ZLOG 
By
"We made steady progress in the quarter with sequential improvement in
both revenue and gross margins in a clearly challenging economy. In
particular, our sequential sales increase reflects the continuing thrust of
our new product portfolio, which increased to 57 percent of total sales in the
quarter compared to 50 percent of total sales in the previous quarter," said
Sales for the quarter ended
The company shipped approximately 675 development tool kits during the December quarter, increasing the total tool kits shipped since the launch of its integrated 8-bit embedded flash microcontrollers to almost 43,000.
The company expects sales for the quarter ended
NON-GAAP FINANCIAL INFORMATION (Unaudited)
The Company may make reference to certain Non-GAAP financial measures. Management believes that these Non-GAAP measures are useful measures of operating performance and liquidity because they may exclude the impact of certain items, such as amortization of intangible assets, stock-based compensation, depreciation, non-operating interest, income taxes and special charges. However, these Non-GAAP measures should be considered in addition to, not as a substitute for, or superior to, net income (loss) and net cash provided by (used in) operating activities, or other financial measures prepared in accordance with GAAP.
Reconciliation of Three Months Ended
Non-GAAP Net (in millions)
Loss to GAAP Dec. 29, Sept. 29, June 30, March 31, Dec. 30, Sept. 30,
Net Loss 2007 2007 2007 2007 2006 2006
Non-GAAP net loss ($1.4) ($0.8) ($2.0) ($1.6) ($0.8) ($0.8)
Non-GAAP
adjustments:
Special
charges and
credits 0.6 0.4 0.4 1.3 0.1 0.9
Amortization
of intangible
assets 0.3 0.3 0.2 0.3 0.3 0.3
Non-cash
stock-based
compensation
R&D 0.1 0.1 0.1 0.1 0.1 0.1
Non-cash
stock-based
compensation
SG&A - 0.3 0.3 0.3 0.3 0.2
Total non-GAAP
adjustments 1.0 1.1 1.0 2.0 0.8 1.5
GAAP Net loss ($2.4) ($1.9) ($3.0) ($3.6) ($1.6) ($2.3)
Non-GAAP Net Loss (Unaudited)
Non-GAAP net loss excludes special charges and non-cash charges relating to the amortization of intangible assets and stock-based compensation. We believe that Non-GAAP net loss is a useful measure as it excludes certain special charge items as well as certain non-cash charges, which facilitates a comparison of the Company's operating performance. However, this Non-GAAP measure should be considered in addition to, not as a substitute for, or superior to, the net loss measured in accordance with GAAP.
Reconciliation of Net
Loss and Cash Flows Three Months Ended
From Operating (in millions)
Activities to Dec. 29, Sept. 29, June 30, March 31, Dec. 30, Sept. 30,
EBITDA 2007 2007 2007 2007 2006 2006
Reconciliation of
net loss to
EBITDA:
Net loss ($2.4) ($1.9) ($3.0) ($3.6) ($1.6) ($2.3)
Depreciation
and
amortization 1.0 1.0 1.0 1.1 1.1 1.1
Interest income (0.2) (0.2) (0.2) (0.3) (0.2) (0.3)
Provision for
income taxes 0.6 0.1 0.5 0.6 0.6 0.4
EBITDA ($1.0) ($1.0) ($1.7) ($2.2) ($0.1) ($1.1)
Reconciliation of
EBITDA to net cash
provided by
(used in) operating
activities:
EBITDA ($1.0) ($1.0) ($1.7) ($2.2) ($0.1) ($1.1)
Provision for
income taxes (0.6) (0.1) (0.5) (0.6) (0.6) (0.4)
Interest income 0.2 0.2 0.2 0.3 0.2 0.3
Non-cash
stock-based
compensation 0.1 0.4 0.4 0.4 0.4 0.3
Loss on
disposition of
operating
assets - 0.1 0.2 - - -
Changes in other
operating
assets and
liabilities (0.6) 1.3 (1.4) 0.8 (1.8) 2.3
Net cash provided
by (used in)
operating
activities ($1.9) $0.9 ($2.8) ($1.3) ($1.9) $1.4
Non-GAAP EBITDA (Unaudited)
Management believes that Non-GAAP EBITDA ("EBITDA"), that is Earnings or loss Before Interest, Taxes, Depreciation and Amortization, is a useful measure of financial performance. We believe that the disclosure of EBITDA helps investors more meaningfully evaluate our liquidity position by the elimination of non-cash related items such as depreciation and amortization. We believe that our investor base regularly uses EBITDA as a measure of the liquidity of our business. Our management uses EBITDA as a supplement to cash flows from operations as a way to assess the cash generated from our business available for capital expenditures and the servicing of other requirements including working capital.
Reconciliation of Net
Loss and Cash Flows Three Months Ended
From Operating (in millions)
Activities to Dec. 29, Sept. 29, June 30, March 31, Dec. 30, Sept. 30,
Adjusted EBITDA 2007 2007 2007 2007 2006 2006
Reconciliation of net
loss to Adjusted
EBITDA:
Net loss ($2.4) ($1.9) ($3.0) ($3.6) ($1.6) ($2.3)
Depreciation and
amortization 1.0 1.0 1.0 1.1 1.1 1.1
Interest income (0.2) (0.2) (0.2) (0.3) (0.2) (0.3)
Provision for
income taxes 0.6 0.1 0.5 0.6 0.6 0.4
Special charges
and credits 0.6 0.4 0.4 1.3 0.1 0.9
Non-cash
stock-based
compensation (1) 0.1 0.4 0.4 0.4 0.4 0.3
Adjusted EBITDA ($0.3) ($0.2) ($0.9) ($0.5) $0.4 $0.1
Reconciliation of
Adjusted EBITDA to
net cash provided by
(used in) operating
activities:
Adjusted EBITDA ($0.3) ($0.2) ($0.9) ($0.5) $0.4 $0.1
Special charges
and credits (0.6) (0.4) (0.4) (1.3) (0.1) (0.9)
Provision for
income taxes (0.6) (0.1) (0.5) (0.6) (0.6) (0.4)
Interest income 0.2 0.2 0.2 0.3 0.2 0.3
Loss on
disposition of
operating
assets - 0.1 0.2 - - -
Changes in other
operating
assets and
liabilities (0.6) 1.3 (1.4) 0.8 (1.8) 2.3
Net cash provided by
(used in) operating
activities ($1.9) $0.9 ($2.8) ($1.3) ($1.9) $1.4
Non-GAAP Adjusted EBITDA (Unaudited)
EBITDA reflects our Earnings or loss Before Interest, Taxes, Depreciation and Amortization. Additionally, management uses separate "Adjusted EBITDA" calculations for purposes of determining certain employees' incentive compensation and, subject to meeting specified Adjusted EBITDA amounts, for accelerating the vesting of EBITDA-linked stock options. Adjusted EBITDA, as we define it, excludes interest, income taxes, effects of changes in accounting principles and non-cash charges such as depreciation, amortization, in-process research and development, and stock-based compensation expense. It also excludes cash and non-cash charges associated with reorganization items and special charges and credits, which represent operational restructuring charges, including asset write-offs, employee termination costs, relocation costs and lease termination costs. Adjusted EBITDA also excludes changes in operating assets and liabilities which are included in net cash used by operating activities. Our management uses Adjusted EBITDA as a supplement to cash flows from operations as a way to assess the cash generated from our business available for capital expenditures and the servicing of other requirements including working capital. This Non-GAAP Adjusted EBITDA measure allows management to monitor cash generated from the operations of the business. However, this Non-GAAP measure should be considered in addition to, not as a substitute for, or superior to, net loss and net cash provided or used in operating activities prepared in accordance with GAAP.
About Zilog, Inc.
Founded in 1974, Zilog is a global supplier of 8, 16 and 32-bit
microcontroller and microprocessor "system-on-a-chip" (SoC) solutions that
allow design engineers the freedom and creativity required for continued
innovation in embedded design. The company won international acclaim for
designing one of the first architectures in the microprocessors and
microcontrollers industry. Today, Zilog designs, develops and markets a broad
portfolio of devices for embedded control and communication applications used
in consumer electronics, home appliances, security systems, point of sales
terminals, personal computer peripherals, as well as industrial and automotive
applications. Zilog is headquartered in
EZ80ACCLAIM!, CRIMZON, Zatara, Zilog, Z8, Z80, eZ80, Z8 ENCORE!, Encore!XP
and Zneo are registered trademarks of Zilog, Inc. in the
Other product and or service names mentioned herein may be trademarks of the companies with which they are associated.
Cautionary Statements
This release contains forward-looking statements (including those related to our expectations for our March, 2008 quarter) relating to expectations, plans or prospects for Zilog, Inc. that are based upon the current expectations and beliefs of Zilog's management and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. For example, delays in the ramp of our 32-bit products or further weakness in our 8-bit classic products could negatively impact our March, 2008 quarter.
Design wins are defined as the projected two-year net sales for a
customer's new product design for which the Company has received at least a
The financial information presented herein is unaudited and is subject to
change as a result of subsequent events or adjustments, if any, arising prior
to the filing of the Company's Form 10-Q for the period ended
For a detailed discussion of these and other cautionary statements, please
refer to the risk factors discussed in filings with the U.S. Securities and
Exchange Commission ("SEC"), including but not limited to, the Company's
Annual Report on Form 10-K for the fiscal year ended
Contact:
Stew Chalmers
Director Corporate Communications
(818) 681-3588
Zilog, Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions except per share data)
Three Months Ended Nine Months Ended
Dec. 29, Dec. 30, Dec. 29, Dec. 30,
2007 2006 2007 2006
Net sales $17.0 $20.7 $50.5 $62.9
Cost of sales 9.0 11.0 27.4 32.9
Gross margin 8.0 9.7 23.1 30.0
Gross margin % 47% 47% 46% 48%
Operating expenses:
Research and development 4.1 5.2 12.6 15.4
Selling, general and
administrative 4.9 5.3 15.0 17.1
Special charges and
credits 0.6 0.1 1.5 1.1
Amortization of
intangible assets 0.3 0.3 0.7 1.0
Total operating
expenses 9.9 10.9 29.8 34.6
Operating loss (1) (1.9) (1.2) (6.7) (4.6)
Other income (expense):
Other income (expense) (0.1) (0.1) (0.2) (0.1)
Interest income 0.2 0.3 0.7 0.9
Loss before provision for
income taxes (1.8) (1.0) (6.2) (3.8)
Provision for income taxes 0.6 0.6 1.2 1.6
Net loss $(2.4) $(1.6) $(7.4) $(5.4)
Basic and diluted net loss
per share $(0.14) $(0.10) $(0.44) $(0.33)
Weighted-average shares used
in computing basic and
diluted net loss per share 16.9 16.7 16.9 16.6
(1) Includes FAS 123R stock-
based compensation
charges as follows:
Cost of Sales $- $- $0.1 $-
Research and
development 0.1 0.1 0.2 0.3
Selling, general and
administrative - 0.3 0.6 0.8
Total stock-based
compensation included
in operating loss $0.1 $0.4 $0.9 $1.1
Zilog, Inc.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
Dec. 29, March 31,
2007 2007
ASSETS
Current assets:
Cash and cash equivalents $18.1 $19.4
Accounts receivable, net 8.4 8.0
Inventories 9.3 8.5
Assets held for sale - 3.2
Deferred tax asset 0.4 0.4
Prepaid expenses and
other current assets 2.1 1.8
Total current assets 38.3 41.3
Property, plant and
equipment, net 5.0 6.5
Goodwill 2.2 2.2
Intangible assets, net 2.7 3.5
Other assets 0.8 2.3
Total assets $49.0 $55.8
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $7.9 $6.1
Income taxes payable 0.5 0.6
Accrued compensation
and employee benefits 2.6 2.8
Other accrued liabilities 2.1 2.9
Deferred income on shipments
to distributors 6.0 7.1
Total current liabilities 19.1 19.5
Deferred tax liability 0.4 0.4
Other non-current liabilities 1.1 1.2
Total liabilities 20.6 21.1
Stockholders' equity:
Common stock 0.2 0.2
Additional paid-in capital 125.9 124.5
Treasury stock (7.4) (7.2)
Other comprehensive income (0.1) -
Accumulated deficit (90.2) (82.8)
Total stockholders' equity 28.4 34.7
Total liabilities and
stockholders' equity $49.0 $55.8
Zilog, Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Three Months Ended Nine Months Ended
Dec. 29, Dec. 30, Dec. 29, Dec. 30,
2007 2006 2007 2006
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $(2.4) $(1.6) $(7.4) $(5.4)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and amortization 0.7 0.8 2.2 2.3
Loss on disposition of
operating assets - - 0.2 -
Non-cash stock-based
compensation 0.1 0.4 0.9 1.1
Amortization of fresh-start
intangible assets 0.3 0.3 0.8 1.0
Changes in operating assets and
liabilities:
Accounts receivable, net (0.5) (1.0) (0.4) 0.7
Inventories (0.8) (0.9) (0.9) (1.9)
Prepaid expenses and other
current and non-current
assets - 0.5 1.3 1.4
Accounts payable 1.0 0.7 1.9 (0.9)
Accrued compensation and
employee benefits 0.2 (0.1) (0.2) 0.3
Deferred income on shipments
to distributors (0.5) (0.9) (1.1) 0.8
Accrued and other current
liabilities (0.1) (0.2) (0.8) (0.4)
Non-current liabilities 0.1 0.1 (0.2) 0.2
Net cash used in operating
activities (1.9) (1.9) (3.7) (0.8)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Disposal of assets held for
sale - MOD II property - (0.6) 3.2 (1.3)
Due to Mod III Preferred
Series A shareholders - (2.8) - (2.6)
Capital expenditures - (0.2) (1.0) (1.7)
Net cash provided by (used
in) investing activities - (3.6) 2.2 (5.6)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net changes in retirement plan
per FAS 158 - - 0.1 -
Proceeds from issuance of
common stock under
employee stock purchase
and stock option plans 0.1 0.3 0.4 0.4
Repurchase of common stock - - (0.3) -
Net cash provided by
financing activities 0.1 0.3 0.2 0.4
Decrease in cash and cash
equivalents (1.8) (5.2) (1.3) (6.0)
Cash and cash equivalents at
beginning of period 19.9 26.2 19.4 27.0
Cash and cash equivalents at end
of period $18.1 $21.0 $18.1 $21.0
Zilog, Inc.
SELECTED UNAUDITED TRENDED FINANCIAL INFORMATION
(Amounts in millions except percentages, selected key metrics and per
share amounts)
Three Months Ended
Dec. 29, Sept. 29, June 30, March 31, Dec. 30, Sept. 30,
2007 2007 2007 2007 2006 2006
Sales & Expenses
Information:
Net sales $17.0 $16.7 $16.8 $19.1 $20.7 $21.2
Cost of sales 9.0 9.0 9.4 10.1 11.0 11.4
Gross margin 8.0 7.7 7.4 9.0 9.7 9.8
Gross margin % 47% 46% 44% 47% 47% 46%
Operating expenses:
Research and
development 4.1 3.9 4.5 5.1 5.2 5.0
Selling, general
and administrative 4.9 5.1 5.0 5.6 5.3 5.8
Special charges and
credits 0.6 0.4 0.4 1.3 0.1 0.9
Amortization of
intangible assets 0.3 0.3 0.2 0.3 0.3 0.3
Total operating
expenses 9.9 9.7 10.1 12.3 10.9 12.0
Operating loss (1.9) (2.0) (2.7) (3.3) (1.2) (2.2)
Interest and other
income 0.1 0.2 0.2 0.3 0.2 0.3
Loss before provision
for income taxes (1.8) (1.8) (2.5) (3.0) (1.0) (1.9)
Provision for income
taxes 0.6 0.1 0.5 0.6 0.6 0.4
Net loss $(2.4) $(1.9) $(3.0) $(3.6) $(1.6) $(2.3)
Weighted average
basic and diluted
shares 16.9 16.9 16.9 16.8 16.7 16.6
Basic and diluted
net loss per
share $(0.14) $(0.11) $(0.18) $(0.21) $(0.10) $(0.14)
Sales Information:
Net Sales - by product
category
Embedded flash
microcontrollers $3.5 $3.9 $3.6 $3.1 $3.6 $3.7
Remote control
solutions 5.6 4.1 5.1 6.3 5.9 6.0
8-bit micrologic
new products 9.1 8.0 8.7 9.4 9.5 9.7
32-bit ARM
products 0.6 0.3 0.1 - - -
Total new
products 9.7 8.3 8.8 9.4 9.5 9.7
8-bit classic
products 7.3 8.4 8.0 9.7 11.2 11.5
Total net
sales $17.0 $16.7 $16.8 $19.1 $20.7 $21.2
Net Sales - by
channel
OEM $7.6 $6.7 $6.9 $8.7 $10.1 $8.6
Distribution 9.4 10.0 9.9 10.4 10.6 12.6
Total net sales $17.0 $16.7 $16.8 $19.1 $20.7 $21.2
Net Sales - by region
America's $5.7 $4.9 $6.7 $8.4 $9.2 $8.3
Asia (including
Japan) 9.0 9.5 7.9 8.0 9.5 10.1
Europe 2.3 2.3 2.2 2.7 2.0 2.8
Total net sales $17.0 $16.7 $16.8 $19.1 $20.7 $21.2
Selected Key Metrics
(as defined in our
Form 10-Q)
Days sales
outstanding 45 43 49 38 38 33
Net sales to
inventory ratio
(annualized) 7.3 7.7 8.2 9.0 8.7 9.9
Weeks of inventory
at distributors 12 12 12 13 13 13
Current ratio 2.0 2.1 2.1 2.1 2.1 1.8
Other Selected
Financial Metrics
Depreciation and
amortization
(excluding
intangibles) $0.7 $0.7 $0.8 $0.8 $0.8 $0.8
Amortization of
fresh-start
intangibles $0.3 $0.3 $0.2 $0.3 $0.3 $0.3
Special charges and
credits $0.6 $0.4 $0.4 $2.2 $0.1 $0.9
Capital
expenditures $- $0.6 $0.3 $0.3 $0.2 $0.9
Cash and cash
equivalents $18.1 $19.9 $19.8 $19.4 $21.0 $26.2
SOURCE Zilog, Inc.
