SanDisk 2011 Annual Report Download - page 162

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
unrecognized tax benefits at January 1, 2012 and January 2, 2011 was $34.1 million and $29.7 million,
respectively. Interest and penalties, net included in the Company’s tax expense for fiscal years 2011, 2010 and
2009 was $3.2 million, ($2.4) million and $6.4 million, respectively.
It is reasonably possible that the unrecognized tax benefits could decrease by approximately $3.1 million
within the next 12 months as a result of the expiration of statutes of limitation. The Company is currently under
audit by several tax authorities. Because timing of the resolution and/or closure of these audits is highly uncertain
it is not possible to estimate other changes to the amount of unrecognized tax benefits for positions existing at
January 1, 2012.
The Company is subject to U.S. federal income tax as well as income taxes in many state and foreign
jurisdictions. In October 2009, the Internal Revenue Service commenced an examination of the Company’s
federal income tax returns for fiscal years 2005 through 2008. The timing of a complete resolution is not certain
within the next twelve months. In addition, the Company is currently under audit by various state and
international tax authorities. The Company cannot reasonably estimate the outcome of these examinations, or that
it will not have a material effect on the Company’s financial position, results of operations or liquidity. The
statutes of limitation in state jurisdictions generally remain open for tax years 2002 through 2010. The major
foreign jurisdictions generally remain open for examination for tax years 2005 through 2011.
In 2011, certain foreign subsidiaries of the Company were under income tax holidays. The aggregate dollar
and per share effects of these tax holidays was immaterial to the Company’s financial results for fiscal years
2011, 2010 and 2009.
Note 11: Net Income per Share
The following table sets forth the computation of basic and diluted net income per share (in thousands,
except per share amounts):
Fiscal years ended
January 1,
2012
January 2,
2011
January 3,
2010
Numerator for basic net income per share:
Net income ................................................... $ 986,990 $ 1,300,142 $ 415,310
Denominator for basic net income per share:
Weighted average common shares outstanding ....................... 239,484 232,531 227,435
Basic net income per share ................................... $ 4.12 $ 5.59 $ 1.83
Numerator for diluted net income per share:
Net income ................................................... $ 986,990 $ 1,300,142 $ 415,310
Interest on the 1% Convertible Notes due 2035, net of tax .............. — 98 468
Net income for diluted net income per share ..................... $ 986,990 $ 1,300,240 $ 415,778
Denominator for diluted net income per share:
Weighted average common shares outstanding ....................... 239,484 232,531 227,435
Incremental common shares attributable to exercise of outstanding
employee stock options, SARs and warrants (assuming proceeds would
be used to purchase common stock), and RSUs ..................... 5,069 5,977 2,512
Effect of dilutive 1% Convertible Notes due 2035 .................... — 393 2,012
Shares used in computing diluted net income per share ............ 244,553 238,901 231,959
Diluted net income per share ............................. $ 4.04 $ 5.44 $ 1.79
Anti-dilutive shares excluded from net income per share calculation .......... 68,079 75,079 47,911
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