XNAS:OIIM O2Micro International Ltd ADR Annual Report 20-F Filing - 3/31/2012

Effective Date 3/31/2012

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f20f_043012.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 20-F
(Mark One)

[  ]    Registration statement pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934
or
[x]    Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2011
or
[  ]    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
or
[  ]    Shell company report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of event requiring this shell company report

Commission file number: 0-30910
 
O2MICRO INTERNATIONAL LIMITED
(Exact Name of Registrant as Specified in Its Charter)
 
The Cayman Islands
(Jurisdiction of Incorporation or Organization)
 
Grand Pavilion Commercial Centre, West Bay Road
P.O. Box 32331 Grand Cayman KY1-1209, Cayman Islands
(Address of Principal Executive Offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of Each Class
Name of Each Exchange On Which Registered
American Depositary Shares
Ordinary Shares, par value $0.00002 per share
NASDAQ Global Select Market
Cayman Islands Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
 
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title of Class)
 
Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.
 
As of December 31, 2011, there were 1,605,275,500 ordinary shares, par value US$0.00002 per share, outstanding.
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes           [ ]                      No           [x]
 
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes           [x]                      No           [  ]
 
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes           [x]                      No           [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes           [ ]                      No           [x]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ]                                                      Accelerated filer [x]                                           Non-accelerated filer [ ]
 
 
1

 
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP [x]                  International Financial Reporting Standards as issued         Other [  ]
       by the International Accounting Standards Board  [  ]
 
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
Item 17     [  ]                      Item 18    [  ]
 
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes           [  ]                      No           [x]
 
 
2

 
TABLE OF CONTENTS
 
PART I
     
     
PART II
     
     
PART III
     
     
 
 
3

 
Certain Definitions and Conventions

In this Annual Report on Form 20-F (“Annual Report”), references to “$” and “dollars” are to United States dollars. Percentages and certain amounts contained herein have been rounded for ease of presentation. Any discrepancies in any table between totals and the sums of amounts listed are due to rounding.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
This Annual Report contains statements of a forward-looking nature. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as “may,” “will,” “expects,” “should,” “could,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms and other comparable terminology. These forward-looking statements include, without limitation, statements regarding our expectation to target and design products for specific applications, to increase expenses for personnel and new product development, to protect our technology and to expand our product offerings, our anticipation that sales to a relatively small number of customers will continue to account for significant portion of net sales, our expectation that we will need to expand our facilities to accommodate the growth in our personnel, our expectation that non-U.S. operations and sales will continue to grow and account for a substantial percentage of our net sales, our expectation that competition for qualified personnel will remain intense, our expectation that we will continue to incur substantial legal expenses that vary with the level of activity in legal proceedings, our statements regarding the growing popularity of thinner displays, mobile computing, electric vehicles, more efficient lighting, and portable devices, our belief that we participate in large and growing markets, our belief that potential future growth in the LCD television mobile computing, general lighting, industrial and automotive markets, represents an attractive growth opportunity for us, our belief that manufacturers are turning to innovative new semiconductor technologies to manage the available power source capacity more efficiently, our belief that there is an increasing need for higher levels of system integration, our belief in the need for mixed-signal and analog integrated circuits specifically designed to optimize the power system usage in devices, our belief in the need to use advanced design methodologies to allow manufacturers to achieve rapid time-to-market with their new products, our expectation that our markets will be dominated by a small number of major brand name companies, our belief that the our success depends on our ability to develop and introduce new products selected for design into products in certain markets, our ability to develop and introduce products in a timely manner to meet customer demands, our expectation that analog and mixed-signal circuits have substantially longer life-cycles than digital integrated circuits, our ability to take advantage of cost-efficiencies associated with the “fabless” semiconductor business model, our expectation that our non-U.S. operations will grow and non-U.S. sales to continue to account for a substantial percentage of our net sales, our intention is to expand the scope of our global operations, that we expect that our gross profit (as a percentage of net sales) will continue to fluctuate in the future as a result of the stages of our products in their life cycles, variations in our product mix, the timing of our product introductions and specific product manufacturing costs, our future gross profit, our expectation that gross margin on products we sell will typically decline over the life of the products, our expectation that expenses for personnel and new product development will increase, our expectation that research and development expenses as a percentage of net sales will continue to fluctuate, our expectation to continue development of innovative technologies and processes, and continued expansion and investment of our engineering, research and development resources, our expectation to continue to invest significant resources into research and development in the future, our expectation that the competition for qualified personnel will remain intense, our expectations regarding the outcome of litigation matters and their how such effects on us, our belief that our cash generated from operations, together with the liquidity provided by existing cash, cash equivalents balances and short-term investment will be sufficient to meet our capital requirements for at least the next 12 months, our intention to continue expanding research and development operations, our expectation that semiconductor companies will increasingly be subject to patent infringement and other litigation matters as the number of products and competitors in the semiconductor industry grows, our anticipation that we will not be paying cash dividends in the foreseeable future (especially if the current US tax treatment of dividends could rise from the current tax rate 15% to up to 43.4% next year, which could be detrimental to our shareholders), our belief that our system-level expertise and extensive experience with power management systems allow us to develop proprietary solutions and foster long-term relationships with our customers, our intention to continue to evaluate additional investment opportunities in our supply chain, our belief that our current facilities are adequate for our needs for the foreseeable future, and that any additional space required will be available to us on commercially reasonable terms, our expectation that our results of operations or cash flows will not be affected to any significant degree by a sudden short-term change in market interest rates, our intention to diversify our customer base and market focus by providing new products used in particular markets, our statements regarding the effect of adoption of certain accounting policies, our expectation that our ADSs will satisfy the “readily tradable” requirement, our expectation not to become a passive foreign investment company in the future, our intention to use the cash we have raised and conduct our business to reduce the risk of classification as a passive foreign investment company, our expectation that we will retain our existing primary listing of American Depositary Share (“ADS”) on the NASDAQ Global Select Market (“NASDAQ”) in the United States for the foreseeable future.  These forward-looking statements are based on our current assumptions and beliefs in light of the information currently available to us.  Actual results, levels of activity, performance or achievements may differ materially from those expressed or implied in these forward-looking statements for a variety of reasons, including: changes in demand for devices that use our products; market conditions in the semiconductor industry and the economy as a whole; the stages of our products in their life cycles, variations, expansions or reductions in the mix of our product offerings, the timing of our product introductions, changes in employment rates, changes in availability and cost of facilities, unpredictability of an inability to control the outcome or timing of litigation, changes in applicable laws or accounting standards, potential delisting of our ADSs from NASDAQ, specific product manufacturing costs, increased competition, introduction of new competitors or competing technologies and the increase of unexpected expenses, and such other factors discussed under “Key Information - Risk Factors,” “Operating and Financial Review and Prospects” and elsewhere in this Annual Report.  We assume no obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise. You are cautioned not to place undue reliance on these forward-looking statements which apply only as of the date of this Annual Report.
 
 
4

 
PART I
 
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

See Item 6 below.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated statements of operations and comprehensive income and cash flow data for the years ended December 31, 2011, 2010 and 2009 and the selected consolidated balance sheet data as of December 31, 2011 and 2010 are derived from our audited consolidated financial statements included elsewhere in this annual report and should be read in conjunction with, and are qualified in their entirety by reference to, these consolidated financial statements, including the notes to these consolidated financial statements and “Item 5. Operating and Financial Review and Prospects” as set forth below in this Annual Report. The selected consolidated statements of operations and comprehensive income and cash flow data for the years ended December 31, 2008 and 2007 and the selected consolidated balance sheet data as of December 31, 2009, 2008 and 2007 are derived from our audited consolidated financial statements which are not included in this annual report. These consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America.
 
   
Years Ended December 31
 
   
2011
   
2010
   
2009
   
2008
   
2007
 
   
(in thousands, except per share data)
 
Consolidated Statement of Operations Data:
                             
Net sales
  $ 124,283     $ 137,789     $ 124,294     $ 135,438     $ 163,573  
Cost of sales
    53,273       53,205       50,139       56,591       69,994  
Gross profit
    71,010       84,584       74,155       78,847       93,579  
Operating expenses (income):
                                       
Research and development
    33,591       31,055       29,128       31,255       29,221  
Selling, general and administrative
    31,165       31,087       41,055       36,560       43,488  
Goodwill impairment
    -       -       -       2,782       -  
Write-off of prepayments to foundry services
    -       -       -       2,942       -  
Litigation income
    (850 )     -       -       (2,000 )     (9,364 )
Total operating expenses
    63,906       62,142       70,183       71,539       63,345  
Income from operations
    7,104       22,442       3,972       7,308       30,234  
Non-operating income (expenses) – net
    2,956       928       1,369       (12,133 )     2,819  
Income (loss) from continuing operations before income tax expense
    10,060       23,370       5,341       (4,825 )     33,053  
Income tax expense (benefit)
    1,063       1,325       1,740       2,240       1,456  
Net income (loss) from continuing operations
    8,997       22,045       3,601       (7,065 )     31,597  
Income (loss) from discontinued operations, net of tax
    9       (9,843 )     (6,418 )     (6,744 )     (6,613 )
Net income (loss)
  $ 9,006     $ 12,202     $ (2,817 )   $ (13,809 )   $ 24,984  
Basic earnings (loss) per share:
 

XNAS:OIIM O2Micro International Ltd ADR Annual Report 20-F Filling

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