HGST as an independent competitor until MOFCOM agrees otherwise (with the minimum period being two years).
We are working closely with MOFCOM to finalize an operations plan that is expected to outline in more detail the
conditions of the competitive requirement.
located there. The flooded facilities in Thailand included our magnetic head slider fabrication facilities, which sup-
plied a substantial majority of our magnetic head requirements prior to the flooding. The flooded facilities in Thai-
land also included our hard drive, head gimbal assembly ("HGA") and head stack assembly ("HSA") facilities.
in Malaysia in the June quarter. We believe we now have the capability to adequately meet anticipated customer
demand.
million in wage continuation during the shutdown period of our facilities, offset by $21 million of insurance recov-
eries and other cost reimbursements. We maintain insurance coverage that provides property and business inter-
ruption coverage in the event of losses arising from flooding. We have submitted claims to our insurers and are
awaiting a determination of how much of our total losses will be covered by insurance. It is reasonably possible that
the final losses that we incur in connection with the flood damage and our business interruption will exceed the limits
of our insurance policies.
Pte. Ltd. (together, "Hoya"), which were acquired on March 8, 2012 and June 30, 2010, respectively, are included in
our operating results only after the dates of their acquisition.
enue. In 2012, 19% of our hard drive revenue was derived from non-compute and enterprise markets, which include
CE products, enterprise applications, and branded products, as compared to 27% in the prior-year period. Hard drive
ASP increased to $62 in 2012 from $45 in 2011. Gross margin percentage increased to 29.2% in 2012 from 18.8% in
2011. Operating income increased from $781 million in 2011 to $1.8 billion in 2012, which included a net $214
million of charges related to the flooding, $80 million of impairments and other charges and $54 million of expenses
related to the acquisition of HGST. As a percentage of net revenue, operating income was 14.2% in 2012 compared to
8.2% in 2011. Net income in 2012 was $1.6 billion, or $6.58 per diluted share, compared to $726 million, or $3.09
per diluted share, in 2011.
decrease slightly from the June quarter. For fiscal 2013, we expect overall hard drive industry shipments to increase
5% from fiscal 2012.