Sandisk (SNDK) risk factors, FY2025 10-K

OPERATIONAL RISKS

1. 01Adverse global or regional conditions could harm our business
2. 02We are dependent on a limited number of qualified suppliers who provide critical services, materials or components, and a disruption in our supply chain or other inability to source our supply requirements, or an increase in the costs of materials or components, could negatively affect our business
3. 03Our operations, and those of certain of our suppliers and customers, are subject to substantial risk of damage or disruption
4. 04Public health crises have had, and could in the future have, a negative effect on our business
5. 05Our success depends on our ability to attract, retain and develop highly skilled management and technical talent
6. 06We are subject to risks related to product defects, which could result in product recalls or epidemic failures and could subject us to warranty claims in excess of our warranty provisions or which are greater than anticipated, litigation or indemnification claims
7. 07We experience cyber incidents of varying degrees on our technology infrastructure and systems and, as a result, unauthorized parties may obtain access to our computer systems and networks, including cloud-based platforms
8. 08We may be adversely affected by the risks, challenges, and evolving regulatory landscape associated with the use of AI in our operations, product development, and business practices

BUSINESS AND STRATEGIC RISKS

1. 09We rely substantially on strategic relationships with various partners, including Kioxia, which subjects us to risks and uncertainties that could harm our business
2. 10We participate in a highly competitive industry that is often subject to declining average selling prices, volatile demand, rapid technological change and industry consolidation, as well as lengthy product qualifications, all of which can negatively impact our business
3. 11If we do not properly manage technology transitions and product development and introduction, our competitiveness and operating results may be negatively affected
4. 12We experience sales seasonality and cyclicality, which could cause our operating results to fluctuate. In addition, accurately forecasting demand has become more difficult, which could harm our business
5. 13Failure to successfully execute on strategic initiatives including acquisitions, divestitures or cost saving measures may negatively impact our future results
6. 14Loss of revenue from a key customer, or consolidation among our customer base, could harm our operating results
7. 15Sales in the distribution channel and to the retail market are important to our business, and if we fail to respond to demand changes within these markets, or maintain and grow our applicable market share, our business could suffer

FINANCIAL RISKS

1. 16Our level of debt may negatively impact our liquidity, restrict our operations and ability to respond to business opportunities and increase our vulnerability to adverse economic and industry conditions
2. 17Fluctuations in currency exchange rates as a result of our international operations may negatively affect our operating results
3. 18Increases in our customers’ credit risk could result in credit losses and term extensions under existing contracts with customers with credit losses could result in an increase in our operating costs

LEGAL AND COMPLIANCE RISKS

1. 19Our aspirations, disclosures and actions related to environmental, social and governance matters expose us to risks that could adversely affect our reputation and performance
2. 20We and certain of our officers may at times be involved in litigation, investigations and governmental proceedings, which may be costly, may divert the efforts of our key personnel and could result in adverse court rulings, fines or penalties, which could materially harm our business
3. 21The nature of our industry and its reliance on intellectual property and other proprietary information subjects us and our suppliers, customers and partners to the risk of significant litigation
4. 22Our reliance on intellectual property and other proprietary information subjects us to the risk that these key components of our business could be copied by competitors
5. 23Future material impairments in the value of our goodwill, intangible assets and other long-lived assets would negatively affect our operating results

RISKS RELATED TO THE SPIN-OFF

1. 24We may not achieve some or all of the expected benefits of the spin-off, and the spin-off may adversely impact our business
2. 25We have incurred and expect to continue to incur ongoing material costs and expenses as a result of the spin-off
3. 26If we are unable to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act, or our internal control over financial reporting is not effective, the reliability of our financial statements may be questioned, and our stock price may suffer
4. 27We were spun off from our former parent company, WDC, and our historical financial information is not necessarily representative of the results that we would have achieved as a separate, publicly traded company and therefore may not be a reliable indicator of our future results
5. 28WDC may fail to perform under various transaction agreements that were executed as part of the spin-off, or we may fail to have necessary systems and services in place when WDC is no longer obligated to provide services under the various agreements
6. 29In connection with our spin-off from WDC, we have agreed to assume, and indemnify WDC for, certain liabilities. If we are required to make payments pursuant to these indemnities to WDC, we would need to meet those obligations and our financial results could be adversely impacted
7. 30In addition, WDC and Sandisk could incur significant U.S. federal income tax obligations, whether under applicable law or under the tax matters agreement that we entered into with WDC
8. 31The spin-off and related internal restructuring transactions may expose us to potential liabilities arising out of state and federal fraudulent conveyance laws and legal dividend requirements
9. 32Some of our officers and directors currently hold or previously held positions with WDC and may still hold equity in WDC, which may give rise to actual or potential conflicts of interest
10. 33These ownership interests could create actual, apparent or potential conflicts of interest when these individuals are faced with decisions that could have different implications for our company and WDC
11. 34We may be unable to implement, on a timely or cost-effective basis, the changes necessary to operate as an independent company

RISKS RELATED TO OUR COMMON STOCK

1. 35Our stock price may fluctuate significantly, which may make it difficult for you to resell the common stock when you want or at prices you find attractive
2. 36Provisions of Delaware law, our certificate of incorporation and our bylaws may prevent or delay an acquisition of our company, which could decrease the market price of our common stock
3. 37Our certificate of incorporation contains an exclusive forum provision that could limit a stockholder’s ability to bring a claim in a judicial forum that the stockholder believes is favorable for such disputes and may discourage lawsuits against us and any of our directors, officers or other employees
4. 38Tax matters may materially affect our financial position and results of operations
5. 39Provisions in our joint venture agreements with Kioxia may deter, prevent or delay an acquisition of us, which could decrease the market price of our common stock and limit our future strategic opportunities
6. 40We may seek a waiver of applicable provisions of the joint venture agreements from Kioxia or Kioxia’s consent with respect to such a transaction, but there is no guarantee that we will successfully obtain Kioxia’s consent or waiver