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A total of $2.8 billion and $1.7 billion of our cash and cash equivalents was held outside of the United States at
June 28, 2013 and June 29, 2012, respectively. Substantially all of the amounts held outside of the United States are
intended to be indefinitely reinvested in foreign operations. If we are required to pay the arbitration award described
in the section "Arbitration Award" above, the award would be paid from one of our foreign subsidiaries using cash and
cash equivalents held outside of the United States. On September 13, 2012, our Board of Directors approved a capital
allocation plan which includes repurchases of our common stock and the adoption of a quarterly cash dividend policy.
Our current plans do not anticipate that we will need funds generated from foreign operations to fund our domestic
operations or capital allocation plan. In the event funds from foreign operations are needed in the United States, any
repatriation could result in the accrual and payment of additional U.S. income tax.
Operating Activities
Net cash provided by operating activities was $3.1 billion in both 2013 and 2012 as compared to $1.7 billion in
2011. Cash flow from operating activities consists of net income, adjusted for non-cash charges, plus or minus work-
ing capital changes. This represents our principal source of cash. Net cash provided by working capital changes was
$715 million for 2013 as compared to $324 million for 2012 and $238 million for 2011.
Our working capital requirements primarily depend on the effective management of our cash conversion cycle,
which measures how quickly we can convert our products into cash through sales. The average quarterly cash con-
version cycles for the three years ended 2013 were as follows:
Years Ended
June 28,
2013
June 29,
2012
July 1,
2011
Days sales outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
43
49
47
Days in inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
39
37
27
Days payables outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(66)
(83)
(75)
Cash conversion cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16
3
(1)
For 2013, our average days sales outstanding ("DSOs") decreased by 6 days, days in inventory ("DIOs") increased
by 2 days, and days payables outstanding ("DPOs") decreased by 17 days. Changes in average DSOs and DIOs are
generally related to linearity of shipments and the timing of inventory builds, respectively. Changes in DPOs are
generally related to production volume and the timing of purchases during the period. In the prior-year period, the
higher DSOs, DIOs and DPOs were primarily due to the impact of including HGST's accounts receivable, inventory
and accounts payable balances as of June 29, 2012, but only including HGST's revenue and cost of sales from the date
of Acquisition. From time to time, we modify the timing of payments to our vendors. We make modifications
primarily to manage our vendor relationships and to manage our cash flows, including our cash balances. Generally,
we make the payment modifications through negotiations with our vendors or by granting to, or receiving from, our
vendors' payment term accommodations.
Investing Activities
Net cash used in investing activities for 2013 was $970 million as compared to $4.2 billion for 2012 and
$793 million for 2011. During 2013, cash used in investing activities consisted primarily of $952 million of capital
expenditures and $17 million related to the purchase of investments. Capital expenditures in 2013 primarily consisted
of flood recovery and increased capacity for our broadening and growing product portfolio. During 2012, cash used in
investing activities consisted of $3.5 billion, net of cash acquired, used for the acquisitions, $76 million of proceeds
related to the sale of equipment, and capital expenditures of $717 million. During 2011, cash used in investing activ-
ities consisted of capital expenditures of $778 million and $15 million for equipment related to the acquisition of a
semiconductor wafer fabrication facility.
Our cash equivalents are invested in highly liquid money market funds that are invested in U.S. Treasury secu-
rities, U.S. Treasury bills and U.S. Government agency securities. We also have $14 million of auction-rate securities,
which are classified as available-for-sale securities in our consolidated balance sheets.
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