VIMC (MM)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

For the month of August 2011

 

 

Commission File Number: 000-51606

 

 

VIMICRO INTERNATIONAL CORPORATION

 

 

15/F Shining Tower

No. 35 Xueyuan Road, Haidian District

Beijing 100191, People’s Republic of China

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F   x             Form 40-F   ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):   ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):   ¨

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes   ¨              No   x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- N/A

This Form 6-K is being incorporated by reference into the registrant’s Registration Statement on Form F-3 (File No. 333-166948), filed with the Securities and Exchange Commission on May 19, 2010.

 

 

 

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Second Quarter 2011 Results

Vimicro International Corporation (“Vimicro” or the “Company”) reported its financial results for the second quarter ended June 30, 2011. Net revenue in the second quarter of 2011 was $15.2 million, up 16.5% from $13.0 million in the first quarter of 2011 and down 37.7% from $24.3 million in the second quarter of 2010 (the 2010 figures have been restated to account for discontinued operations following the divestiture of non-core IC businesses in December 2010). The sequential increase was mainly due to the growth in PC/notebook video processor business and the IP-based surveillance business. The year-over-year decrease was due to a product transition to a higher-performance, lower-cost chip in PC/notebook business and a sharp decline in mobile multimedia processor sales, offset by a significant increase in IP-based surveillance revenue.

Cost of revenue in the second quarter of 2011 was $10.1 million, compared with $16.2 million in the second quarter of 2010. The gross margin in the second quarter of 2011 was 33.2%, up 1.6 percentage points from 31.7% in the first quarter. The sequential increase in gross margin was due to higher margins for PC/notebook and IP-based surveillance products.

Operating expenses in the second quarter of 2011 were $14.8 million, as compared to $12.4 million in the second quarter of 2010. The increase was primarily due to higher levels of investment to develop multiple IP-based surveillance products, including platforms, network, storage, cameras and chipsets.

The non-GAAP net loss attributable to Vimicro International Corporation in the second quarter of 2011, excluding $0.7 million in share-based compensation, was $5.6 million, or approximately $0.15 per ADS, compared to a loss of $2.6 million, or $0.05 per ADS from continuing operations in the year-ago quarter. The GAAP net loss attributable to Vimicro International Corporation in the second quarter of 2011 was $6.3 million, as compared to a net loss of $3.5 million a year ago.

As of June 30, 2011, the Company had cash and cash equivalents of approximately $57.0 million, short-term time deposits of $12.7 million, and total current assets of approximately $112.0 million. As of June 30, 2011, the Company had working capital of approximately $91.5 million and no long-term debt on its balance sheet.

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, inventory reserves related to divested assets and discontinued operations. 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.

 

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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, 2011, which was RMB6.4716 to US$1.00.

 

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Vimicro International Corporation

Consolidated Balance Sheets

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

 

		6/30/2011				12/31/2010
		(unaudited)				(audited)
Assets
Current assets:
Cash and cash equivalents			57,006				69,491
Short-term time deposits			12,669				12,380
Restricted cash			4,565				4,958
Marketable equity securities			0				1,436
Accounts and notes receivable, net of provision for doubtful accounts of $418 and $394 as of December 31, 2010 and June 30, 2011, respectively			11,639				18,647
Amounts due from related party			3,203				10,465
Inventories			17,306				13,751
Prepayments and other current assets, net of provision for doubtful accounts of $18 and $18 as of December 31, 2010 and June 30, 2011, respectively			5,601				4,191
Deferred tax assets			2				2
Total current assets			111,991				135,321
Investment in an unconsolidated affiliate			89				87
Property, equipment and software, net			13,384				9,600
Land use rights			21,071				20,703
Intangible assets, net			2,804				2,929
Goodwill			2,131				2,082
Other assets			1,225				1,203
Total assets			152,695				171,925
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable			6,557				7,378
Amounts due to related party			732				4,848
Notes payable			0				30
Taxes payable			814				1,001
Advances from customers			542				291
Accrued expenses and other current liabilities			6,808				7,613
Deferred government grant			5,082				4,550
Total current liabilities			20,535				25,711
Non-Current liabilities:
Deferred tax liabilities			40				40
Product warranty			229				142
Total liabilities			20,804				25,893
Commitments and contingencies
Shareholders’ equity:
Ordinary shares,$0.0001 par value, 500,000,000 shares authorized, 147,135,996 and 146,841,296 shares issued and outstanding as of December 31, 2010 and June 30, 2011, respectively			15				15
Additional paid-in capital			158,067				156,415
Treasury stock			(4,167	)			(3,836	)
Accumulated other comprehensive income			11,905				12,383
Accumulated deficit			(66,688	)			(54,430	)
Statutory reserve			2,782				2,782
Total shareholders’ equity attributable to Vimicro International Corporation			101,914				113,329
Non-controlling interest			29,977				32,703
Total shareholders’ equity			131,891				146,032
Total liabilities and shareholders’ equity			152,695				171,925

 

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Vimicro International Corporation

Consolidated Statement Of Operations And Comprehensive Income

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

 

		2011 Q2				2011 Q1				2010 Q2
		(unaudited)				(unaudited)				(unaudited)
Net revenue			15,175				13,029				24,341
Cost of revenue			(10,130	)			(8,901	)			(16,154	)
Gross profit			5,045				4,128				8,187
Operating expenses:
Research and development, net			(7,943	)			(7,198	)			(7,858	)
Selling and marketing			(3,243	)			(2,290	)			(1,822	)
General and administrative			(3,636	)			(3,872	)			(2,765	)
Total operating expenses			(14,822	)			(13,360	)			(12,445	)
Loss from operations			(9,777	)			(9,232	)			(4,258	)
Other income/(expense):
Interest income			165				187				289
Foreign exchange gain, net			448				274				54
Gain on disposal of marketable equity securities			633				885				0
Others, net			14				4				52
Loss before income taxes and share of gain/(loss) of an unconsolidated affiliate			(8,517	)			(7,882	)			(3,863	)
Income taxes benefit/(expense)			(53	)			0				(518	)
Net loss before share of profit/(loss) of an unconsolidated affiliate			(8,570	)			(7,882	)			(4,381	)
Net loss from continuing operations			(8,570	)			(7,882	)			(4,381	)
Loss from discontinued operations, net of income tax			0				0				(663	)
Net loss			(8,570	)			(7,882	)			(5,044	)
Less: loss attributable to non-controlling interest			(2,268	)			(1,925	)			(1,504	)
Loss attributed to Vimicro International Corporation			(6,302	)			(5,957	)			(3,540	)
Other comprehensive loss/(income):
Foreign currency translation adjustment			867				346				459
Unrealized (loss)/gain on marketable equity securities			(549	)			(417	)			263
Total comprehensive loss			(8,252	)			(7,953	)			(4,322	)
Less: comprehensive loss attributable to non-controlling interest			(1,866	)			(1,601	)			(1,319	)
Comprehensive loss attributable to Vimicro International Corporation			(6,386	)			(6,352	)			(3,003	)
Loss per share - basic and diluted
continuing operations			(0.04	)			(0.04	)			(0.02	)
discontinued operations			0.00				0.00				(0.00	)
Total loss per share- basic and diluted			(0.04	)			(0.04	)			(0.02	)
Loss per ADS Basic and Diluted
continuing operations			(0.17	)			(0.16	)			(0.08	)
discontinued operations			0.00				0.00				(0.02	)
Total loss per ADS- basic and diluted			(0.17	)			(0.16	)			(0.10	)
Weighted average number of ordinary shares outstanding
Basic and Diluted			146,820,790				146,812,413				147,690,245
Weighted average number of ADS outstanding
Basic and Diluted			36,705,198				36,703,103				36,922,561
Components of share-based compensation expenses are included in the following expense captions:
R&D			(197	)			(327	)			(422	)
S&M			(27	)			(24	)			(50	)
G&A			(474	)			(559	)			(477	)
Total			(698	)			(910	)			(949	)

 

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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 June 30, 2011												Three months ended March 31, 2011												Three months ended June 30, 2010
		GAAP Result				Adjustment				Non-GAAP Results				GAAP Result				Adjustment				Non-GAAP Results				GAAP Result				Adjustment				Non-GAAP Results
Loss from operations			(9,777	)			698				(9,079	)			(9,232	)			910				(8,322	)			(4,258	)			949				(3,309	)
(Loss)/income attributed to Vimicro International Corporation			(6,302	)			698				(5,604	)			(5,957	)			910				(5,047	)			(3,540	)			949				(2,591	)
Diluted (loss)/income per ADS			(0.17	)			0.02				(0.15	)			(0.16	)			0.02				(0.14	)			(0.08	)			0.03				(0.05	)

 

(*)	The adjustment is to exclude non-cash for share-based compensation for employees and non-employees.

 

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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.

 

Date: August 9, 2011

 

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