Xicor Reports Improved Second Quarter Results - Company Financial Information

Edge: Work-Group Computing Report, August 2, 1999

Xicor, Inc. (NASDAQ - NMS: XICO) has reported results for the second quarter and first half of 1999.

Sales for the second quarter of 1999 were $28,751,000 compared to $26,787,000 for the second quarter of 1998. In the second quarter of 1999, Xicor incurred a loss of $1,993,000 or $0.10 per share, compared to a loss of $9,184,000, or $0.48 per share, for the second quarter of 1998. For the first half of 1999 Xicor had sales of $54,407,000 and a loss of $6,390,000 or $0.32 per share, compared to sales of $54,533,000 and a loss of $11,538,000 or $0.60 per share for the comparable 1998 period. The 1998 second quarter and first half losses included an inventory write-down of $2,220,000.

According to Bruce Gray, president, "Second quarter 1999 sales grew about 12% sequentially relative to the first quarter of 1999 driven by strong shipments into wireless communications and networking applications. The average selling price of our products declined at a slower rate than anticipated as well. Increased sales, product mix and more stable prices all resulted in a reduced loss and improved gross margin when compared to the first quarter of 1999. Additionally, shipments of product from lower cost wafers produced by our first foundry partner, Yamaha Corp., contributed to the gross margin improvement.

Mr. Gray continued, "Previous semiconductor industry upturns were characterized by increased demand and firming of prices. Industry experts believe that they are seeing the beginning of the next upturn. If the upturn continues and Xicor benefits from the historical pattern of improved demand and average selling prices, together with an increasing supply of lower cost foundry wafers, we can see the path of returning Xicor to profitability.

"Our outsourcing program continued to gain momentum as we made significant progress in developing additional sources for lower cost wafers during the second quarter with the signing of agreements with Sanyo Electric Co., Ltd. in Japan and ZMD GmbH in Germany to fabricate wafers for us. These agreements complement our wafer foundry agreement with Yamaha in Japan and will provide diversified sources of wafers utilizing our proprietary processes.

"During the second quarter we enhanced our system management product line by announcing two new products and two development tools, as well as commencing sampling of our first sophisticated timekeeping product. We also expanded our broad digitally controlled potentiometer product line (XDCP's) with three new products and added a secure memory product," concluded Mr. Gray. "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995

Xicor designs, develops, manufactures and sells nonvolatile in- the-system programmable products which retain information even when the system is turned off or power is inadvertently lost. Xicor's product line includes digitally controlled potentiometers (XDCP's), system management IC's, and secure and standard nonvolatile memory IC's.

Xicor product, corporate and financial information is readily accessible on the World Wide Web at http://www.xicor.com.

                              XICOR, INC.
                 CONSOLIDATED STATEMENTS OF OPERATIONS
                              (Unaudited)


                                         Three Months Ended
                                   July 4, 1999  June 28, 1998

Net sales                         $ 28,751,000   $ 26,787,000
Cost of sales                       21,305,000     25,521,000
  Gross profit                       7,446,000      1,266,000

Operating expenses:
  Research
   and development                   3,683,000      4,628,000
  Selling, general and
    administrative                   5,553,000      5,620,000
                                     9,236,000     10,248,000

Income (loss)
  from operations                   (1,790,000)    (8,982,000)
Interest expense                      (359,000)      (481,000)
Interest income                        156,000        279,000

Income (loss)
 before income taxes                (1,993,000)    (9,184,000)
Provision
 for income taxes                            -              -

Net income (loss)                $  (1,993,000) $  (9,184,000)

Net income (loss)
 per common share:
  Basic                          $       (0.10) $       (0.48)
  Diluted                        $       (0.10) $       (0.48)


Shares used in per
 share calculations:
  Basic                             20,257,000     19,108,000
  Diluted                           20,257,000     19,108,000


                                        Six Months Ended
                                    July 4,1999   June 28, 1998

Net sales                          $54,407,000   $ 54,533,000
Cost of sales                       42,306,000     45,413,000
  Gross profit                      12,101,000      9,120,000

Operating expenses:
  Research
   and development                   7,242,000      9,194,000
  Selling, general and
    administrative                  10,815,000     11,118,000
                                    18,057,000     20,312,000

Income (loss)
  from operations                   (5,956,000)   (11,192,000)
Interest expense                      (751,000)      (981,000)
Interest income                        317,000        635,000

Income (loss)
 before income taxes                (6,390,000)   (11,538,000)
Provision
 for income taxes                          -               -

Net income (loss)                  $(6,390,000)  $(11,538,000)

Net income (loss)
 per common share:
  Basic                            $     (0.32)  $      (0.60)
  Diluted                          $     (0.32)  $      (0.60)


Shares used in per
 share calculations:
  Basic                             20,215,000     19,099,000
  Diluted                           20,215,000     19,099,000


                             XICOR, INC.
                     CONSOLIDATED BALANCE SHEETS

                                ASSETS

                                      July 4,     December 31,
                                       1999          1998
                                    (Unaudited)
Current assets:
   Cash and cash equivalents     $  13,939,000   $ 17,881,000
   Accounts receivable              10,989,000      8,835,000
   Inventories                      10,509,000     12,770,000
   Prepaid expenses and
     other current assets              671,000      1,016,000

    Total current assets            36,108,000     40,502,000

Property, plant and equipment,
  at cost less accumulated
  depreciation                      32,127,000     38,074,000
Other assets                           288,000        286,000
                                 $  68,523,000   $ 78,862,000


                     LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable                $  8,560,000   $  9,279,000
  Accrued expenses                   8,244,000      9,504,000
  Deferred income on
   shipments to distributors        10,722,000      9,121,000
  Current portion of
    long-term obligations            5,969,000      7,216,000

    Total current liabilities       33,495,000     35,120,000

Long-term obligations               10,575,000     13,137,000

Shareholders' equity:
  Preferred stock;
   5,000,000 shares authorized              -              -
  Common stock;
   75,000,000 shares authorized;
   20,310,593 and 20,134,427 shares
   outstanding                     128,470,000    128,232,000
  Accumulated deficit             (104,017,000)   (97,627,000)
                                    24,453,000     30,605,000
                                 $  68,523,000   $ 78,862,000