Vimicro Announces Unaudited Third-Quarter 2013 Financial Results

       Vimicro Announces Unaudited Third-Quarter 2013 Financial Results

PR Newswire

BEIJING, Nov. 4, 2013

BEIJING, Nov. 4, 2013 /PRNewswire/ -- Vimicro International Corporation
(NASDAQ: VIMC) ("Vimicro" or the "Company"), a leading video processing IC and
surveillance solution provider, today announced unaudited financial results
for the third quarter ended September 30, 2013.

(Logo: http://photos.prnewswire.com/prnh/20070528/CNM014LOGO)

Third-Quarter 2013 Results

Net revenue in the third quarter of 2013 was $24.2 million, as compared to net
revenue of $21.7 million in the year-ago quarter and $11.1 million in the
second quarter of 2013. The 11.1% year-over-year revenue increase was
primarily due to higher sales of surveillance products, which more than offset
lower sales of PC and notebook multimedia processors. Revenues were in line
with the Company's guidance of $23 to $26 million.

Gross profit in the third quarter was $9.5 million, as compared with $8.3
million in the year-ago quarter and $4.2 million in the second quarter of
2013. The gross margin in the third quarter was 39.5%, as compared with 38.0%
in the year-ago quarter and 37.5% in the second quarter of 2013.

Operating expenses in the third quarter were $8.8 million, as compared to $6.8
million in the year-ago quarter. Operating expenses increased year-over-year
primarily due to higher research and development expense. Operating profit
was $0.7 million in the quarter, as compared to an operating profit of $1.5
million in the year-ago quarter.

In the third quarter of 2013, non-GAAP net income attributable to Vimicro
International Corporation was $2.0 million, or approximately $0.06 per ADS on
a diluted basis, as compared to a non-GAAP net income from continuing
operations attributable to Vimicro of $2.8 million, or $0.09 per diluted ADS
in the year-ago quarter. Non-GAAP net income attributable to Vimicro
International Corporation in the third quarter of 2013 and the year-ago
quarter excludes $0.2 and $0.4 million of non-cash, share-based compensation,
respectively. GAAP net income attributable to Vimicro in the third quarter was
$1.8 million, or $0.06 per diluted ADS, as compared to net income from
continuing operations of approximately $2.4 million, or $0.08 per diluted ADS,
in the year-ago quarter. (Results for the third quarter of 2012 have been
adjusted for continuing operations to reflect the divestiture of an equity
interest, which is no longer consolidated.)

As of September 30, 2013, the Company had cash and cash equivalents of
approximately $31.0 million and restricted cash of $4.3 million, totaling
$35.3 million. Total current assets were approximately $101.7 million, and
Vimicro had working capital of approximately $65.2 million and $21.1 million
of long-term bank loans and liabilities on its balance sheet, as of September
30, 2013.

Dr. John Deng, Vimicro's Chairman and Chief Executive Officer, commented, "We
were pleased to see a return to year-over-year revenue growth and
profitability in the third quarter, primarily due to strong performance from
our surveillance business, which more than offset lower sales to our global PC
manufacturer customers. At the end of the third quarter, we received a
sizable surveillance order, which marks Vimicro's expansion into Sichuan
province. We look forward to seeing continuing momentum as we receive
additional large orders and expand geographically."

Recent Events

On September 30, 2013, the Company announced that its subsidiary, Vimicro
Electronics Corporation, received an order with total value of at least USD $9
million for a technology solution using the SVAC (Surveillance Video and Audio
Coding) technology standard, for use in a city-wide surveillance network
project in Ziyang city in Sichuan province.

On October 30, 2013, Chief Strategy Officer David Tang left the Company, and
is succeeded by John Harmon, who was named Vice President of Finance and will
lead the Company's finance-related activities and investor-relations efforts.
Mr. Harmon is an experienced financial services professional with over fifteen
years of experience as a sell-side equity research analyst and as a senior
investor relations professional.

Business Outlook

For the fourth quarter of 2013, the Company expects revenues of $3.5 to $4.5
million for its PC and notebook image processor business line. For the
surveillance business, the Company expects to report at least $9 to $11
million of revenue from completed projects and also expects to report
additional revenue from several new orders with a total value of approximately
$20 million currently being executed over the next couple of quarters.

Conference Call Information

The Company will host a conference call at 5:00 p.m. (U.S. Eastern Standard
Time) / 2:00 p.m. (U.S. Pacific Standard Time) on Monday, November 4, 2013 /
6:00 a.m. (Beijing / Hong Kong time) on Tuesday, November 5, 2013 to discuss
the Company's third-quarter 2013 financial results.

To participate in the conference call, please dial one of the following
numbers five to ten minutes prior to the scheduled conference call time: (866)
202-3048 or (617) 213-8843. The conference call ID number is 18004016.

If you are unable to participate in the call at this time, a replay will be
available starting at 7:00 p.m. Eastern Standard Time on Tuesday, November 5,
2013, through 10:59 a.m. Eastern Standard Time on Tuesday, November 12, 2013.
To access the replay, dial (888) 286-8010 or (617) 801-6888. The replay call
ID number is 37766205.

This conference call will also be broadcast live over the Internet and can be
accessed by all interested parties by clicking on:
http://edge.media-server.com/m/p/oukkyh7d/lan/en. 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 video processing IC and
surveillance 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 applications. Vimicro has aggressively entered the
surveillance market with system-level solutions and semiconductor products to
capitalize on China's domestic demand. 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 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
continuing operations, non-GAAP net income/(loss) from continuing operations
attributable to Vimicro International Corporation and non-GAAP net
income/(loss) from continuing 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 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 6.148 to $1.00 on September 30, 2013.

Company Contact:                    Investor Contact:
Vimicro International Corporation   Vimicro International Corporation
Mr. David Zhang, Legal Manager      Mr. John Harmon, CFA, VP of Finance
Phone: +86 (10) 6894 8888 ext. 7563 Phone: +86 (139) 1141 8230 (Beijing)
E-mail: zhangxiaowei@vimicro.com    E-mail: john.harmon@vimicro.com
www.vimicro.com

- 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)
                                                    September 30, December 31,
                                                    2013          2012
                                                    (unaudited)   (audited)
Assets
Current assets:
Cash and cash equivalents                           31,014        55,532
Restricted cash                                    4,291         2,593
Accounts and notes receivable, net of provision
for doubtful accounts of $2,117
                                                    24,543        24,564
and $2,172 as of September 30, 2013 and December
31, 2012, respectively
Amounts due from related parties, net of provision
for doubtful accounts of
                                                    13,978        4,225
$1,830 and $1,749 as of September 30, 2013 and
December 31, 2012, respectively
Inventories                                        10,572        11,362
Prepayments and other current assets, net of
provision for doubtful accounts of
                                                    6,847         4,809
$144 and $144 as of September 30, 2013 and December
31, 2012, respectively
Assets held for sale                               10,014        –
Deferred tax assets                                418           418
Total current assets                                101,677       103,503
Investments in an equity investee                   6,256         4,220
Property, equipment and software, net               23,144        20,457
Land use rights                                     14,003        14,774
Deferred tax assets-noncurrent                      169           169
Other assets                                        1,759         1,371
Total assets                                        147,008       144,494
Liabilities and equity
Current liabilities:
Accounts payable                                    13,719        7,281
Amounts due to related parties                      2,002         2,184
Taxes payable                                       5,487         2,318
Advances from customers                             185           222
Accrued expenses and other current liabilities     9,888         14,750
Deferred government grant                           5,228         12,476
Total current liabilities                           36,509        39,231
Deferred tax liabilities                            23            23
Product warranty                                    849           466
Long-term bank loan                                 13,012        4,773
Other long-term liabilities                         8,133         4,772
Total liabilities                                   58,526        49,265
Equity:
Ordinary shares,$0.0001 par value, 500,000,000
shares authorized,

154,905,809 shares issued and 115,035,593 shares
outstanding as of                                   15            15

September 30, 2013 and 153,585,440 shares issued
and 116,599,856 shares

outstanding as of December 31, 2012, respectively
Additional paid-in capital                          161,630       161,017
Treasury stock at cost, 39,870,216 shares as of
September 30, 2013 and
                                                    (15,063)      (13,886)
36,985,584 shares as of December 31, 2012,
respectively
Accumulated other comprehensive income             11,555        11,394
Accumulated deficit                                (89,531)      (83,249)
Statutory reserve                                   2,782         2,782
Total shareholders' equity attributable to Vimicro  71,388        78,073
International Corporation
Noncontrolling interest                             17,094        17,156
Total equity                                       88,482        95,229
Total liabilities and equity                       147,008       144,494



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)


                                     2013 Q3     2013 Q2     2012 Q3
                                     (unaudited) (unaudited) (unaudited)
Net revenue                        24,153        11,091        21,747
Cost of revenue                    (14,621)      (6,929)       (13,489)
Gross profit                       9,532         4,162         8,258
Operating expenses:
Research and development, net      (4,053)       (4,004)       (1,840)
Selling and marketing              (2,241)       (2,661)       (2,484)
General and administrative         (2,536)       (3,349)       (2,452)
Total operating expenses           (8,830)       (10,014)      (6,776)
Income/(loss) from operations      702           (5,852)       1,482
Other income:
Interest income, net               (176)         –             3
Foreign exchange gain/(loss), net  219           587           (86)
Others, net                        52            9             1
Income/(loss) before income taxes
and equity in                        797           (5,256)       1,400

loss of an equity investee
Income tax expense                  –             (100)         (228)
Net income/(loss) before equity in
loss of an equity                    797           (5,356)       1,172

investee
Equity in loss of an equity          1,947         (239)
investee, net of tax
Net income/(loss) from continuing    2,744         (5,595)       1,172
operations
Net income/(loss) from continuing
operations
                                     923           65            (1,245)
attributable to noncontrolling
interest
Net income/(loss) from continuing
operations
                                     1,821         (5,660)       2,417
attributable to Vimicro
International Corporation
Loss from discontinued operations,   –             –             (1,641)
net of tax
Loss from discontinued operations
attributable to                      –             –             (421)

noncontrolling interest
Loss from discontinued operations
attributable to                      –             –             (1,220)

Vimicro International Corporation
Net income/(loss)                   2,744         (5,595)       (469)
Income/(loss) attributable to       923           65            (1,666)
noncontrolling interest
Income/(loss) attributable to
Vimicro                              1,821         (5,660)       1,197

International Corporation
Income/(loss) per share
continuing operations
 Basic                          0.02          (0.05)        0.02
 Diluted                        0.02          (0.05)        0.02
discontinued operations
 Basic                          0.00          0.00          (0.01)
 Diluted                        0.00          0.00          (0.01)
Income/(loss) per share
Basic                              0.02          (0.05)        0.01
Diluted                            0.02          (0.05)        0.01
Income/(loss) per ADS
continuing operations
 Basic                          0.06          (0.20)        0.08
 Diluted                        0.06          (0.20)        0.08
discontinued operations
 Basic                          0.00          0.00          (0.04)
 Diluted                        0.00          0.00          (0.04)
Income/(loss) per ADS
Basic                              0.06          (0.20)        0.04
Diluted                            0.06          (0.20)        0.04
Weighted average number of ordinary
shares
outstanding
Basic                              114,892,652   114,809,296   118,625,664
Diluted                            122,741,628   114,809,296   121,700,752
Weighted average number of ADS
outstanding
Basic                              28,723,163    28,702,324    29,656,416
Diluted                            30,685,407    28,702,324    30,425,188
Other comprehensive income/(loss),
net of tax
Foreign currency translation        84            283           (254)
adjustment, net of tax of nil
Comprehensive income/(loss)        2,828         (5,312)       (723)
Comprehensive income/(loss)
attributable to                      1,003         279           (1,923)

noncontrolling interest
Comprehensive income/(loss)
attributable to                      1,825         (5,591)       1,200

Vimicro International Corporation
Components of share-based
compensation

expenses are included in the
following expense

captions:
Research and development, net      (55)          (56)          (220)
Selling and marketing              (18)          (20)          (40)
General and administrative         (82)          (72)          (167)
Total                              (155)         (148)         (427)

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
                        September 30, 2013      June 30, 2013            September 30, 2012
                        GAAP   Adjust- Non-GAAP GAAP    Adjust- Non-GAAP GAAP   Adjust- Non-GAAP
                        Result ment    Result   Result  ment    Result   Result ment    Result
Income/(loss) from
 continuing           2,744  155     2,899    (5,595) 148     (5,447)  1,172  427     1,599
operations
Net income/(loss) from

 continuing

operationsattributable 1,821  155     1,976    (5,660) 148     (5,512)  2,417  427     2,844
to
 Vimicro
International
 Corporation
Income/(loss) from
 continuing
operations
 attributable to      0.06   0.00    0.06     (0.20)  0.01    (0.19)   0.08   0.01    0.09
Vimicro
 International
Corporation
 per diluted ADS
(*) The adjustment is to exclude non-cash share-based compensation for employees and
non-employee.



SOURCE Vimicro International Corporation

Website: http://www.vimicro.com