SanDisk 2003 Annual Report Download - page 79

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
agreements with respect to Fab 3, the Company will reimburse Toshiba for 50% of certain start-up costs and
Fab 3 Co. formation costs incurred by Toshiba and for cancellation fees due under authorized contractor and
vendor invoices for orders placed by Toshiba for certain equipment and construction materials for Fab 3 that
Toshiba cannot otherwise use, which amounts would be substantial. The total investment in Fab 3, excluding
the cost of building construction, is currently estimated at $2.5 billion in the period through the end of 2006, of
which our share is estimated to be approximately $1.3 billion, with initial production currently scheduled for
the end of 2005. The Company and Toshiba would share equally in the investment, and the Company may
need to raise additional capital for its portion of the investment. In addition to its initial investment in
expansion at Yokkaichi and in Fab 3, if a Ñnal agreement for Fab 3 is reached between the Company and
Toshiba, for several quarters the Company will incur substantial start-up expenses related to the hiring and
training of manufacturing personnel, facilitizing the clean room and installing equipment at the expanded
fabrication facility and at Fab 3.
At December 28, 2003, the Company had approximately $141.2 million of total non-cancelable
outstanding purchase orders from its suppliers and subcontractors. The following summarizes the Company's
contractual cash obligations, commitments and oÅ balance sheet arrangements at December 28, 2003, and the
eÅect such obligations are expected to have on its liquidity and cash Öow in future periods (in thousands).
Contractual Obligations and OÅ Balance Sheet Arrangements
Less than 5 Years and
Total 1 Year 2 Ó 3 Years 4 Ó 5 Years Beyond
CONTRACTUAL
OBLIGATIONS:
Convertible subordinated notes
payable (See Note 4.) ÏÏÏÏÏÏÏ $150,000(1) $ Ì $150,000 $ Ì $ Ì
Interest payable on convertible
subordinated notes ÏÏÏÏÏÏÏÏÏÏÏ 20,250 6,750 13,500 Ì Ì
Operating leasesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 6,816 3,132 3,684 Ì Ì
FlashVision research and
development, fabrication
capacity expansion and start-up
costs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 320,516(3)(4) 197,344 69,172 54,000
Non-cancelable purchase
commitments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 141,723(2) 141,723 Ì Ì Ì
Total contractual cash obligations $639,305 $348,949 $236,356 $54,000 $ Ì
(1) On January 10, 2002, the initial purchasers completed the exercise of their option to purchase an
additional $25.0 million of the Notes.
(2) FlashVision binding three-month purchase commitments for Öash memory wafers are denominated in
Japanese Yen, and are subject to Öuctuation in exchange rates prior to payment.
(3) Includes a loan to FlashVision entered into in February 2004.
(4) Excludes potential Fab 3 FlashVision agreement, as agreement not Ñnal.
Less than 5 Years and
Total 1 Year 2 Ó 3 Years 4 Ó 5 Years beyond
CONTRACTUAL SUBLEASE
INCOME:
Non-cancelable operating subleaseÏÏÏÏÏ $336 $212 $124 $Ì $Ì
Total contractual cash income ÏÏÏÏÏÏÏÏ $336 $212 $124 $Ì $Ì
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