Total revenue for fiscal 2006 was $3.258 billion, up 41% from $2.306 billion in 2005. Standalone SanDisk total revenue was $3.142 billion and increased 36% for the year. Consolidated net income was $199 million, or $0.96 per diluted share (including a charge of $226 million for the write-off of acquired in-process technology, $101 million for share-based compensation expenses, $32 million for other acquisition-related charges and a $35 million reduction in income taxes related to these items), compared to net income of $386 million, or $2.00 per diluted share, in 2005.
"The seasonally strong fourth quarter was our first ever billion dollar quarter, completing a year of excellent growth in revenue, standalone SanDisk profit and market share," said Eli Harari, Chairman and CEO of SanDisk. "In Q4 we experienced excellent sales across the board, in both the retail and OEM channels, and spanning across our consumer cards, mobile cards, MP3 players and USB flash drives. I am pleased with the very strong execution by our operations and supply chain resulting in a 73% sequential increase in megabytes sold and a strong non-GAAP operating margin for the SanDisk standalone business, due in large part to our continuing focus on cost reductions."
"In the first quarter of 2007 we expect continuing robust demand for our mobile OEM products, seasonally lower retail sales, and a decline in margins due to the prevailing challenging market pricing for flash memory. Internally we are focused on executing the integration of msystems and driving continued cost reductions by commencing the transition of our captive production from 70-nanometer to 56-nanometer NAND MLC in the first quarter. In early January, we unveiled exciting new products for new markets: SSD (for notebook PCs), ReadyBoost(TM) flashdrives (for Microsoft Vista(TM)), Sansa(R) View (our first flash Personal Video Player), Sansa(R) Connect(TM) (for Wi-Fi(R) content sharing) and USBTV (a revolutionary new product bridging PC and TV). We believe these products will fuel new demand later this year," Harari concluded.
Highlights
-- Consolidated product revenue was a record $1.079 billion in the fourth quarter, up 58% year-over-year including $115 million from the acquisition of msystems.
-- License and royalty revenue for the fourth quarter was $85 million, up 26% year-over-year.
-- Excluding the newly acquired msystems business, total megabytes sold in the fourth quarter increased 268% on a year-over-year basis and 73% sequentially. For the full year of 2006, megabytes sold increased 221%, excluding msystems.
-- On a SanDisk standalone basis, fourth quarter average price per megabyte sold declined 62% on a year-over-year basis and 17% sequentially. For the full year of 2006 the average price per megabyte sold declined 58% excluding msystems.
-- Including msystems, GAAP product gross margin in the fourth quarter was 30.7%, compared to 34.4% in the fourth quarter of 2005 and 32.4% in the third-quarter of 2006. Fourth quarter non-GAAP product gross margin was 32.3% including msystems and 34.7% for SanDisk standalone, compared to 34.4% in the fourth quarter of 2005 and 32.7% in the third quarter of 2006.
-- Consolidated GAAP operating income for the fourth quarter was $12 million, or 1% of revenues (including a charge of $186 million for the write-off of acquired in-process technology, $31 million for share-based compensation expenses and $20 million for other acquisition-related charges). Consolidated non-GAAP operating income (excluding the charges and expenses described above) was $248 million or 21% of revenue compared to operating income of $198 million or 26% of revenue in the fourth quarter of 2005.
-- Consolidated cash flow from operations for 2006 was $594 million compared to $481 million in 2005 and total cash, short-term and long-term investments was $3.3 billion at the end of 2006.
-- SanDisk completed its acquisition of msystems on November 19, 2006 in an all stock transaction valued at approximately $1.5 billion.
-- SanDisk announced a $300 million, two-year stock repurchase plan to reduce the level of stockholder dilution caused by the issuance of employee equity incentive awards.
-- Retail presence grew to more than 208,000 storefronts including 67,000 in the mobile channel.
-- At the 2007 International Consumer Electronics Show, SanDisk won two "Best of CES" Awards for the Hottest MP3 Player--the "Sansa Connect"-- and the CES Innovation Award for the V-Mate(TM) Video Memory Card Recorder.
-- Average retail card capacity in the fourth quarter was 1113 megabytes, up 101% from the fourth quarter of 2005 and up 26% sequentially.
-- SanDisk and Toshiba announced commencement of the transition from 70 nanometer to 56 nanometer technology and the launch of the 16 Gigabit High Performance NAND MLC Flash memory chip expected to begin shipping in the second quarter of 2007.
Scheduled Interviews
Judy Bruner, SanDisk's Executive Vice President, Administration and CFO, is scheduled to appear on Bloomberg TV's "Bloomberg On The Markets," January 31, 2007 beginning at approximately 6:53 a.m. PST.
Conference Call
SanDisk's fourth quarter 2007 conference call is scheduled for 2:00 p.m. PST, Tuesday, January 30, 2007. The conference call will be webcast by CCBN and can be accessed live, and throughout the quarter, at SanDisk's website at www.sandisk.com/IR and at www.streetevents.com for registered streetevents.com users. To participate in the call via telephone, the dial-in number is (913) 981-5523. A copy of this press release will be furnished with the Securities and Exchange Commission on a current report on Form 8-K and will be posted to our website prior to the conference call.
Forward-Looking Statements
This news release contains certain forward-looking statements, including statements about our business prospects and outlook for the first quarter of 2007, including anticipated increased demand for our mobile OEM products, demand for certain new products for new markets, seasonally lower retail sales, a decline in margins due to prevailing challenging market pricing for flash memory, market supply and demand, cost reductions, expected technology transitions and a scheduled appearance by our CFO 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 or a slower adoption rate for these products in current and new markets that we are targeting, 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 related to our conversion to 56-nanometer NAND flash technology or the ramp-up of the 300mm flash fabrication facility, our inability to make additional planned smaller geometry conversions in a timely manner, future average selling price erosion that may be more severe than our expectations due to decreased demand or excess industry capacity of flash memory from ourselves as well as from existing suppliers or from new competitors, less than expected growth in the average megabyte capacity per card, price increases from non-captive flash memory sources and third-party subcontractors, higher than expected operating expenses, higher than anticipated capital equipment expenditures, adverse global economic and geo-political conditions, including adverse currency exchange rates and acts of terror and war, the timely development, internal qualification and customer acceptance of new products that are based on 56-nanometer NAND technology, fluctuations in license and royalty revenues, business interruption due to earthquakes, hurricanes, pandemics, power outages or other natural disasters, particularly in areas in the Pacific Rim and Japan where we manufacture and assemble products, potential impact of high energy prices and other global events outside of our control which could adversely impact consumer confidence and hence reduce demand for our products, risks related to our acquisition of msystems, including that we may not realize the expected benefits of the acquisition due to integration challenges, the loss of customers, suppliers, distributors or other third parties or other issues, that we may incur substantial costs or other damages associated with pending or future litigation related to the merger or costs or damages related to msystems' prior stock option grant practices and that we may incur charges or other accounting changes as a result of the merger, the risk that scheduled appearances by our executives could be cancelled or delayed by us or the network, and the 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 Form 10-K for the fiscal year ended January 1, 2006 and our quarterly reports on Form 10-Q. Future results may differ materially from those previously reported. We do not intend to update the information contained in this release.
About SanDisk
SanDisk is the original inventor of flash storage cards and is the world's largest supplier of flash data storage card products using its patented, high-density flash memory and controller technology. SanDisk is headquartered in Milpitas, CA and has operations worldwide with more than half its sales outside the U.S.
www.sandisk.com
SanDisk, the SanDisk logo, and Sansa are trademarks of SanDisk Corporation, registered in the United States and other countries. msystems is a trademark of msystems Ltd. Sansa Connect and V-Mate are trademarks of SanDisk Corporation. Other brand names mentioned herein are for identification purposes only and may be the trademarks of their respective holder(s).
SanDisk Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share data, unaudited)
Three months ended Twelve months ended
----------------------- ------------------------
December 31, January 1, December 31, January 1,
2006 2006 2006 2006
------------ ---------- ------------ -----------
Revenues:
Product $1,078,880 $ 683,431 $2,926,472 $2,066,607
License and royalty 84,815 67,136 331,053 239,462
------------ ---------- ------------ -----------
Total revenues 1,163,695 750,567 3,257,525 2,306,069
Cost of product
revenues 737,295 448,503 2,007,684 1,333,335
Amortization of
acquisition related
intangible assets 10,368 - 10,368 -
------------ ---------- ------------ -----------
Total cost of revenues 747,663 448,503 2,018,052 1,333,335
------------ ---------- ------------ -----------
Gross profits 416,032 302,064 1,239,473 972,734
Operating expenses:
Research and
development 91,246 44,039 306,866 194,810
Sales and marketing 70,003 38,991 203,406 122,232
General and
administrative 52,390 20,583 159,835 79,110
Write-off of
acquired in-process
technology 186,000 - 225,600 -
Amortization of
acquisition related
intangible assets 4,853 - 17,432 -
------------ ---------- ------------ -----------
Total operating
expenses 404,492 103,613 913,139 396,152
------------ ---------- ------------ -----------
Operating income 11,540 198,451 326,334 576,582
Total other income 31,674 14,111 104,374 36,725
------------ ---------- ------------ -----------
Income before taxes 43,214 212,562 430,708 613,307
Provision for income
taxes 76,736 78,648 230,193 226,923
------------ ---------- ------------ -----------
Income (loss) after
taxes (33,522) 133,914 200,515 386,384
Minority interest 1,619 - 1,619 -
------------ ---------- ------------ -----------
Net income (loss) $ (35,141) $ 133,914 $ 198,896 $ 386,384
============ ========== ============ ===========
Net income (loss) per
share:
Basic $ (0.17) $ 0.72 $ 1.00 $ 2.11
Diluted $ (0.17) $ 0.68 $ 0.96 $ 2.00
Shares used in
computing net income
(loss) per share:
Basic 210,849 186,884 198,929 183,008
Diluted 210,849 197,486 207,451 193,016
SanDisk Corporation
Reconciliation of GAAP to Non-GAAP Operating Results (1)
(In thousands, except per share data, unaudited)
Three months ended Twelve months ended
----------------------- ------------------------
December 31, January 1, December 31, January 1,
2006 2006 2006 2006
------------ ---------- ------------ -----------
SUMMARY RECONCILIATION
OF NET INCOME
GAAP NET INCOME
(LOSS) $ (35,141) $ 133,914 $ 198,896 $ 386,384
Adjustments:
Share-based
compensation (a) 30,793 - 100,641 -
Amortization of
acquisition related
intangible assets
(c) 15,221 - 27,800 -
Inventory step-up
expense related to
msystems
acquisition (d) 4,471 - 4,471 -
Write-off of
acquired in-process
technology (b) 186,000 - 225,600 -
Income tax
adjustments (e) (9,673) - (34,548) -
------------ ---------- ------------ -----------
NON-GAAP NET INCOME $ 191,671 $ 133,914 $ 522,860 $ 386,384
============ ========== ============ ===========
DETAILED
RECONCILIATION OF
SPECIFIC ITEMS:
REVENUE
Product revenues -
Standalone SanDisk $ 964,295 $ 683,431 $2,811,887 $2,066,607
Product revenues -
Former msystems (f) 114,585 - 114,585
License and royalty -
Standalone SanDisk 83,921 67,136 330,159 239,462
License and royalty -
Former msystems (f) 894 - 894
------------ ---------- ------------ -----------
CONSOLIDATED REVENUE $ 1,163,695 $ 750,567 $3,257,525 $2,306,069
============ ========== ============ ===========
GAAP COST OF PRODUCT
REVENUES $ 747,663 $ 448,503 $2,018,052 $1,333,335
Share-based
compensation (a) (2,892) - (7,991) -
Amortization of
acquisition related
intangible assets
(c) (10,368) - (10,368) -
Inventory step-up
expense related to
msystems
acquisition (d) (4,471) - (4,471) -
------------ ---------- ------------ -----------
NON-GAAP COST OF
PRODUCT REVENUES $ 729,932 $ 448,503 $1,995,222 $1,333,335
============ ========== ============ ===========
Standalone SanDisk
Non-GAAP cost of
product revenues 629,951 448,503 1,895,241 1,333,335
Former msystems Non-
GAAP cost of
product revenues
(f) 99,981 - 99,981 -
GAAP GROSS PROFIT $ 416,032 $ 302,064 $1,239,473 $ 972,734
Share-based
compensation (a) 2,892 - 7,991 -
Amortization of
acquisition related
intangible assets
(c) 10,368 - 10,368 -
Inventory step-up
expense related to
msystems
acquisition (d) 4,471 - 4,471 -
------------ ---------- ------------ -----------
NON-GAAP GROSS PROFIT $ 433,763 $ 302,064 $1,262,303 $ 972,734
============ ========== ============ ===========
Standalone SanDisk
Non-GAAP gross
profit 418,265 302,064 1,246,805 972,734
Former msystems
Non-GAAP gross
profit (f) 15,498 - 15,498 -
GAAP RESEARCH AND
DEVELOPMENT EXPENSES $ 91,246 $ 44,039 $ 306,866 $ 194,810
Share-based
compensation (a) (11,522) - (40,999)
------------ ---------- ------------ -----------
NON-GAAP RESEARCH AND
DEVELOPMENT EXPENSES $ 79,724 $ 44,039 $ 265,867 $ 194,810
============ ========== ============ ===========
GAAP SALES AND
MARKETING EXPENSES $ 70,003 $ 38,991 $ 203,406 $ 122,232
Share-based
compensation (a) (7,831) - (21,617) -
------------ ---------- ------------ -----------
NON-GAAP SALES AND
MARKETING EXPENSES $ 62,172 $ 38,991 $ 181,789 $ 122,232
============ ========== ============ ===========
GAAP GENERAL AND
ADMINISTRATIVE
EXPENSES $ 52,390 $ 20,583 $ 159,835 $ 79,110
Share-based
compensation (a) (8,548) - (30,034) -
------------ ---------- ------------ -----------
NON-GAAP GENERAL AND
ADMINISTRATIVE
EXPENSES $ 43,842 $ 20,583 $ 129,801 $ 79,110
============ ========== ============ ===========
GAAP TOTAL OPERATING
EXPENSES $ 404,492 $ 103,613 $ 913,139 $ 396,152
Share-based
compensation (a) (27,901) - (92,650) -
Write-off of
acquired in-process
technology (b) (186,000) - (225,600) -
Amortization of
acquisition related
intangible assets
(c) (4,853) - (17,432) -
------------ ---------- ------------ -----------
NON-GAAP TOTAL
OPERATING EXPENSES $ 185,738 $ 103,613 $ 577,457 $ 396,152
============ ========== ============ ===========
GAAP OPERATING INCOME $ 11,540 $ 198,451 $ 326,334 $ 576,582
Cost of goods sold
adjustments (a) (c)
(d) 17,731 - 22,830 -
Operating expense
adjustments (a-c) 218,754 - 335,682 -
------------ ---------- ------------ -----------
NON-GAAP OPERATING
INCOME $ 248,025 $ 198,451 $ 684,846 $ 576,582
============ ========== ============ ===========
Standalone SanDisk
operating income 248,925 198,451 685,746 576,582
Former msystems
operating loss (f) (900) - (900) -
GAAP NET INCOME (LOSS)$ (35,141) $ 133,914 $ 198,896 $ 386,384
Cost of goods sold
adjustments (a) (c)
(d) 17,731 - 22,830 -
Operating expense
adjustments (a-c) 218,754 - 335,682 -
Income tax
adjustments (e) (9,673) - (34,548) -
------------ ---------- ------------ -----------
NON-GAAP NET INCOME $ 191,671 $ 133,914 $ 522,860 $ 386,384
============ ========== ============ ===========
Diluted net income
(loss) per share:
GAAP $ (0.17) $ 0.68 $ 0.96 $ 2.00
Non-GAAP $ 0.87 $ 0.68 $ 2.51 $ 2.00
Shares used in
computing diluted net
income (loss) per
share:
GAAP 210,849 197,486 207,451 193,016
Non-GAAP 220,090 197,486 208,661 193,016
SanDisk Corporation
Reconciliation of GAAP to Non-GAAP Operating Results (1)
(In thousands, except per share data, unaudited)
Three months ended
--------------------------
December 31, October 1,
2006 2006
------------ ------------
SUMMARY RECONCILIATION OF NET
INCOME
GAAP NET INCOME (LOSS) $ (35,141) $ 103,281
Adjustments:
Share-based compensation (a) 30,793 25,193
Amortization of acquisition
related intangible assets (c) 15,221 4,432
Inventory step-up expense
related to msystems
acquisition (d) 4,471 -
Write-off of acquired in-
process technology (b) 186,000 -
Income tax adjustments (e) (9,673) (9,292)
------------ ------------
NON-GAAP NET INCOME $ 191,671 $ 123,614
============ ============
DETAILED RECONCILIATION OF SPECIFIC
ITEMS:
REVENUE
Product revenues - Standalone
SanDisk $ 964,295 $ 673,189
Product revenues - Former
msystems (f) 114,585 -
License and royalty - Standalone
SanDisk 83,921 78,196
License and royalty - Former
msystems (f) 894 -
------------ ------------
CONSOLIDATED REVENUE $1,163,695 $ 751,385
============ ============
GAAP COST OF PRODUCT REVENUES $ 747,663 $ 455,345
Share-based compensation (a) (2,892) (2,621)
Amortization of acquisition-
related intangible assets (c) (10,368) -
Inventory step-up expense related
to msystems acquisition (d) (4,471) -
------------ ------------
NON-GAAP COST OF PRODUCT REVENUES $ 729,932 $ 452,724
============ ============
Standalone SanDisk Non-GAAP
cost of product revenues 629,951 452,724
Former msystems Non-GAAP cost
of product revenues (f) 99,981 -
GAAP GROSS PROFIT $ 416,032 $ 296,040
Share-based compensation (a) 2,892 2,621
Amortization of acquisition
related intangible assets (c) 10,368 -
Inventory step-up expense related
to msystems acquisition (d) 4,471 -
------------ ------------
NON-GAAP GROSS PROFIT $ 433,763 $ 298,661
============ ============
Standalone SanDisk Non-GAAP
gross profit 418,265 298,661
Former msystems Non-GAAP gross
profit (f) 15,498 -
GAAP RESEARCH AND DEVELOPMENT
EXPENSES $ 91,246 $ 78,073
Share-based compensation (a) (11,522) (10,270)
------------ ------------
NON-GAAP RESEARCH AND DEVELOPMENT
EXPENSES $ 79,724 $ 67,803
============ ============
GAAP SALES AND MARKETING EXPENSES $ 70,003 $ 44,961
Share-based compensation (a) (7,831) (4,623)
------------ ------------
NON-GAAP SALES AND MARKETING
EXPENSES $ 62,172 $ 40,338
============ ============
GAAP GENERAL AND ADMINISTRATIVE
EXPENSES $ 52,390 $ 40,247
Share-based compensation (a) (8,548) (7,679)
------------ ------------
NON-GAAP GENERAL AND ADMINISTRATIVE
EXPENSES $ 43,842 $ 32,568
============ ============
GAAP TOTAL OPERATING EXPENSES $ 404,492 $ 167,713
Share-based compensation (a) (27,901) (22,572)
Write-off of acquired in-process
technology (b) (186,000) -
Amortization of acquisition
related intangible assets (c) (4,853) (4,432)
------------ ------------
NON-GAAP TOTAL OPERATING EXPENSES $ 185,738 $ 140,709
============ ============
GAAP OPERATING INCOME $ 11,540 $ 128,327
Cost of goods sold adjustments
(a) (c) (d) 17,731 2,621
Operating expense adjustments (a-
c) 218,754 27,004
------------ ------------
NON-GAAP OPERATING INCOME $ 248,025 $ 157,952
============ ============
Standalone SanDisk Non-GAAP
operating income 248,925 157,952
Former msystems Non-GAAP
operating loss (f) (900) -
GAAP NET INCOME (LOSS) $ (35,141) $ 103,281
Cost of goods sold adjustments
(a) (c) (d) 17,731 2,621
Operating expense adjustments (a-
c) 218,754 27,004
Income tax adjustments (e) (9,673) (9,292)
------------ ------------
NON-GAAP NET INCOME (LOSS) $ 191,671 $ 123,614
============ ============
Diluted net income (loss) per
share:
GAAP $ (0.17) $ 0.51
Non-GAAP $ 0.87 $ 0.61
Shares used in computing diluted
net income (loss) per share:
GAAP 210,849 202,747
Non-GAAP 220,090 203,757
(1) To supplement our consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP), we use non-GAAP measures of operating results, net income and earnings per share, which are adjusted from results based on GAAP to exclude certain expenses, gains and losses. These non-GAAP financial measures are provided to enhance the user's overall understanding of our current financial performance and our prospects for the future. Specifically, we believe the non-GAAP results provide useful information to both management, and investors as these non-GAAP results exclude certain expenses, gains and losses that we believe are not indicative of our core operating results and because it is consistent with the financial models and estimates published by many analysts who follow the Company. For example, because the non-GAAP results exclude the expenses we recorded for stock compensation in accordance with SFAS 123R effective January 2, 2006 and the acquisition of Matrix Semiconductor, Inc. in January 2006 and msystems Ltd. in November 2006, we believe the inclusion of non-GAAP financial measures provide consistency in our financial reporting. These non-GAAP results are one of the primary indicators management uses for assessing our performance, allocating resources and planning and forecasting future periods. Further, management uses non-GAAP information as certain non-cash charges such as amortization of purchased intangibles and share-based compensation do not reflect the cash operating results of the business and certain one-time expenses such as write-off of acquired in-process technology that do not reflect the ongoing results. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. These non-GAAP measures may be different than the non-GAAP measures used by other companies.
(a) Share-based compensation expense. (b) Write-off of acquired in-process technology associated with the Matrix Semiconductor, Inc., or Matrix, acquisition (January 2006) and msystems Ltd, or msystems, acquisition (November 2006). (c) Amortization of acquisition related intangible assets, primarily core and developed technology, related to the acquisition of Matrix and msystems. (d) Inventory step-up expense related to msystems acquisition. (e) Income taxes associated with certain non-GAAP adjustments. (f) msystems Ltd. results included in SanDisk from date of acquisition on November 19, 2006.
SanDisk Corporation
Condensed Consolidated Balance Sheets
(In thousands)
December 31, January 1,
2006 2006
ASSETS (unaudited)
------------ -----------
Current Assets:
Cash and cash equivalents $1,580,700 $ 762,058
Short-term investments 1,228,773 935,639
Accounts receivable from product revenues,
net 611,740 329,014
Inventory 495,984 331,584
Deferred taxes 176,007 95,518
Other current assets 148,657 121,922
------------ -----------
Total current assets 4,241,861 2,575,735
Long-term investments 457,184 -
Property and equipment, net 317,965 211,092
Notes receivable and investments in flash
ventures 462,307 265,074
Deferred taxes 78,002 -
Goodwill 910,254 5,415
Intangibles, net 389,078 4,608
Other non-current assets 87,034 58,263
------------ -----------
Total assets $6,943,685 $3,120,187
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 241,239 $ 231,208
Accounts payable to related parties 160,258 74,121
Other current accrued liabilities 315,518 115,525
Deferred income on shipments to distributors
and retailers and deferred revenue 183,950 150,283
------------ -----------
Total current liabilities 900,965 571,137
Convertible long-term debt 1,225,000 -
Non-current liabilities and deferred revenue 48,128 25,259
------------ -----------
Total liabilities 2,174,093 596,396
------------ -----------
Minority interest 5,976 -
Commitments and contingencies
Stockholders' Equity:
Common stock 3,652,603 1,622,007
Retained earnings 1,105,520 906,624
Accumulated other comprehensive income 5,493 2,635
Deferred compensation - (7,475)
------------ -----------
Total stockholders' equity 4,763,616 2,523,791
------------ -----------
Total Liabilities and Stockholders'
Equity $6,943,685 $3,120,187
============ ===========
SanDisk Corporation
Condensed Consolidated Statement of Cash Flows
(in thousands, unaudited)
Three months ended Twelve months ended
----------------------- -----------------------
December 31, January 1, December 31, January 1,
2006 2006 2006 2006
------------ ---------- ------------ ----------
Cash flows from
operating activities:
Net income (loss) $ (35,141) $ 133,914 $ 198,896 $ 386,384
Adjustments to
reconcile net income
(loss) to net cash
provided by operating
activities:
Deferred taxes (1,615) (1,344) (25,636) (1,538)
(Gain) loss on
investment in
foundries (1,116) (272) (2,480) 8,480
Depreciation and
amortization 45,876 18,868 135,585 65,774
Provision for doubtful
accounts 556 (161) 3,316 (272)
Share-based
compensation expense 30,793 908 100,641 2,499
Tax benefit from
share-based
compensation 2,627 - (61,453) -
Write-off of acquired
in-process technology 186,000 - 225,600 -
Other non-cash income
(charges) (3,514) (4,397) (313) 5,071
Changes in operating
assets and
liabilities:
Accounts receivable (143,337) (117,634) (115,061) (134,207)
Inventory 34,105 (44,706) (23,660) (135,162)
Other assets (65,995) (63,885) (12,094) (31,148)
Accounts payable
trade 3,503 86,892 (84,860) 148,234
Accounts payable,
related party 16,869 8,302 45,249 24,657
Other liabilities 114,436 62,386 210,273 142,083
------------ ---------- ------------ ----------
Total adjustments 219,188 (55,043) 395,107 94,471
------------ ---------- ------------ ----------
Net cash provided by
operating activities 184,047 78,871 594,003 480,855
------------ ---------- ------------ ----------
Cash flows from
investing activities:
Purchases of short and
long-term investments (697,778) (312,685) (2,135,973) (803,967)
Proceeds from sale and
maturities of short
and long-term
investments 615,348 267,228 1,497,120 722,986
Investment in Flash
Partners and Flash
Alliance - (21,790) (132,209) (21,790)
Investment in
foundries - (3,500) - (3,500)
Acquisition of capital
equipment, net (53,031) (53,977) (176,474) (134,477)
Notes receivable from
FlashVision 15,014 - 23,538 (34,249)
Notes receivable from
Flash Partners - - (95,445) -
Notes receivable from
Matrix Semiconductor - (20,000) - (20,000)
Notes receivable from
Tower (2,912) - (9,705) -
Acquisition of
technology licenses - (4,500) - (4,500)
Cash acquired in
business combination,
net of acquisition
costs 41,655 - 51,087 -
------------ ---------- ------------ ----------
Net cash used in
investing activities (81,704) (149,224) (978,061) (299,497)
------------ ---------- ------------ ----------
Cash flows from
financing activities:
Proceeds from issuance
of convertible debt,
net of issuance costs - - 1,125,500 -
Purchase of
convertible bond
hedge - - (386,090) -
Proceeds from issuance
of warrants - - 308,672 -
Proceeds from employee
stock programs 10,196 67,155 96,304 115,398
Cash distribution to
minority interest (4,491) - (4,491) -
Tax benefit from
share-based
compensation (2,627) - 61,453 -
------------ ---------- ------------ ----------
Net cash provided by
financing activities 3,078 67,155 1,201,348 115,398
------------ ---------- ------------ ----------
Effect of changes in
foreign currency
exchange rates on cash 1,124 644 1,352 1,507
------------ ---------- ------------ ----------
Net increase (decrease)
in cash and cash
equivalents 106,545 (2,554) 818,642 298,263
Cash and cash
equivalents at
beginning of period 1,474,155 764,612 762,058 463,795
------------ ---------- ------------ ----------
Cash and cash
equivalents at end of
period $1,580,700 $ 762,058 $ 1,580,700 $ 762,058
============ ========== ============ ==========
Contact:
SanDisk Corporation
Lori Barker Padon, 408-801-1384 (Investors)
Jay
Iyer, 408-801-2067 (Investors)
Mike Wong, 408-801-1240 (Media)