Exhibit 99.1
NEWS RELEASE for August 14, 2007 at 4:05 PM EDT |
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Contact: | Allen & Caron Inc |
| Chuck Hong | |
| Jill Bertotti (investors) |
| Chief Executive Officer | |
| jill@allencaron.com |
| Netlist, Inc. | |
| Len Hall (media) |
| (949) 435-0025 | |
| len@allencaron.com |
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| (949) 474-4300 |
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NETLIST REPORTS 2007 SECOND QUARTER, SIX-MONTH RESULTS
IRVINE, CA (August 14, 2007) . . . Netlist, Inc. (Nasdaq: NLST) today reported financial results for the second quarter and six months ended June 30, 2007. These results are in line with the preliminary results that were announced July 2.
Revenues for the second quarter and six months ended June 30, 2007 were $12.8 million and $50.3 million, respectively, compared to $39.9 million and $65.9 million for the second quarter and six months ended July 1, 2006. Revenue and gross margins for the quarter were adversely impacted by the decline in the DRAM market and the related decline in demand from OEM customers.
Net loss for this year’s second quarter was $7.2 million, or a $0.37 loss per diluted share, compared to net income in last year’s second quarter of $1.5 million, or $0.10 per diluted share. Net loss for the first six months of 2007 was $6.6 million, or a $0.34 loss per diluted share, compared to net income for the year-earlier period of $1.3 million, or $0.09 per diluted share. Fully diluted weighted-average shares outstanding for this year’s second quarter and first six months were 19,653,000 and 19,638,000, respectively, compared to 15,681,000 and 15,427,000 in the corresponding prior year periods. The increase was due to the Company’s initial public offering (IPO). These results include stock-based compensation expense in the 2007 second quarter and first six months of $294,000 and $622,000, respectively, compared to $74,000 and $147,000 in prior year periods. In addition, the Company recorded special charges of $4.4 million during the second quarter to reflect the impact of declining DRAM prices on inventory values.
Chief Executive Officer Chuck Hong said that DRAM price stabilization that was seen at the end of the second quarter was continuing and that sales and customer purchasing patterns were improving in response.
He commented, “We believe that Netlist and the memory market have turned a corner and we are cautiously optimistic that the remainder of the year will show improving trends on both top and bottom lines. We are seeing progress made on important new OEM programs that we anticipate will come on line by the end of the year and feel that those programs will make a positive contribution to both sales and margins as they are based on proprietary technologies developed at Netlist.”
As of June 30, 2007, cash, cash equivalents and investments in marketable securities were $30.4 million, total assets were $58.6 million, working capital was $27.5 million, total long-term debt was $1.0 million, and stockholders’ equity was $44.3 million.
Outlook for the Third Quarter of 2007
While DRAM market conditions remain quite uncertain, the Company currently believes that it can re-establish revenue growth in the third quarter and that total revenues are expected to exceed $20 million. However, if Netlist encounters adverse developments, such as the significant market price and customer demand deterioration that the Company encountered in the second quarter, the risk of not achieving such growth will increase.
Conference Call Information
Netlist is conducting a conference call today to be broadcast live over the Internet at 5:00 pm Eastern Time to discuss review the financial results for the second quarter and six months ended June 30, 2007. The live webcast and archived replay of the call can be accessed in the Events page of the Investor Relations section of Netlist’s website at www.netlist.com.
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 in Suzhou, 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; uncertainty of customer demand, including delays in expected qualifications; introductions of new products by competitors; changes in end-user demand for technology solutions; the Company’s ability to attract and retain skilled personnel; the Company’s 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, quarterly report on Form 10-Q dated May 15, 2007, and subsequent filings with the U.S. Securities and Exchange Commission made by the Company from time to time. Netlist undertakes 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.
Consolidated Condensed Unaudited Statements of Operations
(in thousands, except per share amounts)
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| Three Months Ended |
| Six Months Ended |
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| June 30, |
| July 1, |
| June 30, |
| July 1, |
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| 2007 |
| 2006 |
| 2007 |
| 2006 |
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Net sales |
| $ | 12,811 |
| $ | 39,914 |
| $ | 50,349 |
| $ | 65,934 |
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Cost of sales(1) |
| 18,734 |
| 33,981 |
| 50,823 |
| 57,447 |
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Gross profit (loss) |
| (5,923 | ) | 5,933 |
| (474 | ) | 8,487 |
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Operating expenses: |
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Research and development(1) |
| 1,478 |
| 848 |
| 2,545 |
| 1,514 |
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Selling, general and administrative(1) |
| 3,845 |
| 2,108 |
| 7,549 |
| 3,911 |
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Total operating expenses |
| 5,323 |
| 2,956 |
| 10,094 |
| 5,425 |
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Operating income (loss) |
| (11,246 | ) | 2,977 |
| (10,568 | ) | 3,062 |
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Other income (expense): |
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Interest income (expense), net |
| 162 |
| (549 | ) | 114 |
| (949 | ) | ||||
Other income, net |
| 4 |
| 15 |
| 5 |
| 5 |
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Total other income (expense), net |
| 166 |
| (534 | ) | 119 |
| (944 | ) | ||||
Income (loss) before provision (benefit) for income taxes |
| (11,080 | ) | 2,443 |
| (10,449 | ) | 2,118 |
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Provision (benefit) for income taxes |
| (3,864 | ) | 895 |
| (3,864 | ) | 812 |
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Net income (loss) |
| $ | (7,216 | ) | $ | 1,548 |
| $ | (6,585 | ) | $ | 1,306 |
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Net income (loss) per common share: |
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Basic |
| $ | (0.37 | ) | $ | 0.14 |
| $ | (0.34 | ) | $ | 0.12 |
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Diluted |
| $ | (0.37 | ) | $ | 0.10 |
| $ | (0.34 | ) | $ | 0.09 |
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Weighted-average common shares outstanding: |
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Basic |
| 19,653 |
| 11,223 |
| 19,638 |
| 10,988 |
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Diluted |
| 19,653 |
| 15,681 |
| 19,638 |
| 15,427 |
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(1) Amounts include stock-based compensation expense as follows: |
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Cost of sales |
| $ | 44 |
| $ | 7 |
| $ | 108 |
| $ | 14 |
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Research and development |
| 19 |
| 11 |
| 65 |
| 22 |
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Selling, general and administrative |
| 231 |
| 56 |
| 449 |
| 111 |
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Netlist, Inc.
Consolidated Condensed Unaudited Balance Sheets
(in thousands)
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| June 30, |
| December 30, |
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| 2007 |
| 2006 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
| $ | 4,999 |
| $ | 30,975 |
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Investments in marketable securities |
| 16,588 |
| 5,267 |
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Accounts receivable, net |
| 7,289 |
| 23,703 |
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Inventories |
| 6,023 |
| 19,473 |
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Deferred taxes |
| 4,903 |
| 1,054 |
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Prepaid expenses and other current assets |
| 685 |
| 988 |
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Total current assets |
| 40,487 |
| 81,460 |
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Property and equipment, net |
| 7,236 |
| 3,830 |
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Deferred taxes |
| 1,122 |
| 576 |
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Long-term investements in marketable securities |
| 8,855 |
| 1,502 |
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Other assets |
| 918 |
| 326 |
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Total assets |
| $ | 58,618 |
| $ | 87,694 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
| $ | 4,392 |
| $ | 11,680 |
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Revolving line of credit |
| 4,807 |
| 19,238 |
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Current portion of long-term debt |
| 866 |
| 1,033 |
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Current portion of deferred gain on sale and leaseback transaction |
| 118 |
| 118 |
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Income taxes payable |
| 181 |
| 552 |
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Accrued expenses and other current liabilities |
| 2,659 |
| 3,255 |
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Total current liabilities |
| 13,023 |
| 35,876 |
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Long-term debt, net of current portion |
| 1,029 |
| 1,230 |
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Deferred gain on sale and leaseback transaction, net of current portion |
| 285 |
| 344 |
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Total liabilities |
| 14,337 |
| 37,450 |
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Commitments and contingencies |
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Stockholders’ equity: |
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Common stock |
| 20 |
| 20 |
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Additional paid-in capital |
| 67,340 |
| 66,557 |
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Note receivable from stockholder |
| — |
| (1 | ) | ||
Accumulated deficit |
| (23,072 | ) | (16,332 | ) | ||
Accumulated other comprehensive loss |
| (7 | ) | — |
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Total stockholders’ equity |
| 44,281 |
| 50,244 |
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Total liabilities and stockholders’ equity |
| $ | 58,618 |
| $ | 87,694 |
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