R	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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ITEM 1.	BUSINESS

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Create industry-leading storage solutions by leveraging our innovative technology. We have a deep understanding of the technology used in the design, manufacture and operation of NAND flash memory and have invented many of the key technologies deployed in the NAND flash industry. We continue to develop advanced generations of NAND flash technology with increased memory density and capacity. In parallel with our NAND scaling efforts, we continue to invest in future alternative technologies that may be viable alternatives to our current NAND flash technology when it can no longer scale at a sufficient rate, or at all. In addition, we continue to invest in other technologies, such as our proprietary controllers, firmware and software that manage the NAND flash memory.

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Maintain cost leadership, leverage scale and drive operational excellence. We believe the markets for flash storage are generally price elastic, meaning that a decrease in the price per gigabyte results in increased demand for higher capacities and the emergence of new applications for flash storage. As a result, we strive to continuously reduce the cost of NAND flash memory in order to enable us to profitably grow our business, supply a diverse set of customers and channels, and continue to grow our markets. We have invested heavily in a vertically integrated business model, which includes our investments in high volume, state-of-the-art NAND flash manufacturing facilities in Japan through our ventures with Toshiba and our in-house assembly and test facility in Shanghai, China in order to reduce the costs of producing our products, increase our ability to control the quality of our products and speed delivery to our customers. We will continue to leverage our vertical integration and invest in additional NAND flash memory fabrication capacity in order to produce leading-edge, high-quality, low-cost products that our customers can count on to store and gain reliable access to their data.

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Drive profitable growth across diversified markets, customers and channels. We create new markets for NAND flash memory through our design and development of NAND flash solutions that are catered to specific requirements in the end markets we serve. We continue to expand our retail customer base to new geographic regions and outlets, and we continue to achieve design wins from our current and new OEM customers by offering leading-edge NAND flash storage solutions. In order to maximize the market penetration of our products, we are also expanding our distribution channels to better reach small and medium business customers.

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Removable Cards. Our removable cards are used in a variety of applications and consumer devices. Our CompactFlash® and Secure Digital, or SD, removable cards are primarily used in digital cameras and camcorders. Our ultra-small microSD removable cards are designed primarily for use in mobile phones. We offer removable cards with increasing levels of performance and reliability through our SanDisk Ultra®, SanDisk Extreme® and SanDisk Extreme PRO® product lines.

•	Embedded Products. Our embedded products are designed to meet the increasing demand for embedded storage for mobile phones, tablets and other portable devices. Our embedded products include our iNAND™ embedded flash product line, our multi-chip packages, or MCP, which combine NAND and mobile DRAM in an integrated package, and other embedded solutions.

•	USB Flash Drives. Our USB flash drives provide the user with the ability to carry files and application software in a portable format. Our USB flash drives are used in the computing and consumer markets, and are designed for high-

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Solid State Drives. We offer SSDs for the client computing and enterprise data center markets. Client computing encompasses desktop computers, notebook computers, tablets and other computing devices. Our client SSDs are used in client computing devices and can be used in a stand-alone configuration, in lieu of a hard drive, or in a dual-drive configuration in conjunction with a hard drive. Our client SSDs include removable and embedded drives and custom form factors. Our enterprise SSDs are used for high-performance data storage and to accelerate enterprise application performance. We also provide enterprise software solutions designed to improve performance of SSDs in traditional and virtualized environments, as well as in mass storage and cache acceleration configurations.

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Digital Media Players. Sansa® is our branded line of flash-based digital media players for the audio and video player market. Many of our Sansa models offer a removable card slot for storage capacity expansion and easy transportability of content between devices. Our Sansa line of products includes features such as FM radio, voice recording and support for a variety of audio and video download and subscription services.

•	Wafers and Components. We sell raw memory wafers and memory components to customers who package the memory under their own brands or embed the memory in other products.

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Mobile. We provide embedded and removable storage for mobile devices. We are a leading supplier of microSD removable storage cards and embedded products, such as iNAND, for use in phones, tablets and other mobile devices. Multimedia features in mobile devices, such as high-definition, or HD, videos, full length feature films and games, as well as native and downloaded applications have driven significantly increased demand for flash storage in these devices.

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Consumer Electronics. We provide flash storage solutions to multiple consumer markets, including imaging, USB drives, gaming, audio/video and GPS. Flash storage solutions are used in digital cameras to store images, in solid-state digital camcorders to store video and in many other devices to store digital data. Portable game devices now include advanced features that require high-capacity memory storage cards and we offer cards that are specifically packaged for the gaming market. We also sell a line of digital media players with both embedded and removable memory under our Sansa brand with varying combinations of audio and video capabilities. Primary removable card formats for consumer devices include CompactFlash, SD and microSD. USB flash drives allow consumers to store and transfer files, pictures and music on keychain-sized devices.

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Computing. We provide multiple flash storage devices and solutions for the computing market. We provide SATA SSDs for the client computing market, which encompasses tablets, notebooks, thin-and-light laptops and desktop computers. We also provide enterprise SSDs that are designed for mission critical environments and include solutions optimized for storage in write intensive, read intensive and mixed use applications. These enterprise SSDs include SAS SSDs for enterprise storage systems, as well as PCIe SSDs, which are designed to accelerate input/output in application servers. In addition, we believe that SSDs will be the fastest growing NAND flash memory end market over the next several years as SSDs increasingly replace hard disk drives in a variety of computing solutions.

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OEM. Our OEM channel represents sales directly and through distributors to OEMs, system integrators and value-added resellers who bundle, embed or integrate our data storage solutions. Our OEM channel addresses a large variety of applications, including mobile phones, tablets, notebooks, gaming devices, enterprise storage solutions, servers and other computing devices. We also sell our data storage solutions to OEMs that offer our products under their own brand name in retail channels. We sell to our OEM channel through our direct sales representatives as well as through independent manufacturers’ representatives.

•	Retail. We sell our products directly and through distributors to consumer electronics stores, office superstores, photo retailers, mobile phone stores, mass merchants, catalog and mail order companies, e-commerce retailers, drug stores,

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•	high-density flash memory process, module integration, device design and reliability;

•	securing data on a flash memory device;

•	controller design;

•	firmware and software development;

•	system-level integration;

•	multi-die stacking and packaging technology; and

•	low-cost system testing.

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Silicon Sourcing. All of our flash memory system products require silicon chips for the memory and controller components. The vast majority of our memory is supplied by our ventures with Toshiba. This represents captive memory supply and we are obligated to take our share of the output from these ventures or pay the fixed costs associated with that capacity. See “Ventures with Toshiba.” We also purchase non-captive NAND memory supply from other silicon suppliers to supplement our captive memory supply. We generally design our controllers in-house and have them manufactured at third-party foundries.

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Assembly and Testing. We sort and test our memory wafers at captive and third-party facilities in China, Japan and Taiwan. Our products are assembled and tested at both our in-house facility in Shanghai, China, and through our network of contract manufacturers, which are primarily in China and Taiwan. We believe the use of our in-house assembly and test facility, as well as contract manufacturers, reduces the cost of our operations, provides flexibility and gives us access to increased production capacity.

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•	price, quality and on-time delivery of products;

•	product performance, availability and differentiation;

•	success in developing new products, applications and markets;

•	timing of new product announcements and successful introductions;

•	sufficient availability of cost-efficient supply;

•	creation and monetization of IP and the development of industry standards and formats;

•	the number and nature of competitors in a given market; and

•	general market and economic conditions.

•	our strong history of technological innovation and standards creation, which enables us to grow the overall market for flash memory;

•	our IP ownership, in particular our patents, and multi-level cell, or MLC, manufacturing know-how, which provides us with license and royalty revenue as well as cost advantages;

•	Flash Ventures, which provides us with leading-edge, low-cost flash memory;

•	our flexible supply chain;

•	that we market and sell a broader range of card formats than any of our competitors, which gives us an advantage in obtaining strong retail and OEM distribution;

•	that we have global retail distribution for our products through worldwide retail storefronts;

•	that we have worldwide leading market share in removable flash cards and USB flash drives; and

•	our strong financial position.

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•	to treat all employees with dignity and respect;

•	to set up processes and procedures intended to (i) comply with applicable laws and regulations as well as our internal guidelines and (ii) uphold ethical standards;

•	to establish policies and procedures intended to promote the idea that the quality of our products and services, consistency of production and employee well-being are predicated on a safe and healthy work environment; and

•	to establish policies and procedures intended to promote environmental responsibility as an integral part of our culture.

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ITEM 1A.	RISK FACTORS

•	competitive pricing pressures, resulting in lower average selling prices and lower revenues;

•	inability to reduce manufacturing costs to keep pace with reductions in average selling prices, resulting in lower or negative product gross margins;

•	excess, insufficient or mismatched captive memory output or capacity, resulting in lower average selling prices, financial charges and impairments, lost sales and market growth opportunities, lower gross margins or other consequences;

•	timing, volume and cost of wafer production from Flash Ventures as impacted by fab start-up delays and costs, technology transitions, lower than expected yields or production interruptions;

•	inability to penetrate or gain market share in new or growing markets for flash memory, including the client and enterprise SSD markets, and the failure of existing or new markets for flash memory to grow or develop;

•	potential delays in product development or lack of customer acceptance of our solutions, particularly OEM products such as our embedded flash storage solutions, and client and enterprise SSD solutions;

•	fluctuations in customer concentration and the loss of, or reduction in orders from, one or more of our major customers that account for a significant portion of our revenues;

•	lengthy, costly and unpredictable design, qualification and sales processes for a limited number of customers in the enterprise SSD market;

•	increased costs and lower gross margins due to more frequent product updates, returns of obsolete products and warranty claims from our more complex SSD solutions and firmware;

•	excess inventory or lost sales resulting from unpredictable or changing demand for our products;

•	failure to manage the risks associated with our ventures and strategic partnerships with Toshiba;

•	fluctuations or declines in our license and royalty revenues due to license agreement renewals on less favorable terms, non-renewals, business performance of our licensees, or if licensees or we fail to perform on contractual obligations;

•	inability to develop, or unexpected difficulties or delays in developing or ramping with acceptable yields, new technologies such as 1Y-nanometer or subsequent process technologies, X3 NAND memory architecture, BiCS technology, 3D ReRAM, or other advanced alternative technologies;

•	disruptions in our supply chain, whether due to natural disasters, emergencies such as power outages, fires or chemical spills, or employee strikes or other job actions;

•	inability to enhance current products or develop new products on a timely basis or in advance of our competitors;

•	increased memory component and other costs as a result of currency exchange rate fluctuations for the U.S. dollar, particularly with respect to the Japanese yen;

•	inability to obtain non-captive memory supply of the right product mix and quality in the time frame necessary to meet demand, or inability to realize an adequate margin on non-captive purchases;

•	insufficient non-flash memory materials or capacity from our suppliers and contract manufacturers to meet demand or increases in the cost of non-memory materials or capacity;

•	insufficient assembly and test or retail packaging and shipping capacity from our Shanghai, China facility or our contract manufacturers, or labor unrest, employee strikes or other disruptions at any of these facilities;

•	errors or defects in our products caused by, among other things, errors or defects in the memory or controller components, including memory and non-memory components we procure from third-party suppliers;

•	the financial strength and market share of our customers; and

•	the other factors described in this “Risk Factors” section and elsewhere in this report.

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•	we may be unable to successfully develop or qualify SSD solutions that meet our customers’ requirements, and we cannot guarantee that customers will adopt our SSD solutions even if we do;

•	designing and qualifying products in the SSD solutions market will require greater investments and customization than our traditional markets;

•	we may not be able to transition customers to our leading edge products which would prevent us from getting the full cost advantage of new technology transitions due to longer customer product cycles in the SSD solutions market;

•	SSD solutions require more software than our traditional products, and we must continue to develop software expertise; and

•	SSD solutions require different go-to-market strategies compared to our historical consumer and mobile products, and we may be unable to build an effective sales and marketing operation to sell our SSD solutions.

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under the terms of our venture agreements with Toshiba, which govern the operations of Flash Ventures, we have limited power to unilaterally direct most of the activities that most significantly impact Flash Ventures’ financial performance, including technology transitions, capital investment and other manufacturing and operational activities at Flash Ventures; the process of reaching agreement with Toshiba may be time consuming and may result in decisions that could harm our future results of operations, financial condition or competitiveness;

•	the terms of our arrangements with Toshiba include provisions such as exclusivity, transfer restrictions, and limited termination rights, which limit our flexibility; and

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•	we may not always agree with Toshiba on the NAND research and development roadmap, or the technology path beyond NAND flash memory, and we or Toshiba may have different priorities with respect to investment in Flash Ventures.

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NAND Manufacturers. We compete with NAND flash memory manufacturers, including Hynix, Intel, Micron, Samsung and Toshiba. These competitors are large companies that may have greater and more advanced wafer manufacturing capacity, substantially greater financial, technical, marketing and other resources, better recognized brand names and more diversified and lower cost businesses than we do, which may allow them to produce flash memory chips in high volumes at low costs and to sell these flash memory chips themselves or to our competitors at a low cost. In addition, many of our competitors have more diversified semiconductor manufacturing capabilities and can internally produce integrated solutions or hybrid products that may include a combination of NAND flash, DRAM, custom ASICs or other integrated products, while our captive manufacturing capability is solely dedicated to NAND flash. These diversified capabilities may also provide these competitors with a competitive advantage not only in product design and manufacturing due to the ability to leverage know-how in DRAM, custom ASICs or other technologies, but also in a greater ability to respond to industry fluctuations due to their ability to convert their DRAM and other semiconductor manufacturing capacity to NAND flash and vice-versa. Current and future memory manufacturer competitors could produce alternative flash or other memory technologies that could compete against our NAND flash technology or our alternative technologies, which may reduce demand or accelerate price declines for our products. Furthermore, the future rate of scaling of the NAND flash technology design that we employ may slow down significantly, which would slow down cost reductions that are fundamental to the adoption of NAND flash technology in new applications. If our scaling of NAND flash technology slows down relative to our competitors, our business and operating results would be harmed and our investments in captive fabrication facilities could be impaired.

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Flash Memory Card Manufacturers and Resellers. We compete with flash memory card manufacturers and resellers, which purchase or have a captive supply of flash memory components and assemble memory cards. We also sell flash memory in the form of white label cards, wafers or components to certain OEMs who sell flash products that may ultimately compete with our branded products in the retail or OEM channels. The sales volumes and pricing to these OEMs can be highly variable and these OEMs may be more inclined to switch to an alternative supplier based on short-term price fluctuations or the timing of product availability, which could harm our branded market share and reduce our sales and profits.

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Client Storage Solution Manufacturers. In the market for client computing SSDs, we face competition from large NAND flash producers such as Intel, Micron, Samsung and Toshiba, from third-party client SSD solution providers such as Kingston, OCZ and PLDS, and from hard drive manufacturers such as Seagate and WDC. In this market, we compete with these industry players largely on the basis of performance capabilities and product reliability. Many of the large NAND flash producers have established relationships with computer manufacturers, or are computer manufacturers themselves, which gives them a competitive advantage in qualifying and integrating their client storage solutions in this market as well as the ability to leverage competencies that have been developed through these relationships in the past. Hard drive manufacturers may also have a competitive advantage in their ability to leverage their existing relationships and brand recognition with customers, as well as their ability to leverage existing technology in creating hybrid drive products. Our failure to compete effectively against these industry players could harm our business and results of operations.

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Enterprise Storage Solution Manufacturers. In the market for enterprise data center SSDs, we face competition from large NAND flash producers such as Intel, Micron, Samsung and Toshiba, from enterprise SSD solution providers such as Fusion-io, LSI, SMART Modular and STEC, and from hard drive manufacturers such as Seagate and WDC. Many of these competitors have significantly more experience with the software components that are required for successful enterprise SSD solutions, and our failure to continue to develop software expertise could harm our ability to effectively compete in this market. In addition, enterprise data center SSDs is an emerging market, and many start-up companies are contributing to the development of this market. Our competitors in this market may acquire or develop other strategic relationships with these start-ups before we are able to, and if we are unable to independently develop capabilities that we would have acquired through these start-ups, we may be unable to effectively compete.

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•	any of our existing patents will continue to be held valid, if challenged;

•	patents will be issued for any of our pending applications;

•	any claims allowed from existing or pending patents will have sufficient scope or strength to protect us;

•	our patents will be issued in the primary countries where our products are sold in order to protect our rights and potential commercial advantage; or

•	any of our products or technologies do not infringe on the patents of other companies.

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•	the need to comply with foreign government regulation;

•	the need to comply with U.S. regulations on international business, including the Foreign Corrupt Practices Act and rules regarding conflict minerals;

•	changes in diplomatic and trade relationships;

•	reduced sales to our customers or interruption to our manufacturing processes in the Pacific Rim that may arise from regional issues in Asia, including natural disasters or labor strikes;

•	imposition of regulatory requirements, tariffs, import and export restrictions and other barriers and restrictions;

•	a higher degree of commodity pricing than in the U.S.;

•	changes in, or the particular application of, government regulations;

•	import or export restrictions that could affect some of our products, including those with encryption technology;

•	duties and/or fees related to customs entries for our products, which are all manufactured offshore;

•	longer payment cycles and greater difficulty in accounts receivable collection;

•	adverse tax rules and regulations;

•	weak protection of our IP rights;

•	delays in product shipments due to local customs restrictions; and

•	delays in research and development that may arise from political unrest at our development centers in Israel or other countries.

•	difficulty in integrating the technology, products, operations or workforce of the acquired business into our business;

•	difficulty in entering into new markets in which we have limited or no experience, such as software solutions, and where competitors have stronger positions;

•	loss of, or impairment of relationships with, our key employees, vendors or customers;

•	difficulty in operating in new and potentially disperse locations;

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•	disruption of our ongoing businesses or the ongoing business of the company we invest in or acquire;

•	failure to realize the potential financial or strategic benefits of the transaction;

•	difficulty integrating the accounting, management information, human resources and other administrative systems of the acquired business;

•	disruption of or delays in ongoing research and development efforts and release of new products to market;

•	diversion of capital and other resources;

•	assumption of liabilities;

•	issuance of equity securities that may be dilutive to our existing stockholders;

•	diversion of resources and unanticipated expenses resulting from litigation arising from potential or actual business acquisitions or investments;

•	failure of the due diligence processes to identify significant issues with product quality, technology and development, or legal and financial issues, among other things;

•	incurring non-recurring charges, increased contingent liabilities, adverse tax consequences, depreciation or deferred compensation charges, amortization of intangible assets or impairment of goodwill, which could harm our results of operations; and

•	potential delay in customer purchasing decisions due to uncertainty about the direction of our product offerings or those of the acquired business.

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•	have entered into various over-the-counter cash-settled derivative transactions with respect to our common stock concurrently with, or shortly following, the pricing of the notes; and

•	may enter into, or may unwind, various over-the-counter cash-settled derivative transactions and/or purchase or sell shares of our common stock in open market and/or privately negotiated transactions following the pricing of the notes, including during any observation period related to a conversion of notes.

ITEM 1B.	UNRESOLVED STAFF COMMENTS

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ITEM 2.	PROPERTIES

ITEM 3.	LEGAL PROCEEDINGS

ITEM 4.	MINE SAFETY DISCLOSURES

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ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

(1)	On October 27, 2011, we announced a board-approved plan authorizing us to repurchase up to $500 million of our common stock in the open market or otherwise. On December 20, 2012, we announced our board approved an increase of $750 million to this repurchase plan, bringing the total amount authorized for stock repurchases to $1.25 billion. This purchase plan will expire on October 26, 2016.

(2)	Does not include amounts paid for commissions.

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*	The material in this section of this report is not deemed “filed” with the SEC and is not to be incorporated by reference into any of our filings under the Securities Act of 1933 or the Securities Exchange Act of 1934 or subject to Regulation 14A or 14C, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

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ITEM 6.	SELECTED FINANCIAL DATA

(1)	Includes share-based compensation of ($78.4) million, amortization and write-off of acquisition-related intangible assets of ($52.4) million and amortization of convertible debt bond discount of ($90.0) million.

(2)

Includes share-based compensation of ($63.1) million, amortization of acquisition-related intangible assets of ($44.2) million, amortization of convertible debt bond discount of ($90.6) million, a charge of ($24.6) million related to a power outage and earthquake experienced in Fab 3 and Fab 4, a loss of ($11.5) million related to the early extinguishment of debt and a net gain of $18.8 million related to the sale of our investment in certain equity securities.

(3)

Includes share-based compensation of ($77.6) million, which includes ($17.3) million due to a non-cash modification of outstanding stock awards pursuant to the retirement of our former Chief Executive Officer, amortization of acquisition-related intangible assets of ($14.2) million, amortization of convertible debt bond discount of ($68.9) million, a charge of ($17.8) million related to a power outage experienced in Fab 3 and Fab 4 and a gain of $13.2 million related to the sale of the net assets of our mobile phone SIM business.

(4)	Includes share-based compensation of ($95.6) million, amortization of acquisition-related intangible assets of ($13.7) million, amortization of convertible debt bond discount of ($55.6) million and other-than-temporary impairment charges of ($7.9) million related to our investment in FlashVision.

(5)

Includes impairment charges related to goodwill of ($845.5) million, acquisition-related intangible assets of ($175.8) million, investments in our flash ventures with Toshiba of ($93.4) million, and our investment in Tower Semiconductor Ltd., or Tower, of ($18.9) million. Also includes share-based compensation of ($97.8) million, amortization of acquisition-related intangible assets of ($71.6) million, amortization of convertible debt bond discount of ($50.5) million and restructuring and other charges of ($35.5) million.

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ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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Share-based Compensation Expense. These expenses consist primarily of expenses for share-based compensation, such as stock options, restricted stock units and our employee stock purchase plan. Although share-based compensation is an important aspect of the compensation of our employees and executives, we exclude share-based compensation expenses from our non-GAAP measures primarily because they are non-cash expenses. Further, share-based compensation expenses are based on valuations with many underlying assumptions not in our control that vary over time and may include modifications that may not occur on a predictable cycle, neither of which are necessarily indicative of our ongoing business performance. In addition, the share-based compensation expenses recorded are often unrelated to the actual compensation an employee realizes. We believe that it is useful to exclude share-based compensation expense for investors to better understand the long-term performance of our core operations and to facilitate comparison of our results to our prior periods and to our peer companies.

•	Amortization and Write-off of Acquisition-related Intangible Assets. We incur amortization, and, occasionally, write-offs of intangible assets in connection with acquisitions. Since we do not acquire businesses on a predictable cycle, we exclude these items in order to provide investors and others with a consistent basis for comparison across accounting periods.

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Convertible Debt Interest. We incur non-cash economic interest expense relating to the implied value of the equity conversion component of the convertible debt. The value of the equity conversion component is treated as a debt discount and amortized to interest expense over the life of the notes using the effective interest rate method. We also incur interest expense equal to the change in fair value of the liability component of the convertible debt when we repurchase a portion of the convertible debt. We exclude these non-cash interest expenses that do not represent cash interest payments made to our note holders.

•	Income Tax Adjustments. This amount is used to present each of the amounts described above on an after-tax basis, considering jurisdictional tax rates, consistent with the presentation of non-GAAP net income.

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ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

ITEM 9A.	CONTROLS AND PROCEDURES

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ITEM 9B.	OTHER INFORMATION

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ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

ITEM 11.	EXECUTIVE COMPENSATION

ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES

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ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)	Documents filed as part of this report

1)	All financial statements

2)	Exhibits required by Item 601 of Regulation S-K

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Note 1.	Organization and Summary of Significant Accounting Policies

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Note 2.	Recent Accounting Pronouncements

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Note 3.	Investments and Fair Value Measurements

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(1)	Cash equivalents exclude cash of $183.4 million and $186.4 million included in Cash and cash equivalents on the Consolidated Balance Sheets as of December 30, 2012 and January 1, 2012, respectively.

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Note 4.	Derivatives and Hedging Activities

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Note 5.	Balance Sheet Information

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Note 6.	Goodwill and Intangible Assets

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Note 7.	Financing Arrangements

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Convertible Bond Hedge. Counterparties agreed to sell to the Company up to approximately 14.0 million shares of the Company’s common stock, which is the number of shares initially issuable upon conversion of the 1% Notes due 2013 in full, at a price of $82.36 per share. During fiscal year 2011, due to the repurchase of a portion of the outstanding 1% Notes due 2013, the Company unwound a pro-rata portion of the convertible bond hedge. The Company may now purchase up to 11.3 million shares of its common stock at a conversion price of $82.36 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% Notes due 2013 or the first day none of the 1% Notes due 2013 remains outstanding due to conversion or otherwise. Settlement of the convertible bond hedge in net shares, based on the number of shares issued upon conversion of the 1% Notes due 2013, on the expiration date would result in the Company receiving net shares equivalent to the number of shares issuable by the Company upon conversion of the 1% Notes due 2013. Should there be an early unwind of the convertible bond hedge transaction, the number of net shares potentially received by the Company will depend upon 1) the then existing overall market conditions, 2) the Company’s stock price, 3) the volatility of the Company’s stock, and 4) the amount of time remaining before expiration of the convertible bond hedge. The convertible bond hedge transaction cost of $386.1 million has been accounted for as an equity transaction. The Company initially recorded approximately $0.8 million in stockholders’ equity from the net deferred tax liability related to the convertible bond hedge at inception of the transaction. As of December 30, 2012, the Company had not purchased any shares under the remaining convertible bond hedge agreement.

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Warrants. The Company received $308.7 million from the same counterparties from the sale of warrants to purchase up to approximately 14.0 million shares of the Company’s common stock at an exercise price of $95.03 per share. During fiscal year 2011, due to the repurchase of a portion of the outstanding 1% Notes due 2013, the Company unwound a pro-rata portion of the warrants. The counterparties may now purchase up to 11.3 million shares of the Company’s common stock at an exercise price of $95.03 per share. As of December 30, 2012, the warrants (separated into 20 separate components) had an expected life of 0.6 years and expire on 20 different dates from August 23, 2013 through September 20, 2013. At expiration, the Company may, at its option, elect to settle the warrants on a net share basis. As of December 30, 2012, the remaining warrants had not been exercised and remained outstanding. The value of the warrants was initially recorded in equity and continues to be classified as equity.

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Convertible Bond Hedge. Counterparties agreed to sell to the Company up to approximately 19.1 million shares of the Company’s common stock, which is the number of shares initially issuable upon conversion of the 1.5% Notes due 2017 in full, at a price of $52.37 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 remains 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 the Company receiving net shares equivalent to the number of shares issuable by the Company upon conversion of the 1.5% Notes due 2017. Should there be an early unwind of the convertible bond hedge transaction, the number of net shares potentially received by the Company will depend upon 1) the then existing overall market conditions, 2) the Company’s stock price, 3) the volatility of the Company’s stock, and 4) the amount of time remaining before expiration of the convertible bond hedge. The convertible bond hedge transaction cost of $292.9 million has been accounted for as an equity transaction. The Company initially recorded approximately $1.7 million in stockholders’ equity from the deferred tax asset related to the convertible bond hedge at inception of the transaction. As of December 30, 2012, the Company had not purchased any shares under this convertible bond hedge agreement.

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Warrants. The Company received $188.1 million from the same counterparties from the sale of warrants to purchase up to approximately 19.1 million shares of the Company’s common stock at an exercise price of $73.33 per share. As of December 30, 2012, the warrants (separated into 40 separate components) had an average expected life of 5.0 years and expire over 40 different dates from November 13, 2017 through January 10, 2018. At each expiration date, the Company may, at its option, elect to settle the warrants on a net share basis. As of December 30, 2012, the warrants had not been exercised and remained outstanding. The value of the warrants was initially recorded in equity and continues to be classified as equity.

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Note 8.	Stock Repurchase Program

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Note 9.	Concentrations of Risk and Segment Information

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Note 10.	Share-based Compensation

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Note 11.	Provision for Income Taxes

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Note 12.	Net Income per Share

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Note 13.	Commitments, Contingencies and Guarantees

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(1)	Includes reimbursement for depreciation and lease payments on owned and committed equipment, funding commitments for loans and equity investments and reimbursement for other committed expenses. Funding commitments assume no additional operating lease guarantees; new operating lease guarantees can reduce funding commitments.

(2)	In May 2006, the Company issued and sold $1.15 billion in aggregate principal amount of 1% Notes due 2013. The Company will pay cash interest on the outstanding notes at an annual rate of 1.0%, payable semi-annually on May 15 and November 15 of each year until May 15, 2013. In fiscal year 2011, the Company redeemed $221.9 million of the outstanding notes.

(3)	In August 2010, the Company issued and sold $1.0 billion in aggregate principal amount of 1.5% Notes due 2017. The Company will pay cash interest on the outstanding notes at an annual rate of 1.5%, payable semi-annually on August 15 and February 15 of each year until August 15, 2017.

(4)	Includes Flash Ventures, related party vendors and other silicon source vendor purchase commitments.

(5)	Includes amounts denominated in a currency other than the U.S. dollar, which are subject to fluctuation in exchange rates prior to payment and have been translated using the exchange rate at December 30, 2012.

(6)	Excludes amounts related to the master lease agreements’ purchase option exercise price at final lease term.

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(1)	The Company’s guarantee obligation, net of cumulative lease payments, was 79.6 billion Japanese yen, or approximately $926 million based upon the exchange rate at December 30, 2012.

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Note 14.	Related Parties and Strategic Investments

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(1)	Net sales represent sales to both the Company and Toshiba.

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Note 15.	Stockholders’ Rights Plan

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Note 16.	Litigation

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Note 17.	Supplementary Financial Data (Unaudited)

(1)	Includes the following charges related to loss on extinguishment of debt, a power outage and earthquake experienced in Flash Ventures and a net gain on sale of investment in equity securities.

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†	Indicates management contract or compensatory plan or arrangement.

*	Furnished herewith.

**	Pursuant to Rule 406T of Regulation S-T, the XBRL files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

±	Pursuant to a request for confidential treatment, certain portions of this exhibit have been redacted from the publicly filed document and have been furnished separately to the Securities and Exchange Commission as required by Rule 24b-2 under the Securities Exchange Act of 1934, as amended.