0001104659-12-077379 8-K 3 20121113 2.02 9.01 20121113 20121113 NETLIST INC 0001282631 3674 954812784 DE 1231 8-K 34 001-33170 121198725 51 DISCOVERY, STE 150 IRVINE CA 92618 949-435-0025 51 DISCOVERY, STE 150 IRVINE CA 92618 8-K 1 a12-26972_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 13, 2012

 

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 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 13, 2012, Netlist, Inc. (the “Company”) issued a press release announcing the Company’s results of operations for the quarter ended September 29, 2012. 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 13, 2012

 

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 13, 2012

 

By:

/s/ Gail M. Sasaki

 

 

 

Gail M. Sasaki

 

 

 

Vice President and Chief Financial Officer

 

3


EX-99.1 2 a12-26972_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

NETLIST REPORTS THIRD QUARTER 2012 RESULTS

 

IRVINE, CALIFORNIA, November 13, 2012 - Netlist, Inc. (NASDAQ: NLST), a designer and manufacturer of high-performance memory subsystems, today reported financial results for the third quarter and nine months ended September 29, 2012.

 

Revenues for the three months ended September 29, 2012, were $6.4 million, down 61 percent from revenues of $16.3 million for the third quarter ended October 1, 2011.  Gross profit for the three months ended September 29, 2012, was $0.4 million, or 6 percent of revenues, compared to a gross profit of $5.5 million, or 34 percent of revenues for the three months ended October 1, 2011, a decrease of 93 percent.

 

Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) after adding back net interest expense, provision for income taxes, depreciation, amortization, stock-based compensation and net non-operating expense (income) was a loss of $3.7 million for the three month period ended September 29, 2012, compared to positive adjusted EBITDA of $32,000 for the prior year period.

 

Net loss for the three months ended September 29, 2012, was $4.8 million, or $0.17 loss per share, compared to a net loss in the prior year period of $1.0 million, or $0.04 loss per share.  These results include stock-based compensation expense of $515,000 for the third quarter of 2012, compared to $464,000 for the third quarter of 2011.

 

“Our third quarter financial results reflect the current transitional period of our business marked by the faster than anticipated decline in sales of PERC, the largest portion of our business for the past two years, and the delay in the ramp up of new products  including HyperCloud®  and NVvault™.” said C.K. Hong, Chief Executive Officer of Netlist. “We continue to execute our strategy to aggressively market these new products to the world’s top OEMs including IBM which introduced our 32GB HCDIMMs on IBM System x3650 M4 servers in late September.”

 

“Our 32GB HyperCloud® solution adds to our promising line-up of new products, including the new DDR3 NVvault line of cache data protection products and 32GB 4R Planar-X RDIMM, which also launched during the third quarter. We remain confident in the market potential of these technologies and believe our operations are well-positioned to grow over the long term.”

 

Revenues for the nine months ended September 29, 2012, were $30.9 million, down 30 percent from revenues of $44.3 million for the nine months ended October 1, 2011.  Gross profit for the nine months ended September 29, 2012, was $8.6 million, or 28 percent of revenues, compared to a gross profit of $14.3 million, or 32 percent of revenues, for the nine months ended October 1, 2011, a decrease of 4 percent in margin percentage and a decrease of 40 percent for the period in gross profit dollars.

 

Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) after adding back net interest expense, provision for income taxes, depreciation, amortization, stock-based compensation and net non-operating expense (income) was a loss of $6.6 million for the nine month period ended September 29, 2012, compared to an adjusted EBITDA loss of $2.2 million for the prior year period.

 



 

Net loss for the nine months ended September 29, 2012, was $9.9 million, or $0.36 loss per share, compared to a net loss in the prior year period of $5.4 million, or $0.22 loss per share.  These results include stock-based compensation expense of $1.5 million and $1.2 million for the nine month periods ended September 29, 2012 and October 1, 2011, respectively.

 

As of September 29, 2012, cash, cash equivalents, and investments in marketable securities were $10.9 million, total assets were $28.8 million, working capital was $14.8 million, total debt was $3.6 million, and stockholders’ equity was $15.8 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 September 29, 2012.  The dial-in number for the call is 1-412-858-4600.  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 net interest expense, provisions for income taxes, depreciation, amortization, share-based compensation and non-operating net income and expense 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 broad portfolio of industrial Flash and specialty memory subsystems including 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, rack-mounted, and 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 and an engineering design center in Silicon Valley, CA. Learn more at www.netlist.com which now includes a blog site with the latest news about Netlist products.

 



 

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® and VLP Planar-X RDIMM; the timing and magnitude of the anticipated decrease in sales to our key customer; our ability to leverage our NVvault™ technology in a more diverse customer base; the rapidly-changing nature of technology; risks associated with intellectual property, including patent infringement litigation against us as well as the costs and unpredictability of litigation over infringement of our intellectual property and the possibility of our 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 filed on February 28, 2012, 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)

 

For more information, please contact:

 

 

 

Brainerd Communicators, Inc.

Gail M. Sasaki

Corey Kinger/Mike Smargiassi (investors)

Chief Financial Officer

Sharon Oh (media)

Netlist, Inc.

NLST@braincomm.com

(949) 435-0025

(212) 986-6667

 

 



 

Netlist, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except par value)

 

 

 

(unaudited)

 

(audited)

 

 

 

September 29,

 

December 31,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

10,441

 

$

10,535

 

Accounts receivable, net

 

3,635

 

11,399

 

Inventories

 

9,975

 

6,057

 

Prepaid expenses and other current assets

 

1,151

 

806

 

Total current assets

 

25,202

 

28,797

 

 

 

 

 

 

 

Property and equipment, net

 

3,073

 

2,771

 

Long-term investments in marketable securities

 

443

 

444

 

Other assets

 

129

 

161

 

Total assets

 

$

28,847

 

$

32,173

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

4,073

 

$

6,155

 

Revolving line of credit

 

2,800

 

 

Accrued payroll and related liabilities

 

1,071

 

1,813

 

Accrued expenses and other current liabilities

 

919

 

460

 

Accrued engineering charges

 

450

 

450

 

Current portion of long-term debt

 

1,115

 

2,144

 

Total current liabilities

 

10,428

 

11,022

 

Long-term debt, net of current portion

 

2,517

 

1,118

 

Other liabilities

 

93

 

94

 

Total liabilities

 

13,038

 

12,234

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Common stock, $0.001 par value - 90,000 shares authorized; 28,414 (2012) and 26,390 (2011) shares issued and outstanding

 

28

 

26

 

Additional paid-in capital

 

98,461

 

92,709

 

Accumulated deficit

 

(82,623

)

(72,740

)

Accumulated other comprehensive loss

 

(57

)

(56

)

Total stockholders’ equity

 

15,809

 

19,939

 

Total liabilities and stockholders’ equity

 

$

28,847

 

$

32,173

 

 



 

Netlist, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 29,

 

October 1,

 

September 29,

 

October 1,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

6,391

 

$

16,347

 

$

30,910

 

$

44,348

 

Cost of sales(1)

 

6,003

 

10,819

 

22,348

 

30,079

 

Gross profit

 

388

 

5,528

 

8,562

 

14,269

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development(1)

 

2,615

 

3,983

 

10,227

 

11,422

 

Selling, general and administrative(1)

 

2,497

 

2,511

 

7,977

 

8,011

 

Total operating expenses

 

5,112

 

6,494

 

18,204

 

19,433

 

Operating loss

 

(4,724

)

(966

)

(9,642

)

(5,164

)

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(98

)

(72

)

(248

)

(147

)

Other income (expense), net

 

4

 

1

 

12

 

(58

)

Total other expense, net

 

(94

)

(71

)

(236

)

(205

)

Loss before provision for income taxes

 

(4,818

)

(1,037

)

(9,878

)

(5,369

)

Provision for income taxes

 

4

 

2

 

5

 

3

 

Net loss

 

$

(4,822

)

$

(1,039

)

$

(9,883

)

$

(5,372

)

Net loss per common share:

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.17

)

$

(0.04

)

$

(0.36

)

$

(0.22

)

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic and diluted

 

28,199

 

25,029

 

27,680

 

24,966

 

 


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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

$

28

 

$

21

 

$

105

 

$

51

 

Research and development

 

193

 

178

 

538

 

466

 

Selling, general and administrative

 

294

 

265

 

877

 

706

 

 



 

Netlist, Inc. and Subsidiaries

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

(in thousands)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 29,

 

October 1,

 

September 29,

 

October 1,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

GAAP net loss

 

$

(4,822

)

$

(1,039

)

$

(9,883

)

$

(5,372

)

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

98

 

72

 

248

 

147

 

Provision for income taxes

 

4

 

2

 

5

 

3

 

Depreciation and amortization

 

471

 

534

 

1,541

 

1,717

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

(4,249

)

(431

)

(8,089

)

(3,505

)

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

515

 

464

 

1,520

 

1,223

 

Other expense (income), net

 

(4

)

(1

)

(12

)

58

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

(3,738

)

$

32

 

$

(6,581

)

$

(2,224

)

 


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