Vimicro Announces Unaudited Second-Quarter 2013 Financial Results

BEIJING, July 30, 2013 /PRNewswire/ -- Vimicro International Corporation (NASDAQ: VIMC) ("Vimicro" or the "Company"), a leading image processing IC and surveillance solution provider, today announced unaudited financial results for the second quarter ended June 30, 2013.

Second-Quarter 2013 Results

Net revenue in the second quarter of 2013 was $11.1 million, as compared to net revenue of $19.5 million from continuing operations in the year-ago quarter and $7.9 million in the first quarter of 2013 (results for the second quarter of 2012 have been adjusted for continuing operations to reflect the divestiture of certain business lines). The 43.2% year-over-year revenue decrease was primarily due to lower sales of PC and notebook multimedia processors. Revenues were below the Company's guidance of $12 to $14 million due to a decline in orders from a major PC-manufacturer customer and delays in the recognition of revenue from one large surveillance contract.

Gross profit in the second quarter was $4.2 million, as compared with $7.1 million in the year-ago quarter and $1.6 million in the first quarter of 2013. The gross margin in the second quarter was 37.5%, as compared with 36.5% in the year-ago quarter and 20.1% in the first quarter of 2013.

Operating expenses in the second quarter were $10.0 million, as compared to $8.0 million in the year-ago quarter. Operating expenses increased year-over-year primarily due to higher research and development expense, which included a $1.7 million purchase of surveillance intellectual property in the second quarter of 2013. The operating loss was $5.9 million in the quarter, as compared to a loss of $0.9 million in the year-ago quarter.

In the second quarter of 2013, non-GAAP net loss attributable to Vimicro International Corporation was $5.5 million, or approximately $0.19 per ADS on a diluted basis, as compared to a non-GAAP net income from continuing operations attributable to Vimicro of $1.1 million, or $0.04 per diluted ADS in the year-ago quarter. Non-GAAP net loss attributable to Vimicro International Corporation in second quarter of 2013 and the year-ago quarter excludes $0.1 and $1.1 million of non-cash, share-based compensation, respectively. GAAP net loss attributable to Vimicro in the second quarter was $5.7 million, or $0.20 per diluted ADS, as compared to a profit from continuing operations of approximately $30,000, or $0.00 per diluted ADS in the year-ago quarter.

As of June 30, 2013, the Company had cash and cash equivalents of approximately $31.9 million and restricted cash of $5.2 million, totaling $37.1 million. Total current assets were approximately $95.8 million, and Vimicro had working capital of approximately $66.2 million and $21.0 million of long-term bank loans and liabilities on its balance sheet, as of June 30, 2013.

Dr. John Deng, Vimicro's Chairman and Chief Executive Officer, commented, "Revenues from sales of PC and notebook multimedia processors decreased sharply year-over year due to the ongoing softness of the global PC market and a decline in orders from a major PC-manufacturer customer. We were pleased to see growth in sales of surveillance products, and we are extremely pleased about the large order we received after the quarter's end. This order will make surveillance our largest business line and complete the transformation of the Company that we started two and a half years ago. We look forward to receiving additional surveillance orders as we grow and expand geographically."

Recent Events

On July 25, 2013, the Company announced that one of its key joint-ventures signed a large contract valued at approximately USD $20 million to provide SVAC-based surveillance products to a major Chinese city.

Business Outlook

For the third quarter of 2013, Vimicro expects revenues of $23 to $26 million, with strong growth in the surveillance segment.

Conference Call Information

The Company will host a conference call at 5:00 p.m. (U.S. Eastern Daylight Time) / 2:00 p.m. (U.S. Pacific Daylight Time) on Tuesday, July 30, 2013 / 5:00 a.m. (Beijing / Hong Kong time) on Wednesday, July 31, 2013 to discuss unaudited second-quarter 2013 financial results.

To participate in the conference call, please dial one of the following numbers five to ten minutes prior to the scheduled conference call time: (800) 901-5241 or (617) 786-2963. The conference call ID number is 56041620.

If you are unable to participate in the call at this time, a replay will be available starting at 7:00 p.m. Eastern Daylight Time on Tuesday, July 30, 2013, through 11:59 a.m. Eastern Daylight Time on Tuesday, August 6, 2013. To access the replay, dial (888) 286-8010 or (617) 801-6888. The replay call ID number is 52500930.

This conference call will also be broadcast live over the Internet and can be accessed by all interested parties by clicking on: http://edge.media-server.com/m/p/5pjwda4w/lan/en. 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 continuing operations, non-GAAP net income/(loss) from continuing operations attributable to Vimicro International Corporation and non-GAAP net income/(loss) from continuing operations attributable to Vimicro International Corporation per diluted 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 6.1787 to $1.00 on June 28, 2013.

- financial tables follow -


VIMICRO INTERNATIONAL CORPORATION

CONSOLIDATED BALANCE SHEETS

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



June 30,
2013

(unaudited)

December 31,
2012

(audited)

Assets



Current assets:                                                                                                                    



Cash and cash equivalents

31,942

55,532

Restricted cash

5,188

2,593

Accounts and notes receivable, net of provision for doubtful accounts of $2,072
       and $2,172 as of June 30, 2013 and December 31, 2012, respectively

23,792

24,564

Amounts due from related parties, net of provision for doubtful accounts of 
       $1,821 and $1,749 as of June 30, 2013 and December 31, 2012, respectively

5,497

4,225

Inventories, net

13,218

11,362

Prepayments and other current assets, net of provision for doubtful accounts of
       $144 and $144 as of June 30, 2013 and December 31, 2012, respectively

5,696

4,809

Assets held for sale

10,014

Deferred tax assets

418

418

Total current assets

95,765

103,503

Investments in an equity investee

3,405

4,218

Investments in unconsolidated affiliates, at cost

2

2

Property, equipment and software, net

21,854

20,457

Land use rights

13,968

14,774

Deferred tax assets-noncurrent

169

169

Other assets

1,504

1,371

         Total assets

136,667

144,494




Liabilities and equity



Current liabilities:



Accounts payable

6,309

7,281

Amounts due to related parties

2,080

2,184

Taxes payable

3,073

2,318

Advances from customers

198

222

Accrued expenses and other current liabilities

11,604

14,750

Deferred government grant

6,290

12,476

Total current liabilities

29,554

39,231

Deferred tax liabilities

23

23

Product warranty

566

466

Long-term bank loan

12,948

4,773

Other long-term liabilities

8,092

4,772

Total liabilities

51,183

49,265

Equity:



Ordinary shares ,$0.0001 par value, 500,000,000 shares authorized,
       154,612,103 shares issued and 114,825,947 shares outstanding as of June 30,
       2013 and 153,585,440 shares issued and 116,599,856 shares outstanding as of
       December 31, 2012, respectively

15

15

Additional paid-in capital

161,462

161,017

Treasury stock at cost, 39,786,156 shares as of June 30, 2013 and 36,985,584
       shares as of December 31, 2012, respectively

(15,063)

(13,886)

Accumulated other comprehensive income

11,549

11,394

Accumulated deficit

(91,352)

(83,249)

Statutory reserve

2,782

2,782

  Total shareholders' equity attributable to Vimicro International Corporation

69,393

78,073

Noncontrolling interests

16,091

17,156

  Total equity

85,484

95,229

  Total liabilities and equity

136,667

144,494

 

VIMICRO INTERNATIONAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

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



2013 Q2

2013 Q1

2012 Q2


(unaudited)

(unaudited)

(unaudited)

Net revenue                                                                                                    

11,091

7,854

19,513

Cost of revenue

(6,929)

(6,274)

(12,398)

Gross profit

4,162

1,580

7,115





Operating expenses:




Research and development, net

(4,004)

(1,182)

(2,842)

Selling and marketing

(2,661)

(2,011)

(2,158)

General and administrative

(3,349)

(2,304)

(3,048)

Total operating expenses

(10,014)

(5,497)

(8,048)

Loss from operations

(5,852)

(3,917)

(933)





Other income:




Interest income

35

125

Foreign exchange gain/(loss), net

587

36

(159)

Others, net

9

1

1

Loss before income taxes and equity in loss of an equity investee

(5,256)

(3,845)

(966)

Income tax (expense)/benefit

(100)

100

(175)

Loss before equity in loss of an equity investee

(5,356)

(3,745)

(1,141)

Equity in loss of an equity investee, net of tax

(239)

(85)

Net loss from continuing operations

(5,595)

(3,830)

(1,141)

Net income/(loss) from continuing operations attributable to 
noncontrolling interest

65

(1,387)

(1,171)

Net income/(loss) from continuing operations attributable to
Vimicro International Corporation

(5,660)

(2,443)

30

Loss from discontinued operations, net of income tax

(699)

Loss from discontinued operations attributable to
noncontrolling interest

(326)

Loss from discontinued operations attributable to
Vimicro International Corporation

(373)

Net loss

(5,595)

(3,830)

(1,840)





Income/(loss) attributable to noncontrolling interest

65

(1,387)

(1,497)

Loss attributable to Vimicro International Corporation

(5,660)

(2,443)

(343)









Income/(loss) per share




continuing operations




    Basic

(0.05)

(0.02)

0.00

    Diluted

(0.05)

(0.02)

0.00

discontinued operations




    Basic

0.00

0.00

0.00

    Diluted

0.00

0.00

0.00

Loss per share




Basic

(0.05)

(0.02)

0.00

Diluted

(0.05)

(0.02)

0.00





Income/(loss) per ADS




continuing operations




    Basic

(0.20)

(0.08)

0.00

    Diluted

(0.20)

(0.08)

0.00

discontinued operations




    Basic

0.00

0.00

(0.01)

    Diluted

0.00

0.00

(0.01)

Loss per ADS




Basic

(0.20)

(0.08)

(0.01)

Diluted

(0.20)

(0.08)

(0.01)





Weighted average number of ordinary shares outstanding




Basic

114,809,296

115,546,597

121,877,701

Diluted

114,809,296

115,546,597

125,502,681

Weighted average number of ADS outstanding




Basic

28,702,324

28,886,649

30,469,425

Diluted

28,702,324

28,886,649

31,375,670





Other comprehensive income/(loss):




Foreign currency translation adjustment

283

116

(175)

Comprehensive loss

(5,312)

(3,714)

(2,015)

Comprehensive income/(loss) attributable to
       noncontrolling interest

279

(1,344)

(1,497)

Comprehensive loss attributable to Vimicro
       International Corporation

(5,591)

(2,370)

(518)





Components of share-based compensation expenses are
   included in the following expense captions:




Research and development

(56)

(95)

(462)

Selling and marketing

(20)

(24)

(50)

General and administrative

(72)

(85)

(560)

Total

(148)

(204)

(1,072)

 

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, 2013

Three months ended
March 31, 2012

Three months ended
June 30, 2012


GAAP
Result

Adjust-
ment

Non-GAAP
Result

GAAP
Result

Adjust-
ment

Non-GAAP
Result

GAAP
Result

Adjust-
ment

Non-GAAP
Result

Income/(loss) from
   continuing operations

(5,595)

148

(5,447)

(3,830)

204

(3,626)

(1,141)

1,072

(69)

Income/(loss) from continuing
   operations attributable to
   Vimicro International
   Corporation

(5,660)

148

(5,512)

(2,443)

204

(2,239)

30

1,072

1,102

Income/(loss) from
   continuing operations
   attributable to Vimicro
   International Corporation
   per diluted ADS

(0.20)

0.01

(0.19)

(0.08)

0.01

(0.07)

0.00

0.04

0.04


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

SOURCE Vimicro International Corporation



RELATED LINKS
http://www.vimicro.com
http://edge.media-server.com/m/p/5pjwda4w/lan/en

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