Exhibit 99.1
NEWS RELEASE for November 15, 2010 at 4:00 PM EDT
Contact: | Allen & Caron Inc | Gail M. Sasaki |
| 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 THIRD QUARTER, NINE-MONTH RESULTS
Year-over-Year Revenues for Third Quarter Up 64 Percent; Margins Increase
IRVINE, CA (November 15, 2010) . . . Netlist, Inc. (NASDAQ: NLST) today reported financial results for the third quarter and nine months ended October 2, 2010.
Revenues for the third quarter ended October 2, 2010, were $10.6 million, up 64 percent from revenues of $6.4 million for the third quarter ended October 3, 2009. Sequentially, revenues improved 14 percent from the $9.3 million in revenues for the second quarter ended July 3, 2010. Gross profit for the third quarter ended October 2, 2010, was $3.0 million, or 28.6 percent of revenues, compared to a gross profit of $1.6 million, or 24.3 percent of revenues, for the third quarter ended October 3, 2009. Sequentially, gross profit improved 66 percent and gross margin improved 9 percentage points from the second quarter ended July 3, 2010.
Net loss for the third quarter ended October 2, 2010, was $4.9 million, or $0.20 loss per share compared to a net loss in the prior year period of $2.1 million, or $0.11 loss per share. The increased loss was primarily attributable to higher engineering, sales and marketing costs associated with technology development, and sampling and qualification efforts at various OEMs and end-users. These results include stock-based compensation expense in the third quarter ended October 2, 2010, of $0.4 million compared with $0.6 million in the prior year period.
“Revenues from our base business continued to grow and gross profit improved in the third quarter,” Chief Executive Officer C.K. Hong said. “In addition, our engineering and marketing teams have been extremely busy and engaged with potential customers for our HyperCloud™ and NetVault™ products, including demonstrations, simulations and multiple meetings with large end-users of server technologies. ”
Revenues for the nine months ended October 2, 2010, were $27.8 million, up 136 percent from revenues of $11.8 million for the nine months ended October 3, 2009. Gross profit for the nine months ended October 2, 2010, was $6.7 million, or 24.0 percent of revenues, compared to gross profit of $1.3 million, or 10.8 percent of revenues for the nine months ended October 3, 2009.
Net loss for the nine months ended October 2, 2010 was $11.9 million, or $0.51 loss per share, compared to a net loss in the prior year period of $9.9 million, or $0.50 loss per share. These results include stock-based compensation expense for both periods of $1.2 million.
As of October 2, 2010, cash, cash equivalents, and investments in marketable securities were $19.0 million, total assets were $35.8 million, working capital was $20.6 million, total debt was $1.7 million, and stockholders’ equity was $24.8 million.
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 third quarter and nine months ended October 2, 2010. The dial-in number for the call is 1-877-941-2068. The live webcast and archived replay of the call can be accessed in the Investors section of Netlist’s website at www.netlist.com.
About Netlist:
Netlist, Inc. designs and manufactures high-performance, logic-based memory subsystems for datacenter server and high-performance computing and communications markets. Netlist’s flagship products include HyperCloud™ Memory, which breaks traditional memory barriers, and the NetVault™ family of products, including both battery and flash memory-based subsystems, which enables data retention for weeks following a disaster. The memory technologies are developed for applications in which high-speed, high-capacity memory, enhanced 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. Founded in 2000, Netlist is headquartered in Irvine, California with manufacturing facilities in Suzhou, People’s Republic of China. For more information, visit the company’s website at www.netlist.com.
Safe Harbor Statement
This news release contains forward-looking statements regarding future events and the future performance of Netlist. 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, continuing development, qualification and volume production of NetVault™ NV and HyperCloud™; the rapidly-changing nature of technology; risks associated with intellectual property, including the costs and unpredictability of litigation over infringement of our intellectual property and the possibility of the Company’s patents being reexamined by the United States Patent and Trademark Office; volatility in the pricing of DRAM ICs and NAND; changes in and uncertainty of customer acceptance of, and demand for, our existing products and products under development, including uncertainty of and/or delays in product orders and product qualifications; delays in the Company’s and its customers’ product releases and development; 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 and vendors in the supply chain; fluctuations in the market price 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 19, 2010, and subsequent filings with the U.S. Securities and Exchange Commission made by the Company from time to time. Except as required by law, 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 Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
|
| Three Months Ended |
| Nine Months Ended |
| ||||||||
|
| October 2, |
| October 3, |
| October 2, |
| October 3, |
| ||||
|
| 2010 |
| 2009 |
| 2010 |
| 2009 |
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|
|
|
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Net sales |
| $ | 10,565 |
| $ | 6,446 |
| $ | 27,759 |
| $ | 11,781 |
|
Cost of sales(1) |
| 7,545 |
| 4,879 |
| 21,103 |
| 10,507 |
| ||||
Gross profit |
| 3,020 |
| 1,567 |
| 6,656 |
| 1,274 |
| ||||
Operating expenses: |
|
|
|
|
|
|
|
|
| ||||
Research and development(1) |
| 4,958 |
| 1,975 |
| 11,156 |
| 5,619 |
| ||||
Selling, general and administrative(1) |
| 2,986 |
| 2,115 |
| 8,163 |
| 6,170 |
| ||||
Total operating expenses |
| 7,944 |
| 4,090 |
| 19,319 |
| 11,789 |
| ||||
Operating loss |
| (4,924 | ) | (2,523 | ) | (12,663 | ) | (10,515 | ) | ||||
Other income (expense): |
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|
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|
|
|
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Interest income (expense), net |
| (3 | ) | (25 | ) | 1 |
| 75 |
| ||||
Other income, net |
| — |
| 4 |
| 71 |
| 134 |
| ||||
Total other income (expense), net |
| (3 | ) | (21 | ) | 72 |
| 209 |
| ||||
Loss before provision (benefit) for income taxes |
| (4,927 | ) | (2,544 | ) | (12,591 | ) | (10,306 | ) | ||||
Provision (benefit) for income taxes |
| 12 |
| (458 | ) | (713 | ) | (409 | ) | ||||
Net loss |
| $ | (4,939 | ) | $ | (2,086 | ) | $ | (11,878 | ) | $ | (9,897 | ) |
Net loss per common share: |
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Basic and diluted |
| $ | (0.20 | ) | $ | (0.11 | ) | $ | (0.51 | ) | $ | (0.50 | ) |
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Weighted-average common shares outstanding: |
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Basic and diluted |
| 24,799 |
| 19,855 |
| 23,422 |
| 19,855 |
| ||||
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(1) Amounts include stock-based compensation expense as follows: |
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Cost of sales |
| $ | 11 |
| $ | 146 |
| $ | 33 |
| $ | 213 |
|
Research and development |
| 134 |
| 156 |
| 297 |
| 262 |
| ||||
Selling, general and administrative |
| 268 |
| 329 |
| 891 |
| 753 |
| ||||
MORE-MORE-MORE
Netlist, Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
|
| October 2, |
| January 2, |
| ||
|
| 2010 |
| 2010 |
| ||
ASSETS |
|
|
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| ||
Current assets: |
|
|
|
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| ||
Cash and cash equivalents |
| $ | 14,722 |
| $ | 9,942 |
|
Investments in marketable securities |
| 3,426 |
| 3,949 |
| ||
Accounts receivable, net |
| 6,951 |
| 4,273 |
| ||
Inventories |
| 3,861 |
| 2,232 |
| ||
Prepaid expenses and other current assets |
| 1,522 |
| 854 |
| ||
Total current assets |
| 30,482 |
| 21,250 |
| ||
|
|
|
|
|
| ||
Property and equipment, net |
| 4,275 |
| 4,779 |
| ||
Long-term investments in marketable securities |
| 894 |
| 941 |
| ||
Other assets |
| 172 |
| 221 |
| ||
Total assets |
| $ | 35,823 |
| $ | 27,191 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
|
|
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Accounts payable |
| $ | 6,234 |
| $ | 4,057 |
|
Accrued payroll and related liabilities |
| 1,884 |
| 2,332 |
| ||
Accrued expenses and other current liabilities |
| 566 |
| 605 |
| ||
Accrued engineering charges |
| 573 |
| 661 |
| ||
Current portion of long-term debt |
| 640 |
| 108 |
| ||
Deferred gain on sale and leaseback transaction |
| 20 |
| 108 |
| ||
Total current liabilities |
| 9,917 |
| 7,871 |
| ||
Long-term debt, net of current portion |
| 1,078 |
| 51 |
| ||
Total liabilities |
| 10,995 |
| 7,922 |
| ||
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Commitments and contingencies |
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Stockholders’ equity: |
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|
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| ||
|
|
|
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Common stock, $0.001 par value - 90,000 shares authorized; 25,306 (2010) and 20,111 (2009) shares issued and outstanding |
| 25 |
| 20 |
| ||
Additional paid-in capital |
| 88,812 |
| 71,332 |
| ||
Accumulated deficit |
| (63,904 | ) | (52,026 | ) | ||
Accumulated other comprehensive loss |
| (105 | ) | (57 | ) | ||
Total stockholders’ equity |
| 24,828 |
| 19,269 |
| ||
Total liabilities and stockholders’ equity |
| $ | 35,823 |
| $ | 27,191 |
|
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