SanDisk 2007 Annual Report Download - page 123

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Pro Forma Disclosures
Prior to fiscal year 2006, the Company followed the disclosure-only provisions of SFAS 123, as amended. The
following table illustrates the effect on net income and earnings per share for the year ended January 1, 2006, if the
fair value recognition provisions of SFAS 123, as amended, had been applied to options granted under the
Company’s share-based compensation plans. For purposes of this pro forma disclosure, the estimated value of the
share-based compensation is recognized over the vesting periods. If the Company had recognized the expense of
share-based compensation in the consolidated statement of income, capital in excess of par would have increased by
a corresponding amount, net of applicable taxes.
January 1, 2006
(In thousands, except per
share amounts
Net income, as reported ......................................... $386,384
Fair value method expense, net of related tax ....................... (52,629)
Pro forma net income........................................... $333,755
Earnings per share as reported:
Basic ..................................................... $ 2.11
Diluted ................................................... $ 2.00
Pro forma earnings per share:
Basic ..................................................... $ 1.82
Diluted ................................................... $ 1.73
Note 9: Restructuring
During the first quarter of fiscal year 2007, the Company implemented a restructuring plan which included
reductions in workforce in all functions of the organization worldwide and closures of redundant facilities in order
to reduce the Company’s cost structure. A restructuring charge of $6.7 million was recorded during the year ended
December 30, 2007, of which $6.0 million related to severance and benefits to 149 terminated employees and the
remaining was primarily for excess lease obligations. All expenses, including adjustments, associated with the
Company’s restructuring plans are included in “Restructuring” in the Consolidated Statements of Income.
The following table sets forth an analysis of the components of the restructuring charge and payments made
against the reserve for the year ended December 30, 2007 (in thousands):
Severance and
Benefits
Lease
Obligations and
Other Charges Total
Restructuring provision .......................... $5,970 $ 758 $ 6,728
Adjustments .................................. (56) — (56)
Cash paid .................................... (5,631) (423) (6,054)
Accrual balance at December 30, 2007............... $ 283 $335 $ 618
The Company anticipates that the remaining restructuring reserve balance will be paid out in cash through the
first quarter of fiscal year 2010 in connection with long-term facility leases.
F-27
Notes to Consolidated Financial Statements — (Continued)