SanDisk 2008 Annual Report Download - page 83

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Notes To Consolidated Financial Statements
Notes Receivable and Investments in the Flash Ventures with Toshiba. Notes receivable and investments
in the flash ventures with Toshiba Corporation (“Toshiba”) were as follows (in thousands):
December 28,
2008
December 30,
2007
Notes receivable, Flash Partners Ltd. ...................................... $ 843,380 $ 639,834
Notes receivable, Flash Alliance Ltd. ...................................... 276,518 —
Investment in FlashVision Ltd. ........................................... 63,965 159,146
Investment in Flash Partners Ltd. ......................................... 202,530 177,529
Investment in Flash Alliance Ltd. ......................................... 215,898 132,396
Total notes receivable and investments in the flash ventures with Toshiba ..... $1,602,291 $1,108,905
In the fourth quarter of fiscal year 2007 and the third quarter of fiscal year 2008, the Company recorded a
$10.0 million and $10.4 million impairment charge, respectively, related to its equity investment in FlashVision
due to FlashVision’s difficulty in selling the remaining excess capital equipment due to limited demand for
200-millimeter production equipment. The FlashVision impairment was recorded in Income (Loss) in Equity
Investments as the impairments relate to the wind-down of the venture. At December 28, 2008, the Company had
an investment in FlashVision of $64.0 million denominated in Japanese yen, and related unrealized gains of
$43.3 million due to cumulative translation adjustments recorded in Accumulated Other Comprehensive Income.
See Note 13, “Commitments, Contingencies and Guarantees—FlashVision,” regarding equity method
investments in fiscal year 2008.
In the fourth quarter of fiscal year 2008, the Company recorded an impairment to the equity investments in
Flash Partners and Flash Alliance of $20.0 million and $63.0 million, respectively, as the fair value of these
investments was determined to be less than the carrying value. These impairments were based upon a comparison
of the forecasted discounted cash flows to the carrying value of each venture. The analysis considered several
factors including the volatility in foreign currencies resulting in an appreciation in the carrying value of these
Japanese yen denominated assets and a reduced business outlook primarily due to NAND-industry pricing
conditions. The impairment analyses and measurement is a process that requires significant judgment and the use
of significant estimates related to valuation such as discount rates, long term growth rates, foreign currency rates
and the level and timing of future cash flows. The Flash Partners and Flash Alliance impairments were recorded
in Cost of Product Revenues due to the operational nature of the ventures. See Note 13, “Commitments,
Contingencies and Guarantees—Flash Partners and Flash Alliance,” regarding equity method investments in
fiscal year 2008.
Other Current Accrued Liabilities. Other current accrued liabilities were as follows (in thousands):
December 28,
2008
December 30,
2007
Accrued payroll and related expenses ...................................... $ 54,516 $ 94,220
Taxes payable ......................................................... 7,244 56,945
Accrued restructuring ................................................... 22,545 2,071
Research and development liability, related party ............................. 4,000 8,000
Foreign currency forward contract payables ................................. 153,523 5,714
Flash Ventures adverse purchase commitments for under utilized capacity (see
Note 13) ........................................................... 121,486 —
Other accrued liabilities ................................................. 139,129 119,900
Total other current accrued liabilities .................................. $502,443 $286,850
F-18