2017 Q3 Financial Results

MediaTek Inc. Reports Third Quarter 2017 Consolidated Results

MediaTek discloses Taiwan-International Financial Reporting Standards (TIFRS) financial measures and also provides Non-Taiwan-International Financial Reporting Standards (Non-TIFRS)Note1 financial measures as supplemental information. Non-TIFRS financial information should be considered in addition to, not as a substitute for, TIFRS financial information. Earnings distribution is made in accordance with financial statements based on TIFRS.

Taiwan-International Financial Reporting Standards (TIFRS) financial measures

Consolidated Revenue

MediaTek Inc. today announced financial results of third-quarter ended September 30, 2017. The third-quarter revenue was NT$63,651 million, up 9.6% sequentially, and down 18.8% year-over-year. The quarter-over-quarter increase was mainly due to increasing seasonal demand of certain consumer electronics. The year-over-year decrease was mainly due to lower smartphone shipments.

Consolidated Gross Profit and Gross Margin

The third-quarter gross profit was NT$23,182 million, up 14% sequentially, and down 16.1% year-over-year. Gross margin for the quarter was 36.4%, up 1.4 percentage points sequentially, and up 1.2 percentage points year-over-year. The quarter-over-quarter and year-over year increases were mainly due to a favorable product mix.

Consolidated Operating Expenses

Operating expenses for the quarter was NT$18,223 million (28.6% of revenue), compared with NT$17,972 million (30.9% of revenue) in the previous quarter, and NT$19,995 million (25.5% of revenue) in the same period last year. The quarter-over-quarter increase was mainly due to higher R&D expenses. The year-over-year decrease was mainly due to lower shipment-related expenses for the quarter.

Operating expenses for the quarter included:

Consolidated Operating Income and Operating Margin 

Operating income for the quarter was NT$4,959 million, up 110.3% sequentially, and down 34.9% year-over-year. Operating margin for the quarter was 7.8%, increased from 4.1% in the previous quarter, and decreased from 9.7% in the year-ago quarter.

Consolidated Non-operating Income (loss) and Income Tax

Non-operating income for the quarter was NT$662 million, or 1% of revenue. It was mainly from interest income and dividend income. Income tax expense for the quarter was NT$560 million.

Consolidated Net Income, Net Profit Margin and EPS

Net income for the quarter was NT$5,061 million, up 129% sequentially, and down 35.4% year-over-year. Net profit margin for the quarter was 8%, increased from 3.8% in the previous quarter, and decreased from 10% in the year-ago quarter. EPS was NT$3.26, compared with NT$1.51 in the prior quarter and NT$4.98 in the year-ago quarter.

Consolidated Cash and Financial Assets-Current

Cash and financial assets-current at the end of the quarter was NT$148,858 million. This represents 37.9% of the company’s total assets. Cash and financial assets-current was NT$154,945 million and NT$155,684 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$21,771 million. The accounts receivable turnover was 30 days based on quarterly average net receivables divided by annualized net revenue. The turnover was lower than the 31 days in the last quarter, and higher than the 26 days in the year-ago quarter.

Consolidated Inventory

Net inventory was NT$36,146 million at the end of the quarter. The inventory turnover was 85 days based on quarterly average inventory divided by annualized cost of goods sold. The turnover was lower than the 93 days in the last quarter, and higher than the 63 days in the year-ago quarter.

Consolidated Cash Flow from Operations 

Net cash provided by operating activities during the quarter was NT$6,948 million, compared with net cash used in operating activities of NT$1,156 million in the prior quarter, and net cash provided by operating activities of NT$3,170 million in the year-ago quarter.

Earnings Webcast

MediaTek will hold a public webcast today (October 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 4:00 – 5:00 p.m. (Taiwan Time)

http://wms.gridow.com/ir/mediatek/tw/mediatek_2017Q3_tw.html

In English 5:30 – 6:30 p.m. (Taiwan Time)

http://wms.gridow.com/ir/mediatek/en/mediatek_2017Q3_en.html

Dial-in Number: +886-2-21928016

Password: 276135#

About MediaTek Inc.

MediaTek Incorporated (TWSE: 2454) is a global fabless semiconductor company that enables 1.5 billion connected devices a year. We are a market leader in developing innovative systems-on-chip (SoC) for mobile device, home entertainment, connectivity and IoT products. Our dedication to innovation has positioned us as a driving market force in several key technology areas, including highly power-efficient mobile technologies and advanced multimedia solutions across a broad range of products such as smartphones, tablets, digital televisions, OTT boxes, wearables and automotive solutions. MediaTek empowers and inspires people to expand their horizons and more easily achieve their goals through smart technology. We call this idea Everyday Genius and it drives everything we do. Visit www.mediatek.com for more information.


Taiwan-International Financial Reporting Standards (TIFRS)

MediaTek Inc.

Consolidated Income Statement (Unaudited)

(In NT$ millions, except EPS)

3Q17

2Q17

3Q16

Q-Q

Y-Y

Net Sales

63,651

58,079

78,403

9.6%

(18.8%)

Operating costs

(40,469)

(37,749)

(50,787)

Gross profit

23,182

20,330

27,617

14.0%

(16.1%)

Selling expenses

(2,332)

(2,715)

(3,532)

Administration expenses

(1,693)

(1,632)

(1,871)

R&D expenses

(14,199)

(13,624)

(14,592)

Operating expenses

(18,223)

(17,972)

(19,995)

Operating income

4,959

2,358

7,622

110.3%

(34.9%)

Net non-operating income

662

1,022

993

Net income before income tax

5,621

3,380

8,615

Income tax expense

(560)

(1,170)

(785)

Net income

5,061

2,210

7,830

129.0%

(35.4%)

EPS attributable to the parent(NT$)

3.26

1.51

4.98

Note: Sums may not equal totals due to rounding.


MediaTek Inc.

Consolidated Income Statement (Percentage of Revenue)

3Q17

2Q17

3Q16

Gross profit

36.4%

35.0%

35.2%

Selling expenses

(3.7%)

(4.7%)

(4.5%)

Administration expenses

(2.7%)

(2.8%)

(2.4%)

R&D expenses

(22.3%)

(23.5%)

(18.6%)

Operating income

7.8%

4.1%

9.7%

Non-operating income

1.0%

1.8%

1.3%

Income tax expense

(0.9%)

(2.0%)

(1.0%)

Net income

8.0%

3.8%

10.0%

Note: Sums may not equal totals due to rounding.


MediaTek Inc.

Consolidated Balance Sheet (Unaudited)

(In NT$ millions)

3Q17

2Q17

3Q16

Cash & financial assets-current

148,858

154,945

155,684

Accounts receivable

21,771

20,581

24,331

Inventories

36,146

39,617

36,630

Other current assets

16,817

23,066

12,472

Funds and investments

50,123

45,861

25,461

Intangible assets

77,045

77,803

72,848

Other non-current assets

41,720

41,438

40,768

Total assets

392,481

403,312

368,194

Short-term loans

63,230

63,237

64,555

Accounts payable

27,943

30,901

30,219

Other current liabilities

36,390

51,638

39,381

Total non-current liabilities

7,018

6,687

3,921

Total equity

257,900

250,849

230,118

Note: Sums may not equal totals due to rounding.


MediaTek Inc.

Consolidated Cash Flow Summary (Unaudited)

(In NT$ millions)

3Q17

2Q17

3Q16

Net cash provided by (used in) operating activities

6,948

(1,156)

3,170

Net cash provided by (used in) investing activities

1,358

(2,410)

(4,864)

Net cash provided by (used in) financing activities

(17,315)

2,422

(11,629)

Effect of changes in exchange rate on cash and cash equivalents

(13)

479

(2,663)

Net increase (decrease) in cash and cash equivalents

(9,021)

(666)

(15,985)

Cash and cash equivalents at the end of the period

129,462

138,483

143,944

Note: Sums may not equal totals due to rounding.


Supplemental Information

Reconciliations of TIFRS Results to Non-TIFRS ResultsNote2

(In NT$ millions)

3Q17

2Q17

3Q16

Q-Q

Y-Y

TIFRS operating income

4,959

2,358

7,622

TIFRS net income

5,061

2,210

7,830

TIFRS EPS(NT$)

3.26

1.51

4.98

Non-TIFRS reconciliation items

538

711

513

Share-based compensation

215

246

111

Amortization of acquisition related assets

407

587

481

Tax effect

(84)

(123)

(79)

Non-TIFRS operating income

5,580

3,192

8,214

74.8%

(32.1%)

Non-TIFRS operating income margin (%)

8.8%

5.5%

10.5%

Non-TIFRS net income

5,598

2,921

8,343

91.6%

(32.9%)

Non-TIFRS net income margin (%)

8.8%

5.0%

10.6%

Non-TIFRS EPS(NT$)

3.61

1.96

5.31

Note1: Sums may not equal totals due to rounding.

Note2: Non-TIFRS financial information should be considered in addition to, not as a substitute for, TIFRS financial information. Reconciliations between TIFRS and Non-TIFRS results include share-based compensation, amortization of acquisition related assets, tax effect and other items. Earnings distribution is made in accordance with financial statements based on TIFRS.