SanDisk 2013 Annual Report Download - page 153

Non-GAAP Financial Measures
Reconciliation of Net Income.
Fiscal years ended
December 29, December 30, January 1,
2013 2012 2012
(In millions except per share amounts)
Net income ........................................ $ 1,042.7 $ 417.4 $ 987.0
Share-based compensation ............................. 99.8 78.4 63.1
Amortization of acquisition-related intangible assets ........... 60.7 51.5 44.2
Impairment of acquisition-related intangible assets ............ 83.2 0.9 —
Convertible debt interest .............................. 67.6 90.0 111.4
Income tax adjustments .............................. (87.0) (55.8) (67.7)
Non-GAAP net income ................................ $ 1,267.0 $ 582.4 $ 1,138.0
Diluted net income per share: ............................ $ 4.34 $ 1.70 $ 4.04
Share-based compensation ............................. 0.42 0.32 0.26
Amortization of acquisition-related intangible assets ........... 0.26 0.21 0.18
Impairment of acquisition-related intangible assets ............ 0.35 — —
Convertible debt interest .............................. 0.29 0.37 0.45
Income tax adjustments .............................. (0.35) (0.22) (0.28)
Non-GAAP diluted net income per share .................... $ 5.31 $ 2.38 $ 4.65
Reconciliation of Diluted Shares.
Fiscal years ended
December 29, December 30, January 1,
2013 2012 2012
(In thousands)
GAAP diluted shares .................................. 240,236 245,253 244,553
Adjustment for share-based compensation .................. 271 (54) 15
Offsetting shares from bond hedge ....................... (2,088) — —
Non-GAAP diluted shares .............................. 238,419 245,199 244,568
We believe these non-GAAP measures provide investors the ability to better assess and understand
operating performance, especially when comparing results with previous periods or forecasting
performance for future periods, primarily because management typically monitors the business excluding
these items. We also use these non-GAAP measures to establish operational goals and for measuring
performance for compensation purposes. However, analysis of results on a non-GAAP basis should be
used as a complement to, and in conjunction with, and not as a replacement for, data presented in
accordance with GAAP.
We believe that the presentation of non-GAAP measures, including non-GAAP net income and
non-GAAP diluted net income per share, provides important supplemental information to management
and investors about financial and business trends relating to our operating results. We believe that the use
of these non-GAAP financial measures also provides consistency and comparability with our past financial
reports.
We have historically used these non-GAAP measures when evaluating operating performance because
we believe that the inclusion or exclusion of the items described below provides an additional measure of
our core operating results and facilitates comparisons of our core operating performance against prior
periods and our business model objectives. We have chosen to provide this information to investors to
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Annual Report