SanDisk 2007 Annual Report Download - page 133

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(1)
In May 2006, the Company issued and sold $1.15 billion in aggregate principal amount of 1% Senior
Convertible Notes due May 15, 2013. The Company will pay cash interest at an annual rate of 1%,
payable semi-annually on May 15 and November 15 of each year until calendar year 2013. In
November 2006, through its acquisition of msystems, the Company assumed msystems’ $75 million
in aggregate principal amount of 1% Convertible Notes due March 15, 2035. The Company will pay
cash interest at an annual rate of 1%, payable semi-annually on March 15 and September 15 of each
year until calendar year 2035.
(2)
Includes Toshiba foundries, FlashVision, Flash Partners, Flash Alliance, related party vendors and
other silicon source vendor purchase commitments.
(3)
Includes amounts denominated in Japanese yen, which are subject to fluctuation in exchange rates
prior to payment and have been translated using the exchange rate at December 30, 2007.
(4)
The Company’s contingent indemnification obligation is 3.6 billion Japanese yen, or approximately
$32 million based upon the exchange rate at December 30, 2007.
(5)
The Company’s guarantee obligation, net of cumulative lease payments, is 125.0 billion Japanese
yen, or approximately $1.11 billion based upon the exchange rate at December 30, 2007.
Due to the uncertainty with respect to the timing of future cash flows associated with unrecognized tax benefit
at December 30, 2007, the Company is unable to make reasonable reliable estimates of the period of cash settlement
with the respective taxing authorities. Therefore, approximately $80 million of unrecognized tax benefits have been
excluded from the contractual obligation table above.
The Company leases many of its office facilities and operating equipment for various terms under long-term,
noncancelable operating lease agreements. The leases expire at various dates from fiscal years 2007 through 2016.
Future minimum lease payments at December 30, 2007 are presented below (in thousands):
Fiscal Year Ending:
2008 ................................................................ $ 9,315
2009 ................................................................ 9,082
2010 ................................................................ 8,061
2011 ................................................................ 6,047
2012 ................................................................ 4,144
2013 and beyond ....................................................... 8,033
44,682
Sublease income to be received in the future under noncancelable subleases ........... (5,009)
Net operating leases ..................................................... $39,673
Foreign Currency Exchange and Other Contracts. The Company transacts business in various foreign
currencies. Exposure to foreign currency exchange rate fluctuations arises mainly from non-functional currency
denominated trade accounts payable, intercompany accounts and loans receivable from related parties. The
Company utilizes foreign currency forward contracts to minimize the risk associated with foreign exchange
effects of trade accounts payable, intercompany accounts and loans receivable from related parties. As a result,
increases or decreases in these accounts due to foreign exchange rate changes are offset by gains and losses on the
forward contracts so as to minimize foreign currency transaction gains and losses. All foreign currency balances and
all outstanding forward contracts are marked-to-market at December 30, 2007 with unrealized gains and losses
included in “Other income” of the Consolidated Statements of Income. As of December 30, 2007, the Company had
foreign currency exchange contract lines of $1.57 billion. The Company had net foreign currency forward contracts
in place denominated in European euros, Israeli New Israel shekels, Japanese yen and Taiwanese dollars to sell
U.S. dollar equivalent of approximately $534 million in foreign currencies based upon the exchange rates at
December 30, 2007.
F-37
Notes to Consolidated Financial Statements — (Continued)