Netlist Reports Second Quarter, Six-Month Results

IRVINE, Calif., Aug. 15, 2011 /PRNewswire/ -- 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.

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SOURCE Netlist, Inc.