AT THE
AT RF MICRO DEVICES FINANCIAL RELATIONS BOARD
Dean Priddy Doug DeLieto Alison Ziegler
Chief Financial Officer Dir., Investor Relations (212) 445-8432
(336) 931-7152 (336) 931-7968
FOR IMMEDIATE RELEASE
JANUARY 20, 2004
RF MICRO DEVICES ANNOUNCES RECORD REVENUE
AND EARNINGS PER SHARE
DECEMBER QUARTER HIGHLIGHTS:
|X| Revenue Grows 18.1% Sequentially To $193.0 Million
|X| Gross Profit Margin Increases 270 Basis Points Sequentially To 41.7%
|X| Net Income Per Diluted Share Equals $0.13
|X| Company Adds Third Ten-Percent Customer
|X| Lead Frame Modules Released And Ramping Production Into Multiple
Handsets
|X| Company Currently Expects March Quarterly Revenue of $152 Million To
$163 Million And Quarterly Earnings Per Share Of $0.02 To $0.04
|X| Company Foresees Continued Market Recovery In Handsets In Calendar
2004 And Expects To Exceed The Overall Rate Of Growth In The Handset
Market
GREENSBORO, NC, JANUARY 20, 2004 - RF Micro Devices, Inc. (Nasdaq: RFMD), a
leading provider of proprietary radio frequency integrated circuits (RFICs) for
wireless communications applications, today reported financial results for its
fiscal 2004 third quarter ended December 31, 2003.
FINANCIAL RESULTS
Revenue for the quarter was $193.0 million, an increase of 32.3% versus revenue
of $145.8 million for the corresponding quarter of fiscal 2003, and a sequential
increase of 18.1% versus revenue of $163.5 million for the quarter ended
September 30, 2003. The record quarterly revenue reflected strength in the
cellular handset market. Additionally, the December 2003 quarter contained 14
weeks, versus 13 weeks in the quarter ended September 30, 2003.
Gross profit for the quarter was $80.4 million, an increase of 47.8% versus
$54.4 million for the prior-year period, and a sequential increase of
approximately 26.0% from $63.8 million for the September 2003 quarter. Gross
profit margin increased sequentially to 41.7%, versus 39.0% in the prior quarter
and 37.3% in the corresponding quarter of fiscal 2003. The year-over-year and
sequential increases in gross profit margin were primarily attributable to
higher volumes, improved yields and cost savings from the conversion from
four-inch to six-inch gallium arsenide (GaAs) wafer fabrication.
Net income for the quarter was $28.2 million, or $0.13 per diluted share,
compared to a net loss of $5.2 million, or ($0.03) per diluted share, for the
corresponding quarter of fiscal 2003. During the third fiscal quarter of 2004,
RFMD made an additional investment in Silicon Wave. Under Accounting Principals
Board Opinion 18 ("The Equity Method of Accounting for Investments in Common
Stock"), the increased investment triggered a change in the method of accounting
used to account for this investment, from the cost method of accounting to the
equity method of accounting. This change in accounting requires the Company to
include its pro rata share of Silicon Wave's net (loss) income in RFMD's
consolidated financial results. As a result of the change, net income for the
prior quarter ended September 30, 2003 has been restated to $10.6 million, or
$0.05 per diluted share, from $11.4 million, or $0.06 per diluted share.
FINANCIAL GUIDANCE AND BUSINESS OUTLOOK
RF Micro Devices currently anticipates March 2004 quarterly revenue of
approximately $153 million to $162 million. Additionally, the Company currently
expects diluted earnings per share in the range of approximately $0.02 to $0.04.
RF Micro Devices is enthusiastic about the growth prospects for the cellular
handset market in calendar 2004 and believes its growth can continue to outpace
the overall market. Additionally, the Company believes ongoing margin
improvement initiatives and anticipated revenue growth will continue to have a
favorable impact on profitability in calendar 2004.
The Company currently anticipates the sequential decline in demand for TDMA
components in the March quarter will be more than seasonal. However, new product
cycles are expected to ramp across multiple product segments throughout the
March quarter and into fiscal 2005. The following new products are expected to
grow incrementally in the March quarter:
|X| The Company recently released a 30-square millimeter quad-band
GSM/GPRS/EDGE power amplifier module, which is the world's smallest
and represents a 75% reduction in footprint versus the
prior-generation component. The quad-band PA module is expected to
begin shipping to a major customer in the current quarter.
|X| The Company is aggressively ramping to multiple customers the RF3146
Lead Frame Module(TM), which represents the next-generation of its
industry-leading PowerStar(R) family of GSM power amplifier modules
with integrated power control.
|X| The Company is ramping a 3 mm x 3 mm CDMA Lead Frame Module, which has
been selected by a top-five handset OEM for multiple handsets.
|X| The Company is ramping new PA modules for the EDGE market to multiple
customers and believes it has market leadership in this
next-generation air interface standard.
|X| The Company is ramping new PA modules for the WCDMA market to multiple
customers and believes it has market leadership in this
next-generation air interface standard.
|X| The Company is ramping production volumes of its 802.11g radio for the
wireless LAN market.
|X| The Company is ramping production volumes of BLUETOOTH(R) components
for a tier-one handset manufacturer for multiple CDMA handsets.
|X| Finally, the Company is pleased to announce that it has received
initial production orders for its POLARIS(TM) Total Radio(TM)
transceiver for delivery in the March quarter. RFMD now expects
shipments of both POLARIS(TM) 1 and POLARIS(TM) 2 will begin in the
first half of calendar 2004 and ramp in the second half of the year.
COMMENTS FROM MANAGEMENT
Bob Bruggeworth, president and CEO of RF Micro Devices, said, "We're extremely
pleased to announce all-time quarterly records in revenue and earnings per
share, driven primarily by seasonal strength in the handset market, gross margin
improvement initiatives and expense control across the organization. Our
performance in cellular power amplifiers is especially noteworthy, as evidenced
by market share gains and our introduction of innovative new products, such as
our next-generation PowerStar(R) RF3146 power amplifier module and the world's
smallest GSM/GPRS/EDGE power amplifier module, measuring just thirty square
millimeters. Our POLARIS products continue to gain design momentum, and we're
pleased to announce that we recently received initial production orders from a
leading handset ODM manufacturing for delivery in the March quarter."
Dean Priddy, CFO and vice president of administration, said, "We're pleased with
the improvements we made in our financial performance in the December quarter.
As we enter 2004, we believe the handset industry fundamentals have
significantly improved, as compared to 2003. These improved fundamentals,
combined with the ramp of several exciting new products, our ability to achieve
customer and market diversification and the structural improvements we've made
to our cost structure, are expected to enable us to significantly outpace last
year's financial results."
RF Micro Devices will conduct a conference call at 5:00 p.m. ET today to discuss
today's press release. The conference call will be broadcast live over the
Internet and can be accessed by any interested party at WWW.FULLDISCLOSURE.COM
or WWW.RFMD.COM (under Investor Info). The call will also be available live by
dialing (303) 262-2075, and a replay will be available by dialing (303) 590-3000
and entering pass code 565527.
RF Micro Devices, Inc., an ISO 9001- and ISO 14001-certified manufacturer,
designs, develops, manufactures and markets proprietary RFICs primarily for
wireless communications products and applications such as cellular and PCS
phones, base stations, WLANs, and cable television modems. The Company offers a
broad array of products - including amplifiers, mixers, modulators/demodulators,
and single-chip receivers, transmitters and transceivers - representing a
substantial majority of the RFICs required in wireless subscriber equipment. The
Company's goal is to be the premier supplier of low-cost, high-performance
integrated circuits and solutions for applications that enable wireless
connectivity. RF Micro Devices, Inc. is traded on the Nasdaq National Market
under the symbol RFMD. For more information about RFMD, please visit
WWW.RFMD.COM.
This press release contains forward-looking statements that relate to RF Micro
Devices' plans, objectives, estimates and goals. Words such as "expects,"
"anticipates," "intends," "plans," "projects," "believes," and "estimates," and
variations of these words and similar expressions, identify these
forward-looking statements. RF Micro Devices' business is subject to numerous
risks and uncertainties, including variability in quarterly operating results,
the rate of growth and development of wireless markets, risks associated with
the operation of wafer fabrication, molecular beam epitaxy and test, tape and
reel facilities and the Company's conversion from four-inch to six-inch wafer
manufacturing, its ability to manage rapid growth and to attract and retain
skilled personnel, variability in production yields, its ability to control and
reduce costs and improve gross margins on highly integrated products, dependence
on a limited number of customers and dependence on third parties. These and
other risks and uncertainties, which are described in more detail in RF Micro
Devices' most recent Annual Report on Form 10-K filed with the Securities and
Exchange Commission, could cause actual results and developments to be
materially different from those expressed or implied by any of these
forward-looking statements.
# # #
RF MICRO DEVICES(R), RFMD(R), POLARIS(TM)TOTAL RADIO(TM), PowerStar(R)and Lead
Frame ModuleTM are trademarks of RFMD, LLC. BLUETOOTH is a trademark owned by
Bluetooth SIG, Inc., U.S.A. and licensed for use by RF Micro Devices, Inc. All
other trade names, trademarks and registered trademarks are the property of
their respective owners.
For more information about RFMD, please visit our website at WWW.RFMD.COM.
Financial Tables Follow
RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
2003 2002 2003 2002
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
---------------- --------------- --------------- ---------------
Total revenue $ 192,973 $ 145,813 $ 487,958 $ 369,490
Costs and expenses:
Cost of goods sold 112,555 91,387 302,491 227,629
Research and development 31,894 24,408 93,797 70,029
Marketing and selling 11,891 9,076 33,625 26,222
General and administrative 5,722 4,658 15,493 13,635
Other operating expense 527 10,500 1,581 11,853
--------- --------- --------- ---------
Total costs and expenses 162,589 140,029 446,987 349,368
--------- --------- --------- ---------
Operating income 30,384 5,784 40,971 20,122
Equity (loss) in investment (781) -- (1,737) (1) --
Other(expense) income, net (1,342) (10,909) (8,274) (16,342)
--------- --------- --------- ---------
Income (loss) before income taxes $ 28,261 $ (5,125) $ 30,960 $ 3,780
Income tax expense 61 58 393 129
--------- --------- --------- ---------
Net income (loss) $ 28,200 $ (5,183) $ 30,567 $ 3,651
========= ========= ========= =========
Net income (loss) per share, diluted $ 0.13 $ (0.03) $ 0.16 $ 0.02
========= ========= ========= =========
Weighted average outstanding diluted
shares 222,889 170,642 210,369 174,752
========= ========= ========= =========
<FN>
(1) Includes the Company's share of equity loss of an investee of $1 million for the first
and second fiscal quarters of fiscal 2004, which reflects a retroactive restatement of such
quarterly amounts due to a change in accounting from the cost method of accounting to the
equity method of accounting for the investment.
</FN>
RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
DECEMBER 31, MARCH 31,
2003 2003
(UNAUDITED)
-------------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 192,021 $ 164,422
Short-term investments 115,713 92,187
Accounts receivable, net 88,000 66,849
Inventories 57,055 57,781
Other current assets 8,639 11,382
------------ ------------
Total current assets 461,428 392,621
Property and equipment, net 296,503 312,013
Goodwill 110,006 110,006
Long-term investments 63,954 59,440
Intangible assets, net 51,740 56,486
Other assets 1,960 2,259
------------ ------------
Total assets $ 985,591 $ 932,825
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 57,214 $ 46,879
Other short-term liabilities, net 223 30,661
------------ ------------
Total current liabilities 57,437 77,540
Long-term debt, net 324,329 295,865
Other long-term liabilities 4,373 2,020
------------ ------------
Total liabilities 386,139 375,425
Shareholders' equity:
Total shareholders' equity 599,452 (2) 557,400
------------ ------------
Total liabilities and shareholders' equity $ 985,591 $ 932,825
============ ============
<FN>
(2) Reflects the Company's year-to-date equity loss of $1.7 million in an
investee, which reflects a change in accounting from the cost method of
accounting to the equity method of accounting for the investment.
</FN>