SanDisk 2008 Annual Report Download - page 54

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Amortization of Acquisition-Related Intangible Assets.
FY 2008
Percent
Change FY 2007
Percent
Change FY 2006
(in millions, except percentages)
Amortization of acquisition-related intangible assets ........... $17.1 (32)% $25.3 45% $17.4
Percent of revenue ...................................... 0.5% 0.6% 0.5%
Amortization of acquisition-related intangible assets in fiscal year 2008 compared to fiscal year 2007 was
lower due to intangible assets that were fully amortized in fiscal year 2007. Our expense from the amortization of
acquisition-related intangible assets was primarily related to our acquisitions of Matrix in January 2006 and
msystems in November 2006. Amortization expense of acquisition-related intangible assets is expected to decline
in fiscal year 2009 primarily due to impairments recorded in fiscal year 2008.
The increase of amortization of acquisition-related intangible assets for the fiscal year ended December 31,
2007 was directly related to twelve months of amortization in fiscal year 2007 from our acquisition of msystems
compared to less than two months of amortization in fiscal year 2006.
Write-off of Acquired In-Process Technology.
FY 2008
Percent
Change FY 2007
Percent
Change FY 2006
(in millions, except percentages)
Write-off of acquired in-process technology .................. n/a — n/a — $225.6
Percent of revenue ...................................... n/a n/a 6.9%
As part of the Matrix acquisition in the first quarter of fiscal year 2006 and the msystems acquisition in the
fourth quarter of fiscal year 2006, a portion of each purchase price was allocated to acquired in-process
technology, which was determined through established valuation techniques in the high-technology industry and
written-off at the date of acquisition because technological feasibility had not been established and no alternative
future uses existed. The value was determined by estimating the net cash flows and discounting forecasted net
cash flows to their present values. As of December 28, 2008, we estimated that the remaining in-process projects
related to the msystems acquisition would be completed over the next two quarters at an estimated total cost of
$4 million. As of December 28, 2008, all in-process projects related to the Matrix acquisition were completed.
Restructuring Charges and Other.
FY 2008
Percent
Change FY 2007
Percent
Change FY 2006
(in millions, except percentages)
Restructuring and other .................................. $35.5 430% $6.7 100% n/a
Percent of revenue ...................................... 1.1% 0.2% n/a
During fiscal years 2008 and 2007, we implemented several restructuring plans which included reductions
of our workforce and consolidation of operations. We recorded restructuring charges and other of $36 million
and $7 million in fiscal years 2008 and 2007, respectively. The goal of these restructuring and other charges was
to bring our operational expenses to appropriate levels relative to our net revenues, while simultaneously
implementing extensive company-wide expense-control programs. All expenses, including adjustments,
associated with our restructuring plans are included in Restructuring Charges and Other in the Consolidated
Statements of Operations. For further discussion of our restructuring plans, refer to Note 10, “Restructuring
Plans,” of the Notes to Consolidated Financial Statements of this Form 10-K included in Item 8 of this report.
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