02MICRO® REPORTS RECORD HIGH SALES AND EARNINGS FOR SECOND QUARTER

Date1-Aug-2007
O2Micro(R) Reports Record High Sales and Earnings for the Second Quarter

Wednesday August 1, 2:03 pm ET

Second Quarter Net Sales up 36% over Prior Year

 

GEORGE TOWN, Grand Cayman, Aug. 1 /PRNewswire-FirstCall/ -- O2Micro® International Limited (Nasdaq: OIIM - News; SEHK: 0457 - News), a leading supplier of innovative power management, and security components and systems, reported its financial results today for the second quarter ended June 30, 2007.

Net sales for the second quarter of 2007 were $38.2 million, an increase of 9% from the preceding quarter, and up more than 36% from the second quarter of the prior year.

 

Second quarter R&D expenditures were $8.2 million or 22% of net sales. Currently, the Company employs over 600 engineers working on R&D worldwide. In the second quarter, O2Micro's intellectual property (IP) portfolio expanded by 8%, with 29 new patents issued.

 

Net income for the second quarter of 2007 was $5.7 million or 15 cents per fully diluted American Depositary Share (ADS). Second quarter net income was reduced by pre-tax litigation expense of $2.8 million.

 

"The Company continues to enhance its leadership position in analog and mixed signal power management products. We continue to grow our competitive positions of the markets we serve," commented Sterling Du, Chairman and CEO of O2Micro.

 

Mr. Du continues, "Our revenue growth can be attributed to the successful protection of our IP portfolio as well as the expansion of our analog and mixed signal IC sales in Consumer, Computer, Industrial, and Automotive markets, and the growing international acceptance of our Security Systems for the Communications market."

 

Conference Call: O2Micro will hold its second quarter conference call today at 2:00 p.m. PDT, 5:00 p.m. EDT, and 5:00 a.m. (August 2, 2007) Hong Kong time. You may participate using the following dial-in information.

 

In the US and CANADA: 866-316-1370, pass code #8094090

In HONG KONG: 800-965-503, pass code #8094090

Other INTERNATIONAL participants: 913-312-6680, pass code #8094090

 

A replay of the call will be available by phone until August 8th using the following dial-in information.

 

In the US and CANADA: 888-203-1112, pass code #8094090

In HONG KONG: 800-901-108, pass code #8094090

Other INTERNATIONAL participants: 719-457-0820, pass code #8094090

 

A live simulcast will also be available on the company website at 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® and Security products, such as VPN/Firewall system solutions.

 

O2Micro International maintains an extensive portfolio of intellectual property with 7,681 patent claims granted, and over 9,000 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. 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 Six Months Ended

June 30, June 30,

2007 2006 2007 2006

 

NET SALES $38,191 $28,029 $73,228 $57,138

 

COST OF SALES 16,518 12,535 32,440 25,342

 

GROSS PROFIT 21,673 15,494 40,788 31,796

 

OPERATING EXPENSES (INCOME)

Research and development (1) 8,219 8,106 16,173 15,222

Selling, general

and administrative (1) 8,670 6,811 16,798 13,395

Patent related litigation 2,755 3,091 6,010 5,352

Litigation income (3,364) (3,364) - -

Stock Exchange of Hong Kong

listing expenses - 396 - 396

Total Operating Expenses 16,280 18,404 35,617 34,365

 

INCOME (LOSS) FROM OPERATIONS 5,393 (2,910) 5,171 (2,569)

 

NON-OPERATING INCOME

(EXPENSES)

Interest income 814 970 1,628 1,869

Impairment loss on long-term

investments - (756) - (756)

Foreign exchange gain (loss) 108 89 (148) 120

Other - net 5 (66) 7 (23)

Total Non-operating Income 927 237 1,487 1,210

 

INCOME (LOSS) BEFORE INCOME TAX 6,320 (2,673) 6,658 (1,359)

 

INCOME TAX EXPENSE (BENEFIT) 578 (161) 817 122

 

NET INCOME (LOSS) 5,742 (2,512) 5,841 (1,481)

 

OTHER COMPREHENSIVE INCOME

Foreign currency translation

adjustments 335 105 324 335

Unrealized gain on

available-for-sale securities 3,090 1,050 3,797 965

 

Total Other Comprehensive

Income 3,425 1,155 4,121 1,300

 

COMPREHENSIVE INCOME (LOSS) $9,167 ($1,357) $9,962 ($181)

 

EARNINGS (LOSS) PER SHARE:

Basic $0.0030 ($0.0013) $0.0031 ($0.0008)

Diluted $0.0030 NA $0.0030 NA

 

EARNINGS (LOSS) PER ADS

Basic $0.15 ($0.06) $0.15 ($0.04)

Diluted $0.15 NA $0.15 NA

 

SHARES USED IN EARNINGS

PER SHARE CALCULATION:

Basic (in thousands) 1,904,024 1,962,097 1,905,620 1,962,866

Diluted (in thousands) 1,920,974 1,975,648 1,917,668 1,984,955

 

ADS UNITS USED IN EARNINGS

PER ADS CALCULATION:

Basic (in thousands) 38,080 39,242 38,112 39,257

Diluted (in thousands) 38,419 39,513 38,353 39,699

 

(1) INCLUDES STOCK-BASED

COMPENSATION CHARGE AS

FOLLOWS:

Research and development $278 $320 $530 $648

Selling, general and

administrative $354 $380 $704 $741

 

O2Micro International Limited and Subsidiaries

Consolidated Balance Sheets

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

 

June 30, December 31,

2007 2006

ASSETS (Unaudited)

 

CURRENT ASSETS

Cash and cash equivalents $49,411 $45,438

Restricted cash 7,626 8,342

Short-term investments 16,945 19,697

Accounts receivable - net 25,113 18,987

Inventories 17,199 14,076

Prepaid expenses and other current assets 7,348 7,379

Total Current Assets 123,642 113,919

 

LONG-TERM INVESTMENTS 27,850 24,059

 

PROPERTY AND EQUIPMENT - NET 42,166 41,427

 

OTHER ASSETS

Restricted assets - net 13,998 14,540

Other Assets 3,269 3,075

 

TOTAL ASSETS $210,925 $197,020

 

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

Notes and accounts payable $13,349 $9,851

Income tax payable 622 991

Accrued expenses and other current liabilities 14,238 12,212

Total Current Liabilities 28,209 23,054

 

OTHER LONG-TERM LIABILITIES

Accrued pension liabilities 435 455

Long-term Interpretation 48 tax liabilities 117 -

 

Total Liabilities 28,761 23,509

 

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 - 1,896,983,950 and 1,906,969,950

shares as of June 30, 2007 and December 31,

2006, respectively 38 38

Additional paid-in capital 140,829 140,224

Retained earnings 37,804 33,877

Accumulated other comprehensive income (loss) 3,493 (628)

 

Total Shareholders' Equity 182,164 173,511

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $210,925 $197,020

 

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Source: O2Micro