SanDisk 2012 Annual Report Download - page 180

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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).
Fiscal years ended
December 30,
2012
January 1,
2012
January 2,
2011
Gross realized gains ................................................ $ 3,867 $ 36,762 $ 20,867
Gross realized losses ............................................... (898) (2,213) (344)
Fixed income securities by contractual maturity as of December 30, 2012 are shown below (in thousands).
Actual maturities may differ from contractual maturities because issuers of the securities may have the right to
prepay obligations or the Company has the option to demand payment.
Amortized
Cost
Fair
Value
Due in one year or less .......................................................... $ 1,396,925 $ 1,400,151
After one year through five years .................................................. 2,959,851 2,981,845
After five years through ten years ................................................. 53,949 53,964
After ten years ................................................................. 509,357 509,365
Total .................................................................... $ 4,920,082 $ 4,945,325
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). These financial instruments were categorized as Level 1 as of December 30, 2012 and January 1,
2012.
December 30, 2012 January 1, 2012
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
1% Convertible Sr. Notes due 2013........................ $ 906,708 $ 927,820 $ 852,146 $ 914,140
1.5% Convertible Sr. Notes due 2017 ...................... 789,913 1,159,370 752,765 1,177,500
Total ............................................ $ 1,696,621 $ 2,087,190 $ 1,604,911 $ 2,091,640
Note 4: Derivatives and Hedging Activities
The Company uses derivative instruments primarily to manage exposures to foreign currency. The
Company’s primary objective in holding derivative instruments is to reduce the volatility of earnings and cash
flows associated with changes in foreign currency. The program is not designated for trading or speculative
purposes. The Company’s derivative instruments expose the Company to credit risk to the extent that the
counterparties may be unable to meet the terms of the agreement. The Company seeks to mitigate such risk by
limiting its counterparties to major financial institutions and by spreading the risk across several major financial
institutions. In addition, the potential risk of loss with any one counterparty resulting from this type of credit risk
is monitored by the Company on an ongoing basis.
The Company recognizes derivative instruments as either assets or liabilities on the balance sheet at fair
value and provides qualitative disclosures about objectives and strategies for using derivative instruments,
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