O2Micro Reports Second Quarter Financial Results

Aug 3, 2011

GEORGE TOWN, Grand Cayman, Aug. 3, 2011 (GLOBE NEWSWIRE) -- O2Micro® International Limited (Nasdaq:OIIM) reported its financial results today for the second quarter of fiscal 2011, ending June 30, 2011.

Financial Highlights for the Second Quarter ending June 30, 2011:

O2Micro International Limited reported second quarter 2011 revenue of $32.5 million. This was up 5% from the first quarter of 2011. The corresponding gross margins were 57% and 60% in the recent and prior quarters, respectively. Total GAAP operating expense, inclusive of stock-based compensation, was $15.6 million in the second quarter of 2011. This was up slightly from $15.2 million in the first quarter of 2011 when the company recorded a one-time benefit of $850,000 for litigation income. On a GAAP basis, the operating margin was 9% in Q2 2011 and 11% in Q1 2011. Pretax income from continuing operations was $3.2 million in Q2 2011 and $3.5 million in Q1 2011.

GAAP net income was $3.0 million in the second quarter of 2011. This was similar to GAAP net income of $3.1 million that was recorded in the prior quarter. GAAP net income per fully diluted ADS was $0.09 in both Q2 2011 and Q1 2011.

Financial Highlights for the Six Months ending June 30, 2011:

O2Micro International Limited reported revenue of $63.6 million for the six months ending June 30, 2011. This was down 14% from $73.8 million in the comparable six months of 2010. The gross margins were 58% and 62% during the corresponding periods of 2011 and 2010, respectively. GAAP operating expenses were $30.9 million and $31.0 million in the first half of 2011 and 2010, respectively. The respective GAAP operating margins for the comparable periods were 10% and 20%. Pretax income from operations was $6.8 million in the first half of 2011 and $15.0 million in the first half of 2010. GAAP net income was $6.1 million in 1H 2011 and $11.2 million in 1H 2010. The GAAP net income per fully diluted ADS was $0.18 in the first six months of 2011 and $0.31 in the corresponding half 2010.

Supplementary Data:

The company ended the second quarter of 2011 with $114.9 million in unrestricted cash and short-term investments or $3.43 per outstanding ADS. The accounts receivable balance was $14.9 million and represented 40 days sales outstanding at the end of Q2 2011. Inventory was $11.7 million or 77 days and turned over 4.7 times during Q2 2011. As of June 30, 2011, the company had $129.0 million in working capital and the book value was $183.2 million, or $5.47 per outstanding ADS.

As of June 30, 2011, O2Micro International Limited counted 700 employees, including 397 engineers.

Management Commentary:

Sterling Du, Chairman and CEO, commented, "We are encouraged by the uptake of our DC/DC and charger products and the increasing LED driver penetration into general lighting applications at a time when the market for our LCD driver products remains soft," Mr. Du continued, "This progress is important to our long-term success in order to extend our business beyond our core backlighting market."

Conference Call: O2Micro will hold its second quarter conference call on August 3, 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:                       800-723-6498, passcode # 4459801

INTERNATIONAL participants:            785-830-7989, passcode # 4459801

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 # 4459801

INTERNATIONAL participants:                        719-457-0820, passcode # 4459801

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®.

O2Micro International maintains an extensive portfolio of intellectual property with 16,692 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
June 30,
Six Months Ended
June 30,
 2011201020112010
   
NET SALES  $ 32,495  $ 39,435  $ 63,571  $ 73,827
         
COST OF SALES   13,897   15,068   26,431   28,342
         
GROSS PROFIT   18,598   24,367   37,140   45,485
         
OPERATING EXPENSES (INCOME)        
Research and development (1)  8,177  7,755  16,594  15,186
Selling, general and administrative (1)  7,467  7,893  15,119  15,786
Litigation income   --    --     (850)   --
Total Operating Expenses   15,644   15,648   30,863   30,972
         
INCOME FROM OPERATIONS   2,954   8,719   6,277   14,513
         
NON-OPERATING INCOME        
Interest income  292  227  563  481
Foreign exchange gain (loss) — net  (141)  5   (200)  9 
Other — net   131    3    134    (27)
Total Non-operating Income     282   235   497   463
         
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAX
 3,236  8,954  6,774  14,976
         
INCOME TAX EXPENSE   304   454   663   822
         
NET INCOME FROM CONTINUING OPERATIONS  2,932  8,500  6,111  14,154
         
LOSS (GAIN) FROM DISCONTINUED OPERATIONS, NET OF TAX (1)   (29)   1,444   4   3,004
         
NET INCOME  2,961  7,056  6,107  11,150
         
OTHER COMPREHENSIVE INCOME        
Foreign currency translation adjustments  852  4  1,075  116
Unrealized gain (loss) on available-for-sale securities  (811)  (530)  (367)  1,254
Unrealized pension gain   4   1   8   3
Total Other Comprehensive Income (Loss)   45   (525)   716   1,373
         
COMPREHENSIVE INCOME  $ 3,006  $ 6,531  $ 6,823  $ 12,523
         
BASIC EARNINGS (LOSS) PER ADS        
Continuing operations  $ 0.09  $ 0.25  $ 0.18  $ 0.41
Discontinued operations   --   (0.04)   --   (0.09)
   $ 0.09  $ 0.21  $ 0.18  $ 0.32
         
DILUTED EARNINGS (LOSS) PER ADS        
Continuing operations  $ 0.09  $ 0.24  $ 0.18  $ 0.40
Discontinued operations   --   (0.04)   --   (0.09)
   $ 0.09  $ 0.20  $ 0.18  $ 0.31
         
ADS UNITS USED IN EARNINGS (LOSS) PER ADS CALCULATION:        
Basic (in thousands)   33,275   33,920   33,392   34,745
Diluted (in thousands)   34,114   34,883   34,342   35,677
         
(1) INCLUDES STOCK-BASED COMPENSATION CHARGE AS FOLLOWS:        
Research and development  $ 407  $ 222  $ 740  $ 475
Selling, general and administrative  $ 543  $ 730  $ 1,304  $ 1,382
Discontinued operations  $ --  $ 16  $ --  $ 38
O2MICRO INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousand U.S. Dollars, Except Share Amounts)
   
     
 June 30,
2011
December 31,
2010
ASSETS(Unaudited)(Audited)
     
CURRENT ASSETS    
Cash and cash equivalents  $ 28,509  $ 42,277
Restricted cash    178    562
Short-term investments    86,393    68,728
Accounts receivable — net    14,906    13,239
Inventories    11,658    13,683
Prepaid expenses and other current assets    1,939    2,434
Total Current Assets    143,583    140,923
     
LONG-TERM INVESTMENTS    20,322    20,676
     
PROPERTY AND EQUIPMENT — NET   28,978   29,739
     
OTHER ASSETS    
Intangible assets  1,729  1,936
Other Assets   4,208   4,360
Total Other Assets  5,937  6,296
     
TOTAL ASSETS   $198,820   $197,634
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
     
CURRENT LIABILITIES    
Notes and accounts payable   $ 7,039   $ 8,299
Income tax payable    544    494
Accrued expenses and other current liabilities    7,023    8,031
Total Current Liabilities    14,606    16,824
     
OTHER LONG-TERM LIABILITIES    
Accrued pension liabilities  646  679
Long-term income tax liabilities  241  302
Other liabilities   129   129
Total Other Long-Term Liabilities  1,016  1,110
     
Total Liabilities    15,622    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 — 1,674,808,500 and 1,675,021,100 shares as of June 30, 2011
and December 31, 2010, respectively
   33    34
Additional paid-in capital   136,577   135,703
Retained earnings  41,172  36,937
Accumulated other comprehensive income  8,318  7,602
Treasury stock — 21,161,550 and 5,000,000 shares as of June 30, 2011
and December 31, 2010,respectively
  (2,902)   (576)
Total Shareholders' Equity    183,198    179,700
     
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $198,820   $197,634
CONTACT: Gary E. Abbott

         Director of Investor Relations, O2Micro

         Phone: 408.987.5920, x8888

         Email: gary.abbott@o2micro.com