SanDisk 2007 Annual Report Download - page 129

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Toshiba Foundry. The Company has the ability to purchase additional capacity under a foundry arrangement
with Toshiba. Under the terms of this agreement, the Company is required to provide Toshiba with a purchase order
commitment based on a nine-month rolling forecast.
TwinSys. The Company had a 50.1% beneficial ownership in TwinSys Data Storage Limited Partnership
(“TwinSys”), a business venture with Toshiba, consisting of (i) 49.9% ownership in TwinSys and (ii) 0.2% interest
held by TwinSys Ltd., in which the Company has a 51% ownership interest. The Company and Toshiba terminated
the operations of TwinSys as of March 31, 2007.
Business Ventures and Foundry Arrangement with Toshiba. Purchase orders placed under Flash Ventures and
the foundry arrangement with Toshiba for up to three months are binding and cannot be canceled.
Other Silicon Sources. The Company’s contracts with the other sources of silicon wafers generally require
the Company to provide purchase order commitments based on nine-month rolling forecasts. The purchase orders
placed under these arrangements relating to the first three months of the nine-month forecast are generally binding
and cannot be canceled. Outstanding purchase commitments for other sources of silicon wafers are included as part
of the total “Noncancelable production purchase commitments” in the “Contractual Obligations” table below.
Subcontractors. In the normal course of business, the Company’s subcontractors periodically procure
production materials based on the forecast the Company provides to them. The Company’s agreements with
these subcontractors require that it reimburse them for materials that are purchased on the Company’s behalf in
accordance with such forecast. Accordingly, the Company may be committed to certain costs over and above its
open noncancelable purchase orders with these subcontractors. Outstanding purchase commitments to subcon-
tractors are included as part of the total “Noncancelable production purchase commitments” in the “Contractual
Obligations” table below.
Off-Balance Sheet Liabilities
The following table details the Company’s portion of the remaining indemnification or guarantee obligations
under each of Flash Ventures’ master lease facilities in both Japanese yen and U.S. dollar equivalent based upon the
exchange rate at December 30, 2007.
Master Lease Agreements by Execution Date Lease Amounts Expiration
(Yen in billions) (Dollars in millions)
FlashVision
June 2006............................... ¥ 3.6 $ 32 2009
Flash Partners
December 2004 .......................... ¥ 16.1 $ 143 2010
December 2005 .......................... 12.4 110 2011
June 2006............................... 11.8 105 2011
September 2006 .......................... 41.2 364 2011
March 2007 ............................. 28.5 252 2012
¥ 110.0 $ 974
Flash Alliance
November 2007 .......................... ¥ 15.0 $ 133 2012
Total indemnification or guarantee obligations . . . . . . ¥ 128.6 $1,139
F-33
Notes to Consolidated Financial Statements — (Continued)