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Second Quarter 2008 Financial Results (Unaudited)
Net revenue in the second quarter of 2008 was $23.1 million as compared to $16.2 million reported in the first quarter of 2008 and $26.5 million in the second quarter of 2007.
Non-GAAP net income in the second quarter of 2008, which excluded $1.3 million in share-based compensation expense, was $0.3 million, compared to a net loss of $1.4 million in the first quarter of 2008 and net income of $1.6 million in the second quarter of 2007. Non-GAAP diluted earnings per ADS (each representing four ordinary shares) for the second quarter of 2008 were $0.01, compared with a loss per ADS of $0.04 in the first quarter of 2008 and earnings per ADS of $0.04 in the second quarter of 2007.
Net loss in the second quarter of 2008, prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP), was $1.0 million, compared with a net loss of $3.2 million in the first quarter of 2008 and net income of $0.2 million in the second quarter of 2007. Diluted loss per ADS was $0.03 in the second quarter of 2008, compared with a loss per ADS of $0.09 in the first quarter of 2008 and earnings per ADS of $0.01 in the second quarter of 2007.
"Our second quarter 2008 results reflect a significant increase in unit shipments but a slight decline in average selling prices sequentially," commented Dr. John Deng, Vimicro's Chairman and Chief Executive Officer. "Looking forward, we have a good opportunity to grow on several market trends both within our existing markets of PC and Notebook Cameras and Mobile Multimedia, as well as the surveillance market for which we have invested heavily in R&D. We look forward to a return to growth in the near future, as we anticipate that many of our recent design wins will result in revenue growth opportunities when our customers' products are released to the market."
Business Outlook
For the third quarter of 2008, Vimicro expects revenue to range between $21 million and $25 million.
Second Quarter 2008 Financial Results Conference Call and Web Cast
Vimicro will host a conference call and Web cast today, July 29, 2008, at 5:30 p.m., Eastern Time, to discuss the Company's second quarter 2008 financial results. Investors and other interested parties may access the call by dialing 800-798-2801 (or +617-614-6205 outside of the U.S.), with the pass code 89521625, at least 10 minutes prior to the start of the call.
In addition, an audio Web cast will be available in the Investor Relations section of the Company's Web site at http://www.vimicro.com . Following the live Web cast, 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 August 5, 2008 at midnight (ET). The replay number is 888-286-8010 with a pass code of63044768. International callers should dial +617-801-6888 and enter the same pass code at the prompt.
About Vimicro International Corporation
Vimicro International Corporation is a worldwide leading fabless semiconductor company that designs, develops and markets proprietary embedded multimedia signal processing chips and solutions that enable multimedia applications for mobile phones over 2.5G/3G networks and PCs over broadband Internet. 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: our limited history of achieving net profit; our growth strategies; our future business development, results of operations and financial condition; our ability to develop and sell mobile multimedia processors that meet changing consumer preferences and industry standards; decrease in the demand for our notebook and PC camera multimedia processors and third-party image sensors which we bundle with some of our PC camera multimedia processors; that multimedia opportunities associated with the 3G build out in China will make a significant contribution to our longer-term growth; our ability to increase our penetration of the PC and notebook multimedia markets; our ability to secure sufficient foundry capacity in a timely manner; our ability to maintain existing customers and attract new customers; and the expected growth of the mobile multimedia processor market. Further information regarding these and other risks is included in our 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 July 29, 2008, 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 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. 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 rate quoted by the Bank of China as of June 30, 2008, which was RMB 6.8591 to US$1.00.
Vimicro International Corporation
Consolidated Balance Sheets
(Amounts expressed in thousands of U.S. dollars,
except number of share data)
06/30/08 12/31/07
(unaudited) (audited)
Assets
Current assets:
Cash and cash equivalents 115,520 116,958
Accounts receivable, net 6,392 5,842
Notes receivable -- 297
Inventories 15,073 13,443
Prepayments and other current
assets 3,192 2,898
Deferred tax assets 301 283
Total current assets 140,478 139,721
Investment in an associate 168 157
Property, equipment and software, net 8,619 8,249
Land use rights 7,349 4,939
Other assets 975 965
Total assets 157,589 154,031
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable 8,191 7,853
Taxes payable 1,180 1,226
Advances from customers 314 154
Due to an associate 60 60
Accrued expenses and other current
liabilities 3,801 3,510
Deferred grants 144 --
Total current liabilities 13,690 12,803
Non-current liabilities:
Deferred tax liabilities 26 26
Total liabilities 13,716 12,829
Commitments and contingencies
Shareholders' equity:
Ordinary shares, $.0001 par value.
140,942,614 and 140,301,378
shares issued and outstanding as
of June 30, 2008 and December 31,
2007, respectively 14 14
Additional paid-in capital 139,490 136,418
Accumulated other comprehensive
income 9,243 5,367
Accumulated deficit (7,656) (3,379)
Statutory reserve 2,782 2,782
Total shareholders' equity 143,873 141,202
Total liabilities and
shareholders' equity 157,589 154,031
Vimicro International Corporation
Consolidated Statements of Operations and Comprehensive Income
(Amounts expressed in thousands of U.S. dollars,
except number of share data)
2008 Q2 2008 Q1 2007 Q2
(unaudited) (unaudited) (unaudited)
Net revenue 23,145 16,234 26,496
Cost of revenue (16,425) (11,108) (18,416)
Gross profit 6,720 5,126 8,080
Operating expenses*:
Research and
development, net (4,840) (5,668) (5,019)
Selling and marketing (1,108) (1,126) (1,169)
General and
administrative (2,777) (2,963) (2,557)
Loss from operations (2,005) (4,631) (665)
Other income/ (expense):
Interest income 609 772 1,065
Others, net 347 631 (147)
(Loss)/ income before
income taxes (1,049) (3,228) 253
Income taxes expense -- -- (48)
Net (loss)/ income (1,049) (3,228) 205
Other comprehensive
income:
Foreign currency
translation
adjustment 1,484 2,392 697
Comprehensive income/
(loss) 435 (836) 902
(Loss)/income per
share
-- Basic (0.01) (0.02) 0.00
-- Diluted (0.01) (0.02) 0.00
(Loss)/ income per ADS
-- Basic (0.03) (0.09) 0.01
-- Diluted (0.03) (0.09) 0.01
Weighted-average number
of ordinary shares
outstanding
-- Basic 140,660,796 140,059,154 139,507,099
-- Diluted 140,660,796 140,059,154 143,126,310
Weighted-average number
of ADS outstanding
-- Basic 35,165,199 35,014,788 34,876,775
-- Diluted 35,165,199 35,014,788 35,781,578
* Components of share-
based compensation
expenses
Research and
development, net (603) (700) (693)
Selling and marketing (208) (261) (191)
General and
administrative (501) (835) (502)
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, 2008
GAAP Adjustment Non-GAAP
Result Results
(Loss)/ income from operations (2,005) 1,312 (693)
Net (loss)/ income (1,049) 1,312 263
Diluted (loss)/ income per ADS (0.03) 0.04 0.01
Three months ended
March 31, 2008
GAAP Adjustment Non-GAAP
Result Results
(Loss)/ income from operations (4,631) 1,796 (2,835)
Net (loss)/ income (3,228) 1,796 (1,432)
Diluted (loss)/ income per ADS (0.09) 0.05 (0.04)
Three months ended
June 30, 2007
GAAP Adjustment Non-GAAP
Result Results
(Loss)/ income from operations (665) 1,385 720
Net (loss)/ income 205 1,385 1,590
Diluted (loss)/ income per ADS 0.01 0.03 0.04
(*) The adjustment is to exclude non-cash for share-based compensation
for employees and non-employees.
For further information about Vimicro, please contact:
Investor Contact:
Shelton Group Investor Relations
Ryan Bright
Tel: +1-972-239-5119 x159
Email: rbright@sheltongroup.com
Web site: http://www.vimicro.com/