SanDisk 2005 Annual Report Download - page 134

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In 2005, 2004 and 2003, the Company sold $12.4 million, $10.2 million and $16.3 million, respectively, of
inventory that had been fully written-off in previous periods.
Property and Equipment. Property and equipment consisted of the following (in thousands):
January 1,
2006
January 2,
2005
Machinery and equipment . . ................................... $318,336 $ 213,043
Software .................................................. 35,990 29,229
Furniture and fixtures ........................................ 1,682 2,781
Leasehold improvements . . . ................................... 8,881 8,958
Property and equipment, at cost................................. 364,889 254,011
Accumulated depreciation and amortization ........................ (153,797) (106,780)
Property and equipment, net ................................... $211,092 $ 147,231
Depreciation expense of property, plant and equipment totaled $63.1 million, $38.1 million and $22.7 million
in fiscal 2005, 2004 and 2003, respectively. Amortization expense of intangible assets and totaled $2.7 million,
$0.8 million and $0.3 million in 2005, 2004 and 2003, respectively.
Warranties. Liability for warranty expense is included in other accrued liabilities in the accompanying
consolidated balance sheets and the activity was as follows (in thousands):
Balance at
Beginning
of Period
Additions
Charged to
Costs of
Revenue (Usage)
Balance at
End of
Period
For the year ended:
December 28, 2003 ........................ $ 3,472 5,694 (5,472) $ 3,694
January 2, 2005 ........................... $ 3,694 14,790 (7,104) $11,380
January 1, 2006 ........................... $11,380 6,033 (6,156) $11,257
Subordinated Notes. On December 24, 2001, the Company completed a private placement of $125.0 million
of 41⁄2% Convertible Subordinated Notes due 2006 (the Notes), and on January 10, 2002 the Company sold an
additional $25.0 million of Notes. The Notes provided for semi-annual interest payments of $3.4 million each on
May 15 and November 15. The Notes were converted into approximately 16.3 million shares of the Company’s
common stock on November 17, 2004. The Company amortized $2.6 million and $0.9 million of debt issuance costs
in 2004 and 2003, respectively, as a component of other income (loss) in the accompanying consolidated income
statements.
Accumulated Other Comprehensive Income (Loss). Accumulated other comprehensive income (loss) pre-
sented in the accompanying consolidated balance sheets consists of the accumulated gains and losses on
available-for-sale marketable securities, net of taxes, for all periods presented (in thousands):
January 1,
2006
January 2,
2005
Accumulated net unrealized gain (loss) on:
Available-for-sale short-term investments ......................... $ (4,233) $ (2,332)
Available-for-sale investments in foundries ........................ (383) 457
Foreign currency translation ................................... 7,251 20,768
Total accumulated other comprehensive income ...................... $ 2,635 $18,893
The amount of income tax expense allocated to unrealized gain on available-for-sale securities was immaterial
at January 1, 2006 and January 2, 2005, respectively.
F-15
Notes to Consolidated Financial Statements — (Continued)
Annual Report