8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) July 21, 2005

SanDisk Corporation

(Exact name of registrant as specified in its charter)

Delaware	000-26734	77-0191793
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

140 Caspian Court, Sunnyvale, California	94089
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (408) 542-0500

N/A

(Former name or former address, if changed since last report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 2.02. Results of Operations and Financial Condition
	Item 9.01. Financial Statements and Exhibits
SIGNATURES
EXHIBIT INDEX
EXHIBIT 99.1

Item 2.02. Results of Operations and Financial Condition

     On July 21, 2005, SanDisk Corporation (“the Registrant”) issued a press release to report its financial results for its second quarter ended July 3, 2005. The press release is attached hereto as Exhibit 99.1 and is incorporated herein in its entirety by reference.

     The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filing of the Registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing. The information in this report, including the exhibit hereto, shall be deemed to be “furnished” and therefore shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.

Item 9.01. Financial Statements and Exhibits

     (c) Exhibits

Number	Description of Document
99.1	Press Release of SanDisk Corporation dated July 21, 2005 to report its financial results for its second quarter ended July 3, 2005.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 21, 2005

SanDisk Corporation
By:	/s/ Judy Bruner
	Name:	Judy Bruner
	Title:	Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

EXHIBIT INDEX

Exhibit
Number	Description of Document
99.1	Press Release of SanDisk Corporation dated July 21, 2005 to report its financial results for its second quarter ended July 3, 2005.

EX-99.1

Exhibit 99.1

CONTACT:	Investor Contact:	Media Contact:
	Lori Barker Padon	Mike Wong
	(408) 542-0585	(408) 548-0223

SANDISK ANNOUNCES SECOND QUARTER RESULTS

• Revenue of $515 million up 19% year-over-year

• Net Income of $70 million; EPS $0.37

• Record License and Royalty Revenues of $61 million

• Megabytes sold up 205% year over year; Strong Demand for High Capacity Cards

SUNNYVALE, CA, July 21, 2005 — SanDisk® Corporation (NASDAQ:SNDK), the world’s largest supplier of flash storage card products, today announced results for the second quarter ended July 3, 2005. Second quarter revenues increased 19% on a year-over-year basis to $515 million and increased 14% compared to the first quarter of 2005. Second quarter net income, which included $27 million from our portion of Fab 3 development costs, was $70.5 million compared to $70.6 million in the second quarter of 2004. Fully diluted earnings per share were $0.37, compared with $0.38 in the second quarter of 2004.

“We are very pleased with our second quarter results,” said Eli Harari, SanDisk CEO. “SanDisk gained U.S. retail market share, and demand for high capacity cards grew at a surprisingly fast pace to an average retail card capacity of 496 megabytes. Demand for 1 gigabyte and higher capacity cards has been strong for the gaming market and our premium Ultra and Extreme lines. OEM bookings are robust, primarily from handset manufacturers that are bundling high capacity cards with new handsets that support music, video and higher megapixel cameras. We believe this trend may be a positive precursor for the long awaited handset card market acceleration in 2006. During the second quarter, we made steady progress towards qualifying our new 70-nanometer 8 gigabit NAND/MLC chip. We expect to complete internal qualification and start production of this highly cost-effective chip in the third quarter and reach volume output in the fourth quarter — in time for the anticipated increase in demand for high capacity cards for year-end holiday sales. We firmly believe that our 2005 investments in advanced technology and in large-scale 300 millimeter NAND/MLC fab capacity, coupled with our valuable IP assets and our strong balance sheet, position SanDisk well for 2006.”

Financial Results and Highlights

• Product revenue was $454 million in the second quarter, up 16% year-over-year and 14% sequentially.

• Revenue from license and royalties increased to a record $61 million, up 46% year-over-year and 19% sequentially.

• Megabytes sold in the second quarter were a record and increased 205% year-over-year

	and were up 39% from the first quarter of 2005.
•	Average density per card sold in retail was 496 megabytes, up 126% from the second quarter of 2004 and up 21% sequentially.
•	Average price per megabyte sold in the second quarter declined 18% sequentially and 62% from the second quarter of 2004. Migration to higher card capacities contributed to the quarterly decline.
•	Total gross margin was 42% of revenues compared to 41% in the second quarter of 2004 and 44% in the first quarter of 2005.
•	Product gross margin was 34% compared to 35% in the second quarter of 2004 and the record 37% in the first quarter of 2005.
•	Operating income was $106 million and 21% of revenue compared to $110 million and 25% of revenue in the second quarter of 2004 and $114 million and 25% of revenue in the first quarter of 2005. Fab development costs included in R&D were $27 million in the second quarter compared to $13 million in the first quarter of 2005.
•	Cash flow from operations was $59 million compared to $8 million in the second quarter of 2004 and total cash and short-term cash investments increased to $1.45 billion.

Scheduled Interviews
SanDisk Corporation President and Chief Executive Officer, Eli Harari, is scheduled to appear on CNBC’s “Squawk Box”, July 22, 2005 at approximately 5:40 a.m. PDT. Judy Bruner, SanDisk’s Executive Vice President, Administration and CFO is scheduled to appear on Bloomberg TV’s “Market Line”, July 22, 2005 at approximately 10:45 p.m. PDT.

Conference Call
SanDisk’s second quarter 2005 conference call is scheduled for 2:00 p.m. PDT, Thursday, July 21, 2005. The conference call will be web cast 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) 981-5584. The call will also be available by telephone replay through Monday, July 25, 2005, by dialing (719) 457-0820 and entering the pass code 5024005. 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.

Forward-Looking Statements
This news release contains certain forward-looking statements, including statements about our business outlook, expectations for new product introductions, production schedules, market growth rates and customers and scheduled appearances by certain of our executives 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, slower than expected expansion of our global sales channels, fluctuations in operating results, unexpected yield variances and longer than expected low yields and other possible delays related to our conversion to 70-nanometer NAND flash technology or the ramp-up of the new 300-millimeter flash fabrication facility, unexpected delays in

qualification, initial production or the ramp-up of volume production of our new 70-nanometer 8 gigabit NAND/MLC chip, any interruption of or delay in supply from any of the semiconductor manufacturing facilities that supply products to us, 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 either from existing suppliers or from new competitors, 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, 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 or other natural disasters, particularly in areas in the Pacific Rim and Japan where we manufacture and assemble products, scheduled appearances by our executives could be cancelled or delayed by us or the network, and the other risks detailed from time-to-time in our Securities and Exchange Commission filings and reports, including, but not limited to, the Form 10-K for the year ended January 2, 2005 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.

About SanDisk
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 Sunnyvale, CA and has operations worldwide, with more than half its sales outside the U.S.

www.sandisk.com

SanDisk is a trademark of SanDisk Corporation, registered in the United States and other countries.

SanDisk Corporation
Condensed Consolidated Statements of Income
(In thousands, except per share data, unaudited)

	Three Months Ended				Year to Date Ended
	July 3, 2005		June 27, 2004		July 3, 2005		June 27, 2004
Revenues:
Product	$	453,762	$	391,327	$	853,441	$	730,106
License and royalty		61,134		41,961		112,430		90,112
Total revenue		514,896		433,288		965,871		820,218
Cost of product revenues		300,797		254,635		551,985		485,647
Gross profits		214,099		178,653		413,886		334,571
Operating expenses:
Research and development		61,404		32,468		107,351		59,230
Sales and marketing		27,034		24,942		51,631		44,603
General and administrative		19,617		10,912		35,341		21,848
Total operating expenses		108,055		68,322		194,323		125,681
Operating income		106,044		110,331		219,563		208,890
Total other income (expense)		5,854		1,981		10,615		4,371
Income before taxes		111,898		112,312		230,178		213,261
Provision for income taxes		41,402		41,701		85,166		79,082
Net income	$	70,496	$	70,611	$	145,012	$	134,179
Net income per share calculation:
Net income used in computing basic net income per share	$	70,496	$	70,611	$	145,012	$	134,179
Tax-effected interest and bond amortization costs related to convertible subordinated notes		0		1,208		0		2,410
Net income used in computing diluted net income per share	$	70,496	$	71,819	$	145,012	$	136,589
Shares used in computing net income per share
Basic		181,469		161,756		181,050		161,481
Diluted		190,256		188,745		190,127		189,100
Net income per share
Basic	$	0.39	$	0.44	$	0.80	$	0.83
Diluted	$	0.37	$	0.38	$	0.76	$	0.72

SanDisk Corporation
Condensed Consolidated Balance Sheets
(In thousands)

	July 3, 2005			April 3, 2005			January 2, 2005*
	(unaudited)			(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	581,089		$	571,805		$	463,795
Short-term investments		870,531			842,095			859,175
Investment in foundries		19,569			18,448			20,398
Accounts receivable, net		242,498			208,810			194,535
Inventories		229,593			223,783			196,422
Deferred tax asset		91,744			92,746			83,150
Other current assets		80,439			23,839			62,653
Total current assets		2,115,463			1,981,526			1,880,128
Property and equipment, net		177,341			166,079			147,231
Investment in foundries		7,900			11,557			14,377
Investment in FlashVision		168,349			172,493			178,681
Investment in FlashPartners		21,927			23,272			24,192
Deferred tax asset		9,265			6,696			1,861
Notes receivable, Flash Vision		53,277			55,504			35,413
Other non-current assets		33,139			32,937			38,297
Total Assets	$	2,586,661		$	2,450,064		$	2,320,180
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current Liabilities:
Accounts payable	$	113,105		$	94,482		$	82,974
Accounts payable to related parties		63,311			64,500			48,115
Accrued payroll and related expenses		32,390			25,579			41,785
Income taxes payable		28,406			45,868			39,139
Research and development liability, related party		6,300			6,149			5,549
Other current accrued liabilities		41,356			33,178			45,584
Deferred income on shipments to distributors and retailers and deferred revenue		176,532			130,326			90,307
Total current liabilities		461,400			400,082			353,453
Deferred tax liability		5,619			6,131			—
Deferred revenue and non-current liabilities		16,613			18,217			26,577
Total Liabilities		483,632			424,430			380,030
Commitments and contingencies
Stockholders’ Equity:
Common stock		1,431,640			1,423,255			1,406,553
Retained earnings		665,252			594,756			520,240
Accumulated other comprehensive income		11,056			12,640			18,893
Deferred compensation		(4,919	)		(5,017	)		(5,536	)
Total stockholders’ equity		2,103,029			2,025,634			1,940,150
Total Liabilities and Stockholders’ Equity	$	2,586,661		$	2,450,064		$	2,320,180

* Information derived from the audited Consolidated Financial Statements.

SanDisk Corporation
Condensed Consolidated Comparative Statement of Cash Flows
June 2005
(in thousands, unaudited)

	Three months ended						Six months ended
	July 3, 2005			June 27, 2004			July 3, 2005			June 27, 2004
Cash flows from operating activities:
Net income		70,496			70,611			145,012			134,179
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred taxes		(12	)		517			1,076			517
Loss (gain) investment in foundries		5,224			(22	)		9,253			551
Depreciation and amortization		14,951			8,603			29,413			16,602
Provision for doubtful accounts		(163	)		589			(163	)		2,270
FlashVision wafer cost adjustment		(1,684	)		(320	)		(2,171	)		(641	)
Other non-cash charges		3,595			1,349			5,514			961
Changes in operating assets and liabilities:
Accounts receivable		(33,525	)		(63,971	)		(47,800	)		(16,851	)
Inventories		(5,810	)		(3,777	)		(33,171	)		(46,591	)
Other current assets		(53,787	)		(29,860	)		(12,175	)		(2,107	)
Other non-current assets		(3,295	)		3,265			(3,066	)		4,359
Accounts payable		18,624			1,484			30,132			(9,907	)
Accrued payroll and related expenses		6,811			10,199			(9,395	)		285
Income taxes receivable/payable		(13,810	)		(17,215	)		(13,900	)		(28,146	)
Accounts payable, related party		(1,038	)		5,219			15,947			8,170
Other current accrued liabilities		8,178			(1,541	)		(4,228	)		211
Deferred income on shipments and deferred revenue		44,602			22,464			83,017			19,766
Other non-current liabilities		(156	)		776			182			776
Total adjustments		(11,295	)		(62,241	)		48,465			(49,775	)
Net cash provided by operating activities		59,201			8,370			193,477			84,404
Cash flows from investing activities:
Purchases of short term investments		(156,384	)		(403,130	)		(295,582	)		(644,407	)
Proceeds from sale of short term investments		128,158			289,913			281,608			482,070
Acquisition of capital equipment, net		(26,067	)		(20,408	)		(56,218	)		(29,818	)
Notes receivable from FlashVision		0			0			(22,222	)		(21,637	)
Net cash used in investing activities		(54,293	)		(133,625	)		(92,414	)		(213,792	)
Cash from Financing activities
Employee stock programs		4,581			2,858			15,853			8,873
Net cash provided by financing activities		4,581			2,858			15,853			8,873
Effect of changes in foreign currency exchange rates on cash		(205	)		0			378			0
Net increase (decrease) in cash and cash equivalents		9,284			(122,397	)		117,294			(120,515	)
Cash and cash equivalents at beginning of period		571,805			736,361			463,795			734,479
Cash and cash equivalents at end of period		581,089			613,964			581,089			613,964