SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
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VIMICRO INTERNATIONAL CORPORATION
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By:
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/s/ John Zhonghan Deng
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Name:
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John Zhonghan Deng
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Title:
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Chairman and Chief Executive Officer
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Date: November 16, 2007
3
Exhibit 99.1
Vimicro Reports Third Quarter 2007 Financial Results
BEIJING – November 15, 2007 – Vimicro International Corporation (NASDAQ: VIMC), a leading fabless semiconductor company that designs and develops
multimedia semiconductor products and solutions, today announced its financial results for the third quarter of 2007 ended September 30, 2007.
Third Quarter of 2007
Net revenue in the third quarter of 2007 was $25.1 million as compared to $26.5 million reported in the second
quarter of 2007 and $33.1 million in the third quarter of 2006.
Net income in the third quarter 2007 was $0.3 million, compared with net income of $0.2
million in the second quarter of 2007 and $2.5 million in the third quarter of 2006. Earnings per ADS (each representing four ordinary shares) were $0.01, compared with earnings per ADS of $0.01 in the second quarter of 2007 and $0.07 in the third
quarter of 2006.
Non-GAAP net income in the third quarter, which excluded $1.7 million in share-based compensation expense, was $1.9 million compared to
net income of $1.6 million in the second quarter of 2007 and $3.2 million in the third quarter of 2006. Non-GAAP earnings per ADS for the third quarter of 2007 were $0.05, compared with earnings per ADS of $0.04 in the second quarter of 2007 and
$0.09 in the third quarter of 2006.
Business Outlook
“Over the past few quarters, we have experienced pressure from declining average selling prices and intense competition within some of our product lines, in particular PC cameras and sensors. However, during the third quarter, we have
seen the ASPs for these products begin to stabilize,” commented John Deng, Chairman and Chief Executive Officer of Vimicro. “In response to this trend, we have increased shipments of more advanced, higher margin products as well as
broadened our global sales and marketing efforts, particularly in Taiwan, Korea and the US. As a result, our overall gross margin has improved, and both sales volume and market share increased during the third quarter for some of our core products,
such as notebook and mobile multimedia processors.”
“Looking forward, we remain encouraged by the growth prospects of our core PC/Notebook and
mobile multimedia products and believe that our R&D efforts targeted at the launch of new innovative products will result in improved ASPs and the continued expansion of our global market share. Additionally, we are well positioned to benefit
from the 3G rollout in China next year and believe that it will further enhance our revenue and profitability.”
Third Quarter 2007 Financial
Results Conference Call and Web Cast
Vimicro will host a conference call and Web cast today, November 15, 2007, at 5:30 p.m., Eastern Time, to
discuss the Company’s third quarter 2007 financial results. Investors and other interested parties may access the call by dialing 866-543-6411 (or +1-617-213-8900 outside of the U.S.), with the pass code 22707216, at least 10 minutes prior to
the start of the call.
4
In addition, an audio Web cast will be available in the Investor Relations section of the Company’s Web site at
http://www.vimicro.com. Following the live Web cast, 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
November 22, 2007 at midnight (ET). The replay number is 888-286-8010 with a pass code of 64451570. 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 worldwide leading fabless semiconductor company that designs, develops and markets proprietary embedded multimedia signal processing chips and solutions that enable multimedia applications for mobile phones over 2.5G/3G networks and
PCs over broadband Internet. Vimicro’s ADSs, each of which represents four ordinary shares, are currently trading on the NASDAQ Global Market under the ticker symbol “VIMC.”
Disclosure of Home Country Practice
Vimicro followed home country
practice with respect to distribution of annual reports in 2006 and 2007. Vimicro has posted its annual reports on http://www.vimicro.com/english/investors.htm and will send its shareholders a written notice containing the website address for its
annual reports and informing them that upon receipt of request from any of its shareholders, Vimicro would deliver a hard copy of the annual report to such shareholder.
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: our limited history of achieving net profit; our growth strategies; our future business development, results of operations and financial condition; our ability to develop and sell mobile multimedia processors that
meet changing consumer preferences and industry standards; decrease in the demand for our notebook and PC camera multimedia processors and third-party image sensors which we bundle with some of our PC camera multimedia processors; that multimedia
opportunities associated with the 3G build out in China will make a significant contribution to our longer-term growth; our ability to increase our penetration of the PC and notebook multimedia markets; our ability to secure sufficient foundry
capacity in a timely manner; our ability to maintain existing customers and attract new customers; and the expected growth of the mobile multimedia processor market. Further information regarding these and other risks is included in our 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 November 15, 2007, and Vimicro undertakes no duty to update such information, except as required under applicable law.
5
Non-GAAP Measures
To
supplement the consolidated financial statements presented in accordance with GAAP, Vimicro uses non-GAAP measures of non-GAAP net income and non-GAAP diluted net earnings 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 September 30, 2007, depending on the period discussed (the third quarter of 2007), which were RMB 7.5108 to
US$1.00.
6
Vimicro International Corporation
Consolidated Balance Sheets
(Amounts expressed in thousands of U.S. dollars, except number of share data)
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9/30/2007
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12/31/2006
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(unaudited)
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(audited)
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Assets
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Current assets:
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Cash
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119,849
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114,834
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Accounts receivable, net
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6,200
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6,315
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Notes receivable
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97
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2,435
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Inventories, net
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12,418
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11,955
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Prepayments and other current assets, net
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2,481
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3,353
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Deferred tax assets
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177
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170
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Total current assets
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141,222
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139,062
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Investment in an associated company
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153
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146
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Property, equipment and software, net
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9,668
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8,498
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Other assets
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1,884
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644
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Total assets
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152,927
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148,350
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Liabilities and Shareholders’ Equity
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Current liabilities:
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Accounts payable
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8,150
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5,379
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Taxes payable
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1,058
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1,500
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Advances from customers
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137
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246
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Due to an associated company
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58
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56
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Accrued expenses and other current liabilities
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5,694
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6,072
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Deferred grants
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67
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210
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Total current liabilities
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15,164
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13,463
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Non-current liabilities:
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Deferred tax liabilities
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30
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30
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Total liabilities
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15,194
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13,493
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Shareholders’ equity:
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Ordinary shares, $.0001 par value. 140,172,049 and 139,782,585
shares issued and outstanding as of September 30, 2007
and
December 31, 2006, respectively
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14
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14
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Additional paid-in capital
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135,875
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131,449
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Deferred stock-based compensation
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—
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—
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Accumulated other comprehensive income (loss)
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3,802
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1,987
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Accumulated deficit
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(4,690
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(1,325
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Statutory reserve
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2,732
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2,732
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Total shareholders’ equity
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137,733
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134,857
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Total liabilities, redeemable convertible preferred shares and shareholders’ equity
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152,927
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148,350
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7
Vimicro International Corporation
Consolidated Statements of Income
(Amounts expressed in thousands of U.S. dollars, except number of share data)
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2007 3Q
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2007 2Q
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2006 3Q
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(unaudited)
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(unaudited)
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(unaudited)
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Net revenue
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25,096
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26,496
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33,101
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Cost of revenue
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(17,301
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)
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(18,416
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(22,408
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)
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Gross profit
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7,795
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8,080
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10,693
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Operating expenses*
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Research and development, net
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(5,244
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)
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(5,019
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)
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(5,460
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)
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Sales and marketing
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(1,208
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)
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(1,169
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)
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(1,118
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)
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General and administrative
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(2,456
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)
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(2,557
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(2,341
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)
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Income (loss) from operations
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(1,113
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)
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(665
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)
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1,774
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Other income (expense):
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Interest income
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1,009
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1,065
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1,046
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Others, net
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373
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(147
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(302
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)
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Income (loss) before income taxes and share of loss of associated company and minority interest
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269
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253
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2,518
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Income taxes expense
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(5
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)
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(48
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)
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(63
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)
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Net income (loss) before share of loss of associated company and minority interest
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264
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205
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2,455
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Share of gain of associated company, net of tax
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1
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—
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—
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Net income (loss) before minority interest
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265
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205
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2,455
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Net income (loss)
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265
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205
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2,455
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Other comprehensive income (loss):
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Foreign currency translation adjustment
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665
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697
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479
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Comprehensive income (loss)
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930
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902
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2,934
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Income (loss) per share
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-Basic
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0.00
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0.00
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0.02
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-Diluted
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0.00
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0.00
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0.02
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Income (loss) per ADS
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-Basic
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0.01
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0.01
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0.07
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-Diluted
|
|
0.01
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|
0.01
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0.07
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Weighted average number of ordinary shares outstanding
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-Basic
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139,912,263
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139,507,099
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138,162,647
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-Diluted
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143,674,362
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143,126,310
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146,021,029
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Weighted average number of ADS outstanding
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|
|
|
|
|
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-Basic
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34,978,066
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34,876,775
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|
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34,540,662
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|
|
|
|
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-Diluted
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35,918,590
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35,781,578
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36,505,257
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* Components of share-based compensation expenses are included in the following expense captions:
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|
|
|
|
|
|
|
|
|
|
|
|
|
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Research and development
|
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(849
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)
|
|
(693
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)
|
|
(555
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)
|
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Sales and marketing
|
|
(211
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)
|
|
(191
|
)
|
|
96
|
|
|
General and administrative
|
|
(592
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)
|
|
(502
|
)
|
|
(278
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
(1,653
|
)
|
|
(1,385
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)
|
|
(737
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)
|
|
|
|
|
|
|
|
|
|
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|
8
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
|
|
Three months ended
|
|
|
|
September 30,
|
|
June 30,
|
|
September 30,
|
|
|
|
2007
|
|
2007
|
|
2006
|
|
|
|
GAAP
Result
|
|
|
Adjustment
|
|
Non-GAAP
Results
|
|
GAAP
Result
|
|
|
Adjustment
|
|
Non-GAAP
Results
|
|
GAAP
Result
|
|
Adjustment
|
|
Non-GAAP
Results
|
|
(Loss) income from operations
|
|
(1,113
|
)
|
|
1,653
|
|
540
|
|
(665
|
)
|
|
1,385
|
|
720
|
|
1,774
|
|
737
|
|
2,511
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
265
|
|
|
1,653
|
|
1,918
|
|
205
|
|
|
1,385
|
|
1,590
|
|
2,455
|
|
737
|
|
3,192
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income per ADS
|
|
0.01
|
|
|
0.04
|
|
0.05
|
|
0.01
|
|
|
0.03
|
|
0.04
|
|
0.07
|
|
0.02
|
|
0.09
|
|
(*)
|
The adjustment is to exclude non-cash for share-based compensation for employees and non-employees.
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For further information about Vimicro, please contact:
Investor
Contact:
Shelton Group Investor Relations
Ryan Bright
Tel: +1-972.239.5119 ext. 159
Email: rbright@sheltongroup.com