SanDisk 2008 Annual Report Download - page 110

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Notes To Consolidated Financial Statements
The Company’s maximum reasonably estimable loss exposure (excluding lost profits) as a result of its
involvement with FlashVision, Flash Partners and Flash Alliance was $3.7 billion and $2.2 billion, as of
December 28, 2008 and December 30, 2007, respectively. These amounts are comprised of the Company’s
investments, notes receivable and guarantee obligations. At December 28, 2008 and December 30, 2007, the
Company’s consolidated retained earnings (accumulated deficit) included approximately $5.1 million and
$2.8 million, respectively, of undistributed earnings of FlashVision, Flash Partners and Flash Alliance.
The following summarizes the aggregated financial information for FlashVision, Flash Partners and Flash
Alliance as of December 28, 2008 and December 30, 2007 (in thousands).
December 28,
2008
December 30,
2007
(Unaudited)
Current assets ......................................................... $1,103,911 $ 870,018
Property, plant and equipment and other assets ............................... 4,159,457 3,331,584
Total assets ........................................................... $5,263,368 $4,201,602
Current liabilities ...................................................... $1,931,300 $1,958,322
Long-term liabilities ................................................... 2,240,800 1,280,471
The following summarizes the aggregated financial information for FlashVision, Flash Partners and Flash
Alliance for the fiscal years ended December 28, 2008, December 30, 2007 and December 31, 2006, respectively
(in thousands). FlashVision’s, Flash Partners’ and Flash Alliance’s year-ends are March 31, with quarters ending
on March 31, June 30, September 30 and December 31.
Twelve Months Ended
December 28,
2008
December 30,
2007
December 31,
2006
(Unaudited)
Net sales (1) ................................................ $3,945,321 $2,435,114 $1,462,024
Gross profit ............................................... 21,263 13,587 8,894
Net income ............................................... 7,222 927 1,730
(1) Net sales represent sales to both the Company and Toshiba.
Tower Semiconductor. As of December 28, 2008, the Company owned 15.9 million Tower shares or
approximately 10.0% of the outstanding shares of Tower Semiconductor Ltd. (“Tower”), one of its suppliers of
wafers for its controller components. The Company also holds a convertible note, an equipment loan receivable,
and warrants to purchase Tower ordinary shares. In the first quarter of fiscal year 2008, the Company’s Chief
Executive Officer resigned as a member of the Tower Board of Directors. In fiscal year 2008, the Company
recognized impairment charges of $18.9 million as a result of the other-than-temporary decline in its investment
in Tower ordinary shares which reduced the investment value to $2.1 million as of December 28, 2008. In
addition, the Company holds a Tower convertible debenture with a market value of $2.9 million. As of
December 28, 2008, the Company also had an outstanding loan of $3.0 million to Tower for expansion of
Tower’s 0.13 micron logic wafer capacity. The loan to Tower is secured by the equipment purchased. The
Company purchased controller wafers and related non-recurring engineering of approximately $25.9 million,
$65.8 million and $41.0 million in the fiscal years ended December 28, 2008, December 30, 2007 and
December 31, 2006, respectively. The purchases of controller wafers are ultimately reflected as a component of
the Company’s cost of product revenues. At December 28, 2008 and December 30, 2007, the Company had
amounts receivable from Tower of $0.4 million and amounts payable to Tower of $6.1 million, respectively.
F-45