SanDisk 2000 Annual Report Download - page 34

3 2 . Sa n D is k C o rp o ra t io n . 2 0 0 0 A n n u a l Re p o rt
Fo r e ig n C u r r e n c y Tr a n s a c tio ns
Fo reign o p erations are m e asured using the U.S. d o llar
as the func tio nal c urrency. Ac c o rd ing ly, m onetary
ac c o unts (p rinc ip ally c ash, ac c ounts re c eivable and lia-
b ilitie s) are rem easure d using the fo re ig n exc hang e
rate at the balance she et date . Op e rations ac c o un ts
and no nm onetary balance shee t ac c o unts are re m e a-
sure d at the rate in e ffect at the d ate o f transactio n.
The e ffe c ts o f foreig n c urre nc y rem easurem ent are
rep orted in c urrent o p eratio ns . See N o te 2 .
C a s h Eq u iv a le n t s a n d S h o rt - Te r m In v e s t m e n ts
Cash eq uivalents c o nsist o f short- term , highly liq uid
financ ial instrum e nts w ith insig nific ant inte rest rate risk
that are read ily c o n vertible to c ash and have m aturitie s
o f thre e m o nths o r less fro m the d ate o f p urc hase .
Cash eq uivalents and sh o rt- term inve stm ents c o nsist
o f m o ne y m arke t funds, taxab le com m ercial p ap er,
U.S. g o ve rnm e nt ag e nc y o b lig ations, c o rp o rate /
m unicipal no te s and b o nd s w ith high- cre d it q uality,
m o ne y m arket pre ferre d sto c k and auc tio n rate p re-
fe rred stock. Sho rt- te rm investm e nts also inc lud e 50 %
o f the UM C share s referred to b elo w (“ Investm ent in
Fo undry” ). The fair m arke t value , b ased o n q uo ted
m arket p ric es, o f c ash eq uivalents and sho rt- term
investm ents is sub stantially e q ual to their c arrying
value at Dec e m b e r 3 1, 2 0 00 and 19 99.
Und e r FAS 115, m anagem e nt c lassifies inve st-
m ents as availab le- for- sale at the tim e of p urc hase
and p eriodically re evaluates suc h d esig natio n. De b t
se c uritie s c lassifie d as available- fo r- sale are re p o rte d
at fair value. Unrec o g nized g ains o r lo sses o n avail-
ab le - fo r- sale sec u rities are inc luded , in e q uity until the ir
d isp o sitio n. Re alized g ains and losse s and d ec line s in
value jud g ed to b e o ther than tem p o rary on availab le -
fo r- sale sec urities are inc lud e d in o ther inc om e
(exp ense ). The c o st of securitie s so ld is base d o n the
sp e c ific id entific atio n m e thod.
All cash e q uivale nts and sho rt- te rm investm e nts
as o f Decem ber 31, 200 0 and 1999 are c lassifie d as
available- fo r- sale sec urities and c o n sist o f the follow ing
(in tho usand s):
Dec em b e r 31, 2 0 0 0 199 9
Cash e q uivale nts:
M one y m arke t fun d $ 2 ,9 2 1 $ 2 1,85 3
Co m m erc ial p ap er 60,505 117,76 9
Co rp o rat e no te s / b ond s 12 ,4 9 2 –
To tal $ 75 ,9 18 $ 139 ,62 2
Sho rt term investm ents :
U.S. go vernm ent age nc y ob lig atio ns $ 10 ,0 0 4 $ 2 ,96 9
M unicip al note s / b o nd s 136,580 133 ,46 2
Co rp o rat e no te s / b ond s 4 7,79 5 58,969
Co m m erc ial p ap er 6 ,115 4,009
Auc tion rate p referred sto c k 59,967 111,64 0
M arke tab le e qu it y sec urities * 112 ,8 5 5 –
To tal $ 3 73 ,3 16 $ 311,04 9
* Investm ent in UM C. N o suc h am o u nts w e re rec o rd e d in fis c al 19 99.
Unrealize d gain and lo sses o n availab le- fo r- sale
se c uritie s at Decem ber 31, 200 0 and 1999 w ere ($ 50.4
m illio n) and $199,000 , resp ec tively. The unrealize d lo ss
as o f Decem ber 31, 200 0 includ es $ 5 0.3 m illio n o f
unre alized lo ss o n the c urrent p o rtio n o f the
Co m p any’s investm e nt in UM C (se e “ Investm ent in
Fo undry” b e lo w ). Fair value of available- fo r- sale se c uri-
tie s is b ased upon quo te d m arket prices. Gro ss real-
ize d g ains and lo sses o n sales o f availab le- for- sale
se c uritie s d uring the years ended Decem b e r 31, 200 0
and 19 99 w ere im m aterial.
Deb t sec urities at De c em b er 31, 200 0 and 1999 ,
b y c o ntrac tual m aturity, are sho w n b elow . Ac tual
m aturities m ay d iffe r fro m contractual m aturitie s
b ecause issuers o f th e se c urities m ay have the rig ht to
p repay o b lig atio ns.
(In tho usand s)
Dec em b e r 31, 2 0 0 0 1999
Sho rt- te rm inve stm ents:
Due in o ne ye ar or le ss $ 94,554 $ 170 ,0 97
Due after o ne year thro ug h
tw o ye ars 16 5 ,9 0 7 14 0,9 52
To tal $ 260,461 $ 3 11,0 49
Lo n g - Te r m Inve s tm e n t s
The Com p any ho ld s m inority e q uity inve stm ents in
c o m p anies having operatio ns o r techno lo g y in areas
w ithin SanDisk’s strate g ic fo c us. Ce rtain o f the inve st-
m ents c arry restric tio ns o n im m e d iate d isp o sitio n.
Investm ents in p u b lic c o m panie s w ith restric tio ns of
less than o ne year are classifie d as availab le - fo r- sale
and are adjusted to the ir fair m arke t value w ith unre al-
ize d g ains and lo sses re c o rd ed as a c o m p o nent o f
ac c um ulated o ther com p rehensive incom e. Up o n d is-
p o sition o f these inve stm ents, the spec ific id e ntific atio n
m etho d is use d to d ete rm ine the c ost basis in c o m p ut-
ing realized g ains or lo sses. Dec lines in value that are
jud g e d to b e othe r than te m p o rary are re p o rte d in
o the r inc o m e and expense.
Ac c o u nts Re c e iv a b le
The ac tivity in the allow anc e fo r doub tful ac c o unts is
as fo llow s (in thousand s):
Ad ditio ns
Fo r the Balanc e at Charg e d to Balanc e
year e nde d Beg inning Co sts and De duc tio ns at End
Dec . 3 1, o f Perio d Ex pe nses (W rite- o ffs) of Pe rio d
19 98 $ 75 6 $ 3 4 5 $ 32 $ 1,06 9
19 99 $ 1,06 9 $ 945 $ 143 $ 1,871
20 00 $ 1,8 71 $ 3,9 91 $ 85 2 $ 5,0 10
In v e n t o r ie s
Invento rie s are state d at the low er o f c o st o r m arke t.
Co st is c o m p uted o n a c urre ntly ad juste d standard
b asis (w hich ap p ro xim ates ac tual c o sts o n a first- in,
first- o ut b asis). M arket value is b ased up o n an e sti-
m ated averag e se lling p ric e red uc e d b y no rm al g ro ss
m arg ins. Inve nto rie s are as fo llo w s (in tho usands):
Dec em b e r 31, 2 0 0 0 1999
Raw m aterials $ 33,092 $ 10,38 7
W o rk- in - p ro c e ss 5 3 ,9 2 1 20 ,708
Finishe d go o ds 9 ,5 8 7 4,5 84
$ 96,600 $ 3 5,6 79