Exhibit 99.1
NEWS RELEASE for May 10, 2007
Contact: | Allen & Caron Inc | Lee Kim |
| Jill Bertotti (investors) | Chief Financial Officer |
| jill@allencaron.com | Netlist, Inc. |
| Len Hall (media) | (949) 435-0025 |
| len@allencaron.com |
|
| (949) 474-4300 |
|
NETLIST REPORTS 2007 FIRST QUARTER RESULTS
IRVINE, CA (May 10, 2007) .. . . Netlist, Inc. (Nasdaq: NLST) today reported financial results for the quarter ended March 31, 2007. These results are in line with the preliminary results that were announced April 16.
Revenues for the 2007 first quarter were $37.5 million compared with $26.0 million in the first quarter ended April 1, 2006, and gross margin for the quarter was 14.5 percent, up from 9.8 percent in the corresponding prior-year period. Net income for the 2007 first quarter was $631,000, or $0.03 per diluted share, compared to a net loss of $242,000, or a $0.02 loss per diluted share, in the corresponding prior-year period. Fully diluted weighted-average shares outstanding for this year’s first quarter were 21,425,000, compared with 10,753,000 in the corresponding prior-year period. The increase was due to the Company’s initial public offering (IPO). These results include stock-based compensation expense of $328,000 in the first quarter of 2007 and $73,000 in the first quarter of 2006.
Chief Executive Officer Chuck Hong said that the Company is pushing forward with its principal strategic focus of developing high-performance memory subsystems that offer a superior value proposition to its OEM customers and targeting new application markets.
“While it is difficult to predict the precise duration of the market conditions and customer ordering patterns that impacted the Company in the first quarter,” he said, “we are well positioned to push forward with numerous programs that will bring high-end memory subsystem products to market in the second half of 2007.”
As of March 31, 2007, cash, cash equivalents and investments in marketable securities were $34.7 million, total assets were $73.6 million, working capital was $40.2 million, total long-term debt was $1.0 million, and stockholders’ equity was $51.2 million.
Conference Call Information
Because management hosted a conference call following the announcement of Company’s preliminary first quarter results on April 16, Netlist will not be conducting a conference call today.
About Netlist, Inc.
Netlist designs and manufactures high-performance memory subsystems for the server and high- performance computing and communications markets. The Company’s memory subsystems are developed for applications in which high speed, high-capacity memory, functionality, small form factor, and heat dissipation are key requirements. These applications include tower servers, rack-mounted servers, blade servers, high performance computing clusters, engineering workstations, and telecommunication switches. Netlist maintains its headquarters and manufacturing facilities in Irvine, California, and is developing additional manufacturing capacity in the People’s Republic of China.
Safe Harbor Statement
This news release contains forward-looking statements regarding future events and the future performance of Netlist, including future opportunities and growth for the company’s business. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expected or projected. These risks and uncertainties include, but are not limited to, the rapidly-changing nature of technology; volatility in the pricing of DRAM ICs; introductions of new products by competitors; changes in end-user demand for technology solutions; our ability to attract and retain skilled personnel; our reliance on suppliers of critical components; evolving industry standards; and the political and regulatory environment in the People’s Republic of China. Other risks and uncertainties are described in the Company’s annual report on Form 10-K, dated February 28, 2007, and other filings with the U.S. Securities and Exchange Commission made by the company from time to time. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
TABLES FOLLOW
NETLIST, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
|
| Three Months Ended |
| ||||
|
| March 31, |
| April 1, |
| ||
Net sales |
| $ | 37,538 |
| $ | 26,020 |
|
Cost of sales(1) |
| 32,089 |
| 23,466 |
| ||
Gross profit |
| 5,449 |
| 2,554 |
| ||
Operating expenses: |
|
|
|
|
| ||
Research and development(1) |
| 1,067 |
| 666 |
| ||
Selling, general and administrative(1) |
| 3,704 |
| 1,803 |
| ||
Total operating expenses |
| 4,771 |
| 2,469 |
| ||
Operating income |
| 678 |
| 85 |
| ||
Other expense: |
|
|
|
|
| ||
Interest expense, net of interest income |
| (48 | ) | (400 | ) | ||
Other income (expense), net |
| 1 |
| (10 | ) | ||
Total other expense, net |
| (47 | ) | (410 | ) | ||
Income (loss) before provision (benefit) for income taxes |
| 631 |
| (325 | ) | ||
Provision (benefit) for income taxes |
| — |
| (83 | ) | ||
Net income (loss) |
| $ | 631 |
| $ | (242 | ) |
|
|
|
|
|
| ||
Net income (loss) per common share: |
|
|
|
|
| ||
Basic |
| $ | 0.03 |
| $ | (0.02 | ) |
Diluted |
| $ | 0.03 |
| $ | (0.02 | ) |
Weighted-average common shares outstanding: |
|
|
|
|
| ||
Basic |
| 19,624 |
| 10,753 |
| ||
Diluted |
| 21,425 |
| 10,753 |
| ||
(1) Amounts include stock-based compensation expense as follows:
Cost of sales |
| $ | 64 |
| $ | 7 |
|
Research and development |
| 46 |
| 11 |
| ||
Selling, general and administrative |
| 218 |
| 55 |
| ||
NETLIST, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
|
| March 31, |
| December 30, |
| ||
ASSETS |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 11,694 |
| $ | 30,975 |
|
Investments in marketable securities |
| 16,149 |
| 5,267 |
| ||
Accounts receivable, net |
| 18,033 |
| 23,703 |
| ||
Inventories |
| 13,380 |
| 19,473 |
| ||
Deferred taxes |
| 1,100 |
| 1,054 |
| ||
Prepaid expenses and other current assets |
| 897 |
| 988 |
| ||
Total current assets |
| 61,253 |
| 81,460 |
| ||
Property and equipment, net |
| 3,894 |
| 3,830 |
| ||
Deferred taxes |
| 932 |
| 576 |
| ||
Long-term investments in marketable securities |
| 6,842 |
| 1,502 |
| ||
Other assets |
| 636 |
| 326 |
| ||
Total assets |
| $ | 73,557 |
| $ | 87,694 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Accounts payable |
| $ | 5,491 |
| $ | 11,680 |
|
Revolving line of credit |
| 12,026 |
| 19,238 |
| ||
Current portion of long-term debt |
| 865 |
| 1,033 |
| ||
Current portion of deferred gain on sale and leaseback transaction |
| 118 |
| 118 |
| ||
Income taxes payable |
| 108 |
| 552 |
| ||
Accrued expenses and other current liabilities |
| 2,459 |
| 3,255 |
| ||
Total current liabilities |
| 21,067 |
| 35,876 |
| ||
Long-term debt, net of current portion |
| 1,010 |
| 1,230 |
| ||
Deferred gain on sale and leaseback transaction, net of current portion |
| 314 |
| 344 |
| ||
Total liabilities |
| 22,391 |
| 37,450 |
| ||
Commitments and contingencies |
| — |
| — |
| ||
Stockholders’ equity: |
|
|
|
|
| ||
Common stock |
| 20 |
| 20 |
| ||
Additional paid-in capital |
| 66,998 |
| 66,557 |
| ||
Note receivable from stockholder |
| (1 | ) | (1 | ) | ||
Accumulated deficit |
| (15,855 | ) | (16,332 | ) | ||
Accumulated other comprehensive income |
| 4 |
| — |
| ||
Total stockholders’ equity |
| 51,166 |
| 50,244 |
| ||
Total liabilities and stockholders’ equity |
| $ | 73,557 |
| $ | 87,694 |
|
# # # #