SanDisk 2006 Annual Report Download - page 112

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reclassifications of deferred taxes could occur during the first quarter of 2007 and greater volatility in the effective
tax rate may be experienced due to the requirements of FIN 48.
In June 2006, the FASB issued Emerging Issues Tax Force Issue No. 06-3, or EITF 06-3, How Sales Taxes
Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement
(That Is, Gross Versus Net Presentation). EITF 06-3 requires disclosure of accounting policy regarding the gross or
net presentation of point-of-sales taxes such as sales tax and value-added tax. If taxes included in gross revenues are
significant, the amount of such taxes for each period for which an income statement is presented should also be
disclosed. EITF 06-3 will be effective for the first annual or interim reporting period after December 15, 2006. The
Company will adopt this pronouncement beginning in the first quarter of fiscal 2007 and does not expect the
adoption of EITF 06-3 to have a material impact on its consolidated results of operations and financial condition.
In September 2006, the SEC issued Staff Accounting Bulletin No. 108, or SAB 108, Considering the Effects of
Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. SAB 108
provides guidance on the consideration of the effects of prior year misstatements in quantifying current year
misstatements for the purpose of a materiality assessment. SAB 108 establishes an approach that requires
quantification of financial statement errors based on the effects of each of the company’s balance sheet and
statement of operations and the related financial statement disclosures. Early application of the guidance in SAB 108
is encouraged in any report for an interim period of the first fiscal year ending after November 15, 2006, and will be
adopted by the Company in the first quarter of fiscal 2007. The Company does not expect the adoption of SAB 108
to have a material impact on its consolidated results of operations and financial condition.
Note 3: Balance Sheet Information
Available-for-Sale Investments.
Available-for-sale investments were as follows for the following fiscal years ended December 31, 2006 and
January 1, 2006 (in thousands):
Book Value
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Market
Value Book Value
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Market
Val u e
December 31, 2006 January 1, 2006
Money market funds .... $ 617,984 $ — $ — $ 617,984 $ 300,833 $— $ — $ 300,833
Commercial paper ...... 557,238 — — 557,238 284,455 — — 284,455
U.S. government agency . . 845,389 257 (962) 844,684 587,352 — (3,691) 583,661
Municipal notes/bonds . . . 435,577 224 (200) 435,601 126,993 — (219) 126,774
Corporate notes/bonds . . . 27,860 — (423) 27,437 59,033 — (322) 58,711
Auction instruments ..... 543,497 — — 543,497 308,040 — (1) 308,039
Equityinvestments ..... 90,350 14,528 (4,938) 99,940 — — — —
Total available-for-sale
investments......... $3,117,895 $15,009 $(6,523) $3,126,381 $1,666,706 $— $(4,233) $1,662,473
Annual Report
F-13
Notes to Consolidated Financial Statements — (Continued)