SanDisk 2013 Annual Report Download - page 157

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. We expect to pay approximately $52 million to these holders of record on
February 24, 2014.
Our short-term liquidity is impacted in part by our ability to maintain compliance with covenants in
the outstanding Flash Ventures master lease agreements. The Flash Ventures master lease agreements
contain customary covenants for Japanese lease facilities as well as an acceleration clause for certain
events of default related to us as guarantor, including, among other things, our failure to maintain
shareholder equity of at least $1.51 billion. As of December 29, 2013, Flash Ventures was in compliance
with all of its master lease covenants, including the shareholder equity covenant with our stockholders’
equity at $6.97 billion as of December 29, 2013. If our shareholders’ equity falls below $1.51 billion or
other events of default occur, Flash Ventures would become non-compliant with certain covenants under
certain master equipment lease agreements and would be required to negotiate a resolution to the
non-compliance to avoid acceleration of the obligations under such agreements, which at December 29,
2013 was 51.6 billion Japanese yen, or approximately $492 million based upon the exchange rate at
December 29, 2013.
As of December 29, 2013, the amount of cash and cash equivalents and short and long-term
marketable securities held by foreign subsidiaries was $858 million, and a portion of this amount could be
subject to U.S. income taxes if repatriated to the U.S. We provide for U.S. income taxes on the earnings of
foreign subsidiaries unless the earnings are considered indefinitely invested outside of the U.S. As of
December 29, 2013, no provision had been made for U.S. income taxes or foreign withholding taxes on
$752 million of undistributed earnings of foreign subsidiaries since we intend to indefinitely reinvest these
earnings outside the U.S. We determined that the calculation of the amount of unrecognized deferred tax
liability related to these cumulative unremitted earnings was not practicable. If these earnings were
distributed to the U.S., we would be subject to additional U.S. income taxes and foreign withholding taxes
reduced by available foreign tax credits.
Our Board of Directors has authorized up to $3.75 billion for stock repurchases, of which $1.93 billion
remain available for stock repurchases as of December 29, 2013. As of December 29, 2013, we had
cumulatively repurchased on the open market 15.9 million shares for $823 million, of which 10.2 million
shares for $589 million were repurchased in fiscal year 2013. In addition to shares repurchased on the open
market, we entered into an ASR program 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 purchase period based on the volume weighted average price of our common
stock during the period. The financial institution initially delivered 14.5 million shares in the third quarter
of fiscal year 2013. 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.
Long-Term Requirements. Depending on the forecasted demand for our products, we may decide to
make additional investments, which could be substantial, in wafer fabrication capacity and assembly and
test manufacturing equipment. We may also engage in merger or acquisition transactions; make equity
investments in other companies; or purchase or license technologies. These activities may require us to
raise additional financing, which could be difficult to obtain, and which if not obtained in satisfactory
amounts, could prevent us from funding Flash Ventures, increasing our wafer supply, developing or
enhancing our products, taking advantage of future opportunities, engaging in investments in or
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Annual Report