SanDisk 2011 Annual Report Download - page 170

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Off-Balance Sheet Arrangements. Off-balance sheet arrangements are as follows (in thousands):
January 1,
2012
Guarantee of Flash Ventures equipment leases(1) ................................................. $ 731,662
(1) The Company’s guarantee obligation, net of cumulative lease payments, was 56.5 billion Japanese yen, or
approximately $732 million based upon the exchange rate at January 1, 2012.
The Company has excluded $219.0 million of unrecognized tax benefits (which includes penalties and
interest) from the contractual obligation table above due to uncertainty with respect to the timing of associated
future cash flows at January 1, 2012. The Company is unable to make reasonably reliable estimates of the period
of cash settlement with the respective taxing authorities.
The Company leases many of its office facilities and operating equipment for various terms under long-
term, noncancelable operating lease agreements. The leases expire at various dates from fiscal year 2012 through
fiscal year 2016. Future minimum lease payments are presented below (in thousands):
January 1,
2012
Fiscal year:
2012 ................................................................................. $ 10,958
2013 ................................................................................. 6,154
2014 ................................................................................. 3,650
2015 ................................................................................. 2,921
2016 ................................................................................. 576
24,259
Sublease income to be received in the future under noncancelable subleases ............................ (2,255)
Net operating leases .................................................................... $ 22,004
On January 31, 2012, the Company purchased for $87.5 million, five adjacent buildings in Milpitas,
California, of which three of these buildings were previously leased. Pursuant to this purchase, the Company
terminated the three building lease agreements with remaining aggregate lease obligations of $3.9 million that
were set to expire in 2013.
Net rent expense was as follows (in thousands):
Fiscal years ended
January 1,
2012
January 2,
2011
January 3,
2010
Rent expense, net .................................................. $ 7,926 $ 7,522 $ 7,921
Note 13: Related Parties and Strategic Investments
Flash Ventures with Toshiba. The Company owns 49.9% of each entity within Flash Ventures and
accounts for its ownership position under the equity method of accounting. The Company’s obligations with
respect to the Flash Ventures master lease agreements, take-or-pay supply arrangements and research and
development cost sharing are described in Note 12, “Commitments, Contingencies and Guarantees.” The
financial and other support provided by the Company in all periods presented was either contractually required or
the result of a joint decision to expand wafer capacity, transition to new technologies or refinance existing
equipment lease commitments. Flash Ventures are VIEs. The Company evaluated whether it is the primary
beneficiary of any of the entities within Flash Ventures for all periods presented and determined that it is not the
primary beneficiary of any of the entities within Flash Ventures because it does not have a controlling fin
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