Financial Releases
RF Micro Devices Delivers Record Quarterly Revenue
Quarterly Highlights:
- Quarterly Revenue Increases For The Sixth Consecutive Quarter, To A Record $246.9 Million
- GAAP Loss Per Share Equals $(0.10), Including Previously Announced $33.9 Million Non-Cash Impairment Of Jazz Investment, $9.3 Million Of Non-Cash Share-Based Compensation Expense And $0.5 Million Of Non-Cash Amortization Of Intangibles
- Non-GAAP Diluted Earnings Per Share Equals $0.11, Excluding Non-Cash Impairment Of Jazz Investment, Non-Cash Share-Based Compensation Expense And Non-Cash Amortization Of Intangibles
- RFMD Currently Expects Record December Quarterly Revenue Of $264 To $280 Million
- RFMD Currently Expects December Quarterly Diluted Earnings Per Share Of $0.10 - $0.12 On A GAAP Basis And Approximately $0.12 - $0.14 On A Non- GAAP Basis
GREENSBORO, N.C., Oct. 24 /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 second quarter ended September 30, 2006. Quarterly revenue grew approximately 39% year-over-year and 3.6% sequentially to a record $246.9 million, and operating income totaled $13.0 million, on a GAAP basis, and $22.8 million, on a non-GAAP basis. RFMD's September quarterly results reflected strength at the world's leading handset manufacturers, market share gains in RF semiconductors and record demand for RFMD's cellular transceivers and transmit modules.
Business Highlights
Revenue
* Record revenue was driven by increased sales to the world's largest
handset original equipment manufacturers (OEMs)
* Sales of POLARIS(TM) TOTAL RADIO(TM) solutions grew 13% sequentially to
30% of total revenue
* RFMD is booked for sequential quarterly revenue growth, reflecting
record unit demand for cellular handsets
Cellular
* RFMD extended its leadership in cellular transmit modules, which
represented greater than 50% of total power amplifier revenue
* Sales of POLARIS(TM) TOTAL RADIO(TM) solutions increased for the ninth
consecutive quarter
* RFMD continued to advance toward production readiness of its next-
generation POLARIS(TM) 3 solution, as additional transceiver design wins
were secured in future cellular handsets
* RFMD anticipates POLARIS(TM) sales will continue to grow sequentially
in the December quarter and will achieve year-over-year growth in
calendar 2007
Wireless Connectivity
* RFMD experienced strong design momentum for WLAN front end modules and
power amplifiers at the world's top-five handset makers and across
multiple non-handset applications, including access points, mobile
computing and consumer electronics
* RFMD released its software-based RF8110 GPS solution and anticipates
production shipments in the first half of calendar 2007
* The SiW3500 Bluetooth(R) radio processor was qualified on the reference
designs of two Asia-based baseband manufacturers
Infrastructure
* RFMD sampled 60-, 90- and 120-watt Gallium Nitride (GaN) WCDMA high
power amplifiers (HPAs) to leading base station customers
* RFMD sampled 6- to 12-watt GaN Power ICs for WiMAX, Public Mobile Radio
and other wideband applications
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 share
data) Q2 Fiscal Q1 Fiscal % Change Q2 Fiscal % Change
2007 2007 vs. Q1 2007 2006 vs. Q2 2006
Revenue $246.9 $238.3 3.6% $177.0 39.5%
Gross Margin 34.9% 33.4% 1.5 ppt 36.0% (1.1)ppt
Operating
Income $13.0 $14.0 (7.2)% $5.5 134.7%
Net (Loss)
Income $(20.0) $13.9 N/M $5.9 N/M
Diluted EPS $(0.10) $0.07 N/M $0.03 N/M
NON-GAAP RESULTS (excluding share-based compensation, amortization,
discontinuation of WLAN chipset development efforts and
impairment charge)
(in millions,
except
percentages
and per
share data) Q2 Fiscal Q1 Fiscal % Change Q2 Fiscal % Change
2007 2007 vs. Q1 2007 2006 vs. Q2 2006
Revenue $246.9 $238.3 3.6% $177.0 39.5%
Gross Margin 35.3% 34.4% 0.9 ppt 36.3% (1.0)ppt
Operating
Income $22.8 $ 20.0 14.0% $8.3 174.2%
Net Income $23.7 $ 19.9 18.9% $8.7 171.9%
Diluted EPS $0.11 $ 0.09 18.7% $0.04 151.6%
N/M = Not Meaningful
Financial Guidance And Business Outlook
RFMD anticipates continued cellular product market share gains in the December 2006 quarter, driven by sales of GSM/GPRS and GSM/EDGE cellular transceivers, power amplifier modules and transmit modules. RFMD believes it is benefiting from strength at its largest customers and robust overall unit demand for cellular handsets.
* Revenue in the December 2006 quarter is currently expected to be in the
range of $264 million to $280 million, representing sequential growth of
approximately 7% to 13% and year-over-year growth of approximately 27%
to 35%
* Quarterly GAAP net income in the December 2006 quarter is currently
expected to be in the range of $0.10 to $0.12 per diluted share,
including estimated non-cash share-based compensation expense and non-
cash amortization of intangibles of approximately $3.3 million in the
aggregate
* Quarterly non-GAAP net income is currently expected to be in the range
of $0.12 to $0.14 per share, excluding 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, 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 December 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, "The cellular market remains strong, and RFMD continues to benefit from strategic R&D and manufacturing investments made to capture growth. POLARIS product revenue continues to set records, and we are very well represented in future generation handsets with leading OEMs. In addition, we continue to extend our market leadership in cellular transmit modules and expect growth in this key product segment as we leverage customer relationships, design resources and our world class supply chain. Overall, RFMD is enjoying increased dollar content in cellular handsets as we deliver more functionality and value to our customers. We expect this trend to strengthen as the industry consolidates and as leading customers increase their reliance on those suppliers capable of delivering increased levels of value and integration."
Dean Priddy, CFO and vice president, finance and administration of RF Micro Devices, said, "We are pleased with the improvement in our top line and bottom line results. In particular, our gross margin improvement exceeded the guidance we provided in the June quarterly earnings release and conference call. The improvement in gross margin is a direct result of investments RFMD has made to lower its manufacturing costs, including in-sourced assembly in our Beijing facility, in-sourced GaAs pHEMT production and ongoing yield improvement initiatives."
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 11072983.
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 STATEMENT OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended September 30,
2006 2005
Total revenue $246,919 $177,004
Costs and expenses:
Cost of goods sold(1) 160,778 113,255
Research and development(1) 46,473 39,461
Marketing and selling(1) 14,480 12,079
General and administrative(1) 12,141 6,497
Other operating expense 32 166
Total costs and expenses(1) 233,904 171,458
Operating income 13,015 5,546
Impairment of Jazz investment (33,865) -
Other income (expense), net 1,412 641
(Loss) income before income taxes $(19,438) $6,187
Income tax expense (539) (250)
Net (loss) income $(19,977) $5,937
Net (loss) income per share, diluted $(0.10) $0.03
Weighted average outstanding diluted shares 191,670 192,195
(1)
Three Months Ended Three Months Ended
September 30, 2006 September 30, 2005
As Share-based As Share-based
Reported Compensation Net Reported Compensation Net
Total costs
and expenses:
Cost of goods
sold $160,778 $768 $160,010 $113,255 $389 $112,866
Research
and development 46,473 1,997 44,476 39,461 658 38,803
Marketing
and selling 14,480 1,705 12,775 12,079 585 11,494
General
and
administrative 12,141 4,819 7,322 6,497 543 5,954
Other operating
expense 32 - 32 166 - 16
Total costs
and expenses $233,904 $9,289 $224,615 $171,458 $2,175 $169,283
RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Six Months Ended September 30,
2006 2005
Total revenue $485,254 $336,388
Costs and expenses:
Cost of goods sold(1) 319,457 218,329
Research and development(1) 90,359 78,174
Marketing and selling(1) 27,890 24,135
General and administrative(1) 20,403 13,165
Other operating expense (income) 98 (684)
Total costs and expenses(1) 458,207 333,119
Operating income 27,047 3,269
Impairment of Jazz investment (33,865) -
Other income (expense), net 2,364 553
(Loss) income before income taxes $(4,454) $3,822
Income tax expense (1,588) (602)
Net (loss) income $(6,042) $3,220
Net (loss) income per share, diluted $(0.03) $0.02
Weighted average outstanding diluted shares 191,345 191,315
(1)
Six Months Ended Six Months Ended
September 30, 2006 September 30, 2005
As Share-based As Share-based
Reported Compensation Net Reported Compensation Net
Total costs
and expenses:
Cost of goods
sold $319,457 $2,985 $316,472 $218,329 $614 $217,715
Research
and development 90,359 3,448 86,911 78,174 1,008 77,166
Marketing
and selling 27,890 2,567 25,323 24,135 996 23,139
General
and
administrative 20,403 5,754 14,649 13,165 602 12,563
Other operating
expense (income) 98 - 98 (684) - (684)
Total costs
and expenses $458,207 $14,754 $443,453 $333,119 $3,220 $329,899
RF MICRO DEVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
Three Months Ended
Sept. 30, June 30, Sept. 30,
2006 2006 2005
GAAP operating expenses $73,126 $65,624 $58,203
Share-based compensation
expense 8,521 3,248 1,786
Amortization of intangible
assets 285 289 273
Discontinuation of WLAN
chipset development efforts 32 67 166
Non-GAAP operating expenses 64,288 62,020 55,978
GAAP operating income 13,015 14,032 5,546
Share-based compensation
expense 9,289 5,466 2,174
Amortization of intangible
assets 503 473 441
Discontinuation of WLAN
chipset development efforts 32 67 166
Non-GAAP operating income 22,839 20,038 8,327
GAAP net (loss) income (19,977) 13,934 5,937
Impairment of Jazz
investment 33,865 - -
Share-based compensation
expense 9,289 5,466 2,174
Amortization of intangible
assets 503 473 441
Discontinuation of WLAN
chipset development efforts 32 67 166
Non-GAAP net income 23,712 19,940 8,718
Plus: Income impact of
assumed conversions for
interest on 1.50% convertible
notes 1,050 1,049 1,035
Non-GAAP net income
plus assumed conversion
of notes-Numerator for diluted
income per share $24,762 $20,989 $9,753
GAAP weighted average
outstanding diluted shares 191,670 225,706 192,195
Adjustments:
Diluted stock options 2,484 - -
Assumed conversion of
1.50% convertible notes 30,144 - 30,144
Non-GAAP weighted average
outstanding diluted shares 224,298 225,706 222,339
Non-GAAP net income per
share, diluted $0.11 $0.09 $0.04
GAAP gross margin percentage 34.9% 33.4% 36.0%
Adjustment for share-based
compensation 0.3% 0.9% 0.2%
Adjustment for intangible
amortization 0.1% 0.1% 0.1%
Non-GAAP gross margin percentage 35.3% 34.4% 36.3%
RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Sept. 30, March 31,
2006 2006
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $79,883 $81,588
Short-term investments 88,729 68,949
Accounts receivable, net 133,441 115,715
Inventories 121,376 116,782
Other current assets 29,548 19,542
Total current assets 452,977 402,576
Property and equipment, net 377,200 341,293
Goodwill 116,034 117,218
Investment in Jazz Semiconductor, Inc. 25,400 59,265
Long-term investments 717 584
Intangible assets, net 9,812 10,849
Other assets 4,741 3,658
Total assets $986,881 $935,443
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $113,271 $102,772
Other short-term liabilities, net 4,119 260
Total current liabilities 117,390 103,032
Long-term debt, net 247,180 226,876
Other long-term liabilities 6,253 6,178
Total liabilities 370,823 336,086
Shareholders' equity:
Total shareholders' equity 616,058 599,357
Total liabilities and shareholders' equity $986,881 $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