02 MICRO ANNOUNCES THIRD QUARTER NET SALES UP 43% OVER PRIOR YEAR

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

Wednesday October 31, 4:00 pm ET

 

Third Quarter Net Sales Up 43% over Prior Year

GEORGE TOWN, Grand Cayman--(BUSINESS WIRE)--O2Micro® International Limited (NASDAQ : OIIM) (SEHK: 0457 - 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, 2007.

Net sales for the third quarter of 2007 were $45.1 million, an increase of 18% from the preceding quarter, and up more than 40% from the third quarter of the prior year.

Net income for the third quarter of 2007 was $11.4 million or 29 cents per fully diluted American Depositary Share (ADS).

Third quarter research and development (R&D) expenditures were $8.7 million, or 19% of net sales. The Company now employs over 620 engineers working on R&D worldwide. In the third quarter, O2Micro’s intellectual property (IP) portfolio expanded by more than 7%, with 346 patents issued worldwide through Q3.

“We are very pleased with our continued revenue growth. Q3 revenue growth of 18% over the prior quarter reflects market share gain in our core markets as well as expansion of new products,” commented Sterling Du, Chairman and CEO of O2Micro.

Mr. Du continues, “The Company continues to increase shareholder value through the introduction of innovative technologies and by increasing the company’s patent portfolio to 346 issued worldwide in Q3, 2007.”

Conference Call: O2Micro will hold its third quarter conference call at 2:00 p.m. PDT, 5:00 p.m. EDT, and 5:00 a.m. (November 1, 2007) Hong Kong time. You may participate using the following dial-in information.

In the US and CANADA: 877-502-9276, pass code #5954697

In HONG KONG: 800-965-503, pass code #5954697

Other INTERNATIONAL participants: 913-312-1300, pass code #5954697

A replay of the call will be available by phone until November 7th using the following dial-in information.

In the US and CANADA: 888-203-1112, pass code #5954697

In HONG KONG: 800-901-108, pass code #5954697

Other INTERNATIONAL participants: 719-457-0820, pass code #5954697

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 8,167 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, introduction of innovative technologies, 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,

2007 2006 2007 2006

NET SALES $ 45,139 $ 31,462 $ 118,367 $ 88,600

COST OF SALES 19,200 14,684 51,640 40,026

GROSS PROFIT 25,939 16,778 66,727 48,574

OPERATING EXPENSES (INCOME)

Research and development (1) 8,683 7,784 24,856 23,006

Selling, general and administrative (1) 8,975 7,251 25,773 20,646

Patent related litigation 2,790 3,508 8,800 8,860

Litigation income ( 5,500 ) - ( 8,864 ) -

Stock Exchange of Hong Kong listing expenses - 385 - 781

Total Operating Expenses 14,948 18,928 50,565 53,293

INCOME (LOSS) FROM OPERATIONS 10,991 ( 2,150 ) 16,162 ( 4,719 )

NON-OPERATING INCOME (EXPENSES)

Interest income 830 902 2,458 2,771

Impairment loss on long-term investments - - - ( 756 )

Foreign exchange loss ( 65 ) ( 595 ) ( 213 ) ( 475 )

Other – net 105 253 112 230

Total Non-operating Income 870 560 2,357 1,770

INCOME (LOSS) BEFORE INCOME TAX 11,861 ( 1,590 ) 18,519 ( 2,949 )

INCOME TAX EXPENSE (BENEFIT) 448 ( 2,140 ) 1,265 ( 2,018 )

NET INCOME (LOSS) 11,413 550 17,254 ( 931 )

OTHER COMPREHENSIVE INCOME (LOSS)

Foreign currency translation adjustments 511 ( 5 ) 835 330

Unrealized gain (loss) on available-for-sale securities ( 1,318 ) ( 877 ) 2,479 88

Total Other Comprehensive Income (Loss) ( 807 ) ( 882 ) 3,314 418

COMPREHENSIVE INCOME (LOSS) $ 10,606 ($ 332 ) $ 20,568 ($ 513 )

EARNINGS (LOSS ) PER SHARE:

Basic $ 0.0060 $ 0.0003 $ 0.0091 ($ 0.0005 )

Diluted $ 0.0058 $ 0.0003 $ 0.0089 NA

EARNINGS (LOSS ) PER ADS:

Basic $ 0.30 $ 0.01 $ 0.45 ($ 0.02 )

Diluted $ 0.29 $ 0.01 $ 0.45 NA

SHARES USED IN EARNINGS PER SHARE CALCULATION:

Basic (in thousands) 1,902,278 1,917,049 1,904,506 1,941,110

Diluted (in thousands) 1,960,613 1,921,590 1,931,983 1,957,350

ADS UNITS USED IN EARNINGS PER ADS CALCULATION:

Basic (in thousands) 38,046 38,341 38,090 38,822

Diluted (in thousands) 39,212 38,432 38,640 39,147

(1) INCLUDES STOCK-BASED COMPENSATION CHARGE AS FOLLOWS:

Research and development $ 273 $ 287 $ 803 $ 935

Selling, general and administrative $ 362 $ 355 $ 1,066 $ 1,096

O2Micro International Limited and Subsidiaries

Consolidated Balance Sheets

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

September 30, December 31,

2007 2006

ASSETS (Unaudited)

CURRENT ASSETS

Cash and cash equivalents $ 48,447 $ 45,438

Restricted cash 7,628 8,342

Short-term investments 26,327 19,697

Accounts receivable – net 24,771 18,987

Inventories 22,562 14,076

Prepaid expenses and other current assets 6,476 7,379

Total Current Assets 136,211 113,919

LONG-TERM INVESTMENTS 26,492 24,059

PROPERTY AND EQUIPMENT – NET 41,564 41,427

OTHER ASSETS

Restricted assets – net 13,485 14,540

Other Assets 3,549 3,075

TOTAL ASSETS $ 221,301 $ 197,020

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES

Notes and accounts payable $ 12,505 $ 9,851

Income tax payable 825 991

Accrued expenses and other current liabilities 12,526 12,212

Total Current Liabilities 25,856 23,054

OTHER LONG-TERM LIABILITIES

Accrued pension liabilities 430 455

Long-term Interpretation 48 tax liabilities 117 -

Total Liabilities 26,403 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 –1,905,049,750 and 1,906,969,950 shares as of September 30, 2007 and December 31, 2006, respectively

38 38

Additional paid-in capital 142,957 140,224

Retained earnings 49,217 33,877

Accumulated other comprehensive income (loss) 2,686 ( 628 )

Total Shareholders’ Equity 194,898 173,511

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 221,301 $ 197,020

 

Contact:

O2Micro® International Limited

Mitchell Benus

Director of Investor Relations, O2Micro

408-332-1749

mitchell.benus@o2micro.com

Source: O2Micro International Limited