ZLOG 
By
Sales for the three month and six month periods ended
The GAAP net loss for the three month period ended
"We were pleased with the growth in sales for the quarter which follows
the previous quarter's positive growth trend led by our new products. Our
product development investments have been focused on these new product
portfolios and we are now starting to see positive results from these
efforts," said
"The global financial crisis and growing recessionary concerns are creating significant difficulties in the semiconductor industry," said Billerbeck. "The current uncertainty in the market has disrupted new order patterns by customers, especially in the consumer related markets. Estimating near term demand levels in this current environment is difficult. As such we have implemented aggressive expense and inventory management programs to reduce our costs and manage our cash flow. These programs include but are not limited to work place temporary shutdowns, discretionary and travel spending reductions along with aligning our product inventory purchases to our expected demand. Currently we expect sales for the December, 2008 quarter will decline sequentially by as much as 16 to 23 percent."
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.
Three Months Ended
Sept. 27, June 28, March 31, Dec. 29, Sept. 29,
2008 2008 2008 2007 2007
(in millions)
Reconciliation of Non-GAAP
Net Loss to GAAP Net Loss
Non-GAAP net loss ($0.5) ($0.5) ($1.3) ($1.4) ($0.8)
Non-GAAP adjustments:
Special charges and
credits 0.5 0.6 0.5 0.6 0.4
Amortization of
intangible assets 0.2 0.2 0.2 0.3 0.3
Non-cash stock-based
compensation COS 0.1 - - - -
Non-cash stock-based
compensation R&D 0.1 0.1 0.1 0.1 0.1
Non-cash stock-based
compensation SG&A 0.2 0.3 (0.2) - 0.3
Total non-GAAP
adjustments 1.1 1.2 0.6 1.0 1.1
GAAP Net loss ($1.6) ($1.7) ($1.9) ($2.4) ($1.9)
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.
Three Months Ended
Reconciliation of Net Loss and Sept. June March Dec. Sept.
Cash Flows From Operating 27, 28, 31, 29, 29,
Activities to EBITDA 2008 2008 2008 2007 2007
(in millions)
Reconciliation of net loss
to EBITDA:
Net loss ($1.6) ($1.7) ($1.9) ($2.4) ($1.9)
Depreciation and
amortization 1.1 1.1 0.9 1.0 1.0
Interest income - (0.1) (0.1) (0.2) (0.2)
Provision for income taxes 0.1 0.1 0.1 0.6 0.1
EBITDA ($0.4) ($0.6) ($1.0) ($1.0) ($1.0)
Reconciliation of EBITDA to net
cash provided by (used in)
operating activities:
EBITDA ($0.4) ($0.6) ($1.0) ($1.0) ($1.0)
Provision for income
taxes (0.1) (0.1) (0.1) (0.6) (0.1)
Interest income - 0.1 0.1 0.2 0.2
Non-cash stock-based
compensation 0.4 0.4 (0.1) 0.1 0.4
Loss on disposition of
operating assets - - 0.1 - 0.1
Changes in other
operating assets and
liabilities (0.5) 0.6 3.0 (0.6) 1.3
Net cash provided by (used
in) operating activities ($0.6) $0.4 $2.0 ($1.9) $0.9
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.
Three Months Ended
Reconciliation of Net Loss and Sept. June March Dec. Sept.
Cash Flows From Operating 27, 28, 31, 29, 29,
Activities to Adjusted EBITDA 2008 2008 2008 2007 2007
(in millions)
Reconciliation of net loss
to Adjusted EBITDA:
Net loss ($1.6) ($1.7) ($1.9) ($2.4) ($1.9)
Depreciation and
amortization 1.1 1.1 0.9 1.0 1.0
Interest income - (0.1) (0.1) (0.2) (0.2)
Provision for income
taxes 0.1 0.1 0.1 0.6 0.1
Special charges and
credits 0.5 0.6 0.5 0.6 0.4
Non-cash stock-based
compensation 0.4 0.4 (0.1) 0.1 0.4
Adjusted EBITDA $0.5 $0.4 ($0.6) ($0.3) ($0.2)
Reconciliation of Adjusted
EBITDA to net cash provided
by (used in) operating
activities:
Adjusted EBITDA $0.5 $0.4 ($0.6) ($0.3) ($0.2)
Special charges
and credits (0.5) (0.6) (0.5) (0.6) (0.4)
Provision for
income taxes (0.1) (0.1) (0.1) (0.6) (0.1)
Interest income - 0.1 0.1 0.2 0.2
Loss on
disposition of
operating assets - - 0.1 - 0.1
Changes in other
operating assets
and liabilities (0.5) 0.6 3.0 (0.6) 1.3
Net cash provided by
(used in) operating
activities ($0.6) $0.4 $2.0 ($1.9) $0.9
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 provided by (used in) 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
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
Design wins are defined as the projected one-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 and percentages)
Three Months Ended Six Months Ended
Sept. 27, Sept. 29, Sept. 27, Sept. 29,
2008 2007 2008 2007
Net sales $19.0 $16.7 $37.2 $33.5
Cost of sales 10.2 9.0 19.8 18.4
Gross margin 8.8 7.7 17.4 15.1
Gross margin % 46% 46% 47% 45%
Operating expenses:
Research and development 4.0 3.9 7.9 8.4
Selling, general and
administrative 5.9 5.1 11.6 10.1
Special charges and credits 0.5 0.4 1.1 0.9
Amortization of intangible
assets 0.2 0.3 0.4 0.5
Total operating expenses 10.6 9.7 21.0 19.9
Operating loss (1) (1.8) (2.0) (3.6) (4.8)
Other income :
Other income (expense) 0.3 - 0.4 (0.1)
Interest income - 0.2 0.1 0.5
Loss before provision for
income taxes (1.5) (1.8) (3.1) (4.4)
Provision for income taxes 0.1 0.1 0.2 0.6
Net loss $(1.6) $(1.9) $(3.3) $(5.0)
Basic and diluted net loss
per share $(0.09) $(0.11) $(0.19) $(0.30)
Weighted-average shares used
in computing basic and
diluted net loss per share 17.0 16.9 16.9 16.9
(1) Includes FAS 123R and
incentive stock-based
compensation charges as
follows:
Cost of sales $0.1 $- $0.1 $0.1
Research and
development 0.1 0.1 0.2 0.2
Selling, general
and administrative 0.2 0.3 0.5 0.5
Total stock-based
compensation
included in
operating loss $0.4 $0.4 $0.8 $0.8
Zilog, Inc.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
Sept. 27, March 31,
2008 2008
ASSETS
Current assets:
Cash and cash equivalents $16.9 $16.6
Accounts receivable, net 7.3 6.8
Inventories 7.6 8.4
Deferred tax asset 0.3 0.3
Prepaid expenses and
other current assets 1.6 1.7
Total current assets 33.7 33.8
Long term investments 1.4 1.9
Property, plant and
equipment, net 7.7 6.6
Goodwill 2.2 2.2
Intangible assets, net 2.1 2.5
Other assets 0.9 0.8
Total assets $48.0 $47.8
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short term debt $1.0 $0.7
Accounts payable 8.3 7.3
Other short-term
liabilities, license
agreements 1.2 0.5
Income taxes payable 0.2 0.5
Accrued compensation and
employee benefits 3.4 2.4
Other accrued liabilities 2.2 2.1
Deferred income on
shipments to
distributors 5.0 5.9
Total current
liabilities 21.3 19.4
Deferred tax liability 0.3 0.3
Other long-term liabilities,
license agreements 1.6 0.6
Other non-current tax
liabilities 0.7 0.7
Total liabilities 23.9 21.0
Stockholders' equity:
Common stock 0.2 0.2
Additional paid-in
capital 126.4 125.8
Treasury stock (7.5) (7.5)
Other comprehensive
income 0.1 0.1
Accumulated deficit (95.1) (91.8)
Total stockholders'
equity 24.1 26.8
Total liabilities and
stockholders' equity $48.0 $47.8
Zilog, Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Three Months Ended Six Months Ended
Sept. 27, Sept. 29, Sept. 27, Sept. 29,
2008 2007 2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1.6) $(1.9) $(3.3) $(5.0)
Adjustments to reconcile net
loss to net cash provided by
(used in) operating activities:
Depreciation and
amortization 0.9 0.7 1.7 1.5
Disposition of operating
assets - 0.1 - 0.2
Non-cash stock-based
compensation 0.4 0.4 0.8 0.8
Amortization of fresh-start
intangible assets 0.2 0.3 0.4 0.5
Changes in operating assets and
liabilities:
Accounts receivable, net 0.2 1.2 (0.4) 0.1
Inventories 1.1 (0.4) 0.8 (0.1)
Prepaid expenses and other
current and non-current
assets - 0.5 (0.1) 1.4
Accounts payable (0.6) 1.0 1.0 0.8
Accrued compensation and
employee benefits (0.1) (0.1) 0.6 (0.4)
Deferred income on shipments
to distributors (0.4) (0.1) (0.9) (0.5)
Accrued and other current
and non-current liabilities (0.7) (0.8) (0.8) (1.1)
Net cash provided by
(used in) operating
activities (0.6) 0.9 (0.2) (1.8)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Disposal of assets held for
sale - MOD II property - - - 3.2
Redemption of long term
investments 0.1 - 0.5 -
Capital expenditures (0.1) (0.6) (0.4) (0.9)
Net cash provided by
(used in) investing
activities - (0.6) 0.1 2.3
CASH FLOWS FROM FINANCING
ACTIVITIES:
Short term debt (0.3) - 0.3
Repurchase of restricted
shares (0.3) - (0.3)
Proceeds from issuance of
common stock under
employee stock purchase
and stock option plans - 0.1 0.1 0.3
Net cash provided by
(used in) financing
activities (0.3) (0.2) 0.4 -
Increase (decrease) in cash and
cash equivalents (0.9) 0.1 0.3 0.5
Cash and cash equivalents at
beginning of period 17.8 19.8 16.6 19.4
Cash and cash equivalents at end
of period $16.9 $19.9 $16.9 $19.9
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:
Purchase of a development
license through a long term
payment arrangement $- $- $2.4 $-
Zilog, Inc.
SELECTED UNAUDITED TRENDED FINANCIAL INFORMATION
(Amounts in millions except percentages, selected key metrics and
per share amounts)
Three Months Ended
Sept. 27, June 28, Mar. 31, Dec. 29, Sept. 29,
2008 2008 2008 2007 2007
Sales & Expenses Information:
Net sales $19.0 $18.2 $16.7 $17.0 $16.7
Cost of sales 10.2 9.6 9.0 9.0 9.0
Gross margin 8.8 8.6 7.7 8.0 7.7
Gross margin % 46% 47% 46% 47% 46%
Operating expenses:
Research and development 4.0 3.9 3.9 4.1 3.9
Selling, general and
administrative 5.9 5.7 4.9 4.9 5.1
Special charges and
credits 0.5 0.6 0.5 0.6 0.4
Amortization of
intangible assets 0.2 0.2 0.2 0.3 0.3
Total operating
expenses 10.6 10.4 9.5 9.9 9.7
Operating loss (1.8) (1.8) (1.8) (1.9) (2.0)
Interest income - 0.1 0.1 0.2 0.2
Other income (expense) 0.3 0.1 (0.1) (0.1) -
Loss before provision for
income taxes (1.5) (1.6) (1.8) (1.8) (1.8)
Provision for income taxes 0.1 0.1 0.1 0.6 0.1
Net loss ($1.6) ($1.7) ($1.9) ($2.4) ($1.9)
Weighted average basic and
diluted shares 17.0 16.9 16.9 16.9 16.9
Basic and diluted net loss
per share ($0.09) ($0.10) ($0.11) ($0.14) ($0.11)
Net Sales Information:
Net Sales - by type
New products (1) $12.0 $11.1 $9.1 $9.8 $8.3
8-bit classic products 7.0 7.1 7.6 7.2 8.4
Total net sales $19.0 $18.2 $16.7 $17.0 $16.7
(1) New products include 32-bit
Zatara, universal remote
control solutions and 8-bit
embedded flash microcontrollers
Net Sales - by channel
Direct $9.4 $9.1 $8.1 $7.6 $6.7
Distribution 9.6 9.1 8.6 9.4 10.0
Total net sales $19.0 $18.2 $16.7 $17.0 $16.7
Net Sales - by region
America's $6.1 $5.7 $6.0 $5.7 $4.9
Asia (including Japan) 10.6 9.6 8.3 9.0 9.5
Europe 2.3 2.9 2.4 2.3 2.3
Total net sales $19.0 $18.2 $16.7 $17.0 $16.7
Selected Key Metrics (as
defined in our Form 10-Q
and 10-K)
Days sales outstanding 34 37 37 45 43
Net sales to inventory ratio
(annualized) 10.0 8.4 8.0 7.3 7.7
Weeks of inventory at
distributors 10 11 12 12 12
Current ratio 1.6 1.5 1.7 2.0 2.1
Other Selected Financial Metrics
Depreciation and amortization
(excluding intangibles) $0.9 $0.9 $0.7 $0.7 $0.7
Amortization of fresh-start
intangibles $0.2 $0.2 $0.2 $0.3 $0.3
Stock based compensation $0.4 $0.4 ($0.1) $0.1 $0.4
Capital expenditures $0.1 $0.3 $2.4 $0.0 $0.6
Cash and cash equivalents $16.9 $17.8 $16.6 $18.1 $19.9
Long term investments $1.4 $1.5 $1.9 - -
Cash and long term
investments $18.3 $19.3 $18.5 $18.1 $19.9
Short term debt $1.0 $1.4 $0.7 - -
SOURCE Zilog, Inc.
