Actions Semiconductor Reports Third Quarter 2014 Results
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Actions Semiconductor Reports Third Quarter 2014 Results

(PRNewswire) — Actions Semiconductor Co., Ltd. (Nasdaq: ACTS) ("Actions Semiconductor" or "the Company"), one of China's leading fabless semiconductor companies that provides comprehensive portable multimedia and mobile internet system-on-a-chip (SoC) solutions for portable consumer electronics, today reported its financial results for the third quarter ended September 30, 2014.

All financial results are reported on a U.S. GAAP basis.

Revenue for the third quarter of 2014 was $13.1 million, as compared to revenue of $12.0 million for the second quarter of 2014, and $16.9 million for the third quarter of 2013.

Net loss attributable to Actions Semiconductor's shareholders for the third quarter of 2014 was $9.2 million or $0.137 per basic and diluted American Depositary Share ("ADS"). This compares to net loss attributable to Actions Semiconductor's shareholders of $3.5 million or $0.050 per basic and diluted ADS, for the second quarter of 2014, and net loss attributable to Actions Semiconductor¡¯s shareholders of $0.2 million or $0.002 per basic and diluted ADS, for the third quarter of 2013.

Actions Semiconductor reported gross margin of 14.6% for the third quarter of 2014, compared to gross margin of 18.4% for the second quarter of 2014, and 33.2% for the third quarter of 2013. Gross margin was impacted by fierce competition in the tablet market and a net inventory write-down that reduced margin by nearly 7%. The Company ended the third quarter with $161.3 million in cash and cash equivalents, together with time deposits, trading securities and marketable securities, current and non-current.

Since the share repurchase program commenced in 2007, the Company has invested approximately $78.9 million in repurchasing its ADSs and ordinary shares, including $25.0 million representing the equivalent of 10.0 million ADSs repurchased through a Dutch auction tender offer in September 2014. As of September 30, 2014, the equivalent of approximately 33.7 million ADSs were repurchased.

"In the third quarter of 2014, revenue came in toward the low end of our expectations, primarily due to a supply shortage of 8-inch wafers for multimedia products from our foundry. Competition in the worldwide tablet market remained intense, keeping selling prices and margins low. Lower gross margin, combined with mask expenses related to our new application processor enabled by 28nm process technology and expenses related to our Dutch auction tender offer contributed to the loss for the quarter," stated Dr. Zhenyu Zhou, CEO of Actions Semiconductor.

"Shipments of dual-core solutions accounted for the majority of tablet shipments during the quarter, and we saw a twofold increase in shipments of quad-core solutions, indicative of the accelerated migration from dual-core to quad-core solutions in the overseas tablet market. We expect another sequential increase in shipments in the fourth quarter, although challenging conditions in the tablet market will persist for the next few quarters.

"As we approach the end of 2014, we believe we are through the most challenging period in our tablet business and are preparing to harvest our investments in 28nm process technology and 64-bit architecture in the year ahead. We recently launched our first 28nm OWL series chipset, the ATM7059, which will target the branded and whitebox tablet market and Over-the-top ("OTT") set-top box market, with a 64-bit solution to be launched before year end. We also see strong potential in the Bluetooth boombox market, especially our Bluetooth 4.0 solutions, which we expect to be a major revenue driver in 2015 following the launch of our RF and audio processing integrated single chip SoC for Bluetooth boomboxes and headphones," Dr. Zhou concluded.

Business Outlook

The following statements are based upon management's current expectations. These statements are forward-looking, and actual results may differ materially. The Company undertakes no obligation to update these statements.

Based on current market trends, the Company expects revenue in the fourth quarter of 2014 to be in the range of $14.0 to $16.0 million. The Company expects a sequential improvement in shipments in the fourth quarter of 2014, although challenging conditions in the tablet market will continue to impact revenue and margins in the near term.

Conference Call Details

Actions Semiconductor's third quarter of fiscal year 2014 teleconference and webcast is scheduled to begin at 8:00 a.m. Eastern Time, on Tuesday, November 4, 2014. To participate in the live call, analysts and investors should dial 1-888-427-9419 (within U.S.) or 1-719-325-2463 (outside U.S.) at least ten minutes prior to the call. The conference ID number is 2795511. Actions Semiconductor will also offer a live and archived webcast of the conference call, accessible from the "Investor Relations" section of the Company's website at www.actions-semi.com. An audio replay of the call will be available to investors through November 14, 2014 by dialing 1-888-203-1112 (within U.S.) or 1-719-457-0820 (outside U.S.) and entering access code 2795511.

About Actions Semiconductor

Actions Semiconductor is one of China's leading fabless semiconductor companies that provides comprehensive portable multimedia and mobile internet system-on-a-chip (SoC) solutions for portable consumer electronics. Actions Semiconductor products include SoCs, firmware, software, solution development kits, as well as detailed specifications of other required components. Actions Semiconductor also provides total product and technology solutions that allow customers to quickly introduce new portable consumer electronics to the mass market in a cost effective way. The Company is headquartered in Zhuhai, China, with offices in Shanghai, Shenzhen, Hong Kong and Taipei. For more information, please visit the Actions Semiconductor website at http://www.actions-semi.com.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995

Statements contained in this release that are not historical facts are forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include statements concerning the outlook for its new products enabled by 28nm process technology and 64-bit CPU for tablets and high-end OTT set-top boxes and new RF and audio processing integrated single chip SoC for Bluetooth boomboxes, customer acceptance of the Actions Semiconductor¡¯s new products and corresponding increases in market share, Actions Semiconductor's belief that it is through the most challenging period in its tablet business and is positioned to capture some upside from its new products and Actions Semiconductor's future expectations with respect to revenue. Actions Semiconductor uses words like "believe," "anticipate," "intend," "estimate," "expect," "project" and similar expressions to identify forward-looking statements, although not all forward-looking statements contain these words. These forward-looking statements are estimates reflecting current assumptions, expectations and projections about future events and involve significant risks, both known and unknown, uncertainties and other factors that may cause Actions Semiconductor's actual performance, financial condition or results of operations to be materially different from those suggested by the forward-looking statements including, among others, customers' cancellation or modification of their orders; our failure to accurately forecast demand for our products; the loss of, or a significant reduction in orders from, any of our significant customers; fluctuations in our operating results; our inability to develop and sell new products; defects in or failures of our products; the expense and uncertainty involved in our customer design-win efforts; the financial viability of the distributors of our products; consumer demand; worldwide economic and political conditions; fluctuations in our costs to manufacture our products; our reliance on third parties to manufacture, test, assemble and ship our products; our ability to retain and attract key personnel; our ability to compete with our competitors; and our ability to protect our intellectual property rights and not infringe the intellectual property rights of others. Other factors that may cause our actual results to differ from those set forth in the forward-looking statements contained in this press release and that may affect our prospects in general are described in our filings with the Securities and Exchange Commission, including our most recently filed Forms F-1, 20-F and 6-Ks. Other unknown or unpredictable factors also could have material adverse effects on Actions Semiconductor's future results, performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this press release may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this press release. Except as required by law, Actions Semiconductor undertakes no obligation and does not intend to update or revise any forward-looking statement to reflect subsequent events or changed assumptions or circumstances.

Investor Contacts:

Elaine Ketchmere, CFA

Ally Xie, CA, CPA

Compass Investor Relations

Semiconductor

eketchmere@compass-ir.com

investor.relations@actions-semi.com

+1-310-528-3031

+86-756-3392353*1018

 

ACTIONS SEMICONDUCTOR CO., LTD.

CONSOLIDATED CONDENSED BALANCE SHEETS

(in thousands of U.S. dollars)








At September 30,


At June 30,


At December 31,


2014


2014


2013


(unaudited)


(unaudited)


(audited)

ASSETS






Current assets:






  Cash and cash equivalents

78,520


60,888


53,263

  Time deposit

161


327


327

  Restricted deposits

38,985


32,463


27,181

  Marketable securities

43,520


79,664


126,607

  Trading securities

74


74


74

  Accounts receivable, net of allowance for doubtful accounts of $379, $185 and $nil
      as of September 30,2014,  June 30, 2014 and December 31, 2013 respectively

4,520


5,196


5,782

  Amount due from a related party

1,032


737


1,301

  Amount due from an equity method investee

46


43


38

  Inventories, net of inventory written-down of $3,747, $2,845 and $1,558 as of
     September 30, 2014, June 30, 2014 and December 31, 2013 respectively

22,806


27,216


20,278

  Prepaid expenses and other current assets

3,563


3,831


3,972

  Income tax recoverable

154


85


67

  Dividend receivable

-


425


-

  Deferred tax assets

848


809


416

Total current assets

194,229


211,758


239,306







  Investments in equity method investees

27,061


26,992


17,843

  Other investments

15,639


15,625


15,648

  Marketable securities

-


16,067


17,139

  Rental deposits

55


61


61

  Property, plant and equipment, net

31,183


30,886


31,896

  Land use right

1,545


1,530


1,588

  Acquired intangible assets, net

17,684


19,115


12,218

  Deposit paid for acquisition of intangible assets

430


489


145

  Deferred tax assets

85


89


99

TOTAL ASSETS

287,911


322,612


335,943







LIABILITIES AND EQUITY






Current liabilities:






  Accounts payable

5,170


7,267


6,016

  Accrued expenses and other current liabilities

9,680


9,521


6,127

  Short-term bank loans

33,500


34,500


35,500

  Other liabilities

1,728


1,698


1,362

  Income tax payable

49


49


49

  Deferred tax liabilities

108


339


343

Total current liabilities

50,235


53,374


49,397







Other liabilities

229


-


412

Deferred tax liabilities

958


988


3,589

Total liabilities

51,422


54,362


53,398

Equity:






 Ordinary shares

1


1


1

 Additional paid-in capital

63,017


63,012


63,001

 Treasury Stock

(70,170)


(45,055)


(44,119)

 Accumulated other comprehensive income

38,919


36,327


40,734

 Retained earnings

204,754


213,997


222,959

Total Actions Semiconductor Co., Ltd. shareholders' equity

236,521


268,282


282,576

Non-controlling interest

(32)


(32)


(31)

Total equity

236,489


268,250


282,545

TOTAL LIABILITIES AND EQUITY

287,911


322,612


335,943

 

ACTIONS SEMICONDUCTOR CO., LTD.

CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS

(in thousands of U.S. dollars, except per share amounts)












Three months ended


Three months ended


Nine months ended


Nine months ended



September 30,


September 30,


September 30,


September 30,



2014


2013


2014


2013



(unaudited)


(unaudited)


(unaudited)


(unaudited)










Revenues:









   System-on-a-chip products


13,084


16,830


36,317


51,710

   Semiconductor product testing services


27


54


81


106

  Total revenues


13,111


16,884


36,398


51,816

Cost of revenues:









   System-on-a-chip products


(11,188)


(11,248)


(29,633)


(34,246)

   Semiconductor product testing services


(11)


(27)


(38)


(45)

Total cost of revenues


(11,199)


(11,275)


(29,671)


(34,291)

Gross profit


1,912


5,609


6,727


17,525

Other operating income


30


501


659


653

Operating expenses:









  Research and development


(10,667)


(6,547)


(24,057)


(19,909)

  General and administrative


(3,130)


(2,133)


(7,954)


(6,217)

  Selling and marketing


(556)


(447)


(1,574)


(1,443)

Total operating expenses


(14,353)


(9,127)


(33,585)


(27,569)

Loss from operations


(12,411)


(3,017)


(26,199)


(9,391)

Other income (expenses)


846


187


(1,651)


1,557

Dividend income from an other investment


-


-


423


493

Interest income


2,029


2,926


7,912


9,117

Interest expense


(87)


(128)


(383)


(352)

(Loss) income before income taxes, equity in net income (loss) of
equity method investees and non-controlling interest


(9,623)


(32)


(19,898)


1,424

Income tax credit (expense)


353


(197)


1,459


(295)

Equity in net income (loss) of equity method investees


27


77


234


(182)

Net (loss) income


(9,243)


(152)


(18,205)


947

Add: Net loss attributable to non-controlling interest


-


-


-


1

Net (loss) income attributable to Actions Semiconductor Co., Ltd.


(9,243)


(152)


(18,205)


948










Net (loss) income attributable to Actions Semiconductor Co., Ltd.









Basic (per share)


(0.023)


(0.000)


(0.044)


0.002

Diluted (per share)

(0.023)


(0.000)


(0.044)


0.002










Basic (per ADS)


(0.137)


(0.002)


(0.267)


0.014

Diluted (per ADS)


(0.137)


(0.002)


(0.267)


0.013










Weighted-average shares used in computation:









Basic


403,462,431


413,849,403


409,491,710


412,083,249

Diluted


403,462,431


413,849,403


409,491,710


425,687,178










Weighted-average ADS used in computation :









Basic


67,243,739


68,974,901


68,248,618


68,680,542

Diluted


67,243,739


68,974,901


68,248,618


70,947,863










Note: Share-based compensation recorded in each









expense classification above is as follows:









  Research and development


3


68


10


273

  General and administrative


1


22


5


54

  Selling and marketing


-


3


-


14

  Cost of revenues


-


-


-


49

 

ACTIONS SEMICONDUCTOR CO., LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands of U.S. dollars)



Three months ended


Nine months ended


Nine months ended


September 30,


September 30,


September 30,


2014


2014


2013


(unaudited)


  (unaudited) 


  (unaudited) 

Operating activities:






Net (loss) income

(9,243)


(18,205)


947

Adjustments to reconcile net (loss) income to net cash provided by






  Operating activities:






  Depreciation of property, plant and equipment

457


1,462


1,564

  Allowance for doubtful accounts receivable

194


379


-

  Amortization of land use right

9


27


27

  Amortization and impairment of acquired intangible assets

1,777


4,138


2,557

  Utilization of subsidy from local authorities of Zhuhai,
  the People's Republic of China ("PRC")

-


-


(222)

  Write down of inventories

902


2,189


583

  Gain on disposal of property, plant and equipment

-


(3)


-

  Loss on disposal of intangible assets

-


415


-

  Share of net (gain) loss of equity method investees

(27)


(234)


182

  Share-based  compensation

5


16


390

  Deferred taxes

(288)


(3,277)


185

  Dividend income from another investment

-


(423)


(493)

  Changes in operating assets and liabilities:






    Accounts receivable

510


862


(1,330)

    Amount due from a related party

(295)


269


340

    Inventories

3,852


(4,858)


(13,748)

    Amount due from an equity method investee

(3)


(8)


4

    Prepaid expenses and other current assets

325


369


6,852

    Accounts payable

(2,158)


(815)


(1,868)

    Accrued expenses and other current liabilities

30


(1,350)


(3,399)

    Income tax recoverable

(68)


(88)


110

    Income tax payable

-


-


1

    Rental deposit received (paid)

7


5


(16)

    Note Receivables

-


-


(37)

  Dividend received

425


425


-

Net cash used in operating activities

(3,589)


(18,705)


(7,371)







Investing activities:






  Investment in an equity method investee

-


(9,016)


(3,712)

  Proceeds from redemption of marketable securities

57,955


153,277


99,532

  Purchase of marketable securities

(4,990)


(53,384)


(82,800)

  Proceeds from disposal of property, plant and equipment

1


20


16

  Purchase of property, plant and equipment

(307)


(1,090)


(522)

  Purchase of intangible assets

(159)


(5,438)


(2,685)

  Increase in restricted deposits

(6,165)


(11,885)


(11,199)

  Decrease in time deposits

162


162


-

  Deposit paid for acquisition of intangible assets

-


(349)


(759)

  Proceeds from disposal of intangible assets

-


24


-

Net cash provided by (used in) investing activities

46,497


72,321


(2,129)







Financing activities:






  Advance subsidy from local authorities of Zhuhai, the PRC

232


232


302

  Proceeds from exercise of share option and restricted stock unit

757


2,410


2,570

  Repurchase of ordinary shares

(25,872)


(28,461)


(3,008)

  Raise of short-term bank loans

-


10,000


5,000

  Repayment of short-term bank loans

(1,000)


(12,000)


-

Net cash (used in) provided by financing activities

(25,883)


(27,819)


4,864







Net increase (decrease) in cash and cash equivalents

17,025


25,797


(4,636)







Cash and cash equivalents at the beginning of the period

60,888


53,263


71,336







Effect of exchange rate changes on cash

607


(540)


1,184

Cash and cash equivalents at the end of the period

78,520


78,520


67,884

SOURCE Actions Semiconductor Co., Ltd.

Contact:
Actions Semiconductor Co., Ltd.
Web: http://www.actions-semi.com