SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2001
Commission file number 0-22511
RF MICRO DEVICES, INC.
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-1733461
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
7628 THORNDIKE ROAD
GREENSBORO, NORTH CAROLINA 27409-9421
(Address of principal executive offices) (Zip code)
(336) 664-1233
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, NO PAR VALUE
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the registrant's common stock held by
non-affiliates of the registrant was approximately $4,111,992,506 as of May 25,
2001. For purposes of such calculation, shares of common stock held by persons
who hold more than 10% of the outstanding shares of common stock and shares held
by directors and officers of the registrant and their immediate family members
have been excluded because such persons may be deemed to be affiliates. This
determination is not necessarily conclusive. There were 164,724,137 shares of
the registrant's common stock outstanding as of May 25, 2001.
DOCUMENTS INCORPORATED BY REFERENCE
The registrant has incorporated by reference into Part II of this report
portions of its annual report to shareholders for the fiscal year ended March
31, 2001 and has incorporated by reference into Part III of this report portions
of its annual report to shareholders for the fiscal year ended March 31, 2001
and portions of its proxy statement for its 2001 annual meeting of shareholders.
This Annual Report on Form 10-K contains forward-looking statements that relate
to our plans, objectives, estimates and goals. Words such as "expects,"
"anticipates," "intends," "plans," "believes" and "estimates," and variations of
such words and similar expressions, identify such forward-looking statements.
Our business is subject to numerous risks and uncertainties, including probable
variability in our quarterly operating results, the rate of growth and
development of wireless markets, risks associated with our operation of MBE and
wafer fabrication facilities and the start-up of a second wafer fabrication
facility, our ability to manage rapid growth and to attract and retain skilled
personnel, variability in production yields, raw material availability,
manufacturing capacity constraints, dependence on a limited number of customers
and dependence on third parties. These and other risks and uncertainties, many
of which are addressed in more detail below in the sections entitled "Business -
Additional Factors That May Affect Future Results" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations," could cause our
actual results and developments to be materially different from those expressed
or implied by any of these forward-looking statements.
We use a 52 or 53-week fiscal year ending on the Saturday closest to March 31 of
each year. Fiscal 2001 was a 53-week year and fiscal 2000 and 1999 were 52-week
years. Our other fiscal quarters end on the Saturday closest to June 30,
September 30 and December 31 of each year. For purposes of this Annual Report on
Form 10-K, we describe each fiscal year as having ended on March 31 and the
first three quarters of each fiscal year are described as having ended on June
30, September 30 and December 31.
Where appropriate, we have adjusted references in this Annual Report on Form
10-K to prices and share numbers of our common stock to reflect three
two-for-one stock splits. Stock splits were effected in the form of a 100% share
dividend payable on March 31, 1999 to record holders of common stock on March
17, 1999, on August 18, 1999 to record holders of common stock on August 2, 1999
and on August 25, 2000 to record holders of common stock on August 8, 2000.
PART I
ITEM 1. BUSINESS
INTRODUCTION
RF Micro Devices, Inc. (RFMD) was incorporated under the laws of North Carolina
in 1991. We design, develop, manufacture and market proprietary radio frequency
integrated circuits (RFICs) primarily for wireless communications products and
applications. As such, we operate as a single business segment. Our products are
included primarily in cellular and personal communications service (PCS) phones,
base stations, wireless local area networks (WLAN), and cable television modems.
The majority of our revenue is derived from sales of RFICs designed for cellular
and PCS phones. We offer a broad array of products including amplifiers, mixers,
modulators/demodulators and single chip transmitters, receivers and transceivers
that represent a substantial majority of the RFICs required in wireless
subscriber equipment. These RFICs perform the transmit and receive functions
that are critical to a phone's performance.
We currently design products using multiple semiconductor process technologies.
These include gallium arsenide (GaAs) heterojunction bipolar transistor (HBT),
silicon bipolar transistor, silicon CMOS, silicon BiCMOS, silicon germanium
(SiGe) BiCMOS and GaAs metal semiconductor field effect transistor (MESFET). We
are also evaluating the development of integrated circuits utilizing indium
phosphide. Generally speaking, GaAs-based products offer better electrical
performance while silicon-based products are less expensive. Original equipment
manufacturers (OEMs) try to maximize tradeoffs between performance and cost. Our
approach to using multiple semiconductor process technologies allows us to offer
customers products that fulfill their performance, cost and time-to-market
requirements. We call this approach to business Optimum Technology Matching(R).
We design most of our GaAs products using HBT and believe that our GaAs HBT
RFICs have the following advantages:
o Linearity: GaAs HBT RFICs exhibit good linearity, which means they can
amplify weak signals with minimal signal distortion. As a result, our
customers can design phones with clearer transmission and reception.
o Efficiency: Our GaAs HBT RFICs are efficient, which means they use
less power than competing products to transmit the same signal
strength. As a result, our customers can design phones with improved
battery life and increased talk time.
o Size: Because our GaAs HBT RFICs are small, they are relatively
inexpensive to manufacture. As a result, we believe we offer our
customers price competitive products.
Because of the importance of design to many of our parts and the strength of our
GaAs HBT technology, we are a single-sourced supplier to many customers. Our
products are purchased by leading OEMs such as Nokia Mobile Phones Ltd., LG
Information & Communications, Ltd., Samsung Electronics Co., Ltd, Motorola,
Inc., NEC Corp., Kyocera America, Inc., Ericsson Mobile Communications, QUALCOMM
Inc. and Siemens A.G.
TRW Inc., which is our largest shareholder, has granted us a license (in
exchange for shares of our common stock) to use its GaAs HBT process to design
and manufacture products for commercial wireless applications. TRW manufactured
all of our GaAs HBT products before September 1998. We now manufacture our GaAs
HBT products under this license at our own manufacturing facility. We believe
TRW beneficially owns 23.5 million shares or about 14% of our common stock.
INDUSTRY OVERVIEW
The wireless communications industry has grown rapidly over the past decade as a
result of technological advances, changes in telecommunications regulations and
the allocation and licensing of additional radio spectrum. Technological
advances have also led to the development of competing wireless communications
services, the establishment of wireless applications and the emergence of third
generation services that offer the prospect of even higher data access speeds,
multimedia capabilities, simultaneous access to multiple services and true
global roaming.
The wireless industry is experiencing a movement from wireless networks that use
analog signal modulation techniques to wireless networks that use digital signal
modulation techniques. As compared to analog technologies, digital technologies
generally provide better signal quality, help the transmission of both voice and
data and improve capacity by allowing the transmission of more information in a
smaller amount of frequency space. Digital technologies place a premium on
linear power amplification, which can mean higher quality signals.
The wireless communications markets have many different air interface signal
transmission standards in different parts of the world, including digital
standards, such as Global System for Mobile Communications (GSM), Time Division
Multiple Access (TDMA) and Code Division Multiple Access (CDMA), analog
standards, such as Advanced Mobile Phone Service and Total Access Communications
Systems, and certain hybrid standards. For PCS, the Federal Communications
Commission has approved seven different air interface standards. The handsets
designed for each air interface standard generally require unique RF and
baseband integrated circuit solutions. Because it has become increasingly
difficult for OEMs of subscriber equipment to develop and supply all the
required components in a timely and cost-effective manner, some OEMs have
increasingly relied on third party value-added technology providers that have
the component and systems level expertise to design and the production capacity
to supply these solutions. This technology outsourcing trend is particularly
evident in the RF segment of the equipment due to the scarcity of RFIC engineers
and the design complexity of the technology. We believe recent delays in the
production of new handsets have been due primarily to technical issues faced by
handset manufacturers related to the complex nature of new handsets.
RF technology presents different engineering challenges than standard
semiconductor design. In general, digital and baseband semiconductor design
engineers create standard semiconductor circuit designs that have predictable
performance which permit an automated design process. Each RF component,
however, has distinctly different characteristics that influence overall system
performance in complex ways. Instead of having stable inputs and outputs, the RF
circuit characteristics can drift based on process variations, temperature,
power supply and other variables. As a result, performance characteristics are
unique for each device, and the RF engineer must evaluate and develop new
designs on a continuous basis for each system performance level and air
interface standard. In addition to being skilled in semiconductor circuit
design, the RF circuit designer must have a thorough understanding of signal
processing principles, must understand the totality of the system for which the
device is intended and must be able to create designs that function within the
unique parameters of different wireless system architectures. As RF technology
has moved from discrete components to integrated circuit solutions, the scarcity
of engineers with both integrated circuit design and RF expertise has become
more pronounced.
In early wireless communications equipment, individually packaged discrete
components were mounted on circuit boards to form complex circuits used to
transmit and receive RF signals. Size, reliability and cost concerns ultimately
led to a move from discrete devices to silicon-based integrated circuits.
Particularly for the critical power amplifier function, the use of silicon
integrated circuits at cellular and PCS frequencies has been limited because of
decreased operating performance. In particular, at high frequencies silicon
RFICs consume more power, have relatively higher noise and distortion parameters
and create excess heat.
Within the last decade, GaAs semiconductor technology has emerged as an
effective alternative or complement to silicon technology in many high
performance RF applications. GaAs has inherent physical properties that allow
electrons to move up to five times faster than in silicon, which permits the
manufacture of GaAs devices that operate at much higher speeds than silicon
devices or at the same speeds with lower power consumption. This is particularly
important in battery powered portable applications such as handsets. Moreover,
the semi-insulating GaAs substrate significantly reduces some of the unwanted
parasitic effects of the conductive silicon substrate that cause its performance
to degrade at high frequencies.
GaAs integrated circuits were first implemented using a type of transistor known
as MESFET. GaAs MESFET integrated circuits have certain limitations including
difficulty meeting high linearity performance criteria without sacrificing other
performance criteria, the general requirement of both a positive and negative
power supply for power stages and the inability to shrink the device size due to
the lateral structure. A different type of GaAs transistor known as an HBT,
which has been used in military and space applications, is now used in
commercial RF applications.
Our GaAs HBT products include power amplifiers and small signal devices that
have been designed into advanced subscriber handsets manufactured by leading
OEMs. In addition to the advantages that GaAs provides over silicon in terms of
speed, efficiency and the ability to operate at high frequencies, we believe
that GaAs HBT components offer benefits over GaAs MESFET devices in comparable
applications in a number of ways, including efficiency, linearity, size and
complexity.
STRATEGY
Our goal is to be the leading worldwide supplier of RFICs for a broad range of
commercial wireless applications. To meet this goal, we have developed a focused
strategy. The key elements are:
o ESTABLISH SOLID CUSTOMER RELATIONSHIPS. We currently have
strong customer relationships with several of the leading
OEMs. These OEMs are interested in suppliers that have the
design capability and manufacturing capacity to meet industry
demands. In fiscal 2000, we entered into an alliance with
QUALCOMM to jointly develop CDMA power amplifiers. In fiscal
2001, we expanded this alliance to include the development of
wideband CDMA power amplifier modules. We plan to construct
a test and tape and reel facility in China located near a
Nokia handset assembly facility, which we believe will
accelerate time-to-market of key components, reduce shipping
costs and contribute to improved inventory management.
o MAINTAIN DIVERSIFICATION IN PROCESS TECHNOLOGIES. We believe
that we are the only provider of RFICs in commercial volumes
that is able to design products in six distinct process
technologies -- GaAs HBT, silicon bipolar, silicon CMOS,
silicon BiCMOS, SiGe BiCMOS and GaAs MESFET. While
attempting to leverage our GaAs HBT capabilities, we also
intend to continue to expand our line of silicon-based
RFICs. In May 2001, we announced a strategic alliance with
Agere Systems Inc. in which we will deploy silicon
manufacturing equipment within Agere's manufacturing line in
Orlando, Florida. This alliance is designed to provide us
with a guaranteed source of supply and favorable pricing for
silicon wafers. Additionally, we intend to combine our
expertise in the design and manufacture of highly integrated
RF chips with Agere's expertise in SiGe process technology
and wireless solutions to offer comprehensive solutions for
multiple wireless technologies such as digital cellular
phones, WLANs and Bluetooth.
o CONTINUE TO EXPAND MANUFACTURING CAPACITY. Our first wafer
fabrication facility has the capacity to produce 60,000
four-inch wafers annually. Our second wafer fabrication
facility currently has the capacity to produce 40,000
four-inch wafers annually; however, with additional
equipment, this can be increased to 60,000 four-inch wafers
annually. This facility can be further expanded to increase
total capacity to the equivalent of 210,000 four-inch wafers
annually. Operating our own GaAs HBT wafer fabrication
facilities has improved our ability to respond to customer
demand for GaAs HBT products and is providing us with
greater opportunities to enhance product and process quality
and reliability. During fiscal 2001, we completed the
expansion of our test facility. This expansion increased our
in-house test capacity by approximately 30% and can be
further expanded to increase test capacity by another 40%.
We intend to start construction on a test and tape and reel
facility in Beijing, China by the fall of calendar 2001.
This facility is expected to be operational by the fall of
calendar 2002.
o OFFER A WIDE RANGE OF RF PRODUCTS. We offer a full line of
products that include power amplifiers, low noise
amplifiers/mixers, quadrature modulators/demodulators and
single chip transceivers. For cellular and PCS applications,
we offer products addressing virtually all of the analog and
digital air interface standards. Our design engineering
staff has developed proprietary design and fabrication
modeling techniques and tools to enable us to deliver
state-of-the-art integrated circuit designs that meet our
customers' stringent technical specifications. In response
to customer requests, we are also offering RFICs in a module
package that, in addition to one or more RFMD-designed
integrated circuits, includes passive components, such as
capacitors, inductors and resistors, that are commonly
incorporated into end-user devices. Our alliance with Agere
is intended to define and develop next-generation silicon
processes for wireless applications that we believe will
ultimately lead to the development of new wireless products.
o FOCUS PRIMARILY ON WIRELESS MARKETS. Since RFMD's formation in
1991, we have focused our efforts almost exclusively on the
design, development, manufacture and sale of RFICs to
participants in the commercial wireless markets. We have
developed and sold integrated circuits for a broad range of
applications within these markets, including cellular and PCS,
base stations, cordless telephony, industrial radios, LANs,
local loop, security, Bluetooth and utility meter reading.
Despite our focus on wireless markets, we also evaluate other
markets and will attempt to enter them if the opportunity
presents itself.
o MAINTAIN BALANCED PRODUCT MIX. We strive to maintain a balance
between custom and standard products. Custom-designed products
are usually developed for volume production orders from large
OEMs. Custom products normally are manufactured on an
exclusive basis for the originating customer for an agreed
period of time. Once exclusive production is over, we attempt
to quickly move custom products into the standard product
category in order to broaden our customer base and leverage
our design and product development expenditures.
MARKETS
We design, develop, manufacture and market our products to both domestic and
international OEMs for commercial applications primarily in the wireless
markets, cellular and PCS handsets, base stations and WLAN equipment.
CELLULAR AND PCS HANDSETS
In cellular and PCS applications, calls are placed through handheld subscriber
devices by making a connection with a base station via RF channels.
BASE STATIONS
Base stations installed across an area create a wireless telecommunications
network that enables cell phones to communicate with one another or with wired
telephones. Each base station is equipped to receive and send RF signals through
an antenna, as well as amplify outgoing signals to ensure the transmission
reaches its destination without fading. For both existing and future generation
wireless technologies, these base stations provide the system backbone and must
be in place before cell phones can be used.
WIRELESS NETWORKS
Wireless networking involves the transmission and reception of data such as
e-mail, faxes and computer files by desktop and portable computers via wireless
RF links rather than wired lines. Network coverage ranges from WLANs, which
might be found within a business or single building, to metropolitan area
networks, which would be limited to a defined metropolitan or geographic area,
to wide area networks, which connect individuals and work groups over larger
geographic areas.
OTHER MARKETS
We also supply custom components for other applications. In the wireless market,
we supply components for local loop systems, cordless telephony, industrial
radios, security systems, utility meter reading systems, two-way paging,
monitoring devices, interactive toys, home networking, PC modem cards, keyless
entry and handheld devices used for point-of-sale, bar coding and other
applications. In other markets, we supply components for set-top converter boxes
and cable modems. We also market various components for satellite and microwave
communications applications, and certain of our components, such as gain blocks
and attenuators, are used for instruments and in other wired applications.
MANUFACTURING, PACKAGING AND TESTING
We are an ISO 9001 certified manufacturer. Our production process starts with
GaAs substrates, called wafers. A transistor layer is grown on the wafer using a
molecular beam expitaxy (MBE) process in our MBE facility. These wafers are sent
to our wafer fabrication facility where we isolate the transistor layer and
interconnect the transistors according to circuit design. The wafers are then
scribed and broken into individual die. The die must be assembled, or packaged,
and tested. After testing, the RFICs are prepared for shipment through a tape
and reel process.
We began manufacturing our own GaAs HBT products in September 1998. We have one
MBE facility and two wafer fabrication facilities located in Greensboro, North
Carolina. During fiscal 2001, our first wafer fabrication facility accounted for
$276.5 million in sales, or approximately 82% of our total revenue. Construction
on the second wafer fabrication facility was completed in December 2000;
however, it was not put into production in fiscal 2001 due to slowing order
activity. We currently expect to qualify the facility in the second quarter of
fiscal 2002 and start production during the third quarter of fiscal 2002.
We currently use independent foundries to supply our silicon-based product
requirements and our GaAs MESFET devices. Use of independent foundries involves
a number of risks, including the possibility of material disruptions in the
supply of key RFICs and the lack of control over delivery schedules,
manufacturing yields, quality and fabrication costs. During the first quarter of
fiscal 2002, we announced a strategic alliance with Agere in which we will
deploy silicon manufacturing equipment within Agere's manufacturing line in
Orlando, Florida. This alliance is designed to guarantee us a source of supply
and favorable pricing on silicon wafers. We expect to begin to realize cost
benefits from this relationship in fiscal 2003.
We currently use eight vendors located in Asia, one vendor located in France and
one vendor located in the United States to package and assemble our products.
All of these vendors are certified to applicable ISO 9000 or QS 9000 series
specifications, which means that their operations have in each case been
determined by independent examiners to comply with certain internationally
developed quality control standards. We qualify and monitor assembly contractors
based on cost and quality. These contractors typically provide us with per-unit
pricing.
We have encountered packaging quality problems with certain of our vendors,
particularly with regard to GaAs products. We have taken steps to improve the
reliability of packaging quality; however, we cannot be sure that we will not
experience additional packaging quality problems in the future. We will continue
to monitor closely our vendors as the complexity of our products and our
production volumes increase.
We also assemble and package in-house certain modules. We had not previously
packaged any type of RFIC on a commercial basis, and this vertical expansion of
our business has necessitated significant investment in equipment and additional
personnel and is requiring us to develop expertise in new production techniques
that are significantly different from RFIC fabrication processes.
We use two independent test vendors in Asia to test our products. In September
2000, we opened a new test facility located in Greensboro, North Carolina. The
expanded facility increased our current in-house test capacity by approximately
30% and can be further expanded to increase test capacity by another 40%.
While the majority of the tape and reel function is done internally, we also use
two domestic outside vendors. In addition, we intend to build a test and tape
and reel facility near a handset assembly facility operated by Nokia in Beijing,
China. Construction of this facility is expected to start by the fall of
calendar 2001, with the facility currently scheduled to be operational by the
fall of calendar 2002.
We maintain an inventory of certain standard products based on our internal
forecasts of expected demand for these products. For custom-designed products,
designs of our products are verified both by us and by the customer before
orders for production wafers are placed. Upon receipt of orders, we schedule
production based on order size, customer delivery requirements, production
schedules and other production considerations.
We typically experience lower yields on new products compared to yields on our
mature products. Due to the complexity of our new module products, we have
encountered significant technical challenges with respect to module assembly and
testing that have also contributed to lower yields. These lower yields, combined
with higher costs, have negatively impacted our gross margins. However, we are
currently implementing a series of cost reduction and yield improvement
initiatives designed to improve gross margins on our module products. We are
also evaluating alternatives in the design of modules.
PRODUCTS AND APPLICATIONS
We offer a broad range of standard and custom-designed RFICs. Custom-designed
products are usually developed for volume production orders from large OEMs.
Custom orders are normally manufactured on an exclusive basis for a negotiated
period. Once exclusivity periods expire, we attempt to convert custom products
into standard products to broaden our customer base and leverage our design and
product expenditures. At March 31, 2001, we offered over 350 products in the
following categories:
POWER AMPLIFIERS
Power amplifiers are our largest product class, representing approximately 44%
of our products offered during fiscal 2001. Power amplifiers provide signal
amplification in the transmitter section of a wireless system in order to boost
a signal through the antenna. Power amplifiers operate at different frequencies,
power levels and air interface standards and generally are classified either as
linear amplifiers, which add a minimum amount of distortion to the shape of the
input signal, or non-linear amplifiers, which are used in analog devices. Power
amplifiers are often the most critical RF component for a number of reasons.
They frequently are the most expensive RF component and are difficult to design
and implement. In addition, power amplifiers normally use the greatest amount of
battery power in a handset, which impacts talk time, and they generally
dissipate the greatest amount of heat.
GAIN BLOCKS
Gain blocks are simple general-purpose amplifiers that boost signals over a
broad frequency range. They are used for amplifier applications whenever noise
is not a concern and whenever a signal's strength has been diminished by
processing through a filter or other component. Gain blocks accounted for
approximately 18% of our products offered in fiscal 2001.
LOW NOISE AMPLIFIERS/MIXERS
Low noise amplifiers (LNA)/mixers accounted for approximately 13% of our
products offered in fiscal 2001. An LNA is a device in the receiver section of a
wireless system that receives signals from an antenna at extremely low microvolt
levels and amplifies the signals by a factor of approximately 10 to 1,000 times
with the addition of as little "white noise" as possible. LNAs are commonly
integrated into circuits with mixers (also referred to as "down-mixers" or "down
converters"), and this combination generally is referred to as a "receiver front
end." Mixers accept the filtered output from the LNA, which is typically at a
high frequency and difficult to process, and mix it with a local oscillator
signal to produce a lower intermediate frequency (IF) signal, which is easier to
process.
QUADRATURE MODULATORS/DEMODULATORS
Quadrature modulators are devices in the transmitter section of a wireless
system that combine digital information with an RF signal by varying the phase
and amplitude of the signal so that the resulting signal can be transmitted.
Quadrature demodulators reverse this process in the receiver section by taking
received RF signals and recovering the embedded digital information for further
processing. Approximately 11% of our products offered in fiscal 2001 were
quadrature modulators/demodulators.
TRANSMITTERS, RECEIVERS AND TRANSCEIVERS
Single chip transmitters and receivers send and receive wireless signals.
Transceivers are highly integrated circuits that combine transmitters with
receivers into a single device. This category accounted for approximately 7% of
our products offered during fiscal 2001.
IF COMPONENTS
In a typical handset, high frequency RF signals are converted into lower
frequency IF signals by the LNA/Mixer and then to baseband in the receive
functions. In the transmit function, baseband inputs (e.g., voice) are converted
from analog to digital form and processed through the IF range to the higher RF
frequency before transmission through the antenna. Our IF devices include
digitally controlled IF amplifiers, which amplify baseband signals after they
have been converted from analog to digital form, and IF amplifiers with
automatic gain control and received signal strength indicators, which are used
for IF-to-baseband conversion in the receive mode. IF components accounted for
approximately 5% of our products offered during fiscal 2001.
ATTENUATORS
An attenuator is a device that reduces the level of an input signal by
controllable amounts. Our attenuators are programmable through use of an
external analog or digital control signal to reduce signals to desired levels
with minimal noise and signal loss when the device is not active. Like gain
blocks, attenuators have many applications both within and outside the wireless
markets. Approximately 2% of our products offered in fiscal 2001 were
attenuators.
PRODUCTS BY TECHNOLOGY
By technology, approximately 64% of our products offered during fiscal 2001 were
fabricated with GaAs HBT. Approximately 26% of our products offered used
conventional silicon technology. SiGe and GaAs MESFET technologies were used in
approximately 4% and 7%, respectively, of our products offered.
RAW MATERIALS
Given the number of component parts used in module production, we may experience
shortages of raw materials. However, due to slowing of orders in the industry,
component supply has become more readily available.
CUSTOMERS
Sales to our largest customer, Nokia, were approximately $178.6 million,
representing approximately 53% of our revenue in fiscal 2001. No other customer
accounted for 10% or more of revenue during fiscal 2001.
We have agreed to provide Nokia with access to certain RFIC technologies and to
our GaAs HBT wafer fabrication facilities, and Nokia has agreed to provide us
with rights to bid for and supply Nokia's requirements for certain RFICs. This
arrangement does not obligate Nokia to purchase any additional products from us,
and there can be no assurance that Nokia will remain a significant customer of
ours or that this relationship will continue.
In fiscal 2000, we entered into an alliance with QUALCOMM to jointly develop
CDMA power amplifier modules. During fiscal 2001, two families of products were
developed. These products provide higher levels of integration and, with
advanced packaging technology, enable handset manufacturers to produce phones
with smaller form factors and increased talk-time. Initial sales of these
products were lower than expected in fiscal 2001 due to a combination of
technical and marketing-related issues. However, these issues have been
addressed and we expect sales of products under this alliance to increase in
fiscal 2002. In March 2001, we expanded our alliance with QUALCOMM to develop a
wideband CDMA power amplifier module for inclusion in QUALCOMM's integrated
circuit family.
SALES AND MARKETING
We sell our products worldwide directly to customers as well as through a
network of 11 domestic sales representative firms and seven foreign sales
representative firms. One South Korean sales representative firm, Jittek,
accounted for approximately 10% of our revenue during fiscal 2001. We select our
domestic and foreign representatives based on technical skills and sales
experience, as well as the presence of complementary product lines and the
customer base served. We provide ongoing training to our representatives to keep
them knowledgeable of our products. We maintain an internal marketing
organization that is responsible for key account management, application
engineering support to customers, developing sales and advertising literature,
such as product announcements, catalogs, brochures and magazine articles in
trade and other publications, and preparing technical presentations for industry
conferences. We have sales offices in Greensboro, North Carolina, the United
Kingdom, Sweden, Finland and Taiwan and sales and support teams in San Diego,
California and Japan. We also have an unmanned sales office in Denmark available
to our staff while traveling to customer locations. The opening of these sales
offices represents the shift of a greater portion of our sales and marketing
efforts in-house, a trend that we intend to continue. We intend to open an
office in South Korea in fiscal 2002.
We believe that maintaining a close relationship with customers and providing
customers with ongoing technical support is essential to customer satisfaction
in the wireless communications industry. Our marketing application staff
interacts with customers during all stages of design and production, provides
customers with current product application notes and engineering data, maintains
regular contact with customer engineers and assists in the resolution of
technical problems. We assign to our largest customers a contract account
manager who maintains regular contact with the customer to determine its product
needs and concerns. Members of senior management also are involved in managing
relationships with significant customers. We believe that maintaining close
contact with customers improves their level of satisfaction and enables us to
anticipate their future product needs.
STRATEGIC RELATIONSHIP WITH TRW
In June 1996, we entered into a broad strategic relationship with TRW based on a
technology license from TRW to us and a supply arrangement between the parties.
As a part of this relationship, TRW provided us with $25.0 million of equity and
debt financing and became a significant shareholder of RFMD. Our key goal in
entering into this alliance was to enable us to construct a four-inch wafer
fabrication facility to manufacture products using GaAs HBT technologies
developed by TRW and licensed to us.
Under our license agreement, TRW has granted us fully paid up, royalty-free,
worldwide licenses with respect to certain of TRW's existing and future GaAs HBT
patent rights and MBE process patent rights, with accompanying know-how and
technical information, to design, develop, manufacture, market, service and
repair certain existing products of ours and any GaAs HBT product in which the
emitter of the GaAs HBT has a width of one to three microns. These products must
be for commercial wireless communications applications and operate on signals
having a frequency of less than 10 GHz. Subject to TRW's right to use the
licensed technology to provide to customers on an ongoing basis certain
specified foundry services, both licenses are exclusive as to all persons
including TRW.
TRW also granted us non-exclusive licenses to use certain of its existing GaAs
HBT rights and MBE rights for the development and sale of certain of our
existing products for applications other than commercial wireless
communications. The license agreement provides that TRW will offer to us, on the
same terms as are offered to third parties, certain future non-HBT related
technologies that it develops for a period of 10 years following June 15, 1998.
We have agreed to share with TRW any modifications or improvements that we make
in the technology or the products developed therefrom, and to grant TRW a
non-exclusive, royalty-free license to use any of these modifications or
improvements in applications outside our field of use. Upon any termination of
the license agreement for default, whether due to our default or otherwise, our
rights to TRW's technologies would cease.
In November 1999, we expanded our license with TRW to permit us to use TRW's
GaAs HBT technology also to manufacture products for commercial coaxial and
other non-fiber wire applications. In consideration for this expanded license,
we granted TRW two additional warrants for the purchase of shares of our common
stock. The first, for 500,000 shares of common stock, was exercised on January
3, 2001 at an exercise price of $20.00 per share. The second warrant is for
1,000,000 shares of common stock at $20.00 per share and is exercisable after
December 31, 2000 and expires on December 31, 2001, but may not be exercised
until we achieve certain annualized sales milestones and will become null and
void if we fail to achieve these milestones. The value of these warrants has
been estimated to be $10.0 million, which represents the cost of our right to
use TRW's technology for these new applications.
RESEARCH AND DEVELOPMENT
Our research and development efforts are focused primarily on the development of
new integrated circuit products, and also at improving manufacturing processes
and yields. At March 31, 2001, there were 327 employees in our research and
development organization; however, given favorable business conditions, we
anticipate adding approximately 50 employees in research and development in
fiscal 2002. To better accommodate our RFIC design engineers, we have design
centers in Scotts Valley, California; Cedar Rapids, Iowa; Chandler, Arizona;
Boston, Massachusetts; and Pandrup, Denmark that are currently staffed by a
total of 92 engineers. The Denmark design center was opened in fiscal 2001.
Our circuit design staff is continually developing RFIC design solutions for new
and emerging wireless applications. Our research and development activities
include not only new circuit designs, but also the development and refinement of
proprietary design tools and models to facilitate new product development.
Moreover, we are continually evaluating test RF circuits under emerging
semiconductor process technologies to augment our Optimum Technology Matching(R)
program and to meet our customers' future wireless equipment needs. In fiscal
2001, we established an Advanced Development Group to focus on next-generation
technology in the areas of RFIC design, packaging and semiconductor processes.
The purpose of this group is to develop technologies that can be quickly
transitioned into new state-of-the art products. Additionally, we believe our
strategic alliance with Agere will enable us to jointly define and develop next
generation wireless silicon processes.
In fiscal 2001, 2000 and 1999, we incurred approximately $60.3 million, $33.3
million, and $14.2 million, respectively, in research and development expenses.
We do not separately account for RFMD-sponsored and customer-sponsored research
and development expenses.
The market for RFICs is characterized by rapid changes in product designs and
the emergence of new semiconductor technologies used to fabricate higher
performance devices. Because the demand of OEMs for continual improvements in
product performance is expected to increase, we believe that our future success
depends in part on our ability to design RFICs under emerging wafer fabrication
technologies that meet the cost and performance parameters of our customers.
Moreover, we believe we must be able to attract and retain qualified research
and development personnel.
COMPETITION
Competition in the markets for our products is intense. We face competition from
several companies engaged in the business of designing, manufacturing and
selling RFICs, as well as suppliers of discrete products such as transistors,
capacitors and resistors. We also experience competition for GaAs HBT products
from companies that have or may develop GaAs HBT or other fabrication processes.
In addition, our current and potential competitors include OEMs that have or may
develop the ability to produce RFICs or discrete products internally for their
own requirements. Our primary competitors are Conexant Systems, Inc., Hitachi
Ltd. and Philips N.V. We believe Hitachi is the current leader in module
development. However, we feel we are well-positioned to improve current module
designs and offer flexibility to our customers in the production of future
modules.
We believe that competition within the markets for our products is driven
primarily by the ability to design and deliver high performance and price
competitive products in sufficient quantities and in a timely manner.
Competition is also affected by the quality of customer service and technical
support and the ability to design customized products that address each
customer's particular requirements and cost limitations. Many of our current and
potential competitors have entrenched market positions, established patents,
copyrights, trade names, trademarks and intellectual property rights and
substantial technological capabilities. Further, many of our competitors may
have significantly greater financial, technical, manufacturing and marketing
resources than we do. Increased competition could adversely affect our revenue
and profitability by causing us to reduce prices or by reducing demand for our
products.
INTELLECTUAL PROPERTY
It is our practice to seek U.S. patent and copyright protection on our products
and developments, where appropriate, and to protect our proprietary technology
under U.S. and foreign laws affording protection for trade secrets and for
integrated circuit designs. We own several U.S. patents for GaAs HBT power
amplifiers and related circuits, the earliest of which will expire in 2015.
Numerous additional patent applications are pending, although it is possible
that the inventions referenced in patent applications will not mature to issued
patents or will infringe upon intellectual property rights of others. It is also
possible that a court will find the issued patents invalid or unenforceable
under numerous legal principles relating to prior art disclosures or inequitable
conduct before the U.S. Patent and Trademark Office.
We have numerous trademark registrations and applications pending in the United
States and throughout the world. We seek registrations for our primary
trademarks, servicemarks and trade names; however, others may have trademark
rights superior to ours in certain jurisdictions, and in some instances our
designations may not be viewed as sufficiently distinctive to warrant exclusive
trademark protection. We believe that we have the right to use our selected
designations, and that these designations are distinctive and capable of
trademark protection. Nevertheless, if our marks are successfully challenged on
these basis, it is possible that we will not be permitted to operate in a
jurisdiction under our trademark, servicemark or trade name or that we will not
have the exclusive right to use these designations.
We rely also upon trade secrets, technical know-how and other unpatented
proprietary information relating to our product development and manufacturing
activities. To protect our trade secrets, technical know-how and other
proprietary information, our employees are required to enter into agreements
providing for maintenance of confidentiality and the assignment of rights to
inventions made by them while in our employ. We also have entered into
non-disclosure agreements to protect our confidential information delivered to
third parties in conjunction with possible corporate collaborations and for
other purposes. However, we cannot be sure that these types of agreements will
effectively prevent unauthorized disclosure of our confidential information,
that these agreements will not be breached, that we would have adequate remedies
for any breach or that our trade secrets and proprietary know-how will not
otherwise become known or independently discovered by others.
While we have not been involved in any patent litigation, we cannot be sure that
third parties will not assert claims against us, our customers or TRW with
respect to existing and future products. Any litigation to determine the
validity of any third party's claims could result in significant expense to us,
and divert the efforts of our technical and management personnel, whether or not
the litigation is determined in our favor. The wireless industry is subject to
frequent litigation regarding patent and other intellectual property rights.
Leading companies and organizations in the wireless industry have numerous
patents that protect their intellectual property rights in these areas. In the
event of an adverse result of any intellectual property rights litigation, we
could be required to expend significant resources to develop non-infringing
technology or to obtain licenses to the technology, which is the subject of the
litigation. We cannot be sure that we would be successful in such development or
that any such license would be available on commercially reasonable terms. We
have on occasion been made aware that aspects of our technology may overlap
technology discussed or claimed in issued United States patents. On these
occasions, we attempt to investigate thoroughly the underlying issues and
determine whether design changes or patent licenses are appropriate.
BACKLOG
At March 31, 2001, our backlog was approximately $86.7 million, compared to
approximately $108.9 million at the end of fiscal 2000. We include in backlog
all accepted product purchase orders for which delivery has been specified
within one year. Product orders in our backlog are subject to changes in
delivery schedules or to cancellation at the option of the purchaser without
significant penalty. Our backlog may vary significantly from time to time
depending upon the level of capacity available to satisfy unfilled orders.
Accordingly, although useful for scheduling production, backlog as of any
particular date may not be a reliable indicator of sales for any future period.
EMPLOYEES
At March 31, 2001, we had 1,145 employees. We believe that our future prospects
will depend, in part, on our ability to continue to attract and retain skilled
technical, marketing and management personnel. Competition for such personnel is
intense, and the number of persons with relevant experience, particularly in
engineering, RFIC design and technical marketing, is limited. None of our
employees is represented by a labor union, and we have never experienced any
work stoppage. We believe that our employee relations are good.
ENVIRONMENTAL MATTERS
By virtue of operating our MBE and wafer fabrication facilities, we are subject
to a variety of extensive and changing federal, state and local governmental
laws, regulations and ordinances related to the use, storage, discharge and
disposal of toxic, volatile or otherwise hazardous chemicals used in the RFIC
manufacturing process. Any failure to comply with such requirements currently in
effect or subsequently adopted could result in the imposition of fines on us,
the suspension of production or a cessation of operations. In addition, such
requirements could restrict our ability to expand our facilities or require us
to acquire costly equipment or incur other significant expenses to comply with
environmental regulations or clean up discharges. We believe that costs arising
from existing environmental laws will not have a material adverse effect on our
financial position or results of operations. There can be no assurance, however,
that the environmental laws will not become more stringent in the future or that
we will not incur significant costs in the future in order to comply with these
laws.
ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS
In addition to the other information in this Annual Report on Form 10-K, readers
should carefully consider the following important factors. These factors, among
others, in some cases have affected, and in the future could affect, our
financial condition and results of operations and could cause our future results
to differ materially from those expressed or implied in any forward-looking
statements that appear in this Annual Report on Form 10-K or that we have made
or will make elsewhere.
OUR OPERATING RESULTS FLUCTUATE.
Our revenue, earnings and other operating results have fluctuated significantly
in the past and may fluctuate significantly in the future. Our future operating
results will depend on many factors, including the following:
o our ability to achieve cost savings and improve yields on our
new products;
o our ability to design, manufacture and deliver our products in
a timely and cost-effective manner;
o our ability to design, manufacture and deliver our products in
large enough volumes to satisfy our customers' requirements;
o the ability of third party foundries, assembly, test and tape
and reel partners to handle our products in a timely and
cost-effective manner that meets our customers' requirements;
o availability of raw materials;
o unexpected poor line, assembly or test yields for our products;
o our ability to bring our second GaAs HBT wafer fabrication
facility into operation;
o our ability to increase capacity utilization;
o demand for our products;
o demand for our customers' products;
o competition; and
o general industry and global economic conditions.
During fiscal 2001, we experienced lower-than-expected order activity due to
three factors: an overly optimistic forecast for the growth of the handset
market that led to excess inventories among manufacturers and reduced component
demand; introduction delays by manufacturers for some highly complex
next-generation handsets; and a delay in the introduction of one of our
next-generation products. These factors negatively impacted our operating
results in the second half of fiscal 2001. Excess inventory among manufacturers
and delays in next-generation handsets by manufacturers will likely negatively
impact our operating results in fiscal 2002.
It is likely that our future operating results will again be adversely affected
by the factors set forth above or other factors. If our future operating results
are below the expectations of stock market analysts or our investors, our stock
price may decline.
WE FACE CHALLENGES MANAGING RAPID GROWTH.
We experienced significant growth that placed a great strain on our management
and other resources. We have grown to 1,145 employees on March 31, 2001 from 133
employees on March 31, 1997. To manage our growth effectively, we must:
o implement and continue to improve operational and financial
systems;
o coordinate the construction, upfit and start-up of our new
facilities;
o expand our presence in international locations, including China;
o train and manage our employee base; and
o attract qualified people with experience in RF engineering,
integrated circuit design and technical marketing and support.
Competition for these people is intense. We must also manage multiple
relationships with various customers, business partners and other third parties,
such as our foundry, assembly, test and tape and reel partners. Our systems,
networks, software tools, procedures or controls may not be adequate to support
our operations and we may not be able to expand quickly enough to exploit
potential market opportunities. Our future operating results may also depend on
expanding sales and marketing, research and development and administrative
support. If we cannot attract qualified people or manage growth effectively, our
operating results will be adversely affected.
WE FACE RISKS ASSOCIATED WITH OUR MBE AND WAFER FABRICATION FACILITIES.
Developing, expanding and exploiting our own GaAs HBT manufacturing capacity has
been and continues to be a key element of our overall business strategy.
We began commercial shipments of products from our first wafer fabrication
facility in September 1998. During fiscal 2001, we completed the construction of
a second wafer fabrication facility. Production shipments from the second
facility are expected to begin in the second half of fiscal 2002. As we initiate
production at this facility, we must qualify each new RFIC design with our
customers. As parts are brought into production, we must maintain our cycle
times and our line, assembly and test yields in order to reach our manufacturing
goals. A number of factors will affect the future success of our facilities,
including the following:
o our ability to qualify new products in a timely manner;
o demand for our products;
o our manufacturing cycle times;
o our production yields;
o our ability to generate revenues in amounts that cover the
significant fixed costs of operating the facilities;
o our ability to hire, train and manage qualified production
personnel;
o our compliance with applicable environmental and other laws and
regulations; and
o our inability to use all or any significant portion of our
facilities for prolonged periods of time for any reason.
Bringing the new fabrication facility on-line will be labor intensive,
technically challenging, time consuming and logistically complex. It will
require us to make significant investments of labor, including the hiring and
training of skilled production personnel. Once the clean room is operational, we
must transfer our manufacturing process and run test wafers until the
manufacturing process is adjusted to the point where commercial production is
feasible. Before production can commence, wafers must be qualified by individual
customers on a component-by-component basis, even for products previously
qualified at our first wafer facility. The delay in one or more steps could
materially delay the entire process.
As a result, we cannot be sure that we will be able to implement successfully
and in a timely manner our GaAs HBT processes at our second wafer facility or
that we will be able successfully to continue to produce GaAs HBT wafers at
acceptable manufacturing yields or in a manner that allows us to offer GaAs HBT
products from our facilities at competitive prices. A failure or delay in our
efforts to fabricate GaAs HBT wafers at acceptable manufacturing cycle times,
yields, costs and quality and in volumes sufficient to satisfy customer demands
could have a material adverse effect on our business, financial condition and
results of operations.
WE DEPEND ON A FEW LARGE CUSTOMERS.
Historically, a substantial portion of our revenue has come from large purchases
by a small number of customers. We expect that trend to continue. In fiscal
2001, our top five customers accounted for 67% of total revenue. Nokia was our
largest customer during fiscal 2001, accounting for 53% of our total revenue.
Accordingly, our future operating results depend on the success of our largest
customers and on our success in selling large quantities of our products to
them.
We typically manufacture custom products on an exclusive basis for one customer
for a negotiated period of time. This factor, along with capacity constraints,
makes it difficult for us to diversify our customer base. The concentration of
our revenue with a few large customers makes us particularly dependent on
factors affecting those customers. For example, if demand for their products
decreases, they may stop purchasing our products and our operating results would
suffer. We experienced such a decrease in demand during the last half of fiscal
2001. Most of our customers can cease incorporating our products into their
products with little notice to us and with little or no penalty. The loss of a
large customer and failure to add new customers to replace lost revenue would
have a material adverse effect on our business, financial condition and results
of operations.
IF WE EXPERIENCE POOR PRODUCTION YIELDS, OUR OPERATING RESULTS MAY SUFFER.
Our integrated circuit products, especially our GaAs HBT products, are very
complex. Each product has a unique design and each product is fabricated using
semiconductor process technologies that are highly complex. In many cases, the
products are assembled in customized packages. Our new module products, which
consist of multiple components in a single package, feature enhanced levels of
integration and complexity. Our customers insist that our products meet their
exact specifications for quality, performance and reliability.
Our products are manufactured on GaAs or silicon substrates, called wafers.
Before our customers can use our products, the wafers must be processed and
scribed and broken into individual die. The die must be assembled, or packaged,
and then the final product must be tested. Our manufacturing yield is a
combination of:
o line yield, which is the number of usable wafers that result
from our fabrication process;
o assembly yield, which is the number of assembled parts we
actually receive from the packaging house divided by the number
of die available on the wafer; and
o test yield, which is the number of assembled parts that pass
all component level testing divided by the total number of
parts tested.
Due to the complexity of RFICs, we periodically experience difficulties in
achieving acceptable yields on certain new products. We are implementing yield
improvement programs and expect to see improvements in fiscal 2002; however, we
cannot be sure that this will be the case or what yield levels we will be able
to achieve.
Our customers also test our RFICs once they have been assembled into their
products. The number of usable RFICs that result from our production process can
fluctuate as a result of many factors, including the following:
o design errors;
o defects in photomasks used to print circuits on a wafer;
o minute impurities in materials used;
o contamination of the manufacturing environment;
o equipment failure or variations in the fabrication process;
o losses from broken wafers or other human error; and
o defects in packaging.
Because average selling prices for our products tend to decline over time and
because many of our manufacturing costs are fixed, we are constantly trying to
improve our manufacturing yields. For a given level of sales, when our yields
improve, our gross margins improve; and when our yields decrease, our unit costs
are higher, our margins are lower, and our operating results are adversely
affected.
OUR OPERATING RESULTS ARE SUBSTANTIALLY DEPENDENT ON DEMAND FOR OUR GAAS HBT
PRODUCTS.
Although we design products using multiple distinct process technologies, a
substantial portion of our revenue comes from the sale of GaAs HBT products.
During fiscal 2001, 92% of our revenue came from the sale of GaAs HBT products.
We currently expect that this process concentration will continue in the near
term. Our dependence on GaAs HBT products could ultimately hurt our operating
results in the future. Competitors have begun to enter the market and offer
their own GaAs HBT products, and direct competition with competitors with GaAs
HBT process technology could adversely affect our selling prices. Also, new
process technologies are constantly being developed and one or more of these
processes could have characteristics that are superior to GaAs HBT. If we are
unable to access these technologies through licenses or foundry service
arrangements, we will be competitively disadvantaged. These and other factors
could reduce the demand for GaAs HBT components or otherwise adversely affect
our operating results.
OUR OPERATING RESULTS ARE SUBSTANTIALLY DEPENDENT ON DEVELOPMENT OF NEW
PRODUCTS.
Our future success will depend on our ability to develop new RFIC solutions for
existing and new markets. We must introduce new products in a timely and
cost-effective manner and we must secure production orders from our customers.
The development of new RFICs is a highly complex process, and we have
experienced delays in completing the development and introduction of new
products at times in the past, including during fiscal 2001. Our successful
product development depends on a number of factors, including the following:
o the accuracy of our prediction of market requirements and
evolving standards;
o acceptance of our new product designs;
o the availability of qualified RFIC designers;
o our timely completion of product designs; and
o acceptance of our customers' products by the market.
We may not be able to design and introduce new products in a timely or
cost-efficient manner and our new products may fail to meet the requirements of
the market or our customers. In that case, we will not likely reach the expected
level of production orders, which could adversely affect our operating results.
Even when a design win is achieved, our success is not assured. Design wins
require significant expenditures by us and typically precede volume revenues by
six to nine months or more. The actual value of a design win to us will
ultimately depend on the commercial success of our customers' products.
OUR INDUSTRY'S TECHNOLOGY CHANGES RAPIDLY AND WE DEPEND ON THE DEVELOPMENT AND
GROWTH OF WIRELESS MARKETS.
We depend on the development and growth of markets for wireless communications
products and services. We cannot be sure about the rate at which markets for
these products will develop or our ability to produce competitive products for
these markets as they develop.
We supply RFICs almost exclusively for wireless applications. The wireless
markets are characterized by frequent introduction of new products and services
in response to evolving product and process technologies and consumer demand for
greater functionality, lower costs, smaller products and better performance. As
a result, we have experienced and will continue to experience some product
design obsolescence. We expect our customers' demands for improvements in
product performance will increase, which means that we must continue to improve
our product designs and develop new products using new wafer fabrication
technologies. It is likely that a competing process technology will emerge that
permits the fabrication of integrated circuits that are superior to the RFICs we
make under existing processes. If that happens and we cannot design products
using that technology or develop competitive products, our operating results
will be adversely affected.
WE DEPEND HEAVILY ON OUR RELATIONSHIP WITH NOKIA.
We have agreed to provide Nokia with access to certain RFIC technologies and to
our GaAs HBT wafer fabrication facilities, and Nokia has agreed to provide us
with rights to bid for and supply Nokia's requirements for certain RFICs. This
arrangement does not obligate Nokia to purchase any additional products from us,
and there can be no assurance that Nokia will remain a significant customer of
ours or that this relationship will continue. In fiscal 2001 sales to Nokia were
53% of our revenue. The loss of Nokia as a customer for any reason would have a
material adverse effect on our operating results.
WE DEPEND ON TRW FOR GAAS HBT TECHNOLOGY.
During fiscal 2001, 92% of our revenue came from the sale of GaAs HBT products,
of which 89% was attributable to products produced at our facility.
We depend on our exclusive license from TRW for its GaAs HBT technology. If the
license is terminated or if it were determined that this technology infringed on
a third party's intellectual property rights, our operating results would be
adversely affected. TRW made no representation to us about whether the licensed
technology infringed on the intellectual property rights of anyone else.
WE DEPEND HEAVILY ON THIRD PARTIES.
We use two independent foundries to manufacture our silicon-based products. We
will remain dependent on a small number of independent foundries to manufacture
our products on a timely basis, to achieve acceptable manufacturing yields and
to offer us competitive pricing. The inability of these independent foundries to
deliver our products on a timely basis, allocate us sufficient manufacturing
capacity, achieve acceptable yields or offer us competitive pricing would have a
material adverse effect on our operating results. In the first quarter of fiscal
2002, we announced a strategic alliance with Agere that is intended to guarantee
supply and favorable pricing of silicon wafers. We cannot be sure that we would
be able to locate other foundries to make our products if we lost any of these
sources of supply.
We use ten independent vendors to assemble and package all of our integrated
circuits, two independent vendors to test our products and two independent
vendors to tape and reel our products. We have had packaging quality problems
with some of our vendors, especially with GaAs HBT products, and it is likely
that we will have more packaging problems in the future. However, we have taken
steps to improve the reliability of packaging quality and continue to monitor
our vendors. A delay or reduction in product shipments or unexpected product
returns because of these problems could have an adverse effect on our operating
results.
Given the shift to module production, we also rely on suppliers of passive
component parts. A delay in the receipt of these raw materials could delay
product shipments and have an adverse effect on our operating results.
WE OPERATE IN A VERY COMPETITIVE INDUSTRY.
Competition in the markets for our products is intense. We compete with several
companies primarily engaged in the business of designing, manufacturing and
selling RFICs, as well as suppliers of discrete products such as transistors,
capacitors and resistors. Several of our competitors either have GaAs HBT
technology or are developing GaAs HBT or new fabrication processes. In addition,
many of our existing and potential customers manufacture or assemble wireless
communications devices and have substantial in-house technological capabilities.
Any of them could develop products that compete with or replace ours. A decision
by any of our large customers to design and manufacture integrated circuits
internally could have an adverse effect on our operating results. Increased
competition could mean lower prices for our products, reduced demand for our
products and a corresponding reduction in our ability to recover development,
engineering and manufacturing costs. Any of these developments would have an
adverse effect on our operating results.
Many of our existing and potential competitors have entrenched market positions,
considerable internal manufacturing capacity, established intellectual property
rights and substantial technological capabilities. Many of our existing and
potential competitors, including Conexant, Hitachi and Philips, may have greater
financial, technical, manufacturing and marketing resources than we do. We
cannot be sure that we will be able to compete successfully with our
competitors.
WE DEPEND HEAVILY ON KEY PERSONNEL.
Our success depends in part on keeping key technical, marketing, sales and
management personnel. We do not have employment agreements with any of our
employees. We must also continue to attract qualified personnel. The competition
for qualified personnel is intense, and the number of people with experience,
particularly in RF engineering, integrated circuit design, and technical
marketing and support, is limited. We cannot be sure that we will be able to
attract and retain other skilled personnel in the future.
WE ARE SUBJECT TO RISKS FROM INTERNATIONAL SALES AND OPERATIONS.
Sales to customers located outside the United States accounted for about 52% of
our revenue in fiscal 2001. We expect that revenue from international sales will
continue to be a significant part of our total revenue. International sales are
subject to a variety of risks, including risks arising from currency
fluctuations and restrictions, tariffs, trade barriers, taxes and export license
requirements. Because all of our foreign sales are denominated in U.S. dollars,
our products become less price-competitive in countries with currencies that are
low or are declining in value against the U.S. dollar. Also, we cannot be sure
that our international customers will continue to accept orders denominated in
U.S. dollars. If they do not, our reported revenue and earnings will become more
directly subject to foreign exchange fluctuations.
All but one of our circuit assembly vendors and both of our test vendors are
located outside the United States. This subjects us to regulatory, geopolitical
and other risks of conducting business outside the United States. We do business
with our foreign assemblers in U.S. dollars. Our assembly costs increase in
countries with currencies that are increasing in value against the U.S. dollar.
Also, we cannot be sure that our international assemblers will continue to
accept orders denominated in U.S. dollars. If they do not, our costs will become
more directly subject to foreign exchange fluctuations.
WE RELY ON INTELLECTUAL PROPERTY AND COULD FACE CLAIMS OF INFRINGEMENT.
Our success depends in part on our ability to obtain patents, trademarks and
copyrights, maintain trade secret protection and operate our business without
infringing on the proprietary rights of other parties. Although we do not
believe this to be the case, it could be determined in the future that TRW or we
are infringing someone's intellectual property rights. We cannot be sure that we
could obtain licenses on commercially reasonable terms or that litigation would
not occur if there were any infringement. If we were unable to obtain necessary
licenses or if litigation arose out of infringement claims, our operating
results could be adversely affected.
In addition to patent and copyright protection, we also rely on trade secrets,
technical know-how and other unpatented proprietary information relating to our
product development and manufacturing activities. We try to protect this
information with confidentiality agreements with our employees and other
parties. We cannot be sure that these agreements will not be breached, that we
would have adequate remedies for any breach or that our trade secrets and
proprietary know-how will not otherwise become known or independently discovered
by others.
During fiscal 2000, three of our new employees were named defendants in trade
secret litigation in connection with our hiring of them. The former employers of
these individuals asserted that, among other things, our hiring would lead to
disclosure of that party's trade secrets. We believe these claims were without
merit, and this litigation has been resolved in a satisfactory manner; however,
we could or our employees could be subject to similar claims and litigation in
the future.
WE ARE SUBJECT TO STRINGENT ENVIRONMENTAL REGULATION.
We are subject to a variety of federal, state and local requirements governing
the protection of the environment. These environmental regulations include those
related to the use, storage, handling, discharge and disposal of toxic or
otherwise hazardous materials used in our manufacturing processes. Failure to
comply with environmental laws could subject us to substantial liability or
force us to significantly change our manufacturing operations. In addition,
under some of these laws and regulations, we could be held financially
responsible for remedial measures if our properties are contaminated, even if we
did not cause the contamination.
TRW AND OUR MANAGEMENT ARE SIGNIFICANT SHAREHOLDERS.
Our directors and executive officers and their affiliates (including TRW)
beneficially own about 16% of RFMD's common stock. TRW, our largest shareholder,
beneficially owns about 14% of the common stock. These shareholders thus can
exercise significant influence over all matters requiring shareholder approval,
including the election of directors and approval of significant corporate
transactions. TRW has agreed to refrain until June 6, 2002 from taking certain
actions affecting control over us. If a third party offers to acquire all of our
stock, however, TRW will have 30 days to make a counterproposal on the same or
better terms and could require us to submit the proposal to a vote by our
shareholders. This right could discourage a third party from offering to acquire
all of our outstanding shares.
OUR STOCK PRICE IS SUBJECT TO VOLATILITY.
The trading price of our common stock is subject to wide fluctuations in
response to quarterly variations in operating results, adverse business
developments, changes in financial estimates by securities analysts,
announcements of technological innovations, new products by us or our
competitors, transactions by corporate insiders and other events and factors. In
addition, the stock market has experienced extreme price and volume fluctuations
based on factors outside our control that have particularly affected the market
prices for many high technology companies. These broad market fluctuations may
materially and adversely affect the market price of our common stock.
FUTURE SALES OF SHARES COULD HAVE AN ADVERSE EFFECT ON MARKET PRICE.
Sales of substantial amounts of common stock in the public market or the
prospect of such sales could adversely affect the market price for our common
stock and our ability to raise equity capital in the future. As of May 25, 2001
we had outstanding a total of 164.7 million shares of common stock. Of these
shares, approximately 141.8 million shares are freely tradable without
restriction or further registration under the Securities Act, except for any
shares acquired by our "affiliates," as that term is defined in Rule 144 under
the Securities Act. We believe that the holders of the remaining 22.9 million
shares are affiliates and, accordingly, that their shares may be sold without
registration only in compliance with the Securities Act (including Rule 144). As
of March 31, 2001, options to purchase 17.8 million shares of common stock were
outstanding under our stock option plans, with a weighted average exercise price
of $14.08 per share and a weighted average remaining contractual life of 7.9
years. Of these, options to purchase 4.2 million shares were exercisable at
March 31, 2001, at a weighted average exercise price of $7.74 per share.
WE MAY ENGAGE IN FUTURE ACQUISITIONS THAT DILUTE OUR SHAREHOLDERS, CAUSE US TO
INCUR DEBT AND ASSUME CONTINGENT LIABILITIES.
As part of our business strategy, we expect to continue to review potential
acquisitions that could complement our current product offerings, augment our
market coverage or enhance our technical capabilities, or that may otherwise
offer growth opportunities. While we currently have no definitive agreements
providing for any such acquisitions, we may acquire businesses, products or
technologies in the future. In the event of such future acquisitions, we could
issue equity securities that would dilute our current shareholders' percentage
ownership, incur substantial debt or assume contingent liabilities. Such actions
by us could seriously harm our results of operations or the price of our common
stock. Acquisitions also entail numerous other risks that could adversely affect
our business, results of operations and financial condition, including:
o difficulties in assimilating acquired operations, technologies
or products;
o unanticipated costs or capital expenditures associated with the
acquisition;
o acquisition-related charges and amortization of acquired
technology and other intangibles that could negatively affect
our reported results of operation;
o diversion of management's attention from our business;
o injury to existing business relationships with suppliers and
customers; and
o failure to successfully integrate these businesses, products,
technologies and personnel.
ITEM 2. PROPERTIES
We currently do not own any of our facilities. We lease three office facilities
and one storage facility in Greensboro, North Carolina. We previously owned one
of the office properties, which houses our corporate headquarters; however, in
March 2001, we completed a sale-leaseback transaction with respect to the
property. A portion of another office facility houses our tape and reel
function. The tape and reel capacity is approximately 60% utilized.
Adjacent to our office facilities are our two wafer fabrication facilities and
our packaging facility. Utilization of the first wafer facility is approximately
67%. The second wafer facility is not being utilized, as there is sufficient
capacity in the first facility to meet current demand. We expect to start
production in the second wafer facility in the second half of fiscal 2002.
We lease two additional facilities in Greensboro for MBE wafer starting material
production and RFIC testing. Utilization of the MBE facility is approximately
67% and utilization of the test facility is approximately 33%.
We also lease space for our design centers in Scotts Valley, California; Cedar
Rapids, Iowa; Boston, Massachusetts; Chandler, Arizona; and Pandrup, Denmark and
for sales and support in Reading, United Kingdom; Oulu, Finland; Copenhagen,
Denmark; and Taipei, Taiwan. In the opinion of our management, our properties
have been well maintained, are in sound operating condition and contain all
equipment and facilities necessary to operate at present levels.
ITEM 3. LEGAL PROCEEDINGS
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock is traded on the Nasdaq National Market under the symbol
"RFMD." The table below shows the high and low per-share sales prices of our
common stock for the periods indicated, as reported by the Nasdaq National
Market. Prices have been adjusted to reflect two-for-one stock splits, each
effected in the form of a 100% share dividend, payable on August 18, 1999 to
record holders on August 2, 1999 and on August 25, 2000 to record holders on
August 8, 2000. As of May 25, 2001, there were 1,337 holders of record of our
common stock.
High Low
Year Ended March 31, 2001
First Quarter $ 70.75 $ 33.56
Second Quarter 49.97 30.13
Third Quarter 37.38 12.09
Fourth Quarter 28.50 10.06
For Fiscal Year 2001 70.75 10.06
Year Ended March 31, 2000
First Quarter $ 18.88 $ 9.50
Second Quarter 27.44 16.05
Third Quarter 41.50 19.81
Fourth Quarter 92.25 31.94
For Fiscal Year 2000 92.25 9.50
We have never paid dividends on our capital stock. We intend to retain earnings
for use in our business and do not anticipate paying any cash dividends in the
foreseeable future. We are prohibited from paying dividends without the consent
of our lenders.
On January 3, 2001, we issued 500,000 shares of common stock to TRW Inc., a
corporation we believe to qualify as an accredited investor, upon its exercise
of a warrant we issued in November 1999 in connection with TRW's grant to us of
a license to use its GaAs HBT technology in products for certain non-fiber wired
communication applications. The warrant's exercise price was $20.00 per share.
We issued the shares in reliance on the exemption from registration provided in
Section 4(2) of the Securities Act of 1933, as amended, based on the
sophistication of the warrant holder and the nature of the transaction.
ITEM 6. SELECTED FINANCIAL DATA
Year Ended March 31,
2001 2000 1999 1998 1997
---------------------------------------------------------------------------------------
(In thousands, except per share data)
Total revenue $335,364 $288,960 $152,852 $45,350 $ 28,802
Net income (loss) $34,974 $50,094 $19,561 $ (523) $ 1,652
Net income (loss) per share:
Basic $ 0.22 $ 0.32 $ 0.14 $ (0.00) $ 0.07
Diluted $ 0.20 $ 0.29 $ 0.13 $ (0.00) $ 0.02
Shares used in per share calculation:
Basic 161,820 158,728 136,944 108,072 22,224
Diluted 173,216 171,668 147,472 108,072 89,720
Total assets $720,931 $344,612 $275,758 $ 93,364 $ 36,265
Long-term debt and capital lease
obligations, less current portion $295,963 $8,203 $ 12,587 $ 12,524 $ 10,829
Redeemable convertible preferred
stock - - - - $ 28,257
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Information required by this Item is contained in the section entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in our fiscal 2001 annual report to shareholders, which is
incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information required by this Item is contained in the section entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in our fiscal 2001 annual report to shareholders, which is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
Information required by this Item is contained in the section entitled
"Financial Statements and Supplemental Data" in our fiscal 2001 annual report to
shareholders, which is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required by this Item is contained in our definitive proxy statement
relating to our Annual Meeting of Shareholders to be held on July 24, 2001 under
the captions "Executive Officers," "Nominees for Election of Directors" and
"Section 16(a) Beneficial Ownership Reporting Compliance," which are
incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information required by this Item is contained in our definitive proxy statement
relating to our Annual Meeting of Shareholders to be held on July 24, 2001 under
the caption "Executive Compensation," which is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by this Item is contained in our definitive proxy statement
relating to our Annual Meeting of Shareholders to be held on July 24, 2001 under
the caption "Security Ownership of Certain Beneficial Owners and Management,"
which is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by this Item is contained in our definitive proxy statement
relating to our Annual Meeting of Shareholders to be held on July 24, 2001 under
the caption "Certain Transactions," which is incorporated herein by reference.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) Financial Statements
The following consolidated financial statements of RF Micro Devices, Inc. are
included in our fiscal 2001 annual report to shareholders and are incorporated
herein by reference:
i. Consolidated Balance Sheets as of March 31, 2001 and 2000
ii. Consolidated Statements of Income for the fiscal years ended
March 31, 2001, 2000 and 1999
iii. Consolidated Statements of Shareholders' Equity for the fiscal
years ended March 31, 2001, 2000 and 1999
iv. Consolidated Statements of Cash Flows for the fiscal years
ended March 31, 2001, 2000 and 1999
v. Notes to Consolidated Financial Statements
(a)(2) Schedule II; Valuation and Qualifying Accounts -- see additional
section of this Report.
No other financial statement schedules are to be filed with this Annual Report
on Form 10-K due to the absence of the conditions under which they are required
or because the required information is included within the consolidated
financial statements or the notes thereto included herein.
(a)(3) Exhibits
Exhibit
No. Description
3.1 Amended and Restated Articles of Incorporation of RF Micro Devices, Inc. (1)
3.2 Amendment to Articles of Incorporation (2)
3.3 Bylaws of RF Micro Devices, Inc. (3)
4.1 Specimen Certificate of Common Stock (3)
4.2 Warrant No. 99-2, dated November 15, 1999, for the purchase of up to 1,000,000 shares of common stock (4)
4.3 Form of Global Note for 3.75% Convertible Subordinated Notes due August 15, 2005 (5)
4.4 Indenture, dated August 1, 2000 (5)
4.5 Registration Rights Agreement, dated August 1, 2000 (5)
The registrant hereby undertakes to furnish to the Securities and
Exchange Commission, upon its request, a copy of any instrument
defining the rights of holders of long-term debt of the registrant
not filed herewith pursuant to Item 601(b)(4)(iii) of Regulation S-K
10.1 1992 Stock Option Plan of RF Micro Devices, Inc. (3)*
10.2 Form of Stock Option Agreement (1992 Stock Option Plan) (3)*
10.3 1997 Key Employees Stock Option Plan of RF Micro Devices, Inc., as amended (4)*
10.4 Form of Stock Option Agreement (1997 Key Employees' Stock Option Plan) (3)*
10.5 Amended and Restated Nonemployee Directors' Stock Option Plan of RF Micro Devices, Inc. *
10.6 Form of Stock Option Agreement (Directors' Stock Option Plan) *
10.7 1999 Stock Incentive Plan of RF Micro Devices, Inc., as amended (4)*
10.8 Stock Option Agreement, dated October 27, 1998, between RF Micro Devices, Inc. and Walter H. Wilkinson, Jr.,
as amended (4)*
10.9 Stock Option Agreement, dated October 27, 1998, between RF Micro Devices, Inc. and Albert E. Paladino, as amended (4)*
10.10 Stock Option Agreement dated October 27, 1998, between RF Micro Devices, Inc. and Erik H. van der Kaay, as amended (4)*
10.11 License and Technical Assistance Agreement, dated June 6, 1996, between RF Micro Devices, Inc. and the
Electronic Systems & Technology Division of the Space and Electronics Group of TRW Inc. (3)
10.12 Lease Agreement, dated October 31, 1995, between RF Micro Devices, Inc. and Piedmont Land Company, as amended (3)
10.13 Lease Agreement, dated October 9, 1996, between RF Micro Devices, Inc. and Highwoods/Forsyth Limited
Partnership, as amended (3)
10.14 Master Equipment Lease Agreement, dated as of December 2, 1996, between Finova Technology Finance, Inc. and
RF Micro Devices, Inc. (3)
10.15 Lease Agreement, dated February 12, 1999, between Highwoods Realty Limited Partnership and RF Micro Devices, Inc. (6)
10.16 Lease dated May 25, 1999, between RF Micro Devices, Inc. and CK Deep River, LLC (4)
10.17 Lease Agreement, dated November 5, 1999, between Highwoods Realty Limited Partnership and RF Micro Devices, Inc. (4)
10.18 License Agreement, dated November 15, 1999, between TRW Inc. and RF Micro Devices, Inc. (4)
10.19 Cooperation Agreement, dated November 15, 1999, between TRW Inc. and RF Micro Devices, Inc. (4)
10.20 Amended, Restated and Replacement Participation Agreement, dated as of December 31, 1999, among RF Micro
Devices, Inc., as the Construction Agent and as the Lessee; First Security Bank, National Association, not
individually, except as expressly stated therein, but solely as the Owner Trustee under the RFMD Real Estate Trust
1999-1; the Various Banks and Other Lending Institutions Which Are Parties Thereto from Time to Time, as the
Holders; the Various Banks and Other Lending Institutions Which Are Parties Thereto from Time to Time, as the Lenders;
and First Union National Bank, as the Agent for the Lenders and respecting the Security Documents, as the Agent
for the Lenders and the Holders, to the extent of their interests (4)
10.21 Amended, Restated and Replacement Lease Agreement, dated as of December 31, 1999, between First Security Bank,
National Association, not individually, but solely as the Owner Trustee under the RFMD Real Estate Trust 1999-1, as
Lessor, and RF Micro Devices, Inc., as Lessee (4)
10.22 Amended, Restated and Replacement Credit Agreement, dated as of December 31, 1999, among First Security Bank,
National Association, not individually, except as expressly stated therein, but solely as the Owner Trustee under the
RFMD Real Estate Trust 1999-1, as the Borrower; the Several Lenders from Time to Time Parties thereto; and First Union
National Bank, as the Agent (3)
10.23 First Amendment to Certain Operative Agreements (RFMD Real Estate Trust No. 1999-1) dated as of April 17, 2000 among
RF Micro Devices, Inc., as the Construction Agent and as the Lessee, First Security Bank, National Association, not
individually, except as expressly stated herein, but solely as the Owner Trustee under the RFMD Real Estate Trust
1999-1, the Various Banks and Other Lending Institutions which are Parties Thereto from Time to Time, as the
Holders, the Various Banks and Other Lending Institutions which are Parties Thereto from Time to Time, as the Lenders,
First Union National Bank, as the Agent for the Lenders and respecting the Security Documents, as the Agent for
the Lenders and the Holders, to the extent of their interests and Credit Suisse First Boston, as Syndication Agent (2)
10.24 Summary of terms of RF Micro Devices, Inc. FY 2001 Executive Bonus Plan*
10.25 Change of Control Agreement, dated March 1, 2001, between RF Micro Devices, Inc. and David A. Norbury*
10.26 Change of Control Agreement, dated March 1, 2001, between RF Micro Devices, Inc. and William J. Pratt*
10.27 Change of Control Agreement, dated March 1, 2001, between RF Micro Devices, Inc. and Jerry D. Neal*
10.28 Change of Control Agreement, dated March 1, 2001, between RF Micro Devices, Inc. and Arthur E. Geissberger*
10.29 Change of Control Agreement, dated March 1, 2001, between RF Micro Devices, Inc. and Robert A. Bruggeworth*
10.30 Change of Control Agreement, dated March 1, 2001, between RF Micro Devices, Inc. and William A. Priddy, Jr.*
10.31 Change of Control Agreement, dated March 1, 2001, between RF Micro Devices, Inc. and Powell T. Seymour*
10.32 Change of Control Agreement, dated March 1, 2001, between RF Micro Devices, Inc. and Gary J. Grant*
10.33 Change of Control Agreement, dated March 1, 2001, between RF Micro Devices, Inc. and Forrest Moore*
13 Excerpts from Annual Report to Shareholders for the fiscal year ended March 31, 2001
21 Subsidiaries of RF Micro Devices, Inc.
23 Consent of Ernst & Young LLP
- --------------
<FN>
(1) Incorporated by reference to the exhibit filed with our Quarterly
Report on Form 10-Q for the quarterly period ended June 26, 1999
(2) Incorporated by reference to the exhibit filed with our Quarterly
Report on Form 10-Q for the quarterly period ended July 1, 2000
(3) Incorporated by reference to the exhibit filed with our Registration
Statement on Form S-1 (File No. 333-22625)
(4) Incorporated by reference to the exhibit filed with our Quarterly
Report on Form 10-Q for the quarterly period ended December 25, 1999
(5) Incorporated by reference to the exhibit filed with our Registration
Statement on Form S-3 (File No. 333-49432)
(6) Incorporated by reference to the exhibit filed with our Annual Report
on Form 10-K for the fiscal year ended March 27, 1999
</FN>
* Executive compensation plan or agreement
(b) Reports on Form 8-K filed in the 4th quarter of fiscal 2001:
None.
(c) Exhibits
The exhibits required by Item 601 of Regulation S-K are filed herewith and
incorporated by reference herein. The response to this portion of Item 14 is
submitted under Item 14(a)(3).
(d) Financial Statement Schedules
The response to this portion of Item 14 is submitted under Item 14(a)(2).
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
RF Micro Devices, Inc.
Date: June 19, 2001 /s/ David A. Norbury
-------------------------------
By: David A. Norbury
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities indicated on June 19, 2001.
/s/ David A. Norbury
- --------------------------------------
Name: David A. Norbury
Title: President, Chief Executive Officer
And Director
(principal executive officer)
/s/ William A. Priddy, Jr.
- --------------------------------------
Name: William A. Priddy, Jr.
Title: Chief Financial Officer and Vice President of Administration
(principal financial officer)
/s/ Barry D. Church
- --------------------------------------
Name: Barry D. Church
Title: Corporate Controller
(principal accounting officer)
/s/ Erik H. van der Kaay
- --------------------------------------
Name: Erik H. van der Kaay
Title: Director
/s/ Albert E. Paladino
- --------------------------------------
Name: Dr. Albert E. Paladino
Title: Director
/s/ William J. Pratt
- --------------------------------------
Name: William J. Pratt
Title: Director
/s/ Walter H. Wilkinson, Jr.
- --------------------------------------
Name: Walter H. Wilkinson, Jr.
Title: Director
Schedule II
Valuation and Qualifying Accounts
Years Ended March 31, 2001, 2000 and 1999
(In thousands)
Balance at Beginning Additions Charged to Deductions from Balance at End of
of Period Costs and Expenses Reserve Period
------------------------ ----------------------- --------------------- ----------------------
Year ended March 31, 2001
Allowance for doubtful accounts $ 775 $ 359 $ 183 (1) $ 951
Inventory reserve 11,114 13,181 4,411 (2) 19,884
Year ended March 31, 2000
Allowance for doubtful accounts $ 391 $ 385 $ 1 $ 775
Inventory reserve 4,386 9,639 2,911 11,114
Year ended March 31, 1999
Allowance for doubtful accounts $ 489 $ 244 $ 342 $ 391
Inventory reserve 2,713 5,844 4,171 4,386
<FN>
(1) During fiscal 2001, the Company wrote-off a fully reserved balance of
$182,911 from fiscal 2000 against the related receivable.
(2) During fiscal 2001, the Company wrote-off scrap related to
quality and obsolescence for a fully reserved balance of $4,411,277.
</FN>