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8-K - FORM 8-K - SMART Modular Technologies (WWH), Inc.c19029e8vk.htm
Exhibit 99.1
(SMART LOGO)

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
SMART Modular Technologies Reports

Third Quarter Fiscal 2011 Results
NEWARK, CA, June 21, 2011 — SMART Modular Technologies (WWH), Inc. (“SMART” or the “Company”) (NASDAQ: SMOD), a leading independent manufacturer of memory modules and solid state storage products, today reported financial results for the third quarter of fiscal 2011 ended May 27, 2011.
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.

 


 

(SMART LOGO)
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.

 


 

(SMART LOGO)

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).

 


 

(SMART LOGO)
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 LOGO)
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 LOGO)
SMART Modular Technologies (WWH), Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
                 
    May 27,     August 27,  
    2011     2010  
    (In thousands)  
ASSETS
               
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 )
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