SanDisk 2013 Annual Report Download - page 133

We also rely on cash incentive awards to motivate and retain employees. These cash incentive awards
depend significantly on our financial and business performance, and variations in our financial and
business performance from our expectations at the time we set the targets for such cash incentive awards
could result in decreased or eliminated awards, reducing the effectiveness of these cash incentive awards in
retaining employees.
Terrorist attacks, war, threats of war and government responses thereto may negatively impact our
operations, revenue, 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 and could harm
our business and operating results.
Natural disasters or epidemics in the countries in which we or our suppliers or subcontractors operate
could harm our operations. Our supply chain operations, including those of our suppliers and
subcontractors, are concentrated in the U.S., China, Japan, Malaysia, Singapore and Taiwan. In the past,
certain of these areas have been affected by natural disasters such as earthquakes, tsunamis, floods and
typhoons, and some areas have been affected by epidemics. In addition, our headquarters, which house a
significant concentration of our research and development and engineering staff, are located in the San
Francisco Bay Area, an area that is prone to earthquakes. If a natural disaster or epidemic were to occur in
one or more of these areas, we could incur a significant work or production stoppage. The impact of these
potential events is magnified by the fact that we do not have insurance for most natural disasters or
epidemics, including earthquakes and tsunamis. The impact of a natural disaster or epidemic could harm
our business and operating results.
Disruptions in global transportation could impair our ability to deliver or receive product on a timely basis,
or at all, causing harm to our financial results. Our raw materials, work-in-process and finished products are
primarily distributed via air transport. If there are significant disruptions in air transport, we may not be
able to deliver our products or receive raw materials. Any natural disaster or other event that affects air
transport in Asia could disrupt our ability to receive raw materials in, or ship finished product from, our
Shanghai, China facility or our Asia-based contract manufacturers. As a result, our business and operating
results may be harmed.
We rely on information systems to run our business and any prolonged down time could harm our business
operations and/or financial results. We rely on an enterprise resource planning system, as well as multiple
other systems, databases, and data centers to operate and manage our business. Any information system
problems, programming errors or unanticipated system or data center interruptions could impact our
continued ability to successfully operate our business and could harm our financial results or our ability to
accurately report our financial results on a timely basis.
Anti-takeover provisions in our charter documents, stockholder rights plan and Delaware law could
discourage or delay a change in control and negatively impact our stockholders. We have taken a number of
actions that could have the effect of discouraging a takeover attempt. For example, we have a stockholders’
rights plan that would cause substantial dilution to a stockholder, and substantially increase the cost paid
by a stockholder, who attempts to acquire us on terms not approved by our board of directors. This could
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Annual Report