BEIJING, Aug. 11 /PRNewswire-Asia-FirstCall/ -- Vimicro International Corporation (Nasdaq: VIMC) ("Vimicro"), a leading multimedia semiconductor and solution provider, today announced financial results for the second quarter ended June 30, 2010.
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Second Quarter 2010
Net revenue in the second quarter of 2010 was $26.4 million, above the Company's guidance of $24 million to $26 million and an increase of 31% compared to $20.1 million in the first quarter of 2010 and 41% from the $18.7 million in the second quarter of 2009. The growth in revenue reflects increases in demand for the Company's notebook camera processor and mobile multimedia products. Gross margin improved to 34.3% compared to 33.6% in the previous quarter driven by continued strength in notebook products and a favorable mix of higher margin mobile products.
Dr. John Deng, Vimicro's Chairman and Chief Executive Officer, commented, "Vimicro's revenue growth in the quarter reflects increased volume for the Company's notebook and mobile product lines with shipments in our notebook segment increasing 30% from our tier-one global brand customers. In addition, revenue from our TD-SCDMA based 3G mobile multimedia processors increased over last quarter as we continue to ramp shipments of higher ASP products in this segment. Also during the quarter, our gross margin further improved driven by increased sales of our higher margin products."
Second quarter 2010 net loss, prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP), was $4.3 million, which included $0.9 million in share-based compensation expense and $1.0 million IP/Software purchase expense. After excluding loss attributable to non-controlling interest, net loss attributed to Vimicro was $2.8 million in the second quarter, or $0.08 loss per ADS (each representing four ordinary shares), compared to a net loss of $4.4 million, or $0.12 loss per ADS, in the first quarter of 2010.
Dr. Deng concluded, "As we look to the second half of the year, we expect continued strong demand for notebook embedded camera products and mobile multimedia products. In the surveillance market, we are well positioned to benefit from new product cycles. We expect our surveillance business to expand as projects that are currently in the bidding process materialize, and we begin delivering on potential opportunities under the government's Peace City initiatives. We look forward to further growth and achieving profitability as the Company expands our penetration of these large and growing markets."
Business Outlook
For the third quarter of 2010, the Company expects revenue to range between $27 million and $31 million, representing 31.7% to 51.2% growth over the $20.5 million reported in the third quarter of 2009, and 2.4% to 17.6% sequential growth over the second quarter.
Financial Results Conference Call and Webcast
Vimicro will host a conference call and Webcast August 10, 2010 at 6:30 p.m. Eastern Time to discuss the Company's recent results. Investors and other interested parties may access the call by dialing 866-730-5769 (or +1-857-350-1593 outside of the U.S.) with the pass code 67825167, at least 10 minutes prior to the start of the call.
In addition, an audio Webcast will be available in the Investor Relations section of the Company's Web site at http://www.vimicro.com . Following the live Webcast, an archived version will be available on the Company's Web site. A telephone replay of the call will also be available approximately two hours after the call and will be available until August 17, 2010 at midnight (ET). The replay number is 888-286-8010 with a pass code of 52640454. International callers should dial +1-617-801-6888 and enter the same pass code at the prompt.
About Vimicro International Corporation
Vimicro International Corporation is a leading multimedia semiconductor and solution provider that designs, develops and markets mixed-signal semiconductor products and system-level solutions that enable multimedia capabilities in a variety of products for the consumer electronics and communications markets. Vimicro is also expanding business into the surveillance market with system-level solutions and semiconductor products. Vimicro's ADSs, each of which represents four ordinary shares, are currently trading on the NASDAQ Global Market 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 develop and sell new mobile multimedia products; the expected growth of the mobile multimedia market; the company's ability to increase sales of notebook camera multimedia processors; 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 multimedia 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. 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 (loss)/income from operations, non-GAAP net (loss)/income attributed to Vimicro International Corporation and non-GAAP diluted net (loss)/income per ADS, which are adjusted from the most directly comparable financial measures calculated and presented in accordance with GAAP to exclude amortization of 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 our business for the foreseeable future. We compensate for these limitations by providing the relevant disclosure of our share-based compensation charges in our reconciliations to the GAAP measures. For more information on the non-GAAP financial measures, please see the tables captioned "Reconciliation of non-GAAP results of operations measures to the nearest comparable GAAP measures" set forth at the end of this release.
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 Bank of China as of June 30, 2010, which was RMB 6.7909 to $1.00.
For further information about Vimicro, please contact:
Investor Contacts:
Jack Guo, Vice President of Investor Relations
Phone: +86-10-6894-8888 ext. 7379
Email: jackguo@vimicro.com
Shelton Group Investor Relations
Leanne K. Sievers, EVP
Phone: +1-949-224-3874
Email: lsievers@sheltongroup.com
Vimicro International Corporation
Consolidated Balance Sheets
(Amounts expressed in thousands of U.S. dollars, except number of share
data)
6/30/2010 12/31/2009
(unaudited) (audited)
Assets
Current assets:
Cash and cash equivalents 60,354 84,510
Short-term time deposits 44,177 43,935
Restricted cash 869 132
Marketable equity securities 819 543
Accounts receivable, net of
provision for doubtful accounts 11,638 9,462
Inventories 16,739 8,804
Prepayments and other current
assets 5,322 4,155
Deferred tax assets 3 3
Total current assets 139,921 151,544
Property, equipment and software, net 9,047 9,015
Land use rights 20,291 10,905
Intangible assets, net 3,348 3,819
Goodwill 2,031 2,019
Other assets 968 973
Total assets 175,606 178,275
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable 7,975 4,958
Notes payable 386 --
Taxes payable 1,226 879
Advances from customers 571 649
Accrued expenses and other current
liabilities 4,927 5,900
Deferred government grants 2,761 3,844
Total current liabilities 17,846 16,230
Non-Current liabilities:
Deferred tax liabilities 99 196
Product warranty 49 25
Total liabilities 17,994 16,451
Shareholders' equity:
Ordinary shares,$0.0001 par value,
500,000,000 shares authorized,
147,724,068 and 147,643,168
shares issued and outstanding as
of June 30, 2010 and December 31,
2009, respectively 15 15
Additional paid-in capital 154,390 151,672
Treasury stock (2,664) (2,664)
Accumulated other comprehensive
income 10,549 9,967
Accumulated deficit (42,989) (35,786)
Statutory reserve 2,782 2,782
Total shareholders equity
attributable to Vimicro
International Corporation 122,083 125,986
Noncontrolling interest 35,529 35,838
Total shareholders' equity 157,612 161,824
Total liabilities and
shareholders' equity 175,606 178,275
Vimicro International Corporation
Consolidated Statement Of Operations And Comprehensive Income
(Amounts expressed in thousands of U.S. dollars, except number of share
data)
2010 Q2 2010 Q1 2009 Q2
(unaudited) (unaudited) (unaudited)
Net revenue 26,368 20,110 18,717
Cost of revenue (17,314) (13,351) (13,393)
Gross profit 9,054 6,759 5,324
Operating expenses:
Research and development, net (8,801) (8,750) (7,371)
Selling and marketing (1,969) (1,457) (1,129)
General and administrative (3,161) (3,208) (6,019)
Total operating expenses (13,931) (13,415) (14,519)
Loss from operations (4,877) (6,656) (9,195)
Other income/(expense):
Interest income 292 309 387
Foreign exchange (loss)/gain, net 54 (35) 2
Gain on disposal of available-for-
sale securities -- -- 512
Others, net 750 861 53
Loss before income taxes (3,781) (5,521) (8,241)
Income taxes expense (518) (172) --
Net loss (4,299) (5,693) (8,241)
Less: (loss)/income attributable to
non-controlling interest (1,504) (1,285) 135
Loss attributed to Vimicro
International Corporation (2,795) (4,408) (8,376)
Other comprehensive income:
Foreign currency translation
adjustment 458 33 73
Unrealized gain on marketable
equity securities 263 13 315
Comprehensive loss (3,578) (5,647) (7,853)
Less: comprehensive (loss)/income
attributable to non-controlling
interest (1,319) (1,285) 188
Comprehensive loss attributable to
Vimicro International Corporation (2,259) (4,361) (8,041)
Loss per share
Basic (0.02) (0.03) (0.06)
Diluted (0.02) (0.03) (0.06)
Loss per ADS
Basic (0.08) (0.12) (0.24)
Diluted (0.08) (0.12) (0.24)
Weighted average number of ordinary
shares outstanding
Basic 147,690,245 147,657,701 138,706,574
Diluted 147,690,245 147,657,701 138,706,574
Weighted average number of ADS
outstanding
Basic 36,922,561 36,914,425 34,676,643
Diluted 36,922,561 36,914,425 34,676,643
Components of share-based
compensation expenses
are included in the following
expense captions:
R&D (422) (532) (1,634)
S&M (50) (56) (70)
G&A (477) (575) (3,963)
Total (949) (1,163) (5,667)
Reconciliations of non-GAAP results of operations measures to the nearest
comparable GAAP measures (*)
(Amounts expressed in thousands of U.S. dollars, except per share
data, unaudited)
Three months ended Three months ended
June 30, March 31,
2010 2010
GAAP Adjust- Non-GAAP GAAP Adjust- Non-GAAP
Results ment Results Results ment Results
Loss from operations (4,877) 949 (3,928) (6,656) 1,163 (5,493)
Loss attributed to Vimicro
International Corporation (2,795) 949 (1,846) (4,408) 1,163 (3,245)
Diluted loss per ADS (0.08) 0.03 (0.05) (0.12) 0.03 (0.09)
Three months ended
June 30, 2009
GAAP Adjust- Non-GAAP
Results ment Results
Loss from operations (9,195) 5,667 (3,528)
Loss attributed to Vimicro
International Corporation (8,376) 5,667 (2,709)
Diluted loss per ADS (0.24) 0.16 (0.08)
(*) The adjustment is to exclude non-cash for share-based compensation for
employees and non-employees.
