RDA Microelectronics Announces Third Quarter 2013 Financial Results

SHANGHAI, China, Nov. 12, 2013 (GLOBE NEWSWIRE) -- RDA Microelectronics (Nasdaq:RDA) ("RDA Microelectronics" or the "Company"), a fabless semiconductor company that designs, develops and markets wireless systems-on-chip and radio-frequency (RF) semiconductors for cellular, connectivity and broadcast applications, today announced its financial results for the third quarter ended September 30, 2013.

Third Quarter Financial Highlights (in US dollars):
  • Revenue was $85.1 million, representing a decrease of 22.8% from the $110.3 million in the second quarter and 22.1% from the $109.3 million in the third quarter of 2012.
  • Gross margin was 32.7%, compared to 32.3% in the previous quarter and 31.1% in the third quarter of 2012.
  • GAAP net income was $9.1 million, or $0.19 per diluted ADS, compared to $13.7 million, or $0.29 per diluted ADS, in the previous quarter and $13.5 million, or $0.28 per diluted ADS, in the third quarter of 2012.
  • Non-GAAP net income was $12.2 million, or $0.25 per diluted ADS, compared to $16.9 million, or $0.35 per diluted ADS, in the previous quarter and $16.7 million, or $0.35 per diluted ADS, in the third quarter of 2012.

For a reconciliation of non-GAAP financial measures, please refer to the tables included in this press release.

Third Quarter and Recent Business Highlights:
  • Completed tape-out of WCDMA baseband with sampling to begin in the first half of 2014.
  • Issued first quarterly dividend of $0.10 per ADS as part of its recurring dividend policy announced last quarter.
  • Signed a definitive merger agreement with Tsinghua Unigroup Ltd. ("Unigroup"), an operating subsidiary of Tsinghua Holdings Co. Ltd., a solely state-owned limited liability corporation funded by Tsinghua University in China, on November 11, 2013, under which Unigroup will acquire all of the outstanding ordinary shares of the Company (the "Shares") and ADS for US$3.0833 per Share or US$18.50 per ADS in cash. Investors are referred to the Company's press release announcing the transaction issued on November 11, 2013, and the Form 6-K filed with SEC regarding the transaction.

Commenting on the Company's third quarter financial results, Vincent Tai, chairman and CEO of RDA Microelectronics, said, "Third quarter revenue declined greater than expected due to adverse currency impacts from several emerging markets, including India, which has driven up the cost of imports and reduced orders from customers who typically export to these markets. While the decline in revenue was disappointing, we do not believe it reflects a reduction in demand for feature phones in these countries, where affordability and limited discretionary spending remain key factors.

"Even when considering the revenue decline in the quarter, we were notably able to improve our gross margin sequentially and still generate solid profits and cash flow. This accomplishment clearly highlights the benefit of our low-cost business model and efficient operations. In order to better position RDA against future currency issues, we have accelerated our plans to establish a direct sales channel with Indian domestic handset manufacturers and now have a sales team in place who are quickly penetrating the top brands.

"Also during the quarter, we taped-out our first WCDMA baseband solution, which we expect to begin sampling in the first half of 2014, and continue to make progress on our more advanced WCDMA, TD and LTE solutions to further expand our penetration of the growing 3G market in China."

Third Quarter Operating Summary:
  • Revenue was $85.1 million, compared to $110.3 million in the previous quarter and $109.3 million in the third quarter of 2012. The sequential decrease in revenue reflected the impact of currency volatility in most emerging markets, including India, which led to a reduction in orders from customers who typically export to these markets.
  • Gross margin was 32.7%, compared to 32.3% in the previous quarter and 31.1% in the third quarter of 2012. The sequential increase in gross margin was due to ongoing product cost reduction efforts.
  • R&D expenses were $15.5 million, compared to $17.7 million in the previous quarter and $16.0 million in the third quarter of 2012. SG&A expenses were $3.1 million, compared with $4.5 million in the previous quarter and $4.0 million in the prior year period. The decreases in R&D and SG&A expenses were mainly due to reduced performance driven compensation expenses.
  • Non-GAAP net income was $12.2 million, compared to $16.9 million in the previous quarter and $16.7 million in the third quarter of 2012.

Balance Sheet and Cash Flow Summary as of September 30 , 201 3 :
  • Cash, cash equivalents and short-term investments increased to $123.5 million, compared to $122.9 million as of June 30, 2013.
  • In the third quarter of 2013, the Company generated $6.1 million in cash from operations, compared to $16.8 million in the prior quarter.
  • Repurchased 60,466 shares of ADS's for $0.7 million under the Company's stock repurchase authorization during the quarter.
  • $4.7 million cash dividend paid during the quarter.
  • Accounts receivable was $53.9 million, compared to $41.8 million as of June 30, 2013.
  • Inventory was $57.0 million compare to $56.1 million as of June 30, 2013.
  • Accounts payable was $53.8 million, compared to $47.6 million as of June 30, 2013.

Fourth Quarter 201 3 Business Outlook

As the Company is in the pre-closing period under the definitive merger agreement executed with Unigroup, the Company has decided not to provide forward looking guidance during this period.

Conference Call:

RDA Microelectronics will host a conference call and live webcast for analysts and investors at 8:00 a.m. Eastern Time on Tuesday, November 12, 2013 (9:00 p.m.in Shanghai, China).
  • For parties in the United States and Canada, please call 1-877-280-7280, conference code 88455034
  • For parties in Hong Kong, please call 800966253, conference code 88455034
  • Other International parties please call +1-678-825-8232, conference code 88455034

RDA Microelectronics will provide a live webcast of the conference call that will be accessible from the "Investors" section of the Company's website at www.rdamicro.com. The webcast will be archived on the website for a period of 30 days. An audio replay of the conference call will also be available two hours after the call and will be available for ten days. To hear the replay, parties in the United States and Canada should call 1-855-859-2056 and enter pass code 88455034, International parties should call 1-404-537-3406 and enter the same pass code.

About RDA Microelectronics

RDA Microelectronics is a fabless semiconductor company that designs, develops and markets wireless system-on-chip and radio-frequency semiconductors for cellular, connectivity and broadcast applications. The Company's product portfolio currently includes baseband, radio-frequency front-end modules, power amplifiers, transceivers, Bluetooth system-on-chip, Wi-Fi, Bluetooth and FM combo chips, FM radio receivers, set-top box tuners, analog mobile television receivers, CMMB mobile television receivers, walkie-talkie transceivers and LNB satellite down converters. For additional information, please see the Company's website at http://www.rdamicro.com.

Forward-Looking Statements

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Any statements in this press release that are not historical facts are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include the Company's anticipated growth strategies; its future results of operations and financial condition; impact of currency volatility in emerging markets; economic conditions in China; the regulatory environment in China; the Company's ability to attract customers and leverage its brand; trends and competition in the semiconductor industry; migration to new technology; the entry into baseband, new TV and display market and other factors and risks detailed in the Company's filings with the Securities and Exchange Commission. This press release also contains statements or projections that are based upon information available to the public, as well as other information from sources which the Company believes to be reliable but whose accuracy or completeness the Company cannot guarantee. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.

Non-GAAP Financial Measures

To supplement the Company's unaudited consolidated financial results presented in accordance with U.S. GAAP, the Company uses adjusted (non-GAAP) net income and net income per diluted ADS, adjusted (non-GAAP) R&D expense and adjusted (non-GAAP) SG&A expense, which are defined as non-GAAP financial measures by the SEC. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see below and the tables captioned "Reconciliation of GAAP and Non-GAAP Results" set forth at the end of this press release.

The Company believes that adjusted (non-GAAP) net income and net income per diluted ADS, adjusted (non-GAAP) R&D expense and adjusted (non-GAAP) SG&A expense, viewed in conjunction with the GAAP financial measures, provide meaningful supplemental information regarding the Company's performance and that both management and investors benefit from referring to these non-GAAP financial measures in assessing the Company's historical performance and when planning and forecasting the Company's performance in future periods. The Company believes that excluding share-based compensation expenses and amortization of acquired and licensed intangibles helps both management and investors to get a better understanding of its ongoing business. Adjusted (non-GAAP) net income and net income per diluted ADS, adjusted (non-GAAP) R&D expense and adjusted (non-GAAP) SG&A expense do not include share-based compensation expenses and amortization of acquired and licensed intangibles that impact the Company's operating expenses and net income for the period. In addition, the Company's adjusted (non-GAAP) net income and net income per diluted ADS, adjusted (non-GAAP) R&D expense and adjusted (non-GAAP) SG&A expense may not be comparable to measures with the same or similar titles utilized by other companies, since other companies may not calculate such measures in the same manner as the Company does. The Company compensates for this and other limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures. Reconciliations of GAAP and non-GAAP results are included at the end of this press release.
RDA MICROELECTRONICS, INC.
Consolidated Balance Sheet Information
  September 30, 2012 June 30, 2013 September 30, 2013
  (unaudited) (unaudited) (unaudited)
  (amounts in thousands of USD, except number of shares and per share data)
ASSETS      
Current assets       
Cash and cash equivalents  58,848  69,255  40,313
Short-term investments-time deposit  108,098  53,691  83,209
Accounts receivable  28,229  41,808  53,949
Inventories   58,486  56,106  56,978
Prepaid expenses and other current assets  10,011  8,398  9,936
Deferred tax assets  3  --  --
Total current assets  263,675  229,258  244,385
       
 Non-current assets       
Property, plant and equipment, Net  8,386  10,291  11,037
Intangible Assets  50,805  49,801  46,960
Goodwill  8,900  8,900  8,900
Other long-term assets  3,206  4,903  4,677
Investment   48  --  --
Total assets  335,020  303,153  315,959
       
LIABILITIES      
Current liabilities       
Accounts payable  55,808  47,575  53,829
Accrued expenses and other current liabilities  24,739  25,054  29,217
Deferred revenue  16,536  9,975  5,946
Dividend payable  55,946  --  --
Total current liabilities  153,029  82,604  88,992
       
Other long-term liability  --  521  1,773
Deferred tax Liability  89  83  142
       
Total liabilities  153,118  83,208  90,907
       
Commitments and contingencies      
       
SHAREHOLDERS' EQUITY      
Ordinary shares  2,885  2,891  2,891
Additional paid-in capital  146,674  147,969  146,968
Recourse loans  (1,567)  (2,241)  (2,260)
Accumulated other comprehensive income  1,042  1,567  1,683
Treasury stock  (14,139)  (15,023)  (13,460)
Retained earnings  47,007  84,782  89,230
Total shareholders' equity  181,902  219,945  225,052
       
Total liabilities and shareholders' equity  335,020  303,153  315,959
       
RDA MICROELECTRONICS, INC.
Consolidated Statement of Operations Information
  Quarter Ended
  September 30, 2012 June 30, 2013 September 30, 2013
  (unaudited) (unaudited) (unaudited)
  (amounts in thousands of USD, except number of shares and per share data)
Revenue  109,308  110,294  85,103
Cost of revenue  (75,307)  (74,618)  (57,263)
Gross profit  34,001  35,676  27,840
       
Operating expenses:      
Research and development  (16,029)  (17,669)  (15,502)
Selling, general and administrative  (3,977)  (4,467)  (3,135)
Total operating expenses  (20,006)  (22,136)  (18,637)
Operating income  13,995  13,540  9,203
Other income:      
Interest income  1,069  810  847
Other income (expense), net  (259)  768  177
Income before income taxes  14,805  15,118  10,227
Income tax expense  (1,328)  (1,414)  (1,128)
Net income  13,477  13,704  9,099
       
       
Earnings per ADS      
- Basic  0.30  0.30  0.20
- Diluted  0.28  0.29  0.19
       
Weighted average ADS equivalent: [1]      
- Basic  45,590,013  46,399,565  46,465,692
- Diluted  47,904,835  48,015,470  48,187,327
       
Share-based compensation was allocated in operating expenses as follows:      
Research and development  446  468  437
Selling, general and administrative  518  431  408
       
[1] Assumes all outstanding ordinary shares are represented by ADSs.  Each ADS represents six ordinary shares.
     
RDA MICROELECTRONICS, INC.
Consolidated Statement of Operations Information
  Nine Months Ended
  September 30, 2012 September 30, 2013
  (unaudited) (unaudited)
  (amounts in thousands of USD, except number of shares and per share data)
Revenue  275,673  292,543
Cost of revenue  (186,524)  (197,803)
Gross profit  89,149  94,740
     
Operating expenses:    
Research and development  (36,757)  (49,093)
Selling, general and administrative  (11,126)  (11,908)
Total operating expenses  (47,883)  (61,001)
Operating income  41,266  33,739
Other income (expense):    
Interest income  2,766  2,423
Other income (expense), net  (629)  965
Income before income taxes  43,403  37,127
Income tax expense  (3,862)  (3,616)
Net income  39,541  33,511
     
     
Earnings per ADS    
- Basic  0.88  0.73
- Diluted  0.84  0.70
     
Weighted average ADS equivalent:    
- Basic  44,755,348  46,423,701
- Diluted  47,220,854  48,102,880
     
     
     
Share-based compensation was allocated in operating expenses as follows:    
   1,150  1,262
Selling, general and administrative  1,248  1,212
 
RDA MICROELECTRONICS, INC.
Reconciliation of GAAP and Non-GAAP Results
(amounts in thousands of USD, except number of shares and per share data)
 
  Quarter Ended September 30, 2013
  (unaudited)
    % of  Share-based Amortization of Non-GAAP % of  Non-GAAP  % of 
  GAAP Result  Net Revenue Compensation Intangible Assets Net Revenue Results Net Revenue
Research and development  15,502 18%  437  2,265 3%  12,800 15%
Selling, general and administrative  3,135 4%  408  --  1%  2,727 3%
Total operating expenses  18,637 22%  845  2,265 4%  15,527 18%
               
Operating income  9,203 11%  845  2,265 4%  12,313 15%
Net income   9,099 11%  845  2,265 4%  12,209 15%
               
Diluted earnings per ADS  0.19    0.01  0.05    0.25  
               
Weighted average ADS-Diluted  48,187,327    48,187,327  48,187,327    48,187,327  
               
  Quarter Ended June 30, 2013
  (unaudited)
    % of  Share-based Amortization of Non-GAAP % of  Non-GAAP  % of 
  GAAP Result  Net Revenue Compensation Intangible Assets Net Revenue Results Net Revenue
Research and development  17,669 16%  468  2,265 2%  14,936 13%
Selling, general and administrative  4,467 4%  431  --  0%  4,036 4%
Total operating expenses  22,136 20%  899  2,265 3%  18,972 17%
               
Operating income  13,540 12%  899  2,265 3%  16,704 15%
Net income   13,704 12%  899  2,265 3%  16,868 15%
               
Diluted earnings per ADS  0.29    0.01  0.05    0.35  
               
Weighted average ADS-Diluted  48,015,470    48,015,470  48,015,470    48,015,470  
               
  Quarter Ended September 30, 2012
  (unaudited)
    % of  Share-based Amortization of Non-GAAP % of  Non-GAAP  % of 
  GAAP Result  Net Revenue Compensation Intangible Assets Net Revenue Results Net Revenue
Research and development  16,029 15%  446  2,265 2%  13,318 13%
Selling, general and administrative  3,977 3%  518  --  1%  3,459 2%
Total operating expenses  20,006 18%  964  2,265 3%  16,777 15%
               
Operating income  13,995 13%  964  2,265 3%  17,223 16%
Net income   13,477 12%  964  2,265 3%  16,705 15%
               
Diluted earnings per ADS  0.28    0.02  0.05    0.35  
               
Weighted average ADS outstanding-Diluted  47,904,835    47,904,835  47,904,835    47,904,835  
               
  Nine Months Ended September 30, 2013
  (unaudited)
    % of  Share-based Amortization of Non-GAAP % of  Non-GAAP  % of 
  GAAP Result  Net Revenue Compensation Intangible Assets Net Revenue Results Net Revenue
Research and development  49,093 17%  1,262  6,795 3%  41,036 14%
Selling, general and administrative  11,908 4%  1,212  --  0%  10,696 4%
Total operating expenses  61,001 21%  2,474  6,795 3%  51,732 18%
               
Operating income  33,739 12%  2,474  6,795 3%  43,008 15%
Net income   33,511 11%  2,474  6,795 3%  42,780 15%
               
Diluted earnings per ADS  0.70    0.04  0.15    0.89  
               
Weighted average ADS outstanding-Diluted  48,102,880    48,102,880  48,102,880    48,102,880  
               
               
  Nine Months Ended September 30, 2012
  (unaudited)
    % of  Share-based Amortization of Non-GAAP % of  Non-GAAP  % of 
  GAAP Result  Net Revenue Compensation Intangible Assets Net Revenue Results Net Revenue
Research and development  36,757 13%  1,150  5,010 2%  30,597 11%
Selling, general and administrative  11,126 4%  1,248  --  0%  9,878 4%
Total operating expenses  47,883 17%  2,398  5,010 2%  40,475 15%
               
Operating income  41,266 15%  2,398  5,010 2%  48,674 17%
Net income   39,541 14%  2,398  5,010 2%  46,949 16%
               
Diluted earnings per ADS  0.84    0.05  0.11    1.00  
               
Weighted average ADS outstanding-Diluted  47,220,854    47,220,854  47,220,854    47,220,854  
CONTACT: Lily Dong, Chief Financial Officer         RDA Microelectronics, Inc.         +86-21-5027-1108         ir@rdamicro.com         or         Leanne Sievers, EVP         Shelton Group Investor Relations         949-224-3874         lsievers@sheltongroup.com

RDA Microelectronics, Inc. logo

More from Press Releases

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

21st Century Fox Scoops Up Local News Stations

21st Century Fox Scoops Up Local News Stations

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Three-Part FREE Webinar Series

Three-Part FREE Webinar Series

March 24 Full-Day Course Offering: Professional Approach to Trading SPX

March 24 Full-Day Course Offering: Professional Approach to Trading SPX