STOCKREPORTS

Zilog, Inc.

NYSE Symbol ZLG In S&P SmallCap 600

Recent Price 18.81 52 Wk Range 28.63 - 15.50

Yield Nil 12-Mo. P/E 16.9

Quantitative Evaluation: Outlook (1 Lowest - 5 Highest) 5- Fair Value 26.00 Risk HIGH Earn/Div Rank NR
Technical Evaluation: BULLISH since 06/97 Rel. Strength Rank (1 Lowest - 99 Highest) 10 Insider Activity NA

Business Profile 02-JUN-97

Although sales and earnings declined in the first quarter of 1997, reflecting the impact of pricing pressures, Zilog believes that it is well positioned to capitalize on certain trends in its target market areas. These trends include the networking of computers and peripherals, increased complexity and sophistication of consumer electronic products, and the migration of intelligence from the computer to peripherals. During the first quarter of 1997, the company strengthened its position as a major chip supplier to the television industry through the release of new products and entrance into strategic partnerships. It believes that this prepared it for an electronics industry trend toward PC/TV convergence.

Operation Review 02-JUN-97

Sales in the first quarter of 1997 fell 13%, year to year, reflecting lower modem sales in the datacommunications market and declines in printer sales in the computer peripherals market. Volumes were penalized by lower average selling prices resulting from a shift in the product mix. Margins narrowed, on the lower volume; net income fell 60%, to $4,783,000 ($0.23 a share), from $12,073,000 ($0.59).

Stock Performance 27-JUN-97n

In the past 30 trading days, ZLG's shares have declined 5%, compared to a 7% rise in the S&P 500. Average trading volume for the past five days was 163,020 shares, compared with the 40-day moving average of 86,292 shares.

Key Stock Statistics

Fiscal Year Ending Dec. 31

Dividend Data: Zilog has never paid dividends on its common stock and does not expect to pay any in the foreseeable future. A three-for-two stock split was effected in February 1993.

Business Summary 02-JUN-97

Zilog, Inc. designs, develops, manufactures and markets application specific standard integrated circuit products (ASSPs) for the data communications, consumer product controller and intelligent peripheral controller markets. The company uses its proprietary Superintegration design technology to combine cores and cells from its library of customer-familiar microprocessor, microcontroller, digital signal processor, memory and logic circuits to meet the design, cost and time-to-market requirements of its customers.

Zilog offers more than 700 product line items, encompassing a wide selection of package, speed grade and other options. Customers include DSC Communication, General Instrument, Hewlett-Packard, Hitachi, Lucent, Microsoft, Motorola, Northern Telecom, NMB, Samsung, Seagate, Sony, Texas Instruments, VeriFone and Zenith. While Lucent accounted for 13% of net sales in 1996, the company does not expect any one customer to account for over 10% of sales in 1997.

The company uses its Superintegration library of proprietary core and cell designs, which are optimized for particular applications in target markets, to introduce new products on a timely basis. It introduced 48, 40 and 40 major new products in 1996, 1995 and 1994, respectively. In 1996, new products included three for the data communications market, 37 for the consumer product controller market, and eight for the intelligent peripheral controller market.

Zilog's two primary assembly and test facilities are located in Manila and Carmona, the Philippines. In addition, the company has excess test capacity at its Nampa, ID, manufacturing facility and its Campbell, CA, engineering facility. In June 1995, Zilog completed construction of a new wafer fabrication facility adjacent to its Idaho plant. The new wafer fabrication facility began commercial production in September 1995, doubling the company's wafer production capacity.

Sales are made through a direct sales force and manufacturer representative firms and distributors. There are 26 direct sales offices and over 120 distributor and representative locations worldwide. International sales accounted for 56%, 57% and 56% of net sales in 1996, 1995, and 1994, respectively.

Important Developments

May '97 Zilog said it plans to invest a major portion of its estimated $50 million capital expenditures budget for 1997 in a new research facility with the capability of designing to a 0.35 micron feature size in mixed signal processes. The company believes that achieving commercial production of this process will be important to continued introduction of new products in its chosen markets.

Capitalization

Long Term Debt: None (3/97).

Curr. Ratio	2.5	2.6	2.2	3.0	2.4	1.9	1.3	1.5	NA	NA
% LT Debt of Cap.	Nil	Nil	Nil	Nil	Nil	Nil	21.4	47.9	NA	NA
% Net Inc.of Revs.	10.0	16.0	15.6	13.2	11.0	9.6	7.3	6.2	NA	NA
% Ret. on Assets	7.9	13.3	13.8	NA	12.7	10.6	12.8	9.2	NA	NA
% Ret. on Equity	9.9	17.2	18.2	18.8	17.3	28.3	29.3	20.3	NA	NA

Data as orig. reptd.; bef. results of disc. opers. and/or spec. items. Per share data adj. for stk. divs. as of ex-div. date. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked.

Office--210 E. Hacienda Ave., Campbell, CA 95008-6600. Tel--(408) 370-8000. Fax--(408) 370-8056/8027. Website--http://www.zilog.com Chrmn, Pres & CEO--E. A. Sack. VP-Fin & CFO--R. E. Collins. Secy--R. R. Pickard. Dirs--T. J. Connors, W. H. Janeway, H. Kressel, E. A. Sack, L. Wangberg, R. M. White. Transfer Agent & Registrar--First National Bank of Boston. Incorporated--in California in 1981. Empl-- 1,601. S&P Analyst: Adam Penn

This report is for information purposes and should not be considered a solicitation to buy or sell any security. Neither S&P nor any other party guarantee its accuracy or make warranties regarding results from its usage. Redistribution is prohibited without written permission. Copyright © 1997