SanDisk 2005 Annual Report Download - page 154

2003. Flash Partners’ 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 ........................................... $255,961 $56,793
Property, plant and equipment and other assets ................... 583,989 3,820
Total assets ............................................. 839,950 60,613
Current liabilities ......................................... $755,647 $12,139
The Company’s maximum reasonably estimable loss exposure (other than lost profits) as a result of its
involvement with Flash Partners was $245.3 million and $166.9 million as of January 1, 2006 and January 2, 2005,
respectively. 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 Company’s year ended January 1,
2006 and January 2, 2005. The entity did not exist for the year ended December 28, 2003 and therefore no
information is provided in this disclosure (in thousands).
January 1,
2006
January 2,
2005(1)
Twelve Months Ended
(Unaudited)
Net revenues ................................................ $266,977 $21,157
Gross loss .................................................. $ (2,471) $ —
Net loss ................................................... $ (675) $ (179)
(1) Net revenues represent reimbursement of start up costs from both the Company and Toshiba.
Note 12: Subsequent Events
On January 13, 2006, the Company completed its acquisition of Matrix Semiconductor, Inc., or Matrix, and
acquired all of the outstanding stock of Matrix. The acquisition consideration was approximately $302 million,
consisting of 3,722,591 shares of common stock and approximately 600,000 shares of equity incentives valued at
approximately $282 million and $20.0 million of cash, respectively. Matrix has pioneered the development of 3-D
one time programmable integrated circuits and will be integrated into the Company’s existing product lines.
Acquisition will be accounted for under the purchase method. The purchase price allocation has not yet been
finalized. As part of its acquisition of Matrix, the Company assumed the obligation of Matrix’s existing facility
lease totaling approximately $21 million which will run through 2016.
In December 2005, Flash Partners entered into a master equipment lease agreement providing for up to
35.0 billion Japanese yen, or approximately $297 million based upon the exchange rate at January 1, 2006, of
original lease obligations. There were no amounts outstanding under this master lease agreement at the end of fiscal
2005; however, the entire amount was drawn down in January 2006 and the Company provided a guarantee for 50%
of the outstanding balances, or approximately $148 million based upon the exchange rate at January 1, 2006. See
Note 5, “Contractual Obligations and Off Balance Sheet Arrangements.”
In January 2006, the Company executed a facility lease agreement for a new corporate office complex to be
located in Milpitas, California. This new corporate facility will house the Company’s research and development,
sales and marketing and general and administrative functions. The facility lease agreement runs through 2013 with
the total obligation of approximately $19 million. See Note 5, “Contractual Obligations and Off Balance Sheet
Arrangements.”
F-35
Notes to Consolidated Financial Statements — (Continued)
Annual Report