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[January 23, 2013] SanDisk Announces Fourth Quarter and 2012 Year-End Results MILPITAS, Calif. --(Business Wire)-- SanDisk Corporation (NASDAQ: SNDK), a global leader in flash memory storage solutions, announced today results for the fourth quarter and fiscal year ended December 30, 2012. Total fourth quarter revenue of $1.54�billion decreased 2% on a year-over-year basis and increased 21% on a sequential basis. Total revenue for fiscal 2012 of $5.05�billion decreased 11% from $5.66 billion in fiscal 2011. On a GAAP(1) basis, fourth quarter net income was $214�million, or $0.87 per diluted share, compared to net income of $281�million, or $1.14�per diluted share, in the fourth quarter of fiscal 2011 and $77�million, or $0.31�per diluted share, in the third quarter of fiscal 2012. Net income for fiscal 2012 was $417�million, or $1.70 per diluted share compared to $987�million, or $4.04 per diluted share in fiscal 2011. On a non-GAAP(2) basis, fourth quarter net income was $257�million, or $1.05�per diluted share, compared to net income of $317�million, or $1.29�per diluted share, in the fourth quarter of fiscal 2011 and net income of $118�million, or $0.48�per diluted share, in the third quarter of fiscal 2012. Net income for fiscal 2012 was $582�million, or $2.38 per diluted share compared to $1.14�billion, or $4.65 per diluted share in fiscal 2011. For reconciliation of non-GAAP to GAAP results, see accompanying financial tables and footnotes. "SanDisk ended 2012 with strong momentum in our SSD business, which contributed 10% of our Q4 revenue. We are now supplying client SSDs to ten leading PC OEMs and our enterprise SSDs are qualified at a fourth storage OEM," said Sanjay Mehrotra, president and chief executive officer of SanDisk. "We drove solid sequential growth in our embedded mobile products and continued to execute well in our retail business. We believe that our broadening customer engagements and expanding product portfolio position us well for strong profitability in 2013." FOURTH QUARTER 2012 KEY FINANCIAL METRICS
Metric	�	GAAP					�	Non-GAAP
in millions of US$, except %	�	Q412	�	Q411	�	Q312		Q412	�	Q411	�	Q312
Revenue	�	$1,542	�	$1,577	�	$1,273		$1,542	�	$1,577	�	$1,273
Gross Profit		$603	�	$662	�	$383		$615	�	$676	�	$395
% of revenue	�	39.1%	�	42.0%	�	30.1%		39.9%	�	42.9%	�	31.0%
Operating Income		$336		$416		$132		$368		$449		$164
% of revenue	�	21.8%	�	26.4%	�	10.4%		23.9%	�	28.5%	�	12.9%

(1) � GAAP represents U.S. Generally Accepted Accounting Principles. (2) Non-GAAP represents GAAP excluding the impact of share-based compensation expense, amortization and write-off 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. �

SanDisk Corporation Preliminary Condensed Consolidated Statements of Operations (in thousands, except per share amounts, unaudited) � � � � � Three months ended Twelve months ended December 30, 2012 January 1, 2012 December 30, 2012 January 1, 2012 Revenues: Product $ 1,444,719 $ 1,473,444 $ 4,678,504 $ 5,287,555 License and royalty � 96,784 � � 103,476 � 374,005 � � 374,590 � Total revenues 1,541,503 1,576,920 5,052,509 5,662,145 � Cost of product revenues 928,661 901,993 3,326,747 3,183,257 Amortization of acquisition-related intangible assets � 9,830 � � 13,186 � 42,542 � � 39,742 � Total cost of product revenues 938,491 915,179 3,369,289 3,222,999 � � � � Gross profit 603,012 661,741 1,683,220 2,439,146 � Operating expenses: Research and development 159,075 147,228 602,765 547,373 Sales and marketing 64,820 55,227 224,054 199,422 General and administrative 39,913 41,746 150,401 157,766 Amortization and write-off of acquisition-related intangible assets � 3,229 � � 1,877 � 9,905 � � 4,485 � Total operating expenses � 267,037 � � 246,078 � 987,125 � � 909,046 � � Operating income 335,975 415,663 696,095 1,530,100 � Other income (expense), net � (12,971 ) � 2,871 � (69,179 ) � (53,346 ) � Income before income taxes 323,004 418,534 626,916 1,476,754 � Provision for income taxes 109,461 137,311 209,512 489,764 � � � � Net income $ 213,543 � $ 281,223 $ 417,404 � $ 986,990 � � Net income per share: Basic $ 0.88 $ 1.16 $ 1.72 $ 4.12 Diluted $ 0.87 $ 1.14 $ 1.70 $ 4.04 � Shares used in computing net income per share: Basic 241,451 241,775 242,076 239,484 Diluted 244,161 246,543 245,253 244,553 �

SanDisk Corporation Reconciliation of Preliminary GAAP to Non-GAAP Operating Results ⁽¹⁾ (in thousands, except per share data, unaudited) � � � � Three months ended Twelve months ended December 30, 2012 January 1, 2012 December 30, 2012 January 1, 2012 � SUMMARY RECONCILIATION OF NET INCOME GAAP NET INCOME $ 213,543 $ 281,223 $ 417,404 $ 986,990 Share-based compensation (a) 19,160 18,432 78,443 63,110 Amortization and write-off of acquisition-related intangible assets (b) 13,059 15,063 52,447 44,227 Convertible debt interest (c) 23,036 21,316 89,963 111,354 Income tax adjustments (d) � (11,582 ) � (18,893 ) � (55,848 ) � (67,673 ) NON-GAAP NET INCOME $ 257,216 � $ 317,141 � $ 582,409 � $ 1,138,008 � � � GAAP COST OF PRODUCT REVENUES $ 938,491 $ 915,179 $ 3,369,289 $ 3,222,999 Share-based compensation (a) (2,070 ) (1,358 ) (7,459 ) (4,674 ) Amortization of acquisition-related intangible assets (b) � (9,830 ) � (13,186 ) � (42,542 ) � (39,742 ) NON-GAAP COST OF PRODUCT REVENUES $ 926,591 � $ 900,635 � $ 3,319,288 � $ 3,178,583 � � GAAP GROSS PROFIT $ 603,012 $ 661,741 $ 1,683,220 $ 2,439,146 Share-based compensation (a) 2,070 1,358 7,459 4,674 Amortization of acquisition-related intangible assets (b) � 9,830 � � 13,186 � � 42,542 � � 39,742 � NON-GAAP GROSS PROFIT $ 614,912 � $ 676,285 � $ 1,733,221 � $ 2,483,562 � � GAAP RESEARCH AND DEVELOPMENT EXPENSES $ 159,075 $ 147,228 $ 602,765 $ 547,373 Share-based compensation (a) � (9,981 ) � (10,929 ) � (41,010 ) � (34,177 ) NON-GAAP RESEARCH AND DEVELOPMENT EXPENSES $ 149,094 � $ 136,299 � $ 561,755 � $ 513,196 � � GAAP SALES AND MARKETING EXPENSES $ 64,820 $ 55,227 $ 224,054 $ 199,422 Share-based compensation (a) � (3,528 ) � (2,847 ) � (14,585 ) � (10,593 ) NON-GAAP SALES AND MARKETING EXPENSES $ 61,292 � $ 52,380 � $ 209,469 � $ 188,829 � � GAAP GENERAL AND ADMINISTRATIVE EXPENSES $ 39,913 $ 41,746 $ 150,401 $ 157,766 Share-based compensation (a) � (3,581 ) � (3,298 ) � (15,389 ) � (13,666 ) NON-GAAP GENERAL AND ADMINISTRATIVE EXPENSES $ 36,332 � $ 38,448 � $ 135,012 � $ 144,100 � � GAAP TOTAL OPERATING EXPENSES $ 267,037 $ 246,078 $ 987,125 $ 909,046 Share-based compensation (a) (17,090 ) (17,074 ) (70,984 ) (58,436 ) Amortization and write-off of acquisition-related intangible assets (b) � (3,229 ) � (1,877 ) � (9,905 ) � (4,485 ) NON-GAAP TOTAL OPERATING EXPENSES $ 246,718 � $ 227,127 � $ 906,236 � $ 846,125 � � GAAP OPERATING INCOME $ 335,975 $ 415,663 $ 696,095 $ 1,530,100 Cost of product revenues adjustments (a) (b) 11,900 14,544 50,001 44,416 Operating expense adjustments (a) (b) � 20,319 � � 18,951 � � 80,889 � � 62,921 � NON-GAAP OPERATING INCOME $ 368,194 � $ 449,158 � $ 826,985 � $ 1,637,437 � � GAAP OTHER INCOME (EXPENSE), NET $ (12,971 ) $ 2,871 $ (69,179 ) $ (53,346 ) Convertible debt interest (c) � 23,036 � � 21,316 � � 89,963 � � 111,354 � NON-GAAP OTHER INCOME (EXPENSE), NET $ 10,065 � $ 24,187 � $ 20,784 � $ 58,008 � � GAAP NET INCOME $ 213,543 $ 281,223 $ 417,404 $ 986,990 Cost of product revenues adjustments (a) (b) 11,900 14,544 50,001 44,416 Operating expense adjustments (a) (b) 20,319 18,951 80,889 62,921 Convertible debt interest (c) 23,036 21,316 89,963 111,354 Income tax adjustments (d) � (11,582 ) � (18,893 ) � (55,848 ) � (67,673 ) NON-GAAP NET INCOME $ 257,216 � $ 317,141 � $ 582,409 � $ 1,138,008 � � Diluted net income per share: GAAP $ 0.87 $ 1.14 $ 1.70 $ 4.04 Non-GAAP $ 1.05 $ 1.29 $ 2.38 $ 4.65 � Shares used in computing diluted net income per share: GAAP 244,161 246,543 245,253 244,553 Non-GAAP 244,081 246,595 245,199 244,568 �

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 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 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, amortization and write-off of acquisition-related intangible assets related to acquisitions of Matrix Semiconductor, Inc. in January 2006, Pliant Technology, Inc. in May 2011, FlashSoft Corporation in February 2012 and Schooner Information Technology, Inc. in June 2012, non-cash economic interest expense associated with the convertible debt, non-cash change in fair value of the liability component of the repurchased portion of the convertible debt and related tax adjustments, we believe the inclusion of non-GAAP financial measures provides 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 and write-off of acquisition-related intangible assets, share-based compensation, non-cash economic interest expense associated with the convertible debt, non-cash change in fair value of the liability component of the repurchased portion of 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 and write-off of acquisition-related intangible assets, primarily core technology, developed technology, customer relationships and trademarks related to the acquisitions of Matrix Semiconductor, Inc. (January 2006), Pliant Technology, Inc. (May 2011), FlashSoft Corporation (February 2012) and Schooner Information Technology, Inc. (June 2012). � (c) Incremental interest expense relating to the non-cash economic interest expense associated with the Company's 1% Sr. Convertible Notes due 2013 and 1.5% Sr. Convertible Notes due 2017 and the non-cash change in fair value of the liability component of the repurchased portion of the 1% Sr. Convertible Notes due 2013. � (d) Income taxes associated with certain non-GAAP to GAAP adjustments. �

SanDisk Corporation Preliminary Condensed Consolidated Balance Sheets (in thousands, unaudited) � � � December 30, 2012 January 1, 2012 � ASSETS Current assets: Cash and cash equivalents $ 995,470 $ 1,167,496 Short-term marketable securities 1,880,034 1,681,492 Accounts receivable from product revenues, net 588,387 521,763 Inventory 750,075 678,382 Deferred taxes 93,877 100,409 Other current assets � 298,517 � � 206,419 � Total current assets 4,606,360 4,355,961 � Long-term marketable securities 2,835,931 2,766,263 Property and equipment, net 665,542 344,897 Notes receivable and investments in Flash Ventures 1,460,112 1,943,295 Deferred taxes 168,718 199,027 Goodwill 201,735 154,899 Intangible assets, net 246,919 287,691 Other non-current assets � 153,810 � � 122,615 � � Total assets $ 10,339,127 � $ 10,174,648 � � LIABILITIES Current liabilities: Accounts payable trade $ 254,459 $ 258,583 Accounts payable to related parties 214,806 276,275 Convertible short-term debt 906,708

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Other current accrued liabilities 257,539 337,517 Deferred income on shipments to distributors and retailers and deferred revenue � 248,155 � � 220,999 � Total current liabilities 1,881,667 1,093,374 � Convertible long-term debt 789,913 1,604,911 Non-current liabilities � 407,947 � � 415,524 � Total liabilities � 3,079,527 � � 3,113,809 � � EQUITY Stockholders' equity: Common stock 5,027,512 4,934,808 Retained earnings 2,071,268 1,796,849 Accumulated other comprehensive income � 165,121 � � 332,701 �

Total stockholders' equity

7,263,901 7,064,358 Non-controlling interests � (4,301 ) � (3,519 ) Total equity � 7,259,600 � � 7,060,839 � � Total liabilities and equity $ 10,339,127 � $ 10,174,648 � �

SanDisk Corporation Preliminary Condensed Consolidated Statements of Cash Flows (in thousands, unaudited) � � � � � Three months ended Twelve months ended December 30, 2012 January 1, 2012 December 30, 2012 January 1, 2012 Cash flows from operating activities: Net income $ 213,543 $ 281,223 $ 417,404 $ 986,990 Adjustments to reconcile net income to net cash provided by operating activities: � Deferred taxes 24,814 3,013 34,368 (74,829 ) Depreciation 49,478 30,025 161,949 114,984 Amortization 43,924 43,895 172,749 161,930 Provision for doubtful accounts 1,382 453 1,452 (1,476 ) Share-based compensation expense 19,160 18,432 78,443 63,110 Excess tax benefit from share-based compensation (1,899 ) (9,075 ) (16,015 ) (24,895 ) Impairment, restructuring and other (3,954 ) (24,320 ) (18,366 ) (49,438 ) Other non-operating 21,737 22,889 92,043 86,660 Changes in operating assets and liabilities: Accounts receivable from product revenues, net (124,151 ) (57,569 ) (68,070 ) (146,726 ) Inventory 102,534 6,264 (71,260 ) (158,534 ) Other assets (30,069 ) (43,134 ) 5,318 (112,577 ) Accounts payable trade (63,888 ) 35,343 (4,124 ) 73,711 Accounts payable to related parties (11,330 ) 17,454 (61,469 ) 34,531 Other liabilities � 74,345 � � (115,341 ) � (194,568 ) � 100,331 � Total adjustments � 102,083 � � (71,671 ) � 112,450 � � 66,782 � � Net cash provided by operating activities � 315,626 � � 209,552 � � 529,854 � � 1,053,772 � � Cash flows from investing activities: Purchases of short and long-term marketable securities (1,228,496 ) (973,002 ) (3,178,660 ) (3,473,915 ) Proceeds from sales of short and long-term marketable securities 613,799 572,876 2,197,302 2,849,232 Proceeds from maturities of short and long-term marketable securities 171,585 128,470 650,060 634,390 Acquisition of property and equipment, net (105,341 ) (78,609 ) (487,973 ) (192,876 ) Investment in Flash Ventures ? ? (50,439 ) (83,316 ) Notes receivable issuances to Flash Ventures ? ? (142,316 ) (399,281 ) Notes receivable proceeds from Flash Ventures 153,413 167,872 511,289 416,388 Purchased technology and other assets (3,755 ) ? (4,000 ) (100,000 ) Acquisitions, net of cash acquired � (212 ) ? � � (69,629 ) � (317,649 ) Net cash used in investing activities � (399,007 ) � (182,393 ) � (574,366 ) � (667,027 ) � Cash flows from financing activities: Proceeds from sale of convertible bond hedge ? ? ? 1,494 Purchase of warrants ? ? ? (1,158 ) Repayment of debt financing ? ? ? (211,441 ) Proceeds from employee stock programs 8,532 61,349 86,302 143,140 Excess tax benefit from share-based compensation 1,899 9,075 16,015 24,895 Share repurchase program (38,577 ) (4,039 ) (230,081 ) (4,039 ) Net cash received for share repurchase contracts ? � ? � � 2,675 � ? � Net cash provided by (used in) financing activities � (28,146 ) � 66,385 � � (125,089 ) � (47,109 ) � Effect of changes in foreign currency exchange rates on cash � (3,488 ) � (898 ) � (2,425 ) � (1,289 ) � Net increase (decrease) in cash and cash equivalents (115,015 ) 92,646 (172,026 ) 338,347 � Cash and cash equivalents at beginning of period 1,110,485 1,074,850 1,167,496 829,149 � � � � � � � � Cash and cash equivalents at end of period $ 995,470 � $ 1,167,496 � $ 995,470 � $ 1,167,496 �