O2Micro Reports Third Quarter Financial Results

Nov 3, 2010
O2Micro Reports Third Quarter Financial Results

O2Micro Reports Third Quarter Financial Results

GEORGE TOWN, Grand Cayman, Nov. 3, 2010 (GLOBE NEWSWIRE) -- O2Micro® International Limited (Nasdaq:OIIM - News) reported its financial results today for the third quarter of fiscal 2010, ending September 30, 2010.

Financial Results for the Third Quarter ending 9/30/2010:

Revenue was $34.5 million in the third quarter of fiscal 2010. This was down 13.4% sequentially and 5.8% versus the year-ago period. Gross margin was 61.8% in the third quarter. This was approximately flat with 61.7% in the prior quarter and up from 60.6% in the year-ago period.

Total Q3 operating expenses were $19.3 million, versus $17.3 million in the second quarter, and $21.9 million in the third quarter of 2009. The GAAP operating expenses incurred in the third quarter of 2010 included a one-time asset impairment charge of $2.2 million and there was no comparable charge in the prior or year-ago periods. These results yielded a GAAP operating margin of 6.0% in the third quarter of 2010, compared to 18.3% in the second quarter of 2010, and 1.0% in the third quarter of 2009.

Pretax income was $2.1 million in Q3 2010, down from $7.5 million in Q2 and up from $684,000 in the year-ago quarter. After taxes, the GAAP net income was $1.7 million in Q3, which was also down from $7.1 million in the prior quarter and up from $267,000 in the Q3 2009 period. GAAP net income per fully diluted ADS was $0.05 in Q3 2010 versus $0.20 in Q2 2010 and $0.01 in Q3 2009.

Financial Results for the Nine Months ending 9/30/2010:

Revenue for the first nine months of 2010 was $109.2 million. This compares favorably to $94.4 million in the first nine months of 2009. The gross margin in the nine months ending September 30, 2010 was 61.7%, up from 58.7% in the comparable nine months of last year. GAAP operating expenses declined to $53.8 million in the first nine months of 2010 from $59.1 million in the comparable period of 2009. The GAAP operating expenses in the nine months ending September 30, 2010 also included a one-time asset impairment charge of $2.2 million and there was no comparable charge during the corresponding period of 2009. The GAAP operating margins were 12.5% and (3.9)% in the first nine months of 2010 and 2009, respectively. Pretax income was $14.1 million in the first nine months of 2010 and reversed a pretax loss of $2.5 million in the comparable nine months of 2009. After taxes, GAAP net income was $12.8 million in the first nine months of 2010, compared to a GAAP net loss of $3.8 million in the first nine months of 2009. The corresponding GAAP net income per fully diluted ADS was $0.36 in the first nine months of 2010, which also compares favorably to a GAAP net loss per ADS of $0.10 in the first nine months of 2009.

Supplementary Data:

The company ended the third quarter of 2010 with $108.2 million in unrestricted cash and short-term investments, or $3.21 per outstanding ADS. The ending cash balance comes after the repurchase of 271,109 ADS units in the third quarter for approximately $1.7 million. The accounts receivable balance was $14.3 million and represented 43 days sales outstanding at the end of Q3 2010. Inventory was $14.4 million. Inventory stood at 93 days at the end of the third quarter and turned over 3.9 times during Q3 2010. As of September 30, 2010, the company had $123.0 million in working capital and the book value was $178.9 million, or $5.30 per outstanding ADS.

As of September 30, 2010, O2Micro International Limited counted 839 employees, including 520 engineers.

Management Commentary:

Sterling Du, Chairman and CEO, commented, "I am pleased that our company remained solidly profitable with high gross and operating margins during this period of oversupply." Mr. Du continued, "At this point, key markets seem to be coming back into balance and we are excited about the breadth of our product line and its potential to drive growth in 2011 and beyond."

Conference Call: O2Micro will hold its third quarter conference call on November 3, 2010 at 7:00 a.m. PDT, 10:00 a.m. EDT. You may participate using the following dial-in information.

In the U.S and CANADA:. 800-289-0507, passcode #8222046
INTERNATIONAL participants: 913-981-5539, passcode #8222046

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 U.S. and CANADA: 888-203-1112, passcode #8222046
INTERNATIONAL participants: 719-457-0820, passcode #8222046

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 security components for the Computer, Consumer, Industrial, and Communications markets. Products include Intelligent Lighting, Battery Management, Power Management, and SmartCardBus® integrated circuits.

O2Micro International maintains an extensive portfolio of intellectual property with 696 patents and 15,127 patent claims granted. 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.

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



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
September 30,
Nine Months Ended
September 30,

2010 2009 2010 2009





NET SALES $ 34,520 $ 36,664 $109,227 $ 94,379





COST OF SALES 13,173 14,450 41,820 38,983





GROSS PROFIT 21,347 22,214 67,407 55,396





OPERATING EXPENSES



Research and development (1) 8,559 8,481 25,418 24,463
Selling, general and administrative (1) 8,532 13,381 26,204 34,633
Long-lived asset impairment charges 2,184 -- 2,184 --
Total Operating Expenses 19,275 21,862 53,806 59,096





INCOME (LOSS) FROM OPERATIONS 2,072 352 13,601 (3,700)





NON-OPERATING INCOME (LOSS)



Interest income 245 329 732 1,157
Foreign exchange gain (loss) (196) (43) (204) 39
Other -- net 16 46 (10) 7
Total Non-operating Income 65 332 518 1,203





INCOME (LOSS) BEFORE INCOME TAX 2,137 684 14,119 (2,497)





INCOME TAX EXPENSE 449 417 1,281 1,282





NET INCOME (LOSS) 1,688 267 12,838 (3,779)





OTHER COMPREHENSIVE INCOME



Foreign currency translation adjustments 1,063 346 1,179 257
Unrealized gain on available-for-sale securities 740 181 1,994 933
Unrealized pension gain 2 2 5 5
Total Other Comprehensive Income 1,805 529 3,178 1,195





COMPREHENSIVE INCOME (LOSS) $ 3,493 $ 796 $ 16,016 $ (2,584)





EARNINGS (LOSS) PER SHARE:



Basic $ 0.0010 $ 0.0001 $0.0075 $(0.0020)
Diluted $ 0.0010 $ 0.0001 $ 0.0073 NA





EARNINGS (LOSS) PER ADS



Basic $ 0.05 $ 0.01 $ 0.37 $ (0.10)
Diluted $ 0.05 $ 0.01 $ 0.36 NA





SHARES USED IN EARNINGS (LOSS) PER SHARE CALCULATION:








Basic (in thousands) 1,678,788 1,849,888 1,717,770 1,844,977





Diluted (in thousands) 1,724,555 1,884,718 1,764,101 NA





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



Basic (in thousands) 33,576 36,998 34,355 36,900
Diluted (in thousands) 34,491 37,694 35,282 NA





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



Research and development $ 247 $ 297 $ 760 $ 913
Selling, general and administrative $ 798 $ 563 $ 2,180 $ 1,672



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


September 30,
2010
December 31,
2009
ASSETS (Unaudited) (Audited)
CURRENT ASSETS

Cash and cash equivalents $ 32,080 $ 38,831
Restricted cash 163 236
Short-term investments 76,102 74,502
Accounts receivable, net 14,338 14,556
Inventories 14,385 9,457
Prepaid expenses and other current assets 2,383 3,342
Total Current Assets 139,451 140,924



LONG-TERM INVESTMENTS 20,997 15,190



PROPERTY AND EQUIPMENT, NET 29,041 30,570



OTHER ASSETS

Restricted assets -- 1,443
Intangible assets 2,043 4,266
Other Assets 4,763 4,921

6,806 10,630
TOTAL ASSETS $ 196,295 $ 197,314



LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

Notes and accounts payable $ 7,018 $ 8,760
Income tax payable 573 411
Accrued expenses and other current liabilities 8,859 7,731
Total Current Liabilities 16,450 16,902



OTHER LONG-TERM LIABILITIES

Accrued pension liabilities 466 498
Long-term income tax payable 335 341
Other liabilities 129 129

930 968
Total Liabilities 17,380 17,870



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 -- 1,687,370,400 and 1,809,461,200 shares as of September 30, 2010 and
December 31, 2009, respectively
34 36
Additional paid-in capital 135,618 142,679
Retained earnings 38,318 33,214
Accumulated other comprehensive income 6,693 3,515
Treasury stock -- 13,555,450 shares and nil as of September 30, 2010 and December
31, 2009, respectively
(1,748) --
Total Shareholders' Equity 178,915 179,444



TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 196,295 $ 197,314



Contact:
O2Micro International Limited
Gary E. Abbott, Director of Investor Relations
408.987.5920, x8888
gary.abbott@o2micro.com