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RF Micro Devices (RFMD) - Press Release 7-29-2008
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RFMD® Delivers June Quarterly
Revenue of $240.5 Million Company On Track
For At Least 10% Non-GAAP Operating Income By December Quarter
Business Highlights:
-- Quarterly Revenue Increased 9.0% Sequentially And 13.7% Year-Over-Year
To $240.5 Million
-- Quarterly GAAP Diluted
Loss Per Share Totaled ($0.09)
-- Quarterly
Non-GAAP Diluted Earnings Per Share (EPS) Totaled $0.03
-- GAAP Gross Margin Improved To 30.1% And Non-GAAP Gross Margin Increased
240 Basis Points To 33.0%
-- RFMD's Cellular
Products Group (CPG) Achieved 10% Sequential Growth In
Cellular Front Ends
-- RFMD's Multi-Market
Products Group (MPG) Significantly Exceeded RFMD's
Revised Revenue Target Of 20% Sequential Growth, Provided On June 3,
2008
-- RFMD Expects September 2008 Quarterly
Revenue To Be In The Range Of
$250 Million To $260 Million
-- September
Quarterly GAAP Diluted Loss Per Share Is Expected To Be In
The Range Of ($0.03) To ($0.05)
-- September
Quarterly Non-GAAP Diluted EPS Is Expected To Be
Approximately $0.05 GREENSBORO, N.C., July 29
/PRNewswire-FirstCall/ -- RF Micro Devices, Inc. (Nasdaq: RFMD), a global
leader in the design and manufacture of high-performance semiconductor
components, today reported financial results for its fiscal 2009 first
quarter ended June 28, 2008. Quarterly revenue increased approximately
13.7% year-over-year and approximately 9.0% sequentially to $240.5 million.
Operating loss was approximately ($39.7) million on a GAAP basis, reflecting
restructuring charges related to the strategic restructuring announced
on May 6, 2008. Non-GAAP operating income was approximately $2.3 million.
Non-GAAP gross margin improved sequentially 240 basis points during
the quarter, primarily driven by the sequential increase in MPG revenue.
Consistent with guidance provided on May 6, 2008, RFMD's June 2008 quarterly
revenue reflected broad-based strength in MPG and a 10% sequential increase
in sales of cellular front ends.
RFMD(R) Product Group Highlights
CPG
-- Sales of cellular front ends increased 10%, or approximately
three times the industry's growth rate in the June quarter
--
RFMD shipped production volumes of cellular front ends to all five of
the world's leading handset OEMs
-- RFMD is experiencing increased
design and bookings activity, driven by multiple customers
--
RFMD is on track to eliminate approximately $75 million in annual CPG
product development expenses by the end of the calendar year
MPG
-- MPG significantly exceeded RFMD's revised revenue target
of 20% sequential growth in MPG revenue
-- All five MPG product
lines -- Aerospace & Defense, Broadband/Consumer, Standard Products,
Wireless Infrastructure and Wireless Connectivity -- grew sequentially
-- The sequential increase in MPG revenue was a significant contributor
to RFMD's 240-basis point improvement in non-GAAP gross margin
-- June 2008 quarterly results reflected new "soft synergies" from
the Sirenza Microdevices acquisition, including supply chain savings
and volume buying power on component parts
-- MPG released 27
new products and is on track to release more than 100 new products in
fiscal 2009
-- RFMD is on track to exceed its fiscal 2009 revenue
goal of $250 million in MPG revenue
GAAP and non-GAAP financial
measures are presented in the tables below, and non-GAAP financial measures
are reconciled to the corresponding GAAP financial measures in the financial
statement portion of this press release.
GAAP RESULTS (in millions,
except percentages
and per Q1 Fiscal
Q4 Fiscal % Change Q1 Fiscal
% Change share data)
2009 2008
vs. Q4 2008 2008 vs.
Q1 2008
Revenue
$240.5 $ 220.6
9.0 % $ 211. 6
13.7 % Gross Margin
30.1 % 25.2 % 4.9ppt
31.5 % (1.4)ppt Operating Loss
$(39.7) $ (32.8) 20.9 %
$ (1.8) 2,162.1 % Net (Loss)
Income $(24.1)
$ (17.2) 39.9 %
$ 23.6 (202.2)%
Diluted (LPS) EPS
$(0.09) $ (0.06) 47.9 %
$ 0.11 (186.6)%
NON-GAAP RESULTS
(excluding share-based compensation, amortization of intangibles, amortization
of acquisition-related inventory step-up, acquired in process research
and development charge, manufacturing facility relocation and related
costs, manufacturing start-up costs, loss on investment, restructuring
charges, valuation allowance adjustment and the tax effect on non-GAAP
restructuring adjustments)
(in millions,
except percentages and Q1 Fiscal
Q4 Fiscal % Change Q1 Fiscal % Change
per share data) 2009
2008 vs. Q4 2008 2008
vs. Q1 2008
Gross Margin
33.0 % 30.6 %
2.4ppt 31.9 % 1.1ppt
Operating Income (Loss)
$ 2.3 $ (13.4)
117.2 % $2.3
2.4 % Net Income
$ 7.9 $ 2.2
260.8 % $ 6.6
21.1 % Diluted EPS
$ 0.03 $ 0.01
270.7 % $ 0.03 (7.6)%
Financial Guidance And Business Outlook
-- Revenue in the September 2008 quarter is currently expected to
be in the range of $250 million to $260 million
-- RFMD forecasts
CPG revenue will increase sequentially in the September 2008 quarter,
driven by handset unit volume growth, share gains at targeted accounts,
new handset launches and improved order visibility
-- RFMD forecasts
MPG revenue will increase sequentially in the September 2008 quarter,
supported by improved order v
-- GAAP net loss in the September
2008 quarter is currently expected to be in the range of ($0.03) to
($0.05) per diluted share, including approximately $15 million to $20
million in restructuring charges related to the strategic restructuring
announced on May 6, 2008
-- Non-GAAP net income in the September
2008 quarter is currently expected to be approximately $0.05 per diluted
share, excluding estimated share-based compensation expense, amortization
of intangibles and restructuring charges
The methodology used
by RFMD to estimate share-based compensation expense does not factor
in items such as new grants, terminations or amounts that may be capitalized
in inventory, and the methodology used to estimate amortization of intangibles
assumes no additional intangible assets are recorded. RFMD does not
estimate the impact of share-based compensation expense on gross margin
or operating expenses and will provide this information with its September
2008 quarterly results. Accordingly, actual quarterly results may differ
from these estimates, and such differences may be material.
Comments
From Management
Bob Bruggeworth, president and CEO of RFMD, said,
"RFMD's new strategy and diversification efforts are already paying
dividends -- one quarter ahead of our original estimates, driven by
exceptional teamwork and steady execution by the entire RFMD team. We
gained share in cellular RF components, with front end revenue increasing
10% sequentially, and our performance in MPG easily exceeded our revised
revenue target of 20% sequential revenue growth.
"Consistent
with our strategic restructuring announcement on May 6, we have eliminated
all product development expenses related to wireless systems, and we
believe our organization is now positioned to achieve sustainable, long-term
growth and profitability. We have already begun to deliver the expense
reductions forecast for later this year, and we are well on our way
to achieving our stated goal of at least 10% non-GAAP operating income
and double-digit return on invested capital (ROIC) by the December quarter."
Dean Priddy, CFO and corporate vice president of administration
of RFMD, said, "RFMD's June financial performance and September quarterly
guidance highlight the progress we have made in achieving our financial
goals. RFMD's sharpened focus on RF components and compound semiconductors
is driving our revenue and profitability, and our expense reductions
are ahead of schedule. As our June results demonstrate, our 240-basis
point sequential improvement in gross margin and approximately 700-basis
point sequential improvement in operating margin are leading indicators
of the superior financial leverage RFMD is positioned to deliver."
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
the following non-GAAP financial measures: (i) non-GAAP gross margin,
(ii) non-GAAP operating (loss) income, (iii) non-GAAP net income, and
(iv) non-GAAP net income per diluted share. Each of these non-GAAP financial
measures is adjusted from GAAP results to exclude certain expenses that
are outlined in the "Reconciliation of GAAP to Non-GAAP Financial Measures"
table on page 8.
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. 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 and to analyze financial performance excluding the
effect of certain non-cash expenses, unusual items 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 margin. Non-GAAP
gross margin excludes share-based compensation expense, amortization
of intangible assets, an adjustment for amortization of acquisition-related
inventory step-up and an adjustment for manufacturing facility relocation
and related costs. We believe that exclusion of these costs in presenting
non-GAAP 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 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 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 margins and other financial measures in comparison to
both prior periods as well as to its competitors. We also believe that
the adjustments to margin related to business acquisitions (amortization
of acquisition-related inventory step-up and an adjustment for manufacturing
facility relocation and related 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 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 (loss)
income. Non-GAAP operating (loss) income excludes share-based compensation
expense, amortization of intangible assets, restructuring charges, acquired
in-process research and development, amortization of acquisition-related
inventory step-up, costs associated with the relocation of a manufacturing
facility, manufacturing start-up costs, and adjustments associated with
the discontinuation of our WLAN chipset development efforts. We believe
that presentation of a measure of operating (loss) income 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 margin. We believe that
restructuring charges, manufacturing start-up costs, acquired in-process
research and development, amortization of acquisition-related inventory
step-up, and costs associated with the relocation of a manufacturing
facility, 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 (loss) income has economic substance because the
excluded expenses are either non-recurring in nature 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, restructuring charges, manufacturing
start-up costs, acquired in-process research and development, amortization
of acquisition-related inventory step-up, costs associated with the
relocation of a manufacturing facility, loss on investment, valuation
allowance adjustment and also reflect an adjustment of income tax associated
with the exclusion of non-GAAP restructuring adjustments. 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 margin
and non-GAAP operating income. 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 non-recurring in nature, do
not represent current cash expenditures, or are variable in nature and
thus unlikely to become recurring expenses.
Limitations of non-GAAP
financial measures. The primary material limitations associated with
the use of non-GAAP gross margin, non-GAAP operating (loss) income,
non-GAAP net income and non-GAAP net income per diluted share as compared
to the most directly comparable GAAP financial measures of gross margin,
operating (loss) income, net (loss) income and net (loss) income per
diluted share 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
margin, operating (loss) income, net (loss) income and net (loss) income
per diluted share.
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.earnings.com
or http://www.rfmd.com
(under Investor Info). A telephone playback of the conference call will
be available approximately one hour after the call's completion by dialing
303-590-3000 and entering pass code 11116474.
About RFMD: About
RFMD: RF Micro Devices, Inc. (Nasdaq GS: RFMD) is a global leader in
the design and manufacture of high-performance semiconductor components.
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 quarterly operating results, the rate of growth
and development of wireless markets, risks associated with our planned
exit from our wireless systems business, including cellular transceivers
and GPS solutions, the risk that restructuring charges may be greater
than originally anticipated and that the cost savings and other benefits
from the restructuring may not be achieved, risks associated with the
operation of our wafer fabrication facilities, molecular beam epitaxy
facility, assembly facility 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, our ability to reduce
costs and improve gross margins by implementing innovative technologies,
our ability to bring new products to market, our ability to adjust production
capacity in a timely fashion in response to changes in demand for our
products, dependence on a limited number of customers, and dependence
on third parties. 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(R) and RFMD(R)
are trademarks of RFMD, LLC. All other trade
names, trademarks and registered trademarks are the property of their
respective owners.
Tables To Follow
RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
June 28, 2008 June 30, 2007
Total revenue
$ 240,492 $
211,599
Costs and expenses:
Cost of goods sold
168,163
144,901 Research and development
51,354
47,688 Marketing and selling
18,522
12,230 General and administrative
13,058
7,776 Other operating expense
29,098
759
Total costs and expenses
280,195
213,354
Operating loss
(39,703)
(1,755) Other (loss) income
(79)
6,069
(Loss) income before income taxes
$ (39,782) $
4,314 Income tax benefit
15,659
19,287
Net (loss) income
$ (24,123) $
23,601
Net (loss) income per share, diluted
$ (0.09)
$ 0.11
Weighted average outstanding diluted shares
261,249
227,504
RF MICRO DEVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
Three Months Ended
June 28, March 29, June
30,
2008 2008
2007
GAAP operating loss
$(39,703) $(32,832)
$(1,755) Share-based compensation
expense
4,481 4,645
2,791 Amortization of
intangible assets 7,771
7,682 461
Acquired in process research
and development
1,400
-
- Amortization of
acquisition-related
inventory step-up
661 5,482
- Charges related to strategic
restructuring
26,568
-
- Restructuring charges
related to sale
of substantially
all Bluetooth(R) assets
-
- 329
Restructuring charges related
to the integration of Sirenza
and other
474 998
- Manufacturing start-up
costs
657 299
430 Manufacturing facility
relocation and related costs
- 337
- Non-GAAP operating income (loss)
2,309 (13,389)
2,256
GAAP net (loss) income
(24,123) (17,240)
23,601 Share-based compensation
expense 4,481
4,645 2,791
Amortization of intangible assets 7,771
7,682 461
Acquired in process research
and development
1,400
-
- Amortization of
acquisition-related inventory
step-up
661 5,482
- Charges related to strategic
restructuring
26,568
-
- Restructuring charges
related to sale
of substantially all
Bluetooth(R) assets
-
- 329
Restructuring charges related
to the integration of Sirenza
and other
474 998
- Manufacturing start-up
costs
657 299
430 Manufacturing facility
relocation and related costs
- 337
- Loss on investment
-
- 671
Tax effect on non-GAAP
restructuring adjustments
(9,944)
-
- Valuation allowance
adjustment
-
- (21,722)
Non-GAAP
net income
7,945 2,203
6,561 Plus: Income impact of assumed
conversions for interest on
1.50% convertible notes
660
- 669
Non-GAAP net income plus assumed conversion
of notes-Numerator for diluted income
per share
$ 8,605 $ 2,203
$ 7,230
GAAP weighted average outstanding
diluted shares Adjustments:
261,249 276,085
227,504 Diluted stock
options
1,745 1,952
- Assumed conversion of
1.50% convertible
notes
30,144
-
- Non-GAAP weighted average
outstanding diluted shares
293,138 278,037
227,504
Non-GAAP net income per share,
diluted
$ 0.03 $ 0.01
$ 0.03
GAAP gross margin percentage
30.1 % 25.2 %
31.5 % Adjustment for
amortization of
acquisition-related inventory
step-up
0.3 % 2.5 %
- Adjustment for share-based
compensation
0.3 % 0.2 %
0.2 % Adjustment for manufacturing
facility relocation and
related costs
- 0.2 %
- Adjustment for intangible
amortization
2.3 % 2.5 %
0.2 % Non-GAAP gross margin percentage
33.0 % 30.6 %
31.9 %
RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 28, March
29,
2008
2008
(Unaudited) (Audited)
ASSETS Current assets:
Cash and cash equivalents
$ 116,581 $
129,750 Restricted cash
69
504 Short-term investments
80,490
100,841 Accounts receivable,
net
117,246
115,629 Inventories
180,196
190,753 Other current
assets
93,663
84,556 Total current assets
588,245
622,033
Property and equipment, net
417,741
430,237 Goodwill
716,179
701,317 Long-term investments
24,586
26,336 Intangible assets, net
206,159
205,072 Other assets
31,770
32,200 Total assets
$ 1,984,680 $ 2,017,195
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities: Accounts
payable and accrued
liabilities
$ 123,044 $
130,785
Current portion - long-term debt
4,613
4,523 Other short-term
liabilities, net
150
283 Total
current liabilities
127,807
135,591
Long-term debt, net
616,211
616,698 Other long-term liabilities
22,323
26,269 Total liabilities
766,341
778,558
Shareholders' equity:
Total shareholders' equity
1,218,339 1,238,637
Total liabilities and
shareholders' equity
$ 1,984,680 $ 2,017,195
SOURCE RF Micro Devices, Inc. 07/29/2008 CONTACT: Dean Priddy,
CFO, 1-336-678-7975, or Doug DeLieto, VP, Investor Relations,
1-336-678-7968, both of RFMD(R); or Joe Calabrese of Financial
Relations Board, 1-212-827-3772, for RFMD Web site:
http://www.rfmd.com
(RFMD)
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