1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 26, 1998
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 (I.R.S. Employer
incorporation or organization) Identification No.)
7625 Thorndike Road
Greensboro, North Carolina 27409-9421
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(Address of principal executive offices, including zip code)
(336) 664-1233
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(Registrant's telephone number, including area code)
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 [ ]
As of November 1, 1998, there were 17,197,935 shares of the registrant's common
stock outstanding.
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RF MICRO DEVICES, INC.
INDEX
PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements
Condensed Statements of Income--Three months
ended September 30, 1998 and 1997
Condensed Statements of Income--Six months
ended September 30, 1998 and 1997
Condensed Balance Sheets--September 30, 1998
and March 31, 1998
Condensed Statements of Cash Flows--Six months
ended September 30, 1998 and 1997
Notes to Condensed Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
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Item 2. Changes in Securities and Use of Proceeds
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
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PART I - FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
RF MICRO DEVICES, INC.
CONDENSED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997
-------- --------
Revenues:
Product sales $ 31,415 $ 8,415
Engineering revenue -- 743
-------- --------
Total revenues 31,415 9,158
Operating costs and expenses:
Cost of goods sold 21,690 4,826
Research and development 3,224 2,099
Marketing and selling 2,520 1,321
General and administrative 1,122 565
-------- --------
Total operating costs and expenses 28,556 8,811
-------- --------
Income from operations 2,859 347
Other income (expense), net (183) 487
-------- --------
Income before income taxes 2,676 834
Income tax expense 321 18
-------- --------
Net income $ 2,355 $ 816
======== ========
Net earnings per share:
Basic $ .14 $ .05
Diluted $ .14 $ .05
Shares used in per share calculation :
Basic 16,311 15,919
Diluted 17,323 17,350
See notes to Condensed Financial Statements.
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RF MICRO DEVICES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997
-------- --------
Revenues:
Product sales $ 54,667 $ 18,617
Engineering revenue 189 776
-------- --------
Total revenues 54,856 19,393
Operating costs and expenses:
Cost of goods sold 37,293 9,991
Research and development 6,000 4,168
Marketing and selling 4,696 2,804
General and administrative 1,991 1,057
-------- --------
Total operating costs and expenses 49,980 18,020
-------- --------
Income from operations 4,876 1,373
Other income (expense), net (28) 662
-------- --------
Income before income taxes 4,848 2,035
Income tax expense 821 45
-------- --------
Net income $ 4,027 $ 1,990
======== ========
Net earnings per share:
Basic $ .25 $ .18
Diluted $ .23 $ .12
Shares used in per share calculation :
Basic 16,222 11,151
Diluted 17,200 15,942
See notes to Condensed Financial Statements
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RF MICRO DEVICES, INC.
CONDENSED BALANCE SHEETS
(In thousands)
SEPTEMBER 30, MARCH 31,
1998 1998
(Unaudited) (Audited)
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 16,844 $ 16,360
Accounts receivable, net 14,908 6,993
Inventories 26,900 24,869
Other current assets 244 81
--------- ---------
Total current assets 58,896 48,303
Property and equipment, net 37,504 26,391
Construction in progress 20,450 14,917
Technology license 3,184 3,202
Other assets 1,179 551
--------- ---------
Total assets $ 121,213 $ 93,364
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued liabilities $ 17,941 $ 11,027
Income taxes payable 828 --
Current obligations under capital leases 4,645 3,050
Deferred revenue 247 --
--------- ---------
Total current liabilities 23,661 14,077
Obligations under capital leases, less current maturities 16,700 12,524
--------- ---------
Total liabilities 40,361 26,601
Shareholders' equity:
Preferred stock, no par value; 5,000,000 shares authorized;
no shares issued and outstanding -- --
Common stock, no par value; 50,000,000 shares authorized;
17,192,254 and 16,124,961 issued and outstanding at
September 30, 1998 and March 31, 1998, respectively 90,255 80,224
Deferred compensation (195) (225)
Accumulated deficit (9,208) (13,236)
--------- ---------
Total shareholders' equity 80,852 66,763
--------- ---------
Total liabilities and shareholders' equity $ 121,213 $ 93,364
========= =========
See notes to Condensed Financial Statements.
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RF MICRO DEVICES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997
-------- --------
Cash flows from operating activities:
Net income $ 4,027 $ 1,990
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation and amortization 1,071 391
Change in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable (7,915) (3,236)
Inventories (2,031) (10,160)
Other assets (791) (698)
Accounts payable 6,914 1,251
Accrued liabilities -- 136
Deferred revenue 247 --
Income taxes payable 828 (42)
-------- --------
Net cash provided (used) by operating activities 2,350 (10,368)
Cash flows from investing activities:
Purchase of capital equipment/leasehold improvements (3,359) (14,447)
Capitalization of Fab/construction costs (5,645) (14,447)
-------- --------
Net cash used by investing activities (9,004) (14,447)
Cash flows from financing activities:
Repayment of capital lease obligations (2,893) (133)
Net proceeds of long-term debt -- (645)
Issuance of common stock 31 38,152
Exercise of warrant 10,000 --
Decease in cash restricted for financing activities -- 12,228
-------- --------
Net cash provided from financing activities 7,138 49,602
-------- --------
Net increase in cash and cash equivalents 484 24,787
Cash and cash equivalents at the beginning of the period 16,360 2,330
-------- --------
Cash and cash equivalents at the end of the period $ 16,844 $ 27,117
======== ========
See notes to Condensed Financial Statements.
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RF MICRO DEVICES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles. However, certain
information or footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed, or omitted, pursuant to the rules and
regulations of the Securities and Exchange Commission. In the opinion
of management, the statements include all adjustments (which are of a
normal and recurring nature) necessary for the fair presentation of the
results of the interim periods presented. These financial statements
should be read in conjunction with the Company's audited financial
statements for the year ended March 31, 1998.
The Company uses a 52- or 53-week fiscal year ending on the Saturday
closest to March 31 of each year. The Company's other fiscal quarters
end on the Saturday closest to June 30, September 30, and December 31
of each year. For purposes of this report (including the Unaudited
Condensed Financial Statements included herein), each fiscal year is
described as having ended on March 31, and each of the first three
quarters of each fiscal year is described as having ended on June 30,
September 30 and December 31.
In April, 1998, the AICPA issued Statement of Position 98-5, "Reporting
on the Costs of Start-Up Activities" ("SOP 98-5"), which is effective
for financial statements for fiscal years beginning after December 15,
1998. SOP 98-5 broadly defines start-up activities and requires that
start-up costs capitalized prior to adoption of SOP 98-5 be written off
as a cumulative effect of an accounting change and that any future
start-up costs be expensed as incurred. The Company is required to
adopt SOP 98-5 on or before April 1, 1999 and is currently evaluating
the impact of adoption.
2. RESEARCH AND DEVELOPMENT COSTS
The Company charges all research and development costs to expense as
incurred.
3. INCOME TAXES
The provision for income taxes has been recorded based on the current
estimate of the Company's annual effective tax rate. For periods with
taxable income, this rate differs from the federal statutory rate
primarily because of the utilization of net operating loss
carryforwards.
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4. INVENTORIES
The components of inventories are as follows (in thousands):
September 30, March 31,
1998 1998
Raw materials $ 6,001 $ 6,356
Work in process 11,734 7,190
Finished goods 10,971 14,036
-------- --------
28,706 27,582
Inventory allowances (1,806) (2,713)
-------- --------
Total inventory $ 26,900 $ 24,869
======== ========
5. NET INCOME PER SHARE
In 1997, the Financial Accounting Standards Board ("FASB") issued
Statement No. 128, "Earnings Per Share" ("SFAS 128"). SFAS 128 replaced
the calculation of primary and diluted earnings per share with basic
and diluted earnings per share. Unlike primary earnings per share,
basic earnings per share excludes any dilutive effects of options,
warrants, and convertible securities, and only reflects actual common
shares outstanding. Diluted earnings per share is similar to the
previously reported fully diluted earnings per share. All earnings per
share amounts for all periods have been presented, and where
appropriate, restated to conform to SFAS 128 requirements.
6. PROPERTY AND EQUIPMENT
During the six months ended September 30, 1998, the Company entered
into capital lease agreements of approximately $5.8 million.
7. SHAREHOLDER'S EQUITY
In September 1998, TRW Inc. exercised a warrant covering 1,000,000
shares of common stock, resulting in proceeds to the Company of
$10,000,000.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
RF Micro Devices, Inc. (the "Company") designs, develops, manufactures, and
markets proprietary radio frequency integrated circuits ("RFICs") for wireless
communications applications such as cellular and personal communications
services ("PCS"), cordless telephony, wireless local area networks,
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wireless local loop, industrial radios, wireless security and remote meter
reading. The Company derives revenues from the sale of standard and
custom-designed products and services. To date, a significant portion of the
Company's revenues has been attributable to the sale of RFICs used in cellular
and PCS handsets. The Company offers a broad array of products, including
amplifiers, mixers and modulators/demodulators, that represent a substantial
majority of the RFICs required in wireless subscriber equipment. The Company
designs products using three distinct process technologies: gallium arsenide
heterojunction bipolar transistor ("GaAs HBT"), gallium arsenide metal
semiconductor field effect transistor ("GaAs MESFET") and silicon bipolar
transistor. For the three months ended September 30, 1998, 89.2% of the
Company's revenues was derived from the sale of GaAs HBT products. The Company
currently expects to continue to rely heavily on sales of GaAs HBT products in
future periods.
RESULTS OF OPERATIONS
The following table sets forth the statement of operations data of the Company
expressed as a percentage of total revenues for the periods indicated:
Three Months Ended Six Months Ended
9/30/98 9/30/97 9/30/98 9/30/97
------- ------- ------- -------
Revenues 100.0% 100.0% 100.0% 100.0%
Operating costs and expenses:
Cost of goods sold 69.0 52.7 68.0 51.5
Research and development 10.3 22.9 10.9 21.5
Marketing and selling 8.0 14.4 8.6 14.5
General and administrative 3.6 6.2 3.6 5.4
----- ----- ----- -----
Total operating costs and expenses 90.9 96.2 91.1 92.9
Income from operations 9.1 3.8 8.9 7.1
Other income (expense), net (0.6) 5.3 (0.1) 3.4
----- ----- ----- -----
Income before income taxes 8.5 9.1 8.8 10.5
Income tax expense (1.0) (0.2) (1.5) (0.2)
----- ----- ----- -----
Net income 7.5% 8.9% 7.3% 10.3%
===== ===== ===== =====
REVENUES
Revenues increased 243.0% from $9.2 million for the three months ended September
30, 1997 to $31.4 million for the three months ended September 30, 1998. The
increase in revenues during the three months ended September 30, 1998 reflected
strong growth in both the GaAs HBT product line (a 312% increase over the second
fiscal quarter of 1998) and the silicon product line (a 207% increase over the
second fiscal quarter of 1998). In addition, commercial shipments from the
Company's wafer fabrication facility commenced in September, 1998 and
contributed $4.4 million (or 14%) of total revenues for the quarter. For the six
month period ended September 30, 1998, revenues increased 182.9% from $19.4
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million in the same period in fiscal 1998 to $54.8 million. This increase was
primarily attributable to increased shipments of the Company's GaAs three-volt
HBT power amplifiers used in a variety of applications.
International shipments accounted for $18.8 million or 60% revenues for the
three months ended September 30, 1998, compared to $6.3 million or 69% for the
three months ended September 30, 1997. Sales to South Korean customers totaled
$3.8 million, or 12.1% of revenues, compared to $2.6 million, or 11.1% of
revenues, for the prior quarter ended June 30, 1998, and $1.7 million or 18.5%
of revenues for the quarter ended September 30, 1997. Although the Company
experienced an increase in sales to South Korean customers in its second fiscal
quarter, this market remains unstable and there is no assurance that this trend
will continue or that the economic instability in Asia will not have a material
adverse effect on the Company's business, financial condition, or results of
operations.
GROSS PROFIT
The gross profit margin was 31.0% for the three months ended September 30, 1998
compared to 47.3% for the three months ended September 30, 1997. The decrease in
the gross profit margin was primarily attributable to significantly higher sales
volume and resultant reduced average selling prices based on volume pricing
agreements. For the six months ended September 30, 1998, the gross profit margin
decreased to 32.0% compared to 48.5% for the six months ended September 30,
1997. The decrease was primarily attributable lower average selling prices based
on volume pricing agreements.
The Company historically has experienced significant fluctuations in gross
profit margins. In certain cases, the Company believes that its gross profit
margins have been significantly affected by low manufacturing, assembly and test
yields, and there can be no assurance that future operating results will not be
similarly affected. Further, the Company sells products in intensely competitive
markets, and the Company believes that downward pressure on average selling
prices will continue to occur in the future. The Company currently expects that
its gross profit margins should improve as an increasing percentage of its GaAs
HBT products are fabricated at the Company's own wafer fabrication facility,
where production costs per wafer are anticipated to be lower.
RESEARCH AND DEVELOPMENT
Research and development expenses for the three months ended September 30, 1998
increased 53.6% to $3.2 million, compared to $2.1 million for the three months
ended September 30, 1997. For the six months ended September 30, 1998, research
and development expenses increased 44.0% to $6.0 million, versus $4.2 million
for the six months ended September 30, 1997. These increases were primarily
attributable to increased salaries and benefits and recruiting expenses related
to increased headcount and additional spending on mask sets and outside services
for both standard and custom-designed products. Research and development
expenses as a percentage of total revenues decreased to 10.3% for the three
months ended September 30, 1998 from 22.9% for the three months ended September
30, 1997. As a percentage of revenues for the six months ended September 30,
1998, research and development expenses were 10.9% versus 21.5% for the six
months ended September 30, 1997. The Company plans to continue to make
substantial investments in research and development and expects that such
expenses will continue to increase in absolute dollar amounts in future periods.
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MARKETING AND SELLING
Marketing and selling expenses for the three months ended September 30, 1998
were $2.5 million, compared to $1.3 million for the three months ended September
30, 1997, an increase of 90.8%. For the six months ended September 30, 1998,
marketing and selling expenses were $4.7 million, compared to $2.8 million for
the six months ended September 30, 1997, an increase of 67.5%. These increases
were primarily attributable to increased salaries and benefits related to
increased headcount and to increased expenses associated with advertising and
commissions. Marketing and selling expenses as a percentage of revenue for the
three months ended September 30, 1998 decreased to 8.0% from 14.4% for the three
months ended September 30, 1997. For the six months ended September 30, 1998,
marketing and selling expenses were 8.6% of revenues, a decrease from 14.5% for
the six month period ended September 30, 1997.
GENERAL AND ADMINISTRATIVE
General and administrative expenses for the three months ended September 30,
1998 were $1.1 million compared to $565,000 for the three months ended September
30, 1997, an increase of 98.6%. For the six months ended September 30, 1998,
general and administrative expenses rose 88.4%, to $1.9 million, up from $1.0
million for the six month period ended September 30, 1997. These increases were
attributable primarily to increased salaries and benefits related to headcount
increases, and to costs associated with being a public company. General and
administrative expenses as a percentage of revenues decreased to 3.6% for the
three months ended September 30, 1998 from 6.2% for the three months ended
September 30, 1997. As a percentage of revenues, general and administrative
expenses also decreased to 3.6% for the six month period ended September 30,
1998 from 5.4% for the six month period ended September 30, 1997.
OTHER INCOME (EXPENSE), NET
Other income (expense), net for the three months ended September 30, 1998
reflected a net expense total of $183,000 compared to net income of $487,000 for
the three months ended September 30, 1997. For the six months ended September
30, 1998, other income (expense), net reflected net expenses of $28,000 against
net income of $662,000 for the six months ended September 30, 1997. The decease
in other income during these periods is attributable to increased interest
expense incurred on borrowings related to the Company's wafer fabrication
facility.
INCOME TAX EXPENSE
The effective tax rates for the three month and the six month periods ending
September 30, 1998 were 12.0% and 17.0%, respectively, which are less than the
combined federal and state statutory rate of approximately 40% due to the use of
net operating loss carryforwards. Income tax expense for the three months and
six months ended September 30, 1998 was approximately $321,000 and $821,000,
respectively, as compared to $18,000 and $45,000 respectively for the
corresponding periods ended September 30, 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company has funded its operations to date through sales of equity and debt
securities, bank borrowings, capital equipment leases and revenues from product
sales. The Company completed its
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initial public offering in June 1997, and raised approximately $37.8 million,
net of offering expenses. As of September 30, 1998, the Company had working
capital of approximately $35.2 million, including $16.8 million in cash and cash
equivalents.
Operating activities generated $2.3 million in cash for the six month period
ended September 30, 1998. This was primarily attributable to net income of $4.0
million, an increase in accounts payable of $6.9 million, partially offset by an
increases in accounts receivable of $7.9 million and in inventories of $2.0
million. Cash used by operating activities for the six months ended September
30, 1997 was $10.4 million. The cash used by operating activities during this
period was primarily attributable to an increase in inventories and accounts
receivable, partially offset by net income of $2.0 million and an increase in
accounts payables of $1.2 million.
The $9.0 million dollars of cash used by investing activities for the six months
ended September 30, 1998 was related to the purchase of $3.3 million of capital
equipment, primarily for use in the Company's wafer fabrication facility, as
well as $5.6 million for the capitalization of wafer fabrication construction
costs. The $14.4 million of cash used by investing activities for the six months
ended September 30, 1997 was primarily related to expenditures associated with
the construction of the Company's GaAs HBT wafer fabrication facility, and for
wafer fabrication and general corporate capital equipment requirements.
The $7.1 million of cash provided by financing activities for the six month
period ended September 30, 1998 related primarily to the receipt of proceeds
from the exercise of a warrant covering 1,000,000 shares of common stock by TRW,
Inc., of $10.0 million, partially offset by $2.9 million in repayments of
capital lease obligations. The $49.6 million of cash provided by financing
activities for the six months ended September 30, 1997 related primarily to the
issuance of common stock in the Company's initial public offering, totaling
$37.8 million, as well as a reduction in restricted cash of $12.2 million set
aside for the purchase of wafer fabrication-related expenditures.
The Company maintains a secured credit facility with Silicon Valley Bank that
includes a $5.0 million working capital line of credit and a $10.0 million term
loan line of credit, both of which were amended during the quarter ended
September 30, 1998 to increase amounts available for borrowings. Borrowings
under the revolving line bear interest at prime plus 0%, payable monthly.
Borrowings under the term loan can be made in $2.5 million increments, and are
repayable in 60 monthly installments at the prime rate. Borrowings under the
working capital line bear interest at the prime rate, and can be made and repaid
at any time during the term of the agreement. At September 30, 1998, there was
no outstanding amount under either of these facilities. The Company is required
to maintain specified amounts of net worth and meet certain ratios with regard
to liquidity and debt to equity under this facility.
The Company currently has 8 capital lease facilities with 4 equipment financing
companies under which the Company has financed the cost of capital equipment and
leasehold improvements associated with its wafer fabrication facility. The
Company has financed an aggregate of $23.4 million of leased property under
these facilities. Lease terms range from 36 months to 60 months with effective
interest factors ranging from 8.6% to 11.1%. At September 30, 1998, the minimum
future lease payments under these leases (excluding interest) were $20.6
million.
In connection with the construction of its wafer fabrication facility, in
October 1998 the Company deposited approximately $3.9 million under an escrow
account in favor of the lessor of the facility in order to secure its payment
obligations under the lease related to the facility. The deposited amounts will
be released to the Company over time based on an agreed amortization schedule,
subject to acceleration in the event the Company meets specified financial
coverage ratios.
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The Company is currently engaged in construction activities related to the
second phase of its wafer fabrication facility. This phase is budgeted at
approximately $30 million and includes a clean room expansion and installation
of additional production equipment.
The Company currently has capital commitments totaling $8.9 million for
construction and equipment associated with the completion of the second phase of
the wafer fabrication facility, and $1.2 million for additional testing
equipment for the product test area, all of which are expected to be funded
through currently established lease facilities.
The Company expects to seek additional equity or debt financing during fiscal
year 1999 to finance a portion of the cost of the second phase of its wafer
fabrication facility and for other corporate requirements. There can be no
assurance that any additional equity financing will not be dilutive to the
holders of the Company's common stock. Further, there can be no assurance that
additional equity or debt financing, if required, will be available on
acceptable terms or at all.
YEAR 2000 ISSUES
The Company has evaluated all internal software and all current products against
anticipated Year 2000 concerns, and believes that its products and business will
not be substantially affected by the advent of the year 2000, and that it has no
significant exposure to contingencies related to the Year 2000 issue for the
products it has sold. The Company has initiated a project to upgrade all
internal software and to conduct testing on both its information technology
systems and its other equipment and machinery to further ensure that all aspects
of its business will be Year 2000 compliant. The Company believes that these
procedures, which are expected to be completed by December 31, 1998, will have
no material effect on the Company's customers and will not require any material
expenditures or other material diversion of resources.
The Company is currently contacting third parties with which it has material
relationships, including its material customers and suppliers, to attempt to
determine their preparedness with respect to Year 2000 issues and to analyze the
risk to the Company in the event such third parties experience significant
business interruptions as a result of Year 2000 noncompliance. The Company
expects to complete this review and analysis and to determine the need for
contingency planning in this regard by December 31, 1998.
Although the Company believes its planning efforts are adequate to address its
Year 2000 concerns, there can be no assurances that the Company will not
experience unanticipated negative consequences and material costs caused by
undetected errors or defects in the technology used in its internal systems, or
that the systems of third parties on which the Company relies will be made
compliant on a timely basis and will not have any material adverse effect on the
Company. The Company is currently unable to estimate the most reasonably likely
worst-case effects of the arrival of the year 2000 and does not currently have a
contingency plan in place for any such unanticipated negative effects. The
Company intends to analyze reasonably likely worst-case scenarios and the need
for such contingency planning once the upgrade and testing of internal systems
and review of third-party preparedness described above have been completed, and
expects to complete this analysis by June 30, 1999.
It is anticipated that the total costs related to the Year 2000 issue will
approximate $150,000, which is currently budgeted in the Company's Information
Technology expense budget. Of this amount, $75,000
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has already been spent to address this issue. To date, there have been no
material deferments of other IT projects resulting from the work taking place on
the Company's Year 2000 program.
RISKS AND UNCERTAINTIES
The preceding Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 that relate to the Company's future plans, objectives,
estimates and goals. These statements are subject to numerous risks and
uncertainties, including probable variability in the Company's quarterly
operating results, dependence on a limited number of customers, manufacturing
capacity constraints, dependence on TRW Inc. as a supplier of GaAs HBT wafers
and economic turmoil in Asia and other areas of the world. These and other risks
and uncertainties are described in the Company's Annual Report on Form 10-K
filed with the Securities and Exchange Commission, and could cause actual
results and developments to be materially different from those expressed or
implied by any of the forward-looking statements included herein.
PART II - OTHER INFORMATION
ITEM 2: CHANGES IN SECURITIES AND USE OF PROCEEDS
On September 14, 1998, the Company issued 1,000,000 shares of common
stock to an entity believed to qualify as an accredited investor upon the
exercise of warrants held by such entity in exchange for $10,000,000 in cash.
The Company issued these shares of common stock in reliance on the exemption
from registration provided by Section 4(2) of the Securities Act of 1933, as
amended.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of RF Micro Devices, Inc. was held
July 28, 1998 (the "Annual Meeting"). At the Annual Meeting, Robert C. Fleming,
Erik H. van der Kaay, David A. Norbury, Albert E. Paladino, William J. Pratt,
Walter H. Wilkinson, Jr. and Terri D. Zinkiewicz were duly elected to the Board
of Directors of the Company and the selection of Ernst & Young LLP as
independent accountants for the year ending March 31, 1999 was ratified. Votes
cast by the shareholders of the Company at the Annual Meeting are as follows:
Nominees for Director Shares Voted in Favor Shares Withheld Broker Non-Votes
Robert C. Fleming 13,649,341 10,300 --
Erik H. van der Kaay 13,650,341 9,300 --
David A. Norbury 13,656,341 3,300 --
Albert E. Paladino 13,649,341 10,300 --
William J. Pratt 13,656,341 3,300 --
Walter H. Wilkinson, Jr 13,649,341 10,300 --
Terri D. Zinkiewicz 13,650,341 9,300 --
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Ratification of the selection of Ernst & Young LLP:
Shares Voted in Favor Shares Voted Against Shares Abstaining Broker Non-Votes
13,637,807 17,984 3,850 --
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 4.5 First Amended and Restated Loan and Security
Agreement, dated July 14, 1998 between RF Micro
Devices and Silicon Valley Bank
Exhibit 27.1 Financial Data Schedule
(b) Report on Form 8-K
The Company did not file any reports on 8-K during the three months
ended September 30, 1998.
16
SIGNATURES
Pursuant to the requirements 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.
Dated: November 9, 1998 /s/ David A. Norbury
---------------------------------------------
DAVID A. NORBURY
President and Chief Executive Officer
(Principal Executive Officer)
Dated: November 9, 1998 /s/ William A. Priddy, Jr.
---------------------------------------------
WILLIAM A. PRIDDY, JR.
Vice President, Finance and Administration
and Chief Financial Officer
(Principal Financial and Accounting Officer)
17
RF MICRO DEVICES, INC.
INDEX TO EXHIBITS
SEQUENTIAL
EXHIBIT NO. DESCRIPTION
- ----------- -----------
27.1 Financial Data Schedule