SanDisk Announces First Quarter Results

                         SanDisk Corporation
       Reconciliation of GAAP to Non-GAAP Operating Results (1)

(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 share-based compensation
 in accordance with SFAS 123(R) 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 acquisition (January 2006)
      and 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.

                         SanDisk Corporation
          Preliminary Condensed Consolidated Balance Sheets
                            (In thousands)

                ASSETS                 April 1, 2007 December 31, 2006
                                       ------------- -----------------
                                        (unaudited)

Current Assets:
  Cash and cash equivalents              $1,811,109        $1,580,700
  Short-term investments                  1,144,838         1,228,773
  Accounts receivable from product
   revenues, net                            144,228           611,740
  Inventory                                 594,156           495,984
  Deferred taxes                            175,770           176,007
  Other current assets                      187,379           148,657
                                       ------------- -----------------
  Total current assets                    4,057,480         4,241,861

  Long-term investments                     527,363           457,184
  Property and equipment, net               328,645           317,965
  Notes receivable and investments in
   flash ventures                           442,884           462,307
  Deferred taxes                             95,366           102,100
  Goodwill                                  852,862           910,254
  Intangibles, net                          376,827           389,078
  Other non-current assets                   68,783            87,034
                                       ------------- -----------------

         Total Assets                    $6,750,210        $6,967,783
                                       ============= =================

        LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Accounts payable                       $  205,824        $  261,870
  Accounts payable to related parties       142,566           139,627
  Other current accrued liabilities         162,687           311,000
  Deferred income on shipments to
   distributors and retailers and
   deferred revenue                          99,273           183,950
                                       ------------- -----------------
  Total current liabilities                 610,350                896,447

    Convertible  long-term  debt                            1,225,000                  1,225,000
    Non-current  liabilities  and  deferred
      revenue                                                                    115,269                        72,226
                                                                              -------------  -----------------
    Total  Liabilities                                              1,950,619                  2,193,673

    Minority  interest                                                      3,651                          5,976

    Commitments  and  contingencies

Stockholders'  Equity:
    Common  stock                                                        3,686,562                  3,657,121
    Retained  earnings                                              1,099,580                  1,105,520
    Accumulated  other  comprehensive
      income                                                                          9,798                          5,493
    Deferred  compensation                                                      -                                  -
                                                                              -------------  -----------------
    Total  Stockholders'  Equity                            4,795,940                  4,768,134
                                                                              -------------  -----------------

                  Total  Liabilities  and
                    Stockholders'  Equity                      $6,750,210                $6,967,783
                                                                              =============  =================
 


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