Sandisk Agreed to Split Out Major Costs After SEC Push

The Tip Desk · October 22, 2026 · 2 min read

Sandisk revised its proposed segment disclosures to separate major charges and give investors a clearer breakdown of research and administrative spending.

Sandisk (SNDK) agreed to show stock-based compensation and goodwill impairment as separate significant segment expenses and split research spending from selling and administrative costs after the SEC pressed for more detail about expenses regularly reviewed by management. The changes expanded an earlier disclosure proposal that would have combined major charges under “Other segment items.”

The amounts were substantial. Sandisk’s revised example separately identified a $1.83 billion goodwill impairment and $182 million of stock-based compensation for fiscal 2025, leaving $54 million in other segment items. Its first proposal had grouped those costs into a single $2.07 billion line, giving readers less visibility into the components.

The March and April dialogue centered on how Sandisk presented expenses for its single reportable segment. The SEC initially asked the company to identify which costs it considered significant, explain what its operating-expense caption contained, and justify combining expense categories. Staff also questioned labels that matched those in the consolidated income statement despite showing different amounts.

Sandisk initially defended the grouping. It said the executive responsible for assessing performance and allocating resources regularly received research and development and selling, general and administrative expenses as a combined amount, excluding stock-based compensation. It also said familiar captions and an explanatory footnote were intended to help readers understand the management presentation.

Its first proposed revision would have added “Segment” to the cost captions, moved explanations ahead of the table, and combined excluded expenses and gains into other segment items. That grouping would have included stock-based compensation and goodwill impairment, which Sandisk said management received separately.

The SEC pressed further on that choice. Staff asked what qualitative and quantitative factors justified treating stock-based compensation and goodwill impairment as expenses that did not warrant separate identification. Staff also pointed to the separate research and administrative expense amounts in the consolidated income statement regularly provided to management, asking why the adjusted segment presentation combined them.

Sandisk then proposed individual lines for segment research and development and segment selling, general and administrative expenses, alongside separate stock-based compensation and impairment charges. The revised explanation specified that the segment cost categories excluded stock-based pay, which appeared on its own line. Other segment items would cover remaining expenses and gains, including business separation costs, employee termination costs, and a business-divestiture gain.

The exchange established a revised proposal without confirming its subsequent adoption or staff acceptance. For readers, the proposed breakdown would make research spending, administrative costs, and major charges individually visible, with stock-based compensation and impairment included in the calculation of operating loss.

Source: Sandisk correspondence with SEC staff dated March 16 and April 21, 2026, made public October 21, 2026.