Milpitas, CA, October 19, 2006 - SanDisk® Corporation (NASDAQ:SNDK), the world's largest supplier of flash storage card products, today announced results for the third quarter ended October 1, 2006. Total third quarter revenue increased 27% on a year-over-year basis to a record $751 million. Third quarter net income as reported in accordance with U.S. Generally Accepted Accounting Principles (GAAP) was $103 million, or $0.51 per diluted share.
Excluding the impact of stock compensation expense and amortization of acquisition related intangible assets and the related tax effects, third quarter non-GAAP net income grew 15% to $124 million, or $0.61 per diluted share, which compares to the third quarter 2005 GAAP net income of $107 million, or $0.55 per diluted share.
"We are very pleased with our third quarter results," said Eli Harari, chairman and chief executive officer of SanDisk Corporation. "Demand for our mobile products continued to be strong in the fast growing mobile phone market and we are pleased with our flash audio player U.S retail market share gains in the third quarter. Despite a challenging pricing environment in the third quarter we delivered non-GAAP operating margin of 21%, primarily due to our highly competitive product cost structure from our captive Flash business ventures in Japan. We expect to benefit in the fourth quarter from projected seasonally strong holiday sales of digital cameras, handsets, flash audio players, USB flash drives and gaming consoles and we now believe growth in our megabytes sold will be approximately 200% for 2006."
Metrics and Highlights
SanDisk Corporation Chairman and Chief Executive Officer, Eli Harari, is scheduled to appear on CNBC's "Closing Bell with Maria Bartiromo," on October 19, 2006 at approximately 1:10 p.m. PDT. Judy Bruner, SanDisk's Executive Vice President, Administration and CFO is scheduled to appear on Bloomberg TV's "Bloomberg On The Markets" and Bloomberg Radio's "Bloomberg on the Radio," October 20, 2006 beginning at approximately 7:40 a.m. PDT.
SanDisk's third quarter 2006 conference call is scheduled for 2:00 p.m. PDT, Thursday, October 19, 2006. 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 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.
This news release contains certain forward-looking statements, including statements about our business prospects and outlook for the forth quarter of 2006, including anticipated increased demand for our products, market supply and demand, expected fabrication production schedules and scheduled appearances by our CEO and 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 70-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 possible 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 70-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 potential acquisition of msystems, including that the acquisition may not be consummated in a timely manner or at all, 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.
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.
SanDisk is a trademark of SanDisk Corporation, registered in the United States and other countries. msystems is a trademark of msystems Ltd.
Lori Barker Padon