SanDisk 2010 Annual Report Download - page 214

Notes To Consolidated Financial Statements
Long-lived assets by geographic area as of the end of fiscal years 2010 and 2009 are as follows (in
thousands):
As of
January 2,
2011
January 3,
2010
Long-lived assets:
United States ....................................................... $ 111,733 $ 147,125
Japan ............................................................. 518,912 428,675
China ............................................................. 112,133 121,519
Other foreign countries ............................................... 27,131 33,055
Total ......................................................... $ 769,909 $ 730,374
Long-lived assets are attributed to the geographic location in which they are located. The Company includes
in long-lived assets property and equipment, long-term equity investments in Flash Ventures and equity
investments, and attributes those investments to the location of the investee’s primary operations.
Customer and Supplier Concentrations. A limited number of customers or licensees have accounted for a
substantial portion of the Company’s revenues. Revenues from the Company’s top 10 customers or licensees
accounted for approximately 46%, 42% and 48% of the Company’s revenues for the fiscal years ended
January 2, 2011, January 3, 2010 and December 28, 2008, respectively. All customers were individually less than
10% of the Company’s total revenues in fiscal years 2010 and 2009. In fiscal year 2008, Samsung Electronics
Co., Ltd. (“Samsung”) accounted for 13% of the Company’s total revenues through a combination of license and
royalty and product revenues.
All of the Company’s flash memory card products require silicon wafers for the memory components and
the controller components. The Company’s memory wafers or components are currently supplied almost entirely
from Flash Ventures and the controller wafers are primarily manufactured by third-party subcontractors. The
failure of any of these sources to deliver silicon wafers could have a material adverse effect on the Company’s
business, financial condition and results of operations. Moreover, Toshiba’s employees that produce Flash
Ventures’ products are covered by collective bargaining agreements and any strike or other job action by those
employees could interrupt the Company’s wafer supply from Toshiba’s Yokkaichi, Japan operations.
In addition, key components are purchased from single source vendors for which alternative sources are
currently not available. Shortages could occur in these essential materials due to an interruption of supply or
increased demand in the industry. If the Company were unable to procure certain of such materials, it would be
required to reduce its manufacturing operations, which could have a material adverse effect upon its results of
operations. The Company also relies on third-party subcontractors to assemble and test a portion of its products.
The Company has no long-term contracts with these subcontractors and cannot directly control product delivery
schedules or manufacturing processes. This could lead to product shortages or quality assurance problems that
could increase the manufacturing costs of its products and have material adverse effects on the Company’s
operating results.
Concentration of Credit Risk. The Company’s concentration of credit risk consists principally of cash, cash
equivalents, short and long-term marketable securities and trade receivables. The Company’s investment policy
restricts investments to high-credit quality investments and limits the amounts invested with any one issuer. The
Company sells to OEMs, retailers and distributors in the U.S., EMEA and Asia-Pacific, performs ongoing credit
evaluations of its customers’ financial condition, and generally requires no collateral.
Off-Balance Sheet Risk. The Company has off-balance sheet financial obligations. See Note 12,
“Commitments, Contingencies and Guarantees.”
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