SanDisk 2005 Annual Report Download - page 148

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(1) In January 2006, the Company incurred additional property lease obligations related to its lease of 3 buildings
in Milpitas, California and from its acquisition of Matrix Semiconductor, Inc. The Company’s additional
property lease obligation subsequent to January 1, 2006 will be $2.7 million, $9.5 million, $10.3 million and
$17.2 million for less than 1 year, 2-3 years, 3-5 years and over 5 years, respectively. See Note 12, “Subsequent
Events.”
(2) In January 2006, Flash Partners drew down the entire December 2005 lease facility which resulted in an
increase of the Company’s guarantee of 17.5 billion Japanese yen, or approximately $148 million based upon
the exchange rate at January 1, 2006. Lease payments are due quarterly and will be completed in 2011. The
Company’s additional lease commitment related to this lease will be $28.2 million, $43.1 million, $41.6 mil-
lion and $35.5 million for less than 1 year, 2-3 years, 3-5 years and over 5 years, respectively. See Note 12,
“Subsequent Events.”
(3) Includes Toshiba foundries, FlashVision, Flash Partners, related parties vendors and other silicon sources
vendors purchase commitments.
(4) Amounts are denominated in Japanese yen, are subject to fluctuation in exchange rates prior to payment and
have been translated using the exchange rate at January 1, 2006.
(5) The Company’s contingent indemnification obligation is 8.8 billion Japanese yen, or approximately $75 mil-
lion based upon the exchange rate at January 1, 2006.
(6) The Company’s guarantee obligation, net of cumulative lease payments, is 24.0 billion Japanese yen, or
approximately $203 million based upon the exchange rate at January 1, 2006.
The Company leases its headquarters and sales offices under operating leases that expire at various dates from
2006 through 2010. Future minimum lease payments under real estate operating leases at January 1, 2006 were as
follows (in thousands):
Fiscal Year Ending:
2006 ................................................................. $2,422
2007 ................................................................. 653
2008 ................................................................. 211
2009 ................................................................. 117
2010 ................................................................. 61
Total ................................................................. $3,464
The Company’s objective for holding derivatives is to minimize the material risks associated with non-
functional currency transactions and does not enter into derivatives for speculative or trading purposes. The
Company’s derivative instruments are recorded at fair value on the balance sheet with changes in fair value recorded
in other income (expense). The Company had foreign currency exchange contract lines available in the amount of
$1.18 billion at January 1, 2006 to enter into foreign currency forward contracts. As of January 1, 2006, the
Company had foreign currency forward contracts in place with a notional amount of 3.95 billion Japanese yen, or
approximately $34 million based upon the exchange rate at January 1, 2006. The fair value of these foreign currency
forward contracts as of January 1, 2006 were immaterial. The realized gains and losses on foreign currency forward
contracts for the fiscal year ended January 1, 2006 was immaterial.
F-29
Notes to Consolidated Financial Statements — (Continued)
Annual Report