Actions Semiconductor Reports Second Quarter 2014 Results
ZHUHAI, China, August 15, 2014 /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 second quarter ended June 30, 2014.
All financial results are reported on a U.S. GAAP basis.
Revenue for the second quarter of 2014 was $12.0 million, as compared to revenue of $11.3 million for the first quarter of 2014, and $18.5 million for the second quarter of 2013.
Net loss attributable to Actions Semiconductor’s shareholders for the second quarter of 2014 was $3.5 million or $0.050 per basic and diluted American Depositary Share (“ADS”). This compares to net loss attributable to Actions Semiconductor’s shareholders of $5.5 million or $0.080 per basic and diluted ADS, for the first quarter of 2014, and net income attributable to Actions Semiconductor’s shareholders of $0.7 million or $0.010 per basic and diluted ADS, for the second quarter of 2013.
Actions Semiconductor reported gross margin of 18.4% for the second quarter of 2014, compared to gross margin of 23.1% for the first quarter of 2014, and 32.2% for the second quarter of 2013. The Company ended the second quarter with $189.5 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 $53.0 million in repurchasing its shares. As of June 30, 2014, approximately 23.3 million ADSs were repurchased.
“Our second quarter performance reflects unfavorable dynamics in the worldwide tablet market. Overall growth in the tablet market has slowed much more quickly than anticipated and competition has become fiercer, with formidable players rapidly carving market shares in the white box tablet market and putting downward pressure on selling prices. The combination of soft sales and an inventory write-down which reduced gross margin by over 7% contributed to our loss for the quarter,” stated Dr. Zhenyu Zhou, CEO of Actions Semiconductor.
“We expect shipments to improve in the second half of the year, although conditions in the tablet market will remain difficult. We are now anticipating revenue in the second half of 2014 to be slightly below year ago levels with continued pressure on margin. Looking ahead, our recent investments in research and development put us in a strong position to take advantage of the industry-wide transition from 32-bit to 64-bit architecture at an early stage. We expect our future product enabled by 28nm process technology and 64-bit CPU for tablets and high-end OTT set-top boxes, along with our upcoming RF and audio processing integrated single chip SoC for Bluetooth boomboxes, will be key revenue drivers in the year ahead. We also plan to tailor our new 64-bit product for use in chrome books, an area which we believe holds additional growth potential.”
“We are in the process of reorganizing our corporate structure, which will put us in a better position to monetize the vast intellectual property portfolio we have developed over the years, including entering into additional licensing contracts and joint venture agreements, provide greater clarity among our legal entities and give us an edge in the constant battle for engineering and management talent in China,” 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 third quarter of 2014 to be in the range of $13.0 to $15.0 million. The Company expects shipments to improve in the second half of 2014, although persistent, fierce competition in the tablet market will cause revenue in the second half of the year to be slightly below year ago levels.
Conference Call Details
Actions Semiconductor’s second quarter of fiscal year 2014 teleconference and webcast is scheduled to begin at 8:00 a.m. Eastern Time, on Friday, August 15, 2014. To participate in the live call, analysts and investors should dial 1- 888-329-8893 (within U.S.) or 1-719-325-2362 (outside U.S.) at least ten minutes prior to the call. The conference ID number is 3075520. 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 August 25, 2014 by dialing 1-888-203-1112 (within U.S.) or 1-719-457-0820 (outside U.S.) and entering access code 3075520.
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 and Shenzhen. 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 product 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, growth potential for chrome book applications, 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 these trends, the benefits to be achieved from its corporate restructuring 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:
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Elaine Ketchmere, CFA |
Ally Xie, CA, CPA |
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Compass Investor Relations |
Actions Semiconductor |
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+1-310-528-3031 |
+86-756-3392353*1018 |
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ACTIONS SEMICONDUCTOR CO., LTD. |
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CONSOLIDATED CONDENSED BALANCE SHEETS |
|||||
|
(in thousands of U.S. dollars) |
|||||
|
At June 30, |
At March 31, |
At December 31, |
|||
|
2014 |
2014 |
2013 |
|||
|
(unaudited) |
(unaudited) |
(audited) |
|||
|
ASSETS |
|||||
|
Current assets: |
|||||
|
Cash and cash equivalents |
60,888 |
40,596 |
53,263 |
||
|
Time deposit |
327 |
322 |
327 |
||
|
Restricted deposits |
32,463 |
37,823 |
27,181 |
||
|
Marketable securities |
79,664 |
124,509 |
126,607 |
||
|
Trading securities |
74 |
73 |
74 |
||
|
Accounts receivable, net of allowance for doubtful accounts of $185, $23 |
5,196 |
6,784 |
5,782 |
||
|
Amount due from a related party |
737 |
725 |
1,301 |
||
|
Amount due from an equity method investee |
43 |
42 |
38 |
||
|
Inventories, net of inventory written-down of $2,845, $1,965 and |
27,216 |
25,308 |
20,278 |
||
|
Prepaid expenses and other current assets |
3,831 |
3,466 |
3,972 |
||
|
Income tax recoverable |
85 |
46 |
67 |
||
|
Dividend receivable |
425 |
– |
– |
||
|
Deferred tax assets |
809 |
578 |
416 |
||
|
Total current assets |
211,758 |
240,272 |
239,306 |
||
|
Investments in equity method investees |
26,992 |
17,779 |
17,843 |
||
|
Other investments |
15,625 |
15,627 |
15,648 |
||
|
Marketable securities |
16,067 |
16,099 |
17,139 |
||
|
Rental deposits |
61 |
70 |
61 |
||
|
Property, plant and equipment, net |
30,886 |
31,142 |
31,896 |
||
|
Land use right |
1,530 |
1,542 |
1,588 |
||
|
Acquired intangible assets, net |
19,115 |
10,862 |
12,218 |
||
|
Deposit paid for acquisition of intangible assets |
489 |
380 |
145 |
||
|
Deferred tax assets |
89 |
93 |
99 |
||
|
TOTAL ASSETS |
322,612 |
333,866 |
335,943 |
||
|
LIABILITIES AND EQUITY |
|||||
|
Current liabilities: |
|||||
|
Accounts payable |
7,267 |
9,992 |
6,016 |
||
|
Accrued expenses and other current liabilities |
9,521 |
5,024 |
6,127 |
||
|
Short-term bank loans |
34,500 |
40,500 |
35,500 |
||
|
Other liabilities |
1,698 |
1,331 |
1,362 |
||
|
Income tax payable |
49 |
49 |
49 |
||
|
Deferred tax liabilities |
339 |
417 |
343 |
||
|
Total current liabilities |
53,374 |
57,313 |
49,397 |
||
|
Other liabilities |
– |
370 |
412 |
||
|
Deferred tax liabilities |
988 |
3,493 |
3,589 |
||
| Total liabilities |
54,362 |
61,176 |
53,398 |
||
|
Equity: |
|||||
|
Ordinary shares |
1 |
1 |
1 |
||
|
Additional paid-in capital |
17,957 |
18,584 |
18,882 |
||
|
Accumulated other comprehensive income |
36,327 |
36,672 |
40,734 |
||
|
Retained earnings |
213,997 |
217,464 |
222,959 |
||
|
Total Actions Semiconductor Co., Ltd. shareholders’ equity |
268,282 |
272,721 |
282,576 |
||
|
Non-controlling interest |
(32) |
(31) |
(31) |
||
|
Total equity |
268,250 |
272,690 |
282,545 |
||
|
TOTAL LIABILITIES AND EQUITY |
322,612 |
333,866 |
335,943 |
||
|
ACTIONS SEMICONDUCTOR CO., LTD. |
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CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS |
||||||||
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(in thousands of U.S. dollars, except number of shares and per share amounts) |
||||||||
|
Three months ended |
Three months ended |
Six months ended |
Six months ended |
|||||
|
June 30, |
June 30, |
June 30, |
June 30, |
|||||
|
2014 |
2013 |
2014 |
2013 |
|||||
|
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
|||||
|
Revenues: |
||||||||
|
Third-parties: |
||||||||
|
System-on-a-chip products |
10,317 |
16,923 |
19,883 |
32,692 |
||||
|
Semiconductor product testing services |
27 |
35 |
54 |
52 |
||||
|
10,344 |
16,958 |
19,937 |
32,744 |
|||||
|
Related-parties: |
||||||||
|
System-on-a-chip products |
1,631 |
1,559 |
3,350 |
2,188 |
||||
|
Total revenues |
11,975 |
18,517 |
23,287 |
34,932 |
||||
|
Cost of revenues: |
||||||||
|
Third-parties: |
||||||||
|
System-on-a-chip products |
(8,411) |
(11,446) |
(15,862) |
(21,509) |
||||
|
Semiconductor product testing services |
(9) |
(13) |
(27) |
(18) |
||||
|
(8,420) |
(11,459) |
(15,889) |
(21,527) |
|||||
|
Related-parties: |
||||||||
|
System-on-a-chip products |
(1,356) |
(1,090) |
(2,583) |
(1,489) |
||||
|
Total cost of revenues |
(9,776) |
(12,549) |
(18,472) |
(23,016) |
||||
|
Gross profit |
2,199 |
5,968 |
4,815 |
11,916 |
||||
|
Other operating income |
150 |
78 |
629 |
152 |
||||
|
Operating expenses: |
||||||||
|
Research and development |
(6,614) |
(7,340) |
(13,390) |
(13,362) |
||||
|
General and administrative |
(2,787) |
(2,107) |
(4,824) |
(4,084) |
||||
|
Selling and marketing |
(634) |
(501) |
(1,018) |
(996) |
||||
|
Total operating expenses |
(10,035) |
(9,948) |
(19,232) |
(18,442) |
||||
|
Loss from operations |
(7,686) |
(3,902) |
(13,788) |
(6,374) |
||||
|
Other income (expenses) |
7 |
1,150 |
(2,497) |
1,370 |
||||
|
Dividend income from an other investment |
423 |
493 |
423 |
493 |
||||
|
Interest income |
2,803 |
2,993 |
5,883 |
6,191 |
||||
|
Interest expense |
(159) |
(124) |
(296) |
(224) |
||||
|
(Loss) income before income taxes, equity in net |
(4,612) |
610 |
(10,275) |
1,456 |
||||
|
income (loss) of equity method investees |
||||||||
|
and non-controlling interest |
||||||||
|
Income tax credit (expense) |
941 |
255 |
1,106 |
(98) |
||||
|
Equity in net income (loss) of equity method investees |
204 |
(186) |
207 |
(259) |
||||
|
Net (loss) income |
(3,467) |
679 |
(8,962) |
1,099 |
||||
|
Add: Net loss attributable to non-controlling interest |
– |
– |
– |
1 |
||||
|
Net (loss) income attributable to Actions Semiconductor Co., Ltd. |
(3,467) |
679 |
(8,962) |
1,100 |
||||
|
Net (loss) income attributable to Actions Semiconductor Co., Ltd. |
||||||||
|
Basic (per share) |
(0.008) |
0.002 |
(0.022) |
0.003 |
||||
|
Diluted (per share) |
(0.008) |
0.002 |
(0.022) |
0.003 |
||||
|
Basic (per ADS) |
(0.050) |
0.010 |
(0.130) |
0.016 |
||||
|
Diluted (per ADS) |
(0.050) |
0.010 |
(0.130) |
0.016 |
||||
|
Weighted-average shares used in computation: |
||||||||
|
Basic |
413,599,856 |
412,242,251 |
412,556,305 |
411,185,535 |
||||
|
Diluted |
413,599,856 |
427,401,804 |
412,556,305 |
424,606,224 |
||||
|
Weighted-average ADS used in computation : |
||||||||
|
Basic |
68,933,309 |
68,707,042 |
68,759,384 |
68,530,923 |
||||
|
Diluted |
68,933,309 |
71,233,634 |
68,759,384 |
70,767,704 |
||||
|
Note: Share-based compensation recorded in each |
||||||||
|
expense classification above is as follows: |
||||||||
|
Research and development |
3 |
41 |
7 |
205 |
||||
|
General and administrative |
2 |
16 |
4 |
69 |
||||
|
Selling and marketing |
– |
3 |
– |
11 |
||||
|
Cost of revenues |
– |
15 |
– |
15 |
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|
ACTIONS SEMICONDUCTOR CO., LTD. |
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|
CONSOLIDATED STATEMENTS OF CASH FLOWS |
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|
(in thousands of U.S. dollars) |
|||||
|
Three months ended |
Six months ended |
Six months ended |
|||
|
June 30, |
June 30, |
June 30, |
|||
|
2014 |
2014 |
2013 |
|||
|
(unaudited) |
(unaudited) |
(unaudited) |
|||
|
Operating activities: |
|||||
|
Net (loss) income |
(3,467) |
(8,962) |
1,099 |
||
|
Adjustments to reconcile net (loss) income to net cash provided by |
|||||
|
Operating activities: |
|||||
|
Depreciation of property, plant and equipment |
502 |
1,005 |
1,055 |
||
|
Allowance for doubtful accounts receivable |
185 |
185 |
– |
||
|
Amortization of land use right |
9 |
18 |
18 |
||
|
Amortization of acquired intangible assets |
1,223 |
2,361 |
1,709 |
||
|
Utilization of subsidy from local authorities of Zhuhai, the People’s Republic of China (“PRC”) |
– |
– |
(59) |
||
|
Write down of inventories |
1,287 |
1,287 |
583 |
||
|
(Gain) loss on disposal of property, plant and equipment |
– |
(3) |
11 |
||
|
Loss on disposal of intangible assets |
415 |
415 |
– |
||
|
Share of net (gain) loss of equity method investees |
(204) |
(207) |
259 |
||
|
Share-based compensation |
5 |
11 |
300 |
||
|
Deferred taxes |
(2,810) |
(2,989) |
78 |
||
|
Dividend income from an other investment |
(423) |
(423) |
(493) |
||
|
Changes in operating assets and liabilities: |
|||||
|
Accounts receivable |
1,398 |
352 |
41 |
||
|
Amount due from a related party |
(12) |
564 |
(559) |
||
|
Amount due from an equity method investee |
(1) |
(5) |
24 |
||
|
Inventories |
(3,242) |
(8,710) |
(16,138) |
||
|
Prepaid expenses and other current assets |
(371) |
44 |
3,377 |
||
|
Income tax recoverable |
(39) |
(20) |
(82) |
||
|
Accounts payable |
(2,715) |
1,343 |
10,780 |
||
|
Accrued expenses and other current liabilities |
(148) |
(1,380) |
(3,350) |
||
|
Income tax payable |
– |
– |
103 |
||
|
Rental deposit received (paid) |
9 |
(2) |
(9) |
||
|
Net cash used in operating activities |
(8,399) |
(15,116) |
(1,253) |
||
|
Investing activities: |
|||||
|
Investment in an equity method investee |
(9,016) |
(9,016) |
(3,712) |
||
|
Proceeds from redemption of marketable securities |
53,890 |
95,322 |
80,513 |
||
|
Purchase of marketable securities |
(9,110) |
(48,394) |
(27,004) |
||
|
Proceeds from disposal of property, plant and equipment |
1 |
19 |
– |
||
|
Purchase of property, plant and equipment |
(300) |
(783) |
(149) |
||
|
Purchase of intangible assets |
(5,259) |
(5,279) |
(498) |
||
|
Decrease (increase) in restricted deposits |
5,301 |
(5,720) |
(5,296) |
||
|
Deposit paid for acquisition of intangible assets |
(109) |
(349) |
– |
||
|
Proceeds from disposal of intangible assets |
– |
24 |
– |
||
|
Net cash provided by investing activities |
35,398 |
25,824 |
43,854 |
||
|
Financing activities: |
|||||
|
Advance subsidy from local authorities of Zhuhai, the PRC |
– |
– |
290 |
||
|
Proceeds from exercise of share option and restricted stock unit |
896 |
1,653 |
2,207 |
||
|
Repurchase of ordinary shares |
(1,528) |
(2,589) |
(2,182) |
||
|
Raise of short-term bank loans |
– |
10,000 |
– |
||
|
Repayment of short-term bank loans |
(6,000) |
(11,000) |
– |
||
|
Net cash (used in) provided by financing activities |
(6,632) |
(1,936) |
315 |
||
|
Net increase in cash and cash equivalents |
20,367 |
8,772 |
42,916 |
||
|
Cash and cash equivalents at the beginning of the period |
40,596 |
53,263 |
71,336 |
||
|
Effect of exchange rate changes on cash |
(75) |
(1,147) |
995 |
||
|
Cash and cash equivalents at the end of the period |
60,888 |
60,888 |
115,247 |
||