SanDisk 2012 Annual Report Download - page 193

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
recorded approximately $1.7 million in stockholders’ equity from the deferred tax asset related to the
convertible bond hedge at inception of the transaction. As of December 30, 2012, the Company had not
purchased any shares under this convertible bond hedge agreement.
•Warrants. The Company received $188.1 million from the same counterparties from the sale of
warrants to purchase up to approximately 19.1 million shares of the Company’s common stock at an
exercise price of $73.33 per share. As of December 30, 2012, the warrants (separated into 40 separate
components) had an average expected life of 5.0 years and expire over 40 different dates from
November 13, 2017 through January 10, 2018. At each expiration date, the Company may, at its option,
elect to settle the warrants on a net share basis. As of December 30, 2012, the warrants had not been
exercised and remained outstanding. The value of the warrants was initially recorded in equity and
continues to be classified as equity.
1% Convertible Notes Due 2035. On February 11, 2010, the Company notified the holders of its 1%
Convertible Notes due 2035 that it would exercise its option to redeem the $75.0 million principal amount
outstanding on March 15, 2010 for a redemption price of $1,000 per $1,000 principal amount of the notes, plus
accrued interest. On March 15, 2010, the Company completed the redemption of the 1% Convertible Notes due
2035 through an all-cash transaction of $75.0 million plus accrued interest of $0.4 million. As of the date of the
completion of the redemption, the Company had no further obligations related to the 1% Convertible Notes due
2035.
Note 8: Stock Repurchase Program
During the fourth quarter of fiscal year 2011, the Company’s Board of Directors authorized the repurchase
of up to $500.0 million of the Company’s outstanding common stock over a period of up to five years. In
December 2012, the Company’s Board of Directors authorized an additional $750.0 million for stock
repurchases, bringing the total amount authorized for stock repurchases to $1.25 billion, of which $1.02 billion
remained available for stock repurchases as of December 30, 2012. Under this program, shares repurchased are
recorded as a reduction to capital in excess of par value and retained earnings in the Company’s Consolidated
Balance Sheet. From inception of this stock repurchase program through December 30, 2012, the Company had
repurchased 5.73 million shares for $234.0 million, of which 5.65 million shares for an aggregate purchase price
of $230.0 million were repurchased during the fiscal year ended December 30, 2012. As part of its stock
repurchase program, the Company may from time-to-time enter into structured stock repurchase arrangements
with financial institutions. These arrangements generally require the Company to make an upfront cash payment
in exchange for the right to receive shares of its common stock or cash at the expiration of the agreement,
dependent upon the volume-weighted average price of the Company’s common stock at the expiration date. The
initial cash principal payment, as well as the subsequent repayment of principal and return on principal, if settled
in cash, are recorded as a component of capital in excess of par value in the Company’s Consolidated Balance
Sheet. During the fiscal year ended December 30, 2012, the Company entered into structured stock repurchase
arrangements that required upfront cash payments of $40.0 million. These arrangements settled within the fiscal
year ended December 30, 2012 and resulted in zero stock repurchases and the Company receiving its original
upfront cash payment of $40.0 million and returns totaling $2.7 million.
Note 9: Concentrations of Risk and Segment Information
Geographic Information and Major Customers. The Company markets and sells flash memory products in
the U.S. and in foreign countries through its sales personnel, dealers, distributors, retailers and subsidiaries. The
Company’s Chief Operating Decision Maker, its President and Chief Executive Officer, evaluates performance
of the Company and makes decisions regarding allocation of resources based on total Company results. Since the
Company operates in one segment, all financial segment information can be found in the accompanying
Consolidated Financial Statements.
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