MEMSIC Announces Second-Quarter 2013 Results

ANDOVER, Mass. — (BUSINESS WIRE) — August 8, 2013 — MEMSIC, Inc. (NasdaqGM: MEMS), a leading MEMS sensing solution provider, today announced financial results for the second quarter ended June 30, 2013.

  • Net sales totaled $13.2 million compared to $14.4 million in the 2012 quarter.
  • Gross margin was 37.6% compared to 40.1% in the 2012 quarter.
  • Operating expenses, including $1.7 million legal and other expenses related to MEMSIC’s pending acquisition, totaled $7.5 million compared to $6.2 million in the 2012 quarter.
  • GAAP net loss was $2.3 million, or $0.09 per diluted share, compared to a net loss of $0.5 million, or $0.02 per diluted share, in the 2012 quarter.
  • EBITDA was ($1.2) million compared to $0.7 million in the 2012 quarter.

MEMSIC Chairman, President and CEO Dr. Yang Zhao commented, “In this year’s second quarter, growing revenue from shipments to the China mobile market helped alleviate the impact of reduced sales to a large mobile customer. We are pleased with the progress we are making in penetrating the China mobile market. The number of units shipped that related to mobile applications increased more than 80% during the period.

“In June 2013 we unveiled our MMC246xMT Two-Axis Magnetic Sensor, which offers top performance at the lowest power consumption for a two-axis magnetic sensor. The MMC246xMT is well suited for consumer, industrial and automotive applications.”

On April 23, 2013, MEMSIC announced it had agreed to be acquired by IDG-Accel China Capital II, L.P. and its affiliates. The company continues to expect that transaction to close in the third quarter of 2013.

About Non-GAAP Financial Information

EBITDA is a measure used by management to evaluate the Company’s ongoing operations and as a general indicator of its operating cash flow (in conjunction with a cash flow statement that also includes, among other items, changes in working capital and the effect of non-cash charges). The Company defines EBITDA as net income, plus interest expense net of interest income, provision for income taxes, and depreciation and amortization. Management believes EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in the comparative evaluation of companies. Because not all companies use identical calculations, the Company's presentation of EBITDA and EBITDA per share may not be comparable to similarly titled measures of other companies. EBITDA is not a recognized term under GAAP and does not purport to be an alternative to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Additionally, EBITDA is not intended to be a measure of free cash flow for management's discretionary use as it does not reflect certain cash requirements such as interest payments, tax payments and debt service requirements.

Pursuant to the requirements of Regulation G, we have provided a reconciliation of EBITDA to GAAP net income as an exhibit to this release.

About MEMSIC, Inc.

MEMSIC, Inc., headquartered in Andover, Massachusetts, provides advanced semiconductor sensors and multi-sensor system solutions based on micro-electromechanical systems (MEMS) technology and sophisticated integration technologies in both the IC level and module level. MEMSIC's unique and proprietary approach combines leading-edge sensor technologies, such as magnetic sensors and accelerometers, with mixed signal processing circuitry to produce reliable, high quality, cost-effective solutions for the mobile phone, automotive, consumer, industrial, and general aviation markets. The company’s shares are listed on the NASDAQ Stock Exchange (NASDAQ GM: MEMS).

Safe Harbor Statement

Statements included in this press release that are not historical in nature are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations of the Company's management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements for reasons identified under the heading "Risk Factors" in the Company's most recent annual report on Form 10-K and other periodic reports filed with the Securities and Exchange Commission. The forward-looking statements contained in this press release are made as of the date hereof, and the Company does not undertake any obligation to update any forward-looking statements, whether as a result of future events, new information or otherwise.

       
MEMSIC, Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
2013 2012
 
ASSETS
Current assets:
Cash and cash equivalents $ 38,583,630 $ 27,306,202
Restricted cash 2,743,062 2,867,896
Short-term investments 20,000,000 34,640,188
Accounts receivable, net of allowance for doubtful accounts of $8,356 and $18,774,
respectively, as of June 30, 2013 and December 31, 2012 4,472,242 4,821,867
Inventories 8,619,887 9,840,659
Other current assets   2,078,356     2,285,923  
Total current assets 76,497,177 81,762,735
 
Property and equipment, net 30,980,960 29,002,825
Long-term investments 2,500,000 2,500,000
Intangible assets, net 9,413,499 9,918,305
Other assets   137,182     144,106  
Total assets $ 119,528,818   $ 123,327,971  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,754,949 $ 3,778,672
Accrued expenses 2,913,365 3,934,975
Advance research funding 2,743,062 2,867,896
Current portion of note payable to bank   2,500,000     1,000,000  
Total current liabilities 13,911,376 11,581,543
 
 
Note payable to bank, net of current portion 13,930,000 16,430,000
Building liability 8,257,988 8,135,115
Other liabilities   100,237     86,420  
Total other liabilities 22,288,225 24,651,535
 
Stockholders’ equity:
 
Common stock, $0.00001 par value; authorized, 45,000,000 shares; 24,312,704 and 24,219,685
shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively 243 242
 
Additional paid-in capital 103,537,903 102,813,203
Accumulated other comprehensive income 4,898,004 4,477,071
Accumulated deficit   (25,636,990 )   (20,896,074 )
MEMSIC, Inc. stockholders' equity 82,799,160 86,394,442
 
Non-controlling interest related to joint ventures   530,057     700,451  
Total stockholders' equity   83,329,217     87,094,893  
 
Total liabilities and stockholders’ equity $ 119,528,818   $ 123,327,971  
 
             
MEMSIC, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
Three months ended June 30, Six months ended June 30,
  2013     2012     2013     2012  
 
Net sales $ 13,179,094 $ 14,415,237 $ 24,607,377 $ 34,432,290
Cost of goods sold   8,225,181     8,630,850     15,494,839     21,230,804  
Gross profit 4,953,913 5,784,387 9,112,538 13,201,486
 
Operating expenses:
Research and development 1,917,807 1,769,201 3,863,179 3,472,360
Sales and marketing 872,237 1,228,408 2,014,303 2,660,707
General and administrative 4,075,952 2,399,923 7,019,341 4,635,995
Depreciation 342,644 378,354 668,815 817,295
Amortization   307,079     413,886     758,023     810,008  
Total operating expenses   7,515,719     6,189,772     14,323,661     12,396,365  
 
Operating (loss) income (2,561,806 ) (405,385 ) (5,211,123 ) 805,121
 
Other income:
Interest and dividend income 7,580 125,259 40,615 233,034
Foreign exchange gain 237,559 (193,190 ) 318,062 (225,453 )
Other, net   12,374     25,468     80,365     38,641  
Total other income 257,513 (42,463 ) 439,042 46,222
 
Loss before income taxes (2,304,293 ) (447,848 ) (4,772,081 ) 851,343
Provision for income taxes   6,098     29,355     36,405     97,938  
Net (loss) income (2,310,391 ) (477,203 ) (4,808,486 ) 753,405
 
Less: net (loss) income attributable to noncontrolling interests   (33,393 )   (15,789 )   (67,570 )   14,315  
Net (loss) income attributable to MEMSIC, Inc. $ (2,276,998 ) $ (461,414 ) $ (4,740,916 ) $ 739,090  
 
Net (loss) income per common share attributable to MEMSIC, Inc.:
Basic $ (0.09 ) $ (0.02 ) $ (0.20 ) $ 0.03  
Diluted $ (0.09 ) $ (0.02 ) $ (0.20 ) $ 0.03  
 
Weighted average shares outstanding used in calculating
net (loss) income per common share:
Basic   24,236,445     23,986,332     24,215,415     23,919,650  
Diluted   24,236,445     23,986,332     24,215,415     24,404,777  
 
           
MEMSIC, Inc.
 
Reconciliation of Net (Loss) Income to Earnings Before Interest, Taxes and Depreciation and Amortization (EBITDA) (Unaudited)
 
 
Three months ended June 30, Six months ended June 30,
  2013     2012     2013     2012  
 
Net (loss) income $ (2,276,998 ) $ (461,414 ) $ (4,740,916 ) $ 739,090
Interest (income) expense, net (7,580 ) (125,259 ) (40,615 ) (233,034 )
Income tax expense 6,098 29,355 36,405 97,938
Depreciation and amortization   1,044,933     1,305,595     2,225,197     2,613,747  
EBITDA $ (1,233,547 ) $ 748,277   $ (2,519,929 ) $ 3,217,741  

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