SanDisk 2006 Annual Report Download - page 150

April 3,
2005
July 3,
2005
October 2,
2005
January 1,
2006
Quarters Ended
(In thousands, except per share data)
2005
Revenues Product ................................ $399,679 $453,762 $529,735 $683,431
License and royalty ............................. 51,296 61,134 59,896 67,136
Total revenues ............................... 450,975 514,896 589,631 750,567
Gross profit ..................................... 199,787 214,099 256,784 302,064
Operating income ................................ 113,519 106,044 158,568 198,451
Net income(2) ................................... $ 74,516 $ 70,496 $107,458 $133,914
Net income per share
Basic(3) .................................... $ 0.41 $ 0.39 $ 0.59 $ 0.72
Diluted(3) .................................. $ 0.39 $ 0.37 $ 0.55 $ 0.68
(1) Includes the following charges related to acquisitions of Matrix in January 2006 and msystems in November
2006, share-based compensation and amortization of acquisition-related intangible assets:
April 2,
2006
July 2,
2006
October 1,
2006
December 31,
2006
Quarters Ended
(In thousands)
Write-off of acquired in-process technology ...... $39,600 $ — $ — $186,000
Share-based compensation ................... 18,786 25,870 25,192 30,793
Amortization of acquisition-related intangible
assets ................................ 3,715 4,432 4,432 15,221
Total................................... $62,101 $30,302 $29,624 $232,014
(2) In the first and second quarter of 2005, we recognized a loss of ($10.1) million and ($0.1) million on the
other-than-temporary decline in the fair value of our investment in Tower and our Tower warrants, respectively.
(3) Quarterly earnings per share figures may not total to yearly earnings per share, due to rounding and fluctuations in
the number of options included or omitted from diluted calculations based on the stock price or option strike prices.
Note 17: Subsequent Events
In September 2006, Flash Partners entered into a master equipment lease agreement providing for up to
98.0 billion Japanese yen, or approximately $823 million based upon the exchange rate at December 31, 2006, of
original lease obligations. On January 10, 2007, Flash Partners utilized approximately 52.0 billion Japanese yen, or
approximately $437 million based upon the exchange rate at December 31, 2006, of the total amount provided for
under the September 2006 master lease agreement, of which the Company guaranteed 26.0 billion Japanese yen, or
approximately $218 million based upon the exchange rate at December 31, 2006. See Note 8, “Commitments,
Contingencies and Guarantees.”
On February 15, 2007, the Board of Directors of the Company approved a plan (the “Plan”) to reduce operating
costs, which includes a worldwide reduction in force of up to 10% of the Company’s headcount, or approximately
250 employees. The Company expects to incur a restructuring charge in connection with the Plan of approximately
$15 million to $20 million, with the majority of the expense occurring in the first quarter of 2007. Cash payments
associated with the Plan will be approximately half of the total restructuring charge, with the remainder comprised
of share-based compensation charges resulting primarily from acceleration of certain equity awards as per terms of
the msystems acquisition. The workforce reduction will impact functions related to operations, engineering, sales
and marketing and administration, and will primarily be based in the United States and Israel, and to a lesser degree,
other international locations. The Plan is expected to be completed by the third quarter of fiscal 2007.
Annual Report
F-51
Notes to Consolidated Financial Statements — (Continued)