SanDisk 2006 Annual Report Download - page 97

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Based on the results of our evaluation, our management concluded that our internal control over financial
reporting of was effective as of December 31, 2006.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
Our independent registered public accounting firm, which has audited the financial statements included in
Item 8 of this report, has issued an attestation report on management’s assessment of our internal control over
financial reporting which is included at page F-2.
Inherent Limitations of Disclosure Controls and Procedures and Internal Control over Financial Reporting.
It should be noted that any system of controls, however well designed and operated, can provide only reasonable,
and not absolute, assurance that the objectives of the system will be met. In addition, the design of any control
system is based in part upon certain assumptions about the likelihood of future events.
Independent Registered Public Accounting Firm’s Attestation Report. The report required by this item is set
forth at page F-2.
Changes in Internal Control over Financial Reporting. There were no changes in our internal control over
financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the quarter ended December 31, 2006 that
have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
On November 1, 2006, we entered into the Building 5 Sublease Agreement with Maxtor Corporation (the
“Sublessor”) for approximately 94,484 square feet of office space at 1100 Sumac Drive, Milpitas, California 95035
(the “Sublease”).
The term of the Sublease is from January 1, 2007 until July 31, 2011. Pursuant to the terms of the Sublease, the
base rent for the Sublease commences on January 1, 2007 and the total rent due for each period described is as
follows: January 1, 2007 until March 31, 2007: $28,271.11; April 1, 2007 until June 30, 2007: $61,414.60; July 1,
2007 until June 30, 2008: $65,193.96; July 1, 2008 until June 30, 2009: $68,973.32; July 1, 2009 until June 30,
2010: $72,752.68; and July 1, 2010 until July 31, 2011: $76,532.04.
The first full month’s rent under the Sublease was due upon the effectiveness of the Sublease. In addition to
base rent, we will be responsible for costs, charges and obligations specified in the Sublease, including certain
operating expenses, management fees payable to Silicon Valley CA-I, LLC, a Delaware limited liability company
(the “Master Lessor”), real estate taxes and utility expenses, standard indemnification of the Sublessor, and for
maintaining specified levels of insurance, in addition to being subject to certain terms of the Master Lease between
the Master Lessor and the Sublessor for the subleased premises. Pursuant to the terms of the Sublease, we were
required to deliver to the Sublessor a security deposit in the form of a letter of credit in the amount of $184,243.80
upon effectiveness of the Sublease.
The foregoing is a summary description of certain terms of the Sublease. It is qualified in its entirety by the text
of the Sublease, attached as an exhibit to this report.
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