Financial Releases
RFMD® Delivers $254.8 Million In Quarterly Revenue
GREENSBORO, N.C., Oct. 27 /PRNewswire-FirstCall/ --RF Micro Devices, Inc. (Nasdaq GS: RFMD), a global leader in the design and manufacture of high-performance semiconductor components, today reported financial results for its fiscal 2010 second quarter ended October 3, 2009. RFMD's September quarterly revenue increased approximately 20% sequentially to $254.8 million. GAAP gross margin for the quarter increased sequentially from 34.8% to 35.9%, and non-GAAP gross margin increased sequentially from 37.0% to 38.1% during the same period. Operating profit was $24.1 million on a GAAP basis and $41.7 million on a non-GAAP basis, reflecting increased revenue and gross profit. Net income was $14.6 million, or $0.05 per diluted share, on a GAAP basis and $36.9 million, or $0.13 per diluted share, on a non-GAAP basis.
September 2009 Quarterly Highlights:
- Quarterly Revenue Increased Sequentially Approximately 20% To $254.8 Million
- On A GAAP Basis, Gross Profit Totaled $91.5 Million, Or 35.9% Of Revenue; Operating Profit Totaled $24.1 Million, Or 9.5% Of Revenue, And Diluted Earnings Per Share Totaled $0.05
- On A Non-GAAP Basis, Gross Profit Totaled $97.0 Million, Or 38.1% Of Revenue; Operating Profit Totaled $41.7 Million, Or 16.4% Of Revenue, And Diluted Earnings Per Share Totaled $0.13
- Non-GAAP Operating Income Dollars Were A Quarterly Record For RFMD
- Free Cash Flow (Net Cash Provided By Operating Activities Minus Property And Equipment Expenditures) Was $45.8 Million, A Sequential Increase Of Approximately 33%
- Adjusting For The 14-Week September 2009 Quarter, RFMD Anticipates Both Revenue And EPS Will Increase Sequentially In The December 2009 Quarter
RFMD® Product Group Highlights
Cellular Products Group (CPG)
- CPG grew significantly faster than its end markets in the September 2009 quarter, driven by secular growth trends and new product cycles
- CPG grew revenue sequentially at its largest customer, and total revenue at all other customers grew sequentially by approximately 50%
- Cellular product sales into 3G handsets grew by approximately 50% year-over-year
- Sales to customers in Greater China increased sequentially by approximately 75%
- To date, CPG has shipped approximately 100 million components featuring RFMD's industry-leading MicroShield® integrated shielding technology, and RFMD has initiated licensing efforts to make this technology industry standard
- CPG broadened its customer base for its industry-leading portfolio of power amplifiers and switch products for 4G LTE data cards and handsets
Multi-Market Products Group (MPG)
- MPG qualified and released RFMD's high-power gallium nitride (GaN) technology with industry-leading reliability performance data
- CATV revenue increased sequentially approximately 70% in the September 2009 quarter, and MPG currently expects significant sequential growth in CATV revenue in the December 2009 quarter
- MPG added two new automatic meter reading (AMR)/smart grid customers in the September 2009 quarter
- MPG increased its electronic toll collection (ETC) customer base in China to seven customers, now covering all major population centers in China, and MPG currently expects a significant acceleration in ETC revenue in fiscal 2011
- Quarterly shipments of WiMAX components increased approximately 40% sequentially in the September 2009 quarter
- MPG released 100 new and derivative products in the September 2009 quarter and has released 169 products through the first half of fiscal 2010
- MPG launched an "Online Store" update offering enhanced web-based RF component sales
- RFMD completed the transfer of production and test of MPG's integrated circuit (IC) and multi-chip module (MCM) products to RFMD's Beijing facility
GAAP Results
(in millions, except
percentages and per
share data) Q2 Fiscal Q1 Fiscal Change Q2 Fiscal Change
2010 2010 vs. Q1 2010 2009(1) vs. Q2 2009
Revenue $254.8 $212.5 19.9 % $271.7 -6.2 %
Gross Margin 35.9 % 34.8 % 1.1 ppt 28.3 % 7.6 ppt
Operating Income
(Loss) $24.1 $12.1 $12.0 $(19.0) $43.1
Net Income (Loss) $14.6 $4.8 $9.8 $(14.2) $28.8
Diluted EPS (LPS) $0.05 $0.02 $0.03 $(0.05) $0.10
NON-GAAP RESULTS (excluding share-based compensation, amortization of intangibles, impairment of intangibles, amortization of acquisition-related inventory step-up, integration charges, manufacturing start-up costs, gain on retirement of convertible subordinated notes, restructuring charges, non-cash interest expense on convertible subordinated notes and tax adjustments)
(in millions, except
percentages and per
share data) Q2 Fiscal Q1 Fiscal Change Q2 Fiscal Change
2010 2010 vs. Q1 2010 2009 (1) vs. Q2 2009
Gross Margin 38.1 % 37.0 % 1.1 ppt 31.6 % 6.5 ppt
Operating Income $41.7 $24.0 $17.7 $18.0 $23.7
Net Income $36.9 $18.9 $18.0 $20.6 $16.3
Diluted EPS $0.13 $0.07 $0.06 $0.07 $0.06
(1) Certain amounts have been adjusted as a result of the retrospective adoption of the Financial Accounting Standard Board's Staff Position No. APB 14-1, "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)" ("FSP APB 14-1," which is included in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Subtopic 470-20, "Debt with Conversion and Other Options" ("FASB ASC 470-20")).
Business Outlook
RFMD believes its overall business environment is improving. RFMD is experiencing continued strong demand from its cellular customers and significantly improved order visibility in MPG's primary markets.
- RFMD's September 2009 quarter was a 14-week quarter, and RFMD's December 2009 quarter is a 13-week quarter
- December 2009 quarterly revenue and EPS are currently expected to grow sequentially, adjusting for 13 weeks in the September 2009 quarter
- December 2009 quarterly gross margin is currently expected to be approximately consistent with September 2009 quarterly gross margin
- RFMD currently anticipates strong cash flow and sequential growth in cash, cash equivalents and short-term investments in the December 2009 quarter
RFMD's actual quarterly and annual results may differ from these expectations and projections, and such differences may be material.
Comments From Management
Bob Bruggeworth, president and CEO of RFMD, said, "The global RFMD workforce delivered an outstanding September quarter, highlighted by sequential and year-over-year increases in gross margin, operating margin and earnings per share. Of note, our non-GAAP operating income dollars were a quarterly record for RFMD.
"Our expectations are for continued strong performance both in the December quarter and in calendar year 2010. Over the foreseeable future, we expect secular growth trends and new product cycles will give us the opportunity to continue growing top- and bottom-line results while continuing to generate superior free cash flow and return on invested capital, or ROIC."
Dean Priddy, CFO of RFMD, said, "During the September quarter, RFMD's business model generated significant improvements in several key financial metrics. RFMD achieved non-GAAP operating margin of 16.4%, reflecting an improvement of 510 basis points compared to the June 2009 quarter. Of note, RFMD's core business (total results less the impact of cellular transceivers) exceeded our target gross and operating margins.
"RFMD's capital efficiency metrics also improved significantly, as the Company generated $45.8 million in free cash flow and improved non-GAAP ROIC to 30.6%, compared to 17.5% in the June 2009 quarter and 11.9% in the September quarter one year ago."
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 profit and gross margin, (ii) non-GAAP operating income, (iii) non-GAAP net income, (iv) non-GAAP net income per diluted share, (v) non-GAAP operating expenses (research and development, marketing and selling and general and administrative), (vi) free cash flow and (vii) return on invested capital (ROIC). Each of these non-GAAP financial measures is either adjusted from GAAP results to exclude certain expenses or derived from multiple GAAP measures, which are outlined in the "Reconciliation of GAAP to Non-GAAP Financial Measures" table on page 9 and the "Additional Selected Non-GAAP Financial Measures And Reconciliations" table on page 10.
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, to assess our liquidity and capital position 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 profit and gross margin. Non-GAAP gross profit and gross margin exclude share-based compensation expense, amortization of intangible assets, adjustments for restructuring and integration charges and an adjustment for amortization of acquisition-related inventory step-up. We believe that exclusion of these costs in presenting non-GAAP gross profit and 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 profit and 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 profit and 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 profit and 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 profit and margin related to business acquisitions (amortization of acquisition-related inventory step-up) and restructuring and integration charges 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 profit and 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 income. Non-GAAP operating income excludes share-based compensation expense, amortization of intangible assets, restructuring and integration charges, impairment of intangibles, amortization of acquisition-related inventory step-up and manufacturing start-up costs. We believe that presentation of a measure of operating 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 profit and gross margin. We believe that restructuring and integration charges, impairment of intangibles, manufacturing start-up costs and amortization of acquisition-related inventory step-up 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 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 and integration charges, impairment of intangibles, manufacturing start-up costs, amortization of acquisition-related inventory step-up, gain on retirement of convertible subordinated notes, non-cash interest expense on convertible subordinated notes and also reflect an adjustment of income taxes. 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 profit and 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.
Non-GAAP research and development, marketing and selling and general and administrative expenses. Non-GAAP research and development, marketing and selling and general and administrative expenses exclude share-based compensation expense, amortization of intangible assets, restructuring and integration charges and impairment of intangibles. We believe that presentation of measures of these operating expenses that exclude 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 profit and gross margin. We believe that restructuring and integration charges and impairment of intangibles 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 these non-GAAP operating expenses has economic substance because the excluded expenses are either non-recurring in nature or do not represent current cash expenditures.
Free cash flow. RFMD defines free cash flow as net cash provided by operating activities during the period minus property and equipment expenditures made during the period. RFMD defines free cash flow per diluted share as net cash provided by operating activities during the period minus property and equipment expenditures made during the period divided by GAAP weighted average outstanding diluted shares during the period. We use free cash flow as a supplemental financial measure in our evaluation of liquidity and financial strength. Management believes that this measure is useful as an indicator of our ability to service our debt, meet other payment obligations and make strategic investments. Free cash flow should be considered in addition to, rather than as a substitute for, net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity. Additionally, our definition of free cash flow is limited, in that it does not represent residual cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt service and other contractual obligations. Therefore, we believe it is important to view free cash flow as a measure that provides supplemental information to our entire statement of cash flows.
Non-GAAP ROIC. Return on invested capital (ROIC) is a non-GAAP measure that management believes provides useful supplemental information for management and the investor by measuring the effectiveness of our operations' use of invested capital to generate profits. We use ROIC to track how much value we are creating for our shareholders. Non-GAAP ROIC is calculated by dividing annualized non-GAAP Operating Income, net of cash taxes, by average invested capital. Average invested capital is calculated by subtracting the average of the beginning balance and the ending balance of current liabilities (excluding the current portion of long-term debt and other short-term financings) from the average of the beginning balance and the ending balance of Net Accounts Receivable, Inventories, Other Current Assets, Net Property and Equipment and a cash amount equal to seven days of quarterly revenue. For the period ending October 3, 2009, which was a 14 week quarter, the annualized non-GAAP operating income, net of cash taxes, has been normalized to a 52-week basis.
Limitations of non-GAAP financial measures. The primary material limitations associated with the use of non-GAAP gross profit and gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, non-GAAP net income per diluted share, free cash flow and free cash flow per diluted share and non-GAAP ROIC as compared to the most directly comparable GAAP financial measures of gross profit and gross margin, operating expenses, operating income (loss), net income (loss), net income (loss) per diluted share and net cash provided by operating activities 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 profit and gross margin, operating expenses, operating income (loss), net income (loss), net income (loss) per diluted share and net cash provided by operating activities.
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 Investors). A telephone playback of the conference call will be available approximately one hour after the call's completion by dialing 303-590-3030 and entering pass code 4167493.
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 risks associated with the recent worldwide economic turmoil and its effect on our business and the business of our suppliers and customers, variability in quarterly operating results, the impact of global macroeconomic and credit conditions on our business, the rate of growth and development of the markets we serve, risks associated with the reduction or elimination of our investments in our wireless systems business, our ability to execute on our plans to consolidate or relocate manufacturing operations, risks associated with the operation of our wafer fabrication facilities, molecular beam epitaxy facility, assembly facility and test and tape and reel facilities, our reliance on inclusion in third party reference designs for a portion of our revenue, our ability to manage channel partners and customer relationships, our dependence on gallium arsenide (GaAs) for the majority of our products, 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, raw material costs and availability, our ability to reduce costs and improve margins in response to declining average selling prices, 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® 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
------------------
October 3, September 27,
2009 2008 (1)
---------- -------------
Total revenue $254,757 $271,669
Costs and expenses:
Cost of goods sold 163,208 194,901
Research and development 34,846 45,063
Marketing and selling 14,741 17,153
General and administrative 16,721 15,781
Other operating expense 1,114 17,816
----- ------
Total costs and expenses 230,630 290,714
------- -------
Operating income (loss) 24,127 (19,045)
Other expense (6,047) (4,200)
------ ------
Income (loss) before income taxes $18,080 $(23,245)
Income tax (expense) benefit (3,501) 9,018
------ -----
Net income (loss) $14,579 $(14,227)
======= ========
Net income (loss) per share, diluted $0.05 $(0.05)
===== ======
Weighted average outstanding diluted shares 298,668 262,091
======= =======
(1) Certain amounts have been adjusted as a result of the retrospective adoption of FSP APB 14-1 (which is included in FASB ASC 470-20).
RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Six Months Ended
----------------
October 3, September 27,
2009 2008 (1)
---------- ---------
Total revenue $467,297 $512,161
Costs and expenses:
Cost of goods sold 301,746 363,063
Research and development 70,479 96,417
Marketing and selling 28,310 35,675
General and administrative 27,933 28,839
Other operating expense 2,650 46,915
----- ------
Total costs and expenses 431,118 570,909
------- -------
Operating income (loss) 36,179 (58,748)
Other expense (10,245) (8,117)
------- ------
Income (loss) before income taxes $25,934 $(66,865)
Income tax (expense) benefit (6,571) 26,113
------ ------
Net income (loss) $19,363 $(40,752)
======= ========
Net income (loss) per share, diluted $0.07 $(0.16)
===== ======
Weighted average outstanding diluted shares 297,573 261,675
======= =======
(1) Certain amounts have been adjusted as a result of the retrospective adoption of FSP APB 14-1 (which is included in FASB ASC 470-20).
RF MICRO DEVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
Three Months Ended
---------------------------------------
October 3, June 27, September 27,
2009 2009 2008 (1)
---------- -------- -------------
GAAP operating income
(loss) $24,127 $12,051 $(19,045)
Share-based compensation
expense 11,125 4,137 8,600
Amortization of
intangible assets 4,804 4,716 7,295
Amortization of
acquisition-related
inventory step-up - - 2,699
Restructuring charges
related to fiscal 2009
strategic 1,072 1,982 17,638
restructuring and adverse
macroeconomic conditions
Impairment of intangibles - 201 -
Other restructuring,
integration charges and
manufacturing 609 935 774
start-up costs --- --- ---
Non-GAAP operating income 41,737 24,022 17,961
====== ====== ======
GAAP net income (loss) 14,579 4,784 (14,227)
Share-based compensation
expense 11,125 4,137 8,600
Amortization of
intangible assets 4,804 4,716 7,295
Amortization of
acquisition-related
inventory step-up - - 2,699
Restructuring charges
related to fiscal 2009
strategic 1,072 1,982 17,638
restructuring and adverse
macroeconomic conditions
Impairment of intangibles - 201 -
Other restructuring,
integration charges and 609 935 774
manufacturing start-up
costs
Gain on retirement of
convertible subordinated
notes - (1,949) -
Non-cash interest expense
on convertible
subordinated notes 4,602 4,279 4,444
Tax adjustments 151 (229) (6,601)
--- ---- ------
Non-GAAP net income 36,942 18,856 20,622
Plus: Income impact of
assumed conversions for
interest on 1.50% 768 760 545
convertible notes --- --- ---
Non-GAAP net income plus
assumed conversion of
notes- $37,710 $19,616 $21,167
Numerator for diluted ======= ======= =======
income per share
GAAP weighted average
outstanding diluted
shares 298,668 269,302 262,091
Adjustments:
Diluted stock options - - 2,615
Assumed conversion of
1.50% convertible notes - 27,130 30,144
- ------ ------
Non-GAAP weighted average
outstanding diluted
shares 298,668 296,432 294,850
======= ======= =======
Non-GAAP net income per
share, diluted $0.13 $0.07 $0.07
===== ===== =====
Three Months Ended
------------------
October 3, June 27, September 27,
2009 2009 2008
------------- ------------- -------------
GAAP gross margin $91,549 35.9% $74,001 34.8% $76,768 28.3%
Adjustment for intangible
amortization 3,705 1.5% 3,596 1.7% 5,138 1.9%
Adjustment for amortization
of acquisition-related
inventory step-up - 0.0% - 0.0% 2,699 1.0%
Adjustment for share-based
compensation 1,389 0.5% 484 0.3% 1,072 0.4%
Other restructuring 385 0.2% 458 0.2% 74 0.0%
--- ----- --- ----- -- -----
Non-GAAP gross margin $97,028 38.1% $78,539 37.0% $85,751 31.6%
======= ===== ======= ===== ======= =====
(1) Certain amounts have been adjusted as a result of the retrospective adoption of FSP APB 14-1 (which is included in FASB ASC 470-20).
RF MICRO DEVICES, INC. AND SUBSIDIARIES
ADDITIONAL SELECTED NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
(Unaudited)
Three Months Ended
October 3, 2009
-----------------------
(as percentage of sales)
GAAP operating income 9.5%
Share-based compensation expense 4.4%
Amortization of intangible assets 1.9%
Restructuring charges related to fiscal 2009
strategic restructuring and adverse 0.4%
macroeconomic conditions
Other restructuring, integration charges and
manufacturing start-up costs 0.2%
----
Non-GAAP operating income 16.4%
====
Three Months Ended
------------------
(In thousands) October 3, June 27, September 27,
2009 2009 2008
---------- -------- ---------
GAAP research and development
expense $34,846 $35,633 $45,063
Less:
Share-based compensation
expense 1,399 1,045 929
Amortization of intangible
assets 12 33 -
Impairment of intangibles - 201 -
Other restructuring and
integration cost 118 120 417
--- --- ---
Non-GAAP research and
development expense $33,317 $34,234 $43,717
======= ======= =======
Three Months Ended
------------------
(In thousands) October 3, June 27, September 27,
2009 2009 2008
---------- -------- ---------
GAAP marketing and selling
expense $14,741 $13,568 $17,153
Less:
Share-based compensation
expense 1,915 1,043 1,239
Amortization of intangible
assets 1,087 1,087 2,157
Other restructuring and
integration cost 8 9 105
- - ---
Non-GAAP marketing and selling
expense $11,731 $11,429 $13,652
======= ======= =======
Three Months Ended
------------------
(In thousands) October 3, June 27, September 27,
2009 2009 2008
---------- -------- ---------
GAAP general and
administrative expense $16,721 $11,212 $15,781
Less:
Share-based compensation
expense 6,422 1,565 5,360
Other restructuring and
integration cost 17 19 -
-- -- -
Non-GAAP general and
administrative expense $10,282 $9,628 $10,421
======= ====== =======
RF MICRO DEVICES, INC. AND SUBSIDIARIES
ADDITIONAL SELECTED NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
(Unaudited)
Three Months Ended
Free Cash Flow (1) October 3, 2009
---------------------- -----------------
(In millions)
Net cash provided by operating activities $47.2
Purchases of property and equipment (1.4)
-----
Free Cash Flow $45.8
=====
(1) Free Cash Flow is calculated as net cash provided by operating activities minus property and equipment expenditures.
RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
October 3, March 28,
2009 2009 (1)
---------- ---------
ASSETS
Current assets:
Cash and cash equivalents $116,667 $172,989
Restricted cash and trading security
investments 19,049 62
Short-term investments 223,344 93,527
Accounts receivable, net 100,854 90,231
Inventories 117,880 113,611
Other current assets 71,092 47,014
------ ------
Total current assets 648,886 517,434
Property and equipment, net 277,747 315,127
Intangible assets, net 111,469 121,191
Goodwill 95,628 95,628
Long-term investments 2,175 20,183
Other non-current assets 18,108 19,079
------ ------
Total assets $1,154,013 $1,088,642
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities 123,801 98,004
Current portion of long term debt 211,448 4,840
Other short-term liabilities, net 14,369 922
------ ---
Total current liabilities 349,618 103,766
Long-term debt, net 283,857 505,107
Other long-term liabilities 53,747 47,807
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Total liabilities 687,222 656,680
Shareholders' equity:
Total shareholders' equity 466,791 431,962
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Total liabilities and shareholders' equity $1,154,013 $1,088,642
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(1) Certain amounts have been adjusted as a result of the retrospective adoption of FSP APB 14-1 (which is included in FASB ASC 470-20).