Science & Technology
Science and Technology
Science and Technology
Tue, July 28, 2009
Mon, July 27, 2009 Zoran Corporation: Zoran Corporation Reports Second Quarter 2009 Results
SUNNYVALE, CA--(Marketwire - July 27, 2009) - Zoran Corporation (
Revenues for the second quarter were $102.7 million, compared to $68.5 million last quarter and $128.7 million for the second quarter of 2008. The Company reported a second quarter GAAP net loss of $13.8 million, or $0.27 per share, which compares with a GAAP net loss of $21.1 million, or $0.41 per share, for the previous quarter and a GAAP net loss of $36.6 million, or $0.71 per share, for the second quarter of the prior year.
Non-GAAP net loss for the second quarter was $4.3 million, or $0.08 per share, which excludes $109 thousand of amortization of acquired intangible assets, $3.1 million of stock-based compensation expenses, and $11 million related to non-recurring licensing related settlements, but includes an adjustment of $4.7 million for the tax provision to a non-GAAP rate. This compares with a non-GAAP net loss of $17.6 million, or $0.34 per share, for the previous quarter, and non-GAAP net income of $1.5 million, or $0.03 per diluted share, for the same period last year.
"While the global economic downturn continues to affect consumer spending, we are pleased with the 50 percent sequential revenue growth and better than expected results we are reporting today," said Dr. Levy Gerzberg, Zoran's president and chief executive officer. "In DTV, we continued to see increasing demand for low to mid-range LCD TVs, where we have a leading position. We saw a similar trend in digital cameras, where growth was driven by demand for low to mid-range models. The DVD market appears to have stabilized, and Zoran is benefitting from increasing demand for higher margin, value-add DVD products such as HDMI players and portables. While consumer spending has not yet reached previous levels, we are encouraged by these positive trends in our end markets."
Recent Highlights
-- Revenues by product line for the second quarter of 2009 were 40 percent DTV, 28 percent Digital Camera, 14 percent DVD, 12 percent Printer Imaging and 6 percent mobile phone processors. -- Zoran's SupraHD® processors power new Advanced 1080P Insignia High Definition Televisions, ranging in size from 19-inch to over 52-inch displays, shipping to Best Buy retail stores this month -- Zoran introduces Breakthrough Frame Rate Conversion (SupraFRC™) product for worldwide 120 Hz LCD DTV market at Computex in Taiwan -- Zoran introduces Advanced SupraHD® 787 HDTV processors to premium 1080P DTV manufacturers -- Zoran technology powers top selling Flip Video Camcorders from Pure Digital -- Zoran introduces Quatro 4500 the industry's first complete solution pairing embedded Multicore processors with software for Office Printing Market -- Zoran announces enhanced support for XPS Print Path Drivers in Windows operating systems including Windows 7 -- Zoran settles outstanding litigation with DTS and obtains Blu-ray license
Future Outlook
The following forward-looking statements are based on our current expectations, and actual results may differ materially.
The Company is currently expecting third quarter 2009 revenues to range between $105 million and $110 million, with gross margins ranging between 47.5 and 48.5 percent. Excluding acquisition related amortization costs and stock-based compensation expense, non-GAAP operating expenses are expected to be in a range of $49 million to $50 million. Acquisition-related amortization costs are expected to be approximately $108 thousand and stock-based compensation expense is expected to range between $2.7 and $3.2 million. The Company expects to record a third quarter GAAP loss in the range of $0.00 to $0.05 per share on approximately 52 million shares. On a non-GAAP basis, which excludes acquisition-related amortization costs and stock-based compensation expense, the Company expects to record net income in the range of $0.01 and $0.05 per diluted share.
Zoran will provide more commentary on its second 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 impairment of intangible assets, acquisition related in-process research and development expenses, amortization of acquired intangible assets, stock-based compensation expense, non-recurring IP licensing related settlements and associated income tax adjustments.
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 its second quarter results. To listen to the call, please call 617-614-4070 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 July 27, until 4:30 p.m. PT on Aug 2, 2009. The access number for the replay is 617-801-6888, confirmation number 65584906. 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. This press release will be furnished to the SEC on a form 8-K and posted to the company's website prior to the conference call.
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 additional operations in China, England, France, 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 future financial performance. These forward-looking statements are subject to many risks and uncertainties that could cause actual results to differ materially from what is currently expected, including risks associated with: potential declines in the Company's sales as a result of the global economic slowdown that could reduce demand for consumer electronic and other products; recent tightening in global credit markets, which could result in insolvency of key suppliers, customers, or retailers and customer inability to finance purchases of our products; the rapidly evolving markets for the Company's products and uncertainty regarding the pace and direction of development of those markets; cost and length of time required for new product development; timing and impact of new product introductions by the Company and its competitors, and of transitions away from older products; intense competition in our markets and in the markets in which our customers operate; the Company's reliance on other parties for wafer supplies, product assembly and testing, and manufacturing capacity; the effects of changes in revenue and product mix on the Company's gross margins; the Company's dependence on sales to a limited number of large customers; fluctuations in tax rate caused by projections of the geographic sources of Company income; dependence on key personnel; and reliance on international operations, particularly operations in Israel. Further information regarding these and other risks and uncertainties can be found under the caption "Risk Factors" and elsewhere in the Company's most recently filed Annual Report on Form 10-K, Quarterly Report on Form 10-Q, and other filings with the SEC.
Zoran, the Zoran logo, SupraHD, SupraFRC and Quatro are trademarks or registered trademarks of Zoran Corporation and/or its subsidiaries 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 Six Months Ended June 30, June 30, -------------------- -------------------- 2009 2008 2009 2008 --------- --------- --------- --------- Revenues: Hardware product revenues $ 92,179 $ 113,606 $ 148,140 $ 207,903 Software and other revenues 10,543 15,079 23,069 29,813 --------- --------- --------- --------- Total revenues 102,722 128,685 171,209 237,716 Costs and expenses: Cost of hardware product revenues 54,312 68,360 90,310 126,149 Research and development 27,476 30,797 56,481 58,684 Selling, general and administrative 36,852 24,260 61,147 49,899 Amortization of intangibles 109 9,256 218 18,493 In-process research and development - 22,383 - 22,383 Restructuring expense - - 859 - --------- --------- --------- --------- Total costs and expenses 118,749 155,056 209,015 275,608 Operating loss (16,027) (26,371) (37,806) (37,892) Interest and other income, net 2,183 2,831 5,635 6,644 --------- --------- --------- --------- Loss before income taxes (13,844) (23,540) (32,171) (31,248) Provision for income taxes - 13,080 2,740 10,050 --------- --------- --------- --------- Net loss $ (13,844) $ (36,620) $ (34,911) $ (41,298) ========= ========= ========= ========= Basic and diluted net loss per share $ (0.27) $ (0.71) $ (0.68) $ (0.80) ========= ========= ========= ========= Shares used to compute basic and diluted net loss per share 51,494 51,707 51,333 51,576 ========= ========= ========= ========= ZORAN CORPORATION NON-GAAP ADJUSTMENTS TO NET LOSS (in thousands, except per share data) (unaudited) Three Months Ended Six Months Ended June 30, June 30, --------------------- --------------------- 2009 2008 2009 2008 -------- -------- -------- -------- GAAP net loss $(13,844) $(36,620) $(34,911) $(41,298) Adjusting items to GAAP net loss: Operating expenses related to stock based compensation expense 3,110 (a) 3,641 (a) 6,032 (a) 6,584 (a) Operating expenses related to IP licensing settlements 11,000 (b) - 11,000 (b) - Amortization of intangibles 109 (c) 9,256 (c) 218 (c) 18,493 (c) In-process research and development expense - 22,383 (d) - 22,383 (d) Restructuring expense - - 859 (e) - Provision for income taxes (4,700)(f) 2,869 (f) (5,160)(f) (1,140)(f) -------- -------- -------- -------- Non-GAAP net income (loss) $ (4,325)(g) $ 1,529 (g) $(21,962)(g) $ 5,022 (g) ======== ======== ======== ======== Non-GAAP basic net income (loss) per share $ (0.08)(g) $ 0.03 (g) $ (0.43)(g) $ 0.10 (g) ======== ======== ======== ======== Non-GAAP diluted net income (loss) per share $ (0.08)(g) $ 0.03 (g) $ (0.43)(g) $ 0.10 (g) ======== ======== ======== ======== Shares used to compute non-GAAP basic net income (loss) per share 51,494 51,707 51,333 51,576 ======== ======== ======== ======== Shares used to compute non-GAAP diluted net income (loss) per share 51,494 52,142 51,333 52,082 ======== ======== ======== ========
(a) This adjustment reflects the stock-based compensation expense recorded under SFAS 123R. The Company excludes this item 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 (g) below)
(b) This adjustment reflects a non-recurring expense recorded during the quarter ended June 30, 2009 as a result of IP licensing related settlements. The Company excludes this item 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 (g) below)
(c) For 2008, this adjustment represents the amortization of intangibles assets primarily associated with the acquisition of Oak Technology, Inc. in August 2003, the acquisition of Emblaze Semiconductor in July 2004 and the acquisition of Oren Semiconductor in June 2005. For 2009, this adjustment represents the amortization of intangible assets associated with the acquisition of Let It Wave, Inc. in June 2008. Such amortization expense does not impact the Company's cash flows and is excluded by management when evaluating our core operating results. (see (g) below)
(d) This adjustment reflects the in-process research and development charge recorded by the Company as part of the acquisition of Let It Wave in June 2008. This in-process research and development charge does not impact the Company's ongoing cash flows and is excluded by management when evaluating our core operating results. (see (g) below)
(e) This adjustment reflects the restructuring expense recorded by the Company as part of closing its facility in Netanya, Israel during the quarter ended March 31, 2009. 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 (g) below)
(f) This adjustment represents the difference between the non-GAAP income tax rate and the GAAP income tax rate. This adjustment is made by the Company when it evaluates its continuing operational performance. (see (g) below)
(g) 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 (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.
ZORAN CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) June 30, December 31, 2009 2008 ------------- ------------- ASSETS Current assets: Cash and short-term investments $ 349,995 $ 358,527 Accounts receivable, net 33,325 22,845 Inventory 41,752 37,365 Prepaid expenses and other current assets 25,463 25,549 ------------- ------------- Total current assets 450,535 444,286 Property and equipment, net 13,049 15,811 Long-term investments 37,250 37,425 Other assets 63,080 69,659 Intangible assets, net 5,048 5,266 ------------- ------------- Total assets $ 568,962 $ 572,447 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 48,601 $ 29,918 Accrued expenses and other liabilities 36,115 36,134 ------------- ------------- Total current liabilities 84,716 66,052 Long term liabilities 27,059 26,985 Stockholders' equity: Common stock 51 51 Additional paid-in capital 867,796 858,429 Accumulated other comprehensive income (loss) 849 (2,472) Accumulated deficit (411,509) (376,598) ------------- ------------- Total stockholders' equity 457,187 479,410 Total liabilities and stockholders' equity $ 568,962 $ 572,447 ============= =============
