SanDisk 2004 Annual Report Download - page 60

Download and view the complete annual report

Please find page 60 of the 2004 SanDisk annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 143

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143

Table of Contents
Notes to Consolidated Financial Statements — (Continued)
Property and Equipment. Property and equipment consisted of the following (in thousands):
January 2, December 28,
2005 2003
Machinery and equipment $ 213,043 $ 105,999
Software 29,229 19,193
Furniture and fixtures 2,781 3,726
Leasehold Improvements 8,958 7,495
Property and equipment, at cost 254,011 136,413
Accumulated depreciation and amortization (106,780) (76,943)
Property and equipment, net $ 147,231 $ 59,470
Depreciation expense of plant and equipment totaled $38.1 million, $22.7 million and $21.1 million in fiscal 2004, 2003 and 2002,
respectively. Amortization expense of intangible assets and totaled $0.8 million, $0.3 million and $0.2 million in 2004, 2003 and
2002, respectively.
Warranties. The warranty liability is included in other accrued liabilities in the accompanying consolidated balance sheets and the
activity was as follows (in thousands): Additions
Balance at Charged to Balance at
Beginning Costs of End of
of Period Revenue (Usage) Period
For the year ended:
December 29, 2002 $ 3,139 $ 3,304 $ (2,971) $ 3,472
December 28, 2003 $ 3,472 $ 5,694 $ (5,472) $ 3,694
January 2, 2005 $ 3,694 $ 14,790 $ (7,104) $ 11,380
Subordinated Notes. On December 24, 2001, the Company completed a private placement of $125.0 million of 41/2% Convertible
Subordinated Notes due 2006 (the Notes), and on January 10, 2002 the Company sold an additional $25.0 million of Notes. The Notes
provided for semi−annual interest payments of $3.4 million each on May 15 and November 15. The Notes were converted into
approximately 16.3 million shares of the Company’s common stock on November 17, 2004. The debt issuance costs were being
amortized over the term of the Notes using the effective interest method and the remaining $1.9 million was recorded as other expense
at the time of conversion. The Company amortized $2.6 million, $0.9 million and $0.9 million of debt issuance costs in 2004, 2003
and 2002, respectively, as a component of other income (loss) in the accompanying consolidated income statements.
Accumulated Other Comprehensive Income (Loss). Accumulated other comprehensive income (loss) presented in the
accompanying consolidated balance sheets consists of the accumulated unrealized gains and losses on available−for−sale marketable
securities, including the short−term portion of the Company’s investments in UMC and Tower, and also includes currency translation
adjustments related to operations denominated in local functional currencies, net of the related tax effects, for all periods presented
(in thousands). January 2, December 28, December 29,
2005 2003 2002
Net income $ 266,616 $ 168,859 $ 36,240
Unrealized gain (loss) on foundries(c) (38,216) 82,741 (89,728)
Unrealized gain (loss) on available−for−sale securities (2,765) (622) 292
Translation gain on remeasurement(d) 5,584 8,037 7,147
Comprehensive income (loss) $ 231,219 $ 259,015 $ (46,049)
F−14