Wednesday October 13, 4:31 pm Eastern Time
Company Press Release
SanDisk Announces Record Revenue and
Bookings for Third Quarter 1999
SUNNYVALE, Calif.--(BUSINESS WIRE)--Oct. 13, 1999--SanDisk Corporation (NASDAQ:SNDK - news), the world's
largest supplier of flash memory data storage products, today announced record revenue for its quarter ended September 30,
1999. Total third quarter revenues were $67.5 million, an increase of 29% from the second quarter of 1999 due primarily to
increased sales of CompactFlash and MultiMediaCard products. Revenues from licenses and royalties were $9.9 million. Net
income for the quarter was $6.5 million, up 11% from $5.7 million in the second quarter of 1999. Diluted earnings per share
was $0.21, compared to $0.19 per share for the second quarter of 1999.
Total third quarter revenues increased $35.5 million, or 111%, over total revenues of $32.1 million for the same period last
year. Product revenues increased by 139% compared to the same period of the prior year and license and royalty revenues
increased by 25%. Current quarter diluted earnings per share was $0.21, compared to $0.09 per share for the third quarter of
1998.
``The third quarter was a very strong quarter for SanDisk' said Dr. Eli Harari, President and CEO of SanDisk. ``New
records were achieved in product revenues, number of units and megabytes shipped and new bookings. We shipped 24%
more units and 52% more megabytes than in the previous record quarter. Bookings have been exceptionally strong in all
geographic areas, amounting to 2.5 times the record bookings we recorded in the previous quarter. We are booked for the
fourth quarter and have a strong backlog for the first quarter of 2000. Current quarter results include foreign currency
transaction gains of $1.3 million.
``During the quarter, we accelerated our 128Mbit flash memory production ramp to meet increased demand. Product gross
margins decreased to 24% from 27% in the second quarter. This was primarily due to lower than anticipated yields on our
128Mbit products, and a 19% decline in the average selling price per megabyte shipped. We also experienced higher than
anticipated production costs due to spot shortages of critical components. The 128Mbit yields have shown significant
improvement recently and are now back on plan. Towards the end of the quarter, we completed internal qualification of the
256Mbit Double Density technology and began customer shipments. We expect product gross margins to improve slightly in
the fourth quarter as we begin significant shipments of our 256Mbit products.
``Taiwan is back to normal production. The recent earthquake did not impact our third quarter results. The financial impact of
the earthquake is expected to be confined to the fourth quarter and manifest itself primarily in terms of spot shortages and
increased expediting costs. We currently believe that the fourth quarter megabytes shipped will exceed megabytes shipped in
the third quarter. However, the projected quarter over quarter growth in revenues will be lower than the growth rate
experienced in the third quarter. In the first quarter of 2000, we anticipate improved margins due to the higher pricing we
instituted on new orders. The shift to the more productive 256Mbit technology should also help to significantly increase
product availability in the first quarter of 2000.
``I am particularly pleased with the strategic initiatives which we recently announced, including the 512Mbit and 1 Gigabit
flash memory co-development and manufacturing joint venture with Toshiba, the launch of SD (Secure Digital) memory card
with Matsushita and Toshiba, the acquisition of the Invox patent portfolio and the PIC (Personal Information Carrier)
government award.'
This news release contains forward looking statements including the Company's expectations for future product revenues
and bookings, average selling prices, gross margin and anticipated product cost reductions that are based on current
expectations and involve risks and uncertainties that may affect the Company's business, financial condition and results of
operations. In addition to the factors discussed above, other risks include: future average selling price erosion due to price
competition; the timely introduction and acceptance of new consumer products that incorporate the Company's flash storage
devices; seasonality of product sales; the timely and successful manufacturing ramp up of new product generations with
acceptable yields and lower manufacturing costs, including the 128Mbit and 256Mbit technologies; the availability of
adequate supply of flash memory wafers from USIC and USC in Taiwan and of other critical materials and components; the
successful ramp up of assembly operations in China and Taiwan; success in developing brand name preference and an
efficient distribution system for SanDisk's products in the retail channel; economic conditions and exchange rates in Japan,
the Pacific Rim and other geographic regions as they affect SanDisk's customers; the successful negotiation of a definitive
agreement with Toshiba on the announced memo of understanding regarding joint development and manufacturing of
advanced flash memories; the successful signing of a definitive agreement with Matsushita and Toshiba for the Secure Digital
memory card; and the other risks detailed from time to time in the Company's Securities and Exchange Commission filings
and reports, including, but not limited to, the Form 10Q/A for the quarter ended June 30, 1999 and the Annual Report on
Form 10-K for the year ended December 31, 1998. Future results may differ materially from those previously reported. The
Company assumes no obligation to update the information in this release.
SanDisk Corporation designs, develops and markets flash memory data storage products used in a wide variety of electronic
systems. The Company has optimized its flash memory storage solution, known as ``system flash', to address the needs of
many emerging applications in the consumer electronics and industrial/communications markets. The Company's products
include removable CompactFlash products and FlashDisk cards, embedded FlashDrives and Flash ChipSet products and
MultiMediaCards. SanDisk is based in Sunnyvale, CA.
SanDisk's web site/home page address: sandisk.com
Note to Editors:CompactFlash and CF are trademarks of SanDisk Corporation.
SanDisk Corporation
Condensed Consolidated Statements of Income
(In thousands, except per share data)
Three months ended Nine months ended
Sept. 30, Sept. 30,
1999 1998 1999 1998
-------- -------- -------- --------
Revenues:
Product $ 57,624 $ 24,143 $135,850 $ 73,049
License and royalty 9,910 7,935 28,369 24,492
-------- -------- -------- --------
Total revenues 67,534 32,078 164,219 97,541
Cost of sales 43,897 18,840 101,264 57,172
-------- -------- -------- --------
Gross profits 23,637 13,238 62,955 40,369
Operating expenses:
Research and development 6,943 4,805 18,162 13,610
Sales and marketing 6,647 3,964 17,575 12,163
General and administrative 3,091 1,836 8,381 5,589
-------- -------- -------- --------
Total operating expenses 16,681 10,605 44,118 31,362
Operating income 6,956 2,633 18,837 9,007
Interest and other
income, net 2,753 1,283 5,822 3,900
-------- -------- -------- --------
Income before taxes 9,709 3,916 24,659 12,907
Provision for income taxes 3,204 1,410 8,137 4,645
======== ======== ======== ========
Net income $ 6,505 $ 2,506 $ 16,522 $ 8,262
======== ======== ======== ========
Earnings per share
Basic $ 0.24 $ 0.09 $ 0.61 $ 0.32
Diluted $ 0.21 $ 0.09 $ 0.55 $ 0.30
Average common shares
outstanding
Basic 27,316 26,411 27,009 26,200
Diluted 30,497 27,392 29,775 27,749
SanDisk Corporation
Condensed Consolidated Balance Sheets
(In thousands; unaudited)
ASSETS September 30, December 31,
1999 1998
Current Assets:
Cash and cash
equivalents $ 22,469 $ 15,384
Short-term investments 116,717 119,074
Accounts receivable, net 43,700 20,400
Inventories 20,684 8,922
Deferred tax assets 15,900 15,900
Prepaid expenses and other
current assets 3,888 6,694
-------- --------
Total current assets 223,358 186,374
Property and equipment, net 28,869 17,542
Investment in foundry 51,208 51,208
Deposits and other assets 4,768 617
-------- --------
Total Assets $308,203 $255,741
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 25,806 $ 6,938
Accrued payroll and
related expenses 7,156 3,768
Other accrued liabilities 20,492 9,745
Deferred revenue 24,103 27,452
-------- --------
Total current liabilities 77,557 47,903
Stockholders' Equity:
Common stock 193,090 186,120
Retained earnings 37,556 21,718
-------- --------
Total stockholders' equity 230,646 207,838
Total Liabilities and
======== ========
Stockholders Equity $308,203 $255,741
======== ======== |
