Flash Memory, Inc.

Exhibit 1

Income Statements, 2007 - 2009 ($000s except earnings per share)

2007

2008

2009

2010

2011

Net sales
Cost of goods sold
Gross margin

$77,131
$62,519
$14,612

$80,953
$68,382
$12,571

$89,250
$72,424
$16,826

$120,000
$97,320.0
$22,680.0

$144,000
$116,784.0
$27,216.0

Research and development

Selling, general and administrative
Operating income
Interest expense
Other income (expenses)

$3,726
$6,594
$4,292
$14
$480
-$39

$4,133
$7,536
$902
$14
$652
-$27

$4,416
$7,458
$4,952
$14
$735
-$35

$6,000
$10,032.00
$6,648.00

$7,200
$12,038.40
$7,977.60

Income before income taxes

$3,773

$223

$4,182

$5,660.79

Income taxes (a)

Net income

$1,509
$2,264

$89
$134

$1,673
$2,509

2264.316
$3,396.47

Earnings per share

$1.52

$0.09

$1.68

(a) In years 2007 and after, Flash's effective combined federal and state income tax rate was 40%.

$937
-$50

$2.28

Flash Memory, Inc.

Exhibit 2

Balance Sheets, 2007 - 2009 ($000s except number of shares outstanding)

December 31,
2008

2007
Cash
Accounts receivable
Inventories
Prepaid expenses
Total current assets

2009

2010

$2,536
$10,988
$9,592
$309
$23,425

$2,218
$12,864
$11,072
$324
$26,478

$2,934
$14,671
$11,509
$357
$29,471

$3,960
$19,726
$13,865
$480
$38,031

$5,306
$792
$4,514

$6,116
$1,174
$4,942

$7,282
$1,633
$5,649

$5,649
$2,057
$3,592

$27,939

$31,420

$35,120

$41,623

Accounts payable
Notes payable (a)
Accrued expenses
Income taxes payable (b)
Other current liabilities
Total current liabilities

$3,084
$6,620
$563
$151
$478
$10,896

$4,268
$8,873
$591
$9
$502
$14,243

$3,929
$10,132
$652
$167
$554
$15,434

$7,999

Common stock at par value

Paid in capital in excess of par value
Retained earnings
Total shareholders' equity

$15
$7,980
$9,048
$17,043

$15
$7,980
$9,182
$17,177

$15
$7,980
$11,691
$19,686

Total liabilities & shareholders' equity

$27,939

$31,420

$35,120

1,491,662

1,491,662

1,491,662

Property, plant & equipment at cost

Less: Accumulated depreciation
Net property, plant & equipment
Total assets

Number of shares outstanding

(a) Secured by accounts receivable.

(b) To avoid a penalty for underpayment of income taxes, Flash made equal estimated tax payments quarterly on the 15th of
April, June, September, and December of each year. The total of these four quarterly payments was required to equal at
least the lesser of (a) 90% of the taxes that would actually be incurred in the same year, or (b) 100% of the taxes due
on income of the prior year.

For informational purposes only:

Notes payable / accounts receivable
Notes payable / shareholders' equity
Notes payable / total capital

60.2%
38.8%
28.0%

69.0%
51.7%
34.1%

69.1%
51.5%
34.0%

$876
$226
$744

2011

Flash Memory, Inc.

Exhibit 3

Key Forecasting Assumptions and Relationships for 2010 Through 2012

Line Item
Cost of goods sold
Research and development
Selling, general and administrative
Interest expense
Other income (expenses)
Cash
Accounts receivable
Inventories
Prepaid expenses
Property, plant & equipment at cost
Accumulated depreciation
Accounts payable
Purchases
Accrued expenses
Income taxes payable
Other current liabilities

Relationships for 2010 Through 2012

Assumption or Ratio
81.10% of sales
5.0% of sales
8.36% of sales
Beginning of year debt balance interest rate
$50,000 of expense each year
3.3% of sales
60 days sales outstanding
52 days of cost of good sold
0.4% of sales
Beginning PP&E at cost + capital expenditures
Beginning A/D + 7.5% of beginning PP&E at cost
30 days of purchases
60% of cost of goods sold
0.73% of sales
10% of income taxes expense
0.62% of sales

Flash Memory, Inc.

Exhibit 4

Selected Financial Information for Flash Memory, Inc., and Selected Competitors, 2007 through 2009

2007
Sales ($ millions)
EPS ($)
Dividend per share ($)
Closing stock price ($)
Shares outstanding (millions)
Book Value per share ($)
ROE
Capitalization (book value)
Debt
Equity
Beta coefficient

Flash Memory, Inc.

2008
2009

30-Apr-10 (a)

2007

77
1.52
-n/a
1.492
11.43
13.28%

81
0.09
-n/a
1.492
11.52
0.78%

89
1.68
-n/a
1.492
13.20
12.75%

5,688
-0.42
-7.25
769.1
10.08
-4.13%

5,841
-2.10
-2.64
772.5
8.00
-26.21%

4,803
-2.29
-10.56
800.7
5.81
-39.43%

28%
72%

34%
66%

34%
66%
n/a

24%
76%

31%
69%

40%
60%

SanDisk Corporation
Sales ($ millions)
EPS ($)
Dividend per share ($)
Closing stock price ($)
Shares outstanding (millions)
Book Value per share ($)
ROE
Capitalization (book value)
Debt
Equity
Beta coefficient

Micron Technology
2008
2009

3,986
0.84
-33.17
227.7
22.64
3.70%

3,351
-8.82
-9.60
225.3
15.27
-57.74%

3,567
1.83
-28.99
227.4
17.18
10.63%

15%
85%

22%
78%

21%
79%

30-Apr-10 (a)

1.46
9.35
847.6
6.61
21.00%
33%
67%
1.25

STEC, Inc.

3.71
39.84
229.3
18.13
17.87%
19%
81%
1.36

189
0.20
-8.74
49.8
3.72
5.40%

227
0.09
-4.26
50.0
3.63
2.36%

354
1.47
-16.34
49.4
5.65
26.06%

0%
100%

0%
100%

0%
100%

(a) Security analyst estimates for year-end EPS $ and Return on Equity; actual data on April 30, 2010, for all other items.

1.29
13.90
50.3
5.48
18.90%
0%
100%
1.00

Current weights of debt and equity

D = value of bank debt from 200
E = value of equity at $25 per sh

$10,132
$37,292

21.4%
78.6%

Micron Technology
D = book value of debt (4-30-201
BVE = book value of equity (4-30
MVE = market value of equity (4

$2,760
$5,603
$7,925

25.8%

E = equity or levered beta

A = asset or unlevered beta
SanDisk Corporation
D = book value of debt (4-30-201
BVE = book value of equity (4-30
MVE = market value of equity (4

1.25
1.03 1.443703

$975
$4,157
$9,135

E = equity or levered beta

A = asset or unlevered beta
STEC, Inc.
D = book value of debt (4-30-201
BVE = book value of equity (4-30
MVE = market value of equity (4
E = equity or levered beta
A = asset or unlevered beta
Average A for the industry

74.2%

9.6%
90.4%
1.36
1.28

$0
$276
$699

0.0%
100.0%
1.00
1.00
1.10

Micron

Sandisk

Debt
Equity Market Value

5602.636
2759.507
7925.06

25.83% Debt
74.17% Equity Market Value

0.978816

1.250786

Beta(avera 1.076534

Re = Rf + E x Market Risk Premium

11.2%
Current weights of debt and equity
D = debt from 2009 balance $10,132
E = equity at $25 per share
$37,292
WACC = D/V x Rd x (1 - T) + E/V x Re

949.4856
9135.312

21.4%
78.6%

9.42%
90.58%

STEC
Debt
Equity Market Value

0
699.17
1