Reports .17 vs .09
SanDisk Announces First Quarter Revenue and Net Income
SUNNYVALE, Calif.--SanDisk Corporation (NASDAQ:SNDK), the world's largest supplier of flash memory data storage products, today announced financial results for its first quarter ended March 31, 1998.
First quarter revenues were $34.1 million, an increase of 59% from revenues of $21.4 million for the same period last year. Revenues from licenses and royalties of $8.7 million represented 25% of the current quarter revenues, up from 15% in the corresponding period a year ago. Net income for the quarter was $4.7 million, or diluted earnings per share of $.17, compared to $2.1 million, or $.09 per share for the first quarter of 1997.
Product revenues in the first quarter declined sequentially by 24% from the record fourth quarter levels of 1997. License and royalty revenues grew by $1.7 million, or 24%. Overall gross margins were 48% compared to 43% in the fourth quarter of 1997 due primarily to the higher licenses and royalties. Product gross margin decreased to 30% from 32% in the prior quarter due primarily to competitive pricing in the market place.
"Business conditions in the just concluded quarter were weak particularly in Japan and Europe" said Dr. Eli Harari, President and CEO of SanDisk. "The first quarter is historically weak because of the seasonal nature of the consumer electronics market. Sales to Japan were approximately 40% lower than in the fourth quarter of 1997, accounting for the majority of the decline in first quarter product sales. Bookings strengthened in the second half of the quarter, although bookings visibility remains limited."
Harari also stated, "We are encouraged by new high resolution digital camera models announced late in the quarter by Canon, Kodak, Konica, Hewlett Packard and Vivitar. These mo$e.R are scheduled to hit the store shelves in the second quarter of 1998, and are expected to generate increased demand for our high capacity cards."
During the quarter, the Company shipped approximately 50% of its product using the 0.35 micron Flash technology and began volume shipments of the industry's highest capacity CompactFlash cards -- the 30, 40 and 48 megabyte (MB) cards.
The Company continues to experience strong design-in activity for CompactFlash, ChipSets and MultiMediaCard products in numerous consumer, industrial and communications applications.
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 filings and reports, including, but not limited to, the Annual Report on Form 10-K for the year ended December 31, 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 a strategic alliance with Seagate Technology which maintains an equity stake in the Company. SanDisk is based in Sunnyvale, CA.
Note to Editors: SanDisk's web site/home page address: sandisk.com CompactFlash and CF are trademarks of SanDisk Corporation.
SanDisk Corporation
Condensed Consolidated Statements of Income
(In thousands, except per share data; unaudited)
Three months ended
March 31,
1998 1997
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Revenues:
Product $25,426 $18,194
License and royalty 8,676 3,250
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Total revenues 34,102 21,444
Cost of sales 17,772 12,965
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Gross profits 16,330 8,479
Operating expenses:
Research and development 4,331 3,001
Sales and marketing 3,951 2,561
General and administrative 2,044 1,377
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Total operating expenses 10,326 6,939
Operating income 6,004 1,540
Interest and other income, net 1,339 955
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Income before taxes 7,343 2,495
Provision for income taxes 2,640 370
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Net income $ 4,703 $ 2,125
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Earnings per share
Basic $ 0.18 $ 0.09
Diluted $ 0.17 $ 0.09
Average common shares outstanding
Basic 26,019 22,397
Diluted 28,022 24,107
The financial statements reflect the adoption of Financial
Accounting Standards no. 128 "Earnings per share".
SanDisk Corporation
Condensed Consolidated Balance Sheets
(In thousands; unaudited)
ASSETS Marc(,3b* 1998 December 31, 1997
Current Assets:
Cash and cash equivalents $ 10,642 $ 20,888
Short-term investments 116,862 114,037
Accounts receivable, net 18,567 19,352
Inventories 20,436 15,648
Prepaid expenses and other
current assets 17,942 18,466
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Total current assets 184,449 188,391
Property and equipment, net 16,366 15,892
Investment in j;y> venture 40,284 40,284
Deposits and other assets 1,023 900
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Total Assets $242,122 $245,467
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 5,318 $ 14,111
Accrued payroll and related
expenses 3,527 4,674
Other accrued liabilities 9,415 7,341
Deferred revenue 26,540 27,967
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Total current liabilities 44,800 54,093
Stockholders' Equity:
Common stock 183,041 181,921
Retained earnings 14,281 9,453
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Total stockholders' equity 197,322 191,374
Total Liabilities and
Stockholders' Equity $242,122 $245,467
CONTACT: SanDisk Corporation
Cindy Burgdorf, 408/542-0577
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