SanDisk Over the Last Decade

SanDisk Over the Past Three Years

 This is a TAB type table. Insert
ITEM 6. SELECTED FINANCIAL DATA

conts here.
Fiscal Years Ended
January 2, January 3, December 28, December 30, December 31,
2011(1) 2010(2) 2008(3) 2007(4) 2006(5)
(In thousands, except per share data)
Revenues
Product . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,462,930 $ 3,154,314 $ 2,843,243 $ 3,446,125 $ 2,926,472
License and royalty . . . . . . . . . . . . . . . 363,877 412,492 508,109 450,241 331,053
Total revenues . . . . . . . . . . . . . . . . . . . . . . . 4,826,807 3,566,806 3,351,352 3,896,366 3,257,525
Cost of product revenues . . . . . . . . . . . . . . . 2,564,717 2,282,180 3,288,265 2,693,647 2,018,052
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . 2,262,090 1,284,626 63,087 1,202,719 1,239,473
Operating income (loss) . . . . . . . . . . . . . . . . 1,461,574 519,390 (1,973,480) 276,514 326,334
Net income (loss) attributable to common
stockholders . . . . . . . . . . . . . . . . . . . . . . . $ 1,300,142 $ 415,310 $ (1,986,624) $ 190,616 $ 180,393
Net income (loss) attributable to common
stockholders per share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5.59 $ 1.83 $ (8.82) $ 0.84 $ 0.91
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . $ 5.44 $ 1.79 $ (8.82) $ 0.81 $ 0.87
Shares used in computing net income (loss)
attributable to common stockholders per
share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . 232,531 227,435 225,292 227,744 198,929
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . 238,901 231,959 225,292 235,857 207,451

At
January 2, January 3, December 28, December 30, December 31,
2011 2010 2008 2007 2006
(In thousands)
Working capital . . . . . . . . . . . . . . . . . . . . . . $ 3,072,585 $ 2,043,664 $ 1,450,675 $ 2,377,399 $ 3,335,858
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . 8,776,710 6,001,719 5,932,140 7,107,472 6,850,491
Convertible long-term debt . . . . . . . . . . . . . 1,711,032 934,722 954,094 903,580 856,595
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . 5,779,395 3,908,409 3,440,721 5,156,303 4,997,470
(1) Includes share-based compensation of ($77.6) million, which includes ($17.3) million due to a non-cash
modification of outstanding stock awards pursuant to the retirement of our former Chief Executive Officer,
amortization of acquisition-related intangible assets of ($14.2) million, a charge of ($17.8) million related to
a power outage experienced in Fab 3 and Fab 4 and a gain of $13.2 million related to the sale of the net
assets of our mobile phone SIM card business.
(2) Includes share-based compensation of ($95.6) million, amortization of acquisition-related intangible assets
of ($13.7) million and other-than-temporary impairment charges of ($7.9) million related to our investment

Annual Report
in FlashVision.
(3) Includes impairment charges related to goodwill of ($845.5) million, acquisition-related intangible assets of
($175.8) million, investments in our flash ventures with Toshiba of ($93.4) million, and our investment in
Tower Semiconductor Ltd., or Tower, of ($18.9) million. Also includes share-based compensation of
($97.8) million, amortization of acquisition-related intangible assets of ($71.6) million and restructuring and
other charges of ($35.5) million.
(4) Includes share-based compensation of ($133.0) million and amortization of acquisition-related intangible
assets of ($90.1) million. Also includes other-than-temporary impairment charges of ($10.0) million related
to our investment in FlashVision.
(5) Includes acquired in-process technology charges of ($225.6) million related to acquisitions of Matrix
Semiconductor Inc., or Matrix, in January 2006 and msystems Ltd., or msystems, in November 2006, share-
based compensation of ($100.6) million and amortization of acquisition-related intangible assets of
($27.8) million.

37
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
Overview
Fiscal Years Ended
January 2, % of January 3, % of December 28, % of
2011 Revenue 2010 Revenue 2008 Revenue
(In thousands, except percentages)
Product revenues . . . . . . . . . . . . $ 4,462,930 92.5% $ 3,154,314 88.4% $ 2,843,243 84.8%
License and royalty revenues . . . 363,877 7.5% 412,492 11.6% 508,109 15.2%
Total revenues . . . . . . . . . . . . . . 4,826,807 100.0% 3,566,806 100.0% 3,351,352 100.0%
Cost of product revenues . . . . . . 2,564,717 53.1% 2,282,180 64.0% 3,288,265 98.1%
Gross profit . . . . . . . . . . . . . . . . . 2,262,090 46.9% 1,284,626 36.0% 63,087 1.9%
Operating expenses
Research and
development . . . . . . . . . . 422,562 8.7% 384,158 10.8% 429,949 12.8%
Sales and marketing . . . . . . 209,797 4.4% 208,514 5.8% 328,079 9.8%
General and
administrative . . . . . . . . . 166,485 3.5% 171,359 4.8% 204,765 6.1%
Impairment of goodwill . . . — — — — 845,453 25.2%
Impairment of acquisition-
related intangible
assets . . . . . . . . . . . . . . . . — — — — 175,785 5.3%
Amortization of
acquisition-related
intangible assets . . . . . . . 1,672 0.0% 1,167 0.0% 17,069 0.5%
Restructuring and other . . . — — 38 0.0% 35,467 1.1%
Total operating expenses . . . . . . 800,516 16.6% 765,236 21.4% 2,036,567 60.8%
Operating income (loss) . . . . . . . 1,461,574 30.3% 519,390 14.6% (1,973,480) (58.9)%
Other income (expense), net . . . . (4,141) (0.1%) (15,589) (0.5)% 21,106 0.6%
Income (loss) before provision
for taxes . . . . . . . . . . . . . . . . . 1,457,433 30.2% 503,801 14.1% (1,952,374) (58.3)%
Provision for income taxes . . . . . 157,291 3.3% 88,491 2.5% 34,250 1.0%
Net income (loss) . . . . . . . . . . . . $ 1,300,142 26.9% $ 415,310 11.6% $(1,986,624) (59.3)%

General
We are the inventor and leading supplier of NAND flash data storage products. Our goal is to provide
simple, reliable, and affordable storage solutions for consumer use in a wide variety of formats and devices. We
sell our products globally to retail and OEM customers.

We design, develop and manufacture data storage solutions in a variety of form factors using our flash
memory, proprietary controller and firmware technologies. We purchase the vast majority of our NAND flash
memory supply requirements through our significant flash venture relationships with Toshiba, which produce
and provide us with leading-edge, low-cost memory wafers. Our removable card products are used in a wide
range of consumer electronics devices such as mobile phones, digital cameras, gaming devices and laptop
computers. Our embedded flash products are used in mobile phones, tablets, eReaders, GPS devices, gaming
systems, imaging devices and computing platforms. For computing platforms, we provide high-speed, high-
capacity storage solutions known as SSDs that can be used in lieu of hard disk drives.

Our strategy is to be an industry-leading supplier of NAND flash storage solutions and to develop large
scale markets for NAND-based storage products. We maintain our technology leadership by investing in
advanced technologies and NAND flash memory fabrication capacity in order to produce leading-edge, low-cost

38
 SanDisk At-A-Glance
Company Overview 1H11 Revenue, $2.7B, Mix
• Innovating in solid-state storage
7%
solutions for the past 23 years Mobile
12%
• Key enabler of large markets: Imaging

8%
Imaging, Mobile, USB Flash USB Flash
Drives
57%
Drives, Solid-state Drives 16% Other
Products

• Key assets include: joint venture IP

investments in three 300-millimeter

leading edge fabs in Japan, 1H11 Channel Mix
SanDisk owned assembly and test
facility in China
• Broad IP portfolio with 3200+ 33%
patents awarded worldwide Retail

• S&P 500/Fortune 500 OEM

67%

3 2011 Citi Technology

FINANCIAL ANALYSTConference, New York, NY.24,
DAY : FEBRUARY September
2011 7, 2011
 OEM Product Portfolio Broad
Product
Portfolio

REMOVABLE EMBEDDED PRODUCTS WAFERS SSD

& COMPONENTS CLIENT &
ENTERPRISE

8 2011 Citi Technology

FINANCIAL ANALYSTConference, New York, NY.24,
DAY : FEBRUARY September
2011 7, 2011
 Broad Retail Product Line
Broad
Product
Portfolio

IMAGING & VIDEO GAMING MOBILE COMPUTING AUDIO/VIDEO

SANDISK EXTREME® PRO™

SANDISK EXTREME®

SANDISK ULTRA®

STANDARD

9 2011 Citi Technology

FINANCIAL ANALYSTConference, New York, NY.24,
DAY : FEBRUARY September
2011 7, 2011
 Large Product Categories Drive Demand for
NAND

Digital USB A/V Mobile Tablets Solid Internet

Cameras Flash players, Phones State Enabled
Drives Gaming Drives TV, Set
& other Top Box
2015
Unit 156M 315M 234M 2,393M 327M 145M 274M*
TAM

Source:
Gartner, June, 2011 - Forecast: Semiconductor Consumption by Electronic Equipment Type, Worldwide, 2Q11 Update
*2014 forecast; Gartner, January, 2011

12 2011 Citi Technology

FINANCIAL ANALYSTConference, New York, NY.24,
DAY : FEBRUARY September
2011 7, 2011
 Well Positioned to Win
• Key player in NAND flash - a secular growth industry
• Both consumers and enterprises desire NAND flash
storage solutions
• SanDisk attributes: deep systems expertise, technology
and cost leadership, trusted partner for customers
• Focus on profitable growth
• Strong financial position

13 2011 Citi Technology

FINANCIAL ANALYSTConference, New York, NY.24,
DAY : FEBRUARY September
2011 7, 2011
 Large and Growing End Markets
KEY UNDERLYING DRIVERS: Consumer Electronics and other
1. Mobile Mobile
2. Computing Tablets
3. Video Computing excl. tablets

BILLIONS OF GB
120
110
100
90
80
70
60
50
40
30
20
10
-
2010 2011 2012 2013 2014
Note: NAND flash consumption includes both in-system and removable storage such as flash cards.
Source: Gartner November, 2010
Semiconductor Forecast Worldwide—Forecast Database [SEQS-WW-DB-DATA]. Numbers are preliminary and subject to change.

11 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 Key Growth Driver 1: Smartphones
MILLIONS OF UNITS

1,000
900
800
700
600
500
400
300
200
100
0
2010 2011 2012 2013 2014
Average NAND
content In 6 8 11 14 20
gigabytes/unit

Source: Gartner November, 2010

Semiconductor Forecast Worldwide—Forecast Database [SEQS-WW-DB-DATA]. Numbers are preliminary and subject to change.

12 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 Key Growth Driver 2: Tablets
MILLIONS OF UNITS

250

200

150

100

50

0
2010 2011 2012 2013 2014

Average NAND
content In 31 33 42 64 96
gigabytes/unit

Source: Gartner November, 2010

Semiconductor Forecast Worldwide—Forecast Database [SEQS-WW-DB-DATA]. Numbers are preliminary and subject to change.

13 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 Future Growth Driver 3: PC SSD
MILLIONS OF UNITS Entry-Level + Mainstream PC
100

80

60

40

20

2010 2011 2012 2013 2014

Average NAND
content In 90 102 130 162 232
gigabytes/unit

Source: Gartner November, 2010

Semiconductor Forecast Worldwide—Forecast Database [SEQS-WW-DB-DATA]. Numbers are preliminary and subject to change.

14 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 NAND Industry Structure
ESTIMATED NAND INDUSTRY REVENUE**
MARKET SHARE IN BILLIONS
COMPANY (IN BITS, 2010)*
$25
Samsung 30.9%
$20
Toshiba 27.1%

$15
SanDisk 19.3%

Micron 9.4% $10

Intel 6.7% $5

Hynix 6.5%
$0
2008 2009 2010E 2011E
Source:
* Gartner NAND Flash Memory Supply and Demand, Worldwide, 2009-2011 (4Q10 Update), December 2010
** Average of estimates from Gartner, IDC, iSuppli and Forward Insights, November / December 2010 reports

19 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 Gartner’s 2011 Outlook for Supply/Demand

SHORT-TERM SUPPLY/DEMAND SUFFICIENCY

2008 104.5% Oversupply

2009 95.7% Shortage
2010 99.7% Shortage
2011 100.1% Balance

Source: Chart created by SanDisk based on data from Gartner’s ―NAND Flash Supply and Demand, Worldwide, 1Q09-4Q11: 4Q10 Update,‖
December 2010

20 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 Industry Capacity Growth Rate Slowing
THE LAW OF LARGE NUMBERS Installed Base
New Capacity
Y/Y % Wafer Capacity Growth
AVERAGE MONTHLY WAFER CAPACITY (300 MM) YoY % Bit Growth
K WAFER STARTS/MONTH YEAR OVER
Y/Y WAFER YEARGROWTH
CAPACITY GROWTH

1,600 200%

1,400 175%

1,200 150%

1,000 125%

800 100%

600 75%

400 50%

200 25%

- 0%
2005 2006 2007 2008 2009 2010 2011 2012

Source: Graph prepared based on data from Forward Insights, February 2011

22 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 Strong Environment: 2011 and Beyond

COMPELLING SECULAR DEMAND DRIVERS

• NAND flash enabling proliferation of feature rich devices YER OVER YEAR GROWTH
• Strategic component in mobile internet ecosystem
• Multiple end markets drive NAND content growth

SUPPLY GROWTH RATES ARE MODERATING

• Stable industry structure and law of large numbers
• Complexity in technology transition and capacity ramp rate

OPTIMISTIC ABOUT BALANCED INDUSTRY SUPPLY AND DEMAND

• SanDisk to expand capacity prudently in line with demand projections

24 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 SanDisk 24nm: Cost Leadership

RELATIVE COST ON A MM2 /GB BASIS

1.80

1.60
HIGH USAGE OF X3 PROVIDES CLEAR COST LEADERSHIP:
2011 X3 USAGE > 50%
1.40

1.20

1.00

0.80

0.60
SanDisk/Toshiba SanDisk/Toshiba Company A Company B Company C
24nm 24nm 25nm 26nm 27nm
64Gb X3 64Gb X2 64Gb X2 64Gb X2 32Gb X2

1.0

27 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 Uniquely Positioned with Retail & OEM

RETAIL & OEM PRODUCT REVENUE

BILLIONS Retail OEM
$5.0

$4.5

$4.0

$3.5 38%
$3.0

$2.5
50%
$2.0
64%
$1.5 62%
$1.0
50%
$0.5 36%
$0.0
2008 2009 2010

42 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 Cloud Computing Effect on Laptops

• Before the cloud: take it all with you

• With cloud computing: thin is in, sync to the cloud

• Mobility becomes more valuable than bulk storage

52 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 An Accelerating Trend towards PC SSD

CHOICE HDD SSD OEM COST CURVE SSD VERSUS

MAINSTREAM HDD* IN NOTEBOOKS
Capacity 1 TB 128 GB
HDD SSD 128 GB
Features + Instant On
$300
+ Lightweight
$250
+ Slim
+ Longer battery life $200
+ Rugged
$150

$100
$50 COST
DELTA
$50

$0
2010 2014

Source: Gartner Semiconductor Forecast Worldwide—Forecast Database [SEQS-WW-DB-DATA] Nov 2010; ―Market Share and Forecast, Hard-Disk
Drives, Worldwide, 2005-2014‖ Oct 2010
* Mainstream HDD is defined to be the weighted ASP for a 2.5‖ mobile HDD

53 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 New Markets for NAND Flash
Enterprise SSD Mainstream/Entry PC SSD Tablet
REVENUE ($B)

$14
$13.3
$12.0
$12
$3.5
$3.2
$10
$8.9

$8
$2.5
$4.8
$5.8 $4.5
$6
$1.8 $3.3
$4 $3.4
$1.1 $2.1
$5.0
$2 $4.3
$1.1 $1.3 $3.1
$0.5 $2.0
$0.6 $1.0
$0
2009 2010 2011 2012 2013 2014

Source: Gartner November, 2010; Semiconductor Forecast Worldwide—Forecast Database [SEQS-WW-DB-DATA]

Numbers are preliminary and subject to change

55 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 Content Growth is Choking the Network

30+ billion pieces of content

shared on Facebook each month

Users upload 35 hours of video

every minute, more in one month than the
Big Three U.S. networks produce in 60 years

YouTube streams 200 million

videos to mobile devices daily

AT&T has reported that its mobile traffic

increased 5,000% in the past 3 years
Cisco VMI 2010, FCC 11/30/10 , Expert interviews, Facebook.com, Rysavy Research, NYU Stern School of Business,
Nielsen Research, IDG, comScore, GSA

57 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 Our Cup Runneth Over
―We expect a 40-fold
increase in [US] mobile
Internet demand over the
next five years…compared
to a three-fold increase
in spectrum for mobile
broadband coming online.‖
— JULIUS GENACHOWSKI,
FCC CHAIRMAN, APRIL 2010

HSPA is ―High Speed Packet Access‖, a protocol supporting up to 14Mbits/second download and 5.8Mbits/second upload
Source: Cisco

58 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 Embedded: Key Growth Driver for OEM

EMBEDDED NAND MARKET OEM EMBEDDED DESIGN WINS

PETABYTES (PB) # OF DESIGN WINS
4,500 250
4,000
3,500 200

3,000
150
2,500
2,000
100
1,500
1,000 50
500
- 0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q4
09 09 09 09 10 10 10 10 11 11 11 11 09 10
iNAND Design-win pipeline has more
than doubled since Q4/09

Source: Forward Insights —NAND Quarterly Insights Q4/10

81 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 Embedded Opportunity is Immense

TABLET & SMARTPHONE NAND TAM

PETABYTES (PB) ■ Tablets ■ Smart Phones
40,000

35,000
More than 50% of 2011
30,000
Embedded Mobile Device
25,000 Models Qualified SanDisk
20,000
Tablet
15,000

10,000

5,000

- Smart Phone
2010 2011 2012 2013 2014

Source: Gartner November, 2010

Semiconductor Forecast Worldwide--Forecast Database [SEQS-WW-DB-DATA]

95 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 2010 Revenue Achieves Record Each Quarter
• Y/Y Growth Rate Highest since 2006
• Seasonality Moderated by OEM Growth Trends

$3,258 $3,896 $3,351 $3,567 $4,827

IN MILLIONS +35% Growth
+41% Growth +20% Growth -14% Decline +6% Growth
$1,400

$1,200

$1,000

$800

$600

$400

$200

$0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2006 2007 2008 2009 2010

177 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 Strong Unit Growth
OEM +58%
Retail +9%
Y/Y UNIT GROWTH RATE
+106% +75% +15% +26% +41%

UNITS IN MILLIONS

600

500

400

300

200

100

0
2006 2007 2008 2009 2010

178 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 OEM Channel Drove
Revenue Growth 2009–2010
OEM: RETAIL:
• Strong Product Category – Mobile • Maintained/Grew WW Share
• Embedded Market Share Gains • ASP/Unit ~Constant
• Channel Expansion – Private Label, Wafers • Significant Margin Expansion

IN MILLIONS OEM RTL

%’s represent y/y change in revenue +75%
$3,000

$2,500
63%
$2,000 -16% 56%
+54% +8%
59%
-14%
$1,500
41%
-20%
$1,000

$500

$0
2008 2009 2010

179 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 Mobile Market Now
Half of SanDisk Business
2010 /2009
REVENUE
END MARKET 2006 2007 2008 2009 2010 GROWTH
Mobile 25% 35% 34% 41% 50% +64%
Imaging 37% 26% 25% 24% 22% +22%
USB 14% 14% 13% 13% 9% 0%
Other Markets 14% 13% 14% 10% 11% +50%
License & Royalty 10% 12% 15% 12% 8% -12%
TOTAL REVENUE 100% 100% 100% 100% 100% +35%

MOBILE IS A MEGA-MARKET WITH MULTIPLE SEGMENTS:

• Smartphones
• Featurephones
• Tablets, e-readers, smartbooks

180 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 Cost Reduction & Price Management 
Record Gross Margin in 2010
ASP/GB Underlying Cost/GB*

-70% -60% -62%

-58%
-60% -52% -52%
PRICING: COST:
-50% -55% -55% -55% STRONG
BALANCED -54%
SUPPLY/DEMAND & -40% -46% REDUCTION
-48%
PRICING OPTIMIZATION -30% CONTINUES
-19%
-20%
-10%
0%
2005 2006 2007 2008 2009 2010

Underlying Product GM*

60%
35% 32%
40%
24% 43%
20% 8%
13%
0%
2005 2006 2007 2008 2009 2010

* Underlying Cost/GB & Product GM are calculated using Non-GAAP Cost of Sales, adjusted as follows:
2008: excludes inventory reserves, fab impairment charges, and accruals for 2009 fab underutilization
2009: excludes inventory reserve benefits, and includes all costs for 2009 fab underutilization

181 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 Record Operating Margin In 2010
Underlying Oper Income Accounting Charges/Benefits % of Revenue
OPERATING INCOME (LOSS) OPERATING INCOME
IN MILLIONS % OF TOTAL REVENUE

$2,000 42%
32%
$1,500 30%

$1,000 18%

$500 6%

$0 -6%

-$500 -18%

-$1,000 -30%
2006 2007 2008 2009 2010

• Non-GAAP excludes stock comp expense, acquisition amortizations, purchase accounting adjustments and impairments.
• Underlying Operating Income/Loss:
• 2008: excludes inventory reserves, fab impairment charges, and accruals for 2009 fab underutilization
• 2009: excludes inventory reserve benefits, and includes all costs for 2009 fab underutilization

185 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 Earnings Per Share

EPS $2.51 $1.72 ($2.07) $1.84 $4.60

$1.70

1.30 1.27
1.18
$1.20 1.08
0.95
0.87
0.75
0.69
$0.70 0.58 0.61 0.54
0.44
0.30 0.36
0.19 0.21
$0.20

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
$(0.30) -0.10

-0.48
-0.59
$(0.80)

$(1.30)

-1.59
$(1.80)

2006 2007 2008 2009 2010

Non-GAAP excludes stock comp expense, acquisition amortizations, purchase accounting adjustments and impairments, non-cash
economic interest expense and tax valuation allowances.

186 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 2010 CF From OPS > 2X Previous High
Free Cash Flow $1.36B
IN MILLIONS Cash Flow from Operations Cash Used in Investing FCF

2006 2007 2008 2009 2010

$1,452 $1,362

$598 $653
$488 $438
$259
$88

($49) ($90)
($247) ($338)
($339)
($426)

($900)

Cash Used in Investing excludes purchases, sales and maturities of short-term and long-term marketable securities.

187 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 2010 Capital Investments
Required Minimal Cash
• Fab 3 – 32nm
• Fab 4 – 32nm, some 24nm, capacity expansion
• $944M JV Funding:
• ~$550M positive cash flow from depreciation
• ~$400M timing benefit – payments will occur in 2011

$ IN MILLIONS

CAPITAL INVESTMENTS 2006 2007 2008 2009 2010

Fab 1&2 15 - - - -
Fab 3 905 899 260 69 192
Fab 4 4 700 1,174 241 752
TOTAL JOINT VENTURE FABS $924 $1,599 $1,433 $310 $944
Other SanDisk CapEx 176 259 184 60 108
TOTAL CAPITAL INVESTMENTS $1,100 $1,858 $1,617 $370 $1,052
FUNDING
Sale of Tools/Restructuring of JVs - - 39 277 -
JV Oper Cash Flow/Return of Capital 237 373 207 55 944
JV Operating Lease Financing 482 612 945 - -
Net Cash Outlay 381 872 426 38 108
TOTAL FUNDING $1,100 $1,858 $1,617 $370 $1,052

188 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 Inventory Turns Increasing
ANNUALIZED TURNS
Inventory Turns in Petabytes
8

0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
08 08 08 08 09 09 09 09 10 10 10 10

189 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 Balance Sheet Continues to Strengthen
CASH & MARKETABLE SECURITIES1 NET CASH2
IN MILLIONS IN MILLIONS

$6,000 $3,500
$5,000 $3,000
$4,000 $2,500
$2,000
$3,000
$1,500
$2,000 $1,000
$1,000 $500
$0 $0
2008 2009 2010 2008 2009 2010
WORKING CAPITAL LEASE GUARANTEES3
IN MILLIONS IN MILLIONS
$3,500 $2,500
$3,000
$2,000
$2,500
$2,000 $1,500
$1,500 $1,000
$1,000
$500
$500
$0 $0
2008 2009 2010 2008 2009 2010
1
Marketable Securities include Short-term & Long-term Marketable Securities
2
Net Cash = Cash + Short-term & Long-term Marketable Securities Less Maturity Value of Debt
3
Lease Guarantees = Fab Equipment Lease Guarantees

190 FINANCIAL ANALYST DAY : FEBRUARY 24, 2011

 SANDISK CORPORATION
CONSOLIDATED BALANCE SHEETS
January 2, January 3,
2011 2010
(In thousands, except for share
and per share amounts)
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 829,149 $ 1,100,364
Short-term marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,018,565 819,002
Accounts receivable from product revenues, net . . . . . . . . . . . . . . . . . . . . . . . . . 367,784 234,407
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 509,585 596,493
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104,582 66,869
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203,027 97,639
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,032,692 2,914,774
Long-term marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,494,972 1,097,095
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266,721 300,997
Notes receivable and investments in flash ventures with Toshiba . . . . . . . . . . . . . . . . 1,733,491 1,507,550
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149,486 21,210
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,404 58,076
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,944 102,017
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,776,710 $ 6,001,719
LIABILITIES
Current liabilities:
Accounts payable trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 173,259 $ 134,427
Accounts payable to related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241,744 182,091
Convertible short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 75,000
Other current accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 284,709 234,079
Deferred income on shipments to distributors and retailers and deferred
revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260,395 245,513
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 960,107 871,110
Convertible long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,711,032 934,722
Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 326,176 287,478
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,997,315 2,093,310
Commitments and contingencies (see Note 12)
EQUITY
Stockholders’ equity:
Preferred stock, $0.001 par value, Authorized shares: 4,000,000, Issued and
outstanding: none . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
Common stock, $0.001 par value; Authorized shares: 800,000,000; Issued and
outstanding: 236,501,736 in fiscal year 2010 and 228,656,504 in fiscal year
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237 229
Capital in excess of par value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,709,506 4,268,845
Retained earnings (accumulated deficit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 812,653 (487,489)
Accumulated other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260,228 128,713
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,782,624 3,910,298
Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,229) (1,889)
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,779,395 3,908,409
Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,776,710 $ 6,001,719

The accompanying notes are an integral part of these consolidated financial statements.

F-4
 This is a TAB type table. Insert
SANDISK CORPORATION

conts here.
CONSOLIDATED STATEMENTS OF OPERATIONS

Fiscal Years Ended

January 2, January 3, December 28,
2011 2010 2008
(In thousands, except per share amounts)
Revenues
Product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,462,930 $ 3,154,314 $ 2,843,243
License and royalty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363,877 412,492 508,109
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,826,807 3,566,806 3,351,352
Cost of product revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,552,188 2,269,651 3,233,753
Amortization of acquisition-related intangible assets . . . . . . . . . . . . . 12,529 12,529 54,512
Total cost of product revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,564,717 2,282,180 3,288,265
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,262,090 1,284,626 63,087
Operating expenses
Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 422,562 384,158 429,949
Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209,797 208,514 328,079
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166,485 171,359 204,765
Impairment of goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 845,453
Impairment of acquisition-related intangible assets . . . . . . . . . . — — 175,785
Amortization of acquisition-related intangible assets . . . . . . . . . 1,672 1,167 17,069
Restructuring and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 38 35,467
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 800,516 765,236 2,036,567
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,461,574 519,390 (1,973,480)
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,361 63,273 94,417
Gain (loss) in equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,612 (1,646) (39,568)
Interest (expense) and other income (expense), net . . . . . . . . . . . . . . (89,114) (77,216) (33,743)
Total other income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,141) (15,589) 21,106
Income (loss) before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,457,433 503,801 (1,952,374)
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157,291 88,491 34,250
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,300,142 $ 415,310 $ (1,986,624)
Net income (loss) per share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5.59 $ 1.83 $ (8.82)

Annual Report
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5.44 $ 1.79 $ (8.82)
Shares used in computing net income (loss) per share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232,531 227,435 225,292
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238,901 231,959 225,292

The accompanying notes are an integral part of these consolidated financial statements.

F-5
 This is a TAB type table. Insert
SANDISK CORPORATION

conts here.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal Years Ended
January 2, January 3, December 28,
2011 2010 2008
(In thousands)
Cash flows from operating activities:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,300,142 $ 415,310 $ (1,986,624)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Deferred and other taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (172,327) (12,884) 146,141
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132,818 152,606 175,179
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93,961 78,090 131,550
Provision for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,575) (719) 8,778
Share-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,590 95,560 97,799
Excess tax benefit from share-based compensation . . . . . . . . . . . . . . . . (29,626) — (1,938)
Impairments, restructuring and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . (41,505) 4,293 1,146,407
Other non-operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,054 (2,757) 19,856
Changes in operating assets and liabilities:
Accounts receivable from product revenues . . . . . . . . . . . . . . . . . . (132,479) (111,597) 332,113
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,314 (13,485) (42,969)
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (127,629) 324,981 (320,593)
Accounts payable trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,957 (106,634) (48,727)
Accounts payable to related parties . . . . . . . . . . . . . . . . . . . . . . . . . 59,653 (187,915) 215,563
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129,544 (146,995) 215,189
Total adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151,750 72,544 2,074,348
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . 1,451,892 487,854 87,724
Cash flows from investing activities:
Purchases of short and long-term marketable securities . . . . . . . . . . . . . . . . . (5,803,438) (1,668,978) (1,986,338)
Proceeds from sales of short and long-term marketable securities . . . . . . . . . 2,771,840 1,137,734 1,697,052
Proceeds from maturities of short and long-term marketable securities . . . . . 407,001 205,874 744,322
Proceeds from sales of property and equipment . . . . . . . . . . . . . . . . . . . . . . . — — 39,680
Acquisition of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (108,142) (59,733) (184,033)
Investment in Flash Partners Ltd. and Flash Alliance Ltd. . . . . . . . . . . . . . . . — — (96,705)
Distribution from FlashVision Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 12,713 102,530
Notes receivable proceeds, Flash Partners Ltd. and Flash Alliance Ltd. . . . . 59,664 387,278 —
Notes receivable proceeds, Tower Semiconductor Ltd. . . . . . . . . . . . . . . . . . — — 3,125
Notes receivable issuance, Flash Partners Ltd. and Flash Alliance Ltd. . . . . . (59,880) (377,923) (287,488)
Purchased technology and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 473 (11,790) 1,786
Proceeds from sale of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,767 — —
Acquisition of MusicGremlin, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (4,604)
Net cash provided by (used in) investing activities . . . . . . . . . . . . . . . . . (2,714,593) (374,825) 29,327
Cash flows from financing activities:
Proceeds from issuance of convertible senior notes, net of issuance costs . . . 982,500 — —
Purchase of convertible bond hedge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (292,900) — —

Annual Report
Proceeds from sale of warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188,100 — —
Proceeds from employee stock programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152,843 20,878 19,701
Repayment of debt financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (75,000) — (9,785)
Distribution to non-controlling interests, net . . . . . . . . . . . . . . . . . . . . . . . . . . — — (916)
Excess tax benefit from share-based compensation . . . . . . . . . . . . . . . . . . . . 29,626 — 1,938
Net cash provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . 985,169 20,878 10,938
Effect of changes in foreign currency exchange rates on cash . . . . . . . . . . . . . . . . 6,317 4,396 323
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . (271,215) 138,303 128,312
Cash and cash equivalents at beginning of the year . . . . . . . . . . . . . . . . . . . . . . . . 1,100,364 962,061 833,749
Cash and cash equivalents at end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 829,149 $ 1,100,364 $ 962,061
Supplemental disclosure of cash flow information:
Cash refunded (paid) for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (338,328) $ 123,977 $ (129,141)
Cash paid for interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (12,323) $ (13,001) $ (12,386)

The accompanying notes are an integral part of these consolidated financial statements.

F-7
 Stockholders Letter
Letter to our Stockholders

2010 was a record year for SanDisk. Strong demand drivers for flash memory combined with our diversified
customer base and solid execution allowed us to deliver our best year ever with a record $4.8 billion in revenues
as well as record profitability and cash flows. We demonstrated our expertise in NAND flash memory technology
and system development through our deployment of 3-bit per cell flash in more than 50% of our sales. The
growth in our embedded product sales highlighted our ability to develop and implement end market solutions.
Solutions that, with our deep involvement with our partners, satisfy our customer needs. Our focus on operational
excellence and cost discipline enabled continued cost leadership, contributing to our record gross margins and
operating margins.

2010 Business Overview

If you recall, back in 2009, we had a focused initiative within SanDisk to broaden our channels and diversify our
customer base, especially within the OEM segment of our business. Those efforts began paying off in the second
half of 2009 and continued throughout 2010, contributing to our strong revenue growth in 2010. Our OEM
revenue grew 75% on a year-over-year basis and accounted for 62% of our product revenue. We gained
significant market share in the embedded business within OEM, as customers began adopting our iNAND™ and
other embedded solutions. Another noteworthy accomplishment was the initial success in migrating some of our
customers to our 3-bits per cell-based iNAND, an industry first in our view.

Our retail business accounted for 38% of product revenue and it grew 8% on a year-over-year basis. We
maintained or grew retail share across all key geographies and we enhanced our product mix, contributing to
significant expansion of retail gross margins in 2010.

From an end market perspective, the mobile market remained the key driver of our business and it accounted for
50% of our business mix, up from just 25% four years ago. The mobile business grew 64% on a year-over-year
basis. The imaging market accounted for 22% of our business and grew 22% as well on a year-over-year basis.
We gained imaging market share with both our SanDisk branded products as well as through sales to our private
label customers. The USB flash drive market drove 9% of our business in 2010, with the revenue level similar to
2009, as we consciously allocated our memory supply to optimize for price and profitability.

Growth Drivers
As we look ahead, we are focused on several powerful demand catalysts for flash memory, including:
smartphones, tablets, solid-state drives (“SSD”) for personal computers (“PCs”) and the Cloud.

Smartphones: With increasing functionality for still photos, music, video, television, navigation, games and
more, smartphones are providing an enhanced life-style experience to consumers worldwide. In addition, the
price points of smartphones continue to trend lower, largely due to carrier subsidies. As a result of increasing
functionality and affordability, according to market analysts, smartphone sales are expected to increase to nearly
a billion units by 2014. Many, if not most, of the smartphones contain high capacity NAND flash storage
solutions either in embedded or in removable formats. Our iNAND and other embedded solutions are broadly
used in a wide variety of smartphones available in the market today, and many of the smartphone models are also
sold with bundled SanDisk branded cards.

Tablets: The launch of the Apple iPad™ in 2010 galvanized a whole new category for NAND flash. According
to market analysts, this market started in the second half of 2010 and quickly grew to consume nearly 5% of
NAND industry supply for the full year 2010. A key enabler of richer media experience for consumers and a
productivity enhancer for business customers, tablets blur the demarcation between a smartphone and a portable
computer. Our iNAND product, which complies with the e-MMC interface for data transfer protocols, has been
designed into many of the tablet models. As this nascent market shifts to adopt the Serial ATA (“SATA”)
interface, we believe that our iSSD products, that support the SATA interface, will begin to gain traction.
Solid-state drives (for PCs): Most believe that the key attributes of an ideal portable computer are thin, instant
on, lightweight, rugged, low battery usage, low heat dissipation, and low noise. These features can currently be
enabled only with NAND flash as the high capacity storage medium. There is a certain segment where SSD can
be viewed as a replacement market for hard disk drives (“HDD”) and this market is likely to be price sensitive.
We still think that at a price point of about $1 per gigabyte (at the end consumer level), the case for SSD to
replace a traditional HDD is quite compelling and we believe the industry will be closer to this price point in the
next few years, resulting in significant demand growth for NAND Flash. We are working on developing
solutions for this emerging client SSD market.

Cloud: We see the Cloud as another opportunity for NAND flash. As more and more data are stored in and
accessed from the Cloud, we expect NAND flash to play a key role at both ends of the Cloud network: the
enterprise data center and the client. In the enterprise data center, NAND flash can be used to support very high
data transfer rates into and out of the servers by leveraging NAND flash’s inherent strength in sequential memory
access. The data transfer rates that an SSD can support can be 100 times faster than with HDD, and can be
provided on a very cost effective basis. We see the enterprise as an exciting opportunity and we are evaluating
ways to address that segment. On the client end, we believe that NAND flash represents the last node on the
network, residing with you in a smartphone or other connected client. It is at this last node that we see
opportunity for SanDisk to provide innovative solutions to service providers. Cricket’s Muve Music™,
MetroPCS and Softbank are already taking advantage of our card-based solutions by offering differentiated
services to their end customers.

From a supply standpoint, in order to meet our customer demand for NAND flash solutions, that we expect will
grow over the next several years, we made a strategic decision to invest in our third 300-millimeter wafer joint-
venture fab along with our partner Toshiba. Construction of Fab 5 is underway and we expect the facility to
begin augmenting our existing supply base in the second half of 2011 and beyond.

Key Strategic Advantages

SanDisk’s strengths rest on three important pillars: first, ability to develop and commercialize innovative
solutions. We achieve this through our leadership in memory technology and its successful implementation with
effective systems solutions approaches. For example, our SanDisk® strongECC™ is an intelligent, proprietary,
solution that is embedded in our advanced controllers. This solution utilizes sophisticated signal processing
techniques to reliably write into and read from the NAND flash memory devices. This approach, combined with
other system level expertise capabilities, has allowed us to continue to drive a high mix of our 3-bits per cell
memory in a broad array of removable and embedded solutions.

Secondly, operational excellence and cost leadership. Our two joint venture manufacturing facilities in Japan
represent the world’s largest source of NAND flash supply, providing us with the advantage of scale, a key factor
in our memory cost leadership. We began ramping the 24-nanometer manufacturing technology on 2-bits per cell
as well as on the 3-bits per cell memory architectures. The 24-nanometer technology is expected to be a key cost
reduction driver in 2011. Our assembly and test facility in Shanghai has become a very important competitive
advantage for us as well since it began operations in 2007. We also continue to rely on our subcontractors for our
back end needs. The scale of our operations continues to expand, and we sold nearly 600 million units in 2010.

Thirdly, the diversity of our customer base, through our retail and OEM channels, is unsurpassed and is one of
the strongest assets for SanDisk. We have cultivated deep engagements with our customers and we remain
focused on delivering the high-quality solutions that they expect from us.

I would like to close by expressing my pride in the 3,469 global employees of SanDisk who have helped bring us
to this point. We entered 2011 with strong operating momentum, compelling products and solutions, a solid
balance sheet and solid customer engagement, and this sets the stage for continued growth of our business in
2011 and beyond. I would like to thank you, our stockholders, for your continuing support and confidence in
SanDisk. I trust you share our excitement and passion in driving our business forward and in delighting the
customers that store their worlds in ours.
 Stockholders Letter
On March 11, 2011, Japan experienced the most powerful earthquake and resulting tsunami in over 100 years.
We are grateful that our employees in Japan were not harmed and our prayers go to those impacted by these
tragic events. Our joint venture fabs were not damaged and suffered minimal downtime due to the earthquake. As
I write this letter, the SanDisk team is working diligently to manage the impact on our business. It will take time
to work through this process, but I am confident in our team’s ability to minimize the future impact on SanDisk.

Sincerely yours,

Sanjay Mehrotra
President and Chief Executive Officer
Press Release
SanDisk Announces Second Quarter 2011 Financial Results
Reports best quarterly revenue in SanDisk's history

MILPITAS, Calif., Jul 21, 2011 (BUSINESS WIRE) --

SanDiskCorporation (NASDAQ:SNDK), a global leader in flash memory storage solutions,

today announced results for the second fiscal quarter ending July 3, 2011. Total second quarter
revenue of $1.375 billion increased 17% on a year-over-year basis and increased 6% on a
sequential basis. Second quarter net income, in accordance with U.S. Generally Accepted
Accounting Principles (GAAP), was $248 million, or $1.02 per diluted share, compared to net
income of $258 million, or $1.08 per diluted share in the second quarter of fiscal 2010 and $224
million, or $0.92 per diluted share, in the first quarter of fiscal 2011.

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 convertible debts and related tax adjustments, second-quarter net income
was $278 million, or $1.14 per diluted share, compared to net income of $258 million, or $1.08
per diluted share, in the second quarter of fiscal 2010 and net income of $251 million, or $1.03
per diluted share, in the first quarter of fiscal 2011. For reconciliation of non-GAAP to GAAP
results, see accompanying financial tables and footnotes.

"We delivered record quarterly revenue, driven by our broad product offerings and our well
diversified Retail and OEM channels," said Sanjay Mehrotra, President and CEO, SanDisk.
"Solid execution on product cost reductions enabled strong profitability. Our integration of
Pliant Technology is progressing well and we are excited by our business prospects in the
enterprise storage segment."

SECOND QUARTER 2011 KEY FINANCIAL METRICS

 Total second quarter revenue was $1.375 billion, up 17% year-over-year and up 6%
sequentially.
 Total second quarter gross profit, product gross profit and operating income compared
on a year-over-year and sequential basis are shown in the table below:

GAAP Non-GAAP
Metric
Q211 Q210 Q111 Q211 Q210 Q111
in millions of US$, except %
Total gross profit $613 $546 $552 $623 $551 $558

% of total revenue 44.6% 46.3% 42.6% 45.3% 46.7% 43.1%

Product gross profit $520 $459 $468 $530 $463 $474

% of product revenue 40.6% 42.0% 38.6% 41.3% 42.4% 39.1%

Operating income $379 $359 $349 $402 $377 $369

% of total revenue 27.6% 30.4% 27.0% 29.3% 32% 28.5%

 Cash flow from operations in the second quarter was $269 million and free cash flow(1)
was ($232) million.
 Total cash and cash equivalents and short and long-term marketable securities at the end
of the second quarter of fiscal 2011 was $5.28 billion compared to $3.72 billion at the
end of the second quarter of fiscal 2010 and $5.51 billion at the end of the first quarter
of fiscal 2011.

OTHER HIGHLIGHTS

 SanDisk, along with its manufacturing partner Toshiba, announced the opening of Fab
5, their third 300-millimeter joint venture wafer fab in Yokkaichi, Japan.
 SanDisk completed the acquisition of Pliant Technology, Inc., a leading developer of
enterprise solid state drives. With the completion of the transaction, Pliant became
SanDisk's Enterprise Storage Solutions business.
 SanDisk expanded its Lightning(R) Enterprise Flash Drive family with six new 2.5-inch
6GB SAS (6 gigabits per second Serial Attached SCSI) models.
 SanDisk augmented its embedded product line up with the announcement of the
SanDisk iNAND Extreme(TM) embedded flash drives. Combined with the iNAND(TM)
and iNAND Ultra(TM) products, the iNAND family of products now cover the needs of
all mobile market segments, from feature phones to high-end tablets.
(1)
Free cash flow represents net cash provided by operating activities plus net cash used in
investing activities less net purchases, sales and maturities of short- and long-term marketable
securities.
 SanDisk Corporation
Preliminary Condensed Consolidated Statements of Operations
(in thousands, except per share amounts, unaudited)

Three months ended Six months ended

July 3, 2011 July 4, 2010 July 3, 2011 July 4, 2010
Revenues:
Product $ 1,281,960 $ 1,091,315 $ 2,492,207 $ 2,084,510
License and royalty 93,033 87,753 176,986 181,221
Total revenues 1,374,993 1,179,068 2,669,193 2,265,731

Cost of product revenues 753,307 629,554 1,490,799 1,212,907

Amortization of acquisition-related intangible assets 8,254 3,132 13,370 6,264
Total cost of product revenues 761,561 632,686 1,504,169 1,219,171
Gross profit 613,432 546,382 1,165,024 1,046,560

Operating expenses:
Research and development 145,332 99,799 264,874 198,452
Sales and marketing 48,200 52,094 95,657 100,595
General and administrative 40,154 35,399 75,453 74,123
Amortization of acquisition-related intangible assets 730 291 730 583
Total operating expenses 234,416 187,583 436,714 373,753

Operating income 379,016 358,799 728,310 672,807

Other income (expense) (14,273) (24) (32,639) 8,962

Income before income taxes 364,743 358,775 695,671 681,769
Provision for income taxes 116,353 100,881 223,157 189,184

Net income $ 248,390 $ 257,894 $ 472,514 $ 492,585

Net income per share:

Basic $ 1.04 $ 1.11 $ 1.98 $ 2.14
Diluted $ 1.02 $ 1.08 $ 1.94 $ 2.07

Shares used in computing net income per share:

Basic 238,851 231,673 238,162 230,487
Diluted 243,862 239,801 243,718 238,566
 SanDisk Corporation
Preliminary Condensed Consolidated Balance Sheets
(in thousands, unaudited)

July 3, 2011 January 2, 2011

ASSETS
Current assets:
Cash and cash equivalents $ 974,854 $ 829,149
Short-term marketable securities 1,719,354 2,018,565
Accounts receivable from product revenues, net 377,102 367,784
Inventory 553,753 509,585
Deferred taxes 138,460 104,582
Other current assets 143,956 203,027
Total current assets 3,907,479 4,032,692

Long-term marketable securities 2,584,332 2,494,972

Property and equipment, net 271,166 266,721
Notes receivable and investments in the flash ventures with Toshiba 2,062,429 1,733,491
Deferred taxes 85,934 149,486
Goodwill 154,899 ―
Intangible assets, net 330,127 37,404
Other non-current assets 91,441 61,944

Total assets $ 9,487,807 $ 8,776,710

LIABILITIES
Current liabilities:
Accounts payable trade $ 181,377 $ 173,259
Accounts payable to related parties 275,611 241,744
Other current accrued liabilities 315,560 284,709
Deferred income on shipments to distributors and retailers and deferred revenue 254,152 260,395
Total current liabilities 1,026,700 960,107

Convertible long-term debt 1,759,217 1,711,032

Non-current liabilities 341,576 326,176
Total liabilities 3,127,493 2,997,315

EQUITY
Stockholders' equity:
Common stock 4,808,640 4,709,743
Retained earnings 1,285,167 812,653
Accumulated other comprehensive income 269,927 260,228
Total stockholders' equity 6,363,734 5,782,624
Non-controlling interests (3,420) (3,229)
Total equity 6,360,314 5,779,395

Total liabilities and equity $ 9,487,807 $ 8,776,710

 SanDisk Corporation
Preliminary Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)

Three months ended Six months ended

July 3, 2011 July 4, 2010 July 3, 2011 (1) July 4, 2010
Cash flows from operating activities:
Net income $ 248,390 $ 257,894 $ 472,514 $ 492,585
Adjustments to reconcile net income to net cash flows from operating activities:
Deferred taxes (13,398) (18,287) (7,224) (78,909)
Depreciation 27,862 34,040 57,637 69,105
Amortization 40,511 20,437 73,350 40,588
Provision for doubtful accounts (209) (977) (2,954) (2,599)
Share-based compensation expense 14,358 14,977 28,949 31,847
Excess tax benefit from share-based compensation (5,399) (11,561) (11,811) (13,728)
Impairments, restructuring and other (6,268) 4,085 (19,445) (16,238)
Other non-operating 21,235 9,674 41,683 18,939
Changes in operating assets and liabilities:
Accounts receivable from product revenues (132,051) (109,829) (587) (109,935)
Inventory (50,380) 73,742 (34,001) 100,230
Other assets (47,620) 2,292 (71,369) 23,577
Accounts payable trade 32,852 19,836 (3,457) (19,072)
Accounts payable to related parties 64,363 53,996 33,867 14,953
Other liabilities 75,000 34,747 110,733 162,002
Total adjustments 20,856 127,172 195,371 220,760

Net cash provided by operating activities 269,246 385,066 667,885 713,345

Cash flows from investing activities:

Purchases of short and long-term marketable securities (972,067) (831,546) (1,609,568) (1,442,959)
Proceeds from sale of short and long-term marketable securities 974,177 474,434 1,471,780 691,711
Proceeds from maturities of short and long-term marketable securities 206,570 125,295 323,810 169,015
Acquisition of property and equipment (27,608) (22,486) (61,353) (37,414)
Investment in Flash Forward Ltd. (18,272) ― (18,333) ―
Distribution from FlashVision Ltd. ― ― ― 122
Notes receivable issuance, Flash Partners Ltd. and Flash Alliance Ltd. (152,811) ― (366,762) ―
Notes receivable proceeds, Flash Partners Ltd. and Flash Alliance Ltd. ― ― 85,096 ―
Proceeds from sale of assets ― ― ― 17,767
Purchased technology and other assets ― ― (100,000) (1,982)
Acquisition of Pliant Technology, Inc., net of cash acquired (302,649) ― (317,649) ―
Net cash used in investing activities (292,660) (254,303) (592,979) (603,740)

Cash flows from financing activities:

Repayment of debt financing ― ― ― (75,000)
Proceeds from employee stock programs 16,458 66,401 58,606 84,356
Excess tax benefit from share-based compensation 5,399 11,561 11,811 13,728
Net cash provided by financing activities 21,857 77,962 70,417 23,084

Effect of changes in foreign currency exchange rates on cash 1,961 5,775 382 3,958

Net increase in cash and cash equivalents 404 214,500 145,705 136,647

Cash and cash equivalents at beginning of period 974,450 1,022,511 829,149 1,100,364

Cash and cash equivalents at end of period $ 974,854 $ 1,237,011 $ 974,854 $ 1,237,011

(1) $15 million of cash used during the first quarter of fiscal year 2011 for the Pliant acquisition has been reclassified from ‘Purchased technology and other assets’ to ‘Acquisition of Pliant
Technology, Inc., net of cash acquired.’
SNDK Analyst Estimates | SanDisk Corporation Stock - Yahoo! Finance http://finance.yahoo.com/q/ae?s=SNDK+Analyst+Estimates

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GET QUOTES Finance Search Fri, Oct 7, 2011, 6:23PM EDT - U.S. Markets closed

SanDisk Corp. (SNDK) At 4:00PM EDT: 43.14 0.51 (1.17%)

Analyst Estimates Get Analyst Estimates for:

Current Qtr. Next Qtr. Current Year Next Year AdChoices

Earnings Est
Sep 11 Dec 11 Dec 11 Dec 12
Avg. Estimate 1.07 1.22 4.46 4.64
No. of Analysts 18.00 18.00 17.00 18.00
Low Estimate 0.92 0.96 4.06 3.56
High Estimate 1.25 1.48 4.85 6.00
Year Ago EPS 1.30 1.27 4.60 4.46

Next Earnings Date: Oct 20, 2011 - Set a Reminder

Current Qtr. Next Qtr. Current Year Next Year

Revenue Est
Sep 11 Dec 11 Dec 11 Dec 12
Avg. Estimate 1.42B 1.58B 5.69B 6.59B
No. of Analysts 21 21 24 24
Low Estimate 1.38B 1.49B 5.54B 5.95B
High Estimate 1.50B 1.70B 5.88B 7.73B
Year Ago Sales 1.23B 1.33B 4.83B 5.69B
Sales Growth (year/est) 15.00% 19.30% 17.80% 15.90%

Earnings History Sep 10 Dec 10 Mar 11 Jun 11

EPS Est 1.05 1.10 1.00 1.00
EPS Actual 1.30 1.27 1.03 1.14
Difference 0.25 0.17 0.03 0.14
Surprise % 23.80% 15.50% 3.00% 14.00%

Current Qtr. Next Qtr. Current Year Next Year

EPS Trends
Sep 11 Dec 11 Dec 11 Dec 12
Current Estimate 1.07 1.22 4.46 4.64
7 Days Ago 1.07 1.22 4.46 4.64
30 Days Ago 1.07 1.19 4.38 4.58
60 Days Ago 1.06 1.20 4.40 4.63
90 Days Ago 1.11 1.25 4.41 4.84

Current Qtr. Next Qtr. Current Year Next Year

EPS Revisions
Sep 11 Dec 11 Dec 11 Dec 12
Up Last 7 Days 0 0 0 0
Up Last 30 Days 1 2 2 2
Down Last 30 Days 0 0 0 0
Down Last 90 Days N/A N/A N/A N/A

Growth Est SNDK Industry Sector S&P 500

Current Qtr. -17.70% 14.00% N/A 23.10%
Next Qtr. -3.90% 38.10% 501.20% 29.90%
This Year -3.00% 6.60% 16.60% 14.40%
Next Year 4.00% 19.50% 21.10% 14.60%
Past 5 Years (per annum) 25.40% N/A N/A N/A
Next 5 Years (per annum) 14.07% 15.65% 18.79% 10.82%
Price/Earnings (avg. for
8.73 19.88 16.57 11.72
comparison categories)

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