Fourth Quarter Fiscal 2009 Highlights:
-- Net sales of $99.8 million
-- Gross profit of $21.3 million
-- GAAP EPS of $0.00 with a net loss of $0.3 million
-- Non-GAAP diluted EPS of $0.05
Fiscal 2009 Highlights:
-- Net sales of $441.3 million
-- Gross profit of $89.8 million
-- GAAP EPS of ($0.18)
-- Non-GAAP diluted EPS of $0.17
-- Operating cash flow of $52.5 million
-- Cash and cash equivalents of $147.7 million
Net sales for the fourth quarter of fiscal 2009 were $99.8 million,
compared to $91.6 million for the third quarter of fiscal 2009, and $160.7
million for the fourth quarter of fiscal 2008. Net sales for the fiscal
year 2009 were $441.3 million, compared to $670.2 million for fiscal year
2008.
Gross profit for the fourth quarter of fiscal 2009 was $21.3 million,
compared to $18.6 million in the third quarter of fiscal 2009, and $24.9
million in the fourth quarter of fiscal 2008. Gross profit for fiscal year
2009 was $89.8 million, compared to $119.7 million in fiscal 2008.
GAAP net loss for the fourth quarter of fiscal 2009 was $0.3 million, or
$0.00 per share, compared to $2.4 million, or ($0.04) per share in the
third quarter of fiscal 2009, and $3.5 million, or ($0.06) per share in the
fourth quarter of fiscal 2008. For fiscal year 2009, SMART reported GAAP
net loss of $11.4 million, or ($0.18) per share, compared to net income of
$9.0 million, or $0.14 per diluted share in fiscal 2008.
Non-GAAP net income was $3.1 million, or $0.05 per diluted share for the
fourth quarter of fiscal 2009, compared to $0.9 million, or $0.01 per
diluted share in the third quarter of fiscal 2009, and $3.4 million, or
$0.05 per diluted share in the fourth quarter of fiscal 2008. For fiscal
year 2009, SMART reported non-GAAP net income of $11.0 million, or $0.17
per diluted share, compared to $35.2 million, or $0.55 per diluted share in
fiscal 2008. Non-GAAP net income excludes certain charges related to
goodwill impairment, restructuring, and other infrequent or unusual items,
as well as stock-based compensation.
Adjusted EBITDA for the fourth quarter of fiscal 2009 was $9.9 million,
compared to $5.2 million for the third quarter of fiscal 2009, and $10.5
million for the fourth quarter of fiscal 2008. For fiscal year 2009,
Adjusted EBITDA was $35.6 million, compared to $62.2 million in fiscal
2008.
Please refer to the Non-GAAP Information section and the "Reconciliation of
Non-GAAP Financial Measures" table below for further detail on non-GAAP net
income and Adjusted EBITDA.
Operating cash flow for the fourth quarter of fiscal 2009 was $7.9 million.
For fiscal year 2009, operating cash flow was $52.5 million. Cash and cash
equivalents at the end of fiscal year 2009 was $147.7 million and long-term
debt, due in 2012, remained at $81.3 million.
"Our fourth fiscal quarter results were stronger than expected due to
supply shortages for DDR2 and DDR3, and a better pricing environment for
DRAM," commented Iain MacKenzie, President and CEO of SMART. "In addition,
our financial results improved, due to the overall economy, the healthier
DRAM environment and our disciplined approach to managing our business.
While our full year results reflect the challenges of the global economic
downturn, we are proud to have maintained our track record of non-GAAP
profitability, achieving EPS of $0.17 per diluted share for the year."
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.
"While we have seen some strength in the DRAM environment, we are cautious
about how sustainable these market conditions are and we are managing our
business accordingly," continued Mr. MacKenzie.
For the first quarter of fiscal 2010, SMART estimates net sales will be in
the range of $98 million to $105 million, gross profit in the range of $20
million to $22 million, and net income per share will be in the range of
($0.01) to $0.01 on a GAAP basis. On a non-GAAP basis, the Company expects
net income per diluted share will be in the range of $0.02 to $0.04. The
guidance for the first quarter includes an income tax provision estimated
in the range of $2.3 million to $2.6 million. Please refer to the Non-GAAP
Information and the "Reconciliation of Guidance for Non-GAAP Financial
Measures" table below for further detail.
Conference Call Details
SMART's fourth quarter and fiscal 2009 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, October 1, 2009. The call may be
accessed US toll free by calling (877) 941-4774 or US toll by calling (480)
629-9760. Please join the conference call at least ten minutes early in
order to register. The access code is 4160955. SMART will also offer a live
and archived webcast of the conference call, accessible from the Company's
website at http://www.smartm.com. A telephonic replay of the conference
call will be available through midnight PDT, October 15, 2009, by dialing
(303) 590-3030 and entering passcode 4160955#.
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 expectations, 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 projections
regarding the Company's financial performance, benefits associated with
operational efficiencies, the DRAM market, new product introductions, and
customer demand for its products.
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 and availability, dependence upon third-party vendors, customer
demand, changes in industry standards or release plans, fluctuations in the
quarterly effective tax rate, possible increases in previously estimated
restructuring charges, lower than anticipated cash savings from
restructuring, higher anticipated costs from increasing capacity, changes
in foreign currency exchange rates and other risks detailed in the
Company's periodic report filings with the Securities and Exchange
Commission including the Company's Form 10-K for the fiscal year ended
August 29, 2008, its Form 10-Q for the quarter ended November 28, 2008, its
Form 10-Q for the quarter ended February 27, 2009, its Form 10-Q for the
quarter ended May 29, 2009, and its Proxy filed on August 6, 2009. 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.
Non-GAAP Information
Certain non-GAAP financial measures are included in this press release,
including Adjusted EBITDA, non-GAAP net income and non-GAAP net income per
diluted share. We define Adjusted EBITDA as GAAP net income (loss) plus net
interest expense, income tax expense, depreciation and amortization
expense, goodwill impairment charges, restructuring charges, and
stock-based compensation expense. Adjusted EBITDA is not a measure of
financial performance calculated in accordance with U.S. GAAP, and should
be viewed as a supplement to, not a substitute for, our results of
operations presented on the basis of U.S. GAAP. Adjusted EBITDA also does
not purport to represent cash flow provided by, or used in, operating
activities in accordance with U.S. GAAP and should not be used as a measure
of liquidity. Non-GAAP financial results do not include stock-based
compensation expense, restructuring charges, impairment charges and other
infrequent or unusual items. These non-GAAP financial measures are provided
to enhance the user's overall understanding of our financial performance.
By excluding these charges, as well as the related tax effects, our
non-GAAP results provide information to management and investors that is
useful in assessing SMART's core operating performance and in evaluating
and comparing our results of operations on a consistent basis from period
to period. These non-GAAP financial measures are also used by management to
evaluate financial results and to plan and forecast future periods. The
presentation of this additional information is not meant to be a substitute
for the corresponding financial measures prepared in accordance with
generally accepted accounting principles. In addition, these measures may
not be used similarly by other companies and therefore may not be
comparable between companies. Investors are encouraged to review the
reconciliations of GAAP to non-GAAP financial measures, which are included
below.
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. SMART also offers high performance, high capacity solid state
drives for enterprise, defense/aerospace, industrial automation, medical,
and transportation markets. 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.
(TABLES TO FOLLOW)
SMART Modular Technologies (WWH), Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
(In thousands, except per share data; unaudited)
Three Months Ended Twelve Months Ended
------------------------------- ---------------------
August 28, May 29, August 29, August 28, August 29,
2009 2009 2008 2009 2008
--------- --------- --------- --------- ----------
Net income (loss) $ (289) $ (2,386) $ (3,528) $ (11,403) $ 8,974
Add:
Goodwill impairment,
no tax effect - - 3,187 10,416 3,187
Restructuring
charges, net of tax - 945 1,795 2,756 1,795
Stock-based
compensation
expense charged
to operating
expense, net of tax 3,384 1,478 1,899 8,424 7,225
Deferred tax assets
valuation allowance
increase - - - - 9,630
One-time charge to
IPR&D related to
Adtron
acquisition - - - - 4,400
Relocation of
corporate
headquarter
charges, net of tax - 820 - 820 -
--------- --------- --------- --------- ----------
Non-GAAP net income $ 3,095 $ 857 $ 3,353 $ 11,013 $ 35,211
========= ========= ========= ========= ==========
Non-GAAP net income
per diluted share $ 0.05 $ 0.01 $ 0.05 $ 0.17 $ 0.55
========= ========= ========= ========= ==========
Shares used in
computing net
income per diluted
share: 63,626 63,489 63,403 63,443 63,555
========= ========= ========= ========= ==========
Net income (loss) $ (289) $ (2,386) $ (3,528) $ (11,403) $ 8,974
Interest expense,
net 1,530 1,629 1,536 6,609 5,355
Income taxes 1,763 368 1,810 5,571 18,421
Depreciation and
amortization 3,491 3,142 3,646 13,077 12,700
--------- --------- --------- --------- ----------
EBITDA 6,495 2,753 3,464 13,854 45,450
Adjustments:
Goodwill impairment - - 3,187 10,416 3,187
Restructuring
charges - 989 1,938 2,810 1,938
Stock-based
compensation
expense charges
to operating
expense 3,398 1,490 1,911 8,475 7,271
One-time charge to
IPR&D related to
Adtron acquisition - - - - 4,400
--------- --------- --------- --------- ----------
Adjusted EBITDA $ 9,893 $ 5,232 $ 10,500 $ 35,555 $ 62,246
========= ========= ========= ========= ==========
Reconciliation of Q1-10 Guidance for Non-GAAP Financial Measures
(In millions, except per share data; unaudited)
Three Months Ending November 27, 2009
----------------------------------------------------
Non-GAAP GAAP
Range of Estimates Range of Estimates
----------------- -----------------
From To Adjustments From To
-------- -------- ------------ ------- --------
Net income (loss) $ 1.0 $ 2.3 $ 1.7(a) $ (0.7) $ 0.6
======== ======== ======= ========
Net income (loss) per
share $ 0.02 $ 0.04 ($ 0.01) $ 0.01
======== ======== ======= ========
Shares used in
computing net income
(loss) per share 64.0 64.0 62.0 64.0
======== ======== ======= ========
(a) Reflects estimated adjustment for stock-based compensation expense.
SMART Modular Technologies (WWH), Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Twelve Months Ended
------------------------- ------------------------
August 28, August 29, August 28, August 29,
2009 2008 2009 2008
----------- ----------- ----------- -----------
(In thousands, except per share data)
Net sales $ 99,808 $ 160,666 $ 441,317 $ 670,151
Cost of sales 78,489 135,729 351,478 550,420
----------- ----------- ----------- -----------
Gross profit 21,319 24,937 89,839 119,731
Research and
development 4,755 5,437 19,811 20,164
Selling, general,
and administrative 13,671 15,064 55,505 59,849
Restructuring charges - 1,938 2,810 1,938
Goodwill impairment - 3,187 10,416 3,187
In process research
and development
charge - - - 4,400
----------- ----------- ----------- -----------
Total operating
expenses 18,426 25,626 88,542 89,538
----------- ----------- ----------- -----------
Income (loss) from
operations 2,893 (689) 1,297 30,193
Interest expense,
net (1,530) (1,536) (6,609) (5,355)
Other income, net 111 507 (520) 2,557
----------- ----------- ----------- -----------
Total other
expense, net (1,419) (1,029) (7,129) (2,798)
----------- ----------- ----------- -----------
Income (loss) before
provision for
income taxes 1,474 (1,718) (5,832) 27,395
Provision for income
taxes 1,763 1,810 5,571 18,421
----------- ----------- ----------- -----------
Net income (loss) ($ 289) ($ 3,528) ($ 11,403) $ 8,974
=========== =========== =========== ===========
Net income (loss)
per share, basic ($ 0.00) ($ 0.06) ($ 0.18) $ 0.15
=========== =========== =========== ===========
Shares used in
computing net
income (loss) per
ordinary share 61,863 61,348 61,699 60,985
=========== =========== =========== ===========
Net income (loss)
per share, diluted ($ 0.00) ($ 0.06) ($ 0.18) $ 0.14
=========== =========== =========== ===========
Shares used in
computing net
income (loss) per
diluted share 61,863 61,348 61,699 63,555
=========== =========== =========== ===========
SMART Modular Technologies (WWH), Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
August 28, August 29,
2009 2008
----------- ----------
(In thousands)
ASSETS
Cash and cash equivalents $ 147,658 $ 115,994
Accounts receivable, net of allowances of
$1,591 and $1,517 as of August 28, 2009 and
August 29, 2008 130,953 193,736
Inventories 63,115 62,430
Prepaid expense and other current assets 12,628 14,973
----------- ----------
Total current assets 354,354 387,133
Property and equipment, net 36,263 39,317
Goodwill 1,061 7,210
Other intangible assets, net 7,475 8,545
Other non-current assets 4,585 4,943
----------- ----------
Total assets $ 403,738 $ 447,148
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 68,928 $ 93,482
Accrued expenses and other current liabilities 16,615 23,942
----------- ----------
Total current liabilities 85,543 117,424
Long-term debt 81,250 81,250
Other long-term liabilities 2,120 1,568
----------- ----------
Total liabilities 168,913 200,242
----------- ----------
Shareholders' equity:
Ordinary shares 10 10
Additional paid in capital 109,264 100,234
Deferred stock-based compensation - (91)
Accumulated other comprehensive income 4,333 14,132
Retained earnings 121,218 132,621
----------- ----------
Total shareholders' equity 234,825 246,906
----------- ----------
Total liabilities and shareholders' equity $ 403,738 $ 447,148
=========== ==========
SMART Modular Technologies (WWH), Inc. and Subsidiaries
Summary Cash Flow Information
(Unaudited)
Three Months Ended
----------------------
August 28, August 29,
2009 2008
---------- ----------
(In thousands)
Net cash provided by (used in) operating activities $ 7,924 $ 578
Net cash used in investing activities $ (2,471) $ (2,362)
Net cash used in financing activities $ 231 $ 6
Year Ended
----------------------
August 28, August 29,
2009 2008
---------- ----------
(In thousands)
Net cash provided by (used in) operating activities $ 52,519 $ 4,550
Net cash used in investing activities $ (21,074) $ (33,819)
Net cash used in financing activities $ 645 $ 18
Contact Information: For More Information Investor Contacts: Suzanne Craig The Blueshirt Group for SMART Modular Technologies 415-217-7722 Barry Zwarenstein CFO, Senior Vice President SMART Modular Technologies 510-624-8134