Financial Releases
RFMD Delivers 50% Growth in Revenue and Improved Operating Income
- Record Revenue Of $238.3 Million, Representing Growth Of Approximately 50%, Compared To Prior-Year Period
- GAAP Diluted Earnings Per Share Of $0.07, And GAAP Operating Income Of $14.0 Million, Including $5.5 Million Of Non-Cash Share-Based Compensation Expense And $0.5 Million Of Non-Cash Amortization Of Intangibles
- Non-GAAP Diluted Earnings Per Share Of $0.09, And Non-GAAP Operating Income Of $20.0 Million, Excluding Non-Cash Share-Based Compensation Expense And Non-Cash Amortization Of Intangibles
- Company Achieves Fifth Consecutive Quarter Of Growth In Revenue And Non-GAAP Operating Income
- RFMD Currently Expects September Quarterly Revenue Will Grow Sequentially Approximately 1% To 5%
- RFMD Currently Expects September Quarterly Earnings Per Share Will Be Approximately $0.08 To $0.09 (GAAP) And Approximately $0.10 To $0.11 (Non-GAAP)
GREENSBORO, N.C., July 25 /PRNewswire-FirstCall/ -- RF Micro Devices, Inc. (Nasdaq: RFMD), a global leader in the design and manufacture of high-performance radio systems and solutions for applications that drive mobile communications, today reported financial results for its fiscal 2007 first quarter ended June 30, 2006. Quarterly revenue grew approximately 50% year-over-year and 5.5% sequentially to a record $238.3 million, and operating income improved to $14.0 million, on a GAAP basis, and $20.0 million, on a non-GAAP basis. RFMD's June quarterly results reflected strength at the world's leading handset manufacturers, market share gains in RF semiconductors and increased market demand for the Company's cellular transceivers and transmit modules.
Business Highlights
Revenue
* Revenue growth was driven primarily by RFMD's largest handset original
equipment manufacturer (OEM) customers
* Revenue growth was across all three business units -- Cellular,
Wireless Connectivity and Infrastructure
* RFMD is booked for sequential growth with the world's four largest
handset manufacturers in the September 2006 quarter
Cellular
* RFMD extended its market share leadership in power amplifiers and
GPRS/EDGE transceivers
* POLARIS(TM) TOTAL RADIO(TM) solution sales increased to approximately
28% of total quarterly revenue, representing the eighth consecutive
quarter of growth in transceiver shipments
* RFMD is currently booked for continued sequential growth in transceiver
shipments in the September 2006 quarter
Wireless Connectivity
* RFMD increased sales of WLAN components for handsets and gaming devices
* RFMD ramped its SiW3500 Bluetooth(R) solution in support of an
EDGE-enabled mobile device powered by Danger, Inc. and manufactured by
Sharp Corporation
Infrastructure
* RFMD demonstrated 120-watt Gallium Nitride (GaN) WCDMA high-power
transistors at the IEEE MTT-S tradeshow and has commenced sampling GaN
power amplifiers
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 Q1 Fiscal Q4 Fiscal % Change Q1 Fiscal % Change
and per share data) 2007 2006 vs. Q4 2006 2006 vs. Q1 2006
Revenue $238.3 $225.9 5.5% $159.4 49.5%
Gross Margin 33.4% 33.6% (0.2) ppt 34.1% (0.7) ppt
Operating Income
(Loss) $ 14.0 $ (1.7) N/M $ (2.3) N/M
Net Income (Loss) $ 13.9 $ (1.6) N/M $ (2.7) N/M
Diluted EPS $ 0.07 $(0.01) N/M $(0.01) N/M
NON-GAAP RESULTS (excluding share-based compensation, amortization,
restructuring and customer related payment)
(in millions,
except percentages Q1 Fiscal Q4 Fiscal % Change Q1 Fiscal % Change
and per share data) 2007 2006 vs. Q4 2006 2006 vs. Q1 2006
Revenue $238.3 $225.9 5.5% $164.4 45.0%
Gross Margin 34.4% 35.0% (0.6) ppt 36.3% (1.9) ppt
Operating Income $ 20.0 $ 19.8 1.4% $ 3.3 N/M
Net Income $ 19.9 $ 19.9 0.3% $ 2.8 N/M
Diluted EPS $ 0.09 $ 0.09 0.2% $ 0.01 N/M
N/M = Not Meaningful
Financial Guidance And Business Outlook
In the September 2006 quarter, RFMD anticipates continued market share gains in RF semiconductors, led by cellular transceivers and transmit modules. RFMD believes it is benefiting from handset market strength and is currently booked for growth in the September quarter with multiple handset OEMs, representing the majority of worldwide handset production.
* Revenue in the September 2006 quarter is currently expected to be in
the range of $240 million to $250 million, representing sequential
growth of approximately 1% to 5% and year-over-year growth of
approximately 35% to 41%.
* Quarterly GAAP net income in the September 2006 quarter is currently
expected to be in the range of $0.08 to $0.09 per share, including
estimated non-cash share-based compensation expense and non-cash
amortization of intangibles of approximately $4.0 million in the
aggregate.
* Quarterly non-GAAP net income is currently expected to be in the range
of $0.10 to $0.11 per share. Non-GAAP net income excludes non-cash
share-based compensation expense and non-cash amortization of
intangibles.
The methodology used by RFMD to estimate non-cash share-based compensation expense does not factor in items such as new grants, exercises, terminations or amounts that may be capitalized in inventory, and the methodology used to estimate intangible amortization assumes no additional intangible assets are recorded. RFMD currently cannot estimate the impact of non-cash share-based compensation expense on gross margin or operating expenses and will provide this information with its September 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 RF Micro Devices, said, "RFMD is successfully executing on a plan to grow quarterly revenue and deliver improved quarterly operating income. During the June quarter, we took share in cellular transceivers and transmit modules, and we expect this trend to continue. In fact, we are currently booked for sequential revenue growth in the September quarter with the world's four largest handset manufacturers. In the second half of calendar year 2006, we expect revenue, margins and earnings will be favorably impacted by momentum at our leading customers, as well as strong handset demand, new product launches and continued design wins."
Dean Priddy, CFO and vice president, finance and administration of RF Micro Devices, said, "We believe the handset industry will experience healthy growth this year of at least 15% and we're positioned to grow well in excess of the overall market. The demand for our GaAs technology has increased rapidly with transmit modules, WCDMA and WLAN in handsets, as well as complete front-end GaAs solutions for the emerging 802.11n PC market. Our 40% increase in fab capacity is expected to be completed in the December quarter and is a supply chain competitive advantage for RFMD. Coupled with this investment we are more than doubling our assembly capacity in Beijing by the December quarter, giving us substantial cost and cycle time advantages.
"We added $25 million in five-year asset-based financing in the June quarter. We do not expect this facility will materially impact quarterly earnings, and it gives us the flexibility to continue making the investments we feel are necessary to drive revenue and earning growth while maintaining a healthy cash balance. In particular, we believe margins will show improvement in the September quarter largely because of the strategic manufacturing investments we are making."
Non-GAAP Financial Measures
RFMD reports gross margin, operating income, net income and earnings per share (EPS) on a GAAP basis and non-GAAP basis. RFMD believes non-GAAP financial measures provide useful supplemental information to investors and facilitate a better understanding of results of operations as seen through the eyes of management. RFMD has chosen to provide this supplemental information to enable investors to perform additional comparisons of operating results and analyze financial performance without the impact of certain non-cash expenses or unusual items that may obscure trends in RFMD's underlying performance. Management uses these non-GAAP financial measures internally to make strategic decisions, forecast future results and evaluate RFMD's current performance. These non-GAAP financial measures are not in accordance with, or an alternative for, GAAP financial measures and may differ from non-GAAP financial measures used by other companies.
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 11065487.
About RFMD
RF Micro Devices, Inc. (Nasdaq: RFMD) is a global leader in the design and manufacture of high-performance radio systems and solutions for applications that drive mobile communications. RFMD's power amplifiers, transmit modules, cellular transceivers and system-on-chip (SOC) solutions enable worldwide mobility, provide enhanced connectivity and support advanced functionality in current- and next-generation mobile handsets, cellular base stations, wireless local area networks (WLANs), wireless personal area networks (WPANs) and global positioning systems (GPS). Recognized for its diverse portfolio of state-of-the-art semiconductor technologies and vast RF systems expertise, RFMD is a preferred supplier enabling the world's leading mobile device manufacturers to deliver advanced wireless capabilities that satisfy current and future market demands.
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 the operation of our wafer fabrication facilities, molecular beam epitaxy facility, assembly facility and test and tape and reel 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® 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 OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
June 30,
2006 2005
Total revenue $238,335 $159,384
Costs and expenses:
Cost of goods sold (1) 158,679 105,074
Research and development (1) 43,885 38,713
Marketing and selling (1) 13,410 12,056
General and administrative (1) 8,262 6,668
Other operating expense (income) 67 (850)
Total costs and expenses (1) 224,303 161,661
Operating income (loss) 14,032 (2,277)
Other income (expense), net 951 (88)
Income (loss) before income taxes 14,983 (2,365)
Income tax expense (1,049) (352)
Net income (loss) $13,934 $(2,717)
Net income (loss) per share, diluted $0.07 $(0.01)
Weighted average outstanding diluted shares 225,706 188,100
(1) The following table shows the share-based compensation expense
included in the cost and expense items shown for the periods
presented:
Three Months Ended Three Months Ended
June 30, 2006 June 30, 2005
As Stock-Based As Stock-Based
Reported Compensation Net Reported Compensation Net
Total costs
and expenses:
Cost of goods
sold $158,679 $2,218 $156,461 $105,074 $225 $104,849
Research and
development 43,885 1,451 42,434 38,713 350 38,363
Marketing and
selling 13,410 862 12,548 12,056 411 11,645
General and
administrative 8,262 935 7,327 6,668 59 6,609
Other operating
expense (income) 67 - 67 (850) - (850)
Total costs and
expenses $224,303 $5,466 $218,837 $161,661 $1,045 $160,616
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 30, March 31, June 30,
2006 2006 2005
GAAP operating expenses $65,624 $77,672 $56,587
Share-based compensation
expense 3,248 17,951 820
Amortization of intangible
assets 289 289 197
Discontinuation of WLAN
chipset development efforts
(adjustment) 67 53 (850)
Non-GAAP operating expenses 62,020 59,379 56,420
GAAP operating income (loss) 14,032 (1,689) (2,277)
Share-based compensation
expense 5,466 20,943 1,045
Amortization of intangible
assets 473 457 365
Customer related payment - - 5,000
Discontinuation of WLAN
chipset development efforts
(adjustment) 67 53 (850)
Non-GAAP operating income 20,038 19,764 3,283
GAAP net income (loss) 13,934 (1,568) (2,717)
Share-based compensation
expense 5,466 20,943 1,045
Amortization of intangible
assets 473 457 365
Customer related payment - - 5,000
Discontinuation of WLAN
chipset development efforts
(adjustment) 67 53 (850)
Non-GAAP net income 19,940 19,885 2,843
Plus: Income impact of assumed
conversions for interest
on 1.50% convertible notes 1,049 1,060 -
Non-GAAP net income plus assumed
conversion of notes -
Numerator for diluted
income per share $20,989 $20,945 $2,843
GAAP weighted average
outstanding diluted shares 225,706 189,599 188,100
Adjustments:
Diluted stock options - 6,002 2,799
Assumed conversion of 1.50%
convertible notes - 30,144 -
Non-GAAP weighted average
outstanding diluted shares 225,706 225,745 190,899
Non-GAAP net income per share,
diluted $0.09 $0.09 $0.01
GAAP gross margin percentage 33.4% 33.6% 34.1%
Adjustment for share-based
compensation 0.9% 1.3% 0.1%
Adjustment for intangible
amortization 0.1% 0.1% 0.1%
Adjustment for customer related
payment - - 2.0%
Non-GAAP gross margin percentage 34.4% 35.0% 36.3%
RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, March 31,
2006 2006
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $104,503 $81,588
Short-term investments 67,641 68,949
Accounts receivable, net 122,789 115,715
Inventories 111,287 116,782
Other current assets 27,271 19,542
Total current assets 433,491 402,576
Property and equipment, net 359,281 341,293
Goodwill 116,626 117,218
Investment in Jazz Semiconductor, Inc. 59,265 59,265
Long-term investments 889 584
Intangible assets, net 10,376 10,849
Other assets 4,049 3,658
Total assets $983,977 $935,443
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $102,455 $102,772
Current portion - long-term debt 3,822 -
Other short-term liabilities, net 221 260
Total current liabilities 106,498 103,032
Long-term debt, net 247,983 226,876
Other long-term liabilities 5,843 6,178
Total liabilities 360,324 336,086
Shareholders' equity:
Total shareholders' equity 623,653 599,357
Total liabilities and shareholders' equity $983,977 $935,443
SOURCE: RF Micro Devices, Inc.
CONTACT: Dean Priddy, Chief Financial Officer, +1-336-931-7975, or Douglas DeLieto, VP, Investor Relations, +1-336-931-7968, both of RF Micro Devices; or Joe Calabrese of Financial Relations Board, +1-212-827-3772, for RF Micro Devices