SanDisk 2008 Annual Report Download - page 108

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Notes To Consolidated Financial Statements
Contractual Obligations and Off-Balance Sheet Arrangements
The following tables summarize the Company’s contractual cash obligations, commitments and off-balance
sheet arrangements at December 28, 2008, and the effect such obligations are expected to have on its liquidity
and cash flows in future periods (in thousands).
Contractual Obligations.
Total
1 Year or Less
(Fiscal 2009)
2 - 3 Years
(Fiscal 2010
and 2011)
4 - 5 Years
(Fiscal 2012
and 2013)
More than 5
Years (Beyond
Fiscal 2013)
Operating leases ....................... $ 34,075 $ 9,078 $ 14,232 $ 5,744 $ 5,021
Flash Partners reimbursement for certain
fixed costs including depreciation ........ 1,907,890(3) 636,549 964,626 259,182 47,533
Flash Alliance reimbursement for certain
fixed costs including depreciation ........ 2,491,220(3) 1,071,652 907,794 493,151 18,623
Toshiba research and development ......... 12,134(3) 12,134 — — —
Capital equipment purchase commitments . . . 15,180 15,085 95 — —
Convertible notes principal and interest (1) . . . 1,294,920 12,250 24,500 24,500 1,233,670
Operating expense commitments .......... 78,685 65,854 9,791 3,040 —
Noncancelable production purchase
commitments (2) ...................... 326,728(3) 326,728 — — —
Total contractual cash obligations ...... $6,160,832 $2,149,330 $1,921,038 $ 785,617 $1,304,847
Off-Balance Sheet Arrangements.
As of
December 28,
2008
Guarantee of Flash Partners equipment leases (4) ......................................... $1,093,263
Guarantee of Flash Alliance equipment leases (4) ......................................... 1,001,714
(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, Flash Ventures, 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 28, 2008.
(4) The Company’s guarantee obligation, net of cumulative lease payments, is 189.4 billion Japanese yen, or
approximately $2.09 billion based upon the exchange rate at December 28, 2008.
The Company has excluded $148.4 million of unrecognized tax benefits from the contractual obligation
table above due to the uncertainty with respect to the timing of associated future cash flows at December 28,
2008. The Company is unable to make reasonable reliable estimates of the period of cash settlement with the
respective taxing authorities.
F-43