SanDisk 2013 Annual Report Download - page 158

acquisitions of companies, growing our business, responding to competitive pressures or unanticipated
industry changes, any of which could harm our business.
Financing Arrangements. At December 29, 2013, we had $1.0 billion aggregate principal amount of our
1.5% Notes due 2017 and $1.5 billion aggregate principal amount of our 0.5% Notes due 2020 outstanding.
See Note 6, ‘‘Financing Arrangements,’’ in the Notes to Consolidated Financial Statements of this
Form 10-K included in Item 8 of this report.
1.5% Notes due 2017. Concurrent with the issuance of the 1.5% Notes due 2017, we sold warrants to
acquire initially up to approximately 19.1 million shares of our common stock at an exercise price of
$73.3250 per share. The 1.5% Notes due 2017 contains provisions whereby the number of shares to be
acquired under the warrants and the strike price are adjusted if we pay a cash dividend or make a
distribution to all or substantially all holders of our common stock. After adjusting for the dividends paid
through December 29, 2013, holders of the warrants may acquire up to approximately 19.2 million shares
of our common stock at a strike price of $72.8005 per share. The warrants mature on 40 different dates
from November 13, 2017 through January 10, 2018, and are exercisable at the maturity date. At each
maturity date, we may, at our option, elect to settle the warrants on a net share basis. As of December 29,
2013, the warrants had not been exercised and remain outstanding. In addition, concurrent with the
issuance of the 1.5% Notes due 2017, we entered into a convertible bond hedge transaction in which
counterparties initially agreed to sell to us up to approximately 19.1 million shares of our common stock,
which is the number of shares initially issuable upon conversion of the 1.5% Notes due 2017 in full, at a
conversion price of $52.37 per share. The 1.5% Notes due 2017 contains provisions where the number of
shares to be sold under the convertible bond hedge transaction and the conversion price will be adjusted if
we pay a cash dividend or make a distribution to all or substantially all holders of our common stock. After
adjusting for the dividends paid through December 29, 2013, the counterparties may acquire up to
approximately 19.2 million shares of our common stock, which is the number of shares issuable upon
conversion of the 1.5% Notes due 2017 in full, at a price of $52.00 per share. The convertible bond hedge
transaction will be settled in net shares and will terminate upon the earlier of the maturity date of the 1.5%
Notes due 2017 or the first day none of the 1.5% Notes due 2017 remain outstanding due to conversion or
otherwise. Settlement of the convertible bond hedge in net shares, based on the number of shares issuable
upon conversion of the 1.5% Notes due 2017, on the expiration date would result in us receiving net shares
equivalent to the number of shares issuable by us upon conversion of the 1.5% Notes due 2017. As of
December 29, 2013, we had not purchased any shares under this convertible bond hedge agreement.
0.5% Notes due 2020. Concurrent with the issuance of the 0.5% Notes due 2020, we sold warrants to
acquire initially up to approximately 16.3 million shares of our common stock at an exercise price of
$122.9220 per share. The 0.5% Notes due 2020 contains provisions whereby the number of shares to be
acquired under the warrants and the strike price are adjusted if we pay a cash dividend greater than a
regular quarterly cash dividend of $0.225 per share or make a distribution to all or substantially all holders
of our common stock. As of December 29, 2013, no adjustment has been made to the number of shares to
be acquired under the warrants or the strike price. The warrants mature on 40 different dates from
January 13, 2021 through March 11, 2021, and are exercisable at the maturity date. At each maturity date,
we may, at our option, elect to settle the warrants on a net share basis. As of December 29, 2013, the
warrants had not been exercised and remain outstanding. In addition, concurrent with the issuance of the
0.5% Notes due 2020, we entered into a convertible bond hedge transaction in which counterparties
initially agreed to sell to us up to approximately 16.3 million shares of our common stock, which is the
number of shares initially issuable upon conversion of the 0.5% Notes due 2020 in full, at a conversion
price of $92.19 per share. The 0.5% Notes due 2020 contains provisions where the number of shares to be
sold under the convertible bond hedge transaction and the conversion price will be adjusted if we pay a
cash dividend greater than a regular quarterly cash dividend of $0.225 per share or make a distribution to
all or substantially all holders of our common stock. As of December 29, 2013, no adjustment has been
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