O2MICRO REPORTS FOURTH QUARTER EARNINGS

Date3-Feb-2005
( BW)(CA-O2MICRO)(OIIM) O2Micro Reports Fourth Quarter Earnings

 

Business Editors/High-Tech Writers

 

SANTA CLARA, Calif. & GEORGE TOWN, Grand Cayman--(BUSINESS WIRE)--Feb. 2, 2005--O2Micro(R) International Limited (Nasdaq:OIIM), a leading supplier of innovative power management and security ICs to manufacturers of products for the computer, consumer, industrial, and communications markets, reported its financial results today for the fourth quarter and the fiscal year ended December 31, 2004.

Net sales for the fourth quarter were $23.8 million. Fourth quarter revenue of $23.8 million was an increase of 8% from the preceding quarter, and a decrease of 5% from the comparable quarter of the prior year. Earnings per share for the fourth quarter, fully

diluted, were 7 cents per share, compared to 8 cents per share in the preceding quarter and 13 cents per share in the comparable quarter of the prior year.

Net income for the fourth quarter of $2.7 million was a decrease of 13% from the preceding quarter, and a decrease of 48% from the comparable quarter of the prior year. Fourth quarter R&D expenditures were $6.1 million, an increase of 24% from the preceding quarter, and an increase of 32% from the comparable quarter of the prior year.

For the fiscal year ended December 31, 2004, total revenues were $92.2 million, an increase of 4% from $88.6 million in fiscal year 2003. Earnings per share for the year ended December 31, 2004 were 35 cents fully diluted, compared to 33 cents fully diluted for the previous year. Net income was $14.1 million, compared to $13.2 million

for the previous year. R&D expenditures were $20.3 million, compared to $19.2 million for the previous year, an increase of 5%.

Sterling Du, Chairman and CEO of O2Micro commented, "O2Micro grew Q4 revenue 8% from the previous quarter, and fiscal year 2004 revenue 4% from the previous year. Legal expenses were higher than expected in Q4 and will remain high through Q2 of 2005 as the result of two trials that are expected to occur in the first half of 2005. These actions against Monolithic Power Systems in California and Sumida Taiwan, one

of the largest users of product from Monolithic Power Systems, in Texas were initiated as part of O2Micro's Intellectual Property protection program."

Conference Call: O2Micro will hold its fourth quarter and fiscal year end conference call today at 2:00 p.m. PST, 5:00 p.m. EST. You may participate by dialing (800) 915-4836, or (913) 905-1086 (for International participants), no passcode required. A replay of the call will be available by phone until February 9th by dialing (888) 203-1112, passcode #116463 or (719) 457-0820 (for International participants), passcode #116463. A live simulcast will also be available on the company website at www.o2micro.com, and an online replay will be available on the site for one week.

 

About O2Micro

 

Founded in April 1995, O2Micro develops and markets innovative power management and security components for manufacturers of products for the computer, consumer, industrial, and communications markets. Products include Intelligent Lighting, Battery Charger and Management, DC/DC Controller, SmartCardBus(R) and MemoryCardBus(TM) ICs.

O2Micro International maintains an extensive portfolio of intellectual property with 1,943 patent claims granted, and over 5,000 more pending. The company maintains offices worldwide. Additional company and product information can be found on the company website at www.o2micro.com.

 

Certain statements in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. They include statements regarding our future growth, expansion of our product and patent portfolios, legal expenditures, litigation activity and other statements regarding O2Micro's or management's intentions, hopes, beliefs, expectations, representations, projections, plans or predictions of the future. Such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. Factors that could cause actual results to differ materially include risks and

uncertainties such as reduced demand for products of electronic equipment manufacturers which include O2Micro's products due to adverse economic conditions in general or specifically affecting O2Micro's markets, technical difficulties and delays in the development process, and errors in the products. You are also referred to the Form F-1 in connection with the company's initial public offering in August 2000, Form F-3 in connection with the company's public offering in November 2001, and the annual reports on Form 20-F, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements. The company assumes no obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

 

O2Micro International Limited and Subsidiaries Consolidated Statements of Operations and Comprehensive Income (In Thousand U.S. Dollars, Except Per Share Amounts)

 

Three Months Ended Year Ended

December 31, December 31,

------------------- --------------

2004 2003 2004 2003

------ ------ ------ ------

(Unaudited)(Unaudited)

NET SALES $23,842 $25,170 $92,196 $88,599

 

COST OF SALES 9,486 10,665 37,403 38,314

-------- -------- -------- -------

 

GROSS PROFIT 14,356 14,505 54,793 50,285

-------- -------- -------- -------

 

OPERATING EXPENSES

Research and development 6,103 4,619 20,260 19,219

Selling, general and

administrative 4,968 3,510 16,348 13,522

Patent litigation 1,788 769 5,334 3,954

-------- -------- -------- -------

Total Operating Expenses 12,859 8,898 41,942 36,695

-------- -------- -------- -------

 

INCOME FROM OPERATIONS 1,497 5,607 12,851 13,590

-------- -------- -------- -------

 

NON-OPERATING INCOME

(EXPENSES)

Interest income 522 331 1,455 1,283

Impairment loss on long-term

investments - - - (17)

Gain on sale of long-term

investments - - 340 -

Foreign exchange gain (loss) 759 (166) 648 287

Other - net 240 (3) 262 (116)

-------- -------- -------- -------

Total Non-operating Income 1,521 162 2,705 1,437

-------- -------- -------- -------

 

INCOME BEFORE INCOME TAX 3,018 5,769 15,556 15,027

 

INCOME TAX EXPENSE 357 653 1,472 1,826

-------- -------- -------- -------

 

NET INCOME 2,661 5,116 14,084 13,201

 

OTHER COMPREHENSIVE INCOME

(LOSS)

Translation adjustments on

subsidiaries 728 - 714 (90)

Unrealized gain (loss) on

available-for-sale securities (478) (83) (303) 261

-------- -------- -------- -------

Total Other Comprehensive

Income (Loss) 250 (83) 411 171

-------- -------- -------- -------

 

COMPREHENSIVE INCOME $2,911 $5,033 $14,495 $13,372

======== ======== ======= ========

 

EARNINGS PER SHARE:

 

Basic $0.07 $0.13 $0.36 $0.34

======== ======== ======= ========

Diluted $0.07 $0.13 $0.35 $0.33

======== ======== ======= ========

 

SHARES USED IN EARNINGS PER

SHARE CALCULATION:

Basic (in thousands) 39,186 38,846 39,156 38,374

======== ======== ======= ========

Diluted (in thousands) 39,808 40,683 40,102 39,736

======== ======== ======= ========

 

O2Micro International Limited and Subsidiaries

Consolidated Balance Sheets

(In Thousand U.S. Dollars, Except Share Amounts)

 

Dec. 31, Dec. 31,

2004 2003

---------- ---------

ASSETS

------

 

CURRENT ASSETS

Cash and cash equivalents $56,320 $66,489

Restricted cash 1,887 1,892

Short-term investments 63,768 53,923

Accounts receivable - net 9,431 9,794

Inventories 11,231 9,613

Prepaid expenses and other current assets 4,491 3,365

------- -------

Total Current Assets 147,128 145,076

------- -------

 

LONG-TERM INVESTMENTS 11,781 7,865

------- -------

 

LAND, PROPERTY AND EQUIPMENT - NET 10,758 4,880

------- -------

 

OTHER ASSETS

Restricted assets - net 13,873 10,044

------- -------

Other Assets 1,656 1,428

------- -------

 

TOTAL ASSETS $185,196 $169,293

========= ========

 

LIABILITIES AND SHAREHOLDERS' EQUITY

------------------------------------

CURRENT LIABILITIES

Notes and accounts payable $3,635 $6,334

Income taxes payable 3,751 2,852

Accrued expenses and other current liabilities 7,029 5,380

------- -------

Total Current Liabilities 14,415 14,566

------- -------

 

COMMITMENTS AND CONTINGENCIES

 

SHAREHOLDERS' EQUITY

Preference shares at $0.001 par value per

share

Authorized - 5,000,000 shares - -

Ordinary shares at $0.001 par value per share

Authorized - 95,000,000 shares

Issued - 39,188,062 and 39,032,616 shares

as of December 31, 2004 and 2003,

respectively 39 39

Additional paid-in capital 139,581 137,076

Accumulated other comprehensive loss (110) (521)

Retained earnings 31,271 18,133

------- -------

Total Shareholders' Equity 170,781 154,727

------- -------

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $185,196 $169,293

========= ========

 

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CONTACT: O2Micro

Gil Goodrich, 408-987-5920 Ext. 8013

gil.goodrich@o2micro.com