Vimicro Reports First Quarter 2010 Financial Results

Jun 09, 2010, 16:30 ET from Vimicro International Corporation

BEIJING, June 9 /PRNewswire-Asia-FirstCall/ -- Vimicro International Corporation (Nasdaq: VIMC) ("Vimicro"), a leading multimedia semiconductor and solution provider, today announced financial results for the first quarter ended March 31, 2010.

(Logo: )

First Quarter 2010

Net revenue in the first quarter of 2010 was $20.1 million, compared to $10.0 million in the first quarter of 2009 and $23.7 million in the fourth quarter of 2009. The significant increase from the prior year period reflects strong demand for the Company's notebook camera and TD-SCDMA based 3G mobile multimedia processors and general improvements in the global economic conditions. Gross margin was 33.6% compared to 29.7% of revenue in the fourth quarter.

Dr. John Deng, Vimicro's Chairman and Chief Executive Officer, commented, "First quarter 2010 outperformed typical seasonal trends as demands for notebook and mobile multimedia products are strong. Notebook product unit shipments increased 33 percent over last quarter driven by strong purchasing trends from tier-one global brands. More importantly, we began volume shipments of our TD-SCDMA based 3G mobile multimedia processors with high ASPs during the quarter."

First quarter 2010 net loss, prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP), was $5.7 million, which included $1.2 million in share-based compensation expense and $1.7 million IP/Software purchase expense. After excluding loss attributable to non-controlling interest, net loss attributed to Vimicro was $4.4 million in the first quarter, or $0.12 loss per ADS (each representing four ordinary shares), compared to a net loss of $6.7 million, or $0.19 loss per ADS, in the first quarter of 2009 and a net loss of $0.6 million, or $0.02 loss per ADS, last quarter.

Dr. Deng concluded, "Over the past year, Vimicro has made significant progress in leveraging our core technology expertise and intellectual property to expand our business from a single product line into new high growth market segments. As we look to the second half of the year, we are well positioned to benefit from new product cycles in the 3G market, and in the security and surveillance market, as well as continued growth in our notebook lines. Collectively, these growth initiatives will assist in moving the Company toward our goal of profitability."

Business Outlook

For the second quarter of 2010, the Company expects revenue to range between $24 million and $26 million, representing 28 percent to 39 percent growth over the $18.7 million reported in the second quarter of 2009, and 19 percent to 29 percent sequential growth over the first quarter. The expected growth is primarily driven by strong orders of Vimicro's notebook cameras processors as well as increasing contribution from TD-SCDMA based 3G mobile multimedia products.

Financial Results Conference Call and Webcast

Vimicro will host a conference call and Webcast June 9, 2010 at 6:30 p.m. Eastern Time to discuss the Company's recent results. Investors and other interested parties may access the call by dialing 800-659-1966 (or +1-617-614-2711 outside of the U.S.) with the pass code 89023174, at least 10 minutes prior to the start of the call.

In addition, an audio Webcast will be available in the Investor Relations section of the Company's Web site at . Following the live Webcast, 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 June 16, 2010 at midnight (ET). The replay number is 888-286-8010 with a pass code of 99669983. 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 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 the consumer electronics and communications markets. Vimicro is also expanding business into the surveillance market with system-level solutions and semiconductor products. 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.

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 March 31, 2010, which was RMB 6.8263 to $1.00.

    Vimicro International Corporation
    Consolidated Balance Sheets
    (Amounts expressed in thousands of U.S. dollars, except number of share

                                                  3/31/2010         12/31/2009
                                                 (unaudited)        (audited)

    Current assets:
         Cash and cash equivalents                  67,164            84,510
         Short-term time deposits                   43,948            43,935
         Restricted cash                               132               132
         Marketable equity securities                  556               543
         Accounts receivable, net of
          provision for doubtful accounts           12,028             9,462
         Inventories                                11,396             8,804
         Prepayments and other current assets        4,429             4,155
         Deferred tax assets                             3                 3
                     Total current assets          139,656           151,544
    Property, equipment and software, net            8,724             9,015
    Land use rights                                 20,116            10,905
    Intangible assets, net                           3,576             3,819
    Goodwill                                         2,020             2,019
    Other assets                                       964               973
                     Total assets                  175,056           178,275

    Liabilities and Shareholders' Equity

    Current liabilities:
         Accounts payable                            5,626             4,958
         Taxes payable                                 953               879
         Advances from customers                       519               649
         Accrued expenses and other
          current liabilities                        4,332             5,900
         Deferred government grants                  3,296             3,844
                     Total current liabilities      14,726            16,230
    Non-Current liabilities:
         Deferred tax liabilities                       66               196
         Product warranty                               25                25
                     Total liabilities              14,817            16,451

    Shareholders' equity:
         Ordinary shares, $0.0001 par
          value, 500,000,000 shares
          authorized, 147,673,168 and
          147,643,168 shares issued and
          outstanding as of March 31, 2010
          and December 31, 2009, respectively           15                15
         Additional paid-in capital                153,439           151,672
         Treasury stock                             (2,664)           (2,664)
         Accumulated other comprehensive
          income                                    10,013             9,967
         Accumulated deficit                       (40,194)          (35,786)
         Statutory reserve                           2,782             2,782
                       Total shareholders
                        equity attributable
                        to Vimicro
                        Corporation                123,391           125,986
         Noncontrolling interest                    36,848            35,838
                       Total shareholders'
                        equity                     160,239           161,824

                       Total liabilities and
                        shareholders' equity       175,056           178,275

    Vimicro International Corporation
    Consolidated Statement Of Operations and Comprehensive Income
    (Amounts expressed in thousands of U.S. dollars, except number of share

                                    2010 Q1          2009 Q4          2009 Q1
                                  (unaudited)      (unaudited)      (unaudited)

    Net revenue                      20,110           23,732           10,022
    Cost of revenue                 (13,351)         (16,673)          (7,140)

    Gross profit                      6,759            7,059            2,882

    Operating expenses:
            Research and
             development, net        (8,750)          (6,706)          (5,965)
            Selling and marketing    (1,457)          (1,867)            (992)
            General and
             administrative          (3,208)          (2,838)          (2,856)
    Total operating expenses        (13,415)         (11,411)          (9,813)
    Loss from operations             (6,656)          (4,352)          (6,931)

    Other income/(expense):
            Interest income             309              321              352
            Foreign exchange
             (loss)/gain, net           (35)             (34)               9
            Gain on disposal of
             securities                  --            1,949               --
            Others, net                 861              614              (17)

    Loss before income taxes         (5,521)          (1,502)          (6,587)

    Income taxes expense               (172)             (91)              --

    Net loss                         (5,693)          (1,593)          (6,587)

    Less: (loss)/income
     attributable to non-
     controlling interest            (1,285)            (993)              67

    Loss attributed to
     Vimicro International
     Corporation                     (4,408)            (600)          (6,654)

    Other comprehensive
            Foreign currency
             translation adjustment      33              (29)             (35)
            Unrealized gain/(loss) on
             marketable equity
             securities                  13           (1,472)             730

    Comprehensive loss               (5,647)          (3,094)          (5,892)
            Less: comprehensive
             attributable to non-
             controlling interest    (1,285)            (990)              60
    Comprehensive loss attributable
     to Vimicro International
     Corporation                     (4,361)          (2,104)          (5,952)

    Loss per share
            Basic                     (0.03)           (0.00)           (0.05)
            Diluted                   (0.03)           (0.00)           (0.05)

    Loss per ADS
            Basic                     (0.12)           (0.02)           (0.19)
            Diluted                   (0.12)           (0.02)           (0.19)

    Weighted average number
     of ordinary shares
            Basic               147,657,701      147,518,482      137,772,235
            Diluted             147,657,701      147,518,482      137,772,235

    Weighted average number
     of ADS outstanding
            Basic                36,914,425       36,879,621       34,443,059
            Diluted              36,914,425       36,879,621       34,443,059

    Components of share-
     based compensation expenses
     are included in the following
     expense captions:
    R&D                                (532)            (437)            (538)
    S&M                                 (56)             (52)             (86)
    G&A                                (575)            (437)            (613)
    Total                            (1,163)            (926)          (1,237)

    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
                                                        March 31,

                                              GAAP                   Non-GAAP
                                             Result     Adjustment    Results
    Loss from operations                     (6,656)      1,163       (5,493)
    (Loss)/income attributed to Vimicro
     International Corporation               (4,408)      1,163       (3,245)
    Diluted (loss)/income per ADS             (0.12)       0.03        (0.09)

                                                    Three months ended
                                                       December 31,

                                               GAAP                  Non-GAAP
                                              Result    Adjustment    Results
    Loss from operations                      (4,352)       926       (3,426)
    (Loss)/income attributed to Vimicro
     International Corporation                  (600)       926          326
    Diluted (loss)/income per ADS              (0.02)      0.03         0.01

                                                    Three months ended
                                                        March 31,
                                              GAAP                   Non-GAAP
                                             Result     Adjustment    Results
    Loss from operations                     (6,931)      1,237       (5,694)
    (Loss)/income attributed to Vimicro
     International Corporation               (6,654)      1,237       (5,417)
    Diluted (loss)/income per ADS             (0.19)       0.03        (0.16)

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

    For further information about Vimicro, please contact:

    Investor Contacts:

    Jack Guo, Vice President of Investor Relations
    Phone: +86-10-6894-8888 x7379

    Shelton Group Investor Relations
    Leanne K. Sievers, EVP
    Phone: +1-949-224-3874

SOURCE Vimicro International Corporation