[July 16, 2014] |
|
SanDisk Announces Second Quarter 2014 Results
MILPITAS, Calif. --(Business Wire)--
SanDisk
Corporation (NASDAQ: SNDK),
a global leader in flash storage solutions, today announced results for
the second quarter ended June 29, 2014. Second quarter revenue of
$1.63 billion increased 11 percent on a year-over-year basis and
increased 8 percent sequentially.
On a GAAP(1) basis, second quarter net income was
$274 million, or $1.14 per share, compared to net income of
$262 million, or $1.06 per share, in the second quarter of fiscal 2013
and $269 million, or $1.14 per share, in the first quarter of fiscal
2014.
On a non-GAAP(2)(3) basis, second quarter net income was
$329 million, or $1.41 per share, compared to net income of
$299 million, or $1.22 per share, in the second quarter of fiscal 2013
and net income of $330 million, or $1.44 per share, in the first quarter
of fiscal 2014. For reconciliation of non-GAAP to GAAP results, see
accompanying financial tables and footnotes.
"We are pleased to deliver record second quarter revenue in both
enterprise and client SSDs, as well as retail products," said Sanjay
Mehrotra, president and chief executive officer of SanDisk. "SSD
solutions comprised 29 percent of our second quarter revenue, compared
to 16 percent in the year ago quarter, demonstrating strong progress in
driving our strategic priorities. Our results position us well to
deliver another record year in 2014."
KEY FINANCIAL METRICS
|
Metric
|
|
GAAP(1)
|
|
Non-GAAP(2)
|
in millions, except percentages and per share amounts
|
|
Q2'14
|
|
Q2'13
|
|
Q1'14
|
|
Q2'14
|
|
Q2'13
|
|
Q1'14
|
Revenue
|
|
$1,634
|
|
$1,476
|
|
$1,512
|
|
$1,634
|
|
$1,476
|
|
$1,512
|
Gross profit
|
|
$760
|
|
$677
|
|
$751
|
|
$783
|
|
$689
|
|
$774
|
percent of revenue
|
|
46%
|
|
46%
|
|
50%
|
|
48%
|
|
47%
|
|
51%
|
Operating income
|
|
$417
|
|
$393
|
|
$425
|
|
$472
|
|
$429
|
|
$476
|
percent of revenue
|
|
25%
|
|
27%
|
|
28%
|
|
29%
|
|
29%
|
|
32%
|
EPS(3)
|
|
$1.14
|
|
$1.06
|
|
$1.14
|
|
$1.41
|
|
$1.22
|
|
$1.44
|
OTHER HIGHLIGHTS
-
In June, SanDisk announced the planned acquisition of Fusion-io (NYSE:
FIO), a leading developer of flash-based PCIe hardware and software
solutions for approximately $1.1 billion, net of cash assumed.
-
During the second quarter, SanDisk introduced innovative products in
three product categories:
-
Within enterprise SSDs, SanDisk introduced the following new
products:
-
Optimus MAX™ SAS SSD, the industry's first 4-terabyte SAS SSD
-
Lightning Ultra™ Gen. II 12Gb/s SAS high-endurance SSD capable
of up to 25 full drive writes per day (DWPD), along with
Lightning Ascend™ Gen. II and Lightning Eco™ Gen. II, designed
for mixed-use and read-intensive applications
-
In client SSDs, SanDisk Extreme PRO®, a
high-performance client SSD with up to 1-terabyte of capacity and
the industry's first 10-year warranty
-
In mobile, iNAND™ Standard™, an embedded flash drive solution for
entry-level tablets and smartphones in China and other high-growth
markets
-
In April, SanDisk announced 15-nanometer 1Z technology, the most
advanced NAND flash process node in the world on both two
bits-per-cell (X2) and three bits-per-cell (X3) NAND flash memory
architectures, with production planned to ramp in the second half of
2014.
-
SanDisk announced today its third quarter 2014 dividend of $0.30 per
share of common stock, payable on August 25, 2014 to shareholders of
record as of the close of business on August 4, 2014.
CONFERENCE CALL
SanDisk's second quarter of fiscal 2014 conference call is scheduled for
2:00 P.M., Pacific Daylight Time, Wednesday, July 16, 2014. 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
913-312-1514 and the dial-in password is 9530920. 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.
ABOUT SANDISK
SanDisk Corporation (NASDAQ: SNDK), a Fortune 500 and S&P 500 company,
is a global leader in flash storage solutions. For more than 25 years,
SanDisk has expanded the possibilities of storage, providing trusted and
innovative products that have transformed the electronics industry.
Today, SanDisk's quality, state-of-the-art solutions are at the heart of
many of the world's largest data centers, and embedded in advanced
smartphones, tablets and PCs. SanDisk's consumer products are available
at hundreds of thousands of retail stores worldwide. For more
information, visit www.sandisk.com.
© 2014 SanDisk Corporation. All rights reserved. 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).
This news release contains certain forward-looking statements, including
those regarding our business prospects, market growth, our intended
financial and strategic plans, our continued focus on our strategic
priorities and our ability to execute on those priorities, our
anticipated momentum for a record year in 2014, technology and product
introductions and wafer production, that are based on our current
expectations and involve numerous risks and uncertainties that may cause
these forward-looking statements to be inaccurate.
Risks that may cause these forward-looking statements to be inaccurate
include, among others:
-
competitive pricing pressures or product mix changes, resulting in
lower average selling prices, lower revenues and reduced gross margins;
-
excess or mismatched captive memory output or capacity, resulting in
lower average selling prices, financial charges and impairments, lower
gross margin or other consequences, or insufficient or mismatched
captive memory output or capacity, resulting in lost revenue and
growth opportunities;
-
weakness in demand in one or more of our product categories, such as
embedded products or SSDs, or adverse changes in our product or
customer mix;
-
potential delays in product development or lack of customer acceptance
and qualification of our solutions, including on new technology nodes,
particularly OEM products such as our embedded flash storage and SSD
solutions;
-
inability to develop, or unexpected difficulties or delays in
developing or ramping with acceptable yields, new technologies or the
failure of new technologies to effectively compete with those of our
competitors;
-
our 1Z nanometer process technology, our X2 and X3 NAND memory
architectures or our solutions utilizing these new technologies may
not be available when we expect; 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 March 30, 2014.
(1) GAAP represents U.S. Generally Accepted Accounting
Principles.
(2) Non-GAAP represents GAAP excluding the impact of
share-based compensation, amortization of acquisition-related intangible
assets, non-cash economic interest expense associated with our
convertible debt and related tax adjustments.
(3) Non-GAAP shares include the impact of offsetting shares
from the call option related to the 1.5% Sr. Convertible Notes due 2017
and the impact of share-based compensation.
SanDisk Corporation
|
Preliminary Condensed Consolidated Statements of Operations
|
(in thousands, except per share amounts, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
Six months ended
|
|
|
June 29, 2014
|
|
June 30, 2013
|
|
June 29, 2014
|
|
June 30, 2013
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
1,634,011
|
|
|
$
|
1,476,263
|
|
|
$
|
3,145,956
|
|
|
$
|
2,816,992
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
854,640
|
|
|
|
789,614
|
|
|
|
1,595,679
|
|
|
|
1,588,997
|
|
Amortization of acquisition-related intangible assets
|
|
|
19,721
|
|
|
|
9,830
|
|
|
|
39,337
|
|
|
|
19,660
|
|
Total cost of revenue
|
|
|
874,361
|
|
|
|
799,444
|
|
|
|
1,635,016
|
|
|
|
1,608,657
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
759,650
|
|
|
|
676,819
|
|
|
|
1,510,940
|
|
|
|
1,208,335
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
204,030
|
|
|
|
172,041
|
|
|
|
402,859
|
|
|
|
343,166
|
|
Sales and marketing
|
|
|
83,398
|
|
|
|
63,601
|
|
|
|
160,370
|
|
|
|
122,728
|
|
General and administrative
|
|
|
54,085
|
|
|
|
46,877
|
|
|
|
102,754
|
|
|
|
91,981
|
|
Amortization of acquisition-related intangible assets
|
|
|
1,481
|
|
|
|
1,742
|
|
|
|
3,127
|
|
|
|
4,111
|
|
Total operating expenses
|
|
|
342,994
|
|
|
|
284,261
|
|
|
|
669,110
|
|
|
|
561,986
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
416,656
|
|
|
|
392,558
|
|
|
|
841,830
|
|
|
|
646,349
|
|
|
|
|
|
|
|
|
|
|
Other income (expense), net
|
|
|
(13,579
|
)
|
|
|
(9,101
|
)
|
|
|
(29,214
|
)
|
|
|
(28,998
|
)
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
403,077
|
|
|
|
383,457
|
|
|
|
812,616
|
|
|
|
617,351
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
129,131
|
|
|
|
121,668
|
|
|
|
269,722
|
|
|
|
189,333
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
273,946
|
|
|
$
|
261,789
|
|
|
$
|
542,894
|
|
|
$
|
428,018
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.21
|
|
|
$
|
1.08
|
|
|
$
|
2.41
|
|
|
$
|
1.77
|
|
Diluted
|
|
$
|
1.14
|
|
|
$
|
1.06
|
|
|
$
|
2.28
|
|
|
$
|
1.74
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing net income per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
225,544
|
|
|
|
241,519
|
|
|
|
225,694
|
|
|
|
242,019
|
|
Diluted
|
|
|
240,756
|
|
|
|
245,815
|
|
|
|
238,463
|
|
|
|
245,569
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SanDisk Corporation
|
Reconciliation of Preliminary GAAP to Non-GAAP Operating Results (1)
|
(in thousands, except per share data, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
Six months ended
|
|
|
June 29, 2014
|
|
June 30, 2013
|
|
June 29, 2014
|
|
June 30, 2013
|
|
|
|
|
|
|
|
|
|
SUMMARY RECONCILIATION OF NET INCOME:
|
|
|
|
|
|
|
|
|
GAAP NET INCOME
|
|
$
|
273,946
|
|
|
$
|
261,789
|
|
|
$
|
542,894
|
|
|
$
|
428,018
|
|
Share-based compensation (a)
|
|
|
34,449
|
|
|
|
24,661
|
|
|
|
64,479
|
|
|
|
46,395
|
|
Amortization of acquisition-related intangible assets (b)
|
|
|
21,202
|
|
|
|
11,572
|
|
|
|
42,464
|
|
|
|
23,771
|
|
Convertible debt interest (c)
|
|
|
21,125
|
|
|
|
16,766
|
|
|
|
42,089
|
|
|
|
40,343
|
|
Income tax adjustments (d)
|
|
|
(22,023
|
)
|
|
|
(15,816
|
)
|
|
|
(33,197
|
)
|
|
|
(32,658
|
)
|
NON-GAAP NET INCOME
|
|
$
|
328,699
|
|
|
$
|
298,972
|
|
|
$
|
658,729
|
|
|
$
|
505,869
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP COST OF REVENUE
|
|
$
|
874,361
|
|
|
$
|
799,444
|
|
|
$
|
1,635,016
|
|
|
$
|
1,608,657
|
|
Share-based compensation (a)
|
|
|
(3,507
|
)
|
|
|
(2,447
|
)
|
|
|
(6,117
|
)
|
|
|
(4,164
|
)
|
Amortization of acquisition-related intangible assets (b)
|
|
|
(19,721
|
)
|
|
|
(9,830
|
)
|
|
|
(39,337
|
)
|
|
|
(19,660
|
)
|
NON-GAAP COST OF REVENUE
|
|
$
|
851,133
|
|
|
$
|
787,167
|
|
|
$
|
1,589,562
|
|
|
$
|
1,584,833
|
|
|
|
|
|
|
|
|
|
|
GAAP GROSS PROFIT
|
|
$
|
759,650
|
|
|
$
|
676,819
|
|
|
$
|
1,510,940
|
|
|
$
|
1,208,335
|
|
Share-based compensation (a)
|
|
|
3,507
|
|
|
|
2,447
|
|
|
|
6,117
|
|
|
|
4,164
|
|
Amortization of acquisition-related intangible assets (b)
|
|
|
19,721
|
|
|
|
9,830
|
|
|
|
39,337
|
|
|
|
19,660
|
|
NON-GAAP GROSS PROFIT
|
|
$
|
782,878
|
|
|
$
|
689,096
|
|
|
$
|
1,556,394
|
|
|
$
|
1,232,159
|
|
|
|
|
|
|
|
|
|
|
GAAP RESEARCH AND DEVELOPMENT EXPENSES
|
|
$
|
204,030
|
|
|
$
|
172,041
|
|
|
$
|
402,859
|
|
|
$
|
343,166
|
|
Share-based compensation (a)
|
|
|
(17,500
|
)
|
|
|
(12,704
|
)
|
|
|
(33,175
|
)
|
|
|
(24,344
|
)
|
NON-GAAP RESEARCH AND DEVELOPMENT EXPENSES
|
|
$
|
186,530
|
|
|
$
|
159,337
|
|
|
$
|
369,684
|
|
|
$
|
318,822
|
|
|
|
|
|
|
|
|
|
|
GAAP SALES AND MARKETING EXPENSES
|
|
$
|
83,398
|
|
|
$
|
63,601
|
|
|
$
|
160,370
|
|
|
$
|
122,728
|
|
Share-based compensation (a)
|
|
|
(7,204
|
)
|
|
|
(4,701
|
)
|
|
|
(13,461
|
)
|
|
|
(8,572
|
)
|
NON-GAAP SALES AND MARKETING EXPENSES
|
|
$
|
76,194
|
|
|
$
|
58,900
|
|
|
$
|
146,909
|
|
|
$
|
114,156
|
|
|
|
|
|
|
|
|
|
|
GAAP GENERAL AND ADMINISTRATIVE EXPENSES
|
|
$
|
54,085
|
|
|
$
|
46,877
|
|
|
$
|
102,754
|
|
|
$
|
91,981
|
|
Share-based compensation (a)
|
|
|
(6,238
|
)
|
|
|
(4,809
|
)
|
|
|
(11,726
|
)
|
|
|
(9,315
|
)
|
NON-GAAP GENERAL AND ADMINISTRATIVE EXPENSES
|
|
$
|
47,847
|
|
|
$
|
42,068
|
|
|
$
|
91,028
|
|
|
$
|
82,666
|
|
|
|
|
|
|
|
|
|
|
GAAP TOTAL OPERATING EXPENSES
|
|
$
|
342,994
|
|
|
$
|
284,261
|
|
|
$
|
669,110
|
|
|
$
|
561,986
|
|
Share-based compensation (a)
|
|
|
(30,942
|
)
|
|
|
(22,214
|
)
|
|
|
(58,362
|
)
|
|
|
(42,231
|
)
|
Amortization of acquisition-related intangible assets (b)
|
|
|
(1,481
|
)
|
|
|
(1,742
|
)
|
|
|
(3,127
|
)
|
|
|
(4,111
|
)
|
NON-GAAP TOTAL OPERATING EXPENSES
|
|
$
|
310,571
|
|
|
$
|
260,305
|
|
|
$
|
607,621
|
|
|
$
|
515,644
|
|
|
|
|
|
|
|
|
|
|
GAAP OPERATING INCOME
|
|
$
|
416,656
|
|
|
$
|
392,558
|
|
|
$
|
841,830
|
|
|
$
|
646,349
|
|
Cost of revenue adjustments (a) (b)
|
|
|
23,228
|
|
|
|
12,277
|
|
|
|
45,454
|
|
|
|
23,824
|
|
Operating expense adjustments (a) (b)
|
|
|
32,423
|
|
|
|
23,956
|
|
|
|
61,489
|
|
|
|
46,342
|
|
NON-GAAP OPERATING INCOME
|
|
$
|
472,307
|
|
|
$
|
428,791
|
|
|
$
|
948,773
|
|
|
$
|
716,515
|
|
|
|
|
|
|
|
|
|
|
GAAP OTHER INCOME (EXPENSE), NET
|
|
$
|
(13,579
|
)
|
|
$
|
(9,101
|
)
|
|
$
|
(29,214
|
)
|
|
$
|
(28,998
|
)
|
Convertible debt interest (c)
|
|
|
21,125
|
|
|
|
16,766
|
|
|
|
42,089
|
|
|
|
40,343
|
|
NON-GAAP OTHER INCOME (EXPENSE), NET
|
|
$
|
7,546
|
|
|
$
|
7,665
|
|
|
$
|
12,875
|
|
|
$
|
11,345
|
|
|
|
|
|
|
|
|
|
|
GAAP NET INCOME
|
|
$
|
273,946
|
|
|
$
|
261,789
|
|
|
$
|
542,894
|
|
|
$
|
428,018
|
|
Cost of revenue adjustments (a) (b)
|
|
|
23,228
|
|
|
|
12,277
|
|
|
|
45,454
|
|
|
|
23,824
|
|
Operating expense adjustments (a) (b)
|
|
|
32,423
|
|
|
|
23,956
|
|
|
|
61,489
|
|
|
|
46,342
|
|
Other income (expense) adjustments (c)
|
|
|
21,125
|
|
|
|
16,766
|
|
|
|
42,089
|
|
|
|
40,343
|
|
Income tax adjustments (d)
|
|
|
(22,023
|
)
|
|
|
(15,816
|
)
|
|
|
(33,197
|
)
|
|
|
(32,658
|
)
|
NON-GAAP NET INCOME
|
|
$
|
328,699
|
|
|
$
|
298,972
|
|
|
$
|
658,729
|
|
|
$
|
505,869
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share:
|
|
|
|
|
|
|
|
|
GAAP
|
|
$
|
1.14
|
|
|
$
|
1.06
|
|
|
$
|
2.28
|
|
|
$
|
1.74
|
|
Non-GAAP
|
|
$
|
1.41
|
|
|
$
|
1.22
|
|
|
$
|
2.84
|
|
|
$
|
2.06
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing diluted net income per share:
|
|
|
|
|
|
|
|
|
GAAP
|
|
|
240,756
|
|
|
|
245,815
|
|
|
|
238,463
|
|
|
|
245,569
|
|
Non-GAAP (e)
|
|
|
232,808
|
|
|
|
244,586
|
|
|
|
231,570
|
|
|
|
245,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SanDisk Corporation
|
Reconciliation of Preliminary GAAP to Non-GAAP Operating Results (1)
|
(in thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
Six months ended
|
|
|
June 29, 2014
|
|
June 30, 2013
|
|
June 29, 2014
|
|
June 30, 2013
|
|
|
|
|
|
|
|
|
|
SUMMARY RECONCILIATION OF DILUTED SHARES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
240,756
|
|
|
245,815
|
|
|
238,463
|
|
|
245,569
|
|
Adjustments for share-based compensation
|
|
336
|
|
|
334
|
|
|
266
|
|
|
198
|
|
Offsetting shares from call option
|
|
(8,284
|
)
|
|
(1,563
|
)
|
|
(7,159
|
)
|
|
(467
|
)
|
Non-GAAP (e)
|
|
232,808
|
|
|
244,586
|
|
|
231,570
|
|
|
245,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
To supplement our condensed consolidated financial statements
presented in accordance with generally accepted accounting
principles (GAAP), we use non-GAAP measures of operating results,
net income and net income per share, which are adjusted from results
based on GAAP to exclude certain expenses, gains and losses. These
non-GAAP financial measures are provided to enhance the user's
overall understanding of our current financial performance and our
prospects for the future. Specifically, we believe the non-GAAP
results provide useful information to both management and investors
as these non-GAAP results exclude certain expenses, gains and losses
that we believe are not indicative of our core operating results and
because they are consistent with the financial models and estimates
published by many analysts who follow us. For example, because the
non-GAAP results exclude the expenses we recorded for share-based
compensation, amortization of acquisition-related intangible assets
related to acquisitions of Pliant Technology, Inc. in May 2011,
FlashSoft Corporation in February 2012, Schooner Information
Technology, Inc. in June 2012 and SMART Storage Systems in August
2013, non-cash economic interest expense associated with the
convertible debt and related tax adjustments, we believe the
inclusion of non-GAAP financial measures provides consistency in our
financial reporting. In addition, our non-GAAP diluted shares
include the impact of the call option which, when exercised, will
offset the issuance of dilutive shares from the 1.5% Sr. Convertible
Notes due 2017, while the GAAP diluted shares exclude the
anti-dilutive impact of this call option. These non-GAAP results are
some of the primary indicators management uses for assessing our
performance, allocating resources and planning and forecasting
future periods. Further, management uses non-GAAP information that
excludes certain non-cash charges, such as amortization of
acquisition-related intangible assets, share-based compensation,
non-cash economic interest expense associated with the convertible
debt and related tax adjustments, as these non-GAAP charges do not
reflect the cash operating results of the business or the ongoing
results. These measures should be considered in addition to results
prepared in accordance with GAAP, but should not be considered a
substitute for, or superior to, GAAP results. These non-GAAP
measures may be different than the non-GAAP measures used by other
companies.
|
|
|
|
(a)
|
|
Share-based compensation expense.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
|
Amortization of acquisition-related intangible assets, primarily
developed technology, customer relationships and trademarks related
to the acquisitions of Pliant Technology, Inc. (May 2011), FlashSoft
Corporation (February 2012), Schooner Information Technology, Inc.
(June 2012) and SMART Storage Systems (August 2013).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
|
Incremental interest expense relating to the non-cash economic
interest expense associated with the 1% Sr. Convertible Notes due
2013, 1.5% Sr. Convertible Notes due 2017, and 0.5% Sr. Convertible
Notes due 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d)
|
|
Income taxes associated with certain non-GAAP to GAAP adjustments,
and the effects of one-time income tax adjustments recorded in a
specific quarter for GAAP purposes are reflected on a forecast basis
in our non-GAAP tax rate.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(e)
|
|
Non-GAAP diluted shares include the impact of offsetting shares from
the call option related to the 1.5% Sr. Convertible Notes due 2017
and the impact of share-based compensation.
|
|
|
|
SanDisk Corporation
|
|
Preliminary Condensed Consolidated Balance Sheets
|
|
(in thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 29, 2014
|
|
|
December 29, 2013
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
885,115
|
|
|
|
$
|
986,246
|
|
Short-term marketable securities
|
|
|
1,794,356
|
|
|
|
|
1,919,611
|
|
Accounts receivable, net
|
|
|
759,967
|
|
|
|
|
682,809
|
|
Inventory
|
|
|
751,683
|
|
|
|
|
756,975
|
|
Deferred taxes
|
|
|
145,640
|
|
|
|
|
138,192
|
|
Other current assets
|
|
|
277,951
|
|
|
|
|
166,885
|
|
Total current assets
|
|
|
4,614,712
|
|
|
|
|
4,650,718
|
|
|
|
|
|
|
|
|
|
|
Long-term marketable securities
|
|
|
3,569,453
|
|
|
|
|
3,179,471
|
|
Property and equipment, net
|
|
|
650,223
|
|
|
|
|
655,794
|
|
Notes receivable and investments in Flash Ventures
|
|
|
1,174,998
|
|
|
|
|
1,134,620
|
|
Deferred taxes
|
|
|
112,366
|
|
|
|
|
134,669
|
|
Goodwill
|
|
|
317,930
|
|
|
|
|
318,111
|
|
Intangible assets, net
|
|
|
194,543
|
|
|
|
|
247,904
|
|
Other non-current assets
|
|
|
95,474
|
|
|
|
|
167,430
|
|
Total assets
|
|
$
|
10,729,699
|
|
|
|
$
|
10,488,717
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES, CONVERTIBLE SHORT-TERM DEBT CONVERSION OBLIGATION
AND EQUITY
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable trade
|
|
$
|
329,899
|
|
|
|
$
|
282,582
|
|
Accounts payable to related parties
|
|
|
151,244
|
|
|
|
|
146,964
|
|
Convertible short-term debt (1)
|
|
|
850,874
|
|
|
|
?
|
|
Other current accrued liabilities
|
|
|
354,657
|
|
|
|
|
509,732
|
|
Deferred income on shipments to distributors and retailers and
deferred revenue
|
|
|
270,109
|
|
|
|
|
291,302
|
|
Total current liabilities
|
|
|
1,956,783
|
|
|
|
|
1,230,580
|
|
|
|
|
|
|
|
|
|
|
Convertible long-term debt
|
|
|
1,177,273
|
|
|
|
|
1,985,363
|
|
Non-current liabilities
|
|
|
295,737
|
|
|
|
|
307,083
|
|
Total liabilities
|
|
|
3,429,793
|
|
|
|
|
3,523,026
|
|
|
|
|
|
|
|
|
|
|
Convertible short-term debt conversion obligation (1)
|
|
|
149,126
|
|
|
|
?
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
Common stock
|
|
|
5,189,183
|
|
|
|
|
5,040,242
|
|
Retained earnings
|
|
|
1,971,784
|
|
|
|
|
2,004,089
|
|
Accumulated other comprehensive loss
|
|
|
(7,992
|
)
|
|
|
|
(76,459
|
)
|
Total stockholders' equity
|
|
|
7,152,975
|
|
|
|
|
6,967,872
|
|
Non-controlling interests
|
|
|
(2,195
|
)
|
|
|
|
(2,181
|
)
|
Total equity
|
|
|
7,150,780
|
|
|
|
|
6,965,691
|
|
Total liabilities, convertible short-term debt conversion obligation
and equity
|
|
$
|
10,729,699
|
|
|
|
$
|
10,488,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The 1.5% Sr. Convertible Notes due 2017 are convertible through
September 30, 2014 as a result of the Company's common stock price
exceeding the trigger price set forth in the indenture for at least
20 trading days during the 30 consecutive trading days ended June
30, 2014. Accordingly, the carrying value of the notes is reported
as short-term debt as of June 29, 2014 and will remain so while the
notes are convertible. The convertible short-term debt conversion
obligation represents the difference between the carrying value of
the convertible debt and the principal amount due in cash upon
conversion.
|
|
|
|
SanDisk Corporation
|
Preliminary Condensed Consolidated Statements of Cash Flows
|
(in thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
Six months ended
|
|
|
|
|
June 29, 2014
|
|
June 30, 2013
|
|
June 29, 2014
|
|
June 30, 2013
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
273,946
|
|
|
$
|
261,789
|
|
|
$
|
542,894
|
|
|
$
|
428,018
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
Deferred taxes
|
|
|
641
|
|
|
|
12,343
|
|
|
|
7,592
|
|
|
|
65,494
|
|
Depreciation
|
|
|
61,364
|
|
|
|
55,195
|
|
|
|
121,453
|
|
|
|
108,212
|
|
Amortization
|
|
|
72,996
|
|
|
|
56,095
|
|
|
|
145,594
|
|
|
|
121,246
|
|
Provision for doubtful accounts
|
|
|
388
|
|
|
|
1,339
|
|
|
|
(159
|
)
|
|
|
1,142
|
|
Share-based compensation expense
|
|
|
34,449
|
|
|
|
24,661
|
|
|
|
64,479
|
|
|
|
46,395
|
|
Excess tax benefit from share-based plans
|
|
|
(10,552
|
)
|
|
|
(7,211
|
)
|
|
|
(28,012
|
)
|
|
|
(15,661
|
)
|
Impairment and other
|
|
?
|
|
|
(2,343
|
)
|
|
?
|
|
|
(5,516
|
)
|
Other non-operating
|
|
|
(312
|
)
|
|
|
(496
|
)
|
|
|
708
|
|
|
|
(360
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
(163,687
|
)
|
|
|
(197,936
|
)
|
|
|
(76,998
|
)
|
|
|
(11,210
|
)
|
Inventory
|
|
|
48,562
|
|
|
|
10,731
|
|
|
|
6,445
|
|
|
|
27,507
|
|
Other assets
|
|
|
(55,066
|
)
|
|
|
41,729
|
|
|
|
(519
|
)
|
|
|
21,573
|
|
Accounts payable trade
|
|
|
49,795
|
|
|
|
12,472
|
|
|
|
13,249
|
|
|
|
15,370
|
|
Accounts payable to related parties
|
|
|
(9,292
|
)
|
|
|
(8,886
|
)
|
|
|
4,280
|
|
|
|
(46,787
|
)
|
Other liabilities
|
|
|
(62,372
|
)
|
|
|
131,311
|
|
|
|
(178,067
|
)
|
|
|
109,021
|
|
Total adjustments
|
|
|
(33,086
|
)
|
|
|
129,004
|
|
|
|
80,045
|
|
|
|
436,426
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
240,860
|
|
|
|
390,793
|
|
|
|
622,939
|
|
|
|
864,444
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Purchases of short and long-term marketable securities
|
|
|
(1,511,635
|
)
|
|
|
(846,740
|
)
|
|
|
(2,778,534
|
)
|
|
|
(1,997,087
|
)
|
Proceeds from sales of short and long-term marketable securities
|
|
|
1,078,061
|
|
|
|
1,334,305
|
|
|
|
2,093,666
|
|
|
|
1,847,659
|
|
Proceeds from maturities of short and long-term marketable securities
|
|
|
249,875
|
|
|
|
213,700
|
|
|
|
379,495
|
|
|
|
506,905
|
|
Acquisition of property and equipment, net
|
|
|
(44,149
|
)
|
|
|
(71,497
|
)
|
|
|
(78,666
|
)
|
|
|
(119,849
|
)
|
Investment in Flash Ventures
|
|
|
(24,296
|
)
|
|
?
|
|
|
(24,296
|
)
|
|
?
|
Notes receivable issuances to Flash Ventures
|
|
|
(63,607
|
)
|
|
?
|
|
|
(87,959
|
)
|
|
?
|
Notes receivable proceeds from Flash Ventures
|
|
|
87,952
|
|
|
|
19,802
|
|
|
|
112,304
|
|
|
|
73,388
|
|
Purchased technology and other assets
|
|
|
(684
|
)
|
|
|
(3,671
|
)
|
|
|
(1,553
|
)
|
|
|
(3,908
|
)
|
Acquisitions, net of cash acquired
|
|
?
|
|
?
|
|
|
2,368
|
|
|
|
(142
|
)
|
Net cash provided by (used in) investing activities
|
|
|
(228,483
|
)
|
|
|
645,899
|
|
|
|
(383,175
|
)
|
|
|
306,966
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Repayment of debt financing
|
|
?
|
|
|
(928,061
|
)
|
|
?
|
|
|
(928,061
|
)
|
Distribution to non-controlling interests
|
|
?
|
|
?
|
|
?
|
|
|
(87
|
)
|
Proceeds from employee stock programs
|
|
|
51,682
|
|
|
|
69,941
|
|
|
|
103,564
|
|
|
|
163,016
|
|
Excess tax benefit from share-based plans
|
|
|
10,552
|
|
|
|
7,211
|
|
|
|
28,012
|
|
|
|
15,661
|
|
Dividends paid
|
|
|
(50,838
|
)
|
|
?
|
|
|
(102,398
|
)
|
|
?
|
Share repurchases (1)
|
|
|
(256,996
|
)
|
|
|
(280,373
|
)
|
|
|
(371,448
|
)
|
|
|
(369,994
|
)
|
Net cash used in financing activities
|
|
|
(245,600
|
)
|
|
|
(1,131,282
|
)
|
|
|
(342,270
|
)
|
|
|
(1,119,465
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Effect of changes in foreign currency exchange rates on cash
|
|
|
1,400
|
|
|
|
611
|
|
|
|
1,375
|
|
|
|
6,716
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
(231,823
|
)
|
|
|
(93,979
|
)
|
|
|
(101,131
|
)
|
|
|
58,661
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
1,116,938
|
|
|
|
1,148,110
|
|
|
|
986,246
|
|
|
|
995,470
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
885,115
|
|
|
$
|
1,054,131
|
|
|
$
|
885,115
|
|
|
$
|
1,054,131
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Share repurchases include cash used to repurchase common stock and
cash used to settle employee tax withholding obligations due upon
the vesting of restricted stock units.
|
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