2014 Q4 Financial Results

MediaTek Inc. Reports Fourth Quarter 2014 Consolidated Results

Consolidated Revenue

MediaTek Inc. today announced financial results of fourth-quarter ended December 31, 2014. Fourth quarter revenue was NT$55,453 million, down 3.5% sequentially, and up 39.3% year-over-year. The quarter-over-quarter decrease was mainly due to seasonal decline across product lines. The year-over-year increase was mainly due to MStar revenue recognition and revenue growth in smartphone.

Annual revenue totaled NT$213,063 million, up 56.6% year-over-year.

Consolidated Gross Profit and Gross Margin

The fourth-quarter gross profit was NT$26,585 million, down 5.8% sequentially, and up 46.2% year-over-year. Gross margin for the quarter was 47.9%, down 1.2 percentage points sequentially and up 2.2 percentage points year-over-year. The quarter-over-quarter decrease was mainly due to product transition and the year-over-year increase was mainly due to higher mix of smartphone and high-end products.

Gross profit of the year amounted to NT$103,869 million (gross margin: 48.8%), up 73.7% year-over-year.

Consolidated Operating Expenses

Operating expenses for the quarter was NT$16,711 million (30.1% of revenue), compared with NT$14,440 million (25.1% of revenue) in the previous quarter, and NT$9,787 million (24.6% of revenue) in the same period last year. The quarter-over-quarter increase was mainly due to higher talent and technology investments. The year-over-year increase was mainly due to MStar expenses recognition as well as increasing talent and technology investments.

Operating expenses for the quarter included:

Full-year 2014 operating expense was NT$56,627 million (26.6% of revenue), increased 63.8% year-over-year.

Consolidated Operating Profit and Operating Margin

Operating profit for the quarter was NT$9,874 million, down 28.4% sequentially, and up 17.5% year-over-year. Operating margin for the quarter was 17.8%, decreased from 24.0% in the previous quarter, and decreased from 21.1% in the year-ago quarter.

Operating profit of the year was NT$47,241 million (operating margin: 22.2%), up 87.1% year-over-year.

Consolidated Non-operating Income (loss) and Income Tax

Non-operating income of NT$1,908 million, or 3.4% of revenue, was mainly from interest income and foreign exchange gains. Income tax expense for the quarter was NT$1,372 million.

Net non-operating income of the year amounted to NT$5,109 million, up 18.7% year-over-year.

Consolidated Net Income and Net Profit Margin and EPS

Net income was NT$10,410 million, down 21.7% sequentially, and up 20.8% year-over-year. Net profit margin for the quarter was 18.8%, decreased from 23.1% in the previous quarter, and decreased from 21.6% in the year-ago quarter. EPS was NT$6.65, compared with NT$8.51 in the prior quarter and NT$6.43 in the year-ago quarter.

Full year 2014 net income was NT$46,399 million, up 68.8% year-over-year. Accumulated EPS was NT$30.04 for the year, compared with NT$20.51 last year.

Consolidated Cash and Financial Assets-Current

Cash and financial assets-current at the end of the quarter was NT$205,294 million. This represents 58.5% of the company’s total assets. Cash and financial assets-current was NT$194,721 million and NT$139,219 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$ 12,552 million. The accounts receivable turnover was 23 days based on quarterly average net receivables divided by annualized net revenue. The turnover was same as 23 days last quarter, and higher than 21 days in the year-ago quarter.

Consolidated Inventory

Net inventory was NT$22,341 million at the end of the quarter. The inventory turnover was 74 days based on quarterly average inventory divided by annualized cost of goods sold. The turnover was higher than 68 days in the last quarter, and higher than 47 days in the year-ago quarter.

Consolidated Cash Flow from Operations

Cash flow from operations during the quarter was NT$10,404 million, a decrease of NT$11,742 million from the prior quarter and a decrease of NT$16,624 million from the year-ago quarter.

Earnings Webcast

MediaTek will hold a public webcast today (February 9). 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/2014Q4/mediatek.html

In English 4:00 – 5:00 p.m. (Taiwan Time) http://mediatek-en.ic.learn.hinet.net/2014Q4/mediatek.html

Dial-in Number: +886-2-21928016 Password: 997260#

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.

Q4 FY14 Consolidated Income Statement

(In NT$ millions, except per share amounts)

4Q14

3Q14

4Q13

Q-Q

Y-Y

Net Revenue

55,453

57,472

39,798

(3.5 %)

39.3%

Cost of Goods Sold

(28,868)

(29,238)

(21,608)

Gross Profit

26,585

28,234

18,190

(5.8 %)

46.2%

Selling expenses

(2,646)

(1,521)

(1,407)

Administration expenses

(1,584)

(1,381)

(1,009)

R&D expenses

(12,481)

(11,538)

(7,372)

Operating Expenses

(16,711)

(14,440)

(9,787)

Operating Income

9,874

13,794

8,403

(28.4 %)

17.5%

Net Non-operating Income

1,908

1,119

1,044

Income Before Income Tax

11,782

14,913

9,446

Income tax expense

(1,372)

(1,612)

(830)

Consolidated Net Income

10,410

13,301

8,616

(21.7 %)

20.8%

EPS Attributable to the Parent(NT$)

6.65

8.51

6.43

Note: Numbers do not add up due to rounding.

Q4 FY14 Supplemental Information: Percentage of Revenue

4Q14

3Q14

4Q13

Gross profit

47.9%

49.1%

45.7%

Selling expenses

(4.8 %)

(2.6 %)

(3.5 %)

Administration expenses

(2.9 %)

(2.4 %)

(2.5 %)

R&D expenses

(22.5 %)

(20.1 %)

(18.5 %)

Operating profit

17.8%

24.0%

21.1%

Non-operating income

3.4%

1.9%

2.6%

Income tax expense

(2.5 %)

(2.8 %)

(2.1 %)

Net profit

18.8%

23.1%

21.6%

Note: Numbers do not add up due to rounding.

MediaTek Inc.

FY14 Consolidated Income Statement

(In NT$ millions, except per share amounts)

2014

2013

Y-Y

Net Revenue

213,063

136,056

56.6%

Cost of Goods Sold

(109,194)

(76,250)

Gross Profit

103,869

59,806

73.7%

Selling expenses

(7,373)

(4,562)

Administration expenses

(5,917)

(3,546)

R&D expenses

(43,337)

(26,454)

Operating Expenses

(56,627)

(34,562)

Operating Income

47,241

25,244

87.1%

Net Non-operating Income

5,109

4,303

Income Before Income Tax

52,350

29,547

Income tax expense

(5,951)

(2,062)

Consolidated Net Income

46,399

27,485

68.8%

EPS Attributable to the Parent(NT$)

30.04

20.51

Note: Numbers do not add up due to rounding.

FY14 Supplement Information: Percentage of Revenue

2014

2013

Gross profit

48.8%

44.0%

R&D expense

(20.3 %)

(19.4 %)

Selling expenses

(3.5 %)

(3.4 %)

Administration expenses

(2.8 %)

(2.6 %)

Operating profit

22.2%

18.6%

Non-operating income

2.4%

3.2%

Income tax expense

(2.8 %)

(1.5 %)

Net profit

21.8%

20.2%

Note: Numbers do not add up due to rounding.

MediaTek Inc.

Consolidated Balance Sheet

(In NT$ millions)

4Q14

3Q14

4Q13

Cash & Financial assets-current

205,294

194,721

139,219

Accounts receivable

12,552

15,418

7,628

Inventories

22,341

24,464

9,347

Funds and investments

15,001

12,179

68,040

Intangible assets

60,758

59,259

15,509

Total assets

351,119

335,083

258,637

Short-term loans

46,161

43,454

29,052

Accounts payable

14,605

21,307

10,944

Other current liabilities

40,854

37,622

21,389

Long-term liabilities & Other liabilities

1,893

1,721

1,899

Stockholders’ equity

247,606

230,979

195,353

MediaTek Inc.

Consolidated Cash Flow Summary

(In NT$ millions)

4Q14

3Q14

4Q13

Cash flow from operations

10,404

11,742

16,624

Cash flow from investing

(8,712)

(4,690)

(1,164)

Cash flow from financing

3,086

(13,726)

9,310

Effect of exchange rate changes

2,949

1,607

611

Net increase in cash & equivalents

7,727

(5,068)

25,381

Cash & equivalents at quarter end

192,798

185,070

132,998

Note: Numbers do not add up due to rounding.