Financial Analysis

Debt Loan Agreement Debt consisted of the following: January 2, 2026 June 27, 2025 (in millions) Variable interest rate Term Loan Facility maturing 2032 $ 650 $ 1,900 $1.5B Revolving Credit Facility maturing 2030 Total debt 650 1,900 Unamortized issuance costs 47 51 Subtotal 603 1,849 Less: Current portion of long-term debt 20 20 Long term debt $ 583 $ 1,829 On February 21, 2025 , the Company entered into a Loan Agreement (the Loan Agreement) by and among the Company, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and the other parties party thereto. The Loan Agreement comprises a term loan B facility in the principal amount of $2.0 billion (the Term Loan Facility) and a revolving credit facility in the principal amount of $1.5 billion (the Revolving Credit Facility and together with the Term Loan Facility, the Facilities). The obligations under the Loan Agreement are guaranteed by the Companys wholly-owned subsidiary, Sandisk Technologies, Inc. (SDT), and are required to be guaranteed by any of the Companys future material U.S. wholly-owned subsidiaries, subject to certain exceptions outlined in the Loan Agreement. The obligations under the Loan Agreement are secured by the Companys assets and SDTs assets and are required to be secured by the assets of any of the Companys future material U.S. wholly-owned subsidiaries, subject, in each case, to certain exceptions outlined in the Loan Agreement. The Loan Agreement includes …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

The Companys disaggregated revenue information was as follows: Three Months Ended Six Months Ended January 2, 2026 December 27, 2024 January 2, 2026 December 27, 2024 (in millions) Revenue by end market: Datacenter $ 440 $ 250 $ 709 $ 550 Edge 1,678 1,028 3,065 2,097 Consumer 907 598 1,559 1,112 Total revenue $ 3,025 $ 1,876 $ 5,333 $ 3,759 Revenue by geography: Asia $ 2,063 $ 1,086 $ 3,578 $ 2,236 Americas 513 389 919 832 Europe, Middle East and Africa 449 401 836 691 Total revenue $ 3,025 $ 1,876 $ 5,333 $ 3,759 …

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Fair Value Measurements and Investments Financial Instruments Carried at Fair Value Financial assets and liabilities that are remeasured and reported at fair value at each reporting period are classified and disclosed in one of the following three levels: Level 1. Quoted prices in active markets for identical assets or liabilities. Level 2. Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3. Inputs that are unobservable for the asset or liability and that are significant to the fair value of the assets or liabilities. The following tables present information about the Companys financial instruments that were measured at fair value on a recurring basis for the periods presented and indicate the fair value hierarchy of the valuation techniques utilized to determine such values: January 2, 2026 Level 1 Level 2 Level 3 Total (in millions) Assets: Cash equivalents - Money market funds $ 390 $ $ $ 390 Foreign exchange contracts (included in Other current assets) 3 3 Total assets at fair value $ 390 $ 3 $ $ 393 Liabilities: Foreign exchange contracts (included in Accrued expenses) $ $ 2 $ $ 2 Total liabilities at fair value $ $ 2 $ $ 2 June 27, 2025 Level 1 Level 2 Level 3 Total (in millions) Assets: Ca …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Income Tax Expense H.R.1, more widely known as the One Big Beautiful Bill Act (OBBBA), was signed into law on July 4, 2025. It reversed the requirement for capitalization of U.S. research and development expenditures that came into law under the Tax Cuts and Jobs Act of 2017, but the mandatory requirement of capitalization of foreign research and development expenditures remains. The tax rates for income earned by the Companys foreign subsidiaries are changed under H.R. 1, which applies to the Companys fiscal years 2027 and onwards. Depending on the Companys operating results, these changes can materially impact the Companys effective tax rate and its operating cash flows. During the six months ended January 2, 2026, the Company recorded a $10 million tax benefit in relation to the OBBBAs impact on its 2025 tax provision. On August 16, 2022, the Inflation Reduction Act of 2022 was signed into law, which contained significant changes to laws related to tax, climate, energy, and health care. The tax measures include, among other things, a corporate alternative minimum tax (CAMT) of 15% on corporations with three-year average annual adjusted financial statement income (AFSI) exceeding $1.0 billion. The Company does not expect to be subject to the CAMT of 15% for fiscal year 2026 as its average annual AFSI did not exceed $1.0 billion for the preceding three-year period. On December 20, 2021, the Organization for Economic Co-operation and Development G20 Inclusive Framework on Bas …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Legal ProceedingsIn the normal course of business, the Company is subject to legal proceedings, lawsuits and other claims. Although the ultimate aggregate amount of reasonably possible monetary liability or financial impact with respect to these other matters is subject to many uncertainties, management believes that any monetary liability or financial impact to the Company from these matters, individually and in the aggregate, would not be material to the Companys financial condition, results of operations or cash flows. However, any monetary liability and financial impact to the Company from these matters could differ materially from the Companys expectations …

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Leases and Other Commitments Leases The Company leases certain domestic and international facilities and datacenter space under long-term, non-cancelable operating leases that expire at various dates through fiscal year 2039. In connection with and subsequent to the separation, the Company entered into various sublease agreements with WDC under long-term, non-cancelable operating leases that expire at various dates through fiscal year 2031. These leases include no material variable or contingent lease payments. Operating lease assets and liabilities are recognized based on the present value of the remaining lease payments discounted using the Companys incremental borrowing rate. O perating lease assets also include prepaid lease payments minus any lease incentives. Extension or termination options present in the Companys lease agreements are included in determining the right-of-use asset and lease liability when it is reasonably certain the Company will exercise those options. Lease expense is recognized on a straight-line basis over the lease term. The following table presents right-of-use lease assets and lease liabilities included in the Companys Condensed Consolidated Balance Sheets: January 2, 2026 June 27, 2025 (in millions) Operating lease right-of-use assets (included in other non-current assets) $ 203 $ 214 Operating lease liabilities: Current portion of long-term operating lease liabilities (included in accrued expenses) 24 26 Long-term operating lease liabilities ( …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

Accounting Pronouncements Recently Adopted In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands segment reporting requirements, primarily through enhanced disclosures surrounding significant segment expenses. This ASU expands on existing segment reporting requirements to require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to an entitys CODM, a description of other segment items by reportable segment, and any additional measures of a segments profit or loss used by the CODM when deciding how to allocate resources. The Company adopted the guidance retrospectively in the fourth quarter of fiscal 2025. See Note 9, Segment Reporting, for additional disclosures. Recently Issued Accounting Pronouncements Not Yet Adopted In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU calls for enhanced income tax disclosure requirements surrounding the tabular rate reconciliation and income taxes paid. The Company is currently compiling the information required for these disclosures. These incremental disclosures will be required beginning with the Companys financial statements for the year ending July 3, 2026, with early adoption permitted. The Company expects to provide any required disclosure …

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Geographic Information and Concentrations of Risk Disaggregated Revenue The Companys broad portfolio of technology and products addresses multiple end markets. Datacenter represents a large and growing end market comprised primarily of products for public or private cloud environments and enterprise customers. Through the Edge end market, the Company provides its original equipment manufacturer (OEM) and channel customers a broad array of high-performance flash solutions across personal computer, mobile, gaming, automotive, virtual reality headsets, at-home entertainment, and industrial spaces. The Consumer end market is highlighted by the Companys broad range of retail and other end-user products, which capitalize on the strength of the Companys product brand recognition and vast points of presence around the world. The Companys disaggregated revenue information was as follows: Three Months Ended Six Months Ended January 2, 2026 December 27, 2024 January 2, 2026 December 27, 2024 (in millions) Revenue by end market: Datacenter $ 440 $ 250 $ 709 $ 550 Edge 1,678 1,028 3,065 2,097 Consumer 907 598 1,559 1,112 Total revenue $ 3,025 $ 1,876 $ 5,333 $ 3,759 Revenue by geography: Asia $ 2,063 $ 1,086 $ 3,578 $ 2,236 Americas 513 389 919 832 Europe, Middle East and Africa 449 401 836 691 Total revenue $ 3,025 $ 1,876 $ 5,333 $ 3,759 The Companys top 10 customers accounted fo r 44% and 40% of its net revenue for the three and six months ended January 2, 2026, respectively, and 42% a …

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Segment Reporting The following table presents the revenue, costs of revenue, operating expenses, and operating income of the Companys reportable operating segment under its internal management reporting system, along with a reconciliation to consolidated net income. This presentation aligns with how the CODM evaluates performance and allocates resources. Three Months Ended Six Months Ended January 2, 2026 December 27, 2024 January 2, 2026 December 27, 2024 (in millions) Revenue $ 3,025 $ 1,876 $ 5,333 $ 3,759 Costs of revenue (1) 1,479 1,267 3,096 2,418 Operating expenses (1) 413 376 859 754 Stock-based compensation expenses 58 48 111 89 Employee termination and other 1 3 (2) 5 Business separation costs 9 21 18 41 (Gain) loss on business divestiture (34) 10 (34) Total interest and other expense, net 128 22 180 46 Income tax expense 134 69 146 125 Net income $ 803 $ 104 $ 915 $ 315 (1) For purposes of the management view presented to the CODM, Costs of revenue excludes stock-based compensation and business separation costs, and Operating expenses excludes stock-based compensation, employee termination, and business separation, each of which are presented separately in the table above. …

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Shareholders Equity Prio r to the separation, certain of the Companys employees participated in WDCs stock incentive plans (the WDC Plans), whereby all awards granted under the plans consisted of WDC common stock. The Stock-based compensation expense recognized in the Companys Condensed Consolidated Financial Statements was determined based upon employees who participated in the WDC Plans and exclusively supported the Companys operations, as well as an allocation of WDCs corporate and shared employee stock-based compensation expenses. In connection with the separation, all outstanding RSU and PSU awards held by former employees of WDC and its affiliates, who became Sandisk employees after the separation, were adjusted pursuant to conversion ratios determined in accordance with the terms of the Employee Matters Agreement. Outstanding RSU and PSU awards held by employees in the positions of Vice President and above as of the separation date were converted into RSU or PSU awards of Sandisk shares and RSU awards of WDC shares on a ratio of one-third (1/3) of one share of the Companys common stock for each WDC award held by each such employee. For all other employees, the value of the converted RSU awards was designed to preserve the aggregate intrinsic value of the award immediately after the separation when compared to the aggregate intrinsic value of those awards immediately prior to separation. Pursuant to the Employee Matters Agreement, the converted awards shall generally co …

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Note 16. Subsequent Events On January 29, 2026, the Company and Kioxia Corporation entered into an FAL Second Commitment and Extension Agreement (the FAL Second Extension Agreement) and FPL Second Commitment and Extension Agreement (the FPL Second Extension Agreement, and together with the FAS Second Extension Agreement, collectively, the Extension Agreements), under which the parties thereto extended the term of the Flash Alliance and Flash Partners joint ventures to December 31, 2034. Following the execution of the Extension Agreements, all of the Flash Ventures across the Yokkaichi and Kitakami sites now co-terminate on December 31, 2034. In addition to the Extension Agreements, the Company entered into Agreement to Enhance Collaboration with Kioxia, pursuant to which the Company will pay Kioxia $1.2 billion, with payments made over the years 2026 through 2029, in consideration of Kioxias manufacturing services and the continued availability of supply. …

SubsequentEventsTextBlock · excerpt; the full note is in the filing