VIMC (MM)

BEIJING, April 29 /Xinhua-PRNewswire-FirstCall/ -- Vimicro International Corporation (NASDAQ:VIMC), a leading fabless semiconductor company that designs and develops multimedia semiconductor products and solutions, today announced financial results for the fourth quarter of 2007, the fiscal year ended December 31, 2007 and the first quarter ended March 31, 2008. (Logo: http://www.newscom.com/cgi-bin/prnh/20070528/CNM014LOGO ) Fourth Quarter and Fiscal Year 2007 Net revenue in the fourth quarter of 2007 was $24.3 million as compared to $25.1 million reported in the third quarter of 2007 and $34.2 million in the fourth quarter of 2006. Net income in the fourth quarter of 2007, prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP), was $1.4 million, compared with net income of $0.3 million in the third quarter of 2007 and $1.6 million in the fourth quarter of 2006. Diluted earnings per ADS (each representing four ordinary shares) were $0.04, compared with earnings per ADS of $0.01 in the third quarter of 2007 and $0.04 in the fourth quarter of 2006. Non-GAAP net income in the fourth quarter, which excluded $0.5 million in share-based compensation expense, was $1.9 million, compared to net income of $1.9 million in the third quarter of 2007 and $2.9 million in the fourth quarter of 2006. Non-GAAP diluted earnings per ADS for the fourth quarter of 2007 were $0.05, compared with earnings per ADS of $0.05 in the third quarter of 2007 and $0.08 in the fourth quarter of 2006. For the fiscal year ended December 31, 2007, net revenue was $92.8 million as compared to $126.6 million in the fiscal year ended December 31, 2006. Fiscal year 2007 net loss, prepared in accordance with U.S. GAAP, was $2.0 million, compared with net income of $9.7 million in fiscal year 2006. Non-GAAP net income for fiscal year 2007 was $2.9 million, which excluded $4.9 million for the amortization of stock-based compensation expenses, as compared to non-GAAP net income of $13.2 million in 2006, which excluded $3.5 million for the amortization of stock-based compensation expenses. Diluted loss per ADS for the fiscal year 2007 was ($0.06) and non-GAAP diluted earnings per ADS for the fiscal year 2007 were $0.08. First Quarter 2008 Net revenue in the first quarter of 2008 was $16.2 million as compared to $16.9 million reported in the first quarter of 2007. First quarter 2008 net loss prepared in accordance with U.S. GAAP was $3.2 million, compared with a loss of $3.8 million in the first quarter of 2007. The US GAAP loss per ADS (each representing four ordinary shares) was ($0.09), compared with a loss of ($0.11) per ADS in the first quarter of 2007. Non-GAAP net loss in the first quarter, which excluded $1.8 million in share-based compensation expense, was $1.4 million compared with a loss of $2.5 million in the first quarter of 2007. Non-GAAP loss per ADS for the first quarter of 2008 was ($0.04) compared with a loss of ($0.07) per ADS in the first quarter of 2007. "2007 was a challenging year for Vimicro as a combination of factors impacted our results throughout the year," commented Dr. John Deng, Vimicro's Chairman and Chief Executive Officer. "Our revenue during the year was primarily affected by our strategic decision to transition away from third- party sensor business and to apply a greater focus on our own products. In addition, we also experienced pressure on average selling prices resulting from a competitive environment in our PC camera business. However, despite these factors, we were able to maintain our market share and leading position within the PC camera and mobile multimedia markets, while at the same time we invested heavily in R&D to further strengthen our product pipeline and expand our addressable markets." Deng further commented, "Additionally, similar to the first quarter last year, our results were impacted by seasonality within our customer base and end markets as well as that associated with the New Year holiday in China. Looking forward to the second quarter and the remainder of 2008, we are encouraged by our prospects and expect healthy growth throughout the year driven by strength within our embedded notebook camera product line, as well as growth within the mobile, personal media player and surveillance camera markets." Business Outlook For the second quarter of 2008, Vimicro expects revenue to range between $22 million and $24 million. Fourth Quarter, Fiscal Year 2007 and First Quarter 2008 Financial Results Conference Call and Web Cast Vimicro will host a conference call and Web cast today, April 29, 2008, at 5:30 p.m., Eastern Time, to discuss the Company's fourth quarter 2007, fiscal year 2007 and first quarter 2008 financial results. Investors and other interested parties may access the call by dialing 800-638-4930 (or +1-617-614-3944 outside of the U.S.), with the pass code 82115850, at least 10 minutes prior to the start of the call. 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 May 6, 2008 at midnight (ET). The replay number is 888-286-8010 with a pass code of 29162053. 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." 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 April 29, 2008, 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 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 December 31, 2007 and March 31, 2008, depending on the period discussed (the fourth quarter of 2007 and the first quarter of 2008), which were RMB 7.3046 to US$1.00 and RMB 7.019 to US$1.00, respectively. Vimicro International Corporation Consolidated Statements of Income (Amounts expressed in thousands of U.S. dollars, except number of share data) 2008 Q1 2007 Q4 2007 Q3 (unaudited) (unaudited) (unaudited) Net revenue 16,234 24,281 25,096 Cost of revenue (11,108) (16,940) (17,301) Gross profit 5,126 7,341 7,795 Operating expenses* Research and development, net (5,668) (4,068) (5,244) Sales and marketing (1,126) (897) (1,208) General and administrative (2,963) (2,642) (2,456) (Loss) income from operations (4,631) (266) (1,113) Other income (expense): Interest income 772 831 1,009 Others, net 631 697 373 (Loss) income before income taxes and share of loss of associated company and minority interest (3,228) 1,262 269 Income taxes expense -- 99 (5) Net (loss) income before share of loss of associated company and minority interest (3,228) 1,361 264 Share of gain of associated company, net of tax -- -- 1 Net (loss) income before minority interest (3,228) 1,361 265 Net (loss) income (3,228) 1,361 265 Other comprehensive income (loss): Foreign currency translation adjustment 2,392 1,565 665 Comprehensive (loss) income (836) 2,926 930 (Loss) income per share --Basic (0.02) 0.01 0.00 --Diluted (0.02) 0.01 0.00 (Loss) income per ADS --Basic (0.09) 0.04 0.01 --Diluted (0.09) 0.04 0.01 Weighted average number of ordinary shares outstanding --Basic 140,059,154 139,947,513 139,912,263 --Diluted 140,059,154 143,316,622 143,674,362 Weighted average number of ADS outstanding --Basic 35,014,788 34,986,878 34,978,066 --Diluted 35,014,788 35,829,155 35,918,590 *Components of share- based compensation expenses are included in the following expense captions: Research and development (700) (17) (849) Sales and marketing (261) (46) (211) General and administrative (835) (511) (592) 2007 Q1 2006 Q4 (unaudited) (unaudited) Net revenue 16,880 34,194 Cost of revenue (11,633) (24,993) Gross profit 5,247 9,201 Operating expenses* Research and development, net (5,708) (4,909) Sales and marketing (1,394) (1,373) General and administrative (2,776) (2,326) (Loss) income from operations (4,631) 593 Other income (expense): Interest income 1,096 1,170 Others, net (353) (267) (Loss) income before income taxes and share of loss of associated company and minority interest (3,888) 1,496 Income taxes expense 53 133 Net (loss) income before share of loss of associated company and minority interest (3,835) 1,629 Share of gain of associated company, net of tax -- (28) Net (loss) income before minority interest (3,835) 1,601 Net (loss) income (3,835) 1,601 Other comprehensive income (loss): Foreign currency translation adjustment 453 563 Comprehensive (loss) income (3,382) 2,164 (Loss) income per share --Basic (0.03) 0.01 --Diluted (0.03) 0.01 (Loss) income per ADS --Basic (0.11) 0.05 --Diluted (0.11) 0.04 Weighted average number of ordinary shares outstanding --Basic 139,435,920 138,637,328 --Diluted 139,435,920 146,334,096 Weighted average number of ADS outstanding --Basic 34,858,980 34,659,332 --Diluted 34,858,980 36,583,524 * Components of share-based compensation expenses are included in the following expense captions: Research and development (682) (698) Sales and marketing (206) (196) General and administrative (448) (394) FY2007 FY2006 (unaudited) (unaudited) Net revenue 92,753 126,564 Cost of revenue (64,290) (86,183) Gross profit 28,463 40,381 Operating expenses* Research and development, net (20,039) (17,320) Sales and marketing (4,668) (5,365) General and administrative (10,431) (10,863) (Loss) income from operations (6,675) 6,833 Other income (expense): Interest income 4,001 4,281 Others, net 570 (881) (Loss) income before income taxes and share of loss of associated company and minority interest (2,104) 10,233 Income taxes expense 99 (530) Net (loss) income before share of loss of associated company and minority interest (2,005) 9,703 Share of gain of associated company, net of tax 1 (31) Net (loss) income before minority interest (2,004) 9,672 Net (loss) income (2,004) 9,672 Other comprehensive income (loss): Foreign currency translation adjustment 3,380 1,391 Comprehensive (loss) income 1,376 11,063 (Loss) income per share --Basic (0.01) 0.07 --Diluted (0.01) 0.07 (Loss) income per ADS --Basic (0.06) 0.28 --Diluted (0.06) 0.26 Weighted average number of ordinary shares outstanding --Basic 139,709,890 137,592,825 --Diluted 139,709,890 146,962,266 Weighted average number of ADS outstanding --Basic 34,927,472 34,398,206 --Diluted 34,927,472 36,740,567 * Components of share-based compensation expenses are included in the following expense captions: Research and development (2,240) (2,266) Sales and marketing (654) (436) General and administrative (2,053) (786) Vimicro International Corporation Consolidated Balance Sheets (Amounts expressed in thousands of U.S. dollars, except number of share data) 3/31/2008 12/31/2007 9/30/2007 (unaudited) (unaudited) (unaudited) Assets Current assets: Cash 114,414 116,958 119,849 Accounts receivable, net 3,399 5,842 6,200 Notes receivable -- 297 97 Inventories, net 17,407 13,443 12,418 Prepayments and other current assets, net 3,989 2,898 2,481 Deferred tax assets 294 283 177 Total current assets 139,503 139,721 141,222 Investment in an associated company 164 157 153 Property, equipment and software, net 8,361 8,249 9,668 Other assets 8,160 5,904 1,884 Total assets 156,188 154,031 152,927 Liabilities and Shareholders' Equity Current liabilities: Accounts payable 8,543 7,853 8,150 Taxes payable 1,271 1,226 1,058 Advances from customers 767 154 137 Due to an associated company 60 60 58 Accrued expenses and other current liabilities 3,359 3,510 5,694 Deferred grants -- -- 67 Total current liabilities 14,000 12,803 15,164 Non-current liabilities: Deferred tax liabilities 26 26 30 Total liabilities 14,026 12,829 15,194 Shareholders' equity: Ordinary shares, $.0001 par value. 140,318,046 and 140,301,378 shares issued and outstanding as of March 31, 2008 and December 31, 2007, respectively 14 14 14 Additional paid-in capital 138,214 136,418 135,875 Accumulated other comprehensive income 7,759 5,367 3,802 Accumulated deficit (6,607) (3,379) (4,690) Statutory reserve 2,782 2,782 2,732 Total shareholders' equity 142,162 141,202 137,733 Total liabilities, redeemable convertible preferred shares and shareholders' equity 156,188 154,031 152,927 3/31/2007 12/31/2006 (unaudited) (audited) Assets Current assets: Cash 114,717 114,834 Accounts receivable, net 4,315 6,315 Notes receivable 1,191 2,435 Inventories, net 11,893 11,955 Prepayments and other current assets, net 2,646 3,353 Deferred tax assets 224 170 Total current assets 134,986 139,062 Investment in an associated company 148 146 Property, equipment and software, net 10,119 8,498 Other assets 834 644 Total assets 146,087 148,350 Liabilities and Shareholders' Equity Current liabilities: Accounts payable 5,980 5,379 Taxes payable 1,085 1,500 Advances from customers 238 246 Due to an associated company 56 56 Accrued expenses and other current liabilities 5,760 6,072 Deferred grants 127 210 Total current liabilities 13,246 13,463 Non-current liabilities: Deferred tax liabilities 30 30 Total liabilities 13,276 13,493 Shareholders' equity: Ordinary shares, $.0001 par value. 140,318,046 and 140,301,378 outstanding as of March 31, 2008 and December 31, 2007, respectively 14 14 Additional paid-in capital 132,785 131,449 Accumulated other comprehensive income 2,440 1,987 Accumulated deficit (5,160) (1,325) Statutory reserve 2,732 2,732 Total shareholders' equity 132,811 134,857 Total liabilities, redeemable convertible preferred shares and shareholders' equity 146,087 148,350 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 March 31, 2008 December 31, 2007 GAAP Adjust- Non-GAAP GAAP Adjust- Non-GAAP Result ment Result Result ment Result (Loss) income from operations (4,631) 1,796 (2,835) (266) 574 308 Net (loss) income (3,228) 1,796 (1,432) 1,361 574 1,935 Diluted (loss) income per ADS (0.09) 0.05 (0.04) 0.04 0.01 0.05 Three months ended Three months ended September 30, 2007 March 31, 2007 GAAP Adjust- Non-GAAP GAAP Adjust- Non-GAAP Result ment Result Result ment Result (Loss) income from operations (1,113) 1,653 540 (4,631) 1,336 (3,295) Net (loss) income 265 1,653 1,918 (3,835) 1,336 (2,499) Diluted (loss) income per ADS 0.01 0.04 0.05 (0.11) 0.04 (0.07) Three months ended December 31, 2006 GAAP Adjust- Non-GAAP Result ment Result (Loss) income from operations 593 1,288 1,881 Net (loss) income 1,601 1,288 2,889 Diluted (loss) income per ADS 0.04 0.04 0.08 Twelve months ended Twelve months ended December 31, 2007 December 31, 2006 GAAP Adjust- Non-GAAP GAAP Adjust- Non-GAAP Result ment Result Result ment Result (Loss) income from operations (6,675) 4,947 (1,728) 6,833 3,488 10,321 Net (loss) income (2,004) 4,947 2,943 9,672 3,488 13,160 Diluted (loss) income per ADS (0.06) 0.14 0.08 0.26 0.10 0.36 (*) The adjustment is to exclude non-cash for share-based compensation for employees and non-employees. For further information about Vimicro, please contact: Investor Contact: Shelton Group Investor Relations Ryan Bright Tel: +1-972-239-5119 x159 Email: http://www.newscom.com/cgi-bin/prnh/20070528/CNM014LOGO DATASOURCE: Vimicro International Corporation CONTACT: Investor Contact: Ryan Bright of Shelton Group Investor Relations at +1-972-239-5119 ext. 159 or Web site: http://www.vimicro.com/

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