EX-99.2

Gross vs. Net Cash, Cash Equivalents & AFS Securities

R&D¹⁰ and Capital Expenditures

Free Cash Flow

R4Q ROIC & R4Q Economic Profit⁸

EX-99.2 3 d916409dex992.htm EX-99.2 EX-99.2

Exhibit 99.2


Amounts in millions, except per share amounts, ASP, percentages	Q4 FY11			Q1 FY12			Q2 FY12			Q3 FY12			Q4 FY12			Q1 FY13			Q2 FY13			Q3 FY13			Q4 FY13			Q1 FY14			Q2 FY14			Q3 FY14			Q4 FY14			Q1 FY15			Q2 FY15			Q3 FY15⁹			Revenue by Channel R4Q Ending Q3 FY15 Revenue by Geography R4Q Ending Q3 FY15
TAM		165.8			176.3			119.1			146.4			156.7			139.1			135.8			135.9			133.3			140.2			142.2			138.1			138.0			147.3			140.8			125.0
HDD Share		32.5	%		32.8	%		23.9	%		30.2	%		45.3	%		44.9	%		43.6	%		44.3	%		44.9	%		44.7	%		44.4	%		43.8	%		45.7	%		44.0	%		43.4	%		43.6	%
Units (HDD)²		53.8			57.8			28.5			44.2			71.0			62.5			59.2			60.2			59.9			62.6			63.1			60.4			63.1			64.7			61.0			54.5
ASP (HDD)	$	44		$	46		$	69		$	68		$	65		$	62		$	62		$	61		$	60		$	58		$	60		$	58		$	56		$	58		$	60		$	61
Revenue	$	2,403		$	2,694		$	1,995		$	3,035		$	4,754		$	4,035		$	3,824		$	3,764		$	3,728		$	3,804		$	3,972		$	3,703		$	3,651		$	3,943		$	3,888		$	3,550
Gross Profit	$	469		$	541		$	648		$	977		$	1,472		$	1,193		$	1,059		$	1,061		$	1,050		$	1,099		$	1,156		$	1,076		$	1,029		$	1,149		$	1,110		$	1,032
Gross Margin		19.5	%		20.1	%		32.5	%		32.2	%		31.0	%		29.6	%		27.7	%		28.2	%		28.2	%		28.9	%		29.1	%		29.1	%		28.2	%		29.1	%		28.5	%		29.1	%
R&D	$	188		$	193		$	191		$	265		$	406		$	396		$	378		$	396		$	402		$	401		$	416		$	418		$	426		$	437		$	426		$	402
SG&A		77			71			85			122			178			179			162			185			180			132			226			201			202			220			164			199
Other		32			18			210			48			80			26			41			63			689			24			36			38			49			23			54			10

Total Operating Expenses	$	297		$	282		$	486		$	435		$	664		$	601		$	581		$	644		$	1,271		$	557		$	678		$	657		$	677		$	680		$	644		$	611
Operating Income (Loss)	$	172		$	259		$	162		$	542		$	808		$	592		$	478		$	417		$	(221	)	$	542		$	478		$	419		$	352		$	469		$	466		$	421
Net Income (Loss)	$	158		$	239		$	145		$	483		$	745		$	519		$	335		$	391		$	(265	)	$	495		$	430		$	375		$	317		$	423		$	438		$	384
EPS	$	0.67		$	1.01		$	0.61		$	1.96		$	2.87		$	2.06		$	1.36		$	1.60		$	(1.12	)	$	2.05		$	1.77		$	1.55		$	1.32		$	1.76		$	1.84		$	1.63
Diluted Shares Outstanding		237			237			237			246			260			252			246			245			236			242			243			242			241			240			238			236
Non-GAAP Results
Gross Profit¹⁰	$	469		$	541		$	648		$	1,077		$	1,511		$	1,231		$	1,097		$	1,099		$	1,085		$	1,135		$	1,196		$	1,115		$	1,078		$	1,188		$	1,187		$	1,069
Gross Margin¹⁰		19.5	%		20.1	%		32.5	%		35.5	%		31.8	%		30.5	%		28.7	%		29.2	%		29.1	%		29.8	%		30.1	%		30.1	%		29.5	%		30.1	%		30.5	%		30.1	%
Operating Expenses ¹⁰	$	262		$	261		$	273		$	383		$	572		$	564		$	529		$	559		$	564		$	574		$	616		$	605		$	598		$	638		$	620		$	591
Net Income	$	193		$	260		$	358		$	619		$	872		$	594		$	513		$	514		$	477		$	514		$	532		$	470		$	445		$	504		$	539		$	441
EPS⁶	$	0.81		$	1.10		$	1.51		$	2.52		$	3.35		$	2.36		$	2.09		$	2.10		$	1.96		$	2.12		$	2.19		$	1.94		$	1.85		$	2.10		$	2.26		$	1.87
Revenue By Channel
OEM		55	%		53	%		59	%		64	%		69	%		63	%		61	%		60	%		66	%		64	%		62	%		62	%		65	%		63	%		63	%		64	%
Distributors		29	%		29	%		25	%		28	%		21	%		24	%		24	%		26	%		23	%		24	%		24	%		25	%		23	%		24	%		23	%		23	%
Retail		16	%		18	%		16	%		8	%		10	%		13	%		15	%		14	%		11	%		12	%		14	%		13	%		12	%		13	%		14	%		13	%
Revenue by Geography
Americas		20	%		19	%		22	%		21	%		27	%		23	%		27	%		27	%		28	%		26	%		25	%		25	%		24	%		27	%		27	%		29	%
EMEA		20	%		22	%		21	%		18	%		18	%		18	%		23	%		22	%		19	%		20	%		23	%		21	%		20	%		21	%		24	%		21	%
Asia/ANZ		60	%		59	%		57	%		61	%		55	%		59	%		50	%		51	%		53	%		54	%		52	%		54	%		56	%		52	%		49	%		50	%
Top 10 Customers Revenue		53	%		49	%		51	%		53	%		53	%		44	%		45	%		45	%		48	%		48	%		42	%		44	%		45	%		45	%		44	%		43	%
Enterprise SSD Revenue	$	—		$	—		$	—		$	11		$	54		$	70		$	89		$	92		$	104		$	106		$	155		$	134		$	113		$	156		$	187		$	224
Non-PC Revenue¹²		35	%		36	%		34	%		31	%		45	%		46	%		51	%		51	%		52	%		53	%		54	%		53	%		54	%		55	%		58	%		60	%
PC Units⁵
Notebook		16.867			19.622			9.814			18.067			32.773			25.887			21.300			21.547			23.989			22.912			22.662			21.814			22.899			23.396			21.178			18.785
Desktop		22.348			21.588			11.391			15.975			21.211			16.819			17.717			18.383			16.185			17.307			16.825			16.635			16.182			16.320			15.375			13.523
Non-PC Units
Consumer Electronics⁴		6.459			7.188			2.352			3.643			4.155			8.019			6.452			6.517			6.544			8.474			8.794			8.573			10.906			10.485			9.295			8.610
Branded		5.672			7.060			3.191			2.926			4.986			5.767			7.139			6.517			5.281			6.146			7.018			6.272			6.012			6.780			7.156			6.090
Enterprise		2.463			2.369			1.724			3.616			7.913			5.988			6.633			7.211			7.897			7.771			7.783			7.129			7.098			7.763			8.041			7.519

Total HDD		53.809			57.827			28.472			44.227			71.038			62.480			59.241			60.175			59.896			62.610			63.082			60.423			63.097			64.744			61.045			54.527
Average GB Shipped		608			634			578			581			668			708			804			805			797			811			874			888			875			1,002			1,087			1,123
EB Shipped		32.7			36.7			16.5			25.7			47.4			44.3			47.6			48.4			47.7			50.8			55.1			53.6			55.2			64.9			66.4			61.3
R4Q EB Shipped		117.8			128.5			114.6			111.5			126.3			133.9			165.1			187.8			188.0			194.5			202.0			207.2			214.7			228.8			240.1			247.8


Volume and HDD Share²	Revenue and Non-GAAP Gross Margin¹⁰	Non-GAAP EPS Analysis

Note: Refer to “Non-GAAP Financial Measures” for information about non-GAAP financial measures included in this quarterly fact sheet.


Balance sheet, cash flows, earnings, dividends and share repurchase amounts in millions	Q4 FY11			Q1 FY12			Q2 FY12			Q3 FY12			Q4 FY12			Q1 FY13			Q2 FY13			Q3 FY13			Q4 FY13			Q1 FY14			Q2 FY14			Q3 FY14			Q4 FY14			Q1 FY15			Q2 FY15			Q3 FY15			Business Model (Non-GAAP) Gross Margin* 27%-32% Operating Expense* 10%-12% Operating Income* 15%-22% Tax 7%-10% of Income Before Tax Capital Expenditures* 5%-7% Conversion Cycle 4-8 Days *Percent of Revenue
Cash and Cash Equivalents	$	3,490		$	3,675		$	3,924		$	3,377		$	3,208		$	3,537		$	3,816		$	4,060		$	4,309		$	4,869		$	4,655		$	4,569		$	4,804		$	5,159		$	4,902		$	4,812
Available-for-Sale (AFS) Securities		—			—			—			—			—			—			—			—			—			—			—			470			499			454			465			523
Debt		(294	)		(263	)		(231	)		(2,743	)		(2,185	)		(2,128	)		(2,128	)		(2,013	)		(1,955	)		(2,398	)		(2,340	)		(2,469	)		(2,438	)		(2,406	)		(2,375	)		(2,344	)

Net Cash, Cash Equivalents & AFS Securities	$	3,196		$	3,412		$	3,693		$	634		$	1,023		$	1,409		$	1,688		$	2,047		$	2,354		$	2,471		$	2,315		$	2,570		$	2,865		$	3,207		$	2,992		$	2,991
Cash Flow From Operations	$	447		$	352		$	378		$	1,208		$	1,128		$	936		$	772		$	727		$	684		$	680		$	727		$	697		$	713		$	827		$	243		$	684
Free Cash Flow	$	294		$	218		$	258		$	1,069		$	804		$	554		$	526		$	539		$	548		$	544		$	557		$	536		$	552		$	667		$	97		$	534
Capital Expenditures	$	153		$	134		$	120		$	139		$	324		$	382		$	246		$	188		$	136		$	136		$	170		$	161		$	161		$	160		$	146		$	150
Depreciation and Amortization	$	150		$	158		$	140		$	188		$	339		$	313		$	309		$	309		$	302		$	312		$	317		$	307		$	308		$	289		$	290		$	285
EBITDA	$	322		$	417		$	302		$	730		$	1,147		$	905		$	787		$	726		$	81		$	854		$	795		$	726		$	660		$	758		$	756		$	706
Accounts Receivable, Net	$	1,206		$	1,356		$	747		$	2,377		$	2,364		$	1,951		$	1,732		$	1,700		$	1,793		$	1,791		$	1,959		$	1,802		$	1,989		$	1,915		$	1,880		$	1,696
Inventory
Raw Materials	$	172		$	170		$	191		$	329		$	245		$	237		$	193		$	191		$	167		$	208		$	201		$	204		$	168		$	178		$	154		$	173
Work in Process		263			275			185			667			552			559			581			583			575			579			581			519			493			509			510			498
Finished Goods		142			200			90			286			413			508			430			423			446			457			511			554			565			585			618			651

Total Inventory	$	577		$	645		$	466		$	1,282		$	1,210		$	1,304		$	1,204		$	1,197		$	1,188		$	1,244		$	1,293		$	1,277		$	1,226		$	1,272		$	1,282		$	1,322
Property, Plant and Equipment, Net	$	2,224		$	2,209		$	2,091		$	4,171		$	4,067		$	4,027		$	3,938		$	3,803		$	3,700		$	3,638		$	3,509		$	3,406		$	3,293		$	3,202		$	3,099		$	3,051
Accounts Payable	$	1,545		$	1,708		$	883		$	2,774		$	2,773		$	2,545		$	2,185		$	2,037		$	1,990		$	2,061		$	2,106		$	1,902		$	1,971		$	2,016		$	2,071		$	2,020
Days Sales Outstanding¹¹		46			46			34			71			45			44			41			41			44			43			45			44			50			48			44			44
Days Inventory Outstanding¹¹		27			27			31			57			34			42			40			40			40			42			42			44			42			45			42			48
Days Payables Outstanding¹¹		73			72			60			123			77			82			72			69			67			69			68			65			68			71			68			73
Cash Conversion Cycle¹¹		—			1			5			5			2			4			9			12			17			16			19			23			24			22			18			19
Inventory Turns¹¹		13			13			12			6			11			9			9			9			9			9			9			8			9			8			9			8
Dividends Paid	$	—		$	—		$	—		$	—		$	—		$	—		$	121		$	—		$	60		$	59		$	59		$	71		$	70		$	94		$	94		$	93
Shares Repurchased		—			—			—			—			16.4			5.2			4.2			5.2			4.4			2.3			2.0			2.8			3.2			2.2			3.2			2.2
Shares Repurchased	$	—		$	—		$	—		$	—		$	604		$	218		$	146		$	243		$	235		$	150		$	150		$	244		$	272		$	223		$	309		$	240
Remaining Amount Authorized	$	416		$	416		$	416		$	416		$	1,312		$	2,594		$	2,448		$	2,205		$	1,970		$	1,820		$	1,670		$	1,426		$	1,154		$	931		$	622		$	2,382
R4Q Economic Profit⁸	$	92		$	113		$	15		$	(83	)	$	542		$	801		$	976		$	884		$	(59	)	$	(176	)	$	(109	)	$	(158	)	$	415		$	332		$	328		$	320
R4Q ROIC⁸		13.2	%		13.6	%		11.9	%		14.8	%		20.4	%		21.3	%		21.0	%		20.0	%		10.1	%		9.7	%		10.5	%		10.2	%		15.1	%		14.2	%		14.1	%		14.1	%
R4Q ROA⁸		9.2	%		9.5	%		8.5	%		10.5	%		14.3	%		14.9	%		14.7	%		14.2	%		7.0	%		6.7	%		7.2	%		7.0	%		10.6	%		10.0	%		10.1	%		10.2	%
Worldwide Headcount³		65,431			67,799			67,121			106,604			103,111			96,002			93,820			87,565			85,777			87,586			87,976			84,556			84,072			83,277			83,993			80,767

Note: Refer to “Non-GAAP Financial Measures” for information about non-GAAP financial measures included in this quarterly fact sheet.

Non-GAAP Financial Measures

Free Cash Flow: Free cash flow is a non-GAAP financial measure defined as cash flows from operations less capital expenditures. We consider free cash flow to be useful as an indicator of our overall liquidity, as the amount of free cash flow generated in any period is representative of cash that is available for strategic opportunities including, among others, investing in the Company’s business, making strategic acquisitions, strengthening the balance sheet, repaying debt, paying dividends and repurchasing stock. We also believe that free cash flow is one of several benchmarks used by investors for comparison of our liquidity with other companies in our industry, although our measure of free cash flow may not be directly comparable to similar measures reported by other companies. Free cash flow should not be construed as an alternative to cash flows from operations or other cash flow measurements determined in accordance with GAAP.

EBITDA: EBITDA is a non-GAAP financial measure defined as net income before interest, income tax expense, depreciation and amortization. We include information concerning EBITDA because we believe it is a useful measure to evaluate our operating performance. As a measure of our operating performance, we believe EBITDA provides a measure of operating results unaffected by differences in capital structures, capital investment cycles and ages of related assets among otherwise comparable companies. While EBITDA is a relevant and widely used measure of operating performance, it does not represent net income as defined by GAAP and it should not be considered as an alternative to that measure in evaluating operating performance.

Non-GAAP Gross Margin and Non-GAAP Gross Profit: Non-GAAP gross margin is a non-GAAP measure defined as non-GAAP gross profit divided by revenue. Non-GAAP gross profit is a non-GAAP measure defined as gross profit before any charges to cost of goods sold that are unusual, non-recurring, or may not be indicative of ongoing operations. Because we believe some charges may not be indicative of ongoing operations, we believe that non-GAAP gross profit is a useful measure to investors as an alternative method for measuring our operating performance and comparing it against prior periods’ performance.

Non-GAAP Operating Expenses: Non-GAAP operating expenses is a non-GAAP measure defined as operating expenses before any charges that are unusual, non-recurring, or may not be indicative of ongoing operations. Because we believe some charges may not be indicative of ongoing operations, we believe that non-GAAP operating expenses is a useful measure to investors as an alternative method for measuring our expense management and comparing it against prior periods’ performance.

Non-GAAP Net Income and Non-GAAP EPS: Non-GAAP net income and non-GAAP EPS are non-GAAP measures defined as net income and EPS, respectively, before any charges that are unusual, non-recurring, or may not be indicative of ongoing operations, or any tax impact related to those charges. Because we believe some charges may not be indicative of ongoing operations, we believe that non-GAAP net income and non-GAAP EPS are useful measures to investors as an alternative method for measuring our earnings performance and comparing it against prior periods’ performance.


In millions, except gross margin and per share amounts	Q4 FY11			Q1 FY12			Q2 FY12			Q3 FY12			Q4 FY12			Q1 FY13			Q2 FY13			Q3 FY13			Q4 FY13			Q1 FY14			Q2 FY14			Q3 FY14			Q4 FY14			Q1 FY15			Q2 FY15			Q3 FY15
Reconciliation of Cash Flows from Operations to Free Cash Flow
Cash Flows from Operations	$	447		$	352		$	378		$	1,208		$	1,128		$	936		$	772		$	727		$	684		$	680		$	727		$	697		$	713		$	827		$	243		$	684
Capital Expenditures		(153	)		(134	)		(120	)		(139	)		(324	)		(382	)		(246	)		(188	)		(136	)		(136	)		(170	)		(161	)		(161	)		(160	)		(146	)		(150	)

Free Cash Flow	$	294		$	218		$	258		$	1,069		$	804		$	554		$	526		$	539		$	548		$	544		$	557		$	536		$	552		$	667		$	97		$	534
Reconciliation of Net Income to EBITDA
Net Income (Loss)	$	158		$	239		$	145		$	483		$	745		$	519		$	335		$	391		$	(265	)	$	495		$	430		$	375		$	317		$	423		$	438		$	384
Interest		2			1			2			4			7			14			10			11			9			10			11			13			5			9			8			9
Income Tax Expense		12			19			15			55			56			59			133			15			35			37			37			31			30			37			20			28
Depreciation and Amortization		150			158			140			188			339			313			309			309			302			312			317			307			308			289			290			285

EBITDA	$	322		$	417		$	302		$	730		$	1,147		$	905		$	787		$	726		$	81		$	854		$	795		$	726		$	660		$	758		$	756		$	706
Reconciliation of Gross Margin to Non-GAAP Gross Margin & Gross Profit to Non-GAAP Gross Profit
Gross Profit¹⁰	$	469		$	541		$	648		$	977		$	1,472		$	1,193		$	1,059		$	1,061		$	1,050		$	1,099		$	1,156		$	1,076		$	1,029		$	1,149		$	1,110		$	1,032
Acquisition-Related Fair Value Adjustments		—			—			—			91			—			—			—			—			—			—			—			—			—			—			—			—
Other		—			—			—			—			—			—			—			—			—			—			—			—			10			—			39			—
Amortization of Intangibles		—			—			—			9			39			38			38			38			35			36			40			39			39			39			38			37

Non-GAAP Gross Profit¹⁰	$	469		$	541		$	648		$	1,077		$	1,511		$	1,231		$	1,097		$	1,099		$	1,085		$	1,135		$	1,196		$	1,115		$	1,078		$	1,188		$	1,187		$	1,069
Revenue	$	2,403		$	2,694		$	1,995		$	3,035		$	4,754		$	4,035		$	3,824		$	3,764		$	3,728		$	3,804		$	3,972		$	3,703		$	3,651		$	3,943		$	3,888		$	3,550
Gross Margin¹⁰		19.5	%		20.1	%		32.5	%		32.2	%		31.0	%		29.6	%		27.7	%		28.2	%		28.2	%		28.9	%		29.1	%		29.1	%		28.2	%		29.1	%		28.5	%		29.1	%
Non-GAAP Gross Margin¹⁰		19.5	%		20.1	%		32.5	%		35.5	%		31.8	%		30.5	%		28.7	%		29.2	%		29.1	%		29.8	%		30.1	%		30.1	%		29.5	%		30.1	%		30.5	%		30.1	%
Reconciliation of Operating Expenses to Non-GAAP Operating Expenses
Total Operating Expenses	$	297		$	282		$	486		$	435		$	664		$	601		$	581		$	644		$	1,271		$	557		$	678		$	657		$	677		$	680		$	644		$	611
Less:
Acquisition-Related Expense		(10	)		(14	)		(14	)		(34	)		—			—			—			—			(7	)		(13	)		—			—			—			—			—			(3	)
Litigation		(25	)		(7	)		—			—			—			—			—			—			(681	)		(13	)		(25	)		(13	)		(13	)		(26	)		(1	)		—
Charges and Insurance Recoveries Related to Flooding, Net		—			—			(199	)		(15	)		—			—			—			—			—			65			—			—			—			—			37			—
Amortization of Intangibles		—			—			—			(3	)		(12	)		(11	)		(11	)		(11	)		(11	)		(11	)		(11	)		(11	)		(8	)		(7	)		(7	)		(7	)
Restructuring and other		—			—			—			—			(80	)		(26	)		(41	)		(74	)		(8	)		(11	)		(26	)		(28	)		(58	)		(9	)		(53	)		(10	)

Non-GAAP Operating Expenses		262			261			273			383			572			564			529			559			564			574			616			605			598			638			620			591
Reconciliation of Net Income (Loss) to Non-GAAP Net Income
Net Income (Loss)	$	158		$	239		$	145		$	483		$	745		$	519		$	335		$	391		$	(265	)	$	495		$	430		$	375		$	317		$	423		$	438		$	384
Acquisition-Related Expense		10			14			14			34			—			—			—			—			7			13			—			—			—			—			—			3
Litigation		25			7			—			—			—			—			—			—			681			13			25			13			13			26			23			—
Charges and Insurance Recoveries Related to Flooding, Net		—			—			199			15			—			—			—			—			—			(65	)		—			—			—			—			(37	)		—
Acquisition-Related Fair Value Adjustments		—			—			—			91			—			—			—			—			—			—			—			—			—			—			—			—
Amortization of Intangibles		—			—			—			12			51			49			49			49			46			47			51			50			47			46			45			44
Restructuring and other		—			—			—			—			80			26			41			74			8			11			26			28			68			9			70			10
Write-off of debt issuance costs		—			—			—			—			—			—			—			—			—			—			—			4			—			—			—			—
Tax Impact		—			—			—			(16	)		(4	)		—			88			—			—			—			—			—			—			—			—			—

Non-GAAP Net Income	$	193		$	260		$	358		$	619		$	872		$	594		$	513		$	514		$	477		$	514		$	532		$	470		$	445		$	504		$	539		$	441
EPS	$	0.67		$	1.01		$	0.61		$	1.96		$	2.87		$	2.06		$	1.36		$	1.60		$	(1.12	)	$	2.05		$	1.77		$	1.55		$	1.32		$	1.76		$	1.84		$	1.63
Non-GAAP EPS	$	0.81		$	1.10		$	1.51		$	2.52		$	3.35		$	2.36		$	2.09		$	2.10		$	1.96		$	2.12		$	2.19		$	1.94		$	1.85		$	2.10		$	2.26		$	1.87
Diluted Shares Outstanding		237			237			237			246			260			252			246			245			236			242			243			242			241			240			238			236
Non-GAAP Diluted Shares Outstanding⁶		237			237			237			246			260			252			246			245			243			242			243			242			241			240			238			236

Non-GAAP Financial Measures

Economic Profit: Economic profit (EP) is a non-GAAP financial measure defined as net operating profit after taxes less the value of invested capital multiplied by the weighted average cost of capital, where net operating profit after taxes is defined as income from operations minus tax expense and invested capital is defined as the sum of current debt, long-term debt and equity. Management uses EP to evaluate business performance and allocate resources, and it is a component in determining management’s incentive compensation. Management believes EP provides additional perspective to investors about financial returns generated by the business and represents profit generated over and above the cost of capital used by the business to generate that profit.


In millions	Q2 FY10			Q3 FY10			Q4 FY10			Q1 FY11			Q2 FY11			Q3 FY11			Q4 FY11			Q1 FY12			Q2 FY12			Q3 FY12			Q4 FY12			Q1 FY13			Q2 FY13			Q3 FY13			Q4 FY13			Q1 FY14			Q2 FY14			Q3 FY14			Q4 FY14			Q1 FY15			Q2 FY15			Q3 FY15
Reconciliation of Operating Income (Loss) to R4Q Economic Profit
Operating Income (Loss)	$	473		$	441		$	293		$	211		$	240		$	158		$	172		$	259		$	162		$	542		$	808		$	592		$	478		$	417		$	(221	)	$	542		$	478		$	419		$	352		$	469		$	466		$	421
Income Tax Provision		(42	)		(40	)		(27	)		(14	)		(14	)		(13	)		(12	)		(19	)		(15	)		(55	)		(56	)		(59	)		(133	)		(15	)		(35	)		(37	)		(37	)		(31	)		(30	)		(37	)		(20	)		(28	)

Net Operating Profit After Taxes		431			401			266			197			226			145			160			240			147			487			752			533			345			402			(256	)		505			441			388			322			432			446			393
R4Q Net Operating Profit After Taxes		972			1,320			1,388			1,295			1,090			834			728			771			692			1,034			1,626			1,919			2,117			2,032			1,024			996			1,092			1,078			1,656			1,583			1,588			1,593
Invested Capital x WACC		(488	)		(534	)		(562	)		(581	)		(606	)		(621	)		(636	)		(658	)		(677	)		(1,117	)		(1,084	)		(1,118	)		(1,141	)		(1,148	)		(1,083	)		(1,172	)		(1,201	)		(1,236	)		(1,241	)		(1,251	)		(1,260	)		(1,273	)

R4Q Economic Profit	$	484		$	786		$	826		$	714		$	484		$	213		$	92		$	113		$	15		$	(83	)	$	542		$	801		$	976		$	884		$	(59	)	$	(176	)	$	(109	)	$	(158	)	$	415		$	332		$	328		$	320

Formulas

Share = Units (HDD) / TAM

ASP = Revenue / Units (HDD)

Free Cash Flow = Cash Flow from Operations – Capital Expenditures

EBITDA = Net Income (Loss) + Interest + Income Tax Expense + Depreciation and Amortization

Days Sales Outstanding (DSO) = Accounts Receivable / (Revenue / 91 days)

Days Inventory Outstanding (DIO) = Inventory / (Cost of Revenue / 91 days)

Days Payables Outstanding (DPO) = Accounts Payable / (Cost of Revenue / 91 days)

Cash Conversion Cycle = DSO + DIO – DPO

Inventory Turns = 364 days / DIO

R4Q Economic Profit = R4Q Net Operating Profit After Taxes – (Invested Capital x WACC)

•

Invested Capital = Short-term debt + Current portion of long-term debt + Long-term debt + Total shareholders’ equity

•

WACC⁷ = 11%

R4Q ROIC = R4Q (Net Income (Loss) + Interest Expense) / R4Q Average (Short-term debt + Current portion of long-term debt + Long-term debt + Total shareholders’ equity)

R4Q ROA = R4Q Net Income (Loss) / R4Q Average Total Assets

Footnotes

1.	ASP, Revenue by Channel and Revenue by Geography exclude external sales of media/substrates.

2.	Unit volume excludes WD TV Media Players without hard drives, WD Livewire, SSD and media.

3.	Worldwide Headcount excludes temporary and contracted employees.

4.	Consumer Electronics includes gaming.

5.	PC includes shipments to distributors, second/third tier external HDD manufacturers, and white box manufacturers.

6.	Q4 FY13 non-GAAP EPS is calculated using the same number of shares used for Q4 FY13 GAAP EPS plus 7 million dilutive shares. Dilutive shares are not included in the Q4 FY13 GAAP EPS calculation as Q4 FY13 resulted in a net loss.

7.	WACC of 11% is an internal assumption.

8.	Q2 FY12 includes charges related to the flooding. Q4 FY13 includes charges related to the arbitration award.

9.	TAM is preliminary and based on internal information.

10.

Certain FY14 prior quarter amounts have been reclassified from gross profit, R&D and SG&A to the other charges line within operating expenses to conform to the annual presentation of FY14 in Part II, Item 8, Note 18 in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K.

11.	Q1 FY15 cash conversion cycle calculated using 98 days due to a 14 week quarter. Q1 FY15 inventory turns calculated using 371 days due to a 53 week year.

12.	Non-PC revenue percentage includes consumer electronics, enterprise applications, branded products, and SSD.