0001104659-08-069587 8-K 3 20081106 2.02 5.02 9.01 20081110 20081110 NETLIST INC 0001282631 3674 954812784 DE 8-K 34 001-33170 081174468 475 GODDARD IRVINE CA 92618 8-K 1 a08-27940_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 6, 2008

 

Netlist, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

 

001-33170

 

95-4812784

(State or other jurisdiction
of incorporation)

 

(Commission
File Number)

 

(IRS Employer
Identification No.)

 

 

 

 

 

51 Discovery, Irvine, California

 

92618

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code:  (949) 435-0025

 

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 6, 2008, Netlist, Inc. (the “Company”) issued a press release announcing the Company’s results of operations for the quarter ended September 27, 2008. 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 5.02       Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers; Compensatory Arrangement of Certain Officers.

 

On November 4, 2008, David Rickey resigned as a Director of Netlist, Inc., for personal reasons.  His resignation will take effect on November 18, 2008.

 

Item 9.01       Financial Statements and Exhibits.

 

d)    Exhibits

 

Exhibit
Number

 


Description

 

 

 

99.1

 

Press Release, dated November 6, 2008.

 

2



 

SIGNATURES

 

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.

 

Date: November 6, 2008

NETLIST, INC.

 

 

 

 

 

/s/   Gail Itow

 

Gail Itow

 

Vice President and Secretary

 

3


EX-99.1 2 a08-27940_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

NEWS RELEASE for November 6, 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 2008 THIRD QUARTER, NINE-MONTH RESULTS

 

IRVINE, CA (November 6, 2008) . . . Netlist, Inc. (NASDAQ: NLST) today reported financial results for the third quarter and nine months ended September 27, 2008.  Revenues for the 2008 third quarter were $28.9 million compared to $27.2 million for the third quarter ended September 29, 2007.  Gross profit for the third quarter of 2008 was $2.0 million, or a gross margin of 7.1 percent, compared with a gross profit of $4.2 million, or a gross margin of 15.3 percent, in the year-earlier period.  Gross margin for the quarter was impacted by a large percentage of laptop memory in the product mix and declining prices in the server module segment of the business.

 

Net loss for this year’s third quarter was $7.4 million, or a $0.37 loss per share, compared to a net loss in the 2007 third quarter of $657,000, or $0.03 loss per share.  This year’s third quarter net loss includes a non-cash provision for income taxes of $4.5 million which was recorded to establish a partial valuation allowance against deferred tax assets.  The valuation allowance analysis included measurement of cumulative operating loss history over a period of three years coupled with the uncertain outlook in the overall economic environment.  This non-cash provision is compared with a benefit of $363,000 for last year’s third quarter.  Fully diluted weighted-average shares outstanding for the 2008 third quarter were 19,855,000, compared to 19,689,000 in the corresponding prior year period.  These results include stock-based compensation expense in the 2008 third quarter of $362,000, compared with $312,000 in the prior year period.

 

Chief Executive Officer Chun K. Hong said, “While sales were in-line with our guidance, we experienced slower than expected growth in sales of our flash and high density server modules, as well as a decline in sales of certain key programs and designs nearing end-of-life in 2008.  Additionally, during the quarter, our sales were impacted by a sequential 32 percent decline in the price of DRAM ICs from last quarter.  Despite the current business environment which remains extremely challenging, we are encouraged by a number of opportunities we have underway.  We continue to invest in R&D while at the same time aggressively managing our inventories and expenses to reflect the current market challenges.  We remain very much committed to our long-term strategy of developing high-performance memory subsystems and new computing applications that offer a superior value proposition for our customers.”

 



 

For this year’s first nine months, revenues were $60.4 million, compared to $77.5 million for the prior year period.  Gross profit for the first nine months of 2008 improved to $7.8 million, or a gross margin of 13.0 percent, compared with a gross profit of $3.7 million, or a gross margin of 4.8 percent, in the year-earlier period.

 

Net loss for the first nine months of 2008 was $10.3 million, or a $0.52 loss per share, compared to a net loss in the first nine months of the prior year of $7.2 million, or $0.37 loss per share.  This year’s third quarter net loss includes a provision for income taxes of $3.3 million compared with a benefit of $4.2 million for last year’s third quarter.  Fully diluted weighted-average shares outstanding for this year’s first nine months were 19,845,000, compared to 19,655,000 in the corresponding prior year period.  These results include stock-based compensation expense in the first nine months of 2008 of $981,000, compared to $934,000 in the prior year period.

 

As of September 27, 2008, cash, cash equivalents, restricted cash and investments in marketable securities were $24.3 million, total assets were $55.5 million, working capital was $25.8 million, total long-term debt was $280,000, and stockholders’ equity was $34.6 million.

 

Outlook for 2008

 

The DRAM market conditions remain uncertain in the near term.  In addition, overall economic and business conditions have become more uncertain due to the financial and credit market impact caused by the global financial downturn on Netlist customers and suppliers.  Due to these cumulative difficult market conditions, the Company plans to withhold specific quarterly guidance until conditions stabilize.  The Company plans to return to a pattern of providing quarterly guidance when it can better forecast those revenues.

 

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 September 27, 2008.  The dial-in number for the call is 1-800-762-8932.  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 and NAND; changes in and uncertainty of customer demand, including delays in product qualifications; delays in our and our 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; 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 29, 2008, 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 Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 27,

 

September 29,

 

September 27,

 

September 29,

 

 

 

2008

 

2007

 

2008

 

2007

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

28,876

 

$

27,194

 

$

60,409

 

$

77,543

 

Cost of sales(1)

 

26,832

 

23,027

 

52,575

 

73,850

 

Gross profit

 

2,044

 

4,167

 

7,834

 

3,693

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development(1)

 

1,651

 

1,256

 

4,943

 

3,801

 

Selling, general and administrative(1)

 

3,364

 

4,040

 

10,142

 

11,589

 

Total operating expenses

 

5,015

 

5,296

 

15,085

 

15,390

 

Operating loss

 

(2,971

)

(1,129

)

(7,251

)

(11,697

)

Other income:

 

 

 

 

 

 

 

 

 

Interest income, net

 

38

 

142

 

381

 

256

 

Other income (expense), net

 

13

 

(33

)

(55

)

(28

)

Total other income, net

 

51

 

109

 

326

 

228

 

Loss before provision (benefit) for income taxes

 

(2,920

)

(1,020

)

(6,925

)

(11,469

)

Provision (benefit) for income taxes

 

4,502

 

(363

)

3,332

 

(4,227

)

Net loss

 

$

(7,422

)

$

(657

)

$

(10,257

)

$

(7,242

)

Net loss per common share:

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.37

)

$

(0.03

)

$

(0.52

)

$

(0.37

)

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic and diluted

 

19,855

 

19,689

 

19,845

 

19,655

 

 


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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

$

44

 

$

53

 

$

106

 

$

161

 

Research and development

 

55

 

40

 

140

 

105

 

Selling, general and administrative

 

263

 

219

 

735

 

668

 

 



 

Netlist, Inc.

Unaudited Condensed Consolidated Balance Sheets

(in thousands)

 

 

 

September 27,

 

December 29,

 

 

 

2008

 

2007

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

12,081

 

$

7,182

 

Restricted cash

 

2,000

 

 

Investments in marketable securities

 

9,224

 

15,573

 

Accounts receivable, net

 

15,749

 

12,034

 

Inventories

 

4,432

 

3,333

 

Income taxes receivable

 

595

 

708

 

Deferred taxes

 

1,254

 

3,464

 

Prepaid expenses and other current assets

 

902

 

392

 

Total current assets

 

46,237

 

42,686

 

 

 

 

 

 

 

Property and equipment, net

 

7,753

 

8,191

 

Deferred taxes

 

 

1,065

 

Long-term investments in marketable securities

 

963

 

7,814

 

Other assets

 

548

 

600

 

Total assets

 

$

55,501

 

$

60,356

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

5,238

 

$

6,697

 

Revolving line of credit

 

12,241

 

4,872

 

Current portion of long-term debt

 

491

 

740

 

Current portion of deferred gain on sale and leaseback transaction

 

118

 

118

 

Accrued expenses and other current liabilities

 

2,360

 

2,872

 

Total current liabilities

 

20,448

 

15,299

 

Long-term debt, net of current portion

 

280

 

638

 

Deferred gain on sale and leaseback transaction, net of current portion

 

137

 

226

 

Total liabilities

 

20,865

 

16,163

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Common stock

 

20

 

20

 

Additional paid-in capital

 

69,086

 

68,109

 

Accumulated deficit

 

(34,156

)

(23,899

)

Accumulated other comprehensive loss

 

(314

)

(37

)

Total stockholders’ equity

 

34,636

 

44,193

 

Total liabilities and stockholders’ equity

 

$

55,501

 

$

60,356

 

 

# # # #

 


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