Year-Over-Year First Quarter Revenues Grow 59 Percent
Santa Clara, Calif. - April 23, 2002 — Zoran Corporation (Nasdaq NM: ZRAN), 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
- 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)
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.
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.