SanDisk 2010 Annual Report Download - page 203

This is a TAB type table. Insert
conts here. Annual Report
Notes To Consolidated Financial Statements
cash and cash equivalents and short and long-term marketable securities. Should the Company fail to comply
with this covenant, the Company may be required to settle the unrealized gain or loss on the foreign exchange
contracts prior to the original maturity. The Company was in compliance with these covenants as of January 2,
2011.
The amounts in the tables below include fair value adjustments related to the Company’s own credit risk and
counterparty credit risk.
Fair Value of Derivative Contracts. Fair value of derivative contracts were as follows (in thousands):
Derivative assets reported in
Other Current Assets Other Non-current Assets
January 2,
2011
January 3,
2010
January 2,
2011
January 3,
2010
Designated cash flow hedges
Foreign exchange contracts .............. $ 14,193 $ — $ — $ —
Equity market risk contract .............. — — — 725
14,193 — — 725
Foreign exchange contracts not designated ...... 4,389 3,708 880 —
Total derivatives .......................... $ 18,582 $ 3,708 $ 880 $ 725
Derivative liabilities reported in
Other Current Accrued Liabilities Non-current Liabilities
January 2,
2011
January 3,
2010
January 2,
2011
January 3,
2010
Designated cash flow hedges
Foreign exchange contracts .............. $ 728 $ — $ — $ —
Equity market risk contract .............. 6,861 — — —
7,589 — — —
Foreign exchange contracts not designated ...... 26,017 7,794 43,156 15,453
Total derivatives .......................... $ 33,606 $ 7,794 $ 43,156 $ 15,453
Foreign Exchange and Equity Market Risk Contracts Designated as Cash Flow Hedges. The effective
portion of designated cash flow derivative contracts on the results of operations was as follows (in thousands):
Amount of gain (loss) recognized
in OCI
Amount of gain (loss) reclassified
from OCI to the Statements of
Operations during the year ended
January 2,
2011
January 3,
2010
January 2,
2011
January 3,
2010
Foreign exchange contracts .................. $ 27,826 $ (10,837) $ 14,646 $ 60,730
Equity market risk contract .................. (7,585) (31,262) — —
Foreign exchange contracts designated as cash flow hedges relate primarily to wafer purchases. Gains and
losses associated with foreign exchange contracts designated as cash flow hedges are expected to be recorded in
cost of product revenues when reclassified out of accumulated OCI. Gains and losses from the equity market risk
contract are expected to be recorded in other income (expense) when reclassified out of accumulated OCI. The
Company expects to realize the accumulated OCI balance related to foreign exchange contracts and equity
market risk contract within the next twelve months.
F-17