Vimicro Announces Unaudited Second-Quarter 2015 Financial Results

BEIJINGAug. 13, 2015 /PRNewswire/ -- Vimicro International Corporation (NASDAQ: VIMC) ("Vimicro" or the "Company"), a leading video surveillance technology and solution provider in China, today announced financial results for the second quarter ended June 30, 2015.

Second-Quarter 2015 Results

Net revenue in the second quarter of 2015 was $31.7 million, as compared to net revenue of $24.0 million in the year-ago quarter and$19.2 million in the first quarter of 2015. Video surveillance revenues were $30.3 million in the second quarter, representing 95.6% of total net revenues and up 50.8% year over year.

Gross profit in the second quarter was $15.1 million, as compared with $9.1 million in the year-ago quarter and $7.7 million in the first quarter of 2015. The gross margin in the second quarter was 47.5%, as compared to 37.8% in the year-ago quarter and 40.1% in the first quarter of 2015. The higher margin in the quarter was a result of several projects with relatively higher margin recognized during the quarter.

Operating expenses in the second quarter of 2015 were $9.0 million, as compared to $10.3 million in the year-ago quarter and $7.6 million quarter over quarter. Research and development expenses were $2.0 million for the second quarter net of $3.2 milliongovernment grants applied (research and development expenses would have been $5.2 million without government grants for the quarter), as compared to $1.8 million year over year and $1.9 million quarter over quarter. Sales and marketing expenses were $2.8 million for the second quarter, as compared to $2.4 million year over year and $2.3 million quarter over quarter. General and administrative expenses were $4.2 million in the second quarter, as compared to $6.1 million year over year and $3.4 million quarter over quarter.

Operating income was $6.0 million in the second quarter of 2015, as compared to the operating loss of $1.2 million in the year-ago quarter and the operating income of $0.2 million quarter over quarter.

The equity in loss of an equity investee was $2.4 million in the second quarter of 2015, as compared to the equity in profit of an equity investee of $1.8 million year over year and the equity in loss of an equity investee of $0.5 million quarter over quarter.

Net loss attributable to non-controlling interests was $1.3 million in the second quarter of 2015, as compared to net loss attributable to non-controlling interests of $0.9 million year over year and net income attributable to non-controlling interests of $1.5 million quarter over quarter.

In the second quarter of 2015, non-GAAP net income attributable to Vimicro was $6.0 million, or approximately $0.17 per ADS on a diluted basis, as compared to a non-GAAP net income attributable to Vimicro of $2.8 million, or $0.10 per diluted ADS in the year-ago quarter. Non-GAAP net income attributable to Vimicro in the second quarter of 2015 and the year-ago quarter excludes $0.8 millionand $0.1 million of non-cash, share-based compensation, respectively. GAAP net income attributable to Vimicro in the second quarter was $5.3 million, or $0.15 per diluted ADS, as compared to net income of $2.7 million, or $0.10 per diluted ADS, in the year-ago quarter.

Balance Sheet

As of June 30, 2015, the Company had cash and cash equivalents of approximately $37.7 million. Total current assets were approximately $201.8 million, and Vimicro had working capital of approximately $88.2 million and $24.0 million of long-term bank loans and liabilities on its balance sheet as of June 30, 2015. 

Recent Events

- Winning of competitive bid for the provision of SVAC-compliant video surveillance cameras and system to Jincheng Municipal Government in Shanxi Province, with contract value of $22 million;

- Multiple contract wins in Taiyuan City, Shanxi Province, to provide SVAC-compliant video surveillance cameras and system of traffic control and monitoring to the Traffic Police Detachment of Taiyuan City, aggregated to $12.88 million.

About Vimicro International Corporation

Vimicro International Corporation (NASDAQ: VIMC) is a leading video surveillance technology and solution provider that designs, develops and markets a full range of video surveillance products and solutions to governments, private enterprises, and consumers inChina. Vimicro co-developed SVAC (Surveillance Video and Audio Coding), the national video surveillance technological standard, which demonstrates its unique strengths in proprietary multimedia IC technology, making it a leader in China's fast-growing security and surveillance market. Vimicro is headquartered in Beijing, China and has subsidiaries and offices throughout China and in Silicon Valley. Vimicro's ADSs each represent four ordinary shares and are traded on the NASDAQ Global Market exchange 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 increase its sales of PC camera processors, as well as video surveillance products; the expected growth of the video surveillance market; 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 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 and fluctuations in the markets in which the Company competes. 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 operations, non-GAAP net income/(loss) from operations attributable to Vimicro International Corporation and non-GAAP net income/(loss) from 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 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 its business for the foreseeable future. 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 People's Bank of China, Assets and liabilities are translated at the exchange rates on the balance sheet date, equity amounts are translated at historical exchange rates, and revenues, expenses, gains, and losses are translated using the average rate for the period. Translation adjustments arising from these are reported as foreign currency translation adjustments and have been shown as a component of other comprehensive income or loss in the consolidated statements of comprehensive income.

 

 

VIMICRO INTERNATIONAL CORPORATION

CONSOLIDATED BALANCE SHEETS

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

         
   

June 30,

 

March 31,

   

2015

 

2015

   

(Unaudited)

 

(Unaudited)

ASSETS

       

    Current Assets

       

         Cash and cash equivalents

 

37,665

 

57,971

         Restricted cash

 

27

 

27

         Accounts receivable, net of provision

 

22,191

 

26,038

         Amounts due from related parties, net of provision

 

117,949

 

120,124

         Inventories

 

15,215

 

15,089

         Prepayments and other current assets, net of provision

 

7,710

 

6,805

         Deferred tax assets

 

1,015

 

1,010

    Total current assets

 

201,772

 

227,064

     Long-term investment

 

604

 

601

     Property, equipment and software, net

 

62,956

 

57,604

     Land use rights

 

15,216

 

15,188

     Deferred tax assets-non current

 

704

 

700

     Other long-term assets

 

1,582

 

1,587

    Total assets

 

282,834

 

302,744

         

LIABILITIES AND STOCKHOLDERS' EQUITY

       

    Current liabilities

       

         Accounts payable

 

37,474

 

47,950

         Amounts due to related parties

 

54

 

6,586

         Taxes payable

 

18,144

 

18,040

         Advances from customers

 

23,638

 

23,623

         Accrued expenses and other current liabilities

 

15,891

 

11,272

         Deferred government grant

 

14,922

 

17,798

         Short-term bank loan

 

1,963

 

1,954

         Deferred income from equity investee

 

1,469

 

11,833

    Total current liabilities

 

113,555

 

139,056

    Deferred government grant-non current

 

1,507

 

1,500

    Deferred tax liabilities

 

5

 

5

    Product warranty

 

3,526

 

3,432

    Long-term bank loan

 

9,160

 

9,117

    Other long-term liabilities

 

9,814

 

9,768

    Total liabilities

 

137,567

 

162,878

         

    Equity

       

         Ordinary shares

 

16

 

16

         Additional paid-in capital

 

205,797

 

204,884

         Treasury stock at cost, net

 

(12,644)

 

(12,858)

         Accumulated other comprehensive income

 

10,240

 

10,103

         Accumulated deficit

 

(84, 954)

 

(90,239)

         Statutory reserve

 

4,068

 

4,068

       Total shareholders' equity attributable to Vimicro International Corporation

 

122,523

 

115,974

       Noncontrolling interest

 

22,744

 

23,892

    Total equity

 

145,267

 

139,866

    Total liabilities and equity

 

282,834

 

302,744

 

VIMICRO INTERNATIONAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

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

 
     
   

Three months ended

 

Six months ended

   

June 30,

 

June 30,

   

2015

 

2014

 

2015

 

2014

   

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

Net revenues

 

31,741

 

24,033

 

50,964

 

40,441

  Third parties

 

6,743

 

7,254

 

12,377

 

17,045

  Related parties

 

24,998

 

16,779

 

38,587

 

23,396

Cost of revenues

 

(16,669)

 

(14,942)

 

(28,177)

 

(25,828)

Gross profit

 

15,072

 

9,091

 

22,787

 

14,613

                 

Operating expenses:

               

Research and development, net

 

(2,034)

 

(1,781)

 

(3,927)

 

(5,635)

Selling and marketing

 

(2,828)

 

(2,436)

 

(5,110)

 

(4,793)

General and administrative

 

(4,183)

 

(6,055)

 

(7,568)

 

(8,485)

Total operating expenses:

 

(9,045)

 

(10,272)

 

(16,605)

 

(18,913)

Income/(loss) from operations:

 

6,027

 

(1,181)

 

6,182

 

(4,300)

Other income/(expense):

               

Interest expense, net

 

(134)

 

(34)

 

(185)

 

(35)

Foreign exchange gain/(loss)

 

605

 

(23)

 

472

 

(515)

Gain on disposal of equity interest

 

-

 

1,319

 

-

 

1,319

Other, net

 

642

 

1

 

642

 

73

Income/(loss) before income taxes and equity in profit of 
  an equity investee:

 

7,140

 

82

 

7,111

 

(3,458)

Income tax expense

 

(671)

 

-

 

(671)

 

(208)

Income/(loss) before equity in profit of an equity investee

 

6,469

 

82

 

6,440

 

(3,666)

Equity in (loss)/profit of an equity investee, net of tax

 

(2,436)

 

1,768

 

(2,897)

 

2,137

Net income/(loss)

 

4,033

 

1,850

 

3,543

 

(1,529)

Net (loss)/income attributable to noncontrolling interest

 

(1,252)

 

(857)

 

241

 

(771)

Net income/(loss) attributable to Vimicro International  
  
Corporation

 

5,285

 

2,707

 

3,302

 

(758)

Income/(loss) per share

               

Basic

 

0.04

 

0.03

 

0.03

 

(0.01)

Diluted

 

0.04

 

0.02

 

0.02

 

(0.01)

Income/(loss) per ADS

               

Basic

 

0.17

 

0.11

 

0.11

 

(0.03)

Diluted

 

0.15

 

0.10

 

0.10

 

(0.03)

Weighted average number of ordinary shares Outstanding

               

   Basic

 

123,265,907

 

95,319,165

 

118,438,212

 

95,716,466

   Diluted

 

140,416,527

 

112,341,075

 

134,692,155

 

95,716,466

Weighted average number of ADS outstanding

               

Basic

 

30,816,477

 

23,829,791

 

29,609,553

 

23,929,117

Diluted

 

35,104,132

 

28,085,269

 

33,673,039

 

23,929,117

Other comprehensive income/ (loss), net of tax

               

Foreign currency translation adjustment, net of tax of nil

 

239

 

(1,287)

 

79

 

(1,112)

Other comprehensive income/(loss), net of tax

 

239

 

(1,287)

 

79

 

(1,112)

Comprehensive income/(loss)

 

4, 272

 

563

 

3,622

 

(2,641)

Comprehensive (loss)/income attributable to 
    noncontrolling interest

 

(1,148)

 

(859)

 

269

 

(618)

Comprehensive income/(loss) attributable to Vimicro 
    International Corporation

 

5,420

 

1,422

 

3,353

 

(2,023)

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

               

Research and development, net

 

(142)

 

(34)

 

(287)

 

(94)

Selling and marketing

 

(55)

 

(18)

 

(97)

 

(37)

General and administrative

 

(554)

 

(70)

 

(801)

 

(157)

                 

Total

 

(751)

 

(122)

 

(1,185)

 

(288)


Contact:

Vimicro International Corporation
Investor Relations
Phone: +8610-5884-8898
E-mail: ir@vimicro.com

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SOURCE Vimicro International Corporation