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Vimicro Reports Fourth Quarter 2008, Fiscal Year 2008 and First Quarter 2009 Financial Results

Posted on: Monday, 6 July 2009, 15:05 CDT

BEIJING, July 6 /PRNewswire-Asia-FirstCall/ -- Vimicro International Corporation (Nasdaq: VIMC) ("Vimicro"), a leading multimedia semiconductor and solution provider, today announced financial results for the fourth quarter of 2008, the fiscal year ended December 31, 2008 and the first quarter ended March 31, 2009.

(Logo: http://www.newscom.com/cgi-bin/prnh/20070528/CNM014LOGO )

Fourth Quarter and Fiscal Year 2008

Net revenue in the fourth quarter of 2008 was $22.2 million as compared to $24.9 million reported in the third quarter of 2008 and $24.3 million in the fourth quarter of 2007.

Net loss in the fourth quarter of 2008, prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP), which included $1.8 million in share-based compensation expense, was $8.3 million, compared with a net loss of $1.1 million in the third quarter of 2008 and net income of $1.4 million in the fourth quarter of 2007. Diluted loss per ADS (each representing four ordinary shares) was $0.24 in the fourth quarter of 2008, compared with a diluted loss per ADS of $0.03 in the third quarter of 2008 and diluted earnings per ADS of $0.04 in the fourth quarter of 2007.

For the fiscal year ended December 31, 2008, net revenue was $86.5 million as compared to $92.8 million in the fiscal year ended December 31, 2007. Fiscal year 2008 net loss, prepared in accordance with U.S. GAAP, which included $6.3 million in share-based compensation expense, was $13.6 million, compared with a net loss of $2.0 million in fiscal year 2007. Diluted loss per ADS for the fiscal year 2008 was $0.39. Diluted loss per ADS for the fiscal year 2007 was $0.06.

First Quarter 2009

Net revenue in the first quarter of 2009 was $10.0 million as compared to $16.2 million reported in the first quarter of 2008.

First quarter 2009 net loss prepared in accordance with U.S. GAAP, which included $1.2 million in share-based compensation expense, was $6.6 million, compared with a net loss of $3.2 million in the first quarter of 2008. The U.S. GAAP diluted loss per ADS was $0.19 in the first quarter of 2009, compared with a diluted net loss of $0.09 per ADS in the first quarter of 2008.

"Our fourth quarter revenue was within our guidance range despite the rapid deterioration of the global economic environment that began during the latter part of the year," commented Dr. John Deng, Vimicro's Chairman and Chief Executive Officer. "As we entered the first quarter of 2009, the continued weakness of the global economic environment had a significant impact on our customers and our business. Combined with typical seasonality associated with the first quarter and the Chinese New Year holiday, revenue declined during the quarter."

Dr. Deng continued, "Looking back at 2008, Vimicro's overall business remained relatively stable with revenue declining only 6.8%, which was achieved during a challenging time for the economy and the semiconductor industry. Most notable, our notebook camera processor sales grew 92.6% over the prior year and represented 32.4% of total revenue in 2008 as compared to 15.7% in 2007. We also continued our research and development efforts in new product development for current and new markets, such as mobile multimedia, netbooks, smart phones and security surveillance. Additionally, we maintained strong cash and bank deposits reserves with $139.8 million as of the end of first quarter."

Dr. Deng concluded, "For the second quarter, revenue will improve substantially from the first quarter. Vimicro's strong balance sheet, diversified product lines, expanding global customer base and domestic market leadership have been key factors in maintaining our position during this challenging environment. Additionally, our continuous innovation in PC camera, mobile multimedia and surveillance solutions will contribute to our future growth as the economy improves."

Second Quarter Preliminary Results

Vimicro also provided preliminary revenue results for the second quarter of 2009 with estimated revenue ranging between $18 million and $19 million.

Financial Results Conference Call and Web Cast

Vimicro will host a conference call and Web cast today July 6, 2009, at 5:30 p.m. Eastern Time to discuss the Company's fourth quarter, year ended 2008 and first quarter of 2009. Investors and other interested parties may access the call by dialing 800-901-5217 (or 617-786-2964 outside of the U.S.) with the pass code 56350221, 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 6, 2009 at midnight (ET). The replay number is 888-286-8010 with a pass code of 42330180. 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 leading multimedia semiconductor and solution provider 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, PCs over broadband Internet. Vimicro is also expanding in the security and surveillance industry with various digital video products and solutions. 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 PC and 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 December 31, 2008 and March 31, 2009, depending on the period discussed, which were RMB 6.8346 to $1.00 and RMB 6.8359 to $1.00, respectively.

Vimicro International Corporation Consolidated Balance Sheets (Amounts expressed in thousands of U.S. dollars, except number of share data) 03/31 12/31 09/30 03/31 12/31 /2009 /2008 /2008 /2008 /2007 (unaudi (unaudit (unaudit (unaudit (audit -ed) -ed) -ed) -ed) -ed) Assets Current assets: Cash and cash equivalents 76,895 58,215 119,762 114,414 116,958 Short-term time deposits 62,903 14,885 -- -- -- Restricted cash -- 73,157 -- -- -- Available-for-sale securities 2,088 731 -- -- -- Accounts receivable, net 3,897 7,131 6,128 3,399 5,842 Notes receivable -- -- -- -- 297 Inventories 12,244 13,430 14,140 17,407 13,443 Prepayments and other current assets 2,412 2,431 3,354 3,989 2,898 Deferred tax assets 2 2 303 294 283 Total current assets 160,441 169,982 143,687 139,503 139,721 Investment in an associate 168 168 168 164 157 Property, equipment and software, net 8,455 8,736 8,258 8,361 8,249 Land use rights 7,359 7,365 7,388 7,186 4,939 Other assets 938 947 968 974 965 Total assets 177,361 187,198 160,469 156,188 154,031 Liabilities and Shareholders' Equity Current liabilities: Accounts payable 3,668 8,074 11,102 8,543 7,853 Taxes payable 1,209 1,345 1,189 1,271 1,226 Advances from customers 202 56 139 767 154 Due to an associate -- -- 60 60 60 Accrued expenses and other current liabilities 4,078 4,870 3,381 3,359 3,510 Total current liabilities 9,157 14,345 15,871 14,000 12,803 Non-current liabilities: Deferred tax liabilities 31 31 26 26 26 Total liabilities 9,188 14,376 15,897 14,026 12,829 Shareholders' equity: Ordinary shares, $0.0001 par value. 137,848,696 and 137,778,145 shares issued and outstanding as of March 31, 2009 and December 31, 2008, respectively 14 14 14 14 14 Additional paid-in capital 143,924 142,681 140,862 138,214 136,418 Treasury stock (1,650) (1,650) -- -- -- Accumulated other comprehensive income 10,137 9,435 9,625 7,759 5,367 Accumulated deficit (23,673) (17,019) (8,711) (6,607) (3,379) Statutory reserve 2,782 2,782 2,782 2,782 2,782 Total parent shareholders' equity 131,534 136,243 144,572 142,162 141,202 Noncontrolling interest 36,639 36,579 -- -- -- Total shareholders' equity 168,173 172,822 144,572 142,162 141,202 Total liabilities and shareholders' equity 177,361 187,198 160,469 156,188 154,031 Vimicro International Corporation Consolidated Statements of Income (Amounts expressed in thousands of U.S. dollars, except number of share data) 2009 Q1 2008 Q4 2008 Q3 2008 Q1 (unaudited) (unaudited) (unaudited) (unaudited) Net revenue 10,022 22,176 24,942 16,234 Cost of revenue (7,140) (17,521) (16,760) (11,108) Gross profit 2,882 4,655 8,182 5,126 Operating expenses* Research and development, net (5,965) (8,238) (5,839) (5,668) Sales and marketing (992) (1,539) (1,276) (1,126) General and administrative (2,856) (3,569) (2,976) (2,963) Total operating expenses (9,813) (13,346) (10,091) (9,757) Loss from operations (6,931) (8,691) (1,909) (4,631) Other income / (expense): Interest income 352 397 593 772 Foreign exchange gain, net 9 39 141 631 Others, net (17) 252 121 -- (Loss) / income before income taxes and share of (loss) / gain of an associate (6,587) (8,003) (1,054) (3,228) Income taxes (expense) / benefit -- (305) -- -- Net (loss) / income before share of (loss) / gain of an associate (6,587) (8,308) (1,054) (3,228) Share of (loss) / gain of an associate, net of tax -- -- (1) -- Net (loss) / income (6,587) (8,308) (1,055) (3,228) Less: Noncontrolling interest 67 -- -- -- (Loss)/income attributed to ordinary shareholders (6,654) (8,308) (1,055) (3,228) Other comprehensive income / (loss): Foreign currency translation adjustment (35) (161) 382 2,392 Unrealized gain / (loss) on available- for-sale securities 730 (29) -- -- Other comprehensive income / (loss) before noncontrolling interest: 695 (190) 382 2,392 Less: Noncontrolling Interest in other comprehensive income (7) -- -- - Other comprehensive income / (loss) after noncontrolling interest: 702 (190) 382 2,392 Comprehensive (loss) / income (5,952) (8,498) (673) (836) (Loss) / income per share -Basic (0.05) (0.06) (0.01) (0.02) -Diluted (0.05) (0.06) (0.01) (0.02) (Loss) / income per ADS -Basic (0.19) (0.24) (0.03) (0.09) -Diluted (0.19) (0.24) (0.03) (0.09) Weighted average number of ordinary shares outstanding -Basic 137,772,235 139,193,972 140,944,218 140,059,154 -Diluted 137,772,235 139,193,972 140,944,218 140,059,154 Weighted average number of ADS outstanding -Basic 34,443,059 34,798,493 35,236,055 35,014,788 -Diluted 34,443,059 34,798,493 35,236,055 35,014,788 * Components of share-based compensation expenses are included in the following expense captions: Research and development (538) (743) (567) (700) Sales and marketing (86) (176) (207) (261) General and administrative (613) (901) (574) (835) 2007 Q4 FY2008 FY2007 (unaudited) (unaudited) (Audited) Net revenue 24,281 86,497 92,753 Cost of revenue (16,940) (61,814) (64,290) Gross profit 7,341 24,683 28,463 Operating expenses* Research and development, net (4,068) (24,585) (20,039) Sales and marketing (897) (5,049) (4,668) General and administrative (2,642) (12,285) (10,431) Total operating expenses (7,607) (41,919) (35,138) Loss from operations (266) (17,236) (6,675) Other income / (expense): Interest income 831 2,371 4,001 Foreign exchange gain, net 195 1,144 185 Others, net 502 387 385 (Loss) / income before income taxes and share of (loss) / gain of an associate 1,262 (13,334) (2,104) Income taxes (expense) / benefit 99 (305) 99 Net (loss) / income before share of (loss) / gain of an associate 1,361 (13,639) (2,005) Share of (loss) / gain of an associate, net of tax -- (1) 1 Net (loss) / income 1,361 (13,640) (2,004) Less: Noncontrolling interest -- -- -- (Loss)/income attributed to ordinary shareholders 1,361 (13,640) (2,004) Other comprehensive income / (loss): Foreign currency translation adjustment 1,565 4,097 3,380 Unrealized gain / (loss) on available- for-sale securities -- (29) -- Other comprehensive income / (loss) before noncontrolling interest: 1,565 4,068 3,380 Less: Noncontrolling Interest in other comprehensive income -- -- -- Other comprehensive income / (loss) after noncontrolling interest: 1,565 4,068 3,380 Comprehensive (loss) / income 2,926 (9,572) 1,376 (Loss) / income per share -Basic 0.01 (0.10) (0.01) -Diluted 0.01 (0.10) (0.01) (Loss) / income per ADS -Basic 0.04 (0.39) (0.06) -Diluted 0.04 (0.39) (0.06) Weighted average number of ordinary shares outstanding -Basic 139,947,513 140,261,311 139,709,890 -Diluted 143,316,622 140,261,311 139,709,890 Weighted average number of ADS outstanding -Basic 34,986,878 35,065,328 34,927,472 -Diluted 35,829,155 35,065,328 34,927,472 * Components of share-based compensation expenses are included in the following expense captions: Research and development (17) (2,613) (2,240) Sales and marketing (46) (852) (654) General and administrative (511) (2,811) (2,053) For further information about Vimicro, please contact: Investor Contacts: Jiabin Song, Senior Manager Investment & IR Phone: +86-10-6894-8888 x7270 Email: songjiabin@vimicro.com Shelton Group Investor Relations Leanne K. Sievers, EVP Phone: +1-949-224-3874 Email: lsievers@sheltongroup.com

SOURCE Vimicro International Corporation

Source: PR Newswire

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