UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 28, 2013

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

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 incorporation or organization)	(I.R.S. Employer 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)

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 þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

As of January 24, 2014, there were 282,535,754 shares of the registrant’s common stock outstanding.

RF MICRO DEVICES, INC. AND SUBSIDIARIES

INDEX

	Page
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets as of December 28, 2013 and March 30, 2013	3
Condensed Consolidated Statements of Operations for the three and nine months ended December 28, 2013 and December 29, 2012	4
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended December 28, 2013 and December 29, 2012	5
Condensed Consolidated Statements of Cash Flows for the nine months ended December 28, 2013 and December 29, 2012	6
Notes to Condensed Consolidated Financial Statements	7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.	15
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	22
Item 4. Controls and Procedures.	22
PART II — OTHER INFORMATION	22
Item 1. Legal Proceedings.	22
Item 1A. Risk Factors.	23
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	23
Item 6. Exhibits.	24
SIGNATURES	25
EXHIBIT INDEX	26

2

PART I — FINANCIAL INFORMATION

ITEM 1.

RF MICRO DEVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	December 28, 2013			March 30, 2013
ASSETS
Current assets:
Cash and cash equivalents	$	117,482		$	101,662
Short-term investments (Note 6)	88,059			77,987
Accounts receivable, less allowance of $312 and $434 as of December 28, 2013 and March 30, 2013, respectively	143,684			143,647
Inventories (Note 3)	136,300			161,193
Prepaid expenses	11,604			13,034
Other receivables	26,559			16,233
Other current assets (Note 5)	2,713			2,481
Total current assets	526,401			516,237
Property and equipment, net of accumulated depreciation of $545,419 at December 28, 2013 and $538,494 at March 30, 2013	200,671			191,526
Goodwill (Note 9)	103,901			104,846
Intangible assets, net (Note 9)	73,324			93,197
Long-term investments (Note 6)	4,509			4,281
Other non-current assets (Note 5)	25,188			21,912
Total assets	$	933,994		$	931,999
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	102,869		$	123,468
Accrued liabilities	61,659			55,760
Current portion of long term debt, net of unamortized discount (Note 4)	85,902			—
Other current liabilities	1,099			6,486
Total current liabilities	251,529			185,714
Long-term debt, net of unamortized discount (Note 4)	—			82,035
Other long-term liabilities (Note 5)	22,403			25,236
Total liabilities	273,932			292,985
Shareholders’ equity:
Preferred stock, no par value; 5,000 shares authorized; no shares issued and outstanding	—			—
Common stock, no par value; 500,000 shares authorized; 282,534 and 280,160 shares issued and outstanding at December 28, 2013 and March 30, 2013, respectively	1,266,714			1,259,420
Accumulated other comprehensive loss, net of tax	(432		)	(498		)
Accumulated deficit	(606,220		)	(619,908		)
Total shareholders’ equity	660,062			639,014
Total liabilities and shareholders’ equity	$	933,994		$	931,999

See accompanying Notes to Condensed Consolidated Financial Statements.

3

RF MICRO DEVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

	Three Months Ended						Nine Months Ended
	December 28, 2013			December 29, 2012			December 28, 2013			December 29, 2012
Revenue	$	288,520		$	271,213		$	892,232		$	683,544
Cost of goods sold	180,997			184,403			586,584			465,945
Gross profit	107,523			86,810			305,648			217,599
Operating expenses:
Research and development	50,378			46,509			147,907			130,053
Marketing and selling	18,054			16,906			56,381			50,022
General and administrative	17,766			15,746			61,320			47,734
Other operating expense	5,933			1,969			11,957			7,127
Total operating expenses	92,131			81,130			277,565			234,936
Income (loss) from operations	15,392			5,680			28,083			(17,337		)
Interest expense	(1,469		)	(1,368		)	(4,381		)	(5,086		)
Interest income	46			52			128			195
Loss on retirement of convertible subordinated notes (Note 4)	—			—			—			(2,756		)
Other income	427			143			1,198			22
Income (loss) before income taxes	14,396			4,507			25,028			(24,962		)
Income tax expense (Note 5)	(8,161		)	(5,950		)	(11,340		)	(12,076		)
Net income (loss)	$	6,235		$	(1,443	)	$	13,688		$	(37,038	)
Net income (loss) per share (Note 2):
Basic	$	0.02		$	(0.01	)	$	0.05		$	(0.13	)
Diluted	$	0.02		$	(0.01	)	$	0.05		$	(0.13	)
Shares used in per share calculation:
Basic	282,439			279,523			281,749			277,562
Diluted	287,920			279,523			287,553			277,562

See accompanying Notes to Condensed Consolidated Financial Statements.

4

RF MICRO DEVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

	Three Months Ended						Nine Months Ended
	December 28, 2013			December 29, 2012			December 28, 2013		December 29, 2012
Net income (loss)	$	6,235		$	(1,443	)	$	13,688	$	(37,038	)
Other comprehensive (loss) income:
Unrealized gain on marketable securities, net of tax	—			81			5		32
Foreign currency translation adjustment, including intra-entity foreign currency transactions that are of a long-term-investment nature	(44		)	(18		)	59		(103		)
Reclassification adjustments, net of tax:
Recognized loss on marketable securities	—			1			—		4
Amortization of pension actuarial loss	1			—			2		—
Other comprehensive (loss) income	(43		)	64			66		(67		)
Total comprehensive income (loss)	$	6,192		$	(1,379	)	$	13,754	$	(37,105	)

See accompanying Notes to Condensed Consolidated Financial Statements.

5

RF MICRO DEVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended
	December 28, 2013			December 29, 2012
Cash flows from operating activities:
Net income (loss)	$	13,688		$	(37,038	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	34,024			37,654
Amortization and other non-cash items	25,295			20,208
Deferred income taxes	1,591			4,141
Foreign currency adjustments	(1,221		)	(1,153		)
Loss on retirement of convertible subordinated notes	—			2,756
Loss on assets and other, net	2,836			4,379
(Income) loss from equity investment	(228		)	140
Share-based compensation expense	24,750			24,124
Changes in operating assets and liabilities:
Accounts receivable, net	(16		)	(38,854		)
Inventories	25,050			(16,832		)
Prepaid expense and other current and non-current assets	(13,790		)	(6,481		)
Accounts payable and accrued liabilities	(7,323		)	66,069
Income tax payable/recoverable	(4,712		)	1,668
Other liabilities	(816		)	7
Net cash provided by operating activities	99,128			60,788
Investing activities:
Purchase of property and equipment	(59,489		)	(33,796		)
Purchase of business, net of cash acquired (Note 9)	—			(48,099		)
Purchase of intangibles	(663		)	—
Proceeds from sale of property and equipment	2,400			443
Purchase of securities available-for-sale	(115,038		)	(69,967		)
Proceeds from maturities of securities available-for-sale	105,000			158,975
Net cash (used in) provided by investing activities	(67,790		)	7,556
Financing activities:
Payment of debt	—			(79,432		)
Debt issuance cost	(122		)	—
Proceeds from the issuance of common stock	5,334			2,808
Repurchase of common stock, including transaction costs	(12,780		)	(6,999		)
Tax withholding paid on behalf of employees for restricted stock units	(8,979		)	(5,866		)
Restricted cash associated with financing activities	145			(98		)
Repayment of capital lease obligations	(47		)	(46		)
Net cash used in financing activities	(16,449		)	(89,633		)
Effect of exchange rate changes on cash	931			(570		)
Net increase (decrease) in cash and cash equivalents	15,820			(21,859		)
Cash and cash equivalents at the beginning of the period	101,662			135,524
Cash and cash equivalents at the end of the period	$	117,482		$	113,665

See accompanying Notes to Condensed Consolidated Financial Statements.

6

RF MICRO DEVICES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying Condensed Consolidated Financial Statements of RF Micro Devices, Inc. and Subsidiaries (together, the “Company” or “RFMD”) have been prepared in conformity with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions, which could differ materially from actual results. In addition, certain information or footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed, or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, the financial 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 Condensed Consolidated Financial Statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 30, 2013.

The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

The Company uses a 52- or 53-week fiscal year ending on the Saturday closest to March 31 of each year. The first fiscal quarter of each year ends on the Saturday closest to June 30, the second fiscal quarter of each year ends on the Saturday closest to September 30 and the third fiscal quarter of each year ends on the Saturday closest to December 31.

2. NET INCOME (LOSS) PER SHARE

The following table sets forth a reconciliation of the numerators and denominators in the computation of basic and diluted net income (loss) per share (in thousands, except per share data):

	Three Months Ended					Nine Months Ended
	December 28, 2013		December 29, 2012			December 28, 2013		December 29, 2012
Numerator:
Numerator for basic and diluted net income (loss) per share — net income (loss) available to common shareholders	$	6,235	$	(1,443	)	$	13,688	$	(37,038	)
Denominator:
Denominator for basic net income (loss) per share — weighted average shares	282,439		279,523			281,749		277,562
Effect of dilutive securities:
Share-based awards	5,481		—			5,804		—
Denominator for diluted net income (loss) per share — adjusted weighted average shares and assumed conversions	287,920		279,523			287,553		277,562
Basic net income (loss) per share	$	0.02	$	(0.01	)	$	0.05	$	(0.13	)
Diluted net income (loss) per share	$	0.02	$	(0.01	)	$	0.05	$	(0.13	)

In the computation of diluted net income per share for the three and nine months ended December 28, 2013, outstanding stock options to purchase approximately 7.5 million shares and 8.2 million shares, respectively, were excluded because the exercise price of the options was greater than the average market price of the underlying common stock and the effect of their inclusion would have been anti-dilutive. In the computation of diluted net loss per share for the three and nine months ended December 29, 2012, all outstanding stock options were excluded because the effect of their inclusion would have been anti-dilutive.

The computation of diluted net income (loss) per share does not assume the conversion of the Company’s $200 million initial aggregate principal amount of 0.75% Convertible Subordinated Notes due 2012 (the “2012 Notes”) or the Company’s $175 million initial aggregate principal amount of 1.00% Convertible Subordinated Notes due 2014 (the “2014 Notes”). The 2012 Notes became due on April 15, 2012, and the remaining principal balance of $26.5 million was paid with cash on hand.

7

RF MICRO DEVICES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

The 2014 Notes generally would become dilutive to earnings if the average market price of the Company’s common stock exceeds approximately $8.05 per share. The maximum number of shares issuable upon conversion of the 2014 Notes as of December 28, 2013, is approximately 8.4 million shares (after giving effect to an aggregate of $87.5 million principal amount of 2014 Notes that were previously purchased and retired by the Company), which may be adjusted as a result of stock splits, stock dividends and antidilution provisions.

Share Repurchase

During the three and nine months ended December 28, 2013, the Company repurchased 0.2 million shares and 2.5 million shares of its common stock at an average price of $4.99 and $5.03 on the open market, respectively. During the three months ended December 29, 2012, the Company did not repurchase any shares of its common stock. During the nine months ended December 29, 2012, the Company repurchased 1.9 million shares of its common stock at an average price of $3.75 on the open market.

3. INVENTORIES

Inventories are stated at the lower of cost or market determined using the average cost method. The components of inventories are as follows (in thousands):

	December 28, 2013		March 30, 2013
Raw materials	$	36,246	$	45,656
Work in process	42,416		64,108
Finished goods	57,638		51,429
Total inventories	$	136,300	$	161,193

4. DEBT

Convertible Debt

The 2014 Notes will mature on April 15, 2014 and the balance of $85.9 million as of December 28, 2013 is recorded in "Current portion of long term debt" on the Condensed Consolidated Balance Sheet.

During the first nine months of fiscal 2013, the Company purchased and retired $47.4 million original principal amount of its 2014 Notes, for an average price of $98.34, which resulted in a loss of $2.8 million, as a result of applying ASC 470-20. ASC 470-20 requires the Company to record gains and losses on the early retirement of its 2014 Notes in the period of derecognition, depending on whether the fair market value at the time of derecognition was greater than, or less than, the carrying value of the debt.

As of December 28, 2013, the 2014 Notes had a fair value on the Private Offerings, Resale and Trading through Automated Linkages ("PORTAL") Market of $87.3 million, compared to a carrying value of $85.9 million. As of March 30, 2013, the 2014 Notes had a fair value on the PORTAL Market of $86.7 million, compared to a carrying value of $82.0 million.

Credit Agreement

In March 2013, the Company and certain material domestic subsidiaries of the Company (the “Guarantors”) entered into a four-year senior credit facility with Bank of America, N.A., as Administrative Agent and a lender, and a syndicate of other lenders (the “Credit Agreement”). The Credit Agreement includes a $125.0 million revolving credit facility, which includes a $5.0 million sublimit for the issuance of standby letters of credit and a $5.0 million sublimit for swingline loans. The Company may request, at any time and from time to time, that the revolving credit facility be increased by an amount not to exceed $50.0 million. The revolving credit facility is available to finance working capital, capital expenditures and other corporate purposes. The Company’s obligations under the Credit Agreement are jointly and severally guaranteed by the Guarantors. On August 15, 2013, the Credit Agreement was amended to revise the definition of "Eurodollar Base Rate" and a provision regarding restricted payments. The Company currently has no outstanding amounts under the Credit Agreement and is in compliance with the financial covenants associated with the Credit Agreement as of December 28, 2013.

8

RF MICRO DEVICES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

5. INCOME TAXES

Income Tax Expense

The Company’s provision for income taxes for the three and nine months ended December 28, 2013 and December 29, 2012 has been calculated by applying an estimate of the annual effective tax rate for the full fiscal year to “ordinary” income or loss (pre-tax income or loss excluding unusual or infrequently occurring discrete items) for the three and nine months ended December 28, 2013 and December 29, 2012.

The Company’s income tax expense was $8.2 million and $11.3 million for the three and nine months ended December 28, 2013, respectively, and $6.0 million and $12.1 million for the three and nine months ended December 29, 2012, respectively. The Company’s effective tax rate was 56.7% and 45.3% for the three and nine months ended December 28, 2013, respectively, and 132.0% and (48.4)% for the three and nine months ended December 29, 2012, respectively. The Company's effective tax rate for both the third quarter of fiscal 2014 and the third quarter of fiscal 2013 differed from the statutory rate primarily due to tax rate differences in foreign jurisdictions, state income taxes, domestic tax credits generated, adjustments to the valuation allowance limiting the recognition of the benefit of domestic deferred tax assets, and for fiscal 2014, adjustments to reduce the carrying value of United Kingdom (U.K.) deferred tax assets.

Deferred Taxes

The valuation allowance against net deferred tax assets has decreased in fiscal 2014 by $4.0 million from the $164.2 million balance as of the end of fiscal 2013. The Company intends to maintain a valuation allowance against its domestic net deferred tax assets until sufficient positive evidence exists to support its full or partial reversal. The amount of the deferred tax assets actually realized could vary depending upon the amount of taxable income the Company is able to generate in the various taxing jurisdictions in which the Company operates.

In July 2013, the Company sold its manufacturing facility located in the U.K., which generated its U.K. tax loss carryovers. U.K. tax loss carryovers can only be used to offset income generated by the same trade or business from which they arose. In connection with the sale, the deferred tax assets related to U.K. tax losses were written off and the related valuation allowance was reversed.

The Company has outstanding domestic federal and state tax net operating loss (“NOLs”) carry-forwards that began or will begin to expire in fiscal 2019 and fiscal 2014, respectively, if unused. The use of the NOLs that were acquired in prior year acquisitions is subject to certain annual limitations under Internal Revenue Code Section 382 and similar state tax provisions.

Uncertain Tax Positions

The Company’s gross unrecognized tax benefits increased from $37.9 million as of the end of fiscal 2013 to $39.1 million as of the end of the third quarter of fiscal 2014, with the change arising from a $1.0 million increase related to tax positions taken with respect to the current fiscal year and a $0.2 million increase related to tax positions taken with respect to prior fiscal years.

U.S. federal tax returns through fiscal 2009, North Carolina tax returns through fiscal 2008, and German tax returns through calendar year 2007 have been examined by their respective taxing authorities. Subsequent tax years in each of those jurisdictions remain open for examination. Other material jurisdictions that are subject to examination by tax authorities are California (fiscal 2009 through present), the U.K. (fiscal 2011 through present), and China (calendar year 2003 through present).

9

RF MICRO DEVICES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

6. INVESTMENTS AND FAIR VALUE MEASUREMENTS

Available-For-Sale

The following is a summary of available-for-sale securities as of December 28, 2013 and March 30, 2013 (in thousands):

	Available-for-Sale Securities
	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair   Value
December 28, 2013
U.S. government/agency securities	$	88,055	$	4	$	—		$	88,059
Auction rate securities	2,150		—		—			2,150
Money market funds	38,794		—		—			38,794
	$	128,999	$	4	$	—		$	129,003
March 30, 2013
U.S. government/agency securities	$	77,988	$	3	$	(4	)	$	77,987
Auction rate securities	2,150		—		—			2,150
Money market funds	26,328		—		—			26,328
	$	106,466	$	3	$	(4	)	$	106,465

The estimated fair value of available-for-sale securities was based on the prevailing market values on December 28, 2013 and March 30, 2013. We determine the cost of an investment sold based on the specific identification method.

The gross realized gains and losses recognized on available-for-sale securities for both the three and nine months ended December 28, 2013 and December 29, 2012, were insignificant.

No available-for-sale investments were in a continuous unrealized loss position for fewer than 12 months as of December 28, 2013. The available-for-sale investments that were in a continuous unrealized loss position for fewer than 12 months as of March 30, 2013 consisted of U.S. government/agency securities with gross unrealized losses of less than $0.1 million and an aggregate fair value of approximately $14.0 million. No available-for-sale investments were in a continuous unrealized loss position for 12 months or greater as of December 28, 2013 or as of March 30, 2013.

The amortized cost of available-for-sale investments in debt securities with contractual maturities is as follows (in thousands):

	December 28, 2013				March 30, 2013
	Cost		Estimated Fair Value		Cost		Estimated Fair Value
Due in less than one year	$	126,849	$	126,853	$	104,316	$	104,315
Due after ten years	2,150		2,150		2,150		2,150
Total investments in debt securities	$	128,999	$	129,003	$	106,466	$	106,465

Fair Value Measurements

On a quarterly basis, the Company measures the fair value of its marketable securities, which are comprised of U.S. government/agency securities, auction rate securities (ARS), and money market funds. Marketable securities are reported at fair value in cash and cash equivalents, short-term investments and long-term investments on the Company’s Condensed Consolidated Balance Sheet. The related unrealized gains and losses are included in accumulated other comprehensive loss, a component of shareholders’ equity, net of tax.

10

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

Recurring Fair Value Measurements

The fair value of the financial assets measured at fair value on a recurring basis was determined using the following levels of inputs as of December 28, 2013 and March 30, 2013 (in thousands):

	Total		Quoted Prices In Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
December 28, 2013
U.S. government/agency securities	$	88,059	$	88,059	$	—
Auction rate securities	2,150		—		2,150
Money market funds	38,794		38,794		—
	$	129,003	$	126,853	$	2,150
March 30, 2013
U.S. government/agency securities	$	77,987	$	77,987	$	—
Auction rate securities	2,150		—		2,150
Money market funds	26,328		26,328		—
	$	106,465	$	104,315	$	2,150

ARS are debt instruments with interest rates that reset through periodic short-term auctions. The Company’s Level 2 ARS are valued at par based on quoted prices for identical or similar instruments in markets that are not active. As of December 28, 2013 and March 30, 2013, the Company did not have any Level 3 securities.

Nonrecurring Fair Value Measurements

The Company's non-financial assets, such as intangible assets and property and equipment, are measured at fair value when there is an indicator of impairment, and recorded at fair value only when an impairment charge is recognized. During the first quarter of fiscal 2014, the Company recorded a $1.7 million impairment of certain property and equipment as a result of the phase out of manufacturing and the then-pending sale of its U.K. manufacturing facility. As of June 29, 2013, the fair value of these impaired assets was estimated to be $0.8 million using a significant Level 3 unobservable input (market valuation approach). The market valuation approach uses prices and other relevant information generated primarily by recent market transactions involving similar or comparable assets, as well as the Company's experience. During the second quarter of fiscal 2014, the Company sold its U.K. manufacturing facility, which resulted in a loss on these impaired assets of $0.6 million.

Other Fair Value Disclosures

The carrying values of cash and cash equivalents, accounts receivable, accounts payable and other accrued liabilities approximate fair values because of the relatively short-term maturities of these instruments.

The fair value of the Company’s 2014 Notes is measured using a Level 1 input obtained from the PORTAL Market and is disclosed in Note 4 to the Condensed Consolidated Financial Statements.

7. RECENT ACCOUNTING PRONOUNCEMENTS

In July 2013, the FASB issued Accounting Standards Update ("ASU") 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” ("ASU 2013-11"). ASU 2013-11 requires an unrecognized tax benefit, or a portion of an unrecognized tax benefit, to be presented in the financial statements as a reduction of a deferred tax asset or a tax credit carryforward, excluding certain exceptions. This ASU will be effective for the Company beginning with the first quarter of fiscal 2015 and the Company does not believe that the adoption of this standard will significantly impact its consolidated financial statements.

11

RF MICRO DEVICES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

In February 2013, the FASB issued ASU 2013-02, "Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income." ASU 2013-02 requires reporting the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required to be reclassified in its entirety to net income. For other amounts that are not required to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures that provide additional detail about these amounts. The amendments do not change the current requirements for reporting net income or other comprehensive income in the financial statements. The Company adopted this guidance in the first quarter of fiscal 2014. The adoption of this guidance affected the presentation of comprehensive income, but did not impact the Company's financial position, results of operations or cash flows.

8. OPERATING SEGMENT INFORMATION

RFMD’s operating segments as of December 28, 2013 are its Cellular Products Group (CPG), Multi-Market Products Group (MPG) and Compound Semiconductor Group (CSG).

CPG is a leading global supplier of cellular radio frequency (RF) solutions which perform various functions in the cellular front end section.  The cellular front end section is located between the transceiver and the antenna.  These RF solutions include power amplifier (PA) modules, transmit modules, PA duplexer modules, antenna control solutions, antenna switch modules, switch filter modules,  switch duplexer modules, and RF power management solutions.  CPG supplies its broad portfolio of cellular RF solutions into a variety of mobile devices, including smartphones, handsets, netbooks, notebooks and tablets.

MPG is a leading global supplier of a broad array of RF solutions, such as PAs, low noise amplifiers, variable gain amplifiers, high power gallium nitride transistors, attenuators, modulators, switches, voltage-controlled oscillators (VCOs), phase locked loop modules, multi-chip modules, front end modules, and a range of military and space components (amplifiers, mixers, VCOs and power dividers). Major communications applications include mobile wireless infrastructure, point-to-point and microwave radios, small cells, WiFi (routers, access points, mobile devices and customer premises equipment) and cable television (CATV) infrastructure. Industrial applications include Smart Energy/Advanced Metering Infrastructure (AMI), private mobile radio, and test and measurement equipment. Aerospace and defense applications include military communications, radar and electronic warfare, as well as space communications.

During the second quarter of fiscal 2013, the Company's foundry services were realigned from its CSG to its MPG. CSG is a business group established to leverage RFMD’s compound semiconductor technologies and related expertise in RF and non-RF end markets and applications. 

As of December 28, 2013, the Company’s reportable segments are CPG and MPG. CSG does not currently meet the quantitative threshold for an individually reportable segment under ASC 280-10-50-12 and is therefore included in the “Other operating segment” line in the following tables. CPG and MPG are separate reportable segments based on the organizational structure and information reviewed by the Company’s Chief Executive Officer, who is the Company’s chief operating decision maker (or CODM), and are managed separately based on the end markets and applications they support. The CODM allocates resources and assesses the performance of each operating segment primarily based on non-GAAP operating income (loss) and non-GAAP operating income (loss) as a percentage of revenue.

The “All other” category includes operating expenses such as share-based compensation, amortization of purchased intangible assets, acquisition-related costs, loss on asset transfer transaction, intellectual property rights (IPR) litigation costs, the inventory revaluation resulting from the transfer of the Company's molecular beam epitaxy (“MBE”) operations, net restructuring costs, certain consulting costs, expenses related to a potential strategic transaction that was terminated and other miscellaneous corporate overhead expenses that the Company does not allocate to its reportable segments because these expenses are not included in the segment operating performance measures evaluated by the Company’s CODM. The CODM does not evaluate operating segments using discrete asset information. The Company’s operating segments do not record inter-company revenue. The Company does not allocate gains and losses from equity investments, interest and other income, or taxes to operating segments. Except as discussed above regarding the “All other” category, the Company’s accounting policies for segment reporting are the same as for RFMD as a whole.

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RF MICRO DEVICES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

The following tables present details of the Company’s reportable segments and a reconciliation of the “All other” category (in thousands):

	Three Months Ended						Nine Months Ended
	December 28, 2013			December 29, 2012			December 28, 2013			December 29, 2012
Net revenue:
CPG	$	238,688		$	222,662		$	731,876		$	535,687
MPG	49,831			48,551			160,347			147,857
Other operating segment	1			—			9			—
Total net revenue	$	288,520		$	271,213		$	892,232		$	683,544
Income (loss) from operations:
CPG	$	32,806		$	25,689		$	83,838		$	36,149
MPG	8,028			1,885			23,759			6,224
Other operating segment	(849		)	(750		)	(2,423		)	(2,014		)
All other	(24,593		)	(21,144		)	(77,091		)	(57,696		)
Income (loss) from operations	15,392			5,680			28,083			(17,337		)
Interest expense	(1,469		)	(1,368		)	(4,381		)	(5,086		)
Interest income	46			52			128			195
Loss on retirement of convertible subordinated notes	—			—			—			(2,756		)
Other income	427			143			1,198			22
Income (loss) before income taxes	$	14,396		$	4,507		$	25,028		$	(24,962	)

	Three Months Ended						Nine Months Ended
	December 28, 2013			December 29, 2012			December 28, 2013			December 29, 2012
Reconciliation of “All other” category:
Share-based compensation expense	$	(4,882	)	$	(8,832	)	$	(24,750	)	$	(24,124	)
Amortization of intangible assets	(7,219		)	(6,456		)	(21,182		)	(15,780		)
Acquisition-related costs and restructuring expenses	—			(4,577		)	(130		)	(4,577		)
Restructuring and disposal costs associated with the phase out of manufacturing and sale of the U.K. facility	(149		)	—			(7,958		)	—
Loss on asset transfer transaction	—			—			—			(5,042		)
IPR litigation costs	(2,333		)	(1,173		)	(5,059		)	(4,691		)
Inventory revaluation resulting from transfer of MBE operations	—			—			—			(2,518		)
Certain consulting expense	(3,430		)	—			(10,430		)	—
Expenses related to a potential strategic transaction that was terminated	(2,883		)	—			(2,883		)	—
Other expenses (including restructuring, (gain) loss on property and equipment, and start-up costs)	(3,697		)	(106		)	(4,699		)	(964		)
Loss from operations for “All other”	$	(24,593	)	$	(21,144	)	$	(77,091	)	$	(57,696	)

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RF MICRO DEVICES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

9. BUSINESS ACQUISITION AND DISPOSITION

Acquisition

During the third quarter of fiscal 2013, the Company completed its acquisition of Amalfi Semiconductor, Inc. ("Amalfi") to accelerate the market adoption of Amalfi's RF silicon complementary metal oxide semiconductor (RF CMOS) and mixed-signal integrated circuits (ICs). The Company acquired Amalfi for a total purchase price of approximately $48.4 million, net of cash received of $37.6 million (adjusted for preliminary working capital adjustments and holdback reserves). The measurement period related to the acquisition of Amalfi concluded during the third quarter of fiscal 2014.

As a result of the acquisition of Amalfi, the Company acquired in-process research and development (IPRD). The acquired IPRD enhanced and strengthened the Company's existing 2G product offerings and also enables the Company to offer future high performing, low-cost products compatible with 3G networks. As of December 28, 2013, the acquired IPRD was 70% complete with an estimated completion time of approximately six to nine months and a total remaining cost of approximately $2.0 million to $2.5 million.  

Disposition

During the second quarter of fiscal 2014, the Company sold its gallium arsenide semiconductor manufacturing facility located in the U.K. to Compound Photonics. As a result of this transaction, the Company wrote-off approximately $1.0 million of MPG-related goodwill.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that relate to our plans, objectives, estimates and goals. Statements expressing expectations regarding our future and projections relating to products, sales, revenues and earnings are typical of such statements and are made under the Private Securities Litigation Reform Act of 1995. Words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” and “estimate,” and variations of such words and similar expressions, identify such forward-looking statements. Our business is subject to numerous risks and uncertainties, including the following:

• changes in business and economic conditions, including downturns in the semiconductor industry and/or the overall economy;

• our ability to accurately predict market requirements and evolving industry standards in a timely manner;

• our ability to accurately predict customer demand and thereby avoid the possibility of obsolete inventory, which would reduce our profit margins;

• our customers’ and distributors’ ability to manage the inventory they hold and forecast their demand;

• our ability to successfully integrate acquired businesses, operations, product technologies and personnel as well as achieve expected synergies;

• our ability to achieve cost savings and improve yields and margins on our new and existing products;

• our ability to respond to possible downward pressure on the average selling prices of our products caused by our customers or our competitors;

• our ability to efficiently utilize our capacity, or to acquire additional capacity, in response to customer demand;

• the inability of certain of our customers to access their traditional sources of credit, which could lead them to reduce their level of purchases or seek credit or other accommodations from us;

• our ability to continue to improve our product designs, develop new products in response to new technologies, and achieve design wins;

• our dependence on a limited number of customers for a substantial portion of our revenue;

• our ability to bring new products to market in response to market shifts and to use technological innovation to shorten time-to-market for our products;

• the risks associated with our wafer fabrication facility, our assembly facility and our test and tape and reel facilities;

• variability in manufacturing yields, and raw material costs and availability;

• our dependence on third parties, including wafer foundries, wafer starting material suppliers, passive component manufacturers, assembly and packaging suppliers and test and tape and reel suppliers;

• our ability to manage channel partner and customer relationships;

• our ability to procure, commercialize and enforce intellectual property rights (IPR) and to operate our business without infringing on the unlicensed IPR of others;

• the risks associated with security breaches and other similar disruptions, which could compromise our information and expose us to liability and could cause our business and reputation to suffer;

• currency fluctuations, tariffs, trade barriers, tax and export license requirements and health and security issues associated with our foreign operations; and

• our ability to attract and retain skilled personnel and develop leaders for key business units and functions.

These and other risks and uncertainties, which are described in more detail in our most recent Annual Report on Form 10-K and in other reports and statements that we file with the Securities and Exchange Commission, could cause the actual results and developments to be materially different from those expressed or implied by any of these forward-looking statements. Forward-looking statements speak only as of the date they were made and we undertake no obligation to update or revise such statements, except as required by the federal securities laws.

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OVERVIEW

The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand the consolidated results of operations and financial condition of RF Micro Devices, Inc. MD&A is provided as a supplement to, and should be read in conjunction with, our Condensed Consolidated Financial Statements and accompanying notes.

We are a recognized global leader in the design and manufacture of high-performance radio frequency (RF) solutions. Our products enable worldwide mobility, provide enhanced connectivity and support advanced functionality in the mobile device, wireless infrastructure, wireless local area network (WLAN or WiFi), cable television (CATV)/broadband, Smart Energy/advanced metering infrastructure (AMI), and aerospace and defense markets. We are recognized for our diverse portfolio of semiconductor technologies and RF systems expertise, and we are a preferred supplier to the world’s leading mobile device, customer premises and communications equipment providers.

We design, develop, manufacture and market our products to both domestic and international original equipment manufacturers and original design manufacturers in both wireless and wired communications applications, in each of our following operating segments.

• Cellular Products Group (CPG) is a leading global supplier of cellular RF solutions which perform various functions in the cellular front end section.  The cellular front end section is located between the transceiver and the antenna.  These RF solutions include power amplifier (PA) modules, transmit modules, PA duplexer modules, antenna control solutions, antenna switch modules, switch filter modules,  switch duplexer modules, and RF power management solutions.  CPG supplies its broad portfolio of cellular RF solutions into a variety of mobile devices, including smartphones, handsets, netbooks, notebooks and tablets.

• Multi-Market Products Group (MPG) is a leading global supplier of a broad array of RF solutions, such as PAs, low noise amplifiers, variable gain amplifiers, high power gallium nitride transistors, attenuators, modulators, switches, VCOs, phase locked loop modules, multi-chip modules, front end modules, and a range of military and space components (amplifiers, mixers, VCOs and power dividers). Major communications applications include mobile wireless infrastructure, point-to-point and microwave radios, small cells, WiFi (routers, access points, mobile devices and customer premises equipment), and CATV infrastructure. Industrial applications include Smart Energy/AMI, private mobile radio, and test and measurement equipment. Aerospace and defense applications include military communications, radar and electronic warfare, as well as space communications. During the second quarter of fiscal 2013, our foundry services were realigned from our Compound Semiconductor Group to our MPG.

• Compound Semiconductor Group (CSG) is a business group that was established to leverage our compound semiconductor technologies and related expertise in RF and non-RF end markets and applications. 

As of December 28, 2013, our reportable segments are CPG and MPG. CSG does not currently meet the quantitative threshold for an individually reportable segment under ASC 280-10-50-12. These business segments are based on the organizational structure and information reviewed by our Chief Executive Officer, who is our chief operating decision maker (or CODM), and are managed separately based on the end markets and applications they support. The CODM allocates resources and assesses the performance of each operating segment primarily based on operating income (loss) and operating income (loss) as a percentage of revenue.

THIRD QUARTER FISCAL 2014 FINANCIAL HIGHLIGHTS:

• Quarterly revenue increased 6.4% as compared to the third quarter of fiscal 2013, primarily due to increased demand for our cellular RF solutions for smartphones.

• Gross margin for the quarter was 37.3% as compared to 32.0% for the third quarter of fiscal 2013. This increase is primarily due to manufacturing and sourcing-related cost reductions and increased demand, which was partially offset by average selling price erosion.

• Operating income was $15.4 million for the third quarter of fiscal 2014 as compared to an operating income of $5.7 million for the third quarter of fiscal 2013. This increase was primarily due to higher revenue and improved gross margin, which was partially offset by increased consulting expenses, increased restructuring expenses associated with achieving manufacturing efficiencies, increased personnel expenses and increased legal fees.

• Inventory totaled $136.3 million at December 28, 2013, reflecting turns of 5.3 as compared to $159.0 million and turns of 4.6 at December 29, 2012.

• Earnings per share for the third quarter of fiscal 2014 was $0.02 as compared to $(0.01) for the third quarter of fiscal 2013.

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• Cash flow from operations was $70.4 million for the third quarter of fiscal 2014 as compared to $43.3 million for the third quarter of fiscal 2013.

• During the third quarter of fiscal 2014, we repurchased 0.2 million shares of our common stock at an average price of $4.99 on the open market.

RESULTS OF OPERATIONS

Consolidated

The following table presents a summary of our results of operations for the three and nine months ended December 28, 2013 and December 29, 2012.

	Three Months Ended
(In thousands, except percentages)	December 28, 2013		% of Revenue		December 29, 2012			% of Revenue		Increase (Decrease)			Percentage Change
Revenue	$	288,520	100.0	%	$	271,213		100.0	%	$	17,307		6.4	%
Cost of goods sold	180,997		62.7		184,403			68.0		(3,406		)	(1.8	)
Gross margin	107,523		37.3		86,810			32.0		20,713			23.9
Research and development	50,378		17.5		46,509			17.2		3,869			8.3
Marketing and selling	18,054		6.3		16,906			6.2		1,148			6.8
General and administrative	17,766		6.2		15,746			5.8		2,020			12.8
Other operating expense	5,933		2.0		1,969			0.7		3,964			201.3
Operating income	$	15,392	5.3	%	$	5,680		2.1	%	9,712			171.0
	Nine Months Ended
	December 28, 2013		% of Revenue		December 29, 2012			% of Revenue		Increase			Percentage Change
Revenue	$	892,232	100.0	%	$	683,544		100.0	%	$	208,688		30.5	%
Cost of goods sold	586,584		65.7		465,945			68.2		120,639			25.9
Gross margin	305,648		34.3		217,599			31.8		88,049			40.5
Research and development	147,907		16.6		130,053			19.0		17,854			13.7
Marketing and selling	56,381		6.3		50,022			7.3		6,359			12.7
General and administrative	61,320		6.9		47,734			7.0		13,586			28.5
Other operating expense	11,957		1.4		7,127			1.0		4,830			67.8
Operating income (loss)	$	28,083	3.1	%	$	(17,337	)	(2.5	)%	45,420			262.0

Revenue increased for the three months ended December 28, 2013 as compared to the three months ended December 29, 2012, primarily due to increased demand for our cellular RF solutions for smartphones. Revenue increased during the nine months ended December 28, 2013 as compared to the nine months ended December 29, 2012, primarily due to increased demand for our cellular RF solutions for smartphones and WiFi products.

Gross margin increased for the three and nine months ended December 28, 2013 as compared to the three and nine months ended December 29, 2012, primarily due to manufacturing and sourcing-related cost reductions and increased demand, which was partially offset by average selling price erosion.

Operating income increased for the three months ended December 28, 2013 as compared to the three months ended December 29, 2012, primarily due to higher revenue and improved gross margin, which was partially offset by increased consulting expenses, increased restructuring expenses associated with achieving manufacturing efficiencies, increased personnel expenses and increased legal fees. Operating income increased for the nine months ended December 28, 2013 as compared to the nine months ended December 29, 2012, primarily due to higher revenue and improved gross margin, which was partially offset by increased personnel expenses, increased consulting expenses, expenses related to the phase out of manufacturing and sale of our Newton Aycliffe, U.K.-based GaAs facility, as well as restructuring expenses associated with

17

achieving manufacturing efficiencies. During the first quarter of fiscal 2013, other operating expense included a $5.0 million loss realized on the transfer of our MBE wafer growth operations to IQE, Inc. ("IQE").

Operating Expenses

Research and development expenses increased for the three and nine months ended December 28, 2013 as compared to the three and nine months ended December 29, 2012, primarily due to personnel expenses associated with new product development for 3G/4G mobile devices as well as increased personnel expenses associated with our investment in CMOS PAs.

Marketing and selling expenses increased for the three and nine months ended December 28, 2013 as compared to the three and nine months ended December 29, 2012, primarily due to increased salaries and commission expenses in support of our customer diversification efforts and in support of our new products for 3G/4G mobile devices.

General and administrative expenses increased for the three and nine months ended December 28, 2013 as compared to the three and nine months ended December 29, 2012, primarily due to increased consulting expenses and IP related legal expenses.

Other operating expense increased for the three and nine months ended December 28, 2013 as compared to the three and nine months ended December 29, 2012 primarily due to expenses related to the phase out of manufacturing and sale of our Newton Aycliffe, U.K.-based GaAs facility, restructuring expenses associated with achieving our manufacturing efficiencies, and expenses related to a potential strategic transaction that was terminated. These increases were partially offset by the loss realized on the transfer of our MBE wafer growth operations to IQE during the first quarter of fiscal 2013 as well as acquisition-related expenses associated with the acquisition of Amalfi during the third quarter of fiscal 2013.

Segment Product Revenue, Operating Income and Operating Income as a Percentage of Revenue

Cellular Products Group

	Three Months Ended
(In thousands, except percentages)	December 28, 2013			December 29, 2012			Increase		Percentage Change
Revenue	$	238,688		$	222,662		$	16,026	7.2	%
Operating income	32,806			25,689			7,117		27.7
Operating income as a % of revenue	13.7		%	11.5		%
	Nine Months Ended
(In thousands, except percentages)	December 28, 2013			December 29, 2012			Increase		Percentage Change
Revenue	$	731,876		$	535,687		$	196,189	36.6	%
Operating income	83,838			36,149			47,689		131.9	%
Operating income as a % of revenue	11.5		%	6.7		%

The increase in CPG revenue for the three and nine months ended December 28, 2013 as compared to the three and nine months ended December 29, 2012 was primarily due to increased demand for our cellular RF solutions for smartphones.

The increase in CPG operating income for the three and nine months ended December 28, 2013 as compared to the three and nine months ended December 29, 2012 was primarily due to higher revenue and improved gross margin (resulting from manufacturing and sourcing-related cost reductions, partially offset by average selling price erosion) which was partially offset by increased personnel expenses associated with new product development for 3G/4G mobile devices as well as increased personnel expenses associated with our investment in CMOS PAs.

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Multi-Market Products Group

	Three Months Ended
(In thousands, except percentages)	December 28, 2013			December 29, 2012			Increase		Percentage Change
Revenue	$	49,831		$	48,551		$	1,280	2.6	%
Operating income	8,028			1,885			6,143		325.9
Operating income as a % of revenue	16.1		%	3.9		%
	Nine Months Ended
(In thousands, except percentages)	December 28, 2013			December 29, 2012			Increase		Percentage Change
Revenue	$	160,347		$	147,857		$	12,490	8.4	%
Operating income	23,759			6,224			17,535		281.7
Operating income as a % of revenue	14.8		%	4.2		%

The increase in MPG revenue for the three and nine months ended December 28, 2013 as compared to the three and nine months ended December 29, 2012 was primarily due to increased demand for our WiFi products.

The increase in MPG operating income for the three months ended December 28, 2013 as compared to the three months ended December 29, 2012 was primarily due to improved gross margin resulting from manufacturing and sourcing-related cost reductions, which was partially offset by average selling price erosion. The increase in MPG operating income for the nine months ended December 28, 2013 as compared to the nine months ended December 29, 2012 was primarily due to improved gross margin resulting from manufacturing and sourcing-related cost reductions and increased revenue, which was partially offset by average selling price erosion.

See Note 8 to the Condensed Consolidated Financial Statements for a reconciliation of segment operating income to the consolidated operating income (loss) for the three and nine months ended December 28, 2013 and December 29, 2012.

OTHER (EXPENSE) INCOME AND INCOME TAXES

	Three Months Ended						Nine Months Ended
(In thousands)	December 28, 2013			December 29, 2012			December 28, 2013			December 29, 2012
Interest expense	$	(1,469	)	$	(1,368	)	$	(4,381	)	$	(5,086	)
Interest income	46			52			128			195
Loss on retirement of convertible subordinated notes	—			—			—			(2,756		)
Other income	427			143			1,198			22
Income tax expense	(8,161		)	(5,950		)	(11,340		)	(12,076		)

Interest Expense

Interest expense decreased for the nine months ended December 28, 2013 as compared to the nine months ended December 29, 2012, primarily due to lower debt balances. During the first quarter of fiscal 2013, our 2012 Notes became due and the remaining principal balance of $26.5 million was paid. In addition, during the first nine months of fiscal 2013, we purchased and retired $47.4 million original principal amount of our 2014 Notes.

Our interest expense included cash interest of $0.3 million and $1.0 million for the three and nine months ended December 28, 2013, respectively, compared to cash interest of $0.2 million and $0.9 million for the three and nine months ended December 29, 2012, respectively.

Loss on the Retirement of Convertible Subordinated Notes

During the first nine months of fiscal 2013, we purchased and retired $47.4 million original principal amount of our 2014 Notes, for an average price of $98.34, which resulted in a loss of approximately $2.8 million, as a result of applying ASC 470-20. ASC 470-20 requires us to record gains and losses on the early retirement of our 2014 Notes in the period of derecognition, depending on whether the fair market value at the time of derecognition was greater than, or less than, the carrying value of the debt.

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Other Income

The fluctuations in other income for the three and nine months ended December 28, 2013 as compared to the three and nine months ended December 29, 2012, are primarily related to the foreign currency exchange rate impact on our Euro, Renminbi (or Yuan) and Sterling denominated accounts, and a change in the gain (loss) on our equity investment.

Income Taxes

Our provision for income taxes for the three and nine months ended December 28, 2013 and December 29, 2012, has been calculated by applying an estimate of the annual effective tax rate for the full fiscal year to “ordinary” income or loss (pre-tax income or loss excluding unusual or infrequently occurring discrete items) for the three and nine months ended December 28, 2013 and December 29, 2012.

Income tax expense was $8.2 million and $11.3 million for the three and nine months ended December 28, 2013, respectively, which is comprised primarily of tax expense related to domestic and international operations and reductions in the net U.K. deferred tax asset, offset by a tax benefit related to changes in the domestic deferred tax asset valuation allowance. Income tax expense was $6.0 million and $12.1 million for the three and nine months ended December 29, 2012, respectively, which is comprised primarily of tax expense related to international operations and changes in the domestic deferred tax asset valuation allowance, offset by a tax benefit related to domestic operations.

The valuation allowance against net deferred tax assets decreased by $4.0 million from the $164.2 million balance as of the end of fiscal 2013. We intend to maintain a valuation allowance against the domestic net deferred tax assets until sufficient positive evidence exists to support its full or partial reversal. The amount of the deferred tax assets actually realized could vary depending upon the amount of taxable income we are able to generate in the various taxing jurisdictions in which we have operations.

In July 2013, the Company sold its manufacturing facility located in the U.K. which generated its U.K. tax loss carryovers. U.K. tax loss carryovers can only be used to offset income generated by the same trade or business from which they arose. In connection with the sale, the deferred tax assets related to U.K. tax losses were written off and the related valuation allowance was reversed.

LIQUIDITY AND CAPITAL RESOURCES

We have funded our operations to date through sales of equity and debt securities, bank borrowings, capital equipment leases and revenue from product sales. Through public and Rule 144A securities offerings, we have raised approximately $1,053.3 million, net of offering expenses. As of December 28, 2013, we had working capital of approximately $274.9 million, including $117.5 million in cash and cash equivalents, compared to working capital of approximately $338.9 million at December 29, 2012, including $113.7 million in cash and cash equivalents. During the first quarter of fiscal 2014, our 2014 Notes (with a balance of $85.9 million and which are due April 15, 2014), were reclassified to current liabilities. This decrease to working capital was partially offset by a decrease in our days payable outstanding for the nine months ended December 28, 2013 as compared to the nine months ended December 29, 2012. As of December 28, 2013, our total cash, cash equivalents and short-term investments balance exceeded the remaining principal amount of our 2014 Notes by $118.0 million.

Our total cash, cash equivalents and short-term investments were $205.5 million as of December 28, 2013. This balance includes approximately $56.0 million held by our foreign subsidiaries. If these funds held by our foreign subsidiaries are needed for our operations in the U.S., we would be required to accrue and pay U.S. taxes to repatriate these funds. However, under our current plans, we expect to permanently reinvest these funds outside of the U.S. and do not expect to repatriate them to fund our U.S. operations.

Our board of directors has authorized the repurchase of up to $200 million of our outstanding common stock, exclusive of related fees, commissions or other expenses, from time to time during a period commencing on January 28, 2011 and expiring on January 31, 2015. This share repurchase program authorizes the Company to repurchase shares through solicited or unsolicited transactions in the open market or in privately negotiated transactions. Between January 25, 2011 and December 28, 2013, we repurchased approximately $62.6 million of our common stock under this program, leaving us with an additional authorization of up to approximately $137.4 million under the program.

In the third quarter of fiscal 2014, our board of directors authorized capital expenditures of up to $25.0 million over the next two years for the expansion of our internal assembly and test capacity.

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Cash Flows from Operating Activities

Operating activities for the nine months ended December 28, 2013 generated cash of $99.1 million, compared to $60.8 million for the nine months ended December 29, 2012. This year-over-year increase was primarily attributable to improved profitability resulting from higher revenue, partially offset by changes in our working capital (primarily a decrease to accounts payable due to the timing of purchases and payments).

Cash Flows from Investing Activities

Net cash used in investing activities for the nine months ended December 28, 2013 was $67.8 million, compared to net cash provided by investing activities of $7.6 million for the nine months ended December 29, 2012. This change was primarily due to increased purchases of property and equipment as well as a decrease in net proceeds from maturities of available-for-sale securities for the first nine months of fiscal 2014 as compared to the first nine months of fiscal 2013. These increases in cash used in investing activities were partially offset by the purchase of Amalfi for approximately $48.1 million during the first nine months of fiscal 2013.

Cash Flows from Financing Activities

Net cash used in financing activities was $16.4 million for the nine months ended December 28, 2013, compared to net cash used in financing activities of $89.6 million for the nine months ended December 29, 2012. Net cash used in financing activities was higher during the nine months ended December 29, 2012 as we paid the $26.5 million remaining principal balance of the 2012 Notes, repurchased and retired $47.4 million original principal amount of our 2014 Notes (for an average price of $98.34) and paid the $6.3 million remaining balance of our bank loan.

COMMITMENTS AND CONTINGENCIES

Convertible Debt The 2014 Notes, which mature on April 15, 2014, have a balance of $85.9 million as of December 28, 2013 and are recorded in "Current portion of long term debt" on the Condensed Consolidated Balance Sheet. As of December 28, 2013, the 2014 Notes had a fair value on the PORTAL Market of $87.3 million, compared to a carrying value of $85.9 million. As of March 30, 2013, the 2014 Notes had a fair value on the PORTAL Market of $86.7 million, compared to a carrying value of $82.0 million.

We may from time to time seek to retire or purchase additional amounts of our outstanding convertible notes through cash purchases or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise. Such purchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors and the amounts involved may be material.

Credit AgreementOn March 19, 2013, we entered into a four-year senior credit facility with Bank of America, N.A., as Administrative Agent and a lender, and a syndicate of other lenders (the “Credit Agreement”). The Credit Agreement includes a $125.0 million revolving credit facility, which includes a $5.0 million sublimit for the issuance of standby letters of credit and a $5.0 million sublimit for swingline loans. We may request, at any time and from time to time, that the revolving credit facility be increased by an amount not to exceed $50.0 million. The revolving credit facility is available to finance working capital, capital expenditures and other corporate purposes. Our obligations under the Credit Agreement are jointly and severally guaranteed by certain subsidiaries. On August 15, 2013, the Credit Agreement was amended to revise the definition of "Eurodollar Base Rate" and a provision regarding restricted payments. We currently have no outstanding amounts under the Credit Agreement.

The Credit Agreement contains various conditions, covenants and representations with which we must be in compliance in order to borrow funds and to avoid an event of default, including financial covenants that we must maintain a consolidated leverage ratio not to exceed 2.50 to 1.0 as of the end of any fiscal quarter and a consolidated liquidity ratio not to be less than 1.05 to 1.0 as of the end of any fiscal quarter. We must also maintain Consolidated EBITDA (as defined in the Credit Agreement) of not less than $75.0 million as of the end of any four-fiscal-quarter period of the Company. We are in compliance with these covenants as of December 28, 2013.

Wafer Supply Agreement During the first quarter of fiscal 2013, we entered into an asset transfer agreement with IQE under which we transferred our MBE wafer growth operations (located in Greensboro, North Carolina) to IQE. The transaction with IQE was intended to lower our manufacturing costs, strengthen our metal organic chemical vapor deposition (MOCVD) supply chain and provide us with access to newly developed wafer starting process technologies. The assets transferred to IQE included our leasehold interest in the real property, building and improvements used for the facility and machinery and equipment located in the facility. Approximately 70 employees at our MBE facility became employees of IQE as part of the transaction. In conjunction with the asset transfer agreement, we entered into a wafer supply agreement with IQE under which

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IQE will supply us with competitively priced MBE and MOCVD wafer starting materials through March 31, 2016. As of December 28, 2013, our minimum purchase commitment related to the wafer supply agreement is approximately $11.1 million.

Capital Commitments At December 28, 2013, we had short-term capital commitments of approximately $7.4 million.

Future Sources of Funding Our future capital requirements may differ materially from those currently anticipated and will depend on many factors, including, but not limited to, market acceptance of our products, volume pricing concessions, capital improvements, demand for our products, technological advances and our relationships with suppliers and customers. Based on current and projected levels of cash flow from operations, coupled with our existing cash and cash equivalents, and our revolving credit facility, we believe that we have sufficient liquidity to meet both our short-term and long-term cash requirements. However, if there is a significant decrease in demand for our products, or in the event that growth is faster than we had anticipated, operating cash flows may be insufficient to meet our needs. If existing resources and cash from operations are not sufficient to meet our future requirements or if we perceive conditions to be favorable, we may seek additional debt or equity financing. We cannot be sure that any additional equity or debt financing will not be dilutive to holders of our common stock. Further, we cannot be sure that additional equity or debt financing, if required, will be available on favorable terms, if at all.

Legal We are involved in litigation and other legal proceedings in the ordinary course of business as well as the matter identified below. No liability has been established in the financial statements regarding current litigation as the potential liability, if any, is not probable or cannot be reasonably estimated. See Part II, Item 1 of this Quarterly Report on Form 10-Q for further information regarding our current legal proceedings.

Taxes We are subject to income and other taxes in the United States and in numerous foreign jurisdictions. Our domestic and foreign tax liabilities are subject to the allocation of revenues and expenses in different jurisdictions. Additionally, the amount of taxes paid is subject to our interpretation of applicable tax laws in the jurisdictions in which we operate. We are subject to audits by tax authorities. While we endeavor to comply with all applicable tax laws, there can be no assurance that a governing tax authority will not have a different interpretation of the law than we do or that we will comply in all respects with applicable tax laws, which could result in additional taxes. There can be no assurance that the outcomes from tax audits will not have an adverse effect on our results of operations in the period during which the review is conducted.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

There have been no material changes to our market risk exposures during the third quarter of fiscal 2014. For a discussion of our exposure to market risk, refer to Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” contained in our Annual Report on Form 10-K for the fiscal year ended March 30, 2013.

ITEM 4. CONTROLS AND PROCEDURES.

As of the end of the period covered by this report, the Company’s management, with the participation of the Company’s Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures in accordance with Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based upon their evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the SEC) (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

In addition, there were no changes in the Company’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

Since February 14, 2012, the Company has been a party in legal proceedings with Peregrine Semiconductor Corporation (“Peregrine”) in which Peregrine has asserted infringement of certain of its patents. The proceedings commenced with a complaint filed by Peregrine in the United States International Trade Commission (“ITC”), which Peregrine ultimately decided

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to dismiss. After various procedural matters following the dismissal of the ITC proceeding, the Company is currently a party to a lawsuit initiated by Peregrine in the United States District Court for the Southern District of California alleging infringement of four Peregrine patents. In December 2013, the Company filed a counterclaim against Peregrine alleging infringement by Peregrine of a Company patent. The Company also petitioned the court for declaratory relief regarding non-infringement and unenforceability of Peregrine’s patents. The Company intends to continue to vigorously defend its position that it has not infringed any valid claim of any of the Peregrine patents in the above-referenced legal proceeding.

ITEM 1A. RISK FACTORS.

In addition to the other information set forth in this report and in our other reports and statements that we file with the SEC, including our quarterly reports on Form 10-Q, careful consideration should be given to the factors discussed in Part I, Item 1A., “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 30, 2013, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

(c) Issuer Purchases of Equity Securities

On January 25, 2011, we announced that our board of directors authorized the repurchase of up to $200 million of our outstanding common stock, exclusive of related fees, commissions or other expenses, from time to time during a period commencing on January 28, 2011 and expiring on January 27, 2013. This share repurchase program authorizes us to repurchase shares through solicited or unsolicited transactions in the open market or in privately negotiated transactions. On January 31, 2013, our board of directors authorized an extension of our 2011 share repurchase program to repurchase up to $200 million of our outstanding common stock through January 31, 2015. Because of the Company's incorporation in North Carolina, which does not recognize treasury shares, the repurchased shares are canceled at the time of repurchase. Shares repurchased are deemed authorized but unissued shares of common stock. The following table summarizes our common stock repurchases for the fiscal quarter ended December 28, 2013:

Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Approximate dollar value of shares that may yet be purchased under the plans or programs
September 29, 2013 to October 26, 2013	0		$0.00	0		$138.1	million
October 27, 2013 to November 23, 2013	155,539		$4.99	155,539		$137.4	million
November 24, 2013 to December 28, 2013	0		$0.00	0		$137.4	million
Total	155,539			155,539		$137.4	million

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ITEM 6. EXHIBITS.

31.1	Certification of Periodic Report by Robert A. Bruggeworth, as Chief Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Periodic Report by William A. Priddy, Jr., as Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Periodic Report by Robert A. Bruggeworth, as Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Periodic Report by William A. Priddy, Jr., as Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following materials from our Quarterly Report on Form 10-Q for the quarter ended December 28, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets as of December 28, 2013 and March 30, 2013; (ii) the Condensed Consolidated Statements of Operations for the three and nine months ended December 28, 2013 and December 29, 2012; (iii) the Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and nine months ended December 28, 2013 and December 29, 2012; (iv) the Condensed Consolidated Statements of Cash Flows for the nine months ended December 28, 2013 and December 29, 2012; and (v) the Notes to the Condensed Consolidated Financial Statements

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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.
Date:	January 30, 2014	/s/ William A. Priddy, Jr.
		William A. Priddy, Jr.
		Chief Financial Officer, Corporate
		Vice President of Administration and Secretary
		(Principal Financial Officer)
Date:	January 30, 2014	/s/ Barry D. Church
		Barry D. Church
		Vice President and Corporate Controller
		(Principal Accounting Officer)

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EXHIBIT INDEX

31.1	Certification of Periodic Report by Robert A. Bruggeworth, as Chief Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Periodic Report by William A. Priddy, Jr., as Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Periodic Report by Robert A. Bruggeworth, as Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Periodic Report by William A. Priddy, Jr., as Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following materials from our Quarterly Report on Form 10-Q for the quarter ended December 28, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets as of December 28, 2013 and March 30, 2013; (ii) the Condensed Consolidated Statements of Operations for the three and nine months ended December 28, 2013 and December 29, 2012; (iii) the Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and nine months ended December 28, 2013 and December 29, 2012; (iv) the Condensed Consolidated Statements of Cash Flows for the nine months ended December 28, 2013 and December 29, 2012; and (v) the Notes to the Condensed Consolidated Financial Statements

Our SEC file number for documents filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended, is 000-22511.

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