At RF Micro Devices At the Financial Relations Board
Dean Priddy Douglas DeLieto Joe Calabrese
Chief Financial Officer VP, Investor Relations (212) 827-3772
(336) 931-7975 (336) 931-7968
For Immediate Release
July 25, 2006
RFMD Delivers 50% Growth In Revenue And Improved Operating Income
Quarterly Highlights:
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, 2006 -- 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
Cellular
-
RFMD extended its market share leadership in power amplifiers and GPRS/EDGE transceivers
-
POLARIS™ TOTAL RADIO™ 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® solution in support of an EDGE-enabled mobile device powered by Danger, Inc. and manufactured by Sharp Corporation
Infrastructure
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)
|
|
Q1 Fiscal 2007
|
|
Q4 Fiscal
2006
|
|
% Change
vs. Q4 2006
|
|
Q1 Fiscal
2006
|
|
% Change
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 and per share data)
|
|
Q1 Fiscal 2007
|
|
Q4 Fiscal
2006
|
|
% Change
vs. Q4 2006
|
|
Q1 Fiscal
2006
|
|
% Change
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.
Tables To Follow
RF MICRO DEVICES, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In
thousands, except per share data)
(Unaudited)
(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 June
30, 2006
|
|
Three Months Ended June
30, 2005
|
|
|
As Reported
|
Stock-Based
Compensation
|
Net
|
|
As Reported
|
Stock-Based
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,
2006
(Unaudited)
|
|
March
31,
2006
(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
|
