0001104659-11-046977 8-K 3 20110815 2.02 9.01 20110815 20110815 NETLIST INC 0001282631 3674 954812784 DE 1231 8-K 34 001-33170 111036222 51 DISCOVERY, STE 150 IRVINE CA 92618 949-435-0025 51 DISCOVERY, STE 150 IRVINE CA 92618 8-K 1 a11-23844_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): August 15, 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 August 15, 2011, Netlist, Inc. (the “Company”) issued a press release announcing the Company’s results of operations for the quarter ended July 2, 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 August 15, 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: August 15, 2011

By:

/s/ Gail M. Sasaki

 

 

Gail M. Sasaki

 

 

Vice President and Chief Financial Officer

 

3


EX-99.1 2 a11-23844_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

NEWS RELEASE for August 15, 2011 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 SECOND QUARTER, SIX-MONTH RESULTS

 

Year-over-Year Quarterly Revenues Up 72 Percent; Gross Profit Up 172 Percent; Net Loss Narrows;

HyperCloud™ Shipments to End Users Commence

 

IRVINE, CA (August 15, 2011) . . . Netlist, Inc. (NASDAQ: NLST) today reported financial results for the second quarter and six months ended July 2, 2011.

 

Revenues for the second quarter ended July 2, 2011, were $16.0 million, up 72 percent from revenues of $9.3 million for the second quarter ended July 3, 2010.  Sequentially, revenues improved 33 percent from the $12.0 million in revenues for the first quarter ended April 2, 2011.  Gross profit for the second quarter ended July 2, 2011, was $4.9 million, or 31 percent of revenues, compared to a gross profit of $1.8 million, or 20 percent of revenues, for the second quarter ended July 3, 2010, an increase of 172 percent.  Gross profit dollars were also up from the previous quarter by 30 percent from a gross profit of $3.8 million, or 32 percent of revenues.

 

Net loss for the second quarter ended July 2, 2011, was $1.5 million, or $0.06 loss per share, a decrease of 62 percent compared to the net loss in the prior year period of $4.0 million, or $0.16 loss per share.  These results include stock-based compensation and depreciation expense in both periods, of $0.4 million and $0.6 million, respectively.  Net loss narrowed 46 percent from the previous quarter ended April 2, 2011.  Cash based loss, after adding back stock-based compensation and depreciation, was $503,000 for the second quarter ended July 2, 2011, an improvement of 83 percent from the prior year’s quarter.

 

“We are pleased with another quarter of strong growth in revenue and increased gross profit both year over year and sequentially,” Chief Executive Officer C.K. Hong said.  “The quarter was anchored by continued traction in shipments of our Vault family of products with a growth rate of 126 percent from the prior year’s quarter.  In addition, our Flash product line also grew by 197 percent from the previous year’s quarter.  Both product lines also saw strong sequential growth.  We reached a significant milestone with HyperCloud™ during the quarter by surpassing $1 million in booked orders.  Finally, we added several new compelling products to our portfolio during the quarter — Hyperstream, 16GB 4Rank very low profile (VLP) Planar-X RDIMM and NVvault™ DDR3 which are in various stages of evaluation and qualification at major OEMs and end users.”

 

Revenues for the six months ended July 2, 2011, were $28.0 million, up 63 percent from revenues of $17.2 million for the six months ended July 3, 2010.  Gross profit for the six months ended July 2, 2011, was $8.7 million, or 31 percent of revenues, compared to a gross profit of $3.6 million, or 21 percent of revenues for the six months ended July 3, 2010, an increase of 140 percent for the period.

 



 

Net loss for the six months ended July 2, 2011, was $4.3 million, or $0.17 loss per share, compared to a net loss in the prior year period of $6.9 million, or $0.31 loss per share.  These results include stock-based compensation expense in both periods of $0.8 million.

 

As of July 2, 2011, cash, cash equivalents, and investments in marketable securities were $12.1 million, total assets were $36.8 million, working capital was $16.7 million, total debt was $4.1 million, and stockholders’ equity was $18.3 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 second quarter and six months ended July 2, 2011.  The dial-in number for the call is 1-877-941-1429.  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 cash-based loss, 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 a wide variety of high-performance, logic-based memory subsystems for global datacenter and high-performance computing and communications markets. Netlist’s flagship products include HyperCloud™, a memory module that breaks traditional memory barriers; the NVvault™ family of products including NVvault™ battery-free, a flash memory-based subsystem that enables data retention for weeks following a disaster, and EXPRESSvault™, a PCI Express backup and recovery solution for cache data protection; and a robust portfolio of high performance and specialty DIMMs including HyperStream, a low latency memory module, and the 16GB, 4Rank, very low profile Planar-X RDIMM, which helps reduce power consumption in servers using the Company’s patented Planar-X technology.

 

The memory products 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 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, 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 annual report on Form 10-K, dated March 3, 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

 

Six Months Ended

 

 

 

July 2,

 

July 3,

 

July 2,

 

July 3,

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

16,001

 

$

9,304

 

$

28,001

 

$

17,194

 

Cost of sales(1)

 

11,064

 

7,486

 

19,260

 

13,558

 

Gross profit

 

4,937

 

1,818

 

8,741

 

3,636

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development(1)

 

3,755

 

3,190

 

7,439

 

6,198

 

Selling, general and administrative(1)

 

2,583

 

2,607

 

5,500

 

5,177

 

Total operating expenses

 

6,338

 

5,797

 

12,939

 

11,375

 

Operating loss

 

(1,401

)

(3,979

)

(4,198

)

(7,739

)

Other (expense) income:

 

 

 

 

 

 

 

 

 

Interest (expense) income, net

 

(50

)

3

 

(75

)

4

 

Other (expense) income, net

 

(59

)

4

 

(59

)

71

 

Total other (expense) income, net

 

(109

)

7

 

(134

)

75

 

Loss before provision (benefit) for income taxes

 

(1,510

)

(3,972

)

(4,332

)

(7,664

)

Provision (benefit) for income taxes

 

1

 

2

 

1

 

(725

)

Net loss

 

$

(1,511

)

$

(3,974

)

$

(4,333

)

$

(6,939

)

Net loss per common share:

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.06

)

$

(0.16

)

$

(0.17

)

$

(0.31

)

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic and diluted

 

24,988

 

24,780

 

24,935

 

22,734

 

 


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

 

Cost of sales

 

$

18

 

$

12

 

$

31

 

$

22

 

Research and development

 

146

 

117

 

288

 

163

 

Selling, general and administrative

 

242

 

297

 

440

 

623

 

 

MORE-MORE-MORE

 



 

Netlist, Inc.

Unaudited Condensed Consolidated Balance Sheets

(in thousands)

 

 

 

July 2,

 

January 1,

 

 

 

2011

 

2011

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

11,690

 

$

14,210

 

Investments in marketable securities

 

 

824

 

Accounts receivable, net

 

9,337

 

6,451

 

Inventories

 

11,370

 

4,509

 

Prepaid expenses and other current assets

 

519

 

1,396

 

Total current assets

 

32,916

 

27,390

 

 

 

 

 

 

 

Property and equipment, net

 

3,153

 

4,077

 

Long-term investments in marketable securities

 

456

 

890

 

Other assets

 

234

 

337

 

Total assets

 

$

36,759

 

$

32,694

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

11,427

 

$

6,256

 

Accrued payroll and related liabilities

 

1,483

 

1,762

 

Accrued expenses and other current liabilities

 

401

 

369

 

Accrued engineering charges

 

932

 

638

 

Current portion of long-term debt

 

1,971

 

674

 

Total current liabilities

 

16,214

 

9,699

 

Long-term debt, net of current portion

 

2,111

 

1,063

 

Other liabilities

 

101

 

85

 

Total liabilities

 

18,426

 

10,847

 

Commitments and contingencies

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Common stock, $0.001 par value - 90,000 shares authorized; 25,344 (2011) and 25,284 (2010) shares issued and outstanding

 

25

 

25

 

Additional paid-in capital

 

89,827

 

89,074

 

Accumulated deficit

 

(71,474

)

(67,141

)

Accumulated other comprehensive loss

 

(45

)

(111

)

Total stockholders’ equity

 

18,333

 

21,847

 

Total liabilities and stockholders’ equity

 

$

36,759

 

$

32,694

 

 

MORE-MORE-MORE

 



 

Netlist, Inc.

Schedule Reconciling GAAP Net Loss to Non-GAAP Cash-based Loss

(in thousands, except per share amounts)

 

 

 

Quarter Ended

 

Six Months Ended

 

 

 

July 2,

 

July 3,

 

July 2,

 

July 3,

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

GAAP net loss

 

$

(1,511

)

$

(3,974

)

$

(4,333

)

$

(6,939

)

 

 

 

 

 

 

 

 

 

 

The non-GAAP amounts have been adjusted to exclude the following items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excluded from cost of sales and operating expenses:

 

 

 

 

 

 

 

 

 

Depreciation and amortization (a)

 

602

 

552

 

1,183

 

1,130

 

Stock-based compensation (b)

 

406

 

426

 

759

 

808

 

 

 

 

 

 

 

 

 

 

 

Total non-GAAP adjustments before income tax

 

1,008

 

978

 

1,942

 

1,938

 

 

 

 

 

 

 

 

 

 

 

Income tax effect of non-GAAP adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net effect of adjustments to GAAP net loss

 

1,008

 

978

 

1,942

 

1,938

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP cash-based loss

 

$

(503

)

$

(2,996

)

$

(2,391

)

$

(5,001

)

 


The items excluded from GAAP financial results in calculating non-GAAP financial results, are set forth below:

 

(a)          Depreciation and amortization have been excluded as a significant portion of the Company’s property and equipment is invested in its operating capacity in China.  It is management’s opinion that its operating capacity is sufficient to support forecasted operations, or could be supplemented with outsourcing solutions.  Accordingly, management omits these expenses when evaluating its operating activities, for strategic decision making, forecasting future results and evaluating current performance.

 

(b)         Employee stock compensation costs incurred have been excluded as management omits these expenses when evaluating its operating activities, for strategic decision making, forecasting future results and evaluating current performance.

 

# # # #

 


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