SanDisk 2010 Annual Report Download - page 201

This is a TAB type table. Insert
conts here. Annual Report
Notes To Consolidated Financial Statements
Gross unrealized gains and losses related to publicly-traded equity investments are due to changes in market
prices. The Company has cash flow hedges designated to substantially mitigate risks, of both gains and losses,
from certain of these equity investments, as discussed in Note 3, “Derivatives and Hedging Activities.” The gross
unrealized loss related to U.S. Treasury and government agency securities, corporate and municipal notes and
bonds and asset-backed securities was primarily due to changes in interest rates. The gross unrealized loss on all
available-for-sale fixed income securities at January 2, 2011 was considered temporary in nature. Factors
considered in determining whether a loss is temporary include the length of time and extent to which fair value
has been less than the cost basis, the financial condition and near-term prospects of the investee, and the
Company’s intent and ability to hold an investment for a period of time sufficient to allow for any anticipated
recovery in market value. For debt security investments, the Company considered additional factors including the
Company’s intent to sell the investments or whether it is more likely than not the Company will be required to
sell the investments before the recovery of its amortized cost.
The following table shows the gross realized gains and (losses) on sales of available-for-sale securities (in
thousands).
Year ended
January 2,
2011
January 3,
2010
December 28,
2008
Gross realized gains ....................................... $ 20,867 $ 13,997 $ 8,870
Gross realized (losses) ..................................... (344) (576) (640)
Fixed income securities by contractual maturity as of January 2, 2011 are shown below (in thousands).
Actual maturities may differ from contractual maturities because issuers of the securities may have the right to
prepay obligations.
Amortized
Cost
Fair
Value
Due in one year or less ................................................. $ 1,951,220 $ 1,953,865
Due after one year through five years ..................................... 2,499,150 2,494,972
Total ........................................................... $4,450,370 $ 4,448,837
For certain of the Company’s financial instruments, including accounts receivable, short-term marketable
securities and accounts payable, the carrying amounts approximate fair value due to their short maturities. For
those financial instruments where the carrying amounts differ from fair value, the following table represents the
related carrying values and the fair values, which are based on quoted market prices (in thousands).
As of January 2, 2011 As of January 3, 2010
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
1% Sr. Convertible Notes due 2013 ............... $ 993,199 $ 1,118,375 $ 934,722 $ 958,813
1.5% Sr. Convertible Notes due 2017 .............. 717,833 1,132,500 — —
1% Convertible Notes due 2035 .................. — — 75,000 74,700
Note 3: Derivatives and Hedging Activities
The Company uses derivative instruments primarily to manage exposures to foreign currency and equity
security price risks. The Company’s primary objective in holding derivatives is to reduce the volatility of
earnings and cash flows associated with changes in foreign currency and equity security prices. The program is
not designated for trading or speculative purposes. The Company’s derivatives expose the Company to credit risk
F-15