2014 Q3 Financial Results

MediaTek Inc. Reports Third Quarter 2014 Consolidated Results

Consolidated Revenue

MediaTek Inc. today announced financial results of third-quarter ended September 30, 2014. Third quarter revenue was NT$57,472 million, up 6.2% sequentially, and up 47.3% year-over-year. The year-over-year increase was mainly due to revenue growth in smartphone and MStar revenue recognition.

Consolidated Gross Profit and Gross Margin

The third-quarter gross profit was NT$28,234 million, up 5.3% sequentially, and up 64.7% year-over-year. Gross margin for the quarter was 49.1%, down 0.5 percentage points sequentially and up 5.2 percentage points year-over-year. The year-over-year increase was mainly due to higher mix of smartphone and high-end products.

Consolidated Operating Expenses

Operating expenses for the quarter was NT$14,440 million (25.1% of revenue), compared with NT$14,063 million (26.0% of revenue) in the previous quarter, and NT$9,274 million (23.8% of revenue) in the same period last year. The sequential and year-over-year increase was mainly due to increasing talent and technology investments, higher expenses associated with higher sales as well as MStar expenses recognition.

Operating expenses for the quarter included:

Consolidated Operating Profit and Operating Margin

Operating profit for the quarter was NT$13,794 million, up 8.1% sequentially, and up 75.4% year-over-year. Operating margin for the quarter was 24.0%, increased from 23.6% in the previous quarter, and increased from 20.2% in the year-ago quarter.

Consolidated Non-operating Income (loss) and Income Tax

Non-operating income of NT$1,119 million, or 1.9% of revenue, was mainly from interest income and investment income. Income tax expense for the quarter was NT$1,612 million.

Consolidated Net Income and Net Profit Margin and EPS

Net income was NT$13,301 million, up 6.0% sequentially, and up 58.0% year-over-year. Net profit margin for the quarter was 23.1%, decreased from 23.2% in the previous quarter, and increased from 21.6% in the year-ago quarter. EPS was NT$8.51, compared with NT$8.03 in the prior quarter and NT$6.28 in the year-ago quarter.

Consolidated Cash and Financial Assets-Current

Cash and financial assets-current at the end of the quarter was NT$194,721 million. This represents 58.1% of the company’s total assets. Cash and financial assets-current was NT$196,431 million and NT$113,192 million at the end of previous quarter and the year-ago quarter, respectively. Financial assets-current portfolio includes mutual funds, bonds, and derivatives.

Consolidated Accounts Receivable

Accounts receivable (net) at the end of the quarter was NT$ 15,418 million. The accounts receivable turnover was 23 days based on quarterly average net receivables divided by annualized net revenue. The turnover was higher than 22 days last quarter, and lower than 25 days in the year-ago quarter.

Consolidated Inventory

Net inventory was NT$24,464 million at the end of the quarter. The inventory turnover was 68 days based on quarterly average inventory divided by annualized cost of goods sold. The turnover was higher than 60 days in the last quarter, and higher than 50 days in the year-ago quarter.

Consolidated Cash Flow from Operations

Cash flow from operations during the quarter was NT$11,742 million, a decrease of NT$13,044 million from the prior quarter and an increase of NT$9,971 million from the year-ago quarter.

Earnings Webcast

MediaTek will hold a public webcast today (November 6). A live webcast of the conference call will be available through the Investor Relations section of the MediaTek website. Investors who want to raise questions may use the toll number attached below.

Schedule and Webcast Links:

In Mandarin 2:00 – 3:00 p.m. (Taiwan Time)

http://mediatek.ic.learn.hinet.net/2014Q3/mediatek.html

In English 4:00 – 5:00 p.m. (Taiwan Time)

http://mediatek-en.ic.learn.hinet.net/2014Q3/mediatek.html

Dial-in Number: +886-2-21928016

Password: 630384#

About MediaTek Inc.

MediaTek is a pioneering fabless semiconductor company, and a market leader in cutting-edge systems on a chip for wireless communications and connectivity, HDTV, DVD and Blu-ray. MediaTek created the world's first octa-core smartphone platform with LTE and our CorePilot™ technology releasing the full power of multi-core mobile processors. Through MediaTek Labs, the company is creating a worldwide ecosystem in support of device creation, application development and services based around MediaTek offerings. With an emphasis on enabling technology for the masses and not the chosen, everyone can be an Everyday Genius. MediaTek [TSE:2454] is headquartered in Taiwan and has offices worldwide. Please visit www.mediatek.com for more information.

MediaTek Inc.

Q3 FY14 Consolidated Income Statement

(In NT$ millions, except per share amounts)

3Q14

2Q14

3Q13

Q-Q

Y-Y

Net Revenue

57,472

54,133

39,008

6.2%

47.3%

Cost of Goods Sold

(29,238)

(27,309)

(21,867)

Gross Profit

28,234

26,824

17,140

5.3%

64.7%

Selling expenses

(1,521)

(2,072)

(1,205)

Administration expenses

(1,381)

(1,589)

(995)

R&D expenses

(11,538)

(10,403)

(7,075)

Operating Expenses

(14,440)

(14,063)

(9,274)

Operating Income

13,794

12,760

7,866

8.1%

75.4%

Net Non-operating Income

1,119

1,392

1,169

Income Before Income Tax

14,913

14,153

9,035

Income tax expense

(1,612)

(1,605)

(619)

Consolidated Net Income

13,301

12,549

8,416

6.0%

58.0%

EPS Attributable to the Parent(NT$)

8.51

8.03

6.28

Note: Numbers do not add up due to rounding.

Q3 FY14 Supplemental Information: Percentage of Revenue

3Q14

2Q14

3Q13

Gross profit

49.1%

49.6%

43.9%

Selling expenses

(2.6 %)

(3.8 %)

(3.1 %)

Administration expenses

(2.4 %)

(2.9 %)

(2.6 %)

R&D expenses

(20.1 %)

(19.2 %)

(18.1 %)

Operating profit

24.0%

23.6%

20.2%

Non-operating income

1.9%

2.6%

3.0%

Income tax expense

(2.8 %)

(3.0 %)

(1.6 %)

Net profit

23.1%

23.2%

21.6%

Note: Numbers do not add up due to rounding.

MediaTek Inc.

Consolidated Balance Sheet

(In NT$ millions)

3Q14

2Q14

3Q13

Cash & Financial assets-current

194,721

196,431

113,192

Accounts receivable

15,418

12,983

11,059

Inventories

24,464

19,326

12,938

Funds and investments

12,179

9,918

66,540

Intangible assets

59,259

59,488

15,332

Total assets

335,083

323,857

238,195

Short-term loans

43,454

34,046

19,760

Accounts payable

21,307

18,439

12,520

Other current liabilities

37,622

55,266

18,690

Long-term liabilities & Other liabilities

1,721

1,789

2,125

Stockholders’ equity

230,979

214,317

185,099

MediaTek Inc.

Consolidated Cash Flow Summary

(In NT$ millions)

3Q14

2Q14

3Q13

Cash flow from operations

11,742

13,044

9,971

Cash flow from investing

(4,690)

22

(374)

Cash flow from financing

(13,726)

12,228

(8,301)

Effect of exchange rate changes

1,607

(2,155)

(905)

Net increase in cash & equivalents

(5,068)

23,139

392

Cash & equivalents at quarter end

185,070

190,138

107,617

Note: Numbers do not add up due to rounding.