MEMSIC Announces Second-Quarter 2013 Results

MEMSIC Announces Second-Quarter 2013 Results

ANDOVER, Mass.--(BUSINESS WIRE)-- 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.

June 30,December 31,
Current assets:
Cash and cash equivalents$38,583,630$27,306,202
Restricted cash2,743,0622,867,896
Short-term investments20,000,00034,640,188
Accounts receivable, net of allowance for doubtful accounts of $8,356 and $18,774,
respectively, as of June 30, 2013 and December 31, 20124,472,2424,821,867
Other current assets 2,078,356  2,285,923 
Total current assets76,497,17781,762,735
Property and equipment, net30,980,96029,002,825
Long-term investments2,500,0002,500,000
Intangible assets, net9,413,4999,918,305
Other assets 137,182  144,106 
Total assets$119,528,818 $123,327,971 
Current liabilities:
Accounts payable$5,754,949$3,778,672
Accrued expenses2,913,3653,934,975
Advance research funding2,743,0622,867,896
Current portion of note payable to bank 2,500,000  1,000,000 
Total current liabilities13,911,37611,581,543
Note payable to bank, net of current portion13,930,00016,430,000
Building liability8,257,9888,135,115
Other liabilities 100,237  86,420 
Total other liabilities22,288,22524,651,535
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, respectively243242
Additional paid-in capital103,537,903102,813,203
Accumulated other comprehensive income4,898,0044,477,071
Accumulated deficit (25,636,990) (20,896,074)
MEMSIC, Inc. stockholders' equity82,799,16086,394,442
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 
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$34,432,290
Cost of goods sold 8,225,181  8,630,850  15,494,839  21,230,804 
Gross profit4,953,9135,784,3879,112,53813,201,486
Operating expenses:
Research and development1,917,8071,769,2013,863,1793,472,360
Sales and marketing872,2371,228,4082,014,3032,660,707
General and administrative4,075,9522,399,9237,019,3414,635,995
Amortization 307,079  413,886  758,023  810,008 
Total operating expenses 7,515,719  6,189,772  14,323,661  12,396,365 
Operating (loss) income(2,561,806)(405,385)(5,211,123)805,121
Other income:
Interest and dividend income7,580125,25940,615233,034
Foreign exchange gain237,559(193,190)318,062(225,453)
Other, net 12,374  25,468  80,365  38,641 
Total other income257,513(42,463)439,04246,222
Loss before income taxes(2,304,293)(447,848)(4,772,081)851,343
Provision for income taxes 6,098  29,355  36,405  97,938 
Net (loss) income(2,310,391)(477,203)(4,808,486)753,405
Less: net (loss) income attributable to noncontrolling interests (33,393) (15,789) (67,570) 14,315 
Net (loss) income attributable to MEMSIC, Inc.$(2,276,998)$(461,414)$(4,740,916)$739,090 
Net (loss) income per common share attributable to MEMSIC, Inc.:
Weighted average shares outstanding used in calculating
net (loss) income per common share:
Basic 24,236,445  23,986,332  24,215,415  23,919,650 
Diluted 24,236,445  23,986,332  24,215,415  24,404,777 
Reconciliation of Net (Loss) Income to Earnings Before Interest, Taxes and Depreciation and Amortization (EBITDA) (Unaudited)
Three months ended June 30,Six months ended June 30,
 2013  2012  2013  2012 
Net (loss) income$(2,276,998)$(461,414)$(4,740,916)$739,090
Interest (income) expense, net(7,580)(125,259)(40,615)(233,034)
Income tax expense6,09829,35536,40597,938
Depreciation and amortization 1,044,933  1,305,595  2,225,197  2,613,747 
EBITDA$(1,233,547)$748,277 $(2,519,929)$3,217,741 
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