SUNNYVALE, CA, May 9, 2006 - SanDisk® Corporation (NASDAQ: SNDK), the world's largest supplier of flash memory data storage card products, announced today that it has priced $1 billion principal amount of its Convertible Senior Notes due 2013. In addition, SanDisk granted the underwriters an option to purchase up to an additional $150 million principal amount of Notes from SanDisk to cover overallotments.
The Notes will be senior unsecured obligations and will pay interest semiannually at a rate of 1.00% per annum. The Notes will be convertible at an initial conversion rate of approximately 12.1426 shares per $1,000 principal amount of Notes (equivalent to an initial conversion price of $82.36 per share of common stock). The initial conversion price represents a premium of approximately 30% to the $63.35 per share closing price of SanDisk's common stock on May 9, 2006. The Notes will be convertible beginning on February 15, 2013, 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 SanDisk common stock.
The net proceeds of the offering will be used for general corporate purposes, including capital expenditures for new and existing manufacturing facilities, development of new technologies, general working capital and other non-manufacturing capital expenditures. Proceeds may also be used to fund strategic investments or acquisitions of products, technologies or complementary businesses. No commitments or agreements have currently been made for any specific acquisitions. In addition, in order to reduce the potential dilution from conversion of the Notes, SanDisk intends to use a portion of the net proceeds of the offering to fund the hedging transactions it has entered into on its common stock with the underwriters of this offering and/or their affiliates. These hedging transactions reduce the potential dilution from conversion of the Notes by generally increasing the conversion price of the Notes to 50% higher than the closing price of SanDisk's common stock on May 9, 2006. If the underwriters exercise their option to purchase additional Notes to cover overallotments, SanDisk may enter into additional hedging transactions on its common stock with the underwriters and/or their affiliates. SanDisk also expects to enter into warrant transactions whereby it will sell to the underwriters of this offering and/or their affiliates warrants to acquire, subject to customary anti-dilution adjustments, approximately 12.1 million shares of our common stock. Holders of the Notes will not have any rights with respect to the purchased call options or the sold warrants.
Morgan Stanley & Co. Incorporated and Goldman, Sachs & Co. are the joint book running managers for the offering and Thomas Weisel Partners LLC is serving as a co-manager 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. 212-761-6775) and Goldman, Sachs & Co., Attn: Prospectus Department, 85 Broad Street, New York, New York 10004.
The Company has filed a registration statement (File No. 333-133890) (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. Alternatively, the Company, any underwriter or any dealer participating in the offering will arrange to send you the prospectus and prospectus supplement if you request it by calling, if you are a retail investor, toll-free 1-800-584-6837 or if you are an institutional investor by calling toll-free 1-866-718-1649.
SanDisk, the world's largest supplier of flash memory data storage card products, designs, manufactures and markets industry-standard, solid-state data, digital imaging and audio storage products using its patented, high density flash memory and controller technology. SanDisk is based in Sunnyvale, CA.
Statements contained in this press release that are not historical facts, including statements regarding the Company's intended use of proceeds from the offering, may be considered forward-looking statements as that item is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from these forward-looking statements. Many of these risks and uncertainties cannot be predicted with accuracy and some might not even be anticipated. Some of the factors that could significantly impact the forward-looking statements in this press release are discussed in the Company's reports filed with the Securities and Exchange Commission. Any forward-looking statement is qualified by reference to these risks and factors. These risks and factors are not exclusive, and the Company undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this release except as required by law. Additional information regarding these and other factors may be contained in the Company's SEC filings, including without limitation, the prospectus supplement relating to the offering, the Company's Form 10-K for its fiscal year ended January 1, 2006, and its Form 10-Q for the fiscal quarter ended April 2, 2006. The Company's filings are available from the Securities and Exchange Commission or may be obtained on the Company's website at www.sandisk.com.
SanDisk's web site/home page address: http://www.sandisk.com.
SanDisk and the SanDisk logo are trademarks of SanDisk Corporation, registered in the U.S. and other countries.
Lori Barker Padon