Zoran Corporation Reports Record First Quarter 2006 Results25 April 2006
Zoran Corporation (Nasdaq: ZRAN), 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, 2006.
Revenues for the first quarter were $142.2 million, including $30.1 million in payments received pursuant to license agreements entered into in connection with the settlement of litigation reached on January 26, 2006, net of amounts payable to the holder of rights under certain patents involved in the litigation and related legal fees. Excluding these litigation related proceeds, revenues would have been $112.1 million which compares with $109.3 million last quarter and $73.9 million for the first quarter of 2005. The Company reported net income for the first quarter of $20.8 million, or $0.43 per diluted share, which includes charges of $12.7 million related to the amortization of acquisition related purchased intangible assets, stock-based compensation expenses of $4.6 million recorded as a result of the adoption of FAS 123R during the quarter and a provision of $6.0 million for income tax expense related to the proceeds received in connection with the litigation settlement. This compares with a net loss of $2.1 million, or $0.05 per share, for the previous quarter and a net loss of $18.8 million, or $0.43 per share, for the first quarter of last year.
Non-GAAP net income for the first quarter was $13.9 million, or $0.28 per diluted share, which excludes the proceeds from the litigation settlement revenues and the associated provision for income tax expense, charges related to the amortization of acquisition related purchased intangible assets and stock-based compensation expenses recorded under FAS 123R. Non-GAAP net income for the first quarter was favorably impacted by a net gain on investments, net of tax, of $1.0 million, or $0.02 per diluted share. This compares to non-GAAP net income of $10.9 million, or $0.23 per diluted share, for the previous quarter and a non-GAAP net loss of $5.9 million, or $0.14 per share, for the first quarter of 2005.
"We are pleased to begin the year with these excellent results for our first quarter of 2006," said Dr. Levy Gerzberg, Zoran's president and chief executive officer. "Record revenues in our DTV and digital camera businesses drove growth in what has historically been a seasonally weak period, and we secured multiple design wins across all of our product lines from major manufacturers around the world. Our diversified revenue base is strengthening our business model with continued increases in profitability and major improvements in our balance sheet. We look forward to additional successes as we solidify and enhance our position in our core markets for the remainder of 2006 and beyond."
Recent Highlights
-- Zoran announced that its SupraHD 660 integrated DTV processor and Cascade 2 high performance demodulator products are powering Sanyo Electric's newest high definition televisions for the United States.
-- Zoran announced that its Generation 9 Elite digital television processor is powering the Humax JC-5000, a new digital cable set-top box for the ARIB-standard market in Japan.
-- Zoran announced its new COACH 9 digital camera processor is available to qualified digital camera manufacturers and demonstrated its new image stabilization and blur reduction technology at the Photo Marketing Show 2006.
-- New Zoran-based digital camera products on display at the Photo Marketing Show included over 90 new models from Aiptek, BenQ, Chicony, DXG, Goodmans, Kodak, Pentax, Premier, Samsung, and others.
-- Zoran announced the availability of its Quatro 4230 digital printer processor, a highly integrated, fully programmable solution for color laser printer manufacturers.
-- Zoran and Zenographics, Inc. announced an agreement to collaborate on providing raster printing solutions for the desktop and workgroup color laser market.
-- Zoran announced its APPROACH 5 mobile multimedia processor incorporating Zoran's leading edge Digital Camera Image Signal Processing (ISP) capabilities along with other leading multimedia features, the industry's most cost-effective SOC for the mobile phone market, and demonstrated it at 3GSM 2006.
Future Outlook
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.
Exclusive of a final one-time payment of $5.6 million in connection with the litigation settlement, the Company is currently expecting second quarter 2006 revenues to range between $118.0 million and $120.0 million, with gross margins ranging between 52 and 53 percent. Excluding any acquisition related costs and stock based compensation expense under FAS 123R, operating expenses are expected to be in a range of $47.5 million to $49.0 million. Acquisition- related costs are expected to be approximately $13.0 million with FAS 123R expense expected to range between $4.5 and $5.0 million. The Company expects to record net income for the quarter in the range of break even to $0.02 per diluted share. Non-GAAP earnings for the quarter, which excludes acquisition related costs, stock-based compensation expense and the final litigation settlement payment are expected to range between $0.26 and $0.29 per diluted share on approximately 50 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 reports non-GAAP financial results. Non-GAAP net income (loss) excludes proceeds received as part of litigation settlements and the associated provision for income taxes, amortization of acquisition-related intangibles and stock-based compensation expenses.
Non-GAAP net income (loss) gives an indication of the Company's baseline performance before gains, losses or other charges that are considered by management to be outside of our core operating results. The Company believes that this presentation of non-GAAP results of operations provides useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations as they exclude charges which we consider to be outside of our core operating results. The Company believes when GAAP results of operations are viewed in conjunction with non-GAAP results of operations, investors are provided with a more meaningful understanding of the Company's ongoing operating performance. In addition, the Company's management uses these non-GAAP measures for reviewing the financial results of the Company and for planning and forecasting future periods. These measures are not in accordance with or an alternative for GAAP financial statements and may be materially different from non-GAAP measures used by other companies.
Quarterly 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 617-597-5342 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 4:00 p.m. PT on April 24, 2006, until 4:00 p.m. PT on May 1, 2006. The access number for the replay is 617-801-6888, confirmation number 62353890. 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 http://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 and Share 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 http://www.zoran.com or at 408-523-6500.
Forward-Looking Statements
This press release includes 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: the 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 most recently filed annual report on Form 10-K and other filings that have been made with the SEC.
NOTE: Zoran, the Zoran logo, COACH, SupraHD, SupraTV, Vaddis, and Quatro 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,
2006 2005
Revenues:
Hardware product revenues $99,169 $59,002
Software and other revenues 12,909 14,882
License litigation settlement
revenues 30,168 --
Total revenues 142,246 73,884
Costs and expenses:
Cost of hardware product revenues 54,466 36,964
Research and development 24,151 20,100
Selling, general and
administrative 24,755 23,174
Amortization of intangibles 12,735 12,330
Deferred stock compensation -- 517
Total costs and expenses 116,107 93,085
Operating income (loss) 26,139 (19,201)
Interest & other income, net 2,823 405
Income (loss) before income taxes 28,962 (18,796)
Provision for income taxes 8,202 --
Net income (loss) $20,760 $(18,796)
Basic net income (loss) per share $0.45 $(0.43)
Diluted net income (loss) per share $0.43 $(0.43)
Shares used to compute basic net
income (loss) per share 46,207 43,213
Shares used to compute diluted net
income (loss) per share 48,487 43,213
ZORAN CORPORATION
NON-GAAP ADJUSTMENTS TO NET INCOME (LOSS)
(in thousands, except per share data)
(unaudited)
Three Months Ended
March 31,
2006 2005
GAAP net income (loss) $20,760 $(18,796)
Adjusting items to GAAP net income
(loss):
Litigation settlement revenues
(net) (24,134)(a) --
Amortization of intangibles 12,735 (b) 12,330 (b)
Deferred stock compensation -- 517 (c)
Operating expenses related to
stock based compensation expense 4,562 (d) --
Non-GAAP net income (loss) $13,923 (e) $(5,949)(e)
Non-GAAP basic net income (loss) per
share $0.30 (e) $(0.14)(e)
Non-GAAP diluted net income (loss)
per share $0.28 (e) $(0.14)(e)
Shares used to compute non-GAAP basic
net income (loss) per share 46,207 43,213
Shares used to compute non-GAAP
diluted net income (loss) per share 49,264 43,213
(a) This adjustment reflects the proceeds received from the settlement of
a license litigation net of associated fees and estimated income taxes.
This amount is excluded by management when evaluating our core operating
results as it is considered a non-recurring item which is not part of our
ordinary, ongoing and customary course of operations. (see (e) below)
(b) 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 (e) below)
(c) This adjustment reflects a deferred stock compensation charge related
to the acquisition of Oak Technology, Inc. in August 2003. This deferred
stock compensation charge does not impact the Company's ongoing cash flows
and is excluded by management when evaluating our core operating results.
(see (e) below)
(d) 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 this expense does not
impact the Company's cash flows and management believes this GAAP measure
is not indicative of its core operating performance. (see (e) below)
(e) Non-GAAP net income (loss) gives an indication of the Company's
baseline performance before gains, losses or other charges that are
considered by management to be outside of our core operating results. The
Company believes that this presentation of non-GAAP net income (loss) and
non-GAAP net income (loss) per share provides useful information to
management and investors regarding certain financial and business trends
relating to its financial condition and results of operations as they
exclude charges considered by management to be outside its core operating
results. The Company believes when GAAP results of operations are viewed
in conjunction with non-GAAP results of operations, investors are provided
with a more meaningful understanding of the Company's ongoing operating
performance. In addition, the Company's management uses these measures
for reviewing the financial results of the Company and for planning and
forecasting future periods. These measures are not in accordance with or
an alternative for GAAP financial statements and may be materially
different from non-GAAP measures used by other companies.
ZORAN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
March 31, December 31,
2006 2005
ASSETS
Current assets:
Cash and short-term
investments $217,876 $149,346
Accounts receivable, net 62,431 70,174
Inventory 38,663 32,616
Prepaid expenses & other
current assets 9,800 11,746
Total current assets 328,770 263,882
Property & equipment, net 14,905 16,057
Other assets 14,179 12,943
Intangible assets, net 294,198 311,341
Total assets $652,052 $604,223
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $44,737 $38,999
Accrued expenses and other
liabilities 53,562 53,937
Total current
liabilities 98,299 92,936
Long term liabilities 12,770 11,939
Stockholders' equity:
Common stock 47 45
Additional paid-in capital 748,792 727,597
Deferred stock-based
compensation -- (593)
Accumulated other
comprehensive income 2,179 3,094
Accumulated deficit (210,035) (230,795)
Total stockholders'
equity 540,983 499,348
Total liabilities and
stockholders' equity $652,052 $604,223
Source: prnewswire
All trademarks and copyrighted information contained herein are the property of their respective owners.
Related Articles
|
