SanDisk 2004 Annual Report Download - page 63

Table of Contents
Notes to Consolidated Financial Statements — (Continued)
increase on the first trading day in January each calendar year, beginning with calendar year 2002 and continuing over the remaining
term of the plan, by an amount equal to 4.4% of the total number of shares outstanding on the last trading day in December in the
immediately preceding calendar year, but in no event will any annual increase exceed 8,000,000 shares. The automatic share increase
was 7,015,396 shares and 6,030,388 shares, in 2004 and 2003, respectively. As of January 2, 2005, there were 47,760,660 shares
reserved for issuance under the plan and a total of 34,677,530 options had been granted.
1995 Non−Employee Directors Stock Option Plan. In August 1995, the Company adopted the 1995 Non−Employee Directors
Stock Option Plan. Under this plan, automatic option grants are made at periodic intervals to eligible non−employee members of the
Company’s Board of Directors. Initial option grants vest over a four−year period. Subsequent annual grants vest one year after date of
grant. All options granted under the Non−Employee Directors Stock Option Plan expire ten years after the date of grant. In May 1999,
the Company’s stockholders increased the shares available for future issuance under the 1995 Non−Employee Directors Stock Option
Plan by 800,000 and approved an automatic share increase feature pursuant to which the number of shares available for issuance under
the plan will automatically increase on the first trading day in January each calendar year, beginning with calendar year 2002 and
continuing over the remaining term of the plan, by an amount equal to 0.2% of the total number of shares outstanding on the last
trading day in December in the immediately preceding calendar year, but in no event will any such annual increase exceed
400,000 shares. The automatic share increase was 321,806 shares and 276,622 shares for 2004 and 2003, respectively. At January 2,
2005, the Company had reserved 2,472,284 shares for issuance under the Non−Employee Directors Stock Option Plan and a total of
1,856,000 options had been granted. Outstanding shares were at exercise prices ranging from $6.22 to $35.03 per share.
Special Stock Option Plan. In January 2000, the Company adopted the Special Stock Option Plan, which provides for the issuance
of nonqualified options to newly hired employees. Under this plan, a committee appointed by the Company’s Board of Directors
determines the vesting and exercise provisions of option grants. As of January 2, 2005, 4,000,000 shares were reserved for issuance
under the Special Stock Option Plan no options have been granted under that plan.
A summary of activity under all stock option plans follows (shares in thousands):
Total Available Weighted
for Future Total Average
Grant/Issuance Outstanding Exercise Price
Balance at December 30, 2001 12,186 17,238 $ 12.89
Granted (5,540) 5,540 $ 6.60
Automatic share increase 6,244 — —
Exercised — (944) $ 2.94
Canceled 2,572 (2,572) $ 19.47
Balance at December 29, 2002 15,462 19,262 $ 10.69
Granted (6,088) 6,088 $ 11.76
Automatic share increase 6,307 — —
Exercised — (5,477) $ 9.45
Canceled 481 (481) $ 17.13
Balance at December 28, 2003 16,162 19,392 $ 11.21
Granted (6,617) 6,617 $ 31.58
Automatic share increase 7,337 — —
Exercised — (2,320) $ 8.21
Canceled 1,057 (1,057) $ 20.93
Balance at January 2, 2005 17,939 22,632 $ 17.02
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