SanDisk Announces Record Revenue and Operating Income for Fourth Quarter and Fiscal Year 2000
SUNNYVALE, Calif.--(BUSINESS WIRE)--Jan. 24, 2001--SanDisk Corporation (NASDAQ:SNDK - news), the world's largest supplier of flash memory data storage products, today announced record revenue for its fourth quarter ended December 31, 2000. Total fourth quarter revenues were $177.7 million, an increase of 115% from $82.8 million in the fourth quarter of 1999. Product revenues were $154.7 million, an increase of 121% from $69.9 million for the same period last year. Revenues from licenses and royalties were $22.9 million, up 78% from $12.9 million in the fourth quarter of 1999. Net income for the quarter was $29.5 million, up 194% compared to $10.0 million in the same period last year. In the fourth quarter of 2000, diluted earnings per share were $0.41, compared to $0.15 per share in the fourth quarter of 1999.
Total revenues for the fourth quarter increased by 4% over the third quarter of 2000. Product revenues increased 2% from $151.8 million in the third quarter of 2000. Revenues from licenses and royalties were 21% higher due primarily to retroactive royalties associated with the recently announced Lexar license agreement. Fourth quarter diluted earnings per share increased to $0.41 per share from $0.35 per share in the third quarter of 2000. Product gross margin improved to 34% from 33% in the third quarter.
Revenues for fiscal 2000 were $601.8 million, an increase of 144% from $247.0 million for the previous year, due to higher product sales and higher revenues from licenses and royalties. Product revenues increased 156% due primarily to increased sales of CompactFlash and MultiMediaCard products. Net income in 2000 was $298.7 million, or $4.11 per share, and included a one-time after tax gain of $204 million, or $2.81 per share, in the first quarter of 2000 from the conversion of SanDisk's foundry investment in United Silicon Inc. into shares of United Microelectronics Corp. Excluding this one-time gain, net income for fiscal year 2000 was $94.7 million, or $1.30 per share, an increase of 202% compared to $0.43 per share for 1999 on a diluted basis.
``FY 2000 was the best year in SanDisk's history,'' said Dr. Eli Harari, President and CEO of SanDisk. ``We more than doubled sales and more than tripled earnings per share compared to 1999. Sales to Japan and Europe each exceeded the $100 million mark for the first time. Retail sales more than tripled compared to 1999. Despite supply constraints throughout most of the year, we shipped over 13 million units, up from 5 million in 1999. We believe we strengthened the fundamentals of our future business through our strategic partnership with Toshiba and our investments in a strong subcontractor supplier base in Taiwan, China, the Philippines and Japan, which gives us the flexibility to respond to global demand at competitive costs. Royalty income from our intellectual property and patents increased significantly and we ended the year with a strong balance sheet.
``Market conditions softened significantly in the fourth quarter due to slowing economic conditions. Product demand slowed, resulting in reduced backlog and low near-term order visibility. Our sales through the retail channel increased substantially in the fourth quarter, spurred by successful holiday sales of digital cameras. However, this was not sufficient to compensate for reduced orders from OEMs, who appear to be working down their existing inventories in a slowing economy. Consequently, our sales in the quarter, although a record, were below our internal expectations.
``We believe the current situation is likely to adversely impact the first one or two quarters of 2001 and are taking aggressive steps to manage our flash production output. We are actively managing our inventory and we expect it to return to historical levels by the second half of the year. We are also taking steps to manage expenses until we see a pickup in demand for our products. At the same time, we believe that we will need substantially more capacity of advanced flash wafers once the current market situation reverses, and are therefore continuing our investments in advanced flash technology and in the FlashVision manufacturing joint venture with Toshiba. We believe that the 512Mbit Nand flash technology resulting from this joint venture will contribute favorably to our competitiveness in the second half of the year, when we plan to have production output from FlashVision in Virginia.
``Despite the near term market lull, we are optimistic that SanDisk has the opportunity to leverage our leading-edge technology and products to further improve our competitive position in 2001. We are encouraged by the large number of new design wins for our products which we believe should result in renewed growth when these products are introduced to the market later this year. Every one of the markets addressed by SanDisk, digital consumer electronics, digital wireless, internet appliances and telecommunications infrastructure, is in its relatively early formative stages, with accelerating growth predicted by industry analysts over the next few years.''
SanDisk completed the lease financing for its FlashVision foundry joint venture with Toshiba on December 27, 2000. The amount of the lease facility from a bank syndication was $215 million, which is guaranteed by SanDisk on behalf of FlashVision.
Business Outlook:
The financial projections contained herein are based on limited information available to us now, which is highly likely to change over time. Although our projections and the factors influencing them will likely change, we do not plan to update them.
Presently, weak worldwide economic conditions and uncertainty make it difficult to predict future market demand. We currently believe that our first quarter sales will be adversely impacted by seasonality, increased pricing pressures and slowing demand from OEMs as they continue their inventory corrections, resulting in product
revenues 15% - 20% below the just completed quarter, and earnings per share approximately in line with first quarter results of a year ago, excluding the one-time gain on foundry investment. Although the recent economic uncertainty makes it difficult to predict results for fiscal 2001, we are currently projecting annual revenues
approximately 30% higher than in 2000, with most of the product sales growth occurring in the second half of the year based on market acceptance of new design wins for our products. Fiscal year 2001 earnings per share are currently projected to grow slightly from 2000, excluding the one-time gain on foundry investment. Product gross margins for 2001 are expected to be 30%, plus or minus a couple of points, due in part to pricing pressures and significant expenses associated with the FlashVision fab production start up. These results could differ materially if the slowdown continues into the second half of the year or the global economy goes into a recession.
This news release contains certain forward looking statements including our expectations for future product revenues and bookings, average selling prices, gross margin and profits that are based on current expectations and involve risks and uncertainties that may significantly and adversely affect our business, financial condition and results of operations. In addition to the factors discussed above, other risks include: the timely introduction and acceptance of new consumer products that incorporate our flash storage devices; slower than expected growth in the emerging markets for our products which may result in reduced sales and increased inventory; the availability of adequate supply of flash memory wafers from UMC in Taiwan and from other sources; the availability of other critical materials and components; the timely and successful manufacturing ramp up of new product generations; increased expenses and fluctuations in operating results and yields related to the startup of wafer production at our FlashVision foundry joint venture; future average selling price erosion due to excess capacity and price competition that is more severe than normal learning curve price reductions; the continued successful management of assembly operations in China, Taiwan and the Philippines; seasonality of product sales; 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, Europe and other geographic regions as they affect SanDisk's customers; the successful development and launch of our Secure Digital card products; 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-Q for the quarter ended September 30, 2000 and the Annual Report on Form 10-K for the year ended December 31, 1999. Future results may differ materially from those previously reported. We assume no obligation to update the information in this release.
SanDisk Corporation, the world's largest supplier of flash data storage 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 fourth quarter 2000 conference call is scheduled for 2:00 p.m. PDT, Wednesday, January 24th. The phone number is (973) 872-3100. A replay will be
available shortly after the end of the call at (402) 220-0468 and will be accessible until Thursday, January 25, 2001 at 6:00 p.m. Pacific Time.
SanDisk's web site / home page address: sandisk.com
CompactFlash and CF are trademarks of SanDisk Corporation. |
