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Vimicro Announces Fourth-Quarter and Full-Year 2012 Financial Results

    Vimicro Announces Fourth-Quarter and Full-Year 2012 Financial Results

- Turnaround Complete in Profitable Year with a Return to Growth

- Full-Year Revenues Grew 20.7% to $71.2 Million

- Full-Year Adjusted Net Income Attributable to Vimicro from Continuing
Operations was $1.5 Million, or $0.05 per Diluted ADS

PR Newswire

BEIJING, April 30, 2013

BEIJING, April 30, 2013 /PRNewswire-FirstCall/ --Vimicro International
Corporation (NASDAQ: VIMC) ("Vimicro" or the "Company"), a leading image
processing IC and surveillance solution provider, today announced financial
results for the fourth quarter and full year ended December 31, 2012.

Fourth-quarter Highlights:

  oNet revenues grew 14.0% to $18.8 million from $16.5 million from
    continuing operations in the year-ago quarter
  oGross margins expanded to 37.7%, as compared to 34.9% in the year-ago
    quarter
  oVimicro remained profitable on an adjusted basis for the third consecutive
    quarter, with adjusted net income attributable to Vimicro of $2.6 million,
    or $0.08 per diluted ADS.

Full-year Highlights:

  oNet revenues from continuing operations increased 20.7% to $71.2 million
  oSurveillance revenue grew 47.0% to $17.8 million from $12.1 million in the
    prior year. Gross margins increased to 36.6% from 34.8% in the prior year
  oNet income from continuing operation attributable to Vimicro was $1.38
    million, or $0.04 per diluted ADS.

Fourth-Quarter 2012 Results

Net revenue in the fourth quarter of 2012 was $18.8 million, as compared to
net revenue from continuing operations of $21.7 million in the third quarter
and $16.5 million from continuing operations in the year-ago quarter.
(Results for the fourth quarter of 2011 and the third quarter of 2012 have
been adjusted for continuing operations to reflect the divestiture of certain
business lines.) Fourth-quarter revenues were below the guidance range of $20
to $23 million due to the delayed recognition of one large contract valued at
around $3 million. The contract will be recognized from the second quarter in
2013.

Gross profit in the fourth quarter was $7.1 million, as compared with $5.8
million in the year-ago quarter. The gross margin in the fourth quarter was
37.7%, as compared with 34.9% in the year-ago quarter and 38.0% in the third
quarter.

Operating expenses in the fourth quarter were $8.7 million, as compared to
$16.5 million in the year-ago quarter, and include a $1.4 million impairment
of an investment in a subsidiary. Operating expenses in the year-ago quarter
include a $6.6 million asset-impairment charge. Operating expenses decreased
year-over-year due to the Company's successful cost-reduction efforts and the
receipt of government R&D subsidies for the development of SVAC-related and
other products. The operating loss was $1.6 million in the quarter, as
compared to a loss of $10.8 million in the year-ago quarter. Excluding $2.7
million for the accounts receivable provision and the investment impairment,
operating income would have been approximately $1.1 million.

Non-GAAP net income attributable to Vimicro International Corporation was $2.6
million, or approximately $0.08 per ADS on diluted basis, as compared to a
non-GAAP net loss from continuing operations attributable to Vimicro of $4.1
million, or $0.12 per ADS in the year-ago quarter. Non-GAAP net income
attributable to Vimicro International Corporation excludes $0.4 million of
non-cash, share-based compensation.

In the fourth quarter of 2012, Vimicro remained profitable on a GAAP basis,
reporting GAAP net income attributable to Vimicro of $2.2 million, or $0.07
per diluted ADS, as compared to a loss of $4.2 million, or $0.12 per diluted
ADS in the year-ago quarter.

Full-Year 2012 Results

For the year ended December 31, 2012, net revenue from continuing operations
was $71.2 million, up 20.7% from $59.0 million in 2011. The increase in sales
was attributable to higher sales of both PC and notebook multimedia processors
and surveillance products. These figures exclude $1.4 million and $12.5
million in revenue from discontinued operations in 2012 and 2011,
respectively.

Cost of revenue in 2012 was $45.1 million, as compared with $38.5 million in
the prior year, and includes a $1.4 million impairment of an investment in a
subsidiary. The gross margin in 2012 was 36.6%, as compared with 34.8% in the
previous year.

Operating expenses in 2012 were $31.7 million and included $1.4 million
investment impairment at a subsidiary, as compared to $49.1 million in the
prior year, which includes a $6.6 million asset-impairment charge. Operating
expenses decreased due to the Company's successful cost-reduction efforts and
the receipt of government R&D subsidies for the development of SVAC-related
and other products.

Non-GAAP net income attributable to Vimicro International Corporation,
excluding $2.1 million in share-based compensation, was $1.5 million, or
approximately $0.05 per ADS, compared to a loss of $25.8 million, or $0.71 per
ADS, in 2011. The full-year 2012 GAAP net loss attributable to Vimicro was
$0.6 million.

As of December 31, 2012, the Company had cash and cash equivalents of
approximately $55.5 million and restricted cash of $2.6 million, totaling
$58.1 million. Total current assets were approximately $103.5 million, and
Vimicro had working capital of approximately $64.3 million, and $4.8 million
of long-term bank loans on its balance sheet, as of December 31, 2012.

Dr. John Deng, Vimicro's Chairman and Chief Executive Officer, commented, "In
2012, we saw the success of strategic decisions we made to refocus Vimicro on
our surveillance business and streamline our cost structure. We turned
profitable in the second quarter, and Vimicro was also profitable on an
adjusted basis for the year. Revenues grew again on an annual basis in 2012,
and surveillance revenues grew a healthy 47%. Vimicro has now established a
solid financial foundation, upon which we can continue to invest in the
development of SVAC-based products and which we expect to deliver future
growth and profitability for our shareholders."

Business Outlook

For the first quarter of 2013, Vimicro expects seasonally lower revenues in
security-surveillance and lower revenues year-over-year in its PC and notebook
multimedia processor business, alongside a temporary decline of orders from a
major PC and notebook customer.

Fourth-Quarter Earnings Release and Conference Call Information

Vimicro plans to release fourth-quarter and full-year 2012 results on Tuesday,
April 30, 2013, after the U.S. market closes. The Company will also hold a
conference call at 6:00 p.m. EDT on Tuesday, April 30, 2013, to discuss
financial results for the fourth quarter and full year ended December 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: (877)
703 6103 or (857) 244 7302. The conference call ID number is. 34129518.

If you are unable to participate in the call at this time, a replay will be
available starting at 9:00 p.m. Eastern Daylight Time on Tuesday, April 30,
2013, through 11:59 a.m. Eastern Daylight Time on Wednesday, May 8, 2013. To
access the replay, dial (888) 286-8010 or (617) 801-6888. The conference call
ID number is 67376125.

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/acs/5634ee5f9ba4c50cfda90f6530992c9a. 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 income/(loss) from
operations, non-GAAP net income/(loss) attributed to Vimicro International
Corporation and non-GAAP diluted net income /(loss) from continuing operations
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 expense. 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 6.2855 to $1.00 on December 31, 2012.



- financial tables follow -



VIMICRO INTERNATIONAL CORPORATION

CONSOLIDATED BALANCE SHEETS

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

                                                             December 31,
                                                             2011     2012
Assets
Current assets:
Cash and cash equivalents                                    $49,227  $55,532
Restricted cash                                              3,520    2,593
Accounts and notes receivable, net of provision for doubtful
accounts of $1,822                                           17,895   24,564
 and $2,172 as of December 31, 2011 and 2012,
respectively
Amounts due from related parties, net of provision for
doubtful accounts of nil                                     4,831    4,225
 and $1,749 as of December 31, 2011 and 2012,
respectively
Inventories, net                                             18,734   11,362
Prepayments and other current assets, net of provision for
doubtful accounts of                                         4,057    4,809
 $162 and $144 as of December 31, 2011 and 2012,
respectively
Deferred tax assets                                          356      418
Total current assets                                         98,620   103,503
Investment in an unconsolidated affiliate, at cost           1,520    2
Investment in equity investee                                -        4,218
Property, equipment and software, net                        14,266   20,457
Land use rights                                              21,488   14,774
Deferred tax assets-noncurrent                               112      169
Other assets                                                 1,291    1,371
Total assets                                                 137,297  144,494
Liabilities and Equity
Current liabilities:
Accounts payable                                             9,280    7,281
Notes payable                                                1,013    -
Amounts due to related parties                               963      2,184
Taxes payable                                                1,209    2,318
Advances from customers                                      1,916    222
Accrued expenses and other current liabilities               8,333    14,750
Deferred government grant                                    5,910    12,476
Total current liabilities                                    28,624   39,231
Deferred tax liabilities                                     33       23
Product warranty                                             300      466
Long-term bank loan                                          -        4,773
Other long-term liabilities                                  -        4,772
Total liabilities                                            28,957   49,265
Shareholders' Equity:
Ordinary shares, $0.0001 par value, 500,000,000 shares
authorized,                                                  -        -
 139,953,296 and 116,599,856
shares issued and outstanding as of December 31, 2011 and
2012,                                                        15       15

respectively
Additional paid-in capital                                   158,879  161,017
Treasury stock                                               (6,490)  (13,886)
Accumulated other comprehensive income                       12,850   11,394
Accumulated deficit                                          (82,630) (83,249)
Statutory reserve                                            2,782    2,782
Total shareholders' equity attributable to Vimicro           85,406   78,073
International Corporation
 Noncontrolling interest                                22,934   17,156
Total equity                                                 108,340  95,229
Total liabilities and equity                                 $137,297 $144,494



VIMICRO INTERNATIONAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Amounts expressed in thousands of U.S. dollars, except number of shares and
per share data)
                   
                               2012 Q3     2011 Q4     FY2012      FY2011
                   2012 Q4
                   (unaudited) (unaudited) (unaudited) (audited)   (audited)
Net revenue        $18,829     $21,747     $16,520     $71,187     $58,972
Cost of revenue    (11,733)    (13,489)    (10,749)    (45,146)    (38,459)
Gross profit       7,095       8,258       5,770       26,041      20,513
Operating
expenses:
Research and       (1,022)     (1,840)     (4,080)     (8,881)     (19,005)
development, net
Selling and        (2,240)     (2,484)     (2,646)     (9,174)     (12,050)
marketing
General and        (5,403)     (2,452)     (3,224)     (12,244)    (11,480)
administrative
Asset impairment   -           -           (6,599)     (1,448)     (6,599)
Total operating    (8,664)     (6,776)     (16,548)    (31,747)    (49,134)
expenses
Income/(loss) from (1,569)     1,482       (10,778)    (5,706)     (28,621)
operations
Other income:
Interest income    17          3           111         234         673
Foreign exchange   190         (86)        340         (19)        1,678
gain/(loss), net
Gain on disposal
of marketable      -           -           -           -           1,517
equity securities
Gain on disposal   1,472       -           -           1,472       -
of equity interest
Others, net        166         1           472         169         492
Income/ (loss)
before income
taxes and share of 276         1,400       (9,855)     (3,850)     (24,261)
profit/ (loss) of
an unconsolidated
affiliates
Income tax         387         (228)       877         (210)       861
(expense)/ benefit
Net income/ (loss)
before share of
profit/(loss) of   663         1,172       (8,978)     (4,060)     (23,400)
an
unconsolidated
affiliates
Equity in
profit/(loss) of
an unconsolidated  (87)        -           -           (87)        -
affiliate,

net of tax
Net income/ (loss)
from continuing    575         1,172       (8,978)     (4,147)     (23,400)
operations
Income/ (loss)
from discontinued
operations, net of -           (1,641)     (7,326)     (3,109)     (16,718)

income tax
Net income/ (loss) 575         (468)       (16,304)    (7,256)     (40,118)
Loss attributable
to non-controlling (1,627)     (1,666)     (5,629)     (6,637)     (11,918)
interest
Income/ (loss)
attributed to
Vimicro            $2,202      $1,198      ($10,675)   ($619)      ($28,200)

International
Corporation
Income/ (loss) per
share
continuing
operations
Basic              $0.02       $0.02       ($0.03)     $0.01       ($0.10)
Diluted            0.02        0.01        (0.03)      0.01        (0.10)
discontinued
operations
Basic              0.00        (0.01)      (0.05)      (0.02)      (0.09)
Diluted            0.00        (0.01)      (0.05)      (0.02)      (0.09)
Income/ (loss) per
share
Basic              $0.02       $0.01       ($0.08)     ($0.01)     ($0.19)
Diluted            0.02        0.00        (0.08)      (0.01)      (0.19)
Income/ (loss) per
ADS
continuing
operations
Basic              $0.07       $0.08       ($0.12)     0.04        (0.37)
Diluted            0.07        0.04        (0.12)      0.04        (0.37)
discontinued
operations
Basic              0.00        (0.04)      (0.18)      (0.06)      (0.41)
Diluted            0.00        (0.02)      (0.18)      (0.06)      (0.41)
Income/ (loss) per
ADS
Basic              $0.07       $0.04       ($0.31)     (0.02)      (0.78)
Diluted            0.07        0.02        (0.31)      (0.02)      (0.78)
Weighted average
number of ordinary
shares
outstanding
Basic              117,771,601 118,625,664 140,005,158 123,253,931 145,123,889
Diluted            124,994,625 240,326,416 140,005,158 127,624,447 145,123,889
Weighted average
number of ADS
outstanding
Basic              29,442,900  29,656,416  35,001,289  30,813,483  36,280,972
Diluted            31,248,656  60,081,604  35,001,289  31,906,112  36,280,972
Other
comprehensive
income/ (loss):
Foreign currency
translation        (1,140)     (254)       920         (1,530)     3,309
adjustment
Unrealized
(loss)/gain on
marketable equity  -           -           (401)       -           149

securities
Reclassification
of unrealized gain
on
 marketable   -           -           -           -           (1,517)
equity security
into earnings, net
of
 tax
Comprehensive      (565)       (722)       (15,785)    (8,786)     (38,177)
income/ (loss)
Comprehensive
income/ (loss)
attributable to    (1,467)     (1,923)     (5,406)     (6,711)     (10,444)

non-controlling
interest
Comprehensive
income/ (loss)
attributable to    902         1,201       (10,379)    (2,075)     (27,733)
Vimicro
International
Corporation
Components of
share-based
compensation
expenses are
included in the
following expense
captions:
R&D                (207)       (220)       (93)        (973)       (782)
S&M                (43)        (40)        (14)        (151)       (80)
G&A                (144)       (168)       (76)        (949)       (1,559)
Total              (394)       (427)       (183)       (2,073)     (2,421)







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          Three months ended             Three months ended
              December 30, 2012           September 30, 2012             December 30, 2011
              GAAP    Adjustment Non-GAAP GAAP      Adjustment Non-GAAP  GAAP     Adjustment Non-GAAP
              Result             Result   Result               Result    Result              Results
Income/(loss)
from          $575    $394       $969     $1,172    $427       $1,599    ($8,978) $183       ($8,795)
continuing
operations
Income/(loss)
attributed to
Vimicro       2,202   394        2,596    2,417     427        2,844     (4,234)  183        (4,051)
International
Corporation
Income/(loss)
from
continuing
operations    0.07    0.01       0.08     0.08      0.02       0.10      (0.12)   0.00       (0.12)
per
diluted
ADS(**)
                                         

                                         

              Twelve months ended         Twelve months ended
              December 30, 2012           December 30, 2011
              GAAP    Adjustment Non-GAAP GAAP      Adjustment Non-GAAP
              Result             Result   Result               Result
Income/(loss)
from          (4,147) $2,074     ($2,073) ($23,400) $2,421     ($20,979)
continuing
operations
Income/(loss)
attributed to
Vimicro       (619)   2,074      1,454    (28,200)  2,421      (25,779)
International
Corporation
Income/(loss)
from
continuing
operations    ($0.02) $0.07      $0.05    ($0.78)   $0.07      ($0.71)
per
diluted
ADS(**)


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

(**) Loss per ADS refers to continuing operations



SOURCE Vimicro International Corporation

Website: http://www.vimicro.com
Contact: Company Contact: Vimicro International Corporation, Mr. David Tang,
Chief Strategy Officer, +86 (10) 6894 8888 ext. 7526, ir@vimicro.com; Ms.
Serena Zhang, Investor Relations Assistant, +86 (10) 6894 8888 ext. 7552,
zhangna@vimicro.com; Investor Contact: CCG Investor Relations, Mr. John
Harmon, CFA, Sr. Account Manager, +86 (10) 8573 1014 (Beijing),
john.harmon@ccgir.com; Mr. Roger Ellis, Senior Partner & SVP for M.I., +1
(310) 954-1332 (Los Angeles), roger.ellis@ccgir.com