Financial Releases
RF Micro Devices Delivers Record Quarterly Revenue
- Record Quarterly Revenue Of $208.0 Million
- Sales Of POLARIS TOTAL RADIO Solutions Grew To 17% Of Total Revenue
- Earnings Per Share Of $0.07 On A GAAP Basis And $0.08 On A Pro Forma Basis
- RFMD Currently Expects March Quarterly Revenue Of $200 Million To $215 Million
- RFMD Currently Expects March Quarterly Earnings Per Share Will Be Approximately $0.05 To $0.06 On A GAAP Basis And Approximately $0.06 To $0.07 On A Pro Forma Basis
GREENSBORO, N.C., Jan. 24 /PRNewswire-FirstCall/ -- 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 2006 third quarter ended December 31, 2005.
Financial Results
Revenue for the quarter was $208.0 million, an increase of 23.1% versus revenue of $168.9 million in the corresponding quarter of fiscal 2005, and a sequential increase of 17.5% versus revenue of $177.0 million for the prior quarter ended September 30, 2005. The increase in quarterly revenue reflected market share gains in cellular products, driven by sales of power amplifier modules, transmit modules and POLARIS TOTAL RADIO transceiver solutions. Quarterly sales of POLARIS solutions increased sequentially approximately 78% versus the quarter ended September 30, 2005, and represented approximately 17% of the Company's total revenue. RFMD also benefited from strength at its largest customers, the world's leading handset manufacturers.
Gross profit for the quarter was $75.0 million, an increase of 28.5% versus $58.4 million for the prior year period, and a sequential increase of approximately 17.6% from $63.7 million for the quarter ended September 30, 2005. Gross profit margin was 36.1%, versus 34.6% in the corresponding quarter of fiscal 2005 and 36.0% for the prior quarter ended September 30, 2005.
Net income calculated in accordance with U.S. generally accepted accounting principles (GAAP) for the quarter ended December 31, 2005 was $14.7 million, or $0.07 per diluted share, compared with GAAP net income of $0.6 million, or $0.00 per diluted share, for the quarter ended December 31, 2004. This compares sequentially to GAAP net income of $5.9 million, or $0.03 per diluted share, for the prior quarter ended September 30, 2005.
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, non-cash and unusual items. For the purposes of this press release, all references to pro forma results reflect non-GAAP financial information. In the quarter ended December 31, 2005, pro forma results excluded an aggregate of approximately $1.3 million in non-cash expenses related to amortization of deferred stock-based compensation, the effect of variable accounting associated with the Company's option exchange program and amortization of transaction-related intangibles, and $0.4 million related to the discontinuation of the Company's WLAN chipset development efforts. A reconciliation of the Company's GAAP financial results to pro forma financial results is provided in the financial statement portion of this release.
After excluding these items, pro forma net income for the quarter ended December 31, 2005 was $16.4 million, or $0.08 per diluted share. This compares with pro forma net income of $3.6 million, or $0.02 per diluted share, for the quarter ended December 31, 2004, and pro forma net income of $8.7 million, or $0.04 per diluted share, for the prior quarter ended September 30, 2005.
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. In the prior quarter ended September 30, 2005, pro forma results excluded an aggregate of approximately $2.6 million in non-cash expenses related to amortization of deferred stock-based compensation, the effect of variable accounting associated with the Company's option exchange program and amortization of transaction-related intangibles, and $0.2 million related to the discontinuation of the Company's WLAN chipset development efforts.
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.
Financial Guidance And Business Outlook
RF Micro Devices currently anticipates revenue in the range of $200 million to $215 million in the March 2006 quarter, representing year-over-year growth of approximately 33% to 43%. Quarterly GAAP net income is expected in the range of $0.05 to $0.06 per share, assuming no impact of variable accounting associated with the recent option exchange program, which is difficult to predict because it is dependent on the Company's closing stock price at the end of the quarter. Quarterly pro forma net income is expected in the range of $0.06 to $0.07 per share.
RF Micro Devices expects its revenue growth will outpace the rate of growth of the handset industry in the March quarter due to market share gains and increased sales of higher dollar content products, such as cellular transceiver modules and cellular transmit modules, which have higher average selling prices and increase RFMD's average dollar content per handset. The Company anticipates particular strength in the markets for CDMA, GSM/GPRS and GSM/GPRS/EDGE handsets as a result of successful new product launches, recent design wins and positive momentum from leading customers.
Comments From Management
"During the December quarter, RF Micro Devices achieved record revenue and strong financial performance, driven by rapid customer adoption of our best-in-class cellular solutions, including our POLARIS TOTAL RADIO transceiver solutions and cellular transmit modules," said Bob Bruggeworth, president and CEO of RF Micro Devices. "In the transceiver market, we continued to gain momentum as POLARIS chipset revenue more than tripled year-over-year and increased approximately 78% versus the prior quarter.
"We expect continued positive momentum in the March quarter as our POLARIS solutions ramp into a growing portfolio of high volume handsets. Based on backlog and customer forecasts from multiple customers, we currently expect sales of our POLARIS products will continue to grow sequentially in the March quarter, which should offset most, if not all, handset seasonality for this quarter and position RFMD to achieve record revenue for the March quarter. Beyond March, we anticipate continued growth in transceivers and expect both new and existing customers to continue to adopt our POLARIS solutions, including our next-generation, single-chip CMOS EDGE transceiver.
Bruggeworth concluded, "We exited 2005 with positive revenue and earnings momentum, and we expect to build on this momentum in calendar 2006 with both revenue and earnings growth as the year progresses."
Dean Priddy, CFO and vice president of administration, said, "Operating income more than tripled sequentially on a dollar basis in the December quarter to 8.2% of sales. We are positioned to begin calendar year 2006 with greatly improved revenue and profitability over the same period one year ago. We are also pleased with the health of our balance sheet. Cash flow from operations was $17.8 million, and our cash position during the quarter improved, even as the Company made substantial capital investments in assembly and fab capacity, which we believe will enable us to further reduce our cost structure and drive continued growth in revenue and earnings."
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.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 11050137.
About RF Micro Devices
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 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, our assembly facility and our test, 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®, 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 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 Nine Months Ended
December 31, December 31,
2005 2004 2005 2004
Total revenue $ 207,974 $ 168,917 $ 544,362 $ 483,798
Costs and expenses:
Cost of goods sold 132,993 110,550 351,322 311,477
Research and development 38,650 38,848 116,824 111,337
Marketing and selling 11,906 11,971 36,041 34,510
General and
administrative 6,919 6,594 20,084 17,768
Other operating expense
(income) 380 - (304) 7,056
Total costs and expenses 190,848 167,963 523,967 482,148
Operating income 17,126 954 20,395 1,650
Loss in equity method
investee - - - (1,761)
Other income (expense), net 298 (133) 851 (2,497)
Income (loss) before
income taxes $ 17,424 $ 821 $ 21,246 $ (2,608)
Income tax expense (2,746) (239) (3,348) (464)
Net income (loss) $ 14,678 $ 582 $ 17,898 $ (3,072)
Net income (loss) per
share, diluted $ 0.07 $ 0.00 $ 0.09 $ (0.02)
Weighted average
outstanding diluted
shares 222,565 192,002 191,678 186,801
RF MICRO DEVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
December 31, December 31,
2005 2004 2005 2004
GAAP net income (loss) $ 14,678 $ 582 $ 17,898 $ (3,072)
Amortization of deferred
stock compensation 1,142 1,336 4,080 4,148
Compensation expense
(benefit) for options
subject to variable
accounting (280) - 2 -
Amortization of
intangible assets 442 1,702 1,249 4,968
Discount and issuance
cost write-off related
to the extinguishment
of the 3.75%
convertible debt - - - 642
In process research and
development charge - - - 6,201
Customer related payment - - 5,000 -
Discontinuation of WLAN
chipset development
efforts/(adjustment) 380 - (304) -
Impairment charge - - - 391
Pro forma net income 16,362 3,620 27,925 13,278
Plus: Income impact of
assumed conversions for
interest on 1.50%
convertible notes 1,036 - 3,128 -
Pro forma net income plus
assumed conversion of
notes -- Numerator for
diluted income per share $ 17,398 $ 3,620 $ 31,053 $ 13,278
GAAP weighted average
outstanding diluted shares 222,565 192,002 191,678 186,801
Adjustments:
Dilutive stock options - - - 4,319
Assumed conversion of
1.50% convertible notes - - 30,144 -
Pro forma weighted
average outstanding
diluted shares 222,565 192,002 221,822 191,120
Pro forma net income
per share, diluted $ 0.08 $ 0.02 $ 0.14 $ 0.07
RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, March 31,
2005 2005
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $ 70,057 $ 26,016
Short-term investments 71,798 134,828
Accounts receivable, net 99,403 74,545
Inventories 105,627 75,090
Other current assets 19,743 15,970
Total current assets 366,628 326,449
Property and equipment, net 334,985 339,624
Goodwill 115,911 119,694
Investment in Jazz Semiconductor, Inc. 59,265 59,265
Long-term investments 292 365
Intangible assets, net 11,306 11,316
Other assets 3,544 3,033
Total assets $ 891,931 $ 859,746
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $ 87,108 $ 74,684
Other short-term liabilities, net 89 4,968
Total current liabilities 87,197 79,652
Long-term debt, net 226,695 226,168
Other long-term liabilities 5,062 5,876
Total liabilities 318,954 311,696
Shareholders' equity:
Total shareholders' equity 572,977 548,050
Total liabilities and
shareholders' equity $ 891,931 $ 859,746
SOURCE: RF Micro Devices, Inc.
CONTACT: At RF Micro Devices, Dean Priddy, Chief Financial Officer, +1-336-931-7975, or Doug DeLieto, VP, Investor Relations, +1-336-678-5091; or At the Financial Relations Board, Joseph Calabrese, +1-212-827-3772