Financial Releases
RF Micro Devices Announces Financial Results
GREENSBORO, N.C., April 26, 2005 /PRNewswire-FirstCall via COMTEX/ -- RF Micro Devices, Inc. (Nasdaq: RFMD), a leading provider of proprietary radio frequency integrated circuits (RFICs) for wireless communications applications, today reported financial results for its fiscal 2005 fourth quarter, ended March 31, 2005.
Financial Results
The Company's results were consistent with updated financial guidance provided on April 14, 2005. Revenue for the quarter was $150.4 million, a decrease of 8.0% versus revenue of $163.4 million for the corresponding quarter of fiscal 2004, and a sequential decrease of 11.0% versus revenue of $168.9 million for the quarter ended December 31, 2004. The year-over-year decline in quarterly revenue was primarily the result of lower sales to handset manufacturers in Asia and the decline in the U.S. market for TDMA handsets. The sequential decline in quarterly revenue reflected normal seasonality, partially offset by strength at a tier-one handset manufacturer in Asia and share gains in the market for EDGE cellular transceivers.
Gross profit for the quarter was $45.0 million, a decrease of 26.2% versus $60.9 million for the prior-year period, and a sequential decrease of approximately 23.0% from $58.4 million for the quarter ended December 31, 2004. Gross profit margin in the March 2005 quarter was 29.9%, versus 34.6% in the prior quarter and 37.3% in the corresponding quarter of fiscal 2004. The year-over-year and sequential decreases in gross profit margin were primarily attributable to lower sales volumes.
Net loss in accordance with U.S. generally accepted accounting principles (GAAP) for the quarter ended March 31, 2005 was ($62.2) million, or ($0.33) per diluted share, compared with a GAAP net loss of ($0.9) million, or ($0.00) per diluted share, for the quarter ended March 31, 2004. This compares sequentially to GAAP net income of $0.6 million, or $0.00 per diluted share, for the prior quarter ended December 31, 2004.
In addition to reporting net income (loss) and net income (loss) per share in accordance with GAAP, RFMD separately reports these items on a non-GAAP basis, referred to as pro forma, in order to exclude the effect of certain non-recurring and non-cash items. For the purposes of this press release, all references to "pro forma" results reflect non-GAAP financial information. In the quarter ended March 31, 2005, pro forma results excluded the effects of the previously announced discontinuation of the WLAN chipset development efforts, deferred compensation and intangible amortization and an accounting correction related to lease expenses for prior periods, which amounted to approximately $41.8 million, $2.5 million and $1.5 million, respectively.
After excluding these items, pro forma net loss for the quarter ended March 31, 2005 was ($16.4) million, or ($0.09) per share. This compares with pro forma net income of $10.2 million, or $0.05 per diluted share, for the quarter ended March 31, 2004, and pro forma net income of $3.6 million, or $0.02 per diluted share, for the quarter ended December 31, 2004.
In the quarter ended March 31, 2004, pro forma results excluded approximately $3.4 million in non-cash expenses related to amortization of deferred stock-based compensation and amortization of transaction-related intangibles as well as a non-cash asset impairment charge of approximately $7.7 million. In the quarter ended December 31, 2004, pro forma results excluded approximately $3.0 million in non-cash expenses related primarily to the amortization of deferred stock-based compensation and the amortization of transaction-related intangibles. A reconciliation of the Company's GAAP financial results to pro forma financial results is provided in the financial statement portion of this release.
RF Micro Devices believes pro forma reporting provides useful supplemental information to the investment community and facilitates a better understanding of its results of operations. RF Micro Devices has chosen to provide this supplemental information to investors to enable them to perform additional comparisons of operating results and as a means to analyze its financial performance without the impact of certain non-cash expenses or unusual items that may obscure trends in the Company's underlying performance. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
Business Outlook And Financial Guidance
For the fiscal 2006 first quarter ending June 30, 2005, RF Micro Devices currently anticipates quarterly revenue in the mid-$150 million range. The Company also currently expects gross margins in the June quarter will increase. Quarterly GAAP net loss is expected to be in the range of ($0.03) to ($0.04) per share and quarterly pro forma net loss is expected to be in the range of ($0.02) to ($0.03) per share.
Comments From Management
Bob Bruggeworth, president and CEO of RF Micro Devices, said, "During the March quarter, our POLARIS 2 TOTAL RADIO shipments totaled approximately two million units, which represented a sequential increase compared to the December quarter. Our POLARIS chipset shipments to date have totaled more than four million units, and we expect continued sequential growth in the June quarter.
"We currently expect year-over-year growth this fiscal year in all three of our business units -- cellular, wireless connectivity and infrastructure - as we introduce new technologies and as we capture incremental semiconductor content in our customers' next-generation devices. We expect continued traction in EDGE, and we are encouraged by customer acceptance of our POLARIS Radio Module. Our POLARIS Radio Module incorporates all the necessary filtering and is matched to an RFMD PowerStar® transmit module with integrated pHEMT switch technology. This highly integrated solution, which essentially solves our customers' RF engineering challenges with two placements, has secured design wins from multiple leading handset manufacturers."
Dean Priddy, CFO and vice president of administration, said, "In fiscal 2006, we plan to improve profitability as the year progresses by focusing on manufacturing cost savings initiatives, including yield improvements, increased wafer fabrication facility utilization, in-house assembly and cost savings from our suppliers. We will also be focused on prudent expense control, and we currently expect expenses as a percentage of sales to decrease throughout the year."
RF Micro Devices will conduct a conference call at 5:00 p.m. ET 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.fulldisclosure.com or http://www.rfmd.com (under Investor Info). The call will also be available live by dialing (480) 629-9028, and a replay will be available by dialing (303) 590-3000 and entering pass code 11028842.
RF Micro Devices, Inc., an ISO 9001- and ISO 14001-certified manufacturer, designs, develops, manufactures and markets proprietary radio frequency integrated circuits (RFICs) for wireless communications products and applications. The Company is a leading supplier of power amplifiers, one of the most critical radio frequency (RF) components in cellular phones. The Company is also the leading manufacturer of GaAs HBT, which offers distinct advantages over other technologies for the manufacture of current- and next- generation power amplifiers. The Company's products are included primarily in cellular phones, base stations, wireless local area networks (WLANs), cable television modems and global positioning systems (GPS). The Company derives revenue from the sale of standard and custom-designed products. The Company offers a broad array of products including amplifiers, mixers, modulators/demodulators and single-chip transmitters, Bluetooth® products and receivers and transceivers that represent a substantial majority of the RFICs required in wireless subscriber equipment. The Company's goal is to be the premier supplier of low-cost, high-performance integrated circuits and solutions for applications that enable wireless connectivity. RF Micro Devices, Inc. is traded on the Nasdaq National Market under the symbol RFMD. For more information about RFMD, please visit http://www.rfmd.com.
This press release contains forward-looking statements that relate to RF Micro Devices' plans, objectives, estimates and goals. Words such as "expects," "anticipates," "intends," "plans," "projects," "believes" and "estimates," and variations of these words and similar expressions, identify these forward-looking statements. 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 the operation of wafer fabrication, molecular beam epitaxy and other foreign and domestic manufacturing facilities, 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 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®, RFMD® and POLARIS TOTAL RADIO are trademarks
of RFMD, LLC. BLUETOOTH is a trademark owned by Bluetooth SIG, Inc., U.S.A.
and licensed for use by RF Micro Devices, Inc. All other tradenames,
trademarks and registered trademarks are the property of their respective
owners.
RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
March 31, March 31,
2005 2004 2005 2004
(Unaudited) (Audited) (Unaudited) (Audited)
Total revenue $150,406 $163,421 $634,204 $651,379
Costs and expenses:
Cost of goods sold 105,450 102,517 416,927 405,008
Research and development 45,127 34,355 156,464 128,152
Marketing and selling 12,899 11,601 47,409 45,226
General and administrative 7,285 5,642 25,053 21,135
Other operating expense 41,790 8,204 48,845 9,785
Total costs and expenses 212,551 162,319 694,698 609,306
Operating (loss) income (62,145) 1,102 (60,494) 42,073
Loss in equity method
investee -- (1,094) (1,761) (2,831)
Other income (expense), net 65 (775) (2,433) (9,049)
(Loss) income before income
taxes $(62,080) $(767) $(64,688) $30,193
Income tax expense (116) (92) (581) (485)
Net (loss) income $(62,196) $(859) $(65,269) $29,708
Net (loss) income per share,
diluted $(0.33) $(0.00) $(0.35) $0.15
Weighted average outstanding
diluted shares 187,547 185,819 186,985 213,272
RF MICRO DEVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
March 31, March 31,
2005 2004 2005 2004
(Unaudited) (Audited) (Unaudited) (Audited)
GAAP net (loss) income $(62,196) $(859) $(65,269) $29,708
Tax-effected adjustments:
Amortization of
deferred stock
compensation 1,227 1,845 5,375 7,761
Amortization of
intangible assets 1,255 1,575 6,223 7,144
Discount and issuance
cost write-off related
to the extinguishments
of the 3.75%
convertible debt -- -- 642 2,579
Lease adjustment 1,483 -- 1,483 --
In process research and
development charge -- -- 6,201 --
Discontinuation of WLAN
chipset development
efforts 41,790 -- 41,790 --
Impairment charge -- 7,678 391 7,678
Pro forma net (loss) income (16,441) 10,239 (3,164) 54,870
Plus: Income impact
of assumed conversions
for interest on 1.50%
convertible notes -- 1,052 -- 3,102
Pro forma net (loss)
income plus assumed
conversion of notes -
Numerator for diluted
(loss) income per share $ (16,441) $ 11,291 $ (3,164) $ 57,972
GAAP weighted average
outstanding diluted
shares 187,547 185,819 186,985 213,272
Adjustments:
Dilutive stock options -- 6,193 -- --
Assumed conversion of
convertible notes 1.50% -- 30,144 -- --
Pro forma weighted average
outstanding diluted shares 187,547 222,156 186,985 213,272
Pro forma net (loss)
income per share, diluted $ (0.09) $ 0.05 $ (0.02) $ 0.27
RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands)
March 31, March 31,
2005 2004
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $ 26,016 $ 102,965
Short-term investments 134,828 224,880
Accounts receivable, net 74,545 86,287
Inventories 75,090 58,552
Other current assets 16,487 10,098
Total current assets 326,966 482,782
Property and equipment, net 339,624 280,356
Goodwill 119,694 110,006
Long-term investments 59,630 62,908
Intangible assets, net 11,316 50,165
Other assets 3,033 1,799
Total assets $ 860,263 $ 988,016
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and
accrued liabilities $ 74,049 $ 55,548
Other short-term liabilities, net 5,344 336
Total current liabilities 79,393 55,884
Long-term debt, net 226,168 324,626
Other long-term liabilities 5,876 4,368
Total liabilities 311,437 384,878
Shareholders' equity:
Total shareholders' equity 548,826 603,138
Total liabilities and shareholders'
equity $ 860,263 $ 988,016
SOURCE: RF Micro Devices, Inc.
Dean Priddy, Chief Financial Officer, +1-336-931-7152, or Doug DeLieto, VP, Investor Relations, +1-336-931-7968, both of RF Micro Devices; or Joe Calabrese of Financial Relations Board, +1-212-827-3772