OIIM O2 Micro International Ltd

O2Micro(R) International Limited (Nasdaq:OIIM), a leading supplier of innovative power management, and security components and systems for the computer, consumer, industrial, and communications markets, reported its financial results today for the first quarter ended March 31, 2005. Net sales for the first quarter were $23.3 million. First quarter revenue of $23.3 million was a decrease of 2% from the preceding quarter, and an increase of 5% from the comparable quarter of the prior year. Earnings per share for the first quarter, fully diluted, were 5 cents per share, compared to 7 cents per share in the preceding quarter and 10 cents per share in the comparable quarter of the prior year. Net income for the first quarter of $2.1 million was a decrease of 21% from the preceding quarter, and a decrease of 50% from the comparable quarter of the prior year. First quarter R&D expenditures were $5.3 million, a decrease of 13% from the preceding quarter, and an increase of 17% from the comparable quarter of the prior year. "O2Micro was again profitable and cash flow positive in Q1. The company continues to build its base for future growth with additions to key engineering resources, and product and patent portfolios. During Q1, O2Micro received patent issues of 12 patents with 347 claims. As of this date O2Micro has 97 issued patents with 2,520 issued claims," commented Sterling Du, Chairman and CEO of O2Micro. Conference Call: O2Micro will hold its first quarter conference call today at 2:00 p.m. PDT, 5:00 p.m. EDT. You may participate by dialing 800-915-4836, or 913-905-1086 (for International participants), pass code #8904280. A replay of the call will be available by phone until May 11th by dialing 888-203-1112, pass code #8904280 or 719-457-0820 (for International participants), pass code #8904280. A live simulcast will also be available on the company website at www.o2micro.com, and an online replay will be available on the site 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(R), PCI ExpressSwitch(TM) and Security products, such as VPN/Firewall system solutions. O2Micro International maintains an extensive portfolio of intellectual property with 2,520 patent claims granted, and over 5,000 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. ExpressSwitch and combinations thereof are trademarks of O2Micro. 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 our future growth, expansion of our 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. Note: In "O2Micro," the 2 should read as subscript. -0- *T 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 -------- 2005 2004 ------- ------- NET SALES $23,277 $22,196 COST OF SALES 8,930 9,400 ------- ------- GROSS PROFIT 14,347 12,796 ------- ------- OPERATING EXPENSES Research and development 5,330 4,561 Selling, general and administrative 4,664 3,651 Patent litigation 2,536 608 ------- ------- Total Operating Expenses 12,530 8,820 ------- ------- INCOME FROM OPERATIONS 1,817 3,976 ------- ------- NON-OPERATING INCOME (EXPENSES) Interest income 608 231 Gain on sale of long-term investments - 340 Foreign exchange gain (loss) (10) 222 Other - net (12) 3 ------- ------- Total Non-operating Income 586 796 ------- ------- INCOME BEFORE INCOME TAX 2,403 4,772 INCOME TAX EXPENSE 314 566 ------- ------- NET INCOME 2,089 4,206 OTHER COMPREHENSIVE INCOME (LOSS) Translation adjustments on subsidiaries 229 170 Unrealized gain (loss) on available-for-sale securities 284 (86) ------- ------- Total Other Comprehensive Income (Loss) 513 84 ------- ------- COMPREHENSIVE INCOME $ 2,602 $ 4,290 ======= ======= EARNINGS PER SHARE: Basic $ 0.05 $ 0.11 ======= ======= Diluted $ 0.05 $ 0.10 ======= ======= SHARES USED IN EARNINGS PER SHARE CALCULATION: Basic (in thousands) 39,178 39,054 ======= ======= Diluted (in thousands) 39,571 40,617 ======= ======= O2Micro International Limited and Subsidiaries Consolidated Balance Sheets (In Thousand U.S. Dollars, Except Share Amounts) March 31, December 31, 2005 2004 -------- -------- A S S E T S (Unaudited) ----------- CURRENT ASSETS Cash and cash equivalents $ 46,526 $ 56,320 Restricted cash 2,113 1,887 Short-term investments 70,238 63,768 Accounts receivable - net 9,533 9,431 Inventories 9,314 11,231 Prepaid expenses and other current assets 8,037 4,491 -------- -------- Total Current Assets 145,761 147,128 -------- -------- LONG-TERM INVESTMENTS 17,296 11,781 -------- -------- LAND, PROPERTY AND EQUIPMENT - NET 10,784 10,758 -------- -------- OTHER ASSETS Restricted assets - net 13,841 13,873 -------- -------- Other Assets 1,517 1,656 -------- -------- TOTAL ASSETS $189,199 $185,196 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES Notes and accounts payable $ 3,335 $ 3,635 Income taxes payable 3,728 3,751 Accrued expenses and other current liabilities 9,326 7,029 -------- -------- Total Current Liabilities 16,389 14,415 -------- -------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY Preference shares at $0.001 par value per share Authorized - 5,000,000 shares - - Ordinary shares at $0.001 par value per share Authorized - 95,000,000 shares Issued - 39,141,757 and 39,188,062 shares as of March 31, 2005 and December 31, 2004, respectively 39 39 Additional paid-in capital 139,456 139,581 Accumulated other comprehensive income (loss) 403 (110) Retained earnings 32,912 31,271 -------- -------- Total Shareholders' Equity 172,810 170,781 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $189,199 $185,196 ======== ======== *T