Revenues for the third quarter were $115.5 million, compared to $102.7 million last quarter and $126.1 million for the third quarter of 2008. The Company reported third quarter GAAP net income of $4.9 million, or $0.09 per diluted share, which compares with a GAAP net loss of $13.8 million, or $0.27 per share, for the previous quarter and a GAAP net loss of $154.2 million, or $3.01 per share, for the third quarter of the prior year. As a reminder, results for the third quarter of 2008 include non-cash charges of $167.6 million for impairment of intangible assets.
Non-GAAP net income for the third quarter was $8.7 million, or $0.17 per diluted share, which excludes $109 thousand of amortization of acquired intangible assets, $3.0 million of stock-based compensation expenses, and $1.2 million related to restructuring expenses in connection with a reduction in force in our APPROACH product line and the closing of our facility in Toronto, Canada, but includes an adjustment of $500 thousand for the tax provision to a non-GAAP rate. This compares with a non-GAAP net loss of $4.3 million, or $0.08 per share, for the previous quarter, and non-GAAP net income of $13.9 million, or $0.27 per diluted share, for the same period last year.
"While continued weakness in global consumer spending persists, Zoran achieved 12 percent sequential revenue growth in the third quarter, reflecting the strength of our leading market positions," said Dr. Levy Gerzberg, Zoran's president and chief executive officer. "Demand for HDTVs remained strong and we continued to gain share in the U.S. market. Growth in digital cameras was strong across all segments and our partnerships with major ODMs in this market continued to benefit Zoran. The DVD market also showed strength as a result of increasing demand for higher margin, value-add DVD products such as HDMI players and portables. As we enter what is typically our seasonally down fourth quarter, we are pleased with the design win activity we are seeing in our end markets, which indicates a strong 2010."
"During the quarter, we discontinued development activity on our APPROACH processors for the multimedia mobile phone market. While we achieved some major successes, including LG's Viewty Camera Phone, we decided that it would be a more efficient use of our resources to explore related market segments, including Camera Phones, with our COACH product line," concluded Dr. Gerzberg.
-- Revenues by product line for the third quarter of 2009 were 39 percent DTV, 30 percent Digital Camera, 15 percent DVD, 12 percent Printer Imaging and 4 percent mobile phone processors -- Zoran's SupraHD® processors power new 1080p high definition Insignia brand flat panel televisions at Best Buy -- Zoran demonstrated latest TV technologies for top-tier CE manufacturers in Japan at CEATEC 2009 -- Zoran announced NDS certification for new STB products and demonstrated new platforms for global Pay-TV market at IBC in Amsterdam -- Zoran's COACH 12-based camera models go to production for holiday selling season -- Zoran addressed "Technology Advances Needed to Enable TV 3.0" on IMS Research panel at Television 3.0 Summit in Beverly Hills -- Zoran delivered "The Evolving TV" presentation at the DisplaySearch TV Ecosystem Conference in San Jose
The following forward-looking statements are based on our current expectations, and actual results may differ materially.
The Company is currently expecting fourth quarter 2009 revenues to range between $91 million and $95 million, with gross margins ranging between 49 and 50 percent. Excluding acquisition related amortization costs and stock-based compensation expense, non-GAAP operating expenses are expected to be in a range of $47.5 million to $48.5 million. Acquisition-related amortization costs are expected to be approximately $108 thousand and stock-based compensation expense is expected to range between $2.9 and $3.2 million. The Company expects to record a fourth quarter GAAP loss in the range of $0.06 to $0.14 per share on approximately 53.7 million shares. On a non-GAAP basis, which excludes acquisition-related amortization costs and stock-based compensation expense, the Company expects a net loss in the range of $0.00 and $0.07 per share.
Zoran will provide more commentary on its third quarter results during the quarterly conference call.
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Zoran provides non-GAAP financial information, consisting of non-GAAP operating expense and non-GAAP net income (loss) and EPS that excludes charges such as impairment of intangible assets, acquisition related in-process research and development expenses, amortization of acquired intangible assets, stock-based compensation expense, restructuring expense, non-recurring IP licensing related settlements and associated income tax adjustments. Non-GAAP results are reconciled to GAAP results on the attached Schedule.
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 items 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.
Quarterly Conference Call
Zoran Corporation has scheduled a conference call for 2:00 p.m. PT today to discuss its third quarter results. To listen to the call, please call 617-896-9871 approximately five minutes prior to the start of the call. For those who are not available to listen to the live conference call, a replay will be available from approximately 4:30 p.m. PT on October 26, until 4:30 p.m. PT on November 1, 2009. The access number for the replay is 617-801-6888, confirmation number 63535089. The conference call will be broadcast live over the Internet and can be accessed by all interested parties through the investor relations section of Zoran's website at www.zoran.com. Please access the website at least fifteen minutes prior to the start of the call to register and to download and install any necessary audio software. This press release will be furnished to the SEC on a Form 8-K and posted to the company's website prior to the conference call.
Zoran Corporation, based in Sunnyvale, California, is a leading provider of digital solutions in the digital entertainment and digital imaging markets. With over two decades of expertise developing and delivering digital signal processing technologies, Zoran has pioneered high-performance digital audio and video, imaging applications and Connect Share Entertain technologies for the digital home. Zoran's proficiency in integration delivers major benefits for OEM customers, including greater capabilities within each product generation, reduced system costs, and shorter time to market. Zoran-based DTV, set-top-box, DVD, digital camera, multimedia mobile phone, and multifunction printer products have received recognition for excellence and are now in hundreds of millions of homes and offices worldwide. With headquarters in the U.S. and additional operations in China, England, France, India, Israel, Japan, Korea, Sweden and Taiwan, Zoran may be contacted on the World Wide Web at www.zoran.com or at 408-523-6500.
This press release includes forward-looking statements, including the chief executive officer quotation and the material presented under "Future Outlook," that reflect the Company's current views with respect to future events and future financial performance. These forward-looking statements are subject to many risks and uncertainties that could cause actual results to differ materially from what is currently expected, including risks associated with: potential declines in the Company's sales as a result of the continuing global economic slowdown that could continue to reduce demand for consumer electronic and other products; continued tightening in global credit markets, which could result in insolvency of key suppliers, customers, or retailers and customer inability to finance purchases of our products; the rapidly evolving markets for the Company's products and uncertainty regarding the pace and direction of development of those markets; the Company's dependence on sales to a limited number of large customers; cost and length of time required for new product development; timing and impact of new product introductions by the Company and its competitors, and of transitions away from older products; intense competition in the Company's markets and in the markets in which its customers operate; the Company's reliance on other parties for wafer supplies, product assembly and testing, and manufacturing capacity; the effects of changes in revenue and product mix on the Company's gross margins; fluctuations in tax rate caused by projections of the geographic sources of Company income; dependence on key personnel; and reliance on international operations, particularly operations in Israel. Further information regarding these and other risks and uncertainties can be found under the caption "Risk Factors" and elsewhere in the Company's most recently filed Annual Report on Form 10-K, Quarterly Report on Form 10-Q, and other filings with the SEC.