Zoran Corporation Reports Third Quarter 2009 Results

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                            ZORAN CORPORATION
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  (in thousands, except per share data)
                                (unaudited)




                              Three Months Ended      Nine Months Ended
                                September 30,           September 30,
                            ----------------------- ----------------------
                               2009        2008        2009        2008
                            ----------- ----------  ----------  ----------

Revenues:
   Hardware product
    revenues                $   104,980 $  112,112  $  253,120  $  320,015
   Software and other
    revenues                     10,558     14,022      33,627      43,835
                            ----------- ----------  ----------  ----------
      Total revenues            115,538    126,134     286,747     363,850

Costs and expenses:
   Cost of hardware product
    revenues                     59,844     66,446     150,154     192,595
   Research and development      27,013     28,922      83,494      87,606
   Selling, general and
    administrative               23,100     23,653      84,247      73,552
   Amortization of
    intangibles                     109      4,494         327      22,987
   Restructuring expense          1,194          -       2,053           -
   Impairment of intangible
    assets                            -    167,579           -     167,579
   In-process research and
    development                       -          -           -      22,383
                            ----------- ----------  ----------  ----------
      Total costs and
       expenses                 111,260    291,094     320,275     566,702

Operating income (loss)           4,278   (164,960)    (33,528)   (202,852)

Interest and other income,
 net                              1,748      3,020       7,383       9,664
                            ----------- ----------  ----------  ----------
Income (loss) before income
 taxes                            6,026   (161,940)    (26,145)   (193,188)

Provision (benefit) for
 income taxes                     1,150     (7,720)      3,890       2,330
                            ----------- ----------  ----------  ----------
Net income (loss)           $     4,876 $ (154,220) $  (30,035) $ (195,518)
                            =========== ==========  ==========  ==========

Basic net income (loss) per
 share                      $      0.09 $    (3.01) $    (0.58) $    (3.80)
                            =========== ==========  ==========  ==========
Diluted net income (loss)
 per share                  $      0.09 $    (3.01) $    (0.58) $    (3.80)
                            =========== ==========  ==========  ==========

Shares used to compute
 basic net income (loss)
 per share                       51,684     51,231      51,451      51,464
                            =========== ==========  ==========  ==========
Shares used to compute
 diluted net income (loss)
 per share                       52,320     51,231      51,451      51,464
                            ===========  ==========    ==========    ==========





                                                        ZORAN  CORPORATION
                                NON-GAAP  ADJUSTMENTS  TO  NET  INCOME  (LOSS)
                                    (in  thousands,  except  per  share  data)
                                                                (unaudited)




                                          Three  Months  Ended                      Nine  Months  Ended
                                              September  30,                                September  30,
                                  -------------------------        -------------------------
                                        2009                      2008                    2009                      2008
                                  ----------        -----------        ----------        -----------

GAAP  net  income
  (loss)                        $  4,876          $    (154,220)      $    (30,035)      $    (195,518)

Adjusting  items
  to  GAAP  net
  income  (loss):

    Operating
      expenses
      related  to
      stock  based
      compensation
      expense                        3,029  (a)            3,405  (a)          9,061  (a)            9,989  (a)
    Operating
      expenses
      related  to  IP
      licensing
      related
      settlements                        -                            -                11,000  (b)                    -
    Amortization
      of
      intangibles                    109  (c)            4,494  (c)              327  (c)          22,987  (c)
    Restructuring
      expense                        1,194  (d)                    -                  2,053  (d)                    -
    Impairment  of
      intangible
      assets                                  -                167,579  (e)                  -                167,579  (e)
    In-process
      research  and
      development
      expense                                -                            -                          -                  22,383  (f)
    Provision  for
      income  taxes                (500)(g)          (7,390)(g)        (5,660)(g)          (8,530)(g)
                                  ----------        -----------        ----------        -----------

Non-GAAP  net
  income  (loss)      $        8,708  (h)$        13,868  (h)$    (13,254)(h)$        18,890  (h)
                                  ==========        ===========        ==========        ===========

Non-GAAP  basic
  net  income
  (loss)  per
  share                      $          0.17  (h)$            0.27  (h)$        (0.26)(h)$            0.37  (h)
                                  ==========        ===========        ==========        ===========
Non-GAAP  diluted
  net  income
  (loss)  per
  share                      $          0.17  (h)$            0.27  (h)$        (0.26)(h)$            0.36  (h)
                                  ==========        ===========        ==========        ===========

Shares  used  to
  compute
  non-GAAP  basic
  net  income
  (loss)  per
  share                              51,684                  51,231                51,451                  51,464
                                  ==========        ===========        ==========        ===========
Shares  used  to
  compute
  non-GAAP
  diluted  net
  income  (loss)
  per  share                      52,752                  51,321                51,451                  51,795
                                  ==========        ===========        ==========        ===========


(a)  This  adjustment  reflects  the  stock-based  compensation  expense  recorded
under  ASC  Topic  718-10.    The  Company  excludes  this  item  when  it  evaluates
the  continuing  operational  performance  of  the  Company  as  management
believes  this  GAAP  measure  is  not  indicative  of  its  core  operating
performance.    (see  (h)  below)

(b)  This  adjustment  reflects  a  non-recurring  expense  recorded  during  the
quarter  ended  June  30,  2009  as  a  result  of  IP  licensing  related
settlements.    The  Company  excludes  this  item  when  it  evaluates  the
continuing  operational  performance  of  the  Company  as  management  believes
this  GAAP  measure  is  not  indicative  of  its  core  operating  performance.
(see  (h)  below)

(c)  For  2008,  this  adjustment  represents  the  amortization  of  intangibles
assets  primarily  associated  with  the  acquisition  of  Oak  Technology,  Inc.  in
August  2003,  the  acquisition  of  Emblaze  Semiconductor  in  July  2004  and  the
acquisition  of  Oren  Semiconductor  in  June  2005.    For  2009,  this  adjustment
represents  the  amortization  of  intangible  assets  associated  with  the
acquisition  of  Let  It  Wave,  Inc.  in  June  2008.    Such  amortization  expense
does  not  impact  the  Company's  cash  flows  and  is  excluded  by  management  when
evaluating  our  core  operating  results.    (see  (h)  below)

(d)  This  adjustment  reflects  the  restructuring  expense  recorded  by  the
Company  as  part  of  closing  its  facility  in  Netanya,  Israel  during  the
quarter  ended  March  31,  2009  and  the  restructuring  of  its  Mobile  division
and  closing  of  its  Toronto  facility  during  the  quarter  ended  September  30,
2009.    The  Company  excludes  these  items  when  it  evaluates  the  continuing
operational  performance  of  the  Company  as  management  believes  this  GAAP
measure  is  not  indicative  of  its  core  operating  performance.    (see  (h)
below)

(e)  This  adjustment  represents  the  impairment  of  acquisition  related  to
goodwill  and  intangible  assets  recorded  by  the  Company  as  part  of  the
annual  analysis  under  ASC  Topic  350-20  and  ASC  Topic  360-10.    The
impairment  of  goodwill  and  intangible  assets  does  not  impact  the  Company's
ongoing  cash  flows  and  is  excluded  by  management  when  evaluating  our  core
operating  results.  (see  (h)  below)

(f)  This  adjustment  reflects  the  in  process  research  and  development  charge
recorded  by  the  Company  as  part  of  the  acquisition  of  Let  It  Wave  in  June
2008.    This  in  process  research  and  development  charge  does  not  impact  the
Company's  ongoing  cash  flows  and  is  excluded  by  management  when  evaluating
our  core  operating  results.  (see  (h)  below)

(g)  This  adjustment  represents  the  difference  between  the  non-GAAP  income
tax  rate  and  the  GAAP  income  tax  rate.  This  adjustment  is  made  by  the
Company  when  it  evaluates  its  continuing  operational  performance.    (see  (h)
below)

(h)  The  Company  believes  that  its  non-GAAP  financial  information  provides
useful  information  to  management  and  investors  regarding  financial  and
business  trends  relating  to  its  financial  condition  and  results  of
operations  because  it  excludes  charges  that  management  considers  to  be
outside  of  the  Company's  core  operating  results.  The  Company  believes  that
this  non-GAAP  net  income  (loss),  in  combination  with  the  Company's
financial  results  calculated  in  accordance  with  GAAP,  provides  investors
with  additional  perspective  and  a  more  meaningful  understanding  of  the
Company's  ongoing  operating  performance.  In  addition,  the  Company's
management  uses  these  non-GAAP  measures  to  review  and  assess  the  financial
performance  of  the  Company,  to  determine  executive  officer  incentive
compensation  and  to  plan  and  forecast  performance  in  future  periods.  The
Company's  non-GAAP  net  income  (loss)  is  not  prepared  in  accordance  with
GAAP,  is  not  an  alternative  to  GAAP  financial  information,  and  may  be
calculated  differently  than  non-GAAP  financial  information  disclosed  by
other  companies.





                                                        ZORAN  CORPORATION
                                    CONDENSED  CONSOLIDATED  BALANCE  SHEETS
                                                            (in  thousands)
                                                                (unaudited)




                                                                                        September  30,        December  31,
                                                                                                  2009                        2008
                                                                                        --------------    --------------

ASSETS

      Current  assets:
                  Cash  and  short-term  investments        $            397,972    $            358,527
                  Accounts  receivable,  net                                      31,808                    22,845
                  Inventory                                                                    31,073                    37,365
                  Prepaid  expenses  and  other  current
                    assets                                                                        18,915                    25,549
                                                                                        --------------    --------------
                        Total  current  assets                                      479,768                  444,286

      Property  and  equipment,  net                                            12,286                    15,811
      Long-term  investments                                                                  -                    37,425
      Other  assets                                                                          70,111                    69,659
      Intangible  assets,  net                                                        4,939                      5,266
                                                                                        --------------    --------------

                  Total  assets                                              $            567,104    $            572,447
                                                                                        ==============    ==============



LIABILITIES  AND  STOCKHOLDERS'  EQUITY

      Current  liabilities:
                  Accounts  payable                                      $              32,742    $              29,918
                  Accrued  expenses  and  other
                    liabilities                                                              38,216                    36,134
                                                                                        --------------    --------------
                        Total  current  liabilities                              70,958                    66,052

      Long-term  liabilities                                                        28,863                    26,985

      Stockholders'  equity:
                  Common  stock                                                                      52                            51
                  Additional  paid-in  capital                                871,246                  858,429
                  Accumulated  other  comprehensive
                    income  (loss)                                                            2,618                    (2,472)
                  Accumulated  deficit                                            (406,633)              (376,598)
                                                                                        --------------    --------------
                        Total  stockholders'  equity                          467,283                  479,410

                  Total  liabilities  and
                    stockholders'  equity                            $            567,104    $            572,447
                                                                                        ==============    ==============

 




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