02 MICRO ANNOUNCES THIRD QUARTER EARNINGS AND RECORD HIGH REVENUES

Date3-Nov-2006

O2Micro Reports Third Quarter Earnings and Record High Revenues

Wednesday November 1, 4:00 pm ET

GEORGE TOWN, Grand Cayman, Nov. 1, 2006 (PRIMEZONE) -- O2Micro(r) International Limited (NASDAQ:OIIM - News) (HKSE:0457.HK - News), a leading supplier of innovative power management, and security components and systems, reported its financial results today for the third quarter ended September 30, 2006.

Net sales for the third quarter were $31.5 million. Third quarter revenue of $31.5 million was an increase of 12% from the preceding quarter and comparable quarter of the prior year. Earnings per American Depositary Share (ADS) for the third quarter, fully diluted, were 1 cent, compared to loss per ADS of 6 cents in the preceding quarter and earnings per ADS of 7 cents in the comparable quarter of the prior year.

Net income for the third quarter of $550,000 was an increase of $3.1 million from the preceding quarter and a decrease of $2.3 million from the comparable quarter of the prior year. Third quarter R&D expenditures were $7.8 million, a decrease of 4% from the preceding quarter, and an increase of 18% from the comparable quarter of the prior year.

``O2Micro continues it's on going effort to increase shareholder value through the introduction of exciting innovative technologies and increasing the company's patent portfolio,'' said Sterling Du, Chairman and CEO of O2Micro. Mr. Du added, ``We continue to build our base for future growth and long term profitability with our investment in O2Micro's Integrated Circuit (IC) test facility in China, close to customers and suppliers. In addition, we have continued the stock repurchase program. Since Q2, we have repurchased 1,157,049 ADSs on the open market.''

Conference Call: O2Micro will hold its third quarter conference call today at 2:00 p.m. PST, 5:00 p.m. EST, and 6:00 a.m. (November 2, 2006) Hong Kong time. You may participate using the following dial-in information.

 

In the U.S. and CANADA: 877-704-5378, pass code no. 9974191

In HONG KONG: 800-965-503, pass code no. 9974191

Other INTERNATIONAL

participants: 913-312-1292, pass code no. 9974191

 

A replay of the call will be available by phone until November 8th

using the following dial-in information.

 

In the U.S. and CANADA: 888-203-1112, pass code no. 9974191

In HONG KONG: 800-908-709, pass code no. 9974191

Other INTERNATIONAL

participants: 719-457-0820, pass code no. 9974191

A live simulcast will also be available on the company website at http://www.o2micro.com, and an online replay will be available on the website 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 6,047 patent claims granted, and over 8,000 more pending. The company maintains offices worldwide. Additional company and product information can be found on the company website at http://www.o2micro.com.

O2Micro, the O2Micro logo, SmartCardBus and combinations thereof are registered trademarks of O2Micro. All other trademarks are the property of their respective owners.

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 O2Micro's future growth, long term profitability, increases in shareholder value, expansion of O2Micro's 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 Ended Nine Months Ended

September 30, September 30,

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

2006 2005 2006 2005

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

NET SALES $ 31,462 $ 28,047 $ 88,600 $ 76,960

 

COST OF SALES 14,684 10,738 40,026 29,259

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

GROSS PROFIT 16,778 17,309 48,574 47,701

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

 

OPERATING EXPENSES

Research and

development (a) 7,784 6,617 23,006 18,207

Selling, general and

administrative (a) 7,251 5,064 20,646 14,824

Patent related

litigation 3,508 2,716 8,860 7,849

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

Total Operating

Expenses 18,543 14,397 52,512 40,880

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

 

INCOME (LOSS) FROM

OPERATIONS (1,765) 2,912 (3,938) 6,821

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

 

NON-OPERATING INCOME

(EXPENSES)

Interest income 902 651 2,771 1,943

Impairment loss on

long-term investments -- -- (756) --

Foreign exchange loss (595) (371) (475) (509)

Other - net (132) 92 (551) 160

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

Total Non-operating

Income 175 372 989 1,594

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

 

INCOME (LOSS) BEFORE

INCOME TAX (1,590) 3,284 (2,949) 8,415

 

INCOME TAX EXPENSE

(BENEFIT) (2,140) 432 (2,018) 494

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

 

NET INCOME (LOSS) 550 2,852 (931) 7,921

 

OTHER COMPREHENSIVE

INCOME (LOSS)

Translation adjustments

on subsidiaries (5) (492) 330 (324)

Unrealized gain (loss)

on available-for-sale

securities (877) (313) 88 (613)

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

Total Other Comprehensive

Income (Loss) (882) (805) 418 (937)

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

COMPREHENSIVE INCOME

(LOSS) ($332) $ 2,047 ($513) $ 6,984

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

 

EARNINGS (LOSS)

PER SHARE:

Basic $ 0.0003 $ 0.0015 ($0.0005) $ 0.0040

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

Diluted $ 0.0003 $ 0.0014 ($0.0005) $ 0.0040

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

 

EARNINGS (LOSS) PER ADS

Basic $ 0.01 $ 0.07 ($0.02) $ 0.20

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

Diluted $ 0.01 $ 0.07 ($0.02) $ 0.20

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

 

SHARES USED IN EARNINGS

PER SHARE CALCULATION:

Basic (in thousands) 1,917,049 1,957,974 1,941,110 1,960,718

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

Diluted (in thousands) 1,921,590 2,019,442 1,957,350 1,996,549

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

 

ADS UNITS USED IN

EARNINGS PER ADS

CALCULATION:

Basic (in thousands) 38,341 39,159 38,822 39,214

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

Diluted (in thousands) 38,432 40,389 39,147 39,931

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

 

(a) INCLUDES STOCK-BASED

COMPENSATION CHARGE

AS FOLLOWS:

 

Research and

development $ 287 $ -- $ 935 $ --

Selling, general and

administrative $ 355 $ -- $ 1,096 $ --

 

O2Micro International Limited and Subsidiaries

Consolidated Balance Sheets

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

 

September 30, December 31,

2006 2005

ASSETS --------- ---------

------- (Unaudited)

CURRENT ASSETS

Cash and cash equivalents $ 40,224 $ 46,375

Restricted cash 8,486 5,605

Short-term investments 24,268 55,653

Accounts receivable - net 17,734 11,460

Inventories 15,728 15,943

Prepaid expenses and other current assets 7,853 6,665

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

Total Current Assets 114,293 141,701

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

 

LONG-TERM INVESTMENTS 19,554 16,898

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

 

LAND, PROPERTY AND EQUIPMENT - NET 41,335 23,319

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

 

OTHER ASSETS

 

Restricted assets - net 14,094 14,492

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

Other Assets 3,247 3,245

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

 

TOTAL ASSETS $ 192,523 $ 199,655

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

LIABILITIES AND SHAREHOLDERS' EQUITY

 

CURRENT LIABILITIES

Notes and accounts payable $ 9,524 $ 5,760

Income taxes payable 755 3,907

Accrued expenses and other

current liabilities 11,239 14,092

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

Total Current Liabilities 21,518 23,759

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

COMMITMENTS AND CONTINGENCIES

 

SHAREHOLDERS' EQUITY

Preference shares at $0.00002 par

value per share

Authorized - 250,000,000 shares -- --

Ordinary shares at $0.00002 par

value per share

Authorized - 4,750,000,000 shares

Issued - 1,905,034,250 and

1,967,824,350 shares as of

September 30, 2006 and December

31, 2005, respectively 38 39

Treasury stock - 15,030,000 shares

as of December 31, 2005 -- (3,296)

Additional paid-in capital 139,464 141,532

Accumulated other comprehensive loss (700) (1,118)

Retained earnings 32,203 38,739

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

Total Shareholders' Equity 171,005 175,896

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

 

TOTAL LIABILITIES AND

SHAREHOLDERS' EQUITY $ 192,523 $ 199,655

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

 

Contact:

O2Micro(r) International Limited

Mitchell Benus, Director of Investor Relations

408-332-1749

mitchell.benus@o2micro.com

Source: O2Micro International Limited