In an unusually generous "golden parachute" deal, Zilog Inc. made a $10.3 million payment to former Zilog chairman, president and CEO Curtis Crawford in the first quarter under a contractual compensation arrangement.
The payment came in a quarter in which the company reported an operating loss of $16.6 million, and borrowed $13 million under its revolving line of credit.
Crawford in January announced he was stepping down as CEO of the troubled company, but would remain as chairman to help guide Zilog's strategic direction. But shortly after, he also resigned that position for reasons that were never made public.
Zilog today reported net sales 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.
Overall, Zilog reported an operating loss 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.
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 facilities.
"Given current market conditions, we continue to closely monitor wafer starts and inventory levels," said Jim Thorburn, acting chief executive officer, in a prepared statement. "We are also considering a number of actions to further reduce our manufacturing cost structure."
"Last week, we took additional action to realign 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, in addition to the $10.3 million payment to Crawford.
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.