O2Micro International - Q1 Earnings

Date4-May-2011

GEORGE TOWN, Grand Cayman, May 4, 2011 (GLOBE NEWSWIRE) -- O2Micro(R) International Limited (Nasdaq:OIIM - News) reported its financial results today for the first quarter of fiscal 2011, ending March 31, 2011.

Financial Results for the First Quarter ending March 31, 2011:

O2Micro International Limited reported Q1 2011 revenue of $31.1 million. Q1 revenue increased by 3% sequentially and decreased by 10% versus the year-ago quarter. During the first quarter of 2011, the gross margin was 60%, which was consistent with the prior and year-ago periods when the company recorded gross margins of 60% and 61%, respectively. GAAP operating expenses were $15.2 million in Q1 2011, compared to $15.7 million in Q4 2010 and $15.3 million in Q1 2010. The first quarter of 2011 included an expense reduction of $850,000 for litigation income and there was no comparable reduction offsetting operating expenses in the prior or year-ago quarters. The GAAP operating margin in the first quarter of 2011 was 11%. This compares with 8% in Q4 2010 and 17% in Q1 2010.

GAAP net income was $3.1 million in the first quarter of 2011, compared to a loss of $636,000 in the fourth quarter of 2010 and net income of $4.1 million in the first quarter of 2010. GAAP net income per ADS was $0.09 in Q1 2011, compared to a loss per ADS of $0.02 in Q4 2010 and net income per ADS of $0.11 in Q1 2010. GAAP net margin for the corresponding periods was 10%, (2%), and 12%, respectively.

Supplementary Data:

The company ended the first quarter of 2011 with $111.6 million in unrestricted cash and short-term investments or $3.30 per ADS. The accounts receivable balance was $14.3 million and represented 40 days sales outstanding at the end of Q1 2011. Inventory was $12.0 million and turned over 3.9 times during Q1 2011. As of March 31, 2011, the company had $126.8 million in working capital and the book value was $182.0 million, or $5.38 per ADS.

As of March 31, 2011, O2Micro International Limited counted 700 employees, including 400 engineers.

Management Commentary:

Sterling Du, Chairman and CEO, commented, "Our first quarter saw a rebound in key consumer segments and penetration into new markets. This gives us confidence in our future growth and validates our strategy to become a key power management supplier to top-tier OEM and ODM customers."

Conference Call: O2Micro will hold its first quarter conference call on May 4, 2011 at 7:00 a.m. PDT, 10:00 a.m. EDT. You may participate using the following dial-in information.

In the US and CANADA: 888-857-6929, passcode # 9500009
INTERNATIONAL participants: 719-325-2313, passcode # 9500009

A replay of the call will be available by phone for one week following the live call. The replay can be accessed using the following dial-in information.

In the US and CANADA: 888-203-1112, passcode # 9500009
INTERNATIONAL participants: 719-457-0820, passcode # 9500009

A live simulcast will also be available on the company website at www.o2micro.com, and an online replay will be available on the company's website for one week.

About O2Micro

Founded in April 1995, O2Micro develops and markets innovative power management and e-commerce components for the Computer, Consumer, Industrial, and Communications markets. Products include Intelligent Lighting, Battery Management, Power Management, and SmartCardBus(R).

O2Micro International maintains an extensive portfolio of intellectual property with 16,123 patent claims granted, and over 18,000 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 or registered trademarks are the property of their respective owners.

The O2Micro International Limited logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6567

Statements made in this release that are not historical, including statements regarding O2Micro's or management's intentions, hopes, beliefs, expectations, representations, projections, plans or predictions of the future, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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 developments 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
March 31,

2011 2010



NET SALES $ 31,076 $ 34,392



COST OF SALES 12,534 13,274



GROSS PROFIT 18,542 21,118



OPERATING EXPENSES (INCOME)

Research and development (1) 8,417 7,431
Selling, general and administrative (1) 7,652 7,893
Litigation income (850) --
Total Operating Expenses 15,219 15,324



INCOME FROM OPERATIONS 3,323 5,794



NON-OPERATING INCOME

Interest income 271 254
Foreign exchange gain (loss) -- net (59) 4
Other -- net 3 (30)
Total Non-operating Income 215 228



INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAX
3,538 6,022



INCOME TAX EXPENSE 359 368



NET INCOME FROM CONTINUING OPERATIONS 3,179 5,654



LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX (1) 33 1,560



NET INCOME 3,146 4,094



OTHER COMPREHENSIVE INCOME

Foreign currency translation adjustments 223 112
Unrealized gain on available-for-sale securities 444 1,784
Unrealized pension gain 4 2
Total Other Comprehensive Income 671 1,898



COMPREHENSIVE INCOME $ 3,817 $ 5,992



BASIC EARNINGS (LOSS) PER ADS

Continuing operations $ 0.09 $ 0.16
Discontinued operations -- (0.04)

$ 0.09 $ 0.12



DILUTED EARNINGS (LOSS) PER ADS

Continuing operations $ 0.09 $ 0.15
Discontinued operations -- (0.04)

$ 0.09 $ 0.11



ADS UNITS USED IN EARNINGS (LOSS) PER ADS CALCULATION:

Basic (in thousands) 33,509 35,571
Diluted (in thousands) 34,569 36,472



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

Research and development $ 333 $ 253
Selling, general and administrative $ 761 $ 652
Discontinued operations $ -- $ 22



O2MICRO INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousand U.S. Dollars, Except Share Amounts)

March 31,
2011
December 31,
2010
ASSETS (Unaudited) (Audited)



CURRENT ASSETS

Cash and cash equivalents $ 29,300 $ 42,277
Restricted cash 565 562
Short-term investments 82,278 68,728
Accounts receivable -- net 14,280 13,239
Inventories 12,008 13,683
Prepaid expenses and other current assets 2,413 2,434
Total Current Assets 140,844 140,923



LONG-TERM INVESTMENTS 21,127 20,676



PROPERTY AND EQUIPMENT -- NET 28,980 29,739



OTHER ASSETS

Intangible assets 1,830 1,936
Other Assets 4,349 4,360
Total Other Assets 6,179 6,296



TOTAL ASSETS $ 197,130 $ 197,634



LIABILITIES AND SHAREHOLDERS' EQUITY



CURRENT LIABILITIES

Notes and accounts payable $ 6,876 $ 8,299
Income tax payable 599 494
Accrued expenses and other current liabilities 6,609 8,031
Total Current Liabilities 14,084 16,824



OTHER LONG-TERM LIABILITIES

Accrued pension liabilities 648 679
Long-term income tax liabilities 302 302
Other liabilities 129 129
Total Other Long-Term Liabilities 1,079 1,110



Total Liabilities 15,163 17,934



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 -- 1,690,205,950 and 1,675,021,100 shares as of March 31, 2011
and December 31, 2010, respectively
34 34
Additional paid-in capital 136,927 135,703
Retained earnings 39,878 36,937
Accumulated other comprehensive income 8,273 7,602
Treasury stock -- 19,836,300 and 5,000,000 shares as of March 31, 2011
and December 31, 2010, respectively
(3,145) (576)
Total Shareholders' Equity 181,967 179,700



TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 197,130 $ 197,634

Contact:

Gary E. Abbott
Director of Investor Relations, O2Micro
Phone: 408.987.5920, x8888
Email: gary.abbott@o2micro.com