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2003 ANNUAL REPORT
ON FORM 10-K

Table of contents

  • Page 1
    2003 ANNUAL REPORT ON FORM 10-K

  • Page 2
    ... for this card format. Our CruzerË› USB Ã-ashdrive lineup now includes Mini, Micro and Titanium versions and has been well received in the market. Intellectual Property SanDisk has 339 patents issued and more patents pending in the areas of Ã-ash chip design, process, device, controllers, MLC and...

  • Page 3
    ... and conÃ'dence of our customers, employees and stockholders. The Future of Flash is Everywhere. Store Your World in Ours! Eli Harari President and Chief Executive OÇcer This letter contains forward looking statements that are based on our current expectations and beliefs. These forward looking...

  • Page 4
    ...,990 (based upon the closing price for shares of the Registrant's common stock as reported by the Nasdaq National Market on that date, the last trading date of the Registrant's most recently completed second quarter). Shares of common stock held by each oÇcer, director and each person known to the...

  • Page 5
    SANDISK CORPORATION TABLE OF CONTENTS Page No. PART I Business Properties Legal Proceedings Submission of Matters to a Vote of Security Holders Executive OÇcers of the Registrant PART II Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of ...

  • Page 6
    ... storage card products help enable mass market adoption of digital cameras, multimedia cellular phones, USB Ã-ash drives and other digital consumer devices. We are the only company that has rights to manufacture and sell every major Ã-ash card format, including Compact Flash, or CF, Secure Digital...

  • Page 7
    ... by fast write speeds, high capacity and lower manufacturing cost. The SanDisk Solution We are focused primarily on three digital consumer markets: digital cameras and other consumer electronics, multimedia cellular phones and USB Ã-ash drives. Each of these markets is currently experiencing...

  • Page 8
    ...our total revenues. We have leveraged our intellectual property and leading market position to establish global industry standard card formats as well as manufacturing partnerships and relationships that provide us with access to leading edge semiconductor capacity, allowing us to share the costs of...

  • Page 9
    ...USB FlashDrives are approximately the size of a small pack of gum. Non-volatility. Our products store information in non-volatile memory cells that do not require power to retain information. High Degree of Ruggedness. Our devices have an operating shock rating of up to 2,000 Gs for the Extreme line...

  • Page 10
    ...and audio recorders. CF products provide interoperability with systems based upon the PC Card ATA standard by using a low-cost passive Type II adapter. CF cards are available in capacities ranging from 32 megabytes to 4 gigabytes in Type I form factor. CF memory°Wi-Fi is available in 128MB capacity...

  • Page 11
    ...protection. All products in the SanDisk Memory Stick PRO product line meet the minimum standard performance of 15Mb/s for high-resolution recording of moving images. Cruzer USB Flash Drive Product Line. Released in July 2003, the Cruzer Mini replaced our original Cruzer product and combines our high...

  • Page 12
    ... formats. We also oÃ...er a low priced CF adapter. TriFlash. TriFlash is a high capacity, small, embedded Ã-ash memory device. TriFlash is designed for storing audio, video, data and images on small portable systems. These products are targeted at Internet music players and cell phones. TriFlash...

  • Page 13
    ... companies that can provide us with access to leading edge semiconductor manufacturing capacity and participate in the development of some of our products. This enables us to concentrate our resources on the product design and development areas where we believe we have competitive advantages...

  • Page 14
    ... business internationally, including political risks and exchange rate Ã-uctuations. Assembly and Testing We sort and test our wafers at Toshiba in Yokkaichi, Japan, and United Test Center, Inc. in Taiwan. Substantially all of the tested wafers are then shipped to our third-party memory assembly...

  • Page 15
    ...for providing support to our direct sales force and distributors in the industrial distribution, OEM and retail channels. The manufacturers' representative companies sell our products as well as products from other manufacturers. OEMs. We provide SanDisk brand name and private label products to OEMs...

  • Page 16
    ... our intellectual property rights and we believe we may be involved in similar disputes in the future. In 1988, we developed the concept of emulation of a hard disk drive with Ã-ash solid-state memory. The Ã'rst related patents were Ã'led in 1988 by Dr. Eli Harari and exclusively licensed to...

  • Page 17
    ...memory card manufacturers, resulting in increased competition for our Secure Digital card and other products. In addition, Matsushita and Toshiba sell Secure Digital cards that compete directly with our products for which no royalties are payable. We have entered into patent cross-license agreements...

  • Page 18
    ... a SanDisk labeled version of the Memory Stick PRO and Memory Stick Pro Duo product lines. Additionally, Olympus' and Fuji's control of the market for digital cameras using the xD-picture card format gives them a competitive advantage in selling xD-picture cards to retail customers. Rotating disk...

  • Page 19
    ...Electronics Corporation, Ritek Corporation, and Power Quotient International Co., Ltd. In the suit, captioned SanDisk Corp. v. Memorex Products, Inc., et al., Civil No. CV 01-4063 VRW, we seek damages and injunctions against these companies from making, selling, importing or using Ã-ash memory cards...

  • Page 20
    ...v. Dane Electric Corp. USA, et al. alleging false advertising, unfair business practices, breach of contract, fraud, deceit, misrepresentation and violation of the California Consumers Legal Remedy Act. The lawsuit purports to be on behalf of a class of purchasers of Ã-ash memory products and claims...

  • Page 21
    ... Dr. Harari is a board member of Tower Semiconductor, a public company in which we hold a minority investment. Mr. Sanjay Mehrotra co-founded SanDisk in 1988 and has served as our Vice President of Engineering, Vice President of Product Development, Director of Memory Design, and Product Engineering...

  • Page 22
    ...2004, our board of directors approved a 2-for-1 stock split, in the form of a 100% stock dividend, payable to stockholders of record as of February 3, 2004. The dividend was paid and the split was eÃ...ected on February 18, 2004. The following table lists the high and low sales prices for each quarter...

  • Page 23
    ... 127.8 million shares of UMC stock and the misappropriation of the proceeds, by an employee of our law Ã'rm in Taiwan, a gain of approximately $7.0 million, or $4.9 million net of tax, related to the sale of 35 million shares of our UMC investment, write-downs related to the recoverability...

  • Page 24
    SANDISK CORPORATION SUPPLEMENTARY QUARTERLY DATA (Unaudited. In thousands, except per share data) March 30 Quarters Ended June 29 September 28 December 28 2003 Revenues Product License and royalty Total revenues Gross proÃ'ts Operating income Net income Net income per share Basic Diluted ...

  • Page 25
    .../communications markets. In 2003, approximately 92% of our product sales were attributable to the consumer electronics market, particularly sales of our CompactFlash, or CF card, Secure Digital, or SD card, miniSD, Memory Stick, SmartMedia and xD-Picture card products primarily in digital camera...

  • Page 26
    ... into the retail channel will be made to participants that will have the right to return unsold products. Our policy is to defer recognition of revenues from these sales until the products are sold to the end customers. In 2003 and 2002, sales to the OEM and Industrial channels accounted for 36% of...

  • Page 27
    ...numerous international laws and regulations...'' For the foreseeable future, we expect to realize a signiÃ'cant portion of our revenues from recently introduced and new products. Typically, new products initially have lower gross margins than more mature products because the manufacturing yields are...

  • Page 28
    ...to distributors and retailers are generally under agreements allowing price protection and/or right of return and, therefore, the income on these sales is deferred until the retailers or distributors sell the merchandise to the their end customer, or the rights of return expire. At December 28, 2003...

  • Page 29
    ...revenue from patent license agreements was $34.5 million and $32.1 million, respectively. The cost of revenues associated with patent license and royalty revenues was insigniÃ'cant for the three years ended December 28, 2003. We record reductions to revenue and trade-accounts receivable for customer...

  • Page 30
    .... Product Revenues. In 2003, our product revenues were $982.3 million up from $492.9 in 2002. The increase was primarily the result of higher unit volumes and higher average card capacities within our target markets. The largest revenue generators for 2003 included SD card, CF card, Memory Stick and...

  • Page 31
    ... sales volumes which were partially oÃ...set by FlashVision start-up and tool relocation costs. In addition, margins and proÃ'ts were favorably impacted by the increase in units and megabytes sold in 2003 resulting in improved economies of scale. Our higher mix of more cost eÃ...ective multi level cell...

  • Page 32
    ... Ì Risks Related to Our Intellectual Property Ì We may be unable to license intellectual property to or from third parties...'' Restructuring Charges. In the third quarter of 2001, we adopted a plan to transfer all of our card assembly and test manufacturing operations from our Sunnyvale location...

  • Page 33
    ...we sold 35 million shares of UMC stock, recognized a gain of approximately $7.0 million and recorded a $0.6 million increase in fair value our Tower warrant as determined using a Black-Scholes option pricing model. During 2003, we recognized a write-down of $3.9 million related to the recoverability...

  • Page 34
    ... and amortization of $23.0 million, loss on unauthorized sale of UMC shares of $18.3 million, a $51.3 million increase in accounts payable, a $57.7 million increase in deferred income on shipments to distributors and retailers and deferred revenue, a $29.1 million increase in liabilities due to...

  • Page 35
    ... foundry capacity to support our business in the future. We may also invest in or acquire other companies' product lines or assets. Our operating expenses may increase as a result of the need to hire additional personnel to support our sales and marketing eÃ...orts and research and development...

  • Page 36
    ... shares are sold, due to Ã-uctuations in the market value of UMC's stock. Investment in FlashVision Joint Venture In June 2000, we closed a transaction with Toshiba providing for the joint development and manufacture of 512 megabit, 1 gigabit and 2 gigabit Ã-ash memory chips and Secure Digital Card...

  • Page 37
    ...with certain payment caps. Future obligations are to be paid in installments using a percentage of our revenue from NAND Ã-ash products built with Ã-ash memory supplied by Toshiba or FlashVision. The direct research and development is a pre-determined amount that extends through the third quarter of...

  • Page 38
    Tower ordinary shares at an exercise price of $7.50 per share. The warrant expires on October 31, 2006. The 8,313,638 Tower ordinary shares represented an approximate 16% equity ownership position in Tower as of December 28, 2003. In Ã'scal 2003 we recorded write-downs to the value of the wafer ...

  • Page 39
    ... Portal Inc., or DPI, with Photo-Me Inc., or PMI, for the manufacture, installation, marketing, and maintenance of self-service, digital photo printing labs, or kiosks, bearing the SanDisk brand name in locations in the United States and Canada. Under the agreement, we invested $2.0 million. In an...

  • Page 40
    ...with Toshiba providing for the joint development and manufacture of 512 megabit, 1 gigabit and 2 gigabit Ã-ash memory chips and Secure Digital Card controllers. As part of this transaction, we and Toshiba formed FlashVision, a joint venture, to equip and operate a silicon wafer manufacturing line at...

  • Page 41
    ... through by our distributors and retail customers; ‚ seasonality in sales of our products; ‚ natural disasters aÃ...ecting the countries in which we conduct our business, particularly Japan, where our principal source of Ã-ash memory wafers is located, as well as Taiwan, South Korea, China and the...

  • Page 42
    ...product and customer mix; ‚ slower than anticipated market acceptance of new or enhanced versions of our products, such as the miniSD card targeted at advanced cell phones and the Cruzer Mini, a USB 2.0 hi-speed Ã-ash drive; ‚ increased sales by our competitors; ‚ competing Ã-ash memory device...

  • Page 43
    ...may lose market share to our competitors. We have in the past experienced, and may in the future experience, severe price competition for our products, which adversely impacts our product gross margins and overall proÃ'tability. In addition, we provide many of our retail customers protection against...

  • Page 44
    ... technologies and product development through volume production, unanticipated costs and expenditures, changing relationships with customers, suppliers and strategic partners, or contractual, intellectual property or employment issues. In addition, key personnel of an acquired company may decide...

  • Page 45
    ...delays and problems impacting production reliability and yields, which may cause our revenues and gross margins to decline. We have developed new products based on NAND MLC Ã-ash technology, a Ã-ash architecture designed to store two bits in each Ã-ash memory cell. High-density Ã-ash memory, such as...

  • Page 46
    ..., the markets for new devices that use our Ã-ash memory products, such as digital cameras, cellular phones that incorporate digital cameras, portable digital music players, USB Ã-ash drives and PDAs, must develop and grow. If sales of these products do not grow, our revenues and proÃ't margins could...

  • Page 47
    ... and possible delays relating to the conversion of our production to 0.13 micron and smaller feature sizes, which could adversely aÃ...ect our operating results. We were using the production capacity at Toshiba's Yokkaichi fabrication facilities to manufacture NAND Ã-ash memory wafers with minimum...

  • Page 48
    ... us to sell our products, we have been developing, and will continue to develop, new controllers, printed circuit boards and test algorithms. Any technical diÇculties or delays in the development of these elements could prevent us from taking advantage of the available Ã-ash memory output and could...

  • Page 49
    ... diminished product demand, production overcapacity, high inventory levels and accelerated erosion of average selling prices. We have experienced these conditions in our business in the past and may experience such downturns in the future. If we and Toshiba enter into deÃ'nitive agreements to build...

  • Page 50
    ... to secure customers for its foundry capacity to help oÃ...set its Ã'xed costs, that failure could jeopardize the completion of Fab 2, the production ramp at Fab 2 and Tower's ability to continue operations. Tower is currently a sole source of supply for one of our new high volume controllers. Any...

  • Page 51
    ... Tower and certain of its shareholders and directors, including us and our President and CEO, a Tower board member, which may be costly and could divert the attention of our management personnel. On July 3, 2003, a purported shareholder class action lawsuit was Ã'led on behalf of United States...

  • Page 52
    ... aÃ...ect our future sales revenue. We have entered into agreements with, and face direct competition from, Toshiba, Samsung and other competitors. In 2000, we, along with Matsushita and Toshiba, formed the SD Association to jointly develop and promote the Secure Digital card. Under this arrangement...

  • Page 53
    ... a SanDisk labeled version of the Memory Stick PRO and Memory Stick Pro Duo product lines. Additionally, Olympus' and Fuji's control of the market for digital cameras using the xD-picture card format gives them a competitive advantage in selling xD-picture cards to retail customers. Rotating disk...

  • Page 54
    ...margins. Our CF card, SD card, miniSD card and Memory Stick card products, which currently account for a majority of our product revenues, have lower gross margins and average selling prices when sold as bundled cards in OEM devices, such as digital cameras, compared to sales through retail channels...

  • Page 55
    ... Japanese OEM customers primarily because most customers in Japan operate on a Ã'scal year ending in March and prefer to delay purchases until the beginning of their next Ã'scal year. Risks Related to Our Intellectual Property We may be unable to protect our intellectual property rights, which would...

  • Page 56
    ... international laws and regulations, and we are vulnerable to political instability and currency Ã-uctuations. Political Risks. Currently, all of our Ã-ash memory, controller wafers and Ã-ash memory products are produced overseas by FlashVision, Renesas, Samsung, Toshiba, Tower and UMC. We also use...

  • Page 57
    ...culty in accounts receivable collection, particularly as we increase our sales through the retail distribution channel and general business conditions deteriorate; ‚ adverse tax rules and regulations; ‚ weak protection of our intellectual property rights; and ‚ delays in product shipments due...

  • Page 58
    ...new product introductions, governmental regulations, litigation or changes in earnings estimates by analysts. In addition, in recent years the stock market has experienced signiÃ'cant price and volume Ã-uctuations and the market prices of the securities of high technology and semiconductor companies...

  • Page 59
    ...Poor's Ratings Services assigned its ""B°'' corporate credit rating to us and its ""B¿'' subordinated debt rating to our notes. If our current ratings are lowered or if other rating agencies assign us or the notes ratings lower than expected by investors, the market price of our common stock could...

  • Page 60
    ...a possible competitive disadvantage with respect to less leveraged competitors and competitors that have better access to capital resources; and ‚ make us more vulnerable in the event of a downturn in our business. There can be no assurance that we will be able to meet our debt service obligations...

  • Page 61
    ... currency exchange rates and marketable equity security prices. To mitigate some of these risks, we utilize currency forward contracts. We do not use derivative Ã'nancial instruments for speculative or trading purposes. At December 28, 2003, we had a warrant to purchase 360,313 ordinary shares of...

  • Page 62
    Item 8. Financial Statements and Supplementary Data SANDISK CORPORATION CONSOLIDATED FINANCIAL STATEMENTS Contents Page Report of Ernst & Young LLP, Independent Auditors Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Stockholders' Equity ...

  • Page 63
    REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS The Board of Directors and Stockholders SanDisk Corporation We have audited the accompanying consolidated balance sheets of SanDisk Corporation as of December 28, 2003 and December 29, 2002, and the related consolidated statements of operations, ...

  • Page 64
    ...: Accounts payable Accounts payable to related parties Accrued payroll and related expenses Income taxes payable Deferred tax liability Research and development liability, related party Other accrued liabilities Deferred income on shipments to distributors and retailers and deferred revenue...

  • Page 65
    ...2003 2002 2001 (In thousands, except per share amounts) Revenues Product License and royalty Total revenue Cost of product revenues Gross proÃ'ts (losses Operating expenses Research and development Sales and marketing... share Basic Diluted Shares used in computing net income (loss) per share ...

  • Page 66
    ... (loss) on available for sale securities Unrealized gain on investments Comprehensive income Exercise of stock options for cash Issuance of stock pursuant to employee stock purchase plan Sale of common stock, net of issuance costs Income tax beneÃ't from stock options exercised Balance...

  • Page 67
    ...Income taxes payable Other current liabilities, related parties Other accrued liabilities Deferred income on shipments to distributors and retailers and deferred revenue Other non-current liabilities, related party Other non-current liabilities Total adjustments Net cash provided by (used in...

  • Page 68
    ... portable computing markets. Principal geographic markets for the Company's products include the United States, Japan, Europe and the Far East. Customer and Supplier Concentrations A limited number of customers historically have accounted for a substantial portion of the Company's revenues. Sales...

  • Page 69
    ... sales to distributors and retailers was $90.1 million and $34.8 million, respectively. Estimated product returns related to end-users are provided for and were not material for any period presented in the consolidated Ã'nancial statements. The Company earns patent license and royalty revenue under...

  • Page 70
    ... patent license agreements was $34.5 million and $32.1 million, respectively. The cost of revenues associated with patent license and royalty revenues was insigniÃ'cant for the three years ended December 28, 2003. The Company records reductions to revenue and trade-accounts receivable for customer...

  • Page 71
    ... million as determined using a Black-Scholes option pricing model with the following assumptions at December 28, 2003: dividend yield of 0.0%; expected life of 2.75 years; volatility factor of 0.70; and risk free interest rate of 2.32%. In 2002, the market value of the Company's investment in Tower...

  • Page 72
    ... designation. Debt securities classiÃ'ed as available-for-sale are reported at fair value. Unrecognized gains or losses on available-for-sale securities are included in equity until their disposition. As of December 28, 2003, the amount of unrecognized gain related to the Company's availablefor-sale...

  • Page 73
    ...be other than temporary are reported in other income and expense. Accounts Receivable Accounts receivable include amounts owed by geographically dispersed distributors, retailers, and OEM customers. No collateral is required. Provisions are provided for sales returns, product exchanges and bad debts...

  • Page 74
    ...the Company may record lower of cost or market price adjustments to its inventories if continued pricing pressure results in a net realizable value that is lower than its manufacturing cost. Although the Company continuously tries to maintain its inventory in line with the near term forecasted level...

  • Page 75
    ... and 2001. Stock-Based Compensation. The Company accounts for employee stock based compensation using the intrinsic value method and accordingly, no expense has been recognized for options granted to employees under the plans as the grant price is set at the fair market value of the stock on the day...

  • Page 76
    ... on the date of issuance using the Black-Scholes model, with the following weighted-average assumptions for issuances made in 2003, 2002 and 2001: December 28, 2003 December 29, 2002 December 30, 2001 Dividend yield Expected volatility Risk free interest rate Expected lives Recent Accounting...

  • Page 77
    ... investments to high-credit quality investments and limits the amounts invested with any one issuer. The Company sells to original equipment manufacturers, retailers and distributors in the United States, Japan, Europe and the Far East, performs ongoing credit evaluations of its customers' Ã'nancial...

  • Page 78
    ... with certain payment caps. Future obligations are to be paid in installments using a percentage of the Company's revenue from NAND Ã-ash products built with Ã-ash memory supplied by Toshiba or FlashVision. The direct research and development is a pre-determined amount that extends through the third...

  • Page 79
    ... substantial start-up expenses related to the hiring and training of manufacturing personnel, facilitizing the clean room and installing equipment at the expanded fabrication facility and at Fab 3. At December 28, 2003, the Company had approximately $141.2 million of total non-cancelable outstanding...

  • Page 80
    ... the primary countries where the Company's products can be sold to provide meaningful protection or any commercial advantage to the Company. Additionally, competitors of the Company may be able to design around the Company's patents. To preserve its intellectual property rights, the Company believes...

  • Page 81
    ...and Power Quotient International Co., Ltd. In the suit, captioned SanDisk Corp. v. Memorex Products, Inc., et al., Civil No. CV 01-4063 VRW, the Company seeks damages and injunctions against these companies from making, selling, importing or using Ã-ash memory cards that infringe it's U.S. Patent No...

  • Page 82
    ... sought damages, attorneys' fees, and an injunction against the Company from making, using, selling, oÃ...ering for sale, and/or importing any product that infringes upon the rights secured by the "601 and "222 patents. Later on October 6, 2003, InÃ'neon Ã'led an amended answer and counterclaim, which...

  • Page 83
    ... quarterly installments. These amounts are secured by irrevocable standby letters of credit issued by the International Commercial Bank of China, or ICBC. Further, Lee and Li has extended a credit to the Company in the amount of $18.3 million to be applied against future legal services provided...

  • Page 84
    ...'s common stock at a fair value, as determined by the Board of Directors, of such shares on the date of grant. The options generally vest over a four-year period, expiring no later than ten years from the date of grant. Unexercised options are canceled upon the termination of employment or services...

  • Page 85
    .... The automatic share increase for 2003 was 276,622 shares. At December 28, 2003, the Company had reserved 2,150,478 shares for issuance under the Non-Employee Directors Stock Option Plan and a total of 1,568,000 options had been granted. Outstanding shares are at exercise prices ranging from $6.215...

  • Page 86
    ... FINANCIAL STATEMENTS Ì (Continued) A summary of activity under all stock option plans follows (shares in thousands): Total Available for Future Grant/Issuance Total Outstanding Weighted Average Exercise Price Balance at December 31, 2000 Granted Exercised Canceled Balance at December 30, 2001...

  • Page 87
    ... distributed as a dividend at the rate of one right for each share of common stock of the Company held by stockholders of record as of the close of business on September 25, 2003. The rights will expire on April 28, 2007 unless redeemed or exchanged. Under the new Rights Agreement and after giving...

  • Page 88
    ...loss) before taxes as follows: December 28, 2003 December 29, 2002 December 30, 2001 Federal statutory rate State taxes, net of federal beneÃ't Utilization of credits and impact of new tax law Reversal of tax beneÃ't previously taken on UMC shares Tax exempt interest income Utilization of loss...

  • Page 89
    ... in United Microelectronics, Inc., or UMC, one of its suppliers of wafers for its controller components, on the cost basis of accounting. During the third quarter of 2003, the Company sold 35 million of its UMC shares for gross proceeds of approximately $30 million. Also during the third quarter...

  • Page 90
    ... Company accounts for its investment in UMC under the cost method of accounting. Tower Semiconductor. In July 2000, the Company entered into a share purchase agreement to make an aggregate $75.0 million investment in Tower Semiconductor for Tower's new foundry facility, Fab 2, in Ã've installments...

  • Page 91
    ...a net loss from this sale for Ã'scal 2003 of approximately $0.2 million. The carrying value of the Divio investment on the Company's consolidated balance sheet at December 29, 2002 was $4.5 million. Prior to Divio's sale, the Company had accounted for its investment in Divio using the cost method of...

  • Page 92
    ... cash holdings and accounts receivable. The Company had no outstanding hedge contracts. There were no unrealized gains or losses on derivative instruments as of December 28, 2003. At December 29, 2002, the Company had $20.2 million in Japanese Yen-denominated accounts payable designated as cash Ã-ow...

  • Page 93
    ... Tower ordinary shares. The fair value as of December 28, 2003 was approximately $1.2 million, as determined using a Black-Scholes option pricing model with the following assumptions: dividend yield of 0.0%; expected life of 2.75 years; volatility factor of 0.70; and risk free interest rate of 2.32...

  • Page 94
    ... of sales to international customers in Europe, Canada, and Asia PaciÃ'c. Other than sales in U.S., Japan and Europe, international sales were not material individually in any other international location. Intercompany sales between geographic areas are accounted for at prices representative...

  • Page 95
    ... gain on available-for-sale securities was immaterial at December 28, 2003 and December 29, 2002, respectively. Note 13: Related Parties The Company has entered into a joint venture agreement with Toshiba, under which they formed FlashVision, to produce advanced NAND Ã-ash memory wafers. (See...

  • Page 96
    ... International Ltd. to its board of directors. Subsequent to this appointment in 2003, the Company paid Flextronics and its aÇliates approximately $8.1 million for wafer testing, packaged memory Ã'nal testing, card assembly and card testing. At December 28, 2003 the Company had amounts payable...

  • Page 97
    ...on the exchange rate in eÃ...ect on that date. On February 20, 2004, the Company and a number of other manufacturers of Ã-ash memory products were sued in the Superior Court of the State of California for the City and County of San Francisco in a purported consumer class action captioned Willem Vroegh...

  • Page 98
    ... eÃ...ectiveness of the design and operation of our disclosure controls and procedures, as deÃ'ned in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the ""Exchange Act''), as of the end of the period covered by this report (the ""Evaluation Date''). Based upon the...

  • Page 99
    ... and Management and Related Stockholder Matters The information required by this item is set forth under the captions ""Security Ownership of Certain BeneÃ'cial Owners and Management'' and ""Equity Compensation Information for Plans or Individual Arrangements with Employees and Non-Employees'' in...

  • Page 100
    ..., among the Registrant and the investors named therein, dated March 3, 1995.(2) License Agreement between the Registrant and Dr. Eli Harari, dated September 6, 1988.(2) 1989 Stock BeneÃ't Plan.(2),(*) Lease Agreement between the Registrant and G.F. Properties, dated March 1, 1996.(3) Amendment to...

  • Page 101
    ...(21), (*) SanDisk Corporation International Employee Stock Purchase Plan, as Amended and Restated as of January 2, 2002. (21),(*) Common R&D and Participation Agreement, dated as of May 9, 2000, by and between the Registrant and Toshiba Corporation.(12),(1) Product Development Agreement, dated as of...

  • Page 102
    ... Exhibit to the Registrant's Form 10-Q for the quarter ended September 30, 2000. (14) Previously Ã'led as an Exhibit to the Registrant's Schedule 13(d) dated January 26, 2001. (15) Previously Ã'led as an Exhibit to the Registrant's 2001 Annual Report on Form 10-K. (16) Previously Ã'led as an Exhibit...

  • Page 103
    ... Ã'led a Current Report on Form 8-K reporting under Item 5 the issuance of a press release announcing that the United States District Court for the Northern District of California had ruled in the SanDisk patent case against Ritek Corporation and granted Ritek's motion for summary judgment. 99

  • Page 104
    ... Date By: /s/ DR. ELI HARARI (Dr. Eli Harari) MICHAEL GRAY (Michael Gray) President, Chief Executive OÇcer and Director (Principal Executive OÇcer) Chief Financial OÇcer, and Senior Vice President, Finance and Administration (Principal Financial and Accounting OÇcer) Chairman of the Board...

  • Page 105
    Signature Title Date By: /s/ DR. JAMES D. MEINDL (Dr. James D. Meindl) ALAN F. SHUGART (Alan F. Shugart) Director March 12, 2004 By: /s/ Director March 12, 2004 101

  • Page 106
    ..., among the Registrant and the investors named therein, dated March 3, 1995.(2) License Agreement between the Registrant and Dr. Eli Harari, dated September 6, 1988.(2) 1989 Stock BeneÃ't Plan.(2),(*) Lease Agreement between the Registrant and G.F. Properties, dated March 1, 1996.(3) Amendment to...

  • Page 107
    ...36 10.37 SanDisk Corporation International Employee Stock Purchase Plan, as Amended and Restated as of January 2, 2002. (21),(*) Common R&D and Participation Agreement, dated as of May 9, 2000, by and between the Registrant and Toshiba Corporation.(12),(1) Product Development Agreement, dated as of...

  • Page 108
    ... Exhibit to the Registrant's Form 10-Q for the quarter ended September 30, 2000. (14) Previously Ã'led as an Exhibit to the Registrant's Schedule 13(d) dated January 26, 2001. (15) Previously Ã'led as an Exhibit to the Registrant's 2001 Annual Report on Form 10-K. (16) Previously Ã'led as an Exhibit...