SanDisk 2005 Annual Report Download - page 153

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variable interest entity and the Company is not the primary beneficiary of FlashVision 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 FlashVision at the Company’s fiscal years ended
January 1, 2006 and January 2, 2005, respectively. FlashVision’s year-end is March 31, with quarters ending on
March 31, June 30, September 30 and December 31 (in thousands).
December 31,
2005
December 31,
2004
(Unaudited)
Current assets ........................................... $117,448 $148,354
Property, plant and equipment and other assets ................... 455,855 516,909
Total assets ............................................. 573,303 665,263
Current liabilities ........................................ 125,882 222,017
Long-term liabilities ...................................... $124,616 $ 71,533
The Company’s maximum reasonably estimable loss exposure (excluding lost profits) as a result of its
involvement with FlashVision was $298.1 and $326.0 million, as of January 1, 2006 and January 2, 2005,
respectively. These amounts are comprised of the Company’s investments, notes receivable and contingent
indemnification obligation. At January 1, 2006 and January 2, 2005, the Company’s consolidated retained earnings
included approximately $2.1 million and $1.7 million, respectively, of undistributed earnings of FlashVision.
The following summarizes financial information for FlashVision for the Company’s fiscal years ended
January 1, 2006, January 2, 2005 and December 28, 2003, respectively (in thousands).
January 1,
2006
January 2,
2005
December 28,
2003
Twelve Months Ended
(Unaudited)
Net sales(1) ..................................... $528,487 $481,792 $272,507
Gross profit ..................................... $ 2,122 $ 2,553 $ 1,572
Net income ..................................... $ 1,438 $ 1,318 $ 296
(1) Net sales represent sales to both the Company and Toshiba.
Flash Partners
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 years ended
January 1, 2006 and January 2, 2005. The entity did not exist during the Company’s fiscal year ended December 28,
F-34
Notes to Consolidated Financial Statements — (Continued)