SanDisk 2013 Annual Report Download - page 41

Fiscal Year 2013 Business Highlights.
• Achieved record revenue of $6.17 billion, up 22% compared to fiscal year 2012.
• Delivered non-GAAP operating margin of 29%, resulting in record diluted earnings per share on a
non-GAAP basis of $5.31 per share, more than twice the non-GAAP diluted earnings per share in
fiscal year 2012.
• Achieved record cash flow from operations of $1.86 billion, more than triple the $530 million of
cash flow from operations in fiscal year 2012.
• Returned cash to stockholders through $1.59 billion of share repurchases and the initiation of a
quarterly dividend beginning in the third quarter.
• On a year-over-year basis, full-year solid state drive (‘‘SSD’’) sales increased by 170%, which
represented 19% of fiscal year 2013 revenue, up from 9% of fiscal year 2012 revenue.
• Grew embedded products revenue by 37% compared to fiscal year 2012.
• Achieved multiple design wins in client SSDs with existing and new customers, and the Company
now supplies client SSDs to all leading PC OEMs.
• In its Retail channel, achieved record annual revenue with share gains in cards and USB drives.
• Completed the strategic acquisition of SMART Storage Systems (‘‘SMART Storage’’),
strengthening the Company’s technology position and broadening its solutions in enterprise storage.
Non-GAAP operating margin differs from what is reported under GAAP. See Annex A for
information on the rationale for the use of non-GAAP financial measures and for a reconciliation of
non-GAAP financial measures to the Company’s results as reported under GAAP.
As discussed in more detail below, a significant portion of the compensation for the Company’s
Named Executive Officers in fiscal year 2013 was based on the performance-based cash incentive program,
which is tied to the achievement of certain financial and strategic objectives established by the
Compensation Committee at the beginning of the year. The Company’s diluted non-GAAP earnings per
share (‘‘EPS’’) for fiscal year 2013 was $5.31 per share, significantly above the EPS target that drove the
financial objectives portion of the cash incentive program, as established by the Compensation Committee
and, in aggregate, the Company also exceeded the target performance for its strategic objectives.
The Company uses non-GAAP measures to establish financial and strategic goals and to measure
performance for executive officer compensation because the Company believes that non-GAAP measures
allow management to better evaluate the core operating performance of the Company especially when
comparing to the results of previous periods and to the Company’s business model objectives. For
reconciliation of non-GAAP to GAAP financial measures, see Item 7, ‘‘Management’s Discussion and
Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures,’’ of the
Company’s Form 10-K for the fiscal year ended December 29, 2013.
Continued Commitment to Good Compensation Governance. The Company endeavors to maintain
good governance standards with respect to its executive compensation program. The Company has
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