SanDisk 2013 Annual Report Download - page 221

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
competition laws relating to the licensing practices and operations of SD-3C. The complaint seeks an
injunction against collection of Secure Digital (‘‘SD’’) card royalties, treble damages, restitution, pre- and
post-judgment interest, costs, and attorneys’ fees, as well as a declaration that Panasonic and SD-3C
engaged in patent misuse and that the patents subject to such alleged misuse should be held
unenforceable. The Company is not named as a defendant in this case, but it established SD-3C along with
Panasonic and Toshiba, and the complaint includes various factual allegations concerning the Company. As
a member of SD-3C, the Company may be responsible for a portion of any monetary award. Other
requested relief, including an injunction or declaration of patent misuse, could result in a loss of revenue to
the Company. Defendants filed a motion to dismiss on September 24, 2010, and Samsung filed a First
Amended Complaint (‘‘FAC’’) on October 14, 2010. On August 25, 2011, the District Court dismissed the
patent misuse claim with prejudice, but gave Samsung leave to amend its other claims. On January 3, 2012,
the District Court granted defendants’ motion to dismiss Samsung’s complaint without leave to amend.
Samsung has appealed, dated January 25, 2012. The briefing on appeal is complete, and oral argument
took place on December 5, 2013.
Federal Antitrust Class Action Against SanDisk, et al. On March 15, 2011, a putative class action captioned
Oliver v. SD-3C LLC, et al was filed in the U.S. District Court for the Northern District of California (the
‘‘District Court’’) on behalf of a nationwide class of indirect purchasers of SD cards alleging various claims
against the Company, SD-3C, Panasonic, Toshiba, and Toshiba America Electronic Components, Inc.
under federal antitrust law pursuant to Section 1 of the Sherman Act, California antirust and unfair
competition laws, and common law. The complaint seeks an injunction of the challenged conduct,
dissolution of ‘‘the cooperation agreements, joint ventures and/or cross-licenses alleged herein,’’ treble
damages, restitution, disgorgement, pre- and post-judgment interest, costs, and attorneys’ fees. Plaintiffs
allege that the Company (along with the other members of SD-3C) conspired to artificially inflate the
royalty costs associated with manufacturing SD cards in violation of federal and California antitrust and
unfair competition laws, which in turn allegedly caused plaintiffs to pay higher prices for SD cards. The
allegations are similar to, and incorporate by reference the complaint in the Samsung Electronics Co., Ltd.
v. Panasonic Corporation; Panasonic Corporation of North America; and SD-3C LLC described above. On
May 21, 2012, the District Court granted Defendants’ motion to dismiss the complaint with prejudice.
Plaintiffs have appealed. Briefing on the appeal was completed on June 21, 2013. Oral argument took
place on December 5, 2013.
Note 17: Supplementary Financial Data (Unaudited)
Fiscal quarters ended
March 31, June 30, September 29, December 29,
2013 2013 2013 2013
(In thousands, except per share data)
2013
Revenue .............................. $ 1,340,729 $ 1,476,263 $ 1,625,153 $ 1,727,858
Gross profit ............................ 531,516 676,819 801,993 857,155
Operating income ........................ 253,791 392,558 408,448 507,413
Net income ............................ $ 166,229 $ 261,789 $ 276,859 $ 337,780
Net income per share
Basic .............................. $ 0.69 $ 1.08 $ 1.20 $ 1.50
Diluted ............................ $ 0.68 $ 1.06 $ 1.18 $ 1.45
F-55
Annual Report