Matthews Emerging Markets Disco (NASDAQ:MEMS)

• 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.�

First Quarter 2013 Financial Results

• Net sales totaled $11.4 million compared to $20.0 million in the 2012 quarter.
• Gross margin was 36.4% compared to 37.1% in the 2012 quarter.
• GAAP net loss was $2.5 million, or $0.10 per diluted share, compared to net income of $1.2 million, or $0.05 per diluted share, in the 2012 quarter.

MEMSIC Chairman, President and CEO Dr. Yang Zhao commented, �Our results for the quarter were within the guidance range we previously provided. During the period, we made additional progress with our strategy to capitalize on the large China mobile market. Our ongoing penetration of that market helped mitigate the impact of reduced shipments to a large mobile customer. Our sales to that customer peaked in the first quarter of 2012, affecting our quarter-over-quarter comparisons. In addition, we remain focused on using MEMSIC�s cutting-edge technology to develop high-performance products for the industrial and automotive markets.�

In light of MEMSIC�s pending acquisition by IDG-Accel China Capital II, L.P. and its affiliates, announced on April 23, 22013, MEMSIC will not conduct a conference call to review its first-quarter 2013 financial results.

ANDOVER, Mass.--(BUSINESS WIRE)--MEMSIC, Inc. (NasdaqGM: MEMS), a leading MEMS solution provider, today announced that it has agreed to be acquired by IDG-Accel China Capital II, L.P. and its affiliates MZ Investment Holdings Limited and MZ Investment Holdings Merger Sub Limited (collectively, �IDG�), for $4.225 per share in cash. Affiliates of IDG currently hold approximately 19.5% of the company�s outstanding common stock. IDG and its affiliates will acquire all the outstanding shares of common stock of MEMSIC that are not currently owned by them, including shares underlying outstanding in-the-money equity awards, for approximately $88.5 million.

The price of $4.225 per share in cash represents a premium of:

• 143% over the $1.74 closing price of MEMSIC's common stock on November 20, 2012, the last trading day before the company announced that it had received a non-binding proposal from IDG-Accel China Growth Fund II L.P. to acquire the company for $4.00 per share;
• 144% over its average closing share price over the 90 calendar days ended on that date; and
• 56% over the company�s closing share price of $2.71 on April 22, 2013.

The Board of Directors of MEMSIC, in approving the transaction, acted at the unanimous recommendation of a Special Committee, consisting of the company's three independent directors, that was appointed in November 2012 to consider the IDG proposal and the company's other strategic alternatives.

MEMSIC's Lead Director and Chairman of the Special Committee, Roger Blethen, stated "The Special Committee and its advisors conducted a disciplined and independent process intended to ensure the best available outcome for our stockholders. The Board of Directors approved the IDG transaction because it strongly believes, after carefully considering the company's strategic alternatives, that it is in the best interest of MEMSIC stockholders and the best of the available alternatives. We believe the $4.225 price is fair and that making that value available to our stockholders immediately in cash is more favorable to them than the other alternatives available, including remaining independent."

The company's Chairman of the Board and Chief Executive Officer, Dr. Yang Zhao, and director Quan Zhou were not members of the Special Committee and did not participate in the deliberations of the Board of Directors approving the merger. Mr. Zhou is an affiliate of IDG. Dr. Zhao will remain employed by the company following the acquisition and will also participate as an equity investor in the acquiring company.

The merger agreement is subject to customary conditions, including a vote of the company�s stockholders. The transaction is expected to close during the third quarter of 201

• Net sales totaled $15.2 million compared to $18.4 million in the 2011 quarter.
• Gross margin was 35.0% compared to 33.8% in the 2011 quarter.
• Operating expenses totaled $5.7 million compared to $7.3 million in the 2011 quarter.
• GAAP net loss was $0.3 million, or $0.01 per diluted share, compared to $0.4 million, or $0.02 per diluted share, in the 2011 quarter.

For the nine months ended September 30, 2012, net sales totaled $49.6 million compared to $46.7 million in the first nine months of 2011. Net income totaled $0.4 million, or $0.02 per diluted share, compared to a net loss of $2.8 million, or $0.12 per diluted share in the prior-year period. EBITDA totaled $4.2 million compared to $0.6 million in the 2011 period.

MEMSIC Chairman, President and CEO Dr. Yang Zhao commented, �We continued to grow sales in the consumer market from high-end digital camera applications and from new consumer applications such as tablet computers. We also benefited from design wins at multiple mobile customers in fast-growing smart phone applications in the China market. The increased sales in these areas helped ameliorate the impact of reduced shipments to a large mobile customer stemming from recent changes in MEMSIC�s strategy and business focus.

�In the coming months, building on our superior magnetic sensor product, our large presence in the China market and the strong, local technical support we offer, we expect to continue to leverage the growth in the China mobile market. We are also moving forward with our launch of the gas flow sensor module, aimed at the residential and industrial meter markets, that we introduced in June 2012. In addition, we are developing high-performance sensor products for the industrial and automotive markets, as well as high-performance but cost-effective IMU product for industrial applications. Although expanding into new automotive and industrial applications will take time, we are optimistic that our advanced technology will lead the market and, in the long term, enhance the stability and profitability of our Company.�

Outlook

• Revenue is expected to be between $14 million and $16 million for the fourth quarter of 2012.
• GAAP net loss is expected to be in the range of $0.02 to $0.04 per share for the fourth quarter of 2012.
• Average diluted share count for the 2012 fourth quarter is estimated to be approximately 24.5 million.

• Net sales totaled $14.4 million compared to $15.4 million in the 2011 quarter.
• Gross margin was 40.1% compared to 32.5% in the 2011 quarter.
• Operating expenses totaled $6.2 million compared to $6.6 million in the 2011 quarter.
• GAAP net loss was $0.5 million, or $0.02 per diluted share, compared to $1.1 million, or $0.05 per diluted share, in the 2011 quarter.
• EBITDA was $0.8 million, compared to ($0.1) million in the 2011 quarter.

For the six months ended June 30, 2012, net sales totaled $34.4 million compared to $28.3 million in the first six months of 2011. Net income totaled $0.7 million, or $0.03 per diluted share, compared to a net loss of $2.4 million, or $0.10 per diluted share in the prior-year period. EBITDA totaled $3.2 million compared to ($0.3) million in the 2011 period.

“Although we experienced a revenue drop from one large mobile customer, we achieved gross margin improvement in the quarter,” commented MEMSIC Chairman, President and CEO Dr. Yang Zhao. “We understand that focusing on the right customer base is important to MEMSIC’s long-term growth and prosperity.

“We are pursuing margin improvement by taking steps to further diversify our sensor business into selected market segments, particularly the market for high-precision industrial and automotive applications. We are bringing even more engineering and marketing resources to bear on these markets so we can take full advantage of the opportunities they offer and the technology platform we have established. Leveraging our high-performance and broad product line of sensors and integrated sensor system products, we are targeting the customers that offer long-term opportunity and bottom-line advantages for MEMSIC.”

Outlook

• Revenue is expected to be between $14 million and $16 million for the third quarter of 2012.
• GAAP net loss is expected to be in the range of $0.03 to $0.05 per share for the third quarter of 2012.
• Average diluted share count for the 2012 third quarter is estimated to be approximately 24.5 million.

Financial results for the fourth quarter ended December 31, 2011.

• Revenues rose to $21.5 million from $11.4 million in the 2010 quarter. Total shipments of our sensor products rose to 35.0 million units from 11.2 million units in prior-year period.
• Gross margin was 35.9% compared to 41.1% in the 2010 quarter.
• Operating expenses, including a $4.5 million non-cash goodwill impairment charge related to the system solution business acquired from Crossbow Technology, totaled $11.6 million compared to $6.3 million in the 2010 quarter.
• GAAP net loss was $3.3 million, or $0.14 per diluted share, compared to net loss of $1.1 million, or $0.05 per diluted share, in the 2010 quarter. Before giving effect to the goodwill impairment charge, MEMSIC realized net income of $1.2 million, or $0.05 per share for the fourth quarter of 2011.
• EBITDA was ($2.3) million, compared to ($0.1) million in the 2010 quarter. Before giving effect to the goodwill impairment charge, EBITDA for the 2011 fourth quarter was $2.2 million.

Chairman, President and CEO Dr. Yang Zhao commented, “MEMSIC achieved record sales for the sixth consecutive quarter, again due primarily to the growing success of our magnetic sensor in the smartphone market. In fact, revenues almost doubled over last year’s period and we substantially exceeded the sales guidance we provided in early November. Our gross margin improved on a sequential basis, increasing to 35.9% from 32.5% and 33.8% in the second and third quarters of 2011, respectively. This improvement reflected the success of our initiatives to achieve margin improvement through technology innovation and manufacturing enhancements.

“The motion sensor and sensor fusion market has been growing at a rapid pace, especially in smartphones. In 2012, our goals are twofold. First, we are pursuing more design wins with global customers in the mobile phone and consumer market. Second, we are working to leverage MEMSIC’s proven MEMS sensor and sensor system integration technology to create more value-added products for the consumer, industrial and automotive markets. With our extensive capabilities to integrate MCU and software to create smart-sensing systems beyond sensor fusion, MEMSIC is an established leader in smart motion management.”

Dr. Zhao added, “Our fourth-quarter 2011 results include a $4.5 million non-cash charge related to the impairment of a portion of the goodwill associated with our Crossbow Technology acquisition in January 2010. The impairment reflects the fact that sales forecasted for the system solution products, particularly the avionics products, are lower than projected at the time of acquisition. We believe this impairment does not negate the tremendous value of the know-how and IPs in sensor integration technology we acquired from Crossbow. Our original vision and strategy of realizing more higher-margin and stable business by combining MEMSIC’s strong sensor component technologies with the system integration technologies we acquired from Crossbow remain unchanged.”

Outlook

• Revenue is expected to be between $18 million and $19 million for the first quarter of 2012, an increase of approximately 39% - 46% from the prior-year period.
• GAAP net loss is expected to be in the range of $0.02 to $0.04 per share for the first quarter of 2012.
• Average diluted share count for the 2012 first quarter is estimated to be approximately 24 million.

On November 23, 2011, MEMSIC Transducer Systems, Co. Ltd. ("MTS"), our wholly-owned subsidiary, entered into an Investment Contribution Agreement ("JV Agreement") with Wuxi New District Science and Technology Financial Investment Group Co. Ltd. ("Wuxi VC Group"), a state owned Chinese venture capital fund. The JV Agreement creates a joint venture to further design, develop and market MTS' wireless sensor network technology.

In connection with the joint venture, a new corporation was organized under the laws of the People's Republic of China ("PRC"), named MEMSIC Wuxi Wireless Sensor Network Technology Co. Ltd. ("Wuxi WSN"). Initially the parties invested approximately $944,000 in cash in Wuxi WSN, of which MTS contributed $629,000 and Wuxi VC Group contributed $315,000. Under the JV Agreement, MTS and Wuxi VC Group hold two-thirds and one-third of the equity of Wuxi WSN respectively. The parties have agreed to increase their investments in Wuxi WSN on a pro rata basis over the next two years, up to an aggregate total investment of 30 million Renminbi, or approximately $4.7 million. MTS may satisfy its continued investment obligations by contributing certain intellectual property rights to Wuxi WSN.

Under the JV Agreement, the initial Board of Directors of Wuxi WSN is set at three members, of which MTS has the right to designate two members and Wuxi VC Group has the right to designate one member.

Wuxi WSN will be located at the Wireless Sensor Network University Technology Center in Taihu International Science Park, Wuxi New District, Wuxi, China and is expected to start operation beginning January of 2012.

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, 2011.

• Revenues rose to $15.4 million from $9.1 million in the second quarter of 2010.
• Gross margin was 32.5% compared to 40.6% in the 2010 quarter.
• Operating expenses, including R&D expense of $2.1 million, totaled $6.6 million compared to $5.9 million in the 2010 quarter.
• GAAP net loss in the 2011 second quarter was $1.1 million, or $0.05 per diluted share, compared to net loss of $2.0 million, or $0.08 per diluted share, in the prior-year period. This includes stock-based compensation of $0.4 million in 2011 and $0.3 million in 2010.
• EBITDA in the 2011 second quarter was ($0.1) million, compared to ($1.1) million in the 2010 period.

“MEMSIC’s continued strong sales growth in the mobile phone and automotive markets demonstrates the success of our company’s ongoing focus on R&D,” commented Chairman, President and CEO Dr. Yang Zhao. “The high technical performance of our magnetic sensor has helped us win market share in the smartphone market. Although the pricing pressure that is typical in the mobile phone market has impacted our gross margin, we are striving for continuous cost improvement through continued innovation. We believe MEMSIC is well positioned to gain more customers and market share in this fast-growing market.”

Outlook

• Revenue is expected to be between $15 million and $16 million for the third quarter of 2011.
• GAAP net loss, including stock-based compensation of $0.4 million, is expected to be in the range of $0.04 to $0.06 per share for the third quarter of 2011.
• Average diluted share count for the 2011 third quarter is estimated to be approximately 24 million.

Financial Highlights 

• Revenues rose to $13.0 million from $7.3 million in the first quarter of 2010.
• Gross margin was 38.1% compared to 39.1% in the 2010 quarter.
• Operating expenses, including R&D expense of $2.3 million, totaled $6.4 million compared to $5.4 million in the 2010 quarter.
• GAAP net loss in the 2011 first quarter was $1.3 million, or $0.06 per diluted share, compared to net loss of $2.3 million, or $0.10 per diluted share, in the prior-year period. This includes $0.4 million in stock-based compensation in both the 2011 and 2010 periods.
• EBITDA in the 2011 first quarter was ($0.2) million, compared to ($1.7) million in the 2010 period

“MEMSIC’s first-quarter results were driven by strong sales into the mobile phone market, which rose to $4.7 million from the prior-year period as the popularity of smartphones continued to expand worldwide,” said Chairman, President and CEO Dr. Yang Zhao. “In addition, our magnetic sensor has been designed into additional phone models by a major global cell phone manufacturer. We turned in a strong performance in the automotive market, where sales rose 58% to $3.8 million from the first quarter of 2010. Sales in the industrial and consumer markets also grew, helping our first-quarter revenue performance top the guidance we provided in March.”

Outlook 

• Revenue is expected to be between $13.0 million and $13.5 million for the second quarter of 2011.
• GAAP net loss, including stock-based compensation of $0.4 million, is expected to be in the range of $0.05 to $0.06 per share for the second quarter of 2011.
• Average diluted share count for the 2011 second quarter is estimated to be approximately 24 million.

We believe that our current cash and recent proceeds of our project loan from the Agricultural Bank of China will be sufficient to meet our anticipated cash needs, including working capital requirements and capital expenditures for at least the next twelve months.

Our future cash requirements will depend on many factors, including our operating income, the timing of our new product introductions, the costs to maintaining adequate manufacturing capacity, the continuing market acceptance of our products, payment terms for major contracts and customers, or other changing business conditions and future developments, including any investments or acquisitions we may decide to pursue

Releases on March 14, 2011.

• Revenues rose to $11.4 million from $5.6 million in the fourth quarter of 2009.
• Gross margin was 41.1% compared to 47.8% in the 2009 quarter.
• Operating expenses totaled $6.3 million compared to $3.9 million in the 2009 quarter, including an increase in R&D expense to $2.3 million from $1.1 million.
• Net loss in the 2010 fourth quarter was $1.1 million, or $0.05 per diluted share, compared to net loss of $0.8 million, or $0.03 per diluted share, in the prior-year period.
• EBITDA in the 2010 fourth quarter was ($0.1) million, compared to ($0.6) million in the fourth quarter of 2009

MEMSIC Chairman, President and CEO, Dr. Yang Zhao commented, “In addition to exceeding our quarterly revenue guidance, our bottom-line results were significantly better than projected. Sales of our magnetic sensor continued to grow as demand for Android-based smartphones expanded worldwide. Our highly competitive product and manufacturing capacity in China position MEMSIC well to benefit from the fast growth in this market. We expect this trend to continue through 2011 and are continuing to pursue new business opportunities with global Tier 1 mobile phone manufacturers.

Outlook

• For the first quarter of 2011, MEMSIC anticipates
• revenue in the range of $11.5 to $12.0 million.
• Net loss, including stock-based compensation of $0.4 million, is expected to be in the range of $0.06 to $0.08 per share. Average diluted share count for the 2011 first quarter is estimated to be 24 million.

• Revenues totaled $10.8 million compared to $7.1 million in the third quarter of 2009.

• Gross margin was 37.8% compared to 41.3% in the 2009 quarter. Gross margin in the 2010 quarter was negatively impacted by a $0.4 million sales credit granted to a customer for estimated engineering and screening costs incurred during 2010. The credit reduced gross margin by 2.4 basis points.

• Operating expenses rose to $6.4 million from $3.1 million in the 2009 quarter, including an increase in R&D expense to $2.4 million from $1.2 million.

• Net loss in the 2010 third quarter was ($1.9) million, or ($0.08) per diluted share, compared to net income of $52,000, or $0.00 per diluted share, in the prior-year period.

• EBITDA in the 2010 third quarter was ($1.0) million compared to $0.4 million in the 2009 quarter.

“In the near term, the continuous cost reduction of sensor products is helping us penetrate more cost-sensitive applications such as toys and games. In the long term, we expect continuous product development in integrated smart sensor and sensing systems to drive higher ASP and margin as well as revenue growth. With our Crossbow acquisition in January 2010, we significantly increased our R&D investment in next-generation multi-sensor and MCU integrated system products at both the IC level for the consumer and mobile market and the module level for the high-end industrial, automotive, and general aviation markets. Our next-generation product lines will naturally combine MEMSIC’s core competency in ultra-low-cost sensor product design and manufacturing with the core competency in multi-sensor system integration we acquired from Crossbow. One example is the high-performance MEMS inertial systems we recently introduced, which offer the superior reliability of our advanced MEMS technology for integrated navigation systems and in stabilization and control applications.”

“The transition to China of manufacturing operations for the sensor system product lines we acquired is progressing as planned. Manufacturing for all of the wireless sensing products has been transferred, and we will finish transferring our inertial navigation system and solution products by Q1 next year except for our FAA-certified product line, which takes longer due to the nature of FAA regulations. We continue to expect cost savings through the transfer process and increased product performance and functionality through redesigning most of the product lines.”

Outlook

For the fourth quarter of 2010, MEMSIC anticipates

• revenue in the range of $10.0 to $11.0 million.
• Net loss, including stock-based compensation of $0.4 million, is expected to be in the range of ($0.08) to ($0.11) per share.
• Average diluted share count for the fourth quarter is estimated to be 24 million.