CAESARSTONE SDOT-YAM LTD. (CSTE) IPO

We estimate that our net proceeds from this offering will be approximately 
$65.4 million, after deducting the underwriting discounts and commissions and 
estimated offering expenses payable by us. 

We intend to use $25.6 million of the net proceeds of this offering to pay a 
special dividend to our existing shareholders immediately following the 
closing of this offering. 

We intend to use $6.5 million of the net proceeds of this offering to pay the 
balance of the acquisition price for the remaining 75% equity interest in our 
U.S. distributor, Caesarstone USA, in which we acquired a 25% interest in 
January 2007. We acquired the remaining interest in May 2011 and the balance 
of the purchase price is payable following the closing of this offering. 

We may use a portion of the net proceeds to expand our production capacity 
during the next one to two years. We estimate that an additional production 
line would require an investment of approximately $30 million. We may choose 
to expand our production capacity by several means, including an acquisition, 
and the funds required may be greater or less. 

We intend to use the balance of the net proceeds of this offering for working 
capital and other general corporate purposes. We may also use all or a portion 
of the remaining net proceeds to acquire or invest in complementary companies, 
products or technologies. We are not currently a party to, or involved with, 
discussions regarding any other material acquisition that is probable, 
although we routinely engage in discussions with distributors and suppliers 
regarding potential acquisitions. 

We will have broad discretion in the way that we use the balance of the net 
proceeds of this offering. Pending use of the net proceeds, we intend to 
invest the net proceeds in interest-bearing, investment-grade instruments or 
deposit the net proceeds in bank accounts.

We believe that we compete principally based upon product quality, new product
development, brand awareness, pricing, customer service and breadth of product
offerings. We believe that we differentiate ourselves from competitors on the 
basis of our signature product designs, our ability to offer our products in 
major markets globally, our focus on the quality of our product offerings, 
our customer service oriented culture, our high involvement in the product 
supply chain and our leading distribution partners. 

The dominant surface materials used by end-consumers in each market vary. 
Our engineered quartz surface products compete with a number of other surface 
materials such as granite, laminate, marble, manufactured solid surface, 
concrete, stainless steel and wood. The manufacturers of these products 
consist of a number of regional and global competitors. Some of our 
competitors may have greater resources than we have, and as a result, may 
adapt to changes in consumer preferences and demand more quickly, devote 
greater resources to design innovation and establishing brand recognition, 
manufacture more versatile slab sizes and implement processes to lower
 costs. 

The engineered quartz surface market is highly fragmented and is also served 
by a number of regional and global competitors. We also face competition from 
low-cost manufacturers in Asia, particularly in Australia, and the United
States. Large multinational companies have also invested in their engineered
quartz surface production capabilities. We believe that we are likely to 
encounter strong competition from these competitors as a result of 
consolidation in the industry in the future. Such consolidation is likely to 
occur as a result of the economies of scale associated with engineered quartz 
manufacturing that are becoming important to remain competitive in an 
increasingly global engineered quartz surface market and will be increasingly 
important as the engineered quartz market matures in the future.