SanDisk 2008 Annual Report Download - page 76

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Notes To Consolidated Financial Statements
Other Long-Lived Assets. Intangible assets with definite useful lives and other long-lived assets are tested for
impairment in accordance with Statement of Financial Accounting Standards No. 144 (“SFAS 144”), Accounting
for Impairment of Disposal of Long-Lived Assets. The Company assesses the carrying value of long-lived assets,
whenever events or changes in circumstances indicate that the carrying value of these long-lived assets may not be
recoverable. Factors the Company considers important which could result in an impairment review include:
(1) significant under-performance relative to the historical or projected future operating results; (2) significant
changes in the manner of use of assets; (3) significant negative industry or economic trends; and (4) significant
changes in the Company’s market capitalization relative to net book value. Any changes in key assumptions about
the business or prospects, or changes in market conditions, could result in an impairment charge and such a charge
could have a material adverse effect on the Company’s consolidated results of operations. See Note 5, “Goodwill
and Intangible Assets,” regarding impairment of long-lived assets in fiscal year 2008.
Fair Value of Financial Instruments. For certain of the Company’s financial instruments, including
accounts receivable, short-term investments and accounts payable, the carrying amounts approximate fair market
value due to their short maturities. See Note 3, “Investments and Fair Value Measurements,” for financial assets
and liabilities measured at fair value. For those financial instruments where the carrying amounts differ from fair
market value, the following table represents the related cost basis and the estimated fair values, which are based
on quoted market prices (in millions):
As of December 28, 2008 As of December 30, 2007
Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value
1% Convertible senior notes due 2013 ...................... $1,150 $ 477 $1,150 $ 913
1% Convertible notes due 2035 ............................ 75 64 75 85
Advertising Expenses. Marketing co-op development programs, where the Company receives, or will
receive, an identifiable benefit (i.e. goods or services) in exchange for the amount paid to its customer and the
Company can reasonably estimate the fair value of the benefit it receives for the customer incentive payment, are
classified, when granted, as marketing expense. Advertising expenses not meeting this criteria are classified as a
reduction to product revenue. Any other advertising expenses not meeting these conditions are expensed as
incurred. Advertising expenses were $39.9 million, $35.5 million and $24.8 million in fiscal years 2008, 2007
and 2006, respectively.
Research and Development Expenses. Research and development expenditures are expensed as incurred.
F-11