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SANDISK ANNOUNCES RECORD FOURTH QUARTER REVENUES AND OPERATING EARNINGS

2004年 01月 20日

Annual Revenues Increase 99% Year-over-Year to Exceed $1 Billion; Annual Earnings per Share Increase 298% Year-over-Year

SUNNYVALE, CA, January 21, 2004 -- SanDisk Corporation (NASDAQ:SNDK), the world's largest supplier of flash storage card products, today announced results for the fourth quarter ended December 28, 2003. Total fourth quarter revenues grew 116% to $389 million compared to the fourth quarter of 2002 and increased 38% sequentially. Income from license and royalties grew to $36 million, up 63% from $22 million in the prior quarter. Fourth quarter net income was $88 million compared to $20 million and $15 million for the fourth quarter of 2002 and the third quarter of 2003, respectively. Earnings per share grew 262% for the fourth quarter of 2003 and were $0.94 per diluted share compared with $0.26 per diluted share in the same quarter of 2002.

Total revenue for fiscal 2003 was $1.1 billion, up 99% from $541 million in 2002. Product revenues were $982 million, up 99% from $493 million in 2002. Net income was $169 million, compared to net income of $36 million in 2002. Earnings per share for fiscal 2003 were $2.03 per diluted share, which compared to net earnings of $0.51 per diluted share in 2002.

"Our excellent performance in the fourth quarter capped an outstanding year for SanDisk," said Eli Harari, President and CEO of SanDisk Corporation. "In the fourth quarter we were able to meet the strong surge in holiday season demand and increased our megabyte shipments by 39%, primarily from increased production of .13 micron NAND at our FlashVision joint venture. In the past two quarters alone, we shipped almost as many megabytes of flash memory as in the prior fifteen years combined. Royalty income increased dramatically in the fourth quarter, reflecting the industry-wide growth of flash memory shipments by our licensees. This is a testimony to the value of SanDisk's broad based patents in these growing markets."

"I am grateful to our worldwide employees for their fantastic team execution, our global customers for making this our first billion dollar year, and our partners and suppliers. In particular, we are privileged to have Toshiba as our steadfast FlashVision joint venture partner. We are also appreciative of the excellent support we are receiving from Samsung in consistently meeting their supply commitments in the face of tight capacity."

"We are optimistic about our business prospects, based on projected continuing strong growth in our target markets for digital cameras and portable digital consumer electronics, the growing adoption of our cards in camera cell phones, and our growing market share in USB flash drives. Flash storage technology and product innovations are enabling numerous other emerging industrial, telecom, automotive and medical applications. Market research reports are forecasting flash cards to grow from $3.5 billion in 2003 to more than $10 billion by 2007. SanDisk is the market leader for flash cards worldwide and we believe we are exceptionally well positioned to be a major participant as this very large opportunity unfolds. We expect to face competition from new flash memory chip suppliers starting late in 2004 or in 2005. This will challenge us to relentlessly drive down our costs through our technology transitions and economies of scale, create new and exciting storage products, and expand our global sales reach and brand awareness among consumers."

Q4 Financial/Business Highlights
· Product revenues were a record $353 million, a growth rate of 36% sequentially and 123% year-over-year.
· Income from license and royalties increased to $36 million, up 63% from $22 million in the third quarter and up 70% from the corresponding quarter last year.
· Sales of CompactFlash and SD cards each exceeded $100 million in the fourth quarter. SanDisk also experienced strong sales growth of Cruzer Mini, miniSD, xD Picture Card and TriFlash products.
· Total megabytes sold in the fourth quarter were a record and increased 39% sequentially and 250% year-over-year. Total megabytes sold in 2003 were approximately 235% higher than in 2002.
· Average price per megabyte sold in the fourth quarter declined 1.7% sequentially and 36% compared to the corresponding quarter of last year. Average price per megabyte sold in 2003 declined by 40% compared to 2002.
· Total gross margin was 42.3% of total revenues and product gross margin was 36.4%, up from 35.3% in the third quarter of 2003.
· Net cash provided by operating activities was approximately $109 million in the fourth quarter and SanDisk completed an underwritten public offering in the fourth quarter adding $522 million in net proceeds. SanDisk's cash and short-term investment position was $1.3 billion at year-end.
· SanDisk signed an agreement with Fujifilm enabling the Company to manufacture xD-Picture Cards for Fuji and to sell cards under the Fuji label through SanDisk's global retail distribution channels.
· SanDisk was added to the prestigious NASDAQ -100® Index.
· Toshiba and SanDisk announced that they intend to accelerate construction of a new 300-millimeter Fab 3 wafer fabrication facility at Toshiba's Yokkaichi operations in order to meet projected growing demand for NAND flash memory in the second half of the decade.

Separate Announcement
SanDisk separately announced today that its Board of Directors approved a two-for-one stock split of its common stock to be effected in the form of a stock dividend to each stockholder of record at the close of business on February 3, 2004.

Business Outlook for 2004
SanDisk is optimistic about business prospects in 2004 and expects:
· Total annual revenues between $1.5 billion and $1.75 billion
· License and royalty revenue of approximately $30 million per quarter with potential upside in the first and fourth quarters
· Average change in selling price per megabyte comparable to the overall decline in 2003 rates at approximately 40%. Price declines are expected to be more moderate in the first half and in the second half of the year price declines are expected to reflect new capacity increases
· Product gross margins in the first half of approximately 32-36%, and 28-32% in the second half
· Operating expenses are expected to increase as the business grows and average approximately 15% of total revenues
· Effective tax rate of approximately 37%
· Capital equipment outlays of approximately $75 million primarily for SanDisk test equipment and $175 million in equipment loans to FlashVision.
In the first quarter of 2004 SanDisk projects:
· Modest seasonal decline in product revenues of 5%-10% sequentially. License and royalty revenues comparable with the fourth quarter of 2003
· Product gross margins of between 33% and 35%
· Operating expense sequential growth of approximately 12%-14% due to volume increases, additional research and development hiring, and increases in marketing expenses.
These projections could vary significantly depending on a number of factors primarily related to growth in demand and the growth in supply, both of which are difficult to forecast accurately for any particular quarter in 2004.

Forward-Looking Statements
This news release contains certain forward-looking statements, including our business outlook, expectations for new product introductions, capacity, future product revenues, average selling prices, gross margins, operating margins and tax rates, 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: market demand for our products that may grow more slowly than our expectations or a slower adoption rate for our products in new markets that we are targeting, fluctuations in operating results, yields and possible delays related to our planned conversion to 90 nanometer NAND flash currently planned to start in the second half of the year, any interruption of or delay in supply from any of the semiconductor manufacturing facilities that supply products to us, future average selling price erosion that may be more severe than our expectations due to possible excess industry capacity of flash memory either from existing suppliers or from new competitors, price increases from non-captive flash memory sources and third-party subcontractors, higher than expected operating expenses due to unanticipated hiring and marketing expenses, higher than anticipated capital expenditures due to unexpected outlays for test equipment and FlashVision, adverse global economic and geo-political conditions, including adverse currency exchange rates, the timely development, internal qualification and customer acceptance of new products that are based on the 90 nanometer NAND technology, fluctuations in license and royalty revenues, business interruption due to earthquakes or other natural disasters, particularly in areas in the Pacific Rim where we manufacture and assemble products, further impairment of our investments in Tower Semiconductor Ltd. due to any decline in stock valuations, 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 28, 2003 and the Annual Report on Form 10-K for the year ended December 29, 2002. Future results may differ materially from those previously reported. We assume no obligation to update the information contained in this release.

About SanDisk
SanDisk Corporation, the world's largest supplier of flash storage card 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.

Conference Call
SanDisk's fourth quarter 2003 conference call is scheduled for 2:00 p.m. Pacific Time, Wednesday, January 21, 2004. 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 (888) 515-2781 or (719) 457-2605 for international callers. The call will also be available by telephone replay through Sunday, January 25, 2004, by dialing (888) 203-1112 or, for international callers, (719) 457-0820 and entering the pass code 565670. A copy of this press release will be filed 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.

SanDisk's web site / home page address: http:/ / www.sandisk.com
All trade names are either registered trademarks or trademarks of their respective holders.

                          SanDisk Corporation
Condensed Consolidated Statements of Income
(In thousands, except per share data, unaudited)
                                Three Months Ended  Twelve Months Ended
                                ------------------- --------------------
                                 Dec. 28,  Dec. 29,  Dec. 28,   Dec. 29,
                                   2003      2002       2003      2002
                                 --------- --------- ---------- ---------
Revenues:
Product                          $353,403  $158,714   $982,341  $492,900
License and royalty                35,892    21,114     97,460    48,373
--------- --------- ---------- --------
Total  revenue                     389,295   179,828  1,079,801  541,273
Cost of product revenues           224,681    99,882    641,189  352,452
--------- --------- ---------- ---------
Gross profits                     164,614    79,946    438,612   188,821
Operating expenses:
Research and development           25,263    17,328      84,200   63,177
Sales and marketing                21,251    11,800     66,317    40,407
General and administrative          9,210     8,168     31,057    27,086
--------- --------- ---------- ---------
Total operating expenses           55,724    37,296    181,574   130,670
Operating income                  108,890    42,650    257,038    58,151
Equity in income of joint 
ventures                               88        572        178      856
Interest income                      3,243     2,124      8,865    8,675
Interest expense                    (1,687)   (1,593)    (6,750)  (6,700)
Gain (loss) in investment in
foundries                             667    (13,962)     3,746   (15,163)
Loss on unauthorized sale of
UMC shares                             -         -       (18,339)     -
Loss in equity investment              -      (1,800)      (148)   (2,700)
 Other loss, net                    (1,705)     (518)    (2,709)   (3,140)
--------- --------- ---------- ---------
Income before taxes                 109,496    27,473    241,881    39,979
Provision for income taxes           21,658     7,863     73,022     3,739
--------- --------- ---------- ---------
Net income                          $87,838   $19,610   $168,859   $36,240
========= ========= ========== =========
Net income per share:
Basic                                  $1.10     $0.28      $2.33     $0.53
Diluted                                $0.94     $0.26      $2.03     $0.51
Shares used in computing net
income per share:
Basic                                  79,942    69,057     72,391    68,805
Diluted                                95,126    80,213     85,808    71,230
SanDisk Corporation
Condensed Consolidated Balance Sheets
In thousands)
                                              Dec. 28,       Dec. 29,
                                                 2003          2002*
                                              -----------     ---------
ASSETS                      (unaudited)
Current Assets:
Cash and cash equivalents                       $734,479      $220,785
Short-term investments                           528,117       235,706
Investment in foundries                          3 6,976       110,069
Accounts receivable, net                         184,236        81,086
Inventories                                      116,896        88,595
Deferred tax asset                                70,806           -
Prepaid expenses, other current assets and
tax receivable                                    53,394        18,489
----------- ---------
Total current assets                           1,724,904       754,730
Property and equipment, net                       59,470        30,307
Investment in foundries                           40,446        24,197
Investment in FlashVision                        144,616       142,825
Deferred tax asset                                 7,927         6,922
Deposits and other non-current assets             46,151        14,598
----------- ---------
Total Assets                                  $2,023,514      $973,579
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts payable                                 $88,737       $28,294
Accounts payable to related parties               45,013        26,349
Accrued payroll and related expenses              28,233        11,690
Income taxes payable                              37,254        15,978
Deferred tax liability                                          -6,922
Research and development liability, related
party                                             11,800        10,507
Other accrued liabilities                         36,661        26,780
Deferred income on shipments to distributors
and retailers and deferred revenue                99,136        43,760
----------- ---------
Total current liabilities                        346,834       170,280
Convertible subordinated notes payable           150,000       150,000
Deferred revenue and other non-current
liabilities                                       25,992        25,579
----------- ---------
Total Liabilities                                522,826       345,859
Commitments and contingencies
Stockholders' Equity:
Preferred stock                                     -             -
Common stock                                   1,207,958       585,968
Retained earnings                                253,624        84,765
Accumulated other comprehensive income (loss)     39,106       (43,013)
----------- ---------
Total stockholders' equity                     1,500,688        627,720
Total Liabilities and Stockholders'
Equity                                        $2,023,514       $973,579
=========== =========
*Information derived from the audited Consolidated Financial
Statements.

 

 

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