Vimicro Announces First-Quarter 2012 Results

BEIJING, June 13, 2012 /PRNewswire-Asia-FirstCall/ -- Vimicro International Corporation (NASDAQ: VIMC) ("Vimicro" or the "Company"), a leading PC-camera processor and IP-based surveillance solution provider, today announced the results for the first quarter ended March 31, 2012.

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First-Quarter 2012 Results

Net revenue in the first quarter of 2012 was $11.6 million, as compared to net revenue from continuing operations of $12.1 million in the first quarter and $16.4 million in the fourth quarter, both of 2011.  (Results for 2011 have been adjusted for continuing operations to reflect the divestiture of the mobile-phone multimedia processor business, which was completed in the fourth quarter of 2011.)  The 4.1% year-over-year revenue decrease was due to lower revenues in the PC/notebook business due to product mix, slightly offset by modestly higher revenues in the surveillance business year over year.

Gross profit in the first quarter was $3.5 million, as compared with $4.1 million in the year-ago quarter.  The gross margin in the first quarter was 30.6%, compared with 33.6% in the year-ago quarter, owing to price declines in both segments.

Operating expenses in the first quarter of 2012 were $9.0 million, as compared to $10.7 million in the year-ago quarter.  Operating expenses decreased year-over-year due to the success of the Company's cost-reduction program. The non-GAAP net loss attributable to Vimicro International Corporation, was $3.5 million, or approximately $0.10 per ADS, as compared to a loss attributable to Vimicro of $2.4 million, or $0.07 per ADS from continuing operations in the year-ago quarter. 

As of March 31, 2012, the Company had cash and cash equivalents of approximately $24.8 million, held-to-maturity securities of $13.3 million, and restricted cash of $8.6 million, totaling $46.7 million. Total current assets were approximately $95.6 million, and Vimicro had working capital of approximately $65.8 million and $1.1 million of notes payable and $4.8 million of long-term bank loans on its balance sheet, as of March 31, 2012.

Dr. John Deng, Vimicro's Chairman and Chief Executive Officer, commented, "In the first quarter, we began to see the early results of the business adjustments we have made over the past two years and the cost reductions we have put in place.  Our PC/camera business has stabilized, and we are encouraged by growth in our surveillance business alongside the China Ministry of Public Security's endorsement of the SVAC standard. We believe China's "Safe City Projects" will adopt the SVAC standard with the Fuzhou Municipal Government being the first one."

Summary of Full-Year and Fourth-Quarter 2011 Results

Total net revenue in the fourth quarter of 2011, including continuing and discontinued operations, was $22.0 million, which was in the guidance range of $22 to $25 million provided in the third-quarter earnings release.

Results for 2010 and 2011 have been adjusted for continuing operations to reflect the divestiture of the mobile-phone multimedia processor business, which was completed in the fourth quarter. Revenues for full-year 2011 from continuing operations were $63.7 million, as compared to $76.5 million in 2010.  Although our surveillance business grew more than 100% in 2011 with revenue increased from $7.8 million to $16.8 million, due to weak economic environment worldwide and the corresponding decreases in our PC camera business, our revenue for 2011 declined by 16.7%.

The loss attributable to Vimicro from continuing operations in 2011 was $15.6 million or $0.43 per ADS, of which $6.6 million was related with asset impairment charges or approximately $0.18 per ADS.

Business Outlook

For the second quarter of 2012, Vimicro expects revenues to increase approximately 40% from the first quarter of 2012.  As a result of the Company's continued cost reduction efforts, Vimicro expects a non-GAAP net loss attributable to Vimicro Corporation to be around $1.5 million for the second quarter of 2012.

First-Quarter Earnings Release and Conference Call Information

The Company plans to release its first-quarter 2012 results on Wednesday, June 13 before the market opens.  The Company will also hold a conference call at 8:00 a.m. EDT on Wednesday, June 13, 2012, to discuss results for its first quarter ended March 31, 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: (800) 573-4752 or (617) 224-4324. The conference call ID number is 93752723.

If you are unable to participate in the call at this time, a replay will be available starting on Wednesday, June 13, 2012 at 10:00 a.m. Eastern Daylight Time, through 11:59 p.m. Eastern Daylight Time Wednesday, June 20, 2012. To access the replay, dial (888) 286-8010 or (617) 801-6888. The conference call ID number is 23604276.

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/p/r4rx5636. 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 (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.

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 6.3009 to $1.00 on December 31, 2011, and RMB 6.2943 to $1.00 on March 31, 2012.

Financial tables follow –

SOURCE Vimicro International Corporation