8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 27, 2015

Western Digital Corporation

(Exact Name of Registrant as Specified in its Charter)

Delaware	001-08703	33-0956711
(State or Other Jurisdiction of Incorporation or Organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

3355 Michelson Drive, Suite 100 Irvine, California	92612
(Address of Principal Executive Offices)	(Zip Code)

(949) 672-7000

(Registrant’s Telephone Number, Including Area Code)

Not applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 240.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On January 27, 2015, Western Digital Corporation (“Western Digital”) announced financial results for the second fiscal quarter ended January 2, 2015. A copy of the press release making this announcement is attached hereto as Exhibit 99.1 and is incorporated herein by reference. A copy of Western Digital’s Quarterly Fact Sheet for the second fiscal quarter ended January 2, 2015 is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

In accordance with General Instruction B.2 of Form 8-K, the information in this Item 2.02, including Exhibit 99.1 and Exhibit 99.2, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

99.1	Press Release issued by Western Digital Corporation on January 27, 2015 announcing financial results for the second fiscal quarter ended January 2, 2015.
99.2	Second Quarter Fiscal Year 2015 Western Digital Corporation Quarterly Fact Sheet.

2

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

			Western Digital Corporation
			(Registrant)
		By:	/s/ Michael C. Ray
Date:	January 27, 2015		Michael C. Ray
			Senior Vice President, General Counsel and Secretary

EX-99.1

Exhibit 99.1

Company contacts:

Bob Blair

Western Digital Investor Relations

949.672.7834

robert.blair@wdc.com

Steve Shattuck

Western Digital Public Relations

949.672.7817

steve.shattuck@wdc.com

FOR IMMEDIATE RELEASE:

WESTERN DIGITAL ANNOUNCES FINANCIAL RESULTS FOR

SECOND QUARTER FISCAL 2015

IRVINE, Calif. — Jan. 27, 2015 — Western Digital^® Corp. (NASDAQ: WDC) today reported revenue of $3.9 billion and net income of $460 million, or $1.93 per share, for its second fiscal quarter ended Jan. 2, 2015. On a non-GAAP basis, net income was $539 million or $2.26 per share. In the year-ago quarter, the company reported revenue of $4.0 billion and net income of $430 million, or $1.77 per share. Non-GAAP net income in the year-ago quarter was $532 million, or $2.19 per share.

The company generated $243 million in cash from operations during the December quarter, net of the Seagate arbitration award payment of $773 million, ending with total cash and cash equivalents of $4.9 billion. During the December quarter, the company utilized $309 million to repurchase 3.2 million shares of common stock. On Nov. 4, the company declared a $0.40 per common-share dividend, which was paid on Jan. 15.

“We delivered strong financial results in the December quarter, with better-than-anticipated revenues, gross margins, and earnings,” said Steve Milligan, president and chief executive officer. “The diversified nature of our business and solid execution by our HGST and WD^® subsidiaries are enabling us to consistently deliver strong financial performance. Also, I am encouraged by the market’s response to our strategic growth initiatives, which we believe position the company to thrive in the evolving data storage ecosystem.”

Western Digital Announces Financial Results For Second Quarter Fiscal 2015

Page 2

The investment community conference call to discuss these results will be broadcast live over the Internet today at the revised time of 3PM Pacific/6PM Eastern. The live and archived conference call webcast can be accessed online at investor.wdc.com. The telephone replay number is 1-866-443-4169 in the U.S. or +1-203-369-1117 for international callers.

About Western Digital

Founded in 1970, Western Digital Corp. (NASDAQ: WDC), Irvine, Calif., is an industry-leading developer and manufacturer of storage solutions that enable people to create, manage, experience and preserve digital content. Its HGST and WD^® subsidiaries are long-time innovators in the storage industry. Western Digital Corporation is responding to changing market needs by providing a full portfolio of compelling, high-quality storage products with effective technology deployment, high efficiency, flexibility and speed. Our products are marketed under the HGST, WD and G-Technology™ brands to OEMs, distributors, resellers, cloud infrastructure providers and consumers. Financial and investor information is available on the company’s Investor Relations website at investor.wdc.com.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning the company’s strategic investments positioning, execution and financial performance. These forward-looking statements are based on management’s current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking

Western Digital Announces Financial Results For Second Quarter Fiscal 2015

Page 3

statements, including volatility in global economic conditions; business conditions and growth in the storage ecosystem; pricing trends and fluctuations in average selling prices; the availability and cost of commodity materials and specialized product components; actions by competitors; unexpected advances in competing technologies; the development and introduction of products based on new technologies and expansion into new data storage markets; and other risks and uncertainties listed in the company’s filings with the Securities and Exchange Commission (the “SEC”), including the company’s Form 10-Q filed with the SEC on Nov. 4, 2014, and the company’s registration statement on Form S-3 filed with the SEC on Nov. 5, 2014, to which your attention is directed. You should not place undue reliance on these forward-looking statements, which speak only as of the date hereof, and the company undertakes no obligation to update these forward-looking statements to reflect new information or events.

###

Western Digital, WD and the WD logo are registered trademarks in the U.S. and other countries. HGST trademarks are intended and authorized for use only in countries and jurisdictions in which HGST has obtained the rights to use, market and advertise the brand. Other marks may be mentioned herein that belong to other companies.

WESTERN DIGITAL CORPORATION

PRELIMINARY¹ CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions; unaudited)

	Jan. 2, 2015		Jun. 27, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	4,902	$	4,804
Short-term investments		241		284
Accounts receivable, net		1,880		1,989
Inventories		1,282		1,226
Other current assets		355		417
Total current assets		8,660		8,720
Property, plant and equipment, net		3,099		3,293
Goodwill		2,566		2,559
Other intangible assets, net		359		454
Other non-current assets		455		473
Total assets	$	15,139	$	15,499
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	2,071	$	1,971
Accrued arbitration award		—		758
Accrued expenses		496		412
Accrued compensation		451		460
Accrued warranty		146		119
Current portion of long-term debt		125		125
Total current liabilities		3,289		3,845
Long-term debt		2,250		2,313
Other liabilities		496		499
Total liabilities		6,035		6,657
Total shareholders’ equity		9,104		8,842
Total liabilities and shareholders’ equity	$	15,139	$	15,499

¹  On Jan. 15, 2015, the Higher Regional Court of Munich declared that Western Digital must pay levies on certain hard drives sold in Germany from January 2008 through December 2010. This decision pertains to third party claims previously disclosed in Western Digital’s periodic filings, and the Company believes this will not have a material adverse effect on its business. No accrual for this matter has been previously recorded and the Company is reviewing the decision to determine whether or not to record an accrual in its results for the quarter ended Jan. 2, 2015.

WESTERN DIGITAL CORPORATION

PRELIMINARY¹ CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share amounts; unaudited)

	Three Months Ended						Six Months Ended
	Jan. 2, 2015			Dec. 27, 2013			Jan. 2, 2015			Dec. 27, 2013
Revenue, net	$	3,888		$	3,972		$	7,831		$	7,776
Cost of revenue		2,756			2,816			5,550			5,521
Gross profit		1,132			1,156			2,281			2,255
Operating expenses:
Research and development		426			416			863			817
Selling, general and administrative		164			226			384			358
Charges related to arbitration award		1			13			15			26
Employee termination, asset impairment and other charges		53			23			62			34
Total operating expenses		644			678			1,324			1,235
Operating income		488			478			957			1,020
Net interest and other		(8	)		(11	)		(17	)		(21	)
Income before income taxes		480			467			940			999
Income tax provision		20			37			57			74
Net income	$	460		$	430		$	883		$	925
Income per common share:
Basic	$	1.97		$	1.82		$	3.79		$	3.92
Diluted	$	1.93		$	1.77		$	3.69		$	3.81
Weighted average shares outstanding:
Basic		233			236			233			236
Diluted		238			243			239			243

WESTERN DIGITAL CORPORATION

PRELIMINARY¹ CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions; unaudited)

	Three Months Ended						Six Months Ended
	Jan. 2, 2015			Dec. 27, 2013			Jan. 2, 2015			Dec. 27, 2013
Cash flows from operating activities
Net income	$	460		$	430		$	883		$	925
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization		290			317			579			629
Stock-based compensation		41			42			80			84
Deferred income taxes		21			(29	)		31			(39	)
Gain from insurance recovery		(37	)		—			(37	)		(65	)
Loss on disposal of assets		8			14			12			29
Non-cash portion of employee termination, asset impairment and other charges		18			2			19			9
Changes in operating assets and liabilities, net		(558	)		(49	)		(497	)		(166	)
Net cash provided by operating activities		243			727			1,070			1,406
Cash flows from investing activities
Purchases of property, plant and equipment		(146	)		(170	)		(306	)		(306	)
Acquisitions, net of cash acquired		(6	)		(560	)		(6	)		(823	)
Purchases of investments		(475	)		—			(595	)		—
Proceeds from sales of investments		464			—			630			—
Proceeds from sale of property, plant and equipment		7			—			7			—
Other investing activities, net		28			(35	)		16			4
Net cash used in investing activities		(128	)		(765	)		(254	)		(1,125	)
Cash flows from financing activities
Employee stock plans, net		62			91			64			98
Repurchases of common stock		(309	)		(150	)		(532	)		(300	)
Dividends to shareholders		(94	)		(59	)		(188	)		(118	)
Proceeds from debt		—			—			—			500
Repayment of debt		(31	)		(58	)		(62	)		(115	)
Net cash provided by (used in) financing activities		(372	)		(176	)		(718	)		65
Net increase (decrease) in cash and cash equivalents		(257	)		(214	)		98			346
Cash and cash equivalents, beginning of period		5,159			4,869			4,804			4,309
Cash and cash equivalents, end of period	$	4,902		$	4,655		$	4,902		$	4,655

WESTERN DIGITAL CORPORATION

PRELIMINARY¹ GAAP TO NON-GAAP RECONCILIATION

(in millions, except per share amounts; unaudited)

	Three Months Ended					Six Months Ended
	Jan. 2, 2015			Dec. 27, 2013		Jan. 2, 2015			Dec. 27, 2013
GAAP net income	$	460		$	430	$	883		$	925
Non-GAAP adjustments:
Amortization of intangibles		45			51		91			98
Employee termination, asset impairment and other charges		53			23		62			34
Charges related to arbitration award		1			13		15			26
Acquisition-related expense		—			—		—			13
Flood-related insurance recovery		(37	)		—		(37	)		(65	)
Other		17			15		29			15
Non-GAAP net income	$	539		$	532	$	1,043		$	1,046
Diluted net income per common share:
GAAP	$	1.93		$	1.77	$	3.69		$	3.81
Non-GAAP	$	2.26		$	2.19	$	4.36		$	4.30
Weighted average shares outstanding:
Diluted		238			243		239			243

The table above sets forth non-GAAP net income and non-GAAP diluted net income per common share. These non-GAAP net income and diluted net income per common share measures exclude amortization of intangibles related to acquisitions, certain employee termination, asset impairment and other charges, certain charges related to an arbitration award and other charges that are unusual, non-recurring or may not be indicative of ongoing operations. The Company believes that non-GAAP net income and non-GAAP earnings per share are useful measures to investors as an alternative method for measuring the Company’s earnings performance and comparing it against prior periods. The presentation of these adjusted amounts vary from numbers presented in accordance with U.S. GAAP and therefore may not be comparable to amounts reported by other companies. The tax effect of the aforementioned items was not material to the condensed consolidated statements of income for the three and six month periods ended January 2, 2015 and December 27, 2013.

EX-99.2

Exhibit 99.2

Amounts in millions, except per share amounts, ASP, percentages 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 FY159

TAM 159.5 165.8 176.3 119.1 146.4 156.7 139.1 135.8 135.9 133.3 140.2 142.2 138.1 138.0 147.3 140.8 Revenue by Channel R4Q Ending Q2 FY15

HDD Share 31.2% 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%

Units (HDD)2 49.8 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 Retail 13%

ASP (HDD) $45 $44 $46 $69 $68 $65 $62 $62 $61 $60 $58 $60 $58 $56 $58 $60 Distributors 24% OEM 63%

Revenue $2,252 $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

Gross Profit $410 $469 $541 $648 $977 $1,472 $1,193 $1,059 $1,061 $1,050 $1,099 $1,156 $1,076 $1,029 $1,149 $1,132

Gross Margin 18.2% 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% 29.1%

R&D $179 $188 $193 $191 $265 $406 $396 $378 $396 $402 $401 $416 $418 $426 $437 $426

SG&A 63 77 71 85 122 178 179 162 185 180 132 226 201 202 220 164

Other 10 32 18 210 48 80 26 41 63 689 24 36 38 49 23 54

Total Operating Expenses $252 $297 $282 $486 $435 $664 $601 $581 $644 $1,271 $557 $678 $657 $677 $680 $644

Operating Income (Loss) $158 $172 $259 $162 $542 $808 $592 $478 $417 $(221) $542 $478 $419 $352 $469 $488

Net Income (Loss) $146 $158 $239 $145 $483 $745 $519 $335 $391 $(265) $495 $430 $375 $317 $423 $460

EPS $0.62 $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 $1.93

Diluted Shares Outstanding 236 237 237 237 246 260 252 246 245 236 242 243 242 241 240 238

Non-GAAP Results Gross Profit10 $410 $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

Gross Margin10 18.2% 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%

Net Income $156 $193 $260 $358 $619 $872 $594 $513 $514 $477 $514 $532 $470 $445 $504 $539

EPS6 $0.66 $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

Revenue By Channel OEM 47% 55% 53% 59% 64% 69% 63% 61% 60% 66% 64% 62% 62% 65% 63% 63% Revenue by Geography R4Q Ending Q2 FY15

Distributors 33% 29% 29% 25% 28% 21% 24% 24% 26% 23% 24% 24% 25% 23% 24% 23%

Retail 20% 16% 18% 16% 8% 10% 13% 15% 14% 11% 12% 14% 13% 12% 13% 14% Americas 26%

Revenue by Geography Americas 22% 20% 19% 22% 21% 27% 23% 27% 27% 28% 26% 25% 25% 24% 27% 27% Asia/ANZ 52% EMEA 22%

EMEA 24% 20% 22% 21% 18% 18% 18% 23% 22% 19% 20% 23% 21% 20% 21% 24%

Asia/ANZ 54% 60% 59% 57% 61% 55% 59% 50% 51% 53% 54% 52% 54% 56% 52% 49%

Top 10 Customers Revenue 49% 53% 49% 51% 53% 53% 44% 45% 45% 48% 48% 42% 44% 45% 45% 44%

Enterprise SSD Revenue $- $- $- $- $11 $54 $70 $89 $92 $104 $106 $155 $134 $113 $156 $187

PC Units5 Notebook 16.227 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

Desktop 20.118 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

Non-PC Units Consumer Electronics4 4.765 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

Branded 6.404 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

Enterprise 2.318 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

Total HDD 49.832 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

Average GB Shipped 578 608 634 578 581 668 708 804 805 797 811 874 888 875 1,002 1,087

EB Shipped 28.8 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

R4Q EB Shipped 107.7 117.8 128.5 114.6 111.5 126.3 133.9 165.1 187.8 188.0 194.5 202.0 207.2 214.7 228.8 240.1

Volume and HDD Share2

Volume

50% HDD Share 45% 80 40% 70 35% 60 30% 50 25% 40 20% 30 15% 20 10% 10 5% 0 0%

Q3’11 Q4’11 Q1’12 Q2’12 Q3’12 Q4’12 Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Q1’15 Q2’15

Revenue and Non-GAAP Gross Margin10

$5,000 Revenue $mils 40%

$4,500 Gross Margin 35%

$4,000 30%

$3,500 25%

$3,000 20%

$2,500 15%

$2,000 10%

$1,500 5%

$1,000 0%

$500

$0

Q3’11 Q4’11 Q1’12 Q2’12 Q3’12 Q4’12 Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Q1’15 Q2’15

Non-GAAP EPS Analysis

$4.00 Actual Non-GAAP EPS

40% EPS Guidance High

35% $3.00 EPS Guidance Low

30% 25% $2.00

20% 15% $1.00

10% 5% $0.00

0% ($1.00) ($2.00)

Q3’11 Q4’11 Q1’12 Q2’12 Q3’12 Q4’12 Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Q1’15 Q2’15

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

Page 1 WDC Quarterly Fact Sheet – Q2 FY15 (preliminary) Western Digital

Balance sheet, cash flows, earnings, dividends and share repurchase amounts in millions 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

Cash and Cash Equivalents $3,230 $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

Available-for-Sale (AFS) Securities - - - - - - - - - - - - 470 499 454 465

Debt (325) (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)

Net Cash, Cash Equivalents & AFS Securities $2,905 $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

Cash Flow From Operations $313 $447 $352 $378 $1,208 $1,128 $936 $772 $727 $684 $680 $727 $697 $713 $827 $243

Free Cash Flow $138 $294 $218 $258 $1,069 $804 $554 $526 $539 $548 $544 $557 $536 $552 $667 $97

Capital Expenditures $175 $153 $134 $120 $139 $324 $382 $246 $188 $136 $136 $170 $161 $161 $160 $146

Depreciation and Amortization $151 $150 $158 $140 $188 $339 $313 $309 $309 $302 $312 $317 $307 $308 $289 $290

EBITDA $309 $322 $417 $302 $730 $1,147 $905 $787 $726 $81 $854 $795 $726 $660 $758 $778

Accounts Receivable, Net $1,171 $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

Inventory Raw Materials $151 $172 $170 $191 $329 $245 $237 $193 $191 $167 $208 $201 $204 $168 $178 $154

Work in Process 260 263 275 185 667 552 559 581 583 575 579 581 519 493 509 510

Finished Goods 163 142 200 90 286 413 508 430 423 446 457 511 554 565 585 618

Total Inventory $574 $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

Property, Plant and Equipment, Net $2,249 $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

Accounts Payable $1,486 $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

Days Sales Outstanding11 47 46 46 34 71 45 44 41 41 44 43 45 44 50 48 44

Days Inventory Outstanding11 28 27 27 31 57 34 42 40 40 40 42 42 44 42 45 42

Days Payables Outstanding11 73 73 72 60 123 77 82 72 69 67 69 68 65 68 71 68

Cash Conversion Cycle11 2 - 1 5 5 2 4 9 12 17 16 19 23 24 22 18

Inventory Turns11 13 13 13 12 6 11 9 9 9 9 9 9 8 9 8 9

Dividends Paid $- $- $- $- $- $- $- $121 $- $60 $59 $59 $71 $70 $94 $94

Shares Repurchased - - - - - 16.4 5.2 4.2 5.2 4.4 2.3 2.0 2.8 3.2 2.2 3.2

Shares Repurchased $- $- $- $- $- $604 $218 $146 $243 $235 $150 $150 $244 $272 $223 $309

Remaining Amount Authorized $416 $416 $416 $416 $416 $1,312 $2,594 $2,448 $2,205 $1,970 $1,820 $1,670 $1,426 $1,154 $931 $622

R4Q Economic Profit8 $213 $92 $113 $15 $(83) $542 $801 $976 $884 $(59) $(176) $(109) $(158) $415 $332 $347

R4Q ROIC8 15.6% 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% 14.3%

R4Q ROA8 10.9% 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% 10.2%

Worldwide Headcount3 61,349 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

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 Gross vs. Net Cash, Cash Equivalents & AFS Securities Cash, Cash Equivalents & AFS Securities Net Cash, Cash Equivalents & AFS Securities$

$6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 Q3 ‘11 Q4 ‘11 Q1 ‘12 Q2 ‘12 Q3 ‘12 Q4 ‘12 Q1 ‘13 Q2 ‘13 Q3 ‘13 Q4 ‘13 Q1 ‘14 Q2 ‘14 Q3 ‘14 Q4 ‘14 Q1 ‘15 Q2 ‘15

R&D10 and Capital Expenditures R&D Capital Expenditures R&D % of Revenue $mils $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 Q3 ‘11 Q4 ‘11 Q1 ‘12 Q2 ‘12 Q3 ‘12 Q4 ‘12 Q1 ‘13 Q2 ‘13 Q3 ‘13 Q4 ‘13 Q1 ‘14 Q2 ‘14 Q3 ‘14 Q4 ‘14 Q1 ‘15 Q2 ‘15 0% 2% 4% 6% 8% 10% 12% 14%

Free Cash Flow Dividends Paid Stock Repurchases Free Cash Flow $mils $0 $200 $400 $600 $800 $1,000 $1,200 Q3 ‘11 Q4 ‘11 Q1 ‘12 Q2 ‘12 Q3 ‘12 Q4 ‘12 Q1 ‘13 Q2 ‘13 Q3 ‘13 Q4 ‘13 Q1 ‘14 Q2 ‘14 Q3 ‘14 Q4 ‘14 Q1 ‘15 Q2 ‘15

R4Q ROIC & R4Q Economic Profit8 R4Q Economic Profit R4Q ROIC $mils ($400) ($200) $0 $200

$400 $600 $800 $1,000 $1,200 Q3 ‘11 Q4 ‘11 Q1 ‘12 Q2 ‘12 Q3 ‘12 Q4 ‘12 Q1 ‘13 Q2 ‘13 Q3 ‘13 Q4 ‘13 Q1 ‘14 Q2 ‘14 Q3 ‘14 Q4 ‘14 Q1 ‘15 Q2 ‘15 0% 5% 10% 15% 20% 25%

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

Page 2 WDC Quarterly Fact Sheet - Q2 FY15 (preliminary) Western Digital

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 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 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

Reconciliation of Cash Flows from Operations to Free Cash Flow

Cash Flows from Operations $313 $447 $352 $378 $1,208 $1,128 $936 $772 $727 $684 $680 $727 $697 $713 $827 $243

Capital Expenditures (175) (153) (134) (120) (139) (324) (382) (246) (188) (136) (136) (170) (161) (161) (160) (146)

Free Cash Flow $138 $294 $218 $258 $1,069 $804 $554 $526 $539 $548 $544 $557 $536 $552 $667 $97

Reconciliation of Net Income to EBITDA

Net Income (Loss) $146 $158 $239 $145 $483 $745 $519 $335 $391 $(265) $495 $430 $375 $317 $423 $460

Interest (1) 2 1 2 4 7 14 10 11 9 10 11 13 5 9 8

Income Tax Expense 13 12 19 15 55 56 59 133 15 35 37 37 31 30 37 20

Depreciation and Amortization 151 150 158 140 188 339 313 309 309 302 312 317 307 308 289 290

EBITDA $309 $322 $417 $302 $730 $1,147 $905 $787 $726 $81 $854 $795 $726 $660 $758 $778

Reconciliation of Gross Margin to Non-GAAP Gross Margin & Gross Profit to Non-GAAP Gross Profit

Gross Profit10 $410 $469 $541 $648 $977 $1,472 $1,193 $1,059 $1,061 $1,050 $1,099 $1,156 $1,076 $1,029 $1,149 $1,132

Acquisition-Related Fair Value Adjustments - - - - 91 - - - - - - - - - - -

Other - - - - - - - - - - - - - 10 - 17

Amortization of Intangibles - - - - 9 39 38 38 38 35 36 40 39 39 39 38

Non-GAAP Gross Profit10 $410 $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

Revenue $2,252 $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

Gross Margin10 18.2% 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% 29.1%

Non-GAAP Gross Margin10 18.2% 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%

Reconciliation of Net Income (Loss) to Non-GAAP Net Income

Net Income (Loss) $146 $158 $239 $145 $483 $745 $519 $335 $391 $(265) $495 $430 $375 $317 $423 $460

Acquisition-Related Expense 10 10 14 14 34 - - - - 7 13 - - - - -

Litigation - 25 7 - - - - - - 681 13 25 13 13 26 1

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

Restructuring and other - - - - - 80 26 41 74 8 11 26 28 68 9 70

Write-off of debt issuance costs - - - - - - - - - - - - 4 - - -

Tax Impact - - - - (16) (4) - 88 - - - - - - - -

Non-GAAP Net Income $156 $193 $260 $358 $619 $872 $594 $513 $514 $477 $514 $532 $470 $445 $504 $539

EPS $0.62 $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 $1.93

Non-GAAP EPS $0.66 $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

Diluted Shares Outstanding 236 237 237 237 246 260 252 246 245 236 242 243 242 241 240 238

Non-GAAP Diluted Shares Outstanding6 236 237 237 237 246 260 252 246 245 243 242 243 242 241 240 238

Page 3 WDC Quarterly Fact Sheet - Q2 FY15 (preliminary) Western Digital

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 Q1 FY10 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

Reconciliation of Operating Income (Loss) to R4Q Economic Profit

Operating Income (Loss) $319 $473 $441 $293 $211 $240 $158 $172 $259 $162 $542 $808 $592 $478 $417 $(221) $542 $478 $419 $352 $469 $488

Income Tax Provision (29) (42) (40) (27) (14) (14) (13) (12) (19) (15) (55) (56) (59) (133) (15) (35) (37) (37) (31) (30) (37) (20)

Net Operating Profit After Taxes 290 431 401 266 197 226 145 160 240 147 487 752 533 345 402 (256) 505 441 388 322 432 468

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 1,610

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) (1,263)

R4Q Economic Profit $484 $786 $826 $714 $484 $213 $92 $113 $15 $(83) $542 $801 $976 $884 $(59) $(176) $(109) $(158) $415 $332 $347

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.

Page 4 WDC Quarterly Fact Sheet - Q2 FY15 (preliminary) Western Digital