Exhibit 99.1
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Western Digital’s Acquisition of SanDisk
Non-Deal Roadshow
NOVEMBER 17-19, 2015
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Safe Harbor/Disclaimers
Forward-Looking Statements
This document contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements include, but are not limited to, statements regarding product and technology positioning, the proposed merger of Western Digital Corporation (“Western Digital”) with SanDisk Corporation (“SanDisk”) (including financing of the proposed transaction and the benefits, results, effects and timing of a transaction), the investment in Western Digital by Unisplendour Corporation Limited (“Unis”), the joint venture with Unis and its subsidiary Unissoft (Wuxi) Group Co., Ltd. (“Unissoft”), all statements regarding Western Digital’s (and Western Digital’s and SanDisk’s combined) expected future financial position, results of operations, cash flows, dividends, financing plans, business strategy, budgets, capital expenditures, competitive positions, growth opportunities, plans and objectives of management, and statements containing the use of forward-looking words, such as “may,” “will,” “could,” “would,” “should,” “project,” “believe,” “anticipate,” “expect,” “estimate,” “continue,” “potential,” “plan,” “forecast,” “approximate,” “intend,” “upside,” and the like, or the use of future tense. Statements contained herein concerning the business outlook or future economic performance, anticipated profitability, revenues, expenses, dividends or other financial items, and product or services line growth of Western Digital (and the combined businesses of Western Digital and SanDisk), together with other statements that are not historical facts, are forward-looking statements that are estimates reflecting the best judgment of Western Digital and SanDisk based upon currently available information. Statements concerning current conditions may also be forward-looking if they imply a continuation of current conditions.
Such forward-looking statements are inherently uncertain, and stockholders and other potential investors must recognize that actual results may differ materially from Western Digital’s and SanDisk’s expectations as a result of a variety of factors, including, without limitation, those discussed below. Such forward-looking statements are based upon the current expectations of Western Digital’s and SanDisk’s management and include known and unknown risks, uncertainties and other factors, many of which Western Digital and SanDisk are unable to predict or control, that may cause Western Digital’s or SanDisk’s actual results, performance or plans to differ materially from any future results, performance or plans expressed or implied by such forward-looking statements. These statements involve risks, uncertainties and other factors discussed below and detailed from time to time in Western Digital’s and SanDisk’s filings with the Securities and Exchange Commission (the “SEC”).
Risks and uncertainties related to the proposed merger include, but are not limited to, the risk that SanDisk’s stockholders do not approve the merger or that Western Digital’s stockholders do not approve the issuance of stock in the merger (to the extent such approval is required), potential adverse reactions or changes to business relationships resulting from the announcement, pendency or completion of the merger, uncertainties as to the timing of the merger, the possibility that the closing conditions to the proposed merger may not be satisfied or waived, including that a governmental entity may prohibit, delay or refuse to grant a necessary approval, adverse effects on Western Digital’s stock price resulting from the announcement or completion of the merger, competitive responses to the announcement or completion of the merger, costs and difficulties related to the integration of SanDisk’s businesses and operations with Western Digital’s businesses and operations, the inability to obtain, or delays in obtaining, cost savings and synergies from the merger, uncertainties as to whether the completion of the merger or any transaction will have the accretive effect on Western Digital’s earnings or cash flows that it expects, unexpected costs, liabilities, charges or expenses resulting from the merger, litigation relating to the merger, the inability to retain key personnel, and any changes in general economic and/or industry-specific conditions.
In addition to the factors set forth above, other factors that may affect Western Digital’s or SanDisk’s plans, results or stock price are set forth in Western Digital’s and SanDisk’s respective filings with the SEC, including Western Digital’s and SanDisk’s most recent Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Many of these factors are beyond Western Digital’s and SanDisk’s control. Western Digital and SanDisk caution investors that any forward-looking statements made by Western Digital or SanDisk are not guarantees of future performance. Neither Western Digital nor SanDisk intend, or undertake any obligation, to publish revised forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events.
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Safe Harbor/Disclaimers
Important Additional Information and Where to find It
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. This communication may be deemed to be solicitation material in respect of the proposed merger between Western Digital and SanDisk. In connection with the proposed merger, Western Digital intends to file a registration statement on Form S-4 with the SEC that contains a preliminary joint proxy statement of SanDisk and Western Digital that also constitutes a preliminary prospectus of Western Digital. After the registration statement is declared effective, Western Digital and SanDisk will mail the definitive joint proxy statement/prospectus to their respective stockholders. This material is not a substitute for the joint proxy statement/prospectus or registration statement or for any other document that Western Digital or SanDisk may file with the SEC and send to Western Digital’s and/or SanDisk’s stockholders in connection with the proposed merger. INVESTORS AND SECURITY HOLDERS OF WESTERN DIGITAL AND SANDISK ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE JOINT PROXY STATEMENT/ PROSPECTUS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. Investors and security holders will be able to obtain copies of the joint proxy statement/prospectus (when filed) as well as other filings containing information about Western Digital and SanDisk, without charge, at the SEC’s website, http://www.sec.gov. Copies of the documents filed with the SEC by Western Digital will be available free of charge on Western Digital’s website at http://www.w dc.com. Copies of the documents filed with the SEC by SanDisk will be available free of charge on SanDisk’s website at http://www.sandisk.com.
Participants in Solicitation
Western Digital, SanDisk and their respective directors, executive officers and certain other members of management and employees may be soliciting proxies from their respective stockholders in favor of the proposed transaction. Information regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of stockholders in connection with the proposed transaction will be set forth in the joint proxy statement/prospectus when it is filed with the SEC. You can find information about Western Digital’s executive officers and directors in Western Digital’s definitive proxy statement filed with the SEC on September 23, 2015. You can find information about SanDisk’s executive officers and directors in its definitive proxy statement filed with the SEC on April 27, 2015. You can obtain free copies of these documents from Western Digital and SanDisk, respectively, using the contact information above. Investors may obtain additional information regarding the interest of such participants by reading the joint proxy statement/prospectus regarding the proposed merger when it becomes available.
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Western Digital’s Acquisition of SanDisk
Western Digital is acquiring SanDisk for approximately $19 billion in a cash and stock transaction
Combination of Western Digital and SanDisk creates a global leader in storage technology
Acquisition at $86.50 a share financed with balance sheet cash,
$17.4 billion of new debt and equity consideration
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Strategic Rationale
Infrastructure, Solutions, & Services
Personal
Cloud
storage Solid State
storage
Storage services Remov mem bedded flash
Backup Core HDD
appliance Gateway
Analytics Flash arrays appliance eSSD ReRAM
cSSD
Software defined storage
Combination creates a global leader in storage technology
Doubles addressable market and enhances position in higher growth segments
Strong up-the-stack positioning with robust portfolio to address rapidly evolving storage trends
Technology leadership with captive NAND supply
Annual run-rate synergies of $500M expected within 18 months post-closing
Achieves immediate scale and margin expansion
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Western Digital at a Glance
Leading market position in Hard Disk Drives (HDDs)
Fast growing Enterprise Solid State Drives (eSSD) business with strong up-the-stack positioning
Rich base of technologies with 10,000+ patents and applications worldwide Strong financial profile with $14.0 billion in LTM1 revenues, consistent profitability and liquidity
Strong track record of value creation through strategic M&A and industry leading partnerships
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| Western Digital LTM as of 10/02/2015. |
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SanDisk at a Glance
Software
Enterprise Client
SSD, Software
& Systems
Removable Embedded
Vertically Integrated Manufacturing
Japan China Malaysia
Semiconductor Fabs Die Packaging & Test Integrated SSD
Manufacturing
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| SanDisk LTM as of 9/27/2015. |
Global leadership in Solid State Drives (SSDs) and NAND Flash
Leading enterprise SSD portfolio supporting Hyperscale / Cloud Expertise in engineering, manufacturing, operations and marketing Large and diverse patent portfolio of 6,500+ patents and applications Financial strength with $5.8 billion in LTM1 revenues
Revenues ($bn)
$6.6
12%
CAGR
$2.3
2005 2014
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Storage: Core Enabler of the Data-Driven Economy
Growth in Data Usage
44 ZB
2020
4.4 ZB
2013
(1ZB = 1B TB)
Changing Workloads
42% Companies Using
process, Sensor or record analyze
Machine Generated
Data
unified distributed >75% of All New Cloud
Apps will be Big Data
Intensive
Strong Growth for Storage Devices & New Solutions
Infrastructure
Private onal Public
Mobile Devices Connected Life
Mobility & Consumerization of IT
Accelerated Time to Deploy
Months Days Hours Minutes
Virtual SDx
Traditional Converged
Increased Business Agility
Source: IDC: “The Digital Universe of Opportunities: Rich Data and the Increasing Value of the Internet of Things,” sponsored by EMC Corp., April 2014.
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Creates a Global Leader in Storage Technology
Enhanced scale and diversity strengthens ability to capture opportunities in an evolving landscape
LTM Revenue1
$ in billion
$19.7
$16.6
$14.0 $13.7
$11.4 $9.1
$6.0 $5.8 $5.3 $3.6
$1.9
(Information Storage) (Storage and Memory) (NAND) (NAND) (NAND) (NAND)
Note: Individual Western Digital and SanDisk LTM revenues do not add up to pro forma LTM revenue due to rounding.
1 LTM revenues based on most recent public filings, Wall Street research and Gartner; Western Digital LTM as of 10/02/2015 and SanDisk LTM as of 09/27/2015; Inte l represents 2014 numbers
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Doubles Addressable Market and Enhances Position in Higher Growth Segments
$37 billion eSSD1 $7 billion
HDD $30 billion
2015 TAM
>2x
$76 billion
Other Solid State $30 billion 2 Storage
$13 billion eSSD1
$33 billion HDD
2017 TAM
Source: Gartner, IDC.
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| Represents Enterprise Solid State Drives. |
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| Includes Client SSD, Embedded Flash, Removable Flash and other NAND Flash based storage products. |
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Robust Platform Enables Innovation in a Rapidly Evolving Storage Market
Strong up-the-stack positioning
Software & Systems
Hyperscale Cloud
Providers
Retail
Retail
Representative Customers
Comprehensive Storage Technology Platform Powerful Multi-channel Distribution Platform
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Technology Leadership Driven by IP and Talent
10,000+ patents / applications
One of the storage industry’s largest portfolios
9,700+ engineers
Leading HDD and eSSD supplier
First and only supplier of helium-filled HDD World’s first 10TB drive for archive applications
6,500+ patents / applications
NAND memory, systems & packaging
3,000+ engineers
World’s most advanced 2D NAND (15nm)
Strong 3D IP portfolio – commercializing 2nd generation 3D NAND in 2016
ReRAM technology development
Broadest portfolio of storage technology solutions in the industry
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Continued Partnership with Toshiba Enables Vertical Integration
Toshiba / SanDisk JV has had a successful 15 year history
Current collaboration extends through 3D NAND and ReRAM
Technology leadership through JV driven by deep collaboration across design and process capabilities
JV provides stable NAND supply at scale through a capital-efficient business model
Shared IP
R&D Fab process technology & R&D manufacturing
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Benefits of Vertical Integration
Innovation Lead in Rapidly Evolving Landscape
Emerging NVM technology driving innovation
NAND control affords maximum innovation
Deep Optimization of Solution Stack
Category leading customers demand tight optimization
Access to media allows customer optimization throughout the stack
Vertical Integration
New business models require rapid time to market
Vertical integration reduces time to market up to 6 months
Rapid Time to Market
Stable supply of NAND is critical
Continuing Toshiba
JV ensures cost effective supply at scale
Cost Effective Supply at Scale
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Significant Synergy Opportunities
Vertical integration
G&A consolidation
Overlapping go-to-market (GTM) consolidation
R&D efficiency
Annual run-rate synergies of $500M expected within 18 months post-closing
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Successful Track Record of M&A, Partnerships and Shareholder Value Creation
600%+
Shareholder Value
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Price Creation
Stock
Key Acquisitions Unisplendour and Partnerships Investment
HGST / Intel JV Agreement
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| Includes value creation from stock price appreciation and dividends. |
16 © 2015 WESTERN DIGITAL CORP. ALL RIGHTS RESERVED.
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Transaction Details
Transaction Approximately $ 19 billion of total consideration
Consideration
$86.50 per share
Per Share – $ 85.10 in cash, 0.0176 share of WDC in equity if the Unisplendour investment closes
Consideration – $ 67.50 in cash, 0.2387 share of WDC equity otherwise
– Cash / equity mix subject to adjustment if SanDisk cash balance falls below target
thresholds
$17.4 billion of debt
Sources of
Financing $6.8 billion1 of balance sheet cash
$0.9 billion1,2 of equity consideration
Approval Approval by SanDisk shareholders required
Process Certain regulatory approvals
Other Expected closing by end of CQ3 2016, subject to customary closing conditions
Considerations Detailed merger integration plan in place to catalyze growth and become a vertically
integrated, media-agnostic storage technology leader
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| Assumes closing of Unisplendour investment. |
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| Includes value of unvested options and restricted stock units (RSUs). |
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Capital Structure Optimized to Maximize Flexibility and Value Creation
$ 17.4 billion of new debt at closing
$ 1.0 billion revolving credit facility
Debt Facilities Facility allows for dividends and repurchases
Management committed to conservative credit profile and deleveraging
over time
xLTM1 EBITDA (w/
($ in billion) synergies)2
Pro Forma Gross Debt $17.4 3.2x
Capitalization
Cash $7.7 1.4x
Net Debt $9.7 1.8x
Combined company expected to maintain dividend policy
Capital Allocation Enables ongoing ability to maximize strategic opportunities
Rapid deleveraging will enhance future flexibility
Expect to be non-GAAP EPS accretive within 12 months of the transaction close
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| Western Digital LTM as of 10/02/2015 and SanDisk LTM as of 9/27/2015. |
2 EBITDA includes synergies from HGST integration and SanDisk transaction and excludes stock-based compensation expense, restructuring charges, and one-time charges.
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Strong Pro Forma Liquidity
Pro forma cash flow from operations inline with historical balances
Cash Flow from Operations $B
$4.6 $4.7 Average: $3.8B
$4.2
$0.5 $1.9
$3.1
$1.7
$2.5
$1.1
$1.1 $4.0
$2.8 $2.5
$2.0
$1.5
CY2011 CY2012 CY2013 CY2014 LTM
Significant free cash flow generation
Free Cash Flow(1) $B
$3.9
$3.3
$3.3 Average: $2.9B
$1.7
$0.4
$1.5 $2.2
$1.7
$0.8
$3.0
$0.8
$2.2
$1.9
$1.4
$0.9
CY2011 CY2012 CY2013 CY2014 LTM
Western Digital SanDisk
Note: Western Digital LTM as of 10/02/2015. SanDisk LTM as of 9/27/2015.
1. Free cash flow defined as cash flow from operations less capex. SanDisk FCF also less net investment and notes receivable activity with Flash Ventures.
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Achieves Immediate Scale and Margin Expansion
Western Digital Non- SanDisk Non- Combined Non-
GAAP LTM1 GAAP LTM2 GAAP LTM
Revenue $14.0B $5.8B $19.7B
Gross Margin 30% 44% 34%
R&D 11% 14% 12%
SG&A 5% 9% 6%
Operating Margin 14% 20% 16%
Non-GAAP financials exclude amortization of intangibles, stock-based compensation expense and one-time charges.
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| LTM as of 10/02/2015. |
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| LTM as of 9/27/2015. |
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GAAP to Non-GAAP Reconciliation1
Western Digital SanDisk Combined
LTM LTM LTM
Revenue $13,989 $5,757 $19,746
GAAP Gross Profit $4,027 $2,372 $6,399
Stock-based Compensation 16 19 35
Amortization 112 115 227
Inventory Step-up — 3 3
Other 40 — 40
Non-GAAP Gross Profit $4,195 $2,510 $6,705
Non-GAAP Gross Margin 30% 44% 34%
GAAP R&D $1,594 $879 $2,473
Stock-based Compensation2 (62) (84) (146)
Amortization — — —
Other (3) — (3)
Non-GAAP R&D $1,529 $795 $2,324
% Revenue 11% 14% 12%
Note: Dollars in millions. Western Digital LTM as of 10/02/2015. SanDisk LTM as of 9/27/2015
Source: Company public filings.
1 Non-GAAP statistics exclude amortization of intangibles, the impact of SFAS 123(R) stock-based compensation expense and one-time charges.
2 The items included within the GAAP to Non-GAAP reconciliation on this slide are only for demonstration and comparability purposes and are not necessarily indicative of the items that will appear in future GAAP to Non-GAAP reconciliations. For example, WDC currently does not exclude stock-based compensation expense from its Non-GAAP results, but it has done so here solely to achieve comparability with SanDisk’s past practice.
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GAAP to Non-GAAP Reconciliation1 (Cont’d)
Western Digital SanDisk Combined
LTM LTM LTM
GAAP SG&A $745 $592 $ 1,337
Stock-based Compensation2 (87) (65) (152)
Amortization (30) — (30)
Other 32 — 32
Non-GAAP SG&A $660 $527 $ 1,187
% Revenue 5% 9% 6%
GAAP Operating Income $1,464 $727 $ 2,191
Stock-based Compensation 165 168 333
Amortization 142 170 312
Inventory Step-up — 3 3
Employee Termination and Impairment of Intangibles 223 61 284
Charges Related to Arbitration Award 1 — 1
Acquisition-related adjustments 3 — 3
Charges and insurance recoveries related to flooding, net (37) — (37)
Other 45 — 45
Non-GAAP Operating Income $2,006 $1,128 $ 3,134
Non-GAAP Operating Margin 14% 20% 16%
Note: Dollars in millions. Western Digital LTM as of 10/02/2015. SanDisk LTM as of 9/27/2015
Source: Company public filings.
1 Non-GAAP statistics exclude amortization of intangibles, the impact of SFAS 123(R) stock-based compensation expense and one-time charges.
2 The items included within the GAAP to Non-GAAP reconciliation on this slide are only for demonstration and comparability purposes and are not necessarily indicative of the items that will appear in future GAAP to Non-GAAP reconciliations. For example, WDC currently does not exclude stock-based compensation expense from its Non-GAAP results, but it has done so here solely to achieve comparability with SanDisk’s past practice.
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Combination Drives Revenue Diversification Across Multiple Categories
Pro-forma LTM Revenue Segmentation
By Product
6%
32%
68% 94%
HDD SSD / NAND
By Geography
28% 25% 41% 50%
22% 34%
Americas Europe, Middle East, Africa Asia
By End Market1
33% 41%
59%
67%
PC Non-PC
Note: LTM Revenue segmentation as of 6/30/2015.
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| PC revenues for SanDisk represents revenues from Client SSD |
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Summary
Infrastructure, Solutions, & Services
Personal
Cloud
storage Solid State
storage
Storage services Remov mem bedded flash
Backup Core HDD
appliance Gateway
Analytics Flash arrays appliance eSSD ReRAM
cSSD
Software defined storage
Combination creates a global leader in storage technology
Doubles addressable market and enhances position in higher growth segments
Strong up-the-stack positioning with robust portfolio to address rapidly evolving storage trends
Technology leadership with captive NAND supply
Annual run-rate synergies of $500M expected within 18 months post-closing
Achieves immediate scale and margin expansion
24 © 2015 WESTERN DIGITAL CORP. ALL RIGHTS RESERVED.
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Q & A
25 © 2015 WESTERN DIGITAL CORP. ALL RIGHTS RESERVED.