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): July 29, 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 July 29, 2015, Western Digital Corporation (“Western Digital”) announced financial results for the fourth fiscal quarter and fiscal year ended July 3, 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 fourth fiscal quarter ended July 3, 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, 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 July 29, 2015 announcing financial results for the fourth fiscal quarter and fiscal year ended July 3, 2015.
99.2	Fourth 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: July 29, 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

FOURTH QUARTER AND FISCAL YEAR 2015

IRVINE, Calif. — July 29, 2015 — Western Digital^® Corp. (NASDAQ: WDC) today reported revenue of $3.2 billion and net income of $220 million, or $0.94 per share, for its fourth fiscal quarter ended July 3, 2015. On a non-GAAP basis, net income was $356 million, or $1.51 per share. In the year-ago quarter, the company reported revenue of $3.7 billion and net income of $317 million, or $1.32 per share. Non-GAAP net income in the year-ago quarter was $445 million, or $1.85 per share.

The company generated $488 million in cash from operations during the fourth fiscal quarter, ending with total cash and cash equivalents of $5.0 billion. It utilized $198 million to repurchase 2.0 million shares of its common stock. On May 5, the company declared a cash dividend of $0.50 per share of its common stock, which was paid on July 15.

For the 2015 fiscal year, the company achieved revenue of $14.6 billion and net income of $1.5 billion, or $6.18 per share, compared to fiscal year 2014 revenue of $15.1 billion and net income of $1.6 billion, or $6.68 per share. On a non-GAAP basis, fiscal year 2015 net income was $1.8 billion, or $7.76 per share, compared to fiscal year 2014 net income of $2.0 billion, or $8.10 per share. The company generated $2.2 billion in cash from operations during the 2015 fiscal year and it utilized $1.4 billion for dividends and share repurchases.

Western Digital Announces Financial Results for Fourth Quarter and Fiscal Year 2015

Page 2

“I am satisfied with our execution and performance in the fourth fiscal quarter in light of the weak PC market,” said Steve Milligan, president and chief executive officer. “Our financial performance reflects our strong product and technology positioning coupled with solid execution. We remain positive about the opportunity to create long term value in the evolving storage ecosystem.”

The investment community conference call to discuss these results will be broadcast live over the Internet today at 2 p.m. Pacific/5 p.m. Eastern. The live and archived conference call webcast can be accessed online at investor.wdc.com. The telephone replay number is 1-800-348-3536 in the U.S. or +1-203-369-3257 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 its product and technology positioning, execution and market opportunities. 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 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;

Western Digital Announces Financial Results for Fourth Quarter and Fiscal Year 2015

Page 3

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 May 12, 2015, 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

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions; unaudited)

	Jul. 3, 2015		Jun. 27, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	5,024	$	4,804
Short-term investments		262		284
Accounts receivable, net		1,532		1,989
Inventories		1,368		1,226
Other current assets		331		417
Total current assets		8,517		8,720
Property, plant and equipment, net		2,965		3,293
Goodwill		2,766		2,559
Other intangible assets, net		332		454
Other non-current assets		601		473
Total assets	$	15,181	$	15,499
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,881	$	1,971
Accrued arbitration award		—		758
Accrued expenses		470		412
Accrued compensation		330		460
Accrued warranty		150		119
Short-term debt		255		—
Current portion of long-term debt		156		125
Total current liabilities		3,242		3,845
Long-term debt		2,156		2,313
Other liabilities		564		499
Total liabilities		5,962		6,657
Total shareholders’ equity		9,219		8,842
Total liabilities and shareholders’ equity	$	15,181	$	15,499

WESTERN DIGITAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share amounts; unaudited)

	Three Months Ended						Years Ended
	Jul. 3, 2015			Jun. 27, 2014			Jul. 3, 2015			Jun. 27, 2014
Revenue, net	$	3,191		$	3,651		$	14,572		$	15,130
Cost of revenue		2,261			2,622			10,351			10,770
Gross profit		930			1,029			4,221			4,360
Operating expenses:
Research and development		381			426			1,646			1,661
Selling, general and administrative		190			202			773			761
Charges related to arbitration award		—			13			15			52
Employee termination, asset impairment and other charges		104			36			176			95
Total operating expenses		675			677			2,610			2,569
Operating income		255			352			1,611			1,791
Net interest and other		(8	)		(5	)		(34	)		(39	)
Income before income taxes		247			347			1,577			1,752
Income tax provision		27			30			112			135
Net income	$	220		$	317		$	1,465		$	1,617
Income per common share:
Basic	$	0.95		$	1.35		$	6.31		$	6.88
Diluted	$	0.94		$	1.32		$	6.18		$	6.68
Weighted average shares outstanding:
Basic		231			234			232			235
Diluted		235			241			237			242

WESTERN DIGITAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions; unaudited)

	Three Months Ended						Years Ended
	Jul. 3, 2015			Jun. 27, 2014			Jul. 3, 2015			Jun. 27, 2014
Operating Activities
Net income	$	220		$	317		$	1,465		$	1,617
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization		250			308			1,114			1,244
Stock-based compensation		45			31			162			156
Deferred income taxes		19			53			28			(13	)
Gain from insurance recovery		—			—			(37	)		(65	)
Loss on disposal of assets		3			7			17			40
Non-cash portion of employee termination, asset impairment and other charges		74			36			86			62
Other non-cash operating activities, net		—			5			—			9
Changes in operating assets and liabilities, net		(123	)		(44	)		(593	)		(234	)
Net cash provided by operating activities		488			713			2,242			2,816
Investing Activities
Purchases of property, plant and equipment		(156	)		(161	)		(612	)		(628	)
Acquisitions, net of cash acquired		(10	)		—			(257	)		(823	)
Purchases of investments		(170	)		(91	)		(857	)		(561	)
Proceeds from sales and maturities of investments		103			72			768			72
Proceeds from sale of property, plant and equipment		—			—			7			—
Other investing activities, net		(8	)		—			(2	)		4
Net cash used in investing activities		(241	)		(180	)		(953	)		(1,936	)
Financing Activities
Employee stock plans, net		55			75			167			215
Repurchases of common stock		(198	)		(272	)		(970	)		(816	)
Dividends paid to shareholders		(116	)		(70	)		(396	)		(259	)
Proceeds from debt, net of issuance costs		255			—			255			2,992
Repayment of debt		(31	)		(31	)		(125	)		(2,517	)
Net cash used in financing activities		(35	)		(298	)		(1,069	)		(385	)
Net increase in cash and cash equivalents		212			235			220			495
Cash and cash equivalents, beginning of period		4,812			4,569			4,804			4,309
Cash and cash equivalents, end of period	$	5,024		$	4,804		$	5,024		$	4,804

WESTERN DIGITAL CORPORATION

GAAP TO NON-GAAP NET INCOME RECONCILIATION

(in millions, except per share amounts; unaudited)

	Three Months Ended				Years Ended
	Jul. 3, 2015		Jun. 27, 2014		Jul. 3, 2015			Jun. 27, 2014
GAAP net income	$	220	$	317	$	1,465		$	1,617
Non-GAAP adjustments:
Amortization of intangible assets		28		47		163			195
Employee termination, asset impairment and other charges		104		36		176			95
Charges related to arbitration award		—		13		15			52
Acquisition-related adjustments		—		—		3			13
Flood-related insurance recovery		—		—		(37	)		(65	)
Other		4		32		55			54
Non-GAAP net income	$	356	$	445	$	1,840		$	1,961
Diluted net income per common share:
GAAP	$	0.94	$	1.32	$	6.18		$	6.68
Non-GAAP	$	1.51	$	1.85	$	7.76		$	8.10
Weighted average shares outstanding:
Diluted		235		241		237			242

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 intangible assets 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 twelve month periods ended July 3, 2015 and June 27, 2014.

EX-99.2

Exhibit 99.2

Amounts in millions, except per share amounts, ASP, percentages	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			Q4 FY159			Revenue by Channel R4Q Ending Q4 FY15    Revenue by Geography R4Q Ending Q4 FY15
TAM		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			111.0
HDD Share		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	%		43.7	%
Units (HDD)2		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			48.5
ASP (HDD)	$	46		$	69		$	68		$	65		$	62		$	62		$	61		$	60		$	58		$	60		$	58		$	56		$	58		$	60		$	61		$	60
Revenue	$	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		$	3,191
Gross Profit	$	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		$	930
Gross Margin		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	%		29.1	%
R&D	$	193		$	191		$	265		$	406		$	396		$	378		$	396		$	402		$	401		$	416		$	418		$	426		$	437		$	426		$	402		$	381
SG&A		71			85			122			178			179			162			185			180			132			226			201			202			220			164			199			190
Other		18			210			48			80			26			41			63			689			24			36			38			49			23			54			10			104
Total Operating Expenses	$	282		$	486		$	435		$	664		$	601		$	581		$	644		$	1,271		$	557		$	678		$	657		$	677		$	680		$	644		$	611		$	675
Operating Income (Loss)	$	259		$	162		$	542		$	808		$	592		$	478		$	417		$	(221	)	$	542		$	478		$	419		$	352		$	469		$	466		$	421		$	255
Net Income (Loss)	$	239		$	145		$	483		$	745		$	519		$	335		$	391		$	(265	)	$	495		$	430		$	375		$	317		$	423		$	438		$	384		$	220
EPS	$	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		$	0.94
Diluted Shares Outstanding		237			237			246			260			252			246			245			236			242			243			242			241			240			238			236			235
Non-GAAP Results
Gross Profit10	$	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		$	951
Gross Margin10		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	%		29.8	%
Operating Expenses 10	$	261		$	273		$	383		$	572		$	564		$	529		$	559		$	564		$	574		$	616		$	605		$	598		$	638		$	620		$	591		$	560
Net Income	$	260		$	358		$	619		$	872		$	594		$	513		$	514		$	477		$	514		$	532		$	470		$	445		$	504		$	539		$	441		$	356
EPS6	$	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		$	1.51
Revenue By Channel
OEM		53	%		59	%		64	%		69	%		63	%		61	%		60	%		66	%		64	%		62	%		62	%		65	%		63	%		63	%		64	%		67	%
Distributors		29	%		25	%		28	%		21	%		24	%		24	%		26	%		23	%		24	%		24	%		25	%		23	%		24	%		23	%		23	%		21	%
Retail		18	%		16	%		8	%		10	%		13	%		15	%		14	%		11	%		12	%		14	%		13	%		12	%		13	%		14	%		13	%		12	%
Revenue by Geography
Americas		19	%		22	%		21	%		27	%		23	%		27	%		27	%		28	%		26	%		25	%		25	%		24	%		27	%		27	%		29	%		32	%
EMEA		22	%		21	%		18	%		18	%		18	%		23	%		22	%		19	%		20	%		23	%		21	%		20	%		21	%		24	%		21	%		21	%
Asia/ANZ		59	%		57	%		61	%		55	%		59	%		50	%		51	%		53	%		54	%		52	%		54	%		56	%		52	%		49	%		50	%		47	%
Top 10 Customers Revenue		49	%		51	%		53	%		53	%		44	%		45	%		45	%		48	%		48	%		42	%		44	%		45	%		45	%		44	%		43	%		44	%
Enterprise SSD Revenue	$	—		$	—		$	11		$	54		$	70		$	89		$	92		$	104		$	106		$	155		$	134		$	113		$	156		$	187		$	224		$	244
Non-PC Revenue12		36	%		34	%		31	%		45	%		46	%		51	%		51	%		52	%		53	%		54	%		53	%		54	%		55	%		58	%		60	%		65	%
PC Units5
Notebook		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			15.513
Desktop		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			11.601
Non-PC Units
Consumer Electronics4		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			9.056
Branded		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			5.151
Enterprise		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			7.199
Total HDD		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			48.520
Average GB Shipped		634			578			581			668			708			804			805			797			811			874			888			875			1,001			1,088			1,123			1,159
EB Shipped		36.7			16.5			25.7			47.4			44.3			47.6			48.4			47.7			50.8			55.1			53.6			55.2			64.8			66.4			61.3			56.2
R4Q EB Shipped		128.5			114.6			111.5			126.3			133.9			165.1			187.8			188.0			194.5			202.0			207.2			214.7			228.7			240.0			247.7			248.7

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	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			Q4 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	$	3,675		$	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		$	5,024
Available-for-Sale (AFS) Securities		—			—			—			—			—			—			—			—			—			—			470			499			454			465			523			590
Debt		(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	)		(2,567	)
Net Cash, Cash Equivalents & AFS Securities	$	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		$	3,047
Cash Flow From Operations	$	352		$	378		$	1,208		$	1,128		$	936		$	772		$	727		$	684		$	680		$	727		$	697		$	713		$	827		$	243		$	684		$	488
Free Cash Flow	$	218		$	258		$	1,069		$	804		$	554		$	526		$	539		$	548		$	544		$	557		$	536		$	552		$	667		$	97		$	534		$	332
Capital Expenditures	$	134		$	120		$	139		$	324		$	382		$	246		$	188		$	136		$	136		$	170		$	161		$	161		$	160		$	146		$	150		$	156
Depreciation and Amortization	$	158		$	140		$	188		$	339		$	313		$	309		$	309		$	302		$	312		$	317		$	307		$	308		$	289		$	290		$	285		$	250
EBITDA	$	417		$	302		$	730		$	1,147		$	905		$	787		$	726		$	81		$	854		$	795		$	726		$	660		$	758		$	756		$	706		$	505
Accounts Receivable, Net	$	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		$	1,532
Inventory
Raw Materials	$	170		$	191		$	329		$	245		$	237		$	193		$	191		$	167		$	208		$	201		$	204		$	168		$	178		$	154		$	173		$	168
Work in Process		275			185			667			552			559			581			583			575			579			581			519			493			509			510			498			500
Finished Goods		200			90			286			413			508			430			423			446			457			511			554			565			585			618			651			700
Total Inventory	$	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		$	1,368
Property, Plant and Equipment, Net	$	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		$	2,965
Accounts Payable	$	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		$	1,881
Days Sales Outstanding11		46			34			71			45			44			41			41			44			43			45			44			50			48			44			44			44
Days Inventory Outstanding11		27			31			57			34			42			40			40			40			42			42			44			42			45			42			48			55
Days Payables Outstanding11		72			60			123			77			82			72			69			67			69			68			65			68			71			68			73			76
Cash Conversion Cycle11		1			5			5			2			4			9			12			17			16			19			23			24			22			18			19			23
Inventory Turns11		13			12			6			11			9			9			9			9			9			9			8			9			8			9			8			7
Dividends Paid	$	—		$	—		$	—		$	—		$	—		$	121		$	—		$	60		$	59		$	59		$	71		$	70		$	94		$	94		$	93		$	116
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			2.0
Shares Repurchased	$	—		$	—		$	—		$	604		$	218		$	146		$	243		$	235		$	150		$	150		$	244		$	272		$	223		$	309		$	240		$	198
Remaining Amount Authorized	$	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		$	2,184
R4Q Economic Profit8	$	113		$	15		$	(83	)	$	542		$	801		$	976		$	884		$	(59	)	$	(176	)	$	(109	)	$	(158	)	$	415		$	332		$	328		$	320		$	203
R4Q ROIC8		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	%		13.1	%
R4Q ROA8		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	%		9.6	%
Worldwide Headcount3		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			76,449

Gross vs. Net Cash, Cash Equivalents & AFS Securities	R&D10 and Capital Expenditures	Free Cash Flow	R4Q ROIC & R4Q Economic Profit8

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	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			Q4 FY15
Reconciliation of Cash Flows from Operations to Free Cash Flow
Cash Flows from Operations	$	352		$	378		$	1,208		$	1,128		$	936		$	772		$	727		$	684		$	680		$	727		$	697		$	713		$	827		$	243		$	684		$	488
Capital Expenditures		(134	)		(120	)		(139	)		(324	)		(382	)		(246	)		(188	)		(136	)		(136	)		(170	)		(161	)		(161	)		(160	)		(146	)		(150	)		(156	)
Free Cash Flow	$	218		$	258		$	1,069		$	804		$	554		$	526		$	539		$	548		$	544		$	557		$	536		$	552		$	667		$	97		$	534		$	332
Reconciliation of Net Income to EBITDA
Net Income (Loss)	$	239		$	145		$	483		$	745		$	519		$	335		$	391		$	(265	)	$	495		$	430		$	375		$	317		$	423		$	438		$	384		$	220
Interest		1			2			4			7			14			10			11			9			10			11			13			5			9			8			9			8
Income Tax Expense		19			15			55			56			59			133			15			35			37			37			31			30			37			20			28			27
Depreciation and Amortization		158			140			188			339			313			309			309			302			312			317			307			308			289			290			285			250
EBITDA	$	417		$	302		$	730		$	1,147		$	905		$	787		$	726		$	81		$	854		$	795		$	726		$	660		$	758		$	756		$	706		$	505
Reconciliation of Gross Margin to Non-GAAP Gross Margin & Gross Profit to Non-GAAP Gross Profit
Gross Profit10	$	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		$	930
Acquisition-related adjustments		—			—			91			—			—			—			—			—			—			—			—			—			—			—			—			—
Other		—			—			—			—			—			—			—			—			—			—			—			10			—			39			—			1
Amortization of Intangibles		—			—			9			39			38			38			38			35			36			40			39			39			39			38			37			20
Non-GAAP Gross Profit10	$	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		$	951
Revenue	$	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		$	3,191
Gross Margin10		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	%		29.1	%
Non-GAAP Gross Margin10		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	%		29.8	%
Reconciliation of Operating Expenses to Non-GAAP Operating Expenses
Total Operating Expenses	$	282		$	486		$	435		$	664		$	601		$	581		$	644		$	1,271		$	557		$	678		$	657		$	677		$	680		$	644		$	611		$	675
Less:
Amortization of Intangibles		—			—			(3	)		(12	)		(11	)		(11	)		(11	)		(11	)		(11	)		(11	)		(11	)		(8	)		(7	)		(7	)		(7	)		(8	)
Employee termination, asset impairment and other charges		—			—			—			(80	)		(26	)		(41	)		(63	)		(8	)		(11	)		(23	)		(25	)		(26	)		(9	)		(36	)		(10	)		(104	)
Charges related to arbitration award		—			—			—			—			—			—			—			(681	)		(13	)		(13	)		(13	)		(13	)		(14	)		(1	)		—			—
Acquisition-related adjustments		(14	)		(14	)		(34	)		—			—			—			—			(7	)		(13	)		—			—			—			—			—			(3	)		—
Charges and Insurance Recoveries Related to Flooding, Net		—			(199	)		(15	)		—			—			—			—			—			65			—			—			—			—			37			—			—
Other		(7	)		—			—			—			—			—			(11	)		—			—			(15	)		(3	)		(32	)		(12	)		(17	)		—			(3	)
Non-GAAP Operating Expenses		261			273			383			572			564			529			559			564			574			616			605			598			638			620			591			560
Reconciliation of Net Income (Loss) to Non-GAAP Net Income
Net Income (Loss)	$	239		$	145		$	483		$	745		$	519		$	335		$	391		$	(265	)	$	495		$	430		$	375		$	317		$	423		$	438		$	384		$	220
Amortization of Intangibles		—			—			12			51			49			49			49			46			47			51			50			47			46			45			44			28
Employee termination, asset impairment and other charges		—			—			—			80			26			41			63			8			11			23			25			36			9			53			10			104
Charges related to arbitration award		—			—			—			—			—			—			—			681			13			13			13			13			14			1			—			—
Acquisition-related adjustments		14			14			125			—			—			—			—			7			13			—			—			—			—			—			3			—
Charges and Insurance Recoveries Related to Flooding, Net		—			199			15			—			—			—			—			—			(65	)		—			—			—			—			(37	)		—			—
Other		7			—			—			—			—			—			11			—			—			15			7			32			12			39			—			4
Tax Impact		—			—			(16	)		(4	)		—			88			—			—			—			—			—			—			—			—			—			—
Non-GAAP Net Income	$	260		$	358		$	619		$	872		$	594		$	513		$	514		$	477		$	514		$	532		$	470		$	445		$	504		$	539		$	441		$	356
EPS	$	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		$	0.94
Non-GAAP EPS	$	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		$	1.51
Diluted Shares Outstanding		237			237			246			260			252			246			245			236			242			243			242			241			240			238			236			235
Non-GAAP Diluted Shares Outstanding6		237			237			246			260			252			246			245			243			242			243			242			241			240			238			236			235

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	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			Q4 FY15
Reconciliation of Operating Income (Loss) to R4Q Economic Profit
Operating Income (Loss)	$	441		$	293		$	211		$	240		$	158		$	172		$	259		$	162		$	542		$	808		$	592		$	478		$	417		$	(221	)	$	542		$	478		$	419		$	352		$	469		$	466		$	421		$	255
Income Tax Provision		(40	)		(27	)		(14	)		(14	)		(13	)		(12	)		(19	)		(15	)		(55	)		(56	)		(59	)		(133	)		(15	)		(35	)		(37	)		(37	)		(31	)		(30	)		(37	)		(20	)		(28	)		(27	)
Net Operating Profit After Taxes		401			266			197			226			145			160			240			147			487			752			533			345			402			(256	)		505			441			388			322			432			446			393			228
R4Q Net Operating Profit After Taxes		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			1,499
Invested Capital x WACC		(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	)		(1,296	)
R4Q Economic Profit	$	786		$	826		$	714		$	484		$	213		$	92		$	113		$	15		$	(83	)	$	542		$	801		$	976		$	884		$	(59	)	$	(176	)	$	(109	)	$	(158	)	$	415		$	332		$	328		$	320		$	203

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.