NEWARK, CA--(Marketwire - Jun 21, 2011) - SMART Modular Technologies (WWH), Inc. ("SMART"
or the "Company") (
Third Quarter Fiscal 2011 Highlights:
-- Net sales of $164.5 million -- Gross profit of $32.4 million -- GAAP diluted EPS of $0.03 -- Non-GAAP diluted EPS of $0.10 -- Adjusted EBITDA of $17.8 million
Net sales for the third quarter of fiscal 2011 were $164.5 million, compared to $170.5 million for the second quarter of fiscal 2011, and $201.2 million for the third quarter of fiscal 2010.
Gross profit for the third quarter of fiscal 2011 was $32.4 million compared to $28.5 million for the second quarter of fiscal 2011, and $45.5 million for the third quarter of fiscal 2010.
On a GAAP basis, net income for the third quarter of fiscal 2011 was $2.3 million or $0.03 per diluted share, compared to $0.2 million or $0.00 per diluted share for the second quarter of fiscal 2011, and $14.9 million or $0.23 per diluted share for the third quarter of fiscal 2010.
On a non-GAAP basis, net income was $7.1 million or $0.10 per diluted share for the third quarter of fiscal 2011, compared to $5.2 million or $0.08 per diluted share for the second quarter of fiscal 2011, and net income of $17.3 million or $0.26 per diluted share for the third quarter of fiscal 2010.
Adjusted EBITDA for the third quarter of fiscal 2011 was $17.8 million, compared to $13.6 million for the second quarter of 2011, and $29.8 million for the third quarter of fiscal 2010.
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.
No conference call will be held in conjunction with this third quarter earnings 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 plus net interest expense, income tax expense, depreciation and amortization expense, stock-based compensation expense, restructuring charges, a technology access charge, and other infrequent or unusual items. 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 flows 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, a technology access charge 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 any 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, to plan and forecast future periods, and to assess performance of certain executives for compensation purposes. The presentation of this additional information is not meant to be a substitute for the corresponding financial measures prepared in accordance with U.S. GAAP. 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 Reconciliation of Non-GAAP Financial Measures table below for more detail on Adjusted EBITDA and non-GAAP calculations.
Additional Information and Where to Find It
All parties desiring details regarding the previously announced merger transaction are urged to review the definitive merger agreement available on the Company's website at http://www.smartm.com, and the SEC's website at http://www.sec.gov. In connection with the proposed transaction, SMART has filed with the SEC a preliminary proxy statement and other documents relating to the transaction and will file with the SEC a definitive proxy statement, and may file with the SEC other documents regarding the proposed transaction. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT AND OTHER FILED DOCUMENTS CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Shareholders will be able to obtain a free-of-charge copy of the proxy statement and other relevant documents (when available) filed with the SEC from the SEC's website at http://www.sec.gov. Shareholders will also be able to obtain a free-of charge copy of the proxy statement and other relevant documents (when available) by directing a request by mail or telephone to The Blueshirt Group, Attention: Suzanne Craig or from SMART's website, http://www.smartm.com. SMART and certain of its directors, executive officers and other members of management and employees may, under the rules of the SEC, be deemed to be "participants" in the solicitation of proxies from stockholders of SMART in favor of the proposed merger. Information regarding SMART's directors and executive officers is contained in SMART's definitive proxy statement filed with the SEC on December 3, 2010 (the "Annual General Meeting Proxy Statement"). Additional information regarding the interests of such potential participants will be included in the proxy statement and the other relevant documents filed and to be filed with the SEC (when available).
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, enterprise, industrial, networking, gaming, telecommunications, defense, aerospace 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, or SSDs, for enterprise, defense, aerospace, industrial automation, medical, and transportation markets. 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
Reconciliation of Non-GAAP Financial Measures
(In thousands, except per share data; unaudited)
Three Months Ended Nine Months Ended
---------------------------- ------------------
May 27, February 25, May 28, May 27, May 28,
2011 2011 2010 2011 2010
-------- --------- --------- -------- --------
Net income $ 2,272 $ 171 $ 14,917 $ 10,410 $ 35,591
Add:
Stock-based
compensation expense
charged to
operating expenses,
net of tax 2,200 2,232 1,896 6,565 5,358
Acquisition costs, no
tax effect 3,533 - - 3,533 -
Restructuring
charges, no tax
effect 480 2,831 - 3,311 -
Technology access
charge, no tax
effect - - - 7,534 -
Display business
divestiture, no tax
effect - - 486 - 486
Gain from insurance
settlement, no tax
effect (1,435) - - (1,435) -
Gain from legal
settlement, no tax
effect - - - - (3,044)
Gain from repurchase
of notes, no tax
effect - - - - (1,178)
Loan fees written off
on repurchase of
notes, no tax effect - - - - 353
-------- --------- --------- -------- --------
Non-GAAP net income $ 7,050 $ 5,234 $ 17,299 $ 29,918 $ 37,566
======== ========= ========= ======== ========
Non-GAAP net income per
diluted share $ 0.10 $ 0.08 $ 0.26 $ 0.45 $ 0.58
======== ========= ========= ======== ========
Shares used in
computing non-GAAP net
income per diluted
share: 67,648 66,087 65,502 66,498 64,843
======== ========= ========= ======== ========
Net income $ 2,272 $ 171 $ 14,917 $ 10,410 $ 35,591
Interest expense, net (179) 230 837 762 3,663 *
Income taxes 5,444 2,557 7,354 13,340 20,504
Depreciation and
amortization 5,452 5,585 4,250 16,935 11,779
-------- --------- --------- -------- --------
EBITDA 12,989 8,543 27,358 41,447 71,537
Adjustments:
Stock-based
compensation expense
charged to operating
expenses 2,212 2,248 1,908 6,605 5,393
Acquisition costs 3,533 - - 3,533 -
Restructuring charges 480 2,831 - 3,311 -
Technology access
charge - - - 7,534 -
Display business
divestiture - - 486 - 486
Gain from insurance
settlement (1,435) - - (1,435) -
Gain from legal
settlement - - - - (3,044)
Gain from repurchase
of notes - - - - (1,178)
-------- --------- --------- -------- --------
Adjusted EBITDA $ 17,779 $ 13,622 $ 29,752 $ 60,995 $ 73,194
======== ========= ========= ======== ========
* Includes $353K of loan fees written off on repurchase of notes.
SMART Modular Technologies (WWH), Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(In thousands, except per share data; unaudited)
Three Months Ended Nine Months Ended
-------------------------------- --------------------
May 27, February 25, May 28, May 27, May 28,
2011 2011 2010 2011 2010
---------- --------- --------- --------- ---------
Net sales $ 164,479 $ 170,549 $ 201,235 $ 551,387 $ 484,438
Cost of sales 132,100 142,024 155,738 446,474 368,162
---------- --------- --------- --------- ---------
Gross profit 32,379 28,525 45,497 104,913 116,276
---------- --------- --------- --------- ---------
Operating expenses:
Research and
development 7,652 7,852 6,657 23,664 17,606
Selling, general
and administrative 15,224 15,169 16,340 45,241 44,037
Acquisition costs 3,533 - - 3,533 -
Restructuring
charges 480 2,831 - 3,311 -
Technology access
charge - - - 7,534 -
---------- --------- --------- --------- ---------
Total operating
expenses 26,889 25,852 22,997 83,283 61,643
---------- --------- --------- --------- ---------
Income from
operations 5,490 2,673 22,500 21,630 54,633
Interest income
(expense), net 179 (230) (837) (762) (3,663)
Other income, net 2,047 285 608 2,882 5,125
---------- --------- --------- --------- ---------
Total other
income
(expense) 2,226 55 (229) 2,120 1,462
---------- --------- --------- --------- ---------
Income before
provision for
income taxes 7,716 2,728 22,271 23,750 56,095
Provision for income
taxes 5,444 2,557 7,354 13,340 20,504
---------- --------- --------- --------- ---------
Net income $ 2,272 $ 171 $ 14,917 $ 10,410 $ 35,591
========== ========= ========= ========= =========
Net income per
share, basic $ 0.04 $ 0.00 $ 0.24 $ 0.16 $ 0.57
========== ========= ========= ========= =========
Net income per
share, diluted $ 0.03 $ 0.00 $ 0.23 $ 0.16 $ 0.55
========== ========= ========= ========= =========
Shares used in
computing net
income per
ordinary share 64,137 63,178 62,463 63,405 62,216
========== ========= ========= ========= =========
Shares used in
computing net
income per diluted
share 67,648 66,087 65,502 66,498 64,843
========== ========= ========= ========= =========
SMART Modular Technologies (WWH), Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
May 27, August 27,
2011 2010
------------- -------------
ASSETS (In thousands)
Current assets:
Cash and cash equivalents $ 131,737 $ 115,474
Accounts receivable, net of allowances of
$1,778 and $1,660 as of May 27, 2011 and
August 27, 2010, respectively 177,664 208,377
Inventories 98,071 112,103
Prepaid expense and other current assets 22,670 33,488
------------- -------------
Total current assets 430,142 469,442
Property and equipment, net 52,505 46,221
Other non-current assets 32,719 21,217
Other intangible assets, net 5,744 6,460
Goodwill 1,061 1,061
------------- -------------
Total assets $ 522,171 $ 544,401
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 91,441 $ 151,885
Accrued liabilities 21,977 29,318
Short-term debt 55,072 -
------------- -------------
Total current liabilities 168,490 181,203
Other long-term liabilities 7,298 4,546
Long-term debt - 55,072
------------- -------------
Total liabilities 175,788 240,821
------------- -------------
Shareholders' equity:
Ordinary shares 11 10
Additional paid in capital 133,548 118,123
Accumulated other comprehensive income 28,625 11,658
Retained earnings 184,199 173,789
------------- -------------
Total shareholders' equity 346,383 303,580
------------- -------------
Total liabilities and shareholders'
equity $ 522,171 $ 544,401
============= =============
SMART Modular Technologies (WWH), Inc. and Subsidiaries
Summary Cash Flow Information
(Unaudited)
Nine Months Ended
--------------------------
May 27, May 28,
2011 2010
------------ ------------
(In thousands)
Net cash provided by (used in) operating
activities $ 19,804 $ (4,136)
Net cash used in investing activities $ (15,773) $ (15,034)
Net cash provided by (used in) financing
activities $ 8,821 $ (23,616)
Contact Information:
For More Information
Investor Contacts:
Suzanne Craig
The Blueshirt Group for SMART Modular Technologies
415-217-7722
Suzanne@blueshirtgroup.com
Barry Zwarenstein
CFO, Senior Vice President
SMART Modular Technologies
510-624-8134
Barry.Zwarenstein@smartm.com