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Vimicro Announces Unaudited Second-Quarter 2015 Financial Results

Second-Quarter 2015 Financial Highlights
- Second-quarter revenues of $31.7 million, up 32.1% year over year
- Quarterly video surveillance revenues of $30.3 million, up 50.8% year over year
- Quarterly gross margin at 47.5%, as compared to 37.8% year over year, and 40.1% quarter over quarter
- Quarterly non-GAAP net income attributable to Vimicro of $6.0 million, as compared to non-GAAP net income attributable to Vimicro of $2.8 million year over year
- Non-GAAP net income attributable to Vimicro per diluted ADS at $0.17 for the quarter, as compared to $0.10 per diluted ADS year over year
2015-08-13 15:52 1698

BEIJING, August 13, 2015 /PRNewswire/ -- Vimicro International Corporation (NASDAQ: VIMC) ("Vimicro" or the "Company"), a leading video surveillance technology and solution provider in China, today announced financial results for the second quarter ended June 30, 2015.

Second-Quarter 2015 Results

Net revenue in the second quarter of 2015 was $31.7 million, as compared to net revenue of $24.0 million in the year-ago quarter and $19.2 million in the first quarter of 2015. Video surveillance revenues were $30.3 million in the second quarter, representing 95.6% of total net revenues and up 50.8% year over year.

Gross profit in the second quarter was $15.1 million, as compared with $9.1 million in the year-ago quarter and $7.7 million in the first quarter of 2015. The gross margin in the second quarter was 47.5%, as compared to 37.8% in the year-ago quarter and 40.1% in the first quarter of 2015. The higher margin in the quarter was a result of several projects with relatively higher margin recognized during the quarter.

Operating expenses in the second quarter of 2015 were $9.0 million, as compared to $10.3 million in the year-ago quarter and $7.6 million quarter over quarter. Research and development expenses were $2.0 million for the second quarter net of $3.2 million government grants applied (research and development expenses would have been $5.2 million without government grants for the quarter), as compared to $1.8 million year over year and $1.9 million quarter over quarter. Sales and marketing expenses were $2.8 million for the second quarter, as compared to $2.4 million year over year and $2.3 million quarter over quarter. General and administrative expenses were $4.2 million in the second quarter, as compared to $6.1 million year over year and $3.4 million quarter over quarter.

Operating income was $6.0 million in the second quarter of 2015, as compared to the operating loss of $1.2 million in the year-ago quarter and the operating income of $0.2 million quarter over quarter.

The equity in loss of an equity investee was $2.4 million in the second quarter of 2015, as compared to the equity in profit of an equity investee of $1.8 million year over year and the equity in loss of an equity investee of $0.5 million quarter over quarter.

Net loss attributable to non-controlling interests was $1.3 million in the second quarter of 2015, as compared to net loss attributable to non-controlling interests of $0.9 million year over year and net income attributable to non-controlling interests of $1.5 million quarter over quarter.

In the second quarter of 2015, non-GAAP net income attributable to Vimicro was $6.0 million, or approximately $0.17 per ADS on a diluted basis, as compared to a non-GAAP net income attributable to Vimicro of $2.8 million, or $0.10 per diluted ADS in the year-ago quarter. Non-GAAP net income attributable to Vimicro in the second quarter of 2015 and the year-ago quarter excludes $0.8 million and $0.1 million of non-cash, share-based compensation, respectively. GAAP net income attributable to Vimicro in the second quarter was $5.3 million, or $0.15 per diluted ADS, as compared to net income of $2.7 million, or $0.10 per diluted ADS, in the year-ago quarter.

Balance Sheet

As of June 30, 2015, the Company had cash and cash equivalents of approximately $37.7 million. Total current assets were approximately $201.8 million, and Vimicro had working capital of approximately $88.2 million and $24.0 million of long-term bank loans and liabilities on its balance sheet as of June 30, 2015.

Recent Events

- Winning of competitive bid for the provision of SVAC-compliant video surveillance cameras and system to Jincheng Municipal Government in Shanxi Province, with contract value of $22 million;

- Multiple contract wins in Taiyuan City, Shanxi Province, to provide SVAC-compliant video surveillance cameras and system of traffic control and monitoring to the Traffic Police Detachment of Taiyuan City, aggregated to $12.88 million.

About Vimicro International Corporation

Vimicro International Corporation (NASDAQ: VIMC) is a leading video surveillance technology and solution provider that designs, develops and markets a full range of video surveillance products and solutions to governments, private enterprises, and consumers in China. Vimicro co-developed SVAC (Surveillance Video and Audio Coding), the national video surveillance technological standard, which demonstrates its unique strengths in proprietary multimedia IC technology, making it a leader in China's fast-growing security and surveillance market. Vimicro is headquartered in Beijing, China and has subsidiaries and offices throughout China and in Silicon Valley. Vimicro's ADSs each represent four ordinary shares and are traded on the NASDAQ Global Market exchange under the ticker symbol "VIMC".

Forward-Looking Statements

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Among other things, the quotations from management in this announcement, as well as Vimicro's expectations and forecasts, contain forward-looking statements. Vimicro may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 20-F and 6-K, etc., in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Vimicro's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the Company's ability to increase its sales of PC camera processors, as well as video surveillance products; the expected growth of the video surveillance market; the Company's ability to retain existing customers and acquire new customers and respond to competitive market conditions; the Company's ability to respond in a timely manner to the evolving market and changing consumer preferences and industry standards and to stay abreast of technological changes; the Company's ability to secure sufficient foundry capacity in a timely manner; the Company's ability to effectively protect its intellectual property and the risk that it may infringe on the intellectual property of others; and cyclicality of the semiconductor industry and fluctuations in the markets in which the Company competes. Further information regarding these and other risks is included in Vimicro's annual report on Form 20-F filed with the Securities and Exchange Commission. Vimicro does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release is as of the date hereof, and Vimicro undertakes no duty to update such information, except as required under applicable law.

Non-GAAP Measures

To supplement the consolidated financial statements presented in accordance with GAAP, Vimicro uses non-GAAP measures of non-GAAP income/(loss) from operations, non-GAAP net income/(loss) from operations attributable to Vimicro International Corporation and non-GAAP net income/(loss) from operations attributable to Vimicro International Corporation per diluted ADS, which are adjusted from the most directly comparable financial measures calculated and presented in accordance with GAAP to exclude share-based compensation expenses. These non-GAAP financial measures are provided to enhance investors' overall understanding of the Company's financial performance as they exclude share-based expenses that are not expected to result in future cash payments. The non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. A limitation of using these non-GAAP financial measures is that these non-GAAP measures exclude share-based compensation charges that have been and will continue to be significant recurring expenses in its business for the foreseeable future. Vimicro believes that both management and investors benefit from referring to these non-GAAP measures in assessing the performance of Vimicro's liquidity and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to Vimicro's historical liquidity. Vimicro computes its non-GAAP financial measures using the same consistent method from quarter to quarter. The accompanying tables have more details on the GAAP financial measures that are most comparable to non-GAAP financial measures and the related reconciliations between financial measures.

Currency Translation

This announcement contains translations of certain RMB amounts into U.S. dollars. Unless otherwise noted, all translations from RMB to U.S. dollars are based on the applicable exchange rates quoted by the People's Bank of China, Assets and liabilities are translated at the exchange rates on the balance sheet date, equity amounts are translated at historical exchange rates, and revenues, expenses, gains, and losses are translated using the average rate for the period. Translation adjustments arising from these are reported as foreign currency translation adjustments and have been shown as a component of other comprehensive income or loss in the consolidated statements of comprehensive income.


VIMICRO INTERNATIONAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(Amounts expressed in thousands of U.S. dollars, except number of shares and per share data)








June 30,


March 31,



2015


2015



(Unaudited)


(Unaudited)

ASSETS





Current Assets





Cash and cash equivalents


37,665


57,971

Restricted cash


27


27

Accounts receivable, net of provision


22,191


26,038

Amounts due from related parties, net of provision


117,949


120,124

Inventories


15,215


15,089

Prepayments and other current assets, net of provision


7,710


6,805

Deferred tax assets


1,015


1,010

Total current assets


201,772


227,064

Long-term investment


604


601

Property, equipment and software, net


62,956


57,604

Land use rights


15,216


15,188

Deferred tax assets-non current


704


700

Other long-term assets


1,582


1,587

Total assets


282,834


302,744






LIABILITIES AND STOCKHOLDERS' EQUITY





Current liabilities





Accounts payable


37,474


47,950

Amounts due to related parties


54


6,586

Taxes payable


18,144


18,040

Advances from customers


23,638


23,623

Accrued expenses and other current liabilities


15,891


11,272

Deferred government grant


14,922


17,798

Short-term bank loan


1,963


1,954

Deferred income from equity investee


1,469


11,833

Total current liabilities


113,555


139,056

Deferred government grant-non current


1,507


1,500

Deferred tax liabilities


5


5

Product warranty


3,526


3,432

Long-term bank loan


9,160


9,117

Other long-term liabilities


9,814


9,768

Total liabilities


137,567


162,878






Equity





Ordinary shares


16


16

Additional paid-in capital


205,797


204,884

Treasury stock at cost, net


(12,644)


(12,858)

Accumulated other comprehensive income


10,240


10,103

Accumulated deficit


(84, 954)


(90,239)

Statutory reserve


4,068


4,068

Total shareholders' equity attributable to Vimicro International Corporation


122,523


115,974

Noncontrolling interest


22,744


23,892

Total equity


145,267


139,866

Total liabilities and equity


282,834


302,744

VIMICRO INTERNATIONAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(Amounts expressed in thousands of U.S. dollars, except number of shares and per share data)







Three months ended


Six months ended



June 30,


June 30,



2015


2014


2015


2014



(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)

Net revenues


31,741


24,033


50,964


40,441

Third parties


6,743


7,254


12,377


17,045

Related parties


24,998


16,779


38,587


23,396

Cost of revenues


(16,669)


(14,942)


(28,177)


(25,828)

Gross profit


15,072


9,091


22,787


14,613










Operating expenses:









Research and development, net


(2,034)


(1,781)


(3,927)


(5,635)

Selling and marketing


(2,828)


(2,436)


(5,110)


(4,793)

General and administrative


(4,183)


(6,055)


(7,568)


(8,485)

Total operating expenses:


(9,045)


(10,272)


(16,605)


(18,913)

Income/(loss) from operations:


6,027


(1,181)


6,182


(4,300)

Other income/(expense):









Interest expense, net


(134)


(34)


(185)


(35)

Foreign exchange gain/(loss)


605


(23)


472


(515)

Gain on disposal of equity interest


-


1,319


-


1,319

Other, net


642


1


642


73

Income/(loss) before income taxes and equity in profit of
an equity investee:


7,140


82


7,111


(3,458)

Income tax expense


(671)


-


(671)


(208)

Income/(loss) before equity in profit of an equity investee


6,469


82


6,440


(3,666)

Equity in (loss)/profit of an equity investee, net of tax


(2,436)


1,768


(2,897)


2,137

Net income/(loss)


4,033


1,850


3,543


(1,529)

Net (loss)/income attributable to noncontrolling interest


(1,252)


(857)


241


(771)

Net income/(loss) attributable to Vimicro International
Corporation


5,285


2,707


3,302


(758)

Income/(loss) per share









Basic


0.04


0.03


0.03


(0.01)

Diluted


0.04


0.02


0.02


(0.01)

Income/(loss) per ADS









Basic


0.17


0.11


0.11


(0.03)

Diluted


0.15


0.10


0.10


(0.03)

Weighted average number of ordinary shares Outstanding









Basic


123,265,907


95,319,165


118,438,212


95,716,466

Diluted


140,416,527


112,341,075


134,692,155


95,716,466

Weighted average number of ADS outstanding









Basic


30,816,477


23,829,791


29,609,553


23,929,117

Diluted


35,104,132


28,085,269


33,673,039


23,929,117

Other comprehensive income/ (loss), net of tax









Foreign currency translation adjustment, net of tax of nil


239


(1,287)


79


(1,112)

Other comprehensive income/(loss), net of tax


239


(1,287)


79


(1,112)

Comprehensive income/(loss)


4, 272


563


3,622


(2,641)

Comprehensive (loss)/income attributable to
noncontrolling interest


(1,148)


(859)


269


(618)

Comprehensive income/(loss) attributable to Vimicro
International Corporation


5,420


1,422


3,353


(2,023)

Components of share-based compensation expenses are
included in the following expense captions









Research and development, net


(142)


(34)


(287)


(94)

Selling and marketing


(55)


(18)


(97)


(37)

General and administrative


(554)


(70)


(801)


(157)










Total


(751)


(122)


(1,185)


(288)


Contact:

Vimicro International Corporation
Investor Relations
Phone: +8610-5884-8898
E-mail: ir@vimicro.com

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Source: Vimicro International Corporation
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