EX-99.1 3 qtr305earningsrel1.htm COMPANY PRESS RELEASE NEWS RELEASE

   NEWS RELEASE

At RF Micro Devices                                                               At the Financial Relations Board
Dean Priddy                                Doug DeLieto                          Joe Calabrese
Chief Financial Officer                 VP, Investor Relations             (212) 827-3772
(336) 931-7152                         (336) 931-7968                              

For Immediate Release
January 25, 2005

RF MICRO DEVICES ANNOUNCES FINANCIAL RESULTS        

December 2004 Quarterly Highlights:

  • Quarterly Revenue Totals $168.9 Million
  • Quarterly GAAP Net Income Per Share Equals $0.00 And Pro Forma Net Income Per Share Equals $0.02
  • POLARIS™ TOTAL RADIO™ Shipments Total Approximately 1.8 Million Units
  • Wireless Connectivity Business Unit Posts 21% Sequential Revenue Growth
  • Company Commences In-House Module Assembly In Beijing Facility

 Greensboro, NC, January 25, 2005 -- RF Micro Devices, Inc. (Nasdaq: RFMD), a leading provider of proprietary radio frequency integrated circuits (RFICs) for wireless communications applications, today reported financial results for its fiscal 2005 third quarter ended December 31, 2004. 

Financial Results

Revenue for the quarter was $168.9 million, a decrease of 12.5% versus revenue of $193.0 million for the corresponding quarter of fiscal 2004, and a sequential increase of 13.3% versus revenue of $149.1 million for the quarter ended September 30, 2004.  The year-over-year decline in quarterly revenue reflected continued weakness in the market for GSM/GPRS cellular handsets in Asia as well as a decline in the U.S. market for TDMA handsets, which were partially offset by strength among certain tier-one handset manufacturers in Wideband CDMA and EDGE and share gains in the market for cellular transceivers. 

Gross profit for the quarter was $58.4 million, a decrease of 27.4% versus $80.4 million for the prior-year period, and a sequential increase of approximately 19.0% from $49.1 million for the quarter ended September 30, 2004.  Gross profit margin in the December 2004 quarter was 34.6%, versus 32.9% in the prior quarter and 41.7% in the corresponding quarter of fiscal 2004.  The year-over-year decrease in gross profit margin was primarily attributable to the lower sales volume, and the sequential increase in gross profit margin was primarily attributable to the higher sales volume.

Net income in accordance with U.S. generally accepted accounting principles (GAAP) for the quarter ended December 31, 2004 was $0.6 million, or $0.00 per diluted share, compared with GAAP net income of $28.2 million, or $0.13 per diluted share, for the quarter ended December 31, 2003.  This compares sequentially to a GAAP net loss of ($6.7) million, or ($0.04) per diluted share, for the prior quarter ended September 30, 2004.

In addition to reporting net income (loss) and net income (loss) per share in accordance with GAAP, RFMD separately reports these items on a non-GAAP basis, referred to as pro forma, in order to exclude the effect of certain non-recurring and non-cash items.  For the purposes of this press release, all references to "pro forma" results reflect non-GAAP financial information.  In the quarter ended December 31, 2004, pro forma results excluded approximately $3.0 million in non-cash expenses related primarily to the amortization of deferred stock-based compensation and the amortization of transaction-related intangibles. 

After excluding these items, pro forma net income for the quarter ended December 31, 2004 was $3.6 million, or $0.02 per diluted share.  This compares with pro forma net income of $31.9 million, or $0.15 per diluted share, for the quarter ended December 31, 2003, and pro forma net loss of ($3.0) million, or ($0.02) per share, for the quarter ended September 30, 2004.

In the quarter ended December 31, 2003, pro forma results excluded approximately $3.7 million in non-cash expenses related to the amortization of deferred stock-based compensation and the amortization of transaction-related intangibles.  In the quarter ended September 30, 2004, pro forma results excluded approximately $3.6 million in non-cash expenses related primarily to the amortization of deferred stock-based compensation and the amortization of transaction-related intangibles.  A reconciliation of the Company's GAAP financial results to pro forma financial results is provided in the financial statement portion of this release.

RF Micro Devices believes pro forma reporting provides useful supplemental information to the investment community and facilitates a better understanding of its results of operations.  RF Micro Devices has chosen to provide this supplemental information to investors to enable them to perform additional comparisons of operating results and as a means to analyze its financial performance without the impact of certain non-cash expenses or unusual items that may obscure trends in the Company's underlying performance.  These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Business Outlook And Financial Guidance

For the fiscal 2005 fourth quarter ending March 31, 2005, RF Micro Devices currently anticipates quarterly revenue in the low- to mid-$150 million range, implying a less-than-seasonal decline, as next-generation product solutions are expected to continue to ramp.  Also, the Company currently expects gross margins in the March quarter will be approximately flat when compared with the December quarter, despite the sequential decline in sales volume.  Accordingly, quarterly GAAP net loss is expected to be in the range of ($0.03) to ($0.04) per share and quarterly pro forma net loss is expected to be in the range of ($0.01) to ($0.03) per share. 

Comments From Management

Bob Bruggeworth, president and CEO of RF Micro Devices, said, "We are pleased to have begun volume production shipments of our POLARISTM 2 transceiver chipsets for EDGE handsets.  POLARISTM TOTAL RADIOTM shipments in the December quarter were approximately 1.8 million units, and we currently forecast March quarterly transceiver shipments will significantly exceed December quarterly shipments. 

"RF Micro Devices is benefiting from the evolution to next-generation air interface standards, such as Wideband CDMA and EDGE, where our market share in cellular power amplifiers is greatest.  By leveraging our leadership position in power amplifiers, we are growing our dollar content in next-generation handsets through increased customer adoption of our cellular transceivers as well as our highly-integrated transmit modules, which incorporate RF switches with our market-leading power amplifiers.  In other handset applications, we continue to see traction for our Bluetooth® products as well as our Wireless LAN power amplifier products."

Dean Priddy, CFO and vice president of administration, said, "Our market position in EDGE and Wideband CDMA, or multi-mode, handsets presents us with a unique opportunity for revenue growth in calendar 2005.  As an organization, we are focused on operational excellence to ensure that this growth is profitable.  During the December quarter we began ramping in-house module assembly at our facility in Beijing, which we believe will improve power amplifier module margins beginning mid-2005. Additionally, other initiatives, such as ramping production at Jazz Semiconductor and corporate-wide yield improvement programs, are projected to complement our projected year-over-year revenue growth and positively impact margins throughout the year."

RF Micro Devices will conduct a conference call at 5:00 p.m. ET today to discuss today's press release.  The conference call will be broadcast live over the Internet and can be accessed by any interested party at www.fulldisclosure.com or www.rfmd.com (under Investor Info).  The call will also be available live by dialing 303-262-2075, and a replay will be available by dialing (303) 590-3000 and entering pass code 11020265.

RF Micro Devices, Inc., an ISO 9001- and ISO 14001-certified manufacturer, designs, develops, manufactures and markets proprietary radio frequency integrated circuits (RFICs) for wireless communications products and applications. The Company is a leading supplier of power amplifiers, one of the most critical radio frequency (RF) components in cellular phones.  The Company is also the leading manufacturer of GaAs HBT, which offers distinct advantages over other technologies for the manufacture of current- and next-generation power amplifiers.  The Company's products are included primarily in cellular phones, base stations, wireless local area networks (WLANs), cable television modems and global positioning systems (GPS).  The Company derives revenue from the sale of standard and custom-designed products.  The Company offers a broad array of products including amplifiers, mixers, modulators/demodulators and single-chip transmitters, Bluetooth® products and receivers and transceivers that represent a substantial majority of the RFICs required in wireless subscriber equipment.  The Company's goal is to be the premier supplier of low-cost, high-performance integrated circuits and solutions for applications that enable wireless connectivity.  RF Micro Devices, Inc., is traded on the Nasdaq National Market under the symbol RFMD. For more information about RFMD, please visit www.rfmd.com.

This press release contains forward-looking statements that relate to RF Micro Devices' plans, objectives, estimates and goals. Words such as "expects," "anticipates," "intends," "plans," "projects," "believes" and "estimates," and variations of these words and similar expressions, identify these forward-looking statements. RF Micro Devices' business is subject to numerous risks and uncertainties, including variability in quarterly operating results, the rate of growth and development of wireless markets, risks associated with the operation of wafer fabrication, molecular beam epitaxy and other foreign and domestic manufacturing facilities, our ability to attract and retain skilled personnel and develop leaders, variability in production yields, our ability to reduce costs and improve gross margins by implementing innovative technologies, our ability to bring new products to market, our ability to increase production capacity quickly in response to increases in demand for our products, dependence on a limited number of customers and dependence on third parties. These and other risks and uncertainties, which are described in more detail in RF Micro Devices' most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, could cause actual results and developments to be materially different from those expressed or implied by any of these forward-looking statements.

RF MICRO DEVICES®, RFMD® and POLARISTM TOTAL RADIOTM are trademarks of RFMD, LLC.  BLUETOOTH is a trademark owned by Bluetooth SIG, Inc., U.S.A. and licensed for use by RF Micro Devices, Inc.  All other tradenames, trademarks and registered trademarks are the property of their respective owners.

Financial Tables Follow

 

                                    RF MICRO DEVICES, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                              (In thousands, except per share data)
                                                                   (Unaudited)

 

Three Months Ended
December 31,

 

 

Nine Months Ended
December 31,

     2004

 

     2003

 

     2004

 

      2003

Total revenue

 $

168,917 

 $

192,973 

 $

483,798 

 $

487,958 

Costs and expenses:

   Cost of goods sold

110,550 

112,555 

311,477 

302,491 

   Research and development

38,848 

31,894 

111,337 

93,797 

   Marketing and selling

11,971 

11,891 

34,510 

33,625 

   General and administrative

6,594 

5,722 

17,768 

15,493 

   Other operating expense

- 

527 

7,056 

1,581 

   Total costs and expenses

167,963 

162,589 

482,148 

446,987 

Operating income

954 

30,384 

1,650 

40,971 

Loss in equity method investee

- 

(781)

(1,761)

(1,737)

Other (expense) income, net

(133)

(1,342)

(2,497)

(8,274)

Income (loss) before income taxes

 $

821 

 $

28,261 

 $

(2,608)

 $

30,960 

Income tax expense

239 

61 

464 

393 

Net income (loss)

 $

582 

 $

28,200 

 $

(3,072)

 $

30,567 

Net income (loss) per share, diluted

 $

0.00 

 $

0.13 

 $

(0.02)

 $

0.16 

Weighted average outstanding
   diluted shares


192,002 


222,889 


186,801 


210,369 

                                      RF MICRO DEVICES, INC. AND SUBSIDIARIES
                     RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
                                                     (In thousands, except per share data)
                                                                          (Unaudited)

 

Three Months Ended
December 31,

 

Nine Months Ended
December 31,

 

2004

 

2003

 

2004

 

2003

 

 

 

 

 

 

 

 

GAAP net income (loss)

 $

582 

 $

28,200 

 $

(3,072)

 $

30,567 

Tax-effected adjustments:

    Amortization of deferred stock
      compensation


1,336 


2,025 


4,148 


5,916 

    Amortization of intangible assets

1,702 

1,714 

4,968 

5,569 

    Discount and issuance cost
      write-off related to the
      extinguishments of the 3.75%
      convertible debt




- 




- 




642 




2,579 

    In process research and  
      development charge


- 


- 


6,201 


- 

    Impairment charge

- 

- 

391 

- 

Pro forma net income

3,620 

31,939 

13,278 

44,631 

 Plus: Income impact of assumed
           conversions for interest on
           1.50% convertible notes



- 



1,059 



- 



2,049 

Pro forma net income plus
     assumed conversion of notes -
     Numerator for diluted income
     per share

 


$




3,620 

 


$




32,998 

 


$




13,278 

 


$




46,680 

GAAP weighted average
    outstanding  diluted shares


192,002 


222,889 


186,801 


210,369 

Adjustments:

    Dilutive stock options

- 

- 

4,319 

- 

    Assumed conversion of 1.50%
     convertible notes


- 


- 


- 


- 

 
Pro forma weighted average
    outstanding diluted shares



192,002



222,889





191,120



210,369 

 Pro forma net income per share,
    diluted


 $


0.02 

 
$


0.15 


 $


0.07 

 
$


0.22 

                                   RF MICRO DEVICES, INC. AND SUBSIDIARIES
                               CONDENSED CONSOLIDATED BALANCE SHEETS
                                                              (In thousands)

December 31,
2004
(Unaudited)

March 31,
2004
(Audited)

ASSETS

Current assets:

        Cash and cash equivalents

 $

99,315 

 $

220,915 

        Short-term investments

105,158 

106,930 

        Accounts receivable, net

75,310 

86,287 

        Inventories

80,794 

58,552 

        Other current assets

10,024 

10,098 

                Total current assets

370,601 

482,782 

Property and equipment, net

306,375 

280,356 

Goodwill

118,760 

110,006 

Long-term investments

59,679 

62,908 

Intangible assets, net

49,690 

50,165 

Other assets

3,535 

1,799 

                Total assets

 $

908,640 

 $

988,016 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

Current liabilities:

        Accounts payable and accrued liabilities

 $

66,227 

 $

55,548 

        Other short-term liabilities, net

4,332 

336 

      Total current liabilities

70,559 

55,884 

Long-term debt, net

225,970 

324,626 

Other long-term liabilities

4,531 

4,368 

     Total liabilities

301,060 

384,878 

Shareholders' equity:

    Total shareholders' equity

607,580 

603,138 

    Total liabilities and shareholders' equity

 $

908,640 

 $

988,016