Exhibit 99.1
NEWS RELEASE for February 28, 2008 at 4:05 PM EST |
Contact: | | Allen & Caron Inc | | Gail Itow |
| | 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 FOURTH QUARTER, YEAR-END RESULTS
IRVINE, CA (February 28, 2008) . . . Netlist, Inc. (NASDAQ: NLST) today reported financial results for the fourth quarter and year ended December 29, 2007. Revenues for the 2007 fourth quarter were $22.5 million compared to $42.0 million for the fourth quarter ended December 30, 2006. Revenues for the fourth quarter fell squarely within Netlist’s prior estimate that revenue for the quarter was projected to exceed $20 million, while the continued weak DRAM market and the level of OEM customer orders affected pricing and business levels as compared to the fourth quarter of 2006. Despite these factors that impacted revenue, gross margin for the fourth quarter of 2007 improved to 22.7 percent compared to 16.2 percent in the year-earlier period.
Chief Executive Officer Chun K. Hong said, “We continue to be encouraged by the growing number of opportunities in the various memory module markets. As we stated last quarter, several programs were winding down to lower levels at the close of 2007, but we have several more programs set to commence throughout 2008 – especially in the second half of the year. We continue to invest in sales and marketing in order to take advantage of more opportunities and increase the number of OEM design-wins and qualifications.”
Net loss for the 2007 fourth quarter was $171,000, or a $0.01 loss per diluted share, compared to net income in the 2006 fourth quarter of $2.0 million, or $0.12 per diluted share. Fully diluted weighted-average shares outstanding for the 2007 fourth quarter was 19,730,000, compared to 16,793,000 in the corresponding prior year period. These results include stock-based compensation expense in the 2007 fourth quarter of $247,000, compared to $145,000 in the prior year period.
Total 2007 revenues were $100.1 million, compared to $151.4 million for 2006. Gross margin for 2007 was 8.8 percent, compared with 14.7 percent in the prior year. Revenues and gross margins for 2007 were adversely impacted by the well-publicized decline throughout the year in the DRAM market and the related decline in sales to OEM customers.
Net loss for 2007 was $7.4 million, or a $0.38 loss per diluted share, compared to net income for the prior year of $5.1 million, or $0.34 per diluted share. Fully diluted weighted-average shares outstanding for 2007 was 19,674,000, compared to 15,331,000 in the prior year. These results
include stock-based compensation expense in 2007 of $1.2 million, compared to $592,000 in 2006.
As of December 29, 2007, cash, cash equivalents and investments in marketable securities were $30.6 million, total assets were $60.4 million, working capital was $27.4 million, total long-term debt was $638,000, and stockholders’ equity was $44.2 million.
Outlook for 2008
The Company currently projects that its revenue for the first quarter of 2008 should exceed $15 million with an accelerating growth pattern in subsequent quarters as planned programs come online. In addition, the Company projects that revenue for all of 2008 will exceed that posted in 2007. However, if Netlist encounters adverse developments, such as the significant market price and customer demand deterioration, the risk of not achieving these current expectations will increase.
Conference Call Information
As previously announced, Netlist is conducting a conference call today to be broadcast live over the Internet at 5:00 pm Eastern Time to discuss and review the financial results for the fourth quarter and year ended December 29, 2007. The dial-in number for the call is 1-888-680-0890. 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 equipment. Netlist maintains its headquarters in Irvine, California with manufacturing facilities in Irvine 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, 2008, quarterly report on Form 10-Q dated November 6, 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.
Unaudited Consolidated Statements of Operations
(in thousands, except per share amounts)
| | Three Months Ended | | Year Ended | |
| | December 29, | | December 30, | | December 29, | | December 30, | |
| | 2007 | | 2006 | | 2007 | | 2006 | |
| | | | | | | | | |
Net sales | | $ | 22,517 | | $ | 42,009 | | $ | 100,060 | | $ | 151,448 | |
Cost of sales(1) | | 17,411 | | 35,210 | | 91,261 | | 129,181 | |
Gross profit | | 5,106 | | 6,799 | | 8,799 | | 22,267 | |
Operating expenses: | | | | | | | | | |
Research and development(1) | | 947 | | 927 | | 4,748 | | 3,315 | |
Selling, general and administrative(1) | | 4,311 | | 2,697 | | 15,900 | | 9,191 | |
Total operating expenses | | 5,258 | | 3,624 | | 20,648 | | 12,506 | |
Operating income (loss) | | (152 | ) | 3,175 | | (11,849 | ) | 9,761 | |
Other income (expense): | | | | | | | | | |
Interest income (expense), net | | 139 | | (311 | ) | 395 | | (1,825 | ) |
Other expense, net | | 44 | | 58 | | 16 | | (24 | ) |
Total other income (expense), net | | 183 | | (253 | ) | 411 | | (1,849 | ) |
Income (loss) before provision (benefit) for income taxes | | 31 | | 2,922 | | (11,438 | ) | 7,912 | |
Provision (benefit) for income taxes | | 202 | | 948 | | (4,025 | ) | 2,844 | |
Net income (loss) | | $ | (171 | ) | $ | 1,974 | | $ | (7,413 | ) | $ | 5,068 | |
Net income (loss) per common share: | | | | | | | | | |
Basic | | $ | (0.01 | ) | $ | 0.14 | | $ | (0.38 | ) | $ | 0.43 | |
Diluted | | $ | (0.01 | ) | $ | 0.12 | | $ | (0.38 | ) | $ | 0.34 | |
Weighted-average common shares outstanding: | | | | | | | | | |
Basic | | 19,730 | | 13,616 | | 19,674 | | 11,705 | |
Diluted | | 19,730 | | 16,793 | | 19,674 | | 15,331 | |
(1) Amounts include stock-based compensation expense as follows: |
Cost of sales | | $ | 10 | | $ | 44 | | $ | 171 | | $ | 104 | |
Research and development | | 44 | | 54 | | 149 | | 125 | |
Selling, general and administrative | | 193 | | 47 | | 861 | | 363 | |
Netlist, Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
| | December 29, | | December 30, | |
| | 2007 | | 2006 | |
| | | | | |
ASSETS | | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 7,182 | | $ | 30,975 | |
Investments in marketable securities | | 15,573 | | 5,267 | |
Accounts receivable, net | | 12,034 | | 23,703 | |
Inventories | | 3,333 | | 19,473 | |
Income taxes receivable | | 708 | | — | |
Deferred taxes | | 3,464 | | 1,054 | |
Prepaid expenses and other current assets | | 392 | | 988 | |
Total current assets | | 42,686 | | 81,460 | |
| | | | | |
Property and equipment, net | | 8,191 | | 3,830 | |
Deferred taxes | | 1,065 | | 576 | |
Long-term investments in marketable securities | | 7,814 | | 1,502 | |
Other assets | | 600 | | 326 | |
Total assets | | $ | 60,356 | | $ | 87,694 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 6,697 | | $ | 11,680 | |
Revolving line of credit | | 4,872 | | 19,238 | |
Current portion of long-term debt | | 740 | | 1,033 | |
Current portion of deferred gain on sale and leaseback transaction | | 118 | | 118 | |
Income taxes payable | | — | | 552 | |
Accrued expenses and other current liabilities | | 2,872 | | 3,255 | |
Total current liabilities | | 15,299 | | 35,876 | |
Long-term debt, net of current portion | | 638 | | 1,230 | |
Deferred gain on sale and leaseback transaction, net of current portion | | 226 | | 344 | |
Total liabilities | | 16,163 | | 37,450 | |
| | | | | |
Commitments and contingencies | | | | | |
| | | | | |
Stockholders’ equity: | | | | | |
Common stock | | 20 | | 20 | |
Additional paid-in capital | | 68,109 | | 66,557 | |
| | | | | |
Note receivable from stockholder | | — | | (1 | ) |
| | | | | |
Accumulated deficit | | (23,899 | ) | (16,332 | ) |
| | | | | |
Accumulated other comprehensive income | | (37 | ) | — | |
Total stockholders’ equity | | 44,193 | | 50,244 | |
Total liabilities and stockholders’ equity | | $ | 60,356 | | $ | 87,694 | |
# # # #
