SUNNYVALE, CA--(MARKET WIRE)--Apr 21, 2008 -- Zoran Corporation (NasdaqGS:
ZRAN -
News), a leading
provider of digital solutions for applications in the growing
digital
entertainment and digital imaging markets, today reported
results for its
first quarter ended March 31, 2008.
Revenues for the first quarter were $109.0 million, compared
to $129.4
million last quarter and $101.7 million for the first quarter
of 2007. The
Company reported a net loss for the first quarter of $4.7
million, or $0.09
per share, which includes charges of $9.2 million related
to the
amortization of acquisition-related purchased intangible
assets and
stock-based compensation expenses of $2.9 million. This
compares with net
income of $58.7 million, or $1.11 per diluted share for
the previous
quarter and a net loss of $5.9 million, or $0.12 per share
for the first
quarter of 2007. Net income for the fourth quarter of 2007
included a tax
benefit of $56.2 million.
Non-GAAP net income for the first quarter was $3.5 million,
or $0.07 per
diluted share, which excludes charges related to the amortization
of
acquisition-related purchased intangible assets and stock-based
compensation expenses. This compares with non-GAAP net income
of $18.1
million, or $0.34 per diluted share, for the previous quarter,
and $9.5
million, or $0.19 per diluted share, for the same period
last year. On a
non-GAAP basis, the Company adjusted its annual tax rate
in the fourth
quarter from 10.7 percent to 4.7 percent, resulting in a
net tax benefit of
$2.9 million.
"During the first quarter we saw increasing momentum in
DTV where we
achieved 19 percent sequential growth and 68 percent annual
growth,
resulting in record revenues and units shipped," said Dr.
Levy Gerzberg,
Zoran's president and chief executive officer. "Zoran's
SupraHD processors
continued to gain traction and we saw multiple LCD TV models
based on this
technology enter the retail market under well-known brands
now available at
major outlets such as Best Buy, Costco and WalMart. Our
mobile phone
processor product line grew 84 percent from last quarter,
exceeding
expectations. We currently expect to achieve even stronger
growth in the
second quarter. Our DVD and digital camera businesses were
adversely
impacted by weak consumer spending as well as seasonal softness,
however we
believe we are well positioned to benefit from the return
of favorable
market trends later in the year."
Recent Highlights
-- Revenues by product line for the first quarter of 2008 were 27 percent
Digital Camera, 25 percent DTV, 21 percent DVD, 19 percent Printer Imaging,
7 percent mobile phone processors and 1 percent other
-- Zoran Powers Coship's New Family of China Cable Set-Top Boxes
-- Zoran Demonstrates Latest Set-Top Box and Digital Television
Technologies at CCBN in Beijing
-- Zoran Powers NTIA-Certified Converter Boxes From Eight Manufacturers
Including Apex Digital, RCA and others
-- Zoran's COACH Processors Power Over 50 new Digital Camera Models at
PMA
-- Zoran Demonstrates COACH 11 Digital Camera Processors with Face
Tracking & Blur Correction Technologies at PMA
-- Zoran Demonstrates Camera and Multimedia Technology for Mobile Phones
at Mobile World Congress
-- Zoran Demonstrates New DVD, HDTV, Digital Camera, Multimedia Mobile
Phone, and Printer Technologies at CES2008
-- Zoran Announces VaddisHD Multimedia Processor Platform for Blu-Ray
PlayersFuture Outlook
The following statements are based on our current expectations.
These
statements are forward-looking, and actual results may differ
materially.
The Company is currently expecting second quarter 2008 revenues
to range
between $130 million and $135 million, with gross margins
ranging between
46 and 46.5 percent. Excluding any acquisition-related costs
and
stock-based compensation expense, operating expenses are
expected to be in
a range of $53 million to $54 million. Acquisition-related
costs are
expected to be approximately $9.2 million with stock-based
compensation
expense expected to range between $2.8 and $3.3 million.
The Company
expects to record second quarter earnings in the range of
a loss of $0.03
per share to net income of $0.03 per diluted share. Non-GAAP
earnings for
the quarter, which exclude acquisition-related costs and
stock-based
compensation expense, are expected to range between $0.14
and $0.18 per
diluted share on approximately 52.2 million shares.
Zoran will provide more commentary on its first quarter
results during the
quarterly conference call.
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance
with generally
accepted accounting principles, or GAAP, Zoran provides
non-GAAP financial
information, consisting of non-GAAP operating expense and
non-GAAP net
income (loss) that excludes the one-time tax benefit, proceeds
received as
part of litigation settlements and the associated provision
for income
taxes, amortization of acquired intangible assets and stock-based
compensation expense.
The Company believes that its non-GAAP financial information
provides
useful information to management and investors regarding
financial and
business trends relating to its financial condition and
results of
operations because it excludes items that management considers
to be
outside of the Company's core operating results. The Company
believes that
this non-GAAP net income (loss), in combination with the
Company's
financial results calculated in accordance with GAAP, provides
investors
with additional perspective and a more meaningful understanding
of the
Company's ongoing operating performance. In addition, the
Company's
management uses these non-GAAP measures to review and assess
the financial
performance of the Company, to determine executive officer
incentive
compensation, and to plan and forecast performance in future
periods. The
Company's non-GAAP net income (loss) is not prepared in
accordance with
GAAP, is not an alternative to GAAP financial information,
and may be
calculated differently than non-GAAP financial information
disclosed by
other companies.
Quarterly Conference Call
Zoran Corporation has scheduled a conference call for 2:00
p.m. PT today to
discuss first quarter results. To listen to the call, please
call
617-801-9702 approximately five minutes prior to the start
of the call.
For those who are not available to listen to the live conference
call, a
replay will be available from approximately 4:30 p.m. PT
on April 21, until
4:30 p.m. PT on April 28, 2008. The access number for the
replay is
617-801-6888, confirmation number 48134525. Additionally,
the conference
call will be broadcast live over the Internet and can be
accessed by all
interested parties through the investor relations section
of Zoran's
website at www.zoran.com.
Please access the website at least fifteen
minutes prior to the start of the call to register and to
download and
install any necessary audio software.
Company Profile
Zoran Corporation, based in Sunnyvale, California, is a
leading provider of
digital solutions for applications in the growing digital
entertainment and
digital imaging markets. With two decades of expertise developing
and
delivering digital signal processing technologies, Zoran
has pioneered
high-performance digital audio and video, imaging applications,
and Connect
Share Entertain technologies for the digital home. Zoran's
proficiency in
integration delivers major benefits for OEM customers, including
greater
capabilities within each product generation, reduced system
costs, and
shorter time to market. Zoran-based DVD, digital camera,
DTV, multimedia
mobile phone, and multifunction printer products have received
recognition
for excellence and are now in hundreds of millions of homes
and offices
worldwide. With headquarters in the U.S. and operations
in Canada, China,
England, Germany, India, Israel, Japan, Korea, and Taiwan,
Zoran may be
contacted on the World Wide Web at www.zoran.com
or at 408-523-6500.
Forward-Looking Statements
This press release includes forward-looking statements,
including the chief
executive officer quotation and the material presented under
"Future
Outlook," that reflect the Company's current views with
respect to future
events and financial performance. These forward-looking
statements are
subject to many risks and uncertainties that could cause
actual results to
differ materially from what is expected, including risks
associated with:
the rapidly evolving markets for the Company's products
and uncertainty
regarding the pace and direction of development of those
markets; cost and
timing of new product development; timing and impact of
new product
introductions by the Company and its competitors and transitions
away from
older products; intense competition in our markets; the
Company's reliance
on fourth parties for wafer supplies, product assembly and
testing, and
scalable manufacturing capacity; the effects of changes
in revenue and
product mix on the Company's gross margins; the Company's
dependence on
sales to large customers; fluctuations in product mix; dependence
on key
personnel; litigation related to our review of historical
stock option
practices and related financial restatements; and reliance
on international
sales and operations, particularly operations in Israel.
Further
information regarding these and other risks and uncertainties
can be found
in the Company's most recently filed Annual Report on Form
10-K and other
filings with the SEC.
Zoran, the Zoran logo, SupraHD, SupraTV, VaddisHD, Quatro,
APPROACH and IPS
are trademarks of Zoran Corporation in the United States
and/or other
countries. All other brands or names may be claimed as property
of others.
ZORAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended
March 31,
------------------------
2008 2007
----------- -----------
Revenues:
Hardware product revenues $ 94,297 $ 87,182
Software and other revenues 14,734 14,477
----------- -----------
Total revenues 109,031 101,659
Costs and expenses:
Cost of hardware product revenues 57,789 44,198
Research and development 27,887 24,988
Selling, general and administrative 25,639 28,593
Amortization of intangibles 9,237 12,169
----------- -----------
Total costs and expenses 120,552 109,948
Operating loss (11,521) (8,289)
Interest and other income, net 3,813 4,205
----------- -----------
Loss before income taxes (7,708) (4,084)
Provision (benefit) for income taxes (3,030) 1,800
----------- -----------
Net loss $ (4,678) $ (5,884)
=========== ===========
Basic and diluted net loss per share $ (0.09) $ (0.12)
=========== ===========
Shares used to compute basic and diluted net loss
per share 51,445 49,442
=========== ===========
ZORAN CORPORATION
NON-GAAP ADJUSTMENTS TO NET LOSS
(in thousands, except per share data)
(unaudited)
Three Months Ended
March 31,
----------------------
2008 2007
-------- --------
GAAP net loss $ (4,678) $ (5,884)
Adjusting items to GAAP net loss:
Amortization of intangibles 9,237 (a) 12,169 (a)
Operating expenses related to stock based
compensation expense 2,943 (b) 3,236 (b)
Benefit from income taxes (4,009) (c) - (c)
-------- --------
Non-GAAP net income $ 3,493 (d) $ 9,521 (d)
======== ========
Non-GAAP basic net income per share $ 0.07 (d) $ 0.19 (d)
======== ========
Non-GAAP diluted net income per share $ 0.07 (d) $ 0.19 (d)
======== ========
Shares used to compute non-GAAP basic net
income per share 51,445 49,442
======== ========
Shares used to compute non-GAAP diluted net
income per share 52,034 50,667
======== ========
(a) This adjustment reflects the amortization of intangible assets
associated with the acquisitions of Oak Technology, Inc. in August 2003,
Emblaze Semiconductor in July 2004 and Oren Semiconductor, Inc. in June
2005. These acquired intangible assets are amortized over their estimated
useful lives. Such amortization expense does not impact the Company's cash
flows and is excluded by management when evaluating our core operating
results. (see (d) below)
(b) This adjustment reflects the stock-based compensation expense recorded
under SFAS 123R. For 2007, the adjustment also includes additional stock
based compensation expense attributable to options that were remeasured as
part of the stock option review and the attributable tax implications under
IRS regulation 409(A) that will be incurred by the Company. The Company
excludes these items when it evaluates the continuing operational
performance of the Company as management believes this GAAP measure is not
indicative of its core operating performance. (see (d) below)
(c) This adjustment represents the difference between the non-GAAP income
tax rate and the GAAP income tax rate. The Company excludes this item when
it evaluates the continuing operational performance of the Company as it is
considered a non-recurring item which is not part of our ordinary, ongoing
and customary course of operations. (see (d) below)
(d) The Company believes that its non-GAAP financial information provides
useful information to management and investors regarding financial and
business trends relating to its financial condition and results of
operations because it excludes charges that management considers to be
outside of the Company's core operating results. The Company believes that
this non-GAAP net income, in combination with the Company's financial
results calculated in accordance with GAAP, provides investors with
additional perspective and a more meaningful understanding of the Company's
ongoing operating performance. In addition, the Company's management uses
these non-GAAP measures to review and assess the financial performance of
the Company, to determine executive officer incentive compensation and to
plan and forecast performance in future periods. The Company's non-GAAP net
income is not prepared in accordance with GAAP, is not an alternative to
GAAP financial information, and may be calculated differently than non-GAAP
financial information disclosed by other companies.
ZORAN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
March 31, December 31,
2008 2007
----------- -----------
ASSETS
Current assets:
Cash and short-term investments $ 314,496 $ 319,809
Accounts receivable, net 55,054 58,220
Inventory 64,602 48,992
Prepaid expenses and other current assets 27,930 25,189
----------- -----------
Total current assets 462,082 452,210
Property and equipment, net 17,555 17,636
Other assets 134,321 155,850
Intangible assets, net 185,399 194,636
----------- -----------
Total assets $ 799,357 $ 820,332
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 52,525 $ 67,836
Accrued expenses and other liabilities 38,930 43,968
----------- -----------
Total current liabilities 91,455 111,804
Long term liabilities 22,029 20,756
Stockholders' equity:
Common stock 51 51
Additional paid-in capital 850,677 847,597
Accumulated other comprehensive income 694 995
Accumulated deficit (165,549) (160,871)
----------- -----------
Total stockholders' equity 685,873 687,772
Total liabilities and stockholders' equity $ 799,357 $ 820,332
=========== ===========