Sunnyvale, CA, January 14, 2000 - SanDisk Corporation (NASDAQ:SNDK) announced today that it will realize a $344 million pre-tax ($204 million after-tax) gain in its fiscal first quarter ending April 2, 2000 as a result of the merger of United Silicon Inc. (USIC) with United Microelectronics Corp. (UMC), a public company in Taiwan. SanDisk had made a $51 million investment in USIC, a joint venture semiconductor manufacturing facility headed by UMC in Taiwan.
The gain is based on the share price of UMC at the date of the merger (i.e. NTD 112, or US$3.56) and will be reported in other income. As a result of the merger, SanDisk will own 111 million UMC shares, or approximately one percent of the combined UMC Group.
All of the UMC shares received by SanDisk are subject to trading restrictions imposed by UMC and the Taiwan Stock Exchange. The trading restrictions will expire on one-half of the shares six months after the date of the merger. The remaining shares will become available for sale over a two-year period beginning in January 2002. When the shares are ultimately sold, it is possible that additional gains or losses will be reported.
Eli Harari, SanDisk's President and CEO said, "The accounting gain that we report today from the merger of USIC with UMC is the icing on the cake for our original investment. UMC and USIC have surpassed all expectations we had for the production of high quality, advanced technology flash memory wafers when we made our investment in USIC. As a result of the consolidation, SanDisk will now have greater access to UMC's other fabs. We have already started to bring up our flash technology at Fab 8F, UMC's newest and most advanced facility. By mid 2000, we expect to have three UMC 8 inch wafer fabs producing our flash memory wafers."
The matters discussed in this news release contains forward looking statements including our expectation that SanDisk may recognize a gain or a loss in future periods when the UMC shares are sold due to fluctuations in the market value of the UMC shares. These forward looking statements are also subject to certain risks and uncertainties as described under the caption "Factors That May Affect Future Results" in the company's annual report on Form 10-K and quarterly reports on Form 10-Q, filed with the Securities and Exchange Commission. The company assumes no obligation to update the information in this release.