Vimicro Announces Improved Third-Quarter 2012 Results and a Return
to Positive GAAP Net Income
BEIJING, Nov. 7, 2012 /PRNewswire-FirstCall/ -- Vimicro
International Corporation (NASDAQ: VIMC) ("Vimicro" or the
"Company"), a leading imaging processor and IP-based surveillance
solution provider, today announced financial results for the third
quarter ended September 30,
2012.
Third-Quarter Highlights:
- Revenues increased 14.9% year over year to $21.7 million
- Surveillance revenues increased 45.4%
year over year
- Gross margins increased more than six
percentage points year over year to 38.0%
- Operating profit turned positive, at $1.5 million
- GAAP net income attributable to Vimicro turned positive,
at $2.9
million, or $0.10 per diluted
ADS
Third-Quarter 2012 Results
Net revenue in the third quarter of 2012 was $21.7 million, as compared to net revenue from
continuing operations of $19.5
million in the second quarter and $18.9 million from continuing operations in the
year-ago quarter. (Results for the third quarter
of 2011 and the second and third
quarters of 2012 have
been adjusted for continuing operations
to reflect the divestiture of certain business
lines.) Third-quarter revenues were towards the upper
end of the guidance range of $20 to $22
million. The 14.9% year-over-year revenue increase was due
to higher sales in both product lines, reflecting successful
execution of the Company's new
focus.
Gross profit in the third quarter was $8.3 million, as compared with $6.0 million in the year-ago
quarter. The gross margin in the third quarter
was 38.0%, as compared with 31.8% in the
year-ago quarter and 36.5% in the second quarter, owing to
a successful new
product transition at key customers.
Operating expenses in the third quarter were $6.8 million, as compared to $11.3 million in the year-ago
quarter. Operating expenses decreased
year-over-year and sequentially due to the success of the
Company's divestiture of non-performing
businesses and an increase in focus on its two
business lines. The Company turned profitable on an operating
basis, reporting operating income of $1.5
million, as compared to a loss of $5.3 million in the year-ago quarter.
Vimicro remained profitable on a non-GAAP basis in the
third quarter, and non-GAAP net income from continuing
operations attributable to Vimicro International
Corporation was $2.9 million, or
approximately $0.09 per
ADS on diluted basis, as compared
to a non-GAAP net loss from continuing operations attributable to
Vimicro of $1.7 million, or $0.05 per ADS in the year-ago
quarter. The non-GAAP net income attributable to
Vimicro International Corporation excludes $0.4 million of non-cash, share-based
compensation. In the third quarter, Vimicro
turned profitable on a GAAP basis, reporting GAAP net income
attributable to Vimicro of $2.9
million, or $0.10 per diluted ADS,
as compared of a loss of $5.3 million, or
$0.14 per
diluted ADS year over year.
As of September 30, 2012,
the Company had cash and cash equivalents of approximately
$33.2 million and restricted cash of
$5.2 million, totaling $38.4 million. Total current assets were
approximately $91.8 million, and Vimicro
had working capital of approximately $64.7
million, and $4.7 million of
long-term bank loans on its balance sheet, as of September 30, 2012.
Dr. John Deng, Vimicro's
Chairman and Chief Executive Officer, commented, "We are pleased to
report such a strong quarter financially and particularly for our
surveillance business, after several quarters during which
the Company was transitioning to its
current focus on image processing and
surveillance. Our reporting positive operating
profit, continued non-GAAP profitability, and a return to positive
GAAP net income in the third quarter shows that Vimicro's
restructuring has been successfully completed.
Our strong third-quarter results show the full benefits of the
changes we made to increase our focus on our current product
line. Looking ahead, we believe the
Company's turnaround will be reflected by the market as we keep
delivering value to our shareholders."
Business Outlook
For the fourth quarter of 2012, Vimicro expects revenues
of $20 to $23
million.
Recent Events
On November, 1, Vimicro announced that its subsidiary
Vimicro Electronics Corporation had secured a major government
purchase contract from the Jinzhong City Public Security Bureau of
Shanxi province to provide
Surveillance Video and Audio Coding (SVAC)-based security
surveillance products and services, with Vimicro's portion valued
at US $6.23 million.
On November 1, Vimicro
announced that that the Company had received notification from the
Nasdaq Stock Market of having regained compliance with the
$1.00 minimum per-share closing
bid-price requirement.
Third-Quarter Earnings Release and
Conference Call Information
Vimicro plans to release third-quarter
2012 results on
Wednesday, November
7 before the U.S. market
opens. The Company will also
hold a conference call at 8:00 a.m.
EST on Wednesday, November 7, 2012, to discuss financial results
for the third quarter ended September 30,
2012.
To participate in the conference call, please dial one of the
following numbers five to ten minutes prior to the scheduled
conference call time: (866) 831-6234 or (617) 213-8854. The
conference call ID number is 74982920.
If you are unable to participate in the call at this time, a
replay will be available starting on Wednesday, November 7, 2012 at 11:00 p.m. EST, through 11:59 p.m. EST on Wednesday, November 14, 2012. To access the
replay, dial (888) 286-8010 or (617) 801-6888. The conference call
ID number is 94453713.
This conference call will also be broadcast live over the
Internet and can be accessed by all interested parties by clicking
on
http://www.media-server.com/m/acs/35bd35c0f4b49c7d96815fe020a68a2a.
Please access the link at least fifteen minutes prior to the start
of the call to register, download, and install any necessary audio
software.
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 PC/notebook, consumer electronics and surveillance
markets. Vimicro is aggressively expanding business into the
surveillance market with system-level solutions and semiconductor
products to capitalize on China's
domestic demand. 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 income/(loss) from operations, non-GAAP net
income/(loss) attributed to Vimicro International Corporation and
non-GAAP diluted net income /(loss) from continuing operations 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 expense. 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, which
was RMB 6.3410 to $1.00 on
September 28, 2012.
Company
Contact:
Vimicro International
Corporation
Mr. David Tang, Chief
Financial Officer
Phone: +86 (10) 6894
8888 ext. 7526
E-mail:
ir@vimicro.com
Ms. Anita Zhang, IR
Associate
Manager
Phone: +86 (10) 6894
8888 ext. 7526
E-mail:
zhangjiayi@vimicro.com
www.vimicro.com
|
Investor
Contact:
CCG Investor
Relations
Mr. John Harmon, CFA,
Sr. Account Manager
Phone: +86 (10) 8573
1014 (Beijing)
E-mail:
john.harmon@ccgir.com
Mr. Roger Ellis, Senior
Partner & SVP for M.I.
Phone: +1 (310) 954-1332
(Los Angeles)
E-mail:
roger.ellis@ccgir.com
www.ccgir.com
|
- financial tables follow -
Vimicro International
Corporation
|
Consolidated Balance
Sheets
|
(Amounts expressed in
thousands of U.S. dollars, except number of shares
data)
|
|
|
|
|
|
|
|
9/30/2012
|
|
12/31/2011
|
|
|
(unaudited)
|
|
(audited)
|
Assets
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash equivalents
|
|
33,192
|
|
49,227
|
Restricted cash
|
|
5,201
|
|
3,520
|
Accounts and notes receivable, net of provision for doubtful
accounts
of $2,070 and $1,822 as
of September 30, 2012 and December 31,
2011,
respectively
|
|
23,126
|
|
17,895
|
Amounts due from related party
|
|
7,580
|
|
4,831
|
Inventories
|
|
12,886
|
|
18,734
|
Prepayments and other current assets, net of provision for
doubtful
accounts of $305 and
$162 as of September 30, 2012 and
December 31, 2011,
respectively
|
|
2,994
|
|
4,057
|
Asset held-for-sale
|
|
6,474
|
|
0
|
Deferred tax assets
|
|
357
|
|
356
|
Total current assets
|
|
91,810
|
|
98,620
|
Investment in an
unconsolidated affiliate
|
|
5,612
|
|
1,520
|
Property, equipment and
software, net
|
|
16,337
|
|
14,266
|
Land use
rights
|
|
14,675
|
|
21,488
|
Deferred tax assets-non
current
|
|
112
|
|
112
|
Other assets
|
|
1,535
|
|
1,291
|
Total assets
|
|
130,081
|
|
137,297
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
5,111
|
|
9,280
|
Notes payable
|
|
0
|
|
1,013
|
Amounts due to related party
|
|
672
|
|
963
|
Taxes payable
|
|
2,835
|
|
1,209
|
Advances from customers
|
|
230
|
|
1,916
|
Accrued expenses and other current liabilities
|
|
8,436
|
|
8,333
|
Deferred government grant
|
|
9,841
|
|
5,910
|
Total current liabilities
|
|
27,125
|
|
28,624
|
Non-current
liabilities:
|
|
|
|
|
Deferred tax liabilities
|
|
33
|
|
33
|
Product warranty
|
|
424
|
|
300
|
Long-term bank loan
|
|
4,731
|
|
0
|
Total liabilities
|
|
32,313
|
|
28,957
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
Ordinary shares,$0.0001 par value, 500,000,000 shares
authorized,
|
|
|
|
|
118,231,636 and 139,953,296 shares issued and
outstanding
|
|
|
|
|
as of September 30, 2012 and December 31, 2011,
respectively
|
|
15
|
|
15
|
Additional paid-in capital
|
|
160,612
|
|
158,879
|
Treasury stock
|
|
(13,254)
|
|
(6,490)
|
Accumulated other comprehensive income
|
|
12,695
|
|
12,850
|
Accumulated deficit
|
|
(83,704)
|
|
(82,630)
|
Statutory reserve
|
|
2,782
|
|
2,782
|
Total equity attributable to Vimicro International
Corporation
|
|
79,146
|
|
85,406
|
Non-controlling interest
|
|
18,622
|
|
22,934
|
Total equity
|
|
97,768
|
|
108,340
|
|
|
|
|
|
Total liabilities and equity
|
|
130,081
|
|
137,297
|
Vimicro International
Corporation
|
Consolidated
Statement Of Comprehensive Income/ (loss)
|
(Amounts expressed in
thousands of U.S. dollars, except number of shares and per share
data)
|
|
|
2012
Q3
|
|
2012
Q2
|
|
2011
Q3
|
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
|
Net revenue
|
|
21,748
|
|
19,519
|
|
18,921
|
|
|
|
|
|
|
|
Cost of
revenue
|
|
(13,490)
|
|
(12,404)
|
|
(12,905)
|
|
|
|
|
|
|
|
Gross profit
|
|
8,258
|
|
7,115
|
|
6,016
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
Research and development, net
|
|
(1,840)
|
|
(2,842)
|
|
(5,308)
|
Selling and marketing
|
|
(2,484)
|
|
(2,159)
|
|
(3,261)
|
General and administrative
|
|
(2,452)
|
|
(3,047)
|
|
(2,758)
|
Total operating
expenses
|
|
(6,776)
|
|
(8,048)
|
|
(11,327)
|
Income/(loss) from
operations
|
|
1,482
|
|
(933)
|
|
(5,311)
|
|
|
|
|
|
|
|
Other income:
|
|
|
|
|
|
|
Interest income
|
|
3
|
|
125
|
|
210
|
Foreign exchange gain/(loss), net
|
|
(87)
|
|
(159)
|
|
617
|
Others, net
|
|
1
|
|
1
|
|
5
|
|
|
|
|
|
|
|
Income/ (loss) before
income taxes and share of profit/ (loss) of an unconsolidated
affiliates
|
|
1,399
|
|
(966)
|
|
(4,479)
|
|
|
|
|
|
|
|
Income tax (expense)/
benefit
|
|
(227)
|
|
(175)
|
|
37
|
|
|
|
|
|
|
|
Net income/ (loss)
before share of profit/ (loss) of an unconsolidated
affiliates
|
|
1,172
|
|
(1,141)
|
|
(4,442)
|
|
|
|
|
|
|
|
Net income/ (loss) from
continuing operations
|
|
1,172
|
|
(1,141)
|
|
(4,442)
|
|
|
|
|
|
|
|
Income/ (loss) from discontinued operations, net of income tax
|
|
494
|
|
(699)
|
|
(2,920)
|
|
|
|
|
|
|
|
Net income/
(loss)
|
|
1,666
|
|
(1,840)
|
|
(7,362)
|
|
|
|
|
|
|
|
Loss attributable to
non-controlling interest
|
|
(1,277)
|
|
(1,497)
|
|
(2,096)
|
|
|
|
|
|
|
|
Income/ (loss)
attributed to Vimicro International Corporation
|
|
2,943
|
|
(343)
|
|
(5,266)
|
|
|
|
|
|
|
|
Income/ (loss) per
share
|
|
|
|
|
|
|
continuing operations
|
|
|
|
|
|
|
Basic
|
|
0.02
|
|
0.00
|
|
(0.02)
|
Diluted
|
|
0.02
|
|
0.00
|
|
(0.02)
|
discontinued operations
|
|
|
|
|
|
|
Basic
|
|
0.00
|
|
0.00
|
|
(0.02)
|
Diluted
|
|
0.00
|
|
0.00
|
|
(0.02)
|
Income/ (loss) per
share
|
|
|
|
|
|
|
Basic
|
|
0.02
|
|
(0.00)
|
|
(0.04)
|
Diluted
|
|
0.02
|
|
(0.00)
|
|
(0.04)
|
|
|
|
|
|
|
|
Income/ (loss) per
ADS
|
|
|
|
|
|
|
continuing operations
|
|
|
|
|
|
|
Basic
|
|
0.08
|
|
0.01
|
|
(0.06)
|
Diluted
|
|
0.08
|
|
0.01
|
|
(0.06)
|
discontinued operations
|
|
|
|
|
|
|
Basic
|
|
0.02
|
|
(0.02)
|
|
(0.08)
|
Diluted
|
|
0.02
|
|
(0.02)
|
|
(0.08)
|
Income/ (loss) per
ADS
|
|
|
|
|
|
|
Basic
|
|
0.10
|
|
(0.01)
|
|
(0.14)
|
Diluted
|
|
0.10
|
|
(0.01)
|
|
(0.14)
|
|
|
|
|
|
|
|
Weighted average number
of ordinary shares outstanding
|
|
|
|
|
|
|
Basic
|
|
118,625,664
|
|
121,877,701
|
|
146,852,718
|
Diluted
|
|
121,700,752
|
|
121,877,701
|
|
146,852,718
|
Weighted average number
of ADS outstanding
|
|
|
|
|
|
|
Basic
|
|
29,656,416
|
|
30,469,425
|
|
36,713,179
|
Diluted
|
|
30,425,188
|
|
30,469,425
|
|
36,713,179
|
|
|
|
|
|
|
|
Other comprehensive
income/ (loss):
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
(254)
|
|
(175)
|
|
1,176
|
|
|
|
|
|
|
|
Comprehensive income/
(loss)
|
|
1,412
|
|
(2,015)
|
|
(6,186)
|
Comprehensive income/ (loss) attributable to non-controlling
interest
|
|
(1,535)
|
|
(1,498)
|
|
(1,571)
|
Comprehensive income/
(loss) attributable to Vimicro International Corporation
|
|
2,947
|
|
(517)
|
|
(4,615)
|
|
|
|
|
|
|
|
Components of
share-based compensation expenses
|
|
|
|
|
|
|
are included in the following expense captions:
|
|
|
|
|
|
|
R&D
|
|
(220)
|
|
(462)
|
|
(165)
|
S&M
|
|
(40)
|
|
(50)
|
|
(15)
|
G&A
|
|
(167)
|
|
(560)
|
|
(450)
|
Total
|
|
(427)
|
|
(1,072)
|
|
(630)
|
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,
|
2012
|
|
2012
|
|
2011
|
|
GAAP
|
|
Adjustment
|
|
Non-GAAP
|
|
GAAP
|
|
Adjustment
|
|
Non-GAAP
|
|
GAAP
|
|
Adjustment
|
|
Non-GAAP
|
Result
|
Results
|
|
Result
|
Results
|
|
Result
|
Results
|
Income/ (loss) from continuing operations
|
1,482
|
|
427
|
|
1,909
|
|
(933)
|
|
1,072
|
|
139
|
|
(5,311)
|
|
630
|
|
(4,681)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/ (loss)
attributed to Vimicro International Corporation
|
2,943
|
|
427
|
|
3,370
|
|
(343)
|
|
1,072
|
|
729
|
|
(5,266)
|
|
630
|
|
(4,636)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/ (loss) from continuing operations per ADS (**)
|
0.08
|
|
0.01
|
|
0.09
|
|
0.01
|
|
0.04
|
|
0.05
|
|
(0.06)
|
|
0.01
|
|
(0.05)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) The
adjustment is to exclude non-cash share-based compensation for
employees and non-employees.
|
|
|
|
|
|
|
|
|
(**) Loss per ADS
refers to continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Vimicro International Corporation