SanDisk 2010 Annual Report Download - page 219

This is a TAB type table. Insert
conts here. Annual Report
Notes To Consolidated Financial Statements
Share-based compensation of $0.9 million and $2.3 million related to manufacturing personnel was
capitalized into inventory as of January 2, 2011 and January 3, 2010, respectively.
Modification of Stock Awards and Other Adjustments. In fiscal year 2010, the Company recognized
$17.3 million of expense related to the modification of stock awards, pursuant to the retirement agreement of the
Company’s former Chief Executive Officer.
In the fourth quarter of fiscal year 2009, the Company identified that its third party equity software
contained a feature that resulted in incorrect share-based compensation expense. This software feature affected
the Company’s share-based compensation expense reported for the nine months ended September 27, 2009 and
the three fiscal years ended December 28, 2008. The Company determined that the impact of the underreported
share-based compensation expense was not material to any of the previously issued annual or interim financial
statements. Accordingly, the fourth quarter and full fiscal year 2009 include a cumulative non-cash adjustment of
$16.2 million to increase share-based compensation, allocated to multiple expense categories. The Company has
modified its implementation of the software to prevent this error going forward.
Note 9: Restructuring Plans
The Company implemented several restructuring plans during fiscal year 2008, and recorded restructuring
charges of $35.5 million in fiscal year 2008. The goal of these plans was to better align the Company’s cost
structure with its anticipated revenue stream and to improve the Company’s results of operations and cash flows.
Restructuring charges in fiscal year 2009 were immaterial.
Second Quarter of Fiscal 2008 Restructuring Plan. In the second quarter ended June 28, 2008, the
Company initiated restructuring actions in an effort to better align its cost structure with its anticipated revenue
stream and to improve the Company’s results of operations and cash flows (“Second Quarter of Fiscal 2008
Restructuring Plan”). The cost of $4.1 million was for severance and benefits related to the involuntary
termination of approximately 131 employees in all functions, primarily in the U.S. and Israel.
The following table sets forth the activity in the accrued restructuring balances related to the Second Quarter
of Fiscal 2008 Restructuring Plan (in millions).
Severance and
Benefits
Restructuring provision ............................................................ $ 4.1
Cash paid ....................................................................... (3.1)
Accrual balance at December 28, 2008 ............................................ 1.0
Accrual adjustments .............................................................. (0.8)
Accrual balance at January 3, 2010 ............................................... 0.2
Cash paid ....................................................................... (0.2)
Accrual balance at January 2, 2011 ............................................... $ —
During fiscal year 2010, the Company completed the final phase of the Second Quarter of Fiscal 2008
Restructuring plan and paid in cash the remaining accrued amount.
Fourth Quarter of Fiscal 2008 Restructuring Plan and Other. In the fourth quarter ended December 28,
2008, the Company initiated additional restructuring actions in an effort to better align its cost structure with
business operation levels (“Fourth Quarter of Fiscal 2008 Restructuring Plan and Other”). Under this plan, the
Company recorded costs of $12.6 million related to the involuntary termination of 428 employees and 51
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