SanDisk 2000 Annual Report Download - page 42

4 0 . Sa n D is k C o rp o ra t io n . 2 0 0 0 A n n u a l Re p o rt
p rivate ly- held m anufac ture r o f d ig ital im ag ing c o m p re s-
sio n te c hnology an d p ro d ucts fo r future d ig ital cam -
c o rd ers that w ill be c ap able o f using our flash m e m o ry
c ard s to sto re ho m e vid eo m o vie s, re p lac ing the m ag -
ne tic tap e currently use d in these system s. Und e r the
ag re em ent, SanDisk ow ns ap p ro xim ate ly 10% of Divio
and is entitle d to o n e b o ard se at. The Co m p any
ac c o unts for this investm ent under the cost m etho d .
In 20 0 0, 1999 , and 19 9 8, the Com p any p urc hase d
w afers from USIC/UM C, a fo und ry in w hich the
Co m p any has o w ne rship, to taling app roxim ately $161.6
m illio n, $ 22.8 m illio n an d $ 11.6 m illion, resp ectively.
Note 8:
S e g m e n t I n f o r m a t io n
The Com p any ap p lie d SFAS N o. 131, “ Disclosure s ab o ut
Segm ents o f an Enterp rise and Re late d Info rm atio n” .
Op e rating seg m e nts are d efined as c o m p o nents of an
ente rprise ab out w hic h se p arate financ ial info rm ation is
available that is e valuate d re g ularly b y the c hief o pe rat-
ing d ecisio n m aker, o r group , in d ec id ing ho w to allo -
c ate resourc es and in asse ssing perfo rm anc e.
The Com p any o p erate s in one se g m e nt, flash
m em o ry p ro d ucts. The Co m p any m arkets its p ro d uc ts
in the United State s and in fo re ig n c o untries throug h its
sale s p erso nnel, d e ale rs, d istrib utors, retailers and its
sub sid iaries. The Chie f Exe c utive Offic e r has b een id e n-
tified as the Chief Operating Dec ision M ake r (“ CODM ” )
b ecause he has final authority o ver reso urc e allo c ation
d ecisio ns and p e rfo rm anc e asse ssm ent. The CODM
d o es not re c e ive d isc re te financ ial inform atio n about
ind ivid ual c o m ponents o f the m arket.
G e o g r a p h ic In fo rm a t io n:
Inform atio n re g ard ing g eog rap hic are as for the years
end ed Dec em ber 31, 200 0, 1999 , and 199 8 are as fo l-
lo w s (in tho usands):
Years En de d De c em be r 31, 2 0 0 0 19 99 199 8
Revenu es:
United State s $ 2 5 8 ,715 $ 116,9 22 $ 60 ,113
Japan 178 ,5 6 4 62 ,176 4 6,2 76
Eu ro p e 9 9 ,3 5 2 22 ,674 9 ,810
Other fo re ign c ount rie s 6 5 ,18 1 45,218 19 ,56 2
To t al $ 6 0 1,8 12 $ 246 ,9 90 $ 13 5,76 1
Long Lived As s ets:
United State s $ 174 ,6 8 5 $ 25 ,4 42 $ 16 ,779
Jap an 5 2 0 26 1 44 5
Eu ro p e 5 5 20 9
Other fo re ign c ount rie s 19 8 ,2 5 3 57,2 73 51,517
To tal $ 3 73 ,5 17 $ 82,996 $ 68,750
Revenues are attribute d to c o untrie s b ase d on the
lo c ation o f the c usto m e rs. Lo ng lived asse ts in o ther
fo re ig n c o untries includ es the lo ng- te rm investm e nt in
UM C o f $197.7 in 2 000 and $51.2 m illio n in 19 99 and
19 98. Lo ng lived asse ts in the Unite d State s inc ludes
the investm e nt in FlashVisio n of $134.7 in 2 000 .
M a jo r C us to m e r s
In 20 0 0, the re w e re no c usto m ers w ho acc o unted for
m o re than 10 % o f to tal re venue . In 19 99 and 19 98, re v-
enue s fro m o ne c usto m e r re p re se nte d ap p ro xim ately
$28 .0 m illio n and $14.0 m illio n , resp ec tively, o f c onso li-
d ate d reve nues.
Note 9:
A c c u m u la t e d O t h e r C o m p r e h e n s iv e
I n c o m e
Financ ial Ac c o unting Stand ard s Board State m e nt N o .
13 0, “ Re p o rting Co m pre he nsive Inc o m e ” ,requires
unre alized g ains o r lo sses o n the Co m p any’s availab le -
fo r- sale sec urities to b e includ ed in o ther c o m p rehen-
sive incom e. Co m p rehensive inc o m e c o nsists o f net
inc o m e and o the r com p rehen sive incom e.
Ac c um ulated o ther com p rehensive incom e p re-
se nte d in the acc o m p anyin g b alanc e she et c o nsists of
the ac c um ulate d unre alized g ains and lo ses o n avail-
ab le - fo r- sale m arketab le securitie s fo r all p erio d s p re-
se nte d . The tax e ffects fo r o the r com p rehensive
inc o m e w ere im m ate rial fo r all perio d s p re se nte d (in
th o usa nd s).
2 0 0 0 1999 1998
Ac cum ulate d o ther c o m p rehe nsive
inc om e at b eg inning o f year $ 19 9 $ 471 $ 4 2
Chang e of ac c um u la ted o ther
c om p re hensive inc om e d uring
the ye ar
Unre alized lo ss on investm ents $ (50,268) ––
Unre alized g ain (lo ss) o n
available - fo r- sa le se cu ritie s $ (343) $ (272 ) $ 4 29
Ac cum ulate d o ther c o m p rehe nsive
inc om e at year end $ (5 0 ,4 12 ) $ 19 9 $ 4 71
The unrealize d loss o n investm e nts includ e s a tax b en-
efit o f ap p ro xim ate ly $ 34.6 m illio n.
Note 10:
S u b s e q u e n t E v e n t ( u n a u d i t e d )
At Decem b er 31, 20 0 0, the m arket value o f b o th o u r
sho rt- te rm and lo ng - term inve stm ent in UM C had
d eclined $ 201.9 m illion b e lo w its c arrying b asis. It w as
d eterm ined that this d e c line w as related to the d o w n-
turn in the se m ic o nd uc to r ind ustry as a w hole and w as
te m p o rary in nature d ue to the histo ric ally cyclic al
nature o f the ind ustry. The available- fo r- sale p o rtion o f
o ur investm e nt w as m arked- to - m arke t thro ugh othe r
c o m p rehensive inc o m e as re q uire d b y SFAS 115 .
As o f M arc h 2 2, 20 0 1, the m arket value o f o ur
investm ent in UM C rem aine d sig nific antly b e lo w our
c o st. The d o w nturn in the sem icond uc tor ind ustry and
the ec o no m y in g e ne ral ap p ears to be m o re seve re
than previo usly antic ip ated. There is a g reat d eal o f
unc ertainty reg arding w hen the sem ic o n d uc tor ind us-
try w ill reco ver fro m this d o w n c yc le . B ecause of the
c o ntinue d d o w nturn in the econo m y, w e b e lie ve that
the dec lin e in the m arke t value of our investm e nt in
UM C at M arc h 2 2, 20 01 is o ther than te m p o rary, and
w e w ill rep o rt a lo ss in o ther inc o m e and expense in
the first q uarter o f 2 001.This lo ss w ill b e b ased upon
the fair m arket value o f the investm e nt at the end of
the first q uarter in fis c al 20 0 1, as c o m p ared to the
investm ent’s cost b asis.