ZiLOG Announces Second Quarter 2001 Results; Revenues essentially flat over previous quarter; Company posts significant improvement in operational performance as EBITDA approaches break even.Business Editors CAMPBELL Campbell, city, United States Campbell, city (1990 pop. 36,048), Santa Clara co., W Calif., in the fertile Santa Clara valley; founded 1885, inc. 1952. , Calif.--(BUSINESS WIRE)--July 24, 2001 ZiLOG (Zilog, Inc., San Jose, CA, www.zilog.com) A semiconductor manufacturer that was founded in 1974. It was a subsidiary of Exxon from 1980 to 1989 and became a public company in 1991. Zilog's Z80 chip was the CPU in CP/M machines, which helped to create the personal computer industry. Inc. 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 $44.0 million for the second quarter of 2001, as compared to $61.1 million in net sales during the second quarter of 2000 and $44.3 million in the first quarter of 2001. Gross margin for the second quarter of 2001 was 19 percent of net sales, compared to 41 percent in the second quarter of 2000 and 14 percent in the first quarter of 2001. The decline in gross margin during the second quarter of 2001 compared to the same period in 2000 reflects continued 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. 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 $19.7 million during the second quarter of 2001, compared to a $0.6 million operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. reported during the second quarter of 2000. The second quarter of 2001 operating loss includes special charges of $8.1 million comprised of severance-related costs of $4.0 million, fixed asset write-offs of $3.3 million and professional service fees of $0.8 million. These restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). actions resulted in elimination of approximately 200 positions worldwide and are expected to yield annual payroll savings of approximately $7.0 million. In the second quarter of 2000 severance-related special charges totaled $1.2 million. "With our sales essentially flat from Q1 to Q2 of this year, ZiLOG's sequential revenue performance is doing well in relation to the rest of the industry," said Jim Thorburn, Acting Chief Executive Officer of ZiLOG. "We have a strong core business and are demonstrating significant improvement in operations. In addition, we have announced further steps to cut costs - including consolidating our manufacturing and streamlining our worldwide organization - that we expect will result in cash savings of nearly $50 million on an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. basis." The Company ended the second quarter of 2001 with $22.7 million of cash and cash equivalents. 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 $1.5 million for the second quarter of 2001, compared with EBITDA of $12.1 million for the second quarter of 2000 and negative EBITDA of $7.1 million in the first quarter of 2001. 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. During the second quarter of 2001, research and development expenses and selling, general and administrative expenses declined by 21 percent and 10 percent, respectively, compared to the same period in 2000. These declines primarily reflect lower compensation-related expenses associated with reduced headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. and savings from spending reduction initiatives throughout the company. 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. 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 communications and embedded Inserted into. See embedded system. control markets. Headquartered in Campbell, Calif., ZiLOG employs approximately 900 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 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 expected cost savings from our proposed consolidation of our 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. fab operations and the termination of our manufacturers representatives. 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 Recent and Anticipated Operating Results and Risks of Acquisitions, are discussed more fully in the Company's filings with the SEC, including its 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 here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" .
ZiLOG, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands)
Three Months Ended Six Months Ended
-------------------------------------------------
July 1, July 2, July 1, July 2,
2001 2000 (2) 2001 2000 (2)
--------- --------- --------- --------
Net sales $ 43,983 $ 61,143 $ 88,233 $ 116,987
Cost of sales 35,455 35,847 73,626 69,702
--------- --------- --------- ---------
Gross margin 8,528 25,296 14,607 47,285
Research and
development 7,197 9,079 16,282 18,840
Selling, general
and administrative 12,926 14,415 26,483 29,904
Special charges 8,116 1,191 8,116 1,191
--------- --------- --------- ---------
28,239 24,685 50,881 49,935
--------- --------- --------- ---------
Operating income
(loss) (19,711) 611 (36,274) (2,650)
Other income (expense):
Interest income 284 690 808 1,458
Interest expense (7,280) (7,244) (14,607) (14,522)
Other, net 62 20 (194) (296)
--------- --------- --------- ---------
Loss before income taxes,
equity investment and
cumulative effect of
change in accounting
principle (26,645) (5,923) (50,267) (16,010)
Provision for
income taxes 49 133 174 265
--------- --------- --------- ---------
Loss before equity
investment and cumulative
effect of change in
accounting principle (26,694) (6,056) (50,441) (16,275)
Equity in loss of
Qualcore Group, Inc. (430) (297) (739) (297)
--------- --------- --------- ---------
Loss before cumulative
effect of change in
accounting principle (27,124) (6,353) (51,180) (16,572)
Cumulative effect of
change in accounting
principle -- -- -- (8,518)
--------- --------- --------- ---------
Net loss ($ 27,124) ($ 6,353) ($ 51,180) ($ 25,090)
========= ========= ========= =========
EBITDA (3) $ (1,543) $ 12,137 $ (8,608) $ 18,962
========= ========= ========= =========
(2) Results of operations for the 2000 periods have been
retroactively restated for the change in accounting method for revenue
recognition reported in the fourth quarter of 2000.
(3) 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)
July 1, December 31,
2001 2000 (1)
---------- ---------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 22,682 $ 40,726
Accounts receivable, net 19,770 29,378
Inventories 19,095 27,547
Prepaid expenses and
other current assets 5,138 14,005
--------- ---------
Total current assets 66,685 111,656
Net property, plant and equipment 94,598 109,451
Other assets 15,876 18,640
--------- ---------
$ 177,159 $ 239,747
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Accounts payable $ 14,343 $ 17,098
Accrued compensation
and employee benefits 9,900 27,720
Other accrued liabilities 30,691 29,148
Short-term debt 13,000 --
Deferred income on
shipments to distributors 9,488 13,998
--------- ---------
Total current liabilities 77,422 87,964
Notes payable 280,000 280,000
Other noncurrent liabilities 14,444 14,666
Stockholders' deficiency (194,707) (142,883)
--------- ---------
$ 177,159 $ 239,747
========= =========
(1) December 31, 2000 figures are derived from audited financial statements at that date. |
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