SanDisk 2010 Annual Report Download - page 175

This is a TAB type table. Insert
conts here. Annual Report
Provision for Income Taxes.
FY 2010
Percent
Change FY 2009
Percent
Change FY 2008
(In millions, except percentages)
Provision for income taxes ........................... $ 157.3 78% $ 88.5 158% $ 34.3
Effective income tax rates ........................... 10.9% 17.6% (1.8)%
Our fiscal year 2010 provision for income taxes was primarily related to income taxes on our U.S. and
foreign operations, partially offset by the release of valuation allowances that were previously recorded against
our U.S. federal and state deferred tax assets and favorable adjustments to uncertain tax positions related to
specific tax jurisdictions.
Our fiscal year 2009 provision for income taxes was primarily related to withholding taxes on license and
royalty income from certain foreign licensees and income tax provisions recorded by foreign subsidiaries while
income taxes for U.S. federal and state were substantially offset by the reduction of valuation allowance related
to the utilization of tax credits.
Our fiscal year 2008 provision for income taxes was primarily due to the non-deductibility of the goodwill
impairment charge and a valuation allowance recorded on certain U.S. and foreign gross deferred tax assets. The
increase in the valuation allowance was due primarily to the size of the fiscal year 2008 net loss and that it was
not more likely than not that certain U.S. and foreign deferred tax assets would be realized in the future.
In October 2009, the I.R.S. commenced an examination of our federal income tax returns for fiscal years
2005 through 2008. We do not expect a resolution to be reached during the next twelve months. In addition, we
are currently under audit by various state and international tax authorities. We cannot reasonably estimate that
the outcome of these examinations will not have a material effect on our financial position, results of operations
or liquidity.
Non-GAAP Financial Measures
Reconciliation of Net Income (Loss).
Twelve months ended
January 2,
2011
January 3,
2010
December 28,
2008
(In thousands except per share amounts)
Net income (loss) ...................................... $ 1,300,142 $ 415,310 $ (1,986,624)
Share-based compensation ........................... 77,590 95,560 97,799
Impairment of goodwill and acquisition-related intangible
assets .......................................... — — 1,021,238
Amortization of acquisition-related intangible assets ....... 14,201 13,696 71,581
Convertible debt interest ............................. 68,898 54,454 49,340
Income tax adjustments .............................. (360,508) (151,813) 280,692
Non-GAAP net income (loss) ............................. $ 1,100,323 $ 427,207 $ (465,974)
Diluted net income (loss) per share: ........................ $ 5.44 $ 1.79 $ (8.82)
Share-based compensation ........................... 0.32 0.41 0.43
Impairment of goodwill and acquisition-related intangible
assets .......................................... — — 4.53
Amortization of acquisition-related intangible assets ....... 0.06 0.06 0.32
Convertible debt interest ............................. 0.29 0.23 0.22
Income tax adjustments .............................. (1.51) (0.65) 1.25
Non-GAAP diluted net income (loss) per share: .............. $ 4.60 $ 1.84 $ (2.07)
Shares used in computing diluted net income (loss) per share:
GAAP ........................................... 238,901 231,959 225,292
Non-GAAP ....................................... 239,042 232,300 225,292
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