SNDK

• Sandisk depends on Flash Ventures with Kioxia for substantially all flash memory, must pay 50% of fixed costs regardless of orders, and the JV entities expire December 31, 2034 absent extension.
• Supply chain risk is acute: many enterprise SSDs require DRAM, a commodity in short supply, and the company relies on limited or sole-source suppliers with production concentrated in Japan, Malaysia, and other Asian sites.
• Pending U.S. investigations under Section 232 and Section 301 could raise tariffs; most U.S. products are currently exempt, but losing exemptions would increase cost of goods sold and pressure margins.
• Newly emphasized AI risks include volatile data center demand that is hard to forecast; delays in build-outs could cause excess inventory and underutilization charges, and AI heightens cybersecurity exposure.
• Top ten customers were 44% of FY2026 revenue, and long-term NBMs commit volumes but expose Sandisk to execution, breach, and supply-allocation risks.
• Post-spin-off risks include first-time SOX 404 attestation, a new ERP implementation, tax indemnification to WDC, and restrictions that could deter acquisitions.

• Principal executive offices are at 951 Sandisk Drive, Milpitas, California.
• The largest owned facility is in Penang, Malaysia at 1,177,000 square feet for flash R&D and manufacturing of media.
• The largest leased facility is in Milpitas, California at 578,000 square feet for flash R&D, marketing and sales, and administrative functions.
• Owned R&D sites include Fujisawa, Japan (23,000 sq ft), Kfar Saba, Israel (204,000 sq ft), and Tefen, Israel (58,000 sq ft).
• All flash-based memory wafers are manufactured by Flash Ventures in leased wafer fabrication facilities in Yokkaichi and Kitakami, Japan.
• The company believes its present facilities are adequate for current needs.

There are no material legal proceedings, other than ordinary routine litigation incidental to the Company, to which we or any of our subsidiaries is a party or of which any of our or our subsidiaries’ property is subject. 38 Table of Contents

• Net revenue increased 175% to $20,248M, driven by Datacenter +437% to $5,153M, Edge +195% to $12,160M, and Consumer +29% to $2,935M; total exabytes sold rose mid-teens.
• Gross margin expanded 4,100 bps to 71.5% on higher sales and pricing; revenue per gigabyte rose almost 150% in Datacenter and almost 180% in Edge.
• Operating expenses fell as a share of revenue; the prior-year $1.8B goodwill impairment did not recur, while R&D rose $196M and SG&A rose $103M on compensation and marketing.
• Operating cash flow was $11,671M versus $84M; cash conversion cycle lengthened to 162 days as DIO rose 43 days on inventory builds.
• Financing used $7,001M, including $4.5B of share repurchases and $1.9B of Term Loan settlement; $1.5B remained under the repurchase program at July 3, 2026.
• Company expects AI-driven demand to persist through calendar 2027 and beyond and plans increased FY2027 capex for newer nodes; tariff and NBM risks noted.

• Equity price risk: the fair value of marketable equity securities in Nanya was $1,777 million as of July 3, 2026, and a 10% price decline could reduce that value by about $178 million; the company typically does not hedge this exposure.
• Foreign currency risk: the company historically purchases short-term foreign exchange contracts, with maturities generally not exceeding twelve months, to hedge certain assets, liabilities, product costs, and operating expenses denominated in foreign currencies.
• The company does not purchase foreign exchange contracts for speculative or trading purposes.
• A sensitivity analysis indicated that a hypothetical 10% adverse movement in foreign currency exchange rates relative to the U.S. dollar would result in a foreign exchange fair value loss of $22 million as of July 3, 2026.
• Total net realized and unrealized transaction and foreign exchange contract currency losses were $17 million in 2026, $29 million in 2025, and $4 million in 2024.
• The company does not hedge all foreign currency exposures, and it may alter or discontinue its hedging activities at any time.

• Revenue, net grew to $20,248 million in fiscal 2026 from $7,355 million in 2025, and net income was $11,433 million versus a $1,641 million loss; diluted EPS was $73.76 versus -$11.32.
• Total assets rose to $22,507 million from $12,985 million, driven by cash of $4,762 million, accounts receivable of $4,708 million, and marketable equity securities of $1,777 million; total liabilities were $6,771 million.
• Operating cash flow was $11,671 million, while financing activities used $7,001 million including $4,524 million of common stock repurchases and $1,900 million of debt repayment.
• KPMG issued unqualified opinions on the financial statements and internal control, and identified sufficiency of audit evidence over revenue, net as the critical audit matter.
• Revenue by end market was Datacenter $5,153 million, Edge $12,160 million, and Consumer $2,935 million; no single customer exceeded 10% of net revenue.
• Contract liabilities were $1,242 million and refund liabilities $1,500 million, with remaining performance obligations of $59.8 billion tied to New Business Models; two additional NBMs with $31.3 billion transaction price were signed after year-end.
• All flash memory wafers are supplied by Flash Ventures, where Sandisk holds 49.9%; maximum loss exposure was $2,897 million and guarantee obligations were $923 million as of July 3, 2026.