SanDisk 2011 Annual Report Download - page 137

This is a TAB type table. Insert
conts here. Annual Report
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
effective for interim and annual periods beginning after December 15, 2011. This guidance is to be adopted
prospectively and early adoption is not permitted. The Company does not believe the adoption of this guidance
will have a material impact on its consolidated financial statements.
Note 3: Investments and Fair Value Measurements
The Company’s total cash, cash equivalents and marketable securities was as follows (in thousands):
January 1,
2012
January 2,
2011
Cash and cash equivalents ....................................................... $ 1,167,496 $ 829,149
Short-term marketable securities .................................................. 1,681,492 2,018,565
Long-term marketable securities .................................................. 2,766,263 2,494,972
Total cash, cash equivalents and marketable securities ............................. $ 5,615,251 $ 5,342,686
Fair Value of Financial Instruments. For certain of the Company’s financial instruments, including cash
held in banks, accounts receivable and accounts payable, the carrying amounts approximate fair value due to
their short maturities, and are therefore excluded from the fair value tables below.
The Company categorizes the fair value of its financial assets and liabilities according to the hierarchy
established by the FASB, which prioritizes the inputs to valuation techniques used to measure fair value. The
hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities
(Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels
of the fair value hierarchy are:
Level 1 Valuations based on quoted prices in active markets for identical assets or liabilities that the
Company has the ability to directly access.
Level 2 Valuations based on quoted prices for similar assets or liabilities; valuations for interest-bearing
securities based on non-daily quoted prices in active markets; quoted prices in markets that are
not active; or other inputs that are observable or can be corroborated by observable data for
substantially the full term of the assets or liabilities.
Level 3 Valuations based on inputs that are supported by little or no market activity and that are
significant to the fair value of the assets or liabilities.
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is
significant to the fair value measurement.
In circumstances in which a quoted price in an active market for the identical liability is not available, the
Company is required to use the quoted price of the identical liability when traded as an asset, quoted prices for
similar liabilities, or quoted prices for similar liabilities when traded as assets. If these quoted prices are not
available, the Company is required to use another valuation technique, such as an income approach or a market
approach.
The Company’s financial assets are measured at fair value on a recurring basis. Instruments that are
classified within Level 1 of the fair value hierarchy generally include money market funds, U.S. Treasury
securities and equity securities. Level 1 securities represent quoted prices in active markets, and therefore do not
require significant management judgment.
Instruments that are classified within Level 2 of the fair value hierarchy primarily include government
agency securities, asset-backed securities, mortgage-backed securities, commercial paper, U.S. government-
sponsored agency securities and corporate/municipal notes and bonds. The Company’s Level 2 securities are
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