Exhibit 99.1
CONTACT: | Investor Contact: | Media Contact: | ||
Lori Barker Padon (408) 542-0585 | Mike Wong (408) 548-0223 |
SANDISK ANNOUNCES FIRST QUARTER RESULTS
• | Revenue of $451 million up 17% year-over-year | |||
• | Net Income of $75 million up 17% year-over-year; EPS $0.39 | |||
• | Operating Margin of 25% driven by strong product gross margin | |||
• | Successful 90-nanometer transition |
SUNNYVALE, CA, April 21, 2005 — SanDisk® Corporation (NASDAQ:SNDK), the world’s largest supplier of flash storage card products, today announced results for the first quarter ended April 3, 2005. Total first quarter revenues increased 17% on a year-over-year basis to $451 million. First quarter net income was $75 million, up 17% compared to $64 million in the first quarter of 2004. Fully diluted earnings per share were $0.39, up 15% compared with $0.34 in the first quarter of 2004.
“The first quarter was another good quarter for SanDisk coming off of the strong fourth quarter holiday sales. We are particularly pleased with this quarter’s profitability. Shipments from 90-nanometer chips increased to more than 80% of our first quarter’s captive supply as 90-nanometer yields exceeded our expectations. Our product gross margins grew to 37%, driven by our increased 90-nanometer output and a modest 10% sequential decline in the average price per megabyte. Industry-wide supply for NAND memory is currently well balanced with growing demand from existing applications and new markets. Demand in the first quarter was exceptionally strong for our high capacity cards, and royalty revenues grew nicely reflecting the continuing growth of the NAND flash market for our licensees,” said SanDisk CEO Eli Harari. “As we move forward in 2005, we believe SanDisk is well positioned to continue expanding into new markets such as the emerging market for our flash cards in handsets, the digital flash music player market and the exciting market for our cards in video game consoles such as the Sony PlayStation Portable.”
Financial Results and Highlights
• | Product revenue grew 18% and royalty revenue grew 7% year-over-year. | |||
• | Megabytes sold in the first quarter increased 189% year-over-year and were down approximately 13% from the seasonally strong fourth quarter of 2004. | |||
• | Average density per card sold in retail was 411 megabytes, up 125% from the first quarter of 2004 and up 15% sequentially. | |||
• | Average price per megabyte sold in the first quarter declined at a moderate pace of 10% sequentially and 59% from the first quarter of 2004. | |||
• | Product gross margin in the first quarter increased 5 points both year-over-year and sequentially to a record 37.2%. |
• | Operating income was $114 million and 25% of revenue compared to $99 million and 25% of revenue in the first quarter of 2004 and $126 million and 23% of revenue in the fourth quarter of 2004. | |||
• | Cash flow from operations was $134 million compared to $76 million in the first quarter of 2004 and $12 million in the fourth quarter of 2004. | |||
• | The SanDisk Sansa™ line of digital music players began shipping at the end of the first quarter. These players have embedded flash of 512 megabyte or 1 gigabyte capacities and they have a SD™ card slot for expandable storage. | |||
• | Gaming cards began shipping in Memory Stick PRO Duo™ and SD formats to support new generation portable game consoles that now incorporate features such as digital audio, video playback and photo viewing. These features demand high capacity memory storage cards. | |||
• | SanDisk Ultra® and SanDisk Extreme™ high performance product lines were among our fastest growing products year-over-year. | |||
• | Retail presence almost doubled year-over-year to 114,000 storefronts. Most recent additions have been in mobile handset, convenience and gaming stores. | |||
• | The new Flash Partners 300-millimeter Fab 3 began running initial test wafers in the first quarter and in February we announced the 8Gigabit chip that is being jointly developed with Toshiba on 70-nanometer technology. |
Scheduled Interview
Conference Call
Forward-Looking Statements
results, unexpected yield variances and longer than expected low yields and other possible delays related to our conversion to 90-nanometer and 70-nanometer NAND flash technology or the ramp-up of the new 300-millimeter flash fabrication facility, any interruption of or delay in supply from any of the semiconductor manufacturing facilities that supply products to us, our inability to make additional planned smaller geometry conversions in a timely manner, future average selling price erosion that may be more severe than our expectations due to possible excess industry capacity of flash memory either from existing suppliers or from new competitors or decreased demand, price increases from non-captive flash memory sources and third-party subcontractors, higher than expected operating expenses, higher than anticipated capital equipment expenditures, adverse global economic and geo-political conditions, including adverse currency exchange rates and acts of terror, the timely development, internal qualification and customer acceptance of new products that are based on the 90-nanometer and 70-nanometer NAND technologies, fluctuations in license and royalty revenues, business interruption due to earthquakes or other natural disasters, particularly in areas in the Pacific Rim and Japan where we manufacture and assemble products, scheduled appearances by our executives could be cancelled or delayed by us or the network and the other risks detailed from time-to-time in our Securities and Exchange Commission filings and reports, including, but not limited to, the Form 10-K for the year ended January 2, 2005 and our quarterly reports on Form 10-Q. Future results may differ materially from those previously reported. We do not intend to update the information contained in this release.
About SanDisk
SanDisk is the original inventor of flash storage cards and is the world’s largest supplier of flash data storage card products using its patented, high-density flash memory and controller technology. SanDisk is headquartered in Sunnyvale, CA and has operations worldwide, with more than half its sales outside the U.S.
www.sandisk.com
SanDisk and SanDisk Ultra are trademarks of SanDisk Corporation, registered in the United States and other countries. Sansa and SanDisk Extreme are trademarks of SanDisk Corporation. SanDisk is an authorized licensee of the SD trademark. Memory Stick PRO Duo is a trademark of Sony Corporation. Other brand names mentioned herein are for identification purposes only and may be the trademarks of their respective holders.
SanDisk Corporation
Condensed Consolidated Statements of Income
(In thousands, except per share data, unaudited)
Three Months Ended | ||||||||
April 3, 2005 | March 28, 2004 | |||||||
Revenues: | ||||||||
Product | $ | 399,679 | $ | 338,779 | ||||
License and royalty | 51,296 | 48,151 | ||||||
Total revenue | 450,975 | 386,930 | ||||||
Cost of product revenues | 251,188 | 231,012 | ||||||
Gross profits | 199,787 | 155,918 | ||||||
Operating expenses: | ||||||||
Research and development | 45,947 | 26,762 | ||||||
Sales and marketing | 24,597 | 19,661 | ||||||
General and administrative | 15,724 | 10,936 | ||||||
Total operating expenses | 86,268 | 57,359 | ||||||
Operating income | 113,519 | 98,559 | ||||||
Other income (expense), net | 4,761 | 2,390 | ||||||
Income before taxes | 118,280 | 100,949 | ||||||
Provision for income taxes | 43,764 | 37,381 | ||||||
Net income | $ | 74,516 | $ | 63,568 | ||||
Shares used in computing net income per share Basic | 180,631 | 161,207 | ||||||
Diluted | 189,999 | 189,403 | ||||||
Net income per share Basic | $ | 0.41 | $ | 0.39 | ||||
Diluted | $ | 0.39 | $ | 0.34 |
SanDisk Corporation
Condensed Consolidated Balance Sheets
(In thousands)
April 3, 2005 | January 2, 2005* | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 571,805 | $ | 463,795 | ||||
Short-term investments | 842,095 | 859,175 | ||||||
Investment in foundries | 18,448 | 20,398 | ||||||
Accounts receivable, net | 208,810 | 194,535 | ||||||
Inventories | 223,783 | 196,422 | ||||||
Deferred tax asset | 92,746 | 83,150 | ||||||
Prepaid expenses, other current assets and tax receivable | 23,839 | 62,653 | ||||||
Total current assets | 1,981,526 | 1,880,128 | ||||||
Property and equipment, net | 166,079 | 147,231 | ||||||
Investment in foundries | 11,557 | 14,377 | ||||||
Investment in FlashVision | 172,493 | 178,681 | ||||||
Investment in FlashPartners | 23,272 | 24,192 | ||||||
Deferred tax asset | 6,696 | 1,861 | ||||||
Note receivable, Flash Vision | 55,504 | 35,413 | ||||||
Deposits and other non-current assets | 32,937 | 38,297 | ||||||
Total Assets | $ | 2,450,064 | $ | 2,320,180 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY: | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 94,482 | $ | 82,974 | ||||
Accounts payable to related parties | 64,500 | 48,115 | ||||||
Accrued payroll and related expenses | 25,579 | 41,785 | ||||||
Income taxes payable | 45,868 | 39,139 | ||||||
Research and development liability, related party | 6,149 | 5,549 | ||||||
Other accrued liabilities | 33,178 | 45,584 | ||||||
Deferred income on shipments to distributors and retailers and deferred revenue | 130,326 | 90,307 | ||||||
Total current liabilities | 400,082 | 353,453 | ||||||
Deferred tax liability | 6,131 | — | ||||||
Deferred revenue and non-current liabilities | 18,217 | 26,577 | ||||||
Total Liabilities | 424,430 | 380,030 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ Equity: | ||||||||
Preferred stock | — | — | ||||||
Common stock | 1,423,255 | 1,406,553 | ||||||
Retained earnings | 594,756 | 520,240 | ||||||
Accumulated other comprehensive income | 12,640 | 18,893 | ||||||
Deferred compensation | (5,017 | ) | (5,536 | ) | ||||
Total stockholders’ equity | 2,025,634 | 1,940,150 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 2,450,064 | $ | 2,320,180 | ||||
*Information derived from the audited Consolidated Financial Statements. |
SanDisk Corporation
Condensed Consolidated Comparative Statement of Cash Flows
March 2005
(in thousands, unaudited)
Three months ended | ||||||||
April 3, 2005 | March 28, 2004 | |||||||
Cash flows from Operating activities: | ||||||||
Net income | 74,516 | 63,568 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Deferred Taxes | 1,088 | 0 | ||||||
Loss (gain) investment in foundries | 4,029 | 573 | ||||||
Depreciation and amortization | 14,462 | 7,999 | ||||||
Provision for doubtful accounts | 0 | 1,681 | ||||||
Other non-cash charges | (212 | ) | (388 | ) | ||||
FlashVision wafer cost adjustment | (487 | ) | (321 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (14,275 | ) | 47,120 | |||||
Prepaid expenses, deposits and other assets | 43,972 | 28,847 | ||||||
Inventories | (27,361 | ) | (42,814 | ) | ||||
Income taxes payable and other accounts payable | (4,788 | ) | (32,236 | ) | ||||
Other current liabilities | (12,406 | ) | 1,752 | |||||
Other current liabilities, related party | 16,985 | 2,951 | ||||||
Deferred income on shipments and deferred revenue | 38,415 | (2,698 | ) | |||||
Other non-current liabilities | 338 | 0 | ||||||
Total adjustments | 59,760 | 12,466 | ||||||
Net cash provided by operating activities | 134,276 | 76,034 | ||||||
Cash flows from Investing activities: | ||||||||
Purchases of short term investments | (139,198 | ) | (241,277 | ) | ||||
Proceeds from sale of short term investments | 153,450 | 192,157 | ||||||
Acquisition of capital equipment, net | (30,151 | ) | (9,410 | ) | ||||
Loan to FlashVision | (22,222 | ) | (21,637 | ) | ||||
Net cash used in investing activities | (38,121 | ) | (80,167 | ) | ||||
Cash flows from financing activities: | ||||||||
Employee stock programs | 11,272 | 6,015 | ||||||
Net cash provided by financing activities | 11,272 | 6,015 | ||||||
Effect of changes in foreign currency exchange rates on cash | 583 | 0 | ||||||
Net increase in cash and cash equivalents | 108,010 | 1,882 | ||||||
Cash and cash equivalents at beginning of period | 463,795 | 734,479 | ||||||
Cash and cash equivalents at end of period | 571,805 | 736,361 | ||||||
Additional information: | ||||||||
Net change in cash and cash equivalents | $ | 108,010 | $ | 1,882 | ||||
Net change in short-term investments | (17,080 | ) | 48,651 | |||||
Net change in cash, cash equivalents and short-term investments | $ | 90,930 | $ | 50,533 | ||||