RF Micro Devices, Inc. Announces Fiscal 2002 First
Quarter Results
Quarterly Highlights:
-- Revenues Grow 27.3% Sequentially To $70.1 Million -- Excluding
Special Charge, Quarterly Loss Per Share Is ($0.05) -- Company Incurs
$22.1 Million Special Charge -- Module Revenues Increase 29%
Sequentially -- Company Is 100% Booked For Approximately 10%
Sequential Revenue Growth
GREENSBORO, N.C., July 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 fiscal 2002 first
quarter, ended June 30, 2001.
Financial Results
The Company incurred a $22.1 million special charge that was the result of two business
trends. First, as a result of an ongoing shift in customer demand from individual integrated
circuits, also known as microwave monolithic integrated circuits (MMICs), to module products,
the Company recorded a $15.3 million inventory reserve and a $2.8 million asset impairment
charge related to MMIC test handlers. Second, the Company recorded a $4 million asset
impairment charge as a result of the decision to outsource all production packaging, and the
subsequent transitioning of the Company's packaging line to an all-R&D facility. RF Micro
Devices believes these actions better position the Company for the future and improve its
competitiveness.
Revenues for the quarter were approximately $70.1 million, a sequential increase of
approximately 27.3% versus revenues of $55.0 million for the quarter ended March 31, 2001
and a decrease of approximately 28.7% versus revenues of $98.2 million for the corresponding
quarter of fiscal 2001. Revenues were ahead of the Company's prior guidance for the quarter,
which was provided on April 17, 2001 and indicated 20% sequential growth. Power amplifier
(PA) module revenues increased 29% sequentially and represented 33% of revenues in the
June quarter, versus 32% of revenues in the March quarter.
Excluding the special charge, gross profit for the quarter would have increased 43.1% sequentially to $19.4 million, versus $13.6
million for the quarter ended March 31, 2001, and decreased 61.6%, versus $50.6 million for the prior year period. The
year-over-year 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. The sequential increase in gross profit was primarily attributable to the sequential increase in the
Company's revenues as well as the result of cost reduction and yield improvement initiatives. Gross profit margin excluding the
special charge increased sequentially 300 basis points to 27.7% from 24.7% in the prior quarter. Including the special charge,
gross profit was $4.2 million.
During the June quarter, other operating expenses totaled $4.9 million. Other operating expenses represent startup costs
associated with the Company's second wafer fab facility and the Company's recently announced facility in China. Currently, the
wafer fab is expected to commence operations late in the September quarter, and construction of the China facility is expected to
be complete in the fall of 2002.
Excluding the effect of the special charge, net loss for the quarter would have been $7.5 million, or ($0.05) per share, based on a
33% tax rate, compared to net income of $16.2 million, or $0.09 per diluted share, for the first quarter of fiscal 2001, based on a
38% tax rate. This compares sequentially to a net loss of $6.8 million, or ($0.04) per share, for the fourth quarter of fiscal 2001,
based on a 33% tax rate. The special charge incurred during the June quarter reduced earnings by approximately $22.1 million, or
($0.13) per share, and reversed a tax benefit of $3.9 million, or ($0.02) per share, for a total impact of ($0.15) per share. Including
the effect of the special charge, net loss for the quarter was $33.5 million, or ($0.20) per share.
Business Outlook And Financial Guidance
Order visibility improved during the June quarter. The Company currently is fully booked to support approximately 10% sequential
revenue growth in the September quarter.
Gross margin for the September quarter is currently expected to range from 28% to 33%. Operating expenses in the September
quarter, excluding other operating expenses associated with the Company's second wafer fab facility and its China facility, are
currently expected to increase sequentially approximately 3%, due mainly to increased investments in the Company's R&D
activities. Other operating expenses are anticipated to range from $5.0 million to $5.5 million. Because of the special charge taken
in the June quarter, the Company now anticipates its tax rate will be approximately 0.0% for the quarter and the year. This is an
update to previous guidance that suggested the Company would recognize a tax benefit in the second fiscal quarter. The updated
tax guidance increases the anticipated loss per share in the September quarter by ($0.01). Taking these factors into account, the
Company currently expects a net loss per share for the September 2001 quarter of approximately ($0.03).
The Company expects module shipments will represent an increasing percentage of total revenues in the September quarter,
driven primarily by market share gains and the ongoing shift in customer demand to module products.
Management continues to anticipate a return to profitability in calendar 2001. 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
David Norbury, President and Chief Executive Officer of RF Micro Devices, said, ``We are very pleased to report
better-than-forecasted sequential revenue growth particularly since the macro environment remains challenging. The growth was
driven primarily by market share gains by our PA modules and continued demand for certain MMIC products. There continues to
be particularly strong interest in our module products, and we currently believe we are on track to begin production shipments of
new power amplifier modules for both TDMA and GSM/GPRS handsets during the September quarter.
``During the June quarter, the Company experienced increased order activity and growth in backlog. Given these factors, and our
ongoing communications with customers, we believe our visibility has improved into the September quarter. We continue to expect
near-term revenue growth and market share gains, and we are optimistic about multiple opportunities in handset and non-handset
markets. Our wireless local area network (WLAN) chipset, for example, is currently being evaluated by several leading
companies. Initial feedback has been positive, and we expect WLAN revenues will begin to reach meaningful levels this fiscal
year.
``Finally, we anticipate September revenues will increase approximately ten percent sequentially, and we are very pleased to be
fully booked to reach that goal.''
Dean Priddy, CFO and vice president of administration, stated, ``Regarding the increased inventory reserves, recent forecast
analysis and customer inputs indicate a strengthening of our module business and continued strength in certain MMIC products but
an overall excess of MMIC products in total. The decision to write down the value of MMIC based test handlers was based on
the same analysis. The shift in our business from MMICs to modules has happened rapidly, and we anticipate module revenue will
represent approximately 50% of total revenue in the September quarter. The write-down of production packaging equipment
reflects the growing industry trend to outsource non-core manufacturing. Our assembly partners have capacity and are working to
reduce costs, so economically it now makes sense for us to outsource all packaging. However, based on customer input, we
believe it's also a competitive advantage to maintain a strong packaging R&D group, which drove our decision to transition our
packaging line to an all-R&D facility.''
Priddy continued, ``We were cash-flow positive for the quarter despite a difficult business environment. Our balance sheet
remains strong and we have sufficient cash to execute on our business plan for the foreseeable future.''
RF Micro Devices will conduct a conference call at 5:00 p.m. (ET) today to discuss fiscal first 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 radio
frequency integrated circuits (RFICs) primarily for wireless communications products and applications such as cellular and PCS
phones, base stations, wireless LANs, and cable television modems. The Company offers a broad array of products -- including
amplifiers, mixers, modulators/demodulators, and single-chip receivers, transmitters and transceivers -- representing a substantial
majority of the RFICs required in wireless subscriber equipment. The Company's 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.
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 probable variability in quarterly operating results, the rate of growth and development of wireless markets,
risks associated with the operation of wafer fabrication facilities, its 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 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® 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 .
RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
THREE MONTHS ENDED
JUNE 30, JUNE 30,
2001 2000
Total revenues $70,052 $ 98,206
Operating costs and expenses:
Cost of goods sold(A) 65,901 47,642
Research and development 16,015 14,174
Marketing and selling 6,565 7,344
General and administrative 3,260 3,719
Other operating expenses 4,912 -
Impairment of long-lived assets 6,801 -
Total operating costs and expenses 103,454 72,879
(Loss) income from operations (33,402) 25,327
Other (expense) income (92) 870
(Loss) income before income taxes (33,494) 26,197
Income tax expense - 9,955
Net (loss) income (B) ($33,494) $16,242
Net (loss) income per share, diluted(B) ($ 0.20) $0.09
Weighted average outstanding diluted shares 164,493 174,468
(A) For the quarter ended June 30, 2001, includes a special inventory
reserve charge of approximately $15.3 million. Excluding the special
charge, gross profit for the quarter would have been $19.4 million.
(B) For the quarter ended June 30, 2001, includes a special charge of
approximately $22.1 million, or ($0.13) per share, and the resulting
reversal of a tax benefit of $3.9 million, or ($0.02) per share, for a
total impact of ($0.15) per share. Excluding the special charge and
resulting tax benefit reversal, net loss for the quarter would have
been $7.5 million, or ($0.05) per share.
RF MICRO DEVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
JUNE 30, MARCH 31,
2001 2001
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $204,599 $266,076
Short-term investments 136,723 75,162
Accounts receivable, net 26,401 38,610
Inventories 61,377 71,015
Other current assets 41,733 41,451
Total current assets 470,833 492,314
Property and equipment, net 205,232 208,571
Technology licenses, net 13,276 13,424
Other assets 9,566 6,622
Total assets $698,907 $720,931
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities
$30,474 $24,023
Current obligations under capital leases 4,839 4,976
Total current liabilities 35,313 28,999
Long-term debt, net 293,081 292,700
Non-current deferred tax liability 19,803 19,471
Obligations under capital leases, less 2,191 3,263
current maturities
Other long-term liabilities 6,108 -
Total liabilities 356,496 344,433
Shareholders' equity:
Total shareholders' equity 342,411 376,498
Total liabilities and shareholders' equity $698,907 $720,931
SOURCE: RF Micro Devices, Inc. |
