Commitments Contingencies and Guarantees (Tables)

9 Months Ended

Oct. 02, 2011

Commitments Contingencies and Guarantees [Abstract]

Company's portion of the remaining guarantee obligations under each of Flash Ventures' master lease facilities

The following table details the Company’s portion of the remaining guarantee obligations under each of Flash Ventures’ master lease facilities (both original and refinanced leases) in both Japanese yen and U.S. dollar equivalent based upon the exchange rate at October 2, 2011.



Master Lease Agreements by Execution Date	Lease Type	Lease Amounts				Expiration
		(Yen in billions)		(Dollars in thousands)
Flash Partners
March 2007	Original	¥	5.1	$	66,028	2012
February 2008	Original	2.3		28,668		2013
April 2010	Refinanced	2.8		36,986		2014
June 2011	Refinanced	4.8		62,882		2014
		15.0		194,564
Flash Alliance
November 2007	Original	10.7		139,756		2013
June 2008	Original	16.2		211,022		2013
		26.9		350,778
Total guarantee obligations		¥	41.9	$	545,342

Remaining guarantee obligations

The following table details the breakdown of the Company’s remaining guarantee obligations between the principal amortization and the purchase option exercise price at the end of the term of the master lease agreements, in annual installments as of October 2, 2011 in U.S. dollars based upon the exchange rate at October 2, 2011.



Annual Installments	Payment of Principal Amortization		Purchase Option Exercise Price at Final Lease Terms		Guarantee Amount
	(In thousands)
Year 1	$	176,980	$	103,060	$	280,040
Year 2	75,510		151,250		226,760
Year 3	8,784		25,218		34,002
Year 4	398		4,142		4,540
Total guarantee obligations	$	261,672	$	283,670	$	545,342

Contractual Obligations

The following tables summarize the Company’s contractual cash obligations, commitments and off-balance sheet arrangements at October 2, 2011, and the effect such obligations are expected to have on its liquidity and cash flows in future periods.

Contractual Obligations.



	Total			1 Year or Less (3 months)		2 - 3 Years (Fiscal 2012 and 2013)		4 –5 Years (Fiscal 2014 and 2015)		More than 5 Years (Beyond Fiscal 2015)
	(In thousands)
Facility and other operating leases	$	23,642		$	2,225	$	15,548	$	5,293	$	576
Flash Partners reimbursement for certain fixed costs including depreciation	988,771		⁽⁴⁾⁽⁵⁾	111,944		520,080		234,277		122,470
Flash Alliance reimbursement for certain fixed costs including depreciation	2,109,285		⁽⁴⁾⁽⁵⁾	155,501		1,081,553		595,907		276,324
Flash Forward equipment investments and expense reimbursement	1,238,694		⁽⁴⁾	89,205		772,815		263,015		113,659
Toshiba research and development	108,901		⁽⁴⁾	37,627		41,274		30,000		—
Capital equipment purchase commitments	75,630			72,345		3,285		—		—
1% Convertible senior notes principal and interest ⁽¹⁾	946,622			4,640		941,982		—		—
1.5% Convertible senior notes principal and interest ⁽²⁾	1,090,000			—		30,000		30,000		1,030,000
Operating expense commitments	36,438			29,824		6,596		18		—
Noncancelable production purchase commitments ⁽³⁾	426,248		⁽⁴⁾	426,248		—		—		—
Total contractual cash obligations	$	7,044,231		$	929,559	$	3,413,133	$	1,158,510	$	1,543,029

Off Balance Sheet Arrangements

Off-Balance Sheet Arrangements.



	October 2, 2011
	(In thousands)
Guarantee of Flash Ventures equipment leases ⁽⁶⁾	$	545,342

__________

⁽¹⁾

In May 2006, the Company issued and sold $1.15 billion in aggregate principal amount of 1% Notes due 2013. The Company will pay cash interest on the outstanding notes at an annual rate of 1.0%, payable semi-annually on May 15 and November 15 of each year until calendar year 2013. In the three months ended October 2, 2011, the Company redeemed $221.9 million of the outstanding notes. See Note 7, “Financing Arrangements - Bond Repurchase,” for further discussion.


⁽²⁾	In August 2010, the Company issued and sold $1.00 billion in aggregate principal amount of 1.5% Notes due 2017. The Company will pay cash interest on the outstanding notes at an annual rate of 1.5%, payable semi-annually on August 15 and February 15 of each year until calendar year 2017.


⁽³⁾	Includes Flash Ventures, related party vendors and other silicon source vendor purchase commitments.


⁽⁴⁾	Includes amounts denominated in Japanese yen, which are subject to fluctuation in exchange rates prior to payment and have been translated using the exchange rate at October 2, 2011.


⁽⁵⁾	Excludes amounts related to the master lease agreements’ purchase option exercise price at final lease term.


⁽⁶⁾	The Company’s guarantee obligation, net of cumulative lease payments, is 41.9 billion Japanese yen, or approximately $545 million based upon the exchange rate at October 2, 2011.

Operating leases future minimum payments

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 2011 through fiscal year 2016. Future minimum lease payments at October 2, 2011 are presented below.



Fiscal Year	Lease Payments
	(In thousands)
2011 (remaining 3 months)	$	2,345
2012	10,548
2013	6,004
2014	3,638
2015	2,906
2016 and thereafter	576
	26,017
Sublease income to be received in the future under noncancelable subleases	(2,375		)
Net operating leases	$	23,642

Net rent expense

Net rent expense for the three and nine months ended October 2, 2011 and October 3, 2010 was as follows:



	Three months ended				Nine months ended
	October 2, 2011		October 3, 2010		October 2, 2011		October 3, 2010
	(In thousands)
Rent expense, net	$	2,019	$	1,839	$	5,866	$	5,624

- Definition

Tabular disclosure of a lessee's leasing arrangements including: (1) the basis on which contingent rental payments are determined, (2) the existence and terms of renewal or purchase options and escalation clauses, (3) restrictions imposed by lease arrangements, such as those concerning dividends, additional debt, and further leasing, (4) rent holidays, rent concessions, or leasehold improvement incentives and unusual provisions or conditions. Disclosure may also include the specific period used to amortize material leasehold improvements made at the inception of the lease or during the lease term. Additionally, for operating leases having initial or remaining noncancelable lease terms in excess of one year: (a) future minimum rental payments required as of the date of the latest balance sheet presented, in the aggregate and for each of the five succeeding fiscal years, (b) the total of minimum rentals to be received in the future under noncancelable subleases as of the date of the latest balance sheet presented, and (c) for all operating leases, rental expense for each period for which an income statement is presented, with separate amounts for minimum rentals, contingent rentals, and sublease rentals. Rental payments under leases with terms of a month or less that were not renewed need not be included.

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- Definition

Tabular disclosure of each guarantee obligation, or each group of similar guarantee obligations, including (a) the nature of the guarantee, including its term, how it arose, and the events or circumstances that would require the guarantor to perform under the guarantee; (b) the maximum potential amount of future payments (undiscounted) the guarantor could be required to make under the guarantee; (c) the current carrying amount of the liability, if any, for the guarantor's obligations under the guarantee; and (d) the nature of any recourse provisions under the guarantee, and any assets held either as collateral or by third parties, and any relevant related party disclosure. Excludes disclosures about product warranties.

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