SanDisk Announces Third Quarter 2012 Financial Results

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SanDisk Announces Third Quarter 2012 Financial Results

MILPITAS, Calif.--(BUSINESS WIRE)-- SanDiskCorporation (NAS: SNDK) , a global leader in flash memory storage solutions, announced today results for the third quarter ended September 30, 2012. Total third quarter revenue of $1.27 billion declined 10% on a year-over-year basis and increased 23% on a sequential basis.

On a GAAP(1) basis, third quarter net income was $77 million, or $0.31 per diluted share, compared to net income of $233 million, or $0.96 per diluted share, in the third quarter of fiscal 2011 and $13 million, or $0.05 per diluted share, in the second quarter of fiscal 2012.


On a non-GAAP(2) basis, third quarter net income was $118 million, or $0.48 per diluted share, compared to net income of $292 million, or $1.20 per diluted share, in the third quarter of fiscal 2011 and net income of $51 million, or $0.21 per diluted share, in the second quarter of fiscal 2012. For reconciliation of non-GAAP to GAAP results, see accompanying financial tables and footnotes.

"Our retail business delivered strong results in Q3 and we believe we gained share across all major geographies worldwide on the strength of the SanDisk brand," said Sanjay Mehrotra, president and chief executive officer of SanDisk. "Our results also reflect a solid recovery in our mobile embedded business and we made good progress toward expanding our SSD product roadmap. We believe we are well positioned to build on our business momentum and improved industry fundamentals to deliver strong sequential growth in the fourth quarter."

THIRD QUARTER 2012 KEY FINANCIAL METRICS

Metric GAAP Non-GAAP
in millions of US$, except % Q312 Q311 Q212 Q312 Q311 Q212
Revenue $1,273  $1,416  $1,032  $1,273  $1,416  $1,032 
Gross Profit$383 $612 $281 $395 $627 $292
% of revenue 30.1% 43.2% 27.2% 31.0% 44.3% 28.3%
Operating Income$132$386$36$164$417$68
% of revenue 10.4% 27.3% 3.5% 12.9% 29.4% 6.6%
 

CONFERENCE CALL

SanDisk's third quarter of fiscal 2012 conference call is scheduled for 2:00 P.M., Pacific Time, Thursday, October 18, 2012. 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 719-457-2086 and the dial-in password is 1746867. 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, including our expectations regarding our business, industry fundamentals and expected financial performance in the fourth quarter of fiscal 2012, supply/demand balance, and our expectations for our SSD products, 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;
  • potential delays in product development or lack of customer acceptance of our solutions, particularly OEM products such as our embedded flash storage solutions, and client and enterprise SSD solutions;
  • unpredictable or changing demand for our products, including for different form factors, capacities and underlying memory technologies;
  • excess or mismatched captive memory output or capacity, which could result in write-downs for excess inventory, lower of cost or market charges, lower average selling prices, fixed costs associated with under-utilized capacity or other consequences;
  • inability to maintain or gain market share in client and enterprise SSD markets; 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 1, 2012.

(1)

 

GAAP represents U.S. Generally Accepted Accounting Principles.

(2)

Non-GAAP represents GAAP excluding the impact of share-based compensation expense, amortization of acquisition-related intangible assets, non-cash economic interest expense associated with the Company's convertible debt, the non-cash change in fair value of the liability component associated with the repurchased portion of SanDisk's convertible debt and related tax adjustments.

 

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 and enterprise markets. SanDisk's products are used by consumers and enterprise customers around the world.

SanDisk is a Silicon Valley-based S&P 500 and Fortune 500 company, with more than half its sales outside the United States. For more information, visit www.sandisk.com.

SanDisk and the SanDisk logo are trademarks of SanDisk Corporation, registered in the United States and other countries.Other brand names mentioned herein are for identification purposes only and may be the trademarks of their respective holder(s).

 
SanDisk Corporation
Preliminary Condensed Consolidated Statements of Operations
(in thousands, except per share amounts, unaudited)
 
 Three months ended Nine months ended
September 30, 2012 October 2, 2011September 30, 2012 October 2, 2011
Revenues:
Product$1,182,159$1,321,904$3,233,785$3,814,111
License and royalty 91,031  94,128  277,221  271,114 
Total revenues1,273,1901,416,0323,511,0064,085,225
 
Cost of product revenues880,469790,4652,398,0862,281,264
Amortization of acquisition-related intangible assets 9,800  13,186  32,712  26,556 
Total cost of product revenues890,269803,6512,430,7982,307,820
    
Gross profit382,921612,3811,080,2081,777,405
 
Operating expenses:
Research and development150,336135,271443,690400,145
Sales and marketing57,93848,538159,234144,195
General and administrative40,20540,567110,488116,020
Amortization of acquisition-related intangible assets 2,369  1,878  6,676  2,608 
Total operating expenses 250,848  226,254  720,088  662,968 
 
Operating income132,073386,127360,1201,114,437
 
Other income (expense), net (13,695) (23,578) (56,208) (56,217)
 
Income before income taxes118,378362,549303,9121,058,220
 
Provision for income taxes41,871129,296100,051352,453
    
Net income$76,507 $233,253 $203,861 $705,767 
 
Net income per share:
Basic$0.32$0.97$0.84$2.96
Diluted$0.31$0.96$0.83$2.90
 
Shares used in computing net income per share:
Basic241,694239,836242,284238,720
Diluted244,221243,680245,502243,782
 
SanDisk Corporation
Reconciliation of Preliminary GAAP to Non-GAAP Operating Results(1)
(in thousands, except per share data, unaudited)
 
 Three months ended Nine months ended
September 30, 2012 October 2, 2011September 30, 2012 October 2, 2011
 
SUMMARY RECONCILIATION OF NET INCOME
GAAP NET INCOME$76,507$233,253$203,861$705,767
Share-based compensation (a)19,95015,72959,28344,678
Amortization of acquisition-related intangible assets (b)12,16915,06439,38829,164
Convertible debt interest (c)22,68542,84066,92790,038
Income tax adjustments (d) (13,547) (14,644) (44,266) (48,780)
NON-GAAP NET INCOME$117,764 $292,242 $325,193 $820,867 
 
 
GAAP COST OF PRODUCT REVENUES$890,269$803,651$2,430,798$2,307,820
Share-based compensation (a)(1,929)(1,284)(5,389)(3,316)
Amortization of acquisition-related intangible assets (b) (9,800) (13,186) (32,712) (26,556)
NON-GAAP COST OF PRODUCT REVENUES$878,540 $789,181 $2,392,697 $2,277,948 
 
GAAP GROSS PROFIT$382,921$612,381$1,080,208$1,777,405
Share-based compensation (a)1,9291,2845,3893,316
Amortization of acquisition-related intangible assets (b) 9,800  13,186  32,712  26,556 
NON-GAAP GROSS PROFIT$394,650 $626,851 $1,118,309 $1,807,277 
 
GAAP RESEARCH AND DEVELOPMENT EXPENSES$150,336$135,271$443,690$400,145
Share-based compensation (a) (10,379) (8,320) (31,029) (23,248)
NON-GAAP RESEARCH AND DEVELOPMENT EXPENSES$139,957 $126,951 $412,661 $376,897 
 
GAAP SALES AND MARKETING EXPENSES$57,938$48,538$159,234$144,195
Share-based compensation (a) (3,794) (2,704) (11,057) (7,746)
NON-GAAP SALES AND MARKETING EXPENSES$54,144 $45,834 $148,177 $136,449 
 
GAAP GENERAL AND ADMINISTRATIVE EXPENSES$40,205$40,567 Read Full Story

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