reporting is not effective, the reliability of our financial statements may be questioned, and our stock price may suffer.
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securities laws to do a comprehensive evaluation of its and its consolidated subsidiaries’ internal control over financial reporting.
−Removed: Neither we nor our independent registered public accounting firm is required to formally attest to the effectiveness of our internal control over financial reporting until the year following the first annual report required to be filed with the SEC.
−Removed: To comply with this statute, we are required to document and test our internal control procedures, our management is required to assess and issue a report concerning our internal control over financial reporting and our independent registered public accounting firm is required to issue an opinion on our internal control over financial reporting.
+Added: We and our independent registered public accounting firm are required to formally attest to the effectiveness of our internal control over financial reporting for the first time in connection with this annual report on Form 10-K.
+Added: To comply with this statute, we are required to annually document and test our internal control procedures, our management is required to assess and issue a report concerning our internal control over financial reporting and our independent registered public accounting firm is required to issue an opinion on our internal control over financial reporting.
The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation to meet the detailed standards under the rules.
−Removed: During the course of our testing, our management may identify material weaknesses or deficiencies which may not be remedied in time to meet the deadline imposed by the Sarbanes-Oxley Act.
If our management concludes that our internal control over financial reporting is not effective, or we identify material weaknesses in our internal controls, any remedial actions required could divert internal resources and take a significant amount of time and effort to complete, and could result in us incurring additional costs that we did not anticipate, including the hiring of outside consultants.
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Our historical financial information included in this annual report on Form 10-K is derived from the consolidated financial statements of Sandisk and the combined financial statements and accounting records of WDC.
−Removed: Accordingly, the historical financial information included in this annual report on Form 10-K does not necessarily reflect the financial condition, results of operations or cash flows that we would have achieved as a separate, publicly traded company during the periods presented or those that we will achieve in the future primarily as a result of the factors described below:
−Removed: • we may need to make significant investments to replicate or outsource certain systems, infrastructure and functional expertise in the future.
−Removed: These initiatives to develop our independent ability to operate will be costly to implement.
−Removed: We may not be able to operate our business as efficiently or at comparable costs, and our profitability may decline;
−Removed: • how we finance our working capital or other cash requirements may differ from how we financed those requirements as part of pre-spin-off WDC.
−Removed: Our access to and cost of debt financing is different from the historical access to and cost of debt financing under pre-spin-off WDC.
−Removed: Differences in access to and cost of debt financing are likely to result in differences in interest rates charged to us on financings, the amounts of indebtedness, types of financing structures and debt markets that may be available to us, which may have an adverse effect on our business, financial condition, results of operations and cash flows; and
−Removed: • in preparing our financial statements, pre-spin-off WDC made allocations of costs and corporate expenses deemed to be attributable to our business.
+Added: Accordingly, the historical financial information included in this annual report on Form 10-K does not necessarily reflect the financial condition, results of operations or cash flows that we would have achieved as a separate, publicly traded company during the periods presented or those that we will achieve in the future.
+Added: For example, in preparing our financial statements, pre-spin-off WDC made allocations of costs and corporate expenses deemed to be attributable to our business.
However, these costs and expenses reflect the costs and expenses attributable to how our business operated as part of a larger organization and do not necessarily reflect costs and expenses that would be incurred by us had we been operating independently.
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For additional information about the past financial performance of our business and the basis of presentation of the current and historical financial statements, see the sections of this annual report on Form 10-K entitled “Financial Statements and Supplementary Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
−Removed: WDC may fail to perform under various transaction agreements that were executed as part of the spin-off, or we may fail to have necessary systems and services in place when WDC is no longer obligated to provide services under the various agreements.
−Removed: In connection with our spin-off, we entered into certain agreements with WDC, such as the separation and distribution agreement, a transition services agreement, a tax matters agreement, an employee matters agreement, a stockholder’s and registration rights agreement, a transitional trademark license agreement and an intellectual property cross-license agreement, as discussed in greater detail in the section of this annual report on Form 10-K entitled “Related Party Transactions—Separation and Distribution Agreement and Other Related Party Transactions with WDC,” which provide for the performance by each company for the benefit of the other for a period of time after the spin-off.
−Removed: If WDC is unable to satisfy its obligations under these agreements, including its indemnification obligations in favor of us, we could incur operational difficulties or losses.
−Removed: If we do not have in place our own systems and services, and do not have agreements with other providers of these services when the transitional or other agreements terminate, or if we do not implement the new systems or replace WDC’s services successfully, we may not be able to operate our business effectively, which could disrupt our business and have a material adverse effect on our business, financial condition and results of operations.
−Removed: These systems and services may also be more expensive to install, implement and operate, or less efficient than the systems and services WDC provides during the transition period.
−Removed: In connection with our spin-off from WDC, WDC has agreed to indemnify us for certain liabilities.
−Removed: However, there can be no assurance that the indemnity will be sufficient to protect us against the full amount of such liabilities, or that WDC’s ability to satisfy its indemnification obligation will not be impaired in the future.
−Removed: WDC has agreed to indemnify us for certain liabilities as discussed further in the section of this annual report on Form 10-K entitled “Related Party Transactions—Separation and Distribution Agreement and Other Related Party Transactions with WDC.” However, third parties could also seek to hold us responsible for liabilities that WDC has agreed to retain, and there can be no assurance that the indemnity from WDC will be sufficient to protect us against the full amount of such liabilities, or that WDC will be able to fully satisfy its indemnification obligations.
+Added: In connection with our spin-off from WDC, we and WDC have assumed certain indemnification obligations.
+Added: These indemnification obligations may not provide the protection we expect and could result in significant liabilities that could adversely affect our financial results.
+Added: Pursuant to agreements entered into in connection with our separation from WDC, WDC has agreed to indemnify us for certain liabilities, and we have agreed to assume, and indemnify WDC for, certain liabilities, as discussed further in the section of this annual report on Form 10-K entitled “Transactions with Western Digital Corporation—Separation and Distribution Agreement and Other Transactions with WDC.” Third parties could also seek to hold us responsible for liabilities that WDC has agreed to retain, and there can be no assurance that the indemnity from WDC will be sufficient to protect us against the full amount of such liabilities, or that WDC will be able to fully satisfy its indemnification obligations.
In addition, WDC’s insurers may attempt to deny coverage to us for liabilities associated with certain occurrences of indemnified liabilities prior to the spin-off.
−Removed: In connection with our spin-off from WDC, we have agreed to assume, and indemnify WDC for, certain liabilities.
−Removed: If we are required to make payments pursuant to these indemnities to WDC, we would need to meet those obligations and our financial results could be adversely impacted.
−Removed: We have agreed to assume, and indemnify WDC for, certain liabilities as discussed further in the section of this annual report on Form 10-K entitled “Related Party Transactions—Separation and Distribution Agreement and Other Related Party Transactions with WDC.” Payments pursuant to these indemnities may be significant and could adversely impact our business, financial condition, results of operations and cash flows, particularly indemnities relating to our actions that could impact the tax-free nature of the distribution.
+Added: Similarly, if we are required to make payments pursuant to our indemnification obligations to WDC, such payments could be significant and could adversely affect our business, financial condition, results of operations and cash flows, particularly indemnities relating to our actions that could impact the tax-free nature of the distribution.
+Added: As a result, indemnification arrangements related to the spin-off may subject us to substantial liabilities and financial obligations that could materially and adversely affect our business and financial results.
If the distribution of our shares, together with certain related transactions, does not continue to qualify for the Intended Tax Treatment, Sandisk, WDC and WDC stockholders could be subject to significant U.S.
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In addition, under the tax matters agreement, we are required to indemnify WDC against certain tax liabilities as a result of the acquisition of our stock or assets, even if we did not participate in or otherwise facilitate the acquisition.
−Removed: For a discussion of the tax matters agreement, see the section of this annual report on Form 10-K entitled “Related Party Transactions—Separation and Distribution Agreement and Other Related Party Transactions with WDC.”
−Removed: The spin-off and related internal restructuring transactions may expose us to potential liabilities arising out of state and federal fraudulent conveyance laws and legal dividend requirements.
−Removed: The spin-off could be challenged under various state and federal fraudulent conveyance laws.
−Removed: Fraudulent conveyances or transfers are generally defined to include (a) transfers made or obligations incurred with the actual intent to hinder, delay or defraud current or future creditors or (b) transfers made or obligations incurred for less than reasonably equivalent value when the debtor was insolvent, or that rendered the debtor insolvent, inadequately capitalized or unable to pay its debts as they become due.
−Removed: A creditor or an entity acting on behalf of a creditor (including, without limitation, a trustee or debtor-in-possession in a bankruptcy by us or WDC or any of our or its respective subsidiaries) may bring a lawsuit alleging that the spin-off or any of the related transactions constituted a fraudulent conveyance.
−Removed: If a court accepts these allegations, it could impose a number of remedies, including, without limitation, voiding the distribution and returning our assets or shares and subjecting WDC and/or us to liability.
−Removed: The distribution of our common stock was also subject to state corporate distribution statutes.
−Removed: Under applicable Delaware law, including the DGCL, a corporation may only pay a distribution of common stock to its stockholders if certain conditions are met, including that the distribution is made entirely out of surplus.
−Removed: Although WDC made the distribution of our common stock entirely out of surplus and we and WDC obtained solvency opinions from an independent appraisal firm, we and WDC cannot ensure that a court would reach the same conclusion in determining the availability of surplus for the separation and the distribution to WDC’s stockholders.
−Removed: Some of our officers and directors currently hold or previously held positions with WDC and may still hold equity in WDC, which may give rise to actual or potential conflicts of interest.
−Removed: There is an overlap between certain of our directors and directors of WDC.
−Removed: Shared directors may have actual or apparent conflicts of interest with respect to matters involving or affecting each of WDC and Sandisk.
−Removed: For example, there is a potential for a conflict of interest when we on the one hand, and WDC and its respective subsidiaries and successors on the other hand, are party to commercial transactions concerning the same or adjacent investments.
−Removed: In addition, certain of our executive officers and directors, because of their current or former positions with WDC, own shares or equity awards of WDC.
−Removed: Following the spin-off, even though our board of directors currently consists of a majority of directors who are independent, and our executive officers who were employees of WDC prior to the completion of the spin-off ceased to be employees of WDC upon the spin-off, some of our executive officers and directors continue to have financial interests in shares of WDC common stock and equity awards.
−Removed: Specifically, each outstanding WDC equity award held by our employees at the level of vice president and above was converted into both a post-separation WDC award relating to shares of WDC common stock and a Sandisk award relating to shares of our common stock at the time of separation.
−Removed: Continuing ownership of shares of WDC common stock and equity awards could create, or appear to create, potential conflicts of interest if we and WDC pursue the same corporate opportunities or face decisions that could have different implications for us and WDC.
−Removed: These ownership interests could create actual, apparent or potential conflicts of interest when these individuals are faced with decisions that could have different implications for our company and WDC.
−Removed: Some contracts and other assets which needed to be transferred or assigned from WDC or its affiliates to us in connection with our spin-off from WDC required the consent of a third party.
−Removed: If such consent was not given, we may not be entitled to the benefit of such contracts and other assets in the future, which could adversely impact our financial condition and future results of operations.
−Removed: In connection with our spin-off from WDC, a number of contracts and licenses with third parties and other assets were to be transferred or assigned from (x) WDC or its affiliates to us or our subsidiaries or (y) us or our affiliates to WDC or its subsidiaries.
−Removed: However, the transfer or assignment of certain of these contracts, licenses or assets may still require the consent of a third party to such a transfer or assignment.
−Removed: Similarly, in some circumstances, we and another business unit of WDC are joint beneficiaries of contracts, and we or WDC will need to (x) enter into a new agreement with the third party to replicate the existing contract, (y) be assigned and delegated the portion of the existing contract related to the applicable business or (z) use commercially reasonable efforts to provide for an alternative arrangement to obtain the same or reasonably similar benefits and burdens of the applicable portion of the existing contract.
−Removed: It is possible that some parties may use the requirement of a consent or the fact that the spin-off occurred to seek more favorable contractual terms from us, to terminate the contract or license or to otherwise request additional accommodations, commitments or other agreements from us.
−Removed: If we are unable to obtain such consents on commercially reasonable and satisfactory terms or if the contracts are terminated, we may be unable to obtain the benefits, assets and contractual commitments which are intended to be allocated to us as part of our spin-off from WDC.
−Removed: The failure to timely complete the assignment of existing contracts, licenses or assets, or the negotiation of new arrangements, or a termination of any of those arrangements, could have a material adverse impact on our financial condition and future results of operations.
−Removed: To the extent we require a specific arrangement and agree to less favorable terms in connection with obtaining any consent to retain that arrangement, the basis for that arrangement may be less favorable than previously held by us and could adversely impact our financial conditions and future results of operations.
−Removed: In addition, where we do not intend to obtain consent from third-party counterparties based on our belief that no consent was required, the third-party counterparties may challenge the transfer of assets on the basis that the terms of the applicable commercial arrangements required the third-party counterparties’ consent.
−Removed: We may incur substantial litigation and other costs in connection with any such claims and, if we do not prevail, our ability to use these assets could be materially and adversely impacted.
−Removed: We may be unable to implement, on a timely or cost-effective basis, the changes necessary to operate as an independent company.
−Removed: Changes in our personnel and systems in connection with the separation, including the allocation of key employees between us and WDC and the separation of key systems, has and may continue to result in loss of continuity, loss of accumulated knowledge, disruptions to our operations and inefficiency during transitional periods.
−Removed: To operate as an independent company, we rely on WDC to provide certain transitional services for a certain amount of time post-separation, allowing us to benefit from the continuation of certain services and cost efficiencies in sharing certain resources and personnel, including with respect to the functionality and reliability of our information technology systems.
−Removed: During this post-separation transitional period, we continue to execute our transformation strategy, including the establishment of standalone financial, administrative, governance, public company compliance and other similar organizations and systems, to replace services and personnel historically provided to us by WDC.
−Removed: We cannot assure you that we will be able to successfully implement these updates on a timely or cost-effective basis.
−Removed: Failure to effectively implement the post-separation initiatives, integrate new governance structures, implement sufficient internal controls and corporate policies, fully develop standalone teams and align stakeholder expectations may result in operational disruptions, regulatory non-compliance, weakened stakeholder relationships, reputational harm, loss of business opportunities, and our inability to realize anticipated financial and strategic benefits.
−Removed: Additionally, we are in the process of transitioning to a new enterprise resource planning (“ERP”) system.
−Removed: The efforts to transition to an updated ERP system are costly and could introduce new quality and cybersecurity issues into our systems.
−Removed: Our failure to successfully transition to a new information system could harm our ability to meet our reporting obligations.
+Added: For a discussion of the tax matters agreement, see the section of this annual report on Form 10-K entitled “Transactions with Western Digital Corporation—Separation and Distribution Agreement and Other Transactions with WDC.”
+Added: We may be unable to implement, on a timely or cost-effective basis, the systems, internal controls, and governance structures necessary to operate effectively as an independent company.
+Added: In connection with our separation from WDC, we have established, and are continuing to develop and refine, the standalone financial, administrative, governance, public company compliance, information technology, and other organizations, systems, and processes necessary to operate as an independent, publicly traded company.
+Added: Building and maturing these functions is a complex, multi-phase undertaking, and we cannot assure you that we will complete it on a timely or cost-effective basis.
+Added: The changes in our personnel, systems, and processes associated with operating independently have resulted, and may continue to result, in a loss of institutional knowledge, gaps in continuity, disruptions to our operations, and inefficiencies as our standalone organizations and systems mature.
+Added: If we fail to effectively implement these initiatives—including integrating our governance structures, establishing and maintaining sufficient internal controls and corporate policies, fully developing our standalone teams and capabilities, and aligning stakeholder expectations—we may experience operational disruptions, material weaknesses or other deficiencies in our internal control over financial reporting, regulatory non-compliance, weakened stakeholder relationships, reputational harm, loss of business opportunities, and an inability to realize the anticipated benefits of the separation.
+Added: In addition, we are in the process of implementing a new version of an enterprise resource planning (“ERP”) system.
+Added: Implementing a new ERP system is costly and complex, requires significant management attention and resources, and may introduce quality, control, or cybersecurity issues into our systems, particularly during the transition.
+Added: Any disruption in, or failure to successfully implement, our new ERP system or other key information systems could adversely affect our business and operations, impair our internal control over financial reporting, and harm our ability to meet our financial reporting obligations on a timely and accurate basis.
RISKS RELATED TO OUR COMMON STOCK
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The market price of our common stock may fluctuate significantly due to a number of factors, some of which may be beyond our control, including:
−Removed: • our business profile, market capitalization or capital allocation policies may not fit the investment objectives of pre-spin-off WDC stockholders, causing a shift in our investor base and our common stock may not be included in some indices in which WDC common stock is included, causing certain holders to sell their shares;
• our quarterly or annual earnings, or those of other companies in its industry;
−Removed: • the failure of securities analysts to cover our common stock;
• actual or anticipated fluctuations in our operating results;
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Such litigation, if instituted against us, could result in substantial costs and a diversion of management’s attention and resources.
−Removed: In addition, investors may have difficulty accurately valuing our common stock.
−Removed: Investors often value companies based on the stock prices and results of operations of other comparable companies.
−Removed: Investors may find it difficult to find comparable companies and to accurately value our common stock, which may cause the trading price of our common stock to fluctuate.
Provisions of Delaware law, our certificate of incorporation and our bylaws may prevent or delay an acquisition of our company, which could decrease the market price of our common stock.
−Removed: Delaware law, our certificate of incorporation and our bylaws each contain provisions that are intended to deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive to the bidder and to encourage prospective acquirers to negotiate with our board of directors rather than to attempt a hostile takeover.
+Added: Delaware law, our certificate of incorporation and our bylaws each contain provisions that are intended to deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive to the bidder and to encourage prospective acquirers to negotiate with our Board rather than to attempt a hostile takeover.
+Added: These provisions may also prevent or discourage attempts to remove and replace incumbent directors.
These provisions include, among others:
−Removed: • provisions regarding the election of directors, classes of directors, the term of office of directors and the filling of director vacancies;
+Added: • our Board has the sole power to set the number of directors and to fill any vacancies on our Board, whether such vacancy occurs as a result of an increase in the number of directors or otherwise;
• no cumulative voting;
−Removed: • removal of directors either with or without cause, by the affirmative vote of the stockholders then entitled to vote at an election of directors having a majority of the voting power of the Company;
−Removed: • our board of directors has the authority to determine designations and the powers, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, including, without limitation, the dividend rate, conversion rights, redemption price and liquidation preference, of any series of shares of preferred stock, and to fix the number of shares constituting any such series, and to increase or decrease the number of shares of any such series (but not below the number of shares thereof then outstanding);
+Added: • the inability of our stockholders to act by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;
+Added: • our Board has the authority to designate a series of preferred stock, determine its rights and preferences and fix the number of shares constituting any such series;
• advance notice requirements applicable to stockholders for director nominations and actions to be taken at annual meetings; and
−Removed: • our bylaws may be altered, amended or repealed, and new bylaws may be adopted, (i) by our board of directors, by vote of a majority of the number of directors then in office as directors, acting at any duly called and held meeting of our board of directors, or (ii) by our stockholders; provided that notice of such proposed amendment, modification, repeal or adoption is given in the notice of special meeting.
−Removed: To the extent permitted by law, any bylaws made or altered by the stockholders may be altered or repealed by either our board of directors or the stockholders.
−Removed: Public stockholders who might desire to participate in these types of transactions may not have an opportunity to do so, even if the transaction is considered favorable to stockholders.
−Removed: These anti-takeover provisions could substantially impede the ability of public stockholders to benefit from a change in control or a change in our management and board of directors and, as a result, may adversely affect the market price of our common stock and your ability to realize any potential change of control premium.
−Removed: In addition, we are subject to Section 203 of the DGCL.
−Removed: Section 203 of the DGCL protects publicly traded Delaware corporations, such as us following the distribution, from hostile takeovers and from actions following a hostile takeover, by prohibiting some transactions once a potential acquirer has gained a significant holding in the corporation.
−Removed: Subject to certain exceptions, the statute prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless:
−Removed: • prior to such date, the board of directors of such corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;
−Removed: • upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of such corporation outstanding at the time the transaction commenced (excluding for purposes of determining the number of shares outstanding (but not the outstanding voting stock owned by the interested stockholder), those shares owned by (i) persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer); or
−Removed: • on or after such date the business combination is approved by the board of directors of such corporation and authorized at an annual or special meeting of stockholders and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder.
−Removed: For purposes of Section 203 of the DGCL, a “business combination” includes a merger, asset sale or other transaction resulting in a financial benefit to the interested stockholder, with an “interested stockholder” being defined as a person who, together with affiliates and associates, owns (or who is an affiliate or associate of the corporation and did own within three years prior to the date of determination whether the person is an “interested stockholder”) 15% or more of the corporation’s voting stock.
−Removed: A corporation may elect not to be governed by Section 203 of the DGCL.
−Removed: Neither our certificate of incorporation nor our bylaws contains the election not to be governed by Section 203 of the DGCL.
−Removed: Therefore, we are governed by Section 203 of the DGCL.
−Removed: We believe these provisions protect our stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers to negotiate with our board of directors and by providing our board of directors with more time to assess any acquisition proposal.
+Added: • only our Board, the Chair of the Board or our Chief Executive Officer may call special meetings of stockholders, and stockholders do not have the authority to call a special meeting of stockholders.
+Added: These anti-takeover provisions could substantially impede the ability of public stockholders to benefit from a change in control or a change in our management and Board, and public stockholders who might desire to participate in these types of transactions may not have an opportunity to do so, even if the transaction is considered favorable to stockholders, which may adversely affect the market price of our common stock and the ability of stockholders to realize any potential change of control premium.
+Added: In addition, we are subject to Section 203 of the DGCL, which generally prohibits a publicly held Delaware corporation from engaging in a broad range of business combinations with any stockholder who has acquired 15% or more of its outstanding voting stock for a period of three years following the date on which such stockholder became an interested stockholder, unless the business combination or the transaction in which the stockholder became an interested stockholder is approved in a prescribed manner.
+Added: This provision may discourage, delay or prevent a change of control of our Company.
+Added: We believe these provisions protect our stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers to negotiate with our Board and by providing our Board with more time to assess any acquisition proposal.
These provisions are not intended to make us immune from takeovers.
−Removed: However, these provisions will apply even if the offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that our board of directors determines is not in the best interests of us and our stockholders.
−Removed: These provisions may also prevent or discourage attempts to remove and replace incumbent directors.
+Added: However, these provisions will apply even if any offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that our Board determines is not in the best interests of us and our stockholders.
Our certificate of incorporation contains an exclusive forum provision that could limit a stockholder’s ability to bring a claim in a judicial forum that the stockholder believes is favorable for such disputes and may discourage lawsuits against us and any of our directors, officers or other employees.
−Removed: Our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or the federal district court in the State of Delaware if the Court of Chancery does not have subject matter jurisdiction) is the sole and exclusive forum for (i) any derivative action brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our current or former director, officer or other employee or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law or our certificate of incorporation or bylaws or (iv) any action asserting a claim governed by the internal affairs doctrine (the “Delaware Exclusive Forum Provision”).
−Removed: Our certificate of incorporation further provides that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the U.S.
−Removed: shall be, to the fullest extent permitted by law, the exclusive forum for resolving any complaint asserting a cause of action under the Securities Act (the “Federal Forum Provision”).
−Removed: The Delaware Exclusive Forum Provision is intended to apply to claims arising under Delaware state law and would not apply to claims brought pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or any other claim for which the federal courts have exclusive jurisdiction.
−Removed: In addition, the Federal Forum Provision is intended to apply to claims arising under the Securities Act and would not apply to claims brought pursuant to the Exchange Act.
−Removed: The exclusive forum provisions we included in our certificate of incorporation will not relieve us of our duties to comply with the federal securities laws and the rules and regulations thereunder and, accordingly, actions by our stockholders to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder must be brought in federal courts.
−Removed: Our stockholders are not deemed to have waived our compliance with these laws, rules and regulations.
−Removed: The exclusive forum provisions we included in our certificate of incorporation may limit a stockholder’s ability to bring a claim in a judicial forum of its choosing for disputes with the company or its directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees.
+Added: Our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if such court does not have subject matter jurisdiction, the federal district court of the State of Delaware) is the sole and exclusive forum for (i) any derivative action brought on our behalf, (ii) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers or other employees to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or our certificate of incorporation or bylaws or (iv) any action asserting a claim governed by the internal affairs doctrine (the “Delaware Exclusive Forum Provision”).
+Added: Our certificate of incorporation further provides that the federal district courts of the United States shall be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act (the “Federal Forum Provision”).
+Added: These exclusive forum provisions do not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
+Added: The exclusive forum provisions in our certificate of incorporation will not relieve us of our duties to comply with the federal securities laws and the rules and regulations thereunder, and our stockholders are not deemed to have waived our compliance with these laws, rules and regulations.
+Added: These exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum of its choosing for disputes with the Company or its directors, officers or other employees.
In addition, stockholders who do bring a claim in the Court of Chancery of the State of Delaware pursuant to the Delaware Exclusive Forum Provision could face additional litigation costs in pursuing any such claim, particularly if they do not reside in or near Delaware.
The court in the designated forum under our exclusive forum provisions may also reach different judgments or results than would other courts, including courts where a stockholder would otherwise choose to bring the action, and such judgments or results may be more favorable to us than to our stockholders.
−Removed: Further, the enforceability of similar exclusive forum provisions in other companies’ organizational documents has been challenged in legal proceedings, and it is possible that a court could find any of our exclusive forum provisions to be inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings.
−Removed: If a court were to find all or any part of our exclusive forum provisions to be inapplicable or unenforceable in an action, we might incur additional costs associated with resolving such action in other jurisdictions.
+Added: Further, if a court were to find all or any part of our exclusive forum provisions to be inapplicable or unenforceable in an action, we might incur additional costs associated with resolving such action in other jurisdictions.
Tax matters may materially affect our financial position and results of operations.
Changes in tax laws in the United States, the European Union and around the globe have impacted and will continue to impact our effective worldwide tax rate, which may materially affect our financial position and results of operations.
−Removed: Further, the majority of countries in the G20 and Organization for Economic Cooperation and Development Inclusive Framework on Base Erosion and Profit Shifting have agreed to adopt a two-pillar approach to taxation, which includes the implementation of a global corporate minimum tax rate of 15%, which when effective could materially increase our tax obligations in these countries.
−Removed: The leaders of the G7 have agreed to work to eliminate the impact of the Undertaxed Profit Rule (UTPR) and the Income Inclusion Rule (IIR) on U.S.
−Removed: parented companies, which we expect would partially reduce our global tax complexity and exposure, however, the Qualified Domestic Minimum Top-Up Taxes (QDMTT) are not expected to be included in such exemption and mitigation efforts.
+Added: Further, the majority of countries in the G20 and Organization for Economic Cooperation and Development Inclusive Framework on Base Erosion and Profit Shifting have agreed to adopt a two-pillar approach to taxation, which includes the implementation of a global corporate minimum tax rate of 15%, which has become effective in certain jurisdictions and materially increase our tax obligations in these countries.
+Added: On January 5, 2026, the OECD/G20 inclusive framework released a “Side-by-Side” Safe Harbor which exempted U.S.
+Added: parented companies from the Undertaxed Profit Rule (UTPR) and the Income Inclusion Rule (IIR);
+Added: however, the Qualified Domestic Minimum Top-Up Taxes (QDMTT) still remain in effect.
+Added: Additionally, we expect to be subject to Corporate Alternative Minimum Tax (“CAMT”) next year.
+Added: CAMT, which was enacted under the Inflation Reduction Act of 2022, imposes a 15% minimum tax on the adjusted financial statement income.
Due to the large scale of our U.S.
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