SanDisk 2010 Annual Report Download - page 157

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assets. If we issue equity securities in connection with an acquisition, the issuance may be dilutive to our existing
stockholders. Alternatively, acquisitions made entirely or partially for cash would reduce our cash reserves.
Acquisitions may require significant capital infusions, typically entail many risks and could result in
difficulties in assimilating and integrating the operations, personnel, technologies, products and information
systems of acquired companies. We may experience delays in the timing and successful integration of acquired
technologies and product development through volume production, unanticipated costs and expenditures,
changing relationships with customers, suppliers and strategic partners, or contractual, intellectual property or
employment issues. In addition, key personnel of an acquired company may decide not to work for us. The
acquisition of another company or its products and technologies may also result in our entering into a geographic
or business market in which we have little or no prior experience. These challenges could disrupt our ongoing
business, distract our management and employees, harm our reputation, subject us to an increased risk of
intellectual property and other litigation and increase our expenses. These challenges are magnified as the size of
the acquisition increases, and we cannot assure you that we will realize the intended benefits of any acquisition.
Acquisitions may require large one-time charges and can result in increased debt or contingent liabilities, adverse
tax consequences, substantial depreciation or deferred compensation charges, the amortization of identifiable
purchased intangible assets or impairment of goodwill, any of which could have a material adverse effect on our
business, financial condition or results of operations.
Mergers and acquisitions of high-technology companies are inherently risky and subject to many factors
outside of our control, and no assurance can be given that our previous or future acquisitions will be successful
and will not materially adversely affect our business, operating results, or financial condition. Failure to manage
and successfully integrate acquisitions could materially harm our business and operating results. Even when an
acquired company has already developed and marketed products, there can be no assurance that such products
will be successful after the closing, will not cannibalize sales of our existing products, that product enhancements
will be made in a timely fashion or that pre-acquisition due diligence will have identified all possible issues that
might arise with respect to such company. Failed business combinations, or the efforts to create a business
combination, can also result in litigation.
Our success depends on our key personnel, including our executive officers, and the loss of key personnel or
the transition of key personnel, including our Chief Executive Officer, could disrupt our business. Our success
greatly depends on the continued contributions of our senior management and other key research and
development, sales, marketing and operations personnel. We do not have employment agreements with any of
our executive officers and they are free to terminate their employment with us at any time. On January 1, 2011,
Sanjay Mehrotra became our President and Chief Executive Officer, and while we intend to make this transition
as smooth as possible, this leadership change may result in disruptions to our business or operations. In addition,
our success will depend on our ability to recruit and retain additional highly-skilled personnel. We have relied on
equity awards in the form of stock options and restricted stock units as one means for recruiting and retaining
highly skilled talent and a reduction in our stock price may reduce the effectiveness of share-based awards used
for retaining employees.
Terrorist attacks, war, threats of war and government responses thereto may negatively impact our
operations, revenues, costs and stock price. Terrorist attacks, U.S. military responses to these attacks, war,
threats of war and any corresponding decline in consumer confidence could have a negative impact on consumer
demand. Any of these events may disrupt our operations or those of our customers and suppliers and may affect
the availability of materials needed to manufacture our products or the means to transport those materials to
manufacturing facilities and finished products to customers. Any of these events could also increase volatility in
the U.S. and world financial markets, which could harm our stock price and may limit the capital resources
available to us and our customers or suppliers, or adversely affect consumer confidence. We have substantial
operations in Israel including a development center in Northern Israel, near the border with Lebanon, and a
research center in Omer, Israel, which is near the Gaza Strip, areas that have experienced significant violence and
political unrest. Turmoil and unrest in Israel, the Middle East or other regions could cause delays in the
development or production of our products. This could harm our business and results of operations.
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