0001104659-11-063273 8-K 3 20111110 2.02 9.01 20111110 20111110 NETLIST INC 0001282631 3674 954812784 DE 1231 8-K 34 001-33170 111196516 51 DISCOVERY, STE 150 IRVINE CA 92618 949-435-0025 51 DISCOVERY, STE 150 IRVINE CA 92618 8-K 1 a11-29575_18k.htm 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 8-K

 

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

Date of Report (Date of Earliest Event Reported): November 10, 2011

 

NETLIST, INC.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware
(State or Other Jurisdiction of
Incorporation)

 

001-33170
(Commission
File Number)

 

95-4812784
(IRS Employer
Identification Number)

 

51 Discovery, Suite 150

Irvine, California 92618
(Address of Principal Executive Offices)

 

(949) 435-0025

(Registrant’s telephone number, including area code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 



 

Item 2.02.  Results of Operations and Financial Condition.

 

On November 10, 2011, Netlist, Inc. (the “Company”) issued a press release announcing the Company’s results of operations for the quarter ended October 1, 2011. The press release is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein in its entirety.

 

The information included in this Item 2.02 of Current Report on Form 8-K, including the attached Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

Item 9.01.  Financial Statements and Exhibits.

 

(d)           Exhibits.

 

Exhibit

 

 

Number

 

Description

 

 

 

99.1

 

Press Release, dated November 10, 2011

 

2



 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

NETLIST, INC.

 

 

 

 

Date: November 10, 2011

By:

/s/ Gail M. Sasaki

 

 

Gail M. Sasaki

 

 

Vice President and Chief Financial Officer

 

3


EX-99.1 2 a11-29575_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

NEWS RELEASE for November 10, 2011 at 4:00 PM EST

 

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

 

Achieves Adjusted EBITDA Breakeven; Net Loss Narrows;

Year-over-Year Quarterly Revenues Up 55 Percent; Gross Profit Up 83 Percent

 

IRVINE, CA (November 10, 2011) . . . Netlist, Inc. (NASDAQ: NLST) today reported financial results for the third quarter and nine months ended October 1, 2011.

 

Revenues for the third quarter ended October 1, 2011, were $16.3 million, up 55 percent from revenues of $10.6 million for the third quarter ended October 2, 2010.  Gross profit for the third quarter ended October 1, 2011, was $5.5 million, or 34 percent of revenues, compared to a gross profit of $3.0 million, or 29 percent of revenues, for the third quarter ended October 2, 2010, an increase of 83 percent.

 

Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) after adding back net interest expense, income taxes, depreciation, amortization, stock-based compensation and net non-operating income was $32,000 for the third quarter ended October 1, 2011, compared to an adjusted EBITDA loss of $4.0 million for the prior year period.

 

Net loss for the third quarter ended October 1, 2011, was $1.0 million, or $0.04 loss per share, an improvement of 79 percent compared to the net loss in the prior year period of $4.9 million, or $0.20 loss per share.  These results include stock-based compensation expense in the third quarter ended October 1, 2011, of $0.5 million compared with $0.4 million in the year-earlier period.

 

Chief Executive Officer C.K. Hong said, “Last quarter, we continued to execute on our base business and extended the trend of improving financial performance. We expanded our gross profit, decreased our operating loss and achieved EBITDA breakeven.  In addition to all of the progress made in the third quarter, we are preparing to roll out several major items at next week’s Super Computing conference — SC11 — in Seattle, including demonstration of a powerful new product platform and announcement of important industry partnerships.”

 

Revenues for the nine months ended October 1, 2011, were $44.3 million, up 60 percent from revenues of $27.8 million for the nine months ended October 2, 2010.  Gross profit for the nine months ended October 1, 2011, was $14.3 million, or 32 percent of revenues, compared to a gross profit of $6.7 million, or 24 percent of revenues, for the nine months ended October 2, 2010, an increase of 114 percent for the period.

 



 

Adjusted EBITDA loss after adding back net interest expense (income), income taxes, depreciation, amortization, stock-based compensation and net non-operating expense (income) was $2.2 million for the first nine months ended October 1, 2011, compared to an adjusted EBITDA loss of $9.8 million for the prior year period.

 

Net loss for the nine months ended October 1, 2011, was $5.4 million, or $0.22 loss per share, compared to a net loss in the prior year period of $11.9 million, or $0.51 loss per share.  These results include stock-based compensation expense of $1.2 million for both periods.

 

As of October 1, 2011, cash, cash equivalents, and investments in marketable securities were $11 million, total assets were $31 million, working capital was $16 million, total debt was $4 million, and stockholders’ equity was $18 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 1, 2011.  The dial-in number for the call is 1-877-941-4775.  The live webcast and archived replay of the call can be accessed in the Investors section of Netlist’s website at www.netlist.com.

 

Note Regarding Use of Non-GAAP Financial Measures

 

Certain of the information set forth herein, including EBITDA and adjusted EBITDA, may be considered non-GAAP financial measures. Netlist believes this information is useful to investors because it provides a basis for measuring Netlist’s available capital resources, the operating performance of Netlist’s business and Netlist’s cash flow, excluding depreciation, amortization and share-based compensation that would normally be included in the most directly comparable measures calculated and presented in accordance with Generally Accepted Accounting Principles. Netlist’s management uses these non-GAAP financial measures along with the most directly comparable GAAP financial measures in evaluating Netlist’s operating performance, capital resources and cash flow. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-financial measures as reported by Netlist may not be comparable to similarly titled amounts reported by other companies.

 

About Netlist:

 

Netlist, Inc. designs and manufactures high-performance, logic-based memory subsystems for server and storage applications for cloud computing. Netlist’s flagship products include HyperCloud™, a patented memory technology that breaks traditional memory barriers, NVvault™ family of products that enables data retention during power interruption, EXPRESSvault™, a PCI Express backup/recovery solution for cache data protection and a robust portfolio of high performance and specialty memory subsystems including HyperStream, VLP (very low profile) DIMMs and Planar-X RDIMMs.

 

Netlist develops technology solutions for customer applications in which high-speed, high-capacity, small form factor and heat dissipation are key requirements for system memory. These customers include OEMs that design and build tower servers, rack-mounted servers, blade servers, high-performance computing clusters, engineering workstations and telecommunications equipment. Founded in 2000, Netlist is headquartered in Irvine, CA with manufacturing facilities in Suzhou, People’s Republic of China. Learn more 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, risks associated with the launch and commercial success of our products, programs and technologies; the success of product partnerships; continuing development, qualification and volume production of EXPRESSvault™, NVvault™, HyperCloud™, HyperStream and VLP Planar-X RDIMM; 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 re-examined 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; 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 quarterly report on Form 10-Q for the quarter ended July 1, 2011, 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 1,

 

October 2

 

October 1,

 

October 2,

 

 

 

2011

 

2010

 

2011

 

2010

 

Net sales

 

$

16,347

 

$

10,565

 

$

44,348

 

$

27,759

 

Cost of sales(1)

 

10,819

 

7,545

 

30,079

 

21,103

 

Gross profit

 

5,528

 

3,020

 

14,269

 

6,656

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development(1)

 

3,983

 

4,958

 

11,422

 

11,156

 

Selling, general and administrative(1)

 

2,511

 

2,986

 

8,011

 

8,163

 

Total operating expenses

 

6,494

 

7,944

 

19,433

 

19,319

 

Operating loss

 

(966

)

(4,924

)

(5,164

)

(12,663

)

Other (expense) income:

 

 

 

 

 

 

 

 

 

Interest (expense) income, net

 

(72

)

(3

)

(147

)

1

 

Other (expense) income, net

 

1

 

 

(58

)

71

 

Total other (expense) income, net

 

(71

)

(3

)

(205

)

72

 

Loss before provision (benefit) for income taxes

 

(1,037

)

(4,927

)

(5,369

)

(12,591

)

Provision (benefit) for income taxes

 

2

 

12

 

3

 

(713

)

Net loss

 

$

(1,039

)

$

(4,939

)

$

(5,372

)

$

(11,878

)

Net loss per common share:

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.04

)

$

(0.20

)

$

(0.22

)

$

(0.51

)

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic and diluted

 

25,029

 

24,799

 

24,966

 

23,422

 

 


(1)  Amounts include stock-based compensation expense as follows:

 

Cost of sales

 

$

21

 

$

11

 

$

51

 

$

33

 

Research and development

 

178

 

134

 

466

 

297

 

Selling, general and administrative

 

265

 

268

 

706

 

891

 

 

MORE-MORE-MORE

 



 

Netlist, Inc.

Unaudited Condensed Consolidated Balance Sheets

(in thousands)

 

 

 

October 1,

 

January 1,

 

 

 

2011

 

2011

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

10,102

 

$

14,210

 

Investments in marketable securities

 

 

824

 

Accounts receivable, net

 

6,792

 

6,451

 

Inventories

 

8,877

 

4,509

 

Prepaid expenses and other current assets

 

1,337

 

1,396

 

Total current assets

 

27,108

 

27,390

 

 

 

 

 

 

 

Property and equipment, net

 

2,950

 

4,077

 

Long-term investments in marketable securities

 

450

 

890

 

Other assets

 

200

 

337

 

Total assets

 

$

30,708

 

$

32,694

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

6,290

 

$

6,256

 

Accrued payroll and related liabilities

 

1,747

 

1,762

 

Accrued expenses and other current liabilities

 

431

 

369

 

Accrued engineering charges

 

736

 

638

 

Current portion of long-term debt

 

2,079

 

674

 

Total current liabilities

 

11,283

 

9,699

 

Long-term debt, net of current portion

 

1,591

 

1,063

 

Other liabilities

 

88

 

85

 

Total liabilities

 

12,962

 

10,847

 

Commitments and contingencies

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Common stock, $0.001 par value - 90,000 shares authorized; 25,459 (2011) and 25,284 (2010) shares issued and outstanding

 

25

 

25

 

Additional paid-in capital

 

90,286

 

89,074

 

Accumulated deficit

 

(72,513

)

(67,141

)

Accumulated other comprehensive loss

 

(52

)

(111

)

Total stockholders’ equity

 

17,746

 

21,847

 

Total liabilities and stockholders’ equity

 

$

30,708

 

$

32,694

 

 

MORE-MORE-MORE

 



 

Netlist, Inc.

Schedule Reconciling GAAP Net Loss to Non-GAAP EBITDA and Adjusted EBITDA

(in thousands, except per share amounts)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

October 1,

 

October 2,

 

October 1,

 

October 2,

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

GAAP net loss

 

$

(1,039

)

$

(4,939

)

$

(5,372

)

$

(11,878

)

 

 

 

 

 

 

 

 

 

 

Interest expense (income), net

 

72

 

3

 

147

 

(1

)

Provision (benefit) for income taxes

 

2

 

12

 

3

 

(713

)

Depreciation and amortization

 

534

 

561

 

1,717

 

1,691

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

(431

)

(4,363

)

(3,505

)

(10,901

)

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

464

 

413

 

1,223

 

1,221

 

Other expense (income), net

 

(1

)

 

58

 

(71

)

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

32

 

$

(3,950

)

$

(2,224

)

$

(9,751

)

 

The table above reconciles net loss to EBITDA and Adjusted EBITDA.  EBITDA is defined as net loss before net interest expense (income), income taxes, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA before net non-operating expense (income) and stock-based compensation expense. Although EBITDA and Adjusted EBITDA are not measures of performance calculated in accordance with GAAP, management believes that it is useful to Netlist, Inc. and to an investor in evaluating the Company because it is a widely used measure to evaluate a company’s operating performance.

 

# # # #

 


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