To the thread:
Wednesday January 21, 4:31 pm Eastern Time
Company Press Release
SanDisk Announces Fourth Quarter Revenue and Net Income
SUNNYVALE, Calif.--(BUSINESS WIRE)--Jan. 21, 1998--SanDisk Corporation (NASDAQ:SNDK - news), the world's
largest supplier of flash memory data storage products, today announced financial results for its fiscal year and fourth quarter
ended December 31, 1997. Revenues for the fiscal year were $125.3 million, an increase of 28% over revenues of $97.6
million for the previous year. Net income in 1997 was $19.8 million, or $.79 per share, compared with $14.5 million, or $.60
per share for 1996 on a diluted basis.
Fourth quarter revenues were $40.3 million, up 54% from revenues of $26.3 million for the same period last year. Revenues
from licenses and royalties represented 17% of current quarter revenues, up from 16% in the corresponding period a year ago.
Net income for the quarter was $7.2 million, or $.27 per share, compared to $4.4 million, or $.18 per share for the fourth
quarter of 1996 on a diluted basis.
Revenues in the fourth quarter increased $4.2 million, or 12%, from the third quarter of 1997. License and royalty revenues
grew by 18%. Overall gross margins were 43.4% compared to 44.3% in Q3'97, while product gross margin decreased to
31.6% from 33.4% in the third quarter due primarily to competitive pricing in the market place. Net income in the fourth quarter
increased $0.4 million, or 6%, compared to the prior quarter. Diluted earnings per share was $.27 for both the third and fourth
quarters.
''1997 was a very good year for SanDisk,'' said Dr. Eli Harari, President and CEO of SanDisk. ''Year over year unit
shipments increased 146%, exceeding 1.4 million units, including over one million units of CompactFlash. Product revenues
grew 18% despite a 51% decline in average selling prices, due in part to a year over year mix shift to lower capacity
CompactFlash cards. Net income for the year increased 37% due primarily to increased license and royalty revenues.
''The fourth quarter of 1997 was an excellent quarter with record revenues and net income. Total CompactFlash megabytes
shipped grew 24% from the prior quarter on a decline of 13% in units shipped, due to a shift to higher capacity cards. This past
Holiday season was our best ever, and we believe that more CompactFlash cards could have been sold had more of the higher
resolution digital camera models been available on store shelves.
''During the fourth quarter, we began shipments of our 0.35 micron Flash memory technology, a key component in our cost
reduction strategy. Approximately 30% of all units shipped in the quarter employed the 0.35 micron technology. 0.35 micron
yields are excellent and we expect to complete the transition to 0.35 micron at all foundry sources by mid-year 1998.''
Consistent with the seasonal nature of SanDisk's business, most notably in the consumer markets addressed by CompactFlash,
the Company anticipates that revenue in the first quarter will decline modestly from the record level in the fourth quarter.
Backlog at the end of the fourth quarter was $18.6 million, compared to $5.8 million at the end of the same period last year. As
expected, the Company entered 1998 with limited bookings visibility, particularly in Japan.
Harari also stated, ''Despite ongoing weakness in the Japanese market and considerable pricing pressures from Asian
competitors, we are experiencing strong design-in activity for our CompactFlash, ChipSets and MultiMediaCard products in
numerous consumer, industrial and communications applications. These activities make us optimistic about 1998 as a whole.''
This news release contains forward looking statements, based on current expectations, that 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 the timely acceptance of new consumer products that incorporate the Company's flash storage devices;
seasonality of product sales; future price competition; and the other risks detailed from time to time in the Company's Securities
and Exchange Commission reports, including, but not limited to, the Annual Report on Form 10-K for the year ended
December 31, 1996, and the Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1997. 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 has strategic alliances with Seagate Technology, Matsushita Electronic Corp., NEC Corp.
[Nasdaq:NIPNY - news] and LG Semicon. The company is based in Sunnyvale, CA.
NOTE TO EDITORS: SanDisk's web site / home page address: http:/ / www.sandisk.com CompactFlash and CF are
trademarks of SanDisk Corporation.
SanDisk Corporation
Condensed Consolidated Statements of Income
(In thousands, except per share data)
Three months ended Twelve months ended
December 31, December 31,
1997 1996 1997 1996
Revenues:
Product $33,340 $22,000 $105,675 $89,599
License and royalty 6,978 4,250 19,578 8,000
Total revenues 40,318 26,250 125,253 97,599
Cost of sales 22,804 15,169 72,280 58,707
Gross profits 17,514 11,081 52,973 38,892
Operating expenses:
Research and
development 3,943 2,901 13,577 10,181
Sales and marketing 3,840 2,325 12,568 8,792
General and
administrative 2,215 1,865 7,148 7,445
Total operating expenses 9,998 7,091 33,293 26,418
Operating income 7,516 3,990 19,680 12,474
Interest and other
income, net 980 831 3,660 3,151
Income before taxes 8,496 4,821 23,340 15,625
Provision for
income taxes 1,274 438 3,501 1,140
Net income 7,222 $ 4,383 $ 19,839 $ 14,485
Earnings per share
Basic $ 0.30 $ 0.20 $ 0.87 $ 0.65
Diluted $ 0.27 $ 0.18 $ 0.79 $ 0.60
Average common shares
outstanding
Basic 24,080 22,298 22,880 22,162
Diluted 26,402 24,211 24,970 24,206
The financial statements reflect the adoption of Financial
Accounting Standards no. 128 "Earnings Per Share."
SanDisk Corporation
Condensed Consolidated Balance Sheets
(In thousands)
ASSETS Dec. 31, 1997 Dec. 31, 1996
Current Assets:
Cash and cash equivalents $ 20,888 $ 19,323
Short-term investments 114,037 54,965
Accounts receivable, net 19,352 11,885
Inventories 15,648 9,630
Prepaid expenses and other
current assets 18,466 1,684
Total current assets 188,391 97,487
Property and equipment, net 15,892 10,285
Investment in joint venture 40,284 -
Deposits and other assets 900 496
Total assets $ 245,467 $ 108,268
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 14,111 $ 7,595
Accrued payroll & related expenses 4,674 2,857
Other accrued liabilities 7,341 4,354
Deferred revenue 27,967 5,652
Total current liabilities 54,093 20,458
Stockholders' Equity:
Common stock 181,921 98,233
Retained earnings
(accumulated deficit) 9,453 (10,423)
Total stockholders' equity 191,374 87,810
Total Liabilities and
Stockholders' Equity $ 245,467 $ 108,268 |
