SanDisk 2008 Annual Report Download - page 109

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Notes to Consolidated Financial Statements
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 year 2009 through
fiscal year 2016. Future minimum lease payments at December 28, 2008 are presented below (in thousands):
Fiscal Year:
2009 .............................................................................. $ 9,963
2010 .............................................................................. 8,725
2011 .............................................................................. 6,529
2012 .............................................................................. 4,866
2013 .............................................................................. 3,133
2014 and thereafter ................................................................... 5,021
38,237
Sublease income to be received in the future under noncancelable subleases ...................... (4,162)
Net operating leases .................................................................. $34,075
Rent expense for the years ended December 28, 2008, December 30, 2007 and December 31, 2006 was
$8.2 million, $7.7 million and $7.8 million, respectively.
Note 14: Related Parties and Strategic Investments
Toshiba. The Company and Toshiba have collaborated in the development and manufacture of NAND flash
memory products. These NAND flash memory products are manufactured by Toshiba at Toshiba’s Yokkaichi,
Japan operations using the semiconductor manufacturing equipment owned or leased by FlashVision, Flash
Partners and Flash Alliance. See also Note 13, “Commitments, Contingencies and Guarantees.” The Company
purchased NAND flash memory wafers from FlashVision, Flash Partners, Flash Alliance and Toshiba, made
payments for shared research and development expenses, made loans to FlashVision, Flash Partners and Flash
Alliance and made investments in FlashVision, Flash Partners and Flash Alliance totaling approximately
$2,038.6 million, $1,294.5 million and $658.4 million in the years ended December 28, 2008, December 30,
2007 and December 31, 2006, respectively. The purchases of NAND flash memory wafers are ultimately
reflected as a component of the Company’s cost of product revenues. During the fiscal year ended
December 28, 2008, the Company had sales to Toshiba (excluding TwinSys as described in Note 13,
“Commitments, Contingencies and Guarantees”) of $5.1 million, compared to $26.7 million in the prior year. At
December 28, 2008 and December 30, 2007, the Company had accounts payable balances due to Toshiba of zero
and $0.2 million, respectively, and accounts receivable balances from Toshiba of $2.2 million and $4.2 million,
respectively. At December 28, 2008 and December 30, 2007, the Company had accrued current liabilities due to
Toshiba for shared research and development expenses of $4.0 million and $8.0 million, respectively.
Flash Ventures with Toshiba. The Company owns 49.9% of each of the flash ventures with Toshiba
(FlashVision, Flash Partners and Flash Alliance) and accounts for its ownership position under the equity method
of accounting. The Company’s obligations with respect to Flash Partners and Flash Alliance master lease
agreements, take-or-pay supply arrangements and research and development cost sharing are described in Note
13, “Commitments, Contingencies and Guarantees.” Flash Partners and Flash Alliance are variable interest
entities as defined under FIN 46R; however the Company is not the primary beneficiary of either Flash Partners
or Flash Alliance because it absorbs less than a majority of the expected gains and losses of each entity. At
December 28, 2008 and December 30, 2007, the Company had accounts payable balances due to FlashVision,
Flash Partners and Flash Alliance of $370.4 million and $131.3 million, respectively. For activity related to the
wind-down of FlashVision, see Note 13, “Commitments, Contingencies and Guarantees.”
F-44