Zoran Corporation Reports Record Results for the Fourth Quarter and Year End 2007

Company achieves records in revenues, profits, and units shipped for 2007

SUNNYVALE, Calif. — Zoran Corporation (Nasdaq GS: ZRAN), a leading provider of digital solutions for applications in the growing digital entertainment and digital imaging markets, today reported results for its fourth quarter and year ended December 31, 2007.

Revenues for the fourth quarter were $129.4 million, compared to $146.4 million last quarter and $96.3 million in the fourth quarter of 2006. The Company reported fourth quarter GAAP net income of $58.7 million, or $1.11 per diluted share, which includes a tax benefit of $56.2 million, as well as charges of $9.2 million for amortization of acquired intangible assets and $3.5 million for stock-based compensation expense. This compares with GAAP net income of $13.1 million, or $0.26 per diluted share, for the previous quarter and GAAP net loss of $11.0 million, or $0.22 per share, for the fourth quarter last year.

Non-GAAP net income for the fourth quarter was $18.1 million, or $0.34 per diluted share. This compares with non-GAAP net income of $26.4 million, or $0.51 per diluted share, for the previous quarter, and $4.7 million, or $0.09 per diluted share, for the fourth quarter last year. On a non-GAAP basis, the Company adjusted its annual tax rate in the fourth quarter from 10.7 percent to 4.7 percent resulting in a net tax benefit of $2.9 million. For all periods, non-GAAP net income excludes charges related to the amortization of acquired intangible assets, stock-based compensation expense, and the one-time tax benefit.

Revenues for the full year 2007 increased $11.6 million to $507.4 million, up from $495.8 million for 2006. Revenues for 2006 include $35.8 million pursuant to the settlement of litigation reached in the first quarter.

GAAP net income for 2007 increased $49.9 million to $66.2 million, or $1.29 per diluted share, up from $16.3 million or $0.33 per share for the full year 2006. Non-GAAP net income for 2007 was $70.9 million, or $1.37 per diluted share. This compares with non-GAAP net income of $52.1 million, or $1.03 per diluted share for 2006.

“2007 was a record year for Zoran in revenues, profits and units shipped,” said Dr. Levy Gerzberg, Zoran’s president and chief executive officer. “We achieved record revenues in our digital camera and Imaging product lines and saw increases in share across all of our core markets: DTV, DVD, digital cameras and Imaging. As we look to 2008, we expect to grow revenues and profits driven primarily by strength in our DTV and mobile phone product lines, as well as increases in our share in all of our target markets.”

2007 and Recent Highlights

• Revenues by product line for the fourth quarter of 2007 were 32 percent Digital Camera, 27 percent DVD, 19 percent Printer Imaging, 17 percent DTV, and 5 percent other.
• Zoran’s COACH digital camera processor, with revolutionary image processing DLSR-grade performance and high definition video recording capabilities, powers hundreds of new digital camera models from top tier brands and captures 33 percent market share.
• Zoran’s APPROACH® multimedia processor powers LG’s new Viewty 5 megapixel camera phone.
• Zoran announced multiple high definition digital television technologies for manufacturers delivering products that meet standards for worldwide markets across Europe, Japan and North America. DTV brands include Best Buy’s Insignia, Costco’s Scepter, Haier, Magnavox, Orion, Sanyo, TPV, and Xoceco among others including models sold at K-Mart, WalMart and other major retail stores.
• Zoran announced multiple new set-top box technologies for manufacturers delivering products that support the regional standards from ATSC in the U.S. to ARIB in Japan and Digital Video Broadcast-Terrestrial (DVB-T) in Europe and the multiple emerging standards in China, India and other countries. STB brands include Alba, DVN, Grundig, Homecast, Metronic, Siemens, Strong, Thomson, Xoceco and others.
• Zoran-based NTIA-certified DTV converter boxes, designed to meet Energy Star requirements, include models from AMTC, AccessHD, Apex Digital, MicroGEM, RCA, Tivax and others.
• Zoran announced and demonstrated new VaddisHD high definition multimedia platform for Blu-Ray and HD-DVD players.
• Zoran based DVD player, recorder and combo products continued to penetrate emerging markets such as the growing automobile entertainment systems and digital picture frame segments as well as emerging regions in India, Russia, South America, and Eastern Europe.
• Zoran’s latest printer imaging software product, supporting Microsoft’s new XPS format was licensed to eight OEMS during the year, extending Zoran’s market leading position with technology embedded in over 250 shipping printers and MFPs from manufacturers such as Canon, HP, Kodak, Okidata, Ricoh, Samsung, Sharp, and Xerox.
• Zoran’s Quatro processor powered Ink Jet AIO and color laser MFPs from major brands including Dell, Epson, Fuji Xerox, Ricoh and Samsung.