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to 19% in 2012. Hard drive average selling price ("ASP") decreased to $61 in 2013 from $62 in 2012. Gross profit as
a percentage of revenue decreased to 28.4% in 2013 from 29.2% in 2012. Operating income decreased from $1.8 bil-
lion in 2012 to $1.3 billion in 2013, which included a $681 million charge related to an arbitration award as well as
$138 million of employee termination benefits and other charges. As a percentage of net revenue, operating income
was 8.2% in 2013 compared to 14.2% in 2012. Net income in 2013 was $1.0 billion, or $3.98 per diluted share,
compared to $1.6 billion, or $6.58 per diluted share, in 2012.
For the September quarter, we expect overall hard drive industry shipments to increase modestly to approx-
imately 135 million to 140 million units from the June quarter's 133 million units primarily due to a seasonal
increase in consumer electronics and branded product shipments. We expect our revenue in the September quarter to
remain flat or increase slightly from the June quarter reflecting modest price declines and a seasonal change in busi-
ness mix.
Summary Comparison of 2013, 2012 and 2011
The following table sets forth, for the periods presented, selected summary information from our consolidated
statements of income by dollars and percentage of net revenue (in millions, except percentages):
Years Ended
June 28, 2013
June 29, 2012
July 1, 2011
Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$15,351
100.0% $12,478
100.0% $9,526
100.0%
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,363
28.4
3,638
29.2
1,791
18.8
R&D and SG&A . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,278
14.8
1,573
12.6
985
10.3
Charges related to arbitration award . . . . . . . . . . . . . .
681
4.4
--
--
25
0.3
Employee termination benefits and other charges . . . .
138
0.9
80
0.6
--
--
Charges related to flooding, net . . . . . . . . . . . . . . . . .
--
--
214
1.7
--
--
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,266
8.2
1,771
14.2
781
8.2
Other expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . .
(44)
(0.3)
(14)
(0.1)
(1)
--
Income before income taxes . . . . . . . . . . . . . . . . . . . .
1,222
8.0
1,757
14.1
780
8.2
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . .
242
1.6
145
1.2
54
0.6
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
980
6.4
1,612
12.9
726
7.6
The following table sets forth, for the periods presented, summary information regarding unit shipments, ASPs
and revenues by geography and channel (in millions, except percentages and ASPs):
Years Ended
June 28,
2013
June 29,
2012
July 1,
2011
Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$15,351
$12,478
$9,526
ASPs (per unit)* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
61
$
62
$
45
Revenues by Geography(%)
Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26%
23%
22%
Europe, Middle East and Africa . . . . . . . . . . . . . . . . . . . .
20
19
23
Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
54
58
55
Revenues by Channel(%)
OEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
63%
63%
49%
Distributors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24
25
32
Retailers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
12
19
Unit Shipments*
PC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
162
150
151
Non-PC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
80
52
56
Total units shipped . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
242
202
207
39