SanDisk 2009 Annual Report Download - page 162

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Notes To Consolidated Financial Statements
Note 17: Condensed Consolidating Financial Statements
As part of the acquisition of msystems Ltd. (hereinafter referred to as “SanDisk IL Ltd.,” “SDIL,” or “Other
Guarantor Subsidiary”) in November 2006, the Company entered into a supplemental indenture whereby the Company
became an additional obligor and guarantor of the assumed $75 million 1% Convertible Notes due 2035 issued by
M-Systems Finance, Inc. (the “Subsidiary Issuer” or “mfinco”) and guaranteed by SDIL. The Company’s (the “Parent
Company”) guarantee is full and unconditional, and joint and several with SDIL. Both SDIL and mfinco are wholly-
owned subsidiaries of the Company. The following Condensed Consolidating Financial Statements present separate
information for mfinco as the subsidiary issuer, the Company and SDIL as guarantors, and the Company’s other
combined non-guarantor subsidiaries, and should be read in conjunction with the Consolidated Financial Statements of
the Company.
These Condensed Consolidating Financial Statements have been prepared using the equity method of accounting.
Earnings of subsidiaries are reflected in the Company’s investment in subsidiaries account. The elimination entries
eliminate investments in subsidiaries, related stockholders’ equity and other intercompany balances and transactions.
Condensed Consolidating Statements of Operations
For the fiscal year ended January 3, 2010
Parent
Company (1)
Subsidiary
Issuer (1)
Other
Guarantor
Subsidiary (1)
Combined
Non-Guarantor
Subsidiaries (2)
Consolidating
Adjustments
Total
Company
(In thousands)
Total revenues ............ $2,026,666 $ — $ 85,583 $ 4,923,009 $(3,468,452) $ 3,566,806
Total cost of revenues ...... 988,270 — 9,430 4,598,128 (3,313,648) 2,282,180
Gross profit (loss) ......... 1,038,396 — 76,153 324,881 (154,804) 1,284,626
Total operating expenses .... 570,147 — 71,349 280,525 (156,785) 765,236
Operating income ......... 468,249 — 4,804 44,356 1,981 519,390
Total other income
(expense) .............. 2,685 10 (1,779) 33,948 (50,453) (15,589)
Income (loss) before
provision for income
taxes ................. 470,934 10 3,025 78,304 (48,472) 503,801
Provision for income taxes . . 74,492 — 4,156 9,843 — 88,491
Equity in net income (loss) of
consolidated
subsidiaries ............ 16,244 — (8,641) (11,230) 3,627 —
Net income (loss) ......... $ 412,686 $ 10 $ (9,772) $ 57,231 $ (44,845) $ 415,310
(1) This represents legal entity results which exclude any subsidiaries required to be consolidated under GAAP.
(2) This represents all other legal subsidiaries.
F-50