SanDisk 2004 Annual Report Download - page 76

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Table of Contents
Notes to Consolidated Financial Statements — (Continued)
The following summarizes financial information for FlashVision for the Company’s fiscal years ended January 2, 2005,
December 28, 2003 and December 29, 2002, respectively (in thousands). Twelve Months Ended
2004 2003 2002
(Unaudited)
Net sales(1) $ 481,792 $ 272,507 $ 73,571
Gross profit (loss) 2,553 1,572 (369)
Net income $ 1,318 $ 296 $ 2,587
(1) Net sales represent sales to both the Company and Toshiba.
Flash Partners
In September 2004, the Company and Toshiba entered into a series of definitive agreements and created a new semiconductor
company, Flash Partners, to produce NAND flash memory products at a new 300−millimeter wafer fabrication facility, Fab 3, at
Toshiba’s Yokkaichi operations. The Company accounts for its 49.9% ownership position in Flash Partners under the equity method
of accounting. The Company’s obligations with respect to Flash Partner’s lease arrangement, capacity expansion, take−or−pay supply
arrangements and research and development cost sharing are described in Note 5. Flash Partners is a variable interest entity and the
Company is not the primary beneficiary of Flash Partners because it is entitled to less than a majority of any residual gains and is
obligated with respect to less than a majority of residual losses with respect to the venture.
The following is the summarized financial information for Flash Partners at the Company’s fiscal year ended January 2, 2005. The
entity did not exist during the Company’s fiscal year ended December 28, 2003. Flash Partners’ year−end is March 31, with each
quarter ending on March 31, June 30, September 30 and December 31 (in thousands). December 31,
2004
(Unaudited)
Current Assets $ 56,793
Property, plant and equipment and other assets 3,820
Total Assets 60,613
Current Liabilities $ 12,139
The Company’s maximum reasonably estimable loss exposure (other than lost profits) as a result of its involvement with Flash
Partners was $166.9 million as of January 2, 2005. These amounts are comprised of the Company’s investments and guarantee of half
of Flash Partners’ lease obligation.
The following summarizes financial information for Flash Partners for the year ended January 2, 2005. The entity did not exist for
the years ended December 28, 2003 and December 29, 2002, respectively and therefore no information is provided in this disclosure
(in thousands). December 31,
2004
(Unaudited)
Net revenues(1) $ 21,157
Gross profit —
Net (loss) $ (179)
(1) Net revenues represent reimbursement of start up costs from both the Company and Toshiba.
F−30