Late-Quarter Reductions In Demand Offset Strength In Shipments Of 3G Front
Ends And POLARIS(R) 3 RF Systems
GREENSBORO, N.C., Jan. 11 /PRNewswire-FirstCall/ -- RF Micro Devices, Inc.
(Nasdaq: RFMD), a global leader in the design and manufacture of
high-performance radio systems and solutions for applications that drive
mobile communications, today updated quarterly expectations for its fiscal
third quarter ended December 29, 2007. The revised revenue expectations for
RFMD include a partial quarter of revenue from Sirenza Microdevices, Inc.
("Sirenza"), which was acquired by RFMD on November 13, 2007.
Based upon a preliminary review, RFMD expects the combined company's
revenue for the fiscal third quarter to be approximately $268 million, of
which approximately $254 million is attributable to RFMD's historical
operations excluding Sirenza. RFMD experienced reduced demand late in the
December quarter from customers in Asia and from its high concentration of
top-tier customers that utilize inventory hubs. Additionally, RFMD
experienced demand softness in the infrastructure and broadband/consumer
markets. As a result, RFMD currently expects combined company earnings per
share on a GAAP basis to be approximately $(0.04) to $(0.05) per share and
non-GAAP earnings per share to be approximately $0.06 to $0.07 per share,
which excludes share-based compensation expense, amortization of intangible
assets, restructuring charges, start-up costs and purchase price accounting
adjustments.
RFMD believes the reduction in demand is temporary and anticipates a
return to growth in fiscal year 2009, which begins April 1, 2008. In the
March 2008 quarter, RFMD currently expects revenues for its Cellular Handset
Products Group (CPG) to be down quarter-over-quarter, offset partially by its
Multi-Market Products Group (MPG), which is expected to be flat to up.
Bob Bruggeworth, president and CEO of RFMD, said, "RFMD entered the
December 2007 quarter prepared to meet strong customer backlog that
subsequently weakened late in the quarter. Despite the demand weakness, we
made progress on several fronts to improve our financial performance, and we
continue to expect strong year-over-year growth in fiscal 2009.
"Specifically, product yields increased on our POLARIS(R) 3 RF system in
the December quarter, and we expect that trend to continue in the March
quarter. The integration of Sirenza is in the final phase, and we expect
earnings accretion beginning in the March quarter. We believe our pending
acquisition of Filtronic will significantly reduce RFMD's GaAs pHEMT sourcing
costs and ultimately will be accretive to margins while adding to MPG revenue
and total RFMD earnings.
Finally, we continue to see strong demand for our 3G multi-mode front ends
and our 802.11 products. In the March 2008 quarter, we are seeing the product
mix in MPG trending toward more favorable gross margins, and we anticipate
quarter-over-quarter growth for CPG in POLARIS 3 revenue as the high-volume
ramp of this product continues."
As previously announced, RFMD plans to release complete fiscal 2008 third
quarter results at approximately 4:00 p.m. Eastern Standard Time on Thursday,
January 31, 2008. RFMD will review these results and provide forward-looking
guidance during its regularly scheduled conference call at 5:00 p.m. Eastern
Standard Time on Thursday, January 31, 2008.
RFMD will discuss today's press release during a presentation this morning
at the 10th Annual Needham Growth Stock Conference at 8:30 a.m. Eastern
Standard Time. A live audio webcast of the presentation will be available via
the RFMD(R) Investor Relations web page at the following URL:
http://phx.corporate-ir.net/phoenix.zhtml?c=95468&p=irol-irhome.
RFMD is finalizing its third quarter financial statements, including the
consolidation of Sirenza's financial results and the calculation of certain
GAAP expenses, such as purchase price accounting adjustments related to the
acquisition of Sirenza. Accordingly, the preliminary results described in
this press release for RFMD's third fiscal quarter are subject to further
adjustments and such adjustments could be material.
Non-GAAP Financial Measures
In addition to disclosing financial results calculated in accordance with
United States (U.S.) generally accepted accounting principles (GAAP), RFMD's
press release contains non-GAAP net income per diluted share. This non-GAAP
financial measure is adjusted from GAAP results to exclude certain expenses
that are outlined in the table below:
Estimated Range
GAAP EPS $(0.04) - $(0.05)
Share-based compensation expense 0.01 - 0.02
Amortization of intangible assets 0.01 - 0.02
Restructuring charges <0.01 - <0.01
Start-up costs <0.01 - <0.01
Purchase price accounting adjustments 0.07 - 0.07
Non-GAAP EPS $0.06 - $0.07
In managing RFMD's business on a consolidated basis, management develops
an annual operating plan, which is approved by RFMD's Board of Directors,
using non-GAAP financial measures. In developing and monitoring performance
against this plan, management considers the actual or potential impacts on
these non-GAAP financial measures from actions taken to reduce unit costs with
the goal of increasing gross margin. In addition, management relies upon
these non-GAAP financial measures to assess whether research and development
efforts are at an appropriate level, and when making decisions about product
spending, administrative budgets, and marketing programs. In addition, RFMD
believes that non-GAAP financial measures provide useful supplemental
information to investors and enable investors to analyze the results of
operations in the same way as management. RFMD has chosen to provide this
supplemental information to enable investors to perform additional comparisons
of operating results and to analyze financial performance excluding the effect
of certain non-cash expenses, unusual items and share-based compensation
expense, which may obscure trends in RFMD's underlying performance.
We believe that this non-GAAP financial measure offers an additional view
of RFMD's operations that, when coupled with the GAAP results and the
reconciliation to the corresponding GAAP financial measure, provides a more
complete understanding of RFMD's results of operations and the factors and
trends affecting RFMD's business. However, this non-GAAP financial measure
should be considered as a supplement to, and not as a substitute for, or
superior to, the corresponding measure calculated in accordance with GAAP.
Non-GAAP net income per diluted share excludes the effects of share-based
compensation expense, amortization of intangible assets, restructuring
charges, start-up costs and purchase price accounting adjustments. RFMD
believes disclosure of non-GAAP net income per diluted share has economic
substance because the excluded expenses are either non-recurring in nature, do
not represent current cash expenditures, or are variable in nature and thus
unlikely to become recurring expenses. RFMD believes that the majority of its
purchased intangibles are not relevant to analyzing current operations because
they generally represent costs incurred by the acquired company to build value
prior to acquisition, and thus are effectively part of transaction costs
rather than ongoing costs of operating RFMD's business. In this regard, RFMD
notes that (i) once the intangibles are fully amortized, the intangibles will
not be replaced with cash costs and therefore, the exclusion of these costs
provides management and investors with better visibility into the actual costs
required to generate revenues over time, and (ii) although RFMD sets the
amortization expense based on useful life of the various assets at the time of
the transaction, RFMD cannot influence the timing and amount of the future
amortization expense recognition once the lives are established. Similarly,
RFMD believes that presentation of non-GAAP net income per diluted share that
excludes the impact of share-based compensation expense assists management and
investors in evaluating the period-over-period performance of RFMD's ongoing
operations because (i) the expenses are non-cash in nature, and (ii) although
the size of the grants is within RFMD's control, the amount of expense varies
depending on factors such as short-term fluctuations in stock price volatility
and prevailing interest rates, which can be unrelated to the operational
performance of RFMD during the period in which the expense is incurred and
generally is outside the control of management. RFMD believes that
restructuring charges, start-up costs and purchase price accounting
adjustments do not constitute part of its ongoing operations and that the
exclusion of these costs provides management and investors with better
visibility into the actual costs required to generate revenues over time and
gives management and investors a more effective means of evaluating our
historical and projected performance.
The primary material limitations associated with the use of non-GAAP net
income per diluted share as compared to the most directly comparable GAAP net
income per diluted share is (i) it may not be comparable to similarly titled
measures used by other companies in RFMD's industry, and (ii) it excludes
financial information that some may consider important in evaluating our
performance. RFMD compensates for these limitations by providing full
disclosure of the differences between this non-GAAP financial measure and the
corresponding GAAP financial measure, including a reconciliation to the
corresponding GAAP financial measure, to enable investors to perform their own
analysis of our net income per diluted share.
About RFMD: RF Micro Devices (Nasdaq: RFMD) is a global leader in the
design and manufacture of high-performance radio frequency systems and
solutions for applications that drive wireless and broadband communications.
RFMD's cellular front ends, cellular transceivers, RF components and system-
on-chip (SoC) solutions enable worldwide mobility, provide enhanced
connectivity and support advanced functionality in the cellular handset,
cellular base station, wireless local area network (WLAN), CATV networking,
aerospace, defense, and global positioning systems (GPS) markets. Recognized
for its diverse portfolio of state-of-the-art semiconductor technologies and
vast RF systems expertise, RFMD is a preferred supplier to the world's leading
mobile device and RF equipment manufacturers.
Headquartered in Greensboro, N.C., RFMD is an ISO 9001- and ISO 14001-
certified manufacturer with worldwide engineering, design, sales and service
facilities. RFMD is traded on the NASDAQ Global Select Market under the symbol
RFMD. For more information, please visit RFMD's website at www.rfmd.com.
This press release includes "forward-looking statements" within the
meaning of the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements include, but are not
limited to, statements about our plans, objectives, representations and
contentions and are not historical facts and typically are identified by use
of terms such as "may," "will," "should," "could," "expect," "plan,"
"anticipate," "believe," "estimate," "predict," "potential," "continue" and
similar words, although some forward-looking statements are expressed
differently. You should be aware that the forward-looking statements included
herein represent management's current judgment and expectations, but our
actual results, events and performance could differ materially from those
expressed or implied by forward-looking statements. We do not intend to update
any of these forward-looking statements or publicly announce the results of
any revisions to these forward-looking statements, other than as is required
under the federal securities laws. 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 our wafer fabrication facilities, molecular
beam epitaxy facility, assembly facility and test and tape and reel
facilities, our ability to complete acquisitions and integrate acquired
companies, including the risk that we may not realize expected synergies from
our business combinations, 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 adjust production
capacity in a timely fashion in response to changes 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 and other
reports 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(R) and RFMD(R) are trademarks of RFMD, LLC. All other
trade names, trademarks and registered trademarks are the property of their
respective owners.
SOURCE RF Micro Devices
Dean Priddy, CFO, +1-336-678-7975, or Doug DeLieto, VP, Investor Relations,
+1-336-678-7968, both of RF Micro Devices
