02MICRO REPORTS FOURTH QUARTER AND FISCAL YEAR END EARNINGS AND REVENUES

Date1-Feb-2008
O2Micro(R) Reports Fourth Quarter and Fiscal Year End Earnings and Record Revenues

Wednesday January 30, 4:00 pm ET

 

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 fourth quarter and fiscal year ended December 31, 2007.

Financial results for the fourth quarter ending 12/31/2007:

 

Net sales for the fourth quarter of 2007 were $47.2 million, an increase of 4.5% from the preceding quarter, and up 30% from the fourth quarter of the prior year. The GAAP gross margin on net sales was 58.7% in the fourth quarter, up from 57.5% in the preceding quarter, and up from 53.9% in the fourth quarter of the prior year.

 

The Company recorded a GAAP operating margin of 15.8% in the fourth quarter. Research and development (R&D) expenditures were $9.8 million, or 20.7% of net sales. SG&A expenses were $8.9 million, or 18.9% of net sales. Other expenses consist primarily of net litigation expense of $1.5 million, or 3.3% of net sales.

 

GAAP Net Income for the fourth quarter of 2007 was $7.7 million or 20 cents per American Depositary Share (ADS).

 

Financial results for the fiscal year ending 12/31/2007:

 

Net sales for the fiscal year ending December 31, 2007 were $165.5 million, an increase of 32.5% from the prior year. The GAAP gross margin on net sales was 57.1% in fiscal 2007, up from 54.6% in fiscal 2006.

 

The Company recorded a GAAP operating margin of 14.3% in fiscal 2007. This compares with a GAAP operating loss of 3.7% in fiscal 2006. For the fiscal year ending 12/31/2007, R&D expenditures were $34.6 million, or 20.9% of net sales; SG&A expenses were $34.7 million, or 21.0% of net sales; and other operating expenses consist primarily of net litigation expense of $1.5 million, or 0.9% of net sales.

 

GAAP Net Income for the fiscal year ending December 31, 2007 and the fiscal year ending December 31, 2006 was $25.0 million and $743,000, respectively. GAAP Net Income per fully diluted ADS was 64 cents in fiscal 2007, up from 2 cents in fiscal 2006.

 

Supplementary data:

 

As of December 31, 2007, O2Micro® had unrestricted cash and short-term investments of $81.2 million, or $2.12 per ADS. Net accounts receivable was $24.6 million, and there were 47 days sales outstanding in accounts receivable at the end of the fourth quarter. Inventory was $22.1 million and turned over 3.5 times in the fourth quarter. Total shareholders' equity increased from $173.5 million at the end of 2006 to $204.1 million at the end of 2007. The book value per ADS was $5.34 at the end of 2007.

 

During the fourth quarter, the company repurchased 100,000 ADS units and there were more than 3.7 million ADS units remaining in the current authorization at year’s end.

 

As of 12/31/2007, O2Micro’s headcount consisted of 1107 employees, including 627 engineers worldwide. This headcount was up from 1089 employees at the end of the third quarter of 2007.

 

Sterling Du, Chairman and CEO, commented, “O2Micro enjoyed a record year of revenue and earnings. Our market leadership has evolved out of the release of innovative new products. For example, our deep expertise with CCFL backlight inverters has enabled us to rapidly penetrate new opportunities in LED backlighting. In fact, several top-tier notebook OEMs have chosen to use our LED drivers for their new high-end products, which should maintain our Intelligent Lighting franchise for years to come.” Mr. Du continued, “It is easy to be excited about our strong position in core markets, but we will continue to develop key products to sustain our long-term growth. Today’s investments in battery management and network security should also pay dividends well into the future.”

 

Conference Call: O2Micro will hold its fourth quarter conference call today at 2:00 p.m. PST, 5:00 p.m. EST, and 6:00 a.m. (January 31, 2008) Hong Kong time. You may participate using the following dial-in information.

 

In the US and CANADA: 888-204-4517, pass code #6778743

In HONG KONG: 800-965-503, pass code #6778743

Other INTERNATIONAL participants: 913-981-5583, pass code #6778743

 

A replay of the call will be available by phone until February 6th using the following dial-in information.

 

In the US and CANADA: 888-203-1112, pass code #6778743

In HONG KONG: 800-901-108, pass code #6778743

Other INTERNATIONAL participants: 719-457-0820, pass code #6778743

 

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 8,594 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

 

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

Three Months Ended Years Ended

December 31, December 31,

2007 2006 2007 2006

Unaudited Unaudited

NET SALES $ 47,173 $ 36,315 $ 165,540 $ 124,915

COST OF SALES 19,459 16,746 71,099 56,772

GROSS PROFIT 27,714 19,569 94,441 68,143

OPERATING EXPENSES (INCOME)

Research and development (1) 9,768 8,745 34,624 31,751

Selling, general and administrative (1) 8,939 8,563 34,712 29,209

Patent related litigation 2,048 2,102 10,848 10,962

Litigation income (

500

) - (

9,364

) -

Stock Exchange of Hong Kong listing expenses - 5 - 786

Total Operating Expenses 20,255 19,415 70,820 72,708

INCOME (LOSS) FROM OPERATIONS 7,459 154 23,621 (

4,565

)

NON-OPERATING INCOME (EXPENSE)

Interest income 804 856 3,262 3,627

Impairment loss on long-term investments - - - (

756

)

Foreign exchange gain (loss) (

335

) 214 (

548

) (

261

)

Other – net (

7

) 18 105 248

Total Non-operating Income 462 1,088 2,819 2,858

INCOME (LOSS) BEFORE INCOME TAX 7,921 1,242 26,440 (

1,707

)

INCOME TAX EXPENSE (BENEFIT) 191 (

432

) 1,456 (

2,450

)

NET INCOME 7,730 1,674 24,984 743

OTHER COMPREHENSIVE INCOME (LOSS)

Foreign currency translation adjustments 832 365 1,667 695

Unrealized gain (loss) on available-for-sale securities 223 (

293

) 2,702 (

205

)

Unrecognized pension loss (

95

) - (

95

) -

Total Other Comprehensive Income 960 72 4,274 490

COMPREHENSIVE INCOME $ 8,690 $ 1,746 $ 29,258 $ 1,233

EARNINGS PER SHARE:

Basic $ 0.0040 $ 0.0009 $ 0.0131 $ 0.0004

Diluted $ 0.0039 $ 0.0009 $ 0.0129 $ 0.0004

EARNINGS PER ADS

Basic $ 0.20 $ 0.04 $ 0.66 $ 0.02

Diluted $ 0.20 $ 0.04 $ 0.64 $ 0.02

SHARES USED IN EARNINGS PER SHARE CALCULATION:

Basic (in thousands) 1,909,382 1,906,970 1,905,725 1,932,575

Diluted (in thousands) 1,979,189 1,912,742 1,943,785 1,946,896

ADS UNITS USED IN EARNINGS PER ADS CALCULATION:

Basic (in thousands) 38,188 38,139 38,115 38,652

Diluted (in thousands) 39,584 38,255 38,876 38,938

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

Research and development $ 255 $ 246 $ 1,058 $ 1,181

Selling, general and administrative $ 342 $ 312 $ 1,408 $ 1,408

O2Micro International Limited and Subsidiaries

 

Consolidated Balance Sheets

 

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

December 31,

2007 2006

ASSETS

(Unaudited)

CURRENT ASSETS

Cash and cash equivalents $ 52,597 $ 45,438

Restricted cash 6,830 8,342

Short-term investments 28,650 19,697

Accounts receivable – net 24,600 18,987

Inventories 22,127 14,076

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

Total Current Assets 142,280 113,919

LONG-TERM INVESTMENTS 26,715 24,059

PROPERTY AND EQUIPMENT – NET 43,148 41,427

OTHER ASSETS

Restricted assets – net 12,393 14,540

Other Assets 3,876 3,075

TOTAL ASSETS $ 228,412 $ 197,020

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES

Notes and accounts payable $ 10,841 $ 9,851

Income tax payable 1,065 991

Accrued expenses and other current liabilities 11,597 12,212

Total Current Liabilities 23,503 23,054

OTHER LONG-TERM LIABILITIES

Accrued pension liabilities 520 455

Long-term Interpretation 48 tax liabilities 210 -

Total Liabilities 24,233 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 –1,911,868,150 and 1,906,969,950 shares as of December 31, 2007 and 2006, respectively 38 38

Treasury stock – 5,000,000 shares (

1,296

) -

Additional paid-in capital 144,944 140,224

Retained earnings 56,847 33,877

Accumulated other comprehensive income (loss) 3,646 (

628

)

Total Shareholders’ Equity 204,179 173,511

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 228,412 $ 197,020

 

Contact:

O2Micro

Gary E. Abbott, 408-987-5920, x8888

Director of Investor Relations

gary.abbott@o2micro.com

 

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Source: O2Micro International Limited