SanDisk 2013 Annual Report Download - page 198

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
may be made in one or more repurchases, in compliance with Rule 10b-18 of the Securities Exchange Act,
subject to market conditions, applicable legal requirements, and other factors. The program does not
obligate the Company to acquire any particular amount of common stock, and the program may be
suspended at any time at the Company’s discretion. As part of the share repurchase program, the
Company has entered into, and may continue to enter into, structured share repurchase transactions with
financial institutions. These agreements generally require that the Company make an up-front payment in
exchange for the right to receive a fixed number of shares of its common stock upon execution of the
agreement, with a potential increase or decrease in the number of shares at the end of the term of the
agreement.
On July 31, 2013, the Company entered into an accelerated share repurchase (‘‘ASR’’) agreement with
a financial institution to purchase $1.0 billion of the Company’s common stock. In exchange for up-front
payments totaling $1.0 billion, the financial institution committed to deliver shares during the ASR’s
purchase period, which will end no later than April 8, 2014. The total number of shares ultimately
delivered, and therefore the average price paid per share, will be determined at the end of the purchase
period based on the volume weighted average price of the Company’s stock during the period. During the
third quarter of fiscal year 2013, 14.5 million shares under this ASR program were initially delivered to the
Company. This does not represent the final number of shares to be delivered under the ASR. Depending
on the average price of the Company’s common stock while the ASR is outstanding, upon the maturity of
the ASR, the financial institution may be required to deliver additional shares to the Company or the
Company may be required to deliver shares to the financial institution. The up-front payment of
$1.0 billion was accounted for as a reduction to stockholders’ equity in the Company’s Consolidated
Balance Sheet.
The Company reflected the ASR as a repurchase of common stock for purposes of calculating
earnings per share and as a forward contract indexed to its own common stock. The forward contract met
all of the applicable criteria for equity classification, and therefore, was not accounted for as a derivative
instrument.
Concurrent with the issuance of the 0.5% Notes due 2020, the Company used approximately
$150.0 million of the net proceeds of the 0.5% Notes due 2020 to repurchase 2.2 million shares of its
common stock.
From inception through December 29, 2013, the Company has repurchased on the open market
30.4 million shares for an aggregate purchase price of $1.82 billion, of which 24.7 million shares for an
aggregate purchase price of $1.59 billion, including the ASR, were repurchased during fiscal year 2013.
As of December 29, 2013, the remaining authorized spending under the Company’s share repurchase
program was $1.93 billion.
Note 8: 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.
F-32