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): April 21, 2010

SanDisk Corporation

(Exact name of registrant as specified in its charter)

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

601 McCarthy Boulevard, Milpitas, California  95035

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (408) 801-1000

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 provision (see General Instruction A.2. below):

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

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

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

¨      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

SIGNATURE

EXHIBIT INDEX

EXHIBIT 99.1

Item 2.02 Results of Operations and Financial Condition

On April 21, 2010, SanDisk Corporation (the “Registrant”) issued a press release to report its financial results for its first quarter ended April 4, 2010.

The press release is attached hereto as Exhibit 99.1 and is incorporated herein in its entirety by reference.  In addition to the condensed consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP), the attached press release contains non-GAAP measures of operating results, net income (loss) and net income (loss) 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 the Registrant’s current financial performance and its prospects for the future.  Specifically, the Registrant believes the non-GAAP results provide useful information to both management and investors as these non-GAAP results exclude certain expenses, gains and losses that it believes are not indicative of its core operating results and because it is consistent with the financial models and estimates published by many analysts who follow the Registrant.  For example, because the non-GAAP results exclude the expenses the Registrant recorded for share-based compensation, the amortization of acquisition-related intangible assets related to acquisitions of Matrix Semiconductor, Inc. in January 2006 and MusicGremlin, Inc. in June 2008, and non-cash economic interest expense associated with the Registrant’s cash-settled convertible debt, the Registrant believes the inclusion of non-GAAP financial measures provide consistency in its financial reporting.  These non-GAAP results are some of the primary indicators management uses for assessing 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 purchased intangible assets, share-based compensation, and non-cash economic interest expense associated with cash-settled convertible debt, 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.

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 this or 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

(d) Exhibits

Exhibit Number	Description of Document
99.1	Press Release of SanDisk Corporation dated April 21, 2010 to report its financial results for its first quarter ended April 4, 2010.

SIGNATURE

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: April 21, 2010
	SANDISK CORPORATION
	By:	/s/ Judy Bruner
	Name:	Judy Bruner
	Title:	Executive Vice President, Administration and Chief Financial Officer (Principal Financial and Accounting Officer)

EXHIBIT INDEX

Exhibit Number	Description of Document
99.1	Press Release of SanDisk Corporation dated April 21, 2010 to report its financial results for its first quarter ended April 4, 2010.

EX-99.1

Exhibit 99.1

      

SanDisk Corporation

601 McCarthy Boulevard

Milpitas, CA 95035-7932

Phone: 408-801-1000

Fax: 408-801-8657

CONTACT:	Investor Contact:	Media Contact:
	Jay Iyer	Ryan Donovan
	(408) 801-2067	(408) 801-2857

SANDISK ANNOUNCES FIRST QUARTER 2010 FINANCIAL RESULTS

Milpitas, CA, April 21, 2010 - SanDiskCorporation (NASDAQ:SNDK), the global leader in flash memory cards, today announced results for the first quarter ended April 4, 2010.  Total first quarter revenue of $1.1 billion increased 65% on a year-over-year basis and decreased 12% on a sequential basis.  Net income, in accordance with U.S. Generally Accepted Accounting Principles (GAAP), was $235 million, or $0.99 per diluted share, compared to GAAP net loss of ($208) million, or ($0.92) per share, in the first quarter of 2009 and GAAP net income of $340 million, or $1.45 per diluted share, in the fourth quarter of 2009.

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 cash-settled convertible note, and related tax adjustments and valuation allowance, first-quarter net income was $225 million, or $0.95 per diluted share, compared to a net loss of ($108) million, or ($0.48) per share, in the first quarter of 2009 and net income of $277 million, or $1.18 per diluted share, in the fourth quarter of 2009.  For reconciliation of non-GAAP to GAAP results, see accompanying financial tables and footnotes.

“We delivered SanDisk’s first ever billion dollar Q1 in total revenue. This performance was driven by several factors including our OEM business which grew to 63% of product revenues balancing out Q1 retail seasonality, and mobile product sales which more than doubled from this time last year.  Total gross margin of 46% was achieved through a combination of a stable pricing environment, excellent cost reduction and our increasingly diversified customer base.  With the year off to a record start, SanDisk is poised to benefit from flash memory demand in growth markets in 2010 and beyond,” said Eli Harari, Chairman and CEO.

FIRST QUARTER 2010 METRICS & HIGHLIGHTS

• Total revenue was $1.1 billion, up 65% year-over-year and down 12% sequentially.
• Product revenue was $993 million, up 69% year-over-year and down 13% sequentially.
• License and royalty revenue was $93 million, up 31% year-over-year and down 6% sequentially.
• Total gross margin, product gross margin and operating income compared on a year-over-year and sequential basis are shown in the table below:

Metric	GAAP									Non-GAAP
in millions of US$, except %		Q110			Q109			Q409			Q110			Q109			Q409
Total gross profit (loss),	$	500		$	(1	)	$	600		$	506		$	4		$	609
% of total revenue		46.0	%		(0.2	%)		48.4	%		46.5	%		0.7	%		49.0	%
Product gross profit (loss),	$	407		$	(73	)	$	501		$	412		$	(67	)	$	509
% of product revenue		40.9	%		(12.3	%)		43.9	%		41.5	%		(11.4	%)		44.6	%
Operating profit (loss),	$	314		$	(165	)	$	376		$	334		$	(146	)	$	417
% of total revenue		28.9	%		(25.1	%)		30.3	%		30.8	%		(22.1	%)		33.6	%

• Cash flow from operations was $328 million and free cash flow was $329 million.
• Total cash and equivalents, short and long-term marketable securities at the end of the first quarter were $3.30 billion compared to $2.38 billion at the end of the first quarter of 2009 and $3.02 billion at the end of the fourth quarter of 2009.
• Average price per gigabyte sold remained unchanged year-over-year and declined 7% sequentially.

OTHER RECENT KEY ANNOUNCEMENTS

• SanDisk introduced its 64 gigabyte SanDisk® iNAND™ Embedded Flash Drives based on 3-bit-per-cell NAND flash technology, that can be used for boot, system code and mass storage functions in mobile phones and portable devices.
• SanDisk began shipping its highest capacity SD™ card, the 64 gigabyte SanDisk Ultra® SDXC™ card, that is capable of up to 15 megabytes/sec read speed and has a Class 4 speed rating, designed for capturing and storing massive 1080p High-Definition video files.
• SanDisk began shipping its SanDisk® G3 Solid State Drives to retailers in North America and Europe at capacities of 60 and 120 gigabytes.
• SanDisk began shipping the industry’s highest capacity 32 gigabyte microSDHC™ card for mobile phones. 

CONFERENCE CALL

SanDisk’s first quarter 2010 conference call is scheduled for 2:00 P.M., Pacific Time, Wednesday, April 21, 2010.  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 719-457-2656 and the dial-in password is 7487142.  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.

SCHEDULED INTERVIEWS

SanDisk Corporation Chairman and Chief Executive Officer, Eli Harari, is scheduled to appear on CNBC’s “Closing Bell with Maria Bartiromo,” on April 21, 2010, at approximately 1:15 P.M., Pacific Time.

A complete reconciliation between GAAP and non-GAAP information referred to in this release is provided in the attached tables.

FORWARD-LOOKING STATEMENTS

This news release contains certain forward-looking statements, including statements about our business prospects and outlook, our expectations for fiscal year 2010 and our expectations regarding our business, including expected flash memory demand in 2010 and beyond, and our mobile business and cost structure, 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 or capacities;
• excess captive memory output or capacity which could result in write-downs for excess inventory, lower of cost or market reserves, fixed costs associated with under-utilized capacity, or other consequences;
• insufficient non-memory materials or capacity from our suppliers and contract manufacturers to meet demand, or increases in cost of non-memory materials or capacity;
• less than anticipated demand, including due to economic weakness in our markets;
• our products may not perform as expected; and
• 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 Annual Report on Form 10-K for the fiscal year ended January 3, 2010.

Future results may differ materially from those previously reported.  We do not intend to update the information contained in this release.

ABOUT SANDISK

SanDisk Corporation is the global leader in flash memory cards, from research, manufacturing and product design to consumer branding and retail distribution. SanDisk's product portfolio includes flash memory cards for mobile phones, digital cameras and camcorders; digital audio/video players; USB flash drives for consumers and the enterprise; embedded memory for mobile devices; and solid state drives for computers. SanDisk is a Silicon Valley-based S&P 500 company, with more than half its sales outside the United States.

SanDisk, the SanDisk logo and SanDisk Ultra are trademarks of SanDisk Corporation, registered in the United States and other countries.  iNAND is a trademark of SanDisk Corporation.  microSDHC, and SDXC are trademarks of SD-3C LLC.  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
	April 4, 2010		March 29, 2009
Revenues:
Product	$	993,195	$	588,099
License and royalty		93,468		71,372
Total revenues		1,086,663		659,471
Cost of product revenues		583,353		657,478
Amortization of acquisition-related intangible assets		3,132		3,132
Total cost of product revenues		586,485		660,610
Gross profit (loss)		500,178		(1,139	)
Operating expenses:
Research and development		98,653		86,936
Sales and marketing		48,501		37,878
General and administrative		38,724		38,325
Amortization of acquisition-related intangible assets		292		292
Restructuring and other		—		765
Total operating expenses		186,170		164,196
Operating income (loss)		314,008		(165,335	)
Other income (expense)		8,986		(18,693	)
Income (loss) before provision for income taxes		322,994		(184,028	)
Provision for income taxes		88,303		23,967
Net income (loss)	$	234,691	$	(207,995	)
Net income (loss) per share:
Basic	$	1.02	$	(0.92	)
Diluted	$	0.99	$	(0.92	)
Shares used in computing net income (loss) per share:
Basic		229,300		226,529
Diluted		236,884		226,529

 SanDisk Corporation

Reconciliation of Preliminary GAAP to Non-GAAP Operating Results (1)

(in thousands, except per share data, unaudited)

	Three months ended
	April 4, 2010			March 29, 2009
SUMMARY RECONCILIATION OF NET INCOME (LOSS)
GAAP NET INCOME (LOSS)	$	234,691		$	(207,995	)
Share-based compensation (a)		16,870			16,330
Amortization of acquisition-related intangible assets (b)		3,424			3,424
Convertible debt interest (c)		13,921			12,926
Income tax adjustments (d)		(43,864	)		66,852
NON-GAAP NET INCOME (LOSS)	$	225,042		$	(108,463	)
GAAP COST OF PRODUCT REVENUES	$	586,485		$	660,610
Share-based compensation (a)		(2,458	)		(2,374	)
Amortization of acquisition-related intangible assets (b)		(3,132	)		(3,132	)
NON-GAAP COST OF PRODUCT REVENUES	$	580,895		$	655,104
GAAP GROSS PROFIT (LOSS)	$	500,178		$	(1,139	)
Share-based compensation (a)		2,458			2,374
Amortization of acquisition-related intangible assets (b)		3,132			3,132
NON-GAAP GROSS PROFIT	$	505,768		$	4,367
GAAP RESEARCH AND DEVELOPMENT EXPENSES	$	98,653		$	86,936
Share-based compensation (a)		(6,802	)		(6,152	)
NON-GAAP RESEARCH AND DEVELOPMENT EXPENSES	$	91,851		$	80,784
GAAP SALES AND MARKETING EXPENSES	$	48,501		$	37,878
Share-based compensation (a)		(2,188	)		(2,349	)
NON-GAAP SALES AND MARKETING EXPENSES	$	46,313		$	35,529
GAAP GENERAL AND ADMINISTRATIVE EXPENSES	$	38,724		$	38,325
Share-based compensation (a)		(5,422	)		(5,455	)
NON-GAAP GENERAL AND ADMINISTRATIVE EXPENSES	$	33,302		$	32,870
GAAP TOTAL OPERATING EXPENSES	$	186,170		$	164,196
Share-based compensation (a)		(14,412	)		(13,956	)
Amortization of acquisition-related intangible assets (b)		(292	)		(292	)
NON-GAAP TOTAL OPERATING EXPENSES	$	171,466		$	149,948
GAAP OPERATING INCOME (LOSS)	$	314,008		$	(165,335	)
Cost of product revenues adjustments (a) (b)		5,590			5,506
Operating expense adjustments (a) (b)		14,704			14,248
NON-GAAP OPERATING INCOME (LOSS)	$	334,302		$	(145,581	)
GAAP OTHER INCOME (EXPENSE)	$	8,986		$	(18,693	)
Convertible debt interest (c)		13,921			12,926
NON-GAAP OTHER INCOME (EXPENSE)	$	22,907		$	(5,767	)
GAAP NET INCOME (LOSS)	$	234,691		$	(207,995	)
Cost of product revenues adjustments (a) (b)		5,590			5,506
Operating expense adjustments (a) (b)		14,704			14,248
Convertible debt interest (c)		13,921			12,926
Income tax adjustments (d)		(43,864	)		66,852
NON-GAAP NET INCOME (LOSS)	$	225,042		$	(108,463	)
Diluted net income (loss) per share:
GAAP	$	0.99		$	(0.92	)
Non-GAAP	$	0.95		$	(0.48	)
Shares used in computing diluted net income (loss) per share:
GAAP		236,884			226,529
Non-GAAP		236,245			226,529

SanDisk Corporation

Reconciliation of Preliminary GAAP to Non-GAAP Operating Results (1)

(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 (loss) and net income (loss) 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 it is consistent with the financial models and estimates published by many analysts who follow the Company.  For example, because the non-GAAP results exclude the expenses we recorded for share-based compensation, the amortization of acquisition-related intangible assets related to acquisitions of Matrix Semiconductor, Inc. in January 2006 and MusicGremlin, Inc. in June 2008, and non-cash economic interest expense associated with our cash-settled convertible debt, we believe the inclusion of non-GAAP financial measures provide consistency in our financial reporting.  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 purchased intangible assets, share-based compensation and non-cash economic interest expense associated with our cash-settled convertible debt, 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 core and developed technology, related to the acquisitions of Matrix Semiconductor, Inc. (January 2006) and MusicGremlin, Inc. (June 2008).

c)   Incremental interest expense relating to the non-cash economic interest expense associated with the Company's cash-settled convertible debt.

d)   Income taxes associated with certain non-GAAP to GAAP adjustments and a valuation allowance on deferred taxes.

SanDisk Corporation

Preliminary Condensed Consolidated Balance Sheets

(in thousands, unaudited)

	April 4, 2010			January 3, 2010
Current assets:
Cash and cash equivalents	$	1,022,511		$	1,100,364
Short-term marketable securities		921,969			819,002
Accounts receivable from product revenues, net		234,458			234,407
Inventory		567,633			596,493
Deferred taxes		43,613			66,869
Other current assets		52,184			97,639
Total current assets		2,842,368			2,914,774
Long-term marketable securities		1,350,850			1,097,095
Property and equipment, net		275,935			300,997
Notes receivable and investments in the flash ventures with Toshiba		1,477,061			1,507,550
Deferred taxes		31,119			21,210
Intangible assets, net		52,703			58,076
Other non-current assets		103,569			102,017
Total assets	$	6,133,605		$	6,001,719
LIABILITIES
Current liabilities:
Accounts payable trade	$	95,237		$	134,427
Accounts payable to related parties		143,048			182,091
Convertible short-term debt		—			75,000
Other current accrued liabilities		275,157			234,079
Deferred income on shipments to distributors and retailers and deferred revenue		226,851			245,513
Total current liabilities		740,293			871,110
Convertible long-term debt		948,937			934,722
Non-current liabilities		289,648			287,478
Total liabilities		1,978,878			2,093,310
EQUITY
Stockholders' equity:
Common stock		4,302,630			4,269,074
Accumulated deficit		(252,798	)		(487,489	)
Accumulated other comprehensive income		107,297			128,713
Total stockholders' equity		4,157,129			3,910,298
Non-controlling interests		(2,402	)		(1,889	)
Total equity		4,154,727			3,908,409
Total liabilities and equity	$	6,133,605		$	6,001,719

SanDisk Corporation

Preliminary Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)

	Three months ended
	April 4, 2010			March 29, 2009
Cash flows from operating activities:
Net income (loss)	$	234,691		$	(207,995	)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Deferred and other taxes		(60,622	)		8,922
Depreciation		35,065			39,125
Amortization		20,151			18,344
Provision for doubtful accounts		(1,622	)		2,163
Share-based compensation expense		16,870			16,330
Excess tax benefit from share-based compensation		(2,167	)		-
Impairments, restructuring and other		(20,323	)		7,133
Other non-operating		9,265			(4,122	)
Changes in operating assets and liabilities:
Accounts receivable from product revenues		(106	)		10,833
Inventory		26,488			40,309
Other assets		88,250			220,383
Accounts payable trade		(38,908	)		(112,452	)
Accounts payable to related parties		(39,043	)		(70,163	)
Other liabilities		60,290			(83,071	)
Total adjustments		93,588			93,734
Net cash provided by (used in) operating activities		328,279			(114,261	)
Cash flows from investing activities:
Purchases of short and long-term marketable securities		(611,413	)		(168,938	)
Proceeds from sale of short and long-term marketable securities		217,277			421,898
Maturities of short and long-term marketable securities		43,720			36,630
Proceeds from sale of assets		17,767			-
Acquisition of property and equipment		(14,928	)		(16,497	)
Distribution from FlashVision Ltd.		122			12,713
Notes receivable issuance, Flash Partners Ltd. and Flash Alliance Ltd.		—			(326,350	)
Notes receivable proceeds, Flash Partners Ltd. and Flash Alliance Ltd.		—			277,070
Purchased technology and other assets		(1,982	)		1,424
Net cash provided by (used in) investing activities		(349,437	)		237,950
Cash flows from financing activities:
Repayment of debt financing		(75,000	)		—
Proceeds from employee stock programs		17,955			4,570
Excess tax benefit from share-based compensation		2,167			—
Net cash provided by (used in) financing activities		(54,878	)		4,570
Effect of changes in foreign currency exchange rates on cash		(1,817	)		(241	)
Net increase (decrease) in cash and cash equivalents		(77,853	)		128,018
Cash and cash equivalents at beginning of period		1,100,364			962,061
Cash and cash equivalents at end of period	$	1,022,511		$	1,090,079