SANDISK PRICES $1 BILLION OF CONVERTIBLE SENIOR NOTES
MILPITAS, CA, August 20,
2010 - SanDisk Corporation (NASDAQ: SNDK),
the global leader in flash memory cards, announced today that it
has priced $1.0 billion principal amount of Convertible Senior
Notes due in 2017. In addition, the Company has granted the
underwriters an option to purchase up to an additional $150 million
principal amount of notes from the Company to cover
overallotments.
The notes will be senior unsecured
obligations and will pay interest semiannually at a rate of 1.5%
per annum. The notes will be convertible into shares of the
Company's common stock at an initial conversion rate of 19.0931
shares per $1,000 principal amount of notes (equivalent to an
initial conversion price of approximately $52.37 per share). The
initial conversion price represents a premium of 25% to the $41.90
per share closing price of the Company's common stock on August 19,
2010. The notes will be convertible beginning on May 15, 2017, or
earlier upon the occurrence of certain events. Upon conversion of
the notes, holders will receive cash up to the principal amount of
each note, and any excess conversion value will be delivered in
shares of the Company's common stock.
The Company currently intends to use
the net proceeds of the offering for general corporate purposes,
including (1) the repayment at maturity or repurchase, from time to
time, of a portion of its outstanding $1.15 billion aggregate
principal amount of senior convertible notes originally issued in
2006, which bear interest at a rate of 1% per annum and mature on
May 15, 2013; (2) capital expenditures for new and existing
manufacturing facilities; (3) development of new technologies; (4)
general working capital; and (5) other non-manufacturing capital
expenditures. The net proceeds may also be used to fund strategic
investments or acquisitions of products, technologies or
complementary businesses or to obtain the right or license to use
additional technologies. The Company currently has no such
commitments or agreements for any specific acquisitions,
investments or licenses. In addition, the Company intends to use
$104.8 million of the net proceeds of the offering to fund the cost
to it of the privately negotiated convertible note hedge
transactions (after taking into account the proceeds to it from
warrant transactions) that the Company intends to enter into with
the underwriters or their respective affiliates. The Company has
entered into separate warrant transactions with the underwriters or
their respective affiliates, at an exercise price that will
initially be $73.33 per share, which represents a premium of 75% to
the $41.90 per share closing price of the Company's common stock on
August 19, 2010. These convertible note hedge transactions and
warrant transactions are expected to reduce the potential dilution
with respect to the Company's common stock upon conversion of the
notes; however, the warrant transactions will have a dilutive
effect with respect to the Company's common stock to the extent
that the market price per share of the Company's common stock
exceeds the strike price of the warrants.
In connection with these hedging
transactions, the underwriters or their respective affiliates have
entered into various derivatives transactions and may engage in
other activities that could have the effect of increasing or
preventing a decline in the price of the Company's common stock in
connection with the pricing of the note offering. These activities
may be discontinued at any time. In addition, in connection with
any conversion of the notes, the underwriters or their respective
affiliates may enter into derivative transactions and engage in
other activities that could adversely impact the price of the
Company's common stock and of the notes.
Morgan Stanley & Co. Incorporated
and Goldman, Sachs & Co. are the joint book running managers
for the offering.
ABOUT THE
OFFERING
A final prospectus supplement related to the offering will be filed
with the Securities and Exchange Commission and will be available
on the SEC's website at www.sec.gov. Printed copies of the final
prospectus supplement relating to the offering may also be
obtained, when available, from Morgan Stanley & Co.
Incorporated, Prospectus Department, 180 Varick Street, New York,
NY 10014 (telephone no. 1-212-761-6775) and Goldman, Sachs &
Co., Prospectus Department, 200 West Street, New York, NY 10282
(telephone no. 1-866-471-2526, facsimile: 1-212-902-9316, or by
e-mailing: prospectus-ny@ny.email.gs.com).
The Company has filed a registration
statement (File No. 333-157078) (including a prospectus and
prospectus supplement) with the SEC for the offering. Before you
invest, you should read the prospectus and prospectus supplement to
that registration statement and other documents the Company has
filed with the SEC for more complete information about the Company
and the offering. You may obtain these documents for free by
visiting EDGAR on the SEC Web site at www.sec.gov.
FORWARD LOOKING
STATEMENTS
This press release contains certain forward-looking statements,
including statements regarding the Company's intent to sell the
notes, enter into related transactions and intended use of proceeds
from the offering that are based on the Company's current
expectations and involve numerous risks and uncertainties that may
cause these forward-looking statements to be inaccurate. Risks that
may cause these forward-looking statements to be inaccurate include
among others:
- competitive pricing pressures, resulting in lower average
selling prices and lower or negative product gross margins;
- less than anticipated demand, including due to economic
weakness in our markets and among consumers generally;
- unpredictable or changing demand for our products, particularly
for certain form factors or capacities;
- insufficient captive and non-captive memory supply to meet
demand;
- insufficient non-memory materials or capacity from our
suppliers and contract manufacturers to meet demand; or increases
in cost of non-memory materials or capacity;
- our products may not perform as expected or may not be
available at the prices, in the regions, in the capacities or at
the time expected;
- difficulties or delays in closing the proposed offering;
and
- other risks detailed from time-to-time under the caption "Risk
Factors" and elsewhere in our SEC filings and reports, including,
but not limited to, our most recent annual report on Form 10-K and
our subsequent quarterly reports on Form 10-Q.
We do not intend to update the
information contained in this press release.
ABOUT SANDISK
SanDisk Corporation is the global leader in flash memory cards,
from research, manufacturing and product design to consumer
branding and retail distribution. SanDisk's product portfolio
includes flash memory cards for mobile phones, digital cameras and
camcorders; digital audio/video players; USB flash drives for
consumers and the enterprise; embedded memory for mobile devices;
and solid state drives for computers. SanDisk is a Silicon
Valley-based S&P 500 company, with more than half its sales
outside the United States.
SanDisk and the SanDisk logo are trademarks
of SanDisk Corporation, registered in the United States and other
countries. Other brand names mentioned herein are for
identification purposes only and may be the trademarks of their
respective holder(s).
| Investor Contact: |
Media Contact: |
Sandisk |
| Jay Iyer |
Ryan Donovan |
SanDisk Corporation |
| (408) 801-2067 |
(408) 801-2857 |
601 McCarthy Boulevard |
| |
|
Milpitas, CA 95035-7932 |
| |
|
Phone: 408-801-1000 |
| |
|
Fax: 408-801-8657 |