SANDISK ANNOUNCES FOURTH QUARTER AND FISCAL 2008 FINANCIAL RESULTS
Milpitas, CA, February 2, 2009 - SanDisk
Corporation (NASDAQ:SNDK), the world's largest supplier of flash
storage card products, today announced results for the fourth
quarter ended December 28, 2008. Total fourth quarter revenue
of $864 million declined 31% on a year-over-year basis and
increased 5% on a quarter-over-quarter basis. Total revenue
for fiscal 2008 of $3.35 billion declined 14% from $3.90 billion in
fiscal 2007.
Fourth quarter net loss, in accordance with U.S. Generally
Accepted Accounting Principles (GAAP), was $(1.86) billion, or a
loss of $(8.25) per share, compared to GAAP net income of $106
million, or $0.45 per share, in the fourth quarter of fiscal
2007. The GAAP net loss for fiscal 2008 was $(2.07) billion,
or $(9.19) per share, compared to net income of $219 million, or
$0.93 per share in fiscal 2007.
"Despite a very difficult pricing environment, macroeconomic
turmoil and the impact on consumer purchasing, we delivered
sequential revenue growth in the fourth quarter. However, we are
very disappointed with our fourth quarter bottom line results,
which included significant asset impairment and inventory related
charges. We are focused on managing our business through the
difficult global economic climate and limited visibility in
2009. We are taking significant steps to curtail our captive
output, conserve cash, and reduce capital and operating
expenditures. We continue to invest in technology leadership
while creating new demand with the exciting products we announced
at the January 2009 Consumer Electronics Show," said Eli Harari,
Chairman and CEO. "We believe that drastic industry-wide
capital expenditure cuts announced for 2009 will contribute to a
better balance between supply and demand and an improved pricing
environment in our markets later in 2009 and into
2010."
Fourth quarter 2008 GAAP results
include:
- A combined pre-tax goodwill and intangible asset impairment
charge of $1.02 billion, due to a sustained decline in SanDisk's
market capitalization, among other factors.
- A valuation allowance of $464 million recorded against net
deferred tax assets, due primarily to the fiscal 2008 net
loss.
- Charges to cost of sales of $388 million including inventory
related charges of $184 million, idle capacity costs of $121
million for reduced fab output in Q109, and an impairment of fab
investments of $83 million partially offsetting the foreign
exchange appreciation of these Japanese yen denominated investments
in the fabs. These cost of sales charges are also included in
the non-GAAP results.
- Restructuring and other charges of $31 million. These
charges are also included in the non-GAAP results.
- These charges in the aggregate amounted to $1.91 billion in the
fourth quarter of fiscal 2008.
FOURTH QUARTER 2008 METRICS
- Total cash, short-term, and long-term investments at the end of
fiscal 2008 was $2.5 billion, compared to $2.9 billion at the end
of fiscal 2007.
- Cash flow from operations for the fourth quarter was $65
million, compared to $149 million in the fourth quarter of
2007.
- Product revenue was $742 million, down 34% year-over-year and
up 8% quarter-over-quarter.
- License and royalty revenue of $122 million, was down 5%
year-over-year and down 8% quarter-over-quarter.
- Total megabytes sold in the fourth quarter increased 123%
year-over-year and 49% sequentially.
- Average price per megabyte sold in the fourth quarter declined
70% on a year-over-year basis and 28% sequentially.
- Average retail card capacity in the fourth quarter was 3.79
gigabytes, an increase of 114% on a year-over-year basis and 31%
sequentially.
- For fiscal 2008 total megabytes sold increased 125% and average
price per megabyte sold declined 62%, both on a year-over-year
basis.
- Non-GAAP net income (loss) was ($372) million in the fourth
quarter, compared to $162 million in the fourth quarter of 2007 and
($132) million in the third quarter of fiscal 2008.
- Non-GAAP earnings per share were $(1.65) compared to $0.69 per
share in the fourth quarter of fiscal 2007 and $(0.59) per share in
the third quarter of fiscal 2008.
OTHER RECENT ANNOUNCEMENTS
- SanDisk and Toshiba signed a definitive agreement to transfer
more than 20% of SanDisk's captive fab capacity to Toshiba for a
total value of approximately $890 million. This considerably
strengthens SanDisk's financial position, lowers inventory
commitments, and enables a more rapid return to a captive/non
captive supply model.
- SanDisk introduced ExtremeFFS™, a new Flash Management System
for improving SSD performance and reliability. ExtremeFFS
technology is being implemented on SanDisk's 3rd generation MLC
SSDs, launched at the January 2009 Consumer Electronics Show (CES),
at 60 gigabyte, 120 gigabyte, and 240 gigabyte (GB)*
capacities.
- SanDisk launched slotMusic™ cards in the U.S. in
conjunction with the four major record labels. slotMusic is a
new physical format for music - high-fidelity, DRM-free MP3 music
on a microSD™ card - which gives consumers the ability to easily
listen to their favorite songs among a mobile phone, PC, and MP3
player with a microSD slot.
- SanDisk unveiled the Sansa® slotRadio™ player and companion
line of slotRadio music cards designed especially for the casual
music consumer. Available in Spring 2009, the small, stylish
device comes bundled with a slotRadio card preloaded with 1,000
songs, professionally arranged into genre-themed playlists.
The plug-and-play model offered by the (microSD) card-plus-player
format dramatically lowers barriers and ushers in a new way for
consumers to easily and immediately enjoy music.
- SanDisk was named an International CES Innovations 2009 Design
and Engineering Awards Honoree for its 16 gigabyte microSDHC™ and
Memory Stick Micro™ (M2™) mobile phone memory cards.
CONFERENCE CALL
SanDisk's fourth quarter 2008 conference call is scheduled
for 2:00 p.m. PST, Monday, February 2, 2009. The conference
call will be webcast and can be accessed live, and throughout the
quarter, at SanDisk's website at http://www.sandisk.com/IR.
To participate in the call via telephone, the dial-in number is
913-312-0835. The dial-in password is 4452969. A copy
of this press release will be furnished to 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.
A complete reconciliation between GAAP and non-GAAP information
referred to in this release is provided in the attached
tables.
FORWARD LOOKING STATEMENTS
This news release contains certain forward-looking
statements, including statements about our business prospects and
outlook, anticipated increased demand for products including our
mobile products, our expectations of a more balanced supply/demand
environment and improved pricing environment and expected growth in
international retail, 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
including, for example, our solid state drives, or a slower
adoption rate for our products in current and new markets that we
are targeting including, for example, the mobile phone market,
- level of demand and consumer confidence due to a continuing
global economic downturn,
- continued significant over-supply in the markets that we
serve,
- continued significant declines in average selling prices,
- 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
and delays related to our conversion to smaller geometries of NAND
flash technology or the ramp-up of the 300 millimeter flash
fabrication facility,
- failure of or delays in the closing of our recently announced
joint venture restructuring with Toshiba,
- increased memory component and other costs as a result of
currency exchange rate fluctuations to the U.S. dollar,
particularly with respect to the Japanese yen,
- business interruption due to earthquakes, hurricanes or other
natural disasters, particularly in areas in the Pacific Rim and
Japan where we manufacture and assemble products,
- adverse results in litigation or regulatory actions affecting
us, and
- 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
Annual Report on Form 10-K for the fiscal year ended December 30,
2007 and our subsequently filed fiscal 2008 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 Corporation, the inventor and world's largest supplier of
flash storage cards, is a global leader in flash memory - from
research, manufacturing and product design to consumer branding and
retail distribution. SanDisk's product portfolio includes
flash memory cards for mobile phones, digital cameras and
camcorders, digital audio/video players, USB flash drives for
consumers and the enterprise, embedded memory for mobile devices,
and solid state drives for computers. SanDisk (www.sandisk.com/corporate)
is a Silicon Valley-based S&P 500 company, with more than half
its sales outside the United States.
SanDisk, the SanDisk logo and Sansa are trademarks of
SanDisk Corporation, registered in the United States and other
countries. ExtremeFFS and slotRadio are trademarks of SanDisk
Corporation. slotMusic is a trademark of SLOTmedia Group LLC.
, microSD and microSDHC are trademarks of SD-3C LLC. Memory
Stick Micro and M2 are trademarks of Sony Corporation. Other
brand names mentioned herein are for identification purposes only
and may be the trademarks of their respective holder(s).
* 1 gigabyte (GB) = 1 billion bytes
SanDisk Supporting Documents (.pdf)
- Preliminary Condensed Consolidated Statements of Operations
- Reconciliation of Preliminary GAAP to Non-GAAP Operating
Results
- Preliminary Condensed Consolidated Balance Sheets
- Preliminary Condensed Consolidated Statement of Cash Flows
Investor Contact:
Jay Iyer
(408) 801-2067
Media Contact:
Ryan Donovan
(408) 801-2857