Quantcast

RFMD® Announces March Quarterly Financial Results

April 26, 2011

GREENSBORO, N.C., April 26, 2011 /PRNewswire/ —

Company Highlights:

  • Quarterly Revenue Totals $213.3 Million
  • GAAP Operating Income Is $13.2 Million, And GAAP Diluted EPS Is $0.08
  • Non-GAAP Operating Income Equals $23.7 Million, Or 11.1% Of Revenue
  • Non-GAAP Diluted EPS Equals $0.08
  • RFMD Generates Approximately $31.4 Million In Quarterly Free Cash Flow And Trailing 12-Month Free Cash Flow Is Approximately $188 Million

RF Micro Devices, Inc. (Nasdaq GS: RFMD), a global leader in the design and manufacture of high-performance radio frequency components and compound semiconductor technologies, today reported financial results for its fiscal 2011 fourth quarter, ended April 2, 2011. RFMD’s March 2011 quarterly revenue declined approximately 18% year-over-year and approximately 23% sequentially to $213.3 million, primarily as a result of seasonality and declining revenue at RFMD’s largest customer. On a GAAP basis, gross margin equaled 35.4%, quarterly operating income totaled $13.2 million, and quarterly net income was $24.1 million, or $0.08 per diluted share.

On a non-GAAP basis, gross margin equaled 37.5%, quarterly operating income totaled $23.7 million, and quarterly net income was $21.7 million, or $0.08 per diluted share. During the quarter, RFMD generated approximately $31.4 million in free cash flow, retired $35.5 million principal amount of convertible debt and repurchased approximately 1.7 million shares of common stock.

RFMD Strategic Highlights:

  • RFMD’s PowerSmart(TM) power platforms recognized as the industry’s most innovative device of 2011 by Compound Semiconductor magazine
  • RFMD’s Cellular Products Group (CPG) commenced volume production of new, higher margin 3G/4G solutions, including RFMD’s PowerSmart(TM) power platforms and RFMD’s RF724x family of ultra high efficiency 3G/4G PAs
  • CPG secured multiple design wins for high-performance, silicon-based switches and switch filter modules across the world’s leading smartphone and tablet manufacturers
  • RFMD’s Multi-Market Products Group (MPG) commenced production of new GaN-based products for high-power military radar and CATV applications
  • MPG secured major design wins across multiple growth markets, including wireless infrastructure, Smart Energy, high-performance WiFi for smartphones and tablets, and point-to-point radio for cellular backhaul

                                      GAAP RESULTS
       (in millions,
           except
      percentages and               Q3
            per       Q4 Fiscal  Fiscal   Change
                                           vs. Q3
        share data)        2011     2011    2011
    Revenue              $213.3   $278.8    (23.5)%
    Gross Margin           35.4%    37.0%     (1.6) ppt
    Operating Income      $13.2    $43.3    $(30.1)
    Net Income            $24.1    $36.7    $(12.6)
    Diluted EPS           $0.08    $0.13    $(0.05)


       (in millions,
           except
      percentages and                Q4
            per                   Fiscal           Change
                                                    vs. Q4
        share data)                  2010            2010
    Revenue                        $260.8            (18.2)%
    Gross Margin                     37.7%             (2.3)  ppt
    Operating Income                $36.6            $(23.4)
    Net Income                      $26.7             $(2.6)
    Diluted EPS                     $0.10            $(0.02)

           NON-GAAP RESULTS (excluding share-based compensation, amortization
              of intangibles, integration charges, start-up costs, loss on
          retirement of convertible subordinated notes, restructuring charges,
            loss on PP&E, loss (income) from equity investment, and non-cash
               interest expense on convertible subordinated notes and tax
                                      adjustments)
    (in millions, except
                           Q4       Q3
    percentages and per  Fiscal  Fiscal   Change
                                           vs. Q3
         share data)       2011     2011    2011
         -----------       ----     ----  -------
    Gross Margin           37.5%    38.7%     (1.2) ppt
    Operating Income      $23.7    $54.0    $(30.3)
    Net Income            $21.7    $52.6    $(30.9)
    Diluted EPS           $0.08    $0.19    $(0.11)


    (in millions, except
                                       Q4
    percentages and per             Fiscal           Change
                                                      vs. Q4
         share data)                   2010            2010
         -----------                   ----          -------
    Gross Margin                       39.6%             (2.1)  ppt
    Operating Income                  $47.7            $(24.0)
    Net Income                        $43.8            $(22.1)
    Diluted EPS                       $0.16            $(0.08)

Business Outlook

RFMD currently believes the demand environment in its end markets supports the following expectations and projections:

  • RFMD expects June quarterly revenue to be flat to down 5% sequentially, as 8-12% growth in RFMD’s core business is offset by declining sales of legacy products
  • RFMD expects to further diversify its revenue base, with its largest customer approaching 15% of revenue in the June 2011 quarter
  • RFMD anticipates its transceiver products will be immaterial to financial results in the June 2011 quarter and thereafter
  • RFMD expects June quarterly gross margin to increase approximately 100 basis points, driven by continued customer diversification and improved product mix
  • RFMD expects to return to sequential growth beginning in the September quarter

RFMD’s actual quarterly results may differ from these expectations and projections, and such differences may be material.

Comments From Management

Bob Bruggeworth, president and chief executive officer of RFMD, said, “RFMD’s strategic restructuring, announced three years ago, is now complete and driving diversified growth opportunities for RFMD. Sales in our Multi-Market Products Group grew by more than 30% in fiscal 2011 over fiscal 2010 and in our Cellular Products Group sales to customers outside our largest customer grew by more than 50% during the same period. In the June quarter we anticipate transceiver products will be immaterial to financial results and we expect to achieve our most diverse quarter of customer mix in RFMD’s history as a public company.

“Looking forward, we expect RFMD will take full advantage of global secular growth trends and grow faster than our core markets. This will enable broad improvement in our financials, supporting margin expansion, operating leverage, earnings growth, continued strong free cash flow, and superior return on invested capital.”

Dean Priddy, CFO and vice president of administration of RFMD, said, “RFMD is executing on its growth strategy. Revenue in our core business, which excludes transceiver revenue, is expected to grow approximately 8-12% sequentially in the June quarter, driven by exciting new product cycles and technologies. This should drive gross margin expansion beginning in the June quarter.

“With all major growth drivers intact, we have the confidence to actively put RFMD’s superior free cash flow to use. During the March quarter, we repurchased approximately 1.7 million shares of common stock and retired $35.5 million principal amount of convertible debt due in 2012. In addition to the ongoing optimization of our capital structure, RFMD will continue investing in the R&D and customer-facing resources necessary to outpace the growth rate in our markets.”

Non-GAAP Financial Measures

In addition to disclosing financial results calculated in accordance with United States (U.S.) generally accepted accounting principles (GAAP), RFMD’s earnings release contains some or all of the following non-GAAP financial measures: (i) non-GAAP gross profit and gross margin, (ii) non-GAAP operating income and operating margin, (iii) non-GAAP net income, (iv) non-GAAP net income per diluted share, (v) non-GAAP operating expenses (research and development, marketing and selling and general and administrative), (vi) free cash flow, (vii), EBITDA, (viii) return on invested capital (ROIC), and (ix) net debt or positive net cash. Each of these non-GAAP financial measures is either adjusted from GAAP results to exclude certain expenses or derived from multiple GAAP measures, which are outlined in the “Reconciliation of GAAP to Non-GAAP Financial Measures” tables on page 10 and the “Additional Selected Non-GAAP Financial Measures And Reconciliations” tables on pages 11 and 12.

In managing RFMD’s business on a consolidated basis, management develops an annual operating plan, which is approved by our Board of Directors, using non-GAAP financial measures. In developing and monitoring performance against this plan, management considers the actual or potential impacts on these non-GAAP financial measures from actions taken to reduce unit costs with the goal of increasing gross margin and operating margin. In addition, management relies upon these non-GAAP financial measures to assess whether research and development efforts are at an appropriate level, and when making decisions about product spending, administrative budgets, and marketing programs. In addition, we believe that non-GAAP financial measures provide useful supplemental information to investors and enable investors to analyze the results of operations in the same way as management. We have chosen to provide this supplemental information to enable investors to perform additional comparisons of operating results, to assess our liquidity and capital position and to analyze financial performance excluding the effect of expenses unrelated to operations, certain non-cash expenses and share-based compensation expense, which may obscure trends in RFMD’s underlying performance.

We believe that these non-GAAP financial measures offer an additional view of RFMD’s operations that, when coupled with the GAAP results and the reconciliations to corresponding GAAP financial measures, provide a more complete understanding of RFMD’s results of operations and the factors and trends affecting RFMD’s business. However, these non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.

Our rationale for using these non-GAAP financial measures, as well as their impact on the presentation of RFMD’s operations, are outlined below:

Non-GAAP gross profit and gross margin. Non-GAAP gross profit and gross margin exclude share-based compensation expense, amortization of intangible assets, other non-cash expenses and adjustments for restructuring and integration charges. We believe that exclusion of these costs in presenting non-GAAP gross profit and gross margin gives management and investors a more effective means of evaluating RFMD’s historical performance and projected costs and the potential for realizing cost efficiencies. We believe that the majority of RFMD’s purchased intangibles are not relevant to analyzing current operations because they generally represent costs incurred by the acquired company to build value prior to acquisition, and thus are effectively part of transaction costs rather than ongoing costs of operating RFMD’s business. In this regard, we note that (i) once the intangibles are fully amortized, the intangibles will not be replaced with cash costs and therefore, the exclusion of these costs provides management and investors with better visibility into the actual costs required to generate revenues over time, and (ii) although we set the amortization expense based on useful life of the various assets at the time of the transaction, we cannot influence the timing and amount of the future amortization expense recognition once the lives are established. Similarly, we believe that presentation of non-GAAP gross profit and gross margin and other non-GAAP financial measures that exclude the impact of share-based compensation expense assists management and investors in evaluating the period-over-period performance of RFMD’s ongoing operations because (i) the expenses are non-cash in nature, and (ii) although the size of the grants is within our control, the amount of expense varies depending on factors such as short-term fluctuations in stock price volatility and prevailing interest rates, which can be unrelated to the operational performance of RFMD during the period in which the expense is incurred and generally is outside the control of management. Moreover, we believe that the exclusion of share-based compensation expense in presenting non-GAAP gross profit and gross margin and other non-GAAP financial measures is useful to investors to understand the impact of the expensing of share-based compensation to RFMD’s gross profit and gross margins and other financial measures in comparison to both prior periods as well as to its competitors. We also believe that the adjustments to profit and margin related to other non-cash expenses and restructuring and integration charges do not constitute part of RFMD’s ongoing operations and therefore the exclusion of these costs provides management and investors with better visibility into the actual costs required to generate revenues over time and gives management and investors a more effective means of evaluating our historical and projected performance. We believe disclosure of non-GAAP gross profit and gross margin has economic substance because the excluded expenses do not represent continuing cash expenditures and, as described above, we have little control over the timing and amount of the expenses in question.

Non-GAAP operating income and operating margin. Non-GAAP operating income and operating margin exclude share-based compensation expense, amortization of intangible assets, other non-cash expenses, restructuring and integration charges, loss on PP&E and start-up costs. We believe that presentation of a measure of operating income and operating margin that excludes amortization of intangible assets and share-based compensation expense is useful to both management and investors for the same reasons as described above with respect to our use of non-GAAP gross profit and gross margin. We believe that other non-cash expenses, restructuring and integration charges, loss on PP&E and start-up costs do not constitute part of RFMD’s ongoing operations and therefore, the exclusion of these costs provides management and investors with better visibility into the actual costs required to generate revenues over time and gives management and investors a more effective means of evaluating our historical and projected performance. We believe disclosure of non-GAAP operating income and operating margin has economic substance because the excluded expenses are either unrelated to operations or do not represent current cash expenditures.

Non-GAAP net income and non-GAAP net income per diluted share. Non-GAAP net income and non-GAAP net income per diluted share exclude the effects of share-based compensation expense, amortization of intangible assets, other non-cash expenses, restructuring and integration charges, loss on PP&E, start-up costs, loss on retirement of convertible subordinated notes, non-cash interest expense on convertible subordinated notes, loss (income) from equity investment and also reflect an adjustment of income taxes for cash basis. We believe that presentation of measures of net income and net income per diluted share that exclude these items is useful to both management and investors for the reasons described above with respect to non-GAAP gross profit and gross margin and non-GAAP operating income and operating margin. We believe disclosure of non-GAAP net income and non-GAAP net income per diluted share has economic substance because the excluded expenses are either unrelated to operations or do not represent current cash expenditures.

Non-GAAP research and development, marketing and selling and general and administrative expenses. Non-GAAP research and development, marketing and selling and general and administrative expenses exclude share-based compensation expense, amortization of intangible assets, and restructuring and integration charges (benefits). We believe that presentation of measures of these operating expenses that exclude amortization of intangible assets and share-based compensation expense is useful to both management and investors for the same reasons as described above with respect to our use of non-GAAP gross profit and gross margin. We believe that restructuring and integration charges (benefits) do not constitute part of RFMD’s ongoing operations and therefore, the exclusion of these costs provides management and investors with better visibility into the actual costs required to generate revenues over time and gives management and investors a more effective means of evaluating our historical and projected performance. We believe disclosure of these non-GAAP operating expenses has economic substance because the excluded expenses are either unrelated to operations or do not represent current cash expenditures.

Free cash flow. RFMD defines free cash flow as net cash provided by operating activities during the period minus property and equipment expenditures made during the period. We use free cash flow as a supplemental financial measure in our evaluation of liquidity and financial strength. Management believes that this measure is useful as an indicator of our ability to service our debt, meet other payment obligations and make strategic investments. Free cash flow should be considered in addition to, rather than as a substitute for, net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity. Additionally, our definition of free cash flow is limited, in that it does not represent residual cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt service and other contractual obligations. Therefore, we believe it is important to view free cash flow as a measure that provides supplemental information to our entire statement of cash flows.

EBITDA. RFMD defines EBITDA as earnings before interest expense and interest income, income tax expense (benefit), depreciation and intangible amortization. Management believes that this measure is useful to evaluate our ongoing operations and as a general indicator of our operating cash flow (in conjunction with a cash flow statement which also includes among other items, changes in working capital and the effect of non-cash charges). The amounts shown for EBITDA as presented herein differ from the amounts calculated under the definition of EBITDA used in our equipment term loan agreement. The definition of EBITDA as used in the loan agreement is further adjusted for certain cash and non-cash charges, including stock compensation expense, and is used to determine compliance with financial covenants.

Non-GAAP ROIC. Return on invested capital (ROIC) is a non-GAAP financial measure that management believes provides useful supplemental information for management and the investor by measuring the effectiveness of our operations’ use of invested capital to generate profits. We use ROIC to track how much value we are creating for our shareholders. Non-GAAP ROIC is calculated by dividing annualized non-GAAP operating income, net of cash taxes, by average invested capital. Average invested capital is calculated by subtracting the average of the beginning balance and the ending balance of current liabilities (excluding the current portion of long-term debt and other short-term financings) from the average of the beginning balance and the ending balance of net accounts receivable, inventories, other current assets, net property and equipment and a cash amount equal to seven days of quarterly revenue.

Net debt or positive net cash. Net debt or positive net cash is defined as unrestricted cash, cash equivalents and short-term investments minus the principal amount of RFMD’s convertible subordinated notes due 2012 and 2014. Management believes that net debt or positive net cash provides useful information regarding the level of RFMD’s indebtedness by reflecting cash and investments that could be used to repay debt.

Limitations of non-GAAP financial measures. The primary material limitations associated with the use of non-GAAP gross profit and gross margin, non-GAAP operating expenses, non-GAAP operating income and operating margin, non-GAAP net income, non-GAAP net income per diluted share, free cash flow, EBITDA, non-GAAP ROIC and net debt or positive net cash, as compared to the most directly comparable GAAP financial measures of gross profit and gross margin, operating expenses, operating income, net income, net income per diluted share and net cash provided by operating activities are (i) they may not be comparable to similarly titled measures used by other companies in RFMD’s industry, and (ii) they exclude financial information that some may consider important in evaluating our performance. We compensate for these limitations by providing full disclosure of the differences between these non-GAAP financial measures and the corresponding GAAP financial measures, including a reconciliation of the non-GAAP financial measures to the corresponding GAAP financial measures, to enable investors to perform their own analysis of our gross profit and gross margin, operating expenses, operating income, net income, net income per diluted share and net cash provided by operating activities.

RF Micro Devices will conduct a conference call at 5:00 p.m. EDT today to discuss today’s press release. The conference call will be broadcast live over the Internet and can be accessed by any interested party at http://www.rfmd.com (under “Investors”). A telephone playback of the conference call will be available approximately one hour after the call’s completion by dialing 303-590-3030 and entering pass code 4432787#.

About RFMD

RF Micro Devices, Inc. (Nasdaq GS: RFMD) is a global leader in the design and manufacture of high-performance radio frequency components and compound semiconductor technologies. RFMD’s products enable worldwide mobility, provide enhanced connectivity and support advanced functionality in the cellular handset, wireless infrastructure, wireless local area network (WLAN), CATV/broadband and aerospace and defense markets. RFMD is recognized for its diverse portfolio of semiconductor technologies and RF systems expertise and is a preferred supplier to the world’s leading mobile device, customer premises and communications equipment providers.

Headquartered in Greensboro, N.C., RFMD is an ISO 9001- and ISO 14001-certified manufacturer with worldwide engineering, design, sales and service facilities. RFMD is traded on the NASDAQ Global Select Market under the symbol RFMD. For more information, please visit RFMD’s web site at www.rfmd.com.

This press release includes “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about our plans, objectives, representations and contentions and are not historical facts and typically are identified by use of terms such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” and similar words, although some forward-looking statements are expressed differently. You should be aware that the forward-looking statements included herein represent management’s current judgment and expectations, but our actual results, events and performance could differ materially from those expressed or implied by forward-looking statements. We do not intend to update any of these forward-looking statements or publicly announce the results of any revisions to these forward-looking statements, other than as is required under the federal securities laws. RF Micro Devices’ business is subject to numerous risks and uncertainties, including variability in operating results, risks associated with the impact of global macroeconomic and credit conditions on our business and the business of our suppliers and customers, our reliance on a few large customers for a substantial portion of our revenue, the rate of growth and development of wireless markets, our ability to bring new products to market, our reliance on inclusion in third party reference designs for a portion of our revenue, our ability to manage channel partner and customer relationships, risks associated with the operation of our wafer fabrication, molecular beam epitaxy, assembly and test and tape and reel facilities, our ability to complete acquisitions and integrate acquired companies, including the risk that we may not realize expected synergies from our business combinations, our ability to attract and retain skilled personnel and develop leaders, variability in production yields, raw material costs and availability, our ability to reduce costs and improve margins in response to declining average selling prices, our ability to adjust production capacity in a timely fashion in response to changes in demand for our products, dependence on gallium arsenide (GaAs) for the majority of our products, dependence on third parties, and substantial reliance on international sales and operations. These and other risks and uncertainties, which are described in more detail in RF Micro Devices’ most recent Annual Report on Form 10-K and other reports and statements filed with the Securities and Exchange Commission, could cause actual results and developments to be materially different from those expressed or implied by any of these forward-looking statements.

RF MICRO DEVICES® and RFMD® are trademarks of RFMD, LLC. All other trade names, trademarks and registered trademarks are the property of their respective owners.

                      RF MICRO DEVICES, INC. AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                       (In thousands, except per share data)
                                    (Unaudited)
                                        Three Months Ended
                                        ------------------
                                   April 2,
                                     2011            April 3, 2010
                                  ---------          -------------
    Total revenue                   $213,326               $260,825

    Costs and expenses:
       Cost of goods sold            137,806                162,396
       Research and development       35,471                 35,484
       Marketing and selling          15,386                 14,461
       General and administrative     11,062                 10,887
       Other operating expense           352                    958
                                         ---                    ---

       Total costs and expenses      200,077                224,186
                                     -------                -------

    Operating income                  13,249                 36,639
    Other expense                     (4,164)                (5,499)
                                      ------                 ------

    Income before income taxes        $9,085                $31,140
    Income tax benefit (expense)      15,050                 (4,412)
                                      ------                 ------

    Net income                       $24,135                $26,728
                                     =======                =======

    Net income per share, diluted      $0.08                  $0.10
                                       =====                  =====

    Weighted average outstanding
     diluted shares                  285,248                275,986
                                     =======                =======

                       RF MICRO DEVICES, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                        (In thousands, except per share data)
                                     (Unaudited)
                                                Twelve Months Ended
                                                -------------------
                                                 April 2,       April 3,
                                                      2011             2010
                                                      ----             ----
    Total revenue                               $1,051,756         $978,393

    Costs and expenses:
       Cost of goods sold                          662,085          623,224
       Research and development                    141,097          138,960
       Marketing and selling                        59,470           56,592
       General and administrative                   48,003           48,316
       Other operating expense                       1,582            4,895
                                                     -----            -----

       Total costs and expenses                    912,237          871,987
                                                   -------          -------

    Operating income                               139,519          106,406
    Other expense                                  (16,014)         (21,572)
                                                   -------          -------

    Income before income taxes                    $123,505          $84,834
    Income tax benefit (expense)                     1,053          (13,815)
                                                     -----          -------

    Net income                                    $124,558          $71,019
                                                  ========          =======

    Net income per share, diluted                    $0.44            $0.25
                                                     =====            =====

    Weighted average outstanding diluted shares    280,394          289,429
                                                   =======          =======

                     RF MICRO DEVICES, INC. AND SUBSIDIARIES
              RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
              (In thousands, except percentages and per share data)
                                   (Unaudited)
                                           Three Months Ended
                                           ------------------
                                                January
                                           April 2,    1,     April 3,
                                               2011    2011        2010
                                               ----    ----        ----

    GAAP operating income                   $13,249 $43,320     $36,639
      Share-based compensation
       expense                                5,293   5,615       5,047
      Amortization of intangible
       assets                                 4,614   4,614       4,750
      Restructuring charges related
       to fiscal 2009 strategic                 199     107         117
             restructuring and adverse
              macroeconomic conditions
      Other expenses (restructuring,
       loss on PP&E, integration,               391     347       1,131
            start-up costs and other non-
             cash expenses)
    Non-GAAP operating income                23,746  54,003      47,684
                                             ======  ======      ======

    GAAP net income                          24,135  36,686      26,728
      Share-based compensation
       expense                                5,293   5,615       5,047
      Amortization of intangible
       assets                                 4,614   4,614       4,750
      Restructuring charges related
       to fiscal 2009 strategic                 199     107         117
            restructuring and adverse
             macroeconomic conditions
      Other expenses (restructuring,
       loss on PP&E, integration,               391     347       1,131
            start-up costs, and other non-
             cash expenses)
      Loss on retirement of
       convertible subordinated notes           766       -           -
      Non-cash interest expense on
       convertible subordinated notes         3,074   3,046       4,316
      Loss (income) from equity
       investment                                30     (34)          -
      Tax adjustments                      (16,806)   2,257       1,717
                                            -------   -----       -----

    Non-GAAP net income                      21,696  52,638      43,806
    Plus:  Income impact of assumed
     conversions for interest on                  -       -          37
        1.50% convertible notes
    Non-GAAP net income plus
     assumed conversion of notes-           $21,696 $52,638     $43,843
        Numerator for diluted income
         per share                          ======= =======     =======

    GAAP and Non-GAAP weighted
     average outstanding diluted            285,248 284,152     275,986
        shares                              ======= =======     =======

    Non-GAAP net income per share,
     diluted                                  $0.08   $0.19       $0.16
                                              =====   =====       =====


                                          Three Months Ended
                                          ------------------
                                          April 2,               January 1,
                                            2011                   2011
                                        ---------             -----------
    GAAP gross margin                $75,520   35.4%        $103,089   37.0%
      Adjustment for intangible
       amortization                    3,514    1.6%           3,515    1.2%
      Adjustment for share-based
       compensation                      759    0.4%           1,065    0.4%
      Other expenses
       (restructuring,
       integration                       239    0.1%             262    0.1%
        and other non-cash
         expenses)
    Non-GAAP gross margin            $80,032   37.5%        $107,931   38.7%
                                     =======   ====         ========   ====


                                  Three Months Ended
                                  ------------------
                                             April 3,
                                                2010
                                             ---------
    GAAP gross margin                     $98,429   37.7%
      Adjustment for intangible
       amortization                         3,651    1.4%
      Adjustment for share-based
       compensation                           895    0.3%
      Other expenses
       (restructuring,
       integration                            427    0.2%
        and other non-cash
         expenses)
    Non-GAAP gross margin                $103,402   39.6%
                                         ========   ====

                   RF MICRO DEVICES, INC. AND SUBSIDIARIES
    ADDITIONAL SELECTED NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
                     (In thousands, except percentages)
                                 (Unaudited)
                                                               Three Months
                                                               Ended
    Non-GAAP Operating Income                                 April 2, 2011
    -------------------------                                 -------------
    (as a percentage of sales)

    GAAP operating income                                                6.2%
      Share-based compensation expense                                   2.5%
      Amortization of intangible assets                                  2.2%
      Restructuring charges related to fiscal 2009 strategic
       restructuring and adverse                                         0.1%
             macroeconomic conditions
      Other expenses (restructuring, loss on PP&E,
       integration, start-up costs and other                             0.1%
             non-cash expenses)
    Non-GAAP operating income                                           11.1%
                                                                        ====


                                        Three Months Ended
                                        ------------------
                          April 2,              January 1,          April 3,
                            2011                 2011             2010
                       ---------            -----------      ---------
    GAAP research and
     development
     expense               $35,471               $33,920         $35,484
    Less:
      Share-based
       compensation
       expense               1,410                 1,405           1,386
      Amortization of
       intangible
       assets                   13                    13              12
    Non-GAAP
     research and
     development
     expense               $34,048               $32,502         $34,086
                           =======               =======         =======

                                  Three Months Ended
                                  ------------------
                       April 2,            January 1,      April 3,
                            2011                 2011             2010
                       ---------            -----------      ---------
    GAAP marketing
     and selling
     expense               $15,386               $14,621         $14,461
    Less:
      Share-based
       compensation
       expense               1,249                 1,255           1,213
      Amortization of
       intangible
       assets                1,087                 1,086           1,087
    Non-GAAP
     marketing and
     selling expense       $13,050               $12,280         $12,161
                           =======               =======         =======

                                  Three Months Ended
                                  ------------------
                       April 2,            January 1,      April 3,
                            2011                 2011             2010
                       ---------            -----------      ---------
    GAAP general and
     administrative
     expense               $11,062               $11,036         $10,887
    Less:
      Share-based
       compensation
       expense               1,875                 1,890           1,553
      Other
       restructuring
       and integration
       benefit                  -                    -            (136)
                              ---
    Non-GAAP general
     and
     administrative
     expense                $9,187                $9,146          $9,470
                            ======                ======          ======

                  RF MICRO DEVICES, INC. AND SUBSIDIARIES
    ADDITIONAL SELECTED NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
                                 (Unaudited)
    Free Cash Flow (1)                               Three Months
    ------------------                                   Ended
                                                        April 2,
                                                          2011
                                                       ---------
    (In millions)

    Net cash provided by operating activities               $36.2
    Purchases of property and equipment                      (4.8)
    Free cash flow                                          $31.4
                                                            =====
    (1)   Free Cash Flow is calculated as net cash provided by operating
    activities
    minus property and equipment expenditures.


                                                         Three
    EBITDA (2)                                          Months
    ----------                                          Ended
                                                       April 2,
                                                         2011
                                                      ---------
    (In millions)

    Net Income                                             $24.1
       Interest                                              3.6
       Income tax benefit                                  (15.0)
       Depreciation                                         15.2
       Amortization                                          4.6
                                                             ---
    EBITDA                                                 $32.5
                                                           =====
    (2)  EBITDA is calculated by adjusting net income for interest
    expense and interest income,
    income tax expense, depreciation and intangible amortization.

                    RF MICRO DEVICES, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                (In thousands)
                                  (Unaudited)
                                                 April 2,   April 3,
                                                      2011       2010
                                                      ----       ----
    ASSETS
    Current assets:
      Cash and cash equivalents                   $131,760   $104,778
      Restricted cash and trading security
       investments                                     422     17,698
      Short-term investments                       159,881    134,882
      Accounts receivable, net                     120,375    108,219
      Inventories                                  149,813    122,509
      Other current assets                          37,908     60,738
                                                    ------     ------
     Total current assets                          600,159    548,824

    Property and equipment, net                    209,478    247,085
    Intangible assets, net                          83,685    102,169
    Goodwill                                        95,628     95,628
    Long-term investments                            2,694      2,175
    Other non-current assets                        33,749     18,127
     Total assets                               $1,025,393 $1,014,008
                                                ========== ==========

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
      Accounts payable and accrued liabilities     130,973    124,253
      Current portion of long-term debt              3,852     15,053
      Other short-term liabilities, net                112     13,427
                                                       ---     ------
     Total current liabilities                     134,937    152,733

    Long-term debt, net                            177,343    289,837
    Other long-term liabilities                     36,758     41,354
                                                    ------     ------
     Total liabilities                             349,038    483,924

     Shareholders' equity                          676,355    530,084
                                                   -------    -------

     Total liabilities and shareholders' equity $1,025,393 $1,014,008
                                                ========== ==========

SOURCE RF Micro Devices, Inc.


Source: newswire



comments powered by Disqus