SanDisk 2009 Annual Report Download - page 102

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Limitations of Relying on Non-GAAP Financial Measures.
We have incurred and will incur in the future, many of the costs excluded from the non-GAAP measures,
including share-based compensation expense, impairment of goodwill and acquisition-related intangible assets,
amortization of acquisition-related intangible assets and other acquisition-related costs, convertible debt interest
expense and income tax adjustments. These measures should be considered in addition to results prepared in
accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. These
non-GAAP measures may be different than the non-GAAP measures used by other companies.
Liquidity and Capital Resources
Cash Flows. Our cash flows were as follows:
FY 2009
Percent
Change FY 2008
Percent
Change FY 2007
(In millions, except percentages)
Net cash provided by operating activities ............. $ 487.8 456% $ 87.7 (87)% $ 653.0
Net cash provided by (used in) investing activities ...... (374.8) (1379)% 29.3 102% (1,218.4)
Net cash provided by (used in) financing activities ...... 20.9 90% 11.0 106% (181.1)
Effect of changes in foreign currency exchange rates on
cash ......................................... 4.4 1367% 0.3 160% (0.5)
Net increase (decrease) in cash and cash equivalents .... $ 138.3 8% $ 128.3 117% $ (747.0)
Operating Activities. Cash provided by operating activities is generated by net income (loss) adjusted for
certain non-cash items and changes in assets and liabilities. Cash provided by operations was $488 million for
fiscal year 2009 as compared to cash provided by operations of $88 million for fiscal year 2008. The increase in
cash provided by operations in fiscal year 2009 compared to fiscal year 2008 resulted primarily from our net
income of $415 million compared with a net loss of ($1.99) billion, which included non-cash impairment
charges, in the comparable period of the prior year. Cash flow from accounts receivable decreased, as reflected
by higher accounts receivable levels in fiscal year 2009 compared with the prior year, due to increased revenue in
fiscal year 2009. Cash used for inventory decreased primarily due to higher sales. Cash flow from other assets
increased compared with the prior year primarily due to a tax refund received in the first quarter of fiscal year
2009 related to carryback claims from the fiscal year 2008 net loss. Accounts payable trade and accounts payable
from related parties decreased primarily due to the reduction of gross inventory, operating expenses and the
timing of Flash Ventures payments as compared to the prior year, resulting in a decrease in cash provided. Cash
flow from other liabilities in fiscal year 2009 decreased as compared to the prior year as a result of settlements in
hedge contracts and the elimination of liabilities for Flash Ventures adverse purchase commitments associated
with under utilization of Flash Ventures’ capacity.
Cash provided by operations was $88 million for fiscal year 2008 as compared to cash provided by
operations of $653 million for fiscal year 2007. The decline in cash provided by operations in fiscal year 2008
compared to fiscal year 2007 resulted primarily from our net loss of $1.99 billion offset by non-cash
impairments. Cash flow from accounts receivable in fiscal year 2008 was positively impacted by increased
collection efforts and by reduced product accounts receivable levels as compared with the prior year period. The
increase in inventory was related primarily to the expansion of capacity and production at Flash Ventures while
revenue from our products declined from fiscal year 2007 to fiscal year 2008. The increase in other assets was
due to the increase in tax receivables related to tax refunds expected on carryback claims due to the fiscal year
2008 net loss. Within operating activities for fiscal year 2008, there was an increase in cash provided primarily
related to an increase in related parties payables due to timing of Flash Ventures payments at fiscal year 2008
year end, an increase in other liabilities related to Flash Ventures capacity under utilization accrual, timing of the
cash settlement of outstanding hedge contracts, and lower deferred income on shipments to distributors and
retailers related to lower revenue levels.
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