2015 Q1 Financial Results

MediaTek Inc. Reports First Quarter 2015 Consolidated Results

Consolidated Revenue

MediaTek Inc. today announced financial results of first-quarter ended March 31, 2015. First quarter revenue was NT$47,536 million, down 14.3% sequentially, and up 3.3% year-over-year. The quarter-over-quarter and year-over-year changes were mainly due to traditional low season in the first quarter and weakening smartphone growth momentum in emerging markets resulting from the rapid appreciation of US dollar.

Consolidated Gross Profit and Gross Margin

The first-quarter gross profit was NT$22,499 million, down 15.4% sequentially, and up 1.2% year-over-year. Gross margin for the quarter was 47.3%, down 0.6 percentage points sequentially and down 1.0 percentage points year-over-year. The quarter-over-quarter and year-over-year decrease were mainly due to smartphone product transition and market competition.

Consolidated Operating Expenses

Operating expenses for the quarter was NT$14,827 million (31.2% of revenue), compared with NT$16,711 million (30.1% of revenue) in the previous quarter, and NT$11,413 million (24.8% of revenue) in the same period last year. The quarter-over-quarter decrease was mainly due to lower seasonal expenses, revenue-associated expenses and one-time charges. The year-over-year increase was mainly due to increasing talent and technology investments.

Operating expenses for the quarter included:

- R&D expenses of NT$10,851 million (22.8% of revenue), decreased from NT$12,481 million in 4Q14, and increased from NT$8,915 million in 1Q14.

- Selling expenses of NT$2,169 million (4.6% of revenue), decreased from NT$2,646 million in 4Q14, and increased from NT$1,134 million in 1Q14.

- Administration expenses of NT$1,807 million (3.8% of revenue), increased from NT$1,584 million in 4Q14, and increased from NT$1,363 million in 1Q14.

Consolidated Operating Profit and Operating Margin  Operating profit for the quarter was NT$7,672 million, down 22.3% sequentially, and down 29.0% year-over-year. Operating margin for the quarter was 16.1%, decreased from 17.8% in the previous quarter, and decreased from 23.5% in the year-ago quarter.

Consolidated Non-operating Income (loss) and Income Tax

Non-operating income of NT$470 million, or 1.0% of revenue, was mainly from interest income and foreign exchange gains. Income tax expense for the quarter was NT$891 million.

Consolidated Net Income, Net Profit Margin and EPS

Net income was NT$7,251 million, down 30.3% sequentially, and down 28.5% year-over-year. Net profit margin for the quarter was 15.3%, decreased from 18.8% in the previous quarter, and decreased from 22.0% in the year-ago quarter. EPS was NT$4.62, compared with NT$6.65 in the prior quarter and NT$6.82 in the year-ago quarter.

Consolidated Cash and Financial Assets-Current

Cash and financial assets-current at the end of the quarter was NT$204,952 million. This represents 56.3% of the company’s total assets. Cash and financial assets-current was NT$205,294 million and NT$173,917 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$ 13,347 million. The accounts receivable turnover was 25 days based on quarterly average net receivables divided by annualized net revenue. The turnover was higher than 23 days in the previous quarter, and higher than 21 days in the year-ago quarter.

Consolidated Inventory

Net inventory was NT$28,085 million at the end of the quarter. The inventory turnover was 92 days based on quarterly average inventory divided by annualized cost of goods sold. The turnover was higher than 74 days in the previous 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$6,000 million, a decrease from NT$10,404 million in the prior quarter and a decrease from NT$9,140 million in the year-ago quarter.

Earnings Webcast

MediaTek will hold a public webcast today (April 30). 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/2015Q1/mediatek.html

In English 4:00 – 5:00 p.m. (Taiwan Time) http://mediatek-en.ic.learn.hinet.net/2015Q1/mediatek.html

Dial-in Number: +886-2-21928016

Password: 712687#

About MediaTek Inc.

MediaTek is a pioneering fabless semiconductor company, and a market leader in cutting-edge Systems on Chip for wireless communications and connectivity, HDTV, DVD and Blu-ray. MediaTek created the world’s first True 8core™ 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.

Q1 FY15 Consolidated Income Statement

(In NT$ millions, except per share amounts)

1Q15

4Q14

1Q14

Q-Q

Y-Y

Net Revenue

47,536

55,453

46,005

(14.3 %)

3.3%

Cost of Goods Sold

(25,038)

(28,868)

(23,779)

Gross Profit

22,499

26,585

22,226

(15.4 %)

1.2%

Selling expenses

(2,169)

(2,646)

(1,134)

Administration expenses

(1,807)

(1,584)

(1,363)

R&D expenses

(10,851)

(12,481)

(8,915)

Operating Expenses

(14,827)

(16,711)

(11,413)

Operating Income

7,672

9,874

10,813

(22.3 %)

(29.0 %)

Net Non-operating Income

470

1,908

688

Income Before Income Tax

8,142

11,782

11,501

Income tax expense

(891)

(1,372)

(1,362)

Consolidated Net Income

7,251

10,410

10,139

(30.3 %)

(28.5 %)

EPS Attributable to the Parent(NT$)

4.62

6.65

6.82

Note: Numbers do not add up due to rounding.

Q1 FY15 Supplemental Information: Percentage of Revenue

1Q15

4Q14

1Q14

Gross profit

47.3%

47.9%

48.3%

Selling expenses

(4.6 %)

(4.8 %)

(2.5 %)

Administration expenses

(3.8 %)

(2.9 %)

(3.0 %)

R&D expenses

(22.8 %)

(22.5 %)

(19.4 %)

Operating profit

16.1%

17.8%

23.5%

Non-operating income

1.0%

3.4%

1.5%

Income tax expense

(1.9 %)

(2.5 %)

(3.0 %)

Net profit

15.3%

18.8%

22.0%

Note: Numbers do not add up due to rounding.

MediaTek Inc.

Consolidated Balance Sheet

(In NT$ millions)

1Q15

4Q14

1Q14

Cash & Financial assets-current

204,952

205,294

173,917

Accounts receivable

13,347

12,552

13,572

Inventories

28,085

22,341

16,649

Funds and investments

17,236

15,001

10,122

Intangible assets

63,007

60,758

60,584

Total assets

363,834

351,119

298,543

Short-term loans

50,934

46,161

22,101

Accounts payable

19,650

14,605

17,421

Other current liabilities

37,575

40,854

29,008

Long-term liabilities & Other liabilities

2,055

1,893

1,615

Stockholders’ equity

253,620

247,606

228,398

MediaTek Inc.

Consolidated Cash Flow Summary

(In NT$ millions)

1Q15

4Q14

1Q14

Cash flow from operations

6,000

10,404

9,140

Cash flow from investing

(6,955)

(8,712)

31,182

Cash flow from financing

4,859

3,086

(7,745)

Effect of exchange rate changes

(558)

2,949

1,424

Net increase in cash & equivalents

3,346

7,727

34,001

Cash & equivalents at quarter end

196,143

192,798

166,999

Note: Numbers do not add up due to rounding.