SonoSite Prices $200 Million of Convertible Senior Notes

  
    
  
  
    
      SonoSite, Inc., (Nasdaq:SONO) the world leader in hand-carried 
      ultrasound, today announced the pricing of $200 million aggregate 
      principal amount of Convertible Senior Notes due 2014 in an offering 
      registered under the Securities Act of 1933 as amended (the “Securities 
      Act”), which represents an increase of $50 
      million from the amount previously announced. The notes will pay 
      interest semiannually at a rate of 3.75% per annum. In certain 
      circumstances, the notes will be convertible based on an initial 
      conversion rate of 26.1792 shares of common stock per $1,000 principal 
      amount of notes, which is equivalent to an initial conversion price of 
      approximately $38.20 per share. Conversions will be settled in cash up 
      to the principal amount of the notes, with any conversion value above 
      the principal amount settled in shares of SonoSite's common stock. 
      Holders of the notes may require SonoSite to repurchase the notes for 
      cash equal to 100% of the principal amount to be repurchased plus 
      accrued and unpaid interest upon the occurrence of a fundamental change. 
      SonoSite has granted the underwriters a 30-day option to purchase up to 
      $25 million in aggregate principal amount of additional notes to cover 
      overallotments.
    
    
      SonoSite intends to use the net proceeds from this offering (remaining 
      after the cost of the convertible note hedge and warrant transactions 
      described below) to fund acquisitions from time to time of one or more 
      complementary businesses or product lines. To the extent the net 
      proceeds are not used for acquisitions, they will be used for general 
      corporate purposes, which may include repayment of debt, capital 
      expenditures, investments in its subsidiaries or as additions to working 
      capital. Net proceeds may be temporarily invested prior to use.
    
    
      In connection with the offering, SonoSite expects to use a portion of 
      the proceeds of the offering to enter into a convertible note hedge 
      transaction with an affiliate of one of the underwriters (the "Option 
      Counterparty"), which will cover approximately 48% (assuming no 
      overallotment) of any notes converted, and will be intended to reduce 
      the potential dilution to SonoSite's common stockholders upon any such 
      conversion by effectively increasing the conversion price for these 
      notes to approximately $46.97 per share of SonoSite’s 
      common stock, representing a 50% premium relative to the last reported 
      sale price on July 10, 2007 of $31.31 per share. The company also 
      expects to enter into a warrant transaction with the Option Counterparty 
      concurrently with the convertible note hedge transaction. The cost of 
      the convertible note hedge transaction will be partially offset by 
      proceeds that will be received from the warrant transaction. In 
      connection with establishing its initial hedge of these transactions, 
      the Option Counterparty or its affiliates expect to enter into various 
      derivative transactions with respect to SonoSite's common stock 
      concurrently with or shortly after the pricing of the notes, and may 
      enter into or unwind various derivative transactions with respect to 
      SonoSite's common stock and/or purchase or sell SonoSite's common stock 
      in secondary market transactions following the pricing of the notes (and 
      are likely to do so during any observation period related to a 
      conversion of notes). These activities could have the effect of 
      increasing or preventing a decline in the price of SonoSite's common 
      stock concurrently with or shortly after the pricing of the notes. In 
      addition, the Option Counterparty or its affiliates may modify its hedge 
      position following the pricing of the notes from time to time by 
      entering into or unwinding various derivative transactions and/or by 
      purchasing or selling SonoSite's common stock in secondary market 
      transactions. These activities could adversely affect the price of 
      SonoSite's common stock and the value of the notes and, as a result, the 
      settlement amount payable upon conversion of the notes.
    
    
      JPMorgan is the sole book running manager for the offering and Piper 
      Jaffray and Savvian are serving as co-managers for the offering.
    
    
      This press release is neither an offer to sell or a solicitation of an 
      offer to buy the notes nor shall there be any sale of the notes in any 
      state or jurisdiction in which such an offer, solicitation or sale would 
      be unlawful prior to the registration or qualification thereof under the 
      securities laws of any such state or jurisdiction.
    
    
      About SonoSite
    
    
      SonoSite, Inc. (www.sonosite.com) 
      is the innovator and world leader in hand-carried ultrasound. 
      Headquartered near Seattle, the company is represented by eight 
      subsidiaries and a global distribution network in over 90 countries. 
      SonoSite’s small, lightweight systems are 
      expanding the use of ultrasound across the clinical spectrum by 
      cost-effectively bringing high performance ultrasound to the point of 
      patient care. The company employs over 550 people worldwide.
    
    
      Forward-Looking Information and the 
      Private Litigation Reform Act of 1995
    
    
      Certain statements in this press release relating to our proposed 
      convertible note financing, possible hedging transactions we may enter 
      into in connection our proposed convertible note financing, our expected 
      use of proceeds from the proposed financing and our acquisition strategy 
      are 'forward-looking statements' for the purposes of the safe harbor 
      provisions of the Private Securities Litigation Reform Act of 1995. 
      These forward-looking statements are based on the opinions and estimates 
      of our management at the time the statements are made and are subject to 
      risks and uncertainties that could cause actual results to differ 
      materially from those expected or implied by the forward-looking 
      statements. These statements are not guaranties of future performance 
      and are subject to known and unknown risks and uncertainties and are 
      based on potentially inaccurate assumptions. Factors that could affect 
      actual results include the risk that we are unable to complete the 
      proposed convertible note financing on the terms described in this 
      release, if at all, the risk that we do not enter into the possible 
      hedging transaction described in this release, resulting in additional 
      dilution from our convertible debt offering, the risk that the proposed 
      hedging transaction described in this release has an adverse effect on 
      the trading price of our common stock and the risk that we are unable to 
      successfully execute our acquisition strategy, as well as other factors 
      contained in the Item 1A. 'Risk Factors' section of our Annual Report on 
      Form 10-K for the year ended December 31, 2006 filed with the Securities 
      and Exchange Commission. We caution readers not to place undue reliance 
      upon these forward-looking statements that speak only as to the date of 
      this release. We undertake no obligation to publicly revise any 
      forward-looking statements to reflect new information, events or 
      circumstances after the date of this release or to reflect the 
      occurrence of unanticipated events.