SanDisk 2010 Annual Report Download - page 178

The increase in cash provided by operations in fiscal year 2009 compared to fiscal year 2008 resulted
primarily from our net income of $415 million compared with a net loss of ($1.99) billion, which included
non-cash impairment charges, in the comparable period of the prior year. Cash flow from accounts receivable
decreased, as reflected by higher accounts receivable levels in fiscal year 2009 compared with the prior year, due
to increased revenue in fiscal year 2009. Cash used for inventory decreased primarily due to higher sales. Cash
flow from other assets increased compared with the prior year primarily due to a tax refund received in the first
quarter of fiscal year 2009 related to carryback claims from the fiscal year 2008 net loss. Accounts payable trade
and accounts payable from related parties decreased primarily due to the reduction of gross inventory, operating
expenses and the timing of Flash Ventures payments as compared to the prior year, resulting in a decrease in cash
provided. Cash flow from other liabilities in fiscal year 2009 decreased as compared to the prior year as a result
of settlements in hedge contracts and the elimination of liabilities for Flash Ventures adverse purchase
commitments associated with under utilization of Flash Ventures’ capacity.
Investing Activities. The higher usage of cash in investing activities in fiscal year 2010 was primarily
related to a net increase in short and long-term marketable securities and an increase in property and equipment
purchases. During fiscal year 2010, we had negligible net loan issuances to Flash Ventures compared to a net
loan repayment from Flash Ventures of $9 million in fiscal year 2009. In addition, in fiscal year 2010, we
received proceeds of $18 million related to the sale of the net assets of our mobile phone SIM card business.
The increase in cash used in investing activities in fiscal year 2009 was primarily related to lower proceeds
from sale and maturities of short and long-term marketable securities, offset by a reduction in the net loans made
to Flash Ventures and a reduced investment in property and equipment. During fiscal year 2009, we loaned
$378 million to Flash Ventures for equipment purchases and received $387 million on the collection of
outstanding notes receivable from Flash Ventures for the sale of a portion of our production capacity and the
return of excess cash from Flash Partners. This resulted in a net loan repayment from Flash Ventures of
$9 million in fiscal year 2009 compared to a loan of $384 million to Flash Ventures for equipment purchases in
fiscal year 2008.
Financing Activities. The fiscal year 2010 net cash provided by financing activities was primarily due to the
net proceeds from the issuance of our 1.5% Notes due 2017, related warrants and convertible bond hedge in
August 2010 of $878 million, higher cash received from employee stock programs and the excess tax benefit
from share-based compensation, offset by the redemption of our 1% Convertible Notes due 2035 of ($75) million
in the first quarter of fiscal year 2010.
Net cash provided by financing activities for fiscal year 2009 of $21 million was higher than fiscal year
2008 primarily due to the repayment of debt financing in fiscal year 2008 of ($10) million.
Liquid Assets. At January 2, 2011, we had cash, cash equivalents and short-term marketable securities of
$2.85 billion. We have $2.49 billion of long-term marketable securities which we believe are also liquid assets,
but are classified as long-term marketable securities due to the remaining maturity of each marketable security
being greater than one year.
Short-Term Liquidity. As of January 2, 2011, our working capital balance was $3.07 billion. During fiscal
year 2011, we expect our portion of capital investments in Flash Ventures plus our investment in non-fab
property, plant and equipment to be between $1.4 billion and $1.6 billion, of which we expect approximately
$800 million to $900 million will be funded through our cash, including by providing loans and investments to
the Flash Ventures.
Depending on the demand for our products, we may decide to make additional investments, which could be
substantial, in wafer fabrication foundry capacity and assembly and test manufacturing equipment to support our
business. We may also make equity investments in other companies, engage in merger or acquisition
transactions, or purchase or license technologies. These activities may require us to raise additional financing,
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