SanDisk 2012 Annual Report Download - page 209

This is a TAB type table. Insert
conts here. Annual Report
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Net rent expense was as follows (in thousands):
Fiscal years ended
December 30,
2012
January 1,
2012
January 2,
2011
Rent expense, net .................................................. $ 6,366 $ 7,926 $ 7,522
On January 31, 2012, the Company purchased for $87.5 million five adjacent buildings in Milpitas,
California; three of which were previously leased by the Company. 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.
Note 14: 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 13, “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 financial
interest in any of those entities. In determining whether the Company is the primary beneficiary, the Company
analyzed the primary purpose and design of Flash Ventures, the activities that most significantly impact Flash
Ventures’ economic performance, and whether the Company had the power to direct those activities. The
Company concluded based upon its 49.9% ownership in Flash Ventures, the voting structure of Flash Ventures
and the manner in which the day-to-day operations of Flash Ventures are conducted that the Company lacked the
power to direct most of the activities that most significantly impact Flash Ventures’ economic performance.
The Company purchased NAND flash memory wafers from Flash Ventures and made prepayments,
investments and loans to Flash Ventures totaling $2.71 billion, $2.95 billion and $2.00 billion in the fiscal years
ended December 30, 2012, January 1, 2012 and January 2, 2011, respectively. At December 30, 2012 and
January 1, 2012, the Company had accounts payable balances due to Flash Ventures of $214.5 million and
$275.8 million, respectively.
The Company’s maximum reasonably estimable loss exposure (excluding lost profits), based upon the
exchange rate at each respective balance sheet date, as a result of its involvement with Flash Ventures is
presented below (in millions).
December 30,
2012
January 1,
2012
Notes receivable ............................................................... $ 820 $ 1,297
Equity investments ............................................................. 640 646
Operating lease guarantees ....................................................... 926 732
Prepayments .................................................................. 26 50
Maximum loss exposure ..................................................... $ 2,412 $ 2,725
At December 30, 2012 and January 1, 2012, the Company’s retained earnings included approximately
($0.6) million and $4.2 million, respectively, of undistributed earnings (deficit) of Flash Ventures.
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