Western Digital (WDC) 8-K Results of Operations and Financial Condition

Exhibit 99.2

Amounts in millions, except per share amounts, ASP, percentages1	Q1 FY13			Q2 FY13			Q3 FY13			Q4 FY13			Q1 FY14			Q2 FY14			Q3 FY14			Q4 FY14			Q1 FY15			Q2 FY15			Q3FY15			Q4 FY15			Q1 FY16			Q2 FY16			Q3 FY16			Q4 FY169
Revenue	$	4,035		$	3,824		$	3,764		$	3,728		$	3,804		$	3,972		$	3,703		$	3,651		$	3,943		$	3,888		$	3,550		$	3,191		$	3,360		$	3,317		$	2,822		$	3,495
Gross Profit	$	1,193		$	1,059		$	1,061		$	1,050		$	1,099		$	1,156		$	1,076		$	1,029		$	1,149		$	1,110		$	1,032		$	930		$	955		$	906		$	753		$	821
Gross Margin		29.6	%		27.7	%		28.2	%		28.2	%		28.9	%		29.1	%		29.1	%		28.2	%		29.1	%		28.5	%		29.1	%		29.1	%		28.4	%		27.3	%		26.7	%		23.5	%
R&D	$	396		$	378		$	396		$	402		$	401		$	416		$	418		$	426		$	437		$	426		$	402		$	381		$	385		$	389		$	359		$	484
SG&A		179			162			185			180			132			226			201			202			220			164			199			190			192			207			166			400
Other		26			41			63			689			24			36			38			49			23			54			10			104			56			59			140			117
Total Operating Expenses	$	601		$	581		$	644		$	1,271		$	557		$	678		$	657		$	677		$	680		$	644		$	611		$	675		$	633		$	655		$	665		$	1,001
Operating Income (Loss)	$	592		$	478		$	417		$	(221	)	$	542		$	478		$	419		$	352		$	469		$	466		$	421		$	255		$	322		$	251		$	88		$	(180	)
Interest & Other Expense, net	$	14		$	10		$	11		$	9		$	10		$	11		$	13		$	5		$	9		$	8		$	9		$	8		$	8		$	7		$	8		$	290
Net Income (Loss)	$	519		$	335		$	391		$	(265	)	$	495		$	430		$	375		$	317		$	423		$	438		$	384		$	220		$	283		$	251		$	74		$	(351	)
EPS	$	2.06		$	1.36		$	1.60		$	(1.12	)	$	2.05		$	1.77		$	1.55		$	1.32		$	1.76		$	1.84		$	1.63		$	0.94		$	1.21		$	1.07		$	0.32		$	(1.34	)
Diluted Shares Outstanding		252			246			245			236			242			243			242			241			240			238			236			235			234			234			234			261
Non-GAAP Results             Gross Profit10	$	1,231		$	1,097		$	1,099		$	1,085		$	1,135		$	1,196		$	1,115		$	1,078		$	1,188		$	1,187		$	1,069		$	951		$	972		$	944		$	794		$	1,084
Gross Margin10		30.5	%		28.7	%		29.2	%		29.1	%		29.8	%		30.1	%		30.1	%		29.5	%		30.1	%		30.5	%		30.1	%		29.8	%		28.9	%		28.5	%		28.1	%		31.0	%
Operating Expenses10	$	564		$	529		$	559		$	564		$	574		$	616		$	605		$	598		$	638		$	620		$	591		$	560		$	567		$	542		$	477		$	691
Net Income	$	594		$	513		$	514		$	477		$	514		$	532		$	470		$	445		$	504		$	539		$	441		$	356		$	366		$	374		$	283		$	208
EPS	$	2.36		$	2.09		$	2.10		$	1.96		$	2.12		$	2.19		$	1.94		$	1.85		$	2.10		$	2.26		$	1.87		$	1.51		$	1.56		$	1.60		$	1.21		$	0.79
Diluted Shares Outstanding6		252			246			245			243			242			243			242			241			240			238			236			235			234			234			234			263
Revenue By Channel             OEM		63	%		61	%		60	%		66	%		64	%		62	%		62	%		65	%		63	%		63	%		64	%		67	%		67	%		65	%		66	%		63	%
Distributors		24	%		24	%		26	%		23	%		24	%		24	%		25	%		23	%		24	%		23	%		23	%		21	%		21	%		21	%		22	%		19	%
Retail		13	%		15	%		14	%		11	%		12	%		14	%		13	%		12	%		13	%		14	%		13	%		12	%		12	%		14	%		12	%		18	%
Revenue by Geography            Americas		23	%		27	%		27	%		28	%		26	%		25	%		25	%		24	%		27	%		27	%		29	%		32	%		30	%		31	%		30	%		38	%
EMEA		18	%		23	%		22	%		19	%		20	%		23	%		21	%		20	%		21	%		24	%		21	%		21	%		21	%		23	%		23	%		19	%
Asia/ANZ		59	%		50	%		51	%		53	%		54	%		52	%		54	%		56	%		52	%		49	%		50	%		47	%		49	%		46	%		47	%		43	%
Revenue              Client Devices14	$	2,650		$	2,259		$	2,168		$	2,109		$	2,198		$	2,226		$	2,126		$	2,170		$	2,255		$	2,089		$	1,820		$	1,546		$	1,670		$	1,581		$	1,370		$	1,584
Client Solutions14		500			568			500			401			455			543			479			444			504			528			452			366			399			459			346			666
Data Center Devices & Solutions14		885			997			1,096			1,218			1,151			1,203			1,098			1,037			1,184			1,271			1,278			1,279			1,291			1,277			1,106			1,245
Total Revenue	$	4,035		$	3,824		$	3,764		$	3,728		$	3,804		$	3,972		$	3,703		$	3,651		$	3,943		$	3,888		$	3,550		$	3,191		$	3,360		$	3,317		$	2,822		$	3,495
Exabytes Shipped             Client Devices		28.0			28.0			28.1			27.9			30.4			33.0			32.9			34.8			39.1			37.6			34.3			30.5			34.3			35.3			31.7			32.0
Client Solutions		7.0			8.7			7.9			6.8			7.9			9.6			8.6			8.2			9.8			11.0			9.6			8.2			9.2			11.3			8.5			9.5
Data Center Devices & Solutions		9.3			10.9			12.4			13.0			12.5			12.5			12.1			12.2			15.9			17.8			17.4			17.5			20.0			22.5			22.8			24.6
Total Exabytes Shipped13		44.3			47.6			48.4			47.7			50.8			55.1			53.6			55.2			64.8			66.4			61.3			56.2			63.5			69.1			63.0			66.1
R4Q EB Shipped		45.9			93.0			140.8			188.0			194.5			202.0			207.2			214.7			228.7			240.0			247.7			248.7			247.4			250.1			251.8			261.7
HDD TAM		139.1			135.8			135.9			133.3			140.2			142.2			138.1			138.0			147.3			140.8			125.0			111.0			118.7			115.1			100.5			98.5
HDD Share		44.9	%		43.6	%		44.3	%		44.9	%		44.7	%		44.4	%		43.8	%		45.7	%		44.0	%		43.4	%		43.6	%		43.7	%		43.6	%		43.2	%		42.9	%		40.7	%
HDD Units2		62.5			59.2			60.2			59.9			62.6			63.1			60.4			63.1			64.7			61.0			54.5			48.5			51.7			49.7			43.1			40.1
HDD ASP	$	62		$	62		$	61		$	60		$	58		$	60		$	58		$	56		$	58		$	60		$	61		$	60		$	60		$	61		$	60		$	63
HDD PC Units5             HDD Notebook Units		25.887			21.300			21.547			23.989			22.912			22.662			21.814			22.899			23.396			21.178			18.785			15.513			15.804			15.318			13.577			11.449
HDD Desktop Units		16.819			17.717			18.383			16.185			17.307			16.825			16.635			16.182			16.320			15.375			13.523			11.601			11.683			12.458			10.681			7.924
HDD Non-PC Units             HDD Consumer Electronics Units4		8.019			6.452			6.517			6.544			8.474			8.794			8.573			10.906			10.485			9.295			8.610			9.056			11.484			8.461			7.318			10.038
HDD Branded Units		5.767			7.139			6.517			5.281			6.146			7.018			6.272			6.012			6.780			7.156			6.090			5.151			5.575			6.443			5.157			4.709
HDD Enterprise Units		5.988			6.633			7.211			7.897			7.771			7.783			7.129			7.098			7.763			8.041			7.519			7.199			7.185			7.008			6.390			5.994
Total HDD Units		62.480			59.241			60.175			59.896			62.610			63.082			60.423			63.097			64.744			61.045			54.527			48.520			51.731			49.688			43.123			40.114

Volume and HDD Share2	Revenue, GAAP and Non-GAAP Gross Margin10	GAAP & Non-GAAP EPS Analysis
Note: Refer to “Non-GAAP Financial Measures” for information about non-GAAP financial measures included in this quarterly fact sheet.

Page 1 Quarterly Fact Sheet – Q4 FY16  

Balance sheet, cash flows, earnings, dividends and share repurchase amounts in millions	Q1 FY13			Q2 FY13			Q3 FY13			Q4 FY13			Q1 FY14			Q2 FY14			Q3 FY14			Q4 FY14			Q1 FY15			Q2 FY15			Q3 FY15			Q4 FY15			Q1 FY16			Q2 FY16			Q3 FY16			Q4 FY16
Cash and Cash Equivalents	$	3,537		$	3,816		$	4,060		$	4,309		$	4,869		$	4,655		$	4,569		$	4,804		$	5,159		$	4,902		$	4,812		$	5,024		$	5,081		$	5,363		$	5,887		$	8,151
Available-for-Sale (AFS) Securities		—			—			—			—			—			—			470			499			454			465			523			590			704			732			146			345
Debt		(2,128	)		(2,128	)		(2,013	)		(1,955	)		(2,398	)		(2,340	)		(2,469	)		(2,438	)		(2,406	)		(2,375	)		(2,344	)		(2,567	)		(2,536	)		(2,505	)		(2,203	)		(16,994	)
Net Cash, Cash Equivalents & AFS Securities	$	1,409		$	1,688		$	2,047		$	2,354		$	2,471		$	2,315		$	2,570		$	2,865		$	3,207		$	2,992		$	2,991		$	3,047		$	3,249		$	3,590		$	3,830		$	(8,498	)
Cash Flow From Operations	$	936		$	772		$	727		$	684		$	680		$	727		$	697		$	713		$	827		$	243		$	684		$	488		$	545		$	598		$	485		$	355
Free Cash Flow	$	554		$	526		$	539		$	548		$	544		$	557		$	536		$	552		$	667		$	97		$	534		$	332		$	394		$	449		$	352		$	114
Capital Expenditures, net15	$	382		$	246		$	188		$	136		$	136		$	170		$	161		$	161		$	160		$	146		$	150		$	156		$	151		$	149		$	133		$	241
Depreciation and Amortization	$	313		$	309		$	309		$	302		$	312		$	317		$	307		$	308		$	289		$	290		$	285		$	250		$	236		$	252		$	246		$	420
EBITDA	$	905		$	787		$	726		$	81		$	854		$	795		$	726		$	660		$	758		$	756		$	706		$	505		$	558		$	503		$	334		$	240
Accounts Receivable, Net	$	1,951		$	1,732		$	1,700		$	1,793		$	1,791		$	1,959		$	1,802		$	1,989		$	1,915		$	1,880		$	1,696		$	1,532		$	1,616		$	1,650		$	1,254		$	1,461
Inventory         Raw Materials	$	237		$	193		$	191		$	167		$	208		$	201		$	204		$	168		$	178		$	154		$	173		$	168		$	135		$	130		$	133		$	571
Work in Process		559			581			583			575			579			581			519			493			509			510			498			500			507			474			440			636
Finished Goods		508			430			423			446			457			511			554			565			585			618			651			700			618			634			654			922
Total Inventory	$	1,304		$	1,204		$	1,197		$	1,188		$	1,244		$	1,293		$	1,277		$	1,226		$	1,272		$	1,282		$	1,322		$	1,368		$	1,260		$	1,238		$	1,227		$	2,129
Property, Plant and Equipment, Net	$	4,027		$	3,938		$	3,803		$	3,700		$	3,638		$	3,509		$	3,406		$	3,293		$	3,202		$	3,099		$	3,051		$	2,965		$	2,890		$	2,801		$	2,687		$	3,508
Accounts Payable	$	2,545		$	2,185		$	2,037		$	1,990		$	2,061		$	2,106		$	1,902		$	1,971		$	2,016		$	2,071		$	2,020		$	1,881		$	1,799		$	1,806		$	1,571		$	1,888
Accounts Payable to Related Parties	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	168
Days Sales Outstanding11		44			41			41			44			43			45			44			50			48			44			44			44			44			45			40			38
Days Inventory Outstanding11		42			40			40			40			42			42			44			42			45			42			48			55			48			47			54			72
Days Payables Outstanding11		82			72			69			67			69			68			65			68			71			68			73			76			68			68			69			70
Cash Conversion Cycle11		4			9			12			17			16			19			23			24			22			18			19			23			24			24			25			40
Inventory Turns11		9			9			9			9			9			9			8			9			8			9			8			7			8			8			7			5
Dividends Paid	$	—		$	121		$	—		$	60		$	59		$	59		$	71		$	70		$	94		$	94		$	93		$	116		$	115		$	116		$	116		$	116
Shares Repurchased		5.2			4.2			5.2			4.4			2.3			2.0			2.8			3.2			2.2			3.2			2.2			2.0			0.7			—			—			—
Shares Repurchased	$	218		$	146		$	243		$	235		$	150		$	150		$	244		$	272		$	223		$	309		$	240		$	198		$	60		$	—		$	—		$	—
Remaining Amount Authorized	$	2,594		$	2,448		$	2,205		$	1,970		$	1,820		$	1,670		$	1,426		$	1,154		$	931		$	622		$	2,382		$	2,184		$	2,124		$	2,124		$	2,124		$	2,124
R4Q Economic Profit8	$	801		$	976		$	884		$	(59	)	$	(176	)	$	(109	)	$	(158	)	$	415		$	332		$	328		$	320		$	203		$	52		$	(157	)	$	(440	)	$	(2,527	)
R4Q ROIC8		21.3	%		21.0	%		20.0	%		10.1	%		9.7	%		10.5	%		10.2	%		15.1	%		14.2	%		14.1	%		14.1	%		13.1	%		11.7	%		10.0	%		7.4	%		3.6	%
R4Q ROA8		14.9	%		14.7	%		14.2	%		7.0	%		6.7	%		7.2	%		7.0	%		10.6	%		10.0	%		10.1	%		10.2	%		9.6	%		8.7	%		7.5	%		5.4	%		1.3	%
Worldwide Headcount3		96,002			93,820			87,565			85,777			87,586			87,976			84,556			84,072			83,277			83,993			80,767			76,449			76,052			74,891			67,884			72,878

Gross vs. Net Cash, Cash Equivalents & AFS Securities	R&D10 and Capital Expenditures	Free Cash Flow & Cash Flow from Operatations	R4Q ROIC, R4Q Economic Profit & R4Q Operating Income8
Note: Refer to “Non-GAAP Financial Measures” for information about non-GAAP financial measures included in this quarterly fact sheet.

Page 2 Quarterly Fact Sheet – Q4 FY16  

Debt Tranches and Interest Rates

Debt	Base Rate			Tenor			Maturity		Original Principal Amount		Balance Outstanding as of 7/1/16A		Indicative Rates bpsB
Revolver drawnC		L+200			5 years				$	0	$	0		2.468	%
Bridge Loan		L+200			7/26/2016	D			$	3,000	$	3,000		2.468	%
Term Loan A (floor of 0bps)		L+200			5 years			April 29, 2021	$	4,125	$	4,125		2.468	%
Term Loan B Dollar (floor of 75bps)		L+550			7 years			April 29, 2023	$	3,750	$	3,750		6.250	%
Term Loan B Euro (floor of 75 bps)E		E+525			7 years			April 29, 2023	$	987	$	987		6.000	%
Sr. Secured Notes Due 2023F		7.375	%		7 years			April 1, 2023	$	1,875	$	1,875		7.375	%
Sr. Unsecured Notes Due 2024F		10.500	%		8 years			April 1, 2024	$	3,350	$	3,350		10.500	%
Total									$	17,087	$	17,087		5.615	%G
Weighted average interest rate excluding the Bridge Loan														6.285	%G

^A  Excluding Original Issue Discount and fees

^B  L = 1 Month LIBOR, E = 1 Month EURIBOR

^B  Based on current leverage ratios

^C  Revolver capacity: $1,000M

^D  Cash bridge contractual maturity date—Paid off on July 21, 2016

^E Principal in EURO denominated debt = Euro 885M, converted at Fiscal Month EUR/USD balance sheet rate of 1.11508

^F Notes are callable in 3 years (starting April 1, 2019)

^G  Weighted average interest rate as of July 1, 2016

The schedule above excludes convertible debt assumed in connection with the acquisition of SanDisk

Estimated Effective Tax Ranges (Non-GAAP)
FY17 :	15% - 20%
FY18 – FY23 :	10% - 15%
Beyond FY23 :	7% - 10%

Page 3 Quarterly Fact Sheet – Q4 FY16  

In millions, except gross margin and per share amounts	Q1 FY13			Q2 FY13			Q3 FY13			Q4 FY13			Q1 FY14			Q2 FY14			Q3 FY14			Q4 FY14			Q1 FY15			Q2 FY15			Q3 FY15			Q4 FY15			Q1 FY16			Q2 FY16			Q3 FY16			Q4 FY16
Reconciliation of Cash Flows from Operations to Free Cash Flow
Cash Flows from Operations	$	936		$	772		$	727		$	684		$	680		$	727		$	697		$	713		$	827		$	243		$	684		$	488		$	545		$	598		$	485		$	355
Purchases of Property, Plant and Equipment, net		(382	)		(246	)		(188	)		(136	)		(136	)		(170	)		(161	)		(161	)		(160	)		(146	)		(150	)		(156	)		(151	)		(149	)		(133	)	$	(151	)
Note Receivable with Flash Ventures, net		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			(90	)
Free Cash Flow	$	554		$	526		$	539		$	548		$	544		$	557		$	536		$	552		$	667		$	97		$	534		$	332		$	394		$	449		$	352		$	114
Reconciliation of Net Income to EBITDA
Net Income (Loss)	$	519		$	335		$	391		$	(265	)	$	495		$	430		$	375		$	317		$	423		$	438		$	384		$	220		$	283		$	251		$	74		$	(351	)
Interest and Other Expense, net		14			10			11			9			10			11			13			5			9			8			9			8			8			7			8			290
Income Tax Expense (Benefit)		59			133			15			35			37			37			31			30			37			20			28			27			31			(7	)		6			(119	)
Depreciation and Amortization		313			309			309			302			312			317			307			308			289			290			285			250			236			252			246			420
EBITDA	$	905		$	787		$	726		$	81		$	854		$	795		$	726		$	660		$	758		$	756		$	706		$	505		$	558		$	503		$	334		$	240
Reconciliation of Operating Income (Loss) to
R4Q Economic Profit
Operating Income (Loss)	$	592		$	478		$	417		$	(221	)	$	542		$	478		$	419		$	352		$	469		$	466		$	421		$	255		$	322		$	251		$	88		$	(180	)
Income Tax (Expense) Benefit		(59	)		(133	)		(15	)		(35	)		(37	)		(37	)		(31	)		(30	)		(37	)		(20	)		(28	)		(27	)		(31	)		7			(6	)		119
Net Operating Profit After Taxes		533			345			402			(256	)		505			441			388			322			432			446			393			228			291			258			82			(61	)
R4Q Net Operating Profit After Taxes		1,919			2,117			2,032			1,024			996			1,092			1,078			1,656			1,583			1,588			1,593			1,499			1,358			1,170			859			570
Invested Capital x WACC		(1,118	)		(1,141	)		(1,148	)		(1,083	)		(1,172	)		(1,201	)		(1,236	)		(1,241	)		(1,251	)		(1,260	)		(1,273	)		(1,296	)		(1,306	)		(1,327	)		(1,299	)		(3,097	)
R4Q Economic Profit	$	801		$	976		$	884		$	(59	)	$	(176	)	$	(109	)	$	(158	)	$	415		$	332		$	328		$	320		$	203		$	52		$	(157	)	$	(440	)	$	(2,527	)
Reconciliation of Gross Margin to Non-GAAP Gross Margin &
Gross Profit to Non-GAAP Gross Profit
Gross Profit10	$	1,193		$	1,059		$	1,061		$	1,050		$	1,099		$	1,156		$	1,076		$	1,029		$	1,149		$	1,110		$	1,032		$	930		$	955		$	906		$	753		$	821
Acquisition-related charges		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			122
Charges related to cost saving initiatives		—			—			—			—			—			—			—			—			—			—			—			—			—			22			25			27
Other charges		—			—			—			—			—			—			—			10			—			39			—			1			—			—			—			—
Amortization of acquired intangible assets		38			38			38			35			36			40			39			39			39			38			37			20			17			16			16			114
Non-GAAP Gross Profit10	$	1,231		$	1,097		$	1,099		$	1,085		$	1,135		$	1,196		$	1,115		$	1,078		$	1,188		$	1,187		$	1,069		$	951		$	972		$	944		$	794		$	1,084
Revenue	$	4,035		$	3,824		$	3,764		$	3,728		$	3,804		$	3,972		$	3,703		$	3,651		$	3,943		$	3,888		$	3,550		$	3,191		$	3,360		$	3,317		$	2,822		$	3,495
Gross Margin10		29.6	%		27.7	%		28.2	%		28.2	%		28.9	%		29.1	%		29.1	%		28.2	%		29.1	%		28.5	%		29.1	%		29.1	%		28.4	%		27.3	%		26.7	%		23.5	%
Non-GAAP Gross Margin10		30.5	%		28.7	%		29.2	%		29.1	%		29.8	%		30.1	%		30.1	%		29.5	%		30.1	%		30.5	%		30.1	%		29.8	%		28.9	%		28.5	%		28.1	%		31.0	%
Reconciliation of Operating Expenses to Non-GAAP
Operating Expenses
Total Operating Expenses	$	601		$	581		$	644		$	1,271		$	557		$	678		$	657		$	677		$	680		$	644		$	611		$	675		$	633		$	655		$	665		$	1,001
Less:
Amortization of acquired intangible assets		(11	)		(11	)		(11	)		(11	)		(11	)		(11	)		(11	)		(8	)		(7	)		(7	)		(7	)		(8	)		(8	)		(8	)		(6	)		(73	)
Employee termination, asset impairment and other charges		(26	)		(41	)		(63	)		(8	)		(11	)		(23	)		(25	)		(26	)		(9	)		(36	)		(10	)		(104	)		(56	)		(27	)		(140	)		(117	)
Charges related to cost saving initiatives		—			—			—			—			—			—			—			—			—			—			—			—			—			(15	)		(24	)		(30	)
Charges related to arbitration award		—			—			—			(681	)		(13	)		(13	)		(13	)		(13	)		(14	)		(1	)		—			—			—			(32	)		—			—
Acquisition-related charges		—			—			—			(7	)		(13	)		—			—			—			—			—			(3	)		—			—			(27	)		(16	)		(116	)
Charges and insurance recoveries related to flooding, net		—			—			—			—			65			—			—			—			—			37			—			—			—			—			—			—
Other charges		—			—			(11	)		—			—			(15	)		(3	)		(32	)		(12	)		(17	)		—			(3	)		(2	)		(4	)		(2	)		26
Non-GAAP Operating Expenses	$	564		$	529		$	559		$	564		$	574		$	616		$	605		$	598		$	638		$	620		$	591		$	560		$	567		$	542		$	477		$	691
Reconciliation of Net Income (Loss) to Non-GAAP Net Income
Net Income (Loss)	$	519		$	335		$	391		$	(265	)	$	495		$	430		$	375		$	317		$	423		$	438		$	384		$	220		$	283		$	251		$	74		$	(351	)
Amortization of acquired intangible assets		49			49			49			46			47			51			50			47			46			45			44			28			25			24			22			187
Employee termination, asset impairment and other charges		26			41			63			8			11			23			25			36			9			53			10			104			56			27			140			117
Convertible Debt		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			58
Charges related to cost saving initiatives		—			—			—			—			—			—			—			—			—			—			—			—			—			37			49			57
Charges related to arbitration award		—			—			—			681			13			13			13			13			14			1			—			—			—			32			—			—
Acquisition-related charges		—			—			—			7			13			—			—			—			—			—			3			—			—			27			16			238
Charges and insurance recoveries related to flooding, net		—			—			—			—			(65	)		—			—			—			—			(37	)		—			—			—			—			—			—
Other charges		—			—			11			—			—			15			7			32			12			39			—			4			2			4			2			(3	)
Income tax adjustments		—			88			—			—			—			—			—			—			—			—			—			—			—			(28	)		(20	)		(95	)
Non-GAAP Net Income	$	594		$	513		$	514		$	477		$	514		$	532		$	470		$	445		$	504		$	539		$	441		$	356		$	366		$	374		$	283		$	208
EPS	$	2.06		$	1.36		$	1.60		$	(1.12	)	$	2.05		$	1.77		$	1.55		$	1.32		$	1.76		$	1.84		$	1.63		$	0.94		$	1.21		$	1.07		$	0.32		$	(1.34	)
Non-GAAP EPS	$	2.36		$	2.09		$	2.10		$	1.96		$	2.12		$	2.19		$	1.94		$	1.85		$	2.10		$	2.26		$	1.87		$	1.51		$	1.56		$	1.60		$	1.21		$	0.79
Diluted Shares Outstanding		252			246			245			236			242			243			242			241			240			238			236			235			234			234			234			261
Non-GAAP Diluted Shares Outstanding6		252			246			245			243			242			243			242			241			240			238			236			235			234			234			234			263
Reconciliation of Income Tax Provision as a percentage of pre-tax
income to Non-GAAP income tax provision as a percentage of
non-GAAP pre-tax income
Net income (loss)	$	519		$	335		$	391		$	(265	)	$	495		$	430		$	375		$	317		$	423		$	438		$	384		$	220		$	283		$	251		$	74		$	(351	)
Income tax expense (benefit)		59			133			15			35			37			37			31			30			37			20			28			27			31			(7	)		6			(119	)
Pre-tax income	$	578		$	468		$	406		$	(230	)	$	532		$	467		$	406		$	347		$	460		$	458		$	412		$	247		$	314		$	244		$	80		$	(470	)
Income tax provision as a percentage of pre-tax income		10	%		28	%		4	%		-15	%		7	%		8	%		8	%		9	%		8	%		4	%		7	%		11	%		10	%		-3	%		8	%		25	%
Non-GAAP Net Income	$	594		$	513		$	514		$	477		$	514		$	532		$	470		$	445		$	504		$	539		$	441		$	356		$	366		$	374		$	283		$	208
Add:
Income tax expense (benefit)		59			133			15			35			37			37			31			30			37			20			28			27			31			(7	)		6			(119	)
Income tax adjustments		—			(88	)		—			—			—			—			—			—			—			—			—			—			—			28			20			95
Non-GAAP income tax expense (benefit)		59			45			15			35			37			37			31			30			37			20			28			27			31			21			26			(24	)
Non-GAAP pre-tax income	$	653		$	558		$	529		$	512		$	551		$	569		$	501		$	475		$	541		$	559		$	469		$	383		$	397		$	395		$	309		$	184
Non-GAAP income tax provision as a percentage of pre-tax income		9	%		8	%		3	%		7	%		7	%		7	%		6	%		6	%		7	%		4	%		6	%		7	%		8	%		5	%		8	%		-13	%

Page 4 Quarterly Fact Sheet – Q4 FY16  

Non-GAAP Financial Measures

This Quarterly Fact Sheet contains non-GAAP financial measures. These non-GAAP measures are not in accordance with, or an alternative for, measures prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies.

Free Cash Flow:Free cash flow is a non-GAAP financial measure defined as cash flows from operations less purchases of property, plant and equipment, net of proceeds from sales of property, plant, and equipment, and the net activity in notes receivable and investments in the Flash Ventures. 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.

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.

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.

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 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 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 may not be indicative of ongoing operations, or any tax impact related to those charges. 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.

Non-GAAP income tax provision as a percentage of non-GAAP pre-tax income: Non-GAAP income tax provision is a non-GAAP measure defined as income tax provision plus any income tax adjustments that may not be indicative of ongoing operations. We believe that non-GAAP income tax provision as a percentage of non-GAAP pre-tax income is a useful measure to investors as an alternative method for measuring our effective tax rate and comparing it against prior periods’ performance.

We exclude the following items from our non-GAAP measures:

Amortization of acquired intangible assets: We incur expenses from the amortization of acquired intangible assets over their economic lives. Such charges are significantly impacted by the timing and magnitude of our acquisitions and any related impairment charges.

Employee termination, asset impairment and other charges: From time-to-time, in order to realign our operations with anticipated market demand or to achieve cost synergies from the integration of acquisitions, we may terminate employees and/or restructure our operations. From time-to-time, we may also incur charges from the impairment of intangible assets and other long-lived assets. These charges (including any reversals of charges recorded in prior periods) are inconsistent in amount and frequency and are not a part of the ongoing operation of our business.

Convertible debt:We exclude non-cash economic interest expense associated with the convertible senior notes, the gains and losses on the conversion of the convertible senior notes and call option, and unrealized gains and losses related to the change in fair value of the exercise option and call option. These charges and gains and losses do not reflect our cash operating results or the ongoing results of our business.

Charges related to cost saving initiatives: In connection with the transformation of our business, beginning in the 2nd quarter of fiscal 2016, we have incurred charges related to cost saving initiatives which do not qualify for special accounting treatment as exit or disposal activities. These charges, which are not part of the ongoing operation of our business, primarily relate to costs associated with rationalizing our channel partners or vendors, transforming our information systems infrastructure, integrating our product roadmap, and accelerated depreciation on assets.

Charges related to arbitration award: In relation to an arbitration award for claims brought against the Company by Seagate Technology LLC, which was satisfied in October 2014, and the related dispute over the calculation of post-award interest, which was resolved in February 2016, we have recorded loss contingencies. The resulting expense is inconsistent in amount and frequency.

Acquisition-related charges:In connection with our business combinations, we incur expenses which we would not have otherwise incurred as part of our business operations. These expenses include third-party professional service and legal fees, third-party integration services, severance costs, non-cash adjustments to the fair value of acquired inventory, contract termination costs, retention bonuses, and changes to the fair value of contingent consideration. We may also experience other one-time accounting impacts in connection with these transactions. These charges and impacts are related to acquisitions, are inconsistent in amount and frequency, and have no direct correlation to the operation of our business.

Insurance recoveries:From time-to-time, we receive insurance recoveries related to losses or other events which occurred in a prior period. Such recoveries are inconsistent in amount and frequency.

Other charges:From time-to-time, we sell investments or other assets which are not considered strategic or necessary to our business; are a party to legal or arbitration proceedings, which could result in an expense or benefit due to settlements, final judgments, or accruals for loss contingencies; or incur other charges or gains which are not a part of the ongoing operation of our business. The resulting expense or benefit is inconsistent in amount and frequency.

Income tax adjustments:Income tax adjustments reflect the difference between income taxes based on a forecasted annual non-GAAP tax rate and a forecasted annual GAAP tax rate as a result of the timing of certain non-GAAP pre-tax adjustments.

Page 5 Quarterly Fact Sheet – Q4 FY16  

Formulas

Share= Units (HDD) / TAM

ASP = Revenue / Units (HDD)

Free Cash Flow= Cash Flow from Operations – Capital Expenditures, net

EBITDA = Net Income (Loss) + Interest and Other Expense, net + 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. HDD 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. Non-GAAP diluted shares outstanding are equivalent to GAAP diluted shares outstanding except in periods when a net loss is reported on a GAAP basis, but net income is reported on a non-GAAP basis. Dilutive shares are not included in the calculation of EPS when a net loss is reported.

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. HDD TAM is preliminary and based on internal information.

10. Certain FY14 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, Note18 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.

13. Excludes Non-Memory Products.

14. Client Devices is comprised of notebook and desktop HDD, consumer electronics HDD, client SSD, embedded, wafer sales and licensing and royalties. Client Solutions is comprised of branded HDD, branded flash, removables and licensing and royalties. Datacenter Devices and Solutions is comprised of enterprise HDD, enterprise SSD, data center software, data center solutions and licensing and royalties.

15. Capital expenditures, net is comprised of purchases of property, plant and equipment, net and note receivable with flash ventures, net.

Page 6 Quarterly Fact Sheet – Q4 FY16