Zoran Corporation Reports First Quarter 2002 Results
Tuesday April 23, 4:08 pm Eastern Time
Press Release
SOURCE: Zoran Corporation
Year-over-Year First Quarter Revenues Grow 59 percent
SANTA CLARA, Calif., April 23 /PRNewswire-FirstCall/ -- Zoran Corporation (Nasdaq: ZRAN - news), a leading provider of digital solutions-on-a-chip for applications in the growing consumer electronics markets, today reported results for its first quarter ended March 31, 2002.
Revenues for the first quarter of 2002 were $31.1 million compared with $19.6 million for the same quarter in 2001 and $35.8 million last quarter. Pro forma net income for the first quarter was $2.2 million, or $0.12 per diluted share, based on 19.2 million shares outstanding compared to pro forma net income of $208,000, or $0.01 per diluted share for the same quarter last year, and $4.0 million, or $0.21 per diluted share for the fourth quarter of 2001.
Two separate and non-recurring events impacted pro forma net income during the quarter. The first was a non-cash loss of $696,000 realized upon the conversion of equity securities in conjunction with the acquisition of the investee. The second was a reduction in the company's tax rate, from 15 percent to 10 percent. The net impact of these two events was a reduction of net income of $469,000, or $0.02 per share. Without these events, pro forma net income would have been $2.7 million, or $0.14 per diluted share. The company anticipates that it will continue to use the 10 percent tax rate for the foreseeable future.
Pro forma net income excludes acquisition-related costs included in operating expenses such as amortization of goodwill and other purchased intangibles. Upon the adoption of Statements of Financial Accounting Standards nos. 141 and 142 this quarter, the company discontinued amortizing goodwill and will make annual evaluations of impairment. The company will continue to amortize other purchased intangibles. Based on generally accepted accounting principles (GAAP) which includes these acquisition-related costs, the company reported a net loss of $235,000, or $0.01 per share, for the first quarter of 2002 on 17.8 million shares outstanding compared to a net loss of $10.6 million, or $0.61 per share, based on 17.3 million shares outstanding in the first quarter of 2001.
``The strong results for the quarter reflect continued strength in our core markets,'' said Dr. Levy Gerzberg, Zoran's president and chief executive officer. ``Our leadership position in the DVD market continues. In fact, we experienced sequential unit growth even during this seasonally slow period. Year-over-year for the quarter, we achieved an impressive 258 percent increase in units shipped. We continue to extend our leadership position in our core markets while maintaining our focus on developing and providing our customers with high quality and feature rich products.''
``Our position in the digital camera market also continued to strengthen and we secured several new design wins with customers such as Casio, Concord, Samsung, and others,'' continued Gerzberg. ``We believe our COACH processor is quickly gaining worldwide acceptance.''
First Quarter Highlights
DVD Market
-- The company announced that Samsung, one of the top three DVD player
manufacturers worldwide, is using Zoran's Vaddis product line in their
DVD players
-- Zoran announced that the Vaddis V advanced multimedia processor is
powering Sharp's new DVD recorder product
-- Zoran and Sanyo have initiated a long-term strategic partnership and
announced that improved DVD player technology is now shipping
-- Toshiba's SD-5700 DVD player, powered by Zoran's Vaddis V DVD processor
was selected one of the "Best Inventions of 2001" by Time Magazine
-- In a review by Home Theater Magazine, Toshiba's SD-5700 received an
excellent video performance rating, a solid DVD-Audio and HDCD
performance score, and an excellent value rating
Digital Camera Market
-- Zoran introduced an advanced, highly-integrated COACH V processor
-- The company announced that the COACH IC is now powering Samsung's
Digimax 350SE high performance 3X optical zoom camera and Casio's Sports
camera
-- Concord Camera introduced the Eye Q Duo 1300 digital camera based on
Zoran's CamMini reference design at the PMA show in February
-- Zoran's CamMini reference design received the award for the "Below $100"
category; and Toshiba's PDR-M11 digital camera, incorporating Zoran's
COACH processor, won DIMA's "$100 to $199" category at the PMA show in
February
Digital Audio Market
-- Zoran announced that the ZR38601 Audio DSP is shipping in wireless
headphones from Acoustic Research(R)
Future Outlook
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.
The company is currently expecting its second quarter 2002 revenues to increase by 3 to 5 percent from first quarter 2002 levels. Product gross margin is expected to remain around 35 percent for the quarter with overall gross margin expected to be in the range of 39 to 40 percent. Operating expenses, excluding any acquisition related costs, are expected to increase between 2 to 3 percent compared to first quarter levels.
The company today announced a 3 for 2 stock split which will become effective on May 22, 2002. Earnings per share forecasts reflect this change and also include the lower tax rate of 10 percent. Pro forma earnings per share are expected to range between $0.09 and $0.10 on approximately 29.3 million diluted shares outstanding. The company is increasing its previously stated guidance for 2002 revenue growth over 2001 from 30 to 35 percent to 34 to 38 percent.
Zoran will provide more commentary and guidance on its first quarter results and 2002 outlook during the earnings conference call.
Earnings Conference Call
Zoran Corporation has scheduled a conference call for 5:00 p.m. ET today to discuss first quarter results. To listen to the call, please call 212-896-6061 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 via telephone from approximately 7:00 p.m. ET on April 23 until 7:00 p.m. ET on April 25. The access number for the replay is 800-633-8284; confirmation number 20504098.
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, download, and install any necessary audio software.
Company Profile
Zoran Corporation, based in Santa Clara, California, is a leading provider of digital solutions-on-a-chip for applications in the growing consumer electronics markets. With almost two decades of expertise developing and delivering digital compression technologies, Zoran has pioneered high-performance processing into various audio, video, and imaging technologies. 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 is a leading supplier in the rapidly expanding DVD and digital camera markets and also offers products that address related digital audio and video applications. With headquarters in the U.S. and operations in Canada, China, Hong Kong, Israel, Japan, Korea and Taiwan, Zoran may be contacted on the World Wide Web at www.zoran.com or at 408-919-4111.
Forward Looking Statements
This press release includes a number of forward-looking statements that reflect the Company's current view with respect to future events and financial performance. These forward-looking statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements including risks associated with: rapidly evolving markets for the Company's products and uncertainty regarding the development of these markets; new product development, the ongoing introduction of new and enhanced products by the Company and its competitors and the transition from older products; intensive competition in markets in which the Company competes; the Company's reliance on independent foundries and contractors for its wafer supplies and product assembly and testing and its ability to ramp up manufacturing capacity to meet changing customer requirements; the effects of changes in revenue and product mix on the Company's gross margins; the Company's historic dependence on sales to a limited number of large customers and fluctuations in customer and product mix among those customers; the dependence on key Company personnel; the reliance on international sales and operations, particularly the Company's operations in Israel; and the effects of general business and changing economic conditions on the markets that the Company serves. Further information regarding these and other risks and uncertainties can be found in the Company's annual report on Form 10-K for the year ended December 31, 2001 and other filings that have been made with the SEC.
ZORAN CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended
March 31,
2002 2001
Revenues:
Product sales $29,105 $17,315
Software, licensing and development 1,985 2,278
Total revenues 31,090 19,593
Costs and expenses:
Cost of product sales 18,832 10,876
Research and development 5,521 5,968
Selling, general and administrative 5,740 5,243
Total costs and expenses 30,093 22,087
Operating income (loss) 997 (2,494)
Interest and other income, net 1,459 2,745
Income before income taxes 2,456 251
Provision for income taxes 246 43
Net income $2,210 $208
Basic net income per share $0.12 $0.01
Diluted net income per share $0.12 $0.01
Shares used in computing per share amounts:
Basic 17,849 17,314
Diluted 19,202 17,876
ZORAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended
March 31,
2002 2001
Revenues:
Product sales $29,105 $17,315
Software, licensing and development 1,985 2,278
Total revenues 31,090 19,593
Costs and expenses:
Cost of product sales 18,832 10,876
Research and development 5,521 5,968
Selling, general and administrative 5,740 5,243
Amortization of goodwill and
other intangibles 2,445 10,808
Total costs and expenses 32,538 32,895
Operating loss (1,448) (13,302)
Interest and other income, net 1,459 2,745
Income (loss) before income taxes 11 (10,557)
Provision for income taxes 246 43
Net loss $(235) $(10,600)
Basic net loss per share $(0.01) $(0.61)
Diluted net loss per share $(0.01) $(0.61)
Shares used in computing per share amounts:
Basic 17,849 17,314
Diluted 17,849 17,314
ZORAN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
March 31, December 31,
2002 2001
ASSETS
Current assets:
Cash and short-term investments $150,912 $110,105
Accounts receivable, net 30,183 33,367
Inventory 12,874 15,681
Prepaid expenses & other
current assets 5,161 5,130
Total current assets 199,130 164,283
Property and equipment, net 6,921 7,159
Other investments 56,886 89,727
Goodwill and other intangibles 67,866 70,175
$330,803 $331,344
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $14,596 $16,705
Accrued expenses and
other liabilities 16,801 16,801
Total current liabilities 31,397 33,506
Stockholders' equity:
Common Stock 18 18
Additional paid-in capital 393,828 391,674
Warrants 717 717
Deferred stock-based compensation (239) (375)
Accumulated other comprehensive loss (493) (6)
Accumulated deficit (94,425) (94,190)
Total stockholders' equity 299,406 297,838
$330,803 $331,344
SOURCE: Zoran Corporation |
