O2Micro Sets New Q2 Earnings Record

Aug 4, 2010

GEORGE TOWN, Grand Cayman, Aug. 4, 2010 (GLOBE NEWSWIRE) -- O2Micro® International Limited (Nasdaq:OIIM) reported its financial results today for the second quarter of fiscal 2010, ending June 30, 2010.

Financial Results for the Second Quarter ending 6/30/2010:

Revenue was $39.9 million in the second quarter of fiscal 2010. This was up 14% sequentially and 15% versus the year-ago period. Gross margin was 61.7% in the second quarter. This was approximately flat with 61.6% in the prior quarter and up from 58.8% in the year-ago period.

Total Q2 operating expenses were $17.3 million, versus $17.2 million in the first quarter, and $20.5 million in the second quarter of 2009. These results yielded a GAAP operating margin of 18.3% in the second quarter of 2010, compared to 12.2% in the first quarter of 2010, and (0.3)% in the second quarter of 2009.

Pretax income was $7.5 million in Q2, which was up from $4.5 in Q1, and reversed a pretax loss of $158,000 in the year-ago quarter. Net income was $7.1 million in Q2, up from $4.1 million in Q1, and up from a net loss of $505,000 in the year-ago quarter. GAAP net income per fully diluted ADS was $0.20 in Q2 2010, versus $0.11 in Q1 2010, and improved over a net loss per ADS of $0.01 in Q2 2009.

Financial Results for the Six Months ending 6/30/2010:

Revenue for the first half of 2010 was $74.7 million. This compares favorably to $57.7 million in the first half of 2009. The gross margin in the six months ending June 30, 2010 was 61.7%, up from 57.5% in the comparable half-year. GAAP operating expenses declined to $34.5 million in the first half of 2010 from $37.2 million in the first half of 2009. The corresponding GAAP operating margins for the six month periods were 15.4% and (7.0)% in the respective halves of 2010 and 2009. Pretax income was $12.0 million in the first half of 2010 and reversed a pretax loss of $3.2 million in the first half of 2009. After taxes, GAAP net income was $11.2 million in the first half of 2010, compared to a GAAP net loss of $4.0 million in the first half of 2009. The corresponding GAAP net income per fully diluted ADS was $0.31 in the first half of 2010, which also compares favorably to a GAAP net loss per ADS of $0.11 in the first half of 2009.

Supplementary Data:

The company ended the second quarter of 2010 with $106.1 million in unrestricted cash and short-term investments, or $3.02 per outstanding ADS. The ending cash balance comes after the repurchase of more than 1.1 million ADS units in the second quarter for approximately $7.8 million. The accounts receivable balance was $18.8 million and represented 40 days sales outstanding at the end of the Q2 2010. Inventory was $13.0 million. Inventory stood at 67 days at the end of the second quarter and turned over 5.4 times during Q2 2010. As of June 30, 2010, the company had $116.9 million in working capital and the book value was $176.0 million, or $5.01 per outstanding ADS.

As of June 30, 2010, O2Micro International Limited counted 827 employees, including 518 engineers.

Management Commentary:

Sterling Du, Chairman and CEO, commented, "We set a new Q2 earnings record with high margins and solid sequential and year-to-year revenue growth. These financial accomplishments are the fruits of our ongoing R&D investment." Mr. Du continued, "Our financial success comes from market leading customers who value the superior power efficiency of our 'green' semiconductor chips, including our LED Driver, Battery, DC/DC, Charger, and Security offerings."

Conference Call: O2Micro will hold its second quarter conference call on August 4, 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: 877-852-6575, passcode #7861418
INTERNATIONAL participants: 719-325-4915, passcode #7861418

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 #7861418
INTERNATIONAL participants:  719-457-0820, passcode #7861418

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® products.

O2Micro International maintains an extensive portfolio of intellectual property with 14,483 patent claims granted, and over 16,000 more pending. The company maintains offices worldwide. Additional company and product information can be found on the company website at www.o2micro.com.

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

O2Micro, the O2Micro logo, SmartCardBus, and combinations thereof are registered trademarks of O2Micro. All other trademarks are the property of their respective owners.

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, 
   2010   2009   2010   2009 
    
NET SALES $ 39,854 $ 34,605 $ 74,707 $ 57,715
     
COST OF SALES  15,249  14,247  28,647  24,533
     
GROSS PROFIT  24,605  20,358  46,060  33,182
     
OPERATING EXPENSES    
Research and development (1) 8,483  7,998  16,859  15,982 
Selling, general and administrative (1)  8,836  12,469  17,672  21,252
Total Operating Expenses  17,319  20,467  34,531  37,234
     
INCOME (LOSS) FROM OPERATIONS  7,286  (109 )  11,529   (4,052 )
     
NON-OPERATING INCOME (LOSS)    
Interest income 230 384 487 828
Foreign exchange gain (loss) (7 ) (405 ) (8 ) 82 
Other – net  3  (28 )  (26 )  (39 )
Total Non-operating Income (Loss)  226  (49 )  453  871
     
INCOME (LOSS) BEFORE INCOME TAX 7,512 (158 ) 11,982  (3,181 )
     
INCOME TAX EXPENSE  456   347   832   865 
     
NET INCOME (LOSS) 7,056  (505 ) 11,150  (4,046 )
     
OTHER COMPREHENSIVE INCOME (LOSS)    
Foreign currency translation adjustments 4  555  116 (89 )
Unrealized gain (loss) on available-for-sale securities (530 ) (751 ) 1,254 752
Unrealized pension gain  1  2  3  3
Total Other Comprehensive Income (Loss)  (525 )  (194 )  1,373  666
     
COMPREHENSIVE INCOME (LOSS) $ 6,531 $ (699 ) $ 12,523 $ (3,380 )
     
EARNINGS (LOSS) PER SHARE:    
Basic $ 0.0042 $(0.0003) $ 0.0064 $ (0.0022)
Diluted $ 0.0040 NA $ 0.0063 NA
     
EARNINGS (LOSS) PER ADS    
Basic $ 0.21 $ (0.01 ) $ 0.32 $ (0.11 )
Diluted $ 0.20 NA $ 0.31 NA
     
SHARES USED IN EARNINGS (LOSS) PER
SHARE CALCULATION:
    
Basic (in thousands) 1,695,983 1,846,359 1,737,260 1,842,521
Diluted (in thousands) 1,744,127 NA 1,783,874 NA
     
ADS UNITS USED IN EARNINGS (LOSS) PER
ADS CALCULATION:
    
Basic (in thousands) 33,920  36,927  34,745  36,850
Diluted (in thousands) 34,883 NA  35,677 NA
     
(1) INCLUDES STOCK-BASED COMPENSATION
CHARGE AS FOLLOWS:
    
Research and development $ 238 $ 334 $ 513 $ 616
Selling, general and administrative $ 730 $ 620 $ 1,382 $ 1,109
     
 
O2Micro International Limited and Subsidiaries
Consolidated Balance Sheets
(In Thousand U.S. Dollars, Except Share Amounts)
   
 June 30,
2010
December 31,
2009
ASSETS(Unaudited)(Audited)
   
CURRENT ASSETS  
Cash and cash equivalents $ 35,025  $ 38,831
Restricted cash   159   236
Short-term investments   71,072   74,502
Accounts receivable, net   18,801   14,556
Inventories   12,981   9,457
Prepaid expenses and other current assets   1,979   3,342
Total Current Assets   140,017   140,924
   
LONG-TERM INVESTMENTS   20,255   15,190
   
PROPERTY AND EQUIPMENT, NET  29,468  30,570
   
OTHER ASSETS  
Restricted assets  1,435  1,443
Intangible assets 3,935 4,266
Other Assets  4,881  4,921
  10,251 10,630
   
TOTAL ASSETS  $199,991  $197,314
   
LIABILITIES AND SHAREHOLDERS' EQUITY  
   
CURRENT LIABILITIES  
Notes and accounts payable  $ 11,944  $ 8,760
Income tax payable   483   411
Accrued expenses and other current liabilities   10,653   7,731
Total Current Liabilities   23,080   16,902
   
OTHER LONG-TERM LIABILITIES  
Accrued pension liabilities 467 498
Long-term income tax payable 335 341
Other liabilities  129  129
   931  968
   
Total Liabilities   24,011   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 – 1,754,594,750 and 1,809,461,200 shares as of June 30, 2010 and
December 31, 2009, respectively
   35   36
Additional paid-in capital  139,498  142,679
Retained earnings 40,777 33,214
Accumulated other comprehensive income 4,888 3,515
Treasury stock – 68,538,500 shares and nil as of June 30, 2010 and
December 31, 2009, respectively
  (9,218 )  --
Total Shareholders' Equity   175,980   179,444
   
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  $199,991  $197,314
CONTACT:  O2Micro International Limited
          Gary E. Abbott, Director of Investor Relations
          408.987.5920, x8888
          gary.abbott@o2micro.com

(C) Copyright 2010 GlobeNewswire, Inc. All rights reserved.