SanDisk 2008 Annual Report Download - page 55

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Fiscal 2008 Restructuring and Other
We recorded restructuring and other charges of $36 million for plans implemented in fiscal year 2008. Of
these charges, $15 million related to severance and benefits for employee reductions worldwide and $21 million
related to marketing contract termination costs, technology license impairments and fixed asset impairments
related to outsourcing certain manufacturing activities. In addition, restructuring and other charges include an
accrual for unrelated litigation settlements.
We expect to reduce our annual cost and operating expenses by approximately $53 million as a result of our
fiscal year 2008 restructuring plans. Approximately 19%, 33%, 31% and 17% of the restructuring cost savings
related to the fiscal year 2008 restructuring plans are expected to be reflected as a reduction in cost of revenues,
research and development expense, sales and marketing expense, and general and administrative expense,
respectively.
Fiscal 2007 Restructuring
In the first quarter of fiscal year 2007, management approved and initiated plans to bring our operational
expenses to appropriate levels relative to our net revenues, while simultaneously implementing extensive
company-wide expense-control programs. This restructuring plan eliminated certain duplicative assets and
resources in all functions of the organization worldwide due to consolidating certain processes in order to reduce
our cost structure, which resulted in a charge of $7 million in fiscal year 2007.
Other Income.
FY 2008
Percent
Change FY 2007
Percent
Change FY 2006
(in millions, except percentages)
Interest income ....................................... $ 94.4 (29)% $133.4 32% $101.1
Interest expense ...................................... (16.5) (2)% (16.9) 59% (10.6)
Income (loss) in equity investments ...................... (39.6) 300% (9.9) (248)% 6.7
Other income, net ..................................... 32.1 110% 15.3 113% 7.2
Total other income, net ............................ $ 70.4 (42)% $121.9 17% $104.4
Our fiscal year 2008 other income decrease compared to fiscal year 2007 was primarily due to lower interest
income in fiscal year 2008 reflecting reduced interest rates and lower cash and investment balances, impairment
of our equity investment in Tower of ($19) million, and an impairment of our investment in FlashVision of
($10) million.
Our fiscal year 2007 other income increase over the comparable period of fiscal year 2006 was primarily
due to interest income of $133 million offset by full year interest expense of ($17) million resulting from our
$1.15 billion debt offering in May 2006 and the acquired msystems’ $75 million debt offering, and an
impairment charge of ($10) million to the wind-down of our FlashVision investment included in “Income (loss)
in equity investments.”
Provision for Income Taxes.
FY 2008
Percent
Change FY 2007
Percent
Change FY 2006
(in millions, except percentages)
Provision for income taxes ............................... $153.7 (12)% $174.8 (24)% $230.2
Effective income tax rates ................................ (8.1)% 43.9% 53.5%
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