SanDisk 2014 Annual Report Download - page 130

Net cash used in financing activities for fiscal year 2013 was primarily related to share repurchases of
$1.59 billion, repayment of our 1% Convertible Senior Notes due 2013 of $928 million, and dividends paid
of $101 million, offset by net cash received of $1.48 billion from the issuance of our 0.5% Notes due 2020,
and related transactions including the purchase of a convertible bond hedge for $332 million and proceeds
from the sale of warrants of $218 million.
Liquid Assets. As of December 28, 2014, we had cash, cash equivalents and short-term marketable
securities of $2.26 billion. We had $2.76 billion of long-term marketable securities, which we believe are
also liquid assets, but are classified as long-term marketable securities due to the remaining maturity of
each marketable security being greater than one year.
Short-Term Liquidity. As of December 28, 2014, our working capital balance was $2.01 billion. During
fiscal year 2015, we expect our total capital investment to be approximately $1.40 billion, including our net
capital investments in Flash Ventures and our investment in non-fab property and equipment. We expect
these fiscal year 2015 investments to be funded by cash of approximately $300 million to $400 million and
by Flash Ventures’ working capital and equipment leases of approximately $1.0 billion to $1.1 billion. For
the fiscal year ended December 28, 2014, total capital investments were $1.15 billion, of which $207 million
was funded by our cash and the remainder was funded by Flash Ventures’ working capital and equipment
leases.
The conversion provision of the 1.5% Notes due 2017 allows the holders the option to convert their
notes during a calendar quarter if our stock price exceeds 130% of the conversion price of the 1.5% Notes
due 2017 for at least 20 trading days during the last 30 consecutive trading days of the previous calendar
quarter. As of the calendar quarter ended December 31, 2014, the 1.5% Notes due 2017 were convertible
at the holders’ option beginning on January 1, 2015 and ending March 31, 2015. Accordingly, the carrying
value of the 1.5% Notes due 2017 was classified as a current liability as of December 28, 2014 and the
difference between the principal amount payable in cash upon conversion and the carrying value of the
1.5% Notes due 2017 was reclassified from Stockholders’ equity to Convertible short-term debt conversion
obligation on our Consolidated Balance Sheet as of December 28, 2014, and will remain so while the notes
are convertible. The determination of whether or not the 1.5% Notes due 2017 are convertible must
continue to be performed on a calendar-quarter basis. Consequently, the 1.5% Notes due 2017 may be
reclassified as long-term debt if the conversion threshold is not met in future quarters. Upon conversion of
any of the 1.5% Notes due 2017, we will deliver cash up to the principal amount of the 1.5% Notes due
2017 and shares of our common stock (plus cash in lieu of any fractional shares of common stock), with
respect to any conversion value greater than the principal amount of the 1.5% Notes due 2017. Based on
the last closing price of the quarter ended December 28, 2014 of $101.31 for our common stock, if all of the
1.5% Notes due 2017 then outstanding were converted, 9.6 million shares would be distributed to the
holders. During the fiscal year ended December 28, 2014, $3 million aggregate principal amount of the
1.5% Notes due 2017 (‘‘Converted Notes’’) was converted at the holders’ option. Upon conversion of the
Converted Notes, we delivered cash of $3 million and 26,626 shares of our common stock with respect to
any conversion value greater than the principal amount of the Converted Notes. Through December 28,
2014, we had received 26,622 shares of our common stock from the exercise of a portion of the convertible
note hedges related to the conversion of $3 million aggregate principal amount of the 1.5% Notes due
2017. As of January 30, 2015, we had received additional conversion notices for a total of $46 thousand
aggregate principal amount of the 1.5% Notes due 2017, for which conversion is expected to be completed
in the first quarter of fiscal year 2015.
Depending on the forecasted demand for our products, we may decide to make additional
investments, which could be substantial, in wafer fabrication capacity and assembly and test manufacturing
equipment. We may also engage in merger or acquisition transactions, make equity investments in other
companies or purchase or license technologies. These activities may require us to raise additional
financing, which could be difficult to obtain, and which if not obtained in satisfactory amounts, could
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