2015 Q3 Financial Results

MediaTek Inc. Reports Third Quarter 2015 Consolidated Results

Consolidated Revenue

MediaTek Inc. today announced financial results of third-quarter ended September 30, 2015. Third quarter revenue was NT$56,962 million, up 21.1% sequentially, and down 0.9% year-over-year. The quarter-over-quarter growth was mainly due to seasonal demand, rising high-end product mix and favorable foreign exchange rate.

Consolidated Gross Profit and Gross Margin

The third-quarter gross profit was NT$24,304 million, up 12.5% sequentially, and down 13.9% year-over-year. Gross margin for the quarter was 42.7%, down 3.2 percentage points sequentially and down 6.4 percentage points year-over-year. The quarter-over-quarter and year-over-year decreases were mainly due to smartphone market competition.

Consolidated Operating Expenses

Operating expenses for the quarter was NT$16,682 million (29.3% of revenue), compared with NT$14,730 million (31.3% of revenue) in the previous quarter, and NT$14,440 million (25.1% of revenue) in the same period last year. The quarter-over-quarter and year-over-year increases were mainly due to higher expenses associated with higher sales as well as increasing R&D talents and technology investments.

Operating expenses for the quarter included:

- R&D expenses of NT$12,343 million (21.7% of revenue), increased from NT$10,897 million in 2Q15, and increased from NT$11,538 million in 3Q14.

- Selling expenses of NT$1,904 million (3.3% of revenue), increased from NT$1,655 million in 2Q15, and increased from NT$1,521 million in 3Q14.

- Administration expenses of NT$2,436 million (4.3% of revenue), increased from NT$2,178 million in 2Q15, and increased from NT$1,381 million in 3Q14. 

Consolidated Operating Income and Operating Margin  Operating income for the quarter was NT$7,622 million, up 11.0% sequentially, and down 44.7% year-over-year. Operating margin for the quarter was 13.4%, decreased from 14.6% in the previous quarter, and decreased from 24.0% in the year-ago quarter.

Consolidated Non-operating Income (loss) and Income Tax

Non-operating income of NT$1,452 million, or 2.5% of revenue, was mainly from capital gain from disposal of securities and interest income. Income tax expense for the quarter was NT$1,114 million.

Consolidated Net Income, Net Profit Margin and EPS

Net income was NT$7,960 million, up 24.8% sequentially, and down 40.2% year-over-year. Net profit margin for the quarter was 14.0%, increased from 13.6% in the previous quarter, and decreased from 23.1% in the year-ago quarter. EPS was NT$5.09, compared with NT$4.06 in the prior quarter and NT$8.51 in the year-ago quarter.

Consolidated Cash and Financial Assets-Current

Cash and financial assets-current at the end of the quarter was NT$168,968 million. This represents 48.6% of the company’s total assets. Cash and financial assets-current was NT$203,124 million and NT$194,721 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$ 16,117 million. The accounts receivable turnover was 23 days based on quarterly average net receivables divided by annualized net revenue. The turnover was lower than 25 days in the previous quarter, and the same as 23 days in the year-ago quarter.

Consolidated Inventory

Net inventory was NT$33,981 million at the end of the quarter. The inventory turnover was 94 days based on quarterly average inventory divided by annualized cost of goods sold. The turnover was lower than 111 days in the previous quarter, and higher than 68 days in the year-ago quarter.

Consolidated Cash Flow from Operations

Net cash provided by operating activities during the quarter was NT$658 million, compared with Net cash used in operating activities NT$1,446 million in the prior quarter, and Net cash provided by operating activities NT$11,742 million in the year-ago quarter.

Earnings Webcast

MediaTek will hold a public webcast today (October 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://wms.gridow.com/ir/mediatek/tw/mediatek_2015Q3_tw.html

In English 4:00 – 5:00 p.m. (Taiwan Time) http://wms.gridow.com/ir/mediatek/en/mediatek_2015Q3_en.html

Dial-in Number: +886-2-21928016

Password: 990145#

About MediaTek Inc.

Since 1997, MediaTek has been a pioneering fabless semiconductor company and a market leader in cutting-edge systems-on-chip (SoC) for mobile devices, wireless networking, HDTV, DVD and Blu-ray. Our tightly-integrated, innovative chip designs help manufacturers optimize supply chains, reduce the development time of new products, and extend a competitive edge in both developing and mature markets around the world. Through MediaTek Labs, the company is also building a developer hub that will support device creation, application development, and services for the Internet of Things era. By building technologies that help connect individuals to the world around them, MediaTek is enabling people to expand their horizons and more easily achieve their goals. We believe anyone can achieve something amazing. And we believe they can do it every single day. We call this idea Everyday Genius and it drives everything we do. Visit www.mediatek.com for more information.

MediaTek Inc.

Q3 FY15 Consolidated Income Statement

(In NT$ millions, except per share amounts)

3Q15

2Q15

3Q14

Q-Q

Y-Y

Net Sales

56,962

47,044

57,472

21.1%

(0.9 %)

Operating costs

(32,658)

(25,448)

(29,238)

Gross Profit

24,304

21,596

28,234

12.5%

(13.9 %)

Selling expenses

(1,904)

(1,655)

(1,521)

Administration expenses

(2,436)

(2,178)

(1,381)

R&D expenses

(12,343)

(10,897)

(11,538)

Operating Expenses

(16,682)

(14,730)

(14,440)

Operating Income

7,622

6,866

13,794

11.0%

(44.7 %)

Net Non-operating Income

1,452

541

1,119

Net Income Before Income Tax

9,074

7,407

14,914

Income tax expense

(1,114)

(1,030)

(1,612)

Net Income

7,960

6,377

13,301

24.8%

(40.2 %)

EPS Attributable to the Parent(NT$)

5.09

4.06

8.51

Note: Numbers do not add up due to rounding.

Q3 FY15 Supplemental Information: Percentage of Revenue

3Q15

2Q15

3Q14

Gross profit

42.7%

45.9%

49.1%

Selling expenses

(3.3 %)

(3.5 %)

(2.6 %)

Administration expenses

(4.3 %)

(4.6 %)

(2.4 %)

R&D expenses

(21.7 %)

(23.2 %)

(20.1 %)

Operating profit

13.4%

14.6%

24.0%

Non-operating income

2.5%

1.1%

1.9%

Income tax expense

(2.0 %)

(2.2 %)

(2.8 %)

Net profit

14.0%

13.6%

23.1%

Note: Numbers do not add up due to rounding.

MediaTek Inc.

Consolidated Balance Sheet

(In NT$ millions)

3Q15

2Q15

3Q14

Cash & Financial assets-current

168,968

203,124

194,721

Accounts receivable

16,117

12,250

15,418

Inventories

33,981

33,654

24,464

Funds and investments

22,904

19,769

12,179

Intangible assets

64,072

63,907

59,259

Total assets

347,415

371,355

335,083

Short-term loans

57,033

57,491

43,454

Accounts payable

18,667

18,806

21,307

Other current liabilities

31,719

67,397

37,622

Total non-current liabilities

2,922

2,224

1,721

Total equity

237,075

225,438

230,979

MediaTek Inc.

Consolidated Cash Flow Summary

(In NT$ millions)

3Q15

2Q15

3Q14

Net cash provided by (used in) operating activities

658

(1,446)

11,742

Net cash provided by (used in) investing activities

(5,609)

(5,181)

(4,690)

Net cash provided by (used in) financing activities

(35,280)

6,633

(13,726)

Effect of changes in exchange rate on cash and cash equivalents

3,523

(325)

1,607

Net increase (decrease) in cash and cash equivalents

(36,708)

(319)

(5,068)

Cash and cash equivalents at the end of the period

159,116

195,824

185,070

Note: Numbers do not add up due to rounding.