Net Sales of $160.0 Million; GAAP Diluted EPS of $0.17; Gross Profit of $32.4 Million
-- Net Sales of $160.0 Million, down 9% from the previous quarter -- Gross Profit of $32.4 Million, down 3% from the previous quarter -- GAAP diluted EPS of $0.17, vs. $0.18 in the previous quarterNet sales for the second quarter of fiscal 2008 were $160.0 million, down 9% compared to $175.0 million for the first quarter of fiscal 2008, and down 33% compared to $239.1 million for the second quarter of fiscal 2007. Gross profit for the second quarter of fiscal 2008 was $32.4 million, down 3% compared to $33.5 million for the first quarter of fiscal 2008, and down 21% compared to $41.2 million for the second quarter of fiscal 2007. Net income for the second quarter of fiscal 2008 was $11.0 million, or $0.17 per diluted share, compared to net income of $11.5 million, or $0.18 per diluted share for the first quarter of fiscal 2008, and $14.0 million, or $0.22 per diluted share for the second quarter of fiscal 2007. SMART ended the second quarter of fiscal 2008 with $155.0 million in cash and cash equivalents. "Our results this quarter were affected by the difficult pricing environment that remained challenging for us as well as others in the industry and slower growth than expected from high density server modules, partially due to delayed product introductions by our customers. As we discussed last quarter, we believed unit growth would improve, and density growth would be necessary to contribute to our improved financial performance. Unit growth in the quarter did improve, but density growth did not, and therefore our results were negatively impacted," explained Iain MacKenzie, President and CEO of SMART. "We were, however, successful in growing our non-DRAM businesses, in particular, the Flash and embedded and display businesses, where revenues grew from 11% to 13% of revenues in the quarter. In addition, we closed the Adtron acquisition on March 3, 2008 and look forward to moving ahead together, to serve the fast-growing solid state flash market where our combined portfolio of products positions us well. The acquisition of Adtron is an additional step towards diversifying the business away from DRAM by broadening our product portfolio and leveraging our core technology and product competencies, manufacturing and test capabilities, and global footprint. We are excited about the future as we jointly address the non-commodity segment of the high-end, enterprise, telecom, industrial, and military market for solid state flash," concluded Mr. MacKenzie. Business Outlook The following statements are based upon management's current expectations. These statements are forward-looking, and actual results may differ materially. The Company undertakes no obligation to update these statements. For the third quarter of fiscal 2008, SMART estimates net sales will be in the range of $160 to $170 million, gross profit will be in the range of $33 to $35 million, and GAAP diluted net income per share will be approximately the same as reported above for the second quarter of fiscal 2008. The shares used in computing diluted net income per ordinary share are estimated to be in the range of 63.6 million to 64.4 million. Conference Call Details SMART's second quarter, fiscal 2008 teleconference and webcast is scheduled to begin at 1:30 p.m. Pacific Daylight Time (PDT), or 4:30 p.m. Eastern Daylight Time (EDT), on Thursday, March 20, 2008. The call may be accessed U.S. toll free by calling (800) 240-8621 or U.S. toll by calling (303) 262-2194. Please join the conference call at least ten minutes early in order to register. The passcode for the call is "SMART." SMART will also offer a live and archived webcast of the conference call, accessible from the Company's website at www.smartm.com. A telephonic replay of the conference call will be available through midnight PDT, April 3, 2008, by dialing (800) 405-2236 and enter the passcode 11109700#. Callers outside the U.S. and Canada may access the replay by dialing (303) 590-3000. Forward-Looking Statements Statements contained in this press release, including the quotations attributed to Mr. MacKenzie, that are not statements of historical fact, including any statements that use the words "will," "believes," "anticipates," "estimates," "expects," "intends" or similar words that describe the company's or its management's future plans, objectives, or goals, are "forward-looking statements" and are made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include the company's financial performance, technical capabilities, business strategies and product plans. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the company to be materially different from the historical results and/or from any future results or outcomes expressed or implied by such forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, the post-closing integration of the businesses and product lines of SMART and Adtron, production or manufacturing difficulties, competitive factors, new products and technological changes, fluctuations in product prices and raw material costs, dependence upon third-party vendors, customer demand, changes in industry standards or release plans, and other risks detailed in the company's periodic report filings with the Securities and Exchange Commission. Such risk factors as outlined in these reports may not constitute all factors that could cause actual results to differ materially from those discussed in any forward-looking statement. The company operates in a continually changing business environment and new factors emerge from time to time. The company cannot predict such factors, nor can it assess the impact, if any, from such factors on the company or its results. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results. The company is not obligated to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this press release. About SMART SMART is a leading independent designer, manufacturer and supplier of electronic subsystems to original equipment manufacturers, or OEMs. SMART offers more than 500 standard and custom products to OEMs engaged in the computer, industrial, networking, gaming, telecommunications, and embedded application markets. Taking innovations from the design stage through manufacturing and delivery, SMART has developed a comprehensive memory product line that includes DRAM, SRAM, and Flash memory in various form factors. Through its subsidiary, Adtron Corporation, SMART offers high performance, high capacity solid state flash disk drives for enterprise, defense/aerospace, industrial automation, medical, and transportation markets. Its Embedded Products Division develops embedded computing subsystems, backed by design and manufacturing, for markets supporting test equipment, 3G infrastructure, and network processing applications. SMART's Display Products Group designs, manufactures, and sells thin film transistors (TFT) liquid crystal display (LCD) solutions to customers developing casino gaming systems as well as embedded applications such as kiosk, ATM, point-of-service, and industrial control systems. SMART's presence in the U.S., Europe, Asia, and Latin America enables it to provide its customers with proven expertise in international logistics, asset management, and supply-chain management worldwide. See www.smartm.com for more information.
SMART MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Three Six Six Months Months Months Months Ended Ended Ended Ended February 29, March 2, February 29, March 2, 2008 2007 2008 2007 --------- --------- --------- --------- (In thousands, except per share data) Net sales $ 159,566 $ 239,137 $ 334,517 $ 476,307 Cost of sales 127,170 197,975 268,599 397,233 --------- --------- --------- --------- Gross profit 32,396 41,162 65,918 79,074 --------- --------- --------- --------- Research and development 4,624 4,450 9,309 8,490 Selling, general and administrative 14,331 16,756 29,392 31,010 --------- --------- --------- --------- Total operating expenses 18,955 21,206 38,701 39,500 --------- --------- --------- --------- Income from operations 13,441 19,956 27,217 39,574 Interest expense, net (1,327) (2,336) (2,351) (4,423) Other (expense) income, net 373 (265) 1,795 (336) --------- --------- --------- --------- Total other expense, net (954) (2,601) (556) (4,759) --------- --------- --------- --------- Income before provision (benefit) for income taxes 12,487 17,355 26,661 34,815 Provision (benefit) for income taxes 1,539 3,385 4,220 6,292 --------- --------- --------- --------- Net income $ 10,948 $ 13,970 $ 22,441 $ 28,523 ========= ========= ========= ========= Net income per ordinary share, basic $ 0.18 $ 0.24 $ 0.37 $ 0.48 ========= ========= ========= ========= Shares used in computing basic net income per ordinary share 60,869 59,396 60,782 59,043 ========= ========= ========= ========= Net income per ordinary share, diluted $ 0.17 $ 0.22 $ 0.35 $ 0.45 ========= ========= ========= ========= Shares used in computing diluted net income per ordinary share 63,713 63,790 63,684 63,653 ========= ========= ========= ========= SMART MODULAR TECHNOLOGIES (WWH), INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) February 29, August 31, 2008 2007 ----------- ----------- (In thousands) ASSETS Cash and cash equivalents $ 155,018 $ 144,147 Accounts receivable, net of allowances of $2,019 and $2,517 as of February 29, 2008 and August 31, 2007, respectively 162,637 184,391 Inventories 61,856 65,105 Prepaid expenses and other current assets 9,803 8,217 ----------- ----------- Total current assets 389,314 401,860 Property and equipment, net 38,957 33,588 Goodwill 3,187 3,187 Other non-current assets 13,029 14,442 ----------- ----------- Total assets $ 444,487 $ 453,077 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable $ 96,441 $ 131,937 Accrued expenses and other current liabilities 21,353 24,043 ----------- ----------- Total current liabilities 117,794 155,980 Long-term debt 81,250 81,250 Other long-term liabilities 2,018 - ----------- ----------- Total liabilities $ 201,062 $ 237,230 ----------- ----------- Shareholders equity: Ordinary shares 10 10 Additional paid-in capital 95,894 92,250 Deferred stock-based compensation (202) (335) Accumulated other comprehensive income 7,214 6,083 Retained earnings 140,509 117,839 ----------- ----------- Total shareholders' equity 243,425 215,847 ----------- ----------- Total liabilities and shareholders' equity $ 444,487 $ 453,077 =========== ===========
Contact Information: For More Information Investor Contacts: Jack A. Pacheco Senior Vice President & Chief Financial Officer SMART Modular Technologies 510-624-8134 Suzanne Craig The Blueshirt Group for SMART Modular Technologies 415-217-4962