EXHIBIT 99.1
CONTACT: Michael Gray, Senior Vice President Finance and Administration
Chief Financial Officer
(408) 542-0585
SANDISK ANNOUNCES FIRST QUARTER 2003 EARNINGS
Record units and megabytes sold, increased OEM sales
SUNNYVALE, CA, April 16, 2003 . . . SanDisk Corporation (NASDAQ:SNDK),
the world's largest supplier of flash memory data storage card products, today
announced results for its first quarter ended March 31, 2003. Total first
quarter revenues were $174.5 million, up 88% compared to the first quarter of
2002. Product revenues were $155.4 million, up 80% from $86.5 million in the
same period of the prior year. First quarter total units sold increased 96%,
total megabytes sold increased 205% and the average price per megabyte sold
declined 40% compared to the same period of the prior year. Revenues from
licenses and royalties were $19.0 million in the first quarter of 2003, up from
$6.2 million in the same period of the prior year due primarily to increased
royalty-bearing sales by licensees. First quarter net income was $24.9 million,
net of unrealized losses of $6.7 million, before tax, resulting from revaluation
of our equity investments in Divio and Tower Semiconductor. This compares to a
net loss of $3.7 million in the first quarter of 2002. Earnings per share for
the first quarter of 2003 were $0.33 per diluted share compared to a net loss of
$0.05 per diluted share in the same period in 2002.
Product revenues for the first quarter of 2003 decreased 2%
sequentially from the prior quarter. Growth in OEM sales of 30% partially offset
a seasonal decline in retail sales of 13% compared to the fourth quarter of
2002. First quarter total units sold increased 10% and total megabytes sold
increased 29% compared to the previous quarter, both representing new record
levels. First quarter product gross margins were 34%, down from 37% in the prior
quarter. Average price per megabyte sold declined by 24% in the first quarter
and was offset by comparable product cost reductions achieved during the
quarter. First quarter sales of NOR flash inventory that was previously written
off contributed 0.7% to product gross margins compared to 2% in the prior
quarter. Revenues from licenses and royalties declined 10% from the prior
quarter due to lower royalty-bearing sales by our licensees. Income before taxes
of $27.6 million in the first quarter compares with $27.5 million in the prior
quarter. In the first quarter of 2003, our provision for income taxes declined
by $5.1 million due to a lower effective tax rate. This caused our net income to
increase to $24.9 million in the first quarter from $19.6 million in the prior
quarter.
Net cash provided by operating activities was $34.0 million for the
first quarter of 2003 compared to $3.6 million used in operating activities in
the same quarter of 2002. Our cash and short-term investment position increased
$28.0 million from the prior quarter to $484.5 million.
"The first quarter was another excellent quarter for SanDisk. Results
were better than expected considering the normal seasonal decline in first
quarter retail sales compared to our
traditionally strong fourth quarter. We experienced a significant increase in
sales to our OEM customers, which reached the highest sales level in the past
eight quarters," said Eli Harari, President and CEO of SanDisk Corporation.
"During the quarter we introduced a number of important new products, including
the miniSD card, which we believe will become a significant revenue generator
for us in new cell phones with built-in digital cameras that are expected to be
introduced this year. During the first quarter, we were able to move the retail
market average card capacity to 120 megabytes, up from 90 megabytes in the prior
quarter, through strategic pricing of higher capacity cards, where we enjoy the
low cost benefits of our MLC (Multi Level Cell) NAND flash. Consumers are
proving the significant price elasticity inherent to our business. We are
currently on schedule to shift the majority of our NAND flash wafer starts at
Yokkaichi from .16 micron to .13 micron in the second quarter. This transition
should provide us with a lower cost structure for wafers manufactured by our
FlashVision joint venture in Yokkaichi, starting in the third quarter of this
year and continuing into 2004. With the projected growth in the usage of flash
cards in digital cameras, cell phones and USB flash drives, we are optimistic
about the prospects for our business in 2003."
Second quarter 2003 business outlook:
Retail sales are expected to be back-end loaded in the second quarter,
while OEM sales are projected to continue the positive trend started in the
first quarter. We currently anticipate second quarter 2003 total revenues to be
approximately the same as the first quarter of 2003. Product gross margins are
projected to be in the range of 26% to 30% due to the incremental costs that we
expect to incur in the second quarter associated with the .13 micron NAND flash
technology transition at FlashVision. Second quarter 2003 operating expenses are
expected to increase moderately compared to the first quarter and our second
quarter effective tax rate is expected to be consistent with the first quarter.
This news release contains certain forward-looking statements,
including our expectations for new product introductions, future product
revenues, average selling prices and gross margins, that are based on our
current expectations and involve numerous risks and uncertainties that may cause
these forward-looking statements to be inaccurate and may significantly and
adversely affect our business, financial condition and results of operations.
Risks that may cause these forward-looking statements to be inaccurate include
among others: future average selling price erosion due to excess industry
capacity, start-up costs, fluctuations in operating results and yields related
to the start-up of .13 micron flash memory wafer production for FlashVision at
the Yokkaichi facility in Japan, adjustments to standard costs to reflect
technology transitions, any interruption of supply from the Yokkaichi facility,
current global economic and geo-political conditions, the timely development,
internal qualification and customer acceptance of new products such as the new
miniSD and the WiFi wireless cards that we announced in the first quarter, as
well as new products that are based on the NAND and NAND/MLC .13 micron flash
chips, fluctuations in royalty revenues, business disruption including reduced
sales to our customers in the Pacific Rim that may arise from the current SARS
epidemic in Asia, further impairment of our investments in Tower Semiconductor
Ltd. and UMC due to the further decline in stock valuations and the other risks
detailed from time-to-time in our Securities and Exchange Commission filings and
reports, including, but not limited to, our Annual Report on Form 10-K for the
year ended December 31, 2002. Future results may differ materially from those
previously reported. We assume no obligation to update the information contained
in this release.
SanDisk Corporation, the world's largest supplier of flash memory data
storage card products, designs, manufactures and markets industry-standard,
solid-state data, digital imaging and audio storage products using its patented,
high-density flash memory and controller technology. SanDisk is based in
Sunnyvale, CA.
SanDisk's first quarter 2003 conference call is scheduled for 2:00 p.m.
Pacific Time, Wednesday, April 16th. The phone number is (877) 502-9272. The
conference call is being webcast by CCBN and can be accessed at SanDisk's
website at www.sandisk.com/IR and at www.streetevents.com for institutional
investors. The webcast will be available through Wednesday, April 30, 2003.
The call will also be available by replay after 6:00 p.m. Pacific Time on April
16th through Sunday, April 20, 2003, by dialing (888) 203-1112 and entering the
pass code 476410. A copy of this press release will be posted to our website.
SanDisk's web site / home page address: http:/ / www.sandisk.com
All trade names are either registered trademarks or trademarks of their
respective holders.
SanDisk Corporation
Condensed Consolidated Statement of Operations
(In thousands, except per share data, unaudited)
Three Months Ended
March 31,
--------------------------
2003 2002
---- ----
Revenues:
Product $ 155,448 $ 86,459
License and royalty 19,032 6,160
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Total revenue 174,480 92,619
Cost of product sales 102,889 81,399
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Gross profit 71,591 11,220
Operating expenses:
Research and development 17,578 14,550
Sales and marketing 12,642 9,048
General and administrative 6,685 4,666
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Total operating expenses 36,905 28,264
Operating income (loss) 34,686 (17,044)
Equity in income (loss) of joint ventures 139 (493)
Interest income 2,188 2,314
Interest expense (1,688) (1,656)
Loss in investment in foundries (2,166) --
Loss in equity investment (4,500) --
Other(expense) income, net (1,016) (54)
--------- --------
Income (loss) before taxes 27,643 (16,933)
Provision for (benefit from) income taxes 2,718 (13,199)
--------- --------
Net income (loss) 24,925 ($ 3,734)
========= ========
Net income (loss) per share
Basic $ 0.36 ($ 0.05)
Diluted $ 0.33 ($ 0.05)
Shares used in computing net income (loss) per share
Basic 69,289 68,598
Diluted 79,957 68,598
SanDisk Corporation
Condensed Consolidated Balance Sheets
(In thousands)
March 31, 2003 December 31, 2002*
-------------- ------------------
ASSETS (unaudited)
Current Assets:
Cash and cash equivalents $ 269,811 $ 266,635
Short-term investments 214,709 189,856
Investment in foundries 119,723 110,069
Accounts receivable, net 80,971 81,086
Inventories 88,058 88,595
Tax refund receivable -- 1,563
Prepaid expenses and other current assets 8,558 16,926
--------- ---------
Total current assets 781,830 754,730
Property and equipment, net 33,130 30,307
Investment in foundries -- 24,197
Investment in FlashVision 142,785 142,825
Deferred tax asset 6,922 6,922
Deposits and other non-current assets 7,807 14,598
--------- ---------
Total Assets $ 972,474 $ 973,579
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LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts payable $ 33,940 $ 28,294
Accounts payable to related parties 23,263 26,349
Accrued payroll and related expenses 7,214 11,690
Income taxes payable 17,837 15,978
Deferred tax liability 1,237 6,922
Research & development liability, related party 4,500 10,507
Other accrued liabilities 27,282 26,780
Deferred income on shipments to distributors and retailers and deferred revenue 42,892 43,760
--------- ---------
Total current liabilities 158,165 170,280
Convertible subordinated notes payable 150,000 150,000
Deferred taxes and other liabilities 2,039 2,404
Deferred revenue 22,027 23,175
--------- ---------
Total Liabilities 332,231 345,859
Stockholders' Equity:
Common stock 588,140 585,968
Retained earnings 109,690 84,765
Accumulated other comprehensive loss (57,587) (43,013)
--------- ---------
Total stockholders' equity 640,243 627,720
Total Liabilities and
Stockholders' Equity $ 972,474 $ 973,579
========= =========
*Information derived from the audited Consolidated Financial Statements.