Actions Semiconductor Reports Fourth Quarter and Full Year 2014 Results

Feb 03, 2015, 07:30 ET from Actions Semiconductor Co., Ltd.

ZHUHAI, China, Feb. 3, 2015 /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 fourth quarter and year ended December 31, 2014.

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

Revenue for the fourth quarter of 2014 was $13.9 million, as compared to revenue of $13.1 million for the third quarter of 2014, and $17.6 million for the fourth quarter of 2013.

Revenue for the year ended December 31, 2014 was $50.3 million, compared to $69.4 million for the year ended December 31, 2013.

Net loss attributable to Actions Semiconductor's shareholders for the fourth quarter of 2014 was $12.2 million or $0.206 per basic and diluted American Depositary Share ("ADS"). This compares to net loss attributable to Actions Semiconductor's shareholders of $9.2 million or $0.137 per basic and diluted ADS, for the third quarter of 2014, and net loss attributable to Actions Semiconductor's shareholders of $0.8 million or $0.012 per basic and diluted ADS, for the fourth quarter of 2013.

Net loss attributable to Actions Semiconductor's shareholders for the year ended December 31, 2014 was $30.4 million or $0.461 per basic and diluted ADS. This compares to a net income attributable to Actions Semiconductor's shareholders of $0.1 million or $0.002 per basic and diluted ADS, for the year ended December 31, 2013.

Actions Semiconductor reported gross margin of negative 19.2% for the fourth quarter of 2014, compared to gross margin of 14.6% for the third quarter of 2014, and 22.2% for the fourth quarter of 2013. Gross margin was impacted by fierce competition in the tablet market and a significant inventory write-down that reduced margin by nearly 30%. The Company ended the fourth quarter with $168.2 million in cash and cash equivalents, together with time deposits, trading securities and marketable securities.

Since the share repurchase program commenced in 2007, the Company has invested approximately $79.4 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 December 31, 2014, the equivalent of approximately 33.9 million ADSs were repurchased.

"In the fourth quarter of 2014, revenue came in toward the low end of our expectations, primarily due to the lingering effects of a supply shortage of wafers for multimedia products from our foundry, along with relatively flat demand and persistent, intense competition in the worldwide tablet market. Negative gross margin, along with a non-cash impairment charge of intangibles related to the reorganization of our corporate structure contributed to the loss for the quarter," stated Dr. Zhenyu Zhou, CEO of Actions Semiconductor.

"As our financial performance demonstrates, 2014 was a challenging year for Actions. Despite these challenges, we were steadfast in our commitment to invest in our future and expect to generate strong results in the year ahead. We are optimistic the recent launches of two new chipsets based on 28 nm process technology, including our ultra-high performance 64-bit, quad-core solution, the ATM9009, will allow us to compete more effectively in the application processor market including the tablet market, the OTT set-top box market and other cloud connected device market. These value-added application processor markets will move Actions beyond tablets into new and profitable growth markets. In our multimedia business, Bluetooth will be the driving force in 2015 and beyond. We expect our newly launched single-chip Bluetooth 4.0 solution for boomboxes, speakers, headphones and related products will establish Actions as a significant player in the rapidly growing Bluetooth voice and music market."

"Supported by these recent product launches, we are targeting revenue growth of 20% to 25% and a good margin improvement in 2015. We will also focus on cost control, with the goal of reducing operating expenses from 2014 levels," 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 first quarter of 2015 to be in the range of $9.5 to $11.5 million. The Company's newly launched products are not expected to contribute to first quarter results, as sales volumes will begin to ramp in the second quarter of 2015. In addition, the first quarter of the year is traditionally the seasonally slowest quarter due to the Chinese New Year holiday, which causes a slowdown in production by consumer electronics manufacturers in China for approximately three to four weeks.

Conference Call Details

Actions Semiconductor's fourth quarter of fiscal year 2014 teleconference and webcast is scheduled to begin at 8:00 a.m. Eastern Time, on Tuesday, February 3, 2015. To participate in the live call, analysts and investors should dial 1-888-299-7209 (within U.S.) or 1-719-325-2464 (outside U.S.) at least ten minutes prior to the call. The conference ID number is 9195995. 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 February 13, 2015 by dialing 1-888-203-1112 (within U.S.) or 1-719-457-0820 (outside U.S.) and entering access code 9195995.

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 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 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

Actions 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 December 31,


At September 30,


At December 31,


2014


2014


2013


(unaudited)


(unaudited)


(audited)

ASSETS






Current assets:






  Cash and cash equivalents

78,177


78,520


53,263

  Time deposit

5


161


347

  Restricted deposits

51,590


38,985


27,161

  Marketable securities

38,384


43,520


126,607

  Trading securities

70


74


74

  Accounts receivable, net of allowance for doubtful accounts of $558, $379 and $nil as of December 31, 2014, September 30, 2014 and December 31, 2013, respectively

2,832


4,520


5,782

  Amount due from a related party

1,650


1,032


1,301

  Notes receivable

161


-


-

  Amount due from an equity method investee

41


46


38

  Inventories, net of inventory written-down of $7,718, $3,747 and $1,558 as of December 31, 2014, September 30, 2014 and December 31, 2013, respectively

13,970


22,806


20,278

  Prepaid expenses and other current assets

4,511


3,563


3,972

  Income tax recoverable

186


154


67

  Deferred tax assets

1,179


848


416

Total current assets

192,756


194,229


239,306







  Investments in equity method investees

27,352


27,061


17,843

  Other investments 

15,627


15,639


15,648

  Marketable securities

-


-


17,139

  Rental deposits

54


55


61

  Property, plant and equipment, net

30,327


31,183


31,896

  Land use right

1,514


1,545


1,588

  Acquired intangible assets, net

16,459


17,684


12,218

  Deposit paid for acquisition of intangible assets

538


430


145

  Deferred tax assets

53


85


99

TOTAL ASSETS

284,680


287,911


335,943







LIABILITIES AND EQUITY






Current liabilities:






  Accounts payable

6,049


5,170


6,016

  Accrued expenses and other current liabilities

8,349


9,680


6,127

  Short-term bank loans

45,000


33,500


35,500

  Other liabilities

1,929


1,728


1,362

  Income tax payable

49


49


49

  Deferred tax liabilities

160


108


343

Total current liabilities

61,536


50,235


49,397







  Other liabilities

-


229


412

  Payable for acquisition of intangible assets

155


-


-

  Deferred tax liabilities

919


958


3,589

Total liabilities

62,610


51,422


53,398

Equity:






 Ordinary shares

1


1


1

 Additional paid-in capital

63,046


63,017


63,001

 Treasury Stock

(70,479)


(70,170)


(44,119)

 Accumulated other comprehensive income

36,937


38,919


40,734

 Retained earnings

192,598


204,754


222,959

Total Actions Semiconductor Co., Ltd. shareholders' equity

222,103


236,521


282,576

Non-controlling interest

(33)


(32)


(31)

Total equity

222,070


236,489


282,545

TOTAL LIABILITIES AND EQUITY

284,680


287,911


335,943

 

ACTIONS SEMICONDUCTOR CO., LTD.

CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS

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












Three months ended


Three months ended


Year ended


Year ended



December 31,


December 31,


December 31,


December 31,



2014


2013


2014


2013



(unaudited)


(unaudited)


(unaudited)


(audited)










Revenues:









  Third-parties:









   System-on-a-chip products


10,425


15,095


40,932


64,617

   Semiconductor product testing services


36


29


117


135



10,461


15,124


41,049


64,752

  Related-parties:









   System-on-a-chip products


3,401


2,451


9,211


4,639

  Total revenues


13,862


17,575


50,260


69,391

Cost of revenues:









  Third-parties:









   System-on-a-chip products


(12,920)


(11,567)


(37,743)


(44,324)

   Semiconductor product testing services


(18)


(13)


(46)


(58)



(12,938)


(11,580)


(37,789)


(44,382)

  Related-parties:









   System-on-a-chip products


(3,585)


(2,094)


(8,405)


(3,583)

  Total cost of revenues


(16,523)


(13,674)


(46,194)


(47,965)

Gross (loss) profit


(2,661)


3,901


4,066


21,426

Other operating income


231


1,517


890


2,170

Operating expenses:









  Research and development


(7,066)


(6,086)


(31,123)


(25,994)

  General and administrative


(2,661)


(2,547)


(10,330)


(8,764)

  Selling and marketing


(601)


(614)


(2,175)


(2,057)

  Impairment on intangible assets


(535)


-


(820)


-

Total operating expenses


(10,863)


(9,247)


(44,448)


(36,815)

Loss from operations


(13,293)


(3,829)


(39,492)


(13,219)

Other (expense) income


(1,085)


779


(2,736)


2,336

Dividend income from an other investment


-


-


423


493

Other-than-temporary impairment loss on investments


-


(681)


-


(681)

Interest income


1,699


3,241


9,611


12,358

Interest expense


(147)


(146)


(530)


(498)

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


(12,826)


(636)


(32,724)


789

Income tax credit (expense) 


337


(108)


1,796


(403)

Equity in net income (loss) of equity method investees


332


(82)


566


(264)

Net (loss) income


(12,157)


(826)


(30,362)


122

Less: Net loss attributable to non-controlling interest


1


1


1


2

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


(12,156)


(825)


(30,361)


124










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









Basic (per share)


(0.034)


(0.002)


(0.077)


0.000

Diluted (per share)


(0.034)


(0.002)


(0.077)


0.000










Basic (per ADS)


(0.206)


(0.012)


(0.461)


0.002

Diluted (per ADS)


(0.206)


(0.012)


(0.461)


0.002










Weighted-average shares used in computation:









Basic


353,508,683


412,162,575


395,380,921


412,103,255

Diluted


353,508,683


412,162,575


395,380,921


425,415,011










Weighted-average ADS used in computation :









Basic


58,918,114


68,693,763


65,896,820


68,683,876

Diluted


58,918,114


68,693,763


65,896,820


70,902,502










Note: Share-based compensation recorded in each









expense classification above is as follows:









  Research and development


-


74


10


347

  General and administrative


-


25


5


79

  Selling and marketing


1


3


1


17

  Cost of revenues


28


-


28


49

 

ACTIONS SEMICONDUCTOR CO., LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands of U.S. dollars)


Three months ended


Year ended


Year ended


December 31,


December 31,


December 31,


2014


2014


2013


(unaudited)


  (unaudited)  


  (audited)  

Operating activities:






Net (loss) income

(12,157)


(30,362)


122

Adjustments to reconcile net (loss) income to net cash provided by operating activities:






  Depreciation of property, plant and equipment

487


1,949


2,072

  Amortization of land use right

9


36


36

  Amortization of acquired intangible assets

1,138


4,991


3,480

  Allowance for doubtful accounts receivable

179


558


-

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

-


-


(1,068)

  Write down of inventories

3,971


6,160


-

  Gain (Loss) on disposal of property, plant and equipment 

2


(1)


-

  Loss on disposal of intangible assets

5


420


-

  Share of net (income) loss of equity method investees

(330)


(564)


264

  Share-based  compensation

29


45


492

  Deferred tax

(299)


(3,576)


279

  Dividend income from an other investment

-


(423)


(493)

  Impairment loss recognised in respect of other investments

-


-


681

  Impairment loss recognised in respect of intangible assets

535


820


-

  Changes in operating assets and liabilities:






    Accounts receivable

1,487


2,349


195

    Amount due from a related party

(618)


(349)


(961)

    Inventories

4,602


(256)


(7,821)

    Amount due from an equity method investee

5


(3)


41

    Prepaid expenses and other current assets

(1,122)


(753)


922

    Accounts payable

901


86


(2,198)

    Accrued expenses and other current liabilities

935


(415)


(3,717)

    Income tax recoverable

(34)


(122)


123

    Income tax payable

1


1


2

    Rental deposit received (paid) 

-


5


(11)

    Note Receivables

(161)


(161)


-

    Dividend received

-


425


-







Net cash used in operating activities

(435)


(19,140)


(7,560)







Investing activities:






  Investment in an equity method investee

-


(9,016)


(3,712)

  Proceeds from redemption of marketable securities

6,019


159,296


112,966

  Purchase of marketable securities

(906)


(54,290)


(113,329)

  Proceeds from disposal of property, plant and equipment

-


20


41

  Purchase of property, plant and equipment

(66)


(1,156)


(706)

  Purchase of intangible assets

(2,606)


(8,044)


(4,134)

  Decrease (increase) in time deposits

156


318


(340)

  Deposit paid for acquisition of intangible assets

(108)


(457)


(145)

  Increase in restricted deposits

(13,089)


(24,974)


(16,819)

  Proceeds from disposal of intangible assets

-


24


-







Net cash (used in) provided by investing activities

(10,600)


61,721


(26,178)







Financing activities:






  Advance subsidy from local authorities of Zhuhai, the PRC

-


232


714

  Proceeds from exercise of share-based awards

132


2,542


3,041

  Repurchase of ordinary shares

(441)


(28,902)


(4,853)

  Raise of short-term bank loans

21,500


31,500


15,000

  Repayment of short-term bank loans

(10,000)


(22,000)


-

Net cash provided by (used in) financing activities

11,191


(16,628)


13,902







Net increase (decrease) in cash and cash equivalents

156


25,953


(19,836)







Cash and cash equivalents at the beginning of the period

78,520


53,263


71,336







Effect of exchange rate changes on cash

(499)


(1,039)


1,763

Cash and cash equivalents at the end of the period

78,177


78,177


53,263

SOURCE Actions Semiconductor Co., Ltd.



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