RFMD ($18 up $22) misses estimates but see's "renewed growth"
Company Anticipates 20% Sequential Revenue Growth In Fiscal 2002 First Quarter
Quarterly Highlights:
-- March Quarterly Book-To-Bill Improves to Greater Than One, Driven By Strong GSM Order Rates -- Company is 100% Booked For 20% Sequential Revenue Growth -- Company Begins Production Shipments of Key High Volume GSM Power Amplifier Module -- Module Products Accelerate to 32% Of Total Revenue -- Consistent With Previously Disclosed Guidance, Quarterly Revenue Is $55.0 Million and Quarterly Loss Per Share is $0.04
GREENSBORO, N.C., April 17 /PRNewswire/ -- RF Micro Devices, Inc. (Nasdaq: RFMD - news), a leading provider of proprietary radio frequency integrated circuits (RFICs) for wireless communications applications, today reported financial results for its fourth quarter and fiscal year ended March 31, 2001.
Financial Results
Consistent with the Company's previous announcement on March 8, 2001 regarding its anticipated results for the fourth quarter, revenues for the quarter were approximately $55.0 million, a decrease of 35.1% versus revenues of $84.8 million for the corresponding quarter of fiscal 2000 and a decrease of 31.2% versus revenues of $79.9 million for the quarter ended December 31, 2000. Power amplifier (PA) module revenues increased 41% sequentially and represented 32% of revenues in the March quarter, versus 16% of revenues in the December quarter.
Gross profit for the quarter decreased 67.7% to $13.6 million, versus $42.0 million for the corresponding quarter of fiscal 2000, and decreased 63.8% sequentially over gross profit of $37.5 million for the quarter ended December 31, 2000. The year-over-year and sequential decrease in gross profit was primarily attributable to the decrease in the Company's revenues, the initial higher cost of goods sold associated with the Company's module products, and greater than normal yield losses associated with the steep ramp of the module business.
Other operating expenses during the March quarter totaled $3.4 million. Other operating expenses represent startup costs associated with the Company's second wafer fab facility, which currently is expected to commence operations late in the quarter ending September 30, 2001.
Net loss for the quarter was $6.8 million, or $0.04 per diluted share, compared to net income of $14.6 million, or $0.08 per diluted share, for the fourth quarter of fiscal 2000, based on a 35% tax rate. This compares sequentially to net income of $7.8 million, or $0.05 per diluted share, for the third quarter of fiscal 2001, based on a tax rate of 36%. Included in the March 2001 results is a one-time $0.02 per share tax benefit, which is the result of R&D tax credits taken in the fourth quarter. Earnings per share for all periods have been adjusted to reflect a 2-for-1 stock split effective August 8, 2000.
Business Outlook And Financial Guidance
Based upon increases in order rates and the Company's backlog, management believes it has improved visibility into fiscal 2002 revenues. The Company's book-to-bill ratio was greater than one for the March quarter, and the Company has booked sufficient orders to result in approximately 20% sequential revenue growth in the June quarter over the quarter ended March 31, 2001.
During the fiscal fourth quarter, the Company began high-volume production shipments of a key PA module for use in an existing dual-band GSM handset for its largest customer. The module is ramping quickly and is expected to result in multi-million-dollar revenues in the June quarter. The Company also anticipates beginning volume production of a high-volume GSM/GPRS PA module late in the June quarter. Both PA modules are expected to become among RF Micro Devices' highest volume products to date, providing a significant opportunity for the Company to gain additional market share in GSM handsets.
While production shipments of PA modules are expected to contribute to sequential revenue growth, start-up costs associated with module products are expected to negatively impact the Company's gross margins in the near-term. However, the Company is implementing a series of cost reduction and yield improvement initiatives designed to improve gross margins.
The Company expects its capacity in its first wafer fab facility will be sufficient to meet demand until late in the September 2001 quarter. Until its second wafer fab commences production, the Company will expense start-up costs associated with preparing this facility for production.
As a result of these factors, the Company currently expects revenues for the quarter ending June 30, 2001 to increase sequentially from the quarter ending March 31, 2001 by approximately 20%. Gross margin for the quarter ending June 30, 2001 currently is anticipated to be in the range of 25% to 30%. Operating expenses in the June quarter, excluding other operating expenses associated with the Company's second wafer fab facility, are currently expected to increase sequentially 3% to 5% due to increased investments in the Company's R&D activities. Other operating expenses are anticipated to range from $6.0 million to $6.5 million, or approximately $0.03 per share after tax. The annualized tax rate for fiscal 2002 is expected to be in the range of 33% to 35%. These factors are currently expected to result in a net loss per share for the June 2001 quarter in the range of approximately ($0.05) to ($0.06).
Looking beyond the June quarter, management anticipates continued growth in revenues in the fiscal second quarter ending September 30, 2001 based on current customer forecasts and the Company's regular communication with its customers. The aforementioned GSM/GPRS PA module is expected to contribute to sequential revenue growth in the September quarter. In addition, other new GSM/GPRS power amplifiers designed for new customers, including Siemens AG, are expected to contribute to revenue growth in the second half of calendar 2001.
As part of its relationship with QUALCOMM, the Company secured several new design wins in CDMA, for which it currently expects to begin production shipments in the quarter ending December 31, 2001. The Company announced on March 5, 2001, the signing of a Memorandum of Understanding (MOU) to expand its alliance with QUALCOMM Incorporated, pioneer and world leader of Code Division Multiple Access (CDMA) digital wireless technology. Under the MOU, RFMD and QUALCOMM, through its QUALCOMM CDMA Technologies (QCT) division, will cooperate on the development of a Wideband CDMA (WCDMA) PA module for inclusion in QCT's MSM5200(TM) integrated circuit family. The PA5200(TM) device is QUALCOMM's first generation IMT-2000 WCDMA PA module and represents a joint design effort between QUALCOMM and RFMD.
Given the Company's current expectations for sequential revenue growth into the second half of calendar 2001, management currently anticipates a return to profitability during that period. Near-term variables that could impact the Company's ability to return to profitability include wafer fab capacity utilization, module product margin improvements, product mix and other items outside the control of the company.
Comments From Management
``The indications we're receiving from our customers lead us to believe that there are renewed prospects for revenue growth at RF Micro Devices beginning this quarter and continuing into the second half of fiscal 2002,'' said, David Norbury, President and Chief Executive Officer of RF Micro Devices. ``In addition to our largest customer, we are developing very promising new relationships with a number of major companies in the handset market, including QUALCOMM and Siemens AG, for example. As our relationships with these and other key customers strengthen, we believe we are very well positioned to gain market share and grow revenues sequentially in advance of the overall recovery in the handset market.
``Regarding our module products, we have seen a significant increase in interest in modules, and we believe our module technology will enable us to gain market share in GSM and CDMA while remaining strong in TDMA. We continue to believe our module technology has positioned the Company to be a key industry supplier in the future, as essentially all major handset manufacturers are transitioning to modules in their future generation handsets.
``We currently believe we will grow revenues approximately twenty percent sequentially in the June quarter, and are very pleased to exit the March quarter 100% booked to reach that goal. Given the increases we've recently seen in production orders and in design activity, we believe our visibility has improved and we are seeing near-term catalysts for continued sequential revenue growth.''
Dean Priddy, CFO and vice president of administration, stated, ``We anticipate that orders for our power amplifier modules will continue to grow at a strong rate. Although the module ramp is a significant shift in our business, we believe our experience in ramping new technologies will help us meet the challenges associated with this new product mix. Improving the margins on our modules is a top priority. We expect that it will take some time before yield improvement and cost-reduction efforts will be fully realized on our bottom line. We are, however, encouraged by the preliminary results from these efforts and we currently expect to see some improvement in our module product margins beginning late in the June quarter, with additional margin improvements continuing into the September quarter.''
RF Micro Devices will conduct a conference call at 5:00 p.m. (ET) today to discuss fiscal fourth quarter results and comment on the Company's outlook. The conference call will be broadcast live over the Internet and can be accessed by any interested party at www.streetevents.com or www.rfmd.com .
RF Micro Devices, Inc., an ISO 9001-certified manufacturer, designs, develops, manufactures and markets proprietary RFICs for wireless communications applications such as cellular and PCS phones, cordless phones, wireless LANs, wireless local loop handsets, industrial radios, wireless security systems and remote meter readers. The company offers a broad array of products -- including amplifiers, mixers, modulators/demodulators, and single-chip receivers, transmitters and transceivers -- representing a substantial majority of the RFICs required in wireless subscriber equipment. The company's strategy is to focus on wireless markets by offering a broad range of standard and custom-designed RFICs in order to position itself as a ``one-stop'' solution for its customers' RFIC needs. In the September 4, 2000 issue of FORTUNE magazine, RF Micro Devices was ranked second among FORTUNE's ``100 Fastest Growing Companies.'' RF Micro Devices, Inc. is traded on the Nasdaq National Market under the symbol RFMD.
RF MICRO DEVICES® and RFMD® are trademarks of RF Micro Devices, Inc. All other tradenames, trademarks and registered trademarks are the property of their respective owners.
For further information about RFMD, please visit our web site at rfmd.com .
This press release contains forward-looking statements that relate to the company's 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. The company's business is subject to numerous risks and uncertainties, including probable variability in quarterly operating results, the rate of growth and development of wireless markets, risks associated with the operation of wafer fabrication facilities, the company's ability to manage rapid growth and to attract and retain skilled personnel, variability in production yields, raw material availability, manufacturing capacity constraints, dependence on a limited number of customers and dependence on third parties. These and other risks and uncertainties, which are described in more detail in the company's Annual Report on Form 10-K and the company's Prospectus dated December 19, 2000 included in its Registration Statement on Form S-3 (Registration No. 333-49432) 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.
R F Micro Devices, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
March 31, March 31,
2001 2000 2001 2000
(Unaudited) (Unaudited) (Unaudited) (Audited)
Total revenue $55,019 $84,830 $335,364 $288,960
Costs and expenses:
Cost of goods sold 41,435 42,742 181,801 152,746
Research and
development 15,407 10,869 60,340 33,338
Marketing and selling 6,994 6,442 28,450 20,109
General and
administrative 3,188 2,994 13,495 9,573
Other operating
expenses 3,355 -- 4,607 --
Total costs and
expenses 70,379 63,047 288,693 215,766
Operating (loss)
income (15,360) 21,783 46,671 73,194
Interest income, net 1,610 727 5,738 3,874
(Loss) income before
income taxes (13,750) 22,510 52,409 77,068
Income tax (benefit)
expense (6,906) 7,879 17,435 26,974
Net (loss) income ($6,844) $14,631 $34,974 $50,094
Net (loss) income per
share, diluted ($0.04) $0.08 $0.20 $0.29
Weighted average
outstanding diluted
shares 163,302 174,340 173,216 171,668
R F Micro Devices, Inc.
Condensed Consolidated Balance Sheets
(In Thousands)
March 31, March 31,
2001 2000
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $266,076 $28,956
Short-term investments 75,162 33,755
Accounts receivable, net 39,988 61,163
Inventories, net 71,015 38,389
Current deferred tax asset 9,028 5,771
Other current assets 31,045 1,815
Total current assets 492,314 169,849
Property and equipment, net 208,571 159,843
Technology license, net 13,424 14,352
Long-term investments 5,508 --
Other assets 1,114 568
Total assets $720,931 $344,612
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accruals $24,023 $23,045
Current obligations under capital leases 4,976 4,495
Total current liabilities 28,999 27,540
Non-current convertible debt 292,700 --
Non-current deferred tax liability 19,471 5,716
Obligations under capital leases, less current
maturities 3,263 8,203
Total long-term liabilities 315,434 13,919
Total liabilities 344,433 41,459
Shareholders' equity 376,498 303,153
Total liabilities and shareholders' equity $720,931 $344,612
SOURCE: RF Micro Devices, Inc.
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