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Vimicro Reports Fourth Quarter 2009 and Fiscal Year 2009 Financial Results
May 12, 2010 (04:05 PM EDT)


BEIJING, May 12 /PRNewswire-Asia-FirstCall/ -- Vimicro International Corporation (Nasdaq: VIMC) ("Vimicro"), a leading multimedia semiconductor and solution provider, today announced financial results for the fourth quarter and year ended December 31, 2009.

(Logo: http://www.newscom.com/cgi-bin/prnh/20070528/CNM014LOGO )

Fourth Quarter 2009

Net revenue in the fourth quarter of 2009 was $23.7 million as compared to $20.5 million reported in the third quarter of 2009 and $22.2 million in the fourth quarter of 2008. The 16 percent sequential increase in revenue was due to continued increases in demand for the Company's multimedia processors as well as increased traction from its new products in the surveillance and mobile phone markets. The Company also benefited from improved product purchasing trends globally and in the domestic Chinese market.

Fourth quarter 2009 net loss, prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP), was $1.6 million, or $0.02 loss per ADS (each representing four ordinary shares), which included $0.9 million in share-based compensation expense. The fourth quarter 2009 GAAP loss compares to a net loss of $4.3 million, or a loss of $0.08 per ADS, in the third quarter of 2009 and a net loss of $8.3 million, or a loss of $0.24 per ADS, in the fourth quarter of 2008.

"Fourth quarter revenue continued to improve representing the third consecutive quarter of growth since the first quarter 2009 low point in the economic cycle," commented Dr. John Deng, Vimicro's Chairman and Chief Executive Officer. "In addition to strong sales of our notebook camera products during the quarter, Vimicro continued to make significant progress towards leveraging our core technology expertise to further penetrate the growing markets of 3G mobile, home & entertainment and surveillance. Our investments and alliances in 3G multimedia and mobile TV are beginning to reflect in our results as shipments have started to ramp. Additionally, our SVAC surveillance standard is now in the final review process with the Chinese government, which provides a strong competitive advantage for Vimicro as a standards leader in the rapidly growing surveillance market."

Fiscal Year 2009

For the fiscal year ended December 31, 2009, net revenue was $73.0 million as compared to $86.5 million for the fiscal year ended December 31, 2008. The decline in annual revenue was due in part to the global economic conditions in early 2009, which impacted pricing and volume of mobile multimedia and other products. This decline was partially offset by an increase in sales of notebook camera processors as well as revenue generated from sales of security and surveillance products. Fiscal year 2009 net loss, prepared in accordance with U.S. GAAP, was $20.7 million, which included $9.0 million in share-based compensation expense, compared with a net loss of $13.6 million in fiscal year 2008, which included $6.3 million in share-based compensation expense. Diluted loss per ADS for fiscal year 2009 was $0.52, compared to a diluted loss per ADS of $0.39 in fiscal year 2008.

Dr. Deng continued, "Although 2009 was a challenging year, we established a solid foundation through business acquisitions, product development and other new initiatives in order to set the stage for top-line improvement in 2010. Our strategic investments combined with our continued efforts towards product innovation and our leadership in multimedia technologies is expected to accelerate revenue growth in 2010 and beyond."

Business Outlook

Vimicro has received strong orders of its notebook cameras and mobile multimedia processors in the first quarter of this year. For the first quarter of 2010, the Company is providing preliminary revenue estimates and expects revenue to be between $19 and $20 million, representing approximately 100% growth over the $10.0 million reported in the first quarter of 2009. In first quarter of 2008 and 2007, Vimicro reported revenue of $16.2 million and $16.9 million respectively. The first quarter is typically a seasonally slower period primarily due to the Chinese New Year holiday and consumer purchasing trends.

Financial Results Conference Call and Webcast

Vimicro will host a conference call and Webcast tomorrow, May 13, 2010 at 6:00 p.m. Eastern Time to discuss the Company's recent results. Investors and other interested parties may access the call by dialing 800-659-1942 (or +1-617-614-2710 outside of the U.S.) with the pass code 43304821, at least 10 minutes prior to the start of the call.

In addition, an audio Webcast will be available in the Investor Relations section of the Company's Web site at http://www.vimicro.com . Following the live Webcast, an archived version will be available on the Company's Web site. A telephone replay of the call will also be available approximately two hours after the call and will be available until May 25, 2010 at midnight (ET). The replay number is 888-286-8010 with a pass code of 37628807. International callers should dial +1-617-801-6888 and enter the same pass code at the prompt.

About Vimicro International Corporation

Vimicro International Corporation is a leading multimedia semiconductor and solution provider that designs, develops and markets mixed-signal semiconductor products and system-level solutions that enable multimedia capabilities in a variety of products for the consumer electronics and communications markets. Vimicro is also expanding business into the surveillance market with system-level solutions and semiconductor products. Vimicro's ADSs, each of which represents four ordinary shares, are currently trading on the NASDAQ Global Market under the ticker symbol "VIMC."

Forward-Looking Statements

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Among other things, the quotations from management in this announcement, as well as Vimicro's expectations and forecasts, contain forward-looking statements. Vimicro may also make written or oral forward- looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 20-F and 6-K, etc., in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Vimicro's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the company's ability to develop and sell new mobile multimedia products; the expected growth of the mobile multimedia market; the company's ability to increase sales of notebook camera multimedia processors; the company's ability to retain existing customers and acquire new customers and respond to competitive market conditions; the company's ability to respond in a timely manner to the evolving multimedia market and changing consumer preferences and industry standards and to stay abreast of technological changes; the company's ability to secure sufficient foundry capacity in a timely manner; the company's ability to effectively protect its intellectual property and the risk that it may infringe on the intellectual property of others; and cyclicality of the semiconductor industry. Further information regarding these and other risks is included in Vimicro's annual report on Form 20-F filed with the Securities and Exchange Commission. Vimicro does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release is as of the date hereof, and Vimicro undertakes no duty to update such information, except as required under applicable law.

Currency Translation

This announcement contains translations of certain RMB amounts into U.S. dollars. Unless otherwise noted, all translations from RMB to U.S. dollars are based on the applicable exchange rates quoted by the Bank of China as of December 31, 2009, which was RMB 6.8282 to $1.00.

    For further information about Vimicro, please contact:

    Investor Contacts:

     Eddie Fan, Senior Investment Manager
     Phone: +86-10-6894-8888 ext. 7299
     Email: fanbin@vimicro.com

     Shelton Group Investor Relations
     Leanne K. Sievers, EVP
     Phone: +1-949-224-3874
     Email: lsievers@sheltongroup.com



    Vimicro International Corporation
    Consolidated Balance Sheets
    (Amounts expressed in thousands of U.S. dollars, except number of share
     data)

                                          12/31/2009   9/30/2009  12/31/2008
                                          (unaudited) (unaudited)  (audited)
    Assets

    Current assets:
     Cash and cash equivalents                84,510      85,816      58,215
     Short-term time deposits                 43,935      43,930      14,885
     Restricted cash                             132          --      73,157
     Marketable equity securities                543       2,500         731
     Accounts receivable, net of
      provision for doubtful accounts          9,462       8,195       7,131
     Inventories                               8,804       9,644      13,430
     Prepayments and other current assets      4,155       2,595       2,431
     Deferred tax assets                           3           2           2
     Total current assets                    151,544     152,682     169,982
    Investment in unconsolidated
     affiliate                                    --          --         168
    Property, equipment and software, net      9,015      10,303       8,736
    land use rights                           10,905       9,431       7,365
    Intangible assets, net                     3,819       4,952          --
    Goodwill                                   2,019          --          --
    Other assets                                 973       2,018         947
     Total assets                            178,275     179,386     187,198

    Liabilities and Shareholders' Equity

    Current liabilities:
     Accounts payable                          4,958       4,558       8,074
     Taxes payable                               879       1,711       1,345
     Advances from customers                     649         309          56
     Accrued expenses and other current
      liabilities                              5,900       4,198       4,870
     Deferred government grants                3,844       4,392          --
     Total current liabilities                16,230      15,168      14,345
    Non-Current liabilities:
     Deferred tax liabilities                    196          31          31
     Product warranty                             25          --          --
     Total liabilities                        16,451      15,199      14,376

    Commitments and contingencies

    Shareholders' equity:
     Ordinary shares,$0.0001 par value,
      500,000,000 shares authorized,
      137,778,145 and 147,643,168 shares
      issued and outstanding  as of
      December 31, 2008 and 2009,
      respectively                                15          15          14


     Additional paid-in capital              151,672     150,716     142,681
     Treasury stock                           (2,664)     (2,438)     (1,650)
     Accumulated other comprehensive
      income                                   9,967      11,470       9,435
     Accumulated deficit                     (35,786)    (35,186)    (17,019)
     Statutory reserve                         2,782       2,782       2,782
     Total shareholders equity
      attributable to Vimicro
      International Corporation              125,986     127,359     136,243
     Noncontrolling interest                  35,838      36,828      36,579
     Total shareholders' equity              161,824     164,187     172,822

     Total liabilities and shareholders'
      equity                                 178,275     179,386     187,198



    Vimicro International Corporation
    Consolidated Statement Of Operations And Comprehensive Income
    (Amounts expressed in thousands of U.S. dollars, except number of share
    data)
                                            2009 Q4      2009 Q3      2008 Q4
                                         (unaudited)  (unaudited)  (unaudited)

    Net revenue                              23,732       20,500       22,176
    Cost of revenue                         (16,673)     (14,692)     (17,521)

    Gross profit                              7,059        5,808        4,655

    Operating expenses:
     Research and development, net           (6,706)      (6,322)      (8,238)
     Selling and marketing                   (1,867)      (1,323)      (1,539)
     General and administrative              (2,838)      (3,126)      (3,569)
    Total operating expenses                (11,411)     (10,771)     (13,346)
    Loss from operations                     (4,352)      (4,963)      (8,691)

    Other income/(expense):
     Interest income                            321          377          397
     Foreign exchange (loss)/gain, net          (34)          16           39
     Gain on disposal of available-for-
      sale securities                         1,949           --           --
     Others, net                                614          307          252

    Loss before income taxes and share
     of gain/(loss) of an
     unconsolidated affiliate                (1,502)      (4,263)      (8,003)

    Income taxes expense                        (91)          --         (305)

    Net loss before share of
     gain/(loss) of an unconsolidated
     affiliate                               (1,593)      (4,263)      (8,308)

    Equity in profit/(loss) of an
     unconsolidated affiliate, net of
     tax                                         --            3           --

    Net loss                                 (1,593)      (4,260)      (8,308)

    Less: loss attributable to non-
     controlling interest                      (993)      (1,123)          --

    Loss attributed to Vimicro
     International Corporation                 (600)      (3,137)      (8,308)

    Other comprehensive loss/(income):
     Foreign currency translation
      adjustment                                (29)          84         (161)
     Unrealized (loss)/gain on
      marketable equity securities           (1,472)         911          (29)
    Other comprehensive loss/(income)        (1,501)         995         (190)

    Total comprehensive loss                 (3,094)      (3,265)      (8,498)
     Less: comprehensive loss
      attributable to non-controlling
      interest                                 (990)      (1,126)          --
    Comprehensive loss attributable to
     Vimicro International Corporation       (2,104)      (2,139)      (8,498)

    Loss per share
     Basic                                    (0.00)       (0.02)       (0.06)
     Diluted                                  (0.00)       (0.02)       (0.06)

    Loss per ADS
     Basic                                    (0.02)       (0.08)       (0.24)
     Diluted                                  (0.02)       (0.08)       (0.24)

    Weighted average number of ordinary
     shares outstanding
     Basic                              147,518,482  148,483,022  139,193,972
     Diluted                            147,518,482  148,483,022  139,193,972

    Weighted average number of ADS
     outstanding
     Basic                               36,879,621   37,120,755   34,798,493
     Diluted                             36,879,621   37,120,755   34,798,493

    Components of share-based
     compensation expenses
     are included in the following
      expense captions:
    R&D                                        (437)        (510)        (743)
    S&M                                         (52)         (53)        (176)
    G&A                                        (437)        (563)        (901)
    Total                                      (926)      (1,126)      (1,820)


                                            FY2009       FY2008
                                          (unaudited)   (audited)

    Net revenue                              72,971       86,497
    Cost of revenue                         (51,898)     (61,814)

    Gross profit                             21,073       24,683

    Operating expenses:
     Research and development, net          (26,364)     (24,585)
     Selling and marketing                   (5,311)      (5,049)
     General and administrative             (14,839)     (12,285)
    Total operating expenses                (46,514)     (41,919)
    Loss from operations                    (25,441)     (17,236)

    Other income/(expense):
     Interest income                          1,437        2,371
     Foreign exchange (loss)/gain, net           (7)       1,144
     Gain on disposal of available-for-
      sale securities                         2,461           --
     Others, net                                957          387

    Loss before income taxes and share
     of gain/(loss) of an
     unconsolidated affiliate               (20,593)     (13,334)

    Income taxes expense                        (91)        (305)

    Net loss before share of
     gain/(loss) of an unconsolidated
     affiliate                              (20,684)     (13,639)

    Equity in profit/(loss) of an
     unconsolidated affiliate, net of
     tax                                          3           (1)

    Net loss                                (20,681)     (13,640)

    Less: loss attributable to non-
     controlling interest                    (1,914)          --

    Loss attributed to Vimicro
     International Corporation              (18,767)     (13,640)

    Other comprehensive loss/(income):
     Foreign currency translation
      adjustment                                 93        4,097
     Unrealized (loss)/gain on
      marketable equity securities              484          (29)
    Other comprehensive loss/(income)           577        4,068

    Total comprehensive loss                (20,104)      (9,572)
     Less: comprehensive loss
      attributable to non-controlling
      interest                               (1,869)          --
    Comprehensive loss attributable to
     Vimicro International Corporation      (18,235)      (9,572)

    Loss per share
     Basic                                    (0.13)       (0.10)
     Diluted                                  (0.13)       (0.10)

    Loss per ADS
     Basic                                    (0.52)       (0.39)
     Diluted                                  (0.52)       (0.39)

    Weighted average number of ordinary
     shares outstanding
     Basic                              143,182,200  140,261,311
     Diluted                            143,182,200  140,261,311

    Weighted average number of ADS
     outstanding
     Basic                               35,795,550   35,065,328
     Diluted                             35,795,550   35,065,328

    Components of share-based
     compensation expenses
     are included in the following
      expense captions:
    R&D                                      (3,119)      (2,613)
    S&M                                        (261)        (852)
    G&A                                      (5,575)      (2,811)
    Total                                    (8,955)      (6,276)



    Reconciliations of non-GAAP results of operations measures to the nearest
    comparable GAAP measures (*)
    (Amounts expressed in thousands of U.S. dollars, except per share
     data, unaudited)

                                                  Three months ended
                                                     December 31,
                                                         2009
                                                GAAP   Adjustment    Non-GAAP
                                               Result                 Results
    Loss from operations                       (4,352)       926       (3,426)
    (Loss)/income attributed to Vimicro
     International Corporation                   (600)       926          326
    Diluted (loss)/income per ADS               (0.02)      0.03         0.01


                                                  Three months ended
                                                     September 30,
                                                          2009
                                                GAAP   Adjustment    Non-GAAP
                                               Result                 Results
    Loss from operations                       (4,963)     1,126       (3,837)
    (Loss)/income attributed to Vimicro
     International Corporation                 (3,137)     1,126       (2,011)
    Diluted (loss)/income per ADS               (0.08)      0.03        (0.05)


                                                  Three months ended
                                                     December 31,
                                                         2008
                                                GAAP   Adjustment    Non-GAAP
                                               Result                 Results
    Loss from operations                       (8,691)     1,820       (6,871)
    (Loss)/income attributed to Vimicro
     International Corporation                 (8,308)     1,820       (6,488)
    Diluted (loss)/income per ADS               (0.24)      0.05        (0.19)


                                                  Twelve months ended
                                                     December 31,
                                                        2009
                                                GAAP   Adjustment    Non-GAAP
                                               Result                 Results
    Loss from operations                      (25,441)     8,955      (16,486)
    (Loss)/income attributed to Vimicro
     International Corporation                (18,767)     8,955       (9,812)
    Diluted (loss)/income per ADS               (0.52)      0.25        (0.27)


                                                  Twelve months ended
                                                     December 31,
                                                        2008
                                                GAAP   Adjustment    Non-GAAP
                                               Result                 Results
    Loss from operations                      (17,236)     6,276      (10,960)
    (Loss)/income attributed to Vimicro
     International Corporation                (13,640)     6,276       (7,364)
    Diluted (loss)/income per ADS               (0.39)      0.18        (0.21)

    (*) The adjustment is to exclude non-cash for share-based compensation for
    employees and non-employees.

SOURCE Vimicro International Corporation