ZiLOG Announces First Quarter 2001 Results.Business Editors CAMPBELL, Calif.--(BUSINESS WIRE)--April 26, 2001 ZiLOG Inc., the Extreme Connectivity company, today reported net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of $44.3 million for the first quarter of 2001, as compared to $55.8 million in net sales during the first quarter of 2000. During the fourth quarter of 2000, ZiLOG changed its method of accounting for revenue recognition on sales to distributors. Under the new accounting method, ZiLOG reports net sales only after its distributors resell re·sell tr.v. re·sold , re·sell·ing, re·sells 1. To sell again. 2. To sell (a product or service) to the public or to an end user, especially as an authorized dealer. products to end customers. The accounting change was retroactively ret·ro·ac·tive adj. Influencing or applying to a period prior to enactment: a retroactive pay increase. [French rétroactif, from Latin applied with an effective date of January 1, 2000 and all figures in this press release are presented on the new accounting method. Gross margin for the first quarter of 2001 was 14 percent of net sales, compared to 39 percent in the first quarter of 2000. The decline in gross margin during the first quarter of 2001 reflects significant under-absorption of fixed manufacturing costs in ZiLOG's wafer fabrication Wafer Fabrication is a procedure composed of many repeated sequential processes to produce complete electrical or photonic circuits. Examples include production of radio frequency (RF) amplifiers, LEDs, optical computer components, and CPUs for computers. facilities. "Given current market conditions, we continue to closely monitor wafer (1) A small, thin continuous-loop magnetic tape cartridge that has been used from time to time for data storage and specialized applications. (2) The base unit of chip making. It is a slice taken from a salami-like silicon crystal ingot up to 12" (300mm) in diameter. starts and inventory levels," said Jim Thorburn, acting chief executive officer of ZiLOG. "We are also considering a number of actions to further reduce our manufacturing cost structure." Overall, ZiLOG reported an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $16.6 million during the first quarter of 2001, compared to a $3.3 million operating loss reported during the first quarter of 2000. "Last week, we took additional action to realign re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. the Company's cost structure in light of current market conditions," Thorburn said. "This action resulted in the elimination of approximately 100 positions within the company." The Company ended the first quarter of 2001 with $26.9 million of cash and cash equivalents. During the first quarter of 2001, ZiLOG made a $13.3 million payment for semi-annual interest on its notes payable and a $10.3 million payment to former ZiLOG chairman, president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Curtis Crawford Curtis J. Crawford has been a director of DuPont since 1998. Dr. Crawford is President and Chief Executive Officer of XCEO, Inc., a consulting firm specializing in leadership and corporate governance. for a previously accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. contractual compensation arrangement. In addition, the Company borrowed $13.0 million under its revolving line of credit Revolving line of credit A bank line of credit on which the customer pays a commitment fee and can take and repay funds at will. Normally a revolving LOC involves a firm commitment from the bank for a period of several years. during the first quarter of 2001. ZiLOG reported negative EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become of $7.1 million for the first quarter of 2001, compared with EBITDA of $6.8 million reported for the first quarter of 2000. EBITDA represents Earnings Before Interest, Taxes, Depreciation, Amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. , equity in loss of Qualcore, non-cash stock compensation expenses, special charges and cumulative effect of change in accounting principle. EBITDA as presented by ZiLOG may not be comparable to similarly titled measures reported by other companies. Selling, general and administrative expenses declined to $13.6 million in the first quarter of 2001 from $15.5 million in the first quarter of 2000 primarily as a result of lower payroll-related expenses. About ZiLOG Inc. ZiLOG, (formerly ZLG ZLG Zentralstelle der Länder für Gesundheitsschutz bei Arzneimitteln Und Medizinprodukten (Federal Republic of Germany) ZLG Zero-Lock Gyro on the NYSE NYSE See: New York Stock Exchange ) the Extreme Connectivity Company, designs, manufactures and markets semiconductor micro-logic devices for the growing communications and embedded Inserted into. See embedded system. control markets. Headquartered in Campbell, Calif., ZiLOG employs approximately 1,000 people worldwide. ZiLOG maintains design centers in Campbell; Austin, Texas; Ft. Worth, Texas; Nampa, Idaho Nampa (IPA: [næm pə]) is the largest city in Canyon County, Idaho, United States, and the second largest in the state. Only the capital city, Boise, is larger. ; Seattle, Wash.; and Bangalore, India, a worldwide customer service center in Austin, advanced manufacturing in Nampa and test operations in Manila Manila (mənĭl`ə), city (1990 pop. 1,601,234), capital of the Philippines, SW Luzon, on Manila Bay. Manila is the center of the country's largest metropolitan area, its chief port, and the focus of all governmental, commercial, industrial, , Philippines. www.zilog.com Note to Editors: ZiLOG is a registered trademark of ZiLOG, Inc. in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and in other countries. "Extreme Connectivity Copyright ZiLOG 2000." All other product and or service names mentioned herein may be trademarks of the companies with which they are associated. Some statements contained in this press release which are not historical facts may be forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , including statements with respect to inventory levels and wafer starts and actions to further reduce our manufacturing cost structure. These statements are subject to risks and uncertainties that could cause ZiLOG's actual results and financial position to differ materially. Certain of these risks, including Implementation of Cost Cutting Measures, and Dependence On Key Personnel, are discussed more fully in the Company's filings with the SEC, including its Registration Statement on Form S-4, Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and Quarterly Reports on form 10-Q Form 10-Q See 10-Q. . Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.
ZiLOG, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands)
Three Months Ended
April 1, April 2,
2001 2000
---------- ----------
Net sales $ 44,250 $ 55,844
Cost of sales 38,171 33,855
---------- ----------
Gross margin 6,079 21,989
Research and development 9,085 9,761
Selling, general and
administrative 13,557 15,489
---------- ----------
22,642 25,250
---------- ----------
Operating loss (16,563) (3,261)
Other income (expense):
Interest income 524 768
Interest expense (7,327) (7,278)
Other, net (256) (316)
---------- ----------
Loss before income taxes, equity
investment and cumulative effect
of change in accounting principle (23,622) (10,087)
Provision (benefit)for income
taxes 125 132
---------- ----------
Loss before equity investment and
cumulative effect of change in
accounting principle (23,747) (10,219)
Equity in loss of Qualcore
group, Inc. (309) -
---------- ----------
Loss before cumulative effect of
change in accounting principle (24,056) (10,219)
Cumulative effect of change
in accounting principle - (8,518)
---------- ----------
Net loss $ (24,056) $ (18,737)
========== ===========
EBITDA $ (7,065) $ 6,825
========== ===========
EBITDA represents earnings (losses) before interest, income taxes,
depreciation, amortization of intangible assets, non-cash stock
compensation expenses, equity in loss of Qualcore, cumulative effect
of change in accounting principle and special charges.
ZiLOG, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
April 1, December 31,
2001 2000/a
---------------- -----------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 26,944 $ 40,726
Accounts receivable, net 22,347 29,378
Inventory 22,520 27,547
Prepaid expenses and other
current assets 12,270 14,005
---------- ----------
Total current assets 84,081 111,656
Net property, plant and
equipment 103,482 109,451
Other assets 17,424 18,640
---------- ----------
$ 204,987 $ 239,747
========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Accounts payable $ 16,235 $ 17,098
Accrued compensation and
employee benefits 14,587 27,720
Other accrued liabilities 22,975 29,148
Short-term debt 13,000 -
Deferred income on shipments
to distributors 11,718 13,998
---------- ----------
Total current liabilities 78,515 87,964
Notes payable 280,000 280,000
Other noncurrent liabilities 14,570 14,666
Stockholders' deficiency (168,098) (142,883)
---------- ----------
$ 204,987 $ 239,747
========== ===========
/a December 31, 2000 figures are derived from audited financial
statements at that date.
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