SanDisk 2013 Annual Report Download - page 144

dilution associated with the conversion of the 0.5% Notes due 2020. We used approximately $150 million
of the net proceeds of the 0.5% Notes due 2020 to repurchase 2.2 million shares of our common stock. We
currently intend to use the remainder of the net proceeds of the offering for general corporate purposes,
including (1) the repurchase, from time-to-time, of shares of our common stock pursuant to our existing
stock repurchase program; (2) to fund potential strategic investments or acquisitions of products,
technologies or complementary businesses or to obtain the right to license or use additional technologies;
(3) the repayment at maturity or repurchase, from time-to-time, of a portion of our currently outstanding
indebtedness; and (4) other general corporate purposes, including capital expenditures related to
manufacturing and technology. We currently have no commitments or agreements for any specific
acquisitions, investments or licenses.
Acquisitions. In August 2013, we completed the acquisition of SMART Storage, a developer of
enterprise SSDs. This acquisition represents an opportunity for us to further enhance our storage product
portfolio. We acquired all of the outstanding shares of SMART Storage through an all-cash transaction.
The total purchase price was $305 million. Acquisition-related costs of approximately $3 million were
expensed during fiscal year 2013.
Dividend Declarations. In each of the third and fourth quarters of fiscal year 2013, we paid a cash
dividend of $0.225 per common share. On January 21, 2014, our Board of Directors declared a dividend of
$0.225 per share for holders of record as of February 3, 2014, which is to be paid on February 24, 2014.
Share Repurchase Program. During the third quarter of fiscal year 2013, our Board of Directors
increased the share repurchase program authorization by $2.50 billion, to an aggregate amount of
$3.75 billion, for share repurchases. In the third quarter of fiscal year 2013, we entered into an ASR
agreement with a financial institution to purchase $1.0 billion of our common stock. In exchange for an
up-front payment totaling $1.0 billion, the financial institution committed to deliver shares during the
ASR’s purchase period, which will end no later than April 8, 2014. The total number of shares ultimately
delivered, and therefore the average price paid per share, will be determined at the end of the applicable
purchase period based on the volume weighted average price of our common stock during that period.
During the third quarter of fiscal year 2013, 14.5 million shares were initially delivered to us by the
financial institution. This does not represent the final number of shares to be delivered under the ASR.
Depending on the average price of our common stock while the ASR is outstanding, upon the maturity of
the ASR, the financial institution may be required to deliver additional shares to us or we may be required
to deliver shares to the financial institution. We currently expect the purchase period for the ASR program
to remain open until April 8, 2014. The up-front payment of $1.0 billion was accounted for as a reduction
to stockholders’ equity in our Consolidated Balance Sheet.
Impairments. In the third quarter of fiscal year 2013, we recorded impairment charges of $47 million
related to amortizable intangible assets and $36 million related to an in-process research and development
intangible asset, both related to the acquisition of Pliant. These impairment charges are primarily the
result of our decision to integrate more of the SMART Storage architecture and technology into our future
enterprise product roadmap and from the delay in the launch of our next-generation SSD platform built on
the Pliant technology.
Critical Accounting Policies & Estimates
Our discussion and analysis of our financial condition and results of operations is based upon our
Consolidated Financial Statements, which have been prepared in accordance with U.S. Generally
Accepted Accounting Principles, or GAAP.
Use of Estimates. The preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related
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