O2MICRO(R) REPORTS SECOND QUARTER EARNINGS AND RECORD HIGH REVENUE

Date4-Aug-2005
( BW)(CA-O2MICRO)(OIIM) O2Micro(R) Reports Second Quarter Earnings and Record High Revenue

 

Business Editors/High-Tech Writers

 

SANTA CLARA, Calif. & GEORGE TOWN, Grand Cayman--(BUSINESS WIRE)--Aug. 3, 2005--O2Micro(R) International Limited (Nasdaq:OIIM), a leading supplier of innovative power management, and security components and systems for the Computer, Consumer, Industrial, and Communications markets, reported its financial results today for the second quarter ended June 30, 2005.

Net sales for the second quarter were $25.6 million. Second quarter record high revenue of $25.6 million was an increase of 10% from the preceding quarter, and an increase of 7% from the comparable quarter of the prior year. Earnings per share for the second quarter, fully diluted, were 7 cents per share, compared to 5 cents per share in the preceding quarter and 10 cents per share in the comparable quarter of the prior year.

Net income for the second quarter of $3.0 million was an increase of 43% from the preceding quarter, and a decrease of 28% from the comparable quarter of the prior year. Second quarter R&D expenditures were $6.3 million, an increase of 17% from the preceding quarter, and an increase of 34% from the comparable quarter of the prior year.

"O2Micro was again profitable and cash flow positive in Q2. The company continues to build its base for future growth with additions to key engineering resources, and product and patent portfolios.

During Q2, O2Micro received patent issues of 10 patents with 157 claims. As of this date O2Micro has 102 issued patents with 2,575 issued claims," commented Sterling Du, Chairman and CEO of O2Micro.

Conference Call: O2Micro will hold its second quarter conference call today at 2:00 p.m. PDT, 5:00 p.m. EDT. You may participate by dialing (800) 406-5345, or (913) 981-5571 (for International participants), pass code #1381478. A replay of the call will be

available by phone until August 10th by dialing (888) 203-1112, pass code #1381478 or (719) 457-0820 (for International participants), pass code #1381478. 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 and systems for the Computer, Consumer, Industrial, and Communications markets. Products include Intelligent Lighting, Battery Management, Power Management, SmartCardBus(R) and Security products, such as VPN/Firewall system solutions.

O2Micro International maintains an extensive portfolio of intellectual property with 2,575 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.

 

O2Micro, the O2Micro logo, SmartCardBus and combinations thereof are registered trademarks of O2Micro.

 

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 (Unaudited)

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

 

Three Months Six Months

Ended Ended

June 30, June 30,

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

2005 2004 2005 2004

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

 

NET SALES $25,636 $24,065 $48,913 $46,261

 

COST OF SALES 9,591 9,724 18,521 19,124

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

 

GROSS PROFIT 16,045 14,341 30,392 27,137

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

 

OPERATING EXPENSES

Research and development 6,260 4,681 11,590 9,242

Selling, general and

administrative 5,096 3,863 9,760 7,514

Patent litigation 2,597 1,120 5,133 1,728

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

Total Operating Expenses 13,953 9,664 26,483 18,484

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

 

INCOME FROM OPERATIONS 2,092 4,677 3,909 8,653

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

 

NON-OPERATING INCOME (EXPENSES)

Interest income 684 254 1,292 485

Impairment loss on long-term

investments - - - -

Gain on sale of long-term

investments - - - 340

Foreign exchange gain (loss) (128) (253) (138) (31)

Other - net 80 7 68 10

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

Total Non-operating Income 636 8 1,222 804

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

 

INCOME BEFORE INCOME TAX 2,728 4,685 5,131 9,457

 

INCOME TAX EXPENSE (BENEFIT) (252) 537 62 1,103

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

 

NET INCOME 2,980 4,148 5,069 8,354

 

OTHER COMPREHENSIVE INCOME (LOSS)

Translation adjustments on

subsidiaries (61) (109) 168 61

Unrealized gain (loss) on

available-for-sale securities (584) 19 (300) (67)

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

Total Other Comprehensive Income

(Loss) (645) (90) (132) (6)

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

 

COMPREHENSIVE INCOME $ 2,335 $ 4,058 $ 4,937 $ 8,348

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

 

EARNINGS PER SHARE:

 

Basic $ 0.08 $ 0.11 $ 0.13 $ 0.21

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

Diluted $ 0.07 $ 0.10 $ 0.13 $ 0.21

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

 

SHARES USED IN EARNINGS PER SHARE

CALCULATION:

Basic (in thousands) 39,176 39,205 39,177 39,161

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

Diluted (in thousands) 39,807 40,272 39,681 40,467

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

 

O2Micro International Limited and Subsidiaries

Consolidated Balance Sheets

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

 

June 30, Dec. 31,

2005 2004

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

ASSETS (Unaudited)

------

CURRENT ASSETS

Cash and cash equivalents $ 48,808 $ 56,320

Restricted cash 3,112 1,887

Short-term investments 65,783 63,768

Accounts receivable - net 9,463 9,431

Inventories 9,930 11,231

Prepaid expenses and other current assets 8,140 4,491

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

Total Current Assets 145,236 147,128

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

 

LONG-TERM INVESTMENTS 16,665 11,781

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

 

LAND, PROPERTY AND EQUIPMENT - NET 17,702 10,758

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

 

OTHER ASSETS

Restricted assets - net 13,777 13,873

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

Other Assets 1,388 1,656

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

 

TOTAL ASSETS $ 194,768 $ 185,196

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

 

LIABILITIES AND SHAREHOLDERS' EQUITY

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

CURRENT LIABILITIES

Notes and accounts payable $ 4,383 $ 3,635

Income taxes payable 3,305 3,751

Accrued expenses and other current liabilities 11,418 7,029

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

Total Current Liabilities 19,106 14,415

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

 

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 - 39,209,511 and 39,188,062 shares as

of June 30, 2005 and December 31, 2004,

respectively 39 39

Additional paid-in capital 140,204 139,581

Accumulated other comprehensive loss (242) (110)

Retained earnings 35,661 31,271

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

Total Shareholders' Equity 175,662 170,781

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

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 194,768 $ 185,196

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

 

--30--

 

CONTACT: O2Micro

Gil Goodrich, 408-987-5920, Ext. 8013

gil.goodrich@o2micro.com