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.
