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Actions Semiconductor Reports Fourth Quarter and Full Year 2015 Results

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ZHUHAI, China, March 31, 2016 /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 full year ended December 31, 2015.

Commenting on the fourth quarter results, Dr. Zhenyu Zhou, CEO of Actions Semiconductor said, "Revenue in the fourth quarter came in at the high end of expectations, primarily due to strong shipments of our latest solutions for Bluetooth-enabled devices and HD video boomboxes.  In our application processor business, sluggish global demand for consumer electronics adversely impacted shipments of our tablet and OTT set-top box solutions.  Smart product SoCs, including our open source SoCs and reference design platforms, still account for a small portion of our shipments but are contributing favorably to gross margin.

"Reflecting on our performance in 2015, we entered the year with a strategy to increase revenue, improve gross margin and reduce expenses.   Although market conditions and competition in the tablet and OTT set-top box markets prohibited us from achieving revenue growth in 2015, we were successful in establishing a meaningful position in the Bluetooth audio and music market and introducing a number of new products targeting profitable and growing end markets.  We also achieved a solid improvement in gross margin and reduced R&D expenses without sacrificing our ability to compete effectively. 

"This year has gotten off to a turbulent start, with the weakening global economy and slower growth in China contributing to what is expected to be the largest slump in the technology sector since the global recession.  However, we still see opportunities for growth, particularly in the Bluetooth and OTT set-top box markets, and we will strive to increase revenue in the year ahead.  We also expect R&D expenditures in 2016 to be below 2015 levels," Dr. Zhou concluded.

Fourth Quarter 2015 Results

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

Revenue for the fourth quarter of 2015 was $11.9 million, as compared to revenue of $13.0 million for the third quarter of 2015, and $13.9 million for the fourth quarter of 2014. 

Actions Semiconductor reported gross profit in the fourth quarter of $1.3 million, as compared with $3.5 million in the third quarter of 2015 and a gross loss of $2.7 million in the fourth quarter of 2014.  Gross margin was 11.1% for the fourth quarter of 2015, compared to gross margin of 26.6% for the third quarter of 2015, and negative 19.2% for the fourth quarter of 2014.  The quarter-over-quarter decrease in gross margin was primarily the result of a write-down of certain slower moving inventory which reduced gross margin by about 9%.   In the year ago period the Company recorded a significant inventory write-down that reduced gross margin by nearly 30%. 

Operating expenses in the fourth quarter of 2015 were $9.1 million, as compared to $16.4 million in the third quarter of 2015 and $10.9 million in the fourth quarter of 2014.

Research and development expenses were $6.4 million for the fourth quarter, as compared to $8.3 million in the third quarter of 2015 and $7.1 million in the fourth quarter of 2014. The quarter-over-quarter and year-over-year decreases were mainly due to higher mask expenses in each of the comparable periods.

General and administrative expenses were $2.3 million in the fourth quarter, as compared to $3.1 million in the third quarter of 2015 and $2.7 million in the fourth quarter of 2014.  The Company recorded $0.6 million in expenses related to its Dutch auction tender offer in the third quarter of 2015.

Selling and marketing expenses were $0.5 million for the fourth quarter, as compared to $0.5 million in the third quarter of 2015 and $0.6 million in the fourth quarter of 2014.

Impairment of intangible assets was nil for the fourth quarter, as compared to $4.5 million in the third quarter of 2015 and $0.5 million in the fourth quarter of 2014.

Operating loss for the fourth quarter of 2015 was $6.5 million, as compared to the operating loss of $12.0 million in the third quarter of 2015 and the operating loss of $13.3 million in the fourth quarter of 2014.

Other expense for the fourth quarter of 2015 was $1.3 million, due to an unrealized, non-cash foreign exchange loss associated with the depreciation of the Chinese RMB against the U.S. dollar, compared to other expense of $1.8 million in the third quarter of 2015 and other expense of $1.1 million in the fourth quarter of 2014. 

Interest income for the fourth quarter of 2015 was $1.1 million, down from $1.3 million in the third quarter of 2015 and down from $1.7 million in the fourth quarter of 2014.  The year-over-year and quarter-over-quarter decreases were due to lower cash and interest bearing securities following Dutch auction tender offers in September 2015 and 2014.

Income tax credit was $0.2 million for the fourth quarter of 2015, compared to income tax expense of $0.1 million in the third quarter of 2015 and an income tax credit of $0.3 million in the fourth quarter of 2014.

Net loss attributable to Actions Semiconductor's shareholders for the fourth quarter of 2015 was $7.2 million or $0.162 per basic and diluted American Depositary Share ("ADS").  This compares to net loss attributable to Actions Semiconductor's shareholders of $12.6 million or $0.217 per basic and diluted ADS, for the third quarter of 2015, and net loss attributable to Actions Semiconductor's shareholders of $12.2 million or $0.206 per basic and diluted ADS, for the fourth quarter of 2014. 

Full Year 2015 Results

Revenue for 2015 was $49.1 million, as compared to revenue of $50.3 million for 2014. 

Gross profit for 2015 was $10.8 million, as compared with $4.1 million in 2014.  Gross margin was 21.9% for 2015, compared to gross margin of 8.1% for 2014.  The year-over-year increase in gross margin was primarily the result of significant write-downs of inventory in 2014 that reduced gross margin by approximately 12%. 

Operating expenses in 2015 were $45.1 million, as compared to $44.4 million in 2014.

Research and development expenses were $28.8 million for 2015, as compared to $31.1 million in 2014. The year-over-year decrease was mainly due to higher mask expenses in 2014. The Company expects full year R&D expenses in 2016 to be below 2015 levels. 

General and administrative expenses were $9.6 million in 2015, as compared to $10.3 million in 2014.  The Company recorded expenses related to its Dutch auction tender offer in the third quarters of 2015 and 2014 of $0.6 million and $0.5 million, respectively.

Selling and marketing expenses were $2.2 million for 2015, as compared to $2.2 million in 2014.

Impairment of intangible assets for 2015 was $4.5 million, as compared to $0.8 million for 2014.  In the third quarter of 2015, the Company recorded an impairment of certain intangible assets based on management's best estimates of the market conditions for tablets and OTT set-top boxes over the remaining useful life of these assets. 

Operating loss for 2015 was $30.5 million, as compared to the operating loss of $39.5 million in 2014.

Other expense for 2015 was $3.0 million, as compared to other expense of $2.7 million in 2014. 

Interest income for 2015 was $5.7 million, down from $9.6 million in 2014.  The year-over-year decrease was due to lower cash and interest bearing securities following Dutch auction tender offers in September 2015 and 2014.

Income tax credit was $0.2 million for 2015, compared to income tax credit of $1.8 million in 2014.

Net loss attributable to Actions Semiconductor's shareholders for 2015 was $28.4 million or $0.518 per basic and diluted ADS.  This compares to net loss attributable to Actions Semiconductor's shareholders of $30.4 million, or $0.461 per basic and diluted ADS, for 2014. 

Financial Condition

The Company ended the fourth quarter of 2015 with $142.5 million in cash and cash equivalents, together with time deposits, trading securities, marketable securities and restricted deposits.  Total current assets were approximately $140.8 million, and the Company had working capital of approximately $48.2 million and $81.0 million in short-term bank loans, and total shareholder's equity was $155.7 million as of December 31, 2015. 

Since the share repurchase program commenced in 2007, the Company has invested approximately $113.4 million in repurchasing its ADSs and ordinary shares, including $57.2 million representing the equivalent of 24.0 million ADSs repurchased through Dutch auction tender offers in September 2015 and 2014.  As of December 31, 2015, the equivalent of approximately 49.0 million ADSs were repurchased. As of December 31, 2015, total number of outstanding ordinary shares (including ordinary shares represented by ADSs) was 265,824,928.

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 2016 to be in the range of $11.5 to $12.0 million.  Traditionally the first quarter of the year is 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.  However, in the first quarter of 2016 the Company expects revenue to be above year ago levels as a result of strong demand for its latest solutions for Bluetooth-enabled devices and a slight increase in shipments of its application processor SoCs. For the full year, the Company expects challenging conditions in the worldwide semiconductor industry to limit its ability to increase revenue.

Conference Call Details

Actions Semiconductor's management will conduct an earnings conference call offering prepared remarks on the fourth quarter and full year 2015, new products, business outlook and other matters. Although the management will not be conducting a question and answer session during the call, the Company continues to welcome written questions and comments from its shareholders.

The teleconference and webcast is scheduled to begin at 8:00 a.m. Eastern Daylight Time, on Thursday, March 31, 2016. To participate in the live call, analysts and investors should dial 1-866-598-9332 (within U.S.) or 1-480-293-0664 (outside U.S.) at least ten minutes prior to the call.  The conference ID number is 2066341. Actions Semiconductor will also offer a 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 April 10, 2016 by dialing 1-888-203-1112 (within U.S.) or 1-719-457-0820 (outside U.S.) and entering access code 2066341.

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 the worldwide semiconductor market, the future prospects for the Company's Bluetooth single chip 4.2 solutions, ability to be successful in the OTT set-top box market, 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,


2015


2015


2014


(unaudited)


(unaudited)


(audited)

ASSETS






Current assets:






  Cash and cash equivalents

36,262


46,564


78,177

  Time deposit

154


-


5

  Restricted deposits

65,255


70,482


51,590

  Marketable securities

13,519


13,635


38,384

  Trading securities

68


68


70

  Accounts receivable, net of allowance for doubtful accounts of $nil, $40, and $558
      as of December 31, 2015, September 30, 2015,  and December 31, 2014,
      respectively

4,826


4,675


2,832

  Amount due from a related party

1,226


1,516


1,650

  Notes receivable

-


-


161

  Amount due from an equity method investee

17


39


41

  Inventories, net of inventory written-down of $6,218, $5,300, and $7,718 as of
    December 31, 2015, September 30, 2015,  and December 31, 2014, respectively

12,076


16,691


13,970

  Prepaid expenses and other current assets

6,448


9,091


4,511

  Income tax recoverable

-


-


186

  Deferred tax assets

938


945


1,179

Total current assets

140,789


163,706


192,756







  Investments in equity method investees

26,962


27,404


27,352

  Other investments 

15,474


15,489


15,627

  Restricted deposits

27,221


16,600


-

  Rental deposits

56


57


54

  Property, plant and equipment, net

27,984


28,820


30,327

  Land use right

1,417


1,452


1,514

  Acquired intangible assets, net

9,055


9,001


16,459

  Deposit paid for acquisition of intangible assets

-


218


538

  Deferred tax assets

193


6


53

TOTAL ASSETS

249,151


262,753


284,680







LIABILITIES AND EQUITY






Current liabilities:






  Accounts payable

4,243


9,279


5,790

  Amount due to a related party

298


225


259

  Accrued expenses and other current liabilities

5,040


4,316


8,349

  Short-term bank loans

81,000


81,000


45,000

  Other liabilities

1,771


1,063


1,929

  Income tax payable

49


49


49

  Deferred tax liabilities

155


134


160

Total current liabilities

92,556


96,066


61,536







  Other liabilities

-


912


-

  Payable for acquisition of intangible assets

197


155


155

  Deferred tax liabilities

715


767


919

Total liabilities

93,468


97,900


62,610







Equity:






 Ordinary shares

1


1


1

 Additional paid-in capital

63,426


63,285


63,046

 Treasury Stock

(103,736)


(103,714)


(70,479)

 Accumulated other comprehensive income

31,863


33,965


36,937

 Retained earnings

164,163


171,349


192,598

Total Actions Semiconductor Co., Ltd. shareholders' equity

155,717


164,886


222,103

Non-controlling interest

(34)


(33)


(33)

Total equity

155,683


164,853


222,070

TOTAL LIABILITIES AND EQUITY

249,151


262,753


284,680

 

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,



2015


2014


2015


2014



(unaudited)


(unaudited)


(unaudited)


(audited)










Revenues:









   System-on-a-chip products


11,938


13,826


49,049


50,143

   Semiconductor product testing services


5


36


91


117



11,943


13,862


49,140


50,260

Cost of revenues:









   System-on-a-chip products


(10,614)


(16,505)


(38,333)


(46,148)

   Semiconductor product testing services


(2)


(18)


(39)


(46)



(10,616)


(16,523)


(38,372)


(46,194)

Gross profit (loss)


1,327


(2,661)


10,768


4,066

Other operating income


1,261


231


3,797


890

Operating expenses:









  Research and development


(6,357)


(7,066)


(28,804)


(31,124)

  General and administrative


(2,266)


(2,661)


(9,597)


(10,330)

  Selling and marketing


(495)


(601)


(2,217)


(2,175)

  Impairment on intangible assets


-


(535)


(4,467)


(820)

Total operating expenses


(9,118)


(10,863)


(45,085)


(44,449)

Loss from operations


(6,530)


(13,293)


(30,520)


(39,493)

Other (expense) income


(1,289)


(1,085)


(2,989)


(2,736)

Dividend income from an other investment


-


-


488


423

Other-than-temporary impairment loss on investments


-


-


(117)


-

Interest income


1,121


1,699


5,714


9,611

Interest expense


(324)


(147)


(850)


(530)

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


(7,022)


(12,826)


(28,274)


(32,725)

Income tax credit (expense) 


224


337


156


1,796

Equity in net (loss) income of equity method investees


(388)


332


(317)


566

Net loss


(7,186)


(12,157)


(28,435)


(30,363)

Less: Net loss attributable to non-controlling interest


1


1


1


2

Net loss attributable to Actions Semiconductor Co., Ltd. Shareholders


(7,185)


(12,156)


(28,434)


(30,361)










Net loss attributable to Actions Semiconductor Co., Ltd. Shareholders









Basic (per share)


(0.027)


(0.034)


(0.086)


(0.077)

Diluted (per share)


(0.027)


(0.034)


(0.086)


(0.077)










Basic (per ADS)


(0.162)


(0.206)


(0.518)


(0.461)

Diluted (per ADS)


(0.162)


(0.206)


(0.518)


(0.461)










Weighted-average shares used in computation:









Basic


265,887,058


353,508,683


329,190,733


395,380,921

Diluted


265,887,058


353,508,683


329,190,733


395,380,921










Weighted-average ADS used in computation :









Basic


44,314,510


58,918,114


54,865,122


65,896,820

Diluted


44,314,510


58,918,114


54,865,122


65,896,820










Note: Share-based compensation recorded in each









expense classification above is as follows:









  Research and development


115


-


308


10

  General and administrative


16


-


27


5

  Selling and marketing


10


1


31


1

  Cost of revenues


2


28


16


28

 

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,


2015


2015


2014


(unaudited)


  (unaudited)  


  (audited)  

Operating activities:






Net loss

(7,186)


(28,435)


(30,363)

Adjustments to reconcile net loss to net cash provided by operating activities:






  Depreciation of property, plant and equipment

454


1,904


1,949

  Amortization of land use right

8


36


36

  Amortization of acquired intangible assets

760


4,526


4,991

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

-


(1,159)


-

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

2


4


(1)

  Loss on disposal of intangible assets

-


-


420

  Share of net loss (income) of equity method investees

388


317


(564)

  Share-based  compensation

143


382


45

  Deferred tax

(228)


(147)


(3,576)

  Impairment loss recognised in respect of other investments

-


117


-

  Impairment loss recognised in respect of intangible assets

-


4,467


820

  Changes in operating assets and liabilities:






    Accounts receivable

(171)


(2,030)


2,907

    Amount due from a related party

290


424


(349)

    Inventories

4,367


1,329


5,904

    Amount due from an equity method investee

22


24


(3)

    Prepaid expenses and other current assets

2,203


(3,080)


(750)

    Accounts payable

(4,894)


(1,258)


(173)

    Amount due to a related party

73


139


259

    Accrued expenses and other current liabilities

943


(480)


(415)

    Income tax recoverable

-


186


(122)

    Income tax payable

-


-


1

    Rental deposit (paid) received 

-


(4)


5

    Note Receivables

-


161


(161)







Net cash used in operating activities

(2,826)


(22,577)


(19,140)







Investing activities:






  Investment in an equity method investee

-


-


(9,016)

  Proceeds from redemption of marketable securities

1,169


35,438


159,296

  Purchase of marketable securities

(573)


(10,151)


(54,290)

  Proceeds from disposal of property, plant and equipment

-


16


20

  Purchase of property, plant and equipment

(127)


(762)


(1,156)

  Purchase of intangible assets

(461)


(3,589)


(8,044)

  (Increase) decrease in time deposits

(154)


(184)


318

  Deposit paid for acquisition of intangible assets

-


-


(457)

  Increase in restricted deposits

(6,536)


(42,700)


(24,974)

  Proceeds from disposal of intangible assets

-


-


24







Net cash (used in) provided by investing activities

(6,682)


(21,932)


61,721







Financing activities:






  Advance subsidy from local authorities of Zhuhai, the PRC

128


1,357


232

  Distribution of government grant to third party

(296)


(296)


-

  Proceeds from exercise of share-based awards

1


763


2,542

  Repurchase of ordinary shares

(23)


(34,020)


(28,902)

  Raise of short-term bank loans

-


36,000


31,500

  Repayment of short-term bank loans

-


-


(22,000)

Net cash (used in) provided by financing activities

(190)


3,804


(16,628)







Net (decrease) increase in cash and cash equivalents

(9,698)


(40,705)


25,953







Cash and cash equivalents at the beginning of the period

46,564


78,177


53,263







Effect of exchange rate changes on cash

(604)


(1,210)


(1,039)

Cash and cash equivalents at the end of the period

36,262


36,262


78,177

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/actions-semiconductor-reports-fourth-quarter-and-full-year-2015-results-300243971.html

SOURCE Actions Semiconductor Co., Ltd.

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