Milpitas, CA, April 21, 2009 - SanDisk Corporation (NASDAQ:SNDK), the world's largest supplier of flash storage card products, today announced results for the first quarter ended March 29, 2009. Total revenue of $659 million declined 22% on a year-over-year basis. Net loss in accordance with U.S. Generally Accepted Accounting Principles (GAAP), was ($208) million, or ($0.92) per share, compared to GAAP net income of $11 million or $0.05 per share in the first quarter of 2008.
Non-GAAP net loss was ($108) million, or ($0.48) per share, compared to non-GAAP net profit of $48 million, or $0.21 per share, in the first quarter of 2008. For reconciliation of non-GAAP to GAAP results, see accompanying financial tables and footnotes.
“Industry fundamentals improved in the first quarter. We are encouraged that industry supply and demand balance is becoming better aligned, resulting in higher flash pricing. Our financial results improved substantially from the prior quarter driven by better than expected demand, strong product cost reductions and lower operating expenses,” said Eli Harari, Chairman and CEO, SanDisk. “We completed the previously announced restructuring of the Manufacturing Joint Ventures with Toshiba, which substantially improves our financial position by bringing in cash and reducing our equipment lease obligations. Our outlook is cautiously optimistic for continued improvement in the second quarter.”
FIRST QUARTER 2009 METRICS & HIGHLIGHTS
· Total cash and equivalents, short-term investments and long-term investments at the end of the first quarter was $2.38 billion compared to $2.54 billion at the end of the fourth quarter of 2008.
· SanDisk completed the restructuring of the Manufacturing Joint Ventures with Toshiba for a total value of 79.3 billion Japanese yen, which included cash proceeds valued in United States dollars at approximately $277 million and the remainder in the form of the transfer of equipment lease obligations to Toshiba.
· Off-balance sheet equipment lease obligations were reduced to $1.23 billion at the end of the first quarter of 2009 compared to $2.09 billion at the end of the fourth quarter of 2008.
· Product revenue was $588 million, down 19% year-over-year and down 21% sequentially.
· License and royalty revenue of $71 million, was down 43% year-over-year and down 41% sequentially.
· Total megabytes sold increased 166% year-over-year and 9% sequentially.
· Average price per megabyte sold declined 69% on a year-over-year basis and 27% sequentially.
· Average retail card capacity was 4.34 gigabytes, an increase of 111% on a year-over-year basis and 15% sequentially.
· GAAP product gross loss was ($73) million compared to GAAP product gross profit of $133 million in the first quarter of 2008 and GAAP product gross loss of ($462) million in the fourth quarter of 2008.
· Non-GAAP product gross loss was ($67) million compared to non-GAAP product gross profit of $151 million in the first quarter of 2008 and non-GAAP product gross loss of ($449) million in the fourth quarter of 2008.
OTHER RECENT ANNOUNCEMENTS
· SanDisk announced the SanDisk® Service Delivery Card (SDC), a high capacity custom memory solution based on a microSD™ card and designed specifically for the Mobile Network Operator (MNO). The unique capabilities of the SanDisk Service Delivery Card enable MNOs to configure local storage to streamline data delivery, improve high capacity memory performance and integrate with network applications and services to enhance the user experience.
· SanDisk announced its 64-gigabit memory, the industry’s highest capacity monolithic chip manufactured on the world's first high-performance 4-bits per cell flash memory architecture.
· SanDisk and Toshiba Corporation announced the co-development of the industry’s smallest 32-gigabit monolithic memory chip featuring 3-bits per cell flash memory architecture using 32-nanometer process technology.
· SanDisk won the Lewis Winner Outstanding Paper Award at the 2009 IEEE International Solid State Circuits Conference (ISSCC), held in San Francisco. The award was made for the paper entitled, “A 16Gb 3b/Cell NAND Flash Memory in 56nm with 8MB/s Write Rate,” presented at the 2008 ISSCC. The paper detailed key advancements leading to the development of 3-bits per cell memory on 56-nanometer technology.
· SanDisk began selling its Sansa® slotRadio™ player and card online at slotRadio.org. Designed especially for the casual music listener, the new player is a stylish, portable music device that comes bundled with a 1,000 songs preloaded onto a microSD card, which have been arranged into a variety of genre-themed playlists.
FORWARD LOOKING STATEMENTS
This news release contains certain forward-looking statements, including statements about our business prospects and outlook, anticipated recovery in our industry, and our expectations of a more balanced supply/demand environment and improved pricing environment, 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:
· slower than expected growth in market demand for our products including, for example, our solid state drives, or a slower adoption rate for our products in current and new markets that we are targeting including, for example, the mobile phone market,
· level of demand and consumer confidence due to a continuing global economic downturn,
· continued over-supply in the markets that we serve,
· continued declines in average selling prices,
· any interruption of or delay in supply from any of the semiconductor manufacturing or subcontracting facilities, including test and assembly facilities that supply products to us,
· slower than expected expansion of our global sales channels,
· fluctuations in operating results, unexpected yield variances and delays related to our conversion to smaller geometries of NAND flash technology,
· increased memory component and other costs as a result of currency exchange rate fluctuations to the U.S. dollar, particularly with respect to the Japanese yen,
· business interruption due to earthquakes, hurricanes or other natural disasters, particularly in areas in the Pacific Rim and Japan where we manufacture and assemble products,
· adverse results in litigation or regulatory actions affecting us, and
· other risks detailed from time-to-time under the caption “Risk Factors” and elsewhere in our Securities and Exchange Commission filings and reports, including, but not limited to, our Annual Report on Form 10-K/A for the fiscal year ended December 28, 2008.
Future results may differ materially from those previously reported. We do not intend to update the information contained in this release.
SanDisk Corporation, the inventor and world’s largest supplier of flash storage cards, is a global leader in flash memory – from research, manufacturing and product design to consumer branding and retail distribution. SanDisk’s product portfolio includes flash memory cards for mobile phones, digital cameras and camcorders, digital audio/video players, USB flash drives for consumers and the enterprise, embedded memory for mobile devices, and solid state drives for computers. SanDisk (www.sandisk.com/corporate
) is a Silicon Valley-based S&P 500 company with more than half its sales outside the United States.
SanDisk and the SanDisk logo are trademarks of SanDisk Corporation, registered in the United States and other countries. slotRadio is a trademark of SanDisk Corporation. microSD is a trademark of SD-3C LLC. Other brand names mentioned herein are for identification purposes only and may be the trademarks of their respective holder(s).
* 1 gigabyte (GB) = 1 billion bytes