O2Micro International Limited

morning and thank you for joining us today to discuss O2 Micro's financial results for the fourth quarter of fiscal year 2020. If you would like a copy of the press release we issued this morning, please call Daniel Myberg at 408-987-5920 extension 8888 and we will email you a copy immediately. It is also posted on the O2 Micro website at www.otomicro.com under the heading Investors. There will be a replay available through February 5, 2021, 9 a.m. Pacific Time, or by visiting the O2 Micro website under the heading Investors. Following the presentation by management, the conference will be open for questions and answers as time permits. Gentlemen, you may begin.

Thank you, Audra. Good morning, everyone, and thank you for joining O2 Micro's Financial Results Conference Call for the fourth quarter of 2020, ending December 31, 2020. This is Daniel Myberg. Corporate Communications for O2 Micro. I'd like to remind listeners that the discussion of business outlook for O2 Micro contains forward-looking statements. Statements made in this release that are not historical fact are forward-looking statements within the meaning of the federal securities laws. Actual results may differ material due to numerous risk factors. Such risk factors are enumerated in the company's 20th annual filings, our annual reports, and other documents filed with the SEC from time to time. Listeners are referred to the O2 macro earnings press release and the documents filed with the SEC to understand these forward-looking statements and the associated risk factors. The statements herein are dated information. The company assumes no responsibility to prove updates to this information. With me today are Perry Kuo, CFO and Director, Jim Kime, Head of Marketing and Sales and Director, and Sterling Du, O2's Founder, CEO, and Chairman. After the prepared remarks from these gentlemen, the floor will be open for your questions. At this point, I would like to introduce Perry Kuo, CFO of O2 Micro, for a discussion of the financial highlights of the fourth quarter of fiscal year 2020, ending December 31, 2020. Perry. Thank you, Ben.

We will now review our financial results for Q4 2020. Please note that financial results will be presented on a GAAP basis unless we designate otherwise. The non-GAAP result is crude stock-based compensation expense, one-time charges, non-recurring gains and losses. Our full GAAP results are available in our press release that was issued earlier today. GAAP revenue in the fourth quarter of 2020 was $23.2 million. Gap net income in the fourth quarter of 2020 was $4.4 million. If we exclude stock-based compensation of $364,000, net gain recognized on long-term investment of $133,000 and one-time paycheck protection program, $604,000, the non-gap net income will be $4 million. Gap net income per fully diluted ADS in the fourth quarter of 2020 was $0.14. Non-gap net income per fully diluted ADS was $0.13. Gross margin was 51.3% in Q4. The gross margin reflects the current revenue level and the product mix. R&D expense. was $3.8 million or 16.4% of revenue. This amount is growth stock-based compensation expense of $80,000. SC&A expense was $4.1 million or 17.7% of revenue. This amount is growth stock-based compensation expense of $284,000. The non-operating income was $920,000. Income tax was $215,000 in the fourth quarter and it mainly reflected the actual tax provisions on each taxable location. In Q4 2020, there was no stock repurchase. Q4 2020, revenue by end market breaks down into the following percentages. Consumer was 41 to 43% of revenue. Computer was 2 to 4% of revenue. Industrial was 53 to 55% of revenue. Communications was almost zero. At this moment, I would like to provide some additional information. O2 Micro finished the first quarter with $47.8 million in unrestricted cash and short-term investment. This represents cash and cash equivalents of $1.76 per ADS. In addition, O2 Micro has no debt. Account receivable at the end of Q4 was $16.4 million. is 64 days. DSO is more than 60 days mainly from account meets. Inventory was $12.6 million at the end of the fourth quarter. This represents 101 days of inventory and inventory turns was 3.6 times in Q4. Net cash generated from operating activities in the fourth quarter was about 5.6 million. Capital expenditure was about 1.2 million in the first quarter for R&D and IT equipment. Depreciation and amortization was 981,000 in Q4. At the end of the fourth quarter of 2020, O2 Micro had 303 employees 56% of which are engineers. Based on current market situation and the best updated managerial rolling forecast, the company has the following guidance for Q1 2021. Next revenues are expected to be down 4% to up 6%. Product gross margin expected to be in the range of 50% to 52%. R&D expenses, excluding stock-based compensation, are expected to be in the range of $4 million to $4.5 million. SG&A expenses, excluding stock-based compensation, are expected to be in the range of $4.1 million to $4.6 million. Stock-based compensation should be in the range of $450,000 to $550,000. Non-operating income expected to be in the range of $200,000 to $300,000, excluding foreign exchange gains or losses. Income tax expense expected to be in the range of $200,000 to $300,000. The goal of our management team and the board of directors is to maximize shareholder value. We have accomplished this by taking the necessary steps, which included managing operating expenses and monetizing assets on the balance sheet. In regards to our share repurchase program, we have been active in this program historically. Since 2002, we have repurchased over 20.3 million ADS shares for $101.3 million. As of the end of Q4, we had $7.6 million remaining in our share buyback authorization. In 2021, there are many dynamic factors associated in the business development. We will carefully plan and execute to target revenue growth and maintain growth margin in the first half of 2021. First is to continue to invest in new product while allocating some resources for the second source development for the capacity support. And to invest in-house R&D testing center and buy more advanced testers for testing capacity required for advanced ICs in both the lighting and the battery management product group. We also monitor the supply chains tightly and have added all in process to support the dynamic demand for multiple end market timing. In Q4 2020, 424,000 shares of EMC were sold and about 1.6 million cash in. The average selling price of EMC in Q4 is around $3.9 per shares, with original cost of 53 cents per share. All EMC shares were sold by end of November 2020. The initial investment in EMC was about $1,960,000 in 2010, and the net exit total cash received was $12.9 million from Q3 2018 to Q4 2020. Returns to shareholders are very much on our minds and will continue to be a focus in the future. We will provide updates to the additional measures to enhance shareholders' value throughout this year. Given the uncertain demand and the macro environment, we are prepared to continue to manage costs as needed. Although we believe we have a high current cost based on current and anticipated revenue levels. I would like to thank everyone for participating and turn the call over to Jim to talk more about our business. Jim, please.