SAN JOSE, Calif., May 11 /PRNewswire-FirstCall/ -- Zilog(R), Inc. (Nasdaq: ZILG) a trusted supplier of application specific, embedded system-on-chip (SoC) solutions for industrial and consumer markets, today reported financial results for its three and twelve month fiscal periods ended March 31, 2009.
On February 18, 2009, the company announced the sale of its universal remote control and secured transaction processor businesses to Maxim Integrated Products, Inc. (Maxim) and Universal Electronics Inc. (UEI) for approximately $31 million in cash including $3.1 million held in escrow. As a result, the company's financial statements have been restated to reflect the activities of these businesses prior to its sale as discontinued operations. Additionally, a gain on sale of $21.6 million was recorded.
Net sales for the fiscal fourth quarter were $7.0 million, primarily consisting of microcontroller products. Net sales for the fourth fiscal quarter declined sequentially by 22 percent and were within the previously announced sales guidance range. Fourth quarter fiscal 2009 net sales compared to $10.1 million in net sales for the fourth quarter a year ago, a decline of 31 percent. Fourth quarter sales reflected lower overall demand as a result of the continued global economic slowdown. This, coupled with the traditional seasonal market slow-down, negatively impacted sales both in the consumer and industrial application markets.
GAAP net income for the fourth quarter ended March 31, 2009, was $12.2 million, or 71 cents per share, including the gain on sale. This GAAP net income for the quarter compares to a GAAP net loss in the previous quarter of $5.7 million, or 33 cents per share, and a GAAP net loss of $1.9 million, or 11 cents per share, in the fourth quarter a year ago. The GAAP net income for the 2009 fiscal fourth quarter included special charges of $3.5 million reflecting severance associated with workforce reductions, office closure costs and tangible and intangible asset write-offs. Special charges were $1.7 million in the previous fiscal quarter and $0.5 million in the fourth quarter of fiscal 2008. Additionally, the Q4 fiscal 2009 GAAP net income included a net loss from discontinued operations of $3.8 million, including $3.1 million in charges associated with license write-offs.
'The collapse of global demand in fiscal 2009 was arguably unprecedented and created economic challenges for all. Even in this uninviting environment, we made progress in our ongoing strategic review process with the successful completion of the sale of our universal remote control and secured transaction businesses. This has in essence been a milestone year for us as we completed the right-sizing of the company, improved our financial strength and continued to expand our product portfolio,' said Darin Billerbeck, Zilog's Chief Executive Officer. 'We enter fiscal 2010 financially solid and strategically focused. We are aligned to our traditional core microcontroller business. At the same time, we are excited with our opportunities to leverage our technologies and market knowledge into higher level system solutions. This should position us well as the global economy emerges from the current worldwide recession.'
For the fiscal year ended March 31, 2009, sales were $36.2 million as compared to $44.6 million for the comparable period a year ago. GAAP net income for the fiscal year ended March 31, 2009, was $3.2 million or 19 cents per share as compared to a GAAP net loss of $9.3 million or 55 cents per share for the comparable 2008 fiscal year. The improvement in profitability reflects lower revenue and margins offset by lower overall operating expenses and the gain on sale.
The company expects net sales for its 2010 fiscal first quarter ending June 27, 2009, to be relatively consistent with the fiscal fourth quarter 2009 levels.
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
Mar. 31, Dec. 27, Sep. 27, Jun. 28, Mar. 31,
2009 2008 2008 2008 2008
(in thousands)
Reconciliation of Non-GAAP Net
Loss to GAAP Net Loss
Non-GAAP net loss from
continuing operations ($1,767) ($2,888) ($2,545) ($2,382) ($3,001)
Non-GAAP adjustments:
Special charges and credits 3,479 1,696 554 590 511
Amortization of intangible
assets 174 209 209 209 209
Non-cash stock-based
compensation COS 21 44 30 42 35
Non-cash stock-based
compensation R&D (24) 126 47 72 36
Non-cash stock-based
compensation SG&A 201 297 211 257 (205)
Total non-GAAP adjustments 3,851 2,372 1,051 1,170 586
GAAP Net loss from continuing
operations (5,618) (5,260) (3,596) (3,552) (3,587)
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
Mar. 31, Dec. 27, Sep. 27, Jun. 28, Mar. 31,
2009 2008 2008 2008 2008
(in thousands)
Reconciliation of Net Loss
and Cash Flows From Operating
Activities to EBITDA
Reconciliation of net loss
to EBITDA:
Net loss from continuing
operations ($5,618) ($5,260) ($3,596) ($3,552) ($3,587)
Depreciation and
amortization 626 675 687 645 723
Interest income (4) (24) (49) (70) (155)
Provision for income taxes (2) 67 62 54 78
EBITDA from continuing
operations ($4,998) ($4,542) ($2,896) ($2,923) ($2,941)
Reconciliation of EBITDA to
net cash provided by (used in)
operating activities:
EBITDA ($4,998) ($4,542) ($2,896) ($2,923) ($2,941)
Provision for income
taxes 2 (67) (62) (54) (78)
Interest income (4) (24) (49) (70) (155)
Non-cash stock-based
compensation 198 467 288 371 (134)
Loss on disposition of
operating assets 985 11 - 34 78
Changes in other operating
assets and liabilities (4,295) (716) (706) 4,056 (384)
Net cash provided by (used in)
continuing operating
activities ($8,112) ($4,871) ($3,425) $1,414 ($3,614)
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.
