SANDISK ANNOUNCES THIRD QUARTER 2011 FINANCIAL RESULTS
Reports Record Quarterly Revenue
SanDisk Corporation (NASDAQ:SNDK), a global leader in flash memory storage solutions, announced results for the third fiscal quarter ending October 2, 2011. Total third quarter revenue of $1.416 billion increased 15% on a year-over-year basis and increased 3% on a sequential basis. Third quarter net income, in accordance with U.S. Generally Accepted Accounting Principles (GAAP), was $233 million, or $0.96 per diluted share, compared to net income of $322 million, or $1.34 per diluted share in the third quarter of fiscal 2010 and $248 million, or $1.02 per diluted share, in the second quarter of fiscal 2011.
On a non-GAAP basis, which excludes the impact of share-based compensation expense, amortization of acquisition-related intangible assets, non-cash economic interest expense associated with the convertible debts and related tax adjustments, third-quarter net income was $292 million, or $1.20 per diluted share, compared to net income of $311 million, or $1.30 per diluted share, in the third quarter of fiscal 2010 and net income of $278 million, or $1.14 per diluted share, in the second quarter of fiscal 2011. For reconciliation of non-GAAP to GAAP results, see accompanying financial tables and footnotes.
"We again delivered record revenue and strong profitability, driven by robust demand in our diversified end markets," said Sanjay Mehrotra, president and chief executive officer. "Our broad portfolio of innovative storage solutions positions us exceedingly well to capitalize on our numerous growth opportunities in smart mobile devices and consumer and enterprise computing platforms."
THIRD QUARTER 2011 KEY FINANCIAL METRICS
Total third quarter gross profit, product gross profit and operating income compared on a year-over-year and sequential basis are shown in the table below:
Metric
in millions of US$, except %
GAAP
Non - GAAP
Q311 Q310 Q211 Q311 Q310 Q211
Total gross profit
% of total revenue $612
43.2% $639
51.8% $613
44.6% $627
44.3% $644
52.2% $623
45.3%
Product gross profit
% of product revenue $518
39.2% $543
47.7% $520
40.6% $533
40.3% $548
48.1% $530
41.3%
Operating income
% of total revenue $386
27.3% $432
35.0% $379
27.6% $417
29.4% $457
37.0% $402
29.3%
Cash flow from operations in the third quarter was $176 million and free cash flow(1) was $189 million.
Total cash and cash equivalents and short and long-term marketable securities at the end of the third quarter of fiscal 2011 were $5.27 billion compared to $5.05 billion at the end of the third quarter of fiscal 2010 and $5.28 billion at the end of the second quarter of fiscal 2011.
Third-quarter Other income (expense) includes a GAAP $12 million loss and a non-GAAP $9 million gain, resulting from the repurchase of $222 million par value of the company's 2013 convertible debt for $211 million.
OTHER HIGHLIGHTS
SanDisk refreshed its suite of retail products for the mobile, imaging and USB flash drive markets. SanDisk also introduced the SanDisk® Memory Vault, the first product in a new category of devices that are designed for long-term data preservation.
SanDisk began selling the SanDisk Ultra® solid state drive (SSD) for the retail market in 60, 120 and 240 gigabyte capacities.
SanDisk introduced the Sansa® Clip Zip™, a sub-$50 MP3 player packed with features, such as a large color screen, compatibility with all major music formats, a stopwatch, an FM radio, voice recording capability and a microSDHC™ card slot for additional storage.
SanDisk led a new initiative, called SATA DEVSLP, with support from Intel, Samsung and Microsoft to enable OEMs to offer solid-state drives with SATA performance at significantly lower power consumption than what is currently available. The implementation of the new technology is planned in future devices, chipsets and operating systems.
CONFERENCE CALL
SanDisk's third quarter of fiscal 2011 conference call is scheduled for 2:00 P.M., Pacific Time, Thursday, October 20, 2011. The conference call will be webcast and can be accessed live, and throughout the quarter, at SanDisk's website at www.sandisk.com/IR. To participate in the call via telephone, the dial-in number is 719-457-2713 and the dial-in password is 2858144. 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.
FORWARD LOOKING STATEMENTS
This news release contains certain forward-looking statements, including statements about our business prospects and growing demand for our products in the smart mobile device and consumer and enterprise computing markets and our expectations regarding our business and continued growth, that are based on our current expectations and are subject to numerous risks and uncertainties that may cause these forward-looking statements to be inaccurate and may significantly harm our business, financial condition and results of operations. Risks that may cause these forward-looking statements to be inaccurate include among others:
competitive pricing pressures, resulting in lower average selling prices and lower or negative product gross margins;
unpredictable or changing demand for our products, particularly for certain form factors, such as embedded flash memory, or capacities, or the mix of X2 and X3;
lower than anticipated demand, including due to general economic weakness in our markets;
insufficient supply from captive flash memory sources, inability to obtain non-captive flash memory supply of the right product mix with adequate margins and quality in the time frame necessary to meet demand, or inability to realize a positive margin on non-captive purchases;
expansion of industry supply, including low-grade supply useable in limited markets, creating excess market supply, causing our average selling prices to decline faster than our costs;
excess captive memory output or capacity which could result in write-downs for excess inventory, lower of cost or market charges, fixed costs associated with under-utilized capacity, or other consequences;
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; 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 Quarterly Report on Form 10-Q for the fiscal quarter ended July 3, 2011.
(1) Free cash flow represents net cash provided by operating activities plus net cash used in investing activities less net purchases, sales and maturities of short and long-term marketable securities.
ABOUT SANDISK
SanDisk Corporation is a global leader in flash memory storage solutions, from research and development, product design and manufacturing to branding and distribution for OEM and retail channels. Since 1988, SanDisk's innovations in flash memory and storage system technologies have provided customers with new and transformational digital experiences. SanDisk's diverse product portfolio includes flash memory cards and embedded solutions used in smart phones, tablets, digital cameras, camcorders, digital media players and other consumer electronic devices, as well as USB flash drives and solid-state drives (SSD) for the computing market. SanDisk's products are used by consumers and enterprise customers around the world.
SanDisk Corporation (NASDAQ:SNDK), a global leader in flash memory storage solutions, announced results for the third fiscal quarter ending October 2, 2011. Total third quarter revenue of $1.416 billion increased 15% on a year-over-year basis and increased 3% on a sequential basis. Third quarter net income, in accordance with U.S. Generally Accepted Accounting Principles (GAAP), was $233 million, or $0.96 per diluted share, compared to net income of $322 million, or $1.34 per diluted share in the third quarter of fiscal 2010 and $248 million, or $1.02 per diluted share, in the second quarter of fiscal 2011.
On a non-GAAP basis, which excludes the impact of share-based compensation expense, amortization of acquisition-related intangible assets, non-cash economic interest expense associated with the convertible debts and related tax adjustments, third-quarter net income was $292 million, or $1.20 per diluted share, compared to net income of $311 million, or $1.30 per diluted share, in the third quarter of fiscal 2010 and net income of $278 million, or $1.14 per diluted share, in the second quarter of fiscal 2011. For reconciliation of non-GAAP to GAAP results, see accompanying financial tables and footnotes.
"We again delivered record revenue and strong profitability, driven by robust demand in our diversified end markets," said Sanjay Mehrotra, president and chief executive officer. "Our broad portfolio of innovative storage solutions positions us exceedingly well to capitalize on our numerous growth opportunities in smart mobile devices and consumer and enterprise computing platforms."
THIRD QUARTER 2011 KEY FINANCIAL METRICS
Total third quarter gross profit, product gross profit and operating income compared on a year-over-year and sequential basis are shown in the table below:
Metric
in millions of US$, except %
GAAP
Non - GAAP
Q311 Q310 Q211 Q311 Q310 Q211
Total gross profit
% of total revenue $612
43.2% $639
51.8% $613
44.6% $627
44.3% $644
52.2% $623
45.3%
Product gross profit
% of product revenue $518
39.2% $543
47.7% $520
40.6% $533
40.3% $548
48.1% $530
41.3%
Operating income
% of total revenue $386
27.3% $432
35.0% $379
27.6% $417
29.4% $457
37.0% $402
29.3%
Cash flow from operations in the third quarter was $176 million and free cash flow(1) was $189 million.
Total cash and cash equivalents and short and long-term marketable securities at the end of the third quarter of fiscal 2011 were $5.27 billion compared to $5.05 billion at the end of the third quarter of fiscal 2010 and $5.28 billion at the end of the second quarter of fiscal 2011.
Third-quarter Other income (expense) includes a GAAP $12 million loss and a non-GAAP $9 million gain, resulting from the repurchase of $222 million par value of the company's 2013 convertible debt for $211 million.
OTHER HIGHLIGHTS
SanDisk refreshed its suite of retail products for the mobile, imaging and USB flash drive markets. SanDisk also introduced the SanDisk® Memory Vault, the first product in a new category of devices that are designed for long-term data preservation.
SanDisk began selling the SanDisk Ultra® solid state drive (SSD) for the retail market in 60, 120 and 240 gigabyte capacities.
SanDisk introduced the Sansa® Clip Zip™, a sub-$50 MP3 player packed with features, such as a large color screen, compatibility with all major music formats, a stopwatch, an FM radio, voice recording capability and a microSDHC™ card slot for additional storage.
SanDisk led a new initiative, called SATA DEVSLP, with support from Intel, Samsung and Microsoft to enable OEMs to offer solid-state drives with SATA performance at significantly lower power consumption than what is currently available. The implementation of the new technology is planned in future devices, chipsets and operating systems.
CONFERENCE CALL
SanDisk's third quarter of fiscal 2011 conference call is scheduled for 2:00 P.M., Pacific Time, Thursday, October 20, 2011. The conference call will be webcast and can be accessed live, and throughout the quarter, at SanDisk's website at www.sandisk.com/IR. To participate in the call via telephone, the dial-in number is 719-457-2713 and the dial-in password is 2858144. 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.
FORWARD LOOKING STATEMENTS
This news release contains certain forward-looking statements, including statements about our business prospects and growing demand for our products in the smart mobile device and consumer and enterprise computing markets and our expectations regarding our business and continued growth, that are based on our current expectations and are subject to numerous risks and uncertainties that may cause these forward-looking statements to be inaccurate and may significantly harm our business, financial condition and results of operations. Risks that may cause these forward-looking statements to be inaccurate include among others:
competitive pricing pressures, resulting in lower average selling prices and lower or negative product gross margins;
unpredictable or changing demand for our products, particularly for certain form factors, such as embedded flash memory, or capacities, or the mix of X2 and X3;
lower than anticipated demand, including due to general economic weakness in our markets;
insufficient supply from captive flash memory sources, inability to obtain non-captive flash memory supply of the right product mix with adequate margins and quality in the time frame necessary to meet demand, or inability to realize a positive margin on non-captive purchases;
expansion of industry supply, including low-grade supply useable in limited markets, creating excess market supply, causing our average selling prices to decline faster than our costs;
excess captive memory output or capacity which could result in write-downs for excess inventory, lower of cost or market charges, fixed costs associated with under-utilized capacity, or other consequences;
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; 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 Quarterly Report on Form 10-Q for the fiscal quarter ended July 3, 2011.
(1) Free cash flow represents net cash provided by operating activities plus net cash used in investing activities less net purchases, sales and maturities of short and long-term marketable securities.
ABOUT SANDISK
SanDisk Corporation is a global leader in flash memory storage solutions, from research and development, product design and manufacturing to branding and distribution for OEM and retail channels. Since 1988, SanDisk's innovations in flash memory and storage system technologies have provided customers with new and transformational digital experiences. SanDisk's diverse product portfolio includes flash memory cards and embedded solutions used in smart phones, tablets, digital cameras, camcorders, digital media players and other consumer electronic devices, as well as USB flash drives and solid-state drives (SSD) for the computing market. SanDisk's products are used by consumers and enterprise customers around the world.
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