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loans of, up to $1.0 billion if existing or new lenders provide additional term or revolving commitments. For addi-
tional information on the Prior Credit Facility and the Credit Agreement, See Part II, Item 8, Note 3 of the Notes to
Consolidated Financial Statements included in this Annual Report on Form 10-K. We believe our current cash, cash
equivalents and cash generated from operations as well as our available credit facilities will be sufficient to meet our
working capital, debt, dividend, stock repurchase and capital expenditure needs for at least the next twelve months.
Our ability to sustain our working capital position is subject to a number of risks that we discuss in Item 1A of this
Annual Report on Form 10-K.
A total of $3.5 billion and $2.8 billion of our cash and cash equivalents was held outside of the United States at
June 27, 2014 and June 28, 2013, 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 $2.8 billion in 2014 as compared to $3.1 billion in both 2013 and
2012. 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 used in working capital changes was $234
million for 2014 as compared to net cash provided by working capital changes of $715 million and $324 million for
2013 and 2012, respectively.
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 2014 were as follows:
Years Ended
June 27,
2014
June 28,
2013
June 29,
2012
Days sales outstanding ................................. 48 43 49
Days in inventory .................................... 41 39 37
Days payables outstanding .............................. (67) (66) (83)
Cash conversion cycle .................................. 22 16 3
For 2014, our average days sales outstanding (“DSOs”) increased by 5 days, days in inventory (“DIOs”) increased
by 2 days, and days payables outstanding (“DPOs”) increased by 1 day. Changes in average DSOs and DIOs are gen-
erally related to linearity of shipments and the timing of inventory builds, respectively. Changes in DPOs are gen-
erally related to production volume and the timing of purchases during the period. In 2012, the higher DPOs were
primarily due to the impact of including HGST’s accounts payable balances as of June 29, 2012, but only including
HGST’s cost of sales from the date of acquisition. From time to time, we modify the timing of payments to our ven-
dors. 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 grant-
ing to, or receiving from, our vendors’ payment term accommodations.
Investing Activities
Net cash used in investing activities for 2014 was $1.9 billion as compared to $970 million for 2013 and $4.2
billion for 2012. During 2014, cash used in investing activities consisted primarily of $823 million related to acquis-
itions, net of cash acquired, $628 million of capital expenditures, $561 million related to the purchase of investments
and $4 million of other investing activities, net, offset by $72 million of proceeds from the sales and maturities of
investments. During 2013, cash used in investing activities consisted primarily of $952 million of capital
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