SanDisk 2009 Annual Report Download - page 144

Notes To Consolidated Financial Statements
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 10: Restructuring Plans
The Company implemented several restructuring plans during fiscal years 2008 and 2007, and recorded
negligible restructuring charges in fiscal year 2009 and restructuring charges of $35.5 million and $6.7 million in
fiscal years 2008 and 2007, respectively. 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.
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
During fiscal year 2009, the Company recorded a reduction of ($0.8) million related to lower employee
severance and benefits costs than was originally estimated. The remaining restructuring accrual balance is
reflected in Other current accrued liabilities in the Consolidated Balance Sheets and is expected to be utilized in
fiscal year 2010.
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
employees in fiscal years 2008 and 2009, respectively, in all functions, primarily in the U.S., Israel and Spain.
Contract termination fees and other charges of $21.0 million included restructuring charges for marketing
contract termination costs, technology license impairments and fixed asset impairments related to outsourcing
certain manufacturing activities. In addition to the restructuring charge, Contract termination fees and other
charges include an accrual for unrelated litigation settlements.
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