-- 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 quarter
Net 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