2015 Q2 Financial Results

MediaTek Inc. Reports Second Quarter 2015 Consolidated Results

Consolidated Revenue

MediaTek Inc. today announced financial results of second-quarter ended June 30, 2015. Second quarter revenue was NT$47,044 million, down 1.0% sequentially, and down 13.1% year-over-year. The quarter-over-quarter and year-over-year changes were mainly due to lower handset demand and intensifying price competition.

Consolidated Gross Profit and Gross Margin

The second-quarter gross profit was NT$21,596 million, down 4.0% sequentially, and down 19.5% year-over-year. Gross margin for the quarter was 45.9%, down 1.4 percentage points sequentially and down 3.7 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$14,730 million (31.3% of revenue), compared with NT$14,827 million (31.2% of revenue) in the previous quarter, and NT$14,063 million (26.0% of revenue) in the same period last year. Operating expenses were largely flat versus the previous quarter. The year-over-year increase was mainly due to increasing R&D talents and technology investments.

Operating expenses for the quarter included:

Consolidated Operating Income and Operating Margin  Operating income for the quarter was NT$6,866 million, down 10.5% sequentially, and down 46.2% year-over-year. Operating margin for the quarter was 14.6%, decreased from 16.1% in the previous quarter, and decreased from 23.6% in the year-ago quarter.

Consolidated Non-operating Income (loss) and Income Tax

Non-operating income of NT$541 million, or 1.1% of revenue, was mainly from interest income. Income tax expense for the quarter was NT$1,030 million.

Consolidated Net Income, Net Profit Margin and EPS

Net income was NT$6,377 million, down 12.1% sequentially, and down 49.2% year-over-year. Net profit margin for the quarter was 13.6%, decreased from 15.3% in the previous quarter, and decreased from 23.2% in the year-ago quarter. EPS was NT$4.06, compared with NT$4.62 in the prior quarter and NT$8.03 in the year-ago quarter.

Consolidated Cash and Financial Assets-Current

Cash and financial assets-current at the end of the quarter was NT$203,124 million. This represents 54.7% of the company’s total assets. Cash and financial assets-current was NT$204,952 million and NT$196,431 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$ 12,250 million. The accounts receivable turnover was 25 days based on quarterly average net receivables divided by annualized net revenue. The turnover was same as 25 days in the previous quarter, and higher than 22 days in the year-ago quarter.

Consolidated Inventory

Net inventory was NT$33,654 million at the end of the quarter. The inventory turnover was 111 days based on quarterly average inventory divided by annualized cost of goods sold. The turnover was higher than 92 days in the previous quarter, and higher than 60 days in the year-ago quarter.

Consolidated Cash Flow from Operations

Net cash used in operating activities during the quarter was NT$1,446 million, compared with Net cash provided by operating activities NT$6,000 million in the prior quarter and NT$13,044 million in the year-ago quarter.

Earnings Webcast

MediaTek will hold a public webcast today (July 31). 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/2015Q2/mediatek.html

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

http://mediatek-en.ic.learn.hinet.net/2015Q2/mediatek.html

Dial-in Number: +886-2-21928016

Password: 963530#

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.

Q2 FY15 Consolidated Income Statement

(In NT$ millions, except per share amounts)

2Q15

1Q15

2Q14

Q-Q

Y-Y

Net Sales

47,044

47,536

54,133

(1.0 %)

(13.1 %)

Operating costs

(25,448)

(25,038)

(27,309)

Gross Profit

21,596

22,499

26,824

(4.0 %)

(19.5 %)

Selling expenses

(1,655)

(2,169)

(2,072)

Administration expenses

(2,178)

(1,807)

(1,589)

R&D expenses

(10,897)

(10,851)

(10,403)

Operating Expenses

(14,730)

(14,827)

(14,063)

Operating Income

6,866

7,672

12,760

(10.5 %)

(46.2 %)

Net Non-operating Income

541

470

1,393

Net Income Before Income Tax

7,407

8,142

14,153

Income tax expense

(1,030)

(891)

(1,605)

Net Income

6,377

7,251

12,549

(12.1 %)

(49.2 %)

EPS Attributable to the Parent(NT$)

4.06

4.62

8.03

Note: Numbers do not add up due to rounding.

Q2 FY15 Supplemental Information: Percentage of Revenue

2Q15

1Q15

2Q14

Gross profit

45.9%

47.3%

49.6%

Selling expenses

(3.5 %)

(4.6 %)

(3.8 %)

Administration expenses

(4.6 %)

(3.8 %)

(2.9 %)

R&D expenses

(23.2 %)

(22.8 %)

(19.2 %)

Operating profit

14.6%

16.1%

23.6%

Non-operating income

1.1%

1.0%

2.6%

Income tax expense

(2.2 %)

(1.9 %)

(3.0 %)

Net profit

13.6%

15.3%

23.2%

Note: Numbers do not add up due to rounding.

MediaTek Inc.

Consolidated Balance Sheet

(In NT$ millions)

2Q15

1Q15

2Q14

Cash & Financial assets-current

203,124

204,952

196,431

Accounts receivable

12,250

13,347

12,983

Inventories

33,654

28,085

19,326

Funds and investments

19,769

17,236

9,918

Intangible assets

63,907

63,007

59,488

Total assets

371,355

363,834

323,857

Short-term loans

57,491

50,934

34,046

Accounts payable

18,806

19,650

18,439

Other current liabilities

67,397

37,575

55,266

Total non-current liabilities

2,224

2,055

1,789

Total equity

225,438

253,620

214,317

MediaTek Inc.

Consolidated Cash Flow Summary

(In NT$ millions)

2Q15

1Q15

2Q14

Net cash provided by (used in) operating activities

(1,446)

6,000

13,044

Net cash provided by (used in) investing activities

(5,181)

(6,955)

22

Net cash provided by (used in) financing activities

6,633

4,859

12,228

Effect of changes in exchange rate on cash and cash equivalents

(325)

(558)

(2,155)

Net increase in cash and cash equivalents

(319)

3,346

23,139

Cash and cash equivalents at the end of the period

195,824

196,143

190,13

Note: Numbers do not add up due to rounding.