SanDisk 2006 Annual Report Download - page 117

Other intangible assets increased by $414.3 million in the year ended December 31, 2006 as a result of the
Company’s acquisition of Matrix and msystems. Technology licenses represent technology licenses purchased from
third parties.
The annual amortization expense of other intangible assets that existed as of December 31, 2006 is expected to
be as follows:
Fiscal Periods
Acquisition-Related
Intangible Assets
Technology
License
Estimated Amortization Expenses
(In thousands)
2007 ................................................ $ 88,562 $ 903
2008 ................................................ 76,629 716
2009 ................................................ 72,124 —
2010 ................................................ 71,929 —
2011 ................................................ 65,164 —
2012 and thereafter ..................................... 13,051 —
Total................................................ $387,459 $1,619
Note 5: Compensation and Benefits
Share-Based Benefit Plans
2005 Incentive Plan. In May 2005, the Company’s board of directors adopted the 2005 Stock Incentive Plan,
which was amended in May 2006 and renamed the 2005 Incentive Plan, or 2005 Plan. Shares of the Company’s
common stock may be issued under the 2005 Plan pursuant to three separate equity incentive programs: (i) the
discretionary grant program under which stock options and stock appreciation rights may be granted to officers and
other employees, non-employee board members and independent consultants, (ii) the stock issuance program under
which shares may be awarded to such individuals through restricted stock or restricted stock unit awards or as a
stock bonus for services rendered to the Company, and (iii) an automatic grant program for the non-employee board
members pursuant to which such individuals will receive option grants or other stock awards at designated intervals
over their period of board service. The 2005 Plan also includes a performance-based cash bonus awards program for
employees classified under Section 16. Grants and awards under the discretionary grant program generally vest as
follows: 25% of the shares will vest on the first anniversary of the vesting commencement date and the remaining
75% will vest proportionately each quarter over the next 32 months of continued service. Awards under the stock
issuance program generally vest in equal annual installments over a 4 year period. Grants under the automatic grant
program will vest in accordance with the specific vesting provisions set forth in that program. A total of
21,571,644 shares of the Company’s common stock have been reserved for issuance under this plan. The share
reserve may increase by up to an additional 10,000,000 shares of common stock to the extent that outstanding
options under the 1995 Stock Option Plan and the 1995 Non-Employee Directors Stock Option Plan expire or
terminate unexercised, of which as of December 31, 2006, 871,644 shares of common stock has been added to the
2005 Plan reserve. All options granted under the 2005 Plan were granted with an exercise price equal to the fair
market value of the common stock on the date of grant and will expire seven years from the date of grant. Through
December 31, 2006, awards to purchase a total of 7,767,347 shares of common stock were granted to employees
under the 2005 Plan, net of cancellations. For years ended December 31, 2006 and January 1, 2006, awards of
6,103,534 and 1,558,625 shares of common stock, respectively, were granted to employees under the 2005 Plan, net
of cancellations.
1995 Stock Option Plan and 1995 Non-Employee Directors Stock Option Plan. Both of these plans
terminated on May 27, 2005, and no further option grants were made under the plans after that date. However,
options that were outstanding under these plans on May 27, 2005 will continue to be governed by their existing
terms and may be exercised for shares of the Company’s common stock at any time prior to the expiration of the ten-
F-18
Notes to Consolidated Financial Statements — (Continued)